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724 So.2d 928 (1998)
Sherri McKINNEY, Appellant.
v.
STATE of Mississippi, Appellee.
No. 97-KA-00932 COA.
Court of Appeals of Mississippi.
November 24, 1998.
*929 Christopher A. Collins, Edmund J. Phillips, Jr., Newton, Attorneys for Appellant.
Office of the Attorney General By Scott Stuart, Jackson, Attorneys for Appellee.
BEFORE THOMAS, P.J., DIAZ, HERRING, AND SOUTHWICK, JJ.
HERRING, J., for the Court:
¶ 1. Sherri McKinney appeals to this Court from her conviction in the Circuit Court of Neshoba County, Mississippi, of possession of cocaine and possession of less than one *930 ounce of marijuana. McKinney challenges her conviction on the basis that the trial court erred in denying (1) a request for a directed verdict; and (2) a motion to exclude evidence recovered during the execution of a search warrant. We find that these assignments of error are without merit, and therefore, we affirm.
A. THE FACTS
¶ 2. On October 4, 1996, the Neshoba County Sheriff's Department secured and executed a search warrant on a residence in Philadelphia, Mississippi, based upon information they received from a confidential informant. According to the testimony of Deputy Eric Clark, a confidential informant advised Clark that she had observed the use and sale of illegal drugs at a residence rented by Sherri McKinney. The informant also alleged that the illegal activity occurred within the past twenty-four hours.
¶ 3. Upon entering the residence, the law enforcement officers found Sherri McKinney along with another individual in the living room. The officers also discovered three children in a bedroom. As the officers proceeded to search the residence, they observed twenty-three rocks of crack cocaine on the top of a dresser in one bedroom and two smoking pipes or "bongs." An identification card belonging to Sherri McKinney was also found in the top drawer of the dresser. Additionally, officers located several marijuana plants in a second bedroom and in the kitchen of the residence. A key chain bearing McKinney's name was also discovered in a tin box in the second bedroom.
¶ 4. McKinney was subsequently indicted and convicted of possession of cocaine and possession of less than one ounce of marijuana. The trial court sentenced McKinney to serve two and one-half years in the custody of the Mississippi Department of Corrections and imposed a fine totaling $1,250. She now appeals to this Court.
B. THE ISSUES
¶ 5. McKinney raises the following issues on appeal which are taken verbatim from her brief:
I. THE COURT ERRED IN DENYING APPELLANT'S MOTION FOR A DIRECTED VERDICT BECAUSE THERE WAS INSUFFICIENT EVIDENCE OF CONSTRUCTIVE POSSESSION.
II. THE COURT ERRED IN OVERRULING APPELLANT'S OBJECTION TO ADMISSIBILITY OF TESTIMONY DESCRIBING THE ITEMS FOUND IN THE SEARCH OF APPELLANT'S RESIDENCE.
C. ANALYSIS
I. DID THE TRIAL COURT ERR IN DENYING McKINNEY'S MOTION FOR A DIRECTED VERDICT?
¶ 6. McKinney asserts that the trial court erred in denying her motion for a judgment notwithstanding the verdict. She contends that the State failed to establish an essential element of the crimes, namely, possession of the controlled substances. McKinney claims that the evidence adduced at trial did not show that she exercised exclusive dominion or control over the illegal drugs, particularly the cocaine, or that she had constructive possession over the drugs. Because the State allegedly failed to prove that she had exclusive control over the bedroom where the officers discovered several "rocks" of cocaine, McKinney argues that she was entitled to a judgment notwithstanding the verdict.
¶ 7. To support a conviction for possession of a controlled substance, the State is not required to prove actual physical possession. Berry v. State, 652 So.2d 745, 748 (Miss.1995). The State may establish constructive possession by evidence showing that the contraband was under the dominion and control of the defendant. Roberson v. State, 595 So.2d 1310, 1319 (Miss.1992). Additionally, the possession of contraband "may be joint or individual." Wolf v. State, 260 So.2d 425, 432 (Miss.1972). "A presumption of constructive possession arises against the owner of premises upon which contraband is found." Cunningham v. State, 583 So.2d 960, 962 (Miss.1991). However, "when contraband is found on premises which are not owned by a defendant ... the [S]tate must *931 show additional incriminating circumstances to justify a finding of constructive possession." Id.
¶ 8. This Court's scope of review based on a challenge to the sufficiency of the evidence is well-settled. In reviewing the trial court's denial of a motion for a judgment notwithstanding the verdict, this Court reviews the sufficiency of the evidence in the light most favorable to the State. McClain v. State, 625 So.2d 774, 778 (Miss.1993). All credible evidence which is consistent with McKinney's guilt must be accepted as true, and the State is given the benefit of all favorable inferences that may be reasonably drawn from the evidence. Id.
¶ 9. A review of the record reveals that there was sufficient, credible evidence to constitute a finding of constructive possession by McKinney. Deputy Eric Clark testified that McKinney rented and occupied the residence in Philadelphia, Mississippi. When the law enforcement authorities executed the search warrant during the late evening of October 4, McKinney was present in the residence along with another individual and three children. The officers discovered twenty-three "rocks" of cocaine in plain view on top of a dresser in a bedroom. A photographic identification card of McKinney was found in the top drawer of the dresser. In another bedroom, the officers located several marijuana plants and a key chain belonging to McKinney. Although McKinney claims that the State failed to establish that she used the particular bedroom where the officers discovered the cocaine, we find that there was sufficient additional incriminating circumstances to prove that McKinney constructively possessed the illegal substances. The fact that the second individual located in the residence pled guilty to the charges is of little consequence to McKinney's case. As noted above, contraband may be jointly or individually held. Accordingly, this assignment of error is without merit.
II. DID THE TRIAL COURT ERR IN ADMITTING THE EVIDENCE DISCOVERED DURING THE SEARCH OF McKINNEY'S RESIDENCE?
¶ 10. McKinney alleges that the trial court erred in admitting into evidence the illegal drugs and other drug paraphernalia recovered from her residence. She contends that the affidavit filed in support of the search warrant did not contain a date to demonstrate the timeliness of the information law enforcement officers obtained from the confidential informant. Because the justice court judge failed to date the affidavit after he signed it, McKinney argues that the affidavit contained stale allegations, and therefore, the search was not valid.
¶ 11. Under Mississippi law, law enforcement authorities may only obtain a search warrant after they have demonstrated probable cause by introducing evidence of underlying facts and circumstances before the magistrate granting the warrant. Petti v. State, 666 So.2d 754, 757 (Miss.1995) (citing Barrett v. Miller, 599 So.2d 559, 566 (Miss.1992)). "Probable cause exists when facts and circumstances within an officer's knowledge, or of which he has reasonably trustworthy information, are sufficient within themselves to justify a man of average caution in the belief that a crime has been committed and that a particular person committed it." Id. An affidavit is a method of presenting to the magistrate a basis upon which he may determine whether in fact probable cause exists to support the issuance of a search warrant. Id. Moreover, the State bears the burden of proving the existence of probable cause. Carney v. State, 525 So.2d 776, 783 (Miss.1988).
¶ 12. Prior to the issuance of a search warrant, the magistrate is required to make a "practical, commonsense decision whether, given all the circumstances set forth in the affidavit before him, ... there is a fair probability that contraband or evidence of a crime will be found in a particular place." Smith v. State, 504 So.2d 1194, 1195 (Miss. 1987) (quoting Illinois v. Gates, 462 U.S. 213, 238, 103 S.Ct. 2317, 76 L.Ed.2d 527 (1983)). In reviewing a magistrate's finding of probable cause, this Court does not make a de novo determination; but rather, we ascertain if there was a substantial basis for the magistrate's finding. Davis v. State, 660 So.2d 1228, 1240 (Miss.1995).
*932 ¶ 13. McKinney attacks the validity of the search warrant, and ultimately the search, on the grounds that the justice court judge failed to complete the blank date section of the affidavit in support of the search warrant. During the trial, the court conducted a suppression hearing outside the presence of the jury. Deputy Eric Clark testified that he applied for a search warrant on October 4, 1996, before Justice Court Judge Leonard Warren. After the judge administered the oath, Deputy Clark stated that he submitted an affidavit in support of a search warrant to the judge and advised him of the situation. According to Clark, he informed the judge that a confidential informant had observed illegal drugs at a residence rented by McKinney within the past twenty-four hours. Clark testified that both he and the judge signed the affidavit, but the judge failed to fill in the date by his signature. After further discussion, the judge issued a search warrant and Clark, along with other law enforcement officials, executed the warrant around ten o'clock that evening and returned the warrant the following day. Additionally, the State introduced the affidavit in support of the search warrant and the warrant for identification purposes; however, the documents were not introduced into evidence during the hearing.[1] At the conclusion of the hearing, the trial court judge denied McKinney's motion to suppress the evidence recovered from her residence.
¶ 14. Before addressing the merits of McKinney's assignment of error, we note that the Mississippi Supreme Court refused to consider a defendant's challenge to the issuance of a search warrant based on a written statement of underlying facts in support of an affidavit that was not properly before the court. Branch v. State, 347 So.2d 957, 958-59 (Miss.1977). In that case, the defendant alleged that the statement of underlying facts did not constitute probable cause. Id. Although the statement was introduced for identification during the suppression hearing, it was never introduced into evidence or included in the record on appeal. Id. The court denied the defendant's requested relief and concluded that the defendant failed to "see that all matters necessary to his appeal, such as exhibits, witnesses' testimony, and so forth, [were] included in the record." Id. at 958.
¶ 15. The relevant court papers indicate that the defendant designated the entire record including the clerk's papers, motions, transcripts, and exhibits offered during the case for purposes of this appeal. The search warrant and an offense report filed by Deputy Clark were included in the record on appeal; however, the affidavit in support of the warrant was not included with the other documents. The defendant attached a copy of the warrant and the affidavit to his brief.[2] Notwithstanding this potential procedural bar to McKinney's assignment of error, we find that there was a substantial basis to support the issuance of the search warrant.
¶ 16. In Powell v. State, 355 So.2d 1378, 1380 (Miss.1978), the defendant asserted that a search warrant was fatally defective because the judge failed to sign the jurat of the affidavit. However, the supreme court noted that the testimony showed that the officer appeared before the judge, who placed the officer "under oath and obtained the information contained in the underlying facts and circumstances of the affidavit." Id. After informing the judge of the circumstances, the officer signed the affidavit and the judge noted the date and his title at the bottom of the form. Id. Based upon the affidavit, the judge issued a search warrant for the defendant's residence. Although the judge signed the warrant, he failed to sign the affidavit in support of the warrant. Id. In reviewing the alleged error, the supreme court relied on the undisputed evidence and concluded that the warrant was not fatally defective. Id.; see also Meyer v. State, 309 So.2d 161, 166 *933 (Miss.1975) (holding that search warrant is not void because of an incomplete date on the affidavit in support of the warrant).
¶ 17. The testimony of Deputy Clark reveals that he applied for, obtained, and executed a warrant on October 4, 1996. During the hearing, Clark identified the affidavit in support of the search warrant and the warrant itself. Clark stated that the judge placed him under oath and he advised the judge of the suspected illegal activity. The warrant was returned and an inventory of the items recovered from the residence was made the following day. Furthermore, the defense introduced into evidence an offense report filed by Clark the day after the execution of the search warrant. The report provides in pertinent part:
On 10/04/96 I received information from a confidential informant that has given me information in the past in which was proven true and correct and led to previous arrests. This informant stated that she had personally seen drugs and paraphernalia being used and sold at this address of 931 North Pecan Avenue. The residence was rental property, being rented by Sherri McKinney and to be occupied by other person's of unknown identity.
On this date of 10/04/96 I requested by affidavit that a Search Warrant be issued to investigate this illegal activity, with intentions of arresting all perpetrators of this criminal activity. A Search Warrant was granted and I proceeded to the jail to group the deputies together and explain the situation.
¶ 18. Although the affidavit in question was undated, we find that there was a substantial basis to support the judge's finding of probable cause. The uncontradicted testimony of Deputy Clark in conjunction with the search warrant and the offense report offered by the defense establish that Clark applied for the warrant on October 4. Clark testified that he obtained the information relating to suspected drug activity from a confidential informant within twenty-four hours of seeking the warrant. Consequently, the allegations contained in the affidavit in support of the search warrant were not stale, and therefore, the search was valid.
¶ 19. THE JUDGMENT OF THE CIRCUIT COURT OF NESHOBA COUNTY OF CONVICTION OF COUNT I OF POSSESSION OF COCAINE AND SENTENCE TO TWO AND ONE-HALF YEARS IN THE CUSTODY OF THE MISSISSIPPI DEPARTMENT OF CORRECTIONS AND FINE OF $1,000; AND COUNT II OF POSSESSION OF LESS THAN ONE OUNCE OF MARIJUANA AND SENTENCE TO PAY A FINE OF $250 IS AFFIRMED. ALL COSTS OF THIS APPEAL ARE TAXED TO NESHOBA COUNTY.
BRIDGES, C.J., McMILLIN AND THOMAS, P.JJ., COLEMAN, DIAZ, HINKEBEIN, KING, PAYNE, AND SOUTHWICK, JJ., CONCUR.
NOTES
[1] During closing arguments, the defense counsel referred to the contents of the search warrant, and the State objected on the basis that the warrant was marked for identification purposes only and not admitted as an exhibit. The court admitted the warrant into evidence without any objection from the defense.
[2] Since the record on appeal failed to include a copy of the affidavit, the document attached to the defendant's brief is not properly before the Court.
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FIRST DISTRICT COURT OF APPEAL
STATE OF FLORIDA
_____________________________
No. 1D18-3251
_____________________________
MARRION QUITEN HOLMES,
Appellant,
v.
STATE OF FLORIDA,
Appellee.
_____________________________
On appeal from the Circuit Court for Walton County.
Kelvin C. Wells, Judge.
July 22, 2019
PER CURIAM.
AFFIRMED.
MAKAR, OSTERHAUS, and BILBREY, JJ., concur.
_____________________________
Not final until disposition of any timely and
authorized motion under Fla. R. App. P. 9.330 or
9.331.
_____________________________
Andy Thomas, Public Defender, and L. Allen Beard, Assistant
Public Defender, Tallahassee, for Appellant.
Ashley Moody, Attorney General, Tallahassee, for Appellee.
2
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COURT OF APPEALS FOR THE
FIRST DISTRICT OF TEXAS AT HOUSTON
ORDER
Appellate case name: Jim P. Benge, M.D. and Kelsey-Seybold Medical Group
PLLC v. Lauren Williams
Appellate case number: 01-12-00578-CV
Trial court case number: 2010-52657
Trial court: 164th District Court of Harris County
Appellants Jim P. Benge, M.D. and Kelsey-Seybold Medical Group PLLC have
filed their motion to strike appellee Lauren Williams’s sur-reply brief, filed in this Court
on June 25, 2013. Appellee responded and, in the alternative, filed a motion to file a
sur-reply brief exceeding the word limit. Appellants’ motion to strike is granted.
Appellee’s sur-reply brief, filed in this Court on June 25, 2013, is stricken.
Appellee may file a sur-reply brief that does not exceed 7,500 words no later than
Monday, July 22, 2013. See generally TEX. R. APP. P. 9.4(i).
Appellee’s motion to file a sur-reply exceeding the word limit is denied. As to
this motion, the ten-day time for determination of a motion under Texas Rule of
Appellate Procedure 10.3 is suspended. See TEX. R. APP. P. 2.
It is so ORDERED.
Judge’s signature: /s/ Harvey Brown
Acting individually ☐ Acting for the Court
Date: July 5, 2013
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947 F.2d 1486
Lovev.McDonough
NO. 91-1369
United States Court of Appeals,Fifth Circuit.
OCT 23, 1991
Appeal From: S.D.Miss., 758 F.Supp. 397
1
AFFIRMED.
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FILED
NOT FOR PUBLICATION JAN 14 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
ELVEN JOE SWISHER and WALTER O. No. 09-35638
LINDSEY,
D.C. No. 1:06-cv-00338-BLW
Plaintiffs - Appellants,
v. MEMORANDUM *
K. E. COLLINS; et al.,
Defendants - Appellees.
Appeal from the United States District Court
for the District of Idaho
Tena Campbell, District Judge, Presiding
Submitted December 8, 2010 **
Seattle, Washington
Before: O’SCANNLAIN and PAEZ, Circuit Judges, and KENDALL, District
Judge.***
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Virginia Kendall, United States District Judge for the
Northern District of Illinois, sitting by designation.
Elven Joe Swisher (“Swisher”) and Walter O. Lindsey (“Lindsey”) appeal an
order by the district court granting summary judgment on their Privacy Act,
defamation and breach of contract claims in favor of defendants. They also
challenge the district court’s decision under Federal Rule of Civil Procedure 56(f)
not to permit further discovery. We review de novo a district court’s grant of
summary judgment, and a ruling under Fed. R. Civ. P. 56(f) for abuse of
discretion. Rockwell Int’l Corp. v. Hanford Atomic Metal Trades Council, 851
F.2d 1208, 1210 (9th Cir. 1988); Margolis v. Ryan, 140 F.3d 850, 853 (9th Cir.
1998). We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.
1. Swisher first argues that the U.S. Marine Corps, National Personnel Records
Center, the Department of Treasury, and the Department of Veterans Affairs
(“federal agency defendants”) violated the Privacy Act (“Act”), 5 U.S.C. § 552a.
The record evidence, however, does not support such a finding. Rather, the record
evidence shows that some of the contested disclosures do not meet the definition of
documents contained within a “system of records” maintained by any of the federal
agency defendants. Id. at § 552a(b); Baker v. Department of Navy, 814 F.2d 1381,
1384 (9th Cir. 1987). Further, a number of the remaining disclosures fall within
specialized categories under the Act that allow for the release of information
2
without consent. See 5 U.S.C. §§ 552a(a)(7), 552a(b)(11); 32 C.F.R. §
310.22(b)(5).
Even assuming that Swisher was able to demonstrate a violation of the Act,
he fails to show that the violations were willful or intentional. See Rose v. United
States, 905 F.2d 1257, 1259 (9th Cir. 1990). Accordingly, the district court
properly granted summary judgment on Swisher’s Privacy Act claim.
2. Swisher and Lindsey alleged that the Marine Corps League (“League”),
including a number of its members and officers, The Idaho Observer, and Patrick
and Steven Teague defamed their character and reputation. Specifically, Swisher
and Lindsey contend that the defendants referred to them as “extortionists,”
“blackmailers,” “rapists,” and “stalkers.” In response to the defendants’ motions
for summary judgment, Swisher and Lindsey failed to present any admissible
evidence that demonstrates a genuine issue of material fact regarding whether these
statements were in fact made. Thus, because Swisher and Lindsey failed to present
any admissible evidence, the district court properly granted summary judgment as
a matter of law on the defamation claims.
We further note that with regard to the Teagues, any alleged defamatory
statements are barred by the Idaho Tort Claims Act (“ITCA”). The Teagues were
state employees with the Idaho Division of Veterans Services at the time the
3
relevant events occurred. The ITCA provides employees with governmental
immunity from defamation claims arising out of actions within the employee’s
scope of employment, if such actions were without malice or criminal intent.
Idaho Code Ann. § 6-904(3). Here, Swisher and Lindsey failed to present any
evidence to rebut the Teagues’ evidence that any such alleged statements occurred
within the scope of their employment. Moreover, the summary judgment record
does not show that any of the alleged defamatory statements were made with
malice or criminal intent.
3. Next, Swisher and Lindsey contend that the League violated its bylaws when
it expelled Swisher and suspended Lindsey from the organization. The district
court found that the League’s Bylaws and Administrative Procedures (“Bylaws”)
constitute the League’s contract with its members, and thus the court’s review was
limited to whether the League followed the procedures set forth in the Bylaws.
The evidence in the summary judgment record demonstrates that the League
substantially complied with its procedures by providing Swisher and Lindsey with
adequate notice of the charges against them, and a full and fair hearing to present
their defenses to the charges. Moreover, both Swisher and Lindsey were
represented by advocates during the hearing. Because the League complied with
its procedures, Swisher and Lindsey’s breach of contract claim fails as a matter of
4
law. Therefore, the district court did not err in granting summary judgment on this
claim
4. Finally, Swisher and Lindsey contend that the district court should have
granted their Rule 56(f) request for a continuance. Rule 56(f) allows the district
court to “order a continuance” to conduct additional discovery when a party
opposing a motion for summary judgment “shows by affidavit that, for specified
reasons, it cannot present facts essential to justify its opposition.” Fed. R. Civ. P.
56(f). A district court’s denial of a Rule 56(f) request is reviewed for abuse of
discretion. Margolis, 140 F.3d at 853.
Here, Swisher and Lindsey did not present specific reasons to support their
request, but rather relied on the generalized and conclusory allegations contained in
their complaint and other documents previously filed. Moreover, Swisher and
Lindsey had ample time and opportunity to conduct discovery, but failed to do so.
We therefore conclude that the district court did not abuse its discretion in denying
Swisher and Lindsey’s Rule 56(f) motion.
AFFIRMED.
5
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Slip Op. 20-49
UNITED STATES COURT OF INTERNATIONAL TRADE
UNITED STATES,
Plaintiff,
v.
Before: Claire R. Kelly, Judge
MAVERICK MARKETING, LLC ET AL.,
Consol. Court No. 17-00174
Defendants and Consolidated
Defendants.
OPINION AND ORDER
[Granting Defendants’ motion to supplement and denying Defendants’ motion to
reconsider.]
Dated: April 16, 2020
Joseph H. Hunt, Assistant Attorney General, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice, of Washington, DC, for plaintiff United States.
With him on the brief were Jeanne E. Davidson, Director, Claudia Burke, Assistant
Director, and Stephen C. Tosini, Senior Trial Counsel.
Barry M. Boren, Law Offices of Barry M. Boren, of Miami, FL, for defendants
Maverick Marketing, LLC and Good Times USA, LLC.
Mark A. Loyd, Dentons Bingham Greenebaum LLP, of Louisville, KY, for defendant,
Good Times USA, LLC.
Rhonda A. Anderson, Rhonda A. Anderson, P.A., of Coral Gables, FL, for defendant
Gateway Import Management, Inc.
Kelly, Judge: Before the court are Defendants Good Times USA, LLC (“Good
Times”), Maverick Marketing, LLC (“Maverick”), and Gateway Import Management,
Inc.’s (“Gateway”) (collectively, “Defendants”) motions for partial reconsideration
Consol. Court No. 17-00174 Page 2
(“motion to reconsider”) of the court’s order, denying in part and granting in part
Defendants’ motions to compel discovery (“order”), as well as for leave to file
supplemental evidence for the motion to reconsider (“motion to supplement”). See
United States v. Maverick Marketing, LLC, 44 CIT __, Slip. Op. 20-17 (Feb. 7, 2020)
(“Maverick I”); see also Am. Mot. Partial Reconsideration of [Order] at 1–2, Apr. 14,
2020, ECF No. 102 (“Defs.’ Br. Supporting Reconsideration”); Am. Mot. File Supp.
Defs.’ Mot. Reconsider, Apr. 14, 2020, ECF No. 103 (“Defs.’ Mot. Supp.”).1 Specifically,
Defendants request, pursuant to U.S. Court of International Trade Rule (“USCIT”)
Rule 54(b), that the court reconsider its decision to deny: Maverick’s requests for
production (“RFP”) Nos. 9, 25, 38, and 39 for industry documents pertaining to cigar
pricing; Maverick’s RFP Nos. 30–33 for production related to trademarks of nonparty
companies; and, Good Times’ RFP Nos. 4–8, 15, and 17–21 for government documents
on affiliated nonparties.2 See Defs.’ Br. Supporting Reconsideration at 3–5; see also
Maverick Status Report at RFP Nos. 9, 25, 30–33, 38, 39; Good Times Status Report
1 On February 18, 2020, Defendants filed a motion to reconsider and, subsequently,
on March 16, 2020, Defendants also filed a motion to supplement. However, in light
of an error in the named counsel for Defendants, Defendants refiled corrected motions
on April 14, 2020 at the request of the court, which the court accepted for filing the
following day. See Order, Apr. 15, 2020, ECF No. 104. The refiled motions are
identical to the originals, except Mr. Boren indicates in the refiled motions that he
represents Maverick and Gateway, rather than “all Defendants.”
2Defendants’ motion for partial reconsideration concerns Maverick’s and Good Times’
RFPs. See Defs.’ Br. Supporting Reconsideration at 3 n.2 (noting that Gateway’s RFP
Nos. 10, 26, 39 and 40 are the same as Maverick’s RFP Nos. 9, 25, 38, and 39).
Consol. Court No. 17-00174 Page 3
at RFP Nos. 4, 8, 15, 17–21.3 Defendants further ask the court to amend its order
and compel Plaintiff to produce the documents requested. Id. at 14–15. In addition,
Defendants request leave to file supplemental evidence in support of that motion. See
Defs.’ Mot. Supp. at 1–2. Plaintiff opposes both motions. See Pl.’s Opp’n [Defs.’ Br.]
at 1, March 9, 2020, ECF No. 95 (“Pl.’s Br. Opp’n Reconsideration”); see also Pl.’s
Opp’n Defs.’ Mot. for Leave Supp. Mot. Reconsideration, Mar. 31, 2020, ECF No. 99
(“Pl.’s Opp’n Mot. Supp.”). For the reasons that follow, the court grants Defendants’
motion to supplement and denies Defendants’ motion for partial reconsideration.
BACKGROUND
The court presumes familiarity with the facts of this case as set forth in its
previous opinion, see Maverick I, Slip Op. 20-17 at 3–5, 44 CIT at __, and recounts
those relevant to disposition of these motions. Plaintiff commenced separate actions,
later consolidated, pursuant to section 592 of the Tariff Act of 1930, as amended 19
U.S.C. § 1592(d) (2012),4 seeking to recover unpaid Federal Excise Taxes (“FET”) from
Defendants. See Am. Summons, Aug. 3, 2017, ECF No. 8; Compl., July 10, 2017, ECF
No. 2; Order, Sept. 12, 2019, ECF No. 66 (consolidating Ct. Nos. 17-00174, 17-00232,
3 This opinion refers to the Defendants’ RFPs and Plaintiff’s responses to the RFPs
as itemized and excerpted in Defendants’ status reports. See Discovery Status Report
of Def. [Good Times] in the Maverick and Gateway Cases, Feb. 3, 2020, ECF No. 89-
1 (“Good Times Status Report”); Discovery Status Report of Def. [Maverick], Feb. 3,
2020, ECF No. 89-2 (“Maverick Status Report”); see also Amend. Status Report of
Def. [Gateway], Feb. 4, 2020, ECF No. 90.
4 Further citations to the Tariff Act of 1930, as amended, are to the relevant
provisions of Title 19 of the U.S. Code, 2012 edition.
Consol. Court No. 17-00174 Page 4
19-00004, and 19-00019 under Ct. No. 17-00174). Plaintiff alleges that Defendants
failed to disclose a “special arrangement.” See Compl. at ¶ 21. Additionally,
according to Plaintiff, Defendants made material misstatements to Customs and
Border Protection (“CBP”) regarding FET owed, by using “transaction value” on entry
forms, when the statute demands application of constructive sales price (“CSP”) to
merchandise entered pursuant to a special arrangement. Id. at ¶¶ 21–25. Plaintiff
alleges these false statements were the result of Defendants’ failure to exercise
reasonable care. See id.
Defendants deny these allegations, see Defs.’ [Maverick] & [Good Times’]
Answers and Affirmative Defenses at ¶¶ 21–25, Mar. 29, 2018, ECF No. 48
(“Answer”), and raise among their affirmative defenses that they acted with
reasonable care and were not negligent, “because they received and reasonably relied
on professional advice from their customs house broker and an experienced trade
attorney” and fully complied with applicable statutes and regulations. See id. at
Third Affirm. Defense. Defendants further contend they were not negligent because
“Plaintiff had an established and uniform practice” (“EUP”) of allowing the same
behavior complained of in this case. See id. at Fifth Affirm. Defense.
On April 4, 2019, Defendants Maverick and Good Times served RFPs on
Plaintiff. See [Maverick and Good Times’] Mot. Order Compelling Disc. &
Consideration Sanctions at Exs. A–B, Sept. 26, 2019, ECF No. 67 (“Maverick’s Mot.”).
On June 7, 2019, Plaintiff responded. Id. at Exs. E–F. On June 27, 2019, Defendants
Consol. Court No. 17-00174 Page 5
notified Plaintiff of their objections to Plaintiff’s production responses. Id. at Exs. I–
J. Plaintiff replied to Defendants’ objections on July 10, 2019 and supplemented its
responses. Id. at Ex. M. Defendants thereafter filed their motion to compel. See
generally Maverick’s Mot.
On February 7, 2020, the court rendered its decision on Defendants’ motion to
compel. See generally Maverick I. In relevant part, the court denied the motion to
compel with respect to certain industry documents pertaining to cigar pricing, certain
trademark information of nonparty companies, and certain government documents
on affiliated nonparties (collectively, “discovery requests”). Id. at 6–22. Discovery
remains ongoing.
JURISDICTION AND STANDARD OF REVIEW
The court continues to have jurisdiction pursuant to 28 U.S.C. § 1582. See
United States v. Maverick Mktg., LLC, 42 CIT __, __, 322 F. Supp. 3d 1373, 1379–80
(2018) (holding that the court possesses subject-matter jurisdiction in this case); see
also United States v. Gateway Imp. Mgmt., 42 CIT __, 324 F. Supp. 3d 1328 (2018).
A court may reconsider a non-final judgment, pursuant to USCIT Rule 54 “‘as
justice requires,’ meaning when the court determines that ‘reconsideration is
necessary under the relevant circumstances.’” Irwin Indus. Tool Co. v. United States,
41 CIT __, __, 269 F. Supp. 3d 1294, 1300–01 (2017) (quoting Cobell v. Norton, 355 F.
Supp. 2d 531, 539 (D.D.C. 2005)), aff'd, 920 F.3d 1356 (Fed. Cir. 2019). Factors a
court may weigh when contemplating reconsideration include whether there has been
Consol. Court No. 17-00174 Page 6
a controlling or significant change in the law or whether the court previously
“patently” misunderstood the parties, decided issues beyond those presented, or failed
to consider controlling decisions or data. See, e.g., In re Papst Licensing GmbH & Co.
KG Litigation, 791 F. Supp. 2d 175, 181 (D.D.C. 2011); Singh v. George Washington
Univ., 383 F. Supp. 2d 99, 101 (D.D.C. 2005). The movant carries the burden of
proving that “some harm, legal or at least tangible,” would accompany a denial of the
motion. Cobell, 355 F. Supp. 2d at 540.
Given that the USCIT Rules do not prescribe a procedure to amend or
supplement a motion or brief, USCIT Rule 1 governs, granting the court discretion to
“prescribe the procedure to be followed in any manner not inconsistent with these
rules.” See USCIT R. 1. Further, USCIT Rule 1 provides that the rules “should be
construed, administered, and employed by the court and the parties to secure the
just, speedy, and inexpensive determination in every action and proceeding.” Id.
DISCUSSION
Defendants request that the court reconsider and amend its order to compel
Plaintiff’s response to Defendants’ discovery requests. See Defs.’ Br. Supporting
Reconsideration at 1–2, 6–14. Defendants explain this production is relevant for
determining whether Defendants’ entries were valued at fair market price (“FMP”)
and whether or not they exercised reasonable care, i.e., were not negligent, in
reporting value of their cigars on entry. See id. at 3–6, 9–13. Further, Defendants
point to Plaintiff’s own discovery requests that, in their view, further underscore the
Consol. Court No. 17-00174 Page 7
relevance of Defendants’ requested production and for which they seek leave to file
as supplemental evidence. See Defs.’ Mot. Supp. at 1-2. Without the requested cigar
pricing documents, trademark information, and government documents, Defendants
contend that they would suffer harm in presenting their case. Defs.’ Br. Supporting
Reconsideration at 1–2, 9. Plaintiff counters that the motion to reconsider is
unwarranted because the court did not err in denying the motion to compel and,
therefore, requests the court to deny that motion in full. See Pl.’s Br. Opp’n
Reconsideration at 1, 3–10. In addition, Plaintiff urges the court to reject Defendants’
request for leave to supplement their motion to reconsider, as it is untimely and
irrelevant. See Pl.’s Opp’n Mot. Supp. at 1, 4–5. The court grants Defendants leave
to supplement their motion to reconsider, given that no harm follows from granting
their motion, and accepts their supplemental evidence, Pl.’s Second Set of
Interrogatories, Requests for Admission and [RFPs] to [Good Times], Mar. 17, 2020,
ECF No. 96-1, for filing. However, and in view of that supplemental evidence,
because the discovery sought is irrelevant, duplicative, and unduly burdensome, and
Defendants do not persuade that they would be harmed without the requested
production, the court denies the motion to reconsider.
I. Motion to supplement
Defendants request leave to supplement the motion to reconsider with
Plaintiff’s discovery requests, because that supplemental evidence “sheds light on the
relevance” of Defendants’ own discovery requests at issue in the motion to reconsider.
Consol. Court No. 17-00174 Page 8
See Defs.’ Mot. Supp. at 1–2. In particular, Defendants allege that Plaintiff’s RFPs
seek third-party information that Plaintiff previously characterized as irrelevant and
refused to produce, when requested by Defendants. Id. Plaintiff counters that
Defendants’ motion to supplement is untimely, because Defendants could have
sought to supplement their motion for reconsideration prior to receiving Plaintiff’s
reply to that motion, avoiding a second round of briefing. See Pl.’s Opp’n Mot. Supp.
at 4. Further, Plaintiff contends that the supplemental evidence is irrelevant to the
motion to reconsider, because Plaintiff’s RFPs concern Good Times’ state of mind
about its transactions compared to third-parties, relevant to establishing violation of
19 U.S.C. § 1592(a), unlike Defendants’ RFPs that ask Plaintiff to produce documents
pertaining to the government’s other enforcement actions, which is irrelevant to the
question of Defendants’ alleged negligence. Id. at 4–5. Plaintiff, however, raises no
argument that allowing Defendants to supplement their motion would be prejudicial
and, further, does not persuade that the filing is barred as untimely by virtue of
following Plaintiff’s response to Defendants’ motion to reconsider.5 See Pl.’s Opp’n
Mot. Supp. at 4. Therefore, Defendants are granted leave to file supplemental
evidence in support of their motion to reconsider and the court accepts that
5 Defendants filed their original motion to reconsider on February 18, 2020. On
February 27, 2020, Plaintiff served its discovery request on Defendants. Thereafter,
on March 16, 2020, Defendants filed their original motion for leave to supplement.
As explained above, at the request of the court, Defendants refiled both motions on
April 14, 2020, to correct an error in named counsel. See Order, Apr. 15, 2020, ECF
No. 104.
Consol. Court No. 17-00174 Page 9
supplemental evidence for filing.6 To the extent that the parties raise questions as to
the relevance of that supplemental evidence, the court considers those arguments
with respect to the motion to reconsider.
II. Motion to reconsider
Defendants request the court to reconsider and amend its order to compel
Plaintiff’s response to Defendants’ discovery requests, see Defs.’ Br. Supporting
Reconsideration at 1–2, 6–14, because the production is relevant to determine FMP
of cigars as well as to establishing Defendants’ exercise of reasonable care, and,
without the requested production, they would suffer harm in presenting their case.
See id. at 3–6, 9–13. Plaintiff counters that, as the court held, the production is
irrelevant and urges the court to deny the motion to reconsider. See Pl.’s Br. Opp’n
Reconsideration at 1, 3–10. For the reasons that follow, Defendants’ motion to
reconsider is denied.
A. Fair market price
Defendants’ view that the government must supply certain industry
documents pertaining to cigar pricing to determine FMP is mistaken, because the
requested production is not relevant to the Alcohol and Tobacco Tax and Trade
Bureau’s (“TTB”) assessment of Defendants’ FET liability, and, to the extent that it
6 Defendants, in amending the motion to supplement, also refiled the same
supplemental evidence included in the original motion to supplement. The court, in
granting the motion to supplement, accepts for filing the supplemental evidence,
which it deems as filed as of April 14, 2020, the date Defendants re-filed the motion
to supplement.
Consol. Court No. 17-00174 Page 10
has any relevancy, it is duplicative and unduly burdensome.7 Defendants’ motion to
compel discovery stems from a misreading of the applicable statute and regulations
that govern TTB’s FET calculation.
Here, Plaintiff alleges that Defendants erroneously used transaction value as
the basis for FET liability, when, given their special arrangement, they should have
used CSP as the basis for FET. See Compl. at ¶ 22; see also Compl., Sept. 6, 2017,
ECF No. 2 (from associated Dkt. No. 17-00232). TTB normally calculates FET based
on the sales price that a particular importer sells to an unrelated party in arm’s
length transaction. See 26 U.S.C. § 5702(l)(3) (“In determining price [of cigars] . . .
rules similar to the rules of section 4216(b) shall apply.”); 27 C.F.R. §§ 40.22, 41.39
7 Plaintiff argues that Defendants’ request is also barred by statute, because the
United States cannot release a taxpayer’s return or return information, absent
application of an exception. See Pl.’s Br. Opp’n Reconsideration at 6; see also 26
U.S.C. § 6103. Previously, Plaintiff had also argued it could not disclose nonparty
taxpayer information that Defendants requested and sought to compel. See Pl.’s
Opp’n Def.’s Mots. Compel at 6–8, Oct. 11, 2019, ECF No. 69. However, Maverick I
did not address the parties’ arguments regarding the non-discoverability of nonparty
taxpayer information under 26 U.S.C. § 6103 and instead denied the motion on
relevancy grounds. See Maverick I, 44 CIT at __, Slip Op. 20-17 at 6–11. Again, the
court does not need to reach this issue but raises it to note that, to the extent, as
Defendants assert, they have authorizations from affiliated companies to permit the
government to disclose taxpayer information pursuant to 26 U.S.C.
§ 6103(c), it stands to reason that Defendants can seek at least some of that
information directly from those parties. See Maverick’s Mot. at 8; [Defs.’ Gateway
Good Times] Mot. Order Compelling Disc. & Consideration Sanctions at 7, Sept. 26,
2019, ECF No. 66 (from associated Dkt. Ct. No. 17-00232). Although Defendants may
wish to use data obtained from their affiliates or other companies as proffered
industry data, expert testimony, or other information to demonstrate that a lower
price applies to Defendants’ cigar entries to determine CSP, see Storm Plastics, Inc.,
770 F.2d at 154–56, it would be unduly burdensome to require the government to
attempt to compile this information for the Defendants.
Consol. Court No. 17-00174 Page 11
(2014) (setting out how to determine sale price of large cigars).8 If, however, a sale is
not at arm’s length, e.g., made pursuant to a special arrangement, and at less than
FMP, TTB determines FET liability on the basis of CSP.9 26 U.S.C. § 4216(b)(1)(C);
26 C.F.R. § 48.4216(b)-2(e). CSP is “computed on the price for which such articles are
sold, in the ordinary course of trade, by manufacturers or producers thereof, as
determined by the Secretary” of the Internal Revenue Service (“IRS”). 26 U.S.C.
§ 4216(b)(1)(C).
In light of the difficulties to determine the price at which merchandise, such
as cigars, “are sold, in the ordinary course of trade, by manufacturers or producers[,]”
the IRS adopted the “95 percent presumption.” The “95 percent presumption” is the
IRS’s longstanding practice to presume, for the basis of excise tax, that CSP equals
8 The citation is to the Code of Federal Regulations 2014 edition, the most recent
version in effect at the time of the last entries of the subject merchandise. The entries
at issue in this action were imported between the years 2012 and 2015. See Compl.
at ¶ 1.
9 Courts have read 26 U.S.C. § 4216(b)(1)(C) as imposing two interrelated criteria for
the application of CSP, namely that the sale is made (1) at otherwise than arm’s
length and (2) at less than fair market price. Accord Creme Manufacturing Co., Inc.
v. United States, 492 F.2d 515, 520–22 (5th Cir. 1974); Storm Plastics, Inc. v. United
States, 770 F.2d 148, 152–54 (10th Cir. 1985). The Fifth Circuit, in Creme
Manufacturing, explained that the two criteria are directed to ensuring that the price
is a “bona fide expression” of price and an accurate representation of its true worth.
492 F.2d at 520. Further, by permitting the IRS to employ CSP, “Congress sought to
prevent taxpayers from reducing their excise tax liability by charging artificially low
prices to related buyers who then, without excise tax liability, might obtain the
market price from independent buyers.” Id. at 519 (citing H.R. REP. NO. 708, 72nd
Cong., 1st Sess. 38 (1932)).
Consol. Court No. 17-00174 Page 12
95 percent of the taxpayer’s lowest established resale price to an unrelated distributor
in the ordinary course of trade. A taxpayer may rebut this presumption with industry
data, expert testimony, or other information, to overcome the presumption and show
a lower price applies. See Storm Plastics, Inc. v. United States, 770 F.2d 148, 152––
56 (10th Cir. 1985) (discussing the practice, as set out in IRS Revenue Rulings, and
noting that witness testimony on the industry rebutted the presumption).10 Here,
Defendants contend that TTB “determined the price used by manufacturers in the
ordinary course of trade[.]” See Defs.’ Br. Supporting Reconsideration at 3–4.
Defendants wish to survey the prices at which cigars are sold using unrelated
taxpayer information in the government’s possession. Yet, as the revenue rulings
demonstrate, when TTB calculates FET based on CSP, it presumes that CSP equals
10 Although revenue rulings lack force of law, they guide IRS officials’ practice. See
Storm Plastics, Inc., 770 F.2d at 154 (holding a revenue ruling as inconsistent with
Congressional intent). Relevant here, revenue ruling 62-68, as modified, sets forth
the IRS’s 95 percent presumption. See Rev. Rul. 62-68, 1962-1 C.B. 216. (“on
intercompany sales at less than arm’s length and less than the fair market price, a
manufacturer of an article . . . may elect to use as a basis for tax, pursuant to section
4216(b)(1)(C), a [CSP] equal to 95 percent of its selling company’s lowest established
resale price for the article to unrelated wholesale distributors in the ordinary course
of trade.”); see also Rev. Rul. 71-240, 1971-1 C.B. 372 (providing that any
intercompany sale price that is less than 95 percent of the selling company’s lowest
established resale price to unrelated distributors is presumed to be less than FMP).
Subsequent revenue rulings elaborated that a taxpayer is entitled to rebut the
presumption. See Rev. Rul. 76-182, 1976-1 C.B. 343; Rev. Rul. 89-47, 1989-1 C.B. 295
(modifying Rev. Rul. 76-182 to enable a taxpayer to rebut the presumption when the
taxpayer does not have sales to unrelated wholesale distributors in the ordinary
course of trade and, consistent with Storm Plastics, do so “in a variety of ways,” be it
the use of industry data, expert testimony, or other information).
Consol. Court No. 17-00174 Page 13
95 percent of the taxpayer’s lowest established resale price the taxpayer sells to
unrelated customers. See Storm Plastics, 770 F.2d at 152. Therefore, Defendants’
request for certain industry documents pertaining to cigar pricing is not relevant,
because TTB does not itself investigate and determine what the industry actually
charges for that product but applies the 95 percent presumption. See id. at 152–54.11
To the extent that the government calculated liability, i.e., underpayment of
FET based on calculated CSP of Defendants’ cigar imports, see, e.g., Compl. at Attach.
1, July 10, 2017, ECF No. 2-1, the court compelled Plaintiff to produce documents
relied upon in that determination of damages and liability, as requested by
Maverick’s RFP Nos. 4, 15, 26, and 28. Specifically, Plaintiff has already been
instructed to produce, “every document, spreadsheet, worksheet, supporting
documents, or record used by the government to calculate the FETs claimed to be due
in this case” as well as “every document or record used or obtained by the government
to investigate, calculate or establish the sales price for which each article imported
by Maverick was sold in the ordinary course of trade by manufacturers or producers
thereof.” See Maverick Status Report at RFP Nos. 26, 28. Further, Plaintiff must
11 USCIT Rule 26(b)(1) permits “discovery regarding any nonprivileged matter that
is relevant to any party’s claim or defense and proportional to the needs of the case,
considering the importance of the issues at stake in the action, the amount in
controversy, the parties’ relative access to relevant information, the parties’
resources, the importance of discovery in resolving the issues, and whether the
burden or expense of the discovery outweighs its likely benefit.” USCIT R. 26(b)(1).
“Evidence is relevant if: (a) it has any tendency to make a fact more or less probable
than it would be without the evidence; and (b) the fact is of consequence in
determining the action.” Fed. R. Evid. 401.
Consol. Court No. 17-00174 Page 14
also produce information supporting its response to Maverick’s Interrogatory No. 3,
which provides: “For each item the government contends was not sold in an arms-
length transaction, please provide the price at which such articles were ‘sold, in the
ordinary course of trade, by manufacturers or producers thereof’, how each price was
calculated, upon what facts and evidence this price was determined to be the
appropriate price, and list each and every manufacturer or producer whose prices
were examined to determine this price.” See id. at RFP No. 15, Interrogatory No. 3;
see also Maverick I, 44 CIT at __, Slip Op. 20-17 at 22–23. If Plaintiff relied on other
information, or other information is necessary for Plaintiff to make its case, and
Plaintiff has not produced that information, Plaintiff may be unable to introduce that
information at trial. See USCIT R. 37(c)(1) (“If a party fails to provide information .
. . the party is not allowed to use that information . . . at a trial[.]”).
However, the court denied the expansive requests for information related to
the calculation of FET on all imports of cigars into the United States.12 See Maverick
12 Maverick seeks: “copies of all documents, records, agreements, and correspondence
. . . that pertain[] to the assessment, taxation, or computation of FET for imported
cigars since April 1, 2009”; “copies of every document or record which references or
refers to advanced pricing arrangements or other agreements, expert reports, audit
results and reports, and economic studies that relate or refer in any way to the
calculating [sic] of FETs for large cigars”; “copies of any documents and records
regarding the sale price of cigars including, but not limited to[,] any report or study
regarding cigar pricing”; and, “copies of any correspondence, notes, records,
agreements, contracts, documents, rulings, decisions, and audit results including, but
not limited to any, Advanced Pricing Agreements or similar agreements, between
Customs, TTB, the IRS, or any other government entity and any cigar company or
group of companies that relate in whole or in any part to the pricing of cigars.”
Maverick Status Report at RFP Nos. 9, 25, 38, and 39.
Consol. Court No. 17-00174 Page 15
I, 44 CIT at __, Slip Op. 20-17 at 11 n.12. USCIT Rule 26(b)(2) limits discovery, inter
alia, when “the discovery sought is unreasonably cumulative or duplicative, or can be
obtained from some other source that is more convenient, less burdensome, or less
expensive[.]” USCIT R. 26(b)(2)(C)(i). Defendants acknowledge that, when
calculating FET liability on the basis of CSP, the 95 percent presumption applies,
unless the taxpayer can come forward with industry data rebutting that presumption.
See Defs.’ Br. Supporting Reconsideration at 8–9. They seem to rely upon their right
to rebut that presumption to argue that the information is relevant and aver that it
is in the sole possession of Plaintiff. See id. at 3, 9. To the extent that industry data
not already captured by discovery ordered thus far is relevant, placing the onus on
Plaintiff to produce all the requested documents, records, agreements, and
correspondence pertaining to all companies’ pricing information would be overly
burdensome, as Plaintiff has reasonably explained. See, e.g., Maverick Status Report
at RFP Nos. 9, 38, 39; see also Pl.’s Opp’n Defs.’ Mot. Compel at 8, Oct. 11, 2019, ECF
No. 69 (“Pl.’s Opp’n Mot. Compel”) (explaining that “[t]he effort to retrieve and
produce all these records for TTB alone, and not including IRS records, would take
3,800 to 4,800 person-hours at a cost of $153,446.40 to $191,808.00” to respond to
Maverick RFP Nos. 38 and 39, alone). To hold otherwise would be tantamount to
reversing the government’s use of the 95 percent presumption in the first place: the
government would be forced to compile and maintain industry data in order to pursue
a penalty action for underpayment of FET.
Consol. Court No. 17-00174 Page 16
B. Reasonable Care
Likewise, the reasonable care standard fails to justify Defendants’ requests.
The reasonable care standard, as the court previously explained, “is concerned with
the reasonableness of a defendant’s actions alone—not whether the actions of
similarly situated entities evinces a ‘reasonableness’ standard that would bear on
defendant’s actions.” See Maverick I, 44 CIT at __, Slip Op. 20-17 at 10; see also
United States v. Aegis Sec. Ins. Co., 43 CIT __, __, Slip Op. 19-162 at 26 (Dec. 17,
2019) (determining that whether or not one exercises reasonable care does not depend
upon the “consensus in the community[,]” but rather on the “application of reason”).13
Defendants, in requesting production of trademark information of nonparty
companies and government documents on affiliated nonparties—i.e., Maverick’s RFP
Nos. 30–33 and Good Times’ RFP Nos. 4–8, 15, 17–2114—seek to establish that “the
13 The H.R. Report on the amendments to 19 U.S.C. § 1592 provides examples of steps
an importer should take to meet the “reasonable care” standard, including: “seeking
guidance from the Customs Service through the pre-importation or formal ruling
program; consulting with a Customs broker, a Customs consultant, or a public
accountant or an attorney; using in-house employees such as counsel, [etc.]” H.R. REP.
NO. 103-361, pt.1, at 120 (1993), reprinted in 1993 U.S.C.C.A.N. 2552, 2670. Notably,
these examples do not include relying on the government’s past action or inaction
toward the behavior. Id.
14 Maverick RFP Nos. 30–33 seek trademark information of nonparties, such as
“documents or records which identif[y] all the trademarks” on cigars manufactured
or imported by named nonparties. See Maverick Status Report at RFP Nos. 30–33.
Similarly, Good Times’ RFP Nos. 4–8, 15, and 17–21 request government documents
on affiliated nonparties, i.e., “copies of every document, record, or communication”
concerning a named nonparty, see Good Times’ RFP Nos. 4–8, 15, and documents and
records, inter alia, related to federal investigations of Good Times and its affiliates.
See Good Times Status Report at RFP Nos. 17–21.
Consol. Court No. 17-00174 Page 17
requirement to disclose [their arrangement] was not known in the trade,” and, as a
result, Defendants were not negligent.15 See Defs.’ Br. Supporting Reconsideration
at 12 (“Something must put [importers] on notice that they might not be in
compliance with the law”). Yet, contrary to Defendants’ assertion, the statute and
regulations compel disclosure of a special relationship. See 19 U.S.C. §§ 1484(a),
1592(a); 26 C.F.R. § 48.4216(b)–2.16
In addition, Defendants mistakenly invoke, and selectively cite to, Hitachi v.
United States to argue that knowledge in the trade is relevant to their defense
against negligence. See Defs.’ Br. Supporting Reconsideration at 10–13 (citing
Hitachi v. United States, 21 CIT 373, 964 F. Supp. 344 (1997), aff’d in part, rev’d in
part, 172 F.3d 1319 (Fed. Cir. 1999)). Relevant here, Defendants refer to the Court
of Appeals’ decision to argue that “if the requirement to disclose was not known in
15 Specifically, Defendants assert that trademark information of nonparties is
relevant to whether there was a requirement to disclose a special arrangement
because, “TTB audited [those] companies and did not find that importing cigars with
trademarks owned by others was a disqualifying factor,” when, in this case, Plaintiff
contends that Good Times controlled the importer “because the imported cigars bore
[Good Times’] trademarks[.]” Defs.’ Br. Supporting Reconsideration at 12.
16 Defendants may be trying to assert that they were not on notice that the particular
circumstances of their transactions were made under a “special arrangement” that
needed to be disclosed. If that is their position, whether the statute and regulations
provide notice of the need to disclose a special arrangement does not rely upon the
knowledge or actions of other importers. Defendants raise, as a separate affirmative
defense, that “26 CFR § 48.4216(b)(2)(e) [sic] is void for ambiguity.” See Answer at
First Affirm. Defense. Section 48.4216(b)-(2)(e) sets out when a sale is “considered to
be made under circumstances otherwise than at ‘arm’s length[,]’” including when
“[t]he sale is made pursuant to special arrangements between a manufacturer and a
purchaser.” 26 C.F.R. § 48.4216(b)(2)-(e)(2).
Consol. Court No. 17-00174 Page 18
the trade, then the Defendants would not have been negligent under Hitachi.” Id. at
12. However, in that case, the government challenged on appeal the Court of
International Trade’s decision not to penalize importer’s failure to disclose escalation
payments under an economic price adjustment clause because it would be contrary to
due process. See Hitachi, 172 F.3d at 1330. The government argued that the
importers had notice that they must disclose escalation payments and the importers’
failure to disclose violated the Customs laws. See id. 1323–25. Yet, as the Court of
Appeals for the Federal Circuit explained, no statute or regulation required the
disclosure of the escalation payments. See id. at 1330. The Court of Appeals for the
Federal Circuit faulted the government in suggesting that, in the absence of such a
statute and the presence of a Customs Decision, that such reporting was not required.
Id. at 1330–31. In such a situation the Court of Appeals tasked the government to
point to some knowledge in the trade. Id. Unlike the situation in Hitachi, the statute,
here, clearly proscribes Defendants’ conduct. Further, the government is not
estopped from enforcing its laws, irrespective of whether, and to what extent, it has
enforced the law in the past or its state of mind in deciding whether or not to enforce
the law.17 See Hitachi v. United States, 21 CIT 373, 390–91, 964 F. Supp. 344, 363
17 Although Defendants emphasize they “do not seek to estop Plaintiff from enforcing
the law,” they argue that estopping enforcement “must be balanced with the
requirements of due process in relation to notice.” Defs.’ Br. Supporting
Reconsideration at 13. This argument conflates the due process considerations of
(footnote continued)
Consol. Court No. 17-00174 Page 19
(1997) (“Despite the harsh consequences, the federal government is not estopped to
enforce laws against citizens who were advised by government that their actions were
legal when the government later ascertains that such actions were not in compliance
with the law.”).18 The government’s treatment or past investigations of nonparties
do not relate to whether Defendants, here, violated the law or acted with reasonable
care.19 Therefore, information on trademarks and government documents are not
notice, whether a party has notice of penalizable conduct, with reasonable care, the
conduct required to avoid the penalty of negligence. See, e.g., Lambert v. California,
355 U.S. 225, 228 (1957).
In addition, Defendants attempt to distinguish differences in the government’s
obligations for unliquidated as opposed to liquated entries. See Defs.’ Br. Supporting
Reconsideration at 13–14. They state that “[i]n proceeding against Defendants for
liquidated entries as the Plaintiff does here, the bar to estoppel does not bar
Defendants from using Plaintiff’s past practices as evidence relevant to whether or
not Defendants exercised reasonable care or were negligent in relation to Plaintiff’s
19 U.S.C. § 1592 claims.” Id. at 14. However, reference to Plaintiff’s alleged past
practice is irrelevant, because declining to act does not establish a practice. See
Maverick I, Slip Op. 20-17 at 9, 44 CIT at __. Moreover, it is not the bar to estoppel
that renders the Defendants’ request irrelevant; it is the reasonable care standard.
18 Similarly, Defendants’ citation of the lower court’s decision for the proposition that
Customs’ past acquiescence would be evidence tending to show reasonable care in the
circumstances is also misplaced. See Defs.’ Br. Supporting Reconsideration at 12.
Read in context, the court explained that “even if there were such a past practice, it
would not estop the federal government from enforcing the statute.” Hitachi, 21 CIT
at 390–91, 964 F. Supp. at 363.
19For example, Maverick RFP Nos. 30–33 seek trademark information of nonparties,
such as “documents or records which identif[y] all the trademarks” on cigars
manufactured or imported by named nonparties. See Maverick Status Report at RFP
Nos. 30–33. Maverick claims this trademark information is relevant because
Plaintiff invokes Good Times’ ownership of trademarks on the imported cigars to
(footnote continued)
Consol. Court No. 17-00174 Page 20
relevant in determining whether Defendants’ conduct would be that “expected from
[] person[s] in the same circumstances.” See Defs.’ Br. Supporting Reconsideration
at 9 n.13, 10 (citing 19 C.F.R. Pt. 171, app. B(D)(6)). Moreover, Plaintiff has
reasonably explained that the cost of obtaining the documents requested would be
overly burdensome to the government given the limited, if any, relevancy. See, e.g.,
Maverick Status Report at RFP Nos. 5–8, 15, and 17–21 (Plaintiff objects that the
requests are overly burdensome).
Nonetheless, Defendants seek to establish that the discovery sought is relevant
by pointing to Plaintiffs’ requests for information about third-parties. See Defs.’ Mot.
Supp. at 1–3.20 This argument is unavailing. As a threshold matter USCIT R.
26(b)(1) permits discovery regarding any nonprivileged matter that is relevant to any
party’s claim or defense “[u]nless otherwise limited by court order.” USCIT R.
demonstrate Good Times’ control, Defs.’ Br. Supporting Reconsideration at 11–12,
and avers that it believes the government did not pursue other similarly situated
parties. See Maverick’s Mot. at 8. Likewise, Good Times’ RFP Nos. 4–8, 15, and 17–
21 request government documents on affiliated nonparties, i.e., “copies of every
document, record, or communication” concerning a named nonparty, see Good Times’
RFP Nos. 4–8, 15, and documents and records, inter alia, related to federal
investigations of Good Times and its affiliates. See Good Times Status Report at RFP
Nos. 17–21. Setting aside the variety of a factors that the government considers in
determining whether to pursue an investigation, even if another company might
have acted in the same manner as Defendants is not relevant to whether Defendants
exercised reasonable care here. See Maverick I, 44 CIT at __, Slip Op. 20-17 at 10;
see also Aegis, 43 CIT at __, Slip Op. 19-162 at 26.
20 Defendants point to supplemental evidence that comprises Plaintiff’s RFPs
pertaining to an email regarding other importers’ contracts and for documents within
Good Times’ possession relating to the determination of FET on tobacco products. See
Defs.’ Mot. Supp. at 2–3.
Consol. Court No. 17-00174 Page 21
26(b)(1). Federal Rule of Evidence 401 provides “[e]vidence is relevant if: (a) it has
any tendency to make a fact more or less probable than it would be without the
evidence; and (b) the fact is of consequence in determining the action.” Fed. R. Evid.
401. The court may limit the proposed discovery if it is irrelevant. USCIT R.
26(b)(2)(C)(iii). It is for the court to determine what is relevant. See Sprint/United
Mgmt. Co. v. Mendelsohn, 552 U.S. 379, 384, 387 (2008) (noting that the question of
relevancy is one reserved to the sound discretion of the trial court.). Moreover, it is
possible for plaintiffs and defendants to seek discovery for different purposes
depending on their claims and defenses. Plaintiff here claims to seek information
regarding Good Times’ state of mind as allegedly relevant to liability under 19 U.S.C.
§ 1592. See Pl.’s Opp’n Mot. Supp. at 4. However, whether or not the documents
Plaintiff has sought are relevant to its claims is not before the court. The issue before
the court is whether the documents requested by Defendants are relevant.
Defendants fail to persuade that Plaintiff’s discovery requests in this case bear on the
relevance of their own discovery requests.
CONCLUSION
Defendants have not demonstrated that they would suffer harm if the court
declines to reconsider and amend its order. Although Defendants contend they
“would be harmed by the[] unavailability” of the requested production to make their
case, see Defs.’ Br. Supporting Reconsideration at 2, Defendants’ discovery requests
are irrelevant, duplicative, and unduly burdensome. To the extent that the requested
Consol. Court No. 17-00174 Page 22
information is relevant, Defendants may pursue alternate avenues that alleviate the
burden of production otherwise placed on Plaintiff. Further, if Plaintiff relied on any
other information in the determination of FET of Defendants’ cigar imports, or if it
would need to rely upon any other information at trial to make its case, and did not
proffer that relevant information, Plaintiff may be unable to introduce that
information at trial. See USCIT R. 37(c)(1).
For the foregoing reasons, it is
ORDERED that Defendants’ motion to supplement is granted; and it is
further
ORDERED that Defendants’ supplemental evidence, Pl.’s Second Set of
Interrogatories, Requests for Admission and [RFPs] to Good Times, Apr. 14, 2020,
ECF No. 103-1, is accepted for filing and is deemed filed as of April 14, 2020; and it
is further
ORDERED that Defendants’ motion for reconsideration is denied.
/s/ Claire R. Kelly
Claire R. Kelly, Judge
Dated: April 16, 2020
New York, New York
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780 A.2d 726 (2001)
Renee BRENNER (a minor), by and through her custodians and grandparents, David S. JOHNSON and Rose Johnson, and her parents, William and Patricia Brenner, Appellants,
v.
WEST SHORE SCHOOL DISTRICT.
Commonwealth Court of Pennsylvania.
Argued April 2, 2001.
Decided May 15, 2001.
Publication Ordered July 12, 2001.
Shawn P. McLaughlin, York, for appellants.
Andrew J. Blady, Doylestown, for appellee.
Before McGINLEY, SMITH, Judges and JIULIANTE, Senior Judge.
McGINLEY, Judge.
Renee Brenner (Renee), by and through her custodians and grandparents, David S. Johnson and Rose Johnson (Mrs. Johnson), (collectively, Grandparents), and her parents William (Brenner) and Patricia Brenner (Mrs. Brenner), (all collectively, appellants) appeal the order of the Court of Common Pleas of York County (trial court) that denied appellants' post trial *727 motions from a decree nisi that denied the appellants' petition for injunctive relief.
Renee was born on November 15, 1984. Brenner and Mrs. Brenner are the natural parents of Renee and reside at 3901 Schoolhouse Road in Dover. The Grandparents reside at 3165 Old Trail Road, York Haven and have resided there for as long as Renee has lived. Brenner and Mrs. Brenner (Parents) lived at 3300 Old Trail Road, York Haven until Renee was in eighth grade. Old Trail Road is located on the division line between the District and the Northeastern School District. Parents did not reside in the District at any time when Renee was of school age.
Renee attended school within the District from her entry in kindergarten until November 24, 1998, when she enrolled in the Dover Area School District. When Renee enrolled in kindergarten, Mrs. Johnson and Mrs. Brenner went to the elementary school and explained that Mrs. Johnson was Renee's primary caregiver. On the District Information Sheet, which was completed on September 4, 1990, Grandparents were listed as emergency contact and the box marked "pupil lives with both parents was checked." Some of the documents concerning Renee sent out by the District were addressed to Mrs. Johnson and others to the Parents. Renee's main bedroom is at her Grandparents' house although the Parents have maintained significant involvement in Renee's daily needs. Renee stays with the Parents part of the week. Parents have always declared Renee as a dependent on state and federal income tax returns and have provided health and medical coverage.
The Parents moved to 3901 Schoolhouse Road, Dover in November 1998. In the fall of 1998, after District tax collectors noticed that Renee was not residing in the District, the District told Mrs. Brenner that Renee would be expelled if she were not removed from the District. Renee then attended Dover School District for about two months during her eighth grade year. While Renee was attending Dover School District, Mrs. Brenner temporarily separated from Brenner and lived with Renee at Grandparents' house.
The District contacted Mrs. Johnson by telephone and by confirmatory letter on September 14, 1999, to inform her that because the Parents resided outside of the physical boundaries of the District, Renee must immediately withdraw from the District and enroll in the district where the Parents resided. The District also instructed Mrs. Johnson to obtain a legal document which indicated that she was Renee's legal guardian and to have that notarized.
Parents and Grandparents then entered into a stipulation and agreement for custody on September 22, 1999. The stipulation stated that Parents and Grandparents had joint legal custody of Renee with Grandparents having majority physical custody of the child and that Parents were responsible for providing appropriate financial support for and on behalf of Renee including health insurance coverage.
Because the Parents did not withdraw Renee from the District, the District suspended Renee from attending Redland High School in the District on or about September 24, 1999. On September 29, 1999, the Court of Common Pleas of York County adopted the stipulation and agreement as an order.
Appellants presented a motion for a preliminary injunction on October 8, 1999. The trial court granted the preliminary injunction and directed that Renee could return to the District school. Appellants also sought an order which would keep Renee in the District for the remainder of *728 her secondary education. The District denied that Renee should be accepted as a student and asked that the trial court dismiss the Appellants' complaint.
On October 10, 1999, Brenner and Mrs. Johnson met with Dr. Daniel Sheets (Dr. Sheets), director of pupil services for the District. At this meeting, Brenner and Mrs. Johnson were given a parent questionnaire and a resident questionnaire, which were not returned to the District.
The trial court heard the matter on December 7, 1999. Mrs. Johnson testified that Renee had her own room at her house and kept her belongings there. Notes of Testimony, December 7, 1999, (N.T.) at 10; Reproduced Record (R.R.) at 132a. Mrs. Johnson testified that Renee's parents did not pay her or provide financial support in return for her care of Renee. N.T. at 17; R.R. at 139a. Mrs. Johnson also testified that Renee stayed with her four to five nights a week during the 1998-99 school year. N.T. at 26; R.R. at 149a. Brenner essentially corroborated Mrs. Johnson's testimony. Brenner testified that Renee's room in his house was "basically the guest room." N.T. at 52; R.R. at 174a.
Dr. Sheets testified that Old Trail Road is right on the District boundary line and the District cannot determine from a particular address whether it is in the District until it actually checks the tax records. Dr. Sheets further testified that it came to his attention that the Parents did not live in the District when Renee was in eighth grade. N.T. at 55-56; R.R. at 177a-178a. Dr. Sheets testified that with respect to Renee no one completed the resident affidavit form given to a resident who is not the parent of a child residing in the District. N.T. at 61; R.R. at 183a. Dr. Sheets also testified that Mrs. Brenner, a District school bus driver, drove Renee to school in a District bus when she was residing in the Northeastern School District. N.T. at 74; R.R. at 196a.[1]
By decree nisi filed June 13, 2000, the trial court denied and dismissed the Appellants' petition for injunctive relief. The trial court determined that Section 1302 of the Public School Code of 1949 (Code)[2], 24 P.S. § 13-1302, governs the entitlement to free school privileges.[3]
The trial court found that the testimony did not support a guardianship by the Grandparents because the Grandparents were not supporting the child gratis, assuming all obligations relative to school requirements and supporting the child continuously. The trial court determined that *729 the Parents provided substantial support and were significantly involved in the child's schooling. Further, the trial court determined that the Grandparents were not supporting Renee continuously.
The Appellants filed post trial motions and contended that the findings of fact were inconsistent with respect to the amount of time Renee stayed with the Grandparents and Parents, that the District was estopped from asserting a position different from what it had taken for the majority of Renee's educational life and upon which the Appellants reasonably relied, that because Renee was accepted as a pupil in the District for nearly ten years the Grandparents did not have to provide both legal documentation of dependency or guardianship and a sworn statement as to certain specific factors but just one or the other under the Code and that the trial court committed errors with respect to whether the Appellants were given certain forms.
In an opinion dated August 10, 2000, the trial court dismissed the post trial motions.[4] Also, on August 10, 2000, the trial court entered the decree nisi as modified as a final decree.
Appellants contends that for purposes of the Code Renee should be considered a resident of the District, that because she was accepted as a pupil of the District she should not now have to comply with the filing requirements for guardianship under the Code, and that Renee while in the custody of Mrs. Johnson, a resident of the District, is entitled to free school privileges in the District because Mrs. Johnson provided proper documentation of guardianship. Appellants also contend that the Grandparents have established they are residents of the District, that they are supporting Renee gratis, that they will assume all personal obligations for her relative to school requirements, and that they intend to keep and support Renee continuously.[5]
Initially, the Appellants contend that for purposes of the Code, Renee is and always has been a resident of the District. The Appellants base this contention on the fact that the grandparents have primary physical custody of Renee, Renee spends the majority of her time at the grandparents' home, and that the grandparents should be considered the guardians of Renee under Section 1302 of the Code, 24 P.S. § 13-1302.
However, the Code provides that in order for a child living with a person who is not the child's natural parent to be entitled to free school privileges within that district, the adult must support the child gratis as if it were his own. Here, the trial court determined that while Grandparents maintained significant involvement with Renee, they did not meet the test of supporting Renee gratis as if she were their own. The trial court determined in its initial adjudication:
The testimony presented in this case does not support a guardianship by the Grandparents in which the Grandparents are supporting the child gratis, assuming all personal obligations for the child relative to school requirements, *730 and supporting the child continuously. First, Parents have provided substantial support for Renee, such as maintaining health insurance, maintaining a bedroom, providing for her food, clothing and other needs. Parents have declared Renee as a dependent on their state and Federal taxes, thus evidencing that they provide financial support and maintenance to Renee. The language of the School Code, which states, `supporting the child gratis,' must be interpreted in light of a full reading of the statute. To support a showing of supporting the child gratis, the proponent must present evidence that the guardian is doing more than merely not receiving payment for keeping the child in the guardian's house. By providing health insurance, buying clothing, providing rides to school, and claiming the child as a dependent, the Parents' involvement in Renee's daily needs undermines the Grandparents' claim that they are supporting Renee gratis. Thus, Plaintiffs have failed to demonstrate that Grandparents meet this first requirement.
Adjudication by the Trial Court, June 13, 2000, at 8-9; R.R. at 74a-75a.
We agree with the trial court that the Grandparents did not meet this threshold requirement.
Next, Appellants contend that the District cannot force Renee to comply with the filing requirements of Section 1302 of the Code, 24 P.S. § 13-1302, where the District accepted Renee as a pupil of the District and neither Renee nor the Grandparents have neither materially nor substantially altered their living or other relevant circumstances. Essentially, Appellants contend that once the District accepted Renee as a pupil when she enrolled, it could not years later require the Grandparents to establish guardianship and comply with the Code in order for Renee to attend school in the District. Appellants make this argument because Section 1302 of the Code states "[b]efore such child may be accepted as a pupil, such resident shall file...." However, Dr. Sheets testified that once the District became aware of the Parents' residence it took immediate action. Appellants also argue that it would be unfair to Renee to force her to change schools.
The trial court determined:
While it is true that Renee was accepted as a pupil for ten years, at the time the Plaintiffs were notified that Renee was in the wrong district, Renee ceased to be an accepted pupil at the Defendants' school district. As a non-resident pupil, she would have to follow the guidelines of the school code. Additionally, no language in the statute carves out an exception for a child in Renee's situation.
Trial Court Opinion, August 10, 2000, at 5; R.R. at 95a. We agree.[6]
Accordingly, we affirm.
*731 ORDER
AND NOW, this 15th day of May, 2001, the order of the Court of Common Pleas of York County in the above-captioned matter is affirmed.
NOTES
[1] Jim Carter, supervisor of child accounting and alternative programs for the District, testified regarding Renee's records.
[2] Act of March 10, 1949, P.L. 30, as amended.
[3] Section 1302 of the Code provides:
A child shall be considered a resident of the school district in which his parents or the guardian of his person resides.... When a resident of any school district keeps in his home a child of school age, not his own, supporting the child gratis as if it were his own, such child shall be entitled to all free school privileges accorded to resident school children of the district, including the right to attend the public high school maintained in such district or in other districts in the same manner as though such child were in fact a resident school child of the district, and shall be subject to all the requirements placed upon resident school children of the district. Before such child may be accepted as a pupil, such resident shall file with the secretary of the board appropriate legal documentation to show dependency or guardianship or a sworn statement that he is a resident of the district, that he is supporting the child gratis, that he will assume all personal obligations for the child relative to school requirements, and that he intends to so keep and support the child continuously and not merely through the school term.
24 P.S. § 13-1302.
[4] The trial court amended its findings to state in finding of fact number eighteen that "Renee's parents have maintained significant involvement in Renee's daily needs and scholastic needs, including having Renee stay at their residence for part of the week. N.T., 12/7/99 at 6 and 42." Trial Court Opinion, August 10, 2000 (Opinion) at 2; R.R. at 92a.
[5] Our review in cases involving a permanent injunction is limited to whether the trial court abused its discretion or committed an error of law. Sisco v. Luppert, 658 A.2d 886 (Pa. Cmwlth.1995).
[6] Appellants also contend that Renee is entitled to free school privileges in the District because Parents and Grandparents have provided the appropriate documentation to show dependency or guardianship and that Grandparents are supporting Renee gratis, will assume all personal obligations for Renee relative to her school requirements and will support Renee continuously and not merely during the school year. Appellants essentially restate their initial argument with the addition of the representation that any necessary documentation was provided. As we have already determined that Grandparents did not meet the requirements under the Code, we need not address this argument. Assuming arguendo that we must determine the question of whether required documentation was presented to the District, we agree with the trial court's determination that the Appellants did not present the appropriate documentation.
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Opinions of the United
2009 Decisions States Court of Appeals
for the Third Circuit
4-27-2009
Clay Caldwell v. Jeffrey Beard
Precedential or Non-Precedential: Non-Precedential
Docket No. 08-3286
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2009
Recommended Citation
"Clay Caldwell v. Jeffrey Beard" (2009). 2009 Decisions. Paper 1475.
http://digitalcommons.law.villanova.edu/thirdcircuit_2009/1475
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BLD-140 NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 08-3286
___________
CLAY CALDWELL,
Appellant
v.
JEFFREY A. BEARD, Secretary of Corrections;
LOUIS FOLINO, Superintendent, SCI Greene;
WALLACE DITTSWORTH, Food Service Manager, SCI Greene;
MARK DICARLO, Asst. Food Service Manager, SCI Greene;
LINDA VARNER, R.H, IT Medical Director, SCI Greene
____________________________________
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civil Action No. 07-cv-00727)
District Judge: Honorable Terrence F. McVerry
____________________________________
Submitted for Possible Dismissal Pursuant to 28 U.S.C. § 1915(e)(2)(B)
or Summary Action Pursuant to Third Circuit LAR 27.4 and I.O.P. 10.6
March 19, 2009
Before: McKEE, FISHER and CHAGARES, Circuit Judges
(Filed: April 27, 2009)
___________
OPINION
___________
PER CURIAM
Clay Caldwell appeals from an order of the United States District Court for the
Western District of Pennsylvania granting Defendants’ motion to dismiss Caldwell’s
complaint for failure to state a claim. For the reasons set forth below, we will summarily
affirm. See I.O.P. 10.6.
On May 29, 2007, Caldwell, a prisoner proceeding pro se, filed an action against
Jeffrey A. Beard, Secretary of The Department of Corrections (“DOC”); Louis Folino,
Superintendent, SCI-Greene; Wallace Dittsworth, Food Service Manager, SCI-Greene;
Mark Dicarlo, Asst. Food Service Manager, SCI-Greene; and Linda Varner, R.H, IT
Medical Director, SCI-Greene. In his complaint, Caldwell alleged violations of his First,
Fifth, Eighth and Fourteenth Amendment rights in connection with an injury he suffered
while working in the Food Services Department at SCI-Greene. Caldwell claimed that on
January 15, 2007, while filling plastic cups with soap and water in order to clean his
assigned kitchen area, he was scalded by extremely hot water. As a result, he was taken
to the medical department where he was treated for a small burn on his hand. In his
complaint, Caldwell alleged that the Food Services Department raised the water
temperature prior to his cleaning the kitchen in order to prepare for an upcoming state
inspection.
II.
We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291. Our review of
the District Court’s dismissal for failure to state a claim is plenary. Port Auth. of N.Y. &
2
N.J. v. Arcadian Corp., 189 F.3d 305, 311 (3d Cir. 1999). When considering a district
court’s grant of a motion to dismiss under Rule 12(b)(6), we “accept all factual
allegations as true and construe the complaint in the light most favorable to the plaintiff.”
Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008).
III.
A. Eighth Amendment Claim
The District Court properly dismissed Caldwell’s Eighth Amendment claim as the
allegations against Defendants amounted to, at most, a claim for negligence. In order to
establish a cognizable Eighth Amendment claim, a prisoner is required to allege “more
than ordinary lack of due care for the prisoner’s interests or safety.” Whitley v. Albers,
475 U.S. 312, 319 (1986).
Caldwell claimed that Defendants violated his Eighth Amendment rights by raising
the temperature of the water in the prison kitchen which resulted in injury to his hand. In
his opposition to Defendants’ motion to dismiss, Caldwell specifically stated that “[a]
prisoner may be able to recover damages for prisoner personnel’s negligence through tort
actions. Prison officials and personnel have a tort law duty to provide safe living and
working conditions for prisoners.” Plaintiff’s Opposition at 1 (emphasis added).
A prison official violates the Eighth Amendment when the official is deliberately
indifferent to inmate health or safety and when this act or omission results in the denial of
“the minimal civilized measure of life’s necessities.” See Farmer v. Brennan, 511 U.S.
3
825, 834 (1994). Therefore, a prison official can be held liable under the Eighth
Amendment for denying humane conditions of confinement if he knows that inmates face
a substantial risk of serious harm and disregards that risk by failing to take reasonable
measures to abate it. Id. at 847. Claims of negligence, without a more culpable state of
mind, do not constitute “deliberate indifference.” See Singletary v. Pa. Dept. of Corr.,
266 F.3d 186, 193 n.2 (3d Cir. 2001). Although increased water temperature in the
prison’s kitchen may pose a risk, Caldwell’s allegations do not reflect the deliberate
indifference required to impose liability under the Eighth Amendment.1 Because we
agree with the District Court that Caldwell’s claim amounts merely to negligence, his
allegations are not actionable under section 1983.
B. Fourteenth Amendment Claim
Caldwell also asserted a claim against Defendant Varner for alleged improper
disclosure of his confidential medical information in violation of Caldwell’s Fourteenth
Amendment substantive due process rights. Specifically, Caldwell claimed that
1
The District Court’s alternative ground for dismissal of Caldwell’s Eighth
Amendment claims against Defendants Folino and Beard was also proper. In a section
1983 case, a defendant must have been personally involved in the alleged wrongdoings.
Rode v. Dellarciprete, 845 F.2d 1195, 1207 (3d Cir. 1988). Here, Caldwell does not
allege that Defendants Folino and Beard were personally involved in the incident which
brought about his injury. Thus, the Eighth Amendment claims against them were
properly dismissed on that alternative ground. We address below the roles of Defendants
Beard and Folino in the grievance process.
4
Defendant Varner improperly shared his medical records with the DOC official in charge
of investigating and responding to Caldwell’s administrative grievance.
We agree with the District Court that Caldwell waived his right to confidentiality
when he initiated his grievance with the DOC. In his grievance, Caldwell complained
about the extensiveness of the injury to his hand as well as the number of times that he
sought medical treatment following the incident.
While a prisoner does not shed all fundamental protections of the Constitution at
the prison gates, inmates retain only those rights that are not inconsistent with their status
as prisoners or with the legitimate penological objectives of the corrections institution.
See Doe v. Delie, 257 F.3d 309, 315 (3d Cir. 2001). In Doe, we explicitly held that a
prisoner has a constitutional right to privacy in his medical information. Id. at 316.
However, he placed his medical condition at issue by filing a grievance alleging
that he had been severely injured. Disclosure of Caldwell’s medical records by
Defendant Varner to the grievance officer responsible for responding to Caldwell’s claim
was reasonably related to the legitimate penological interest of adjudicating the grievance
and assessing the severity of Caldwell’s alleged injury. Therefore, the District Court
properly dismissed Caldwell’s Fourteenth Amendment claim against Defendant Varner.2
2
To the extent that Caldwell claims that his equal protection rights were violated
under the Fourteenth Amendment, he has not alleged any facts suggesting that he was
treated differently from similarly situated inmates – as is required to sustain such a claim.
See Wilson v. Schillinger, 761 F.2d 921, 930 (3d Cir. 1985).
5
C. First and Fifth Amendment Claims
Although Caldwell also alleged that Defendants violated his First and Fifth
Amendment rights, he offered very few facts in his complaint supporting those claims.
The District Court interpreted Caldwell’s First Amendment claim as one arguing that his
rights had been violated when the DOC denied his administrative grievance. In doing so,
the DOC denied his right to petition the government in violation of the First Amendment.
The District Court correctly noted that an inmate has no constitutional right to a grievance
procedure. See Flick v. Alba, 932 F. 2d 728, 729 (8th Cir. 1991). Thus, we agree that the
DOC’s act of denying Caldwell’s grievance did not infringe upon his constitutional right
to petition the government for redress.
The District Court also correctly determined that Caldwell did not raise a
cognizable Fifth Amendment claim. The claim appears to be based upon the DOC’s
alleged denial of due process during the administrative grievance process. As the District
Court correctly noted, the due process clause under the Fifth Amendment only protects
against federal governmental action and does not limit the actions of state officials. See
Riley v. Camp, 130 F.3d 958, 972 n.19 (11th Cir. 1997).
The District Court’s decision to deny Caldwell leave to amend his complaint was
also proper. Granting a plaintiff leave to amend is not necessary where amendment
would be futile. See Grayson v. Mayview State Hosp., 293 F.3d 103, 111 (3d Cir. 2002).
Based on the above discussion of Caldwell’s claims, we are satisfied that it would have
6
been an exercise in futility for the District Court to have permitted Caldwell to amend his
complaint.
For the foregoing reasons, we conclude that the District Court properly granted
Defendants’ motion to dismiss. As there is no substantial question presented by this
appeal, we will summarily affirm. See Third Cir. LAR 27.4; I.O.P. 10.6.
7
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605 F.2d 1207
Van Santv.U. S.
No. 78-1583
United States Court of Appeals, Fourth Circuit
9/7/79
1
E.D.Va.
REVERSED AND REMANDED
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NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
IN RE: SHEIKHA LATEEFAH ALSABAH,
Appellant
______________________
2015-1264
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board, in No. 29/234,717.
______________________
JUDGMENT
______________________
DAVID E. DOUGHERTY, Hauptman Ham, LLP, Alexan-
dria, VA, argued for appellant. Also represented by SEAN
A. PASSINO.
MONICA BARNES LATEEF, Office of the Solicitor, United
States Patent and Trademark Office, Alexandria, VA,
argued for appellee Michelle K. Lee. Also represented by
THOMAS W. KRAUSE, MARY L. KELLY, JAMIE LYNNE
SIMPSON.
______________________
THIS CAUSE having been heard and considered, it is
ORDERED and ADJUDGED:
PER CURIAM (NEWMAN, CLEVENGER, and O’MALLEY,
Circuit Judges).
AFFIRMED. See Fed. Cir. R. 36.
ENTERED BY ORDER OF THE COURT
October 16, 2015 /s/ Daniel E. O’Toole
Date Daniel E. O’Toole
Clerk of Court
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336 So.2d 427 (1976)
Stanley S. MOLES, M.D., P.A. D/B/a Diagnostic Clinic, and Myron W. Wheat, Jr., M.D., Appellants,
v.
Roger S. WHITE, Individually, and As Executive Director and Administrator of the Morton F. Plant Hospital, et al., Appellees.
No. 75-1572.
District Court of Appeal of Florida, Second District.
August 6, 1976.
Rehearing Denied September 10, 1976.
*428 Charles F. Robinson and J. Bruce Harper of Robinson, Macpherson, Johnson & Harper, Clearwater, for appellants.
Emil C. Marquardt, Jr. and James A. Martin, Jr. of McMullen, Everett, Logan, Marquardt & Cline, Clearwater, for appellees.
BOARDMAN, Judge.
Appellants/plaintiffs timely appeal from an order granting appellees'/defendants' *429 motion to dismiss with prejudice all counts of the amended complaint for failure to state a cause of action.
The appellants are Stanley S. Moles, M.D., P.A., a Florida professional service corporation employing licensed physicians practicing various medical specialities, including those essential to open heart surgery; and Myron W. Wheat, Jr., M.D., a licensed medical doctor, well qualified and specializing in open heart surgery, employed at Stanley S. Moles. The appellees are the Morton F. Plant Hospital, Inc., a nonprofit Florida corporation which owns, operates, and manages The Morton F. Plant Hospital (Hospital) in Clearwater, Florida; Roger S. White, executive director and chief executive officer of the Hospital; and Charles Lasley, M.D., Donald R. Eubanks, M.D., and Javier Ruiz, M.D., medical staff members of the Hospital. The Hospital is the only facility in the Clearwater area authorized to provide open heart surgery and supportive services. In February, 1975, appellant Wheat's application for appointment to the Hospital was summarily rejected by appellee White, without referral of the application to the Credentials Committee for qualification, or to the medical staff of the Hospital for a recommendation, prompting this action.
Appellants contend that it was error to dismiss the said complaint because the material facts averred in the complaint allege a cause of action for a violation of the state antitrust provisions, denial of due process, restraint of trade or commerce, and breach of a fiduciary trust and public purpose. We cannot agree.
The Florida antitrust statute, entitled "COMBINATIONS RESTRICTING TRADE OR COMMERCE," is by its very terms applicable solely to business activity characterized as "trade" or "commerce." Fla. Stat., § 542.01. Florida case law has not yet determined operation of a hospital or the practice of medicine to be within the ambit of this statute, and we are not prepared to hold that such was the intention of the legislature. Consequently, Counts I, II and IV, concerning restraint of trade, must fail.[1] See 54 Am.Jur.2d, Monopolies, Restraints of Trade, and Unfair Trade Practices (1968, Supp. 1975); 22 Fla.Jur., Monopolies, Combinations, and Restraints of Trade § 2 (1958, Supp. 1975) and Unfair Trade Practices § 487 (1971, Supp. 1975); 58 C.J.S. Monopolies § 18 (1948, Supp. 1975).
Appellant contends that the trial court could not, as a matter of law, conclude that the Hospital was a private entity immune from adhering to the universally recognized requirements of due process. The trial court relied on a Supreme Court of Florida decision, West Coast Hospital Ass'n. v. Hoare, Fla. 1953, 64 So.2d 293, to reach its ruling that the Hospital is a private institution. Coincidentally, that decision concerned the same hospital involved in the instant case. In Hoare, the supreme court said:
Without determining the question, it may be that the Legislature has the power and authority to regulate private hospitals, but it has not attempted to do so. There are sufficient fields of endeavors or activities once considered proper for the exercise of free enterprise, where now the government, by specific legislative enactments, is owning, regulating or controlling such endeavors or activities, without the courts invading the legislative field, by adding other endeavors or activities to the ownership, regulation or control of government, political subdivisions or public officials.
Our hospital licensing laws have not been substantially changed since before the Hoare case. Fla. Stat., Ch. 395. With respect to the effect of a more recent rule promulgated by the Department of Health and Rehabilitative Services under the authority of the hospital licensing law, we concur with the following comment contained in the order entered below:
... It is noted that the rules of the Division of Health, Department of Health *430 and Rehabilitative Services, Hospital Licensure, 10D-28.08(f) provides for the appointment of members to the medical staff by the governing authority of the hospital and that no action on appointment shall be taken without prior referral to the medical staff for their recommendation, and that the governing body shall only appoint members to the medical staff as recommended by the medical staff. Wherefore, if the alleged refusal to accept and qualify Plaintiffs application constitutes a breach of state agency rules, the agency should be advised so that it may examine the offense.
By the passage of Fla. Stat. §§ 381.493-497, the state has become involved in the planning of new hospital facilities, but this legislation does not suggest a legislative determination to become involved in the day-to-day management of these facilities.
In the meantime, our Florida courts are continuing to distinguish between public and private hospitals. Cf. North Broward Hospital Dist. v. Mizell, Fla. 1962, 148 So.2d 1; Monyek v. Parkway General Hospital, Inc., Fla.App.3d, 1973, 273 So.2d 430; Burris v. Morton F. Plant Hospital, Fla.App.2d, 1967, 204 So.2d 521. See 40 Am.Jur.2d, Hospitals and Asylums § 26 (1968, Supp. 1975); 41 C.J.S. Hospitals § 3 (1948, Supp. 1975). Although the complaint alleges in general terms comprehensive and persuasive regulation by the state and national governments, this is a conclusion by the appellants and does not change the nature of the Hospital from private to public. While the Hospital may receive funds from tax assessments and from the public generally, that is not sufficient to render it a public institution. See West Coast Hospital Ass'n. v. Hoare, supra.
We have read the cases cited in appellants' brief and are aware that there are cases decided in other jurisdictions which hold that acceptance of Hill-Burton funds for hospital construction will establish a sufficient nexus with the state to require adherence to the principles of due process by the recipients. Notwithstanding, we adhere to the view expressed in several other cases that the mere acceptance of these funds does not impose due process requirements upon a private hospital unless it be shown that there is state action supporting the discriminatory activity. Greco v. Orange Memorial Hospital Corporation, 5th Cir.1975, 513 F.2d 873; Jackson v. Norton-Children's Hospitals, Inc., 6th Cir.1973, 487 F.2d 502; Ward v. St. Anthony Hospital, 10th Cir.1973, 476 F.2d 671. No allegations of racial discrimination are being made in this case. See Greco v. Orange Memorial Hospital Corporation, supra. The requisite state action necessary to bring into play these constitutional principles must encourage rather than discourage the discriminatory practices. Barrett v. United Hospital, D.C.N.Y. 1974, 376 F. Supp. 791, aff'd 506 F.2d 1395 (2d Cir.1974). See Annot., 37 A.L.R.3d 645.
Count V alleges a breach of a fiduciary trust perpetrated upon the citizens of the City of Clearwater, not parties to this suit, and violation of public purpose. The allegation that the Hospital has a public purpose does not, in our judgment, make it a public entity. Apropos to this contention is the following statement of the court in Barrett v. United Hospital, supra:
... Even if it may be successfully argued that a private hospital is performing a public function it is clear that the function involved is the admission and treatment of patients, not the hiring and firing of doctors, nurses and other staff personnel. I find no compelling authority for extending the `public function' argument to a private hospital in the absence of a nexus between the governmental function performed and the violative activity alleged.
The conclusionary allegations of this count add nothing to the other portions of the complaint which have previously been held to be insufficient.
For the reasons stated above, we hold that the trial court's order dismissing the *431 amended complaint for failure to state a cause of action was proper and should be, and is, hereby
AFFIRMED.
McNULTY, C.J., and GRIMES, J., concur.
NOTES
[1] Count IV of the complaint did not allege a violation of Chapter 542 of the Florida Statutes but only alleged an unlawful restraint of trade.
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716 F.Supp.2d 686 (2010)
AUTO CLUB GROUP INS. CO., as Subrogee of Andrea and John Nelson, Plaintiff,
v.
ALL-GLASS AQUARIUM CO., INC., Defendant/Third-Party Plaintiff,
v.
Judco Manufacturing, Inc., Third-Party Defendant.
Case No. 08-15205.
United States District Court, E.D. Michigan, Southern Division.
May 27, 2010.
*687 Patricia S. Johnson, Gibson and Sharps, Northville, MI, for Plaintiff.
Michael F. Schmidt, Harvey Kruse, Troy, MI, for Defendant/Third-Party Plaintiff.
Kieran F. Cunningham, Strobl, Cunningham, Bloomfield Hills, MI, for Third-Party Defendant.
OPINION AND ORDER
LAWRENCE P. ZATKOFF, District Judge.
I. INTRODUCTION
This matter is before the Court on Defendant All-Glass Aquarium's ("Defendant") motion for summary judgment [dkt. 36].[1] The parties have fully briefed the motion. The Court finds that the facts and legal arguments are adequately presented in the parties' papers such that the decision process would not be significantly aided by oral argument. Therefore, pursuant to E.D. Mich. L.R. 7.1(e)(2), it is hereby ORDERED that the motion be resolved on the briefs submitted. For the following reasons, Defendant's motion for summary judgment is GRANTED.
II. BACKGROUND
This action arose out of an August 18, 2006, fire that damaged the home and *688 personal property of John and Andrea Nelson. Plaintiff Auto Club Insurance Co. ("Plaintiff") is the subrogee of the Nelsons. The alleged source of the fire was a 50-gallon aquarium located in the Nelsons' basement, and the alleged cause of the blaze was a faulty light switch inside the aquarium's hood. Third-Party Defendant Judco Manufacturing ("Judco") manufactured the light switch, which Defendant installed during its manufacture of the aquarium hood.
On August 17, 2006, both Nelsons were in the basement of their home. John Nelson went upstairs at approximately 8:00 p.m., and Andrea Nelson stayed downstairs for another hour to finish ironing. John Nelson testified that the aquarium light was not on while he was downstairs. He also testified that the light would not have been turned on since the last time the fish were fed, which occurred on August 14 or August 15. John Nelson also testified that his wife was a smoker, but he did not know whether she had smoked in the basement that evening.[2]
Early the next morning, John Nelson was awoken by the smell of smoke. According to fire-department records, John Nelson called in the fire at 4:32 a.m. on August 18, 2006. Despite the department's efforts, the Nelsons' home and property sustained over $200,000 worth of fire, smoke, and water damage.
Plaintiff hired fire investigator James Maxwell ("Maxwell") to conduct a cause-and-origin investigation. Maxwell twice visited the scene, first on August 22, 2006, and again on October 4, 2006. Maxwell examined the area around the aquarium and collected the surviving debris of the aquarium. He concluded that the fire originated near the top of the aquarium based on burn patterns, but he admitted that an electrical engineer would be required to determine the cause.
Plaintiff also hired Michael McGuire ("McGuire") as an electrical-engineering expert. McGuire did not visit the scene but instead performed a laboratory analysis of the remains collected by Maxwell. McGuire concluded that the only possible cause of the fire was the light switch.
Adam Bainbridge ("Bainbridge") is an electrical engineer retained by Defendant, who analyzed the same remnants as did McGuire on February 28, 2008. Bainbridge identified a piece of the switch from the debris, which contradicted McGuire's conclusion that the fire completely destroyed the switch. Bainbridge found the switch piece to be unharmed, which led him to conclude that the fire started from a different source. Bainbridge could not rule out a brown extension cord that was plugged into the same power strip as were other cords servicing the aquarium, and he also questioned whether an electrical problem in the ceiling might have started the fire.
Plaintiff filed its two-count subrogee complaint in state court alleging that (1) Defendant breached its implied warranty because the aquarium was not reasonably fit for its intended use; and (2) Defendant was negligent in its manufacture of the aquarium. Defendant removed the case to federal court based on diversity of citizenship, and the Court granted Defendant leave to file a third-party complaint against Judco for indemnification. Defendant has now moved for summary judgment on all claims.
*689 III. LEGAL STANDARD
Summary judgment is proper where "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(c); Thompson v. Ashe, 250 F.3d 399, 405 (6th Cir.2001). The moving party bears the initial burden of demonstrating the absence of any genuine issue of material fact, and all inferences should be made in favor of the nonmoving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
To support its motion, the moving party may show "that there is an absence of evidence to support the nonmoving party's case." Id. at 325, 106 S.Ct. 2548. Although all inferences must be drawn in favor of the nonmoving party, this Court bears no obligation to imagine favorable facts where the nonmoving party has alleged none. The moving party must also set forth facts sufficient to establish its case: "[T]he mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient [to defeat a motion for summary judgment]; there must be evidence on which the jury could reasonably find for the plaintiff." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
IV. ANALYSIS
Defendant argues that Plaintiff cannot sustain its claims under Michigan products-liability law because it has not proven causation or identified any defect. Defendant also alleges that Plaintiff's claims should be dismissed due to Plaintiff's spoliation of evidence.
Plaintiff contends that its breach-of-implied-warranty and negligence claims are not subject to the same standards as a traditional products-liability claim. Plaintiff also disputes that it was responsible for the spoliation of any evidence.
A. Michigan Products-Liability Law
"Traditional principles of products liability law recognize three types of defects: manufacturing defects, defects due to faulty design, and defects due to inadequate instructions or warnings." Fleck v. Titan Tire Corp., 177 F.Supp.2d 605, 613 (E.D.Mich.2001) (citing Restatement (Third) of Torts § 2 (1998)). "In Michigan, two theories of recovery are recognized in product liability cases; negligence and implied warranty." Johnson v. Chrysler Corp., 74 Mich.App. 532, 535, 254 N.W.2d 569 (1977). The breach-of-warranty claim "tests the fitness of the product and requires that the plaintiff `prove a defect attributable to the manufacturer and causal connection between that defect and the injury or damage of which he complains.'" Gregory v. Cincinnati, Inc., 450 Mich. 1, 12, 538 N.W.2d 325 (1995) (citing Piercefield v. Remington Arms Co., 375 Mich. 85, 98-99, 133 N.W.2d 129 (1965)). The negligence claim "tests the defendant's conduct instead of the product to determine whether it was reasonable under the circumstances." Gregory, 450 Mich. at 12, 538 N.W.2d 325.
"It is well-settled under Michigan law that a prima facie case for products liability requires proof of a causal connection between an established defect and injury." Skinner v. Square D. Co., 445 Mich. 153, 159, 516 N.W.2d 475 (1994). "A plaintiff in a product liability action need not offer evidence which positively excludes every other possible cause." Mulholland v. DEC Int'l Corp., 432 Mich. 395, 415, 443 N.W.2d 340 (1989). Rather, the plaintiff need only "establish[] a logical sequence of cause and effect, notwithstanding the *690 existence of other plausible theories, although other plausible theories may also have evidentiary support." Id.
B. Breach of Implied Warranty
Plaintiff's first claim alleges that Defendant breached its implied warranty of fitness in manufacturing a defective aquarium hood.
When a products liability action is premised on a breach of implied warranty of fitness, the plaintiff must prove that a defect existed at the time the product left the defendant's control, which is normally framed in terms of whether the product was "reasonably fit for its intended, anticipated, or reasonably foreseeable use."
Bouverette v. Westinghouse Elec. Corp., 245 Mich.App. 391, 396, 628 N.W.2d 86 (2001) (quoting Gregory, 450 Mich. at 34, 538 N.W.2d 325). "Implied warranty claims do not require the plaintiff to specify the type of defect alleged: the mere showing that something went wrong consistent with the existence of a defect is sufficient." Sundberg v. Keller Ladder, No. 00-10117, 2001 WL 1397290, at *6 (E.D.Mich. Nov. 8, 2001).
Defendant relies heavily on Skinner, and argues that Plaintiff's claims must be dismissed because both the cause of the fire and any defect in the aquarium are speculative. Skinner involved a homemade tumbling machine used to shine and smoothen metal parts, on which the decedent had installed a power switch. While using the machine, the decedent was fatally electrocuted. His estate and family filed a products-liability lawsuit against the manufacturer of the power switch. The Michigan Supreme Court rejected the plaintiffs' various hypotheses on how the switch caused the electrocution, noting that `[o]f course, the plaintiffs' offered scenario is a possibility. However, so are countless others." Id. at 173, 516 N.W.2d 475. Defendant maintains that Plaintiff has not produced sufficient evidence that the fire was caused by the aquarium switch, as opposed to the brown extension cord or another possibility.
Plaintiff argues that it need not identify a specific defect in order to proceed on its claims based on Kenkel v. Stanley Works, 256 Mich.App. 548, 665 N.W.2d 490 (2003). In Kenkel, the plaintiff became stuck in a malfunctioning automated door at the entrance to a pharmacy, and the court allowed the lawsuit to proceed even though the plaintiff did not identify the exact defect in the door. The court held that "a plaintiff pursuing a claim of breach of implied warranty is not required to identify the precise defect in the product unless there are multiple actors to whom a malfunction could be attributed." Id. at 557, 665 N.W.2d 490. The Kenkel court distinguished Skinner because the plaintiff was able to describe the events prior to and during the malfunction; whereas the Skinner plaintiff died immediately afterward and the facts were left to speculation. Id. at 498-99.
The cases applying Kenkel can be broken into two categories. The first involves situations where the source of the injury (i.e., the causation requirement) has been established by direct testimony or otherwise. In those cases, the plaintiff is not required to identify the specific defect to survive summary judgment. For example, in Norton v. Auto Club Group Insurance Co., No. 02:04-dv-40376, 2009 WL 884129 (E.D.Mich. Mar. 30, 2009), the decedent testified that his toaster caught fire; therefore, a reasonable juror could find that "a toaster that ignited and set fire to a kitchen was defective[.]" Id. at *20. Likewise, in Sundberg, the court did not require the showing of a specific defect in an allegedly-defective ladder when it was *691 undisputed that the ladder caused the plaintiff's injuries. Id. at *7. See also State Farm Mut. Auto. Ins. Co. v. BMW of N. Am., LLC, No. 08-12402, 2009 WL 2447612, at *4 (E.D.Mich. Aug. 7, 2009).
However, when causation has not been sufficiently alleged, the identification of the specific defect is required. In Paquin v. Control Chief Corp., No. 2:06-cv-252, 2009 WL 1174457 (W.D.Mich. Apr. 29, 2009), the plaintiff, who was a crane operator, saw and testified to what happenedhe was struck by the crane's loadbut he could not explain why it happened. While the plaintiff blamed a remote-control box, the court noted that "[o]ther potential causes, such as a malfunction in the crane or operator error were present." Id. at *8. See also Istvan v. Honda Motor Co., Ltd., No. 08-12507, 2010 WL 1254844, at *6 (E.D.Mich. Mar. 25, 2010) (granting summary judgment when multiple factors could have led to motorcycle crash). Such a rule is consistent with Skinner, as there was no proof in Skinner that the allegedly-defective switch caused the decedent's injuries; therefore, the defect could not be assumed.
In this case, causation is greatly disputed, as the parties' experts have identified more than one potential cause of the fire. As the fire started at night, there are no witnesses to testify to the fire's origin. Had Plaintiff been able to prove that the aquarium hood was the source of the fire, whether by eyewitness testimony or otherwise, then it would not be required to identify a specific defect. See, e.g., Kenkel, 256 Mich.App. at 557, 665 N.W.2d 490. However, this is not the case here. See Skinner, 445 Mich. at 163, 516 N.W.2d 475 ("[T]he mere happening of an unwitnessed mishap neither eliminates nor reduces a plaintiff's duty to effectively demonstrate causation.").
A recent decision of this court provides perhaps the closest factual scenario to the current case and, accordingly, the best guidance. In Meemic Insurance Co. v. Hewlett-Packard Co., No. 09-10155, ___ F.Supp.2d ___, 2010 WL 1949750 (E.D.Mich. May 13, 2010), the plaintiff's insured returned to find her home on fire. The cause-and-origin experts arrived at competing conclusions; the plaintiff's expert believed that the fire was caused by an AC printer adapter, while the defendant's expert ruled out the adapter. The plaintiff's electrical-engineering expert who happened to be McGuire, same as Plaintiff's expert hereconcluded that the adapter failed for unknown reasons and caused the fire; whereas the defendant's electrical-engineering expert concluded that the adapter could not have caused the blaze.
The Meemic court first found that McGuire's opinion, which was based on his visual examination of the adapter, was not sufficiently reliable expert testimony under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), and was otherwise irrelevant. Id. at ___-___, at *10-11. The court alternatively held that McGuire's opinion, if admissible, was not sufficient to establish the required causal link between the adapter and the fire. Id. at ___, at *13. The court similarly found that McGuire's opinions based on "conjecture and speculation" were not sufficient to establish that the adapter was defective. Id. at ___, at *14.
1. Causation
The Court now moves to Plaintiff's claims in this case. The only evidence submitted by Plaintiff in regard to causation is McGuire's opinion, in which he concluded that the light switch was the cause of the fire. This opinion was the result of *692 McGuire's analysis of the materials that Maxwell collected from the Nelson residence following the fire.
As mentioned above, Meemic is almost factually identical to the present case. Both cases involved an unwitnessed basement fire that was allegedly caused by a faulty electronic device; the only difference is the type of device. When considering causation, the Meemic court found that:
Plaintiff has not presented substantial evidence of causation. Plaintiff's only evidence to establish a causal connection between the fire and the AC power adapter is the opinion of McGuire. And, as discussed above, McGuire's opinion is based on his subjective belief following a visual examination of the AC power adapter: it amounts to little more than "mere suppositions." Notwithstanding this Court's determination that McGuire's opinion is inadmissible, his opinion is also insufficient to establish a causal link between an alleged defect in the AC power adapter and the fire. In viewing the evidence in the light most favorable to Plaintiff, the Court finds that Plaintiff has not sufficiently established causation.
Id. at ___, at *13 (footnote omitted).
Furthermore, the Meemic court came to this conclusion without discussing the viability of other possible causes of the fire. In this case, a brown extension cord was present near the aquarium that neither Maxwell nor Bainbridge could rule out as the cause of the fire. John Nelson, the homeowner, could not remember the purpose for which he was using the brown cord; he could not recall whether it was used for lighting at his bar or to operate a component of the aquarium. Nelson Dep. at 44-48. Bainbridge testified that the brown extension cord displayed arcing 57 inches from the male end that was plugged into the power strip, which was consistent with the cord being used for the aquarium and being present near the top of the aquarium; therefore, he could not eliminate it as a source of the fire. Bainbridge Dep. at 62; 71-72.
McGuire testified as follows in regard to the brown extension cord:
Q: Did you find any arcing in the brown extension cord?
A: Yes.
Q: Is arcing a potential ignition source for a fire?
A: It can be.
...
Q: I'm saying, for the sake of the question, assume that the brown extension cord was located near where the fire started, at the top of the hood.
A: It wouldn't have to be "near." It would have to be exactly where the fire started. The arcing would have to be exactly at that location. That would be the only way that would be feasible, hypothetically.
Q: And what is the basisYour report says you eliminate the brown extension cord. Well, what do you eliminate it based on?
A: It's not where the fire started. It was on the floor.
Q: That's the reason why you've eliminated it?
A: Yes.
McGuire Dep. at 43-44. That is, McGuire did not further consider the extension cord because he had been informed that the cord was on the floor, rather than near the top of the aquarium.
The Court finds that McGuire's opinions as to causation do not rise above the speculative level and are insufficient to sustain Plaintiff's burden on summary judgment. See Meemic, ___ F.Supp.2d at ___, 2010 *693 WL 1949750, at *13; see also Citizens Ins. Co. of Am. v. Sears Roebuck & Co., 203 F.Supp.2d 837, 852 (W.D.Mich.2002) (granting summary judgment where the plaintiff could not show that it was "more likely than not" that a grill fire occurred in the manner alleged); Pioneer State Mut. Ins. Co. v. Gen. Motors Corp., Nos. 249713, 251382, 2005 WL 995042, at *2 (Mich.Ct. App. Apr. 28, 2005) ("McGuire's conclusion is essentially a `hunch,' made on the basis of the evidence he found of an electrical failure, combined with the proximity in time to the fire to some significant repair work [the defendant] had completed on the car.").
Moreover, if Defendant's motion were denied, the jury would be "left to decide what caused [the incident] with equally supportable theories." Istvan, 2010 WL 1254844, at *6. Michigan's products-liability jurisprudence does not demand such guesswork. Summary judgment is therefore appropriate.
2. Defect
As in Meemic, McGuire's testimony and opinion regarding the alleged defect is no more compelling. McGuire testified that the fire was caused by the failure of the light switch in the aquarium hood as evidenced by arcing visible on the wiring connected to the switch inside the hood. McGuire posited that the fire was the result of the build-up of a carbon track inside the switch. Similar to Meemic, McGuire could not identify a specific manufacturing defect in the product:
Q: You have no knowledge as to how the switch failed?
A: Well, specifically, I don't know what you mean by that but switch failures
Q: You said the switch failed. Can you tell us how the switch failed
A: Well, it generates heat.
Q: how this particular switch in this particular circumstance, how it failed?
A: I don't know the specific point, whether it was the switch contact points or the terminals.
Q: Would it be fair to say you don't know specifically how the switch failed?
A: I know how. I know what the failure mode is. I don't know exactly which point.
McGuire Dep. at 67-68.
Likewise, McGuire could not identify how the carbon tracking accumulated in this specific switch:
Q: All right. How is a switch improperly manufactured that it would lead to carbon tracking?
A: At times, I've seen it where the contacts are misaligned. The contact arms could be bent, so it's not providing proper pressure, or the terminals could not be properly seated.
...
Q: Is there anything in your investigation that showed [carbon tracking] could possibly be caused by the way it was assembled into the
A: Oh, sure. The terminals are going to be connected by the installer, not by the manufacturer of the switch.
Q: And do you know whether or not that was a problem in this case?
A: It very well could be. There's no way to tell at this point.
Q: Your investigation wouldn't show whether or not you had a perfectly manufactured switch that then was improperly installed?
A: Right. That's always a possibility.
McGuire Dep. at 70-71.
Thus, McGuire has only identified arcing on the wiring to the switch, which he hypothesizes was caused by heat buildup due to carbon tracking. McGuire had no evidence *694 to support his carbon-tracking conclusion because he opined that the entire switch was destroyed in the fire. However, Bainbridge identified a contact piece of the switch that survived the fire, which he concluded was not arced or melted. See Bainbridge Dep. at 105-06. McGuire's error could perhaps be explained because his "exemplar" hood was not an exact replica; in fact, the model McGuire used had a different switch. See McGuire Dep. at 20. Bainbridge testified that he received identical switches during his review. See Bainbridge Dep. at 37-40.
In addition, "in the case of a `manufacturing defect', the product may be evaluated in against the manufacturer's own production standards, as manifested by that manufacturer's other like products." Prentis v. Yale Mfg. Co., 421 Mich. 670, 683, 365 N.W.2d 176 (1984). Even if the Court were to accept McGuire's testimony that the carbon tracking was caused by an improper installation during Defendant's manufacturing process, Plaintiff makes no effort to compare the product at issue to Defendant's manufacturing standards. See Hammons v. Icon Health & Fitness, 616 F.Supp.2d 674, 682 (E.D.Mich.2009); Johnson v. Black & Decker (U.S.), Inc., 408 F.Supp.2d 353, 357 (E.D.Mich.2005).
Considering that Plaintiff has produced no evidence of an alleged manufacturing defect[3] other than McGuire's opinions, and considering that those opinions fail to identify a specific defect in the switch or a fault in the manufacturing process, the Court finds that summary judgment is appropriate for this reason as well.
C. Negligence
Plaintiff does not differentiate its negligence claim from its implied-warranty claim. As stated above, the causation factor is lacking and Plaintiff has not sufficiently identified a defect. Moreover, Plaintiff has presented no evidence that Defendant acted unreasonably in its manufacture of the aquarium hood. Defendant is therefore entitled to summary judgment on Plaintiff's negligence claim.
V. CONCLUSION
Accordingly, and for the above reasons, IT IS HEREBY ORDERED that Defendant's motion for summary judgment [dkt. 36] is GRANTED.
IT IS FURTHER ORDERED that Defendant's motion for leave to file excess pages [dkt. 35] is GRANTED and Defendant's second-filed motion for summary judgment [dkt. 37] is DENIED as MOOT.
IT IS SO ORDERED.
NOTES
[1] The Court grants Defendant's motion for leave to file excess pages [dkt. 35], which was filed contemporaneously with its motion, and accepts Defendant's 29-page brief. Assumedly out of caution, Defendant also filed a 20-page motion and brief [dkt. 37]. As the Court has accepted the 29-page brief, Defendant's 20-page motion and brief for summary judgment [dkt. 37] is DENIED as moot.
[2] Andrea Nelson has since passed away for reasons unrelated to the fire; therefore, her testimony is not available.
[3] The Court notes that Plaintiff has put forth no argument in support of a design defect or a failure-to-warn theory, which are the other theories upon which to claim a product defect. See, e.g., Fleck, 177 F.Supp.2d at 613.
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962 F.2d 8
NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.UNITED STATES OF AMERICA, Plaintiff-Appellee,v.Robert Tyrone MORGAN, Defendant-Appellant.
No. 91-7192.
United States Court of Appeals,Fourth Circuit.
Argued: March 6, 1992Decided: May 15, 1992
1
Argued: William F. Fox, Jr., The Catholic University Of America School of Las, Washington, D.C., for Appellant.
2
Juliet Ann Eurich, Assistant United States Attorney, Baltimore, Maryland, for Appellee.
3
On Brief: Richard D. Bennett, United States Attorney, Baltimore, Maryland; Bonnie L. Gay, Executive Office for United States Attorneys, United States Department of Justice, Washington, D.C., for Appellee.
4
Before RUSSELL, Circuit Judge, WILLIAMS, United States District Judge for the Eastern District of Virginia, sitting by designation, and BLATT, Senior United States District Judge for the District of South Carolina, sitting by designation.
OPINION
WILLIAMS, District Judge:
5
Appellant Robert Tyrone Morgan ("Morgan") appeals the Memorandum and Order of the district court clarifying the intent of its sealing order and denying the appellant's motion to remove the seal.
I.
6
Robert Morgan, together with Gilbert Clark and Shadid Abdul Rahim, were convicted of armed bank robbery on December 8, 1983. Each of the defendants was sentenced by Judge Harvey to twenty-five years imprisonment. An appeal to this Court was taken by each of the defendants, and their convictions were affirmed in a per curiam opinion. United States v. Morgan, 779 F.2d 47 (4th Cir. 1985) (per curiam), cert. denied, 476 U.S. 1122 (1986).
7
The defendants then began filing a series of pro se motions with the sentencing court. Nine of these motions were addressed by the sentencing court in a March 24, 1987, Memorandum and Order. United States v. Clark, No. H-83-00351 (D. Md. Mar. 24, 1987). One of the issues raised by the motions was the discovery and production of rough notes taken by FBI Special Agent Kent Stout during or immediately after an interview with one of the government witnesses, Douglas Bell.1 The court, after reviewing the materials in camera and comparing them to the FBI 302 Report, ruled that the rough notes were "not discoverable as either Jencks or Brady materials." Id. at 8.
8
The defendants again appealed these adverse rulings. During the pendency of that appeal, the defendants filed a motion for correction or modification of the record under Fed. R. App. P. 10(e). The sentencing court granted the motion on September 15, 1987. As a result, the court placed three documents under seal and made them a part of the record: (1) a letter from Assistant United States Attorney Max H. Lauten, dated March 27, 1987, to the court; (2) the FBI 302 Report, dated August 22, 1983; and (3) the FBI agent's rough notes, dated August 22, 1983. On July 5, 1988, this Court affirmed the sentencing court's denial of the various motions, including its refusal to produce the rough FBI notes. United States v. Clark, No. 87-7188 (4th Cir. July 5, 1988) (per curiam).
9
At some point during that summer, Morgan filed an additional motion with this Court to unseal the documents. That motion was denied by an Order of this Court on August 17, 1988. In re Morgan, No. 87-8043 (4th Cir. Aug. 17, 1988). In April of 1989, all three defendants filed motions under 28 U.S.C. § 2255 to vacate their sentences. In these motions, the defendants again raised the issue of Douglas Bell's testimony and the rough FBI notes. These motions were denied by the sentencing court on September 18, 1989, and that decision affirmed by this Court on October 18, 1990.
10
In the meantime, Morgan began pursuing a separate avenue for obtaining the rough notes. In late August of 1988, Morgan filed a request for the documents under the Freedom of Information Act, 5 U.S.C. § 552 (hereinafter "FOIA"), which was eventually litigated in the United States District Court for the District of Columbia. The D.C District Court granted summary judgment for the government based on Judge Harvey's order sealing the documents. Morgan v. United States Dep't of Justice, No. 89-0527 (D.D.C. Oct. 13, 1989). On appeal the United States Court of Appeals for the District of Columbia Circuit reversed and remanded the case. Morgan v. United States Dep't of Justice, 923 F.2d 195 (D.C. Cir. 1991). The D.C. Circuit held that the mere existence of the seal was not enough to bar disclosure. Rather, it held that "the proper test for determining whether an agency improperly withholds records under seal is whether the seal, like an injunction, prohibits the agency from disclosing the records." Id. at 197. The D.C. Circuit went on to state that determining the intent of the order sealing the documents might require a motion by the Department of Justice for clarification from the court that had ordered the documents sealed. Accordingly, the D.C. Circuit gave the D.C. District Court leave to stay proceedings pending such a clarification. Id. at 198.
11
Pursuant to these directives, the government filed a motion with the sentencing court for a clarification of the order sealing the agent's rough notes. This motion was filed on or about April 29, 1991, and supplemented by an additional memorandum on June 10, 1991. Morgan, in response, filed a motion on June 24, 1991, requesting that the seal be removed. On July 3, Judge Harvey issued a Memorandum and Order granting the motion of the United States for clarification and denying Morgan's motion to remove the seal. United States v. Morgan, No. H-83-00351 (D. Md. July 3, 1991). In particular, the court clarified the issue of intent by holding that the "sealing Order, which was affirmed when the Fourth Circuit declined to unseal the notes, was intended to operate as the functional equivalent of an injunction prohibiting disclosure of the matters under seal." Id. at 5. The court went on to deny Morgan's motion to remove the seal on the ground that Morgan "has not here met his burden of showing that circumstances have changed and that reasons now exist for this Court to reconsider its prior ruling.... [M]atters today remain in the same posture as they were when this Court entered its Order of September 16, 1987 and when the Fourth Circuit refused to unseal the Agent's notes on August 17, 1988." Id. at 6.
II.
12
There is some dispute among the parties as to what is the appropriate standard of review. Appellant Morgan suggests that the majority of the issues in the instant case should be subject to de novo review. The government, in contrast, argues that the appropriate standard of review is abuse of discretion.
13
In resolving this issue, it is important to recognize what this case is, and is not, about. This Court is not called upon to determine the propriety of releasing the documents under FOIA. Morgan has a FOIA request pending only in the D.C. District Court. It would constitute a grave breach of comity for this Court to presume to decide an issue which is properly pending before a separate court and which has not properly been raised in this Court.
14
In addition, the issue before this Court is not the propriety of the district court's original decision to place the documents under seal. This Court has already ruled on the precise issues of whether the rough notes should have been discoverable and whether the order sealing the rough notes was appropriate. See United States v. Clark, No. 87-7188, slip op. at 4-5 (4th Cir. July 5, 1988) (per curium); In re Morgan, No. 87-8043 (4th Cir. Aug. 17, 1988). Any attempt to relitigate those specific issues is barred by this Court's previous rulings. See Allen v. McCurry, 449 U.S. 90, 94 (1980); Keith v. Aldridge, 900 F.2d 736, 739 (4th Cir.), cert. denied, 112 L. Ed. 2d 215 (1990).
15
The only issues before this Court are (1) the district court's determination of the original intent of the sealing order; and (2) the decision not to remove the seal. On these limited issues, the appropriate standard of review is abuse of discretion. Cf. In re Application and Affidavit for a Search Warrant, 923 F.2d 324, 326 (4th Cir.), cert. denied, 114 L. Ed. 2d 484 (1991); Baltimore Sun Co. v. Goetz, 886 F.2d 60, 65 (4th Cir. 1989); Rushford v. New Yorker Magazine, Inc., 846 F.2d 249, 253 (4th Cir. 1988).
III.
16
The Appellant's argument that the district court's determination of its intent in ordering the seal requires an intricate, multifactor analysis is mistaken. As the district court realized, the question before it was a narrow one: to determine whether the district court "issued the sealing order with the intention of prohibiting the United States from releasing the rough notes under any circumstances or whether the intention of the Court in issuing the sealing order was more limited; i.e., only to protect the rough notes from disclosure as part of the public record in the criminal case." Supplemental Memorandum of the United States, Joint Appendix, at 30-31. Obviously, no one is in a better position to determine the original intent of the sealing order than the judge who ordered the documents sealed. The appellant argues, however, that determining intent requires, what amounts to, a de novo review of the sealing order. Whatever merit such a requirement might have when a new judge is forced to divine the intent of his or her predecessor, there is little or nothing to be gained by requiring the original judge to go through these procedural hoops. Judge Harvey assumedly recalls what his original intention was, and absent strong evidence to the contrary-and no such evidence has been offered-we have no reason to question the bona fides of that recollection.
IV.
17
Similarly, we find no abuse of discretion in the lower court's decision to deny appellant's motion to remove the seal. The appellant is correct that judicial seals are generally disfavored, the presumption being in favor of public access. See Stone v. University of Md. Medical Sys. Corp., 855 F.2d 178, 180, 182 (4th Cir. 1988). As such, there is some merit to his argument that an order sealing documents should not necessarily continue in perpetuity. Cf. Rushford v. New Yorker Magazine, Inc., 846 F.2d 249, 253 (4th Cir. 1988); Olympic Refining Co. v. Carter, 332 F.2d 260, 264-66 (9th Cir.), cert. denied, 379 U.S. 900 (1964). At the same time, however, there must be some limit to a party's2 ability to repeatedly litigate the same issue. Cf. Allen v. McCurry, 449 U.S. at 94 ("As this Court and other courts have often recognized, res judicata and collateral estoppel relieve parties of the cost and vexation of multiple lawsuits, conserve judicial resources, and, by preventing inconsistent decisions, encourages reliance on adjudication."). At a minimum,3 these concerns strongly counsel against requiring the full analysis argued for by the appellant. Requiring the full complement of procedural requirements set forth in In re Knight Publishing Co., 743 F.2d 231, 235 (4th Cir. 1984), would amount to a full and complete relitigation of the issue every time a motion was made to unseal the documents. We believe a more appropriate balance was drawn by the court below. Where the motion is brought by a party that has had a full opportunity to litigate the initial imposition of the seal, the appropriate threshold question is whether or not that party has shown a change in circumstances sufficient to warrant a reconsideration of the seal. The appellant has presented no facts that would lead us to conclude that the district court's determination that the defendant failed to show a change in circumstances warranting reconsideration of the order was erroneous or an abuse of discretion.
18
Accordingly, the orders of the district court clarifying the intent of the order sealing the documents and denying the appellant's motion to remove the seal are
19
AFFIRMED.
1
These notes were incorporated into a formal report of the interview known as an FBI 302 Report. The defendants were provided copies of the FBI 302 Report prior to trial in accordance with the government's general practice in the district
2
The ability of new and different parties to raise their interests in the documents under seal presents a separate question. See Olympic Refining Co., 332 F.2d at 264-66 (reversing the refusal to vacate a prior order sealing documents so that a later litigant could have the discovery necessary to its case)
3
We do not consider the government's argument that Morgan's motion to remove the seal is barred by principles of res judicata and collateral estoppel; those arguments were neither raised in a timely manner in the court below nor addressed by that court. See, e.g., Thurston v. United States, 810 F.2d 438, 444 (4th Cir. 1987); Kinty v. United Mine Workers, 544 F.2d 706, 722 (4th Cir. 1976), cert. denied, 429 U.S. 1093 (1977)
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People v Colon (2017 NY Slip Op 01791)
People v Colon
2017 NY Slip Op 01791
Decided on March 9, 2017
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on March 9, 2017
Sweeny, J.P., Mazzarelli, Moskowitz, Kahn, JJ.
3359 2265/11
[*1]The People of the State of New York, Respondent,
v Joey Colon, Defendant-Appellant.
Robert S. Dean, Center for Appellate Litigation, New York (Hunter Haney of counsel), for appellant.
Darcel D. Clark, District Attorney, Bronx (James Wen of counsel), for respondent.
Judgment, Supreme Court, Bronx County (Troy K. Webber, J.), rendered April 23, 2015, convicting defendant, upon his plea of guilty, of criminal possession of a weapon in the second degree and sentencing him, as a second violent felony offender, to a term of seven years, unanimously affirmed.
Although we do not find that defendant made a valid waiver of his right to appeal, we find that the court properly denied defendant's suppression motion. During a lawful traffic stop, the police had, at least, a founded suspicion of criminality warranting an inquiry into whether defendant had any weapons (see generally People v Garcia, 20 NY3d 317, 324 [2012]. The officer's suspicions were based on a combination of defendant's suspicious hand movements directed at his waistband, which is a place closely associated with weapons, and the fact that, when directed to get out of the car, he turned his back toward the officer, which could reasonably be interpreted as an effort to hide something. The possibility of innocent explanations for each of defendant's actions, viewed in isolation, does not undermine the finding of founded suspicion.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: MARCH 9, 2017
CLERK
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489 F.2d 979
UNITED STATES of America, Plaintiff-Appellee,v.Robert CARMICHAEL, Defendant-Appellant.
No. 71-1492.
United States Court of Appeals, Seventh Circuit.
Argued Sept. 14, 1972.Decided Nov. 6, 1972.
Gerald M. Werksman, Chicago, Ill., for defendant-appellant.
James R. Thompson, U.S. Atty., William T. Huyck, Arnold Kanter, asst. U.S. Attys., Chicago, Ill., for plaintiff-appellee.
Before SWYGERT, Chief Judge, and KILEY and FAIRCHILD, Circuit Judges.
KILEY, Circuit Judge.
1
Appellant Robert Carmichael was indicted in five counts, each charging violation of 18 U.S.C. 1708 by his possession on five different dates of a United States Treasury Check stolen from the mail, knowing it had been stolen. He was tried by a jury and convicted on two counts and sectenced to concurrent five year terms. We reverse.
2
Before trial Carmichael filed a motion to suppress a quantity of checks seized in his automobile at the time of his arrest under an arrest warrant. The judge conducted a hearing during which a Secret Service agent, Hussey, whose affidavit was filed in sole support of the afrest warrant, testified. The agent's affidavit was based upon information given to him by an informant alleged to be reliable. The judge precluded inquiry into the reliability of the informant, found the supporting affidavit of the agent was not facially insufficient, and denied Carmichael's motion on the ground that the warrant was valid.
3
Carmichael contends that the district judge erred in denying him an opportunity to challenge the reliability of the government informant. He further contends that the judge erred in ruling that the affidavit supporting the application was sufficient on its face. We hold that the affidavit was facially insufficient and that the district judge erred in refusing to suppress the evidence. We need not consider whether the judge erred in precluding defendant's questioning of the agent concerning the reliability of the informant.
4
After the judge precluded questions concerning the informant's reliability, Carmichael's attorney stated that the 'first' reason for the motion to suppress was that 'on its face the affidavit is insufficient' as based on 'hearsay upon hearsay.' The court denied the motion to suppress urged on the basis of this 'first' reason.
5
A federal magistrate issued the warrant for Carmichael's arrest. The affidavit supporting the warrant application is:
6
And the complainant states that this complaint is based on the fact that your complainant was told by a reliable informant, whose information in the past has led to the conviction of at least six people, that T. W. ALLEN, ROBERT E. CARMICHAEL and JOHN DOE have in their possession numerous treasury and commercial checks one which is a check made payable to Photo Finishers, in the amount of $5,276.00. The confidential informant told your cumplainant that he has seen these checks in the possession of one of the defendants and that the defendant who had possession told him that the checks would be given by ROBERT E. CARMICHAEL to JOHN DOE and then to T. W. ALLEN, and that these checks were stolen from the mail, and that ROBERT E. CARMICHAEL, T. W. ALLEN and JOHN DOE would cash or cause these checks to be cashed.
7
The substance of the affidavit is that the agent's 'confidential informant' told him that he, the informant, had 'seen' the checks in possession of 'one of the defendants,' that that defendant in possession of the stolen checks told the 'confidential informant' that the checks would be given by Carmichael to 'John Doe' and then to T. W. Allen, that the checks were stolen, and that Carmichael, Allen and 'Doe' would cash, or cause the cashing of, the checks.
8
We think the affidavit is insufficient on its face to establish probable cause for Carmichael's arrest. We shall assume that the 'confidential informant('s)' reliability is sufficiently established. A common sense reading of the affidavit, Spinelli v. United States, 393 U.S. 410, 415, 89 S.Ct. 584, 21 L.Ed.2d 637 (1969), justified the magistrate in treating as probable the 'confidential informant('s)' report relating to those matters which he personally observed. We think that there was probable cause shown for the magistrate to conclude that 'one of the defendants' possessed the checks. Spinelli at 412, 89 S.Ct. 584.
9
Nevertheless, there is nothing in the hearsay information given by the 'confidential informant' that identifies Carmichael as the possessor. Carmichael is implicated in the check cashing scheme solely through the allegations of 'that defendant' whom the 'confidential informant' had seen in possession of the checks and who told the 'confidential informant' what role he said Carmichael would play in cashing the stolen checks.
10
When the affidavit of special agent Hussey was presented to the magistrate for his consideration it was patently ambiguous. Given the information provided on the face of the affidavit it is not possible to identify the 'defendant who had possession' of the checks and therefore it is not possible to establish his reliability. During the hearing on the motion to suppress the government revealed that T. W. Allen was the informant. At that point it became possible to read agent Hussey's affidavit in such a fashion that the ambiguity is somewhat dissipated. The statement can now be read to indicate that T. W. Allen told agent Hussey that he saw the checks in the possession of Robert Carmichael and that Carmichael told Allen that he would give the checks to 'John Doe' who would in turn give them to Allen. Nothing in the record before this court intimates that the magistrate was presented information at the time the arrest warrant was sought that would allow him to interpret the affidavit in the manner we have described.
11
We recognize that an affidavit 'need not reflect the direct observations of the affiant and may rest upon hearsay' so long as a substantial basis for crediting the hearsay is presented, Jones v. United States, 362 U.S. 257, 271, 80 S.Ct. 725, 4 L.Ed.2d 697 (1960); and that the affidavit must be tested by us in a 'commonsense and realistic fashion,' United States v. Ventresca, 380 U.S. 102, 108, 85 S.Ct. 741, 13 L.Ed.2d 684 (1965). We find nothing, however, in the affidavit before us which tends to show the reliability of 'that defendant' who had possession of the stolen checks. The government does not argue that this unidentified 'defendants('s)' statements were against his penal interest. See United States v. Harris,403 U.S. 573, 583, 91 S.Ct. 2075, 29 L.Ed.2d 723 (1971). The 'confidential informant('s)' report to the agent of the hearsay implication of Carmichael is of no aid to establish reliability or credibility of 'that defendant.' Spinelli, supra at 413 n. 3, 89 S.Ct. 584. The 'confidential informant' received his information indirectly and the affidavit does not show that he explained to the agent why 'that defendant' in the alleged conspiracy was reliable. Spinelli, supra at 416, 89 S.Ct. at 589. There is nothing in the affidavit which sets forth 'underlying circumstances' necessary to enable the magistrate 'independently to judge' the validity of 'that defendant('s)' observation of the criminal activity attributed to Carmichael. Nor was there any other source of information given in the affidavit to corroborate the statement of the second informant.
12
We hold, by virtue of this court's decision in United States v. Roth, 391 F.2d 507, 511 (7th Cir. 1967), that the district judge committed reversible error in denying Carmichael's motion to suppress. The arrest warrant was based on hearsay upon hearsay. Roth, supra at 511, and thus the district judge erred in admitting at trial the evidence seized incident to Carmichael's arrest under the warrant. The government does not argue that even if the arrest warant was invalid there was nevertheless fufficient evidence to support Carmichael's conviction. The conviction must be reversed.
13
Should Carmichael be tried again under the counts in the indictment before us, it may be useful for the trier of fact to have our decision on contentions-- other than that with respect to the motion to suppress-- raised by Carmichael. We see no merit in his contention that reversible error was committed in the ruling which permitted the government to cross-examine Carmichael about criminal activity on February 4, 1969, where the offense in issue was alleged to have been committed February 10, 1969. In the first place, a government witness testified that he was in Carmichael's apartment on February 4 and saw Carmichael with a check subject of Count IV of the indictment, that it was taken from an envelope containing a number of other checks and that he heard discussion that the checks were stolen and efforts would be made to cash them. This testimony tended to prove Carmichael's knowledge that the checks he was accused of possessing had been stolen.
14
Carmichael testified that he did not know how the checks got into his car. The court permitted the government to cross-examine Carmichael concerning the February 4 incidents. This ruling was not erroneous, since the examination bore on an element of the offense charged. United States v. Wall, 225 F.2d 905, 907 (7th Cir. 1955); United States v. Turner, 423 F.2d 481, 483, 484 (7th Cir. 1970); United States v. Phillips, 375 F.2d 75, 79 (7th Cir. 1967). This court's opinion in United States v. Phillips, 401 F.2d 301, 305 (7th Cir. 1968), is not to the contrary.
15
There is no merit in the contention that the court erred in permitting the agent to testify in rebuttal in view of Carmichael's denial of knowledge of the theft of the checks. See United States v. Lambert, 463 F.2d 552 (7th Cir.) decided June 12, 1972. The contention presupposes that the cross-examination of Carmichael was 'impermissible.' We have decided to the contrary.
16
Because the court erred in denying the motion to suppress the facially insufficient affidavit and erred in permitting the introduction of the evidence at the trial, the judgment is reversed and the cause remanded for further proceedings consistent with this opinion.
17
Reversed and remanded.
18
FAIRCHILD, Circuit Judge, dissents.
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334 So.2d 75 (1976)
CUNA MUTUAL INSURANCE SOCIETY, Appellant,
v.
Alexander E. ADAMIDES, Appellee.
No. 75-1379.
District Court of Appeal of Florida, Third District.
June 22, 1976.
Smathers & Thompson and Shepherd D. Johnston, Miami, for appellant.
Robert E. Brandt, Miami, for appellee.
Before HENDRY and HAVERFIELD, JJ., and CHARLES CARROLL (Ret.), Associate Judge.
*76 PER CURIAM.
Appellant, defendant below, appeals a final judgment entered by the trial court in favor of appellee, plaintiff below.
Appellee filed an amended complaint seeking to recover benefits under a credit life and disability insurance policy issued to the Miami Fireman's Federal Credit Union by appellant, CUNA Mutual Insurance Society. Appellee was an insured under the policy by virtue of his making a loan through the Credit Union. Appellant's amended answer raised as an affirmative defense a policy term excluding coverage of loss where the loss was substantially contributed to by a previously manifested injury or sickness, except where the loss occurred six months after the coverage was otherwise effective. After a non-jury trial, the trial court entered a final judgment in favor of appellee. From this final judgment, entered on July 31, 1975, appellant appeals.
Appellant argues that the trial court erred in entering judgment for appellee because his disability was materially contributed to by a sickness or injury manifest prior to coverage, and resulted in disability within six months of coverage, and, therefore, was not covered under the policy. Appellee argues that the evidence viewed in the light most favorable to him proved a cause of action against appellant under the policy, despite the affirmative defense of the exclusionary "risks not assumed" clause of the policy.
The policy provision relied upon by appellant reads as follows:
"RISKS NOT ASSUMED.
"Cuna Mutual does not assume the risk and no benefit is provided for any loss if any material contributing cause of loss was from sickness or injury which first became manifest prior to the time insurance coverage is otherwise effective under this contract, except for such loss occurring six months after coverage is otherwise effective. Coverage is otherwise effective under this contract for each loan at the date the loan is advanced ..." [Emphasis added.]
"Loss," as used in this provision, is defined in the policy as follows:
"Disability for which a benefit is payable under this contract is hereby defined as that condition of health which by reason of a medically determinable physical or mental impairment renders the member totally and permanently unable to engage in any occupation or gainful activity for remuneration or profit. A member who, because of disability, is unable to perform his usual occupation shall be disabled within the meaning of this benefit only if totally and permanently unable, because of such disability, to engage in any other occupation or gainful activity for remuneration or profit. Qualification for disability, as defined herein, shall be met only if all reasonable medical and surgical treatment which would provide a reasonable probability of removing disability has been accepted by the member."
In our opinion, whether or not the "loss" insured against, in this case the disability of appellee, occurred six months after appellee was covered under the policy was a question of fact which was for the trier of fact to determine. Where, as here, a case is tried before a trial judge without the intervention of a jury, the conclusions he reaches have the weight of a jury verdict. Further, the conclusions of the trial judge come before the appellate court clothed with the presumption of correctness, and in testing the accuracy of such conclusions the appellate court should interpret the evidence and all reasonable inferences and deductions capable of being drawn therefrom in the light most favorable to sustain those conclusions. See, e.g., Alter v. Finesmith, Fla.App. 1968, 214 So.2d 732; Highland Lakes, Inc., v. Art Present Real Estate, Inc., Fla.App. 1962, *77 147 So.2d 348; Lowery v. Rosenberg, Fla. App. 1962, 147 So.2d 321; and 2 Fla.Jur., Appeals § 346. Implicit in the final judgment, entered by the trial court in the instant case, was a finding that the "loss" suffered by appellee occurred more than six months after the policy became effective and, therefore, appellee's loss was not excluded from coverage under the policy. This finding is supported by substantial competent evidence in the record and, pursuant to the rules set forth above, should not be disturbed on appeal by us.
We have carefully considered the record, all points in the briefs, and arguments of counsel in the light of the controlling principles of law, and have concluded that no reversible error has been demonstrated. Therefore, for the reasons stated and upon the authorities cited, the final judgment appealed is affirmed.
Affirmed.
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224 N.J. Super. 105 (1988)
539 A.2d 1230
IN THE MATTER OF WILLIAM J. DEMARCO, AN ATTORNEY AT LAW OF THE STATE OF NEW JERSEY, CONTEMNOR-APPELLANT.
Superior Court of New Jersey, Appellate Division.
Submitted February 29, 1988.
Decided March 23, 1988.
*107 Before Judges PETRELLA, BAIME and ASHBEY.
William J. DeMarco, attorney for appellant William J. DeMarco (Richard J. Baldi on the brief).
W. Cary Edwards, Attorney General of New Jersey, attorney for respondent State of New Jersey. (Jessica S. Oppenheim, Deputy Attorney General, of counsel and on the brief).
PER CURIAM.
Attorney William J. DeMarco appeals from determinations finding him guilty of two separate contempts in the face of the court. R. 1:10-1. He argues on this appeal that he should *108 have been allowed to obtain an adjournment to get transcripts of the colloquy which occurred during a gambling conspiracy trial captioned State v. Carmine Mancinelli et al. He also argues that alternatively the trial judge should have handled all of the contempt proceedings in accordance with the procedures under R. 1:10-2. Finally, he argues that statements he made to the trial judge were not contumacious per se when reviewed in the context of the trial proceedings contemporaneous with the statements. On this appeal we consider the matter de novo and make independent findings. R. 2:10-4.
During pre-trial proceedings on December 9, 1986 about whether the press and the public should have access to particular documents, DeMarco challenged what he referred to as the far-reaching nature of the proposed form of order. He posed and answered a hypothetical question by saying that the judge would stop the trial and produce the documents even to school children who might be observing the trial. DeMarco stated "[t]hat's what you want to happen, obviously, because you want this order to be signed." The transcript reveals the following colloquy:
THE COURT: I repeat, Mr. DeMarco, I made no decision. I don't want this order to be signed, as you put it.
Now, please present your arguments as an attorney should present arguments.
MR. DE MARCO: I am presenting my argument.
THE COURT: I made my position. I have an open mind.
MR. DE MARCO: You say you have an open mind. It is my experience during the course of this limited pretrial proceeding that every argument defense counsel has made has been confronted with your absolute certainty about how wrong we are.
THE COURT: Mr. DeMarco, that statement borders on being contemptuous.
We'll have a recess.
MR. DE MARCO: If you feel I'm contemptuous you have a remedy.
THE COURT: Mr. DeMarco
MR. DE MARCO: If you feel I'm contemptuous
The court recessed, and advised DeMarco that it was instituting a summary contempt proceeding under R. 1:10-1 and directed him to immediately show cause why he should not be held in *109 contempt and adjudged summarily because of statements which the judge then read (presumably after having the court reporter transcribe the few pages of the record that were involved). The court noted that DeMarco had refused to calm down and said twice that if the judge felt that he was being contemptuous, he had a remedy. DeMarco then asked for a recess of about 20 to 30 minutes. The court granted the recess and DeMarco requested Joseph Afflitto, an attorney representing a codefendant, to represent him in the contempt proceeding. The court then rejected a request by counsel for a further adjournment to study the transcript and indicated that if it was a question of an hour or two to have the court reporter read back whatever transpired, he would gladly do that, but he would not adjourn the hearing beyond that. The court then stated that it would give counsel a few hours and continued the matter until 1:30 p.m. Because the issue raised by the press had not been resolved, the court decided to complete the hearing on the proposed form of order before addressing the contempt hearing. When DeMarco was heard concerning the proposed form of order, he stated:
[MR. DE MARCO:] ... The press and the Court and Greco says the press is the vehicle of the public and in that manner they get to know what's in the transcript because they use the press. But nowhere do I see any one of these cases I'm sorry, was I disturbing the Court? [Emphasis added].
THE COURT: Mr. DeMarco, what's the purpose of that statement?
MR. DE MARCO: I saw you were you just leaned back quickly. I thought I was disturbing the Court.
THE COURT: Are you baiting the Court once again, Mr. DeMarco?
MR. DE MARCO: I have never baited the Court before. I think you are baiting me now. I really can't finish.
THE COURT: There you go again.
MR. DE MARCO: I can't continue the argument. Every time you argue something
THE COURT: Please finish.
MR. DE MARCO: I really can't. I can't. I got a threat of contempt over my head. I'm making a legitimate argument to you. You're accusing me of baiting.
THE COURT: I'm listening to you.
MR. DE MARCO: I really can't continue when I get accused of baiting a Court when I'm making a legitimate argument. You know, it begins to I begin to be *110 frightened to say anything. The next thing you're going to hold me in contempt for the way I sit down.
THE COURT: You are to present your arguments.
MR. DE MARCO: I'm sorry, I cannot continue.
The summary contempt proceeding continued on December 10, 1986 and the judge included the statements made by DeMarco at the end of the morning hearing. The judge stated that he did not defer the hearing partially because DeMarco had been abusive to him one day when a "Mr. Bidnik" was in the courtroom. However, he stated that for purposes of the contempt hearing he was not considering, and would not "consider anything other than appear[ed] in [the] transcript." After this hearing was completed the judge withheld adjudication until the conclusion of the trial. There appears to have been no adjudication ever made with respect to this incident. The judge apparently took no further action with reference to the earlier remarks of DeMarco on December 9, and 10, 1986. Whether this was due to the court's acceptance of counsel's suggestion that perhaps time might cool things down does not appear in the record. The judge may have thought this was enough warning or that after reflection DeMarco might offer some form of apology for what occurred. Since there is no adjudication relative to December 9, we do not consider it. We do note that the record reflects a disrespectful and defiant attitude of counsel toward the court.
On December 15, 1986, while the judge was hearing arguments about the admissibility of transcripts of certain intercepted telephone conversations, DeMarco indicated to the judge that he would use in cross-examination the fact that there were mistakes as to dates and times. The prosecutor then argued:
MR. CAMPOLO: What I wanted to say, we even got back to format here, the format for each one of these transcripts vary significantly. There's not even any assumption that any of this introductory matter, other than the actual transcripts, will ultimately be permitted to the jury because someone who sponsors in this evidence will have to testify about the date and time.
This is a question of really housekeeping for the Court, whether you want to allow this sort of introductory information on the transcript, whether some counsel may reserve the right [to] redact it altogether.
*111 Again, I'm looking for some simplicity here, and defense counsel even concedes that we're correcting these transcripts as we go through. Some of the words are inaccurate, some of them are misspelled, there are differences of interpretation.
And for them now to argue that somehow the mistyping of the day of the week on one of these transcripts by some unknown person somehow raises a crucial issue of cross-examination, is preposterous. I think it's a fraud, and I would [Emphasis supplied].
DeMarco objected, arguing that if the prosecutor wanted to get personal, he was "fooling with the wrong crowd."[1] The following colloquy occurred:
THE COURT: I would urge counsel
MR. DE MARCO: Urge the Prosecutor, he started it and I'll finish it.
THE COURT: Please at all times conduct yourselves as attorneys. And if you avoid the use of strong language, please avoid it when referring to the argument of your adversaries.
MR. DE MARCO: I object to when I raise an argument that it be called a fraud, and I want an apology.
MR. CAMPOLO: I will not apologize.
MR. DE MARCO: Your Honor
THE COURT: We were going to proceed.
MR. DE MARCO: Wait a minute.
THE COURT: We are going to proceed.
MR. DE MARCO: I think that language was more contemptuous than what I said to this Court, and you let him get away with [it].
THE COURT: We are going to proceed. I've got to have this case completed. I'm not going to have counsel obstruct the continuation of this case.
MR. DE MARCO: Judge, you overlook if defense counsel in pursuit of a Constitutional issue uses strong language, you want to hold him in contempt. But the Prosecutor can get up and patch up his case and call the defense a fraud and you let him get away with.
I don't think you're being fair now, Judge. You have to be evenhanded to both sides, and you're not being that way.
THE COURT: All right. The Court notes that once again Mr. DeMarco is attacking the integrity of the Court; and I want a copy of this transcript.
MR. DE MARCO: See, Judge, it's another example, the State can get up and make remarks and the Court just let's it go. When defense counsel stands up and defends his clients in defense of his client's rights, you use every intimidating method you know how to try and silence the defense. [Emphasis supplied].
*112 The judge recessed the trial and requested a copy of the transcript from the court reporter.
Additional pre-trial proceedings took place on February 25, 1987 with respect to a subpoena issued at the request of a codefendant to the Superintendent of the State Police for the production of certain documents and records. The Attorney General[2] and the State Commission of Investigation had moved to quash the subpoena, in part based on lack of relevance and materiality. The judge reserved decision and gave the Deputy Attorney General until the next day to prepare affidavits concerning the difficulty of retrieving the information requested. DeMarco interjected "[h]ow about testimony rather than an affidavit?" When the judge indicated that he would accept an affidavit, the following exchange occurred:
MR. DE MARCO: How about if we don't accept an affidavit? Maybe we want to cross-examine.
Could we have the name who's going to prepare the affidavit so we can issue a subpoena so we can question him? I think we have the right.
MR. CISZAK: I imagine I will prepare the affidavit based on the facts that were given to me.
MR. DE MARCO: Then it's no one's affidavit except his affidavit. We can't ask him questions because it's going to be double hearsay.
MR. PETRINA: I can't see how Mr. Ciszak is going to tell you he is going to prepare an affidavit. An affidavit is sworn testimony, in effect.
Is he going to tell whoever is giving this what he's going to say? That person is suppose to say it, Judge.
MR. CISZAK: Hopefully counsel doesn't think that the Court is so ignorant to think that every client prepares his own affidavit and the attorney just allows him to put it in the proper form obviously for our clients. And every person who made it out of law school knows that.
MR. DE MARCO: I understood it was going to be your affidavit.
MR. CISZAK: I said I'll prepare it.
MR. DE MARCO: You're not going to sign it?
MR. CISZAK: Of course not.
MR. DE MARCO: Can you tell us whose affidavit it's going to be?
MR. CISZAK: I imagine the person who signs it.
MR. DE MARCO: I would like to know the person so I can subpoena him.
I mean Mr. Ciszak thinks this is funny. It's not funny to us.
*113 Since December 1 we tried to pick a jury. I would like to continue it.
Can we find out whose affidavit it's going to be?
THE COURT: I'm sure Mr. Ciszak doesn't think these proceedings are "funny".
MR. PETRINA: He's laughing.
THE COURT: All right. Let's proceed.
MR. DE MARCO: He's somebody from the State, it's got to be, right?
THE COURT: I'm going to take drastic action, I'm warning counsel, I'm going to take drastic action if counsel don't behave in these proceedings.
MR. DE MARCO: Is the Court threatening me? Are you threatening me, Judge? Is that a threat?
THE COURT: Let's proceed.
MR. DE MARCO: Is it a threat to me?
THE COURT: Mr. DeMarco.
MR. DE MARCO: Are you threatening me?
THE COURT: Mr. DeMarco, not a further word from you.
MR. DE MARCO: There will be further words from me in defense of my client.
There's not a judge nor a man who would quiet me in a courtroom when I'm defending a client.
THE COURT: You constantly demean the Court.
MR. DE MARCO: I demeaned you?
I think the State has served to demean you throughout these entire proceedings.
After some additional discussion about when the affidavits could be available, DeMarco informed the court that he would not be satisfied with an affidavit, but rather wanted a subpoena for the two individuals and persistently asked why they could not be brought in. The judge determined that they would meet at 11 a.m. and work through the lunch hour to accommodate DeMarco and Afflito. DeMarco replied "you're not accommodating me at all, you're accommodating an order from Judge Bissel, not me."[3]
DeMarco again requested the names of the individuals and when the Deputy Attorney General replied he was not sure who they would be, the judge determined that it would respond to *114 defense counsel's request the next day. DeMarco then remarked:
Another waste of time. So when I get the names, then I'll waste more time by issuing a subpoena and we'll have to wait until they come.
Your Honor, talking about dancing to the tune. You are dancing to the tune of the State. I can't believe an Attorney General comes in here and tells you I'm going to submit an affidavit of two people tomorrow, but I'm not going to give up their names and you're going to sustain that.
That record is going to look beautiful when someone sees that, it looks beautiful.
I have nothing further, Judge.
Thank you for the justice today.
The next day, February 26, 1987, the judge found that DeMarco's statements to the court constituted contempt of court under R. 1:10-1. An order was entered to this effect on March 6, 1987 and recited that a hearing regarding the penalty would take place upon conclusion of the trial of State v. Mancinelli, the underlying proceeding. The order specifically found the following quoted statements contumacious and attached copies of the transcript page to the order:
(1) `HE'S SOMEBODY FROM THE STATE, IT'S GOT TO BE, RIGHT?' (See attached transcript page 81, lines 22-23) [footnote omitted];
(2) `YOUR HONOR, ..., YOU ARE DANCING TO THE TUNE OF THE STATE.' (See attached transcript page 93, line 11).
(3) `THANK YOU FOR THE JUSTICE TODAY.' (See attached transcript page 93, line 20).
According to a newspaper article in The Record of March 26, DeMarco was reported as saying to a staff reporter on March 23, the final day of trial:
This genius we have on the bench couldn't give the right charge on conspiracy. He doesn't know the law of conspiracy, but he expects 12 laymen to know.
On March 25, 1987 DeMarco was ordered to show cause on April 1, 1987 why he should not be held in contempt for his conduct on December 15, 1986 and his March 23 statement to the reporter.
On April 1, 1987, apparently after the trial was concluded, the judge rejected DeMarco's request for additional time to obtain portions of the transcripts. On April 1, 1987 the court conducted the summary contempt proceedings. The statements made *115 to the court on December 15, 1986 were found to constitute contempt under R. 1:10-1. A fine of $500 was imposed with respect to that offense. In addition, the judge gave DeMarco an opportunity to address the March 6, 1987 contempt order relative to the February 25 incident. The judge reaffirmed the contempt finding in that order and imposed a $500 penalty. A judgment of contempt was entered on April 3, 1987. Payment of the fines was stayed pending determination of this appeal.
The matter of the statement of March 23 to the newspaper reporter was treated as a separate and independent matter and was referred to the Office of Attorney Ethics in Trenton for action. Although the judge could have alternatively instituted R. 1:10-2 proceedings, he expressly did not rule on that matter, and as neither that statement nor the referral is the subject of the Notice of Appeal[4] we do not pass upon DeMarco's contentions concerning the statement assertedly made to the newspaper reporter on March 23, and the subsequent publication thereof in the newspaper of March 26. The judge did not make a contempt finding with respect to that statement or consider it in his adjudication. He referred it to the Office of Attorney Ethics which presumably is acting thereon.
DeMarco argues that the judge should not have proceeded in a summary manner, and that his rights were violated when the judge proceeded under R. 1:10-1 which provides:
Contempt in the actual presence of a judge may be adjudged summarily by the judge without notice or order to show cause. The order of contempt shall recite the facts and contain a certification by the judge that he saw or heard the conduct constituting the contempt.
When a contempt is committed in the presence of the judge, he may act summarily without notice or order to show cause. In re Yengo, 84 N.J. 111, 121 (1980), cert. den. 449 U.S. 1124, 101 S.Ct. 941, 67 L.Ed.2d 110 (1981). See also Cooke v. United States, 267 U.S. 517, 534-536, 45 S.Ct. 390, 394-395, 69 *116 L.Ed. 767, 773 (1925); State v. Vasky, 203 N.J. Super. 91, 98 (App.Div. 1985); In re Hinsinger, 180 N.J. Super. 491, 495 (App. Div. 1981). Notice and an order to show cause are only required when the proceedings are under R. 1:10-2. When the proceedings are under R. 1:10-1, the judge "may act upon his own knowledge of the facts," In re Contempt of Ungar, 160 N.J. Super. 322, 332 (App.Div. 1978), however the "contemnor's right to be heard includes the right to present `proof of material facts, if any, of which the court may be unaware.'" Id. (quoting In re Carton, 48 N.J. 9, 21, 222 A.2d 92 (1966)).
Contempt has been defined as:
... a disobedience of the court by acting in opposition to its authority, justice and dignity. It comprehends any act which is calculated to or tends to embarass, hinder, impede, frustrate or obstruct the court in the administration of justice, or which is calculated to or has the effect of lessening its authority or its dignity; or which interferes with or prejudices parties during the course of litigation, or which otherwise tends to bring the authority and administration of the law into disrepute or disregard. In short, any conduct is contemptible which bespeaks of scorn or disdain for a court or its authority. [Citations omitted]. [In re Callan, 122 N.J. Super. 479, 494 (Ch.Div. 1973), aff'd 126 N.J. Super. 103 (App.Div. 1973), rev'd on other grounds 66 N.J. 401 (1975)].
Contempt in the face of the court is direct contempt. In re Yengo, supra, 84 N.J. at 123.
The essence of a direct contempt, or contempt in the face of the court, is conduct that the judge can determine through his own senses is offensive and that tends to obstruct the administration of justice. [Citation omitted]. Generally, a disruptive act in the presence of the court, such as the use of offensive words or conduct, is a direct contempt. [Citation omitted]. [Ibid.]
As noted in Yengo, even an act not committed in the presence of the court may be a direct contempt. Id. The contempts here were direct contempts cognizable by the judge under R. 1:10-1, hence there was no necessity for notice or an order to show cause.
A judge may act summarily where the contemptuous conduct occurred in his immediate presence, was personally witnessed or heard by him and created "an open threat to the orderly procedure of the court and such a flagrant defiance of the person and presence of the judge before the public." Cooke v. United States, supra, 267 U.S. at 536, 45 S.Ct. at 394, 69 L.Ed. *117 at 773. See State v. Vasky, supra, 203 N.J. Super. at 98; In re Hinsinger, supra, 180 N.J. Super. at 495. As cogently stated by Justice Handler in his concurring opinion in In re Yengo:
It has long been recognized that there are occasions when this inherent authority must be exercised both swiftly and summarily in order to ensure obedience to court orders and respect for court procedures.... The summary contempt power is integrally related to judicial self-preservation.... `The sole credible basis for the summary contempt process is necessity, a need that the assigned role of the judiciary not be frustrated....' This judicial `power is as ancient as the courts to which it is attached and "as ancient as any other part of the common law."' ...
The summary contempt power operates upon contemptuous conduct occurring `in the actual presence of a judge.' R. 1:10-1. New Jersey courts have treated the question of what constitutes a contempt in the `actual presence of the court' primarily in terms of the capacity of such conduct to undermine the court's authority and to interfere with or obstruct the orderly administration of justice. [Citations omitted]. [84 N.J. at 130-131].
DeMarco's procedural argument is that despite the judge's statements that he intended to proceed on the basis of a summary contempt under R. 1:10-1, the delay in adjudication of the penalty until the close of the trial, and the alleged consideration by the judge of matters other than the statements made in open court,[5] somehow converted the matter into a R. 1:10-2 proceeding. He further argues procedurally that he should have been allowed time to obtain transcripts of the relevant portions of the testimony. Dealing with the latter aspect first, we note that on several occasions the judge provided copies of the relevant pages of the transcript, although it was not necessary that this be done.
Moreover, we note that despite the lack of additional transcript pages, DeMarco's counsel at the hearing before the trial judge argued at length as to the surrounding circumstances at the time of his conduct. Counsel sought to justify DeMarco's statements in light of what had occurred. DeMarco neither alleges nor asserts any specific language in the transcripts *118 which in any way would affect the determination below or here. He fails to articulate in his brief how an adjournment would have benefited him in any fashion, other than by way of a mere generalization. There is no indication in the record that DeMarco was prejudiced in any fashion. He was aware that a hearing would be scheduled at the close of the criminal proceeding and was therefore free to obtain the transcripts during the ensuing weeks. He knew of the first instance on December 15, 1986. Likewise, he was given verbal notice on February 25, 1987 with respect to what had transpired on that date and written notice in the order. An order adjudicating his contempt had been entered on March 6, 1987, with the penalty aspect deferred. DeMarco apparently chose to do nothing from February 25 either until the date the order to show cause was entered or received, or even until the hearing date regarding obtaining the few additional transcript pages involved. In any event, there was no factual discrepancy and counsel was able to argue the issue thoroughly without additional transcript pages. Our thorough review of the transcripts does not demonstrate any basis for challenging the judge's determination. Indeed, the delay in the proceedings was partially as a result of counsel's argument and request.
We also note that such a delay does not automatically convert the proceeding into one requiring a hearing before another judge and the formalities under R. 1:10-2. See Kerr S.S. Co., Inc. v. Westhoff, 215 N.J. Super. 301, 305 (App.Div. 1987).[6] Here, it is obvious that DeMarco's words were spoken *119 in the presence of the judge on December 15, 1986 and February 25, 1987 and directed at him. No further evidence was needed for the judge to certify to his observations of that contumacious behavior. It is evident from the record that the statements of attorney DeMarco, who is expected to act as an officer of the court, were directed at the court, and contrary to his contention not in response to or directed at other attorneys in the case. This clearly resulted in a disruption of the proceedings by the use of improper or offensive words or conduct directed at the judge and constituted direct contempt. State v. Gonzalez, 134 N.J. Super. 472, 475 (App.Div. 1975), mod. on other grounds 69 N.J. 937 (1975). Cf. In re McAlevy, 69 N.J. 349, 351-352 (1976).
Nor does the claim that other matters were considered on April 1 have any merit. The judge made it clear that he would not consider or base his ruling on such matters. He specifically stated that the contumacious conduct consisted of DeMarco's statements to him and that he was only considering those statements. References in the March 6 and March 25, 1987 orders were made to those remarks and the order included transcript quotations and page references to the copies annexed.
The incidents involved were relatively recent and uncomplicated and treated virtually contemporaneously. DeMarco's presentation was not inhibited. He was not precluded from offering an explanation of his conduct. He could even have had the court reporter read back the few pages of transcript that were involved. This certainly would not have been difficult because the sections had already been marked and transcriptions made by the court recorder at the judge's request. The judge here properly relied on his observation of what happened in the courtroom and what was said. There was no requirement to transfer the matter to another judge. Furthermore, counsel's disagreement with the judge's characterization of the proceedings does not change an R. 1:10-1 proceeding into an R. 1:10-2 *120 proceeding. See Matter of Daniels, 219 N.J. Super. 550, 580-581 (App.Div. 1987), certif. granted 109 N.J. 496 (1987).
In summary, denial of DeMarco's request for an opportunity to obtain more complete copies of the transcripts was not a denial of due process of law. There is, of course, under the court's power to punish directly a diminishing of the "procedural due process accorded to the alleged contemnor." In re Yengo, supra, 84 N.J. at 122. Here, however, the judge below, as well as DeMarco, was fully aware of all of the material facts. Appropriate arguments concerning his state of mind could be made, and indeed were made. DeMarco had adequate notice. There was no need to further adjourn the hearing until additional transcript pages were obtained or could be obtained. No sufficient reason is even shown why the limited portions of the transcript that might have been necessary could not have been speedily obtained either during the trial or between the time that the February 25, 1987 order to show cause was signed and the April 1, hearing date.[7] It is clear from the record that DeMarco knew what he was doing, knew the consequences (on an earlier occasion he indeed twice challenged the judge to use his contempt authority if the judge thought he was being contumacious) and had sufficient recall as to what occurred.
DeMarco had a right to and received a hearing with the attendant right of allocution. See Taylor v. Hayes, 418 U.S. 488, 500, 94 S.Ct. 2697, 2704, 41 L.Ed.2d 897, 908 (1974); In re Yengo, supra, 84 N.J. at 122; In re Logan, 52 N.J. 475, 477 (1968); In re Kozlov, 156 N.J. Super. 316, 326 (App.Div. 1978), rev'd on other grounds 79 N.J. 232 (1979). Under our due process concepts it is also appropriate to allow the alleged *121 contemnor the right to be represented by an attorney, to retreat from his conduct, and to have the opportunity to correct misunderstandings on the part of the judge. In re Kozlov, supra, 156 N.J. Super. at 326. Hence, although in a direct contempt proceeding the judge is empowered to adjudicate the contemnor's conduct immediately, procedural due process is satisfied by a hearing in which the alleged contemnor is given every opportunity to place his position before the trial judge before whom the conduct occurred. In re Yengo, supra, 84 N.J. at 127. The record clearly discloses that the judge informed DeMarco virtually immediately after each incident that a hearing as to his alleged contumacious conduct would be held. The statements that had been made and formed the basis of the hearing were those made by DeMarco to the judge. There was no factual disagreement as to what was said. The hearing was to determine whether the conduct was contumacious in light of the surrounding circumstances and whether the attorney had intended to commit contempt. Our review of the record satisfies us fully that the judge properly held the contempt proceedings under R. 1:10-1 as to those matters for which he had adjudicated DeMarco in contempt.
We now turn to DeMarco's substantive claim that his comments were not contumacious per se when reviewed in the context of the proceedings. DeMarco contends that in each incident which resulted in the two contempt citations on appeal, he was only engaging in a "dialogue" with the trial judge or responding to allegations by the prosecutor that he was making fraudulent assertions. Our review of the record amply demonstrates beyond a reasonable doubt that DeMarco exhibited a pattern of abusive and unwarranted behavior directed at the trial judge. His statements far exceeded the bounds of colloquy and constituted rude, uncalled for attacks upon the objectivity and integrity of the judge, thus disrupting the trial proceedings. See Cooke v. United States, supra, 267 U.S. at 536, 45 S.Ct. at 394, 69 L.Ed. at 773; Matter of Stanley, 102 *122 N.J. 244, 253 (1986); In re McAlevy, supra, 69 N.J. at 351-352; State v. Vasky, supra, 203 N.J. Super. at 98; State v. Gonzalez, supra, 134 N.J. Super. at 475. See also R.P.C. 3.5(c) and 8.4(a) and (d).[8] The conduct displayed by DeMarco here was hardly within the bounds of appropriate vigorous representation of a client expected of a lawyer in the presentation of a matter or trial of a case. See In re Vincenti, 92 N.J. 591, 602 (1983); In re Mezzacca, 67 N.J. 387, 389-390 (1975). As stated in In re Vincenti, "`[a]n attorney who exhibits the lack of civility, good manners and common courtesy here displayed tarnishes the entire image of what the bar stands for.'" 92 N.J. at 601 (quoting In re McAlevy, supra, 69 N.J. at 352). For instance, in the incident of December 15, at the pre-trial motion the judge obviously was trying to stop an argument between the prosecutor and DeMarco. The judge had requested the attorneys to conduct themselves properly and avoid strong language in referring to their adversaries. DeMarco was not satisfied with this and proceeded to charge the judge with being unfair and even characterized his adversary's statement to him as "more contemptuous" than his own statement to the judge. Even if another attorney made such a statement directed to the court (it was not directed at the court here) that does not excuse DeMarco's earlier remarks.
The judge's integrity was also unfairly attacked by DeMarco at the February 25, 1987 court proceeding. Apparently DeMarco was displeased with the fact that the court had not ruled along the lines that he requested. We have quoted earlier in this opinion the language used by counsel. But an adverse ruling is never cause for such conduct or statements by counsel, either directed at the court or to opposing counsel.
*123 Nor is such conduct justified either by belief of the contemnor that the judge's rulings or comments are provocative, or as a reaction to an asserted erroneous ruling. In re Contempt of Carton, supra, 48 N.J. at 18-19. As the Supreme Court commented in In re Vincenti, supra, 92 N.J. at 603, "[r]espect for and confidence in the judicial office are essential to the maintenance of any orderly system of justice." Our courts have determined that any act in opposition to or which tends to lessen or bring into disrepute the court's authority or dignity is punishable by contempt. State v. Gonzalez, supra, 134 N.J. Super. at 475. Disruptive conduct is punishable by contempt proceedings. Such actions as committed here by DeMarco, viewed objectively in the context of the proceedings were indeed contumacious. In re Vincenti, supra, 92 N.J. at 600-601.
We reject as meritless DeMarco's attempt to justify his rude attack on the trial judge as a reasonable reaction to statements by either the judge or the attorney who was representing the State. The remarks were obviously addressed to the judge. They demonstrated DeMarco's persistent pattern of disrespectful, insulting behavior which constituted neither appropriate advocacy nor heat-of-trial remarks.
The judge below acted with restraint and in an effort to preserve order. He was restrained in his actions and used his summary contempt power as a last resort, after repeated warnings which were ignored. See Com. of Pa. v. Local Union 542, Intern'l Union of Oper. Engrs., 552 F.2d 498, 514 (3d Cir.1977), cert. den. 434 U.S. 822, 98 S.Ct. 67, 54 L.Ed.2d 79 (1977). We find, in the exercise of our de novo jurisdiction that the attorney's actions impacted adversely on the authority of the court and constituted contempt. See In re Yengo, supra, 84 N.J. at 122.
Accordingly, the judgments of conviction are affirmed. The stays are vacated.
NOTES
[1] The significance of the reference to "crowd" is uncertain. The element of threat is not.
[2] The Passaic County Prosecutor's office was trying the criminal case.
[3] Apparently Judge Bissel had scheduled the two attorneys to appear before him at 2:30 p.m. the next day. In any event, DeMarco's entire attitude as reflected in the exchange was unprofessional. R.P.C. 3.5(c) and 8.4(a) and (d).
[4] Appellant failed to include a copy of his Notice of Appeal in his appendix. See R. 2:6-1(a)(6). The State submitted it in its appendix.
[5] This related to an incident for which he was not adjudged in contempt, see discussion, supra at page 110, and perhaps to the statement to the reporter which was referred to the Office of Attorney Ethics, discussed at page 115.
[6] There may indeed be benefits to all concerned by proceeding cautiously. Emotions are allowed to subside and the involved individuals can consider proceeding in a different fashion than previously attempted. Moreover, interference with the attorney's handling of the case for his client is minimized. In re Contempt of Ungar, 160 N.J. Super. 322, 333 (App.Div. 1978); see Taylor v. Hayes, 418 U.S. 488, 498-500, 94 S.Ct. 2697, 2703-2704, 41 L.Ed.2d 897, 907-908 (1974); Com. of Pa. v. Local Union, 542, Intern'l Union of Oper. Engrs., 552 F.2d 498, 513-514 (3d Cir.1977), cert. den. 434 U.S. 822, 98 S.Ct. 67, 54 L.Ed.2d 79 (1977).
[7] DeMarco argues that he received the order on February 27 and only had three days to prepare for the hearing. He apparently did not count the day of receipt (a Friday) or Saturday and Sunday. However, it is also clear that the attorney had been warned on the record on each of the earlier occasions, heard the judge order copies of the transcript and even received from the judge copies of certain portions of the transcript that the judge had ordered.
[8] Compare the former Disciplinary Rule 7-106(C)(6) which even in stronger language prohibited "undignified or discourteous conduct ... degrading to a tribunal."
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876 So.2d 474 (2003)
Carolyn A. AYERS
v.
CAVALRY SVP I, LLC.
2020728.
Court of Civil Appeals of Alabama.
October 3, 2003.
*475 John Langland, Huntsville, for appellant.
Naomi A. Cohen Ivker of Zarzaur & Schwartz, P.C., Birmingham, for appellee.
THOMPSON, Judge.
This appeal arises from the entry of a summary judgment in favor of Cavalry SVP I, LLC ("Cavalry"), in an action to recover from Carolyn A. Ayers $13,543.33, plus interest and costs, allegedly due on a credit account.
The facts in the record on appeal indicate the following. A credit-card account with U.S. Bank was opened in the name of the appellant, Ayers. U.S. Bank provided credit for the purposes of allowing the cardholder to make purchases and to obtain cash advances. Ayers made purchases and obtained cash advances on the credit account and failed to pay U.S. Bank the balance on the account.[1] U.S. Bank sold the "Ayers account" to Midfirst Bank, which sought to have Ayers pay the *476 outstanding balance due on the account. Ayers failed to pay Midfirst Bank, and Midfirst Bank transferred the account to Cavalry. Cavalry sought and obtained a summary judgment against Ayers for the sum of $16,824.90, which represented an award of $13,543.33 in principal due on the account, and $3,281.57 in interest.
In her brief on appeal, Ayers contends that the trial court erred in entering a summary judgment because, she argues, 1) Cavalry failed to properly plead a cause of action in its complaint, 2) the affidavit attached to Cavalry's motion for a summary judgment contained hearsay and was not based on the personal knowledge of the affiant, and 3) Ayers presented substantial evidence of disputed material facts making the entry of a summary judgment improper. We will address these issues separately.
Ayers first argues that Cavalry's complaint failed to properly plead a cause of action and that the trial court should have dismissed the action pursuant to Rule 12(b)(6), Ala. R. Civ. P. However, Ayers filed an answer to Cavalry's complaint on February 10, 2003. Ayers filed her Rule 12(b)(6) motion to dismiss on March 4, 2003. A party must make a Rule 12(b)(6) motion "before pleading if a further pleading is permitted." Rule 12(b), Ala. R. Civ. P. Here, Ayers did not assert her Rule 12(b)(6) motion to dismiss for failure to state a claim in her first responsive pleading to the complaint. In Trotter v. Sumner, 56 Ala.App. 87, 89, 319 So.2d 284, 285 (Ala.Civ.App.1975), this court stated:
"[W]e note that defendant's motion to dismiss for failure to state a claim upon which relief can be granted was filed after his responsive pleading. While this defense, as enumerated in Rule 12(b)(6), is preserved by Rule 12(h)(2), it cannot be raised by a motion to dismiss filed subsequent to a responsive pleading. Rule 12(b), Alabama Rules of Civil Procedure."
See also Sims v. Lewis, 374 So.2d 298, 301 (Ala.1979)("The 12(b)(6) motion should not be used to test the sufficiency of a complaint after a responsive pleading has been filed."). Because Ayers's motion to dismiss was filed after her answer, which was a responsive pleading to Cavalry's complaint, the trial court did not err in denying her motion to dismiss. Rule 12(b)(6), Ala. R. Civ. P.; Trotter, 56 Ala.App. at 89, 319 So.2d at 285.
Ayers also argues that the trial court erred in granting Cavalry's motion for a summary judgment because, Ayers argues, she demonstrated that material facts were in dispute and presented substantial evidence in rebuttal to Cavalry's summary-judgment motion. Cavalry sued Ayers seeking to recover under the theory of an account stated. Ayers alleges that Cavalry failed to present the evidence necessary to sustain a summary judgment as to the elements of a cause of action for an account stated.
A motion for a summary judgment is properly granted where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Rule 56, Ala. R. Civ. P.; Bussey v. John Deere Co., 531 So.2d 860 (Ala.1988). "When the movant makes a prima facie showing that no genuine issue of material fact exists, the burden shifts to the nonmovant to present substantial evidence creating such an issue." Rutledge v. Wings of Tuscaloosa, Inc., 848 So.2d 1005, 1006 (Ala.Civ.App.2002) (citing Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794 (Ala.1989)). Evidence is "substantial" if it is of "such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance *477 Co. of Florida, 547 So.2d 870, 871 (Ala.1989).
In reviewing a summary judgment, this court must review the record in a light most favorable to the nonmovant and must resolve all reasonable doubts against the movant. Ex parte Brislin, 719 So.2d 185 (Ala.1998). "Mere conclusory allegations or speculation that fact issues exist will not defeat a properly supported summary judgment motion, and bare argument or conjecture does not satisfy the nonmoving party's burden to offer substantial evidence to defeat the motion." Blackburn v. State Farm Auto. Ins. Co., 652 So.2d 1140, 1142 (Ala.1994).
"An account stated is a post-transaction agreement. It is not founded on the original liability, but is a new agreement between parties to an original account that the statement of the account with the balance struck is correct and that the debtor will pay that amount. It is as if a promissory note had been given for the balance due.
"A prima facie case on an account stated is made when the plaintiff proves (1) a statement of the account between the parties is balanced and rendered to the debtor; (2) there is a meeting of the minds as to the correctness of the statement; and (3) the debtor admits liability. The debtor's admission to the correctness of the statement and to his liability thereon can be express or implied. An account rendered, and not objected to within a reasonable time becomes an account stated, and failure to object will be regarded as an admission of correctness of the account."
University of South Alabama v. Bracy, 466 So.2d 148, 150 (Ala.Civ.App.1985) (citations omitted).
The first element in establishing a cause of action for an account stated requires that a statement of the account be "balanced and rendered" to the debtor. In Car Center, Inc. v. Home Indemnity Co., 519 So.2d 1319, 1323 (Ala.1988), our supreme court held that a creditor had not proven a "rendering of the statement of the account" when the creditor had "no competent testimony concerning the actual mailing of the statement." The court noted that the affidavits submitted by the plaintiff in that case did not provide facts describing the plaintiff's mailing procedures or indicate that the affiant had knowledge of the plaintiff's mailing procedures. Id. at 1323.
In the instant case, there is no evidence indicating that Cavalry properly rendered the statement of the account to Ayers. The affidavit attached to Cavalry's motion for a summary judgment does not indicate that the affiant had any knowledge of the mailing procedures used with regard to sending Ayers a statement of her account. The affidavit stated, in pertinent part:
"1. I am the manager of Cavalry SPV I, LLC which is a corporation organized and existing under the laws of the State of Delaware.
"2. I have knowledge of the facts herein set forth and am duly authorized to make this Affidavit; that the claim against Carolyn Ayers is within my knowledge and is just, true and correct and that all just and lawful offsets, payments and credits have been allowed.
"3. There is now due from said debtor the PRINCIPAL sum of $13,543.33."
Cavalry attached to its motion for a summary judgment invoices that contain Ayers's address. However, that evidence alone does not establish that a statement of the account was rendered to Ayers. In Car Center, the court indicated that evidence showing that a properly addressed statement of the account with sufficient postage was sent and was not returned to *478 the sender was sufficient to presume that the addressee received the statement of the account. Id. at 1323. Cavalry did not present any evidence indicating that a statement of or a bill for the account was ever mailed, properly addressed with sufficient postage, or rendered to Ayers. Thus, Cavalry failed to present evidence in support of this first element necessary to establish a cause of action for an account stated.
An account stated also requires an express or implied agreement to pay the bill. Car Center, supra. Calvary does not allege an express agreement between the parties. In Car Center, our supreme court held that "[a]n implied agreement to pay a bill can arise only where there has been a showing that the bill was rendered and the recipient of the bill failed to object within a reasonable time." 519 So.2d at 1323. Here, Cavalry has failed to demonstrate that a bill was rendered to Ayers, and, therefore, that Ayers's agreement to pay the bill could be implied.
In Mobile Rug & Shade Co. v. Daniel, 424 So.2d 1332, 1333 (Ala.Civ.App.1983) (quoting Martin v. Stoltenborg, 273 Ala. 456, 459, 142 So.2d 257, 259 (1962)), this court noted that "`[a]n account stated is not founded on the original liability, but on the defendant's admission that a definite sum is due in the nature of a new promise, express or implied.'" In that case, the court noted that, according to an affidavit, the plaintiff sought to recover upon the original liability rather than upon a new promise by the defendant to pay the total account balance. The court noted that the evidence indicated only an original promise to pay, not a new promise to do so. Thus, the court determined that the claim in that case was in the nature of one for an open account and not for an account stated. Id. The court in that case determined that the three-year statute of limitations barred an action alleging an open account. The situation presented in the present case is almost identical to that in Mobile Rug & Shade, supra, in that the evidence indicates that Cavalry is also seeking to recover upon the original liability.
Cavalry's motion for a summary judgment might arguably be supported by substantial evidence establishing the elements of a prima facie case on a cause of action for an open account. "A plaintiff establishes a prima facie case in an action for money due on open account by presenting evidence that money was delivered to the defendant, that it was a loan, and that it has not been repaid." Livingston v. Tapscott, 585 So.2d 839, 841 (Ala.1991)(citing 58 C.J.S. Money Lent § 7 (1948)). However, Ayers asserts in her answer to Cavalry's complaint that an action seeking to recover on an open account is barred by the applicable statute of limitations.[2]See Defco, Inc. v. Decatur Cylinder, Inc., 595 So.2d 1329, 1332 (Ala.1992); § 6-2-37(1), Ala.Code 1975 (statute of limitations for cause of action alleging an open account is three years).
Because Cavalry failed to present evidence sufficient to establish a prima facie case on its claim seeking recovery on the theory of an account stated, the evidence before the trial court was insufficient to support the entry of a summary judgment. We therefore conclude that the trial court erred in entering a summary judgment in favor of Cavalry, and we remand the case for further proceedings.
REVERSED AND REMANDED.
*479 YATES, P.J., and CRAWLEY and MURDOCK, JJ., concur.
PITTMAN, J., concurs in the result.
NOTES
[1] Ayers appears to deny, in her affidavit in opposition to Cavalry's motion for a summary judgment, that she entered into an agreement "for a line of credit" with Cavalry or its predecessors in interest. However, Ayers has not denied making purchases or obtaining cash advances on the account.
[2] The relevant dates for the account at issue are unclear from the record before this court. This is a matter for the trial court to resolve.
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251 S.W.3d 267 (2007)
FORDYCE BANK & TRUST CO., Appellant,
v.
BEAN TIMBERLAND, INC., Potlatch Corporation, And Idaho Timber Corp. Of Carthage, Inc., Appellees.
No. 06-734.
Supreme Court of Arkansas.
March 1, 2007.
*269 Ronnie A. Phillips, LTD, by: Ronnie A. Phillips, Fordyce, AR, for appellant.
Walthall Law Firm, P.A., by: G. Christopher Walthall, Malvern, AR, for appellee Idaho Timber Corp. of Carthage, Inc.
Haley, Claycomb, Roper & Anderson, by: Richard L. Roper; Williams & Anderson, PLC, by: Beth M. Deere and Clayborne S. Stone, Little Rock, AR, for appellee Potlatch Corporation.
Bridges, Young, Matthews & Drake, PLC, by: Michael J. Dennis, Pine Bluff, AR, for amici curiae Arkansas Forestry Ass'n, Arkansas Timber Producers Ass'n, and Arkansas Forest and Paper Council.
Whetstone & Spears, by: Joe Woodson and Don Spears, Little Rock, AR, for amici curiae Arkansas Bankers Ass'n.
TOM GLAZE, Justice.
This appeal requires our court to determine whether appellees Potlatch Corp. ("Potlatch") and Idaho Timber Corp. ("Idaho") are buyers in the ordinary course of business under the Uniform Commercial Code (UCC). See Ark.Code Ann. § 4-9-320 (Repl.2001).
The appellant in this case, Fordyce Bank & Trust Co. ("Fordyce" or "the Bank"), issued several loans to appellee Bean Timberland ("Bean") so that Bean could purchase timber from various landowners. Bean gave the bank security interests in the purchased timber, and the proceeds from the sale of the timber were intended to repay the loans the Bank had made to Bean. The Bank, intending to perfect its security interests, filed its UCC Financing Statements with the Secretary of State's Office. However, when Bean sold the timber to the various lumber mills with which it did business, including Potlatch and Idaho, Bean failed to remit the sales proceeds to the Bank.
The Bank filed suit against Bean, Potlatch, and Idaho on February 19, 2004. In its complaint, the Bank alleged that Bean had known that the Bank had a valid first lien on the timber covered by the security interests. In addition, the Bank alleged that Potlatch and Idaho had both "negligently entered into contracts" with Bean for the purchase of timber and had "failed to exercise good faith" in those transactions. The Bank further contended that Potlatch and Idaho had been "negligent in failing to request a lien search of the UCC records [from] the Arkansas Secretary of State's Office." Had Potlatch and Idaho conducted a lien search, the Bank argued, they would have discovered the Bank's "properly recorded and perfected financing statement and security agreement granting [the Bank] a valid first lien[.]"
The case was tried at a bench trial in the Dallas County Circuit Court.[1] Following the close of the Bank's case, the trial court granted Potlatch's and Idaho's motions for *270 directed verdict on the Bank's negligence and fraud claims.[2] Following the trial, the court later entered an order in which it found that Potlatch and Idaho were buyers in the ordinary course of business, and thus they were not required to perform a lien search on the timber purchased from Bean. The trial court dismissed the Bank's complaint, and the Bank filed a timely notice of appeal.
In its first point on appeal, the Bank argues that the trial court erred in granting a dismissal on the negligence count "since the UCC does not preempt common law negligence." The gist of the Bank's argument is that the trial court improperly "based its ruling upon its perception that the UCC preempted a common law negligence action." However, it is not apparent from the arguments on the motions to dismiss that the Bank raised its preemption argument in its response to the defendants' motions; nor is it apparent in the trial court's ruling on the dismissal motions that the court ruled that the UCC preempts the common law of negligence. In ruling on the defendants' motions, the court stated as follows:
Court: [T]his is a complicated case, and it is in an area where there is obvious disagreement as to what the law allows. It is helpful to the court to hear the facts, which I have now heard, and review the law. The easy issue would be to grant a directed verdict on the theory of fraud and common law negligence.
It appears that this is a UCC case, and it will rise or fall depending on the interpretation of those provisions cited by counsel in their arguments. I am going to deny the motions for directed verdict at this time, hear all of the evidence, and then have a chance to review the law applicable to those facts.
Idaho's Counsel: Did you grant a directed verdict as to common law fraud and
Court: Fraud and common law negligence.
Idaho's Counsel: Thank you.
In order to preserve an issue for appellate review, the Bank was obligated to obtain a specific ruling on it from the trial court. This court has held that it will not review a matter on which the trial court has not ruled, and a ruling should not be presumed. Vaughn v. State, 338 Ark. 220, 992 S.W.2d 785 (1999). Moreover, the burden of obtaining a ruling is on the movant; objections and matters left unresolved are waived and may not be relied upon on appeal. Camden Community Dev. Corp. v. Sutton, 339 Ark. 368, 5 S.W.3d 439 (1999); McElroy v. Grisham, 306 Ark. 4, 810 S.W.2d 933 (1991). Here, the court simply stated that it would grant the directed-verdict motions "on the theory of fraud and common law negligence." Without a specific determination that the common-law-negligence claims were preempted by the UCC, this court cannot address the Bank's arguments on this issue on appeal.
We next turn to the Bank's second point on appeal, wherein it contends that the trial court erred in granting Potlatch's and Idaho's directed-verdict motions because there was sufficient evidence of negligence. Under Arkansas law, in order to prevail on a claim of negligence, the plaintiff must prove that the defendant owed a duty to the plaintiff, that the defendant breached the duty, and that the breach was the proximate cause of the *271 plaintiff's injuries. See Branscumb v. Freeman, 360 Ark. 171, 200 S.W.3d 411 (2004); Wilson v. Rebsamen Ins., Inc., 330 Ark. 687, 957 S.W.2d 678 (1997). In its complaint, the Bank asserted that Potlatch and Idaho were negligent in failing to request a lien search of the UCC records in the Arkansas Secretary of State's Office. In its second point on appeal, the Bank asserts that the trial court improperly granted Potlatch's and Idaho's motions for directed verdict despite testimony that Potlatch and Idaho should have known that their timber purchases from Bean were secured by financing, which would give rise to a duty to check for liens with the Secretary of State. Thus, to answer the question raised on appeal, this court must determine whether Potlatch and Idaho had a duty to perform a lien search; in turn, the answer to this question depends on whether Potlatch and Idaho were buyers in the ordinary course of business.
A buyer in the ordinary course of business is defined in Ark.Code Ann. § 4-1-201(9) (Repl.2001), in pertinent part, as follows:
"Buyer in ordinary course of business" means a person that buys goods in good faith, without knowledge that the sale violates the rights of another person in the goods, and in the ordinary course from a person, other than a pawnbroker, in the business of selling goods of that kind. A person buys goods in the ordinary course if the sale to the person comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices. . . .
(Emphasis added.)
Under Ark.Code Ann. § 4-9-320(a) (Repl.2001), a buyer in the ordinary course of business "takes free of a security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence." Thus, if Potlatch and Idaho were buyers in the ordinary course of business, they would be under no duty to perform a lien search, because even if they knew of a lien and had performed a lien search, they could nonetheless take free of the Bank's security interest.
To determine whether Potlatch and Idaho were buyers in the ordinary course of business, the court must look to see whether the sale to them "comport[ed] with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices." See § 4-9-320(a). Evidence presented at trial clearly showed that Potlatch and Idaho's practices were "usual or customary" in the timber business.
Bean sold timber to various mills as "gatewood." Gatewood is severed timber that is brought to a lumber mill's front gate by a logger; the wood is weighed and inventoried, and if the timber meets the mill's specifications, the mill will purchase it. If the wood does not meet specifications, the mill will not buy it. Numerous witnesses testified that purchases of gatewood are common in the Arkansas logging industry. For example, Robert Frey, the raw material procurement and marketing manager for Weyerhauser in Arkansas and Oklahoma, testified that the "basic way" the timber industry does business is for a mill to have written contracts with loggers or timber producers; those contracts would have specifications that set the mill's requirements for timber that it would accept.
Frey testified that lumber mills, such as Weyerhauser, would not typically go out and look at growing timber before it was cut, but would instead purchase it at the mill gates based on specifications. The gatewood system, according to Frey, was a "common way of doing business in the *272 timber industry in Arkansas," and most companies that he knew about conduct business in this manner. Further, Frey testified that Weyerhauser does not perform title searches for liens and ownership on any gatewood timber. Frey also noted that, if Bean "delivers all of his product as gatewood, that is normal if that is how he does business. There is nothing wrong with that."
Frey testified that Weyerhauser does not conduct title searches at the county courthouse or at the Secretary of State's office on gatewood; however, it would do a title search and obtain a legal description of the tract for standing timber (as opposed to the cut timber of the type Bean sold) in order to make sure that the supplier was bringing the timber that the mill had contracted for.
Mack Smith, procurement manager for Idaho, testified that he had held that position for twelve and a half years. It was not Idaho's practice to do a title or lien search on the timber it purchased unless the person from whom the mill was buying was "someone we have never heard of." Smith stated that he had never bought anything other than gatewood from Bean, and that there was nothing that Bean did that was out of the ordinary course of business.
Steve Barham, the general manager of Anthony Forestry Products Company, testified that Anthony had not checked title to any gatewood in the three and a half years he had been with the company. He said that there was nothing in the operation of Idaho's mill that was out of the ordinary course of business. On cross-examination, Barham stated that Anthony has no control in the harvesting of gatewood, and he reiterated that his company does no title searches on gatewood. He further stated that, prior to the trial, he had not even been aware that one could do a lien search with the Secretary of State's office on gatewood.
The procurement manager for Potlatch's Prescott mill, Jim Cornelius, testified that nothing in Potlatch's gatewood purchases from Bean did "anything to cause alarm." Cornelius also stated that he had no actual knowledge that the Bank had a security interest in Bean's inventory. He also declared that, in his thirty years in timber procurement, he had "never undertaken a search for security interests in gatewood," and that Potlatch "does not perform lien searches in any other state, either."
Finally, Joe Willett, procurement manager for Deltic Timber Corporation's Waldo mill, testified that he has a bachelor's degree in forestry and had worked for Deltic for twentysix years. Willett stated that the way Bean Timberland was doing business with Potlatch and Idaho Timber "sounded good to [him]," and that if Mr. Bean had been in his office, Willett would have bought his logs. Willett also noted that, despite the growing trend toward mills' purchasing gatewood, he did not believe there would be more problems of the type raised in this case. He also noted that, if mills were required to perform a lien check every time a load of gatewood came in, the mills would not take gatewood: "If lien searches were required . . ., if we had that hanging over our head every time a truckload crossed the scale, we would not let it come in."
In sum, the trial court had before it abundant evidence that purchasing gatewood without performing a lien search was the standard practice in the timber industry. Clearly, Bean's sales to Potlatch and Idaho, and Potlatch's and Idaho's practice of not conducting lien searches, "comport[ed] with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices." See § 4-93-20(a). *273 As such, the trial court correctly determined that Potlatch and Idaho were buyers in the ordinary course of business. Further, because the mills were buyers in the ordinary course of business, they owed the Bank no duty to conduct a lien search. With no duty, there could be no breach of any duty. See Mans v. Peoples Bank of Imboden, 340 Ark. 518, 10 S.W.3d 885 (2000) (if the court finds that no duty of care is owed, the negligence count is dismissed as a matter of law). Therefore, the trial court properly granted a directed verdict on the Bank's negligence claims.
Nonetheless, the Bank contends in its third point on appeal that Potlatch and Idaho could not have been buyers in the ordinary course of business because the wood they purchased from Bean was not "inventory." The Bank urges that the trial court erroneously concluded that the cut timber was "the type of inventory" covered by the buyer-in-the-ordinary-course-of-business protection. The Bank states that the UCC provides such protection in this case only if the goods can be classified as inventory.
Under the UCC, "a security agreement is effective according to its terms between the parties, against purchases of the collateral, and against creditors." Ark.Code Ann. § 4-9-201(a) (Repl.2001). In this case, the security agreement is between the Bank and Bean. That security agreement between the Bank and Bean, filed in the Secretary of State's office, was intended to secure the payment and performance of Bean's debts, liabilities, or obligations to the Bank, and it gave the Bank a security interest in cut timber.
The Bank concedes that the timber, once cut, becomes ordinary goods. See Comment to Ark.Code Ann. § 4-9-501 (Repl.2001) ("Once cut, however . . . [t] he timber then becomes ordinary goods.") (emphasis added). However, the Bank urges that the cut timber, which is "goods," is not "inventory." This distinction is important to the Bank because the Commentary to Ark.Code Ann. § 4-9-320(a) states that the protection afforded to buyers in the ordinary course of business "applies primarily to inventory collateral." See Comment to Ark.Code Ann. § 4-9-320 (Repl.2001).
All parties to this case agree that the cut timber is "goods." According to the Commentary to Ark.Code Ann. § 4-9-102 (Repl.2001), there are "four mutually-exclusive `types' of collateral that consist of goods: `consumer goods,' `equipment,' `farm products,' and `inventory.'" The Commentary continues as follows:
The classes of goods are mutually exclusive. For example, the same property cannot simultaneously be both equipment and inventory.
. . . .
Goods are inventory if they are leased by a lessor or held by a person for sale or lease. . . . Goods to be furnished or furnished under a service contract, raw materials, and work in process also are inventory. Implicit in the definition is the criterion that the sales or leases are or will be in the ordinary course of business. . . .
Comment to Ark.Code Ann. § 4-9-102 (Repl.2001). If cut timber constitutes "goods," it must be inventory if it is not consumer goods, equipment, or farm products.
Consumer goods are goods "that are used or bought for use primarily for personal, family, or household purposes." Ark.Code Ann. § 4-9-102(23) (Repl.2001). Clearly, cut timber would not fall into this category. Equipment means "goods other than inventory, farm products, or consumer goods." Ark.Code Ann. § 4-9-102(33) (Repl.2001). The Commentary notes that, generally speaking, "goods used in a business *274 are equipment if they are fixed assets or have, as identifiable units, a relatively long period of use." See Comment to Ark. Code Ann. § 4-9-102. This obviously does not describe cut timber. Finally, farm products are defined in § 4-9-102(34) (Repl.2001), as follows:
"Farm products" means goods, other than standing timber, with respect to which the debtor is engaged in a farming operation and which are:
(A) crops grown, growing, or to be grown, including:
(i) crops produced on trees, vines, and bushes; and
(ii) aquatic goods produced in aquacultural operations;
(B) livestock, born or unborn, including aquatic goods produced in aquacultural operations;
(C) supplies used or produced in a farming operation; or
(D) products of crops or livestock in their unmanufactured states.
Again, cut timber does not fall within any of these descriptions. Because timber is "goods," but it is not consumer goods, equipment, or farm products, then logically it must be inventory. Inventory means "goods, other than farm products, which . . . are held by a person for sale or lease or to be furnished under a contract of service; . . . or . . . consist of raw materials, work in process, or materials used or consumed in a business." Ark.Code Ann. § 4-9-102(48)(B) & (D) (Repl.2001). The cut timber at issue in this case was held by Bean for sale to Potlatch and Idaho; therefore, the timber certainly meets the definition of inventory.
The Bank nonetheless urges that cut timber is not inventory because, if it is not, then Potlatch and Idaho are not entitled to the protections afforded to buyers in the ordinary course of business. However, although the Bank cites several cases from other jurisdictions that describe inventory as usually consisting of merchandise, the Bank offers no authority to the effect that cut timber cannot constitute inventory.[3] Accordingly, we hold that the trial court correctly concluded that the cut timber at issue in this case is "inventory," and Potlatch and Idaho are buyers in the ordinary course of business.
Finally, the Bank urges that the provisions of the UCC giving a safe harbor to buyers in the ordinary course of business are inapplicable to option contracts.[4] The Bank urges that the contracts Bean had with Potlatch and Idaho were option contracts, and that the UCC does not apply to option contracts. However, the record reveals that the Bank never raised this argument before the trial court. Consequently, it is not preserved for our review. This court has made it abundantly clear that it will not consider an argument raised for the first time on appeal. See, e.g., Henyan v. Peek, 359 Ark. 486, 199 *275 S.W.3d 51 (2004); Bailey v. Delta Trust & Bank, 359 Ark. 424, 198 S.W.3d 506 (2004).
Affirmed.
NOTES
[1] Bean, which went into bankruptcy at some point prior to the filing of the lawsuit, filed an answer in which it denied having perpetrated a fraud against the Bank, but admitted that it had defaulted on the notes and that the Bank should be "entitled to proceed with liquidation of any collateral which is security for debt owed by Bean Timberlands, Inc." Bean has not filed a brief in this appeal; the issues on appeal are solely related to the Bank's claims against Potlatch and Idaho.
[2] Although the trial court and counsel refer to the defendants' motion for directed verdict, because this was a bench trial, the motion made was one to dismiss, and we will treat it as such. See Ark. R. Civ. P. 50(a) (2006).
[3] The Bank cites several cases for the proposition that the purpose of the buyer-in-the-ordinary-course-of-business provision is for the protection of purchasers who buy from merchants in the ordinary course of business. However, none of the cases cited by the Bank hold that timber cannot be inventory. See Muir v. Jefferson Credit Corp., 108 N.J.Super. 586, 262 A.2d 33 (1970) (sale of an automobile); Cunningham v. Camelot Motors, Inc., 138 N.J.Super. 489, 351 A.2d 402 (1975) (sale of an automobile); Commercial Credit Equip. Corp. v. Bates, 154 Ga.App. 71, 267 S.E.2d 469 (1980) (sale of a tractor); Fleet Capital Corp. v. Yamaha Motor Corp., USA, 2002 WL 31174470 (S.D.N.Y.), 48 UCC Rep. Serv.2d 1137, 2002 WL 31174470 (2002) (sale of a golf cart); Kuemmerle v. United New Mexico Bank, 113 N.M. 677, 831 P.2d 976 (1992) (sale of inventory from a grocery store).
[4] An option contract is essentially "a contractual obligation to keep an offer open for a specified period, so that the offeror cannot revoke the offer during that period." Black's Law Dictionary 1127 (8th ed.2004).
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Opinion filed February 7, 2019
In The
Eleventh Court of Appeals
__________
No. 11-18-00093-CR
__________
CRISTOBAL GONZALES, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 106th District Court
Dawson County, Texas
Trial Court Cause No. 17-7784
MEMORANDUM OPINION
The jury convicted Cristobal Gonzales of the offense of sexual assault, found
both enhancement allegations to be true, and assessed punishment at confinement
for life. We affirm.
Appellant’s court-appointed counsel has filed in this court a motion to
withdraw. The motion is supported by a brief in which counsel professionally and
conscientiously examines the record and applicable law and concludes that the
appeal is frivolous and without merit. Counsel has provided Appellant with a copy
of the brief, a copy of the motion to withdraw, and a copy of both the clerk’s record
and the reporter’s record. Counsel advised Appellant of his right to review the record
and file a response to counsel’s brief. Counsel also advised Appellant of his right to
file a petition for discretionary review with the clerk of the Texas Court of Criminal
Appeals seeking review by that court. See TEX. R. APP. P. 48.4, 68. Court-appointed
counsel has complied with the requirements of Anders v. California, 386 U.S. 738
(1967); Kelly v. State, 436 S.W.3d 313 (Tex. Crim. App. 2014); In re Schulman, 252
S.W.3d 403 (Tex. Crim. App. 2008); and Stafford v. State, 813 S.W.2d 503 (Tex.
Crim. App. 1991).
Appellant has not filed a response to counsel’s Anders brief. Following the
procedures outlined in Anders and Schulman, we have independently reviewed the
record, and we agree that the appeal is frivolous and without merit.1 We note that
no objections were preserved for review and that the evidence presented at trial
revealed particularly heinous facts.
We grant counsel’s motion to withdraw and affirm the judgment of the trial
court.
PER CURIAM
February 7, 2019
Do not publish. See TEX. R. APP. P. 47.2(b).
Panel consists of: Bailey, C.J.,
Stretcher, J., and Wright, S.C.J.2
Willson, J., not participating.
1
We note that Appellant has a right to file a petition for discretionary review pursuant to TEX. R.
APP. P. 68.
2
Jim R. Wright, Senior Chief Justice (Retired), Court of Appeals, 11th District of Texas at Eastland,
sitting by assignment.
2
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697 F.2d 805
UNITED STATES of America, Plaintiff,v.Steven VAGUE, Defendant.Appeal of Robert DE MEO, Respondent-Appellant.
No. 82-1666.
United States Court of Appeals,Seventh Circuit.
Argued Nov. 9, 1982.Decided Jan. 18, 1983.As Modified March 8, 1983.As Amended on Denial of Rehearing and Rehearing En Banc May 8, 1983.
William M. Doty, Jr., Russo, Doty & Associates, Chicago, Ill., for defendant.
Susan Bogart, Asst. U.S. Atty., Dan K. Webb, U.S. Atty., Chicago, Ill., for plaintiff.
Before ESCHBACH and POSNER, Circuit Judges, and GRANT,* Senior District Judge.
POSNER, Circuit Judge.
1
This appeal from a judgment of civil contempt against attorney Robert De Meo brings up to us a question of first impression: whether a federal district judge has the power to compel, on his own initiative, a criminal defendant's attorney to return part of the legal fee that the attorney collected from the defendant, on the ground that the fee was exorbitant.
2
A federal grand jury indicted Steven Vague and Gerald McDermott for possession of, and conspiracy to possess, goods stolen from O'Hare Airport in Chicago. Vague was 23 years old and lived with his parents. The family hired De Meo, a member of the Illinois bar, to represent Steven. The indictment had been returned on December 23, 1980; after some procedural skirmishing both defendants decided to plea bargain; and on March 16, 1981, Vague pleaded guilty to two counts of the indictment. Sentencing was set for April 23.
3
In reading the presentence report the district judge noticed among Vague's liabilities a $12,000 item described as Mr. De Meo's fee in the case. According to the report all but $1,000 had been paid. At the beginning of the sentencing hearing the district judge asked De Meo to explain the fee. De Meo replied that he had set it on the assumption that the case would go to trial, and under prodding from the judge conceded that therefore the fee should be reduced. The judge adjourned the sentencing hearing to May 12 to give De Meo time to think about a suitable reduction.
4
At the reconvened hearing De Meo said he had decided to reduce his fee to $8,000, but the judge was not satisfied and proceeded to question De Meo, Steven Vague, Vague's father, and the assistant U.S. attorney who had handled the case against Steven--all of whom were present for the sentencing--concerning De Meo's work on the case. The judge reserved decision on the fee and then sentenced Vague (to 90 days on work release followed by five years on probation).
5
The fee order was entered later. 521 F.Supp. 147 (N.D.Ill.1981). The judge found that De Meo had put in at most 40 hours of work beneficial to his client, of which about two-thirds had been spent in listening to tape recordings of an electronic surveillance, and that De Meo's work had been competent but not outstanding. According to the presentence report McDermott's lawyer had charged his client only $1,250. The judge concluded that the maximum reasonable fee for De Meo's representation of Vague was $2,500, and ordered De Meo to return the difference between that amount and what he had already been paid. De Meo refused. The judge adjudged him in civil contempt and De Meo has appealed from the judgment. The Department of Justice has filed a brief on behalf of the district judge.
6
In refusing to reduce his fee below $8,000, De Meo took the position that his fee arrangements with his client were none of the district judge's business unless and until his client complained--and neither Steven Vague nor his father (who apparently is footing the bill) has complained. That position is untenable. Canon 3(B)(3) of the Code of Judicial Conduct for United States Judges provides that a federal judge "should take or initiate appropriate disciplinary measures against a judge or lawyer for unprofessional conduct of which the judge may become aware," and section 2-106(a) of the Illinois Code of Professional Responsibility provides that "a lawyer shall not enter into an agreement for, charge, or collect an illegal or excessive fee." This prohibition, which obviously establishes a category of "unprofessional conduct," is not limited to contingent-fee agreements or to fees payable by children or others who cannot make enforceable contracts. Applied to a freely bargained fixed fee such as De Meo's for representing Steven Vague, the prohibition may seem paternalistic or worse, but its application even to a fixed-fee contract with a competent adult cannot be questioned after In re Kutner, 78 Ill.2d 157, 35 Ill.Dec. 674, 675-76, 163-64, 399 N.E.2d 963, 964-65 (1979). Although the federal courts are not bound to apply state rules of professional ethics to lawyers practicing before them, Theard v. United States, 354 U.S. 278, 77 S.Ct. 1274, 1 L.Ed.2d 1342 (1957), we may assume without deciding that they would apply the Illinois rule as interpreted in Kutner, and therefore that when the district judge discovered that De Meo had charged a fee that apparently violated section 2-106 he was duty-bound to take some action.
7
But the question is whether he took the right action. The Commentary to Canon 3(B)(3) suggests that he should have reported the matter to the ethics committee of the Illinois bar or the Executive Committee of the United States District Court for the Northern District of Illinois, in which are vested as we shall see the district court's disciplinary powers. The district judge did neither. He postponed sentencing till after a hearing on the alleged ethical violation and then ordered the lawyer to disgorge the fruits of the violation.
8
If he had not discovered the alleged violation until after he sentenced Vague and thereby terminated the criminal case, the judge could not have ordered De Meo to return a portion of the fee. He would have lost jurisdiction over the criminal case and would have had no authority to start a new proceeding against De Meo. See Matter of Innkeepers of New Castle, Inc., 671 F.2d 221, 230 (7th Cir.1982). Even if the judge had discovered the alleged violation before imposing sentence on Vague, if he had done nothing at all about it till after the case was closed probably it would then have been too late for him to do anything. Cf. Brown v. Watkins Motor Lines, Inc., 596 F.2d 129 (5th Cir.1979). Only the judge's action in postponing sentencing till after he had investigated the fee question gives his order of restitution the appearance of being ancillary to the criminal proceeding, for it was the postponement that enabled him to act in the fee matter before imposing sentence. But the power to order restitution of an excessive legal fee should not depend on whether the restitution proceeding begins before or after the sentence is imposed. It would be inconsistent with the spirit of the Sixth Amendment and the Speedy Trial Act to encourage a district judge as in this case to postpone sentencing in order to deal with collateral matters.
9
By shearing the case of the accidental feature that the judge discovered and investigated the alleged unethical conduct before imposing sentence we bring into focus the principal objection to his action--it cast him in the role of a prosecutor. No one complained to him about De Meo's fee. The judge decided there might be a violation of the code of ethics, conducted the examination of De Meo and other witnesses, determined that a violation had in fact occurred, and prescribed the remedy. He assumed the role that the Vagues' lawyer would have played had they sued for restitution of the excessive fee paid De Meo.
10
There would have been no mixing of judicial and prosecutorial functions if the judge had simply referred the matter to an ethics committee. If the committee had found a violation, De Meo could have sought judicial review, and in the review proceeding the lawyer for the committee would have played the same role that a government lawyer plays in the appeal of a criminal case. As the matter was handled the district judge took the place of the committee. In representing the district court in this court, the Department of Justice is representing the only adversary to Mr. De Meo.
11
Prosecutorial and adjudicative functions are often combined in the administrative process--the Federal Trade Commission, for example, issues complaints and then adjudicates them, see 15 U.S.C. Sec. 45(b). But such a combination is alien to traditional conceptions of the federal judiciary, and not only because a federal judge may not sit in a case in which he is a party. 28 U.S.C. Sec. 455(b)(5)(i); Code of Judicial Conduct for United States Judges, Canon 3(C)(1)(d)(i). A federal judge may not insist that a criminal or civil proceeding be begun or continued. United States v. Cox, 342 F.2d 167, 171 (5th Cir.1965); Webster Eisenlohr, Inc. v. Kalodner, 145 F.2d 316 (3d Cir.1944). "The judicial power is limited to deciding controversies. That has been its function historically; that is its function under the Constitution of the United States. No doubt a great deal goes on in the world which ought not to go on. If courts had general investigatory powers, they might discover some of these things and possibly right them. Whether they would do as well in this respect as officers or bodies expressly set up for that purpose may be doubted, but until the concept of judicial power is widened to something quite different from what it now is courts will better serve their public function in limiting themselves to the controversies presented by parties in litigation." Id. at 319-20.
12
It is true that when a contempt of court is committed in his presence, a federal judge is allowed to prosecute the violator, determine the merits of the alleged violation, and punish the violator. See Rule 42(a) of the Federal Rules of Criminal Procedure; United States v. Moschiano, 695 F.2d 236, 250-252 (7th Cir.1982). But that is a situation where the judge must act immediately to uphold the authority of the courts. There was no comparable exigency here; the matter could have been referred to an ethics committee. It is also true that a federal court of appeals can "take any appropriate disciplinary action against any attorney who practices before it for conduct unbecoming a member of the bar," Fed.R.App.P. 46(c), even if there is no complaint; that in such a case we are both prosecutor and judge; and that restitution could be an appropriate method of discipline. But the power granted by Rule 46(c) is granted to the court, not to an individual judge. The district court has similar powers, but, significantly, the General Rules of the United States District Court for the Northern District of Illinois vest the court's disciplinary powers not in one judge but in the court's Executive Committee, see Rule 3.51(A), composed of the chief judge and the next four most senior active judges, Rule 1.02(C)-(E). Rules 3.55-.57 set up elaborate procedures for disciplinary proceedings, and Rule 3.55(B) provides that "the Executive Committee may appoint the United States Attorney or any other attorney to prosecute disciplinary matters before it." And restitution is not allowed as a sanction. See Rule 3.54(A).
13
This was not an authorized disciplinary proceeding, and it was not a case where even though there is no dispute over fees the judge is required to take some judicial action--approve a class-action settlement, or approve the distribution of a fund in the court's possession--before a fee can lawfully be paid to the lawyer. See, e.g., Prandini v. National Tea Co., 557 F.2d 1015, 1020-21 (3rd Cir.1977). A judge cannot be made to approve an unethical transaction, but the district judge in this case was not asked to do any such thing; he was just asked to decide Steven Vague's punishment for a crime. To reach the fee question the judge had to start a separate proceeding.
14
Rosquist v. Soo Line R.R., 692 F.2d 1107 (7th Cir. 1982), an appeal from an order by the same district judge, is distinguishable. A man and his two children brought a personal injury suit. After entry of judgment on the jury's verdict in their favor, their lawyer petitioned the court to direct payment to him on one-third of the net amount of the judgment, pursuant to his contingent-fee agreement with the father. The district judge appointed a guardian ad litem for the children, and later decided not to allow the father's lawyer to get the full agreed-upon fee. We upheld this decision. Although the guardian did not object in the district court to the fee award, he argued that he did not think it necessary for him to do so since the judge had already expressed his concern with the size of the fee, and in this court, the guardian vigorously defended the judge's action, which had had the effect on increasing the amount of the judgment available for the children. Thus there was a controversy between the lawyer and a party, not just, as here, between the lawyer and a judge--the Vagues have yet to raise a peep about the fee that the district judge has so vigorously denounces as excessive. Cf. Hoffert v. General Motors Corp., 656 F.2d 161, 164 (5th Cir. 1981). Moreover, in Rosquist the district judge was being asked to approve a fee award out of a fund in the court's control, the judge was thus required to take some action--and he could not be forced, as we have pointed out, to take an unjust action. Here he was not asked to do anything with reference to fees. Also, in Rosquist the judge's intervention was on behalf of children--seriously injured children, to boot--and there is a long equity tradition of regarding child litigants as wards of the court, to be treated more protectively than adult litigants. Steven Vague is an adult. Finally, Rosquist was a civil case and this is a criminal case. The intervention of a federal judge in the fee arrangements between a criminal defendant and his lawyer could reduce the ability of such defendants to obtain the effective assistance of counsel to which the Sixth Amendment entitles them.
15
So we cannot find any basis for what the judge did in this case--and lest this seem a timid and paltry ground for our reversing him we add that we think it a mistake to graft onto a lawsuit an issue that the judge is neither asked nor required to resolve. That not only makes federal litigation even more complicated than it already is but casts the judge in the role of a prosecutor when there is the simple alternative of reference to an ethics committee. This is a matter of particular concern in a criminal case, for reasons already indicated. The distinguished district judge in this case, though displaying a praiseworthy concern with preventing unethical conduct, exceeded his power when he ordered De Meo to make restitution, and the judgment of contempt for disobeying that order is therefore
16
REVERSED.
GRANT, Senior District Judge, dissenting:
17
I must respectfully dissent from the majority decision in this case, believing as I do, that the distinguished trial judge properly and responsibly acted within his discretion in supervising the conduct of a member of the bar appearing before the court, and by compliance with the provisions of Canon 3(B)(3) of the ABA Code of Judicial Conduct, which reads:
18
A judge should take or initiate appropriate disciplinary measures against a judge or lawyer for unprofessional conduct of which the judge may become aware.
19
The majority opinion concludes that Judge Grady exceeded the bounds of this judicial authority, and that he should have referred the issue either to the Illinois Bar Ethics Committee or the Executive Committee of the United States District Court for the Northern District of Illinois. (At p. 807). However, nowhere is there any clear directive or procedure, nor is there any caselaw from this Circuit, mandating such action. The commentary to Canon 3(B)(3) itself indicates that "[d]isciplinary measures may include reporting a lawyer's misconduct to an appropriate disciplinary body." (emphasis added).
20
Judge Grady, in a very scholarly Memorandum Opinion, United States v. Vague, 521 F.Supp. 147 (N.D.Ill.E.D.1981), outlined the basis upon which he concluded that he had the right, the duty and the obligation to investigate and prevent this fee gouging. This appears to be a matter of first impression in the Circuit but, as Judge Grady points out, other circuits have examined and sustained a trial court's right to supervise attorney's fees. See Coffelt v. Shell, 577 F.2d 30 (8th Cir.1978); In re Michaelson, 511 F.2d 882, 888 (9th Cir.), cert. denied, 421 U.S. 978, 95 S.Ct. 1979, 44 L.Ed.2d 469 (1975); In re Silver, 508 F.2d 647 (9th Cir.1974); Cappel v. Adams, 434 F.2d 1278, 1280 (5th Cir.1970). Since Judge Grady's district court decision, Senior Circuit Judge Fairchild, concurring in another case in this Circuit, wrote:
21
In my opinion, a court has some degree of supervisory power over attorney's fees charged for services in a case before the court. The power is derived from the relationship between the court and its officers ...
22
In The Matter of Innkeepers of New Castle, Inc., 671 F.2d 221, 232 (7th Cir.1982).
23
In a later case, Rosquist v. Soo Line R.R., 692 F.2d 1107 (7th Cir.1982), this Court sustained Judge Grady's reduction of attorney fees. In that case, as here, the adult parties to the fee arrangement had not objected to the amount of fees. The District Court sua sponte, raised and pursued the subject of the amount of the fee awarded.
24
The supervision of attorneys before the court is a discretionary function of the trial court, and the decision of the trial court in such a function can be reversed only upon a showing of abuse of that discretion. Judge Grady acted very reasonably and very responsibly in questioning the fee exacted in this case, and inquiring into its continued validity after the plea bargain. There was more than ample precedence for his decision. There is no clear mandate by the Code of Judicial Conduct to refer the incident to others, but only the comment that he "may" do so. It was an alternative that he might have chosen but, rather, he opted to exercise his discretion by taking appropriate action.
25
I find no abuse of discretion by Judge Grady. I would affirm his judgment.
*
Of the Northern District of Indiana
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480 F.3d 591
José LÓPEZ, Petitioner, Appellant,v.Commonwealth of MASSACHUSETTS and Page True, Warden, Sussex State Prison, Respondents, Appellees.
No. 06-1663.
United States Court of Appeals, First Circuit.
Heard January 9, 2007.
Decided March 27, 2007.
Mary A. Azzarito with whom Benjamin D. Entine and The Law Offices of Benjamin D. Entine, J.D., Ph.D were on brief for appellant.
Scott A. Katz, Assistant Attorney General, Criminal Bureau, with whom Thomas F. Reilly, Attorney General, was on brief for appellees.
Before BOUDIN, Chief Judge, LYNCH and LIPEZ, Circuit Judges.
BOUDIN, Chief Judge.
1
This is an appeal by Jose Lopez, a state prisoner, from the denial by the federal district court of his habeas corpus petition. The central issue concerns the delayed disclosure to Lopez of information helpful to his defense. We recount briefly the factual background and prior proceedings, reserving certain details for later discussion.
2
Lopez met Maria Rodriguez in July 1993 and, soon thereafter, began to live with Rodriguez and her two sons in Haverhill, Massachusetts. Lopez and Rodriguez quarreled and she obtained a protection order against him but she also allowed him on occasion to stay at her apartment. On June 28, 1994, they quarreled again after Rodriguez was paid to enter into a sham marriage with a man who sought U.S. citizenship.
3
Lopez left the apartment after this quarrel but returned early in the morning on June 29. In the afternoon of the 29th, Rodriguez left the apartment, leaving Lopez to watch after her son Danny, age seven, who was then playing at a neighbor's house. Later in the afternoon, Lopez picked up Danny in his truck. Lopez returned to the apartment in the evening without Danny and said he did not know where Danny had gone.
4
On June 30, police searched an apartment that Lopez had visited on the afternoon Danny had disappeared and recovered certain items, including pants that Lopez had been wearing on the prior day which were now wet. From his truck, they recovered a piece of rope. On the same day, Lopez was arrested.
5
Danny's body was discovered at a salvage yard in Haverhill on July 8, 1994, in the trunk of a white car that was marked to be destroyed. A 100-pound transmission had been used to weight down Danny's body, and rope was wrapped around his neck and tied to the hinges of the trunk. Lopez, the police learned, had visited the yard about 10 days before, looking for a transmission, and had been directed to the area where the body was thereafter found.
6
Lopez was tried for Danny's murder and for kidnapping. In addition to the evidence described above, the Commonwealth showed by medical testimony that Danny had died around the time of his disappearance and that paint smears from a screwdriver found in Lopez' truck were consistent with paint on the car in which Danny was found, that two sets of fibers linked Danny to Lopez' truck, and that Lopez' pants contained white paint chips, iron and rust stains and also red fibers that matched those on Danny's shirt.
7
Julia Diaz, a friend of Rodriguez' who was acquainted with Lopez, testified that Lopez had told her that, if Rodriguez left him, he would "hurt [Rodriguez] where it hurts the most." According to Diaz, Lopez told her a story about a couple "having problems," which led the man to hide the woman's children for a few days, returning the children only once the couple "got back together."
8
The Commonwealth also presented testimony from Angel Miranda, Lopez' cellmate during his wait for trial. Miranda testified that Lopez had confessed to Miranda that he (Lopez) had offered Danny "ten dollars, driven him to a junkyard, strangled him with a brown towel until he was unconscious, and placed him inside the trunk of a car `marked to be crushed,' with a transmission on top of him." Commonwealth v. Lopez, 433 Mass. 406, 742 N.E.2d 1067, 1070 (2001).
9
Lopez did not testify but, through other witnesses, sought to establish that he had been close to and cared about the boys; that without Danny he (Lopez) had been seen at a number of places and spent time with various individuals on the afternoon of the disappearance; that he worked with cars and patronized the junkyard in question on other occasions; and (through an expert) that the state's forensic evidence — paint, rust and fiber — was not conclusive.
10
One other line of evidence offered in Lopez' defense is directly pertinent to this appeal. Lopez' trial had begun on July 12, 1996, and the prosecution's case in chief had ended on July 17. On July 18, when the defense began to present its case, the prosecutor, Kevin Mitchell, learned from Massachusetts State Police Sergeant John Garvin that a Haverhill police officer had received a phone call on July 17 from one John Roche, who had information regarding Lopez' case. Mitchell directed Garvin to create a report summarizing the call and upon receipt gave the report to Lopez' counsel.
11
Roche testified on July 23, 1996, as a defense witness, that he lived on a road abutting the salvage yard and that he had observed a suspicious truck on the road in the last week of June 1994. There were three people in the truck, one of whom was "stocky, bald and Spanish." Roche also said that he had told the Haverhill police of this fact on July 3, 1994, and had recontacted the police during the trial to repeat this information because they had apparently not followed up on it.1
12
Ronald Parolisi, captain of the Haverhill police, then testified that the person described by Roche "sounded like a local person that [the police] know as Kojak," who was suspected of dealing drugs, and that Kojak had not been a subject of the murder investigation. In his closing, Lopez seized on Roche's and Parolisi's testimony, suggesting that Kojak — perhaps along with Rodriguez — had killed Danny and disposed of the body.
13
The jury convicted Lopez of both murder and kidnapping, the former resulting in a mandatory life sentence. See Mass. Gen. Laws ch. 265, § 2 (1994). Lopez then sought a new trial based on allegedly new evidence, specifically, that "Kojak" was a drug dealer named Juan Garcia, that Roche had now identified a photograph of Garcia as one of the men he had seen in the truck near the junkyard, and that — to Lopez' own knowledge — Garcia had supplied drugs to Rodriguez and had vowed to have revenge against Lopez after a fight between Garcia and Lopez.
14
The trial judge denied the new-trial motion, saying that he did not see "a substantial risk that, [if] the jury [were] exposed to [the Garcia-Kojak] evidence, [it] would have reached a different conclusion."2 See Lopez, 742 N.E.2d at 1074. The Supreme Judicial Court affirmed, saying that there was "no evidence" that Garcia was involved in Danny's murder, that Roche had been vague about when he saw Garcia, and that the only link of Garcia to the crime was Lopez' own self-serving affidavit. Id. The decision concluded:
15
Merely introducing another possible suspect, without substantial admissible evidence that this person, and not the defendant, may have committed the crimes, does not warrant a new trial. Here, the possibility of Garcia as an alternate suspect was presented to some extent at trial, and rejected by the jury. The little additional and generalized information contained in the defendant's postconviction affidavits casts no real doubt on the validity of the jury's verdicts.
16
Id. at 1074-75 (footnote omitted).
17
Lopez then filed a petition for habeas corpus in the federal district court including a claim that the Kojak evidence had been wrongfully withheld by the police in violation of the Brady doctrine, see Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), and the district court ordered an evidentiary hearing. Lopez v. Massachusetts, 349 F.Supp.2d 109, 126 (D.Mass.2004). At the four-day hearing, there was testimony from Roche, Lopez, Garcia, trial prosecutor Kevin Mitchell, and Haverhill police officer Todd Smith.3
18
At the close of the hearing, on March 1, 2006, the district court judge ruled from the bench. He denied the petition, saying inter alia
19
• that he largely credited Roche's testimony, although he thought that Roche's identification of Garcia as the man in the truck may have resulted from a suggestive identification process by the defense;
20
• that he was not persuaded by Lopez [apparently referring to Lopez' attempt to link Garcia to Rodriguez and Lopez' claim of a prior quarrel between him and Garcia];
21
• that he could not conclude "that any of the facts upon which [the state courts had] based their legal rulings were unreasonable as a matter of law"; and
22
• that Lopez had had it within his knowledge to provide the information needed to pursue "any additional follow-ups" [apparently meaning that when Kojak's name first surfaced, Lopez could have made the connection and offered the exculpatory information about drug dealing and the alleged quarrel].
23
The district court granted a certificate of appealability, 28 U.S.C. § 2253(c) (2000); Fed. R.App. P. 22(b)(1), and Lopez appealed to this court. The question before us, broadly framed, is whether there was a Brady violation warranting Lopez' release, subject always to the right of the state to retry him. Where the state court has resolved a constitutional issue, the habeas court must defer within specified limits to judgments by the state court as to issues of both law and fact. See 28 U.S.C. § 2254(d)(1), (e)(1).
24
The Brady issue was raised in the state proceedings, but the state courts relied not on federal precedent but on state-law cases; nor did they phrase their grounds for rejecting a new trial in traditional Brady terms. See Lopez, 742 N.E.2d at 1073-75. Neither of these facts necessarily precludes deference, see Gipson v. Jordan, 376 F.3d 1193, 1196-97 & n. 1, 1200-05 (10th Cir.2004), cert. denied, ___ U.S. ___, 126 S.Ct. 729, 163 L.Ed.2d 567 (2005); see also Early v. Packer, 537 U.S. 3, 8, 123 S.Ct. 362, 154 L.Ed.2d 263 (2002), but we bypass the issue because the result is the same even if no deference is accorded.
25
Under Brady, the prosecutor has a duty to make available to the defense exculpatory evidence, including evidence useful for impeachment, possessed by the prosecution team or its agents. Giglio v. United States, 405 U.S. 150, 153-54, 92 S.Ct. 763, 31 L.Ed.2d 104 (1972); Brady, 373 U.S. at 87, 83 S.Ct. 1194. Roche's evidence was certainly helpful to the defense — how helpful is a separate issue — but it was turned over and Lopez made use of it both through Roche and in closing. So the evidence possessed by the prosecutor was turned over — but only in mid-trial.
26
On this appeal, the Commonwealth argues that although circuit precedent has applied Brady to cases of delayed disclosure, see United States v. Lemmerer, 277 F.3d 579, 584 (1st Cir.), cert. denied, 537 U.S. 901, 123 S.Ct. 217, 154 L.Ed.2d 173 (2002), no Supreme Court case does so. Accordingly the Commonwealth argues, the state court in denying relief cannot be accused of an unreasonable application of clearly established Supreme Court precedent. See Carey v. Musladin, ___ U.S. ___, 127 S.Ct. 649, 166 L.Ed.2d 482 (2006). The Commonwealth's blanket position limiting Brady to complete non-disclosure is mistaken.
27
It could not, for example, comport with Brady's duty to disclose to say that a prosecutor could choose to sit on vital exculpatory evidence for six months and belatedly turn it over to the defense in mid-trial too late to be effectively used. Depending upon all kinds of circumstances, delayed release may not be a violation or it may mitigate a prior withholding; but to treat Brady as mechanically limited solely to complete non-disclosure would be foolish and not "reasonable."
28
However, the non-disclosure claim in this case is less straightforward, whether couched as delay or complete non-disclosure. The prosecutor turned over the information from the second call to the state police about as fast as could be expected. So to make out a Brady violation depends at the outset on showing that the first call should have been disclosed in a more timely fashion — specifically, that the prosecutor is responsible for what Smith knew and that Smith should have regarded as exculpatory the somewhat vague and unpromising initial call from Roche.
29
Both issues raise interesting questions not addressed by Lopez in his brief and only indirectly adverted to by the Commonwealth and the state courts.4 We need not pursue them because even a wrongful withholding of evidence is not a basis for Brady relief unless it was prejudicial, meaning (in this context) either a likelihood of a different result or circumstances that otherwise shake a court's confidence in the result of the trial. See Strickler v. Greene, 527 U.S. 263, 281, 119 S.Ct. 1936, 144 L.Ed.2d 286 (1999); Kyles v. Whitley, 514 U.S. 419, 434, 115 S.Ct. 1555, 131 L.Ed.2d 490 (1995).
30
The evidence against Lopez was largely circumstantial but very strong. Indeed, it was more than circumstantial if one gives significant weight to Lopez' supposed confession to Miranda. But absent corroboration (e.g., by a tape recording of the confession or a newly revealed detail), alleged confessions to cellmates are often to be treated very skeptically, given the incentives to lie and the limited ability to cross-examine a witness who claims no first-hand knowledge of anything but the supposed confession.5 Miranda later recanted his testimony.
31
But the circumstantial evidence of Lopez' guilt — motive, opportunity and forensic ties — was even stronger than our outline of the main facts indicates. Just prior to Danny's disappearance, Lopez had had a serious quarrel with Rodriguez and a clear motive to retaliate. Further, according to Diaz, Rodriguez had virtually outlined such a course of revenge on a child — to the extent at least of kidnapping — after a quarrel with Rodriguez in 1993.
32
As for opportunity, Lopez had admittedly made contact with Danny during the afternoon in question; he said afterwards that he called Danny away from the neighbor to help him close a window — itself a somewhat surprising explanation — but he denied that Danny had left with him in his truck. However, a neighbor had seen Danny getting into the truck with Lopez on that afternoon.
33
The evidence showed that Lopez was familiar not only with the junkyard but with the very location where Danny's body was found in a car. And the forensic evidence linking Lopez with the crime was considerable. The state court's summary on this point is telling:
34
Paint smears taken from a screwdriver found in the defendant's truck matched the paint on the automobile in which the body was found. Fibers consistent with those from the victim's multicolored shorts were found in the defendant's truck, and black fibers consistent with the truck's carpet were found on the victim's sandals. In addition, the defendant's black pants contained stains of iron and rust, white paint chips, and red fibers consistent with those from the victim's hooded shirt.
35
Lopez, 742 N.E.2d at 1070.
36
The defense offered some counters — Lopez' supposed affection for the children, incomplete alibi evidence, and an attack on the state's forensics — but the Commonwealth's case was assuredly a strong one, even disregarding Miranda. Further, Roche's main story, including the identification of "Kojak" by a police witness at the trial, was made available to the jury. Let us see just what is added by what Lopez claims to be new evidence.
37
The single critical fact that could have helped Lopez appreciably is testimony that Garcia — in addition to knowing Rodriguez — had a strong motive to kill her child; and Lopez' basis for this was a supposed quarrel between Lopez and Garcia. Even so, it would take a pretty remarkable leap for the jury to think that Garcia would revenge himself by killing an innocent child to frame Lopez when he could more simply have killed Lopez himself.
38
And, there is a further difficulty. Garcia, as we now know, would have testified at trial that he did not even know Lopez. Lopez could not have countered him at trial with an affidavit; Lopez himself would have had to testify to the contrary. This in turn would have opened Lopez to cross-examination on a host of issues that could easily have been devastating, ranging from the lie about Danny not getting into his truck to gaps in his alibi evidence to the multi-strand forensic evidence and wet pants.
39
It is far from certain that Lopez would have taken this risk — even with the added incentive of Roche's later clear-cut (if suspect) identification of Garcia as the man Roche had seen. And, if Lopez had testified, it is uncertain that the jury would have believed him (the district judge did not) and even more uncertain that it would have thought Garcia's quarrel (if it occurred) was a plausible motive for Garcia to kill Danny.
40
Of course, to acquit Lopez, it would have been enough for him to raise a reasonable doubt; but, as against the quite strong circumstantial case against Lopez, the very most that Lopez' testimony could have shown about Garcia as an alternative suspect is far from strong; and by testifying Lopez could easily have made his position much worse. We understand why the district court held a hearing but our confidence in the verdict is not at all shaken.
41
Affirmed.
Notes:
1
Roche said that when he initially contacted the Haverhill police on July 3, 1994, he had spoken to a person who identified himself as Sergeant Smith. In a post-trial motion, Lopez pointed to evidence that a Sergeant Smith had worked as a dispatcher for the Haverhill police around the time of Roche's call
2
The motion also relied on an affidavit of Miranda recanting his trial testimony; but the state trial judge disbelieved the recantation and, as no evidence on this issue is claimed to have been wrongfully withheld, it does not raise a constitutional issue
3
Roche and Lopez stood by their stories. Garcia admitted a prior conviction for drug dealing in 1984 but said he had stopped selling drugs thereafter, said that he had been to the junkyard a couple of times, and — most significant — said that he knew Rodriguez but did not know Lopez at all
4
Kyles v. Whitley, 514 U.S. 419, 438, 115 S.Ct. 1555, 131 L.Ed.2d 490 (1995), holds that Brady applies even if evidence is known only to police investigators, but who counts in the latter category could be debated. See generally United States v. Bender, 304 F.3d 161, 164 (1st Cir.2002), cert. denied, 537 U.S. 1167, 123 S.Ct. 980, 154 L.Ed.2d 906 (2003); United States v. Osorio, 929 F.2d 753, 760-62 (1st Cir.1991). As for when information must be regarded as exculpatory, compare Jones v. Jago, 575 F.2d 1164, 1166-67 (6th Cir.), cert. denied, 439 U.S. 883, 99 S.Ct. 223, 58 L.Ed.2d 196 (1978), with United States v. Rhodes, 569 F.2d 384 (5th Cir.), cert. denied, 439 U.S. 844, 99 S.Ct. 138, 58 L.Ed.2d 143 (1978).
5
See Zappulla v. New York, 391 F.3d 462, 470 n. 3 (2d Cir.2004), cert. denied, ___ U.S. ___, 126 S.Ct. 472, 163 L.Ed.2d 358 (2005); Moore v. Olson, 368 F.3d 757, 760 (7th Cir.), cert. denied, 543 U.S. 949, 125 S.Ct. 362, 160 L.Ed.2d 266 (2004).
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634 F.2d 1352
Blakley, Matter of
79-3645
UNITED STATES COURT OF APPEALS Fifth Circuit
12/18/80
1
S.D.Tex.
AFFIRMED
2
---------------
*** Opinion contains citation(s) or special notations.
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165 Pa. Commonwealth Ct. 392 (1994)
645 A.2d 389
CARNEGIE MELLON UNIVERSITY and Niagara Fire Insurance Company, Petitioners,
v.
WORKMEN'S COMPENSATION APPEAL BOARD (LENZ), Respondent.
Commonwealth Court of Pennsylvania.
Argued November 15, 1993.
Decided June 28, 1994.
*395 Steven L. Morrison, for petitioners.
Amiel B. Caramanna, Jr., for respondent.
Before COLINS and SMITH, JJ., and DELLA PORTA, Senior Judge.
DELLA PORTA, Senior Judge.
Carnegie Mellon University and Niagara Fire Insurance Company (collectively, Employer) appeal from the order of the Workmen's Compensation Appeal Board (Board) which affirmed the referee's decision granting a petition for review filed by Daniel Lenz (Claimant) and denying a petition for suspension or modification filed by Employer. The issues raised on appeal are (1) whether the referee applied the correct burden of proof for establishing the causal relationship between Claimant's alleged psychiatric disability and his back injury; (2) whether the referee's finding of the causation is supported by substantial evidence; and, (3) whether the referee's finding that Employer failed to offer available light-duty *396 work within Claimant's medical limitations is supported by substantial evidence.
I.
Claimant was employed by Employer as an air-conditioning mechanic when on April 26, 1989, he sustained a back injury, while pulling a dolly containing an air-conditioning unit. After the injury, Claimant received total disability benefits pursuant to a notice of compensation payable until he returned to sedentary light-duty office work on April 18, 1990 as a physical plant service coordinator. This position was within the physical restrictions imposed by Claimant's treating physician, Milton J. Klein, M.D., board-certified in physical medicine and rehabilitation. Subsequently, on August 15, 1990, Dr. Klein removed Claimant from work because of Claimant's complaints of neck pain and increased back pain. Claimant missed 36.5 days while working on this light-duty position.
On August 16, 1990, Claimant filed a petition for review, alleging that his disability benefits were improperly computed. Thereafter, on September 12, 1990, Employer offered Claimant another light-duty position of a scheduling board assistant/clerk, and informed him that this position complied with the new stricter physical limitations imposed by Dr. Klein on August 20, 1990. In a letter dated September 15, 1990, Claimant refused to accept Employer's offer of the position, stating that he would not accept another "phony" job; he was harassed and discriminated against by Employer while working on the first light-duty job; his request for retraining or settling the case had been denied; and returning to another created position "may prove a tragedy for all people concerned."
On September 21, 1990, Employer filed a petition for suspension or modification of Claimant's benefits as of September 18, 1990 on the basis that Claimant refused to accept the available light-duty job within his medical restrictions. On October 3, 1990, Claimant's counsel notified Employer that Claimant was under the care of Dr. Anthony J. McGroarty, a *397 psychologist, and was being referred to a psychiatrist. On October 8, 1990, Employer terminated Claimant's employment for reasons of abandonment of his employment and insubordination. Both petitions were consolidated by the referee.
Claimant presented the deposition testimony of Dr. Klein who stated that Claimant was disabled due to his back injury on the days he was unable to work on the light-duty job; as of January 16, 1991, Claimant's back condition had not changed and was unlikely to improve, and he was unable to perform his pre-injury work; and, the job duties of the second alternative work offered by Employer on September 12, 1990 did appear to fit within the stricter physical restrictions imposed by him.
To support his psychiatric injury claim, Claimant presented the deposition testimony of Dr. McGroarty who first saw Claimant on August 3, 1990 on a referral by Dr. Klein for treatment of depression. Dr. McGroarty's diagnosis of Claimant's condition was adjustment disorder with mixed emotional features and paranoid personality disorder. He opined that the major cause of Claimant's psychological problems was his anger, depression and perception that Employer and its insurance carrier were not cooperating with him in his effort to find an alternative career which would enhance his self-esteem, and that the back pain contributed to his condition to some extent. He also stated that Claimant was not temperamentally well suited to work in an office setting.
Employer presented the deposition testimony of Jules Kann, M.D., a clinical psychologist. Dr. Kann testified that Claimant is an extremely angry person with a psychopathic type personality with a pronounced paranoid manipulative flavor to it. He opined that Claimant's psychological problems were not the result of any specific events, and rather, he had been reacting the same way all his life as in this matter.
Finding the testimony of Claimant and Drs. Klein and McGroarty credible, the referee concluded that Claimant was totally disabled due to the work-related back injury when he missed work on the light-duty job between April 18, 1990 and August 15, 1990; Claimant's psychological condition is causally *398 related to the back injury and rendered him unfit for the scheduling board assistant/clerk position offered by Employer; and Employer thus failed to establish available employment within Claimant's medical limitations. The referee accordingly reinstated Claimant's total disability benefits for the 36.5 days he missed on the physical plant service coordinator position and thereafter continuing into the future. The Board affirmed the referee's decision.[1]
On appeal, Employer does not challenge the referee's decision reinstating the total disability benefits for the period prior to Claimant's refusal to accept its offer of the scheduling board assistant/clerk position on September 18, 1990. Employer's Brief, p. 7. Employer contends, however, that the benefits should be suspended as of September 18, 1990 (1) because Claimant failed to establish the causal relationship between his back injury and psychiatric disability which allegedly prevented him from returning to the scheduling board assistant/clerk position, and (2) because it is undisputed that the duties of that position were within Claimant's physical restrictions.
II.
To reinstate the benefits which had been suspended when he returned to the light-duty job, Claimant had to prove that: (1) through no fault of his own, his earning power was once again adversely affected by his disability and (2) the disability which gave rise to his original claim, in fact, continued. Pieper v. Ametek-Thermox Instruments Division, 526 Pa. 25, 584 A.2d 301 (1990). The causal connection between the original work-related injury and the disability which gave rise to suspended compensation is presumed. Id. However, the claimant must prove by a preponderance of the evidence that his claim for reinstatement of the benefits is based upon *399 the same disability for which he initially received benefits. Id. Claimant initially received the total disability benefits for his back injury. Only after filing the petition for review seeking reinstatement of benefits, Claimant first indicated that he suffered a work-related psychiatric injury. Since Employer did not accept liability for the alleged psychiatric disability when it paid benefits for the back injury, the causal connection between the work-related back injury and the psychiatric disability cannot be presumed.
"[P]sychological disorders such as suicidal tendencies and depression are not the `immediate and direct' or `natural and probable' consequences of a [physical injury]." Hilton Hotel Corp. v. Workmen's Compensation Appeal Board (Totin), 102 Pa.Commonwealth Ct. 528, 533, 518 A.2d 1316, 1319 (1986). Consequently, Claimant had the burden of establishing the causal relationship between the back injury and the psychiatric disability by unequivocal medical testimony. School District of Philadelphia v. Workmen's CompensationAppeal Board (Coe), 163 Pa.Commonwealth Ct. 89, 639 A.2d 1306 (1994).
Disabilities caused by psychological elements fall into three discrete categories: (1) psychological stimulus causing physical injury, the mental/physical case; (2) physical stimulus causing psychic injury, the physical/mental case; (3) psychological stimulus causing psychic injury, the mental/mental case. Volterano v. Workmen's Compensation Appeal Board (Allied Corp.), 149 Pa.Commonwealth Ct. 222, 613 A.2d 61 (1992), aff'd, 536 Pa. 335, 639 A.2d 453 (1994). It is undisputed that this case does not fall within the mental/physical category. In a physical/mental case, a claimant has the usual burden of proving that the physical injury arose in the course of employment and the mental injury was related thereto. Sibrava v. Workmen's Compensation Appeal Board (Trans World Airlines), 113 Pa.Commonwealth Ct. 286, 537 A.2d 75 (1988). In a mental/mental case, however, the claimant has the heightened burden of proving by objective evidence that he or she has suffered a psychiatric injury and that *400 such injury is other than a subjective reaction to normal working conditions. Martin v. Ketchum, Inc., 523 Pa. 509, 568 A.2d 159 (1990). Employer contends that the referee should have applied the heightened burden of proof applicable to a mental/mental injury case.
Employer, however, admits its liability for Claimant's total disability resulting from the back injury up to the point when he refused to accept the second offered modified position. It never alleged that Claimant's disability from his back injury had terminated. Moreover, Claimant's psychiatric disability claim was based not upon the work-related stress, as in other mental/mental cases, but upon his back injury as "a precursor to his psychological injury." Wilson v. Workmen's Compensation Appeal Board (Aluminum Co. of America), 159 Pa.Commonwealth Ct. 296, 301, 632 A.2d 1361, 1363 (1993). Hence, this case does not fall within a mental/mental category. Where, as here, posttraumatic psychological disability is allegedly caused by the work-related physical injury, the claimant is required to prove only that the psychiatric injury arose in the course of employment and was related thereto. Bell v. Workmen's Compensation Appeal Board (Allegheny County Housing Authority), 152 Pa.Commonwealth Ct. 636, 620 A.2d 589 (1993).
III.
Having concluded that the referee applied the correct burden of proof in this matter, our next inquiry is whether the referee's finding of the causal nexus between the alleged psychiatric disability and the back injury is supported by substantial evidence. To find the causation, the referee relied upon Dr. McGroarty's testimony which she summarized as follows:
He found that the claimant considered himself an extremely good worker and provider, as a mechanic, and that, from the claimant's point of view, the injury has taken those capabilities away from him. The doctor admitted that part of the claimant's present frustration is his desire for a settlement out of this case, and his rigid desire to become a *401 helicopter pilot. He also felt that part of the claimant's frustration with the first light duty job was his perception that he would not be able to advance as he would have been able to as a mechanic. The doctor further admitted that the claimant's personality style is of long standing, and he has been involved in confrontational situations in the past, including the use of threats to manipulate people to do what he wanted. . . . His opinion is . . . that the claimant was not temperamentally well suited for work which requires him to be confined to an office setting at CMU.
Referee's Findings of Fact No. 12.
Additionally, Dr. McGroarty opined as follows concerning the cause of Claimant's psychiatric condition:
Q. And based on the history he gave you together with your treatment of him and your review of any records you might have had, what is your opinion to a reasonable degree of psychological certainty as to the cause of that diagnosis?
A. It appears that the psychological problems that he is experiencing are as a result of the process that he's gone through since especially this last and third time that he's been off work as a result of his back pain.
Q. And, specifically, what aspects of that situation do you feel have caused this problem? Has his back pain contributed?
A. The back pain has contributed to some extent, although I think the major cause of the psychological problems has been his perception that at one point in the process the insurance company and the university were not cooperating with him in his efforts to try to find an alternative career which enhances his self-esteem.
His feeling is that he's had years of training, years of experience, that he's put in time to be able to do a good job as a heating and air conditioning mechanic, and that he would like to try to develop another career which would *402 provide the same situation within the physical limitations that he has as a result of the back pain and injury.
Q. You think that's the cause?
A. I think that's the core cause of the anger and the depression.
Dr. McGroarty's Deposition, pp. 14-15.
Thus, according to Dr. McGroarty, the cause of Claimant's condition, i.e., anger, depression and frustration due to his inability to return to the pre-injury job and to pursue an alternative career as a helicopter pilot, resulted from his perception of the situations he was in, which has only an indirect relationship to his original physical injury itself. Further, it is undisputed that Claimant had a preexisting psychological condition. Consequently, Claimant had to prove that the work-related back injury materially contributed to his psychiatric disability. Carpenter Technology Corp. v. Workmen's Compensation Appeal Board (Wisniewski), 144 Pa.Commonwealth Ct. 72, 600 A.2d 694 (1991). Dr. McGroarty's opinion that Claimant's back pain contributed "to some extent" to his psychiatric disability was insufficient to establish the causation. The fact that Claimant was not temperamentally well suited to work in an office setting is also not related to Claimant's physical injury itself.
Relying on Textron, Inc. Townsend Co. v. Workmen's Compensation Appeal Board (Morack), 105 Pa.Commonwealth Ct. 273, 523 A.2d 1216 (1987), Claimant contends that his preexisting psychological condition was aggravated by the back injury. In Textron, the claimant had previously been reinjured on four different occasions after the initial injury. On the morning he was scheduled to return to another position, he attempted suicide. The referee found that the claimant's genuine fear of returning to work exacerbated his underlying predisposition of depressive episodes. This Court upheld the referee's finding of causal relationship between the claimant's depression and the original back injury because the record amply supported the claimant's genuine fear of the *403 reinjury. In the matter sub judice, the referee did not find, and there is no allegation, that Claimant's psychological condition was aggravated by his fear of reinjury upon his return to work. Rather, Dr. McGroarty testified that Claimant's psychological conditions were caused by his perception of the situation, which is not related to the duties of his employment. Therefore, Textron is distinguishable and its holding is inapplicable to this matter.
Since Dr. McGroarty's testimony does not support the referee's finding of the causal relationship between the back injury and the psychiatric conditions, Claimant failed to establish the causation by unequivocal medical testimony, and his psychological reasons for refusing to accept Employer's offer of the second modified job was not work-related.
IV.
An employer may rebut the claimant's proof of loss of earning power by establishing availability of work which the claimant was capable of performing. Pieper; Todloski v. Workmen's Compensation Appeal Board (Supermarket Service Corp.), 115 Pa.Commonwealth Ct. 138, 539 A.2d 517 (1988). Thus, a suspension of benefits is appropriate where a claimant has recovered from his work-related disability to the point where he can return to either his pre-injury job or alternative job with no loss of earnings and where such a job is actually available. Kachinski v. Workmen's Compensation Appeal Board (Vepco Construction Co.), 516 Pa. 240, 532 A.2d 374 (1987); Mancini's Bakery v. Workmen's Compensation Appeal Board (Leone), 155 Pa.Commonwealth Ct. 641, 625 A.2d 1308 (1993).
Dr. Klein testified that on August 20, 1990, he signed a physical capacities assessment form for the scheduling board assistant/clerk position and that the requirements of that position appeared to fit within the physical restrictions he imposed upon Claimant. Because Claimant refused to accept *404 Employer's offer of the available light-duty job within his physical restrictions for the non-work-related psychological reasons, the referee's finding that Employer failed to offer available work within Claimant's medical limitations is not supported by substantial evidence. Hence, Claimant's total disability benefits must be suspended as of September 18, 1990, the date Claimant refused to accept the offered position.
Accordingly, the order of the Board is affirmed to the extent that it affirmed the referee's decision reinstating Claimant's total disability benefits for the 36.5 days that Claimant missed work while performing the duties of the physical plant service coordinator and until Claimant refused to accept the scheduling board assistant/clerk position on September 18, 1990; and is reversed to the extent that it affirmed the referee's decision denying Employer's petition for suspension of the benefits as of September 18, 1990.
ORDER
AND NOW, this 28th day of June, 1994, the order of the Workmen's Compensation Appeal Board is affirmed to the extent that it affirmed the referee's reinstatement of the total disability benefits of Daniel Lenz for 36.5 days between April 18, 1990 and August 15, 1990 and until September 18, 1990; and is reversed to the extent that it affirmed the referee's denial of the petition for suspension of the benefits as of September 18, 1990.
NOTES
[1] This Court's scope of review in a worker's compensation case is limited to determining whether necessary findings of fact are supported by substantial evidence, whether an error of law was committed, or whether constitutional rights were violated. Lenzner Coach Lines v. Workmen's Compensation Appeal Board (Nymick), 158 Pa.Commonwealth Ct. 582, 632 A.2d 947 (1993).
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I N T H E S U P R E M E C O U R T O F T E N N E S S E E FILED
A T K N O X V I L L E
April 28, 1997
Cecil Crowson, Jr.
Appellate C ourt Clerk
L A W R E N C E M O O R E ) F O R P U B L I C A T I O N
)
A p p e l l e e ) F I L E D : A P R I L 2 8 , 1 9 9 7
)
v . ) K N O X C O U N T Y
)
S T A T E O F T E N N E S S E E ) H O N . R A Y L . J E N K I N S , J U D G E
)
A p p e l l a n t ) N O . 0 3 - S - 0 1 - 9 6 0 7 - C R - 0 0 0 7 3
F o r A p p e l l e e : F o r A p p e l l a n t :
M A R K E . S T E P H E N S J O H N K N O X W A L K U P
P u b l i c D e f e n d e r A t t o r n e y G e n e r a l a n d R e p o r t e r
P A U L A R . V O S S M I C H A E L E . M O O R E
A s s i s t a n t P u b l i c D e f e n d e r S o l i c i t o r G e n e r a l
K n o x v i l l e , T N
G O R D O N W . S M I T H
A s s o c i a t e S o l i c i t o r G e n e r a l
N a s h v i l l e , T N
R A N D A L L E . N I C H O L S
D i s t r i c t A t t o r n e y G e n e r a l
Z A N E S C A R L E T T
A s s i s t a n t D i s t r i c t A t t o r n e y
G e n e r a l
K n o x v i l l e , T N
O P I N I O N
J U D G M E N T O F T H E C O U R T O F C R I M I N A L A P P E A L S B I R C H , C . J .
REVERSED; PETITION DISMISSED
2
In 1994, Lawrence Moore, the petitioner, filed a pro se
petition for habeas corpus relief alleging that his 1983
convictions for robbery and kidnapping violated his due process
rights under the state constitution. Treating the petition as one
for post-conviction relief, the trial court concluded that the
statute of limitations barred consideration of the claim and
dismissed the petition. The Court of Criminal Appeals found that
the petition raised a claim under State v. Anthony, 817 S.W.2d 299
(Tenn. 1991). In addition, the intermediate court held that
Anthony announced a new constitutional rule that applied
retroactively, and therefore, under Burford v. State, 845 S.W.2d
204 (Tenn. 1992), and Sands v. State, 903 S.W.2d 297 (Tenn. 1995),
Moore’s petition was timely. We granted the State’s application
for permission to appeal.
After granting the State’s application, we released our
opinion in State v. Denton, S.W.2d , 1996 WL 688350 (Tenn.
December 2, 1996). In Denton, we held that Anthony did not
announce a new constitutional rule:
Prior to Anthony, there were two
lower court opinions that applied
the same rule. See Brown v. State,
574 S.W.2d 57 (Tenn. Crim. App.
1978) and State v. Rollins, 605
S.W.2d 828 (Tenn. Crim. App. 1980).
Further, although there was a dearth
of direct Tennessee case law on the
issue, numerous other jurisdictions
had addressed the relationship
between kidnapping and other
felonies that characteristically
involved some detention of the
victim. While the case law from
other state jurisdictions does not
constitute “precedent” within the
Meadows/Teague rule, such analyses
3
of the issue were widespread and
represented a body of persuasive
authority available to the
petitioner. In light of the
previous intermediate court
opinions, we hold that Anthony did
not announce a new rule.
Id. at *2. Because Anthony did not announce a new constitutional
rule, it does not constitute a “later-arising” ground for relief
under Sands. Consideration of Moore’s petition is barred by the
statute of limitations. Tenn. Code Ann. § 40-30-102 (1990).
The judgment of the Court of Criminal Appeals is
reversed, and the petition is dismissed.
________________________________________
ADOLPHO A. BIRCH, JR., Chief Justice
CONCUR:
Drowota, Anderson, Reid, Holder, JJ.
4
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IN THE COURT OF APPEALS OF IOWA
No. 15-1069
Filed September 10, 2015
IN THE INTEREST OF S.M. AND V.M.,
Minor Children,
R.M., Father,
Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Woodbury County, Mary L. Timko,
Associate Juvenile Judge.
A father appeals the termination of his parental rights to two children, born
in 2013 and 2014. AFFIRMED.
Zachary Hindman of Bikakis, Mayne, Arneson, Hindman & Hisey, Sioux
City, and Brian Buckmeier of Buckmeier & Daane Lawyers, P.C., Sioux City, for
appellant father.
Thomas J. Miller, Attorney General, Kathrine S. Miller-Todd, Assistant
Attorney General, Patrick Jennings, County Attorney, and Diane Murphy,
Assistant County Attorney, for appellee State.
Stephanie Parry of Forker & Parry, Sioux City, for appellee Mother.
Joseph Kertels of the Public Defender’s Office, Sioux City, attorney and
guardian ad litem for minor children.
Considered by Vaitheswaran, P.J., and Potterfield and McDonald, JJ.
2
VAITHESWARAN, P.J.
A father appeals the termination of his parental rights to two of his
children, born in 2013 and 2014. He contends (1) the State failed to prove the
grounds for termination cited by the juvenile court, (2) the juvenile court should
have afforded him an additional six months to reunify with his children, and
(3) termination was not in the children’s best interests.
Our de novo review of the record reveals the following facts. The
Department of Human Services became involved with the family when the
youngest child was born with amphetamines in her system. The child’s mother
admitted to using methamphetamine with the father on the date of delivery.
The parents agreed to a safety plan. The mother and the youngest child
moved from the hospital to a women’s and children’s center. The older child and
her half-siblings stayed with a family friend.
The father underwent a drug abuse assessment, which identified his
potential for relapse as “high.” He began attending an extended outpatient drug
treatment program. Initially, his attendance was consistent. Later, his
participation dropped off “due to transportation issues and his job.” He also failed
to submit several urine samples for testing.
Five months after the youngest child’s birth, the father tested positive for
methamphetamine in his system. His therapist reported he had stopped
attending treatment a month earlier.
The juvenile court formally removed the children from the parents’ care.
Following a home study, the children were placed with the father’s aunt and
uncle.
3
Within approximately two months of the removal, the father was arrested
for domestic assault. A records check revealed four prior convictions for
domestic assault. The father was discharged from the outpatient drug treatment
program he had sporadically attended. Ultimately, he was convicted of
aggravated domestic assault and began serving a two-year prison sentence. He
remained incarcerated at the time of the termination hearing.
(1) The juvenile court terminated the father’s parental rights pursuant to
two statutory provisions. See Iowa Code § 232.116(1)(b) (requiring proof of
abandonment), (h) (requiring proof child cannot be returned to parent’s custody)
(2015). On appeal, the father challenges the evidence supporting the
abandonment ground but concedes the “children could not have been returned to
his care immediately, since he was in prison.”
We may affirm if we find clear and convincing evidence to support either of
the statutory grounds. In re S.R., 600 N.W.2d 63, 64 (Iowa Ct. App. 1999).
Given the father’s incarceration, we conclude section 232.116(1)(h) was
satisfied.
(2) The father sought six additional months to reunify with the children.
See Iowa Code § 232.104(2)(b). The juvenile court expressed reservations
about his ability “to assume a parental role following his release from prison
within a reasonable period of time.” We too have reservations.
The father was not slated to discharge his sentence until three months
after the termination hearing. He admitted he would have to spend an additional
three months in a halfway house. At a minimum, then, he would not be living
independently for at least six months.
4
Following his youngest child’s birth, the father had several months to
comply with substance abuse services. The father squandered the opportunity.
He also committed the same crime that resulted in four prior convictions, leaving
significant doubts about his willingness to reform. When asked how long the
children should have to wait for their parents, the father responded “[s]houldn’t be
no time.” Based on this record, we conclude additional time for reunification was
not warranted.
(3) Termination must be in the children’s best interests. See In re P.L.,
778 N.W.2d 33, 37 (Iowa 2010). While we do not question the father’s love for
his children, there is simply no basis for concluding they would be safe in his
care.
The father’s drug use and assaults placed the children at severe risk of
physical and emotional harm. As for the bond these young children once shared
with the father, the department social worker assigned to the case testified they
“had no real knowledge or remembrance of their father.” We conclude
termination was in the children’s best interests.
We affirm the termination of the father’s parental rights to these children.
AFFIRMED.
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757 N.W.2d 849 (2008)
2008 WI App 148
STATE
v.
SMITH.
No. 2007AP1375-CR.
Court of Appeals of Wisconsin.
August 12, 2008.
Unpublished Opinion. Affirmed.
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State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: February 18, 2016 106396
________________________________
THE PEOPLE OF THE STATE OF
NEW YORK,
Respondent,
v MEMORANDUM AND ORDER
THEODORE HUTCHINS,
Appellant.
________________________________
Calendar Date: January 12, 2016
Before: Peters, P.J., McCarthy, Rose and Lynch, JJ.
__________
O'Connell and Aronowitz, Albany (Scott Iseman of counsel),
for appellant.
James R. Farrell, District Attorney, Monticello, for
respondent.
__________
McCarthy, J.
Appeal from a judgment of the County Court of Sullivan
County (LaBuda, J.), rendered January 8, 2014, upon a verdict
convicting defendant of the crimes of official misconduct (two
counts) and coercion in the first degree (two counts).
At all relevant times, defendant was on the board of
trustees for the Village of Monticello and John LiGreci was the
Village Manager. Defendant and LiGreci were charged, in a sealed
indictment, with acting in concert to commit two counts of
official misconduct and two counts of coercion in the first
degree based on two directives that LiGreci gave to two different
Police Chiefs. Both directives pertained to the employment
application of a citizen (hereinafter the candidate) seeking to
-2- 106396
become a police officer for the Village. Following a jury trial,
defendant was found guilty as charged. He was sentenced to six
months in jail, five years of felony probation and 500 hours of
community service. Defendant now appeals. Upon our conclusion
that there is legally insufficient evidence in regard to multiple
elements for each conviction, we reverse.
Evidence is legally sufficient when, "viewing the evidence
in the light most favorable to the People," it provides "a valid
line of reasoning and permissible inferences from which a
rational jury could have found the elements of the crime proved
beyond a reasonable doubt" (People v Reed, 22 NY3d 530, 534
[2014] [internal quotation marks and citations omitted]). A
person commits official misconduct when, "with intent to obtain a
benefit or deprive another person of a benefit[, he or she]
commits an act relating to his [or her] office but constituting
an unauthorized exercise of his [or her] official functions,
knowing that such act is unauthorized" (Penal Law § 195.00 [1];
see People v Barnes, 117 AD3d 1203, 1206 [2014]). "A conviction
for official misconduct must be supported by proof that a
defendant knew that [the] acts were unauthorized, so as to
'negate the possibility that the misconduct was the product of
inadvertence, incompetence, blunder, neglect or dereliction of
duty, or any other act, no matter how egregious, that might more
properly be considered in a disciplinary rather than a criminal
forum'" (People v Barnes, 117 AD3d at 1206, quoting People v
Feerick, 93 NY2d 433, 448 [1999] [citation, brackets and emphasis
omitted]).
To commit coercion in the first degree, a person must
commit coercion in the second degree and compel or induce the
victim to "[v]iolate his or her duty as a public servant" (Penal
Law § 135.65 [2] [c]). A person commits coercion in the second
degree when "he or she compels or induces a person to engage in
conduct which the latter has a legal right to abstain from
engaging in . . . by means of instilling in him or her a fear
that, if the demand is not complied with, the actor or another
will . . . [u]se or abuse his or her position as a public servant
by performing some act within or related to his or her official
duties . . . in such manner as to affect some person adversely"
(Penal Law § 135.60 [8]). Thus, proof of a defendant's guilt of
-3- 106396
either official misconduct or coercion in the first degree based
on a theory of accessorial liability for an executive's order to
a subordinate employee requires proof beyond a reasonable doubt
that, objectively, the executive did not have the authority to
give such a directive and further that, subjectively, the
defendant knew that the executive lacked such authority.
Defendant's convictions are premised upon LiGreci's
directive to then Police Chief Doug Solomon to cease a background
check on the candidate and his subsequent directive to subsequent
Police Chief Mark Johnstone to provide him with answers to
questions posed by the Village attorney that regarded a potential
lawsuit related to the police department's background check.1
The People did not cite or introduce into evidence any codified
laws, regulations, policies or rules that delineated a Village
Manager or Police Chief's respective authority in regard to
1
We reject the People's invitation to consider a new
theory of prosecution, raised for the first time on appeal, that
defendant's directives to LiGreci are the unauthorized acts. The
indictment, the case that the People presented at trial and the
charges that were given to the jury all unambiguously identify
LiGreci's directives to the Police Chiefs as the relevant acts
giving rise to the alleged crimes. Accordingly, the People's
argument is unpreserved given that the People never sought jury
instructions that would permit the jury to consider that theory
(see CPL 470.05 [2]; People v Morrison, 110 AD3d 1380, 1381
[2013], lv denied 22 NY3d 1201 [2014]). Further, raising a
theory of prosecution after the conclusion of a trial deprives a
defendant of fair notice, the meaningful opportunity to present a
defense at trial and of the right to have a jury decide the facts
that subject the defendant to criminal liability (see generally
Apprendi v New Jersey, 530 US 466, 483-484 [2000]; People v
Grega, 72 NY2d 489, 495-496 [1988]). In any event, the People's
newly raised theory is without merit. The record contains no
proof that could reasonably be construed as delineating the
limitations of a Village trustee's authority to give directives
to a Village Manager. Therefore, no rational factfinder could
conclude, beyond a reasonable doubt, that defendant's directives
to LiGreci were unauthorized.
-4- 106396
employment background checks or that related to the instances in
which a Police Chief can, or cannot, disregard his or her
supervisor's directive to answer questions.2 Accordingly, the
People were left with the task of proving beyond a reasonable
doubt that LiGreci lacked the authority to give such orders
despite the absence of any codification that supported that
contention; relatedly, they were also tasked with proving beyond
a reasonable doubt that defendant did not have a subjective good
faith belief that LeGreci had the authority to give such
directives (see generally People v Michaels, 132 AD3d 1073, 1076-
1077 [2015]; People v Rios, 107 AD3d 1379, 1381-1382 [2013], lv
denied, 22 NY3d 1158 [2014]).
We first turn to the proof regarding the executive
authority over background checks of candidates seeking employment
as police officers of the Village. Multiple witnesses familiar
with the functioning of the Village's government confirmed that
the Village Manager – LiGreci – had the sole authority to make
hiring decisions for the municipal departments, including the
police department. Further, it is uncontested that the Village
Manager serves as a supervisor to the Police Chief. In addition,
LiGreci testified that it was within his authority as the Village
Manager to halt the background check.
During his testimony, Solomon admitted that no law tasked
him with the responsibility to conduct background checks.
Further, he never indicated that the Village had vested him with
the authority to conduct background checks. To the contrary,
Solomon explained that he had created the background check
procedure used for police officer candidates. Considering this
evidence, no rational juror could conclude that LiGreci's
directive to halt the background check was unauthorized.3
2
We note that policy documents that the police department
created itself are insufficient to establish that the Village
vested the police department or Police Chief with any particular
authority.
3
To the extent that LiGreci's stated justification for
halting the background check was that it had proceeded in an
-5- 106396
Further, even assuming that the record contained legally
sufficient proof to establish this element, we nonetheless
conclude that the record contains no evidence that defendant had
the requisite knowledge that the directive was unauthorized.
Considering the proof that LiGreci's power to hire personnel was
well known within the Village and the fact that the record
contains no evidence that defendant was ever informed of
Solomon's supposed duty to conduct background checks, there was
legally insufficient evidence to establish the requisite mental
state (see Penal Law § 20.00; People v Michaels, 132 AD3d at
1076). Accordingly, we reverse defendant's convictions of
official misconduct under count 7 of the indictment and coercion
in the first degree under count 8 of the indictment.
We reach a similar conclusion regarding LiGreci's directive
to Johnstone – Solomon's successor as Police Chief – to provide
answers to questions related to the candidate's background check,
which was the subject of potential civil litigation. When
Johnstone was asked why he felt that he was entitled to disregard
a supervisor's directive to provide answers to questions posed by
the Village attorney,4 Johnstone explained that he had sought
inappropriate manner, we note that a recorded telephone
conversation relating to the background check revealed an officer
inquiring into topics such as whether the candidate associated
with "undesirable people" and whether the candidate lived with a
paramour "out of wedlock." Further, Solomon admitted that he had
already made up his mind about the candidate's qualifications
before beginning the background check, and agreed that "no matter
how long any investigation lasted, no matter how many people were
interviewed, no matter how many documents were retrieved [and] no
matter how many psychological examinations were performed,
nothing was going to change [his] opinion" that the candidate was
unsuitable to be a police officer.
4
Inasmuch as the crime of coercion in the second degree
required additional proof that LiGreci instilled in Johnstone a
fear of LiGreci creating an adverse consequence for Johnstone if
he failed to comply with the order (see Penal Law § 135.60 [8]),
the uncontradicted proof shows that Johnstone did not believe
-6- 106396
counsel from Sullivan County District Attorney James Farrell and,
as a result, knew that there was a pending criminal investigation
of the candidate and of LiGreci. Johnstone averred that, based
on the existence of such criminal investigation, he had a duty
not to answer the questions. Contrary to Johnstone's reasoning,
however, the police department's prior human resources work was
not the subject of the criminal investigation, and there would be
no legitimate reason to keep information related to their human
resource activities confidential from the Village.
The remainder of Johnstone's testimony renders it
unreasonable to conclude that he believed that he had a legal
right or obligation to refuse to answer the questions. As
Johnstone testified, when a different supervisor gave him a
directive to answer the same questions for LiGreci, Johnstone
immediately complied.5 In regard to this compliance, Johnstone
explained: "If you don't follow a direct order[,] you are
considered insubordinate and . . . suspended." The record is
silent as to any explanation from Johnstone that could reasonably
reconcile his testimony that it was his "legal right not to
answer [the questions]" when LiGreci directed him to do so but
that it would have been "insubordinat[ion]" not to answer the
questions when a different supervisor made the exact same
request.
Finally, the record contains no proof that could support a
reasonable conclusion that defendant knew, prior to LiGreci's
directive, that a criminal investigation had been commenced that
deprived LiGreci of the authority to have Johnstone answer the
questions (see generally Penal Law § 20.00; People v Kaplan, 76
that LiGreci had made efforts to instill such fear; when asked
whether he was ever threatened by LiGreci in respect to answering
the questions, Johnstone unequivocally answered "no."
5
Were we to focus on an element unique to coercion in the
second degree, this evidence leads to the single reasonable
conclusion that Johnstone was "compel[led] or induce[d]" to
answer the questions by this supervisor, and not by LiGreci,
whose order Johnstone had disregarded (Penal Law § 135.60).
-7- 106396
NY2d 140, 146 [1990]). To the extent that proof was presented on
the issue of knowledge, it tended to suggest the exact opposite
conclusion – that defendant remained ignorant of the apparently
confidential criminal investigation. Johnstone testified that he
never informed LiGreci of the ongoing criminal investigation, and
he explained that he did not want certain people to learn about
the criminal investigation, including defendant. Accordingly,
the only relevant proof in the record is that, at a minimum, the
police department was attempting to keep LiGreci and defendant
ignorant of the criminal investigation. Further, the only
reasonable inference to draw from Johnstone's testimony was that
he understood defendant to be unaware of the criminal
investigation at that point in time. Accordingly, no rational
juror could find that defendant knew that LeGreci was not
authorized to give the directive due to an ongoing criminal
investigation (compare People v Robinson, 60 NY2d 982, 986
[1983]). Based on the foregoing, we reverse defendant's
remaining convictions of official misconduct under count 9 of the
indictment and coercion in the first degree under count 10 of the
indictment. Given our conclusion that the evidence was legally
insufficient in regard to each of defendant's convictions, his
remaining contentions are rendered academic.
Peters, P.J., Rose and Lynch, JJ., concur.
ORDERED that the judgment is reversed, on the law, and
indictment dismissed.
ENTER:
Robert D. Mayberger
Clerk of the Court
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327 F.2d 513
Application of Frank Peter DOYLE, John Herbert Charles Nayler and George Newbolt Rolinson.
Patent Appeal No. 7098.
United States Court of Customs and Patent Appeals.
February 13, 1964.
Kenyon & Kenyon, Ralph L. Chappell, New York City, for appellants.
Clarence W. Moore, Washington, D. C. (Raymond E. Martin, Washington, D. C., of counsel), for Comr. of Patents.
Before WORLEY, Chief Judge, and RICH, MARTIN, SMITH and ALMOND, Judges.
MARTIN, Judge.
1
This is an appeal from the decision of the Patent Office Board of Appeals affirming the examiner's rejection of claims 2 and 4, the only remaining claims in appellants' application serial No. 833,680, filed August 14, 1959 for SUBSTANCES PRODUCED FROM PENICILLIN-PRODUCING MOULDS.
2
2. 6-Aminopenicillanic1 acid having the structural formula:
3
NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE
4
which is capable of reacting with phenylacetyl chloride to produce benzylpenicillin, and which gives a negative Bratten-Marshall test and a negative ninhydrin test.
5
4. Solid, nonhygroscopic 6-aminopenicillanic acid having the structural formula
6
NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE
7
and melting at about 209-210 ° C.
8
The application discloses that 6-APA is used in preparing antibiotic substances.
9
The references relied on by the examiner and the board are:
10
Kuhne — Pharmazie, Vol. I, pages 200-201 (1946)
11
Sakaguchi et al. — J.Agri.Chem.Soc. (Japan), Vol. 23, page 411 (1950)
12
Arnstein et al. — Biochem J., Vol. 67, pages 180-187 (1957)
13
Hockenhull et al. — Arch.Biochem., Vol. 23, pages 160-1612(1949)
14
The Kuhne article discloses that a more complete investigation of the material known as penicillin A has revealed that it is not a simple substance but consists of several different penicillins, all of which have a common skeleton and differ only by a side chain always located in the same position. Penicillin G, one of such penicillins, is depicted as having the following structural formula:
15
NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE
16
Kuhne indicates that although the skeleton portion of penicillin G had not been named it has been proposed to "include the keto-C atom in the side chain, and to refer to the linkage of this C-atom to the nitrogen as a peptide linkage, so that the skeleton would be that of an amine of the following structure:
17
NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE
18
The Sakaguchi et al. publication discloses a new enzyme, penicillin-amidase, which splits penicillin G. The authors indicate that from the reaction mixture of penicillin G and penicillin-amidase, "phenyl acetic acid and a substance which we presume `penicin' have been isolated, the latter substance being in the form of hygroscopic crystalline needles giving m. p. 158-159°C. This substance, which itself does not give ninhydrin reaction,3 develops an intense blue violet coloration by ninhydrin reagent after it was acted with [upon by] penicillinase." "Penicin" is depicted as having the formula:
19
NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE
20
Arnstein et al. disclose suggested pathways of penicillin biosynthesis. Set forth as a possible reaction mechanism is a process which starts with cysteinylvaline, the final step in the penicillin biosynthesis being postulated as consisting of the acylation of a compound having the structural formula:
21
NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE
22
The examiner rejected claims 2 and 4 as "lacking invention" over Kuhne or Sakaguchi et al. or Arnstein et al., all of which were considered to "teach the concept of 6-aminopenicillanic acid which is the compound that is instantly being claimed." The examiner stated that the presence of 6-APA could be readily appreciated by one skilled in the art in view of the cited references. The patentability of isolating 6-APA from the fermentation liquor obtained in the biosynthesis of penicillins was said by the examiner to have been recognized by the Patent Office since appellants' parent application, serial No. 750,057, of the instant application serial No. 833,6804 has matured into US patent No. 2,941,995 and the claims of the parent application "are directed to a method of recovering the 6-aminopenicillanic acid from an aqueous solution."
23
In affirming the examiner's rejection the board stated:
24
"In each of these publications [Sakaguchi et al., Kuhne and Arnstein et al.] the compound claimed was described by its structural formula which is the means most commonly used by chemists to accurately describe an organic chemical. From the publications a chemist would be informed of, and understand the exact nature of the claimed compound and its relationship to valuable compounds of the prior art."
25
Appellants contend that they have produced a compound which was not available before and have made possible "new penicillins both for commercial exploitation and for extensive research work." They urge that they were the first to produce, isolate and purify solid 6-APA and to determine its properties. It is argued that the prior art had depicted the structural formula of 6-APA, not to describe an alleged existing compound, but rather as a possible merely theoretical intermediate which might exist along a suggested pathway of reaction in penicillin biosynthesis; as a non-existent, purely theoretical skeleton to form the basis for a new system of penicillin nomenclature; and as a "presumed" structural formula for a material isolated from the reaction mass after enzymatic action on penicillin, but not having the physical properties of 6-APA.
26
We think the issue facing this court is whether the compound as recited in the appealed claims is described in, or obvious from, the cited art. To determine that question, a careful analysis of appellants' application is necessary.
27
According to the application, appellants have found that substances having antibiotic activity can be obtained by reacting, with a suitable chemical reagent, the fermentation liquor obtained by growing a penicillin-producing mould, such as penicillium chrysogenum.
28
The application discloses that the fermentation liquor contains a compound of the structural formula:
29
NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE
30
which "we term 6-aminopenicillanic acid following the nomenclature adopted by other workers in analogous fields." Appellants state that this 6-APA is a nonhygroscopic compound which in a substantially pure form has a melting point of 209 to 210 °C. and gives the following analysis: carbon 44.6%; hydrogen 5.7%; nitrogen 13.1%; and sulfur 14.1%. Compared with this analysis they point out that C8H12O3N2S, the empirical formula of 6-APA, requires: carbon 44.4%; hydrogen 5.6%; nitrogen 13.0% and sulfur 14.8%. The compound 6-APA is stated to give a negative Bratten-Marshall test and a negative ninhydrin test and to be capable of reacting with phenylacetyl chloride to produce benzylpenicillin.
31
Appellants state in their application that the procedure to be followed in preparing antibiotic substances from 6-APA depends largely upon the extent to which the 6-APA has itself been purified. Thus, it is said that 6-APA may be used in three different states of purification: (1) isolated 6-APA, (2) 6-APA concentrate and (3) the dilute fermentation brew containing 6-APA. 6-APA concentrate is described as a clarified fermentation liquor which has been subjected to an initial concentration procedure and from which the natural penicillins have been substantially removed by solvent extraction at pH 2 to 3. It is said to usually contain 0.6-1.2 mg./ml. of 6-APA which represents about 1% of the total solids present. The dilute brew is the original clarified fermentation brew from which natural penicillins have been substantially removed by solvent extraction at a pH of 2 to 3 but which has not been concentrated. The dilute brew is said to be about ten times more dilute than the 6-APA concentrate.
32
Appellants disclose in the application that when 6-APA is available in relatively pure form it is only necessary to use a small excess of added reagent in preparing the antibiotics and that the products are, in turn, obtained in a fairly pure state. On the other hand, appellants indicate that when the starting material is a 6-APA concentrate, it is necessary to use a much larger excess of reagent and the resulting products, as compared with those obtained when starting with 6-APA in relatively pure form, are "very much less pure." With the dilute brew, as with the 6-APA concentrate, appellants state that a "large excess of reagent" is necessary in preparing the antibiotics.
33
The examiner has readily conceded that 6-APA "is a valuable intermediate" but considers that from the art of record "its presence could be readily appreciated." We agree with the examiner that this is the case with respect to appellants' claim 2, especially in light of the Sakaguchi et al. reference.
34
Sakaguchi et al. state they have found in the mycelium of penicillium chrysogenum that the enzyme penicillin-amidase "splits penicillin G into its components, i. e. phenyl acetic acid and a residual portion of penicillin G" which they have assigned the structural formula:
35
NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE
36
That residual portion does not give a ninhydrin reaction but is said to develop an intense blue violet coloration by ninhydrin reagent after it is acted upon by penicillinase. The authors have further postulated, through a reaction mechanism, that the splitting of penicillin G involves an hydrolysis of penicillin G.
37
Appellants obtain a compound which they have characterized as having the structural formula:
38
NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE
39
from a strain of penicillium chrysogenum. The compound gives a negative ninhydrin test. In an affidavit of one Sidney N. Sadoff, submitted by appellants, it is stated that the enzyme penicillinase destroys 6-APA, and thus contamination of an aqueous solution of 6-APA with bacteria that produce penicillinase ordinarily leads to the destruction of 6-APA. In exhibits attached to the Sadoff affidavit it is stated that during a hydrolysis reaction an amidase enzyme hydrolyzes penicillin G to 6-APA and phenylacetic acid.
40
Thus both Sakaguchi et al. and appellants start with a strain of penicillium chrysogenum and both indicate that through a hydrolysis reaction, catalyzed by an amidase enzyme, they obtain the compound, phenyl acetic acid, and a compound which does not give a ninhydrin reaction and has the structural formula
41
NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE Furthermore, Sakaguchi et al. indicate, as to appellants, that the latter compound is unstable in the presence of the enzyme penicillinase. Such close correlation from the record convinces us that the 6-APA as defined in claim 2 is disclosed in the Sakaguchi et al. reference. Although the record indicates that 6-APA when in a solid nonhygroscopic form melting at 209 to 210° C. is pure, claim 2 does not specify the melting point of the 6-APA therein claimed nor for that matter, the form in which it occurs. See In re Kebrich, 201 F.2d 951, 954, 40 CCPA 780, 785. Thus, we think that the Sakaguchi et al. reference describes the 6-APA as recited in claim 2.
42
We are not persuaded, however, that the 6-APA as recited in claim 4 is described in, or obvious from the cited art. That claim recites solid, nonhygroscopic 6-APA melting at about 209-210° C. and the application indicates that 6-APA with those physical characteristics is substantially pure. In none of the art of record do we find even a suggestion of 6-APA in a solid, nonhygroscopic substantially pure form nor a suggestion of obtaining 6-APA as such.
43
While the mere purification of a known material ordinarily does not result in a patentable product, a pure compound may, under certain conditions, be patentable over the same compound in an impure form. In re Williams, 171 F.2d 319, 36 CCPA 756. We think such conditions prevail here. Appellants have disclosed that use of substantially pure 6-APA in solid nonhygroscopic form results in a greater quantity of pure antibiotic with a lesser quantity of added reagent than is obtainable with impure 6-APA. In fact, the affidavit of record, indicates that when 6-APA with a purity of less than 90% is acylated the amount of an antibiotic of requisite quality obtained is reduced in yield too far for commercial acceptance.
44
Accordingly for the reasons set forth above the decision of the board is reversed as to claim 4 but affirmed as to claim 2.
45
Modified.
Notes:
1
Hereafter referred to in the opinion as 6-APA
2
The board considered the Hockenhull et al. publication as being merely cumulative and did not discuss its disclosure or apply it to the claims. We find noth-thing in that publication calling for specific consideration here and thus agree with the board's treatment
3
NOLLER, CHEMISTRY OF ORGANIC COMPOUNDS 293 (1952) discloses that in the ninhydrin reaction, α-amino acids, and proteins or their degradation products that contains a free carboxyl group having an α-amino group, yield a blue color when heated in dilute solution with triketohydrindene hydrate (ninhydrin)
4
Serial No. 833,680 is stated by appellants to be a division of serial No. 750,057
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52 F.3d 314
Edward Knox Hall, Ethel Mae Hallv.Law Firm of Sinins, Bross and Marum
NO. 94-5613
United States Court of Appeals,Third Circuit.
Mar 07, 1995
Appeal From: D.N.J., No. 94-cv-03295,
Bissell, J.
1
AFFIRMED.
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NO. 07-08-00308-CR
IN THE COURT OF APPEALS
FOR THE SEVENTH DISTRICT OF TEXAS
AT AMARILLO
PANEL B
--------------------------------------------------------------------------------
JULY 13, 2010
--------------------------------------------------------------------------------
MARK ANTHONY TAYLOR, APPELLANT
v.
THE STATE OF TEXAS, APPELLEE
--------------------------------------------------------------------------------
FROM THE 251ST DISTRICT COURT OF RANDALL COUNTY;
NO. 16,410-C; HONORABLE ANA ESTEVEZ, JUDGE
--------------------------------------------------------------------------------
Before QUINN, C.J., and CAMPBELL and HANCOCK, JJ.
MEMORANDUM OPINION
Appellant, Mark Anthony Taylor, appeals his conviction for the offense of aggravated assault with an affirmative deadly weapon finding and sentence of nine years incarceration in the Institutional Division of the Texas Department of Criminal Justice. Specifically, appellant challenges the trial court's affirmative finding of a deadly weapon and requests reformation of the judgment to delete such finding. We affirm the judgment of the trial court.
Background
In 2004, appellant was indicted for the offense of aggravated assault. The indictment alleged that appellant intentionally and knowingly caused bodily injury to Micha Dawn Tarver, by striking her with his fist, and that he used or exhibited a deadly weapon in the commission of the offense, specifically referencing his fist. The indictment also included a specific notice of the State's intent to seek an affirmative finding of a deadly weapon, which again identified appellant's fist as the deadly weapon.
Prior to trial on the indicted offense, appellant and the State reached a plea agreement. As a result of and in accordance with this plea agreement, appellant signed a judicial confession that he committed the offense of aggravated assault "exactly as charged in the indictment," and the State recommended that appellant be placed on deferred adjudication community supervision for a period of five years and fined $2,000. The trial court admonished appellant and placed appellant on deferred adjudication community supervision in accordance with the plea agreement between appellant and the State. Notably, no mention of any deadly weapon finding was made during this plea hearing. No appeal was taken from this proceeding.
In 2006, the State moved to proceed to an adjudication of guilt alleging that appellant had violated the terms of his community supervision. After a hearing on this motion, appellant was continued on deferred adjudication community supervision, but the term of his community supervision was modified and extended for two additional years.
In 2008, the State again filed a motion to proceed to adjudication of guilt alleging that appellant had violated the terms of his deferred adjudication community supervision. A hearing was held on this motion. During this hearing, the trial court asked appellant if he was the same person that had pled guilty to the offense of aggravated assault with a deadly weapon to which appellant responded in the affirmative. Appellant pled true to the allegations contained in the motion to proceed to adjudication. The trial court found that there was sufficient evidence of the alleged violations, adjudicated appellant guilty of aggravated assault, made an affirmative deadly weapon finding, and sentenced appellant to incarceration for a period of nine years. Appellant timely appealed from this judgment.
By one issue, appellant contends that the trial court erred in making an affirmative finding that appellant used or exhibited a deadly weapon when the weapon alleged is not deadly per se, and is neither mentioned in the written plea agreement nor in the trial court's oral recitation of the terms of the plea agreement.
Analysis
Appellant contends that neither the written plea agreement nor the trial court's oral recitation of the terms of that agreement referenced appellant's use or exhibition of a deadly weapon in committing the aggravated assault. Therefore, according to appellant, his plea agreement did not include the trial court's affirmative finding of a deadly weapon. Further, appellant contends that the trial court must have ratified appellant's construction of the agreement as not including a deadly weapon finding when the trial court's oral recitation of the terms of the agreement omitted any mention of a deadly weapon finding.
A plea bargain may limit a trial court's authority to enter a deadly weapon finding. This is so because, once a trial court has accepted the plea agreement, the court has a "ministerial, mandatory, and non-discretionary duty to specifically enforce" the terms of the agreement. Perkins v. Court of Appeals for the Third Supreme Judicial Dist. of Tex., 738 S.W.2d 276, 285 (Tex.Crim.App. 1987). In performing this duty, the court's "primary concern is to ascertain and give effect to the parties' intentions as expressed in the instrument." Hatley v. State, 206 S.W.3d 710, 718 (Tex.App. -- Texarkana 2006, no pet.). Reviewing courts "will not disturb the terms of [a plea] agreement by reading into it details not contemplated by the parties as reflected in the agreement or raised by the evidence." Ex parte Williams, 758 S.W.2d 785, 786 (Tex.Crim.App. 1988).
In the present case, the record reflects that the parties' plea agreement did not contemplate that an eventual adjudication of appellant's guilt would foreclose an affirmative finding of a deadly weapon. First, the indictment of appellant for the aggravated assault on Tarver specifically alleged that he used a deadly weapon and, further, includes a separate notice of the State's intent to seek a deadly weapon finding. Second, nothing in the plea agreement indicates that the State intended to withdraw its request for a deadly weapon finding. Third, the judicial confession appellant signed stated that he committed the offense "exactly as charged in the indictment." Fourth, during the 2004 hearing, appellant testified that he had reviewed the indictment and had committed each of the elements alleged in the indictment. Finally, during the 2008 hearing, appellant testified that he was the same person that had pled guilty to the offense of aggravated assault with a deadly weapon in November of 2004. Clearly, the record reflects that appellant was, from the outset, aware that the State was seeking an affirmative finding of a deadly weapon in this case and we will not read into the parties' agreement a term that was not addressed in the agreement and which all of the evidence indicates was not intended to be affected by the agreement.
Additionally, even were we to find that the parties intended to foreclose an affirmative deadly weapon finding in an eventual adjudication of appellant's guilt, such a term of the agreement would have been unenforceable. Upon deciding to proceed to an adjudication of guilt, the trial court is not bound by the terms of a prior plea bargain agreement, even if the plea agreement contemplated limiting the sentence to be assessed after adjudication. Ex parte Huskins, 176 S.W.3d 818, 819 (Tex.Crim.App. 2005). This is so because, "once the trial court proceeds to adjudication, it is restricted in the sentence it imposes only by the relevant statutory limits." Id. (quoting Von Schounmacher v. State, 5 S.W.3d 221, 223 (Tex.Crim.App. 1999)).
Consequently, we overrule appellant's sole appellate issue.
Conclusion
For the foregoing reasons, we overrule appellant's issue and affirm the judgment of the trial court.
Mackey K. Hancock
Justice
Do not publish.
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955 F.2d 722
293 U.S.App.D.C. 394
The SOCIETY OF PLASTICS INDUSTRY, INC., Petitioner,v.INTERSTATE COMMERCE COMMISSION and the United States ofAmerica, Respondents,Forty Railroads, Intervenors.
No. 90-1600.
United States Court of Appeals,District of Columbia Circuit.
Argued Oct. 17, 1991.Decided Feb. 7, 1992.
[293 U.S.App.D.C. 396] On Petition for Review of an Order of the Interstate Commerce Commission.
Martin W. Bercovici, with whom Kris Anne Monteith, was on the brief, for petitioner.
Louis Mackall, V, Atty., I.C.C. with whom, James F. Rill, Asst. Atty. Gen., John J. Powers, III, and John P. Fonte, Attys., Dept. of Justice and Robert S. Burk, Gen. Counsel and Craig M. Keats, Associate Gen. Counsel, I.C.C. were on the brief, for respondents.
Robert M. Jenkins, III, with whom Robert E. Weicher for The Atchison, Topeka & Santa Fe Ry. Co., William P. Quinn for Bay Colony Railroad Corp., Michael E. Roper for Burlington Northern Railroad Co., Charles C. Rettberg for CSX Transp., Inc., Constance L. Abrams for Consolidated Rail Corp., John H. Doeringer for Illinois Central Railroad Co., Robert L. Calhoun for Indiana and Ohio Railway Co., Robert B. Batchelder for Missouri Pacific Railroad Co., Nathan Fenno for New York Susquehanna and Western Railway Corp., Rahway Valley Railroad Co., and The Staten Island Railway Corp., James L. Howe, III for Norfolk Southern Railway Co., and Norfolk and Western Railway Co., and John MacDonald Smith for Southern Pacific Transp. Co., St. Louis Southwestern Railroad Co. were on the joint brief, for intervenors. Paul A. Cunningham also entered an appearance for intervenors.
Before RUTH BADER GINSBURG and SILBERMAN, Circuit Judges, and VAN GRAAFEILAND,* Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge VAN GRAAFEILAND.
VAN GRAAFEILAND, Senior Circuit Judge:
1
The Society of the Plastics Industry, Inc. ("the Society"), a national trade association whose members ship large quantities of goods by rail, petitions this court to review and set aside the Interstate Commerce Commission's decision in The Society of The Plastics Industry, Inc. v. Consolidated Rail Corp., et al., No. 40298 (served Oct. 22, 1990), which held that a Multiple Independent Factor Through Rate ("MIFTR") is a joint rate within the meaning of the Interstate Commerce Act. Consolidated Rail Corporation ("Conrail") and thirty-nine other rail carriers participating in the MIFTRs at issue were permitted to intervene in support of the decision. We affirm.
2
Rail carriers are authorized to establish through routes and rates applicable to through routes. 49 U.S.C. § 10703(a)(1). "A through route is an arrangement under which a shipment is transported to its ultimate destination by two or more railroads in succession." Baltimore Gas & Elec. Co. v. United States, 817 F.2d 108, 110 (D.C.Cir.1987). Historically, the rates used for through routes have been either joint rates or combination rates. A traditional joint rate is a unitary rate arrived at by agreement between the carriers participating in a through route, each carrier's share, [293 U.S.App.D.C. 397] or "division", being expressed as a percentage of the joint rate. The joint rate must be published and filed with the Commission in a tariff, but the divisions need not be. See 49 U.S.C. § 10762(a); Metropolitan Edison Co. v. Conrail, 5 I.C.C.2d 385 (1989). A carrier participating in a traditional joint rate may not adjust its division without the specific concurrence of the other participants. Pittsburgh & Lake Erie R.R. Co. v. ICC, 796 F.2d 1534, 1537 (D.C.Cir.1986).
3
A combination rate, on the other hand, is simply the sum of the rates set by all the participating carriers for the movement over their lines. A rate set by an individual carrier may be a local rate, i.e., the rate between the two points served by that carrier, or a proportional rate based on the carrier's portion of a through movement. Such local and proportional rates are published and filed with the Commission in a tariff. An individual carrier may adjust its local or proportional rate unilaterally. Id.
4
An MIFTR is a unitary rate comprised of independent factors representing the amount each participating carrier charges for movement over its line. However, unlike traditional joint rate participants, MIFTR carriers are authorized by previously executed general concurrences to unilaterally adjust their independent factors. An MIFTR is published and filed with the Commission, but the independent factors are not. There are, of course, certain safeguards against injudicious unilateral adjustments by an MIFTR carrier. If a participating carrier is dissatisfied with the change, it may withdraw from the MIFTR. Moreover, any change in the overall rate charged to a shipper under the MIFTR necessitates refiling of the tariff, thus permitting a challenge by the shipper and a complaint about abuses.
5
In 1987 Conrail announced its intention to cancel its participation in joint rates for the movement of plastics from Southwestern origins to Central-Eastern destinations and in most instances to substitute proportional rates at levels equal to its divisions of the cancelled joint rates. Various shipping interests, including the Society, and various rail carriers petitioned the Commission to suspend and investigate Conrail's joint rate cancellations. The Commission, in Cancellation of Joint Rates and Routes on Synthetic Plastics, Conrail, No. 71380 (served Oct. 9, 1987), declined to do so. Conrail subsequently obtained the concurrences necessary for MIFTRs, and published and filed ICC Tariff CR 4026 containing MIFTRs for its through routes.
6
The Society filed a complaint with the Commission, pursuant to 49 U.S.C. § 11701, challenging Conrail's and its connecting carriers' use of MIFTRs. The Society contended that, because the possibility of unilateral adjustment makes MIFTRs more like combination rates than joint rates, Conrail and its connecting carriers violate 49 U.S.C. §§ 10761 and 10762 by refusing to publish and file with the Commission their independent factors. The Society contended that failure to divulge an MIFTR's independent factors has numerous adverse effects on shippers, carriers, and competition. It alleged that the use of MIFTRs forecloses shippers from negotiating with carriers that refuse to disclose their rates, allows unilateral manipulation of rates by the carrier that is the publishing agent, and permits a dominant carrier such as Conrail, through the use of unilateral adjustments, to skew competition and damage efficiency. In addition, the Society asserted that because the reasonableness of a carrier's joint rate division cannot be challenged, treating an MIFTR as a joint rate violates the Act. In their petition supporting the Society's complaint, IMC Fertilizer Group, Inc., Growmark, Inc., and Farmland Industries, Inc., which have not petitioned for court review, asserted that these adverse effects make MIFTRs an unreasonable practice related to transportation or service in violation of 49 U.S.C. § 10701(a). They said that carriers should "not be permitted to use MIFTRs as a means to unjustifiably shield unreasonable rate increases on market dominant traffic from appropriate regulatory scrutiny." Soo Line Railroad Company, which participates in MIFTRs under ICC Tariff CR 4026, filed a statement asserting that Conrail's ability to manipulate its independent [293 U.S.App.D.C. 398] factor to favor particular gateways makes MIFTRs anti-competitive. Soo likewise has not petitioned for review by this court.
7
The Society's final argument was that Conrail's communications to the carriers participating in the MIFTRs at issue do not satisfy the provisions of 49 U.S.C. § 10706(a) which exempt certain rate arrangements and communications from the antitrust laws. As the MIFTRs' publishing agent, Conrail gives advance notice to its connecting carriers of adjustments to its independent factor, and invites the connecting carriers to make their own adjustments at the same time, purportedly for economy of publication. The Society asserted that because Conrail does not have rate bureau status, Conrail's communications do not qualify for the exemptions contained in § 10706(a)(2)(A). Moreover, said the Society, even if Conrail did have rate bureau status, its communications are not covered by the antitrust exemption because they are discussions of single line rates under § 10706(a)(3)(A)(i).
8
The Commission, holding that an MIFTR is a joint rate, denied the Society's complaint. Acknowledging that a joint rate can only be created and adjusted through agreement of the participating carriers, the Commission found the general concurrences used to establish MIFTRs sufficient. It reasoned that
9
[t]he difference between a traditional joint rate and a MIFTR is in the mechanism for making adjustments after the rate has been established. A traditional joint rate requires a separate arrangement or agreement to make each adjustment. A MIFTR embodies a general arrangement or agreement to accept any such adjustment that any other carrier participant may propose. Both a traditional joint rate and a MIFTR require agreement among all participants in the rate. The fact that the participants in a MIFTR concur at the outset in the right of any party to take independent action with respect to its portion of the rate, rather than entering into specific rate agreements following that initial agreement, does not change the fact that a MIFTR is a joint rate. It is a unitary rate that is jointly held out over the lines of two or more carriers and is established by arrangement or agreement between the carriers.
10
Having held that an MIFTR is a joint rate, the Commission concluded that an independent factor is, in effect, a division of the joint rate:
11
The independent factors of a MIFTR, like the divisions of a traditional joint rate, have no existence separate from the MIFTR of which they form a part.... The part of the through service to which any such factor applies is not available for independent purchase by the shipping public. Like any division of a traditional joint rate, a MIFTR factor represents nothing more than a participating carrier's share of a single through charge.
12
Consequently, the carriers' refusal to publish and file their independent factors was not a violation of the Act's filing requirements.
13
The Commission also rejected the contention that MIFTRs are an unreasonable practice in violation of § 10701(a). It found no merit in the contention that MIFTRs are unlawful because they shield the independent factors from scrutiny. This, it said, amounted to no more than an argument that "because ... certain advantages [are conferred] upon joint rates, the Commission should look with disfavor upon such rates." It disposed of the Society's assertion that nondisclosure of independent factors precludes shippers from negotiating with carriers, pointing out that the Commission's policy of not compelling disclosure of traditional joint rate divisions had not precluded such negotiations. In response to Soo's assertion that MIFTRs are anti-competitive in that they allow Conrail or any other carrier to manipulate its independent factor to favor particular gateways, the Commission found that MIFTRs enhance competition.
14
We believe that MIFTRs advance intramodal competition by enabling participating railroads to adjust their independent factors in order to promote the most advantageous routes. As economic conditions change, rates may be moved more [293 U.S.App.D.C. 399] quickly toward efficient levels, and freight may be shifted more quickly onto efficient routings.
15
The Commission pointed out that Conrail could favor gateways through the manipulation of its prior proportional rates. Moreover, if Conrail manipulated its independent factor in an unlawful manner, Soo was free to file a specific complaint concerning the matter. See 49 U.S.C. § 10701(a), (c).
16
Finally, the Commission rejected the Society's arguments concerning the antitrust exemption provisions in 49 U.S.C. § 10706, stating that "Conrail makes no claim to any such immunity, and it is well settled that rate discussions among joint rate partners do not require immunity and do not necessarily violate the antitrust laws."
17
Our review of the Commission's interpretation of the Act is governed by Chevron U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). See Consolidated Rail Corp. v. United States, 896 F.2d 574, 578 (D.C.Cir.1990). Under Chevron, we ask first "whether Congress has directly spoken to the precise question at issue." 467 U.S. at 842, 104 S.Ct. at 2781. If Congress has expressed a clear intent on the precise question, that intent controls, and our inquiry is over. Id. at 842-43 & n. 9, 104 S.Ct. at 2781 & n. 9. If, however, Congress was "silent or ambiguous with respect to the specific issue," id. at 843, 104 S.Ct. at 2782, deference is due the Commission's interpretation, and we ask only "whether the agency's answer is based on a permissible construction of the statute." Id.
18
Our initial inquiry under Chevron is strictly confined, in that the Supreme Court intended that the term "precise question at issue" be interpreted tightly. See Central States Motor Freight Bureau, Inc. v. ICC, 924 F.2d 1099, 1104-05 (D.C.Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 87, 116 L.Ed.2d 59 (1991); Ohio v. United States Dept. of the Interior, 880 F.2d 432, 442-43 (D.C.Cir.1989). The precise question before us is whether an MIFTR is an allowable form of joint rate.
19
The Society argues that the language and structure of the Act demonstrate a clear Congressional intent that the traditional form of joint rate be its exclusive form. Describing the Act as "plain and unambiguous," the Society contends that it does not permit adjustment of a joint rate without the concurrence of each participating carrier in the specific adjustment. However, the Act does not define "joint rate", and it imposes few express requirements on the form of a joint rate. Although 49 U.S.C. § 10762(b)(2) contains a concurrence requirement, it does not describe the concurrence that is required. The section provides that "[t]he Commission may prescribe or approve what constitutes a concurrence or acceptance," but it does not specify whether this express delegation of authority is limited to matters of form as opposed to substance, an ambiguity that in itself militates against finding the clarity required by Chevron.
20
The Society also contends that repeated references in the Act to "divisions" of joint rates and resolution of divisions disputes demonstrate a clear congressional intent to deal with only the traditional form of joint rate. The Society asserts that the Act speaks of rates, joint rates and divisions of joint rates but says nothing of MIFTRs, varieties of joint rates or independent factors. It is undoubtedly true that Congress had traditional joint rates in mind when it enacted the relevant statutory provisions. Given that the traditional form of joint rate was the only one in which carriers had participated, what else could Congress have been addressing? However, we cannot accord this fact the weight that the Society would have us give to it. That Congress conceived of joint rates in their traditional form simply does not, without more, amount to an unambiguous expression that they could exist only in that form. Indeed, the broad language of § 10701a, which permits the establishment of "any rate" that is reasonable and not otherwise prohibited by the Act, is some indication of an intent to the contrary.
21
Contrary to the Society's contentions, a holding that MIFTRs are a permissible [293 U.S.App.D.C. 400] form of joint rate does not render 49 U.S.C. §§ 10705 and 10705a superfluous and meaningless. Section 10705 authorizes the Commission to prescribe divisions of joint rates and permit the cancellation of joint rates, and sets forth certain standards and tests to be applied in these procedures. Section 10705a, added by the Staggers Rail Act of 1980, Pub.L. No. 96-448, 94 Stat. 1895, allowed joint rate participants to apply a surcharge without the concurrence of the other carriers. § 10705a(a)(1)(A). This authorization was limited, however, in that, under certain circumstances, the surcharge could be cancelled by a participating carrier or a shipper. The authorization was further limited in that it was to expire three years after the effective date of the Staggers Act, subject to extension for one additional year by the Commission. § 10705a(p)(1). Section 10705a contained separate provisions for unilateral surcharges on light density lines, § 10705a(b), and for cancellation of joint rates by carriers recouping less than 110 percent of their variable costs, § 10705a(a), which have not expired. Because traditional joint rates continue to exist, § 10705a's cancellation provisions and § 10705's provisions concerning divisions disputes and cancellations have a continuing role to play. Indeed, before Conrail could enter into the MIFTRs at issue here, it had to comply with § 10705's cancellation provisions. The argument that § 10705a's unilateral surcharge provisions were meaningless if an MIFTR is permissible overlooks the fact that an MIFTR does not provide relief to carriers stuck in traditional joint rates. An MIFTR allows a carrier to make unilateral adjustments only when all of the participating carriers have expressed a general agreement in advance.
22
A somewhat more tenable contention is that Congress, in granting a limited ability to impose unilateral surcharges under § 10705a, intended to foreclose the broad ability to make unilateral adjustments that exists under an MIFTR. The Society relies on the principle of expressio unius est exclusio alterius. Upon careful consideration, however, this contention also must be dismissed. Section 10705a was limited not only in the relief it afforded, but also in the situation it addressed. It was directed to the urgent problem then existing of carriers mired in traditional joint rates that returned less than their variable costs. See H.R.Conf.Rep. No. 1430, 96th Cong., 2d Sess. 111 (1980), reprinted in 1980 U.S.C.C.A.N. 4110, 4143. Section 10705a's narrow focus was on how to afford immediate relief to those carriers. The Chairman of the House Interstate and Foreign Commerce Committee explained that
23
[a] number of carriers have a very severe problem right now, caused by 100 years of incremental regulation, in that they are carrying large amounts of interline traffic at less than the out-of-pocket cost to haul it. The surcharge section is meant to give them a chance to get out of that bind....
24
126 Cong.Rec. 24,832 (1980) (statement of Rep. Staggers). As evidenced by its sunset provision, the § 10705a surcharge was a temporary solution only. See H.R.Conf.Rep. No. 1430, supra, at 112; H.R.Rep. No. 1035, 96th Cong., 2d Sess. 42 (1980), reprinted in 1980 U.S.C.C.A.N. 3978, 3987. This provision, which gave time-limited retrospective relief to carriers stuck in traditional joint rates, is not a clear prohibition against future efforts by carriers to enter into concurrences allowing for unilateral adjustments.
25
Reliance on the principle of expressio unius can be troublesome under Chevron. See Cheney R.R. Co. v. ICC, 902 F.2d 66, 68-69 (D.C.Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 519, 112 L.Ed.2d 530 (1990). Because § 10705a dealt only with traditional joint rates not unilaterally adjustable, and not with rates containing general concurrences for adjustments, its implications for the latter are far from clear. In short, in enacting § 10705a, Congress did not express a clear intent to preclude the creation of MIFTRs.
26
The Society's final argument under the first Chevron test is that Congress, in passing the Staggers Act, "ratified the long-standing and well-entrenched standards applicable to joint rates." This doctrine of ratification holds that when Congress reenacts, without change, statutory terms that have been given a consistent [293 U.S.App.D.C. 401] judicial or administrative interpretation, Congress has expressed an intention to adopt that interpretation. See Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S. 353, 381-82 & n. 66, 102 S.Ct. 1825, 1840-41 & n. 66, 72 L.Ed.2d 182 (1982).
27
Prior to passage of the Staggers Act, both the courts and the Commission consistently held that adjustments to joint rates required the concurrence of the participating carriers. See, e.g., ICC v. Columbus & Greenville Ry. Co., 319 U.S. 551, 553, 555, 63 S.Ct. 1209, 1210, 1211, 87 L.Ed. 1580 (1943); Petition for Declaratory Order--Superphosphate, 358 I.C.C. 39, 41 (1978). In enacting the unilateral surcharge provisions of § 10705a and expediting proceedings to adjust joint rates, Staggers Act § 218, 49 U.S.C. § 10705(f)(1), Congress recognized that "[u]nder existing law, unless all carriers participating in the joint rate concur, these rates and divisions can be changed only by protracted proceedings before the Commission." H.R.Conf.Rep. No. 1430, supra, at 111. Seizing on Congress's affirmative recognition of this law and on the fact that Congress made only limited changes in it, the Society argues that Congress has ratified or reenacted it.
28
The doctrine of ratification or reenactment has little applicability in the instant case, however, because, prior to the enactment of the Staggers Act, no judicial or administrative decision had addressed the precise question at issue, which is whether an MIFTR is a permissible form of joint rate. The legislative history cited by the Society simply reenforces what already has been conceded as undeniable: Congress had traditional joint rates in mind when it enacted the Staggers Act. Yet, as stated earlier, this cannot be equated with a clear intent that the traditional form be the exclusive form.
29
The second step under Chevron requires that we affirm the Commission's conclusion that an MIFTR is a joint rate if it is "based on a permissible construction of the statute." 467 U.S. at 843, 104 S.Ct. at 2782. The Commission's conclusion does not have to be the one we would have reached in the first instance. Id. at 843 n. 11, 104 S.Ct. at 2782 n. 11. It need only be reasonable. Id. at 844-45, 104 S.Ct. at 2782-83.
30
We find the Commission's conclusion clearly reasonable in the light of Congress's expressed intent in both the Railroad Revitalization and Regulatory Reform Act of 1976, Pub.L. No. 94-210, 90 Stat. 31 ("4R Act") and the Staggers Act to reduce regulatory constraints on rail rates. Both the 4R and Staggers Acts identified excessive rate regulation as a cause of the financial plight of the railroad industry. See S.Rep. No. 499, 94th Cong., 1st Sess. 10 (1975), reprinted in 1976 U.S.C.C.A.N. 14, 24; H.R.Conf.Rep. No. 1430, supra, at 89. One purpose of the 4R Act was to eliminate protracted regulatory proceedings concerning divisions disputes by providing for simplified and expedited treatment. 4R Act § 201; see S.Rep. No. 499, supra, at 8-10. As noted in that Senate Report:
31
If railroads are to regain lost traffic, or even to retain present traffic, they must be able to lower their rates, innovate new services, and respond to new and changing circumstances. If railroads are to increase their revenues and attract the resources necessary to revitalize the industry, they must be able to raise their rates in a timely fashion....
32
Id. at 11. The Staggers Act took the deregulatory effort further. See H.R.Rep. No. 1035, supra, at 38. In enacting the Staggers Act, Congress announced a new rail transportation policy which mandated, in part, that competition and demand for services be allowed to establish rates to the maximum extent possible and that federal regulatory control be minimized. Staggers Act § 101(a), 49 U.S.C. § 10101a(1), (2).
33
The Commission's conclusion that an MIFTR is a permissible form of joint rate is consistent with these congressional enactments. MIFTRs diminish the need for regulatory intervention by the Commission. By agreeing beforehand to allow unilateral adjustments, carriers participating in an MIFTR obviate the need for protracted proceedings for divisions disputes and cancellations. Moreover, by agreeing to allow unilateral adjustments, carriers retain the flexibility to react to competition and the [293 U.S.App.D.C. 402] demand for services. It would be incongruous, indeed, to interpret the carriers' efforts to avoid in this manner the problems that the 4R and Staggers Acts were attempting to remedy as inconsistent with those Acts.
34
Of course, as the Society asserts, protection of shippers' interests continues to be a purpose of the Act. However, the Commission's decision does not infringe impermissibly on that protection. Treating an MIFTR as an allowable form of joint rate does not remove it from regulatory scrutiny; it is subject to challenges of unreasonableness and discrimination that apply to a joint rate. See 49 U.S.C. §§ 10701(a), (c), 10701a(b), 10707(a). Whether such scrutiny might on a particular occasion prove to be insufficient is not presently before us. We are concerned only with the general validity of MIFTRs as joint rates.
35
The Society's remaining contentions are not persuasive. The Commission's decision does not make a "cynical hoax" of its competitive access rules, 49 C.F.R. §§ 1144.1-1144.6, adopted in Intramodal Rail Competition, 1 I.C.C.2d 822 (1985), aff'd, Baltimore Gas & Elec. Co. v. United States, 817 F.2d 108 (D.C.Cir.1987), because the rules will continue to apply to joint rate cancellations. Even if resort to the competitive access rules is diminished, this would be consistent with Congress's overarching intent to decrease regulatory intervention.
36
We are not persuaded by the Society's argument that the Commission's decision is inconsistent with the antitrust exemptions of § 10706 because it confers antitrust immunity on the discussions of participating carriers concerning MIFTRs that would not otherwise exist. It is not clear that immunity would not otherwise exist, given § 10706's grant of immunity to discussions between rail carriers "practicably participat[ing]" in a "particular interline movement". The Society has not pointed us to any authority indicating that Congress intended to limit the phrase "interline movement" in this section to a movement under a traditional joint rate, and we refuse to elevate this uncertainty into a conclusion that the Commission's decision is unreasonable.
37
The Society's final argument is that the instant ruling was an unexplained departure from prior Commission decisions. It is well settled that "[d]ivergence from agency precedent demands an explanation." Hall v. McLaughlin, 864 F.2d 868, 872 (D.C.Cir.1989). If, however, "we determine that the Commission 'has not in fact diverged from past decisions, [then] the need for a comprehensive and explicit statement of its current rationale is less pressing.' " Cross-Sound Ferry Services, Inc. v. ICC, 934 F.2d 327, 329-30 (D.C.Cir.1991) (quoting Hall, 864 F.2d at 872). In such a case, the path of the Commission's reasoning need only be reasonably discernible. Id. at 330.
38
The Commission did not depart from precedent. The numerous decisions cited by the Society for the proposition that unilateral adjustments to a joint rate are impermissible did not deal with the situation presented by an MIFTR, where the participating carriers expressly agree to allow such adjustments. As the Commission stated in its decision:
39
Though we have often stated broadly that unilateral independent action is impossible in the joint rate context, the cases in which those statements were made did not squarely raise the issue with which we are confronted in the present case: whether a through rate that lacks a specific concurrence requirement can be a joint rate, assuming that it is subject to a general, up-front concurrence and that it possesses the other attributes of a joint rate.
40
The Commission's decision in Single-Shipment Minimum Charges, South Western Area, MWMFB, 367 I.C.C. 875 (1983), was not contrary to its decision herein. In MWMFB the Commission held certain minimum charge exceptions published by a rate bureau on behalf of individual carriers unlawful as applied to joint rates because they lacked the concurrence of the other carriers. In so holding, the Commission rejected the argument that general powers of attorney given the rate bureau by the carriers satisfied the concurrence requirement. However, unlike the concurrences in an MIFTR, the general powers of attorney given the rate bureau [293 U.S.App.D.C. 403] in MWMFB were not agreements permitting unilateral adjustments by other carriers. Moreover, as the Commission recognized, reading MWMFB as precluding MIFTRs would be in tension with the Commission's decision in Petition to Delay Application of the Direct Connector Requirement to Joint Rail Rates in General Increases, 367 I.C.C. 886 (1983), decided thirteen days after MWMFB, which recognized as an alternative to traditional joint rates "the 'independent factor' system of joint rates now being tried on an experimental basis by several railroads." Id. at 895.
41
In sum, an MIFTR arrangement is compatible with the intent of Congress as expressed in the language, structure and legislative history of the Act as amended. The Commission reasonably rejected petitioner's plea to freeze the former regulatory approach and historical practice in the industry as the legal requirement.
42
The Society's petition for review of the Commission's decision is denied.
*
Of the United States Court of Appeals for the Second Circuit, sitting by designation pursuant to 28 U.S.C. § 294(d)
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9 F.3d 110
NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.UNITED STATES of America, Plaintiff-Appellee,v.William Henry CROOM, IV, Defendant-Appellant.
No. 93-5108.
United States Court of Appeals, Sixth Circuit.
Oct. 25, 1993.
Before: MARTIN and BOGGS, Circuit Judges; and JOINER, Senior District Judge.*
PER CURIAM.
1
William Henry Croom, IV, appeals his conviction for possession with intent to distribute eight grams of cocaine base in violation of 21 U.S.C. Sec. 841(a)(1), and for carrying and using a firearm during and in relation to a drug trafficking crime in violation of 18 U.S.C. Sec. 924(c)(1). Croom maintains that the district court improperly denied his motion to suppress evidence and, in the alternative, asserts that the evidence presented was insufficient to support his conviction. For the following reasons, we affirm the district court.
2
On the evening of December 3, 1991, members of the Knoxville, Tennessee Police Department's armed robbery task force attended a pre-shift briefing concerning recent armed robberies of markets and restaurants along Chapman Highway in South Knoxville. At the briefing, a maroon Oldsmobile Delta 88 associated with William Henry Croom was identified as a suspect vehicle in the robberies. Officers Charles Newman and Carl McCarter then began their shift by setting up a surveillance operation on Chapman Highway in an unmarked police car.
3
Sometime after 10:00 p.m., Newman and McCarter saw a maroon Delta 88 pull up at a Subway sandwich shop on Chapman Highway. Five black males got out of the car and entered the shop. The men emerged five minutes later, re-entered the Delta 88, and began driving in a normal manner towards downtown Knoxville. Newman and McCarter followed the Delta 88, along with officers in unmarked cars, in a "hopscotch" surveillance pattern.
4
At this time, the officers received a radio call indicating that an armed robbery had just taken place at the Subway sandwich shop. Newman requested further information and was told that it was a "good" robbery, that five black males in a maroon Delta 88 were involved, and that a weapon had been seen. The Delta 88 that Newman and Carter were following then pulled off the road and stopped. Newman and McCarter pulled in behind the stopped car, got out of their vehicle, and began to approach the Delta 88 on the driver's and passenger's sides.
5
After Newman and McCarter got out of their car, other officers arriving on the scene received a radio call indicating that the Subway shop had not been robbed. By this time several of the additional officers had already left their cars and were approaching the Delta 88. Officer Doug Stiles was approaching the driver's side of the car when he saw that the individual in the front passenger seat was holding a gun. Stiles yelled "gun" to alert the other policemen, and ordered the occupants of the Delta 88 to raise their hands. Officers Newman and Michael Duncan testified at trial that they then saw the passenger in the right front seat open the car door and drop a nine-millimeter semi-automatic handgun to the ground.
6
The police subsequently took the occupants of the maroon Delta 88 into custody. Croom was removed from the front passenger seat, searched, and handcuffed. Police found a digital pager, a cellular telephone, a small amount of marijuana, four hundred forty-three dollars, and six Blazer nine-millimeter cartridges on Croom's person. A nine-millimeter semi-automatic handgun with its safety off, its hammer cocked, and a Blazer cartridge in its chamber was recovered from beneath the Delta 88.
7
Croom initially identified himself as Bill Jones and told the officers that his wallet and identification were in the car. Upon searching the car, the police discovered Croom's wallet on the transmission hump in the front floorboard. The officers found a plastic bag containing eight grams of cocaine, divided into five individual packets, lying in the wallet's fold. Drug Enforcement Agency Special Agent David Lewis testified at trial that the packaging and amount of the cocaine were consistent with distribution, rather than personal use.
8
First, Croom argues that the district court should have granted his motion to suppress the cocaine, the firearm, and the items found on his person. Croom asserts that the police had no reasonable suspicion of criminal activity, based on articulable facts, that could justify an investigatory stop of the Delta 88. See Terry v. Ohio, 392 U.S. 1, 21-22 (1968). We disagree.
9
In Terry, the Supreme Court held that a police officer with a reasonable suspicion of criminal activity, based on articulable facts, may conduct a "stop and frisk" search of an individual "for purposes of investigating possible criminal behavior even though there is no probable cause to make an arrest." Id. at 21-22. The determination of whether the stop is reasonable rests on the application of an objective standard: whether "the facts available to the officer at the moment of the seizure or the search 'warrant a man of reasonable caution in the belief that the action taken was appropriate." Id. (citing Carroll v. United States, 267 U.S. 132, 162 (1925)).
10
The district court's findings of fact in determining whether to grant a motion to suppress are subject to a clearly erroneous standard of review by this court. United States v. Coleman, 628 F.2d 961, 963 (6th Cir.1980). The district court found that officers Newman and McCarter were unaware that the armed robbery report was in error when they pulled over behind the suspect Delta 88 and got out of their car. This finding of fact is not clearly erroneous on the record before us. In addition, we note that Newman and McCarter did not need to know that the robbery report was correct in order to simply walk up to the stopped Delta 88, which pulled over of its own volition. See U.S. v. Rose, 889 F.2d 1490 (6th Cir.1989) (DEA agents' approach to narcotics suspect's vehicle neither seizure nor unjustified investigatory stop). Accordingly, we believe that the district court did not err in determining that it was reasonable for officers Newman and McCarter to approach the stopped Delta 88.
11
Once these officers got out of their car and saw the right front passenger of the Delta 88 throw a weapon to the ground, it was reasonable for the officers to search the passenger's person and the automobile for their own protection. Terry, 392 U.S. at 27. In Michigan v. Long, 463 U.S. 1032, 1050 (1983), the Supreme Court stated: "If while conducting a legitimate Terry search of the interior of the automobile, the officer should, as here, discover contraband other than weapons, he clearly cannot be required to ignore the contraband, and the Fourth Amendment does not require its suppression in such circumstances." The nine-millimeter handgun, the eight grams of cocaine, and the items on Croom's person were thus discovered during a constitutional search, and the district court properly denied Croom's motion to suppress this evidence.
12
Second, Croom asserts that the evidence presented by the government is insufficient to support his conviction for possession with intent to distribute cocaine, and is therefore also insufficient to support his conviction for possession of a firearm during and in relation to a crime of drug trafficking. We are unpersuaded by this argument.
13
In determining the sufficiency of evidence for a criminal conviction, the relevant question is whether "after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Jackson v. Virginia, 443 U.S. 307, 319 (1979) (emphasis in original); See also United States v. Ellzey, 874 F.2d 324, 328 (6th Cir.1989) (judgment reversed for insufficiency of evidence only if, viewing the record as a whole, judgment not supported by substantial and competent evidence). We believe that a rational jury could find Croom guilty beyond a reasonable doubt of (1) knowing (2) possession with intent to distribute (3) a controlled substance under 21 U.S.C. Sec. 841(a)(1) based on the evidence submitted at trial, including Agent Lewis' testimony and the items found on Croom's person and in the car. As Croom does not dispute the fact that he possessed a weapon at the time he was arrested, the firearm charge is also supported by sufficient evidence. See United States v. Acosta-Cazares, 878 F.2d 945 (6th Cir.), cert. denied, 493 U.S. 899 (1989).
14
For the foregoing reasons, the decision of the district court is affirmed.
*
The Honorable Charles W. Joiner, Senior United States District Judge for the Eastern District of Michigan, sitting by designation
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492 P.2d 1353 (1972)
27 Utah 2d 53
STATE of Utah, Plaintiff and Respondent,
v.
Philip GEORGOPOULOS, Defendant and Appellant.
No. 12574.
Supreme Court of Utah.
January 19, 1972.
Sumner J. Hatch, Salt Lake City, for defendant-appellant.
Vernon B. Romney, Atty. Gen., David S. Young, Asst. Atty. Gen., Salt Lake City, for plaintiff-respondent.
CROCKETT, Justice.
Defendant appeals from his conviction by a jury of the crime of knowingly receiving stolen property, a pick-up truck and camper, value over $50.00, and therefore a felony under Sec. 76-38-12 U.C.A. 1953. He challenges the conviction on these grounds: That the conviction is based upon the testimony of an accomplice which did not have the corroboration required by law; and improper admission of evidence (a) concerning other stolen property in the defendant's possession; and (b) evidence obtained by a search warrant which he claims was improvidently issued.
On appeal we survey the evidence, not as claimed by the defendant, but both as to the facts directly shown, and any inferences the jury could fairly and reasonably *1354 draw therefrom, in the light favorable to their verdict.[1]
During the night of September 17, 1969 a new Chevrolet truck on which was mounted a new El Dorado camper were stolen from the lot of the Streator Chevrolet Company at 320 West 1300 South in Salt Lake City. Prior to this time the defendant had talked to Ray Richards, telling him that he had access to repossessed campers and discussed the possibility of Richards purchasing one. Just prior to the theft above referred to, defendant told Richards that he could get him such a camper for $1,000 in cash, which Richards turned over to him, but without taking a receipt or other documentary evidence of the transaction. On September 19, two days after the above mentioned theft of the truck and camper, defendant again contacted Richards and told him that he could get him a much better deal, that for an additional $800 he could have both the camper and a new truck. Richards accepted the offer and turned over the additional money, $450 in cash and $350 by check. He testified that the defendant took him to a small warehouse in South Salt Lake and gave him a key to the warehouse containing the Chevrolet truck and El Dorado camper. There were no keys to the vehicle so Richards cross-wired it and moved it to another location. Richards admitted that he repainted the truck and camper. The truck and camper were later identified through the National Auto Theft Bureau as those stolen from the Streator Company lot.
Two months later, in December, 1969, Officer Nick Poloukos of the Salt Lake City Police, in investigating reports concerning stolen property, went to a warehouse at 9th West and South Temple. It was later found to be leased to an A & K Trucking Company, and that the defendant Georgopoulos was making the payments. No one responded to the knock of the officers. Officer Poloukos testified that "the overhead door" was sufficiently raised that he could look under it. He obtained the license number of a truck, which checked out to be a stolen vehicle. Upon this information a search warrant was issued and the stolen Chevrolet truck and El Dorado camper, the subject of this conviction, were thus recovered.
In arguing his point that his conviction was based on the uncorroborated testimony of an accomplice defendant places reliance on
Sec. 77-31-18, U.C.A. (1953)
A conviction shall not be had on the testimony of an accomplice, unless he is corroborated by other evidence, which in itself and without the aid of the testimony of the accomplice tends to connect the defendant with the commission of the offense; and the corroboration shall not be sufficient, if it merely shows the commission of the offense or the circumstances thereof.
The defendant's insistence that the witness Ray Richards was an accomplice is but an ipse dixit of his own. In order for one to be an accomplice it must be shown that he knowingly, voluntarily, and with common intent with the principal offender, united in the commission of a crime, so that he could also be charged with the same offense.[2] What we say about the witness Ray Richards is not intended to in any way justify or condone his conduct. But the legal question as to whether he was an accomplice and the effect of his testimony present quite a different problem. There are certain aspects of the situation which suggest that he was or should have been aware that the property he was purchasing from the defendant was stolen, notwithstanding his attempted explanations to the contrary. Nevertheless, as will be seen from the facts hereinabove recited, if the defendant received the stolen truck and camper, as the jury have found he did, it *1355 was in the defendant's warehouse and thus in his possession before the witness Ray Richards knew anything about this particular truck and camper and paid the money for them on September 19, two days after they had been stolen.
Once the offense of receiving the stolen property had been committed, the subsequent conduct and/or knowledge of the witness Richards with respect to the stolen property did not make him an accomplice to the defendant's original offense.[3] The credibility of his testimony as affected by any unseemly aspects of his conduct was for the jury to judge. In view of what has been said above it is unnecessary to further discuss the sufficiency of the State's evidence to sustain the conviction.
In regard to defendant's contention that prejudicial error was committed in the introduction of evidence concerning other stolen property in his possession, these observations are made: First; with respect to another camper, when it was not sufficiently identified as a similar camper shown to be in the defendant's possession, the evidence was actually stricken and the jury told to disregard it. Second; as to other evidence: evidence of an accused's continued possession of other stolen property is proper as bearing on the issue of the guilty knowledge of the defendant, and lessening the likelihood that he innocently received the stolen goods subject of the charge against him.[4]
Reference to the facts as recited above shows that there is no merit to defendant's unsupported assertion that Officer Poloukos was guilty of a trespass in obtaining the information upon which the affidavit for the search warrant was based. He simply made a plain sight inspection by looking under the door and obtaining the numbers on the 1967 Ford truck, which turned out to be stolen property, and thus provided a proper foundation for the issuance of the search warrant.[5]
Affirmed. No costs awarded.
CALLISTER, C.J., and HENRIOD, TUCKETT and ELLETT, JJ., concur.
NOTES
[1] See State v. Aures, 102 Utah 113, 127 P.2d 872; and State v. Ward, 10 Utah 2d 34, 347 P.2d 865.
[2] State v. Bowman, 92 Utah 540, 70 P.2d 458; State v. Coroles, 74 Utah 94, 277 P. 203.
[3] State v. Washington, 25 Utah 2d 111, 476 P.2d 1019.
[4] State v. Zeman, 63 Utah 422, 226 P. 465; Wertheimer & Goldberg v. State, 201 Ind. 572, 169 N.E. 40.
[5] Sleep v. Morrill, 199 Or. 128, 260 P.2d 487; Amphitheaters, Inc. v. Portland Meadows, 184 Or. 336, 198 P.2d 847; James v. United States, 135 U.S.App.D.C. 314, 418 F.2d 1150; State v. Tapp, 26 Utah 2d 392, 490 P.2d 334 (1971).
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805 F.2d 1042
**U.S.v.Brock
86-8075
United States Court of Appeals,Eleventh Circuit.
11/7/86
1
N.D.Ga.
AFFIRMED
2
---------------
** Local Rule: 25 case.
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467 S.E.2d 675 (1996)
342 N.C. 838
CROWELL CONSTRUCTORS, INC., Petitioner
v.
STATE of North Carolina, ex rel., William W. COBEY, Jr., Secretary, North Carolina Department of Environment, Health and Natural Resources, Respondent.
No. 178PA94.
Supreme Court of North Carolina.
March 8, 1996.
*676 McCoy, Weaver, Wiggins, Cleveland & Raper by Richard M. Wiggins and Anne Mayo Evans, Fayetteville, for petitioner-appellee.
Michael F. Easley, Attorney General by Daniel F. McLawhorn and Kathryn Jones Cooper, Special Deputy Attorneys General, and David W. Berry, Associate Attorney General, for respondent-appellant.
LAKE, Justice.
This case comes before this Court for the second time and currently presents an issue of first impression involving an award of attorney's fees pursuant to N.C.G.S. § 6-19.1.
In 1979, Crowell Constructors, Inc. ("Crowell") purchased a thirty-six-acre tract of land in Moore County. This land had previously been operated as a sand and gravel pit by Cumberland Sand & Gravel Company. Gravel and sand were brought to the property and separated by a washing and screening process. As a by-product of this process, poor-quality sand was produced and stockpiled *677 on the property. When Cumberland Sand & Gravel ceased its operations in 1960, it left behind some 150 tons of this poor-quality sand in stockpiles as high as twenty-five feet; some of these stockpiles were conical in shape, and some were ridge-like. All of the sand was stockpiled above the original surface soil.
From 1960 until the early 1980s, the stockpiled sand lay fallow. During these intervening years, varying densities of natural vegetation, including scrub pine trees, began to grow on top of the sand. After Crowell purchased the property, it began to remove the stockpiled sand from the site with the aid of front-end loaders and trucks. On 8 February 1984, the North Carolina Department of Natural Resources and Community Development, the predecessor of the Department of Environment, Health and Natural Resources ("DEHNR"), see N.C.G.S. §§ 143B-279.1 to -279.5 (1993), sent Crowell a notice of violation informing the company that by removing the sand, it was mining without a permit in violation of The Mining Act of 1971. See N.C.G.S. §§ 74-46 to -68 (1985) (amended 1994); see also N.C.G.S. §§ 143B-290 to -293 (1993). After communications with Crowell's legal counsel, DEHNR determined that, due to the short-term nature of the removal, Crowell would not be required to apply for a mining permit, although it was DEHNR's opinion that Crowell's activities technically met the definition of "mining." DEHNR determined that Crowell's activities would be better regulated by the Sedimentation Pollution Control Act of 1973. Accordingly, Crowell submitted a soil erosion and sediment control plan, which DEHNR later approved.
Nearly two years later, DEHNR inspected the site again and observed that Crowell was still removing the stockpiled sand and that Crowell had not properly implemented its soil erosion and sediment control plan. On 14 February 1986, DEHNR sent Crowell a second notice of violation informing Crowell that it was subject to a civil penalty of up to $5,000 for each day of illegal mining. After conferring with DEHNR concerning the violations, Crowell agreed to immediately cease removing the stockpiled sand and to apply for a mining permit. On 19 February 1986 and 14 March 1986, DEHNR inspected the site again and found Crowell still removing the sand. In response, DEHNR assessed a $10,000 civil penalty against Crowell for mining on two occasions without a permit in violation of The Mining Act.
Crowell contested the penalty assessment and petitioned for agency hearing before an Administrative Law Judge ("ALJ"). The ALJ's recommended decision concluded that while Crowell had violated The Mining Act, the civil penalty was arbitrary and capricious as the penalty amount was based upon unpublished guidelines, and the penalty was reduced to $2,000. The North Carolina Mining Commission next heard the matter and, on 16 September 1988, issued its final agency decision which modified the ALJ's recommended decision by reinstating the original $10,000 penalty assessment. Crowell filed a petition for judicial review of the agency decision in Superior Court, Cumberland County. On 15 August 1989, the superior court reversed the Mining Commission on the ground there was no competent, material or substantial evidence in the record to support a finding that Crowell's activities constituted mining in violation of The Mining Act.
DEHNR appealed to the Court of Appeals which, in a divided opinion, reversed the superior court and, in reinstating the $10,000 penalty, held that the record demonstrated substantial evidence to support a finding that Crowell's activities constituted mining within the meaning of The Mining Act and that the Commission's decision was neither arbitrary nor capricious. Crowell Constructors v. State ex rel. Cobey, 99 N.C.App. 431, 393 S.E.2d 312 (1990) (hereinafter Crowell I). Crowell appealed to this Court based on the dissent filed, and, because DEHNR had failed to include a written notice of appeal in the record pursuant to Rule 3(a) and Rule 9(a)(1)(i) of the North Carolina Rules of Appellate Procedure, this Court held the Court of Appeals lacked jurisdiction over the appeal and thus vacated the decision in Crowell I and remanded for dismissal of the appeal. Crowell Constructors v. State ex rel. Cobey, 328 N.C. 563, 402 S.E.2d 407 (1991) (per curiam).
*678 Thereafter, Crowell filed a petition for attorney's fees pursuant to N.C.G.S. § 6-19.1 in Superior Court, Cumberland County, on the basis that DEHNR acted "without substantial justification" in pressing its claim against Crowell. On 12 August 1992, the superior court entered judgment granting Crowell's petition for reimbursement of attorney's fees in the amount of $16,529.20. DEHNR appealed the award to the Court of Appeals and relied upon the Crowell I opinion, which held that substantial evidence showed Crowell's activities constituted mining, as a basis for the position that DEHNR was not "without substantial justification" in assessing the civil penalty against Crowell. However, the Court of Appeals noted that since this Court had vacated Crowell I, the opinion was a nullity and void. Thus, the Court of Appeals held that the agency, in relying upon a nullity, failed to carry its burden of showing "substantial justification." The Court of Appeals further held that the trial court had concluded that there was no competent or substantial evidence that Crowell violated The Mining Act, and since DEHNR had failed to properly preserve an appeal from that conclusion, this was the law of the case and binding on appeal. Crowell Constructors v. State ex rel. Cobey, 114 N.C.App. 75, 440 S.E.2d 848 (1994) (hereinafter Crowell II). The Court of Appeals then modified the amount of attorney's fees allowed to $14,619.20 and affirmed the superior court. Id. at 80-81, 440 S.E.2d at 851.
This Court granted DEHNR's petition for writ of supersedeas and discretionary review on 5 May 1994. On 16 June 1994, this Court also allowed DEHNR's motion to amend the record on appeal of Crowell II to include the record on appeal of Crowell I. We therefore note at the outset of our review that when the Court of Appeals reached its latest decision in this matter, it only had before it the record on appeal of Crowell II, which essentially contains the procedural history of this case. The underlying facts of this dispute are contained in the record on appeal of Crowell I. Thus, in reaching our decision on this appeal, this Court has been able to rely upon facts that were unavailable to the panel of the Court of Appeals which last considered this matter.
The essential issue presented here for resolution is whether DEHNR was "without substantial justification" under N.C.G.S. § 6-19.1 in pressing its claim that Crowell was engaged in mining without a permit in violation of The Mining Act. We conclude that, based upon the records of Crowell I and Crowell II, we cannot say that DEHNR was "without substantial justification" in its determination that Crowell was illegally mining. Crowell is, therefore, not entitled to reimbursement of its reasonable attorney's fees pursuant to N.C.G.S. § 6-19.1. Accordingly, we reverse the Court of Appeals.
This Court has not previously considered the meaning of "substantial justification" pursuant to N.C.G.S. § 6-19.1. This statute provides in pertinent part:
In any civil action ... brought by the State or brought by a party who is contesting State action pursuant to G.S. 150A-43... unless the prevailing party is the State, the court may, in its discretion, allow the prevailing party to recover reasonable attorney's fees ... if:
(1) The court finds that the agency acted without substantial justification in pressing its claim against the party; and
(2) The court finds that there are no special circumstances that would make the award of attorney's fees unjust.
N.C.G.S. § 6-19.1 (1986) (emphasis added). Thus, in order for the trial court to exercise its discretion and award reasonable attorney's fees to a party contesting State action in one of the prescribed ways, the prevailing party must not be the State, the trial court must find the State agency acted "without substantial justification" in pressing its claim and the trial court must find no special circumstances exist which make an award of attorney's fees unjust. In resolving issues concerning statutory construction, this Court's first task is to ascertain legislative intent in order to assure that both the purpose and the intent of the legislature are carried out. Electric Supply Co. of Durham v. Swain Elec. Co., 328 N.C. 651, 403 S.E.2d 291 (1991). The words "substantial justification" *679 are undefined within the statute. Therefore, absent any ambiguity in the language employed in the statute, these words must be accorded their plain and definite meanings. State ex rel. Util. Comm'n v. Edmisten, 291 N.C. 451, 232 S.E.2d 184 (1977).
The Court of Appeals, in construing "substantial justification," has followed the United States Supreme Court's construction of similar language under the Equal Access to Justice Act ("EAJA") in Pierce v. Underwood, 487 U.S. 552, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988). See Crowell II, 114 N.C.App. at 79-80, 440 S.E.2d at 851. We concur with the Court of Appeals in this regard.
The EAJA contains an attorney's fees provision almost identical to our statute, N.C.G.S. § 6-19.1, and provides in relevant part:
Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses ... incurred by that party in any civil action ... brought by or against the United States ... unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.
28 U.S.C. § 2412(d)(1)(A) (1994) (emphasis added). In Pierce, the United States Supreme Court noted that the word "substantial" was subject to two different connotations:
On the one hand, it can mean "[c]onsiderable in amount, value, or the like; large," as, for example, in the statement "he won the election by a substantial majority." On the other hand, it can mean "[t]hat is such in substance or in the main,"as, for example, in the statement "what he said was substantially true."
Pierce, 487 U.S. at 564, 108 S.Ct. at 2549, 101 L.Ed.2d at 504 (citations omitted). Of these two connotations, the Court held that the connotation most naturally conveyed by the EAJA was "`justified in substance or in the main'that is, justified to a degree that could satisfy a reasonable person." Id. at 565, 108 S.Ct. at 2550, 101 L.Ed.2d at 504.
We agree and conclude that for purposes of N.C.G.S. § 6-19.1, "substantial justification" should be construed as "`justified in substance or in the main' that is, justified to a degree that could satisfy a reasonable person." Pierce, 487 U.S. at 565, 108 S.Ct. at 2550, 101 L.Ed.2d at 504. Our legislature, in enacting N.C.G.S. § 6-19.1 in order that a prevailing party may recover its reasonable attorney's fees when a State agency has pressed a claim against that party "without substantial justification," obviously sought to curb unwarranted, ill-supported suits initiated by State agencies. In order to further the legislature's purpose of reining in wanton, unfounded litigation, the State's action, for purposes of N.C.G.S. § 6-19.1, is measured by the phrase "substantial justification." This standard should not be so strictly interpreted as to require the agency to demonstrate the infallibility of each suit it initiates. Similarly, this standard should not be so loosely interpreted as to require the agency to demonstrate only that the suit is not frivolous, for "that is assuredly not the standard for Government litigation of which a reasonable person would approve." Pierce, 487 U.S. at 566, 108 S.Ct. at 2550, 101 L.Ed.2d at 505. Rather, we adopt a middle-ground objective standard to require the agency to demonstrate that its position, at and from the time of its initial action, was rational and legitimate to such degree that a reasonable person could find it satisfactory or justifiable in light of the circumstances then known to the agency.
DEHNR argues that the Court of Appeals, rather than viewing the circumstances and information known by DEHNR at the time it assessed the civil penalty against Crowell to decide whether DEHNR was "without substantial justification," applied instead what amounted to an outcome determinative test based upon which party prevailed in the trial court below. According to DEHNR, this shift in focus disregards prior precedent set by the Court of Appeals in S.E.T.A. UNCCH v. Huffines, 107 N.C.App. 440, 420 S.E.2d 674 (1992). While we agree with DEHNR that an outcome determinative test was, in essence, applied in this case, in fairness to the Court of Appeals, we recognize *680 that this shift from the Court of Appeals' prior precedent and previous holding in Crowell I primarily resulted from the peculiar procedural history of this case, as contained in the limited record on appeal before the Court of Appeals. In light of the expanded record and additional facts available to this Court, we necessarily reach a different result.
S.E.T.A. involved an award of attorney's fees pursuant to N.C.G.S. § 6-19.2 which has the same criteria for awarding attorney's fees as N.C.G.S. § 6-19.1, but applies instead to a State agency's refusal to permit public access to public records. The Court of Appeals stated:
The test for substantial justification is not whether this [c]ourt ultimately upheld respondent's reasons for resisting public disclosure of the requested documents as correct but, rather, whether respondent's reluctance to disclose was "`justified to a degree that could satisfy a reasonable person'" under the existing law and facts known to, or reasonably believed by, respondent at the time respondent refused to make disclosure.
S.E.T.A., 107 N.C.App. at 443-44, 420 S.E.2d at 676 (citations omitted). Thus, pursuant to S.E.T.A., in deciding whether a State agency has pressed a claim against a party "without substantial justification," the law and facts known to, or reasonably believed by, the State agency at the time the claim is pressed must be evaluated.
When the test or focus of whether an agency's position or action is "without substantial justification" is directed to the end result in the trial court, the standard becomes more a question of which party prevailed at that point and less a question of whether the agency's position, at the inception of the controversy, was justified to a degree that could satisfy a reasonable person. Indeed, the Supreme Court in Pierce rejected such an outcome determinative test under the EAJA in stating:
Obviously, the fact that one other court agreed or disagreed with the Government does not establish whether its position was substantially justified. Conceivably, the Government could take a position that is not substantially justified, yet win; even more likely, it could take a position that is substantially justified, yet lose.
Pierce, 487 U.S. at 569, 108 S.Ct. at 2552, 101 L.Ed.2d at 507.
In the instant case, the crux of DEHNR's claim against Crowell, and hence the threshold measure of its justification, hinged upon whether Crowell's activities met, or could reasonably be considered to have met, one of the three definitions of "mining" contained within The Mining Act. Under the first of these definitions, "mining" means "[t]he breaking of the surface soil in order to facilitate or accomplish the extraction or removal of minerals, ores, or other solid matter." N.C.G.S. § 74-49(7)(a). Under N.C.G.S. § 74-49(6), "sand" is defined as a "mineral." Thus, in order to determine whether DEHNR was or was not "without substantial justification" for assessing the $10,000 civil penalty against Crowell for illegal mining, consideration must be given to whether the agency, at the time the claim was pressed, had a basis, satisfactory to a reasonable person, to conclude that Crowell had broken through the "surface soil" in order to remove the sand.
Based upon our review and analysis of the records before us in Crowell I and Crowell II, we conclude under the above standard that DEHNR, at the time it assessed the civil penalty against Crowell, was not "without substantial justification" in asserting that Crowell, by removing sand that had been stockpiled for some twenty-four years, was technically engaged in mining without a permit in violation of The Mining Act. The records reveal that the stockpiles of sand were as high as twenty-five feet in 1960 when Cumberland Sand & Gravel ceased operations. Twenty-four years later in 1984, the sand was covered to varying degrees with vegetation, including pine trees. Photographs indicate a brown or dark band of material, indicative of a second growth of soil, at the top of the sand, upon which scrub pines and other vegetation grew. In order to remove the sand, Crowell cleared the vegetation on the newer "surface soil" from the top of the sand and cut into and extracted the sand with a front-end loader. Under these *681 circumstances, we conclude DEHNR was justified to a degree that could satisfy a reasonable person in asserting its position or opinion that the top portion of the sand over a period of twenty-four years had become the "surface soil," when a black band of second soil growth existed, upon which scrub pines and other types of vegetation grew. Because we hold that DEHNR was not "without substantial justification" in its initial position, Crowell is not entitled to recover attorney's fees under N.C.G.S. § 6-19.1.
Accordingly, we reverse the decision of the Court of Appeals and remand this case to that court for further remand to the Superior Court, Cumberland County, for proceedings consistent with this opinion.
REVERSED AND REMANDED.
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160 S.W.3d 256 (2005)
Joan Carol Ellis ROBERTS, Appellant,
v.
Dr. Milas Eldon DAVIS, Jr., and Dr. George Alan Aydelott, Appellees.
No. 06-04-00057-CV.
Court of Appeals of Texas, Texarkana.
Submitted February 16, 2005.
Decided March 15, 2005.
Rehearing Overruled April 13 and 26, 2005.
*259 Joan Carol Ellis Roberts, Mount Pleasant, pro se.
Jeffery C. Lewis, Atchley, Russell, Waldrop & Hlavinka, LLP, Texarkana, for appellees.
Before ROSS, CARTER, and CORNELIUS,[*] JJ.
OPINION
WILLIAM J. CORNELIUS, Justice (Retired).
Joan Carol Ellis Roberts appeals from an adverse summary judgment in her libel suit against Dr. Milas Eldon Davis, Jr., and Dr. George Alan Aydelott.
Roberts was employed as a CAT Scan technician in the radiology department of Titus Regional Medical Center in Mount Pleasant, Texas. Doctors Davis and Aydelott were staff radiologists under contract with the medical center. The doctors became concerned about Roberts' performance, work habits, and attitudes, and they reported these concerns and their complaints to the medical center's administrators on several occasions. Roberts, in turn, initiated several administrative and judicial proceedings against the doctors. *260 The doctors made specific complaints about Roberts in two letters. One was dated March 7, 2002, and was signed by both Dr. Davis and Mr. Aydelott. The other was dated April 9, 2001, and was signed only by Dr. Davis. Both letters were addressed to George Burns, director of radiology of the medical center. Both letters are attached to this opinion as appendices.
The doctors filed a joint motion for summary judgment. They attached to their motion copies of the two letters written to Burns, as well as other summary judgment evidence consisting of various documents and affidavits of their own as well as an affidavit of Gene Lott, director of human resources of the medical center. The only specific grounds for summary judgment raised by the doctors in their motion were (1) limitations barred Roberts' suit; (2) the letters are not defamatory, including the defense that the contents are true; and (3) the statements by the doctors were protected by qualified privilege.
Roberts responded to the doctors' motion for summary judgment. Her response controverted the three main issues raised by the doctors in their motion, and also raised some procedural errors she alleged would make summary judgment erroneous. Roberts supported her response by summary judgment evidence consisting of documents and affidavits of various persons, including her own affidavit. The trial court granted the doctors' motion in a general order that did not state the specific reasons for the judgment.
On appeal Roberts contends the trial court erred in: overruling her special exceptions to the doctors' affidavits; modifying the judgment after it was initially rendered, including the addition of a recovery of costs to the doctors; rendering a judgment that fails to state it is based on the pleadings; and granting summary judgment overruling Roberts' objections to the doctors' affidavits. Roberts also contends the trial court erred in granting summary judgment because the doctors failed to conclusively prove by competent summary judgment evidence that limitations barred her suit; or that the letters were not defamatory; or that qualified privilege applied to the contents of the letters.
Defendants moving for summary judgment are entitled to judgment only if the summary judgment evidence conclusively disproves one or more essential elements of the plaintiff's causes of action, or conclusively establishes one of the defendant's affirmative defenses. Friendswood Dev. Co. v. McDade & Co., 926 S.W.2d 280, 282 (Tex.1996).
We will first address Roberts' procedural complaints. Roberts complains of the trial court's overruling of her special exceptions to the affidavits the doctors attached to their motion for summary judgment. Roberts contends the affidavits were conclusory and based on hearsay rather than on facts. We find that the trial court properly overruled Roberts' objections. The affidavits contain sufficient statements of facts to at least raise fact questions as to the issues in controversy. If some of the statements in the affidavits are conclusions or are based on hearsay, the error is harmless because sufficient statements of facts remain to support the summary judgment. See Brown v. Owens, 663 S.W.2d 30, 34 (Tex.App.-Houston [14th Dist.] 1983), rev'd in part on other grounds, 674 S.W.2d 748 (Tex.1984); Watson v. Druid Hills Co., 355 S.W.2d 65, 68 (Tex.App.-Dallas 1962, writ ref'd n.r.e.).
The trial court's modification of the judgment, including the award of costs, was not error. The modification was made while the trial court retained plenary power over the judgment. Owens-Corning Fiberglas Corp. v. Wasiak, 883 S.W.2d 402, *261 406 (Tex.App.-Austin 1994, no writ). The inclusion of an award of costs in the modified judgment was not error. Rule 131 of the Texas Rules of Civil Procedure provides that "the successful party to a suit shall recover from his adversary all costs incurred therein." Tex.R. Civ. P. 131. An additional hearing on the award was not necessary in this instance. And, although the judgment must be based on the pleadings, there is no requirement that the judgment state in express terms that it is so based. Tex.R. Civ. P. 301.
When an order granting summary judgment is in general terms and does not state the specific grounds on which it is based, the summary judgment may properly be sustained on appeal only on a ground or grounds that are expressly raised in the motion for summary judgment or a response thereto. Tex.R. Civ. P. 166a(c); Travis v. City of Mesquite, 830 S.W.2d 94, 100 (Tex.1992); Oden v. Marrs, 880 S.W.2d 451, 454 (Tex.App.-Texarkana 1994, no writ). Thus, the summary judgment here can be sustained only if the summary judgment evidence conclusively proves that Roberts' suit is barred by limitations, or the letters are not defamatory, or if they are defamatory, the statements made therein are protected by qualified privilege.
The summary judgment evidence does not conclusively prove that Roberts' suit is barred by limitations. The statute of limitations applicable to libel is one year. Tex. Civ. Prac. & Rem.Code Ann. § 16.002(a) (Vernon 2002). A cause of action for libel accrues on the date of the publication alleged to be defamatory. Ellert v. Lutz, 930 S.W.2d 152, 156 (Tex.App.-Dallas 1996, no writ). The letters involved here were written April 9, 2001, and March 7, 2002, respectively. Roberts' suit was filed March 10, 2003. Thus, unless the discovery rule operates to defer the beginning of the limitations period, limitations ran on Roberts' suit March 7, 2003, before her suit was filed.
The discovery rule in libel cases applies when the publication is inherently undiscoverable, and it operates to defer the beginning of the limitations period until the plaintiff actually discovers the libel, or by the exercise of reasonable diligence should have discovered it. Kelley v. Rinkle, 532 S.W.2d 947 (Tex.1976). In a summary judgment context where limitations is an issue, the movant for summary judgment has the burden to conclusively establish that the discovery rule does not apply.
The doctors' summary judgment evidence supporting limitations relies on evidence that the allegedly libelous letters were in Roberts' personnel files, and on evidence that Roberts had an opportunity to review the letter of Dr. Davis at a counseling session June 7, 2001. Roberts' summary judgment evidence contradicts these allegations and states she did not know of the defamatory statements or the letter until she first saw the letters in April or May of 2002. Similarly, the summary judgment evidence does not show when the letters were placed in Roberts' personnel file. There is therefore no summary judgment proof that, even if Roberts had searched her personnel files, she would have known about the letters before April or May of 2002, when she contends she first saw the letters. We conclude from the summary judgment evidence the doctors failed to conclusively prove that the discovery rule did not apply, and failed to conclusively prove that limitations barred Roberts' suit. The summary judgment cannot be upheld on the basis of limitations.
The doctors also moved for summary judgment on the ground that the letters were not defamatory. Defamation *262 in written form is libel. Libel is defined as:
A libel is a defamation expressed in written or other graphic form that tends to blacken the memory of the dead, or that tends to injure a living person's reputation and thereby expose the person to public hatred, contempt or ridicule, or financial injury or to impeach any person's honesty, integrity, virtue, or reputation or to publish the natural defects of anyone and thereby expose the person to public hatred, ridicule, or financial injury.
Tex. Civ. Prac. & Rem.Code Ann. § 73.001 (Vernon 1997).
Whether a statement is reasonably capable of a defamatory meaning, and whether a statement is an opinion or a statement of fact, are questions of law for the court. Musser v. Smith Protective Serv., Inc., 723 S.W.2d 653, 654 (Tex.1987). But if a statement's meaning is ambiguous, the question whether it is defamatory is one for the jury. Id. To sustain the summary judgment on the basis that the letters were not defamatory, the doctors here must have proven by uncontroverted summary judgment evidence that the letters are not defamatory.
We find that the letter of March 7, 2002, signed by Dr. Aydelott and Dr. Davis, as a matter of law is not defamatory. As can be seen by a reading of the letter, it is a critique by Roberts' supervisors of her job performance. It accuses her of deliberate obstruction and deteriorating behavior in her work and her relationships with other employees, and suggests that her attitude contributes to a dysfunctional work situation in the CAT Scan section. The letter does not accuse her of any crime or question her honesty, integrity, or virtue, and all the criticism is related to her work, which is a natural and proper concern on the part of an employee's supervisors or employer. See Schauer v. Mem'l Care Sys., 856 S.W.2d 437 (Tex.App.-Houston [1st Dist.] 1993, no writ), partially overruled on other grounds, Huckabee v. Time Warner Entm't Co., L.P., 19 S.W.3d 413, 423 (Tex.2000). As the letter of March 7, 2002, is not defamatory, the summary judgment as to Dr. Aydelott will be affirmed.
We find, however, that the doctors' summary judgment evidence does not conclusively prove that the letter of April 9, 2001, signed only by Dr. Davis, is not defamatory. Unlike the March 7, 2002, letter, the April 9, 2001, letter accuses Roberts of violations of state and federal law, repetitious and malicious illegal malpractice, manufacture of false reasons for violating orders, and illegally practicing medicine. Roberts controverted these charges in her summary judgment evidence, and we conclude that at least a fact issue is raised as to the defamatory nature of this letter. The courts generally hold that falsely accusing a person of criminal conduct is defamatory as a matter of law. Christy v. Stauffer Pub., Inc., 437 S.W.2d 814 (Tex.1969).
The doctors contend the letters are not defamatory because the statements made in them are true. Substantial truth is a defense to a charge of libel. Doctor Davis' summary judgment evidence, however, does not assert that the statements in the letter are true or even substantially true. The only assertion about truth is his statement that, "The information contained in said letters was true and correct to the best of my knowledge and belief." That statement is an opinion. It is not a statement that the information is true.[1] The summary judgment *263 evidence does not support the summary judgment on the basis of the truth of the statement.
The doctors asserted in their motion for summary judgment that qualified privilege applied to their statements as a matter of law. A qualified privilege extends to statements made in good faith on a subject in which the maker has an interest or duty, to another person having a corresponding interest or duty. Dixon v. Southwestern Bell Tel. Co., 607 S.W.2d 240 (Tex.1980); Leatherman v. Rangel, 986 S.W.2d 759 (Tex.App.-Texarkana 1999, writ denied); Martin v. Southwestern Elec. Power Co., 860 S.W.2d 197 (Tex.App.-Texarkana 1993, writ denied). Qualified privilege justifies the statements if they are made without malice. Dixon v. Southwestern Bell Tel. Co., 607 S.W.2d at 242; Martin v. Southwestern Elec. Power Co., 860 S.W.2d at 199. The privilege is peculiarly applicable to communications between employers and employees. The elements of qualified privilege are good faith, an interest to be upheld, a statement limiting the communication to the proper scope, a proper occasion, and publication in a proper manner and to proper parties only. Martin v. Southwestern Elec. Power Co., 860 S.W.2d at 199. When a defendant in a defamation suit moves for summary judgment on the basis of qualified privilege, the defendant has the burden of conclusively proving that the statements were not made with malice.
The summary judgment evidence here conclusively establishes all of the essential elements of qualified privilege as to the Davis letter, except lack of malice. Dr. Davis' summary judgment evidence states that he made the statements solely in an effort to fulfill his duties to the medical center and its radiological department, and to provide quality care and prevent the endangerment of the medical center's patients. Roberts' summary judgment evidence, on the other hand, points to the statements of Dr. Davis charging Roberts with criminal conduct, as well as statements that the doctors had tried to get Roberts terminated, but she "conned" the administration to prevent her termination. Dr. Davis further states that Roberts violated orders just to "show us who's boss," and states he will continue to make such reports "until someone discharges her from employment at TRMC." These statements are such that a reasonable person could infer they were prompted by malice. In Roberts' summary judgment evidence, she alleges the charges of criminal conduct are false and the doctor's statements were motivated by malice. Malice cannot be inferred from the falsity of the statements alone, Marathon Oil Co. v. Salazar, 682 S.W.2d 624, 631 (Tex.App.-Houston [1st Dist.] 1984, writ ref'd n.r.e.), but malice may be inferred if the statements are made with knowledge that they are false, or with reckless disregard of their truth. Dr. Davis asserted in his affidavit that all of the information he put in his letter was true and correct to the best of his knowledge and belief. That assertion may be sufficient to show a lack of malice if uncontradicted, but Roberts' summary judgment evidence contradicted it here, thus raising a fact issue on malice. Roberts' summary judgment evidence that Dr. Davis made these criminal charges when he had full knowledge of the circumstances raises an inference that the doctor knew the criminal charges were false or *264 made them with reckless disregard for their truth. Dr. Davis in his affidavit stated that all the statements in his letter were "true to the best of my knowledge and belief." Thus, we believe a fact issue was raised on the issue of malice, and for that reason summary judgment on the basis of qualified privilege cannot be sustained as to Dr. Davis.
Because we find the summary judgment evidence proves that the letter of March 7, 2002, from Dr. Aydelott and Dr. Davis is not defamatory, we affirm the summary judgment as to Dr. Aydelott. Because we find the summary judgment evidence raises a fact issue whether the letter of April 9, 2001, from Dr. Davis is defamatory and the summary judgment evidence raises a fact issue as to Dr. Davis' malice, we reverse the summary judgment as to Dr. Davis. Roberts' cause of action against Dr. Davis is severed and remanded to the trial court for trial.
*265
April 9, 2001
George Burns
Director of Radiology
TRMC
Mt. Pleasant, Texas 75455
This is a complaint lodged against Joan Roberts for deliberate, persistent, malicious, and repetitious malpractice of radiology technology. Therefore, I have no choice but to make formal complaint of these actions in an effort to protect the patient's rights, the radiology department of TRMC and myself, as a responsible Radiologist in charge, as these criminal acts occur.
The acts are predictable that she will deliberately not follow medical orders or directives by the referring physicians, the radiologists, or her supervisors and will manufacture false reasons for performing in violation of orders. This has occurred with regular and predictable patterns whenever working alone, such as at nights or weekends or when Darrell Beck is not around, to prevent this from happening when possible. This weekend is a prime example of such actions and occurred as follows. The ED added a number of cases as well as the floor on Friday, 4/6/01. As usual, Joan pushed our out-patients and in-patients down on the list to be done, and all were not done (DB not here on 4/6/01). Therefore, CT of abdomen and pelvis was postponed until Saturday morning, 4/7/01, with my permission and unbeknown to me (but not Joan) so was CT head also put off until Saturday morning.
So on Saturday morning, I asked Jay, the chief technician in charge on weekends, about when got her oral contrast for the CT abdomen and pelvis. He informed me that Joan had told him and the nurse on the floor to give the contrast later in the morning that she would not be in until later. I had Jay send the contrast up to the floor for Ms. to ingest and had Jay recall Joan again to come in and begin the study at 10 AM. He did and she said that she was going to take a shower and would be in later, and did not show up until about 10:45. After the case, she then performs the ED case prior to the in-patient, head scan and all of this took until about 1:30 or 2 PM to finish. This, of course, prevented my leaving for three hours, which was the intention.
Then, on Sunday morning, 4/8/01, she had an ED CT head scan about 6 AM on and called me in about 7 AM. She then left, knowing that there were two in-patients to be done. She doesn't come back to do these until 10:45 AM, while also running in another ED head on prior to head CT and not finishing up until after noon time. All of these put-offs and delays are to intentionally violate our medical directives and orders and to show us "who's boss". This has been her action for a long time. Then to further violate State and Federal Laws, she *266 offers to show the referring physicians what the studies show, whether they ask or not. This has continued even with warnings, not to practice medicine and malpractice.
These, and many other malpractice acts have prompted us (physicians and radiology directors) to have the administration terminate her employment, but her many excuses con the administration and others and has prevented this from occurring, to date.
I will continue such reports on Joan Roberts' illegal malpractice actions until someone discharges her from employment at TRMC.
Sincerely submitted,
Milas E. Davis, Jr., MD
MED/pk
*267
March 7, 2002
Mr. George Burns, R.T.
Director of Radiology
Titus Regional Medical Center
2001 N. Jefferson
Mt. Pleasant, Texas 74544
Dear George,
As you well know, the dysfunctional work situation in our CT section has continued to worsen. Several months ago, in an attempt to improve the situation, we asked you to appoint Mr. Darrell Beck as "lead tech" in that section. The intent was that Mr. Beck could provide the needed direction to keep himself, Ms. Joan Roberts, and Mr. Keith Moffett working more smoothly and productively together.
To an extent, this appointment has been a successful endeavor for the rest of the department. We (the radiologists), as well as the rest of the department has a reliable tech that assures that our orders are followed and that the flow through CT is maximized. On the other hand, Ms. Roberts has sabotaged that effort from the beginning. She deliberately obstructs all Darrell's efforts and adds unnecessary stress to every situation. In addition, she has become very unreliable. Yesterday morning, March 6, 2002, after receiving a phone call, she called Adam Larson and informed him that she had become ill and had to leave. Neither of her co-workers knew she had left. This morning, she called you at 4:50 am to tell you she was not coming to work. Keith was scheduled to be on vacation and Darrell was supposed to come in at 9:00 am. This left our CT department uncovered until Darrell arrived. She was also supposed to be on call tonight. This required Darrell to change his plans for the evening so he could cover her call. This behavior is occurring frequently. It has also occurred in the form of not responding to her pager or not assuring that her phone is available. Darrell and Keith have both had to respond during these times.
Ms. Robert's progressively deteriorating behavior has pushed both Darrell and Keith near the breaking point. Unless this is corrected soon, our department will loose Darrell, Keith, or both. This deteriorating behavior is also destructive to the moral of the total radiology department. We ask you to immediately remove Ms. Roberts from the CT section, either by termination, lateral movement in the radiology department or to another department.
Sincerely,
George Aydelott, M.D. Mjias Davis, M.D.
Medical Director Staff Radiologist
Department of Radiology Department of Radiology
cc: Steve Jacobson, Frances Standridge, Gene Lott, All Board Members
NOTES
[*] William J. Cornelius, Chief Justice, Retired, Sitting by Assignment.
[1] A good faith belief in the truth of a statement may be evidence that the statement was made without malice, but it is not sufficient, even if uncontradicted, to prove that the statement is actually true. See Mitre v. La Plaza Mall, 857 S.W.2d 752 (Tex.App.-Corpus Christi 1993, writ denied); Johnson v. Southwestern Newspapers Corp., 855 S.W.2d 182 (Tex.App.-Amarillo 1993, writ denied).
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12-3439-cr
United States v. Copeland
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 Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
on the 19th day of June, two thousand thirteen.
PRESENT: REENA RAGGI,
PETER W. HALL,
DEBRA ANN LIVINGSTON,
Circuit Judges.
----------------------------------------------------------------------
UNITED STATES OF AMERICA,
Appellee,
v. No. 12-3439-cr
MAURICE COPELAND,
Defendant-Appellant.
----------------------------------------------------------------------
FOR APPELLANT: Maurice Copeland, pro se, Ayer, Massachusetts.
FOR APPELLEE: Emily Berger, Christopher C. Caffarone,
Assistant United States Attorneys, for Loretta E.
Lynch, United States Attorney for the Eastern
District of New York, Brooklyn, New York.
Appeal from a judgment of the United States District Court for the Eastern District
of New York (Joanna Seybert, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of the district court entered on August 13, 2012, is
AFFIRMED.
Defendant Maurice Copeland, proceeding pro se, challenges his conviction for
possessing with intent to distribute 50 grams or more of cocaine base, see 21 U.S.C.
§ 841(a)(1), arguing that the district court erred in denying his motion to dismiss the
indictment for lack of subject matter jurisdiction. Copeland also raises, for the first time
on appeal, claims that his Fourth and Fourteenth Amendment rights were violated by
conduct occurring before his entry of an unconditional guilty plea. We assume the
parties’ familiarity with the underlying facts, procedural history of the case, and issues on
appeal.
As an initial matter, it is well settled that “[a] knowing and voluntary guilty plea
waives all nonjurisdictional defects in the prior proceedings.” United States v. Coffin, 76
F.3d 494, 496 (2d Cir. 1996); accord United States v. Lasaga, 328 F.3d 61, 63 (2d Cir.
2003). To reserve an issue for appeal after a guilty plea, “a defendant must obtain the
approval of the court and the consent of the government, and he must reserve the right to
appeal in writing.” United States v. Coffin, 76 F.3d at 497 (citing Fed. R. Crim. P.
11(a)(2)). Because Copeland’s constitutional challenges are not themselves
2
jurisdictional, he waived any right to raise them on appeal by entering an unconditional
plea of guilty. To the extent Copeland argues otherwise because jurisdiction was lacking
in his case, his argument is without merit.
We review de novo both the denial of a motion to dismiss an indictment and
questions of subject matter jurisdiction. See United States v. White, 237 F.3d 170, 172
(2d Cir. 2001); United States v. Yousef, 327 F.3d 56, 137 (2d Cir. 2003). In so doing, we
conclude that Copeland’s reliance on In re Liberatore, 574 F.2d 78 (2d Cir. 1978), to
challenge jurisdiction is misplaced. In that case, we held that a district court lacked
authority to stay the running of a prior state sentence. See id. at 89 (observing that
“sovereignty which first arrests the individual acquires the right to prior and exclusive
jurisdiction over him”). At the same time, however, we stated that “[t]his exclusivity of
jurisdiction does not mean, of course, that another sovereignty interested in prosecuting
the individual . . . must necessarily stand idly by while the prisoner completes the service
of the sentence imposed by the courts of the first sovereignty.” Id. Indeed, we have
recognized that the “shift from state to federal jurisdiction is commonplace.” United
States v. Johnson, 171 F.3d 139, 142 (2d Cir. 1999). Thus, we conclude that the district
court correctly determined that it had jurisdiction over Copeland’s prosecution and did
not err in refusing to dismiss the indictment.
3
We have considered Copeland’s remaining arguments and find them to be without
merit. The judgment of the district court is hereby AFFIRMED.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
4
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134 P.3d 761 (2006)
139 N.M. 474
2006-NMSC-022
Lajusta SAM, individually and as personal representative of the Estate of Tyler Dexter Sam, deceased, and as next friend of Bronte Kieran S., Cory Deyoung S., and Britney Lynn S., minor children, Plaintiffs-Respondents,
v.
The Estate of Benny SAM, Jr., and Arizona School Risk Retention Trust, Inc., an Arizona non-profit corporation, Defendants-Petitioners.
No. 28,426.
Supreme Court of New Mexico.
April 24, 2006.
*762 Briones Law Firm, P.A., Kyle Michael Finch, Farmington, NM, Jones, Skelton & Hochuli, P.L.C., Eileen Dennis Gilbride, Phoenix, AZ, for Petitioners.
Keleher & McLeod, P.A., David W. Peterson, Albuquerque, NM, Ascione, Heideman & McKay, L.L.C., Patrick J. Ascione, Justin D. Heideman, Provo, UT, for Respondents.
OPINION
MAES, Justice.
{1} This case arises from an accident that occurred in New Mexico and involved an Arizona government employee. As a matter of first impression, we must determine whether a New Mexico district court should, as a matter of comity, recognize the sovereign immunity of a sister state, Arizona. Petitioners urge us to reverse the Court of Appeals' findings that neither New Mexico's nor Arizona's limits on waiver of sovereign immunity apply to Respondents' claim and that the claim is not barred by either state's statute of limitations. Both Arizona and New Mexico have waived sovereign immunity through their respective Tort Claims Acts. See NMSA 1978, §§ 41-4-1 to -27 (1976, as amended through 2004); ARIZ.REV.STAT. ANN. §§ 12-820 to -823 (1984, as amended through 2002). However, the waiver of sovereign immunity in both states is restrained by strict statutes of limitations that bar suits filed a certain amount of time after the alleged tort. Section 41-4-15(A); ARIZ.REV. STAT. ANN. § 12-821. We hold that, in the interests of comity, New Mexico should extend the Tort Claims Act statute of limitations to states with similar tort claims acts *763 when they are sued in New Mexico district courts. We reverse the Court of Appeals' decision in this case and affirm, with modification, the district court's ruling that Respondents' claim was not timely filed.
BACKGROUND
{2} The tragic accident that gave rise to this case occurred in Gallup, New Mexico. Mr. Benny Sam, Jr. ("Sam") ran over and killed his four-year-old son while backing out of his driveway. The truck Sam was driving belonged to his employer, the Window Rock Unified School District, an Arizona governmental entity. Sam was authorized to drive the truck home for the weekend, and was moving it out of his driveway to work on his personal vehicle when the accident occurred. Throughout the course of the litigation both sides have assumed that Sam was acting in the course and scope of his employment.
{3} Sam later passed away. Subsequently, his wife, both individually and as personal representative of her son's estate ("Respondents"), sued Sam's estate ("the Estate") and the Arizona School Retention Trust, Inc. ("the Trust") in the New Mexico District Court of McKinley County. The suit was filed one day prior to exactly three years after the accident occurred. Thus, Respondents' suit was timely filed if New Mexico's three-year statute of limitations for general tort actions applied, see NMSA 1978, § 37-1-8 (1976), but the New Mexico Tort Claims Act's two-year statute of limitations for actions against New Mexico governmental entities would bar the suit if applied to the case. See § 41-4-15(A).
{4} The two original defendants, the Trust and the Estate (collectively, "Petitioners"), each filed separate motions for summary judgment based on different rationales. In two separate rulings the district court judge granted the motions. First, the judge dismissed the suit against the Trust because Respondents failed to comply with Arizona's notice of claim under ARIZ.REV.STAT. ANN. § 12-821.01(A) (requiring persons with a claim against an Arizona governmental entity or employee to give notice to the entity within one hundred and eighty days after the cause of action accrues). Second, the judge granted summary judgment against Respondents for failing to file the complaint within either the one-year statute of limitations period of the Arizona Tort Claims Act, see ARIZ.REV.STAT. ANN. § 12-821, or the two-year statute of limitations period of the New Mexico Tort Claims Act. See § 41-4-15(A).
{5} The district judge concluded that Respondents' action was barred by "the statute of limitations of both Arizona and New Mexico." This conclusion was based on his legal findings that: (1) the public policy behind both states' tort claims acts is the same; (2) a "public employee in either state in the same situation would only be subject to a one [sic] or two-year statute" of limitations; and (3) to "allow this suit to go forward ... would undermine the policies and laws of both Arizona and New Mexico."
{6} Respondents appealed both rulings to the Court of Appeals. The Court first upheld the district court's determination that Respondents failed to timely appeal the judge's order of dismissal against the Trust. Sam v. Estate of Sam, 2004-NMCA-018, ¶ 1, 135 N.M. 101, 84 P.3d 1066. Respondents did not challenge this ruling on appeal and it is deemed abandoned. See Deaton v. Gutierrez, 2004-NMCA-043, ¶ 26, 135 N.M. 423, 89 P.3d 672. Second, under a de novo standard of review, the Court reversed the district court's determination that either Arizona's or New Mexico's tort claims act statute of limitations applied to this case. Sam, 2004-NMCA-018, ¶¶ 1, 12, 135 N.M. 101, 84 P.3d 1066. It first determined that the Arizona Tort Claims Act was inapplicable because New Mexico courts are "not required to recognize Arizona's statute of limitations ... or the sovereign immunity granted to its public employees." Id. ¶ 13. Second, it held that the New Mexico Tort Claims Act was inapplicable because Sam was not employed by New Mexico and was therefore not covered by New Mexico's Tort Claims Act. Id. ¶ 14. The Court decided that the correct statute of limitations was New Mexico's general three-year statute of limitations governing tort actions. Id. ¶ 15; see § 37-1-8. The Court determined that because New Mexico generally applies the law of the place where the wrong or tort occurred, the general three-year statute of limitations was appropriate in *764 this case. Sam, 2004-NMCA-018, ¶ 15, 135 N.M. 101, 84 P.3d 1066 (citing Torres v. State, 119 N.M. 609, 613, 894 P.2d 386, 390 (1995)).
DISCUSSION
{7} Petitioners argue that the Court of Appeals erred when it applied the general rule that the law of the place of the wrong controls. They claim that the Court of Appeals should have instead performed a comity analysis to determine whether New Mexico should recognize and apply the Arizona one-year statute of limitations or apply the New Mexico Tort Claims Act two-year statute of limitations to Arizona governmental entities sued in New Mexico. Conversely, Respondents urge us to uphold the Court of Appeals decision. Their principal policy arguments in favor of applying the three-year statute of limitations are that New Mexico's Mandatory Financial Responsibility Act (NMMFRA) evinces a strong state interest in compensating victims of negligent acts and that a three-year statute of limitations would make the determination easy and promote predictability and uniformity. Additionally, they argue that a comity analysis is not warranted in this case, but assert that even if we decide to engage in a comity analysis, public policy would dictate that New Mexico's general three-year statute of limitations applies.
{8} Whether a district court should extend immunity to a sister state as a matter of comity is an issue of first impression in New Mexico. Comity is a principle whereby a sovereign forum state recognizes and applies the laws of another state sued in the forum state's courts. The sovereign forum state has discretion whether or not to apply the laws of the other state. In order to fully explore this topic, we will discuss the principles behind comity and what factors a New Mexico court should consider to determine if comity should be extended.
{9} The parties disagree about the preliminary matter of what standard of review an appellate court should apply to this issue. Generally, when the facts of a case are not in dispute, we review the grant or denial of a motion to dismiss de novo. See Self v. United Parcel Serv., Inc., 1998-NMSC-046, ¶ 6, 126 N.M. 396, 970 P.2d 582 (reviewing summary judgment). This includes whether a governmental entity has immunity. See Godwin v. Mem'l Med. Ctr., 2001-NMCA-033, ¶ 23, 130 N.M. 434, 25 P.3d 273 (reviewing the New Mexico Tort Claims Act). Respondents urge us to adopt this standard of review for this case. Petitioners argue that we should adopt a dual standard of review for cases involving a district court's decision to extend comity. They argue that we should review the district court's decision to use a comity analysis de novo, and then review a district court's application of comity for abuse of discretion. They argue that an abuse of discretion standard is appropriate because the analysis is fact-sensitive. See, e.g., Jackett v. Los Angeles Dep't of Water & Power, 771 P.2d 1074, 1075 (Utah Ct.App. 1989). This two-tiered standard of review is based on analyses from other state courts and federal circuit courts. See Lee v. Miller County, Arkansas, 800 F.2d 1372, 1376 (5th Cir.1986); Levert v. Univ. of Ill. at Urbana/Champaign, 857 So.2d 611, 618 (La.Ct.App. 1st Cir.2003); Univ. of Ia. Press v. Urrea, 211 Ga.App. 564, 440 S.E.2d 203, 204 (1993). We agree with Petitioners and adopt this two-tiered standard of review. Therefore, we must first determine whether the district court used a comity analysis to arrive at the proper standard of review.
{10} The district court's findings of fact and conclusions of law in this case are brief. Although it appears that Petitioners' Estate did say the word "comity" at the hearing on the motion for summary judgment, comity was not mentioned in either its Brief in Support of Motion for Summary Judgment or its Reply Brief in Support of Motion for Summary Judgment. In fact, Petitioners' Estate did not cite any case law supporting its position in either of those briefs. It only argued that since the Estate was being sued in New Mexico based on Sam's capacity as an employee of Arizona, either the Arizona or New Mexico statute of limitations for tort actions involving public employees should apply.
{11} Petitioners argue that if we determine that the district court did not apply a *765 comity analysis we should still affirm the district court under the "right for any reason" doctrine. See Maralex Res., Inc. v. Gilbreath, 2003-NMSC-023, ¶ 13, 134 N.M. 308, 76 P.3d 626. "[A]n appellate court `will affirm the district court if it is right for any reason and if affirmance is not unfair to the appellant.'" Id. (quoting Moffat v. Branch, 2002-NMCA-067, ¶ 13, 132 N.M. 412, 49 P.3d 673).
{12} There is no clear indication that the trial court analyzed this case under the principles of comity. Although it structured its conclusions of law in a way that reflects a comity analysis, it did not do so expressly. Therefore, review of the district court's decision should be de novo because the district court only stated it was granting a motion for summary judgment. In future cases, we will utilize the approach urged by Petitioners. We will review the appropriateness of a district court's decision to engage in a comity analysis de novo, but will review the district court's fact-intensive comity analysis for abuse of discretion.
{13} The seminal cases dealing with when and how a forum state should extend immunity under comity to a sister state sued in its courts are Nevada v. Hall, 440 U.S. 410, 99 S.Ct. 1182, 59 L.Ed.2d 416 (1979), and Franchise Tax Board of California v. Hyatt, 538 U.S. 488, 123 S.Ct. 1683, 155 L.Ed.2d 702 (2003). Both of these cases stand for the principle that a forum state is not required to extend immunity to other states sued in its courts, but the forum state should extend immunity as a matter of comity if doing so will not violate the forum state's public policies. The Court of Appeals recognized that New Mexico was not required to extend immunity to Arizona. See Sam, 2004-NMCA-018, ¶ 13, 135 N.M. 101, 84 P.3d 1066. However, it then stated that Arizona's one-year statute of limitations "is not applicable to actions involving [Arizona] employees when the cause of action accrues in New Mexico." Id. We review Hall and Hyatt as well as decisions from other state courts that have addressed this issue.
{14} In Hall, 440 U.S. 410, 99 S.Ct. 1182, California residents were injured in an automobile accident negligently caused by an employee of the University of Nevada driving a University of Nevada vehicle in California. The plaintiffs sued and won in a California court, where the University of Nevada claimed its damages should be limited to $25,000, the maximum recovery allowed under Nevada's limited waiver of sovereign immunity through its tort claims act. The United States Supreme Court began by recognizing that no state may be sued in its own court without its permission, unless it has expressly waived its sovereign immunity in some manner. Next, the Court stated that a claim of immunity in another state's courts is possible, but "must be found either in an agreement, express or implied, between the two sovereigns, or in the voluntary decision of the second to respect the dignity of the first as a matter of comity." Id. at 416, 99 S.Ct. 1182.
{15} The University of Nevada argued in favor of a federally enforced mandate of interstate comity that would require California to honor Nevada's limited waiver of sovereign immunity. In rejecting the University of Nevada's argument, the Court found that while the United States Constitution, through the Eleventh Amendment, "places explicit limits on the powers of federal courts to entertain suits against a State;" there is no such limitation on a state court entertaining a suit against another state. Id. at 420, 99 S.Ct. 1182. Further, the Court held that the Full Faith and Credit Clause only requires "each State to give effect to official acts of other States," id. at 411, 99 S.Ct. 1182, but "does not require a State to apply another State's law in violation of its own legitimate public policy." Id. at 422, 99 S.Ct. 1182.
{16} However, the Court stated that nothing prevented a forum state from recognizing another state's immunity, or limited waiver of immunity, in the forum state's courts based on comity. Id. at 425, 99 S.Ct. 1182. The Court noted the presumption that "the States intended to adopt policies of broad comity toward one another." Id. This presumption is based on the "intimate union of these states, as members of the same great political family," and the "deep and vital interests which bind them so closely together." Id. at 425-26, 99 S.Ct. 1182 (quoting Bank of *766 Augusta v. Earle, 38 U.S.(13 Pet.) 517, 590 (1839)). However, in order to refuse to honor the laws of another state, a forum state only needs to declare that the other state's law would violate its own legitimate public policy. To require more would allow the citizens of one state to determine the public policy of another. Id. In other words, the Court was stating that it would be "wise policy, as a matter of harmonious interstate relations, for States to accord each other immunity or to respect any established limits on liability," as long as doing so did not violate the forum state's public policy. Id. at 426, 99 S.Ct. 1182.
{17} The Court concluded that the waiver of immunity in both states was sufficiently different and to apply Nevada law would violate California's public policy. California law did not set a cap on the damages an injured person could recover from the state when it waived immunity, while Nevada set the limit at $25,000. Id. at 424, 99 S.Ct. 1182. This difference was sufficient for California to justify not extending comity to Nevada. Id. at 427-28, 99 S.Ct. 1182.
{18} The Court reaffirmed Hall in Hyatt, 538 U.S. 488, 123 S.Ct. 1683. There, a taxpayer, a former California resident living in Nevada, brought an action in Nevada state court against a California tax-collection agency for both negligent and intentional torts. Id. at 490-91, 123 S.Ct. 1683. Nevada had waived sovereign immunity for intentional acts by similar Nevada agencies, but had not waived immunity for merely negligent acts. Id. at 492-93, 123 S.Ct. 1683. The Nevada Supreme Court denied in part the agency's writ of mandamus by allowing the taxpayer's claims of intentional torts to proceed in Nevada's courts, but dismissing the claims for negligent acts. Id. at 492-94, 123 S.Ct. 1683. The United States Supreme Court affirmed this decision, stating that the "Nevada Supreme Court sensitively applied principles of comity with a healthy regard for California's sovereign status, relying on the contours of Nevada's own sovereign immunity from suit as a benchmark for its analysis." Id. at 499, 123 S.Ct. 1683.
{19} While the particular issue in this case is new to New Mexico, our courts have used a similar comity analysis in other situations. "Comity refers to the spirit of cooperation in which a domestic tribunal approaches the resolution of cases touching the laws and interests of other sovereign states." Leszinske v. Poole, 110 N.M. 663, 668, 798 P.2d 1049, 1054 (N.M.Ct.App.1990) (quoting Societe Nationale Industrielle Aerospatiale v. United States District Court, 482 U.S. 522, 543 n. 27, 107 S.Ct. 2542, 96 L.Ed.2d 461 (1987)). In Leszinske, a father sued to gain full custody of his children after his ex-wife married her uncle in Costa Rica. The district court in that case conditioned the award of primary custody to the mother on her entering into a valid marriage with the uncle. Id. at 664, 798 P.2d 1049. The mother went to Costa Rica to marry her uncle because New Mexico considers marriage between an uncle and a niece to be an invalid marriage. Id. at 664-65, 798 P.2d 1049. In deciding whether to recognize the Costa Rican marriage that undoubtably went against the public policy of New Mexico to some degree, the Court of Appeals stated that "the dispositive question is whether the marriage offends a sufficiently strong public policy to outweigh the purposes served by the rule of comity." Id. at 669, 798 P.2d 1049. The Court found that recognizing a marriage that was invalid under New Mexico law was not sufficiently offensive to New Mexico public policy to outweigh the principles of comity.
{20} Of course, it is well settled that another state court cannot compel a New Mexico court to dismiss a case or refuse to hear one. See Spear v. McDermott, 1996-NMCA-048, ¶ 48, 121 N.M. 609, 916 P.2d 228 ("[N]either the full-faith-and-credit principle nor the concept of comity requires recognition of an attempt by one court to abate or stay proceedings in a different court."). This case presents a different issue than was involved in Spear. Here, the issue is whether the New Mexico courts should apply Arizona's statute of limitations or extend New Mexico's statute of limitations to an Arizona public employee based on the principles of comity, not whether it is compelled to do so. Clearly, Hall establishes that New Mexico courts are not compelled to extend immunity, but rather, they are encouraged to do so if it *767 would not violate New Mexico's public policy. This is where the Court of Appeals in this case erred. It stated that because New Mexico is not required to recognize Arizona's statute of limitations, it "is not applicable to actions involving [Arizona public] employees when the cause of action accrues in New Mexico." Sam, 2004-NMCA-018, ¶ 13, 135 N.M. 101, 84 P.3d 1066. By stating that the Arizona statute of limitations was not applicable without further discussion, it is uncertain whether the Court considered the question of comity fully or simply felt that it was incapable of applying Arizona law.
{21} Thus, following Leszinske and the seminal cases from the United States Supreme Court, the question in this case is whether the Arizona Tort Claims Act "offends a sufficiently strong public policy to outweigh the purposes served by the rule of comity." Leszinske, 110 N.M. at 669, 798 P.2d at 1055. As a general rule, comity should be extended. Only if doing so would undermine New Mexico's own public policy will comity not be extended.
{22} Several other jurisdictions have considered similar issues to the one we decide today. The courts have applied a variety of factors to determine if the forum state should extend immunity based on comity. The factors assist in determining whether extending immunity through comity would violate the forum state's public policy. These factors include: (1) whether the forum state would enjoy similar immunity under similar circumstances, see, e.g., Head v. Platte County, Missouri, 242 Kan. 442, 749 P.2d 6, 10 (1988); (2) whether the state sued has or is likely to extend immunity to other states, see, e.g., Morrison v. Budget Rent A Car Sys., 230 A.D.2d 253, 657 N.Y.S.2d 721, 731 (1997); (3) whether the forum state has a strong interest in litigating the case, see, e.g., Ehrlich-Bober & Co. v. Univ. of Houston, 49 N.Y.2d 574, 427 N.Y.S.2d 604, 404 N.E.2d 726, 730 (1980); and (4) whether extending immunity would prevent forum shopping, see, e.g., Newberry v. Ga. Dep't of Indus. & Trade, 286 S.C. 574, 336 S.E.2d 464, 465 (1985). We likewise consider each of these factors when determining whether recognizing the sovereign immunity of a sister state would be contrary to the public policy of New Mexico.
{23} First, it is clear that a similar action brought against a New Mexico entity or government employee would be barred by the two-year statute of limitations in the New Mexico Tort Claims Act. See § 41-4-15. Like Arizona, New Mexico waived immunity on this type of claim, but did so with a strict statute of limitations. The New Mexico Tort Claims Act expresses a clear public policy that tort claims against negligent New Mexico governmental entities should be allowed, but only if brought within two years of the date of the alleged tort.
{24} The second factor, whether Arizona would extend immunity to New Mexico, has not been addressed by Arizona's courts. Thus, it is unclear whether Arizona would extend immunity to this state under a comity analysis. However, we believe that New Mexico has an interest in according immunity by comity in this instance in order to encourage Arizona to extend immunity to a New Mexico governmental entity in the future. When faced with deciding whether to grant New Mexico immunity, Arizona and other states will likely consider our decisional law on the subject of comity. Those states may be reluctant to extend immunity to our state if we have previously declined to extend immunity to a sister state. See Morrison, 657 N.Y.S.2d 721 (when determining whether to extend immunity to South Carolina, the New York court examined the Supreme Court of South Carolina's decision declining to extend immunity to North Carolina by comity).
{25} Regarding the third factor, New Mexico certainly has an interest in litigating this case, but that interest is tempered by the concept of comity and the New Mexico Tort Claims Act. Respondents' arguments address this factor. They argue that to apply the Arizona statute of limitations would contravene New Mexico's public policy of adequately compensating victims of automobile accidents. This public policy is contained in the New Mexico Mandatory Financial Responsibility Act (NMMFRA). See NMSA 1978, §§ 66-5-201 and -201.1 (1983, as amended in 1998); see also Estep v. State Farm Mut. Auto. Ins. Co., 103 N.M. 105, 108, *768 703 P.2d 882, 885 (1985) ("[t]he fundamental purpose for the enactment of financial responsibility laws [is] protecting innocent accident victims from financial hardship"). Even Respondents note, however, that the NMMFRA does not specifically apply to this case. The NMMFRA requires automobile insurance to ensure compensation for victims of automobile accidents. Sections 66-5-205 to -208. In this case there was insurance, but the statute of limitations may bar Respondents' recovery under the insurance policy. While the NMMFRA embodies strong public policy in New Mexico, we believe it must be balanced against the equally clear New Mexico public policy of limiting claims against the government contained in the Tort Claims Act. Section 41-4-2.
{26} Through the Tort Claims Act, our Legislature has determined that it is appropriate to allow persons harmed by the negligent acts of New Mexico public employees to recover, but only if they file suit within two years. Arizona has similarly determined that persons harmed by the negligent acts of Arizona public employees can file suit, but they must do so within one year. New Mexico has a particular interest in providing compensation or access to the courts to residents of the state. We believe that we are faced with a situation similar to that which Nevada faced in Hyatt. In Hyatt, the United States Supreme Court approved of Nevada applying its own limited waiver of immunity to California. Hyatt, 538 U.S. at 499, 123 S.Ct. 1683. Nevada recognized that both states waived immunity, but differed in how they waived immunity. Nevada had waived immunity for intentional acts but not for negligent acts, while California retained complete immunity for the agency sued. Id. at 493-94, 123 S.Ct. 1683. Therefore, not only was it appropriate for Nevada to grant California immunity, but also to only grant to California what it deemed appropriate for itself.
{27} Similarly, we believe that New Mexico should extend a limited grant of immunity to Arizona because both states have done so through tort claims acts. However, we should only extend New Mexico's two-year statute of limitations instead of applying Arizona's one-year statute of limitations. Applying Arizona's one-year statute of limitations is not in accordance with the public policy behind our own two-year statute of limitations. To apply Arizona's one-year statute of limitations would violate our own public policy of allowing two years to file suit against a governmental agency. This way, we are extending a limited grant of immunity to a sister state under the principles of comity in accordance with our state's public policy. Extending New Mexico's two-year statute of limitations fulfills the principles of comity without violating our own public policy.
{28} Finally, extending New Mexico's statute of limitations to Arizona governmental entities will limit forum shopping. While we have decided not to recognize Arizona's one-year statute of limitations because it is not in accordance with New Mexico's public policy, we are extending New Mexico's two-year statute of limitations instead of the general three-year statute of limitations. Although this solution may not completely eliminate forum shopping, we believe it will prevent forum shopping to some degree.
CONCLUSION
{29} While we affirm the district court's grant of Petitioners' Motion to Dismiss the Estate, we do so for reasons not addressed by the district court. We reverse the Court of Appeals on this issue. The district court should have applied a comity analysis and concluded that the two-year statute of limitations in the New Mexico Tort Claims Act applies to this case. Because Respondents did not file suit within two years of the accident, their suit is barred.
{30} IT IS SO ORDERED.
WE CONCUR: RICHARD C. BOSSON, Chief Justice, PAMELA B. MINZNER, PATRICIO M. SERNA, EDWARD L. CHÁVEZ, Justices.
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278 F.3d 119
J.C., by his Parents and Next Friend, Mr. and Mrs. C., Plaintiff-Appellee/Cross-Appellant,v.REGIONAL SCHOOL DISTRICT 10, BOARD OF EDUCATION, Defendant-Appellant/Cross-Appellee.
Docket No. 00-9484(XAP).
Docket No. 00-9484(LEAD).
United States Court of Appeals, Second Circuit.
Argued November 8, 2001.
Decided January 24, 2002.
Winona W. Zimberlin, Hartford, CT, for Plaintiff-Appellee/Cross-Appellant J.C. By His Parents and Next Friend, Mr. and Mrs. C.
William R. Connon, Sullivan, Schoen, Campane & Connon, LLC, Hartford, CT, (Mark J. Sommaruga, on the brief), for Defendant-Appellant/Cross-Appellee Regional School District 10, Board of Education.
Arthur A. Smith, Mansfield Center, CT, for Amicus Curiae Education Law Project, Inc.
Bruce A. Goldstein, Bouvier, O'Connor, LLP, Buffalo, NY, for Amicus Curiae Bouvier, O'Connor, LLP.
Before: MINER, STRAUB, and B.D. PARKER, Circuit Judges.
B.D. PARKER, Circuit Judge.
1
Regional School District 10, Board of Education ("the Board") appeals from a judgment of the United States District Court, District of Connecticut, entered September 28, 2000. The District Court granted summary judgment and awarded attorneys' fees to J.C. pursuant to the Individuals with Disabilities Education Act, 20 U.S.C. § 1415(i)(3)(B) (1999) ("IDEA" or "the Act"), on the ground that J.C. was a prevailing party under the catalyst theory of recovery, applicable at the time under the law of this and other circuits. J.C. v. Reg. Sch. Dist. No. 10, 115 F.Supp.2d 297 (D.Conn.2000).
2
Following the District Court's decision and the Board's notice of appeal, the Supreme Court decided Buckhannon Board and Care Home, Inc. v. West Virginia Department of Health and Human Resources, 532 U.S. 598, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001). Buckhannon rejected the catalyst theory and interpreted the term "prevailing party" to require a judgment or similar form of judicially sanctioned relief as a predicate for attorneys' fees. Because J.C. obtained no judicially sanctioned relief, we reverse.
BACKGROUND
3
The IDEA sets forth detailed administrative procedures to guarantee disabled children an appropriate education. 20 U.S.C. §§ 1400 et seq. (1997). To this end, the Act requires that public schools create for each student with a disability a written individualized education program ("IEP") of study best suited to the child's special needs. Id. § 1414(d)(2)(A). An IEP is typically prepared by an IEP Team, consisting of parents, teachers, and educational specialists who meet and confer in a relatively informal, collaborative process to determine how best to accommodate the needs of the disabled student. Id. § 1414(d)(1)(B). In Connecticut, the IEP Team is known as a planning and placement team ("PPT"). Conn. Agencies Regs. § 10-76a-1(p) (1992).
4
The IDEA further requires schools to provide an opportunity for parents to present complaints through the IEP process with respect to any matter relating to the identification, evaluation, or educational placement of their child. 20 U.S.C. § 1415(b)(6). Whenever these complaints are not adequately addressed, the IDEA grants parents a right to mediation or to an impartial due process hearing, a more formal process conducted by the appropriate educational agency. Id. §§ 1415(e)(1), (f)(1). If the matter is not resolved satisfactorily during the due process hearing phase, parents then have a right to commence a civil action in federal court or an appropriate state court. Id. § 1415(i)(2)(A). In an action brought under 20 U.S.C. § 1415, "the court, in its discretion, may award reasonable attorneys' fees as part of the costs to the parents of a child with a disability who is the prevailing party." Id. § 1415(i)(3)(B). The IDEA qualifies this provision by providing that "[A]ttorneys' fees may not be awarded relating to any meeting of the IEP Team unless such meeting is convened as a result of an administrative proceeding or judicial action." Id. § 1415(i)(3)(D)(ii).
5
J.C. enrolled in Regional School District 10 in the fall of 1988, and in August 1995 his parents requested that the school district evaluate him for possible learning disabilities. The Board did not conduct an evaluation of J.C. at that time, and he was not offered special education. In the fall of 1997, J.C.'s parents again requested an evaluation, and this time, in response to their request, the school convened a PPT meeting at which J.C.'s parents met with teachers and professionals from the school district to assess and plan for J.C.'s educational needs. The PPT observed that J.C.'s grades had been inconsistent and that he had been identified as exhibiting signs of Attention Deficit and Hyperactivity Disorder. The PPT ordered a psychological assessment but ultimately concluded that J.C. did not require special educational services or accommodations.
6
J.C. was suspended from school in October 1998 for allegedly vandalizing a school bus, and his parents were notified that an expulsion hearing was scheduled for November 12, 1998. On November 11, 1998, J.C.'s parents, through their attorney, sent a letter to the Board seeking both a PPT and a due process hearing. They also requested that the Board fund an independent evaluation of J.C., determine his eligibility for special education, and permit him to return to school.
7
The Board responded by cancelling the expulsion hearing and scheduling PPT meetings to address these requests. The PPT convened on November 19, 1998 and agreed to order an independent psychological evaluation of J.C. On November 20, 1998, a pre-hearing conference was held at which the hearing officer postponed the due process hearing until J.C. could be evaluated. J.C. was evaluated on December 9, 1998, and the PPT reconvened on January 25, 1999 to discuss the results. The PPT determined that J.C. suffered from an educational disability and that his actions on the school bus were a manifestation of this disability. The school terminated the expulsion proceedings, and the PPT drafted an IEP that provided for all the other relief requested in the November 11 letter.
8
Following the PPT's decision, both parties agreed that no issues remained to be determined and jointly requested a hearing for the sole purpose of adopting the PPT's results as an official decision and order. At the hearing on April 13, 1999, however, the Board changed its mind, fearing that transforming the results of the PPT into an official decision would expose the Board to liability for attorneys' fees. The hearing officer declined to adopt the PPT's results as an official order, citing a Connecticut regulation that allows "[a] settlement agreement [to] be read into the record as an agreement between the parties only." Conn. Agencies Regs. § 10-76h-16(d) (2000). The results of the PPT were not read into the record, and the hearing officer issued a final written decision dismissing the hearing as moot.
9
Following the aborted April 13 hearing, J.C.'s parents sought attorneys' fees from the Board on the ground that J.C. was a prevailing party within the meaning of the IDEA because the PPT had afforded him the relief sought through the due process hearing. When the Board refused this demand, the parents filed suit in district court, seeking attorneys' fees under the IDEA, 20 U.S.C. § 1415(i)(3)(B), and § 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794a(b).1 Both parties moved for summary judgment and, in September 2000, the District Court denied the Board's motion and granted J.C.'s motion, awarding him $13,940 in attorneys' fees and $200 in costs pursuant to the IDEA. The court did not, however, award attorneys' fees for time spent preparing for and attending PPT meetings. J.C. subsequently moved for supplemental fees and the District Court granted his motion. Following the entry of judgment, the Board timely appealed. J.C. then cross-appealed seeking attorneys' fees for preparation for and attendance at the PPT meetings.
DISCUSSION
10
Generally, this Court reviews a district court's award of attorneys' fees under the IDEA for abuse of discretion. See G.M. v. New Britain Bd. of Educ., 173 F.3d 77, 80 (2d Cir.1999). But where, as here, the challenge is to a district court's interpretation of the fee statute itself, our review of this legal issue is de novo. Doyle v. Kamenkowitz, 114 F.3d 371, 374 (2d Cir.1997); Mautner v. Hirsch, 32 F.3d 37, 39 (2d Cir.1994).
11
As previously noted, the IDEA authorizes the award of reasonable attorneys' fees to the parents of a child with a disability who is the prevailing party. 20 U.S.C. § 1415(i)(3)(B). In determining that J.C. was a prevailing party and, thus, entitled to attorneys' fees, the District Court applied a two-part test, under which a party "prevails" whenever (1) the party obtains relief, and (2) there is a causal connection between the filing of the litigation or administrative proceeding and the relief obtained. See G.M., 173 F.3d at 81 (citing Wheeler v. Towanda Area Sch. Dist., 950 F.2d 128, 131 (3d.Cir.1991)). To meet the second part of this test, the District Court relied upon the catalyst theory of recovery, which finds a causal connection "`where even though the litigation did not result in a favorable judgment, the pressure of the lawsuit was a material contributing factor in bringing about extrajudicial relief.'" Id. (quoting Wheeler, 950 F.2d at 132). In awarding fees, the District Court determined that J.C. obtained all the relief he had sought and that the demand for a due process hearing was the catalyst to this recovery because it "was a material contributing factor in bringing about the settlement." J.C., 115 F.Supp.2d at 300-01.
12
Following the District Court's decision and the appeal to this Court, the Supreme Court decided Buckhannon Board and Care Home, Inc. v. West Virginia Department of Health and Human Resources, 532 U.S. 598, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001), which clarified the term "prevailing party." The decision held that, to be a prevailing party, one must either secure a judgment on the merits or be a party to a settlement agreement that is expressly enforced by the court through a consent decree. Buckhannon, 121 S.Ct. at 1840. The Court further held that results obtained without such an order did not supply a basis for an award of attorneys' fees because "[a] defendant's voluntary change in conduct... lacks the necessary judicial imprimatur" to render the plaintiff a prevailing party. Id. The Court expressly rejected the catalyst theory as a predicate for recovering attorneys' fees because "[i]t allows an award where there is no judicially sanctioned change in the legal relationship of the parties." Id.
13
Buckhannon concerned the fee-shifting provisions of the Americans with Disabilities Act of 1990 ("ADA"), 42 U.S.C. § 12205, and the Fair Housing Amendments Act of 1988 ("FHAA"), 42 U.S.C. § 3613(c)(2), but the decision expressly signaled its wider applicability. The Supreme Court observed that Congress authorized attorneys' fees for prevailing parties in numerous fee-shifting statutes. To support this proposition, the Court cited Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), which considered the award of fees under the Civil Rights Attorneys' Fees Awards Act of 1976, 42 U.S.C. § 1988 ("§ 1988"), and held that the standards used to interpret the term "prevailing party" under any given fee-shifting statute "are generally applicable in all cases in which Congress has authorized an award of fees to a `prevailing party.'" Id. at 433 n. 7, 103 S.Ct. 1933. The IDEA's legislative history demonstrates that Congress intended the term "prevailing party" to be construed consistently under the IDEA and other fee-shifting statutes. In adding a provision for attorneys' fees to the Education of the Handicapped Act (renamed the IDEA in 1990), the Senate Committee on Labor and Human Resources stated that "[i]t is the committee's intent that the terms `prevailing party' and `reasonable' be construed consistent[ly] with the U.S. Supreme Court's decision in Hensley v. Eckerhart, 461 U.S. 424, 440, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983)." S.Rep. No. 99-112, at 13 (1986), reprinted in 1986 U.S.C.C.A.N. 1798, 1803 (footnote omitted). Accordingly, it is clear that Congress intended "prevailing party" under the IDEA to have the same meaning as "prevailing party" under § 1988.
14
Prior to Buckhannon, our Circuit showed fidelity to Hensley by construing "prevailing party" consistently across various fee-shifting statutes. See, e.g., NAACP v. Town of East Haven, 259 F.3d 113, 117 n. 5 (2d Cir.2001) (applying precedents addressing attorneys' fees awards to a Title VII case "without regard to whether they involved Title VII or some other federal statute"). For example, we relied upon case law interpreting "prevailing party" under § 1988 when applying the catalyst theory to the IDEA. G.M., 173 F.3d at 81 (citing Tex. State Teachers Ass'n v. Garland Indep. Sch. Dist., 489 U.S. 782, 789, 109 S.Ct. 1486, 103 L.Ed.2d 866 (1989) and Koster v. Perales, 903 F.2d 131, 134-35 (2d Cir.1990)). More recently, we extended the Supreme Court's holding in Buckhannon to § 1988, concluding that "[although] the holding in Buckhannon applied to the FHAA and ADA, it is clear that the Supreme Court intends the reasoning of the case to apply to § 1988 as well." NY State Fed'n of Taxi Drivers, Inc. v. Westchester County Taxi & Limousine Comm'n, 272 F.3d 154, 158 (2d Cir. 2001).
15
Notwithstanding Buckhannon's broad application, J.C. argues that the IDEA differs from other statutes with fee-shifting provisions and requires a different interpretation of "prevailing party." First, J.C. claims that the IDEA "involves a multi-tiered administrative process designed to function without any court involvement." Pl.'s Supplemental Br. at 5. This argument is unpersuasive, however, because the ADA, which was at issue in Buckhannon, also requires parties to exhaust administrative processes prior to litigation.
16
Next, J.C. argues that the catalyst theory should still apply because of certain unique features inherent in IDEA proceedings. J.C. contends that the Act is calibrated to achieve the early, informal resolution of student placement controversies. Pegging fee awards to civil judgments or due process hearing awards, J.C. argues, would undermine this goal by tacitly encouraging counseled parents to avoid settlements at the IEP stage and to pursue due process hearings or civil litigation for which fees are recoverable. This argument is simply not viable after Buckhannon, which considered and rejected various policy arguments in favor of the catalyst theory. See 121 S.Ct. at 1842-43. Further, it is difficult to reconcile J.C.'s policy argument for awarding fees pursuant to informal settlements with the fact that, even before Buckhannon, Congress deliberately chose not to allow the recovery of attorneys' fees for participation in IEP proceedings that were not convened as a result of an administrative proceeding or judicial action. 20 U.S.C. § 1415(i)(3)(D)(ii). The IEP Team is a mechanism for compromise and cooperation rather than adversarial confrontation. This atmosphere would be jeopardized if we were to encourage the participation of counsel in the IEP process by awarding attorneys' fees for settlements achieved at that stage.
17
Finally, J.C. argues that, even if Buckhannon governs the IDEA, the award of attorneys' fees in this case was proper because the IEP is more of a judicial consent decree than a private settlement. J.C. contends that the IEP changed the legal relationship of the parties because it is required by statute for all disabled children and because it is legally binding on the school board. We disagree. The fact that the IEP is required by statute only distinguishes it further from a judicial order or decree. Any legal obligation to develop and implement an IEP arises from the IDEA's statutory mandate and is not part of a judicial remedy. Moreover, even if the IEP changed the legal relationship between the parties, this change was not judicially sanctioned, as required by Buckhannon.
18
Although the District Court based its decision upon the IDEA, J.C. initially sought attorneys' fees under both the IDEA and the Rehabilitation Act. The District Court declined to consider the Rehabilitation Act claim, noting that the parties had failed to brief the issue. J.C., 115 F.Supp.2d 297, 299 n. 2 (D.Conn.2000). Courts of appeals have discretion to decide what issues may be addressed for the first time on appeal because "there are circumstances in which a federal appellate court is justified in resolving an issue not passed on below, as where the proper resolution is beyond any doubt." Singleton v. Wulff, 428 U.S. 106, 121, 96 S.Ct. 2868, 2877, 49 L.Ed.2d 826 (1976). We have chosen to exercise such discretion in cases where the issues not addressed below involved purely legal questions. See Chertkova v. Conn. Gen. Life Ins. Co., 92 F.3d 81, 88 (2d Cir.1996); Bornholdt v. Brady, 869 F.2d 57, 68 (2d Cir.1989). Because the Rehabilitation Act claim raises a purely legal issue whose resolution is no longer open to serious question, we elect to address it.
19
J.C. now argues that Congress intended the Rehabilitation Act to be broader in scope than the IDEA and, even if he is not entitled to attorneys' fees pursuant to the IDEA, he is a prevailing party under the Rehabilitation Act. This is a question of first impression in our Court, and we join our sister Circuits in holding that the meaning of "prevailing party" under the Rehabilitation Act is identical to the meaning of "prevailing party" under § 1988. See Pottgen v. Mo. State High Sch. Activities Ass'n, 103 F.3d 720, 723 (8th Cir.1997); Child v. Spillane, 866 F.2d 691, 692 n. 1 (4th Cir.1989); Disabled in Action of Pa. v. Pierce, 789 F.2d 1016, 1018-19 (3d Cir. 1986); Hall v. Bolger, 768 F.2d, 1148, 1151 (9th Cir.1985); Jones v. Ill. Dep't of Rehab. Servs., 689 F.2d 724, 730 n. 8 (7th Cir. 1982); see also Pickman v. Dole, 671 F.Supp. 982, 986 (S.D.N.Y.1987). Accordingly, the Supreme Court's holding in Buckhannon and our holding in New York State Federation of Taxi Drivers regarding § 1988 are applicable to the Rehabilitation Act. We conclude that J.C. is not a prevailing party under the Rehabilitation Act's fee-shifting provision.
CONCLUSION
20
Because the Supreme Court's holding in Buckhannon governs J.C.'s claims pursuant to the IDEA and the Rehabilitation Act, the judgment of the District Court is reversed and J.C.'s cross-appeal requesting additional fees is denied. The case is remanded to the District Court with instructions to dismiss the complaint.
Notes:
1
Section 504 of the Rehabilitation Act prevents any program or activity that receives federal funding from discriminating against or denying benefits to individuals with disabilities. 29 U.S.C. § 794(a). The statute's fee-shifting provision states that "[i]n any action or proceeding to enforce or charge a violation of a provision of this subchapter, 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." 29 U.S.C. § 794a(b)
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Docket No. 82750–Agenda 15–September 1997.
THE PEOPLE OF THE STATE OF ILLINOIS, Appellee, v. MICHAEL QUIGLEY, Appellant.
Opinion filed June 18, 1998.
JUSTICE NICKELS delivered the opinion of the court:
Defendant was charged with two driving under the influence (DUI) offenses, one a misdemeanor and the other a felony, in separate prosecutions based on the same incident. The misdemeanor charge was dismissed on speedy-trial grounds. In this appeal, we determine what effect, if any, this dismissal has on the subsequent prosecution of the remaining, felony DUI charge. The circuit court of Winnebago County ruled that the State could proceed on the felony charge, and the appellate court affirmed (No. 2–95–1643 (unpublished order under Supreme Court Rule 23)). We allowed defendant's petition for leave to appeal (166 Ill. 2d R. 315).
BACKGROUND
The underlying factual allegations are relatively simple. On August 27, 1994, defendant was involved in a multiple-vehicle collision while driving his car on Route 251 in or near the Village of Machesney Park. An individual in one of the other vehicles was injured as a result of the collision, suffering a broken ankle. A deputy sheriff of Winnebago County responded to the scene and asked defendant to perform field sobriety tests and a breathalyzer test. Defendant failed the field sobriety tests. The breathalyzer test revealed that defendant's blood-alcohol content (BAC) was 0.14.
Although the underlying allegations are straightforward, the circuit court proceedings are somewhat convoluted. Defendant was initially charged with two ordinance violations of DUI. Defendant filed a speedy-trial demand in connection with both of these ordinance violations.
Nearly three months later, on November 23, 1994, a grand jury indicted defendant for aggravated DUI under section 11–501(d)(3) of the Illinois Vehicle Code. This statute provides:
“(d) Every person convicted of committing a violation of this Section shall be guilty of aggravated driving under the influence of alcohol or drugs or a combination of both which shall be a Class 4 felony if:
* * *
(3) such person
in committing a violation of paragraph (a)
was involved in a motor vehicle accident which resulted in great bodily harm or permanent disability or disfigurement to another, when such violation was the proximate cause of such injuries.” (Emphasis added.) 625 ILCS 5/11–501(d)(3) (West 1992).
Section 11–501(d)(3) requires, as a predicate for aggravated DUI, a violation of paragraph (a). Section 11–501(a) provides, in pertinent part:
“(a) A person shall not drive or be in actual physical control of any vehicle within this State while:
1. the alcohol concentration in such person's blood or breath is 0.10 or more based on the definition of blood and breath units in Section 11–501.2;
2. under the influence of alcohol ***.” 625 ILCS 5/11–501(a) (West 1992).
The indictment alleged aggravated DUI based on the violation of section 11–501(a)(2). The felony charge was docketed as case 94–CF–2699.
On December 15, 1994, the ordinance charges against defendant were dismissed. On that date, the State filed an information against defendant charging him with a misdemeanor violation of section 11–501(a)(1), driving while having a BAC of 0.10 or more.
(footnote: 1) The misdemeanor charge was docketed as case 94–TR–39335.
The record states that the misdemeanor “file [was] to be set with [the] felony charge.” The misdemeanor and felony DUI charges were consolidated or intended to be consolidated. On January 6, 1995, however, the circuit court dismissed the felony charge of aggravated DUI. The reason for this dismissal is unclear from the record. Thus, only the misdemeanor DUI charge remained pending against defendant.
On January 18, 1995, defendant filed a speedy-trial demand in the felony DUI case, which had been dismissed. On February 1, 1995, defendant was reindicted on the same charge of aggravated DUI. The reindicted felony charge was docketed as case 95–CF–250. Thus, defendant was again facing the misdemeanor and felony DUI charges in two separate cases.
On June 6, 1995, defendant filed a motion to dismiss the misdemeanor DUI case on the grounds that the State had violated his right to a speedy trial. Defendant argued that the speedy-trial period had expired on April 10, 1995. On September 15, 1995, the circuit court granted the motion to dismiss the misdemeanor DUI case with prejudice on speedy-trial grounds. The State did not appeal the dismissal.
On September 25, 1995, defendant filed a motion to dismiss the aggravated DUI charge based generally on: (1) compulsory joinder grounds, and (2) double jeopardy grounds. The circuit court denied the motion to dismiss. The circuit court found that the charges were not subject to compulsory joinder because the two DUI charges were not based on the same act. Thus, the State was not required to bring the two DUI charges in a single prosecution. The circuit court further determined that double jeopardy did not bar the subsequent prosecution of the felony DUI charge. Based on this reasoning, the circuit court allowed the State to proceed with its prosecution of the felony DUI charge. Defendant immediately appealed the denial of the motion to dismiss on double jeopardy grounds. See 145 Ill. 2d R. 604(f).
Defendant raised the same arguments in the appellate court. Defendant's arguments were again rejected.
(footnote: 2) The appellate court agreed with the circuit court that there was no compulsory joinder violation. The appellate court held that the State was not required to bring the misdemeanor and felony DUI charges in one proceeding because the offenses were not based on the same act. The appellate court also agreed that there was no double jeopardy violation. The appellate court held that the speedy-trial dismissal of the misdemeanor DUI charge did not constitute an “acquittal” for double jeopardy purposes. Thus, the subsequent prosecution was not barred.
ANALYSIS
The issue here involves the interrelationship of compulsory joinder, double jeopardy, and speedy-trial principles. The parties raise arguments addressing each of these areas. We consider each in turn.
I. Compulsory Joinder
Section 3–3 of the Criminal Code of 1961 requires the compulsory joinder of certain offenses in a single prosecution. Section 3–3 provides:
“(a) When the same conduct of a defendant may establish the commission of more than one offense, the defendant may be prosecuted for each such offense.
(b) If the several offenses are known to the proper prosecuting officer at the time of commencing the prosecution and are within the jurisdiction of a single court,
they must be prosecuted in a single prosecution, except as provided in Subsection (c), if they are based on the same act
.
(c) When 2 or more offenses are charged as required by Subsection (b), the court in the interest of justice may order that one or more of such charges shall be tried separately.” (Emphasis added.) 720 ILCS 5/3–3 (West 1992).
This statute was enacted to prevent the prosecution of multiple offenses in a piecemeal fashion and to forestall, in effect, abuse of the prosecutorial process. See
People v. Mullenhoff
, 33 Ill. 2d 445, 447 (1965);
People v. Golson
, 32 Ill. 2d 398, 410-12 (1965). A prosecutor might otherwise harass a defendant through successive prosecutions of multiple offenses and put a defendant through the expense of several trials until the prosecutor obtains a result that satisfies him. See
Golson
, 32 Ill. 2d at 410-12;
People v. Kennedy
, 161 Ill. App. 3d 197, 199 (1987);
People v. Lewis
, 112 Ill. App. 3d 626, 629-30 (1983).
We now address the compulsory joinder issue. Section 3–3 requires joinder where multiple charges are known to the prosecutor when the prosecution begins, the charges are within the jurisdiction of a single court, and the charges are based on the same act. In the instant case, the parties do not dispute that the misdemeanor and aggravated DUI charges were known to the proper prosecuting officer at the time the prosecution began or that the charges were within the jurisdiction of a single court. Neither party suggests that the circuit court ordered separate trials in the “interest of justice.” 720 ILCS 5/3–3(c) (West 1992). The parties only dispute whether the two DUI charges were “based on the same act.”
The appellate court found that the charges were not based on the same act. The appellate court stated that, although the two offenses required that defendant be intoxicated, each offense was premised on a different act. Specifically, the appellate court found that defendant committed the offense of misdemeanor DUI when he started driving his vehicle. He could have been arrested and charged with misdemeanor DUI any time before the accident. Defendant then committed the offense of aggravated DUI when he performed some other act that led to the accident. The appellate court stated that the offenses were completely separate acts that occurred at separate times. Thus, the misdemeanor and aggravated DUI charges were not required to be joined in a single prosecution.
The appellate court relied, in part, on
People v. Mueller
, 109 Ill. 2d 378 (1985). In
Mueller
, the defendant was charged with murdering two individuals and concealing their bodies. Defendant was initially charged with the murders. Defendant claimed self-defense and was acquitted by a jury. After the trial, defendant was subsequently charged with homicidal concealment. He was convicted on this charge. On appeal to this court, the defendant argued that he should have been charged in a single prosecution because both charges were based on the same act. This court disagreed, finding that the two charges were based on separate acts. The shooting of the victims served as the basis for the murder charges, and the hiding of the bodies was the basis for the concealment charge. This court stated that joinder is not required where multiple offenses arise from a series of closely related acts.
Mueller
, 109 Ill. 2d at 385. Accordingly, the charges were not subject to compulsory joinder. See also
People v. Astorga
, 245 Ill. App. 3d 124, 130-32 (1993) (simultaneous possession of a stolen scale and possession of controlled substance with intent to deliver were not based on the same act);
People v. Thomann
, 197 Ill. App. 3d 516, 519-20 (1990) (possession of videotape of child pornography on one date was separate act from possession of advertisements containing similar material nearly two months later);
People v. Navis
, 24 Ill. App. 3d 842, 846 (1974) (act of driving while intoxicated was independent of and had no relationship to the simultaneous act of driving while license revoked).
Defendant herein argues that the two offenses are based on a single act, driving under the influence, and relies on
People v. Mullenhoff
, 33 Ill. 2d 445 (1965). In
Mullenhoff
, the defendant was initially charged with attempt to commit deviate sexual assault. The defendant was found not guilty. The defendant was then charged with attempted rape and convicted. On appeal to this court, the defendant argued that the charges should have been brought as part of a single prosecution because they were based on the same act. This court found that both offenses arose out of the same conduct. Accordingly, the charges were subject to compulsory joinder. See also
People v. Hiatt
, 229 Ill. App. 3d 1094, 1097 (1992) (possession of a videotape containing child pornography and possession of photos of different children were single act of possession);
People v. Mitsakopoulos
, 171 Ill. App. 3d 198, 200-01 (1988) (compulsory joinder applied to theft and forgery charges based on the defendant's unauthorized control over the proceeds of a check);
People v. Baker
, 77 Ill. App. 3d 943, 944-45 (1979) (simultaneous possession of a controlled substance and possession of cannabis were same act of possession for purposes of compulsory joinder). We agree with defendant that the misdemeanor and felony DUI charges were based on the same act.
The language of the DUI statute supports this interpretation. Section 11–501(d)(3) is violated if an individual
“in committing a violation of paragraph (a) was involved in a motor vehicle accident which resulted in great bodily harm or permanent disability or disfigurement to another,
when such violation was the proximate cause of such injuries
.” (Emphasis added.) 625 ILCS 5/11–501(d)(3) (West 1992).
Under section 11–501(d)(3), aggravated DUI occurs when an individual commits some form of misdemeanor DUI, in violation of paragraph (a), and other circumstances are present. The legislature added aggravating factors that changes the misdemeanor DUI to a Class 4 felony. The essential and underlying criminal act, however, remains the same: driving while under the influence. The physical injury caused to others by driving while under the influence produces the felony. See
People v. Avery
, 277 Ill. App. 3d 824, 830 (1995).
Driving while under the influence may lead to some other act that, in turn, leads to the accident. The underlying cause of both misdemeanor and aggravated DUI, however, is driving while under the influence. The misdemeanor DUI and the aggravated DUI charges are
based
on the same act. Section 11–501(d)(3) does not require any other specific act or Vehicle Code violation. Any other act resulting in an accident involving great bodily harm, by itself, would not support the aggravated DUI charge.
This interpretation is further supported by the committee comments to the compulsory joinder statute. The “same act” requirement applies primarily to two situations: (1) where several persons are affected by one act, and (2) where several different statutes are violated by one act. Ill. Ann. Stat., ch. 38, par. 3–3, Committee Comments–1961, at 102 (Smith-Hurd 1989). Two examples of the violation of several different statutes by one act include: (1) an illegal sale which also involves illegal possession of certain property, (2) and driving a vehicle recklessly while intoxicated. Ill. Ann. Stat., ch. 38, par. 3–3, Committee Comments–1961, at 102 (Smith-Hurd 1989). Causing an accident while intoxicated is similar to driving recklessly while intoxicated. Both are based on the act of driving while intoxicated.
In the instant case, the appellate court erred in failing to recognize that the misdemeanor DUI is a continuing offense that does not just occur when an individual starts driving his vehicle. The misdemeanor DUI offense continues while a defendant is driving and proximately causes the accident. Defendant was allegedly engaged in only one continuous and uninterrupted act of driving while under the influence. In this instance, the phrase “based on the same act” cannot be given a hypertechnical interpretation to create multiple acts based on discrete moments in time. See
People v. Pena
, 170 Ill. App. 3d 347, 350-52 (1988) (multiple convictions for DUI and speeding could not be based on different “acts” of DUI and speeding during the same driving episode). Accordingly, we find that the charges should have been brought in one proceeding.
II. Double Jeopardy
Double jeopardy principles and additional protections are codified in section 3–4 of the Criminal Code of 1961 (720 ILCS 5/3–4 (West 1992)). See
Mueller
, 109 Ill. 2d at 383. Section 3–4(b)(1) addresses the consequences of failing to comply with compulsory joinder under section 3–3. Section 3–4(b)(1) provides:
“(b) A prosecution is barred if the defendant was formerly prosecuted for a different offense, *** if such former prosecution:
(1) Resulted in either a conviction or an acquittal, and *** was for an offense with which the defendant should have been charged on the former prosecution, as provided in Section 3–3 of this Code (unless the court ordered a separate trial of such charge) ***.” 720 ILCS 5/3–4(b)(1) (West 1992).
Section 3–4(b)(1) therefore prohibits a subsequent prosecution where the offense charged should have been brought in a former prosection under section 3–3.
It is well settled, however, that section 3–4(b)(1) only applies where there was a
conviction or acquittal
in the former prosecution. See
People v. Miller
, 35 Ill. 2d 62, 64-66 (1966);
People v. Piatt
, 35 Ill. 2d 72, 73-74 (1966);
People v. Lewis
, 112 Ill. App. 3d 626, 630 (1983);
People v. Peterson
, 108 Ill. App. 3d 856, 859 (1982);
People v. Tate
, 47 Ill. App. 3d 33, 35-36 (1977). For purposes of the statute, “[a]n `acquittal' occurs when the trier of facts–the jury, or the court when a jury is waived–renders a verdict or finding of not guilty.” Ill. Ann. Stat., ch. 38, par. 3–4, Committee Comments–1961, at 125 (Smith-Hurd 1989). The Criminal Code defines an “acquittal” as “a verdict or finding of not guilty of an offense, rendered by a legally constituted jury or by a court of competent jurisdiction authorized to try the case without a jury.” 720 ILCS 5/2–1 (West 1992). An acquittal generally requires some resolution of a defendant's factual guilt or innocence. See
United States v. Scott
, 437 U.S. 82, 97-99, 57 L. Ed. 2d 65, 78-79, 98 S. Ct. 2187, 2197-98 (1978);
People v. Tripp
, 208 Ill. App. 3d 1006, 1009-11 (1991);
People v. Crowe
, 195 Ill. App. 3d 212, 219 (1990);
People v. Luallen
, 188 Ill. App. 3d 862, 863-64 (1989). In the instant case, the misdemeanor DUI prosecution was not terminated by an acquittal or conviction. It was terminated by a pretrial order of dismissal. Accordingly, double jeopardy and related protections, as contained in section 3–4(b)(1), do not apply to a speedy-trial dismissal, which occurs before trial.
III. Compulsory Joinder and Speedy-Trial Principles
The parties also raise an issue concerning the interaction of compulsory joinder and speedy-trial principles. Initially, however, we consider the scope of review on appeal. We note that defendant took an interlocutory appeal to the appellate court on double jeopardy grounds under Rule 604(f). In turn, this court allowed defendant's petition for leave to appeal under Rule 315. In this appeal, both parties have thoroughly addressed compulsory joinder, given its relationship to double jeopardy. The parties further dispute whether the aggravated DUI charge should be dismissed based on the interrelationship of compulsory joinder and speedy-trial principles. We address the issue in the interest of judicial economy. See
Schrock v. Shoemaker
, 159 Ill. 2d 533, 537 (1994) (scope of review not limited to certified question where interlocutory appeal arose under Rule 308);
Bright v. Dicke
, 166 Ill. 2d 204, 208 (1995);
People v. Berland
, 74 Ill. 2d 286, 310 (1978); 155 Ill. 2d R. 366(a)(5).
Compulsory joinder requires the State to bring multiple charges in a single prosecution. The charges are tried together unless the circuit court determines that a separate trial is required in the interest of justice. See 720 ILCS 5/3–3(c) (West 1992). Once a speedy-trial demand is filed, the multiple charges are subject to the same speedy-trial period. If the charges are required to be brought in a single prosecution, the speedy-trial period begins to run when the speedy-trial demand is filed, even if the State brings some of the charges at a later date. “Where new and additional charges arise from the same facts as did the original charges and the State had knowledge of these facts at the commencement of the prosecution, the time within which trial is to begin on the new and additional charges is subject to the same statutory limitation that is applied to the original charges.”
People v. Williams
, 94 Ill. App. 3d 241, 248-49 (1981); see also
People v. Stanley
, 266 Ill. App. 3d 307, 309-11 (1994);
People v. Hinkle
, 234 Ill. App. 3d 663, 666-68 (1992);
People v. Hawkins
, 212 Ill. App. 3d 973, 979-81 (1991);
People v. Howard
, 205 Ill. App. 3d 702, 710 (1990);
People v. Wilkey
, 202 Ill. App. 3d 756, 758 (1990);
People v. Crowe
, 195 Ill. App. 3d 212, 214-16 (1990);
People v. Alcazar
, 173 Ill. App. 3d 344, 354 (1988);
People v. Rodgers
, 106 Ill. App. 3d 741, 744 (1982);
People v. King
, 8 Ill. App. 3d 2, 4-6 (1972).
The State argues that the misdemeanor and aggravated DUI charges were not subject to the same speedy-trial limitation. The State relies on subsection (e) of the speedy-trial statute (725 ILCS 5/103–5(e) (West 1992)), which discusses the simultaneous prosecution of multiple offenses. It essentially provides that a defendant who simultaneously demands trial on more than one charge pending against him must be tried or found guilty after waiver of trial on, at least, one charge within the initial 160-day period. A defendant may then be tried on the remaining charges within another 160 days. If one of the charges was brought to trial in a timely manner but the trial was terminated without a judgment, such as by mistrial, the statute provides additional time within which to try the remaining charges. See 725 ILCS 5/103–5(e) (West 1992). The State argues that this statute gave it additional time to prosecute the aggravated DUI charge.
We reject the State's argument. Application of section 103–5(e) ordinarily arises where the State is simultaneously pursuing two separate prosecutions against a defendant. Section 103–5(e) preserves a defendant's right to a speedy trial while also lessening the State's burden of preparing more than one charge for trial. See
People v. Cavitt
, 246 Ill. App. 3d 514, 520 (1993). The statute provides additional time as long as the State elects to proceed on one of the charges within the initial 160-day period, either by trial or by guilty plea. See
People v. Beard
, 271 Ill. App. 3d 320, 325-28 (1995);
Cavitt
, 246 Ill. App. 3d at 520;
People v. Holmes
, 234 Ill. App. 3d 931, 939-40 (1992).
The instant case involves multiple charges that were required to be tried together. There was no trial or plea of guilty on either charge within the initial 160-day period. Instead, the misdemeanor DUI charge was dismissed on speedy trial grounds because it had not been brought to trial within the requisite time. The State cannot obtain more time on the aggravated DUI charge by relying on the fact that the misdemeanor DUI charge was terminated by the State's own action. Thus, section 103–5(e) does not apply.
The State also argues that defendant invited error by preventing consolidation of the cases. On June 6, 1995, defendant filed a motion to dismiss the misdemeanor DUI case on speedy-trial grounds. Defendant argued that the speedy-trial period had run on April 10, 1995. While the motion was pending, the State apparently requested consolidation of the two cases on July 3, 1995, and defendant objected. It is not clear from the record the basis of the objection, and the State did not obtain a ruling on its request for consolidation. The circuit court later ruled that the speedy-trial period had run. The State argues that it sought to consolidate the two cases and that defendant objected. The State argues that a party may not invite error and thereafter seek relief from that error.
The State's argument of invited error is without merit for several reasons. First, defendant cannot be said to have invited error where the State never obtained a ruling on its request for consolidation. Second, the circuit court determined that the speedy-trial period on the misdemeanor DUI case had run before June 6, 1995. The State's request to consolidate on July 3, 1995, was therefore untimely. As stated earlier, because the DUI offenses should have been brought in a single prosecution, both offenses were subject to the same speedy-trial limitation. Third, the State has not shown how defendant, by objecting, prevented the State from proceeding on the cases within the speedy-trial period. Accordingly, defendant did not invite error.
In the instant case, the circuit court determined that the speedy-trial period had run on the misdemeanor DUI charge. The State could have appealed that determination. See 145 Ill. 2d R. 604(a)(1); 725 ILCS 5/114–1(a)(1) (West 1992); 725 ILCS 5/103–5 (West 1992). It did not. Because the State did not appeal this determination, we do not consider the correctness of the dismissal of the misdemeanor DUI charge on speedy-trial grounds. The State may not now seek to relitigate the issue. The aggravated DUI charge was essentially a new and additional charge that should have been brought with the misdemeanor DUI charge and was subject to the same speedy-trial limitation. The State did not act in a timely manner to bring the two related charges in a single proceeding. The aggravated DUI charge is therefore barred on speedy-trial grounds.
CONCLUSION
For the foregoing reasons, the prosecution of the aggravated DUI charge is barred. The judgment of the appellate court and the order of the circuit court are reversed.
Appellate court judgment reversed;
circuit court order reversed.
FOOTNOTES
1:The statute was later amended. This section is now violated if an individual drives with a BAC of 0.08. See Pub. Act 90–43, §5, eff. July 1, 1997. The amendment does not apply to this case.
2:Defendant raised an additional double jeopardy argument in both the circuit and appellate courts. Based on defendant's BAC, defendant's driver's license was automatically suspended pursuant to statute. See 625 ILCS 5/11–501.6 (West 1992). Defendant argued that the statutory summary suspension constituted a “punishment” for purposes of double jeopardy. Defendant argued that he could not receive an additional punishment in connection with the prosecution of the felony DUI charge. The lower courts rejected this argument. Defendant has not raised that argument in this court. Defendant's argument was recently rejected by this court in
People v. Lavariega
, 175 Ill. 2d 153 (1997).
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477 F.Supp.2d 314 (2007)
The GREENBRIAR COMPANIES, INC., and Greenbriar Management Services, Plaintiffs,
v.
SPRINGFIELD TERMINAL RAILWAY, Guilford Rail System, Guilford Motor Express, Inc., and Boston & Maine Corporation, Defendants.
Civil Action No. 06-10207-NMG.
United States District Court, D. Massachusetts.
February 9, 2007.
*315 Dan Vernon Bair, II, Lisa Brodeur-McGan, Attorneys at Law, Brodeur-McGan, Springfield, MA, for Plaintiffs.
Robert B. Culliford, Alexandra B. Schmit, Guilford Transportation Industries, Inc., Portsmouth, NH, for Defendants.
MEMORANDUM & ORDER
GORTON, District Judge.
The plaintiffs have filed a motion for real estate attachment which is opposed by the defendants. The motion is resolved as follows.
I. Factual Background
The Greenbrier Companies, Inc. and Greenbrier Management Services (collectively "Greenbrier" or "the plaintiffs") bring this suit against Springfield Terminal Railway Company ("Springfield Terminal"), Guilford Rail System, Guilford Motor Express, Inc. ("Guilford Motor") and Boston & Maine Corporation ("BMC") (collectively, "the defendants") under a provision of the Interstate Commerce Act, as amended at 49 U.S.C. § 11704, for failure to pay so-called "car hire" fees.
The plaintiffs are rail carriers that own rail freight cars, which move throughout the United States. According to the complaint, the defendants are also rail carriers comprising the Guilford Rail System located in Billerica, Massachusetts.
The plaintiffs allege that the defendants and Greenbrier were parties to Circular No. OT-10, Car Service and Car Hire Agreement ("the Agreement"). The Agreement provides for the defendants' use of Greenbrier's rail cars in accordance with the rules promulgated by the Association of American Railroads. Under the Agreement, the defendants must keep an accounting of their use of Greenbrier's rail cars and remit monthly payments for such use. This ancient system of "car hire" requires users of rail equipment to self-report their use of rail cars and creates a contract for each use.
The sole count of the plaintiffs' complaint alleges that the defendants are liable under 49 U.S.C. § 11704 for breaching the Agreement. That statute provides that a party may file a civil action against a rail carrier in federal court. Because the defendant is a rail carrier, the action is governed by the procedural requirements of the Interstate Commerce Act rather than state contract law.
According to the complaint, prior to June 8, 2004, the defendants owed Greenbrier approximately $443,592 based on the defendants' own self-reporting of car use. On June 8, 2004, the defendants allegedly agreed to pay Greenbrier the outstanding amount in $60,000 monthly installments until all debts were paid (the "June 2004 Agreement"). In consideration for those payments, Greenbrier agreed not to file *316 suit to recover the debt. In their answers, the defendants dispute the existence of the June 2004 Agreement. Furthermore, the defendants `assert they have paid Greenbrier approximately $687,285 since July 8, 2004.
A. Motion for Approval of Real Estate Attachment
On August 1, 2006, the plaintiffs filed a motion for real estate attachment to secure a judgment pursuant to Fed.R.Civ.P. 64 and Mass. R. Civ. P. 4.1. According to the plaintiffs, the defendants have failed to pay their debts in accordance with the Agreement and the plaintiffs therefore seek to attach real property owned by Springfield Terminal at Montgomery Street in Chicopee, Massachusetts. The defendants allegedly owe the plaintiffs $410,135 and, under M.G.L. c. 231, § 6C, also owe a statutorily-imposed interest payment of $31,518. With the addition of approximately $13,000 in legal fees and $265 in costs, the plaintiffs seek an attachment in the amount of $455,247.
In opposition, the defendants contend that attachment is not a proper procedure because it is preempted by federal law. Rule 64 of the Federal Rules of Civil Procedure provides that a motion for attachment is governed by the law of the state in which the district court is held. Therefore, a motion for attachment in this District is brought pursuant to Mass. R. Civ. P. 4.1. The defendants assert, however, that attachment is a state-law remedy that is preempted by the federal Interstate Commerce Act.
II. Legal Analysis
A. Preemption
Rule 64 of the Federal Rules of Civil Procedure provides that:
At the commencement of and during the course of an action, all remedies providing for seizure of person or property for the purpose of securing satisfaction of the judgment ultimately to be entered in the action are available under the circumstances and in the manner provided by the law of the state in which the district court is held, existing at the time the remedy is sought, subject to the following qualifications: (1) any existing statue of the United States governs to the extent to which it is applicable . . . (emphasis added).
Pursuant to Rule 64, a motion for attachment is governed by Massachusetts law, specifically Mass. R. Civ. P. 4.1. The defendants, however, contend that the instant motion falls into the exception provided by subsection (1) because a "statute of the United States" governs the underlying action.
By virtue of the fact that the defendants are rail carriers, the underlying action arises under the Interstate Commerce Act rather than under state contract law. The Interstate Commerce Act provides a host of regulatory and procedural requirements. An amendment to the Act also states that:
Except as otherwise provided in this part, the remedies provided under this part with respect to the regulation of rail transportation are exclusive and preempt the remedies provided under Federal or State law. (emphasis added).
49 U.S.C. § 10501(b). The Interstate Commerce Act contains no provision relating to pre-judgment attachment of property. According to the defendants, because 1) state law is explicitly preempted by the express language of § 10501(b) for cases involving the regulation of rail transportation and 2) attachment is a state-law remedy, a real estate attachment is impermissible in the instant case.
*317 No other federal court appears to have addressed the precise issue of whether state law governing pre-judgment attachment is preempted by the language of the Interstate Commerce Act. The defendants' argument, however, is undermined by the fact that attachment is not merely a creature of state law but is specifically provided for by Fed.R.Civ.P. 64. Rule 64 explicitly makes attachment available as a remedy "during the course of an action" with the caveat that such an attachment is available only "in the manner provided by the law of the state" in which the district court is held. Federal law, therefore, provides for pre-judgment real estate attachment, albeit that Fed.R.Civ.P. 64 leaves the details of how such an attachment should be executed to individual states.
The Supreme Court of the United States has held that in all cases in federal court, whether or not removed from state court, state law is incorporated to determine the availability of remedies such as attachment. Granny Goose Foods, Inc. v. Brotherhood of Teamsters and Auto Truck Drivers Local No. 70, 415 U.S. 423, 436 n. 10, 94 S.Ct. 1113, 39 L.Ed.2d 435 (1974). Subsection (1) of Rule 64, which provides that state procedures for attachment are subject to "any existing statute of the United States", has been interpreted to mean that if there is any applicable federal statute that specifically modifies the manner provided by the state in making the remedy of attachment available, then the federal statute trumps the state procedure. Brown v. Beckham, 137 F.2d 644 (6th Cir. 1943). Certain federal statutes, such as the Soldier's and Sailor's Act, 28 U.S.C. §§ 1609-1611 (foreign sovereign immunity from attachment) and 28 U.S.C. § 2405 (garnishment by United States), directly modify the procedure for attachment orders. See Wright et al., Federal Practice & Procedure, 11A FPP § 2933.
The Interstate Commerce Act is not one of those statutes. Although the Act provides that the remedies provided therein are "exclusive" and "preempt the remedies provided under Federal or State law", 49 U.S.C. § 10501(b), there is no portion of the Act specifically modifying the process for attachment and therefore no direct conflict with the Massachusetts rule governing attachment orders, Mass. R. Civ. P. 4.1. This Court, therefore, may issue an order of attachment in accordance with the Massachusetts rule.
B. Attachment
Because pre-judgment attachment under Fed.R.Civ.P. 64 and Mass. R. Civ. P. 4.1 is not preempted by the Interstate Commerce Act, the next step in the inquiry is to determine whether the plaintiff has met the burden of showing that an attachment is appropriate as a matter of Massachusetts law. In order to obtain an attachment order, a plaintiff must demonstrate 1) a reasonable likelihood of success on the merits and 2) a reasonable likelihood of recovering a judgment equal to or greater than the amount of the attachment sought that is 3) over and above any liability insurance shown by the defendant to be available to satisfy the judgment. Int'l Ass'n of Bridge, Structural and Ornamental Iron Workers v. Burtman Iron Works, Inc., 164 F.R.D. 305, 306-07 (D.Mass. 1995).
1. Likelihood of Success on the Merits
The plaintiffs have attached an affidavit to their motion for attachment outlining their case. They have established, and the defendants do not oppose, the basic elements of an action for breach of contract. The plaintiffs, therefore, have demonstrated a reasonable likelihood of success on the merits.
*318 2. Equal to or Greater Than Amount
The plaintiffs have itemized in their motion and affidavit the amounts owed to them. The defendants do not challenge that amount Instead, in their opposition, the defendant's state that an order of attachment is unnecessary because the defendants have other assets sufficient to cover any judgment. That argument is irrelevant to this analysis.
3. Over and Above Insurance
The burden is on the defendants to prove the availability of liability insurance to satisfy the judgment. Mass. R. Civ. P. 4.1(c) provides that:
. . . the order of approval [of attachment] may be entered only . . . upon a finding by the court that there is a reasonable likelihood that the plaintiff will recover judgment, including interest and costs, in an amount equal to or greater than the amount of the attachment over and above any liability insurance shown by the defendant to be available to satisfy the judgment. (emphasis added).
See Int'l Ass'n of Bridge, Structural and Ornamental Iron Workers, 164 F.R.D. at 306-07. The defendants do not contend that any such liability insurance exists. There is no excuse not to grant the motion for attachment on the grounds of liability insurance.
ORDER
In accordance with the foregoing, plaintiffs' motion for approval of real estate attachment (Docket No. 18) is ALLOWED.
So ordered.
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302 F.2d 732
UNITED STATES of Americav.William J. COLMAN and Phyllis E. Colman.
No. 6993.
United States Court of Appeals Tenth Circuit.
April 20, 1962.
Appeal from the United States District Court for the District of Utah.
William T. Thurman, U. S. Atty., and Gerald R. Miller, Asst. U. S. Atty., Salt Lake City, Utah, for appellant.
Ned Warnock and A. M. Ferro, Salt Lake City, Utah, for appellee.
Before MURRAH, Chief Judge, and BREITENSTEIN, Circuit Judge.
PER CURIAM.
1
Notice of appeal withdrawn by appellant and cause dismissed April 20, 1962.
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604 A.2d 331 (1992)
The HOLLISTON MILLS, INC.
v.
CITIZENS TRUST COMPANY et al.
No. 90-441-A.
Supreme Court of Rhode Island.
March 10, 1992.
*332 J. Robert Weisberger, Wistow & Barylick, Inc., Providence, for plaintiff.
Anthony F. Muri, Goldenberg & Muri, Providence, for defendant.
OPINION
FAY, Chief Justice.
This is an appeal from an order entered in Superior Court granting a motion for summary judgment in favor of the defendant, Citizens Savings Bank (Citizens). The plaintiff, The Holliston Mills, Inc. (Holliston), brought this action to recover amounts taken from its receivables by Citizens as a prepayment premium according to the terms of the loan agreement between the parties. Holliston maintains that the trial justice erred in concluding *333 that there were no genuine issues of material fact supporting its position. We find that the trial justice's determination was proper and therefore affirm the lower court judgment. The relevant facts are as follows.
On January 16, 1986, Holliston and Citizens entered into a loan-and-security agreement involving two types of loans, a revolving loan of up to $12,800,000 and a five-year term loan of $3,200,000. The agreement included a provision for Citizens to receive and control Holliston's receivables, referred to as lock-box collections, as security in order to satisfy Holliston's outstanding fees and other obligations. Section 10 of the agreement provides:
"The term of this Agreement shall commence on the date hereof and shall continue until all Obligations shall have been fully paid and satisfied. Either party may terminate this Agreement on thirty (30) days prior written notice effective any time after December 31, 1986, but such termination shall not affect the duties of Borrower hereunder or the security interest of Bank in the Collateral so long as any Obligations are outstanding, and notwithstanding such termination, Borrower shall continue to assign Receivables to Bank and turn over all collections to Bank as herein provided, until all the Obligations are paid in full and satisfied."
Section 11.12 of the agreement mandated a percentage premium Holliston would have to pay upon prepayment within three years after December 31, 1986, if the prepayment was made either in whole or in part out of money other than the proceeds of Holliston's internal business operations. Read along with section 10, the provision imposed a 5 percent charge if debtor Holliston prepaid either of the loans within the first year after December 31, 1986, a 3 percent charge if paid within the second year, a 1 percent charge if paid within the third year, and no charge thereafter. Section 11.7 provides:
"If Bank shall employ counsel in connection with the execution and consummation of the transactions contemplated by this Agreement or to take any action in or with respect to any suit or proceeding (bankruptcy or otherwise) relating to this Agreement, or to prepare this Agreement or any amendment or waiver in connection with this Agreement, or to enforce the security interest of Bank in the Collateral, or to enforce any other rights of Bank hereunder whether before or after the occurrence of any Event of Default, or to collect any of the Obligations, then in any of such events, all reasonable attorneys' fees and any expenses, costs and charges relating thereto, shall be part of the Obligations, payable on demand and secured by the Collateral."
Therefore, the obligations owed according to section 10 included both the prepayment premium according to section 11.12 and reasonable attorneys' fees according to section 11.7 of the agreement.
On August 25, 1987, Holliston sent written notice to Citizens that it was terminating the agreement in accordance with the terms and rights under section 10. Holliston stated it intended to pay all its obligations on or before September 24, 1987. Citizens sent Holliston a response letter on August 27, 1987, calculating the amount due from the loans, which amount included a prepayment premium of $376,958.80. On September 24, 1987, Holliston paid Citizens $11,888,707.54, the sums due, less the prepayment premium. On that same day Citizens revised its payment amount, including a prepayment premium of $348,373.13, adjusted after taking into consideration money paid to Citizens out of its lock-box collections of receivables. Citizens then obtained a further revised sum of $341,624.40 from Holliston's receivables in lock-box collections, which it held pursuant to the loan agreement. The payment included $91,949.25 for the term loan, $246,175.15 for the revolving loan, and $3,500 in legal fees incurred in connection with the prepayment-premium collection.
Holliston filed a three-count complaint in Superior Court on October 22, 1987, seeking to recover the total amount of $341,624.40, alleging breach of express contract, breach of implied contract, and conversion. *334 On November 10, 1989, Holliston moved to amend its complaint, adding two additional counts: there was a lack of consideration for the prepayment premium, and the loans were due on demand, rendering their payment not a prepayment. Holliston's motion was granted on November 20, 1989. Holliston was seeking return of the amounts improperly collected by Citizens as a prepayment premium, including interest and costs.
On September 28, 1989, Citizens filed a motion for summary judgment to which Holliston objected and on December 5, 1989, filed a cross-motion for summary judgment. A hearing was held before the Superior Court on February 27, 1990. The trial justice considered the facts and issues presented in the instant case and entered summary judgment for Citizens on February 28, 1990. The trial justice found the termination notice under section 10 of the loan agreement to be mutual, allowing either party the right to so terminate. He also noted that the relationship of the parties and the entire agreement dictated Holliston's payment to be a prepayment. The trial justice did not agree with the proposition that separate and distinct consideration was needed for the prepayment. The trial justice stated, "The prepayment provision is merely a method by which the bank has established that it is economically feasible for them to loan money on those particular terms and conditions, and considering it in its entirety, there is consideration for the agreement."
The trial justice found that the prepayment provision clearly stated that the bank was forfeiting a right to the amount of interest it would have earned over the ordinary time on the loan. This forfeiture was counterbalanced by the right to obtain full and complete satisfaction of the loan. Further, the trial justice found that Citizens's security in obtaining interest had been jeopardized by Holliston's voluntary actions. In finding the prepayment provision proper and the agreement supported by consideration, the trial justice stated that the premium owed in the place of expected interest payments was "derived so that it was economically feasible for the bank to advance the sums required by Holliston." Holliston appealed the Superior Court judgment on March 13, 1990.
The issue presented before this court is whether the trial justice erred in concluding that when he granted Citizens's motion for summary judgment, there were no genuine issues of material fact to support Holliston's position. Holliston contends that such genuine issues of material fact did exist with respect to whether the loans were in effect demand loans, the agreement was illusory, the prepayment-premium provision required separate consideration, and failure to provide the required consideration rendered the premium provision unenforceable.
Under Rule 56 of the Superior Court Rules of Civil Procedure, a party may make a motion for summary judgment to the trial justice on the basis that there exists no genuine issue of material fact to be resolved and, therefore, the trial justice may make a determination of whether the moving party is entitled to judgment as a matter of applicable law. Ludwig v. Kowal, 419 A.2d 297, 301 (R.I. 1980). The trial justice views the evidence in a light most favorable to the party against whom the motion is made, drawing from that evidence all reasonable inferences in support of the party's claim but not resolving facts. Mullins v. Federal Dairy Co., 568 A.2d 759, 761 (R.I. 1990); Rustigian v. Celona, 478 A.2d 187, 189 (R.I. 1984). Summary judgment is proper when there is no ambiguity as a matter of law. Lennon v. MacGregor, 423 A.2d 820, 821-22 (R.I. 1980). If no issues of material fact exist, then the trial justice decides whether the moving party is entitled to judgment as a matter of law before entering a summary judgment order. Rustigian, 478 A.2d at 189.
On appeal this court is to review the propriety of the summary judgment order according to the same standards that the trial justice applies in deciding whether to grant a party's motion for summary judgment. Steinberg v. State, 427 A.2d 338, 340 (R.I. 1981); see Grissom v. Pawtucket *335 Trust Co., 559 A.2d 1065, 1066 (R.I. 1989). This court is to decide whether, after examining all pleadings and affidavits and materials in a light most favorable to the nonmoving party, there is a genuine issue of material fact supporting that party's claim. A party who opposes such a motion must not rely solely on pleadings but must assert facts that raise a genuine issue to be resolved. Volino v. General Dynamics, 539 A.2d 531, 533 (R.I. 1988).
In the present case Holliston asserts that the trial justice erred in granting Citizens's motion for summary judgment because there actually did exist genuine issues of material fact. Holliston asserts that the loans were in effect demand loans, thereby rendering the loan agreement illusory. Further, Holliston contends that Rhode Island case law mandates that prepayment provisions are separate agreements requiring separate consideration and that in this case no such consideration existed between Holliston and Citizens in the prepayment-premium agreement. We find that the loans were not demand loans and that the loan agreement was not illusory. The prepayment provision in the loan agreement was not a separate agreement requiring separate consideration, and there existed adequate consideration for the loan agreement as a whole. We conclude that the trial justice properly found that because no genuine issues of material fact exist that require a trial determination and upon which a trial justice could find for the opposing party as a matter of law, Citizens was therefore entitled to summary judgment.
Holliston first asserts that the term loan and the revolving loan were payable on demand after thirty days' notice and that because Citizens had no obligation to support its right to a prepayment premium, the contract was thereby rendered illusory. It contends that because of the difficulty in paying "such a huge sum of money without at least thirty (30) days to marshal the necessary funds * * * the distinction between a demand note and a loan payable upon thirty days notice is a distinction without a difference." We conclude that these loans were not demand loans because the borrower, Holliston, had thirty days to repay once it presented its notice of termination and the prepayment option could not be exercised by either party until after December 31, 1986. Both loans were restricted by prohibiting prepayment before December 31, 1986. The term loan expressly prevented prepayment before December 31, 1986, and the revolving loan was payable subject to section 10 of the loan agreement, which set December 31, 1986, as the earliest date for prepayment. Both parties were seasoned veterans in the loaning process and, in participating in loan transactions, fully aware of the prepayment provision that did not operate unfairly to either party. The fact that the revolving loan in the present case was not for a fixed period is not dispositive of its character. The money was to be retained for a predetermined time, with prepayment at the option of either party, an option that Holliston voluntarily exercised. The loans were not payable on demand at any time by Citizens. Rather the loans were payable according to a schedule or, in the alternative, at a prepayment time exercisable by either party after December 31, 1986. Citizens required Holliston to pay a premium if Holliston chose to repay out of money other that its receivables and before five years had expired. We conclude that there exists no factual basis to support Holliston's contention that these loans were demand loans.
In general termination clauses supported by adequate consideration are not illusory, but if a termination clause allows a party to terminate at any time at will without more, that promise is illusory. It is only binding on one party because the other party has in effect promised nothing. See generally I Farnsworth on Contracts § 2.14 (1990); I Williston on Contracts §§ 104, 105 (Jaeger 3d. ed. 1957). However, if the relevant provision requires the party to give notice a stated time before termination is effective, that promise is sufficient consideration for a valid contract, not rendering it invalid for lack of consideration or mutuality. See generally I Williston on Contracts § 105.
*336 In Lehner v. Adam Hat Stores, Inc., 88 R.I. 88, 143 A.2d 313 (1958), a party sought to avoid an agreement, charging that the promises lacked mutuality. This court found that the "provision amounts to a reservation of a right in each party to cancel the agreement subject to certain conditions. That the condition applicable to one party is lighter than the condition applicable to the other does not render the favored party's promise illusory." Id. at 96, 143 A.2d at 317. Similarly in Joni Auto Rentals, Inc. v. Weir Auto Sales, Inc., 491 A.2d 328, 330 (R.I. 1985), this court found that when one party's obligation was triggered by the other party's promise to do something, there was a corresponding obligation on the promising party's part and the contracts were not therefore illusory. We have also declined to find the contractual promise illusory in an agreement in which both parties are bound to act. Petrone v. Davis, 118 R.I. 261, 266, 373 A.2d 485, 488 (1977).
In the present case the contract terms required notice and provided thirty days within which to satisfy all obligations owed to the lending party according to the loan agreement. The terms provided that neither party could exercise the option to seek prepayment until one year had expired from the making of the loans and the signing of the agreement. The agreement between the parties was therefore not illusory. The power of termination was not arbitrary in either party. Each party promised something in exchange for the other's promise. Holliston promised to pay the loan and prepayment premium if it opted to prepay ahead of schedule, and Citizens promised to allow the prepayment in exchange for full payment within thirty days at an agreed-upon schedule of percentages after December 31, 1986. This was not an unrestricted unilateral right of cancellation exercisable at any time but rather one that provided limits and restrictions constituting the necessary legal detriment of consideration and conditions so as not to render the agreement illusory.
Holliston was being loaned a substantial amount of money and being offered the option of prepayment. Citizens had to derive some benefit from this loan and to compensate for interest it would lose by virtue of Holliston's prematurely exercising the prepayment option. Holliston voluntarily decided to prepay the loans with full knowledge of the prepayment premium that would be owed. Assigning percentages of the principal loan amount as a premium is within the benefit due and accruing to Citizens in exchange for allowing Holliston to borrow large sums of money and prepay at an earlier time prior to maturity.
Holliston next contends that Rhode Island law mandates that a prepayment-premium provision of an agreement constitutes a separate agreement and must be supported by consideration separate from the mere making of a loan, citing Reichwein v. Kirschenbaum, 98 R.I. 340, 343, 201 A.2d 918, 920 (1964), and Marley v. Consolidated Mortgage Co., 102 R.I. 200, 205, 229 A.2d 608, 611 (1967), as controlling law on this principle. The narrow holding of those stated cases is not controlling on the issues raised regarding the present loan agreement between the parties. The principle of treating prepayment provisions as separate agreements as presented in these cases is not applicable to all prepayment provisions in all circumstances and loan transactions.
In Reichwein the loan agreement containing the payment provisions contained no provision expressly entitling the makers of the note to the option to prepay. 98 R.I. at 341, 201 A.2d at 919. That case involved an allegation of usury because the amount charged for prepayment exceeded the amount that the lender could statutorily charge as interest. This court found the contract free from usury, stating that the rationale was based on
"the right of a lender who has bargained to let his money out over an agreed period of time to be compensated by a borrower who for his own advantage seeks and is granted the privilege of prepayment, a privilege not otherwise his. Such a prepayment the authorities treat as a charge made for a new and *337 separate agreement in termination of an indebtedness and not as consideration for the making of a loan or of a forbearance for money." (Emphasis added.) Id. at 343, 201 A.2d at 920.
This court found that by construing the agreement to prepay as a separate agreement, this is not a payment of interest and cannot serve as a basis for a usury claim. Id. The case therefore centered not on the issue of all prepayment provisions constituting separate agreements but instead on the situation in which no agreement providing for prepayment exists as part of the loan-agreement contract as a whole, yet that right is separately extended. To prevent such transactions from being considered usurious, this court treated the prepayment premium as a separate agreement, not as an interest payment on the existing note. The underlying rationale was that construing the transaction in this manner protected parties from rendering something usurious that would not be except for the debtor's voluntary act. Id.
In Marley v. Consolidated Mortgage Co., 102 R.I. 200, 229 A.2d 608 (1967), the note agreement did not provide a prepayment right unless the parties separately agreed to do so in writing. Within the agreement terms, the borrowing party simultaneously executed a separate agreement instrument in which the lender granted the borrower the right to prepay and included a formula to establish the rebate due to the lender when the borrower exercised the option to prepay. Id. at 202 n. 1, 229 A.2d at 609 n. 1. The borrower asserted that the agreement that permitted prepayment and the loan agreement itself were essentially the same transaction, and because the amount due as a premium was over the statutory limit, this rendered the prepayment rebate agreement usurious. Id. at 204-05, 229 A.2d at 610-11. Although the negotiation of the loan would have involved the prepayment right, this court was "not persuaded there was but a single agreement involved in this one transaction" and concluded that "the transaction resulted in separate and distinct agreements, the one executed and the other executory." Id. at 205, 229 A.2d at 611. In finding this separately executed agreement not violative of usury laws, this court found that "the executory option to prepay is separate and distinct from the executed loan transaction." Id. at 208, 229 A.2d at 612.
These cases are distinguishable because they concerned issues of violation of the usury statute, G.L. 1956 (1985 Reenactment) § 6-26-2, as amended by P.L. 1986, ch. 359, § 2, and involved separate agreements. The issue of usury has been neither addressed nor charged in the present case before this court. Holliston proposes that the prepayment provision embodied in the loan agreement between Holliston and Citizens is a separate agreement for which separate consideration is required. This proposition is not what Reichwein and Marley represent. Those cases are clearly distinguishable because no prepayment provision was embodied within either loan transaction. Therefore, we conclude that the prepayment provision in the loan agreement between Holliston and Citizens was not a separate agreement for which separate consideration was required.
We decline to rewrite documents in the banking industry. In the present case the sophisticated and experienced parties expressly and knowingly entered into the agreement that contained provisions including the prepayment option exercisable after one year and requiring a premium payment if said option was exercised within the first three years after December 31, 1986. The loan agreement itself contained consideration between both Holliston and Citizens. Holliston was receiving the benefit of being loaned large sums of money and the option to prepay, and Citizens in return was receiving the ability to collect interest on the loans. If Holliston voluntarily opted to prepay, this prepayment would terminate interest payments to Citizens. In exchange Citizens included a common prepayment premium, a percentage of the funds borrowed, graduated downward with time. Citizens also extended to Holliston thirty days' reprieve within which to satisfy the obligations *338 owed. This is a benefit that Citizens bargained for with Holliston, having full knowledge, as a benefit for Citizens's loaning such a large sum of money and extending to Holliston the privilege of prepayment. A prepayment premium is not a charge for use of money but is instead a consideration granted to the party who has extended to the borrowing party the option or privilege of early repayment and avoidance of further accrued interest. See, e.g., Bell Bakeries, Inc. v. Jefferson Standard Life Insurance Co., 245 N.C. 408, 418, 96 S.E.2d 408, 415 (1957); Bearden v. Tarrant Savings Association, 643 S.W.2d 247, 249 (Tex. Ct. App. 1982); Boyd v. Life Insurance Company of the Southwest, 546 S.W.2d 132, 133 (Tex. Civ. App. 1977).
The relevant issue is not usury but instead whether consideration is necessary for the provisions of the loan agreement. The agreement between the parties was fair and bargained for, and we therefore decline to rewrite the loan agreement and prepayment provision in which the terms embodied in one instrument represented the meeting of the minds of the parties. The terms of the contract did not render it illusory or unsupported by adequate consideration but clearly entitled Citizens to collect the prepayment premium. By its own voluntary act Holliston cannot avoid the premium payment for the privilege of prepayment on terms to which it expressly agreed. We therefore find that the trial justice correctly found no genuine issues of material fact to exist and properly granted Citizens's motion for summary judgment.
The final issue raised involves the counsel fees incurred by Citizens and to be paid by Holliston in accordance with section 11.7 of the loan agreement. We find this provision to be a valid obligation owed pursuant to sections 10 and 11.7 of the agreement, allowing Citizens to receive from Holliston amounts it expended in an effort to retain its rightfully owed prepayment premium in defending this lawsuit. We therefore remand this case to the Superior Court for a determination of the counsel fees expended by Citizens in order to defend this suit by Holliston.
For the reasons stated, Holliston's appeal is denied and dismissed. The decision of the Superior Court granting summary judgment for Citizens is affirmed, and the papers of this case are remanded to the Superior Court.
WEISBERGER, J., did not participate.
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977 S.W.2d 657 (1998)
TEXAS DEPARTMENT OF TRANSPORTATION, Appellant,
v.
Don PIRTLE, Appellee.
No. 02-97-233-CV.
Court of Appeals of Texas, Fort Worth.
June 4, 1998.
Rehearing Overruled July 16, 1998.
Dan Morales, Atty. Gen., Jorge Vega, Grady Click, Michael Ratliff, Asst. Attys. Gen., Laquita A. Hamilton, Deputy Atty. Gen., Austin, for Appellant.
Stephen D. Colbert, P.C., Flower Mound, for Appellee.
Before DAUPHINOT, RICHARDS and HOLMAN, JJ.
OPINION
DAUPHINOT, Justice.
A jury found that Appellant, the Texas Department of Transportation ("the department"), *658 was not liable for damages Appellee Don Pirtle incurred in his one-car accident. The trial court assessed all costs of court, including attorney's fees and mediator's fees Pirtle incurred, to the department, finding that it had failed to mediate in good faith. In a single point, the department complains that the trial court erred in assessing costs against it.
The civil practice and remedies code provides that a trial court may order litigants into alternative dispute resolution[1] ("ADR") and that the proper remedy for a party dissatisfied with this order is to file a written objection within ten days.[2] Instead of filing a written objection, the department attended the mediation but refused to participate. In arguing that it had no duty to mediate in good faith, the department cites Gleason v. Lawson,[3]Hansen v. Sullivan,[4] and Decker v. Lindsay[5] All are inapposite.
Gleason addresses situations where a judge does not order litigants into ADR.[6]Hansen addresses situations where a litigant does mediate in good faith, but is unable to resolve the dispute.[7]Decker addresses situations where a litigant does file a written objection within ten days, but the judge overrules the objection.[8]
The rules of civil procedure provide that, "The successful party to a suit shall recover of his adversary, all costs incurred therein, except ...[9] [t]he court may, for good cause, to be stated on the record, adjudge the costs otherwise."[10] We may reverse a trial court's imposition of costs only for abuse of discretion.[11] In response to the department's insistence that costs be assessed against Pirtle, the trial court stated, "[T]hey pretty much told me from the beginning they weren't going to mediate because it's the position of the Department of Transportation that part of its responsibility in fulfilling its public trust is not to settle disputed liability cases." Had the department exercised its statutory remedy by filing a written objection, Pirtle would have been spared the expense of attending mediation.
We find that it is not an abuse of discretion for a trial court to assess costs when a party does not file a written objection to a court's order to mediate, but nevertheless refuses to mediate in good faith. We overrule the department's sole point. Finding no reversible error, we affirm the trial court's judgment.
NOTES
[1] See TEX. CIV. PRAC. & REM.CODE ANN. § 154.021 (Vernon 1997).
[2] See TEX. CIV. PRAC. & REM.CODE ANN. § 154.022 (Vernon 1997).
[3] Gleason v. Lawson, 850 S.W.2d 714 (Tex. App.Corpus Christi 1993, no writ).
[4] Hansen v. Sullivan, 886 S.W.2d 467 (Tex. App.Houston [1 st Dist.] 1994, no writ).
[5] Decker v. Lindsay, 824 S.W.2d 247 (Tex.App. Houston [1 st Dist.] 1992, no writ).
[6] Gleason, 850 S.W.2d at 717-18.
[7] Hansen, 886 S.W.2d at 469.
[8] Decker, 824 S.W.2d at 248.
[9] TEX.R. CIV. P. 131.
[10] TEX.R. CIV. P. 141; See Rhodes v. Cahill, 802 S.W.2d 643, 647 (Tex.1990) (op. on reh'g) (finding good cause exists to assess costs against successful party for serving a citation before an ad litem attorney is appointed).
[11] See Rogers v. Walmart Stores, Inc., 686 S.W.2d 599, 601 (Tex.1985).
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173 F.3d 713
99-1 USTC P 50,531, 99 Cal. Daily Op. Serv. 4543,99 Cal. Daily Op. Serv. 4990,1999 Daily Journal D.A.R. 4627,1999 Daily Journal D.A.R. 5834,1999 Daily Journal D.A.R. 6503,Pens. Plan Guide (CCH) P 23953S
In re Donna VIZCAINO, John R. Waite, Mark Stout, GeoffreyClubert, Lesley Stuart, Thomas Morgan, ElizabethSpokoiny and Larry Spokoiny, and theclass they represent,Plaintiffs-Petitioners,v.UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OFWASHINGTON, Respondent,Microsoft Corporation and its pension and welfare benefitsplans, Defendants/Real Parties in Interest.Donna Vizcaino; John R. Waite; Mark Stout; GeoffreyCulbert; Lesley Stuart; Thomas Morgan;Elizabeth Spokoiny; Larry Spokoiny,Plaintiffs-Appellants,v.Microsoft Corporation, and its health and benefits plans:Health Benefit Plan, Life Insurance Plan,Short-term and Long-term DisabilityPlans, and Savings (401K)Plan, Defendant-Appellee.
Nos. 98-71388, 99-35013United States Court of Appeals,
Ninth Circuit.May 12, 1999.*
1
Stephen K. Strong and David F. Stobaugh, and Brian J. Waid, Bendich, Stobaugh & Strong, Seattle, Washington, for appellants-petitioners-plaintiffs.
2
James D. Oswald and Michael P. Monaco, Song Oswald & Mondress, Seattle, Washington, Theodore O. Rogers, Jr., Sullivan & Cromwell, New York City, and Margaret K. Pfeiffer, Richard H. Sauer, and Joseph J. Matelis, Sullivan & Cromwell, Washington, DC, for appellee-real party in interest.
3
Petition for Writ of Mandamus to the United States District Court for the Western District of Washington. D.C. No. CV-93-00178-CRD.
4
Appeal from the United States District Court for the Western District of Washington; John C. Coughenour, District Judge, Presiding. D.C. No. CV-93-0178C.
5
Before: REINHARDT and HAWKINS, Circuit Judges, and SCHWARZER,** Senior District Judge.
ORDER
6
The Court is of the unanimous opinion that the facts and legal arguments are adequately presented in the briefs and record and the decisional process would not be significantly aided by oral argument.
7
Therefore, this matter is ordered submitted on the briefs and record without oral argument on Wednesday, May 12, 1999, in San Francisco. Fed.R.App.P. 34(a); 9th Cir.R. 34-4(a)(2).
OPINION
8
SCHWARZER, Senior District Judge.
9
In our prior opinions in this litigation, we held that, as common law employees, the members of a class certified by the district court were entitled to participate in Microsoft's tax-qualified Employee Stock Purchase Plan ("ESPP") even though they had been told when hired that they were ineligible for such benefits and had signed contracts disclaiming them. See Vizcaino v. Microsoft Corp., 97 F.3d 1187 (9th Cir.1996) ("Vizcaino I"), aff'd, 120 F.3d 1006 (9th Cir.1997) (en banc) ("Vizcaino II"). The certified class had been defined by the district court to include "[a]ll persons employed by Microsoft Corporation ... who are denied employee benefits because they are considered independent contractors or employees of third-party employment agencies, but who meet the definition of employees of Microsoft Corporation under the common law." Vizcaino I, 97 F.3d at 1190 n. 1. We reversed the district court's judgment for Microsoft and remanded for determination of "[a]ny remaining issues regarding the rights of a particular worker." Vizcaino II, 120 F.3d at 1015. On remand, the district court revised its prior class definition to limit the class to workers who worked for Microsoft as independent contractors between 1987 and 1990 either in positions that the Internal Revenue Service (IRS) had reclassified as in fact being common law employee positions, or in positions that Microsoft contemporaneously had voluntarily converted to temporary agency employees. It held those workers to be eligible for employee benefits for work done while independent contractors and for work subsequently performed by them in the same position as temporary employees hired through a temporary employment agency. The district court's revised class definition excludes (1) all other temporary employees hired into a position subsequent to its reclassification or conversion, and (2) all other persons who worked for Microsoft as common law employees. We must decide whether the district court's order fails to carry out this court's mandate.
I. FACTUAL AND PROCEDURAL BACKGROUND
10
The relevant facts are set forth in detail in our prior opinions. We summarize them here only to the extent necessary for this disposition.
11
Microsoft, in addition to having regular employees, has utilized the services of other workers whom it classified as independent contractors (sometimes called freelancers) or temporary agency employees (also called temps). Following a federal employment tax examination in 1990, the IRS determined that Microsoft had misclassified workers in various positions occupied by independent contractors and that services performed by workers in the specified positions constituted an employer-employee relationship. In response to the IRS ruling, Microsoft offered some of the workers in reclassified positions jobs as regular employees. Most of the workers, however, were given the option to "convert" to temps or lose their working relationship with Microsoft. In addition, Microsoft voluntarily "converted" independent contractors in other positions to temps. The temporary employment agency "payrolled" these workers but in other respects the workers' relationship with Microsoft remained essentially unchanged. In the years following the reclassification and conversion, Microsoft utilized the services of numerous temps.
12
Plaintiffs, who were formerly independent contractors, brought this action on behalf of a class of persons employed by Microsoft who met the definition of employees under the common law but who were denied employment benefits because Microsoft considered them independent contractors or employees of third-party employment agencies. Of the various employee benefits sought by plaintiffs, only the ESPP remains at issue. Microsoft denied liability because each of the workers--though conceded to be common law employees--had signed an Independent Contractor Agreement which expressly provided that each independent contractor was responsible for his or her own benefits. The district court granted Microsoft's motion for summary judgment on two grounds: First, because the terms of the agreement barred the claim, and, second, because the terms of the ESPP had not been communicated to the workers and therefore could not have become a part of their contract.
13
We reversed, holding that through its express incorporation of § 423 of the Internal Revenue Code, see 26 U.S.C. § 423 (1994), which requires that qualifying stock purchase plans permit all common law employees to participate, Microsoft's ESPP extended eligibility to all common law employees. See Vizcaino I, 97 F.3d at 1197. The plaintiff class was therefore afforded the same options to acquire stock as all other employees. See id. We remanded for "the determination of any questions of individual eligibility for benefits that may remain following issuance of this opinion and for calculation of the damages or benefits due the various class members ." Id. at 1200; see also Vizcaino II, 120 F.3d at 1015 ("Any remaining issues regarding the rights of a particular worker in the ESPP and his available remedies must be decided by the district court upon remand.").
14
On remand, the district court, on February 13, 1998, issued its "Order Regarding Scope of Remand." It denied Microsoft's motion for clarification of the composition of the class, rejecting its contention that the class definition excluded those plaintiffs who were temps and whose claims arose post-conversion (some but not all of whom had worked as independent contractors pre-conversion). The court concluded that "the plaintiff class will remain as defined in its original certification order [of July 21, 1993] until the issue of whether post-conversion plaintiffs are common law employees is presented."
15
Following the February 13 order, Microsoft renewed its motion to amend the class certification, asking the court to "certify subclasses for the question of who is a common law employee." By order of July 15, 1998, the district court denied Microsoft's motion but "clarified" the class definition, limiting the class to
16
all Microsoft workers who, like all the named plaintiffs, worked as independent contractors between 1987 and 1990 and whose positions were reclassified as employee positions after the IRS reviewed them. This ... includes the claims brought by the same workers for their work after 1990, when many of them, including four named plaintiffs, were transferred to temporary employment agencies. This is the scope of the plaintiff class.
17
The court explained that the class had to be clarified because it could only include "the named plaintiffs and those similarly situated, both before and after conversion to temporary employment." The new definition excluded from the class other groups of potential claimants who were not reclassified by the IRS or converted by Microsoft, i.e., temps hired post-conversion into reclassified or converted positions, and all other common law employees not treated as such by Microsoft.
18
The July order also granted partial summary judgment for plaintiffs (it is unclear whether the order included only named plaintiffs or also the members of the redefined class). Based on Microsoft's concession, the court found these plaintiffs to have been common law employees while working as independent contractors in positions later reclassified by the IRS. In addition, it found that most plaintiffs who had subsequently been converted into temps were also common law employees entitled to ESPP participation during their time as temps. The court reasoned that the issue is "not whether a worker is an employee or an independent contractor; the question is which company is the workers' employer (Microsoft or a temporary agency)." Using a five-factor test it had devised (considering recruitment, training, duration of employment, right to assign additional work, and control over the relationship between worker and agency) the court found that Microsoft, not the temporary agency, employed these workers.
19
Following plaintiffs' motion for reconsideration, the district court on October 26, 1998, issued a further "Order Regarding Motion to Revise," granting the motion in part and denying it in part. The court rejected plaintiffs' contention that it lacked authority under Rule 23 of the Federal Rules of Civil Procedure to modify the class at this stage in the litigation, citing the existence of "unusual circumstances." It went on to reject plaintiffs' contention that class membership should include all workers who ever worked in a position that was held by an independent contractor and then reclassified by the IRS or contemporaneously converted by Microsoft. The court found that "[p]laintiffs are mistaken to focus on the ... positions. A worker's position is not dispositive, and in most cases irrelevant, to the legal question presented," which the court defined as whether the worker is a common law employee of Microsoft or of a temporary agency. On that basis, plaintiffs' motion for summary judgment in favor of any employees who worked in a converted position was denied. In rejecting plaintiffs' motion, the court reaffirmed its July ruling limiting the class "to the IRS-reclassified independent contractors and any work by the same workers in the same position as converted 'temps'." The court did, however, include in the class workers who were independent contractors before becoming temps and were converted to temporary agencies voluntarily by Microsoft, i.e., who were not reclassified by the IRS but were contemporaneously converted by Microsoft.
20
The court acknowledged that the effect of its modification of the class, limiting membership to "a particular group of Microsoft workers, who share distinct circumstances with the named plaintiffs," was to drastically reduce it to "only a sliver of Microsoft's contingent (or non-employee) workforce." By order of December 9, 1998, the court denied plaintiffs' motion to add named plaintiffs as class representatives but allowed "workers who claim to have been misclassified common law employees of Microsoft, and to have been wrongly excluded from benefits, [to] intervene in this action." Each of those workers would, however, have to demonstrate that he or she was a common law employee of Microsoft.
21
Plaintiffs then moved for a permanent injunction requiring Microsoft to immediately allow all common law employees to participate in the ESPP. The district court denied the motion by order of December 22, 1998, on two grounds: (1) With respect to those workers who had been excluded from the class, plaintiffs had failed to demonstrate "actual success on the merits," and (2) with respect to the named plaintiffs and those they represent, their legal remedies are adequate. Plaintiffs have taken an interlocutory appeal from this order, which is also pending before this panel.
22
Plaintiffs now petition for mandamus under the All Writs Act, 28 U.S.C. § 1651 (1994), to enforce this court's mandate in Vizcaino I and II. PB 15-20. They ask that the district court's orders of July 15 and October 26, 1998, reducing the plaintiff class be vacated and the original class definition reinstated. We hold that we have jurisdiction and grant the petition.
II. EXERCISE OF MANDAMUS JURISDICTION
23
The All Writs Act provides that "[t]he Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law." 28 U.S.C. § 1651(a) (1994). The traditional office of the writ of mandamus is to " 'confine an inferior court to a lawful exercise of its prescribed jurisdiction or to compel it to exercise its authority when it is its duty to do so.' " Will v. United States, 389 U.S. 90, 95, 88 S.Ct. 269, 19 L.Ed.2d 305 (1967) (quoting Roche v. Evaporated Milk Ass'n, 319 U.S. 21, 26, 63 S.Ct. 938, 87 L.Ed. 1185 (1943)). Thus, when a lower court obstructs the mandate of an appellate court, mandamus is the appropriate remedy. See United States v. United States Dist. Ct., 334 U.S. 258, 263-64, 68 S.Ct. 1035, 92 L.Ed. 1351 (1948). The justification for mandamus in such circumstances is two-fold. First, inferior courts' disregard of appellate mandates "would severely jeopardize the supervisory role of the courts of appeals within the federal judicial system." In re Chambers Dev. Co., 148 F.3d 214, 224 (3d Cir.1998); see also Citibank, N.A. v. Fullam, 580 F.2d 82, 87 (3d Cir.1978). Second, as a policy matter, litigants who have proceeded to judgment in higher courts "should not be required to go through that entire process again to obtain execution of the judgment." General Atomic Co. v. Felter, 436 U.S. 493, 497, 98 S.Ct. 1939, 56 L.Ed.2d 480 (1978).
24
Mandamus to compel an inferior court to follow an appellate mandate is closely related to the doctrine of law of the case. The Supreme Court long ago emphasized that when acting under an appellate court's mandate, an inferior court "is bound by the decree as the law of the case; and must carry it into execution, according to the mandate. That court cannot vary it, or examine it for any other purpose than execution." In re Sanford Fork & Tool Co., 160 U.S. 247, 255, 16 S.Ct. 291, 40 L.Ed. 414 (1895); see also Cowgill v. Raymark Indus., Inc., 832 F.2d 798, 802 (3d Cir.1987) (law of the mandate, also called law of the case, embodies the principle that on remand "litigants should not be permitted to relitigate issues that they have already had a fair opportunity to contest"); Firth v. United States, 554 F.2d 990, 993 (9th Cir.1977) ("When a case has been decided by an appellate court and remanded, the court to which it is remanded must proceed in accordance with the mandate and such law of the case as was established by the appellate court."). On remand, a trial court can only consider "any issue not expressly or impliedly disposed of on appeal." Firth, 554 F.2d at 993; see also Nguyen v. United States, 792 F.2d 1500, 1502 (9th Cir.1986). District courts "must implement both 'the letter and the spirit of the mandate, taking into account the appellate court's opinion and the circumstances it embraces.' " Delgrosso v. Spang & Co., 903 F.2d 234, 240 (3d Cir.1990) (quoting Bankers Trust Co. v. Bethlehem Steel Corp., 761 F.2d 943, 949 (3rd Cir.1985)).
25
Microsoft's reliance on the so-called Bauman factors is misplaced. See Bauman v. United States Dist. Ct., 557 F.2d 650, 654-55 (9th Cir.1977). Bauman does not apply when mandamus is sought on the ground that the district court failed to follow the appellate court's mandate. In at least two cases decided after Bauman, this court granted a writ to compel district court compliance with a prior appellate mandate without reference to Bauman. See Brown v. Baden, 815 F.2d 575, 576 (9th Cir.1987) (mandamus issued to compel district court to comply with prior appellate order to reassign case); ATSA of Cal., Inc. v. Continental Ins. Co., 754 F.2d 1394, 1396 (9th Cir.1985) (mandamus issued to compel district court to comply with prior appellate mandate that arbitrator should determine the applicable law in commercial dispute).
26
Pointing out that the issuance of a writ is discretionary, see Kerr v. United States Dist. Ct., 426 U.S. 394, 403, 96 S.Ct. 2119, 48 L.Ed.2d 725 (1976); Lusardi v. Lechner, 855 F.2d 1062, 1070 (3d Cir.1988), Microsoft contends that this discretion should not be exercised here because mandamus is a "drastic" remedy for "extraordinary circumstances," Kerr, 426 U.S. at 402-03, 96 S.Ct. 2119, and not appropriate unless the right to it is "clear and indisputable." Allied Chemical Corp. v. Daiflon, Inc., 449 U.S. 33, 35, 101 S.Ct. 188, 66 L.Ed.2d 193 (1980). Microsoft argues that plaintiffs cannot make that showing because the orders at issue involved class certification, a matter committed to the discretion of the district court and not now appealable. The question here, however, is whether the district court's order revising the class definition on remand conflicted with the appellate mandate. Moreover, mandamus may be appropriate even concerning traditionally discretionary matters. See, e.g., Brown, 815 F.2d at 576.
27
Microsoft's other argument, that issuance of the writ will frustrate the policy against piecemeal litigation, is inapposite. See, e.g., Kerr, 426 U.S. at 403, 96 S.Ct. 2119; Lusardi, 855 F.2d at 1069; Monti v. Department of Indus. Relations, 582 F.2d 1226, 1228 (9th Cir.1978). That policy has no relevance where mandamus is sought to compel the district court to follow the appellate mandate and avoid relitigation of final judgments. See General Atomic, 436 U.S. at 497, 98 S.Ct. 1939 ("A litigant who ... has obtained judgment ... after a lengthy process of litigation ... should not be required to go through that entire process again to obtain execution of the judgment....").
28
Accordingly, if the district court disregarded this court's mandate, as plaintiffs contend, mandamus is the appropriate remedy.
III. THE SCOPE OF THIS COURT'S MANDATE
29
The appeal before us in Vizcaino I and II was taken from a judgment on the merits denying relief to plaintiffs and the members of the class certified by the district court. Because that class included "[a]ll persons employed by Microsoft ... who are denied employee benefits because they are considered independent contractors or employees of third party employment agencies, but who meet the definition of employees of Microsoft Corporation under the common law," that judgment would be res judicata with respect to the claims not only of the plaintiffs and other workers who had worked as independent contractors in positions reclassified by the IRS or voluntarily converted by Microsoft (included in the revised class) but also of all other common law employees of Microsoft (now excluded). In other words, had the judgment not been reversed, it would have been preclusive as to all the workers now excluded from the class under the district court's revised class certification. Were the case before us now in that posture--i.e., had this court affirmed rather than reversed--there is little doubt what Microsoft's position would be as to who is included in the class. Microsoft's argument that the scope of the class was not material to the issue on appeal is not tenable for that reason alone--substantial rights were at issue for all the members of the certified class.
30
Although the discussion in the prior opinions focused on the plaintiffs in their capacity as independent contractors rather than as temps, this was a natural consequence of the legal posture of the case presented, not a tacit limitation on the class' claims. The class certification is a central premise of both opinions. Thus, in Vizcaino I, the panel relied on the Magistrate Judge's finding that "Microsoft conceded the fact that the named plaintiffs and the class they represent generally were common law employees" and that Microsoft "reserved only the right to object to the employment status of particular plaintiffs during certain periods of their tenure with Microsoft." 97 F.3d at 1193 n. 4. It went on to "hold that the named plaintiffs and the class they represent are covered by the specific provisions of the ESPP." Id. at 1197. In Vizcaino II, the en banc court states that "the ESPP must, essentially, be made available to all employees" and "[t]he ESPP was created and offered to all employees." 120 F.3d at 1011, 1014. And the class is an integral element of the mandate which remanded "for the determination of any questions of individual eligibility for benefits that may remain following issuance of this opinion and for calculation of the damages or benefits due the various class members." Vizcaino I, 97 F.3d at 1200; see also Vizcaino II, 120 F.3d at 1015 ("Any remaining issues regarding the rights of a particular worker in the ESPP and his available remedies must be decided by the district court upon remand."). Thus, the district court's statement that this case is about a particular group of Microsoft employees who share "distinct circumstances" is unfounded.
31
Microsoft's basic contention is that the district court properly exercised its discretion to modify the scope of the class. Its brief takes a scatter-gun approach, laying down heavy fire but consisting largely of blanks.
32
Microsoft's major point seems to be that the certification order was only "provisional" and hence subject to alteration at a later point. Under Federal Rule of Civil Procedure 23(c)(1) a class certification order "may be conditional," but the district court's order was not conditional, much less provisional (a concept for which Microsoft cites no authority). Over Microsoft's objection, the court "certified [the class] as plaintiffs request for all issues remaining in the case," the only qualification being that "[i]f at a later date it appears certain questions should be decertified pursuant to 23(c)(4)(A), the Court can do so." We do not interpret the statement referring to the possible withdrawal of certain issues from class treatment as a reservation of the right to substantially narrow the membership of the class at some future date. Certainly, our mandate (which runs to all common law employees of Microsoft) cannot be read as contemplating redefinition of the class; our direction to the district court to determine questions of "individual eligibility" presupposed the existence of the certified class. Vizcaino I, 97 F.3d at 1200.
33
Rule 23, moreover, does not provide authority for the modification. Rule 23(c)(1) permits a certification order to be altered or amended "before the decision on the merits," not afterward. See Scott v. City of Anniston, 682 F.2d 1353, 1357 (11th Cir.1982) (ruling that appellate decision finding evidence sufficient to make prima facie case and insufficient to sustain proffered defense and remanding for further proceedings as to individual class members' damages was a "decision on the merits" precluding subsequent class modification under Rule 23(c)(1)); Jimenez v. Weinberger, 523 F.2d 689, 697 (7th Cir.1975) (holding that Rule 23(c)(1)'s "explicit permission to alter or amend a certification order before decision on the merits plainly implies disapproval of such alteration or amendment thereafter"). This court's prior decision adjudicates the merits of the plaintiff class' claim, leaving only "questions of individual eligibility for benefits that may remain ... and calculation of the damages or benefits due the various class members." Vizcaino I, 97 F.3d at 1200.
34
Nor is there merit to Microsoft's claim that the modification was required to comply with Rule 23. In its 1993 order certifying the class under both Rules 23(b)(1)(A) and 23(b)(2), the district court found that "[p]laintiffs and defendants agree that plaintiffs' class meets the requirements of numerosity, commonality, typicality, and adequacy imposed under Fed.R.Civ.P. 23(a)." It is too late now--after a decision on the merits--to argue that commonality and typicality are lacking.
35
The district court's position that "unusual circumstances" permit redefinition of the class after decision on the merits lacks legal support and is erroneous. We are aware of no authorities defining what "unusual circumstances" allow a district court to circumvent the restriction imposed by Rule 23(c)(1). That the class could now comprise several thousand members rather than the "several hundred members" contemplated in the certification ruling, does not strike us as justifying a revision that wipes out the right of numerous class members to share in the benefits of the class adjudication. The "unusual circumstances" rather seem to arise from the district court's perception that the class it previously certified is "circular," i.e., that it relies on a legal conclusion to define membership in the class. According to the court, "common law employees are plaintiffs, and plaintiffs are common law employees." But the court's reading reflects a misconception. It is implicit in the definition of the class that its members are persons who claim to have been (or to be) common law employees who were denied ESPP benefits. That under this definition ultimate success may turn on resolution of a disputed legal issue does not make it circular. In Forbush v. J.C. Penney Co., 994 F.2d 1101 (5th Cir.1993), the court, dealing with an analogous situation, said:
36
Penney asserts that this definition is hopelessly "circular," as the court must first determine whether an employee's pension benefits were improperly reduced before that person may be said to be a member of the class. This argument is meritless and, if accepted, would preclude certification of just about any class of persons alleging injury from a particular action. These persons are linked by this common complaint, and the possibility that some may fail to prevail on their individual claims will not defeat class membership.
37
Id. at 1105. Defining a class of employees as linked by their common claim to have been denied benefits to which they were entitled as common law employees is no more circular than defining a class of employees by their common claim to have been injured by their employer's unlawful actions. See, e.g., Vaszlavik v. Storage Tech. Corp., 183 F.R.D. 264, 267 (D.Colo.1998) (certifying plaintiffs' class defined by description of plaintiffs' legal claim).
38
We conclude that the district court's orders did not conform to the mandate.
IV. EXECUTION OF THE MANDATE
39
This court's mandate therefore left the district court no room to revise the class definition, but it charged the court with "the determination of any questions of individual eligibility for benefits." Vizcaino I, 97 F.3d at 1200. Plaintiffs contend that they are entitled to a class-wide judgment, encompassing not only workers in IRS-reclassified positions but also workers voluntarily converted and temps hired subsequent to conversion. Microsoft's position appears to be that, while it conceded in the district court that the named plaintiffs and the members of the class were common law employees, see id. at 1193 n. 4, their common law employee status is now open for reexamination.
40
To the extent the district court granted summary judgment for plaintiffs, we agree. The named plaintiffs and others similarly situated--which to the court meant independent contractors who worked in positions reclassified by the IRS or who were voluntarily converted by Microsoft--were entitled to participate in the ESPP both before and after their conversion to temporary employees in essentially the same job positions. Microsoft's argument at this point, that its earlier concession regarding the common law employee status of the members of the class was merely arguendo, is without merit. Not only did Microsoft stand by this concession throughout the litigation but the district court also found it supported by the facts and ruled that Microsoft continued to be bound by it. We agree with the district court that this group of past and present employees is entitled to partial summary judgment, leaving for further determination only the issue of past damages. Their right to participate being clearly established, we also see no reason why those workers in this group who are currently employed by Microsoft should not now participate on an ongoing basis in the ESPP, and entry of an order to that effect is now appropriate.
41
The district court further ruled, however, that its conclusion with respect to the above group could apply to temps "only insofar as their circumstances match those of the named plaintiffs (conversion to same position)." We are at a loss to understand the full import of that statement, particularly the parenthetical comment. We assume that the court meant to restrict eligibility to temps who had previously been independent contractors and had then been converted to temps in the same position. We make that assumption because the district court rejected plaintiffs' contention that workers who occupy positions reclassified as common law employees are for that reason eligible for ESPP benefits. The district court reasoned that the question presented by the temps' claim was "not whether a worker is an employee or an independent contractor ... [but] which company is the worker's employer (Microsoft or the temporary agency)." The answer to that question, it said, lies in an assessment of the common law factors articulated in Nationwide Mutual Ins. Co. v. Darden, 503 U.S. 318, 323-24, 112 S.Ct. 1344, 117 L.Ed.2d 581 (1992), although the court singled out five factors as determinative: recruitment, training, duration, right to assign additional work, and control over the relationship between worker and agency.
42
We agree that the assessment of the triangular relationship between worker, temporary employment agency and client is not wholly congruent with the two-party relationship involving independent contractors. In posing the question as the district court did, however, it set up a false dichotomy. Even if for some purposes a worker is considered an employee of the agency, that would not preclude his status of common law employee of Microsoft. The two are not mutually exclusive. "[In the] determination of whether a person is an employee ... [courts look to] the usual common law factors ." Vizcaino II, 120 F.3d at 1009-10 (citing Darden, 503 U.S. at 322, 112 S.Ct. 1344). Darden observed that "we construe the term [employee] to incorporate 'the general common law of agency.' " 503 U.S. at 323 n. 3, 112 S.Ct. 1344. At common law, "a servant ... permitted by his master to perform services for another may become the servant of such other in performing the services." Restatement (Second) of Agency § 227 (1958). "Starting with a relation of servant to one [employer], he can become the servant of another [employer] only if there are the same elements in his relation to the other as would constitute him a servant of the other were he not originally the servant of the first ." Id. § 227 cmt. a. "Many of the factors stated in Section 220 [setting out ten traditional agency factors which are cited in Darden, 503 U.S. at 324, 112 S.Ct. 1344] are also useful in determining whether the lent servant has become the servant of the borrowing employer." Id. cmt. c; see also id. § 226 ("A person may be the servant of two masters, not joint employers, at one time as to one act, if the service to one does not involve abandonment of the service to the other."); Kelley v. Southern Pac. Co., 419 U.S. 318, 324, 95 S.Ct. 472, 42 L.Ed.2d 498 (1974) (under common law, plaintiff can establish employment by rail carrier while nominally employed by another as borrowed servant, as servant of two masters, or as subservant); Williamson v. Consolidated Rail Corp., 926 F.2d 1344, 1348-49 (3d Cir.1991) (following Kelley ); Nyman v. MacRae Bros. Constr. Co., 69 Wash.2d 285, 418 P.2d 253, 254 (1966) (noting that there are three possibilities for a worker's status in a tort suit: servant of the general master; servant of the borrowing master; servant of both); In re Earthmovers, Inc., 199 B.R. 62, 67 (Bankr.M.D.Fla.1996) (finding agency and recipient of services to be "de facto 'co-employers' of [the] workers"). While this court has not heretofore addressed the specific issue, our decision in Burrey v. Pacific Gas and Elec. Co., 159 F.3d 388 (9th Cir.1998), is based on the premise that workers leased from an employment agency could be the common law employees of the recipient of their services; their status with respect to the latter must be determined using the Darden factors. See id. at 394-395.
43
Finally, the IRS has repeatedly looked to common law principles in the determination of common law employee status in three-party employment situations. See, e.g., Rev.Rul. 87-41, 1987-1 C.B. 296 (applying twenty traditional common law factors to hypothetical situations to determine whether technical service workers were employees of employment agency, without ruling whether workers were employees of client); Rev.Rul. 75-41, 1975-1 C.B. 323 (applying common law test derived from Treasury regulations to determine whether workers providing services to medical professionals pursuant to contract with a third-party professional service corporation were employees of the corporation); Rev.Rul. 66-162, 1966-1 C.B. 234 (applying Restatement (Second) of Agency § 226 (1958) in ruling that sales clerks of concessionaire in department store were employees of both concessionaire and store); 14 Standard Federal Tax Reporter (CCH) p 33,538.64 at 60,589 (Jan. 28, 1999) (suggesting that traditional common law factors apply to the determination of whether technical service personnel are employees of the client they serve pursuant to a contract with a third party (e.g., employment agency)).
44
We conclude, therefore, that the determination of whether temps were Microsoft's common law employees turns not on whether they were also employees of an agency but rather on application of the Darden factors to their relationship with Microsoft. That, however, need not entangle the district court and the parties in interminable proceedings resolving the issue on a worker-by-worker basis. As the Supreme Court pointed out in Darden, "application [of the factors] generally turns on factual variables within an employer's knowledge, thus permitting categorical judgments about the employee' status of claimants with similar job descriptions." 503 U.S. at 327, 112 S.Ct. 1344 (emphasis added).
45
The facts of this case confirm the validity of the Court's observation in Darden. The IRS made its determination of employee status with reference to specific positions. In a series of letters, the IRS advised Microsoft that "we have determined that services performed for Microsoft by an individual in the position commonly referred to as [here followed the titles of various positions such as computer based training, proof reader, formatter, etc.] constitutes an employer-employee relationship ... It is our conclusion that Microsoft either exercised, or retained the right to exercise, direction over the services performed. This control establishes an employer-employee relationship." Vizcaino I, 97 F.3d at 1190 n. 2. The IRS determinations allow no exception for individuals in these positions on the ground that they may be on the payroll of employment agencies. Presumptively, therefore, any individual occupying an IRS reclassified position and otherwise qualified under the ESPP is an eligible common law employee--regardless of whether he or she had been personally converted from independent contractor to temp as a result of the IRS determination. The plan, by its terms, excludes short-term workers who work less than five months per year or less than half-time. There may, of course, be special circumstances affecting the rights of particular workers. The relevant facts would be within Microsoft's knowledge. The burden should therefore be on Microsoft to show why any particular worker serving in a reclassified position who meets the ESPP service requirements is not entitled to participate.
46
We reach the same conclusion with respect to workers in positions voluntarily converted by Microsoft. The district court found that workers who had previously been independent contractors but were voluntarily converted by Microsoft to temporary agencies contemporaneous with the IRS reclassification should also be considered common law employees. The record does not disclose whether the voluntary conversions were of positions, in a fashion analogous to the IRS reclassification, i.e., whether Microsoft determined with reference to particular positions that services performed constitute an employer-employee relationship. If that is the case, the conclusion would be the same as in the case of the IRS reclassifications: Presumptively, any individual occupying a converted position and otherwise qualified under the ESPP is an eligible common law employee--regardless of whether he or she had been personally converted from independent contractor to temp as a result of Microsoft's conversion. If, on the other hand, Microsoft merely changed the treatment of particular individuals qua individuals, that would not inure to the benefit of other individuals hired as temps. We assume that the evidence illuminating the nature and effect of these conversions is readily available from Microsoft and will enable the district court to make the appropriate determination.
47
The record does not disclose whether there are in addition workers who served neither in reclassified nor converted positions but who may nevertheless be common law employees eligible to participate in the ESPP but denied benefits. The determination whether a worker was or is a Microsoft common law employee will be governed by the Darden factors. We leave it to the district court to determine the appropriate procedure for dealing with any such claims.
V. CONCLUSION
48
We held in Vizcaino I and II that all common law employees of Microsoft are entitled to participate in Microsoft's ESPP, subject to the exceptions specified in the plan. The members of the certified class share a common claim to past and, in certain cases, current and future participation. They are entitled to press their claim in this action under the procedure we have outlined.
49
The petition is GRANTED and the matter is REMANDED to the district court for further proceedings consistent with this opinion. Because our opinion also disposes of the issues raised in plaintiffs' appeal from the denial of a permanent injunction, we DISMISS that appeal without prejudice.
*
The panel unanimously finds this case suitable for decision without oral argument. Fed.R.App.P. 34(a) and 9th Cir.R. 34-4(a)(2)
**
The Honorable William W Schwarzer, Senior United States District Judge for the Northern District of California, sitting by designation
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147 B.R. 430 (1992)
In re Dorothy SCHOONOVER, Debtor.
Bankruptcy No. 3-90-02172.
United States Bankruptcy Court, S.D. Ohio, W.D.
November 3, 1992.
*431 Lester R. Thompson, Dayton, Ohio, for debtor.
John R. Butz, Trustee, Springfield, Ohio.
DECISION AND ORDER DENYING TRUSTEE'S OBJECTION TO DEBTOR'S CLAIM FOR HOMESTEAD OBJECTION AND ALLOWING DEBTOR'S CLAIM OF EXEMPTION
WILLIAM A. CLARK, Bankruptcy Judge.
Before the court is an objection of the chapter 7 trustee in bankruptcy to the debtor's claim for a $5,000 exemption in the sale proceeds from her former residential property. The court has jurisdiction by virtue of 28 U.S.C. § 1334 and the standing order of reference in this district. This matter is a core proceeding under 28 U.S.C. § 157(b)(2)(B) allowance or disallowance of exemptions from property of the estate.
FACTS
On May 18, 1990, Dorothy Schoonover filed a chapter 13 petition in bankruptcy and claimed a $5,000 exemption in her residence pursuant to Ohio Revised Code § 2329.66(A)(1).[1] During October of 1991, the debtor, who had resided at her residence for approximately 18 years, moved out of her residence and into her mother's home. Because of a loss of employment, the debtor converted her chapter 13 case to a chapter 7 liquidation case on November 19, 1991. At some point during or around this period of time, the debtor's residence was sold at foreclosure proceedings, and there is $9,125 currently available for distribution from the debtor's chapter 7 bankruptcy estate. The debtor claims $5,000 of these proceeds as her exemption, but the chapter 7 trustee has objected to the claimed exemption on the ground that the debtor had vacated her residence prior to the conversion of her chapter 13 case to chapter 7.
CONCLUSIONS OF LAW
The issue is whether the debtor's exemption rights are determined at the date she filed her chapter 13 petition or the date that she converted her bankruptcy case from chapter 13 to chapter 7. As a general rule the appropriate date for determining exemptions is the date of the filing of a bankruptcy petition. Smith v. Webb (In re Smith), 121 B.R. 827, 830 (Bankr. E.D.Ark.1990); In re Lindsey, 94 B.R. 723, 724 (Bankr.S.D.Ala.1988). It is this date which provides a "line of cleavage" for determining exemptions. In re Sajkowski, 49 B.R. 37, 39 (Bankr.D.R.I.1985). Consistent with this rule, § 522 of the Bankruptcy Code provides that a debtor may 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. . . . (Emphasis Supplied)
11 U.S.C. § 522(b)(2)(A).
Section 348 of the Bankruptcy Code provides that the conversion of a bankruptcy case from one chapter to another chapter does not alter the filing date of the original bankruptcy petition:
Conversion of a case from a case under one chapter of this title to a case under another chapter of this title constitutes an order for relief under the chapter to which the case is converted, but, except as provided in subsections (b) and (c) of this section, does not effect a change in the date of the filing of the petition, the *432 commencement of the case, or the order for relief. (Emphasis Supplied)
11 U.S.C. § 348(a).[2]
Read together, § 522 and § 348(a) dictate that the debtor's exemption rights are controlled by the date she filed her chapter 13 petition and not at the time the case was converted to chapter 7:
"§ 522(b)(2)(A) specifies the date of filing as the date for determining what property may be exempted and § 348(a) states that conversion does not effect a change in that date." In re Lepper, 58 B.R. 896, 901 (Bankr.D.Md.1986).
"[T]o hold that the conversion date controls exemption eligibility would be tantamount to assuming that conversion creates a new filing date, an assumption that the statutory words preclude." Stinson v. Williamson (In re Williamson), 804 F.2d 1355, 1359 (5th Cir.1986).[3]
Where, as here, a statutory scheme is coherent and consistent, there is generally no need for the court to inquire beyond the plain language of the statute. U.S. v. Ron Pair Enterprises, Inc., 489 U.S. 235, 240-241, 109 S.Ct. 1026, 1030, 103 L.Ed.2d 290 (1989). Nevertheless, in Armstrong v. Lindberg (In re Lindberg), 735 F.2d 1087 (8th Cir.1984), cert. denied, 469 U.S. 1073, 105 S.Ct. 566, 83 L.Ed.2d 507 (1984), the Eighth Circuit went beyond the plain language of the statutes and concluded that the date of converting a chapter 13 case to chapter 7 controls the determination of a debtor's exemptions. The court acknowledged that examining § 348(a) in conjunction with § 522, "suggests[s] that the date of the chapter 13 petition controls," Id. at 1089, but found that other Code sections and the bankruptcy rules created a tension with these two Bankruptcy Code sections. After examining the policies behind exemptions in chapter 13 and administrative considerations, the court concluded that the date of conversion controls the exemptions that may be made from estate property. Although it is admittedly difficult to know when to abandon the plain wording of a statute and to examine policy considerations, this court agrees with the court's observation in In re Whitman, 106 B.R. 654, 657 n. 7 (Bankr.S.D.Cal.1989), that the concern expressed by the Eighth Circuit regarding the potential inability of debtors to make full use of their exemptions upon conversion is misplaced:
The Eighth Circuit in Lindberg expressed concern that if the date of filing rather than the date of conversion controlled what exemptions a debtor can claim, a debtor would be foreclosed from exempting any new property acquired after filing but prior to conversion. In re Lindberg, 735 F.2d 1087, 1090 (8th Cir. 1984). By determining exemptions as of the conversion date, debtors can make full use of exemptions, thereby promoting the goal of the Bankruptcy Code: Providing debtors with a fresh start. Id. at 1090. The court in Lindberg reasoned that a debtor's right to claim exemptions should not be limited when converting from a chapter 13 to a 7, since a chapter 13 case is a voluntary procedure which may be dismissed by the debtor at any time. 11 U.S.C. Section 1307; In re Lindberg, at 1090.
The concern expressed by the court in Lindberg is misplaced. Bankruptcy Rule 1009 provides that a voluntary petition, schedule or statement of financial affairs may be amended by the debtor as a matter of course at any time before the case is closed. This rule is supported by case law which holds that amendments should be freely granted. In re Whitman, 106 B.R. 654, 657 n. 7 (Bankr. S.D.Cal.1989).
Based upon the plain meaning which emerges from reading § 522 and § 348(a) in conjunction, and finding no convincing *433 reason to go beyond that meaning, this court finds that the debtor is entitled to the $5,000 exemption claimed in her original chapter 13 bankruptcy petition.
Even if this court had determined that the date of conversion controlled the debtor's exemption rights, that finding alone would not be dispositive of this case. The court would have ordered a rehearing of the trustee's objection in order to conduct a more thorough inquiry into the debtor's reasons for leaving her residence and to establish a more precise chronology of events. On October 22, 1991, a Notice of Default was filed in this court by the mortgage holder, which resulted in a modification of the automatic stay of § 362 and permitted the mortgage holder to conduct foreclosure proceedings against the debtor's residence. If the debtor vacated the premises as a consequence of either actual or anticipated foreclosure proceedings, the court does not believe the debtor's exemption right was waived or forfeited. Obviously, in any foreclosure proceeding the debtor must vacate the premises at some time. It would be incongruous to find that where a debtor vacates premises in response to actual or anticipated foreclosure proceedings she may forfeit the exemption rights afforded by Ohio Revised Code § 2329.66(A) if she leaves "too early."
For the foregoing reasons, it is hereby ORDERED that the trustee's OBJECTION is DENIED, and the debtor's EXEMPTION is ALLOWED.
NOTES
[1] "Every person who is domiciled in this state may hold property exempt from execution, garnishment, attachment, or sale to satisfy a judgment or order, as follows:
(1) The person's interest, not to exceed five thousand dollars, in one parcel or item of real or personal property that the person or a dependent of the person uses as a residence." Ohio Rev.Code § 2329.66(A)(1).
[2] Subsections (b) and (c) are not applicable in this case.
[3] Despite this strong statement and the court's emphasis on the language of the statute, the court confined its decision to a conversion from chapter 11 to chapter 7 and expressly refused to state whether the same result would occur if a chapter 13 case were converted to a chapter 7 case. In doing so, the court stated it was not saying that In re Lindberg, discussed next in the text of this opinion, was incorrectly decided. Equally important in the view of this court, however, is the fact that the Fifth Circuit did not say that In re Lindberg was correctly decided.
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161 F.3d 19
98 CJ C.A.R. 5207
NOTICE: Although citation of unpublished opinions remains unfavored, unpublished opinions may now be cited if the opinion has persuasive value on a material issue, and a copy is attached to the citing document or, if cited in oral argument, copies are furnished to the Court and all parties. See General Order of November 29, 1993, suspending 10th Cir. Rule 36.3 until December 31, 1995, or further order.
UNITED STATES of America, Plaintiff-Appellee,v.Ahmad R. SHAYESTEH, Defendant-Appellant.
No. 97-4111.
United States Court of Appeals, Tenth Circuit.
Oct. 6, 1998.
Before SEYMOUR, BRORBY, and BRISCOE, Circuit Judges.
ORDER AND JUDGMENT*
BRORBY, J.
1
After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed. R.App. P. 34(a); 10th Cir. R. 34.1.9. The case is therefore ordered submitted without oral argument.
2
Mr. Shayesteh was convicted of two counts of possessing a controlled substance with intent to distribute, in violation of 21 U.S.C. § 841(a)(1). The first count involved cocaine and the second methamphetamine. The district court sentenced him to 262 months of incarceration. Mr. Shayesteh appeals, asserting that the district court should have suppressed certain evidence and that it erred in sentencing him and in denying his motion for a new trial. We exercise jurisdiction under 28 U.S.C. § 1291, and affirm the conviction and the sentence.
3
On May 22, 1995, the Utah Highway Patrol filed an application with a state court for authority to establish and operate an administrative traffic checkpoint.1 A state magistrate judge granted permission to do so. The order provided the roadblock was for purposes of checking drivers' licenses and registrations, and looking for impaired drivers. The order also provided, in part: "[U]nless the officer making the initial contact ... has reasonable suspicion that criminal activity has occurred ... the officer shall not further detain the vehicle or its occupants nor ask for consensual permission to search the occupants or the vehicle."
4
The roadblock was set up and operating on a highway in southern Utah on Memorial Day 1995. Northbound vehicles were stopped and then sent on their way if there were no irregularities in their license and registration and if the driver did not appear impaired. If there was a problem, the driver and car were sent off to the right lane, a secondary checkpoint.
5
Mr. Shayesteh drove up to the checkpoint around five o'clock in the afternoon. He was the sole occupant of his car. Trooper Joe Reynolds asked him for his license and registration. Because Mr. Shayesteh could not find his registration, the trooper directed him into the secondary checkpoint area.
6
Trooper Reynolds went to his vehicle, ran a registration check, and learned the vehicle was registered to Mr. Shayesteh. The trooper returned Mr. Shayesteh's license to him and told him everything was fine. At that point, Mr. Shayesteh was free to leave. However, he was unable to leave as there were vehicles in front of and behind him. While waiting for a chance to merge Mr. Shayesteh's vehicle back into the traffic lane, Trooper Reynolds carried on a short conversation with him. The trooper engaged in this conversation in order to be friendly.
7
The trooper asked Mr. Shayesteh where he was going. Mr. Shayesteh said he was going to Salt Lake City for a few days. Because no luggage was visible in the car, the trooper asked Mr. Shayesteh where his luggage was and Mr. Shayesteh responded he did not have any. The trooper then asked what was in the trunk, and Mr. Shayesteh told him the trunk was empty, and volunteered "would you like to look?" Trooper Reynolds replied "sure." Mr. Shayesteh got out of the car and the trooper frisked him and searched the passenger compartment for weapons. Mr. Shayesteh then opened the trunk with his key. Contrary to Mr. Shayesteh's earlier statement, the trunk contained two duffle bags. Mr. Shayesteh said the bags were not his.
8
The trooper took one of the bags out of the trunk to see if there was anything behind it. A county sheriff's officer was present with a certified drug detection dog, although the dog was not being used at the roadblock site. The dog, a Chesapeake Bay Retriever, sniffed the bag on the ground and alerted. Mr. Shayesteh was then handcuffed, and a search of the bag revealed a large quantity of cocaine and methamphetamine.
9
Mr. Shayesteh moved to suppress the drugs. The motion was referred to a magistrate judge. The magistrate judge held two hearings on the matter. Mr. Shayesteh testified at one of the hearings. The gist of his testimony was that he did not consent to the search and only did as he was ordered. He denied that the dog alerted. He described the fifty-five pound retriever as a "very tiny, very small dog," no bigger than the officer's foot. He further testified the dog did not react to the bag, but the officer did by picking it up, sniffing it, and stating he smelled marijuana. The magistrate judge issued a Report and Recommendation recommending denial of the motion. The district court adopted the Report and Recommendation in its entirety over Mr. Shayesteh's objection, and denied the motion.
10
Mr. Shayesteh also testified at trial. He stated a man in Arizona asked him to deliver the bag in which the drugs were found to Utah, and that he had never opened the bag. Mr. Shayesteh further testified that while he was in jail, a trooper came to him with a ziplock baggie and had him touch it, which was how his fingerprints came to be on a baggie of drugs found in the bag. Despite this testimony, the jury found him guilty on both charges.
11
At sentencing, the district court increased the offense level by two points for obstruction of justice based upon the fact Mr. Shayesteh committed perjury at trial by testifying under oath that he was framed by the officers and at the motion to suppress hearing with his testimony concerning the dog. The sentencing court also failed to grant Mr. Shayesteh's motion for a downward departure for being a minimal participant.
12
After sentencing, the district court denied Mr. Shayesteh's motion for a new suppression hearing, new trial, and request for an evidentiary hearing.
13
On appeal, Mr. Shayesteh raises the following issues: (1) the trooper detained him in violation of the roadblock authorization; (2) his consent was tainted by his improper detention; (3) he did not consent to the search, and the dog alert did not provide probable cause for a search; (4) the district court erred in enhancing his sentence for perjury; (5) the district court erred by not considering his motion for sentence reduction because he was a minor participant; (6) the district court should have granted him a new trial due to ineffective assistance of counsel; and (7) the district court should have granted an evidentiary hearing to see if a new trial was warranted by newly discovered evidence.
Motion to suppress issues
14
In support of his contention that the district court erred in denying his motion to suppress, Mr. Shayesteh makes three arguments. He claims the trooper detained him after returning his license, in violation of the court's order granting authority for the roadblock. He argues his consent to search the car was tainted by the illegal detention. And, he argues the district court erred in finding that he consented to the search and that the dog sniff established probable cause for the search of the bag.
15
First, Mr. Shayesteh argues the trooper's questioning of him after his license had been returned constituted an illegal detention, rendering the resulting search unlawful. He concedes the roadblock provided a legitimate basis for the initial stop. Therefore, he only complains of the trooper's actions after his driver's license was returned.
16
The district court adopted the magistrate judge's factual findings. The magistrate judge found:
17
The officer told the defendant everything was alright and gave the defendant's license back and he took it and placed it in his wallet. Defendant was free to go at that point. However, defendant could not immediately reenter the flow of traffic because there was a vehicle with a boat in front of him and a vehicle behind him. Traffic would not permit his immediate entry into a lane of travel to go on his way.
18
"When we review an order granting a motion to suppress, we accept the trial court's factual findings unless clearly erroneous, and we view the evidence in the light most favorable to the district court's finding." United States v. Zapata, 997 F.2d 751, 756 (10th Cir.1993) (internal quotation marks and citation omitted). "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. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948).
19
Mr. Shayesteh contends the trooper's actions exceeded the scope of the limitations provided in the roadblock authorization. His arguments on this point hinge on his claim the magistrate judge erred in finding that the trooper's questions did not constitute a detention. The magistrate judge found Mr. Shayesteh was not detained by the trooper, he was detained by the position of the other vehicles at the checkpoint. Mr. Shayesteh fails to raise anything in the record that demonstrates this finding to be clearly erroneous.2
20
Mr. Shayesteh also argues the trooper exceeded his authority under the roadblock authorization because "[a] plain reading of the Authorization can only lead to the conclusion that consent searches were absolutely prohibited." This is simply not true. Our plain reading of the authorization leads to the conclusion that asking for permission to search a vehicle was prohibited. Trooper Reynolds did not ask for permission to search Mr. Shayesteh's car; therefore, he did not violated the terms of the authorization.
21
As long as Trooper Reynolds was not the cause of the delay, he was not prohibited from engaging Mr. Shayesteh in conversation. See United States v. Angulo-Fernandez, 53 F.3d 1177, 1179 (10th Cir.1995) (involving trooper and driver of broken down car). The magistrate judge had the opportunity to evaluate Trooper Reynolds and Mr. Shayesteh as they testified about the stop. At the conclusion of this testimony, the magistrate judge found the trooper's testimony credible and Mr. Shayesteh's incredible. The record simply does not support Mr. Shayesteh's contention that the magistrate judge was clearly erroneous in finding Trooper Reynolds was not the cause of the delay.
22
Second, Mr. Shayesteh argues any consent to search he may have given was tainted by the initial illegality of the detention. As we have determined there was no illegal detention in this case, we need not address this argument.
23
Third, Mr. Shayesteh contends the district court erred in finding he consented to the search. The test is whether the consent was voluntarily given under the totality of the circumstances. United States v. Price, 925 F.2d 1268, 1270 (10th Cir.1991).
24
The magistrate judge's factual findings on this point, which were adopted by the district court, included:
25
While waiting for the traffic to clear in the collection lane and to free defendant's vehicle to move back into the flow of traffic, Officer Reynolds had a short friendly conversation with defendant.... The officer did not ask if defendant had any drugs or guns and did not ask for the permission of defendant to search the vehicle. The defendant ... volunteered "would you like to look [in the trunk]?"
26
The magistrate judge also determined Mr. Shayesteh opened the trunk of his car without a request from the trooper. Mr. Shayesteh claims these findings are "preposterous and clearly erroneous." A review of the transcripts from the hearings on the motion to suppress shows these findings were fully supportable and were certainly not clearly erroneous. We agree with the magistrate judge that Mr. Shayesteh's consent was voluntarily given.3
27
Mr. Shayesteh also argues that by subjecting him to a frisk and by letting other law enforcement officials gather, the trooper created a coercive environment that vitiated any consent. However, Mr. Shayesteh volunteered to allow the trooper to look in the trunk before the frisk and before any other officers or troopers joined the two. Because of the order of events, these factors could not have affected the voluntariness of Mr. Shayesteh's offer to allow a search.4
28
Mr. Shayesteh also argues his consent limited the scope of the search to a "look" in the trunk. By moving and searching the bag, he argues, the trooper exceeded the terms of the consent. However, once Mr. Shayesteh opened the trunk and it was found, contrary to his previous statements, to contain luggage, the trooper had reasonable suspicion justifying further investigation. Furthermore, moving one bag out of the trunk to see if anything was behind it would be consistent with permission to take a "look" in the trunk.
29
Mr. Shayesteh also contends the narcotics sniffing dog's alert to the bag from his trunk did not provide probable cause to search the bag. The district court case cited by Mr. Shayesteh in support of his argument on this point, United States v. Kennedy, 955 F.Supp. 1331 (D.N.M.1996), has since been reversed by this Circuit, see United States v. Kennedy, 131 F.3d 1371 (10th Cir.1997), petition for cert. filed (U.S. Jun. 22, 1998) (No. 97-9625). An alert by a certified narcotics sniffing dog provides probable cause for a search and arrest. United States v. Williams, 726 F.2d 661, 663 (10th Cir.), cert. denied, 467 U.S. 1245, 104 S.Ct. 3523, 82 L.Ed.2d 830 (1984). As there is no question the dog used in this case was certified, there was probable cause for the search of the bag and its contents.
30
For these reasons, we affirm the district court's denial of Mr. Shayesteh's motion to suppress.
Sentencing issues
31
Mr. Shayesteh argues the district court erred in sentencing because it enhanced his sentence for perjury and because it refused to consider his motion for a reduction based on his alleged status as a minimal participant. Unfortunately, he failed to provide a copy of the sentencing hearing transcript in the record on appeal. We cannot determine whether the district court failed to make a full finding of obstruction of justice, encompassing all of the factual predicates of perjury, as Mr. Shayesteh contends, without reference to the transcript of the hearing. Similarly, we cannot review whether the district court failed to properly address Mr. Shayesteh's motion for a downward departure for being a minimal participant (indeed, we cannot even determine if Mr. Shayesteh made such a motion) without reference to the transcript of the hearing.
32
"This Court will decline to consider a claim in the absence of the appropriate documents in the record on appeal, since any discussion of such a claim would be speculation." United States v. Vasquez, 985 F.2d 491, 494 (10th Cir.1993). It is the appellant's responsibility to insure that all the necessary materials are part of the record. Id. at 495. See Fed. R.App. P. 10; 10th Cir. R. 10.1, 10.3, 10.3.1(c). The transcript of the sentencing hearing is essential to the issues Mr. Shayesteh raises. We will not decide them without it.
Motion for new trial issues
33
According to Mr. Shayesteh, the district court should have granted him a new trial due to the ineffective assistance of his trial counsel.5 This court requires claims of ineffective assistance of counsel to be brought on collateral review, not direct appeal. See United States v. Galloway, 56 F.3d 1239, 1240 (10th Cir.1995). We see no reason not to apply that rule in this case.
34
Mr. Shayesteh argues the district court erred in denying his motion for a new trial and in denying him an evidentiary hearing on the issues raised in the motion. "We review the denial of a motion for a new trial for an abuse of discretion." See United States v. Sinclair, 109 F.3d 1527, 1531 (10th Cir.1997).
35
Federal Rule of Criminal Procedure 33 authorizes courts to grant motions for new trials "if required in the interest of justice." Such motions are "not regarded with favor and should only be granted with great caution." Sinclair, 109 F.3d at 1531. When a motion for a new trial is premised on newly discovered evidence, the defendant must show:
36
"(1) the evidence was discovered after trial; (2) the failure to learn of the evidence was not caused by his own lack of diligence; (3) the new evidence is not merely impeaching; (4) the new evidence is material to the principal issues involved; and (5) the new evidence is of such a nature that in a new trial it would probably produce an acquittal."
37
Id. (quoting United States v. Stevens, 978 F.2d 565, 570 (10th Cir.1992)).
38
The new evidence offered by Mr. Shayesteh consists of photographs of the roadblock scene and a newspaper article quoting Trooper Reynolds. The government did not give the photographs to the defense until well after the suppression hearing. Mr. Shayesteh contends the photographs were relevant to the suppression question because they demonstrate he could have easily re-entered traffic. The district court determined the photographs would not have led to a different result on the motion to suppress. We agree. The photographs do not reflect the scene at the time the trooper was talking to Mr. Shayesteh, so they can provide no information about whether he was blocked in by traffic. As such, they fail the fourth prong of the test mentioned above; they are not material to the principal issues involved. The district court did not abuse its discretion in denying a new trial based on these photographs.
39
Mr. Shayesteh also complains about the apparent destruction of the negatives of the photographs taken around the time of his arrest. As the actual photographs exist, we can see no prejudice or harm in the destruction of the negatives.
40
During the suppression hearing, Trooper Reynolds testified he had no suspicions about Mr. Shayesteh or his vehicle. In a local newspaper article on the arrest, however, the trooper is credited with "admitting to having a second sense about the car and driver." Mr. Shayesteh's counsel did not discover the article until after trial. Because the article was published before trial, the district court refused to consider it new evidence for Rule 33 purposes. The district court also determined the article was no more than impeaching evidence. Mr. Shayesteh contends this was error. We believe a newspaper article that does not even provide a direct quotation on the material point is merely impeaching evidence. The district court did not abuse its discretion in denying a new trial or suppression hearing in light of this evidence.
41
Mr. Shayesteh also argues the district court should have granted him an evidentiary hearing to determine if any prejudice resulted from sending one of the seized bags to the jury room during deliberations. His counsel did not object to the admission of the bag during trial. At trial, Mr. Shayesteh testified he put personal items in the bag and that he had stored the bag in the trunk of his car. Mr. Shayesteh claims a post-trial inspection showed the bag contained different items than he had put in the bag. He makes no attempt to explain why he thinks exposure of these items to the jury may have been prejudicial. The district court determined there was no evidence to support the claim that the jury may have been influenced by the contents of the bag, or to support the assertion that the contents of the bag were prejudicial. Mr. Shayesteh fails to persuade us these findings were an abuse of discretion.
42
We have fully reviewed the record and Mr. Shayesteh's argument and we see no grounds for reversal. Therefore, we AFFIRM the conviction and the sentence.
*
This order and judgment is not binding precedent except under the doctrines of law of the case, res judicata and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3
1
The application was filed pursuant to Utah's Administrative Traffic Checkpoint Act which can be found at § 77-23-101 to 105 of the Utah Code Annotated. In general terms, this law allows a magistrate to issue written authority to the Highway Patrol to establish and operate a traffic checkpoint under specified conditions. Utah Code Ann. § 77-23-104
2
Mr. Shayesteh discusses the conflicting evidence on traffic volume at the time he was delayed from leaving the roadblock. However, the magistrate judge's factual finding was premised on the location of vehicles that were out of the traffic lane, blocking Mr. Shayesteh's car. Mr. Shayesteh's discussion of traffic volume and roadblock procedures do not address this finding
3
Mr. Shayesteh claims "it is preposterous to conclude that the defendant would claim that he did not have anything in the trunk and then offer the trooper a look in the trunk, knowing he had luggage in the trunk." Reiterating his point, he states such a notion is "inconceivable." It is neither preposterous nor inconceivable. More than a few criminals have made such offers in the hopes that law enforcement officials would think they had nothing to hide. Such reliance on hyperbole instead of evidence is a sure sign of a weak argument
4
Mr. Shayesteh cites United States v. Turner, 928 F.2d 956 (10th Cir.), cert. denied, 502 U.S. 881, 112 S.Ct. 230, 116 L.Ed.2d 187 (1991), in support of his argument on this point. That case, however, dealt with a show of authority prior to consent. Id. at 959
5
Mr. Shayesteh's counsel appropriately raised this issue as obligated by the Supreme Court's decision in Anders v. California, 386 U.S. 738, 87 S.Ct. 1396, 18 L.Ed.2d 493 (1967)
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217 F.2d 409
James MATTHEWSv.UNITED STATES of America.
No. 15086.
United States Court of Appeals Fifth Circuit.
December 9, 1954.
S. B. Wallace, Griffin, Ga., for appellant.
Floyd M. Buford, Asst. U. S. Atty., Frank O. Evans, U. S. Atty., Joseph H. Davis, Asst. U. S. Atty., Macon, Ga., for appellee.
Before HUTCHESON, Chief Judge, and RIVES and TUTTLE, Circuit Judges.
TUTTLE, Circuit Judge.
1
James Matthews was indicted and tried on five counts, charging, first, that he had in his possession, custody and under his control a still and distilling apparatus; second, that he carried on the business of a distiller without having given bond; third, that he carried on the business of a distiller with intent to defraud; fourth, that he worked in a distillery; and fifth, that he carried and delivered raw material, to-wit, three 55-gallon drums of kerosene to a distillery for the production of spirituous liquors. He was convicted on the first four counts, and the fifth count was nol prossed.
2
Defendant introduced no evidence in his own behalf. He objected to the introduction of certain documentary evidence by the government, and moved for a directed verdict of acquittal. The trial court's adverse rulings on these matters form the basis of his appeal here.
3
The evidence on which this conviction was based was circumstantial and it was meager. Whether it was sufficient to have authorized the court to submit the case to the jury, if it was all admissible, need not be decided, since we find that the court committed prejudicial error in admitting, over defendant's objection, the so-called "sugar reports." The government proved that when the arresting officers raided the still in question a 1949 Dodge truck with 1953 Georgia license Number A/H11314, was about twenty yards from the distillery, backed up to 336 gallons of non-tax paid whiskey.
4
When appellant was arrested between 50 and 100 yards from the still site, he did not have on a hat. A hat was found five yards from the Dodge truck. Appellant's only statement at the place and time of arrest was that it was his hat.
5
On the 1949 Dodge truck, parked in the distillery yard, there were forty cases of one-gallon glass jugs and three 55-gallon oil drums. The distillery consisted of two 150-gallon steamers, two 220-gallon stills, one 60-gallon still, one doubler, one radiator condenser, a pressure tank, a set of gas burners, eighteen 220-gallon fermenters, and 1980 gallons of mash.
6
A kerosene and gasoline mixture was used in firing the illicit distillery. The radiator condenser found at the still was an automobile radiator with connections welded on to it; it was a fairly new radiator. When the illicit distillery was raided all persons there ran.
7
Mr. Thomas Felton Thompson, of the Buford Feed and Grain Company, 809 Bankhead Avenue, Atlanta, Georgia, testified that on August 4, 1953, he sold 3600 pounds of sugar to one James Walker, which he delivered to a vehicle bearing 1953 Georgia license number A/H 11314, this being the same license number as that on the vehicle later seen at the still. He further testified that on August 10, 1953, he sold 3600 pounds of sugar to one James Walker and delivered same to a ton and a half truck, bearing 1953 Georgia license number A/H11314. Mr. Thompson further testified that at the time of these sales, 3600 pounds of sugar cost $327.60 and that each of the three transactions was a cash sale. He testified that he was not present at the time of these two sales, but he then testified that he personally had delivered a 3600 pound order to the same truck to one James Walker on August 17th. He declared that at the time of this sale defendant was standing at the side of the truck, but that he neither did nor said anything.
8
The government also introduced in evidence over defendant's objection three reports made by the Buford Company to the Alcohol Tax Unit of the Internal Revenue Service showing the details of these three sales.
9
1. The government's proof in this case was weak and entirely circumstantial, and while there was more here than mere presence and flight, as in the case of Vick v. United States, 216 F.2d 228, decided by this Court October 29, 1954, in view of the opportunity more fully to develop the case which a new trial will furnish, we find it unnecessary to decide whether it was or was not insufficient. The trouble is that some of the evidence ought not to have gone to the jury, and the fact that it did must be held to be prejudicial error. While it is not necessary for us to speculate as to what effect the illegal evidence had on the deliberations of the jury, it is nevertheless appropriate to point out that a case in which the government has barely proved enough to sustain a verdict offers a good backdrop against which to examine the importance of adhering to rules of evidence which might otherwise annoy those who are impatient with the law's technicalities.
10
2. The sales slip taken from the person of the accused after arrest was not inadmissible for the reasons assigned on the trial. United States v. Heitner, 2 Cir., 149 F.2d 105. Its admissibility over objection as to relevancy, if such objection had been properly made, is doubtful. The purchases referred to on the sales slip were in no way tied into the operation of the still or of its construction; any deduction by the jury drawn from the fact that Matthews had purchased an unspecified number of drums and an automobile radiator and a shovel and a hoe would of necessity be based on pure speculation; however, appellant's counsel did not object to the admission of the sales slip on the ground of relevancy, and this question is therefore not before us for decision.
11
3. As to the admission of the so-called "sugar reports" the situation is different.
12
The government had its witness, an Internal Revenue employee, identify three separate sheets of typewritten entries on a form entitled "Return Under Section 2811, I.R.C. (Alcohol and Tobacco Tax)". This form was printed, and carried the notation in the upper left hand corner "Form 169, U. S. Treasury Department Internal Revenue Service (Revised Oct. 1953)." The form had six columns headed respectively as follows: "Date Sold or Shipped," "Quantity (Lb., cwt., or gal.)," "Kind of Substance (Brand)," "Name and Address of Person or Firm to Whom Sold or Delivered," "Auto Tag No.; R. R. Car No.," "Driver's Name and Address; No. of Permit; Date it Expires." At the bottom of each page appeared the following language:
13
"This return, required by formal demand letter issued pursuant to section 2811, I.R.C. [26 U.S.C.A. § 2811], is a correct and complete report for this period of all dispositions, including sales of substances named in the demand letter."
14
The defendant's name did not appear anywhere on these returns. Upon their having been identified by the government's witness, counsel sought to elicit information as to their contents, particularly to show that there were three sales made to one James Walker by the Buford Feed and Grain Co. Defendant's counsel objected on several grounds, including the objection that this evidence was hearsay.1
15
The court withheld its ruling and thereupon permitted the witness to testify as to the contents of these sugar reports which had been received by him in the mail, and which were the sole basis of his testimony as to three 3600 pound sales to one James Walker.
16
The District Attorney subsequently put Mr. Thompson on the stand and he testified as to three sales to James Walker, but stated that he was not present at two of them. He also testified that on the occasion handled by him the defendant was standing in the vicinity of the truck, but that he neither spoke nor acted in connection with the transaction, and that the man who called himself James Walker paid for the 3600 pounds of sugar.
17
In this posture of affairs defense counsel renewed his objection, stating: "We want to renew our objection on this." Subsequently the government tendered in evidence the three "sugar reports" and defendant's counsel again objected. The court admitted them as to the defendant Matthews and not as to the other defendants in the case.
18
4. The relevancy of the sugar reports and the testimony as to sales to Walker may have been established satisfactorily in view of the association of the defendant with the truck at the two separate places; i. e. in Chamblee at the Buford Feed and Grain Co., and later at the site of the still. But there can be no justification for the admission of the oral testimony from the reports and of the reports themselves over the objection that they were hearsay.
19
The only basis for arguing for the admissibility of these reports as an exception to the rule prohibiting the admission of hearsay evidence would be that it is within the exception that finds expression in § 1732, Title 28, U.S.C., sometimes known as the Federal Business Records Act2 or the one that is contained in § 1733,2 which we shall refer to as the official records statute.
20
That the oral testimony and reports were hearsay — extra judicial testimonial assertions that certain sales of sugar were made — is apparent. The first question is whether the Federal Business Records Act, expressing an exception to the hearsay rule, is broad enough to include these reports.
21
The record discloses the true nature of these reports. They were required to be made by certain dealers in sugar, malt, yeast and other articles normally used in the manufacture of alcoholic beverages, 26 U.S.C. § 2811. It then becomes necessary to determine whether these reports were "made in regular course of any business."
22
Certainly these reports were not made by the Buford Feed and Grain Co. in furtherance of its business in the buying and selling of merchandise. If they were, then it may be conceded that a construction of the Federal statute making them admissible is not an unwarranted extension of the old and familiar shopbook or book-of-account exception to the hearsay rule. So long as the accuracy and reliability of records sought to be introduced in evidence have been tested by the fact that a business concern carries on its own affairs from day to day in reliance upon such records, there is no departure from the standards of accuracy and trustworthiness that were basic in the historic rule permitting testimony from the shop book or book of account.
23
Where, as here, one party seeks to prove a substantive fact by the introduction in evidence of a report that is compiled, not in connection with the Buford Company's own operation, but at the behest of the Director of Internal Revenue under sanction of a Federal statute, none of the proofs of trustworthiness, such as reliance by the public on the record or the use of the record as an integral part of the business in its own interest, is present.
24
The Supreme Court passed upon the scope of the Federal Business Records Act, 28 U.S.C. § 1732, in Palmer v. Hoffman, 318 U.S. 109, 63 S.Ct. 477, 479, 87 L.Ed. 645, 144 A.L.R. 719. A quotation from that opinion shows that the Court, in holding that an accident report made out by an employee of defendant railroad in accordance with company rules was inadmissible under the statute, construed the words "in the regular course of business" to exclude that part of a business which is primarily concerned with litigation and the like and only indirectly with the main activity of the business. 318 U.S. 109, 111-113, 63 S.Ct. 479:
25
"We may assume that if the statement was made `in the regular course' of business, it would satisfy the other provisions of the Act. But we do not think that it was made `in the regular course' of business within the meaning of the Act. The business of the petitioners is the railroad business. That business like other enterprises entails the keeping of numerous books and records essential to its conduct or useful in its efficient operation. Though such books were considered reliable and trustworthy for major decisions in the industrial and business world, their use in litigation was greatly circumscribed or hedged about by the hearsay rule — restrictions which greatly increased the time and cost of making the proof where those who made the records were numerous. * * * It was that problem which started the movement towards adoption of legislation embodying the principles of the present Act. * * * And the legislative history of the Act indicates the same purpose.
26
"The engineer's statement which was held inadmissible in this case falls into quite a different category. It is not a record made for the systematic conduct of the business as a business. An accident report may affect that business in the sense that it affords information on which the management may act. It is not, however, typical of entries made systematically or as a matter of routine to record events or occurrences, to reflect transactions with others, or to provide internal controls. The conduct of a business commonly entails the payment of tort claims incurred by the negligence of its employees. But the fact that a company makes a business out of recording its employees' versions of their accidents does not put those statements in the class of records made `in the regular course' of the business within the meaning of the Act. If it did, then any law office in the land could follow the same course, since business as defined in the Act includes the professions. We would then have a real perversion of a rule designed to facilitate admission of records which experience has shown to be quite trustworthy."
27
This Circuit has had one previous occasion to construe this statute. In Chapman v. United States, 194 F.2d 974, certiorari denied 344 U.S. 821, 73 S.Ct. 19, 97 L.Ed. 639, we held that exclusion of an Air Force board report concerning an aircraft crash was not error, and said, 194 F.2d 974, 978:
28
"In complete agreement with the view of the district judge, that the report was inadmissible under Palmer v. Hoffman * * * we are of the further opinion that the decisions from the Second and Third Circuits [Footnote: Moran v. Pittsburgh-Des Moines Steel Co., 3 Cir., 183 F.2d 467; Pekelis v. Transcontinental & Western Air, Inc., 2 Cir., 187 F.2d 122, 23 A.L.R.2d 1349], cited and relied on by appellants, seem, in the language of our brother Chase, dissenting in Korte v. New York, N. H., & H. R. Co., 2 Cir., 191 F.2d 86, 92, the last but not the least of the line `to be a rather complete disregard of what was decided in Palmer v. Hoffman * * *.'"
29
We are still of the opinion that Palmer v. Hoffman is a precedent binding upon this court, that it correctly construes 28 U.S.C. § 1732, and that its authority has not been impaired by denial of certiorari in the Pekelis and Korte cases.3 And we think that, like those cases, United States v. Grayson, 2 Cir., 166 F.2d 863, 870, which resembles in some respect the case at bar, although the hearsay objection was not there raised, construes Section 1732 incorrectly.
30
In the Grayson case two types of evidence were tendered. In the one instance, the trial court admitted as official records certain "offering sheets." The Court of Appeals held this was error, and this holding will be discussed below in our consideration of the official records exception to the hearsay rule. In the other instance the trial court excluded certain "sales reports," which were filed by registered dealers in oil royalties under a requirement of the Securities & Exchange Commission (so far as appears the particular reports were not filed by anybody connected with the accused Grayson). The admission of these reports was objected to on two grounds: (1) They were too remote to be material, and (2) They were privileged because of regulations of the Commission. No objection was made on the ground that they were hearsay. The court rejected the contentions that were made and observed "they were competent as to the sales price, because, unlike the `Offering Sheets,' the price was a matter within the knowledge of the dealers and they were made in the regular course of their business." The court did not discuss the question that is here so important — whether the fact that the reports were required by law to be filed of itself caused the court to find that they were made in the regular course of business. The court was concerned with the grounds for rejecting the evidence that had been urged on the trial court and its statement that the reports were made in the regular course of business was made without further elaboration or explanation. We do not feel therefore that the Grayson case should be considered as authority for the proposition that reports made to government agencies under the sanction of statutory requirements or appropriate regulations are by that fact admissible in evidence as an exception to the hearsay rule by virtue of the provisions of Section 1732.
31
We have next to consider whether these reports come within the exception to the hearsay rule under Section 1733. It is difficult to construe the language of this section to cover reports made by non-official persons to comply with statutory or other legal governmental requirements. However, the statute has been construed to cover some such documents by some Federal courts.
32
On the other hand, there are two Federal cases squarely holding such reports non-admissible where the duty to submit the reports is merely enforceable by a penal statute. The first of these cases is U. S. v. Elder, D.C., 232 F. 267. In that case it was held that monthly returns kept by an oleomargarine dealer and required by internal revenue regulations were not admissible as official records in a prosecution of a customer of such dealer charged with violating the oleomargarine law. This case is cited by Wigmore who says the case "seems correct." 5 Wigmore, Evidence, 1633(a). The case, however, has never been cited in any other opinion. Wigmore comments as to one reason why the case has not been cited more frequently:
33
"Most such reports, required by statute, are privileged in one way or another; hence the present question does not often arise."
34
The second case in which a Court of Appeals held the mere requirement that reports be furnished did not authorize their admission under the official records statute, is United States v. Grayson, supra. As mentioned above, the trial court in that case admitted certain records called "offering sheets" as official documents. The court there says:
35
"Official in one sense of course they were, for the dealers had filed them in obedience to a regulation of the Securities & Exchange Commission; but not all documents required to be filed by law are competent evidence of all that they record. The exception is confined to transactions of which it is not only the duty of an official to make entry, but which must themselves have come within his knowledge in the course of his duties."
36
It is clear that there was no such limitation on the admissibility of records under Section 1733. In holding, therefore, that the admission of the "offering sheets" in the Grayson case was error, it is clear that the court decided that such documents were not official records within the purview of Section 1733.
37
Among the cases holding that reports submitted pursuant to statutory requirements are admissible as official records, are Sternberg Dredging Co. v. Moran Towing & Transport Co., 2 Cir., 196 F. 2d 1002; McInerney v. United States, 1 Cir., 143 F. 729; Sullivan v. United States, 1 Cir., 161 F. 253.
38
In Sternberg Dredging Co. v. Moran Towing & Transport Co., supra, in which the Court of Appeals for the 2nd Circuit most recently made such a holding, the Court found that a written report of occurrences at the time of an accident made by the master of a tug pursuant to Coast Guard regulations was admissible as an official record. In its opinion the Court stated that there was nothing inconsistent with the Grayson decision, supra, because the Court said the report "contained nothing but what its author had himself witnessed." [196 F.2d 1005.]
39
As we view it, there is an important distinction between cases like Sternberg, McInerney and Sullivan, supra, on the one hand, and Elder and Grayson, supra, on the other. This distinction can be seen from the fact that in each of the cases in which the courts have held the report amounts to an official act, the person acting had a public duty beyond that placed upon him by the requirement of the statute. In each of those cases the actor was a ship's captain. The court's opinion in the McInerney case, supra, points up this important fact:
40
"It would seem to be settled upon authority that a manifest, or a report, like the one in question, made by a designated officer under the positive requirements of a statute regulating the manner in which such officer shall discharge a quasi public duty, delivered to a proper officer of the government which confers the authority and imposes the duty, and produced by a proper custodian from the proper government office, so far partakes of the character of a public document as to become evidence of the facts which it contains and which it is by law required to set out." 143 F. 729, 736-738.
41
Wigmore's statement of the controlling principle is as follows:
42
"Can it be said that a private person, expressly required to make a record or certificate, makes it under an official duty? Or, is it to be said that the term `official' duty is too narrow, and that the principle includes in effect all documents made under any duty created by law?
43
"It would seem at first that the latter mode of statement cannot be justified; * * * the sanction does involve at least the idea of duty as created by official status, and not merely the idea of duty in the limited and imperfect sense of amenability to a penalty imposed by law * * *.
44
"In short, a person may (so far as legal theory is concerned) be an officer for the purpose of doing a single specific class of acts, and may apart from this be merely a private person. It is therefore proper enough, where by statute such a specific and narrow duty has been created, to regard the statements made under it as statements under an official duty within the notion of the present exception."
45
The principle may be understood more easily from the recent text (March, 1954) of the American Law Institute, Basic Problems of Evidence.4
46
In accordance with the authorities cited above and because of the principles enunciated with respect to both Sections 1732 and 1733 then, we must hold that admission of the reports over defendant's objection was error; and yet our holding is supported not merely by these precedents but also by the absence here of the rational justification which obtains in every recognized exception to the hearsay rule; that is, a circumstantial probability of trustworthiness, and a necessity for the evidence. These reports of sugar sales are of course valuable as clues to tax investigators. However, the necessity or convenience of introducing them as evidence is not apparently greater than the convenience of admitting any hearsay. Lacking the necessary elements of necessity and circumstantial assurances of trustworthiness essential to the regular entries admissible at common law,5 these reports are not "records which experience has shown to be quite trustworthy," Palmer v. Hoffman, 318 U.S. 109, 63 S. Ct. 477, 480, 87 L.Ed. 645, 144 A.L.R. 719, and consequently there is no sufficient rational basis to except them from the hearsay rule.
47
The question may well be posed, whether admission of these reports, even if permitted under a literal construction of Section 1732 or Section 1733, might not be contrary to the right of accused persons to confrontation of witnesses. U. S. Constitution, Amendment VI. It has been uniformly held that that right may not be invoked to exclude evidence otherwise admissible under well established exceptions to the hearsay rule, and undoubtedly Wigmore is correct in saying, with respect to the Constitutional right to confrontation, 5 Wigmore, Evidence § 1397:
48
"The rule sanctioned by the Constitution is the Hearsay rule as to cross-examination, with all the exceptions that may legitimately be found, developed, or created therein."
49
But, if Congress attempted to create new exceptions to the hearsay rule which were contrary to the sound principles underlying that rule, the very principles which must have been contemplated by the drafters of the Sixth Amendment, could we properly say these were "legitimately created" or that they did not violate the Constitutional right of confrontation in criminal cases? We think not. While the Sixth Amendment does not prevent creation of new exceptions to the hearsay rule based upon real necessity and adequate guarantees of trustworthiness, it does embody those requirements as essential to all exceptions to the rule, present or future. To hold otherwise would be to hold that Congress could abolish the right of confrontation by making unlimited exceptions to the hearsay rule.
50
The judgment appealed from is reversed and the cause remanded for further proceedings not inconsistent with this opinion.
Notes:
1
The following colloquy took place between the court and counsel:
"Mr. Wallace:
"Now, Your Honor, we object to that on several grounds. We don't have James Walker on trial and he doesn't say that he made these records himself. He says somebody sent them to him. He's just the custodian of them. He hasn't said that he made these records up, somebody just sent them to him. That's hearsay and it's immaterial and prejudicial because it's against somebody else, James Walker; and we're not trying him today.
* * * * * *
"Mr. Davis:
"Your Honor please, we expect to show that these reports are submitted to the Alcohol and Tobacco Tax office by various wholesalers throughout the State as the law requires them. The regulations requires [sic] them to submit those reports concerning extraordinary sales of sugar and malt and meal and things like that; and on that they list the name of the purchaser, or the purported name of the purchaser and the license number of the vehicle to which those sales were delivered. And we expect to show by this evidence, Your Honor please, that on three different occasions that sales of sugar were made to one James Walker; and that the license number that was given as belonging to this James Walker was the same license number on the truck that was found at the still-site, if Your Honor please.
"The Court:
"Yes, but he's not a defendant.
* * * * * *
"Mr. Davis:
"Let me state this in my place, if Your Honor please: We expect to show by the owner of this feed company that on one occasion listed in there that the defendant, James Matthews, was at the truck at the time the sugar was delivered to it in Atlanta; and we certainly think that after we finish our evidence that it is tied in with one of the defendants on trial, Your Honor please, is tied in with this particular truck.
* * * * * *
"The Court:
"Well, with the district attorney stating in his place that he is going to connect it, I will admit it; but if he doesn't do it, I will exclude it.
"Mr. Wallace:
"Do you want me to make another motion later on?
"The Court:
"Yes, at that time.
"Mr. Wallace:
"And, of course, we will want to make the motion that it is not admissible, even though he connected it." R. 28-35.
2
§ 1732. Record made in regular course of business
"In any court of the United States and in any court established by Act of Congress, any writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence, or event, shall be admissible as evidence of such act, transaction, occurrence, or event, if made in regular course of any business, and if it was the regular course of such business to make such memorandum or record at the time of such act, transaction, occurrence, or event or within a reasonable time thereafter.
"All other circumstances of the making of such writing or record, including lack of personal knowledge by the entrant or maker, may be shown to affect its weight, but such circumstances shall not affect its admissibility.
"The term `business,' as used in this section, includes business, profession, occupation, and calling of every kind." § 1733. Government records and papers; copies.
"(a) Books or records of account or minutes of proceedings of any department or agency of the United States shall be admissible to prove the act, transaction or occurrence as a memorandum of which the same were made or kept.
"(b) * * *"
3
Pekelis v. Transcontinental & Western Air, Inc., 2 Cir., 187 F.2d 122, 23 A.L.R. 2d 1349, certiorari denied 341 U.S. 951, 71 S.Ct. 1020, 95 L.Ed. 1374; Korte v. New York, N. H. & H. R. Co., 2 Cir., 191 F.2d 86, certiorari denied 342 U.S. 868, 72 S.Ct. 108, 96 L.Ed. 652. See Note, 37 Cornell L.Q. 290
4
"3Ad hoc Officials. Statutes frequently confer upon qualified persons authority to perform designated functions and forbid performance of them by others. Each of these authorized persons is required to make and file in a designated public office a written report setting forth specified matters concerning his performance of these functions and the persons or things connected therewith. In acting pursuant to statute he serves the purpose of a public officer or his deputy, and is sometimes said to be an ad hoc official. His written report carries the same indicia of reliability as that of a public officer and is admissible in evidence under the same conditions."
See also the somewhat more extensive treatment in the American Law Institute's Model Code of Evidence, Rule 516, which purports to restate the common law except that it would permit admission of conclusions of fact in official records, which most jurisdictions do not permit:
"Rule 516. Written statements by persons required to report authorized acts.
"Subject to Rule 519 [Discretion of judge to exclude in certain circumstances], evidence of a writing made as a record, report or memorandum of facts and conclusions concerning an act, event or condition, unless specifically privileged from disclosure by a statute requiring it to be made, is admissible as tending to prove the truth of each matter stated therein in compliance with statutory requirements if the judge finds that
"(a) the maker of the writing was duly authorized pursuant to statute to perform designated functions performance of which by persons not so authorized as forbidden by statute, and was required by statute to file a written report in a designated place or office setting forth specified matters relating to the performance of those functions and the persons or things connected therewith, and
"(b) the writing was made and filed by him as a report so required by the statute.
"Comment
"This rule deals with records made by persons who are sometimes said to be ad hoc public officials, such as physicians, undertakers and ministers of the gospel, but it is not confined to them. It is applied to those whose business or profession requires action in matters usually made the subject of vital statistics and health regulations, and who are under a duty to make and file reports of specified acts, events or conditions. * * *"
5
5 Wigmore, Evidence §§ 1420, 1521, 1522
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44 Md. App. 188 (1979)
407 A.2d 799
PHYLLIS POLLOKOFF ET AL.
v.
MARYLAND NATIONAL BANK.
No. 187, September Term, 1979.
Court of Special Appeals of Maryland.
Decided November 13, 1979.
The cause was argued before MORTON, COUCH and WEANT, JJ.
Sheldon H. Braiterman, with whom was James D. Johnson on the brief, for appellants.
William J. Evans for appellee.
COUCH, J., delivered the opinion of the Court.
The District Court of Maryland has original jurisdiction in actions in contract or tort where the amount claimed does not exceed $5,000.00. For such actions where the amount claimed *189 is at least $2,500.00, but below $5,000.00, the District Court and Circuit Court have concurrent jurisdiction at the election of the plaintiff. Annotated Code of Maryland, Cts. & Jud. Proc., §§ 4-401 and 4-402.[1] Thus it would appear that a circuit court, or other trial court having general jurisdiction, has no original jurisdiction to try civil cases where the amount involved is less than $2,500.00. It is these jurisdictional provisions which have given rise to this appeal.
Appellants, Phyllis and Robert Pollokoff, opened a Premium Passbook account with Maryland National Bank, appellee, said account having a deposit term of five years with a maturity date of March 23, 1978. It appears that any funds in the account after the maturity date were to be either withdrawn or put in a regular passbook account. Appellants had funds in the premium account on March 23, 1978 but did not transfer these funds to a regular account, nor withdraw same, until May 19, 1978. Appellants requested the interest which had accrued from March 23, 1978 to May 19, 1978, which was denied by appellee. Thereafter, appellants sued appellee in the Superior Court of Baltimore City, on their own behalf and on behalf of all other persons similarly situated, for the accrued interest. Appellee responded to this action with a motion raising preliminary objection based on lack of jurisdiction inasmuch as the amount in controversy was below the monetary jurisdiction of the Superior Court so far as appellants were concerned and jurisdiction could not be obtained by the aggregation of claims of all members of the *190 class similarly situated as appellants. Appellee's motion was subsequently granted, and this appeal ensued.
The sole issue before us is:
"Under Maryland Rule 209, can the claims of individual class members to a class action suit brought in the Superior Court be aggregated so as to meet the Court's $2500 jurisdictional amount?"
Maryland Rule 209 a provides:
"When there is a question of law or fact common to persons of a numerous class whose joinder is impractical, one or more of them whose claims or defenses are representative of the claims or defenses or all and who will fairly and adequately protect the interests of all may sue or be sued on behalf of all."
As noted above, the Superior Court of Baltimore City has no jurisdiction over civil cases where the amount involved is $2,500.00 or less, at least insofar as original jurisdiction is concerned. Thus appellants, as individuals, would have to have a claim involving more than $2,500.00 before invoking the jurisdiction of the Superior Court. The record reveals their claim only involves $27.62, therefore they, as individuals, could not bring their action in the Superior Court. In obvious recognition of this fact, appellants brought a "class action" and argue that by aggregating the claims of all the members of the class the jurisdictional amount of $2,500.00 is met. Appellee successfully countered by arguing that the claims could not be aggregated to overcome the jurisdictional hurdle.
The parties agree, and our research confirms, that this precise question has not been previously considered by an appellate court in Maryland and thus this is a case of first impression in this state. Appellants do cite Sun Cab Co. v. Cloud, 162 Md. 419, 159 A. 922 (1932), as support for their argument. Our reading of that case, however, persuades us to the contrary. Sun Cab involved an action in equity for an injunction restraining a referendum on a recently passed legislative act; the complainants (taxpayers) brought the *191 action on their behalf and other taxpayers. Appellant intervened and demurred to the bill raising, in part, the right of complainants as taxpayers to relief because they showed no special injury distinct and peculiar to themselves. The trial court overruled the demurrer and the Court of Appeals, in affirming this ruling, stated:
"The property loss to them, or the loss of civil rights, which according to our rules must be established as a foundation for the interposition of a court of equity, may be small, when apportioned among them. Probably the loss to one taxpayer in any such proceeding seldom amounts to twenty dollars, the minimum of the debt or damage which a court of equity may consider. Code, art. 16, sec. 109; Kenneweg v. Allegany County, 102 Md. 119, 62 A. 249, 250. But, when a suit is instituted by one or more taxpayers in representation of all, the case is quite different. The amount involved and sought to be protected is then the total amount of loss to taxpayers, or the total amount which may be wrongfully expended. In Kenneweg v. Allegany County, supra, cited against the maintenance of the present suit, a single taxpayer was the complainant, and, as the court observed, he `does not sue in behalf of himself and other taxpayers who may be similarly situated, * * * but he sues alone, in his own name and his own behalf.' His loss alone was too small to come within the statutory limitation, the court held. But a bill filed in the name of one or more of the taxable inhabitants for themselves and all others similarly situated the court should regard as `in the nature of a public proceeding to test the validity of the corporate acts sought to be impeached and deal with and control it accordingly.' 4 Dillon, Municipal Corporations (5th Ed.), sec. 1587; Kelly, Piet & Co. v. Baltimore, 53 Md. 134, 141. Therefore the conclusion of the court is that the taxpayers' suit may be maintained in this instance."
*192 Id. at 427. We believe this case is factually inapposite here. In the instant case we are not dealing with a taxpayer's suit nor a case where appellants can get no relief.
It has been stated many times that since Maryland's Rules of Procedure were patterned after the Federal Rules of Procedure, federal cases interpreting comparable rules, while not binding, are indeed persuasive authority. The Supreme Court has had two occasions to deal with the comparable federal rule on class actions Rule 23 (b) (3). In Snyder v. Harris, 394 U.S. 332 (1969), and Zahn v. International Paper Company, 414 U.S. 291 (1973), it was flatly held that separate claims of class members may not be aggregated to meet monetary jurisdictional requirements where diversity of citizenship was the basis for jurisdiction. While appellants argue in their brief that if Md. Rule 209 does not permit the filing of class actions in a court of general trial jurisdiction because of the prohibition of aggregation claims to meet the monetary jurisdiction of the court, then effectively the rule means nothing. This is so, appellants argue, because the District Court is incapable, administratively, of handling a class action. Whatever merit this argument may have, we believe this is the wrong forum to give relief. In our view appellants should seek relief if relief is justified (see Johnson v. Chrysler Credit Corp., 26 Md. App. 122, 337 A.2d 210 (1975)) from the Legislature or from the Court of Appeals through a rule change.
We hold, therefore, that in order to satisfy the jurisdictional requirements of the Maryland Code, Cts. & Jud. Proc., §§ 4-401 and 4-402, a plaintiff may not aggregate the claims of all other members of a class, similarly situated.
Judgment affirmed.
Costs to be paid by appellants.
NOTES
[1] "§ 4-401. Exclusive original jurisdiction.
Except as provided in § 4-402, and subject to the venue provisions of Title 6, the District Court has exclusive original jurisdiction in: (1) An action in contract or tort if the debt or damages claimed do not exceed $5,000; ...."
"§ 4-402. Exceptions.
(a) Equity cases. Except as provided in § 4-401, the District Court does not have equity jurisdiction.
* * *
(d) Concurrent jurisdiction cases. Except in a case under paragraph (2), (4), (5), or (6) of § 4-401, the plaintiff may elect to file suit in the District Court or in a trial court of general jurisdiction, if the amount in controversy exceeds $2,500."
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788 F.2d 33
252 U.S.App.D.C. 131, 57 A.F.T.R.2d86-1207, 86-1 USTC P 9341
Donald H. MATHES, Appellant,v.COMMISSIONER OF INTERNAL REVENUE.
No. 84-5456.
United States Court of Appeals,District of Columbia Circuit.
April 18, 1986.
Donald H. Mathes, pro se.
Glenn L. Archer, Jr., Asst. Atty. Gen., U.S. Dept. of Justice, Michael L. Paup and Gary R. Allen, Attys., Tax Div., U.S. Dept. of Justice, Washington, D.C., were on brief, for appellee.
Before GINSBURG, SCALIA and BUCKLEY, Circuit Judges.
Opinion for the Court filed by Circuit Judge SCALIA.
SCALIA, Circuit Judge:
1
Donald H. Mathes appeals from an order of the Tax Court dismissing his petition for failure properly to prosecute. The appeal is utterly frivolous and "merit[s] public attention only as [an] illustration[ ] of irresponsible appellate practice deserving of sanction." Granzow v. Commissioner, 739 F.2d 265, 267 (7th Cir.1984).
2
* In 1981, Mathes and his wife, Patricia Marie Mathes, filed a joint tax return for 1980 in which they excluded from gross income almost $60,000 in wages. In a statement filed with the return, Mr. and Mrs. Mathes claimed that wages did not constitute "income" subject to taxation under the United States Constitution. Not surprisingly, on audit the Commissioner determined that the Matheses were indeed required to pay tax on their wages and issued a notice of deficiency.
3
Mathes brought suit in the United States Tax Court, seeking a redetermination of the deficiency. In his petition (as later amended) Mathes alleged, inter alia, that "neither he nor his wife was a person required to pay an income/excise tax or to prepare and file a return." In attachments to the petition, Mathes argued, inter alia, that wages are received in exchange for labor of equal value and therefore result in no taxable gain; that the IRS has "little or no jurisdiction over either the wages, income or persons of either the Petitioner or his wife or his children"; and that only employees of federal or state government are subject to the income tax. Much of Mathes's petition, and of his other filings, consisted of irrelevant polemic such as the following:
4
The IRS is the "master" and the citizen must be the "obedient slave." The taxpayer can hope only for a few "crumbs" of mercy from his IRS "master"--after all every parasite must keep his host healthy enough to provide a continuing source of "blood to suck."
5
At the time Mathes filed his petition in the Tax Court, he had obtained employment abroad and moved to Norway. Nevertheless, Mathes requested that his trial take place in Houston, Texas. The Tax Court granted his request on November 29, 1982.
6
On April 21, 1983, the Commission moved for partial summary judgment. In opposing the Commissioner's motion, Mathes argued again that wages are not income and that he was not within the jurisdiction of the IRS. In addition, Mathes argued that no tax was due on his wages because he had been paid in Federal Reserve notes--an argument Mathes knew to be meritless because he had been told so when previously litigating the issue before the Tax Court, see Mathes v. Commissioner, 46 TAX CT. MEM.DEC. (P-H) p 77,220, at 77-922 (July 14, 1977), and on appeal before the Fifth Circuit, see Mathes v. Commissioner, 576 F.2d 70, 71 (5th Cir.1978). Likewise, Mathes asserted a right to jury trial even though he had been informed by the Fifth Circuit, as other tax protesters have been told repeatedly, that "[t]he law is ... clear that a taxpayer who elects to bring his suit in the Tax Court has no right, statutory or constitutional, to a trial by jury." Mathes, 576 F.2d at 71-72.
7
On August 9, 1983, the Tax Court granted the Commissioner's motion and directed Mathes to file, on or before September 9, 1983, a proper amended petition limited to the issues on which summary judgment had not been granted. The Court warned Mathes that failure to file on time could result in dismissal of the remainder of his case. By order of September 26, the Tax Court extended the deadline to October 27; and on November 7, the Tax Court once again extended the deadline, this time to December 22. Both extensions were necessitated by Mathes's repeated failure to comply with the terms of the August 9 order. In the meantime, Mathes had been informed that his case was set for trial on February 28, 1984, in Houston.
8
By mail posted in Norway on December 22--and therefore received one week after the twice-extended deadline--Mathes submitted his amended petition (which was nevertheless accepted by the Tax Court) and asked that his trial be delayed because his employment in Norway had been extended, making it inconvenient for him to return to the United States at the present time. The Tax Court calendared Mathes's motion for hearing on February 28 in Houston. On February 2, Mathes reiterated his request for a continuance and moved to enjoin the Commissioner from seeking dismissal of his petition. The February 2 motion was also calendared for February 28.
9
Mathes neither appeared in court on February 28 nor engaged counsel to pursue his request for a continuance or proceed to trial. The Tax Court denied the pending motions and, at the request of the Commissioner, dismissed the suit for failure properly to prosecute. Mathes appeals that dismissal.
II
10
This appeal is frivolous. It is abundantly clear from the record that the Tax Court did not abuse its discretion in dismissing the case. Throughout the proceedings, the Tax Court showed remarkable patience in diligently attempting to discern whether Mathes's arguments had any shred of merit, in indulgently granting requests for time extensions, and in accepting Mathes's tardy filing. On the day his case was scheduled for hearing, neither Mathes nor counsel engaged by him appeared. The Tax Court was not obliged to hold this case in abeyance (and thereby delay collection of the assessed tax) pending the distant and as yet undetermined time when Mathes might decide to resume residence in the United States. And even if it were obliged to do so, it was entitled to demand that Mathes or his representative appear to argue the pending motions.
11
Mathes argues before us that dismissal of his petition was inappropriate because, inter alia, the Tax Court had a "staggering number of detailed issues to resolve." Brief for Appellant at 1. The substantive merits of a claim are of course irrelevant to the propriety of a dismissal for failure to prosecute--but the irrelevance of the 57 "detailed issues" listed by Mathes is in any event exceeded by their absurdity. As part of his "7th Issue," Mathes alleges that he is entitled to a jury trial, although, as we noted above, Mathes was informed by the Fifth Circuit that he has no such right. Mathes's "55th Issue" is entitled "Federal Reserve Notes Are Not Dollars By Law," which is apparently a revival of the same ludicrous argument the Fifth Circuit rejected. We are not certain what to make of Mathes's "30th Issue--IRS Makes War On Citizens" or his "57th Issue--Tax Slavery." The remainder of Mathes's brief consists in large part of "arguments against the income tax which have been put to rest for years." Parker v. Commissioner, 724 F.2d 469, 472 (5th Cir.1984). Cases rejecting claims identical to many of those made by Mathes, and in some instances characterizing those claims as "patently frivolous," "preposterous and nearly silly," "baseless," or "ludicrous," include Charczuk v. Commissioner, 771 F.2d 471, 472-75 & n. 3 (10th Cir.1985); Sauers v. Commissioner, 771 F.2d 64, 68-69 & n. 6 (3d Cir.1985); Martin v. Commissioner, 756 F.2d 38, 40 (6th Cir.1985); Lonsdale v. Commissioner, 661 F.2d 71, 72 (5th Cir.1981).
III
12
For Mathes, the frivolous nature of this appeal is not an aberration. On at least four previous occasions, he has ventured into court on tax matters. See Mathes v. Commissioner, 50 A.F.T.R.2d (P-H) p 82-5233 (S.D.Tex. May 27, 1982); Mathes v. Scott, 40 A.F.T.R.2d (P-H) p 77-5242 (S.D.Tex. Sept. 9, 1977); Mathes v. Commissioner, 46 TAX CT. MEM.DEC. (P-H) p 77,220 (July 14, 1977), aff'd, 576 F.2d 70 (5th Cir.1978); Mathes v. Commissioner, 63 T.C. 642 (1975). In none of these cases was he successful and in none of them, as far as we can discern, did he present arguments with even a wisp of merit. In one illustrative case, Mathes sued a judge of the Tax Court and an attorney employed by the IRS for violating his constitutional rights. He alleged that during a hearing in one of his earlier frivolous lawsuits the judge and the attorney had been "discourteous to Plaintiff and acted in a 'snide, capricious and defamatory manner,' in refusing to answer his demand that they acknowledge that the Constitution is the supreme law of the land." Mathes, 40 A.F.T.R.2d at 77-5855.
13
Federal courts of appeals have the means to deal with obstructive and vexatious litigation. Rule 38 of the Federal Rules of Appellate Procedure states that "[i]f a court of appeals shall determine that an appeal is frivolous, it may award just damages and single or double costs to the appellee." Similarly, 28 U.S.C. Sec. 1912 (1982) states that "[w]here a judgment is affirmed by ... a court of appeals, the court in its discretion may adjudge to the prevailing party just damages for his delay, and single or double costs." (While this provision "speak[s] of 'damages for delay,' the courts of appeals quite properly allow damages, attorney's fees, and other expenses incurred by an appellee if the appeal is frivolous without requiring a showing that the appeal resulted in delay." FED.R.APP.P. 38 advisory committee note (collecting cases).) Finally, in the specific context of appeals from the Tax Court, we have "power to impose damages in any case where the decision of the Tax Court is affirmed and it appears that the notice of appeal was filed merely for delay." 26 U.S.C. Sec. 7482(c)(4) (1982). Cases from other circuits sanctioning taxpayers for pursuing frivolous appeals include the following: Eicher v. United States, 774 F.2d 27, 30 (1st Cir.1985) (pro se appellant assessed double costs); Paulson v. United States, 758 F.2d 61, 62 (2d Cir.1985) (pro se appellant assessed double costs and reasonable attorneys' fees); United States v. Isenhower, 754 F.2d 489, 490 (3d Cir.1985) (tax protester, in pro se appeal from criminal conviction, ordered to show cause why damages and single or double costs should not be imposed); Sparrow v. Commissioner, 748 F.2d 914, 915-16 (4th Cir.1984) (appellant assessed double costs and attorneys' fees); Crain v. Commissioner, 737 F.2d 1417, 1418 (5th Cir.1984) (pro se appellant assessed double costs and $2000 "damage award"); Martin v. Commissioner, 756 F.2d 38, 40-41 (6th Cir.1985) (pro se appellant assessed double costs); United States v. Ekblad, 732 F.2d 562, 563-64 (7th Cir.1984) (pro se appellant assessed double costs and reasonable attorneys' fees); Hayward v. United States Tax Court, 762 F.2d 706, 707 (8th Cir.1985) (pro se appellant assessed double costs and attorneys' fees); Ryan v. Bilby, 764 F.2d 1325, 1328-29 (9th Cir.1985) (pro se appellant assessed double costs); Clark v. Commissioner, 744 F.2d 1447, 1448 (10th Cir.1984) (pro se appellant assessed double costs and attorneys' fees); Fortney v. United States, 774 F.2d 445, 446 (11th Cir.1985) (pro se appellant assessed double costs).
14
We think similar action is called for here.
15
* * *
16
* * *
17
The judgment of the Tax Court is affirmed and appellant is assessed double costs and reasonable attorneys' fees. The Commissioner shall file with this court within 14 days of the issuance of this opinion a submission as to the expenses he has incurred in litigating this frivolous appeal.
18
So ordered.
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577 F.2d 738
U. S.v.Sutton
No. 77-1389
United States Court of Appeals, Fourth Circuit
5/11/78
1
M.D.N.C.
AFFIRMED
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21 Cal.App.4th 1770 (1993)
27 Cal. Rptr.2d 32
THERESA ADLER, Plaintiff and Appellant,
v.
DION VAICIUS, Defendant and Respondent.
Docket No. B071879.
Court of Appeals of California, Second District, Division Six.
December 28, 1993.
*1772 COUNSEL
Ilan Funke-Bilu for Plaintiff and Appellant.
Jencks & Hunt, Michael R. Jencks and Lisa M. Pontius for Defendant and Respondent.
OPINION
STONE (S.J.), P.J.
Theresa Adler appeals from an order awarding attorney fees pursuant to Code of Civil Procedure section 527.6, subdivision (h).[1] She asserts that the court cannot award a defendant attorney fees where she has been deprived of the opportunity to proceed to a full, due process *1773 hearing under section 527.6 through no fault of her own and that where the plaintiff has a temporary restraining order, the court should award attorney fees in her favor if the circumstances so warrant.
We hold that appellant was not deprived of a "full, due process hearing" since she voluntarily dismissed her petition with prejudice and that the trial court did not err in awarding attorney's fees to respondent.
FACTS
Appellant filed a petition for injunction prohibiting harassment September 15, 1992, in which she alleged that she had made a report with the San Luis Obispo Sheriff's Department against respondent, a police officer, for sexual battery and that an administrative inquiry was being conducted by his department. She further alleged that respondent stopped her as she was walking home from work September 3, 1992, and accused her of taking down a street sign. Earlier in the evening she had encountered a friend of respondent who had harassed her about not waiting on him in the restaurant where she worked. She had this person thrown out and believed he was harassing her for respondent.
September 16, 1992, the court issued an order to show cause (OSC) and temporary restraining order (TRO) ex parte returnable for hearing September 30, 1992, and restraining respondent from coming within 150 yards of appellant and her family. The TRO was served on respondent September 17, 1992. Respondent obtained a modification of the TRO, pending hearing, that he stay only 25 yards from appellant. He filed a response to the petition for injunction on September 30, 1992, denying appellant's allegations and stating that his actions on September 4, 1992, stemmed from observing a group of persons attempting to remove a sign at 1 a.m. while he was on duty. He did not recognize appellant immediately and told the group to stop as they began to walk away from him. After stopping the group and speaking to appellant, he allowed them to go.
Respondent had no further contact with appellant after September 4. He knew she dated several officers in the San Luis Obispo Police Department and that she was a waitress at McClintock's. On the morning he stopped her, she was loud, argumentative, and appeared to have been drinking. He had seen her several times when either he or she had been accompanied by other persons. He had no knowledge of any complaint filed against him by her although he learned that appellant filed a criminal report the morning of September 4 but did not name him in it.
On September 30, 1992, no judge was available and appellant's attorney refused to stipulate to a temporary judge. Respondent refused to stipulate *1774 that the TRO be continued. The court continued the matter to October 1, the first available date for hearing before a judge. October 1, 1992, respondent's attorney served on appellant a notice of deposition and for production of documents pertaining to complaints she had filed against various police officers. October 1, the judge disqualified himself, having learned from counsel's correspondence that the hearing would take more than two hours. The matter was reset on the short cause calendar for October 8, 1992.
October 1, 1992, appellant's attorney filed a request for dismissal with prejudice. Respondent filed a motion for an award of attorney fees and costs as prevailing party pursuant to sections 527.6, subdivision (h), 128.5, and 1032, subdivision (a). Appellant opposed the motion on grounds that it was she, rather than respondent, who was entitled to fees under section 128.5 and as a prevailing party because the TRO was "completely successful." She asserted that respondent failed to timely file his response to her petition for injunction and that since he refused to stipulate to continue the TRO pending a new hearing date, the court was powerless to hold a new hearing. The court granted respondent's motion and awarded him $975 in attorney fees and $201 in costs.[2]
DISCUSSION
1. Jurisdiction to Conduct Further Proceedings
(1a) Appellant asserts that the court lost jurisdiction when the TRO expired September 30, 1992, and that all subsequent orders made, including the order of dismissal based on her request therefor, were void for lack of jurisdiction. She bases this assertion on section 527.6, subdivisions (c) and (d) which state that "[a] temporary restraining order granted under this section shall remain in effect, at the court's discretion, for a period not to exceed 15 days, unless otherwise modified or terminated by the court. [¶] (d) Within 15 days of the filing of the petition, a hearing shall be held on the petition for the injunction...." According to appellant, when respondent failed to stipulate to continuation of the TRO when no judge was available on September 30, 1992, she had only two viable options. She could do nothing or file another application and petition. Thus, she decided to file a request for dismissal and let the departmental investigation proceed on her complaint. Moreover, she states that she achieved what she wanted by obtaining the TRO since it was unlikely respondent would bother her after she filed her complaint with the police department.
*1775 Appellant incorrectly equates the continued validity of the TRO with the court's jurisdiction to hold a hearing on the underlying petition for injunction or on a motion for attorney fees. (2) Although the purpose of section 527.6 is to provide expedited injunctive relief to victims of harassment, the party to be enjoined has certain important due process safeguards, i.e., "a full opportunity to present his or her case, with the judge required to receive relevant testimony and to find the existence of harassment by `clear and convincing' proof of a `course of conduct' that actually and reasonably caused substantial emotional distress, had `no legitimate purpose,' and was not a `constitutionally protected activity.'" (Schraer v. Berkeley Property Owners' Assn. (1989) 207 Cal. App.3d 719, 730-731 [255 Cal. Rptr. 453], italics in original.)
(1b) Appellant would turn these safeguards on their head if a person could obtain a TRO ex parte and then, prior to hearing on the injunction, dismiss the proceedings and claim attorney fees as prevailing party before the restrained party had the opportunity for a hearing on the merits. Section 527.6 sets out that a plaintiff may first obtain a TRO in accordance with section 527, subdivision (a), which may remain in effect for no more than 15 days unless otherwise modified or terminated by the court. The TRO may be granted "with or without notice upon an affidavit which, to the satisfaction of the court, shows reasonable proof of harassment of the plaintiff by the defendant, and that great or irreparable harm would result to the plaintiff." (§ 527.6, subd. (c).)
Section 527, subdivision (a) provides that in the case of a TRO granted without notice, when the matter first comes up for hearing, the party who obtained the TRO must be ready to proceed and that the defendant "shall be entitled, as of course, to one continuance for a reasonable period, if he or she desires it, to enable him or her to meet the application for the preliminary injunction...." We cannot believe that a defendant, under 527.6, would have less right to due process procedural safeguard than under 527 since the hearing under 527.6 "provides the only forum the defendant in a harassment proceeding will have to present his or her case" and since section 527.6, subdivision (c) specifically provides that "the plaintiff may obtain a temporary restraining order in accordance with subdivision (a) of Section 527." (Schraer v. Berkeley Property Owners' Assn., supra, 207 Cal. App.3d at pp. 732-733; see also Kobey v. Morton (1991) 228 Cal. App.3d 1055, 1059-1060 [278 Cal. Rptr. 530].)
(3) Cases interpreting section 527, subdivision (a), do not support appellant's theory of lost jurisdiction. The hearing may be lawfully continued beyond the statutory time at the request of the defendant, when the necessary *1776 business of the court prevents it from hearing the matter within that time, and when defendant's counteraffidavits are not served as provided in that code section. (McDonald v. Superior Court (1937) 18 Cal. App.2d 652, 657 [64 P.2d 738]; River Farms Co. v. Superior Court (1933) 131 Cal. App. 365, 369 [21 P.2d 643]; compare Agricultural P. Com. v. Superior Court (1938) 30 Cal. App.2d 154, 155 [85 P.2d 898], in which the defendants objected to continuance of the restraining order and the court found the order void.) The requirements of section 527 are for the defendant's benefit and may be waived by him. (West Coast Constr. Co. v. Oceano Sanitary Dist. (1971) 17 Cal. App.3d 693, 699 [95 Cal. Rptr. 169].)
(1c) Here appellant was ready to proceed, as was respondent, but the court did not have a judge available to hear the matter. Contrary to appellant's assertion, respondent did not have to file written opposition (although he did so at some time on that date). Whether respondent's counteraffidavits were served before the court called the matter or afterward did not affect the court's jurisdiction. Neither did respondent's possible failure to present written opposition to appellant prior to the time set for hearing constitute a concession that appellant's position was meritorious. The court is required to receive relevant testimony at the hearing, whether oral or written. (Schraer v. Berkeley Property Owners' Assn., supra, 207 Cal. App.3d at pp. 730-733; § 527.6, subd. (d).) The court did not lose jurisdiction by continuing the hearing where the business of the court prevented a hearing when set due to unavailability of a judge.
2. Appellant Not the Prevailing Party
(4) Appellant asserts that the court could not award attorney fees to a defendant where the plaintiff "has been awarded a temporary restraining order without suffering a subsequent demurrer, cross-complaint, or response, and is deprived of the opportunity to proceed to a full, due process hearing pursuant to Code of Civil Procedure Section 527.6 through no fault of her own." Given the facts here, this argument is specious. As explained, ante, respondent did file a response and appellant was not deprived of a "full, due process hearing ... through no fault of her own." She voluntarily dismissed her petition with prejudice before the continued hearing date. A voluntary dismissal with prejudice is a final determination on the merits. (Roybal v. University Ford (1989) 207 Cal. App.3d 1080, 1085 [255 Cal. Rptr. 469].)
A defendant has the right to seek costs after dismissal of the complaint, and attorney fees recoverable under statutory authorization are deemed an element of costs. (West Coast Development v. Reed (1992) 2 Cal. App.4th 693, 706 [3 Cal. Rptr.2d 790]; Catello v. I.T.T. General Controls (1984) 152 *1777 Cal. App.3d 1009, 1013 [200 Cal. Rptr. 4].) International Industries, Inc. v. Olen (1978) 21 Cal.3d 218, 225 [145 Cal. Rptr. 691, 577 P.2d 1031], relied upon by appellant, does not aid her since Olen held that, in pretrial dismissal cases, the parties are left to bear their own attorney fees "whether claim is asserted on the basis of the contract or [Civil Code] section 1717's reciprocal right." Respondent is entitled to costs and attorney fees here because section 527.6, subdivision (h), specifically provides for them, in the court's discretion, to a prevailing party. (See also § 1033.5, subd. (a)(10)(B).)
Since section 527.6 does not define "prevailing party," the general definition of "prevailing party" in section 1032 may be used. (Elster v. Friedman (1989) 211 Cal. App.3d 1439, 1443 [260 Cal. Rptr. 148].) Section 1032, subdivision (a)(4), provides that "`Prevailing party' includes ... a defendant in whose favor a dismissal is entered...." Appellant believes that she falls within another provision of section 1032, subdivision (a)(4), i.e., "When any party recovers other than monetary relief and in situations other than as specified, the `prevailing party' shall be as determined by the court...." She claims she obtained all the relief she sought the TRO. She disregards the plain wording of section 1032. That section applies "... in situations other than as specified...." Respondent is "a defendant in whose favor a dismissal is entered...." (§ 1032, subd. (a)(4).) Thus, the court did not abuse its discretion in awarding respondent attorney fees under section 527.6, subdivision (h). (See Leydon v. Alexander (1989) 212 Cal. App.3d 1, 5 [260 Cal. Rptr. 253].)[3]
The order is affirmed. Costs to respondent.
Gilbert, J., and Yegan, J., concurred.
NOTES
[1] All statutory references are to the Code of Civil Procedure unless otherwise indicated.
[2] Although appellant appealed from the minute order of November 20, 1992, we deem the appeal to be from the after-filed judgment of January 6, 1993. (Cal. Rules of Court, rule 2(a); American Motorists Ins. Co. v. Cowan (1982) 127 Cal. App.3d 875, 883 [179 Cal. Rptr. 747].)
[3] Appellant has not challenged the award of costs to respondent.
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317 U.S. 519 (1943)
AMERICAN MEDICAL ASSOCIATION
v.
UNITED STATES.[*]
No. 201.
Supreme Court of United States.
Argued December 11, 14, 1942.
Decided January 18, 1943.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA.
*520 Messrs. Seth W. Richardson and William E. Leahy, with whom Messrs. Edward M. Burke and Charles S. Baker were on the brief, for petitioners.
Mr. John Henry Lewin and Assistant Attorney General Arnold, with whom Solicitor General Fahy and Messrs. Charles H. Weston and Richard S. Salant were on the brief, for the United States.
*526 MR. JUSTICE ROBERTS delivered the opinion of the Court.
Petitioners have been indicted and convicted of conspiring to violate § 3 of the Sherman Act,[1] by restraining trade or commerce in the District of Columbia. They are respectively corporations of Illinois and of the District of Columbia. Joined with them as defendants were two unincorporated associations and twenty-one individuals, some of whom are officers or employes of one or other of the petitioners, the remainder being physicians practicing in the District of Columbia and members of the petitioners serving, as to some of them, on various committees of the petitioners having to do with professional ethics and with the practice of medicine by petitioners' members.
For the moment it is enough to say that the indictment charged a conspiracy to hinder and obstruct the operations of Group Health Association, Inc., a nonprofit corporation organized by Government employes to provide medical care and hospitalization on a risk-sharing prepayment basis. Group Health employed physicians on a full time salary basis and sought hospital facilities for the treatment of members and their families. This plan was contrary to the code of ethics of the petitioners. The indictment *527 charges that, to prevent Group Health from carrying out its objects, the defendants conspired to coerce practicing physicians, members of the petitioners, from accepting employment under Group Health, to restrain practicing physicians, members of the petitioners, from consulting with Group Health's doctors who might desire to consult with them, and to restrain hospitals in and about the City of Washington from affording facilities for the care of patients of Group Health's physicians.
The District Court sustained a demurrer to the indictment on the grounds, amongst others, that neither the practice of medicine nor the business of Group Health is trade as the term is used in the Sherman Act.[2] On appeal the Court of Appeals reversed, holding that the restraint of trade prohibited by the statute may extend both to medical practice and to the operations of Group Health.[3]
The case then went to trial in the District Court. Certain defendants were acquitted by direction of the judge. As to the others, the case was submitted to the jury, which found the petitioners guilty and all the other defendants not guilty. From judgments of conviction the petitioners appealed to the Court of Appeals, which reiterated its ruling as to the applicability of § 3 of the Sherman Act, considered alleged trial errors, and affirmed the judgments.[4]
We granted certiorari limited to three questions which we thought important: 1. Whether the practice of medicine and the rendering of medical services as described in the indictment are "trade" under § 3 of the Sherman Act. 2. Whether the indictment charged or the evidence *528 proved "restraints of trade" under § 3 of the Sherman Act. 3. Whether a dispute concerning terms and conditions of employment under the Clayton and Norris-LaGuardia Acts was involved, and, if so, whether petitioners were interested therein, and therefore immune from prosecution under the Sherman Act.
First. Much argument has been addressed to the question whether a physician's practice of his profession constitutes trade under § 3 of the Sherman Act. In the light of what we shall say with respect to the charge laid in the indictment, we need not consider or decide this question.
Group Health is a membership corporation engaged in business or trade. Its corporate activity is the consummation of the cooperative effort of its members to obtain for themselves and their families medical service and hospitalization on a risk-sharing prepayment basis. The corporation collects its funds from members. With these funds physicians are employed and hospitalization procured on behalf of members and their dependents. The fact that it is cooperative, and procures service and facilities on behalf of its members only, does not remove its activities from the sphere of business.[5]
If, as we hold, the indictment charges a single conspiracy to restrain and obstruct this business it charges a conspiracy in restraint of trade or commerce within the statute. As the Court of Appeals properly remarked, the calling or occupation of the individual physicians charged as defendants is immaterial if the purpose and effect of their conspiracy was such obstruction and restraint of the business of Group Health. The court said:[6] "And, of *529 course, the fact that defendants are physicians and medical organizations is of no significance, for Sec. 3 prohibits `any person' from imposing the proscribed restraints . . ." It is urged that this was said before this Court decided Apex Hosiery Co. v. Leader, 310 U.S. 469. But nothing in that decision contradicts the proposition stated. Whether the conspiracy was aimed at restraining or destroying competition, or had as its purpose a restraint of the free availability of medical or hospital services in the market, the Apex case places it within the scope of the statute.[7]
Second. This brings us to consider whether the indictment charged, or the evidence proved, such a conspiracy in restraint of trade. The allegations of the indictment are lengthy and detailed. After naming and describing the defendants and the Washington hospitals, it devotes many paragraphs to a recital of the plan adopted by Group Health and alleges that, principally for economic reasons, and because of fear of business competition, the defendants have opposed such projects.
The indictment then recites the size and importance of the petitioners, enumerates means by which they can prevent their members from serving Group Health plans, or consulting with physicians who work for Group Health, and can prevent hospitals from affording facilities to Group Health's doctors.
In charging the conspiracy, the indictment describes the organization and operation of Group Health and states that, from January 1937 to the date of the indictment, the defendants, the Washington hospitals, and others cognizant of the premised facts, "have combined and conspired together for the purpose of restraining trade in the District of Columbia, . . ." In five paragraphs the pleading states the purposes of the conspiracy. *530 The first is the purpose of restraining Group Health from doing business; the second, that of restraining members of Group Health from obtaining adequate medical care according to Group Health's plan; the third, that of restraining doctors serving Group Health in the pursuit of their calling; the fourth, that of restraining doctors not on Group Health's staff from practicing in the District of Columbia in pursuance of their calling; and the fifth, that of restraining the Washington hospitals in the business of operating their hospitals.
After reciting certain of the proceedings and plans adopted to forward the conspiracy, the indictment alleges that the conspiracy, and the intended restraints which have resulted from it, have been effectuated "in the following manner and by the following means"; and alleges that the defendants have combined and conspired "with the plan and purpose to hinder and obstruct Group Health Association, Inc., in procuring and retaining on its medical staff qualified doctors and to hinder and obstruct the doctors serving on that staff from obtaining consultations with other doctors and specialists practicing in the District of Columbia." It states that, pursuant to this plan and purpose, the defendants have resorted to certain means to accomplish the end, and recounts them.
In another paragraph, the defendants are charged to have conspired with "the plan and purpose to hinder and obstruct Group Health Association, Inc. in obtaining access to hospital facilities for its members and to hinder and obstruct the doctors on the medical staff of Group Health from treating and operating upon their patients in Washington hospitals." It is alleged that, pursuant to this plan and purpose, defendants have done certain acts to deter hospitals with which they were connected and over which they exercised influence, from affording hospital facilities to Group Health's doctors.
*531 The petitioners' contention is, in effect, that the indictment charges five separate conspiracies defined by their separate and recited purposes, namely, conspiracy to obstruct the business of Group Health, to obstruct its members from obtaining the benefit of its activities, to obstruct its doctors from serving it, to obstruct other doctors in the practice of their calling, and to restrain the business of Washington hospitals. The petitioners say that they were entitled to have the trial court rule upon the sufficiency in law of each of these charges and, as this was not done, the general verdict of guilty cannot stand. They urge that even though some of the named purposes relate to the business of Group Health, and that business be held trade within the meaning of the statute, yet, as the practice of medicine by doctors not employed by Group Health is not trade, and the operations of Washington hospitals are not trade, the last two purposes specified cannot constitute violations of § 3 and the jury should have been so instructed. In this view they insist that the jury may have convicted them of restraining physicians unconnected with Group Health, or of restraining hospitals, and, if so, the verdict and judgment cannot stand.
If in fact the indictment charges a single conspiracy to obstruct and restrain the business of Group Health, and if the recited purposes are really only subsidiary to that main purpose or aim, or merely different steps toward the accomplishment of that single end, and if the cause was submitted to the jury on this theory, these contentions fail.
When the case first went to the Court of Appeals that tribunal construed the indictment as charging but a single conspiracy. It said:[8] "The charge, stated in condensed form, is that the medical societies combined and conspired to prevent the successful operation of Group Health's *532 plan, and the steps by which this was to be effectuated were as follows: (1) to impose restraints on physicians affiliated with Group Health by threat of expulsion or actual expulsion from the societies; (2) to deny them the essential professional contacts with other physicians; and (3) to use the coercive power of the societies to deprive them of hospital facilities for their patients."
In the trial, the District Court conformed its rulings to this decision and submitted the case to the jury on the theory that the indictment charged but one conspiracy.
We think the courts below correctly construed the indictment. It is true that, in describing the conspiracy, five purposes are stated which the conspiracy was intended to further, but, in a later paragraph, still in the charging part of the instrument, it is alleged that the purpose was to hinder and obstruct Group Health in various ways and by various coercive measures, which are identical with the "purposes" before stated. The trial judge, after calling the jury's attention to the juxtaposition of these two formulations of the charge, added:
"These purposes, it is alleged, were to be attained by certain coercive measures against the hospitals and doctors designed to interfere with employment of doctors by Group Health and use of the hospitals by members of its medical staff and their patients.. . ."
In immediate context the judge added:
"To sustain that charge the Government must prove beyond a reasonable doubt that a conspiracy did in fact exist to restrain trade in the District in at least one of the several ways alleged, and according to the particular purpose and plan set forth."
At another point, the trial judge summarized the Government's claim that the evidence in the case showed opposition by the petitioners to Group Health and its plan; that they feared competition between the plan and the *533 organized physicians and that, to obstruct and destroy such competition, the petitioners conspired with certain officers and members and hospitals to prevent successful operation of Group Health's plan by imposing restraints upon physicians affiliated with Group Health, by denying such physicians professional contact and consultation with other physicians, and by coercing the hospitals to deny facilities for the treatment of their patients. Again the judge charged: "Was there a conspiracy to restrain trade in one or more of the ways alleged?" And again: "If it be true . . . that the District Society, acting only to protect its organization, regulate fair dealing among its members, and maintain and advance the standards of medical practice, adopted reasonable rules and measures to those ends, not calculated to restrain Group Health, there would be no guilt, though the indirect effect may have been to cause some restraint against Group Health."
We need add but a word as to the sufficiency of the proof to sustain the charge. The petitioners in effect challenge the sufficiency, in law, of the indictment. They hardly suggest that if the pleading charges an offense there was no substantial evidence of the commission of the offense. But, however the argument is viewed, we agree with the courts below that the case was one for submission to a jury. No purpose would be served by detailed discussion of the proofs.
Third. We hold that the dispute between petitioners and their members, and Group Health and its members, was not one concerning terms and conditions of employment within the Clayton[9] and the Norris-LaGuardia[10] Acts.
Section 20 of the Clayton Act, as expanded by § 13 of the Norris-LaGuardia Act, is the only legislation which *534 can have any bearing on the case. Section 20 applies to cases between "an employer and employees, or between employers and employees, or between employees, or between persons employed and persons seeking employment, involving, or growing out of, a dispute concerning terms or conditions of employment . . ."; and provides that none of the acts specified in the section shall "be considered or held to be violations of any law of the United States."
Section 13 of the Norris-LaGuardia Act defines a labor dispute as including "any controversy concerning terms or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment, regardless of whether or not the disputants stand in the proximate relation of employer and employee." It also provides that "A case shall be held to involve or to grow out of a labor dispute when the case involves persons who are engaged in the same industry, trade, craft, or occupation; or have direct or indirect interests therein; or who are employees of the same employer; or who are members of the same or an affiliated organization of employers or employees; whether such dispute is (1) between one or more employers or associations of employers and one or more employees or associations of employees; (2) between one or more employers or associations of employers and one or more employers or associations of employers; or (3) between one or more employees or associations of employees and one or more employees or associations of employees; or when the case involves any conflicting or competing interests in a `labor dispute' (as defined in this section) of `persons participating or interested' therein (as defined in this section)."
Citing these provisions, the petitioners insist that their dispute with Group Health was as to terms and conditions *535 of employment of the doctors employed by Group Health since the District Medical Society objected to its members, or other doctors, taking employment under Group Health on the terms offered by that corporation. They assert that § 20 of the Clayton Act, as expanded by § 13 of the Norris-LaGuardia Act, includes all persons and associations involved in a dispute over terms and conditions of employment who are engaged in the same industry, trade, craft, or occupation, or have direct or indirect interests therein. And they rely upon our decisions in New Negro Alliance v. Sanitary Grocery Co., 303 U.S. 552, and Drivers' Union v. Lake Valley Co., 311 U.S. 91, as bringing within the coverage of the acts a third party, even though that party be a corporation not in trade, and employers and employers' associations even though they be only indirectly interested in the controversy. They insist that as the petitioners and Group Health, its members and doctors, other doctors and the hospitals, were either directly or indirectly interested in a controversy which concerned the terms of employment of doctors by Group Health, the case falls within the exemption of the statutes and they cannot be held criminally liable for a violation of the Sherman Act.
It seems plain enough that the Clayton and Norris-LaGuardia Acts were not intended to immunize such a dispute as is presented in this case. Nevertheless, it is not our province to define the purpose of Congress apart from what it has said in its enactments, and, if the petitioners' activities fall within the classes defined by the acts, we are bound to accord petitioners, especially in a criminal case, the benefit of the legislative provisions.
We think, however, that, upon analysis, it appears that petitioners' activities are not within the exemptions granted by the statutes. Although the Government asserts the contrary, we shall assume that the doctors having *536 contracts with Group Health were employes of that corporation. The petitioners did not represent present or prospective employes. Their purpose was to prevent anyone from taking employment under Group Health. They were interested in the terms and conditions of the employment only in the sense that they desired wholly to prevent Group Health from functioning by having any employes. Their objection was to its method of doing business. Obviously there was no dispute between Group Health and the doctors it employed or might employ in which petitioners were either directly or indirectly interested.
In truth, the petitioners represented physicians who desired that they and all others should practice independently on a fee for service basis, where whatever arrangement for payment each had was a matter that lay between him and his patient in each individual case of service or treatment. The petitioners were not an association of employes in any proper sense of the term. They were an association of individual practitioners each exercising his calling as an independent unit. These independent physicians, and the two petitioning associations which represent them, were interested solely in preventing the operation of a business conducted in corporate form by Group Health. In this aspect the case is very like Columbia River Packers Assn. v. Hinton, 315 U.S. 143. What was there decided requires a holding that the petitioners' activities were not exempted by the Clayton and the Norris-LaGuardia Acts from the operation of the Sherman Act.
The judgments are
Affirmed.
MR. JUSTICE MURPHY and MR. JUSTICE JACKSON took no part in the consideration or the decision of this case.
NOTES
[*] Together with No. 202, Medical Society of the District of Columbia v. United States, also on writ of certiorari, post, p. 613, to the United States Court of Appeals for the District of Columbia.
[1] Act of July 2, 1890, § 3, c. 647, 26 Stat. 209, 15 U.S.C. § 3.
[2] United States v. American Medical Association, 28 F. Supp. 752.
[3] United States v. American Medical Association, 72 App. D.C. 12, 110 F.2d 703, 710, 711.
[4] American Medical Association v. United States, 76 U.S. App. D.C. 70, 130 F.2d 233.
[5] Compare Associated Press v. Labor Board, 301 U.S. 103, 128-9; In re Duty on Estate of Incorporated Council, 22 Q.B. 279, 293; Maryland & Virginia Milk Producers' Assn. v. District of Columbia, 119 F.2d 787, 790; La Belle v. Hennepin County Bar Assn., 206 Minn. 73 App. D.C. 399, 119 F.2d 787, 790; La Belle v. Hennepin County Bar Assn., 206 Minn. 290, 294; 288 N.W. 788, 790.
[6] 110 F.2d 711.
[7] Compare Fashion Originator's Guild v. Federal Trade Commission 312 U.S. 457, 465, 466, 467.
[8] 110 F.2d 711.
[9] 38 Stat. 730, §§ 6 and 20, 15 U.S.C. 17, 29 U.S.C. 52.
[10] 47 Stat. 70, §§ 4, 5, 6, 8 and 13, 29 U.S.C. §§ 104, 105, 106, 108 and 113.
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Order Michigan Supreme Court
Lansing, Michigan
December 15, 2008 Clifford W. Taylor,
Chief Justice
136617 Michael F. Cavanagh
136653 Elizabeth A. Weaver
136983 Marilyn Kelly
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman,
GARY L. BUSH, Guardian of GARY E. BUSH, Justices
a Protected Person,
Plaintiff-Appellee,
v SC: 136617
COA: 274709
Kent CC: 06-000982-NM
BEHROOZ-BRUCE SHABAHANG, M.D.,
GEORGE T. SUGIYAMA, M.D., M. ASHRAF
MANSOUR, M.D., VASCULAR ASSOCIATES,
P.C., and SPECTRUM HEALTH
BUTTERWORTH CAMPUS,
Defendants,
and
JOHN CHARLES HEISER, M.D., and WEST
MICHIGAN CARDIOVASCULAR SURGEONS,
Defendants-Appellants.
_________________________________________/
GARY L. BUSH, Guardian of GARY E. BUSH,
a Protected Person,
Plaintiff-Appellee,
v SC: 136653
COA: 274708
Kent CC: 06-000982-NM
BEHROOZ-BRUCE SHABAHANG, M.D.,
Defendant-Appellant,
and
JOHN CHARLES HEISER, M.D., WEST
MICHIGAN CARDIOVASCULAR SURGEONS,
GEORGE T. SUGIYAMA, M.D., M. ASHRAF
MANSOUR, M.D., VASCULAR ASSOCIATES,
P.C., and SPECTRUM HEALTH
BUTTERWORTH CAMPUS,
Defendants.
_________________________________________/
2
GARY L. BUSH, Guardian of GARY E. BUSH,
a Protected Person,
Plaintiff-Appellee,
v SC: 136983
COA: 274726
Kent CC: 06-000982-NM
BEHROOZ-BRUCE SHABAHANG, M.D.,
JOHN CHARLES HEISER, M.D., WEST
MICHIGAN CARDIOVASCULAR SURGEONS,
GEORGE T. SUGIYAMA, M.D., M. ASHRAF
MANSOUR, M.D., and VASCULAR
ASSOCIATES, P.C.,
Defendants,
and
SPECTRUM HEALTH BUTTERWORTH
CAMPUS,
Defendant-Appellant.
_________________________________________/
On November 19, 2008, the Court heard oral argument on the applications for
leave to appeal the May 1, 2008 judgment of the Court of Appeals. On order of the
Court, the applications are again considered, and they are GRANTED, limited to the
issues: (1) whether the plaintiff’s defective notice of intent as to defendants West
Michigan Cardiovascular Surgeons and Spectrum Health tolled the period of limitations
pursuant to MCL 600.5856(c), as amended by 2004 PA 87, effective April 22, 2004; and
(2) whether defendant Shabahang’s defective response to the plaintiff’s notice of intent,
MCL 600.2912b(7), was presumed valid such that the plaintiff was required to wait the
full 182-day period before filing his medical malpractice action.
KELLY, J. (concurring).
I concur in the order granting leave to appeal. However, I would welcome
briefing and argument on all issues raised in the three cases in which leave to appeal has
been granted.
I, Corbin R. Davis, Clerk of the Michigan Supreme Court, certify that the
foregoing is a true and complete copy of the order entered at the direction of the Court.
December 15, 2008 _________________________________________
1215 Clerk
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451 S.W.2d 40 (1970)
BEAUFORT TRANSFER COMPANY, a Corporation, Plaintiff-Respondent,
v.
FISCHER TRUCKING COMPANY, a Corporation, and Harry Morris, Defendants-Appellants, and
Philipp Transit Lines, Inc., a Corporation, Intervenor Defendant-Appellant.
No. 54176.
Supreme Court of Missouri, Division No. 2.
February 9, 1970.
Motion for Rehearing or to Transfer Denied March 9, 1970.
*41 Husch, Eppenberger, Donohue, Elson & Cornfeld, Myron Gollub, St. Louis, for plaintiff-respondent, Beaufort Transfer Co.
Thompson, Mitchell, Douglas, Neill & Guerri, Donald J. Stohr, Gary T. Nelms, St. Louis, for intervenor defendant-appellant, Philipp Transit Lines, Inc.
Flynn & Parker, Norman C. Parker, St. Louis, for defendants-appellants, Fischer Trucking Co. and Harry Morris.
Motion for Rehearing or to Transfer to Court En Banc Denied March 9, 1970.
MORGAN, Judge.
Beaufort Transfer Company, a corporation, sought specific performance of what was alleged to have been a binding contract of Fischer Trucking Company, a corporation, and Harry Morris, its president, to sell certain intrastate and interstate common carrier operating rights to Beaufort. The Philipp Transit Lines, Inc., alleged it had purchased the same operating rights from Fischer and was allowed to intervene as a party defendant. The trial court decreed specific performance of the contract as prayed by Beaufort and the three defendants have appealed.
It is agreed that Fischer was having financial difficulties which became critical during the year 1966. Its assets were encumbered by a chattel mortgage in addition to liens for delinquent taxes filed by the Internal Revenue Service. Negotiations for sale culminated in the two contracts now in dispute.
*42 On September 8, 1966, Harry Morris, in the office of an attorney, signed what was entitled an "Earnest Money Receipt," individually, and as the president of Fischer. It recited a sale price of $33,000, payable by an initial payment of $250, payment of which was acknowledged, and the balance of $32,750 within thirty days after the Interstate Commerce Commission and the Missouri Public Service Commission had approved the transfer of the operating rights. Fees and expenses in connection with the transfer were to be divided equally; certain debts were to be liquidated in accordance with a disbursement letter; and, in consideration of the purchase, Fischer and Harry Morris, individually, agreed to "enter into an agreement not to compete with Buyer (Beaufort) as to the operating rights transferred herein containing terms satisfactory to Buyer." The attorney prepared proposed corporate resolutions for adoption by the boards of directors of Beaufort and Fischer, and they were to be returned to the attorney the next day. However, those of Fischer were not returned, and the attorney later received a letter from Harry Morris, dated September 14, returning the $250 down payment and expressing regret "we were unable to get our board of directors to ratify the contract between Fischer Trucking Company and Beaufort Transfer Company."
Philipp, intervenor-defendant, declares in its brief that, "On September 14, 1966, Fischer and Philipp substantially agreed on terms of sale of the same operating rights to Philipp." The agreed sale price was $40,000, but the contract was not formalized until September 20. The validity of this contract has not been challenged, but obviously its effectiveness depends on whether or not Fischer had any carrier rights to sell on September 20. Clearly, it did not if the agreement to sell to Beaufort, dated September 8, was binding on Fischer.
Fischer denies any obligation under the purported contract of sale to Beaufort, because:
(1) The sale, being for substantially all the corporation's assets, was not approved by the board of directors as required by Section 351.400, RSMo 1959, V.A.M.S.
(2) The parties did not intend that there would be a binding agreement until the proposal was approved by the boards of directors of Beaufort and Fischer.
(3) The contract is not susceptible of specific performance for the reasons: (a) The Interstate Commerce Commission and the Public Service Commission, not being parties to this action, need not comply with the decree as entered by the trial court, and (b) The terms of the noncompeting obligation of Harry Morris and Fischer were left, by the contract, to future agreement of the parties.
Philipp, intervenor, adopts the arguments of Fischer and further submits:
(1) Specific performance of the Beaufort-Fischer Contract will cause unreasonable and disproportionate hardship and loss to Philipp, because it has made substantial expenditures for road equipment and docking facilities in reliance on its contract of September 20.
Admittedly, with respect to the Beaufort contract, the specific procedure outlined in Section 351.400, was not followed. It, in part, provides:
"A sale * * * of all, or substantially all, the property and assets * * * of a corporation, if not made in the usual and regular course of its business * * * may be authorized in the following manner:
(1) The board of directors may adopt a resolution recommending such sale * * * and directing the submission thereof to a vote at a meeting of shareholders * * * *43 except that such proposed sale * * need not be adopted by the board of directors and may be directly submitted to any meeting of shareholders;
(2) (Notice of Meeting.)
(3) * * * the shareholders may authorize such sale * * * (by) * * * the affirmative vote of the holders of at least three-fourths of the outstanding shares entitled to vote * * *;
(4) After such authorization * * * the board of directors * * * in its discretion * * * may abandon such sale * * * subject to the rights of third parties under any contracts relating thereto * * *." (Emphasis added in each instance.)
The italicized portions of the statute would compel these conclusions: (1) holders of three-fourths of the shares outstanding may approve such a sale without prior approval of the board of directors, but (2) the board, in its discretion, may abandon the sale "subject to the rights of third parties under any contracts relating thereto." As such a third party, Beaufort contends its contractual rights are not defeated by the absence of a formal approval by the board of directors, since Harry Morris owned one hundred percent of the outstanding shares and had complete control and ownership of the corporation. The argument is not new nor novel. In the early case of Union National Bank v. Shoemaker, 68 Mo.App. 592 (1897), three shareholders, owning all outstanding shares of a corporation, transferred corporate property in disregard of regulatory statutes and the court held: "They were in fact the corporation, and whatever all these shareholders did or consented to must be treated as the act of the corporation." See Land Clearance For Redevelopment Auth. v. Zitko, Mo., 386 S.W.2d 69, 81 [26]. The purpose of Section 351.400 was fully considered by this court in the late case of Still v. Travelers Indemnity Company, Mo., 374 S.W.2d 95, wherein it was concluded that, "The statute on the sale of corporate assets is designed primarily for the protection of stockholders of the corporation." As to the effect of noncompliance with this section, the court determined that no public policy consideration was created, and that a transaction which does not follow the prescribed procedure is not, of necessity, unlawful or void. In reliance on the Still case, this court again declared in Flarsheim v. Twenty Five Thirty Two Broadway Corp., Mo., 432 S.W.2d 245 at 250, that: "There is a considerable number of instances where corporate officers dispose of the corporate assets in good faith but with little or no regard for the methods of sale and dissolution procedures provided by law. However, the general penalty provision of the corporation law, § 351.715, does not make transactions not in compliance with procedures of the corporation law void as against public policy."
Fischer relies primarily on the case of Grafeman Dairy Co. v. Northwestern Bank, 290 Mo. 311, 235 S.W. 435 (and cases therein cited) as well as Josephine Hospital Corporation v. Modoc Realty Co., 307 Mo. 336, 270 S.W. 638. However, we do not consider either controlling, for in each case there were minority stockholders, perhaps nominal, whose interests were being ignored and which the statute in question was designed to protect. A further question of diversion of corporate assets was involved.
The Fischer Board of directors was composed of Harry Morris, his wife, young daughter and a friend. After their testimony that the board met on September 8 to consider the sale to Beaufort, the trial court made this finding: "The Court does not believe any of the defendants' testimony with respect to an alleged meeting of Directors of defendant corporation. * * *" The trial court further found that Harry Morris was sole owner of the corporation, that the Beaufort contract had been approved by one hundred percent of *44 the voting shares of Fischer, and that there was no one within the purview of the statute (Sec. 351.400) with standing to object. With this we agree, if Harry Morris was, in fact, the owner of all outstanding shares of Fischer.
During times of interest here, 300 shares of stock of Fischer were outstanding. One certificate for 150 shares was in the name of "Harry or Olwyn Morris." The latter is the wife of Harry Morris and also corporate secretary of Fischer. Prior to February 7, 1966, another certificate for 150 shares was in the name of Walter Erb. The acquisition of these shares by Harry Morris is reflected in the board minutes of Fischer dated February 7, 1966. They, in part, provide: "* * * Walter Erb in accordance with an agreement between himself and Harry Morris * * * surrendered to Harry Morris 150 shares." The consideration, a note for $5,000, payable to Mr. Erb, was secured by delivery of the certificate to a bank under an escrow agreement. The minutes then continue: "Walter Erb upon receipt of the note resigned as President of the company and as Chairman of the Board relinquishing all prior and/or subsequent rights." The certificate shows transfer of ownership to Mr. Morris by Mr. Erb. We agree with the trial court that Mr. Morris became owner of these shares, with all voting rights, upon transfer and such rights were not returned to Mr. Erb by the security arrangement. In any event, Mr. Erb has asserted no rights as a "dissenting shareholder," and on September 20 he acknowledged satisfaction of the debt and released the escrow bank from any obligation. On this date a new certificate, for the former shares of Mr. Erb, was issued in the name of "Harry or Olwyn Morris." Thus, all outstanding shares were so issued, and the legal significance thereof is the decisive issue presented.
The parties agree as to the law on this issue but disagree as to its proper application to the facts of this particular case. This chose in action, as so designated, created a presumption of ownership by the entirety which could be overcome only by competent evidence which was so unequivocal as to leave no doubt the intent of the parties was otherwise. In Re Estate of O'Neal, Mo., 409 S.W.2d 85; Jenkins v. Meyer, Mo., 380 S.W.2d 315; Longacre v. Knowles, Mo., 333 S.W.2d 67; In Re Baker's Estate, Mo.App., 359 S.W. 2d 238, 243. In seeking to evaluate the evidence to resolve whether or not this "presumption of ownership" was rebutted, we need not detail alleged declarations and activities of Mr. Morris indicating he was the sole owner of Fischer, because much more persuasive is the record evidence reflecting not only his intent but also that of Mrs. Morris. In a letter of August 19, 1966, to Beaufort, by authority of Fischer, the following is of interest: "Any accounts receivable due prior to the date of agreement will naturally be payable to the present owner of Vendor, Mr. Harry Morris." (Emphasis added.) More directly in point is the following excerpt from corporate minutes of Fischer dated February 8, 1966: "Harry Morris, being the holder of all of the voting shares of stock in the company was present." Mrs. Morris prepared these minutes and signed as secretary, as did all members of the board of directors. Mr. Morris further testified the minutes were true and accurate. We find nothing in the record indicating the intent of Mr. Morris and Mrs. Morris was otherwise, but, to the contrary, find all of the evidence to be consistent with the minutes as written. It would be difficult to conceive of more convincing proof of the intent of the parties, and we conclude that the "presumption of ownership" was rebutted by competent evidence.
Fischer further contends the contract is not susceptible to a decree of specific performance for the reasons heretofore listed. Obviously, the contract was written in contemplation of future ICC and PSC approval and resolving of details pertaining to the non-competing agreement. However, the possible effect, if any, such conditions *45 might have had on this issue have become moot. Beaufort, in its brief, declares: "* * * Beaufort does not ask the Court to compel the ICC or the PSC to do anything." In passing, we notice an order of ICC, in the record, approving transfer of the questioned carrier rights to Beaufort, subject to Beaufort prevailing in the instant case.
As to the proposed noncompeting agreement, we find nothing in the record inconsistent with the finding of the trial court that: "* * * no evidence was presented that plaintiff was insisting upon compliance with this sentence of the contract. This portion of the contract was entirely abandoned by the parties and only raised for the first time after trial." Furthermore, the performance required need not be identical with that promised. Restatement of Contracts, Sec. 359(2).
Looking now to the intervenorPhilipp, we consider its argument that unreasonable and disproportionate hardship will be suffered because of its reliance on its contract of purchase on September 20. This contention is based on the submitted principle that, "* * * where a bill is brought for the specific performance of a contract, the after-acquired rights of third parties are equitable considerations to be regarded in adjudicating the questions." Ver Standig v. St. Louis Union Trust Co., 344 Mo. 880, 129 S.W.2d 905, 909. However, it is of interest that in the sentence following the above quote, the court further said: "The contract will not be enforced to the harm of the innocent." See also Landau v. St. Louis Public Service Co., 364 Mo. 1134, 273 S.W.2d 255. No definition of the word "innocent" was given, but common sense demands it be limited to those who act in ignorance of or in reliance on the contract in question, and that those, with knowledge, who act in utter disregard of it are in no position to assert rights under such an equitable principle. Evidence was offered that Philipp did make substantial expenditures to increase its capacity so that it might assume Fischer's obligations. All appear to have been after October 1, 1966, and the knowledge of Philipp on that date becomes relevant. The trial court specifically found that Philipp "* * * did not expend any sums whatsoever * * * prior to its learning of the contract between plaintiff and defendants, even under intervener's own evidence." All of the testimony and exhibits in evidence confirm the correctness of this finding. For this reason, Philipp can not sustain either position of being in "ignorance" of or of having acted in "reliance" on the Beaufort-Fischer contract of September 8, 1966.
The decree and judgment of the trial court is affirmed.
All of the Judges concur.
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2 F.3d 403
International Graffiv.Fine Organics Corp.
NO. 93-7166
United States Court of Appeals,Second Circuit.
July 12, 1993
1
Appeal From: D.Conn.
2
AFFIRMED.
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759 N.W.2d 133 (2008)
Jeanette A. DODD, Petitioner-Appellant,
v.
FLEETGUARD, INC., and Constitution State Services, L.L.C., Respondents-Appellees.
No. 07-1342.
Court of Appeals of Iowa.
August 13, 2008.
*134 Mark S. Soldat of Soldat & Parrish-Sams, P.L.C., West Des Moines, for appellant.
*135 Richard G. Book of Huber, Book, Cortese, Happe & Lanz, P.L.C., West Des Moines, for appellee.
Considered by HUITINK, P.J., and VOGEL and EISENHAUER, JJ.
HUITINK, P.J.
Jeanette Dodd appeals from a decision on judicial review upholding the workers' compensation commissioner's denial of her disability claim.
I. Background Facts and Prior Proceedings
Since 1960 Dodd has held numerous jobs ranging from a dishwasher, to a waitress, elderly care provider, installer, and a painter. In 1994 she began working at Fleetguard, Inc. as an assembler. On April 10, 2001, she went to her family doctor, Dr. Dennis Colby, and complained of swelling in her right shoulder. In the medical record for this examination, Dr. Colby indicated: "No known injury, but this has given her problems and quite severe pain." Dr. Colby referred her to an orthopaedic surgeon.
At some point, Dodd reported the shoulder injury to Fleetguard and said that it was work-related. On April 27, 2001, a representative from Fleeguard's insurance agency interviewed her about the injury. When asked when this injury occurred, Dodd said nothing about a recent incident or injury. Instead, she answered: "It first started in 1995 and I was doing [work at Fleetguard]. And I thought it was just a sore muscle, so I shrugged it off. And as the years got by, it just got worse." She also told the representative that she did not report the 1995 incident and she had never sought treatment until her recent visit to Dr. Colby.
Dodd was eventually diagnosed with a rotator cuff tear. She underwent surgery to repair the shoulder on October 15, 2001. After this surgery, Dodd met with a third doctor to discuss her continuing shoulder pain.
On December 29, 2003, Dodd filed a petition with the Iowa Workers' Compensation Commissioner seeking benefits for a right shoulder injury that occurred "cumulatively and progressively." She claimed the injury manifested on or about April 15, 2001five days after she first visited Dr. Colby for her shoulder pain. On December 14, 2004, she amended her petition by claiming the work injury manifested itself on or about April 10, 2001.
On December 22, 2004, Dodd met with Dr. John Kuhlein for an independent medical examination. When responding to questions propounded directly from Dodd's attorney regarding the cause of these injuries, Dr. Kuhlein stated that he did not believe the shoulder injury was a cumulative injury. Instead, Dr. Kuhlein indicated Dodd's shoulder condition was the result of two specific work-injuries. Dr. Kuhlein stated the first injury occurred in either 1997 or 1998, while the second occurred on April 15, 2001.
The matter proceeded to a hearing before the deputy commissioner. Besides Dodd's testimony, the only evidence addressing causation came from Dr. Kuhlein's medical report. The medical reports from her three treating physicians did not express an opinion on whether the shoulder injury was work-related. During direct examination, Dodd testified that on April 9, 2001, she felt a sharp pain in her shoulder while pulling filters towards her body. Her testimony continued as follows:
Q. Did you report that to anyone? A. Not at that time. I did the next day.
Q. And that was to [Fleetguard's safety director]? A. Yes.
*136 Q. And then she sent you to Dr. Colby? A. Yes.
However, during cross-examination, she set forth a different sequence of events surrounding the time of the injury.
Q. Okay. You say you reported this [injury] to [the safety director] right away? A. Yes.
Q. Is she the one who made the appointment for you to see Dr. Colby? A. No. I think I first saw Dr. Colby on my own, but then [the safety director] intervened and said, "You have to go through"because I wasn't sure what it was.
. . . .
Q. So you believe that you went to Dr. Colby first before reporting it as a work injury? A. I believe so.
Dodd also testified that Dr. Colby must have made a mistake when he wrote in his April 10, 2001 report that her shoulder pain was the result of "[n]o known injury."
On March 31, 2006, the deputy issued an arbitration decision denying Dodd's claim for benefits. The deputy found Dodd had "failed to prove she had sustained a work-related injury to her right shoulder and that her work caused her right shoulder condition." In doing so, the deputy concluded Dodd's testimony concerning the date and cause of her alleged injury was "not especially convincing" or "credible" because it was contradicted by Dr. Colby's medical report. The deputy also noted that the only physician who correlated the shoulder injury with work activity at FleetguardDr. Kuhleinbased his opinion on Dodd's "less than credible" statements. The deputy also questioned the credibility of Dr. Kuhlein's report because it indicated the alleged work injury occurred on April 15, 2001five days after she first sought treatment for her shoulder pain.
Dodd appealed this decision to the commissioner. In a brief ruling, the commissioner adopted the deputy's decision as his own. On judicial review, the district court affirmed the commissioner's decision and taxed the costs of the action against Dodd.
Dodd now appeals, claiming: (1) the commissioner's decision was erroneous because it did not include separate sections setting forth the findings of fact and conclusions of law, (2) the commissioner's decision was not supported by cited authority or reasoned opinion, (3) Fleetguard should have been precluded from disputing whether the injury arose out of and in the course of employment because it had waived this issue in the prehearing report, (4) the trial court erred by affirming the commissioner's findings and conclusions that Dodd was not credible and that her injury did not arise out of and in the course of her employment with Fleetguard, (5) the commissioner should have ordered Fleetguard to reimburse her for the medical examination she obtained from Dr. Kuhlein, and (6) the trial court erred by taxing judicial review costs against Dodd and by not remanding to the commissioner for re-taxation of agency costs.
II. Standard of Review
The Iowa Administrative Procedure Act, Iowa Code chapter 17A, governs our review of this agency action. See Pirelli-Armstrong Tire Co. v. Reynolds, 562 N.W.2d 433, 436 (Iowa 1997). Iowa Code section 17A.19 (2007) lists the instances when a court may, on judicial review, reverse, modify, or grant other appropriate relief from agency action. We apply the standards of section 17A.19(10) to the agency's actions to determine whether our legal conclusions are the same as those reached by the district court. See Ewing v. Allied Constr. Servs., 592 N.W.2d 689, 691 (Iowa 1999). If our conclusions are *137 the same, we affirm; if they are not, we reverse. Id. When reviewing the taxation of costs, our review is for abuse of discretion. Robbennolt v. Snap-On Tools Corp., 555 N.W.2d 229, 238 (Iowa 1996).
III. Merits
Improper Format. Before analyzing the merits of the commissioner's decision, we first reject Dodd's claim that the commissioner's decision was erroneous because it did not include separate sections distinguishing the findings of fact from the conclusions of law. See Iowa Code § 17A.16(1) ("A proposed or final decision shall include findings of fact and conclusions of law, separately stated." (emphasis added)). Even though the arbitration decision only has one heading for "FINDINGS OF FACT AND CONCLUSIONS OF LAW," we are able to clearly discern the line between the findings of fact, which end on one page, and the conclusions of law, which begin on the very next page. We find no error here.
Waiver. We also reject Dodd's claim that the issue of whether the injury arose out of her employment was waived when Fleetguard did not specifically identify this as a disputed issue on the prehearing conference report. Significant events happened after the prehearing conference report was filed. Dodd amended her petition to change the date of injury and also procured Dr. Kuhlein's medical report. Also, at the time of the hearing, the parties presented the deputy commissioner with a hearing report indicating that this issue was in dispute. The deputy then reviewed the hearing report with counsel and specifically noted that this issue was in dispute.
We will not reverse the commissioner on this issue because Dodd's attorney agreed the issue was in dispute and did not object when the deputy indicated she would be deciding this issue.
Credibility and Adequacy of Decision. The thrust of Dodd's appeal attacks the commissioner's credibility findings and argues that the arbitration decision is not supported with cited authority or reasoned opinion. In essence, Dodd argues why we should conclude her testimony was credible.
In judicial review proceedings, we do not weigh the evidence de novo. See New Homestead v. Iowa Dep't of Job Serv., 322 N.W.2d 269, 271 (Iowa 1982). It is the commissioner's duty as the trier of fact to determine the credibility of witnesses. See Arndt v. City of LeClaire, 728 N.W.2d, 389, 394-95 (Iowa 2007). We give deference to the commissioner's credibility findings, Clark v. Iowa Dep't of Revenue & Fin., 644 N.W.2d 310, 315 (Iowa 2002), and we will affirm if there is substantial evidence in the record to support these findings. See Wal-Mart Stores, Inc. v. Caselman, 657 N.W.2d 493, 500 (Iowa 2003); see also Iowa Code § 17A.19(10)(f)(3) (noting the adequacy of the evidence must be judged in light of "determinations of veracity by the presiding officer who personally observed the demeanor of the witnesses").
Evidence is substantial for purposes of reviewing an administrative decision when a reasonable person could accept it as adequate to reach the same finding. Asmus v. Waterloo Cmty. Sch. Dist., 722 N.W.2d 653, 657 (Iowa 2006). The fact that two inconsistent conclusions may be drawn from the same evidence does not prevent the agency's findings from being supported by substantial evidence. Id.
Based on our review of the record, we find there was substantial evidence to support the commissioner's credibility findings. When Dodd originally filed her *138 petition with the workers' compensation commissioner, she claimed her injury occurred "cumulatively and progressively" and manifested on or about April 15, 2001. After she filed this petition, Dodd procured her own doctor to perform an independent medical examination. This doctor rejected her theory that her right shoulder injury occurred cumulatively and progressively. Instead, he opined that her right shoulder cuff tear was the result of two specific injuries. At the hearing, Dodd claimed she injured her shoulder at work on a specific dateApril 9, 2001when she pulled some filters towards her and "felt this tear" in her shoulder. However, the medical notes from the doctor who examined her shoulder on April 10, 2001, state there was no known injury. The notes do not indicate she injured her shoulder at work and do not indicate she felt a "tear" in her shoulder. Likewise, when she was interviewed by Fleetguard's insurance representative on April 27, 2001, she did not mention the alleged April 9 work injury. Instead, she stated her shoulder pain started in 1995 while she was working at Fleetguard and "as the years got by, it just got worse." When this is combined with her wavering testimony concerning (1) whether Fleetguard sent her to see Dr. Colby and (2) when she first told Fleetguard about the injury, we find there is substantial evidence to support the commissioner's credibility findings.
We also find the deputy's reasons for discounting Dr. Kuhlein's causation opinion are equally sound. First, Dr. Kuhlein's opinion was "based on the history presented by Ms. Dodd," which the deputy found to be not credible. Second, Dr. Kuhlein's medical report identifies the date of injury as April 15, 2001,[1] even though Dodd first complained of her shoulder injury to Dr. Colby on April 10, 2001. The agency, as the fact finder, determines the weight to be given to any expert testimony. Sherman v. Pella Corp., 576 N.W.2d 312, 321 (Iowa 1998). Such weight depends on the accuracy of the facts relied upon by the expert and other surrounding circumstances. Id. Because the information relied upon by Dr. Kuhlein was deemed to be not credible, we find the commissioner had ample reason to reject his conclusion that the rotator cuff tear was caused by a specific work injury.
Dodd also claims the commissioner's conclusion constitutes reversible error as a violation of Iowa Code section 17A.16(1) because the commissioner did not support his conclusion with cited authority or a reasoned opinion and this "places both the court and Dodd in a position of not even knowing whether the correct causation standard was applied."
Iowa Code section 17A.16(1) states that each conclusion of law in an agency decision "shall be supported by cited authority or by a reasoned opinion." While interpreting this statute, our supreme court has noted
This court has long held that the commissioner must "state the evidence relied upon and [ ] detail reasons for his conclusions." Moreover, the commissioner's decision must be "sufficiently detailed to show the path he has taken *139 through conflicting evidence." We have refrained, however, from reading "unnecessary and burdensome" requirements into the statute. Thus we have held the commissioner need not discuss every evidentiary fact and the basis for its acceptance or rejection so long as the commissioner's analytical process can be followed on appeal. So also have we held the commissioner's duty to furnish a reasoned opinion satisfied if "it is possible to work backward ... and to deduce what must have been [the agency's] legal conclusions and [its] findings of fact."
Bridgestone/Firestone v. Accordino, 561 N.W.2d 60, 62 (Iowa 1997) (internal citations omitted).
We find no error in the commissioner's analytical process. The commissioner rejected Dodd's claims because he found there was no credible evidence to prove there was a cumulative or specific injury. In doing so, the commissioner first determined Dodd's testimony describing how she had injured herself at work was not credible. He then noted there was no medical evidence to support Dodd's claim that the rotator cuff tear was the result of a cumulative injury. Finally, he determined Dr. Kuhlein's opinion relating the injury to two specific instances at work was worth little weight. The commissioner listed the reasons why he determined Dodd's testimony was not credible and listed reasons why he gave no weight to the opinion of the one doctor who supported her theory of causation. The commissioner's legal conclusions were apparent. We find no error here. See Arndt, 728 N.W.2d at 395 ("The reviewing court only determines whether substantial evidence supports a finding `according to those witnesses whom the [commissioner] believed.'") (quoting Tim O'Neill Chevrolet, Inc. v. Forristall, 551 N.W.2d 611, 614 (Iowa 1996)).
For these same reasons, we also find no merit to Dodd's claims that the commissioner's decision was necessarily the product of reasoning that was so illogical as to render it wholly irrational and otherwise unreasonable, arbitrary, or capricious. See Iowa Code § 17A.19(10)(i), (l), (n). Dodd did not present credible evidence to prove her shoulder injury arose out of and in the course of her employment with Fleetguard. Without credible evidence to support her claim, she obviously failed to meet her burden of proof. We find no error in the commissioner's reasoning. Therefore we, like the district court, affirm that part of the commissioner's decision which finds Dodd is not entitled to workers' compensation benefits.
Section 85.39 Fees. Iowa Code section 85.39 requires an employer to reimburse an employee for the costs of an independent medical examination (IME) when "an evaluation of permanent disability has been made by a physician retained by the employer and the employee believes this evaluation to be too low." Dodd's request for reimbursement of $1212.63 for a portion of the cost of Dr. Kuhlein's independent medical examination was denied, without analysis, by the commissioner. Likewise, the district court summarily denied this request for reimbursement as "moot."
Fleetguard does not dispute that, under the plain language section 85.39, all of the explicit requirements for reimbursement were satisfied. However, it contends it should not be required to pay for the IME because "chapter 85 is limited to injuries arising out of and in the course of employment" and "it would not be a logical construction of section 85.39 to require the employer to pay for a permanent impairment evaluation ... where the injury did *140 not arise out of and in the course of employment...."
We disagree. Unlike section 85.27, section 85.39 does not state the employer's liability for medical expenses is dependent on the claimant's proof of compensability. See, e.g., Iowa Code § 85.27 ("The employer, for all injuries compensable under this chapter or chapter 85A, shall furnish [medical services]."). Also, in a 2001 decision interpreting section 85.39 our supreme court did not identify any such implied requirement for reimbursement. See IBP, Inc. v. Harker, 633 N.W.2d 322 (Iowa 2001). Instead, while explaining the purpose behind section 85.39, the court emphasized the unequal financial position of the parties:
Under the Iowa statute, the employer is given the right to choose who will provide treatment for an employee's injury. In addition, the employer is allowed to subject the employee to reasonable medical examinations by other physicians, presumably of the employer's choosing. The quid pro quo for these employer rights is the right of the employee to have a physician of his choosing present at any IME conducted at the employer's request and to have an IME conducted by a doctor of his own choice if the physician retained by the employer has given a disability rating unacceptable to the employee. In an apparent attempt to equalize the generally unequal financial positions of the parties, the legislature has said that the employer must pay for the employee's IME under the latter circumstances.
Id. at 327 (internal citations omitted).
In light of this stated purpose, the plain text of the statute, and the fact that we "liberally construe workers' compensation statutes in favor of the worker," Ewing, 592 N.W.2d at 691, we conclude section 85.39 does not include an implied requirement that the claimant ultimately prove the injury arose out of and in the course of employment. Because Dodd met all of the requirements under section 85.39, we reverse that portion of the district court decision which affirms the commissioner's conclusion that Dodd was not entitled to reimbursement of $1212.63 for the IME.
IV. Conclusion
We have considered all issues raised on appeal, whether or not specifically addressed in this opinion. We remand this matter to the agency for further proceedings consistent with this decision. Costs in the district court and on appeal are assessed equally between the parties.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
NOTES
[1] Dodd contends the April 15 date is merely a typographical error and that the report actually implies the injury occurred on or about April 10. In his report, Dr. Kuhlein states on two occasionsonce on the cover page of the report and once in direct response to a question propounded by Dodd's attorneythat the April 2001 injury occurred on April 15. In light of the fact that Dodd originally claimed the injury manifested on April 15, 2001, we are unwilling to conclude that this was a typographical error. It may have been an accurate reflection of the information provided by Dodd.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-6722
QUINTIN M. LITTLEJOHN,
Plaintiff - Appellant,
v.
UNITED STATES OF AMERICA, with all agents in active concert
both individually and in their official capacity,
Defendant - Appellee.
Appeal from the United States District Court for the District of
South Carolina, at Greenville. J. Michelle Childs, District
Judge. (6:13-cv-00369-JMC)
Submitted: August 29, 2013 Decided: September 4, 2013
Before DUNCAN, AGEE, and KEENAN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Quintin Littlejohn, Appellant Pro Se.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Quintin Littlejohn appeals the district court’s order
denying relief on his civil complaint. The district court
referred this case to a magistrate judge pursuant to 28 U.S.C.A.
§ 636(b)(1)(B) (West 2006 & Supp. 2013). The magistrate judge
recommended that relief be denied and advised Littlejohn that
failure to file specific, timely objections to this
recommendation could waive appellate review of a district court
order based upon the recommendation.
The timely filing of specific objections to a
magistrate judge’s recommendation is necessary to preserve
appellate review of the substance of that recommendation when
the parties have been warned of the consequences of
noncompliance. Wright v. Collins, 766 F.2d 841, 845-46 (4th
Cir. 1985); see also Thomas v. Arn, 474 U.S. 140 (1985).
Littlejohn has waived appellate review by failing to file
specific objections after receiving proper notice. Accordingly,
we affirm the judgment of the district court.
We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials
before this court and argument would not aid the decisional
process.
AFFIRMED
2
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83 F.Supp.2d 1102 (2000)
David Michael SCHWARTZ, Plaintiff,
v.
CITY OF PHOENIX, a municipal corporation, Stefani McMichael, Michael Sechez, Stuart Sterling, David Lundberg, Defendants.
No. CIV96-1727-PHX-ROS.
United States District Court, D. Arizona.
January 7, 2000.
*1103 Edward Stanley Coleman, Edward S Coleman PLC, Las Vegas, NV, Timothy H Barnes, Barnes & Lassiter PC, Mesa, AZ, for David Michael Schwartz, plaintiff.
David Michael Schwartz, Las Vegas, NV, pro se.
William R Jones, Jr, Jones Skelton & Hochuli PLC, Phoenix, AZ, for Phoenix, City of, Steffani McMichael, Michael Sechez, Stuart Sterling, David Lundberg, defendants.
ORDER
SILVER, District Judge.
On July 24, 1996, Plaintiff filed a Complaint alleging that Defendants, the City of Phoenix and four of its police officers, violated his constitutional rights when they obtained and executed two search warrants, seized property belonging to Plaintiff, and failed to return the property to Plaintiff. By Order of March 31, 1999, as amended by Order of April 8, 1999, the Court granted Defendants' Motion for Summary Judgment in part. The Motion was granted in favor of Defendant City of Phoenix on all of Plaintiff's federal claims (the First, Fourth, and Fifth Amendment claims), and in favor of the individual Defendants on the claims of taking in violation of the Fifth Amendment and retaliation in violation of the First Amendment.
The text of the Order indicated that the Court would grant the individual Defendants' request for summary judgment on the Fourth Amendment claim in part and deny it in part, and indicated that an opinion setting forth the Court's findings of fact and conclusions of law with respect to the Fourth Amendment claim would be forthcoming. On the order line, instead of explaining which portion of the request for summary judgment on the Fourth Amendment claim was granted and which was denied, the Court denied the individual Defendants' Motion for Summary Judgment on the Fourth Amendment claim, as well as denying summary judgment on the supplemental state claims of negligence and conversion. In the first portion of the current Order, the Court sets forth its findings of fact and conclusions of law regarding the Fourth Amendment claim, grants the claim in part, and denies it in part. In the second portion of the Order, *1104 the Court addresses the issue of the deadline for discovery.
I. Fourth Amendment Claim of Unreasonable Seizure
By Order entered in January 1998 denying Defendants' initial summary judgment motion, the Court clarified its prior December 1996 Order, explaining that "Plaintiff's Fourth Amendment claim alleging the unlawful seizure of his property is still pending." (Order at 21, Dkt. # 60). However, some confusion apparently remained about the factual basis of Plaintiff's illegal seizure claim. In their second motion for summary judgment, Defendants focus their arguments regarding this claim on three issues: whether probable cause existed to issue the warrants, whether the warrants described the items to be seized with sufficient particularity, and whether the items seized fell within the scope of the warrants. (Defendants' Second Mot. for Summ.J. at 6-8, dkt. # 79).
In his response, Plaintiff does not address the issue of probable cause. With respect to the allegedly illegal August 1994 search and seizure at 1040 East Indian School Road, Plaintiff argues only that some of the property seized was beyond the scope of the warrant. With respect to the allegedly illegal September 1994 search of the storage locker, Plaintiff argues both that the warrant was facially overbroad and that some of the property seized was beyond the scope of the warrant. Defendants addressed Plaintiff's arguments in their reply. Therefore, the Court will base its analysis upon the Fourth Amendment claims as stated by Plaintiff.
A. Whether Claims are Barred by Heck v. Humphrey
Plaintiff cannot maintain a section 1983 action to recover damages for "harm caused by actions whose unlawfulness would render [his] conviction or sentence invalid" because the conviction and sentence have not been reversed, expunged, declared invalid by a state tribunal, or called into question upon issuance of a writ of habeas corpus by a federal court. See Heck v. Humphrey, 512 U.S. 477, 486-87, 114 S.Ct. 2364, 129 L.Ed.2d 383 (1994). Plaintiff can seek damages for an allegedly unreasonable search and seizure that did not produce evidence introduced at his criminal trial.[1]See id. at 487 n. 7, 114 S.Ct. 2364. Moreover, due to the existence of doctrines including independent source, inevitable discovery, and harmless error, a successful challenge by Plaintiff to the legality of a search and seizure that did produce evidence admitted at his criminal trial "`would not necessarily imply that the plaintiff's conviction was unlawful.'"[2]Trimble v. City of Santa *1105 Rosa, 49 F.3d 583, 585 (9th Cir.1995) (quoting Heck, 512 U.S. at 487 n. 7, 114 S.Ct. 2364). However, Plaintiff must establish that he has sustained actual, compensable injury other than the injury of conviction and imprisonment. Heck, 512 U.S. at 487, 114 S.Ct. 2364.
In his verified Complaint,[3] Plaintiff declares that none of the property seized during the allegedly illegal August 2, 1994 search and seizure at 1040 East Indian School Road was introduced in evidence at his subsequent trials. (See Compl. at ¶ 29). Defendants do not dispute Plaintiff's declaration. Because no evidence from this search was used against Plaintiff, the instant action for damages resulting from the allegedly illegal search of the Indian School Road property would not render his conviction invalid. See Heck, 512 U.S. at 487 n. 7, 114 S.Ct. 2364. Accordingly, Heck does not bar the section *1106 1983 claims pertaining to the search of the Indian School Road property.
Plaintiff further declares that the police seized many items during the allegedly illegal September 16, 1994 search of the storage locker, but only one set of items, dildos, were subsequently introduced as evidence via photograph in his felony criminal trial. (See Compl. at ¶ 29). Plaintiff claims that this seizure was illegal on two bases. First, he claims, the seizure was the product of a facially overbroad warrant. This claim, if proven, would likely mean that the dildos should have been suppressed as the product of an illegal search. See United States v. Spilotro, 800 F.2d 959, 964, 968 (9th Cir.1986); United States v. Cardwell, 680 F.2d 75, 78-79 (9th Cir.1982). Thus, this claim raises the question of whether the Heck bar applies.
In his response, Plaintiff attempts to avoid application of Heck by arguing that the dildos admitted into evidence via a photograph were irrelevant to his criminal convictions. Plaintiff was convicted of four misdemeanor charges as well as felony charges for enticement, operating a house of prostitution, and conducting an illegal enterprise. (Schwartz Dep. at pp. 5, 19, Exh. D. to Defs.' Stmt. of Facts in support of First Mot. for Summ.J. (DSOF1), dkt. # 39). Plaintiff argues that the other evidence admitted at his trial provided sufficient grounds for his convictions, including testimony of two former employees, tape recordings of conversations between Plaintiff and undercover police officer McMichael, videos taped at Plaintiff's business by undercover police officers Sterling and Sechez, and the testimony of these three undercover police officers.[4] (Pl.'s Resp. at 9). In his Complaint, Plaintiff alleges that the video taped by Sterling shows a nude "model masturbati[ing] herself with a `dildo'", and the video taped by Sechez shows "one ... [nude wom[e]n] us[ing] a dildo on the other." (Compl. at ¶¶ 15, 18). Due to the independent evidence, particularly the videos and the officers' testimony, the dildos admitted into evidence were not necessary to Plaintiff's conviction. Thus the bar of Heck does not apply to Plaintiff's claim of illegal seizure due to a facially overbroad warrant. See Heck, 512 U.S. at 486-87, 114 S.Ct. 2364.
Plaintiff also argues that the seizure of items from the storage locker was illegal because, even if the warrant was not overbroad, the police officers executing the warrant exceeded its scope by seizing items outside the warrant's terms. Plaintiff does not claim that seizure of the dildos, the only evidence from the storage area that was admitted at trial, exceeded the scope of the warrant. Because this claim pertains only to seized property that was not utilized at trial, the bar of Heck does not apply to the claim of illegal seizure exceeding the scope of the warrant.
In sum, Heck does not bar Plaintiff's § 1983 Fourth Amendment claims alleging illegal searches of both the Indian School Road property and the storage locker.
B. Whether Genuine Issues of Fact Remain Regarding the Legality of the Searches and Seizures
Plaintiff challenges the search and seizure of items at the Indian School Road property on the ground that certain items seized were not within the scope of the search warrant. The warrant authorized seizure of the following:
1. Any and all alcoholic beverages stored at this location for sale.
2. Any and all currency which by its storage appears to be related to the alcohol that is being sold.
3. Any and all bills or paperwork [t]hat tend to show ownership, occupancy of the listed premises.
4. Any and all receipts for the purchase of alcoholic beverages.
*1107 5. Any and all adult movies or equipment used to facilitate the showing of these adult movies.
(Search Warrant attached as part of Exh. 1 to Notice of Filing Executed Warrants, Dkt. # 94). The warrant further stated that the listed items would constitute evidence tending to show that Schwartz had committed the offenses of selling alcohol without a state liquor license and violating zoning ordinances governing the running of an "adult", i.e., pornographic, theater. (Id.)
Plaintiff argues that the warrant authorized seizure of only the "adult" video tapes totaling in the range of twenty to thirty of the approximately 130 video tapes seized. He adds that many of the tapes were clearly marked "Barney," "Sesame Street," etc. Plaintiff's argument fails because the police officers conducting the search were not required to rely on the label on the video tape to determine its content or to view every video tape in entirety on the premises before seizing it. The video tapes fall within the scope of the warrant provision authorizing seizure of adult movies.
Plaintiff further argues that the warrant provision authorizing seizure of "equipment used to facilitate the showing of these adult movies" did not encompass seizure of the three camcorders, electronic equipment used to make movies rather than to show them. Defendants respond that the affidavit upon which the warrant is based establishes that patrons of Plaintiffs' business were allowed to record films that could be classified as "adult" and thus the seizure was within the scope of the warrant as construed by reference to the affidavit. An affidavit may supply the particularity required of a search warrant if the affidavit accompanies the warrant and is expressly incorporated therein. United States v. McGrew, 122 F.3d 847, 849 (9th Cir.1997). Plaintiff does not challenge Defendants' reliance on the affidavit; rather, he argues that, even when construed in conjunction with the affidavit, the warrant does not authorize seizure of the camcorders.
The affidavit states that two undercover officers paid for "nude photo shoot[s]" of women employed by Plaintiff. The term "photo shoot" suggests photography but is broad enough to encompass video recording. Taken together with the information in the affidavit, the warrant phrase "equipment used to facilitate the showing of these adult movies" is broad enough to encompass the camcorders because equipment that may have been used to make adult movies helps "facilitate the showing of these ... movies." Seizure of the camcorders was proper.
Plaintiff also argues that the warrant language authorizing seizure of adult movies did not authorize the seizure of two other items listed on the report: "photos [of] nude woman `Bobbi'" and "stack of photos of women." Defendants respond that the adult theater zoning code ordinance set forth in the affidavit prohibits projecting on a screen for exhibition photos depicting women engaged in sexual activities or depicting "specified anatomical areas" of women. Defendants also note, as a general matter, that, during the course of a legal search, officers may seize items in plain view other than those listed in the warrant if the incriminatory nature of the items is immediately apparent to the officers. United States v. Hudson, 100 F.3d 1409, 1420 (9th Cir.1996), cert. denied, 522 U.S. 939, 118 S.Ct. 353, 139 L.Ed.2d 274 (1997). In a search for "adult movies or equipment used to facilitate the showing of these adult movies," the photograph of a nude woman is incriminatory in nature because it is additional evidence of the availability of pornographic material for exhibition in violation of the adult theater zoning code. However, a genuine issue of material fact exists with respect to the "stack of photos of women" because the record does not contain information about the content of these photographs and thus the Court cannot determine whether the photos were of an "incriminatory *1108 nature ... immediately apparent" for purposes of the plain view exception to the warrant requirement. Id.
Plaintiff proceeds to challenge the search and seizure of items at the storage locker on the ground that the warrant was facially overbroad. The warrant authorized seizure of the following:
1. Any paperwork consisting of bills, applications, diaries of business transactions which tend to show the conducting of an illegal enterprise.
2. Any video tapes which may contain sexual conduct between female employees and customers of David Schwartz.
(Search Warrant attached as part of Exh. 2 to Notice of Filing Executed Warrants, Dkt. # 94). The warrant further states that the listed items would constitute evidence of the offense of "[t]he illegal control of an enterprise."
Once again, Defendants rely on the affidavit on which the warrant is based to supply the particularity missing from the face of the warrant and Plaintiff does not challenge Defendants' ability to do so. The affidavit provides, in relevant part:
Your affiant made contact with the resident of [1040 East Indian School Road] in an undercover capacity and found that the business was a house of prostitution. During the daytime hours customers were coming into the location and paying to video tape females who worked there and prostitution was taking place during the taping. The resident and person managing the business was found to be David Schwartz, as described, and working there with him was Lisa Hartley, as described. Undercover detectives went into the location and video taped female employees of David Schwartz and an act of prostitution was completed.
Witnesses advised through interviews that David Schwartz video taped and kept the tapes of several incidents where prostitution was performed.... [A] self proclaimed partner in the illegal enterprise ... advised that she was informed by Lisa Hartley and a friend of hers "John" that they had moved ... property from 1040 E. Indian School Road to a storage locker. The storage locker was found to be located at 5728 N. 67th Avenue.... The evidence was to be boxes that contained ... paperwork which would include bills, applications, and diaries of business transactions. There was also to be boxes containing video tapes which could contain sexual conduct between female employees and customers o[f] David Schwartz.
[After Schwartz attempted to retrieve property from the locker rented to Hartley], [t]he managers of the storage unit requested that your affiant advise Schwartz that he was not allowed to remove property from the unit without the presence of Lisa Hartley. While doing this David Schwartz stated to me that some of the property in the rented unit by Lisa Hartley was his property from his business at 1040 E. Indian School Rd.
(Aff. attached as part of Exh. 2 to Notice of Filing Executed Warrants, Dkt. # 94). This affidavit clearly establishes the nature of the "illegal enterprise" referenced in the warrant a house of prostitution. Construed with the affidavit, the warrant is not facially overbroad because it authorizes seizure of a variety of records tending to show operation of a house of prostitution.
Plaintiff also argues that the officers executing this second warrant seized many items outside the warrant's scope. Plaintiff lists these items in his Response to Defendants' Motion for Summary Judgment at pages 8 and 9. The warrant provision authorizing seizure of "video tapes which may contain sexual conduct between female employees and customers of David Schwartz" encompasses item 67, "[b]ox containing numerous video tapes" and item 79, "8 mm video tapes." As stated above, the officers did not need to examine the content of the video tapes before seizing them the fact that the items are tapes, along with the affidavit linking Schwartz to these tapes, is sufficient.
*1109 Most of the other seized items that, according to Plaintiff, fall outside the scope of the warrant are photographs, and many of them contain images of nude or partially nude women, men, or girls. Photographs depicting nudity, partial nudity, or genitalia are listed as item numbers 9, 26, 29, 33, 37, 39, and 58. Those items described merely as photographs, usually of women, or albums containing such photographs are numbers 2, 20, 23, 38, 39,[5] 47, 66, and 69. Other items listed are materials used to make or store photographs, including photo albums, a camera, and negatives, listed as item numbers 3, 12, 39, 41, 48, 59, and 66. The list also includes sexually-oriented magazines and newspapers and a "[s]exual [p]osition [h]andbook," specifically item numbers 8, 38, and 60. The final item Plaintiff challenges is simply described as "[t]hree posters."
As Defendant argues, the photographs depicting nudity, partial nudity, or genitalia, as well as item number 23, "[m]iscellaneous photos and model's personal information," were properly seized pursuant to the plain-view exception as incriminatory evidence that Schwartz was running a house of prostitution. See Hudson, 100 F.3d at 1420. The incriminatory nature is particularly clear given the information in the affidavit indicating that Schwartz allowed customers to video tape photography is merely another means of recording visual images. Based on this information, the officers also appropriately seized the photography materials albums, film, a camera, and negatives. The sexually-oriented magazines, newspapers, and handbook likewise constitute incriminatory information within plain view.
However, a genuine issue of material fact exists with respect to whether the police officers had the authority to seize the other photographs pursuant to the plain-view exception. As stated above in the analysis of the "stack of photos of women" seized at the Indian School Road address, the record does not provide additional information about the content of these photographs and thus the Court cannot determine whether the photos were of an "incriminatory nature ... immediately apparent." Id. The same is true of the three posters seized.
The Defendant police officers argue that, to the extent genuine issues of material fact remain regarding the Fourth Amendment claim, they are entitled to qualified immunity for seizing the listed items. The officers are entitled to qualified immunity if a reasonable officer could have believed the conduct at issue was lawful under clearly established law. Newell v. Sauser, 79 F.3d 115, 117 (9th Cir.1996). Long-established and clear rules of criminal procedure allow officers to seize evidence only pursuant to a lawful warrant or one of the valid warrant exceptions, including the exception for incriminating items within plain view. See Horton v. California, 496 U.S. 128, 133 & n. 6, 135, 110 S.Ct. 2301, 110 L.Ed.2d 112 (1990) (quoting Mincey v. Arizona, 437 U.S. 385, 390, 98 S.Ct. 2408, 57 L.Ed.2d 290 (1978)). Whether the officers reasonably could have believed that it was lawful to seize the remaining items, largely photographs, requires greater information about the content of those items. Thus, a genuine issue of material fact exists regarding the officers' entitlement to qualified immunity. Summary judgment on qualified immunity grounds will be denied.
II. Discovery Deadline
At a status hearing on June 22, 1999, the court ordered the parties to file by July 9, 1999 a stipulated proposed order regarding a discovery deadline. On August 16, 1999, Defendants filed a "Notice of Inability to File Discovery Stipulation." The Notice informed the Court that the parties had agreed to depose several people, including Plaintiff, on July 7 and 8, 1999. *1110 However, the parties were unable to reach any further agreements regarding discovery.
In response to the "Notice of Inability to File Discovery Stipulation," the Court set a second status hearing for October 18, 1999 and instructed the parties to file by October 14, 1999 a joint brief of their positions regarding completion of discovery. On October 14, Plaintiff filed a Motion to Amend the Complaint to Name an Additional Party. This motion is currently pending before the Magistrate Judge. The parties' joint status report filed October 15, 1999 indicates that the potential new defendant already has been deposed and plaintiff anticipates that only requests for admission will be served upon him. The report adds that Plaintiff will be serving requests for admissions upon all defendants and anticipates needing an additional two months to complete discovery. The report further states that Defendants "object to any additional discovery at this point because [the] discovery deadline previously agreed to by the parties has passed." At the second status hearing on October 18, the Court indicated that it would set relevant deadlines.
A review of the record indicates that both parties continued to engage in discovery after expiration of the latest discovery deadline. In the Orders docketed on the dates shown in the table below, the discovery deadline and other deadlines were established and then extended:
Deadlines
Date of order in which deadline was set
Matter to Which 2/3/97 5/22/97 9/22/97 3/25/98
Deadline Applies
Discovery 5/26/97 8/22/97 9/26/97 none
Dispositive Motions 5/12/97 9/19/97 10/10/97 5/29/98
Pretrial Order 9/1/97 1/23/98 1/23/98 6/30/98 or 60 days after
ruling on dispositive
motions.
The extension granted on March 25, 1998 was in response to Defendants' Motion to extend time for filing both dispositive motions and the joint pretrial statement. As the table indicates, Magistrate Judge Silver, to whom the case was assigned for resolution of nondispositive motions, did not extend the discovery deadline at that time. Thereafter, however, Plaintiff filed a Motion for Issuance of a Discovery Scheduling Order. By Order docketed June 23, Judge Silver granted the Motion and allowed Plaintiff to serve 10 interrogatories on each Defendant by June 26, 1998. Plaintiff filed a Notice of Service of Discovery of Interrogatories on each of the five Defendants on July 1, 1998. The record indicates that, with the exception of these interrogatories, the discovery deadline expired on September 26, 1997.
Thereafter, the parties continued to engage in discovery despite the passage of the discovery deadline and their failure to request additional extensions. Defendants were the first and most frequent offenders. On October 19, 1998, Defendants filed a notice of serving Plaintiff with their first set of non-uniform interrogatories. On May 13, 1999, Defendants filed a notice of serving Plaintiff with their first request for production of documents. Thereafter, the depositions referenced in the joint status report, conducted by both parties, occurred in July, 1999. Finally, Defendants filed a notice of serving Plaintiff with another request for production of documents on July 19, 1999.
Given Defendants' repeated discovery requests after the expiration of the deadline, the Court concludes that neither of *1111 the parties will be prejudiced by extension of the discovery deadline for approximately six weeks to Monday, February 28, 2000. The parties are instructed to limit their discovery requests, seeking only information that could lead to relevant evidence regarding the remaining claims, a portion of the original Fourth Amendment claim plus the supplemental state claims of negligence and conversion. Following the Magistrate Judge's ruling on the Motion to Amend, and his determination of whether additional deadlines are necessary for discovery and dispositive motions, the Court will set deadlines for submission of the proposed final pretrial order and for the final pretrial conference.
Accordingly,
IT IS ORDERED vacating the portion of the prior Order dated March 31, 1999 that denied Defendants' Motion for Summary Judgment on the Fourth Amendment claim.
IT IS FURTHER ORDERED granting Defendants' Motion for Summary Judgment on the Fourth Amendment claim in part and denying it in part. Summary judgment is denied with respect to the issue of whether the Defendants violated the Fourth Amendment by seizing from the property located on Indian School Road the item described in the inventory as: "stack of photos of women" and by seizing from the storage locker those items described in the inventory merely as photographs, usually of women, or albums containing such photographs, numbered in the inventory as follows: 2, 20, 38, 39, 47, 66, and 69, as well as the items described as "three posters". Summary judgment is granted to Defendants with respect to the issue of whether Defendants violated the Fourth Amendment by seizing all of the other items.
IT IS FURTHER ORDERED extending the discovery deadline to Monday, February 28, 2000.
IT IS FURTHER ORDERED that the parties are to inform the court whether or not they request this Court to appoint a judge to conduct a settlement conference. The parties shall inform the Court by filing notice no later than Friday, March 10, 2000.
NOTES
[1] The relevant text of Heck followed by the footnote reads:
But if the district court determines that the plaintiff's action, even if successful, will not demonstrate the invalidity of any outstanding criminal judgment against the plaintiff, the action should be allowed to proceed ...
7. For example, a suit for damages attributable to an allegedly unreasonable search may lie even if the challenged search produced evidence that was introduced in a state criminal trial resulting in the § 1983 plaintiff's still-outstanding conviction. Because of doctrines like independent source and inevitable discovery ... and especially harmless error ... such a § 1983 action, even if successful, would not necessarily imply that the plaintiff's conviction was unlawful. In order to recover compensatory damages, however, the § 1983 plaintiff must prove not only that the search was unlawful, but that it caused him actual, compensable injury ... which, we hold today, does not encompass the "injury" of being convicted and imprisoned (until his conviction has been overturned).
512 U.S. at 487 & n. 7, 114 S.Ct. 2364 (citations omitted).
[2] The Ninth Circuit has not yet had an opportunity to fully interpret footnote seven, but other circuit courts have divergent interpretations of the footnote's meaning. In Trimble, 49 F.3d at 585, the Ninth Circuit cited the portion of footnote seven set forth above in the text, but then determined that the plaintiff's Fourth Amendment claim had to be dismissed because the plaintiff had not alleged an actual compensable injury caused by the purported illegal search other than his conviction and sentence. Therefore, the Ninth Circuit was not required to determine whether the evidence resulting from the purported search impacted the validity of the conviction. Because the Ninth Circuit did not engage in this inquiry, it is unclear whether the Ninth Circuit interprets footnote seven as creating an automatic exception to the bar of Heck for claims alleging violations of the Fourth Amendment, or as requiring analysis of whether the underlying conviction would remain valid absent the challenged evidence. Moreover, because the Ninth Circuit analyzed the plaintiff's Fourth Amendment claims separately from his Fifth and Sixth Amendment claims, it is unclear whether the court considers the analysis required by footnote seven applicable to constitutional claims other than Fourth Amendment claims, i.e., it is unclear whether the Ninth Circuit would require district courts hearing § 1983 actions to apply doctrines such as harmless error and independent source to determine the validity of convictions based on evidence challenged on Fifth or Sixth Amendment grounds.
Relying on the same portion of footnote 7 discussed in Trimble, the Eleventh Circuit concluded that the bar of Heck did not apply to a § 1983 suit challenging a search on Fourth Amendment grounds. See Datz v. Kilgore, 51 F.3d 252, 253 n. 1 (11th Cir.1995). In concluding that Heck did not apply, the Eleventh Circuit did not evaluate the impact of the § 1983 action on the underlying criminal convictions. See id. Rather, the Eleventh Circuit expressly concluded that Heck is not a bar because a conviction based on evidence offered in violation of the Fourth Amendment "might still be valid" due to doctrines such as inevitable discovery. Datz, 51 F.3d at 253 n. 1 (emphasis added). This suggests that the Eleventh Circuit interprets footnote seven of Heck as creating an automatic exception to the bar of Heck for all claims alleging violations of the Fourth Amendment
In sharp contrast, in Schilling v. White, 58 F.3d 1081, 1085-86 (6th Cir.1995), the Sixth Circuit construed Heck as barring a § 1983 suit by a convicted person challenging a search on Fourth Amendment grounds. The Sixth Circuit concluded that, without exception, a § 1983 claimant must "show that a conviction was invalid as an element of constitutional injury." Schilling, 58 F.3d at 1086. The Sixth Circuit interpreted footnote 7 to mean that "because an illegal seizure does not automatically render a conviction invalid, an illegal seizure does not alone create a[n] injury compensable under § 1983." Id. (emphasis added).
This Court interprets footnote 7 of Heck and the accompanying text as providing one example of when a § 1983 action might proceed because the allegations of a constitutional violation do not "necessarily" invalidate the conviction. Heck, 512 U.S. at 487 & n. 7, 114 S.Ct. 2364. The exception to the bar of Heck set forth in footnote 7 is not limited solely to Fourth Amendment claims, but may exist for other constitutional challenges as well. For example, harmless error analysis may also apply to Fifth Amendment claims, as illustrated by the Supreme Court's citation in footnote 7 of Heck to Arizona v. Fulminante, 499 U.S. 279, 307-308, 111 S.Ct. 1246, 113 L.Ed.2d 302 (1991) in which it held that the doctrine of harmless error can apply to the admission of a coerced confession under the Fifth Amendment. Consequently, a plaintiff convicted based upon an unconstitutionally coerced confession admitted into evidence at trial may, if the admission was harmless error, properly bring a § 1983 action for the Fifth Amendment violation if he or she sustained damages, because a successful suit under § 1983 would not imply the invalidity of the conviction. The analysis of whether the Heck bar applies depends not on the constitutional claim alleged, but on whether the claim, if successful, would invalidate the underlying criminal conviction. This determination must be made on a case-by-case basis.
[3] A verified Complaint is treated as an opposing affidavit to the extent it is based on personal knowledge and contains facts admissible in evidence. See Schroeder v. McDonald, 55 F.3d 454, 460 (9th Cir.1995).
[4] Plaintiff does not offer an affidavit or other evidence to establish the truth of his assertion that this other evidence was admitted at his criminal trial. However, Defendants do not dispute the introduction of this evidence.
[5] Some item numbers appear more than once because the numbered description references more than one item.
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680 F.Supp.2d 1007 (2010)
HABITAT EDUCATION CENTER, David Zaber, Ricardo Jomarron, Don Waller, and Environmental Law and Policy Center, Plaintiffs,
v.
UNITED STATES FOREST SERVICE, Tom Tidwell, Chief, U.S. Forest Service, and Tom Vilsack, Secretary, U.S. Department of Agriculture, Defendants.
Case No. 04-C-0254.
United States District Court, E.D. Wisconsin.
January 14, 2010.
*1011 Bradley D. Klein, Howard A. Learner, Kathrine B. Dixon, Chicago, IL, Brady C. Williamson, Godfrey & Kahn SC, Madison, WI, Sean O. Bosack, Godfrey & Kahn SC, Milwaukee, WI, for Plaintiffs.
Pamela S. West, United States Department of Justice, Washington, DC, for Defendants.
DECISION AND ORDER
LYNN ADELMAN, District Judge.
In 2004, plaintiffs Habitat Education Center, David Zaber, Ricardo Jomarron, Don Waller, and the Environmental Law and Policy Center brought this action pursuant to the Administrative Procedure Act ("APA"), 5 U.S.C. § 706, against the United States Forest Service and other federal officials and entities.[1] Plaintiffs challenged the Forest Service's approval of the McCaslin timber project in the Chequamegon-Nicolet National Forest ("CNNF"). Plaintiffs alleged that the Forest Service violated the National Environmental Policy Act ("NEPA"), 42 U.S.C. § 4321 et seq., and the National Forest Management Act ("NFMA"), 16 U.S.C. §§ 1600-1687.
In March 2005, I found that the Forest Service violated NEPA by failing to prepare an adequate environmental impact statement ("EIS") and enjoined the project until the Forest Service complied with NEPA. See Habitat Educ. Ctr., Inc. v. Bosworth ("Habitat I"), 363 F.Supp.2d 1070 (E.D.Wis.2005). On remand, the Forest Service prepared a supplemental EIS ("SEIS") that addressed the deficiencies I identified in the original EIS. In 2006, in reliance on the SEIS, the Forest Service issued a new Record of Decision ("ROD"), in which it re-approved the McCaslin project.
Following the preparation of the SEIS and new ROD, the Forest Service filed a motion to lift the injunction in this case. However, because the motion to lift the injunction did not attempt to show that the SEIS complied with NEPA, I denied the motion without prejudice. The parties *1012 have since filed cross-motions for summary judgment addressing the adequacy of the SEIS, and I consider below whether the Forest Service has complied with NEPA and whether the injunction should be lifted.
I. BACKGROUND
I have extensively discussed the history of the CNNF and the background to plaintiffs' claims in other opinions. See Habitat Educ. Ctr. v. U.S. Forest Serv. ("Habitat V"), 603 F.Supp.2d 1176 (E.D.Wis.2009); Habitat Educ. Ctr. v. U.S. Forest Serv. ("Habitat IV"), 593 F.Supp.2d 1019 (E.D.Wis.2009). I will not repeat that discussion here except to note that, in bringing this action, plaintiffs express concern over the Forest Service's management of three sensitive species that inhabit the CNNF: American Pine Marten, Northern Goshawk, and Red-shouldered Hawk. They argue that the Forest Service has not adequately analyzed the potential impact of the McCaslin project on the habitat of these species.
II. STANDING
The Forest Service argues that plaintiffs did not have standing to seek the original injunction in this case and that, even if they did, they do not currently have standing to oppose the Forest Service's motion to lift the injunction. To show that they have standing to seek injunctive relief, plaintiffs must demonstrate that they are under threat of suffering an injury-in-fact that is concrete and particularized; the threat must be actual and imminent, not conjectural or hypothetical; it must be fairly traceable to the challenged action of the defendant; and it must be likely that a favorable judicial decision will prevent or redress the injury. See, e.g., Summers v. Earth Island Inst., ___ U.S. ___, 129 S.Ct. 1142, 1149, 173 L.Ed.2d 1 (2009). Two of the five plaintiffs are organizations, and for these plaintiffs to establish standing, they must show that they each have at least one member that has standing to seek injunctive relief. Id.
Before I enjoined the McCaslin project, plaintiffs submitted affidavits showing that the individual plaintiffs and the members of the organizational plaintiffs regularly visited the CNNF and the McCaslin project area, and that the McCaslin project would harm their professional and recreational interests in the area. (Exs. 1 & 2, Docket Entry #31.) Further, plaintiffs recently filed supplemental affidavits indicating that they continue to visit the CNNF and the project area and that the present iteration of the McCaslin project would harm their professional and recreational interests in the area. (Exs. 2-4, Docket Entry #186.) These affidavits satisfactorily demonstrate that plaintiffs have personal stakes in this lawsuit sufficient to warrant their invocation of federal court jurisdiction. Summers, 129 S.Ct. at 1149. Therefore, plaintiffs have standing to oppose the Forest Service's request to lift the injunction against the McCaslin project.
III. DISCUSSION
A. Standard of Review
When an agency's decision is challenged under the APA based on the agency's failure to comply with NEPA, the standard of judicial review is a narrow one. Highway J Citizens Group v. Mineta, 349 F.3d 938, 952 (7th Cir.2003). The court is not empowered to examine whether the agency made the "right" decision, but only to determine whether, in making its decision, the agency followed the procedures prescribed by NEPA. Id. (NEPA "`does not mandate particular results, but simply prescribes the necessary process.'")
*1013 In the present case, plaintiffs argue that the Forest Service did not comply with the procedures required by NEPA because it did not prepare a satisfactory EIS before approving the McCaslin project. NEPA requires that federal agencies prepare an EIS for all "major Federal actions significantly affecting the quality of the human environment." 42 U.S.C. § 4332(2)(C). An EIS is "a detailed analysis and study conducted to determine if, or the extent to which, a particular agency action will impact the environment." Highway J, 349 F.3d at 953. Requiring an agency to prepare an EIS serves two purposes. First, "`[i]t ensures that the agency, in reaching its decision, will have available, and will carefully consider, detailed information concerning significant environmental impacts.'" Dep't of Transp. v. Public Citizen, 541 U.S. 752, 768, 124 S.Ct. 2204, 159 L.Ed.2d 60 (2004) (quoting Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 349, 109 S.Ct. 1835, 104 L.Ed.2d 351 (1989)) (alteration in original). Second, "it `guarantees that the relevant information will be made available to the larger audience that may also play a role in both the decisionmaking process and the implementation of that decision.'" Id. Thus, the agency must "articulate why [it has] settled upon a particular plan and what environmental harms (or benefits) [its] choice entails." Simmons v. U.S. Army Corps of Eng'rs, 120 F.3d 664, 666 (7th Cir.1997). The EIS must show that agency officials have "[thought] through the consequences ofand alternatives to their contemplated acts," and must ensure that "citizens get a chance to hear and consider the rationales the officials offer." Id. Stated differently, the agency must demonstrate that it "has taken a `hard look' at environmental consequences." Kleppe v. Sierra Club, 427 U.S. 390, 410 n. 21, 96 S.Ct. 2718, 49 L.Ed.2d 576 (1976). However, "[w]hat constitutes a `hard look' cannot be outlined with rule-like precision," Nat'l Audubon Soc'y v. Dep't of the Navy, 422 F.3d 174, 185 (4th Cir.2005), and it is a standard that "is not susceptible to refined calibration," Churchill County v. Norton, 276 F.3d 1060, 1071 (9th Cir.2001) (internal quotation marks and citation omitted). Rather than apply a rigid standard, a court must make a "pragmatic judgment" as to whether the agency has fostered the two principal purposes of an EIS: informed decisionmaking and informed public participation. Id.
In making its pragmatic judgment, a court must be careful not to "`flyspeck' an agency's environmental analysis, looking for any deficiency, no matter how minor." Nat'l Audubon Soc'y, 422 F.3d at 186. With a document as complicated and mired in technical detail as an EIS, it will always be possible to point out some potential defect or shortcoming, or to suggest some additional step that the agency could have taken to improve its environmental analysis. An EIS is unlikely to be perfect, and setting aside an EIS based on minor flaws that have little or no impact on informed decisionmaking or informed public participation would defy common sense. Thus, rather than getting bogged down in possible technical flaws, a court must "take a holistic view of what the agency has done to assess environmental impact." Id. Further, courts must remember that it is the agency, and not the court, that has the technical expertise required to perform the environmental analysis in the first place. This means that judicial review of an EIS must be deferential, especially when it comes to the scientific and technical details that make up the heart of the analysis. Citizens for Alternatives to Radioactive Dumping v. Dep't of Energy, 485 F.3d 1091, 1098 (10th Cir.2007) (judicial deference is "especially strong" where decision involves technical or scientific matters within agency's area of expertise). Of *1014 course, deferential review does not mean no review, and courts must ensure that agencies carry out their duties under NEPA, make reasoned choices, and provide a discussion that fully and frankly explains the environmental consequences of a proposed action. However, to strike a proper balance between deference and a "searching and careful" inquiry, Marsh v. Oregon Natural Res. Council, 490 U.S. 360, 378, 109 S.Ct. 1851, 104 L.Ed.2d 377 (1989), a court may invalidate an EIS only if, after first learning what is going on so that it does not decide on the basis of superficial beliefs and assumptions, the court is firmly convinced that an error or omission in the EIS has defeated the goals of informed decisionmaking and informed public participation. Cf. Eagle Foundation, Inc. v. Dole, 813 F.2d 798, 803 (7th Cir.1987). Again, this standard of review is not precise, but requires that the court exercise good judgment.[2]
With this standard in mind, I turn to plaintiffs' arguments.
B. Analysis of Cumulative Impacts
Plaintiffs' fist two arguments are addressed to the discussion of cumulative impacts in the SEIS. Regulations promulgated by the Council on Environmental Quality ("CEQ")[3] require that an EIS include a discussion of environmental impacts, including impacts that are direct, indirect and cumulative. 40 C.F.R. § 1508.25. "Cumulative impact" is:
the impact on the environment which results from the incremental impact of the action when added to other past, present and reasonably foreseeable future actions regardless of what agency (Federal or non-Federal) or person undertakes such other actions. Cumulative impacts can result from individually minor but collectively significant actions taking place over a period of time.
40 C.F.R. § 1508.7. A proper cumulative impacts analysis will assess the proposed action in light of other activity that has affected or will affect the same environmental resources. The goal is to highlight any environmental degradation that may occur if the minor effects of multiple actions accumulate over time. For example, although a single forest project might have minimal environmental consequences, combining that project with those that preceded it and others that are anticipated might reveal a more serious overall impact. Placing the project into a broader context that includes these recent and anticipated projects helps prevent "the tyranny of small decisions." Council on Environmental Quality, Considering Cumulative Effects Under the National Environmental Policy Act 1 (Jan.1997), available at http://ceq.hss.doe.gov/nepa/ccenepa/ccenepa.htm (last viewed Jan. 5, 2010) (hereinafter "CEQ Guidance").
With respect to the Forest Service's cumulative-impacts analysis, plaintiffs allege *1015 the following deficiencies: (1) the Forest Service arbitrarily limited the geographic scope of the analysis to the Nicolet side of the CNNF; and (2) the Forest Service failed to discuss certain reasonably foreseeable projects that were proposed after the SEIS was drafted. I address these contentions below.
1. Selection of geographic area to be analyzed for cumulative impacts.
One of the first steps in any cumulative effects analysis is to identify the geographic boundaries within which cumulative effects will be measured. Identifying such boundaries "is a task assigned to the special competency of the appropriate agencies." Kleppe, 427 U.S. at 414, 96 S.Ct. 2718; see also Neighbors of Cuddy Mountain v. Alexander, 303 F.3d 1059, 1071 (9th Cir.2002) (deferring to agency's determination of the scope of its cumulative impact review). Nevertheless, "the choice of analysis scale must represent a reasoned decision and cannot be arbitrary." Idaho Sporting Cong., Inc. v. Rittenhouse, 305 F.3d 957, 973 (9th Cir. 2002). "An agency must provide support for its choice of analysis area and must show that it considered the relevant factors." Native Ecosystems Council v. Dombeck, 304 F.3d 886, 902 (9th Cir.2002). Relevant factors include "the scope of the project considered, the features of the land, and the types of species in the area." Selkirk Conservation Alliance v. Forsgren, 336 F.3d 944, 958 (9th Cir.2003). The presence of species habitat outside the project area is also a relevant consideration in determining the geographic scope of a cumulative impacts analysis. CEQ Guidance, supra, at 15. However, "[i]t is not practical to analyze the cumulative effects of an action on the universe"; instead, the analysis must be limited to a meaningful geographic area. Id. at 8. Thus, "the boundaries for evaluating cumulative effects should be expanded to the point at which the resource is no longer affected significantly or the effects are no longer of interest to affected parties." Id.
In the present case, the affected resources are the sensitive species within the CNNFAmerican Pine Marten, Northern Goshawk, and Red-shouldered Hawk. The SEIS discusses the cumulative impacts of past, present and reasonably foreseeable forest projects on the viability of these three species. SEIS at 27-36.[4] For each species, the Forest Service limited its discussion of cumulative impacts to those affecting the population of sensitive species located on Nicolet side of the forest.[5] Plaintiffs argue that because American Pine Marten, Northern Goshawk, and Red-shouldered Hawk are located on both the Chequamegon and Nicolet sides of the CNNF, the Forest Service should have considered cumulative impacts to these species on a forest-wide basis, and that therefore the analysis in the SEIS is deficient.
I conclude that the Forest Service drew reasonable geographic boundaries. The discussion in the SEIS begins by noting that, for each species, the default geographic boundary is normally the entire CNNF. SEIS at 27-36. The Forest Service then explains that it limited its detailed cumulative-effects analysis to the Nicolet side of the CNNF because the Nicolet and Chequamegon populations of each species do not interact and are independent *1016 of each other. Because the populations do not interact, the destruction of habitat on the Nicolet side of the CNNF would not threaten the viability of populations on the Chequamegon side, and vice versa. Similarly, the preservation of habitat on the Nicolet side would not benefit the populations on the Chequamegon side, and vice versa. Thus, a project conducted on the Nicolet side of the CNNF will have no impact on the viability of Chequamegon populations, and a project conducted on the Chequamegon side will have no impact on the viability of Nicolet populations.
Plaintiffs argue that even though the Nicolet and Chequamegon populations of the relevant species are independent of each other, the Forest Service must still assess the impact of the McCaslin project on the forest-wide population of each species. But as just discussed, the Forest Service did assess the project's impact on the forest-wide population of each species. It first concluded that the McCaslin project will have no impact on Chequamegon populations and that any projects occurring on the Chequamegon side of the forest will have no impact on Nicolet populations. It then studied in detail the cumulative impact of the McCaslin project on the only resources that will be impacted by the project the Nicolet population of each species. Because the McCaslin project will have no impact on Chequamegon populations and Chequamegon projects will have no impact on Nicolet populations, informed decisionmaking and informed public participation did not require an extensive discussion of Chequamegon projects or Chequamegon populations.[6]
Plaintiffs also take issue with the Forest Service's conclusion that the Nicolet and Chequamegon populations do not interact. However, the degree of interaction between the two populations is a technical issue that implicates the agency's expertise, and I must defer to the Forest Service's conclusion so long as it is not arbitrary and capricious. See, e.g., Marsh, 490 U.S. at 376-77, 109 S.Ct. 1851. In recent cases, I considered identical arguments by plaintiffs and concluded that the Forest Service reasonably determined that the Chequamegon and Nicolet populations do not interact. Habitat V, 603 F.Supp.2d at 1189-90; Habitat IV, 593 F.Supp.2d at 1030-31. Because plaintiffs' arguments in the present case and the administrative record are in all material respects identical to those in the prior cases, I again conclude that the Forest Service's determination that the species do not interact across landbases was reasonable.
Plaintiffs also argue that even if the Nicolet and Chequamegon populations do not interact, the Nicolet populations of goshawk and marten do extend into the Ottawa National Forest in Michigan's upper peninsula, and that therefore the geographic scope should have been extended to include the Ottawa National Forest. With respect to goshawk, the biological evaluation attached to the McCaslin SEIS indicates that goshawk that nest on the Nicolet side of the CNNF may forage in the Ottawa National Forest. SEIS, Appx. B, at 33. Plaintiffs argue that the Forest *1017 Service should have accounted for any projects in Ottawa that might impact the Ottawa foraging territory used by the Nicolet goshawk population. However, the Forest Service did take the Ottawa foraging territory into consideration. It noted that no timber projects have occurred in the Ottawa foraging territory in over fifteen years, and that therefore there are no Ottawa projects to include in the cumulative-impacts analysis. Id.
With respect to marten, plaintiffs point out that in July 2006 a researcher from Michigan State University stated that "[t]here appears to be some gene flow between the Nicolet Forest population and martens in the Upper Peninsula." R. 002236. However, as far as the record reveals, this is simply one researcher's tentative opinion. Further, the opinion was not presented until ten days after the biological evaluation for the McCaslin project was finalized and well after the draft SEIS was issued, and thus the Forest Service was not required to address it unless it resulted in a seriously different picture of the environmental landscape. See infra, p. 16. The record does not reveal that this opinion resulted in such a change.
Accordingly, I conclude that the Forest Service's choice of geographic scope for its cumulative-impacts analysis was not arbitrary and capricious.
2. Failure to supplement SEIS to account for certain reasonably foreseeable projects.
As indicated, the CEQ regulations require that an EIS include a discussion of the environmental impact of a project when added to "other past, present and reasonably foreseeable future actions." 40 C.F.R. § 1508.7 (emphasis added). At the time the SEIS for McCaslin was completed, the regulations did not define "reasonably foreseeable future actions."[7] However, courts have applied the "rule of reason" discussed above to the question of whether an agency should have discussed a particular future action in its EIS. See City of Oxford, Ga. v. Fed. Aviation Admin., 428 F.3d 1346, 1353-54 (11th Cir.2005). Thus, whether (and to what extent) the future action should have been discussed turns on the amount of discussion necessary to serve the two principal purposes of NEPA: ensuring informed decisionmaking and informed public participation. Id.
Plaintiffs argue that the Forest Service failed to consider two reasonably foreseeable projects when it analyzed and approved the McCaslin projectFishel and Grub Hoe. Both projects are scheduled to occur on the Nicolet side of the CNNF in the near future. The Forest Service did not discuss either of these projects in the McCaslin SEIS. The Forest Service contends that it was not required to discuss them because it did not have meaningful information about their environmental effects until after the draft SEIS for McCaslin was completed.
In my past decisions involving the CNNF, I addressed similar arguments by the parties. See Habitat V, 603 F.Supp.2d at 1191-93; Habitat IV, 593 F.Supp.2d at 1034-36. In those decisions, I found that the Forest Service was not required to discuss anticipated projects when, at the time the EIS governing the challenged project was issued, the anticipated projects were so inchoate that they could not be meaningfully discussed. I reasoned that even though the Forest Service may know that it plans to conduct some type of forest management project in an area at some point in the near future, the Forest Service *1018 need not discuss that project in a present EIS where the project is so nascent that the Forest Service cannot reasonably forecast its likely environmental consequences.
In the present case, I conclude that the Forest Service was not required to discuss Grub Hoe in the McCaslin SEIS because the record contains no evidence suggesting that the Forest Service had any meaningful information about Grub Hoe at the time it finalized the SEIS. Indeed, the project was not formally proposed until more than a year and a half after the final McCaslin SEIS was issued.
The Fishel project is a closer call. That project was formally proposed on March 9, 2006, four months before the final SEIS for McCaslin was issued. In the proposal, the Forest Service identified the project's boundaries, stated the project's objectives, and identified the precise action it proposed to take. See R. 000063-70. The proposal even estimated the number of acres that would be affected by the project and the volume of timber that would be made available for sale. R. 000069. Thus, by September 2006, when the McCaslin project was approved, the Fishel project was a reasonably foreseeable future action that could have been meaningfully discussed. However, the Forest Service argues that it was not required to discuss Fishel in the McCaslin SEIS because the draft SEIS for McCaslin was issued in January 2006, two months before the Fishel project was formally proposed.
In my prior decisions, I did not need to distinguish between a draft EIS and a final EIS because both the draft and final EISs for the relevant projects had been issued before meaningful information concerning the reasonably foreseeable future actions was available. The present case presents the question of whether a final EIS must contain a discussion of reasonably foreseeable future projects when meaningful information about the environmental effects of those projects becomes available after the draft EIS is released but before the final EIS is completed.
Pursuant to CEQ regulations, "environmental impact statements shall be prepared in two stages and may be supplemented." 40 C.F.R. § 1502.9. The regulations state that most of the heavy lifting in terms of environmental analysis should be performed before the draft EIS is completed. Id. § 1502.9(a) ("The draft statement must fulfill and satisfy to the fullest extent possible the requirements established for final statements...."). Once the draft EIS is completed, the agency must solicit comments from the public and other agencies. Id. §§ 1502.9(b) & 1503.1. The agency must then respond to comments in the final EIS. Id. § 1502.9(b). The CEQ regulations also require agencies to "prepare supplements to either draft or final environmental impact statements" if the agency "makes substantial changes in the proposed action that are relevant to environmental concerns," or "[t]here are significant new circumstances or information relevant to environmental concerns and bearing on the proposed action or its impacts." Id. § 1502.9(c)(1).
The regulations thus indicate that any reasonably foreseeable projects that can be meaningfully discussed by the time a draft EIS is completed must be discussed in the draft. Further, because the purpose of the final EIS is to respond to comments rather than to complete the environmental analysis (which should have been completed before the draft was released), an agency is not automatically required to discuss projects that become reasonably foreseeable during the interim between the release of the draft EIS and the release of the final EIS. Instead, when new information about a reasonably foreseeable *1019 project becomes available after the draft EIS is released, the question is whether the agency is required to supplement the draft statement to account for the new information.
In my earlier decisions involving the CNNF, I discussed the legal standards that courts apply when determining whether an agency is required to supplement an EIS. Habitat V, 603 F.Supp.2d at 1193; Habitat IV, 593 F.Supp.2d at 1039-40. In short, an agency need not supplement an EIS every time new information comes to light. Rather, an agency must supplement an EIS when the new information results in a "seriously different picture of the environmental landscape." Wisconsin v. Weinberger, 745 F.2d 412, 418 (7th Cir.1984) (emphasis in original).
Nothing in the administrative record indicates that the anticipated environmental effects of the Fishel project will result in a serious change to the environmental landscape presented in the McCaslin SEIS. There is no indication that, for example, the loss of habitat that the Fishel project will cause, when combined with the loss of habitat that the McCaslin project will cause, will result in habitat quantity falling below desired thresholds for species viability. Further, to the extent that the Fishel project will contribute to the cumulative impact of timber projects conducted on the Nicolet side of the forest, the Forest Service will analyze and consider that impact in the Fishel EISi.e., before the Fishel project is implemented and the cumulative impact is realized.[8] Thus, the "tyranny of small decisions" will be avoided even if the McCaslin SEIS is not supplemented.
Accordingly, I conclude that the McCaslin SEIS is not invalid due to its failure to discuss the Grub Hoe and Fishel projects.
C. Analysis of Reasonable Alternatives
An EIS must discuss alternatives to a proposed action. 42 U.S.C. § 4332(2)(C)(iii). The CEQ regulations specify that the agency preparing an EIS must "[r]igorously explore and objectively evaluate all reasonable alternatives, and for alternatives which were eliminated from detailed study, briefly discuss the reasons for their having been eliminated." 40 C.F.R. § 1502.14(a).
In their initial complaint, plaintiffs did not allege that the discussion of reasonable alternatives in the McCaslin EIS was deficient. However, they alleged that the EIS did not contain an adequate discussion of the cumulative impacts of the McCaslin project on American Pine Marten, Northern Goshawk and Red-shouldered Hawk. I found that the cumulative-impacts discussion in the original EIS was deficient because it did not discuss the cumulative impact to each species in adequate detail. Habitat I, 363 F.Supp.2d at 1079-1082. After I invalidated the original EIS, the Forest Service prepared the SEIS, which includes a more thorough discussion of cumulative impacts and which plaintiffs have not challenged on the ground that it contains insufficient detail. Although plaintiffs no longer object to the level of detail in the cumulative-impacts analysis, they contend that the Forest Service should have revisited its analysis of reasonable alternatives in light of its revised cumulative-impacts analysis. The Forest Service argues that because I did not find *1020 that its original analysis of reasonable alternatives was deficient, it was not required to revisit that analysis on remand.
I begin by noting that, to an extent, the Forest Service has revisited its analysis of reasonable alternatives. In the SEIS, the Forest Service analyzes the expected cumulative impact of each of five alternative proposalsone "no action" alternative and four "action" alternativeson each species. SEIS at 27-36. These five alternatives are the same five alternatives that the Forest Service selected for detailed study in the original EIS. Plaintiffs argue that the Forest Service should have started from scratch and reconsidered all possible alternatives in light of the revised cumulative-impacts discussion, rather than limiting the revised analysis to those alternatives selected for detailed study during the original EIS process.
I conclude that the SEIS contains an adequate discussion of alternatives. Although the Forest Service did not reconsider any alternatives other than those selected for detailed study during the original EIS process, plaintiffs have not shown that the revised cumulative-impacts analysis had any effect on the Forest Service's rationale for eliminating alternatives from detailed study the first time around. In the original EIS, the Forest Service gave reasons for eliminating seven alternatives from detailed study, and none of those reasons had anything to do with cumulative effects. See McCaslin EIS at 22-23.[9] Thus, although I agree with plaintiffs that the Forest Service would have been required to revisit its elimination of alternatives if the revised cumulative-impacts analysis undermined the reasons for eliminating those alternatives from detailed study, the record does not indicate that any of the original reasons have been undermined.
Plaintiffs also argue that the Forest Service violated NEPA by designating one of the four alternatives (Alternative 5) as its "preferred" alternative during the SEIS process. Plaintiffs contend that the Forest Service should have analyzed the alternatives without expressing a preference for any of them. However, I am aware of no authority prohibiting an agency from informing the public that it thinks one particular alternative best fulfills the project's purposes. Of course, the agency cannot rig the environmental analysis to make the preferred alternative look more attractive than it is or focus on the preferred alternative to the exclusion of other reasonable alternatives, but the record in the present case does not suggest that the Forest Service rigged the analysis or failed to objectively evaluate the other four alternatives.
Accordingly, I conclude that the SEIS contains an adequate discussion of reasonable alternatives.
IV. CONCLUSION
For the reasons stated, IT IS ORDERED that plaintiffs' motion for summary judgment is DENIED and that defendants' motion for summary judgment is GRANTED.
IT IS FURTHER ORDERED that the injunction entered on April 4, 2005 is DISSOLVED.
IT IS FURTHER ORDERED that the Clerk of Court enter judgment accordingly.
NOTES
[1] For simplicity, I will refer to all defendants collectively as the Forest Service.
[2] Some courts have described this standard as applying a "rule of reason," under which the court asks "whether an EIS contains a reasonably thorough discussion of the significant aspects of the probable environmental consequences." See, e.g., Churchill County, 276 F.3d at 1071 (internal quotation marks and citation omitted); see also Ecology Ctr., Inc. v. United States Forest Service, 451 F.3d 1183, 1189-90 (10th Cir.2006) ("We apply a rule of reason standard (essentially an abuse of discretion standard) in deciding whether claimed deficiencies in a [final] EIS are merely flyspecks, or are significant enough to defeat the goals of informed decision making and informed public comment.").
[3] NEPA established CEQ as an agency within the Executive Office of the President. It "coordinates federal environmental efforts and works closely with agencies and other White House offices in the development of environmental policies and initiatives." See http://www.whitehouse.gov/administration/eop/ceq (click "About CEQ") (last viewed Jan. 8, 2010).
[4] The SEIS is located in the administrative record at 000569.
[5] As explained in my prior opinions, the CNNF consists of two noncontiguous landbases, the Chequamegon and the Nicolet. See, e.g., Habitat IV, 593 F.Supp.2d at 1021-22. A map showing the location of the two landbases is available at the CNNF website, http://www.fs.fed.us/r9/cnnf/general/onlinemap/index.html (last visited Jan. 5, 2010).
[6] Plaintiffs point out that they are concerned about the cumulative impact of timber projects on both the Chequamegon and Nicolet populations, and that therefore informed public participation required a discussion of Chequamegon populations and Chequamegon projects. Again, however, the McCaslin SEIS disclosed that the McCaslin project will have no impact on Chequamegon populations, and that therefore the project will not contribute to the cumulative impact to Chequamegon populations. To the extent that other timber projects will impact Chequamegon populations, plaintiffs can consult the environmental documents prepared for those projects.
[7] In a regulation effective July 24, 2008, the Forest Service defined "reasonably foreseeable future actions" as "[t]hose Federal or non-Federal activities not yet undertaken, for which there are existing decisions, funding, or identified proposals." 36 C.F.R. § 220.3.
[8] In fact, the final EIS for the Fishel project does account for the environmental effects of the McCaslin project on American Pine Marten, Northern Goshawk and Red-shouldered Hawk. See Fishel Environmental Impact Statement at 67-82, available at http://www.fs.fed.us/r9/cnnf/natres/eis/erfl/fishel/01-Fishel.FEIS.0222008.pdf (last viewed Jan. 8, 2010).
[9] The original McCaslin EIS is available on the CD located at R. 000567.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
No. 01-4173
WILLIAM J. STREETT; SHARON L.
STREETT; JAMES G. SPRINKEL,
Defendants-Appellants.
Appeal from the United States District Court
for the Western District of Virginia, at Harrisonburg.
James P. Jones, District Judge.
(CR-00-27)
Argued: September 27, 2001
Decided: October 18, 2001
Before WILKINSON, Chief Judge, and LUTTIG and
MICHAEL, Circuit Judges.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Edward Scott Austin, GENTRY, LOCKE, RAKES &
MOORE, Roanoke, Virginia; Paul Lawrence Knight, Washington,
D.C., for Appellants. Rick A. Mountcastle, Assistant United States
Attorney, Abingdon, Virginia, for Appellee. ON BRIEF: Guy M.
Harbert, III, GENTRY, LOCKE, RAKES & MOORE, Roanoke, Vir-
ginia, for Appellant Sprinkel; John J. McDermott, HALL, ESTILL,
2 UNITED STATES v. STREETT
HARDWICK, GABLE, GOLDEN & NELSON, P.C., Washington,
D.C., for Appellant William Streett; John S. Hart, Jr., JOHN S.
HART, JR., P.C., Harrisonburg, Virginia, for Appellant Sharon
Streett. Ruth E. Plagenhoef, United States Attorney, Abingdon, Vir-
ginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Defendants William J. Streett, Sharon L. Streett, and James G.
Sprinkel appeal the district court’s order denying their joint motion to
dismiss the tax charges against them. They contend that the Double
Jeopardy Clause bars a retrial after a hung jury under the circum-
stances of this case. Because the defendants acquiesced in the mistrial
declaration, and because the court did not abuse its discretion in find-
ing that a mistrial was required by manifest necessity, we affirm the
order of the district court.
I.
On March 8, 2000, Defendants Dr. William J. Streett, his wife
Sharon L. Streett, and their accountant, James G. Sprinkel, were
charged with conspiracy to obstruct the Internal Revenue Service
("IRS") in the ascertainment and collection of federal income taxes,
in violation of 18 U.S.C. § 371. The Streetts were also charged with
three counts of making a false tax return, in violation of 26 U.S.C.
§ 7206(1). Mrs. Streett pleaded guilty to this charge before trial.
The defendants’ jury trial began on November 6, 2000 and lasted
two and one-half days. The case was submitted to the jury at noon on
November 9, 2000. After approximately three hours of deliberation,
the jury told the court that it could not reach a unanimous verdict on
UNITED STATES v. STREETT 3
any of the charges. After the court returned the jurors to the jury room
to consider whether "there are questions or other items of evidence
that the jury has not seen that you think might be of assistance," the
court asked the government whether it wanted the court to declare a
mistrial. The government responded that it would first like to hear
"whether the jurors have any additional questions or evidence they
want to look at and see what happens then." The court then asked
defense counsel whether he had anything to add. Defense counsel
replied, "Not at this time, Your Honor."
After the jury returned and reported that no additional assistance
from the court would help it to reach a unanimous decision, the court
asked the government what it wanted to do. The government
responded, "I would say we need a mistrial, Your Honor." The court
next asked defense counsel whether he wished to add anything.
Defense counsel replied, "No, sir." The court then declared a mistrial,
advising the jury that it was being discharged because of its inability
to reach a unanimous decision. After returning the jurors to the jury
room, the court asked if there was any further matter that needed to
be taken up. In response, defense counsel requested postponement of
Mrs. Streett’s meeting with the probation office.
On December 13, 2000, a grand jury returned a second indictment
against Sprinkel, charging him with two counts of making a materi-
ally false statement or writing to the IRS, in violation of 18 U.S.C.
§ 1001. The false statements charged in the second indictment
involved the same conduct charged as overt acts in the conspiracy
count of the original indictment. On December 15, the government
successfully moved to consolidate both indictments.
On February 6, 2001, the defendants filed a joint motion to dismiss
the indictments for violations of the Double Jeopardy Clause. The dis-
trict court denied the motion on February 26, 2001, finding that the
defendants had acquiesced in the declaration of a mistrial. The court
also determined that there was a manifest necessity for a mistrial
because the jury was reasonably perceived to be hopelessly dead-
locked "after a relatively short trial on issues of comparative simplic-
ity." Defendants appeal.
4 UNITED STATES v. STREETT
II.
A.
We review de novo the legal questions raised by double jeopardy
claims. United States v. Imngren, 98 F.3d 811, 813 (4th Cir. 1996).
In addition, we must accept the district court’s factual findings unless
they are clearly erroneous. United States v. Johnson, 55 F.3d 976, 978
(4th Cir. 1995). Finally, the trial court has "broad discretion" in deter-
mining whether manifest necessity requires a mistrial declaration. Illi-
nois v. Somerville, 410 U.S. 458, 462 (1973). Thus, we review that
determination for abuse of discretion. United States v. Sloan, 36 F.3d
386, 393 (4th Cir. 1994). However, strict scrutiny is appropriate
"when there is reason to believe that the prosecutor is using the supe-
rior resources of the State to . . . achieve a tactical advantage over the
accused." Arizona v. Washington, 434 U.S. 497, 508 (1978).
B.
The Double Jeopardy Clause states that no person shall "be subject
for the same offence to be twice put in jeopardy of life or limb." U.S.
Const. amend. V. The Clause allows for a retrial following a mistrial
provided that, "taking all the circumstances into consideration, there
is a manifest necessity" for declaring a mistrial. United States v.
Perez, 22 U.S. (9 Wheat.) 579, 580 (1824). It has long been estab-
lished that the failure of a jury to agree on a verdict is an instance of
"manifest necessity." Id. at 579-80; Richardson v. United States, 468
U.S. 317, 323-24 (1984).
However, the Double Jeopardy Clause "bars retrials where bad-
faith conduct by judge or prosecutor . . . threatens the harassment of
an accused by . . . declaration of a mistrial so as to afford the prosecu-
tion a more favorable opportunity to convict the defendant." Washing-
ton, 434 U.S. at 508 (internal quotation omitted). Nevertheless, if the
defendant has an opportunity to object to the trial court’s declaration
of a mistrial but fails to do so, the defendant impliedly consents to the
mistrial and cannot raise a double jeopardy defense to further prose-
cution before a second jury. See United States v. Ndame, 87 F.3d 114,
115 (4th Cir. 1996); United States v. Ham, 58 F.3d 78, 83-84 (4th Cir.
1995); United States v. Ellis, 646 F.2d 132, 135 (4th Cir. 1981).
UNITED STATES v. STREETT 5
III.
A.
The defendants argue that the Double Jeopardy Clause bars repro-
secution of this case because the government requested a mistrial for
the purpose of gaining a tactical advantage in a future retrial, thereby
triggering strict scrutiny under Washington. 434 U.S. at 508. The
defendants maintain that the tactical advantage was a second indict-
ment against Sprinkel. The defendants point out that during trial, it
was never denied that Sprinkel made the alleged false statements;
rather, his defense was that the statements were not in furtherance of
any conspiracy. According to the defendants, if Sprinkel continued
with this same defense at retrial to avoid conviction on the one con-
spiracy count, the result might well be two convictions under the new
indictment for making false statements. Moreover, the defendants
contend that by effectively preventing Sprinkel from presenting a via-
ble defense to the conspiracy charge, the government will more easily
be able to convict the Streetts of this same charge because a conspir-
acy requires at least two people. The defendants submit that the short
time between the mistrial declaration and the second indictment is cir-
cumstantial evidence of the government’s illicit intent.
In addition, the defendants argue that there was no manifest neces-
sity for a mistrial because this was a complex case in which the jury
had deliberated for only a short time and was not given an Allen
charge. See Allen v. United States, 164 U.S. 492 (1896). The defen-
dants further maintain that they did not consent to a mistrial.
B.
There are two significant problems with the defendants’ position.
Procedurally, there is no doubt that the defendants were given an
opportunity to object to the trial court’s declaration of a mistrial but
failed to do so. In fact, the court twice gave defense counsel the
opportunity to object when it was considering declaring a mistrial.
Defense counsel twice indicated that it had nothing to say. In addi-
tion, after the court advised the jury that it was being discharged
because of its inability to reach a unanimous decision, the court gave
defense counsel yet another opportunity to object to the mistrial, ask-
6 UNITED STATES v. STREETT
ing if there was any further matter that needed to be taken up. Again,
defense counsel did not object to the mistrial declaration. Indeed,
none of the defendants made a double jeopardy challenge until
approximately three months after the end of the first trial.
At a minimum, the defendants failed to object to the mistrial decla-
ration. At a maximum, they affirmatively acquiesced. Either way,
they cannot now raise a double jeopardy defense to further prosecu-
tion before a second jury. See Ndame, 87 F.3d at 115; Ham, 58 F.3d
at 83-84; Ellis, 646 F.2d at 135.
Even if the defendants had not acquiesced in the mistrial declara-
tion, their claim fails in substance. The district court was not too
quick on the trigger here. The court did not automatically declare a
mistrial. Rather, when the jury informed the court that it was unable
to reach a unanimous decision on any of the charges, the court asked
the jury to return to the jury room to consider whether any additional
assistance would aid it in its decision, and then consulted with both
the government and defense counsel. It was only after the jury indi-
cated that no additional help would allow it to reach a unanimous
decision that the court declared a mistrial. The district court is in the
best position to determine whether further deliberation would have
been fruitful. It is very difficult for us to replicate its vantage point.
Our role is limited to deciding whether the court abused its discretion.
See Sloan, 36 F.3d at 393. It did not.
As for the defendants’ contention that strict scrutiny is the correct
standard of review because the government had an illicit purpose in
seeking the mistrial declaration, there have been no findings or sug-
gestions by the district court that the prosecutor acted in bad faith.
And there is nothing in the record that would cause us to conclude
that the court was clearly erroneous in assessing the government’s
intent. See Johnson, 55 F.3d at 978. It was the prosecutor who stated
that he wanted to hear whether the jurors had any additional questions
or wanted to examine any other evidence before the court declared a
mistrial. It was only after the jurors again indicated that they could
not reach a unanimous decision that the government requested a mis-
trial.
Moreover, the defendants’ "tactical advantage" theory also rings
hollow in view of their failure to object when the government ulti-
UNITED STATES v. STREETT 7
mately sought a mistrial. As we found in Ham, defense counsel’s
actions "suggest that the double jeopardy argument was a mere after-
thought . . . conjured up long after the district court dismissed the
original jury." 58 F.3d at 84. Strict scrutiny is thus inappropriate in
this case. See Washington, 434 U.S. at 508.
IV.
For the foregoing reasons, the order of the district court is
AFFIRMED.
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FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
GAYLAN HARRIS, on behalf of No. 13-56061
himself and others similarly situated,
Plaintiff-Appellant, D.C. No.
8:09-cv-00098-
v. AG-MLG
COUNTY OF ORANGE,
Defendant-Appellee. OPINION
Appeal from the United States District Court
for the Central District of California
Andrew J. Guilford, District Judge, Presiding
Argued February 6, 2014
Submitted August 28, 2018
Pasadena, California
Filed September 5, 2018
2 HARRIS V. COUNTY OF ORANGE
Before: Marsha S. Berzon, Johnnie B. Rawlinson, *
and Michael R. Murphy**, Circuit Judges.
Opinion by Judge Berzon
SUMMARY ***
Employment Benefits
The panel affirmed in part, and reversed in part, the
district court’s dismissal of an action brought by a class of
retired employees alleging that the County of Orange
violated their vested rights when it restructured its health
benefits program; and remanded for further proceedings.
The County restructured two retiree benefits: the Retiree
Premium Subsidy (which combined active and retired
employees into a single unified pool for purposes of
calculating medical insurance premiums); and the Grant
Benefit (providing retired employees with a monthly grant
to defray the cost of health care premiums). The retirees
contended that the County’s decision in 2006 to eliminate
*
This case was originally submitted to a panel that included Judge
Pregerson. Following Judge Pregerson’s death, Judge Rawlinson was
drawn by lot to replace him. Ninth Circuit General Order 3.2(h). Judge
Rawlinson has read the briefs and reviewed the record.
**
The Honorable Michael R. Murphy, Senior Circuit Judge for the
U.S. Court of Appeals for the Tenth Circuit, sitting by designation.
***
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
HARRIS V. COUNTY OF ORANGE 3
the Retiree Premium Subsidy and to reduce the Grant
Benefit increased their health care costs significantly.
The retirees alleged that they had an implied contractual
right to receive the Grant Benefit throughout their
retirement. The panel held that the retirees’ second amended
complaint set forth sufficient allegations regarding the
continuation of the Grant Benefit during the employees’
lifetime to survive a motion to dismiss. The panel noted that
the retirees alleged the existence of annual memorandum of
understanding between the union and the County,
establishing a right to the Grant Benefit; and the retirees’
specific allegations plausibly supported the conclusion that
the County impliedly promised a lifetime benefit, which
could not be eliminated or reduced. The panel reversed the
district court’s order insofar as it dismissed the retirees’
contract claims regarding the Grant Benefit.
The retirees’ California Fair Employment and Housing
Act (“FEHA”) age discrimination claim challenged the
elimination of the Retiree Premium Subsidy. The panel
noted that retirees had no contractual right to continue
receiving the Retiree Premium Subsidy pursuant to the
holding in Retired Emps. Ass’n of Orange Cty., Inc. v. Cty.
of Orange (REAOC V), 742 F.3d 1137 (9th Cir. 2014). The
panel held that California law did not fault the County for
offering different benefits to retirees and to active employees
at the outset, absent a FEHA violation. The panel further
held that the retirees’ FEHA claim was a novel one, and
therefore the panel looked to federal cases interpreting
employment discrimination and civil rights for guidance.
The panel held that the federal Age Discrimination in
Employment Act applied to retirees. The panel further held
that changes in retirees’ health benefits were covered by
FEHA, despite the fact that they were not active employees.
4 HARRIS V. COUNTY OF ORANGE
The panel concluded that the County, under the Age
Discrimination in Employment Act, and so, under
California’s FEHA age discrimination provisions, may treat
retirees as a group differently, with regard to medical
benefits, than employees as a group, taking into account that
the cost of providing medical benefits to the retiree group
was higher because the retirees were on average older.
Accordingly, retirees’ claim of unlawful age discrimination
under FEHA failed as a matter of law, and the panel affirmed
the district court’s dismissal of the claim.
COUNSEL
Michael P. Brown (argued), Law Office of Michael P.
Brown, Seattle, Washington, for Plaintiff-Appellant.
Arthur A. Hartinger (argued) and Jennifer L. Nock, Renne
Sloan Holtzman Sakai LLP, Oakland, California, for
Defendant-Appellee.
OPINION
BERZON, Circuit Judge:
This is the fourth time we have been asked to consider
whether the County of Orange (“the County”) violated the
vested rights of its retired employees when it restructured its
health benefits program. This time, we are asked to consider
whether two reforms adopted by the County in 2006
deprived the plaintiffs of vested employment benefits, in
violation of the County’s contractual obligations, and
constituted age discrimination, in violation of California’s
Fair Employment and Housing Act (“FEHA”).
HARRIS V. COUNTY OF ORANGE 5
We affirm the district court’s dismissal of the FEHA
claim, but conclude that the district court erred in dismissing
certain of Retirees’ contract claims. We accordingly reverse
in part and remand.
I.
This case arises out of the restructuring of two benefits
the County provided to its retirees: the Retiree Premium
Subsidy and the Grant Benefit.
Retiree Premium Subsidy. The County began offering
group medical insurance to its retired employees in 1966.
Initially, premiums were calculated separately for active and
retired employees. The County paid a large portion of the
premiums for active employees, but retirees paid most of
their own premiums.
In 1985, the County combined active and retired
employees into a single unified pool for purposes of
calculating premiums. Because retired employees are, on
average, older and more expensive to insure for medical
coverage than active employees, retirees, if pooled
separately, pay higher premiums. By allowing retirees to
participate in a single unified pool, the County effectively
established a health insurance subsidy for retirees, lowering
their premiums while raising active employee premiums
(largely paid by the County) above the actual cost of
covering active employees as a separate group. For purposes
of the present litigation, this benefit is called the “Retiree
Premium Subsidy.”
Grant Benefit. From 1993 through 2007, retired
employees also received a monthly grant (the “Grant
Benefit”) to defray the cost of health care premiums. The
terms of the Grant Benefit were set forth in Memoranda of
6 HARRIS V. COUNTY OF ORANGE
Understanding (“MOUs”) between the County and its union-
represented employees. The monthly grant for retirees was
calculated by multiplying an employee’s years of service at
retirement by a fixed-dollar amount (“the Grant Multiplier”).
The initial Grant Multiplier was $10, but it increased every
year by up to 5%, to reflect inflation.
The Grant Benefit was established in 1993 after years of
negotiations between the County and its labor unions. In
return for the Grant Benefit, the unions and the Orange
County Employee Retirement System (“OCERS”) agreed to
allow the County to access $150 million in surplus
investment earnings controlled by OCERS. The County
intended the Grant Benefit to induce employees to retire
early, allowing the County to reduce its workforce. The
Benefit was funded by a mandatory contribution from active
employees of 1% of their gross monthly wages, 1 as well as
investment earnings from a portion of the OCERS surplus.
Under the agreements governing the 1993 Grant Benefit, the
County was obligated to “step in” if the 1% contribution and
investment earnings were insufficient to cover program
expenses. In addition, any employee who left County
employment before becoming eligible for a Grant Benefit
would receive a lump sum cash rebate of his 1% salary
contribution.
Retirees attach to their complaint the 1993B94 MOU and
the Board of Supervisors resolution formally adopting it, as
an “exemplar” of the agreements reached between the
1
In submissions after oral argument, the parties disputed whether
employees contributed 1% of their otherwise payable wages, or whether,
instead, the County agreed to increase wages by 1% for the purpose of
funding the Grant Benefit. For reasons addressed below, this dispute is
not material for present purposes.
HARRIS V. COUNTY OF ORANGE 7
County and its main labor union each year between 1993 and
2007. The MOU provides that “[e]ffective August 1, 1993[,]
the County shall administer a Retiree Medical Insurance
Grant plan for employees who have retired from County
service and who meet the eligibility requirements set forth
in” other provisions of the MOU. It further provides that
“[u]pon . . . County retirement, an eligible retiree . . . shall
receive a” Grant Benefit. Retirees allege that “[t]he terms
contained in the remaining MOUs in effect between 1993
and 2007 . . . are materially the same.”
2008 Benefits Reductions. Beginning in 2004, the
County negotiated with its labor unions to restructure the
retiree medical program, which was underfunded. Two
years later, the Board of Supervisors approved an agreement
with the labor union that made the following relevant
reductions in benefits for retirees: (1) the County would split
retired and active employees into separate pools to set
premiums; (2) the maximum increase for the Grant
Multiplier would be reduced from 5% to 3%; and (3) once a
retiree became eligible for Medicare (at age 65), the Grant
Benefit would be reduced by 50%.
Retirees allege that the County’s decision to eliminate
the Retiree Premium Subsidy and to reduce the Grant
Benefit increased their health care costs significantly. Some
retirees cannot afford the increases and have had to abandon
their County-sponsored health insurance for plans with
lesser benefits.
REAOC Litigation. On November 5, 2007, the Retired
Employees Association of Orange County, Inc. (“REAOC”),
a non-profit representing County retirees and their spouses,
filed suit challenging the County’s decision to eliminate the
Retiree Premium Subsidy. The district court granted
summary judgment in favor of the County in the REAOC
8 HARRIS V. COUNTY OF ORANGE
case, holding that the County was not obligated to provide
the Retiree Premium Subsidy for the duration of Retirees’
lives because there was no evidence of “any explicit
legislative or statutory authority” requiring the County to do
so, and because that obligation could not arise by implication
from past practices or the parties’ course of dealing. Retired
Emps. Ass’n of Orange Cty., Inc. v. Cty. of Orange (REAOC
I), 632 F. Supp. 2d 983, 987 (C.D. Cal. 2009).
On appeal, we certified to the California Supreme Court
the question “[w]hether, as a matter of California law, a
California county and its employees can form an implied
contract that confers vested rights to health benefits on
retired county employees.” Retired Emps. Ass’n of Orange
Cty., Inc. v. Cty. of Orange (REAOC II), 610 F.3d 1099,
1101 (9th Cir. 2010). The California Supreme Court,
answering the certified question, held that “under California
law, a vested right to health benefits for retired county
employees can be implied under certain circumstances from
a county ordinance or resolution.” Retired Emps. Ass’n of
Orange Cty., Inc. v. Cty. of Orange (REAOC III), 52 Cal. 4th
1171, 1194 (2011). In light of that response, we remanded
the case to the district court for further proceedings. Retired
Emps. Ass’n of Orange Cty., Inc. v. Cty. of Orange (REAOC
IV), 663 F.3d 1292 (9th Cir. 2011). On remand, the district
court again entered summary judgment in favor of the
County, finding that REAOC had failed to show the
existence of an implied contract right to the pooled premium.
REAOC appealed, and this Court affirmed. See Retired
Emps. Ass’n of Orange Cty., Inc. v. Cty. of Orange (REAOC
V), 742 F.3d 1137 (9th Cir. 2014).
Harris Litigation. While the REAOC case was pending,
Plaintiffs, on behalf of thousands of retired Orange County
employees (collectively, “Retirees”), filed this class action,
HARRIS V. COUNTY OF ORANGE 9
which was assigned to the same district judge presiding over
the REAOC litigation. The complaint alleged that the
County breached its contractual obligations to Retirees by
eliminating the Retiree Premium Subsidy and reducing the
Grant Benefit, and that the elimination of the Retiree
Premium Subsidy also constituted age discrimination in
violation of California’s Fair Employment and Housing Act.
The Harris and REAOC litigations overlap to the extent both
seek declaratory and injunctive relief related to the County’s
elimination of the Retiree Premium Subsidy. But this class
action, Harris, also seeks damages, pleads claims relating to
the reduction of the Grant Benefit, and asserts a FEHA claim
not alleged in REAOC.
Like REAOC, this case has a lengthy procedural history,
including a prior trip to this Court. In 2011, the district court
granted the County’s motion for judgment on the pleadings,
holding, inter alia, that Retirees’ contract claims relating to
the Grant Benefit should be dismissed because Retirees had
not identified any “explicit legislative or statutory authority”
that required the County to provide the Grant Benefit in
perpetuity. 2 While an appeal was pending, the California
Supreme Court issued its answer to the certified question in
the REAOC litigation. In light of REAOC III, we reversed
the district court’s Rule 12(c) dismissal, concluding that
although “there was no explicit legislative or statutory
authority requiring the County to provide the Grant [Benefit]
in perpetuity,” the “district court should have granted the
Retirees leave to amend.” Harris v. Cty. of Orange (Harris
I), 682 F.3d 1126, 1134 (9th Cir. 2012).
2
The district court also dismissed the FEHA and Retiree Premium
Subsidy claims for procedural reasons not relevant to the current appeal.
10 HARRIS V. COUNTY OF ORANGE
On remand, Retirees filed a Second Amended Complaint
(“SAC”). The allegations in the SAC mirrored those in the
prior complaint with regard to the Retiree Premium Subsidy
claims. With regard to the Grant Benefit claims, Retirees
alleged that the County impliedly promised to provide the
Grant Benefit for life, as shown in the express terms of the
relevant MOUs and by extrinsic evidence of the parties’
intent.
On January 30, 2013, the district court granted the
County’s motion to dismiss the SAC. The court dismissed
the contract claims relating to the Grant Benefit with
prejudice “because there is no explicit legislative or statutory
authority requiring the County to provide the retirement
benefits associated with the Grant,” and because “the
minimal changes made in the[] SAC still fail to address the
problems previously identified by this Court and the Ninth
Circuit.” The FEHA claim was dismissed as well, on the
ground that “Plaintiffs have provided no legal authority that
FEHA prohibits this action” — splitting the premium pool
into separate retiree and active pools — “which is based on
retirement status and is facially neutral to age.” But because
the application of FEHA in this context was a “somewhat
murky area of law[,]” the district court granted leave to
amend that claim.
Less than a month later, another panel of this Court
issued its opinion in Sonoma Cty. Ass’n of Retired Emps. v.
Sonoma Cty., 708 F.3d 1109 (9th Cir. 2013), in which
retirees alleged that Sonoma County had breached its
obligation to provide certain health care benefits in
perpetuity. Noting that the district court in that case “did not
have the benefit of” the California Supreme Court’s answer
to the certified question in the REAOC litigation — “that a
public entity in California can be bound by an implied term
HARRIS V. COUNTY OF ORANGE 11
in a written contract under specified circumstances” — this
Court reversed the dismissal of the Sonoma complaint so that
the retirees could attempt “to plausibly allege that the
County used resolutions or ordinances to ratify or approve
MOUs that created contracts for healthcare benefits and
included implied terms vesting those benefits for
perpetuity.” Id. at 1119–20. Sonoma briefly discussed the
Harris I appeal. See id. at 1119.
In light of Sonoma, Retirees moved for reconsideration
of the district court’s January 30, 2013 order dismissing the
SAC, asserting that Sonoma made clear that “retired county
employees could premise claims to vested retirement health
benefits on an implied contract theory, supporting their
claim to vesting solely . . . by extrinsic evidence of the
parties’ intent.” The district court denied the motion for
reconsideration.
Retirees then filed a Third Amended Complaint
(“TAC”), reasserting all claims, and the County again moved
to dismiss the complaint. At the hearing on the County’s
motion, Retirees described and offered to submit additional
evidence purporting to show that the County’s reason for
eliminating the Retiree Premium Subsidy was based on
Retirees’ age. The district court, taking the proffered
evidence into account, once more dismissed the contract-
based claims for the reasons given in the January 30, 2013
order. The court also dismissed the FEHA claim, this time
with prejudice, concluding “that ‘splitting the pool’ between
retired employees and active employees is not actionable age
discrimination under FEHA.”
Retirees moved for reconsideration, seeking leave to file
a Fourth Amended Complaint that included the evidence
they had described at the hearing regarding the motion to
dismiss the TAC. The district court denied the motion,
12 HARRIS V. COUNTY OF ORANGE
stating that it had already considered the new allegations and
evidence presented at the hearing.
After judgment was entered in favor of the County on all
claims, Retirees timely appealed. The appeal challenges the
dismissal of three categories of claims: (1) contract claims
related to the reduction of the Grant Benefit; (2) contract
claims related to the elimination of the Retiree Premium
Subsidy; and (3) the FEHA claim related to the elimination
of the Retiree Premium Subsidy.
REAOC V directly addressed the second set of claims.
See 742 F.3d at 1142–44. As this case is indistinguishable
from REAOC V as to those claims, we affirm the district
court’s dismissal of Retirees’ claims that the County
breached its contractual obligations by eliminating the
Retiree Premium Subsidy. We address the other two claims,
not covered by REAOC V, in turn.
II. Implied Contract
A.
Retirees allege that they had an implied contractual right
to receive the Grant Benefit throughout their retirement. As
in REAOC V, it is undisputed that the County and its retirees
had annual contracts providing for health benefits. Id. at
1140. “Th[ose] contract[s] [were] the product of
negotiations resulting in binding MOUs . . . adopted by
County resolution . . . between the County and” its
employees. Id. The entitlement to the Grant Benefit was set
forth expressly in the MOUs, which stated that “[u]pon . . .
County retirement, an eligible retiree . . . shall receive” a
Grant Benefit, which is then described. Retirees therefore
allege an express contractual right to the Grant Benefit for
some period. The question on appeal is whether those
HARRIS V. COUNTY OF ORANGE 13
annual contracts also contained, as an implied term, a
promise that the Grant Benefit would continue during their
retirement.
The district court dismissed the Grant Benefit contract
claims with prejudice, relying on Harris I as holding that
“‘to state a claim for a contractual right to the Grant, the
Retirees must plead specific resolutions or ordinances
establishing that right.’” “Plaintiffs here have failed to do
so,” the district court stated. “Instead, they pointed to
documents already found insufficient by this Court and the
Ninth Circuit to allege a term guaranteeing continuance of
the grant — the 1993–1994 MOU and the Board resolution
enacting it.” Furthermore, the district court concluded,
“Plaintiffs’ ‘circumstantial evidence’ of legislative intent
does not salvage these claims.”
To begin, the district court misread this Court’s decision
in Harris I. Harris I did not directly address Retirees’
implied contract claim, as clarified in the SAC, with respect
to the Grant Benefit. Sonoma explained the limits of Harris
I: “The retirees in Harris [I] asserted two claims, one based
on an implied promise to subsidize health insurance
premiums . . . via a pooling arrangement,” the Retiree
Premium Subsidy claim, “and the other based on the
county’s express promise . . . to provide a monthly grant
toward the cost of health insurance,” the Grant Benefit
claim. Sonoma, 708 F.3d at 1119 (emphasis added). It was
only on remand that Retirees clarified their allegations as
encompassing both express terms as to the substance of the
Grant Benefit and an implied term that required the County
to continue providing that benefit during their retirement. 3
3
Specifically, the FAC alleged only that “Plaintiffs had a contractual
right to the Grant and other benefits of the Grant Program as that
14 HARRIS V. COUNTY OF ORANGE
In short, “in dismissing the claims based on the express
written contract,” Harris I “did not purport to rule on a
theory premised on implied terms or to interpret or apply”
the California Supreme Court decision in REAOC III, as that
theory was not spelled out in the complaint reviewed in
Harris I. Sonoma, 708 F.3d at 1119.
The County characterizes Harris I’s remand as having
been very limited in scope, suggesting, perhaps, that Retirees
should not have been permitted to amend the complaint to
allege an implied contract term. The County contends that
Harris I “remanded with only one instruction on this issue:
‘to amend their Complaint to set out specifically the terms of
those MOUs on which their claim is predicated.’” We do
not read Harris I so narrowly.
Harris I held that Retirees “should be granted leave to
amend their Complaint to set forth facts establishing their
claimed right to receive the Grant in perpetuity.” 682 F.3d
at 1135. Although we suggested that one way to establish
such a right would be by “set[ting] out specifically the terms
of those MOUs on which the[] claim is predicated,” Harris
I did not prohibit Retirees from amending the complaint to
establish that same right by other means. Id. Indeed, in
identifying the FAC’s flaws, Harris I noted that “Retirees
have failed to plead facts that suggest that the County
promised, in the MOUs or otherwise, to maintain the Grant
as it existed on the Retirees’ respective dates of retirement.”
Id. (emphasis added). Retirees’ allegations in the SAC
regarding an implied right to the Grant Benefit supported by
program was reflected in the MOUs in place on the date of their
respective retirements,” while the SAC alleged that “Plaintiffs had an
implied contractual right to receive the Grant Benefit, as it was defined
in the 1993–2007 MOUs, throughout their retirement.”
HARRIS V. COUNTY OF ORANGE 15
extrinsic evidence are thus well within the scope of Harris
I’s remand.
Moreover, the district court allowed the filing of the
SAC, rather than rejecting it as inconsistent with our
directive in Harris I. “The decision of whether to grant leave
to amend . . . remains within the discretion of the district
court.” Leadsinger, Inc. v. BMG Music Publ’g, 512 F.3d
522, 532 (9th Cir. 2008). Having done so, the district court
was obliged to determine whether that complaint stated a
claim — which, we now conclude, it did.
B.
Our question is whether in light of the REAOC opinions
and Sonoma, the SAC sets forth sufficient allegations
regarding the continuation of the Grant Benefit during
Retirees’ lifetimes to survive a motion to dismiss. It does.
Sonoma set forth the framework for deciding a case like
this one, in which the MOU is explicit as to the substance of
the benefit but not as to its term: “[T]o survive a motion to
dismiss, the . . . complaint must plausibly allege that the
County: (1) entered into a contract that included implied
terms providing healthcare benefits to retirees that vested for
perpetuity; and (2) created that contract by ordinance or
resolution.” 708 F.3d at 1115. 4
Sonoma held that the plaintiff association in that case
“met the first requirement by plausibly alleging that: (1) the
County entered into a contract; (2) the contract provided
healthcare benefits to retirees; and (3) the contract included
4
As explained below, the second of these requirements is not
seriously disputed.
16 HARRIS V. COUNTY OF ORANGE
an implied term that the benefits were vested for perpetuity.”
Id. Specifically, the association met the first two elements
by alleging that the County entered into MOUs that
“promised healthcare benefits” — and “[t]here is no doubt
that the MOUs are contracts.” Id. at 1115–16. As to the last
of these elements, Sonoma concluded that the
complaint also plausibly alleges that the
County intended these healthcare benefits to
vest for perpetuity. The complaint states that
the County conveyed this intent “in writing,
orally, by implication, and through practice.”
The Association supported this allegation
with factual matter, including: (1) MOUs,
resolutions, and other documents establishing
the County’s long-standing course of
conduct; (2) allegations that former
employees who drafted these documents
would testify in support of the Association’s
position regarding the “background, purpose,
and intent” of the documents; and
(3) statements that at least one former Board
member would testify as to the County’s
intent that the benefits vest in perpetuity.
Id. at 1116. To the extent the point was unclear before,
Sonoma clarified that, once a plaintiff identifies an express
contract covering the substance of a benefit, it may rely on
extrinsic evidence to prove the existence of an implied term
requiring the continuation of that benefit in perpetuity.
REAOC V reiterated this point, emphasizing that “[w]e do
not cabin the role of extrinsic evidence as narrowly as the
district court did. Indeed, the California Supreme Court
recognized the role of ‘convincing extrinsic evidence,’ and
in Sonoma . . . , we noted that implied terms may include
HARRIS V. COUNTY OF ORANGE 17
‘testimony regarding the County’s intent.’” 742 F.3d at
1143 (citations omitted).
In this case, Retirees have alleged the existence of annual
MOUs establishing a right to the Grant Benefit. This
allegation suffices to meet the first two elements of
Sonoma’s first requirement. Retirees further allege that they
“had an implied contractual right to receive the Grant
Benefit . . . throughout their retirement.” In support, the
TAC makes specific allegations regarding the basis for this
implied right, including allegations regarding the course of
negotiations for the Grant Benefit. Retirees’ allegations
plausibly support the conclusion that the County impliedly
promised a lifetime benefit, which could not be unilaterally
eliminated or reduced.
First, as evidence that the Grant Benefit was part of a
bargained-for exchange, Retirees point to the agreement
allowing the County to access $150 million in disputed
surplus investment earnings controlled by OCERS. Retirees
allege that the County “estimated in 1993 that the
mechanism as arranged and implemented,” including the
$150 million OCERS fund and the 1% wage contribution,
“would cover the costs of the Grant program for at least
30 years.” The establishment of a long-term funding
mechanism, including the commitment of a large sum of
money that could have been used for other purposes,
undermines the County’s contention that there was no
promise to provide the Grant Benefit beyond the duration of
any single one-year MOU. The logical extension of the
County’s argument is that it could have terminated the Grant
Benefit in 1994, notwithstanding the receipt of the $150
million OCERS funds, an inference considerably less
plausible than the converse inference — that the
commitment of the OCERS funds indicates a continuing
18 HARRIS V. COUNTY OF ORANGE
obligation, and so refutes the County’s year-by-year
description of its obligation. The complaint thus contains, at
a minimum, sufficient “factual content [to] allow[] the court
to draw the reasonable inference” that the County promised
to provide the benefit for a longer term than the period
covered by each MOU. Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009).
Second, that active employees were required to
contribute 1% of their wages to fund the Grant Benefit
supports the notion that the parties intended the benefit to be
available for employees throughout their retirements, rather
than eliminated or reduced before employees could fully
benefit from their earlier contributions. This understanding
is strongly reinforced by the MOU’s rebate provision, which
allowed active employees to recoup any wages they
contributed if they separated from County service before
becoming eligible to receive the Grant Benefit. The rebate
provision suggests that the contributions made by active
employees were tied to future eligibility for the Grant
Benefit, constituting a form of deferred compensation
assured to those employees who continued working until
they became eligible for retirement. To reduce the benefit
during the retirements of the same employees who had
funded it breaches that implicit commitment. The SAC thus
sufficiently alleges that the County “entered into a contract
that included implied terms providing healthcare benefits to
retirees that vested for perpetuity.” Sonoma, 708 F.3d at
1115. 5
5
We note, however, that Retirees may not at this juncture have as
much contemporaneous evidence of legislative intent to create a
contractual right to lifetime benefits as the plaintiff association did in
Sonoma. Further, Retirees will have to bear their Aheavy burden,”
HARRIS V. COUNTY OF ORANGE 19
To survive a motion to dismiss, Sonoma requires, finally,
that Retirees allege that the County “created that contract by
ordinance or resolution.” Id. In Sonoma, the plaintiff
association did not do that. Although “the complaint alleged
that the MOUs were ‘Board-ratified,’ it did not allege that
the Board ratified the MOUs by resolution or ordinance; nor
did the [plaintiff association] submit copies of any such
resolutions or ordinances with the amended complaint.” Id.
at 1117. Sonoma therefore remanded to the district court to
allow the plaintiff association to amend the complaint to cure
this pleading defect. 6
REAOC III, 52 Cal. 4th at 1190, of establishing an implied right to vested
benefits notwithstanding the explicit anti-vesting clause in the 1993
Retiree Medical Plan document.
As to the second concern, we note that Retirees’ contract claims are
premised on the express and implied terms of the MOUs, not the Retiree
Medical Plan, a separate document. Unlike the MOUs, which were the
product of collective bargaining, the Retiree Medical Plan was
unilaterally created by the County. Retirees maintain that “[t]he 1993
Plan Document,” including its anti-vesting provision, “was not
incorporated into or referenced in the binding contracts between the
County and the unions, and there is no indication that its contents were
ever discussed with or disclosed to the unions during the negotiations
that led to the adoption of those agreements.” The simple existence of
the anti-vesting clause, therefore, provides no basis for holding Retirees’
implied contract claims implausible as a matter of law.
6
On remand, the Sonoma district court held that the plaintiff
association was able to “solve this problem” by filing “twenty-six
resolutions . . . contain[ing] language expressly adopting the MOUs
highlighted in the Ninth Circuit’s opinion.” Sonoma Cty. Ass’n of
Retired Emps. v. Sonoma Cty., C 09-4432 CW, 2015 WL 1870841, at *7
(N.D. Cal. Apr. 23, 2015).
20 HARRIS V. COUNTY OF ORANGE
Here, by contrast, Retirees attached to the SAC the
Board resolution expressly adopting the terms of the
“exemplar” 1993 MOU. The County has not disputed that
each annual MOU was similarly adopted by resolution of the
Board. 7 We require nothing more at this pleading stage of
the litigation.
We therefore reverse the district court’s order insofar as
it dismissed Retirees’ contract claims regarding the Grant
Benefit.
III. Age Discrimination
Retirees’ FEHA age discrimination claim challenges the
elimination of the Retiree Premium Subsidy.
We begin by reiterating that Retirees had no contractual
right to continue receiving the Retiree Premium Subsidy.
REAOC V so held, and that conclusion is binding here.
742 F.3d at 1142. Our inquiry must therefore proceed ab
initio — that is, as if the County decided for the first time to
provide retiree health benefits and chose at that point to
create separate active and retiree pools for calculating
insurance premiums, taking into account in doing so that the
retiree pool is older, on average, than the active employee
pool.
7
The County contends that Retirees “fail to satisfy the second factor
of requirement alleging a contract ‘created . . . by ordinance or
resolution’” because the MOUs and Board resolutions adopting them do
not contain an implied vesting term. This argument is just a restatement
of the County’s position, which we have rejected, regarding Sonoma’s
first requirement.
HARRIS V. COUNTY OF ORANGE 21
As a general matter, California law “‘does not require
equal health care benefits for active employees and
retirees.’” Orange Cty. Emps. Ass’n v. Cty. of Orange,
285 Cal. Rptr. 799, 805 (Cal. Ct. App. 1991) (quoting
Ventura Cty. Retired Emps.’ Ass’n v. Cty. of Ventura,
279 Cal. Rptr. 676, 678 (Cal. Ct. App. 1991)). 8 After a
thorough “review of [California’s] entire statutory scheme,”
Orange County Employees Association rejected the
contention that a local government was required to provide
the same health coverage to retirees as to active employees,
at no increased cost to retirees. 285 Cal. Rptr. at 805. It
specifically held that “local agencies [are permitted] to
consider the differences between retired and active
employees in providing health benefits,” and that such
agencies are not required to “provide the same medical
benefit package to retirees and active employees.” Id. We
could not, therefore, fault the County for offering different
benefits to retirees and to active employees at the outset,
absent a FEHA violation.
FEHA was enacted “to protect and safeguard the right
and opportunity of all persons to seek, obtain, and hold
employment.” Cal. Gov’t Code § 12920. To that end,
FEHA makes it “an unlawful employment practice . . . [f]or
an employer, because of the . . . age . . . of any person, to . . .
discriminate against the person in compensation or in terms,
conditions, or privileges of employment.” Cal. Gov’t Code
§ 12940(a). Retirees assert that the County’s decision to
8
Federal law also permits certain exemptions for special types of
health insurance, including “retiree-only” plans. See Carson v. Lake
Cty., Ind., 865 F.3d 526, 530 (7th Cir. 2017). For example, as we have
recently held, retiree-only health plans are not covered by parts of the
Employee Retirement Income Security Act (“ERISA”). See King v. Blue
Cross & Blue Shield of Ill., 871 F.3d 730, 739–40 (9th Cir. 2017).
22 HARRIS V. COUNTY OF ORANGE
“split the pool” and thereby eliminate the Retiree Premium
Subsidy violated FEHA by “target[ing] ‘retirees’ based on
. . . express stereotyped assumptions that (1) a ‘retiree’ is
likely to be older than an active employee; and (2) an older
person is likely to have higher health costs than a younger
one.”
“[B]ecause California courts have interpreted [FEHA] in
accordance with cases interpreting the Age Discrimination
in Employment Act (‘ADEA’), and the federal Civil Rights
Act, we look to federal cases in those areas” in evaluating
novel FEHA claims. Strother v. S. Cal. Permanente Med.
Grp., 79 F.3d 859, 866 (9th Cir. 1996) (citations omitted).
Here, there are no reported California cases discussing the
interplay of retirement status and age discrimination under
FEHA, so we turn to federal case law for guidance.
First, this circuit has not decided whether the ADEA
applies to retirees. We hold that it does. 9
Interpreting the term “employees” in the context of Title
VII’s anti-retaliation provision, the Supreme Court observed
that “the word ‘employed’ [in the definition of
“employee”] 10. . . could just as easily be read to mean ‘was
9
Kentucky Retirement Systems v. EEOC, 554 U.S. 135, 138 (2008),
assumed, but did not address directly, whether the ADEA applies to
retirees; the question therefore remains open. See, e.g., Sorenson v.
Mink, 239 F.3d 1140, 1149 (9th Cir. 2001) (“[U]nstated assumptions on
non-litigated issues are not precedential holdings binding future
decisions.” (citation omitted)).
10
Title VII defines “employee” as “an individual employed by an
employer,” except “any person elected to public office in any State or
political subdivision of any State by the qualified voters thereof, or any
person chosen by such officer to be on such officer’s personal staff, or
an appointee on the policy making level or an immediate adviser with
HARRIS V. COUNTY OF ORANGE 23
employed.’” Robinson v. Shell Oil Co., 519 U.S. 337, 342
(1997). It therefore concluded that an employer’s adverse
treatment of individuals who were no longer employed could
nonetheless constitute discrimination against “employees.”
Id.
Like Title VII, the ADEA defines the term “employee”
as “an individual employed by any employer.” 29 U.S.C.
§ 630(f). The Third Circuit, in a persuasive opinion, applied
Robinson to the ADEA, ruling that “the ADEA applies even
when retiree benefits are structured discriminatorily after
retirement,” rather than before retirement. Erie Cty. Retirees
Ass’n v. Cty. of Erie, 220 F.3d 193, 210 (3d Cir. 2000). Like
the Third Circuit, we construe the definition of “employee”
and of “employee benefits” in the ADEA in favor of the
ADEA’s broad anti-discrimination purpose, and are
persuaded that Congress intended the statutory protections
to cover post-employment benefits for already retired
employees.
As to the application of the usual ADEA/FEHA analogue
here, we note that “the statutory definition of ‘employee’ [in
the FEHA statute] does not actually define who is an
employee under the FEHA; it merely excludes persons
employed by close relatives and those ‘employed’ by
nonprofit sheltered workshops and rehabilitation facilities.
Therefore . . . the FEHA definitional provision is not
particularly helpful in determining under what
circumstances one may be considered to be an employee for
purposes of the FEHA.” Mendoza v. Town of Ross, 128 Cal.
App. 4th 625, 632 (2005). “More helpful is the definition of
‘employee’ contained in regulations enacted by the
respect to the exercise of the constitutional or legal powers of the office.”
42 U.S.C. § 2000e(f).
24 HARRIS V. COUNTY OF ORANGE
Department of Fair Employment and Housing” [ADFEH”]
— “[a]ny individual under the direction and control of an
employer under any appointment or contract of hire or
apprenticeship, express or implied, oral or written.” Estrada
v. City of Los Angeles, 218 Cal. App. 4th 143, 148 (2013);
Cal. Code Regs., tit. 2, § 11008(c).
Neither the FEHA’s statutory (non)definition nor the
DFEH’s regulatory definition provides any basis for
departing from the norm of construing the FEHA as parallel
to the ADEA. Like the ADEA, the statute uses the term
“employed” in the employee exclusions, which could mean
“was employed.” The regulation uses the term “under the
direction and control of an employer,” which also could
include individuals under such control in the past. And the
policy considerations under the two statutes favoring
inclusion of retirees are also the same, see Erie, 220 F.3d at
210. We therefore hold that changes in retirees’ health
benefits are covered by the FEHA, despite the fact that they
are not active employees.
Crucially, however, the County’s elimination of the
subsidy does not discriminate among retirees based on age.
Cf. Am. Ass’n of Retired Pers. v. EEOC, 489 F.3d 558 (3d
Cir. 2007). Nor does the subsidy elimination distinguish
among active employees based on age, or against active
employees who are old enough to retire but have not. The
sole question before us is whether the County, under the
ADEA and so under California’s FEHA age discrimination
provisions, may treat retirees as a group differently, with
regard to medical benefits, than employees as a group,
taking into account that the cost of providing medical
benefits to the retiree group is higher because the retirees are
on average older. We conclude that it may.
HARRIS V. COUNTY OF ORANGE 25
The starting point for this inquiry is Hazen Paper
Company v. Biggins, 507 U.S. 604 (1993). Hazen concerned
“whether an employer violates the ADEA by acting on the
basis of a factor, such as an employee’s pension status or
seniority, that is empirically correlated with age.” Id. at 608.
The Court held that “liability depends on whether the
protected trait (under the ADEA, age) actually motivated the
employer’s decision” and “had a determinative influence on
the outcome.” Id. at 610 (emphasis added). Observing that
the “essence of what Congress sought to prohibit in the
ADEA” is making employment decisions based on
“inaccurate and stigmatizing stereotypes” about older
employees, the Court explained that when an employment
“decision is wholly motivated by factors other than age, the
problem of inaccurate and stigmatizing stereotypes
disappears . . . even if the motivating factor is correlated with
age, as pension status typically is.” Id. at 610–11 (emphasis
omitted). In short, “there is no disparate treatment under the
ADEA when the factor motivating the employer is some
feature other than the employee’s age.” 11 Id. at 609; see also
Kentucky Retirement System v. EEOC, 554 U.S. 135, 148
(2008) (“Where an employer adopts a pension plan that
includes age as a factor, and that employer then treats
employees differently based on pension status, a plaintiff, to
state a disparate-treatment claim under the ADEA, must
adduce sufficient evidence to show that the differential
treatment was ‘actually motivated’ by age, not pension
status.”); Smith v. City of Jackson, 544 U.S. 228, 242 (2005)
(holding that a decision to give raises based on an
11
The Supreme Court has subsequently made clear that mixed-
motive age discrimination claims are not permitted under the ADEA:
Plaintiffs bringing disparate treatment claims must prove that age was
the “but-for” cause of the employer’s adverse decision. See Gross v.
FBL Fin. Servs., Inc., 557 U.S. 167, 175–78 (2009).
26 HARRIS V. COUNTY OF ORANGE
employee’s seniority and position — factors correlated with
age — “was a decision based on a ‘reasonable facto[r] other
than age’” and therefore did not violate the ADEA).
Having so held, Hazen was careful not to rule out “the
possibility that an employer who targets employees with a
particular pension status on the assumption that these
employees are likely to be older thereby engages in age
discrimination.” 507 U.S. at 612–13.
Critically for present purposes, however, Hazen
concerned the comparative treatment of active employees
based on whether they were eligible to retire, not a
comparison of the benefits provided to active employees and
to retirees. See id. Conversely, Kentucky Retirement
concerned a comparison of the benefits provided to different
retirees — again, no comparison of the benefits provided to
active employees and to retirees was at stake. 554 U.S. at
138. The two cases, consequently, are informative here in
their holdings that a focus on retiree status alone is not itself
age discrimination, but they do not address whether, where
the issue is calculating benefits for all retirees as a group, it
is an ADEA or FEHA violation to consider that retirees as a
group are on average older than active employees as a group.
Retirees nonetheless maintain that here, pension status
was not a “factor other than age” but rather an impermissible
“proxy for age.” Id. at 610, 613; Kentucky Retirement,
554 U.S. at 142. As evidence, they point to statements by
County officials made both contemporaneously with the
decision to charge employees more for medical benefits and
during the course of litigation, as well as to reports prepared
to assist the County in deciding how to restructure retiree
HARRIS V. COUNTY OF ORANGE 27
health benefits. 12 For example, the 2004 report notes “that a
45 year-old can be expected to have less than $3,000 per year
in claims, while a 60 year-old would have well over $4,000
per year.” They argue that reliance upon such age-based
generalizations constitutes using retiree status as a proxy for
age within the meaning of Hazen, even though, among
retirees, the cost of medical benefits does not vary by age.
Such class-based treatment, they maintain, is prohibited by
analogy to Los Angeles Department of Water and Power v.
Manhart, 435 U.S. 702, 708 (1978), and Arizona Governing
Committee v. Norris, 463 U.S. 1073, 1084 (1983).
Retirees’ reliance on Manhart and Norris is
fundamentally misplaced. Manhart invalidated as
discriminatory a retirement plan’s requirement that female
employees make larger pension contributions while
working. Having determined that “female employees, on the
average, will live a few years longer than . . . male
12
Allegations regarding the 2004 report are contained only in
Retirees’ Fourth Amended Complaint, never accepted by the district
court. Retirees, however, put on evidence regarding the report at the
April 29, 2013 hearing on the County’s motion to dismiss the TAC, and,
in denying Retirees’ request for leave to file a Fourth Amended
Complaint, the district court stated that it had considered “Plaintiffs’
proffer at the hearing about the Fourth Amendment Complaint” and
concluded that “that the additional allegations would [not] cure the
defects in the pleadings.” The district court thus denied leave to amend
essentially on grounds that the proposed “amendment would be futile.”
Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1041 (9th
Cir. 2011). In evaluating the district court’s ruling in this regard, we too
must consider the allegations in the proposed Fourth Amended
Complaint. See id. at 1042 (reviewing a proposed amended complaint
in assessing whether leave to amend should have been granted). As these
allegations were essentially considered by the district court as to the
merits when denying leave to amend, we consider them in deciding this
appeal.
28 HARRIS V. COUNTY OF ORANGE
employees,” and, consequently, will, as a group, have higher
pension payouts in total than men as a group, the employer
charged each woman more in pension contributions than
each man. Manhart, 435 U.S. at 705.
Manhart rejected the sex-based difference in pension
contributions there challenged. “An employment practice
that requires 2,000 individuals to contribute more money
into a fund than 10,000 other employees simply because
each of them is a woman, rather than a man, is in direct
conflict with both the language and the policy of the Act.
Such a practice does not pass the simple test of whether the
evidence shows ‘treatment of a person in a manner which
but for that person’s sex would be different.’ It constitutes
discrimination and is unlawful unless exempted by the Equal
Pay Act of 1963 or some other affirmative justification.” Id.
at 711.
Manhart stands for the proposition that Title VII
prohibits discrimination “against any individual” on account
of “such individual’s” characteristics, id. at 708 (emphasis
in original) (quoting 42 U.S.C. § 2000e-2(a)(1)), “squarely
reject[ing] the notion that . . . an employer may adopt a
retirement plan that treats every individual woman less
favorably than every individual man,” Norris, 463 U.S. at
1083 (emphasis added) (discussing Manhart). “[T]he basic
policy of [Title VII] requires that we focus on fairness to
individuals rather than fairness to classes,” the Court
explained. Manhart, 435 U.S. at 709. Because individual
women may not fit the generalization on which the
Department’s policy was based — that is, they may not live
as long as the average man — the Court concluded that the
retirement plan was unfair to individual women. Id. at 711.
Likewise, in Norris, the Court held that employers may
not offer employees the option of receiving retirement
HARRIS V. COUNTY OF ORANGE 29
benefits from companies that pay a woman lower monthly
retirement benefits than a “similarly situated” man who has
contributed the same amount from his salary to the plan.
463 U.S. at 1074, 1083. “[I]t is just as much discrimination
‘because of . . . sex,’” the Court explained, “to pay a woman
lower benefits when she has made the same contributions as
a man as it is to make her pay larger contributions to obtain
the same benefits.” Id. at 1086.
Unlike the retirement plans in Manhart and Norris, the
County’s plan does not discriminate against “similarly
situated” persons on the basis of a prohibited characteristic,
here, age. Rather, the retirees’ contention is that in
calculating the rate to be charged to retirees as a group — a
classification that, under Hazen, is not itself an age-based
classification — age was taken into account. But Manhart
specifically noted that its holding did not “call into question
the . . . practice of considering the composition of an
employer’s work force in determining the probable cost of a
retirement . . . plan” and that it was not “unlawful to
determine the funding requirements for an establishment’s
benefit plan by considering the composition of the entire
force.” Manhart, 435 U.S. at 718 & n.34.
It is this aspect of Manhart — the recognition that the
setting of benefits or rates for the pertinent covered group of
employees as a whole, termed the “entire force” in Manhart,
by taking sex actuarially into account, would not be
discrimination based on sex — that controls here. The
County does not, among retirees, charge more to older than
younger retirees. From the outset, the County treated
employees differently from retirees for purposes of medical
benefits, most notably by paying for most of the medical
benefits of active employees but requiring retired employees
to pay for most of their own, with some help from the Grant
30 HARRIS V. COUNTY OF ORANGE
Benefit. That fundamental differentiation has not been
challenged here — not surprisingl`y, as, under California
law, retirees need not be provided medical benefits at all. By
adopting the split-roll for the purpose of calculating
premiums for medical insurance, the County was simply
following through on its determination that already retired
persons, who have ceased providing any services to the
County, are a separate “force” — in Manhart terms — from
the “force” of active employees. Nothing in Manhart
prohibits considering retirees as a separate group for
purposes of calculating the cost of benefits, and making cost
determinations related to that separate group on the basis of
the age of the cohort as a whole — just as employee medical
plans can calculate the equal premiums charged to every
active individual employee by actuarially taking into
account the age and gender distribution of all active
employees.
Retirees have not cited any case to the contrary. Instead,
Retirees rely principally on cases in which some active
employees were treated differently from other active
employees, allegedly because of age. As we have explained,
neither Hazen nor Kentucky Retirement concerned a
circumstance in which the contention was that retirees as a
group were treated differently than active employees as a
group based on the average older age of retirees. And in
other cases Retirees cite, the plaintiffs sought or held active
employment, but were treated differently from similarly
situated job seekers or employees on account of their
retirement eligibility or status. See, e.g., EEOC v. Local 350,
Plumbers & Pipefitters, 998 F.2d 641, 646 (9th Cir. 1992);
Hilde v. City of Eveleth, 777 F.3d 998, 1002–03 (8th Cir.
HARRIS V. COUNTY OF ORANGE 31
2015). 13 We have found no case after Hazen and Kentucky
Retirement suggesting that an employer’s unequal treatment
of retirees vis-à-vis active employees can amount to
unlawful discrimination on the basis of age, whether or not
the average older age of retirees is taken into account in
deciding on policy affecting retirees. Actually retired
workers who are not working and not seeking to work are
simply not similarly situated to the County’s active
employees as to whom they seek equal treatment.
Under California law, public employees need not
provide retired employees medical benefits. Here, the
County has chosen to provide some access to retiree medical
care, albeit on different terms, and at different premium rates
from those applicable to active employees. Active
employees eligible for retirement — a substantial number of
whom are older than many retirees — receive the medical
benefits paid by other active employees, without regard to
age. Under these circumstances, calculating the rates
charged to retirees separately from those applicable to active
employees, taking into account the higher medical costs of
the older cohort of retirees, does not constitute
impermissible discrimination against the retirees based on
age. The overall distinction between the medical plans
covering active employees and retirees is, under Hazen, not
itself discrimination based on age, and calculating the rate
charged every retiree, regardless of age, by taking average
age into account is not, under Manhart, discrimination
against any individual retiree based on a protected category.
13
Additionally, Local 350 was decided before Hazen, and,
inconsistently with Hazen, treated retirement status as necessarily a
proxy for age.
32 HARRIS V. COUNTY OF ORANGE
In short, where employers are not required to provide
post-retirement benefits at all, and particularly where
retirees as a force are covered by separate benefit terms, the
County does not violate the FEHA by treating retirees as a
separate force and making cost calculations accordingly,
taking into account the age distribution of the retiree group
as a whole. Retirees’ claim of unlawful age discrimination
under FEHA fails as a matter of law.
IV.
For the foregoing reasons, we affirm in part, reverse in
part, and remand to the district court for further proceedings
consistent with this opinion. 14
AFFIRMED in part, REVERSED in part,
REMANDED for further proceedings.
14
We deny Retirees’ motion to reassign the case on remand.
“Absent proof of personal bias on the part of the district judge, remand
to a different judge is proper only under unusual circumstances.” United
States v. Reyes, 313 F.3d 1152, 1159 (9th Cir. 2002). There is no claim
of personal bias here, and the record reveals none. Nor do we find any
“unusual circumstances” warranting reassignment. This case presents
complicated questions with which the district court, this Court, and the
California Supreme Court have wrestled over the past several years.
There is no indication that Judge Andrew J. Guilford has been inflexible
in applying this Court’s precedent as it has developed. Moreover, given
the overlap between this case and the REAOC litigation, which
proceeded to discovery and summary judgment, there would be
significant duplication if another judge were required to familiarize
himself or herself with the case.
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417 F.Supp. 532 (1976)
Fannie CRANE and Evelyn Jackson, Individually and on behalf of all other persons similarly situated
v.
David MATHEWS, Individually and in his capacity as Secretary of the United States Department of Health, Education and Welfare, et al.
Civ. A. No. C75-2317A.
United States District Court, N. D. Georgia, Atlanta Division.
February 5, 1976.
On Motion for Temporary Injunctive Relief February 9, 1976.
On Motion for Permanent Injunction June 14, 1976.
*533 *534 *535 Wayne M. Pressel, Georgia Legal Services, Inc., Atlanta, Ga., Lawrence R. Mullen, Los Angeles, Cal., Adele M. Blong, NLSP Center of Social Welfare Policy and Law, Inc., New York City, for plaintiffs.
Arthur K. Bolton, Atty. Gen., Stephen L. Cotter, Asst. Atty. Gen., State of Ga., Atlanta, Ga., for Busbee, Parham and Thurmond.
Julian M. Longley, Jr., Asst. U. S. Atty., N. D. Ga., Atlanta, Ga., for Mathews and Federal defendants.
ORDER
MOYE, District Judge.
This case is before the Court on plaintiffs' motion for preliminary injunction. The action brought by two named plaintiffs on behalf of themselves and all Georgia Medicaid beneficiaries, challenges the approval of a demonstration project, entitled "Recipient Cost Participation in Medicaid Reform," undertaken by the State of Georgia in connection with its Medicaid program under Title XIX of the Social Security Act of 1935, as amended, 42 U.S.C. § 1396 et seq. The project purports to be an attempt to demonstrate the effectiveness of recipient financial participation in the costs of certain medical care provided under the program.
Plaintiffs challenge the approval of the project, asserting that the Court has jurisdiction over the Secretary under 5 U.S.C. § 701 et seq., and over the state defendants pursuant to 28 U.S.C. § 1343(3) and (4) and 42 U.S.C. § 1983. In addition, plaintiffs assert jurisdiction for declaratory relief under 28 U.S.C. §§ 2201 and 2202. The complaint sets forth four counts against the state and federal defendants: (1) Plaintiffs contend that in approving this project, the Secretary acted beyond the scope of his authority under 42 U.S.C. § 1315, thereby violating 42 U.S.C. § 1396a(a)(14) and 45 C.F.R. 249.49(a)(1); (2) that the project was not designed, processed, or approved in accordance with applicable federal requirements set forth in the Handbook of Public Assistance Administration,, Part IV, § 8400 et seq.; (3) that defendants failed to give Medicaid beneficiaries timely notice of the project and opportunity to object and seek administrative review, thereby contravening 45 C.F.R. 205.5 ("State Plan Amendments") and 205.10 ("Hearings"); and (4) that the failure of the state to give timely notice of the waivers and opportunity to seek administrative review violates the Due Process Clause of the Fourteenth Amendment.
The state and federal defendants assert that Congress has granted the Secretary broad discretion under 42 U.S.C. § 1315 to authorize states to conduct pilot, demonstration, and experimental projects in conjunction with approved state plans under the public assistance titles of the Social Security Act, including the Medicaid program, and that the Georgia project fully meets all statutory and administrative requirements for approval of such projects.
*536 Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq., provides for the establishment of cooperative federal-state programs, commonly called "Medicaid", to provide payment for "necessary medical services" rendered to certain "[needy] individuals, whose income and resources are insufficient to meet the costs of [these] services." 42 U.S.C. § 1396. States which choose to participate in the Medicaid program must submit to the Secretary of Health, Education, and Welfare a "state plan" which fulfills all requirements of the Act. See 42 U.S.C. 1396a. If the state submits a plan which fulfills all requirements set out in section 1396a and implementing federal rules, then the Secretary must approve it. Georgia participates in the Medicaid program under such an approved state plan.
Title XIX requires that states which institute Title XIX plans provide Medicaid assistance at least to individuals receiving grants under the cash assistance program of the Social Security Act[1] (the "categorically needy"). 42 U.S.C. § 1396a(a)(10)(A). In addition, the statute permits the states at their option, to include certain other individuals. 42 U.S.C. § 1396a(a)(10)(B). The Georgia program is limited to the categorically needy.
The statute also sets out, at 42 U.S.C. § 1396d(a)(1)-(17), the mandatory and optional medical services which are available under the program. States, like Georgia, which cover only the categorically needy must provide at least the services listed in § 1396d(a)(1)-(5): certain inpatient hospital services, outpatient hospital services, laboratory and x-ray services; covered skilled nursing facility services for individuals 21 years of age and older; early and periodic screening, diagnosis, and treatment services for children under 21; family planning services and supplies; and physicians' services. 42 U.S.C. § 1396a(a)(13)(B). In addition the state must provide a mix of institutional and non-institutional care and services, and home health services for any individual entitled under the state plan to skilled nursing facility services. Id. These items of medical care are commonly known as "mandatory" or "required" services. The other services listed in § 1396d(a), which a state may offer, if it chooses, are called "optional" services.
Among the state plan requirements set out in § 1396a(a) is the requirement in subsection (14) governing the imposition of co-payments or cost-sharing on Medicaid beneficiaries. The statute, 42 U.S.C. § 1396a(a)(14), 45 C.F.R. 249.40(a)(1), provides that cash assistance recipients and certain other individuals may not be required to contribute to the costs of mandatory services under the program, and that any such charge with respect to other medical care under the program will be nominal in amount, as determined in accordance with standards approved by the Secretary and included in the plan. 42 U.S.C. § 1396a(a)(14)(A)(ii). The statute allows a broader scope with respect to individuals other than the categorically needy. 42 U.S.C. § 1396a(a)(14)(B). The co-payment provisions of the Act have been implemented by the Secretary in regulations at 45 C.F.R. 240.40, as amended, 39 F.R. 36590 (October 11, 1974), 39 F.R. 39267 (November 6, 1974).
While state requirements under Title XIX are mandatory upon the states, Title XI of the Act, section 1115, 42 U.S.C. § 1315, provides a mechanism whereby such requirements may be waived in certain circumstances. As pertinent to this case, section 1115 provides that:
"In the case of any experimental, pilot, or demonstration project which, in the judgment of the Secretary, is likely to assist in promoting the objectives of [the public assistance titles of the Act] in a State or States
(a) The Secretary may waive compliance with any of the [state plan] requirements *537 of section . . . 1396a . . to the extent and for the period he finds necessary to enable such State or States to carry out such project . . ."
It is with respect to this provision of the Act that this case is concerned.
On September 15, 1975, the State of Georgia submitted to HEW an application for a section 1115 demonstration project, entitled "Recipient Cost Participation in Medicaid Reform." The application, in part, sought permission for the state to impose co-payments with respect to certain mandatory Medicaid services otherwise exempted from co-payment by statute. The imposition of co-payments represented an alleged state experiment designed to devise a mechanism which would curtail over utilization in Georgia of "marginally needed" health care. The state proposes to impose co-payments for some, but not all, types of mandatory medical care certain inpatient and outpatient hospital services and physicians' services. Certain preventive services are to be exempted from the co-payments, such as services resulting from EPSDT referrals, family planning services, and physicians' services delivered in institutions. Moreover, co-payments are not required for children eligible under the Child Welfare or Aid to Families with Dependent Children foster care programs. The amount of the co-payment is $2.00 for all other office and home physicians', outpatient hospital, emergency room, psychiatric, and physical medicine services. A co-payment of 50% of the state's payment for the first day of care up to a maximum of $25.00 is to be made on inpatient hospital services except those resulting from EPSDT referrals. A refund would be made to the recipient of all co-payments when those payments exceeded six physician or outpatient visits over a continuous six-month period or when inpatient hospitalization was in excess of a continuous twelve-month period. One co-payment would be required for each program of care. A "Recipient Special Services" function would be created within the Medicaid program to provide a mechanism for recipients to appeal cases in which co-payment created a special financial difficulty.
After evaluation of the proposal, the Acting Social and Rehabilitation Service (SRS) Administrator, John A. Svahn, recommended approval of the co-payment project for one year in an Action Memorandum to the Secretary, dated October 24, 1975, if seven or ten staff comments on the project, set out in the Action Memorandum, were satisfied. The Action Memorandum noted the importance of the project in terms of national health insurance but did not, however, set forth a precise articulation of the manner in which the project was likely to assist in achieving the objectives of Title XIX, as required by the waiver provision of 42 U.S.C. § 1315.
On November 14, 1975, then Acting SRS Administrator John C. Young (who was serving in that capacity in the absence of Mr. Svahn) formally approved the project. On November 24, the state was so notified by letter from William C. Pembleton, SRS Grants Management Officer, to T. M. Parham, Commissioner of the Georgia Department of Human Resources. The approval letter authorized the state to commence the project on December 1, 1975, and set forth five conditions that the state must meet by January 1, 1976. The approval resulted in a waiver, pursuant to 42 U.S.C. § 1315(a), of federal provisions governing co-payments under the Medicaid program.
Before the program could begin, however, plaintiffs, on November 28, filed suit in this Court seeking, among other things, a temporary restraining order against the Secretary and Georgia officials to block initiation of the project. On December 3, the Court issued an order restraining the Secretary and Georgia officials from implementing the project and requiring them to notify appropriate individuals that the project had been restrained and to instruct all providers of services to return any recipient financial contributions which might already have been made. The Court also ordered a hearing on a motion for preliminary injunction for December 23. A hearing was held on December 23, and a subsequent hearing on December 31 on plaintiffs' motion for preliminary injunction.
*538 Between the time of the December 23 and 31 hearings, a second Action Memorandum was issued from SRS Administrator Svahn to the Secretary. In the second memorandum, dated December 29, the Administrator advised the Secretary of developments in the structure and content of the Georgia project since the time of approval on November 14. More specifically, he summarized and reviewed the recent communications between federal and state officials with respect to the five additional requirements set forth in the November 24 approval letter and informed the Secretary that he had determined that Georgia had fully satisfied all conditions except one, involving the identification by a panel of competent medical experts of services as severely needed which are to be exempted from the experiment. The Administrator informed the Secretary that he had extended the date for full satisfaction of that condition until February 1, 1976, but that the project might proceed at any time prior to that date even without such satisfaction. The Court has been informed by the state defendant that this condition has been satisfied. Furthermore, the second Action Memorandum also set forth in considerable detail the Title XIX objectives which the project was designed to achieve. The Administrator requested that the Secretary concur in these final decisions. On December 30, the Secretary did so concur.
On December 30 the Secretary executed an affidavit in which he stated that he concurred in the December 29 Action Memorandum from the Administrator and confirmed the Administrator's prior approval of the demonstration project pursuant to 42 U.S.C. § 1315, and the Administrator's determination that the conditions set forth in the November 24 approval letter had either been satisfied in full or that their satisfaction could properly be delayed.[2]
After consideration of all four documents the Action Memorandum of October 24, the November 24 letter from Pembleton to Parham, the December 29 Action Memorandum, and the Secretary's affidavit, the Court concludes that the Georgia proposal has received the appropriate final federal approval. The Court considers the belated Departmental action in issuing the December 29 Action Memorandum and the affidavit of the Secretary as evidence that the Secretary has made the essential judgment required of him under section 1115 that the project is likely to assist in achieving the objectives of the Act. While these actions are belated and many of the problems in this case might have been obviated if the Secretary had only articulated his position somewhat earlier, which he now has, the Court is unwilling to construe that belated action as constituting more than an elaboration of his earlier judgment and, particularly, it is unwilling to construe that belated rationalization, if so it be, as evidence of improper motives or action on the part of the Secretary.
Preliminary Injunction Tests
In weighing any request for preliminary injunction, this Court must be guided by the standards set forth by the United States Court of Appeals for the Fifth Circuit in Canal Authority of State of Florida v. Callaway, 489 F.2d 567 (1974). The Court of Appeals there noted that, although the granting of a preliminary injunction is discretionary, the district court must exercise that discretion in the light of four prerequisites:
"The four prerequisites are as follows: (1) a substantial likelihood that plaintiff will prevail on the merits, (2) a substantial threat that plaintiff will suffer irreparable injury if the injunction is not granted, (3) that the threatened injury to plaintiff outweighs the threatened harm the injunction may do to defendant, and (4) that granting the preliminary injunction *539 will not disserve the public interest." (Citation omitted.) 489 F.2d, at 572.
The Court of Appeals has also stressed the extraordinary character of such relief:
"In considering these four prerequisites, the court must remember that a preliminary injunction is an extraordinary and drastic remedy which should not be granted unless the movant clearly carries the burden of persuasion. The primary justification for applying this remedy is to preserve the court's ability to render a meaningful decision on the merits." Id. (Citation omitted.)
Those standards are set forth in recognition of the fact that the district court must decide whether to grant the interim relief of a preliminary injunction without the benefit of full discovery and consideration of the issues on the merits that would occur at trial. Based on a consideration of these factors, the Court finds that plaintiffs have not met these four essential requirements and, therefore, the Court must deny plaintiffs' motion for preliminary injunction.
1. Likelihood of success on the merits
Section 1115 of the Social Security Act, 42 U.S.C. § 1315, vests in the Secretary broad power to authorize projects which do not fit within the permissible statutory guidelines of the standard public assistance programs. Aguayo v. Richardson, 352 F.Supp. 462 (S.D.N.Y.), aff'd, 473 F.2d 1090 (2d Cir.), cert. den., 414 U.S. 1146, 94 S.Ct. 900, 39 L.Ed.2d 101 (1973); California Welfare Rights Organization v. Richardson, 348 F.Supp. 491 (N.D.Cal.1972); H.R.Rep.No. 1414, 87th Cong., 2d Sess. (1962); S.Rep.No. 1589, 87th Cong., 2d Sess. (1962), U.S.Code Cong. & Admin.News 1962, p. 1943. The only limitation upon the Secretary's authority under section 1115 is that he must judge the project to be one which is likely to assist in promoting the objectives of the applicable title of the Act. Id. Congress has entrusted this judgment to the Secretary and not to the courts. Id.
Thus, once a project has been approved by the Secretary, it is the function of the courts only to determine whether his decision was arbitrary and capricious and lacking in rational basis. See Aguayo v. Richardson, 473 F.2d, at 1103; Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 420, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971). That review is to be based on the record used by the decision-maker. Id. Therefore other factors or opinions not considered by him in approving the project would not be relevant.
Given the large degree of judgment vested in the Secretary with respect to the approval of section 1115 projects, it is not for the courts to deny the Secretary the right to approve a project merely because the Court might in certain situations disagree with his judgment. That judgment is committed to the Secretary and must be sustained as long as he exercises it within the confines of the statute. And, as the case law shows, the only prerequisite to the exercise of that authority is that in the Secretary's judgment the demonstration or experiment furthers the objectives of the appropriate title of the Act, in this case Title XIX. Aguayo v. Richardson, supra; CWRO v. Richardson, supra. The Secretary has made that judgment with respect to the Georgia project.
In view of that wide discretion, an attack upon the Secretary's authority faces a very grave obstacle. The Court has considered the arguments and the materials before it which go basically to the lack of good faith of the defendants in proposing and authorizing the waiver. Such an attack, going almost to the personal motives of the parties involved, would be a particularly difficult type of attack to mount successfully. Based on the evidence presented to it, the Court is unable to find that there is a substantial likelihood that the plaintiffs will prevail on the merits.
2. Irreparable harm to the plaintiffs
In considering the question of irreparable injury to the plaintiffs, the Court is mindful that all section 1115 approvals may well have a severe effect upon the people involved since those individuals constitute *540 the most vulnerable sector of our population. The Court is certain that there will be injury of one kind or another. For the most part, injury which is measured in dollar amounts does not constitute irreparable injury for purposes of a preliminary injunction. Consequently, the Court must look beyond the injury to the plaintiffs measured in terms of the co-payments they must make, and focus upon the denial of uses to which the funds used to make co-payments might entail. The Court is quite certain that there might be some instances in which less necessary medical treatment or less food is consumed by someone who used the money to make a co-payment. While recognizing that there very well may be some such effect, however, the Court nevertheless believes that the evidence on that point is too speculative to sustain the issuance of a preliminary injunction, particularly in view of the circumstances and types of medical care exempted from imposition of co-payment under the project.
Moreover, the Court must assume that the public officials charged with the administration of the Medicaid program in Georgia will perform their duty under the project and weigh the various problems involved, and believes that the exemption of medically dangerous situations and other matters from the co-payment requirements indicates a concern to reduce to a minimum the injury which any member of the class will suffer.
Finally, with respect to any injury, the Court notes that the limitation of the experiment to a temporary period only, would seem to reduce to a minimum any injury to the class.
For these reasons, the Court is unable to find that there is a substantial threat that plaintiffs will suffer irreparable injury if the injunction is not granted.
3. Public Interest
It is clear that the Medicaid program has important cost considerations. The incurring of excess costs with respect to one phase of the Medicaid program may very well mean a reduction of the program in another area. The public purse, both that of the state and even of the United States, is not absolutely unlimited. Accordingly, public officials must make some effort to provide the greatest good possible at the least possible costs. That appears to be the underlying motive behind this project, and it is one to be commended, and not one to be criticized. The Court believes that the public officials involved are attempting to act in the public interest and that it would disserve the public interest to enjoin them.
4. Balancing of Interests
Considering the public interest involved and weighing it against the threatened injury to the plaintiffs, the Court concludes that the potential harm to plaintiffs does not outweigh the threatened harm to the defendants. The Court thus concludes that the plaintiffs have failed to sustain their burden of persuasion in this case by failing to meet all, or indeed any, of the four prerequisites set out in Canal Authority v. Callaway. Accordingly, plaintiffs' request for a preliminary injunction is denied.
The Court also rules that the Secretary's motion for summary judgment is denied.
Finally, as a further control, the Court will attempt to expedite the final trial of this case, if that should prove to be necessary. To that end, having heard the description of the memoranda sought by the plaintiffs, the Court directs the federal defendants to turn over to the plaintiffs the following eight items of documents:
1. Memorandum to Morrill from Murray, dated September 18, 1975;
2. Memorandum to Altman from Harlan, dated September 30, 1975;
3. Note to the Secretary from Altman, dated October 3, 1975;
4. Memorandum to Lariviere from Smyth, dated October 3, 1975;
5. Note to Lariviere from Murray (undated);
6. Memorandum to Lariviere from Speigleblatt;
7. Memorandum to Lariviere from Reid, dated October 3, 1975;
*541 8. Notes and records of the following meetings:
(a) Meeting between the Secretary and Governor Busbee on August 29;
(b) Meeting between the Secretary and Governor Busbee on August 29;
(c) Meeting between Thurmond, Bellows, and SRS staff in Washington on September 3; and
(d) Meeting between Morrill, Bellows, and SRS staff on September 18.
SO ORDERED, this 5 day of February, 1976.
ON MOTION FOR TEMPORARY INJUNCTIVE RELIEF
Plaintiffs in the instant action seek injunctive relief until such time as the final trial on a permanent injunction is held. On December 23 and 31 a hearing was held on plaintiffs' motion for a preliminary injunction. At the close of the hearing on December 31 the Court verbally denied plaintiffs' motion and did the same by written order dated February 5, 1976.
Plaintiffs now claim that the ten "severely needed services" which the state defendant was required to identify by February 1, 1976, although identified, have not been approved by the federal defendant and, therefore, the Georgia co-payment project cannot proceed. Furthermore, plaintiffs claim that the ten severely needed services that have been identified by the state defendant are inappropriate to the co-payment experiment inasmuch as they are essentially identical to the life endangering service excluded from the co-payment project.
Defendants argue that identification of the ten severely needed services is required but not approval by defendant HEW. Moreover, defendants claim that such identification is merely for statistical purposes and is not a legal prerequisite to the continuation of the Georgia co-payment project. Defendants further contend that any overlapping among the ten severely needed services and the life endangering services is immaterial.
In addition, plaintiffs reassert the irreparable injury which they and the class they represent will suffer if the co-payment project is permitted to continue.
The Court finds that injunctive relief is not appropriate at this time. However, the Court desires that the case be resolved as expeditiously as possible and, therefore, sets the trial for a permanent injunction for February 23, 1976.
Accordingly, plaintiffs' motion for injunctive relief is hereby ORDERED DENIED.
SO ORDERED, this 9 day of February, 1976.
ON MOTION FOR PERMANENT INJUNCTION
This is a proposed class action, brought by recipients of Medicaid in the State of Georgia, challenging an experimental project entitled "Recipient Cost Participation in Medicaid Reform" [hereinafter referred to as the Co-payment Project], undertaken by the State of Georgia in connection with its Medicaid Program under Title XIX of the Social Security Act of 1935, as amended, 42 U.S.C. § 1396 et seq. Jurisdiction over defendant Mathews is founded under 5 U.S.C. § 701 et seq., and over the state defendants pursuant to 28 U.S.C. § 1343(3) and (4) and 42 U.S.C. § 1983. In addition, plaintiffs assert jurisdiction for declaratory relief under 28 U.S.C. §§ 2201, 2202.
On December 4, 1975, the Court temporarily restrained the defendants from commencing the co-payment project. On December 31, 1975, the Court denied plaintiffs' motion for a preliminary injunction and the co-payment project commenced soon thereafter. See Order dated February 5, 1976. A trial was had on February 23, 24, 25, 1976, and the case is now before the Court for final disposition. Plaintiffs seek to permanently enjoin operation of the Georgia co-payment project.
As a preliminary matter the Court hereby GRANTS plaintiffs' motion for class certification, the class consisting of all current and future recipients of Medicaid in the State of Georgia with the exclusion of *542 foster child recipients of Aid to Families with Dependent Children under Title IV of the Social Security Act. See Fed.R.Civ.P. 23(b)(2). The Court also GRANTS plaintiffs' motions to amend complaint filed February 9 and 17, 1976.
A discussion of the pertinent provisions of the Social Security Act and of the Georgia co-payment project is found in the Court's Order of February 5, 1976. In summary, the co-payment project purports to be an attempt to demonstrate the effectiveness of recipient financial participation in the costs of certain medical care provided under the Georgia Medicaid Program. The plaintiff class consists of individuals defined as the "categorically needy," 42 U.S.C. § 1396a(a)(10)(A), in the Georgia Medicaid Program who are entitled to certain "mandatory" medical services without cost. See 42 U.S.C. § 1396d(a). The statute specifically provides that the categorically needy may not be required to contribute to the costs of mandatory services under the Medicaid program. 42 U.S.C. § 1396a(a)(14).
While state requirements under Title XIX are mandatory upon the states, section 1115 of Title XI, 42 U.S.C. § 1315, provides that the Secretary may waive compliance with any of these requirements "[i]n the case of any experimental, pilot, or demonstration project which, in the judgment of the Secretary, is likely to assist in promoting the objectives of [Title XIX]." The State of Georgia has obtained a section 1115 waiver from the Secretary in order to proceed with the co-payment project which, in part, requires Georgia recipients of Medicaid to contribute a "co-payment" for certain mandatory Medicaid services otherwise exempted from co-payments by statute. There are three basic parts of the experiment physician surveys, recipient surveys, and the actual imposition of the co-payment upon the recipient.
Plaintiffs' attack on the co-payment project is twofold. First, plaintiffs attack defendant Mathews' approval of the section 1115 waiver contending that the Secretary acted beyond the scope of his authority and, furthermore, acted in an arbitrary and capricious manner. Second, plaintiffs contend that the provisions of 45 C.F.R. § 46, relating to the protection of human subjects in project activities funded by the Department of Health, Education and Welfare [HEW], are applicable to the Georgia co-payment project and that defendants have failed to comply with the requirements of that regulation.
The section 1115 waiver.
On February 5, 1976 the Court denied a motion for a preliminary injunction in this action based upon the likelihood that plaintiffs would not prevail on the merits of their attack upon the section 1115 waiver.[1] The Court stated:
"Section 1115 of the Social Security Act . . . vests in the Secretary broad power to authorize projects which do not fit within the permissible statutory guidelines of the standard public assistance programs. . . . The only limitation upon the Secretary's authority, under Section 1115 is that he must judge the project to be one which is likely to assist in promoting the objectives of the applicable title of the Act. . . . Congress has entrusted this judgment to the Secretary and not to the courts.
. . .
"Thus, once the project has been approved by the Secretary, it is the function of the courts only to determine whether his decision was arbitrary and capricious and lacking in rational basis . . .. That review is to be based on the record used by the decision-maker. . . . Therefore other factors or opinions not considered by him in approving the project would not be relevant.
"Given the large degree of judgment vested in the Secretary with respect to the approval of section 1115 projects, it is not for the courts to deny the Secretary *543 the right to approve a project merely because the Court might in certain situations disagree with his judgment. That judgment is committed to the Secretary and must be sustained as long as he exercises it within the confines of the statute. And, as the case law shows, the only prerequisite to the exercise of that authority is that in the Secretary's judgment the demonstration or experiment furthers the objectives of the appropriate title of the Act, in this case Title XIX. . . . The Secretary has made that judgment with respect to the Georgia project.
"In view of that wide discretion, an attack upon the Secretary's authority faces a very grave obstacle. The Court has considered the arguments and the materials before it which go basically to the lack of good faith of the defendants in proposing and authorizing the waiver. Such an attack, going almost to the personal motives of the parties involved, would be a particularly difficult type of attack to mount successfully. Based on the evidence presented to it, the Court is unable to find that there is a substantial likelihood that the plaintiffs will prevail on the merits." (citations omitted)
Having again reviewed the voluminous record in this case and after hearing three days of oral argument on this issue, the Court finds that plaintiffs have failed to show that defendant Mathews abused his discretion in approving the section 1115 waiver. In the absence of any clear abuses of discretion by the Secretary, the Court will not disturb defendant Mathews' decision in this matter.
45 C.F.R. § 46.
The applicability and underlying policy of the regulations governing the protection of human subjects is set forth at 45 C.F.R. §§ 46.101(a), 46.102(a):
"The regulations in this part are applicable to all Department of Health, Education and Welfare grants and contracts supporting research, development, and related activities in which human subjects are involved.
* * * * * *
"Safeguarding the rights and welfare of subjects at risk in activities supported under grants and contracts from DHEW is primarily the responsibility of the institution which receives or is accountable to DHEW for the funds awarded for the support of the activity. In order to provide for the adequate discharge of this institutional responsibility, it is the policy of DHEW that no activity involving human subjects to be supported by DHEW grants or contracts shall be undertaken unless an Institutional Review Board has reviewed and approved such activity, and the institution has submitted to DHEW a certification of such review and approval, in accordance with the requirements of this part."
The provisions of 45 C.F.R. § 46 are designed to regulate institutional grantees which receive HEW funds for, or in connection with, research projects involving human subjects. The regulations only apply if a determination is made that the project in question involves human subjects. Although the regulations do not explicitly state who is to make the initial decision as to whether human subjects are involved, it appears from the regulations and the testimony at trial that the initial determination is made by the institution submitting the project application, subject to review by the Secretary of HEW. See 45 C.F.R. § 46.111(b); transcript of testimony of Dr. Donald Chalkley at hearing held on February 25, 1976, pp. 17-20 [hereinafter Chalkley, T.R.].
If human subjects are involved, the institutional applicant must submit to HEW, prior to any undertaking of the project, a certification by its Institutional Review Board [IRB][2] that the IRB has reviewed *544 the project, determined whether the project places human subjects at risk, and approved the project. 45 C.F.R. §§ 46.102(a), (b), 46.111(a). The review by the IRB must determine at the outset whether human subjects will be placed at risk by the proposed project.[3] 45 C.F.R. § 46.102(b). If risk is involved, the IRB must determine whether (1) the risks to the subject are so outweighed by the sum of the benefit to the subject and the importance of the knowledge to be gained as to warrant a decision to allow the subject to accept these risks; (2) the rights and welfare of any such objects will be adequately protected; and (3) legally effective informed consent will be obtained by adequate and appropriate methods in accordance with the provisions of the regulations. 45 C.F.R. § 42.102(b)(1), (2), and (3).
If the institution submitting the project application to HEW certifies that the project does not involve human subjects then the regulations are by-passed, subject to HEW's review of that certification.
With regard to Georgia's co-payment project, the Georgia Department of Human Resources submitted to the Social and Rehabilitation Service [SRS] of HEW an application for a section 1115 waiver accompanied by the departmental certification that human subjects were not involved in the proposed project. Defendant Mathews, acting through SRS, approved this certification.
The question presently before the Court is: Are human subjects involved in the Georgia co-payment project in such a way as to trigger the provisions of 45 C.F.R. § 46? The Court need not determine whether the subjects are at risk; this is a determination to be made by the IRB, only after a determination is made that human subjects are involved.
The difficulty with the regulation in question is that, on its face, the language is broad and general, and the provisions themselves do not define the critical terminology neither "grants and contracts supporting research, development, and related activities" nor "human subjects" is defined.
The state defendant argues, that any project approved under a section 1115 waiver is not subject to the protection of human subject regulations. The state defendant claims that the language of § 46.101(a), which states that the regulation is applicable to "grants and contracts supporting research, development, and related activities" is not co-extensive with the language of section 1115 providing for Secretarial authorization of "experimental, pilot, or demonstration project[s]." Moreover, the defendants cite § IV-8432 of the Handbook of Public Assistance Administration [hereinafter Handbook] which provides:
"In enacting section 1115, Congress did not include `research' projects. This omission emphasizes the focus on action or operational innovation rather than basic research or fact-finding studies or surveys."
Nevertheless, in the Action Memorandum from the Acting Administrator of SRS, and the Acting General Counsel, to the Secretary of HEW, filed with the Court on March 22, 1976, by defendant Mathews, it appears that defendant Mathews does not wholly agree with the state defendant. The Action Memorandum states as follows:
"It would seem . . . that in the usual and customary sense in which these terms are used, § 1115 projects might well be considered `research,' `development' or `related activities.'
"Despite the Handbook's disclaimer of the nature of § 1115 projects as `research,' however, it appears to be the general SRS understanding that these projects at least fall broadly within the purview of the term `research,' and indeed § 1115 projects would seem to fit dictionary definitions of the term. . .
*545 "Moreover, elsewhere in § 8432 of the Handbook a description of the types of projects encompassed under § 1115 suggests that § 1115 projects might well be considered `research' within at least the dictionary sense of that term. . . . ". . . [C]ertain elements of a research project are part and parcel of any § 1115 project."
Although defendant Mathews indicates that there is support for both positions, it appears from the Action Memorandum that the more reasonable interpretation favors the inclusion of section 1115 projects within the scope of the protection of human subject regulations. Further support for this conclusion is found in defendant Mathews' decision that part of the Georgia co-payment project physician and recipient surveys must be submitted to the IRB in accordance with the regulations.
The state defendant further claims that the protection of human subjects regulation was promulgated pursuant to an express statutory command under an amendment to the Public Health Service Act, 42 U.S.C. § 289l-3. The scope of that amendment is specifically limited to biomedical and behavioral research projects involving human subjects which fall under the Public Health Service Act. Programs under the Social Security Act are not covered by this amendment. However, this contention is without merit inasmuch as the regulations were promulgated only in part pursuant to authority in the Public Health Service Act. The regulation applies to all HEW-supported activities as defined at § 46.101. With the exception of the Public Health Service Programs, the regulations have been promulgated pursuant to the Secretary's broad rulemaking authority, rather than pursuant to any express terms of a specific statutory mandate. See Federal Defendant's Response, p. 2, May 5, 1976. Moreover, there is no specific requirement or exemption in either section 1115 or the protection of human subjects regulation as to the applicability of the regulation to section 1115 projects. Defendant Mathews specifically states in the March 22 Action Memorandum that HEW "has never resolved the question whether § 1115-type projects should be included within the purview of 45 C.F.R. Part 46 . . . although of late it has begun to give consideration to their applicability in projects involving medical care" and has determined that parts of the Georgia co-payment project, physician and recipient surveys, are within the scope of the regulations.
Accordingly, the Court finds that the protection of human subjects regulation may be applicable to a section 1115 project. However, the second, and more difficult inquiry with respect to the application of the protection of human subjects regulations to the Georgia co-payment project is the scope of the term "human subjects" in 45 C.F.R. § 46.101(a). Although "human subjects" is not defined in the regulations, "subject at risk" is defined as:
". . . any individual who may be exposed to the possibility of injury, including physical, psychological, or social injury, as a consequence of participation as a subject in any research, development, or related activities which departs from the application of those established and accepted methods necessary to meet his needs, or which increases the ordinary risks of daily life, including the recognized risks inherent in a chosen occupation or field of service." 45 C.F.R. § 46.103(b).
Defendant Mathews, although conceding that a determination of whether individuals are human subjects and whether they are subjects at risk are totally separate issues, attempts to avoid application of the regulations to the co-payment project by arguing that Georgia Medicaid recipients are not placed "at risk" by the co-payment project. Such an argument is unsound. The Court need not, and will not, determine if the co-payment project places human subjects at risk, but only whether the co-payment project involves human subjects. Such a conceptual distinction is clear from the face of the regulations. Indeed, the history of the regulations does not support defendant Mathews' method of determining whether *546 human subjects are involved by determining if they are at risk. HEW specifically rejected an original proposal which provided that the regulations be applied only to "activities in which human subjects may be at risk." 38 Fed.Reg. 27882 (October 9, 1973). The adoption of the present language "activities in which human subjects are involved" is evidence of HEW's intent that the determination of whether human subjects are involved is to be carried out without reference to the question of risk.
At trial, defendant Mathews offered the testimony of Dr. Donald T. Chalkley, Director of the Office for Protection from Research Risks, Office of the Director, National Institutes of Health, Public Health Service, Department of Health, Education and Welfare. Dr. Chalkley is charged with the administration of the protection of human subjects regulation and is one of the drafters of the regulation. The definition of human subjects offered by Dr. Chalkley, which has not been disputed by any of the parties, is an individual "who is deliberately and personally imposed upon." Chalkley T.R. 9. With this definition in mind, Dr. Chalkley testified that the aspects of the Georgia co-payment project involving physician and recipient surveys were covered by the protection of human subject regulations. Defendant Mathews has agreed with this determination and directed that this part of the project be submitted to the IRB. The March 22 Action Memorandum states that "survey instruments designed to test attitudes may have psychological impact upon the interviewees by, for example, inducing in them a sense of shame, guilt, embarrassment, or other emotional reaction." The Memorandum goes on to state that the interviewees are likely to be subjects at risk.[4]
Yet Dr. Chalkley and defendant Mathews claim that the imposition of the co-payment does not involve human subjects because, first, it does not place individuals "at risk" and, second, it imposes only financial risks upon individuals and the regulation was not designed to cover fiscal burdens.
However, whether the co-payments place individuals at risk is not material to the issue presently before the Court. Furthermore, to find that the surveys are within the scope of the regulations because the interviews may have a psychological impact upon the interviewees, but that the actual imposition of co-payments are not within the scope of the regulations defies logic. Certainly the imposition of co-payments, which financially burden recipients defined as the categorically needy in the Georgia Medicaid Program, may inhibit such individuals from seeking necessary medical services. The Georgia co-payment project has the effect of diminishing the amount of money that a family might have available for basic living needs and forces the family to make a determination whether to apply that money to basic living needs or to apply it to purchase medical care. Such an activity in which human beings, defined in the Social Security Act as the categorically needy, are required to pay for medical care in a situation in which they could not otherwise be statutorily required to pay for such care and would not otherwise have to apply income to that need, is an activity which "deliberately and personally imposes" upon those human beings. See Chalkley T.R. 39.
The regulations must be read and applied consistently. Based upon the testimony of Dr. Chalkley and the conclusions of defendant Mathews in the March 22 Action Memorandum it appears that human subjects are involved in the co-payment aspect of the Georgia co-payment project.
The Court notes that Dr. Chalkley later expanded upon his definition of human subjects, stating that the individual must also be exposed to some method that is not standard and accepted in meeting the individual's deeds. Chalkley T.R. 54. Such a definition is akin to the meaning of "subject at risk" which, as has already been discussed, is conceptually distinct from "human *547 subject." However, even under this expanded definition it appears that the imposition of co-payments involves human subjects. The standard and accepted method for obtaining certain "mandatory" medical services, as defined in Title XIX, for the categorically needy in Georgia is by statutory prohibition of any payment for those services by the individual recipient. Requiring a co-payment exposes these individuals to a method which is not standard or accepted in meeting their needs. See Institutional Guide to DHEW Policy on Protection of Human Subjects, pp. 3-4, cited in defendant Mathews' Action Memorandum, pp. 9-11, March 22, 1976.
Today's holding does not mean that any experimental government program or demonstration project designed to test whether a particular fee or tax or sanction would bring about a salutary change in behavior patterns of the affected members of the public would come within the purview of these regulations, as defendant Mathews asserts. First, the regulations are only applicable to HEW-supported projects. Second, the projects must involve grants and contracts supporting research, development, and related activities in which human subjects, as defined above, are involved. Once this threshold is crossed the only requirement imposed by the regulation is that the project be submitted to an Institutional Review Board for examination. If, at the outset, the IRB determines that human subjects are not "at risk," as defined in the regulation, then there is nothing further in the regulation with which the institution submitting the project must comply.
Defendant Mathews further claims that application of the regulation to section 1115 projects will have the effect of precluding the Secretary from conducting any section 1115 projects which involve diminution of benefits inasmuch as the regulation requires that informed consent be obtained from each affected individual. However, the regulation requires such consent only from individuals determined to be subjects at risk, 45 C.F.R. § 46.109. If an IRB determines that a section 1115 project does involve subjects at risk then this is the very class of persons that the protection of human subjects regulation is designed to protect. Moreover, it is not impossible to devise certain incentives to encourage the necessary number of individuals for an experimental sample to consent to participate in a section 1115 project involving diminution of benefits.
The principle which accords substantial weight to an agency's interpretation of its own regulation is inapplicable insofar as that interpretation is inconsistent with the requirements of the regulation and inconsistent with other interpretations of the regulation by the same agency. See New York State Department of Social Services v. Dublino, 413 U.S. 405, 421, 93 S.Ct. 2507, 37 L.Ed.2d 688 (1973); Francis v. Davidson, 340 F.Supp. 351, 368 (D.Md.), aff'd, 409 U.S. 904, 93 S.Ct. 223, 34 L.Ed.2d 168 (1972); Barron v. Saucier, Civil Action No. 17159 (N.D.Ga. Sept. 27, 1973).
Accordingly, the state defendant's motion to dismiss, filed February 20, 1976, is hereby ORDERED DENIED. The plaintiffs' motion for a permanent injunction is hereby ORDERED GRANTED to become effective forty-five (45) days from the date of this Order if the following conditions have not been met by the defendants: The remaining portion of the Georgia co-payment project which has not been submitted to the Institutional Review Board must be so submitted for the purposes set forth at 45 C.F.R. § 46.102(b). Furthermore, the IRB must review the project, make any recommendations necessitated by such review, and the state defendant must act upon those recommendations, if any are made, within the 45-day period.
NOTES
[1] Those programs are the Aid to Families with Dependent Children program (Title IV of the Act, 42 U.S.C. § 601 et seq.); the Supplemental Security Income program (Title XVI of the Act, 42 U.S.C. § 1381 et seq.); and the aid to the aged, blind, and disabled programs in Guam, Puerto Rico, and the Virgin Islands (Titles I, X, XIV, and XVI of the Act, 42 U.S.C. §§ 301 et seq., 1201 et seq., 1351 et seq., 1381 et seq.).
[2] Because of a clerical error in the last paragraph of the December 29 Memorandum, condition number 2 (as numbered in the November 24 approval letter) was erroneously listed as having been satisfied; however, as is evident from the full context of the December 29 Action Memorandum as well as paragraph 7 of the affidavit of the Secretary, this Court finds that this reference to condition 2 should have been and was intended to be to condition 3.
[1] The claim regarding 45 C.F.R. § 46, the protection of human subjects regulation, was raised subsequent to the denial of the preliminary injunction. See Plaintiffs' Second Motion to Amend, February 17, 1976.
[2] An institution which conducts HEW-supported projects is required to "assure" HEW that an IRB has been constituted to review proposed HEW-supported projects involving human subjects and to further carry out the requirements of the regulations. 45 C.F.R. §§ 45.105(a), 45.106(b). The Georgia Department of Human Resources has such an approved assurance on file with HEW.
[3] "Subject at risk" is defined at 45 C.F.R. § 46.102(b).
[4] The physician and recipient surveys have been submitted to the Georgia IRB which found that the recipient surveys potentially placed human subjects at risk. The IRB made several recommendations which have been instituted by the State of Georgia.
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218 Ga. 284 (1962)
127 S.E.2d 379
KENDRICK
v.
KENDRICK.
21769.
Supreme Court of Georgia.
Argued September 11, 1962.
Decided September 18, 1962.
H. Briscoe Black, for plaintiff in error.
Wavelyn E. Smith, contra.
CANDLER, Justice.
The parties to this litigation were divorced in the Superior court of Meriwether County on February 15, 1959. Custody of their minor son was awarded to the mother. A contract between the parties for the support and maintenance of their minor child was approved by the court and made a part of the final judgment. Such contract obligated and the judgment required the father to pay the mother as child support $100 per month until such child reached 18 years of age. It awarded no alimony to the wife. On February 22, 1961, Mrs. Kendrick filed a petition in the same court seeking an upward revision and modification of the judgment which fixed the amount of child support payable to her each month. Her petition alleges a substantial change for the better in his income and financial status since the judgment awarding child support was rendered. A general demurrer which Mr. Kendrick interposed was overruled and there is an exception to that judgment. On the trial and after the parties had introduced all of their evidence, the jury returned the following verdict: "We, the jury, find in favor of the plaintiff and our verdict is: (1) That $100 payments now being made be voided; (2) That defendant pay $35 per week for child support until child reaches age 18; (3) That trust fund be set up to provide for child's college education as follows: (1) Lump sum of $500 be paid *285 in now; (2) Payments of $50 per month to trust fund until child reaches age 18; (3) That trust fund be administered by court-appointed administrator; and (4) That trust fund be made available to child at age 18 for college education only.
If he desires not to go to college, funds will be withheld until child is 21, at which time he will have power to dispose of or use as he so desires." A decree following the verdict was entered on March 1, 1962. The defendant moved for a new trial on the usual general grounds and later amended it by adding 7 special grounds. His amended motion was overruled and he excepted to that judgment. Held:
1. Since the petition clearly alleges a substantial change for the better in the defendant's income and financial status after the judgment awarding child support was rendered on February 15, 1959, there is no merit in the contention that the court erred in overruling a general demurrer to it.
2. Code § 30-207 provides that a verdict and judgment awarding support for a minor child shall specify what amount such child shall be entitled to for its permanent support; and in what manner, how often, to whom, and until when it shall be paid. Prior to the approval of an act which the legislature passed in 1955 (Ga. L. 1955, p. 630), there was no statute in this State which authorized or empowered the courts to revise and modify in any respect a permanent judgment for alimony or a permanent award for the support of a minor child or children. Roberson v. Roberson, 210 Ga. 346 (1) (80 SE2d 283); and Etheridge v. Echols, 212 Ga. 597 (94 SE2d 377). But by the cited act the court which had rendered such a judgment was authorized and empowered to revise and modify it, either downward or upward where there had been a substantial change in the income or financial status of the husband or father. Such act expressly provides that on the hearing of an application either by the husband or the wife to revise and modify such a judgment, the merits of whether the wife or child or children, or both, are entitled to alimony and support are not in issue, "but only whether there has been such a substantial change in the income and financial status of the husband as to warrant either a downward or upward revision and modification of the permanent alimony judgment." It is settled by many decisions of this court that where the language of a statute is plain and *286 unambiguous, no occasion for construction exists and it must be taken to mean what it clearly expresses and the courts have nothing to do but enforce it. Nixon v. Nixon, 196 Ga. 148, 155 (26 SE2d 711); Bibb County v. Hancock, 211 Ga. 429, 438 (86 SE2d 511); and Anderson v. Cooper, 214 Ga. 164, 166 (104 SE2d 90). It seems clear to us and we hold that the act of 1955 conferred authority and power on the court rendering an alimony or child support judgment to revise and modify it either downward or upward where a substantial change in the income and financial status of the husband was alleged and proven and in no other respect. This being true, the jury in this case had no legal authority to find a verdict upon which a valid judgment could be entered which revised and modified the original child support judgment in any respect except as to the amount it required the defendant to pay the plaintiff each month for the support of their minor child. Since this disposes of the controlling question in this case, it is unnecessary to pass on other questions posed by the record.
Judgment reversed. All the Justices concur.
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313 F.3d 1058
Richard Dale HOON, Petitioner/Appellee,v.State of IOWA, Respondent/Appellant,John F. Ault, Warden, Respondent.
No. 01-3078.
United States Court of Appeals, Eighth Circuit.
Submitted: May 13, 2002.
Filed: December 19, 2002.
Thomas W. Andrews, argued, Des Moines, IA, for appellant.
George W. Appleby, argued, Des Moines, IA, for appellee.
Before WOLLMAN, BRIGHT, and JOHN R. GIBSON, Circuit Judges.
WOLLMAN, Circuit Judge.
1
The State of Iowa appeals from the district court's grant of Richard Dale Hoon's petition for writ of habeas corpus. We reverse and remand with directions to dismiss the petition.
I.
2
On October 22, 1994, three men robbed Ailleen Foley in her Davenport, Iowa home. The men knocked at Foley's door, and when she answered the door they violently threw open the storm door and two of them entered the house. One of the men threatened Foley with a sawed-off shotgun while the other searched the house. After taking her purse, which contained, among other things, Foley's rosary and rosary case, they left. The men wore masks made of maroon cloth that covered their noses and mouths but left their eyes exposed.
3
There were no developments in the case until February 1, 1995, when Davenport Police met Timothy Caskey at a Davenport motel. Caskey had Foley's rosary and rosary case in his possession at the time. Later that day, Caskey confessed to the robbery, stating that he and David Carney were the two men who entered Foley's house and that Carney threatened Foley with the shotgun while Caskey searched the house. Caskey told the detectives that on the evening of the robbery he and his then girlfriend, Chandra Wilson, were on the levee near a river boat. They were later joined by two of Caskey's friends. After taking Ms. Wilson to her home, Caskey returned to the levee, where he again met up with the two friends. The three men then drove around the city looking for someone to rob. After seeing the elderly Mrs. Foley sitting near the picture window in her home, the three decided that she would be a suitable victim. In subsequent photo arrays, at deposition, and at trial, Foley identified Hoon and Caskey as the men who entered her house.
4
Caskey and Hoon were tried jointly. Hoon's attorney and the prosecutor agreed that the prosecutor would admit Caskey's confession through the testimony of two police detectives, but that they would not mention Hoon's name. When the detectives testified regarding Caskey's confession, they used words such as "the other individual" or "the other subject" in place of Hoon's name. They testified, among other things, that Caskey stated that he and two other individuals met on a levee near Davenport and planned the crime, that they stole a maroon Chevrolet Malibu, that the three of them drove around in the Malibu looking for someone to rob, and that they used the headliner of the car to make masks. While the detectives never mentioned Hoon's name in their testimony, they stated that Caskey identified Carney as one of the other men.
5
Caskey's confession was verified at trial in several ways. First, when the Malibu was recovered, Foley's ATM card was recovered from beneath the front seat. Second, Caskey had Foley's rosary and rosary case in his possession. Third, Chandra Wilson testified that Caskey, Carney, and Hoon had met on the levee earlier in the evening and that Carney had driven away in a maroon Malibu.
6
The Iowa Court of Appeals held that Hoon's counsel was ineffective for failing to object to the admission of Caskey's confession. The state court held that allowing the detectives to replace Hoon's name with "the other individual" while other evidence in the case identified Hoon as that individual violated Bruton v. United States, 391 U.S. 123, 88 S.Ct. 1620, 20 L.Ed.2d 476 (1968). The state court also held, however, that Hoon suffered no prejudice from this failure because there was sufficient additional evidence to convict him. Following the state court's ruling, Hoon filed a petition for a writ of habeas corpus pursuant to 28 U.S.C. § 2254. The district court held that the state court's finding of no prejudice was an unreasonable application of federal law and granted the writ. The state now appeals.
II.
7
The sole issue we must decide is whether the district court properly concluded that the holding of the Iowa Court of Appeals that Hoon's counsel's failure to object to the admission of Caskey's confession did not amount to ineffective assistance of counsel was an unreasonable application of federal law. Because we conclude that the district court failed to give appropriate deference to the state court's finding that Hoon suffered no prejudice as a result of his counsel's error, we reverse.
8
We review the district court's legal conclusions de novo and its findings of fact for clear error. Hadley v. Groose, 97 F.3d 1131, 1134 (8th Cir.1996).
9
In ruling on a petition for habeas corpus, the scope of a federal court's review of a state court's decision is extremely limited. As the Supreme Court recently stated, "The Antiterrorism and Effective Death Penalty Act of 1996 modified a federal habeas court's role in reviewing state prisoner applications in order to prevent federal habeas `retrials' and to ensure that state-court convictions are given effect to the extent possible under law." Bell v. Cone, 535 U.S. 685, 122 S.Ct. 1843, 1849, 152 L.Ed.2d 914 (2002). A federal court may grant a writ of habeas corpus to a state prisoner if the state court's decision was either (1) contrary to, or (2) an unreasonable application of federal law as determined by the Supreme Court. Siers v. Weber, 259 F.3d 969, 972 (8th Cir.2001); 28 U.S.C. § 2254(d)(1). Hoon does not claim that the Iowa state court's decision was contrary to clearly established federal law, but maintains that the state court unreasonably applied federal law to his case. The focus under the unreasonable application test is "whether the state court's application of clearly established federal law is objectively unreasonable." Bell, 122 S.Ct. at 1850. The Supreme Court has repeatedly cautioned that an unreasonable application is different from an incorrect one. Id.; Williams v. Taylor, 529 U.S. 362, 409, 120 S.Ct. 1495, 146 L.Ed.2d 389 (2000).
10
The clearly established federal law to be applied in Hoon's case is found in Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984). To show his counsel was ineffective under the Strickland standard, Hoon must show that his attorney's performance was deficient and that he suffered prejudice as a result. Siers, 259 F.3d at 974 (citing Strickland, 466 U.S. at 687, 104 S.Ct. 2052). We need not inquire into the effectiveness of counsel, however, if we determine that no prejudice resulted from counsel's alleged deficiencies. Strickland, 466 U.S. at 697, 104 S.Ct. 2052; Siers, 259 F.3d at 974. To show prejudice, Hoon would have to show that "there is a reasonable probability that but for counsel's unprofessional errors, the result ... would have been different. A reasonable probability is a probability sufficient to undermine confidence in the outcome." Siers, 259 F.3d at 974 (quoting Strickland, 466 U.S. at 694, 104 S.Ct. 2052). In evaluating the probability of a different result, the court must consider the totality of the evidence. Id.
11
The Iowa Court of Appeals did not engage in a lengthy discussion of its prejudice analysis in its opinion. After citing Iowa Supreme Court decisions that set forth the prejudice standard announced in Strickland, the court said:
12
Despite the fact that error was not properly preserved with respect to the testimony given by the police detectives ... we conclude that there was no prejudice entitling Hoon to a new trial on the robbery and burglary charges. There was enough other evidence in the record that would convict Hoon of these crimes.
13
Presuming, as do we, that the Iowa Court of Appeals based its finding of no prejudice upon a correct application of the Strickland standard, the district court concluded that the finding of no prejudice was unreasonable, concluding that if Caskey's confession were properly redacted by removing all references to the existence of a third person,1 the confession would no longer implicate Hoon at all. The case would then come down to an evaluation of the credibility of the testimony given by Caskey, who claimed the other man in the house was Carney, and that given by Foley, who identified Hoon as the other man. The district court held that "different juries could reasonably disagree on the question," and that therefore there was a reasonable probability that if Hoon's counsel had objected to the introduction of Caskey's confession, Hoon would have been acquitted.
14
The district court may have been correct that a jury could have found Caskey more credible than Foley and therefore chosen to believe that Carney was the other man in the house, but that alone is not sufficient to overturn the state court's decision. In order to succeed, Hoon
15
must do more than show that he would have satisfied Strickland's test if his claim were being analyzed in the first instance, because under § 2254(d)(1), it is not enough to convince a federal habeas court that, in its independent judgment, the state-court decision applied Strickland incorrectly. Rather, he must show that the [Iowa] Court of Appeals applied Strickland to the facts of his case in an objectively unreasonable manner.
16
Bell, 122 S.Ct. at 1852 (internal citation omitted). Here, even though the district court acknowledged the proper standard of review established in Williams, it did not give the state court's ruling proper deference, but appears to have granted the petition based only on a difference "in its opinion of [the properly redacted confession's] probable effect on the outcome." Siers, 259 F.3d at 975; see also Evans v. Rogerson, 223 F.3d 869, 871 (8th Cir.2000) ("the district court put its own spin on the facts and disregarded [the state court's] reasonable view of them").
17
Under AEDPA, we must give substantial deference to the state court's analysis of the evidence, and the fact that evidence exists that might lead us to a different conclusion is not sufficient for us to conclude that the Iowa court's application of the Strickland attorney-performance standard was objectively unreasonable. Accordingly, the district court should not have granted the habeas petition.
18
The judgment is reversed, and the case is remanded to the district court with directions to dismiss the petition.
Notes:
1
We note that the district court's analysis of the necessary redactions appears to follow the dissent inUnited States v. Logan, 210 F.3d 820 (8th Cir.2000) (en banc). The majority in Logan stated that "there is no violation where the confession implicates the defendant only when linked to other evidence." Id. at 822 (internal quotation omitted). Thus, it appears that the only Bruton violation in Hoon's trial under our precedent was the failure to provide a limiting instruction, not the failure to delete all references to Hoon's existence from the confession. Id. at 822-23. We need not decide how Logan applies to this case, however, because even under the district court's view of the proper redactions, the state court's decision that Hoon suffered no prejudice was reasonable.
19
BRIGHT, Circuit Judge, dissenting.
20
I respectfully dissent. When you ask the wrong question, you get a wrong answer. I think the majority here has done just that in agreeing with the Iowa Court of Appeals and reversing the thoughtful and incisive opinion of the federal district judge.
21
The majority adopts the same question for review as the Iowa court, namely whether Richard Dale Hoon showed that "there is a reasonable probability that but for counsel's unprofessional errors, the result... would have been different." Op. at 1061 (citing Siers v. Weber, 259 F.3d 969, 974 (8th Cir.2001)). Both conclude that no prejudice existed because "[t]here was enough other evidence in the record that would convict Hoon of these crimes." (J.A. at 168.)
22
The majority here reverses the district court on the ground that "the district court failed to give appropriate deference to the state court's finding that Hoon suffered no prejudice as a result of his counsel's error." Op. at 1060. I believe that the majority applied an incorrect standard. The standard is whether "there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different." See Strickland v. Washington, 466 U.S. 668, 694, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984) (cited in Hoon v. State, No. 4-99-CV-90578 (Ia.2001), J.A. at 224). A reasonable probability is less than a preponderance. See Williams v. Taylor, 529 U.S. 362, 405-06, 120 S.Ct. 1495, 146 L.Ed.2d 389 (2000). Therefore, I believe the standard is not the "could have convicted" standard used by the majority, but rather the question to be answered from the record is whether the Iowa Court of Appeals unreasonably concluded that a complete redaction of Hoon's co-defendant's confession did not create a reasonable likelihood that the jury would find reasonable doubt as to Hoon's guilt.
23
The district court undertook the correct inquiry, and considered what the evidence would look like absent trial counsel's deficient performance. The district court undertook the analysis as set out in Strickland:
24
When a defendant challenges a conviction, the question is whether there is a reasonable probability that, absent the errors, the factfinder would have had a reasonable doubt respecting guilt....
25
In making this determination, a court hearing an ineffectiveness claim must consider the totality of the evidence before the judge or jury. Some of the factual findings will have been unaffected by the errors, and factual findings that were affected will have been affected in different ways. Some errors will have had a pervasive effect on the inferences to be drawn from the evidence, altering the entire evidentiary picture, and some will have had an isolated, trivial effect .... Taking the unaffected findings as a given, and taking due account of the effect of the errors on the remaining findings, a court making the prejudice inquiry must ask if the defendant has met the burden of showing that the decision reached would reasonably likely have been different absent the errors.
26
Strickland, 466 U.S. at 695-96, 104 S.Ct. 2052 (emphasis added).
27
Here, the federal district court determined that, had Hoon's counsel made sure Timothy Caskey's confession was correctly redacted, under Iowa law the confession could not have even mentioned the existence of the third person (Hoon). In addition, the court would have been required to issue a limiting instruction to the jury. These changes would indeed appear to "alter[] the entire evidentiary picture." Id. at 696, 104 S.Ct. 2052. The district court, following Strickland's dictates, noted what evidence was untouched by the change and what evidence was altered. After redacting Caskey's confession to include no reference to Hoon, Ailleen Foley's testimony that Caskey and Hoon were the two intruders would be directly inconsistent with Caskey's statement that he and David Carney (with no mention of a third person) were the intruders. In addition, the jury would be instructed that Caskey's confession, which did not mention the existence of a third intruder, could not be used against Hoon.
28
The federal district court noted Foley's apparent confusion over who was the gunman, her several statements that she did not get a good look at the non-gunman, and her statements implying fear and anxiety during the break-in, would cast some doubt on her credibility. The court determined that the credibility battle between Caskey's confession and Foley's testimony, along with the jury instruction that the confession should not have been used against Hoon, was sufficient to create a reasonable probability that a jury would have reasonable doubt as to Hoon's guilt. (J.A. at 226.) Therefore, the district court properly concluded that there was a reasonable probability that Hoon would have been acquitted absent the violation, thereby showing prejudice.
29
I agree with the district court that the Iowa court was unreasonable in concluding that correcting for the Bruton violation does not "undermine confidence in the outcome" of the trial. Therefore, the Strickland requirements have been met here. I am mindful of the deference due a state court under the unreasonable standard, but I think the state court here unreasonably applied federal law.
30
Therefore, I respectfully dissent and would affirm the district court's decision.
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In the United States Court of Federal Claims
OFFICE OF SPECIAL MASTERS
No. 17-99V
(not to be published)
*************************
ELIZABETH A. HARRIS, * Special Master Oler
*
Petitioner, * Filed: July 30, 2018
*
v. * Decision; Attorney’s Fees and Costs.
*
*
SECRETARY OF HEALTH AND *
HUMAN SERVICES, *
*
Respondent. *
*************************
Nancy Routh Meyers, Ward Black Law, Greensboro, NC, for Petitioner.
Robert Paul Coleman, III, U. S. Dep’t of Justice, Washington, DC, for Respondent.
DECISION GRANTING ATTORNEY’S FEES AND COSTS1
On January 23, 2017, Elizabeth A. Harris filed a petition seeking compensation under the
National Vaccine Injury Compensation Program (the “Vaccine Program”), alleging that she
suffered from an exacerbation and worsening of peripheral neuropathy as a result of her
influenza (“flu”) vaccine administered on December 2, 2015.2 Petition, ECF No. 1. On June 1,
2018, the parties filed a joint stipulation of dismissal (ECF No. 40), and I therefore issued an
order concluding proceedings on June 14, 2018 (ECF No. 36).
1
Although this Decision has been formally designated “not to be published,” it will nevertheless be posted on the
Court of Federal Claims’ website in accordance with the E-Government Act of 2002, 44 U.S.C. § 3501 (2012).
This means the ruling will be available to anyone with access to the internet. As provided by 42 U.S.C. § 300aa-
12(d)(4)(B), however, the parties may object to the decision’s inclusion of certain kinds of confidential information.
Specifically, under Vaccine Rule 18(b), each party has fourteen days within which to request redaction “of any
information furnished by that party: (1) that is a trade secret or commercial or financial in substance and is
privileged or confidential; or (2) that includes medical files or similar files, the disclosure of which would constitute
a clearly unwarranted invasion of privacy.” Vaccine Rule 18(b). Otherwise, the Decision in its present form will be
available. Id.
2
The Vaccine Program comprises Part 2 of the National Childhood Vaccine Injury Act of 1986, Pub. L. No. 99-660,
100 Stat. 3758, codified as amended at 42 U.S.C. §§ 300aa-10 through 34 (2012) (“Vaccine Act” or “the Act”).
Individual section references hereafter will be to § 300aa of the Act (but will omit that statutory prefix).
Petitioner filed a motion requesting final attorney’s fees and costs, dated June 1, 2018.
See Motion for Attorney’s Fees, ECF No. 39. Petitioner requests reimbursement of attorney’s
fees and costs in the total amount of $17,969.15 (representing $16,905.00 in attorney’s fees and
$1,064.15 in costs). See Fees and Costs Summary, ECF No. 39-1 at 2. Petitioner requests
$350.00 per hour for work performed by Ms. Meyers in 2016 and 2017, as well as $375.00 per
hour for work performed in 2018. Id. Petitioner also requests $145.00 per hour for worked
performed by paralegals. Id. In compliance with General Order No. 9, Petitioner filed a signed
statement indicating that she did not incur any fees or costs in this matter. ECF No. 44.
Respondent filed a document reacting to the fees request on June 14, 2018, indicating that
he is satisfied that the statutory requirements for an award of attorney’s fees and costs are met in
this case, but deferring to my discretion the determination of the amount to be awarded. ECF
No. 42. Petitioner did not file a reply to Respondent’s response.
I reviewed Ms. Meyers’ detailed records of time and expenses incurred in this case, and
find that they are reasonable. Respondent did not identify any entries as objectionable.
I hereby GRANT Petitioner’s motion for attorney’s fees and costs. Thus, an award of
$17,969.153 should be made in the form of a check payable jointly to Petitioner, Elizabeth A.
Harris, and Petitioner’s counsel, Ms. Nancy Routh Meyers, Esquire, of Ward Black Law. The
clerk shall enter judgment accordingly.4
IT IS SO ORDERED.
s/ Katherine E. Oler
Katherine E. Oler
Special Master
3
This amount is intended to cover all legal expenses incurred in this matter. This award encompasses all charges by
the attorney against a client, “advanced costs” as well as fees for legal services rendered. Furthermore, § 15(e)(3)
prevents an attorney from charging or collecting fees (including costs) that would be in addition to the amount
awarded herein. See Beck v. Sec’y of Health & Human Servs., 924 F.2d 1029 (Fed. Cir. 1991).
4
Pursuant to Vaccine Rule 11(a), entry of judgment can be expedited by each party filing a notice renouncing the
right to seek review.
2
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772 N.W.2d 15 (2009)
STATE
v.
CRABB.
No. 08-0800.
Court of Appeals of Iowa.
June 17, 2009.
Decision without published opinion. Affirmed.
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STATE OF WEST VIRGINIA
SUPREME COURT OF APPEALS
GARY LEE PRATER, FILED
March 30, 2017
Claimant Below, Petitioner RORY L. PERRY II, CLERK
SUPREME COURT OF APPEALS
OF WEST VIRGINIA
vs.) No. 16-0369 (BOR Appeal No. 2050925)
(Claim No. 910020791)
WEST VIRGINIA OFFICE OF
INSURANCE COMMISSIONER,
Commissioner Below, Respondent
and
ALMA DEVELOPING, INC.,
Employer Below, Respondent
MEMORANDUM DECISION
Petitioner Gary Lee Prater, pro se, appeals the decision of the West Virginia Workers’
Compensation Board of Review. The West Virginia Office of the Insurance Commissioner, by
Brandolyn N. Felton-Ernest, its attorney, filed a timely response.
This appeal arises from the Board of Review’s Final Order dated March 29, 2016, in
which the Board affirmed, in part, and reversed, in part, an October 28, 2015, Order of the
Workers’ Compensation Office of Judges. In its Order, the Office of Judges affirmed, in part,
and reversed, in part, the claims administrator’s March 27, 2015, decisions which denied
authorization of the medications Hydrocodone, Fioricet, and Zoloft. The Court has carefully
reviewed the records, written arguments, and appendices contained in the briefs, and the case is
mature for consideration.
This Court has considered the parties’ briefs and the record on appeal. The facts and legal
arguments are adequately presented, and the decisional process would not be significantly aided
by oral argument. Upon consideration of the standard of review, the briefs, and the record
presented, the Court finds no substantial question of law and no prejudicial error. For these
reasons, a memorandum decision is appropriate under Rule 21 of the Rules of Appellate
Procedure.
1
Mr. Prater, a coal miner, was injured in the course of his employment on June 13, 1991,
when a piece of slate fell on him. Diane Shaffer, M.D., completed the physician’s section of the
report of occupational injury and listed the injuries as head trauma, acute cervical sprain, and
acute lumbar sprain. A lumbar MRI taken in April of 1999 showed mild degenerative changes in
the lumbar spine. There were mild disc bulges at L3-4 and L4-5. At L4-5 there was also a mild
left foraminal disc protrusion. A moderate bulging disc with a small protrusion was seen at L5
S1.
On November 3, 2000, David Jenkinson, M.D., performed an independent medical
evaluation in which Mr. Prater sustained fractured teeth, a lacerated forehead, and injuries to his
knee, cervical spine, and lumbar spine as a result of the compensable injury. He subsequently
underwent two left knee surgeries. At the time of evaluation, Mr. Prater reported pain on the left
side of his neck, the medial aspect of his knee, and the lumbar spine. On examination, he had
tenderness in the cervical spine but full range of motion. The lumbar spine and left knee had full
range of motion with no pain complaints. Dr. Jenkinson diagnosed minor cervical strain, status
post left knee medial menisectomy, and minor low back strain. He assessed 5% impairment for
the cervical spine and 1% for the left knee for a total of 6% whole person impairment.
On August 14, 2003, the claims administrator authorized the medications Ranitidine,
Zoloft, Butalbital, Alprazolam, and Hydrocodone. A treatment note by Ronald Mann, M.D.,
dated August 18, 2014, indicates Mr. Prater continued to have back pain and tenderness. He
diagnosed neck and back pain. Mr. Prater underwent a drug screen which was positive for
opioids. On November 17, 2014, Dr. Mann stated in a treatment note that Mr. Prater had neck
and back pain that was essentially stable and unchanged. He noted that he requires the prescribed
medications for functionality. Mr. Prater again underwent a drug screen which was positive for
opioids. On March 11, 2015, Mr. Prater again underwent a urine drug screen which was negative
for all tested medications. Dr. Mann recommended he take his medication as prescribed. On
March 24, 2015, Dr. Mann wrote a letter to the claims administrator stating that Mr. Prater was
prescribed Hydrocodone, Nexium, Neurontin, Zoloft, Celebrex, and Fioricet due solely to the
compensable injury.
On March 27, 2015, the claims administrator denied an authorization request for
Hydrocodone. It noted that Mr. Prater tested negative for the medication on March 11, 2015.
That same day, the claims administrator also denied an authorization request for Fioricet. It
stated that the medication is a barbiturate and Mr. Prater tested negative for it on February 11,
2015; November 17, 2014; and August 18, 2014, indicating the drug was not in his system. The
claims administrator noted that Fioricet treats Mr. Prater for muscle contraction headaches, a
non-compensable condition. In a final March 27, 2015, decision, the claims administrator denied
an authorization request for Zoloft. It found that the medication was to treat anxiety and sleep
difficulties, neither of which are compensable conditions.
Dr. Mann wrote a letter in June of 2015 stating that he has treated Mr. Prater for the
work-related injury since September of 1999. He suffers from back pain and muscle spasms
daily. His current medications allow him to function but he has difficulty obtaining them through
2
workers’ compensation. He continues to require the medication for his daily living. In a second
letter dated July 8, 2015, Dr. Mann stated that Mr. Prater continued to take Hydrocodone,
Nexium, Neurontin, Zoloft, Celebrex, and Fioricet. He asserted that the medications are required
solely due to the compensable injury, and he will continue to require the medications long term
as his injuries will progress with time.
The Office of Judges reversed the claims administrator’s decisions denying Hydrocodone
and Fioricet on October 28, 2015. It found that Mr. Prater showed by a preponderance of the
evidence that the medications are necessary to treat his compensable injury. Dr. Mann wrote a
letter stating that Hydrocodone and Fioricet were prescribed solely to treat the work-related
injury. He said they are necessary for chronic pain, quality of life, and functionality. Dr. Mann
even identified the instant claim as the basis of his request. The West Virginia Office of the
Insurance Commissioner argued before the Office of Judges that Mr. Prater failed urine drug
screens because he did not have opiates or barbiturates in his system when he was tested. The
Office of Judges determined that he did not fail a drug test and that Dr. Mann never stated that he
failed to comply with his medication regimen. The Office of Judges stated that Dr. Mann is
aware of Mr. Prater’s medications and would be obliged to take action if he believed they were
being abused. Finally, the Office of Judges found that the West Virginia Office of the Insurance
Commissioner failed to submit any medication evidence supporting its argument that the
medications would treat unrelated degenerative conditions. In its Order, the Office of Judges also
affirmed the claims administrator’s denial of the medication Zoloft. The Office of Judges found
that the medication was properly denied because there is no evidence the claim is compensable
for a psychiatric condition. Dr. Mann’s letters indicate that Zoloft is used to treat anxiety and
sleep problems, which are unrelated to the compensable injury.
The Board of Review affirmed the Office of Judges’ Order insofar as it denied the
medication Zoloft. The Board of Review reversed the Office of Judges insofar as it authorized
the medications Hydrocodone and Fioricet. The Board of Review found that per West Virginia
Code of State Rules § 85-20-53 and § 85-20-54-62 (2006) specific documentation is required
when controlled substances are prescribed beyond the time limit periods set out after the initial
injury. As Mr. Prater was injured in 1991, this documentation is required. Dr. Mann’s reports
failed to provide the necessary documentation for authorization of Hydrocodone. Regarding
Fioricet, Dr. Mann stated on March 24, 2015, and July 8, 2015, that the medication was to treat
muscle contraction headaches, a non-compensable condition.
After review, we agree with the reasoning and conclusions of the Board of Review. As
Hydrocodone is a controlled substance, the requirements of West Virginia Code of State Rules §
85-20-53 apply in this case and proper documentation of the necessity of exceeding the time
limits was not provided. Additionally, the medications Fioricet and Zoloft are for the treatment
of a non-compensable condition.
For the foregoing reasons, we find that the decision of the Board of Review is not in clear
violation of any constitutional or statutory provision, nor is it clearly the result of erroneous
conclusions of law, nor is it based upon a material misstatement or mischaracterization of the
evidentiary record. Therefore, the decision of the Board of Review is affirmed.
3
Affirmed.
ISSUED: March 30, 2017
CONCURRED IN BY:
Chief Justice Allen H. Loughry II
Justice Robin J. Davis
Justice Margaret L. Workman
Justice Elizabeth D. Walker
DISSENTING:
Justice Menis E. Ketchum
4
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COURT OF APPEALS FOR THE
FIRST DISTRICT OF TEXAS AT HOUSTON
ORDER
Appellate case name: Metropolitan Transit Authority v. Beverly Brooks
and
Beverly Brooks v. Metropolitan Transit Authority
Appellate case number: 01-16-00158-CV
Trial court case number: 2013-19862
Trial court: 269th District Court of Harris County
Appellant, Metropolitan Transit Authority (“METRO”), and appellant, Beverly
Brooks, filed notices of appeal of the trial court’s final judgment, signed on December 4,
2015. Each appellant’s brief was due on August 8, 2016. See TEX. R. APP. P. 38.6(a). On
August 29, 2016, Brooks filed her appellant’s brief. METRO’s appellee’s brief, therefore,
was due on September 28, 2016.
After we granted two motions for an extension of time, METRO’s appellant’s brief
was due on December 16, 2016, with no additional extensions. On November 7, 2016, we
granted METRO’s motion to extend the time to file its appellee’s brief and extended the
time to file that brief to December 16, 2016, with no further extensions. METRO then filed
another motion to extend, representing that it “has been trying to settle this appeal.” We
granted an extension to January 17, 2017, and notified METRO that no additional
extensions would be granted.
METRO, however, did not file a brief. On January 26, 2016, the Clerk of this Court
notified METRO that, unless we received METRO’s appellant’s brief by February 6, 2017,
the appeal might be dismissed for want of prosecution. On February 1, 2017, METRO
responded with another motion for extension, representing that it “has been trying to settle
this appeal” and requesting an extension to February 28, 2017 “due to a busy work
schedule.”
We deny motion. Nevertheless, METRO’s appellant’s and appellee’s briefs are
due to be filed no later than TUESDAY, FEBRUARY 28, 2017. If the Clerk of this
Court does not receive METRO’s appellant’s brief by February 28, 2017, the Court
may dismiss METRO’s appeal of the December 4, 2015 judgment for want of
prosecution or failure to comply with a requirement of the Texas Rules of Appellate
Procedure or an order of this Court. See TEX. R. APP. P. 38.8(a)(1), 42.3. And, if the
Clerk of this Court does not receive METRO’s appellee’s brief by February 28, 2017,
the Court may set the appeal for submission without METRO’s appellee’s brief.
It is so ORDERED.
Judge’s signature: /s/ Terry Jennings
Acting individually Acting for the Court
Date: February 17, 2017
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In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
No. 02-17-00387-CR
RAFID AHMED GHENI OBAIDA, § On Appeal from Criminal District Court No. 1
Appellant
§ of Tarrant County (1388085D)
§ October 25, 2018
V.
§ Opinion by Justice Gabriel
THE STATE OF TEXAS § (nfp)
JUDGMENT
This court has considered the record on appeal in this case and holds that there
was no error in the trial court’s judgment. It is ordered that the judgment of the trial
court is affirmed.
SECOND DISTRICT COURT OF APPEALS
By /s/ Lee Gabriel
Justice Lee Gabriel
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390 F.2d 595
NATIONAL LABOR RELATIONS BOARD, Petitioner,v.SHELBY MANUFA CTURING COMPANY, Respondent.
No. 17569.
United States Court of Appeals Sixth Circuit.
March 7, 1968.
Howard B. Shore, N.L.R.B., Washington, D.C., (Arnold Ordman, Gen. Counsel, Dominick L. Manoli, Associate Gen. Counsel, Marcel Mallet-Provost, Asst. Gen. Counsel, Paul J. Spielberg, Atty., N.L.R.B., Washington, D.C., on the brief), for petitioner.
Arthur R. Donovan, Evansville, Ind., (Arthur R. Donovan, Harry P. Dees, Joseph A. Yocum, Evansville, Ind., on the brief), for respondent; Kahn Dees, Donovan & Kahn, Evansville, Ind., of counsel.
Before WEICK, Chief Judge, PHILLIPS and CELEBREZZE, Circuit Judges.
PER CURIAM.
1
The Board, in agreement with the trial examiner, found that the company violated Sections 8(a)(1) and 8(a)(3) of the National Labor Relations Act as amended.1 The violations consisted of coercive interrogating of employees during an organizing campaign, enforcing unlawful no-solicitation and no-distribution rules, granting a wage increase because employees voted against the union, and suspending employees for wearing union insignia in the plant.
2
The Board further found, in disagreement with the trial examiner, that the company violated Section 8(a)(5) of the Act by refusing to bargain with the union. The Board also discredited a witness whose testimony was credited by the examiner. 155 NLRB 464.
3
We are of the opinion that substantial evidence supports the Board's findings and order affirming the examiner as to the Section 8(a)(1) and 8(a)(3) violations, and that the Board's order with respect thereto should be enforced.
4
The Board's findings with respect to the Section 8(a)(5) violation, in our judgment, are not supported by substantial evidence when the record is viewed as a whole. The authorization cards had two faces. One face contained an authorization for representation with a line for signature. Undeneath the signature line were the words 'This card is for use in support of the demand of UAW-AFL-CIO for recognition, or for an NLRB election.' The other face contained in large, bold faced type, the words 'SECRT BALLOT ELECTION', and underneath, in smaller type were the words, 'This card will be filed with the National Labor Relations Board to secure a secret ballot election conducted by representatives of the United States Government.' Under the statement, in large, bold face type, were the words, 'THIS CARD IS CONFIDENTIAL.' In our opinion these cards were ambiguous. They were calculated to and did indicate a purpose to secure an election. This is all the more clear from evidence that the card solicitors did in fact represent to a number of employees that their purpose was to secure an election. The examiner in his decision stated:
5
'Several witnesses testified that the talk all over the plant during the campaign was about having an election.'
6
Under these circumstances the examiner was correct in ruling that the cards cannot be relied upon to support the bargaining order. NLRB v. Swan Super Cleaners, 384 F.2d 609 (6th Cir. 1967); Dayco Corp. v. NLRB, 382 F.2d 577 (6th Cir. 1967); Peoples Serv. Drug Stores Inc. v. NLRB, 375 F.2d 551 (6th Cir. 1967); Pizza Prod. Corp. v. NLRB, 369 F.2d 431 (6th Cir. 1966). This case is readily distinguishable on its facts from NLRB v. Cumberland Shoe Corp., 351 F.2d 917 (6th Cir. 1965); NLRB v. Winn-Dixie Stores, Inc., 341 F.2d 750 (6th Cir. 1965), cert. denied, 382 U.S. 830, 86 S.Ct. 69, 15 L.Ed.2d 74.
7
Moreover, the evidence disclosed that the company had a good faith doubt that the union had a majority.
8
The Board's order with respect to Section 8(a)(1) and 8(a)(3) violations is enforced. Enforcement is denied with respect to the Section 8(a)(5) bargaining order.
1
29 U.S.C. 151 et seq
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COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
§
SERGIO RENE MONTEJANO, No. 08-12-00235-CR
§
Appellant, Appeal from the
§
v. 168th District Court
§
THE STATE OF TEXAS, of El Paso County, Texas
§
Appellee. (TC# 20090D05687)
§
JUDGMENT
The Court has considered this cause on the record and concludes there was no error in the
judgment. We therefore affirm the judgment of the court below. This decision shall be certified
below for observance.
IT IS SO ORDERED THIS 17TH DAY OF SEPTEMBER, 2014.
YVONNE T. RODRIGUEZ, Justice
Before McClure, C.J., Rivera, and Rodriguez, JJ.
Rivera, J. (Not Participating)
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72 Wyo. 509 (1954)
267 P.2d 970
THE STATE OF WYOMING, Plaintiff and Respondent,
vs.
H.H. CALLAWAY, Defendant and Appellant.
No. 2611
Supreme Court of Wyoming
March 9, 1954
*511 For the defendant and appellant the cause was submitted upon the brief and also oral argument of W.A. Muir of Rock Springs, Wyoming.
For the plaintiff and respondent the cause was submitted upon the brief of Howard B. Black, Attorney General, Paul T. Liamos, Deputy Attorney General, James L. Hettinger and Robert A. McKay, Assistant Attorneys General, all of Cheyenne, Wyoming, and John S. Mackey, County and Prosecuting Attorney of Pinedale, Sublette County, Wyoming. Oral argument by Mr. Mackey.
OPINION
HARNSBERGER, Justice.
The appellant was tried and convicted under Section 9-317, Wyoming Compiled Statutes, 1945, which reads as follows:
"Whoever buys, receives, conceals or aids in the concealment of anything of value, which has been stolen, taken by robbers, embezzled or obtained by false pretense, knowing the same to have been stolen, taken by robbers, embezzled or obtained by false pretense, shall, if the goods are of the value of twenty-five dollars or upwards, suffer the punishment prescribed for grand larceny, and if the goods are worth less than twenty-five dollars, shall suffer the punishment prescribed for petit larceny."
The information charged that defendant did "* * * wilfully, unlawfully and feloniously receive, conceal and aid in the concealment of the carcass of one Hereford cow, branded Bar Cross, ▴, on Left Ribs, of the value of $250.00, said carcass of said Hereford cow branded Bar Cross, ▴, on Left Ribs, having been stolen from the Bar Cross Land & Livestock Company, a Wyoming corporation, and the said H.H. Callaway knowing at the time of receiving, concealing and aiding in the concealment of the carcass of said Hereford cow that the same had been stolen." The jury's verdict found the defendant guilty as charged and ascertained and declared the value of the property received by the defendant to be $250.00. Direct appeal to this court has *516 been taken by the defendant from the judgment and sentence pronounced upon that verdict.
Before the trial a defense motion to suppress certain evidence obtained without search warrant was sustained and a demurrer to the information was overruled and appellants say this was reversible error in that the information fails to allege or set out the name or names of the persons who stole the property in question; that it does not allege a felonious taking of the property by the persons supposed to have stolen the same and that it does not allege the time or place of the larceny.
In Curran v. State, 12 Wyo. 553, 76 P. 577, this court held that in charging the crime of receiving stolen property, the name of the thief was immaterial and that it was unnecessary either to allege the name of the thief or that the name of the thief was unknown. Furthermore, the court announced that the material facts are (1) the receipt (2) of goods which have been stolen, and (3) knowing them to have been stolen. See also 45 Am. Jur., Receiving Stolen Property, 384, 385, Sec. 2. The essential elements of the crime which render its fruits "stolen property", were not included by the court as material facts required to be alleged in an information charging the commission of the statutory substantive crime of receiving, concealing and aiding in the concealing of something of value which has been stolen, knowing the same to have been stolen.
Ordinarily it is sufficient that the information charge a statutory crime substantially in the language of the statute, although as in McGinnis v. State, 16 Wyo. 72, 91 P. 936, 944, it was recognized "* * * that that rule has no application as to a common-law crime, where the statute has defined it in generic terms, but that in such case the information or indictment would be insufficient in merely following the statute. * * *"
*517 But our statute is not couched merely in generic terms, it fully, directly, expressly and without any uncertainty or ambiguity, sets forth all of the elements which this court has said are necessary to constitute the offense intended to be punished. Counsel has cited State v. Hall, 27 Wyo. 224, 194 P. 476, as supporting his position in demurring, but we cannot follow his reasoning. All we find in that case is that Hall was prosecuted under a penal statute requiring the owner or controller of sheep that had been dipped in accordance with law, to file an affidavit showing that fact. The information failed to state that the sheep in question had been dipped, in the absence of which fact, no crime would have been committed. For this reason, the demurrer to the information was sustained.
We see no reason to change or modify the holding in Curran v. State, supra, nor was it necessary for the information to allege a felonious taking of the property by the persons supposed to have stolen the same or to allege the time and place of the larceny.
The appellant insists he was prejudiced by the court's admission of evidence relating to the head, hide, udder and legs of the animal from which the state claimed the carcass in question was taken, and by the admission in evidence of these exhibits. From the authorities the appellant submits, we might surmise he suggests these exhibits were too gruesome and tended to inflame the jury, or we might conclude his contention is that these items were not sufficiently identified or connected with the defendant and the crime charged. We think there is little, if any, merit in either case.
The court unquestionably has a reasonable discretion which it may exercise in determining whether such exhibits are too gruesome or inflammatory and, unless this prerogative is manifestly abused, this court will not interfere.
*518 The relevancy, the materiality and the connection of these exhibits with the crime informed against is so patent when considered in connection with testimony showing the exhibits corresponded to parts of the very animal which the state claimed was the animal whose carcass had been stolen and unlawfully received and, together with other testimony relative to the killing of such an animal, its being dressed out, of similar parts having been buried by the thieves at the place where the exhibits were discovered, and the identity of the brand on the hide with the brand of the company which the information stated to be the owner of the stolen property, all coupled with the positive identification of the exhibits by one of the thieves and many other similar details, that it seems unnecessary to further discuss the matter.
Certain evidence in behalf of the state was given by witnesses who produced and identified the hide, head, udder, and legs of a two year old cow, the hide bearing a brand known as the Bar Cross, shown as ▴, and other evidence proving that this brand belonged to the Bar Cross Land and Livestock Company, a Wyoming corporation of which company one Norman Barlow is the manager, the treasurer and a director. Testimony also showed these parts of a cow were found buried on the Lookout Mountain range in Sublette county, Wyoming, where Mr. Barlow ran the cattle belonging to his company, and where the remains of such a cow had been placed by the two young men who had killed it. Mr. Barlow testified to the corporate existence of the Bar Cross Land and Livestock Company and that the approximate value of the animal in question was $250.
An important witness for the prosecution was one of two young men, who at the time had been employed by the defendant and lived at the Middle Butte Ranch where the defendant and his partner resided and operated *519 a "dude" business. This testimony shows that sometime around 8:00 o'clock P.M. on the evening of July 1, 1952, the witness and the other employee left the defendant's ranch in a pick-up truck intending to hunt for wild game; that as they were about to leave, the defendant said to them "Don't come home without the liver;" that at a place some seven or eight miles from the ranch these employees shot and killed a two year old cow with a .22 high powered rifle belonging to the defendant, dressed out the cow, cut it in half, buried the entrails, head, hide, udder and feet, loaded the halves of the carcass into the pick-up and drove the "long way" back to the defendant's Middle Butte Ranch, arriving between 11:00 o'clock P.M. and 1:00 o'clock A.M. that night. They went to the washhouse to clean up when the defendant came there and asked what they had gotten. When he was told they had a moose the defendant said, "I don't believe you," whereupon defendant was told they had in fact killed the cow. When the place of the killing was described to the defendant, he said "That is a pretty poor place to get it because it is bad to hide it there." Later when asked where the meat was to be put, the defendant said, "Bring it up to where we can wash it off," and defendant then got a hose, connected it to the water line and turned on the water to wash off the meat and the truck. The defendant also said something about hanging the meat out and that if somebody found it they would be in trouble over it. The defendant and one of the employees got in the truck and brought the meat out and quartered it with a meat saw, which the defendant produced, after which the meat was taken into the cookhouse, placed on the floor and the defendant and the employees cut it up into chunks and put it in the deepfreeze. During this time the witness said, "Well, I reckon if we get caught, this is it," and the defendant replied, "No, I have skinned out a few myself *520 and you boys haven't done nothing I haven't done or wouldn't do myself." It was also stated during this conversation that the cow was Barlow's because he was the only man that runs cattle on Lookout Mountain where the cow was killed.
The only other evidence which is of much importance at this time was given by a neighbor of the defendant, who said he went to the Middle Butte Ranch at 6:30 o'clock on the morning of July 2, 1952, to use the 'phone; that while telephoning he saw the defendant go to the deepfreeze and open it; that the deepfreeze was full of meat; that the defendant punched the meat a couple of times with his hand; that the witness asked the defendant if he punched the meat to see if it was frozen; that the defendant closed the lid and went back into the kitchen. It does not appear that the question of the witness was answered.
The court is said to have erred in not striking the testimony of a state's witness that the defendant told the witness "he had skinned out a few himself and hadn't been caught yet and we hand't done nothing that he wouldn't do or hadn't done." Counsel says there are numerous authorities which hold such evidence to be inadmissible, but that he does not care to cite them. This is unfortunate for appellant, as it leaves us unconvinced that there was any error in the admission of that testimony.
Appellant says there was error in permitting the manager who was also an officer and director to testify as to the corporate existence of the Bar Cross Land and Livestock Company. In the first place there is some question as to whether or not any objection was made to the testimony. What took place is best shown by quoting from the record:
*521 "Q. What is your occupation?
"A. Ranching.
"Q. Do you operate your own ranch?
"A. I am manager of the Bar Cross Land and Livestock Company.
"Q. What is the legal status or entity of the Bar Cross? BY MR. MUIR: Objected to as not proper proof of a corporation's existence.
"A. It is a Wyoming corporation authorized to do business in the State of Wyoming.
BY MR. MUIR: Just a moment! We object to this testimony, if the Court please. That is not the way to prove a corporation.
BY MR. NELSON: He is the manager of it. He ought to be entitled to testify to the legal entity.
BY THE COURT: He might not know anything about the legal status.
BY MR. NELSON: Do you know what the legal status of the Bar Cross Land and Livestock Company is?
"A. Yes.
"Q. What is it?
"A. It is a livestock and land operation a corporation.
"Q. Is it a Wyoming corporation?
"A. It is a Wyoming corporation.
"Q. You are the manager of that corporation?
"A. I am manager and treasurer.
"Q. You are then a director of the corporation, is that it?
"A. I am.
* * *"
Thus, it will be seen that without a ruling having been made on the objection made to the previous question as to the legal status or entity of the Bar Cross Land and Livestock Company, and without any objection being made to substantially the same question when it was asked after the witness had testified that he did know the company's legal status, the witness was permitted to say that the Bar Cross Land and Livestock Company was a Wyoming corporation of which the witness was the manager, treasurer and a director.
*522 Furthermore, no motion to strike the testimony was made.
In addition, it seems that corporate existence may be proved by just such testimony. See 20 Am. Jur., Evidence, p. 255, § 267; 23 C.J.S., Criminal Law, p. 194, § 921; 14 C.J., Corporations, p. 175, § 180, 16 C.J., Criminal Law, p. 614, § 1205, 22 C.J.S., Criminal Law, p. 1190, § 695; Edelhoff v. State, 5 Wyo. 19, 36 P. 627.
The most difficult question we are called upon to decide is whether the thief, without whose testimony in this case the conviction cannot be upheld, was an accomplice of the receiver of the stolen property and, if so, whether in this jurisdiction such testimony must be corroborated or whether a cautionary instruction must be given the jury relative to their consideration of the same.
As to the first query, there is undoubtedly a sharp division of authority. While Wharton's Criminal Evidence, Vol. 2 (Eleventh Edition) p. 1248, § 741, points out that a majority of the courts have held a thief is not an accomplice of the receiver of stolen property, an examination of the authorities there listed shows that eleven states so hold as against nine states to the contrary. In each group are some of our western states.
In 45 Am. Jur. 402, 403, § 17, it is said:
"The question whether one guilty of the larceny of personal property is to be regarded as an accomplice of one who criminally receives it, knowing it to be stolen, must frequently be determined where it is sought to convict the receiver on the testimony of the thief and it must be ascertained whether the rules relating to accomplice testimony are applicable. There is a division of authority upon this question. Whether the thief is such an accomplice is ordinarily tested either by the inquiry whether he has taken a guilty part in the commission of the crime with which the receiver is charged, or by *523 a determination of whether he could himself be indicted for the offense, either as principal or accessory.
"In many jurisdictions it is held that these questions must be answered in the negative, and that as a rule, the stealing of the property by one person and the receiving of it, knowing it to be stolen, by another, do not, without more, constitute the thief an accomplice of the receiver. There is, however, increasing recognition among these authorities of an exception under which the thief is held an accomplice of the receiver in cases where an agreement existed between them prior to the larceny for one to steal and the other to receive the property. On the other hand, the courts in an apparently increasing number of jurisdictions reach a contrary result from the application of the general tests, sometimes by reason of statutes broadening the definition of principals and accessories in crime, and take the view that one who steals the property is an accomplice of one who receives it from him with knowledge that it is stolen. Included in the group so holding are several courts which maintain the position that the receiver is not an accomplice as to the theft."
And in the annotations on the subject in 111 A.L.R. 1400, under the caption "View that corroboration is required thief testifying against receiver", it is noted:
"Courts in an apparently increasing number of jurisdictions take the view that in a prosecution for receiving stolen property the thief is an accomplice of the defendant, so as to necessitate corroboration of the thief's testimony. * * *"
and there is listed as included in the group which so hold, the states of Alabama, New York and Utah. Of these three states, Alabama is the only one which was not included among the nine states cited by Wharton, as above noted, so numerically the score at present seems to be eleven states holding the thief is not an accomplice and ten holding he is. Of course, this indicates nothing more than that as yet there has been no sound or logical reasoning advanced which has found *524 general acceptance in the minds of the host of learned judges who have struggled with the question.
Having in mind the reference in American Jurisprudence to the possible influence of statutes which broaden the definition of principals and accessories in crime, we quote our own applicable statute, Section 9-114, Wyoming Compiled Statutes, 1945:
"Every person who shall aid or abet in the commission of any felony, or who shall counsel, encourage, hire, command, or otherwise procure such felony to be committed, shall be deemed an accessory before the fact, and may be indicted, informed against, tried and convicted in the same manner as if he were a principal, and either before or after the principal offender is convicted or indicted or informed against; and upon such conviction he shall suffer the same punishment and penalties as are prescribed by law for the punishment of the principal."
If literal acceptance be given to the meaning of the word "Every" in this statute, then all persons without exception, and including the thief, would become accessory to the crime of receiving stolen property, if such person actually gave aid or abetted in the commission by another of that crime and, being such an accessory, could be informed against, tried and convicted in the same manner as if he were a principal. Yet, the statement most frequently found in those decisions which hold that a thief is not an accomplice of the receiver of stolen property, is that the thief cannot be convicted of the crime of receiving stolen property because the larceny and the receiving of the stolen property are different crimes. Vol. 2, Wharton's Criminal Evidence, 1248, 1249, § 741. Other courts say it is because the thief cannot receive from himself. See People v. Lima, 25 Cal. (2d) 573, 154 P. (2d) 698, 700.
It has also been said that the reason why a thief cannot be an accomplice of the receiver of stolen property, *525 is because intent is a necessary element of that crime and that there can be no intent to unlawfully receive something which the thief already possessed. This reasoning seems insufficient under a statute such as ours because, as in this case, by committing the acts which constituted him an accessory to the defendant's crime of unlawfully receiving the stolen property, the thief did not himself receive the property but, in fact, parted with it. The criminal intent necessary to make one an accessory to the crime here charged lies not in a criminal intent that the accessory knowingly receive the stolen property, but in the criminal intent to give aid and to abet another in that other person's commission of that substantive crime.
It may be that some of the earlier cases holding the thief cannot be an accomplice, were so decided under circumstances where it was being claimed that the thief was an accomplice even though he was not such a party to the transaction of receiving the stolen property as would bring him within the purview of our accessory statute and thus there resulted the too broad pronouncement that a thief cannot be an accomplice to the receiver of stolen property, without limiting that statement to cases where the thief was not guilty of other subsequent acts in connection with the commission of the further crime of receiving the stolen property.
In Vol. 2, Wharton's Criminal Law, p. 1551, § 1234, after stating that it is elementary that where the larceny of the defendant is proved, the charge of receiving fails, because there can be no guilty reception unless there is a prior stealing by another, it is said:
"As an elementary principle, if larceny by the defendant be proved, though the offender appear only to be a principal in the second degree, the charge of receiving falls, because the offenses are substantially distinct, *526 and because there can be no guilty reception unless there be a prior stealing by another. But this reasoning fails, when on an indictment for receiving, proof transpires to show that the defendant was also an accessory before the fact. The offenses are so distinct that one cannot be said to merge in the other, nor is conviction of the one in any way incompatible with conviction of the other. Hence, in defiance of such testimony the defendant, if there be sufficient evidence of guilty receiving, may be convicted of such receiving."
This amounts to saying, that even though the receiver be subject to conviction for larceny by reason of his being an accessory before the fact to that crime, such a conviction would not bar his conviction of the further crime of unlawfully receiving the stolen property if there was sufficient evidence of his unlawful receiving of the same.
So also, it may be said, that if in addition to having stolen the property, the thief by his subsequent acts becomes an accessory to the further crime of receiving the stolen property, the two separate crimes do not become merged nor would the conviction for the theft save the thief from conviction as an accessory to the substantive crime of receiving the stolen property.
76 C.J.S., Receiving Stolen Goods, p. 18, § 14-b., similarly says it is elementary law that the thief cannot be convicted of receiving the stolen property, but at page 20 makes the following qualification:
"* * * however, one who steals personal property and sells it to another may, under a proper state of facts, be considered an accomplice of the buyer of the stolen property."
While it is possible to draw small distinctions between an accessory and an accomplice, for the purposes with which we are here concerned, we consider them as being the same. See 1 Words and Phrases, (Permanent Edition) 237 et seq., and 431 et seq.
*527 The important thing to consider in this case is, whether the testimony of the thief is to be considered on a different plane than the testimony of any other witness in the case. We are not concerned with whether or not the thief may also be convicted of the crime of unlawfully receiving stolen property except as his being so subject to such conviction establishes him as a person whose participation in the transaction which is charged as constituting another the unlawful receiver of stolen property, makes it probable that through motives of fear, hope, revenge, etc., he may be tempted to color, enlarge or even to fabricate his testimony, in furtherance of his own ulterior purposes.
At different times this court has had occasion to speak concerning the necessity of corroboration of the testimony of accomplices, but so far it has not been said distinctly that a conviction may not be had solely upon the uncorroborated testimony of an accomplice. In McNealley (McNeally) v. State, 5 Wyo. 59, 67, 69, 70, 36 P. 824, 826, 827, 828, the trial court commenced an instruction with the statement "`If, from all the evidence, the jury believe that the witness Henry Bierman was an accomplice of the defendant in the crime charged, they should not convict the defendant upon his testimony alone; * * *'". The balance of the instruction contained matter which the court held to be prejudicial to the defendant and the case was reversed, but disapproval of the above quoted portion of the instruction was not expressed, although the following comment was made "* * * While it is not clear that in this jurisdiction a conviction on the unsupported testimony of an accomplice may not be sustained, as there are authorities based upon the strongest of reasoning that the jury may, if they please, act upon the evidence of an accomplice, notwithstanding the turpitude of his conduct, the general rule would prevail that it is the *528 duty of the court to advise the jury not to convict upon such testimony alone, and without corroboration. * * *" Then, the court said "* * * We do not care to lay down the strictest rule known, as to the absolute necessity of the presence of testimony corroborating the accomplice in order to warrant a conviction, nor as to the quantum of such confirmatory evidence, as it is not necessary to do so in the determination of questions presented in this case. * * *"
In Smith v. State, 10 Wyo. 157, 165, 67 P. 977, 979, it was said "* * * No doubt a jury may convict upon the uncorroborated testimony of an accomplice, for the reason that there is no law of this State which forbids it, and the court would not be authorized by a peremptory instruction to direct an acquittal as in a case where no evidence was produced by the State connecting the defendant with the crime. But it is questionable if the jury have a `right' to find a defendant guilty of a felony upon such uncorroborated testimony, and the authorities are uniform that they ought not to do so. * * *"
To relieve this statement of a seeming contradiction or at least some possible ambiguity, it might be taken to mean that while the jury has a legal right to convict upon such uncorroborated testimony, they should not do so.
In Clay v. State, 15 Wyo. 42, 60, 61, 86 P. 17, 19, 20, an instruction to the jury containing the statement "* * * that the uncorroborated testimony of an accomplice was sufficient upon which to base a verdict of guilt, if they were satisfied beyond all reasonable doubt of its truth. * * *", was discussed in connection with the evidence in the case and in conjunction with another instruction which was given at the request of the defendant to the effect "* * * that under the laws of this *529 state a person accused of crime could be convicted upon the uncorroborated evidence of an accomplice, but that it was questionable if they should so convict, and `that it was dangerous to do so unless the testimony of the accomplice is corroborated by evidence tending to connect the accused with the crime charged, and there should be evidence tending to show that the defendant was engaged and took part in the actual commission of the crime.' * * *", but again the court declined to definitely decide whether a conviction could be had in this state upon the uncorroborated testimony of an accomplice.
In State v. Baish, 32 Wyo. 136, 140, 230 P. 678, the jury was instructed as follows:
"`* * * You are further instructed that while it is a rule of law in this State that a person may be convicted of a crime by the uncorroborated testimony of an accomplice, still the jury should always act on such testimony with great care and caution, and should subject it to careful examination in the light of all the other evidence in the case; and the jury ought not to convict upon such testimony alone unless, after a careful examination of such testimony, you are satisfied beyond all reasonable doubt of its truth and that you can safely rely upon it; and if you are not so satisfied, then you should not convict the defendant unless you believe the testimony of the witness McCarthy to be corroborated by other and credible evidence tending to connect the defendant with the theft of the automobile alleged to have been stolen.'"
While it is true that only the first part of this instruction was criticized by the appealing defendant as being contrary to the law announced in Clay v. State, 15 Wyo. 42, 61, 86 P. 17, 19, to the effect that "* * * the jury should not be instructed that they may base their verdict upon the uncorroborated evidence of the accomplice, if they believe it to be true, unless explained and accompanied by other instructions, because such an *530 instruction by implication excludes other evidence in the case from their consideration. * * *", the affirmance of the judgment served to give approval to the instruction given.
In State v. Alderilla, 37 Wyo. 478, 482, 483, 263 P. 616, 617, this court voiced no criticism of the only instruction on the subject of accomplices and corroboration which had been requested and was given as follows:
"`The evidence of the witness Frank Bromley shows that he was an accomplice of the defendant in the commission of the crime charged against the defendant. You are instructed that the testimony of an accomplice should be received by you with great caution, and you ought not to convict the defendant of the crime charged upon the testimony of an accomplice alone, unless it is corroborated by other credible evidence tending to show that the defendant is guilty of the crime charged in the information.'"
In comment this court said "We have in this state no statute requiring corroboration of the testimony of an accomplice in a case of this kind, but in a proper case the jury is always warned of the danger of convicting without such corroboration. * * * If, after a proper caution by the judge, the jury nevertheless convict the defendant, we doubt the authority of this court to set aside the verdict merely on the ground that the accomplice's testimony was uncorroborated. * * *"
Finally, in State v. Vines, 49 Wyo. 212, 234, 237, 238, 54 P. (2d) 826, 833, 834, it was said:
"* * * We have no statute, and there is no rule of the common law, that forbids a conviction on the uncorroborated testimony of an accomplice, but by a rule of practice it is the duty of the court to advise the jury not to convict upon such testimony. * * * The reason for the rule is the supposed promise or hope of conditional immunity. This supposition is clearly justified in the case at bar. * * *"
*531 The opinion observes that the duty of the appellate court in passing on the sufficiency of the evidence in such a case is not easy to determine. It, however, reaffirms that appellate courts will not disturb a jury's findings on the facts approved by the trial judge's refusal to set the verdict aside, if there is any substantial evidence to support the same, and concludes (p. 834):
"* * * In spite of the recognized danger of acting on the uncorroborated testimony of an accomplice, we have no doubt that such testimony may constitute what we call `substantial evidence.' See State v. Alderilla, supra. In at least one case we have said that there must be `substantial credible evidence' to support the verdict. Jones v. State, 26 Wyo. 293, 299, 183 Pac. 745. In that case a defendant charged with larceny was convicted on the testimony of a witness who it was claimed was an accomplice. Because the witness was of bad character, and his improbable story was contradicted on material matters, it was held that his evidence was neither substantial nor credible, and the verdict was set aside. The decision in that case would seem to be authority for a similar disposition of the case at bar. * * *"
But later on (p. 834, 835) the court said:
"* * * It is not necessary to decide that the judgment in the present case should be reversed on the sole ground that the jury should not have believed Reel's (the accomplice's) testimony that appellant participated in the crime. * * *" (parenthesis supplied)
In the case now before us, neither the defendant nor the state requested any instruction relative to accomplices or respecting their testimony and the court did not of its own volition give any such instruction although it was the testimony of the thief who so aided and abetted the defendant in the alleged commission of the crime charged as to constitute him an accessory under our statute and hence an accomplice, which alone imputed to the defendant the knowledge that the meat received by him was stolen property.
*532 If we are to require observance of what this court in State v. Vines, supra, has said is a "rule of practice", then we must say that the trial court failed in its duty to advise the jury not to convict upon such testimony unless the same was corroborated, for though the crime here under consideration is far less grave than the murder charged in State v. Vines, the reason given for the rule as there stated, is also present here. The witness was the confessed thief of the stolen property and had pleaded guilty to its larceny. The hope of securing favorable treatment was undoubtedly present although he had at the time of testifying already been paroled. The record also suggests there was possible the motive of revenge because the defendant had not assisted the witness in his effort to be released on bond while the witness was being held in jail upon the charge of larceny.
While we cannot say that there is any precedent to be found in any of this court's earlier decisions for holding that a defendant may not be convicted upon the uncorroborated testimony of an accomplice, we do find that this court has been consistent as well as in substantial agreement with the appellate courts of most jurisdictions, in strongly indicating that where the testimony necessary to convict is given by an accomplice without corroboration, the trial court must advise and caution the jury as to the danger attendant upon their accepting the same as sufficient to convict.
If, then, the judgment of conviction in this case is to stand, and if we are to uphold what has previously been held, it will be because we now decide that although it may appear as it does in this case, that the accomplice's testimony alone supplied the evidence necessary to convict the defendant and it thereupon became the duty of the court to properly instruct and caution the jury as indicated by the decisions of this court, the failure of *533 the court to discharge its duty to so instruct, does not amount to reversible error.
However, when courts, including our own, in obvious recognition of the danger that innocent persons may easily be convicted upon such uncorroborated testimony and, with the apparent approval of appellate tribunals, have imposed upon themselves the "duty" to give juries proper cautionary instruction, it would seem strange if we were to now conclude that the neglect or disregard of that "duty" is not reversible error. We are not so disposed.
We do not overlook that the state maintains the necessary corroboration of the thief's testimony is to be found in the testimony of the neighbor who, while telephoning from the defendant's telephone, saw the defendant lift up the door of the deepfreeze and punch the meat several times. This act of the defendant is entirely consistent with his innocence of guilty knowledge that the meat was stolen. All of the evidence, including that of the state and its chief witness, agreed that the original purpose was to go hunting for wild game and, of course, it was the contention of the defendant that he understood the meat that was brought in and placed in the deepfreeze was moose meat. No one testified to the contrary, except the thief accomplice. While it may have been reprehensible for the defendant to have seemingly countenanced the wrongdoing of the thieves' taking game out of season, by being a party to the keeping of game meat in his deepfreeze, this improper conduct cannot justly be said to impute to him the knowledge that the meat was the carcass of a two year old cow stolen from the Bar Cross Land & Livestock Company as charged in the information.
We find no merit in the appellant's charge that there was a fatal variance between the information and the *534 proof concerning the name of the corporate owner of the cow in question. The position of the appellant in this respect is somewhat vague and uncertain, but we understand the criticism is based upon the fact that in the information the owner's name is written as "Bar Cross Land & Livestock Company, a Wyoming corporation," while the name of the company should in fact have been written as the "Bar Cross Land and Livestock Company, a Wyoming corporation." The point is not well taken. See Pickens v. The State, 58 Ala. 364; Lorah (Loraw) v. Nissley, 156 Pa. 329, 331, 27 A. 242; Schulze v. Light, Tex. Civ. App., 143 S.W. (2d) 200, 202; Brown v. State, 16 Tex. Court of App., 245, 248; Stewart v. State, 137 Ala. 33, 34 So. 818, 821; Commonwealth v. Clark, 58 Mass. (4 Cush.) 596, 597; Molton v. State, 29 Tex. App. 527, 16 S.W. 423.
The appellant challenges the court's instruction defining the word "carcass", which is as follows:
"You are instructed that Webster's New International Dictionary, Second Edition, defines the word `carcass' as follows: `The trunk of a slaughtered animal, after the hide, head, limbs, edible organs, and offal have been removed; the dressed body.'"
Appellant says the instruction is "no doubt proper" but that, in this case, "carcass" means "the body of an animal when dead", citing as authority the case of Whitson v. Culbertson, 7 Ind. 195, 196. Appellant also cites The New Century Dictionary, which defines "carcass" as "`the dead body of an animal.'" The importance of the proper meaningn of the word "carcass" is primarily concerned with the jury's understanding of the testimony of the manager of the owner company as to the value of the stolen property received by the defendant. Mr. Barlow, the owner's manager, testified that the approximate value of "this animal" was $250, and his was the only evidence about the value of the *535 property stolen. The jury's fixing of the value of the stolen property at $250 indicated they considered the value of "this animal" testified to by Mr. Barlow, to be identical with the value of the "dressed body" of the animal. If this were the only point upon which a reversal was being sought, we would be disposed to give the matter considerable study. In the present circumstance, however, we deem it sufficient to say that the certainty of the evidence, as specifically applying to the value of the property charged to have been stolen, is somewhat questionable.
Lastly, we take note that it appears from the record that the two men who killed and stole the cow in question, both pleaded guilty and both were paroled. One testified in behalf of the state and against the defendant, while the other testified in behalf of the defendant and against the state. While the thieves were both paroled, this defendant was sentenced to the penitentiary upon his conviction of the crime of receiving the fruits of the larceny. The considerations which moved the court to so dispose of these matters are not in the record, and we must assume, and we do assume, that the learned judge acted with circumspection and justly as he viewed the matter, yet these facts do not relieve this court of its duty to require that all persons accused of crime are accorded all of the protection to which the law entitles them. We believe that under the law of this state, the defendant was entitled to have the jury properly instructed with respect to the consideration which they should give to the uncorroborated testimony of the thief who, as an accessory before the fact, became an accomplice of the defendant in the commission of the crime for which the defendant was being tried. With such an instruction it may be that the jury would still have returned its verdict of guilty, but without *536 the instruction, we cannot say that the defendant had a fair and impartial trial.
Because of what has been said, the judgment must be reversed and the cause remanded for a new trial.
Reversed and remanded for a new trial.
BLUME, C.J. and RINER, J. concur.
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225 Ga. 735 (1969)
171 S.E.2d 306
SURRENCY et al.
v.
DUBBERLY, Member of Wayne County Board of Education, et al.
25483.
Supreme Court of Georgia.
Argued October 15, 1969.
Decided November 12, 1969.
Albert E. Butler, for appellants.
Alvin Leaphart, for appellees.
FRANKUM, Justice.
The plaintiffs, citizens and taxpayers of Wayne County, the appellants in this case, sought by an action of mandamus and injunction to prevent the members of the Wayne County Board of Education from permitting 74 nonresident students (that is students residing outside of Wayne County and in adjoining counties) from attending public schools in the Wayne County School District, and from expending Wayne County funds for the purpose of providing an education for such students. It appears that the county board acted under the provisions of Code Ann. § 32-650 which provides that the State Board of Education is authorized to provide by regulation a procedure whereby pupils shall, for such compelling reasons and circumstances as may be defined and specified by the State board, be permitted to attend and be included as enrolled pupils in average daily attendance in the public schools of such county and that the State board may provide a procedure whereby State funds may follow such pupils. Plaintiffs contended that the State funds which will be allocated to Wayne County for the 74 pupils involved will provide only a portion of the cost of educating those pupils for the school year 1969-70 *736 and that the additional burden placed upon the taxpayers of Wayne County by reason of the attendance in the schools of Wayne County of such pupils constitutes an illegal burden upon the taxpayers of said county. The trial court dismissed the case as it related to mandamus and denied injunctive relief, and that judgment is the judgment appealed from.
"The county, city or other independent board of education shall constitute a tribunal for hearing and determining any matter of local controversy in reference to the construction or administration of the school law, with power to summon witnesses and take testimony if necessary, and when such board has made a decision, it shall be binding on the parties: Provided, however, either party shall have the right to appeal to the State Board of Education, which appeal shall be made through the local superintendent of schools in writing and shall distinctly set forth the question in dispute, the decision of the local board, a transcript of the testimony and other evidence adduced before the board certified as true and correct by the local superintendent and a concise statement of the reasons why the decision below is complained of. This section shall apply to all county, city, or independent school systems in this State, regardless of when created. The State Board shall provide by regulation for notice to the parties and hearing on the appeal. The appellant and the appellee shall be notified by the State Board of Education in writing as to said board's decision on any matter appealed to the board within 25 days of the date of the decision." Code Ann. § 32-910. It nowhere appears from the complaint or from the evidence adduced upon the hearing of this matter that the plaintiffs have availed themselves of the administrative remedy provided by the quoted Code section. The controversy here is a local controversy within the meaning of that term as used in this Code section, and the plaintiffs are not entitled to resort to the extraordinary legal remedy of mandamus or to have equitable relief in the absence of a showing that they have exhausted their administrative remedies or that the remedy provided by the aforesaid Code section will not afford them adequate relief so as to authorize the intervention of a court of a court of equity. Otwell v. West, 220 Ga. 95 (137 SE2d 291); Carter v. Board of Education of Richmond County, 221 Ga. 775 (147 SE2d 315), and Boatright v. Brown, *737 222 Ga. 497 (2) (150 SE2d 680). It follows that the trial court did not err in rendering the judgment complained of.
Judgment affirmed. All the Justices concur.
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200 F.Supp. 264 (1961)
FIDELITY AND CASUALTY COMPANY OF NEW YORK, A corporation, and General Accident, Fire and Life Assurance Corporation, Ltd., Plaintiffs,
v.
J. A. JONES CONSTRUCTION COMPANY, A corporation, Defendant.
No. LR 61 c 17.
United States District Court E. D. Arkansas, W. D.
November 22, 1961.
*265 Cockrill, Laser & McGehee, Rose, Meek, House, Barron, Nash & Williamson, Little Rock, Ark., for plaintiffs.
Mehaffy, Smith & Williams, Little Rock, Ark., for defendant.
*266 YOUNG, District Judge.
This is an action for indemnity. Plaintiffs are insurance carriers subrogated to the rights of the architectural firm which prepared plans for and supervised the construction of a J. C. Penney store at Sixth and Main Streets, Little Rock, Arkansas. Defendant was the general contractor for the job. The action arises from a cave-in of an excavation wall on March 4, 1957, for which the architectural firm was held liable to four of defendant's employees killed or injured thereby. See Erhart v. Hummonds, 334 S.W. 2d 869 (Ark.1960). Defendant, before answering, has moved for summary judgment. Fed.R.Civ.P. 12(b), 28 U.S.C.A.; 2 Moore, Federal Practice, § 12.09 [3].
Defendant's motion for summary judgment, though primarily asserting a failure to state a claim upon which relief can be granted, Fed.R.Civ.P. 12(b) (6), also alleges that plaintiffs' cause of action is barred by the statute of frauds and by "* * * the statute of limitations and/or laches." As this is not an action to charge the defendant upon its special promise to answer for the debt, default, or miscarriage of another, but rather for its own conduct, it is not an action barred by the statute of frauds. As to the action being barred by statutes of limitation or by laches, it may be noted that normally the statute of limitations runs in favor of the principal obligor, where indemnity is owed, from the time when payment of the obligation is made. Restatement, Restitution § 77 (1937). Here the cave-in out of which this action arises occurred March 4, 1957, the actions by, or on behalf of, the four employees were consolidated and tried May 6-9, 1959, affirmed on appeal May 2, 1960 (rehearing denied May 30, 1960), and this action for indemnity filed in this court January 24, 1961. Defendant admits that a demand was made upon it to defend the four suits prior to their trial in May 1959, and defendant's attorney states in an affidavit attached to the motion for summary judgment that he "maintained a comprehensive file in this case throughout the proceedings in the Circuit Court of Pulaski County and subsequent appeal to the Arkansas Supreme Court" which discloses that defendant was apprised of the four suits from the time of the filing of the initial suit in the latter part of 1957. Defendant makes no allegation of inexcusable delay in the commencement of this action, nor does it allege prejudice on it as the result of any such delay. The defense of limitations or of laches is therefore not well taken.
I
Defendant's assertion that the complaint fails to state a claim upon which relief can be granted is based upon two facts; there is no contract between defendant and the architectural firm to whose rights these plaintiffs are subrogated, and the four workmen to whom the architectural firm was held liable were defendant's employees and received Workmen's Compensation Act benefits from defendant's compensation insurance carrier. Not having specifically entered into a contract having an indemnity clause, defendant insists that the Arkansas Workmen's Compensation Act exclusively measures its responsibility and liability, directly or indirectly, for injury to its employees.
The question thus presented whether an employer who has paid compensation act benefits to an employee must indemnify a third person held liable for the employee's injury, where, as between the third person and the employer, the injury was the fault of the employer has received conflicting answers from American courts. With apparent unanimity courts have held that the policy of workmen's compensation coverage protects employers who have paid compensation from actions to enforce contribution among tortfeasors, but have found nothing that prevents the enforcement against such an employer of his express indemnity contract. 2 Larson, Workmen's Compensation §§ 76.21, 76.40 (1952); Note, 8 Ark.L.Rev. 512 (1954); accord, C & L Rural Elec. Co-op. Corp. v. Kincaid, 221 Ark. 450, 256 S.W.2d 337 *267 (1953). Where the action is for indemnity from an employer who has not given an express indemnity contract, the cases are not in agreement, though upon analysis a general agreement may be detected among the majority of these cases.
Thus, where the action for indemnity is among parties whose only legal relationship is that of joint feasors, indemnity as well as contribution is denied. Slattery v. Marra Bros., Inc., 186 F.2d 134, 138-139 (2d Cir.1951) (L. Hand, J.,); Peak Drilling Co. v. Halliburton Oil Well Cementing Co., 215 F.2d 368 (10th Cir. 1954), affirming Calvery v. Peak Drilling Co., 118 F.Supp. 335 (W.D.Okla. 1954). But "(i)n the absence of an express contract the obligation to indemnify may arise from undertakings implicit in relationships assumed." Atella v. Gen. Elec. Co., 21 F.R.D. 372, at 374 (D. R.I.1957); e. g., Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133 (1956) (On rehearing) (Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C.A. § 901 et seq.); General Elec. Co. v. Moretz, 270 F.2d 780 (4th Cir. 1959) (Tennessee Workmen's Compensation Act, I.C.A. § 50-901 et seq.); American Dist. Telegraph Co. v. Kittleson, 179 F.2d 946 (8th Cir.1950) (Iowa Workmen's Compensation Act, I.C.A. § 85.1 et seq.) (Riddick, J.); Westchester Lighting Co. v. Westchester County Small Estates Corp., 278 N.Y. 175, 15 N. E.2d 567 (1938) (New York Workmen's Compensation Act, Workmen's Compensation Law, § 1 et seq.). See 2 Larson, supra, § 76.43; Note: Third Party's Right to Contribution and Indemnity Under Workmen's Compensation in Tenn., 13 Vand.L.Rev. 772, 778-79 (1960). It is, then, only a partial defense to assert a lack of an express contract containing an indemnity agreement, for neither at common law nor under workmen's compensation acts is indemnity made to depend upon the existence of such an express contractual clause. Restatement, Restitution § 76 (Comment b.) (Common law); Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., supra, 350 U.S. at 132-133, 76 S.Ct. at 236-237; 2 Larson, supra, §§ 76.43, 76.44(a), (b) (Workmen's compensation acts).
II
Is there, then, such a breach of duty[1] by defendant to be found in the facts related in this record as will raise at law an obligation on defendant's part to indemnify these plaintiffs?
In February of 1957 defendant, J. A. Jones Construction Company, contracted with one Seventh & Main Realty Company to construct for the Realty Company a building to be located at Sixth and Main Streets, Little Rock, Arkansas; the building was to be constructed according to specifications and drawings prepared by the architectural firm of Erhart, Eichenbaum and Rauch of Little Rock, and was to serve, upon completion, as a store for the J. C. Penney Company. As the Penney Company declined to supervise construction of the building, the architectural firm was retained by the owners to perform this function. As supervisors of construction they exercised the authority of their principal, Seventh & Main Realty Company, on behalf of, and in the interest of, the principal, but the contract between defendant and the Realty Company gave them a somewhat greater authority than merely that of an agent, for it provided in several instances that the methods of construction to be selected, or the manner of performance thereof, was subject not only to the architects' approval, but that *268 the architects might direct the contractor in the performance of his contract, specifying such methods and procedures as they thought proper and necessary. The contractual provisions set out in the complaint are as follows:
"General Conditions:
"All work shall be executed in strict conformity with all laws and regulations of Federal, State, County, or City, authorities, and/or local utility companies having jurisdiction at the location of this work. None of the terms or provisions of the drawings or this specification shall be construed as waiving or cancelling any said laws and regulations. (GC 04).
"Construction Equipment Except and unless otherwise specified, each Contractor shall furnish at his own cost and risk, all tools, hoists, derricks, apparatus, including power for same, scaffolding and all temporary work, material and supplies necessary for expeditious prosecution of this contract. (GC 14).
"Responsibilities of Contractor The General Contractor shall take over and assume all responsibility for the entire premises. He shall erect such protection as may be required, or as directed by the Architect, maintain same, and maintain any existing protection, all in accordance with the governing laws, rules, regulations and ordinances. All such protection unless of a permanent nature, shall be removed from the premises when directed.
"Each Contractor shall be responsible for his own work and every part thereof, and all work of every description used in connection therewith. He shall specifically assume, and does assume, all risks of damage or injury from whatever cause to property or persons used on or in connection with his work, and of all damage or injury from any causes to property wherever located resulting from any action or operation under this particular Contract or in connection with his work under this Contract, and to undertake and promise to protect and defend the Owner against all claims on account of any such damage or injury. (GC 15).
"Supervision Each Contractor shall keep on his work, during its progress, a competent superintendent, and any necessary assistants, all satisfactory to the Architect * * (GC 17).
"Specifications:
"Earthwork, Shoring and Underpinning
"1-01 Scope: The work required under this section of the specifications consists of furnishing of all labor, materials and equipment, and of performing all operations in connection with excavation, filling and backfilling for building construction, and installation of necessary sheet piling, shoring and underpinning, complete, in strict accordance with this section of the specifications and applicable drawings.
"1-02 Excavation: a. General: Excavation will not be classified, and shall include all materials encountered in whatsoever nature, and no extra allowance in cost will be made in connection therewith. The excavation shall conform to the dimensions and elevations shown on the drawing, leveled off at exact depth required. Widths of excavations shall be sufficient to provide for easy placing and removal of forms, where form work is indicated, and for installation of such protective shoring and bracing as may be necessary to prevent caving of banks * * *. Undercutting will not be permitted.
"c. Shoring and Sheet Piling: This Contractor shall do all shoring necessary to maintain the banks of excavations, to prevent sluffing (sic) or caving, and to protect workmen, and shall repair or restore any damage that may occur in connection *269 therewith, at his own expense. The type of sheet piling required shall be optional with the Contractor, the only requirement being it shall be adequate for the purpose intended. Should the Contractor so elect, he may use the sheet piling as exterior forms for concrete work, placing the concrete directly against the piling surface and leaving the piling in place. Sheet piling shall be driven so as to maintain true alignment and braced if required.
"d. Inspection: Upon completion of excavation, and prior to commencement of concrete work, excavations will be inspected by the Architect to insure that suitable earth foundation conditions have been obtained, and that compliance with the requirements, the specifications and the drawings have been maintained. No concrete shall be placed until this inspection has been made and approval of the Architect has been obtained."
It is alleged that the defendant, in excavating for the basement and footings of the building, made an almost vertical cut some seventeen feet in depth along the east property line, parallel with and contiguous to the alley which lay to the rear of the site. On Thursday, February 28, 1957, approximately one month from the beginning of construction work, defendant erected bracing to support the side of the completed excavation, but, as erected, the bracing was considered by the architects to be inadequate; an official of the defendant construction company was notified that Thursday at his Shreveport, Louisiana, office by the architects that the bracing presented a hazard and that defendant's superintendent on the job was incompetent; it is further alleged that defendant immediately sent a representative to replace the superintendent then on the job, that the representative arrived on the job the following day, Friday, toured the construction site with the architects, was shown the inadequate bracing, and agreed to remedy the condition as the first order of business on the next work day, Monday, March 4, 1957.[2]
The complaint alleges that the defendant's representative failed to correct the inadequate bracing as the first order of business on Monday, but rather, that he had his crew remove part of the inadequate bracing and begin the digging of a one-foot deep trench at the base of the excavation wall. It is alleged that it had rained over the weekend prior to that Monday, so that the excavation side was more unstable and dangerous than it previously had been. In the cave-in that occurred that Monday morning, three of defendant's employees working at the base of the excavation side were suffocated, while another was seriously injured. These four men were covered by Workmen's Compensation insurance, and these benefits were paid.
Four suits were brought against the Architects for the injury and death of these four workmen, but, as previously noted, they were consolidated for trial. It is alleged that the complaint in each action alleged negligence on the part of the Architects in the following particulars: failing to direct the erection of protective bracing required by the construction contract, failing to require compliance with a Little Rock safety ordinance concerning excavation, failing to require compliance with the plans and specifications, failing to properly prepare the plans and specifications, failing to properly inspect the dangerous condition and to take the necessary safety steps a proper inspection would have required, and, lastly, that the architects' inspector drove his automobile down the alley *270 though he knew of the improper bracing, of the weekend rain, and of the danger of a cave-in being caused by traffic vibration and vehicle weight. As the case was presented to the jury, all save the last two were apparently abandoned, for the issues submitted were the architects' negligence in failing to stop all construction work until the defective bracing was corrected, and the negligence of their inspector in driving down the alley. Erhart v. Hummonds, supra, 334 S.W.2d 874 (dissent). It may be noted that the complaint in this case denied that the architects' inspector did drive down the alley and so cause the cave-in.
Had the four suits been brought against the building owners and successfully maintained, their rights to indemnity against defendant construction company under the express contractual language would be clear, as would their right even in the absence of such indemnity provision. See Burris v. American Chicle Co., 120 F.2d 218, 219 (2d Cir.1941). Is the result to be different because the suits were brought against a party who represented the owners and saw to the correct performance of defendant's obligation to them? Clearly not, for the obligation of indemnity is not restricted by formal legal relations; the obligation "* * * applies where two or more persons are subject to a duty to a third person either as joint promisors or otherwise, under such circumstances that one or more of them, as between themselves, should perform it rather than the other." Restatement, Restitution § 76 (Comment b). As I have detailed, plaintiffs' cause of action for indemnity is based upon defendant's alleged failure to properly perform its construction contract (see Restatement, Restitution § 95), both by its failure to abide by the contract requirements and specifications and by its failure to conform to the architects' directions, and defendant's promises to comply with the safety provisions of its contract and to conform to the directions of the architects in the performance of that contract, as well as the specific promise to "* * * do all shoring necessary to maintain the banks of excavations, to prevent sluffing (sic) or caving, and to protect workmen * *", are warranties of competent, workman-like performance. See Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., supra, 350 U.S. 133-134, 76 S.Ct. 237; Hugev v. Dampskisaktieselskabet International, 170 F.Supp. 601, 607608 (S.D. Calif.1959). Moreover, the architects, to whose rights these plaintiffs are subrogated, may, in addition having regard to the purposes of the contract in question and the relationship of all parties be said to be brought "* * * into the zone of modern law that recognizes rights in third-party beneficiaries. Restatement, Law of Contracts, § 133." Crumady v. The Joachim Hendrik Fisser, 358 U.S. 423, 428, 79 S.Ct. 445, 448, 3 L.Ed.2d 413 (1959).
Whether plaintiffs' right to indemnity be said to rest upon the commission of a tort by defendant against the architects a tort separate from that committed against his own employees and within the exclusive coverage of the Workmen's Compensation Act as to those employees or whether plaintiffs' right to indemnity be said to rest upon third party beneficiary rights of the architects to the defendant's contract with the building owners[3], or whether their right to indemnity be said to rest upon the breach of defendant's warranties of competent, workmanlike performance[4], the *271 result reached is the sameplaintiffs' complaint states a cause of action upon which relief could be granted.
III
The discussion to this point has proceeded upon the assumption that as the Arkansas Supreme Court has not passed upon this precise question, the law of Arkansas, which this court applies where jurisdiction is based upon diversity of citizenship, as it is here, is to be presumed to be that generally followed and applied elsewhere in similar circumstances. As noted, the Arkansas Supreme Court has held that contribution will not lie against a compensation-paying employer, but that indemnity upon an express indemnity agreement can be maintained. C & L Rural Elec. Co-op. Corp. v. Kincaid, supra, and in so holding it is in accord with the majority of holdings on these points. Note, 8 Ark.L. Rev. 512 (1954). While perhaps a majority of courts have refused indemnity where the right asserted was based upon an active-passive, or primary-secondary, theory of tort negligence liability[5], so that the exclusive remedy provisions of the workmen's compensation laws in question might be said to have abrogated the common law where the party actively or primarily liable has paid compensation to the injured party[6], still the decision in this case may be based upon other grounds.
While no Arkansas cases are to be found which apply a primary-secondary theory of indemnity, Magness v. St. Paul Mercury Indemnity Co., (unreported) (W.D.Ark.1956); and see Citizens Coach Co. v. Wright, 228 Ark. 1143, 1150, 313 S.W.2d 94 (1958) (Order on motion to clarify), those cases which do concern indemnity may fairly be said to be generally in accord with the majority of cases elsewhere, and to have accorded indemnity where the obligation arose "from undertakings implicit in relationships assumed." See, Ferguson v. Huddleston, 208 Ark. 353, 186 S.W.2d 152 (1945); Voss v. Arthurs, 129 Ark. 143, 148, 195 S.W. 680 (1917) (dictum); Joest *272 v. Clarendon & Rosedale Packet Co., 122 Ark. 353, 183 S.W. 759 (1916). As early as Hill v. Wright, 23 Ark. 530 (1861), the Court recognized this, remarking that "* * * the obligation of principals to reimburse the securities the money paid by them, is not founded on the bonds which securities give for their principal, but on the express contracts of indemnity which the parties make, or upon the implied promise raised by the payment of money for another at his request." Id. at 532 (emphasis added). The principle enunciated by § 95 of the Restatement of the Law of Restitution[7] makes no radical innovation in the law of Arkansas, nor is there reason to suppose that the Arkansas courts would not allow indemnity in this instance under one of the theories previously explained.
Nor does the wording of the Arkansas Workmen's Compensation Act require a different result. Ark.Stats.1947, § 81-1304 provides:
"The rights and remedies herein granted to an employee subject to the provisions of this act, on account of injury or death, shall be exclusive of all other rights and remedies of such employee, his legal representative, dependents, or next of kin, or anyone otherwise entitled to recover damages from such employer on account of such injury or death * *." (Emphasis added).
On its face the act does not cover liability based upon grounds independent of the injury to employee, and similar language in other compensation acts has been held to be no bar to a right to indemnity. Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., supra, 350 U. S. at 131, 76 S.Ct. at 236; Lunderberg v. Bierman, supra, 63 N.W.2d at 360-365, 43 A.L.R.2d at 873-877. Compare Ward v. Denver & R. G. W. R. Co., 119 F.Supp. 112 (D.Colo.1954), with American District Telegraph Co. v. Kittleson, supra.
IV
One further contention by defendant remains to be considered. As noted, the issues submitted to the jury in Erhart v. Hummonds were the negligence of the architects in failing to stop all construction work until the defective bracing was corrected and the negligence of their employee in allegedly driving his car down the alley just prior to the cave-in. As the jury returned a general verdict against the architects it is impossible to say whether their verdict was based on the first or second ground, or both. Defendant contends that these plaintiffs are "* * * bound by all findings without which the judgment could not have been rendered, and that, if the judgment in the earlier action rested on a fact fatal to recovery in the action over against the indemnitor, the latter action cannot be successfully maintained." Annotation, 24 A.L.R.2d 329, 330 (1952). The alleged negligence of the supervisor is not a jury "finding without which the judgment could not have been rendered," for the judgment could stand upon the alternate issue. In such a situation plaintiffs' right to indemnity (and conversely, defendant's obligation to indemnify) must be determined by additional findings of fact. Weyerhaeuser Steamship Co. v. Nacirema Operating Co., 355 U.S. 563, 78 S.Ct. 438, 2 L.Ed.2d 491 (1958).
The motion for summary judgment is denied.
NOTES
[1] In the view that I take of this case it is unnecessary to decide whether this "duty" may arise only because of a contractual obligation undertaken, which by its nature may be said to warrant its faithful performance, or if this "duty" may also arise in a situation in which the negligence of the employer may be said to be a tort against a third party, independent of the tort thereby committed against an employee. See Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., supra, 350 U.S. 131-134, 76 S.Ct. at 236-237; Slattery v. Marra Bros., Inc., supra, 186 F.2d 138-139.
[2] The statement of facts by the court in Erhart v. Hummonds, supra, indicates that the defendant was informed by the architects on Thursday that unless a new superintendent was put on the job they would ask the owner to stop work immediately, as allowed by the contract. There was also testimony that the east wall footings were poured on Friday afternoon, a step which would have required the architects' approval under Section 1-02(d) of the contract specifications.
[3] This contract contained defendant's general promise to assume "* * * all risks of damage or injury from whatever cause to property or persons used on or in connection with his work, and of all damage or injury from any cause to property wherever located resulting from any action or operation under this particular Contract or in connection with his work under this Contract * * *."
[4] Damage to the architects as a result of defendant's breach of these warranties was within the area of foreseeable risk. As these warranties are "comparable to a manufacturer's warranty of the soundness of its manufactured product", Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., supra, 350 U.S. at 133-134, 76 S.Ct. at 237, plaintiffs might maintain their action whether or not the architects were in privity to the defendant's contract with the owners. MacPherson v. Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050, L.R.A.1916F, 696 (1916) (Cardozo, J.); see Ford Motor Co. v. Fish, 335 S.W.2d 713 (Ark.1960); cf. BucTon Construction Co. v. Carlson, 225 Ark. 208, 280 S.W.2d 408 (1955); see generally, Chapman Chemical Co. v. Taylor, 215 Ark. 630, 222 S.W.2d 820 (1949); Note, 13 Ark.L. Rev. 386 (1949); Prosser, Recent Developments in the Law of Negligence, 9 Ark.L.Rev. 81, 87-89 (1954).
"The * * * action is not changed from one for a breach of contract to one for a tort simply because recovery may turn upon the standard of the performance of [defendant's contract] * * *." Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., supra.
[5] E.G., McCormick v. United States, 134 F. Supp. 243 (S.D.Tex.1955); Calvery v. Peak Drilling Co., 118 F.Supp. 335 (W.D.Okla.1954), aff'd sub nom., Peak Drilling Co. v. Halliburton Oil Well Cementing Co., 215 F.2d 368 (10th Cir. 1954); Hunsucker v. Hight Point Bending & Chair Co., 237 N.C. 559, 75 S.E. 2d 768 (1953). See also Slattery v. Marra Bros., Inc., 186 F.2d 134, 138-139 (2d Cir.1951).
[6] It should be pointed out that there is a difference in substance often obscured by the use of active-passive, primary-secondary terminology. The terms may be used in situations where the parties are in pari delicto, though not at fault in the same degree. See the discussion in Slattery v. Marra Bros., Inc., supra. More properly the terms may be used to indicate that a person has become subject to tort liability without personal fault because of the unauthorized and wrongful conduct of another. See Restatement, Restitution § 96; Lunderberg v. Bierman, 241 Minn. 349, 63 N.W.2d 355, 43 A.L.R.2d 865, at 876 (1954); 2 Larson, supra, § 76.42. The use of this terminology in the first sense by the cases cited in Note 5 indicates another way of refusing contribution. In the latter sense the terminology is descriptive of the relationship of the parties; it is not a statement of the legal reasoning underlying indemnity.
[7] § 95. Where a person has became (sic) liable with another for harm caused to a third person because of his negligent failure to make safe a dangerous condition of land or chattels, which was created by the misconduct of the other or which, as between the two, it was the other's duty to make safe, he is entitled to restitution from the other for expenditures properly made in the discharge of such liability, unless after discovery of the danger, he acquiesced in the continuation of the condition.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-1967
ROGER SEAWRIGHT, of Seawright PC Solutions, d/b/a Wall
Decor Prints,
Plaintiff - Appellant,
v.
M. SHANKEN COMMUNICATIONS, d/b/a Cigaraficionado.com,
Defendant - Appellee.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. James K. Bredar, District Judge.
(1:14-cv-01326-JKB)
Submitted: February 12, 2015 Decided: February 18, 2015
Before MOTZ, WYNN, and FLOYD, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Roger Seawright, Appellant Pro Se. Daniel Zev Herbst, REED
SMITH LLP, Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Roger Seawright appeals the district court’s orders
dismissing his civil complaint against M. Shanken Communications
and denying his motion for reconsideration. We have reviewed
the record and find no reversible error. Accordingly, we affirm
for the reasons stated by the district court. Seawright v. M.
Shanken Comm., No. 1:14-cv-01326-JKB (D. Md. July 3, 2014 &
filed Aug. 26, 2014; entered Aug. 27, 2014). We dispense with
oral argument because the facts and legal contentions are
adequately presented in the materials before this court and
argument would not aid the decisional process.
AFFIRMED
2
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689 S.E.2d 104 (2009)
WATSON
v.
The STATE.
No. A10A0205.
Court of Appeals of Georgia.
December 30, 2009.
*105 Brown & Gill, Angela Brown Dillon, for appellant.
Daniel J. Porter, Dist. Atty., Wesley C. Ross, Asst. Dist. Atty., for appellee.
BLACKBURN, Presiding Judge.
Following a jury trial, Travis Watson appeals his conviction on four counts of aggravated assault[1] and on one count of possessing a firearm during the commission of a crime.[2] Pointing to several alleged factual deficiencies in the State's case, he challenges only the sufficiency of the evidence. Because the evidence amply sufficed to sustain the verdict, we affirm.
When reviewing a defendant's challenge to the sufficiency of the evidence, we view the evidence in the light most favorable to the jury's verdict, and the defendant no longer enjoys the presumption of innocence. Short v. State.[3] We do not weigh the evidence or determine witness credibility, but only determine if the evidence was sufficient for a rational trier of fact to find the defendant guilty of the charged offense beyond a reasonable doubt. Jackson v. Virginia.[4]
So viewed, the evidence shows that on May 31, 2005, a man entered the lobby of a Red Roof Inn and demanded from the desk clerk that she return to him his cash deposit for some movies. When the desk clerk asked the man for identification, the man became angry, cursing and threatening the clerk. The motel manager came forward from her office to resolve the situation, but the man continued his cursing and threats, resulting in the manager's calling the police. Overhearing the call to the police, the man picked up a glass bowl and hurled it at the manager's head. The bowl struck the manager's left hand (which was raised in a protective gesture), breaking a finger in that hand, and then shattered as it struck and injured the manager's head and spine. A motel guest entered the lobby during the melee, witnessing the violence.
At this point, the man drew a gun, pointing it at all three people and yelling, "I'm going to kill you all." He then ran from the motel. The motel guest wrote down the tag number of the car in which the man escaped. A video surveillance machine captured portions of the incident on tape.
The tag number showed the vehicle was registered to Watson, and based on a photographic lineup, the manager identified Watson as the perpetrator, all of which led to Watson's arrest. Indicted on four counts of aggravated assault (throwing the glass bowl at the manager and threatening the three victims with the gun) and on one count of possessing a firearm during the commission of a crime, Watson argued at trial that he was not the perpetrator. A jury found him guilty on all counts. On appeal, Watson challenges the sufficiency of the evidence.
"Under the Code, aggravated assault has two essential elements: (1) an attempt to commit a violent injury, or an act that places another in reasonable apprehension thereof, and (2) that the assault was aggravated by either (a) an intention to murder, rape or rob, or (b) the use of a deadly weapon" or an object that likely could or actually did result in serious bodily injury. (Punctuation and emphasis omitted.) Coney v. State.[5] See *106 OCGA § 16-5-21(a). Regarding possession of a firearm, OCGA § 16-11-106(b) is violated by "[a]ny person who shall have on or within arm's reach of his or her person a firearm ... during the commission of ... [a]ny crime against or involving the person of another...."
Watson first challenges the conviction of aggravated assault involving his throwing the glass bowl at the manager. He claims initially that no evidence showed that the manager was placed in reasonable apprehension of a violent injury. But the State was only required to show "an attempt to commit a violent injury, or an act that places another in reasonable apprehension thereof." (Punctuation omitted; emphasis supplied.) Coney, supra, 290 Ga.App. at 366(1), 659 S.E.2d 768. "Therefore, a victim's apprehension of receiving a violent injury is not an essential element of an assault in which it is alleged that the defendant actually attempted to commit a violent injury to the person of the victim." (Punctuation omitted.) Brinson v. State.[6] Watson's hurling the bowl at the manager's head constituted an actual attempt to commit a violent injury to the person of the manager. Moreover, the manager's act of raising her hand protectively showed apprehension of violent injury on her part.
Watson then contends that insufficient evidence showed that the glass bowl was an "object, device, or instrument which, when used offensively against a person, is likely to or actually does result in serious bodily injury." OCGA § 16-5-21(a)(2). Specifically, he claims that the manager was incompetent to testify that her finger was broken as a result of the bowl's impact and that her head and spine were injured. But the State was only required to show that the thrown bowl was likely to result in serious bodily injury, not that it actually caused such injury. See Peterson v. State[7] ("[t]here is no requirement that a victim be actually injured and the crime is complete without proof of injury") (punctuation omitted). Moreover, victims of crimes are competent to testify as to the injuries they suffered during an assault. Jones v. State.[8]
Watson next argues that the evidence showed he threatened to kill only the manager, even though the aggravated assault charges involving the desk clerk and the motel guest alleged he threatened them in addition to pointing the gun at them. The manager testified, however, that Watson threatened to kill "all" three of them while pointing the gun at them. Moreover, "[w]here conjunctive pleadings set forth more than one act by which the accused committed the crime, the evidence is sufficient so long as it shows at least one of the acts alleged." Straker v. State.[9] See Wilson v. State[10] ("[i]f a crime may be committed in more than one way, it is sufficient for the State to show that it was committed in any one of the separate ways listed in the indictment, even if the indictment uses the conjunctive rather than disjunctive form"). Because pointing the gun at the victims was one way of establishing aggravated assault, see Willingham v. State[11] ("the presence of a gun would normally place a victim in reasonable apprehension of being injured violently") (punctuation omitted), whereas threatening to kill them while pointing the gun at them was a second way, the evidence of the verbal threateven though included conjunctively in the indictmentwas unnecessary to sustain the convictions.
Finally, Watson claims that insufficient evidence showed either that he was the perpetrator of the assaults or that he possessed a firearm during the crimes. Yet, in addition to the videotape, all three victims identified Watson in court as the perpetrator, and all three confirmed that he pointed a gun *107 at them. This testimony was sufficient to convict Watson of aggravated assault and of possession of a firearm during the commission of a crime. See OCGA § 24-4-8 ("[t]he testimony of a single witness is generally sufficient to establish a fact"); Taylor v. State[12] (identification testimony of three eyewitnesses sustained verdict of aggravated assault).
Judgment affirmed.
BARNES and BERNES, JJ., concur.
NOTES
[1] OCGA § 16-5-21(a)(2).
[2] OCGA § 16-11-106(b)(1).
[3] Short v. State, 234 Ga.App. 633, 634(1), 507 S.E.2d 514 (1998).
[4] Jackson v. Virginia, 443 U.S. 307, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979).
[5] Coney v. State, 290 Ga.App. 364, 366(1), 659 S.E.2d 768 (2008).
[6] Brinson v. State, 272 Ga. 345, 347(1), 529 S.E.2d 129 (2000).
[7] Peterson v. State, 204 Ga.App. 532, 533(1), 419 S.E.2d 757 (1992).
[8] Jones v. State, 294 Ga.App. 564, 567(2), 669 S.E.2d 505 (2008).
[9] Straker v. State, 259 Ga.App. 904, 905-906(a), 578 S.E.2d 568 (2003).
[10] Wilson v. State, 234 Ga.App. 375, 375(1), 506 S.E.2d 882 (1998).
[11] Willingham v. State, 281 Ga. 577, 579, 642 S.E.2d 43 (2007).
[12] Taylor v. State, 296 Ga.App. 156, 157, 674 S.E.2d 47 (2009).
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181 F.2d 96
Ralph A. BYNUM, Appellant,v.UNITED STATES of America, Appellee.
No. 13078.
United States Court of Appeals Fifth Circuit.
April 20, 1950.
Appeal from the United States District Court for the Southern District of Georgia; Frank M. Scarlett, Judge.
No appearance entered on behalf of appellant.
Wm. T. Morton, Asst. U. S. Atty., Augusta, Ga., J. Saxton Daniel, U. S. Atty., Savannah, Ga., for appellee.
Before HUTCHESON, Chief Judge, and McCORD and WALLER, Circuit Judges.
PER CURIAM.
1
The judgment of the lower Court is Affirmed.
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791 F.2d 923
Widmerv.Widmer
85-5483
United States Court of Appeals,Third Circuit.
4/15/86
M.D.Pa.,
Muir, J.
AFFIRMED
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539 U.S. 979
McCain, United States Senator, et al.v.McConnell, United States Senator, et al.
No. 02-1702.
Supreme Court of United States.
August 19, 2003.
1
Motion of the National Rifle Association and the Paul plaintiffs for reconsideration of the August 4, 2003, order [ante, p. 974] concerning divided argument denied.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-4829
UNITED STATES OF AMERICA,
Plaintiff – Appellee,
v.
JULIO SPIRO DIBBI,
Defendant – Appellant.
Appeal from the United States District Court for the Middle
District of North Carolina, at Greensboro. N. Carlton Tilley,
Jr., Senior District Judge. (1:09-cr-00233-NCT-1)
Submitted: January 31, 2011 Decided: February 24, 2011
Before AGEE and DAVIS, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Affirmed by unpublished per curiam opinion.
William E. West, Jr., Winston-Salem, North Carolina, for
Appellant. Anna Mills Wagoner, United States Attorney, Frank J.
Chut, Jr., Assistant United States Attorney, Greensboro, North
Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Julio Spiro Dibbi pled guilty to aiding and abetting
the filing of false tax returns, 26 U.S.C. § 7206(2) (2006)
(Count One), and interfering with Internal Revenue Service (IRS)
laws, 26 U.S.C. § 7212(a) (2006) (Count Two), and was sentenced
at the bottom of his advisory guideline range to a term of
thirty months imprisonment. Dibbi appeals his sentence,
contending that the district court erred by denying his request
for either a departure or variance sentence below the guideline
range based on his poor health and advanced age. We affirm.
A district court’s refusal to depart below the
applicable guidelines range does not provide a basis for appeal
under 18 U.S.C. § 3742(a) (2006), “unless the court failed to
understand its authority to do so.” United States v. Brewer,
520 F.3d 367, 371 (4th Cir. 2008); see United States v. Allen,
491 F.3d 178, 193 (4th Cir. 2007) (declining to disturb the
district court’s post-United States v. Booker, 543 U.S. 220
(2005), sentence where the court understood its ability to
depart below the guidelines but declined to exercise such
authority).
Dibbi contends on appeal that the district court
believed it lacked the authority to depart. However, his
argument simply mischaracterizes the court’s finding that
Dibbi’s health and age did not warrant a departure. The record
2
reveals no confusion on the court’s part about its authority to
depart if circumstances warranted.
With respect to the court’s decision not to vary
downward, we review a sentence, “whether inside, just outside,
or significantly outside the Guidelines range,” under a
“deferential abuse-of-discretion standard.” Gall v. United
States, 552 U.S. 38, 41 (2007). In conducting this review, we
first ensure “that the district court committed no significant
procedural error, such as failing to calculate (or improperly
calculating) the Guidelines range, treating the Guidelines as
mandatory, failing to consider the [18 U.S.C.] § 3553(a) [2006]
factors, selecting a sentence based on clearly erroneous facts,
or failing to adequately explain the chosen sentence.” Id. at
51. “When rendering a sentence, the district court must make an
individualized assessment based on the facts presented,”
applying the “relevant § 3553(a) factors to the specific
circumstances of the case before it.” United States v. Carter,
564 F.3d 325, 328 (4th Cir. 2009) (internal quotation marks and
emphasis omitted). The court must also “state in open court the
particular reasons supporting its chosen sentence” and “set
forth enough to satisfy” us that it has “considered the parties’
arguments and has a reasoned basis for exercising [its] own
legal decisionmaking authority.” Id. (internal quotation marks
omitted).
3
If the sentence is free from procedural error, we then
review it for substantive reasonableness. Gall, 552 U.S. at 51.
“Substantive reasonableness review entails taking into account
the ‘totality of the circumstances, including the extent of any
variance from the Guidelines range.’” United States v. Pauley,
511 F.3d 468, 473 (4th Cir. 2007) (quoting Gall, 552 U.S. at
51). Even if we would have imposed a different sentence, “this
fact alone is ‘insufficient to justify reversal of the district
court.’” Id. at 474 (quoting Gall, 552 U.S. at 51).
Dibbi does not claim that the district court erred in
calculating his guideline range. This court presumes that a
sentence imposed within the properly calculated guidelines range
is reasonable. United States v. Go, 517 F.3d 216, 218 (4th Cir.
2008); see Rita v. United States, 551 U.S. 338, 346-56 (2007)
(upholding appellate presumption of reasonableness for within-
guidelines sentence). We conclude that Dibbi has failed to
overcome the presumption of reasonableness for his within-
guidelines sentence. In rejecting counsel’s request for a
downward variance, the court considered the § 3553(a) sentencing
factors and determined that they were best served by the
imposition of a within-guidelines sentence. The court
emphasized that a variance was not warranted based on Dibbi’s
health and age, particularly in light of the seriousness of the
offense and the fact that Dibbi continued his criminal conduct
4
over a period of years and tried to cover his crimes by
convincing others to lie to the IRS.
Dibbi also claims that the district court failed to
exercise its discretion to vary below the guideline range
because it improperly considered his status as a naturalized
citizen. While national origin, along with race, sex, religion
and socio-economic status are not relevant to sentencing, see
U.S. Sentencing Guidelines Manual § 5H.10 (2009), the district
court did not focus on any of these factors. The court did
comment on Dibbi’s immigrant background and his seeming
ingratitude in breaking the laws of a country that had “treated
[him] well.” The court made the comments while considering
whether Dibbi’s conduct warranted a sentence above the guideline
range, rather than as a reason for refusing to vary below the
range. We conclude that the court’s comments did not render the
sentence unreasonable.
We therefore affirm the sentence imposed by the
district court. We dispense with oral argument because the
facts and legal contentions are adequately presented in the
materials before the court and argument would not aid the
decisional process.
AFFIRMED
5
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891 F.2d 906
29 Wage & Hour Cas. (BNA) 1080
Willisv.City of Florence, AL
NO. 89-7078
United States Court of Appeals,Eleventh Circuit.
NOV 16, 1989
1
Appeal From: N.D.Ala.
2
AFFIRMED.
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20 S.W.3d 130 (2000)
Tom GEORGE, Appellant,
v.
The STATE of Texas, Appellee.
No. 14-98-01315-CR.
Court of Appeals of Texas, Houston (14th Dist.).
March 30, 2000.
*132 Mike DeGeurin, Houston, for appellant.
Alan Curry, Houston, for appellee.
Panel consists of Chief Justice MURPHY and Justices HUDSON and WITTIG.
MAJORITY OPINION
J. HARVEY HUDSON, Justice.
The appellant, Tom George, was charged by information with the misdemeanor offense of driving while intoxicated. Appellant initially entered a plea of not guilty, and the parties proceeded to trial. When the jury, after lengthy deliberations, appeared deadlocked, the parties negotiated a plea agreement. Appellant then entered a plea of guilty to the court. In accordance with the plea bargain, the court assessed appellant's punishment at confinement in the Harris County Jail for one hundred days, probated for one year, and a fine of four hundred dollars. Appellant filed a general notice of appeal and now raises four points of error, i.e., the trial judge (1) prejudiced his right to a jury trial; (2) interfered with plea negotiations; (3) coerced a plea of guilty; and (4) erred in presiding over the motion for new trial hearing. We affirm.
*133 JURISDICTION
Appellant's first three points of error all relate to his contention that his plea of guilty was coerced by the trial judge who, after it became apparent the jury was deadlocked, allegedly threatened to impose, as a condition of community supervision, a thirty-day period of confinement in the county jail if appellant did not immediately reach a plea agreement with the State's attorney. The State contends we have no jurisdiction to entertain these points of error because appellant did not specify in his notice of appeal that (1) the appeal is for a jurisdictional defect; (2) the substance of the appeal was raised by written motion and ruled on before trial; or (3) the trial court granted permission to appeal. See Tex.R.App. P. 25.2(b)(3).
There is a split of authority regarding whether, under the current Rules of Appellate Procedure, a general notice of appeal will confer jurisdiction upon an appellate court to consider the voluntariness of a plea entered pursuant to a plea agreement. A similar split of authority arose under the former rules and was resolved by the Court of Criminal Appeals in Flowers v. State, 935 S.W.2d 131, 134 (Tex. Crim.App.1996). There the court held that an appellant may always "raise the issue of whether his plea was voluntary." Id. However, ten months after Flowers was decided, the Rules of Appellate Procedure were revised. Rule 40(b)(1) of the former rules was replaced by the current Rule 25.2(b)(3).
While Rule 25.2(b)(3) restructures the phrases found in Rule 40(b)(1), the substantive meaning of the rule remains, on its face, unchanged.[1] However, because the Court of Criminal Appeals did not expressly incorporate within the new rule an exception for the voluntariness of the plea, some courts have theorized the Court of Criminal Appeals intended to partially overrule Flowers when it adopted Rule 25.2(b)(3).[2] On the other hand, some courts have noted the facial similarity of the two rules and concluded that Flowers remains fully viable.[3]
This court, as well as others, have held that inherent in the concept of "a plea" is the notion that it be free and voluntary.[4] In fact, a court has no authority to accept a plea unless it be made voluntarily. See TEX.CODE CRIM. PROC. ANN. art. 26.13(b) (Vernon 1989). A declaration of guilt made under compulsion, duress, or coercion is simply not a plea. Thus, the *134 restrictions on an appeal from a negotiated plea contained in Rule 25.2(b)(3) have no application where the plea was not entered voluntarily. Rejecting the State's contention, we assume jurisdiction and address appellant's points of error.
VOLUNTARINESS OF THE PLEA
In his first three points of error, appellant contends the trial judge used intimidation, threats, and hostile remarks to coerce a guilty plea. We have no direct record from the plea hearing, but appellant's trial counsel offered testimony at a hearing on appellant's motion for new trial regarding the events preceding his plea. Moreover, at least a portion, if not all, of court reporter's notes from the plea hearing were read into the record at the motion for new trial hearing.
The cause was initially tried to a jury. The jury began deliberating shortly before noon. Thereafter, the Honorable Mark Atkinson, who was scheduled to attend a judicial conference, asked the Honorable Jean Hughes to receive the verdict for him. At approximately 2:50 p.m., the jury sent out a note indicating they were deadlocked 4 to 2 in favor of a conviction. Judge Hughes gave the jury an Allen charge.[5] At 3:25 p.m., the jury sent out a second note saying they were still deadlocked and that no juror was willing to change his or her position. Judge Hughes instructed the jury to continue deliberating.
Appellant's counsel testified that he was negotiating with the State's attorney about a possible plea agreement, when the judge called appellant and his counsel before the bench and inquired about the progress of the negotiations. During these discussions, counsel alleges the judge addressed appellant directly and asked what concerns he had regarding a possible plea agreement. When counsel objected to the judge directly questioning his client, he claims the judge berated him as a neophyte. The judge then allegedly proceeded to inform appellant that if he did not reach some plea agreement, she would impose jail time as a condition of any probation he might receive. Counsel also claims the judge then added that appellant, a Gypsy, would emerge from jail "marimae." This is apparently a Gypsy word that is roughly synonymous with "polluted."
Further, counsel claims that during the subsequent negotiations, the judge learned that appellant was illiterate. The judge allegedly told counsel she was going to add, as a condition of probation, that appellant pass an English proficiency skills test. When appellant asked what would happen to him if he did not learn how to read and write, counsel claims the judge told appellant he would remain on probation for ten years or more.[6] Counsel also testified the judge informed him that if a mistrial had to be declared, the parties would begin a new trial the following day. Counsel informed the court he could not be ready for trial because his witnesses had already been released from their subpoenas.[7]
The record from the plea hearing is silent regarding most of counsel's allegations except for the court's reference to *135 "merimae." The record refutes counsel's assertion that the remark was made during plea negotiations. The comment was made after, not before, appellant entered his plea. At the conclusion of the hearing, appellant asked the court: "How about if I don't learn to read or write for another 30, 40 years? Am I still on probation?" The trial judge responded:
If you go into probation with that attitude, you won't make it one month. Do you understand? You will get a decent attitude or you won't survive probation. You will be doing 100 days in jail and you will be merimae, won't you? You will be polluted.
This comment, coming after the entry of appellant's plea, could not logically have induced the plea.
While appellant's counsel accused the court of misconduct, he offered little, if any, evidence that the alleged improprieties had any influence on appellant's decision to enter a guilty plea. Appellant did not testify at the hearing. Although his verified motion for new trial asserts the plea was involuntary, the motion is merely a pleading, not evidence. See Mattox v. State, 874 S.W.2d 929, 936 (Tex.App.-Houston [1st Dist.] 1994, no pet.). The motion did not prove itself, and absent any evidence offered in support of the motion, it was properly overruled. See Dugard v. State, 688 S.W.2d 524, 529 (Tex.Crim.App. 1985).
Further, there is much direct and circumstantial evidence to indicate the plea was entered freely and voluntarily. Appellant's counsel testified that appellant negotiated directly with the State's attorney, proposing specific numbers he would be willing to accept. After considering the State's offer, appellant agreed to enter a plea against his counsel's advice. As counsel stated, "[I]t was his plea bargain." Before the plea, counsel read the written admonishments to appellant and explained them to him. At the plea hearing, appellant told the court he was pleading guilty for no other reason than that he was guilty. Appellant stated that his attorney had explained the written admonishments to him and that he understood them.
Proper admonishment by a trial court creates a prima facie showing that a guilty plea is both knowing and voluntary. See Ex parte Gibauitch, 688 S.W.2d 868 (Tex.Crim.App.1985); Tovar-Torres v. State, 860 S.W.2d 176, 178 (Tex.App.-Dallas 1993, no pet.). A defendant may, of course, still raise the claim that his plea was not voluntary, but the burden shifts to him to demonstrate that he did not fully understand the consequences of his plea such that he suffered harm. See Martinez v. State, 981 S.W.2d 195, 197 (Tex.Crim. App.1998). Further, when a defendant affirmatively indicates at the plea hearing that he understands the nature of the proceeding and is pleading guilty because the allegations in the indictment are true, not because of any outside pressure or influence, he has a heavy burden to prove that his plea was involuntary. See Crawford v. State, 890 S.W.2d 941, 944 (Tex.App.-San Antonio 1994, no pet.); Jones v. State, 855 S.W.2d 82, 84 (Tex.App.-Houston [14 th Dist.] 1993, pet. ref'd).
The voluntariness of a plea is determined by the totality of the circumstances. See Hancock v. State, 955 S.W.2d 369, 371 (Tex.App.-San Antonio 1997, no pet.); Munoz v. State, 840 S.W.2d 69, 74 (Tex.App.-Corpus Christi 1992, pet. ref'd). Moreover, the judge presiding over a motion for new trial is the trier of fact and his findings should not be disturbed absent an abuse of discretion. See Tollett v. State, 799 S.W.2d 256, 259 (Tex.Crim.App.1990); Reissig v. State, 929 S.W.2d 109, 113 (Tex. App.-Houston [14th Dist.]1996, pet. ref'd). Here, the record suggests at least two intelligent reasons to enter a plea. First, a jury had already considered the evidence against him and four of the six jurors had concluded beyond a reasonable doubt that he was guilty. Second, appellant had two prior convictions. In light of the record before us, we cannot say the trial judge *136 abused her discretion in overruling appellant's motion for new trial. Appellant's first, second, and third points of error are overruled.
MOTION FOR NEW TRIAL HEARING
Appellant contends in his final point of error that the trial judge erred in presiding over the hearing on his motion for new trial when the propriety of her conduct was the central issue to be decided. Appellant also argues it was inappropriate for Judge Hughes to preside over the hearing because she was a witness to the alleged misconduct who ultimately testified in rebuttal.
Propriety of presiding at the motion for new trial hearing
Public policy demands that when a judge presides over a trial, he or she must be absolutely impartial. See Sun Exploration and Production Co. v. Jackson, 783 S.W.2d 202 (Tex.1989). Ordinarily, an impartial judge is one who has no independent or personal knowledge of the facts bearing on the issues to be decided.[8] However, when a judge entertains a motion for new trial, he will frequently have at least some personal knowledge of facts pertaining to the alleged error. In fact, having been present during the trial, the judge will usually be an eyewitness to the events being complained of. Sometimes, the defendant's complaint focuses, as it does here, on the propriety of the judge's own conduct or statements. Thus, the first issue we must address is whether it is proper for a judge who presided at trial to also preside over the hearing on a defendant's motion for new trial.
The Rules of Appellate Procedure provide that if a defendant files a motion for new trial he "must present the motion for new trial to the trial court within 10 days of filing it." Tex.R.App. P. 21.6 (emphasis added). The court, in turn, must rule on the motion within 75 days of sentencing. See Tex.R. App. 21.8. Thus, our procedural rules seem to contemplate that the same judge who presided at trial will ordinarily decide the motion for new trial. Certainly, this has long been the prevailing practice of Texas trial judges. Well over a hundred years ago, the Texas Supreme Court was prompted to write: "[W]e have no doubt that the regular or any other judge who has presided during the term, may act upon and decide a motion for new trial made in a case tried by him during the term." Niagara Ins. Co. v. Lee, 73 Tex. 641, 648, 11 S.W. 1024, 1027 (1889). Thus, in most instances, the truth of the averments in a motion for new trial is a question of fact within the purview of the trial judge.[9]
Propriety of relying on personal recollections
When deciding a motion for new trial, the question is raised whether a judge may properly consider his or her own recollection of events transpiring before the court in the previous proceeding. Although there are few cases touching on this point, the issue was addressed by the Eighth Circuit Court of Appeals in Tyler v. Swenson, 427 F.2d 412 (8 th Cir.1970). There the petitioner claimed in a post-conviction writ of habeas corpus that his plea had been coerced by the trial judge who allegedly advised him to accept a 20-year plea bargain offer or face the possibility of a 50-year sentence. The defendant's mother testified that she heard this threat made by the judge while the parties were conducting plea negotiations in his chambers. The trial judge immediately remarked that the petitioner's mother had never, at any time, been in the court's *137 chambers. Ultimately, the judge found the events testified to by the petitioner and his mother had not taken place, and he denied relief.
On appeal from the denial, the petitioner claimed he had been deprived of a fair hearing because the trial judge "weighed evidence involving his own recollection and observations without petitioner having a right to confront him as a witness on cross-examination." Id. at 415. The court of appeals agreed:
In the instant case, petitioner had no opportunity to cross-examine the trial judge since the judge did not take the stand; furthermore, petitioner had no cause to attempt to disqualify the trial judge until it became apparent after the hearing was concluded that the trial judge was going to rely upon his own recollection as an evidentiary basis for denying petitioner's claim.
We think it runs against the grain of fairness to say that the same judge may consider his own crucial testimony and recollection rebutting petitioner's claim and simultaneously pass upon the credibility of all witnesses in weighing the evidence. A member of the judiciary has no peculiar competence in factual recollection of unrecorded events.
...
In the instant case, it is urged that because the trial judge did not take the stand as a witness the above rules are not applicable. However, the unfairness of this is compounded when the judge, as was done here, weighs his own recollection of events in making his findings.
Id. at 415-16. We find Tyler to be both unpersuasive and distinguishable from the case before us.
First, the opinion is logically inconsistent. Tyler begins by suggesting that due process is violated whenever a trial judge presides over a post-trial hearing, yet the opinion concludes by expressly approving the practice:
To avoid misunderstanding, we note that it is not our intention by this decision to retreat from the federal and state decisions which accurately point up the recognition that the trial court, familiar with the prior proceedings, generally represents the better and more expeditious forum for post-conviction proceedings.
Id. at 417 (emphasis added).
If there is any advantage in having the trial judge preside over post-trial hearings, it is precisely because he or she is already familiar with the facts. His personal knowledge of the case is the only distinguishing characteristic that separates him from fellow jurists. Thus, Tyler espouses conflicting positions. On one hand, a trial judge is well-suited to preside over post-trial proceedings precisely because he is familiar with the facts; but, on the other hand, any memory or recollection of those facts violates the defendant's right to due process.
We think it foolish to suggest that a judge can, or must, disregard his memory of events occurring in his courtroom. Immediately after commencing trial, a judge must rely upon his recollection of preceding events every time he rules on an objection. While a judge may ultimately be convinced by evidence and/or the arguments of counsel that his recollection of a particular fact is mistaken, i.e., his memory of a specific event is flawed or his senses did not accurately capture the event in question, a magistrate is not capable of intelligent thought or making even the most elementary decisions without reference to facts recalled from memory.
Second, we believe Tyler is mistaken in suggesting that a judge's unarticulated recollection of events or proceedings from the trial can rightly be characterized as "testimony" or that the memory of such events transforms the judge into a "witness." If a judge possesses independent knowledge of a case, he may be subject to recusal, but if the court's knowledge is derived solely from the testimony and *138 events witnessed by him in the courtroom, he does not thereby become a "witness" and his recollection of the proceedings is not "testimony."
As a general rule, for purposes of recusal, a judge's "`personal' knowledge of evidentiary facts means `extrajudicial,'" so "facts learned by a judge in his or her judicial capacity regarding the parties before the court, whether learned in the same or a related proceeding, cannot be the basis for disqualification."
Conkling v. Turner, 138 F.3d 577, 592 (5th Cir.1998) (quoting Lac du Flambeau Indians v. Stop Treaty Abuse-Wis., 991 F.2d 1249, 1255-56 (7th Cir.1993)).
A judge who cannot remember from one moment to the next what has previously transpired in the proceeding can not fairly preside over the cause. It is the intuitive recognition of this precept that frequently generates alarm among the parties when a substitution of judges occurs during or immediately after trial.[10] Thus, a judge's recollection of previous proceedings in the cause cannot be characterized as "testimony."
Third, Tyler dealt with a hearing on a writ of habeas corpus which rests directly upon a constitutional foundation. Here, the trial judge was presiding over a motion for new trial derived from rules of appellate procedure. See Tex.R.App. P. 21.1-21.9; see also Phynes v. State, 828 S.W.2d 1, 2 (Tex.Crim.App.1992); Fuentes v. State, 960 S.W.2d 926, 927 (Tex.App.-Tex-arkana 1998, no pet.) (holding that there is no constitutional right to appeal a criminal conviction). Thus, any constitutional error occurring here must be predicated upon due process or due course of law provisions. To the extent that due process rights are implicated and threatened by the prospect of a trial judge deciding the merits of a motion for new trial, the movant has the right to file a motion to recuse.[11] Moreover, he has an absolute right to have the recusal motion determined by a different judge. See TEX.R. CIV. P. 18a(d).[12]
Here, appellant attempted to show that the trial judge had not merely erred, but had purposefully intervened in the plea negotiations and by deliberate intimidation, coerced an involuntary plea. If true, these actions would cast serious doubt on the judge's suitability to impartially decide his request for a new trial. Appellant, however, did not file a motion to recuse.
Appellant contends he had no notice that Judge Hughes would preside over the hearing on his motion for new trial. However, because Judge Hughes had presided over the trial, counsel was undoubtedly aware there was at least a possibility that she would also preside over the hearing for new trial. Moreover, while counsel made an initial objection to Judge Hughes' authority to sit in place of Judge Atkinson, he did not move to recuse her at any time *139 during the course of the hearing.[13] If appellant believed Judge Hughes could not fairly preside over the hearing, he should have attempted to foreclose that possibility by filing a motion to recuse.
By its very nature, a motion for new trial is a revisitation or reconsideration of facts and issues with which the court is often familiar. Unless the trial judge is disqualified or has been recused, it is not improper for a trial judge to preside over a hearing on a motion for new trial and review the propriety of his or her own rulings, pronouncements, or conduct. Moreover, when deciding a motion for new trial, it is not improper for the trial judge to rely, in part, upon his or her personal recollections of the evidence and proceedings at trial.
Propriety of articulating recollections
The next question presented is whether a judge may properly articulate for the record those facts recalled by him bearing on issues raised in the motion for new trial. In other words, may the judge publicly articulate what he is authorized to privately consider? Here, the trial judge "clarified the record" with a lengthy statement in which she relied upon her recollection of the events preceding appellant's plea to refute much of the testimony of his trial counsel.
The complete text of the trial judge's comments are contained in an appendix to this opinion, but in summary, she (1) set forth the sequence of events preceding the plea, (2) explained how she became involved in the plea negotiations, (3) stated how she learned of appellant's illiteracy, (4) refuted counsel's accusation that she had threatened appellant with incarceration, (5) and told how the term "marimae" had arisen during the course of the proceedings. We find it difficult to characterize the trial judge's remarks as a mere "clarification" of the record.
It is well-established that a trial judge may clarify the record when the spoken word does not reflect the true trial proceedings, and explanations of this sort may be of assistance to an appellate court. See Myers v. State, 781 S.W.2d 730, 733-34 (Tex.App.-Fort Worth 1989, pet. ref'd). For example, when a witness points to or describes the clothing of the defendant worn at trial, the judge may direct that the record reflect that the witness identified the defendant. Id. See also Martinez v. State, 822 S.W.2d 276, 282 (Tex.App.-Corpus Christi 1991, no pet.) and Chase v. State, 750 S.W.2d 41, 43-44 (Tex.App.-Fort Worth 1988, pet. ref'd) (where trial judge clarified the record by explaining that a child witness identified the vaginal area of an anatomically correct doll).
"Clarification" of the record is proper where the trial judge, acting as the "eyes" of the appellate court, makes an *140 explanation of some event or physical phenomenon observable to those in the courtroom and about which there is no reasonable dispute. Here, the judge recited facts which were very much in dispute. In fact, she carefully rebutted each allegation of impropriety made by appellant's trial counsel. Thus, we find the comments at issue fall outside a proper "clarification" of the record.
Appellant contends trial judge's remarks are "testimony" and that by uttering such remarks she made herself a witness in the case. By her own admission, the judge sought to amplify the appellate recordsomething normally reserved only for witnesses. Further, the burden of making a record to reveal or dispel error rests with the parties, not the court. In her role as a fact-finder, the judge may consider her personal recollections of prior testimony and events in the cause, but she must do so silently. Once the judge begins assisting one side or the other in constructing a record, her position is altered from one of being a neutral fact-finder to an adversary. "It is difficult to see how the neutral role of the court could be more compromised, or more blurred with the prosecutor's role, than when the judge serves as a witness for the state." Brown v. Lynaugh, 843 F.2d 849, 851 (5th Cir.1988).
We recognize that when a judge's character, impartiality, or professionalism has been impugned, it may be difficult to resist the urge to "set the record straight." Such was the case in Great Liberty Life Ins. Co. v. Flint, 336 S.W.2d 434 (Tex.Civ. App.-Fort Worth 1960, no writ.). There the court proceeded to trial in the absence of the defendant company or its attorney after the case had been reset for trial on numerous occasions. At the hearing on the defendant's motion for new trial, counsel testified that he had contacted the trial judge by telephone a month prior to the trial date in question. He further testified that the judge had agreed to reset the case for two weeks. At the conclusion of the testimony, the trial judge said, "Let the record show that the Court did not talk to anybody on that date about the case." Id. at 436.
In deciding the merits of the appeal, the appellate court characterized the trial judge's comment as "testimony." However, because the judge had not been sworn as a witness or made himself available for cross-examination, the court of appeals concluded it could not properly consider his remarks. Id.
When Great Liberty was decided, it was not considered improper for a judge to testify in the same proceeding over which he was presiding. A judge presiding over a trial could testify as a witness in the case so long as he was sworn like any other witness. See Howell v. State, 146 Tex. Crim. 454, 455, 176 S.W.2d 186, 187 (Tex. Crim.App.1943). The current rules of evidence expressly forbid this practice. Rule 605 provides:
The judge presiding at the trial may not testify in that trial as a witness. No objection need be made in order to preserve the point.
TEX.R. EVID. 605.
Whether Rule 605 is applicable at a motion for new trial hearing is not clear. The rule seems, on its face, to have no application outside of a "trial." See Orion Enterprises, Inc. v. Pope, 927 S.W.2d 654, 660 (Tex.App.-San Antonio 1996, orig. proceeding) (holding the rule was not applicable in a pretrial venue hearing). The Court of Criminal Appeals has on two occasions, however, substituted the word "proceeding" for "trial" when discussing the rule's application. See Kemp v. State, 846 S.W.2d 289, 310 n. 9 (Tex.Crim.App. 1992); Hensarling v. State, 829 S.W.2d 168, 171 (Tex.Crim.App.1992). From the context of the issues under discussion in those cases, it is impossible to determine whether this deviation was intentional or is otherwise significant.
The Court of Criminal Appeals has been careful, however, to emphasize that the *141 rule applies only to situations where the judge testifies formally:
The language of Rule 605 is unambiguous, and construing this rule according to rules of grammar and common usage leads to only one interpretation of the rule. The phrase "the judge presiding at the trial may not testify in that trial" means that the judge who is presiding over a proceeding may not "step down from the bench" and become a witness in the very same proceeding over which he is currently presiding.
Hensarling, 829 S.W.2d at 171. See also Kemp, 846 S.W.2d at 310 n. 9 (noting that Rule 605 circumscribes only that situation in which a trial judge would actually "step down from the bench" to become a witness); Hammond v. State, 799 S.W.2d 741, 747 (Tex.Crim.App.1990) (holding that where court informed jurors that the defendant had escaped from custody, "the trial judge acted within his judicial capacity, and did not `testify'").
Whether or not the remarks under consideration here constitute "testimony," we are not unmindful of Rule 605's intended objective, i.e., to preserve the judge's posture of impartiality before the parties and the jury. See Bradley v. State ex rel. White, 990 S.W.2d 245, 248 (Tex.1999). The trial court's detailed rebuttal of appellant's evidence could reasonably be interpreted as adversarial in nature. Thus, even if the trial judge's remarks do not constitute "testimony" under the Rules of Evidence, we find they are expressly prohibited by the Rules of Appellate Procedure. See Tex.R.App. P. 21.8(b) ("In ruling on a motion for new trial, the court must not summarize, discuss, or comment on evidence.")
Although Great Liberty was decided before the adoption of Rule 605 or Rule 21.8(b), the court's objective was the same as the one we pursue todayto maintain the trial judge's office as an impartial fact-finder. Accordingly, we adopt the same appellate remedy utilized in Great Liberty. When a judge summarizes, discusses, or comments on evidence in ruling on a motion for new trial, we will decline to consider those remarks in deciding whether the court abused its discretion in ruling on the merits of the motion.
While we find the court erred in commenting on the evidence at the conclusion of the motion for new trial, the comments do no not constitute reversible error without a showing that appellant was harmed. See Lewis v. State, 911 S.W.2d 1, 8 n. 16 (Tex.Crim.App.1995). Because we declined to consider the remarks of the trial judge in our disposition of appellant's first three points of error, appellant has not been prejudiced by her summation of the evidence. Appellant's final point of error is overruled.
The judgment of the trial court is affirmed.
APPENDIX
THE COURT: Okay. For the record, since I was the Judge who took this plea, let me clarify the record.
Judge Atkinson was to serve as a facilitator in the judicial conference that was going on in Houston that week and had asked me thatbefore lunch he had a jury out deliberating, would I accept the verdict for him, which I agreed to do, which is not unusual practice.
Approximately after the 2:50 note is when I brought the jury out and read the Allen Charge to them. It was immediately as the jury departed the courtroom that I ordered the parties to begin plea bargaining and see if they could not work this out. The plea negotiations were progressing slowly, there were trips in and out between the DA and the lawyer.
I was concerned about the progression, if they were being made in good faith, and I did advise the attorneys that I was available the next day, I had nothing set for trial. I could in fact try this case the next day, as Judge Atkinson had a visiting judge scheduled to try other matters, but I *142 was available to try if the witnesses were available. That is the only time this court said anything about trying the case the next day. No one even mentioned it to me again after that.
I felt it was necessary to bring the defendant in at one point to go over the plea bargain agreement with him, as this Court had concerns based on Mr. VonBlon's behavior and attitude in the court as to whether Mr. George was really understanding the plea offer.
I was advised by Janet Kleban there was a problem because the defendant didn't read or write, and I informed Ms. Kleban, that's a standard condition of probation that everyone take a skills test to show that they have obtained a certain level. That was a standard condition of probation, at which time Ms. Kleban left the courtroom and went out, I guess to talk to the attorney.
MR. DEGEURIN: Your Honor, may I interrupt?
THE COURT: No, you may not. Have a seat.
MR. DEGEURIN: Are you subject to cross-examination?
THE COURT: No, sir, I'm not. Have a seat. I want to clarify the record.
There was discussions at the bench with the defendant, his attorney and the State as to what the potential conditions of probation were. There was concern whether or not this defendant could comply with the conditions of probation. And this Court did tell him, as I understand Judge Atkinson told him prior to the trial that 30 days as a condition of probation is always an option the Court has. He was never told he was going to be sentenced by me to 30 days, but that was an option the Court had as a condition of probation.
He was never told he could be on probation for ten years as Mr. VonBlon indicated.
I had given the parties more than an hour to negotiate, from approximatelyit was 4 or 5 minutes to 3:00 when I asked them to start negotiating. They went back and forth, nothing was agreed, and I had a jury that was out. I had to make a determination whether I was going to declare a mistrial or continue to have them deliberate. And finally at 4:00 o'clock I said it's put up or shut up time. We're either going to do this or not, I need to know, because I thought it had been stalled and drug out and was not being conducted in good faith.
As far as the marimae, I am familiar with gypsies, I do know marimae means polluted, and in the gypsy culture if a person goes to jail they are considered marimae. There is no correct spelling, I spell it M-A-R-I-M-A-E. And because of Mr. George's attitude, his remark about what if it takes me 30 to 40 years to learn to read, his tone was extremely sarcastic, indicative of him not going to have a very good attitude going on probation. And I felt that he needed to understand what could happen to him, make it very clear to him what could happen if he did not comply with the conditions of probation. Because in earlier plea discussions there wasI was informed there was an alternative offer of straight jail time rather than probation, but then he indicated that he wanted to take the probation. And Ithe Court felt that the plea was free and voluntarily given.
Just for the record, Defense Exhibit No. 4, which is the note that I answered, Keep deliberating, that came out after I gave them the Allen Charge, while they were still in plea negotiations.
With that, the motion is denied.
MR. DEGEURIN: Your Honor
THE COURT: The motion is denied.
MR. DEGEURIN: Yes, Your Honor, but it'sI must state my position. You continuously granted objections where I was trying to present evidence that may have called for hearsay. And then sitting *143 on the Court on Judge Atkinson's bench today, you make statements that include hearsay, not subject to cross-examination, not allowing a full record, simply opinions and thoughts and hearsay of your own, and I don't know who you have been talking to about what the plea offers were before you got involved in the plea negotiations, but, you know, I don't have a chance to even object or ask you questions about that, Judge.
THE COURT: Counsel, these are not opinions, these are what actually happened. I was the Presiding Judge in the Court at the time.
Motion is denied. We're through with this hearing.
MR. DEGEURIN: I want to ask how it came that you are sitting today in Judge Atkinson's court?
THE COURT: This hearing is over, Counsel.
PAUL C. MURPHY, Chief Justice, dissenting.
Because the majority mischaracterizes appellant's complaint on appeal as well as the holding in Tyler v. Swenson, 427 F.2d 412 (8 th Cir.1970), I respectfully dissent.
By ignoring the heart of appellant's complaint, the majority makes an easy case for themselves. Rather than squarely reaching all issues raised by appellant, the majority couches appellant's challenge to Judge Hughes' competency to hear appellant's motion for new trial only in terms of the trial judge having knowledge of relevant facts. While appellant makes this challenge, he also asserts that he was denied due process because Judge Hughes testified at a hearing over which she presided denied him the right to an impartial hearing. I believe that the potential for partiality inherent in Judge Hughes' conduct runs afoul of the structural due process protections of the Constitution. See In re Murchison, 349 U.S. 133, 135, 75 S.Ct. 623, 99 L.Ed. 942 (1955). (holding that "[a] fair tribunal is a basic requirement of due process"). Judge Hughes' conduct, therefore, impacts appellant's due process rights, raises questions about the integrity of the proceeding, and prevents us from showing deference to her rulings. Thus, I would reverse Judge Hughes' ruling on appellant's motion and remand the case for a new hearing presided over by a different judge.
It is clear that Judge Hughes' statements at the close of the hearing constituted testimony. In addressing this issue, "[t]he question should be whether the judge's statement of fact is essential to the exercise of some judicial function or is the functional equivalent of witness testimony." Hammond v. State, 799 S.W.2d 741, 746 (Tex.Crim.App.1990) (citing 27 Wright & Gold, Federal Practice and Procedure: Federal Rules of Evidence § 6063, p. 353 (1990)). Here, Judge Hughes' testimony directly controverted the testimony of appellant's trial attorney and served no apparent judicial function. C.f. Hammond, 799 S.W.2d at 746-47 (stating that though the judge's statements to the jury about defendant's escape was a relevant fact issue not yet in evidence, it also served to warn the jurors of the defendant's escape and was motivated by safety concerns). Though she claimed to be clarifying the record, a permissible judicial function, I agree with the majority that she went beyond clarification of the record, making her statements testimony.
Not only did she testify, however. Her testimony was clearly adverse to appellant, giving the judge the appearance of bias frowned on by the Constitution. Brown v. Lynaugh 843 F.2d 849, 851 (5 th Cir. 1988) ("[I]t is difficult to see how the neutral role of the court could be more compromised, or more blurred with the prosecutor's role, than when the judge serves as a witness for the state."); Tyler, 427 F.2d at 415 ("We think it runs against the grain of fairness to say that the same judge may consider his own crucial testimony and recollection rebutting petitioner's claim and *144 simultaneously pass upon the credibility of all witnesses in weighing the evidence").
Because the judge's testimony created the appearance of unfairness and a lack of impartiality, the harm is so severe that we need not inquire into actual prejudice. See Arizona v. Fulminante, 499 U.S. 279, 309, 111 S.Ct. 1246, 113 L.Ed.2d 302 (1991). The error committed in this case was an error in the hearing itself, rather than an error in the trial process, making it a structural error. See id. at 310, 111 S.Ct. 1246. Furthermore, structural errors are so fundamental they are not subject to harmless error analysis. See id. at 309-10, 111 S.Ct. 1246.
The majority, however, disagrees with this binding precedent. Though conceding that the judge testified and it was erroneous for her to do so, it applies a harmless error analysis to this error, relying on Great Liberty Life Ins. Co. v. Flint, a thirty-year-old court of civil appeals decision with weak precedential value. See 336 S.W.2d 434, 436 (Tex.Civ.App.-Fort Worth, no writ).
Its reliance on Great Liberty is misplaced for at least four reasons. First, Great Liberty was decided at a time when Texas law allowed judges to become witnesses at proceedings over which they presided. See Great Liberty, 336 S.W.2d at 436;[1]but see Tex.R. Evid. 605 (preventing judges from both presiding over and testifying at the same trial). Second, Great Liberty has not been cited as authority by any court in almost fifteen years, a fact which when coupled with the case's lack of writ history makes it a decision with only questionable precedential value.[2] Third, Great Liberty was decided before Fulminante `s clear stance opposing such judicial conduct. Finally, it is an elementary legal principle that state appellate court opinions are secondary to U.S. Supreme Court opinions on the same subject. Since Great Liberty applies an analysis forbidden by the U.S. Supreme Court, its holding should be subservient to that of the highest court in the land.
The majority's harmless error analysis illustrates why the Supreme Court frowns on its application to instances where a judge testifies at a hearing over which she presides. By following Great Liberty`s effete directive to ignore the judge's testimony and render a decision based on the other testimony presented, the majority cures only the error of the judge's testimony. While such judicial maneuvering is effective in that it diminishes the error of the judicial testimony itself, it does not, however, remove the taint of bias and prejudice that Judge Hughes' testimony gave to the entire proceeding. The Constitution forbids even the appearance of partiality brought by a judge who considers his own testimony when ruling on a motion before him. See Murchison, 349 U.S. 133, 136, 75 S.Ct. 623, 99 L.Ed. 942 (1955); see also Kennedy v. Great Atlantic & Pacific Tea Co., 551 F.2d 593, 596-97 (5 th Cir.1977) (calling any suspicion that justice has been interfered with by a judge or other court official intolerable and "unacceptable"); Bradley v. State ex rel. White, 990 S.W.2d 245, 249 (Tex.1999) (applying and recognizing this same analysis in the context of a challenge to judicial testimony based on Tex.R. Evid. 605). Unfortunately, this prohibition and the impact Judge Hughes' testimony had on the integrity of the proceeding are ignored by the majority's harmless error scheme.[3]
*145 Not only does the majority opinion miss the mark on this issue, but it also misconstrues Tyler v. Swenson. In that case, the defendant alleged in a post-conviction motion that the trial judge had made statements to the defendant during plea discussions that coerced him to plead guilty. See Tyler, 427 F.2d at 412-14. The hearing on the motion was presided over by the same judge whose conduct was challenged in the motion. See id. at 413. The judge took an active role at the hearing, offering testimony that directly contradicted that of the appellant's witnesses and gave the judge the appearance of being aligned with the prosecution. See id. at 414. The Missouri state intermediate and supreme courts found that it was not erroneous for the judge to hear the post-conviction motion because the defendant failed to attempt to recuse the judge and the judge did not actually take the stand as a witness and, therefore, did not testify. See id. at 414 (citing State v. Tyler, 440 S.W.2d 470 (Mo. 1969)). The Eighth Circuit reversed the decision of the state court, finding that the judge testified even though he was not formally called as a witness. See id. at 415-16. The court also found that the judge's testimony violated appellant's due process right to a fair an impartial trial. See id.
Regardless of the close factual similarity between Tyler and this case, the majority unconvincingly attempts to distinguish it on several grounds.
The majority's misperception of Tyler begins with the notation that the opinion is inconsistent because it "begins by suggesting that due process is violated whenever a trial judge presides over a post-trial hearing, yet ... concludes by expressly approving of the practice." Maj. Op. at 137. Though the majority provides a citation to support its statement about the conclusion of the opinion, it fails point to exactly where in the opinion the Tyler court makes the suggestion that trial judges cannot preside over post-trial motions. This is not due to mere oversight on the part of the majoritythe opinion makes no such suggestion. The opinion does, however, draw a clear line by stating expressly that a judge cannot preside over a trial in which he is a witness. See Tyler, 427 F.2d at 415.
Apparently unsure of its first attempt to distinguish Tyler, the majority makes two more attempts. It further misconstrues the case by stating that the case suggests that a "judge's unarticulated recollection of events" can be testimony. Maj. Op. at 137. The Tyler court, however, dealt with a situation where the judge clearly articulated his recollection of events. See Tyler, 427 F.2d at 414. The majority also seeks to distinguish Tyler because the Tyler court was addressing the issue on a writ of habeas corpus, which is constitutional in nature, rather than on a motion for new trial, which is merely a matter of state procedure. This distinction, however, is one without a difference. The grounds asserted in appellant's motion for new trial were constitutional (i.e., the denial of cross-examination of a witness and the lack of a fair and impartial proceeding). Moreover, the underlying case in Tyler was based on a post-trial motion much like Texas' motion for new trial. See id. at 415. Regardless, as the Tyler court points out, "[s]tate procedural rules are subservient to basic requirements of due process." *146 Id. These grounds for distinguishing Tyler are weak, at best.
The final problem with the majority's challenge to Tyler is the fact that the case and its analysis recently have been cited with approval by the Texas Supreme Court. See Bradley, 990 S.W.2d at 248 (Tex.1999).
Here, the majority makes the same mistakes frowned upon by the Tyler court. They state that a defendant must protect his Due Process rights to a fair and impartial trial by filing a motion to recuse, and fault him because he failed to file such a motion. Maj. Op. at 138-139. There are several problems with this proposition, as well. First, there was no indication that Judge Hughes would preside over the motion for new trial. The motion and orders were filed in Judge Atkinson's court, and the hearing was reset at least once by Judge Atkinson's clerk. Nor was any notice given to appellant or his counsel that Judge Atkinson would not preside over the hearing. Second, the grounds for recusing Judge Hughes did not become clear until after she testified at the end of the hearing. By then it was too late to file the motion to recuse, which must be filed at least ten days before the proceeding. See Tex.R. Civ. P. 18a; Stafford v. State, 948 S.W.2d 921, 924 (Tex.App.-Texarkana 1997, pet. ref'd) (acknowledging the application of the civil recusal rule in the criminal context). Finally, while it is true that the appellant had to be aware of the "possibility" that Judge Hughes would preside over the trial, Maj. Op. at 138, it was equally possible that any other judge could have presided over the hearing. The majority's logic would require criminal defense attorneys to come to every hearing armed with verified motions to recuse any judge who potentially might be recusable, an absurd requirement not contemplated by the procedural rules of this state.
Tyler and other such decisions recognize that the public confidence in the judiciary is undermined when a judge can consider her own testimony in ruling on a defendant's guilt or on a defendant's post-trial motion. This confidence is especially undermined when the judge whose behavior is challenged through the procedural safeguards put in place by the legislature is the very judge who commits this apparent impropriety. As Justice Frankfurter so aptly stated, "[J]ustice must satisfy the appearance of justice." Offutt v. United States, 348 U.S. 11, 13, 75 S.Ct. 11, 99 L.Ed. 11 (1954). Here, unfortunately, the judge's conduct in denying appellant's motion gives the proceeding the appearance of bias and taint of partiality that our courts cannot have and still be considered fair. Moreover, the majority's application of harmless error to this conduct can only be seen as encouraging itan encouragement not given by the analysis articulated in Tyler.
Though the majority's analysis muddies the waters somewhat, three things here are clear and apparently conceded by the majority. It is clear and the majority apparently concedes that Judge Hughes testified. Maj. Op. at at 139-140. Likewise, it is clear and apparently conceded by the majority that Judge Hughes' testimony was adverse to appellant and favorable to the State. Maj. Op. at 139. Also, it is clear and apparently conceded by the majority that this behavior impacted appellant's due process rights. Maj. Op. at 138.
The Supreme Court is also clear in holding that situations such as this are intolerable because they give the judicial system a patina of partiality and unfairness that cannot be cured through the application of harmless error review. See Fulminante, 499 U.S. 279, 309, 111 S.Ct. 1246, 113 L.Ed.2d 302 (1991); Murchison, 349 U.S. at 136, 75 S.Ct. 623. Thus, the result in this case should also be clearremand the case back to the trial court for a new hearing on appellant's motion. Because the majority, however, loses its way, I respectfully note my dissent.
NOTES
[1] With regard to convictions arising out of a negotiated plea agreement, Rule 40(b)(1) provided:
... in order to prosecute an appeal for a nonjurisdictional defect or error that occurred prior to entry of the plea the notice shall state that the trial court granted permission to appeal or shall specify that those matters were raised by written motion and ruled on before trial.
Rule 25.2(b)(3) currently provides:
... the notice must:
(A) specify that the appeal is for a jurisdictional defect;
(B) specify that the substance of the appeal was raised by written motion and ruled on before trial; or
(C) state that the trial court granted permission to appeal.
[2] See Long v. State, 980 S.W.2d 878 (Tex.App.-Fort Worth 1998, no pet.); Elizondo v. State, 979 S.W.2d 823, 823-24 (Tex.App.-Waco 1998, no pet.).
[3] See Hernandez v. State, 986 S.W.2d 817, 819-20 (Tex.App.-Austin 1999, pet. ref'd); Vidaurri v. State, 981 S.W.2d 478, 479 n. 1 (Tex.App.-Amarillo 1998, pet. granted). Some courts have continued to rely on Flowers for other reasons. See Davis v. State, 7 S.W.3d 695, 1999 Tex.App. LEXIS 8278 (Tex. App.-Houston [1st Dist.], 1999); Minix v. State, 990 S.W.2d 922, 923 (Tex.App.-Beaumont 1999, pet. ref'd); Price v. State, 989 S.W.2d 435, 437 (Tex.App.-El Paso 1999, pet. ref'd); Luna v. State, 985 S.W.2d 128, 130 (Tex.App.-San Antonio 1998, pet ref'd).
[4] See Moore v. State, 4 S.W.3d 269, 272 (Tex. App.-Houston [14th Dist.] 1999, no pet.). See also Session v. State, 978 S.W.2d 289, 291 (Tex.App.-Texarkana 1998, no pet.); Johnson v. State, 978 S.W.2d 744, 745-46 (Tex.App.-Eastland 1998, no pet.).
[5] An "Allen" charge, sometimes known as a "dynamite charge," is one instructing a deadlocked jury to continue deliberating. See Ex parte Menchaca, 854 S.W.2d 128, 133 n. 3 (Tex.Crim.App.1993). See also Allen v. United States, 164 U.S. 492, 17 S.Ct. 154, 41 L.Ed. 528 (1896).
[6] Ordinarily, the maximum term of community supervision for a misdemeanor offense is two years. See TEX.CODE CRIM. PROC. ANN. art. 42.12, § 3(c) (Vernon Supp.2000). However, the term may be extended as often as the judge determines is necessary for up to three years, but under some circumstance the court is authorized to extend the term to five years. See TEX.CODE CRIM. PROC. ANN. art. 42.12, § 22(c) (Vernon Supp.2000).
[7] Judge Hughes "clarified" the record and refuted the allegations of misconduct. However, for reasons set forth in our discussion of appellant's fourth point of error, we will not consider Judge Hughes' remarks in our analysis.
[8] See generally Wilson v. State, 792 S.W.2d 477, 483 n. 5 (Tex.App.-Dallas 1990, no pet.); Arnold v. State, 778 S.W.2d 172, 178 (Tex. App.-Austin 1989), aff'd, 853 S.W.2d 543 (Tex. Crim.App.1993) (applying Rules of Civil Procedure regarding recusal and disqualification of judges to criminal cases).
[9] See 25 Tex. Jur.3d, Criminal Law § 3570 (1983).
[10] See Villarreal v. State, 860 S.W.2d 529, 535 (Tex.App.-Corpus Christi 1993, pet. ref'd) (where defendant claimed the use of four different judges resulted "in discontinuity and lack of familiarity by the judges with previous proceedings"); Jimenez v. State, 838 S.W.2d 661, 665-667 (Tex.App.-Houston [1 st Dist.] 1992, no pet.) (where defendant complained he was denied a fair trial and due process when, after two days of trial, there was a substitution of judges). See also Webb v. State, 755 S.W.2d 222, 225 (Tex.App.-Houston [1 st Dist.] 1988, pet. ref'd) (Smith, J., dissenting, states that courts "should be reluctant to approve the assessment of punishment by a judge who did not hear the evidence that led to conviction, when the judge who did is available").
[11] See CNA Ins. Co. v. Scheffey, 828 S.W.2d 785, 793 (Tex.App.-Texarkana 1992, writ denied) (holding that where appellant moved to recuse trial judge from deciding the motion for new trial, the judge of the administrative district was required to designate a judge to hear the recusal motion).
[12] Rule 18a applies to recusal matters in criminal cases. See Stafford v. State, 948 S.W.2d 921, 924 (Tex.App.-Texarkana 1997, pet. ref'd); Sanchez v. State, 926 S.W.2d 391, 394 (Tex.App.-El Paso 1996, pet. ref'd).
[13] Rule 18a of the Rules of Civil Procedure requires that a motion to recuse be filed ten days before the trial or hearing in question. However, the rule does not contemplate the situation in which a party cannot know the basis of recusal prior to trial. Thus, a court may, in its discretion, consider an untimely motion to recuse. See Kirby v. Chapman, 917 S.W.2d 902, 910 (Tex.App.-Fort Worth 1996, no writ). Here, however, appellant made no attempt to recuse Judge Hughes or object to her presiding over the hearing for any reason other than she was presiding outside her courtroom:
THE COURT: Are you ready to proceed on its motion for new trial, Mr. DeGeurin?
MR. DEGEURIN: All right. Well, you will alsomight be a witness and
THE COURT: I have not been subpoenaed. We're ready to proceed, so if you have evidence, let's proceed.
MR. DEGEURIN: All right. I'm not calling you as a witness, but the State may.
THE COURT: I have not been subpoenaed by anybody, so let's proceed.
MR. DEGEURIN: All right. While I would have toI will have to state, Your Honor, that I would object to you hearing the plea since it was in Judge Atkinson's court and the trial was in Judge Atkinson's court.
THE COURT: But as it turned out to be a plea, and I am the Judge that took the plea, and I am going to hear the hearing so proceed.
[1] This old rule allowing a judge to testify, Vernon's Ann. C.C.P.1925, art. 717, was replaced by the now repealed Tex.Code.Crim. P. Ann. art 38.13. Art. 38.13 was found unconstitutional by the Fifth Circuit. See Brown v. Lynaugh, 843 F.2d 849, 851 (5 th Cir.1988).
[2] In fact, the most recent case citing Great Liberty states that "the true basis [for the court's opinion in Great Liberty] is in doubt." See Duvall v. Sadler, 711 S.W.2d 369, 375 (Tex.App.-Texarkana 1986, writ ref'd n.r.e.) (op. on reh'g).
[3] The majority also alludes to the judge's conduct potentially violating Tex.R. Evid. 605, depending upon whether or not it applies outside of a trial context. The majority states that the Court of Criminal Appeals "has been careful ... to emphasize the rule applies only to situations where the judge testifies formally," Maj. Op. at 140. The Court of Criminal Appeals' application of Rule 605 is far from clear, however. Compare Hensarling v. State, 829 S.W.2d 168, 171 (Tex.Crim.App.1992) (stating that Rule 605 only applies to situations where a judge "`steps down from the bench' and becomes a witness in the very same proceeding over which he is currently presiding.") with Hammond v. State, 799 S.W.2d 741 (Tex.Crim.App.1990) (applying Rule 605 to a situation where a judge called jurors during a trial).
If Rule 605 does apply, however, the error is not subject to harmless error review. See Bradley v. State ex rel. White, 990 S.W.2d 245, 249 (Tex.1999). This contingency is ignored by the majority's application of harmless error to the judge's conduct.
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268 S.W.3d 65 (2006)
RELIANCE STEEL & ALUMINUM COMPANY and Samuel Alvarado, Appellants,
v.
Michael L. SEVCIK and Cathy S. Loth, Appellees.
No. 13-03-00407-CV.
Court of Appeals of Texas, Corpus Christi-Edinburg.
March 9, 2006.
Rehearing Overruled April 13, 2006.
*68 Chad Michael Forbes, The Wright Law Firm, Thomas C. Wright, Wright, Brown & Close, L.L.P., Houston, Russell H. McMains, Law Offices of Russell H. McMains, Corpus Christi, TX, for Appellants.
David W. Holman, Godwin, Gruber L.L.P., Ruth B. Downes, Holman & Keeling, Houston, Macklin K. Johnson, Hallettsville, TX, for Appellee.
Before Justices HINOJOSA, YAÑEZ, and GARZA.
MEMORANDUM OPINION
Memorandum Opinion by Justice HINOJOSA.
Appellees, Michael L. Sevcik and Cathy S. Loth, sued appellants, Reliance Steel & Aluminum Company and Samuel Alvarado,[1] for damages resulting from an automobile accident. Following a jury trial, the trial court signed a judgment in favor of appellees in the amount of $3,020,000. In four issues, appellants contend (1) the evidence is legally and factually insufficient to support the jury's findings that Cathy Loth sustained damages for (a) past and future medical care, (b) future loss of earning capacity, and (c) future pain and mental anguish; and (2) the trial court erred in admitting evidence of Reliance Steel's annual sales. We modify the trial court's judgment, and as modified, affirm.
A. FACTUAL BACKGROUND
On September 24, 1999, Cathy Loth was a passenger in a pickup truck driven by Michael Sevcik. The pickup truck was traveling westbound on Interstate Highway 10 in the right lane of traffic. At the same time, in the same vicinity, Samuel Alvarado was driving a Reliance Steel tractor trailer rig, also westbound on Interstate Highway 10, in the middle lane. While moving into the right lane of traffic, Alvarado hit the rear of the pickup truck. Sevcik and Loth sued Reliance Steel and Alvarado, claiming Alvarado's negligence caused the injuries they sustained from the accident.
B. STANDARD OF REVIEW
In reviewing the legal sufficiency of the evidence, we view the evidence in the light favorable to the verdict, crediting favorable evidence if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not. City of Keller v. Wilson, 168 S.W.3d 802, 807 (Tex.2005). There is legally insufficient evidence or "no evidence" of a vital fact when (a) there is a complete absence of evidence of a vital fact, (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (c) the evidence offered to prove a vital fact is no more than a mere scintilla, or (d) the evidence conclusively establishes the opposite of the vital fact. Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex.1997). More than a scintilla of evidence exists when the evidence supporting *69 the finding, as a whole, "rises to a level that would enable reasonable and fair-minded people to differ in their conclusions." Id. (quoting Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497 (Tex.1995)). If the evidence is so weak as to do no more than create a mere surmise or suspicion of its existence, its legal effect is that it is no evidence. Haynes & Boone v. Bowser Bouldin, Ltd., 896 S.W.2d 179, 183 (Tex. 1995).
In reviewing the factual sufficiency of the evidence, we consider, weigh, and examine all the evidence presented at trial. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989). We set aside a finding for factual insufficiency only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and manifestly unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986) (per curiam).
C. SUFFICIENCY OF EVIDENCE OF PAST AND FUTURE MEDICAL EXPENSES
1. Past Medical Expenses
In their first issue, appellants contend the evidence is legally and factually insufficient to support the jury's finding that Loth incurred past medical expenses of $40,000.00.
To recover for past medical expenses, a plaintiff must prove the actual amount of the expenses incurred and that those expenses were reasonable and necessary. See Doctor v. Pardue, 186 S.W.3d 4, 20 (Tex.App.-Houston [1st Dist.] 2006, pet. denied); Monsanto Co. v. Johnson, 675 S.W.2d 305, 312 (Tex.App.-Houston [1st Dist.] 1984, writ ref'd n.r.e.). A plaintiff can prove reasonableness and necessity of past medical expenses by either (1) presenting expert testimony on the issues of reasonableness and necessity, or (2) presenting an affidavit prepared and filed in compliance with section 18.001 of the Texas Civil Practice and Remedies Code. See Doctor, 186 S.W.3d at 20; Walker v. Ricks, 101 S.W.3d 740, 746-47 (Tex.App.-Corpus Christi 2003, no pet.).
At trial, Loth introduced an exhibit into evidence that her costs for past medical treatment totaled $33,985.23, not $40,000. Appellees argue that the jury's damage award is supported by the record because the jury heard evidence that Loth incurred other medical expenses that were not included in the exhibit. They assert the exhibit does not include (1) any of the charges by Ralph Lilly, M.D. for his consultation and treatment of Loth; (2) the cost of care provided by Larry Pollock, Ph.D. for testing and evaluating Loth; and (3) at least two visits to Loth's psychologist, Laurel Graham. However, the record is devoid of any testimony or affidavits regarding the reasonableness and necessity of these expenses. See Doctor, 186 S.W.3d at 20. Accordingly, we hold the evidence is legally and factually sufficient to support a finding for past medical expenses of only $33,985.23.
2. Future Medical Expenses
In their first issue, appellants also contend the evidence is legally and factually insufficient to support the jury's finding that Loth incurred future medical expenses of $250,000.
Texas follows the "reasonable probability" rule for future damages arising from personal injuries. Rosenboom Mach. & Tool, Inc. v. Machala, 995 S.W.2d 817, 828 (Tex.App.-Houston [1st Dist.] 1999, pet. denied); City of San Antonio v. Vela, 762 S.W.2d 314, 321 (Tex.App.-San Antonio 1988, writ denied). To recover for future medical expenses, a plaintiff must show there is a reasonable probability that such medical expenses will be incurred in the future. Rosenboom, 995 S.W.2d at 828; Whole Foods Mkt. Southwest v. Tijerina, *70 979 S.W.2d 768, 781 (Tex.App.-Houston [14th Dist.] 1998, pet. denied). The preferred practice for establishing future medical costs is through expert medical testimony, but there is no requirement that a plaintiff establish such costs in that manner. Tijerina, 979 S.W.2d at 781. Because no precise evidence is required, the jury may award damages for future medical care based on the nature of the injury, the medical care received prior to trial, and the condition of the injured party at the time of trial. Id.; Vela, 762 S.W.2d at 321.
It is within the jury's sound discretion to determine what amount, if any, to award in future medical expenses. Rosenboom, 995 S.W.2d at 828; Tijerina, 979 S.W.2d at 781. Issues such as life expectancy, medical advances, and the future costs of products and services are, by their very nature, uncertain, and therefore, appellate courts are particularly reluctant to disturb a jury's award of these damages. Brownsville Pediatric Ass'n v. Reyes, 68 S.W.3d 184, 191 (Tex.App.-Corpus Christi 2002, no pet.). However, this standard of review is "not so nebulous that a reviewing court will uphold a jury award for future medical expenses when there is no evidence." Harvey v. Culpepper, 801 S.W.2d 596, 599 (Tex.App.-Corpus Christi 1990, no writ).
Dr. Lilly, Loth's treating physician, testified that Loth sustained a closed head injury sufficient to cause traumatic brain injury as a result of the collision. He said that Loth sustained injuries to the frontal lobe and cerebellum. This injury has caused Loth to experience impaired concentration, change in personality, significant depression, traumatic headaches, and neck pain. Dr. Lilly has recommended and prescribed central nervous system stimulants to deal with concentration and attention, anti-epileptic medicine, and anti-depressants. Loth testified that she spends at least $137 per month on her medications. Dr. Lilly further testified that Loth's brain injury has caused a permanent deficit that Loth will have to deal with for the rest of her life. He recommended that she continue with neurological care and on-going therapeutic follow-up.
Dr. Pollock, a neuropsychologist, testified that Loth had a number of areas of normal and intact functioning that were not affected by her injury, but several important areas of functioning showed serious problemsthe most serious being the area of verbal memory. He said that the impairments in Loth's memory and executive functioning are permanent. Dr. Pollock also testified that Loth would benefit from a rehabilitation program called Project ReEntry. He said the program costs approximately $3,000 per week, and he felt she could accomplish her maximum benefit from the program in about six months. The program is located in Houston, which would require Loth to relocate during that six-month period. Loth testified that relocating to Houston would cost her approximately $1,800 to $2,000 per month in living expenses, and in addition, she would need to obtain child care during this time.
Having viewed the evidence in the light most favorable to Loth, and crediting all evidence reasonable jurors could believe and disregarding all contrary evidence except that which jurors could not ignore, we hold the evidence is legally sufficient to support the jury's finding for future medical expenses. Furthermore, having weighed all the evidence, we cannot conclude that the award is so contrary to the overwhelming weight of the evidence as to be clearly wrong and manifestly unjust. Accordingly, we hold the evidence is factually sufficient to support the jury's finding *71 for future medical expenses. Appellants' first issue is overruled.
D. SUFFICIENCY OF EVIDENCE OF FUTURE LOSS OF EARNING CAPACITY
In their third issue, appellants contend the evidence is legally and factually insufficient to support the jury's finding that Loth incurred future loss of earning capacity in the amount of $750,000.
Loss of future earning capacity is the plaintiff's diminished capacity to earn a living after the trial. Tagle v. Galvan, 155 S.W.3d 510, 519 (Tex.App.-San Antonio 2004, no pet.); Strauss v. Cont'l Airlines, Inc., 67 S.W.3d 428, 435 (Tex.App.-Houston [14th Dist.] 2002, no pet.). Recovery for loss of earning capacity is not based on the actual earnings lost, but on the loss of capacity to earn money. Strauss, 67 S.W.3d at 435.
To support a finding of damages for loss of future earning capacity, a plaintiff must introduce evidence sufficient to allow the jury to reasonably measure earning capacity in monetary terms. Bonney v. San Antonio Transit Co., 160 Tex. 11, 325 S.W.2d 117, 121 (1959); Tagle, 155 S.W.3d at 519; Strauss, 67 S.W.3d at 435. In support, a plaintiff can introduce evidence of past earnings; the plaintiff's stamina, efficiency, and ability to work with pain; the weaknesses and degenerative changes that will naturally result from the injury; the plaintiff's work-life expectancy; and the plaintiff's age, health, and general physical condition. Tagle, 155 S.W.3d at 519; Plainview Motels, Inc. v. Reynolds, 127 S.W.3d 21, 36 (Tex.App.-Tyler 2003, no pet.). There must be some evidence that the plaintiff had the capacity to work prior to the injury, and that her capacity was impaired as a result of the injury. Tagle, 155 S.W.3d at 520; Reynolds, 127 S.W.3d at 36. In determining what evidence is sufficient to support a finding for loss of earning capacity, no general rule can be laid down, except that each case must be judged upon its peculiar facts and the damages are proved to the degree of certainty to which the case is susceptible. Strauss, 67 S.W.3d at 436.
Because the amount of money a plaintiff might earn in the future is always uncertain, the jury has considerable discretion in determining the amount. Tagle, 155 S.W.3d at 519. However, a jury should not be left to mere conjecture when facts appear to be available upon which the jury could base an intelligent answer. Strauss, 67 S.W.3d at 435 (citing Bonney, 325 S.W.2d at 121).
Appellants assume that the jury based its finding of $750,000 on Loth's testimony that she made $630 one week in the early 1990s, multiplied by 52 weeks per year for 23 years, her work-life expectancy. Appellants argue that the evidence is insufficient to support such a finding. We disagree.
Loth testified that she began sewing as a child. In the early 1990s she became a "home stitcher" for D & D Western Wear. At trial, she testified that during that time she was making up to $630 per week. Because she enjoyed creating her own original designs and felt she could make more money in her own business, Loth testified that she had begun to create her own business, Rockin' C Originals. She introduced into evidence a sketchbook of original western wear, which she designed and priced. She testified that she had contacted several "high-end" western stores in Austin and Houston that were interested in her designs, and some of her pieces were sold in these stores. One particular piece she sold for $250. She was in the process of developing her business prior to her husband's death in 1998. After his death, Loth designed a new *72 house and began construction, just prior to the collision, which included a sewing room for her business.
Several witnesses testified regarding her talents and capabilities prior to the accident. However, the effects of her injury have severely diminished her capacity to sew for a living. Testimony indicated that Loth suffers from memory loss, concentration problems, attention problems, and difficulty completing tasks, all of which have had a significant impact on her sewing projects. Loth testified that a project that once took only forty-five minutes to complete now takes her more than four hours to complete. Dr. Pollock testified he did not feel that Loth could have any meaningful employment. He said that while she may be able to make some garments, she is not capable of earning a living at it.
Having viewed the evidence in the light most favorable to Loth, and crediting all evidence reasonable jurors could believe and disregarding all contrary evidence except that which jurors could not ignore, we hold the evidence is legally sufficient to support the jury's finding that Loth incurred future loss of earning capacity in the amount of $750,000. Furthermore, having weighed all the evidence, we cannot conclude that the finding is so contrary to the overwhelming weight of the evidence as to be clearly wrong and manifestly unjust. Accordingly, we hold the evidence is factually sufficient to support the jury's finding of future loss of earning capacity. Appellant's third issue is overruled.
D. SUFFICIENCY OF EVIDENCE OF FUTURE PAIN AND MENTAL ANGUISH
Question 2b of the jury charge asked the jury to find the amount of damages for any physical pain and mental anguish that Loth would sustain in the future. The jury found the amount of damages for physical pain and mental anguish to be $ 1,500,000. In their fourth issue, appellants contend the evidence is legally and factually insufficient to support the jury's finding.
Damages for physical and mental injuries are separate and distinct. SunBridge Healthcare Corp. v. Penny, 160 S.W.3d 230, 248 (Tex.App.-Texarkana 2005, no pet.); Southwest Tex. Coors, Inc. v. Morales, 948 S.W.2d 948, 954 (Tex.App.-San Antonio 1997, no writ) (Green, J., concurring). When a damage issue is submitted in broad form, ascertaining the amount the jury awarded for each element of damages is difficult, if not impossible. Penny, 160 S.W.3d at 248; see Wal-Mart Stores, Inc. v. Garcia, 30 S.W.3d 19, 24 (Tex.App.-San Antonio 2000, no pet.); Brookshire Bros. v. Lewis, 997 S.W.2d 908, 921-22 (Tex.App.-Beaumont 1999, pet. denied). Therefore, an appellant who seeks to challenge a multi-element damage award on appeal must address each element and show the evidence is insufficient to support the entire award. Penny, 160 S.W.3d at 248; see Garcia, 30 S.W.3d at 24; Lewis, 997 S.W.2d at 922. If an appellant fails to address an element of damages, the appellant waives the sufficiency challenge. Penny, 160 S.W.3d at 248; see Garcia, 30 S.W.3d at 24; Lewis, 997 S.W.2d at 922.
Here, appellants failed to address the physical pain element of the jury's finding. Because appellant's brief merely focused on the mental anguish element, and failed to provide any authority or argument regarding the physical pain element, we conclude appellants waived their right to complain about the sufficiency of the jury's finding. See TEX.R.APP. P. 33.1. Appellants' fourth issue is overruled.
E. EVIDENCE OF GROSS SALES
In their second issue, appellants contend the trial court erred in admitting evidence of Reliance Steel's annual sales.
*73 We review a trial court's decision to admit or exclude evidence for an abuse of discretion. Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998). Testimony concerning the wealth or poverty of a party is ordinarily inadmissible in a civil case. Cooke v. Dykstra, 800 S.W.2d 556, 562 (Tex.App.-Houston [14th Dist.] 1990, no writ). We will not reverse a trial court for an erroneous evidentiary ruling unless the error probably caused the rendition of an improper judgment. TEX.R.APP. P. 44.1; Malone, 972 S.W.2d at 43. Appropriate inquiries include the length of the allegedly improper argument, whether it was repeated or abandoned and, in an evaluation of the whole case, the argument's probable effect on a material finding. Standard Fire Ins. Co. v. Reese, 584 S.W.2d 835, 839-40 (Tex.1979); Crown Plumbing, Inc. v. Petrozak, 751 S.W.2d 936, 940 (Tex.App.-Houston [14th Dist.] 1988, writ denied). The complainant must show that the probability that the argument caused harm is greater than the probability that the verdict was grounded on proper proceedings and evidence. Petrozak, 751 S.W.2d at 941; Reese, 584 S.W.2d at 840.
Prior to the reading of the deposition testimony of Robert Balez, the corporate representative of Reliance Steel, appellants objected to the admissibility of his testimony as irrelevant. Appellees argued it was relevant because the testimony showed that Reliance Steel was not a "mom and pop" operation and included the number of hours its drivers were on the road per day. The trial court overruled appellants' objection. Balez's testimony regarding the size of Reliance Steel, its corporate structure, the number of employees, and its locations, was read into evidence. Appellants complain of the following testimony:
Q: How big a company is Reliance?
A: I believe last year's annual sales approximated $1.9 billion.
Absent this single statement, the record is devoid of any other reference to Reliance Steel's financial status. The annual sales of Reliance Steel was not referred to at any other stage of the trial by any witness or trial counsel. It was never repeated nor argued.
Having reviewed the evidence supporting the jury's verdict, even if the trial court erred in admitting this evidence, we cannot conclude that this one statement lead to the rendition of an improper verdict. See Malone, 972 S.W.2d at 43. Appellants' second issue is overruled.
F. CONCLUSION
We have held that the evidence is legally and factually sufficient to support a finding only of $33,985.23 for Loth's past medical expenses. Accordingly, we modify the trial court's judgment to reflect that Loth is granted judgment for past medical expenses only in the amount of $33,985.23. As modified, the trial court's judgment is affirmed.
NOTES
[1] Prior to closing arguments, the parties stipulated that Alvarado was an employee of Reliance Steel at the time of the accident and that he was in the course and scope of his employment; therefore, the doctrine of respondeat superior would apply and vicarious responsibility for the employee's conduct would be attributed to Reliance Steel.
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951 F.2d 361
NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.Jackie Clinton OWENS, Petitioner-Appellant,v.George SUMNER, Warden, et al., Respondent-Appellee.
No. 90-15615.
United States Court of Appeals, Ninth Circuit.
Submitted Nov. 5, 1991.*Decided Dec. 16, 1991.
Before FLETCHER, WIGGINS and KOZINSKI, Circuit Judges.
1
MEMORANDUM**
2
The state trial court's admission of Owen's prior conviction does not raise a claim cognizable on federal habeas. See Jammal v. Van de Kamp, 926 F2d 918, 919 (9th Cir 1991). Here the court's ruling that Owens's prior conviction would be admissible for impeachment purposes does not rise to the level of a constitutional violation, and thus the district court did not err in denying his petition. See Gordon v. Duran, 895 F2d 610, 613 (9th Cir 1990). We review the district court's finding that Owens did not make a colorable showing of factual innocence for clear error, Carter v. McCarthy, 806 F2d 1373, 1375 (9th Cir 1986), cert denied, 484 US 870 (1987), and find none.
3
AFFIRMED.
*
The panel unanimously finds this case suitable for decision without oral argument. Fed.R.App.P. 34(a); 9th Cir.R. 34-4
**
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3
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UNITED STATES ARMY COURT OF CRIMINAL APPEALS
Before
KERN, BERG, and YOB
Appellate Military Judges
UNITED STATES, Appellee
v.
Private E2 ANTHONY J. CRUSE
United States Army, Appellant
ARMY 20080148
Headquarters, I Corps and Fort Lewis
Debra Boudreau, Military Judge
Colonel James K. Lovejoy, Staff Judge Advocate
For Appellant: Gregory M. Gagne, Esquire (argued); Captain Jennifer A. Parker,
JA; Keith Scherer, Esquire (on brief); Captain E. Patrick Gilman, JA.
For Appellee: Captain Edward J. Whitford, JA (argued); Colonel Michael E.
Mulligan, JA; Major Amber J. Williams, JA; Major LaJohnne A. White, JA; Captain
Benjamin M. Owens-Filice, JA (on brief).
17 November 2011
---------------------------------
MEMORANDUM OPINION
---------------------------------
This opinion is issued as an unpublished opinion and, as such, does not serve as precedent.
YOB, Judge:
A panel of officer and enlisted members, sitting as a general court-martial,
convicted appellant, contrary to his plea, of one specification of premeditated
murder in violation of Article 118, Uniform Code of Military Justice, 10 U.S.C. §
918 (2008) [hereinafter UCMJ]. Appellant was sentenced to be reduced to the grade
of Private E1, total forfeitures of all pay and allowances, to be discharged with a
dishonorable discharge, and to be confined for life with the possibility of parole.
The convening authority approved the finding and the adjudged sentence.
This case is before this court for review pursuant to Article 66, UCMJ.
Appellant raised four assignments of error, only one of which merits discussion, but
no relief. This assignment of error alleges the military judge deprived appellant of a
CRUSE – ARMY 20080148
fair trial by failing to instruct the members on fear, anger and adequate provocation
and the lesser included offenses of voluntary manslaughter and negligent homicide.
BACKGROUND
The charge stemmed from a stabbing that occurred at Fort Lewis during the
pre-dawn hours of 15 June 2007. After spending several hours drinking alcoholic
beverages in a barracks room, appellant, PV2 Jack Allen, and a third Soldier walked
to a courtyard adjacent to another barracks and began talking to other Soldiers who
were socializing outside. The third Soldier soon departed leaving the appellant and
PV2 Allen amongst the other Soldiers. Appellant engaged in offensive behavior, to
include urinating on the outside of the barracks building and holding himself out as
a non-commissioned officer and harassing other Soldiers.
Appellant upset another Soldier, PFC Evans, by taunting him. PFC Evans
responded with comments that upset PV2 Allen. After exchanging words, PFC
Evans and PV2 Allen moved to a grassy area in anticipation of a fistfight. PV2
Allen had a bottle in his hand but he set this aside when someone stated it should be
a fair fight. PV2 Allen also discarded a folding knife and appellant picked it up. A
female Soldier tried to calm PV2 Allen by standing in front of him and talking to
him. When she moved out of the way, the victim approached PV2 Allen in an
attempt to calm him down. The victim had his empty hands raised in front in a
gesture that indicated he was trying to calm PV2 Allen. At this point there was a
group of Soldiers standing behind PFC Evans and appellant stood behind PV2 Allen.
As the victim stood before PV2 Allen, appellant grasped the now open knife he had
retrieved and plunged it into the victim’s neck with such force that the blade reached
the victim’s spine. The stabbing severed the carotid artery in the victim’s neck. The
victim immediately collapsed and bled to death in a matter of a few minutes. As
soon as the victim fell, appellant and PV2 Allen fled from the scene on foot.
Appellant and PV2 Allen spent the next several hours in the woods deciding
what to do. Appellant suggested going AWOL or concocting a story claiming that
the victim was aggressively approaching PV2 Allen with a bottle in his hand, and
that appellant was defending his fellow Soldier. After turning themselves in to
appellant’s squad leader, appellant and PV2 Allen did claim the victim approached
PV2 Allen with a bottle immediately before the stabbing. Appellant also made this
assertion to Criminal Investigation Division (CID) agents at the outset of his
interrogation. However, when an agent confronted appellant with the information
that other witnesses at the scene saw nothing in the victim’s hands, appellant
abandoned this claim. Appellant’s written, sworn statement did not indicate the
victim had anything in his hand prior to being stabbed or that he made any
aggressive action against PV2 Allen or appellant. PV2 Allen testified at trial under
a grant of immunity, and made no claim that the victim either had anything in his
hand or approached PV2 Allen in an aggressive manner. While there were clearly
2
CRUSE – ARMY 20080148
heated words exchanged between PFC Evans and PV2 Allen and the situation had
the potential to erupt into a fistfight, there was no evidence of any physical assault,
other than appellant stabbing the victim.
LAW AND DISCUSSION
“Whether a panel was properly instructed is a question of law reviewed de
novo.” United States v. Medina, 69 M.J. 462, 465 (C.A.A.F. 2011) (quoting United
States v. Ober, 66 M.J. 393, 405 (C.A.A.F. 2008)). A three-pronged test determines
whether failure to give an instruction is error: “(1) the requested instruction is
correct; (2) it is not substantially covered in the main instruction; and (3) it is on
such a vital point in the case that the failure to give it deprived the accused of a
defense or seriously impaired its effective presentation.” United States v. Gibson,
58 M.J. 1, 7 (C.A.A.F. 2003) (citing United States v. Damatta-Olivera, 37 M.J. 474,
478 (C.M.A. 1993) (quoting United States v. Winborn, 14 C.M.A. 277, 282, 34
C.M.R. 57, 62 (1963))).
Our superior court has noted that military law “requires a trial judge to
give…an instruction on a lesser included offense ‘sua sponte…for which there
is…some evidence which reasonably places the lesser included offense in issue.’ ”
United States v. Wells, 52 M.J. 126, 129 (C.A.A.F. 1999) (citing United States v.
Staten, 6 M.J. 275, 277 (C.M.A. 1979)). “A matter is ‘in issue’ when some
evidence, without regard to its source or credibility, has been admitted upon which
members might rely if they chose.” Wells at 129-130 (citing United States v.
Johnson, 1 M.J. 137 (C.M.A. 1975)).
In cases involving murder charges, the lesser included offense of voluntary
manslaughter is in issue when there is evidence that the killing of another occurred
while the accused was in the heat of passion, accompanied by adequate provocation.
United States v. Stark, 19 M.J. 519, 523 (A.C.M.R. 1984) (citing United States v.
Maxie, 23 C.M.R. 942, 951 (A.F.B.R. 1957), aff’d, 25 C.M.R. 418 (C.M.A. 1958));
Manual for Courts-Martial (2008 ed.), para. 44c.(1)(b). “Although heat of passion
is a subjective determination, adequate provocation is an objective concept.” Stark at
523 (citing United States v. Seeloff, 15 M.J. 978 (A.C.M.R. 1983)).
In this case there was no evidence introduced on the issue of adequate
provocation. Nothing in the record indicates there were any acts by the victim or
bystanders that would provoke a reasonable person to the heat of passion required to
support a conviction of voluntary manslaughter. Appellant’s counsel points out that
there was a suggestion at trial that both appellant and PV2 Allen had made
statements early on that appellant stabbed the victim only after the victim raised his
arm in an attempt to hit PV2 Allen with a broken bottle. However, evidence
indicated appellant and PV2 Allen had merely concocted this story to justify the
stabbing. In addition, both appellant and PV2 Allen abandoned the claim that the
3
CRUSE – ARMY 20080148
victim had a bottle in his hand in their subsequent statements and PV2 Allen utterly
abandoned this claim when he testified at trial.
The military judge instructed the panel on defense of another under the theory
that appellant may have perceived that PV2 Allen was about to engage in a fight and
appellant may have perceived the victim to be an aggressor. However, the evidence
presented at trial did not raise the issue as to whether this constituted adequate
provocation of appellant from the perspective of a reasonable person. In the absence
of any evidence that the victim’s conduct raised the rage in appellant or otherwise
provided adequate provocation, it was not error to refuse appellant’s requested
instruction on voluntary manslaughter. Under the evidence presented, no rational
fact-finder would have concluded there was adequate provocation under a reasonable
person standard.
Given our superior court’s holdings in United States v. Miller, 67 M.J. 385,
387 (C.A.A.F. 2009) and United States v. Girouard, 70 M.J. 5 (C.A.A.F. 2011), the
Article 134, UCMJ, offense of negligent homicide is not a lesser included offense of
a premeditated murder charge under Article 118, UCMJ. Even if negligent homicide
were considered a lesser-included offense under the law, the facts raised at trial
would not warrant an instruction that this is a lesser-included offense at issue in this
case.
Therefore, we conclude that instructions on voluntary manslaughter and
negligent homicide were not required. Because the first prong of the Gibson test is
not met, we conclude that the failure of the military judge to give the instruction on
involuntary manslaughter was not error. Even if the first prong of the Gibson test
was met and the military judge should have given the voluntary manslaughter
instruction, we would find no prejudice in a failure to instruct, given the lack of
evidence for a rational fact-finder to conclude the killing occurred in the heat of
passion, accompanied by adequate provocation.
CONCLUSION
We have considered the record of trial, the briefs submitted by the parties,
and oral arguments by both parties on the assignments of errors raised. On
consideration of the entire record, we hold the finding of guilty and sentence
adjudged and as approved by the convening authority to be correct in law and fact.
Accordingly, the finding of guilty and the sentence are AFFIRMED.
Senior Judge KERN and Judge BERG concur.
4
CRUSE – ARMY 20080148
FORTHE
FOR THECOURT:
COURT:
MALCOLM H. SQUIRES, JR.
MALCOLM H. SQUIRES, JR.
Clerk of Court
Clerk of Court
5
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IN THE SUPREME COURT OF THE STATE OF DELAWARE
JOSE SANTIAGO, §
§ No. 538, 2013
Defendant Below, §
Appellant, § Court Below—Superior Court
§ of the State of Delaware in
V. § and for New Castle County
§
STATE OF DELAWARE, §
§ Cr. ID Nos. 1302000803
Plaintiff Below, § 1209009276
Appellee. §
Submitted: August 22, 2014
Decided: November 12, 2014
Before HOLLAND, RIDGELY and VALIHURA, Justices.
O R D E R
This 12th day of November 2014, upon consideration of the appellant’s
brief filed pursuant to Supreme Court Rule 26(c), his attorney’s motion to
withdraw, and the State’s response, it appears to the Court that:
(1) On April 2, 2013, the appellant, Jose Santiago, pled guilty to
Burglary in the Second Degree in Cr. ID No. 1209009276 (hereinafter “the
Burglary 2nd Degree case”) and in return the State entered a nolle prosequi
on three other charges in the indictment. As part of the plea agreement,
Santiago agreed that he was eligible to be sentenced as a habitual offender
under title 11, section 4214(a) of the Delaware Code (hereinafter “section
4214(a)”), because of a Florida conviction in 2000 and two prior New Jersey
convictions, including a burglary conviction on January 5, 2012. The State
also indicated its intent to seek habitual offender sentencing to include eight
years at Level V imprisonment.
(2) On July 8, 2013, Santiago pled guilty to Theft of a Motor
Vehicle in Cr. ID No. 1302000803 (“the Theft MV case”) and in return the
State entered a nolle prosequz‘ on a charge of Receiving Stolen Property.
Again, as part of the plea agreement, Santiago agreed that he was eligible for
habitual offender sentencing. This time, however, the State indicated that it
would not pursue habitual offender sentencing or Level V incarceration.
(3) On September 20, 2013, following a presentence investigation,
Santiago was sentenced in both the Burglary 2nd Degree case and the Theft
MV case. In the Burglary 2nd Degree case, the Superior Court declared
Santiago a habitual offender under section 4214(a) and sentenced him to a
total of eight years at Level V with credit for time previously served. In the
Theft MV case, the Superior Court sentenced Santiago to two years at Level
V suspended for one year of Level III probation. This is Santiago’s direct
appeal.
(4) On appeal, Santiago’s defense counsel has filed a brief and a
motion to withdraw pursuant to Supreme Court Rule 26(c) (“Rule 26(c)”).
Santiago’s counsel asserts that, based upon a complete and careful
2
examination of the record, there are no arguably appealable issues.
Santiago, through his counsel, has submitted one point for the Court’s
consideration. The State has responded to Santiago’s point and has moved
to affirm the Superior Court judgment.
(5) When reviewing a motion to withdraw and an accompanying
brief under Rule 26(c), this Court must be satisfied that defense counsel has
made a conscientious examination of the record and the law for arguable
claims.1 The Court must also conduct its own review of the record and
determine whether the appeal is so totally devoid of at least arguably
appealable issues that it can be decided without an adversary presentation.2
(6) On appeal, Santiago contends that the documentation the State
presented regarding his prior New Jersey burglary conviction was
insufficient to declare him a habitual offender under section 4214(a).
Santiago’s claim is without merit. When pleading guilty in the Burglary 2nd
Degree case, Santiago agreed that he had a prior New Jersey conviction for
burglary that qualified him as a habitual offender. Santiago did not dispute
the State’s habitual offender petition and, when given the opportunity to
address the court, Santiago stated that he had nothing to add. Santiago is
1 Penson v. Ohio, 488 US. 75, 83 (1988); McCoy v. Court of Appeals of Wisconsin, 486\
US. 429, 442 (1988); Anders v. California, 386 US 738, 744 (1967).
2 Id.
bound by his written plea agreement, and by his statements and those of his
counsel, that he was eligible for sentencing as a habitual offenderf’
(7) The Court has reviewed the record carefully and has concluded
that Santiago’s appeal is wholly without merit and devoid of any arguably
appealable issue. We are satisfied that Santiago’s defense counsel made a
conscientious effort to examine the record and the law and properly
determined that Santiago could not raise a meritorious claim on appeal.
NOW, THEREFORE, IT IS ORDERED that the State’s motion to
affirm is GRANTED. The judgment of the Superior Court is AFFIRMED.
The motion to withdraw is moot.
BY THE COURT:
/s/ Randy 1 Holland
Justice
3 Somerville v. State, 703 A.2d 629, 632 (Del. 1997).
4
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218 Wis.2d 423 (1998)
578 N.W.2d 194
IN the MATTER OF DISCIPLINARY PROCEEDINGS AGAINST Larry J. RATZEL, Attorney at Law.[]
No. 97-0197-D.
Supreme Court of Wisconsin.
Submitted on briefs May 5, 1998.
Decided May 27, 1998.
For Larry J. Ratzel the cause was submitted on the briefs of Larry J. Ratzel, New Berlin.
For the Board of Attorneys Professional Responsibility the cause was submitted on the brief by Robert G. Krohn and Roethe, Krohn & Pope, Edgerton.
¶ 1. PER CURIAM.
Attorney Larry J. Ratzel appealed from the referee's report concluding that he engaged in professional misconduct in the course of two matters and recommending that the court suspend Attorney Ratzel's license for two years as discipline for that misconduct. The Board of Attorneys Professional Responsibility (Board) cross-appealed from the referee's recommendation of discipline, taking the position that Attorney Ratzel's disciplinary history and the seriousness of his misconduct established in this proceeding warrant the revocation of his license to practice law.
¶ 2. The referee concluded that Attorney Ratzel engaged in professional misconduct in an estate matter by representing several clients with interests adverse to each other and to a former client and using information related to the representation of that former client to his disadvantage, by disobeying a court order to refrain from any further representation in that estate matter, by failing to keep a client advised of the potential value of the client's claim against the estate and notify the client that Attorney Ratzel had received funds in which the client had an interest, by participating in a court hearing while his license to practice law *425 was suspended, by failing to notify two clients of the disciplinary license suspension and misrepresenting to the Board that he had complied with the notification requirements applicable to the suspension, and by misrepresenting to the Board that he had not been present at a court hearing and participated in negotiations and the preparation and filing of briefs. The referee also concluded that Attorney Ratzel engaged in professional misconduct in another matter by representing a client whose interests were materially adverse to those of a former client he had represented in the same matter.
¶ 3. We determine that the referee's conclusions in respect to Attorney Ratzel's professional misconduct were properly drawn from the evidence presented. We also determine that the two-year license suspension recommended by the referee is the appropriate disciplinary response to the seriousness of Attorney Ratzel's professional misconduct in these matters, viewed in light of the fact that this is the fourth occasion we have had to discipline him for professional misconduct.
¶ 4. Attorney Ratzel is 77 years old and was licensed to practice law in 1950 and practices in New Berlin. He has been disciplined three times for professional misconduct. In 1982, the court publicly reprimanded him for failing to file an answer to a crossclaim, which resulted in a default judgment against his client, and failing to communicate with his client concerning his negotiations with an insurer in a personal injury matter. Disciplinary Proceedings Against Ratzel, 108 Wis. 2d 447, 321 N.W.2d 543. In 1983, the court suspended his license for two months for failure to file a motion to set aside a default judgment within a reasonable period of time and failure to inform his client of the decision of the appellate court, despite repeated requests for information from that client. Disciplinary *426 Proceedings Against Ratzel, 112 Wis. 2d 646, 334 N.W.2d 102. In 1992, the court suspended his license for five months, commencing September 1, 1992, as discipline for filing actions, asserting positions, and conducting defenses on behalf of a client when he knew that such actions would serve merely to harass or maliciously injure an adverse party, knowingly advancing claims unwarranted under law, and making false statements of law or fact to a court. Disciplinary Proceedings Against Ratzel, 170 Wis. 2d 121, 487 N.W.2d 38.
¶ 5. On the basis of admitted facts and evidence presented at a disciplinary hearing, the referee in this proceeding, Attorney Charles Herro, made the following findings of fact and conclusions of law concerning Attorney Ratzel's conduct. As asserted in Attorney Ratzel's brief in this appeal, the material facts are not in dispute.
¶ 6. A client Attorney Ratzel had represented for several years died January 31, 1990. In May, 1974, Attorney Ratzel had drafted and witnessed the client's assignment of his interest in certain Las Vegas properties to his daughter and his son. Attorney Ratzel also drafted and witnessed the client's will designating the client's daughter as sole beneficiary and personal representative of the estate.
¶ 7. Shortly after the client's death, his daughter told Attorney Ratzel she was not retaining him to probate the estate. In early March, 1990, after the daughter filed a petition to admit her father's will to probate, Attorney Ratzel met with the client's mother and had her execute an agreement he had prepared retaining him to represent her in claims against her granddaughter, both in her individual capacity and as sole heir and personal representative of the estate. *427 That agreement also mentioned a claim regarding the Las Vegas properties that were the subject of the 1974 assignment.
¶ 8. Toward the end of May, 1990, Attorney Ratzel filed four separate claims totaling almost $450,000 against the estate for advances and credits the client's mother had given her son during his life. Attorney Ratzel also filed eight claims against the estate on behalf of six other claimants. In April, 1991, the personal representative asked the probate court to disqualify Attorney Ratzel from representing the claimants on the ground that his prior representation of the decedent created a conflict. The court took no action on the motion.
¶ 9. In January, 1992, the personal representative filed a general inventory showing the net value of the estate at approximately $146,000. Neither that inventory nor the interim final account filed in November, 1992 included the Las Vegas properties for the reason that the personal representative believed her father had assigned them to her and her brother prior to his death. Attorney Ratzel did not file an objection to the inventory and raised no question concerning the assignment of the Las Vegas properties, although he was aware of the assignment.
¶ 10. The mother's claims against the estate were tried in May, 1992 and the court, in September, 1992, held in favor of the mother on three claims and awarded her approximately $397,000. In late 1992, Attorney Ratzel suggested that the personal representative resign, as there were no longer any assets in the estate by virtue of the award to the decedent's mother.
¶ 11. While those claims were being litigated, Attorney Ratzel's license to practice law was suspended for five months, commencing September 1, *428 1992, and another attorney was substituted as counsel for the mother. Notwithstanding the suspension, Attorney Ratzel was present in court during the hearing held September 25, 1992 and had discussions with the substituted attorney before and after that hearing. He also reviewed the judgment that was prepared following the court's decision and was present when the personal representative's attorney delivered a quitclaim deed for a portion of the decedent's property to the mother's attorney pursuant to that decision.
¶ 12. Attorney Ratzel did not notify in writing two of the other claimants he was representing that his license had been suspended and did not notify one of those claimants, who was the decedent's brother, that he would have to obtain other counsel to represent him. Yet, in the affidavit of compliance he submitted to the Board September 14, 1992, Attorney Ratzel stated that he had notified all clients whose matters were pending that his license had been suspended and that he had executed and filed substitutions of counsel in all matters pending before a court. In fact, substitutions had not been submitted in respect to the six persons on whose behalf he had filed claims against the estate.
¶ 13. In late 1992, the decedent's daughter resigned as personal representative, and in February of 1993, at the suggestion of Attorney Ratzel, the decedent's brother was named successor personal representative. The brother then retained Attorney Ratzel to represent him. At the same time, Attorney Ratzel continued to represent all of the claimants who had filed in the estate, including the decedent's mother and the successor personal representative. He did not obtain written consents from any of them for such multiple representations.
*429 ¶ 14. When the successor personal representative filed a supplemental general inventory, it included the Las Vegas properties as assets of the estate. The personal representative claimed that the decedent never had conveyed or intended to convey the Las Vegas properties to his daughter, and litigation commenced the following year. In that litigation, the daughter requested that Attorney Ratzel be disqualified as counsel for the personal representative because of the adverse interests he represented by virtue of having drafted and witnessed the assignment of the Las Vegas properties to her. Attorney Ratzel opposed that motion, contending that his representations of the estate and of the various claimants were not adverse to his prior representation of the decedent and were not adverse to each other. On July 11, 1994, the probate court disqualified Attorney Ratzel as counsel for the personal representative and prohibited him from having further representation in any matter subsequently involving the probate proceedings, having determined that Attorney Ratzel's various representations in the estate "flew squarely in the face" of the rule of professional conduct prohibiting an attorney from acting in the presence of conflicting interests.
¶ 15. Notwithstanding that court order, Attorney Ratzel continued to represent the various claimants in the estate. In 1995 and 1996, he negotiated a settlement of the claims of two of those persons and secured the release of those claims on behalf of the estate. Also, while the decedent's mother had retained new counsel to represent her, Attorney Ratzel remained closely involved in her representation by, among other things, attending meetings and drafting pleadings and briefs that the new attorney signed and submitted. Attorney Ratzel also continued to give legal advice to and perform *430 legal services for the personal representative and the successor attorney retained to represent him: he continued to meet with the personal representative regarding estate matters and sent the successor attorney numerous memoranda between November 1995 and February 1996 concerning the claims against the estate, settlement strategies, and how to close the estate.
¶ 16. Although he knew in 1995 that the personal representative was attempting to include the Las Vegas properties in the estate and that, if successful, the value of the estate would increase by almost $200,000, Attorney Ratzel continued to tell two of the claimants he represented that the estate was virtually worthless. In July, 1995, he negotiated the release of one of those claims for $3500, which he deposited into his trust account. That client agreed to take back a $2000 loan and to have the $3500 applied to fees for prior legal services Attorney Ratzel had provided him. Some time thereafter, Attorney Ratzel disbursed the $3500 to himself.
¶ 17. Also in July, 1995, Attorney Ratzel negotiated the release of the claim of another of his clients. The client testified that Attorney Ratzel told him he might be paid later and that a portion of his claim would remain open. On July 24, 1995, the personal representative gave Attorney Ratzel an estate check for $5000 payable to Attorney Ratzel's client trust account in exchange for the release of that client's claim. The client did not learn that Attorney Ratzel had received those funds until April, 1996, when he telephoned Attorney Ratzel after being interviewed by the investigator to whom the Board had assigned the grievance against Attorney Ratzel. Attorney Ratzel did not disburse the $5000 to the client.
*431 ¶ 18. In the course of the Board's investigation into his conduct in the estate matter, Attorney Ratzel stated in a letter to the Board that he was not "present" during the September 25, 1992 probate court hearing. He also told the district committee investigator that it was "totally inaccurate" that he had negotiated the release of two claims against the estate with the estate's attorney. Contrary to that assertion, the two clients confirmed his participation in the negotiations, and Attorney Ratzel admitted having received the two settlement checks and depositing them into his trust account. Attorney Ratzel also told the committee investigator that it was "totally inaccurate" that he had written briefs that were signed by the attorney for the decedent's mother.
¶ 19. On the basis of those facts, the referee concluded that Attorney Ratzel engaged in the following professional misconduct. His simultaneous representation of the personal representative and various claimants against the estate, knowing the estate's assets were less than the amount claimed by the various parties he represented and having been involved in the decedent's business and personal affairs, including the drafting of the will that was being probated and the assignment of properties that he later attacked as a fraudulent conveyance, violated SCR 20:1.7(a)[1] and 1.9(a) and (b),[2] as the representation of several clients *432 with adverse interests to each other and to a former client in a substantially related matter and the use of information related to the representation of a former client to his disadvantage. By disobeying the court's order to refrain from any further representations in the litigation surrounding the estate, Attorney Ratzel violated SCR 20:3.4(c).[3] His failure to keep one of the claimants advised of the potential collection value of his claim and notify that client of his receipt of funds in which the client had an interest violated SCR 20:1.4(b).[4] Attorney Ratzel engaged in the practice of law while his license was suspended, in violation of *433 SCR 20:5.5(a)[5] and 22.26(2),[6] by participating in a court hearing, reviewing the judgment, and being present when the quitclaim deed was delivered. His failure to send written notice to two of his clients regarding his disciplinary suspension, file the requisite substitution of attorney documents on behalf of the claimants he was representing, and file a truthful affidavit with the Board concerning his compliance with the notification requirements violated SCR 22.26(1).[7]*434 His misrepresentation in the affidavit of compliance he filed with the Supreme Court's Board violated SCR 20:3.3(a)(1).[8] His misrepresentations to the Board that he had not been present at the court hearing and his denial of having participated in negotiations in the estate matters and in the preparation or filing of briefs violated SCR 20:8.1(a)[9] and 8.4(c)[10] and 22.07(2).[11]
*435 ¶ 20. In an unrelated matter, the referee concluded that Attorney Ratzel represented a client whose interests were materially adverse to those of a former client in the same matter, in violation of SCR 20:1.9(a). There, a representative of a real estate company discussed with Attorney Ratzel in early October, 1995 a problem the company was having with a former employee, who had taken files and other documents with him when he left employment. Attorney Ratzel first told the representative that he did not want to get involved but eventually agreed that he would contact the former employee. The representative then gave him a list of the files the company was seeking to recover.
¶ 21. On or about November 1, 1995, Attorney Ratzel telephoned the former employee, identified himself as "Attorney Larry Ratzel," and said he was doing the company representative a favor by asking whether the former employee was going to keep the files or return them. The former employee replied that he would probably return the files by a specified date. Attorney Ratzel related that conversation to the company representative, who said he doubted the former employee would do as he said. When asked what else he intended to do, Attorney Ratzel said he would not render any additional assistance in the matter.
¶ 22. Some time in early November, the realty company retained an attorney to recover the files from the former employee, and an action was filed requesting, among other things, that a receiver be appointed to take possession of the files in question and that an injunction issue against the former employee. Upon receiving the complaint in that action, the former employee called Attorney Ratzel and asked if he would represent him. After reviewing the complaint, Attorney *436 Ratzel agreed to do so and then filed a memorandum in opposition to the appointment of a receiver and appeared on behalf of the former employee at a show cause hearing regarding the restraining order and injunction. On the day of that hearing, the realty company wrote Attorney Ratzel that it did not consent to his representation of the former employee and demanded that he withdraw.
¶ 23. As discipline for his misconduct in these matters, the referee recommended that Attorney Ratzel's license to practice law be suspended for two years, not the license revocation the Board had sought. Noting that in his responsive pleadings and in his testimony Attorney Ratzel had admitted a substantial portion of the allegations of the complaint, the referee said:
However, his acknowledgment and admissions are then subject to his interpretation and together with his definition of his activities, as supported by case law he cites, he arrives at a conclusion that he has in no way violated any Supreme Court Rule. The Referee finds the reasoning contorted. This argument by the Respondent is without substance; it is unsound and is a flimsy excuse for his actions. Notwithstanding, the Respondent did so testify under oath and has filed his memorandum brief in support of his position. He may well believe his argument for reasons not elicited; including his age, the many years of practice and location of his practice.
¶ 24. In this appeal, Attorney Ratzel first argued that the referee's conclusion that he acted in the presence of conflicting interests by representing the decedent's mother and other claimants in the estate matter was improper for the reason that the assignment of the Las Vegas properties did not in fact *437 transfer the decedent's interest to his daughter and son and, consequently, that property was an asset of the estate and continued to serve as collateral for notes the decedent had outstanding at the time of his death. Attorney Ratzel asserted that what he termed the "purported assignment" was merely a device to place the Las Vegas properties beyond the reach of creditors and, as such, amounted to a fraudulent conveyance. He insisted that he did not act in the presence of interests conflicting with either those of the daughter acting as personal representative or in her own capacity or with the decedent's, as the daughter did not have a valid claim in the Las Vegas properties by virtue of the assignment. On the same basis, he contended that his representation of the decedent's brother as successor personal representative in seeking to include those properties as an estate asset did not conflict with his representation of other claimants in the estate or with the interests of the decedent.
¶ 25. We find no merit to that argument, as the validity of the assignment of the properties is immaterial to the issue of whether Attorney Ratzel's representation of the decedent's mother and of the other claimants was in conflict with the interests of a former client from whom he had obtained information not only concerning the properties and the basis for the mother's claims against the estate but also in respect to his former client's intentions regarding the disposition of his estate following his death.
¶ 26. Moreover, as the referee repeatedly cautioned Attorney Ratzel in the course of the disciplinary hearing, the validity of the assignment of the properties was not at issue in this proceeding. The referee sustained each of the Board's numerous objections to *438 his attempts to present evidence on and argue the merits of that issue.
¶ 27. On the issue of whether the referee properly concluded that he engaged in the practice of law while his license was suspended, Attorney Ratzel contended that as he did not "represent" anyone in the matter at the time of the hearing on the mother's claims, he was not "present" and, therefore, his statement to that effect to the Board was not a misrepresentation. Further, he argued that in order to have been engaged in the practice of law at the time of that hearing, he would have had to be "representing" a client, and that representation would be evidenced by an "appearance" in the matter. He made the same argument in support of his contention that he did not violate the probate court's order that he refrain from further representation in the estate matter in any respect.
¶ 28. Attorney Ratzel's limited view of what constitutes engaging in the practice of law is unsupportable. The record demonstrates that he offered legal research, advice, and legal opinions to a party in respect to a number of issues in the estate litigation. Also, he prepared releases and obtained receipts on behalf of two claimants he represented in the estate, and the estate's payments made to those claimants went to and were deposited in Attorney Ratzel's client trust account.
¶ 29. In respect to the real estate company matter, Attorney Ratzel argued that the telephone call he made to the employee at the request of the company's representative was "gratuitous" and specifically limited to repeating the demands for the return of the files that already had been made. That, he asserted, did not constitute representation of the company with which *439 his subsequent representation of the employee would conflict. In support of his position, Attorney Ratzel pointed out that there was no litigation pending between the company and its employee when he telephoned the employee. He asserted further that no substitution of attorneys was required or sought when the company hired other counsel to commence an action, no one complained to the court of any conflict of interests in his representation of the employee, and he withdrew as counsel prior to any hearing on the merits of the litigation.
¶ 30. None of those arguments has merit. It was uncontroverted that following the telephone call he made to the employee to request the return of company files, Attorney Ratzel went to see the former employee to obtain his agreement for their return. Attorney Ratzel's eventual withdrawal from representation of the employee in the litigation neither prevented nor excused his professional misconduct in accepting and pursuing that representation.
¶ 31. Having determined that there is no merit to any of Attorney Ratzel's arguments in support of his contentions that the referee's conclusions regarding Attorney Ratzel's professional misconduct in these matters were improper, we adopt those conclusions and the findings of fact on which they are based. We turn then to the issue of what constitutes appropriate discipline to impose for that professional misconduct.
¶ 32. Attorney Ratzel took no position on the issue of discipline, arguing that the referee's conclusions should be reversed and the Board's complaint dismissed on the merits. In its cross-appeal, the Board contended that the seriousness of Attorney Ratzel's misconduct in the two matters considered in this proceeding, aggravated by the fact that he has been *440 disciplined three times for other professional misconduct, warrants the revocation of his license. In support of that contention, the Board noted Attorney Ratzel's continuous refusal to comply with the conflict of interests rules and with court ordersthat of the probate court and this court's license suspension order. In addition, the Board asserted, Attorney Ratzel repeatedly has demonstrated an unwillingness to accept any responsibility for his conduct, as evidenced by his belabored arguments to justify his actions.
¶ 33. We agree that by his disciplinary history Attorney Ratzel has established a marked willingness and disturbing propensity to ignore the ethical constraints we impose on attorneys when it suits his purposes. Also of concern is his resort to tortured semantics to justify his misconduct and evade responsibility for it. Yet, taking into consideration his age and his assertion in the course of this proceeding that he no longer is actively practicing law, we determine that the license suspension recommended by the referee is adequate to protect the public, the legal profession, and the courts from his further misconduct and to serve as a deterrent to others who would act similarly.
¶ 34. IT IS ORDERED that the license of Larry J. Ratzel to practice law in Wisconsin is suspended for a period of two years, effective July 7, 1998.
¶ 35. IT IS FURTHER ORDERED that within 60 days of the date of this order, Larry J. Ratzel pay to the Board of Attorneys Professional Responsibility the costs of this proceeding, provided that if the costs are not paid within the time specified and absent a showing to this court of his inability to pay the costs within that time, the license of Larry J. Ratzel to practice law in Wisconsin shall remain suspended until further order of the court.
*441 ¶ 36. IT IS FURTHER ORDERED that Larry J. Ratzel comply with the provisions of SCR 22.26 concerning the duties of a person whose license to practice law in Wisconsin has been suspended.
NOTES
[] Motion for reconsideration denied June 25, 1998.
[1] SCR 20:1.7 provides, in pertinent part:
Conflict of interest: general rule
(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless:
(1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and
(2) each client consents in writing after consultation.
[2] SCR 20:1.9 provides: Conflict of interest: former client
A lawyer who has formerly represented a client in a matter shall not:
(a) represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client consents in writing after consultation; or
(b) use information relating to the representation to the disadvantage of the former client except as Rule 1.6 would permit with respect to a client or when the information has become generally known.
[3] SCR 20:3.4 provides, in pertinent part:
Fairness to opposing party and counsel
A lawyer shall not:
. . .
(c) knowingly disobey an obligation under the rules of a tribunal except for an open refusal based on an assertion that no valid obligation exists;
[4] SCR 20:1.4 provides, in pertinent part:
Communication
. . .
(b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.
[5] SCR 20:5.5 provides, in pertinent part:
Unauthorized practice of law
A lawyer shall not:
(a) practice law in a jurisdiction where doing so violates the regulation of the legal profession in that jurisdiction;
[6] SCR 22.26 provides, in pertinent part:
Activities on revocation or suspension of license.
. . .
(2) A suspended or disbarred attorney may not engage in the practice of law or in any law work activity customarily done by law students, law clerks or other paralegal personnel, except that he or she may engage in law related work for a commercial employer not itself engaged in the practice of law.
[7] SCR 22.26 provides, in pertinent part:
Activities on revocation or suspension of license.
(1) (a) A disbarred or suspended attorney on or before the effective date of disbarment or suspension shall:
1. Notify, by certified mail, all clients being represented in pending matters of the disbarment or suspension and consequent inability to act as an attorney after the effective date of the disbarment or suspension.
2. Advise the clients to seek legal advice of the client's own choice elsewhere.
(b) A disbarred or suspended attorney with a matter pending before a court or administrative agency shall promptly notify the court or administrative agency and the attorney for each party of the disbarment or suspension and consequent inability to act as an attorney after the effective date of the disbarment or suspension. The notice must identify the successor attorney or, if there is none at the time of the notice, state the place of residence of the client of the disbarred or suspended attorney.
[8] SCR 20:3.3 provides, in pertinent part:
Candor toward the tribunal
(a) A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal;
[9] SCR 20:8.1 provides, in pertinent part:
Bar admission and disciplinary matters
An applicant for admission to the bar, or a lawyer in connection with a bar admission application or in connection with a disciplinary matter, shall not:
(a) knowingly make a false statement of material fact;
[10] SCR 20:8.4 provides, in pertinent part:
Misconduct
It is professional misconduct for a lawyer to:
. . .
(c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation.
[11] SCR 22.07 provides, in pertinent part:
Investigation.
. . .
(2) During the course of an investigation, the administrator or a committee may notify the respondent of the subject being investigated. The respondent shall fully and fairly disclose all facts and circumstances pertaining to the alleged misconduct or medical incapacity within 20 days of being served by ordinary mail a request for response to a grievance. The administrator in his or her discretion may allow additional time to respond. Failure to provide information or misrepresentation in a disclosure is misconduct. The administrator or committee may make a further investigation before making a recommendation to the board.
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United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
June 24, 2009
Before
DANIEL A. MANION, Circuit Judge
DIANE P. WOOD, Circuit Judge
JOHN DANIEL TINDER, Circuit Judge
Nos. 07‐3605 & 08‐1224 Appeals from the United States
District Court for the Western
DENNIS HECKER, et al., District of Wisconsin
Plaintiffs‐Appellants,
No. 06 C 719
v.
John C. Shabaz, Judge.
DEERE & COMPANY, FIDELITY
MANAGEMENT TRUST CO., and
FIDELITY MANAGEMENT &
RESEARCH CO.,
Defendants‐Appellees.
O R D E R
Appellants filed their Petition for Panel Rehearing and Petition for Rehearing En Banc
on March 9, 2009. Appellee Deere & Company and Appellees Fidelity Management Trust
Company and Fidelity Management & Research Company filed their Answers to the Petition
on April 6, 2009. In addition, three amicus curiae briefs in support of rehearing or rehearing en
banc were filed in conjunction with the Petition: one from the Secretary of Labor (filed March
20, 2009), one from the AARP and other groups (filed March 18, 2009), and one from a group
of law professors (filed March 20, 2009). No judge1 asked for a vote on the petition for rehearing
en banc, and all members of the panel have voted to deny the petition for rehearing, with the
following addition to the original opinion, Hecker v. Deere & Co., 556 F.3d 575 (7th Cir. 2009):
The Secretary of Labor has made a number of points in her amicus brief that deserve a
1
Judge Joel M. Flaum and Judge Ilana Diamond Rovner took no part in the
consideration of this matter.
Nos. 07‐3605 and 08‐1224 2
brief response. First, she argues that the panel has erred by failing to give appropriate deference
to her interpretation of the regulation implementing 29 U.S.C. § 1104(d), 29 C.F.R. § 2550.404c‐1.
But, as the Secretary herself acknowledges, the panel did not ignore any language in the
regulation proper. Instead, it did not give the weight that the Secretary believes is due to some
language in a footnote to the preamble to the regulation. (We are speaking here of the version
of the regulation that was in force at the time relevant to this suit; it should go without saying
that the Secretary is free to propose and enact new regulations addressed more specifically to
the way in which choice of investment options in a plan relates to the safe harbor provision, if
she believes that this would be appropriate.) In her brief, the Secretary explains that she
presently “interprets her regulation to mean that, even if the plan otherwise qualifies as a section
404(c) plan, the fiduciary is not relieved by 404(c) from liability for plan losses resulting from
the imprudent selection and monitoring of an investment option offered by the plan . . . .” As
support for that statement, she cites 56 Fed. Reg. 10724, 10732 n.21 (Mar. 13, 1991); DOL Opinion
Letter No. 98‐04A, 1998 WL 326300 at *3 n.1 (May 28, 1998); DOL Information Letter to Douglas
O. Kant, 1997 WL 1824017 at *2 (Nov. 26, 1997) (Kant Letter). This is enough, she asserts, to make
that proposition a rule, entitled to deference under Chevron USA Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837, 842‐43 (1984), rather than a more informal statement of administrative
practice, entitled only to respect under the standards of United States v. Mead Corp., 533 U.S. 218,
229‐30 (2001), which in turn relies on Skidmore v. Swift & Co., 323 U.S. 134 (1944).
With respect, we cannot agree with the Secretary that the footnote in the preamble is
entitled to full Chevron deference. The panel did defer to the Secretary’s concerns, to the extent
that it refrained from making any definitive pronouncement on “whether the safe harbor applies
to the selection of investment options for a plan.” Hecker, 556 F.3d at 589. Instead, as we explain
further in this order, we left this area open for future development, whether on the basis of a
different set of pleadings, or on the basis of a regulation directed to this issue. The Secretary
admits that the panel’s primary holding – that there was no duty to scour the market to find the
fund with the lowest imaginable fees, and that the fees themselves in the Funds identified in the
complaint could not be deemed imprudent because they were offered at the same prices to the
general public – does not call into question the validity of even the preamble to the Secretary’s
regulation, much less the regulation taken as a whole. Thus, her real quibble is with the panel’s
alternate holding that the complaint the court was evaluating contained enough information to
warrant the conclusion that Deere was entitled to the safe harbor defense. In our view, the
Secretary’s concern is more hypothetical than real. She fears that some case in the future may
arise in which a Plan fiduciary acts imprudently by selecting an overpriced portfolio of funds,
and that this opinion will somehow immunize the fiduciary from accountability for that
decision.
The panel’s opinion, however, stands for no such broad proposition. It was limited to the
complaint before the court, as supplemented by the materials the panel found were properly
before the district court. Applying the pleading standards enunciated in Bell Atlantic Corp. v.
Twombly, 550 U.S. 544 (2007), we concluded that these plaintiffs failed to state a claim for the
Nos. 07‐3605 and 08‐1224 3
kind of fiduciary misfeasance the Secretary describes. At the time we wrote, the Court had not
yet handed down Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009). Iqbal reinforces Twombly’s message that
“[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court
to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at
1949. The Court explained further that “where the well‐pleaded facts do not permit the court to
infer more than the mere possibility of misconduct, the complaint has alleged – but it has not
‘show[n]’ – ‘that the pleader is entitled to relief.’ Fed. Rule Civ. Proc. 8(a)(2).” Id. at 1950.
The Secretary also fears that our opinion could be read as a sweeping statement that any
Plan fiduciary can insulate itself from liability by the simple expedient of including a very large
number of investment alternatives in its portfolio and then shifting to the participants the
responsibility for choosing among them. She is right to criticize such a strategy. It could result
in the inclusion of many investment alternatives that a responsible fiduciary should exclude. It
also would place an unreasonable burden on unsophisticated plan participants who do not have
the resources to pre‐screen investment alternatives. The panel’s opinion, however, was not
intended to give a green light to such “obvious, even reckless, imprudence in the selection of
investments” (as the Secretary puts it in her brief). Instead, the opinion was tethered closely to
the facts before the court. Plaintiffs never alleged that any of the 26 investment alternatives that
Deere made available to its 401(k) participants was unsound or reckless, nor did they attack the
BrokerageLink facility on that theory. They argued – and especially in their Petition for
Rehearing they continue to argue – that the Plans were flawed because Deere decided to accept
“retail” fees and did not negotiate presumptively lower “wholesale” fees. The opinion discusses
a number of reasons why that particular assertion is not enough, in the context of these Plans,
to state a claim, and we adhere to that discussion.
We add another point that was raised earlier but that we did not mention in the opinion:
the complaint is silent about the services that Deere participants received from the company‐
sponsored plans. It would be one thing if they were treated exactly like all other retail market
purchasers of Fidelity mutual fund shares; it would be quite another if, for example, they
received extra investment advice from someone dedicated to the Deere accounts, or if they
received other extra services. If the Deere participants received more for the same amount of
money, then their effective cost of participation may in fact have approached wholesale levels.
We return, therefore, to the general point made in the opinion: this complaint, alleging that
Deere chose this package of funds to offer for its 401(k) Plan participants, with this much variety
and this much variation in associated fees, failed to state a claim upon which relief can be
granted.
We therefore DENY the Petition for Rehearing and Petition for Rehearing En Banc.
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201 N.W.2d 404 (1972)
John SANDEN and Anna B. Sanden, Plaintiffs and Appellants,
v.
Arland G. HANSON and Evelyn Hanson, Defendants and Respondents.
Civ. Nos. 8818, 8819.
Supreme Court of North Dakota.
August 31, 1972.
Rehearing Denied November 1, 1972.
*406 Stokes, Vaaler, Gillig, Warcup & Woutat, Grand Forks, for plaintiffs and appellants.
Ella Van Berkom, Minot, for defendants and respondents.
PAULSON, Judge.
This is an appeal by the plaintiffs, John Sanden and Anna B. Sanden, from judgments of the District Court of Bottineau County, dismissing their complaints in two actions which were consolidated for trial. The plaintiffs have demanded a trial de novo.
The first action was initiated on July 31, 1968, by summons and complaint, which complaint alleged that on September 10, 1965, the defendants, Arland G. Hanson and Evelyn Hanson, became indebted to the Sandens by reason of a promissory note executed on September 10, 1965. The complaint further alleged that $3,100 had been paid on the note by the Hansons and that $6,900 was still owing.
In response to this complaint the Hansons filed an answer and counterclaim alleging that the Sandens were entitled to no payments on the note described in the complaint. The transcript of the trial and the memorandum opinion of the district court reveal that the basis for the Hansons' denial of liability on the note dated September 10, 1965, was the existence of a "Standby *407 Agreement" entered into by the Sandens, the Hansons, and the Small Business Administration acting through the First National Bank in Bottineau, North Dakota.
The promissory note, which is the basis of the Sandens' complaint, and the Standby Agreement, which is the basis of the Hansons' answer and counterclaim, are the result of a series of dealings between the Sandens and the Hansons whereby the Hansons purchased a children's clothing store from the Sandens.
During the summer of 1965, after the Hansons had agreed to purchase the Sandens' business for a total price of $25,000 ($15,000 was allocated to inventory and the remainder, $10,000, was allocated to fixtures), the Sandens and the Hansons decided to look for methods of financing the sale. To this end the Hansons arranged a Small Business Administration loan for $15,000 through the First National Bank in Bottineau. However, before the SBA would make the loan to the Hansons, it required that the Hansons, the Sandens, and the SBA enter into a Standby Agreement, the purpose of which was to ensure that the SBA loan of $15,000 would be repaid before any payments (with the exception of some payments allowed by the Standby Agreement) were made by the Hansons to the Sandens on the $10,000, which part of the total purchase price of $25,000 would still be owing by the Hansons to the Sandens. After the Sandens and the Hansons signed the Standby Agreement, the SBA, acting through the First National Bank in Bottineau, loaned the $15,000 to the Hansons. This amount was then paid to the Sandens as payment for the inventory in the store, thereby leaving $10,000 still owing the Sandens for the store fixtures.
On September 10, 1965, the same day that the SBA made the loan of $15,000 to the Hansons pursuant to the Standby Agreement, the Hansons and the Sandens executed a promissory note for the $10,000 still owing on the total purchase price of $25,000. Pursuant to the note, the Hansons made monthly installment payments totaling $3,100 until, because of financial difficulties encountered in the conduct of the children's clothing store business, they were unable to make any further payments to the Sandens. Approximately three months after the discontinuation of payments on the note, the Sandens commenced this action for the balance due.
The primary issue raised by the Sandens on this appeal from the dismissal of their action on the promissory note is the extent to which the terms of the Standby Agreement may affect or modify the terms of the promissory note executed by the Hansons and payable to the Sandens.
The Standby Agreement provides, in pertinent part, as follows:
". . . Borrower, John & Anna B. Sanden, Bottineau, North Dakota (hereinafter called `Standby Creditor') . . covenant to and with each other, and to and with Bank and SBA as follows:
......
"2. Without the prior written consent of Bank and SBA, Standby Creditor. . . will take no action (a) to assert, collect or enforce all, or any part of, the Claim . . . [The Claim being defined by the Standby Agreement as the $10,000 still owed by the Hansons to the Sandens on the total purchase price of $25,000.]
......
"9. This Standby Agreement and all obligations hereunder or with respect hereto, of . . . Standby Creditor. . . shall continue in full force and effect until payment in full of the indebtedness evidenced by the Note . . . [The Note is one for $15,000 executed by the Hansons and payable to the First National Bank in Bottineau in consideration of the $15,000 loaned by the Bank to the Hansons.]" [Emphasis added.]
*408 The extent, if any, to which the above provisions of the Standby Agreement may affect or modify the terms of the promissory note which is the basis of this action is specifically dealt with in § 41-03-19 of the North Dakota Century Code, which, in part, provides:
41-03-19. (3-119) Other writings affecting instrument.1. As between the obligor and his immediate obligee or any transferee the terms of an instrument may be modified or affected by any other written agreement executed as a part of the same transaction . . ."
Section 41-03-19, N.D.C.C., applies to negotiable instruments the general rule (12 Am.Jur.2d, Bills and Notes § 1244) that writings executed as part of the same transaction are to be read together as a single agreement because, as between the immediate parties, a negotiable instrument is merely a contract, and is no exception to the principle that the courts will look to the entire contract in writing. 2 U.L.A., Uniform Commercial Code § 3-119, Comment No. 3.
Thus, since the issue of the terms of the promissory note is between the obligors, the Hansons, and their immediate obligees, the Sandens, and since the other agreement, the Standby Agreement, is in writing, § 41-03-19, N.D.C.C., requires a modification of the terms of the note if the Standby Agreement and the note were executed as parts of the same transaction. The meaning of the phrase "as a part of the same transaction" (§ 41-03-19, N.D. C.C.) has been stated as "so proximate in time as to grow out of, elucidate and explain the quality and character of the transaction, or an occurrence within such time as would reasonably make it part of the transaction". Elsberry Equipment Company v. Short, 63 Ill.App.2d 336, 211 N.E.2d 463, 468 (1965). Certainly the Standby Agreement executed on August 3, 1965, and the promissory note executed on September 10, 1965, and payable to the Sandens, can be said to have arisen out of the same transaction as that phrase has been defined above, since they were both executed as part of a plan for financing the sale of the children's clothing store and since a reading of the provisions of the Standby Agreement indicates that it was intended to limit the right of the Sandens to assert the claim for the $10,000 still owing after September 10, 1965, even if that assertion were to take the form of securing a judgment on a promissory note evidencing the claim.
Thus, § 41-03-19, N.D.C.C., as applied to this case, requires that the terms of the promissory note, which is the basis of this action, be modified to conform to the provisions of the Standby Agreement entered into between the Sandens, the Hansons, and the SBA. Such a modification requires that this Court add a provision to the note, the effect of which would be to prevent the payees, the Sandens, from proceeding to enforce the note by securing a judgment on it until the written consent of the SBA has been obtained as called for in paragraph 2 of the Standby Agreement, or until the payment in full of the $15,000 owing to the First National Bank in Bottineau. This modification of the note is consistent with the intention of the Sandens and the Hansons when they entered into the arrangement for the financing of the sale of the children's clothing store which was to allow the Hansons to discharge their obligation under the SBA loan before being burdened by any action by the Standby Creditors on their claim for $10,000.
Having found that the promissory note and the Standby Agreement, when read together, prevent the Sandens from securing a judgment on the note until the written consent of the SBA to do so has been obtained or until the $15,000 owing to the Bank has been fully paid, we conclude that since neither of these conditions has been met, the action on the note by the Sandens was properly dismissed.
The second action was initiated on October 25, 1968, by summons and complaint, which complaint alleged that the Sandens *409 had leased to the Hansons the premises on which the children's store business was conducted for a term of five years commencing on July 1, 1965, and expiring on June 30, 1970, at a monthly rental of $125 per month. The complaint further alleged that the Hansons took possession of the leased premises and paid the monthly rent up to and including the month of June 1968, but that no rent had been paid after June 1968.
The Hansons answered the complaint by admitting that they had signed the lease agreement described in the complaint and that they had not paid any rent under the lease since July 10, 1968. However, they further alleged as an affirmative defense that they surrendered the leased premises to the Sandens on or about July 1, 1968, and that the surrender of the premises was accepted by the Sandens on or about July 6, 1968, as a result of their beneficial use of the premises.
The district court found that the leased premises had been surrendered by the Hansons and that the Sandens accepted the surrender by using the premises to their benefit since the surrender. Subsequently, the district court entered a judgment that the Sandens' action on the lease should be dismissed. From this adverse judgment the Sandens have appealed.
The issue presented by this appeal is whether or not the written lease agreement entered into between the Sandens and the Hansons was terminated on or about July 6, 1968, after the Hansons allegedly surrendered the leased premises and the Sandens allegedly accepted that surrender.
Section 47-16-14, N.D.C.C., provides that:
"When a lease of real property terminates.The leasing of real property terminates:
......
"2. By the mutual consent of the parties;. . ."
The mutual consent of the parties required by § 47-16-14 may be express or implied from the conduct of the parties. Thus a lease may be terminated or surrendered either by express agreement or by operation of law, whereby the surrender results from acts of the parties to the lease which imply mutual consent to the termination. Casper Nat. Bank v. Curry, 51 Wyo. 284, 65 P.2d 1116 (1937); Beall v. White, 94 U.S. 382, 24 L.Ed. 173 (1876); 49 Am.Jur. 2d, Landlord and Tenant § 1099.
In an action such as we have here to recover rent due under a lease, the defendant must plead the affirmative defense of surrender of the lease by operation of law (49 Am.Jur.2d, Landlord and Tenant § 637) and must prove the elements of that defense. 49 Am.Jur.2d supra, § 638. Since the Hansons have properly pleaded the defense of surrender by operation of law, our responsibility on this appeal, where a trial de novo has been demanded, is to determine if the Hansons have proved all the necessary elements of that defense.
The initial element of the affirmative defense of surrender by operation of law which must be proved by the Hansons is that they intended to surrender the leased premises to the Sandens. This requirement has been described by this Court, in Hermon Hanson Oil Syndicate v. Bentz, 77 N.D. 20, 40 N.W.2d 304, 306 (1949):
"Unless it appears either by direct evidence or preponderant circumstances that the lessee intended to abandon his lease, the courts will not declare it terminated on that ground. Intention of the lessee to abandon . . . [a] lease is a requisite."
The only act by the Hansons which may be considered as evidence of their intent to surrender the leased premises occurred on July 1, 1968, when Mrs. Hanson left the keys to the leased premises in the cash register. While this act is not conclusive evidence of an intention to surrender the leased premises, we believe that *410 its weight is greatly increased by the circumstances under which the keys to the premises were relinquished. The business for which the Hansons had leased the premises had been terminated and the inventory and fixtures which were once owned by the Hansons prior to July 1, 1968, had all been sold to other parties. Thus, on July 1, 1968, the Hansons had no property of their own in the store and no plans for any future use of the premises. Under these circumstances, we find that the act of leaving the keys in the cash register on the leased premises is persuasively indicative of the Hansons' intention to surrender the leased premises.
The second element of the defense of surrender and acceptance which the Hansons must prove is the acceptance of the surrender by the Sandens. This acceptance may be implied where the landlord takes possession of the premises and uses them for his own purposes. Anderson v. Andy Darling Pontiac, 257 Wis. 371, 43 N.W.2d 362 (1950); 52 C.J.S. Landlord and Tenant § 493.
The record indicates that the SBA took possession of the fixtures which the Hansons had purchased from the Sandens for $10,000, and sold them to the Sandens in an attempt to recover any money which was still owing on the $15,000 SBA loan. The record further indicates that the fixtures, now owned by the Sandens, have remained on the leased premises since July 1, 1968, the date of their sale to the Sandens.
While we are not bound by the findings of the district court on a trial de novo, they are entitled to appreciable weight. Automobile Club Insurance Co. v. Hoffert, 195 N.W.2d 542 (N.D.1972), and cases cited therein. In light of the use of the leased premises by the Sandens to store their fixtures, we conclude that the district court was correct in finding that the surrender of the leased premises was accepted by the Sandens through their continuing use of the property to their benefit.
Having found that the Hansons have met their burden of proof with respect to the elements of the defense of surrender and acceptance of the lease, we conclude that the district court properly dismissed the Sandens' action for rent due under the lease.
The judgment of the district court in both actions is affirmed.
STRUTZ, C. J., and ERICKSTAD, TEIGEN and KNUDSON, JJ., concur.
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52 N.Y.2d 943 (1981)
Lily Dale Assembly, Inc., Appellant,
v.
County of Chautauqua, Defendant, and Gregory D. Josephson, Respondent.
Court of Appeals of the State of New York.
Argued January 13, 1981.
Decided February 12, 1981.
Bruce K. Carpenter for appellant.
Philip A. Erickson for respondent.
Robert Abrams, Attorney-General (Stanley Fishman and Shirley Adelson Siegel of counsel), pro se.
Concur: Chief Judge COOKE and Judges JASEN, GABRIELLI, JONES, WACHTLER, FUCHSBERG and MEYER.
Order affirmed, with costs, for reasons stated in the memorandum at the Appellate Division (72 AD2d 950; see, also, Real Property Tax Law, § 504, subd 4).
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349 F.Supp.2d 1073 (2004)
BRAD FOOTE GEAR WORKS, INC., an Illinois corporation, Plaintiff,
v.
DELTA BRANDS, INC., a Texas corporation, Defendant.
No. 03 C 7023.
United States District Court, N.D. Illinois, Eastern Division.
September 10, 2004.
*1074 James Dominick Adducci, Marshall Lee Blankenship, Adducci, Dorf, Lehner, Mitchell & Blankenship, P.C., Chicago, IL, for Plaintiff.
Randall Edmund Server, Tucker Bower Robin & Romanek, Chicago, IL, for Defendant.
MEMORANDUM OPINION AND ORDER
MORAN, Senior District Judge.
Plaintiff Brad Foote Gear Works, Inc. (BFG) brought this action against Delta Brands, Inc. (Delta) for breach of contract and account stated. In a Memorandum Opinion and Order dated August 5, 2004, we granted plaintiff summary judgment on its account-stated claim and denied it on the breach of contract claim. Because plaintiff sought the same relief for both counts, it moved for dismissal of the breach of contract claim and entry of final judgment on the account-stated claim. Defendant has now brought a motion to reconsider our grant of summary judgment. The motion is denied.
Motions for reconsideration serve to correct manifest errors of law or fact or to present newly discovered evidence. Rothwell Cotton Co. v. Rosenthal & Co., 827 F.2d 246, 251 (7th Cir.1987)(citing Keene Corp. v. International Fidelity Insurance Co., 561 F.Supp. 656 (N.D.Ill. 1982)). Defendant argues that the court erred in interpreting two cases on which it relied in reaching its decision on plaintiff's summary judgment motion. First, defendant maintains that Fabrica de Tejidos Imperial, S.A. v. Brandon Apparel Group, Inc., 218 F.Supp.2d 974 (N.D.Ill.2002) is distinguishable from the case before us and provides no support for our ruling. In Fabrica de Tejidos Imperial, S.A., plaintiff brought claims of breach of contract and account stated against a defendant for failure to pay for delivered goods. The court held that there was no genuine issue of material fact as to the breach of contract claim and that plaintiff was entitled to *1075 summary judgment. Id. at 978. After granting summary judgment as to the contract claim, the court defined an "account stated" and discussed the elements of such a claim. Id. at 978-79. Ultimately, the court dismissed the count as moot because "it is merely an alternate theory for proving the same damages asserted in a breach of contract claim." Id. Our opinion granting plaintiff summary judgment cited Fabrica de Tejidos Imperial, S.A. for its definition and explanation of an account stated. The court's holding did not rest on supposed similarities with the facts or outcome in that case. Though defendant makes much of the fact that the court in Fabrica de Tejidos Imperial, S.A, found no genuine issue of material fact as to the breach of contract claim, while in this case BFG conceded there was a disputed issue of fact as to its contract claim, that distinction in no way precluded granting summary judgment on the account-stated claim.
Defendant next asserts that summary judgment was improper because the existence of an account stated was in dispute and was an issue to be decided by a trier of fact. Defendant cites W.E. Erickson Construction, Inc. v. Congress-Kenilworth Corp., 132 Ill.App.3d 260, 267, 87 Ill.Dec. 536, 477 N.E.2d 513, 519 (1st Dist. 1985), which we also cited in our opinion, in support of its argument. In that case, the court correctly stated, "[W]here the existence of an account stated is disputed, the issue of whether it exists is a fact question which, in a bench trial is properly resolved by the trial court." Id. at 268, 87 Ill.Dec. 536, 477 N.E.2d 513. However, as pointed out in our previous opinion, the affidavits of defendant's executive vice-president, dated July 26, 2004, do not create a dispute regarding the existence of an account stated. The court in W.E. Erickson Construction, Inc. noted, "Where a statement of account is rendered by one party to another and is retained by the latter beyond a reasonable time without objection, this constitutes a recognition by the latter of the correctness of the account and establishes an account stated." Id. at 267, 87 Ill.Dec. 536, 477 N.E.2d 513. Defendant provided no evidence that it objected within a reasonable time to its president's statement of account to BFG, and therefore it did not establish a genuine issue of material fact regarding the existence of an account stated.
CONCLUSION
For the foregoing reasons, defendant's motion to reconsider is denied.
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548 So.2d 1365 (1989)
AmSOUTH BANK, N.A.
v.
RELIABLE JANITORIAL SERVICE, INC., et al.
No. 87-924.
Supreme Court of Alabama.
June 16, 1989.
Rehearing Denied July 14, 1989.
Broox G. Holmes and Edward A. Dean of Armbrecht, Jackson, DeMouy, Crowe, Holmes & Reeves, Mobile, for appellant.
*1366 Irvin Grodsky of Grodsky and Mitchell and Wilson M. Hawkins, Jr., Mobile, for appellees.
ALMON, Justice.
Reliable Janitorial Service, Inc., Reliable Carpet Cleaning, Inc., and Sentry Mutual Insurance Company ("Sentry") filed an action against AmSouth Bank, N.A. ("AmSouth"). The two "Reliable" corporations (which shall sometimes be referred to together as "Reliable") alleged that AmSouth converted checks made payable to the corporations and that AmSouth negligently or willfully and wantonly diverted the funds from checks made payable to the corporations to some other entity, not Reliable; Sentry claimed that it would be subrogated to a recovery by Reliable. The trial court entered summary judgment for the plaintiffs on the conversion claims and made the judgment final pursuant to Rule 54(b), A.R.Civ.P.
Reliable Janitorial Service, Inc., and its subsidiary, Reliable Carpet Cleaning, Inc., have a bank account with AmSouth; the claims of those two plaintiffs are identical. Reliable has about 150 employees, most of whom work providing janitorial services; Reliable also employed at the time of the transactions involved in this lawsuit a bookkeeper/office manager named Rosa Pennington. Pennington was the only full-time employee in Reliable's office, and Pennington managed many day-to-day financial matters for Reliable. Pennington deposited checks made payable to Reliable, but did not have authority to write checks on Reliable's account. AmSouth sent monthly statements to Reliable showing deposits to and withdrawals from Reliable's account. Reliable and AmSouth dispute how active a role Reliable's president had in managing Reliable's financial affairs.
Beginning in January 1985, Pennington obtained counter deposit slips from AmSouth. She wrote on the deposit slips that the depositor was "Reliable Janitorial Service, Inc.," or "Reliable Carpet Cleaning, Inc.," but, in the space for the account number, Pennington wrote the account number for her own personal account with AmSouth. She stamped checks, which were made payable to "Reliable Janitorial Service, Inc.," or "Reliable Carpet Cleaning, Inc.," with the indorsement "For Deposit Only, Reliable Janitorial Service, Inc.," or "For Deposit Only, Reliable Carpet Cleaning, Inc." Reliable alleges that over an 11-month period Pennington used 80 of the counter deposit slips described above to deposit 169 checks so indorsed; Reliable further alleges that AmSouth credited the deposits to Pennington, not Reliable. Pennington, since then, has spent all the funds that she diverted to her account.
Reliable filed this action against AmSouth, alleging conversion as well as negligent or willful and wanton conduct in depositing the funds into Pennington's account. Reliable had an employee theft insurance policy with Sentry, and Sentry paid $25,000, the limit of its liability under the policy, to Reliable to reimburse Reliable for the funds Pennington diverted to her account. Sentry joined Reliable's suit, alleging it was a subrogee to the extent of its payment to Reliable. AmSouth asserted both the common law defense of account stated and the defense found in Ala.Code 1975, § 7-3-406. The trial court rejected both of these defenses, and, after fairly extensive discovery, the trial court granted Reliable's motion for summary judgment on the conversion claims. The trial court entered final judgment for Reliable Janitorial Service, Inc., for $43,271.57, for Reliable Carpet Cleaning, Inc., for $1,444.42, and for Sentry for $26,925.59.
AmSouth's first issue is whether the trial court erred by granting summary judgment on Reliable's conversion claim. To examine this issue, we look to the statutes concerning restrictive indorsements and those concerning conversion. There is no dispute that Pennington stamped the checks whose funds she misdirected with the indorsement "For Deposit Only, Reliable Janitorial Service, Inc.," or "For Deposit Only, Reliable Carpet Cleaning, Inc." Sections 7-3-205 and 7-3-206, Ala.Code 1975, address such indorsements. Section 7-3-205 provides:
*1367 "§ 7-3-205. Restrictive indorsements.
"An indorsement is restrictive which either:
"(a) Is conditional; or
"(b) Purports to prohibit further transfer of the instrument; or
"(c) Includes the words `for collection,' `for deposit,' `pay any bank,' or like terms signifying a purpose of deposit or collection; or
"(d) Otherwise states that it is for the benefit or use of the indorser or of another person."
Undeniably, the indorsements Pennington stamped on the checks were restrictive indorsements within the meaning of § 7-3-205(c).
Section 7-3-206 addresses the effect of such an indorsement, and, pertinently, that section provides:
"(3) Except for an intermediary bank, any transferee under an indorsement which is conditional or includes the words `for collection,' `for deposit,' `pay any bank,' or like terms (subparagraphs (a) and (c) of section 7-3-205) must pay or apply any value given by him for or on the security of the instrument consistently with the indorsement...." (Emphasis added.)
Thus, under the exact words of the statute, AmSouth must apply the value of Reliable's checks consistently with the indorsement, i.e., for deposit to Reliable's account.
Construing Ala.Code 1975, § 7-3-419, the trial court found AmSouth liable for conversion as a matter of law. The pertinent portions of § 7-3-419 provide:
"(1) An instrument is converted when:
". . . .
"(b) Any person to whom it is delivered for payment refuses on demand either to pay or to return it....
". . . .
"(4) An intermediary bank or payor bank which is not a depositary bank is not liable in conversion solely by reason of the fact that proceeds of an item indorsed restrictively (sections 7-3-205 and 7-3-206) are not paid or applied consistently with the restrictive indorsement of an indorser other than its immediate transferor." (Emphasis added.)
The trial court entered summary judgment for Reliable on its conversion claim based on § 7-3-419(1)(b). That section addresses conversion by "Any person to whom [an instrument] is delivered for payment"; in this situation, AmSouth was a depositary bank, not a drawee/payor bank, which § 7-3-419(1)(b) addresses.[1] Section 7-3-419(1)(b) thus does not address this fact situation, where AmSouth, for the purposes of this lawsuit, served solely as a depositary bank. Accordingly, the trial court should not have based the summary judgment for Reliable on § 7-3-419(1)(b).
Nevertheless, § 7-3-419(4) applies in this fact situation. That section provides that intermediary or payor banks that are not depositary banks are not liable in coversion "solely by reason of the fact that proceeds of an item indorsed restrictively (§§ 7-3-205 and 7-3-206) are not paid or applied consistently with the restrictive indorsement." The inference from that section is that banks that are depositary banks may be liable in conversion[2] "solely by reason of the fact that proceeds of an item indorsed restrictively (Section 7-3-205 and Section 7-3-206) are not paid or applied consistently with the restrictive indorsement." *1368 This conclusion, that AmSouth may be liable in conversion, enforces the mandate from 7-3-205 and 7-3-206 that AmSouth must apply the value of Reliable's checks consistently with the indorsement. Accordingly, the conclusion is consistent with the general statutory scheme of Title 7, Article 3. For the foregoing reasons, the first issue presents no basis for reversal.
AmSouth also argues that the trial court erred by failing to allow AmSouth to assert the common law defense of account stated. The trial court held that Ala.Code 1975, § 7-4-406(1), embodies the full extent of the doctrine of account stated regarding bank deposits and collections. That section provides:
"§ 7-4-406. Customer's duty to discover and report unauthorized signature or alteration.
"(1) When a bank sends to its customer a statement of account accompanied by items paid in good faith in support of the debit entries or holds the statement and items pursuant to a request or instructions of its customer or otherwise in a reasonable manner makes the statement and items available to the customer, the customer must exercise reasonable care and promptness to examine the statement and items to discover his unauthorized signature or any alteration on an item and must notify the bank promptly after discovery thereof."
Ruling on this section, the trial court wrote:
"The Bank also argues that the Plaintiffs are estopped or foreclosed by the common law doctrine of account stated. The Court holds, however, that Code Section 7-4-406 embodies the full extent of the doctrine of account stated regarding bank deposits and collections. This Code section restricts the doctrine to `statement[s] of account accompanied by items paid in good faith in support of the debit entries' and requires the customer `to examine the statement and items to discover his unauthorized signature or any alteration on an item.'"
(Emphasis added.) Based on this interpretation of the statute, the trial court held that AmSouth was not entitled to a defense of account stated.
The Court of Civil Appeals properly described the purpose of § 7-4-406 in East Gadsden Bank v. First City National Bank, 50 Ala.App. 576, 581, 281 So.2d 431 (1973). There, the court wrote:
"The purpose of the section is clearly to define the responsibility of a customer to its drawee bank in respect to examining its statement of account from the bank and promptly discovering and reporting any item which may contain an instrument altered after being written and delivered, or which has been paid upon the forged signature of the customer."
(Emphasis added.) As East Gadsden Bank states, § 7-4-406 addresses the relationship between a drawer and a payor/drawee bank. Section 7-4-406 governs a customer's duty to discover unauthorized signatures or alterations on items drawn on his account. Subsection (2) states the consequences if a customer "failed with respect to an item to comply with the duties imposed on the customer by subsection (1)" (emphasis added). This section refers repeatedly to items paid by the bank. Accordingly, § 7-4-406 does not, by its terms, apply to a depositary bank, which AmSouth is in these transactions, or to deposits that are never credited to the account. The trial court's holding that § 7-4-406 embodies the full extent of the common law defense of account stated is, therefore, not strictly correct.
Nevertheless, this error by the trial court does not necessarily mean that AmSouth is entitled to the defense. AmSouth argues that the account stated defense is applicable because of Ala.Code 1975, § 7-1-103. That section provides:
"Unless displaced by the particular provisions of this title, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating *1369 or invalidating cause, shall supplement its provisions."
Accordingly, we must decide whether account stated is an appropriate common law defense, which we should accept through the statutory permission of § 7-1-103, to Reliable's conversion action against AmSouth.
The common law defense of account stated was accepted in McCarty v. First National Bank of Birmingham, 204 Ala. 424, 85 So. 754 (1920). The defense, were we to permit it in this situation, would require AmSouth to prove that had Reliable checked its bank statements in a reasonable time after AmSouth delivered the bank statements, Reliable should have recognized that its account, as reflected by the bank statements, contained less money than it should have. Boaz Bank v. Nailer, 213 Ala. 314, 104 So. 793 (1925). Reliable must have accepted the bank statement "with knowledge of its purport" and must have "acquiesced in its correctness." McCarty, 204 Ala. at 427, 85 So. at 757. If the jury accepts this defense, then AmSouth's statement of the account is considered to be a proper and true statement of the amount of money due to be in the account at the time the statement reflects. McCarty, supra; Boaz Bank, supra. Considering that the transactions that serve as the basis for this lawsuit occurred over an 11-month period, presumably the jury could find that the defense applies to only some of the bank statements, but not to others.
Reliable argues that the holdings in Rudisill Soil Pipe Co. v. First National Bank of Anniston, 224 Ala. 436, 140 So. 569 (1932), mandate that the defense of account stated would not apply in this case. Because the defense of account stated was not raised in Rudisill, that case is distinguishable.
While many cases where the defense of account stated has been used involve forgeries and, thus, are not precisely similar factually to the present case, the defense is appropriate, because it allows the jury to determine whether during this transaction there was fault in Reliable's conduct that reduces or eliminates AmSouth's liability for conversion. Accordingly, we hold that the trial court erred when it refused to allow AmSouth to use the account stated defense.
AmSouth's third issue concerns another defense the trial court disallowed, Ala.Code 1975, § 7-3-406. That section provides:
"Any person who by his negligence substantially contributes to a material alteration of the instrument or to the making of an unauthorized signature is precluded from asserting the alteration or lack of authority against a holder in due course or against a drawee or other payor who pays the instrument in good faith and in accordance with the reasonable commercial standards of the drawee's or payor's business."
AmSouth contends that, under § 7-3-406, the jury could find that Reliable was negligent, then find that Reliable's negligence "substantially contribute[d] to a material alteration of the instrument." However, § 7-3-406 by its terms requires that the material alteration must be to an instrument. Section § 7-3-102(1)(e) provides that "`Instrument' means a negotiable instrument." In the present case, if there were material alterations, the "material alterations" would have been to deposit slips, not to the instruments themselves. Accordingly, AmSouth may not use § 7-3-406 as a defense.[3] Cf. Al Sarena Mines, Inc. v. SouthTrust Bank of Mobile, Inc., 548 So.2d 1356 (Ala.1989).
AmSouth's final issue is whether the trial court erred in determining as a matter of law that Pennington was not Reliable's agent. We do not necessarily accept AmSouth's premise that such a determination of agency is implied in the judgment. To the extent that the agency issue is material *1370 and relevant, the account stated defense will present the issues that AmSouth claims are involved in its various arguments about agency. AmSouth's arguments concerning agency seek to establish that Pennington's acts and knowledge can be imputed to Reliable, if Pennington is found to be Reliable's agent. We question the validity of this argument, because the cases on which AmSouth relies address a fact situation different from the present case. AmSouth's cases address a more frequently occurring fact situation, where an injured third party attempts to place liability on a principal for the alleged agent's wrongful acts by imputing the agent's act or knowledge to the principal. In that fact situation, decisional law sometimes imputes the acts or knowledge of the agent to the principal. However, in the present situation, AmSouth would have us hold the principal responsible for the acts of its agent, even though the principal itself, not a third party, is the injured party. Thus, far from presenting a question of whether a principal is liable to a third party for the acts of an agent, this case presents a question of whether a third party is liable for its wrongdoing, concurrent with the wrongdoing of the agent, which injured the principal. Although some defenses may arise from the agency relationship, the principal defense is the account stated defense, so we do not address the question of whether the trial court's summary judgment for Reliable was erroneous under the agency arguments made by AmSouth.
Because the account stated defense presents a genuine question of material fact and precludes judgment as a matter of law for Reliable, the trial court erred in entering summary judgment. Therefore, the judgment is reversed and the cause is remanded.
REVERSED AND REMANDED.
All the Justices concur.
NOTES
[1] Section 7-3-102(3), Ala.Code 1975, states that the definitions of "payor bank" and "depositary bank" to be used in relation to Article 3 are the definitions stated in Ala.Code 1975, § 7-4-105. Section 7-4-105 provides:
"In this article unless the context otherwise requires:
"(a) `Depositary bank' means the first bank to which an item is transferred for collection even though it is also the payor bank;
"(b) `Payor bank' means a bank by which an item is payable as drawn or accepted." "Payment" of a check is made only by the drawee/payor bank on which the check is drawn. Strickland v. Kafko Mfg. Inc., 512 So.2d 714, 716 (Ala.1987).
[2] Even if none of the specific conversion actions of § 7-3-419(1) will lie, a common-law conversion action may lie. Ala.Code 1975, § 7-1-103; Al Sarena Mines, Inc. v. SouthTrust Bank, 548 So.2d 1356 (Ala.1989); Strickland v. Kafko Mfg., Inc., 512 So.2d 714 (Ala.1987).
[3] Considering all the evidence the trial court had before it, we find no error in the trial court's holding that neither of the stamped indorsements, "For Deposit Only, Reliable Janitorial Service, Inc.," or "For Deposit Only, Reliable Carpet Cleaning, Inc.," was an "unauthorized signature" within the meaning of "unauthorized signature" in § 7-3-406.
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970 A.2d 429 (2009)
COM.
v.
LEE SON YOM.
No. 776 MAL (2008).
Supreme Court of Pennsylvania.
April 27, 2009.
Disposition of petition for allowance of appeal. Denied.
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301 F.2d 149
NATIONAL LABOR RELATIONS BOARD, Petitioner,v.LOCAL JOINT EXECUTIVE BOARD OF HOTEL AND RESTAURANTEMPLOYEES AND BARTENDERS INTERNATIONAL UNION OFLONG BEACH AND ORANGE COUNTY andCulinary Alliance Local 681,Respondents.
No. 17413.
United States Court of Appeals Ninth Circuit.
March 5, 1962.
Stuart Rothman, Gen. Counsel, Dominick L. Manoli, Associate Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, Melvin J. Welles, Elliott Moore and Daniel J. Harrington, Attorneys, National Labor Relations Board, Washington, D.C., for petitioner.
Gyler & Gottlieb, Emanuel Gyler, Long Beach, Cal., for respondents.
Before BARNES and JERTBERG, Circuit Judges, and DAVIS, District Judge.
BARNES, Circuit Judge.
1
This is a petition by the National Labor Relations Board1 for enforcement of its order2 issued against respondents pursuant to Section 10(e) of the National Labor Relations Act, as amended (61 Stat. 136, 73 Stat. 59, 29 U.S.C.A. 151 et seq.) This court has jurisdiction by virtue of the unfair labor practices having occurred in Long Beach, California.
2
Because one of the grounds of appeal is alleged insufficient evidence, we state the evidence in some detail. In early 1959, Crown Cafeteria, a partnership,3 was operating a cafeteria in Pasadena, California, and began remodeling a site for a second cafeteria in Long Beach, California. On about April 16, 1959, before Crown had begun hiring employees for its new Long Beach cafeteria, one Clayton Smith, Director of Organization for respondent, visited Crown's Long Beach site and left a copy of the Union's contract for one Leonard Smitley, Crown's managing partner. The contract contained a compulsory hiring clause, which required among other things that all employees of an employer who signed the contract must join the Union within thirty-one days of their employment.
3
On about May 2, 1959, organizer Smith returned to the Long Beach cafeteria and asked Smitley where he was obtaining employees; Smitley answered by stating that he was hiring locally. Organizer Smith then asked if Crown planned to operate a 'union house.' Smitley said 'no,' and added that he doubted, in view of Crown's wage scale and benefits, whether his employees would be interested in a union. Smitley also observed that it was up to the employees to elect whether they wanted a union; to which Smith said: 'That is not the way we do it nowadays.' Before leaving, organizer Smith asked Smitley if he had read the Union's contract yet; Smitley said he had not.
4
On May 4, 1959, the day before the Long Beach cafeteria was to open, organizer Smith returned and again asked Smitley if he had read the Union's contract. When Smitley answered that he had not, organizer Smith saw the cafeteria manager and suggested that if he 'had any influence with Mr. Smitley in regard to union activities' he should use it, or the Union would picket the cafeteria. The next morning, before the cafeteria opened for business, the Union had established a picket line with signs reading:
5
'Notice to all members of organized labor and their friends. This establishment is non-union. Please do not patronize.'
6
The Union admittedly did not represent a majority of Crown's employees on May 5, 1959, or on any subsequent material date.
7
The Board asserted jurisdiction over this case under its standards of retail business; i.e., that Crown's gross annual sales were in excess of $500,000. The Board found that Crown's business exceeded this standard and that the Long Beach cafeteria alone exceeded the standard when the business done in the first two months of its operations (May and June 1959) was projected on an annual basis.
8
The Board found that the Union, in attempting to have Crown sign a union-security contract when the Union did not represent a majority of the cafeteria's employees, violated Section 8(b)(2) of the Act.4
9
The Board's order requires respondents to cease attempting to cause Crown to enter into a union-security contract with them when they do not represent a majority of Crown's employees, and to post the customary notices.
10
The briefs of the parties herein present four questions to this court. These questions may be stated as follows:
11
1. Did the Board properly assert its jurisdiction over the alleged unfair labor practices?
12
2. Is these substantial evidence in the record to support the Board's finding that respondents violated Section 8(b)(2) by attempting to cause Crown to sign a union-security contract?
13
3. Should the Board have consolidated the instant case with a subsequent case against respondents?
14
4. Does the Supreme Court's rejection of the Curtis doctrine in N.L.R.B. v. Drivers, Chauffeurs, Helpers Local No. 639, 1960, 362 U.S. 274, 80 S.Ct. 706, 4 L.Ed.2d 710, require a dismissal of the instant petition for enforcement?
15
* Jurisdiction
16
The trial examiner found the total sales of Crown's two cafeterias, during the period from July 1958 through June 1959, were in excess of $600,000; Pasadena accounting for $521,000 and Long Beach accounting for $90,000 in total sales during that period. The trial examiner also found that, during this period, both cafeterias purchased goods and equipment valued in excess of $100,000 which originated outside of California. It was further found that the record warranted a finding that both cafeterias were centrally controlled and that the figures of both could properly be considered in determining jurisdiction over the case; but, notwithstanding the propriety which such a finding would have, it was found that the projected figures of the Long Beach operation on an annual basis reveal that this operation alone meets the jurisdictional standard of the Board.
17
Respondents attack this finding on several theories. First, they claim that the two cafeterias are operated separately and therefore the figures from Crown's Pasadena operation cannot properly be used in determining the jurisdictional standard. From a businessman's point of view, this contention is without substantial merit. It is true separate books were kept for each cafeteria. This is common sense, and standard business procedure. How could a businessman properly analyze, conduct, evaluate, and control his business if he did not keep an accurate account on each branch of his enterprise? Recognizing the importance of following such an accounting system, does his make each branch, or cafeteria, a separate business? We hold it does not. If one location had a loss, it would offset a gain made at the other location. The profit of both would be added together to arrive at the total profit for the partnership's enterprise. Respondents offer no proof, in rebuttal to the findings, that each cafeteria was a separate partnership; i.e., no evidence is shown that each cafeteria was analogous to a separate corporation. Surely the trial examiner was correct in finding that the 'figures of both (cafeterias) may properly be considered' in determining the jurisdictional standard of the Board.
18
The Board asserted jurisdiction under its standard for a retail business. Hence respondents' contention that $50,000 of direct flow was also necessary to establish jurisdiction is based on the mistaken application of the Board's non-retail standard to Crown's retail business.
19
But even assuming respondent's erroneous contention to be valid, the trial examiner found that 'both operations purchased goods and equipment valued in excess of $100,000 which originated outside the State of California.' As stated above, we believe it was proper for the Board to consider the figures of both operations in determining its jurisdiction. Thus, respondents first urge that an erroneous standard was used for determining jurisdiction and, then, that it was erroneous for the Board to consider the figures from the operation of both locations; i.e., respondents first urge this court to only consider the direct flow figures of the Long Beach cafeteria, and, then, to apply the Board's non-retail standard to a retail business.
20
The contention here urged by respondents as to lack of jurisdiction is without merit. That the Board properly asserted its jurisdiction may be best answered by the following language in N.L.R.B. v. W. B. Jones Lumber Co., 9 Cir. 1957, 245 F.2d 388 at 390-391:
21
'If the first question be considered next, it will be found that the Board had jurisdiction by statute over any operations of a company which affect commerce within the meaning of the Act.
22
'There is no question of the power of the Board to act in the field. There is no question of the authority of the Board to resolve all controversy over coverage in a field where it had jurisdiction by statute.
23
'The Union contends that the Board should not assert in this case the jurisdiction which all agree it possesses. The Board should, so the Union contends, be bound by certain self-limiting standards gratuitously adopted by the Board itself. These standards, so announced, could not limit the jurisdiction conferred by Congress. The Board did not proclaim that, in all cases involving less monetary amounts than those contemplated by such regulations, the business in such amounts would never in a particular case have sufficient impact upon commerce to warrant the exercise of the powers of the Board. The purpose of these standards seems to have been to adopt a general rule of thumb so that the Board could concentrate its energies upon cause where the activities did have a substantial effect upon commerce as defined by the Act. It would not appear subversive if the Board had decided that the activities in extraordinary cases were such that there was a substantial effect upon commerce so defined, notwithstanding the traffic fell far below the standards in monetary value.
24
'Although this question had been discussed, it is not justiciable, in our opinion, unless either the activities fell outside the jurisdictional terminals set up by Congress or unjust discrimination were involved in the consideration of one case and refusal to hear others unfair or lacking in due process. If the rights and guaranties have been protected and the Board acts within the scope of its statutory authority, the question of whether or not it chooses to act within the established limits is one of policy. The courts are not vested with authority to control such exercise of prerogative. Furthermore, the Union has no right to challenge the exercise or non-exercise of any jurisdiction with which Congress has endowed the Board.'
25
That the operations of Crown affect commerce, within the meaning of the Act, seems unquestionable.
II
Sufficiency of Evidence
26
Respondents contend that in reviewing this matter this court should be guided by N.L.R.B. v. Local 50, Bakery & Confectionery Workers, 2 Cir. 1957, 245 F.2d 542. There the second circuit refused to enforce a Board order because there was no substantial evidence to sustain the Board's finding that the picketing was designed to induce a work stoppage or that it was for an unlawful objective. There the evidence showed that before certification the Union's picketing was aimed at propagandizing the employees and at gaining recognition from the employer; both objectives were then permitted by the statute. The second circuit there held unwarranted the Board's inference, in light of precertification evidence, that the Union's continued picketing was solely for the illegal purpose of coercing recognition. It was also held that the mere existence of a picket line was not to be interpreted as a strike signal. And, said the second circuit, lacking some evidence of inducement, the Board was not warranted in presuming that picketing was for an illegal purpose.
27
The case which respondents would have guide this court in this matter has been criticized.5 But the second circuit has itself distinguished that holding in other cases which appear more closely in point on the facts to the instant case. In N.L.R.B. v. Knitgoods Worker's Union, Local 155, 1959, 267 F.2d 916, the second circuit held the Bakery & Confectionery Union case inapplicable. In the Knitgoods Worker's case, as in the instant case, no demands were made on the employees to join the union, but, as in the instant case, demands were made only on the employer; in the Bakery & Confectionery Union case the employees were solicited. In the Knitgoods Worker's case the picketing signs were characterized, as in the instant case, as organizational, but the second circuit agreed with the Board that little weight is to be given to such symbols. And in the Knitgoods Worker's case, as in the instant case (as distinguished from the Bakery & Confectionery Union case), the union did not make 'any efforts to reach the employees through any of the ordinary methods traditionally resorted to * * * to organize workers.'6
28
It is unquestioned that respondents did not represent a majority of Crown's employees. And a union's attempt to cause an employer to sign a contract containing a union-security provision, at a time when the union does not represent a majority of the employees of that employer, violates the proscription of Section 8(b)(2) of the Act. N.L.R.B. v. Local 208, International Bro. of Teamsters, et al., 9 Cir. 1961, 291 F.2d 374.
29
Respondents contend that: 'The instant case clearly reveals no demand was ever made by Respondents of the Company that it execute a contract. * * *'
30
We agree that the record does not reveal that respondents made an unequivocal verbal or written demand upon Crown to sign the union-security contract. The trial examiner, however, found that there was evidence supporting the conclusion that respondents' conduct was designed to achieve and force union recognition and a union-security contract. This finding was confirmed by the Board. That such evidence as is found in this record is substantial enough to support the findings of the Board was answered by us very recently in N.L.R.B. v. Local 208, International Bro. of Teamsters, et al.,supra, at 378, where the sequence of events and statements of the union's agent showed that the union sought to coerce an employer into executing a union-security contract. And, in our review, findings of the Board on questions of fact will not be disturbed if supported by substantial evidence. N.L.R.B. v. Cascade Employers Ass'n, Inc., 9 Cir. 1961, 296 F.2d 42.
31
Respondent also urge that the Board's finding on their objective (that a lack of a union-security contract was the unfairness attacked by the placards of the pickets) was erroneous. 'Objectives', say the respondents, 'can and do change and it is natural to assume that one intends to comply with the law when the law changes because an unlawful purpose is not likely to be inferred.'7 But the unlawful objective found by the Board was, in our opinion, proven not to have changed.8
32
We hold there was substantial evidence, in all respects, to support the findings of the Board.
III
33
Does N.L.R.B. v. Drivers, Chauffeurs, Helpers Local No. 639, supra, require dismissal?
34
Respondents contend International Association of Machinists, Local Lodge 311 v. N.L.R.B., 1961, 110 U.S. App.D.C. 74, 289 F.2d 451, completely supports their argument that the Supreme Court's decision in N.L.R.B. v. Drivers, Chauffeurs, Helpers Local No. 639, supra, 362 U.S. 274, 80 S.Ct. 706, 4 L.Ed.2d 710, requires the Board's petition for enforcement in the instant case be dismissed. We disagree. The facts of the Bakery & Confectionery Union case, supra, and the Machinists Local case are close. This circuit's case, N.L.R.B. v. Local 208, International Bro. of Teamsters, et al., supra, is closer to the facts in the instant case; though respondents contend the latter case is 'entirely distinguishable from the facts of the instant case.'
35
The Board's complaint in the instant case originally alleged that respondents had violated Section 8(b)(1)(A) of the Act as well as Section 8(b)(2). The Board's decision in the instant case took cognizance of the Supreme Court's decision in the Drivers, Chauffeurs, Helpers Union case and held:
36
'3. Although the complaint alleged that respondent's picketing for a union-security clause violated Section 8(b)(1)(A) as well as Section 8(b)(2), the Supreme Court's decision makes it clear that peaceful picketing for any purpose does not restrain and coerce employees in violation of Section 8(b)(1) (A). Therefore, we shall dismiss the allegation in the complaint that Respondents' picketing for a union-security clause constituted a derivative violation of Section 8(b)(1)(A).'
37
In the Local 208 case, supra, the Board also found the Union to have violated Section 8(b)(1)(A), and its order provided a remedy accordingly. However, subsequent to the Supreme Court's Drivers, Chauffeurs, Helpers Union case, supra, the Board did not petition this court for enforcement of its order as were based upon its findings of a violation of Section 8(b)(1)(A). This court then enforced so much of the Board's order as was based on the union's violation of Section 8(b)(2) alone.
IV
Consolidation of Cases
38
Respondents here urge, as they before the Board, that the instant case should have been merged or consolidated with a second case filed on January 5, 1960, (almost two months after the hearing in the instant case) which alleged that respondents were violating Section 8(b)(7)(C) of the Act.9 It is the contention of respondents that an analysis of the two complaints and notices of hearing reveal substantial similarity. The essence of this contention is:
39
'It is therefore submitted the Petitioner had the identical power to secure whatever relief they deemed essential under case, No. 1 (the instant case) without their issuance of a complaint in Case No. 2 since the facts of Case No. 2 were predicated to a substantial measure on the allegations contained in Case No. 1 with the exception that the Act of 1959 permitted a new charge to be filed under 8(b)(7)(C) and the effect thereof does not give authority to the Petitioner to overlook and bypass the pendency of another action when the principle of law is so well established that another action cannot be entertained when another action is pending involving the same parties and the same facts.'
40
The Board has, we think, adequately answered this same contention in a footnote to its decision and order which reads as follows:
41
'1. Respondent's argument that the complaint in this case should be dismissed on the ground that issuance of the complaint in case No. 21-CP-4 constituted a merger of this case and that case is without merit. The violation of Section 8(b)(2) found in this case is independent of the violation of Section 8(b)(7) (C) found in Local Joint Executive Board of Hotel and Restaurant Employees and Bartenders International Union of Long Beach and Orange County, et al. Crown Cafeteria, 130 N.L.R.B.No. 68.'
42
While the Board could have consolidated the cases10 because of common facts and parties, we believe the Board correctly exercised its discretion in refusing to consolidate cases which were brought under different provisions of the Act. The instant case involves a violation of the 1947 Act; a relatively routine matter. On the other hand, the second case is one of first impression under the 1959 amendments to the Act. It was argued orally before the Board with other cases brought under the same amendments, and presently is before the Board on a motion for reconsideration.
43
A consolidation of cases before the Board rests in the Board's sound discretion. Lane v. N.L.R.B., 10 Cir. 1951, 186 F.2d 671, 675; N.L.R.B. v. Tex-O-Kan Flour Mills Co., 5 Cir. 1941, 122 F.2d 433, 437. Cf. F.C.C. v. Pottsville Broadcasting Co., 1940, 309 U.S. 134, 142-143, 60 S.Ct. 437, 84 L.Ed. 656. We see niether an abuse of discretion nor a denial of due process in the Board's refusal to consolidate the two cases here under consideration and, therefore, believe this contention of respondents is without merit. Cf. United States v. Pan-American Petroleum Co., 9 Cir. 1932, 55 F.2d 753, cert. denied 287 U.S. 612, 53 S.Ct. 14, 77 L.Ed. 532.
44
A decree enforcing the Board's order in full is ordered entered.
1
Hereinafter for convenience referred to as the 'Board'
2
Reported at 130 NLRB No. 130
3
Hereinafter for convenience referred to as 'Crown'
4
'UNFAIR LABOR PRACTICES
,'Sec. 8. (b) It shall be an unfair labor paractice for a labor organization or its agents--
'(2) to cause or attempt to cause an employer to discriminate against an employee in violation of subsection (a)(3) * * *
'(7) to picket or cause to be picketed, or threaten to picket or cause to be picketed, any employer where an object thereof is forcing or requiring an employer to recognize or bargain with a labor organization as the representative of his employees, or forcing or requiring the employees of an employer to accept or select such labor organization as their collective bargaining representative, unless such labor organization is currently certified as the representative of such employees: * * *
'Provided further, That nothing in this subparagraph (C) shall be construed to prohibit any picketing or other publicity for the purpose of truthfully advising the public (including consumers) that an employer does not employ members of, or have a contract with, a labor organization, unless an effect of such picketing is to induce any individual employed by any other person in the course of his employment, not to pick up, deliver or transport any goods or not to perform any services. Nothing in this paragraph (7) shall be construed to permit any act which would otherwise be an unfair labor practice under this section 8(b).'
5
See: Retail Wholesale & Dept. Store Union, AFL-CIO v. Rains, 5 Cir., 1959, 266 F.2d 503, 505-506
6
N.L.R.B. v. Knitgoods Workers' Union, Local 155, 267 F.2d at 919. See also, N.L.R.B. v. Local 239, International Bro. of Teamsters, et al., 2 Cir. 1961, 289 F.2d 41
7
Citing N.L.R.B. v. McGahey, 5 Cir. 1956, 233 F.2d 406
8
N.L.R.B. v. Local 239, International Bro. of Teamsters, et al., supra, at 43-44
9
This section, added by amendments enacted in September 1959, made picketing for recognition unlawful 'where such picketing has been conducted without a petition (for a Board election) having been filed within a reasonable period of time not to exceed 39 days.' This amendment became effective on November 13, 1959
10
In the Appendix to Respondents' Brief in the instant case are found the decision and order of the Board; the dissenting opinion; the intermediate report and recommended order; the motion and consideration; the General Counsel's motion for clarification of the Board's decision and order; the Board's charge filed against respondents; and the complaint and notice of hearing, in the second case
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Not for Publication in West's Federal Reporter
United States Court of Appeals
For the First Circuit
No. 14-1277
UNITED STATES OF AMERICA,
Appellee,
v.
YAMIL DAVILA-LOPEZ,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Juan M. Pérez-Giménez, U.S. District Judge]
Before
Lynch, Kayatta, and Barron,
Circuit Judges.
Thomas Trebilcock-Horan and Trebilcock & Rovira, LLC on brief
for appellant.
Julia M. Meconiates, Assistant U.S. Attorney, Mariana E.
Bauzá-Almonte, Assistant U.S. Attorney, Chief, Appellate Division,
and Rosa Emilia Rodríguez-Vélez, U.S. Attorney, on brief for
appellee.
May 22, 2017
LYNCH, Circuit Judge. In this sentencing appeal,
defendant Yamil Davila-Lopez raises two issues: (1) whether the
district court committed procedural error by denying him a two-
level reduction under the Guidelines pursuant to U.S.S.G. § 3B1.2,
and (2) whether the sentence ultimately imposed by the district
court is substantively unreasonable. Both of Davila-Lopez's
claims lack merit, and we affirm his sentence of 135 months'
imprisonment.
Nonetheless, we remand to allow the district court to
consider anew whether to grant Davila-Lopez's post-appeal motion
for a sentence reduction, which he has apparently requested in
light of an amendment to the Guidelines that took effect after he
was sentenced, see U.S.S.G. Manual app. C, amend. 782 (2014), and
which the district court granted while this appeal was pending.
We vacate for want of jurisdiction the district court's order
granting that reduction in the first instance.
I.
Davila-Lopez worked in a variety of capacities for a
drug-trafficking organization, which, between 2005 and 2010,
imported cocaine and heroin into Puerto Rico and the continental
United States from the Dominican Republic on board luxury yachts
equipped with secret compartments designed to hide contraband.
Davila-Lopez participated as a transporter in at least two trips
to and from the Dominican Republic, during which he helped smuggle
- 2 -
$2-3 million in narcotics. Davila-Lopez also lent his skills as
an engineer to the organization by constructing the secret
compartments used to hide drugs and money on the yachts. Finally,
Davila-Lopez stored drugs and drug proceeds for the organization
at his residence.
On August 23, 2013, Davila-Lopez pled guilty to both
counts of an indictment charging him with conspiracy to import
cocaine into the United States, in violation of 21 U.S.C. §§ 952(a)
and 963, and conspiracy to possess with the intent to distribute
cocaine, in violation of 21 U.S.C. §§ 841(a)(1) and 846. The
United States Probation Office filed a Presentence Report ("PSR")
on December 4, 2013. The PSR's calculation of Davila-Lopez's
sentence began with a Base Offense Level ("BOL") of 38 because his
offenses involved at least 150 kilograms of cocaine. See U.S.S.G.
§ 2D1.1(c). With a three-level reduction for acceptance of
responsibility, see id. § 3E1.1(a)-(b), Davila-Lopez's Total
Offense Level ("TOL") was set at 35, which, combined with a
Criminal History Category of I, yielded a Guideline Sentencing
Range ("GSR") of 168 to 210 months.
Davila-Lopez did not file any written objections to the
PSR. Before his sentencing hearing, he filed a motion requesting
that the district court grant him a two-level reduction applicable
when the defendant's role in the relevant criminal activity was
"minor." Id. § 3B1.2(b). The district court denied the motion in
- 3 -
a line order, and when defense counsel renewed the request at
sentencing, the court denied it again from the bench.
The court did grant Davila-Lopez a different two-level
reduction, assented to by the government, because he met the
criteria for the safety valve set forth in U.S.S.G. § 5C1.2. The
court's remaining calculations mirrored those set forth in the
PSR. With a resulting TOL of 33, Davila-Lopez's GSR was determined
to be 135 to 168 months and, after considering the § 3553(a)
factors, the court imposed a bottom-end sentence of 135 months'
imprisonment.
II.
On appeal, Davila-Lopez first claims that the court
erred in denying him the minor role reduction. He argues that he
should not be viewed as a major player in the drug-trafficking
organization, as there is no evidence that he "had any proximity
[to] the [organization's] ringleaders" or "negotiated the[]
purchase or sale" of the organization's narcotics. Instead, he
argues, he was "a mere transporter" who "served as a mechanic and
handy man for the organization and offered his residence" for the
storage of contraband -- a far cry from a "leader."
"A defendant bears the burden of proving his entitlement
to a minor participant reduction by a preponderance of the
evidence." United States v. Meléndez-Rivera, 782 F.3d 26, 28 (1st
Cir. 2015). To prevail in this appeal, Davila-Lopez must show
- 4 -
that the district court's finding that he did not satisfy that
burden was clearly erroneous. Id. at 29. He cannot make this
showing.
The district court emphasized, and it is undisputed,
that (1) Davila-Lopez helped smuggle approximately 860 kilograms
of cocaine into Puerto Rico during two separate trips, (2) he used
his specialized skills to "creat[e] or construct[] the hidden
compartments" in the vessels that the "smuggling venture" relied
on to "be successful," and (3) he permitted the conspirators --
and was sufficiently trusted by them -- to store drugs and proceeds
at his home prior to their reaching their final destination. "A
determination of a defendant's role in [an] offense is invariably
fact-specific," id., and, on these uncontested facts, the court
was certainly justified in concluding that Davila-Lopez's
contributions to the criminal enterprise were too significant for
his role to be deemed "minor."
Davila-Lopez's insistence that he was not among the
organization's "leader[s]" does not make the court's finding
erroneous. See id. ("[A] defendant need not be the key figure in
a conspiracy in order to be denied [the minor role reduction].");
United States v. García-Ortiz, 657 F.3d 25, 29-30 (1st Cir. 2011)
("The fact that [other participants] may be more culpable than the
defendant does not necessarily mean that the defendant's role in
the offense is minor."); see also, e.g., United States v. Vargas,
- 5 -
560 F.3d 45, 50 (1st Cir. 2009) (affirming the denial of the
reduction where the defendant truck driver delivered a single
shipment of cocaine but had no "involvement in [any] other facet[]
of the conspiracy"); United States v. Santos, 357 F.3d 136, 143
(1st Cir. 2004) ("[E]ven those who serve purely and simply as drug
couriers are not automatically guaranteed mitigating role
reductions.").
Davila-Lopez's second claim on appeal -- that his
sentence is substantively unreasonable -- is easily dispatched.
Davila-Lopez did not object to his sentence before the district
court, but we need not decide whether plain error review applies
because Davila-Lopez's argument fails even under the abuse of
discretion standard applicable to preserved challenges to
substantive reasonableness. See United States v. Ruiz-Huertas,
792 F.3d 223, 228 (1st Cir. 2015).
Davila-Lopez's argument is essentially that the district
court did not afford adequate weight to the "mitigating factors"
he presented in support of his request for the "minimum possible
sentence" -- namely, that his role in the organization was, by his
account, minor and that his wife was in the process of receiving
treatment for cancer.
The district court did not abuse its discretion in
denying Davila-Lopez's request for a variance to the statutory
minimum sentence, rather than a Guidelines sentence. Indeed, after
- 6 -
considering the role Davila-Lopez played in the criminal activity,
the court considered his personal history and characteristics --
including mitigating circumstances, such as his family ties, lack
of substance abuse, and otherwise clean criminal record -- and
concluded that "punishment and deterrence" would be sufficiently
afforded by a sentence at the minimum boundary of the properly
calculated GSR. See 18 U.S.C. § 3553(a); see also United States
v. Llanos-Falero, 847 F.3d 29, 36 (1st Cir. 2017) (sentences "well
within the Guidelines range" are presumptively reasonable). While
the court did not find that Davila-Lopez's wife's medical treatment
warranted a variance below the GSR, it did grant him the right to
voluntarily surrender one week after the sentencing hearing, when
his wife would be more fully "recuperated from her surgical
operations."
Ultimately, "[a] sentencing court is under a mandate to
consider a myriad of relevant factors, but the weighting of those
factors is largely within the court's informed discretion." United
States v. Clogston, 662 F.3d 588, 593 (1st Cir. 2011). Davila-
Lopez seeks merely to "substitute his judgment for that of the
sentencing court," and that is not a basis for a finding of error.
Id. The district court did not impose a substantively unreasonable
sentence.
Davila-Lopez's sentence of 135 months' imprisonment is
affirmed.
- 7 -
III.
The docket of the district court reveals events post-
dating the filing and pre-dating the resolution of this appeal
that bear on our disposition.1
After Davila-Lopez filed his appeal, the Guidelines were
amended, with retroactive effect, in a manner that lowered the BOL
applicable to the offenses of conviction in this case. See
U.S.S.G. Manual app. C, amends. 782, 788 (2014); United States v.
Rodríguez-Milián, 820 F.3d 26, 35 (1st Cir.), cert. denied, 137 S.
Ct. 138 (2016) (mem.). Despite the fact that his appeal to this
court was pending, Davila-Lopez moved, in the district court, for
a reduction of his sentence pursuant to 18 U.S.C. § 3582(c)(2).
The parties then jointly filed a memorandum with the district court
stipulating to a revised sentence of 108 months -- the bottom end
of the GSR of 108 to 135 months that would apply if the Guidelines
amendment were given effect and no other changes were made to the
court's earlier calculations.
1 In dereliction of their duties to this court, the parties
did not bring these developments to our attention; it is only
because they appear on the district court's docket that we are
aware of them. See Fed. R. App. P. 12.1(a) ("If a timely motion
is made in the district court for relief that it lacks authority
to grant because of an appeal that has been docketed and is
pending, the movant must promptly notify the circuit clerk if the
district court states . . . that it would grant the motion . . . ."
(emphasis added)).
- 8 -
The district court did not have jurisdiction over
Davila-Lopez's motion, notwithstanding the parties' stipulation,
because this court had assumed appellate jurisdiction over Davila-
Lopez's sentence. See Rodríguez-Milián, 820 F.3d at 35.
Nonetheless, the district court erroneously purported to grant
that motion, in accordance with the parties' 108-month
stipulation. See Fed. R. App. P. 12.1(a) (where a district court
lacks jurisdiction over a motion because the matter is pending on
appeal, it may indicate "that it would grant the motion or that
the motion raises a substantial issue," but it may not grant the
motion outright (emphasis added)).
Because the district court lacked jurisdiction, "[t]he
putative sentence reduction is . . . a nullity," Rodríguez-Milián,
820 F.3d at 35, and the order granting it is vacated. However, we
will construe that order as an indication that the court would
grant Davila-Lopez's motion, and we remand the case so that the
motion can be properly entertained. See id. at 35-36; see also
Fed. R. App. P. 12.1(b). In doing so, we remind the district court
that it may "substitute the amended Guidelines range" for the
initial range, but it must "'leav[e] all other guideline
application decisions unaffected,'" Dillon v. United States, 560
U.S. 817, 821 (2010) (quoting U.S.S.G. § 1B1.10(b)(1)), and
otherwise comply with the strictures of U.S.S.G. § 1B1.10(b)(2).
So ordered.
- 9 -
| {
"pile_set_name": "FreeLaw"
} |
300 F.3d 340
KOOL, MANN, COFFEE & CO., f/d/b/a Moore, Owen, Thomas & Co., and Thomas O. Moore,v.L. Coleman COFFEY and Robert Bruce Coffey, Appellants in No. 01-4052 (D.C. Civil No. 99-cv-00058)Moore, Owen, Thomas & Co. and Thomas O. Moorev.L. Coleman Coffey and Robert Bruce Coffey (D.C. Civil No. 99-cv-00204)Moore, Owen, Thomas & Co. and Thomas O. Moorev.Robert Bruce Coffey (D.C. Civil No. 00 cv-00230)*Kool, Mann, Coffee & Co., f/d/b/a Moore, Owen, Thomas & Co., Cross-Appellant in No. 01-4066.
No. 01-4052.
No. 01-4066.
United States Court of Appeals, Third Circuit.
Argued: Monday, May 13, 2002.
Filed: July 29, 2002.
COPYRIGHT MATERIAL OMITTED COPYRIGHT MATERIAL OMITTED COPYRIGHT MATERIAL OMITTED Christopher M. Hill (argued), Christopher M. Hill & Associates, P.S.C., Frankfort, KY, for Appellants.
Denise McClelland (argued), Frost, Brown & Todd LLC, Lexington, KY, A. Jeffrey Weiss, A. Jeffrey Weiss & Associates, St. Thomas, for Appellee/Cross-Appellant Kool, Mann, Coffee & Co.
Leslie Rosenbaum (argued), Rosenbaum & Rosenbaum, P.S.C., Lexington, Ky, for Appellee Thomas Owen Moore.
Before: AMBRO, FUENTES and GARTH, Circuit Judges.
GARTH, Circuit Judge.
1
This contentious dispute — spanning almost two decades, two bankruptcy filings, and countless appeals and counter-appeals — revolves around the sale of a business called Lake Cumberland State Dock, Inc. ("LCSDI") in 1985 by L. Coleman Coffey and his son, Robert Bruce Coffey (together, the "Coffeys"), to Kool, Mann, Coffee & Co., Inc. ("Kool Mann"), which is principally owned by Thomas O. Moore ("Moore"). The substantive claims asserted by the parties are actually relatively simple: the Coffeys claim that Kool Mann owes them the balance remaining of the $5 million purchase price from the sale of LCSDI, while Kool Mann contends that it is entitled to a number of set-offs against that balance because of alleged misrepresentations by the Coffeys as well as certain other deductions. It is the tortured procedural history of this matter which makes this appeal exceedingly — and unnecessarily — complex.
2
Since litigation began in 1986, this dispute has gone before, inter alia, the United States District Court for the Eastern District of Kentucky and the Sixth Circuit, twice before the Bankruptcy Court of the Virgin Islands (which issued numerous orders and opinions), twice before the District Court of the Virgin Islands, and once before us, the Third Circuit. We summarize the procedural history of this matter in more detail below. Suffice it to say that it has been 17 years since Kool Mann agreed to purchase LCSDI.
3
For our purposes here, we have detailed only those facts that bear on our current disposition.1 In light of the protracted nature of this litigation and the length of time and judicial resources it has consumed, we have taken it upon ourselves to determine the value of the Coffeys' proof of claim in bankruptcy to be $238,280.78. We have done so even though under normal circumstances we might have been inclined to remand to the District Court for a remand to the Bankruptcy Court to recalculate the damage figures. In the interests of both judicial efficiency and fairness — and to terminate what has appeared to be interminable litigation — we will affirm the District Court's affirmance of the Bankruptcy Court's findings of fact of fraud and, for the reasons set forth in this opinion, conclude with the ruling that the amount owed by Kool Mann to the Coffeys in this proceeding is $238,280.78. We do so despite the fact that we will be affirming in part and reversing in part the District Court's October 2, 2001 judgment. However, in an effort to conclude this long standing controversy, we will not remand any portion of this appeal, even that segment we are reversing, but will rather decide the relevant value of the Coffeys' claim in this opinion and direct that that value be entered by the Bankruptcy Court.
I. Sale of LCSDI
4
LCSDI was a family-owned marina and houseboat rental business owned by the Coffeys on Lake Cumberland, Kentucky. It owned and operated an extensive system of docks and slips, a number of pontoon boats, and other boats which it rented to customers for use on Lake Cumberland. The boats were leased by LCSDI from Vacation Cruises ("VC"), a partnership also owned by the Coffeys. In 1986, VC owed about $700,000 to three regional banks in connection with the boats it owned.
5
Kool Mann is an exceedingly complex leasing business.2 Primarily, Kool Mann's business consisted of purchasing certain equipment (such as computers, telephones, trailers, and construction equipment) and leasing them to various customers known as users. In turn, Kool Mann would assign the lease payments as security against financing which was used to purchase the equipment in the first place. Under this arrangement, Kool Mann's investors were purportedly enabled to utilize certain income tax incentives and investment tax credits, take depreciation on the equipment, and sell the equipment at the expiration of the lease for a profit. Kool Mann operated this arrangement successfully for a number of years.
6
In the fall of 1985, Moore, the principal owner of Kool Mann, approached the Coffeys about purchasing LCSDI and VC. On December 11, 1985, Moore agreed that Kool Mann would pay a total of $5 million to the Coffeys for the outstanding stock of LCSDI.3 A first payment of $200,000 was due at closing, and an additional $800,000 (plus interest at a 10% per annum rate) was payable three months later (together, the "down payment"). The remaining principal balance was to be paid pursuant to an installment promissory note, which contemplated five annual installments of $150,000 principal and a final balloon principal payment for the remaining $3,250,000 due on September 30, 1991. The note also provided for interest to be paid with the installment payments at 0.5% above the prime interest rate. The Coffeys were provided with a security interest in the assets of LCSDI and a personal guaranty by Moore. The closing was scheduled to take place on December 31, 1985.
7
The Coffeys provided Kool Mann with unaudited September 30, 1985 and November 30, 1985 financial statements (together, the "financial statements"). After realizing that transactions concerning certain houseboats were not accurately described on the financial statements, L. Coleman Coffey wrote a letter to Moore on December 20, 1985 (the "December 1985 Letter") stating that "[t]he financial statements are reasonally [sic] accurate except for the houseboat transactions. These amounts will wash-out and show a small profit for the corporation."
8
The sale was finalized on December 31, 1985 pursuant to a Purchase and Sale Agreement dated December 31, 1985 (the "Purchase Agreement"). The representations and warranties in the Purchase Agreement were modified to reflect the existence of the December 1985 Letter, stating
9
(e) The financial statements as of November 30, 1985 ... are complete and correct and fairly represent the financial condition of the Corporation ... except as noted, discussed and agreed by the parties and evidenced by a letter to Tom Moore of December 20, 1985, which is hereto attached and herein incorporated.
10
Moreover, the parties entered into a side letter dated December 31, 1985, whereby the Coffeys agreed that any favorable tax savings they received due to the capital gains treatment of the disposition of the houseboats (the "Tax Savings") would serve to reduce the final balloon payment to be paid by Kool Mann on September 30, 1991 (the "Tax Savings Side Letter").
II. Proceedings
A. The Kentucky Litigation
11
Shortly after the sale, a dispute arose as to which party would assume certain pre-existing debts of LCSDI, totaling approximately $1.213 million for the houseboat fleet it owned (including the $700,000 debt originally held by VC). In the fall of 1986, Kool Mann filed suit in federal court in Kentucky seeking declaratory relief as to the assumption of debt issue and also sought a set-off against the purchase price of LCSDI for alleged misrepresentations and accounting fraud by the Coffeys. The Coffeys counterclaimed for judgment on the $ 4 million balance due on the purchase price. The Coffeys also filed suit in state court against Moore, individually, under his personal guaranty. That action was removed to federal court and both were consolidated before the Honorable Karl S. Forester, U.S. District Court Judge for the Eastern District of Kentucky.
12
The Kentucky federal court bifurcated the assumption of debt issue from the misrepresentation and fraud issue. After a six-day trial, Judge Forester ruled on January 31, 1990 that Kool Mann had agreed to assume the company's debt when it agreed to pay $5 million for LCSDI, and that therefore Kool Mann was not entitled to set-off the amount of the assumed debt against the money it owed. See Moore, Owen, Thomas v. Coffey, 1991 WL 519627, slip op. at ¶¶ 6, 8, 10, 14.I (E.D. Ky. Jan. 31 1990). That ruling was not appealed.
13
On December 20, 1990, while the fraud issue was still pending before the district court in Kentucky, Kool Mann filed for bankruptcy protection in the Virgin Islands, where it purportedly maintained certain offices. Recognizing that he could not rule against Kool Mann due to its pending bankruptcy, Judge Forester entered summary judgment against Moore on October 11, 1991, rejecting Kool Mann's charge of fraud and holding that Moore was responsible for the balance owed to the Coffeys.
14
The Sixth Circuit reversed, finding a material issue of fact concerning the alleged misrepresentations. That court also held that the obligation of Moore on his personal guaranty could not be determined until the amount due from Kool Mann was first ascertained, and ruled that if fraud on the part of the Coffeys were to be found, Moore's personal liability under the guaranty would be discharged. See Moore, Owen, Thomas & Co. v. Coffey, 992 F.2d 1439, 1448-50 (6th Cir.1993).
B. Initial Bankruptcy Court Proceedings
15
As noted, Kool Mann filed for bankruptcy protection on December 20, 1990. The filing was made in the Virgin Islands, and the proceedings were assigned to the Honorable William Gindin, U.S. Bankruptcy Court Judge, sitting by designation in the Virgin Islands.
16
The Coffeys filed a $6 million Proof of Claim in the bankruptcy proceedings, seeking the balance of the purchase price, interest, and attorneys' fees. In response, Kool Mann objected to the amount of the Coffeys' claim in the Bankruptcy Court (the "claim objection"), and also filed a separate complaint against the Coffeys, alleging fraud, misrepresentation and set-off against any claim the Coffeys may have had against Kool Mann, including attorneys' fees and punitive damages (the "adversary proceeding"). Moore joined Kool Mann as a plaintiff in the adversary proceeding seeking to void his personal guaranty on the ground of fraudulent inducement.
17
A motion for estimation of the Coffey's Proof of Claim was filed under 11 U.S.C. § 502(c) (the "Estimation Hearing").4 The object of such a proceeding is to establish the estimated value of a creditor's claim for purposes of formulating a reorganization plan. The Bankruptcy Court conducted several days of hearings in 1992, but suspended them because of the intervening bankruptcy filing of Robert Coffey, in the Western District of Kentucky before the Honorable Wendell Roberts.
18
Judges Roberts, Gindin and Forester conferred and agreed that the most efficacious way to proceed would be to resolve all issues (including those still unresolved in the Kentucky litigation) in one forum, before Judge Gindin. Counsel for the parties agreed, and the hearings continued before Judge Gindin in 1992. On June 9, 1993, Judge Gindin issued his findings (the "June 1993 Findings").
19
There, Judge Gindin decided that the Coffey's ultimate claim was $26,915.78. First, he gave credence to Kool Mann's claim that it had relied upon the fraudulent misrepresentations of the financial statements presented by the Coffeys during the negotiation of the sale of LCSDI. Crediting Kool Mann's valuation expert, the Bankruptcy Court valued LCSDI's "true" worth in 1985 absent misrepresentations at $2,549,482, roughly $2.45 million less than the negotiated purchase price. Second, the Bankruptcy Court credited Kool Mann with $236,566.22 pursuant to the Tax Savings Side Letter. Third, the Bankruptcy Court further reduced the Coffey's claim by the number of principal payments that Kool Mann had made prior to the dispute. Finally, Judge Gindin credited Kool Mann with the debt payments (the assumed indebtedness of $1.213 million) it had made on behalf of LCSDI after the sale. Accordingly, the Bankruptcy Court held that the Coffeys' total claim after all the credits and deductions totaled $26,915.78.
20
In September 1993, the Bankruptcy Court entered a declaratory judgment in the adversary proceeding on the basis of its June 1993 Findings, and released Moore from his personal guaranty as a result of the Coffeys' fraudulent inducements.
C. First Appeal to the District Court
21
The Coffeys appealed to the District Court of the Virgin Islands. In an Opinion dated July 17, 1995 (the "July 1995 Opinion"), the Honorable John Fullam, United States District Court Judge, sitting by designation from the Eastern District of Pennsylvania, reversed the Bankruptcy Court and remanded the case to that court for further proceedings. Noting that an Estimation Hearing has no legal effect other than establishing the approximate amount of the claim that will be recognized in a reorganization, Judge Fullam held that inadequate notice had been afforded to the Coffeys that the results of the Estimation Hearing would also be binding in the adversary proceeding. Accordingly, the case was remanded to the Bankruptcy Court for a reestimation of the Coffeys' claim and a trial of the adversary complaint on its merits.
22
However, Judge Fullam did not stop there. He noted that "[i]nasmuch as further proceedings will be required in any event, it is appropriate to address what appear to be significant errors in the bankruptcy judge's analysis." In re Kool, Mann, 233 B.R. 291, 1999 WL 249423, slip op. at 7 (1995). Judge Fullam stated that the Bankruptcy Court did not adequately consider the effect of the time pressure on the parties' negotiations, and that the Bankruptcy Court had put too much emphasis on the fact that the senior Coffey was an accountant. He also cautioned that the Bankruptcy Court paid too little attention to the findings made by Judge Forester in Kentucky and the views expressed by the Sixth Circuit.
23
A "more serious error," according to Judge Fullam, was the complete absence of a "causal relationship between the alleged fraudulent misrepresentations and inaccurate financial records, on the one hand, and damage to the debtor on the other." Id. at 9. He expressed concern about the methodology used by Kool Mann's expert because it was "based upon hypothetical cash flow projections bearing little or no relationship to the actual facts pertaining to this particular business." Id. at 10. The court therefore concluded that "[o]n this record, the evidence is insufficient to establish the amount of damages attributable to the Coffey's misrepresentations." Id. at 10-11.
24
Moreover, Judge Fullam noted that the Bankruptcy Court should not have credited Kool Mann with the assumed indebtedness and that Kool Mann was not entitled to the Tax Savings credit because the Tax Savings Side Letter contemplated that the credit would occur only when the Coffeys first realized their tax saving. "Since the debtor has not yet paid the purchase price, there has been no tax saving, and the debtor is not yet entitled to the credit." Id. at 12.
D. First Appeal to the Court of Appeals
25
The parties appealed Judge Fullam's decision. On February 29, 1996, a panel of this Court summarily affirmed Judge Fullam's decision in its entirety, without opinion. See In re Kool, Mann, 79 F.3d 1138 (3d Cir.1996).
E. Remand to the Bankruptcy Court
26
On remand, the parties proceeded in the Bankruptcy Court to reestimate the Coffeys' claim, agreeing to present additional evidence to supplement the pre-existing record. An order was issued by Judge Gindin on June 24, 1996 setting forth the procedure to be followed and stating that the Bankruptcy Court would "adjudicate and determine the Coffeys' claim and the debtor's objection thereto thereby making an estimation of the claim" unnecessary. In re Kool, Mann, No. 390-00017, order at 1 (Bankr.D.V.I. Jun. 24, 1996). A motion for an immediate trial on the adversary proceeding, however, was denied.
27
Over the next several years, the Bankruptcy Court issued three decisions relevant to this appeal.
28
1. The Bankruptcy Court's March 1999 Findings
29
Judge Gindin issued his new findings with regard to the value of the Coffeys' claim in a March 1999 Opinion (the "March 1999 Findings"). See In re Kool, Mann, 233 B.R. 291 (1999). Once again finding that the Coffeys had committed fraud, Gindin listed seven specific instances of fraud and their related dollar amounts:
30
1. The overvaluation of 33 houseboats for a total of $330,000;
31
2. In the November 30, 1985 financials, the listing of the value of houseboats as $429,607 in inventory when those boats did not exist;
32
3. In the November 30, 1985 financials, the listing of the value of motors in inventory as $40,190 when they did not exist;
33
4. In the November 30, 1985 financials, the overstating of profits by $100,000 as a result of incorrectly recording the sale and purchase of motors;
34
5. Representation by the Coffeys that the purchase of new houseboats and sale of old houseboats would "wash" or show a little profit, when the transaction actually resulted in a loss of $168,500;
35
6. Disclosure in a report submitted by Coffeys' expert, James Graves (the "Graves Report"), that costs of sales of boat motors in the amount of $58,000 were omitted from the financials; and
36
7. L. Coleman Coffey's testimony that he represented that cash flow was over $500,000 per year, when it was only $188,848.
37
In re Kool, Mann, 233 B.R. at 301. According to the Bankruptcy Court, the aggregate dollar amount of these misrepresentations totaled roughly $1.487 million. Id. at 305 n. 10. The Bankruptcy Court also found 7 additional instances of fraud which did not result in corresponding exact dollar amounts:
38
1. Coffey's representation that the financial statements were kept in accordance with GAAP, when they were not kept in accordance with GAAP;
39
2. Violation in the November 30, 1985 financials of GAAP Financial Accounting Standard No. 57 because no disclosure was made of certain intercompany transactions between VC and LCSDI;
40
3. In the November 30, 1985 financials, improper crediting to the account of "Notes Receivables" when the transaction was actually a sale of substantial assets;
41
4. Overstatement of assets of business due to the reporting of sale of houseboats under the asset side of the balance sheet, without a corresponding reduction on the liability side; 5. Breach of the representation that there were no changes in the methodology of maintaining LCSDI's financial statements, despite Coffey's testimony that he changed the way LCSDI recorded houseboat transactions from the September 30, 1985 financials to the November 30, 1985 financials;
42
6. Coffey's admission that he breached the representation that the financial statements did not include any non-recurring income or special items of income; and
43
7. Coffey's testimony that all of the information concerning the overstatements, errors and changes in accounting methodology was available to him prior to closing.
44
Id. at 301-02. The court rejected the Coffeys' contention that the December 1985 Letter remedied each of these misrepresentations. Engaging in a "multiple cash flow analysis" advanced by Kool Mann's expert,5 the Bankruptcy Court determined that the combined net effect of all of these misrepresentations caused more than a mere dollar-for-dollar reduction to the value of LCSDI. The court concluded that the inaccuracies amounted to valuing the company at $2,288,167. That value resulted in more than a $2.7 million reduction from the $5 million purchase price.
45
The Bankruptcy Court then addressed a number of what it deemed to be "procedural" issues. As an initial matter, the court rejected the Coffeys' complaint that it improperly conducted a trial on the merits instead of an "Estimation Hearing," ruling that a bankruptcy judge has wide discretion in deciding how an estimation hearing may be conducted.
46
Next, Judge Gindin found that most of Judge Fullam's July 1995 Opinion did not bind him as it merely expressed several areas of "concern" regarding the fraud evidence and testimony. According to the Bankruptcy Court, Judge Fullam in his District Court opinion made three rulings which were affirmed by this Court in 1996, and which Judge Gindin was accordingly obliged to follow: (1) that the Coffeys were afforded inadequate notice that the findings of the Estimation Hearing would be binding on the adversary proceeding, (2) that Kool Mann was not entitled to a credit for the pre-existing indebtedness of LCSDI (assumption of the $1.213 million debt), and (3) that Kool Mann was not entitled to a Tax Savings credit because the Coffeys had not yet received any tax benefit.
47
As to the "substantive" issues, the Bankruptcy Court applied Kentucky law and ruled that Kool Mann satisfied each of the elements supporting its fraud case against the Coffeys. Judge Gindin, among other things, then rejected Kool Mann's request for punitive damages and rejected the Coffeys' request for pre-petition interest.
48
Accordingly, the Bankruptcy Court held that due to the Coffeys' fraud, the value of LCSDI at the time of the sale and after all elements of fraud and misrepresentation had been discounted, was actually $2,288,167. From this amount, the court deducted $1 million, the downpayment previously made by Kool Mann, and ruled that the value of the Coffeys' claim in the bankruptcy proceeding was $1.288 million. An Order was filed on April 20, 1999, reflecting the foregoing as well as relieving Moore from his individual obligations under his personal guaranty because of the Coffeys' fraud as it would be held under Kentucky law. See, e.g., Moore, Owen, Thomas & Co., 992 F.2d 1439, 1448 (6th Cir.1993).
49
2. The Bankruptcy Court's November 1999 Opinion
50
Shortly after the Bankruptcy Court issued its findings in connection with the value of the Coffeys' claim, Kool Mann and Moore filed a motion for summary judgment in the related adversary proceeding, which the court granted on November 8, 1999 (the "November 1999 Opinion"). There, Judge Gindin ruled that the claims raised in the adversary proceeding were identical to those raised in valuing the Coffeys' claim, and that, therefore, the findings made in the March 1999 Findings had preclusive effect on the claims in the adversary proceeding under the doctrine of res judicata. See In re Kool, Mann, No. 390-00017, slip op. at 14 (Bankr.D.V.I. Nov. 8, 1999). Moreover, Judge Gindin ruled that although Moore was not technically a party when the earlier March 1999 Findings were made, all claims involving Moore were also precluded by reason of res judicata since his interests were identical to those of Kool Mann. See id. at 10-13.
51
Judgment was entered in the adversary proceeding in favor of Kool Mann and Moore.
52
3. The Bankruptcy Court's October 10, 2000 Opinion
53
On October 10, 2000, the Bankruptcy Court ruled on Kool Mann's motion to amend the court's March 1999 Findings (the "October 2000 Opinion"). There, Judge Gindin ruled that Kool Mann was entitled to an additional credit of $528,350.22.
54
There were two grounds for the court's ruling. First, in light of the court's prior rejection of the Coffeys' request for pre-petition interest, Judge Gindin ruled that prior interest payments made by Kool Mann in 1986 in the amount of $291,784 should be recharacterized as principal payments.
55
Second, the Bankruptcy Court ruled that because the Coffeys received a depreciation recapture in 1986, they had, indeed, realized the Tax Savings contemplated under the Tax Savings Side Letter. Accordingly, Judge Gindin ruled that Kool Mann was entitled to a Tax Savings credit of $236,566.22 pursuant to that agreement.6
56
The Bankruptcy Court, however, rejected Kool Mann's arguments that it was entitled to a credit for the pre-existing indebtedness of LCSDI and also rejected its contention that it was entitled to attorneys' fees.
57
Judgment was entered on October 24, 2000 reflecting an additional credit to Kool Mann in the amounts of $291,784 and $236,566.22. Consequently, the value of the Coffeys' claim in bankruptcy was reduced to $759,816.78.
F. Second Appeal to District Court
58
The parties again cross-appealed the various orders of Judge Gindin to the District Court of the Virgin Islands. On October 2, 2001, the Honorable Stanley Brotman, U.S. District Court Judge of the District of New Jersey, sitting by designation, issued an opinion affirming in part and reversing in part Judge Gindin's orders (the "October 2001 Opinion").
59
Approving of most of the Bankruptcy Court's decision, Judge Brotman agreed with the Bankruptcy Court that the bulk of Judge Fullam's July 1995 Opinion was dicta, and that it merely vacated the Bankruptcy Court's initial findings on procedural grounds (i.e., inadequate notice) with only two additional substantive holdings: (1) that Kool Mann was not entitled to a set-off for payments made on assumed indebtedness of LCSDI; and (2) that Kool Mann was not entitled to a set-off for Tax Savings. Judge Brotman then found that in any event, "the Bankruptcy Court adequately responded on remand to Judge Fullam's comments." In re Kool, Mann, Nos. 99-00058, 99-00204, 00-00230, slip op. at 14 (D.V.I. Oct. 2, 2001). However, Judge Brotman ruled that the Bankruptcy Court erred with respect to his granting of the Tax Savings issue and denied that credit to Kool Mann.
60
Judge Brotman's rulings are set forth in the District Court's judgment issued on October 2, 2001, and can be succinctly summarized as follows:
61
1. Bankruptcy Court's decision to combine the Estimation Hearing and the adjudication of Kool Mann's claim is AFFIRMED;
62
2. Bankruptcy Court's finding of fraud by the Coffeys, and calculating the actual value of LCSDI as a result of that fraud at $2,288,167 is AFFIRMED;
63
3. Bankruptcy Court's grant of credit to Kool Mann for the $1 million downpayment is AFFIRMED;
64
4. Bankruptcy Court's release of Moore of his obligations under the personal guaranty is AFFIRMED;
65
5. Bankruptcy Court's denial of Coffeys' request for pre-petition interest is AFFIRMED;
66
6. Bankruptcy Court's denial of credit to Kool Mann for assumed indebtedness in the amount of $1.213 million is AFFIRMED;
67
7. Bankruptcy Court's denial of punitive damages to Kool Mann is AFFIRMED;
68
8. Bankruptcy Court's grant of summary judgment in favor of Moore in the adversary proceeding is AFFIRMED on basis of collateral estoppel, not res judicata;7
69
9. Bankruptcy Court's grant of credit to Kool Mann in the amount of $236,566.22 in tax savings is REVERSED;
70
10. Bankruptcy Court's grant of credit to Kool Mann of $291,784 due to recharacterization of interest payments to principal payments is AFFIRMED.
71
See In re Kool, Mann, Nos. 99-00058, 99-00204, 00-00203, judgment at 2-4 (D.V.I. Oct. 2, 2001). Consequently, Judge Brotman ruled that the total balance due and owing to the Coffeys by Kool Mann was $1,051,600.78.8
G. This Appeal
72
In this appeal, the Coffeys claim that the District Court erred in the following respects: (1) that the Bankruptcy Court's rulings on remand concerning fraud, the calculation of fraud damages and its decision to forgo an Estimation Hearing violated our mandate affirming Judge Fullam's July 1995 Opinion; (2) that the Bankruptcy Court's findings of fraud were not supported in the record; (3) that the Bankruptcy Court's calculation of damages was erroneous; and (4) that the Bankruptcy Court improperly recharacterized the 1986 interest payments as principal.
73
Kool Mann opposes the Coffeys' contentions and argues further that, as a threshold matter, the Coffeys are precluded from making any of their arguments on appeal because they failed to challenge properly the Bankruptcy Court's November 1999 judgment in the adversary proceeding. Moreover, Kool Mann cross-appeals the District Court's ruling that affirmed the Bankruptcy Court's denial of credit for payments made by Kool Mann on assumed indebtedness of LCSDI, and the District Court's reversal of the Bankruptcy Court's decision to permit the Tax Savings credit.
III. Standard of Review
74
As the District Court sat as an appellate court in this matter, our review of the District Court's determination is plenary. See Fellheimer, Eichen & Braverman, P.C. v. Charter Technologies, Inc., 57 F.3d 1215, 1223 (3d Cir.1995). "In reviewing the bankruptcy court's determinations, we exercise the same standard of review as the district court." Id. (citing Brown v. Pennsylvania State Employees Credit Union, 851 F.2d 81, 84 (3d Cir. 1988)). The Bankruptcy Court's factual findings may not be set aside unless they are clearly erroneous. Bankruptcy Rule 8013; Brown, 851 F.2d at 84 (citation omitted). "It is the responsibility of an appellate court to accept the ultimate factual determination of the fact-finder unless that determination either is completely devoid of minimum evidentiary support displaying some hue of credibility or bears no rational relationship to the supportive evidentiary data." Hoots v. Pennsylvania, 703 F.2d 722, 725 (3d Cir.1983) (citation omitted). "Furthermore, in reviewing the bankruptcy court's factual findings we are to give due regard to the opportunity of that court to judge first-hand the credibility of witnesses." Fellheimer, 57 F.3d at 1223 (citing Bankruptcy Rule 8013) (internal quotation marks omitted). The Bankruptcy Court's legal determinations are reviewed under a plenary standard, and its exercises of discretion for abuse thereof. In re Engel, 124 F.3d 567, 571 (3d Cir.1997).
IV. Waiver
75
Kool Mann contends that in this appeal the Coffeys raise issues relating only to the findings made by the Bankruptcy Court with respect to the value of their claim, and fail to challenge the Bankruptcy Court's November 1999 judgment in the adversary proceeding. It reasons that this failure means that any objection to the judgment in the adversary proceeding has been waived, and that therefore, the judgment in the adversary proceeding, in turn, has preclusive effect on the findings of fraud underlying the value of the Coffeys' claim. Consequently, Kool Mann concludes that the Coffeys are estopped from advancing the arguments they make in this appeal since these arguments urge a result in the claim valuation inconsistent with the judgment entered in the adversary proceeding.
76
We disagree. As an initial matter, we conclude that the Coffeys did not fail to challenge the judgment rendered by the Bankruptcy Court in the adversary proceeding. A number of the issues raised by the Coffeys in their opening brief directly challenge various findings made by the Bankruptcy Court which form the very underpinning of both the value of their claim and the merits of Kool Mann's adversary proceeding. For instance, by arguing that the lower court's findings of fraud were clearly erroneous, we interpret such a challenge to mean that the Coffeys believed that the findings of fraud supporting both judgments — the one made pursuant to the claim valuation and the one made pursuant to the adversary proceeding — were clearly erroneous. While the Coffeys could have made their intentions more explicit, the context of their arguments makes it reasonably clear that they challenged the merits of both judgments.
77
Moreover, in advancing its argument, Kool Mann confuses the failure of the Coffeys to challenge the preclusive effect of the March 1999 Findings on the adversary proceeding with the failure to challenge the judgment in the adversary proceeding itself. It is true that the Coffeys cannot — and do not — argue in this appeal that preclusion principles do not apply between the findings made in connection with their claim valuation and the merits underlying the adversary proceedings. The issues involved in both proceedings are, in fact, one and the same, and the Coffeys' opening brief does not question the res judicata analysis conducted by the Bankruptcy Court. See Nagle v. Alspach, 8 F.3d 141, 143 (3d Cir.1993) ("When an issue is either not set forth in the statement of issues presented or not pursued in the argument section of the brief, the appellant has abandoned and waived that issue on appeal"). However, the fact that the Coffeys have abandoned their right to challenge the binding effect of one judgment upon another, does not mean that they have lost the ability to challenge the merits of both judgments.
78
Accordingly, we reject this argument and turn to the remaining claims in this appeal.
V. Law of the Case
79
The Coffeys contend that the Bankruptcy Court's findings on remand violated the "law of the case" doctrine by ignoring our 1996 mandate affirming Judge Fullam's July 1995 Opinion. See Bankers Trust v. Bethlehem Steel Corp., 761 F.2d 943, 949 (3d Cir.1985) ("[On remand, the] trial court must proceed in accordance with the mandate and the law of the case as established on appeal."). First, they argue that the Bankruptcy Court's findings of fraud and calculation of fraud damages in its March 1999 Findings contradicted the holdings made by Judge Fullam when he noted that the evidence was insufficient to support a finding of fraud and when he criticized the methodology used by Kool Mann's expert in valuing LCSDI. Second, they contend that the Bankruptcy Court violated Judge Fullam's instruction by failing to conduct a separate Estimation Hearing on remand.
80
A. The Bankruptcy Court's Findings of Fraud and Calculation of Fraud Damages on Remand
81
Upon careful examination of the District Court's July 1995 Opinion, we conclude that Judge Fullam's sole mandate (and therefore our sole 1996 mandate) was to vacate Judge Gindin's June 1993 Findings on procedural grounds and to order a new trial on the merits. Consequently, the views expressed by Judge Fullam in his 1995 opinion concerning the findings of fraud and calculation of damages should be read merely as dicta. In the July 1995 Opinion, Judge Fullam held only that the Coffeys did not receive adequate notice that the Estimation Hearing was to be combined with the adversary proceeding, and he therefore vacated the Bankruptcy Court's initial June 1993 Findings. The Bankruptcy Court was directed to:
82
reconsider and reestablish an estimated value of the Coffey's claim, on the basis of the present evidentiary record together with such additional evidence as the parties may present. The adversary proceeding will be remanded for trial on the merits (or such other disposition as the parties may consent to).
83
In re Kool, Mann, No. 390-00017, slip op. at 12 (D.V.I. Jul. 17, 1995). Once Judge Fullam decided that notice to the Coffeys' was inadequate, he offered a number of observations and comments on the evidence and other matters before Judge Gindin.
84
Inasmuch as further proceedings will be required in any event, it is appropriate to address what appear to be significant errors in the bankruptcy judge's analysis.
85
Id. at 7 (emphasis added).
86
Each of Judge Fullam's comments about the merits of the case was simply precatory and was not necessary to the actual holding of the case. Accordingly, these statements are properly considered dicta, and are not binding. See Government of the Virgin Islands v. Marsham, 293 F.3d 114, 2002 WL 1204957, at *4 (3d Cir.2002) ("That statement, however, is dictum and is not binding on this, or any other, panel of this Court."); Calhoun v. Yamaha Motor Corp., 216 F.3d 338, 344 n. 9 (3d Cir. 2000) ("Insofar as this determination was not necessary to either court's ultimate holding, however, it properly is classified as dictum. It therefore does not possess a binding effect on us pursuant to the `law of the case' doctrine."). Therefore, the "significant errors" deemed to have been made by the Bankruptcy Court concerning the sufficiency of the evidence of fraud, causation, and damages — as well as Judge Fullam's belief that Kool Mann was not entitled to an assumed indebtedness credit or a Tax Savings credit — were not binding on remand.
87
Accordingly, the Bankruptcy Court was free to consider "those issues not expressly or implicitly disposed of by the appellate decision," and was "thereby free to make any order or direction in further progress of the case, not inconsistent with the decision of the appellate court, as to any question not settled by the decision." Bankers Trust, 761 F.2d at 950 ("upon a reversal and remand for further consistent proceedings, the case goes back to the trial court and there stands for a new determination of the issues presented as though they had not been determined before, pursuant to the principles of law enunciated in the appellate opinion") (emphasis added). Therefore, we conclude that the Bankruptcy Court did not violate our 1996 mandate affirming Judge Fullam's 1995 order when it again found fraud by the Coffeys and entered a calculation of claim damages in its March 1999 Findings.
B. The Estimation Hearing on Remand
88
The Coffeys also contend that the Bankruptcy Court violated Judge Fullam's mandate by forgoing the Estimation Hearing on remand, and by effectively combining the Estimation Hearing, claim objection, and the adversary proceeding into one proceeding. We disagree.
89
After Judge Fullam's decision was issued, the Bankruptcy Court held numerous telephone conferences with counsel to decide the best procedure for determining the value of the Coffeys' claim in bankruptcy and to determine the merits of the adversary proceeding. Kool Mann filed a motion to consolidate all issues into one proceeding, or alternatively, to set a hearing only on Kool Mann's claim objection, or alternatively, to set the adversary proceeding for immediate trial.
90
The Bankruptcy Court ruled on the motion to consolidate pursuant to its Case Management Order, dated June 24, 1996. There, the Court determined to go forward with the claim objection, stating that
91
[t]he debtor's objection to the Coffeys' proof of claim in this matter will be consolidated with the remanded estimation proceeding pursuant to Rule 42(a) Fed.R.Civ.P. and determined in accordance with 11 U.S.C. § 502(b)9 and Bankruptcy Rule 3007;10 as a result of this consolidation the Court will adjudicate and determine the Coffeys' claim and the debtor's objection thereto thereby making an estimation of the claim under § 502(c) unnecessary.
92
In re Kool, Mann, No. 390-00017, order at 1 (Bankr.D.V.I. Jun. 24, 1996). With regard to the valuation of the Coffeys' claim, the parties agreed to a trial on the papers and were permitted to present additional evidence through briefs and affidavits to supplement the already existing 1992 record. The parties waived the right to present further live testimony and accordingly waived the right to further cross-examine witnesses in this matter.
93
This procedure did not violate Judge Fullam's mandate. In remanding the case to the Bankruptcy Court, Judge Fullam required that the Bankruptcy Court do two things: (1) reconsider the value of the Coffeys' claim and (2) remand the adversary proceeding for trial.
94
As to Judge Fullam's first requirement (determination of the Coffeys' claim), there was no requirement that a particular kind of procedure be employed in estimating the value of the Coffeys' claim. In Bittner v. Borne, 691 F.2d 134 (3d Cir.1982), we noted that the Bankruptcy Code was silent "as to the manner in which contingent or unliquidated claims are to be estimated," and that under the authority of the Bankruptcy Court to estimate the value of claims under 11 U.S.C. § 502(c), "[t]he bankruptcy court ha[d] exclusive jurisdiction to direct the manner and the time in which such a claim is to be liquidated or estimated as to its amount, and its decision should be subject to review only on the ground of abuse of discretion." Id. at 138. There, we rejected the stockholder's argument that the bankruptcy court had erred because it assessed the ultimate merits rather than estimating their claims, substantially similar to the argument presented here by the Coffeys. Accordingly, we wrote that
95
we are persuaded that Congress intended the [Estimation Hearing] procedure to be undertaken initially by the bankruptcy judge, using whatever method is best suited to the particular contingencies at issue.... In reviewing the method by which a bankruptcy court has ascertained the value of a claim under Section 502(c)(1), an appellate court may only reverse if the bankruptcy court has abused its discretion. The appellate court must defer to the congressional intent to accord wide latitude to the decisions of the [bankruptcy court].
96
Id. at 135 (emphasis added). Indeed, we further noted that "[i]t is conceivable that in rare and unusual cases arbitration or even a jury trial on all or some of the issues may be necessary to obtain a reasonably accurate evaluation of the claims." Id.
97
Judge Gindin's decision to conduct a trial on the papers in connection with the claim objection and dispense with an Estimation Hearing was not an abuse of discretion. From a judicial economy standpoint, the Bankruptcy Court's decision to forgo an extraneous Estimation Hearing under § 502(c) makes practical sense since there would be no need to estimate the Coffeys' claim once the claims were actually adjudicated and valued under § 502(b).
98
As to Judge Fullam's second requirement (that the adversary proceeding be remanded for trial), the Coffeys contend that the Bankruptcy Court violated this mandate by combining the trial on the adversary proceeding with the claim objection proceeding. However, the adversary proceeding was never actually combined with the adjudication of the value of the Coffeys' claim. Indeed, the Case Management Order of June 24, 1996 setting forth the procedure of the claim objection denied the motion to set a date for the adversary proceeding to go to immediate trial, suggesting that the claim objection and the adversary proceeding were to be treated separately.
99
Rather, the Bankruptcy Court waited until the proceeding on the claim objection was completed, and then entertained summary judgment motion papers on the adversary proceeding to determine whether — as in all summary judgment motions — a trial on the merits was warranted. In a separate November 1999 Opinion, the Bankruptcy Court determined that the principles of res judicata prevented it from entering a result in the adversary proceeding that was different than that of the claim objection,11 and therefore the Bankruptcy Court entered summary judgment in favor of Kool Mann and Moore.
100
Accordingly, we conclude that the Bankruptcy Court did not violate Judge Fullam's mandate by dispensing with the Estimation Hearing and deciding the adversary proceeding in a summary judgment proceeding.
VI. Findings of Fraud
101
Since Judge Fullam's comments in 1995 are not binding as to the facts of this case, the only issue concerning the Bankruptcy Court's findings of fraudulent behavior by the Coffeys on remand was whether they were clearly erroneous. As described below, we are satisfied that the findings of fraud made by the Bankruptcy Court and affirmed by the District Court are correct and amply supported by the record.12
102
The parties do not contest the application of Kentucky law to the merits of this action. They also do not dispute that, under Kentucky law, the party alleging fraud must prove five elements: (1) a material misrepresentation that is false; (2) is known to be false or made recklessly; (3) made with inducement to be acted upon; (4) which is relied upon; and (5) causes injury. See Moore, Owen Thomas & Co. v. Coffey, 992 F.2d 1439, 1444 (6th Cir.1993).
A. Material Misrepresentations
103
As previously noted, the Bankruptcy Court found numerous instances of misrepresentations made by the Coffeys during the negotiation of the sale of LCSDI, especially with respect to financial information that was provided to Kool Mann as part of its due diligence concerning the company. In some cases, the value of the particular misrepresentations could be quantified, such as: (1) the value of houseboats as $429,607 when they did not exist; (2) the value of motors in inventory as $40,190 when they did not exist; (3) the overstatement of profits by $100,000 by incorrectly recording the sale and purchase of motors; (4) omission of costs of boat motor sales by $58,000; and (5) improper credits to "Notes Receivables." The aggregate total amount of these quantifiable misrepresentations was at least $1.4 million. See In re Kool, Mann, 233 B.R. at 305 n. 10. The affidavit testimony adduced in the bankruptcy proceedings combined with the financial statements presented by the Coffeys to Kool Mann amply support a conclusion that these items were inaccurately reported prior to sale.
104
Moreover, the record supported Judge Gindin's finding that a number of false statements were made about the financial statements by the Coffeys, many of which were unquantifiable. For example, although the Purchase Agreement warranted that the financial statements were prepared in accordance with Generally Accepted Accounting Principles ("GAAP"), L. Coleman Coffey conceded in a deposition that the financial statements were not kept in accordance with GAAP. See Purchase Agreement at ¶ 5(e). In addition, the record supports the finding that prior to closing, the Coffeys represented that there were no changes made in the methodology of maintaining LCSDI's financial statements, despite L. Coleman Coffey's own testimony conceding that he changed the way LCSDI recorded certain houseboat transactions from the September 30, 1985 financials to the November 30, 1985 financials. Moreover, L. Coleman Coffey conceded that he breached the representation made in ¶ 5(e) of the Purchase Agreement that the financial statements did not include any non-recurring or special items of income.
105
Finally, in connection with cash flow, L. Coleman Coffey also conceded that he had told Moore prior to closing that cash flow was around $500,000 to $600,000 per year. Both Kool Mann and the Coffeys introduced evidence — in the form of expert and lay testimony — that LCSDI's cash flow was, in fact, far less than $500,000 in 1985.
106
Accordingly, the findings of material misrepresentations by the Bankruptcy Court were well supported in the record.
B. Knowledge of Fraud
107
There is also sufficient evidence to support Judge Gindin's finding that the Coffeys knew of their fraud. L. Coleman Coffey testified that he had access to all of the correct information prior to the closing date, and his formal training as a certified public accountant has not been disputed. Moreover, Judge Gindin made various credibility determinations regarding L. Coleman Coffey's testimony, and determined, as the fact finder is entitled to do, that his testimony was not credible in many respects, and that Coffey was aware of the misrepresentations that were being made prior to closing. Scully v. U.S. WATS, Inc., 238 F.3d 497, 506 (3d Cir. 2001) ("credibility determinations are the unique province of a fact finder").
C. Inducement to Rely
108
Judge Gindin was entitled to find, as he did, that the Coffeys intended that Kool Mann rely upon many inaccuracies presented during negotiations. The testimony adduced at trial supported the view that L. Coleman Coffey knew that in order to obtain a $5 million purchase price, he had to show a cash flow of over $500,000. The evidence also showed that Coffey conveniently provided a cash flow figure in that range, and that he knowingly provided the inaccurate financial statements which supported his cash flow range. As discussed above, the Bankruptcy Court was entitled to find that Coffey knew of the numerous misrepresentations and inaccuracies prior to providing the information to Kool Mann. Accordingly, it was not clearly erroneous for the Bankruptcy Court to have found that Coffey intended for Kool Mann to rely upon his misrepresentations.
D. Reliance
109
Judge Gindin was also entitled to find that Kool Mann did, in fact, rely upon the misrepresentations when it agreed to purchase LCSDI. The evidence demonstrates that Kool Mann calculated its purchase price on values and figures presented on the financial statements provided to Kool Mann. Moore testified that he needed a cash flow of over $500,000 to be able to service the debt he would incur as a result of the purchase of LCSDI and that he would not have entered into the transaction had he known that cash flow was not over $500,000. This evidence is sufficient to establish reliance on the part of Kool Mann.
E. Causation of Injury
110
Finally, there is little doubt that the record supports the existence of damages to Kool Mann caused by the misrepresentations discussed above. Moore testified that his calculation of the purchase price was based upon the financial statements provided to him by L. Coleman Coffey. Moreover, the record is replete with references to the amount and magnitude of various misrepresentations, and their respective effects on asset valuation and cash flow.
111
Accordingly, we will affirm the Bankruptcy Court's finding of fraud by the Coffeys.
VII. Calculation of Damages Due to Fraud
112
The Coffeys challenge the method of calculation of fraud damages employed by the Bankruptcy Court in 1999, contending that its method used to value LCSDI without fraud was incorrect. To determine the magnitude of the injury to Kool Mann as a result of the Coffeys' fraud, the Bankruptcy Court sought to establish the "true value" of LCSDI at the time of sale. See Sowell v. Butcher, 926 F.2d 289, 297 (3d Cir.1991) ("under ... common law fraud actions, a plaintiff's damages are most commonly calculated as the difference between the price paid for the security and the security's `true value.'"). This "true value" represented the real worth of LCSDI at the time of the sale in 1985 without any inaccuracies, and thereby subsumed all of the fraudulent conduct by the Coffeys.
113
In order to ascertain LCSDI's "true value," the Bankruptcy Court utilized a multiple of cash flow analysis by calculating LCSDI's actual 1985 cash flow without the misrepresentations and projecting it over 15 years at a pre-determined 7.5% growth rate and an 18.5% present value discount factor. This calculation purportedly yielded a value of $2,288,167. For the reasons set forth below, while we approve of the methodology employed by the Bankruptcy Court in arriving at LCSDI's "true value," we conclude that the value of LCSDI, after taking into account all of the fraud found by the Bankruptcy Court, should be corrected to reflect a value of $1,766,631, not $2,288,167.
A. LCSDI's 1985 Cash Flow
114
Both the Coffeys and Kool Mann submitted expert testimony on LCSDI's actual 1985 cash flow. The Coffeys' expert, James Graves, determined that free cash flow in 1985 was $352,585. See Graves Report at 2. In reaching this figure, Graves noted that he made two additional downward adjustments which had not yet been disclosed at that time: (1) a cost of sale increase of $29,000 due to sale of a 46 foot boat in 1985; and (2) understatement of the cost of motors sold in 1985 by $58,000.
115
Judge Gindin noted that Graves' figure was artificially inflated because it included proceeds from net long-term debt in the amount of $173,000. In other words, Graves added the difference between the proceeds LCSDI borrowed from creditors in 1985 minus the amount LCSDI was required to pay back to those creditors in 1985 (which netted to $173,000). Agreeing with one of Kool Mann's experts, Thomas Millon, that net debt proceeds do not belong in cash flow figures, see Affidavit of Thomas Millon dated June 27, 1996 at ¶ 18, the Bankruptcy Court reduced Mr. Graves' figure further by $173,000 to arrive at $179,585.
116
The Bankruptcy Court also analyzed the testimony and exhibits of Kool Mann's cash flow expert, Robert Malinowski. Piggybacking from Malinowski's cash flow analysis presented at the Estimation Hearing in 1992 (at which time he calculated LCSDI's actual cash flow to be $246,848), Malinowski deducted from his original amount of $246,848 the $58,000 cost of motors item disclosed on the Graves report to arrive at a cash flow of $188,848. See Affidavit of Robert Malinowski dated June 27, 1996 at ¶¶ 5-7. Noting that both experts arrived at nearly the same cash flow amount (after deducting long-term debt proceeds from Graves' figure), and also observing that the Coffeys did not dispute the accuracy of Malinowski's cash flow analysis, Judge Gindin applied the $188,848 amount as LCSDI's 1985 actual cash flow.13
117
The Coffeys raise two objections to the Bankruptcy Court's calculation of cash flow. First, they complain that the reduction of $173,000 in cash flow due to the inclusion of net long-term debt proceeds is, at worst, a disagreement among experts, and therefore cannot have been proximately caused by the Coffeys' fraud. Accordingly, they argue that the cash flow value used by Judge Gindin should be increased by $173,000.
118
We are not persuaded. The Bankruptcy Court, as finder of fact, was entitled to exclude net debt proceeds from LCSDI's cash flow. Hoots, 703 F.2d at 725 ("It is the responsibility of an appellate court to accept the ultimate factual determination of the fact-finder unless that determination either is completely devoid of minimum evidentiary support displaying some hue of credibility or bears no rational relationship to the supportive evidentiary data."). As an initial matter, it is important to remember that the Coffeys represented prior to closing that LCSDI's cash flow was around $500,000 to $600,000. On this record, the Bankruptcy Court could have found that this representation was unqualified and unconditioned — that is, the representation that cash flow was above $500,000 was not conditioned upon the need to borrow more money in order to reach that amount. See Affidavit of Thomas Millon at ¶ 18 ("the free cash flow is artificially inflated as a result of the business borrowing $173,000 more each year than it repays"). Accordingly, we conclude that finding that this inflation of cash flow is a result of fraud is not clearly erroneous on the state of this record.
119
Second, the Coffeys contend that the $58,000 reduction in cash flow for understated costs related to motors sold in 1985 was an improper deduction because this "understatement" had been disclosed prior to closing. As proof, the Coffeys refer to a schedule attached to the 1985 Purchase Agreement listing a number of motors with "not paid" written next to some of them, representing motors in LCSDI's inventory which were ultimately sold to Kool Mann and which were not fully paid off. According to the Coffeys, these motors were the very motors related to the $58,000 cost. Kool Mann, in turn, claims that these motors are different from those that were the subject of the $58,000 reduction, arguing that an understated "cost of motors sold" in 1985 could not be the same thing as motors remaining in LCSDI's inventory at the end of 1985.
120
Again, such an argument may be proper before the finder of fact, but it is not for us — a reviewing court — to decide. The Bankruptcy Court's decision to believe Kool Mann's explanation over the Coffeys' explanation, and to ascribe fraud to the Coffeys, is supported by this record and is therefore not clearly erroneous. Indeed, there is nothing in the record to show that the disclosed debt on certain "unpaid" motors is the same "cost" of motors sold which was unreported and which resulted in overinflated revenues by $58,000.
121
Accordingly, we find that Judge Gindin did not err in concluding that LCSDI's actual cash flow was $188,848.
B. Projection of Cash Flow
122
Once LCSDI's 1985 cash flow was ascertained, the Bankruptcy Court applied the cash flow to certain growth rates and discounts projected by Kool Mann's methodology expert, Thomas Millon, who the Bankruptcy Court found to be credible. The Bankruptcy Court purported to use the cash flow amount of $188,848 and to apply to it a number of factors, including an annualized growth rate of 7.5% and a present value discount of 18.5% over 15 years. According to Kool Mann's expert, the rates and time frame utilized were industry standards in valuing a company like LCSDI, an assertion which was not disputed by the Coffeys' expert. Using this methodology, the Bankruptcy Court concluded that the actual value of LCSDI — after discounting for all of the Coffeys' fraud — was $2,288,167 in 1985, a reduction in value of $2,711,833 from the $5 million purchase price. See In re Kool, Mann, 233 B.R. at 307-08.14
123
The Coffeys argue that the cash flow methodology used by the Bankruptcy Court is objectionable in that it is the same methodology that was criticized by Judge Fullam in his July 1995 Opinion. However, since we have already concluded that that portion of Judge Fullam's decision was dictum, see Section V.A., supra, we reject the Coffeys' objection to the Bankruptcy Court's damage calculation.
124
In any event, we are satisfied that the Bankruptcy Court did not err in its use of the cash flow methodology in this particular case. A number of courts have commented on the propriety of the discounted cash flow methodology for certain valuation situations, particularly where valuing stock and other securities of a company. See In re Valley-Vulcan Mold Co., 2001 WL 224066, No. 99-4129 (6th Cir. Feb. 26, 2001) (noting, with approval, that expert's "valuations were based on discounted cash-flow valuation, a well-recognized methodology for determining a business's going concern values."); In the Matter of Genesis Health Ventures, Inc., 266 B.R. 591, 613 (2001) (noting the use of the discounted cash flow method as one method to support value of an enterprise); In re Grant Broadcasting of Philadelphia, Inc., 75 B.R. 819, 824 (E.D.Pa.1987) ("the Debtors' expert used a valuation method, the multiple of cash flow method, which both parties' experts agreed was the most frequently used in the broadcast industry to determine the value of stations."); see also Wilson v. Great American Industries, Inc., 979 F.2d 924, 933 (2d Cir.1992) (approving of "capitalization of earnings method"); Burlington Northern Railroad Co. v. Bair, 815 F.Supp. 1223, 1229 (N.D.Iowa 1993) (approving the discounted cash flow methodology as one of several available "methods of arriving at true market value").
125
Other courts have criticized the use of cash flow valuations in valuing companies, complaining of the imprecision of such a methodology. But even those courts have recognized its value in certain limited situations. See, e.g., Metlyn Realty Corp. v. Esmark, Inc., 763 F.2d 826, 835-36 (7th Cir.1985) (noting that "[s]uch valuations are highly sensitive to assumptions about the firm's costs and rate of growth," and that cash flow studies may not be "the best way" to value a business, but "may be necessary when there is no other way to find value"). Indeed, this Circuit has stated previously that "the law does not command mathematical preciseness from the evidence in finding damages," and that "all that is required is that sufficient facts ... be introduced so that a court can arrive at an intelligent estimate without speculation or conjecture." Scully v. U.S. WATS, Inc., 238 F.3d 497, 515 (3d Cir.2001) (internal quotations omitted); see also Jones & Laughlin Steel Corp. v. Pfeifer, 462 U.S. 523, 552, 103 S.Ct. 2541, 76 L.Ed.2d 768 (1983) ("We do not suggest that the trial judge should embark on a search for "delusive exactness." It is perfectly obvious that the most detailed inquiry can at best produce an approximate result.... But we are satisfied that whatever rate the District Court may choose to discount the estimated stream of future earnings, it must make a deliberate choice, rather than assuming that it is bound by a rule of state law.").
126
The particular facts of this case, which involve the extremely difficult task of valuing the stock of a company which is privately owned and not traded on a public exchange, favor the use of such methods which take into account the expected value of the company's future performance. Indeed, the record shows that if cash flow had been, in fact, somewhere in the $500,000 to $600,000 range (as the Coffeys' represented it was), the cash flow methodology used by the Bankruptcy Court would have valued LCSDI somewhere between $4,816,318 to $5,404,088, consistent with the $5 million agreed upon by the parties. See Millon Aff. at ¶ 6. This fact only further supports Judge Gindin's decision to accept the Millon methodology as a valid way to value LCSDI in 1985.
C. The Value of LCSDI
127
As already noted, the Bankruptcy Court concluded that the "true value" of LCSDI was $2,288,167 in 1985. However, a close examination of the record shows that the application of the methodology employed by the Bankruptcy Court should have yielded a value of LCSDI as $1,766,631, as demonstrated by Exhibit D to Millon's affidavit.
128
In the normal course, given this discrepancy, we would have returned this discrete issue to the District Court for remand to the Bankruptcy Court for recalculation. However, in light of the fact that we are convinced this litigation should be brought to a halt, we have scrupulously analyzed the manner in which the damages figures were reached by Judge Gindin (and affirmed by Judge Brotman) and conclude that the Bankruptcy Court, in fact, intended to apply the $1,766,631 figure.
129
In rough summary, Exhibit D starts with an Adjusted Cash Flow of $188,848 on a 7.5% adjusted annual growth rate and an 18.5% present value factor, each consistent with Judge Gindin's analysis. Had the Bankruptcy Court followed through with the Exhibit D figures, it would have reached a total present value of $1,766,631 for LCSDI. Indeed, this exhibit reveals that for the year 1986, the starting figure of cash flow on a 15 year analysis was the $188,848 value, giving rise to a present value of $173,482.
130
On the other hand, Exhibit C of Millon's affidavit, which has a bottom line figure of $2,288,168, was adopted by the Bankruptcy Court although the details giving rise to this present value were disclaimed, and not used in its analysis, by the Bankruptcy Court. For instance, Exhibit C commences with a cash flow figure of $215,018 (not $188,848) which was derived from Exhibit A.I. attached to Mr. Millon's affidavit (appearing on page 437 of the Joint Appendix). However, in its opinion, the Bankruptcy Court expressly declined to use the hypothetical projections endemic in the analysis contained in Exhibit A.I., and decided instead to use the historical data supplied by the cash flow analysis in Exhibit D. See In re Kool, Mann, 233 B.R. at 305. Indeed, the cash flow figures used in Mr. Millon's Exhibit C appear to be derived from the very analyses that Judge Fullam criticized as being too speculative in his July 1995 Opinion. In re Kool, Mann, No. 390-00017, slip op. at 10-11 (D.V.I. Jul. 17, 1995).
131
The details underlying the analysis in Exhibit D — concluding that the value of LCSDI after all misrepresentations and fraudulent matters had been deducted was $1,766,631 — reflects that the Bankruptcy Court relied on these various percentages and present value rates, but accepted the bottom line valuation not of Exhibit D, but of Exhibit C. With the record in this posture, we are confident that the Bankruptcy Court and the District Court would readily agree that the value of LCSDI had to stem from an Exhibit D analysis and chart, and should have been recorded as $1,766,631. This being so, and reading the respective opinions as we believe the authors intended them to be read, we conclude that the value of the stock purchased by Kool Mann was $1,766,631, and it is that figure which we have utilized in determining the ultimate obligation of Kool Mann to the Coffeys.
VIII. Recharacterization of Interest
132
As the parties' agreement provided, and as we have related, Kool Mann had agreed that interest would be paid on the remaining balance due on the purchase price of LCSDI. In October and November of 1986, Kool Mann made interest payments of $330,000, of which $38,216 was returned by the Coffeys as overpayment (for a total interest payment of $291,784). These payments were continuously characterized as interest payments until the Bankruptcy Court's October 2000 Opinion. At that time, the Bankruptcy Court — on a motion for reconsideration — recharacterized those payments as principal payments. The Bankruptcy Court did so on the ground that the fraud committed by the Coffeys resulted in a reduction in the amount owed by Kool Mann. Thus, the principal amount due the Coffeys was not quantified or known and could only be classed as an unliquidated sum. While prejudgment interest is allowed on a liquidated sum, prejudgment interest on an unliquidated sum is, under Kentucky law, permitted only at the discretion of the court. See Brown v. Fulton, 817 S.W.2d 899, 901-02 (Ky.App.1991). The upshot of this recharacterization of interest to principal was to reduce the Coffeys' claim in bankruptcy by an additional $291,784.
133
We will affirm the Bankruptcy Court's recharacterization of interest payments into principal payments. In the absence of any fraud, it is undisputed that Kool Mann would have been contractually obligated to pay the $291,784 in interest payments, which was based upon the remaining principal amount. The difficulty is that in light of the fraud and corresponding revaluation of the value of LCSDI, the amount of interest due cannot now be calculated the same way, as the principal amount has become uncertain. Indeed, the only true way to calculate contractual interest would have been to re-amortize the installment payments of principal and interest, recalculated to take into account the far smaller principal due from Kool Mann after deductions for fraud had been made.
134
To the extent some portion of the $291,784 could be considered payment of contractual interest, we note that the Coffeys — and Kool Mann, for that matter — have not demonstrated how we would determine what portion, if any, of the $291,784 could be considered contractual interest based on a reconstituted principal amount in light of the Coffeys' fraud. We also conclude that Kentucky law would permit a judge to reject such interest where the contract at issue has been permeated with fraud. Cf. Middleton v. Middleton, 287 Ky. 1, 152 S.W.2d 266, 268 (1941) ("in the case of an unliquidated claim, the allowance of interest rests in the discretion of the jury or the court trying the case").
135
In this way, a much smaller portion of the $291,784 would have been contractually obligated to have been paid as interest. To the extent any remaining amount could be considered prejudgment interest, the Bankruptcy Court was well within its discretion to deny such interest in toto, in light of the many findings of fraud on the part of the Coffeys. See Church & Mullins Corp. v. Bethlehem, 887 S.W.2d 321, 325 (Ky.1992) ("the determination as to whether or not to award prejudgment interest [on an unliquidated sum] is based upon the foundation of equity and justice.").
136
Moreover, the Coffeys could not expect interest on the ultimate amount we have settled on as being due to them from Kool Mann's estate in bankruptcy inasmuch as any such award would, in effect, constitute post-petition interest which is not generally available. See 7 Collier on Bankruptcy, ¶ 1129.04[4][b][i][C], pp. 1129-97-98 (rev. 15th ed. 1999) ("[U]nless the debtor is solvent, or the creditor is oversecured, post-petition interest is not part of a creditor's allowed claim.").
137
Accordingly, we will affirm the Bankruptcy Court's recharacterization of interest payments into principal payments, thereby reducing the Coffeys' claim in bankruptcy by an additional $291,784.
IX. Assumed Indebtedness of LCSDI
138
Kool Mann cross-appeals the District Court's affirmance of the Bankruptcy Court's refusal to grant a credit for payments made in connection with certain pre-existing houseboat debt of LCSDI in the amount of $1,213,000. Both the Bankruptcy Court and the District Court relied in part upon the decisions of the Kentucky litigation and Judge Fullam's June 1995 Opinion to conclude that Kool Mann was not entitled to this credit. While Judge Fullam's comments on this matter were dicta and therefore not binding (see Section V.A., supra), the decision rendered by Judge Forester on the assumption of debt issue in 1990, which was never appealed, must be considered final.
139
In the Kentucky litigation, Judge Forester ruled that Kool Mann was not entitled to a set-off against the purchase price for indebtedness it assumed as part of the business. Moore, Owen v. Coffey, No. 87-64, slip op. at ¶ 25 (E.D.Ky. Jan. 31, 1990). Indeed, by purchasing LCSDI's stock, and not just its assets, Kool Mann agreed to pay a particular price for LCSDI as a whole — its assets and liabilities. To credit Kool Mann with the payments it made against this indebtedness now would conflict with the Kentucky court's decision. Accordingly, we will not permit the indebtedness credit.
X. Tax Savings Credit
140
Kool Mann also cross-appeals the District Court's ruling which reversed the Bankruptcy Court's grant of a Tax Savings credit to Kool Mann pursuant to the Tax Savings Side Letter. While the parties do not dispute that the Coffeys have received a tax benefit of $236,566.22 and both the Coffeys and Kool Mann had agreed on the amount of the savings, the District Court refused to credit Kool Mann with this amount because Kool Mann had not yet made a final "balloon payment" as contemplated by the Tax Savings Side Letter.15
141
As noted, the parties agreed to pay the remaining balance of the purchase price over five annual installment payments of $150,000 plus a final balloon payment on September 30, 1991 of $3,250,000 ($5 million price minus $1 million down payment minus $750,000 in installment payments). Had there been no fraud, the $236,566.22 would have been deducted on September 30, 1991 from the remaining $3,250,000 payment pursuant to the Tax Savings Side Letter. The problem now, however, is that due to the fraud and decades-long litigation, there can be no final balloon payment against which the Tax Savings can be offset, other than the amount determined in bankruptcy as the amount which Kool Mann now owes the Coffeys.
142
To determine that figure, we have accepted $1,766,631 as the value of the company after fraud from which we have thus far deducted the $1 million down payment, $291,784 principal payments after interest was recharacterized, no installment payments (since they were not made), and no payments for assumed indebtedness of $1.213 million (because of the decisions rendered in the Kentucky litigation). These deductions leave $474,847 owed to the Coffeys by Kool Mann in bankruptcy. We conclude that this figure now represents the final "balloon payment" to be made by Kool Mann to the Coffeys after the fraud and above referenced deductions have been properly accounted for. As a result, the Tax Savings credit of $236,566.22 must now also be subtracted from the after-fraud value, resulting in Kool Mann owing the Coffeys $238,280.78 in bankruptcy.
XI. Conclusion
143
For the foregoing reasons, we will affirm the District Court's October 2, 2001 judgment, other than with respect to the calculation of the Coffeys' claim and Kool Mann's obligation. In that connection, as we have explained, we hold as follows: LCSDI must be valued as $1,766,631 as a result of the Coffeys' fraud, not $2,288,167 as the Bankruptcy Court and the District Court held. In addition, we will reverse the District Court's order which had reversed the Bankruptcy Court on the Tax Savings issue and we will reinstate the Bankruptcy Court's ruling thereby granting Kool Mann an additional credit in the amount of $236,566.22. As discussed in Section VIII, supra, Kool Mann is also entitled to a credit based on the recharacterization of interest as principal in the amount of $291,784.
144
Accordingly, the value of the Coffeys' claim in the Kool Mann bankruptcy will be calculated as follows:
145
• Value of LCSDI after fraud: $1,766,631
• Credit for down payment made to the Coffeys
by Kool Mann: - $1,000,000
• Credit for recharacterization of interest as
principal - $ 291,784
• Credit for payments on assumed indebtedness
of LCSDI: - $ 0
• Credit for Tax Savings: - $ 236,566.22
--------------
Total amount of deductions - $1,528,350.22
---------------
Value of Coffeys claim in Bankruptcy: $ 238,280.78
146
We will therefore direct the District Court to remand this matter to the Bankruptcy Court with the direction that the Bankruptcy Court record the value of the Coffeys' claim in the Kool Mann bankruptcy to be $238,280.78.
Notes:
1
The facts of this case have been well documented in a number of previously published opinionsSee, e.g., Moore, Owen, Thomas & Co. v. Coffey, 992 F.2d 1439 (6th Cir.1993); Moore, Owen, Thomas & Co. v. Coffey, 1991 WL 519627 (E.D.Ky. Oct. 11, 1991); In re Kool, Mann, Coffee & Co., 233 B.R. 291 (Bankr.D.N.J.1999).
2
The debtor, here the cross-appellant, was initially named Moore, Owen, Thomas & Co., but changed its name to Kool, Mann, Coffee & Co. prior to filing bankruptcy
3
For tax reasons, the parties structured the sale so that VC would initially contribute the houseboats it owned to LCSDI and that Kool Mann would then purchase all the outstanding capital stock of LCSDI. As a result, the sale of LCSDI would also include the houseboats originally owned by VC
4
11 U.S.C. § 502(c) states: "[t]here shall be estimated for purpose of allowance under this section ... any contingent or unliquidated claim, the fixing or liquidation of which, as the case may be, would unduly delay the administration of the case."
5
The cash flow methodology used by the Bankruptcy Court on remand in 1999 differed from the methodology it applied in its original findings in 1993. Although both relied upon projections of future cash flow to come up with the actual value of LCSDI in 1985, the 1999 methodology purported to utilize a constant growth rate of 7.5% of LCSDI's actual 1985 cash flow (determined to be $188,848), and was discounted for present value over 15 years. The 1993 methodology, on the other hand, appeared to use cash flow projections based upon speculative estimations of LCSDI's future houseboat and other business activity. On remand, the Bankruptcy Court disclaimed use of the 1993 methodologySee In re Kool, Mann, 233 B.R. at 305. The valuation method applied by the Bankruptcy Court on remand is described in more detail in Section VII of this opinion. See text, infra.
6
The Bankruptcy Court's October 2000 Opinion appears to contain a typographical error. At one point in that opinion, the court stated that the Tax Savings amount was $236,522. The Bankruptcy Court later corrected itself, applying the proper $236,566.22 figureSee In re Kool, Mann, No. 390-00017, slip op. at 7 (Bankr.D.V.I. Oct. 10, 2000).
7
Both parties agree that Judge Brotman only addressed the preclusive effect of the March 1999 Findings on the adversary proceeding as to Moore, not Kool Mann. Accordingly, Judge Gindin'sres judicata ruling in the November 1999 Opinion remains undisturbed as to Kool Mann.
8
Indeed, it appears Judge Brotman made an error in math. According to his own rulings, the amount due to the Coffeys should be $996,383.00, not $1,051,600.78. Instead of crediting Kool Mann with $291,784 for recharacterizing interest to principal, Judge Brotman mistakenly credited it with $236,566.22 for the Tax Savings credit, which he ruled could not be off-set
9
11 U.S.C. § 502(b) states, in relevant part: "if [an] objection to a claim is made, the court, after notice and a hearing, shall determine the amount of such claim in lawful currency of the United States as of the date of the filing of the petition, and shall allow such claim in such amount."
10
Bankruptcy Rule 3007 states: "An objection to the allowance of a claim shall be in writing and filed. A copy of the objection with notice of the hearing thereon shall be mailed or otherwise delivered to the claimant, the debtor or debtor in possession and the trustee at least 30 days prior to the hearing. If an objection to a claim is joined with a demand for relief of the kind specified in Rule 7001, it becomes an adversary proceeding."
11
As discussed earlier in Section IV,supra, that determination is not challenged by the Coffeys in this appeal.
12
Because the Bankruptcy Court's findings of fraud by the Coffeys will be affirmed, we will also affirm the release of Moore from his personal guarantySee People's State Bank v. Hill, 210 Ky. 222, 275 S.W. 694, 697 (1925) ("It is a well established rule of law that if a creditor induces a surety or guarantor to enter into the contract of suretyship or guaranty by any fraudulent concealment or misrepresentation of material facts that the surety or guarantor will be released."). Indeed, the Sixth Circuit expressed its approval of this very principle when it reversed the Kentucky District Court's summary judgment against Moore in 1993. See Moore, Owen, Thomas & Co., 992 F.2d 1439, 1448 (6th Cir.1993) ("If Moore was fraudulently induced into entering the guaranty agreement, then he is entitled to be released from his substantial monetary obligation.").
13
It is noteworthy to recognize that though Judge Gindin used Kool Mann's cash flow figures, he actually used the higher of the two cash flow determinations presented by Kool Mann and the Coffeys (after deducting Graves' figure for long-term debt proceeds)
14
As will be discussed in the next section,see Section VII.C., infra, we conclude that the value of LCSDI in 1985 should be $1,766,631, not $2,288,167.
15
The Tax Savings Side Letter states, in its entirety (emphasis added):
This letter shall confirm our promise as sellers under our agreement with [Kool Mann] of December 31, 1985 the Purchaser, to reduce the balloon payment of $4,000,000 due and payable to us as "Payee" under that certain note by [Kool Mann] of December 31, 1985 by any tax savings to us (including the partnership, Vacation Cruises) resulting from capital gains treatment ultimately accorded to the disposition of the boat assets of the partnership. Interest shall not be calculated on this amount if realized, but the balloon payment shall be adjusted to compensate the final balance due then under the note.
AMBRO, Circuit Judge, Concurring in Part and Dissenting in Part:
Judge Garth has written an excellent opinion, though I respectfully disagree in two respects. In my view, the Bankruptcy Judge erred on the "prejudgment" interest issue and in granting Kool, Mann the tax savings credit. In his March 1999 opinion, the Bankruptcy Judge decided both of these questions in the Coffeys' favor. But in a supplemental opinion in October 2000, he reversed himself. On these two issues, the Bankruptcy Judge should have observed the old adage that your first instinct is often the right one.
A. Prejudgment interest
Kool, Mann argues that a payment of $291,784 that it tendered to the Coffeys in October 1986 was a payment against principal on its promissory note, which should be set off against the Coffeys' bankruptcy claim. The Coffeys maintain, however, that this was an interest payment that Kool, Mann owed them under the promissory note. The Bankruptcy Judge initially agreed with the Coffeys and classified the payment as interest. However, he subsequently had a change of heart and decided to credit the payment against principal and reduce the Coffeys' claim by that amount. He justified this new outcome by relabeling the $291,784 payment as "prejudgment interest" and noting that he had decided in his March 1999 opinion not to grant the Coffeys prejudgment interest on their bankruptcy claim.
The Bankruptcy Judge erred because, under Kentucky law (which governs this issue), the question whether to grant prejudgment interest arises with regard to unliquidated damages claims (often sounding in tort), not with regard to contractual disputes where the contract clearly requires specific interest payments. See State Farm Mut. Auto. Ins. Co. v. Reeder, 763 S.W.2d 116, 119 (Ky.1988). Interest due on a promissory note before the debtor files for bankruptcy is part of the creditor's claim against the debtor in bankruptcy just like any other prepetition amount owed on the note. 11 U.S.C. § 502(b). The decision to award required interest payments on the valid portion of a contractual claim is not a discretionary matter. Thus, while the Coffeys cannot keep the whole interest payment because most of it was based on a fraudulent principal amount, they should plainly be allowed to keep any interest due on the non-fraudulent portion of the company's purchase price.
Accordingly, I would remand to the Bankruptcy Judge to calculate how much interest would have been owed, under the promissory note, on $766,631 (which equals the company's legitimate market value of $1,766,631 minus the $1,000,000 down payment). A remand for this discrete purpose would not consume much time or resources, as the parties would not be permitted to reargue any other aspect of this case. While it is easier to dispose of this issue ourselves by tossing out the entire interest payment, the portion of the $291,784 that represents non-fraudulent interest could be a significant sum of money, and there is inherent value to our reaching correct outcomes. Unless we are prepared to make the calculation ourselves, the Coffeys have the right to have this issue resolved properly by the Bankruptcy Judge.
B. The Tax Savings Credit
On the first appeal to Judge Fullam, he opined that Kool, Mann was not entitled to a credit pursuant to its agreement with the Coffeys that it would receive the benefit of any tax savings that the Coffeys realized by structuring the deal as a stock purchase rather than an asset purchase. On remand, Judge Gindin initially ruled that he was constrained by this outcome and denied Kool, Mann the $236,522 tax savings credit it requested. Somewhat inexplicably, however, Judge Gindin changed his mind in his October 2000 opinion and granted Kool, Mann the credit. On appeal to the District Court, Judge Brotman reversed him on the basis that his decision did not comply with the original appeal to Judge Fullam. We should affirm that decision (albeit for a different reason).1
Under the plain language of the Tax Savings Side Letter, Maj. Op. at n. 15, Kool Mann is not entitled to a tax savings credit. The Side Letter provides for a reduction of the "balloon payment of $4 million ... adjusted to compensate the final balance due then under the note" for "any tax savings to us ... resulting from capital gains treatment ultimately accorded to the disposition of the boat assets of the partnership." (Emphasis added.) The Bankruptcy Judge concluded that the Coffeys realized tax savings in 1986 due to "depreciation recapture." Depreciation recapture is of course not capital gains treatment.2 To my knowledge there has not been a capital gains tax savings, and thus Kool Mann is not entitled to the $236,522 tax savings credit.
Notes:
1
As can be seen below, my disagreement is on the merits, for I agree with the majority that Judge Fullam's statements on this issue were not binding on the Bankruptcy Court
2
Depreciation recapture arises when a taxpayer sells a capital asset after it is depreciated. Depreciation recapture is the portion of the amount realized from the sale of a capital asset that is equal to the total depreciation deduction reported for the asset. Depreciation recapture is subject to tax at ordinary income tax rates. Capital gains occur when a taxpayer sells a capital asset for more than what the taxpayer paid for it. Generally, the difference in the amount received by the taxpayer for the sale of the capital asset, over the amount paid by the taxpayer when the asset was purchased, is subject to capital gains tax. With capital gains, tax savings result because the rate of tax imposed on the gain received is lower than ordinary income tax rates
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 97-4877
HERBERT WAKEFIELD, III,
Defendant-Appellant.
Appeal from the United States District Court
for the District of South Carolina, at Greenville.
Henry M. Herlong, Jr., District Judge.
(CR-96-710)
Submitted: April 30, 1998
Decided: June 5, 1998
Before WIDENER and ERVIN, Circuit Judges, and
BUTZNER, Senior Circuit Judge.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
_________________________________________________________________
COUNSEL
Benjamin T. Stepp, Assistant Federal Public Defender, Greenville,
South Carolina, for Appellant. Harold Watson Gowdy, III, OFFICE
OF THE UNITED STATES ATTORNEY, Greenville, South Caro-
lina, for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
Herbert Wakefield, III, appeals his sentences imposed upon a
guilty plea to using and carrying a firearm during a drug trafficking
crime in violation of 18 U.S.C. § 924(c) (1994), and possession with
intent to distribute cocaine base in violation of 21 U.S.C. § 841(a)(1)
(1994). Wakefield's attorney has filed a brief in accordance with
Anders v. California, 386 U.S. 738 (1967), raising two issues but stat-
ing that in his view there are no meritorious grounds for appeal.
Wakefield was informed of his right to file a supplemental brief, but
he failed to do so. For the reasons that follow, we affirm.
At the time of the sentencing hearing, Wakefield was currently
serving a state prison sentence. Counsel requested that the court exer-
cise its discretion and order that any sentences imposed for the instant
offenses run concurrently with the state prison term already being
served. Consistent with the Presentence Investigation Report (PSR),
the district court set Wakefield's offense level at 29, and sentenced
him to 60 months' imprisonment on count III, and 151 months'
imprisonment on count IV, resulting in a total prison term of 211
months. The court ordered the 211-month sentence to run consecu-
tively to Wakefield's state sentence.
Wakefield's counsel raises the issue of whether the district court
fully complied with Fed. R. Crim. P. 11 in accepting Wakefield's
guilty plea. Following a de novo review of the entire record, we con-
clude that the district court complied with all the mandates of Rule
11 in accepting Wakefield's guilty plea.
Wakefield's counsel also raises the issue of whether the district
court abused its discretion in applying U.S. Sentencing Guidelines
Manual § 5G1.3(c) (1997), when it ordered the federal sentences to
run consecutively to the state prison term Wakefield was already serv-
2
ing. See United States v. Puckett, 61 F.3d 1092, 1097 (4th Cir. 1995)
(noting that district court's decision to impose sentence consecutively
or concurrently is reviewed for abuse of discretion). Our review of the
sentencing hearing transcript reveals that the district court properly
considered the factors set forth in 18 U.S.C.A.§ 3584 (1994) (refer-
encing 18 U.S.C.A. § 3553(a) (1994)), and that it was fully cognizant
of the four enumerated factors set forth in USSG§ 5G1.3(c), com-
ment. (n.3). See United States v. Johnson, ___ F.3d ___, 1998 WL
89376 (4th Cir. Mar. 4, 1998) (Nos. 96-4541, 97-4596). Accordingly,
the district court did not abuse its discretion in ordering Wakefield's
sentences to run consecutively with his previously-imposed state sen-
tence.
As required by Anders, we have examined the entire record and
find no other meritorious issues for appeal. Because the record dis-
closes no reversible error, we affirm. This court requires that counsel
inform his client, in writing, of his right to petition the Supreme Court
of the United States for further review. If the client requests that a
petition be filed, but counsel believes that such a petition would be
frivolous, then counsel may move in this court for leave to withdraw
from representation. Counsel's motion must state that a copy thereof
was served on the client.
We dispense with oral argument because the facts and legal conten-
tions are adequately presented in the materials before the court and
argument would not aid the decisional process.
AFFIRMED
3
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