text
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847 F.2d 841
Unpublished DispositionNOTICE: Federal Circuit Local Rule 47.8(b) states that opinions and orders which are designated as not citable as precedent shall not be employed or cited as precedent. This does not preclude assertion of issues of claim preclusion, issue preclusion, judicial estoppel, law of the case or the like based on a decision of the Court rendered in a nonprecedential opinion or order.AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES and Roy W.Purdie, Petitioners,v.DEFENSE GENERAL SUPPLY CENTER, Respondent.
No. 87-3458.
United States Court of Appeals, Federal Circuit.
April 13, 1988.
Before MARKEY, Chief Judge, RICH and NIES, Circuit Judges.
PER CURIAM.
DECISION
1
Petition to overturn an arbitrator's award, FMCS File No. 8706463, sustaining the removal of Roy W. Purdie (Purdie) by the Defense General Supply Center (agency). Following review of the arbitrator's response to our January 19, 1988 remand for a more complete statement and the responses thereto, we affirm the award.
OPINION
2
The arbitrator properly sustained the charge of AWOL. His unchallenged findings that Purdie was three minutes late for work and that "[h]e did not have an acceptable excuse" support the conclusion that Purdie incurred "[a]n absence from duty which was not authorized," or AWOL, under DLAR 1424.1, encl. 1, paragraphs A.1. and J. That AWOL "is charged in multiples of 15 minutes for the actual time absent" under paragraph B.2. of those regulations, and that Purdie's supervisor followed that paragraph, are immaterial. Paragraph 1 of the agency's "Notice of Proposed Removal" charged Purdie with "AWOL," not with any particular duration of AWOL. The arbitrator properly reasoned that "[w]hether [Purdie] should have been charged AWOL for three minutes or fifteen minutes was not a material factor in determining whether there was just cause for removal."
3
The record does not support Purdie's assertion that the agency indicated that all five of the charges, of which the arbitrator sustained only four, were necessary to Purdie's removal. As the arbitrator recognized, the agency proposed Purdie's removal in light of Purdie's prior discipline for repeated tardiness, leaving the work site without permission, and AWOL, in addition to the five charges.
4
We will not disturb a choice of penalty within the agency's discretion unless the severity of its action appears totally unwarranted in light of all relevant factors. See Yeschick v. Department of Transp., FAA, 801 F.2d 383, 384-85 (Fed.Cir.1986); DeWitt v. Department of the Navy, 747 F.2d 1442, 1445 (Fed.Cir.1984), cert. denied, 470 U.S. 1054 (1985). It does not so appear here.
| {
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FILED
rCNOURT OF APPEALS
DIM-Oty 11
I
2013 JUL -2 AM 9=04
STAM OF WASHINGTON
OY ..-
UT'-
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
In re the Detention of No. 42552 1 II
- -
Consolidated with No. 42871 7 II)
- -
DARNELL McGARY,
Appellant.
PUBLISHED OPINION
In re Personal Restraint Petition of
DARNELL McGARY,
Petitioner.
BRINTNALL, P. .
QUINN- J — Darnell McGary appeals the 2011 jury verdict upholding his
commitment as a sexually violent predator (SVP). He argues that (1) trial court erred by
the
excluding actuarial evidence regarding his chances of recidivism, 2)the prosecutor committed
(
misconduct at closing argument, and (3)cumulative error denied him.the right to a fair trial.
In his consolidated personal restraint petition ( RP),
P McGary argues that the State should
be precluded from arguing that he satisfied the SVP criteria based on mental disorders other than
Consol. Nos. 42552 1 II /42871 7 II
- - - -
those addressed in a 2004 stipulation and that the State has not proven that he currently suffers
from a mental disorder. We affirm the commitment order and deny the PRP.
FACTS
McGary pleaded guilty to three violent sex offenses that occurred in 1987 and 1988: two
counts of first degree rape and one count of indecent liberties by forcible compulsion. McGary
was incarcerated for these crimes. In 1992, McGary attempted to force a fellow inmate into
sexual activity. McGary began to manifest symptoms of schizophrenia in 1994, while still
incarcerated.
At the end of McGary's sentence in 1998, the State petitioned to have him committed as
an SVP. McGary was transferred to the Special Commitment Center (SCC)pending trial on the
SVP petition. McGary ultimately stipulated to commitment as an SVP in February 2004.
McGary stipulated that he suffered from schizophrenia and antisocial personality disorder, and
that his personality disorder made him more likely than not to engage in predatory acts of sexual
violence if not confined in a secure facility.
In December 2004, McGary filed a PRP alleging that the State breached the stipulation
by confining him for a disorder (paraphilia) to which he did not stipulate. After the Supreme
Court transferred his petition to this court, we dismissed it because there was no evidence that
the State was in breach of the agreement.
1
Washington law defines an SVP as "any person who has been convicted of or charged with a
crime of sexual violence and who suffers from a mental abnormality or personality disorder
which makes the person likely to engage in predatory acts of sexual violence if not confined in a
secure facility." RCW 71. 9. We cite the current version of the statutes because the
020( 8).1
0
SVP definition has not changed since the State filed its petition.
Consol. Nos. 42552 1 II /42871 7 II
- - - -
In 2010, SCC forensic evaluator Dr. Megan Carter conducted McGary's annual review
and determined that he no longer met the criteria for commitment as an SVP. McGary moved
for dismissal of the commitment order requiring his confinement as an SVP. In accordance with
RCW 71. 9.the superior court granted McGary a trial to determine whether he was entitled
090,
0
to unconditional release into the community.
McGary filed a pretrial motion to dismiss, or, in the alternative, to bar evidence of any
new diagnoses not referenced in his 2004 stipulation that might prevent his release, based on
principles of collateral estoppel or issue preclusion. The trial court denied the motion.
The State filed a pretrial motion to preclude McGary's expert, Dr:Richard Wollert, from
testifying about the MATS 1 actuarial instrument he had recently developed. The State argued
-
that the MATS 1 test was inadmissible under ER 703 because it was not reasonably relied upon
-
by experts in the field. The State attached unpublished orders of several superior courts that had
found Wollert's testimony generally unreliable. The trial began without a hearing on this
motion.
The State called several witnesses to testify about McGary's mental diagnoses and his
danger of reoffense. The State first called Dr. Brian Judd, who was McGary's sex offender
treatment provider in 2004 and 2005. Judd testified that McGary's diagnoses of paraphilia NOS
nonconsent), personality disorder, and schizophrenia are long term conditions.
- SCC
psychiatrist Dr. Leslie Sziebert, who is treating McGary for his schizophrenia, testified that he
was part of the senior clinical team that disagreed with Dr. Carter's conclusion that McGary no
longer meets the SVP criteria. Dr. Sziebert's concern was that McGary would not ,take his
2
This is a chronic disorder that, in McGary's case, involves intense urges to engage in sexual
encounters with nonconsenting females.
3
Consol. Nos. 42552 1 II /42871 7 II
- - - -
aintipsychotic medications if released. He described a violent confrontation between McGary
and a staff member that occurred in 2005 when McGary was not taking antipsychotic
medications.
Psychologist Les Hutchens testified that he treated McGary at the SCC from 2009 2010.
-
McGary did not succeed in his treatment group because he believed he had completed treatment
and was ready for release. The State also called Dr. Steven Marquez, who concluded after
evaluating McGary in 2010 that his condition had not changed such that he would recommend
McGary's release into the community.
The State then called Dr. Douglas Tucker, who also evaluated McGary in 2010. Tucker
diagnosed McGary with five mental disorders: paraphilia NOS (nonconsent),schizophrenia,
alcohol dependence, cannabis abuse, and antisocial personality disorder..
Tucker concluded that
based on these disorders, McGary continues to meet the definition of an SVP.
Dr.Tucker also scored McGary's risk of recidivism using three actuarial tests: the Static-
99R, the Static-
2002R, and the MnSOST R. Tucker gave McGary a score of seven on the Static-
-
99R, giving him a 37. percent chance to reoffend within five years and a 48. percent chance to
9 6
reoffend within ten years. Tucker gave McGary a seven on the Static 2002R as well, which
-
corresponded to a '29.3 percent chance to reoffend within five years and 40 percent within ten
years. Finally, Tucker gave McGary a score of sixteen on the MnSOST R,corresponding to an
-
88 percent chance of reoffending within six years. Based on all of these instruments, Tucker
testified that McGary was in the moderate high to high risk category to reoffend.
Dr. Tucker also evaluated McGary under the PCL R test, which evaluates an offender's
-
level of Tucker gave McGary 32. ,which
2 high score. Tucker
psychopathy. a was a very
concluded that McGary was likely to commit rape or attempted rape if not confined.
4
Consol. Nos. 42552 1 II /42871 7 II
- - - -
McGary then called Dr. Carter, who also gave McGary a seven on the Static 99R,
-
although she testified that McGary no longer met the criteria as an SVP.
Before the defense called Dr. Wollert, the State requested a hearing on its motion to
exclude his proposed testimony about the MATS 1 actuarial instrument. The trial court allowed
-
the parties to voir dire Wollert outside the presence of the jury. Wollert testified during voir dire
that there was nothing novel about his approach to developing the MATS 1,but he added that he
-
knew of only six experts nationwide who had used the MATS 1 since its publication in
-
November 2010.
Dr. Wollert did not explain how he would have scored McGary on the MATS 1,but he
-
did testify that for someone McGary's age, the highest chance of recidivism possible under the
test would have been 25.5 percent. The trial court ruled that the MATS 1 was not the type of test
-
reasonably relied on by experts in the field and excluded it under ER 703.
During his testimony before the jury, Dr. Wollert testified that he scored McGary using
the Static 99R test. He gave McGary a seven when including the 1992 prison incident, but a
-
score of three without it. Because there were uncertainties regarding the 1992 incident, Wollert
believed that McGary's chances of recidivism should take both scores into account. Wollert also
evaluated McGary under the PCL R and gave him a score of 23, which is the average for prison
-
offenders. He admitted during his direct examination that he had scored McGary on this test the
previous day. Finally, Wollert evaluated McGary using the Static-
2002R. He gave McGary a
five on the Static 2002R when including the 1992 incident, and a four when excluding it. On
-
cross -examination, Wollert acknowleged that he had scored McGary on the Static 2002R the day
-
before, and the State asked about the timing of his PCL R scoring as well.
-
5
Consol. Nos. 42552 1 II /42871 7 II
- - - -
During closing argument, the State briefly addressed Dr. Wollert's late scoring of the
Static 2002R and PCL R tests:
- -
You heard Dr. Wollert got this case about two -and ahalf years ago. When did he
- -
score the PCL R?
- Tuesday night. When did he score the Static- 2002R? Last
night. We had his reports. [The State] deposed him awhile back to find out what
his opinions would be,and then he sandbagged us. He came in, and he did those
.
things days before he testified without us knowing about it. We found out when
you found out when he testified, and we got sand all in our hair. That happens
sometimes in courtrooms. We just pick up and move on. That was not right. It
wasn't right.
8 Report of Proceedings (RP)at 1142 43.
-
The jury found that McGary continued to meet the definition of an SVP, and the trial
court issued an order continuing his SCC commitment. Approximately two months after the
verdict, McGary filed a motion for summary judgment that was apparently based on an earlier
habeas corpus petition he had filed in the superior court. That court transferred McGary's
motion here for consideration as a PRP, and we consolidated the petition with McGary's appeal
of the commitment order.
ANALYSIS
EXPERT TESTIMONY AND THE MATS 1 ACTUARIAL INSTRUMENT
-
McGary argues that the trial court erred by excluding the MATS 1 because it was
-
admissible under ER 703. The State responds that McGary failed to preserve this issue with an
adequate offer of proof, that the MATS 1 was inadmissible under both ER 702 and ER 703, and
-
that any error in excluding this evidence was harmless.
We review evidentiary rulings for abuse of discretion. State v. Lormor, 172 Wn. d 85,
2
94, 257 P. d
3 624 (2011). A trial court abuses its discretion if it relies on unsupported facts,
3 That petition is not part of our record.
10
Consol. Nos. 42552 1 II /42871 7 II
- - - -
applies the wrong legal standard, or adopts a position no reasonable person would take. State v.
Lord, 161 Wn. d 276, 284, 165 P. d 1251 (2007).We may affirm the trial court on any basis
2 3
the record supports. LaMon v. Butler, 112 Wn. d 193, 200 01,770 P. d 1027, cert. denied, 493
2 - 2
U. .814 (
S 1989).
A. ISSUE PRESERVATION
The State argues initially that McGary has not preserved his objection to the trial court's
exclusion of the MATS 1 because he failed to make a detailed offer of proof.
-
Under ER 103(
2), not be predicated on a decision to exclude evidence
a)( may
error
unless "the substance of the evidence was made known to the court by offer or was apparent
from the context within which questions were asked."The substance of an offer of proof need
not be made known in detail. State v. Ray, 116 Wn. d 531, 539, 806 P. d 1220 (1991).Rather,
2 2
the substance of the evidence may be made apparent from the questions asked or from the
context in which they were asked. Ray, 116 Wn. d at 539.
2
Here, the substance of Dr. Wollert's testimony was adequately disclosed, even though he
did not testify exactly what score McGary received on the MATS 1 or exactly how that score
-
would have affected the assessment of his risk of recidivism. Wollert did testify that, given
McGary's age, his maximum rate of recidivism under the MATS 1 would be 25. percent.
- 5
Consequently, the potential significance of Wollert's testimony was disclosed: the MATS 1
-
would have predicted McGary's chances of recidivism as lower than the tests performed by the
other experts. McGary thus preserved his objection to exclusion of the MATS 1.
-
B. ER 702 AND ER 703
The State argues further that evidence concerning the MATS 1 was inadmissible under
-
ER 702 and ER 703.
7
Consol. Nos. 42552 1 II /42871 7 II
- - - -
Actuarial instruments are often used in SVP trials to aid in the prediction of an offender's
future dangerousness. See, e. ., re Det. of Thorell, 149 Wn. d 724, 753, 72 P. d 708 (2003),
g In 2 3
cent, denied, 541 U. . 990 (2004); re Det. of Robinson, 135 Wn. App. 772, 786, 146 P. d 451
S In 3
2006),
review denied, 161 Wn. d 1028 (2007).As the Supreme Court explained in Thorell,
2
The actuarial approach evaluates a limited set of predictors and then combines
these variables using a predetermined, numerical weighting system to determine
future risk of reoffense which may be adjusted (or not) by expert evaluators
considering potentially important factors not included in the actuarial measure.
149 Wn. d at 753.
2
Actuarial instruments are not novel scientific evidence requiring a Frye hearing and de
novo review. Thorell, 149 Wn. d at 755; see Frye v. United States, 293 F. 1013, 1014 (D. Cir.
2 C.
1923) standard for admitting novel scientific theory or principle is whether it has achieved
(
general acceptance in the relevant scientific community). Rather, actuarial instruments are
analyzed as an aid to expert testimony under ER 702 and ER 703. Thorell, 149 Wn.2d at 755 56.
-
ER 702 provides that "[ f scientific, technical, or other specialized knowledge will assist
i]
the trier of fact to understand the evidence or to determine . fact in issue, a witness qualified as
a
an expert by knowledge, skill, experience, training, or education, may testify thereto in the form
of an opinion or otherwise." To admit expert testimony under ER 702, the trial court must
determine that the witness qualifies as an expert and that the testimony will assist the trier of fact.
Lakey v. Puget Sound Energy, Inc., Wn.2d 909, 918, 296 P. d 860 (2013).
176 3
4
There is some disagreement in Washington cases concerning the proper standard to apply under
ER 702. Some courts apply the two part test set forth in Lakey, while others apply a three part
- -
test that includes a consideration of whether the expert testimony is generally accepted in the
scientific community. See, e. .,g State v. Cheatam, 150 Wn. d 626, 645, 81 P. d 830 (2003);
2 3
State v. McPherson, 111 Wn. App. 747, 761, 46 P. d 284 (2002). The "general acceptance"
3
consideration is clearly based on Frye. State v. Cauthron, 120 Wn. d 879, 890 n. ,846 P. d 502
2 4 2
1993). Given the Thorell holding that the Frye standard does not apply to the admissibility of
8
Consol. Nos. 42552 1 II /42871 7 II
- - - -
The Lakey court compared the tests for admissibility under ER 702 and Frye: "Frye
excludes testimony based on novel scientific methodology until a scientific consensus decides
the methodology is reliable; ER 702 excludes testimony where the expert fails to adhere to that
reliable methodology." 176 Wn. d at 918 19. Unreliable testimony does not assist the trier of
2 -
fact and is properly excluded under ER 702. Lakey, 176 Wn. d at 918.
2
The trial court may consider questions related to reliability under the "
helpfulness to the
jury"standard of admissibility. State v. Copeland, 130 Wn. d 244, 259, 922 P. d 1304 (1996).
2 2
The trial court's conclusions regarding helpfulness will depend on its evaluation of the state of
knowledge presently existing about the subject of the proposed testimony and its appraisal of the
facts of the case. State v. Riker, 123 Wn. d 351, 364, 869 P. d 43 (1994).The trial court has
2 2
broad discretion in determining whether an expert's testimony is admissible under ER 702.
Philippides v. Bernard, 151 Wn. d 376, 393, 88 P. d 939 (2004);
2 3 State v. Rafay, 168 Wn. App.
734, 783, 285 P. d 83 (2012),
3 review denied, 176 Wn. d 1023 (2013).
2
ER 703 provides that "[ he facts or data in the particular .case upon which an expert
t]
bases an opinion or inference may be those perceived by or made known to the expert at or
before the hearing."If those facts or data are of a type reasonably relied upon by experts in the
"
particular field in forming opinions or inferences upon the subject," facts or data need not be
the
admissible in evidence. ER 703. Because ER 703 is concerned with the trustworthiness of the
resulting opinion, the trial court should not allow the opinion if the expert can show only that he
customarily relies on such material and if the data are relied on only in preparing for litigation.
State v. Nation, 110 Wn. App. 651, 663, 41 P. d 1204 (2002),
3 review denied, 148 Wn. d 1001
2
actuarial instruments and the Lakey explanation of the differences between the Frye test and the
two part test for admissibility under ER 702, we apply the two part test set forth in Lakey.
- -
9
Consol. Nos. 42552 1 II /42871 7 II
- - - -
2003). The proponent of the testimony must show that experts in the witness's field, in
"
general, reasonably rely upon such material in their own work; i..,for purposes other than
e
litigation." 5D KARL B. TEGLAND, COURTROOM HANDBOOK ON WASHINGTON EVIDENCE, Rule
703 cmt. at 391 (2012 13 ed.). word " easonably"in ER 703 gives trial courts discretion in .
- The r
determining whether the underlying information is sufficiently reliable to form the basis of an
expert's opinion. 513 KARL B. TEGLAND, WASHINGTON PRACTICE: EVIDENCE LAW AND
PRACTICE, § 703.
2 at 226 (5th ed. 2007).
Dr.Wollert's status as an expert is not at issue here. The question is whether his MATS-
1 test is based on. a reliable methodology that is generally relied upon by experts in his field. In
Lakey, the Supreme Court upheld exclusion of expert testimony under ER 702 because the expert
failed to follow a reliable methodology. 176 Wn. d at 920.
2 The trial court's exclusion of
Wollert's proposed testimony was proper for the same reason.
In his offer of proof, Dr. Wollert testified that he had published an article concerning the
MATS 1 test in November 2010,just 10 months earlier. He explained that he developed the test
-
by taking six items from the Static 99 "
- plus age." 7 RP at 837. Wollert knew of six other
experts who had used the MATS 1 test since its publication; before that,no one had used it. Dr.
-
Wollert did not know whether the six experts testified exclusively for the defense, but he
believed they all belonged to the Sex Offender Crime Defense Association. Wollert did not,
know how frequently the other experts had used the MATS 1 or whether they had used it in
-
conjunction with widely accepted other actuarial instruments. He explained that the MATS 1
-
test is "state of the art."7 RP at 840. McGary's counsel conceded in argument that use of the
MATS 1 " t common."7 RP at 861.
- isn'
10
Consol. Nos. 42552 1 II /42871 7 II
- - - -
There are no published state or federal appellate court decisions referring to the MATS 1
-
test.
The trial court was fully aware of the limited state of knowledge concerning the MATS 1
-
test and decided against its admission because it had been used by only six experts other than Dr.
Wollert, its creator. The decision to exclude Wollert's testimony about the MATS 1 actuarial
-
instrument was not manifestly unreasonable under ER 702. See State v. Cheatam, 150 Wn. d
2
626, 652, 81 P. d 830 (2003) even where the relevance and helpfulness of expert witness
3 (
testimony is debatable, there is no error if the decision to exclude is based on tenable grounds).
Wollert's opinion about McGary's risk of recidivism under the MATS 1 test was unreasonable
-
under ER 703 because the court found that the test was not reasonably relied upon by experts
generally and thus not sufficiently reliable to support that opinion.
C. HARMLESS ERROR
Even if the trial court did err in excluding the MATS 1, this error was harmless.
-
Evidentiary error warrants reversal only when there is a reasonable probability that the error
materially affected the outcome at trial. In re Det. of West, 171 Wn. d 383, 410, 256 P. d 302
2 3
2011). Both Dr. Wollert and Dr. Carter testified that they assessed McGary's chances of
recidivism at below 50 percent using other actuarial tests and both concluded that McGary did
5 A New York trial court recently observed that while this actuarial instrument may "end up
becoming the gold standard for actuarial risk assessment instruments,"the MATS 1 cannot -
currently be relied on to predict sex offender risk because it is the subject of ongoing research, is
not commonly used and accepted, and was derived from the Static 99, which is "the most
-
commonly used actuarial risk assessment instrument in use in the world today."State v. Suggs,
32 Misc. 3d 1206( ), N. .2d 763, 2011 WL 2586413, at *22 ( Y.Sup. Ct. 2011), d
A 932 S. Y N. aff'
on other grounds, 104 A. .
3d 511, 960 N. . (N. .App. Div. 2013).
D S.. 427 Y
2d
Y
11
Consol. Nos. 42552 1 II /42871 7 II
- - - -
not meet the criteria for commitment as an SVP. The record does not reflect any reasonable
possibility that admitting yet another actuarial test would have materially affected the trial's
outcome.
But McGary argues that because the exclusion of the MATS 1 required Dr. Wollert to
-
prepare some of his actuarial testing just prior to his testimony, and because the State attacked
Wollert's testimony on this basis during his cross -examination and during closing argument,
exclusion of the MATS 1
- was prejudicial. We note initially that the State filed its motion to
exclude the MATS 1 test on August 5 and that Wollert did not testify until August 17. Wollert
-
scored McGary on the PCL R the day before he testified and before the MATS 1 test was
- -
excluded, and he scored McGary on the Static 2002R on the evening before his cross-
-
examination and after the MATS 1 test was excluded. It is unclear why the exclusion of the
-
MATS 1
- required this testing sequence. We reject McGary's claim of prejudice, particularly
where his own attorney introduced the subject of timing and where he did not object to the cross -
examination or argument at issue. See State v. Swan, 114 Wn. d 613, 661, 790 P. d 610 (1990)
2 2
failure to object strongly indicates statement did not appear prejudicial when made),cent.
denied, 498 U. . 1046 (1991).
S
PROSECUTORIAL MISCONDUCT
McGary makes the related claim that the State committed prosecutorial misconduct by
referring to Dr. Wollert's late preparation of the Static 2002R and the PCL R during his cross-
- -
examination and during closing argument.
To establish prosecutorial misconduct, the defendant must establish that the prosecutor's
conduct was improper. State v. Emery, 174 Wn. d 741, 759,
2 278 P. d 653 ( 2012). The
3
defendant also must show that the improper comments resulted in prejudice. Emery, 174 Wn. d
2
12
Consol. Nos. 42552 1 II /42871 7 II
- - - -
at 760. Where the defendant does not object to the comments at trial, any claim of error is
waived unless the misconduct was "so flagrant and ill intentioned that an instruction could not
have cured the resulting prejudice."Emery, 174 Wn. d at 760 61.
2 -
As noted, McGary did not object to the purported misconduct below. Because both the
cross -examination and argument at issue could have been cured with an appropriate instruction,
we decline to consider it further. See State v. Belgarde, 110 Wn. d 504, 508, 755 P. d 174
2 2
1988) prosecutor's argument that defendant belonged to group of butchers and madmen that
(
killed indiscriminately warranted reversal despite lack of objection);State v. Claflin, 38 Wn.
App. 847, 850 51, 690 P. d 1186 (1984) prosecutor's reading of poem describing emotional
- 2 (
impact of rape required reversal because no instruction could have cured the resulting prejudice),
review denied, 103 Wn. d 1014 (1985).
2
CUMULATIVE ERROR
Finally, McGary argues that cumulative error denied him the right to a fair trial. The
cumulative error doctrine applies when several errors occurred during trial that would not merit
reversal standing alone, but together effectively denied the defendant a fair trial. State v.
Hodges, 118 Wn. App. 668, 673 74,77 P. d 375 (2003),
- 3 review denied, 151 Wn. d 1031 (2004).
2
Having identified only one potentially harmless error, we reject McGary's claim of cumulative
error.
PERSONAL RESTRAINT PETITION
McGary argues in his PRP that the State should be bound to the terms of the 2004
stipulation, thereby requiring his commitment to be evaluated on the basis of his personality
disorder alone and precluding the State from arguing that other diagnoses support his
commitment. He also asserts that because of his favorable annual review from Dr. Carter in
13
Consol. Nos. 42552 1 II /42871 7 II
- - - -
2010, he should be released because there is insufficient evidence to prove that he is currently
suffering from a mental disorder.
In making these arguments, McGary largely ignores the 2011 trial and verdict. The
jury's verdict that he still meets the criteria of an SVP disposes of his argument that Dr. Carter's
2010 annual review entitles.him to release. Furthermore, the trial court denied a similar motion
to dismiss or to preclude the State from offering evidence of additional diagnoses before the
2011 trial began. McGary did not challenge that ruling in his direct appeal and does not refer to
it in his petition. His arguments have been rendered moot by the 2011 commitment trial. See In
re Det. ofJ. .,138 Wn. App. 882, 889, 159 P. d 435 (2007) issue is moot when court can no
S 2 (
longer provide meaningful relief).
McGary briefly refers to the 2011 trial in his reply brief, where he asserts that the State
did not produce sufficient evidence of mental disorder to justify his continuing commitment. We
disagree. The evidence summarized earlier is more than sufficient to satisfy the State's burden
of proving beyond a reasonable doubt that McGary continues to meet the SVP criteria. In re
Det. ofKeeney, 141 Wn. App. 318, 324, 169 P. d 852 (2007).
3
We affirm the order requiring McGary's continuing SVP commitment and deny his PRP.
Q INN-
BRINTNALL, P. .
J
We concur
PE O
BJ G, J.
14
| {
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} |
543 U.S. 1130
CLARKv.UNITED STATES.
No. 04-7815.
Supreme Court of United States.
January 24, 2005.
1
C. A. 3d Cir. Certiorari denied. Reported below: 110 Fed. Appx. 245.
| {
"pile_set_name": "FreeLaw"
} |
101 Mich. App. 194 (1980)
300 N.W.2d 491
PEOPLE
v.
BREWER
Docket No. 47087.
Michigan Court of Appeals.
Decided October 24, 1980.
Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, Robert L. Kaczmarek, Prosecuting Attorney, and Linda Berns Wright, Appellate Prosecuting Attorney, for the people.
Kenneth W. Schmidt, for defendant on appeal.
Before: MacKENZIE, P.J., and ALLEN and D.F. WALSH, JJ.
*195 PER CURIAM.
On March 16, 1979, defendant was convicted by a jury of criminal sexual conduct in the second degree, contrary to MCL 750.520c(1)(a); MSA 28.788(3)(1)(a). Defendant was sentenced to a term of 3 to 15 years imprisonment and now appeals by right.
The determinative issue in this appeal is whether the trial court was legally correct in instructing the jury that voluntary intoxication is not a defense to the crime of second-degree criminal sexual conduct. We hold that no error was committed.
It is the general rule that voluntary intoxication does not negate an accused's general intent which is necessary for the commission of certain crimes. Contrary to defendant's assertion, second-degree criminal sexual conduct is a crime which only requires a general intent. The relevant statutory provisions state:
"(1) A person is guilty of criminal sexual conduct in the second degree if the person engages in sexual contact with another person and if any of the following circumstances exists:
"(a) That other person is under 13 years of age." MCL 750.520c(1)(a); MSA 28.788(3)(1)(a).
"Sexual contact" is defined in MCL 750.520a(g); MSA 28.788(1)(g), which provides as follows:
"* * * the intentional touching of the victim's or actor's intimate parts or the intentional touching of the clothing covering the immediate area of the victim's or actor's intimate parts, if that intentional touching can reasonably be construed as being for the purpose of sexual arousal or gratification." (Emphasis added.)
The underlined portion reveals that defendant need not have specifically intended to perpetrate *196 the touching for the purpose of sexual arousal or gratification as long as such a purpose may be construed from this act of touching. Therefore, it must be concluded that only a general intent is required in order to perpetrate the crime of second-degree criminal sexual conduct.
Under the statute governing rape[1] prior to the enactment of the criminal sexual conduct act, supra, rape was not a specific intent crime and the defense of intoxication did not apply. People v Taylor, 73 Mich App 139, 143; 250 NW2d 570 (1977). Likewise, before its repeal, the offense of taking indecent liberties with a child under 16 years of age was to be held a general intent crime. People v Zuniga, 56 Mich App 231, 235; 223 NW2d 652 (1974).[2] It was because prior law did not adequately protect victims of sexual attack that the Michigan Legislature passed the criminal sexual conduct act. Note, Criminal Law Sexual Offenses A Critical Analysis of Michigan's Criminal Sexual Conduct Act, 25 Wayne L Rev, 203-204 (1976). If the purpose of the new statute was to more adequately protect victims of sexual molestation, it hardly follows that to the new statute a new element, viz: specific intent, would be added.
Since it is the general rule that an accused's general intent may not be negated by his voluntary intoxication, see generally 1 Gillespie, Michigan Criminal Law & Procedure (2d ed, 1979 rev), § 44, p 91, the trial court properly instructed the jury that voluntary intoxication was not a defense *197 to the charge of second-degree criminal sexual conduct.
Affirmed.
NOTES
[1] MCL 750.520; MSA 28.788 (now repealed).
[2] "[T]wo elements must be shown to sustain a conviction for taking indecent liberties. First, there must be an assault and second, the liberties taken must be of such a nature as the common sense of society would brand as indecent and improper. Assault is a general intent crime and, therefore, a purposeful touching is all that is required." (Emphasis supplied.)
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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 11, 2012 Decided October 2, 2012
No. 11-3037
UNITED STATES OF AMERICA,
APPELLEE
v.
TYRONE HINES,
APPELLANT
Appeal from the United States District Court
for the District of Columbia
(No. 1:10-cr-00150-1)
Matthew Gardner Kaiser, appointed by the court, argued
the cause for the appellant.
Suzanne Grealy Curt, Assistant United States Attorney,
argued the cause for the appellee. Ronald C. Machen, Jr.,
United States Attorney, and Roy W. McLeese III and John P.
Mannarino, Assistant United States Attorneys, were on brief.
Elizabeth Trosman, Assistant United States Attorney, entered
an appearance.
Before: HENDERSON and BROWN, Circuit Judges, and
RANDOLPH, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge HENDERSON.
2
KAREN LECRAFT HENDERSON, Circuit Judge: Appellant
Tyrone Hines was convicted of one count of bank robbery and
two counts of attempted bank robbery and was sentenced to
concurrent terms of 132 months on each count. He challenges
his conviction on the grounds that the district court erred in
failing to hold a competency hearing and in extending the
thirty-day deadline for indicting a defendant following arrest
under the Speedy Trial Act (STA, Act), 18 U.S.C. §§ 3161 et
seq. He also challenges his sentence, asserting the district
court erroneously increased his offense level for obstruction
of justice pursuant to section 3C1.1 of the United States
Sentencing Guidelines (Guidelines) based on a statement he
made at a pre-trial suppression hearing, which the court found
to be deliberately false. Notwithstanding the able and
vigorous advocacy of Hines’s appellate counsel, we affirm
Hines’s conviction and his sentence.
I.
Hines was arrested on March 9, 2010 and charged in a
criminal complaint with the March 4, 2010 attempted robbery
of a BB&T Bank branch in Washington, D.C.1 A magistrate
judge denied Hines’s motion for release from custody and
committed him to government custody, concluding there were
“no conditions that [he] could set that would reasonably
assure [Hines’s] appearance or that he would not commit new
crimes if released, and he should be detained pending trial.”
Detention Mem. at 4, United States v. Hines, Cr. No. 10-150
(D.D.C. Mar. 24, 2010).
Under the STA, the government must indict a defendant
within thirty days after his arrest, 18 U.S.C. § 3161(b), and try
him within seventy days after the indictment, id.
§ 3161(c)—except that a pre-trial detainee, such as Hines,
1
All dates are in 2010 unless otherwise noted.
3
must be tried within ninety days after he is first detained, id.
§ 3164(b)2—all subject to the exclusion of “periods of delay”
as authorized under 18 U.S.C. § 3161(h). On April 7 and May
4, a magistrate judge granted joint motions filed by Hines’s
then-counsel and the government seeking two separate,
successive thirty-day “interests-of-justice” continuances to be
excluded from the STA calendar pursuant to 18 U.S.C.
§ 3161(h)(7), which lists as one of the periods which “shall be
excluded in computing the time within which an information
or an indictment must be filed, or in computing the time
within which the trial of any such offense must commence”:
2
The STA provides in relevant part:
(b) Any information or indictment charging an individual
with the commission of an offense shall be filed within
thirty days from the date on which such individual was
arrested or served with a summons in connection with such
charges. . . .
(c)(1) In any case in which a plea of not guilty is entered,
the trial of a defendant charged in an information or
indictment with the commission of an offense shall
commence within seventy days from the filing date (and
making public) of the information or indictment, or from the
date the defendant has appeared before a judicial officer of
the court in which such charge is pending, whichever date
last occurs.
18 U.S.C. § 3161(b)-(c); and:
The trial of any [detained person who is being held in
detention solely because he is awaiting trial] shall
commence not later than ninety days following the
beginning of such continuous detention . . . . The periods of
delay enumerated in section 3161(h) are excluded in
computing the time limitation specified in this section.
Id. § 3164(b).
4
Any period of delay resulting from a continuance
granted by any judge on his own motion or at the
request of the defendant or his counsel or at the
request of the attorney for the Government, if the
judge granted such continuance on the basis of his
findings that the ends of justice served by taking
such action outweigh the best interest of the public
and the defendant in a speedy trial. No such period
of delay resulting from a continuance granted by the
court in accordance with this paragraph shall be
excludable under this subsection unless the court sets
forth, in the record of the case, either orally or in
writing, its reasons for finding that the ends of justice
served by the granting of such continuance outweigh
the best interests of the public and the defendant in a
speedy trial.
The stated purpose of each exclusion motion was to allow
ongoing plea negotiations to continue and the second motion
sought as well “an opportunity to complete a mental health
evaluation.” Joint Mot. to Exclude Additional Time Under
the Speedy Trial Act, United States v. Hines, Cr. No. 10-150
(D.D.C. Apr. 30, 2010). Together, the two continuances
extended the indictment deadline to June 7. Shortly after the
second motion was filed, however, Hines informed his
counsel that he did not want a plea offer and, upon being so
notified, the government proceeded with the indictment. On
June 3, the grand jury returned an indictment charging Hines
with three counts: (1) robbery of a Citibank branch on
February 26; (2) attempted robbery of a Bank of America
branch on March 4; and (3) attempted robbery of the BB&T
Bank branch on March 4 (all in violation of 18 U.S.C.
§ 2113(a)).
Hines was arraigned on June 16 and pleaded not guilty.
At the arraignment, the district court asked Hines’s counsel
5
about the nature of the two STA exclusions, in particular
whether they applied to both the thirty-day indictment
deadline and the additional ninety-day trial deadline or only to
the former. Counsel responded that she did not believe her
client “specifically agreed to any exclusion of time, other than
the exclusion of time within which to indict him” and that he
“was excluding time within which the Government would
have to indict him to give [her] an opportunity to present to
him the best plea offer.” Tr. of Arraignment at 8, 10, United
States v. Hines, Cr. No. 10-150 (D.D.C. June 16, 2010). She
also informed the court the mental health evaluation
mentioned in the second motion to exclude “was at [her]
request,” was “still an ongoing process” and “was done for the
purposes of trying to convince the Government to give
[Hines] a better plea offer.” Id. at 7. Concluding the matter
was not “as clear-cut as it might be,” the court indicated it
would examine the record further and invited counsel to file a
written explanation of her position. Id. at 9. Later during the
proceedings, counsel informed the court that Hines had
“expressed dissatisfaction with her representation.” Id. at 22.
After questioning Hines about his willingness to proceed with
his current counsel, and explaining to Hines that appointing
new counsel would delay the case, the court agreed to look
into finding new counsel to represent him. On June 21, the
district court conducted a status hearing at which new counsel
represented Hines. The government moved to exclude from
the STA calendar the period from June 26 to July 7 to make
up for the delay caused by changing counsel.3 Hines agreed
to the exclusion.
3
The government explained that “previous defense counsel was
prepared to file [certain motions] on the 26th and new defense counsel
understandably needs until July 7th.” Tr. of Status Hr’g at 20, United
States v. Hines, Cr. No. 10-150 (D.D.C. June 21, 2010).
6
On July 19, Hines moved the court for release pending
trial, asserting “a violation of his rights under the [STA].”
Mot. to Recons. Def.’s Bond at 1, United States v. Hines, Cr.
No. 10-150 (D.D.C. July 19, 2010). According to the motion,
Hines’s first lawyer “excluded the time to indict [Hines], but
did not exclude the time to bring [him] to trial” so that “[t]he
ninety-day (90) period for [Hines] to go to trial tolled on
Monday June 7, 2010 and therefore [he] should be released
pending his trial.” Id. at 2. The district court denied the
motion on the ground that a continuance under section
3161(h) “appl[ies] both in calculating the time within which
an indictment must be filed under section 3161(b) as well as
in calculating the time within which a trial must begin under
either section 3161(c)(1) or section 3164(b).” Mem. Order at
6, United States v. Hines, Cr. No. 10-150 (D.D.C. July 30,
2010) (citing U.S.C. §§ 3161(h), 3164(b)).
In a July 30 hearing, Hines informed the court that he and
his second lawyer were experiencing “irreconcilable
differences,” Tr. of Status Hr’g at 23, United States v. Hines,
Cr. No. 10-150 (D.D.C. July 30, 2010), but ultimately agreed
he was “satisfied” and would “work with” his lawyer, id. (ex
parte) at 7. Nonetheless, on August 23, his lawyer filed a
motion to withdraw as counsel, citing “irreconcilable
differences which have resulted in the parties[’] inability to
discuss the case.” Mot. to Withdraw as Counsel for Def. at 1,
United States v. Hines, Cr. No. 10-150 (D.D.C. Aug. 23,
2010). At the hearing on the motion, Hines recited various
objections to his lawyer’s representation. Despite its
skepticism of Hines’s complaints, the court agreed to appoint
new counsel.
Meanwhile, at an August 8 evidentiary hearing on
Hines’s two motions to suppress, the court had asked Hines’s
second lawyer if a mental evaluation had ever been
performed. Counsel reported that it had but “they did not find
7
that there were any issues that rose to the level of not being
competent.” Tr. of Mot. Hr’g at 5, United States v. Hines, Cr.
No. 10-150 (D.D.C. Aug. 8, 2010). The court concluded
“there didn’t appear to be any competency issues” and
counsel agreed. Id. at 8.
At a status hearing on August 11, the court denied the
motions to suppress, in part because it discredited Hines’s
claim that he was interviewed and confessed on March 10,
rather than on March 9, as the government witnesses and
other evidence indicated. Hines, she observed, “could be
confused or decided based on his own legal research that he
could raise an issue to get his confession suppressed by
changing the timing.” Tr. of Status Hr’g at 18, United States
v. Hines, Cr. No. 10-150 (D.D.C. Aug. 11, 2010). At the
hearing, the court again observed—this time in the context of
Hines’s Miranda rights waiver—that the mental health
evaluation had not raised any competency issues with him.
At an August 30 status hearing, Hines’s third
lawyer—who had just been appointed—reported that the first
defense counsel had agreed to obtain a written assessment
from the psychologist who had assessed Hines’s mental health
and stated that his brief conversations with Hines had not
raised any competency concerns with him.
Hines’s criminal trial began on October 26. The
government presented overwhelming evidence of Hines’s
guilt—including his confession to all three offenses, his
identification by one of the tellers, his image on bank
surveillance tapes and his fingerprints on a note demanding
$5,000 from the BB&T Bank teller. Hines elected not to
present any evidence. The jury retired to deliberate shortly
after 3:00 p.m. on October 27 and around noon the next day
returned a verdict of guilty on all three counts of the
indictment.
8
Hines was sentenced on March 30, 2011. Expressly
adopting the pre-sentencing report, the court calculated a
Guidelines sentencing range of 140 to 175 months, based on a
criminal history of V and an adjusted offense level of 29,
including a two-point enhancement for obstruction of justice
premised on the court’s factual finding “by clear and
convincing” evidence at the August 11 status hearing that
Hines’s suppression hearing testimony regarding the date of
his interview and confession “was false” and Hines
“deliberately lied.” Tr. of Sentencing Hr’g at 21, United
States v. Hines, Cr. No. 10-150 (D.D.C. Mar. 30, 2011). The
court then sentenced Hines to concurrent terms of 132 months
on each count, to be followed by a three-year period of
supervised release, and ordered him to pay three $100 special
assessments and restitution of $5,000.
Hines timely appealed his conviction and sentence.
II.
We address Hines’s three grounds for appeal separately.
A. Speedy Trial Act
First, Hines contends the district court should have sua
sponte dismissed the indictment because he was not indicted
within thirty days after his arrest as required under the STA,
18 U.S.C. § 3161(b). In particular, Hines argues that the two
thirty-day continuances the court ordered when it granted the
joint motions by Hines and the government were not properly
subtracted because the court did not set out in the record
adequate “reasons for finding that the ends of justice served
by the granting of such continuance outweigh the best
interests of the public and the defendant in a speedy trial”
pursuant to 18 U.S.C. § 3161(h)(7)(A). Accordingly, he
asserts, his “rights under the Speedy Trial Act were violated”
and “the indictment against him should be dismissed.”
Appellant’s Br. at 48. We need not decide the propriety of the
9
two continuances because, under 18 U.S.C. § 3162(a)(2),
Hines waived his right to dismissal by failing to move to
dismiss the indictment before his trial commenced.
In construing section 3162(a)(2)’s waiver provision, we
“[p]roceed[] as we must from the fundamental canon that
statutory interpretation begins with the language of the statute
itself.” United States v. Hart, 324 F.3d 740, 745 (D.C. Cir.
2003) (quotation marks omitted). Section 3162(a) provides:
(a)(1) If, in the case of any individual against
whom a complaint is filed charging such individual
with an offense, no indictment or information is filed
within the time limit required by section 3161(b) as
extended by section 3161(h) of this chapter, such
charge against that individual contained in such
complaint shall be dismissed or otherwise dropped.
In determining whether to dismiss the case with or
without prejudice, the court shall consider, among
others, each of the following factors: the seriousness
of the offense; the facts and circumstances of the
case which led to the dismissal; and the impact of a
reprosecution on the administration of this chapter
and on the administration of justice.
(2) If a defendant is not brought to trial within
the time limit required by section 3161(c) as
extended by section 3161(h), the information or
indictment shall be dismissed on motion of the
defendant. The defendant shall have the burden of
proof of supporting such motion but the Government
shall have the burden of going forward with the
evidence in connection with any exclusion of time
under subparagraph 3161(h)(3). In determining
whether to dismiss the case with or without
prejudice, the court shall consider, among others,
each of the following factors: the seriousness of the
10
offense; the facts and circumstances of the case
which led to the dismissal; and the impact of a
reprosecution on the administration of this chapter
and on the administration of justice. Failure of the
defendant to move for dismissal prior to trial or
entry of a plea of guilty or nolo contendere shall
constitute a waiver of the right to dismissal under
this section.
18 U.S.C. § 3162(a)(1)-(2) (emphasis added). Although the
italicized waiver language appears only in subsection (a)(2)
(addressing tardy-trial dismissals) and not in subsection (a)(1)
(addressing tardy-indictment dismissals), as we observed in
United States v. Bittle, 699 F.2d 1201 (D.C. Cir. 1983), the
waiver provision may well apply to both subsections. See
Bittle, 699 F.2d at 1207 n.15 (“Perhaps the provision in
subsection (a)(2) governs subsection (a)(1) because the
provision refers to ‘section’ rather than ‘subsection,’ but we
need not decide this issue.” (emphases added)); cf. United
States v. Taylor, 497 F.3d 673, 676 n.3 (D.C. Cir. 2007)
(“[U]nder § 3162(a)(2), a defendant’s failure to ‘move for
dismissal prior to trial’ constitutes waiver of § 3161(c) claims.
It is unclear whether [the defendant’s] motion to dismiss
based on a separate provision [§ 3161(b)] suffices to avoid
waiver.”). Since Bittle, three of our sister circuits have so
construed the waiver language. See United States v.
Spagnuolo, 469 F.3d 39, 44 (1st Cir. 2006) (“Applying the
normal rules of statutory construction leads us to conclude
that the motion and waiver provision of § 3162(a)(2) also
applies to § 3162(a)(1) speedy indictment claims, because
‘section’ must refer to all of § 3162, and not just to the
paragraph in § 3162 where the motion and waiver provision
was (improvidently) located.”); United States v. Brown, 287
F.3d 684, 687–88 (8th Cir. 2002) (“[W]e conclude that Brown
waived his right to appeal the speedy trial issue when he
failed to seek a dismissal of the indictment prior to trial.”
11
(citing 18 U.S.C. § 3162(a)(2))); United States v. Gamboa,
439 F.3d 796, 803–04 (8th Cir. 2006) (citing 18 U.S.C.
§ 3162(a)(2) and concluding defendant waived his right to
raise a speedy-indictment issue on appeal by failing to move
for dismissal on that ground before trial in district court);
United States v. Lewis, 980 F.2d 555, 560 (9th Cir. 1992) (“A
defendant seeking to dismiss a case for a claimed violation of
the STA’s speedy indictment provisions must move for
dismissal prior to trial (although not necessarily before
indictment) or he waives his right to dismissal under
§ 3162(a)(1)” (emphasis in original)), abrogated on other
ground by Bloate v. United States, 130 S. Ct. 1345 (2010).
We do so now as well.
The Congress “ordinarily adheres to a hierarchical
scheme in subdividing statutory sections,” which scheme
uses, successively, “subsections” (e.g., “(a)”), “paragraphs”
(e.g., “(1)”), subparagraphs (e.g., “(A)”) and “clauses” (e.g.,
“(i)”). Koons Buick Pontiac GMC, Inc. v. Nigh, 543 U.S. 50,
60-61 (2004). Elsewhere in the STA, the Congress used its
customary language. See, e.g., 18 U.S.C. § 3161(d)(2) (“The
sanctions of section 3162 apply to this subsection.”), (h)(3)(B)
(“For purposes of subparagraph (A) of this paragraph . . . .”),
(h)(7)(B)(iv) (referring to “clause (ii)”) (emphases added).
Thus, had the Congress intended to limit the waiver provision
to dismissals for untimely trials only (and not extend it to
untimely indictments as well), we would expect the statute to
read: “Failure of the defendant to move for dismissal prior to
trial or entry of a plea of guilty or nolo contendere shall
constitute a waiver of the right to dismissal under this
paragraph”—or perhaps even “under this subsection,” see
Bittle, 699 F.2d at 1207 n.15. As written, however, the
language provides for waiver of the right to dismissal under
the entire section, including dismissal both for an untimely
indictment and for an untimely trial. Accord Spagnuolo, 469
F.3d at 44.
12
The literal construction of the waiver provision (applying
to both (a)(1) and (a)(2) dismissals) is also supported by its
legislative history. The House of Representatives Report on
the 1975 House bill that enacted section 3162—and it was the
House bill that was subsequently enacted by both chambers of
the Congress—appears to treat indictment and trial dismissals
identically, requiring that in either case the defendant file a
motion to dismiss and providing that he waives the right to
dismissal if he does not so move before his trial begins:
Dismissal with prejudice
In the event that the time limits of the bill,
subject to the various exclusions, are not met, the
court on motion of the defendant may dismiss the
complaint, information or indictment against the
individual. This sanction applies to both the period
between arrest and indictment and between
indictment and trial. The effect of a dismissal would
be to bar any future prosecution against the
defendant for charges arising out of the same
conduct. Dismissal with prejudice would apply to
those offenses which were known or reasonably
should have been known at the time of dismissal. A
defendant must move to dismiss the case prior to
trial, entry of a plea of guilty or nolo contendere, or
he waives the right of dismissal with prejudice on
grounds that the requirements of this legislation
were not met. [Section 3162(a)].
H.R. Rep. No. 93-1508, at 23 (1974), reprinted in 1974
U.S.C.C.A.N. 7401, 7416 (emphases added).
Moreover, applying the waiver to section 3162(a)(1)
dismissal is also consistent with the waiver provision’s
purpose. The United States Supreme Court has observed that
section 3162(a)(2)
13
serves two unrelated purposes. First, § 3162(a)(2)
assigns the role of spotting violations of the Act to
defendants—for the obvious reason that they have
the greatest incentive to perform this task. Second,
by requiring that a defendant move before the trial
starts or a guilty plea is entered, § 3162(a)(2) both
limits the effects of a dismissal without prejudice (by
ensuring that an expensive and time-consuming trial
will not be mooted by a late-filed motion under the
Act) and prevents undue defense gamesmanship.
Zedner v. United States, 547 U.S. 489, 502-03 (2006)
(footnote omitted). These same two purposes apply equally to
dismissal of an indictment under section 3162(a)(1). Without
the waiver provision, a defendant has no incentive to police
the government’s compliance with the STA’s indictment
deadlines. More importantly, without the waiver constraint a
defendant may freely game the system by rolling the dice on a
trial and then seeking a section 3162(a)(1) dismissal for
failure to timely indict—if he is unhappy with the
result—putting the prosecution and the court through the time,
effort and expense of a trial that may subsequently be mooted
at the defendant’s whim. See Spagnuolo, 469 F.3d at 44 (“The
Act created incentives both for compliance by the government
and for enforcement by defendants. It would be odd to use a
different set of incentives for the two situations of speedy
indictment and speedy trial. Under both, a defendant must
move promptly, or waive his rights.”).
Applying the waiver to tardy-indictment dismissals is
also consistent with other provisions of the Act, which
generally (but for the different deadlines for each) treat
indictments and trials identically. Significantly, for example,
the STA treats an exclusion under section 3161(h) as having
the same effect on both the time for indictment and the time
for trial. See 18 U.S.C. § 3161(h) (“The following periods of
14
delay shall be excluded in computing the time within which
an information or an indictment must be filed, or in
computing the time within which the trial of any such offense
must commence: . . . .” (emphasis added)). Given the
Congress’s gamesmanship concern, we see no reason it would
have foreclosed a trial-time challenge once a trial begins,
while freely allowing through appeal an identical challenge to
the exclusion as applied to the time for indictment.
Hines raises a single argument in his reply brief opposing
the government’s waiver assertion. He urges that finding
waiver would be contrary to the Supreme Court’s decision in
Zedner. There, the Court concluded that a defendant had not
effectively waived his right to a speedy trial when, at the
district judge’s urging, he signed “a blanket, prospective
waiver of his rights under the Act,” waiving them “for all
time.” Zedner, 547 U.S. at 492, 494 (quotation marks
omitted). The Court reasoned that the STA “was designed
with the public interest firmly in mind” and “[t]hat public
interest cannot be served, the Act recognizes, if defendants
may opt out of the Act entirely.” Id. at 501. Thus, the Court
explained, “[a]llowing prospective waivers would seriously
undermine the Act because there are many cases—like the
case at hand—in which the prosecution, the defense, and the
court would all be happy to opt out of the Act, to the
detriment of the public interest.” Id. at 502. Waiver under
section 3162(a)(2), however, is not prospective but
retrospective, is authorized under the Act and is consistent
with its policies. See id. (“The sort of retrospective waiver
allowed by § 3162(a)(2) does not pose a comparable danger
because the prosecution and the court cannot know until the
trial actually starts or the guilty plea is actually entered
whether the defendant will forgo moving to dismiss. As a
15
consequence, the prosecution and the court retain a strong
incentive to make sure that the trial begins on time.”).4
Accordingly, we conclude that under section 3162(a)(2)’s
waiver provision, Hines waived his right to seek dismissal
under section 3162(a)(1) based on an untimely indictment.5
B. Competency Hearing
Hines next challenges the district court’s failure to order
a competency hearing ex mero motu. We review the district
court’s failure to so order for abuse of discretion. United
States v. Jones, 642 F.3d 1151, 1159 (D.C. Cir. 2011); United
States v. Perez, 603 F.3d 44, 47 (D.C. Cir. 2010).
“A defendant has a right to a competency hearing ‘if
there is reasonable cause to believe that the defendant may
presently be suffering from a mental disease or defect
rendering him mentally incompetent to the extent that he is
unable to understand the nature and consequences of the
4
Under this reasoning, we cannot uphold the interests-of-justice
exclusions solely on the ground that Hines himself voluntarily
approved them—we would also have to examine the adequacy of the
district court’s findings supporting the exclusions. See Zedner, 547
U.S. at 500-01 (“The purposes of the Act also cut against exclusion on
the grounds of mere consent or waiver. If the Act were designed
solely to protect a defendant’s right to a speedy trial, it would make
sense to allow a defendant to waive the application of the Act. But the
Act was designed with the public interest firmly in mind.”).
5
Apart from the parties’ waiver discussions, Hines asserts that his
second lawyer was ineffective in failing to move for dismissal based
on the untimely indictment at the same time he moved for Hines’s
release under 18 U.S.C. § 3164(c). Given the facts in this case,
counsel’s failure to move for dismissal was not “outside the wide
range of professionally competent assistance.” Strickland v.
Washington, 466 U.S. 668, 694 (1984).
16
proceedings against him or to assist properly in his defense.’ ”
Jones, 642 F.3d at 1159 (quoting 18 U.S.C. § 4241(a)).
“Competence to stand trial requires ‘sufficient present ability
to consult with his lawyer with a reasonable degree of rational
understanding and . . . a rational as well as factual
understanding of the proceedings against him.’ ” United
States v. Klat, 213 F.3d 697, 702 n.5 (D.C. Cir. 2000)
(quoting Dusky v. United States, 362 U.S. 402, 402 (1960))
(internal quotation marks omitted). The district court had no
reason to believe Hines lacked such competence. Among the
factors a court must consider are “a defense attorney’s view
about the competence of her client” and “the professional
evaluation of a psychologist.” Jones, 642 F.3d at 1160 (citing
Drope v. Missouri, 420 U.S. 162, 178 n.13 (1975)). Here the
court considered both factors and reasonably found they
provided no basis to question Hines’s competence.
Hines’s first counsel gave no indication she thought him
incompetent to stand trial. Although she requested a mental
health evaluation, she did so only “for the purpose of trying to
convince the Government to give [Hines] a better plea offer.”
Arraignment Tr. at 7.
Hines’s second lawyer informed the court that he had
talked to the person who performed the evaluation and
reported “they did not find that there were any issues that rose
to the level of not being competent.” Aug. 8, 2010
Suppression Mot. Hr’g Tr. at 5. The court responded: “I
guess from my perspective the evaluation indicated there
didn’t appear to be any competency issues. . . . [I]s there an
issue that needs to be raised at this point in the context of . . .
his competency now . . . ?” Id. at 8. Counsel replied:
I don’t believe so, Your Honor. I think that—the
only thing that I can say is that I think there are times
when I thought I might have had that sense, but in
more and more dealing with [Hines], it’s not my
17
impression that he has a competency issue, but I’m
not an expert. But to the extent that I can say, I think
that the more that I’ve dealt with [Hines], the more I
have a better understanding of some of the things
that he raises and why, and some of the adamancies,
for lack of a better word, therefrom. . . . But not that
I can say at this point, to the point where I’d say, oh,
he has a competency issue where he doesn’t
appreciate what’s going on.
Id. The Court then stated: “So, it sounds as if the evaluation
that [Hines’s first counsel] did doesn’t raise an issue, and you
in dealing with him, which his competency really to a large
degree comes up to what does he understand, can he
participate, defend himself, et cetera.” Counsel responded:
“Right.” Id. at 8-9. A few days later at the status hearing
denying Hines’s motions to suppress, the court observed that
Hines had been “examined by a psychologist at the request of
the defense counsel” and “[t]he findings show no competency
issues which would reflect on whether any mental incapacity
to interfere with his understanding his rights.” Aug. 11, 2010
Status Hr’g Tr. at 26.
Finally, during the first status hearing after he was
appointed counsel, Hines’s third lawyer told the court that his
“brief discussions” with Hines had not “raised a concern with
[him] that . . . there [was] anything going on that ha[d] a
bearing on his ability to communicate with counsel or to
effectively assist in structuring a defense.” Tr. of Status Hr’g
at 4, United States v. Hines, Cr. No. 10-150 (D.D.C. Aug. 30,
2010). At the sentencing, moreover, the lawyer assured the
court: “I’m not . . . requesting of the Court any kind of
forensic evaluation of [Hines] at this point. I do believe he’s
competent.” Sentencing Tr. at 3. All of the foregoing
evidence supports the court’s repeated opinion that Hines
presented no competency issues.
18
Hines offers three grounds for rejecting the trial court’s
competency determination: (1) Hines was previously found
not guilty by reason of insanity (NGI) in a Virginia state
criminal prosecution; (2) he stated he had been diagnosed as
bipolar, apparently in 2009; and (3) his “conduct throughout
th[e] case leaves little doubt that he was unable to assist
counsel.” Appellant’s Br. at 26.
Regarding the NGI verdict, it came to light only after trial
and, as the district court observed, Hines’s lawyer in the
Virginia case had objected to the NGI verdict and the Virginia
judge had “made no findings” about it. Sentencing Hr’g Tr. at
4. Tellingly, the fact of a NGI verdict suggests the Virginia
court considered Hines competent at the time of his trial
(whatever his mental condition at the time of the crime).
Thus, the mere fact of the NGI verdict says nothing about
competence vel non at the time of his trial in October 2010.
Moreover, whether or not an accurate bipolar diagnosis
may have been made in 2009, as Hines asserted, the recent
July 2010 mental health evaluation Hines’s first lawyer
requested expressly “ruled out any bipolar disorder.”
Sentencing Hr’g Tr. at 38.
Finally, Hines’s conduct leading up to trial displayed an
awareness of the proceedings’ nature and significance and he
took an active (if sometimes misguided) role in his defense.
As the court observed, Hines “had ideas and some of them
may be fixed, but [he is] entitled to have [his] own ideas.”
Sentencing Hr’g Tr. at 7. Even if ill-advised, his proposed
defense strategies did not create reasonable cause to believe
him incompetent to stand trial. See Perez, 603 F.3d at 48
(“Although [the defendant] may have held dubious legal
views and pursued an inadvisable strategy, none of this
provided reasonable cause for the district court to question his
competence to stand trial. As the Seventh Circuit has
recognized, ‘persons of unquestioned competence have
19
espoused ludicrous legal positions, but the articulation of
unusual legal beliefs is a far cry from incompetence.’ ”
(quoting United States v. Alden, 527 F.3d 653, 660 (7th Cir.
2008))).6
C. Obstruction of Justice Enhancement
Finally, Hines asserts the district court improperly
imposed a 2-point enhancement for obstruction of justice
based on its finding that he deliberately misrepresented that he
was not interviewed until March 10, 2010 when in fact he was
interviewed and confessed on March 9, 2010. We reject this
contention as well.
Hines argues that the district court’s finding at the March
30, 2011 sentencing hearing that he “deliberately lied” about
the date of his interview, Sentencing Hr’g Tr. at 21, is
inconsistent with its earlier statement at the August 11 status
hearing that Hines “could be confused or decided based on his
own legal research that he could raise an issue to get his
6
We reject outright Hines’s suggestion that the district court was
required to conduct a competency simply because it “questioned” his
competency to stand trial. Appellant’s Br. at 25. The court asked
about Hines’s mental state solely because one of the STA exclusion
motions sought time for a mental health examination—which Hines’s
counsel acknowledged was a strategic move intended to secure a more
favorable plea offer. Neither the fact of the examination nor the
court’s consequent inquiry regarding Hines’s mental health manifested
a reasonable cause to believe he was not competent to stand trial. See
Perez, 603 F.3d at 47-48; 18 U.S.C. § 4241(a). To the contrary, the
court made clear that it found that Hines presented no “competency
issues,” Aug. 8, 2010 Suppression Mot. Hr’g Tr. at 8, and, given all of
the evidence cited supra, this determination was not an abuse of
discretion.
20
confession suppressed by changing the timing.”7 Aug. 11,
2010 Status Hr’g Tr. at 18. Not so. As the court explained at
sentencing, it made no finding of intent at the earlier hearing:
So, as part of my Court findings, I didn’t conclude or
make a finding one way or the other about his intent
or motivation for the false testimony, it was
immaterial at that time. I did make a finding I didn't
believe him by not crediting his testimony. All of the
evidence pointed to and supported March 9th as the
correct date. And even his own videotaped statement
supported March 9th as the date, and I made that
finding at the hearing for suppression.
Sentencing Hr’g at 20. At sentencing, however, when it came
time to make a finding on a U.S.S.G. § 3C1.1 obstruction of
justice enhancement, the court made an express finding “by
clear and convincing” evidence that Hines’s testimony
regarding the date of the confession “was false” and that
Hines “deliberately lied.” Sentencing Hr’g Tr. at 21. In so
finding, the court noted that at the status hearing (the
7
The court found it particularly significant that Hines had “done
. . . legal research” regarding the timing of his statement. Sentencing
Tr. at 22. The court “observed his demeanor” at the suppression
hearing and found that “he knew exactly what he was saying and why
he was claiming it was March 10th and not March 9th.” Id. The court
explained at the August 11 status hearing:
As the defendant testified, he had done legal research. He
testified that from arrest to the time of the statement it had
to be from three to six hours but not more than eight hours.
The Court would note that from arrest to statement, in D.C.
Superior Court, the time limit is three hours, in Federal
Court it is six hours for the confession to be admissible, if
it’s voluntary and conforms to other requirements.
Aug. 11, 2010 Status Hr’g Tr. at 18-19.
21
transcript of which the court had reviewed before sentencing),
when asked about his videotaped interview and confession,
Hines “repeatedly stated, quote: I remember it was the 10th.
Unquote. Quote: I remember it was the l0th because I was
arrested on the 9th. Unquote.” Id. The court added: “He
never states he was confused, he can’t recall or equivocates in
any way. He makes a very definitive statement that the
interview was on March 10th.” Id. at 21-22. The court’s
finding of fact is “to be affirmed unless clearly erroneous.”
United States v. Davis, 635 F.3d 1222, 1224 (D.C. Cir. 2011).
Given the testimony on which the court relied, its finding is
not clearly erroneous.
For the foregoing reasons, Hines’s conviction and
sentence are affirmed.
So ordered.
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989 S.W.2d 681 (1999)
Scott KELLOG, Plaintiff/Appellant,
v.
Kenneth KELLOG, Jr., Defendant/Respondent.
No. 74760.
Missouri Court of Appeals, Eastern District, Division Three.
April 27, 1999.
*683 James E. Lownsdale, Brandenburg & Lownsdale, St. Louis, for appellant.
Jon R. Sanner, Brinker & Doyen, L.L.P., St. Louis, for respondent.
KATHIANNE KNAUP CRANE, Judge.
In this case plaintiff, Scott Kellog, did not file his claim to recover damages for negligence against his stepfather, defendant Kenneth Kellog, Jr., until over six years after his damages were sustained. The trial court entered summary judgment in defendant's favor on the ground that the action was barred by the five year statute of limitations applicable to personal injury actions, Section 516.120 RSMo (1994). It further found that plaintiff failed to raise a genuine issue of fact that he was "mentally incapacitated", as that term is used in the tolling statute, Section 516.170 RSMo (1994), for the two years following his injury. Plaintiff appeals, primarily contending that genuine issues of fact remain on the question of his mental incapacity. We affirm.
Plaintiff filed an action on April 11, 1996 to recover damages from multiple defendants[1] for negligence and medical malpractice. He alleged that he was a hemophiliac and that while he was in defendant's care, defendant sent him outside to get firewood where he slipped on ice and fell, causing him to bleed continuously. He suffered an infection while being treated at St. Louis University Medical Center which required the amputation of his right leg in March, 1990. He alleged that defendant was negligent in sending him outside, in failing to clear the ice, and in failing to promptly seek medical assistance for him. Plaintiff also alleged that the statute of limitations should be tolled because his injuries kept him from recognizing, prosecuting, or protecting his legal rights.
Defendant moved for summary judgment on the grounds that plaintiff's cause of action was barred by the applicable statute of limitations and that plaintiff was not "mentally incapacitated" so as to toll the statute of limitations under Section 516.170. The trial court granted the motion. It determined that plaintiff did not present sufficient evidence to raise a question of fact on the issue of mental incapacity. It further found plaintiff's affidavits to be based on conclusions and not on facts which would allow a finder of fact to determine that plaintiff was mentally incapacitated.
DISCUSSION
I. Propriety of Summary Judgment on the Issue of "Mentally Incapacitated"
For his first point plaintiff argues the trial court failed to adequately define, interpret, and apply the term "mentally incapacitated" as used in Section 516.170 RSMo (1994). Plaintiff contends that, no matter what definition of "mentally incapacitated" is used, the record established plaintiff was "mentally incapacitated" so as to invoke the tolling provisions of Section 516.170. For his second point plaintiff asserts that the trial court overlooked and ignored genuine issues of material fact which precluded summary judgment on the issue of mental incapacity. Considered together, these points raise two issues: the meaning of the term "mentally incapacitated" and whether the undisputed facts in the summary judgment record supported a finding that plaintiff was not "mentally incapacitated" as a matter of law.
A. Meaning of "Mentally Incapacitated"
The legislature did not define the term "mentally incapacitated" as used in Section 516.170. We are thus guided by the rule that "[w]ords and phrases shall be taken in their plain or ordinary and usual sense, but technical words and phrases having a peculiar and appropriate meaning in law shall be understood according to their technical import." Section 1.090 RSMo (1994); Bartareau v. Executive Business Products, Inc., 846 S.W.2d 248, 249 (Mo.App.1993).
Prior to its 1983 revision, Section 516.170 provided:
*684 If any person entitled to bring an action in sections 516.100 to 516.370 specified, at the time the cause of action accrued be either within the age of twenty-one years, or insane, or imprisoned on a criminal charge, or in execution under a sentence of a criminal court for a less term than for his natural life, such persons shall be at liberty to bring such actions within the respective times in sections 516.100 to 516.370 limited after such disability is removed.
The Missouri Supreme Court interpreted "insane" as used in this version of Section 516.170 as follows: "Unsoundness of mind has been judicially declared to be synonymous with `insanity.' It exists where there is an essential privation of the reasoning faculties, or where a person is incapable of understanding and acting with discretion in the ordinary affairs of life." Fendler v. Roy, 331 Mo. 1083, 58 S.W.2d 459, 464 (1932). In Fiandaca v. Niehaus, 570 S.W.2d 714, 717 (Mo.App.1978), we held, "[t]hat a person is old, infirm, has a weakened mind, impaired mental capacities and is subject to influence and domination by her children does not establish that she is insane."
In 1983 the Missouri legislature made a comprehensive revision of the probate code as it relates to guardianship.[2] The bill changed the nomenclature of guardianship proceedings in Chapter 475 by omitting stigmatizing vocabulary and replacing those terms with "incapacitated" and "disabled".[3] The definitions of the new terms provided a functional approach to the guardianship process based upon a person's specific abilities and disabilities.[4]
The bill also removed stigmatizing language in numerous other statutes which previously used terms such as "incompetent" and "insanity" and substituted forms of the word "incapacity."[5] In Section 516.170, the statute at issue in this case, the term "mentally incapacitated" was substituted for the word "insane."
At the time it substituted "mentally incapacitated" in Section 516.170, the legislature also made mental incapacity a condition which made a person ineligible to vote, Section 115.133.2; operated as a waiver of a person's right to a jury trial in civil actions, Section 510.190.4; qualified a person for guardianship, Section 475.030.1; made a person incompetent to testify, Section 491.060; was a ground for removal of a personal representative, Section 473.140; and required that a guardian ad litem be appointed for a person interested in the probate of a will, Section 473.083.2. The legislature has also used "mentally incapacitated" to describe the condition which entitled a child to child support after emancipation, Section 452.340.4; or excused a child from attending school, Section 167.031.1(1).
Also, at the time the term "mentally incapacitated" was added to Section 516.170, Black's Law Dictionary defined "mental incapacity" the same way the Missouri Supreme Court had previously defined "insanity": "Such is established when there is found to exist an essential privation of reasoning faculties, or when a person is incapable of understanding and acting with discretion in the ordinary affairs of life." BLACKS LAW DICTIONARY 889 (5th ed.1979).
In discussing the current version of Section 516.170, our supreme court has described mentally incapacitated persons as those who, although they have a right to file a suit, have a disability which prevents meaningful access to the courts. Wheeler v. Briggs, 941 S.W.2d 512, 515 (Mo. banc 1997). "The legislature, in recognition of this practical inability to bring suit, included mentally *685 incapacitated persons in the tolling provisions of Section 516.170...." Id.
In light of the above, we conclude that the substitution of "mentally incapacitated" for "insane" did not substantively change this statute. See Estate of Brown v. Fulp, 718 S.W.2d 588, 590 (Mo.App.1986) (construing substitution of "mentally incapacitated" for "insane" in the 1983 revision to The Dead Man's Statute, Section 491.010 (1983 Supp.)). Therefore, a plaintiff who seeks to toll a limitations period due to mental incapacity must set forth facts which show that plaintiff was deprived of an ability to reason or was unable to understand and act with discretion in the ordinary affairs of life, which disability prevented plaintiff from bringing suit.
B. Propriety of Summary Judgment on Issue of Mental Incapacity
In his motion for summary judgment, defendant set out facts, supported by his affidavit and references to plaintiff's deposition, which showed that plaintiff was not mentally incapacitated. Defendant alleged plaintiff's ability to handle his affairs, care for himself, get a driver's license, attend college, and obtain employment during the five years after his injury. Defendant further averred that plaintiff had lived in defendant's household continuously until 1993 and that he was unaware that plaintiff had ever suffered or been treated for any mental or psychological illness or disability. Specifically, with respect to the two years after the injury, defendant referenced plaintiff's deposition testimony that, although he did not leave his house during those two years, he bathed, he made out a grocery list which he gave to his mother along with his food stamps so she could get groceries for him, he prepared his own meals in his room, he fed himself, and he sometimes joined the family for meals.
Because defendant met his burden and showed the existence of facts necessary to support the bar of the statute of limitations, plaintiff could not rest upon the mere allegations or denials in his pleading, but his response, by affidavits or as otherwise provided in Rule 74.04, had to set forth specific facts showing that there existed a genuine issue for trial. ITT Com. Fin. Corp. v. MidAm. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993); Rule 74.04(e). As the party claiming the exemption, plaintiff had the burden of showing exemption from the operation of the statute of limitations. Woodruff v. Shores, 354 Mo. 742, 190 S.W.2d 994, 995 (1945); Campbell v. Laclede Gas Co., 84 Mo. 352, 375-76 (1884), aff'd 119 U.S. 445, 7 S.Ct. 278, 30 L.Ed. 459 (1886). Further, because the law favors statutes of limitations, exceptions are strictly construed. Chambers v. Nelson, 737 S.W.2d 225, 227 (Mo.App.1987). We are not at liberty to extend them, even in cases of hardship. Id.
Therefore, to survive summary judgment, plaintiff's response to defendant's motion, by affidavits or as otherwise provided in Rule 74.04, had to set forth specific facts showing that there existed a genuine issue that 1) he was deprived of his reasoning faculties or 2) that he was incapable of understanding or acting with discretion in the ordinary affairs of his life.
In his response to defendant's motion, plaintiff argued that his action was not barred by the statute of limitations because he was "mentally incapacitated" for the two years following the amputation. He cited portions of his deposition where he testified that he did not leave home for two years following the amputation, that he could not recall the date of the incident, or what was said to him that night. He attached as exhibits his affidavit and that of a psychologist. Plaintiff's affidavit averred as follows:
1. I was injured in December, 1989, at my stepfather's house.
2. I am a hemophiliac, and my injury led to the amputation of my leg in March, 1990.
3. The amputation of my leg was an extremely traumatic event in my life, and devastated me for years. Before the amputation, I was leading a normal life, fully independent, in charge of my affairs.
4. For nearly 4½ years following the amputation, I had frequent recurrent dreams and recollections of the trauma, and such recollections have been so distressing that I avoided even the slightest reminders of events leading up to the amputation of my leg.
*686 5. For 2 years following the amputation, I was completely unable to function, both mentally and physically, because of the stress from the trauma. I rarely left my room. I could not concentrate. I could not consider my legal rights in any way because the ordeal reminded me of the trauma.
The psychologist, Herbert Berger, attested as follows:
1. I am a licensed psychologist, practicing in the County of St. Louis, State of Missouri, for twenty years. A copy of my Curriculum Vitae is attached hereto.
2. I have conducted a psychological screening of the Plaintiff, Scott Kellog, on October 12, 1996.
3. Based upon my screening, it is my opinion that Scott Kellog suffered such a mental incapacity, as a result of the amputation of his leg, as to render him impaired and unable to exercise his rights, and his psychological state rendered him incapable of seeking help for at least 2-1/2 years following said amputation.
The legal file also contains a supplemental affidavit signed by plaintiff. Although it is not file stamped, the parties stipulated that it was before the court on the motion for summary judgment.[6]
1. During my visit with Dr. Berger, we discussed, in detail, my life situation during the first 3 years after my amputation, the years 1990-1992. Dr. Berger asked a lot of questions regarding my ability to function during that period of time, and he wrote down everything I said.
2. During the time period 1990-1992, I was incapable of handling even my basic needs of daily life, or of understanding the ordinary affairs of life.
3. I relied upon others, exclusively, to provide me food, clothing, shelter, and safety, from the time I came home from the hospital (March 1990), to about summer/fall of 1992.
4. I was incapable of doing anything except sitting in my room, watching TV, occasionally bathing, and fixing meals, from December 1991, through about summer/fall, 1992.
5. During this time period, I was mentally incapable of understanding my responsibilities to myself as a person, my rights, or my own health and welfare.
6. During this time period of my life, I was mentally incapable of making such simple decisions as when to get out of bed, or choosing what and when to eat, let alone such decisions as how I would make any money, or what I would do to survive another day.
7. During this time period, even the thought of going out and doing anything frightened me, and made me feel such overwhelming insecurity that I wanted to end my life. I was afraid of my hemophilia, that I might end up losing my other leg. I did not care about living. If my mom and brothers hadn't taken care of me, I would not be alive today.
The affidavits do not allege facts which would raise a fact question about plaintiff's mental incapacity as that term is used in the statute. Plaintiff's original affidavit made the conclusory allegation that he could not function for two years following the amputation, both mentally and physically, because of the stress from the trauma. But the only facts he asserts to support that conclusion are that he rarely left his room and could not concentrate. He avers that he could not consider his legal rights because the ordeal reminded him of the trauma. This affidavit is insufficient to create a disputed question of fact on the question of mental capacity because it contains no facts showing that he was deprived of his reasoning faculties or that he was incapable of understanding and acting with discretion in the ordinary affairs of his life. Rarely leaving one's room and an inability to concentrate do not constitute "mental incapacity" which will toll the statute of limitations.
*687 Dr. Berger's affidavit is insufficient in two respects. First, his opinion is a bare conclusion which is not supported by any facts and is thus insufficient to rebut a motion for summary judgment. Weaver v. State Farm Mut. Auto. Ins. Co., 936 S.W.2d 818, 822 (Mo. banc 1997). "An affidavit which fails to aver specific facts and relies only upon mere doubt and speculation fails to raise any issue of material fact. Conclusory allegations are not sufficient to raise a question of fact in summary judgment proceedings." Id. Second, his conclusion goes to the question of whether plaintiff could exercise certain undefined "rights" or was capable of "seeking help". It does not address plaintiff's ability to reason or to manage his affairs.
Plaintiff's supplemental affidavit likewise does not create a factual issue. The fact that plaintiff relied on others for his physical care does not, standing alone, show that he was mentally incapacitated where his physical condition required such assistance. His averments about his mental state are conclusions which are unsupported by facts and are contradicted by facts contained in his affidavit and in his deposition. Although he concludes that he was incapable of handling the basic needs of daily life or of understanding the ordinary affairs of life and that he was mentally incapable of making simple decisions as when to get out of bed or choosing what and when to eat, he also avers that he watched television, bathed, and fixed meals. In his deposition he testified that he made out a grocery list which he gave to his mother along with his own food stamps so she could do his grocery shopping and he prepared his own meals and fed himself in his room. "A party may not avoid summary judgment by giving inconsistent testimony and then offering the inconsistencies into the record in order to demonstrate a genuine issue of material fact." ITT, 854 S.W.2d at 388.
The two most common means used to demonstrate mental incapacity are a medical diagnosis of a condition which would make a person "mentally incapacitated" as that term is used in Section 516.170 or evidence that the probate court had issued letters of guardianship for a person during the period of incapacity. See Henry v. Henry, 886 S.W.2d 172, 174-75 (Mo.App.1994); Albert v. Sauer, 869 S.W.2d 853, 855 (Mo.App. 1994) (both of which applied Section 452.340.4); see also, Vance v. Stevens, 930 F.2d 661, 662 (8 th Cir.1991) (construing Section 516.170).
In this case plaintiff did not file letters of guardianship, he did not provide an affidavit of a physician attesting to a mental disability, his psychologist's affidavit was conclusory and did not address the salient issues of mental disability, and his own conclusory and contradictory averments were insufficient to create an issue of fact. Because plaintiff did not raise a genuine issue of material fact that he was "mentally incapacitated" so as to toll the statute of limitations, defendant was entitled to summary judgment as a matter of law. Points one and two are denied.
II. Due Process and Equal Protection Claims
For his final point plaintiff contends the trial court deprived him of due process and equal protection of the laws when it required him to prove his mental incapacity, without giving him prior notice of what would be required to prove that he was "mentally incapacitated" and by misinterpreting the facts in the light most favorable to defendant. This point was not preserved because this alleged constitutional error was not raised in the trial court. Further, it is frivolous. Point three is denied.
The judgment of the trial court is affirmed.
PAUL J. SIMON, P.J. and LAWRENCE E. MOONEY, J., concur.
NOTES
[1] Only defendant Kenneth Kellog, Jr. remains a party defendant to this action.
[2] See Laws of Missouri 1983, H.C.S.S.C.S.S.B. 44 and 45, pp. 804-906.
[3] John A. Borron, The Guardianship Code RevisionAn Overview, 39 J. Mo. BAR 453, 454 (1983); I MISSOURI GUARDIANSHIP AND TRUST LAW Section 1.9 (Mo. Bar 1985, 1987, Supp.1993).
[4] See supra, note 3.
[5] I MISSOURI GUARDIANSHIP AND TRUST LAW Section 1.9; see also, e.g., Section 70.661 in which "totally incapacitated" was substituted for "incompetent" and "incapacity" was substituted for "incompetency"; Section 473.083.2 in which "mentally incapacitated person" was substituted for "person of unsound mind"; and Sections 473.140 and 491.060(1) in which "mentally incapacitated" was substituted for "insane". See also, Borron, supra, note 10 at 461.
[6] We call to plaintiff's attention that Rule 81.12(a) requires the record to be in chronological order and that the respective dates of pleading or entry into the record of documents in the legal file be shown. Eastern District Rule 330 further requires that the circuit court minute sheet be included in the legal file.
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People v Graziano (2020 NY Slip Op 04764)
People v Graziano
2020 NY Slip Op 04764
Decided on August 26, 2020
Appellate Division, Second Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on August 26, 2020
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Second Judicial Department
MARK C. DILLON, J.P.
LEONARD B. AUSTIN
SHERI S. ROMAN
SYLVIA O. HINDS-RADIX
LINDA CHRISTOPHER, JJ.
2018-02023
(Ind. No. 497/16)
[*1]The People of the State of New York, respondent,
vKimberly Graziano, appellant.
Laurette D. Mulry, Central Islip, NY (Edward E. Smith of counsel), for appellant.
Timothy D. Sini, District Attorney, Riverhead, NY (Edward A. Bannan of counsel), for respondent.
DECISION & ORDER
Appeal by the defendant, as limited by her motion, from a sentence of the Supreme Court, Suffolk County (John B. Collins, J.), imposed September 19, 2017, on the ground that the sentence was excessive.
ORDERED that the sentence is affirmed.
The defendant did not validly waive the right to appeal, since the Supreme Court failed to explain the nature of the right to appeal and the consequences of waiving that right on the record (see People v Parrish, 179 AD3d 841). Thus, appellate review of her contention that the sentence imposed was excessive is not precluded by the purported waiver.
However, the sentence imposed was not excessive (see People v Suitte, 90 AD2d 80).
DILLON, J.P., AUSTIN, ROMAN, HINDS-RADIX and CHRISTOPHER, JJ., concur.
ENTER:
Aprilanne Agostino
Clerk of the Court
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167 Ill. App.3d 952 (1988)
522 N.E.2d 347
JAMES DUNAVAN, Plaintiff-Appellant,
v.
FRANK S. CALANDRINO et al., Defendants-Appellees.
No. 5-87-0106.
Illinois Appellate Court Fifth District.
Opinion filed April 21, 1988.
*953 *954 J. Douglas Weingarten, of Chicago (J. Barton Kalish & Colleagues, of counsel), for appellant.
Heyl, Royster, Voelker & Allen, of Springfield (Adrian E. Harless, of counsel), for appellees.
Affirmed in part, and reversed in part and remanded.
JUSTICE LEWIS delivered the opinion of the court:
Plaintiff, James Dunavan, filed a two-count complaint in the circuit court of Fayette County on July 13, 1984, alleging that his former attorneys, Frank S. Calandrino, J. Jay Robeson, and Michael J. Logan, the defendants herein, had negligently represented him in the prosecution of personal injury and workmen's compensation claims against Langston Enterprises, Inc., and the State of Illinois. On August 31, 1984, plaintiff sought leave to file an amended complaint. Leave was granted on September 12, 1984, and plaintiff filed his first amended complaint.
In response, defendants filed two motions to dismiss. Of these motions, the only one of consequence in this appeal was filed on March 15, 1985, and challenged plaintiff's complaint for failure to state a *955 cause of action. On April 11, 1985, the circuit court dismissed plaintiff's first amended complaint pursuant to defendants' motion. The court granted plaintiff leave to file an amended complaint within 28 days.
On May 9, 1985, plaintiff filed his second amended complaint in four counts. Count I (breach of contract) and count II (negligence) arose out of the prosecution of the negligence claim against Langston Enterprises, Inc. Count III (breach of contract) and count IV (negligence) arose out of the workmen's compensation claim against the State of Illinois. Defendants again moved to dismiss. The motion was granted on May 31, 1985. Plaintiff was given 28 days to file an amended complaint.
Plaintiff filed his third amended complaint on July 1, 1985. Once again, defendants moved to dismiss pursuant to section 2-615 of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-615), claiming that the complaint was insufficient in all counts to state a cause of action. Defendants requested that the court enter an order dismissing each of the counts of the third amended complaint, that judgment be entered in their favor, and that they be awarded their costs.
The court, on September 20, 1985, having reviewed the briefs submitted by the parties and having heard their arguments, found that counts I and II of the third amended complaint would, if proven, fail to show that the actions of defendants were the proximate cause of plaintiff's alleged loss and that the plaintiff would have prevailed in his claim against Langston Enterprises, Inc. The court found that equitable estoppel did not apply and granted defendants' "motion to strike" counts I and II. The court found counts III and IV sufficient to withstand defendants' motion to dismiss.
On March 31, 1986, six months after counts I and II had been dismissed, plaintiff filed a motion for leave to file a fourth amended complaint. Plaintiff's motion was denied on June 10, 1986.
Plaintiff then filed a motion for voluntary dismissal on June 23, 1986. On July 1, 1986, defendants filed a motion for "final order of judgment" as to counts I and II of plaintiff's third amended complaint. These motions came before the court for hearing on July 31, 1986.
The court heard arguments and a docket entry dated July 31, 1986, reflects the court's findings. The court found that
"in order for something to be dismissed, however absolute the [right] may be, it has to exist. By virtue of final disposition earlier * * * [counts] I & II long ago were dismissed and that part *956 of this litigation terminated. Such [counts] do not now exist for [section] 2-1009 [of the Code of Civil Procedure] to apply to, and as a matter of entering a written Final Judgment on what the court has previously acted upon[,] Final Order of [Judgment] as to [counts] I & II is now entered & filed; [plaintiff's] Voluntary Dismissal pursuant to 2-1009 allowed as to [counts] III & IV."
A final order of judgment as to counts I and II was entered on July 31, 1986. The court found as follows:
"1. That Counts I and II of the Plaintiff's Third Amended Complaint are defective and insufficient in law because they fail to show that the actions, inactions or negligence of the Defendants was [sic] the proximate cause of the Plaintiff's alleged loss or damage and that the Plaintiff would have prevailed in his claim against Langston Enterprises, Inc.;
2. That the Plaintiff's proposed Fourth Amended Complaint amending Counts I and II of the Plaintiff's Third Amended Complaint are [sic] insufficient in law because they fail to set forth sufficient allegations which, if proven, show that the actions, inactions or negligence of the Defendants was [sic] the proximate cause of the Plaintiff's alleged loss or damage and that the Plaintiff would have prevailed in his claim against Langston Enterprises, Inc."
On August 25, 1986, plaintiff filed a motion to reconsider and a memorandum in support thereof. Defendants filed a response on November 12, 1986. A docket entry reflects that plaintiff's motion to reconsider was denied on January 16, 1987. Plaintiff filed notice of appeal on February 6, 1987.
On appeal, plaintiff claims that the circuit court erred in denying a voluntary dismissal of counts I and II; that the court abused its discretion when it denied leave to amend counts I and II; and that the court erred in striking counts I and II of the third amended complaint and, in doing so, holding that equitable estoppel did not apply.
Defendants contend that we lack jurisdiction to consider any order other than the circuit court's January 16, 1987, order denying plaintiff's motion to reconsider the order of July 31, 1986; that the court was correct in denying plaintiff's motion for voluntary dismissal of counts I and II; and that the court did not err when it dismissed plaintiff's third amended complaint and denied leave to file a fourth.
We find that we have jurisdiction to consider all orders pertaining to counts I and II.
1 Counts I and II were dismissed with prejudice on September *957 20, 1985, when an order of dismissal was entered that failed to specify that dismissal was without prejudice or that plaintiff was granted leave to amend. Plaintiff bears the burden of persuading the circuit court either to include a specification that the dismissal is without prejudice or to permit an amendment if he wishes to plead over. (Illinois Municipal League v. Illinois State Labor Relations Board (1986), 140 Ill. App.3d 592, 488 N.E.2d 1040; Bond v. Dunmire (1984), 129 Ill. App.3d 796, 473 N.E.2d 78.) Where plaintiff does neither, Supreme Court Rule 273 (107 Ill.2d R. 273) states that an involuntary dismissal operates as an adjudication on the merits. Thus, the September 20 order was a final order where it did not state that dismissal was without prejudice and it did not grant leave to amend. Any doubts remaining as to the effect of that order were removed when, on June 10, 1986, the court denied leave to file a fourth amended complaint.
2 Although the orders entered prior to July 31, 1986, were final orders, they were not appealable until that date. Supreme Court Rule 304 (107 Ill.2d R. 304) provides for appeals from final judgments that do not dispose of an entire proceeding. Rule 304(a) applies to this case and provides as follows:
"If multiple parties or multiple claims for relief are involved in an action, an appeal may be taken from a final judgment as to one or more but fewer than all of the parties or claims only if the trial court has made an express written finding that there is no just reason for delaying enforcement or appeal. Such a finding may be made at the time of the entry of the judgment or thereafter on the court's own motion or on motion of any party. The time for filing the notice of appeal shall run from the entry of the required finding. In the absence of such a finding, any judgment that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties is not enforceable or appealable and is subject to revision at any time before the entry of a judgment adjudicating all the claims, rights, and liabilities of all the parties." (107 Ill.2d R. 304.)
An order dismissing a portion of a complaint with prejudice is not appealable as a matter of right unless a written finding is entered in compliance with Rule 304(a). (Buechele v. St. Mary's Hospital Decatur (1987), 156 Ill. App.3d 637, 509 N.E.2d 744.) No such finding was entered here. Therefore, the orders dismissing counts I and II of plaintiff's third amended complaint with prejudice and denying plaintiff leave to file a fourth amended complaint were not appealable until entry *958 of the July 31, 1986, order. That order clarified the status of counts I and II, denied plaintiff's motion for a voluntary dismissal as to those counts, and allowed plaintiff's motion to voluntarily dismiss counts III and IV which, unlike counts I and II, had been found sufficient to state a cause of action. While the July 31 order did not technically "adjudicate" all the claims, rights, and liabilities of the parties it did, nonetheless, dispose of all pending claims in the proceeding. We hold, therefore, that given the procedural scenario presented by this case, the July 31 order constituted final judgment in this proceeding and all prior final, nonappealable orders became appealable after that date.
3 Since a notice of appeal is to be liberally construed and an appeal from a subsequent, final and appealable order draws into question all prior nonfinal rulings and final, but nonappealable orders which produced the judgment (First National Bank v. St. Charles National Bank (1987), 152 Ill. App.3d 923, 504 N.E.2d 1257), the earlier orders that gave rise to the July 31 order can be considered in this appeal. Were this not so, plaintiff would be denied his right to review of the orders dismissing counts I and II. If and when plaintiff refiles a new complaint, based upon counts III and IV of his third amended complaint, a new action will have been commenced. Plaintiff could not appeal the dismissal of counts I and II herein at the conclusion of the new proceeding because the cause of action represented by those counts will have never been a part of that proceeding. There has been an adjudication on the merits which would prohibit raising that cause of action in a new proceeding. An appeal of the involuntary dismissal of counts I and II must be allowed now.
4 Defendants contend that we cannot review the July 31 order because, according to defendants, plaintiff appeals only from the January 16, 1987, denial of his motion to reconsider. Plaintiff's notice of appeal states that plaintiff appeals from the January 16, 1987, order "denying Plaintiff-Appellant's Motion to Reconsider the Court's Orders dated July 31, 1986." The July 31 order is referred to in the notice of appeal. Plaintiff filed his motion to reconsider within 30 days of the July 31 order and filed notice of appeal within 30 days of the denial of his motion to reconsider. The July 31 order was the subject of plaintiff's motion to reconsider. There would be no point to a review of the order denying the motion to reconsider without considering the order that produced the motion. In short, defendants' position is untenable.
5 We now consider the propriety of the court's denial of a voluntary dismissal of counts I and II. As we have previously noted, *959 those counts were dismissed with prejudice prior to July 31, 1986, and before plaintiff's motion for voluntary dismissal was filed. As the court noted in its July 31 order denying a voluntary dismissal as to counts I and II, those counts were "long ago * * * dismissed and that part of this litigation terminated." Although a plaintiff's right to have a cause voluntarily dismissed is generally regarded as absolute, there are some limits.
Section 2-1009 of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-1009) represents an attempt to restrict, to some extent, plaintiff's common law right to obtain a voluntary dismissal. (Ill. Ann. Stat., ch. 110, par. 2-1009, Historical and Practice Notes, at 417 (Smith-Hurd 1983).) Recent decisions have further restricted this "absolute" right. (See O'Connell v. St. Francis Hospital (1986), 112 Ill.2d 273, 492 N.E.2d 1322.) We believe this case exhibits misguided reliance upon section 2-1009.
We cannot countenance the tactic plaintiff employed here. Strong policy considerations militate against a procedure which would, in effect, allow a plaintiff to circumvent a court's ruling at will. To accept plaintiff's interpretation of section 2-1009 would be to adopt a construction of the statute which would infringe upon the fundamental exclusive authority of the judiciary to render judgment. The supreme court in O'Connell limited the right to obtain a voluntary dismissal rather than compromise the judiciary's authority to render judgment. (112 Ill.2d at 283, 492 N.E.2d at 1326-27.) We must do the same in the case before us. Failure to act would, in effect, render every dismissal with prejudice a nullity because a plaintiff could always move for voluntary dismissal and then refile his cause of action later in a new proceeding.
6 While we acknowledge our holdings in Bailey v. State Farm Fire & Casualty Co. (1985), 137 Ill. App.3d 155, 484 N.E.2d 522, they do not apply to the case before us. In Bailey we held that the granting of a motion to dismiss with leave to amend does not affect plaintiff's absolute right to obtain a voluntary dismissal of his complaint. (137 Ill. App.3d at 158.) Plaintiff in this case did not ask for and was not granted leave to amend and, as previously noted, he did not request that the order of dismissal specify that dismissal was without prejudice. Bailey also stands for the proposition that hearings pursuant to a section 2-615 motion to dismiss (Ill. Rev. Stat. 1985, ch. 110, par. 2-615) do not mark the commencement of trial or hearing under section 2-1009 of the Code. (See also Heinz v. County of McHenry (1984), 122 Ill. App.3d 895, 897, 461 N.E.2d 672, 674.) Although hearings pursuant to a section 2-615 motion may not mark *960 the commencement of trial or hearing for purposes of section 2-1009, the granting of such a motion must be considered the equivalent of trial. It is, after all, an adjudication on the merits according to Supreme Court Rule 273 (107 Ill.2d R. 273). Moreover, a dismissal with prejudice is deemed to be as conclusive of the rights of the parties as if the matter had proceeded to trial and had been resolved by a final judgment adverse to plaintiff. (Morris v. Union Oil Co. (1981), 96 Ill. App.3d 148, 421 N.E.2d 278.) The dismissal with prejudice of counts I and II constituted a final judgment adverse to plaintiff. If we are to preserve the judiciary's authority to render judgment on the pleadings, we cannot allow plaintiff to obtain a voluntary dismissal.
Plaintiff's recourse, upon dismissal of his personal injury claim, was to ask the circuit court to enter Rule 304(a) findings so that he could pursue an appeal from the dismissal of that cause of action. Alternatively, he could have awaited the outcome of the remainder of the case. However, he could not simply obtain a voluntary dismissal of counts I and II after a dismissal with prejudice had been entered.
Although we have found that plaintiff was not entitled to a voluntary dismissal of counts I and II, we do not believe the dismissal of these counts for failure to state a cause of action was proper.
7 The purpose of pleadings is to present, define, and narrow the issues and limit the proof needed at trial. Pleadings are not intended to erect barriers to a trial on the merits, but instead to remove them and facilitate trial. The prime purpose of pleadings must never be hidden in a morass of technicalities. Swaw v. Ortell (1984), 137 Ill. App.3d 60, 484 N.E.2d 780.
8 Dismissal of an action due to a pleading deficiency is a drastic punishment. (Trent v. Brasch Manufacturing Co. (1985), 132 Ill. App.3d 586, 477 N.E.2d 1312.) The practice of striking or dismissing a complaint should be confined to cases where there is want of equity on the face of the complaint and it is clear that no amendment will aid it. (Matchett v. Rose (1976), 36 Ill. App.3d 638, 344 N.E.2d 770.) A motion to dismiss should be granted only where it clearly appears that no set of facts could be proved which would entitle plaintiff to recover and, to this end, all pleadings are liberally construed. (Willard v. Northwest National Bank (1985), 137 Ill. App.3d 255, 484 N.E.2d 823.) The granting of a motion to dismiss for failure to state a cause of action should be affirmed on appeal only when no set of facts can be proved under the pleadings which will entitle plaintiff to relief. Payne v. Mill Race Inn (1987), 152 Ill. App.3d 269, 504 N.E.2d 193.
9, 10 The essential test of the sufficiency of a complaint is whether it reasonably informs the defendant of a valid claim under a *961 general class of cases of which the court has jurisdiction. (Swaw, 137 Ill. App.3d at 67, 484 N.E.2d at 785.) A plaintiff pleading a legal malpractice action must allege the existence of an attorney/client relationship; a duty arising from that relationship; a breach of that duty on the part of defendant/counsel; proximate cause; and damages. (Claire Associates v. Pontikes (1986), 151 Ill. App.3d 116, 502 N.E.2d 1186.) In an action for legal malpractice a plaintiff has the burden of showing that, but for the negligence complained of, he would have been successful in the prosecution of the underlying action. (Kohler v. Woollen, Brown & Hawkins (1973), 15 Ill. App.3d 455, 304 N.E.2d 677.) Therefore, plaintiff must plead facts tending to show that he had a valid cause of action. See Rogers v. Robson, Masters, Ryan, Brumund & Belom (1979), 74 Ill. App.3d 467, 476, 392 N.E.2d 1365, 1373; Cook v. Gould (1982), 109 Ill. App.3d 311, 440 N.E.2d 448.
11 Obviously, where an attorney has allowed the statute of limitations to run without having filed a valid complaint, a plaintiff cannot prove, by way of pleadings, that he would have recovered in the underlying claim. Nevertheless, he must allege facts sufficient to state a cause of action. In this case, defendant was required to state a cause of action for negligence, the essential elements of which are the existence of a duty of reasonable care owed plaintiff by defendant, breach of that duty, and injury proximately resulting from that breach. Magnone v. Chicago & North Western Transportation Co. (1984), 126 Ill. App.3d 170, 466 N.E.2d 1261.
12 Plaintiff contends that he should be excused from pleading and proving the validity of the underlying personal injury claim because of defendants' conduct. Plaintiff represents that defendants misled him by assuring him that he had a valid cause of action. Plaintiff claims that defendants tried to "string [him] along as long as possible" in order to limit their liability to him. According to plaintiff, "Defendants hoped that if [he] finally realized he did have a malpractice claim against [them], it would be difficult or impossible to prove the validity of the underlying case because of the passage of time." Plaintiff concludes that defendants should be estopped from denying the validity of plaintiff's underlying personal injury claim, citing Kohler. We disagree.
In Kohler, the defendant attorneys had prosecuted claims for arbitration and had procured awards. It was later determined that the claims filed in arbitration were barred by a two-year limitation period so that the arbitrator had no power or authority to do anything but deny the claims. The appellate court, noting that defendants continued to assert the validity of the awards throughout the proceedings *962 before the arbitrator, in the circuit court and in the appellate court, and until denial of leave to appeal by the supreme court, reasoned that defendants were estopped from denying the validity of the awards. Kohler, 15 Ill. App.3d at 458.
In the case before us, it appears that the defendants did little more than file a complaint on behalf of the plaintiff. Although the case eventually came before this court on the issue of whether defendants had named the proper party (Dunavan v. Heritage House Nursing Home (1984), 121 Ill. App.3d 813, 460 N.E.2d 75), argument was not had on the merits of the claim. This distinguishes the instant case from Kohler.
Moreover, plaintiff need not rely upon equitable estoppel. It appears from the record that there was still evidence available as of January 14, 1986, which could have enabled plaintiff to make out a case of negligence against the nursing home. Therefore, even assuming arguendo that defendants' delay in informing plaintiff of their error hindered his investigation and ability to prove he had a valid claim, plaintiff cannot avoid proving the validity of his underlying cause of action.
13 As previously stated, plaintiff's complaint is sufficient to state a cause of action and should not have been dismissed. In reaching this conclusion, we have considered the complaint filed by plaintiff in conjunction with the complaint previously filed by defendants in the underlying action. That complaint was attached to plaintiff's complaint as an exhibit and was incorporated by reference for the express purpose of stating a cause of action for negligence against the nursing home. As plaintiff argued in the circuit court, the attached complaint, prepared by defendants in the prior action, could be considered a part of the complaint in the instant action. Exhibits attached to a complaint become a part of the complaint as do the factual matters contained therein. See Goldstein v. Lustig (1987), 154 Ill. App.3d 595, 507 N.E.2d 164.
While plaintiff's third amended complaint undoubtedly could have been more artfully drawn and with minimal investigation could have included more specific facts, we nonetheless view it as sufficient to state a cause of action. That complaint contained the following allegations.
On June 15, 1976, plaintiff, while employed as a nursing home inspector for the State of Illinois, was severely injured when he fell at Heritage House Nursing Home in Vandalia, Illinois. On October 21, 1976, plaintiff entered into an oral contract with defendant Calandrino to prosecute the claim against the nursing home. Calandrino assigned *963 the case to defendant Robeson. Sometime prior to June 14, 1978, plaintiff told Robeson that Heritage House Nursing Home was owned by Langston Enterprises, Inc. On June 14, 1978, defendant Calandrino filed a complaint naming "Heritage House Nursing Home and Bonnie Johnson, its Administrator" as defendants. Calandrino and Robeson breached Calandrino's contract with plaintiff and failed to exercise ordinary skill, care, and ability when they failed to investigate the case sufficiently so as to name the proper defendant. Because of defendants' breach of contract and negligence, plaintiff obtained no recovery from Langston Enterprises, Inc., even though the complaint filed by defendants stated a "meritorious" cause of action. Plaintiff suffered damages including pain and suffering, expenses for medical care and the value of lost earnings, all in excess of $15,000.
The complaint attached to plaintiff's third amended complaint, and incorporated by reference, states in pertinent part:
"5. That on June 15, 1976, the Plaintiff in his capacity as a state inspector entered the defendants' place of business for the purpose of ascertaining whether the defendants were operating in compliance with applicable state regulations.
6. That it was the duty of the defendants, by its [sic] agents[,] servants or employees, to so maintain[,] control and operate their permises [sic] so as not to cause injury to persons including the Plaintiff, who might enter upon the premises.
7. That disregarding their duty the defendants so operated, maintained and controlled their premises so that the Plaintiff was caused to slip and fall.
8. That at the time and place aforesaid the defendants were guilty of one or more of the following wrongful act[s] or omissions:
(a) Carelessly maintained, kept and controlled said lobby and waiting room so that as a direct and proximate result thereof, plaintiff was injured.
(b) Carelessly permited [sic] and allowed water to remain on the floor of the lobby and waiting room.
(c) Carelessly failed to remove the water or otherwise place in a good and safe condition the said floor of the lobby and waiting room.
(d) Carelessly failed to warn the public, including plaintiff, of the dangerous and unsafe condition of the floor of the lobby and waiting room although the defendants knew or in the exercise of ordinary care ought to have known that such warning was reasonably necessary to prevent injury to members *964 of the public in said lobby and waiting room, including plaintiff.
9. That as a direct and proximate result of one or more or all of the aforesaid wrongful acts of the defendants, the Plaintiff, JAMES DUNAVAN, then and there sustained injuries to various parts of his body; that he sustained a severe shock to his nervous system; and during all of said time he has suffered great physical pain and anguish; and he has been prevented from attending to his usual and regular affairs, employment and occupation; and in endeavoring to be cured and healed of said injuries and disabilities, he has necessarily expended sums of money for medical, surgical, hospital and other expenses, all to Plaintiff's damage in the sum in excess of FIFTEEN THOUSAND DOLLARS ($15,000.000 [sic])."
Plaintiff's complaint might have included more specific factual allegations. For example, some information could have been included from the deposition of Doris Langston which was taken on January 14, 1986. Langston was the owner and operator of the nursing home and owned a majority interest in the Langston Enterprises, Inc. Langston states in her deposition that the water on the floor of the nursing home was there as a result of condensation from air conditioning units. The problem periodically occurred in several areas throughout the nursing home. A note from Sue Kistler, an employee of the nursing home, indicated that a towel had been placed on the floor, apparently to absorb water, just prior to the plaintiff's fall. No signs were posted to indicate that the floor was wet. While these facts might have been incorporated into the complaint, we believe the complaint was sufficient, as drafted, to withstand defendants' motion to dismiss. Moreover, we find the existence of these facts troubling because it appears plaintiff could have presented a viable case.
14 The defect in plaintiff's complaint, according to the circuit court, was that the complaint failed "to show that the * * * negligence of the defendants was the proximate cause of the plaintiff's alleged loss or damage and that the plaintiff would have prevailed in his claim against Langston Enterprises, Inc." As we have already observed, it is impossible to predict what a trier of fact might have done had this case gone to trial. The point is, the case did not go to trial, perhaps due to defendants' negligence, and there is simply no way that plaintiff could demonstrate to a certainty that he would have been successful. Where a legal malpractice case involves an underlying cause of action that never reached the trial stage because of alleged negligence on the part of plaintiff's attorney, plaintiff must allege that he had a *965 valid cause of action and must ultimately prove up his case at trial. See Cook v. Gould (1982), 109 Ill. App.3d 311, 440 N.E.2d 448.
We find plaintiff's allegations, as stated in the appended complaint, sufficient to state a cause of action in negligence. Moreover, having examined the transcript of the deposition of Doris Langston, it appears that plaintiff could present a submissible case for consideration. Cf. Hollembaek v. Dominick's Finer Foods, Inc. (1985), 137 Ill. App.3d 773, 484 N.E.2d 1237; Deike v. Sears, Roebuck & Co. (1983), 112 Ill. App.3d 747, 445 N.E.2d 1258.
For the foregoing reasons, the circuit court's denial of plaintiff's motion to voluntarily dismiss counts I and II of the third amended complaint is affirmed; however, the involuntary dismissal of counts I and II is reversed and the cause is remanded for further proceedings.
Affirmed in part; reversed in part.
HARRISON, P.J., and CALVO, J., concur.
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162 F.3d 93
U.S.v.Blue*
NO. 97-50322
United States Court of Appeals,Fifth Circuit.
October 16, 1998
Appeal From: W.D.Tex. ,No.W-96-CA-410
1
Affirmed.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34-2
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547 S.W.2d 91 (1977)
Jo Anne FRANCO, Administratrix, et al., Appellants,
v.
Marion A. BUNYARD et al., Appellee.
No. 76-176.
Supreme Court of Arkansas, In Banc.
February 28, 1977.
Rehearing Denied March 28, 1977.
*92 McMath, Leatherman & Woods, Little Rock, John Lisle, Springdale, for appellants.
Putman, Davis & Bassett, Fayetteville, Kelley & Luffman, Rogers, for Marion A. Bunyard, Individually and Bunyard Supply Co., Inc. d/b/a Western Auto Supply, an Arkansas Corp.
Wayne Harris, Warner & Smith, Fort Smith, for Western Auto Supply Co.
GEORGE ROSE SMITH, Justice.
Early in June, 1971, Daniel Lon Graham, serving a life sentence for kidnaping, escaped from the state penitentiary. Late in the afternoon of June 17 he bought a secondhand pistol at Bunyard Supply Company, Inc., in the city of Rogers. The seller assertedly violated a federal statute and federal regulations in making the sale. On the next day Graham robbed a grocery store in Springdale, taking three young employees as hostages. In a nearby wooded area Graham used the gun to murder two of the young men and wound the third.
This action for the wrongful deaths and personal injuries was brought by the appellants against Bunyard Supply, against Marion A. Bunyard, its president, manager, and principal stockholder, and against the company's national affiliate, Western Auto Supply Company. Upon the basis of extensive discovery depositions and similar proof, the defendants moved for summary judgment on the ground that there was no genuine issue as to any material fact. This appeal is from a judgment granting the motion. The trial judge reasoned that Graham's criminal use of the gun was an intervening efficient cause not foreseeable by the seller.
The federal gun control law and regulations were examined by the Supreme Court in Huddleston v. United States, 415 U.S. 814, 94 S.Ct. 1262, 39 L.Ed.2d 782 (1974). As stated in that opinion, Congress was concerned with the widespread traffic in firearms and the ease with which they could be obtained by criminals and others not legally entitled to possess them. The court noted that the principal agent in the scheme of federal enforcement of the law is the licensed dealer. He is required to keep records of [acquisition and] disposition and is criminally liable for disposing of a weapon contrary to the Act. Information drawn from the records kept by licensed dealers is a prime guarantee of the Act's effectiveness in keeping lethal weapons out of the hands of criminals.
The regulations issued under the Act are, in our opinion, the real key to its enforcement. The regulations require the licensed dealer, prior to making an over-the-counter delivery of a firearm to a purchaser, to complete Form 4473, the Firearms Transaction Record. That record must show the buyer's name, address, date and place of birth, height, weight, and race, and must include his signed certification that he has not been convicted of a crime punishable by imprisonment for more than one year and that he is not a fugitive from justice. The seller, before transferring the gun, must require the buyer to identify himself in any manner customarily used in commercial transactions, as by a driver's license. Form 4473 requires the number on the identification, such as the driver's license number, to be entered on the form.
According to the proof as a whole, and especially the affidavit of Howard McDaniel, *93 the Bunyard clerk who made the sale, there was not even a token compliance with the law. Graham entered the store an hour or so before its 5:30 closing time. He first negotiated for the purchase of a clothes washer and drier (to be delivered the next morning, to a fictitious address), evidently as a ruse for obtaining a pistol. He then inquired about buying a used gun, to protect his chickens against dogs. He had no wallet, no money, no driver's license, no identification of any kind. Even so, after giving a worthless check for more than $400 for the washer-drier and the gun, he was allowed to leave the store with the pistol without even signing Form 4473, as required by the regulations. According to McDaniel, that form was not filled out until the next day, after it was learned that the store had been duped. There were, of course, omissions in the form as filled out, such as Graham's driver's license number. Again according to McDaniel, he forged the name that Graham had given (Bill Shaw). Marion Bunyard signed the required certification that "it is my belief that it is not unlawful for me to sell ... the firearm" to the purchaser.
We have no doubt that upon the issue raised by the motion for summary judgment and argued here, the proof presents questions of fact as to the liability of Bunyard Supply. (The separate liability of Marion Bunyard is not argued.) The violation of a statute or valid regulation is ordinarily evidence of negligence. Bussell v. Missouri Pac. R.R., 237 Ark. 812, 376 S.W.2d 545 (1964); AMI Civil 2d, 601 (1974). On the issue of proximate cause, it is enough to point out that the tragedies could not have occurred as they did if the federal rules had been obeyed. That is, Graham had no means of identificationan essential prerequisite to the purchase of a gun. This is not, as the appellees argue, a mere matter of record keeping. Form 4473 required the seller to obtain and record Graham's identification before handing over the gun. Graham had no identification. Thus, had the law been obeyed, he could not have obtained possession of the gun and could not have used it to shoot innocent men the next day. On the issue of foreseeability, we need say only that the very purpose of the law is to keep pistols out of the hands of such persons as Graham, who was both a convicted criminal and a fugitive from justice. It certainly cannot be said that his use of the gun in such a way as to injure others was not foreseeable. Of course it is not required that the precise sequence of events leading to the injury be foreseeable. Helena Gas Co. v. Rogers, 104 Ark. 59, 147 S.W. 473 (1912).
There is, however, no proof of liability on the part of Western Auto Supply Company. It is a national concern having company-owned and home-owned stores throughout the country. Bunyard Supply did business as Western Auto Supply, but it was home-owned and so identified to the public. In the franchise contract Bunyard Supply reserved to itself the "ownership, management, and control" of the store. The national chain agreed to sell its various brands of merchandise to the local store, but the vital power of control remained with Bunyard. And, specifically, the federal license to sell guns was issued to Bunyard Supply, not to Western Auto Supply Company. There was certainly no partnership between the two companies; so, in the absence of any power on the part of Western Auto Supply Company to control the actions of Bunyard Supply, there is no basis for a finding of liability on the theory of agency or joint venture. Hinson v. Culberson Stowers Chevrolet, 244 Ark. 853, 427 S.W.2d 539 (1968); Bennett v. Gundolf, 238 Ark. 582, 383 S.W.2d 289 (1964).
As to Western Auto Supply Company, the judgment is affirmed; as to Bunyard Supply Company and Marion Bunyard, the judgment is reversed and the cause remanded.
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Filed 3/15/16 Performance Contracting v. Abener Teyma Mojave General Partnership CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
PERFORMANCE CONTRACTING, INC.,
Plaintiff and Respondent, E062939
v. (Super.Ct.No. CIVDS1413926)
ABENER TEYMA MOJAVE GENERAL OPINION
PARTNERSHIP et al.,
Defendants and Appellants.
APPEAL from the Superior Court of San Bernardino County. Gilbert G. Ochoa,
Judge. Reversed with directions.
Gibbs Giden Locher Turner Senet & Wittbrodt LLP, Nathan D. O’Malley, and
Luke N. Eaton for Defendants and Appellants.
Bremer Whyte Brown & O’Meara LLP, Jeremy S. Johnson, and Holly A.
Bartuska for Plaintiff and Respondent.
1
Defendants Abener Teyma Mojave General Partnership, Abeinsa Holdings, Inc.,
Abener North America Construction, L.P., and Mojave Solar, LLC (Mojave)
(collectively, defendants) appeal from the trial court’s order denying their petition to
compel arbitration of plaintiff Performance Contracting, Inc.’s action against them for
breach of contract and related claims. The trial court denied the petition on the ground
that some of the defendants were “third parties” under Code of Civil Procedure section
1281.2, subdivision (c).1 We conclude that, as a matter of law, none of the defendants
constitute third parties as that term is used in section 1281.2, subdivision (c), and we
therefore reverse the trial court’s ruling with directions to grant defendants’ petition to
compel arbitration.
I
FACTUAL AND PROCEDURAL BACKGROUND
A. The Complaint and the Petition to Compel Arbitration
In October 2014, plaintiff entered into a contract with defendant Abener Teyma
Mojave General Partnership whereby plaintiff agreed to supply and install insulation
materials on the power plant commonly known as the Mojave Solar Power Plant Project
(the Project). The contract contains an arbitration clause requiring arbitration of “any
dispute” arising out of the contract.
1 All statutory references are to the Code of Civil Procedure.
2
In September 2014, plaintiff filed a complaint asserting causes of action for
foreclosure of mechanics lien, breach of contract, fraudulent and negligent
misrepresentation, unjust enrichment, and violation of California’s prompt payment
statutes. (Civ. Code, §§ 3287 et seq., 8800, 8812, 8814, 8816, 8818; Bus. & Prof. Code
§§ 7108.5, 7108.6.) The gravamen of these claims is the allegation that all defendants are
parties to the contract and owe plaintiff over $3 million for work plaintiff performed
under the contract. The complaint alleges that: plaintiff entered into the contract with all
defendants; all defendants “have a unity of interest and are commonly owned and
represented”; all defendants “commonly owned” the Project; each defendant “was the
agent, employee or joint venturer of each of the other . . . Defendants”; and each
defendant “benefit[ed] from Plaintiff’s work on the Project and avail[ed] itself to the
obligations imposed by way of the Agreement and by ownership of the Project.”
Defendants Abener Teyma Mojave General Partnership, Abeinsa Holdings, Inc.,
and Abener North America Construction, L.P. moved to compel arbitration, arguing the
existence of the valid arbitration clause in the contract triggers arbitration under section
1281.2.
Plaintiff opposed the petition, arguing that arbitration was inappropriate under
section 1281.2, subdivision (c) due to the presence of third party defendants not subject to
arbitration and the possibility of conflicting rulings on common issues of law and fact.
Plaintiff asserted there was “an obvious risk of inconsistent determinations or rulings” if
3
arbitration were to proceed because Abeinsa Holdings, Inc., Abener North America
Construction, L.P., and Mojave were nonsignatories to the contract and therefore could
not be compelled to arbitration. Plaintiff also argued defendants had conceded that
nonsignatory Mojave was a third party for purposes of section 1281.2, subdivision (c)
because Mojave had not joined defendants’ petition to compel arbitration.
In their reply, defendants argued the nonsignatory defendants did not constitute
third parties under section 1281.2, subdivision (c) because they were all related and
commonly owned. Defendants also argued there was no possibility of conflicting rulings
because “all” of the nonsignatory defendants were willing to participate in arbitration.
Defendants explained in a footnote that Mojave was also represented by the undersigned
counsel and had not yet appeared “because it [was] awaiting the outcome of [the petition]
before incurring the costs and expenses of filing a response to the complaint.”
Two days before the hearing on defendants’ petition, defendants, including
Mojave, filed a surreply. The surreply explained that defendants had recently retained
new counsel to represent them in the action and that new counsel had discovered “there
had been a miscommunication regarding the Defendants’ willingness to participate in
arbitration.” The surreply was “intended to remove all doubt that all Defendants,
including MOJAVE, are willing to submit to arbitration in this matter.”
4
B. The Trial Court’s Denial of the Petition
At the hearing on the petition, defense counsel announced his appearance on
behalf of all defendants and reiterated the argument that there was no possibility of
conflicting rulings because all defendants were willing to arbitrate the dispute. The court
asked defense counsel why Mojave had not joined the petition, stating: “All I see is
they’re not here. If they were here, then I would have a different issue that I would have
to decide.” The court admonished defense counsel for filing a surreply, informed the
parties that it had not read the surreply, and stated that Mojave had not yet appeared in
the case.
Defense counsel replied that it was his understanding former counsel and Mojave
had an agreement whereby Mojave could avoid the cost of appearing by not joining the
petition. Counsel emphasized that despite Mojave’s failure to join in the moving papers,
“what we’ve represented both in the reply and in our documents is that Mojave wants to
go to arbitration.” The trial court observed that former defense counsel’s strategy to help
Mojave “save $395.00 at the risk of their client’s rights” was ill-advised and denied the
petition.
5
II
DISCUSSION
A. California Public Policy Favors Arbitration and California Law Requires
Enforcement of Valid Arbitration Agreements
In California, “[a] strong public policy favors the arbitration of disputes, and
doubts should be resolved in favor of deferring to arbitration proceedings.” (Laswell v.
AG Seal Beach, LLC (2010) 189 Cal.App.4th 1399, 1404-1405 (Laswell), quoting Rowe
v. Exline (2007) 153 Cal.App.4th 1276, 1282 (Rowe).) “A trial court is required to order
a dispute to arbitration when the party seeking to compel arbitration proves the existence
of a valid arbitration agreement covering the dispute. [Citation.] Under Code of Civil
Procedure section 1281.2, ‘[o]n petition of a party to an arbitration agreement alleging
the existence of a written agreement to arbitrate a controversy and that a party thereto
refuses to arbitrate such controversy, the court shall order the petitioner and the
respondent to arbitrate the controversy if it determines that an agreement to arbitrate the
controversy exists, unless it determines that’ the case falls into one of three limited
exceptions.” (Laswell, supra, at pp. 1404-1405.)
One of the limited exceptions to the enforcement of contractual arbitration
provisions is where “[a] party to the arbitration agreement is also a party to a pending
court action or special proceeding with a third party, arising out of the same transaction
or series of related transactions and there is a possibility of conflicting rulings on a
common issue of law or fact.” (§ 1281.2, subd. (c).) “This exception ‘ “addresses the
6
peculiar situation that arises when a controversy also affects claims by or against other
parties not bound by the arbitration agreement.” ’ ” (Laswell, supra, 189 Cal.App.4th at
p. 1405, quoting Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376,
393 (Cronus).) “The exception thus does not apply when all defendants, including a
nonsignatory to the arbitration agreement, have the right to enforce the arbitration
provision against a signatory plaintiff.” (Laswell, supra, at p. 1405; accord, Molecular
Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 709; RN
Solution, Inc. v. Catholic Healthcare West (2008) 165 Cal.App.4th 1511, 1519; Rowe,
supra, 153 Cal.App.4th at p. 1290.) The exception “ ‘is not a provision designed to limit
the rights of parties who choose to arbitrate or otherwise to discourage the use of
arbitration. Rather, it is part of California’s statutory scheme designed to enforce the
parties’ arbitration agreements.’ ” (Cronus, supra, at p. 393.)
When the elements of the exception are present (i.e., there are third parties not
subject to arbitration on claims arising out of the same transaction or related transactions,
and a possibility of conflicting rulings on common issues of law or fact), section 1281.2,
subdivision (c) gives the trial court discretion to deny or stay arbitration. “ ‘The court’s
discretion under [the exception, however,] does not come into play until it is ascertained
that the subdivision applies, which requires the threshold determination of whether there
are nonarbitrable claims against at least one of the parties to the litigation (e.g., a
nonsignatory).’ ” (Laswell, supra, 189 Cal.App.4th at p. 1405.)
7
B. Section 1281.2, Subdivision (c) Does Not Apply and the Trial Court Did
Not Have Discretion to Deny the Petition
Whether a defendant is in fact a third party for purposes of section 1281.2,
subdivision (c), is a matter of law subject to de novo review. (Laswell, supra, 189
Cal.App.4th at p. 1406.) If the third party exception applies, the trial court’s
discretionary decision as to whether to stay or deny arbitration is subject to abuse of
discretion review. (Ibid.)
The trial court did not state its reasoning for denying the petition, but all of the
argument at the hearing related to Mojave’s failure to join the petition and the possibility
of conflicting rulings. The contract between plaintiff and defendant Abener Teyma
Mojave General Partnership provided for arbitration of “any dispute” arising under the
contract. The contract defines a dispute as a claim “of any kind arising between the
Parties in connection with . . . this Contract, including but not limited to, any question
regarding . . . the performance (or failure to perform) the Work.” The contract defines
the parties as plaintiff and defendant Abener Teyma Mojave General Partnership. The
trial court seemingly adopted plaintiff’s argument that the contract covered only Abener
Teyma Mojave General Partnership and that the presence of Abeinsa Holdings, Inc.,
Abener North America Construction, L.P., and Mojave as defendants in the action
demonstrated there were third parties not subject to the arbitration agreement. The trial
court thus at least implicitly concluded that the threshold requirement for application of
section 1281.2, subdivision (c)—that there were third parties not subject to the arbitration
8
agreement—was satisfied and, as a result, it had discretion to deny arbitration. We
conclude, however, the threshold requirement for the third party exception was not
satisfied in this case as a matter of law and, therefore, the trial court had no discretion to
deny arbitration.
As the Laswell court noted, “ ‘[t]he term “third party” for purposes of [the
exception to arbitration in section 1281.2, subdivision (c)] must be construed to mean a
party that is not bound by the arbitration agreement.’ [Citation.] ‘[I]n many cases,
nonparties to arbitration agreements are allowed to enforce those agreements where there
is sufficient identity of parties.’ [Citation.] In addition, ‘ “ ‘[t]he equitable estoppel
doctrine applies when a party has signed an agreement to arbitrate but attempts to avoid
arbitration by suing nonsignatory defendants for claims that are “ ‘based on the same
facts and are inherently inseparable’ ” from arbitrable claims against signatory
defendants.’ ” ’ ” (Laswell, supra, 189 Cal.App.4th at p. 1407, italics added.) “Claims
that rely upon, make reference to, or are intertwined with claims under the subject
contract are arbitrable.” (Rowe, supra, 153 Cal.App.4th at p. 1287.)
Here, although plaintiff and Abener Teyma Mojave General Partnership are the
only signatories to the contract and the contract defines “dispute” as one between plaintiff
and Abener Teyma Mojave General Partnership, the three nonsignatory defendants are
equally bound by the contract and thus entitled to enforce it against plaintiff. According
to plaintiff’s own allegations, all defendants are related entities, all defendants are parties
9
to the contract, and all defendants are responsible for misrepresenting the contract’s
payment terms and failing to timely pay for a portion of the work plaintiff performed. In
other words, plaintiff’s own allegations “demonstrate [its] claims against all defendants
are based on the same facts and theory and are inherently inseparable.” (Laswell, supra,
189 Cal.App.4th at p. 1407.) Additionally, the contract states that Mojave is the “Owner”
of the Project and the contract is printed on Abeinsa letterhead. And, defense counsel
represented more than once in connection with the petition to compel arbitration that all
defendants were represented by the same counsel and would participate in the arbitration
proceedings.
Under these circumstances, Abeinsa Holdings, Inc., Abener North America
Construction, L.P., and Mojave can enforce the contract’s arbitration clause against
plaintiff and thus are not third parties within the meaning of section 1281.2, subdivision
(c). (See, e.g., Laswell, supra, 189 Cal.App.4th at pp. 1407-1408 [nonsignatory
defendants could enforce arbitration agreement against the plaintiff because she alleged
they were related to the signatory defendant and were responsible for the improper care
she received at the signatory defendant’s hospice care center]; Rowe, supra, 153
Cal.App.4th at pp. 1284-1290 [nonsignatory defendants could enforce arbitration
agreement against the plaintiff because he alleged in the breach of contract cause of
action that the corporation signatory was an alter ego of the nonsignatory defendants and
equitable estoppel principles applied to the other statutory causes of action].) Because
10
section 1281.2, subdivision (c) does not apply to this case as a matter of law, “we need
not determine whether the trial court’s selection among the alternative dispositions
offered by the subdivision was an abuse of discretion.” (Rowe, supra, 153 Cal.App.4th at
p. 1290.)
Plaintiff’s various arguments as to why we should affirm the trial court’s ruling
are unpersuasive. There is no support in the record for plaintiff’s assertion that
defendants waived their argument that they are not third parties under section 1281.2,
subdivision (c) by failing to raise it below and by conceding they are third parties. In
their reply brief, defendants explicitly argued that section 1281.2, subdivision (c)’s third
party exception did not apply because all of the nonsignatory defendants could enforce
the contract’s arbitration provision and were willing to submit to arbitration. Similarly,
there is no support for plaintiff’s contention that Mojave’s unwillingness to submit to
arbitration constitutes a possibility of conflicting rulings. On at least two occasions,
defense counsel, who represented all defendants including Mojave, stated that Mojave
would submit to arbitration. While Mojave did not join the initial petition to compel
arbitration, it joined the surreply and was present at the hearing on the petition.
Lastly, plaintiff’s contention that Mojave is not a proper party to this appeal does
not change our conclusion that section 1281.2, subdivision (c) does not apply here as a
matter of law. Regardless of whether Mojave can be said to have formally joined the
petition to compel arbitration, plaintiff is estopped by the allegations in its complaint
11
from arguing that any of the nonsignatory defendants cannot enforce the contract’s
arbitration clause.2 (See, e.g., Rowe, supra, 153 Cal.App.4th at p. 1287 [“a signatory to
an arbitration clause may be compelled to arbitrate against a nonsignatory when the
relevant causes of action rely on and presume the existence of the contract containing the
arbitration provision”].)
III
DISPOSITION
The order denying the petition to compel arbitration is reversed and the matter is
remanded with directions for the trial court to enter a new order granting the petition to
compel arbitration. Defendants shall recover their costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
2 We decline plaintiff’s invitation to dismiss Mojave from this appeal. Any
“aggrieved” party may file a notice of appeal (§ 902) and we liberally construe the issue
of standing to resolve doubts in favor of the right to appeal (Apple, Inc. v. Franchise Tax
Bd. (2011) 199 Cal.App.4th 1, 13). Mojave took steps to become a part of the petition by
joining the surreply, appearing at the hearing, and representing through its counsel that it
wanted to submit to arbitration. Along with the other defendants, Mojave was aggrieved
by the trial court’s denial of the petition.
12
CODRINGTON
J.
We concur:
HOLLENHORST
Acting P. J.
MILLER
J.
13
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432 S.W.2d 906 (1968)
Don DRAKE, Appellant,
v.
The STATE of Texas, Appellee.
No. 41528.
Court of Criminal Appeals of Texas.
October 9, 1968.
Julius Glickman, Houston, for appellant.
Carol S. Vance, Dist. Atty., Phyllis Bell and Frank Puckett, Asst. Dist. Attys., Houston, and Leon B. Douglas, State's Atty., Austin, for the State.
OPINION
BELCHER, Judge.
The offense is robbery by assault; the punishment, seven years. The appellant and Donna Drake were jointly indicted and tried, found guilty by a jury, and each elected to have the court assess the punishment.
As grounds of error the appellant contends that his arrest without a warrant was illegal, that the facts did not justify the conclusion that he was about to escape, and that evidence obtained by his illegal arrest was harmful and prejudicial to him.
The testimony of the state reveals that the assaulted party, Emilio Betancourt, met the appellant, Donna Drake, a sister of the appellant, and a Negro man in a tavernpool hall where they visited at a table. These three persons were not previously known by Betancourt, and according to the *907 record the name of the Negro was never ascertained by Betancourt or the officers. After a brief time, Betancourt left the tavern going home and the three persons also left, apparently, following him. Later, when Betancourt had declined some of their suggestions they attacked him, the appellant hitting him in the face, striking him two or three times with a dagger, and then hitting him two or three times with a soft drink bottle which he had in the other hand. They stomped and hit Betancourt on the head and back, took his billfold containing twenty dollars and left. Betancourt, bleeding and with his clothing torn, went to a nearby residence, the officers were notified and came to the scene, and he described the assault and those who had attacked him to the officers.
Officer Rich, a state's witness, testified in part as follows:
"Q Officer, did I understand you to say you had a description of these people?
"A Yes, sir.
"Q After you had received this description you said you did not get a warrant?
"A No, sir.
"Q Did you feel you had time to get a warrant?
"A No, sir.
"Q Did you feel they might escape?
"A Yes, sir.
"Q Did the description you were given of these people fit the people you arrested?
"A Yes, sir.
"Q Did you get the descriptions from Emilio Betancourt?
"A Yes, sir, we did.
"Q And after you placed these people under arrest did you go to the police station with them?
"A Yes, sir, we had them outside the place where we arrested them and Mr. Betancourt came by. Somebody had picked him up and he stopped by and said this was the two whites involved.
"Q And you did go to the police station thereafter?
"A Yes, sir.
"Q Did you take the defendants Donna and Don Drake to the booking office?
"A Yes, sir.
"Q On your way to the booking office where did you park your car?
"A In the rear of the police station.
"Q As you were approaching the booking office did anything unusual happen?
"A Yes, sir, the male, Don Drake, broke and ran.
"Q Where did he run to?
"A He ran down from the station toward the bayou.
"Q Will you describe what happened there?
"A He ran across the parking lot and I hollered at him to stop and I pulled my pistol and shot over his head, and at this time he dropped to the ground and I arrested him again.
* * * * * *
"Q Did you talk with Emilio Betancourt that night?
"A Yes, sir.
"Q Then did you go to the pool room?
"A Yes, sir.
"Q What is the name of the pool room, if you know?
"A It doesn't have a name.
"Q When you went to the pool room, will you tell what you saw, first of *908 all, describe the pool room if you will?
"A It is primarily a beer jointit is mostly colored in that areaand there is a pool table inside and I believe food is served.
"Q Is that place frequented by colored men?
"A Yes, sir, primarily.
"Q How many people did you see there that night?
"A There were probably between ten and fifteen there altogether when we arrived.
"Q Did you see any white people there?
"A Yes, sir, two.
"Q Who were they? You are talking about Don Drake and Donna Drake, sitting here by Mr. Nahas?
"A Yes, sir.
"Q Where were they sitting in there when you first saw them?
"A They were sitting about the center of the place.
"Q Were they at a table?
"A Yes, sir.
"Q Who else was there, if anyone?
"A There was a colored male sitting at the table with them when we first drove up.
"Q When you entered the place, what happened?
"A After we got out of the car all three of them got up from the table and the colored male ran out the back door and the white female went to the rest room and the white boy went over and started talking to some colored fellow who was in there.
"Q Did he preface his conversation with the colored man in any manner whatsoever? Did he commit any particular acts?
"A He went over and shook hands with him after we came in the front door, and after we come in the front door he started to leave the place by the front door, and at this time we arrested him.
"Q Did you ever find out who this colored man was?
"A No, sir.
"Q Have you seen him since to your knowledge?
"A No, sir, we didn't get a good enough look at him to identify him. He went out the back door before we could get close enough to identify him.
"Q Did Donna Drake come out of the rest room?
"A Yes, sir, and we had her brother go ask her to come out."
The facts and circumstances in evidence were sufficient to constitute probable cause and authorized the officers to arrest the appellant without a warrant for the offense of robbery by assault.
The admission of the testimony of appellant's flight immediately after his arrest under the evidence was not error. Crenshaw v. State, Tex.Cr.App., 389 S.W.2d 676.
Another ground of error urged is that the exclusion of testimony impeaching that of the assaulted party was harmful to the appellant.
The testimony offered pertained to the testimony of the assaulted party at the examining trial for this offense.
When the testimony was offered the following occurred:
"Appellant's Counsel: We take exception to the ruling of the Court, and offer *909 it on the bill for the purpose of impeachment of this witness.
"The Court: All right."
This ground of error cannot be appraised for the reason that said testimony is not contained in the record.
The judgment is affirmed.
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826 F.2d 1068
Wolf (Leonard)v.U.S.
NO. 86-1485
United States Court of Appeals,Seventh Circuit.
JUL 31, 1987
1
Appeal From: S.D.Ill.
2
AFFIRMED.
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669 F.Supp. 1418 (1987)
Richard CARR, Plaintiff,
v.
CITY OF CHICAGO, Cook County, Corporation Counsel's Office, Cook County State's Attorney's Office, Palmer House Company, Raymond Sophie, Earl Grinberg, James Lindsey, Officer W. Polacek, Officer C. Burns and unknown officers, prosecutors and civilian whose identities are presently unknown to plaintiff, all individually and in their official capacities, Defendants.
No. 85 C 7610.
United States District Court, N.D. Illinois, E.D.
September 14, 1987.
Richard Carr, Chicago, Ill., pro se.
Judson H. Miner, Corp. Counsel, City of Chicago by Stanley J. Sacks, Asst. Corp. Counsel, Chicago, Ill., for defendants City of Chicago, Corp. Counsel's Office, Polacek, Burns, and Sophie.
Richard M. Daley, State's Atty., Cook County by James D. Egan, Asst. State's Atty., Chicago, Ill., for defendants Cook *1419 County, Cook County State's Attys. Office, and Grinberg.
Thomas P. Mangan, Garbutt and Jacobson Assoc., Chicago, Ill., for defendants Palmer House Co. and Lindsey.
MEMORANDUM OPINION
BUA, District Judge.
Before this court is a motion brought by the Palmer House Company and James Lindsey to dismiss them from plaintiff's First Amended Complaint. Plaintiff's claim is based on the deprivation of various constitutional rights, and is brought pursuant to 42 U.S.C. § 1983. This court denies defendants' motion for the reasons stated below.
FACTS
On January 14, 1983, plaintiff was exiting a restaurant in the Palmer House Hotel in Chicago. Several hotel security guards took plaintiff into custody. One of the security guards, defendant Lindsey, called the Chicago Police and signed a complaint against plaintiff.
Plaintiff was transported by the police officers to police headquarters for the First District. One of the officers informed plaintiff that "every time he came into the First District and they saw him, he would be arrested." Complaint at ¶ 19. Plaintiff was detained at the station lockup for five to six hours before being released. Plaintiff alleges he was arrested, detained and charged in a similar fashion at least twenty times since May 1982. Finally, plaintiff filed this suit on August 29, 1985.
DISCUSSION
A. Security Guard James Lindsey
Plaintiff brought a 42 U.S.C. § 1983 action against James Lindsey who is a security guard employed by the Palmer House. The Supreme Court has articulated the two essential elements of a § 1983 action: that plaintiff was deprived of a federally protected right, and the person who deprived plaintiff of the federally protected right acted under the color of state law. Gomez v. Toledo, 446 U.S. 635, 638, 100 S.Ct. 1920, 1922-23, 64 L.Ed.2d 572 (1980).
The threshold issue before this court is whether James Lindsey was "acting under the color of state law" when he detained plaintiff and signed a complaint against plaintiff. This court believes Lindsey was acting under the color of state law. This court rules Lindsey was not acting as a private citizen in his capacity as a private security guard when he detained plaintiff and signed a complaint against him.
Section 1983 liability can attach only to governmental actors. A private citizen can be transformed into a governmental actor under special circumstances. A private citizen comes within the reach of § 1983 liability only when "he is a willful participant in joint action with the state or its agents." Gramenos v. Jewel Companies, Inc., 797 F.2d 432, 435 (7th Cir.1986). Joint action can be defined as an agreement on a joint course of action in which the private party and the state have a common goal and act in furtherance of that goal. Id. See also Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).
Private security guards are engaged in "state action" when they enter into agreements with police pursuant to which the security guards carry out the policemen's directions. Security guards who carry out such directions are exercising the state's function and are treated as if they were state officials. But if a security guard is acting independently, his conduct is judged under state tort law principles (e.g., false arrest, malicious prosecution, and battery) rather than being judged under the Fourth Amendment principles.
In the instant case, plaintiff alleges defendant Lindsey arrested and detained plaintiff while he notified the police. Two police officers arrived at the Palmer House Company and allegedly "had" Lindsey sign a complaint against plaintiff. Second Amended Complaint at ¶ 17. Paragraph 25 of the complaint alleges the charge against plaintiff, and the arrest and detention of plaintiff were carried out by the Palmer House pursuant to a policy, practice or *1420 custom of the City of Chicago. These allegations were reiterated with a slight modification in paragraph 27. Finally, the complaint suggests Lindsey's cooperation with the police amounts to a conspiracy.
In evaluating plaintiff's pro se complaint, this court construes plaintiff's allegations liberally. This court applies substantially less stringent standards than those applied to complaints drafted by professional counsel. See Haines v. Kerner, 404 U.S. 519, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972). This complaint will not be dismissed because it does not appear beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to the requested relief.
Although plaintiff's complaint is not a model of clarity, it tugs at the root of state action. For example, plaintiff alleged the police officers "had" Lindsey sign a complaint against plaintiff. Such an allegation suggests the police officers had some control over Lindsey or that Lindsey was acting in cooperation with the police. In addition, the word "had" connotes control, authority or influence that the police held over Lindsey. A more sophisticated counsel may have phrased the relationship differently between Lindsey and the police. Nevertheless, plaintiff can prove a set of facts sufficient to support his claim. This court will not dismiss this pro se plaintiff's claim merely because he was not schooled in the art of proper pleading.
Now that this court has held that Lindsey was acting under the color of state law, this court must also determine whether Lindsey's actions deprive plaintiff of a constitutional right. After careful consideration, this court finds that plaintiff's constitutional rights were violated. Plaintiff was clearly deprived of his Fourteenth Amendment right to liberty when he was arrested and detained by plaintiff and two Chicago police officers. In sum, this court denies defendant Lindsey's motions to dismiss and for summary judgment.
This court may not be so liberal if it is confronted by a proper motion for summary judgment. Plaintiff may be required to offer some evidence of some concerted effort or plan between Lindsey and the police officers. Otherwise, plaintiff will have failed to establish a question of fact about whether Lindsey violated plaintiff's constitutional rights while acting under the color of state law.
The defendants are in tune with this court's logic and have attempted to defeat plaintiff by moving in the alternative for summary judgment. However, defendant fails to comply with local General Rule 12(e) of the U.S. District Court for the Northern District of Illinois. Under Local Rule 12(e), a party moving for summary judgment must serve and file, in addition to affidavits and other materials referred to in Fed.R.Civ.P. 56(e), a statement of the material facts which the moving party contends there is no genuine issue and those facts that entitle the moving party to judgment as a matter of law. Local Rule 12(e) also states that failure to submit such a statement constitutes grounds for denial of the summary judgment motion. Defendant failed to file a statement of material facts. Consequently, this court denies defendant's motion for summary judgment for its failure to comply with Local Rule 12(e).
B. Palmer House Corporation
The Palmer House Corporation also moves to dismiss the amended complaint. The Palmer House claims it cannot be held liable under § 1983 based on vicarious liability for acts of its security guards.
This argument was raised and rejected by Judge Shadur of the United States District Court for the Northern District of Illinois. Carr v. City of Chicago, 85 C 6521 (N.D.Ill. Aug. 11, 1986) [Available on WESTLAW, DCT database]. In Carr, Judge Shadur was confronted by a plaintiff who had brought suit against the Plitt Theatres, Inc. in response to the allegedly wrongful conduct committed by its employees. Employees of the Plitt Theatres allegedly arrested and detained plaintiff and filed a false complaint against plaintiff. Plitt Theatres moved to dismiss claiming liability cannot be based upon the theory of respondeat superior. Judge Shadur denied the motion stating that private corporations *1421 may be vicariously liable under § 1983 for acts of its employees.
This court is confronted by a factually identical case. The instant plaintiff brought the claims before both this court and Judge Shadur. Moreover, the plaintiff in both cases was detained and arrested by private security employees of a private corporation. In addition, these employees filed complaints against plaintiff. Since the instant case is legally and factually identical to the case before Judge Shadur, this court will adopt the holding presented by Judge Shadur. Accordingly, this court denies the Palmer House's motion to dismiss.
CONCLUSION
This court denies defendant Lindsey's motions for summary judgment and to dismiss plaintiff's Second Amended Complaint. In addition, the Palmer House's motion to dismiss is also denied.
IT IS SO ORDERED.
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STATE OF MINNESOTA
IN COURT OF APPEALS
A15-0005
State of Minnesota,
Respondent,
vs.
Robin Lyne Hensel,
Appellant.
Filed January 25, 2016
Affirmed
Larkin, Judge
Morrison County District Court
File No. 49-CR-13-869
Lori Swanson, Attorney General, St. Paul, Minnesota; and
Paul D. Reuvers, Nathan C. Midolo, Iverson Reuvers Condon, Bloomington, Minnesota
(for respondent)
Kevin C. Riach, David D. Coyle, Fredrikson & Byron, P.A., Minneapolis, Minnesota (for
appellant)
Considered and decided by Larkin, Presiding Judge; Worke, Judge; and Bjorkman,
Judge.
SYLLABUS
Minn. Stat. § 609.72, subd. 1(2) (2012), is not void for vagueness or facially
overbroad in violation of the First Amendment to the United States Constitution.
OPINION
LARKIN, Judge
On appeal from her conviction of disorderly conduct for disturbing a city council
meeting, appellant argues that (1) Minn. Stat. § 609.72, subd. 1(2), violates the First
Amendment, (2) the district court erred by denying her requested jury instructions, and (3)
the evidence is insufficient to support her conviction. We affirm.
FACTS
Appellant Robin Lyne Hensel is a retired resident of the City of Little Falls. Hensel
regularly attends Little Falls City Council meetings. Council meetings take place at the
Little Falls City Hall in a room that has a raised dais where the council sits. Members of
the public sit in chairs that are set out by the public works director. On some occasions,
tables and chairs have been set up in the area between the dais and public-seating area to
accommodate work sessions before the council meeting. Typically the extra chairs are
removed before the council meeting begins.
The events underlying this appeal took place at the council’s meetings on June 3
and 7, 2013. At the June 3 meeting, the work-session tables were set up between the public-
seating area and dais. Hensel brought signs to the meeting, which she placed beside the
council dais and around her chair in the front row of the public-seating area. She also wore
a sign on her head. The mayor’s husband was at the meeting, and he asked to sit at the
work-session tables. The council president allowed him and other members of the public
to come forward and sit in front of Hensel at the work-session tables. Then, immediately
2
after the meeting was called to order, the mayor moved to close the meeting and reconvene
at another time. The meeting was rescheduled for June 7 at 9:30 a.m.
On June 7, Hensel arrived at the meeting and seated herself in the front row of the
public-seating area. There were no tables and chairs between the dais and the public-
seating area that morning. Before the meeting was called to order, Hensel twice moved
her chair forward into the area in between the public-seating area and dais where council
members were seated. Hensel asserted that she moved her seat forward because of what
she believed to be unequal treatment based on events at the June 3 city council meeting.
The first time Hensel moved her seat forward, the public works director moved the
chair back and told Hensel, “We set the council chambers up and the chair stays here,
please.” The second time, the police chief asked Hensel to move her chair back to the
public-seating area. She refused, and an exchange of comments ensued among Hensel, the
police chief, the city attorney, and city council members. Hensel said that she would
compromise, and moved her chair partway back to the public-seating area. When she
refused to move her chair any further, the police chief removed her from the meeting. As
a result of Hensel’s conduct before the June 7 meeting, the council was unable to start the
meeting on time.
Respondent State of Minnesota charged Hensel with disorderly conduct for
disturbing a public meeting. Hensel pleaded not guilty and moved to dismiss the charge
for lack of probable cause and on First Amendment grounds. The district court denied the
motion. The district court reasoned that the statute was overbroad in that it reached speech
3
and expressive conduct protected by the First Amendment, but that it could be narrowly
construed to reach only conduct.
The case was tried to a jury. Hensel requested a jury instruction regarding
expressive conduct to advise the jury that, if it found that Hensel’s conduct consisted only
of expressive conduct, it must find that the expressive conduct constituted fighting words
to find her guilty. She also requested a jury instruction regarding the First Amendment that
would have precluded the jury from finding her guilty if her disturbing conduct was
inseparable from protected expression. The district court denied the requests, reasoning
that the First Amendment issues were legal issues for the court to decide.
The jury returned a guilty verdict, and the district court denied Hensel’s request for
a judgment of acquittal. The district court sentenced Hensel to 15 days of stayed jail time
and placed her on unsupervised probation to the court for one year. Hensel appeals.
ISSUES
I. Did the district court err by denying Hensel’s motion to dismiss on First
Amendment grounds?
II. Did the district court abuse its discretion by denying Hensel’s requested jury
instructions?
III. Is the evidence sufficient to support the conviction?
ANALYSIS
Hensel was convicted under Minn. Stat. § 609.72, subd. 1(2), which provides that:
Whoever does any of the following in a public or private place,
including on a school bus, knowing, or having reasonable
grounds to know that it will, or will tend to, alarm, anger or
disturb others or provoke an assault or breach of the peace, is
guilty of disorderly conduct, which is a misdemeanor:
4
....
(2) disturbs an assembly or meeting, not unlawful in its
character . . . .
Hensel argues that the statute is unconstitutional, that the district court erred in instructing
the jury, and that the evidence was insufficient to support her conviction. We address each
argument in turn.
I.
Hensel first asserts a First Amendment1 facial challenge to Minn. Stat. § 609.72,
subd. 1(2), arguing that it is both vague and overly broad.2 “To be a constitutional exercise
of the police power of the state, a statute that punishes speech must be neither overly broad
nor unduly vague.” In re Welfare of S.L.J., 263 N.W.2d 412, 417 (Minn. 1978). This court
reviews the constitutionality of a statute de novo. State v. Crawley, 819 N.W.2d 94, 101
(Minn. 2012).
In a case involving a First Amendment challenge, whether First Amendment
concerns are actually implicated is a threshold inquiry. State v. Stockwell, 770 N.W.2d
1
Hensel relies on both the First Amendment to the United States Constitution and Article
I, Section 3, of the Minnesota Constitution. Because “the Minnesota constitutional right
to free speech is coextensive with the First Amendment,” Tatro v. Univ. of Minn., 816
N.W.2d 509, 516 (Minn. 2012), we refer only to the First Amendment in our analysis.
2
Hensel has not asserted an as-applied challenge, i.e., that the statute is unconstitutional as
applied to her. As our supreme court explained in Rew v. Bergstrom, the same substantive
test applies regardless of whether a challenge is facial or as-applied. 845 N.W.2d 764, 778,
780 (Minn. 2014). The difference is that a facial challenge seeks to invalidate the entire
statute and accordingly requires a higher showing of a substantial number of
unconstitutional applications. See id. at 778 (explaining that facial challenge differs in “the
showing required to invalidate a statute, not in the underlying substantive standard that
applies to each type of challenge”).
5
533, 537 (Minn. App. 2009), review denied (Minn. Oct. 28, 2009). The party asserting
First Amendment protection bears the burden in this regard. Id. (citing Clark v. Cmty. for
Creative Non-Violence, 468 U.S. 288, 293 n.5, 104 S. Ct. 3065, 3069 n.5 (1984)). The
state asserts that Hensel has not met this burden because “[n]o spoken word or expressive
conduct comes under the control of Minn. Stat. § 609.72, subd. 1(2)’s reach.” We disagree;
the language of the statute is clearly broad enough to encompass both speech and
expressive conduct. See Minn. Stat. § 609.72, subd. 1(2) (penalizing all conduct that
knowingly disturbs a meeting). Hensel has met the threshold burden of demonstrating that
First Amendment concerns are implicated in this case.3
To succeed on her facial First Amendment challenge, Hensel “must establish that
no set of circumstances exists under which [the statute] would be valid, that the statute
lacks any plainly legitimate sweep, or that a substantial number of its applications are
unconstitutional, judged in relation to the statute’s plainly legitimate sweep.” Rew, 845
N.W.2d at 778 (quotations and citations omitted). “We do not evaluate the facial
constitutionality of a statute in a vacuum.” Id.
3
The state also argues that Hensel’s particular conduct was not sufficiently expressive to
warrant First Amendment protection, and both parties devote significant attention to this
issue. But Hensel need not establish that she was engaged in protected speech to support
her facial challenge to the statute. See Dunham v. Roer, 708 N.W.2d 552, 563 (Minn. App.
2006) (recognizing exception to general standing requirements for facial First Amendment
challenges), review denied (Minn. Mar. 28, 2006). Even so, we observe that Hensel’s
conduct was expressive conduct because (1) she intended a message—that she be treated
the same as other citizens with respect to seating arrangements, including the mayor’s
husband—and (2) the circumstances were such that her message was understood. See
Spence v. Washington, 418 U.S. 405, 410-11, 94 S. Ct. 2727, 2730-31 (1974) (describing
expressive conduct). We further observe that Hensel engaged in actual speech, in addition
to expressive conduct.
6
Rather, the task in evaluating a facial challenge is to determine
whether a statute is unconstitutional in a substantial number or
all of its applications, as the case may be, under the applicable
constitutional standard governing challenges of the type
brought by the party alleging the unconstitutionality of the
statute.
Id.
Minn. Stat. § 609.72, subd. 1(2), is not unconstitutionally vague.
“‘As generally stated, the void-for-vagueness doctrine requires that a penal statute
define the criminal offense with sufficient definiteness that ordinary people can understand
what conduct is prohibited and in a manner that does not encourage arbitrary and
discriminatory enforcement.’” State v. Newstrom, 371 N.W.2d 525, 528 (Minn. 1985)
(quoting Kolender v. Lawson, 461 U.S. 352, 357, 103 S. Ct. 1855, 1858 (1983)).4
The [vagueness] doctrine is based on fairness and is not
designed to “convert into a constitutional dilemma the practical
difficulties in drawing criminal statutes both general enough to
take into account a variety of human conduct and sufficiently
specific to provide fair warning that certain kinds of conduct
are prohibited.”
State v. Enyeart, 676 N.W.2d 311, 319 (Minn. App. 2004) (quoting Colten v. Kentucky,
407 U.S. 104, 110, 92 S. Ct. 1953, 1957 (1972)), review denied (Minn. May 18, 2004).
“[A] higher standard of certainty of meaning is required” for statutes that impose criminal
penalties. Newstrom, 371 N.W.2d at 528. But even a criminal statute “need not be drafted
4
A statute can be unconstitutionally vague for “either of two independent reasons”: either
because it fails to sufficiently inform people of what is proscribed or it authorizes or
encourages arbitrary enforcement. State v. Ness, 834 N.W.2d 177, 184 (Minn. 2013).
These “two due process values . . . tend to coalesce” even if they are “analytically distinct.”
United States v. Wivell, 893 F.2d 156, 159 (8th Cir. 1990).
7
with absolute certainty or mathematical precision.” Dunham, 708 N.W.2d at 568 (stating
the principle in a case involving a quasi-criminal statute and noting that for purposes of a
vagueness analysis, a quasi-criminal statute is tantamount to a criminal one), review denied
(Minn. Mar. 28, 2006); see also Enyeart, 676 N.W.2d at 319 (“The vagueness doctrine
does not preclude the use of broad, flexible standards that require persons subject to a
statute to exercise judgment.”). “Instead, uncertainty invalidates a statute only when those
subject to it cannot determine with reasonable certainty whether a particular act is
forbidden or permitted.” Enyeart, 676 N.W.2d at 319 (citing State v. Kuluvar, 266 Minn.
408, 417, 123 N.W.2d 699, 706 (1963)).
Applying these principles here, we conclude that Minn. Stat. § 609.72, subd. 1(2),
is not void for vagueness. The statute must be construed in context and in light of its intent.
See State v. Hipp, 298 Minn. 81, 87-88, 213 N.W.2d 610, 614-15 (1973) (rejecting
vagueness challenge to public-assembly statute after examining its context and intent).
Although not defined by the statute, the term “disturb” is commonly understood to mean
“[t]o break up or destroy the tranquility, order, or settled state of.” American Heritage
Dictionary 525 (5th ed. 2011); see also Black’s Law Dictionary 546 (9th ed. 2009)
(defining “disturbance of a public meeting” as “[t]he unlawful interference with
proceedings of a public assembly”). Thus, viewed in context, the statute can be understood
by persons of common intelligence as prohibiting conduct that could be expected to
interfere with the ability to conduct a meeting.
The fact that Minn. Stat. § 609.72, subd. 1(2), does not specifically itemize what
conduct disturbs a meeting does not compel the conclusion that it is vague. See Dunham,
8
708 N.W.2d at 569 (explaining that a criminal statute “need not be drafted with absolute
certainty or mathematical precision”). Rather, as our supreme court recognized in Hipp,
more specific statutory language may be infeasible:
Because of the nature of the offense, which contemplates a
form of conduct repugnant to good order and not a specific act,
the language of the statute must, as a practical necessity, be
general to cover the countless variations of [conduct] which
can disturb or threaten the public peace.
298 Minn. at 88, 213 N.W.2d at 615; see also State v. Krawsky, 426 N.W.2d 875, 878-79
(Minn. 1988) (holding that statute prohibiting interference with peace officer performing
duties was not vague and noting that “given the wide variety of circumstances in which the
type of conduct [the statute] legitimately seeks to proscribe can occur, it seems unlikely
that a substantially more precise standard could be formulated which would not risk
nullification in practice because of easy evasion”). Minnesota’s approach is consistent
with that of other states. See e.g., State v. McNair, 135 N.W.2d 463, 465 (Neb. 1965)
(“What constitutes a disturbance of a lawful assembly is not susceptible to specific
definition, but must depend to some extent upon the nature and the character of the
particular assemblage. However, while it may be difficult to specifically define
beforehand, there is no problem in determining what constitutes a disturbance in a given
case.”); People v. Malone, 141 N.Y.S. 149, 151 (N.Y. App. Div. 1913) (noting that,
although “what shall constitute a disturbance cannot easily be brought within a definition
applicable to all cases[,] . . . there is commonly no great difficulty in ascertaining what is a
willful disturbance in a given case” (quotation omitted)).
9
Notably, laws prohibiting the disturbance of public meetings are neither unique to
Minnesota nor of recent vintage. And such laws are generally construed to “proscribe only
those disruptive physical actions and verbal utterances that are in violation of the normal
customs and rules of governance, implicit or explicit, of the meeting.” 24 Am. Jur. 2d
Disturbing Meetings § 1 (2008); see also State v. Linares, 655 A.2d 737, 744 (Conn. 1995)
(construing statutory language proscribing intentional disturbance, disruption, or
interference with general assembly proceedings as “limited to actual impediments to the
legislative process based on the objective qualities of the conduct”). We conclude that
Minn. Stat. § 609.72, subd. 1(2), is subject to a similar, reasonable understanding, and thus
is not unconstitutionally vague.5
Minn. Stat. § 609.72, subd. 1(2), is not unconstitutionally overbroad.
As we noted above, determining facial validity requires this court to evaluate
whether, assuming the application of appropriate constitutional scrutiny, a substantial
number of hypothetical applications of the statute would violate the First Amendment.
Rew, 845 N.W.2d at 778. There are undoubtedly applications of Minn. Stat. § 609.72,
5
Although not dispositive to our analysis, we also observe that courts of other jurisdictions
have rejected vagueness challenges to similarly worded statutes. See Linares, 655 A.2d at
744-45 (rejecting vagueness challenge to statute proscribing intentional disturbance,
disruption, or interference with general assembly proceedings, noting that statute
prohibited only “actual impediments to the legislative process based on the objective
qualities of the conduct”); State v. Fielden, 629 S.E.2d 252, 253 (Ga. 2006) (holding not
vague statute proscribing knowing or reckless commission of an act which may reasonably
be expected to disrupt meeting); State v. Markovich, 77 S.W.3d 274, 279 (Tex. Crim. App.
2002) (same for statute prohibiting knowing obstruction or interference, explaining that
“[a] person of ordinary intelligence knows the type of conduct that is likely to cause an
impairment to the ordinary conduct of a meeting”).
10
subd. 1(2), that will implicate both core speech and expressive conduct. The statute
proscribes disturbances of meetings, which certainly could take the form of speaking out
of turn, heckling, shouting, chanting, and other forms of oral protest. Disturbances could
also take the form of expressive conduct like Hensel’s refusal to move her chair in this
case. The fact that speech and expressive conduct are implicated, however, does not end
the inquiry. It merely prompts the next question, which is whether restrictions on these
forms of expression can withstand the applicable constitutional scrutiny. Id.
In this case, we conclude that it is appropriate to apply the test for time, place, or
manner restrictions articulated by the United States Supreme Court in Clark, 468 U.S. at
293, 104 S. Ct. at 3069. The Court has made clear that “the First Amendment does not
guarantee the right to communicate one’s views at all times and places or in any manner
that may be desired.” Heffron v. Int’l Soc’y for Krishna Consciousness, Inc., 452 U.S. 640,
647, 101 S. Ct. 2559, 2564 (1981). Time, place, or manner restrictions are “valid provided
that they are justified without reference to the content of the regulated speech, that they are
narrowly tailored to serve a significant governmental interest, and that they leave open
ample alternative channels for communication of the information.” Clark, 468 U.S. at 293,
104 S. Ct. at 3069.6
6
The Court articulated a similar test in United States v. O’Brien for determining the
constitutionality of a conduct-regulating statute’s incidental restrictions on expressive
conduct. 391 U.S. 367, 377, 88 S. Ct. 1673, 1679 (1968). In Clark, the Court recognized
that the O’Brien test, “in the last analysis is little, if any, different from the standard applied
to time, place, or manner restrictions.” 468 U.S. at 298, 104 S. Ct. at 3072.
11
Hensel does not dispute that Minn. Stat. § 609.72, subd. 1(2), is content neutral.
Accordingly, we turn to evaluating whether the statute is narrowly tailored to serve a
significant government interest and whether it leaves open ample alternative channels for
communication of information.
We have no trouble identifying the governmental interest protected by Minn. Stat.
§ 609.72, subd. 1(2). The statute protects the ability of governmental officials to do the
work of governing. See Linares, 655 A.2d at 750-51 (recognizing governmental interest
in prohibiting interferences with state general assembly); Smith-Caronia v. United States,
714 A.2d 764, 767 (D.C. 1998) (recognizing government interest in not allowing persons
to “delay, impede, or otherwise disrupt the orderly processes of the legislature which
represents all Americans” (quotation omitted)); State v. Cephus, 830 N.E.2d 433, 439
(Ohio Ct. App. 2005) (identifying significant governmental interest as ability of
government officials to “conduct official business in an orderly manner without
interference or disruption”). The statute also protects the rights of all citizens to meet and
participate in government. See In re Kay, 464 P.2d 142, 147 (Cal. 1970) (“The
constitutional guarantees of the free exercise of religious opinion, and of the rights of the
people peaceably to assemble and petition for redress of grievances, would be worth little
if outsiders could disrupt and prevent such a meeting in disregard of the customs and rules
applicable to it.”); Morehead v. State, 807 S.W.2d 577, 580 (Tex. Crim. App. 1991) (“[W]e
have no doubt that the State has a legitimate, even compelling, interest in ensuring that
some individuals’ unruly assertion of their rights of free expression does not imperil other
citizens’ First Amendment freedoms.”).
12
Having identified the significant governmental interest, we next consider whether
Minn. Stat. § 609.72, subd. 1(2), is narrowly tailored to serve that interest and whether it
leaves open ample other channels of communication. We begin by observing that the
statute applies in a very limited context; it only proscribes the disturbance of lawful
assemblies or meetings. Minn. Stat. § 609.72, subd. 1(2). Moreover, as we observe above,
this proscription is reasonably understood to reach only conduct (including speech) that
would be expected to interfere with the ability to conduct a meeting. See id. Furthermore,
the statute penalizes only conduct that is intended to cause a disturbance. See Minn. Stat.
§§ 609.02, subd. 9(1) (2012) (“When criminal intent is an element of a crime in this chapter,
such intent is indicated by . . . some form of the verbs “know” or “believe.”); 609.72, subd.
1 (requiring that the actor “[know], or [have] reasonable grounds to know that [her conduct]
will, or will tend to, alarm, anger or disturb others or provoke an assault or breach of the
peace”).
Based on all of the foregoing, we conclude that Minn. Stat. § 609.72, subd. 1(2), is
narrowly tailored to serve significant governmental interests. See Krawsky, 426 N.W.2d
at 877 (concluding that statute prohibiting interference with peace officer performing duties
was not overly broad because the statutory prohibition was limited to conduct obstructing
or interfering with police officer performing duties and required that actor intend to
obstruct or interfere); see also Smith-Caronia, 714 A.2d at 767 (concluding that statute
precluding intentional disturbance of congressional sessions was narrowly tailored because
it “restrict[ed] the prohibited conduct to loud speech and other acts both of a nature to and
13
specifically intended to disrupt the business of Congress”).7 We also conclude that the
statute leaves open ample other channels of communications. Citizens like Hensel are free
to communicate their dissatisfaction with their government in a variety of ways, as long as
those communications do not disturb lawful meetings.
We are cognizant that some courts, including the district court in this case, have
concluded that statutes proscribing disturbances of meetings are overly broad and must be
accorded a narrowing construction to survive constitutional scrutiny. See Morehead, 807
S.W.2d at 581 (construing statute to “criminalize only physical acts or verbal utterances
that substantially impair the ordinary conduct of lawful meetings and thereby curtail the
exercise of other’s First Amendment rights”). Given our interpretation of the statute, we
do not believe that a narrowing construction is required. In this regard, we note that “even
if there are marginal applications in which a statute would infringe on First Amendment
values, facial invalidation is inappropriate if the remainder of the statute covers a whole
range of easily identifiable and constitutionally proscribable conduct.” Parker v. Levy, 417
U.S. 733, 760, 94 S. Ct. 2547, 2563 (1974) (quotation omitted); see also Smith-Caronia,
7
Hensel relies on our supreme court’s holding in State v. Machholz that the felony-
harassment statute was unconstitutionally overbroad. 574 N.W.2d 415, 421 (Minn. 1998).
The language of the statute at issue in Machholz was much broader in scope than Minn.
Stat. § 609.72, subd. 1(2). See id. at 418 (providing that a person commits a gross
misdemeanor by “‘engag[ing] in any other harassing conduct that interferes with another
person or intrudes on the person’s privacy or liberty’” (quoting Minn. Stat. § 609.749, subd.
2(7) (1996))). In Machholz, the court did not expressly consider whether the statute at
issue was a reasonable time, place, or manner restriction. Essentially, however, the court
concluded that the statute was not narrowly tailored. See id. at 420-21 (noting multiple
instances of protected speech that would be proscribed under the statute). In sum,
Machholz is distinguishable.
14
714 A.2d at 767 (rejecting argument that statute must be given narrowing construction to
apply only to “‘actual, material’ (or more than ‘de minimus’) disruptions”).
For similar reasons, we reject Hensel’s assertion that Minn. Stat. § 609.72, subd.
1(2), must be narrowly construed to reach only fighting words. In this respect, Hensel
relies on S.L.J., in which the Minnesota Supreme Court addressed an overbreadth challenge
to a provision of the disorderly conduct statute that criminalized “‘engag[ing] in offensive,
obscene, or abusive language.’” 263 N.W.2d at 415 (quoting Minn. Stat. § 609.72, subd.
1(3)). The court reasoned that the statutory language “clearly contemplates punishment
for speech that is protected under the First and Fourteenth Amendments,” but construed
the statute narrowly to proscribe only fighting words in order to uphold its constitutionality.
Id. at 419. In a subsequent case, In re Welfare of T.L.S., this court held that the narrowing
construction of S.L.J. does not apply to the conduct-based proscriptions in Minn. Stat. §
609.72, subd. 1(3). 713 N.W.2d 877, 880-81 (Minn. App. 2006). Likewise here, because
Minn. Stat. § 609.72, subd. 1(2), is addressed to conduct (including speech) that disturbs
lawful meetings, we conclude that the narrowing construction of S.L.J. is not required. See
O’Brien, 391 U.S. at 376, 88 S. Ct. at 1678-79 (stating that, “when ‘speech’ and
‘nonspeech’ elements are combined in the same course of conduct, a sufficiently important
governmental interest in regulating the nonspeech element can justify incidental limitations
on First Amendment freedoms”); Linares, 655 A.2d at 751 (distinguishing cases applying
fighting-words narrowing construction to breach-of-the-peace statutes because “they
involved statutes that were not narrowly tailored to the nature of a particular site or the
needs of specific government institutions”).
15
Because we conclude that Minn. Stat. § 609.72, subd. 1(2), is neither void for
vagueness nor unconstitutionally overbroad, we reject Hensel’s challenge to the
constitutionality of the statute.
II.
Hensel next challenges the district court’s denial of her request for two jury
instructions. A district court has “considerable latitude” in the selection of language for
jury instructions. State v. Gatson, 801 N.W.2d 134, 147 (Minn. 2011) (quotation omitted).
“The refusal to give a requested jury instruction lies within the discretion of the district
court and no error results if no abuse of discretion is shown.” State v. Mitchell, 577 N.W.2d
481, 493 (Minn. 1998) (quotation omitted). A district court does not abuse its discretion
by using a pattern jury instruction when that instruction accurately states the law. State v.
Goodloe, 718 N.W.2d 413, 422 (Minn. 2006).
In this case, the district court used the pattern instructions for a disorderly conduct
charge. See 10 Minnesota Practice, CRIMJIG 13.120, 13.121 (2015). Those pattern
instructions allow courts to select the subdivision or subdivisions of section 609.72 at issue.
Id. Under the language for subdivision 1(3), the pattern instructions include additional,
bracketed language instructing the jury, consistent with S.L.J., that if the “defendant’s
conduct consisted only of offensive, obscene, or abusive language, you must also find that
the words used were ‘fighting words’” and defining that term. CRIMJIG 13.121. We
conclude that the pattern instructions accurately state the law.
Hensel requested two additional instructions. The first defined expressive conduct
and stated that, if Hensel’s conduct consisted solely of “offensive, obscene, or abusive
16
language or expressive conduct, [the jury] must also find that the words or expressive
conduct constituted ‘fighting words.’” The second stated that, “[o]nly if the defendant’s
First Amendment protected expression, whether consisting of words or conduct, is
separable from the conduct which disturbed the assembly or meeting can the defendant be
found guilty of disorderly conduct under Minn. Stat. § 609.72, subd. 1(2).” The district
court did not err by denying Hensel’s request for these instructions because they do not
accurately state the law. As we note above, the narrowing construction of S.L.J. does not
apply to the conduct-based proscriptions in the disorderly conduct statute. See T.L.S., 713
N.W.2d at 880-81. Moreover, the United States Supreme Court has made clear that “when
‘speech’ and ‘nonspeech’ elements are combined in the same course of conduct, a
sufficiently important governmental interest in regulating the nonspeech element can
justify incidental limitations on First Amendment freedoms.” O’Brien, 391 U.S. at 376,
88 S. Ct. at 1678-79. There is no requirement that conduct be separable from speech before
it may constitutionally be proscribed. See id.; see also T.L.S., 713 N.W.2d at 880-81
(“Although the disorderly conduct statute prohibits only ‘fighting words’ as applied to
speech content, the disorderly shouting of otherwise protected speech or engaging in other
‘boisterous or noisy conduct’ may still trigger punishment without offending the First
Amendment.”).8 Accordingly, we reject Hensel’s assertion that the district court erred by
denying her requested jury instructions.
8
In support of her separability argument, Hensel cites to an unpublished case from this
court and an Eighth Circuit decision. Neither is binding on this court. See Minn. Stat.
§ 480A.08, subd. 3(b) (2012) (providing that unpublished opinions of the Minnesota Court
of Appeals are not precedential); Citizens for a Balanced City v. Plymouth Congregational
17
III.
Lastly, Hensel argues that the evidence was insufficient to support her conviction.
In considering a claim of insufficient evidence, this court’s review is limited to a careful
analysis of the record to determine whether the evidence, when viewed in the light most
favorable to the conviction, was sufficient to allow the jurors to reach the verdict that they
did. State v. Webb, 440 N.W.2d 426, 430 (Minn. 1989). We will not disturb the verdict if
the jury, acting with due regard for the presumption of innocence and the requirement of
proof beyond a reasonable doubt, could reasonably conclude the defendant was guilty of
the charged offense. Bernhardt v. State, 684 N.W.2d 465, 476-77 (Minn. 2004).
To find Hensel guilty of disorderly conduct for disturbing a meeting, the jury was
required to find that (1) she disturbed a meeting that was not unlawful in its character and
(2) she knew, or had reasonable grounds to know that her conduct would, or would tend to
“alarm, anger, or disturb others or provoke an assault or breach of the peace.” Minn. Stat.
§ 609.72, subd. 1(2).
“The intent element of a crime, because it involves a state of mind, is generally
proved circumstantially.” State v. Davis, 656 N.W.2d 900, 905 (Minn. App. 2003), review
denied (Minn. May 20, 2003). When a conviction is based on circumstantial evidence, we
use a two-step process to assess the sufficiency of the evidence to sustain the conviction.9
State v. Silvernail, 831 N.W.2d 594, 598 (Minn. 2013). First, we identify the circumstances
Church, 672 N.W.2d 13, 20 (Minn. App. 2003) (noting that we are bound only by
Minnesota Supreme Court and United States Supreme Court decisions).
9
Hensel does not refer to or rely on the circumstantial-evidence standard.
18
proved, that is, the evidence supporting the jury’s guilty verdict. Id. at 598-99. Second,
we “determine whether the circumstances proved are consistent with guilt and inconsistent
with any rational hypothesis except that of guilt,” giving no deference to the jury’s choice
among reasonable inferences. Id. at 599 (quotations omitted). “To successfully challenge
a conviction based upon circumstantial evidence, a defendant must point to evidence in the
record that is consistent with a rational theory other than guilt.” State v. Taylor, 650
N.W.2d 190, 206 (Minn. 2002).
The evidence presented in this case—that Hensel moved her chair forward and
refused repeated requests to return it to the public-viewing area, all the while arguing with
council members—although not overwhelming, is sufficient to support Hensel’s
conviction. The jury could have reasonably found that Hensel’s conduct prevented the
council from conducting its meeting and that she either knew or had reasonable grounds to
know that her conduct would disturb the meeting. The evidence that Hensel points to in
support of her sufficiency challenge is not consistent with a rational theory other than guilt.
Accordingly, we do not disturb the jury’s verdict.
DECISION
Because Minn. Stat. § 609.72, subd. 1(2), is not unconstitutionally vague or
overbroad, the district court did not err by denying Hensel’s requested jury instructions,
and the evidence supports Hensel’s conviction, we affirm.
Affirmed.
19
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49 B.R. 796 (1985)
In re Robert A. NORMAN, Deloria Marie Mier, Debtors.
Florence DUHON and Paulette Rawdon, Plaintiffs,
v.
Deloria M. MIRE and Robert A. Norman, Defendants.
Bankruptcy Nos. 484-01173-LO-7, 484-01174-LO-7, Adv. Nos. 485-0038, 485-0037.
United States Bankruptcy Court, W.D. Louisiana.
May 10, 1985.
James E. Mouton, Lafayette, La., for debtors.
Cecelia A. Bonin, New Iberia, La., for creditors.
Felix O. Pavy, Opelousas, La., trustee.
FINDINGS AND CONCLUSIONS
RODNEY BERNARD, Jr., Bankruptcy Judge.
These matters are before the court upon motions to dismiss creditors' complaints to determine dischargeability of a debt.
After reviewing the pleadings and hearing argument of counsel, there being no dispute as to the facts, the court makes the following findings and conclusions.
These Chapter 7 cases were filed on November 11, 1984 and bear consecutive numbers. It is not evident from the record, but safe to presume, that there is, or was, some relationship between the debtors. They lived at the same address a short time before filing their petitions and several of the debts scheduled are identical. These facts are gleaned from the entire case records offered into the record of this proceeding by the debtors. The bar date for attacks upon the discharges was February 25, 1985. The creditors, Florence Duhon and Paulette Rawdon, filed complaints to determine dischargeability on February 12, 1985. The debtors have filed motions to dismiss the complaints and these, consolidated for purposes of hearing, were fixed and heard on April 23, 1985. The motions to dismiss are grounded upon the following allegations:
The pleading was not accompanied by the requisite filing fee.
The pleading failed to comply with the provisions of Bankruptcy Rules 703 and 710 and Official Form No. 34 in these particulars:
1) No parties were denominated as plaintiff or defendant,
2) The complaint "gave" no address,
3) No summons was issued and there was no notice of trial or pre-trial conference.
*797 As authority for the foregoing delineated grounds, debtors cite Fuerst v. Anderson, 5 B.R. 47. There, the plaintiff creditor had filed a complaint objecting to the discharge on January 24, 1980, unaccompanied by a filing fee and not complying with Bankruptcy Rules 703 and 710 nor conforming to Official Form No. 25 and Official Interim Form No. 24. On February 1, 1980 the debtor filed a motion to dismiss the complaint which motion was granted on February 12, 1980 because of the failure of the creditor to comply with certain local rules not applicable here. Also on February 12, 1980 the creditor filed an amended complaint curing the aforementioned deficiencies. No summons and notice of trial was issued since the original complaint had already been dismissed. Then, on March 14, 1980, the creditor filed a motion to reinstate the complaint and amended complaint. The court there found that it had acted properly and was indeed required to dismiss the complaint since the plaintiff had not answered the motion to dismiss within the time allowed by its local rule. The court went on to opine that "To find that the court has some basis for unwinding the discharge proceedings herein is, it seems, to hold that finality of action in this area is to be sacrificed if it be demonstrated that counsel's unfamiliarity with practice and procedure before the Bankruptcy Court is the root of the problem." This, because the discharge had already been granted. The court did not dwell upon the alleged deficiencies in the original pleading filed, as indeed it need not, having other and ample grounds upon which to dismiss the complaint.
In the instant case, the factual situation differs so significantly from Fuerst as to make that decision inapplicable. A more similar factual situation existed in City Bank and Trust Company v. King, 35 B.R. 471. There, the debtors moved to dismiss the creditor's objection to discharge on grounds that the pleading initiating the proceeding was not accompanied by the requisite filing fee and did not comply with requirements of the Bankruptcy Rules nor conform to Official form No. 25. In that case the objection was filed by the creditor on July 19, 1983 and on the next day, being the last day upon which an attack upon the discharge could be made, the filing fee was paid. The court concluded that the content of the pleading was of such composition that there was no substantial prejudice to the rights of the debtors and permitted amendment to the pleading.
Since Fuerst and City Bank and Trust Company, new rules have been promulgated incorporating a different numbering system and containing many more references to the Federal Rules of Civil Procedure. For instance, Rule 701 is now Rule 7001; Rule 704 is now Rule 7004 and Rule 710 is now Rule 7010. The effect upon pleadings is virtually the same. In this respect then, it is safe to embrace the reasoning of the Fuerst court.
In the case at bar the debtors' complaints are captioned In Re: Robert A. Norman and In Re: Deloria M. Mier. Both included the designation "COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT". The allegations of the complaint make reference to "debtor" throughout, though, never in fact naming the debtor. The filing fees, Sixty Dollars ($60.00) each were not paid until February 26, 1985, the day after the bar date.
This court finds that the complaints herein conform substantially to the Rules of Bankruptcy Procedure, as filed. Some reference is made in the motion to dismiss that an attempt was made on March 6, 1985 to cure defects in the complaint. Presumably, this reference is to the Summons issued that date since no amended complaint was ever filed.
The only remaining issue concerns the late payment of filing fees and the effect thereof, if any. The authority for collection of filing fees is contained in 28 U.S.C. § 1930(b) which authorizes the Judicial Conference of the United States to *798 prescribe fees of the same type which it prescribes under 28 U.S.C. § 1914(b). Acting under this authority the Judicial Conference adopted a schedule of fees "to be charged for services performed by the clerks of the bankruptcy courts, .....". This schedule, under paragraph numbered 7., provides:
For instituting any civil action, suit or proceeding in a controversy over which the bankruptcy court does not have exclusive jurisdiction, whether by original process, removal or otherwise, $60.00; for filing a complaint in a controversy over which the court has exclusive jurisdiction, $15.00.
Nowhere in the statute, the schedule prescribed by the Judicial Conference, the Local Rules for the Western District of Louisiana nor the Local Rules of the Bankruptcy Court is the clerk ordered to collect the fee before filing the complaint nor is the clerk given any guidance as to when or how the fee is to be collected. The practice by the clerk is to collect the fee at the time of filing. Exceptions are made so as not to inconvenience attorneys who have neglected to bring a check with them or who have made out the check incorrectly. Upon the attorney's solemn promise that the fee will be forthcoming within a short period of time, the clerk will usually accept papers for filing without simultaneous payment of the fee. The clerk's method of collection is to withhold issuance of the summons until the fee has been paid. This is the type of forbearance on the part of the clerk which leads to controversies of the kind at bar. What is controlling here is the filing of the complaint, not the payment of a fee. (Emphasis added.)
It is the conclusion of this court that the alleged deficiencies in the complaint, as well as the late payment of the filing fee, are insignificant. The motion to dismiss is denied and the complaining creditors are ordered to file an amended complaint within ten days of issuance of the order to be issued in connection with the foregoing.
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39 U.S. 334 (1840)
14 Pet. 334
THE UNITED STATES, APPELLANTS,
vs.
ELIZABETH WIGGINS, APPELLEE.
Supreme Court of United States.
*336 The case was argued by Mr. Gilpin, Attorney General, and Mr. Dent, for the United States; and by Mr. Downing, for the appellee.
*344 Mr. Justice CATRON delivered the opinion of the Court.
The first question arises upon the admission in evidence of the memorial of Mrs. Wiggins, and the decree thereon by the governor, Estrada, on the certificate of the secretary, Aguilar. They are as follow:
MEMORIAL FOR GRANT.
Translation.
"His Excellency the Governor:
"Isabel Wiggins, an inhabitant of the town of Fernandina, with the greatest respect appears before your Excellency, and states, that she has never importuned the attention of the government with petitions for lands, as she procured to support her family with the fruits of her industry, in this town; but owing to the diminution of trade, she considers that she will have to devote herself to the pursuits of the country; and wishing to establish herself on the eastern side of the pond of St. George, she supplicates your Excellency to be pleased to grant to her three hundred acres in the said place, as she has five *345 children and five slaves, with herself; which favour she begs of the just administration of your Excellency.
"Fernandina, 1st August, 1815.
"ISABEL WIGGINS."
DECREE.
"St. Augustine, 6th August, one thousand eight hundred and fifteen.
"The tract which the interested party solicits is granted to her, without prejudice to a third party; and for the security thereof, let a certified copy of this instance and decree be
issued to her, from the secretary's office. ESTRADA."
CERTIFICATE OF AGUILAR.
"I, Don Tomas de Aguilar, sub-lieutenant of the army, and secretary of the government of the place and province of East Florida, for his majesty, do certify that the preceding copy is faithfully drawn from the original which exists in the secretary's office, under my charge, and pursuant to the order I give the present, in St. Augustine of Florida, on the sixth of August, one thousand eight hundred and fifteen. TOMAS DE AGUILAR."
Before the memorial and concession were offered in evidence, Elizabeth Wiggins made affidavit: "That, in August, 1815, she petitioned for the grant; that she received shortly after from the secretary of the government, a certified copy of the petition and decree; that she never had had possession or control of the original; that she always understood that it was, at the date thereof, placed in the proper public office, as was usual in such cases; that she understood from her counsel the same could not be found; and that she is ignorant what has become of the same."
The affidavit was objected to, on the part of the United States, and rejected by the Court, and the evidence offered received without its aid; on proof being made of the handwriting of Aguilar, the government secretary.
Much evidence was introduced to prove the practice and rules in use in the offices of the Spanish government, from which titles to lands issued. We think the evidence was admissible; the existence of a foreign law, especially when unwritten, is a fact to be proved, like any other fact, by appropriate evidence. The Spanish province of Florida, was foreign to this country in 1815, when the transaction referred to purports to have taken place.
A principal witness to prove the practice in the government Secretary's office, was Alvarez, who had been a clerk in it from 1807, to the time of the change of government, in 1821. He, and others, establish beyond controversy, that persons wishing grants of land from the Spanish government, presented a memorial to the governor, and he decreed on the memorial, in the form pursued in Mrs. Wiggins' case; that the decree of the governor was filed in the secretary's office, and constantly retained there, unless, in cases where a royal title was ordered to be issued, when the decree was transferred *346 to the escribano's office. Mrs. Wiggins' is a case of the first class; and the petition and decree could not be removed from the government secretary's office. These papers were not recorded in books there, but kept in files or bundles.
The evidence given to the grantee, was a certified copy of the decree, or of the memorial and decree, by the government secretary; and that it was one of the ordinary duties of the secretary to make certified copies of memorials and decrees for the use of the parties. Generally, the decree of the governor directed the copy to be made for the use of the party; and that copies made by the government secretary, and certified by him, were generally received as evidence of title in the Spanish Courts of justice; the copies were made immediately after making the decree, and delivered to the party when he called for them. No seal was affixed to the secretary's certificate; which was evidence of the facts to which it certified, in a case like this. From the evidence of the duties incumbent on the government secretary of Florida, derived from this record, and other sources, we have no doubt the duties were such as proved; that the secretary was the proper officer appointed by law to give copies; and that the law trusted him, for this particular purpose, so far as he acted under its authority. It follows, in this case, as in all others where the originals are confined to a public office, and copies are introduced, that the copy is (first) competent evidence by authority of the certificate of the proper officer: and (second) that it proves, prima facie, the original to have been of file in the office, when the copy was made. And for this plain reason: the officer's certificate has accorded to it the sanctity of a deposition: he certifies, "that the preceding copy is faithfully drawn from the original, which exits in the secretary's office, under my charge."
The same doctrine was holden in this Court in Owings vs. Hull, 9 Peters, 624, 625. The copy of a bill of sale for slaves, made and of record in a notary's office, in New Orleans, was offered in evidence, without accounting for the original; and objected to for this reason. By the laws of Louisiana, the original could not be removed from the notary's office; and he was authorized to give a copy. This was received and deemed evidence of what was contained in the original; and, of course, that it existed when the copy was made.
Again, in Percheman's case, (7 Peters, 85,) it was decided by this Court, that a copy of a Spanish grant, certified by the government secretary, could be given in evidence without accounting for the nonproduction of the original; and this, on general principles; which did not require the aid of legislation: much reliance in that case having been placed upon acts of Congress to give effect to the certificate.
This Court, in the United States vs. Delespine, (12 Peters, 655,) recognized the principle, that a certified copy, such as the one before us, was evidence, for there a copy of the first copy was introduced: and when speaking of the first copy, the Court say, "the *347 first copy was made from the original filed in the proper office, from which the original could not be removed for any purpose. That copy, it is admitted, would have been evidence in the cause." The original copy having been lost, and no decree being found in the government secretary's office in favour of Delespine, although there was proof that one had existed, the copy of the first copy was received, and a decree founded on it.
Delespine's case is, however, prominently distinguished from the present on the main point in controversy; in that case, there was positive proof of the existence in the secretary's office of the original concession; here there is none, save the inference that arises from Aguilar's certificate, with some other circumstances: and the question is, can a decree for the land be founded upon these proofs; in the face of the fact, that no decree, or evidence of the claim now exists, or has ever been known to exist in the proper office.
We have established that the copy of the petition and decree are made prima facie evidence by the certificate of the secretary. "What is prima facie evidence of a fact? It is such as, in judgment of law, is sufficient to establish the fact; and, if not rebutted, remains sufficient for the purpose." Kelly vs. Jackson, 6 Peters, 632. And is it rebutted in this case? Had the papers in the government secretary's office been carefully kept; and had this claim been first brought forward at a late day, as it is insisted in argument it was, (that is, eighteen years after its date,) then the presumption would stand against its original existence; and it ought to be rejected, if the certificate had no support. But this is far from being the fact. The survey was made by the proper surveyor, for Mrs. Wiggins, March 23d, 1821, in conformity to the memorial and decree, and which refers to their date. Then again she pursued this claim before the register and receiver of the land-office of East Florida, whilst they acted as a board of commissioners for the examination of Spanish claims and titles; and they rejected it because there was no evidence of cultivation. Truly, the certificate and plot of the survey were only before them; but as no exception appears to have been taken, for want of sufficient evidence of the existence of the concession, the circumstance of the nonproduction of it before the board, has not so much in it as was supposed in the argument.
The record shows why such vigorous exertions were made, either to reject or to destroy the force of Aguilar's certificate. The attorney for the government offered to prove by William G. Davis, that Aguilar, just before the delivery of the province was made to the United States, offered to forge a grant, in favour of the witness, for a tract of land; and the attorney also offered to prove by William Levington, that about the same time, Aguilar offered to forge, or did actually forge, under the signature of the former governor, White, of that province, a grant of land in favour of the witness; which evidence the Court rejected; and, we think, correctly. Aguilar was not introduced as a witness; but the proof offered sought to establish upon him forgery and fraud in other instances, so as to *348 destroy the credit of his certificate in this. The secretary may have been honest and faithful in the discharge of his duties in 1815, and grossly the reverse in 1821; and although any number of frauds should be established upon him, still, if the particular act sought to be avoided be not shown to be tainted with fraud, it cannot be affected with other frauds. 4 Peters, 297. If there had been a forgery in this instance, it is probable it would have been brought to light at the time the survey was made: the making of which is the controlling fact with this Court, coming in aid of the certificate of Aguilar. For it must be admitted, that if the unsupported certificate had been brought forward, and the claim for the first time set up under it, in July, 1833, eighteen years after it bears date; that it could not have furnished any foundation for a decree, or been evidence of title worthy of credit. The lapse of time, the silence of the claimant, and her failure to have presented it for confirmation, would, under the circumstances, have been conclusive objections to its credibility. But the existence of the claim in 1821, is rendered certain by the return of the surveyor general; and before the American tribunals it has been steadily pursued.
Furthermore, the presumption that the original memorial and concession, supposed to have been on file in the government secretary's office, have been lost or destroyed, is very strong. After the papers were taken possession of in 1821, by the authorities of the United States, they were almost abandoned, in an open house, subject to the inspection and depredation of every one; many of the files were seen united, and the papers scattered about the room; the doors and windows of the house being open. There can hardly be a doubt that some of the papers were destroyed or lost.
Nothing is therefore found in the condition of the office, to rebut the prima facie presumption furnished by the secretary's certificate; as might be the case, had the papers been kept with proper care: and especially, had the concessions been numbered, and no number been missing.
The next question is, does the concession carry with it the conditions imposed by law on those having lands given to them for the purpose of settlement? The object of the applicant, Mrs. Wiggins, is distinctly set forth by her memorial; with the number of the family of which she was the head, that is, five children and five slaves, with herself. By the regulations of Governor White, published in 1803, it was declared, that to each head of a family there should be distributed fifty acres; and to the children and slaves, sixteen years of age, twenty-five acres for each one; but from the age of eight to sixteen years, only fifteen acres.
Taking the slaves and children all to have been over sixteen, there being ten of them, would have entitled the applicant to two hundred and fifty acres on their account, and the fifty acres on her own; which would have made up the three hundred acres applied for.
The same ordinance provides, "That those employed in the city, *349 if lands be granted to them for cultivation, by themselves or their slaves; it shall be with the express condition, that he shall commence cultivation within one month after the concession of them, with the understanding, that if they do not do it, they will be granted to any one who will denounce him, and verbally prove it." And that all concessions, without time specified, shall be void, and held as though not made, if grantees do not appear to take possession and cultivate them within the term of six months.
In the concession to Mrs. Wiggins, no time is specified for the settlement; and the government of the United States may take advantage of the nonperformance of the condition prescribed by law, if the eighth article of the treaty with Spain does not provide for the omission. It stipulates, "that grants of lands made by Spain, before the 24th of January, 1818, shall be ratified and confirmed to the persons in possession of the lands, to the same extent that the same grants would be valid, if the territories had remained under the dominion of Spain."
It was adjudged by this Court, in the cases of Arredondo and Percheman, 6 and 7 Peters, that the words "shall be ratified and confirmed," in reference to perfect titles, should be construed to mean "are" ratified and confirmed, in the present tense. The object of the Court in these cases was to exempt them from the operation of the eighth article, for the reason that they were perfect titles by the laws of Spain, when the treaty was made; and that when the soil and sovereignty of Florida were ceded by the second article, private rights of property were by implication protected. The Court, in its reasoning, most justly held that such was the rule by the laws of nations, even in cases of conquest, and undoubtedly so in a case of concession: therefore, it would be an unnatural construction of the eighth article, to hold that perfect and complete titles, at the date of the treaty, should be subject to investigation and confirmation by this government; and to reconcile the article with the law of nations, the Spanish side of the article was referred to, in aid of the meaning of the American side, when it was ascertained that the Spanish side was in the present tense: whereupon the Court held, that the implication resulting from the second article, being according to the law of nations, that, and the eighth article, were consistent; and that perfect titles "stood confirmed" by the treaty; and must be so recognised by the United States, and in our Courts.
The construction of the treaty being settled, a leading inquiry in the cases referred to was, were they perfect, unconditional Spanish grants?
Percheman's had no condition in it; and the only difficulty involved was, whether it had been made by the proper authority. The Court held it had been so made.
The grant to Arredondo and son was for four leagues square, and made as a present grant from its date; with the subsequent condition that the grantees should settle and improve the land in three *350 years, and on failure, the grant should become void: further, that they should settle on it two hundred Spanish families; but no time was fixed for the performance of this condition. Possession was taken and improvements made within the three years; but the families were not settled when the country was ceded. This Court declared, that after the cession of Florida to the United States, the condition of settling Spanish families had become, probably, impossible, by the acts of the grantor, the government of Spain; and certainly immaterial to the United States: therefore, the grant was discharged from the unperformed condition, and single.
That the perfect titles, made by Spain, before the 24th of January, 1818, within the ceded territory, are intrinsically valid, and exempt from the provisions of the eighth article, is the established doctrine of this Court; and that they need no sanction from the legislative or judicial departments of this country.
But that there were at the date of the treaty very many claims, whose validity depended upon the performance of conditions in consideration of which the concessions had been made, and which must have been performed before Spain was bound to perfect the titles; is a fact rendered prominently notorious by the legislation of Congress and the litigation in the Courts of this country for now nearly twenty years. To this class of cases the eighth article was intended to apply; and the United States were bound, after the cession of the country, to the same extent that Spain had been bound before the ratification of the treaty, to perfect them by legislation and adjudication: and to this end the government has provided that it may be sued by the claimants in its own Courts; where the claims shall be adjudged, and the equities of the claimants determined and settled according to the law of nations, the stipulations of the treaty, and the proceedings under the same, and the laws and ordinances of the government from which the claims are alleged to have been derived.
These are the rules of decision prescribed to the Courts by Congress, in the act of 1824, ch. 173, sec. 2; passed to settle the titles of Missouri and Arkansas; and made applicable to Florida, by the act of 1828, ch. 70, sec. 6. By the sixth section of the act of 1824, the claimant who has a decree in his favour, is entitled to a patent from the United States; by which means his equitable claim draws to it the estate in fee. These are the imperfect claims to which the eighth article of the treaty with Spain refers.
That a Spanish concession carrying on its face a condition, the performance of which is the consideration for the ultimate perfect title, is void, unless the condition has been performed in the time prescribed by the ordinances of Spain; was decided by this Court after the most mature consideration, in the cause of the United States vs. Kingsley, (12 Peters;) which is the leading decision upon the imperfect titles known as Mill grants; and which has been followed by all others coming within the principles then, with so much care *351 and accuracy laid down. The concession to Mrs. Wiggins, carrying with it the conditions incident to settlement rights by the ordinances and usages of Spain; a brief notice, in addition to what has already been said, will be taken of the regulations and ordinances governing the case. As, on the first point, the practice of the government in disposing of the public domain, may be proved by those familiar with the customs; and there is in the record, very satisfactory proof by witnesses of the laws and customs governing the provincial authorities in this respect; but as the proof is in exact accordance with the published ordinances on the subject, of course the written law will be relied upon.
After the passage of the act of 1828, it was the opinion of the Attorney General of the United States, that it was indispensable to the correct decision of the Florida claims by the Court, that a correct translation into the English language should be made of the Spanish and French ordinances, affecting the land titles in that country. The task of translating and compiling them was assigned to Joseph M. White, Esq., then of Florida. The collection was accordingly made and translated, and the manuscript deposited in the state department; and Congress was informed of the fact, by a special message from the President of the United States, of February 11th, 1829. 2 White's Recopilacion, 9, 10. It was afterwards published by Mr. White; and latterly he has published a second and enlarged edition, which is the one referred to in this case.
The treaty with Spain for the cession of Florida, was signed 2d February, 1819: on the 25th of November preceding, the political and military governor (Coppinger) caused to be published an ordinance setting forth the conditions on which concessions for settlement claims had been issued; obviously with a view to the future cession. 2 White's Recopilacion, 282-285. From the ordinance it appears, "That concessions made to foreigners or natives, of large or small portions of land, carrying their documents with them, (which shall be certificates issued by the secretary,) without having cultivated or ever seen the lands granted to them, such concessions are of no value or effect; and should be considered as not made, because the abandonment has been voluntary, and that they have failed in complying with the conditions prescribed for the encouragement of population:" "and therefore, there is no reason why they should not revert to the class of public lands, making null the titles of cession which were made to them."
Ten years had been the time required for cultivation and occupation; this rule was not rigidly adhered to, but the titles were perfected in some instances, where valuable improvements had been made, and the occupation had been short of ten years; the governors taking into consideration the disturbed state of the country. These exceptions were abatements of the general rule, requiring ten years cultivation and occupation: as Mrs. Wiggins, however, never cultivated, or occupied the land claimed, she took no interest under the *352 rule, or any exception made to it; and it is free from doubt, had Spain continued to govern the country, no title could have been made to her; nor can any be claimed from the United States, as successors to the rights and obligations of Spain.
It is, therefore, adjudged, that the decree below be reversed, and the petition dismissed.
This cause came on to be heard on the transcript of the record from the Superior Court for the District of East Florida, and was argued by counsel. On consideration whereof, it is now here ordered and decreed by this Court, that the decree of the said Superior Court in this cause be, and the same is hereby reversed and annulled; and that this cause be, and the same is hereby, remanded to the said Superior Court, with directions to dismiss the petition.
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240 P.2d 833 (1952)
STEARNS et al.
v.
WILLIAMS et ux.
No. 7745.
Supreme Court of Idaho.
January 31, 1952.
*835 O. R. Baum, Pocatello, Oscar W. Worthwine, Boise, for appellants.
Albaugh, Bloem, Barnard & Smith, Idaho Falls, for respondents.
THOMAS, Justice.
H. T. Stearns and C. D. Stearns, husband and wife, appellants herein, will be referred to as plaintiffs and Joseph Williams and Myrtle Williams, husband and wife, will be referred to as defendants.
The plaintiffs brought an action for specific performance of a real estate sales contract. It is deemed advisable to detail some of the salient facts before setting forth and considering the numerous assignments of error.
The plaintiff H. T. Stearns, a geologist, had been for more than twenty-five years prior to 1946 in the employment of the federal government and had during such employment made an extensive survey of the water potential and other geological aspects of the Arco area in Butte County, and had written and submitted a report in connection therewith to the federal government which was published some several years ago. During this time Stearns observed and made a study of the gravel deposits in the Craters of the Moon area and discovered many deposits which were exceptionally good for the manufacture of building and road materials, but made no filings thereon at the time because he was in the government service.
Either in 1938 or 1939, no definite date being fixed in the records, the plaintiffs were married. In 1946 Mr. Stearns resigned from government service and has since been generally engaged as a private consulting geologist and did on several occasions, both in 1947 and in 1948, visit the Arco area.
On or about January 5, 1949 the Atomic Energy Commission, an agency of the federal government, engaged the services of a Detroit engineering firm, under written contract, to survey, study and make a report on a site near Arco, Idaho, and one at Fort Peck, Montana, both of which sites the government had under consideration with *836 the probability of selecting one of them for the location of an atomic reactor plant.
On January 9, 1949 the Detroit firm entered into a written sub-contract with Mr. Stearns on a daily salary basis to make a report on the water potential and geological conditions and other pertinent factors which were to be considered in the selection of a site for the location of an atomic reactor plant.
The sub-contract between the engineering firm and Stearns specifically set forth that both sites had already been made known to Stearns and that the Commission, in engaging the engineering firm, desired that a survey and comprehensive study of the availability of water supply at each site be obtained and that Stearns was to do all things necessary to investigate and prepare and submit a report on each site with reference to water potential, geological conditions, and other pertinent factors. The sub-contract then specifically provided as follows: "The said report, etc. to be as contemplated by the Commission in its contract of January 5, 1949, with the Contractor, the applicable provisions of which contract have been communicated to the sub-contractor and which he understands and accepts as a part hereof."
The sub-contract provided also that Stearns would undertake the work immediately and proceed with haste to complete and submit his report not later than January 25, 1949; that he would consult and cooperate with geologists, and others employed by the engineering firm in connection with the survey, as well as with geologists and others employed by the United States Government; Stearns further under the provisions of the sub-contract expressly agreed to participate in all meetings and conferences arranged by the engineering firm in connection with the conduct of the studies.
The sub-contract specifically provides that both the engineering firm and Stearns agree that all the Commission's conditions and requirements of security and secrecy shall be strictly observed by Stearns.
On or about January 21, 1949 Stearns left Pocatello, on his own time, and went to Arco and there, on January 22 of the same year, negotiated for the purchase of the property of defendants, and also two other tracts under separate contracts to purchase; all the contracts were negotiated in the name of Mrs. Stearns, through a real estate broker, and her separate funds were used to make the required payments under each contract.
The purchase price of the property of defendants, consisting of twenty-nine lots, was $435; the down-payment of $50 was made after the contract was executed by the defendants on January 26, 1949 and the balance was payable on or before April 26, 1949.
Mr. Stearns completed and mailed his report on both sites on January 31, 1949, and on March 23 of the same year the Atomic Energy Commission made its first public announcement that the Arco site had been selected for the installation of an atomic reactor plant.
Immediately following the public announcement of the selection, there was considerable demand for real property in and adjacent to Arco and the market value rose sharply. The property of defendants was not reasonably worth more than the contract price at the time the contract was entered into but following the public announcement, and continuously up to the time of the trial in June 1950, its fair market value was many times the sale price; its value following the announcement and at the time of the trial was variously placed at from $100 to $500 a lot.
The plaintiffs in the month of April 1949 and prior to the date the balance was payable under the contract made tender of the payment, which defendants refused. Plaintiffs then commenced the action for specific performance.
The defendants by their answer and by way of an affirmative defense alleged fraud and deceit in the procurement of the contract, inadequate consideration thereof, and that such contract offended public policy. The court denied specific performance and dismissed the action on the ground that the contract offended public policy.
*837 The appellants set forth some sixteen assignments of error. We do not deem it necessary to separately state and treat these assignments. The errors are generally directed to the findings of fact, conclusions, and judgment entered, and in refusing to sustain objections to questions propounded to the plaintiffs who were called as witnesses by defendants, under the provisions of Sec. 9-1206, I.C., and for refusing upon motion of plaintiffs to strike such testimony of the plaintiffs. All the assignments of error essential to the determination of the case will be considered and treated in connection with the disposition of the basic legal problems presented by the appeal.
Basically the defendants urge that the plaintiffs were engaged in a joint enterprise in the purchase of the property at a time when Mr. Stearns was indirectly, if not directly, employed by the federal government in a trust and confidential capacity upon a project of a highly secret nature, in which society (the public) had an interest and in which Stearns had such a duty that he could not legally, in the interests of the public, enter into an agreement which would have a tendency to create a conflict or an antagonism between his duty to the public and his own private or personal interests; that the purchase of the property in the area during the time he was employed to report upon the site would necessarily have a tendency, at least, to influence his report to the end that the Arco site might be selected to the exclusion of the Fort Peck site, even though the Fort Peck site might in his unbiased opinion be the more desirable; that by making such purchases he was voluntarily placing himself in a position where there might well develop a conflict between his public duty and his private interest; and that where a tendency toward such conflict is present a court of equity will not lend its aid to enforce such a contract.
It was urged that irrespective of the disparity between the fair value of the property and the contract price, or even though the evidence would not support fraud, the contract was void on the further ground of public policy because it had an evil tendency to bring the duty of Stearns to the government in conflict with his personal interest.
Whether a contract is against public policy is a question of law for the court to be determined from all the facts and circumstances of each case. Stansell v. Roach, 147 Tenn. 183, 246 S.W. 520, 29 A.L.R. 143; 17 C.J.S., Contracts, § 211(d), page 568, note 75.
An agreement voluntarily made between competent persons is not lightly to be set aside on the grounds of public policy, or because it has turned out unfortunately for one party. Crimmins & Peirce Co. v. Kidder Peabody Acceptance Corp., 282 Mass. 367, 185 N.E. 383, 88 A.L.R. 1122. However, such contracts are subject to the limitation that they must not contravene public policy. Huey v. Brand, Tex.Civ. App., 92 S.W.2d 505; St. Regis Candies v. Hovas, 117 Tex. 313, 3 S.W.2d 429; Id., Tex.Civ.App., 8 S.W.2d 574; 12 Am.Jur., §§ 167 and 172, pp. 662 and 670.
The usual test applied by courts in determining whether a contract offends public policy and is antagonistic to the public interest is whether the contract has a tendency toward such an evil, Wood v. Casserleigh, 30 Colo. 287, 71 P. 360; if it is opposed to the interest of the public, or has a tendency to offend public policy, it will be declared invalid, even though the parties acted in good faith and no injury to the public would result in the particular instance; the test to be applied is not what is actually done but that which may or might be done under the terms of the contract; it is the evil tendency of the contract and not its actual injury to the public that is determinative, as the law looks to its general tendency and closes the door to temptation by refusing to recognize such agreements. 17 C.J.S., Contracts, § 211, page 564, notes 42-46.
It is contended by the appellants that the contract of purchase was made by Mrs. Stearns through her agent, Mr. Stearns, with her separate funds and that she had no confidential or fiduciary relationship to the government nor any knowledge of the proposed project; and that knowledge of the proposed project possessed by Mr. *838 Stearns cannot be imputed to her; that information acquired by Mr. Stearns outside the scope of his agency and under circumstances which made it his legal duty to refrain from divulging to his principal, Mrs. Stearns, and which he did not so divulge, could not be imputed to or binding upon her as principal; the lower court held that Mr. and Mrs. Stearns were joint adventurers.
There is considerable evidence in the record as to the relationship existing between Mr. and Mrs. Stearns with reference to the purchase of the property and the plans for its use; the record is quite clear that Mr. Stearns was possessed of superior knowledge of the geology of the surrounding country and that he had a very valuable and secret process for the manufacture of building material from the gravel and cinder deposits in the Arco area; that it was contemplated that this process would be used in the enterprise, and that both Mr. and Mrs. Stearns conceived such an undertaking many years earlier; that the purchase in question and other property were to be purchased for carrying out this enterprise.
The evidence in respect to their relationship reveals many striking inconsistencies; throughout the testimony of Mrs. Stearns she continually, when testifying concerning the plans, the filing of placer claims on gravel and cinder deposits and the testing of such deposits, referred to herself and Mr. Stearns; she spoke of their plans and filings, that they were going to construct a building upon the premises to manufacture building materials; she also spoke of it as their project and that they had acquired it and were going to set up a plant; Mr. Stearns specifically stated in his testimony that they were going to set up a plant and referred to Mrs. Stearns and himself, in testifying that they had a plan to make the plant; that they had a secret process which was very valuable; in one place in his testimony, he testified that they had purchased the Beers property which was adjacent to the property in question, and testified further that they had to have the Williams property also as they needed it; when questioned with reference to his contemplated market he again spoke of he and Mrs. Stearns having a market for the material and that they had taken an option on machinery; at one place in his testimony he testified specifically that it was his intention to cash in on the knowledge he acquired in the particular area when he was working for the government; however, when very carefully worded and pointed questions were asked of him, he positively testified that he was buying the property for Mrs. Stearns, and that she was going to build the structure on the property and to operate it, and that no money of his was being used in the property and that he was going to turn his secret process over to her; he finally testified under examination by his own counsel that it was the intention of himself and his wife to erect a block and brick plant on the property. The above analysis briefly sets forth the import of the testimony of both Mr. and Mrs. Stearns with reference to the contemplated project; upon the above uncertain and indefinite evidence, which contains many inconsistencies, the court below concluded that Mr. and Mrs. Stearns were engaged in a joint adventure.
Whether a relation of joint adventurers exists is primarily a question of fact for the trial court to determine from the facts and the inferences to be drawn therefrom. Milton Kauffman, Inc., v. Superior Court, 94 Cal.App.2d 8, 210 P.2d 88; San Francisco Iron & Metal Co. v. American Milling & Industrial Co., 115 Cal.App. 238, 1 P.2d 1008.
It is immaterial in whose name the property is acquired in a joint venture, as one holding title is a trustee for those who are so engaged in the joint enterprise. Ferguson v. Nagle, 159 Okl. 219, 15 P.2d 1.
To constitute a joint adventure the parties may combine their property, money, efforts, skill or knowledge in some common undertaking, and their contribution in this respect need not be equal or of the same character, but there must be some contribution by each joint adventurer of something promotive of the enterprise. Parker v. Trefry, 58 Cal.App.2d 69, 136 P.2d 55; Rae v. Cameron, 112 Mont. 159, 114 P.2d 1060; Nelson v. Abraham, 29 *839 Cal.2d 745, 177 P.2d 931; 48 C.J.S., Joint Adventures, § 1, page 802; § 2, page 814, note 95; § 8, page 836; and even though one adventurer owns all the property used in the joint adventure, this is not conclusive in determining whether such relationship exists. United States Fidelity & Guaranty Co. v. Dawson Produce Co., 200 Okl. 540, 197 P.2d 978.
A contract of joint adventure need not be expressed but it may be implied, in whole or in part, from the conduct of the parties, Lane v. National Ins. Agency, 148 Or. 589, 37 P.2d 365; direct testimony or documents are not essential, Hupfeld v. Wadley, 89 Cal.App.2d 171, 200 P.2d 564; 48 C.J.S., Joint Adventures, § 3, page 816; Yeager v. Graham, 150 Kan. 411, 94 P.2d 317. Again, even though the details of such joint adventure were shown by indefinite and uncertain testimony, this does not preclude finding that such a joint adventure existed from their acts and conduct, and from the testimony and the inferences that might reasonably be drawn therefrom. Replogle v. Ray, 48 Cal.App. 2d 291, 119 P.2d 980; Milton Kauffman, Inc., v. Superior Court, supra; Nelson v. Abraham, supra.
A joint adventure is generally a relationship analogous to but not identical with a partnership, and is often defined as an association of two or more persons to carry out a single business enterprise with the objective of realizing a profit. McKee v. Capitol Dairies, Inc., 164 Or. 1, 99 P.2d 1013; Nelson v. Abraham, supra; Bosworth v. Eason Oil Co., 202 Okl. 359, 213 P.2d 548; Sime v. Malouf, 95 Cal. App.2d 82, 212 P.2d 946, 213 P.2d 788; 48 C.J.S., Joint Adventures, § 1, pages 801-802.
In a joint enterprise there must be agreement to enter into an undertaking between parties having a unity of interest in the objects or purposes of the agreement, and a common purpose in its performance, Brigham v. Munden, 142 Or. 471, 19 P.2d 1096; while a provision for sharing losses is important in construing an agreement for a joint enterprise, it is not essential, and neither an agreement to share profits nor losses is conclusive in the construction of the contract, but the intention of the parties controls. Las Vegas Machine & Engineering Works v. Roemisch, Nev., 213 P.2d 319. As to third persons, the legal and not the actual intention controls. Snavely v. Walls, 13 Cal. App.2d 600, 57 P.2d 161; Aiken Mills v. United States, D.C., 53 F.Supp. 524; Id., 4 Cir., 144 F.2d 23.
On the basis of the testimony, the acts, conduct and surrounding circumstances as revealed by the record, the court did not err in concluding that Mr. and Mrs. Stearns were engaged in a joint adventure.
Here it is pointed out by the plaintiffs that there was no contractual or fiduciary relationship between Stearns and the government but only between Stearns and the engineering firm, and that furthermore there was no confidential or fiduciary relationship between Stearns and the defendants, but only the mere relationship of vendor and purchaser; that he owed no duty to either the government or the defendants; that for this additional reason the principle of public policy cannot be applied to defeat his rights to specific performance.
Both the contract and the sub-contract were made near the same time and in relation to the same general subject-matter, and the provisions of the contract between the engineering firm and the government were made known to Stearns; by the provisions of the sub-contract reference is made to the contract and by reference pertinent provisions of the contract are made a part of the sub-contract, and hence binding upon the sub-contractor; under its very terms the sub-contractor was placed in a position of confidence and trust and was duty-bound, not only to refrain from disclosing the nature of his work to the general public, including the defendants, but was implicitly sworn to secrecy, except perhaps to the extent, as he testified, that he could make such disclosure to some other governmental agency, such as the Navy which owned some of the grounds upon which his work was *840 being done, if and only if it were necessary in order for him to get the information which was required of him.
The lower court refused to decree specific performance of the contract on the broad general principle that the contract offended sound public policy. The meaning of the phrase "public policy" is vague and variable; it has never been exactly defined, Strong v. Western Union Tel. Co., 18 Idaho 389, 109 P. 910, 30 L.R.A.,N.S., 409; however, the courts have with frequency approved Lord Brougham's definition of public policy as the principle which declares that no one can lawfully do that which has a tendency to be injurious to the public good. Public policy, however, is only variable in so far as the habits, capacity and opportunities of the public have become more varied and complex, and the principles to be applied have always remained unchanged and unchangeable, but courts are obliged to make new applications of old principles. 12 Am.Jur., § 169, p. 666; Skutt v. City of Grand Rapids, 275 Mich. 258, 266 N.W. 344; Finnie v. Walker, 2 Cir., 257 F. 698, 5 A.L.R. 831; 12 Am.Jur., § 167, p. 662, notes 4 and 5.
Public policy may be found and set forth in the constitution or in the statutes, or where it is found in neither it is sometimes set forth by judicial decision. Brooks v. Cooper, 50 N.J.Eq. 761, 26 A. 978, 21 L.R.A. 617, 35 Am.St.Rep. 793.
While it is often said that agreements are against public policy, because it is the policy of the law to secure fidelity in the discharge of their duties by all persons holding such positions of trust and confidence, yet it is more accurate to say that such agreements, tending to cause unfaithful conduct by fiduciaries, are illegal because they are in effect agreements to wrong or defraud the persons whose interests the fiduciaries have in charge.
The law frowns upon any act upon the part of one placed in a relationship of trust or confidence where such party places his personal interest in antagonism to duty or which tends to that result; one employed by another to transact business for him has no right to enter into an agreement with a third person which would place it in his power to wrong his principal, and which would tempt a bad man to act in bad faith toward an employer; such agreements are within the rule that the law voids agreements made with a view to place one under wrong influences, such as those which offer him a temptation to do that which may affect injuriously the right and interest of third persons; such agreements are opposed to honesty in business and are contrary to public policy. 12 Am. Jur., § 179, pp. 678-679.
However, it is urged by plaintiffs that the trial court erroneously predicated judgment on the basis that Stearns was a public officer or employee in a fiduciary position; that he is neither a public officer nor employee for the reason that no such relation can exist between two parties who have no contractual relationship. Contracts of this character are not confined to executors, administrators, trustees, agents, partners, public officers and employees but embrace any person occupying a fiduciary or confidential relationship. It need only be shown that to bring such agreements within the rule there was in fact some relationship of trust or confidence and the agreement contemplated or tended to a violation of such trust or confidence; the rule is applied even though the third person, with respect to whom the relation of trust or confidence existed, is not injured. 17 C. J.S., Contracts, § 198, page 550; Hendricks v. Wall, Tex.Civ.App., 277 S.W. 207.
From what has heretofore been set forth, to the effect that the rule is not limited to certain particular designated parties but embraces all persons who occupy a position of trust or confidence, it is not necessary to, nor do we determine whether Stearns was either a public officer or public employee; if his relationship was one of trust and confidence, of a confidential, fiduciary or even quasi-fiduciary nature, he would come within the purview of the general rule as set forth.
A fiduciary relationship does not depend upon some technical relation created by or defined in law, but it exists in cases where there has been a special confidence imposed in another who, in equity *841 and good conscience, is bound to act in good faith and with due regard to the interest of one reposing the confidence. Staab v. Staab, 160 Kan. 417, 163 P.2d 418; Renegar v. Bruning, 190 Okl. 340, 123 P. 2d 686; Dyblie v. Dyblie, 389 Ill. 326, 59 N.E.2d 657; Szekeres v. Reed, 96 Cal.App. 2d 348, 215 P.2d 522.
Oftentimes the terms "fiduciary relation" and "confidential relation" are used interchangeably, Gerson v. Gerson, 179 Md. 171, 20 A.2d 567; Fipps v. Stidham, 174 Okl. 473, 50 P.2d 680; the confidential relationship which is protected in equity is synonymous with fiduciary relationship, Sachs v. Cluett, Peabody & Co., 265 App. Div. 497, 39 N.Y.S.2d 853; it exists whether the relationship is technically fiduciary or merely informal, whenever one trusts in and relies on the other, Sewell v. Ladd, Mo.App., 158 S.W.2d 752; Van't Hof v. Jemison, 291 Mich. 385, 289 N.W. 186. In respect to either confidential or fiduciary relationship, it is possible that an unfair advantage may be taken and where one is bound to act for the benefit of another, he can take no advantage to himself; no precise language can define the limits of such relationships, In re Null's Estate, 302 Pa. 64, 153 A. 137.
The highest consideration of public policy demands that all duties in which the government and the public are concerned shall be performed with fidelity; no one who has assumed the performance of such duties should be permitted to make the question whether he will continue in the performance in such manner a matter of private speculation, Jacobs v. Tobiason, 65 Iowa 245, 21 N.W. 590.
We have been cited to no cases, nor have we in our search discovered any cases, where the precise question has been determined, where the same general principles are involved; it would add unduly to the length of this opinion and it would serve no useful purpose to discuss and analyze the numerous cases cited in the general text where contracts have been declared illegal because their direct tendency was injurious to the public interest. Each case in this field must necessarily depend upon its own facts and circumstances; where the precise question as to whether or not a particular agreement is against public policy has not been determined, analogous cases involving the same general principles may be looked to by the court in arriving at a satisfactory conclusion, Kentucky Ass'n of Highway Contractors v. Williams, 213 Ky. 167, 280 S. W. 937, 45 A.L.R. 544.
It is the relationship which Stearns has with a third party, that is, with his government, which is of importance in this case; the very nature of his relationship to the public at the time he entered into the contract of purchase for the benefit of himself and his wife as joint adventurers should forbid him, as a matter of sound public policy, to refrain from using such confidential information and relationship to his own personal gain, where it even has a tendency to injuriously affect the public good or conflict with his public duty; more important, the temptation to color his report because of such personal interest is great and he should never have permitted such temptation to exist, and it is for such reasons and under such relationships that the courts have condemned such agreements as highly offensive to sound public policy and have refused to lend their aid. Stearns voluntarily placed himself in a position where his own interests would have a direct tendency to conflict with his obligation to the public; to sanction the contract would be to sanction an agreement which has a tendency to cause Mr. Stearns to make a favorable report on the Arco site in preference to that of any other site, even though there might be others better or equally as favorable, and thereby likely cause injury to the public; it must be borne in mind that he entered into the particular contract not after his employment had been severed but before he had completed and mailed his report.
Application of the reasoning and the general principles announced in the many cases referred to in this opinion through the text citations makes clear that the conclusion is inescapable that the government placed special confidence and trust and reliance in Stearns and that the contract which is sought to be enforced in *842 this case had at its inception a direct evil tendency to cause Mr. Stearns to place conflicting personal interest above duty and, for such reason, even though he acted in good faith and no resulting injury to the government followed, the contract offends public policy and this court will not lend its aid to the enforcement thereof.
It is further contended by the plaintiffs that the judgment of the trial court is based upon a theory different than the theory upon which the case was set forth in the pleadings or tried; in this respect it is urged that the defendants alleged in their answer a defense based upon misrepresentation of material facts; that there is no allegation that Mr. Stearns was a public officer or employee and, as such, owed a duty to the government to refrain from entering into any contract which might have a tendency to be injurious to the public good. It is further urged that the trial judge arrived at a decision on the erroneous theory that Mr. Stearns was a public officer or employee, and a theory which is entirely different than the theory upon which the defendants tried the case; the court did find and conclude that there was no misrepresentation of any material fact, or any fraud or overreaching in the procurement of the contract, but concluded that Stearns was a public employee and that specific performance of the contract was denied on the grounds of sound public policy.
A party to a contract, void as against public policy, cannot waive its illegality by failure to specially plead the defense or otherwise, but whenever the same is made to appear at any stage of the case, it becomes the duty of a court to refuse to enforce it, Reed v. Johnson, 27 Wash. 42, 67 P. 381, 57 L.R.A. 404; again, a court of equity will not knowingly aid in the furtherance of an illegal transaction; in harmony with this principle, it does not concern itself as to the manner in which the illegality of a matter before it is brought to its attention, Wright v. Corbin, 190 Wash. 260, 67 P.2d 868. Furthermore, the court itself will raise the question of the invalidity of a contract which offends public policy and, as stated before, the parties cannot waive it, Noonan v. Gilbert, 63 App.D.C. 30, 68 F.2d 775; McCowen v. Pew, 153 Cal. 735, 96 P. 893, 21 L.R.A.,N. S., 800. The court, having once acquired jurisdiction to make equitable disposition of the case, retains such jurisdiction to do equity, even though its disposition of the case will be grounded upon some theory not set forth in the pleadings, nor urged to the court, but which is supported by the evidence.
The plaintiffs contend that the court erred after timely objection in the admission of certain testimony of Mr. and Mrs. Stearns as adverse parties under cross-examination, under the provisions of Sec. 9-1206, I.C., and in refusing to grant their motion to strike such testimony; it is urged in this connection that an adverse party can be interrogated under this statute only with reference to matters peculiarly within his knowledge and which cannot in all probability be developed otherwise; that the court in permitting such examination of these witnesses abused its discretion for the reason that such witnesses were interrogated upon many matters which were not peculiarly within their respective knowledge and which might well have been developed through other sources; plaintiffs rely on the case of Boeck v. Boeck, 29 Idaho 639, 161 P. 576, and Darry v. Cox, 28 Idaho 519, 155 P. 660, for support of their position; in the main, the testimony so adduced and objected to covered matters which were peculiarly within the knowledge of the witnesses and which were not otherwise readily available; again, much of such testimony was of a preliminary nature.
The statutes such as Sec. 9-1206, I.C., were enacted to enable a party to call his adversary; such statutes, which are found in many states, are remedial in character and are liberally construed in order to accomplish their primary purpose; in applying liberal construction to such statutes it has been held that any relevant matter in issue is within the scope of the examination of witnesses called under such statute; it has been held under a similar statute in California that a party may call an adverse party as a witness to prove or *843 to be interrogated concerning facts material to his case, and that he may be called to prove a single material fact or any number of material facts or even the whole case; Lawless v. Calaway, 24 Cal.2d 81, 147 P.2d 604; Intagliata v. Shipowners & Merchants Towboat Co., Cal.App., 151 P. 2d 133; see also Morton v. Morton Realty Co., 41 Idaho 729, 241 P. 1014.
Cross-examination and the extent of such examination of an adverse party under this section of the statute are largely in the discretion of the trial court, Portland Cattle Loan Co. v. Gemmell, 41 Idaho 756, 242 P. 798; Evans v. Bannock County, 59 Idaho 442, 83 P.2d 427; while objection to such examination was seasonably made and a timely motion to strike such testimony was likewise made, yet plaintiffs' counsel examined such witnesses fully and at length on such matters which were covered by the cross-examination under the statute; in many respects the cross-examination of the adverse party under the statute covered matters which were peculiarly within the knowledge of the witnesses examined and not readily obtainable otherwise; it appears that the plaintiffs suffered no disadvantage or prejudice from such examination and we find no abuse of judicial discretion by the court in permitting such examination and in denying the motion to strike such testimony at the conclusion thereof. The conclusions reached in this respect are not out of harmony with the holdings in either the Boeck case or the Darry case, supra.
Having considered all errors assigned and finding no error, the judgment of the district court should be and is affirmed.
Costs to respondents.
GIVENS, C. J., and PORTER, TAYLOR and KEETON, JJ., concur.
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28 F.3d 105
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.F. Farah ETEMAD, Plaintiff-Appellant,v.STATE OF CALIFORNIA, DEPARTMENT OF TOXIC SUBSTANCES CONTROL;Kathy Darling; Jose Kou, Defendants-Appellees.
No. 93-56508.
United States Court of Appeals, Ninth Circuit.
Submitted June 6, 1994.*Decided June 21, 1994.
Before: TANG, PREGERSON, and T.G. NELSON, Circuit Judges.
1
MEMORANDUM**
2
F. Farah Etemad appeals pro se the district court's Fed.R.Civ.P. 12(b)(6) dismissal of her action against the State of California Department of Toxic Substances Control ("DTSC") and two of its employees alleging various claims arising from her discharge from employment. Etemad also appeals the district court's sanction of $750 against her. We have jurisdiction under 28 U.S.C. Sec. 1291, and we affirm.
3
On February 10, 1992, Etemad filed a pro se complaint against DTSC alleging various claims arising out of her discharge from employment. After granting two opportunities to amend the complaint, the district court dismissed the complaint with prejudice. On March 1, 1993, Etemad filed a notice of appeal for review of that dismissal.1 On July 26, 1993, while the appeal of the February 10 complaint's dismissal was still pending, Etemad filed another complaint raising the same allegations, but adding two DTSC employees as defendants.
4
* Dismissal
5
We review de novo a district court's dismissal on res judicata grounds and for failure to state a claim. Palomar Mobilehome Park Ass'n v. City of San Marcos, 989 F.2d 362, 363 (9th Cir.1993) (res judicata); Oscar v. University Students Cooperative Ass'n, 965 F.2d 783, 785 (9th Cir.) (en banc) (failure to state claim), cert. denied, 113 S.Ct. 655, and cert. denied, 113 S.Ct. 656 (1992).
6
We hold that the district court properly dismissed the claims against DTSC which were included in her first complaint. Pendency of an appeal does not suspend the operation of an otherwise final judgment for purposes of res judicata. Eichman v. Fotomat Corp., 759 F.2d 1434, 1439 (9th Cir.1985). Accordingly, Etemad's appeal of the dismissal of the first complaint did not affect its preclusive effect. See id.
7
The district court also properly dismissed the new claims against two DTSC employees. Etemad's Equal Opportunity Opportunity Commission (EEOC) charge neither named the employees nor alleged facts concerning the employees' conduct. Therefore, she is barred from maintaining a Title VII cause of action against them. See Bratton v. Bethlehem Steel Corp., 649 F.2d 658, 666 (9th Cir.1980) (private Title VII action may be brought only against parties named in the EEOC charge).
II
Sanctions
8
We review for abuse of discretion the district court's order imposing sanctions. United States ex rel Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir.1992).
9
A pro se litigant may be sanctioned for filing papers "for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation." Fed.R.Civ.P. 11. Here, Etemad filed a complaint in an attempt to amend a complaint that had been dismissed after Etemad had been granted two opportunities to amend. DTSC moved for attorney fees of $2500 but the district court determined that $750 was a more appropriate amount. We hold that the sanction imposed did not constitute an abuse of discretion. See Borneo, 971 F.2d at 248.
AFFIRMED.2
*
The panel unanimously finds this case suitable for decision without oral argument. Fed.R.App.P. 34(a); 9th Cir.R. 34-4
**
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3
1
On April 5, 1994, we affirmed the dismissal of many of her claims but vacated and remanded for the district court to reinstate her Title VII claim. See Etemad v. State of California, Dept. of Toxic Substance Control, No. 93-55385, unpublished memorandum disposition (9th Cir. April 5, 1994)
2
We have considered all other issues Etemad raised in her opening brief and reject them as meritless
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279 S.W.3d 123 (2008)
HITACHI AUTOMOTIVE PRODUCTS USA, INC., Appellant,
v.
Chester R. CRAIG, Jr.; Honorable James L. Kerr, Administrative Law Judge; and Workers' Compensation Board, Appellees.
No. 2007-SC-000631-WC.
Supreme Court of Kentucky.
October 23, 2008.
Rehearing Denied April 23, 2009.
Timothy J. Walker, Ferreri & Fogle, Lexington, KY, Counsel for Appellant, Hitachi Automotive Products USA, Inc.
Thomas G. Polites, Wilson, Polites & McQueen, Lexington, KY, Counsel for Appellee, Chester R. Craig, Jr.
OPINION OF THE COURT
An Administrative Law Judge (ALJ) dismissed the claimant's application for benefits having found that he received the letter required by KRS 342.040(1) but failed to file an application for benefits within two years after the employer terminated voluntary income benefits. The decision implicitly rejected the claimant's arguments that conduct by the employer's insurance carrier violated KRS 342.267 and 803 KAR 25:240, that the violations reasonably induced a tardy filing, and that they estopped the employer from asserting a limitations defense. Although the Workers' Compensation Board affirmed, the Court of Appeals reversed. Appealing, the employer asserts that estoppel is an inappropriate remedy for unfair claims settlement practices, that the facts do not warrant an estoppel, and that the Court of Appeals misinterpreted 803 KAR 25:240 and engaged in impermissible fact-finding.
We affirm. KRS 342.267 penalizes an employer who commits unfair claims settlement practices but offers no remedy to the affected worker. The evidence before the ALJ compelled findings that the carrier violated KRS 342.267 and 803 KAR 25:240 and that the violations reasonably *124 induced a tardy filing. Equity required an estoppel.
The claimant has an eighth-grade education and a GED. He began working for the defendant-employer in 1994. He strained his back while working as a fireman in May or June 2002 and filed a claim, but the injury resolved with minimal treatment. He then sustained a non-work-related back injury for which he underwent surgery in 2002 and missed four weeks' work.
The work-related back injury that is the subject of this appeal occurred on April 8, 2003, while the claimant helped to lift a heavy pallet. He continued to work until September 2003, when he underwent surgery to the same area of his back as in 2002. His employer paid temporary total disability (TTD) and medical benefits voluntarily but terminated TTD when he returned to work on January 12, 2004, and notified the Office of Workers' Claims. The employer terminated medical benefits two years later on January 12, 2006, after which the insurance adjuster informed the claimant that the statute of limitations had expired. Although the claimant obtained counsel and filed an application for benefits in February 2006, the employer asserted that the statute of limitations barred the claim because more than two years had passed since it terminated TTD. As a consequence, the ALJ ordered the claimant to show cause why the claim should not be dismissed.
The claimant admitted that he received a letter from the Office of Workers' Claims, which informed him that he had two years from January 12, 2004, to file a claim. He testified that he "got a ton of paperwork right after my surgery.... So I read it, but really didn't understand it. Everything that I was getting was either from Liberty Mutual or a doctor, so that came out of the blue." He stated that nothing occurred in the matter until his surgeon, Dr. Wheeler, received a November 16, 2004, letter from the insurance adjuster, requesting answers to various questions regarding the injury. After examining him on January 21, 2005, Dr. Wheeler completed the questionnaire and listed the claimant's current diagnoses as being status post herniated disc lumbar region (x2), stenosis, sciatica, and post laminectomy syndrome. He assigned a 13% permanent impairment rating, stating that no portion of the rating was due to a pre-existing dormant or unrelated injury or condition.
The claimant testified that he delivered the completed questionnaire to the plant nurse, Rhonda Burkhead, on or about January 22, 2005, and asked about its significance. She advised him that the questionnaire's purpose "was so Anita Ashley could come up with a settlement price and a range." He testified that Ms. Ashley "sent me a letter, I believe, saying that she wanted to know exactly what the percentage was before, compared to the 13 percent now, and [that] she thought the 13% was a little high." When they spoke later, she indicated that some of the impairment should be attributed to the 2002 injuries and surgery. After he explained that Dr. Wheeler told him that he was "a hundred percent" after the surgery, she said, "Okay," and the conversation ended. He acknowledged that she did not make an offer to settle the claim but stated that he thought she would do so because she did not inform him that she needed additional information from Dr. Wheeler or tell him that the claim was denied. On February 7, 2006, she informed him by letter that the limitations period had expired and that the employer would no longer pay benefits. After speaking with her, he located the letter from the Office of Workers' Claims *125 among his papers, obtained counsel, and filed a claim on February 28, 2006.
An affidavit from Ms. Anita Ashley, the insurance adjuster, indicated that she received the questionnaire that Dr. Wheeler completed in January 2005. It also indicated that she explained her concerns regarding pre-existing impairment to Dr. Wheeler in a letter dated May 23, 2005, and asked him to specify the permanent impairment rating that existed after the initial surgery. According to Ms. Ashley, he failed to respond.
The claimant argued that the employer should be estopped from raising a limitations defense such as occurred in City of Frankfort v. Rogers, 765 S.W.2d 579 (Ky. App.1988), because its insurance carrier failed to comply with KRS 342.267 and 803 KAR 25:240. He asserted specifically that the carrier's adjuster obtained a permanent impairment rating from Dr. Wheeler more than a year before the limitations period expired and violated 803 KAR 25:240, §§ 4 and 6 by failing to propose a reasonable settlement within the limitations period. He also asserted that conduct by the plant nurse and the adjuster lulled him into thinking that the carrier would offer a settlement and that he would not need to file a claim. He argued that the carrier's misconduct warranted an equitable remedy.
The employer maintained that its carrier did not commit an unfair claims settlement practice and had no obligation to make a settlement offer because liability and the extent and duration of disability were uncertain. The employer also argued that no statute tolls the limitations period based on an unfair claims settlement practice. It emphasized that the claimant received the required letter informing him of the applicable limitations period.
KRS 342.270(1) provides that an injured worker who cannot agree with the employer regarding compensation must file an application for resolution of the claim "within two (2) years after the accident, or... within two (2) years after the cessation of voluntary payments, if any have been made." More specifically, KRS 342.185(1) tolls the period of limitations for so long as an employer pays "income benefits." To assure that an injured worker receives notice of the applicable limitations period, KRS 342.040(1) requires an employer who terminates or fails to pay income benefits when due to notify the Department (formerly Office) of Workers' Claims and requires the Department to notify the worker of the right to prosecute a claim. The Department does so with what it terms a "WC-3 letter."[1] Although KRS 342.990 provides civil and criminal penalties for an employer's failure to comply strictly with KRS 342.040(1), Chapter 342 provides no remedy for a worker who, unaware of the applicable limitations period, fails to file a timely claim. Thus, the courts have turned to equitable principles when the circumstances warranted and estopped employers who failed to comply strictly with KRS 342.040(1) from asserting a limitations defense, even in the absence of bad faith or misconduct.[2]
The court explained in Akers v. Pike County Board of Education, 171 S.W.3d 740, 743 (Ky.2005), that estoppel is an equitable remedy that courts often invoke to prevent a party from benefiting from its misconduct. A party may be estopped to plead a limitations defense if the party's false representation or fraudulent concealment reasonably induces inaction on the part of the plaintiff. Nothing requires estoppel *126 to be based on a statutory violation by the estopped party. The elements of estoppel include: 1.) acts, language, or silence amounting to a representation or concealment of material facts; 2.) the facts are known to the estopped party but unknown to the other party; 3.) the estopped party acts with the intention or expectation that the other party will rely on its conduct; and 4.) the other party does so to its detriment.[3]Patrick v. Christopher East Health Care, 142 S.W.3d 149 (Ky. 2004), explains that the facts and circumstances of each case determine the propriety of resorting to an equitable remedy.
A strong public policy encourages parties to settle workers' compensation claims in order to resolve them promptly, with minimal litigation expenses.[4] Older Kentucky cases hold that insurance settlement negotiations do not toll the limitations period or estop a carrier from asserting a limitations defense unless the carrier makes a false promise to settle the claim or engages in other misleading behavior that reasonably induces a tardy filing.[5] They also hold that voluntary medical payments do not toll the limitations period.[6] Courts in other jurisdictions have estopped carriers and their principals from asserting a limitations defense when they induced a late filing by actions or communications that led a worker to believe that a settlement would be reached or by intentionally prolonging settlement negotiations.[7]
In 1996 the legislature enacted KRS 342.267 to protect injured workers, most of *127 whom lack knowledge of the law and insurance technicalities. KRS 342.267 prohibits insurance carriers, self-insurance groups, and self-insured employers from engaging in unfair claims settlement practices in violation of Chapter 342 or KRS 304.12-230, which prohibits certain acts and omissions by insurance carriers. KRS 304.12-230(5) specifies that an insurer's "fail[ure] to affirm or deny coverage of claims within a reasonable time" is such a practice. KRS 342.267 permits a $1,000 to $5,000 fine to be imposed for each violation and permits the Department's executive director to revoke a carrier's certificate of authority to sell insurance in Kentucky for a pattern of violations. Proceedings under KRS 342.267 are separate from the affected worker's claim because the real party in interest under the statute is the Commonwealth.
803 KAR 25:240 imposes various duties on workers' compensation insurance carriers and their agents. Section 4 of the regulation requires carriers to "diligently investigate a claim for facts warranting the extension or denial of benefits." Section 6 requires carriers to "attempt in good faith to promptly pay a claim in which liability is clear." It also prohibits them from compelling a worker to institute formal proceedings to recover benefits in such a claim, from requiring a worker to obtain information that is accessible to the carrier, from offering a settlement for substantially less than the reasonable value of a claim, or from threatening to appeal in order to compel such a settlement. Section 5, entitled "Standards for Prompt and Timely Actions," provides as follows:
(1) After receipt of notice of a work-related injury necessitating medical care or causing lost work days, a carrier shall as soon as practicable advise an injured employee of acceptance or denial of the claim.
(2) A carrier shall provide to the employee in writing the specific reasons for denial of a claim.
(3) A carrier shall inform an employee of additional information needed for the claim to be accepted.
(4) A carrier shall meet the time constraints for accepting and paying workers' compensation claims established in KRS Chapter 342 and applicable administrative regulations.
KRS 342.267 and 803 KAR 25:240 evince a clear legislative intent to promote the fair and equitable settlement of workers' compensation claims without resort to litigation.[8] They assure that a worker will receive prompt and decisive information regarding the status of a claim from the time that the employer receives notice until the claim is finally resolved. The regulation protects injured workers from forfeiting viable claims by helping to prevent carriers from engaging in conduct that "runs out the clock." It clearly acknowledges that settlements may occur at any time until a claim is finally resolved and does not limit itself to the carrier's initial acceptance or denial.[9] In other words, it uses the term "claim" as a collective noun that applies to the claims for permanent income and medical benefits as well as to the claims for TTD and medical treatment at the time of injury.
Chapter 342 provides no remedy to a worker who receives the WC-3 letter but fails to file a timely application for permanent income and medical benefits due to a carrier's subsequent misconduct.[10] KRS *128 342.267 and 803 KAR 25:240 broaden the circumstances that warrant an estoppel by providing new grounds for deeming a carrier's silence to be misleading.
The claimant had the burden to prove his assertion that the adjuster violated KRS 342.267 or 803 KAR 25:240 and that the misconduct reasonably induced the tardy filing. The ALJ failed to address the arguments, and nothing indicates that the executive director was asked to investigate. As a consequence, the record contains no pertinent findings of fact. Although KRS 342.285 designates the ALJ as the finder of fact in workers' compensation proceedings, the circumstances do not require a remand for consideration under 803 KAR 25:240 because overwhelming evidence compelled findings that the carrier violated the regulation and that the conduct reasonably induced the tardy filing.[11]
After notifying the Office of Workers' Claims that TTD benefits were terminated, which prompted the WC-3 letter, the adjuster obtained a permanent impairment rating from Dr. Wheeler and informed the claimant in a letter that she thought the rating was too high. He received the letter, after which the parties discussed various issues relating to permanent disability benefits. The adjuster failed to advise him after the conversation whether she would accept or deny his claim for permanent income and medical benefits; failed to inform him that she needed additional information in order to decide whether to accept the claim; and failed to provide specific reasons in writing for denying permanent income and medical benefits if that was her position, all of which violated 803 KAR 25:240, § 5.[12] Although she did not make a settlement offer, the discussion led the claimant to think reasonably that she required no further information, that she would make a settlement offer, and that he would not need to file a claim. Thus, he took no action until she informed him that the limitations period had expired. At that point, he promptly obtained counsel and filed a claim.
Equity will not permit a carrier or its principal to blatantly disregard the obligations created by 803 KAR 25:240 and benefit from the misconduct.[13] The employer's carrier failed to comply with 803 KAR 25:240. Thus, equity required the employer to be estopped from asserting a limitations defense.
The decision of the Court of Appeals is affirmed and the claim is remanded for the ALJ to consider the merits.
MINTON, C.J.; CUNNINGHAM, NOBLE, SCHRODER, SCOTT and VENTERS, JJ., concur. ABRAMSON, J., not sitting.
NOTES
[1] See Billy Baker Painting v. Barry, 179 S.W.3d 860 (Ky.2005).
[2] Id.
[3] Gray v. Jackson Purchase Production Credit Association, 691 S.W.2d 904 (Ky.App.1985).
[4] Whittaker v. Pollard, 25 S.W.3d 466 (Ky. 2000); Golden Oak Mining Co., L.P. v. Kentucky Coal Workers' Pneumoconiosis Fund, 19 S.W.3d 99 (Ky.2000); Newberg v. Weaver, 866 S.W.2d 435 (Ky.1993).
[5] Carroll County Memorial Hospital v. Yocum, 489 S.W.2d 246 (Ky.1972) (estoppel appropriate where claimant's attorney relied on representation that carrier would waive limitations period for a reasonable time to conclude settlement negotiations); Miller v. Thacker, 481 S.W.2d 19 (Ky.1972) (estoppel appropriate where plaintiff's parents relied reasonably on carrier's misinformation concerning limitations period); Cuppy v. General Accident Fire & Life Assurance Corporation, Ltd., 378 S.W.2d 629 (Ky.1964) (statements that adjuster wanted plaintiff to get well and that carrier would take care of everything did not toll KRS 413.140's limitations period where more than a year elapsed between the statements and the filing); Pospisil v. Miller, 343 S.W.2d 392, 394 (Ky.1961) (plaintiff presumed to know KRS 413.140's limitations period and had no right to rely on representations by her adversary, the defendant's adjuster); Pipes Chevrolet Company v. Bryant, 274 S.W.2d 663 (Ky.1954) (adjuster's discussion of approximate entitlement to compensation and payment of medical bills was in nature of settlement negotiation and did not warrant estoppel); Island Creek Coal Company v. Lewis, 474 S.W.2d 361 (Ky.1971) (adjuster's refusal to settle before he knew if the "Osborne law" would change insufficient to warrant estoppel).
[6] Parrish v. Briel Industries, Inc., 445 S.W.2d 119 (Ky.1969) (reimbursement of medical expenses does not toll the statute of limitations); Kentucky West Virginia Gas Co. v. Spurlock, 415 S.W.2d 849 (Ky.1967) (payments of medical bills are not "voluntary payments" within the meaning of KRS 342.270(1)); Miles v. General Electric Co., 280 S.W.2d 529 (Ky. 1955) ("payments" means payments of compensation, not medical bills). Compare Purdy v. Palmore, 789 S.W.2d 12 (Ky.1990) (voluntary medical payments toll limitations period for claims controlled by 1972 Act); Hetteberg v. City of Newport, 616 S.W.2d 35 (Ky.1981) (voluntary medical payments toll limitations period).
[7] Robinson v. Pan American World Airways, Inc., 650 F.Supp. 125 (S.D.N.Y.1986); Cassidy v. Luburich, 49 Ill.App.3d 596, 7 Ill.Dec. 154, 364 N.E.2d 315 (1977). See McAdam v. Grzelczyk, 911 A.2d 255 (R.I.2006), and Allan E. Korpela, "Settlement Negotiations as Estopping Reliance on Statute of Limitations," 39 ALR 3rd 127 (1971).
[8] See 803 KAR 25:240, § 6.
[9] Id.
[10] Travelers Indemnity Company v. Reker, 100 S.W.3d 756 (Ky.2003) (KRS 342.267 does not authorize a civil action for damages for a carrier's alleged bad faith in refusing to pay benefits and, therefore, limits a worker to the exclusive remedy provided in Chapter 342).
[11] Special Fund v. Francis, 708 S.W.2d 641, 643 (Ky.1986).
[12] One could find reasonably that she also violated the regulation by failing to investigate the claim diligently and follow up on the unanswered May 2005 letter to Dr. Wheeler.
[13] See City of Frankfort v. Rogers, supra.
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546 F.2d 417
La Duca, Appeal of
No. 76-1417
United States Court of Appeals, Third Circuit
10/22/76
1
D.N.J.
AFFIRMED
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37 Ill. App.3d 132 (1976)
345 N.E.2d 795
ARMOUR AND COMPANY, Plaintiff-Appellant,
v.
UNITED AMERICAN FOOD PROCESSORS, INC., et al., Defendants-Appellees.
No. 62084.
Illinois Appellate Court First District (4th Division).
Opinion filed March 10, 1976.
Rehearing denied April 29, 1976.
*133 Charles J. Merriam, Allen H. Gerstein, and Michael F. Borun, all of Chicago (Merriam, Marshall, Shapiro & Klose, of counsel), for appellant.
Rudnick, Wolfe, Snyderman & Foreman, of Chicago (Lester D. Foreman, Stephen A. Landsman, and Joseph W. Sheyka, of counsel), for appellees.
Reversed and remanded.
Mr. PRESIDING JUSTICE JOHNSON delivered the opinion of the court:
This is an appeal from an order denying the issuance of a preliminary injunction against defendants for allegedly participating in certain unfair methods of competition against plaintiff and its business.
Plaintiff, Armour and Company, through its wholly owned division Pfaelzer Brothers (Pfaelzer hereinafter), is engaged in the mail order sale and distribution of meat products. Defendant United American Food Processors, Inc. (United), through its Gourmet Fare division, is also engaged in the sale and distribution of meat products by mail. Two former employees of plaintiff, Charles E. Hersheway and Patricia A. Linderoth, were joined as individual defendants to the action. Hersheway was employed by Armour in September 1964 and assigned to Pfaelzer. He executed Armour's "Employee Patent and Trade Secret Agreement" approximately 1 year later. When Hersheway terminated his employment in September 1974, he was general manager and chief operating officer of Pfaelzer. He subsequently commenced employment with defendant United as president of its Gourmet Fare division. Defendant Linderoth was employed by Armour in November 1970, and *134 executed the patent and trade secret agreement at that time. When she resigned in August 1974, she was director of special marketing at Pfaelzer. Linderoth also obtained a position with United's Gourmet Fare division.
Armour's "Employee Patent and Trade Secret Agreement" provides in pertinent part:
"* * * [T]hat as a result of his employment by ARMOUR he has in the past or may in the future develop, obtain or learn about trade secrets or confidential information which is the property of ARMOUR, and EMPLOYEE agrees to use his best efforts and the utmost diligence to guard and protect said trade secrets and confidential information, and EMPLOYEE agrees that he will not during or after the period of his employment by ARMOUR, use for himself or others, or divulge to others any of ARMOUR'S trade secrets or confidential information which he may develop, obtain or learn about during or as a result of his employment by ARMOUR, unless authorized to do so by ARMOUR in writing. EMPLOYEE further agrees that if his employment by ARMOUR is terminated for any reason, he will not take with him but will leave with ARMOUR all records and papers and all matters of whatever nature which bears ARMOUR'S secret or confidential information."
The contract further recites that:
"* * * `[T]rade secrets' and `confidential information' may include * * * lists of customers or any information of whatever nature which gives to ARMOUR an opportunity to obtain an advantage over its competitors who do not know or use it, but it is understood that said terms do not include knowledge, skills or information which is common to the trade or profession of EMPLOYEE."
Shortly after Hersheway joined United, he began to compile a list of former Pfaelzer customers whom he intended to contact to solicit business for Gourmet Fare. He hired his former secretary, Mrs. Lynn Hynes, who had been responsible for compiling and maintaining Pfaelzer's "preferred customer list." She was requested to identify any Pfaelzer customers that she could remember. Names were suggested by Hersheway and Linderoth as well as Hynes in meetings held in Linderoth's home until their offices were ready. Hynes provided at least 60 to 80 names of Pfaelzer customers. A "prime list" of prospective customers was finally developed which included 198 names which, by comparison, were identical with customers on Pfaelzer's preferred list.
On December 23, 1974, Armour filed suit against United, Hersheway *135 and Linderoth. The complaint sought various types of relief: the immediate return of all materials and copies allegedly misappropriated from plaintiff by Hersheway and preliminary and permanent injunctions against defendants, their agents and employees (1) preventing any personal, telephone, mail or other contact with any person, directly or indirectly, through use of the misappropriated material; (2) requiring them to refrain from filling any orders acquired through use of misappropriated material and to turn over such orders and all inquiries concerning them to plaintiff; (3) preventing the distribution of brochures or other promotional materials likely to cause confusion of the public between the goods and services offered by plaintiff and those offered by defendant; and (4) preventing further acts of unfair competition. In addition, plaintiff sought an accounting for all gains, profits and advantages derived as a result of the unfair competitive acts, damages sustained, costs of litigation and attorneys fees.
The trial court conducted a hearing on plaintiff's motion for a preliminary injunction. During the course of the proceedings, plaintiff admitted that its motion was unduly broad and stated that no relief with regard to the alleged physical taking would be requested. Consequently, plaintiff limited the interlocutory relief sought to an injunction against the use or disclosure of confidential information as to trade secrets, particularly with respect to Pfaelzer customers. At the close of plaintiff's case, defendants moved for a finding in their favor. On May 27, 1975, the trial court granted defendants' motion and denied plaintiff's motion for a preliminary injunction.
1 The sole issue before this court is whether the trial judge erred in refusing to grant a preliminary injunction under the circumstances of this case. While the grant or denial of an interlocutory injunction rests in the sound discretion of the trial court, the decision is subject to appellate review limited, however, to the inquiry of whether the trial judge abused his discretion. (Schlicksup Drug Co. v. Schlicksup (1970), 129 Ill. App.2d 181, 186, 262 N.E.2d 713.) It is not the purpose of a preliminary injunction to determine controverted rights or decide the merits of a case. (Nemirow v. Kuhn (1971), 133 Ill. App.2d 604, 607, 273 N.E.2d 532.) Instead, its purpose is to preserve the status quo which is the last actual, peaceable, uncontested status which preceded the controversy. (Schlicksup Drug Co. v. Schlicksup (1970), 129 Ill. App.2d 181, 187, 262 N.E.2d 713.) Therefore, this court will look to the sufficiency of the evidence for the sole purpose of determining whether the trial court abused its discretion by not granting the requested injunction.
2 In order for a preliminary injunction to issue, the petitioner must establish a need to preserve the status quo in order to prevent *136 irreparable injury for which there is no adequate remedy at law, and a likelihood of success on the merits. (Amber Automotive, Inc. v. Illinois Bell Telephone (1973), 15 Ill. App.3d 769, 770, 305 N.E.2d 270.) These requirements will be considered separately in light of the evidence presented by plaintiff.
Plaintiff contends that irreparable injury will be caused by use and divulgence of its customer list in violation of the agreement signed by Hersheway and Linderoth. According to the testimony presented at the hearing, Pfaelzer's customer lists are the product of a direct marketing technique which is very expensive but extremely important since its business is derived almost exclusively from mail order solicitations. Pfaelzer solicits many prospective customers at a time through dissemination of hundreds of thousands of catalogs and brochures. The mailing lists used include Pfaelzer's confidential list of approximately 43,000 actual customers.
The "preferred customer" list, however, is prepared from a confidential card index system which identifies those actual customers who have purchased a significantly large quantity of products, minimum worth $300, in the preceding year. Because of the high volume of business the preferred customers represent, the list is considered a confidential document, kept under lock and key, and used to make personal contact with such customers as a follow-up to the mailing of the Christmas holiday brochures. Pfaelzer had about 1000 preferred customers at the time Hersheway and Linderoth terminated their employment.
Without expressing any opinion as to plaintiff's contention that its preferred list is a trade secret, we note that the preferred customers were considered to be the cream of Pfaelzer's business. By way of comparison, the testimony of the general manager showed that a good response to a general mailing of 600,000 would be 2 1/2 to 4 percent while a good response to the actual customer list of 43,000 would be 17 or 18 percent. With respect to the preferred customer list, however, the response could be as high as 50 percent. Such a response is a clear indication of the high value of the list.
The identification of a source of valuable customers who are not generally known throughout the trade is clearly an asset to a business dependent on customer solicitation and contact. It is undisputed that the individual defendants had access to Pfaelzer's preferred list as a sole consequence of their employment responsibilities. Lists of customers compiled in the course of business have been recognized by the courts as valuable assets and protected against improper use by persons who have gained knowledge of them by virtue of their employment. B.R. Paulsen & Co. v. Lee (1968), 95 Ill. App.2d 146, 153, 237 N.E.2d 793.
"It is clear that an employee may take with him, at the *137 termination of his employment, general skills and knowledge acquired during his tenure with the former employer. It is equally clear that the same employee may not take with him confidential particularized plans or processes developed by his employer and disclosed to him while the employer-employee relationship exists, which are unknown to others in the industry and which give the employer advantage over his competitors." (Schulenburg v. Signatrol, Inc. (1965), 33 Ill.2d 379, 387, 212 N.E.2d 865.)
An employer is entitled not to have his old customers enticed away from him under Illinois law. (Snyder v. Hamilton (1963), 39 Ill. App.2d 352, 365, 189 N.E.2d 97.) If defendants are permitted to solicit Pfaelzer's preferred customers, plaintiff's relationship with its most valuable customers may be impaired with the consequence that plaintiff may lose business. We think that irreparable injury was established by plaintiff's evidence and nothing more.
Defendants argue that irreparable injury has not been shown because plaintiff failed to prove any aggressive solicitation of its preferred customers, or any customer defection and monetary loss. However, this contention ignores the fact that preliminary injunctive relief is fashioned to prevent the danger of future loss. The evidence here showed that approximately 20 percent of Pfaelzer's preferred customers appeared on Gourmet Fare's "prime list" which was prepared by Hersheway for solicitation purposes. There is no requirement that a court must wait until an injury occurs before granting relief. (Fink v. Board of Trustees (1966), 71 Ill. App.2d 276, 282, 218 N.E.2d 240.) In any event, plaintiff's supposed inability to show monetary loss actually supports the proposition that a proponent must show it is sustaining or about to sustain an injury which would be irreparable by money damages alone. Veach Oil Co. v. Ogilvie (1974), 22 Ill. App.3d 233, 235, 317 N.E.2d 328.
Plaintiff must also establish a probability of success on the merits before a preliminary injunction may issue. However, absolute certainty of plaintiff's ultimate success is not required provided plaintiff makes out a prima facie case for final relief. (Gifford v. Rich (1965), 58 Ill. App.2d 405, 408, 208 N.E.2d 47.) What is required is that the movant raise a fair question as to the existence of the right claimed, lead the court to believe he will be entitled to relief prayed for if the proof and law sustain his allegations, and make it appear advisable that the positions of the parties remain the same until the merits of the case are considered. (Frederick Chusid & Co. v. Collins Tuttle & Co. (1973), 10 Ill. App.3d 818, 821, 295 N.E.2d 74.) We believe that the pleadings and evidence made out such a case.
The right claimed by the plaintiff is based on Armour's "Employee *138 Patent and Trade Secret Agreement" executed by Hersheway and Linderoth. Again we emphasize that this court takes no position on the issue of whether the customer list was a protectable trade secret, for this is a substantive issue to be determined at a trial on the merits. However, the agreement itself explicitly provided that after his employment was terminated, the employee would not use for himself or others, or divulge to others, any of Armour's trade secrets or confidential information which he obtained as a result of his employment. The contract also contained a recital that the "trade secret" or "confidential information" could include lists of customers.
Confidential information has been protected from disclosure to a competitor by Illinois courts. In Boylston Coal Co. v. Rautenbush (1925), 237 Ill. App. 550, the complainant sought an injunction to prevent the defendants from wrongfully appropriating certain confidential information of the complainant which had been obtained by one of the defendants, Rautenbush, while an employee of the complainant. The evidence established that a large amount of labor and money had been expended to compile a list of "good agents" for complainant's mail order coal business. The list as finally formed was the result of continual advertising and weeding out of names, which in the aggregate amounted to 250,000 persons, until a reduced list of 8000 or 9000 had been developed. A thousand of those were considered good agents and through their combined efforts, they sold enough coal to make complainant's business profitable. Rautenbush, as sales manager, had obtained the list in the course of his duties and used it for the benefit of a competing firm of which he had become a member. The court found that use of the list, which was entirely unique and in itself a source of sales and profits, was a violation of plaintiff's property rights and, further, that the employee was bound not to disclose or use confidential matter which he gained by reason of his former employment.
3 The case at bar is strikingly similar to Boylston in that Pfaelzer's preferred customer list was developed only by expending a great deal of money and was a source of sales and profits. In addition, plaintiff's case for a preliminary injunction is strengthened by the existence of the employment agreement prohibiting use and divulgence of trade secrets and confidential information. It is well settled by the decisions of courts of this country that equity will restrain an employee from making disclosures or use of trade secrets communicated to him in the course of a confidential employment, and particularly if he has contracted not to do so. (Victor Chemical Works v. Iliff (1921), 299 Ill. 532, 547, 132 N.E. 806.) The contract is significant in view of the fact that some cases have indicated that confidential information would not be protected *139 in the absence of an express agreement. Ellis & Marshall Associates, Inc. v. Marshall (1973), 16 Ill. App.3d 398, 405, 306 N.E.2d 712; American Cleaners & Dyers v. Foreman (1929), 252 Ill. App. 122, 126.
Defendants cite Revcor, Inc. v. Fame, Inc. (1967), 85 Ill. App.2d 350, 228 N.E.2d 742, as support for the proposition that an employee cannot be prevented from seeking out a former employer's customers with whom he has had regular contact in the course of his employment. It should be noted that defendants have made no showing of any personal contract on the part of Hersheway or Linderoth with Pfaelzer's preferred customers. In any event, defendants have ignored the caveat of the Revcor decision which provides that if the employee agreed to a restrictive covenant in his employment contract, or if the names of actual or potential customers are confidential, not publicly listed or otherwise readily available, then the employee might, under proper circumstances, be enjoined from soliciting business from those customers. We think that the circumstances of this case fall within the Revcor exception.
Defendant's reliance on Kalnitz v. Ion Exchange Products, Inc. (1971), 2 Ill. App.3d 158, 276 N.E.2d 60, is also misplaced. While the court did hold that a former salesman of a corporation was not prohibited from soliciting customers with whom he had a personal relationship, two factors distinguish that case from the one at bar. First, the record there was devoid of evidence establishing the confidentiality of the customer lists. Second, as the court pointed out, there was no contract in existence to control the defendant's actions.
4 We think it advisable that the positions of the parties remain as they were before the controversy. With plaintiff's case, and nothing in rebuttal, a prima facie case has been made out which is sufficient for the issuance of a preliminary injunction the purpose of which is to secure emergency relief restoring the parties to the status quo ante litem. (Wessel Co. v. Busa (1975), 28 Ill. App.3d 686, 693, 329 N.E.2d 414.) We therefore hold that plaintiff's motion for a preliminary injunction was proper and that the trial court abused its discretion in denying it.
For the foregoing reasons, the order of the circuit court denying the issuance of the temporary injunction is reversed and the cause is remanded with instructions to enter the injunction pending disposition on the merits.
Reversed and remanded.
DIERINGER and ADESKO, JJ., concur.
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156 Mich. App. 102 (1986)
401 N.W.2d 630
HAUSER
v.
ROMA'S OF MICHIGAN, INC
Docket No. 88025.
Michigan Court of Appeals.
Decided November 4, 1986.
Lakin, Worsham & Victor, P.C. (by Larry A. Smith), for plaintiffs.
Eaton & Humanic (by Richard E. Eaton), for defendant.
Before: ALLEN, P.J., and WAHLS and M. WARSHAWSKY,[*] JJ.
WAHLS, J.
This case raises two issues, both asking whether the trial court abused its discretion. The first issue concerns the court's refusal to set aside a mediation award on the grounds that plaintiff failed to timely reject the award, as required by the new court rules. The second issue centers around the refusal to set aside the mediation award based on newly discovered evidence.
Plaintiff Catherine Hauser (her husband, William, *104 brought a derivative loss-of-consortium claim) commenced an action against defendant, Roma's of Michigan, for damages resulting from injuries she sustained when she slipped and fell at Roma Hall. The mediation evaluation of $15,000 was accepted by defendant in writing. Plaintiffs, on the other hand, failed to timely respond; therefore under the new court rule, MCR 2.403(L)(1), acceptance was deemed. Defendant moved to have plaintiffs' deemed acceptance affirmed and judgment entered thereon. Plaintiffs opposed the motion and sought to have the acceptance set aside. Following an evidentiary hearing, the trial judge granted defendant's motion, declining to set aside plaintiffs' acceptance. Plaintiffs appeal as of right.
Plaintiffs argue that the trial court abused its discretion by declining to set aside the acceptance of the mediation award pursuant to MCR 2.612(C)(1), formerly GCR 1963, 528.3, which provides:
(1) On motion and on just terms, the court may relieve a party or the legal representative of a party from final judgment, order, or proceeding on the following grounds:
(a) Mistake, inadvertence, surprise, or excuseable neglect.
A trial court has the discretion to set aside a party's acceptance of a mediation evaluation prior to the entry of a judgment upon the award. MGM Brakes Division of Indian Head, Inc v Uni-Bond, Inc, 417 Mich 905; 330 NW2d 853 (1983). Although the determination is discretionary, the judgment on the acceptance should be set aside only if failure to do so would result in substantial injustice. Muntean v Detroit, 143 Mich App 500, 511; 372 NW2d 348 (1985). "The court must `strike a balance between the goal of remedying injustice, *105 on the one hand, and the desire to achieve finality in litigation, on the other hand.'" Id. (Citation omitted.)
We will only reverse the lower court where there has been an abuse of discretion. Muntean, supra.
[A]n abuse of discretion involves far more than a difference in judicial opinion between the trial and appellate courts. The term discretion itself involves the idea of choice, of an exercise of the will, of a determination made between competing considerations. In order to have an "abuse" in reaching such determination, the result must be so palpably and grossly violative of fact and logic that it evidences not the exercise of will but perversity of will, not the exercise of judgment but defiance thereof, not the exercise of reason but rather of passion or bias. [Spalding v Spalding, 355 Mich 382, 384-385; 94 NW2d 810 (1959).]
Plaintiffs claim upon appeal that, although it was negligent to fail to reject the mediation evaluation timely, such negligence was a mistake or excusable neglect within the meaning of MCR 2.612(C). Plaintiffs' explanation for failure to act timely is that their counsel was unaware of the change in the effect of failing to file a rejection under the new court rule. Plaintiffs' counsel was proceeding under the former rule which stated that failure to file a timely acceptance or rejection constituted rejection. GCR 1963, 316(h)(1). Under the current rule, failure to file rejection of a mediation evaluation within twenty-eight days constitutes acceptance. MCR 2.403(L)(1). Plaintiff filed a rejection twenty-nine days outside the time limit. The new rules took effect on March 1, 1985. The mediation evaluation was made on March 4, 1985.
*106 In view of the narrow standard of review, we cannot say that the trial court abused its discretion in denying plaintiffs' request to set aside the acceptance of the mediation evaluation. The new rules had been available for several months. Plaintiffs' counsel had sufficient time to apprise himself of the applicable rule. There are no extraordinary or unusual circumstances that would render the trial court's decision of refusal to set aside the evaluation as an abuse of discretion.
Plaintiffs' other claim is that their acceptance should be set aside on the basis of newly discovered evidence regarding the extent of Mrs. Hauser's injuries. MCR 2.612(C)(1)(b). We first note that plaintiffs raised this issue in response to defendant's motion to have plaintiffs' acceptance of the mediation evaluation affirmed and to have a judgment entered thereon. Normally, plaintiffs would bring a motion for relief from judgment entered on the mediation award. However, we will treat this as properly raised.
By virtue of the relationship between newly discovered evidence justifying a new trial, MCR 2.611(B), and relief from a judgment, MCR 2.612(C)(1)(b), we conclude that the same standard of review applies to both. 3 Martin, Dean & Webster, Michigan Court Rules Practice, p 538; 3 Honigman & Hawkins, Michigan Court Rules Annotated (2d ed), p 183. The requirements for newly discovered evidence to support a new trial motion are: (1) the evidence is newly discovered, not merely its materiality; (2) the evidence is not merely cumulative; (3) it is likely to change the result; and (4) the moving party could not have produced it at trial with reasonable diligence. Hainault v Vincent, 365 Mich 370, 377; 112 NW2d 569 (1961).
In the present case, there was no newly discovered *107 evidence to indicate that the extent of the injury was of a more serious nature than at the time of the hearing. Plaintiff was previously informed that there was a possibility of surgery in the future should the condition became symptomatic. Therefore, plaintiffs' claim that the necessity for future surgery was not known at the time of mediation is incorrect. Although plaintiffs may not have known with certainty that further surgery would be required, they were fully aware of the possibility. Thus, the trial court did not abuse its discretion in declining to set aside plaintiffs' acceptance of the mediation evaluation on the grounds of newly discovered evidence. Hainault, supra.
Affirmed.
NOTES
[*] Circuit judge, sitting on the Court of Appeals by assignment.
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438 F.2d 123
UNITED STATES of America, Plaintiff-Appellee,v.Henry Grady WHITEHEAD, Sr., Armel Dayton O'Neal and LamarrC. Bailey, Defendants-Appellants.
No. 29498.
United States Court of Appeals, Fifth Circuit.
Feb. 4, 1971Rehearing Denied March 1, 1971Certiorari Denied May 17, 1971
See 91 S.Ct. 1667.
C. O. McMillan, Stephenville, Tex., for Whitehead and O'Neal.
Lamarr Carlysle Bailey, pro se.
W. E. Smith, Asst. U.S. Atty., Eldon B. Mahon, U.S. Atty., Frank C. McCown, Asst. U.S. Atty., Fort Worth, Tex., for appellee.
Appeals from the United States District Court for the Northern District of Texas; Leo Brewster, Judge.
Before JONES, BELL and SIMPSON, Circuit Judges.
PER CURIAM:
Affirmed. See Local Rule 21.1
1
See NLRB v. Amalgamated Clothing Workers of America, 5th Cir. 1970, 430 F.2d 966
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167 F.3d 347
Cora M. VAUGHN, Vaughn and Associates, P.C., and ReginaldMarcus, Plaintiffs-Appellees,v.Scott L. KING, individually and as mayor of the City of Garyand as special administrator of the Gary Sanitary District,Gary Sanitary District, an executive department of the Cityof Gary, City of Gary, Defendants-Appellants.
Nos. 97-3458, 97-3494.
United States Court of Appeals,Seventh Circuit.
Argued Sept. 14, 1998.Decided Jan. 29, 1999.
Bessie M. Taylor (argued), Eric O. Clark, Gary, IN, for Plaintiffs-Appellents.
James B. Meyer (argued), Monica S. Morris, W. Anthony Walker, Meyer, Lyles & Godshalk, Gary, IN, for Defendants-Appellees.
Before EASTERBROOK, RIPPLE and ROVNER, Circuit Judges.
RIPPLE, Circuit Judge.
1
Cora Vaughn, her law partner, Reginald Marcus, and her law firm, Vaughn and Associates, P.C. (collectively, the plaintiffs), filed this action against Scott King, the current mayor of Gary, Indiana, the Gary Sanitary District and the City of Gary (collectively, the defendants). The plaintiffs alleged that the defendants had breached several contracts by failing to pay for legal services. The plaintiffs also alleged that, by failing to provide the plaintiffs with any process prior to refusing to pay for the legal services, the defendants had violated rights secured by the Fourteenth Amendment to the Constitution of the United States. Finally, the plaintiffs claimed that the defendants' politically motivated termination of the professional services contracts had violated First Amendment rights. A supplemental state contract claim was also pleaded.
2
The district court first granted summary judgment to the defendants on the First Amendment claim. In a later order, the district court dismissed sua sponte the plaintiffs' Fourteenth Amendment claim. The remaining state contract claim was tried before a jury and a general verdict for the plaintiffs in the amount of $181,956.98 was returned. The plaintiffs and the defendants now appeal. For the reasons set forth in the following opinion, we affirm the judgment of the district court.
3
* BACKGROUND
A. Facts
4
Beginning in 1992, the Gary Sanitary District ("the District") awarded the plaintiffs contracts for general legal services and for collection services. At first, Ms. Vaughn contracted with the District to perform general legal services. Later that year, her law partner, Mr. Marcus, signed a contract to collect money owed to the District. The parties extended these contracts on several occasions. Then-mayor Thomas Barnes did not sign the contracts; the parties agree, however, that he fully approved of them.
5
When Mayor Barnes stepped down, the plaintiffs supported a candidate other than the victor, Scott King. The defendants allege that, shortly after Mr. King's election, the Board declared the contracts void. The plaintiffs contend that the City voided only the general legal services contract, but did not void the collection contract.
B. Proceedings in the District Court
1.
6
In ruling on the parties' motions for summary judgment, the district court rejected the defendants' argument that the contracts were void because then-Mayor Barnes had not signed them. With respect to the legal services contract, the court determined that there was no issue of material fact as to the amount owed, and the court therefore concluded that the plaintiffs were entitled to judgment for $75,900.72.
7
In the course of discussing the collection services contract, the district court stated that the plaintiffs were entitled to 25% of all fees collected by the District through the plaintiffs' efforts. The court also rejected the defendants' contention that, because the plaintiffs were lawyers whose employment was terminated, all damages under this contract were limited to a quantum meruit recovery. The court nevertheless held that the plaintiffs had not established that all of the debtors' payments to the District were a result of the plaintiffs' collection efforts; and therefore summary judgment was inappropriate on that issue.
8
Finally, the district court granted the defendants' summary judgment motion on the First Amendment claim; it held that "an independent contractor providing legal services for a municipal entity, where the entity is the client of the attorney, is in a confidential position from which he or she can be dismissed for political considerations." R.44 at 22.
2.
9
On the remaining issues, a jury returned a general verdict of $181,956.98 in favor of the plaintiffs. This was substantially less than the $1.5 million in compensatory damages the plaintiffs were seeking. The district court then denied the plaintiffs' motions for judgment as a matter of law and for a new trial. The court held that there was sufficient evidence to support the jury's verdict. Even if the amounts collected were undisputed, noted the court, the jury would have been justified in determining that the collection services contract had been terminated and was not ongoing at trial or that the contract had been obtained under undue influence. The jury also could have found, continued the district court, that the plaintiffs had not sought to collect the attorneys' fees from the debtors and therefore were entitled only to payment for the time expended in making these collections.
10
The district court also rejected the plaintiffs' argument that it had erred in allowing the jury to interpret the contract's compensation terms. The court disagreed with the plaintiffs' submission that there was nothing for the jury to decide because those terms unambiguously provide that the plaintiffs are entitled to 25% of all funds that were paid to the Board due to the plaintiffs' efforts. It also rejected the claim that the court's summary judgment order already had settled this issue by interpreting the contract to mean that the plaintiffs are entitled to 25% of the amount the City collected through the plaintiffs' efforts. In the district court's view, the collections contract was ambiguous regarding the amount the plaintiffs should be paid; the prior summary judgment order was conclusive only as to issues presented in the summary judgment motion. Similarly, the court rejected the plaintiffs' contention that, because the court had found the contracts valid in its earlier order, it could not instruct the jury that the collection services contract may be invalid because of undue influence. The court reasoned that other issues of contract validity, not the issue of undue influence, had been at issue in the summary judgment order.
II
DISCUSSION
A. The Contract Claim
1.
11
The defendants submit that, under Indiana Code §§ 36-9-25-10(14) and 36-4-5-3(9),1 contracts entered into by the City are void unless they are signed by the mayor. Because the mayor never signed the contracts, the defendants submit, the contracts are void, and the plaintiffs may recover only damages in quantum meruit.
12
We cannot accept this argument for two reasons. First, we believe that the district court was on solid ground in holding that the Board had independent authority to hire outside counsel. Indiana Code § 36-9-25-10(15) gives the Board authority to "employ" lawyers and other professionals.2 We believe that this provision includes authority to hire independent contractors.3 The use of the verb "employ" does not indicate that that section refers only to formal employment, as opposed to contractual, relationships.
13
More fundamentally, as we have noted recently in Alston v. King, 157 F.3d 1113, 1115-16 (7th Cir.1998), Indiana law does not require, in unambiguous terms, the mayor's signature for the contracts to be valid. Indeed, no Indiana statute states that contracts not signed by the mayor are void, or even voidable at the City's discretion. The Supreme Court of Indiana has indicated that such a formalistic compliance with this requirement of a mayoral signature is not necessary. "The applicable statutes certainly do not preclude the mayor from delegating his duty to sign contracts, and it is impractical to require the mayor to sign every written agreement to which the City is a party." Speckman v. City of Indianapolis, 540 N.E.2d 1189, 1191 (Ind.1989).4 Although Speckman involved a delegation question somewhat different from the one presented by the facts of this case, the defendants present no convincing argument and no other authority that might suggest that the Supreme Court of Indiana would reach a contrary result. We therefore hold that the mayor's failure to sign the plaintiffs' contracts did not make those contracts void or voidable. Notably, the defendants do not contend that Thomas Barnes, the City's mayor at the time the parties entered into the contract, disapproved of the contracts. Indeed, he fully approved. The defendants' argument is purely formalistic: If a contract entered into by the City is to be valid, the mayor must actually affix his signature to it. As we held in Alston, 157 F.3d at 1115-16, we do not believe that the law of Indiana requires such an unrealistic result.
2.
14
Under Indiana law, contracts entered into between an attorney and client while the attorney-client relationship exists are presumptively invalid as the product of undue influence. See Lutz v. Belli, 516 N.E.2d 95, 97 (Ind.Ct.App.1987). The attorney must establish the fairness of the transaction and show that the compensation arrangement under the contract does not exceed fair and reasonable remuneration for the services.
15
The district court instructed the jury that, if it found undue influence, it also should find the contract invalid. The plaintiffs submit that it was error to submit the undue influence issue to the jury. They first submit that undue influence is an affirmative defense under Federal Rule of Civil Procedure 8(c),5 and that the defendants therefore waived the defense by not pleading it.
16
The question whether undue influence ought to be considered an affirmative defense under Rule 8(c) is a difficult one. Although the defense is not among those specifically listed in the Rule, it is similar to duress, which is listed. Moreover, the law of this circuit is unclear as to whether, in a diversity case, a defense not listed in Rule 8(c) and on which the plaintiff bears the burden of proof under state law must be pled by a defendant. See Brunswick Leasing Corp. v. Wisconsin Central Ltd., 136 F.3d 521, 530 (7th Cir.1998) (discussing the various approaches taken by courts). However, we need not resolve that issue in this case; the pretrial order placed the parties on notice that undue influence was an issue for trial. Pretrial orders supersede the pleadings. See Wilson v. Kelkhoff, 86 F.3d 1438, 1442 (7th Cir.1996); Erff v. MarkHon Indus., Inc., 781 F.2d 613, 617 (7th Cir.1986); see also Fed.R.Civ.P. 16(e). Because the issue of undue influence was presented in the pretrial order, the plaintiffs' claim that they were unfairly surprised by the submission of the issue to the jury is without merit, and it cannot be said that the defendants waived reliance upon it.
17
The plaintiffs next argue that there was insufficient evidence in the record to warrant submitting the issue of undue influence to the jury. Our review of the record convinces us that there is no merit to this contention. Ms. Vaughn was the primary lawyer for the City when her partner, Mr. Marcus, entered into the collection contract with the City, and Ms. Vaughn spoke in support of the collection contract at the board meeting. Indiana law presumes undue influence when an attorney and her client enter into a contract during the period of the attorney-client relationship; the jury was entitled to conclude that Ms. Vaughn exercised such influence over the decision to contract with her law partner for collection services.
3.
18
The district court instructed the jury to determine whether the collection services contract had been terminated. The plaintiffs argue that it was error to submit this issue to the jury because there was no evidence in the record to support the conclusion that the Board terminated the collection services contract.
19
The plaintiffs' contention lacks merit. The minutes of the Board's meetings reflect that the Board terminated both Ms. Vaughn's general legal services contract and Mr. Marcus' collection contract, albeit at different meetings. Indeed, the pretrial order indicates that the termination of the collection services contract was an established fact.4.
20
The district court instructed the jury to interpret the collection contract on the issue of the amount of payment due to the plaintiffs. The plaintiffs contend that the court erred in allowing the jury to interpret the contract clauses because the contract unambiguously required that the plaintiffs be paid 25% of any money the City received as a result of the plaintiffs' efforts.
21
We cannot accept the plaintiffs' argument. First of all, the plaintiffs did not object to the instruction in the jury instruction conference; therefore the objection is waived. See Stachniak v. Hayes, 989 F.2d 914, 920 (7th Cir.1993). Additionally, the claim has no merit. Article III of the contract states that the plaintiffs should be paid 25% of all money collected. Article IV states, however, that the plaintiffs must submit itemized invoices of its billable hours if they do not collect fees directly from the debtor. Reading the two clauses together, we believe that the parties may have intended that the plaintiffs should receive 25% of the collections only if they collect them directly from debtors and should receive an hourly rate otherwise.
5.
22
Finally, the plaintiffs submit that the district court improperly excluded certain evidence. We review the evidentiary rulings of the district court under an abuse of discretion standard. See BE & K Constr. Co. v. Will & Grundy Counties Bldg. Trades Council, 156 F.3d 756, 763 (7th Cir.1998).
23
We note at the outset that the plaintiffs cite parts of the record and argue, without any analysis, that the district court erred in excluding certain evidence. The plaintiffs' arguments with respect to these issues are so cursory that they are waived. We shall limit our discussion to those evidentiary issues that have been developed adequately in the appellate brief.
24
The plaintiffs submit that the district court erred in excluding testimony by a board member regarding his understanding of how Ms. Vaughn was to be paid under the collection contract. We do not believe that this matter was preserved adequately for appellate review. During a sidebar discussion of the matter, the district court indicated that it was inclined to exclude the evidence on the ground that the contract terms were controlling. Because the court had ruled that the collections contract was ambiguous as to how much the plaintiffs should be paid, we have difficulty in understanding the district court's remarks. However, although the court's remarks quite obviously invited a further response from counsel, the attorney elected not to pursue the matter.6 On this record, therefore, the matter was not preserved adequately for appellate review. Moreover, because counsel did not indicate the specific testimony that he planned to elicit, we cannot evaluate how the testimony, if admitted, would have affected the jury's verdict. The plaintiffs claim that the witness' answer would have been relevant to the issues of undue influence and contract interpretation, but do not reveal what the witness would have said.
25
The plaintiffs also argue that the court should have admitted testimony about conversations between the plaintiffs' representatives and the City's representatives regarding negotiation and implementation of the contract. In one instance, the plaintiffs' counsel sought to ask Ms. Vaughn why the collection contract was called a special services contract. The court did not allow her to testify as to what the City's negotiators had said because the court thought that such testimony would be hearsay. The court's ruling on this matter is obscure. Any error, however, was harmless. Although the plaintiffs argue that Ms. Vaughn's answer would have been relevant to the issues of undue influence and the contract's interpretation, we are never told what Ms. Vaughn would have said, or how the jury's interpretation of the contract would have been affected. It is not the responsibility of this court to make arguments for the parties. See United States v. Berkowitz, 927 F.2d 1376, 1384 (7th Cir.), cert. denied, 502 U.S. 845, 112 S.Ct. 141, 116 L.Ed.2d 108 (1991).
26
The plaintiffs also object to the court's refusal to admit statements made by Ms. Vaughn prior to trial. Our examination of the record leaves it less than clear that there is an adequate factual foundation for this contention. In any event, the district court properly refused to admit those statements because a witness' testimony as to her own prior out-of-court statement is generally hearsay. See Kenneth S. Brown et al., McCormick on Evidence, § 251 at 744-46 (1984). Ms. Vaughn makes no other argument that would place these statements within a hearsay exception.
27
The plaintiffs finally argue that the district court erred in not allowing them to lead adverse witnesses. We do not believe that the district court's handling of this matter affected the outcome of this case.
B. The Procedural Due Process Claim7
28
In the complaint, the plaintiffs allege that the defendants "violated the Fifth and Fourteenth Amendments to the U.S. Constitution when they failed to afford plaintiffs their due process rights prior to refusing to pay the attorney fees" and that "[d]efendants further violated plaintiffs' property interests when they terminated plaintiffs' collection contracts without due process." Amended Complaint p 21. The district court dismissed this claim sua sponte. It held that the right to litigate a contract claim is all the process that is due a typical contract claimant. The plaintiffs submit that they were not given an opportunity to respond to this dismissal. However, the record indicates that the court gave the plaintiffs an opportunity to respond in a hearing and offered to reconsider the issue if they could make a better argument later. We believe that the court afforded the plaintiffs an adequate opportunity to be heard.
29
Courts generally should not grant summary judgment sua sponte. See Sawyer v. United States, 831 F.2d 755, 759 (7th Cir.1987). Such a course is permissible, however, "when the outcome is clear, so long as the opposing party has had an adequate opportunity to respond." Id. The plaintiffs clearly had an opportunity to respond. Moreover, the outcome of the due process claim was clear because the plaintiffs had already been provided all the process due to them. This court has held that all the process due to a typical contract claimant is the right to litigate their contract claim in court. See Mid-American Waste Systems, Inc. v. City of Gary, 49 F.3d 286, 291 (7th Cir.1995). Therefore, the plaintiffs have no claim against the defendants for not providing more process before terminating their contracts.
C. The First Amendment Claim
30
The plaintiffs argue that their First Amendment rights were violated when their independent contractor position was terminated for political reasons. The district court held that the plaintiffs, as attorneys, were in a confidential position which could be terminated under the test articulated in Elrod v. Burns, 427 U.S. 347, 372, 96 S.Ct. 2673, 49 L.Ed.2d 547 (1976). The plaintiffs argue that this court should hold that the confidential workers exception does not apply to independent contractors.
31
We have no authority to accept the plaintiffs' suggestion. The Supreme Court has held that the Elrod framework, which includes the confidential employee rule, applies to independent contractors. See O'Hare Truck Serv., Inc. v. City of Northlake, 518 U.S. 712, 720-26, 116 S.Ct. 2353, 135 L.Ed.2d 874 (1996). Indeed, this court recently stated in dictum that the confidential employee rule applies to independent contractors. See Milazzo v. O'Connell, 108 F.3d 129, 132 (1997), cert. denied, --- U.S. ----, 119 S.Ct. 619, 142 L.Ed.2d 559 (1998).
Conclusion
32
For the foregoing reasons, the judgment of the district court is affirmed.
33
AFFIRMED.
1
Indiana Code § 36-9-25-10 provides, in part, that "[i]n performing its duties the board may do the following:... (14) Enter into contracts in the name of the municipality, with the approval of the executive as provided by law."
Indiana Code § 36-4-5-3 provides, in part, that "[t]he executive shall:... (9) sign all bonds, deeds, and contracts of the city and all licenses issued by the city ...."
2
Indiana Code § 36-9-25-10 provides, in relevant part, that "[i]n performing its duties the board may do the following:... (15) Employ and pay for all ... professional services needed in carrying out this chapter ...."
3
This conclusion also rebuts the defendants' argument that the contract was void because it was not signed by the City's corporation counsel pursuant to Indiana Code § 36-4-9-12. Because the Board possessed authority to employ outside counsel, it was not required to obtain the signature of either the mayor or the corporation counsel
4
In Speckman, a former employee sued the City of Indianapolis, alleging that his termination violated his employment contract with the City. See 540 N.E.2d at 1190-91. The City argued that Speckman's contract was invalid because the mayor had not signed it. The Supreme Court of Indiana held that the mayor's signature was not required, in part because the mayor could delegate his authority to sign contracts to the City's corporate counsel. See id
5
Federal Rule of Civil Procedure 8(c) provides in part:
In pleading to a preceding pleading, a party shall set forth affirmatively accord and satisfaction, arbitration and award, assumption of risk, contributory negligence, discharge in bankruptcy, duress, estoppel, failure of consideration, fraud, illegality, injury by fellow servant, laches, license, payment, release, res judicata, statute of frauds, statute of limitations, waiver, and any other matter constituting an avoidance or affirmative defense.
6
Q: Based on your understanding, how was Cora Vaughn to be paid under the contract for collections?
MR. MEYER: I'm going to object unless he can establish a foundation that he actually read the contracts.
THE COURT: Counsel. (Side bar discussion.)
MR. COOPER: Judge, I know you're tired of us. Please be patient, your Honor.
THE COURT: What I'm thinking about, Counsel, is you're asking for his understanding on the discussion as to how it was to be paid.
Doesn't the contract control? Don't you have the--there's a contract here. What difference does it make what they talked about? Isn't the contract what's controlling?
MR. COOPER: Yes, sir, but there's been so much discussion about--
THE COURT: Counsel, I can't make objections for everybody. I try to stay out of your litigation as much as I can. Sometimes you gentlemen force me into it.
MR. COOPER: Let me see if I can skip around some of that, your Honor.
THE COURT: Okay. (End of side bar discussion.)
THE COURT: Sustained.
Tr. 357-58.
7
The plaintiffs argue that their procedural and substantive due process rights have been violated. We deal here only with their procedural due process claims. The plaintiffs have blended their substantive due process claim with their First Amendment claim; we therefore deal with that issue in the discussion of the First Amendment issue
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204 B.R. 966 (1997)
Richard Albert SMOKER and Phyllis Ann Smoker, Appellants,
v.
HILL & ASSOCIATES, INC., John Alden Insurance Company, and Sarah Christensen, Appellees.
Tedd E. Mishler, United States Trustee.
No. 3:96cv465 AS.
United States District Court, N.D. Indiana, South Bend Division.
January 24, 1997.
*967 *968 Mark F. James, Berger, James, Gammage & Wilber, South Bend, IN, for Richard Albert Smoker, Phyllis Ann Smoker.
Robert C. Whippo, James R. Brotherson, Chester, Pfaff & Brotherson, Elkhart, IN, for Hill & Associates, Inc.
William G. Beatty, Johnson & Bell, Ltd., Chicago, IL, for John Alden Insurance Company.
Michael A. Metz, Sr., Elkhart, IN, for Sarah Christensen.
Tedd E. Mishler, Michigan City, IN, Pro Se.
MEMORANDUM AND ORDER
ALLEN SHARP, Chief Judge.
Debtors Richard Albert Smoker and Phyllis Ann Smoker appeal from a final decision of the United States Bankruptcy Court granting summary judgment to Hill & Associates, Inc. ("Hill"), concerning Hill's Motion for Relief from Stay, Abandonment and Adequate Protection, and the debtors' objection thereto. Specifically, the bankruptcy court's decision lifted the automatic stay with respect to certain insurance commissions (and proceeds therefrom) in which Hill asserts a security interest. This court has jurisdiction over the debtors' appeal pursuant to 28 U.S.C. § 158(a).
I. BACKGROUND
Debtor Richard Smoker ("Smoker") was a co-owner, officer, and employee of a corporation that brokered property and casualty insurance policies under the name of "Hill & Smoker Insurance, Inc." Shortly after Smoker left his employment with that corporation, he was named a defendant in a state court lawsuit filed by the corporation (renamed Hill & Associates, Inc.) in Elkhart Superior Court. The state court issued a preliminary injunction against Smoker which, inter alia, required him to relinquish monies, checks, and business records taken from the corporation.
To settle the state court litigation, Richard Smoker, Hill & Associates, Inc., Lawrence L. Hill (owner of Hill & Associates, Inc.), and Shirley Smoker (Richard Smoker's sister) entered into a Compromise and Settlement Agreement ("the Settlement Agreement"). Under the Settlement Agreement, Smoker was required to pay Lawrence Hill the sum of $50,000 plus interest, costs, and attorney's fees. Smoker further agreed to indemnify Hill from obligations totaling $84,568 to persons (including appellee Sarah Christensen) who might have claims against Hill.[1]
*969 The Settlement Agreement also required Smoker to deliver an Irrevocable Collateral Assignment of Insurance Commissions ("Collateral Assignment") to Hill. The Collateral Assignment provided, among other things, for the transfer of
all of Smoker's right, title, and interest in and to all commissions, moneys, and proceeds ("Commissions") now due or that may hereafter become due to Smoker in connection with placement, sale, or brokering of insurance contracts, policies, or products heretofore place, sold, or brokered by Smoker or Smoker's agents or employees or by any agents or employees of any corporation or business entity which is owned or controlled by Smoker.
Bankr.Mem. of Decision (May 1, 1996) at 3 (quoting Exh. B. to Stipulation of Facts at 1). In the event of Smoker's default on his obligations under the Settlement Agreement, the Collateral Assignment gave Hill the right to transmit a copy of the Collateral Assignment to any insurance company from which Smoker was or became entitled to receive commissions. The terms of the Collateral Assignment provided that if Smoker received any commissions due Hill after the latter gave notice to the insurance company owing the commissions, he would accept the commissions as trustee for Hill and would deliver them promptly to Hill. The Collateral Assignment further provided that its terms would remain irrevocable until Smoker had discharged all of his obligations under the Settlement Agreement. Lawrence L. Hill (on behalf of Hill & Associates, Inc.) and Smoker executed the Collateral Assignment on April 15, 1993, in the presence of a notary public.
Hill filed UCC-1 financing statements on April 19, 1993, with the Elkhart County Recorder and the Indiana Secretary of State covering all insurance commissions which were then due and payable or which would later became due and payable. Thereafter, on April 27, 1994, Hill sent notices of the Collateral Assignment to a number of insurance companies along with a demand that each company turn over the commissions which would otherwise be payable to Smoker but for the Collateral Assignment. Although many of the companies complied with the notice, some did not including the appellee John Alden Insurance Company ("Alden").
Following Alden's receipt of notice of the Collateral Assignment, Smoker requested that Alden disregard the terms of the Collateral Assignment and continue to pay commissions from business he had generated for Alden directly to him. Alden agreed to abide by Smoker's instructions not to honor the Collateral Assignment in favor of Hill, provided that Smoker indemnify and hold Alden harmless from any claims, costs, or judgments arising from its decision. Smoker signed Alden's letter to that effect, indicating his willingness to indemnify the company. Thereafter, Alden paid Smoker $11,902.76 in commissions and held the additional sum of $16,659.42.
Appellee Hill & Associates, Inc., holds a secured claim against Smoker in the amount of $59,428.85, together with accrued interest thereon from August 14, 1993, at the daily rate of $13.70. In addition, Hill has an unsecured claim against Smoker in the amount of $78,632.75, representing sums which Hill was required to pay to persons (including appellee Christensen) whom Smoker had agreed to pay under the terms of the Settlement Agreement. Those payments became necessary when Smoker failed to honor his agreement to indemnify Hill against the claims of persons from whom Smoker had borrowed money.
The debtors filed their voluntary petition for relief under Chapter 13 of the Bankruptcy Code on January 4, 1995. Thereafter, on March 2, 1995, appellee Hill & Associates, Inc., filed its Motion for Relief from Stay, Abandonment and Adequate Protection. After the parties filed their stipulation of facts on February 6, 1996, the bankruptcy court took the matter under advisement. On February 12, 1996, the debtors and Hill filed their respective motions for summary judgment concerning Hill's Motion for Relief from Stay, Abandonment and Adequate Protection.
In its Memorandum of Decision dated May 1, 1996, the bankruptcy court granted Hill's motion for summary judgment and denied the debtors' cross-motion for summary judgment. Although the bankruptcy court concluded *970 that Smoker's contractual right to receive commissions, which had been conditionally assigned to Hill, remains property of the debtors' estate, the court lifted the automatic stay with respect to the commissions in which Hill asserts a security interest, holding that (1) Hill holds a valid security interest in the commissions under Indiana law; (2) Hill duly perfected its security interest in the commissions; (3) the commissions remain subject to Hill's perfected security interest pursuant to 11 U.S.C. § 552(b)(1), notwithstanding the debtors' Chapter 13 petition; (4) the lack of adequate protection of Hill's security interest in the commissions is cause for lifting the automatic stay pursuant to 11 U.S.C. § 362(d)(1); and (5) the commissions which are subject to Hill's security interest are burdensome and of inconsequential value and benefit to the debtors' estate and should be abandoned pursuant to 11 U.S.C. § 554(b).
The debtors filed their timely notice of appeal in the bankruptcy court on May 10, 1996. Thereafter, however, the appellants failed to file or serve a designation of the items to be included in the record and a statement of the issues to be presented on appeal as required by Rule 8006 of the Federal Rules of Bankruptcy Procedure. Consequently, the only documents transmitted to this court by the Clerk of the bankruptcy court were the notice of appeal and certified copies of the bankruptcy court's judgment, its Memorandum of Decision, and the docket in the bankruptcy case below.
Rule 8001 of the Federal Rules of Bankruptcy Procedure conveys broad discretion on the district courts to take such action as they deem appropriate when determining whether to dismiss an appeal due to missing designations and statements of issues on appeal. See FED.R.BANKR.P. 8001(a). Because the record in the present cause does not show bad faith or a consistent pattern of dilatory behavior, see In re Scheri, 51 F.3d 71, 74 (7th Cir.1995); In re Bulic, 997 F.2d 299, 303 (7th Cir.1993), and because the appellants timely filed their appellate brief, this court will not dismiss the Smokers' appeal. However, the court's conclusion that dismissal is not warranted in this instance in no sense constitutes a precedent for this court to allow appellants to avoid their procedural responsibilities.
II. DISCUSSION
Pursuant to the terms of the Collateral Assignment, Hill gained the right upon Smoker's default under the Settlement Agreement to collect the commissions directly from the insurance companies until Smoker satisfied his obligations to Hill. In addition, Smoker was obligated to accept and deliver promptly to Hill any commissions that became due under the Settlement Agreement after Hill gave notice of the Collateral Assignment to the insurance companies.
Upon the filing of the Chapter 13 petition, Smoker's contractual rights to the placement, sale, or brokering of insurance contracts, policies, or products including the right to payment of commissions conditionally assigned to Hill became property of the debtors' estate. See 11 U.S.C. § 541(a)(1) (1993). Any commissions received subsequent to the filing of the bankruptcy petition also became property of the debtors' estate. Id. § 541(a)(6), (7); § 1306(a).
This appeal presents two issues for review: (1) whether insurance commissions purportedly assigned by a Chapter 13 debtor prior to the petition date and payable after the filing of the Chapter 13 petition remain subject to a perfected security interest in the purported assignee's favor pursuant to the exception set forth in 11 U.S.C. § 552(b)(1); and (2) whether appellee/creditor Hill & Associates, Inc., is entitled to relief from the automatic stay pursuant to 11 U.S.C. § 362(d)(1) and abandonment of the assigned insurance commissions pursuant to 11 U.S.C. § 554(b).
A. Standard of Review
In reviewing a bankruptcy court's decision pursuant to 28 U.S.C. § 158(a), the district court functions as an appellate court and is authorized to affirm, reverse, modify, or remand the bankruptcy court's ruling. FED.R.BANKR.P. 8013. Although a decision granting or denying a motion to lift the *971 automatic stay pursuant to 11 U.S.C. § 362(d) ordinarily may be overturned only upon a showing that the bankruptcy court abused its discretion, In re C & S Grain Co., Inc., 47 F.3d 233, 238 (7th Cir.1995); In re Boomgarden, 780 F.2d 657, 660 (7th Cir. 1985), the present action involves an appeal from an order granting summary judgment as to the creditor's request to lift the automatic stay. A bankruptcy court's decision to grant summary judgment is purely a question of law. Investors Credit Corp. v. Batie (In re Batie), 995 F.2d 85, 88 (6th Cir.1993).
Appellate courts apply the same standards of review in examining bankruptcy court decisions that govern appeals in other cases. Citizens Nat'l Bank & Trust Co. v. Serelson (In re Burkart Farm & Livestock), 938 F.2d 1114, 1115 (10th Cir.1991). Thus, since a bankruptcy court's conclusions of law are subject to plenary review by the district court, this court must conduct a de novo review of the bankruptcy court's decision to lift the stay.[2]In re Batie, 995 F.2d at 88; see Oulds v. Principal Mut. Life Ins. Co., 6 F.3d 1431, 1436 (10th Cir.1993); Shugrue v. Air Line Pilots Ass'n, Int'l (In re Ionosphere Clubs, Inc.), 922 F.2d 984, 988 (2d Cir.1990), cert. denied, 502 U.S. 808, 112 S.Ct. 50, 116 L.Ed.2d 28 (1991). De novo review requires the district court to make an independent examination of the bankruptcy court's judgment without giving deference to that court's analysis or conclusions. See Moody v. Amoco Oil Co., 734 F.2d 1200, 1210 (7th Cir.), cert. denied, 469 U.S. 982, 105 S.Ct. 386, 83 L.Ed.2d 321 (1984).
B. Summary Judgment Standard
Summary judgment is appropriate only if 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.BANKR.P. 7056(c); see FED.R.CIV.P. 56(c). "A fact is material for purposes of summary judgment only if it might effect the outcome of a case under governing law." JPM, Inc. v. John Deere Indus. Equip. Co., 94 F.3d 270, 273 (7th Cir.1996); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).
The operative inquiry is whether, based upon all the documents submitted, a reasonable trier of fact could find by a preponderance of the evidence that the moving party is entitled to a verdict. Anderson, 477 U.S. at 250, 106 S.Ct. at 2511. A trial court must enter summary judgment if, in viewing the evidence in a light most favorable to the non-moving party and drawing all reasonable inferences in that party's favor, the court determines that the non-moving party has "fail[ed] to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).
C. Analysis
Chapter 13 of the Bankruptcy Code permits individual debtors to structure repayment of their indebtedness through a flexible repayment plan approved by the bankruptcy court and supervised by a standing trustee. Thus, unlike debtors who opt for liquidation under Chapter 7, Chapter 13 debtors may retain their property by agreeing to repay creditors over a period not exceeding five years. See 11 U.S.C. § 1322(a)(1), (d) (1994).
The debtors in this case had been unable, prior to the bankruptcy court's summary judgment ruling, to submit a confirmable Chapter 13 plan due to the uncertainty of whether they would be able to obtain the proceeds of insurance commissions from policies which Smoker had sold prepetition. The bankruptcy court's decision to lift the stay and allow the commissions to be abandoned resolved that question for purposes of the proceeding below, and provided the basis for this appeal.
*972 1. Postpetition effect of Hill's interest in the commissions
In order to determine the propriety of the bankruptcy court's decision that the insurance commissions purportedly assigned by the debtor prior to the petition date and payable postpetition remain subject to Hill's perfected security interest, it is necessary to begin by looking to the relevant statutory provision. Section 552 of the Bankruptcy Code provides as follows:
(a) Except as provided in subsection (b) of this section, property acquired by the estate or by the debtor after the commencement of the case is not subject to any lien resulting from any security agreement entered into by the debtor before the commencement of the case.
(b)(1) Except as provided in sections 363, 506(c), 522, 544, 545, 547, and 548 of this title, if the debtor and an entity entered into a security agreement before the commencement of the case and if the security interest created by such security agreement extends to property of the debtor acquired before the commencement of the case and to proceeds, product, off-spring, or profits of such property, then such security interest extends to such proceeds, product, offspring, or profits acquired by the estate after the commencement of the case to the extent provided by such security agreement and by applicable nonbankruptcy law, except to any extent that the court, after notice and a hearing and based on the equities of the case, orders otherwise.
. . . . .
11 U.S.C. § 552 (1994). Section 552(a) is intended to permit the debtor to gather into his estate as much property as possible to satisfy the claims of all creditors. Philip Morris Capital Corp. v. Bering Trader, Inc. (In re Bering Trader, Inc.), 944 F.2d 500, 502 (9th Cir.1991). Section 552(b), on the other hand, provides a narrow exception to the general rule of § 552(a) by balancing the Bankruptcy Code's interest in freeing the debtor from prepetition obligations against a secured creditor's right to maintain a bargained-for interest in specific items of collateral such as "proceeds, product, offspring, or profits" acquired by the debtor after the petition has been filed. See id.
It is well settled that state law is the "applicable nonbankruptcy law" which governs the priority or perfection of a creditor's interest in proceeds acquired postpetition by the debtor. Butner v. United States, 440 U.S. 48, 55, 99 S.Ct. 914, 918, 59 L.Ed.2d 136 (1979); In re Chaseley's Foods, Inc., 726 F.2d 303, 304-05 (7th Cir.1984). Because the state of Indiana was the place of the parties' contracts and dealings, the law of Indiana governs the determination of the nature of Hill's interest in the insurance commissions.
The right to receive insurance commissions payable by an insurer is an "account" under Indiana law. See IND.CODE § 26-1-9-106 (1993) (defining an account as "any right to payment for goods sold . . . or for services rendered which is not evidenced by an instrument or chattel paper, whether or not it has been earned by performance"). A security interest in an account is perfected by filing a financing statement, see IND.CODE § 26-1-9-302(1) (1993), and it is undisputed here that Hill's security interest in Smoker's commissions was properly perfected when the corporation filed its UCC-1 financing statements with the Elkhart County Recorder and the Indiana Secretary of State.
Although the title of the Collateral Assignment and that document's use of the phrase "irrevocable collateral assignment" suggest that Smoker unconditionally assigned to Hill the right to receive the insurance commissions, a closer examination reveals otherwise. In Indiana, "[a]n assignment is a transfer which confers a complete and present right in a subject matter to the assignee." Brown v. Indiana Nat'l Bank, 476 N.E.2d 888, 894 (Ind.Ct.App.1985) (citation omitted). To determine whether a valid assignment has been made, a court must look to the purported assignor's intent. Id. ("A written agreement assigning a subject matter must manifest the assignor's intent to transfer the subject matter clearly and unconditionally to the assignee."); see also Indiana State Dep't of Pub. Welfare v. Foster, 542 N.E.2d 234, 236 (Ind.Ct.App.1989).
The Collateral Assignment clearly manifests Smoker's intent to grant Hill a conditional assignment of his right, title, and *973 interest in the commissions to secure payment of his obligations under the Settlement Agreement. See Bankr.Mem. of Decision (May 1, 1996) at 10 (quoting Exh. A to Stipulation of Facts at 2-3). First, the Collateral Assignment provides for the assignment of Smoker's right to receive the commissions only "until Smoker has fully paid and discharged all of his obligations and indebtedness set forth in the Agreement." Id. (quoting Exh. B. to Stipulation of Facts at 2). In addition, the terms of the Collateral Assignment allow Hill to provide notice of the Collateral Assignment to insurance companies (requiring them to pay commissions to Hill rather than Smoker) only upon Smoker's default as to his payment obligations under the Agreement. Id. (quoting Exh. B. to Stipulation of Facts at 1-2). Thus, the Collateral Assignment was not an outright assignment of the right to receive the commissions.
Under Indiana law, an agreement which conditionally transfers ownership rights to a creditor and permits the creditor to exercise its right to possession only upon a default is a security agreement not an outright assignment. Brown, 476 N.E.2d at 892; see IND.CODE § 26-1-1-201(37) (1993) (A security interest created by such an agreement is "an interest in personal property or fixtures which secures payment or performance of an obligation"). "Where the debtor defaults on the obligation owed, the secured party may take possession of the collateral put up by the debtor and thereafter dispose of it by public or private sale. The proceeds are used to satisfy the indebtedness." Brown, 476 N.E.2d at 892 (citing IND.CODE §§ 26-1-9-503, 9-504).
Section 552(a) of the Bankruptcy Code states the general rule that a prepetition security interest does not extend to property acquired by the estate after the filing of the bankruptcy petition. The exception to this general rule, found in § 552(b), applies to proceeds, product, offspring, or profits of encumbered property acquired postpetition if (1) the parties entered into a security agreement before the bankruptcy petition was filed; and (2) the security interest extends to prepetition property of the debtor and to proceeds, product, offspring, or profits of such property. Thus, while creditors ordinarily may not reach property of the debtor acquired postpetition, § 552(b) provides an exception if the creditor can demonstrate a connection between prepetition and postpetition property.
In the present case, the bankruptcy court determined that while the insurance commissions are postpetition property of the debtors' estate, they nonetheless fall within the exception set forth in § 552(b) since they constitute proceeds or profits of contractual rights (property) that Smoker acquired prior to filing the debtors' petition. Although the debtors argued in the bankruptcy court proceeding that a decision to lift the stay would effectively give Hill a security interest in their future income (and that such an interest cannot give rise to a lien under the Bankruptcy Code), the bankruptcy court concluded that Indiana law specifically excepts the granting of a security interest in insurance commissions from the general rule that an assignment of wages is invalid and unenforceable.
On appeal, the debtors apparently do not dispute the bankruptcy court's finding that the insurance commissions constitute proceeds or profits of contractual rights acquired prior to filing their Chapter 13 petition. However, they renew their argument from the bankruptcy proceeding that the exception in § 552(b) is inapplicable since a security interest in future income cannot give rise to a lien within the meaning of the Bankruptcy Code.
It is the general rule that the assignment of future wages as security for a present debt does not constitute a lien within the meaning of the Bankruptcy Code. In Local Loan Co. v. Hunt, 292 U.S. 234, 54 S.Ct. 695, 78 L.Ed. 1230 (1934), the Supreme Court of the United States stated that
[t]he earning power of an individual is the power to create property; but it is not translated into property within the meaning of the Bankruptcy Act until it has brought earnings into existence. An adjudication of bankruptcy, followed by a discharge, releases a debtor from all previously incurred debts, with certain exceptions not pertinent here; and it logically cannot be supposed that the act nevertheless intended to keep such debts alive for *974 the purpose of permitting the creation of an enforceable lien upon a subject not existent when the bankruptcy became effective or even arising from, or connected with, preexisting property, but brought into being solely as the fruit of the subsequent labor of the bankrupt.
Local Loan, 292 U.S. at 243, 54 S.Ct. at 698-99. More recently, a number of lower courts have applied the rule in Local Loan to hold that an assignment of future earnings does not create a lien within the meaning of the present Bankruptcy Code. See, e.g., In re Miranda Soto, 667 F.2d 235 (1st Cir.1981); In re Rumker, 184 B.R. 512 (Bankr.S.D.Ga. 1995); In re Flor, 166 B.R. 512 (Bankr. D.Conn.1994); Trust Co. Bank v. Walker (In re Walker), 35 B.R. 237 (Bankr.N.D.Ga.1983).
It is beyond question that in enacting § 552, Congress sought to preserve the "fresh start" policy so eloquently stated by the Supreme Court in Local Loan by requiring that only security interests in after-acquired property "arising from, or connected with, preexisting property" be preserved in bankruptcy. Local Loan, 292 U.S. at 243, 54 S.Ct. at 699. Indeed, any analysis of the "fresh start" provisions of the present Bankruptcy Code would be incomplete without reference to the Supreme Court case which firmly established the concept of the "fresh start" in modern bankruptcy jurisprudence.
However, as discussed above, the bankruptcy court based its decision in the present case on a recently enacted state law provision which holds that insurance commissions are not subject to the general state law prohibition on the assignment of wages: "An assignment or pledge of, or a grant of a security interest in, a contractual right of a person to receive commissions payable directly or indirectly by an insurer (as defined in IC 27-1-2-3) does not constitute an assignment of wages subject to this chapter." IND.CODE § 22-2-7-1(c) (1993). The aforementioned provision took effect on March 18, 1993, before Hill perfected its security interest in the insurance commissions on April 19, 1993. Thus, the validity of the Smokers' appeal turns on the question of whether Indiana law is contrary to federal bankruptcy law. See Ocasek v. Manville Corp. Asbestos Disease Compensation Fund, 956 F.2d 152, 154 (7th Cir.1992).
When interpreting the Bankruptcy Code, as with any other statute, a court must look first to the language of the statute. United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 1030, 103 L.Ed.2d 290 (1989). The constitutional authority of Congress under Article I, Section 8, "[t]o establish . . . uniform Laws on the subject of Bankruptcies throughout the United States" clearly would encompass a federal statutory provision defining the precise extent to which postpetition proceeds or profits of the debtor's prepetition property remain subject to a perfected security interest. See Stellwagen v. Clum, 245 U.S. 605, 613, 38 S.Ct. 215, 217, 62 L.Ed. 507 (1918) (noting that pursuant to Congress's constitutional rulemaking authority, state laws are suspended only to the extent of actual conflict with federal bankruptcy law).
But Congress has not chosen to exercise its power to fashion such an all-encompassing rule: Section 552(b) of the Bankruptcy Code states that a security interest will extend to "proceeds, product, offspring, or profits" of property acquired prepetition "to the extent provided by such security agreement and by applicable nonbankruptcy law." 11 U.S.C. § 552(b)(1). Thus, Congress appears to have been content with looking to state law for the final determination as to the extent of such property interests. Indeed, the United States Court of Appeals for the Seventh Circuit has acknowledged "that the Bankruptcy Code was written in the shadow of state law and . . . Congress intended state law to fill the interstices." In re Estate of Medcare HMO, 998 F.2d 436, 441 (7th Cir.1993) (citing Butner v. United States, 440 U.S. 48, 54, 99 S.Ct. 914, 917-18, 59 L.Ed.2d 136 (1979)).
Therefore, because Congress has expressly provided in § 552(b) for state law limitation of the extent to which such profits and proceeds remain subject to a prepetition security interest, it cannot be stated, much less found, that Indiana's law excepting insurance commissions from the general rule prohibiting the assignment of future wages "stands `as an obstacle to the accomplishment and execution of the full purposes and objective of Congress.'" See California Fed. Sav. & Loan Ass'n v. Guerra, 479 U.S. 272, 281, 107 S.Ct. 683, 689, 93 L.Ed.2d 613 (1987) (quoting Hines v. Davidowitz, 312 U.S. 52, 67, 61 *975 S.Ct. 399, 404, 85 L.Ed. 581 (1941)). Accordingly, the court finds that the bankruptcy court did not err in holding that the commissions which became payable to Smoker after the filing of the debtors' Chapter 13 petition remain subject to Hill's perfected security interest pursuant to 11 U.S.C. § 552(b)(1). Moreover, this court cannot disagree with the bankruptcy judge's conclusion that the equities of the case do not warrant altering the extent of Hill's security interest.
2. Relief from the automatic stay and abandonment of the commissions
The bankruptcy court lifted the automatic stay pursuant to 11 U.S.C. § 362(d)(1), which provides as follows:
(d) On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided under subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning such stay
(1) for cause, including the lack of adequate protection of an interest in property of such party in interest;
11 U.S.C. § 362(d)(1) (1994). The bankruptcy court determined that pursuant to 11 U.S.C. § 362(g), Hill & Associates, Inc., had carried its burden of showing that the debtors had no equity in the property by demonstrating a factual and legal basis for Hill's continued security interest in the commissions pursuant to 11 U.S.C. § 552(b). The court concluded that the debtors, on the other hand, had failed to show that Hill's security interest would be adequately protected during the pendency of the Chapter 13 proceeding.
The debtors argue that the bankruptcy court erred by lifting the stay because "[t]he commissions of the Debtor are absolutely necessary for an effective reorganization." Appellants' Brief in Support of Appeal at 8. However, the debtors confuse the provision under which the bankruptcy court granted the motion to lift the stay. The phrase "necessary for an effective reorganization" refers to an alternate ground for relief from the stay pursuant to § 362(d)(2). Because Sections 362(d)(1) and 362(d)(2) are phrased in the disjunctive, relief from the automatic stay can be granted under either provision. In re Kerns, 111 B.R. 777, 785 (S.D.Ind.1990); see Production Credit Ass'n of the Midlands v. Wieseler (In re Wieseler), 934 F.2d 965, 968 (8th Cir.1991).
Here, the bankruptcy court based its decision on § 362(d)(1), concluding that relief should be granted "for cause" since "the debtors have failed to show that Hill's security interest will be adequately protected during the pendency of this Chapter 13 proceeding." Bankr.Mem. of Decision (May 1, 1996) at 13. Since, on the basis of the record on appeal, the bankruptcy court's decision to lift the stay under § 362(d)(1) cannot be faulted, it is unnecessary to decide whether the commissions were "necessary to an effective reorganization" under § 362(d)(2).
Finally, the debtors contend that it was error for the bankruptcy court to find that the commissions should be abandoned pursuant to 11 U.S.C. § 554(b). Specifically, the debtors argue that the commissions are of significant value to the estate, in that they are the debtors' primary source of income, and that the bankruptcy judge erred in concluding that the commissions are burdensome to the debtors' estate.
Section 554(b) of the Bankruptcy Code provides that "[o]n request of a party in interest and after notice and a hearing, the court may order the trustee to abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate." 11 U.S.C. § 554(b) (1994). Thus, a party seeking an order of abandonment must present a prima facie case that the property is either burdensome to the estate or of inconsequential value or benefit to the estate. In re Masters, 104 B.R. 83, 84 (Bankr.S.D.Ind.1989) (citing In re Paolella, 79 B.R. 607, 610 (Bankr.E.D.Pa. 1987)).
The record on appeal shows that appellees Hill, John Alden Insurance Company, and Sarah Christensen have asserted causes of action relating to the commissions which Smoker conditionally assigned to Hill. The bankruptcy court determined that the commissions themselves have become burdensome to the estate by virtue of having generated litigation in which the debtors likely cannot afford to participate. In addition, the court concluded that since the commissions *976 described in the Collateral Assignment are fully encumbered by Hill's security interest, they are of inconsequential value and benefit to the debtors' estate and should be abandoned pursuant to 11 U.S.C. § 554(b).
The bankruptcy court's decision ordering the commissions to be abandoned is adequately supported by the record before this court. Accordingly, that decision will be affirmed as well.
CONCLUSION
For the reasons described above, the bankruptcy court's decision granting Hill's motion for summary judgment and denying the debtors' cross-motion for summary judgment is AFFIRMED.
IT IS SO ORDERED.
NOTES
[1] Apparently, Smoker had either borrowed funds personally or had represented that he was borrowing funds on behalf of Hill. See Bankr.Mem. of Decision (May 1, 1996) at 2.
[2] Although the bankruptcy court's Memorandum of Decision contains a section titled "Findings of Fact," this court does not consider the statements made there to be findings in reference to disputed facts but, instead, to be merely a recitation of facts that were assumed by the court to be true for purposes of its rulings indeed, summary judgment may be granted only where there is no genuine issue of material fact. Thus, the clearly erroneous standard ordinarily applied to findings of fact has no application here.
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27 U.S. 664 (____)
2 Pet. 664
CLAUDIUS F. LE GRAND, APPELLANT
vs.
NICHOLAS DARNALL, APPELLEE.
Supreme Court of United States.
Mr Taney, for the appellant.
Mr Stewart, for the appellee.
*667 Mr Justice DUVALL delivered the opinion of the Court.
This case is brought up by appeal from a decrees of the circuit court for the district of Maryland, sitting as a court of equity; and is submitted on written argument. The principal facts are the following.
Bennett Darnall, late of Anne Arundel county, Maryland, on the 4th day of August 1810, duly made and executed his last will and testament, and thereby devised to his son, the appellee, several tracts of land in fee, one of which was called Portland Manor, containing by estimation five hundred and ninety six acres. The mother of Nicholas Darnall was the slave of the testator, and Nicholas was born the slave of his father, and was between ten and eleven years old at the time of the death of the testator. Bennett Darnall, in his will, refers to and confirms two deeds of manumission executed by him; one bearing date in 1805, and the other in 1810. In both of those deeds, Nicholas Darnall and a number of other slaves were included, and emancipated after his decease. The testator died in the month of January 1814.
Nicholas Darnall, on his arrival to full age, took possession of the property devised to him, and on the 26th of April 1826 he entered into a contract with Le Grand the appellant for the sale of the tract called Portland Manor for the consideration of twenty-two dollars per acre, amounting to the sum of thirteen thousand one hundred and twelve dollars, *668 payable by agreement, in six annual payments with interest. Le Grand passed his notes pursuant to the terms of the agreement, and received the bond of Darnall to convey to him the property in fee simple upon payment of the purchase money. Le Grand was thereupon put into possession of the land. At the time the contract was made, the parties believed the title to the land to be unquestionable. Soon afterwards, however, doubts were suggested to Darnall, and he communicated them to Le Grand, and they entered into a supplementary and conditional agreement, without varying in substance the original contract. Darnall was not more than ten or eleven years of age at the time of the death of his father; and, by a law of the state of Maryland, it is provided that no manumission by last will and testament shall be effectual to give freedom to any salve, unless the said slave shall be under the age of forty-five years, and able to work and gain a sufficient maintenance and livelihood at the time the freedom intended to be given shall take place.
A decision had lately been made by the court of appeals of Maryland, in the case of Hamilton vs. Cragg, that an infant (whose age did not exceed two years when his title to freedom commenced) was not able to work and gain a sufficient maintenance and livelihood, and was therefore adjudged to be a salve. This decision of the highest court of law in the state gave rise to doubts concerning the capability of the appellee to make a good title to the land which he had sold to the appellant. Darnall deposited the amount of the first payment, that is to say $3000, in the hands of Benjamin Tucker of Philadelphia, to be held with the consent of the appellant subject to the result of an examination into the title. In consequence of the decision of the court of appeals of Maryland, the heir at law of Bennett Darnall, the testator, made claim to the land, and threatened to commence suit for the recovery of it. Le Grand being alarmed about the title, refused to make any further payment; and an action was commenced against him, and judgment recovered for the second payment. To prevent an execution and to ascertain, under all the circumstances of the case, whether the appellee could make a good title to the land which he had sold *669 to him, he filed his bill of complaint in equity, in the circuit court, stating the circumstances, and obtained an injunction against any further proceedings at law. The appellee put in his answer, admitting all the facts stated in the bill, except that of his inability to gain a maintenance and livelihood by labour, when his right to freedom commenced. The case was submitted to the court upon the bill, answer, exhibits and proof which had been taken; and the court, upon due consideration, ordered the injunction to be dissolved, and decreed the bill to be dismissed. From this decree, an appeal was taken to this Court, and the cause is now to be finally decided.
There is one question only to be discussed. If the appellee, at the time of the death of the testator, was entitled to his freedom under the will and deeds of manumission before mentioned, then his title to the land sold was unquestionable. His claim to freedom under the instruments above referred to depends upon a just construction of the act of the legislature of Maryland, passed in the year 1796, ch. 47, sect. 13.
The words of the act are these: "that all persons capable in law to make a valid will and testament, may grant freedom to, and effect the manumission of any slave or slaves belonging to such person or persons, by his, her or their last will and testament; and such manumission of any slave or slaves may be made to take effect at the death of the testator or testators, or at such other period as may be limited in such last will and testament; provided always, that no manumission by last will and testament, shall be effectual to give freedom to any slave or slaves, if the same shall be to prejudice of creditors; nor unless the said slave or slaves shall be under the age of forty-five years, and able to work and gain a sufficient maintenance and livelihood at the time the freedom given shall commence." The time of the freedom of the appellee commenced immediately after the death of the testator, when, according to the evidence he was about eleven years old. Four respectable witnesses of the neighborhood were examined. They all agree in their testimony, that Nicholas was well grown, healthy and intelligent, and of good bodily and mental capacity: that he and *670 his brother Henry could readily have found employment, either as house servant boys, or on a farm, or as apprentices; and that they were able to work and gain a livelihood. The testator devised to each of them real and personal estate to a considerable amount. They had guardians appointed, were well educated and Nicholas is now living in affluence. Experience has proved that he was able to work, and gain a sufficient maintenance and livelihood. No doubt as to the fact has ever been entertained by any who know him. Of course, he was capable in law to sell and dispose of the whole or any part of his estate, and to execute the necessary instruments of writing to convey a sufficient title to the purchase.
The court of appeals of Maryland, in the case of Hale vs. Mullin, decided, that a devise of property real or personal by a master to his slave, entitles the slave to his freedom by necessary implication. This Court entertains the same opinion.
It is not the inclination of this Court to express any opinion as to the correctness of the decision of the court of appeals of Maryland, in the case of Hamilton vs. Cragg. It is unnecessary in reference to the case under consideration.
The decree of the circuit court is affirmed; and by consent of parties without costs.
This cause came on to be heard on the transcript of the record from the circuit court of the United States for the district of Maryland, and was argued by counsel; on consideration whereof, it is considered, ordered and decreed by this Court, that the decree of the said circuit court in this cause be and the same is hereby affirmed without costs.
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39 B.R. 513 (1984)
In re VASU FABRICS, INC., Debtor.
NEW YORK CREDIT ADJUSTMENT BUREAU, INC., Trustee, Plaintiff,
v.
JUST IN-MATERIALS DESIGNS, LTD., Defendant.
Bankruptcy No. 82 B 12071 (PBA), Adv. No. 83-5813A.
United States Bankruptcy Court, S.D. New York.
April 27, 1984.
*514 Patterson, Belknap, Webb & Tyler, New York City, for trustee; David W. Dykhouse, Rees W. Morrison, New York City, of counsel.
Lauritano & Schlacter, New York City, for defendant Just In-Materials Designs, Ltd.; Jed R. Schlacter, New York City, of counsel.
MEMORANDUM DECISION ON TRUSTEE'S MOTION FOR SUMMARY JUDGMENT
PRUDENCE B. ABRAM, Bankruptcy Judge:
On October 26, 1982 an involuntary petition for relief under Chapter 7 of the Bankruptcy Code was filed against the debtor, Vasu Fabrics, Inc. ("Vasu" or the "Debtor"). An order for relief was entered on November 23, 1982. The Trustee, New York Credit Adjustment Bureau, Inc. ("Trustee"), was appointed on February 2, 1983. On July 21, 1983, the Trustee commenced this adversary proceeding against Just In-Materials Designs, Ltd. ("Just In") seeking to recover $9,000 as a preferential payment under Section 547 of the Bankruptcy Code, 11 U.S.C. § 547. On December 14, 1983, the Trustee moved for summary judgment. The defendant, Just In, *515 has opposed the motion. Oral argument was heard on January 9, 1984. Following argument, additional submissions were made in response to certain questions raised by the court during the argument.
The motion for summary judgment must be denied as the Trustee has failed to establish that there are no material undisputed facts. However, because of the importance to the future course of this litigation, the court has determined that it should proceed to consider and resolve the various legal issues presented to it on the summary judgment motion.
FACTS
On December 8, 1981, or approximately ten (10) months prior to the filing of the Chapter 7 petition, Just In commenced an action in the United States District Court for the Southern District of New York (the "District Court Action") against Vasu alleging copyright infringement of a textile pattern, unfair trade practices and unfair competition. Just In sought, inter alia, $500,000 in damages. About eight months later in early August, 1982, Just In served an amended complaint which added Ivan Melamed and Susan Melamed, the principals and shareholders of Vasu, as defendants.
Approximately one month before the filing of the Chapter 7 petition and on September 30, 1982, Just In entered into a settlement agreement with the three defendants, Vasu, Ivan and Susan Melamed, in the District Court Action. Pursuant to the terms of the agreement, Vasu and the Melameds agreed to pay to Just In $9,000 in full settlement of Just In's copyright infringement, unfair competition and unfair trade practice claims against them. The Debtor and the Melameds represented that they had sold no more than approximately 14,509 yards of fabric bearing the disputed design and that there was no outstanding inventory of the fabric remaining. The three defendants further agreed permanently to cease and desist from any activity with respect to the disputed textile design. A consent judgment was entered on October 7, 1982 permanently enjoining the three defendants from use of designs substantially similar to the plaintiff's copyrighted design.
Payment to Just In of the $9,000 due under the settlement agreement was apparently made on September 29, 1982 prior to the signing of the settlement agreement. Payment was made in the form of a bank check payable to Just In issued by Chemical Bank on September 29, 1982 in the amount of $9,000. On September 29, 1982, the Debtor issued its own check in the amount of $9,000 to Chemical Bank. In the upper left hand corner of the check was the notation: "For settlement of Just In-Materials Designs, Ltd."
The Debtor's schedules reflect creditors are owed in excess of $500,000. The total assets scheduled by the Debtor are $27,955. The Trustee presently is holding assets of the Debtor's estate totalling $130,000.
DISCUSSION
In order to recover a payment alleged to be preferential, the Trustee must establish, by a preponderance of the evidence, each element of the cause of action created by Section 547(b) of the Bankruptcy Code.[1]*516 Matter of Kennesaw Mint, Inc., 32 B.R. 799, 803 (Bkrtcy.N.D.Ga.1983). There is no dispute that the $9,000 payment to Just In was made within 90 days of the filing of the Chapter 7 petition. Thus, Code § 547(b)(4) is satisfied.
Section 547(b)(3)"Insolvent"
Turning to Code § 547(b)(3), Just In has disputed that the Debtor was insolvent. The schedules filed by the Debtor reflect a substantial excess of liabilities over assets. Nor does the amount recovered by the Trustee beyond the value of the assets stated in the petition eliminate the deficit.
Code § 547(f) provides:
"For the purposes of this section, the debtor is presumed to have been insolvent on and during the 90 days immediately preceding the date of the filing of the petition."
This presumption requires Just In to come forward with some evidence to rebut the assertion of insolvency. Matter of Lucasa International, Ltd., 13 B.R. 596 (Bkrtcy.S. D.N.Y.1981). The mere speculation that the schedules may not be accurate would be insufficient to rebut the statutory presumption at trial. See Matter of Emerald Oil Co., 695 F.2d 833 (5th Cir.1983). Just In argues that discovery is necessary on the issue of insolvency to determine whether the schedules are accurate, and until such time as discovery can be had, the motion should be denied. Although discovery should perhaps have already been had, apparently it was not. The court will permit Just In further discovery on this issue. At trial, unless Just In comes forward with evidence sufficient to rebut or meet the presumption, the court will be bound to rule in the Trustee's favor on this issue.
Section 547(b)(2)"Antecedent Debt"
Just In denies that the settlement payment was "for or on account of an antecedent debt owed by the Debtor before such transfer was made" and thus that Code § 547(b)(2) is not satisfied. Just In states that:
"it may very well be that a claim of the defendant [Just In] came into being upon commencement of [defendant's] copyright suit against [Vasu]. However, it is submitted that no debt arose prior to September 30, 1982the date of the Settlement Agreement involved herein." Brief at 7.
Just In then argues the finding of a preference requires payment of an antecedent debt, not an antecedent claim.
The term "antecedent debt" is not a term defined in the Bankruptcy Code. Of its component parts, the term "antecedent" is not defined; the term "debt" is defined in Code § 101(11) as "liability on a claim." Claim is defined in Code § 101(4) as:
"(A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or
"(B) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured;"
"Creditor" is defined in Code § 101(9)(A) as an entity "that has a claim against the debtor that arose at the time of or before the order for relief." The differences in these three terms are ones of point of view: "debt" concerns itself with the debtor's obligation; "claim" concerns itself with the creditor's right. Bankruptcy Code § 547 in dealing with preference is written from the perspective of the debtor; thus it is appropriate that the term "debt" is used. No significance can be read into the use of the term "antecedent debt" rather than "antecedent claim."
*517 As the definition of "debt" is "liability for a claim," it might be urged that the term "debt" carries with it the requirement that the debtor's obligation be an established or conceded one, not merely one asserted against it. This reading lacks persuasiveness. The Bankruptcy Code does not define the term "liability". Black's Law Dictionary (4th ed. 1968) contains the following definition:
"The word is a broad legal term. It has been referred to as of the most comprehensive significance, including almost every character of hazard or responsibility, absolute, contingent, or likely." (Emphasis added.)
Further, the Code's definition of "claim" includes unliquidated, disputed and contingent rights to payment. There is liability on a claim even though the claim is disputed, contingent or unliquidated, providing that liquidation occurs, the dispute is resolved or adjudicated, and the contingency happens. Just In's argument that it may have been the holder of a claim at the time it commenced the District Court Action, but that the Debtor was not then correspondingly liable on a debt, is rejected in favor of simply symmetry: claim is the flip side of the debt coin. The legislative history states that "the terms [debt and claim] are co-extensive: a creditor has a `claim' against the debtor; the debtor owes a `debt' to the creditor." H.R. No. 95-595, 95th Cong. 1st Sess. 309-310 (1977), U.S. Code Cong. & Admin.News 1978, 5787, 6266, 6267.[2]
The Bankruptcy Code has an expansive definition of "claim" that is a significant departure from the former Bankruptcy Act. Under the former Bankruptcy Act, a patent infringement claim which was not fixed as to liability prior to the filing of a petition in bankruptcy was not a "provable" claim. Thus no dividend or distribution under a plan was payable on the infringement claim and the claim was legally unaffected by any discharge, although there might be no remaining source from which it could ultimately be collected. Haynes Stellite Co. v. Chesterfield, et al., 97 F.2d 985 (6th Cir.1938); Goldsmith v. Overseas Scientific Corporation, 188 F.Supp. 530 (S.D.N.Y.1960). The concept of provability was abandoned in the Bankruptcy Code. The definition of "claim" was expanded and no longer are claims not fixed as to liability on the date of the filing precluded from participation in the bankruptcy case. The effect of the broad definition of claim and the abandonment of the concept of provability is that "all legal obligations of the debtor, no matter how remote or contingent, will be able to be dealt with in the bankruptcy case. It permits the broadest possible relief in the bankruptcy court." H.R.Rep. 95-595, 95th Cong. 1st Sess. 309 (1977), U.S.Code Cong. & Admin.News 1978, 6266.
The Just In debt was clearly antecedent at the time of the settlement, as the debt was necessarily based on events occurring prior to the filing of the District Court Action some 10 months previously. There is no merit to Just In's argument that it did not receive payment on an antecedent debt as the settlement amount of $9,000 was paid to it before the settlement agreement was signed. This argument depends on there being some distinction between "debt" and "claim" which the court has rejected in this case. There has been no showing that the sale of allegedly infringing goods continued after the filing of the District Court Action or that it took place contemporaneously with the settlement so as to bring the settlement within one of the exceptions contained in Code § 547(c).
While there may be a superficial unfairness in finding a creditor who never intended to extend credit and did not have the opportunity to collect its claim contemporaneously exposed to a preference challenge, the unfairness is only superficial.[3]*518 Many other types of creditors than copyright infringement claimants are without ability to collect their claims non-preferentially. Had Congress wished to exclude payment on disputed, unliquidated, or contingent claims from the scope of Code § 547(b), it could have done so. Congress expressly excepted such debts and claims in a number of sections. For example, Code § 109(e) excludes contingent or unliquidated debt from the computation of eligibility for Chapter 13 relief.[4]See In re Richard Russell Sylvester and Irene Lehman Sylvester, 19 B.R. 671, 8 B.C.D. 1306 (Bkrtcy.App. 9th Cir.1982). Likewise, the holders of contingent claims are not eligible to be petitioning creditors in an involuntary petition under Code § 303(b).[5]See Matter of Covey, 650 F.2d 877 (7th Cir. 1981); In re all Media Properties, 5 B.R. 126, 2 C.B.C.2d 449 (Bkrtcy.S.D.Tx.1980).
This court will not read into Code § 547 a limitation which Congress has not chosen to include. Thus, the payment to Just In of $9,000 was a payment of an antecedent debt under Code § 547(b)(2).
Section 547(b)(5)"Receive More"
In the usual preference case, the receive more, or greater percentage, requirement of Code § 547(b)(5) is not an issue once the other elements of the preference cause of action have been found. This case poses a special problem, however. The September 30, 1982 settlement agreement contemplated the possibility of disgorgement of the $9,000 payment and provided that, in the event Just In were required to give up the $9,000 paid to it, it could enter judgment for $18,000.[6] The Trustee has urged that this jump in the amount of the Just In claim is an unenforceable penalty. The court is of the opinion that whether it is a penalty or not must be judged by the facts. Was $9,000 a reasonable settlement based on Vasu's admitted sales? Or was it less than any probable judgment after trial but fixed at $9,000 because that was all the money available? If the later, the provision does not appear to be a penalty. These facts remain to be explored at trial.
The answer might affect the outcome of this preference action as a $9,000 payment *519 of a $9,000 claim is a 100% payment; however, a $9,000 payment of a $18,000 claim is a 50% payment; and a $9,000 payment is but 33 1/3% of a $27,000 claim.[7] Whether the Trustee would prevail at 33 1/3% or 50% is not entirely apparent from the facts submitted on the summary judgment motion and the court cannot rule on this issue at this time.
Section 547(b)"Property of the Debtor"
It is well settled that transfers to a creditor for or on account of an antecedent debt are not avoidable as preferential transfers if it was not the Debtor's property that was transferred. I-T-E Circuit Breaker Co. v. Holzman, 354 F.2d 102 (9th Cir.1968); Matter of Lucasa International, Ltd., 13 B.R. 596 (S.D.N.Y.1981); In re Design 3 Ltd., Inc., 18 B.R. 431 (Bkrtcy. S.D.Fla.1982). Just In has asserted on information and belief that the payment to it was made with funds provided to the Debtor by Ivan and Susan Melamed and that it did not receive a transfer of property of the Debtor. If this is true, the Trustee would have failed to establish a prime element of its case and would lose.
The evidence submitted by the Trustee in its motion for summary judgment shows that the Debtor issued a check payable to Chemical Bank for $9,000 on the same date that Chemical Bank issued a bank check in the same amount payable to Just In. Further, the Debtor's check has a notation that it was for the Just In settlement. Just In has suggested that the Debtor's $9,000 check to Chemical Bank might have been a payment of a debt of the Debtor to Chemical. This suggestion seems weak. Nevertheless, it remains the fact that as Ivan and Susan Melamed were co-defendants in the District Court Action they might have advanced their own funds to the Debtor for the sole purpose of effecting all or part of the settlement payment. Resolving all ambiguities in favor of the party against whom summary judgment is asserted, United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176, 177 (1962), the court cannot say that the Trustee has satisfied its burden of showing the absence of a material issue of fact, see Adickes v. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142, 154 (1970). Just In is entitled to further discovery on this issue, and summary judgment must be denied. Nevertheless, the court is constrained to point out that, if at trial, the same evidence should be adduced by the Trustee and Just In offered no rebuttal evidence, the court would rule in the Trustee's favor on this point as the court can reasonably infer from the two checks that the Debtor was the source of the funds paid to Just In.
CONCLUSION
The Trustee's motion for summary judgment is denied. The parties are directed to complete discovery within thirty (30) days; a joint pretrial order shall be submitted within sixty (60) days and a trial is hereby scheduled for June 28, 1984 at 10:00 a.m.
IT IS SO ORDERED.
NOTES
[1] Section 547(b) provides:
"Except as provided in subsection (c) of this section, the trustee may avoid any transfer of property of the debtor
(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt owed by the debtor before such transfer was made;
(3) made while the debtor was insolvent;
(4) made
(A) on or within 90 days before the date of the filing of the petition; or
(B) between 90 days and one year before the date of the filing of the petition, if such creditor, at the time of such transfer
(i) was an insider; and
(ii) had reasonable cause to believe the debtor was insolvent at the time of such transfer; and
(5) that enables such creditor to receive more than such creditor would receive if
(A) the case were a case under Chapter 7 of this title;
(B) the transfer had not been made; and
(C) such creditor received payment of such debt to the extent provided by the provisions of this title."
[2] To the extent that it is contrary the court rejects In re King, 9 B.R. 376, 4 C.B.C.2d 130, 131 (Bkrtcy.D.Oregon 1981).
[3] Compare with Feinblatt v. Block, 456 F.Supp. 776, 780 (D.Md.1978) where the court stated: "[A] willing extension of credit is not necessary in order to create an antecedent debt under the preference provision of the [Bankruptcy] Act. Engelkes v. Farmers Co-operative Co., 194 F.Supp. 319, 326 (N.D.Iowa 1961). To the contrary, it is a well settled rule that property converted, embezzled, or otherwise taken by the bankrupt, or obtained by him by fraud, can be claimed from the bankrupt estate only so long as it can be definitely traced, with the consequence that an attempted repayment by the bankrupt prior to bankruptcy is a preference, except where made from the very property taken. Morris Plan Industrial Bank of New York v. Schorn, 135 F.2d 538, 539 (2d Cir.1943); accord Atherton v. Green, 179 F. 806, 808 (7th Cir.1910); Malone v. Gimpel, 151 F.Supp. 549, 554 (N.D.N.Y.1956), aff'd, 244 F.2d 954 (2d Cir.1957); Dinkelspiel v. Garrett, 96 F.Supp. 800, 804-05 (W.D.Ark. 1951); see Cunningham v. Brown, 265 U.S. 1, 11-12, 44 S.Ct. 424, 426-427, 68 L.Ed. 873 (1924)."
[4] Code § 109(e), 11 U.S.C. § 109(e) provides:
"Only an individual with regular income that owes, on the date of the filing of the petition, noncontingent, liquidated, unsecured debts of less than $100,000 and noncontingent, liquidated secured debts of less than $350,000. . . . "
[5] Code § 303(b), 11 U.S.C. § 303(b), provides:
"An involuntary case is commenced by the filing with the bankruptcy court of a petition under Chapter 7 or 11 of this title
(1) by three or more entities, each of which is either a holder of a claim against such person that is not contingent as to liability . . . if such claims aggregate at least $5,000 more than the value of any lien on property of the debtor securing such claims held by the holders of such claims * * *"
[6] The settlement agreement provides as follows:
"6. It is further agreed that in the event the defendants or any of them, become parties to a bankruptcy proceeding, such that the payment made herein to the plaintiff is recovered by the defendants' creditors, the defendants hereby consent to the entry of a further judgment against the corporate defendant in the sum of $18,000.00, on three (3) days notice to the defendants' attorneys of record herein."
Apparently the $9,000 paid was not the subject of a judgment. Thus, entry of an $18,000 judgment would appear to fix Just In's claim at $18,000, which is what counsel for Just In agreed was the correct interpretation. It might be urged, however, that the liability for the recovered $9,000 settlement amount remains and that the $18,000 is in addition to that amount, making a total of $27,000.
[7] Just In has stated that the greater percentage test must start by using its $500,000 claim for relief as a base. Payment of $9,000 on a $500,000 claim is only a 1.8% payment. This argument ignores the settlement agreement which is controlling since the agreement expressly contemplated and provided for the amount of Just In's claim should the payment be recovered as preferential or otherwise.
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710 F.2d 836
(fn*)Baladadv.I. N. S.
83-4019
UNITED STATES COURT OF APPEALS Fifth Circuit
6/28/83
1
I.N.S.
AFFIRMED
2
---------------
* Fed.R.App. P. 34(a); 5th Cir. R. 18.
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592 So.2d 1370 (1992)
William Samuel BURRIER, et al., Plaintiff-Appellant,
v.
MALMAC ENERGY CORPORATION, et al., Defendants-Appellees.
No. 23,121-CA.
Court of Appeal of Louisiana, Second Circuit.
January 22, 1992.
*1371 Bruscato, Loomis & Street by C. Daniel Street, Monroe, for plaintiff-appellant.
Hayes, Harkey, Smith, Cascio & Mullens by Bruce M. Mintz, Monroe, for defendants-appellees.
Before MARVIN, C.J., and SEXTON and NORRIS, JJ.
MARVIN, Chief Judge.
In this action against his alleged statutory employer and its insurer, the original claimant's children, as substituted plaintiffs, appeal a judgment dismissing, on an exception of prescription, alternative demands made in supplemental petitions for worker's compensation benefits. Claimant's original petition, which was timely filed, sought personal injury damages arising out of the same accident on allegations of strict liability and negligence.
We reverse and render judgment overruling the exception of prescription. Parker v. Southern American Insurance Co., 590 So.2d 55 (La.1991).
We do not reach the merits of the defendants' exception of prematurity founded on the fact that the alleged statutory employer was not named as a potential defendant in earlier administrative proceedings for w.c. benefits that the original claimant filed with OWC against his actual employer in 1987. The trial court did not rule on the exception of prematurity.
A 1988 settlement of the w.c. action between claimant and his actual employer, which was reduced to judgment in the district court in another action, was not consummated or paid apparently because the uninsured actual employer took bankruptcy.
We shall remand to allow the trial court to consider the effect of that w.c. judgment and have a hearing on defendants' exception of prematurity.
CHRONOLOGY
Burrier, the original claimant, was accidentally injured on October 21, 1986, while working as a production superintendent for Stallion Exploration & Production Company on a well that was owned by Malmac Energy Corporation, the later-alleged statutory employer.
Burrier timely filed a w.c. action against Pescatore, d/b/a Stallion, after obtaining certification from OWC that he had submitted his claim for informal resolution.
On October 14, 1987, Burrier sought personal injury damages from several defendants, including Malmac, the well owner who allegedly had contracted with Stallion. The damage suit against Malmac, alleging the accidental injury of October 21, 1986, was timely. In Burrier's first supplemental petition on July 7, 1988, Malmac's liability insurer, U.S.F. & G., was joined as a defendant with Malmac. This joinder was also "timely" in the sense that prescription had been interrupted by the timely filing of the damage suit against the insured, Malmac. Parker, cited supra.
Burrier filed his second supplemental petition on May 25, 1989, alleging alternatively that Malmac was his statutory employer and was liable to him under the w.c. law. In a third supplemental petition on December 1, 1989, Malmac's w.c. insurer, Travelers, was joined as a co-defendant.
Burrier died from natural causes while this appeal was pending. His children were substituted as the appellants in this court.
RESOLUTION
The original demand for personal injury damages against Malmac made these factual allegations: Burrier, as Stallion's employee [production supervisor], was sent to *1372 work on October 21, 1986, on a well owned by Malmac that had recently become productive. In answer to Malmac's interrogatories, Burrier said he was "sent" to the well by Malcolm McDonald of Palestine, Texas, who was "with" [or employed by] Malmac. Burrier was directed to "blow the well down because water was getting in the lines." When Burrier attempted to do this, pressure caused the "well head" to spin, striking and injuring Burrier.
Burrier's post-prescription demands against Malmac for w.c. benefits, which were made in the alternative, did not reallege the "facts" of the accident, but asserted that "the injury he received on October 21, 1986, was sustained while in the course and scope of his employment with Stallion and therefore with Malmac." He alleged his entitlement to w.c. benefits from Malmac and medical expenses "previously listed in his original petition from said defendant."
Where a plaintiff is injured in one distinct accident, the timely filing of tort demands against an actual employer interrupts prescription on a w.c. demand that is later made against the same employer. Shewmake v. Alejaudro, 466 So.2d 711 (La.App. 4th Cir.1985). The reverse of that circumstance is also true; a timely w.c. demand against the employer interrupts prescription on a later-filed tort demand against the employer's liability insurer. Parker, cited supra.
In our opinion, Parker enervates Chenier v. Vanguard Party Sales, Inc., 430 So.2d 367 (La.App. 3d Cir.1983), and other cases which suggest a result contrary to Shewmake. We see no valid reason why a result different from Parker-Shewmake should be pronounced against a statutory employer than is pronounced against an actual employer. A plaintiff's original demand arising out of a distinct accidental injury, based either in tort or in w.c., interrupts prescription which would have accrued against a later demand founded on the other base. Parker, Shewmake, cited supra; Baker v. Payne & Keller of La., Inc., 390 So.2d 1272 (La.1980)
LRS 23:1061 has always included language to the effect that a principal [who is a statutory employer] is liable to the employee of his contractor as if the employee had been "immediately employed" by the statutory employer and that, in the appropriate circumstances, references in the law to the employer shall be "substituted" for and considered as references to the principal [statutory employer]. The legislature's "substitution" that imposes w.c. liability on the statutory employer warrants our similar "substitution" to apply the actual employer case law to the alleged statutory employer.
If the original timely pleading gives actual notice to a party that a formal claim is being made based on a particular factual situation, no essential purpose of a prescriptive statute is violated by permitting relation back of a post-prescription amendment based on the same factual situation. Through the original pleading the opponent knows that judicial relief is sought from the general factual situation alleged and he is put on notice that his evidence concerning that factual situation should be collected and preserved. See discussion of CCP Art. 1153 in Baker v. Payne & Keller of Louisiana, Inc., supra, at p. 1275, quoting the late Justice Tate in 43 Tul.L.Rev. 211, 233 (1969). Compare fact-pleading discussion in Harris v. Bardwell, 373 So.2d 777 (La.App. 2d Cir.1979).
Burrier's amended and supplemental demand, in the alternative, for w.c. benefits against Malmac clearly "arises out of the occurrence" or factual situation alleged in Burrier's original demand for personal injury damages. The post-prescription amendment then relates back to the date of filing the original pleading. CCP Art. 1153. Baker, supra.
DECREE
The judgment of the trial court is reversed and judgment is hereby rendered *1373 overruling the exceptions of prescription filed by Malmac and Travelers at their cost. The case is remanded for further proceedings.
REVERSED, RENDERED, AND REMANDED.
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515 So.2d 1009 (1987)
GULF COAST HOME HEALTH SERVICES OF FLORIDA, INC., Appellant,
v.
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES and Beverly Enterprises Florida, Inc. d/b/a Beverly Gulf Coast Florida, Inc. (Pasco County), Appellee.
No. BP-17.
District Court of Appeal of Florida, First District.
September 11, 1987.
Rehearing Denied December 8, 1987.
*1010 Leonard A. Carson, James W. Linn and Bruce A. Leinbeck of Carson & Linn, Tallahassee, for appellant.
Sam Power and Lesley Mendelson, Dept. of Health and Rehabilitative Services, Tallahassee, for appellee/Health and Rehabilitative Services.
NIMMONS, Judge.
This is an administrative appeal from a final order of the Department of Health and Rehabilitative Services (HRS), denying Gulf Coast's Petition to Intervene or, Alternatively, Petition for a Formal Administrative Hearing, pursuant to Section 120.57, Florida Statutes and Fla. Admin. Code Rule 28-5.207. We affirm.
Beverly Enterprises Florida, Inc. (Beverly) made application to establish a Medicare-certified home health agency in Pasco County, HRS District 5, a district served by Gulf Coast. In a preliminary free-form action, HRS denied Beverly's CON application. On August 13, 1985, Beverly requested an administrative hearing to challenge HRS's denial of its application. HRS referred Beverly's petition to the Division of Administrative Hearings (DOAH). HRS published notice of this litigation in the August 30, 1985 issue of the Florida Administrative Weekly.
Before DOAH had scheduled the final hearing, HRS entered into a stipulation (undated) with Beverly whereby HRS agreed to issue the CON. In the stipulation HRS recited that it had re-evaluated its original position with respect to the need for home health agencies in District 5 and had determined that there was a need for the home health agency proposed by Beverly. The parties further agreed in the stipulation that there were no remaining issues of fact or disputes of law left to be determined.
On May 30, 1986, HRS and Beverly submitted to DOAH a joint motion for remand of the case from DOAH to HRS. The DOAH hearing officer issued an order dismissing Beverly's petition and closing the DOAH case concerning Beverly's home health CON application. The case was then remanded to HRS.
On June 20, 1986, before HRS issued its final order on Beverly's CON application, Gulf Coast filed with HRS its Petition to Intervene or, Alternatively, Petition for Formal Administrative Hearing to challenge HRS's reversal of position on Beverly's CON application. HRS denied Gulf Coast's petition for a Section 120.57 hearing on the basis that it was untimely. Gulf Coast appealed to this Court pursuant to Section 120.68, Florida Statutes.
Substantially affected persons have a right to seek relief under the Administrative Procedure Act from an HRS decision granting or denying a CON. Section 381.494(8)(e), Florida Statutes (1985).[1] The question in the present case is whether appellant timely exercised this right and, if not, whether the untimely exercise thereof is excusable. See NME Hospitals, Inc. v. Department of Health & Rehabilitative Services, 492 So.2d 379 (Fla. 1st DCA 1985).
*1011 As required in Capeletti Brothers, Inc. v. State, Department of Transportation, 362 So.2d 346, 348 (Fla. 1st DCA 1978), the substantially affected person must be provided with a "clear point of entry, within a specified time period after some recognizable event in investigatory or other freeform proceedings, to formal or informal proceedings under Section 120.57." Moreover, that point of entry must not be so remote from the agency action as to be ineffectual as a vehicle for affording a party whose substantial interests are or will be affected by agency action a prompt opportunity to challenge disputed issues of material fact in a Section 120.57 hearing. General Development Utilities, Inc. v. Florida Department of Environmental Regulation, 417 So.2d 1068, 1070 (Fla. 1st DCA 1982).
In the present case, Gulf Coast was afforded such a "clear point of entry" by way of the "Notice of Litigation" published by HRS in the August 30, 1985 issue of Florida Administrative Weekly. That notice provided as follows:
NOTICE OF LITIGATION
The Florida Department of Health and Rehabilitative Services has received the following petitions for administrative hearings as of the close of business on August 21, 1985, concerning certificate of need (CON) decisions. A brief description of these projects is listed below. Resolutions of these requests for hearing by way of a grant or denial of the certificates of need at issue will determine substantial interests of persons. Those persons whose substantial interests may be determined by these proceedings, including settlements, grants and denials, are advised to govern themselves accordingly and may wish to exercise rights including intervention. See Chapter 120, F.S. as well as Section 28-5.111 and 28-5.207, F.A.C. In deference to the rights of substantially affected persons DHRS will not settle or otherwise reach a final resolution of these matters for a period of 30 days from the date of this publication. (e.s.)
Gulf Coast has argued that this notice was not "meaningful" or sufficient to provide it with a clear point of entry into the administrative review process because the notice did not state what policy HRS was going to utilize in making subsequent agency decisions.[2] However, to provide a person with a clear point of entry, HRS is not required to give notice of what policy it is going to use in its decision-making. Notice is "meaningful" or adequate to provide one with a clear point of entry into the administrative review process as long as it satisfies the standards articulated in Capeletti and General Development Utilities Inc., supra.
The notice in the present case satisfied these standards. It provided Gulf Coast with a clear point of entry to proceedings under Section 120.57 after HRS's preliminary free-form action in denying Beverly's CON application. This point of entry placed all substantially affected persons on notice that Beverly's CON application had been denied, a hearing had been requested, the possibility of settlement existed, and HRS would not settle the case for a period of 30 days from the date of publication.
Moreover, such notice is not "so remote from the agency action as to be ineffectual as a vehicle for affording" appellant "a prompt opportunity to challenge disputed issues of material fact in a Section 120.57 hearing." General Development Utilities, Inc., supra at 1070. If Gulf Coast had availed itself of its clear point of entry in a timely fashion, it could have presented its challenge to HRS's policy. But Gulf Coast failed to do so. Gulf Coast neither petitioned for a Section 120.57 hearing nor sought to intervene pursuant to Fla. Admin. Code Rule 28-5.207, in the formal administrative review initiated by Beverly within the 30-day period prescribed by the notice. *1012 Hence, Gulf Coast waived its right to administrative review.
AFFIRMED.
SHIVERS and THOMPSON, JJ., concur.
NOTES
[1] That section provides as follows:
(e) An applicant or a substantially affected person who is aggrieved by the issuance, revocation, or denial of a certificate of need shall have the right, within not more than 30 days from the day of notice of the issuance, revocation, or denial of such certificate by the department, to seek relief according to the provisions of the Administrative Procedure Act and to seek judicial review of decisions resulting from hearings under the Administrative Procedure Act. In such judicial review, the court must affirm the decision of the department unless the decision is found to be arbitrary, capricious, or not in compliance with this act.
[2] Gulf Coast has conceded that in all other respects the Notice of Litigation provided a sufficient point of entry.
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207 F.3d 907 (7th Cir. 2000)
Lee KNOWLIN, Plaintiff-Appellant,v.Pat THOMPSON and Ed Michalek, Defendants-Appellees.
No. 97-3463
In the United States Court of Appeals For the Seventh Circuit
Submitted November 30, 1999*Decided March 23, 2000
Appeal from the United States District Court for the Eastern District of Wisconsin. No. 96-C-5--Charles N. Clevert, Judge.
Before Harlington Wood, Jr., Flaum, and Evans, Circuit Judges.
Flaum, Circuit Judge.
1
Lee Knowlin, a Wisconsin prisoner proceeding pro se, filed suit under 42 U.S.C. sec. 1983 seeking compensatory and punitive damages against Arkansas law enforcement officers for alleged violations of the Arkansas Uniform Criminal Extradition Act ("UCEA"). The district court dismissed Knowlin's complaint without prejudice as barred by Heck v. Humphrey, 512 U.S. 477 (1994). For the reasons stated below, we affirm.
Background
2
In reviewing the district court's dismissal, we accept the allegations in the plaintiff's complaint as true and draw all reasonable inferences in favor of the plaintiff. See Hernandez v. Joliet Police Dep't, 197 F.3d 256, 262 (7th Cir. 1999). In February 1992, the State of Wisconsin released Knowlin on parole. After violating the conditions of his parole, Knowlin left Wisconsin. In February 1994, Knowlin was arrested in Sherwood, Arkansas, for traffic violations. Shortly after Knowlin's arrest in Arkansas, authorities there received a request from the State of Wisconsin to hold him pending a formal extradition request. Knowlin appeared before an Arkansas judge on a detainer warrant on February 15, 1994, and he informed the court that he would not waive formal extradition procedures. On February 28, 1994, the governor of Wisconsin submitted a request for Knowlin's extradition to the Arkansas governor. On March 10, 1994, the Arkansas governor issued a certificate of delivery, authorizing Knowlin's transfer to Wisconsin under the terms of the UCEA. Under the Arkansas UCEA, before Knowlin was surrendered to Wisconsin authorities, he was to be informed of the demand for his surrender, the charges against him, and his right to an attorney. See Ark. Code Ann. sec. 16-94-210. If Knowlin chose to test the legality of the proposed extradition, he was to be taken before a judge and allowed a reasonable amount of time to apply for a writ of habeas corpus, a proceeding in which the court could establish Knowlin's identity and verify the facial validity of the extradition papers. See id. Knowlin, following through with his election to oppose extradition, filed a pro se motion on March 14, 1994, requesting that his extradition proceedings be moved from the Sherwood Municipal Court to the Arkansas Circuit Court, where he could seek a habeas writ. On March 15, an Arkansas judge transferred Knowlin's pending extradition proceedings to the state's circuit court, but before a hearing could be held on his habeas application, the defendants, Sherwood law enforcement officers Pat Thompson and Ed Michalek,1 delivered him to Wisconsin agents. After a parole revocation hearing, the State of Wisconsin revoked Knowlin's parole and imprisoned him. See Wisconsin ex rel. Knowlin v. Schwarz, No. 95-2504, 1996 WL 266005, at *1 (Wis. Ct. App. May 21, 1996).
3
Knowlin subsequently filed suit in the district court under sec. 1983 against Thompson and Michalek for surrendering him to Wisconsin authorities without first permitting him to pursue a habeas corpus action in an Arkansas court to contest his extradition. Knowlin alleged that his surrender prior to the disposition of his habeas corpus action violated his federal rights under the Fourteenth Amendment and the UCEA.
4
The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing that Knowlin failed to state a claim upon which relief could be granted and, alternatively, that they were entitled to qualified immunity. Knowlin, citing our decision in McBride v. Soos, 594 F.2d 610, 613 (7th Cir. 1979) (holding that a complaint "which charges abuse of the extradition power by noncompliance with applicable law states a cause of action [under sec. 1983]"), argued that he indeed stated a proper claim. The district court rejected both proffered defenses. Instead, the court concluded sua sponte that Knowlin's claim was barred by Heck v. Humphrey, 512 U.S. 477 (1994), and its progeny. Accordingly, the district court dismissed Knowlin's complaint without prejudice.
Discussion
5
In the district court, Knowlin asserted that, when the defendants delivered him to Wisconsin authorities while his Arkansas habeas corpus action remained pending, they violated his rights under the Fourteenth Amendment and the UCEA. On appeal, Knowlin has abandoned his Fourteenth Amendment argument, and we therefore consider only Knowlin's allegation that the defendants violated the UCEA. We conclude, like the district court, that Knowlin's sec. 1983 claim is barred by Heck.
6
Heck involved a sec. 1983 claim arising out of alleged unlawful acts by state prosecutors and police officers that had led to the plaintiff's arrest, and ultimately his conviction. In analyzing whether Heck's claim was cognizable under sec. 1983, the Court analogized to the common-law cause of action for malicious prosecution, one element of which is the termination of the prior criminal proceeding in favor of the accused. The Supreme Court upheld the dismissal of the suit, and it stated that if a "judgment in favor of the plaintiff would necessarily imply the invalidity of his conviction or sentence . . . the [sec. 1983] complaint must be dismissed unless the plaintiff can demonstrate that the conviction or sentence has already been invalidated." Id. at 487. This rule stems not from exhaustion principles, but from "the hoary principle that civil tort actions are not appropriate vehicles for challenging the validity of outstanding criminal judgments . . . ." Id. at 486, 114 S.Ct. 2364.
7
The tort of malicious prosecution provides the closest analogy again in this case, and thus Knowlin cannot prevail in his claim based on the denial of an opportunity to test the facial validity of the extradition demand through habeas proceedings absent a showing that he was not, in fact, extraditable through proper procedures. It is irrelevant that Knowlin, in his complaint, alleges only that the defendants denied him a procedure guaranteed by federal law; he does not allege that he was innocent of the charges in the demanding state or was otherwise not extraditable. In Edwards v. Balisok, the Supreme Court rejected the proposition that a claim challenging only a procedural defect, not a defective result, is always cognizable under sec. 1983 after Heck. 117 S.Ct. 1584, 1587-88 (1997). Rather, Heck requires an inquiry into the nature of the allegations and whether the entire claim for damages would, if proven, necessarily imply the invalidity of the conviction or sentence. Id. at 646-48, 117 S.Ct. at 1588.
8
In Antonelli v. Foster, 104 F.3d 899 (7th Cir. 1997), the plaintiff sought damages under sec. 1983, alleging that his detention pursuant to a parole violator warrant was invalid because he was not given a copy of the application for the warrant. We held that the suit was barred by Heck because the plaintiff had not proven that his detention had been invalidated: "A suit for damages for confinement pursuant to a warrant would also be a suit for malicious prosecution, . . . which can succeed only if the prosecution fails, that is, only if the confinement is held to be unlawful in the proper forum." Id. at 900 (citations omitted). So too, here, to establish a sec. 1983 claim for monetary relief, including a showing of damages, Knowlin will have to prove that he suffered some deprivation of liberty greater than that which he would have suffered through extradition in full compliance with the UCEA. That showing, in turn, would necessarily imply the invalidity of his Wisconsin parole revocation, which Heck instructs cannot be shown through a sec. 1983 suit. Heck therefore bars the instant suit.
Conclusion
9
For the reasons stated herein, the decision of the district court is AFFIRMED.
Notes:
*
After an examination of the briefs and the record, we have concluded that oral argument is unnecessary. Thus, the appeal is submitted on the briefs and the record. See Fed. R. App. P. 34(a)(2).
1
Knowlin also sued Sherwood police officer Leonard Carver, but voluntarily dismissed the suit against Carver because he was unable to effect service against this third defendant. Although Knowlin also alleged official capacity claims against the defendants, he conceded in the district court that he could not state such a claim.
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958 F.2d 237
35 Fed. R. Evid. Serv. 332
Brian Eugene DANA, Appellant,v.DEPARTMENT OF CORRECTIONS, Appellee.
No. 89-5303MN.
United States Court of Appeals,Eighth Circuit.
Submitted May 14, 1990.Decided March 4, 1992.
Paul Engh, Minneapolis, Minn., for appellant.
Steven DeCoster, Asst. Ramsey County Atty., St. Paul, Minn., for appellee.
Before JOHN R. GIBSON, FAGG and WOLLMAN, Circuit Judges.
FAGG, Circuit Judge.
1
A Minnesota jury convicted Brian Eugene Dana of sexually abusing his five-year-old son, C.D., and his four-year-old son, T.D. The trial court sentenced Dana to two consecutive forty-three month terms. Later, the Minnesota Court of Appeals reversed Dana's convictions. State v. Dana, 416 N.W.2d 147, 154 (Minn.Ct.App.1987). After the Minnesota Supreme Court reinstated his convictions, State v. Dana, 422 N.W.2d 246, 251 (Minn.1988), Dana brought this federal habeas action. The district court denied Dana's petition. Dana appeals and we affirm.
2
Although the trial court ruled T.D. could not testify at Dana's trial, C.D. testified that Dana abused both him and his younger brother. In addition to C.D.'s testimony, adult witnesses testified about both boys' statements describing their abuse and identifying Dana as their abuser. These witnesses included a child psychologist, a pediatrician, the boys' mother, their stepfather, and a police officer. Dana's primary contention on appeal is that the admission of T.D.'s out-of-court statements through these adult witnesses violated Dana's rights under the Confrontation Clause.
3
"[T]he [C]onfrontation [C]lause neither bars the admission of all out-of-court statements, nor requires that all declarants be subject to cross-examination." United States v. Dorian, 803 F.2d 1439, 1446 (8th Cir.1986). The hearsay statements of an unavailable witness are admissible " 'if [they] bear[ ] adequate "indicia of reliability." ' " Idaho v. Wright, 497 U.S. 805, 110 S.Ct. 3139, 3146, 111 L.Ed.2d 638 (1990) (quoted cases omitted). Dana does not dispute that T.D. was an unavailable witness within the meaning of the Confrontation Clause. Thus, we need only decide whether T.D.'s hearsay statements bear "sufficient indicia of reliability to withstand scrutiny under the Clause." Id., 110 S.Ct. at 3147. Reliability can be inferred when a hearsay statement falls within a firmly rooted hearsay exception. Id. at 3146. A statement that does not fall within a firmly rooted exception must be excluded " 'absent a showing of particularized guarantees of trustworthiness.' " Id. (quoted case omitted).
4
Relying in part on evidence corroborating T.D.'s hearsay statements to the adult witnesses, the district court concluded T.D.'s statements were admissible because they possessed particularized guarantees of trustworthiness. After the district court denied Dana's habeas petition, however, the Supreme Court decided corroborating evidence cannot be used to determine trustworthiness. See id. at 3150. Having reviewed the record, we now conclude T.D.'s hearsay statements to the psychologist, the pediatrician, T.D.'s mother, and his stepfather were admissible without corroborating evidence.
5
The Department of Corrections argues T.D.'s statements to the psychologist and the pediatrician fall within Minnesota's medical diagnosis and treatment hearsay exception, see Minn.R.Evid. 803(4), and thus, the reliability of these statements can be inferred. Dana contends T.D.'s statements identifying Dana as his abuser do not fall within the exception because the statements are not relevant to diagnosis and treatment. In Minnesota, however, a child sexual abuse victim's statements identifying the abuser as a member of the child's immediate family are relevant to diagnosis and treatment. State v. Larson, 453 N.W.2d 42, 47 (Minn.) (Larson I ), vacated on other grounds, --- U.S. ----, 111 S.Ct. 29, 112 L.Ed.2d 7 (1990); see State v. Larson, 472 N.W.2d 120, 126 (Minn.1991) (en banc) (after remand of Larson I ) (child sexual abuse victim's statements identifying abuser fall within exception), cert. denied, --- U.S. ----, 112 S.Ct. 965, 117 L.Ed.2d 131 (1992); see also United States v. Renville, 779 F.2d 430, 436 (8th Cir.1985) (involving identical federal exception).
6
Dana also contends T.D.'s statements to the psychologist do not fall within Minnesota's medical diagnosis and treatment exception because the psychologist abandoned her role as a therapist and lost her professional objectivity. Although the psychologist discontinued T.D.'s therapy to investigate whether Dana had abused T.D., the psychologist needed this information to treat T.D. effectively. See Renville, 779 F.2d at 436-38; Larson I, 453 N.W.2d at 47. The record does not show the psychologist lost her professional objectivity.
7
We conclude T.D.'s hearsay statements to the psychologist and the pediatrician fall within Minnesota's medical diagnosis and treatment hearsay exception. Because this exception is firmly rooted, White v. Illinois, --- U.S. ----, 112 S.Ct. 736, 742 n. 8, 116 L.Ed.2d 848 (1992), the reliability of T.D.'s statements can be inferred. Wright, 110 S.Ct. at 3146. Thus, the admission of T.D.'s statements to the psychologist and the pediatrician did not violate the Confrontation Clause.
8
We also conclude the admission of T.D.'s hearsay statements to his mother and stepfather did not violate the Confrontation Clause. The Minnesota trial court admitted T.D.'s statements to his mother and stepfather under a statutory exception to the hearsay rule. See Minn.Stat. § 595.02 subd. 3 (Supp.1985). Neither party argues this exception is firmly rooted. Thus, to satisfy the Confrontation Clause's reliability requirement, T.D.'s statements must possess particularized guarantees of trustworthiness. See Wright, 110 S.Ct. at 3146.
9
We believe T.D.'s statements to his mother and stepfather are particularly trustworthy for several reasons. First, T.D.'s revelations of abuse were either spontaneous or the result of nonleading questions. See Wright, 110 S.Ct. at 3152 (spontaneity indicates trustworthiness). The record does not show any inconsistencies in T.D.'s statements to his mother and stepfather. See id. at 3150. T.D.'s age suggests he lacked a motive to accuse Dana falsely and weighs in favor of trustworthiness. See Dorian, 803 F.2d at 1445; Renville, 779 F.2d at 441. Finally, T.D.'s graphic descriptions of abuse give his statements the ring of truth. See Dorian, 803 F.2d at 1445. We would not expect a four-year-old child to manufacture the lurid accusations of abuse T.D. made to his mother and stepfather. See id.; United States v. Cree, 778 F.2d 474, 477-78 (8th Cir.1985).
10
Although T.D. had been visiting the psychologist for a month when T.D. revealed the abuse to his mother and stepfather, we do not believe the visits prompted T.D.'s revelations. During the first month, the psychologist questioned T.D. in very general terms. The psychologist did not suggest Dana had abused T.D. and certainly did not provide T.D. with the vivid details of abuse that T.D. revealed to his mother and stepfather. We conclude T.D.'s statements to his mother and stepfather possess particularized guarantees of trustworthiness.
11
Disregarding the corroborating evidence relied on by the district court, however, we cannot conclude T.D.'s statements to the police officer are particularly trustworthy. The police officer used leading questions both times he interviewed T.D., and during the video-taped interview, T.D.'s statements were inconsistent. The police officer's testimony, however, played a minor role in the prosecution's case against Dana. The officer's testimony revealed nothing that did not otherwise come out at trial, and T.D.'s contradictory performance on the video tape aided Dana's defense. Given the strength of the prosecution's case, we conclude the officer's testimony was "unimportant in relation to everything else the jury considered on the issue [of Dana's guilt]." Yates v. Evatt, --- U.S. ----, 111 S.Ct. 1884, 1893, 114 L.Ed.2d 432 (1991). Thus, any error in admitting the police officer's testimony and the video tape was harmless beyond a reasonable doubt. Id., 111 S.Ct. at 1892-93; see United States v. Copley, 938 F.2d 107, 110-11 (8th Cir.1991) (listing factors relevant to harmlessness).
12
Finally, Dana contends the evidence is insufficient to support his convictions for sexually abusing his sons. Having reviewed the record, we conclude sufficient evidence supports the jury's verdict. See Jackson v. Virginia, 443 U.S. 307, 318-19, 99 S.Ct. 2781, 2788-89, 61 L.Ed.2d 560 (1979).
13
Accordingly, we affirm.
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Case: 17-10915 Document: 00514666005 Page: 1 Date Filed: 10/02/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
No. 17-10915
Fifth Circuit
FILED
October 2, 2018
UNITED STATES OF AMERICA, Lyle W. Cayce
Clerk
Plaintiff - Appellee
v.
WAYMON SCOTT MCLAUGHLIN,
Defendant - Appellant
Appeals from the United States District Court
for the Northern District of Texas
USDC No. 4:16-CR-212-1
Before DENNIS, CLEMENT, and ENGELHARDT, Circuit Judges.
PER CURIAM:*
Waymon Scott McLaughlin was indicted on six counts of bank robbery
by intimidation, in violation of 18 U.S.C. § 2113(a). A jury convicted
McLaughlin of four of the six counts of bank robbery by intimidation.
McLaughlin was sentenced to four concurrent terms of 188 months of
imprisonment based, in relevant part, on enhancements for his aggravating
role in counts five and six. McLaughlin now appeals his conviction and
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 17-10915 Document: 00514666005 Page: 2 Date Filed: 10/02/2018
No. 17-10915
sentence. Specifically, McLaughlin argues that the district court erred in
instructing the jury, in admitting as an exhibit a photograph of his ear, in
denying his motion to suppress the robbery note, and in calculating his
sentence. As set forth below, we disagree with each of these arguments and
therefore AFFIRM McLaughlin’s conviction and sentence.
I. BACKGROUND
McLaughlin was indicted on six counts of bank robbery by intimidation,
in violation of 18 U.S.C. § 2113(a). The superseding indictment charged
McLaughlin with robbing five FDIC-insured banks in the Fort Worth area a
total of six times between December 2015 and May 2016. McLaughlin pleaded
not guilty and proceeded to a jury trial.
McLaughlin filed a pre-trial motion to suppress, inter alia, a robbery note
that was found in a FedEx envelope he was carrying immediately prior to his
lawful May 2016 arrest, claiming that the envelope was obtained from a sealed
medical envelope during a warrantless search. Following an evidentiary
hearing, the district court denied McLaughlin’s motion to suppress, finding
that the search of the envelope was lawful as both a search incident to arrest
and as an inventory search. Additionally, prior to trial, McLaughlin argued
that the Government’s “newly produced” exhibit, a photograph of his ear,
should be excluded because it violated the court’s scheduling order and
prejudiced McLaughlin’s ability to prepare his defense. The district court
overruled McLaughlin’s objection, admitting Government’s Exhibit 83.
At trial, the jury heard evidence of all six charged bank robberies. The
jury found McLaughlin not guilty as charged in counts one and two of the
superseding indictment; but found McLaughlin guilty as charged in counts
three, four, five, and six of the superseding indictment. Having overruled
McLaughlin’s objection to the aggravating role enhancement, the district court
sentenced McLaughlin within the guidelines to 188 months imprisonment for
2
Case: 17-10915 Document: 00514666005 Page: 3 Date Filed: 10/02/2018
No. 17-10915
all four counts, each term to run concurrently. McLaughlin now challenges his
conviction and sentence on the grounds discussed below.
II. DISCUSSION
A. Jury Instructions
McLaughlin appeals the district court’s denial of his proposed jury
instruction that stated, “to take ‘by means of intimidation’ means the
defendant used force or threatened to use force.” 1 Because McLaughlin
preserved the issue on appeal, we “review [the] district court’s denial of
[McLaughlin’s] proffered jury instruction for abuse of discretion,” affording the
district court “substantial latitude in formulating jury instructions.” United
States v. Porter, 542 F.3d 1088, 1093 (5th Cir. 2008). A refusal to give a
requested instruction constitutes reversible error only if such instruction: “(1)
is a substantively correct statement of the law, (2) is not substantially covered
in the charge as a whole, and (3) concerned an important point in the trial such
that the failure to instruct the jury on the issue seriously impaired the
defendant’s ability to present a given defense.” Id. (citing United States v. Jobe,
101 F.3d 1046, 1059 (5th Cir. 1996)). It is within a trial judge’s discretion to
deny a jury instruction if the instruction sought fails to meet any one of these
elements. Id. The district court’s instructions will be affirmed if “the court’s
1 The district court instructed the jury:
“By means of intimidation” means to say or do something in such
a way that a person of ordinary sensibilities hearing or seeing
such thing would be fearful of bodily harm. It is not necessary to
prove that the alleged victim was actually frightened, and
neither is it necessary to show that the behavior of the defendant
was so violent that it was likely to cause terror, panic, or
hysteria. However, a taking would not be by “means of
intimidation” if the fear, if any, resulted from the alleged
victim’s own timidity rather than some intimidating conduct on
the part of the defendant. The essence of the offense is the taking
of money or property accompanied by intentional, intimidating
behavior on the part of the defendant.
3
Case: 17-10915 Document: 00514666005 Page: 4 Date Filed: 10/02/2018
No. 17-10915
charge, as a whole, is a correct statement of the law and . . . clearly instructs
jurors as to the principles of the law applicable to the factual issues confronting
them.” United States v. Spalding, 894 F.3d 173, 187 (5th Cir. 2018) (quoting
United States v. Kay, 513 F.3d 432, 446 (5th Cir. 2007)).
On appeal, McLaughlin argues that the district court erred because his
requested instruction accurately states the law as clarified by this court in
United States v. Brewer, 848 F.3d 711 (5th Cir. 2017). Further, McLaughlin
claims that the pattern jury instruction used by the district court was
insufficient because not merely fear, but a threat of force is required by the
bank robbery statute. Moreover, McLaughlin contends that the court not only
denied his request, it directly called the issue to the jury’s attention and
effectively instructed the jury that the use of force was irrelevant to its decision
when it directed the jury to strike through the words “force, violence or,” in the
definition of the crime, 18 U.S.C. § 2113(a). Finally, McLaughlin asserts that
the instruction was critical in his case, urging us to vacate all four counts of
conviction.
The district court did not err in refusing to give McLaughlin’s proffered
jury instruction. McLaughlin’s challenge instantly fails because his proposed
jury instruction is not an accurate statement of law. See Russell v. Plano Bank
& Trust, 130 F.3d 715, 719 (5th Cir. 1997) (“Where a party argues on appeal
that the district court erred in refusing to give a proffered jury instruction, that
party must show as a threshold matter that the proposed instruction correctly
stated the law.”) (internal quotation and citation omitted). The use of force is
not necessary to prove robbery by intimidation; rather, the use of force is an
alternative method of proving bank robbery under § 2113(a), which was not
alleged in this case. See United States v. Higdon, 832 F.2d 312, 314 (5th Cir.
1987) (“The requirement of a taking ‘by force and violence, or by intimidation’
4
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No. 17-10915
under section 2113(a) is disjunctive. The government must prove only ‘force
and violence’ or ‘intimidation’ to establish its case.”).
Nor does McLaughlin’s proposed jury instruction accurately reproduce
the holding in United States v. Brewer—that federal bank robbery in violation
of 18 U.S.C. § 2113(a) categorically qualifies as a crime of violence under
U.S.S.G. § 4B1.2(a)(1) because robbery by intimidation, the “least culpable
conduct” under the statute, requires at least an implicit threat to use force. 848
F.3d 711, 714–16 (5th Cir. 2017). The Brewer court reaffirmed that an express
threat to use force is not required for a conviction of robbery by intimidation.
See id. at 715. McLaughlin’s omission of the word “implicit”—arguably the
single most important word in the court’s holding—without further qualifying
the type of threat of force required misstates the law and would have misled
the jury.
Moreover, the district court’s definition of taking by intimidation
accurately encapsulates the Fifth Circuit Pattern Jury Instruction (Criminal)
§ 2.80A (2015), and is further supported by our decision in United States v.
Higdon. 832 F.2d 312, 315 (5th Cir. 1987) (“[I]ntimidation results when one
individual acts in a manner that is reasonably calculated to put another in
fear. . . . [A] taking by intimidation under section 2113(a) occurs when an
ordinary person in the teller’s position reasonably could infer a threat of bodily
harm from the defendant’s acts.”). “It is well-settled that a district court does
not err by giving a charge that tracks this Circuit’s pattern jury instructions
and that is a correct statement of the law.” United States v. Whitfield, 590 F.3d
325, 354 (5th Cir. 2009) (citing United States v. Turner, 960 F.2d 461, 464 (5th
Cir. 1992)).
Finally, we reject McLaughlin’s related assertion that the jury was
misled regarding the requirement of an implicit threat of force when the
district court directed the jury to strike through the words “force and violence,
5
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No. 17-10915
or” in the written jury instructions defining bank robbery under 18 U.S.C. §
2113(a). Because McLaughlin failed to assert an objection before the district
court, this unpreserved issue is reviewed for plain error. See United States v.
Sellers, 926 F.2d 410, 417 (5th Cir. 1991). This argument fails for several
reasons. First, the statute is disjunctive: section 2113(a) requires a taking “by
force and violence, or by intimidation.” 18 U.S.C. § 2113(a) (emphasis added).
“The government must prove only ‘force and violence’ or ‘intimidation’ to
establish its case.” Higdon, 832 F.2d at 314.
Second, the record indicates that the district court instructed the jury to
strike these words to reflect the superseding indictment, which charged
McLaughlin with multiple counts of robbery by intimidation, not robbery by
force or violence. Moreover, the district court judge clarified to the jury his
reason for the modification: “It is true that Title 18, 2113, makes it a crime for
anyone to take from a person by force, violence, or intimidation any money, et
cetera, but that’s not alleged in this case. So I don’t want you to be confused
between a statement of what the statute is and the later presentation of the
three elements.” Therefore, the district court properly adapted the instruction
to the allegations of the indictment. See United States v. Bizzard, 615 F.2d
1080, 1081–82 (5th Cir. 1980). Taken as a whole, we are satisfied that the
district court correctly instructed the jurors on the law. See United States v.
Pace, 10 F.3d 1106, 1121 (5th Cir. 1993).
For these reasons, the district court did not abuse its broad discretion in
refusing McLaughlin’s jury instruction.
B. Government’s Exhibit 83 - Photograph of McLaughlin’s Left Ear
Next, McLaughlin challenges the district court’s admittance into
evidence Government’s Exhibit 83, a photograph of his left ear, which he
argues should have been excluded because it violated the court’s discovery
order and did not give the defense fair notice. It is within the sound discretion
6
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No. 17-10915
of the district court whether or not to impose sanctions for a discovery violation.
See United States v. Dvorin, 817 F.3d 438, 453 (5th Cir. 2016). In making this
determination, district courts should consider: “(1) the reasons why disclosure
was not made; (2) the amount of prejudice to the opposing party; (3) the
feasibility of curing such prejudice with a continuance of the trial; and (4) any
other relevant circumstances.” Id. (quoting United States v. Garrett, 238 F.3d
293, 298 (5th Cir. 2000)). “Any sanction imposed should be the least severe
penalty necessary to ensure compliance with the court’s discovery orders.” Id.
A district court’s determination not to impose sanctions is reviewed for abuse
of discretion. Id. “The standard of review for discovery matters is steep. We
review alleged errors in the administration of discovery rules under an abuse
of discretion standard and will not reverse on that basis unless a defendant
establishes prejudice to his substantial rights.” United States v. Holmes, 406
F.3d 337, 357 (5th Cir. 2005).
We affirm the district court’s admission of Government’s Exhibit 83. 2
The exhibit at issue is a photograph of McLaughlin’s left ear that was produced
eight days before trial. See United States v. Bentley, 875 F.2d 1114, 1118 (5th
Cir. 1989) (affirming the district court’s refusal to exclude evidence as a
sanction for the government’s untimely disclosure of evidence the night before
trial). The district court did not find, nor is there any indication in the record,
that the Government’s failure to disclose the photograph sooner was
intentional or in bad faith. See Dvorin, 817 F.3d at 453. In fact, McLaughlin
concedes that there is no evidence that the Government intentionally produced
the exhibit late; rather, the Government provided the photograph to defense
counsel the same day it was taken. McLaughlin did not request a continuance
upon receiving the photograph nor did McLaughlin reassert his objection to the
2 McLaughlin did not further advance this challenge at oral argument.
7
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No. 17-10915
exhibit at trial. Furthermore, the photograph is of McLaughlin’s ear, which he
inevitably brought with him to court, and is not alleged to be an inaccurate or
modified depiction. Thus, the Government could have simply pointed to
McLaughlin’s ear in the courtroom. See, e.g., United States v. Weeks, 919 F.2d
248, 253 (5th Cir. 1990) (referring to a photograph of the defendant as a
“physical demonstration”). Considering these facts, the district court did not
abuse its discretion in declining to exclude the photograph or impose sanctions.
Equally fatal to his argument on appeal, McLaughlin failed to make a
specific showing that the tardiness of the disclosure prejudiced his substantial
rights. Moreover, although it is uncontroverted that the Government relied
heavily on Exhibit 83 in its closing argument, the Government did not solely
rely on the ear identification to prove McLaughlin’s guilt—the record contains
surveillance photographs of McLaughlin’s entire face, testimony of numerous
bank tellers, as well as other corroborating, incriminating physical evidence.
McLaughlin has not shown that the photograph was inadmissible or that any
alleged discovery violation by the Government necessitated the exclusion of the
photograph, the “most extreme sanction possible.” See Bentley, 875 F.2d at
1118; see also United States v. Sarcinelli, 667 F.2d 5, 7 (5th Cir. 1982)
(reversing the district court’s exclusion of evidence for prosecutor’s failure to
timely comply with the discovery orders because a less severe sanction could
have been imposed). Thus, the district court did not abuse its discretion in
allowing into evidence Government’s Exhibit 83.
McLaughlin’s assertion that he was denied an opportunity to be heard is
meritless. The district court considered the essence of the argument now
presented on appeal when it overruled McLaughlin’s preliminary objection to
the photograph.
8
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No. 17-10915
C. Denial of McLaughlin’s Motion to Suppress
In his third argument on appeal, McLaughlin contends that the district
court improperly denied his motion to suppress the robbery note that he claims
was discovered during an unlawful search of an envelope he was carrying at
the time of his arrest. 3 When reviewing a district court’s ruling on a motion to
suppress, we review factual findings for clear error and legal conclusions de
novo. United States v. Ortega, 854 F.3d 818, 825 (5th Cir. 2017). “Factual
findings are clearly erroneous only if a review of the record leaves this Court
with a ‘definite and firm conviction that a mistake has been committed.’”
United States v. Hearn, 563 F.3d 95, 101 (5th Cir. 2009) (quoting United States
v. Hernandez, 279 F.3d 302, 306 (5th Cir. 2002)). The evidence is viewed “in
the light most favorable to the prevailing party,” here the Government. United
States v. Santiago, 410 F.3d 193, 197 (5th Cir. 2005). Our review is particularly
deferential “where a district court’s denial of a suppression motion is based on
live oral testimony . . . because the judge had the opportunity to observe the
demeanor of the witnesses.” Id. Such deference applies to our review, as the
district court based its conclusion on its finding that Officer Dallas Connor’s
recitation of events at the suppression hearing was credible. The district
court’s ruling “should be upheld if there is any reasonable view of the evidence
to support it.” United States v. Gonzalez, 190 F.3d 668, 671 (5th Cir. 1999)
(internal quotation marks and citation omitted).
McLaughlin argues that the robbery note was inadmissible because it
was recovered during a warrantless search and neither of the warrant
exceptions presented by the Government and ultimately relied on by the
district court—search incident to arrest and inventory search—is applicable.
“Warrantless searches are per se unreasonable under the Fourth Amendment,
3 The note read: “This is bank Robber [sic] give me Twenties Fifties hundreds.”
9
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No. 17-10915
subject to a few specific exceptions.” United States v. Mata, 517 F.3d 279, 284
(5th Cir. 2008). A search incident to arrest is a reasonable search permitted by
the Fourth Amendment that does not require a search warrant. Chimel v.
California, 395 U.S. 752, 762–63 (1969). Incident to a lawful arrest, police may
search the arrestee’s person and “the area within his immediate control— . . .
the area from within which he might gain possession of a weapon or
destructible evidence.” Id. at 763. The search incident to arrest exception does
not extend to a search that is remote in time or place from the arrest. United
States v. Chadwick, 433 U.S. 1, 15 (1977), abrogated on other grounds by
California v. Acevedo, 500 U.S. 565 (1991).
In conducting a search incident to arrest, officers may search the
arrestee himself, as well as certain containers that were located either on the
arrestee’s person or within his reach at the time of his arrest, provided the
search is contemporaneous with the arrest. See United States v. Robinson, 414
U.S. 218, 235–36 (1973) (upholding search of closed cigarette package on
arrestee’s person); see also United States v. Johnson, 846 F.2d 279, 282 (5th
Cir. 1988) (per curiam). But see Riley v. California, 134 S. Ct. 2473, 2485 (2014)
(declining to extend the search incident to arrest exception as applied in
Robinson to searches of data on an arrestee’s cell phone). “For searches which
are incident to arrest we review de novo the application of the proper legal
standard to the established facts.” United States v. Johnson, 18 F.3d 293, 294
(5th Cir. 1994). A search incident to arrest must be objectively reasonable.
Robinson, 414 U.S. at 236.
McLaughlin argues that the search of the envelope containing the
robbery note was not incident to arrest because the officer searched the
envelope and seized the robbery note when McLaughlin was handcuffed and
beyond reaching distance. McLaughlin argues that even if the officers had a
right to search the envelope for contraband and weapons, they were prohibited
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No. 17-10915
from reading the contents of the envelope, which he claims was predominately
marked as containing medical records, attempting to analogize Riley v.
California. 134 S. Ct. at 2485 (holding that the search incident to arrest
exception does not apply to the contents of an arrestee’s cell phone).
The district court concluded that the search was lawful and the robbery
note was legally admissible, finding that Officer Connor conducted the search
of the unsealed envelope—which was removed from McLaughlin’s person at
the time of his arrest—in good faith and contemporaneous with and incident
to McLaughlin’s lawful arrest. We agree. There is no dispute regarding the
legality of McLaughlin’s arrest, which was executed pursuant to an arrest
warrant for robbery. When he was arrested, McLaughlin had just exited a
convenience store and was carrying an envelope underneath his arm. At the
suppression hearing, Officer Connor testified that the strip of glue on the
envelope had never been moistened, and it did not visually appear to ever have
been sealed. Considering Officer Connor’s testimony and upon its own
examination of the envelope, the district court conclusively found that the
envelope was unsealed and that the unsealed envelope was held close enough
to McLaughlin’s person to justify a search incident to arrest.
Additionally, the search was prompt and close to the point of
McLaughlin’s arrest. Less than five minutes after McLaughlin was
handcuffed, Officer Connor searched the unsealed envelope (an open container)
for weapons, contraband, and identification information. Officer Connor
testified that she first searched the envelope within a couple of minutes of
McLaughlin’s arrest, prior to McLaughlin being placed in the police car.
McLaughlin’s testimony that he was inside of the patrol car when he saw
Officer Connor search the envelope is not definitively inconsistent. McLaughlin
admitted that he was not fixated on Officer Connor and that she could have
previously opened the envelope without him seeing. Officer Connor further
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No. 17-10915
testified at the suppression hearing that she had been informed that
McLaughlin—a suspect in numerous bank robberies, including two robberies
that occurred that day—had fled from police days earlier and that a firearm
was recovered during that pursuit. Officer Connor noted, based on her 24 years
of experience as a police officer, that the envelope was large enough to contain
a weapon.
When looking inside the envelope, Officer Connor discovered and read
the bank robbery note. McLaughlin correctly observes that the Government
failed to show the spatial distance between McLaughlin and the envelope and
that Officer Connor was not concerned for her safety at the time she read the
note. However, these facts are of no moment given that McLaughlin was
carrying the unsealed envelope under his arm at the time of his arrest and that
the search was conducted at the scene of the arrest (a public area) only
moments after McLaughlin’s arrest. See Robinson, 414 U.S. at 235–36; see also
Riley, 134 S. Ct. at 2484 (discussing Robinson, the only Supreme Court decision
applying Chimel’s search incident to arrest analysis to a search of an item
found on the arrestee’s person: “[T]he Court did not draw a line between a
search of Robinson’s person and a further examination of the cigarette pack
found during that search. It merely noted that, ‘[h]aving in the course of a
lawful search come upon the . . . package of cigarettes, [the officer] was entitled
to inspect it.’”) (quoting Robinson, 414 U.S. at 236).
Accordingly, the district court did not err in finding that the search of
the unsealed envelope was a lawful search incident to arrest. 4 We therefore
affirm the district court’s denial of McLaughlin’s motion to suppress.
4 McLaughlin’s reliance on Riley and implausible attempt to compare the contents of
an envelope to the contents of a cell phone is wholly unfounded. Such a comparison was
unequivocally rejected by the Supreme Court in Riley: “Cell phones differ in both a
quantitative and a qualitative sense from other objects that might be kept on an arrestee’s
person.” Riley, 134 S. Ct. at 2489. The Court specifically differentiated the privacy concerns
12
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No. 17-10915
Having concluded that the search was reasonable as a search incident to
arrest, we need not decide if this was also a valid inventory search. 5
D. Aggravating Role Sentencing Enhancement
McLaughlin argues that the district court erroneously applied a two-
level enhancement in counts five and six for his aggravating role as an
“organizer, leader, manager, or supervisor.” 6 He objected to the sentencing
enhancement, preserving this issue for appeal. We review the district court’s
application of the Sentencing Guidelines de novo and its factual findings for
clear error. United States v. Ochoa-Gomez, 777 F.3d 278, 281 (5th Cir. 2015).
The determination that McLaughlin held an aggravating role under § 3B1.1(c)
is a factual finding reviewed for clear error. Id. (citing United States v.
Gonzales, 436 F.3d 560, 584 (5th Cir. 2006)). There is no clear error if the
district court’s finding is “plausible in light of the record read as a whole.”
United States v. Bowen, 818 F.3d 179, 192 (5th Cir. 2016) (citation omitted). A
finding of fact is clearly erroneous “only if, based on the entire evidence, we are
left with the definite and firm conviction that a mistake has been committed.”
Id. (internal quotation marks and citation omitted).
of a cell phone from those implicated by the search of a cigarette pack, a wallet, or purse. Id.
The degree of invasion of privacy is infinitely higher with a cell phone (i.e., immense storage
capacity), while the likelihood of concealing a weapon in a cell phone is much lower than the
envelope at issue. See id. Finally, contrary to McLaughlin’s assertions, it was not readily
apparent that the envelope seized during his arrest contained medical documents. “The
search incident to arrest exception rests not only on the heightened government interests at
stake in a volatile arrest situation, but also on an arrestee’s reduced privacy interests upon
being taken into police custody.” Id. at 2488. Thus, McLaughlin’s heightened privacy interest
argument fails.
5 During oral argument, Appellee emphasized the validity of the search as a search
incident to arrest.
6 Based on a multiple count adjustment, McLaughlin’s total offense level was 33 and
his criminal history was classified as a category II, resulting in a guideline range of 151 to
188 months imprisonment. Absent the aggravating role enhancement, McLaughlin’s
sentencing guideline range would have been 135 to 168 months imprisonment. See U.S.S.G.
Ch. 5, Pt. A (Sentencing Table).
13
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No. 17-10915
Pursuant to Section 3B1.1(c) of the Sentencing Guidelines, a defendant’s
offense level is increased by two levels if the defendant was “an organizer,
leader, manager, or supervisor in any criminal activity.” U.S.S.G. § 3B1.1(c)
(emphasis added). In distinguishing a leadership or organizational role from
one of mere management or supervision, courts consider the following factors:
[T]he exercise of decision making authority, the nature of
participation in the commission of the offense, the recruitment of
accomplices, the claimed right to a larger share of the fruits of the
crime, the degree of participation in planning or organizing the
offense, the nature and scope of the illegal activity, and the degree
of control and authority exercised over others.
Id. at cmt. n.4. 7 Although this distinction is unnecessary under § 3B1.1(c), the
factors are instructive in determining whether McLaughlin held an
aggravating role in the offense. To warrant an adjustment, a defendant must
be the organizer, leader, manager, or supervisor of at least one other
participant. 8 U.S.S.G. § 3B1.1 cmt. n.2; accord Ochoa-Gomez, 777 F.3d at 282.
A “participant” is defined as “a person who is criminally responsible for the
commission of the offense, 9 but need not have been convicted.” U.S.S.G. §
3B1.1(c) cmt. n.1. “All that is required is that the person participate knowingly
in some part of the criminal enterprise.” United States v. Glinsey, 209 F.3d 386,
396 (5th Cir. 2000) (citing United States v. Boutte, 13 F.3d 855, 860 (5th Cir.
1994)).
7 “The application notes accompanying a Guideline generally bind federal courts
unless they are inconsistent with the text of the Guideline.” United States v. Ochoa-Gomez,
777 F.3d 278, 282 (5th Cir. 2015).
8 An aggravating role adjustment is applicable, even where a defendant did not
exercise control over another participant, if he exercised management responsibility over the
property, assets, or activities of a criminal organization. United States v. Delgado, 672 F.3d
320, 345 (5th Cir. 2012) (en banc), cert. denied, 568 U.S. 978 (2012).
9 The term “offense” includes the contours of the underlying scheme, which is broader
than the offense charged. United States v. Wilder, 15 F.3d 1292, 1299 (5th Cir. 1994).
14
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No. 17-10915
On appeal, McLaughlin argues that the district court erred by imposing
the aggravating role enhancement because (1) there was insufficient evidence
that he was an organizer, leader, manager, or supervisor of at least one
participant; and (2) the district court applied the incorrect legal standard for
assessing the criminal responsibility of Aldenishae Calton (Calton), who he
contends is not a “participant” as defined in U.S.S.G. § 3B1.1 since she did not
commit the underlying crime and did not have actual knowledge of the bank
robberies.
According to the PSR, McLaughlin acted as a leader, organizer, manager,
or supervisor of at least one participant in counts five and six based on the
following:
McLaughlin recruited Calton and Glover into the offense. 10
McLaughlin utilized Calton to drive him to at least two banks on
May 27, 2016, where he committed robberies. McLaughlin told
Calton which banks to go to, and provided Calton with a portion of
the proceeds after each robbery. Calton was found to be in
possession of $506 when McLaughlin was arrested. Calton is
considered a participant in the offense, pursuant to the definition
at USSG §3B1.1, comment (n.1). In considering the factors at
USSG § 3B1.1, comment (n.4), McLaughlin was in charge of
organizing and directing Calton, claimed the larger share of the
fruits of the crime, and was the primary participant in the
commission of the offense.
Overruling McLaughlin’s objection, the district court adopted the PSR as its
findings of fact and adjusted McLaughlin’s offense level upward based on his
aggravating role in counts five and six. See United States v. Harris, 702 F.3d
226, 230 (5th Cir. 2012) (A PSR generally bears sufficient indicia of reliability).
A review of the record shows that, because the district court’s finding is
10McLaughlin contests the district court’s adoption of this finding, pointing to Calton’s
testimony that she was recruited by Marquita Glover. This does not affect our conclusion that
the district court did not err in imposing the aggravating role sentencing enhancement in
McLaughlin’s guideline calculation.
15
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No. 17-10915
plausible in light of the record as a whole, it did not clearly err in imposing the
two-level aggravating role enhancement. McLaughlin’s assertion that there
was insufficient evidence upon which to base the aggravating role
enhancement is unavailing. McLaughlin was convicted of four counts of
robbery by intimidation, including counts five and six. It is uncontroverted that
as the bank robber, McLaughlin exercised extensive participation and
decision-making in the commission of the offense, while Marquita Glover
(Glover) and Calton parked and waited in the car. See § 3B1.1 cmt. n.4.
Further evidence supports that McLaughlin acted as an organizer,
leader, manager, or supervisor of Calton in the criminal activity: Calton drove
McLaughlin to the location of the bank robberies in counts five and six;
McLaughlin directed Calton to drive to the Kroger’s store on Altamesa, the
location of the bank robbery in count five; and McLaughlin had control of the
stolen cash and directly paid Calton after three of the bank robberies. See id.;
United States v. Gordon, 248 F. App’x 521, 525 (5th Cir. 2007) (per curiam).
Finally, the record supports the district court’s finding by a preponderance of
the evidence that McLaughlin claimed the majority of the criminal proceeds.
Specifically, the crime scene officer, Jose Palomares, recovered a second FedEx
envelope from McLaughlin, Glover, and Calton’s hotel room, which contained
$3,200 of the $3,796 recovered that day (reflecting the bill denominations as
demanded in the robbery note), along with optical paperwork that belonged to
McLaughlin. These facts are consistent with the district court’s finding that
McLaughlin held an aggravating role within the meaning of Section 3B1.1(c)
in counts five and six.
McLaughlin’s second challenge that the enhancement was erroneous
because Calton does not qualify as a participant and lacked the knowledge for
participant status is equally unconvincing. McLaughlin erroneously asserts
that Calton cannot qualify as a participant because she was not criminally
16
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No. 17-10915
responsible for the bank robberies. To the contrary, a participant need only
“participate knowingly in some part of the criminal enterprise.” Glinsey, 209
F.3d at 396. At sentencing, the district court found that the evidence at trial
established that Calton was a participant for purposes of the aggravating role
enhancement, finding that she had sufficient knowledge of the offense to make
her criminally responsible. Although Calton testified that she “didn’t know”
whether something illegal was going on, the record plausibly supports the
district judge’s deduction that the totality of the circumstances proved that
Calton had the requisite knowledge that something “nefarious was going on,
and probably, even specific like there [were] bank robberies happening.”
Specifically, Calton testified at trial that she knew Glover and
McLaughlin needed money to get Glover’s boyfriend, Timothy Lewis, out of jail
and that she would be paid to drive them. 11 Calton testified that she drove
Glover and McLaughlin to Wal-Mart on East Berry, Kroger on Altamesa
Boulevard, and Wal-Mart on Vickery Boulevard where McLaughlin would get
out of Calton’s Nissan Altima with a FedEx envelope, enter the store, and
return with money. 12 McLaughlin exited each store with cash and paid Calton
a portion of the criminal proceeds at least three different times, totaling
$506.00 over a span of only a few hours. Finally, in Calton’s interview with the
FBI on the day of McLaughlin’s arrest, Calton admitted that she knew that
McLaughlin was unlawfully obtaining money from the banks that she drove
him to that day. Accordingly, Calton qualifies as a participant under the
enhancement.
11 On cross examination, defense counsel stated to Calton, “If what you said is what
happened, you basically just told law enforcement under oath that you’re the getaway driver.”
12 Calton also drove McLaughlin and Glover to Wal-Mart in Waco where he got out
with the FedEx envelope, but did not return with money because the “line was too long.”
17
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No. 17-10915
Therefore, because its finding is “plausible in light of the record as a
whole,” the district court’s imposition of the Section 3B1.1(c) aggravating role
enhancement was not clearly erroneous. See Bowen, 818 F.3d at 192.
III. CONCLUSION
For the foregoing reasons, McLaughlin’s conviction and sentence are
AFFIRMED.
18
| {
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} |
723 S.E.2d 582 (2012)
STATE
v.
JOHNSON.
No. COA11-1099.
Court of Appeals of North Carolina.
Filed April 17, 2012.
Case Reported Without Published Opinion No Error.
| {
"pile_set_name": "FreeLaw"
} |
220 B.R. 276 (1998)
In re CARTER PAPER COMPANY, INC., Debtor.
Frank L. CARTER and Carter Paper Company, Inc.
v.
Martin A. SCHOTT, Trustee, et al.
Bankruptcy No. 90-10449, Adversary No. 96-1038.
United States Bankruptcy Court, M.D. Louisiana.
April 16, 1998.
*277 *278 Jacques F. Bezou, Covington, LA, for plaintiffs.
Martin A. Schott, Baton Rouge, LA, trustee.
Pamela Magee, Baton Rouge, LA, for trustee.
REASONS FOR ORDER STRIKING JURY TRIAL DEMAND
LOUIS M. PHILLIPS, Bankruptcy Judge.
Introduction
This adversary proceeding seeks, on behalf of Carter Paper Company, Inc. (CPC), debtor in the captioned case, and Frank L. Carter, the purported owner of the debtor, judgment against Martin A. Schott (Schott or Trustee), trustee of the CPC bankruptcy estate, for "intentional and wilful breach of fiduciary duty" to CPC and Carter, in failing either to prosecute or abandon an anti-trust claim (that the plaintiffs allege existed as an estate asset) until after the claim prescribed. The matter currently before the Court is the trustee's motion to strike the plaintiff's demand for a jury trial. For the reasons given below, the court finds that the plaintiff is not entitled to a jury trial and will grant the trustee's motion.
Facts
On April 6, 1990, three creditors of CPC filed an involuntary Chapter 7 petition against CPC.[1] This court entered an order for relief on June 12, 1990. Purportedly, CPC's assets included an antitrust and unfair trade practices claim against rival paper companies (the claim). CPC's bankruptcy schedules failed to mention the claim. CPC alleges that the Trustee knew of the claim, and that despite repeated requests from debtor's counsel, the trustee failed to file an action on behalf of the estate or to abandon *279 the claim so that CPC could bring an action.[2]Id. The claim prescribed on January 11, 1994.[3] On February 1, 1994, three weeks after the prescription date, Schott abandoned the estate's interest in the claim. A few weeks later Schott filed a report of no distribution, and in July the court closed CPC's case.
In 1996, CPC filed a petition in state court[4] alleging that Schott had violated his fiduciary duty to the estate and that debtor's counsel had committed legal malpractice. Schott removed the case to the United States District Court for the Middle District of Louisiana, which referred the matter to this Court. The bankruptcy case has been reopened. This Court severed and remanded all claims against parties other than Schott, concluding that there was no jurisdictional nexus between those claims and the action against the trustee. (The other defendants (previous lawyers and almost lawyers for CPC) had not asserted cross-claims or third party claims against the Trustee, and advised the Court they did not intend to assert such.) As a consequence of the severance, the Court instructed CPC to amend its complaint to incorporate only the allegations relevant to the action against the Trustee. In the complaint, as amended, Carter asserts a right to trial by jury and has consented to such before this Court. Implicitly, Carter has consented to issuance by this Court of a final judgment if trial by jury is not available. The Trustee has brought a motion to strike CPC's demand for a jury trial. Bankruptcy Rule 7012(b); Federal Rule of Civil Procedure 12(f).
Jurisdiction
The complaint in this adversary proceeding alleges that Schott improperly administered the bankruptcy estate and caused a loss to CPC. This Court has subject matter jurisdiction over this proceeding. 28 U.S.C. § 157(b)(1). See Matter of Baheth Construction Co., Inc., 118 F.3d 1082 (5th Cir.1997) (action seeking damages from trustee and surety for trustee's pursuit of a temporary restraining order against the plaintiff constituted, at the very least, a matter related to a case under title 11 within the meaning of 28 U.S.C. § 157(a); therefore bankruptcy court had jurisdiction). The Trustee has consented to issuance by this Court of a final judgment but denies that CPC has a right to trial by jury. CPC alleges a right to trial by jury, but has consented to such before this Court, at least implicitly consenting to the issuance by this Court of a final judgment. This Court, having subject matter jurisdiction, infers from the express consents of the parties the authority to issue a final judgment (even *280 if this proceeding is only related to a case under Title 11). 28 U.S.C. § 157(c)(2).
A bankruptcy court can preside over a jury trial only with the approval of the district court and the consent of all parties. 28 U.S.C. § 157(e); In re Clay, 35 F.3d 190 (5th Cir.1994). This Court previously has obtained approval from the Honorable District Court to conduct jury trials pursuant to § 157(e), with consent of the parties. The parties have consented to trial by jury before this Court, in the event trial by jury is required. The Trustee disputes the right to jury trial, but consents, if such a right exists, to trial by jury here.[5]
The Supreme Court, Jury Trials, Bankruptcy Cases
The United States Supreme Court has published a line of cases, Schoenthal v. Irving Trust Co., 287 U.S. 92, 53 S.Ct. 50, 77 L.Ed. 185 (1932); Katchen v. Landy, 382 U.S. 323, 86 S.Ct. 467, 15 L.Ed.2d 391 (1966); Granfinanciera v. Nordberg, 492 U.S. 33, 109 S.Ct. 2782, 106 L.Ed.2d 26 (1989), and Langenkamp v. Culp, 498 U.S. 42, 111 S.Ct. 330, 112 L.Ed.2d 343 (1990), which embodies the Supreme Court's understanding of the interplay between the Seventh Amendment[6] right to a jury trial and the inherently equitable nature of the bankruptcy courts. An examination of this series of cases will provide guidance in resolving the present dispute.
Schoenthal, supra, began as a suit in equity brought by the Irving Trust Company (the trustee) to recover $1500 in preferences paid by a bankruptcy debtor to Morris and Fannie Schoenthal (the Schoenthals). The trustee claimed to have no adequate remedy at law, and sought an equitable decree declaring the payments preferential and directing the Schoenthals to pay to the trustee the amount of the preferences with interest and costs. 287 U.S. at 93, 53 S.Ct. at 51.
The Schoenthals sought trial by jury. The trial court denied the motion and, after trial, entered judgment in favor of the trustee. The Second Circuit affirmed. Irving Trust Co. v. Schoenthal, 54 F.2d 1079 (2nd Cir. 1932). The Supreme Court reversed, holding that the defendants were entitled to trial by jury. 287 U.S. at 97, 53 S.Ct. at 52.
The Supreme Court invoked the rule that suits in equity are unavailable if law provides *281 a remedy. It also observed that in England preferences were historically triable at law. The facts failed to support the trustee's assertion that it had no adequate remedy at law. 287 U.S. at 96-97, 53 S.Ct. at 52. The preferences were money payments of ascertained and definite amounts. The bill disclosed no facts calling for an accounting or other equitable relief. Consequently, the defendants had a right to trial by jury. Id.
The rule of Schoenthal is that a preference action against a party who has not filed a claim against the bankruptcy estate is a legal action, entitling the parties to the protection of the Seventh Amendment. In 1932, when Schoenthal was decided, preference actions were not considered part of the bankruptcy process; they could be brought in state courts as well as bankruptcy courts. Id., at 94-95, 53 S.Ct. at 51. Recognition of the fact that the preference action "constitute[d] no part of the proceedings in bankruptcy," id., led the Court to distinguish the preference action from the bankruptcy process and generated the conclusion that utilizing the power to avoid a preferential transfer did not invoke the bankruptcy court's equitable jurisdiction. Since the Schoenthals had not filed a claim against the estate, the outcome of the preference action would not require the bankruptcy court to consider disallowance of their claim and would not alter the pro rata distribution of the estate. The "proceedings in bankruptcy," therefore, were seen by the court as being bound up in the allowance or disallowance of claims; the process necessary to effectuate a pro rata distribution of the res, or estate, being administered by the trustee.
Katchen v. Landy, 382 U.S. 323, 86 S.Ct. 467, 15 L.Ed.2d 391 (1966) also involved a preference action, but this time the defendant had filed a claim against the estate. The issue was whether the filing of a claim precluded the creditor's invocation of the Seventh Amendment right to a jury trial previously recognized in Schoenthal. Id., at 325, 86 S.Ct. at 470.
Katchen's Bonus Corner, Inc. (the company) borrowed $50,000, issuing notes to memorialize the debts. Louis Katchen (Katchen), an officer of the company, was a surety on the notes. After a fire severely damaged the company's assets, Katchen placed the company's funds in a trust account under his control. He made some payments on the notes with funds from the trust account and others from his personal funds. Bankruptcy followed. Katchen filed one claim against the bankruptcy estate for rent (he owned the property on which the business operated) and another for the payments made from his personal funds on the company's notes. Landy, the trustee, claimed that the payments from the trust fund to the creditors were voidable preferences. He sought judgment against Katchen for the amount of the preferences.[7] The referee overruled Katchen's objection to jurisdiction and rendered judgment for Landy. The referee further ruled that he would allow Katchen's claims only when Katchen satisfied the judgment. The District Court and the Court of Appeals affirmed. Katchen took his case to the Supreme Court. Id., at 325-26, 86 S.Ct. at 470-71.
Katchen relied on Schoenthal. He argued that there was no legal difference between a preferred party who had not filed a claim against the estate and a preferred party whose claim would be allowed only if he surrendered his preference. Katchen conceded that the Bankruptcy Act precluded allowance of a creditor's claim until the creditor had surrendered any voidable preferences.[8] He maintained, however, that the Act did not confer jurisdiction on a bankruptcy *282 court to order a preference surrendered. Since a District Court had to order the surrender of the preference, the trustee's action against Katchen effectively arose outside the bankruptcy case. Therefore, Katchen was entitled to a jury trial. Katchen concluded by asserting that any other interpretation of the Act would violate the Seventh Amendment. Id., at 327-28, 86 S.Ct. at 471-72.
The Court rejected his contentions. Id., at 328, 86 S.Ct. at 472. While the Bankruptcy Act did not expressly authorize bankruptcy courts to order claimants to surrender preferences, the absence of congressional direction was not conclusive. The matter was to be determined by the Court "after due consideration of the structure and purpose of the Bankruptcy Act as a whole, as well as the particular provisions of the Act brought in question." Id., at 328, 86 S.Ct. at 472. After extensive statutory analysis, 382 U.S. at 330-35, 86 S.Ct. at 473-76, the Court found that the Bankruptcy Act did empower the referee to order the surrender of a preference unrelated to the preferred party's claim. Id., at 335-36, 86 S.Ct. at 476. The Court then addressed Katchen's argument that this reading of the statute violated his Seventh Amendment right to a jury trial.
The Court stated that Katchen might have been entitled to a jury trial if he had presented no claim in the bankruptcy proceeding. Nevertheless, when the same issue arose as part of the process of allowance and disallowance of claims, it was triable in equity. Referring to bankruptcy courts, the Supreme Court observed:
These courts are essentially courts of equity, and they characteristically proceed in summary fashion to deal with the assets of the [estate] they are administering. The bankruptcy courts have summary jurisdiction to adjudicate controversies relating to property over which they have actual or constructive possession. They also deal in a summary way with matters of an administrative character.
382 U.S. at 327, 86 S.Ct. at 471. The power to allow, disallow, and reconsider claims, of basic importance in the administration of a bankruptcy estate, is exercised in summary proceedings. This power to allow or disallow claims is essential to the performance of the duties imposed upon the bankruptcy court. The whole process of proof, allowance, and distribution is an adjudication of interests claimed in a res. Id., at 329-30, 86 S.Ct. at 472-73.
When Katchen filed a claim against the bankruptcy estate, he converted his legal claim into an equitable claim to a pro rata share of the res under the court's administration, a share which could neither be allowed nor determined until Katchen gave up his preference. Since bankruptcy courts have jurisdiction to adjudicate controversies relating to property over which they have actual or constructive possession, and since proceedings of bankruptcy courts are inherently proceedings in equity, there is no Seventh Amendment right to a jury trial when the creditor submits a claim. Id., at 336-37, 86 S.Ct. at 476-77.
In both Schoenthal and Katchen the trustee brought an action to avoid a preferential transfer. In Schoenthal the defendant was allowed a jury trial, while in Katchen he was not. The only significant factual difference between the cases is that Katchen filed a claim, and the Schoenthals did not. Clearly, the act of filing a claim took Katchen beyond the protection of the Seventh Amendment. By filing a claim against the estate, Katchen converted his legal claim to an equitable one and invoked the summary jurisdiction of the bankruptcy court. His claim had become part of the bankruptcy process. The Schoenthals, by contrast, never entered the bankruptcy arena, and therefore the claim against them did not implicate the claims allowance process. While Katchen's claim would be disallowed if he refused to surrender his preference, the Schoenthals had no claim to be disallowed. The Katchen case shows that a claim which would otherwise be considered legal becomes equitable if it involves or is part of the "bankruptcy process," and is thereby triable, as an equitable matter, by the bankruptcy court.[9] The apparent *283 key to resolving the Seventh Amendment question, then, is to determine whether or not the action at issue invokes the equitable jurisdiction of the bankruptcy court by virtue of the action there are many, perhaps overlapping ways of saying it being "part of" and/or "integral to" and/or "a component of" and/or "an administrative matter involving or necessary to effectuate the bankruptcy proceedings" and/or "the administration of the res under constructive control of the court for purposes of determining claims to that res and/or effecting distribution of the res to those having claims against it."
The Supreme Court confirmed this lesson twenty-three years later, in Granfinanciera v. Nordberg, 492 U.S. 33, 109 S.Ct. 2782, 106 L.Ed.2d 26 (1989). The question in Granfinanciera was whether a party who had not submitted a claim against an estate had a right to a jury trial in an action by the trustee to recover a fraudulent transfer (rather than a preferential transfer as in Schoenthal), notwithstanding an intervening jurisdictional scheme, set forth in 28 U.S.C. § 157, that deemed actions to recover (both preferential and) fraudulent transfers "core proceedings" subject to resolution, by final judgment, by the bankruptcy court without a jury. 492 U.S. at 36, 109 S.Ct. at 2787. The Supreme Court found that the defendant retained its Seventh Amendment rights.
In 1983, Chase & Sanborn filed a petition for reorganization. In 1985, Nordberg, the trustee, filed an action against Granfinanciera seeking recovery of $1.7 million in allegedly fraudulent transfers. Granfinanciera requested a trial by jury. The bankruptcy court denied the request, holding that a suit to recover a fraudulent transfer was a core proceeding which would have been tried by a court of equity in eighteenth century England. The Court entered judgment against Granfinanciera in the amount of $1,500,000. Id., at 37, 109 S.Ct. at 2787. The district court affirmed. The Eleventh Circuit also affirmed, finding that Granfinanciera had no statutory right to a jury trial under 11 U.S.C. § 548(a)(2).[10] The Court further ruled that the Seventh Amendment was inapplicable because actions to recover fraudulent conveyances are equitable, and bankruptcy proceedings are inherently equitable. The Eleventh Circuit read Katchen v. Landy to say that Congress may, pursuant to its powers under the Bankruptcy Clause, convert a creditor's legal right into an equitable claim and displace any Seventh Amendment right to trial by jury. The Eleventh Circuit found that Congress had done so by designating fraudulent conveyance actions "core proceedings." Id., 492 U.S. at 37, 109 S.Ct. at 2788; 28 U.S.C. § 157(b)(2)(H).
The Supreme Court reversed. 492 U.S. at 38, 109 S.Ct. at 2788. The Court began its analysis by providing the framework that lower courts should use when determining whether a cause of action created by statute, such as that for the recovery of fraudulent conveyances, invokes the protection of the Seventh Amendment:
First, we compare the statutory action to 18th-century actions brought in the courts of England prior to the merger of the courts of law and equity. Second, we examine the remedy sought and determine whether it is legal or equitable in nature. The second stage of this analysis is more important than the first. If, on balance, these two factors indicate that a party is entitled to a jury trial under the Seventh Amendment, we must decide whether Congress may assign and has assigned resolution of the relevant claim to a non-Article III adjudicative body that does not use a jury as fact finder.
Id., at 42, 109 S.Ct. at 2790. In resolving the first question, regarding the historical antecedents of the action, the Court relied on Schoenthal to find that actions to recover preferential or fraudulent transfers were considered actions at law in 18th-century England. Id., at 43-47, 109 S.Ct. at 2791-93.
Next, the Court turned to the second part of its analysis: the nature of the relief sought by Nordberg. Id. Again relying on Schoenthal, *284 the Court found that the fraudulent transfer in this case was indistinguishable from the preferential transfer in Schoenthal:
Indeed, in our view Schoenthal removes all doubt that respondent's cause of action should be characterized as legal rather than as equitable. In Schoenthal, the trustee in bankruptcy sued in equity to recover alleged preferential payments, claiming that he had no adequate remedy at law. As in this case, the recipients of the payments apparently did not file claims against the bankruptcy estate. The Court held that the suit had to proceed at law instead, because the long-settled rule that suits in equity will not be sustained where a complete remedy exists at law, then codified at 28 U.S.C. § 384, "serves to guard the right of trial by jury preserved by the Seventh Amendment and to that end it should be liberally construed." The Court found that the trustee's suit indistinguishable from respondent's suit in all relevant respects could not go forward in equity because an adequate remedy was available at law. There, as here, "the preferences sued for were money payments of ascertained and definite amounts," and "the bill discloses no facts that call for an accounting or other equitable relief."
492 U.S. at 48-49, 109 S.Ct. at 2793-94. The Court concluded that Nordberg sought a legal remedy.
After deciding that the historical antecedents of the action were legal and that the nature of the remedy sought was also legal, the Court turned to the third step in its analysis: whether Congress had permissibly assigned resolution of Nordberg's claim to a non-Article III adjudicative body that does not use a jury as fact finder. The Court determined that such an assignment was permissible only when the claim involved public rights. The Court expended considerable effort explaining why a legal action involving public rights did not necessitate a jury trial, but in the end it found that Nordberg's action did not involve public rights and that the defendants were entitled to a jury. 492 U.S. at 55, 109 S.Ct. at 2797. The Court finished by saying:
There can be little doubt that fraudulent conveyance actions by bankruptcy trustees . . . are quintessentially suits at common law that more nearly resemble state-law contract claims brought by a bankrupt corporation to augment the bankruptcy estate than they do creditors' hierarchically ordered claims to a pro rata share of the bankruptcy res.
Id., at 56, 109 S.Ct. at 2798.
Granfinanciera is, of course, about power. The jurisdictional statute, 28 U.S.C. § 157, purports to allow bankruptcy courts to issue final judgments, without juries, in both preference and fraudulent conveyance actions by designation of those actions as "core proceedings." See 28 U.S.C. §§ 157(b)(2)(F), 157(b)(2)(H). As pointed out, now about a million times, it is thought that Congress thought it was taking its cue from Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982), wherein, through Justice Brennan (the author of Granfinanciera), the court (or part of it) said, in refuting an argument presented by the appellants, "But the restructuring of debtor-creditor relations, which is at the core of the federal bankruptcy power, must be distinguished from the adjudication of state-created private rights, such as the right to recover contract damages." Id., at 71, 102 S.Ct. at 2871.[11]
The Court in Granfinanciera observed that before 1978, preference actions were not part of the bankruptcy process,[12] 492 U.S. at 56, 109 S.Ct. at 2798; citing Schoenthal, 287 U.S. at 94-95, 53 S.Ct. at 51, and that Congress had, by the coalescence of the 1978 Code and 1984 jurisdictional statute, proposed to eliminate a party's right to trial *285 by jury by designating the fraudulent conveyance as a "core proceeding." 28 U.S.C. § 157(a)(2)(H).
Congress simply reclassified a pre-existing, common-law cause of action that was not integrally related to the reformation of debtor-creditor relations and that apparently did not suffer from any grave deficiencies. This purely taxonomic change cannot alter our Seventh Amendment analysis. Congress cannot eliminate a party's Seventh Amendment right to a jury trial merely by re-labeling the cause of action to which it attaches and placing exclusive jurisdiction in an administrative agency or a specialized court of equity.
492 U.S. at 60-61, 109 S.Ct. at 2800. This passage illustrates the fundamental teaching of Granfinanciera. The court had already stated in Schoenthal that a party who had not filed a claim against a bankruptcy estate was entitled to a trial by jury on a preference action brought against him. The rationale, as stated above, was that the preference action was not part of the bankruptcy process. The Court in Granfinanciera held that Congress could not alter the Seventh Amendment analysis by moving a preference action from outside the bankruptcy process to inside. Further, it is the province of the judicial power to determine the actual nature of an action; i.e., equitable or legal, and for an action to be equitable, it must have been either recognized as equitable prior to the existence of Congress (i.e., grafted into Article III and, by extension, the Seventh Amendment of the Constitution), or sufficiently demonstrate the characteristics of such an equitable action if given subsequent recognition as an action cognizable in the courts. The province of Congress, on the other hand, within the context of the jury trial right, is limited to the power (as described by the judiciary) to create statutory schemes and assign matters involving public rights to non-Article III judges without juries. That the Supreme Court is reaffirming the primacy of the judicial power to determine Congressional power in circumscribing judicial power by assigning matters to non-Article III tribunals to be tried without juries is clear throughout the Granfinanciera opinion.
In essence, the Court in Granfinanciera, in looking back to the Bankruptcy Act, can be seen as embracing the proposition that Congress, in promulgating prior statutes (including the jurisdictional statute) recognized the limit of Congressional power to delineate the scope and nature of equitable processes (or proceedings) and reached it. Conversely, through the promulgation of the subsequent jurisdictional provisions, Congress, failing to heed its historical awareness of its limitations, exceeded its authority by trying to tinker with the definition, scope, nature (or whatever you want to call it) of the bankruptcy (i.e., the particular equitable) process.
The dissent in Granfinanciera argued that the court's decision was a repudiation of Katchen v. Landy. Id., at 71-72, 109 S.Ct. at 2806. The majority disagreed, stating that Katchen "confirms this analysis." Id., at 57, 109 S.Ct. at 2798. The Court explained that the holding in Katchen did not depend solely upon the inherently equitable nature of bankruptcy courts. The critical factor was the bankruptcy court's "having `actual or constructive possession' of the bankruptcy estate, and its power and obligation to consider objections by the trustee in deciding whether to allow claims against the estate." Id.
The Court read Schoenthal and Katchen as holding that a creditor's right to a jury trial on a preference claim depends upon whether the creditor has submitted a claim against the estate. 492 U.S. at 58, 109 S.Ct. at 2799. Granfinanciera had not filed a claim against the estate, so Nordberg's fraudulent conveyance action did not implicate the process of allowance and disallowance of claims. Nor was the preference/fraudulent transfer action integral to the restructuring of debtor-creditor relations. The Court read Katchen and Granfinanciera as harmonious. Id., at 58-59, 109 S.Ct. at 2799.
Langenkamp v. Culp, 498 U.S. 42, 111 S.Ct. 330, 112 L.Ed.2d 343, reaffirmed Katchen v. Landy just as Granfinanciera reaffirmed Schoenthal. The debtors were Oklahoma financial institutions. Langenkamp was the trustee in the debtors' Chapter *286 11 case. At the time of filing, Culp[13] held savings certificates issued by the debtors. Id., at 43, 111 S.Ct. at 330. Within the 90-day period immediately preceding bankruptcy, Culp redeemed some of the savings certificates. Id. Since he also retained some of them, he was a creditor when the bankruptcy case was filed in 1994. Culp filed timely proofs of claim. Id. Approximately one year later, Langenkamp instituted a preference action under § 547(b) to recover the money Culp had received immediately prior to the bankruptcy. After bench trial, the bankruptcy court found for Langenkamp. Id., 498 U.S. at 42-45, 111 S.Ct. at 331. On appeal, the Tenth Circuit reversed on the issue of Culp's entitlement to a jury trial. In re Republic Trust & Sav. Co., 897 F.2d 1041 (10th Cir.1990). Citing Granfinanciera and Katchen, the Tenth Circuit held that "those appellants that did not have or file claims against the debtors' estates undoubtedly were entitled to a jury trial on the issue whether the payments they received from the debtors within ninety days of the latter's bankruptcy constituted avoidable preferences." Id., at 1046. The Tenth Circuit further held that the creditors who had claims, including Culp, were entitled to a jury trial because the trustee's actions to avoid the transfers were plenary rather than summary proceedings involving the process of allowance and disallowance of claims. Id., at 1047.
The Supreme Court reversed in a per curiam opinion. Langenkamp, 498 U.S. at 44, 111 S.Ct. at 331. The Court explained that Granfinanciera stood for the proposition that a creditor who files a claim against a bankruptcy estate triggers the process of allowance and disallowance of claims, thereby subjecting himself to the equitable jurisdiction of the bankruptcy court. If the trustee then files a preference action, that action becomes part of the claims-allowance process, and is triable only in equity. The creditor's claim and the preference action become "integral to the restructuring of the debtor-creditor relationship." Consequently, the right to a jury trial disappears. Once a creditor like Culp files a proof of claim, he places himself within the equitable jurisdiction of the bankruptcy court. Id., at 44-45, 111 S.Ct. at 331-32. There is no mention in the case of the public rights analysis, as the Court is obviously within what it considers already-plowed ground.[14]
At this juncture we can glean primary threads from the Supreme Court bankruptcy/jury trial cases:
First The bankruptcy process is the process by which a res, under the constructive possession of the bankruptcy court, is administered for the purpose of allowing, disallowing, organizing, and prioritizing the claims of creditors in, to, and upon the res referred to by the Court as the restructuring of the debtor-creditor relationship;
Second A creditor who makes a claim in, to, or upon the res has invoked the equitable jurisdiction of the bankruptcy court to determine matters involving the allowance of the claim referred to by the Court as triggering the process of allowance and disallowance of claims or the claims allowance process. This process must be completed before the res under constructive possession of the court can be distributed.
Third The bankruptcy process (or, in the old parlance, the bankruptcy "proceedings") *287 is an inherently equitable process[15] which may employ private claims and causes of action (or have such related to it), but utilizes such, through the trustee, as any other private litigant, subject to the non-bankruptcy party's right to jury trial.
Fourth Congress, essentially, has no power, notwithstanding its Article I authority to pass uniform laws respecting bankruptcies, to determine the scope of the bankruptcy process as it intersects with a party's right to jury trial within a particular proceeding. It is for the Supreme Court to determine the extent of the equitable nature of (and therefore matters integral to) the bankruptcy process.[16]
From these four main threads, we distill a two-pronged bankruptcy construct, established by the Supreme Court, within which proceedings are to be analyzed to determine whether a jury trial right exists under the Seventh Amendment.
Prong 1. The Claims Administration Prong. The claims administration prong consists of the process by which the trustee organizes claims against the res for the purpose of allowance against the estate and its property. The duty of the trustee here is to best ensure that bad claims are objected to, good claims allowed, and all claims are organized according to applicable ranking or prioritization law. Proceedings inherent in or integral to this process say, the determination of whether a claimant has received an avoidable transfer so as to preclude allowance of the claim until the transfer is avoided and disgorged are equitable so that, notwithstanding that a creditor has a claim which arises under and must be fixed according to state law, if the claim is asserted within the bankruptcy process against property of the estate, the allowance of that claim is an equitable proceeding.
Prong 2. The Administration of the Res Prong. Clearly, given the foregoing Supreme Court opinions, equitable administration of the res does not include the utilization of private causes of action against persons who are not parties in the bankruptcy case process. So, fraudulent transfers, preferences, and the liquidation of pre-petition state law contract or tort claims by the bankruptcy estate against third parties are not inherently equitable. The administration-of-res-prong, therefore, is initially shorn (equitably speaking) of the tools of collection. However, there is much involved in the administration of the res that would immediately come to mind as being inherent to the bankruptcy process:
(1) Identification of estate property;
(2) Securing estate property by means of possession, insurance, establishment of central accounts, etc.;
*288 (3) Retention of professionals, such as real estate persons, auctioneers, appraisers, lawyers, accountants, etc., to provide the trustee with information concerning value or to assist in the process of reducing property to money for ease of distribution;
(4) If necessary or appropriate, management or operation of particular assets for purposes of maximizing value.
These components of res administration boil down to one objective the maximization and preservation of estate property until the various claims against the property can be sifted through, organized, objected to, and/or fixed so that the rightful creditors can receive the most value on account of their claims.[17]
Is CPC's claim a claim against the estate, so that it falls within the Claims Administration Prong?
Given the focus within the Supreme Court opinions upon Prong One of the bankruptcy process (the Claims Administration Prong), the Court should logically begin its analysis with an examination of the nature of CPC's claim to determine whether it is a claim against the estate. If it is, then it necessarily implicates the process of allowance and disallowance of claims, and the above line of cases makes clear that there can be no jury trial. To determine whether this action against a bankruptcy trustee is a claim against the estate, the court must submerge itself into the murky depths of the various explications of bankruptcy trustee liability, wherein many have, analytically speaking, perished. We hope to emerge, if soiled, at least alive.
A bankruptcy trustee's function is set forth in § 323(a): he is the representative of the estate. As the representative of the estate, he has certain duties. For Chapter 7 cases, those duties are set forth in § 704. One of them is to "collect and reduce to money the property of the estate for which such trustee serves, and close such estate as expeditiously as is compatible with the best interests of parties in interest." § 704(1). CPC is a party in interest,[18] and, for purposes of this discussion, will be assumed to be one of the parties that Schott had a duty to protect under § 704(1).
CPC alleges that by neither pursuing the antitrust claim nor abandoning it until after it had prescribed, Schott failed to fulfill his responsibilities as trustee because (i) he failed to collect a particular asset of the estate and failed to reduce it to money; or (ii) he failed properly to exercise his abandonment power under § 554, to jettison the action from the estate back to CPC so that it could pursue the action itself. For purposes of this motion, the court assumes the validity of CPC's allegations. The next question to be answered is: does CPC have, and is it asserting, a legally cognizable claim against the bankruptcy estate through Schott, and if so, what law creates it?
One might expect that Congress would have included in the Bankruptcy Code a provision detailing the extent and nature of a trustee's liability for breach of his fiduciary duty to the estate, since the Code creates the position of bankruptcy trustee and sets forth *289 the trustee's duties. However, the Code is silent on the issue, except that through § 323(b), it is clear that "The trustee in a case under this title has capacity to sue and be sued." (Also, a court can remove a trustee for cause, § 324(a), and a court can limit the trustee's compensation, § 326(d). Nothing in the Code indicates whether a court may impose monetary liability on the trustee for his actions, or whether such liability, if it exists, will result in a claim against the estate or a claim against the trustee personally.) What we glean from § 323(b) is that the trustee, as representative of the estate, has the capacity to be named in suits asserting claims against the estate. Is there more?
The court must turn to the jurisprudence for guidance. Several cases have held that a trustee is a fiduciary representative of the bankruptcy estate and owes the concomitant obligations of loyalty and due care to the estate and its beneficiaries. However, as Justice Frankfurter observed:
But to say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary? In what respect has he failed to discharge these obligations? And what are the consequences of his deviation from duty?
SEC v. Chenery Corp., 318 U.S. 80, 85-86, 63 S.Ct. 454, 458, 87 L.Ed. 626 (1943). The most significant question for present purposes (determining whether this suit is, in effect, a suit against the bankruptcy trustee) is the last: What are the consequences of a bankruptcy trustee's deviation from duty?[19]
As the following analysis of the relevant jurisprudence will show, there is no generally accepted answer. The question before the court is: if Schott is found to have breached a fiduciary duty to CPC, will he be liable personally or as a representative of the estate, or both? Some courts hold that a bankruptcy trustee is personally liable for all acts of mismanagement or breach of fiduciary duty. Others hold that the trustee is personally liable only for intentional acts of wrongdoing, and that he is liable "in his official capacity" for negligent breaches of duty. As mentioned, the complaint as amended alleges wilful or intentional breaches of fiduciary duty, but experience tells us that if Schott could be liable for negligent breaches, CPC would take it (there is presently no deadline order which would preclude further amendment of the complaint, if such would be necessary). If the phrase "in his official capacity" carries the same meaning as "in a representative capacity," then this second line of cases stands for the proposition that a claim against a bankruptcy trustee for a negligent breach of his fiduciary duty is a claim against the estate.[20] Such a result would lead to a finding that CPC's lawsuit falls squarely upon the ground already plowed by the Supreme Court and would require a conclusion that CPC was not entitled to a trial by jury.
Before moving forward, let us take a couple of steps back. We will be discussing the cases involving trustee liability, including those that make the personal liability/liability in an official capacity distinction. Prior to discussing the "liability only in an official capacity for negligent acts" cases, it was thought that it might be beneficial to know what the term "liability in an official capacity" means.
We read §§ 323(a) and (b) as a whole to mean that the trustee has the capacity to be sued as the representative of the bankruptcy *290 estate created under the Bankruptcy Code by the filing of a bankruptcy case. As mentioned, § 704 sets forth, generally, the universe of trustee duties which can be described essentially as Bankruptcy Estate Administration. (See § 704(9)). At first blush, then, the phrase "liability in an official capacity" is descriptive of liability of the bankruptcy estate for actions of the bankruptcy estate, which can be established by means of assertion of a claim against the representative of the estate, the one with capacity to be sued. Therefore, we understand the phrases "liability in an official capacity" or "action against the trustee in his official capacity" to mean "actions against the bankruptcy estate through the trustee." Also, we understand the phrases to be exclusive of actions against, and liability of, a trustee personally or individually. For guidance of our understanding, we resort to the mines possessing the richest veins of authority the civil rights arena. There we find immeasurable pronouncements on this subject (usually within the context of actions seeking to tag the bigger repository of money, i.e. the state, municipality, or employer). Over and over the U.S. Supreme Court has asserted that "a suit against a state official in his or her official capacity is not a suit against the official, but rather is a suit against the official's office. As such, it is no different from a suit against the state itself." Mack v. United States, ___ U.S. ___, ___, 117 S.Ct. 2365, 2382, 138 L.Ed.2d 914 (1997), citing Will v. Michigan Department of State Police, 491 U.S. 58, 71, 109 S.Ct. 2304, 2312, 105 L.Ed.2d 45 (1989). In Kentucky v. Graham, the Court stated:
Personal-capacity suits seek to impose personal liability upon a government official for actions he takes under color of state law . . . Official-capacity suits, in contrast, generally represent only another way of pleading an action against an entity of which an officer is an agent. As long as the government entity receives notice and an opportunity to respond, an official-capacity suit is, in all respects other than name, to be treated as a suit against the entity. It is not a suit against the official personally, for the real party in interest is the entity. Thus, while an award of damages against an official in his personal capacity can be executed only against the official's personal assets, a plaintiff seeking to recover on a damages judgment in an official-capacity suit must look to the entity itself.
Graham, 473 U.S. 159, 165-66, 105 S.Ct. 3099, 3105, 87 L.Ed.2d 114 (1985) (citations and internal quotation marks omitted). See also, Huckabay v. Moore, 137 F.3d 871 (5th Cir.1998) (Per a suit against a county commissioner as employer, the court says "Because the wrongful acts are performed within his official capacity, any recovery against that person must be against him in that capacity, not individually"). For examples of suits against bankruptcy trustees or trustee-types, see Barton v. Barbour, 104 U.S. (14 Otto) 126, 26 L.Ed. 672 (1881), in which a court-appointed receiver was sued for damages allegedly suffered by a passenger while riding a railroad car in operation as part of ongoing railroad operations, while the railroad company (and its assets) was in receivership. Although the question was whether a court of another state (than the one appointing the receiver) had jurisdiction over a suit at law seeking recovery for the negligent acts of administration of the property subject to the receivership, the Court does opine concerning the difference between an official capacity claim and a personal suit against the receiver. In sum, the Court sees that "the claim of the plaintiff, which is against the receiver for personal injury sustained by her while traveling on the railroad managed by him, stands on precisely the same footing as any of the expenses incurred in the execution of the trust, and must be adjusted and satisfied in the same way." Id., 104 U.S. at 131. As distinguished from this official capacity claim, "if one claiming that the assignee has wrongfully taken possession of his property as property of the bankrupt, he is entitled to sue him in his private capacity as a wrongdoer in an action at law for its recovery." Id., at 134. Suits in an official capacity, then, generate claims against the res of the receiver (or trustee or assignee in bankruptcy) and are to be settled as such; claims against the receiver for ultra vires acts, or acts outside the scope of administration of the res, do not *291 result in claims against the res, but can be asserted against the representative individually. Also, in Reading v. Brown, 391 U.S. 471, 88 S.Ct. 1759, 20 L.Ed.2d 751 (1968), an action against a receiver of a corporation in an arrangement for negligence of the receiver and those in his employ, while acting within the scope of his authority (in allowing a building the only asset of the debtor to burn down, uninsured) was, within the subsequent liquidation, a claim for costs and expenses of the administration of the res, entitled to priority over the prepetition claims.
The United States Supreme Court, in Mosser v. Darrow, 341 U.S. 267, 71 S.Ct. 680, 95 L.Ed. 927 (1951), issued what the dissent characterized as a "rule of trustee liability [that] did not exist before today, as is shown by the fact that no statute or case is cited in support of the court's decision." 341 U.S. at 275, 71 S.Ct. at 684. In so doing, the Court issued its last discourse (to date) on the scope of a trustee's liability for acts done while administering a bankruptcy estate. The opinion has engendered much confusion concerning the extent to which a claim against a trustee is, in fact, a claim against the estate, or, put another way, the extent to which a trustee can be personally liable for acts done while acting as trustee.
Darrow was the reorganization trustee for two trusts. He hired two trust insiders, Kulp and Johnson, to help him reorganize the businesses. One of Darrow's reorganization strategies was to buy up the outstanding bonds of various subsidiary companies at a substantial discount. One of the terms of the agreement by which Kulp and Johnson agreed to work for him was that they would be allowed to conduct trade in these bonds on their own behalf. This fact was not disclosed to the court or to the trustee's counsel. Kulp and Johnson often bought bonds from holders who had come to sell them to Darrow and would later sell the bonds to Darrow at a substantial profit. After several years, the SEC intervened in the case and demanded an investigation into Darrow's activities as trustee. Darrow resigned and filed his final reports and accounts. Mosser, the successor trustee, objected to approval of those reports. He claimed that Darrow's tolerance of the insiders' activities had cost the estate $43,000 and that Darrow should be held personally liable for the lost income. 341 U.S. at 268-70, 71 S.Ct. at 681. The Supreme Court held Darrow personally liable to the estate for the income diverted to the insiders, despite the fact that he had not benefitted from their actions. Id., at 275, 71 S.Ct. at 684.
The Court began its analysis by observing that a trustee is a representative of the court and must be held to a strict standard. Id., at 271, 71 S.Ct. at 682. Further, because self-interests are "always corrupting" (though not always corrupt), "These strict prohibitions would serve little purpose if the trustee were free to authorize others to do what he is forbidden." 341 U.S. at 271, 71 S.Ct. at 682. Upon this observation, the Court concludes: "We think that which the trustee had no right to do he had no right to authorize, and that the transactions were as forbidden for benefit of others as they would have been on behalf of the trustee himself." Id., at 272, 71 S.Ct. at 682. As noted above, the Court fashions a remedy for such actions, though the trustee himself profited not at all, in great part to forestall future conduct such as was before it. "The most effective sanction for good administration is personal liability for the consequences of forbidden acts, and there are ways by which a trustee can effectively protect himself against personal liability." Id., at 274, 71 S.Ct. at 683. ("A further remedy for limiting, if not avoiding personal liability is to account at prompt intervals, which puts upon objectors the burden of raising their objections." Id.)
By its opinion the Mosser Court reversed the Court of Appeals, which had concluded that no personal liability (or surcharge against Darrow) should attach. Crucial to unraveling the confusion that has ensued from the opinion is to understand just what the Supreme Court reversed. In its opinion, Darrow v. Mosser, 184 F.2d 1 (7th Cir.1950), the Court of Appeals cited numerous treatises for the proposition that a trustee who uses due diligence or reasonable care in the selection of employees is not liable to beneficiaries for the negligence or dishonesty of the employees if reasonably prudent in the *292 supervision of them. 184 F.2d at 7. As well, Darrow offered numerous bankruptcy cases supporting the proposition that if the trustee is not derelict in the hiring, a surcharge will not be imposed if the employees turn out bad. The generalized conclusion of the authority offered by the trustee is that if a trustee acts within the scope of his authority, he is not chargeable with losses to the estate through the acts of others, and he is personally chargeable only if guilty of personal fault in the nature of fraud or "supine negligence equivalent to fraud." 184 F.2d at 8-9. (The Court points out that the reference to "supine negligence equivalent to fraud" is a reference to Taylor v. Benham, 46 U.S. (5 How.) 233, 12 L.Ed. 130 (1847). In that case the Supreme Court says, in connection with a claim against an executor for losses over the sums received by the executor, "When a trustee is liable for more, it must be, in the language of the books, `in cases of very supine negligence or wilful default.'" 46 U.S. at 275.)
The Court of Appeals concludes that simple negligence is not sufficient to establish that a trustee sufficiently breaches his obligation of due diligence and care in the administration of the estate to suffer personal liability, and if anything, simple negligence is all that had been established. Therefore, the surcharge issued by the lower court was reversed. Now, two things in addition shed light. First, the Court does not suggest that Darrow was not negligent, and in fact points out that a certain portion of the successor trustee's claim was reserved for future proceedings. In this regard the court notes that Darrow's "failure to file reports showed a woeful neglect of duty." 184 F.2d at 10. Not subject to the successor trustee's cross-appeal was the request to impress upon certain assets a resulting trust arising from these acts of negligence, and as well to assess additional surcharge. The resulting trust request is tantamount to a claim that the estate is to be maintained and made whole by the imposition of a resulting trust. As well, there is the possibility of other surcharge (maybe woeful negligence is equivalent to supine negligence equivalent to fraud). Second, the Court predicts the Supreme Court's reversal of its opinion through a reference to Magruder v. Drury, 235 U.S. 106, 35 S.Ct. 77, 59 L.Ed. 151 (1914), a case involving a trustee whose firm acted as broker of a sale of trust securities, earning a profit on the sale. Though guilty of no "wrongdoing" the trustee was required to return the profit he had earned as a result of the general prohibition upon a trustee profiting from the trust's business. Though this conclusion is seen as being of no import, the Court also notes that the argument that "he should be surcharged for allowing his agents and employees to make profits he could not himself make in equity," 184 F.2d at 10, is devoid of authority and is to be dismissed. (As we have seen and will see, the absence of authority was no hurdle for the Supreme Court.)
Darrow's argument, based upon the Court of Appeals' decision, was that while a bankruptcy trustee could be held liable only upon a showing of fraud or supine negligence, personal liability here would require the conclusion that simple negligence would suffice for such a surcharge. The Supreme Court disagreed:
We see no room for the operation of principles of negligence in a case in which conduct has been knowingly authorized . . . The question whether he was negligent in not making detailed inquiries into their operations is unimportant, because he had given a blanket authority for the operations. The liability here is not created by a failure to detect defalcations, in which case negligence might be required to surcharge the trustee, but is a case of a willful and deliberate setting up of an interest in employees adverse to that of the trust.
341 U.S. at 272, 71 S.Ct. at 682. What is the Supreme Court saying in this last sentence? Some of it is clear. If a trustee intentionally constructs, either personally or by means of employees, a set-up by which he or his employees can profit from trust business, the trustee will be surcharged, personally, to return the profits to the estate. However, what is not clear is whether the Court is also embracing personal liability arising from plain garden-variety negligence. There can be two interpretations: (i) in issues involving failure to detect defalcations, it is possible to assess the trustee personally for the damage, *293 or return of profits, upon a showing that simple negligence caused harm; (ii) in light of prior jurisprudence protecting the trustee personally unless guilty of fraud or supine negligence, if what was before the court (as the Court of Appeals thought) was failure to detect defalcations, the trustee might be correct in his argument that to surcharge personally, the court would have to say simple negligence is now sufficient (but because that is not what the court is dealing with, the question is moot). As we shall see, the Mosser case and issues therein, never again revisited by the Supreme Court, have generated a variety of views among the circuits facing questions of trustee liability. Although the circuit courts that have interpreted Mosser fail to agree on its meaning,[21] they all agree on two points. First, the standard of care that Mosser imposes on a bankruptcy trustee is that of an ordinarily prudent man in the conduct of his private affairs under similar circumstances and with a similar object in view. Second, although a mistake of judgment is not a basis for liability, a failure to meet the standard of care will subject the trustee to liability of some kind. In re Cochise College Park, Inc., 703 F.2d 1339 (9th Cir.1983).
There is no consensus on the issue that is most important for our purposes: whether the trustee's liability is representative, and therefore a claim against the bankruptcy estate, or purely personal. Some courts hold that a bankruptcy trustee is personally liable only for willful and deliberate violations of the standard of care. If the trustee is merely negligent, then according to these cases, he will be liable in his "official capacity." Sherr v. Winkler, 552 F.2d 1367 (10th Cir. 1977). Such liability would result in a claim against the estate. Other courts have found that a trustee is personally liable for negligent acts as well as wilful or intentional ones.[22]Cochise, supra. If the trustee is personally liable for all breaches of duty, then no such breach will result in a claim against the estate, and the first prong of the equitable bankruptcy process is not implicated in an action against a trustee for breach of his fiduciary duty to the estate.
The line of cases denying personal liability for negligent acts begins with Sherr, supra. The facts of that case may be stated as follows: In 1968, Sierra Trading Company (Sierra) and American Petrofina Corp. (Petrofina) each owned 50% interests in certain Wyoming oil and gas leases. In December of that year, Sierra assigned 75% of its interest to Rapp Oil Company. Rapp then assigned its rights to Sherr and Rubin, the plaintiffs (Sherr). After Sierra filed Chapter X, Winkler was appointed as reorganization trustee. Winkler was not an attorney, but was "an independent oil operator with much experience in drilling and production." Sherr, 552 F.2d at 1371. Winkler was unaware that Sherr had any interest in the revenues from the leases. He authorized his attorney to conduct a title search to determine all ownership interests, but the attorney's report made no mention of Sherr's interest. On October 9, 1970, Winkler sought the reorganization court's permission to use proceeds received from Petrofina to operate, maintain, and preserve assets of the estate for a period of 90 days. Sherr appeared at the hearing, but the court held that he had no standing to lodge an objection. The court granted Winkler's motion, and eventually extended the amount of time Winkler could use the funds to January 15, 1972. After extensive litigation, it was determined that the plaintiffs owned roughly $150,000 of the money that Winkler had been using. Once they recovered this money, they sued Winkler for conversion, attorney fees, and punitive damages. Id., at 1369-72.
The trial court found for Winkler, holding that he had acted pursuant to court order; that his actions did not constitute negligence, bad faith, or reckless disregard of the plaintiffs' *294 rights; and that he had not violated his fiduciary duties to the estate. The Tenth Circuit affirmed. It observed that the standard applicable to surcharge of a bankruptcy trustee is negligence, citing Mosser, supra. The court also cited Mosser for the following rules on trustee liability: "a trustee or receiver in bankruptcy is (a) not liable, in any manner, for mistake in judgment where discretion is allowed, (b) liable personally only for acts determined to be wilful and deliberate in violation of his duties, and (c) liable, in his official capacity, for acts of negligence." Id., at 1375. The plaintiff argued that Mosser created a broad rule of personal liability for a bankruptcy trustee, but the court disagreed. It quoted Mosser's statement that "The liability here is not created by a failure to detect defalcations, in which case negligence might be required to surcharge the trustee, but is a case of a willful and deliberate setting up of an interest in employees adverse to that of the trust," Mosser, 341 U.S. at 272, 71 S.Ct. at 682, and stated: "There the court held that a reorganization trustee would not be liable personally except for willful and deliberate acts. . . . A trustee in bankruptcy may be held liable in his official capacity and thus surcharged if he fails to exercise that degree of care required of an ordinarily prudent person." Sherr, 552 F.2d at 1375. The court concluded by affirming the trial court's finding that Winkler had committed neither negligence nor a willful and deliberate act and that he wouldn't be liable under any standard. Id., at 1376.
The Fourth,[23] Sixth,[24] and Seventh[25] Circuits have either followed Sherr or cited it favorably. The Second and Ninth Circuits have not. In re Cochise College Park, Inc., 703 F.2d 1339 (9th Cir.1983), is a Ninth Circuit case in which the court rejects Sherr, stating that a trustee "is subject to personal liability for not only intentional but also negligent violations of duties imposed upon him by law." Id. at 1357. The Cochise court criticized Sherr's statement that to surcharge a trustee is to hold him liable in his official capacity:
Given that the "surcharge" itself means to impose "personal liability on a fiduciary for wilful or negligent misconduct in the administration of his fiduciary duties", we find this interpretation to be incorrect. Properly construed, the language quoted from Mosser indicates merely that the sort of personal liability which may be imposed on a trustee for the acts of his employees is not strict liability but rather liability depending at least on a showing of the trustee's own negligence; Mosser does not "hold" in any sense that personal liability does not obtain if such a showing of negligence is made.
Id. at 1358, n. 26. (citations omitted). See Bennett v. Williams, 892 F.2d 822 (9th Cir. 1989); In re Rigden, 795 F.2d 727 (9th Cir. 1986).
The Second Circuit has also found that a trustee was personally liable for negligent acts, upholding a surcharge of a Chapter XIII trustee that imposed personal liability on him for failure to monitor the debtors' performance of their wage-earner plan. In re Gorski, 766 F.2d 723 (2nd Cir.1985). The lower court had found that the trustee's failure to carry out his obligations constituted "a material breach and default of his fiduciary duties and . . . a negligent disregard of the rights and best interest of creditors." Id. at 725. The issue on appeal was whether surcharge was appropriate. The court cited Mosser and Cochise for the proposition that: "In the usual case, a surcharge is imposed on the fiduciary in the amount of the actual or estimated financial harm suffered by either the creditors or the estate and is payable accordingly." Id. at 727. Consequently, it affirmed the order surcharging the trustee, but reversed that part of the order which required that he pay the surcharge to the U.S. Treasury. The court said: "There is no *295 question that a trustee in bankruptcy may be held personally liable for breach of his fiduciary duties. Such liability may attach as the result of negligent, as well as knowing or intentional, breaches." Id. at 727 (citations omitted).
No opinion from the Fifth Circuit, the District Court for the Middle District of Louisiana, or this Court has ever addressed the issue of whether a bankruptcy trustee is personally liable for acts of negligence. This Court must now determine whether the Sherr court or the Cochise court interpreted Mosser correctly. If the Sherr court is correct, and a bankruptcy trustee is liable in his official capacity for acts of negligence, and if CPC's claim against Schott can be construed to include allegations of negligence, then the claim is a claim against the estate. If CPC's claim is one against the estate, then the administration-of-claims-prong of the bankruptcy process is implicated, and CPC has no right to a jury trial. If, on the other hand, Cochise is correct, and Schott is liable in his personal capacity for acts of negligence, then administration of claims is not relevant here, and the court must go on to determine whether CPC's claim comes within the scope of the second prong of the equitable bankruptcy process, the administration of the res.
While the Sherr interpretation has been found persuasive by four of the six Circuit Courts of Appeals to have addressed the issue, it has also been heavily criticized. The critics claim that the case improperly differentiates between the surcharge of a trustee and personal liability. As one commentator states:
This language is questionable, in that it tries to distinguish the surcharge of a trustee from personal liability while surcharge is in fact a means of imposing personal liability. In all the cases cited in the general discussion above concerning personal liability for loss to the estate in collection, preservation or distribution of the assets, surcharge and personal liability were synonymous. . . . the decision cites Mosser v. Darrow for the proposition that a trustee or receiver is `liable personally only for acts determined to be wilful and deliberate in violation of his duties' and `liable in his official capacity, for acts of negligence,' for which the trustee is surcharged. As explained earlier, Mosser made no such distinction. On the contrary, that case shows just the opposite, for while the trustee in Mosser was found personally liable for a wilful and deliberate act, the result was a surcharge of the trustee. Surcharge, in other words, was and is merely the means of imposing personal liability upon a bankruptcy trustee or receiver for loss to the estate. It is certainly not, as the Sherr decision states, a means of imposing liability in his `official capacity' unless that phrase is to be given a meaning entirely opposite to which traditional definition, i.e., where the estate rather than the fiduciary is required to bear loss to the third persons . . . Sherr v. Winkler, it seems, uses all the language pertinent to personal liability of bankruptcy officers, but the contradicting and confusing manner in which the court arranged the language gives it poor potential as a case precedent.
Tiller, Personal Liability of Trustees and Receivers in Bankruptcy, 53 Am.Bankr.L.J. 75, 99-102 (Winter 1979) (footnotes omitted).
This Court finds that the reasoning of the dictum in the Sherr opinion is incorrect. Mosser did not state that a trustee can be held personally liable only if he has committed a willful or deliberate breach of his fiduciary duties. Mosser involved a willful and deliberate breach of duty, and the court, in recognizing the fact, stated that the issue of negligence was not relevant to its case: "We see no room for the operation of the principles of negligence in a case in which conduct has been knowingly authorized." Mosser, 341 U.S. at 272, 71 S.Ct. at 682. The Sherr court somehow understood "surcharge" to be an imposition of liability in an official capacity, when it is not. Black's Law Dictionary offers the following definitions for "surcharge":
The amount with which a court may charge a fiduciary who has breached his trust through intentional or negligent conduct. The imposition of personal liability on a fiduciary for such conduct. . . . The imposition of personal liability on a fiduciary *296 for wilful or negligent misconduct in the administration of his fiduciary duties.
Black's Law Dictionary 1441 (6th Deluxe ed.1990). In addition, use of the term "surcharge" only in connection with "official capacity" liability runs directly afoul of what the Mosser court actually did, which was to hold the trustee personally liable for the "surcharge."
That is not to say that the Cochise line of authority is correct. In its own way, it too has misread Mosser. What Mosser reversed was the appeals court determination that this case involved the necessity of determining whether Darrow was sufficiently negligent (supinely so) to warrant personal liability (surcharge) and the lower court's conclusion that if personal liability was to be assessed against Darrow, it would have to be upon simple negligence far below the supine negligence or intentional, bad conduct previously required, as Darrow had not (in the opinion of the Court of Appeals) been guilty of such. We think that the Mosser court made no determination concerning whether run-of-the-mill negligence is sufficient to constitute breach of fiduciary duty sufficient to warrant imposition of personal liability, as it dispensed with any determination regarding any level of negligence. We think it probable that the Court was addressing Darrow's claim that surcharge would require a modification of the supine negligence standard, and it was saying that if failure to detect wrongdoing was the issue, perhaps (given the profits generated for the estate and the overall apparent soundness of the business practices employed) Darrow would be right. Because it wasn't, he wasn't.
What we get from this disparate authority is that the real question is whether the trustee is personally liable for damages done to the estate. It is perhaps the posture of the claimants in the various cases that has resulted in the differing lines of analysis. Recall that the Mosser claim was brought by a successor trustee on behalf of the estate for damage done to the estate. The question was "To what extent will a trustee be personally liable to the estate (or creditors of the estate) if damage is done to the estate (or the interest of a creditor in that estate) as a result of his administration?" This is the question presented by Cochise, Gorski, etc. Either a trustee will be liable personally, or there will be no liability at all. If damage is done to the estate, then the estate cannot be held liable for that damage to its creditors (or itself).
First, assume some damage to the estate through trustee administration. Each creditor has the same position relative to other creditors that it had before the asset in question was destroyed or the damage done. Each creditor has suffered a loss in proportion to the size of his claim. If any creditor is to receive from the estate some compensation for his loss, then that compensation must take the form of a larger share of the estate. But if one creditor gets a larger share of the now smaller estate, some other creditor (or group of creditors) must take a correspondingly smaller share. Therefore, the trustee's action in damaging the estate, if the estate was to be liable, would result in one creditor (or group of creditors) compensating another for damages that they have all suffered in proportion to their claims, while the trustee, whose action occasioned the loss, pays nothing.
If, alternatively, a court attempted to adhere to the rule that the trustee's negligence results in a claim against the estate, but also wanted to avoid the injustice of forcing some creditors to compensate others for a loss in which they were all equally blameless, the court might attempt to compensate the claimants without altering the pro rata distribution of the estate. How? If the claim for negligence is a claim against the estate, and each creditor is to share in the compensation according to the size of its claim against the estate, then each creditor will receive an additional claim against the estate that corresponds exactly to the creditor's pre-existing claim. Since each creditor will have a claim that is larger, but larger by the same proportion that every other claim is larger, the increase in claims will alter nothing, and each creditor will have the same pro rata share of the estate that it would have received prior to the trustee's negligence. The only difference is that, as a result of the loss to the estate, the estate is less valuable, so each *297 creditor will bear the loss in proportion to the size of its claim.
We see, therefore, that the Sherr proposal of official capacity liability, as it would be the same thing as estate liability, cannot exist with a claim against a trustee for damage done to the estate. Either the trustee is liable or he is not. If he is, then the estate derives the recovery from the trustee's personal liability/surcharge; if he is not, then notwithstanding actual damage to the estate, his level of problematic conduct is insufficient to warrant imposition of personal liability.
If Sherr is seen in this light, it makes at least some sense. Recall that the plaintiff was a third party who did not hold a prepetition claim against the estate, who was not a party who was dependent upon estate administration. In fact, the plaintiff alleged the opposite "You are using my property; give it back. By the way, I want attorney fees, etc." Clearly, the claim alleges that the trustee, while trustee, caused damage but (and here is the difference from Mosser) caused damage to an otherwise non-party, not to any estate property interests. The initial question, therefore, is not to what extent has the estate been damaged, but to what extent has the plaintiff been damaged by the trustee and his estate? What we have is two parties out in the world colliding. Is anyone hurt? If so, who pays? In this context the trustee is acting as trustee, unless the action is undertaken within the trustee's other life, or outside the scope of his authority as trustee (representative of the estate). To this outsider this trustee is nothing more than the person through whom the estate acts. Therefore, it is utterly appropriate to consider official capacity versus personal capacity questions. However, it is not correct to tie this analysis back to Mosser. We see the Sherr case as analogous to an action against a corporate officer, the individual county commissioner, etc. To what extent will the conduct allow the claimant to place its grabbing hands in the individual's pocket as opposed to that of the entity being represented by the individual's action? With this focus, the official capacity question (vis a vis negligent conduct within the scope of a trustee's representation) is a real one, and the answer (without consulting Mosser, which is utterly inapplicable) is probably not too far off from what the Sherr court said it was.
Further support for the proposition that liability in an official capacity does play an important role for bankruptcy trustees comes from another Supreme Court case, Reading Co. v. Brown, 391 U.S. 471, 88 S.Ct. 1759, 20 L.Ed.2d 751 (1968). In 1962, the I.J. Knight Realty Company filed a Chapter XI petition under the Bankruptcy Act. The court appointed Brown to be the receiver, and authorized him to conduct the company's business, which consisted of leasing space in a building in Philadelphia. In 1963 the entire building was destroyed by a fire, which spread to adjoining buildings and caused substantial damage. One hundred forty-seven claims, totaling three and a half million dollars, were filed against the estate as a result of the fire. The Supreme Court held that the post-petition tort claims were valid claims against the estate, and further, that these claims were entitled to priority as administrative expenses. According to Justice Harlan, author of the opinion, the rationale behind this result was that the insolvent corporation was allowed to enter Chapter XI to benefit the prepetition creditors, while Reading Co., along with the other fire claimants, "had an insolvent business thrust upon it by operation of law." 391 U.S. at 478, 88 S.Ct. at 1763.
For our purposes, the important thing to note about the opinion is the result rather than the rationale. The defendant in the case was Brown, the trustee. But the fire claimants were not attempting to recover against Brown personally. Rather, they were attempting to get the court to recognize their claims against the estate. Brown, as the legal representative of the Knight Realty Company, was sued in his representative, or official, capacity, because an employee of the Knight Realty Company negligently started the fire that caused the damage. It is unlikely that the fire claimants could have recovered against Brown personally unless he was somehow personally responsible for starting the fire.
*298 What we have in Reading v. Brown, then, is the end result of an official capacity suit for the negligence of the estate, assessed through the representative (actor) of the estate, which occurred as a result of the trustee acting within his official capacity. Mosser is inapplicable, because vis a vis the injured parties, it cannot be said that the damage was caused by a breach of fiduciary duty. In fact, the claimants, spending the time and money they did, recognized this naturally. The reasoning of Sherr applied to the facts of Reading Co. v. Brown (with one difference, a personal claim against the trustee as opposed to a claim against the estate seeking administrative priority) generates a correct result. The claim is one for negligence-caused property damage. The trustee was acting within the scope of his authority. The claim can only be assessed against the trustee in his official capacity as a claim against the estate.
However, we can use Reading v. Brown to move into an arena dealt with by Mosser. What about the question of whether the prepetition creditors have a claim against the trustee, personally, for damage done to the estate no insurance, asset destroyed, administrative claims result which further dilute the creditors' claim values. Now we see that talk of "official capacity" would be misplaced. Remember, Darrow acted within his "official capacity" he hired employees. The Reading v. Brown trustee managed the building. The official capacity claim, though, has no role to play here, as the damage caused to the estate cannot be paid by the estate; it can only be paid by a trustee if the trustee's conduct rises to the level of misconduct sufficient to constitute a breach of fiduciary duty. Whereas simple negligence will obligate an estate to third parties (as it did in Reading v. Brown), the question of whether simple negligence will obligate a trustee to the estate for damage caused to the estate, we think, is not answered by Mosser v. Darrow. In fact, in refusing to discuss negligence, the court (breaking new ground) does not opine one way or the other. Authority other than Mosser, therefore, must be used to bind a trustee, personally, for negligent damage to an estate.
Back to our case. We see that the claim, diminution in the value of an estate (or formerly estate) asset, is one for damage to the estate. Therefore, though it is the debtor and its owner asserting the claim, there is no analytical avenue by which an official capacity claim can be asserted. If Schott did wrong, he did it to the estate. As such, while he was in fact acting within his official capacity as trustee (the trustee can administer or abandon, etc.), the estate allegedly damaged (or the debtor's interest in property worthless to the estate made even more worthless by prescription) cannot owe itself. What we have here is a personal claim against the trustee, so that even if the nature of the factual allegations would change by amendment, to allege negligence, there could be no "official capacity liability." It simply is not available to a trustee in response to a claim by, for, and on the basis of the estate.
In this case, CPC alleges that Schott damaged the estate through his failure to pursue the antitrust claim. Alternatively, he damaged the debtor through his failure to abandon the claim so that the debtor could bring the claim. Either way, if Schott is liable, it is because he failed to conduct the business of the bankruptcy trustee properly and violated his duties under the Bankruptcy Code. This is not a case involving a third party with a post-petition tort or contract claim. If Schott is liable, then it is in his personal capacity. CPC's claim is not a claim against the estate, and the administration-of-claims-prong of the equitable bankruptcy process is therefore not implicated here.
Does CPC's claim sufficiently implicate the Trustee's duties to fall within the Administration of the Res Prong?
Before concluding that CPC's action is a "suit at common law" within the meaning of the Seventh Amendment, the Court must also examine Prong Two of the bankruptcy process to determine whether the action against the trustee implicates that aspect of the court's equitable jurisdiction. Prong Two involves the administration and distribution of the res. Though the cited Supreme Court authority is specifically grounded in the Claims Administration Prong, this Administrative *299 Res Prong is just as necessary to the bankruptcy process as Prong One (it simply has not gotten the media attention that has been lavished upon Prong One). While Prong One provides the framework by which the trustee determines who has a valid claim against the res, Prong Two provides the mechanism by which the trustee ensures that there is a res to be distributed and that it maintains its value pending distribution. If CPC's claim sufficiently involves administration of the res, then it falls within the traditional, pre-1978 scope of the bankruptcy process. If that is the case, the Seventh Amendment is not implicated because CPC's claim is equitable rather than legal.
Under the Bankruptcy Code, the person responsible for administration of the estate is the trustee. §§ 323(a), 704. He must "collect and reduce to money the property of the estate." § 704(1). He must close the estate "as expeditiously as is compatible with the best interests of parties in interest." § 704(1).
The decision of whether to abandon property of the estate is intricately bound up with the equitable administration process of maximizing return to creditors. In fact, courts of equity created the abandonment power in the eighteenth and nineteenth centuries in order to assist the assignee in bankruptcy with the administration of the bankrupt estate. Under the old bankruptcy procedures, title to all of the bankrupt's property vested in the assignee, either through court order or through operation of law. The assignee then administered the property on behalf of the bankrupt's creditors. Quickly, courts realized that some items served as a burden on the assignee and benefitted nobody. They then developed the equitable doctrine of abandonment, which entitled the assignee to relinquish his claim to certain property, subject to the objection of creditors and to court approval.
But though the legal title passes to the assignee, he is not bound, said Judge Ware, to take possession of the property. Leasehold estates pass to the assignee under the English bankrupt laws, but the assignee is not bound to take the lease and charge the estate with the payment of the rent, as the rent may be greater than the value of the lease, and thus the estate may be burdened instead of being benefited, and in such a case the claim may be abandoned by the assignee . . . Copeland v. Stephens, 1 Barn. & Ald. 603; Fowler v. Down, 1 Bos. & P. 44.
Amory v. Lawrence, 1 F.Cas. 778, 783 (C.C.D.Mass.1872).[26]
Abandonment has grown increasingly important as the availability of bankruptcy relief has increased and as the focus of the law has shifted away from maximization of return to creditors who have filed claims and toward debtor relief. In most modern cases, the trustee determines that the cost of gathering, liquidating, and distributing estate property would be greater than any possible return to creditors.[27] Consequently, in most cases the *300 trustee does little more (formally) than to file some type of report of no distribution, which after the entry of the debtor's discharge, causes the case to be closed.[28] Once the case is closed, all scheduled assets are automatically abandoned unless the court orders otherwise. § 554(c). Therefore, abandonment of all estate property occurs as a matter of law in the vast majority of bankruptcy cases.
What has developed, then, is a nationwide proclivity for abandonment by operation of law, coupled with immediate (within 130 days) closure of bankruptcy cases. It is thought (and we know this is anecdotal) that nationwide approximately 98% of all Chapter 7 cases are closed without administration of assets. Therefore, modern bankruptcy practice in the Chapter 7 arena has evolved into a mass legal abandonment, with the claims prong of the bankruptcy process, on a wide scale, receding into near-irrelevance. If a trustee determines that there are sufficient assets in a case to make administration of the estate cost-effective, the trustee must then determine the best way to maximize the return to creditors. One way the trustee can achieve this objective is through invocation of his power to abandon burdensome or useless property of the estate. § 554.[29] (In fact, abandonment could be used by the trustee as a component of the decision-making process, by carving out assets that, if held onto, might devalue others.) If the trustee elects to abandon specific assets of the estate, then those assets will not be liquidated and no proceeds from them will be distributed to creditors. Unlike the preference action at issue in Schoenthal, the power to abandon estate property has historically constituted an integral part of the bankruptcy process; it was created centuries ago by courts of equity as a tool to assist bankruptcy trustees, and it occurs in almost every Chapter 7 case. In fact, "abandoning property of the estate" has no meaning in any context other than a bankruptcy case.
When a trustee abandons property of an estate, ownership of that property vests once again in the debtor. Since a debtor usually gets a discharge even when the trustee administers nothing,[30] abandonment operates as a distribution to the debtor of whatever portion of the estate is abandoned, free of any associated claims (other than, of course, lien claims). Consequently, § 554 places limitations and safeguards on the trustee's ability to abandon property of the estate. A trustee can only abandon property of the estate if he determines that the property is burdensome or of inconsequential value[31]*301 and can only do so after notice and opportunity to be heard is given to all creditors and parties in interest. See Bankruptcy Rule 6007. The estate has, therefore, the procedural safeguard of the creditors and parties in interest possessing the power to object to a proposed abandonment if they think the trustee is incorrect in his assessment of the asset's value. Additionally, as provided in § 554(b) and Bankruptcy Rule 6007(b), parties in interest can ask the bankruptcy court to order the trustee to abandon property that should be abandoned under the "burdensome or of inconsequential value" standard. See In re Irwin Hyman, 123 B.R. 342 (9th Cir. BAP 1991) ("If a debtor does become concerned that a trustee may act in dereliction of duty and not liquidate particular property within a reasonable time, the debtor may force the issue by requesting that the trustee abandon the property pursuant to § 554(b)").
Clearly, a determination whether to abandon property of the estate goes to the very heart of the bankruptcy process. It requires the trustee to notify all creditors so that they can object if they believe their interests are not being protected. It requires a hearing before the bankruptcy court if anyone objects to the trustee's proposal. It requires the trustee to determine the size of the estate, the amount of claims against the estate, and the relative value of the particular asset in question. As stated above, the bankruptcy process involves two steps: the determination of the validity, nature, and extent of each creditor's claim and the maintenance and administration of the estate pending distribution. The decision to abandon property of the estate constitutes an integral part of the trustee's second task: the maintenance and administration of the res. In maintaining and administering the res, the trustee has an obligation to maximize the value of the assets available for distribution (number four in the Court's list of components of Prong Two of the bankruptcy process: administration of the res). This obligation includes a fiduciary duty to the estate to rid the estate of any property that operates as a net reduction in the value of the res.[32] It is apparent that a claim involving a trustee's failure to timely abandon property of the estate implicates the trustee's duty to maximize the value of the assets of the estate, a component part of the administration of the bankruptcy estate, which is, in turn, an integral part of the equitable bankruptcy process.[33]
*302 As an alternative ground for relief, CPC has suggested that in the event Schott could not have validly abandoned the antitrust claim (because it had value to the estate) then he is liable for failure to prosecute the claim on behalf of the estate. In re Bridges, 31 B.R. 27 (Bankr.W.D.Ky.1983) discusses the fact that pursuit of litigation is a matter for the trustee's discretion:
The trustee in bankruptcy, while occupying the position of an officer of the court having high accountability, must preserve independence of professional judgment in deciding whether to pursue litigation. There are many reasons why a trustee may choose not to sue. The cause of action may not appear meritorious, or the possibility of recovery slim, or the hopes of settlement encouraging. . . . Plaintiff is abundantly free to point out directly to the trustee the elements of an alleged (lawsuit), then leaving it in the discretion of the trustee as to whether to sue. That preliminary judgment is the trustee's alone to make. Only upon an abuse of that discretion would the Court direct the trustee to act.
31 B.R. at 28 (citations omitted). If Bridges is correct, and the decision to pursue litigation is a matter for the trustee's discretion, then this Court has the authority to review the trustee's decision for abuse of discretion. The ordinary procedural vehicle for challenging the trustee's decision in a matter concerning administration of estate assets is a motion filed by the interested party in the bankruptcy case. CPC filed no such motion, but now seeks to hold Schott liable for his decision not to pursue the antitrust claim. The question for present purposes is: does the decision to pursue litigation (or not to pursue it) involve administration of the estate, such that CPC's claim involves the equitable bankruptcy process. The answer to that question is an unequivocal "Yes."
Recall that the trustee's duty in a Chapter 7 case is to "collect and reduce to money the property of the estate for which such trustee serves." § 704(1). One of the assets of CPC's estate was the antitrust claim. The way to reduce such an asset to money is to resolve the claim, either through litigation or settlement. Consequently (and assuming that Schott knew of the unscheduled claim), Schott had a Bankruptcy Code-imposed duty to examine this claim and decide whether it was worth the estate's time, effort, and inherent costs.
Furthermore, there is no question concerning Congressional power to alter the scope of the bankruptcy process, as there was in Granfinanciera. This is not a situation in which Congress has sought to bring a formerly distinct remedy into the sphere of bankruptcy through a mere change in taxonomy. CPC's complaint alleges that Schott failed to liquidate an asset of the estate. If the equitable bankruptcy process contains anything at all, then it must contain the trustee's power to liquidate assets in a liquidation case, or, more particularly, the power to determine whether to liquidate assets. Whether CPC's claim against Schott is viewed as one challenging Schott's decision not to pursue the antitrust claim, or as one challenging his failure to abandon the (presumably) burdensome or worthless antitrust claim in time for CPC to pursue it, the result is the same: the complaint in this adversary proceeding raises a claim that challenges the trustee's decisions in the administration of the res in CPC's bankruptcy case.
The trustee's duty properly to administer the res on behalf of the estate's creditors (and, for purposes of discussion, the debtor) is an inherent part of the equitable process that makes up bankruptcy, and the particular decision making (or absence of decision making) complained of here is integral to this inherent part. Since the claim against the trustee seeks to hold the trustee liable for his part in administering the estate in a bankruptcy case, and since administration of the estate is an inherent part of this court's inherently equitable bankruptcy jurisdiction, it follows that CPC's claim is an inherently equitable claim seeking equitable relief. Therefore, Schott's motion to strike CPC's demand for a jury trial should be granted.
Alternative analysis: CPC's claim as one alleging breach of fiduciary duty
While this court prefers to analyze the issue before it by determining the allowable *303 scope of the bankruptcy process and deciding whether CPC's claim falls within that process, most other courts have addressed the issue from a more narrow perspective. They have attempted to determine the nature of the claim and the nature of the relief sought regardless of the broader context in which the claim arises (i.e., bankruptcy, labor relations, etc.). If the court analyzes the nature of CPC's claim from such a narrow perspective and ignores, for the moment, that it is a bankruptcy court (with historically equitable jurisdiction), and that this is a claim challenging the bankruptcy trustee's decisions regarding estate administration and abandonment (equitable powers), the result is the same. This is an equitable claim seeking equitable relief.
CPC has alleged that Schott damaged the estate by failing either to bring the antitrust action on behalf of the estate or abandon it so that CPC could bring the action. In so doing, perhaps CPC could be arguing that the trustee's duty to administer the res, which has as one of its integral components the power of abandonment, contains a duty which extends to the debtor. That is, perhaps CPC is arguing that the breached duty is the duty owed to initiate the abandonment proceeding on behalf of the debtor "if you don't want the stuff, then you owe a duty to institute the proceedings available within the equitable universe that is bankruptcy estate administration so that the debtor obtains the greatest income possible." This very question generates the analysis of the equitable principles underlying the equitable process of bankruptcy estate administration and requires all parties to account for the cleanliness of their hands before they cast stones here particularly, in light of § 554(b), which gives parties in interest (say, the debtor) standing to seek to compel the trustee to abandon property. This claim is essentially an allegation that Schott breached his fiduciary duty (which somehow extends to CPC) by failing to pursue the litigation (a matter of discretion) or properly to exercise his discretionary power to abandon property under § 554. Thus, this case involves a claim against a bankruptcy trustee in his individual capacity for breach of the fiduciary duty imposed upon him by § 704(a) in that he failed to exercise his discretion under § 554 to act in a manner that would have preserved the value of property of the estate, if not for the estate or its creditors, then (after finding that the property had no value to the estate) for the debtor.
The vast majority of courts to rule on the issue has held that breach of fiduciary duty actions are equitable actions. Chauffeurs, Teamsters and Helpers Local No. 391 v. Terry, 494 U.S. 558, 567-68, 110 S.Ct. 1339, 1346, 108 L.Ed.2d 519 (1990) (citing 2 J. Story, Commentaries on Equity Jurisprudence § 960, at 266 (13th ed. 1886) and Restatement (Second) of Trusts § 199(c) (1959)); In re Jensen, 946 F.2d 369 (5th Cir.1991); In re Hutchinson, 5 F.3d 750, 757 (4th Cir.1993)("The basis for holding bankruptcy trustees liable is the equitable power of courts to enforce fiduciary duties."); In re Evangelist, 760 F.2d 27, 29 (1st Cir.1985); In re Combined Metals Reduction Company, 557 F.2d 179, 197 (9th Cir.1977) ("When a trustee has breached his trust, an equity court may hold him liable for any loss"); In re Sunshine Trading & Transportation Company, 193 B.R. 752 (Bkrtcy.E.D.Va. 1995); In re Elegant Equine, 155 B.R. 189, 192-93 (Bkrtcy.N.D.Ill.1993) (and cases cited therein); but see Anderson v. United States, 520 F.2d 1027 (5th Cir.1975) (stating in dictum that action against bankruptcy trustee for negligent failure to obtain discharge of corporate liability was an action at law).[34]*304 See also, Bank of Marin v. England, 385 U.S. 99, 102, 87 S.Ct. 274, 277, 17 L.Ed.2d 197, 200 (1966) ("There is an overriding consideration that equitable principles govern the exercise of bankruptcy jurisdiction"). This is an issue that has been ruled upon by courts all over the country, and the Court is willing to accept the cited authority for the proposition that a claim for breach of fiduciary duty is an equitable claim.
While the above cases have specifically ruled that actions to recover for breach of fiduciary duty were equitable, there is a much larger group of cases that, while not explicitly dealing with the jury trial issue, involved breaches of fiduciary duty and were resolved without juries. In fact, the case that created the modern rule for bankruptcy trustee liability, Mosser v. Darrow, supra, was such a case.[35] Recall that Darrow was being pursued by a successor trustee to repay, through surcharge, profits gained by insiders of the debtor through their conducting of bankruptcy estate business. Clearly, Darrow had intentionally placed these insiders, as employees of the trustee, into a position from which they could profit by trading in estate-owned securities. This Darrow did in his attempt to maximize the value of the estate. The requested surcharge was an attempt to make the estate the beneficiary of profits earned by the insiders, to question directly the trustee's administrative decision-making.
The case began as a proceeding before a special master in equity, rather than a jury *305 trial, In re Federal Facilities Realty Trust, 97 F.Supp. 622, 623 (N.D.Ill.1949), and proceeded to the Supreme Court upon the district court's affirming of the special master's determination that a surcharge should issue, after analysis of Darrow's accounts. When the case reached the Supreme Court, the remedy the court enforced against the trustee was not a legal judgment, but a surcharge against his accounts, which is, by definition, an equitable remedy imposed against fiduciaries who wilfully or negligently violate their duties. Black's Law Dictionary 1292 (6th Deluxe Ed.1990). The liability of Darrow was personal, specifically so, and payable in dollars. Therefore, while the successor trustee was seeking an accounting, etc., he really wanted the equitable version of a legal judgment: PAY ME DOLLARS, NOW. Mosser did not involve negligence (see above discussion), but as regards the CPC complaint, neither does this case. Thus, the Court finds that, while its preferred focus on the component parts of the bankruptcy process may be unusual, its result, that CPC's claim is an equitable claim seeking equitable relief, is supported by an overwhelming majority of the cases to consider the issue.
The two cases CPC cites in support of its contrary position are Petrino v. Eley, 146 B.R. 267 (D.Colo.1992) and Bertholet v. Harman, 126 B.R. 413 (Bkrtcy.D.N.H.1991). The Petrino court stated without citation of authority that a claim for breach of fiduciary duty constitutes a legal claim. As has been shown, the majority of courts has held otherwise. The Bertholet court distinguished prior cases holding that a claim against a trustee was equitable. The Bertholet court found that in these prior cases, the claim against the trustee was brought by a successor trustee, while in Bertholet the claim was brought by the debtor. According to the Bertholet court, that fact led to the conclusion that any recovery to be had would benefit the debtor personally rather than the estate, and the claim was therefore legal. However, the equitable nature of the claim does not depend on the identity of the plaintiff. Rather, the legal or equitable nature of the claim depends on the extent to which the claim implicates the bankruptcy process. This Court finds Petrino and Bertholet to be incorrect statements of the law and declines to find in them any precedential value.
CPC also cites In re Jensen, 946 F.2d 369 (5th Cir.1991). That case involved state law tort claims that arose pre-petition and were filed by the debtors in state court pre-petition. After the debtors filed their Chapter 11 petition, the defendants in the state court tort actions removed those actions to the bankruptcy court. Obviously the state-law tort actions were independent of the bankruptcy case since they were filed pre-petition. The Fifth Circuit in Jensen simply recognized that the fact that the Jensens filed a bankruptcy petition did not deprive them of their right to a jury trial on previously filed state law tort actions. This conclusion lines up squarely with the Supreme Court's cases which distinguish an action by the estate against a non-creditor from the inherently equitable process of administration of the res. Of course, under Jensen, as required by Granfinanciera, et al., the pre-bankruptcy tort (or breach of contract) claim is not integral to estate administration. In Jensen the court concluded that as the tort claim was separate from the creditors' claims, it was separate from, and did not implicate, the claims allowance process. The case is irrelevant to what we have here.
CPC's claim against Schott arose solely because of CPC's bankruptcy case and the administration of that bankruptcy case by Schott. If CPC had not been in bankruptcy, Schott would never have been appointed trustee and would never have had the opportunity or power to abandon property of the estate. CPC now seeks a jury trial on the issue of the trustee's failure to abandon the claim until it was too late. The antitrust claim may not have arisen during the course of the bankruptcy proceeding, but Schott's involvement in the case certainly did. Jensen is fundamentally distinguishable from this case on the determining issue: whether or not the claim for which a jury trial is sought is inextricably intertwined with the bankruptcy case. In Jensen, the state-law tort claims were utterly distinct from the bankruptcy case and, in fact, preceded it. Here, the claim against the trustee is derived from the guts of the bankruptcy case, and its *306 resolution will require a re-examination of the manner in which the bankruptcy case was handled.
As the court in Jensen pointed out, "there may be situations in which an award of monetary relief is equitable." Id., at 372. This is one of those situations. Although CPC is seeking a money judgment against Schott, that judgment, if granted, would constitute a surcharge against Schott and his accounts as trustee. In other words, Schott would be held liable for restitution of the value of the estate property he had a fiduciary obligation to protect (for either the estate or the debtor): the antitrust claim. Restitution is an equitable remedy. A claim for a trustee's breach of fiduciary duty is an equitable claim. Again, In re Jensen is inapposite.
CPC also relies upon Chauffeurs, Teamsters and Helpers Local No. 391 v. Terry, 494 U.S. 558, 567-68, 110 S.Ct. 1339, 1346, 108 L.Ed.2d 519 (1990). In that case, McLean Trucking Company and the Union were parties to a collective-bargaining agreement which covered the employee-plaintiffs. The plaintiffs believed that certain of McLean's policies concerning layoffs and recalls violated the terms of the collective bargaining agreement, and they asked the union to refer their complaint to the relevant grievance committee. The Union refused. The disgruntled employees sued the union, alleging breach of the duty of fair representation, and McLean, alleging breach of the terms of their collective bargaining agreement. Before the case reached the Supreme Court, McLean filed bankruptcy and was dismissed from the plaintiffs' lawsuit.
The plaintiffs in Terry argued that the union's duty of fair representation was akin to an attorney-client relationship and argued that they were entitled to a jury trial, just as the plaintiff in a legal malpractice action would be. The Terry court concluded, by majority, only one thing: plaintiffs were entitled to a jury trial. It concluded, as a court, nothing as to why.[36] Justice Marshall, writing for four justices, in fact rejected the analogy proposed by the plaintiffs and concluded that the plaintiffs' claim against the union was more like a claim for breach of fiduciary duty. Terry, 494 U.S. 558, 568, 110 S.Ct. 1339, 1345. The Court concluded that a breach of fiduciary duty claim is fundamentally different from a legal malpractice claim, and a majority concluded that the claim against the union was equitable in nature. A client can fire an attorney, and a client controls the essential aspects of the representation. Neither option is available to a union member with respect to union leadership. The claim against the union, if anything, is less of a breach of fiduciary duty claim than that against a bankruptcy trustee for acts undertaken, or not undertaken, within the realm of estate administration.
Though Marshall determined that the claim against the union for breach of the duty of fair representation was an equitable claim, he stated that the plaintiffs, in order to prevail on the equitable claim against the union, must prove as a preliminary issue that McLean had breached the collective bargaining agreement. Since the collective bargaining issue was obviously legal and was an element of the claim against the union, the Court concluded that the nature of the action was at least partially legal.[37] He then found *307 that the legal and equitable issues involved were "in equipoise," Terry, supra, at 570, 110 S.Ct. at 1347, and that under the circumstances the right to a jury trial should be upheld. Most important to the Court's analysis was the fact that the remedy sought was back pay. The back pay award was legal rather than equitable, and that fact tilted the balance in favor of a jury trial (of course, what this has to mean is that the union was, in Louisiana parlance, solidarily liable with the employer for back pay, which seems somewhat incorrect). The overriding problem caused by Terry in its rush to jury trial right is its failure to consider the fact of the bankruptcy of the employer. The effect, from the plaintiffs' perspective, was that they could file a claim and obtain a final judgment on its allowability, through the summary process of claims allowance. This would have expedited the resolution of their claim through a process created by Congress and would have provided them the prospect of quick resolution of both actions. To hold that converting a legal claim into an equitable one converts a previously equitable claim, of which the formerly-legal-now-equitable action is a component, into a legal claim, without ever considering the conversion of the legal claim to an equitable one, is, to us, mind-boggling and problematically result-oriented.
CPC attempts to bootstrap its way to a jury, through a version of this Terry unequitizing analysis, by arguing that Schott's liability depends upon the merits of the underlying antitrust claim and that the antitrust claim is legal. This assertion is erroneous.[38]Terry dealt with a two-pronged action against two parties which, as erroneously ascertained by the Court, dwindled to the same action against one of the parties upon the bankruptcy of the other. The contract and fiduciary duty claim arose from the same alleged transaction and occurrence, i.e., the breach of contract by the employer. If there had been no breach of contract by the employer, there could not (says the court) have been a breach of fiduciary duty claim, or, put another way, the breach of fiduciary duty claim was dependent upon the finding of breach of contract. In this case, the antitrust claim, to the extent it existed, preexisted the bankruptcy estate, was, in and to itself, a claim grounded in a set of facts and occurrences exclusive of the bankruptcy process and the trustee's involvement with the *308 CPC estate. The alleged asset, says the debtor, is now gone. The debtor argues that just as the union in Terry was charged with the protection of the plaintiff's interests in view of the breach of contract claim, Schott was charged with the protection of the debtor's (and its owner's) interests in the antitrust claim. Just as it was necessary to determine the breach of contract claim, it is necessary to determine whether the debtor would have won the antitrust claim. There are, however, some differences between this case and Terry.
First, notwithstanding the legal nature of the antitrust claim, it was, as an estate asset, a part of the res subject to constructive possession by the Court. As such, this Court maintained control over its disposition, within the areas of, for example, abandonment, settlement and compromise, fee and expense reimbursement, and control of any proceeds generated. In fact, had the trustee not finally abandoned the claim, the estate (and the Court) would have retained it in perpetuity, as it was not scheduled. Oversight by another court could only have occurred had the trustee decided to prosecute it, and even then, final authority over the aforementioned questions and issues would have remained here.
The aberrational nature of Terry is revealed by debtor's argument, or, perhaps it is the incorrect reading by the debtor of the case that is revealed. According to the logic of the debtor, a debtor or other party in interest who objected to a proposed settlement and compromise of an estate action against a non-party (say, this antitrust claim) would have the right to a jury trial of their objection, as resolution of the underlying claim (legal in nature) would be required before this Court could determine whether to approve a proposed settlement and compromise. Clearly, this is not correct.
Now, can we get to the essential difference, if there is one other than what has been mentioned, or are we espousing essentially flannel-mouthed verbiage because Terry, so wrongly decided, leaves us no alternative? Though to some extent our backs are placed against the wall by the illogic of Terry, we think maybe even the Terry court could not have used sufficient imagination to override another distinction warranting mention.
Recall how we started, that the antitrust claim preceded the formation of the estate. The claim against Schott proceeds upon the premise that there is a claim (maybe worth something, maybe not) that, in fact, was ultimately abandoned by Schott. Terry involved a different situation. The same transaction and occurrences giving rise to the legal claim gave rise to the equitable claim. Pretty clearly, they were, in essence, different versions of the same claim; certainly, the two claims arose out of the exact same transaction and occurrences that allowed the two defendants to be joined in a single lawsuit, from inception. The court, we think, was incorrect in concluding that because there previously existed a jury trial right against the employer, the jury trial right could migrate over to the equitable claim against the union; however, the fact of the existence of the antitrust claim in no way establishes that Schott could have been joined as a defendant in the antitrust action so that, notwithstanding that a jury trial right existed, once the antitrust claim was dismissed on the basis of prescription, the debtor could allow the jury trial right to migrate over to the claim against Schott. The claims are distinct; the claims arise out of different sets of transactions and occurrences; Schott could not have been joined as a co-defendant with the anti-trust defendant (see Rules 19 and 20, Federal Rules of Civil Procedure) in hopes that the debtor, if the antitrust claim would be dismissed, could assert now I have only one person against whom I can march and, therefore, am entitled to assert my jury trial right (existing on the antitrust claim) against him. This cannot be.
Terry, whatever it stands for, does not stand for the proposition that a classic equitable action for breach of fiduciary duty is converted to a legal action with a jury trial right because the plaintiff has a separate legal claim against someone else that pre-exists the establishment of the trust. This argument is nothing more than that the breach of fiduciary duty action is in reality a malpractice action, which was one of the only things about which the majority of the Terry *309 court agreed. CPC would characterize the breach of fiduciary duty claim as wholly dependent upon the merits of the antitrust claim, when in fact Schott's liability will be determined by the duties imposed upon him by the Bankruptcy Code.[39] Many things will have to be considered, among them (non-exclusively): the scope of duty; the ability of a debtor to bring the claim when no motion to compel abandonment was even filed; the extent to which the trustee's duty is affected by the failure of the debtor to schedule the antitrust claim; the scope of the trustee's business judgment given the age of the claim; and the existence of the claims against the estate. The trustee was the representative of the estate, not a lawyer hired by the debtor to file and prosecute a lawsuit. The underlying merits of the antitrust action may have some relevance to the ultimate claim breach of fiduciary duty but the breach claim is not dependent for its existence on the antitrust claim being, conclusively, meritorious.
The claim currently before the Court is analogous to the claim against the union in Terry. There, the court found that the plaintiffs' claim against the union was equitable, in part because the facts that the union members had no option to fire the union leadership and no power to control the significant parts of the relationship rendered the action more like a breach of fiduciary duty action than a legal malpractice claim. Likewise, neither option is available to a debtor in bankruptcy with respect to the trustee. If the action in Terry was analogous to a breach of fiduciary duty action and therefore equitable, then CPC's action is also equitable because it is a breach of fiduciary duty action and nothing else. There is no legal claim in this case to balance against the equitable nature of the alleged breach of fiduciary duty. If Schott is liable at all, it is because he failed in his duty as a bankruptcy trustee in connection with actions or inactions that exist at the heart of the inherently equitable bankruptcy process. There is no other basis upon which CPC can proceed. There is, for example, no contractual relationship between CPC and the trustee, of which CPC can claim breach (as there was in Terry). Any claim in this case emanates from the interactions of the equitable triumvirate of trustee, estate, and debtor. There is no equipoise here, only equity. CPC's reliance on Terry is misplaced.
CPC also cites Terry for the proposition that monetary damages are equitable only when they are (i) restitutionary or (ii) accompanied with injunctive relief. This Court acknowledges that holding and observes that CPC's reliance is again misplaced. As stated above, the damages sought by CPC in this case are restitutionary and therefore equitable. In Terry the union members sought compensation in the form of back pay. The court held that the proposed compensation was not equitable, but legal. CPC isn't seeking back pay. Nor is it seeking money it "would have received had the trustee properly filed" the antitrust claim, as alleged in its brief. If Schott had filed and prevailed upon the antitrust claim, the estate would have received money. CPC would have received money only if Schott had won and all of CPC's creditors had been paid in full from the judgment proceeds. If Schott had abandoned the claim and CPC filed on its own behalf, any recovery would have been obtainable by CPC's creditors, since CPC received no discharge. CPC seeks compensation *310 for Schott's purported failure to administer the estate properly, not for the money it might (possibly) have won. According to CPC's allegations, the antitrust claim was rendered worthless because of the wilful (or negligent) breach of Schott's fiduciary duty to the estate, and thereby, through some sort of extension upon the equitable power of abandonment, of his duties to the debtor. Such compensation is restitutionary, as is evidenced by the definition of "surcharge." Black's Law Dictionary 1292 (6th ed.1990). See In re Hutchinson, supra.
To obtain relief on its claim, CPC must engage itself and the Court in a recapitulation of the CPC estate properly administered (assuming that its factual allegations concerning the trustee's intentional disregard of its numerous protestations are true so as to generate a claim at all). The trustee as defendant will perhaps have an alternative perspective. The substance of the antitrust claim is only one among many components of the puzzle being put together here. It is not the be-all, end-all, over-arching nature of the claim. Again, this is not Terry.
The Court notes that CPC alleged in its complaint that Schott "committed wilful and deliberate acts in violation of his fiduciary duties," and the Court has accepted CPC's characterization of the nature of his claim for the purposes of the above analysis. However, the Court is aware that the Federal Rules of Civil Procedure, applicable to this Court through incorporation in the Bankruptcy Rules, have abolished technical forms of pleading in favor of notice pleading. Therefore, CPC is not presently bound by its characterization of Schott's actions as "willful and deliberate acts in violation of his fiduciary duties." CPC Amended Complaint, ¶ 7. CPC might also argue that its claims sound in negligence or intentional tort and are therefore purely legal.
The Court has already pointed out that almost any unintentional breach of fiduciary duty can be characterized as negligence. By the same logic, any intentional breach of fiduciary duty can be characterized as an intentional tort. There is authority for the proposition that the very act of negligence or wilful infliction of injury that would give rise to a tort claim is the same act that creates the breach of fiduciary duty, and that the action is converted to an equitable action because the office of trustee is inherently equitable, and the trustee is necessarily subject to the authority of the court of equity that appoints him. In re Barrows, 171 B.R. 455 (Bkrtcy.D.N.H.1994). Also, we have pointed out that if negligence is the ultimate basis upon which CPC might proceed, there's an abundance of federal trust law regarding the requirement of "fraud, or supine negligence equivalent to fraud," that as a matter of equity will or will not establish the standard of trustee liability from the equitable perch of a breach of fiduciary duty claim.
The Barton Doctrine
Although the Court has provided ample grounds for granting Schott's motion, an additional alternative ground may exist. CPC's request for a jury trial also appears contrary to the Barton doctrine. In Barton v. Barbour, 104 U.S. (14 Otto) 126, 26 L.Ed. 672 (1881), the Supreme Court announced a rule that railroad receivers could be sued in their representative capacity only by leave of the appointing court. The doctrine later expanded to include claims against bankruptcy trustees and to include claims against such persons in their personal capacity, as well as their representative capacity. In re Lehal Realty Associates, 101 F.3d 272, 276 (2nd Cir.1996), and cases cited therein. Congress has enacted 28 U.S.C. § 959, paragraph (a) of which overrules that part of the Barton doctrine that protects bankruptcy trustees who are carrying on the business of the estate.[40] However, Schott is not being sued *311 for anything he may have done in "carrying on the business" of CPC. Rather, he is being sued to determine whether he should have abandoned property of the estate more quickly than he did. This Court has not granted leave for the matter to be tried before another court, and within the context of the Barton doctrine, the Court finds no meaningful difference between another court and a jury. See Chappel v. First Trust Co. of Appleton, Wisconsin, 30 F.Supp. 765 (E.D.Wis.1940) (In ruling that the court was without jurisdiction to hear a complaint against a bankruptcy trustee, the court stated: "A trustee in bankruptcy is an officer of the court which appoints him. If his conduct is wrongful as to the assets belonging to the bankrupt estate, he is accountable to the bankruptcy court and to no other."); In re Markos Gurnee Partnership, 182 B.R. 211 (Bkrtcy.N.D.Ill.1995) (holding that an action against a trustee for breach of fiduciary duty must be brought in the court that appointed the trustee). See generally, In re DeLorean Motor Company, 991 F.2d 1236 (6th Cir. 1993) (Barton doctrine barred action against trustee in non-appointing forum).
The Court recognizes that, in a conflict between the Seventh Amendment and a judicially created doctrine, the amendment will prevail. However, the Court sees no conflict between the two. Rather, the existence of the Barton doctrine is further evidence in support of the Court's conclusion that the Seventh Amendment does not extend to cases of this type because the relief they seek is inherently equitable.
Conclusion
The nature of the relief sought by CPC, that of surcharging a bankruptcy trustee for improper administration of the bankruptcy estate (consisting, primarily, of the failure to appropriately use a power (abandonment) created by the equity courts to assist a trustee in going about his equitable business), is inherently equitable and inextricably involves the equitable bankruptcy process (as it has historically been defined). Also, because the action for breach of fiduciary duty was historically brought before a court of equity and the relief being sought, restitution, is equitable, this Court finds that this adversary proceeding raises an equitable claim and that the Seventh Amendment is not implicated in this case. See, in addition to everything that has been cited thus far, In re Hooper, 112 B.R. 1009 (9th Cir. B.A.P. 1990); In re Sunshine Trading & Transportation Company, 193 B.R. 752 (Bkrtcy.E.D.Va.1995); In re Elegant Equine, 155 B.R. 189 (Bkrtcy. N.D.Ill.1993); In re American Solar King, 142 B.R. 772 (Bkrtcy.W.D.Texas 1992); In re Brenner, 119 B.R. 495 (Bkrtcy.E.D.Pa.1990); In re E Z Feed Cube Co., 115 B.R. 684 (Bkrtcy.D.Or.1990); In re Dunoco Corp., 56 B.R. 137 (Bkrtcy.C.D.Cal.1985). Consequently, Schott's motion to strike will be granted.[41] A separate order will issue.
NOTES
[1] A notation in the case file suggests that the debtor later converted the case from involuntary to voluntary, but the date and circumstances of this change are not apparent. Whether the case was ever converted to a voluntary case is irrelevant for present purposes.
[2] A preliminary question raised by these facts is whether a bankruptcy trustee even has the power to abandon an asset that has not been listed in the debtor's bankruptcy schedules. Obviously, if Schott had no power to abandon an unscheduled asset, he can't be liable for his failure to do so. Although language in one case is broad enough to be cited for the proposition that a trustee in bankruptcy is without power to abandon an unscheduled asset, see Krank v. Utica Mutual Insurance Co., 109 B.R. 668, 669 (E.D.Pa.1990) ("If, however, the debtor fails to list a claim as an asset, the trustee cannot abandon the claim because he or she will have had no opportunity to determine whether it will benefit the estate"), most cases that have addressed the issue have indirectly reached a contrary conclusion. These cases state that a trustee's abandonment of an asset is irrevocable unless one of two exceptions applies. The first exception is that the debtor has misled the trustee concerning the worth of the asset. The second is that the asset is unscheduled. See Tschirn v. Secor Bank, 123 B.R. 215, 218 (E.D.La.1991); In re Ozer, 208 B.R. 630, 633 (Bankr.E.D.N.Y.1997); In re Bryson, 53 B.R. 3, 4 (Bankr.M.D.Tenn.1985); In re The Burch Company, Inc., 37 B.R. 273, 274 (Bankr.D.S.C.1983). If the fact that an asset is unscheduled can serve as a ground for revocation of its abandonment, then it perhaps follows that the trustee must have the power to abandon the asset in the first place. This Court, solely for the purposes of this jury trial right proceeding, assumes the (implicit) majority position that a bankruptcy trustee does have the power to abandon an unscheduled asset, reserving to the trustee the right to urge, through Rule 12(b)(6) or Rule 56 motions, a contrary position.
[3] Although the complaint alleges that the action prescribed on January 11, the correspondence between the trustee and the debtor's counsel indicates that counsel originally informed the trustee that the prescription date was January 15, 1994.
[4] Actually, CPC is co-plaintiff, along with Frank Carter, the principal shareholder and moving force behind CPC. CPC was the debtor in bankruptcy; Carter's interest in this action is not clear. For reasons of efficiency and simplicity, the court uses "CPC" to refer to both plaintiffs.
[5] This Court is therefore faced with both a statutory basis for jury trial and the parties' consent, if jury trial is necessary, neither of which were factors before the court in In re Clay, 35 F.3d 190 (5th Cir.1994). What would the Clay court do with what must look to it like a horribly misguided love-feast? On one hand the Clay court places tremendous emphasis on the importance of consent, "Because one function of Article III is to protect litigants, courts have accorded significant if not dispositive weight to consent and waiver. . . . Consent is a key factor empowering magistrates to conduct jury proceedings," id., at 196, manifesting an unspoken belief that anyone would be crazy to consent to trial by jury before a bankruptcy judge. On the other hand, the Clay court gives the impression of having peered over the jurisdictional abyss only to back up (off) after so circumscribing its approach to bankruptcy jurisdiction that actually to speak of what it has seen would require exposing the bankruptcy jurisdictional structure as, in fact, having no clothes. From this view the Clay court allows itself a few observations, such as that a bankruptcy court's jurisdiction is essentially incompatible with the right to a jury trial. "We may sometimes fail to acknowledge the equitable roots of certain bankruptcy cases and hence find a right to a jury trial when we should not." Id., at 194. Since this case, essentially between the debtor and the Trustee and concerning abandonment of estate property, is unquestionably within this court's jurisdiction, In re Clay gives an early indication that CPC has no Seventh Amendment right to a jury.
In re Markos Gurnee Partnership, 182 B.R. 211, 222 (Bankr.N.D.Ill.1995) raises another interesting argument based on a bankruptcy court's jurisdiction. That court held that an action against a trustee for breach of fiduciary duty can only be brought in the bankruptcy court that presided over the case. The court's rationale was that such an action can only arise in the context of a bankruptcy case, and that consequently the bankruptcy court has "arising in" jurisdiction under 28 U.S.C. § 1334. This Court is convinced by the above reasoning that it has jurisdiction, and In re Clay, supra, teaches that bankruptcy jurisdiction, equitable in nature, is inconsistent with a right to trial by jury. Unfortunately, the finding of jurisdiction does not completely resolve the issue. If the jurisdictional statute leads to one result and the Seventh Amendment analysis leads to another, it is the jurisdictional statute that must yield.
[6] The Seventh Amendment to the United States Constitution provides, in relevant detail: "In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved."
[7] Apparently, the trustee's argument was that Katchen benefitted from the payments since he would have been liable to the creditors as surety. The trial court must have viewed this reduction in Katchen's potential liability as a preference.
[8] 11 U.S.C. § 93(g) provided:
The claims of creditors who have received or acquired preferences, liens, conveyances, transfers, assignments or encumbrances, void or voidable under this title, shall not be allowed unless such creditors shall surrender such preferences, liens, conveyances, transfers, assignments, or encumbrances.
The Court observed that the language of this section was concerned with creditors rather than claims, and concluded that the allowance of a claim could therefore be conditioned on surrender of preferences unrelated to the claims.
[9] As mentioned above, we are not faced with a question of whether this Court has jurisdiction to enter a final judgment, given the consent of the parties. Were this not the case, we point out, notwithstanding the abyss recoiled from in Clay, that Katchen involved a final judgment by a bankruptcy court.
[10] Throughout the rest of this opinion, citations to statutes will be to the Bankruptcy Code, Title 11 of the United States Code, unless otherwise indicated.
[11] For one out of the million or so references, see Matter of Wood, 825 F.2d 90, 93 (5th Cir.1987): "In response to Marathon, Congress altered the placement of bankruptcy jurisdiction by creating a statutory distinction between core and non-core proceedings and restricting the power of bankruptcy courts to adjudicate the latter."
[12] Throughout the opinion, the Court used the terms "preferential transfer" and "fraudulent transfer" almost interchangeably. Since the distinctions between the two are irrelevant to this case, I will follow the Court's lead.
[13] There were other creditors in the same position as Culp, but for simplicity's sake his name is used to represent them all.
[14] The discussion in terms of subjecting one's self to the jurisdiction of the bankruptcy court, or of triggering the equitable claims allowance process, should not be confused with the case law determined by waiver of the right to a jury trial through choice of forum. See Commodity Futures Trading Comm'n v. Schor, 478 U.S. 833, 106 S.Ct. 3245, 92 L.Ed.2d 675 (1986). By filing a claim a creditor does not "choose" the bankruptcy forum (as opposed to another) within which to liquidate his claim and does not choose to waive the jury trial right (as opposed to exercising it in another forum, vis a vis the claim). The choice is either to have a claim against the estate or not. Withholding the claim is tantamount to relinquishing the claim since the creditor has no alternative venue in which to present it. If the choice is to assert the claim (in the only forum available), then the choice constitutes a decision that whatever jury trial right might exist regarding claims of the estate against the claimant (in the nature of preferences or fraudulent transfers, for example) ceases to exist.
[15] The Fifth Circuit has recognized that bankruptcy jurisdiction is "largely equitable" and "nigh mutually exclusive of cases or controversies at law in which there is a right to a jury trial." In re Clay, 35 F.3d 190, 194 (5th Cir. 1994).
[16] Here the Supreme Court seems to approach thin ice, as pointed out by the dissenting opinions in Granfinanciera. "[T]he Court [demonstrates a] cramped view of Congress' power under the Bankruptcy Clause to enlarge the scope of bankruptcy proceedings . . . Today, the Court . . . places a straightjacket on Congress' power under the Bankruptcy Clause: a straightjacket designed in an era, as any reader of Dickens is aware, that was not known for its enlightened thinking on debtor-creditor relations," 492 U.S. at 89, 109 S.Ct. at 2815 (dissenting opinion of White, J.); "[I]t would be improper for this Court to employ, in its Seventh Amendment analysis, a century-old conception of what is and is not central to the bankruptcy process, a conception that Congress has expressly rejected. To do so would, among other vices, trivialize the efforts Congress has engaged in for more than a decade to bring the bankruptcy system into the modern era." Id., at 93, 109 S.Ct. at 2817 (dissenting opinion of Blackmun, J.). Congress has the power to pass the law. An action which would have been an action at common law prior to the Constitution is an equitable action if it involves a claim in a bankruptcy case, only because Congress has established, statutorily, the bankruptcy case and the bankruptcy claims process. At bottom, the dissent requires focus upon the fact of the existence of the bankruptcy process itself and of Congress's inherent power to create it. The majority seems to be saying that Congress can create an equitable process, but is limited in determining the scope of the equitable nature of the process by the pre-Constitution scope of equity jurisdiction. This essentially deprives Congress of the authority to confect the bankruptcy system in a way that is too different from what has gone before (way before).
[17] There is probably a third distinct prong, though it has not been embraced by the Supreme Court's analysis. This third prong of the bankruptcy process construct involves the spectrum of issues, actions, proceedings, administrative matters within the arena that can be labeled the "discharge/dischargeability of the debtor and actions against the debtor." The weight of authority is satisfied that there is no jury trial right within this prong, even as regards the issuance of money judgments against the debtor which are not necessarily filed as claims against the bankruptcy estate. See, e.g., Matter of Walker, 51 F.3d 562 (5th Cir.1995) (Court determines that bankruptcy court may enter final judgment for attorney fees on non-dischargeable debt); Matter of Maurice, 21 F.3d 767 (7th Cir.1994); In re McLaren, 3 F.3d 958 (6th Cir.1993); In re Hallahan, 936 F.2d 1496 (7th Cir.1991); Matter of Copeland, 412 F.Supp. 949 (D.Del.1976); In re Hooper, 112 B.R. 1009 (9th Cir. BAP 1990); In re Thrall, 196 B.R. 959 (Bankr.D.Colo.1996).
[18] Ordinarily, a Chapter 7 debtor would qualify as a party in interest only upon a showing that the estate contained surplus funds. In re George Schumann Tire and Battery Company, 145 B.R. 104, 107 (Bankr.M.D.Fla.1992). However, CPC has alleged that Schott should have abandoned the estate's claim to the property. If Schott had done so, CPC would have benefitted directly, and is thus a party in interest on the issue of abandonment.
[19] This question may prove of significance to the merits of the plaintiff's claims. Does a Chapter 7 trustee owe a fiduciary duty to the debtor (and/or, in the corporate Chapter 7 case, the owners of the debtor)? Is the answer to this question dependant upon the context within which it is asked? For example, does it matter if the estate is insolvent? Is the scope of the duty (if any) related to or affected by the extent to which the party claiming breach had the authority or ability to provoke the same result that the trustee failed to obtain (say by seeking to compel abandonment pursuant to § 554(b))? As noted, we leave these questions, since they involve the merits, for another day. However, integral to this Court's thinking is the extent to which these questions, when folded together, implicate the equitable nature of the particular action raised by this complaint.
[20] Such a result would, as explained above, lead to the conclusion that CPC cannot have a jury trial because a claim against the estate implicates the first prong of the bankruptcy process.
[21] Compare In re Cochise College Park, Inc., 703 F.2d 1339 (9th Cir.1983) (favoring the first interpretation of Mosser) with Sherr v. Winkler, 552 F.2d 1367 (10th Cir.1977) (favoring the second).
[22] All of these cases hold that a bankruptcy trustee is personally liable for willful or intentional breaches of duty. Therefore, to the extent that CPC's claim against Schott is based on Schott's intentional misconduct, it is not a claim against the estate and therefore does not involve the first prong of the bankruptcy process.
[23] In re Hutchinson, 5 F.3d 750 (4th Cir.1993); Turshen v. Chapman, 823 F.2d 836 (4th Cir. 1987); Yadkin Valley Bank & Trust Co. v. McGee, 819 F.2d 74 (4th Cir.1987); United States for the Use and Benefit of Julien P. Benjamin Equipment Co. v. Sapp, 641 F.2d 182 (4th Cir.1981).
[24] Ford Motor Credit Co. v. Weaver, 680 F.2d 451 (6th Cir.1982). The Sixth Circuit also cited Weaver favorably in an unpublished opinion, In re Slodov, 1988 WL 62180, at *6 (6th Cir.1988).
[25] In re Chicago Pacific Corp., 773 F.2d 909 (7th Cir.1985).
[26] See also, First National Bank of Jacksboro v. Lasater, 196 U.S. 115, 25 S.Ct. 206, 49 L.Ed. 408 (1905); Dushane v. Beall, 161 U.S. 513, 16 S.Ct. 637, 40 L.Ed. 791 (1896); Sessions v. Romadka, 145 U.S. 29, 12 S.Ct. 799, 36 L.Ed. 609 (1892); Sparhawk v. Yerkes, 142 U.S. 1, 12 S.Ct. 104, 35 L.Ed. 915 (1891); American File Co. v. Garrett, 110 U.S. 288, 4 S.Ct. 90, 28 L.Ed. 149 (1884); Glenny v. Langdon, 98 U.S. (8 Otto) 20, 25 L.Ed. 43 (1878); Quinn v. Gardner, 32 F.2d 772 (8th Cir.1929); In re Malcom, 48 F.Supp. 675 (E.D.Ill.1943). Other cases mentioning the trustee's equitable power to abandon burdensome property include South Staffordshire R. Co. v. Burnside, 5 Exch. 129; Ex parte Davis, 3 Ch. Div. 463; Furdonjee's Case, 3 Ch. Div. 268.
[27] In fact, Rule 2002(e), Federal Rules of Bankruptcy Procedure, provides:
In a Chapter 7 liquidation case, if it appears from the schedules that there are no assets from which a dividend can be paid, the notice of the meeting of creditors may include a statement to that effect; that it is unnecessary to file claims; and that if sufficient assets become available for the payment of a dividend, further notice will be given for the filing of claims.
Only a tiny minority of bankruptcy courts (in fact, a minority of one this one) opens cases as though assets may be available; the bulk of courts (by order, local rule, or administrative policy) assumes that there will be no assets to administer and opens all Chapter 7 cases as cases falling under Rule 2002(e), notwithstanding that the rule seems to require a preliminary analysis of the schedules before the notice of no dividend. Of course, opening a case as an asset case and then issuing a Notice of No Dividend, while seemingly required, would be administratively prohibitive.
[28] The CPC bankruptcy case was such a case. No distribution to creditors was ever made. However, no discharge was entered because Carter Paper is a corporation. This presents an interesting dilemma for CPC in the current proceeding. If the claim was worth pursuing, Schott could not have abandoned it, and even if he had, any recovery by CPC would have been reached by CPC's creditors. If it wasn't worth pursuing, CPC has suffered no damage. Frank Carter, the owner and operator of CPC, may have been able to bring an action on his own behalf. If he had recovered individually, CPC's creditors would have been unable to reach the recovery. Of course, Carter was not a debtor, and any individual claim he had never became part of the bankruptcy estate. Since it was never part of the estate, Carter could have filed his own action at any time. Therefore, it appears that CPC is arguing that Schott is liable because he failed to do something abandon a valuable asset that he had no legal right to do. At this preliminary stage, CPC has not had the opportunity to resolve this dilemma for the Court, but the explanation is anticipated.
[29] The abandonment section (we guess we forgot to quote it earlier) reads:
§ 554. Abandonment of property of the estate
(a) After notice and a hearing, the trustee may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.
(b) On request of a party in interest and after notice and a hearing, the court may order the trustee to abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.
(c) Unless the court orders otherwise, any property scheduled under section 521(1) of this title not otherwise administered at the time of the closing of a case is abandoned to the debtor and administered for purposes of section 350 of this title.
(d) Unless the court orders otherwise, property of the estate that is not abandoned under this section and that is not administered in the case remains property of the estate.
[30] Unless the debtor is a corporation, as in this case.
[31] The Supreme Court has created another limitation on the power of abandonment. In Midlantic National Bank v. New Jersey Department of Environmental Protection, 474 U.S. 494, 106 S.Ct. 755, 88 L.Ed.2d 859 (1986), the Court held that a bankruptcy trustee could not abandon estate property "in contravention of a state statute or regulation that is reasonably designed to protect the public health or safety from identified hazards." Id., at 507, 106 S.Ct. at 762.
[32] While the fiduciary duty to creditors is clear, the duty to CPC is less clear. Before property can properly be abandoned, the trustee must determine that it is burdensome or worthless to the estate. If it is burdensome or worthless, then it has a negative value, or at best no value, to the estate, and the trustee is maximizing the value of the estate by dumping it. The Court is not at all certain that the fiduciary duty to the creditors to rid the estate of burdensome property is complemented by a fiduciary duty to the debtor to return burdensome property. For purposes of this determination, the Court is willing to assume the existence of such a duty. There will be ample opportunity later to decide whether it really exists.
[33] Interestingly, an anomaly is presented by the facts of this case. If not for the fact that the antitrust claim was never scheduled, had Schott closed the case sooner (he could have), then the claim would have been abandoned to the debtor by operation of law. Under such circumstances, CPC would be alleging as part of its complaint the failure to close the case before prescription. Here, however, had Schott closed the case earlier, the property would have remained property of the estate (see § 554(d)), and as such, could not have been prosecuted by the debtor. This is yet another issue which points out the equitable nature of the claim, and the extent to which the guts of the bankruptcy process hold the key.
In fact, the only way to resolve the tangle is to peer into the middle of the "administration of the res" process because equity-provided alternative perspectives abound. Could CPC argue that Schott owed it a duty to force it to schedule the antitrust claim so that it would have the "failure to close expeditiously" allegation against him? This involves the question of the scope of a trustee's fiduciary duty and the extent to which a party's unclean hands might have beneficial effect upon the complaining party's claim. Equity. Could Schott argue that it was in the estate's best interest to go ahead and say nothing about the claim, hoping that the debtor would mistakenly believe that it still possessed the claim and would expend funds to prosecute it (even after the estate was closed), given that the claim was unscheduled and would continue to be estate property? Equity.
[34] Anderson v. United States is a potentially troublesome case (though not cited by CPC as authority) that must be dealt with by this Court. Anderson sued the United States, and the government counterclaimed. Anderson named Emile Turner, who had served as trustee in an earlier bankruptcy case, as a third-party defendant in the counterclaim. Anderson alleged that Turner had negligently failed to obtain a discharge of certain corporate liabilities that the United States now wanted to collect from Anderson personally. Turner asked the district court to enjoin Anderson from proceeding against him until Anderson obtained permission from the bankruptcy court to proceed. The district court denied Turner relief, and the Fifth Circuit found that it had no jurisdiction over an appeal. In doing so, the court stated the following dictum: "It is clear that the underlying negligence action is one at law." Anderson, at 1029.
After careful consideration this Court has determined that the case, although issued by the Fifth Circuit, is not binding on the questions before the Court. Several factors lead to that conclusion: First, the statement was dictum. Second, due to the procedural and legal posture of the case, and the fact that Turner sought a stay rather than change of venue, Turner had to prove that the action against him was an action at law. He alleged that it was so, and apparently the issue was not disputed. Third, the fact that the court had no jurisdiction over the matter raises some doubt about the decision's precedential value, particularly since this Court undoubtedly does have jurisdiction. Finally, the facts leading to Turner's alleged negligence are not stated in the decision. Therefore, the Court finds it difficult to determine the extent to which the cases are distinguishable.
The weight of authority holds that an action for breach of fiduciary duty is equitable, while an action for negligence is legal. It seems likely that any unintentional breach of fiduciary duty could be characterized as "negligence" if the parties were so inclined, and this court is of the opinion that a constitutional right's applicability should not be determined by the label that a party places on its complaint. The issue here should not be whether Schott's behavior is properly characterized as negligence or as a breach of fiduciary duty. The issue is whether a claim raised in the bankruptcy court, a court of equity, that raises an allegation of breach of fiduciary duty, an equitable claim, for misuse of the equitable power of abandonment, which was created by courts of equity to assist the bankruptcy trustee in the equitable administration of the res, and which power is subject to review by a court of equity, is an equitable claim, or is instead a legal claim that gives rise to a Seventh Amendment right to a jury trial. That issue was not before the Fifth Circuit in Anderson, and this Court is convinced that the Fifth Circuit, when faced with the issue, will not consider Anderson to be binding precedent.
[35] The court has already cited several cases for the proposition that an action against a bankruptcy trustee creates no right to a jury trial. In addition to Mosser v. Darrow, supra, there is a host of published decisions in which the courts resolve the issue of trustee liability without ever expressly discussing the right to a jury trial. After a thorough search, the Court has found only two reported decisions, discussed in the text of this opinion, holding that an action against a trustee for breach of fiduciary duty generates a right to a jury trial. Opposed to these two decisions, the Court has found the following nonexclusive list of cases: Connecticut General Life Ins. Co. v. Universal Ins. Co., 838 F.2d 612 (1st Cir. 1988); In re Gorski, 766 F.2d 723 (2nd Cir.1985); In re Combined Metals Reduction Company, 557 F.2d 179 (9th Cir.1977); In re Johnson, 518 F.2d 246 (10th Cir.1975); In re Holywell Corporation, 177 B.R. 991 (S.D.Fla.1995); In re San Juan Hotel Corporation, 71 B.R. 413 (D.P.R.1987); Chappel v. First Trust Co. of Appleton, Wis., 30 F.Supp. 765 (E.D.Wis.1940); In re Rollins, 175 B.R. 69 (Bkrtcy.E.D.Cal.1994) (Issue of trustee liability raised on motion); In re Barrows, 171 B.R. 455 (Bkrtcy.D.N.H.1994); In re Charlestown Home Furnishing, 150 B.R. 226 (Bkrtcy.E.D.Mo. 1993); In re George Schumann Tire and Battery Company, Inc., 145 B.R. 104 (Bkrtcy.M.D.Fla. 1992); In re Melenyzer, 140 B.R. 143 (Bkrtcy. W.D.Tex.1992); In re Sturm, 121 B.R. 443 (Bkrtcy.E.D.Pa.1990); In re Center Teleproductions, Inc., 112 B.R. 567 (Bkrtcy.S.D.N.Y.1990); In re Consupak, Inc., 87 B.R. 529 (Bkrtcy.N.D.Ill. 1988) (Court's motion to surcharge trustee); In re Reich, 54 B.R. 995 (Bkrtcy.E.D.Mich.1985); In re 2001 Cincinnati, Inc., VIP Clubs of America, 43 B.R. 6 (Bkrtcy.S.D.Ohio 1984); In re Happy Time Fashions, Inc., 7 B.R. 665 (Bkrtcy.S.D.N.Y. 1980).
[36] Justice Marshall, writing for himself and three other justices, decided that the jury trial right arose because of the merger of the legal claim against the employer into the equitable claim against the union. Justice Brennan, concurring in judgment, found a jury trial right purely on the basis of the recovery requested, i.e. back pay. Justice Stevens found the action against the union to be more akin to the malpractice claim. The dissent concludes that the action against the union was a breach of fiduciary duty claim and therefore equitable, and that the breach of contract action did not displace the equitable nature of the action, and that the plaintiffs were not entitled to a jury trial. From a substantive, analytical perspective, then, the only idea common to a majority of the members of the court was that the action against the union was a breach of fiduciary duty action, equitable in nature. We will refer to Justice Marshall's opinion as that "of the Court," though, technically, it was not.
[37] In footnote 6 of the majority opinion, the Court explains this process of unequitization of the legal claim by stating: "The claim we confront here is not typical; instead, it is a claim consisting of discrete issues that would normally be brought as two claims, one against the employer and one against the union . . . The Seventh Amendment analysis should not turn on the ability of the plaintiff to maintain his suit against both defendants." 494 U.S. at 570, 110 S.Ct. at 1347. What we think the court means here is that the plaintiffs, having a jury trial right against one defendant on a breach of contract claim (the employer in the collective bargaining issue), should not lose the right to jury trial simply because it no longer can bring the action against the (only) defendant potentially liable for breach of contract. This "process" of unequitizing an action is finished off by the (to be as kind as we can) rather hazy suggestion that if the issue making up the legal action (though only bringable against another party) is somehow an issue underlying the equitable action, then, if the legal action cannot be brought against that other party (due to it being converted into an equitable action through the claims allowance process), the equitable action (which is now two equitable actions) is converted into a legal one for jury trial purposes. The court thus reached the startling conclusion that an equitable claim against a labor union for violating its duty of fair representation is converted into a legal claim when the party against which the legal claim (for breaching a collective bargaining agreement) was brought, the employer, files for (equitable) bankruptcy relief. The usual bankruptcy analysis is that a creditor's legal claim against a debtor is exchanged for an equitable claim to a pro rata share of the estate under the bankruptcy court's constructive possession. In Terry, by contrast, the employer's bankruptcy (which involved the submission of all assets to the equitable jurisdiction of the bankruptcy court), rather than converting legal claims to equitable ones, somehow converted the employees' equitable claim against the union into a legal one, because the employees were now faced with one defendant instead of two. Remember, the plaintiffs did not lose their right to assert the breach of contract claim, they simply decided to forego the breach of contract action (which they still had), complain a bit about not having it any more (given the bankruptcy), and thereafter assert that the now completely equitable universe in which both claims existed was magically (and mysteriously) now a legal universe, with jury trial for all on everything. This Court has previously been made to realize the limitations on its powers of comprehension, but rarely in such a bewildering manner. The logic of the Terry opinion is extraordinarily elusive.
[38] This argument is a reflection of the extent to which the Supreme Court owes a duty to inferior courts not to issue opinions that are like shiny baits, situated to attract arguments for anything because the opinion can be pointed to as saying anything (which is no different from observing that, analytically, the opinion says nothing).
[39] While Schott's potential liability in failing to abandon the antitrust claim is largely independent of the merits of that claim, it is obvious that CPC was damaged by the failure to abandon timely, if at all, only to the extent that the antitrust claim was meritorious. However, to the extent that the claim was meritorious, Schott was not justified in abandoning it. Instead, he should have administered this asset for the benefit of the estate by bringing the action himself. CPC is seeking damages against Schott for failure to do something that, if the facts are as CPC asserts them to be, Schott should not have done. CPC is advancing the following position: a jury should decide that either Schott or the bankruptcy judge in this case (myself) would have found that the antitrust claim was worthless or burdensome to the estate, and the jury must further find that both Schott and the bankruptcy court would have been wrong, because the claim had sufficient value to pay all creditors, plus a little left over for CPC. Ignoring the internal inconsistency of this position, the Court must point out that it is in a much better position than a jury to determine what it would have found concerning the value of the antitrust claim in connection with an abandonment motion, settlement of the antitrust claim (had Schott brought it), etc.
[40] 28 U.S.C.A. § 959. Trustees and receivers suable; management; State laws
(a) Trustees, receivers or managers of any property, including debtors in possession, may be sued, without leave of the court appointing them, with respect to any of their acts or transactions in carrying on business connected with such property. Such actions shall be subject to the general equity power of such court so far as the same may be necessary to the ends of justice, but this shall not deprive a litigant of his right to trial by jury.
(b) Except as provided in section 1166 of title 11, a trustee, receiver or manager appointed in any cause pending in any court of the United States, including a debtor in possession, shall manage and operate the property in his possession as such trustee, receiver or manager according to the requirements of the valid laws of the State in which such property is situated, in the same manner that the owner or possessor thereof would be bound to do if in possession thereof.
[41] This result obviates the need for a determination of whether Carter's claim implicates a "public right." At least one bankruptcy court has held that the official actions of a bankruptcy trustee involve public rights. In re Brenner, 119 B.R. 495, 497 (Bkrtcy.E.D.Pa.1990). Because there are other grounds for holding that there is no right to a jury trial in this matter, and because the Fifth Circuit has indicated that it is somewhat skeptical of whether the public rights doctrine as it now exists can provide any jurisdictional clarity to the bankruptcy process, In re Clay, 35 F.3d 190 (5th Cir.1994), this Court offers no opinion on the public rights issue. Furthermore, shortly after Granfinanciera, the Supreme Court called into question the import of the public rights issue. See Chauffeurs, Teamsters and Helpers Local No. 391 v. Terry, 494 U.S. 558, 565 n. 4, 110 S.Ct. 1339, 1345 n. 4, 108 L.Ed.2d 519 (1990).
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655 S.E.2d 539 (2007)
STATE of West Virginia ex rel. WEST VIRGINIA DEPARTMENT OF HEALTH AND HUMAN RESOURCES, CHILD SUPPORT ENFORCEMENT DIVISION, and Angela L. Varney, Petitioners Below, Appellants
v.
Cecil C. VARNEY, Respondent Below, Appellee.
No. 33332.
Supreme Court of Appeals of West Virginia.
Submitted October 24, 2007.
Decided November 21, 2007.
Angela L. Varney, Delbarton, WV, pro se.
Cecil C. Varney, Williamson, WV, pro se.
PER CURIAM.
This is an appeal by Appellant Angela L. Varney[1] from an order of the Circuit Court of Mingo County, West Virginia, which denied her appeal and affirmed the final order of the Family Court of Mingo County. At issue is the enforceability of a decretal judgment for alimony arrearages against Appellant's former spouse, Appellee Cecil C. Varney. The court below determined that the statute of limitations applies to bar Appellant's claim. Upon careful review of the briefs, record, arguments of counsel, and applicable precedent, this Court reverses the order of the circuit court.
I. Factual and Procedural Background
During the pendency of the parties' divorce proceedingswhich began over seventeen years agonumerous motions and briefs were filed with respect to custody of the parties' only child, the payment of certain marital debts and the disposition of certain marital assets. As a result of this protracted ordeal, a plethora of orders were entered addressing these issues, which either have been resolved or are not relevant to the instant appeal. Therefore, we recite only those facts and refer only to those filings and court orders which are pertinent to resolution of this appeal.
The sole question in this appeal involves a judgment for alimony arrearages entered against Appellee and in favor of Appellant. On June 5, 1991, the circuit court entered an Order Pendente Lite, which, inter alia, provided that "[b]y agreement of the parties, the defendant [Appellee herein] shall pay $1,000 per month as alimony to the plaintiff [Appellant herein] during the pendency of this action."
The parties were subsequently divorced by Divorce Decree entered in the Circuit Court of Mingo County on January 27, 1992. Also on that date, the circuit court entered a Final Order with Findings of Facts, Conclusions of Law and Recommendations to the Court,[2] in which the various issues relating to the parties' divorce were addressed.[3]
Relevant to the instant appeal, the court made reference to Appellee's failure to comply with the June 5, 1991, Order Pendent Lite[4] and stated, in paragraph 35, that
Since the time a temporary hearing was held in this matter by the former Special Family Law Master[,] the Defendant [Appellee herein] has failed to comply with his agreement made. Whether, due to the *542 delay of the entry of the Order, the matter can be said not to constitute a decretal judgment, it nevertheless constituted a contractual commitment of the Defendant to make such payments. Accordingly the Plaintiff [Appellant herein] should be granted a judgment against the Defendant for all arrearages of support and Five Thousand Two Hundred Dollars ($5,200.00) for payments made by the Plaintiff on the debts.
Absent from the January 27, 1992, order was any calculation of the amount of support in arrears, including any reference to a specific time period during which the Appellee failed to make the subject support payments.
A contempt proceeding was conducted on January 27, 1992,[5] before the Honorable David W. Knight, Special Judge. Judge Knight subsequently entered an Order Pursuant to Rule and Modifying Divorce Decree on March 19, 1992. This order was entered by the clerk of the circuit court in Civil Order Book No. 82, at page 546, on March 23, 1992. The Order Pursuant to Rule and Modifying Divorce Decree concluded, inter alia:
During the course of the hearings, various testimony on documentary evidence was introduced which leads the Court to believe that there should be a modification of the Divorce Decree for the purposes of clarification.
It is, therefore, ORDERED that the Divorce Decree entered on the 27th day of January, 1992, be, and hereby is, modified as follows:
1. Paragraph 35 of the Family Law Master's Recommended Decision which was incorporated into the Divorce Decree shall henceforth read as follows:
Since the time a temporary hearing was held in this matter by the former Special Family Law Master, the Defendant has failed to comply with his agreement made. Whether, due to the delay of the entry of the Order, the matter can be said not to constitute a decretal judgment, it nevertheless constituted a contractual commitment of the Defendant to make such payments. Accordingly, the Plaintiff shall be granted a judgment against the Defendant for all arrearages of alimony totalling Eleven Thousand Dollars ($11,000.00), plus interest calculated at ten percent (10%) from the month of October, 1991, per annum, and Five Thousand Two Hundred Dollars ($5,200.00) for payments made by Plaintiff on the debts, plus interest, from the month of October, 1991, at a rate of 10%, per annum.
. . . .
3. All the rest and residue of the Divorce Decree . . . shall remain unchanged and in full force and effect.
During the course of the January 27, 1992 contempt proceeding, the judge explained his reason for modifying paragraph 35 of the previously-entered divorce decree[6] as follows:
I find that the arrearage should have been stopped and the alimony should have been stopped at the time the law master made his finding, which was the first of October, 1991[7] and that there was a period of 11 months, according to my calculation between the last hearing and what would have been the end of September. So, I find that the arrearage from that period of time or [sic] $11,000.00, in addition to that the law master made a finding of $5,200.00 *543 in paragraph 35. I find that the $400.00 a month figure set by the law master, set by the agreement for additional support in the temporary petition order on paragraph 35 and will grant a judgment against the defendant for $11,000.00 and the $5,200.00.
. . . .
The judgment should include the $11,000.00 and the $5,200.00 and the pre-judgment interest from the last of September and the first of October, 1991 and I am not going to compound the interest.
(Footnote added).
The court also found that Appellee's failure to make support payments under the June 5, 1991, order did not amount to either civil or criminal contempt. According to the transcript, the court explained that its ruling that the interest should not be compounded was based, in part, on its finding of no contempt. Additionally, the March 23, 1992, order denied the BCSE's motion to establish a program of automatic withdrawal from Appellee's business account for amounts owed under the June 5, 1991, order.
Thereafter, Appellant, along with the BCSE, attempted to collect the foregoing judgment. As reflected in a December 19, 1996, circuit court order, a Writ of Suggestion was issued and served on an officer of the Bank of Mingo in an effort to secure funds on deposit there in the name of Appellee and his mother, Mary Varney. The December 19, 1996, order refers to the family court's March 23, 1992, order awarding Appellant "alimony which was unpaid resulting in arrearage against the defendant of $17,214.16 as of August 31, 1996, including interest[.]" Notably, on January 10, 1997, Appellee filed a Motion for Stay of Order and an accompanying affidavit, in which he neither objects to or otherwise questions the court's reference to the March 23, 1992 order as awarding the judgment against Appellee. Ultimately, an Order Quashing Suggestion Execution and Lifting Stay was entered on November 3, 1997, on the ground, inter alia, that notwithstanding the apparent joint ownership of the funds, the funds are the sole property of Appellee's mother and not subject to execution by Appellee's creditors.
Meanwhile, the West Virginia Department of Health and Human Resources, Child Support Enforcement Division, filed a Petition for Contempt. On September 22, 1997, the circuit court granted the petition and entered an Order to Show Cause requiring Appellee to show cause as to why he should not be adjudged in contempt for refusing to obey the March 23, 1992,[8] order requiring him to pay a judgment for alimony. On January 15, 1998, Appellee filed a Motion to Dissolve Order to Show Cause. Approximately five years later, by order entered August 26, 2002, the court found Appellee not to be in contempt and, accordingly, entered a Final Order Dissolving Rule for Contempt.
Other efforts by Appellant to collect the decretal judgment include the filing of a Notice to Employer/Source of Income to Modify Withholding on August 12, 1996 and the obtaining of abstracts of judgment on September 5, 1996, February 28, 2002 and March 21, 2002.[9] Appellant also obtained a Suggestion of Personal Property and a Suggested Execution on March 20, 2002.
On March 20, 2002, Appellant obtained a writ of execution for the judgment against Appellee,[10] with a return day of May 5, 2002.[11] Though the record is not clear on *544 this point, it appears that either there was no return by an officer or the writ was returned unsatisfied. See W.Va.Code § 38-3-18. Upon learning that a writ of execution had been issued, Appellee wrote a letter, dated April 2, 2002, to the Clerk of the Circuit Court of Mingo County. In the letter and accompanying affidavit, Appellee avers that the March 23, 1992, order does not create a judgment but rather, modifies the divorce decree entered on January 27, 1992. Appellee requested that the writ of execution and abstract of judgment "that wrongfully and mistakenly state the date of judgment as March 23, 1992, or any date other than January 27, 1992" be rescinded. The record does not indicate whether the clerk of the circuit court took any action with respect to Appellee's letter and affidavit.
On May 19, 2003, the BCSE filed a Motion for Determination of Judgement and requested that the court enter an order "setting a judgement amount and ruling that the judgements previously entered by the court have been properly renewed by the [Appellant] in a timely manner and are, therefore, valid and enforceable judgements." In support of its motion, the BCSE stated, inter alia, that a writ of execution was issued on March 20, 2002 in an "attempt to collect the judgement and pursuant to [W.Va.Code § 38-3-18] acted to toll the running of the statute of limitations and preserve the judgement. . . . Nine years and [t]hree [h]undred [s]ixty [t]wo days from the original entry of the judgement against the [Appellee] and in favor of the [Appellant]."
Following a hearing on the matter, the family court entered a Final Order on December 21, 2004, and ruled, inter alia, that paragraph 35 of the January 27, 1992 order granting the parties' divorce granted a judgment in favor of Appellant and against Appellee "`for all arrearages of support and . . . $5200.00 for payments made by the [Appellant] on the debts.'" The court further concluded, in pertinent part,
That the gross total of said judgment, although an ascertainable sum certain, was not set out in said Order; and
That by Order entered herein on March 23, 1992, the Court modified the language of said judgment by further calculating the arrearage of support, adding prejudgment interest, to begin from October, 1991, and thereby establishing the amount of the decretal judgment to be $16,200.00 plus applicable interest; and
That subsequently thereto, over the course of the years, the plaintiff caused the Clerk of this Court to issue various Abstracts of Judgment, Suggestions and Notices to Employers of Income Withholding, all in an effort to collect said judgment; and
That the Court notes that the Clerk of this Court erroneously identified the date of the judgment as March 23, 1992 (which is the date of the modified judgment), instead of the correct date of January 27, 1992; and
That West Virginia Code Chapter 38-3-18 provides that "a judgment execution may be issued within ten years after the date thereof;"
That in the case of Shaffer v. Stanley, [215 W.Va. 58] 593 S.E.2d 629 (W.Va.2003), filed on November 26, 2003, the West Virginia Supreme Court of Appeals ruled that administrative attempts to enforce an obligation, otherwise collectable by the Bureau for Child Support Enforcement, do not toll the statute of limitations; and
That during the ten-year period from January 27, 1992, through and including January 27, 2002, no actions were taken by the plaintiff to preserve the decretal judgment other than administrative actions which do not satisfy the requirements set forth in Shaffer v. Stanley.
The family court ruled, therefore, that the date of the decretal judgment is January 27, 1992, and that, because Appellant did not obtain a writ of execution before January 27, 2002, the enforceability of the judgment was extinguished as of that date. Thus, the court determined that "efforts to collect this decretal judgment are now subject to bar by the affirmative defense of statute of limitations."
Appellant appealed the family court's order to the Circuit Court of Mingo County. In a Final Order Denying Appeal and Affirming Final Order of the Family *545 Court, entered September 8, 2005, the circuit court agreed with the family court's finding that the date of the decretal judgment is January 27, 1992. The court concluded that although the March 20, 1992, order "alter[ed] the language" of the January 27, 1992, order, it "does not establish a new decretal amount." Accordingly, the circuit court ruled that because Appellant did not obtain a formal writ of execution between January 27, 1992, and January 27, 2002, the limitation period was not tolled. The circuit court affirmed the family court's ruling that the statute of limitations applies to bar Appellant from recovering upon the decretal judgment against Appellee. It is from this order that Appellant now appeals.[12]
II. Standard of Review
Our consideration of the circuit court's order presently challenged by Appellant is governed by the following standard of review: "In reviewing a final order entered by a circuit judge upon a review of, or upon a refusal to review, a final order of a family court judge, we review the findings of fact made by the family court judge under the clearly erroneous standard, and the application of law to the facts under an abuse of discretion standard. We review questions of law de novo." Syllabus, Carr v. Hancock, 216 W.Va. 474, 607 S.E.2d 803 (2004).
III. Discussion
A.
At the outset, and as noted above, the Divorce Decree and Final Order with Findings of Facts, Conclusions of Law and Recommendations to the Court were signed by the circuit court judge on January 27, 1992, but were entered in the civil docket book by the clerk of the circuit court on January 28, 1992. Similarly, the Order Pursuant to Rule and Modifying Divorce Decree was signed by the circuit court judge on March 19, 1992, but was not entered in the civil docket book by the clerk of the circuit court until March 23, 1992. It is well settled that
[i]n a proceeding governed by the Rules of Civil Procedure, a judgment rendered in such proceeding is not final and effective until entered by the clerk in the civil docket as provided in Rule 58[13] and Rule 79(a)[14] of the Rules of Civil Procedure.
*546 (Footnotes added). Syl. pt. 4, State v. Mason, 157 W.Va. 923, 205 S.E.2d 819 (1974). See Id., at syl. pt. 5 ("Rendition of a judgment is the pronouncement of the judgment by the court, while entry of the judgment is the notation of the judgment in the official records.").[15] Accordingly, for purposes of determining when the limitation period began to run in this case, the proper date is the date of entry of the judgment by the circuit clerk in the civil docket.[16]
B.
At issue in this appeal is whether the statute of limitations applies to bar recovery of the judgment for alimony arrearages awarded in favor of Appellant and against Appellee. It is undisputed that the limitation period in W.Va.Code § 38-3-18 applies to the collection of a judgment for alimony arrearages. "`The ten-year statute of limitations in W.Va.Code, 38-3-18 [1923] and not the doctrine of laches applies when enforcing a decretal judgment which orders the payment of monthly sums for alimony or child support.' Syllabus point 6, Robinson v. McKinney, 189 W.Va. 459, 432 S.E.2d 543 (1993)." Syl. Pt. 6, Collins v. Collins, 209 W.Va. 115, 543 S.E.2d 672 (2000).
West Virginia Code § 38-3-18 provides:
On a judgment, execution may be issued within ten years after the date thereof. *547 Where execution issues within ten years as aforesaid, other executions may be issued on such judgment within ten years from the return day of the last execution issued thereon, on which there is no return by an officer or which has been returned unsatisfied. An action, suit or scire facias may be brought upon a judgment where there has been a change of parties by death or otherwise at any time within ten years next after the date of the judgment; or within ten years from the return day of the last execution issued thereon on which there is no return by an officer or which has been returned unsatisfied. But if such action, suit or scire facias be against the personal representative of a decedent, it shall be brought within five years from the qualification of such representative.
We interpreted this statutory provision to mean that "[b]y the specific terms of W.Va.Code § 38-3-18 (1923) (Repl.Vol.1997), the issuance of an execution operates to preserve the judgment, and the statute of limitations commences to run from the return date of the execution." Collins, 209 W.Va. 115, 543 S.E.2d 672, at syl. pt. 7. As we recognized in Zanke v. Zanke, 185 W.Va. 1, 4, 404 S.E.2d 92, 95 (1991), appeal after remand, 192 W.Va. 310, 452 S.E.2d 401 (1994),
[u]nder W.Va.Code, 38-3-18, a judgment may remain alive after the ten-year period if the judgment creditor seeks issuance of an execution within the ten-year period. Should this judgment remain unsatisfied, the creditor can obtain additional executions in a like manner to keep the judgment alive. Conversely, however, if the ten-year period is allowed to run without an execution being issued in favor of the payee spouse, the judgment dies a statutory death, incapable of revival.
(Footnote and citations omitted.)
Furthermore, in Shaffer v. Stanley, 215 W.Va. 58, 593 S.E.2d 629 (2003), we made clear that administrative actions to obtain past due child support payments "do[] not constitute an execution of judgment under W.Va.Code § 38-3-18 (1923) for the purpose of tolling the ten-year limitation period for the execution of an issuance on a judgment." Syl. pt. 5, in relevant part.[17] Though the facts in Shaffer involved a judgment for child support arrearages, the requirement that a formal writ of execution be issued in order to toll the ten-year limitation period applies to a judgment for alimony arrearages.
In the instant case, Appellant made various attempts to collect the decretal judgment. It is clear from the record, however, that the only writ of execution issued was on March 20, 2002, less than ten years from the date of entry of the March 23, 1992, order, but more than ten years after the January 27, 1992, order was entered. The lower court determined that the date of the decretal judgment is January 27, 1992, the date of the Divorce Decree and Final Order with Findings of Fact, Conclusions of Law and Recommendations to the Court. Because a formal writ of execution was not issued within ten years of that datethat is, before January 27, 2002the circuit court ruled the statute of limitations applies to bar enforceability of the judgment. We disagree.
A careful review of the March 23, 1992, Order Pursuant to Rule and Modifying Divorce Decree reveals that the court made a material modification to the January 27, 1992, order such that it was tantamount to a new judgment. In the March 23, 1992, order, the lower court found that Appellee was not in contempt for failing to make the alimony payments to Appellant and, further, denied the BCSE's motion to have the unpaid alimony automatically withdrawn from Appellee's business account. Moreover, the *548 March 23, 1992, order stated that the court heard "various testimony on documentary evidence" leading it to modify the Divorce Decree. The order granted a judgment in favor of Appellant for all alimony arrearages totaling $11,000.00, plus interest, from October of 1991, as well as $5,200.00 for payments Appellant made on debts, plus interest, also from October of 1991. As the hearing transcript made clear, the March 23, 1992, order was based on a particular finding that the alimony should have ceased in October 1991. The court found the total arrearage to be $11,000.00 because, as explained during the January 27, 1992, contempt proceeding, "there was a period of 11 months, according to [the court's] calculation between the last hearing and what would have been the end of September." Furthermore, the lower court determined that the interest should not be compounded based, in part, upon the finding that Appellee's failure to make the subject payments did not constitute contempt.
Clearly, in its March 23, 1992, order, the lower court awarded Appellant a precisely-calculated judgment based upon evidence it considered and findings it made after the January 27, 1992 order was entered.'[18] We conclude, therefore, that it is from the date of the March 23, 1992, judgment that the limitation period set forth in W.Va.Code § 38-3-18 began to run. Because a writ of execution was issued on March 20, 2002, within the ten-year statute of limitations that had attached to the March 23, 1992, judgment, the decretal judgment against Appellee was preserved and the statute of limitations began to run anew from the return day of the execution. See Collins, 209 W.Va. 115, 543 S.E.2d 672, at syl. pt. 7. As previously indicated, the return day of the execution is May 5, 2002. Though it is not clear from the record, it appears that either there was no return by an officer or the execution was returned unsatisfied. See W.Va.Code § 38-3-18. In either event, we find that, pursuant to W.Va. Code § 38-3-18, Appellant may continue her efforts to collect the decretal judgment from Appellee either by obtaining another writ of execution or by instituting a civil action, until May 5, 2012.
IV. Conclusion
Based upon the foregoing, the circuit court's order of September 8, 2005, is hereby reversed.
Reversed.
Justice MAYNARD, deeming himself disqualified, did not participate in the decision of this case.
Judge DAVID R. JANES, sitting by temporary assignment.
NOTES
[1] The West Virginia Department of Health and Human Resources, Child Support Enforcement Division (now Bureau for Child Support Enforcement, or "BCSE"), did not participate in this appeal.
[2] Both the Divorce Decree and the Final Order with Findings of Facts, Conclusions of Law and Recommendations to the Court were signed by the circuit court judge on January 27, 1992. They were entered by the clerk of the circuit court, in Book No. 81, at pages 279 and 280, respectively, on January 28, 1992. In later orders, which are discussed below, the Divorce Decree and Final Order with Findings of Fact, Conclusions of Law and Recommendations to the Court are referred to as having been entered on January 27, 1992, rather than January 28, 1992. To avoid confusion, we shall refer to January 27, 1992 as the date of the orders' entry. However, this discrepancy is discussed in more detail in the Discussion section of this opinion.
[3] According to the Final Order with Findings of Facts, Conclusions of Law and Recommendations to the Court, prepared by the Special Family Law Master, the matter came to be heard on various dates over the course of several months. The Divorce Decree indicates that the Special Family Law Master's findings, conclusions and recommendations were submitted to the circuit court on or about October 1, 1991.
[4] Appellant received no award of alimony under the final terms of the divorce.
[5] Appellant instituted contempt proceedings on September 5, 1991, alleging Appellee failed to pay certain marital debts and unilaterally disposed of certain marital assets, in violation of the June 5, 1991 order. The court issued a rule to show cause that same day. A hearing on the matter was conducted on January 27, 1992; however, according to various correspondence in the record, the transcript of the hearing was, for the most part, lost. Approximately one and one-quarter pages of the hearing transcript were salvaged and appear in the record; the hearing is discussed in more detail below.
[6] The court also modified paragraph 34 of its prior order; that modification is not relevant to the instant appeal.
[7] As indicated previously, Findings of Fact, Conclusions of Law and Recommendations of the Special Family Law Master were submitted to the circuit court on or about October 1, 1991.
[8] The Order to Show Cause entered on September 22, 1992, identified the date of the order as March 19, 1992. As noted above, the circuit court judge signed the order on March 19, 1992, but the order was not entered by the clerk of the circuit court until March 23, 1992. This issue is discussed in more detail in the Discussion section of this opinion.
[9] It appears from the record that the abstracts of judgment obtained by Appellant were not docketed in the office of the clerk of the county commission. See W.Va.Code § 38-3-5.
[10] The writ of execution issued on March 20, 2002, was in the amount of $33,050.00. Of this amount, $16,200.00 was for the unpaid principal and $16,740.00 for unpaid interest. The remaining amount was for unpaid costs and the cost of the writ.
[11] In an affidavit dated April 22, 2002, Margaret Kohari, a deputy clerk in the office of the Clerk of the County Commission of Mingo County, stated that the writ of execution was filed with her office on March 21, 2002, and recorded in Execution Docket Book at page 132. See W. Va.Code § 38-3-8.
[12] On January 29, 1992, Appellee filed for discharge in bankruptcy pursuant to Chapter 7 of the Bankruptcy Code. The bankruptcy court entered a Discharge Order on May 15, 1992, thereby dismissing the bankruptcy action. On appeal to the circuit court, Appellant argued, for the first time, that the limitation period was automatically tolled as a result of the bankruptcy filing, see W.Va.Code § 55-2-22 ("[e]ffect of bankruptcy"), and that she had until ten years after the May 15, 1992, discharge order was entered to execute on the judgment in order to preserve it. This assignment of error was not raised before the family court and thus, the circuit court declined to address it for the first time on appeal. Similarly, though Appellant raises this assignment of error in the instant appeal, it is well settled that "`"[i]n the exercise of its appellate jurisdiction, this Court will not decide non-jurisdictional questions which were not considered and decided by the court from which the appeal has been taken." Syllabus Point 1, Mowery v. Hitt, 155 W.Va. 103 [, 181 S.E.2d 334] (1971).' Syl. pt. 1, Shackleford v. Catlett, 161 W.Va. 568, 244 S.E.2d 327(1978)." Syl. pt. 3, Voelker v. Frederick Business Properties Co., 195 W.Va. 246, 465 S.E.2d 246 (1995).
[13] Rule 58 of the West Virginia Rules of Civil Procedure, Entry of Judgment, provides:
Subject to the provisions of Rule 54(b), the court shall promptly settle or approve the form of the judgment and sign it as authority for entry by the clerk. The clerk, forthwith upon receipt of the signed judgment, shall enter it in the civil docket as provided by Rule 79(a). The notation of a judgment in the civil docket as provided by Rule 79(a) constitutes the entry of the judgment; and the judgment is not effective before such entry. The entry of judgment shall not be delayed for the taxing of costs or to permit a motion for a new trial or any other motion permitted by these rules.
[14] Rule 79(a) of the West Virginia Rules of Civil Procedure, Books and Records Kept by the Clerk and Entries therein, provides:
(a) Civil Docket.The clerk shall keep a book known as "civil docket" of such form and style as may be prescribed by the Supreme Court of Appeals, and shall enter therein each civil action to which these rules are made applicable. Actions shall be assigned consecutive file numbers. The file number of each action shall be noted on the folio of the docket whereon the first entry of the action is made. All papers filed with the clerk, all process issued and returns made thereon, all appearances, orders, verdicts, and judgments shall be entered chronologically in the civil docket on the folio assigned to the action and shall be marked with its file number. These entries shall be brief but shall show the nature of each paper filed or writ issued and the substance of each order or judgment of the court and of the returns showing execution of process. The entry of an order or judgment shall show the date the entry is made. When in an action trial by jury has been properly demanded or ordered the clerk shall note the word "jury" on the folio assigned to that action.
[15] The facts in Mason involved the sale at public auction of unredeemed property that had previously been "sold to the State" for unpaid taxes. Following the sale, the Deputy Commissioner of Forfeited and Delinquent Lands reported the sale to the court on February 9, 1972, and the court signed a "Decree of Confirmation" on that date. Also on that date, the "decree" was entered in the "Civil Action Book" and the "Delinquent Land Order Book." On February 25, 1972, the heirs of the property's former owner sought to redeem the property, arguing that the "Decree of Confirmation" signed by the court on February 9, 1972, "was not a final order because it had not been entered in the civil docket as required by Rule 58 of the Rules of Civil Procedure, and that they had the right to petition for redemption any time before the order of confirmation was final." 157 W.Va. at 925, 205 S.E.2d at 821. This Court determined that the confirmation of sale was not final when it was signed by the court on February 9 and entered in the order book. Rather, the Court relied on the language of Rules 58 and 79(a) of the W.Va. R. Civ. P. and found the confirmation of sale (deemed a "judgment" pursuant W.Va. R. Civ. P. 54(a)) was not final until after March 13, 1972, when it was entered in the civil docket.
[16] In Moats v. Preston County Comm., 206 W.Va. 8, 521 S.E.2d 180 (1999), we held in syllabus points one and two, the following:
1. Generally, an order is effective when a court announces it.
2. An oral order has the same force, effect, and validity in the law as a written order. In other words, the actual physical possession of a written order is not required to effectuate said order.
Our holding in Moats is not applicable to the case presently before us. At issue in Moats was whether a county commission was immune from suit and liability for damages to plaintiff under the West Virginia Governmental Tort Claims and Insurance Reform Act, W.Va.Code § 29-12A-1 to -18, "by reason of enforcing and executing the order of the mental hygiene commissioner." 206 W.Va. at 12, 521 S.E.2d at 184.
In Moats, the plaintiff's decedent intentionally injured herself (and eventually died from her injuries) while in the custody of the sheriffs department awaiting transport to a hospital for examination, following an involuntary commitment hearing. Under the Act, if the sheriffs department was acting pursuant to an order entered by the mental hygiene commissioner, it would be immune from suit. The plaintiff argued, however, that the sheriff's department voluntarily assumed responsibility for the decedent and was not executing or enforcing the commissioner's order because it did not have a written copy of it in its possession at the time the decedent injured herself. Thus, plaintiff argued, the sheriff's department could not enforce or execute an order until it receives it. Based upon syllabus points one and two, above, we rejected plaintiff's argument and concluded that "[b]ecause the Sheriff's Department had notice of the order entered by the mental hygiene commissioner in this case, we find that the Sheriff was acting pursuant to said order." 206 W.Va. at 13, 521 S.E.2d at 185.
The facts of Moats involved the duty of law enforcement officers to execute and enforce a lawful order of a court even though the officers did not have actual physical possession of said order. Our decision in Moats did not involve entry of a judgment order as it relates to the running of statutes of limitations and thus, does not affect our holding in the instant case.
[17] At issue in Shaffer was whether attempts by the Bureau of Child Support Enforcement to intercept the former husband's income tax returns for the purpose of satisfying past due child support payments, as provided by W.Va.Code §§ 48-18-117 and 48-18-118, tolled the ten-year limitation period set forth in W.Va.Code § 38-3-18. This Court determined that the income tax intercepts were not "executions" under W.Va. Code § 38-3-18. We concluded that "an execution necessarily involves a court process wherein a judicial writ is issued." Shaffer, 215 W.Va. at 65, 593 S.E.2d at 636. On the other hand, "a tax offset is a purely administrative action initiated and carried out by executive agencies." Id. Thus, actions other than executions do not toll the limitation period in W.Va.Code § 38-3-18.
[18] In syllabus point one of Sauls v. Howell, 172 W.Va. 528, 309 S.E.2d 26 (1983), we held:
Mature, unpaid installments provided for in a decree of divorce, which decree ordered a husband to pay to his former wife $2,700, "in lieu of alimony" at $150 per month, stand as decretal judgments against the husband, and the wife is entitled to institute suggestion proceedings under W.Va.Code, 38-5-10 [1931], to recover upon those judgments, and she need not institute ancillary proceedings to reduce the amount of those judgments to a sum certain.
In Sauls, the payee wife sought to recover the decretal judgments by instituting suggestion proceedings against a corporation believed to possess profit-sharing funds owed to her former husband. Unlike the instant case, the wife did not have the benefit of a judgment which set forth precisely the amount of unpaid alimony. Nothing in Sauls prohibits a judgment creditor from executing on such a judgment.
| {
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FILED
MAY 02 2016
1 NOT FOR PUBLICATION
2 SUSAN M. SPRAUL, CLERK
U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
3 UNITED STATES BANKRUPTCY APPELLATE PANEL
4 OF THE NINTH CIRCUIT
5 In re: ) BAP No. CC-15-1273-TaKuF
)
6 CHONGHEE JANE KIM, ) Bk. No. 2:13-bk-25661-BB
)
7 Debtor. ) Adv. No. 2:14-ap-01456-BB
______________________________)
8 )
BENJAMIN HOOSHIM; ALEXANDRE )
9 OH, )
)
10 Appellants, )
)
11 v. ) MEMORANDUM*
)
12 EDWARD M. WOLKOWITZ, CHAPTER )
7 TRUSTEE, )
13 )
Appellee. )
14 ______________________________)
15 Argued and Submitted on February 19, 2016
at Pasadena, California
16
Filed – May 2, 2016
17
Appeal from the United States Bankruptcy Court
18 for the Central District of California
19 Honorable Sheri Bluebond, Bankruptcy Judge, Presiding
20
Appearances: Andrew Edward Smyth argued for appellants;
21 Matthew Abbasi argued for appellee.
22
Before: TAYLOR, KURTZ, and FARIS, Bankruptcy Judges.
23
24
25
26 *
This disposition is not appropriate for publication.
27 Although it may be cited for whatever persuasive value it may
have (see Fed. R. App. P. 32.1), it has no precedential value.
28 See 9th Cir. BAP Rule 8024-1(c)(2).
1 INTRODUCTION
2 Benjamin Hooshim and Alexandre Oh appeal from the
3 bankruptcy court’s entry of a default judgment against them and
4 in favor of the chapter 71 trustee. The default judgment
5 avoided their liens against real property pursuant to
6 § 544(b)(1) and California Civil Code § 3439.04 and provided for
7 the Trustee’s recovery of the liens and the related notes under
8 §§ 550 and 551. The default judgment, however, also denied the
9 Trustee’s request for a recovery of title to and possession of
10 the real property itself given that the Trustee previously sold
11 it subject to the liens. The Trustee did not cross-appeal from
12 this determination.
13 Once the bankruptcy court determined that the Trustee was
14 not entitled to recover the real property, the only other relief
15 the Trustee sought in his complaint – set aside of the liens -
16 could not benefit the estate. We, thus, hold that the Trustee
17 lacked standing to seek such relief. As a result, we VACATE the
18 default judgment and DISMISS this appeal.
19 FACTS
20 Pre-petition Transfers and Litigation
21 Chapter 7 debtor Chonghee Jane Kim owned real property
22 located in or around Los Angeles, California, including
23 investment property in Sylmar (the “Property”).
24 In 2010, Finnegan & Diba, a law corporation, sued Kim in
25 state court and obtained a judgment against her in the principal
26
27 1
Unless otherwise indicated, all chapter and section
28 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
2
1 amount of $109,843.89. Unbeknownst to the law firm, during the
2 course of this litigation, Kim transferred all of her real
3 property to two wholly-owned limited liability companies for no
4 consideration. As relevant to this appeal, Kim transferred the
5 Property to E & E Global, LLC (the “LLC”).
6 Kim later caused the LLC to encumber the Property with two
7 deeds of trust, each securing a promissory note payable to one
8 of the Appellants.2 Appellants had previously loaned money to
9 Kim – not to the LLC - in the amounts set forth in the notes.
10 The LLC executed its notes and recorded the trust deeds several
11 months later, and the timing of execution and recordation was
12 far from random; they were executed and recorded just one week
13 before entry of the judgment against Kim in the state court
14 action. Appellants, however, did not participate in the LLC
15 transactions,3 and they learned about the notes and trust deeds
16 at a later, unknown point in time.
17 After its discovery of these transfers, Finnegan & Diba
18 commenced a second state court action against Kim. Among other
19 things, the complaint sought to set aside the transfers as
20 fraudulent. Within days, Kim caused the LLC to transfer the
21 Property back to her via quitclaim deed. She then filed a
22 chapter 7 petition; that case was dismissed almost a year later,
23
24
2
One note referenced a $50,000 debt owed to Hooshim; the
25 other note referenced a $100,000 debt owed to Oh.
26 3
While Appellants may not have initially known about the
27 LLC’s notes and trust deeds, they were close associates of Kim.
Hooshim was married to Kim’s sister. Oh was a longtime friend
28 and client of Kim’s bookkeeping and accounting services.
3
1 based on Kim’s failure to attend a continued § 341(a) meeting of
2 creditors.
3 Following dismissal of the first bankruptcy case, Finnegan
4 & Diba obtained a default judgment against Kim in the second
5 state court action; the judgment avoided Appellants’ trust
6 deeds. Just days before entry of this judgment, however, Kim
7 filed a second chapter 7 petition. The immediate result was
8 that the state court default judgment was void.
9 Trustee’s Sale of the Property
10 Expeditious in his liquidation efforts, the Trustee shopped
11 the Property and received a third party purchase offer. The
12 Trustee moved for authority to sell the Property under § 363(b),
13 subject to overbid. Of particular importance, the sale of the
14 Property was subject to any existing liens.
15 At the sale hearing, Kim emerged as the successful bidder.4
16 Following the bankruptcy court’s entry of an order confirming
17 the sale and receipt of payment, the Trustee quitclaimed the
18 Property to Kim.
19 No one appealed from the sale order, and it is now final.
20 Trustee’s Avoidance Proceeding
21 Seven months after the sale order became final, the Trustee
22 commenced an adversary proceeding against Appellants; he did not
23 name Kim as a party. As relevant to this appeal,5 the adversary
24
25 4
Kim paid $35,000 and acquired the Property and two other
real properties.
26
5
27 The adversary complaint also asserted fraudulent
transfer claims pursuant to § 548(a)(1)(A) and (a)(1)(B). The
28 (continued...)
4
1 complaint asserted the following claims and sought the following
2 relief:
3 ! First Claim for Relief (§ 544 / Cal. Civ. Code (“CC”)
4 § 3439). Avoidance of title transfer and lien transfers and
5 recovery of the Property.
6 ! Fourth Claim for Relief (Quiet Title). 100% title to
7 and possession of the Property free and clear of the liens.
8 ! Prayer:
9 ! Avoidance of transfer of title and liens under
10 §§ 544 and CC § 3439.
11 ! A declaration that the Property was property of
12 the estate free and clear of liens.
13 ! Vesting of legal title to the Property in the
14 estate.
15 ! Recovery of the Property under § 550.
16 ! The usual “other relief” catch all and costs.
17 Appellants did not initially defend the avoidance
18 proceeding, and, when they did enter the fray, they did not
19 timely comply with the bankruptcy court’s directive to
20 participate in a mediation. As a result, the bankruptcy court
21 struck Appellants’ answer to the complaint and entered defaults
22 against them.
23 In moving for default judgment, the Trustee argued that
24 judgment was warranted by the evidence that Kim transferred and
25 encumbered the Property with actual intent to hinder, delay, or
26
5
27 (...continued)
bankruptcy court ultimately determined that these claims were
28 time-barred. No cross-appeal was taken from this determination.
5
1 defraud. Appellants opposed and focused on the effect of the
2 sale of the Property to Kim. They asserted that the Trustee
3 quitclaimed to Kim any and all interest the estate had in the
4 Property and, thus, that he lacked standing to pursue the
5 avoidance and recovery claims.
6 Following a hearing, the bankruptcy court entered an order
7 granting in part and denying in part the Trustee’s motion for
8 default judgment. It determined that the Trustee had standing
9 to avoid Kim’s fraudulent transfers of her interests in the
10 Property. And it concluded that the notes and trust deeds “were
11 created solely for the purpose of intentionally hindering,
12 defrauding and delaying Creditor, Finnegan & Diba . . . and for
13 no other purpose.” Emphasis in original. The bankruptcy court,
14 thus, avoided the trust deeds as fraudulent transfers under
15 § 544 and CC § 3439.04 and provided that all rights, title, and
16 interests in the trust deeds were transferred to the Trustee and
17 preserved for the benefit of the estate pursuant to §§ 550 and
18 551. The bankruptcy court also ruled that as the “holder in due
19 course” of the notes and trust deeds, the Trustee was “entitled
20 to fully and completely enforce the terms of the assumed
21 encumbrances.”
22 The bankruptcy court, however, denied the Trustee’s
23 requests for recovery, title, and possession in relation to the
24 Property given the Trustee’s prior sale of the Property.
25 Appellants timely appealed.
26 While this appeal was pending - at oral argument, in fact -
27 the Trustee informed the Panel that he had exercised the power
28 of sale under the trust deeds and foreclosed on the Property.
6
1 This information prompted the Panel to re-visit and grant
2 Appellants’ motion for a temporary stay, which prevents the
3 Trustee’s disbursement of any proceeds from the sale pending
4 final disposition of this appeal.
5 ISSUE
6 Whether the Trustee had standing to assert the avoidance
7 and recovery claims against Appellants.
8 DISCUSSION6
9 On appeal, Appellants continue to challenge the Trustee’s
10 standing to assert the avoidance and recovery claims.7 They
11 also maintain that the claims either were sold to Kim by the
12 Trustee or extinguished by the quitclaim deed. We agree with
13 the bankruptcy court that the Trustee did not sell avoidance
14 claims to Kim and that the quitclaim deed did not extinguish the
15 claims; in the absence of a sale expressly so providing, only
16 the Trustee could assert the estate’s fraudulent transfer
17 claims. But the sale did affect the estate’s remedies on
18 account of such claims.
19 In short, after the sale of the Property subject to the
20
21
6
Appellants request that the Panel take judicial notice
22 of an adversary complaint filed by Kim against the Trustee while
this appeal was pending; the complaint asserts claims for quiet
23
title and declaratory relief. We grant the request, solely for
24 the fact that it was filed and not for the truth of the matters
asserted in the complaint.
25
7
Although Appellants do not frame their arguments as a
26 constitutional standing issue, we have an independent duty to
27 examine issues of jurisdiction and justiciability, even sua
sponte. See Am. Civ. Liberties Union of Nev. v. Lomax, 471 F.3d
28 1010, 1015 (9th Cir. 2006).
7
1 liens, the estate’s injury was no longer redressable through a
2 lien avoidance action. If this was unclear when the Trustee
3 filed the adversary complaint which requested recovery of the
4 Property, it became clear when the bankruptcy court denied
5 recovery of title by the estate.
6 Standing exists only when an injury can be redressed
7 through favorable judicial decision. The judicial power of the
8 federal courts, including the bankruptcy courts, is both
9 supplied and limited by the Constitution of the United States.
10 One limitation is standing, which involves the question of
11 “whether the litigant is entitled to have the court decide the
12 merits of the dispute or of particular issues.” Warth v.
13 Seldin, 422 U.S. 490, 498 (1975). Thus, “standing imports
14 justiciability: whether the plaintiff has made out a ‘case or
15 controversy’ between himself and the defendant within the
16 meaning of Art. III. This is the threshold question in every
17 federal case, determining the power of the court to entertain
18 the suit.” Id. (citation omitted).
19 To establish standing, “[t]he plaintiff must have suffered
20 or be imminently threatened with a concrete and particularized
21 ‘injury in fact’ that is fairly traceable to the challenged
22 action of the defendant and likely to be redressed by a
23 favorable judicial decision.” Lexmark Int’l, Inc. v. Static
24 Control Components, Inc., 134 S. Ct. 1377, 1386 (2014) (citation
25 omitted). “[R]edressability analyzes the connection between the
26 alleged injury and requested judicial relief. [It] does not
27 require certainty, but only a substantial likelihood that the
28 injury will be redressed by a favorable judicial decision.”
8
1 Nw. Requirements Utilities v. FERC, 798 F.3d 796, 806 (9th Cir.
2 2015) (internal quotation marks and citation omitted).
3 Here, there is no dispute that Kim transferred the Property
4 to the LLC. The resulting injury was remedied in part when,
5 pre-petition, Kim caused the LLC to reconvey the Property. But
6 while the Property was in the hands of the LLC, Kim caused the
7 LLC to grant liens on the Property in favor of Appellants. We
8 see no error in the bankruptcy court’s determination that Kim
9 caused the LLC to encumber the Property with the actual intent
10 to hinder, delay, or defraud Finnegan & Diba.8 The reconveyance
11 of the Property did not extinguish the liens. Consequently, the
12 Trustee’s sale of the Property did not entirely redress the
13 injury to the estate caused by Kim’s pre-petition fraudulent
14 transfers. No doubt, the existence of Appellants’ liens reduced
15 the sale price received for the Property. We, thus, agree that
16 the trust deed transfers were actually fraudulent and that there
17 was injury to the estate.
18 The Trustee had options for addressing this injury. He
19 could have moved to avoid the trust deeds prior to sale of the
20 Property. Or, he could have sold the Property, free and clear
21
8
22 We acknowledge that CC § 3439.05(a) applies only when
there is a transfer “by the debtor” and recognize that, here,
23 the LLC transferred the trust deeds. At oral argument before
24 the Panel, the Trustee responded to this concern by asserting
that there was substantial evidence in the record supporting
25 that the LLC was the alter ego of Kim; we cannot find any direct
discussion of this topic – nor is there an express finding by
26 the bankruptcy court in this regard. But the bankruptcy court’s
27 implicit conclusion that the LLC’s transfer of the trust deeds
was the equivalent of a transfer by Kim is not disputed by
28 Appellants and can be inferred on the record we do have.
9
1 of the trust deed liens. In such a case, he could then move to
2 avoid the liens on the sale proceeds. In both cases, he could
3 have achieved full value through sale. The Trustee, however,
4 chose neither of these options. Prior to the time he filed the
5 adversary complaint, he sold the Property subject to Appellants’
6 liens.
7 Once the Trustee sold the Property subject to Appellants’
8 liens, any injury to the estate was no longer redressable by
9 avoiding the trust deeds. Set aside of the trust deeds after
10 the sale benefitted only Kim. Despite this fact, the only
11 relief both requested by the Trustee in the adversary complaint
12 and before the Panel on appeal was lien set aside. Again, had
13 the Trustee possessed a meritorious claim to reacquire title to
14 the Property after the sale, then his request for lien set aside
15 was a remedy that addressed the continuing injury.
16 Unfortunately, he did not possess such a right to reacquire
17 title, and - even if he did - he did not preserve this claim on
18 appeal.
19 The Trustee neither requested nor preserved a claim for a
20 money judgment under § 550. We acknowledge that in a case
21 involving fraudulent conveyance of a trust deed, § 550 allows a
22 trustee to file a complaint seeking either set aside of the
23 liens or recovery of their value. The Trustee, however, never
24 sought recovery of the value of the liens through a money
25 judgment. At this post-judgment point in time, the historical
26 possibility of a claim for a money judgment (equal to the value
27 of the lien rights in the Property transferred) against
28 Appellants pursuant to § 550(a) does not cure the standing
10
1 problem. Again, the Trustee did not seek this relief, and the
2 time for doing so has passed. See 11 U.S.C. § 546(a).9
3 Rights to enforce the notes do not follow from recovery of
4 the trust deeds or otherwise. We also acknowledge the relief
5 accorded in connection with the notes but conclude that the
6 standing problem remains. The adversary complaint did not
7 assert that the LLC’s execution of the notes was fraudulent.10
8
9
9 We assume that the Trustee recognized the significant
hurdles to such a recovery. The Ninth Circuit has made
10 clear that in the context of a § 550 lien recovery award, a
money judgment is available only where the lien can be
11 appropriately valued. See USAA Fed. Sav. Bank v. Thacker
12 (In re Taylor), 599 F.3d 880, 892 (9th Cir. 2010). Nothing in
this record suggests an attempt by the Trustee to value
13 Appellants’ liens. This makes sense, as the record is unclear
as to if and when the notes were ever delivered to Appellants
14 and there is no evidence that Appellants provided consideration
15 to the LLC. Valuation of a trust deed where there are serious
barriers to foreclosure could be difficult.
16
10
We recognize that California law permits the avoidance,
17 not only of transfers made by a debtor, but also of “obligations
18 incurred by a debtor” if actual or constructive fraud exists.
Cal. Civ. Code §§ 3439.04(a), 3439.05(a). For example, if a
19 debtor executes a promissory note in favor of a friend
evidencing a fictitious debt, for the purpose of diverting some
20 of the debtor’s assets to the friend rather than to legitimate
21 creditors, the obligation is avoidable. This provision does not
help the Trustee, however, for several reasons.
22 First, the record indicates that Kim owed legitimate debts
to Appellants. Therefore, signing the notes did not create a
23 fraudulent obligation that could be avoided.
24 Second, even if the notes were avoidable, the statute would
not authorize the Trustee to recover the notes and become the
25 holder of them. If a transfer is avoided, the statute permits
the trustee to recover either the property or its value. Id.
26 § 3439.08(b)(1). By its terms, however, the statute does not
27 permit “recovery” of an avoidable obligation. There is a good
reason for this difference. Avoidance of a fraudulent
28 (continued...)
11
1 The bankruptcy court made no such finding. Indeed, the
2 bankruptcy court’s determination that Appellants loaned money to
3 Kim in the amounts included in the LLC notes is inconsistent
4 with such a conclusion; the notes, even in an alter ego
5 situation, merely evidence a legitimate debt. On this record,
6 the relief as to the notes follows, if at all, only from the
7 recovery of the trust deeds. Thus, our conclusion that the
8 Trustee lacks standing to recover the trust deeds makes recovery
9 of the notes and the exercise of rights thereunder impossible.
10 Our conclusion in this regard is supported by other
11 considerations. First, to the extent the bankruptcy court
12 granted recovery as to the notes other than as following from
13 recovery of the trust deeds, it erred. The adversary complaint
14 did not seek this relief. Given that the Trustee recovered
15 judgment through a default prove-up, the bankruptcy court could
16 not grant relief beyond that pled in the complaint. See Fed. R.
17 Civ. P. 54(c) (“A default judgment must not differ in kind from,
18 or exceed in amount, what is demanded in the pleadings.”),
19 incorporated into adversary proceedings by Fed. R. Bankr.
20 P. 7054; see also McDonald v. Checks-N-Advance, Inc.
21 (In re Ferrell), 539 F.3d 1186, 1192-93 (9th Cir. 2008); Sec. &
22 Exch. Comm’n v. Wencke, 577 F.2d 619, 623 (9th Cir. 1978).
23 Second, even if the trust deeds were recoverable, the
24 record does not support the bankruptcy court’s determination
25
10
(...continued)
26 obligation – i.e., eliminating that obligation – restores the
27 creditors to the status quo that existed before the fraudulent
obligation was incurred. No further remedy is needed to provide
28 complete relief to the affected parties.
12
1 that the Trustee was the holder in due course of the notes and,
2 therefore, was entitled to exercise the power of sale under the
3 trust deeds.
4 In California, it is well-established that a deed of trust
5 follows the debt, whether evidenced by a promissory note or
6 otherwise; the converse is not true. See Willis v. Farley,
7 24 Cal. 490, 497-98 (1864) (“The doctrine that a mortgage is a
8 mere incident of the debt which it is executed to secure, and
9 follows the same in whosoever hands it may come by transfer or
10 assignment . . . may be regarded as the settled law of this
11 State.”); see also W. Loan & Bldg. Co. v. Scheib, 218 Cal. 386,
12 393 (1933) (“A mortgage is merely security for a debt, and if
13 there is no debt there is no mortgage.”). Only a party with
14 rights to enforce the note can properly authorize a foreclosure.
15 See Yvanova v. New Century Mortg. Corp., 62 Cal. 4th 919, 927
16 (2016).
17 No provision of the Bankruptcy Code converts a note payable
18 by third parties to a non-debtor (or to a debtor, for that
19 matter) into an obligation that can be enforced by a trustee
20 pursuant to a fraudulent conveyance action that attacks the
21 security for the note. Even where a trustee successfully avoids
22 a trust deed, there is no resultant right to collect debt owed
23 to the trust deed transferee by a third party or a debtor.
24 Further, the record does not establish that the Trustee was
25 the holder in due course of the notes. A holder can enforce a
26
27
28
13
1 note.11 Cal. Com. Code § 3301. One, however, must have more
2 than possession to be a holder; one also must be named as the
3 payee in the note or the note must be bearer paper. Cal. Com.
4 Code § 1201(a)(21)(A). Here, the record establishes that the
5 notes named Appellants as payees and there is no evidence that
6 the notes were endorsed in blank or to the Trustee.
7 Given our determination, the Trustee’s foreclosure may be
8 problematic. As stated, the Panel ordered a stay pending final
9 disposition of this appeal. Once the mandate issues, the
10 bankruptcy court will need to address the repercussions of the
11 foreclosure sale.
12 CONCLUSION
13 Based on the foregoing, we VACATE the judgment and DISMISS
14 the appeal.
15
16
17
18
19
20
21
22
23
24
25
11
There are two other mechanisms by which a non-holder may
26 enforce a note. See Cal. Com. Code § 3301. Here, the
27 bankruptcy court solely determined holder in due course status;
it did not discuss the other mechanisms nor does the record
28 suggest their applicability under these facts.
14
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208 N.W.2d 758 (1973)
MAIN REALTY, INC., Respondent,
v.
Howard PAGEL, Appellant.
No. 43522.
Supreme Court of Minnesota.
June 15, 1973.
*759 Eckberg, Lammers & Briggs and James F. Lammers, Stillwater, for appellant.
Smith, Juster, Feikema, Haskvitz & Casserly, Wyman Smith and Ronald L. Haskvitz, Minneapolis, for respondent.
Heard before KNUTSON, C. J., and OTIS, KELLY, and SCHULTZ, JJ.
PER CURIAM.
This is a mandamus proceeding to require the building inspector of the village of Woodbury, Washington County, to issue a building permit to plaintiff for the construction of a "mini shopping center" at 3171 Lower Afton Road in the village of Woodbury. The district court granted the writ and defendant appeals. We affirm.
The permit which is sought is for the construction of a one-story building with a 100-foot front and 50-foot depth, designed to accommodate three retail stores for use as a laundry, meat market, and grocery. Preliminary oral approval was given by the defendant building inspector on September 13, 1971, when a permit fee of $153 was paid. On September 22, the permit was denied by the city council. Thereupon, plaintiff sought and secured from the district court a writ of mandamus compelling defendant to issue the permit.
On appeal, defendant advances numerous arguments for denying the permit. He contends that the property was a subdivision and that plaintiff was required to secure approval of a final plat of the subdivision before a permit would issue; that the property had to be rezoned to qualify as a shopping center district; that a plot plan must be submitted to show structures, parking, driveways, landscaping, screening, and the developer's financial responsibility; that the property in its undeveloped state was highly desirable to the village because of its landscaping and trees; that plaintiff had the burden of proving compliance with the normal setbacks and other zoning and site requirements; that the question of obstructing future street extensions had to be resolved; and that under the village's police power it had discretion to deny the permit if the public welfare, health, and safety were not properly served by issuing the permit.
With the exception of an allusion to providing for the health, welfare, and safety of the village residents, none of the reasons for denying the permit advanced on appeal were set forth in the minutes of the council meeting at which plaintiff's application was rejected. The minutes of that portion of the meeting set forth in full are as follows:
"COUNCIL MINUTES
September 22, 1971
"Pursuant to due call and notice thereof, a regular meeting was duly held at the Village Office on the 22nd day of September, 1971, at 8:00 P.M.
* * * * * *
"PETITIONS, REQUESTS, COMMUNICATIONS
"Mr. Carl Lien of Land Increment Inc. came before the Council with building site plans for a mini-shopping center at the NW Quadrant of I-494 and Co. Road 26.
"Council reviewed same with Mr. Lien, of Land Increment, Inc. Moved by Mayor Bielenberg that the plans for a mini-shopping center as proposed by *760 Land Increment Development Inc. and Main Realty be rejected on the basis of providing for the health, welfare, and safety for the people of Woodbury; also, based on the letter of the Village Planner dated August 3, 1971, pointing out certain factors and difficulties of placing this type of business in the area and lot as proposed. Motion seconded by Councilman Strong.
"Discussion: Attorney for Main Realty and Land Increment Inc. stated that if the plans meet all requirements of the Village Zoning and Building Code, the Council cannot deny the issuance of a permit. Also the plans have been revised since the last presentation and comply with current Village Ordinances and Building Codes in all details. The Council replied that there are certain statements in the Planners' letter that make the area undesirable for this type of business, and also the Village has been in contact with the State Highway Department on upgrading the I-494 Inter-change going west. Councilman Olander stated that if the new revised plans comply with all current Village Ordinances and Building Codes, there would be no basis for rejecting by the Council. Mayor Bielenberg stated that he was concerned with the vehicle movement and pedestrian traffic crossing the I-494 over pass, mostly the children. Councilman Strong requested the motion be voted on as stated.
"Voting in favor of: Bielenberg, Farrell, Strong and Wolterstorff.
"Voting against: Olander."
Defendant raised for the first time in his answer to the petition plaintiff's noncompliance with the zoning ordinance and subdivision ordinance, the need for a plot plan, and proof of the developer's financial responsibility. The trial court found that plaintiff had submitted plans showing all the details required by the village building ordinances. It held that the village did not have discretion arbitrarily to reject an application because of the possibility of obstructing future street extensions without a more tangible showing. It further held that the village council acted arbitrarily in defining the proposed "mini shopping center" as a shopping center which would be subject to special handling by the council.
On appeal, defendant seeks to support the council's decision by the recommendations contained in the report of the village planning consultant and by reports of the county engineer and the State Highway Department. These reports were not introduced in evidence and were not available either to the trial court or to this court. In this state of the record, we hold that the trial court was compelled to issue the writ.
Defendant justifies the refusal to issue a permit by asserting that the village is vested with discretion to determine whether it is in the interests of the health, welfare, and safety of the village. In his brief submitted to this court, defendant states:
"* * * The Zoning Ordinance § 4.10, platting does not prohibit the erection and maintenance of a building such as that proposed by respondent. It merely requires that one desiring to erect and maintain such structures obtain permission from the Village Council. There is nothing unconstitutional, as counsel for respondent argued in the lower court, in vesting the power to dispense or withhold such permits in the Village Council."
We do not agree that the village is vested with such sweeping authority. In recent years a number of cases have articulated the perimeters of municipal authority in granting or denying permits of this kind. In Zylka v. City of Crystal, 283 Minn. 192, 199, 167 N.W.2d 45, 51 (1969), we alluded to "the danger of permitting the council to deny a special-use permit without contemporaneous findings or reasons and then permit its members after several months of *761 thought to present reasons perhaps totally unrelated to the actual reasons for denying the permit." Where the requested use is consistent with those authorized by the zoning ordinance, the permit may not be denied unless there is a showing that the public health, safety, or welfare is in danger. Twin City Red Barn, Inc. v. City of St. Paul, 291 Minn. 548, 192 N.W.2d 189 (1971). We have held that the failure of the council to record contemporaneously a legally sufficient basis for its determination constitutes a prima facie showing of arbitrariness. Inland Const. Co. v. City of Bloomington, 292 Minn. 374, 392, 195 N. W.2d 558, 569 (1972).
We are not impressed by the vague references in the council minutes to the "health, welfare, and safety for the people of Woodbury" as justification for denying the permit without an articulation by the council of the factual basis and reasons for that determination. Enright v. City of Bloomington, Minn., 203 N.W.2d 396, 399 (1973); Hay v. Township of Grow, Minn., 206 N.W.2d 19 (1973). On the record submitted to the trial court and to this court, we hold that the village was obliged to issue the permit.
Affirmed.
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326 A.2d 868 (1974)
GETTY OIL COMPANY, a corporation of the State of Delaware, and Getty Oil Company (Eastern Operations), Inc., a corporation of the State of Delaware, Defendants-Below, Appellants,
v.
Shirley E. LODEN, Administratrix of the Estate of Carlton L. Loden, Jr., Deceased, and Shirley E. Loden, Individually, Plaintiffs-Below, Appellees.
Supreme Court of Delaware.
Argued September 11, 1974.
Decided September 24, 1974.
Alfred M. Isaacs, Flanzer & Isaacs, Wilmington, for defendants-below, appellants.
F. Alton Tybout, Tybout, Redfearn & Schnee, Wilmington, for plaintiffs-below, appellees.
Before HERRMANN, C. J., DUFFY, J., and QUILLEN, Chancellor.
PER CURIAM:
This is an appeal from an order of the Superior Court denying summary judgment to the defendants. The Superior Court opinion is reported. Loden v. Getty Oil Company, Del.Super., 316 A.2d 214 (1974).
In our judgment, the Superior Court was correct in finding that the deceased was not an employee of Getty Oil Company and that this action is not barred by the Workmen's Compensation Law. Compare Balma v. Tidewater Oil Company, Del.Supr., 214 A.2d 560 (1965). In adopting this finding, we express no opinion on whether there may be independent grounds to support the conclusion below on the basis of the particular contract between Getty Oil Company and Catalytic Construction Company and/or the statutory provision, 19 Del.C., § 2311.
Affirmed.
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111 So.2d 82 (1959)
Lee RATNER and Harry James Johnson, Appellants,
v.
Wendell P. ARRINGTON and Royal Palm Flying Service, Inc., a corporation, Appellees.
No. 58-335.
District Court of Appeal of Florida. Third District.
April 9, 1959.
*83 Smathers, Thompson & Dyer, Miami, for appellants.
Nichols, Gaither, Green, Frates & Beckham, Miami, for appellee Wendell P. Arrington.
CARROLL, CHAS., Chief Judge.
The appellee Wendell P. Arrington was injured in a collision between a private aircraft in which he was riding and another aircraft. Arrington filed an action for damages in the Circuit Court in Dade County against Lee Ratner and Harry James Johnson, the owner and the pilot respectively of the aircraft in which he was a passenger, and also against Royal Palm Flying Service, Inc., the owner of the other aircraft involved. The complaint charged that negligent operation of the two airplanes caused plaintiff's injuries.
The Ratner party had taken off from North Perry Airport on a business trip. Arrington had been engaged to do certain work for Ratner at a location to which they were proceeding.
The accident occurred in the daytime on December 8, 1955, when the Ratner aircraft was landing at Page Field in Fort Myers. As the Ratner aircraft came in for a landing on an appropriate runway and had "touched down", a "crop duster" aircraft, which was owned and being operated by Royal Palm Flying Service, Inc., started its take-off on an intersecting runway, with the collision resulting. In the Ratner airplane at the time of the collision were the owner Ratner, the pilot Johnson, Arrington and two other passengers.
The trial of the cause before a jury resulted in a judgment in favor of the plaintiff Arrington against the three defendants for $198,339. Ratner and Johnson appealed.
The assignments of error and the points raised thereon by appellants have been examined and considered in the light of the record, briefs and argument, and are found *84 to be without merit, and the judgment appealed from is affirmed.
Two of the questions raised require some discussion. During the course of the trial one J.T. Watson, an investigator for the Civil Aeronautics Administration, a witness called on behalf of the plaintiff, was allowed to testify as to certain statements made to him by the appellant Johnson, who was the pilot of the Ratner aircraft. He testified Johnson said that he (Johnson) did not make a pattern approach but a direct approach. This portion of Watson's testimony was as follows:
"A. It was on December 8, 1955, approximately two hours after the accident happened, at Page Field in Fort Myers, Florida. I interviewed Mr. Johnson as soon as I got there; and I asked him the details of his version of the crash. At that time, particularly, I asked him what type of traffic pattern he had made to Page Field. He told
"Q. What answer did he give you as to that, sir? A. He told me that he had flown from about four miles south of Alva, where Mr. Ratner had a farm, and he had called in and got clearance for a VFR [visual flight rules] approach in a Control Zone. We drew the flight path out on scratch paper, showing the route that he estimated that he flew; and he said he made a slight correction to line up with the runway, came on in and landed on Runway 22.
"Q. Now, was that his complete statement to you on the occasion of your first interview with Mr. Johnson? A. Practically so. Prior to my leaving to go back to Tampa, I asked him again, and I showed him the sketch I had, if that was his version of it; and at that time he made a slight correction in it, saying he believed he flew a little closer to the airport and made approximately a forty-five degree approach to the approach end of the runway.
"Q. Now, he never did at any time describe to you a complete traffic pattern on the approach to this runway; did he? A. No, he did not."
Appellants contended in the trial court, and argued here, that this testimony was inadmissible under 49 U.S.C.A. § 581 [now § 1441(e)].[1]
That statute, which included provision for C.A.B. investigation of airplane accidents, provided "that no part of any report or reports of the former Air Safety Board or the Civil Aeronautics Board relating to any accident, or the investigation thereof, shall be admitted as evidence or used in any suit or action for damages growing out of any matter mentioned in such report or reports."
Appellants contend that this court should construe that provision of the federal statute to bar the introduction of the investigator's testimony as above quoted; and as a ground for so contending, appellants, by analogy, point to the Florida case of Stevens v. Duke, Fla. 1949, 42 So.2d 361, which held that § 317.17, Fla. Stat., F.S.A., requiring motor vehicle accident reports to be kept confidential and prohibiting their use as evidence in any trial, operates to exclude testimony by an investigating officer of statements made to him by the parties in the course of the investigation reported.
However, we are not free to place upon the federal statute the interpretation *85 thus contended for by appellants, as we must give effect to the construction given it by the federal appellate courts. See Roberts v. American Nat. Bank, 94 Fla. 427, 115 So. 261, 263; Humphreys v. State ex rel. Palm Beach Co., 108 Fla. 92, 145 So. 858, 861; Cadieux v. Cadieux, Fla. 1954, 75 So.2d 700, 702.
Federal appellate courts have placed a narrow construction on this statutory provision, holding that it was designed to guard against introduction of reports "expressing agency views about matters which are within the function of courts and juries to decide", and to prevent introduction into evidence of "opinions or conclusions about possible causes of the accident or defendant's negligence". The federal courts hold that the statute does not render inadmissible testimony of such an investigating official of statements made to him by a party during the course of the investigation. Universal Airline v. Eastern Air Lines, 1951, 88 U.S.App.D.C. 219, 188 F.2d 993; Lobel v. American Air Lines, 2 Cir., 1951, 192 F.2d 217, 220, certiorari denied 342 U.S. 945, 72 S.Ct. 558, 96 L.Ed. 703; Israel v. United States, 2 Cir., 1957, 247 F.2d 426, (citing: Ritts v. American Overseas Airlines, D.C.S.D.N.Y. 1947, 97 F. Supp. 457; Tansey v. Transcontinental & Western Air, D.C. 1949, 97 F. Supp. 458); Maxwell v. Fink, 1953, 264 Wis. 106, 58 N.W.2d 415. On that construction of the federal statute, Watson's testimony was admissible, and the learned trial judge properly overruled the objections thereto.
We next consider the contention made by appellants that the court was guilty of prejudicial error in overruling their objections to the use before the jury, by the counsel for plaintiff in their closing arguments, of a placard showing items of damages and suggested amounts to be awarded therefor.[2]
In argument at the close of the trial, appellee's counsel produced and referred to a placard or chart prepared by them. This chart was about two and a half feet wide and three feet high, made of heavy white cardboard. There was written thereon, in bold lettering in black ink appellee's name, age, life expectancy; his medical expenses, including names of hospitals and doctors with amounts set opposite each, and which were sub-totaled. The chart then listed "Pain and Suffering" under which it gave dates showing the period from the accident to date of the trial, and then stated "783 days @ 15", with the amount thus calculated, $11,745. An item of *86 "Physical Disability and Inability to Lead a Normal Life" was similarly treated, as was the item "Loss of Earnings" with a computation on a weekly basis. The chart continued, repeating and treating the same headings as items of future damages. For a better understanding of the appearance and contents of the chart, it is copied into this opinion, as follows:
Wendell Arrington
Age 43 Expectancy 28.8 yrs.
To Date
Medical Expense
Lee Memorial Hosp. 1,211.15
North Shore Hosp. 20. -
St. Francis Hosp. 1,227.42
Mercy Hosp. 1,102.30
Dr. Warnock 575. -
Dr. Quillian Jones 240. -
Dr. Russell 1,290. -
Dr. Zaydon 1,175. -
Drs. Leslie & Small (anesthetists) 292.50
Dr. Ferrer (anesthetist) 172.50
Dr. Fusco (anesthetist) 30. -
Nurse Early 661.30
Nurse Skelton 721.30
Wheatley Brace Company 55. -
Drugs & Medicines 470.72
________
9,244.19
Pain and Suffering
12/8/55-1/30/58 783 days @ 15. 11,745. -
Physical Disability and Inability to
Lead a Normal Life
12/8/55-1/30/58 783 days @ 5. 3,915. -
Loss of Earnings
111 weeks @ 125. 13,875. -
_________
38,779. -
Future
10,220 days 28 years
Medical Expense 500. -
Pain and Suffering
10,220 days 10,220. -
Physical Disability and Inability
to Lead a Normal Life
10,220 days @ 3 30,660. -
Loss of Earning Capacity
To age 70 27 years 162,000. -
__________
242.159. -
The propriety of the use of a blackboard to illustrate or aid in an argument was recognized, indirectly, by the district court of appeal in the second district in Andrews v. Cardosa, Fla.App. 1957, 97 So.2d 43, 45, where the court held that it was within a trial judge's discretion to deny the use of such an item, saying:
"The denial by the trial judge of the request of plaintiffs' counsel to use a blackboard during final argument for the purpose of illustrating numerous items of damage to the jury, and to give the jury pads of paper and pencils for the purpose of making notes, rested in the sound discretion of the trial judge."
The use of a blackboard or chart in aid of counsel's argument to the jury is permissible when the use thereof is limited so as not to prejudice an opposing party. A distinction should be recognized between a placard or chart which is in evidence or used for evidentiary purposes, such as a chart disclosing objects or places, and a chart or placard which is not evidence but used to illustrate and aid in conveying an argument to the jury. The former may be exhibited throughout the trial or portion thereof in which it is relevant. The latter, that is, the chart used with argument, should be withdrawn from the jury's observation at the conclusion of the argument in which it is employed. Haycock v. Christie, 1957, 101 U.S.App.D.C. 409, 249 F.2d 501; Four-County Electric Power Ass'n v. Clardy, 1954, 221 Miss. 403, 73 So.2d 144, 44 A.L.R.2d 1191. Also, the chart or placard used in argument should refer only to matters which are in evidence, or to inferences which properly may be drawn from the evidence in the case. See Haycock v. Christie, supra; Clark v. Hudson, 1957, 265 Ala. 630, 93 So.2d 138; Mclaney v. Turner, 1958, 267 Ala. 588, 104 So.2d 315; Kindler v. Edwards, 1955, 126 Ind. App. 261, 130 N.E.2d 491; Four-County Electric Power Ass'n v. Clardy, supra; Arnold v. Ellis, Miss. 1957, 97 So.2d 744; Haley v. Hockey, 1950, 199 Misc. 512, 103 N.Y.S.2d 717; Warren Petroleum Corp. v. Pyeatt, Tex.Civ.App. 1955, 275 S.W.2d 216; Green v. Rudsenske, Tex.Civ.App. 1959, 320 S.W.2d 228; and Annotation, 44 A.L.R.2d 1205. Having regard for such limitations, it may be said that it is within the discretion of the trial court to permit the use of a blackboard, chart or placard before the jury, in *87 illustration and aid of argument of counsel, to show any matter which counsel could state to the jury in proper argument.
It is not the use of a chart or placard which creates the problem but rather the contents thereof.[3] Appellants contend that to show a per diem or other mathematical formula as a suggestion or aid to the jury in determining the amount to award for such items of damages as pain and suffering, disrupted activities or loss of earning capacity is to present to the jury matters which are not in evidence and are not supported by the evidence.
It has long been the rule in this state and elsewhere that the amount to be allowed as compensation for pain and suffering must be determined by the trier of the facts based upon the evidence submitted, but the law furnishes no yardstick which may be applied to the evidence to indicate the amount of such damages.
The question of whether it is error to permit an attorney in argument to the jury to suggest, as a basis for determination of the amount of damages to be allowed for pain and suffering, that a designated sum may be arrived at by considering a stated figure per day or per month or other period, has not been decided in this state. In Braddock, v. Seaboard Air Line R. Co., Fla. 1955, 80 So.2d 662, where the Supreme Court held that the rule for reduction of an award of future damages to present worth was not applicable to future pain and suffering, the court made reference to the problem we have under discussion here, saying (at page 668):
"* * * Jurors know the nature of pain, embarrassment and inconvenience, and they also know the nature of money. Their problem of equating the two to afford reasonable and just compensation calls for a high order of human judgment, and the law has provided no better yardstick for their guidance than their enlightened conscience. Their problem is not one of mathematical calculation but involves an exercise of their sound judgment of what is fair and right. The problem is often further complicated by the fact that the pain and suffering are yet to be suffered and thus even further removed from exact calculation and certain measurement. But such further uncertainty does not change the problem from one of judgment to one of calculation. It still rests with the enlightened conscience of the jury. * * *"
However, further in the opinion in the Braddock case the court showed that the precise question under consideration here was not raised or decided in that case, saying:
"* * * The method of counsel's argument to the jury by which the damages are broken down into per diem assessment was neither challenged nor disapproved in the court below, and we are not required to pass upon it here. If it is considered to be deceptive and to produce an excessive verdict, the court, in a proper case, and in the exercise of sound discretion to prevent injustice by excessive verdicts, may so find and order an appropriate remittitur. * * *"
Later, on a second appeal in the Braddock case, Fla. 1957, 96 So.2d 127, 129, the *88 Supreme Court implicitly endorsed the use of the per diem argument by affirming a jury verdict for $248,439, which coincided exactly with the aggregate of the plaintiff's demands as set out on a chart similar to the one involved in this case.[4]
In recent years the question has received consideration in a number of other jurisdictions. The weight of authority favors allowing use in argument of a mathematical formula such as suggesting amounts on a per diem basis when damages for pain and suffering are involved. Clark v. Hudson, supra, 1956, 265 Ala. 630, 93 So.2d 138; Mclaney v. Turner, supra, 1958, 267 Ala. 588, 104 So.2d 315; Aetna Oil Co. v. Metcalf, 1944, 298 Ky. 706, 183 S.W.2d 637; Four-County Electric Power Ass'n v. Clardy, supra, 1954, 221 Miss. 403, 73 So.2d 144, 44 A.L.R.2d 1191; Arnold v. Ellis, supra, Miss. 1957, 97 So.2d 744; A.B.C. Storage & Moving Co. v. Herron, Tex.Civ.App. 1940, 138 S.W.2d 211; J.D. Wright & Son Truck Line v. Chandler, Tex.Civ.App. 1950, 231 S.W.2d 786. See Imperial Oil, Limited v. Drlik, 6 Cir., 1956, 234 F.2d 4, certiorari denied 352 U.S. 941, 77 S.Ct. 261, 1 L.Ed.2d 236; Haycock v. Christie, supra, 1957, 101 U.S.App.D.C. 409, 249 F.2d 501; Kindler v. Edwards, supra, 1955, 126 Ind. App. 261, 130 N.E.2d 491; Boutang v. Twin City Motor Bus Company, 1956, 248 Minn. 240, 80 N.W.2d 30; Flaherty v. Minneapolis & St. Louis Railway Co., 1958, 251 Minn. 345, 87 N.W.2d 633; Haley v. Hockey, supra, 1950, 199 Misc. 512, 103 N.Y.S.2d 717. Contra, Henne v. Balick, Del. 1958, 146 A.2d 394; Botta v. Brunner, 1958, 26 N.J. 82, 138 A.2d 713. But see Ahlstrom v. Minneapolis, St.P. & S.S.M.R. Co., 1955, 244 Minn. 1, 68 N.W.2d 873; Hallada v. Great Northern R. Co., 1955, 244 Minn. 81, 69 N.W.2d 673; Wuth v. United States, D.C.E.D.Va. 1958, 161 F. Supp. 661. See generally Annotation 60 A.L.R.2d 1347; and Law Review discussions: 19 Ohio St.L.J. 780 (1958); 12 Rutgers L.Rev. 522 (1958); 4 Vill.L.Rev. 137 (1958).
Authorities opposing per diem amount arguments as to damages for pain and suffering give varied reasons: (1) that there is no evidentiary basis for converting pain and suffering into monetary terms; (2) that it is improper for counsel to suggest a total amount for pain and suffering, and therefore wrong to suggest per diem amounts; (3) that to do so amounts to the attorney giving testimony, and expressing opinions and conclusions on matters not disclosed by the evidence; (4) that juries frequently are misled thereby into making excessive awards, and that admonitions of the court that the jury should not consider per diem arguments as evidence fail to erase all prejudicial effect; (5) that following such argument by plaintiff, a defendant is prejudiced by being placed in a position of attempting to rebut an argument having no basis in the evidence, with the result that if he does not answer plaintiff's argument *89 in kind he suffers its effect on the jury, but if defendant does answer in kind he thereby implies approval of the per diem argument for damage determination for pain and suffering.
Authorities approving such arguments give numerous reasons: (1) that it is necessary that the jury be guided by some reasonable and practical considerations; (2) that a trier of the facts should not be required to determine the matter in the abstract, and relegated to a blind guess; (3) that the very absence of a yardstick makes the contention that counsel's suggestions of amounts mislead the jury a questionable one; (4) the argument that the evidence fails to provide a foundation for per diem suggestion is unconvincing, because the jury must, by that or some other reasoning process, estimate and allow an amount appropriately tailored to the particular evidence in that case as to the pain and suffering or other such element of damages; (5) that a suggestion by counsel that the evidence as to pain and suffering justifies allowance of a certain amount, in total or by per diem figures, does no more than present one method of reasoning which the trier of the facts may employ to aid him in making a reasonable and sane estimate; (6) that such per diem arguments are not evidence, and are used only as illustration and suggestion; (7) that the claimed danger of such suggestion being mistaken for evidence is an exaggeration, and such danger, if present, can be dispelled by the court's charges; and (8) that when counsel for one side has made such argument the opposing counsel is equally free to suggest his own amounts as inferred by him from the evidence relating to the condition for which the damages are sought.
The items or elements of damages listed on the chart in this case, and which thus were argued to the jury, all were supported by some evidence of established or calculable monetary value, except the elements of "pain and suffering" and "physical disability and inability to lead a normal life". As to those two elements, we are not prepared to hold that it was prejudicial error for the trial court to allow counsel for appellee, in argument to the jury, to suggest an amount which he felt would be proper and reasonable to be awarded as damages therefor. Nor do we hold it was error to include a suggested per diem amount approach to such an award.
True, the latter point is one which presently is giving courts much concern. Recent holdings, for and against the allowance of such arguments, are not grounded on reasons of sufficient force to compel the decision either way. The ultimate course of judicial opinion on the point is not yet discernible. Therefore, in approving the practice now we do not purport to foreclose the question. We do, however, now hold that the trial judge did not abuse his discretion in overruling appellants' objections to the use of the chart and the argument of appellee's counsel based on the chart.
In so holding we give due regard to the proposition that "pain and suffering have no market price." But the very absence of a fixed rule or standard for any monetary admeasurement of pain and suffering as an element of damages supplies a reason why counsel for the parties should be allotted, on this item of damages, their entitled latitude in argument to comment on the evidence, its nature and effect, and to note all proper inferences which reasonably may spring from the evidence adduced. See 53 Am.Jur., Trial, § 485. And we take judicial notice (Courtney v. Central Trust Co., 112 Fla. 298, 150 So. 276; 31 C.J.S. Evidence § 49, p. 617) of the custom, which has been in effect for some years in trials of such cases in Dade County, for attorneys to use damage charts in arguments to the jury and to submit per diem amount arguments with reference to such elements of damages as pain and suffering, inability to lead a normal life and loss of earning capacity. See Four-County Electric Power Ass'n v. Clardy, supra, *90 1954, 221 Miss. 403, 73 So.2d 144, 152, 44 A.L.R.2d 1191, 1203.
Affirmed.
PEARSON, J., and FLOYD, ROBERT L., Associate Judge, concur.
NOTES
[1] That point had important bearing on the question of whether negligent operation of the Ratner airplane combined with the negligence of the duster airplane and was a contributing proximate cause of the collision, in view of the conflict in the testimony as to whether the former made a required pattern approach or made a straight-in landing approach, and the evidence that the duster airplane pilot looked out for and could have observed an airplane approaching in the required landing pattern, but did not see the Ratner airplane coming into the field.
[2] The objections as referred to, made by defendants' counsel at the trial, were as follows: "Mr. Dyer: They have, as a matter of fact; and in the interest of not interrupting them at the time of the argument, I would like to make an objection at this time to the use of a blackboard with elements of damage and projected injuries based upon per diem or based upon what the plaintiff's counsels' idea is as to the amount of damages; and I make that objection for this reason, your Honor: Of course it is not evidence, and while I realize the plaintiff's counsel will tell them that it is not evidence, it is nevertheless a pictorial view that the jury is given at the end of the case which they look at just before they retire to the juryroom on rebuttal argument, and it rivets their attention to a matter which even though it is explained as not in evidence, is bound to be impressed upon their minds vividly, and I think it is unfair, an unfair way to deal with the jury. * * * Mr. Dyer: May it please the Court, I would like to renew the objection that I made at the close of the case before the final summations to the jury in connection with the use of a chart by counsel for the plaintiff in suggesting the various elements of damages, in putting his figures on those elements on a per diem basis and drawing a pictorial display for the jury, which I think your Honor observed the number five juror, for instance, copying everything down as the argument went along. Even though the chart is now removed, it has been given them a definite impression that overshadows everything else in this case, and for that reason we think it is prejudicial, that it doesn't bring the jury to a focus of the entire evidence of the case, and we therefore respectfully move the Court for a mistrial."
[3] This placard offered opportunity to contend that certain of the items were overlapping, when separate figures were suggested thereon for such items as (1) "pain and suffering", (2) "physical disability and inability to lead a normal life", and (3) "loss of earning capacity". The figures thus used could represent substantial duplication and overlapping of amounts, because each of the three topics just mentioned could embody elements of the others. On that feature we do no more here than suggest the problem it presents, as the arguments advanced by appellants did not single out and call for a decision on that feature. See discussion of this question in Seaboard Air Line R. Co. v. Braddock, Fla. 1957, 96 So.2d 127, 129 (dissenting opinion, Ogilvie, A.J.).
[4] The affirmance in the Braddock case was without opinion, but a dissenting opinion set out the chart used in argument in that case, as follows:
"`Mike' Braddock
"Age 9 Expectancy 56 years
Pain and Suffering to date 395 days
Experience of accident 5,000.00
Hospital 3/25-4/5/52 1,200. -
First 30 days at home 300. -
To date 353 days 700. -
Inability to Lead Normal Life
3/25-5/31/52 crutches 340. -
6/1-10/31/52 pylon 459. -
11/1/52 to date artificial limb 348. -
Humiliation and Embarrassment 1,915. -
_________
10,262. -
20,440 days Future 56 yrs.
Medical
Checkup by doctor once a year 440. -
Artificial legs 3,600. -
Repairs and Maintenance 2,640. -
Stump socks 985. -
Extra pants, shoes and socks 4,400. -
Limb adjustment every 2 weeks 2,912. -
_________
14,977. -
Pain and Suffering 20,440 days 20,440. -
Humiliation and Embarrassment
20,440 days 40,880. -
Inability to Lead a Normal Life
20,440 days 40,880. -
Loss of Earning Capacity
5500 × 50% x 56 121,000. -
__________
Total 248,439.
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F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
SEP 21 2004
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk
LINDAWATI TJANDRA; WE LI
TJEONG,
Petitioners,
No. 03-9559
v. (Nos. A77-868-396 & A77-868-397)
(Petition for Review)
JOHN ASHCROFT, Attorney General
of the United States,
Respondent.
ORDER AND JUDGMENT *
Before SEYMOUR and ANDERSON , Circuit Judges, and KANE , ** Senior
District Judge.
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.
*
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.
**
The Honorable John L. Kane, Senior District Judge, United States District
Court for the District of Colorado, sitting by designation.
Petitioner Lindawati Tjandra and her husband, petitioner We Li Tjeong,
seek review of a decision of the Board of Immigration Appeals (BIA) dismissing
their appeal from the denial of their application for asylum, withholding of
removal, and relief under the Convention Against Torture. The alleged
persecution was aimed at Ms. Tjandra; therefore, Mr. Tjeong’s claims are
dependent on her claims. Because we conclude that we lack jurisdiction to hear
this appeal, we dismiss the petition for review.
Petitioners are citizens of Indonesia and ethnic Chinese. They are
Christian. Indonesia is a predominantly Muslim country. Ms. Tjandra claims
that, on account of her race or religion, she was gang-raped by seven men during
the Indonesian riots of May 1998, that one of the men was dressed in military
clothing, and that she suffers severe depression as a result of this ordeal. On
October 28, 1998, Ms. Tjandra and her husband fled Indonesia and entered the
United States on visitors’ visas. On October 14, 1999, Ms. Tjandra and her
counsel signed an application for asylum and withholding of removal, but the
application was not filed until December 1999, more than one year after
petitioners entered the United States. The INS 1
thereafter served petitioners with
1
“The INS ceased to exist on March 1, 2003, and its functions were
transferred to the U.S. Citizenship and Immigration Services (“USCIS”) within
the newly formed Department of Homeland Security.” Sviridov v. Ashcroft ,
358 F.3d 722, 724 n.1 (10th Cir. 2004).
-2-
notices to appear, asserting that they were removable under 8 U.S.C.
§ 1227(a)(1)(B), for overstaying their visitors’ visas. At a master calendar
proceeding, petitioners conceded removability but sought asylum, withholding of
removal, and relief under the Convention Against Torture. After a merits hearing,
an immigration judge (IJ) issued an oral decision holding Ms. Tjandra’s
application for asylum time-barred under 8 U.S.C. § 1158(a)(2)(B). The IJ also
denied withholding of removal and relief under the Convention Against Torture,
but granted voluntary departure. Ms. Tjandra timely appealed to the BIA, which
dismissed her appeal on April 21, 2003. In doing so, the BIA held that the IJ
“correctly pretermitted her asylum application.” Admin. R. at 9. The BIA also
denied withholding of removal and relief under the Convention Against Torture.
This petition for review followed.
Ms. Tjandra raises two issues on appeal. First, she generally asserts that
she received ineffective assistance of counsel from the attorney who represented
her before the IJ and BIA. In particular, she claims that she was prejudiced by
her former attorney’s deficient performance because her former attorney failed to
-3-
timely file her asylum application. 2
Second, Ms. Tjandra asserts that she was
incorrectly denied withholding of removal.
Before we address Ms. Tjandra’s first issue, which she raises for the first
time in this court, we must examine our jurisdiction. As we have often stated,
“[t]he failure to raise an issue on appeal to the Board constitutes failure to
exhaust administrative remedies with respect to that question and deprives the
Court of Appeals of jurisdiction to hear the matter.” Rivera-Zurita v. INS , 946
F.2d 118, 120 n.2 (10th Cir. 1991). Notwithstanding, “[c]ourts have carved out
an exception to the exhaustion requirement for constitutional challenges to the
immigration laws, because the BIA has no jurisdiction to review such claims.”
Akinwunmi , 194 F.3d at 1341. But because the BIA has created a mechanism for
hearing an ineffective assistance of counsel claim, see Matter of Lozada , 19 I. &
N. Dec. 637 (BIA 1988), this court has held that an “alien’s failure to raise the
claim to the BIA,” via a motion to reopen the administrative proceedings,
“deprives this court of jurisdiction to review it.” Akinwunmi , 194 F.3d at 1341;
2
Contrary to petitioners’ suggestion that the Sixth Amendment entitles those
in deportation proceedings to the effective assistance of counsel, “there is no
Sixth Amendment right to counsel in a deportation proceeding.” Akinwunmi v.
INS , 194 F.3d 1340, 1341 n.2 (10th Cir. 1999). Instead “a claim of ineffective
assistance of counsel in a deportation proceeding may be based only on the Fifth
Amendment guarantee of due process.” Id. Because petitioners’ brief on appeal
contains Fifth Amendment ineffective-assistance-of-counsel arguments, albeit
without citing the Fifth Amendment, we assume, without deciding, that petitioners
also proceed under a Fifth Amendment due process theory.
-4-
see also Osei v. INS , 305 F.3d 1205, 1208 (10th Cir. 2002) (noting that because
the Board has “a mechanism for hearing due-process based claims of ineffective
assistance of counsel, such claims must first be presented to the Board”).
Likewise, this court is without jurisdiction to hear any argument with respect to
the denial of petitioners’ request for withholding of removal or relief under the
Convention Against Torture because petitioners did not raise these issues before
the BIA. See Rivera-Zurita , 946 F.2d at 120 n.2.
Accordingly, we DISMISS the petition for review because we lack
jurisdiction.
Entered for the Court
John L. Kane
Senior District Judge
-5-
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-5181
UNITED STATES OF AMERICA,
Plaintiff – Appellee,
v.
KENISHCA WALIZADA,
Defendant – Appellant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Claude M. Hilton, Senior
District Judge. (1:10-cr-00148-CMH-1)
Submitted: June 29, 2011 Decided: July 7, 2011
Before WILKINSON, KEENAN, and WYNN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Cary S. Greenberg, Caroline E. Costle, GREENBERGCOSTLE, P.C.,
McLean, Virginia, for Appellant. Neil H. MacBride, United
States Attorney, William H. Jones, II, Special Assistant United
States Attorney, Gordon D. Kromberg, Assistant United States
Attorney, Alexandria, Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Kenishca Walizada appeals his jury conviction for
structuring financial transactions to evade reporting
requirements, in violation of 31 U.S.C. § 5313(a) (2006). The
court sentenced Walizada to two years’ probation. We affirm.
Walizada argues that the evidence was not sufficient
to support the jury’s finding that he had structured or
attempted to structure a financial transaction and that the
language of the Code of Federal Regulations defining a
structured transaction is ambiguous. This Court reviews a
sufficiency of the evidence challenge by determining whether,
viewing the evidence in the light most favorable to the
Government, the trial evidence “could support any rational
determination of guilty beyond a reasonable doubt.” United
States v. Young, 609 F.3d 348, 355 (4th Cir. 2010). The
evidence adduced at trial was clearly sufficient to support the
jury’s verdict. Further, we reject Walizada’s contention that
the language in the applicable regulations is ambiguous.
We therefore affirm Walizada’s conviction and
sentence. We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials
before the court and argument would not aid the decisional
process.
AFFIRMED
2
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543 U.S. 1111
HUNTERv.UNITED STATES.
No. 04-6798.
Supreme Court of United States.
January 24, 2005.
1
C. A. 5th Cir. Reported below: 105 Fed. Appx. 551; Motions of petitioners for leave to proceed in forma pauperis granted. Certiorari granted, judgments vacated, and cases remanded for further consideration in light of United States v. Booker, ante, p. 220.
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March 8 2016
DA 15-0413
IN THE SUPREME COURT OF THE STATE OF MONTANA
2016 MT 59N
IN THE MATTER OF:
E.O. and N.B.,
Youths in Need of Care.
APPEAL FROM: District Court of the Sixth Judicial District,
In and For the County of Park, Cause Nos. DN 13-11 and DN 13-12
Honorable Brenda R. Gilbert, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Paul Sullivan, Measure, Sampsel, Sullivan & O’Brien, P.C.,
Kalispell, Montana
For Appellee:
Timothy C. Fox, Montana Attorney General, Micheal S. Wellenstein,
Assistant Attorney General, Helena, Montana
Bruce E. Becker, Park County Attorney, Livingston, Montana
Submitted on Briefs: January 13, 2016
Decided: March 8, 2016
Filed:
__________________________________________
Clerk
Chief Justice Mike McGrath delivered the Opinion of the Court.
¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court Internal Operating
Rules, this case is decided by memorandum opinion and shall not be cited and does not
serve as precedent. Its case title, cause number, and disposition shall be included in this
Court’s quarterly list of noncitable cases published in the Pacific Reporter and Montana
Reports.
¶2 This case pertains to the parental rights of M.B. over her two children, E.O. (born
in 2001) and N.B. (born in 2007). E.O. and N.B are Indian children with different
fathers, and neither of the fathers is a party to the case. On November 13, 2013, the
Department of Public Health and Human Services (“DPHHS”) filed petitions for
emergency services, adjudication as youths in need of care, and temporary legal custody
regarding E.O. and N.B. The petitions arose out of reports that M.B.’s consumption of
alcohol and medications was interfering with her ability to care for the children. M.B.
had a history with child protective services both in Montana and South Dakota prior to
November 2013.
¶3 The District Court granted the petition for emergency protective services on
November 14, 2013, and by February 20, 2015, the District Court had adjudicated the
children as youths in need of care and granted DPHHS legal custody of the children for
six months. DPHHS developed a treatment plan for the benefit of the children, which
included a number of tasks for M.B. She stipulated to the plan and the District Court
approved it on April 3, 2014. On September 24, 2014, DPHHS requested a six-month
2
extension of the temporary legal custody, to which M.B. agreed and the court granted on
November 24, 2014. DPHHS then filed a petition to terminate M.B.’s parental rights on
January 26, 2015. A hearing was conducted over the course of three days. The District
Court made oral findings of fact and conclusions of law that terminated M.B.’s parental
rights on June 2, 2015. A written order was issued on June 12, 2015; M.B. appeals from
this order. We affirm.
¶4 The District Court found that M.B. had failed to complete several integral parts of
the treatment plan. The treatment plan required M.B. to keep an adequate home for the
children, stop using controlled substances and alcohol, and continue seeing a trauma
therapist for treatment, all of which M.B. failed to successfully perform. M.B. argues
that DPHHS failed to properly consider the root causes of her addiction and substance
abuse issues. Consequently, M.B. posits that since DPHHS did not adequately provide
her with assistance for the treatment of abuse and trauma, they failed to make reasonable
efforts to reunite her with her children.
¶5 We review a district court’s decision to terminate parental rights for an abuse of
discretion. In re C.J.M., 2012 MT 137, ¶ 10, 365 Mont. 298, 280 P.3d 899. We review a
district court’s findings of fact under the clearly erroneous standard. In the Matter of
J.C., 2008 MT 127, ¶ 34, 343 Mont. 30, 183 P.3d 22. We review a district court’s
application of the law for correctness. In re C.J.M., ¶ 10.
¶6 In cases involving the termination of parental rights over Indian children, there are
federal obligations imposed on the State pursuant to the Indian Child Welfare Act
(“ICWA”). 25 U.S.C. § 1912. Congress enacted ICWA to protect and preserve Indian
3
culture and curtail the high rate of non-tribal agencies’ breakup of Indian families.
“ICWA sets minimum federal standards that must be followed strictly by state courts.”
In re H.T., 2015 MT 41, ¶ 42, 378 Mont. 206, 343 P.3d 159 (quoting In re K.B., 2013 MT
133, ¶ 21, 370 Mont. 254, 301 P.3d 836); 25 U.S.C. § 1902. Under ICWA, the State
must show that it made active efforts to “provide remedial services and rehabilitative
programs designed to prevent the breakup of the Indian family and that these efforts have
proved unsuccessful.” 25 U.S.C. § 1912(d). Additionally, ICWA requires the State to
prove beyond a reasonable doubt that absent termination of parental rights, the children
would suffer serious physical or emotional harm. 25 U.S.C. § 1912(f). We have
previously held that ICWA obligates the State to take timely and affirmative steps to
prevent the breakup of Indian families. In re J.S., 2014 MT 79, ¶ 25, 374 Mont. 329, 321
P.3d 103.
¶7 E.O. and N.B. are Indian children, and M.B. does not dispute that ICWA applies
in this case. However, in her brief, she contends that in addition to the “active efforts”
standard required by ICWA, the State must also follow a “reasonable efforts” standard
required by state law. See § 41-3-423(1), MCA. However, in our previous cases
concerning the termination of parental rights over Indian children, we have never
combined federal and state standards. See e.g., In re H.T., ¶ 42; In re K.B., ¶ 21. Rather,
we have held that ICWA outlines the correct procedure for handling the adjudication of
parental rights involving Indian children. In re H.T., ¶ 42; In re K.B., ¶ 21. In this case,
the District Court assessed whether DPHHS had made active efforts to keep the family
4
together, which is an application of the correct standard under federal law. Thus, we
cannot agree that the District Court made an error in law.
¶8 We have construed “active efforts” to mean that timely steps be taken by the
agency to prevent the breakup of Indian families. In re J.S., ¶ 25. ICWA also requires a
heightened responsibility on the part of the agency seeking to protect the children. In re
J.S., ¶ 25. The State cannot simply issue a treatment plan and wait for the parent to
complete it. Under ICWA, there is a burden on the State to encourage and provide
assistance to the parent to ensure the highest chance of successful completion of the
treatment plan. In re A.N., 2005 MT 19, ¶ 23, 325 Mont. 379, 106 P.3d 556. Still, the
parent must demonstrate a willingness to comply and to conform his or her lifestyle to the
best interests of the child. In re A.N., ¶ 23.
¶9 M.B. argues that DPHHS’s efforts on her behalf were inadequate because her
mental state in the aftermath of her rape in early 2013 needed to be addressed before she
could treat her substance abuse issues. She also posits that the District Court erred in
concluding that it was unlikely that M.B. would make significant progress on her
treatment plan within a reasonable amount of time. However, the record shows that M.B.
had substance abuse problems before 2013 and that she started using controlled
substances in her teenage years. Consequently, tying her current substance abuse issues
with the trauma she suffered in 2013 confuses the source of her addiction. Further,
DPHHS referred M.B. to a licensed professional counselor for therapy weeks after E.O.
and N.B. were adjudicated as youths in need of care. This demonstrates DPHHS’s timely
action in attempting to keep the family together. The counselor began therapy at the end
5
of January 2014 and DPHHS provided these services to M.B. at its cost before ultimately
incorporating it in the April 3, 2014 treatment plan. M.B. attended therapy for 16
sessions and was diagnosed with PTSD. The counsellor noted that M.B. had suffered
abuse and violence as a youth and needed more treatment, but the counseling sessions
stopped when M.B. moved from Livingston to Billings in July 2014. The counselor
recommended continued treatment in Billings, and DPHHS would have paid for it.
During this process DPHHS was actively monitoring M.B.’s development and treatment.
After moving to Billings, M.B. did not independently seek further therapy. Nevertheless,
DPHHS encouraged M.B. to enter chemical dependency programs at the Indian Health
Board in Billings. Eventually, after providing financial assistance, rent money,
encouragement, and careful monitoring, the DPHHS’s efforts to provide assistance were
hampered by M.B.’s decision to move to Minneapolis.
¶10 Furthermore, an ICWA expert testified that DPHHS had met its “active efforts”
burden in M.B.’s case. DPHHS made a concerted effort to encourage and facilitate
M.B.’s need for trauma and addiction treatment. The Department did not simply write a
plan and wait for M.B. to follow through. Rather, it provided active monitoring and
logistical and financial assistance until M.B. moved to Minneapolis. DPHHS’s actions
were both timely and affirmative, and they continued over the span of two years. In re
J.S., ¶ 25. Confronted with that record, the District Court concluded that DPHHS had
met its “active effort” burden as required under ICWA. Upon review we cannot agree
that the District Court’s findings were clearly erroneous.
6
¶11 We have determined to decide this case pursuant to Section I, Paragraph 3(c) of
our Internal Operating Rules, which provides for memorandum opinions. In the opinion
of the Court, this case presents a question controlled by settled law or by the clear
application of applicable standards of review.
¶12 Affirmed.
/S/ MIKE McGRATH
We Concur:
/S/ LAURIE McKINNON
/S/ PATRICIA COTTER
/S/ JIM RICE
/S/ JAMES JEREMIAH SHEA
7
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665 F.2d 1051
Bernierv.Enomoto
80-5253
UNITED STATES COURT OF APPEALS Ninth Circuit
10/29/81
1
C.D.Cal.
REVERSED AND REMANDED
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589 N.E.2d 766 (1992)
226 Ill. App.3d 356
168 Ill.Dec. 366
SERVICE ADHESIVE COMPANY, Appellant,
v.
The INDUSTRIAL COMMISSION et al. (Hayward Rorie, Appellee).
No. 1-91-0656WC.
Appellate Court of Illinois, First District, Industrial Commission Division.
February 28, 1992.
*767 Terrance J. Van Driska and Mark A. Potter, Chicago, for appellant.
Guth & Coughlin, Ltd., Chicago (Glen J. Guth, of counsel), for appellee.
Justice LEWIS delivered the opinion of the court:
Claimant, Hayward Rorie, filed an application for adjustment of claim pursuant to the Workers' Occupational Diseases Act (Ill.Rev.Stat.1983, ch. 48, par. 172.36 et seq.) (the Act), in which he alleged that he had contracted leukemia as a result of his exposure to the chemical benzene while in the course of his employment with the respondent, Service Adhesive Company. The arbitrator found the claimant's leukemia was causally connected to his occupational exposure to benzene during the course of his employment and awarded the claimant 4222/7 weeks for temporary total disability, permanent and total disability, and medical expenses in the amount of $12,905. On appeal, the Industrial Commission (the Commission) affirmed the decision of the arbitrator, and the circuit court of Cook County confirmed the Commission's decision. The respondent appeals. We affirm for the reasons set forth below.
At the hearing before the arbitrator, the claimant testified that he was married and that he had two children. The claimant had worked for the respondent as a glue maker from 1979 until April or May 1981. Prior to his employment with the respondent, he had worked for three months for Ingrid Plastics in shipping, and before working for Ingrid, he had been employed by Martin Box Factory.
According to the claimant, he had only a tenth grade education, but in the course of his employment with the respondent, he was taught to read written formulas for making glue. These formulas required the claimant to use certain chemicals to manufacture the glue, and he recalled that the names of some of these chemicals were formaldehyde and benzene. The formulas for the different types of glue were given to him by his supervisor, Robert Harris, *768 and the formulas were returned to his supervisor when he was finished.
In making different glues, the claimant extracted a chemical from a 55-gallon drum into a three- or five-gallon pail and poured the chemical into the top of a mixer with the other ingredients called for in the formula for the glue. When the claimant poured the chemical into the mixer, the chemical "splashed over everything." One of the drums from which the chemical was removed was black and was marked "benzene" in white and gray lettering engraved on the top of the drum. The claimant used the liquid from the drum labelled "benzene" once or twice a day.
The claimant performed his job duties in the "cold glue room," i.e., a separate room where the glue was made without heat. The claimant worked at making glue eight hours per day, five days a week, and he worked a couple of hours of overtime every week. The cold glue room had one window in it. In performing his work, the claimant wore cloth gloves, but he did not wear a mask over his face. In addition, the respondent did not provide a shower to remove the chemicals from his body. When the claimant poured the benzene into the top of the mixer, he became dizzy and weak from inhaling the fumes, and his skin on his hands and face itched and burned.
In April or May of 1981, the claimant saw Dr. Guralnick for hemorrhoid problems, and at that time, he was admitted by the doctor to Westlake Community Hospital for a hemorrhoidectomy. While hospitalized, the claimant called the respondent and talked to the secretary, Gerry, and informed her of his hospitalization. He asked Gerry to notify his supervisor. Gerry asked the claimant what hospital he was in and he told her.
During his hospitalization at Westlake, Dr. Krasnow took a blood sample from the claimant. Because an analysis of the blood sample revealed an abnormality, the claimant was referred to Dr. Messmore at Loyola University. The claimant has been treated by Dr. Messmore since that time. In 1981 and 1982, the claimant saw Dr. Messmore every week and in 1983 and 1984, every other week. In 1985, the claimant was readmitted to the hospital for chemotherapy. After this hospitalization, the claimant saw Dr. Messmore every other week in 1986 and 1987. After 1987 and until the current time, the claimant visited the doctor once a month. At each of the claimant's visits, the doctor takes a blood sample to monitor his condition. The claimant had been hospitalized seven or eight times over the last seven years.
In 1981, the claimant was very sick, weak and dizzy. In addition, he lost weight until he was only 117 pounds. The claimant testified that he has not worked for the respondent since April or May 1981, and that he has not looked for employment as his doctor told him he could not work due to his illness.
When the claimant worked for the respondent, there were seven persons employed, including the bosses. Other workers who were employed when the claimant worked for the respondent were William Bosley, Glen Bosley and Lavelle Chandler. According to the claimant, William Bosley usually did deliveries and pickups for the respondent, but upon occasion, Bosley would help out with making the glues.
The claimant admitted that he has sickle cell anemia trait, and that two of his sisters and his mother also have this condition; however, no other family members have leukemia. Before the claimant worked for the respondent, he never experienced the symptoms he had in 1981.
William Bosley testified that he had worked for the respondent from 1967 until 1982. When he was first employed by the respondent, he was a truck driver, but in 1970 or 1971, Bosley became a foreman. As foreman, Bosley was the "main cook," and he did "all of the cooking in the bag room." Bosley explained the term "cooking" referred to the mixing of the different chemicals used in the making of the type of glue. To make the glues, Bosley used formulation cards. Because of his duties, Bosley was familiar with the chemicals used by the respondent in the glues. Some of the chemicals Bosley used for making glue were formaldehyde, benzene, caustic *769 potash, caustic soda, paraffin wax, and "VMP." These chemicals were delivered to and stored on the premises of the respondent. Bosley described the containers in which the chemical benzene came in as being a 55-gallon, two-tone, grayish drum with the name of the chemical on the drum by either a label or an engraved stamp on top. If the drum had a label on it, the label was yellow. According to Bosley, whether the drum had a label or was engraved depended on the source of the chemical.
Bosley cooked for the respondent until the respondent got a tractor-trailer in 1978. After that time, he resumed driving a truck for the respondent. However, whenever the truck was not running, Bosley helped make glue, and he did so during the time that the claimant was employed by the respondent.
In addition to the foregoing testimony, the claimant offered into evidence the medical records of Westlake Community Hospital and Foster McGaw Hospital (Loyola University) and the evidence deposition of Dr. Daniel Hryhorczuk. In Dr. Hryhorczuk's deposition, taken on December 22, 1988, the doctor testified that his specialty is occupational medicine and clinical toxicology. The doctor explained that occupational medicine deals with the diagnosis, treatment and prevention of work-related illnesses, while clinical toxicology deals with the diagnosis and treatment of poisons.
Dr. Hryhorczuk first saw the claimant on June 24, 1987. As part of his examination of the claimant, the doctor reviewed the claimant's medical records. Dr. Hryhorczuk was given a history by the claimant, in which the claimant told the doctor that in February 1981, he began experiencing weakness, weight loss, dizziness, fever and night sweats. In May 1981, the claimant went into the hospital at Westlake Community Hospital for a hemorrhoidectomy, and during this hospitalization, he was found to have an abnormal blood count. Subsequently, the claimant was admitted to Loyola University's Foster McGaw Hospital for further work-up. A bone marrow biopsy done at Foster McGaw Hospital revealed the claimant had acute myelocytic leukemia. At that time, the claimant underwent induction therapy for this condition.
The claimant was readmitted to Foster McGaw Hospital in July 1981 for consolidation therapy. In November 1981, the claimant was hospitalized for treatment to his right eye, which was also related to his leukemia. In March 1985, the claimant suffered a relapse of his leukemia and received reinduction therapy. In addition to the leukemia, the medical records revealed that the claimant also is positive for sickle cell trait.
The claimant told the doctor that he smoked one pack of cigarettes per day for 16 years, but that he quit smoking several years ago. The claimant admitted that he occasionally drank alcohol, but he denied intravenous drug abuse. The claimant's work history given to the doctor was consistent with his testimony at the arbitration hearing, i.e., that he worked for Martin Brothers Box Manufacturing Company as a machine operator from 1976 to 1978, and that he worked for Ingrid Blasting Company in the shipping department for three months in 1979. The claimant was not exposed to chemicals at either of these places of employment.
The doctor was informed that the claimant had worked for the respondent as a glue maker from September 1979 until April 1981, and that his duties included mixing ammonia, formaldehyde, chlorathane, caustic soda, potash powder and benzene for the production of glue. The claimant told the doctor that he carried three- to five-gallon pails of liquid solvents from 55-gallon drums and poured the liquid into a mixer. The claimant handled a few gallons of benzene per day, and he inhaled the vapors of the benzene, which made the claimant dizzy and intoxicated. This work was performed in a cold glue room that was 50 feet by 30 feet by 15 feet, and the room had two windows, no exhaust fans, and a door which was open during the summer months. The claimant was equipped with cloth gloves and a work uniform by the respondent for his job, but no shower facilities or medical surveillance *770 was provided. The claimant occasionally splashed chemicals on the cloth gloves.
The doctor was informed that the claimant had no cancer in his family. The doctor's findings regarding the claimant were based upon the claimant's history, the doctor's examination, and the claimant's medical records. The doctor found that the claimant suffers from acute myelocytic leukemia, which was in remission at the time of the doctor's examination. In the doctor's opinion, the claimant's leukemia was most likely caused by the claimant's occupational exposure to benzene.
Dr. Hryhorczuk explained that acute myelocytic leukemia is a malignancy of the bone marrow which affects the myelocytic cell line. A person who has this condition can go into remission with therapy, i.e., there is a disappearance of the signs and symptoms of the disease, and a remission may last for months or for years. However, the doctor stated that the claimant's condition was permanent, and that there is no cure for his leukemia. In the doctor's opinion, the claimant could work at a desk job or from home, but he is severely restricted in the kinds of work he can do, and he would not advise the claimant to work in areas where he may sustain trauma, where he may be exposed to infectious agents or where he is required to do heavy physical labor. In addition, the claimant will require continued medical care and observation, in that he will require outpatient visits to monitor his blood count; he will need treatment of complications as they arise; and he may require further therapy for a new onset of the leukemia. The claimant's need for continuous medical care may interfere with or make continuous employment difficult. Dr. Hryhorczuk stated that there was no evidence linking sickle cell trait with an increased risk of leukemia.
On cross-examination, Dr. Hryhorczuk explained that there are various types of leukemia, but that the claimant's type is caused by benzene. The doctor believed that, while there is no medical certainty, medical science knows with a "high probability" what the causes of leukemia are. With the type of leukemia the claimant has, the route of exposure to the benzene is usually through inhalation and skin contact. Dr. Hryhorczuk did not believe that cloth gloves were an adequate barrier to prevent skin contact, and, in fact, the cloth gloves would retain the benzene and result in higher exposure. The doctor explained that a person with acute myelocytic leukemia may have mild symptoms of the leukemia for weeks or months before there is clinical recognition of the condition, but in his experience, the symptoms would not be present for years prior to discovery. Further, in acute forms of leukemia, such as here, "they're [acute forms of leukemia are] fairly aggressive and present with symptoms fairly soon." Dr. Hryhorczuk was unaware of any epidemiologic studies linking smoking with leukemia. Dr. Hryhorczuk admitted that the claimant had no symptoms of the disease at the time of his examination; however, he explained that patients may go into prolonged periods of remission.
The medical records of the hospitals, which were admitted into evidence, corroborated the claimant's testimony that he went into the hospital for a hemorrhoidectomy on May 14, 1981. At the time of his admission into the hospital, the claimant was 6 feet 1 inch tall and weighed 165 pounds. A pathology report of a bone marrow biopsy done on May 16, 1981, gave a diagnosis of acute myelocytic leukemia. At Foster McGaw Hospital, the claimant's acute myelocytic leukemia was confirmed on June 9, 1981. The claimant was treated with chemotherapy for his leukemia, and in November 1981 he was found to be in remission. In 1985, the claimant had a relapse of his leukemia and was again given chemotherapy, which caused him to have a second remission. In 1987, the claimant was still in remission and had been in remission for two years. The medical records reflected that for his leukemia the claimant's treating doctor from Foster McGaw Hospital was Dr. Messmore.
Robert Harris testified for the respondent that he had been employed by the respondent during the claimant's period of employment. During that time, Harris *771 was production manager and the claimant's supervisor, and as such, he was familiar with the chemicals used by the respondent. Harris denied that the chemical benzene was used by the respondent from 1979 to 1981, but he stated that a chemical called benzoflex was used. According to Harris, the benzoflex did not contain any benzene by-products. Harris also testified that the claimant did not inform him personally that he was ill from working with materials at the company.
On cross-examination, Harris admitted that written formulas, which gave the contents of the products, were used by the respondent. Harris did not bring any of the formulas with him to corroborate his testimony.
Dr. William Brice Buckingham testified in his evidence deposition of May 18, 1989, that he had examined the claimant on February 10, 1988. His clinical findings on that date revealed that the claimant was 43 years of age, well developed, well nourished, cooperative, 74 inches tall, and 206 pounds. He did not find the claimant acutely or chronically ill on the date of his examination. On the basis of the doctor's clinical findings and laboratory findings, he found no evidence of a disease process. In his opinion, the claimant could be actively employed based upon his findings.
On cross-examination, Dr. Buckingham stated that he did not know Dr. Hryhorczuk, and that he did not have a specialty in clinical toxicology. The doctor testified that he had treated patients with bone marrow malignancies, bone marrow suppression, and bone marrow hyperplasia.
From the foregoing evidence, the arbitrator found the claimant's acute myelocytic leukemia was causally connected to his industrial exposure to the chemical benzene while employed by the respondent. The arbitrator awarded the claimant temporary total disability, permanent and total disability and medical expenses for his condition. The Commission subsequently affirmed the arbitrator's decision, and the Commission's decision was confirmed by the circuit court.
On appeal, the respondent contends that the Commission's decision was against the manifest weight of the evidence. Under this issue, the respondent specifically argues that the Commission erred in finding that (1) the claimant was exposed to the chemical benzene during the course of his employment, (2) timely notice of the claimant's condition was given to the respondent, (3) the claimant is permanently and totally disabled as a result of his condition, and (4) the claimant was entitled to $12,905 in medical expenses. The respondent also contends that it was denied due process of law by the Commission, as the arbitrator did not make specific findings of fact and conclusions of law as required by statute but instead merely signed a document containing findings of fact and conclusions of law which was prepared by the claimant's attorney. In response to the respondent's issues, the claimant asserts initially in his brief that the respondent has waived the issues of exposure to benzene, timely notice, medical expenses, and due process because it has not cited to authority or to the pages of the record in support of its arguments, and therefore, the respondent's brief is not in conformance with Supreme Court Rule 341(e)(7). (134 Ill.2d R. 341(e)(7).) The claimant is correct, and under the supreme court rule and the case law, this court is not required to consider those issues not supported by citation to authority or to references in the record. (Britt v. Federal Land Bank Association (1987), 153 Ill.App.3d 605, 106 Ill.Dec. 81, 505 N.E.2d 387.) However, the respondent did cite to authority on the issue that the Commission's decision that the claimant is permanently and totally disabled is against the manifest weight of the evidence, and this issue must be addressed.
Further, despite the respondent's failure to cite authority, we will, in our discretion, consider two of the issues raised by the respondent, i.e., the respondent's issue of whether the claimant was exposed to benzene during the course of his employment and the issue of whether timely notice of his condition was given to the respondent. With regard to the issue that the Commission's finding that the claimant was exposed to benzene during the course *772 of his employment was against the manifest weight of the evidence, the respondent asserts that the claimant's evidence that he was exposed to benzene during his work was contradicted by the respondent's witness, Robert Harris. The respondent contends that Harris was a more credible witness, but the respondent supports its assertion with facts not of record. In absence of a stipulation, facts outside the record cannot be considered on appeal. People v. Haas (1981), 100 Ill.App.3d 1143, 56 Ill.Dec. 521, 427 N.E.2d 853.
It is well established that it is the province of the Commission to resolve disputed questions of fact, including those of causal connection; to draw permissible inferences; and to judge the credibility of the witnesses. (Beeler v. Industrial Comm'n (1989), 179 Ill.App.3d 463, 128 Ill.Dec. 226, 534 N.E.2d 408.) Unless the Commission's decision is contrary to the manifest weight of the evidence, its determination will not be overturned on appeal. (Beeler v. Industrial Commission (1989), 179 Ill.App.3d 463, 128 Ill.Dec. 226, 534 N.E.2d 408.) We do not find that the Commission's determination that the claimant was exposed to the chemical benzene while employed by the respondent was against the manifest weight of the evidence.
At arbitration, the claimant and William Bosley both testified that the chemical benzene was used in the mixing of different glues. Both witnesses testified that they had worked with written formulas which listed the chemicals involved in making the various glues. Each of the two witnesses stated that the benzene was kept in a 55-gallon drum and that the chemical was removed from the drum into three- and five-gallon pails as needed. While the claimant's and Bosley's description of the 55-gallon drums containing benzene differed, the discrepancy was explained by the fact that the chemical came in different containers when it was obtained from a different source. In contrast, the respondent's witness, Robert Harris, testified that there were written formulas for the glues, but that the chemical benzene was not used by the respondent in the manufacturing of the glues. Neither the written formulas nor the labels from the drums were introduced into evidence by either party. Thus, the arbitrator and in turn the Commission were left to decide which of the witnesses was more credible. The Commission determined that the claimant's and Bosley's testimony was more credible, and since this is the Commission's province, its decision in this regard will not be overturned on review.
In its second issue, the respondent contends that the Commission's decision that it was given timely notice of disablement by the claimant was against the manifest weight of the evidence, as the respondent was not given any notice by the claimant. The respondent argues that the evidence revealed that the claimant called the office of the respondent and talked to a secretary by the name of "Gerry;" that the claimant informed the respondent that he was not able to come to work because he was hospitalized for treatment of his hemorrhoids; and that this notification failed to inform the respondent that the claimant had a disease which resulted from his occupational exposure to benzene during his employment with the respondent. The respondent also contends that it was prejudiced by the claimant's failure to give it timely notice of his disablement, as it was unable to have the arbitrator conduct an on-site inspection of the respondent's premises because the respondent went out of business before the date of the arbitration hearing.
In the Commission's decision, it did not address directly the issue of notice in any of its findings of fact and conclusions of law. The only reference to be found in the Commission's order which possibly related to notice was where the Commission stated:
"Petitioner stated that in April 1981, he telephoned his supervisor, William Harri [sic], from Westlake Community Hospital, spoke to a secretary named "Gerry" and informed her that he was in the hospital."
Although the Commission did not directly address the issue of notice, it considered this matter indirectly. The Commission, *773 after making separate findings on several issues, affirmed the arbitrator's decision as to all other matters. In the arbitrator's decision, the arbitrator found that the claimant's telephone call from the hospital constituted timely notice of his occupational illness to the respondent. Thus, by affirming the arbitrator's decision, the Commission indirectly found that the claimant had given timely notice of his occupational illness to the respondent.
While the evidence in the record did not support the determination that the claimant's telephone call to the respondent was notice of his occupational disease, nevertheless, the respondent's issue regarding lack of notice must fail. It has been held that a reviewing court can affirm the Commission's decision if there is any legal basis in the record to support the Commission's decision regardless of the Commission's findings or reasoning. (General Motors Corp. v. Industrial Comm'n (1989), 179 Ill. App.3d 683, 128 Ill.Dec. 547, 534 N.E.2d 992.) Here, regardless of the Commission's findings, the issue of notice, or the lack thereof, is resolved against the respondent based upon the law and the record.
The statute provides as follows with regard to notice:
"There shall be given notice to the employer of disablement arising from an occupational disease as soon as practicable after the date of the disablement. If the Commission shall find that the failure to give such notice substantially prejudices the rights of the employer the Commission in its discretion may order that the right of the employee to proceed under this Act shall be barred.
* * * * * *
Notice of the disabling disease may be given orally or in writing. In any case, other than injury or death caused by exposure to radiological materials or equipment, unless application for compensation is filed with the Commission within 3 years after the date of the disablement, where no compensation has been paid, or within 2 years after the date of the last payment of compensation, where any has been paid, whichever shall be later, the right to file such application shall be barred." (Ill.Rev.Stat. 1983, ch. 48, par. 172.41(c).)
From the foregoing language, it is clear that there is no definite time or prescribed form for giving notice, and that the key phrase in the statute is that notice is to be given "as soon as practicable after the date of the disablement." (Crane Co. v. Industrial Comm'n (1965), 32 Ill.2d 348, 205 N.E.2d 425.) The statute further established that a claim will not fail for lack of timely notice to an employer unless (1) the employer is prejudiced by the failure or (2) the employee fails to file an application for adjustment of claim within three years from the date of disablement.
As was noted previously, the record reflects that the respondent did not receive notice of the claimant's occupational disease prior to the filing of his claim. Because we agree with the respondent that timely notice of the claimant's disabling disease was not given but disagree that the failure to give notice bars the claimant's petition, the issue remains as to whether the claimant was otherwise barred from having his claim considered by the Commission.
Initially, we consider whether the respondent was unduly prejudiced by the failure to receive timely notice of the claimant's condition. The respondent contends it was prejudiced because it went out of business prior to the arbitration hearing, thereby making it impossible for the arbitrator to conduct an on-site inspection. There was no evidence presented at arbitration that the respondent was out of business. Therefore, since this was a matter outside of the record, it cannot be considered on appeal. (People v. Haas (1981), 100 Ill. App.3d 1143, 56 Ill.Dec. 521, 427 N.E.2d 853.) The respondent presents no other cogent argument as to why it was prejudiced by the lack of notice. The record does not reflect any prejudice to the respondent. The respondent presented a witness who testified that there was no benzene used in the manufacturing of the glues at the time the claimant was employed. The respondent also adequately *774 cross-examined the claimant's witnesses. In addition, we note that the record reflects that the claimant's application for benefits was filed in December 1983, but that the first arbitration hearing on the claim was not held until September 29, 1988, almost five years later. This provided adequate time for the respondent to investigate the claim, preserve evidence, and prepare a defense to the claimant's petition. Further, after Dr. Hryhorczuk's evidence deposition was taken on December 22, 1988, the respondent subsequently obtained the evidence deposition of Dr. Buckingham and presented this evidence at a later arbitration hearing, thus providing the respondent further opportunity to respond and to present a defense. We do not find that the respondent was unduly prejudiced by the lack of notice.
Similarly, the claimant's application for benefits was not barred as his application for benefits was timely filed with the Commission. Although the date that the claimant became disabled due to his occupational disease is not precisely known from the record provided, the record does establish that the claimant was found to have leukemia in May 1981. There is no medical testimony, other than Dr. Hryhorczuk's testimony, which causally connected the claimant's leukemia to his occupational exposure to benzene; however, in the claimant's application for adjustment of claim, he gives the date of disablement as May 1, 1981, his last date of employment with the respondent. The claimant filed his application for adjustment of claim on December 21, 1983, less than three years after the date of disablement given on his application. Also on his application, the claimant gives his occupational disease as a blood disorder caused by his exposure to the chemical benzene. From this statement, a diagnosis linking his exposure to benzene to his leukemia must have occurred sometime prior to his filing his application and after his last day of work with the respondent in order for him to assert this fact on his application, which would place the respondent on notice as to the claim it would need to defend against. Thus, the claimant met his statutory requirement of filing his application within three years of his date of disablement.
The third issue presented by the respondent is that it was denied due process of law by the Commission. As was noted earlier in this opinion, the respondent cited no cases in support of this contention. In addition, the respondent's assertions primarily concern deficiencies in the arbitrator's decision. Without belaboring this issue, suffice it to say that the Commission exercises original jurisdiction and is not bound by the arbitrator's findings. (U.S. Industrial Chemical Co. v. Industrial Comm'n (1986), 143 Ill.App.3d 881, 97 Ill. Dec. 839, 493 N.E.2d 646.) In the instant case, the Commission set forth its own findings of fact and conclusions of law, and any deficiencies to be found in the arbitrator's decision (some of which were corrected in the Commission's order) cannot be found to be a denial of due process of law for the respondent.
Further, the respondent waived this issue because it did not raise this issue before the Commission, and in its brief to the circuit court, it made only a broad statement of being denied due process of law but did not argue this point. Failure to present the issue to the Commission waives the issue before the circuit court and, subsequently, to this court. (Yellow Freight Systems v. Industrial Comm'n (1984), 124 Ill.App.3d 1018, 80 Ill.Dec. 273, 464 N.E.2d 1256.) Therefore, we decline to address the respondent's issue of denial of due process of law before the arbitrator.
The respondent has also waived the issue of whether the Commission erroneously awarded the claimant $12,905 in medical expenses. In the respondent's statement of exceptions and brief filed with the Commission, the respondent's complete argument regarding this issue was as follows:
"The Arbitrator awarded $12,905.00 in medical expenses, although, the bill on the face, shows most of the bills were paid through Blue Cross and other insurance carriers." *775 This argument is highly lacking in reasons and specifics as to why the medical expenses should not be awarded to the claimant. The Commission, in its order, found that the medical expenses incurred by the claimant were reasonable and necessary, and the respondent's argument fails to persuade this court otherwise.
Similarly, in the respondent's brief to the circuit court, it enumerates the issues for consideration by the court. In this listing, the respondent states: "Whether medical bills paid by Blue Cross and other carriers should have been awarded directly to Mr. Rorie." As was done with the issue of denial of due process, the issue was not argued in the body of its brief. The circuit court did not address the issue of medical expenses in its decision. Failure to adequately argue and present this issue to either the Commission or to the circuit court did not preserve this issue for consideration to this court, and we decline to speculate and consider for the first time on appeal the argument raised by the respondent with regard to the medical expenses.
The respondent's last issue is whether the Commission's decision that the claimant was permanently and totally disabled was against the manifest weight of the evidence. The respondent contends that Dr. Buckingham found that the claimant had no disease process present at the time of his examination, and that based upon the doctor's examination and his laboratory findings, the claimant was able to work as of the date of the examination. The respondent further asserts that Dr. Hryhorczuk's testimony that the claimant was in remission and that the claimant's work activities would be sharply limited was insufficient to show that the claimant was permanently and totally disabled.
In determining whether the Commission's determination was proper, our review is limited to whether the medical evidence in the record was sufficient to support the award, i.e., not against the manifest weight of the evidence. (United Electric Coal Co. v. Industrial Comm'n (1978), 74 Ill.2d 198, 23 Ill.Dec. 535, 384 N.E.2d 329; Crane Co. v. Industrial Comm'n (1965), 32 Ill.2d 348, 205 N.E.2d 425.) The resolving of conflicting medical opinions as to causal connection is the province of the Commission, and unless against the manifest weight of the evidence, the Commission's decision will not be overturned on review. (County of Cook v. Industrial Comm'n (1974), 57 Ill.2d 24, 310 N.E.2d 6.) Additionally, judicial deference is given to the Commission in cases where the medical testimony is conflicting. County of Cook v. Industrial Comm'n (1974), 57 Ill.2d 24, 310 N.E.2d 6.
Dr. Hryhorczuk, a specialist in clinical toxicology and occupational medicine, testified that the claimant's leukemia was caused by his exposure to benzene in the work place. According to the doctor, although the claimant was in remission at the time of his examination, i.e., asymptomatic, the claimant's condition was permanent and there was no cure for the claimant. Further, he would not advise the claimant to work in areas where he may sustain trauma, where he may be exposed to infectious agents, or where he was required to do heavy physical labor. At most, the claimant could do desk work or work from his home, but he was severely restricted in the kinds of work he could do. The doctor also testified that the continuing medical treatment required by the claimant's condition would interfere or would make difficult continuous employment.
In contrast to Dr. Hryhorczuk's testimony, Dr. Buckingham testified that the claimant was free of any disease process at the time of his examination, and that, in his opinion, the claimant was able to work. However, from the record, it is apparent that Dr. Buckingham did not review any of the claimant's medical records but based his opinion upon his examination and laboratory findings. Because the claimant was in remission, the claimant would appear to be capable of work. However, a review of the claimant's medical records would reveal that the claimant has a serious, life-threatening disease, and the Commission resolved the conflict between the medical experts and based its decision upon Dr. Hryhorczuk's *776 opinion. The Commission's determination that the claimant was permanently and totally disabled was not against the manifest weight of the evidence.
For the foregoing reasons, the judgment of the circuit court of Cook County confirming the decision of the Industrial Commission is affirmed.
Affirmed.
McCULLOUGH, P.J., and WOODWARD, STOUDER, and RAKOWSKI, JJ., concur.
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603 F.3d 308 (2010)
PROFIT PET; Bob Baran, Plaintiffs-Appellees,
v.
ARTHUR DOGSWELL, LLC, Defendant-Appellant.
No. 09-1228.
United States Court of Appeals, Sixth Circuit.
Argued: January 12, 2010.
Decided and Filed: May 7, 2010.
*310 ARGUED: Stephen S. Muhich, Dykema Gossett PLLC, Grand Rapids, Michigan, for Appellant. Loyst Fletcher, Jr., Law Office, Flint, Michigan, for Appellees. ON BRIEF: Stephen S. Muhich, Dykema Gossett PLLC, Grand Rapids, Michigan, for Appellant. Loyst Fletcher, Jr., Law Office, Flint, Michigan, for Appellees.
Before: MARTIN and WHITE, Circuit Judges; ZOUHARY, District Judge.[*]
OPINION
ZOUHARY, District Judge.
INTRODUCTION
This is a contractual relationship gone to the dogs. It is a dispute between a pet supply manufacturer, Arthur Dogswell, LLC (Dogswell), and its Midwestern sales representative, Profit Pet. Dogswell terminated the contract between the parties after three years, and Profit Pet sued alleging (1) Dogswell terminated the contract without cause, as defined by the contract, and (2) Profit Pet was entitled to certain payments. After cross motions for summary judgment, the district court ruled at a hearing in Profit Pet's favor. The parties stipulated to an agreed damage amount based on the court's ruling, and judgment was entered in favor of Profit Pet in the amount of $209,039.56. Dogswell timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1291.
There are four issues in this case:
1. Did Dogswell terminate the contract "for cause" or "without cause," as those terms are defined in the contract?
2. Did Profit Pet breach the contract prior to the termination?
3. Is Profit Pet entitled to commissions on sales to "big box" stores located in its geographic sales territory?
4. Does the Michigan Sales Representative Commission Act (SRCA) apply to any payment owed to Profit Pet?
For the reasons described below, we AFFIRM the district court's rulings that the termination was without cause and that Profit Pet did not breach the contract, REVERSE the district court's holdings on big box commissions and the applicability of the SRCA, and REMAND the case for further proceedings consistent with this Opinion.
BACKGROUND
The Parties
Marco Giannini formed Dogswell in 2003. Dogswell manufactures and sells pet products including pet foods and treats. Bob Baran does business as Profit Pet. Profit Pet is a sales representative for pet product manufacturers.
The Agreement
In August 2004, Dogswell entered into a Representation Agreement ("Agreement") with Profit Pet, granting Profit Pet the exclusive right to represent Dogswell's products to distributors in eleven Midwestern states.[1] Section 8.1 of the Agreement *311 permitted modification or amendment by a writing signed by the parties.
The Agreement set forth the relationship between the parties as one of principal and independent contractor, with explicit language that Dogswell was concerned solely with sales by Profit Pet, and not how Profit Pet conducted its business (Section 5). The parties agree the commission rate was 7%, although the rate was left blank in the Agreement. No language in the Agreement precluded Profit Pet from representing competitors' products.
The Agreement distinguished terminations "for cause" and "without cause," and listed three specific "for cause" scenarios (Section 7.1):
Profit Pet fails to sell $60,000 worth of goods on a quarterly basis, beginning in the second full quarter of the Agreement;
Commission of a felony in the course of performance of the Agreement; or
Failure to cure within fifteen days from a good faith written notice of breach or default.
If none of these events occurred, then the termination would be "without cause." In addition, if Dogswell "terminates agency while [Profit Pet] is performing quarterly goals, [Profit Pet] is to receive 1 [year's] worth of commissions based on previous 6 month sales" (Section 7.2).
The March Toward Termination
The parties began conducting business under the Agreement in August 2004. On March 20, 2007, Giannini and Baran had a conversation, memorialized later the same day in an e-mail that described Dogswell's desired "key performance metrics." Dogswell requested a reduced commission rate, that Profit Pet hire more employees, file certain reports with Dogswell, set up a meeting for a Dogswell employee with Pet Supplies Plus, and acquire an invitation for Dogswell to a Pet Supplies Plus open house (Doc. No. 37, Ex. D).
Baran responded on April 17, 2007 by affirming his "satisfaction" with the current Agreement and rejecting the suggestion that he hire additional staff or take a reduced commission. Giannini replied immediately with another e-mail, reiterating his desire that Profit Pet work with Pet Supplies Plus, hire a new employee, and expand"a major thing that we need to be added to continue to grow with you." He concluded the e-mail with: "I want to continue working with you, but if we are going to grow together, we need to have you grow your business. We have been growing our business ... We ask you to do the same with a larger staff." Baran e-mailed a response explaining that his "job is to sell," and that he was not in a position to hire a new employee.
Dogswell terminated the business relationship by e-mail on June 18, 2007, followed the next day with a letter indicating Dogswell would pay Profit Pet all commissions earned through the end of June. Neither communication referenced the Agreement.
ANALYSIS
Standard of Review
This Court reviews a grant or denial of summary judgment de novo. Saroli v. Automation & Modular Components, Inc., 405 F.3d 446, 450 (6th Cir.2005). Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law." Federal Civil Rule 56(c).
*312 The summary judgment standard does not change simply because the parties presented cross-motions. Taft Broadcasting Co. v. United States, 929 F.2d 240, 248 (6th Cir.1991). The fact that both parties have moved for summary judgment does not mean a court must grant judgment as a matter of law for one side or the other; rather, a "court must evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration." Id.
Termination Without Cause
The first bone of contention here is whether Dogswell provided the required notice to Profit Pet in order to terminate the contractual relationship "for cause." The Agreement (Section 7.1) provides for three circumstances where termination is for cause: failure to meet the sales obligation, commission of a felony, and failure to cure after good faith notice of breach or default. Dogswell admits Profit Pet was meeting its quarterly sales obligation and there was no felony. Therefore, the issue is whether Dogswell sent a "good faith written notice" of Profit Pet's "actual breach or actual default" (Section 7.1.2). If it did, then Profit Pet had fifteen days to cure the breach. If it failed to do so, Dogswell could have terminated the Agreement by written notice ten days after the failure to cure. There is no dispute that the time period was adequate, or that Profit Pet failed to do what Dogswell demanded.
The district court held Dogswell did not provide the required "good faith written notice" (TR 49-56). The district court found the language in the e-mails to be "perfectly consistent with an ongoing business dialogue, ... where one party would like to modify some terms of the agreement... but it doesn't specify default or breach as required under the notice and cure provision" (TR 52-53). This Court agrees. These e-mails request Profit Pet:
lower the commission rate from 7% to 5%;
hire employees so that it could "grow;"
start filing certain business and customer reports; and
attend a meeting with Pet Supplies Plus that a Dogswell employee could also attend, and acquire an invitation for Dogswell to attend a Pet Supplies Plus open house.
On their face, these e-mails are not notice of a breach.
Furthermore, Section 5 of the Agreement states:
[Profit Pet] is not an employee of [Dogswell] for any purpose whatsoever, but is an independent contractor. [Dogswell] is interested only in the results obtained by [Profit Pet], who shall have sole control of the manner and means of performing under this Agreement. [Dogswell] shall not have the right to require [Profit Pet] to do anything which would jeopardize the relationship of independent contractor between [Dogswell] and [Profit Pet].
Requests for Profit Pet to hire employees, set up meetings, or to file reports detailing its day-to-day operations do not describe or even imply a breach or default. Instead, they show Dogswell hounding Profit Pet to act contrary to Section 5 of the Agreement which clearly states Profit Pet "shall have sole control of the manner and means of performing."
Profit Pet's specific duties under the Agreement are limited to obtaining orders and "reorders" of Dogswell's products and services in the specified territory; "diligently" and "faithfully" working the territory in "an endeavor to secure business" for Dogswell (Section 4); and selling at *313 least $60,000 worth of goods per quarter (Section 7.1). The e-mails specify no failure by Profit Pet to meet these or any other obligations under the Agreement. Indeed, the e-mails make no reference or citation to the Agreement.
Dogswell howls that the district court imposed a "hyper-technical notice requirement." Not so. The district court correctly held that a valid notice requires some reference to a breach with an opportunity for Profit Pet to cure. The e-mails contain no such reference. Because Dogswell failed to provide the required "good faith written notice" of breach or default, the termination of Profit Pet was without cause.
No Prior Breach by Profit Pet
Michigan law does not allow a party who was the first to substantially breach a contract to later sue on the same contract. Michaels v. Amway Corp., 206 Mich.App. 644, 650, 522 N.W.2d 703, 706 (1994). Dogswell argues that, prior to the termination, Profit Pet breached the Agreement by representing competitors' products, and that Profit Pet is therefore barred from recovering for any later wrongful termination by Dogswell. This argument has no bite.
There is no language in the Agreement imposing a non-competition requirement on Profit Pet. The Agreement grants Profit Pet the exclusive right to represent Dogswell's products in certain states, thus limiting Dogswell's ability to contract with a competitor of Profit Pet (Section 1). But there is no similar language limiting Profit Pet. If the parties intended to restrict Profit Pet's ability to represent other manufacturers, a provision to that effect should have been included.
Nor can Dogswell rely on the Agreement's requirement that Profit Pet "use its best efforts to promote [Dogswell's] products" (Section 4). The district court summarized the issue well, stating "there's nothing that's inherently inconsistent with diligent and faithful work in the territory and best efforts to promote the principal's products with representing a competitor, particularly where there's no record that the plaintiff here represented particular products in competition with the principal's products" (TR 58).
Even if there were a non-competition requirement for Profit Pet, there is no factual basis for Dogswell's argument that Profit Pet sold competing products. Dogswell barks about statements made by Profit Pet owner Bob Baran in his deposition that he "rep'd" certain competitors during the same time he was representing Dogswell (Appellant's Brief, pp. 21-24). However, Baran does not say he represented products directly competing with Dogswell products. On the contrary, he clearly rejects any suggestion that he was representing a product in direct competition with Dogswell products (Baran Dep., p. 40). This, the only evidence of competition Dogswell offers, is insufficient. The district court correctly held that Profit Pet did not substantially breach the Agreement prior to termination.
Big Box Store Commissions
Dogswell argues the district court erred by holding Dogswell liable to Profit Pet for commissions on sales to "big-box" storesTarget and United Natural Foods, Inc. (UNFI). The district court held that "the contract says [Profit Pet] gets commissions for materials or goods delivered into the territory to those accounts. And so I think he's entitled to those commission payments as a matter of law" (TR 60). We find the Agreement to be ambiguous on this point and reverse the district court's holding.
*314 Under Michigan law, whether a contract is ambiguous is a question of law properly determined by the court. See Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 146 F.3d 367, 373 (6th Cir. 1998). In making such a determination, a district court should read the contract as a whole and give the contract language its ordinary and natural meaning. See Comerica Bank v. Lexington Ins. Co., 3 F.3d 939, 942 (6th Cir.1993). However, a court's role in construing the terms of a contract is not unqualified. "Where [a contract's] meaning is obscure and its construction depends upon other and extrinsic facts in connection with what is written, the question of interpretation should be submitted to the jury, under proper instructions." D'Avanzo v. Wise & Marsac, P.C., 223 Mich.App. 314, 319, 565 N.W.2d 915, 918 (1997) (internal citations and quotation marks omitted). The fact-finder "must interpret the contract's terms, in light of the apparent purpose of the contract as a whole, the rules of contract construction, and extrinsic evidence of intent and meaning. In resolving such a question of fact, i.e., the interpretation of a contract whose language is ambiguous, the finder of fact is to consider relevant extrinsic evidence." Klapp v. United Ins. Group Agency, 468 Mich. 459, 469, 663 N.W.2d 447, 453-54 (2003).
The Agreement, a printed form modified by handwritten notes and cross outs, is not a model of clarity. The parties drafted it without the aid of an attorney, and frankly it is doggone messy. A number of fill-in spaces are left blank, including the commission rate, a not insignificant contract term. Whole sections are deleted by hand with the notation "VOID" and the parties' initials. Some sections, such as the penalty payment discussed below, are written entirely by hand and squeezed into what little white space existed between typed sections. It is no wonder that ambiguity and inconsistency is the result.
Of course, the Agreement must be read as a whole and, in so doing, we find there are conflicting, but reasonable, interpretations whether Profit Pet is entitled to commissions on sales to big box stores. If the words in a contract are equally susceptible to at least two reasonable interpretations, then the court must reverse the grant of summary judgment. Mayor of City of Lansing v. Mich. Pub. Serv. Comm'r, 470 Mich. 154, 166, 680 N.W.2d 840 (2004). Here, the Agreement does not consistently define terms. Certain terms are defined by placing the term in quotes in a parenthetical after the definition. For example, it does so for "Principal" and "Agency" in the preamble, "Products" and "Territory" in Section 1, "Sales Policies" in Section 2, and "aggrieved party" in Section 7.1.2. Section 6 has the header "Commissions," but fails to similarly define the term, nor is "commissions" consistently capitalized when used. (The Agreement treats the terms "orders" and "notices" in Sections 3 and 9, respectively, in similar fashion.)
Certainly Sections 4 and 6, read together, define commission in a way which comports to the common understanding of how commissions are earned and paid. Coates v. Bastion Bros., Inc., 276 Mich.App. 498, 504, 741 N.W.2d 539, 544 (2007) ("Dictionary definitions may be used to ascertain the plain and ordinary meaning of terms undefined in an agreement."). The word "commission" (in the sense of a payment) is understood in common parlance as a payment made to an agent regarding a sale for which the agent is responsible. The Webster's Third New International Dictionary (1986) defines "commission" as "a fee paid to an agent or employee for transacting a piece of business or performing a service; especially: a percentage of *315 the money received from a total paid to the agent responsible for the business."
Section 6.1, standing alone, is ambiguous. That Section states: "Commissions are earned ... on all `accepted orders' solicited within and/or delivered to the Territory, whether the orders are sent by the Agency, received by the Principal by the mails, taken at the Principal's place of business or otherwise." Does this provision limit commissions to those "earned" by Profit Pet performing its duties under Section 4? That Section explains that Profit Pet must "promote orders and reorders of [Dogswell's] products and services in the Territory and the long term goodwill of [Profit Pet]," and that Profit Pet "diligently and faithfully work the Territory in an endeavor to secure business for [Dogswell] and use its best efforts to promote [Dogswell's] products." It is undisputed that Profit Pet never secured big box store business, nor sought to promote Dogswell's products to the big box market. Therefore, one interpretation is that Profit Pet did not "earn" a commission for big box sales.
A different and also reasonable interpretation of the Agreement was found by the district court: namely, that Profit Pet would be entitled to commissions on all orders "delivered to" the Territory, regardless of whether Profit Pet had affected those sales. This interpretation was reached by focusing on the broad language of Section 6.1.
In sum, the Agreement is ambiguous as to big box store commissions. The issue is one for the trier of fact to decide.[2]
Having determined the Agreement is ambiguous, the trier of fact can also consider evidence outside the four corners of the Agreement, including the parties' course of conduct. The parties agree that Profit Pet never represented Dogswell's products to Target or UNFI, and Profit Pet never received or demanded a commission on such sales until after this lawsuit. This past pattern of conduct between the parties during the pendency of the Agreement supports the reasonable interpretation that big box store commissions were not included in the Agreement. See Detroit Greyhound Employees Fed. Credit Union v. Aetna Life Ins. Co., 381 Mich. 683, 692, 167 N.W.2d 274, 279 (1969) ("whatever is done by the parties during the period of the performance of the contract is done under its terms as they understood and intended it should be").
Finally, the parties stipulated to a damage amount in light of the district court's ruling that Profit Pet was entitled to big box commissions, resulting in the judgment of $209,039.56 in favor of Profit Pet. That stipulation does not specify the amount attributable to big box commissions. There is no mention of the value of the big box commissions in the briefing or elsewhere in the record. Therefore, should the trier of fact find big box commissions inappropriate, a recalculation of damages would be necessary (deducting any dollar amount for big box commissions).
The Michigan Sales Representative Commission Act
The district court held that the SRCA applied to the "without cause" payment *316 authorized in Section 7.2 of the Agreement. This was error.
The SRCA states that a principal is liable to the sales representative for actual damages, and "if the principal is found to have intentionally failed to pay the commission when due, an amount equal to 2 times the amount of commissions due but not paid as required by this section or $100,000.00, whichever is less." M.C.L. § 600.2961(5). The statute defines "commission" as "compensation accruing to a sales representative for payment by a principal, the rate of which is expressed as a percentage of the amount of orders or sales or as a percentage of the dollar amount of profits." M.C.L. § 600.2961(1)(a).
Section 6.1 describes the commission limiting it to those sales "substantially attributable in whole or in part to activities and services performed prior to the effective date of termination, regardless of the shipment and invoice date." The Agreement next provides a penalty for termination without cause. Section 7.2 states: "If [Dogswell] terminates agency while [Profit Pet] is performing quarterly goals, [Profit Pet] is to receive 1 [year's] worth of commissions based on previous 6 month sales."
Although the penalty payment is calculated based upon the previous six months' sales, Profit Pet has already been paid a commission on those sales. In other words, Profit Pet, having already been paid the last six months' commissions on its sales, is entitled under the Agreement to receive an additional payment equaling a year's worth of commissions as damages for the termination of its agencynot for additional work done or sales accomplished. The one year's commission is a contractual penalty, not a commission envisioned by the SRCA, and the SRCA simply does not apply. Any argument to the contrary is barking up the wrong tree, and a misreading of both the Agreement and the statute.
CONCLUSION
For the foregoing reasons, we AFFIRM the district court's order that Dogswell terminated the contract without cause, REVERSE the district court's order that Profit Pet is due big box store commissions and that the SRCA applies to the without cause termination penalty payment, and REMAND for further proceedings consistent with these rulings.
NOTES
[*] The Honorable Jack Zouhary, United States District Judge for the Northern District of Ohio, sitting by designation.
[1] The territory included Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, Ohio, and Wisconsin.
[2] Furthermore, even were the Agreement clear and unambiguous, the Agreement lacks an integration clause, and the district court did not examine whether the Agreement was intended to be integrated or whether there was a prior or contemporaneous agreement addressing the big box store commissions, as there was addressing the commission rate. See NAG Enters., Inc. v. All State Indus., Inc., 407 Mich. 407, 409-10, 285 N.W.2d 770, 771-72 (1979) (parol evidence rule applies only after finding that parties intended contract to be complete integration of their agreement).
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Electronically Filed
Supreme Court
SCWC-11-0000410
13-JUN-2016
08:30 AM
SCWC-11-0000410
IN THE SUPREME COURT OF THE STATE OF HAWAI#I
MATTHEW CLEMENT,
Petitioner/Petitioner-Appellant,
vs.
STATE OF HAWAI#I,
Respondent/Respondent-Appellee.
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-11-0000410; S.P.P. NO. 06-1-0035; CR. NO. 99-0376)
ORDER REJECTING APPLICATION FOR WRIT OF CERTIORARI
(By: Recktenwald, C.J., Nakayama, McKenna, Pollack, and Wilson, JJ.)
Petitioner/Petitioner-Appellant’s Application for Writ
of Certiorari, filed on April 29, 2016, is hereby rejected.
DATED: Honolulu, Hawai#i, June 13, 2016.
Dwight C.H. Lum /s/ Mark E. Recktenwald
for petitioner
/s/ Paula A. Nakayama
/s/ Sabrina S. McKenna
/s/ Richard W. Pollack
/s/ Michael D. Wilson
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TO BE PUBLISHED IN THE OFFICIAL REPORTS
OFFICE OF THE ATTORNEY GENERAL
State of California
DANIEL E. LUNGREN
Attorney General
______________________________________
OPINION :
: No. 95-514
of :
: August 25, 1995
DANIEL E. LUNGREN :
Attorney General :
:
GREGORY L. GONOT :
Deputy Attorney General :
:
______________________________________________________________________________
THE HONORABLE JEFFREY A. THOMPSON, District Attorney, County of
Tehama, has requested an opinion on the following questions:
1. May a member, regular or alternate, of a Republican county central committee
vote for officers or be an officer of the committee without having first taken and subscribed the oath or
affirmation set forth in section 3 of article XX of the Constitution?
2. Does a letter from a member of a Republican county central committee which
appoints another person as his or her alternate on the committee, without stating more, authorize the
alternate to vote?
CONCLUSIONS
1. A member, regular or alternate, of a Republican county central committee may
not vote for officers or be an officer of the committee without having first taken and subscribed the oath
or affirmation set forth in section 3 of article XX of the Constitution.
2. A letter from a member of a Republican county central committee which
appoints another person as his or her alternate on the committee, without stating more, does not
authorize the alternate to vote.
1. 95-514
ANALYSIS
The two questions presented concern certain provisions of the Elections Code
pertaining specifically to county central committees of the Republican Party of California. (Elec.
Code, '' 7400-7444.)1 County central committees, along with party conventions and state central
committees, are the governing bodies of qualified political parties. (See '' 7000-7884; 59
Ops.Cal.Atty.Gen. 60 (1976).) The county central committee has charge of the party campaign within
the county under the general direction of the state central committee. (' 7440.)
While political party committees have certain public attributes, they are not public
agencies (59 Ops.Cal.Atty.Gen., supra, 61), and their members are not public officers (59
Ops.Cal.Atty.Gen. 162, 163-164 (1976); 25 Ops.Cal.Atty.Gen. 119, 120 (1954)). California courts
have declined to hold county central committee membership as constituting a public office. (Moore v.
Panish (1982) 32 Cal.3d 535, 544; Stout v. Democratic County Central Com. (1952) 40 Cal.2d 91, 94;
Azevedo v. Jordan (1965) 237 Cal.App.2d 521, 528.) Instead, county central committee membership
is considered an office of the political party. (Moore v. Panish, supra, 32 Cal.3d at 545; Los Angeles
County Democratic Central Committee v. County of Los Angeles (1976) 61 Cal.App.3d 335.)
However, political parties and their committees are subject to regulation in the public interest. (Katz v.
Fitzgerald (1907) 152 Cal. 433; 59 Ops.Cal.Atty.Gen., supra, 60.)
1. Oath of Office
Although not public officers, members of a Republican county central committee are
required to take the same oath of office as public officers and employees prior to entering upon their
duties. Section 7408 provides:
"Each member of a committee, whether elected to the committee or appointed
to fill a vacancy, before he or she enters upon the duties of his or her office, shall take
and subscribe the oath or affirmation set forth in Section 3 of Article XX of the
Constitution.
"The oath or affirmation required by this section may be taken before any
officer authorized to administer oaths and no fee shall be charged by any person before
whom the oath is taken or subscribed."
Section 3 of article XX of the Constitution states:
"Members of the Legislature, and all public officers and employees, executive,
legislative, and judicial, except such inferior officers and employees as may be by law
1
All section references are to the Elections Code unless otherwise indicated. Similar provisions govern the
committees of the Democratic Party of California ('' 7050-7254), the American Independent Party of California (''
7500-7695), and the Peace and Freedom Party of California ('' 7700-7884).
2. 95-514
exempted, shall, before they enter upon the duties of their respective offices, take and
subscribe the following oath or affirmation:
"`I, ________________________, do solemnly swear (or affirm) that I will
support and defend the Constitution of the United States and the Constitution of the
State of California against all enemies, foreign and domestic; that I will bear true faith
and allegiance to the Constitution of the United States and the Constitution of the State
of California; that I take this obligation freely, without any mental reservation or
purpose of evasion; and that I will well and faithfully discharge the duties upon which I
am about to enter.'
"`And I do further swear (or affirm) that I do not advocate, nor am I a member
of any party or organization, political or otherwise, that now advocates the overthrow of
the Government of the United States or the State of California by force or violence or
other unlawful means; that within the five years immediately preceding the taking of
this oath (or affirmation) I have not been a member of any party or organization,
political or otherwise, that advocated the overthrow of the Government of the United
States or of the State of California by force or violence or other unlawful means except
as follows:
__________________________________________________________________
(If no affiliations, write in the words "No Exceptions")
and that during such time as I hold the office of ______________________
(name of office)
I will not advocate nor become a member of any party or organization, political or
otherwise, that advocates the overthrow of the Government of the United States or of
the State of California by force or violence or other unlawful means.'
"And no other oath, declaration, or test, shall be required as the qualification for
any public office or employment.
"`Public officer and employee' includes every officer and employee of the State,
including the University of California, every county, city, city and county, district, and
authority, including any department, division, bureau, board, commission, agency, or
instrumentality of any of the foregoing."
As explained by the Court of Appeal: "[T]he requirement of execution of the oath `before' entering
upon the duties to be undertaken establishes the execution of the oath as a condition precedent to a
lawful undertaking of those duties." (Smith v. County Engineer (1968) 266 Cal.App.2d 645, 653.)
Does the act of voting for or becoming an officer of a county central committee
constitute "enter[ing] upon the duties" of the office of committee member? The functions of a county
central committee and the duties of its members are set forth in sections 7440-7444. These provisions
establish that "[a] committee shall have charge of the party campaign under general direction of the
3. 95-514
State Central Committee . . . ." (' 7440); that, "[a]t the first organizational meeting, a committee shall
organize by selecting a chairperson, a secretary, and any other officers and committees as it deems
necessary for carrying on the affairs of this party" (' 7441); and that "[t]he committees shall perform
any other duties and services for this political party as seem to be for the benefit of the party" (' 7443).
The committee may, at its discretion, make certain rules and regulations governing its internal affairs.
(' 7442.)
Mandated by section 7441, the act of organizing a Republican county central
committee by selecting officers must be considered one of the duties of the committee members. This
is underscored by the fact that section 7443, which is part of the same statutory scheme as section 7441,
refers to the performance of "any other duties . . . for the benefit of the party." (Emphasis added.)
We therefore conclude that a regular member of a Republican county central committee
must take the requisite oath of office before voting for committee officers or becoming an officer of the
committee.
Must alternate members also take the oath of office before participating in the
organization of a county committee? The position of alternate member is set forth in section 7406,
which states:
"A committee may authorize each elected member and each ex officio member
of that committee to appoint an alternate member. An ex officio member who is also
an incumbent officeholder of any of the offices listed in Sections 7404 and 7405 at the
time of the meeting of the committee may appoint an alternate member without
authorization from that committee, if the member desires to appoint an alternate.
"The alternate member shall have the right to vote only with the written
authorization of the member who appointed him or her. An alternate member of a
committee shall be subject to the rules and regulations of the committee.
"An alternate member must meet the same qualifications as the regular
member, and may vote only in the absence of the member who appointed him or her,
except that an alternate member appointed by an incumbent Senator, Member of the
Assembly, or Representative in Congress need not reside in the district of the
appointing power but need only reside in the county of jurisdiction of the committee."
(Emphasis added.)
The requirement that each member of the committee take the oath of office is properly construed as a
qualification for holding membership on a county central committee. This is reflected in article XX,
section 3 of the Constitution which, after setting forth the oath, provides that ". . . no other oath,
declaration, or test, shall be required as a qualification for any public office or employment." The oath
"becomes, in a sense, a matter of eligibility, for one who cannot take the oath, in effect, is rendered
ineligible" to hold office. (Smith v. County Engineer, supra, 266 Cal.App.2d at 653.)
4. 95-514
Since taking the oath is a qualification, or condition precedent, for becoming a regular
member of a county central committee, it is also a qualification which must be met by an alternate
member of the committee pursuant to the terms of section 7406.
Therefore, in answer to the first question, we conclude that neither a regular nor an
alternate member of a Republican county central committee may vote for officers or be an officer of the
committee without having first taken and subscribed the oath or affirmation set forth in section 3 of
article XX of the Constitution.
2. Delegation of Authority to Vote
The second question presented asks whether a letter from a member of a Republican
county central committee which appoints another person as his or her alternate on the committee,
without stating more, authorizes the alternate to vote. We conclude that it does not.
As previously quoted, section 7406 provides that "[t]he alternate member shall have the
right to vote only with the written authorization of the member who appointed him or her." It is
evident from this provision that appointment as an alternate, whether written or otherwise, does not in
and of itself confer the right to exercise the vote of the regular member. The appointment is
independent of any right by the alternate to vote on behalf of the regular member, and the reference to
"written authorization" relates to giving permission to vote, not to the appointment itself.
The language of section 7406 thus assumes that the appointment has already been
made; the provision concerns itself with the mechanism by which voting power may be conferred on
the alternate. That mechanism is limited under the statute to a written document which states that the
regular member authorizes the alternate to vote on his or her behalf.
We therefore conclude in answer to the second question that a letter from a member of
a Republican county central committee which appoints another person as his or her alternate on the
committee, without stating more, does not authorize the alternate to vote.
*****
5. 95-514
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10-2919-cv
SRM Global Fund Limited Partnership v. Countrywide Financial Corporation, et al.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals
2 for the Second Circuit, held at the Daniel Patrick Moynihan
3 United States Courthouse, 500 Pearl Street, in the City of
4 New York, on the 23rd day of November, two thousand eleven.
5
6 PRESENT: DENNIS JACOBS,
7 Chief Judge,
8 ROBERT A. KATZMANN,
9 DEBRA ANN LIVINGSTON,
10 Circuit Judges.
11
12 - - - - - - - - - - - - - - - - - - - -X
13 SRM GLOBAL FUND LIMITED PARTNERSHIP
14 Plaintiff-Appellant,
15
16 -v.- 10-2919-CV
17
18 COUNTRYWIDE FINANCIAL CORPORATION,
19 n/k/a Bank of America Home Loans,
20 ANGELO R. MOZILO, DAVID SAMBOL,
21 ERIC P. SIERACKI,
22 Defendants-Appellees,
23
24 BANK OF AMERICA CORPORATION,
25 KENNETH D. LEWIS,
26 Defendants.
27
28 - - - - - - - - - - - - - - - - - - - -X
29
30
1 FOR APPELLANTS: DAVID BOIES (Philip C. Korologos, Boies,
2 Schiller & Flexner LLP, New York, NY,
3 Richard B. Drubel, Matthew J. Henken,
4 Boies, Schiller & Flexner LLP, Hanover,
5 NH, George A. Zelcs, Korein Tillery LLC,
6 Chicago, IL, Stephen M. Tillery, Douglas
7 R. Sprong, Peter Rachman, Christopher A.
8 Hoffman, Korein Tillery LLC, St. Louis,
9 MO., on brief), Boies, Schiller & Flexner
10 LLP, New York, NY.
11
12 FOR APPELLEES: BRIAN A. PASTUSZENSI (Alexis L. Shapiro,
13 Goodwin Procter LLP, Boston, MA, Mark
14 Holland, Goodwin Procter LLP, New York,
15 NY, Richard M. Wyner, Goodwin Procter
16 LLP, Washington, DC, on brief), Goodwin
17 Procter LLP, Boston, MA, for Appellee
18 Countrywide Financial Corporation, n/k/a
19 Bank of America Home Loans.
20
21 DAVID SIEGEL (Kenneth R. Heitz, Daniel P.
22 Lefler, Adam Fletcher, on brief), Irell &
23 Manella LLP, Los Angeles, CA, for
24 Appellee Angelo R. Mozilo.
25
26 Lori Lynn Phillips, Orrick, Herrington &
27 Sutcliffe LLP, Seattle WA, Michael D.
28 Torpey, Penelope A. Graboys Blair,
29 Orrick, Herrington & Sutcliffe LLP, San
30 Francisco, CA, for Appellee David Sambol.
31
32 SHIRLI FABBRI WEISS (Keara M. Gordon, DLA
33 Piper LLP (US), New York, NY, David
34 Priebe, DLA Piper LLP (US), East Palo
35 Alto, CA), DLA Piper LLP (US), San Diego,
36 CA, for Appellee Eric P. Sieracki.
37
38 Appeal from a judgment of the United States District
39 Court for the Southern District of New York (Berman, J.).
40
41 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
42 AND DECREED that the judgment of the district court be
43 AFFIRMED.
44
45 Appellant SRM Global Fund Limited Partnership appeals
46 from a judgment of the United States District Court for the
47 Southern District of New York (Berman, J.), dismissing its
2
1 securities and common-law fraud complaint against
2 Countrywide Financial Corporation and three of its officers.
3
4 SRM asserted claims for violations of the Securities
5 Exchange Act of 1934--specifically Section 10(b), 15 U.S.C.
6 § 78j(b); Rule 10b-5, promulgated under the Exchange Act, 17
7 C.F.R. § 240.10b-5; Section 18(a), 15 U.S.C. § 78r(a); and
8 Section 20(a), 15 U.S.C. § 78t(a)--and common-law fraud.
9 The district court dismissed the complaint for failure to
10 identify an actionable misstatement or omission. We assume
11 the parties’ familiarity with the underlying facts, the
12 procedural history, and the issues presented for review.
13
14 Having conducted the requisite review of the record,
15 see Scalisi v. Fund Asset Mgmt., L.P., 380 F.3d 133, 137 (2d
16 Cir. 2004), we affirm the dismissal of SRM’s complaint for
17 substantially the reasons stated in the district court’s
18 thorough and well-reasoned opinion. See SRM Global Fund
19 Ltd. P’ship v. Countrywide Fin. Corp., No. 09 Civ. 5064
20 (RMB), 2010 WL 2473595 (S.D.N.Y. June 17, 2010).
21
22 One issue is closer than others, and as to that as well
23 we agree with the district court, which ruled that SRM
24 failed to identify any statements actionable under Section
25 18. The plaintiff was required to specify a statement in a
26 qualifying SEC filing that was “at the time and in the light
27 of the circumstances under which it was made false or
28 misleading with respect to any material fact.” 15 U.S.C.
29 § 78r(a). The amended complaint relies on four SEC filings:
30 Countrywide’s 2006 and 2007 Form 10-Ks and two Form 8-Ks
31 filed on August 6, 2007 and October 26, 2007. (Amended
32 Complaint (“AC”) ¶ 320.)1 The 10-Ks, alleges SRM, falsely
33 state that Countrywide had “developed a comprehensive
34 Liquidity Management Plan (‘LMP’) to moderate liquidity risk
35 with the goal of maintaining adequate, appropriate, and
36 cost-effective sources of liquidity under all market
37 conditions.” (Id. ¶ 112.) The 2007 10-K advised that
38 Countrywide had “adequate liquidity to meet our obligations,
39 including--but not limited to--our commitments to lend,
40 maturities of debt and obligations to fund rapid
1
SRM also complains that each of Countrywide’s
quarterly filings was false and misleading for similar
reasons. (See, e.g., AC ¶¶ 34, 43, 56, 79, 121.) SRM
failed to adequately plead that any of the statements from
these filings were false or misleading as well.
3
1 amortization events. At December 31, 2007, we estimate that
2 we have available liquidity totaling $36.6 billion.” (Id.)
3 The 2006 10-K made similar representations. (Id. ¶ 113.)
4 In its August 6, 2007 8-K, Countrywide represented that it
5 had net available liquidity of $186.5 billion as of June 30,
6 2007. (Id. ¶ 53.) A press release accompanying its October
7 26, 2007 8-K stated that, during the third quarter,
8 Countrywide had “stabilized its liquidity,” “strengthened
9 its capital position,” and “anticipate[d] that the company
10 will be profitable in the fourth quarter.” (Id. ¶ 72.) SRM
11 argues that these statements were false and misleading
12 because, almost a year later, Countrywide officers
13 identified July 2007 as the time period in which Countrywide
14 had lost viability, and August 2, 2007 as the date on which
15 liquidity “disappeared” (although SRM acknowledges that
16 Countrywide continued to access tens of billions of dollars
17 in new liquidity after that date). (Id. ¶ 76.)
18
19 Fraud cannot be pled by hindsight. See Shields v.
20 Citytrust Bancorp, Inc., 25 F.3d 1124, 1129 (2d Cir. 1994).
21 Countrywide’s optimistic statements about future
22 profitability constitute non-actionable forward-looking
23 statements. See San Leandro Emergency Medical Group Profit
24 Sharing Plan v. Philip Morris Cos., 75 F.3d 801, 811 (2d
25 Cir. 1996); see also Rombach v. Chang, 355 F.3d 164, 174 (2d
26 Cir. 2004) (“[E]xpressions of puffery and corporate optimism
27 do not give rise to securities violations.”). The same is
28 true of Countrywide’s high hopes for its “Liquidity
29 Management Plan.” See ECA & Local 134 IBEW Joint Pension
30 Trust of Chicago v. JP Morgan Chase Co., 553 F.3d 187, 206-
31 07 (2d Cir. 2009) (characterizing as “no more than puffery”
32 statements that company would “continue to reposition and
33 strengthen its franchises with a focus on financial
34 discipline” and that company had “risk management processes
35 that are highly disciplined and designed to preserve the
36 integrity of the risk management process” (alterations and
37 internal quotation marks omitted)). Finally, SRM has not
38 alleged facts demonstrating that Countrywide misstated its
39 liquidity position in its public filings.
40
41
42
43
44
45
46
4
1 Having considered all of SRM’s arguments presented on
2 appeal, we hereby AFFIRM the judgment of the district court.
3
4 FOR THE COURT:
5 CATHERINE O’HAGAN WOLFE, CLERK
6
7
5
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
WILLIAM E. DYSON, III, )
)
Plaintiff, )
)
v. ) Civil Action No. 14-cv-663 (KBJ)
)
CHUCK HAGEL, Secretary of Defense, )
)
Defendant. )
)
MEMORANDUM OPINION
In July of 2013, the Department of Defense (“DOD”) terminated Plaintiff’s
employment purportedly due to his failure to maintain the requisite security clearance.
(Compl., ECF No. 1, ¶ 10.) Plaintiff appealed DOD’s termination decision to the
EEOC, alleging that DOD had unlawfully discriminated against him based on race and
age. (Ex. A to Compl. (“Ex. A”), ECF No. 1-2, at 1.) On January 16, 2014, the EEOC
issued a decision that dismissed Plaintiff’s appeal, and Plaintiff received word of that
determination the following day (January 17, 2014). (See id. at 3-4; Compl. ¶ 2.) The
EEOC’s determination letter also clearly advised Plaintiff that he had 90 days to file a
civil action (Ex. A at 4), but Plaintiff did not file a complaint until April 18, 2014—i.e.,
91 days later.
A federal employee may file a civil action in district court under Title VII and
ADEA “within 90 days of receipt of notice of final action taken by a department,
agency . . . or the [EEOC].” 42 U.S.C. § 2000e–16(c); see also 29 C.F.R. § 1614.408.
The 90-day time limit “functions like a statute of limitations[,]” Wiley v. Johnson, 436
F. Supp. 2d 91, 96 (D.D.C. 2006), and although a court has the power to toll this
limitations period, it can only exercise that power in “extraordinary circumstances.”
Smith v. Dalton, 971 F. Supp. 1, 3 (D.D.C. 1997) (citing Mondy v. Sec’y of the Army,
845 F.2d 1051, 1057 (D.C. Cir. 1988)). A “[p]laintiff has the burden of pleading and
proving any equitable reasons for his failure to meet the 90-day time limit.” Id. (citing
Saltz v. Lehman, 672 F.2d 207, 209 (D.C. Cir. 1982)). Failure to meet this burden is
grounds for dismissal. Na’im v. Rice, 577 F. Supp. 2d 361, 371 (D.D.C. 2008) (sua
sponte dismissing employment discrimination claim where plaintiff filed suit more than
90 days after she received EEOC’s right-to-sue letter); see also Davis v. Gables
Residential/H.G. Smithy, 525 F. Supp. 2d 87, 98 (D.D.C. 2007) (dismissing complaint
as time-barred where plaintiff acknowledged receipt of right-to-sue letter, but filed his
complaint more than 90 days later); Anderson v. Local 201 Reinforcing Rodmen, 886 F.
Supp. 94, 97 (D.D.C. 1995) (dismissing complaint filed 97 days after EEOC issued
right-to-sue letter). Moreover, “[t]he mere fact that a plaintiff is representing [himself]
does not render him immune” from the 90-day deadline. Horsey v. Harris, 953 F. Supp.
2d 203, 210 (D.D.C. 2013) (internal quotation marks and citation omitted).
On May 5, 2014, this Court ordered Plaintiff to show cause by May 27, 2014,
why this case should not be dismissed for failure to meet the 90-day deadline. Plaintiff
filed no response to that Order, and he pleads no facts in his complaint that would
otherwise allow this Court to equitably toll the 90-day deadline. Accordingly, this
Court will dismiss the complaint as untimely under 42 U.S.C. § 2000e-16(c).
A separate, final order accompanies the Memorandum Opinion.
DATE: July 2, 2014 Ketanji Brown Jackson
KETANJI BROWN JACKSON
United States District Judge
2
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184 Cal.App.4th 408 (2010)
109 Cal.Rptr.3d 197
THE PEOPLE, Plaintiff and Respondent,
v.
JEFFREY DANIEL NORTON, Defendant and Appellant.
No. A123659.
Court of Appeals of California, First District, Division Three.
May 5, 2010.
CERTIFIED FOR PARTIAL PUBLICATION[*]
*411 Alex Coolman, under appointment by the Court of Appeal, for Defendant and Appellant.
Edmund G. Brown, Jr., Attorney General, Dane R. Gillette, Chief Assistant Attorney General, Gerald A. Engler, Assistant Attorney General, Martin S. Kaye and Ronald E. Niver, Deputy Attorneys General, for Plaintiff and Respondent.
OPINION
JENKINS, J.
Appellant Jeffrey Daniel Norton entered a plea of no contest and was convicted of a felony offense of domestic violence. He appeals from the judgment of conviction, contending the evidence against him was the product of a warrantless search that violated his Fourth Amendment rights. We affirm the judgment, as we conclude that the evidence was lawfully obtained under the emergency aid exception to the warrant requirement. In addition, we hold that Norton is entitled to additional presentence conduct credit under the 2009 amendments to Penal Code section 4019,[1] as we conclude these amendments should be given retroactive effect.
FACTUAL AND PROCEDURAL BACKGROUND
In September 2008, the district attorney filed a criminal complaint against Norton alleging corporal injury to a cohabitant (§ 273.5, subd. (a)) and criminal threats (§ 422) as felony offenses, and misdemeanor battery (§ 243, subd. (e)(1)). Norton moved to suppress all the evidence against him on Fourth Amendment grounds (§ 1538.5).
The following evidence was presented at the preliminary hearing: Norton had been dating M.D. for six months and stayed periodically at her apartment. On September 24, 2008, at approximately 11:30 p.m., M.D. called police to report that her boyfriend was vandalizing her car. Fairfield police officers Jeremy Nipper and Chad Rowlett were dispatched to her residence and arrived within five minutes of her call. Officer Nipper did an area check but saw no one on the street and decided to obtain additional information from M.D. After the officer knocked on the door of M.D.'s apartment five or six times, Norton answered the door. Norton appeared agitated and said, "What the fuck do you want?" When Officer Nipper asked if M.D. was in the *412 apartment, Norton claimed she was asleep inside. The officer looked past Norton into the apartment but could not see anyone, as the apartment was dark.
Officer Nipper testified that he became concerned about M.D.'s welfare "because I couldn't see her ... [and] [Norton] was in an agitated state." The officer explained: "She had called about a vandalism, and the person responsible was her boyfriend. Upon contact, trying to get additional information as to his whereabouts, he answers the door, and that just raises my suspicion as to her welfare not knowing what had taken place prior to her reporting this vandalism or what could have occurred." Accordingly, after asking Norton to step outside and sit on the porch, Officer Nipper called into the apartment for M.D., but she did not respond. As the officer continued to call into the apartment, Norton grew more and more agitated, believing police were going inside. Norton asked why the officers were there, why they needed to go inside the apartment, and why they wanted to talk to M.D. As Norton's agitation mounted, he stopped complying with the direction to sit still and remain on the porch, so the officers handcuffed him to ensure their own safety. Officer Nipper noted a strong odor of alcohol on Norton.
Receiving no response from M.D., Officer Nipper called for backup so he and Officer Rowlett could go inside the apartment without leaving Norton unattended. While awaiting backup, Officer Nipper continued to call out for M.D., but she did not respond. Backup arrived within five minutes, and Officer Nipper entered M.D.'s apartment with Officer Rowlett. Officer Nipper discovered M.D. in the rear bedroom, crouching behind the bed where her young children were sleeping. Her legs were covered in bruises, and she appeared nervous and scared. She wanted to know where Norton was and did not want him to hear her talking to the officers. After Officer Nipper assured M.D. that Norton was outside with other officers, she explained that Norton had been drinking for the past few days and assaulted her numerous times during this period, hitting and kicking her repeatedly. M.D. said Norton told her during an argument, "Try driving offor try driving off now or try starting [your car] now." Believing he had vandalized her car, M.D. called the non-emergency number for police. She said she was afraid of Norton because he told her, "If you call the police, I'll fucking kill you."
A superior court judge acting as the magistrate (the magistrate) denied Norton's motion to suppress M.D.'s statements, the officers' observations regarding her physical condition, and her testimony, which Norton characterized as "exploitation of the illegal entry to the residence." The magistrate found that M.D.'s vandalism call implicating her boyfriend "is an inherently suspicious circumstance all by itself about what's going on at that moment [in] the relationship between these two parties." The magistrate observed, *413 further, that within five minutes of the call, Officer Nipper was confronted at the door by Norton with an "inherently pugnacious" response and obvious agitation. Noting Norton's increasing agitation as Officer Nipper called into the apartment, and the officer's inability to see or obtain a response from M.D., the magistrate concluded, "[A]ll of that adds up to an exigent circumstance that authorizes at that moment the officer to do a welfare check inside the house under the officer's community caretaking function." The magistrate held Norton to answer on all three counts and added another count of corporal injury to a cohabitant based on M.D.'s testimony. Norton was charged accordingly, in an information that asserted three prior convictions and two prior prison terms as sentence enhancements. He entered a plea of not guilty on all counts and denied the enhancement allegations.
In the trial court, Norton moved to set aside the information on Fourth Amendment grounds (§ 995), effectively seeking review of the magistrate's ruling regarding the validity of the search. Norton contended he had been committed without probable cause, as the only evidence against him was the product of an unconstitutional search. The trial court denied the motion. Shortly thereafter, Norton pleaded no contest to one count of corporal injury to a cohabitant (§ 273.5, subd. (a)), and the remaining counts and enhancement allegations were dismissed under the plea agreement. On December 17, 2008, the trial court sentenced Norton to the low term of two years and awarded him 127 days of presentence credit, consisting of 85 days of actual time in local custody and 42 days of conduct credit under former section 4019. Norton filed a timely notice of appeal from the judgment of conviction.
In October 2009, during the pendency of Norton's appeal, the Legislature amended section 4019 to afford additional presentence conduct credit to qualified prisoners. (Stats. 2009-2010, 3d Ex. Sess., ch. 28, § 50.) These amendments took effect on January 25, 2010, after submission of Norton's appeal but before it was decided. (Gov. Code, § 9600.) The next day, he filed a supplemental brief asking this court to vacate the submission to consider his entitlement to an additional 42 days of presentence conduct credit under section 4019, as amended, for a total of 169 days of presentence credit. We vacated the submission and requested supplemental briefing from the Attorney General on this issue. The Attorney General complied with our request, contending in his supplemental brief that Norton is not entitled to additional conduct credit because the amendments to section 4019 do not apply retroactively.
*414 DISCUSSION
I. The Evidence Against Norton Was the Product of a Lawful Search.[*]
II. Norton Is Entitled to Additional Credit Under Section 4019, As Amended.
A. The 2009 Amendments to Section 4019
(1) Under section 2900.5, a criminal defendant is entitled to credit against his term of imprisonment for all days he spends in custody, "including days credited to the period of confinement pursuant to Section 4019 ...." (§ 2900.5, subd. (a).) Section 4019 provides the method of calculating the credit to which a prisoner is entitled against his sentence for good behavior and work performance (conduct credit), based on his time in local custody after arrest and before sentence is imposed on a felony conviction.[8] (§ 4019, subd. (a)(4).) Under former section 4019, which was in effect when Norton was sentenced, a prisoner who had "satisfactorily complied with the reasonable rules and regulations ..." and had not "refused to satisfactorily perform labor as assigned ..." was entitled to two days of conduct credit for every four days spent in local custody. (Former § 4019, subd. (f) [prisoners are deemed to have served six days for every four days in actual custody]; see People v. Bravo (1990) 219 Cal.App.3d 729, 732 [268 Cal.Rptr. 486].) Applying this formula, the trial court awarded Norton 42 days of conduct credit for the 85 days he spent in local custody before sentencing. The following year, the Legislature amended section 4019, doubling the rate at which qualified prisoners accrue presentence conduct credit. (Stats. 2009-2010, 3d Ex. Sess., ch. 28, § 50.) Under section 4019 as amended, prisoners who are not required to register as sex offenders (§ 290 et seq.), were not committed for a serious felony (§ 1192.7), and do not have prior convictions for a serious felony (§ 1192.7) or a violent felony (§ 667.5) are entitled to two days of conduct credit for every two days they spend in local custody. (§ 4019, subd. (f) [qualified prisoners are deemed to have served four days for every *415 two days in actual custody].)[9] Norton contends he is entitled to 42 days of additional presentence conduct credit under the amended statute.
In considering whether Norton is entitled to the additional credit he seeks, the determinative issue is whether the amendments to section 4019 should be given retroactive application.[10] If these provisions operate retroactively, they apply to all qualified prisoners, including Norton, whose judgments of conviction are not yet final. (People v. Vieira (2005) 35 Cal.4th 264, 306 [25 Cal.Rptr.3d 337, 106 P.3d 990].)[11]
B. The Amendments Apply Retroactively Absent Clear Prospective Intent.
(2) "To ascertain whether a statute should be applied retroactively, legislative intent is the `paramount' consideration." (People v. Nasalga (1996) 12 Cal.4th 784, 792 [50 Cal.Rptr.2d 88, 910 P.2d 1380] (Nasalga).) Whether the Legislature intended a statute to operate retroactively is a question of law that we decide independently. (In re Chavez (2004) 114 Cal.App.4th 989, 994 [8 Cal.Rptr.3d 395].) In this case, the Legislature did not expressly state whether it intended that the amendments to section 4019 be given retroactive effect. We therefore look to other factors to discern legislative intent. (In re Estrada (1965) 63 Cal.2d 740, 744 [48 Cal.Rptr. 172, 408 P.2d 948] (Estrada).) We begin by considering the relevant principles, cited by each of the parties, that govern our analysis in this regard. The Attorney General relies on section 3 in contending we must presume the amendments to section 4019 were intended to apply prospectively only, absent express legislative intent or a "clear and unavoidable implication" to the contrary. (§ 3 ["No part of [the Penal Code] is retroactive, unless expressly so declared."].) Under section 3, "`[a] new statute is generally presumed to operate prospectively absent an express declaration of retroactivity or a clear and compelling implication that the Legislature intended otherwise. [Citation.]'") (People v. Alford (2007) 42 Cal.4th 749, 753 [68 Cal.Rptr.3d 310, 171 P.3d 32].) Norton maintains, however, relying on Estrada and its progeny, that "[a]bsent a saving clause, a *416 criminal defendant is entitled to the benefit of a change in the law during the pendency of his appeal." (People v. Rossi (1976) 18 Cal.3d 295, 299-300 [134 Cal.Rptr. 64, 555 P.2d 1313]; People v. Babylon (1985) 39 Cal.3d 719, 722 [216 Cal.Rptr. 123, 702 P.2d 205]; People v. Wright (2006) 40 Cal.4th 81, 90 [51 Cal.Rptr.3d 80, 146 P.3d 531], relying on People v. Trippet (1997) 56 Cal.App.4th 1532, 1544-1545 [66 Cal.Rptr.2d 559].) As the Attorney General concedes, the court in Estrada carved out an exception to section 3 when the Legislature enacts a provision lessening punishment: "`[W]here the amendatory statute mitigates punishment and there is no saving clause, the rule is that the amendment will operate retroactively so that the lighter punishment is imposed'" (the rule in Estrada). (See Estrada, supra, 63 Cal.2d at p. 748.) The Attorney General contends the rule in Estrada does not apply here. The primary question before us, therefore, is whether the general presumption of prospectivity or the rule in Estrada controls our construction of section 4019, as amended.
(3) In Estrada, the court explained: "[Section 3] simply embodies the general rule of construction, coming to us from the common law, that when there is nothing to indicate a contrary intent in a statute it will be presumed that the Legislature intended the statute to operate prospectively and not retroactively. That rule of construction, however, is not a straitjacket. Where the Legislature has not set forth in so many words what it intended, the rule of construction should not be followed blindly in complete disregard of factors that may give a clue to the legislative intent." (Estrada, supra, 63 Cal.2d at p. 746.) The court emphasized that section 3 "is to be applied only after, considering all pertinent factors, it is determined that it is impossible to ascertain the legislative intent." (Estrada, at p. 746.) In considering an amendment reducing the penalty for a prison escape, the court concluded "the Legislature must have intended that the amendatory statute should operate in all cases not reduced to final judgment at the time of its passage." (Ibid.) The court reasoned: "When the Legislature amends a statute so as to lessen the punishment[,] it has obviously expressly determined that its former penalty was too severe and that a lighter punishment is proper as punishment for the commission of the prohibited act. It is an inevitable inference that the Legislature must have intended that the new statute imposing the new lighter penalty now deemed to be sufficient should apply to every case to which it constitutionally could apply." (Id. at p. 745.) In other words, "`[a] legislative mitigation of the penalty for a particular crime represents a legislative judgment that the lesser penalty or the different treatment is sufficient to meet the legitimate ends of the criminal law ...,'" and when a lesser penalty has been deemed sufficient to satisfy the public interest, the Legislature obviously intends that no prisoner remain subject to the original, greater penalty. (Ibid.; see Nasalga, supra, 12 Cal.4th at p. 792 ["`Ordinarily, when an amendment lessens the punishment for a crime, one may reasonably infer the Legislature *417 has determined imposition of a lesser punishment on offenders thereafter will sufficiently serve the public interest.'"], citing In re Pedro T. (1994) 8 Cal.4th 1041, 1045 [36 Cal.Rptr.2d 74, 884 P.2d 1022].) In these circumstances, "the rule of construction that statutes are normally to be interpreted to operate prospectively and not retroactively ... has been rebutted." (Estrada, at p. 747; accord, People v. Floyd (2003) 31 Cal.4th 179, 185 [1 Cal.Rptr.3d 885, 72 P.3d 820].) Accordingly, "when the Legislature amends a statute for the purpose of lessening the punishment, in the absence of clear legislative intent to the contrary, a criminal defendant should be accorded the benefit of a mitigation of punishment adopted before his criminal conviction became final." (In re Chavez, supra, 114 Cal.App.4th at p. 999.)
Thus, if section 4019, as amended, constitutes an "amendatory statute" that "mitigates punishment" within the meaning of Estrada, it will be given retroactive effect unless the Legislature has "clearly signal[ed] its intent to make the amendment prospective, by the inclusion of either an express saving clause or its equivalent." (Nasalga, supra, 12 Cal.4th at p. 793.)
(4) We conclude that section 4019, as amended, is a statute lessening punishment, as it operates to reduce the sentences of qualified prisoners. Under section 4019, a prisoner accrues time for good conduct that is "deducted from his or her period of confinement ...." (§ 4019, subds. (b)(1) & (c)(1).) The amendments to this section increase the rate at which a prisoner accrues such time against his sentence, and, as the Attorney General concedes, "will necessarily shorten sentences ...." We are not persuaded a provision that necessarily reduces the sentences of qualified prisoners is any less an "amendatory statute that mitigates punishment" simply because it achieves this end by increasing sentencing credits. California courts have not limited Estrada's application to provisions that directly lessen the punishment for a particular offense.[12] Indeed, a majority of Courts of Appeal in California holds that provisions affording or increasing sentencing credit are statutes lessening punishment under Estrada. In People v. Hunter (1977) 68 Cal.App.3d 389, 392-394 [137 Cal.Rptr. 299] (Hunter), the Second District concluded that Estrada is not limited to amendments lessening a maximum sentence and held that amendments to section 2900.5 (custody credits) should be applied retroactively. The court stated: "The 1976 amendment to Penal Code section 2900.5 must be construed as one lessening punishment, as the term is used in Estrada. True, Estrada deals with a statute which lessens the maximum sentence for a particular crime while the amendment to section 2900.5 concerns credit against a lesser sentence imposed as a condition of probation. But in the circumstances which we here consider, the distinction is *418 without legal significance." (Hunter, at p. 393; accord, People v. Sandoval (1977) 70 Cal.App.3d 73, 87 [138 Cal.Rptr. 609]; People v. House (2010) 183 Cal.App.4th 1049 [giving retroactive application to § 4019, as amended].) Relying on Hunter, the Fourth District applied the rule in Estrada to section 4019, as originally enacted, treating its provision of conduct credits as a law "granting amelioration in punishment." (People v. Doganiere (1978) 86 Cal.App.3d 237, 239 [150 Cal.Rptr. 61] (Doganiere).) The Third District and Division Two of this court recently reached the same conclusion in considering the 2009 amendments to section 4019. (People v. Brown (2010) 182 Cal.App.4th 1354, 1363-1364 ["Whatever the ultimate purpose or purposes of the amendment to section 4019, the effect of the amendment is to reduce the overall time of imprisonment, and, thus, the punishment, for those less serious offenders who have demonstrated good behavior while in custody. A prisoner released from prison one day sooner has been punished one day less in prison than he would have been had there not been a change in the law."]; People v. Landon (2010) 183 Cal.App.4th 1096.)
As we conclude that section 4019, as amended, mitigates punishment, Estrada controls. Under Estrada, we deem the Legislature to have found the sentences reduced by the additional conduct credit "sufficient to meet the legitimate ends of the criminal law" for qualified prisoners. (Estrada, supra, 63 Cal.2d at p. 745.) The same "inevitable inference" follows: the Legislature intended the shorter sentences to apply retroactively. (Ibid.)
In so holding, we have considered but respectfully disagree with decisions to the contrary by our colleagues in the Fifth District. In People v. Brunner (1983) 145 Cal.App.3d 761, 764 [195 Cal.Rptr. 367], the Fifth District held an amendment that expressly afforded credit and repealed a statute precluding such credit was not a "statute lessening punishment." We find that this decision lacks persuasive force. The court relied on In re Kapperman (1974) 11 Cal.3d 542 [114 Cal.Rptr. 97, 522 P.2d 657] (Kapperman), which struck down a provision applying a credit statute prospectively (§ 2900.5, subd. (c)) and distinguished cases like Estrada, which "involv[ed] the application to previously convicted offenders of statutes lessening the punishment for a particular offense." (Kapperman, supra, 11 Cal.3d at p. 546.) Kapperman does not hold, however, that Estrada has no application to statutes increasing sentencing credits; the court found Estrada inapposite because section 2900.5, subdivision (c) expressly stated the Legislature's intent. (Kapperman, supra, 11 Cal.3d at p. 546.) To the extent the Kapperman court's emphasis on "punishment" suggests an increase in credit does not lessen punishment, it was not necessary to the court's holding and is therefore dicta. (Ibid.; People v. Nguyen (2000) 22 Cal.4th 872, 879 [95 Cal.Rptr.2d 178, 997 P.2d 493].)
Similarly, in People v. Rodriguez (2010) 183 Cal.App.4th 1 (Rodriguez), the Fifth District held that Estrada did not apply to section 4019, as amended, *419 because "it is not obvious that the Legislature has determined the punishment for [qualified prisoners] was too severe, nor is it an inevitable inference that the Legislature intended its punishment-mitigating provisions to apply [retroactively]." (Rodriguez, at p. 7.) We do not find Rodriguez persuasive. First, the court in that case found it significant that the amendments to section 4019 lessen punishment "by allowing [qualified prisoners] to accrue conduct credits at a greater rate than other felons and not, as in Estrada, by reducing the penalty for a specific offense." (Rodriguez, at p. 8.) As noted above, in our view, this is a distinction without a difference. Second, we believe the court unduly emphasized the incentive effect of conduct credit in distinguishing such credit from "statutes which reduce punishment in other ways" (id. at p. 10) because "`it is impossible to influence behavior after it has occurred'" (id. at p. 8). The relevant question is the Legislature's intent in amending the statute, not the purpose for its initial enactment. In any case, the authority on which the court relied is distinguishable, as it emphasizes the purpose of conduct credit in addressing whether an express provision of prospectivity violated equal protection. (Ibid.; In re Stinnette (1979) 94 Cal.App.3d 800, 804-805 & fn. 3, 806 [155 Cal.Rptr. 912] [holding the credit's incentive purpose provides a reasonable basis for awarding it only prospectively].) The issue here is not whether a rational basis exists for a prospectivity provision, but whether we should infer a retroactive intent in the absence of such a provision.[13] Third, we do not agree that Estrada applies only if "it ... necessarily follow[s] that the Legislature determined the punishment ... was `too severe.'" (Rodriguez, supra, 183 Cal.App.4th at p. 9.) The issue is whether the Legislature has deemed a lesser punishment sufficient (Estrada, supra, 63 Cal.2d at p. 745); the policy reasons for such a finding do not diminish its significance. Finally, we find the court's analysis flawed to the extent it looks to the legislative history in determining whether Estrada applies in the first instance. (Rodriguez, supra, 183 Cal.App.4th at pp. 8-9.) The rule in Estrada turns on a statute's penalty-reducing effect, not a construction of other sources of legislative intent.[14]
*420 (5) Accordingly, we follow the majority of California courts in holding that section 4019, as amended, constitutes an amendatory statute mitigating punishment under Estrada. We believe this is the better view, as it adheres most closely to the holding in Estrada and the reasoning on which the court relied in that case.
Having concluded under Estrada that the general presumption of prospectivity has been rebutted, we must give retroactive effect to the amendments to section 4019 unless the Attorney General has shown a clear legislative intent of prospective application. (Estrada, supra, 63 Cal.2d at p. 748; In re Chavez, supra, 114 Cal.App.4th at p. 999; Nasalga, supra, 12 Cal.4th at p. 793 [burden to show "`the Legislature [has] demonstrate[d] its intention [to apply the amendments prospectively] with sufficient clarity that a reviewing court can discern and effectuate it'"], quoting In re Pedro T., supra, 8 Cal.4th at p. 1049.)[15] As the Attorney General does not contend a clear intent of prospectivity exists, confining his arguments to whether the presumption of prospectivity applies in the first instance, we hold that section 4019, as amended, operates retroactively. The statute, as amended, reflects a legislative policy decision that, in light of the budget crisis, the sentences reduced by additional conduct credit are sufficient for qualified prisoners and that the lesser punishment was intended to apply to "every case to which it constitutionally could apply...." (Estrada, supra, 63 Cal.2d at p. 745.)[16]
Accordingly, under section 4019, as amended, Norton is deemed to have served four days for every two days in local custody and is therefore entitled to a total of 84 days of conduct credit. (People v. Fry (1993) 19 Cal.App.4th 1334, 1341 [24 Cal.Rptr.2d 43].) The trial court awarded him 42 days of conduct credit under former section 4019, so he is entitled to an additional 42 days of conduct credit, for a total of 169 days of presentence credit.
*421 DISPOSITION
The judgment is affirmed. The matter is remanded to the trial court with instructions to amend the abstract of judgment to reflect the additional credit to which Norton is entitled and to deliver a certified copy of the amended abstract of judgment to the Department of Corrections and Rehabilitation.
McGuiness, P. J., and Pollak, J., concurred.
NOTES
[*] Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is certified for publication with the exception of part I. of the Discussion.
[1] All further statutory references are to the Penal Code unless otherwise specified.
[*] See footnote, ante, page 408.
[8] Section 4019 also provides credit for time spent in local custody (1) "under a judgment of imprisonment" in a criminal proceeding; (2) as a condition of probation after sentence is suspended; and (3) for a definite period for contempt in a non-criminal proceeding. (§ 4019, subd. (a)(1)-(3).) We limit our analysis to how the 2009 amendments affect the presentence conduct credits of state prison inmates (§ 4019, subd. (a)(4)).
[9] Prisoners within the exempt classes (i.e., sex offenders, serious or violent felons) will continue to receive two days credit for every four days in local custody. (§ 4019, subds. (b)(2), (c)(2) & (f) ["a term of six days will be deemed to have been served for every four days spent in actual custody ..."].)
[10] The Attorney General does not contend Norton is a sex offender or a serious or violent felon, ineligible for additional credit under section 4019, as amended. Accordingly, we assume Norton is otherwise qualified for additional credit under section 4019, as amended, and consider only whether the amended statute is retroactive in its application.
[11] "[F]or the purpose of determining retroactive application of an amendment to a criminal statute, a judgment is not final until the time for petitioning for a writ of certiorari in the United States Supreme Court has passed." (People v. Vieira, supra, 35 Cal.4th at p. 306.)
[12] See, e.g., Nasalga, supra, 12 Cal.4th at page 795 (increasing the threshold for a sentence enhancement); People v. Vieira, supra, 35 Cal.4th at pages 305-306 (making a restitution fine "`subject to the defendant's ability to pay'").
[13] For the same reasons, we also reject the Rodriguez court's distinction between conduct credit and custody creditthe ground on which it distinguished Hunter, supra, 68 Cal.App.3d 389, and on which the Attorney General contends the reasoning in Doganiere, supra, 86 Cal.App.3d at page 240 is "unsound." (Rodriguez, supra, 183 Cal.App.4th at pp. 9-10 [distinguishing Hunter because it addressed custody credit, which was constitutionally required, rather than an incentive for good conduct].)
[14] For the same reason, we reject the Attorney General's argument that the presumption of prospectivity applies because the legislative history suggests a prospective intent. We find no merit in this contention in any case. The amendments to section 4019 were adopted as part of Senate Bill No. 3X 18 (2009-2010 3d Ex. Sess.). which was introduced at a special session called by the Governor on December 19, 2008, in response to a fiscal emergency. (Stats. 2009-2010, 3d Ex. Sess., ch. 28, § 50; see Governor's Proclamation to Leg., Sen. Daily J., Jan. 5, 2009, pp. 2-4.) It is evident the Legislature carefully crafted the bill to reduce prison populations, without compromising public safety. (Sen. Rules Com., Off. of Sen. Floor Analyses, Unfinished Business, Analysis of Sen. Bill No. 3X 18 (2009-2010 3d Ex. Sess.) as amended Aug. 31, 2009, p. 1 [Sen. Bill 3X 18 "makes changes related to public safety necessary to implement the Budget Revisions of the 2009 Budget."].) The bill provides early release to low-risk prisoners, reduces the number of new inmates by raising the felony property crime thresholds, and creates programs to reduce the number of failed probationers and return parolees. These measures serve a fiscal purpose, not a penological one, as the Attorney General contends, and we see no indication the additional conduct incentive provided by section 4019, as amended, is anything more than an incidental benefit.
[15] There is no saving clause, within the meaning of Estrada, that "expressly provide[s] that the old law should continue to operate as to past acts, so far as punishment is concerned." (Estrada, supra, 63 Cal.2d at p. 747.)
[16] In light of our conclusion in this regard, we need not decide whether limiting section 4019, as amended, to prospective application would violate equal protection.
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722 N.W.2d 400 (2006)
2006 WI App 194
McFAUL v. MARTINSEN.
No. 2005AP2373.
Wisconsin Court of Appeals.
August 29, 2006.
Unpublished opinion. Affirmed.
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 18-1527
In re: CARLOS BROWN,
Petitioner.
On Petition for Writ of Mandamus from the United States District Court for the District of
Maryland, at Greenbelt. (8:17-po-07283-TMD-1)
Argued: March 20, 2019 Decided: July 26, 2019
Before MOTZ, AGEE and WYNN, Circuit Judges.
Petition for writ of mandamus granted by published opinion. Judge Agee wrote the opinion,
in which Judge Motz and Judge Wynn joined.
ARGUED: Victor Darrel Stone, MARYLAND CRIME VICTIMS’ RESOURCE
CENTER, INC., Upper Marlboro, Maryland, for Petitioner. Jason Daniel Medinger,
OFFICE OF THE UNITED STATES ATTORNEY, Baltimore, Maryland; Cullen Oakes
Macbeth, OFFICE OF THE FEDERAL PUBLIC DEFENDER, Baltimore, Maryland, for
Respondents. ON BRIEF: Russell P. Butler, MARYLAND CRIME VICTIMS’
RESOURCE CENTER, INC., Upper Marlboro, Maryland, for Petitioner. Robert K. Hur,
United States Attorney, Jane F. Nathan, Assistant United States Attorney, OFFICE OF
THE UNITED STATES ATTORNEY, Baltimore, Maryland, for Respondent United
States of America. James Wyda, Federal Public Defender, Baltimore, Maryland, Paresh
S. Patel, Assistant Federal Public Defender, OFFICE OF THE FEDERAL PUBLIC
DEFENDER, Greenbelt, Maryland, for Respondent Joyce Boone.
AGEE, Circuit Judge:
In June 2017, Joyce Boone injured Carlos Brown in a car accident she caused while
driving under the influence of alcohol. She pleaded guilty to three traffic violations before
the United States magistrate judge and was sentenced to two years’ probation. Brown asked
the court to order restitution as a condition of Boone’s probation, but his request was
denied. He now petitions this Court for a writ of mandamus pursuant to 18 U.S.C.
§ 3771(d)(3). For the reasons stated below, we grant the petition and remand the case.
I.
A.
Brown owned and operated his own electrician’s business at the time of the
accident. In June 2017, he was riding a motorcycle on a federal roadway in Maryland when
Boone ran a red light while operating her vehicle under the influence of alcohol. She
collided with Brown, leaving him with serious injuries that required at least seven surgeries
within one year of the accident. Brown had metal rods installed in various parts of his body
and needed assistive devices to walk. Because of these injuries, Brown alleged that he
became unable to work as an electrician or perform daily activities and was “struggling
physically, mentally, emotionally, [and] financially.” J.A. 39.
2
Boone was later charged with six violations of various federal traffic regulations in
the United States District Court for the District of Maryland. 1 She reached a plea agreement
with the Government and pleaded guilty to three offenses 2: (1) driving with a blood alcohol
concentration of .08 or above in violation of 36 C.F.R. § 4.23(a)(2); (2) failing to obey a
traffic control device in violation of 36 C.F.R. § 4.12; and (3) unsafely operating a motor
vehicle in violation of 36 C.F.R. § 4.22(b)(1). Under the terms of the plea agreement, the
Government agreed to recommend a sentence of probation but make no recommendation
regarding Brown’s claim for restitution as part of Boone’s sentence. The parties proceeded
to a plea hearing, 3 during which the court conducted a plea colloquy and accepted Boone’s
guilty plea.
At the hearing, Brown requested that the court order restitution in the amount of
$18,976 as a condition of Boone’s probation. Specifically, Brown sought restitution for the
deductible of $250 he paid to his vehicle insurance company and his estimated lost wages
for the past seven months, which he calculated at an hourly rate of $22, less the settlement
amount of $30,000 he received from his insurer. To support his restitution request, Brown
1
A violation of the federal traffic regulations is punishable for a term of
imprisonment not exceeding six months, 36 C.F.R. § 1.3; see 18 U.S.C. § 1865(a), and thus
is a Class B misdemeanor, 18 U.S.C. § 3559 (a)(7).
2
Boone’s proceedings were before the magistrate judge because she was charged
with petty offenses, see 18 U.S.C. § 19 (identifying a Class B misdemeanor as a “petty
offense”), and magistrate judges have authority “to dispose of cases involving petty
offenses . . . committed by both youth offenders and adults,” United States v. Snow, 748
F.2d 928, 931 (4th Cir. 1984).
3
The magistrate judge set a bench trial for February 1, 2018. On that day, the
Government notified the court that the parties reached a plea agreement, which converted
the scheduled trial into a plea hearing.
3
provided personal and familial statements about his injuries and an October 2017 letter
from his physician stating that he would not be able to work full-time for one to one-and-
a-half years after the accident. Brown explicitly declined to seek restitution for his medical
bills or future lost wages.
Boone agreed that the $250 deductible was an appropriate part of a restitution award
but objected to Brown’s claim for past lost wages because she contended his supporting
evidence was speculative and not reliable. She asked the court to order a restitution award
of $250, or, in the alternative, schedule a hearing as to any other proper amounts, although
she believed the issue of restitution “would all get flushed out in the civil proceedings
through discovery where it should be flushed out. Not here [in] a criminal magistrate
court.” J.A. 52. At that point, the court noted that Brown “got serious injuries [and] has had
serious medical injuries in the past. It sounds like more surgery is down the road, lost
wages, children. [T]his is not something I can decide today.” J.A. 60–61. The court
declined to order restitution at that time, stating that Brown’s case was “extraordinarily
unusual,” J.A. 60, but ordered a presentence report directing the probation officer to
examine the issue of restitution. The court scheduled a sentencing hearing for April 2018.
Prior to the sentencing hearing, Brown filed an amended request seeking restitution
in the amount of $19,040.32 solely to cover his past lost wages. To support the request, he
submitted his 2017 federal tax return, his own affidavit detailing his physical struggles, and
the letter from his physician. In the letter, the doctor noted that Brown was using a walker
and needed physical therapy twice per week for the next six months. The physician further
stated “[i]f he is able to resume his regular full-time work as an electrician, it will likely be
4
1[ to ]1-1/2 years from the time of his injury.” J.A. 75. There was no evidence offered as
to whether Brown could work part-time as an electrician or was capable of maintaining
some other form of full- or part-time employment.
At the sentencing hearing, Brown reiterated his request for restitution, stating that
he would not pursue any civil action against Boone. She continued to oppose the request,
arguing that the court should “stay out of it” because Brown’s restitution request “is [better
suited for] civil litigation.” J.A. 109. Further, Boone challenged the reliability of the
October 2017 letter from Brown’s doctor and questioned why Brown could not find other
employment and thereby mitigate damages. She also argued that the court may not award
restitution here because her conduct underlying the offenses to which she pleaded guilty
did not cause Brown’s injury. 4 Boone asked the court to place her on one year of probation
and not to order restitution as a condition of probation.
B.
The court sentenced Boone to two years’ probation but declined to order restitution,
largely for two reasons: Brown lacked sufficient evidence to support his restitution request
and the sentencing forum was unsuitable for determining the requested restitution. First,
even though the court acknowledged that it had discretion to order restitution and “no
reason to not believe Mr. Brown,” J.A. 126, it rejected Brown’s request, stating:
although there is evidence of lost wages through Mr. Brown’s own testimony
and tax return, in my opinion there has got to be more than simply the
victim’s statement to award restitution in the amount of $20,000. . . . . [T]his
4
Boone has abandoned this claim on appeal and does not contest that her conduct
underlying the convicted offenses did cause Brown’s injury.
5
is misdemeanor court. This court generally does not deal with restitution, and
if we are going to deal with restitution, it is not in this amount.
J.A. 127. The court also discussed Brown’s future medical bills that were approximately a
“half a million dollars,” J.A. 128, although Brown did not request restitution for those
expenses.
Next, based on the proffered evidence and Boone’s opposition, the court determined
that under the circumstances of this case it was not the appropriate forum to determine
restitution and referenced United States v. Fountain in support of its decision. See 768 F.2d
790, 801–02 (7th Cir. 1985) (upholding the district court’s decision not to award restitution
for future lost wages because “the calculation of lost future earnings involves the difficult
problem of translating an uncertain future stream of earnings into a present value”). The
court then stated, “[i]n a criminal context the Court will put its foot into the waters of
restitution if things are readily and accurately ascertainable uncontested. We are contested
here, and that is why this is just so not the forum to be dealing with these kinds of figures.”
J.A. 129. The court also noted that “to order restitution in the amount that is being requested
with the evidence that would give me the level of confidence and comfort in that I am being
accurate would, in my opinion, complicate and prolong the sentencing process.” J.A. 130.
The court advised Brown to seek restitution in a civil suit so that he could conduct
discovery and deal with “big figures.” J.A. 129.
6
From the denial of his request for restitution, Brown timely petitions for a writ of
mandamus as authorized by the Crime Victims’ Rights Act (“CVRA”), 18 U.S.C. § 3771. 5
Boone opposes the petition, and the Government, in accordance with its obligation under
the plea agreement, takes no position either for or against a restitution award. We have
jurisdiction under § 3771(d)(3) and grant the petition for the reasons that follow. 6
II.
On appeal, Boone makes two arguments: that (1) we lack subject matter jurisdiction
to review Brown’s petition and (2) even if we have jurisdiction, the petition lacks merit.
We examine and reject each argument in turn.
A.
Section 3771(d)(3) governs our jurisdiction over Brown’s petition, as it allows a
crime victim to “petition the court of appeals for a writ of mandamus” if “the district court
denies the [restitution request].” § 3771(d)(3) (emphasis added). Boone asserts that the
statute does not authorize our review of Brown’s petition because it challenges the decision
made by a magistrate judge, not a district court judge. She argues that by using the specific
5
The CVRA “protect[s] victims and guarantee[s] them some involvement in the
criminal justice process” by providing them with “notice of any proceedings, the right to
attend those proceedings, the right to confer with the prosecutor, and the right to be
‘reasonably heard at any public proceeding in the district court involving release, plea,
sentencing, or parole proceeding.’” United States v. Moussaoui, 483 F.3d 220, 234 (4th
Cir. 2007) (quoting 18 U.S.C. § 3771(a)).
6
We note that despite Boone’s concession that restitution for the $250 insurance
deductible was appropriate, the court declined to award that amount. Brown makes no
claim on appeal that the failure to make that award was erroneous.
7
term “district court,” § 3771(d)(3) “only authorizes a victim to challenge a district court’s
denial of a restitution request—not a magistrate court’s denial of the same.” Response Br.
12. In effect, Boone argues that a magistrate court does not fall within the meaning of
“district court” under § 3771(d)(3) because it is separate and different from a district court.
Arguing that Congress’ choice of the term “district court” in § 3771(d)(3) precludes
our review of magistrate judges’ decisions, Boone cites to 18 U.S.C. § 3402 in support.
This general appeal statute states, “[i]n all cases of conviction by a United States magistrate
judge an appeal of right shall lie from the judgment of the magistrate judge to a judge of
the district court of the district in which the offense was committed.” § 3402. Boone asserts
that only the Government can appeal a magistrate judge’s denial of a restitution request to
a district judge under § 3402 and, if the district judge denies the appeal, can proceed to a
court of appeals under § 3771(d)(3). According to Boone, Congress intentionally
distinguished the magistrate judge from the district judge in § 3402 and, had it intended a
crime victim to have any rights to directly petition a court of appeals for a writ of
mandamus based on a magistrate judge’s denial of restitution, Congress would have used
the term “magistrate” in § 3771(d)(3). Thus, in Boone’s view, where the Government takes
no position on a petition for a writ of mandamus and the district court judge has not
reviewed the magistrate judge’s denial, we lack subject matter jurisdiction to consider the
petition. We disagree.
Boone’s argument is erroneous for at least three reasons. First, her reading of
“district court” in § 3771(d)(3) is inconsistent with the relevant statutory definitions. Under
18 U.S.C. § 3001, the statutes in Part II of Title 18, including § 3771, are governed by the
8
applicable definitional rules of the Federal Rules of Criminal Procedure. Pursuant to Rule
1, “‘[c]ourt’ means a federal judge performing functions authorized by law.” Fed. R. Crim.
P. 1(b)(2). “‘Federal judge,” in turn, is defined to include “a magistrate judge.” Fed. R.
Crim. P. 1(b)(3)(B). The Advisory Committee intentionally crafted this definition to
“reflect[] the current understanding that magistrate judges act as the ‘court’ in many
proceedings” because it found the term “court’s” synonymous use with “‘district judge’”
to be “misleading or unduly narrow” and not to “cover the many functions performed by
magistrate judges.” Fed. R. Crim. P. 1(b)(2) advisory committee’s note to 2002
amendment. This principle must be incorporated into the definition of “district court” in
§ 3771 because Rule 1 governs the statute’s definitions. See id. Thus, by definition, a
“district court” under § 3771(d)(3) includes a magistrate judge. Boone’s argument ignores
both the definitional structure for § 3771 imposed through § 3001 and Congress’ decision
not to alter that structure for purposes of § 3771.
Second, Boone misstates the scope of § 3402, which deals with “an appeal of right”
“from the judgment of the magistrate judge to a judge of the district court” in “all cases of
conviction by a United States magistrate judge.” 18 U.S.C. § 3402. The case before us is
not such an appeal. It is a fundamentally different proceeding by the crime victim—not the
defendant—and thus does not fall under § 3402 as an appeal from a “case[ ] of conviction
by a United States magistrate judge.” § 3402; see In re Murphy-Brown, LLC, 907 F.3d 788,
793 (4th Cir. 2018) (“[W]rits of mandamus function differently from ordinary
appeals. . . .”).
9
Under the plain terms of § 3771(d)(3), it is the “movant” who “may petition the
court of appeals for a writ of mandamus” “[i]f the district court denies the relief sought.”
§ 3771(d)(3). Brown is the “movant” under § 3771(d)(3) and is clearly accorded the right
to petition under the statute. Congress’ specific grant of this right to a “movant” is unrelated
to any appeal under § 3402 and is plainly not a right granted to a defendant or limited to
the Government. Congress has made this distinction clear by enacting § 3771(d)(4), which
“simultaneously affords the government with the ability to obtain ordinary appellate review
of the [restitution] decision.” See In re Antrobus, 519 F.3d 1123, 1129 (10th Cir. 2008). By
expressly providing only the Government, not a “movant,” with ordinary direct appeal
rights, Congress has distinguished the appellate rights for mandamus review afforded to a
“movant” under § 3771(d)(3) from the ordinary appeal rights afforded to a party or the
Government under § 3771(d)(4) which would be subject to § 3402. See Sosa v. Alvarez-
Machain, 542 U.S. 692, 711 n.9 (2004) (“[W]hen the legislature uses certain language in
one part of the statute and different language in another, the court assumes different
meanings were intended.” (internal quotation marks omitted)).
As a result, Boone’s position simply ignores Congress’ specific choice of “a
mandamus petition [to a court of appeals] as the appropriate vehicle for appellate review
of an order denying a crime victim’s assertion of a right protected thereunder.” In re Doe,
264 F. App’x 260, 262 (4th Cir. 2007); see Fed. R. Crim. P. 60(b)(5) (stating that a crime
victim may move to reopen a plea or sentence if, among other things, “the victim petitions
the court of appeals for a writ of mandamus within 10 days after the denial, and the writ is
granted”); United States v. Monzel, 641 F.3d 528, 540 (D.C. Cir. 2011) (“Since the
10
enactment of the CVRA, every circuit . . . has held that mandamus is a crime victim’s only
recourse for challenging a restitution order”).
Brown, as the victim, has no right to contest the propriety of Boone’s conviction.
See United States v. Aguirre-Gonzalez, 597 F.3d 46, 53 (1st Cir. 2010) (“[C]rime victims
are not parties to a criminal sentencing proceeding. . . . . Thus, the baseline rule is that
crime victims, as non-parties, may not appeal a defendant’s criminal sentence.”). Instead,
by petitioning this Court for a writ of mandamus, Brown is asserting his separate statutory
right to restitution which Congress has afforded him under the CVRA. See id. at 54
(holding that although “crime victims have no right to directly appeal a defendant’s
criminal sentence,” “the CVRA expressly provides [them] with a limited avenue to
challenge the restitution component of a defendant’s sentence through a petition for a writ
of mandamus”). Brown’s § 3771(d)(3) petition thus has no relation to an appeal under
§ 3402 and the distinctions that statute draws between a magistrate judge and a district
judge do not apply here.
Last, Boone’s interpretation of § 3771(d)(3) creates a conflict with other statutes
governing magistrate judges and ignores Congress’ policy choices behind those statutes.
Her approach violates canons of statutory interpretation that require courts to “reflect,
rather than distort, the policy choices that elected representatives have made” in
interpreting statutes, Almendarez-Torres v. United States, 523 U.S. 224, 238 (1998), and
to avoid “reading conflicts into statutes,” Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1630
(2018). In following these doctrines, we must reject Boone’s argument.
11
Our analysis is derived from two statutes under the Federal Magistrates Act, 28
U.S.C. § 636, and 18 U.S.C. § 3401, which create and govern the office of magistrate judge
and demonstrate a magistrate judge’s role as an arm of the district court. The Federal
Magistrates Act invests certain judicial powers in magistrate judges, including the powers
“to enter a sentence for a petty offense” and “to conduct trials under section 3401, title 18,
United States Code, in conformity with and subject to the limitations of that section”
“within the district in which sessions are held by the court that appointed the magistrate
judge.” 28 U.S.C. § 636(a). In turn, § 3401(b) provides, “[a]ny person charged with a
misdemeanor, other than a petty offense may elect . . . to be tried before a district judge for
the district in which the offense was committed.” 18 U.S.C. § 3401(b) (emphasis added).
This section indicates that a defendant who is charged with a petty offense, like Boone,
may not elect to be tried before a district judge and must proceed before a magistrate judge
unless a district judge chooses to preside in the case.
This statutory scheme reflects “Congress’ perception that the assistance of federal
magistrates was a necessary measure to ensure that the already severe pressures on the
federal district courts do not become overwhelming.” United States v. Raddatz, 447 U.S.
667, 713 (1980) (Marshall, J., dissenting). By enacting the Federal Magistrates Act,
The Congress . . . manifested its intention to create a judicial officer and to
invest in him the power to furnish assistance to a judge of the district court.
The magistrate was given jurisdiction over petty criminal offenses and the
Act also gave each district court the discretionary power to use the magistrate
to assist a district court judge . . .
....
[T]he Congress clearly indicated its intent that the magistrate should be a
judicial officer whose purpose was to assist the district judge to the end that
the district judge could have more time to preside at the trial of cases having
12
been relieved of part of his duties which required the judge to personally hear
each and every pretrial motion or proceeding necessary to prepare a case for
trial.
H.R. Rep. No. 94-1609, at 6 (1976), as reprinted in 1976 U.S.C.C.A.N. 6162, 6166
(emphasis added). Pursuant to this clear congressional intent, magistrate judges “are
appointed and subject to removal by Article III judges,” Peretz v. United States, 501 U.S.
923, 937 (1991), and “district judges retain plenary authority over when, what, and how
many pretrial matters are assigned to magistrates,” Raddatz, 447 U.S. at 685 (Blackmun,
J., concurring). Thus, magistrate judges, as “competent and impartial assistants” of district
judges, are an integral part of a district court. Id. at 686.
Based on this legislative history and the statutory scheme governing magistrate
judges, we conclude that a magistrate court is included within the term “district court”
under § 3771(d)(3). See Ali v. Fed. Bureau of Prisons, 552 U.S. 214, 222 (2008) (noting
that courts’ construction of a statutory term must “ensure that the statutory scheme is
coherent and consistent”). Unlike the specific distinction Congress has drawn between the
magistrate judge and the district court judge in § 3402, Congress has made no such
distinction in § 3771 regarding petitions for a writ of mandamus. We see no basis, sub
silentio, to draw such a distinction in the absence of a specific direction from Congress. To
do so would create the absurd result that under § 3771(d)(3), a crime victim could petition
from the denial of restitution if a district judge made the determination but could not do so
if a magistrate judge made the same decision.
Boone’s reading requires that when a magistrate judge declines to award restitution
pursuant to § 636(a) and § 3401 in a petty offense case, a victim cannot exercise his
13
statutory rights under § 3771(d)(3) to seek appellate review of that decision. Boone points
to no legal authority other than her tortured interpretation of § 3771(d)(3), which
effectively negates the specific rights of crime victims guaranteed by the CVRA.
Construing the statutes as Boone proposes directly contradicts Congress’ express,
unambiguous intent that regardless of whether the underlying offense is a petty offense,
“[t]he crime victim or the crime victim’s lawful representative [as well as] the attorney for
the Government may assert” the rights to restitution provided under § 3771. § 3771(d)(1)
(emphasis added).
For all these reasons, we reject Boone’s argument and hold that we have subject
matter jurisdiction over Brown’s petition under § 3771(d)(3).
B.
Next, we address Boone’s argument that the petition lacks merit. In doing so, we
review the lower court’s restitution decision for abuse of discretion. United States v.
Leftwich, 628 F.3d 665, 667 (4th Cir. 2010).
Before analyzing the merits of the petition, we review the scope of the applicable
restitution statutes because “federal courts do not have the inherent authority to order
restitution, but must rely on a statutory source” to do so. United States v. Cohen, 459 F.3d
490, 498 (4th Cir. 2006). Relevant here are two restitution enactments: the Victim and
Witness Protection Act (“VWPA”), 18 U.S.C. § 3663, and the Mandatory Victims
Restitution Act (“MVRA”), 18 U.S.C. § 3663A. 7 These statutes “impose different
7
The CVRA is substantively different from the VWPA and the MVRA in that it
“makes available to crime victims, among other things, procedural mechanisms to assert
14
requirements on the district court when it determines an award of restitution.” Leftwich,
628 F.3d at 667. The key difference between them is that “an award of restitution under
the VWPA is not mandatory,” whereas “the MVRA mandates that the sentencing court
order restitution in the full amount of the victim’s loss when the defendant has been
convicted of certain specified offenses.” Id. at 668. As the parties concede and the lower
court correctly held, the VWPA governs Brown’s restitution request because Boone’s
offenses do not qualify as offenses that warrant mandatory restitution under the MVRA.
Cf. 18 U.S.C. § 3663A(a)(1), (c).
To analyze the applicable restitution statutes, we first examine whether the
sentencing court may award restitution under § 3563(b)(2) because Brown asked that
restitution be imposed as a condition of Boone’s probation. Under this provision, a court
has discretion to order “restitution to a victim of the offense under section 3556” as a
condition of probation. § 3563(b)(2). In turn, § 3556 states that “[t]he court, in imposing a
sentence on a defendant who has been found guilty of an offense . . . may order restitution
in accordance with section 3663” and follow the procedures set forth in § 3664. § 3556.
An award of restitution under § 3663 is discretionary, as this section states that the
court “may order . . . that the defendant make restitution to any victim of [the] offense.”
substantive rights in a defendant’s criminal proceedings and on appeal, including rights as
provided in the VWPA and MVRA.” Aguirre-Gonzalez, 597 F.3d at 48 n.2; see United
States v. Kovall, 857 F.3d 1060, 1065 (9th Cir. 2017) (“The CVRA provides mechanisms
for enforcing a victim’s rights under the Act.”). Thus, the CVRA “provide[s] a right to
petition the court of appeals for mandamus, grant[s] the government express power to
assert crime victims’ rights on appeal, [and] set[s] forth procedures by which victims may
move to reopen sentences,” whereas the VWPA and the MVRA do not. See Monzel, 641
F.3d at 543–44.
15
§ 3663(a)(1)(A) (emphasis added). The court’s discretion under the VWPA, however, is
not unfettered; instead, “[d]iscretion in ordering restitution is circumscribed by the
procedural and substantive protections” of the statute. Leftwich, 628 F.3d at 667 (internal
quotation marks omitted). The court, in “determining whether to order restitution,” must
consider “the amount of the loss sustained by each victim as a result of the offense,” “the
financial resources of the defendant, the financial needs and earning ability of the defendant
and the defendant’s dependents, and such other factors as the court deems appropriate.”
§ 3663(a)(1)(B)(i).
Nonetheless, “[t]o the extent that the court determines that the complication and
prolongation of the sentencing process resulting from the fashioning of an order of
restitution under this section outweighs the need to provide restitution to any victims, the
court may decline to make such an order.” § 3663(a)(1)(B)(ii). Congress adopted this
provision “to prevent sentencing hearings from becoming prolonged and complicated trials
on the question of damages owed the victim,” S. Rep. No. 97-532, at 31 (1982), as
reprinted in 1982 U.S.C.C.A.N. 2515, 2537, and so “that sentencing courts [do] not
become embroiled in intricate issues of proof,” 8 United States v. Reifler, 446 F.3d 65, 136
8
Several decisions cited herein address the complexity exception under the MVRA,
but they are relevant here. Similar to the VWPA, the MVRA exempts sentencing courts
from awarding restitution if “determining complex issues of fact related to the cause or
amount of the victim’s losses would complicate or prolong the sentencing process to a
degree that the need to provide restitution to any victim is outweighed by the burden on the
sentencing process.” 18 U.S.C. § 3663A(c)(3)(B) (emphasis added); cf.
§ 3663(a)(1)(B)(ii). Because the balancing test required under the complexity exception of
the MVRA is substantially similar to that under the VWPA, the decisions interpreting and
applying the MVRA’s complexity exception provide useful guidance in our
§ 3663(a)(1)(B)(ii) analysis. See United States v. Randle, 324 F.3d 550, 556 n.3 (7th Cir.
16
(2d Cir. 2006). Relying primarily on this rationale, the magistrate judge here held that
determining restitution would complicate and prolong the sentencing process and thus
denied Brown’s request for restitution.
In making this determination, the court abused its discretion because it improperly
failed to articulate the balancing analysis as required by § 3663(a)(1)(B)(ii) when
restitution is denied. A court does not properly discharge its duty to conduct “a balancing
test” under § 3663(a)(1)(B)(ii) unless it expressly “weigh[s] the need to provide restitution
to a victim against the burden on the sentencing process posed by determining complex
issues of fact.” United States v. Malone, 747 F.3d 481, 486 (7th Cir. 2014); United States
v. Gushlak, 728 F.3d 184, 192 (2d Cir. 2013) (“[T]he statute explicitly contemplates that
the district court weigh against the burden of ordering restitution the victims’ interests in
receiving restitution.”). In conducting this balancing test, the court must articulate its
analysis because we require “district courts to make specific fact findings on those matters
relevant to application of the VWPA.” United States v. Bruchey, 810 F.2d 456, 458 (4th
Cir. 1987). Thus, in applying § 3663(a)(1)(B)(ii), a court must (1) make fact findings
specific to two statutory factors—“the need to provide restitution to a victim,” and “the
burden on the sentencing process posed by determining complex issues of fact”—and (2)
then explicitly balance these two factors. Malone, 747 F.3d at 486.
2003) (“Because of the similarity of the statutory language in the VWPA and MVRA, court
decisions interpreting the language of the VWPA are helpful in construing the language of
the MVRA.”).
17
The magistrate judge acknowledged Brown’s need for restitution and stated, as to
his proffered proof of lost earnings, “I have no reason to not believe Mr. Brown.” J.A. 126.
The court went on to note, though, that it questioned the sufficiency of Brown’s evidence,
saying, “in my opinion there has got to be more than simply the victim’s statement to award
restitution in the amount of $20,000.” J.A. 127. The magistrate judge then noted Brown’s
extensive medical expenses—although he did not seek restitution for these—and his
disputed claim for lost earnings, and observed, “this is a forum which is so much less
equipped to handle situations like this than a civil proceeding.” J.A. 127.
After discussing case law on the difficulty of calculating lost future earnings, the
court reiterated its concern
about not just lost wages, but about future medical bills, future pain and
suffering, future emotional distress. In a criminal context the Court will put
its foot into the waters of restitution if things are readily and accurately
ascertainable uncontested. We are contested here, and that is why this is just
so not the forum to be dealing with these kinds of figures.
J.A. 129.
The court then quoted the text of § 3663(a)(1)(B)(ii) and concluded:
Mr. Brown is not without his day in court. He has a remedy. He has a civil
remedy. And to order restitution in the amount that is being requested with
the evidence that would give me the level of confidence and comfort in that
I am being accurate would, in my opinion, complicate and prolong the
sentencing process.
. . . I am going to decline to order, as a discretionary condition of
probation, restitution in this matter.
J.A. 130.
While the court found certain facts relating to each of the statutory factors—the
victim’s need for restitution and the burden imposed on the sentencing court—it failed to
18
articulate how it balanced those factors to determine that restitution was unwarranted. By
failing to do so, the court violated its duty under § 3663(a)(1)(B)(ii) to expressly weigh:
the burden of adjudicating the restitution issue against the desirability of
immediate restitution—or otherwise stated, a weighing of the burden that
would be imposed on the court by adjudicating restitution in the criminal
case against the burden that would be imposed on the victim by leaving him
or her to other available legal remedies.
United States v. Kones, 77 F.3d 66, 68–69 (3d Cir. 1996). Put another way, the court abused
its discretion by failing to state why the burden of complexity or delay in sentencing
outweighed Brown’s need for restitution. This abuse of discretion harmed Brown because
he received none of the requested restitution to which he may be entitled under the VWPA.
Accordingly, we grant the petition for mandamus, thereby vacating the order denying
restitution, and remand the case for the magistrate judge to conduct and explain on the
record its balancing analysis in determining whether to award restitution.
C.
In light of some of the court’s remarks and the parties’ arguments on brief, we will
exercise our discretion to address certain issues that are likely to recur upon remand. United
States ex rel. Drakeford v. Tuomey Healthcare Sys., Inc., 675 F.3d 394, 406 (4th Cir. 2012)
(“[W]e note that our precedent is clear that we may address issues that are likely to recur
on remand.”). First, the lower court’s reference to Fountain, 768 F.2d at 801–02, and its
explanation of the difficulty in calculating restitution for future lost earnings, appears to
have limited applicability when, as here, the requested restitution is limited to past lost
earnings. While projecting future losses is inherently speculative, the same concern is
19
absent for earnings already lost. For that reason, Fountain should not be a guiding star for
the lower court’s balancing analysis on remand.
Next, Brown asserts that the sentencing court erroneously considered the
availability of a civil remedy in deciding whether to award restitution. This argument lacks
merit. Other circuits have concluded that in determining whether to deny restitution under
§ 3663(a)(1)(B)(ii), a court may consider the availability of other legal remedies. See
Kones, 77 F.3d at 68–69 (holding that in applying § 3663(a)(1)(B)(ii), a court must
consider “the burden that would be imposed on the victim by leaving him or her to other
available legal remedies”). Specifically, the Tenth Circuit in United States v. Gallant
observed the following:
While the availability of other relief is deemed irrelevant to the process of
calculating the amount of a restitution award [under the MVRA], it is not
necessarily irrelevant to the availability of such an award under § 3663A. The
existence of pending civil litigation may in some cases be relevant to the
balancing test established by [the MVRA’s] complexity exception.
537 F.3d 1202, 1254 (10th Cir. 2008) (final emphasis added). We agree with the Tenth
Circuit’s reasoning and hold that, in considering and balancing the statutory factors under
§ 3663(a)(1)(B)(ii), the court may consider, among other factors, the availability of
alternative civil remedies for Brown’s past lost earnings. That said, the court on remand
“should not place great weight on this factor.” Id. It is merely one factor for the court to
balance and should not be the controlling factor in and of itself. Rather, “the primary
consideration” of the complexity exception “is the burden that calculating restitution would
place on the sentencing process.” Id.
20
Last, the court below referenced Brown’s need for compensation for his medical
expenses despite the fact that Brown specifically denied any claim to medical expenses and
requested restitution only for past lost earnings. In performing its § 3663(a)(1)(B)(ii)
balancing analysis, the court should confine its review to what Brown requested—past lost
earnings. Any consideration of unclaimed medical expenses is irrelevant. 9
III.
For the reasons stated above, Brown’s petition for a writ of mandamus is granted
and the case is remanded to the lower court for further proceedings consistent with this
opinion.
PETITION GRANTED
9
We express no view, and take no position, on whether Brown’s motion for
restitution should be granted. That matter is left to the lower court to determine in a manner
consistent with this opinion on remand.
21
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16-120
Zheng v. Sessions
BIA
Cheng, IJ
A205 432 429
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
2nd day of May, two thousand eighteen.
PRESENT:
JOHN M. WALKER, JR.,
BARRINGTON D. PARKER,
REENA RAGGI,
Circuit Judges.
_____________________________________
HONG TONG ZHENG,
Petitioner,
v. No. 16-120
NAC
JEFFERSON B. SESSIONS III, UNITED
STATES ATTORNEY GENERAL,
Respondent.
_____________________________________
FOR PETITIONER: James A. Lombardi, New York,
New York.
FOR RESPONDENT: Chad A. Readler, Acting Assistant
Attorney General, Derek C. Julius,
Assistant Director, Bernard A.
Joseph, Senior Litigation Counsel,
Office of Immigration Litigation,
United States Department of Justice,
Washington, D.C.
UPON DUE CONSIDERATION of this petition for review of a
Board of Immigration Appeals (“BIA”) decision, it is hereby
ORDERED, ADJUDGED, AND DECREED that the petition for review is
DENIED.
Petitioner Hong Tong Zheng, a native and citizen of the
People’s Republic of China, seeks review of the BIA’s affirmance
of an Immigration Judge’s (“IJ’s”) denial of his application
for asylum, withholding of removal, and relief under the
Convention Against Torture (“CAT”). See In re Hong Tong Zheng,
No. A205 432 429 (B.I.A. Dec. 31, 2015), aff’g No. A205 432 429
(Immig. Ct. N.Y. City Mar. 11, 2014). Under the circumstances
of this case, we review the decision of the IJ as supplemented
by the BIA, see Yan Chen v. Gonzales, 417 F.3d 268, 271 (2d Cir.
2005), applying well-established standards of review, see
8 U.S.C. § 1252(b)(4)(B); Xiu Xia Lin v. Mukasey, 534 F.3d 162,
165-66 (2d Cir. 2008). In so doing, we assume the parties’
familiarity with the underlying facts and procedural history
of this case, which we reference only as necessary to explain
our decision to deny the petition for review.
“Considering the totality of the circumstances, and all
relevant factors, a trier of fact may base a credibility
determination on the demeanor, candor, or responsiveness of the
2
applicant or witness, . . . the consistency between the
applicant’s . . . written and oral statements . . . , the internal
consistency of each such statement, [and] the consistency of
such statements with other evidence of record . . . without
regard to whether an inconsistency, inaccuracy, or falsehood
goes to the heart of the applicant’s claim.” 8 U.S.C.
§ 1158(b)(1)(B)(iii); see Xiu Xia Lin v. Mukasey, 534 F.3d at
163-64. Here, substantial evidence supports the agency’s
determination that Hong Tong Zheng was not credible as to his
claims that Chinese police detained and beat him on account of
his Christianity, and that they continued to look for him
afterwards.
The agency reasonably relied in part on Hong Tong Zheng’s
demeanor, finding his testimony to be rehearsed and evasive.
See 8 U.S.C. § 1158(b)(1)(B)(iii); see also Majidi v. Gonzales,
430 F.3d 77, 81 n.1 (2d Cir. 2005) (recognizing that particular
deference is given to the trier of fact’s assessment of
demeanor). Hong Tong Zheng’s testimony was clear and concise
when questioned by his attorney, but he was often unable to
provide additional details when requested by the IJ or the
government.
3
The agency also found significant inconsistencies and
omissions in Hong Tong Zheng’s testimony. The record supports
those findings, particularly with regard to whether police
looked for Hong Tong Zheng after his release from detention.
Although questioned about his fear of future harm in China, Hong
Tong Zheng only mentioned that police continued to look for him
when asked pointed questions by the IJ. Then, when pressed for
details, his testimony became inconsistent: he first testified
that police looked for him at his father’s house twice, once
in February 2011 and once in April 2011; and he later testified
that he did not know if police visited his father in April. See
Li Hua Lin v. U.S. Dep’t of Justice, 453 F.3d 99, 109 (2d Cir.
2006) (“We can be still more confident in our review of
observations about an applicant’s demeanor where, as here, they
are supported by specific examples of inconsistent
testimony.”).
The agency also reasonably relied on omissions from Hong
Tong Zheng’s written statement and his mother’s letter
regarding whether police had visited his father’s house or were
looking for him. See 8 U.S.C. § 1158(b)(1)(B)(iii); see also
Xiu Xia Lin v. Mukasey, 534 F.3d at 165-67 & n.3. Although
asylum applicants are not required to list every incident or
4
provide every detail in their asylum applications because the
application form provides only limited space, see Pavlova v.
I.N.S., 441 F.3d 82, 90 (2d Cir. 2006), Hong Tong Zheng attached
a detailed written statement of more than two pages to his
application, which included less pertinent information.
Furthermore, his mother’s two-page letter stated that Hong Tong
Zheng would “definitely” be arrested if he returned to China,
C.A.R. 219, yet failed to mention that police had continued to
look for him as support for that assertion. See Xiu Xia Lin
v. Mukasey, 534 F.3d at 165-66 & n.3.
The agency further reasonably declined to give weight to
a handwritten letter from Hong Tong Zheng’s church in China
because the author’s identity was not provided. See Xiao Ji
Chen v. U.S. Dep’t of Justice, 471 F.3d 315, 341-42 (2d Cir.
2006) (holding that determination of the weight of evidence is
largely a matter of agency discretion). Moreover, the letter
omits any mention that Hong Tong Zheng and his fellow church
members were arrested while attending service at the church.
See Xiu Xia Lin v. Mukasey, 534 F.3d at 166-67 & n.3; see also
Biao Yang v. Gonzales, 496 F.3d 268, 273 (2d Cir. 2007) (“An
applicant’s failure to corroborate his . . . testimony may bear
on credibility, because the absence of corroboration in general
5
makes an applicant unable to rehabilitate testimony that has
already been called into question.”). Hong Tong Zheng did not
provide a compelling explanation for this or any of the other
record inconsistencies. See Majidi v. Gonzales, 430 F.3d at
80 (“A petitioner must do more than offer a plausible
explanation for his inconsistent statements to secure relief;
he must demonstrate that a reasonable fact-finder would be
compelled to credit his testimony.” (emphasis in original)
(internal quotation marks omitted)).
In sum, given its findings as to demeanor and
inconsistencies in the record, the agency’s adverse credibility
determination is supported by substantial evidence. See
8 U.S.C. § 1158(b)(1)(B)(iii); Xiu Xia Lin v. Mukasey, 534 F.3d
at 167. That determination is dispositive of Hong Tong Zheng’s
claims for asylum and withholding of removal.1 See Paul v.
Gonzales, 444 F.3d 148, 156-57 (2d Cir. 2006).
For the foregoing reasons, the petition for review is
DENIED. As we have completed our review, any stay of removal
that the Court previously granted in this petition is VACATED,
and any pending motion for a stay of removal in this petition
is DISMISSED as moot. Any pending request for oral argument
1 Hong Tong Zheng does not challenge the denial of CAT relief
or the BIA’s denial of his motion to remand.
6
in this petition is DENIED in accordance with Federal Rule of
Appellate Procedure 34(a)(2), and Second Circuit Local Rule
34.1(b).
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
7
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Matter of Melissa KK. v Michael LL (2019 NY Slip Op 01690)
Matter of Melissa KK. v Michael LL
2019 NY Slip Op 01690
Decided on March 7, 2019
Appellate Division, Third 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 and Entered: March 7, 2019
525934
[*1]In the Matter of MELISSA KK., Appellant,
vMICHAEL LL. et al., Respondents, and CLINTON COUNTY DEPARTMENT OF SOCIAL SERVICES, Respondent. (And Another Related Proceeding.)
Calendar Date: January 15, 2019
Before: Egan Jr., J.P., Lynch, Devine, Rumsey and Pritzker, JJ.
Rural Law Center of New York, Castleton (Kelly L. Egan of counsel), for appellant.
Thomas H. Webb III, Clinton County Department of Social Services, Plattsburgh, for Clinton County Department of Social Services, respondent.
Cheryl Maxwell, Plattsburgh, attorney for the children.
MEMORANDUM AND ORDER
Devine, J.
Appeal from an order of the Family Court of Clinton County (Lawliss, J.), entered May 25, 2017, which dismissed petitioner's applications, in two proceedings pursuant to Family Ct Act article 6, for custody of the subject children.
Petitioner (hereinafter the grandmother) commenced these proceedings in April 2017 to obtain custody of the subject children, two of her grandchildren who were in foster care due to ongoing neglect proceedings. Between the filing of her first and second custody petitions, the parents of the children surrendered their parental rights and freed the children for adoption. The parties then appeared for, as is relevant here, a fact-finding hearing on the custody petitions. Respondent Clinton County Department of Social Services moved to dismiss the petitions at the close of the grandmother's proof, arguing that she had not produced sufficient evidence to support an award of custody and that, in any event, the surrenders of parental rights left adoption as her only viable remedy. Family Court granted the motion, prompting this appeal.
We affirm. "[O]nce the parents have voluntarily surrendered the child, 'adoption [is] the sole and exclusive means to gain care and custody of the child'; courts are 'without authority to entertain custody . . . proceedings commenced by a member of the child's [extended] family'" (Matter of Shirley E. v David E., 63 AD3d 1231, 1232 [2009], quoting Matter of Genoria SS. v Christina TT., 233 AD2d 827, 828 [1996], lv denied 89 NY2d 811 [1997]; see Matter of Peter L., [*2]59 NY2d 513, 518-519 [1983]). Thus, regardless of the quality of the grandmother's proof, when the parents "surrendered [their] parental rights to [the Department] for the purposes of adoption, Family Court was deprived of authority to entertain [the grandmother's custody petitions] and appropriately dismissed" them (Matter of Theresa BB. v Ryan DD., 64 AD3d 977, 978 [2009], lv denied 13 NY3d 707 [2009]; Matter of Linda S. v Krishnia S., 50 AD3d 805, 806 [2008]; see also Matter of Shirley E. v David E., 63 AD3d at 1232).
Finally, inasmuch as the grandmother's notice of appeal is limited to the order dismissing her custody petitions, her contentions regarding the related child protective proceedings are not properly before us (see CPLR 5515 [1]; Matter of Demetria FF. [Tracy GG.], 140 AD3d 1388, 1390-1391 [2016]).
Egan Jr., J.P., Lynch, Rumsey and Pritzker, JJ., concur.
ORDERED that the order is affirmed, without costs.
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114 F.3d 803
Isaac L. NEAL, Jr., Appellant,v.Gerado ACEVEDO, Appellee.
No. 96-2215.
United States Court of Appeals,Eighth Circuit.
Submitted Jan. 17, 1997.Decided June 11, 1997.
1
Kathy Goudy, Des Moines, IA, for appellant.
2
Thomas J. Miller, Thomas D. McGrane, Des Moines, IA, for appellee.
3
Before LOKEN and MORRIS SHEPPARD ARNOLD, Circuit Judges, and GUNN,1 Senior District Judge.
4
GUNN, Senior District Judge.
5
Isaac L. Neal, Jr. appeals the District Court's2 order denying his 28 U.S.C. § 2254 petition for a writ of habeas corpus. For the reasons set forth below, we affirm.
I. Background
6
A jury convicted Neal of first-degree kidnapping in violation of Iowa Code §§ 710.1 and 710.2 for the abduction and sexual abuse of a sixteen-year-old female. The trial court sentenced Neal to life in prison without the possibility of parole. The Iowa Supreme Court affirmed the conviction. State v. Neal, 353 N.W.2d 83 (Iowa 1984). Thereafter, Neal moved for postconviction relief in state court. Following an evidentiary hearing, the trial court denied Neal's application for relief. App. at 135-43. Neal obtained no relief on appeal.
7
Neal then commenced this habeas action alleging numerous grounds for relief. The District Court denied the petition. This appeal ensued.
8
The following facts are drawn primarily from the Iowa Supreme Court's opinion. On August 26, 1982, a male assailant accosted a young woman in Davenport, Iowa, and dragged her into a car. The assailant forced the victim to perform oral sex on him as he drove. The assailant later stopped and made the woman disrobe. A police car passed by and the assailant drove to a different location. The assailant then unsuccessfully attempted anal intercourse with the victim. Thereafter, the assailant ordered the victim out of the car. She tried to escape and a struggle ensued. The assailant stabbed the victim in the neck, but the victim bit the assailant's arm and escaped. The victim then ran to a nearby house and the police were summoned. The victim gave the police a description of the assailant and the automobile. Neal, 353 N.W.2d at 85.
9
The police recovered the vehicle from a city street about two hours later and traced ownership of the vehicle to Neal's fiancee, Anita Wells. The victim positively identified the car the next day. The victim later identified Neal as her assailant, selecting his picture from a photographic array, picking him out of a lineup, and pointing him out as the perpetrator at trial. Id.
10
Additional circumstantial evidence connected Neal to the crime. Police recovered Neal's palm print from the driver's door handle of the vehicle. A Davenport police officer testified that he observed Neal driving the car used in the offense at around 9:00 p.m., on August 26, 1982. Id. at 89; App. at 12-13.
11
Neal presented an alibi defense at trial. He testified that he was at his fiancee's home the night of the crime. App. at 85. Patty Jo Wells, his fiancee's mother, corroborated this testimony. Id. at 67. She recalled seeing Neal at around 8:15 or 8:30 p.m., just before going to bed for the evening. Id. at 65. Neal's fiancee, Anita Wells, also corroborated Neal's testimony regarding his whereabouts the night of the crime. Id. at 76. Ms. Wells stated that she went to bed between 8:00 and 8:30 p.m. the night of the crime. Id., 77. She left Neal downstairs with her baby. Id. Ms. Wells testified that Neal drove her car on one occasion, but that he rode in it all the time. Id. at 73. She further stated that she used her car after Neal was last in it and that she opened the driver's side door by using the handle. Id. at 82. Ms. Wells reported the car stolen the morning after the crime. Id. at 76.
12
On appeal, Neal argues that (1) trial counsel provided ineffective assistance in violation of the Sixth and Fourteenth Amendments; and (2) his conviction violates the Due Process Clause of the Fourteenth Amendment because the evidence adduced at trial was insufficient.
II. Discussion
A. Ineffective Assistance
13
"The Sixth Amendment guarantees a criminal defendant charged with a serious crime the right to effective assistance of counsel." Garrett v. United States, 78 F.3d 1296, 1301 (8th Cir.), cert. denied, --- U.S. ----, 117 S.Ct. 374, 136 L.Ed.2d 264 (1996). In order to prevail on his ineffective-assistance claim, Neal must show that (1) counsel's performance was deficient and (2) counsel's deficient performance prejudiced the defense. Strickland v. Washington, 466 U.S. 668, 687, 104 S.Ct. 2052, 2064, 80 L.Ed.2d 674 (1984). An attorney's performance must be objectively reasonable and "scrutiny of counsel's performance must be highly deferential." Id. at 689, 104 S.Ct. at 2065. There exists a strong presumption that counsel's conduct falls within the wide range of professionally reasonable assistance. Id. In order to establish prejudice, the defendant must show that "there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different." Id. at 694, 104 S.Ct. at 2068. A reasonable probability is one "sufficient to undermine confidence in the outcome." Id.
14
Neal first argues that trial counsel provided ineffective assistance by failing to consult with him sufficiently to prepare for trial. At the hearing on Neal's motion for postconviction relief, trial counsel testified that Neal's position was clear from the start: he did not commit the offense, and he was at his fiancee's home when it occurred. App. at 112-14. Counsel further testified that he met with Neal no more than twice at the jail and spoke with Neal at court hearings. Id. at 114-15.
15
"[W]hen the facts that support a certain potential line of defense are generally known to counsel because of what the defendant has said, the need for further investigation may be considerably diminished or eliminated altogether." Strickland, 466 U.S. at 691, 104 S.Ct. at 2066. Here, the information Neal gave to counsel limited the potential avenues of investigation and the need for further consultation. Given Neal's alibi defense, counsel conducted an adequate investigation and presented all the witnesses who could corroborate the defense.
16
Moreover, as the District Court correctly observed, Neal has failed to provide any examples of evidence counsel could have discovered through further investigation or what exculpatory information Neal could have conveyed to counsel through further consultation. See Otey v. Grammer, 859 F.2d 575, 578 (8th Cir.1988) (burden on petitioner to show what additional evidence counsel could have discovered that would have helped defense); United States v. Mealy, 851 F.2d 890, 908 (7th Cir.1988) (conclusory allegations regarding time spent in consultation with trial counsel do not show how petitioner was prejudiced at trial; thus ineffective-assistance claim fails). Accordingly, we reject Neal's first argument in support of his ineffective-assistance claim.
17
Neal next maintains that counsel provided ineffective assistance by failing to request instructions on lesser-included offenses. Trial counsel testified that he discussed this issue with Neal. Counsel could not recall whether Neal wanted lesser-included offense instructions, but counsel testified he explained why they were inappropriate. Counsel stated that arguing lesser-included offenses is inconsistent with the alibi defense. App. at 125-26. Counsel testified that making such an argument "is almost guaranteed to lose you a case as a defense lawyer." App. at 126. Counsel further testified that he did not believe lesser-included offense instructions would have been warranted in view of the evidence presented. Id.
18
"[S]trategic choices made after thorough investigation of law and facts relevant to plausible options are virtually unchallengeable." Strickland, 466 U.S. at 690, 104 S.Ct. at 2066. We conclude that trial counsel's decision not to request the lesser-included offense instructions was reasonable trial strategy because the instructions would have been inconsistent with Neal's alibi defense. See Kubat v. Thieret, 867 F.2d 351, 364-65 (7th Cir.1989) (counsel's decision not to request lesser-included offense instruction in kidnapping case reasonable in light of defendant's alibi defense). We also agree that the facts of the case would not have warranted such an instruction. We therefore reject this aspect of Neal's claim of ineffective assistance.
19
In the District Court, Neal also claimed that counsel provided ineffective assistance by failing to move to suppress evidence seized from his fiancee's car and by failing to request a ruling on his motion to present evidence concerning the prior sexual conduct of the victim. It is unclear from Neal's brief whether he intends to raise these issues on appeal. In any event, we agree with the District Court that Neal lacked standing to challenge the search of his fiancee's car. See United States v. Kiser, 948 F.2d 418, 424 (8th Cir.1991). Therefore, counsel did not perform deficiently by failing to move to suppress evidence from the vehicle. We further conclude that Neal was not prejudiced by counsel's failure to request a ruling on his motion to present evidence concerning the prior sexual conduct of the victim before the victim's testimony. The record reflects that such a request would not have changed the trial court's decision to deny the motion.
B. Sufficiency of the Evidence
20
Neal next contends that the evidence was insufficient to support his conviction for first-degree kidnapping. Neal argues that the victim gave inconsistent descriptions of him, that his physical characteristics at the time of the incident conflicted with the description given by the victim, and that the state failed to establish that the assailant used force creating either a substantial risk of death or serious injury to the victim as required to prove second-degree sexual abuse.
21
The Due Process Clause protects "the accused against conviction except upon proof beyond a reasonable doubt of every fact necessary to constitute the crime with which he is charged." In re Winship, 397 U.S. 358, 364, 90 S.Ct. 1068, 1073, 25 L.Ed.2d 368 (1970). In a challenge to the sufficiency of the evidence to support a state court conviction, we must determine "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 offense beyond a reasonable doubt." Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979).
22
Under Iowa law, kidnapping is defined as either confining a person or removing a person from one place to another without authority or consent, with, inter alia, the intent to inflict serious injury upon such person or to subject the person to sexual abuse. Iowa Code Ann. § 710.1. First-degree kidnapping requires that the person kidnapped, as a consequence of the kidnapping, suffer serious injury or intentionally be subjected to torture or sexual abuse. Id., § 710.2. Sexual abuse is defined as, inter alia, a sex act performed by force or against the will of another. Id., § 709.1. To prove second-degree sexual abuse, the state must establish that the assailant displayed a deadly weapon in a threatening manner or used or threatened to use force creating a substantial risk of death or serious injury to any person. Iowa Code Ann. § 709.3.
23
Upon review of the record, we conclude that a rational trier of fact could find the evidence adduced at trial sufficient to support Neal's conviction for first-degree kidnapping. The victim's testimony established the essential elements of the offense. App. at 36-37, 39. The minor discrepancies in the victim's descriptions of Neal were brought before the jury by defense counsel. The jury could have rationally discounted these discrepancies in light of the victim's positive identification of Neal at trial, the other circumstantial evidence connecting Neal to the crime, and the problems with Neal's alibi defense. Finally, Neal's argument that the evidence was insufficient to show a use of force creating either a substantial risk of death or serious injury to the victim misses the mark because any degree of sexual abuse will support a conviction for first-degree kidnapping. See State v. Mitchell, 450 N.W.2d 828, 831 (Iowa 1990). Thus, the State did not have to prove second-degree sexual abuse to convict Neal of first-degree kidnapping, State v. Newman, 326 N.W.2d 796, 802 (Iowa 1982), and the evidence clearly shows that sexual abuse occurred. In any event, we agree with the State that Neal's use of the knife during the course of the offense and his stabbing of the victim would support a conviction for second-degree sexual abuse.III. Conclusion
24
For the reasons set forth above, we conclude that the District Court correctly denied Neal's petition for a writ of habeas corpus. Accordingly, we affirm the judgment of the District Court.
1
The Honorable George F. Gunn, Jr., Senior United States District Judge for the Eastern District of Missouri, sitting by designation
2
The Honorable Donald E. O'Brien, Senior United States District Judge for the Southern District of Iowa
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40 Wn.2d 210 (1952)
242 P.2d 514
ORVILLE ANDERSON, Respondent,
v.
THE DEPARTMENT OF LABOR AND INDUSTRIES, Appellant.[1]
No. 31836.
The Supreme Court of Washington, Department One.
March 27, 1952.
*211 The Attorney General and Robert L. Simpson, Assistant, for appellant.
Allen & Carey and Floyd L. Colvin, for respondent.
MALLERY, J.
The claimant was injured in extrahazardous employment in 1941. He was rated as totally and permanently disabled, effective January 7, 1943, and was awarded a pension of $40 a month for himself, and $12.50 a month for his three-year-old son. On March 9, 1943, he received a "cash advance" on his own pension in the amount of $750. Accordingly, his monthly pension was reduced proportionately to $37.15. On February 28, 1944, he received a second "cash advance" in the amount of $600. His monthly pension was again reduced proportionately to $34.85. On August 10, 1944, he received a third "cash advance" of $300, and his monthly pension was similarly reduced to $33.70. On November 23, 1945, he applied for a final lump sum settlement of his claim. His application was granted, and the department sent him $2,350, which was the difference between $4,000 and the amounts he had theretofore received as "cash advances." He contended, however, that he was entitled to a full $4,000 without credit being taken for the "cash advances."
On July 5, 1946, the supervisor of industrial insurance rejected his claim for the additional amount of the "cash advances" as part of the final lump sum payment. From this ruling the claimant appealed to the joint board, which sustained the supervisor's order. Whereupon, the claimant appealed to the superior court of Pierce county, which reversed the order of the department. The department has appealed.
This case involves a construction of Rem. Rev. Stat., § 7681 [P.P.C. § 705-13], in effect at the time of respondent's injuries, which provides, in part, as follows:
*212 "In case of death or permanent total disability the monthly payment provided may be converted, in whole or in part, into a lump sum payment (not in any case to exceed four thousand dollars ($4,000.00)), equal or proportionate as the case may be to the value of the annuity then remaining, to be fixed and certified by the state insurance commissioner, in which event the monthly payment shall cease in whole or in part accordingly or proportionately. Such conversions may only be made after the happening of the injury and upon the written application of the beneficiary (in case of minor children the application may be by either parent) to the department, and shall rest in the discretion of the department. Within the rule aforesaid the amount and value of the lump sum payment may be agreed upon between the department and the beneficiary. In the event any payment shall be due to an alien residing in a foreign country, the department may settle the same by making a lump sum payment in such amount as may be agreed to by such alien, not to exceed 50% of the value of the annuity then remaining." (Italics ours.)
Our specific question is: When a pensioner has requested and received partial conversions pursuant to Rem. Rev. Stat., § 7681, and subsequently requests a final lump sum settlement, is he entitled to the full four thousand dollars maximum allowed by the statute without deduction of the sums previously received as partial conversions?
In Booth v. Department of Labor & Industries, 189 Wash. 201, 64 P. (2d) 505, we held that the amount of the lump sum settlement was not subject to discretion or agreement, but that it must be the remainder of the claimant's annuity reserve then remaining or four thousand dollars, whichever was the lesser, and that a purported lump sum settlement in a lesser amount was not binding as final upon the claimant.
In Horton v. Department of Labor & Industries, 199 Wash. 212, 90 P. (2d) 1009, we held that, where, by agreement, the claimant had accepted three thousand dollars as a final lump sum settlement, and had later accepted one thousand dollars more which brought the total up to four thousand dollars, the claimant had received all that could be paid *213 under the statute, and could not, therefore, exact any further award or attack the settlement made at his request.
The difference between the Booth and Horton cases and the instant case is that the "cash advances" here in question were partial conversions, and did not purport to be a final lump sum settlement in full of the claimant's claim.
If the "cash advances," as the appellant calls them, are in fact the partial conversions contemplated under the act, then the respondent has received four thousand dollars, the maximum allowed as a lump sum settlement, and his claim is properly closed. The respondent, however, contends that the "cash advances" were not partial conversions of his claim because the statute was not followed, in that (1) no written application was made for them, and (2) the insurance commissioner did not fix and certify the value of the annuity then remaining when the "cash advances" were made, as is required by the statute.
[1] As to the necessity for a written application, it may be at once conceded that the department had no authority to make a partial conversion without the written application of the claimant. The record before us is silent on the question of respondent's written application for the "cash advances," but it must be remembered that the findings of the department are prima facie correct, and the burden is upon respondent to overturn them. Rem. Supp. 1943, § 7697. When the respondent appealed to the joint board, he offered and omitted such exhibits from the departmental record as he chose. He did not offer his written requests for the "cash advances," as an exhibit, neither did he offer to show that the record did not contain them. He cannot now be heard to say that, because the record before us does not show them, they are not in the departmental record.
[2] As to the failure of the insurance commissioner to certify the value of the annuity remaining after the "cash advances," it is difficult to understand how appellant's pension could have been proportionately reduced without knowing the remaining annuity value. In any event, the purpose of requiring the insurance commissioner to certify *214 the value of the remaining annuity reserve is solely to ascertain whether a lump sum settlement must fall below four thousand dollars or not. The amount of the reserve in this case exceeds four thousand dollars, and respondent has received the full four thousand dollars. Therefore, no possible injury has come to the respondent, even if we assume that there was such an omission.
[3] The respondent contends that the "cash advances" were, in fact, merely an advance payment of his forty dollars a month pension as such, and that, with the elapse of time, payments must be resumed as soon as the period paid for has run. This contention is not tenable. Nowhere in the law is the department authorized to pay pensions in any manner other than the fixed amount as they accrue. Advance payments of a greater amount are only authorized by law when they are made as partial conversions of the claim. State ex rel. Funtash v. Industrial Commission, 154 Ohio St. 497, 96 N.E. (2d) 593.
We, therefore, hold that the "cash advances" were, in fact, partial conversions of respondent's claim, and, since he has received four thousand in the aggregate, his claim must be closed.
It appears that, after respondent's claim was closed, and on July 15, 1947, the department, by inadvertence and mistake, sent out a circular letter advising pensioners of an increase in their pensions, as provided for by chapter 233, p. 961, Laws of 1947, and, thereafter, sent him three months' checks totaling $188. Later, the department attempted to correct this error and requested him to refund the amount he had so received. Since he did not return it, the department then stopped payment of his son's $12.50 a month pension until the $188 was absorbed.
Rem. Rev. Stat., § 7679, subd. (c) [P.P.C. § 705-1], reads as follows:
"... If an injured workman, or the surviving spouse of an injured workman, shall not have the custody of a minor child for, or on account of, whom payments are required to be made under this section, such payment or payments *215 shall be made to the person having the lawful custody of such minor child." (Italics ours.)
[4] Since the person having custody of a child may not be the natural parent, it would follow that the child's pension is distinct from and not a part of the parent's pension as such. The department, therefore, had no right to correct mistakes as to the parent's pension at the expense of the child's pension.
[5] In connection with the erroneous payment of $188 to the respondent after his claim was closed, he now contends that it constituted a reopening of his claim, and is binding upon the department as such, under the doctrine of res judicata. He cites Abraham v. Department of Labor & Industries, 178 Wash. 160, 34 P. (2d) 457. In the Abraham case, and other cases applying the principle of res judicata, the awards in question were predicated upon appropriate hearings or other procedure, so that they constituted a determination of a right. In this instance, the notice of pension and the payments were simply mailed out through a clerical error. It was not a determination. The rule of the Abraham case is not applicable here.
That part of the judgment, therefore, which required the department to repay the $188 deducted from the child's pension is affirmed, as is, also, the allowance of attorneys' fees in the court below. The remainder of the judgment is reversed, as herein indicated. No costs are allowed upon the appeal.
SCHWELLENBACH, C.J., GRADY, DONWORTH, and WEAVER, JJ., concur.
June 3, 1952. Petition for rehearing denied.
NOTES
[1] Reported in 242 P. (2d) 514.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-1772
CHARLES F. WHIMS, JR.,
Plaintiff – Appellant,
v.
RAY MABUS, Sec. of the Navy,
Defendant - Appellee.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. Benson Everett Legg, District Judge.
(1:11-cv-01861-BEL)
Submitted: November 20, 2012 Decided: November 26, 2012
Before TRAXLER, Chief Judge, and SHEDD and FLOYD, Circuit
Judges.
Dismissed by unpublished per curiam opinion.
Charles F. Whims, Jr., Appellant Pro Se. Neil R. White,
Assistant United States Attorney, Greenbelt, Maryland, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Charles F. Whims, Jr., seeks to appeal the district
court’s order dismissing his employment discrimination action.
We dismiss the appeal for lack of jurisdiction because the
notice of appeal was not timely filed.
When the United States or its officer or agency is a
party, the notice of appeal must be filed no more than sixty
days after the entry of the district court’s final judgment or
order, Fed. R. App. P. 4(a)(1)(B), unless the district court
extends the appeal period under Fed. R. App. P. 4(a)(5), or
reopens the appeal period under Fed. R. App. P. 4(a)(6). “[T]he
timely filing of a notice of appeal in a civil case is a
jurisdictional requirement.” Bowles v. Russell, 551 U.S. 205,
214 (2007).
The district court’s order was entered on the docket
on April 12, 2012. The notice of appeal was filed on June 15,
2012. Because Whims failed to file a timely notice of appeal or
to obtain an extension or reopening of the appeal period, we
dismiss the appeal. 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.
DISMISSED
2
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UNITED STATES OF AMERICA
MERIT SYSTEMS PROTECTION BOARD
LOWELL D. SHACKELFORD, DOCKET NUMBER
Appellant, AT-4324-14-0777-I-1
v.
DEPARTMENT OF THE ARMY, DATE: February 24, 2015
Agency.
THIS FINAL ORDER IS NO NPRECEDENTIAL *
Jason C. Odom, Anniston, Alabama, for the appellant.
Chester Harkins Long Hutchinson, Fort Knox, Kentucky, for the agency.
BEFORE
Susan Tsui Grundmann, Chairman
Anne M. Wagner, Vice Chairman
Mark A. Robbins, Member
FINAL ORDER
¶1 The appellant has filed a petition for review of the initial decision, which
denied his request for corrective action under the Uniformed Services
Employment and Reemployment Rights Act of 1994 (codified at 38 U.S.C.
§§ 4301-4333) (USERRA). Generally, we grant petitions such as this one only
*
A nonprecedential order is one that the Board has determined does not add
sign ificantly to the body of MSPB case law. Parties may cite nonprecedential orders,
but such orders have no precedential value; the Board and administrative judges are not
required to follow or distinguish them in any future decisions. In contrast, a
precedential decision issued as an Opinion and Order has been identified by the Board
as significantly contributing to the Board’s case law. See 5 C.F.R. § 1201.117(c).
2
when: the initial decision contains erroneous findings of material fact; the initial
decision is based on an erroneous interpretation of statute or regulation or the
erroneous application of the law to the facts of the case; the judge’s rulings
during either the course of the appeal or the initial decision were not consistent
with required procedures or involved an abuse of discretion, and the resulting
error affected the outcome of the case; or new and material evidence or legal
argument is available that, despite the petitioner’s due diligence, was not
available when the record closed. See Title 5 of the Code of Federal Regulations,
section 1201.115 (5 C.F.R. § 1201.115). After fully considering the filings in this
appeal, and based on the following points and authorities, we conclude that the
petitioner has not established any basis under section 1201.115 for granting the
petition for review. Therefore, we DENY the petition for review and AFFIRM
the initial decision, which is now the Board’s final decision. 5 C.F.R.
§ 1201.113(b).
BACKGROUND
¶2 The agency appointed the appellant to the position of Recruiting
Operations Officer at Jacksonville State University under a Veterans Recruitment
Appointment on December 16, 2013, subject to satisfactory completion of a
2-year trial period. Initial Appeal File (IAF), Tab 13 at 37. The appellant had
worked previously at the university as a government contractor for more than 10
years. See IAF, Tab 1 at 10, Tab 13 at 2. The agency provided the appellant with
written performance expectations. IAF, Tab 13 at 33-34. On February 28, 2014,
the appellant’s supervisor conducted a performance counseling meeting to address
issues with the appellant’s performance, including failure to complete assigned
tasks, lack of knowledge of requirements for cadets, and delegation of duties to
other staff members. Id. at 28-29. The agency terminated the appellant during
his trial period on May 6, 2014, stating that his performance did not reflect basic
proficiency in the essential functions of his position as he had failed to plan
3
events and complete tasks by the assigned dates. Id. at 13, 16-18. Specifically,
the agency stated that the appellant had “cost the program recruiting opportunities
with prospective” cadets due to a failure to follow instructions and pay attention
to detail and that other employees were required to assist the appellant and
monitor his work product, negatively affecting their ability to perform their own
assignments. Id. at 16.
¶3 The appellant filed an appeal with the Board, alleging that the agency had
terminated him in retaliation for filing an equal employment opportunity
complaint and penalized him for U.S. Army Reserve commitments in violation of
USERRA. IAF, Tab 1 at 1-2, 10-12. The administrative judge docketed the
contested termination as one appeal, MSPB Docket No. AT-315H-14-0714-I-1,
and the alleged USERRA violation as the present appeal, informing the appellant
of the requirements of establishing Board jurisdiction over an alleged violation
of 38 U.S.C. § 4311(a). IAF, Tab 3. The appellant responded with a narrative of
his contractor recruiting position and active duty service prior to his appointment
to the civil service and provided statements from several individuals, including
colleagues from his civilian and U.S. Army Reserve positions. IAF, Tab 7 at
2-15. He outlined his difficulties with his supervisor, Major T., regarding his
mandatory U.S. Army Reserve commitments, who allegedly informed him that,
despite his rank of Lieutenant Colonel in the U.S. Army Reserve, he had no such
rank in his civil service position. Id. at 5-6. After holding the requested hearing
in which both the appellant and Major T. testified, the administrative judge issued
an initial decision denying corrective action, finding that the appellant had failed
to demonstrate by preponderant evidence that his military service was a
substantial or motivating factor in the agency’s decision to terminate him during
the trial period. IAF, Tab 17, Initial Decision (ID) at 5.
4
DISCUSSION OF ARGUMENTS ON REVIEW
¶4 On review, the appellant argues that the administrative judge denied him
proper procedure and erred by weighing the agency’s evidence before considering
the appellant’s case in violation of the burden-shifting analytical framework set
out in 38 U.S.C. § 4311(c)(1). Petition for Review (PFR) File, Tab 1 at 2-3. The
appellant asserts that he “unquestionably established” that his service in the U.S.
Army Reserve was a substantial or motivating factor in the agency’s decision to
terminate him during his trial period and that the administrative judge
misinterpreted the evidence by treating his evidence as “nothing more than a case
in rebuttal” to the agency’s evidence and argument. Id. at 3-4. The agency
responds that the administrative judge properly considered all record evidence in
reaching his conclusion and that there is no requirement that an initial decision
refer to an appellant’s testimony first or give it more weight than other evidence.
PFR File, Tab 3 at 6. Thus, the agency argues that the administrative judge
afforded the appellant proper procedures and committed no error that affected the
appellant’s substantive rights. Id. at 7.
¶5 Under 38 U.S.C. § 4311(a), an individual who has an obligation to perform
military service shall not be denied retention in employment or any benefit of
employment by an employer on the basis of that service. An appellant raising a
discrimination claim under 38 U.S.C. § 4311(a) bears an initial burden to prove
by preponderant evidence that his military status was a substantial or motivating
factor in the agency action. Sheehan v. Department of the Navy, 240 F.3d 1009,
1013 (Fed. Cir. 2001). If an appellant meets this burden of proof, the employing
agency has an opportunity to show, by preponderant evidence, that it would have
taken the action despite the appellant’s protected service status. Id. at 1014;
see 38 U.S.C. § 4311(c)(1). The factfinder may reasonably infer discriminatory
motivation under USERRA from a variety of factors, including an employer’s
expressed hostility towards members protected by the statute together with
knowledge of the employee’s military activity, and proximity in time between the
5
employee’s military activity and the adverse employment action. Sheehan, 240
F.3d at 1014.
¶6 The appellant argues that the administrative judge weighed the agency’s
case before his case “in contravention of the proper ‘burden shifting’ procedure.”
PFR File, Tab 1 at 3. The appellant presents no authority for his proposition
that 38 U.S.C. § 4311(c)(1) requires the administrative judge to consider the
entirety of the appellant’s case before considering the agency’s evidence, or to
draft the initial decision in a similar manner. Indeed, our reviewing court has
held that, “[i]n determining whether the employee has proven that his protected
status was part of the motivation for the agency’s conduct, all record evidence
may be considered, including the agency’s explanation for the actions taken.”
Sheehan, 240 F.3d at 1014. Thus, we find that the administrative judge properly
considered all testimony and written evidence in determining that the appellant
had not proved by preponderant evidence that his U.S. Army Reserve service was
a substantial or motivating factor in the agency’s decision to terminate him. See
ID at 5-18. The order in which the administrative judge analyzed the testimony
of the witnesses does not affect the analysis of whether the appellant provided
sufficient evidence to demonstrate discrimination under USERRA, and the
appellant has offered no basis for disturbing the initial decision or for the Board
to analyze the record under a different analytical framework. See 5 C.F.R.
§ 1201.115(c).
¶7 We have reviewed the appellant’s remaining arguments and find they
constitute mere disagreement with the administrative judge’s explained findings,
which are supported by the record evidence. See PFR File, Tab 1 at 4; see also
Crosby v. U.S. Postal Service, 74 M.S.P.R. 98, 105-06 (1997) (finding no reason
to disturb the administrative judge’s findings when the administrative judge
considered the evidence as a whole, drew appropriate inferences, and made
reasoned conclusions); Broughton v. Department of Health & Human
Services, 33 M.S.P.R. 357, 359 (1987) (same). The initial decision thoroughly
6
analyzes the record evidence regarding the appellant’s performance issues during
his trial period, and it highlights his own acknowledgment of certain deficiencies.
ID at 12. Further, we find no reason to disturb the administrative judge’s
findings that the comments and behavior of Major T. and Captain S. failed to
establish that the appellant’s military service or obligations were a substantial or
motivating factor in the agency’s action. ID at 12-15.
¶8 Although the appellant alleges that the administrative judge erred in giving
“more weight” to the evidence and testimony of the agency, the initial decision
provided detailed analysis of the record and explained the administrative judge’s
credibility determinations regarding the testimony of the appellant and his
supervisor. PFR File, Tab 1 at 4; ID at 5-18; see Haebe v. Department of
Justice, 288 F.3d 1288, 1301 (Fed. Cir. 2002) (the Board must give deference to
an administrative judge’s credibility determinations when they are based,
explicitly or implicitly, on observation of the demeanor of witnesses testifying at
a hearing; the Board may overturn such determinations only when it has
“sufficiently sound” reasons for doing so). The administrative judge considered
the appellant’s testimony alleging that Major T. had discriminated against him
and degraded him because of his military status, but found more persuasive Major
T.’s testimony that his Reserve status was not a factor. See ID at 8-10. For
instance, as highlighted in the initial decision, Major T. testified that the
appellant provided less than 1 week notice that he would be at Fort Knox for a
training course for several weeks and taking one of the program’s vans, leaving
the program without sufficient transportation to transport the cadets for a field
exercise, which had been scheduled 10 weeks in advance. ID at 7-8, 13-14.
Regarding the appellant’s failure to follow procedures, Major T. testified that all
other staff members who required absences for Reserve or Guard duty provided
advance notice on the shared office calendar to allow the program staff to plan
accordingly while the appellant failed to notify his supervisor. IAF, Tab 15
(Hearing CD). The administrative judge found that this testimony was
7
corroborated by that of the appellant’s coworker in the Alabama National Guard
who experienced no difficulties with Major T. regarding his uniformed service.
ID at 17-18.
¶9 Thus, we find that the appellant has presented no basis for overturning the
initial decision. He has not shown error in the administrative judge’s analysis or
finding that he failed to prove by preponderant evidence that his U.S. Army
Reserve service was a substantial or motivating factor in the agency’s decision to
terminate him during his trial period.
NOTICE TO THE APPELLANT REGARDING
YOUR FURTHER REVIEW RIGHTS
You have the right to request review of this final decision by the United
States Court of Appeals for the Federal Circuit. You must submit your request to
the court at the following address:
United States Court of Appeals
for the Federal Circuit
717 Madison Place, N.W.
Washington, DC 20439
The court must receive your request for review no later than 60 calendar
days after the date of this order. See 5 U.S.C. § 7703(b)(1)(A) (as rev. eff. Dec.
27, 2012). If you choose to file, be very careful to file on time. The court has
held that normally it does not have the authority to waive this statutory deadline
and that filings that do not comply with the deadline must be dismissed. See
Pinat v. Office of Personnel Management, 931 F.2d 1544 (Fed. Cir. 1991).
If you need further information about your right to appeal this decision to
court, you should refer to the federal law that gives you this right. It is found in
Title 5 of the United States Code, section 7703 (5 U.S.C. § 7703) (as rev. eff.
Dec. 27, 2012). You may read this law as well as other sections of the United
States Code, at our website, http://www.mspb.gov/appeals/uscode.htm.
Additional information is available at the court’s
8
website, www.cafc.uscourts.gov. Of particular relevance is the court’s “Guide
for Pro Se Petitioners and Appellants,” which is contained within the
court’s Rules of Practice, and Forms 5, 6, and 11.
If you are interested in securing pro bono representation for your court
appeal, you may visit our website at http://www.mspb.gov/probono for a list of
attorneys who have expressed interest in providing pro bono representation for
Merit Systems Protection Board appellants before the court. The Merit Systems
Protection Board neither endorses the services provided by any attorney nor
warrants that any attorney will accept representation in a given case.
FOR THE BOARD: ______________________________
William D. Spencer
Clerk of the Board
Washington, D.C.
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300 U.S. 14 (1937)
HONEYMAN
v.
HANAN, EXECUTOR.
No. 370.
Supreme Court of United States.
Argued January 14, 1937.
Decided February 1, 1937.
APPEAL FROM THE SUPREME COURT OF NEW YORK.
*15 Mr. Robert B. Honeyman for appellant.
Mr. James S. Brown, Jr., with whom Messrs. Anthony F. Tuozzo and William Gilligan were on the brief, for appellee.
Mr. John F.X. McGohey, Assistant Attorney General of New York, with whom Mr. John J. Bennett, Jr., Attorney General, Mr. Henry Epstein, Solicitor General, and Mr. Benjamin Heffner, Assistant Attorney General, were on the brief, on behalf of the State of New York, as amicus curiae, by special leave of Court, urging affirmance of the judgment below.
MR. CHIEF JUSTICE HUGHES delivered the opinion of the Court.
Upon the filing of the jurisdictional statement, the appellee moved to dismiss the appeal upon the ground that the decision of the federal question now raised was not necessary to the determination of the cause. Rule 12, *16 par. 3. Further consideration of the motion was postponed to the hearing upon the merits.
The record is brief. The suit was brought against the executor of the estate of Herbert W. Hanan, deceased, to recover a deficiency judgment upon a bond secured by a mortgage which had been foreclosed in an earlier suit in which the mortgaged property had been sold and an application for a deficiency judgment had been refused. The judgment in the present suit dismissed the amended complaint upon the ground that it did not state facts sufficient to constitute a cause of action.
The amended complaint alleged that in 1907 the John H. Hanan Realty Company, with John H. Hanan, had executed a bond for $118,000, and as collateral security the John H. Hanan Realty Company had made a mortgage covering certain premises in the city of New York; that later the bond and mortgage were assigned to John H. Hanan; that in 1920 John H. Hanan, together with Herbert W. Hanan (defendant's testator) and Addison G. Hanan, had executed their joint and several bond to the guardians of the estates of certain infants in the sum of $60,000 and as collateral security therefor John H. Hanan had assigned to the obligees the bond and mortgage first mentioned; and that thereafter the bond of John H. Hanan, Herbert W. Hanan and Addison G. Hanan had been assigned, together with the bond and mortgage first mentioned, to the plaintiff.
A copy of the bond in suit was annexed. It recited that it was executed as additional security for the payment of the first mentioned bond and mortgage, upon which the principal sum of $60,000 remained unpaid, and that the time for payment had been extended as provided in a contemporaneous agreement. The condition of the obligation was the payment of that sum with interest as the *17 same should become due and payable according to the terms and conditions of the bond and mortgage first mentioned and the extension agreement.
The amended complaint further alleged that the John H. Hanan Realty Company had failed to comply with the terms of the bond and mortgage first mentioned and had failed to pay the taxes on the mortgaged premises or the interest on the bond; that thereupon, in September, 1933, the plaintiff had brought an action to foreclose the mortgage and that the defendant herein was a party to that action; that pursuant to judgment therein the mortgaged premises were sold and the proceeds were applied on account of the indebtedness due the plaintiff; that the referee's report of sale was confirmed; that thereafter a motion was "duly made for a deficiency judgment" which was denied and the foreclosure action was discontinued as to the defendant herein by the filing of a stipulation; that the deficiency due the plaintiff was $58,523.35, upon which $554.01 had been received by the plaintiff from the receiver in the foreclosure action, leaving due $57,969.34, which the decedent, Herbert W. Hanan, became bound to pay.
The amended complaint and the motion to dismiss for the insufficiency of its allegations contained no mention of a federal question. The trial court granted the motion with the mere statement that "The mortgage moratorium laws apply to the facts alleged in the said complaint." The judgment of dismissal was affirmed by the Appellate Division without opinion. 246 App. Div. 781; 285 N.Y.S. 527. The Court of Appeals granted leave to appeal and in May, 1936, affirmed the judgment, also without opinion. 271 N.Y. 564; 3 N.E. (2d) 186. In the entire progress of the cause to this point of determination by the highest court of the State, the record discloses no reference to a federal question.
*18 In June, 1936, upon motion, the Court of Appeals amended its remittitur by adding the following:
"A question under the Federal Constitution was presented and necessarily passed upon by this court. The plaintiff contended that chapter 794 of the Laws of the State of New York, enacted in 1933, as amended (Sections 1083-a and 1083-b of Civil Practice Act), impair the obligations of contracts, and thus violate Article I, Section 10, of the Constitution of the United States. This court held that such laws do not violate said provision of Article I, Section 10, of the constitution of the United States." 271 N.Y. 662; 3 N.E. (2d) 473.
It is solely upon this statement in the amended remittitur that we are asked to review the judgment and to pass upon the constitutionality of the state statute. We are not aided by any discussion by the state court of the question thus described, or by its explication or construction of the statute cited, or by a statement of the particular application of the statute to which the paragraph in the amended remittitur is addressed.
Before we may undertake to review a decision of the court of a State it must appear affirmatively from the record, not only that the federal question was presented for decision to the highest court of the State having jurisdiction but that its decision of the federal question was necessary to the determination of the cause. Lynch v. New York ex rel. Pierson, 293 U.S. 52, 54, and cases there cited. Whether these requirements have been met is itself a federal question. As this Court must decide whether it has jurisdiction in a particular case, this Court must determine whether the federal question was necessarily passed upon by the state court. That determination must rest upon an examination of the record. A certificate or statement by the state court[1] that a federal *19 question has been presented to it and necessarily passed upon is not controlling. While such a certificate or statement may aid this Court in the examination of the record, it cannot avail to foreclose the inquiry which it is our duty to make or to import into the record a federal question which otherwise the record wholly fails to present.
In Commercial Bank of Cincinnati v. Buckingham's Executors, 5 How. 317, this Court was asked to decide a question which was said to be presented under the contract clause with respect to the validity of a statute of Ohio. The Supreme Court of that State entered upon its record an elaborate certificate stating that the validity of the statute was drawn in question upon the ground that as applied to the charter of the plaintiffs in error it "impaired the obligations thereof, and was repugnant to the constitution of the United States, and that the decision of this court [the Ohio court] was in favor of the validity of the said act of the legislature as so applied." Notwithstanding the certificate, the case was dismissed for want of jurisdiction. Id., p. 343. The Court said:
"It is not enough, that the record shows that `the plaintiff in error contended and claimed' that the judgment of the court impaired the obligation of a contract, and violated the provisions of the constitution of the United States, and `that this claim was overruled by the court'; but it must appear, by clear and necessary intendment, that the question must have been raised, and *20 must have been decided, in order to induce the judgment. Let us inquire, then, whether it appears on the face of this record, that the validity of a statute of Ohio, `on the ground of its repugnancy to the constitution or laws of the United States' was drawn in question in this case." Id., p. 341.
Pursuing that essential inquiry, the Court found that the question decided by the state court was one of the construction of the statute and not of its validity.
In Lawler v. Walker, 14 How. 149, the Supreme Court of Ohio certified that the validity of statutes of the State had been drawn in question as being in violation of the Federal Constitution and that the court had held the statutes to be valid. The certificate in that case was found to be vague and indefinite but the Court also restated the above-quoted ruling of Commercial Bank of Cincinnati v. Buckingham's Executors, supra. While in Parmelee v. Lawrence, 11 Wall. 36, the certificate was made by the presiding judge of the state court and not by the court itself, we took occasion to say:
"We will add, if this court should entertain jurisdiction upon a certificate alone in the absence of any evidence of the question in the record, then the Supreme Court of the State can give the jurisdiction in every case where the question is made by counsel in the argument. The office of the certificate, as it respects the Federal question, is to make more certain and specific what is too general and indefinite in the record, but it is incompetent to originate the question within the true construction of the 25th section [of the Judiciary Act]." Id., p. 39.
This statement was quoted with approval in Powell v. Brunswick County, 150 U.S. 433, 439.
The case of Brown v. Atwell, 92 U.S. 327, affords another illustration of the rule. The judgment was rendered in the Court of Appeals of New York and an entry was made in its record that on the argument of the *21 appeal it was claimed by the appellant that the Act of Congress of 1836, known as the Patent Act, governed the effect of the several transfers relating to the letters patent appearing in the case, and that the court had decided against the claims urged under that act. This Court observed that, until the certificate of the Court of Appeals, it nowhere appeared in the record that any question was raised as to the effect of the patent laws upon the title under consideration. And the Court said (id., pp. 329, 330):
"We have often decided that it is not enough to give us jurisdiction over the judgments of the State courts for the record to show that a Federal question was argued or presented to that court for decision. It must appear that its decision was necessary to the determination of the cause, and that it was actually decided, or that the judgment as rendered could not have been given without deciding it. Commercial National Bank of Cincinnati v. Buckingham's Executors, 5 How. 341; Lawler et al. v. Walker et al., 14 id. 154; R.R. Co. v. Rock, 4 Wall. 180; Parmelee v. Lawrence, 11 id. 38.
"The same cases also establish the further rule, that `the office of the certificate, as it respects the Federal question, is to make more specific and certain that which is too general and indefinite in the record, but is incompetent to originate the question'."
The Court found that the record did not present the federal question to which the certificate referred and the case was accordingly dismissed.
The rule was succinctly stated in Rector v. City Deposit Bank Co., 200 U.S. 405, 412, as follows:
"It is elementary that the certificate of a court of last resort of a State may not import a Federal question into a record where otherwise such question does not arise, it is equally elementary that such a certificate may serve to elucidate the determination whether a Federal question exists."
*22 Thus the true function of a certificate or statement of a state court, by way of amendment of, or addition to, the record, is to aid in the understanding of the record, to clarify it by defining the federal question with reasonable precision and by showing how the question was raised and decided, so that this Court upon the record as thus clarified may be able to see that the federal question was properly raised and was necessarily determined. Our decisions in cases where certificates have been found useful should be read in the light of that fundamental consideration. In Marvin v. Trout, 199 U.S. 212, 223, as explained in Consolidated Turnpike Co. v. Norfolk & Ocean View Ry. Co., 228 U.S. 596, 599, there was "a record disclosure of the existence of the Federal question," which was also certified. In the latter case it was assumed that the certificate, made by order of the state court, operated to show that some federal question was decided, but on examining the record this Court found the question to be unsubstantial and denied rehearing, the case having previously been dismissed for want of jurisdiction. Id., p. 603. The record in Cincinnati Packet Co. v. Bay, 200 U.S. 179, 182, showed that the federal question had been raised and the certificate aided in disclosing that the question was not treated as having been raised too late under the local procedure, a point upon which the state court was the judge. Applying the rule, in Rector v. City Deposit Bank Co., supra, the Court concluded that as the suit was brought by a trustee in bankruptcy by virtue of the authority conferred upon him by the act of Congress the certificate made "clear the effect, if it were otherwise doubtful, that rights under the bankrupt law were relied upon and passed upon below." See, also, Capital City Dairy Co. v. Ohio, 183 U.S. 238, 243, 244. It was in the light of these decisions that the question was presented in Whitney v. California, 274 U.S. 357, 360-362. The writ of error had been dismissed *23 for want of jurisdiction (269 U.S. 530) and a motion for rehearing was granted. Id., p. 538. The Court of Appeal of the State, as an addition to the record, entered an order stating that the question whether the California Criminal Syndicalism Act and its application were repugnant to the Fourteenth Amendment to the Federal Constitution was considered and passed upon by the court. While this Court said that the record did not show that the defendant had raised or the state court had decided a federal question except as it appeared from that order, the record did disclose facts indicating the presence of the federal question which the order of the state court said was actually presented and decided, and accordingly jurisdiction was entertained. And it has been in recognition of the established principle governing the exercise of our jurisdiction, and not as a departure from it, that we have said that opportunity might be afforded upon seasonable application to obtain a certificate from the state court where it appeared that an appropriate certificate might lead to a better understanding of the record. See Lynch v. New York ex rel. Pierson, supra; International Steel Co. v. Surety Co., 297 U.S. 657, 662.
In some of the cases cited above, we found from our examination of the record that, notwithstanding the certificate, the decision of the state court rested upon an adequate non-federal ground and hence we were without jurisdiction. See Commercial Bank of Cincinnati v. Buckingham's Executors, supra; Brown v. Atwell, supra; Powell v. Brunswick County, supra. A similar result follows where, even assuming that the state court has formally determined a federal question, it does not appear to have been a substantial one. See Consolidated Turnpike Co. v. Norfolk & Ocean View Ry. Co., supra. In other cases an examination of the record has left the Court in doubt as to what has actually been determined. That is the situation in the present case.
*24 The appellee points to the provision of § 1078 of the Civil Practice Act of New York (enacted long before the so-called moratorium acts) that, after final judgment for the plaintiff in a foreclosure action, no other action shall be maintained to recover any part of the mortgage debt without leave of the court in which the former action was brought. In the instant case the amended complaint does not allege that such leave was obtained. We are also advised of decisions by the state court, prior to the one here sought to be reviewed, construing Chapter 794 of the Laws of New York of 1933 (§§ 1083-a and 1083-b of the Civil Practice Act) to which the amended remittitur refers. That act (§ 1083-a) forbids a judgment for any residue of the debt, remaining unsatisfied after sale of the mortgaged property, except as therein provided. Provision is made for an application by the creditor in the foreclosure action for leave to enter a deficiency judgment, and thereupon the court is to determine the fair and reasonable market value of the mortgaged premises and is to make an order directing the entry of a deficiency judgment. which is to be for an amount equal to that remaining due less the market value as determined or the sale price of the property whichever shall be the higher; and if no motion for a deficiency judgment is thus made, the proceeds of the foreclosure sale are to be regarded as full satisfaction of the mortgage debt "and no right to recover any deficiency in any action or proceeding shall exist." Section 1083-b provides that in actions. other than foreclosure actions, to recover for an indebtedness secured solely by a mortgage on real property and originating simultaneously with such mortgage and secured thereby, against any one "directly or indirectly or contingently liable therefor," the party against whom the money judgment is demanded shall be entitled to set off the reasonable market value of the mortgaged property less prior liens. *25 The Court of Appeals had sustained the constitutional validity of this legislation which would seem to be applicable to an action upon a collateral bond such as that described in the amended complaint herein. See Klinke v. Samuels, 264 N.Y. 144; City Bank Farmers Trust Co. v. Ardlea Incorporation, 267 N.Y. 224.
With these recent decisions in mind, it may be, as has been suggested, that the Court of Appeals considered the federal question, which it described in the amended remittitur as relating to the validity of §§ 1083-a and 1083-b, to be no more than a challenge of the requirement that the right to a deficiency judgment should be heard and determined in the foreclosure action, and sustained the validity of that requirement, without reviewing, or deeming it necessary to review, the questions which could have been raised, and if properly raised could have been brought to this Court in the foreclosure action to which both the plaintiff and defendant herein had been parties. Whether this view of the action of the state court is the correct one, we are unable satisfactorily to determine. If its decision was in truth based upon the theory that by a proper construction of the statute or for any other reason the extent of the deficiency or the right to recover it had been finally determined in a prior litigation, there was no longer a necessity to inquire whether the statute would be constitutional in its application to a different case a case lacking the feature of any prior determination , and an answer to that inquiry would be superfluous, even if attempted.
In the exercise of our appellate jurisdiction we have power not only to correct errors in the judgment under review but to make such disposition of the case as justice requires. We have applied this principle to cases coming from state courts where supervening changes had occurred since the entry of the judgment, and where the record failed adequately to state the facts underlying *26 the decision of the federal question. See Patterson v. Alabama, 294 U.S. 600, 607; Villa v. Van Schaick, 299 U.S. 152. We have afforded an opportunity for appropriate presentation of the question by an amendment of the record as the state court might be advised. Villa v. Van Schaick, supra. We think that a similar opportunity should be accorded here in order that uncertainty may be removed and that the precise nature of the federal question, how it was raised and the grounds of its disposition, may be definitely set forth, so that we may be able to decide whether a substantial question within our jurisdiction has necessarily been determined.
For that purpose the judgment is vacated and the cause is remanded for further proceedings.
Judgment vacated.
NOTES
[1] As to the insufficiency of a certificate by the chief justice or presiding justice of the state court, see Railroad Co. v. Rock, 4 Wall. 177, 178, 180; Powell v. Brunswick County, 150 U.S. 433, 439; Sayward v. Denny, 158 U.S. 180, 183; Henkel v. Cincinnati, 177 U.S. 170, 171; Home for Incurables v. New York, 187 U.S. 155, 158; Fullerton v. Texas, 196 U.S. 192, 194; Louisville & Nashville R. Co. v. Smith, Huggins & Co., 204 U.S. 551, 561; Seaboard Air Line Ry. v. Duvall, 225 U.S. 477, 481; Connecticut General Life Ins. Co. v. Johnson, 296 U.S. 535; Purcell v. New York Central R. Co., 296 U.S. 545.
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UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-30566
Summary Calendar
Civil Docket No. 98-461-B-M1
KENNETH DERRYL NORRIS AND MARY ELLEN KLEIN NORRIS
Plaintiffs-Appellants,
v.
UNION PLANTERS BANK OF LOUISIANA, ET AL.
Defendant-Appellee,
Appeal from the United States District Court
for the Middle District of Louisiana
January 28, 2000
Before JOLLY, JONES, and BENAVIDES, Circuit Judges.
PER CURIAM:*
Kenneth Derryl Norris and Mary Ellen Klein Norris
(collectively “Appellants”) appeal the district court’s granting
summary judgment to Union Planters Bank of Louisiana (“Union
Planters”) and the taxing of costs against the Appellants pursuant
to 28 U.S.C. § 1920. Since the state court judgment on which the
district court relied has subsequently been reversed, Louisiana’s
res judicata statute, which served as the basis for summary
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion
should not be published and is not precedent except under the limited
circumstances set forth in 5TH CIR. R. 47.5.4.
judgment, does not apply.2 This court, therefore, vacates and
remands.
This court reviews the granting of summary judgment de
novo and applies the same criteria as the district court. See Baker
v. Putnal, 75 F.3d 190, 197 (5th Cir. 1996). Summary judgment is
appropriate when, viewing the evidence in the light most favorable
to the non-moving party, the record shows that there is no genuine
issue of material fact and the moving party is entitled to judgment
as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317,
322-23, 106 S. Ct. 2548, 2552-53 (1986); see also Fed. R. Civ. P.
56(c).
In determining the preclusive effect of the first state
court judgment, the district court applied Louisiana’s res judicata
principles. See Jones v. Sheehan, Young & Culp, P.C., 82 F.3d 1334,
1338 (5th Cir. 1996)(in giving res judicata effect to a state court
judgment, a federal court applies the res judicata principles of the
state from which the judgment originated); see also 28 U.S.C.
§ 1738. Under Louisiana’s res judicata statute, a valid, final
judgment between the same parties has preclusive effect.3 At the
2
The Appellants filed their state court action in February 1997. The
state court entered judgment for Union Planters in December 1997 (“first
judgment”), and the Appellants filed a timely appeal. In April 1998, the
Appellants filed a second action which was removed to federal court. In May
1999, the district court granted summary judgment to Planters. The Louisiana
appellate court reversed the first judgment in June 1999, and the Appellants then
appealed the district court judgment.
3
La. Rev. Stat. Ann. § 13:4231 (West 1991), provides in pertinent
part:
Except as otherwise provided by law, a valid and final
judgment is conclusive between the same parties, except
on appeal or other direct review, to the following
extent:...(2) If the judgment is in favor of the
2
time the district court granted summary judgment to Union Planters,
the first judgment was valid and final. See La. Rev. Stat. Ann.
§ 13:4231, cmt. (d); La. Code Civ. Proc. Ann. art. 967 (West 1984).
After the district court entered judgment, the Louisiana appellate
court reversed the first judgment. As a result, there is no final
judgment to which the federal court can give preclusive effect: “the
preclusive effect of a judgment attaches once a final judgment has
been signed by the trial court and ... bar[s] any action filed
thereafter unless the judgment is reversed on appeal.” Id.
(emphasis added). Once the first judgment is reversed, “a second
judgment based upon the preclusive effects of the first judgment
should not stand.” 18 Charles Alan Wright, Arthur R. Miller &
Edward H. Cooper, Federal Practice and Procedure § 4433 (2d ed.
1990).4 Given the reversal of the first judgment, Louisiana’s res
judicata statute no longer bars pursuit of Appellants’ claim in the
district court. Union Planters is not entitled to judgment as a
matter of law on the basis of preclusion. This court, therefore,
defendant, all causes of action existing at the time of
final judgment arising out of the transaction or
occurrence that is the subject matter of the litigation
are extinguished and the judgment bars a subsequent
action on those causes of action.
4
See also Butler v. Eaton, 141 U.S. 240, 244, 11 S. Ct. 985, 987
(1891); Ornellas v. Oakley, 618 F.2d 1351, 1356 (9th Cir. 1980)(“A reversed or
dismissed judgment cannot serve as the basis for a disposition on the ground of
res judicata or collateral estoppel.”); Di Gaetano v. Texas Co., 300 F.2d 895,
897 (3d Cir. 1962)(if the prior judgment relied upon in the district court is
reversed after the judgment of the district court, “the defense of collateral
estoppel ... has evaporated”); In re Hedged-Investments Assocs., 48 F.3d 470,
472-73 (10th Cir. 1995); South Carolina Nat’l Bank v. Atlantic States Bankcard
Ass’n, 896 F.2d 1421, 1430-31 (4th Cir. 1990); Erebia v. Chrysler Plastics Prods.
Corp., 891 F.2d 1212, 1215 (6th Cir. 1989).
3
vacates the district court’s granting summary judgment to Union
Planters and remands the case to the district court.5
VACATED AND REMANDED.
5
Since this court vacates the district court’s judgment, the taxation
of costs is to be determined by the district court after the outcome of this
remand.
4
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Ferraro v 270 Skip Lane, LLC (2019 NY Slip Op 07924)
Ferraro v 270 Skip Lane, LLC
2019 NY Slip Op 07924
Decided on November 6, 2019
Appellate Division, Second Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on November 6, 2019
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Second Judicial Department
REINALDO E. RIVERA, J.P.
SHERI S. ROMAN
ROBERT J. MILLER
VALERIE BRATHWAITE NELSON, JJ.
2018-03206
(Index No. 6387/15)
[*1]Ronald Ferraro, appellant,
v270 Skip Lane, LLC, et al., respondents.
Joseph B. Strassman, Rockville Centre, NY, for appellant.
Rawle & Henderson, LLP, New York, NY (Derek E. Barrett of counsel), for respondents.
DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Nassau County (Anthony L. Parga, J.), entered January 3, 2018. The order granted the defendants' motion for summary judgment dismissing the complaint.
ORDERED that the order is affirmed, with costs.
The plaintiff allegedly was injured when his foot became caught in a pothole in a parking lot located on premises owned by the defendant 270 Skip Lane, LLC (hereinafter 270 Skip Lane), and leased to the plaintiff's employer. The plaintiff alleges that he was walking across the parking lot when his foot became caught in a pothole and his leg twisted, injuring his knee. The plaintiff commenced this action against 270 Skip Lane and its management company, the defendant JPD United, Inc., to recover damages for his injuries. The defendants moved for summary judgment dismissing the complaint, arguing that the defendant 270 Skip Lane was an out-of-possession landlord with no duty to repair the parking lot. The Supreme Court granted the defendants' motion, and the plaintiff appeals.
An out-of-possession landlord is not liable for injuries that occur on its premises unless the landlord has retained control over the premises and has a "duty imposed by statute or assumed by contract or a course of conduct" (Alnashmi v Certified Analytical Group, Inc., 89 AD3d 10, 18; see Rivera v Nelson Realty, LLC, 7 NY3d 530, 534; Guzman v Haven Plaza Hous. Dev. Fund Co., 69 NY2d 559, 566; Casson v McConnell, 148 AD3d 863, 864). The liability of an out-of-possession landlord must be based on the violation of a duty imposed by statute or assumed by contract or a course of conduct, "and not merely through its control' as that term is currently used" (Alnashmi v Certified Analytical Group, Inc., 89 AD3d at 18; see Star v Berridge, 77 NY2d 899, 901; People v Scott, 26 NY2d 286, 290; Richer v JQ II Assoc., LLC, 166 AD3d 692, 693; cf. Gronski v County of Monroe, 18 NY3d 374, 379).
Here, the complaint sounds in common-law negligence and the pleadings do not allege the violation of a statute. The defendants demonstrated their prima facie entitlement to judgment as a matter of law by establishing that 270 Skip Lane was an out-of-possession landlord which did not assume a duty by contract or course of conduct to maintain the parking lot of the [*2]leased premises (see Fox v Saloon, 166 AD3d 950, 951; Richer v JQ II Assoc., LLC, 166 AD3d at 694; Fuzaylova v 63-28 99th St. Farm Ltd., 161 AD3d 946, 946; Castillo v Wil-Cor Realty Co., Inc., 109 AD3d 863, 864; Alnashmi v Certified Analytical Group, Inc., 89 AD3d at 18). In opposition, the plaintiff failed to raise a triable issue of fact (see Fox v Saloon, 166 AD3d at 951).
Having correctly determined that 270 Skip Lane lacked a duty to repair the parking lot, the Supreme Court was not required to address the issue of whether it had notice of the alleged dangerous condition (see Villarreal v CJAM Assoc., LLC, 125 AD3d 644, 645; Garcia v Town of Babylon Indus. Dev. Agency, 120 AD3d 546, 547; Alnashmi v Certified Analytical Group, Inc., 89 AD3d at 19).
Accordingly, we agree with the Supreme Court's determination granting the defendants' motion for summary judgment dismissing the complaint.
RIVERA, J.P., ROMAN, MILLER and BRATHWAITE NELSON, JJ., concur.
ENTER:
Aprilanne Agostino
Clerk of the Court
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82 Cal.App.2d 528 (1947)
OTIS D. BABCOCK, Appellant,
v.
McCLATCHY NEWSPAPERS (a Corporation), Respondent.
Civ. No. 7394.
California Court of Appeals. Third Dist.
Nov. 22, 1947.
Otis D. Babcock, in pro. per., Frank A. Prior and George M. Naus for Appellant.
Downey, Brand, Seymour & Rohwer, Sullivan, Roche, Johnson & Farraher and John F. Hamlyn for Respondent.
THOMPSON, J.
The plaintiff has appealed from a judgment rendered on the pleadings, after he had been given leave to amend his complaint, but refused to do so.
The complaint purports to charge the defendant with libel in publishing the statement of a citizen, in the form of an inquiry affecting the qualifications of opposing candidates in a political campaign for election to the office of District Attorney of Sacramento County. The plaintiff was completing his term as district attorney, and sought reelection. His opponent was John Quincy Brown, the present district attorney. An attorney by the name of A. J. Harder challenged plaintiff to debate, in a public meeting, the qualifications of the respective candidates. Harder said: "The people of this county have a right to ask: 1. How was it possible for you, Mr. Babcock, going into office dead broke, on a salary of $4,500 to buy an office building at a purported price of $80,000?" Also: "2. Why do you contend you have cleaned up vice when the public clinic shows an increase of venereal diseases? and, 3. How can you claim to have efficiently run your office in the face of many dismissals of cases and failures to convict persons accused of crime?" Mr. Harder added that: "In contrast to the record of the incumbent Babcock, John Quincy Brown, deputy state attorney general, has an exemplary record, both as a member of the bar and in his private life. Sacramento needs this man."
The foregoing challenge to debate was published in the defendant's newspaper at Sacramento, in August, 1942, under the caption:
"Harder Issues Challenge, Gets Babcock Reply"
District Attorney Accepts Offer to Debate on
Vice, Convictions.""
The amended complaint for libel, under section 45 of the Civil Code, was filed in Sacramento County in January, 1943. It contains the following allegations and also excerpts from the published article: *531
"That the defendants, knowing the premises, on the 8th day of August, 1942, falsely and maliciously and with intent and design to injure, disgrace and defame this plaintiff and bring him into disgrace and obloquy, composed and published and caused to be published a certain malicious libel in the Sacramento Bee containing among other things the false, libelous and malicious matters following:"
" 'How was it possible for you, Mr. Babcock, going into office dead broke, on a salary of $4,500, to buy an office building at a purported price of $80,000? * * *"
" 'In contrast to the record of the incumbent Babcock, John Quincy Brown, deputy state attorney general, has an exemplary record, both as a member of the bar and in his private life. Sacramento County needs this man.' "
As innuendo of the foregoing language, the complaint added the following:
"That the defendants meant thereby to be understood as meaning and asserting, and the readers of said publication, in fact, understood as meaning and asserting, that plaintiff was a dishonest public official and that he was guilty of corruption in his official duties while occupying the office of District Attorney of Sacramento County."
The complaint alleges no special damages. It merely alleges general damages in the sum of $30,000 and asks for exemplary damages in the further sum of $20,000. It is not contended that special damages were pleaded.
A demurrer to the sufficiency of the allegations of the complaint was overruled.
The defendant filed its answer, denying the essential allegations of the complaint, and affirmatively alleging that the published article was privileged under section 47 of the Civil Code, together with other defenses.
Paraphrasing the published question upon which the plaintiff chiefly relies to support his action for alleged slander, it means, substantially, how was it possible for the plaintiff to buy an office building for the purported price of $80,000, on his salary of $4,500 per year, since he was dead broke when he took office. Or, in other language, it means where did plaintiff get the money with which he purchased the $80,000 building? That seems to be a fair and legitimate question to ask a public officer who is a candidate for reelection, provided the assumed basis for the question is truthfully stated. It *532 contains the assumption of facts that plaintiff was dead broke when he took office; that his salary was $4,500 per year, and that he thereafter bought an office building for which he paid $80,000. Those facts are not denied. To state an actionable cause for libel it would be necessary to specifically allege that the said essential elements of that question were false. It was insufficient to merely allege generally that the published article was false and malicious. Realizing that the truthfulness of the implied averments upon which the question was based would be a complete defense to the charge of libel, the defendant sought to take the deposition of the plaintiff to elicit evidence upon those possible issues. The plaintiff refused to answer questions on those issues on the ground that they were not material in the suit for libel. Upon citation to show cause why plaintiff should not be required to answer the questions, the trial court held they were immaterial and refused to instruct plaintiff to answer the questions. Upon mandate, this court held that the questions were material and that plaintiff should be required to answer them. A hearing was granted by the Supreme Court in that mandate proceeding. The Supreme Court held (McClatchy Newspapers v. Superior Court, 26 Cal.2d 386 [159 P.2d 944), at page 395, that:
"[I]f ... evidence of plaintiff's financial transactions would be relevant to such potential issues, defendant would be entitled to take his deposition along the lines suggested."
Subsequently, upon notice, the defendant moved the trial court for judgment on the pleadings, on the theory that the amended complaint fails to state a cause of action since the gist of the charge relied upon was not alleged to be untrue; that the complaint does not charge libel per se, and that no special damages were alleged therein. That motion was heard December 27, 1946, before the Honorable J. O. Moncur, a visiting judge. He granted the motion, and judgment was accordingly rendered that plaintiff take nothing by his action. From that judgment this appeal was perfected.
Two questions are involved on this appeal. First, does the amended complaint state an action for libel per se? Second, if an action for libel per se is not alleged, is the complaint fatally defective, since no special damages were alleged or claimed?
[1] We are of the opinion the amended complaint fails to state a cause of action for libel per se, and that, since it does not specifically deny the gist of the implied charge, and *533 fails to allege or ask for special damages, the complaint is fatally defective, and the court, therefore, properly rendered judgment on the pleadings. The plaintiff was granted opportunity to amend his complaint, but refused to do so.
The plaintiff relies solely on the two questions previously quoted from the complaint, namely, how could he go into office dead broke and buy an office building for $80,000 on his salary of $4,500? and, second, in contrast with the record of plaintiff, his opponent, Mr. Brown, has an exemplary record as a member of the bar and in his private life.
Those questions were propounded by Mr. Harder, a citizen of Sacramento, as the basis for a challenged public debate between himself and plaintiff upon the qualifications of the respective candidates. It will be observed that nowhere in the published article was the plaintiff specifically charged with dishonesty or corruption as a public officer, or otherwise. We concede that the two questions are open to the construction that dishonesty and corruption may be inferred. But we are convinced both statements are reasonably susceptible of a contrary construction. If that be true, then, under California authorities, the complaint fails to state a cause of libel per se, in spite of the fact that the complaint alleges an innuendo charging defendant with meaning that plaintiff was guilty of dishonesty and corruption as a public officer. Sifted to its essential meaning, the first question is an inquiry as to where plaintiff obtained the money with which he purchased an office building which cost him $80,000. Obviously, that question reasonably infers that if it developed that plaintiff secured the money by gift, inheritance or profitable business investments, the purchase of the building was perfectly legitimate. It is true that, emphasizing the acquiring of means in excess of plaintiff's salary, the answer, as a defense, charges plaintiff with violating section 78 of the Sacramento County charter by engaging in private practice of the law contrary to the prohibition that officers "shall not engage in any private practice." But since that is a mere defense, which does not appear in the complaint, we shall disregard it. [2] The innuendo is itself a recognition of the fact that the language may not be considered defamatory on its face. When a defamatory meaning is necessarily apparent from the language employed, no innuendo is necessary. (Newell's Libel and Slander, 4th ed. 558, 542; 37 C.J. 147, 671.) The innuendo infers that the language is *534 open to the reasonable construction that it is not slanderous per se, or actionable.
[3] It is self-evident, with respect to the first question, that the inquiry may be construed to mean merely, where did plaintiff procure the means with which he purchased the $80,000 building? Of course, it is also open to the inference that the money may have been corruptly or dishonestly acquired. In effect, it may be construed to mean that, since he took office financially broke, the electors have a right to ask the candidate for reelection whether he obtained funds from gifts, inheritances or profitable investments with which he purchased the property. As the respondent expresses it, the question is reasonably susceptible of the construction, "How did you make your money? How did you increase your worth?" If it is reasonably open to that construction, the complaint does not state an actionable cause of libel per se, in spite of the innuendo. The question is based on the assumption that plaintiff took office "dead broke" and that he subsequently bought a building which cost him $80,000. We must assume both statements are true since plaintiff failed to deny either of them. If those statements be true it would seem to be a legitimate inquiry to ask the plaintiff, in effect, did you get the money from gifts, legacies or profitable investments, or otherwise? We conclude that the question does not constitute an actionable cause of libel per se.
[4] The second alleged libelous statement included in the complaint and relied upon by plaintiff is certainly open to the reasonable construction that the record of plaintiff's opponent, Mr. Brown, as compared with that of plaintiff, is "exemplary," as a public officer and in private life. It does not impute dishonesty or corruption in office. To say that one man's record, as a prosecuting officer or in private life, is exemplary as compared with another, does not ordinarily mean that the less ideal man is corrupt, dishonest or faithless. Merely because a man is not exemplary would not tend to expose him to "hatred, contempt, ridicule, or obloquy," or cause "him to be shunned or avoided." Primarily the word "exemplary" merely means serving as an example, a pattern, a model, ideal or superior. Characterizing the record of a lawyer as exemplary would ordinarily mean he was able, capable, forceful, industrious and successful. It might also mean he is reliable and trustworthy. To say that a lawyer is not ideal or exemplary ordinarily means that he may lack *535 those characteristics in the highest degree, and that he might be careless, negligent, indolent, or possibly unreliable. We think that statement is not libelous per se since it is susceptible of either construction. For the purpose of determining that question the innuendo adds nothing of value to the complaint. [5] An innuendo may not enlarge the charge or change the import of the language employed. It is permitted for the purpose of explaining the meaning of language which is ambiguous or uncertain in its application. (Newell on Slander and Libel, supra, pp. 588, 589, 542, 543; 16 Cal.Jur. 88, 57-60.) The question as to whether a complaint states an actionable cause for libel is a problem for the determination of the court. (Mortensen v. Los Angeles Examiner, 112 Cal.App. 194, 202 [296 P. 927].)
[6] In the interest of public welfare, an individual or a newspaper is privileged to challenge the fitness or qualifications of a candidate for public office, provided the statements with relation thereto are true. In the case of Eva v. Smith, 89 Cal.App. 324 [264 P. 803], a member of the city council of San Mateo published in the "San Mateo Times" regarding the defendant and other candidates for reelection, among other things, that "I am strongly in favor of keeping the City Council free from any suspicion or taint of unfairness in the City's contracts. No contractor should be influenced to buy from any particular firm. ..." The complaint contained an innuendo alleging that defendant intended thereby to charge plaintiff with dishonesty in performance of his official duties as a member of the city council. A demurrer to the complaint was sustained without leave to amend. The order sustaining the demurrer was affirmed. On appeal the Supreme Court said:
"Taking the article as a whole, it seems clear to us that it amounts to no more than a criticism of plaintiff's qualifications for office and one which defendant was entitled to make. No malversation on the part of plaintiff is charged. ... Nor does the article charge the plaintiff was guilty of dishonest conduct with reference to any public contracts. An individual who seeks or accepts public office invites and challenges public criticism so far as it may relate to his fitness and qualifications, and it is a proper subject of comment. It is, therefore, justifiable for one to communicate, bona fide, to the constituency any matter respecting a candidate material to the election. ... No one, of course, has a right to wrongfully impute dishonesty *536 to him. ... The conduct of public officers being open to public criticism, it is for the interest of society that their acts may be freely published with fitting comment or strictures. ... It would be absurd to hold as libelous to say of a candidate for public office that he was utterly unworthy of public confidence. ... And, again, it has been said that it is one of the infelicities of public life that a public officer is thus exposed to critical and often unjust comment; .... The purpose of the rule permitting fair and honest criticism is that it promotes the public good and hence is based upon public policy. (Triggs v. Sun Printing Assn., supra [179 N.Y. 144 (103 Am.St.Rep. 841, 1 Ann.Cas. 326, 66 L.R.A. 612, 71 N.E. 739)].) In thus permitting criticism the law gives a wide liberty, there being an honest regard for the truth. Within this limit public journals, speakers, and private individuals may express opinions and indulge in criticism upon the character or habits, or mental or moral qualifications of official candidates. (1 Cooley on Torts, p. 443.)"
[7] Section 256 of the Penal Code provides that a communication made by one who is interested in the subject, to one who is also interested therein, is not presumed to be malicious, "and is a privileged communication." We must presume that newspapers and the electors of a particular locality are interested in the character and fitness of their public officers. As the Eva case, supra, from which we have quoted, says, such statements should be made with an "honest regard for the truth."
Concerning the liability for alleged libel in publishing an article involving a labor dispute, it is likewise said in Emde v. San Joaquin County Central Labor Council, 23 Cal.2d 146, at page 154 [143 P.2d 20, 150 A.L.R. 916]:
"Because, however, the peaceful settlement of labor contention is a matter of vital public concern, the parties to such a controversy must be accorded the right to make fair comment upon the facts involved, at least so long as the criticism is based upon a true or privileged statement of fact." (Italics ours.)
In Snively v. Record Publishing Co., 185 Cal. 565, it is said at page 574 [198 P. 1]:
"Since a libel is 'a false and unprivileged publication' (section 45), it follows that the publication must be both false and unprivileged in order that it shall constitute an actionable libel."
[8] From the foregoing it follows that since the plaintiff did not deny the truthfulness of the essential facts upon *537 which the inquiry complained of was clearly based, we must assume those facts were true, and that the complaint, therefore, fails to state an actionable cause for libel per se.
[9] The complaint in this case fails to allege special damages. The rule is established in California and in other jurisdictions that, where no special damages by reason of the publication are alleged, the existence of an actionable cause for libel depends upon whether or not the complaint alleges facts which are libelous per se. In other words, if the complaint fails to allege an action which is libelous per se, it is necessary to plead special damages or the complaint is fatally defective for failure to state an actionable cause based on libel. (Peabody v. Barham, 52 Cal.App.2d 581 [126 P.2d 668]; Washer v. Bank of America, 21 Cal.2d 822 [136 P.2d 297, 155 A.L.R. 1338]; Ruble v. Kirkwood, 125 Ore. 316 [266 P. 252, 254]; Thompson v. Osawatomie Pub. Co., 159 Kan. 562 [156 P.2d 506]; Knapp v. Post Printing & Pub. Co., 111 Colo. 492 [144 P.2d 981]; 37 C.J. 35, 358; 86 A.L.R. 848, note; 12 So.Cal.L.Rev., p. 239.)
Other California cases recognized the foregoing rule by holding either directly, or in effect, that it is only when the complaint fails to state an action which is libelous per se, that it is necessary to plead special damages. (Pollock v. Evening Herald Pub. Co., 28 Cal.App. 786, 789 [154 P. 30]; Harris v. Curtis Pub. Co., 49 Cal.App.2d 340, 344 [121 P.2d 761]; Schomberg v. Walker, 132 Cal. 224 [64 P. 290]; Layne v. Kirby, 208 Cal. 694 [284 P. 441]; Bates v. Campbell, 213 Cal. 438 [2 P.2d 383].) In the Schomberg case, the court said, at page 227: "It is only when the libelous meaning of the publication is covert--not apparent on the face of the language used--that averment and proof of special damage is required." In that case the Supreme Court held that the alleged publication was libelous per se, and that it was, therefore, not necessary to have alleged special damages. For that reason the judgment in favor of the defendant was reversed. In the Pollock case a judgment in favor of the defendant was affirmed on appeal. The appellate court said, at page 788: "It appears to be the rule that 'in order to maintain an action upon words which are not libelous ... per se, the plaintiff must have suffered some special damage, and the recovery is limited to compensation therefor.' " In the Harris case a judgment of nonsuit was affirmed on appeal. The court said: "Where the publication is not libelous per se the matters referred to must be *538 alleged in order to state a cause of action." In the Layne case an order sustaining a demurrer to the complaint was reversed on appeal. The Supreme Court held that the alleged defamatory matter was libelous per se. The same proceeding and conclusion was reached in the Bates case.
In the Peabody case, supra, upon which the respondent in this case chiefly relies, a judgment of nonsuit was affirmed on appeal. A hearing was denied by the Supreme Court. In determining that a complaint for libel fails to state an actionable cause, unless the defamatory matter relied upon consists of libel per se, or alleges special damages, the appellate court said:
"A publication is libelous per se when on its face and without the aid of innuendo, it exposes a person to hatred, contempt. ... Whether the language used is libelous per se must be determined from the language itself. (Mortensen v. Los Angeles Examiner, 112 Cal.App. 194 [296 P. 927].) In order to determine whether it is libelous per se no resort may be had to any declaration as to the meaning of the words or as to the intention of their author; it must be construed apart from allegations of innuendo and inducement. [Citing authorities.] Also in determining whether a publication is libelous per se, its language must be given the natural and popular construction of the average reader. ..."
"When offending language is susceptible of an innocent interpretation it is not actionable per se. Neither will language be given a libelous character unless such is the plain and obvious import. ... Neither is it actionable per se if the offending language has more than one meaning. [Citing authorities.] ..."
"... But in addition to an allegation of the inducement [when the defamatory matter is not libelous per se], it is also necessary for plaintiff to allege special damages by reason of the meaning gained from the publication by specifically designated parties affected by the publication with the items of losses suffered in each instance. ..."
"... The absence of such allegation and of the allegation of special damages renders plaintiff's complaint utterly inadequate to warrant an inquiry into the results of the publication."
In the Washer case, supra, the Supreme Court reversed an order sustaining a demurrer to the complaint for failure to state a cause of action. The Supreme Court held that the complaint adequately alleged facts sufficient to state a cause *539 for special damages. It, however, specifically referred to the Peabody case with entire approval, from which case we have previously quoted. At page 828 of the Washer case it is said:
"... And when the offending language is susceptible of an innocent interpretation, it is not actionable per se, but, in addition to an innuendo, it is necessary for the plaintiff to allege special damages by reason of the meaning gained from the publication."
In support of the foregoing rule, which appears to be firmly established in this state, the respondent in this case has cited numerous authorities from a score of other jurisdictions. But it is not necessary to discuss those cases, or the numerous cases to the contrary from other jurisdictions, upon which the appellant relies.
In support of the aforesaid rule of pleading with respect to the sufficiency of a complaint for libel, it is interesting to note that the Legislature adopted section 45a of the Civil Code (Stats. 1945, ch. 1489, p. 2762) after this suit was commenced. That section provides:
"A libel which is defamatory of the plaintiff without the necessity of explanatory matter, such as an inducement, innuendo or other extrinsic fact, is said to be a libel on its face. Defamatory language not libelous on its face is not actionable unless the plaintiff alleges and proves that he has suffered special damage as a proximate result thereof. ..." (Italics added.)
We assume the Legislature adopted the preceding section in recognition of the established rule of pleadings which prevails in California. The adoption of section 45a of the Civil Code merely enacts, in code form, the rule which has long been in force in this state. (1 Witkin's Summary of California Law, 6th ed., p. 674, 85; 19 So.Cal.L.Rev., p. 121.)
We conclude that the complaint in this case fails to state an actionable cause for libel per se, and that since no special damages are alleged, and plaintiff refused to amend his complaint in that respect, the motion for judgment on the pleadings was properly granted.
The judgment is affirmed.
Peek, J., and Adams, P. J., concurred.
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NUMBER 13-99-578-CR
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI
___________________________________________________________________
CHARLES WILSON, Appellant,
v.
THE STATE OF TEXAS, Appellee.
___________________________________________________________________
On appeal from the 23rd District Court
of Matagorda County, Texas.
___________________________________________________________________
O P I N I O N
Before Justices Dorsey, Yañez, and Castillo
Opinion by Justice Dorsey
Appellant, Charles Wilson, was convicted of possession of a
controlled substance with intent to deliver, and was assessed
punishment of life imprisonment. He filed a pro se brief with this Court,
complaining of two points.(1)
First, Wilson complains that the affidavit supporting the search
warrant allowing his home to be searched was inadequate. The right
of a citizen to be secure from unreasonable searches and seizures is
guaranteed under the United States Constitution, the Texas Constitution
and various statutory provisions. Article 18.01(b) of the code of criminal
procedure states that no search warrant shall issue for any purpose in
Texas unless sufficient facts are first presented to satisfy the issuing
magistrate that there is probable cause for its issuance. Tex. Code Crim.
Proc. Ann. art. 18.01(b) (Vernon Supp. 2000). A sworn affidavit setting
forth substantial facts establishing probable cause shall be filed in every
instance in which a search warrant is requested. Id. Probable cause to
support the issuance of a search warrant exists where the facts
submitted to the magistrate are sufficient to justify a conclusion that the
object of the search is probably on the premises to be searched at the
time the warrant is issued. Illinois v. Gates, 462 U.S. 213, 238-39
(1983).
The search warrant allowing the police to search Wilson's
residence was issued by a magistrate, who relied on information
contained in an affidavit sworn out by a police officer. That affidavit
stated that Wilson was suspected to be manufacturing crack cocaine
at his residence at 1113 Fourth Street in Bay City. The facts upon
which the police officer's suspicions were based also were contained
in the affidavit. It said:
(1) Crack and powder cocaine, along with certain items
used in manufacturing crack cocaine, were seized from the
same residence--which belonged to Wilson at that time as
well--seven months prior to the date of the affidavit;
(2) Numerous confidential informants had said that Wilson
was still manufacturing and distributing crack cocaine;
(3) Wilson still lived in the same residence where the
cocaine and manufacturing equipment were found
previously;
(4) Wilson had made noticeable improvements to the
residence, yet had no obvious means of income;
(5) A fellow police officer said that Wilson had purchased
two boxes of baking soda at a convenience store;
(6) That police officer also said that a clerk at the
convenience store told him that Wilson had been buying up
to 15 boxes of baking soda there each week;
(7) The police officer swearing out the affidavit swore that
from extensive training, he knew that baking soda is used to
manufacture crack cocaine and that the amount of baking
soda purchased by Wilson is more than the amount typically
purchased for normal use.
Wilson contends that this is not enough information to create the
probable cause that criminal activity was underway necessary for the
issuance of a search warrant. He argues that because each of these
facts, taken individually, would be insufficient, they may not be
combined to form sufficient suspicion upon which to base a search
warrant. We disagree.
The question of whether the facts alleged in a probable cause
affidavit sufficiently support a search warrant is determined by
examining the totality of circumstances. See Gates, 462 U.S. at
228-229; Ramos v. State, 934 S.W.2d 358, 362-63 (Tex. Crim. App.
1996); Johnson v. State, 803 S.W.2d 272, 288 (Tex. Crim. App. 1990),
rev'd on other grounds, Heitman v. State, 815 S.W.2d 681, 685 (Tex.
Crim. App. 1991).(2)
The court of criminal appeals has stated that the
task of a magistrate who is requested to issue a search warrant is to:
make a practical common sense 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. The affidavit must be
more than a mere conclusory statement that gives the
magistrate virtually no basis at all for making a judgment
regarding probable cause. The magistrate must be
presented with sufficient information to allow that individual
to determine probable cause; his action cannot be a mere
ratification of the bare conclusions of others. The magistrate
should not be bound by standards such as proof beyond a
reasonable doubt or by a preponderance of the evidence.
The magistrate's sole concern should be probability.
Johnson, 803 S.W.2d at 288 (internal quotations and cites omitted).
"An affidavit must allege substantial facts establishing probable cause
to believe that the items would be found at the identified place."
Massey v. State, 933 S.W.2d 141, 148 (Tex. Crim. App. 1996). We look
at the four corners of the affidavit to determine whether "the facts
submitted to the magistrate are sufficient to justify a conclusion that the
property that is the object of the search probably is on the premises to
be searched at the time the warrant issues." Id.
The United States Supreme Court has explained:
The process does not deal with hard certainties, but with
probabilities. Long before the law of probabilities was
articulated as such, practical people formulated certain
common-sense conclusions about human behavior; jurors
as factfinders are permitted to do the same--and so are law
enforcement officers. . . . [T]he evidence . . . must be seen
and weighed not in terms of library analysis by scholars, but
as understood by those versed in the field of law
enforcement.
As these comments illustrate, probable cause is a fluid
concept--turning on the assessment of probabilities in
particular factual contexts--not readily, or even usefully,
reduced to a neat set of legal rules. Informants' tips
doubtless come in many shapes and sizes from many
different types of persons. As we said in Adams v. Williams,
407 U.S. 143, 147, 92 S.Ct. 1921, 1924, 32 L.Ed.2d 612
(1972), "Informants' tips, like all other clues and evidence
coming to a policeman on the scene may vary greatly in their
value and reliability." Rigid legal rules are ill-suited to an area
of such diversity. "One simple rule will not cover every
situation." Ibid.
Gates, 462 U.S. at 231.
Moreover, great deference must be given to the magistrate's
decision. Johnson, 803 S.W.2d at 289; Gates, 462 U.S. at 236. The
reason for this deference is that without it, there would be little or no
incentive for a police officer to go to the trouble of first obtaining a
warrant in order to conduct a search. Gates, 462 U.S. at 236. Thus,
the deferential standard is in keeping with our preference that searches
be conducted only under the authority of a warrant. Id.; see U.S. Const.
amend. IV.
Accordingly, "appellate court review of the sufficiency of an
affidavit is not a de novo review." Johnson, 803 S.W.2d at 289. "[T]he
traditional standard for review of an issuing magistrate's probable cause
determination has been that so long as the magistrate had a substantial
basis for . . . conclud[ing] that a search would uncover evidence of
wrongdoing, the Fourth Amendment requires no more." Id. (internal
quotations omitted). "A grudging or negative attitude by reviewing
courts toward warrants . . . is inconsistent with the Fourth
Amendment's strong preference for searches conducted pursuant to a
warrant, [and thus,] courts should not invalidate . . . warrant[s] by
interpreting affidavit[s] in a hypertechnical, rather than a commonsense,
manner." Gates, 462 U.S. at 236 (internal quotations omitted).
We realize that some courts have adopted a de novo standard of
review, relying on Guzman v. State, which held that where a trial
court's decision does not turn on the credibility of any witnesses, no
deference is to be accorded to that decision. Guzman v. State, 955
S.W.2d 85, 89 (Tex. Crim. App.1997); see Ramos v. State, No.
01-99-00188-CR, 2000 WL 1593837, *2 (Tex. App.--Houston [1st Dist.]
Oct. 26, 2000, no pet. h.); Wynn v. State, 996 S.W.2d 324, 326-27
(Tex. App.--Fort Worth 1999, no pet.). The Guzman court relied, in
part, on Ornelas v. United States, 517 U.S. 690 (1996). In Ornelas, the
U.S. Supreme Court held that appellate review of reasonable suspicion
and probable cause should be conducted de novo. Ornelas, 517 U.S.
at 69798. However, the Ornelas Court noted that the de novo
standard would not apply to determinations regarding issuance of a
search warrant. It stated:
The Fourth Amendment demonstrates a 'strong preference
for searches conducted pursuant to a warrant,' Gates, supra,
at 236, 103 S.Ct., at 2331, and the police are more likely to
use the warrant process if the scrutiny applied to a
magistrate's probable-cause determination to issue a
warrant is less than that for warrantless searches. Were we
to eliminate this distinction, we would eliminate the
incentive.
Ornelas, 517 U.S. at 698. Accordingly, we will continue to follow
Johnson and Gates, and accord great deference to the decision of the
magistrate who issued the warrant. See also State v. Bradley, 966
S.W.2d 871, 873-74 n.1 (Tex. App.--Austin 1998, no pet.); Daniels v.
State, 999 S.W.2d 52, 54 (Tex. App.--Houston [14th Dist.] 1999, no
pet.).
Wilson also challenges the reliability of the police officer who
swore the affidavit and the sources of his information. The Texas high
court, in Johnson, spoke to that issue as well:
The reliability of the affiant and his sources of
information are part of the "totality of the circumstances" that
the magistrate should evaluate in making his probable cause
determination. A magistrate, however, is entitled to rely on
source information supplied by an average citizen, since,
unlike many police informants, they are "much less likely to
produce false or untrustworthy information." Jaben v.
United States, 381 U.S. 214, 85 S.Ct. 1365, 14 L.Ed.2d 345
(1965); see Esco v. State, 668 S.W.2d 358 (Tex. Crim.
App.1982). The same rule applies to law enforcement
officers. The magistrate may rely on the affidavit of a police
officer based on his knowledge or the knowledge of other
officers. "Observations of fellow officers of the Government
engaged in a common investigation are plainly a reliable
basis for a warrant applied for by one of their number."
United States v. Ventresca, 380 U.S. 102, 85 S.Ct. 741, 13
L.Ed.2d 684 (1965).
Johnson, 803 S.W.2d at 236. Also, Texas courts have noted that
information may be bolstered by corroboration with independent police
work or by cross-corroboration with other informants. Doescher v.
State, 578 S.W.2d 385, 392 (Tex. Crim. App. 1978); Lockett v. State,
879 S.W.2d 184, 188 (Tex. App.--Houston [14th Dist.] 1994, pet. ref'd).
We hold the affidavit in Wilson's case is sufficient to justify the
issuance of the warrant. Most of the information contained in the
affidavit was based on the personal knowledge of the police officer who
made the affidavit. The information which came from the other police
officer is recognized in the law as a reliable basis for issuance of a
warrant. See Ventresca, 380 U.S. at 10809; Johnson, 803 S.W.2d at
289. The information provided by the second police officer that Wilson
was currently purchasing large quantities of baking soda--a known
ingredient in the manufacture of crack cocaine--from a convenience
store is particularly suspicious.
Finally, the only other category of information contained in that
affidavit was the statement made by the affiant that numerous
confidential informants had told him that Wilson was again
manufacturing and distributing drugs from that residence. That
information, alone, arguably would be insufficient to support issuance
of a warrant. However, that information is corroborated by the other
information contained in the affidavit that creates suspicion that Wilson
was again manufacturing and distributing drugs. See Doescher, 578
S.W.2d at 392; Lockett, 879 S.W.2d at 188. Based on a totality of the
circumstantial evidence contained in the affidavit presented to the
magistrate in this case, we believe that the affidavit was sufficient to
justify issuance of the search warrant. We hold the affidavit alleges
facts sufficient to justify a conclusion that the property that is the object
of the search probably was in Wilson's residence or car. We overrule
Wilson's first point of error.
By his second point of error, Wilson contends that he received
ineffective assistance of counsel. The only instance of ineffectiveness
he points to on the part of his trial counsel is that his trial counsel
stipulated to the authenticity of the affidavit and the search warrant at
the suppression hearing. This allegation does not meet the standard for
proving ineffective assistance of counsel.
Texas courts follow the test established in Strickland v.
Washington to determine whether counsel's representation was
inadequate so as to violate a defendant's Sixth Amendment right to
counsel. Strickland v. Washington, 466 U.S. 668; see Thompson v.
State, 9 S.W.3d 808, 812 (Tex. Crim. App.1999). The Strickland test
requires appellant to: (1) prove that counsel's performance was below
an objective standard of reasonableness and (2) prove that this deficient
performance prejudiced the defense. To make out a claim of ineffective
assistance, an appellant must show ineffective assistance firmly rooted
in the record. Jackson v. State, 877 S.W.2d 768, 771-72 (Tex. Crim.
App. 1994). Wilson has failed to show either inadequate representation
or prejudice to his case.
The record shows that during the suppression hearing, Wilson's
counsel stipulated to the authenticity and admissibility of the search
warrant and the affidavit. The Texas Rules of Evidence require, as a
predicate to admissibility, that evidence be properly authenticated or
identified. See Tex. R. Evid. 901. That is, the proponent must show the
trial court that the document or evidence in question is what he
purports it to be. See id. The rule lists several ways that authentication
might be accomplished; for example, evidence may by authenticated by
the testimony of a witness with knowledge. See id. at 901(b)(1).
Wilson was not harmed by his counsel's stipulating to the
authenticity and admissibility of the documents in question. To the
contrary, he needed those documents in order to support his argument
that the facts contained in the affidavit were an insufficient basis for the
magistrate's issuance of the search warrant. Likewise, in that setting,
we cannot say that counsel's stipulation fell below the standards of
adequate representation. We overrule Wilson's point on ineffective
assistance of counsel.
Because we have overruled all of Wilson's points of error, we
affirm his conviction.
______________________________
J. BONNER DORSEY,
Justice
Do not publish.
Tex. R. App. P. 47.3(b).
Opinion delivered and filed
this 8th day of February, 2001.
1. We have liberally construed the arguments contained in Wilson's
pro se brief, and address them as two discrete points of error.
2. The court of criminal appeals disapproved Johnson to the extent
that it held that the Texas Constitution should always be interpreted in
conformity with U.S. Supreme Court opinions interpreting the Fourth
Amendment. Heitman v. State, 815 S.W.2d 681, 685 n. 6 (Tex. Crim.
App. 1991). However, the court has not overruled the substantive
holding in Johnson that the Gates analysis should be applied to the
review of a magistrate's probable cause determination. See State v.
Bradley, 966 S.W.2d 871, 876 n.1 (Tex. App.--Austin 1998, no pet.)
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411 F.3d 679
UNITED STATES of America, Plaintiff-Appellee,v.Mareco CARAWAY, Defendant-Appellant.
No. 04-5115.
United States Court of Appeals, Sixth Circuit.
Argued: April 19, 2005.
Decided and Filed: June 9, 2005.
Stephen B. Shankman, Office of the Federal Public Defender for the Western District of Tennessee, Memphis, Tennessee, for Appellant.
David N. Pritchard, Assistant United States Attorney, Memphis, Tennessee, for Appellee.
Pamela B. Hamrin, Office of the Federal Public Defender for the Western District of Tennessee, Memphis, Tennessee, for Appellant.
Before: BOGGS, Chief Judge; RYAN and ROGERS, Circuit Judges.
OPINION
ROGERS, Circuit Judge.
1
Mareco Caraway appeals his conviction and sentence for being a felon in possession of a firearm. Mr. Caraway argues on appeal that the evidence presented at trial was constitutionally insufficient to sustain his conviction, and that the district court abused its discretion in allowing the prosecutor to introduce certain evidence to rebut the testimony of a defense witness. Mr. Caraway also argues that his sentence violates the Sixth Amendment because he received a one-level enhancement under the armed career criminal sentencing guideline based on the district court's finding that he possessed the firearm in connection with a violent felony, in this case assaulting the police officer who attempted to apprehend him. U.S.S.G. § 4B1.4(b)(3) (2002). We affirm Mr. Caraway's conviction, but vacate Mr. Caraway's sentence and remand the case for resentencing in light of United States v. Booker, ___ U.S. ___, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005).
I.
2
On November 28, 2002, Lieutenant Darryl Porter and Officer Jonas Holguin of the Memphis Police Department responded to a call reporting the location of a stolen vehicle. Lt. Porter was told by an unidentified individual that the driver of the stolen car was a black man in a brown jacket walking away from the vehicle about 300 feet from Lt. Porter and Officer Holguin. At about the same time, Officer Ronald Weddle arrived on the scene and Lt. Porter asked Officer Weddle to question the individual walking away. Officer Weddle drove toward the individual, who ran down an alley when Officer Weddle stepped from his squad car to question the suspect. Officer Weddle gave chase on foot, down the alley and into a back yard.
3
Officer Weddle discovered the suspect crouching behind a shed in the backyard, facing away from Officer Weddle and holding a handgun. Officer Weddle drew his gun and ordered the suspect to drop his weapon and surrender. The suspect turned toward Officer Weddle and pointed a silver pistol at him, then fled, dropping the gun along the way. The suspect tried to jump a fence, at which point Officer Weddle grabbed him from behind and pulled him to the ground. The suspect continued to resist, and in the process shed his jacket and shirt to break away from Officer Weddle. Officer Weddle observed the suspect climb the fence and crawl under a black SUV to hide; Weddle radioed this information to Officer Holguin and Lt. Porter. Officer Holguin found the suspect under the SUV and ordered him out. The suspect made one last attempt to flee, but was subdued by Officers Holguin and Weddle.
4
After the suspect was secured, Officer Weddle returned to the backyard and retrieved the gun and clothing that the suspect had discarded. The suspect turned out to be Mr. Caraway. Lt. Porter, as the supervising officer on the scene, arrived to sign off on Mr. Caraway's arrest. While counting the money found on Mr. Caraway, Lt. Porter heard Mr. Caraway state, "First you take my gun and now you are going to take my money." Lt. Porter returned the money to Mr. Caraway, and he was then taken to be booked. The property report prepared at booking listed him as wearing two black t-shirts and a pair of gray pants. Mr. Caraway was charged in Tennessee state court with evading arrest, unlawful possession of a weapon, aggravated assault, assault, and resisting official detention. However, these charges were dropped on January 28, 2003, after Officer Weddle was unable to make a positive identification of Mr. Caraway at a preliminary hearing. Following the hearing, Officer Weddle refreshed his recollection of Mr. Caraway's appearance by reviewing a booking photo of Mr. Caraway taken the night of the arrest.
5
In April of 2003, Mr. Caraway was indicted by a federal grand jury for being a felon in possession of a firearm. He pled not guilty and proceeded to trial in September 2003. At trial, Lt. Porter and Officers Weddle and Holguin testified to the events described above. Officer Weddle positively identified Mr. Caraway as the individual he chased down and arrested in November of 2002, and the defense cross-examined Weddle on his earlier inability to identify Mr. Caraway. The prosecutor also established that the firearm and ammunition recovered from the scene of Mr. Caraway's arrest were manufactured outside of Tennessee and therefore had traveled in interstate commerce. At the close of the Government's case-in-chief, defense counsel moved for a judgment of acquittal under Federal Rule of Criminal Procedure 29, but the motion was denied.
6
Mr. Caraway's defense rested on a theory of misidentification. The defense called Ms. Tonya Rice, a property clerk on duty when Mr. Caraway was booked, who testified that he was wearing two black t-shirts and a gray pair of pants at the time he was booked. In rebuttal, the prosecutor recalled Officer Weddle to the stand. Weddle again testified that Mr. Caraway had been wearing a brown jacket and long-sleeved shirt, but that they were removed when the two men struggled the night of Mr. Caraway's arrest. Officer Weddle further testified that the jacket and shirt were taken to the evidence room of the Memphis police department that evening. The prosecutor also introduced the jacket and shirt into evidence. Defense counsel objected to the testimony and the introduction of the jacket and shirt, on the grounds that the rebuttal was improper. The district court overruled the objection. At the close of evidence, the defense again moved for a judgment of acquittal, and the district court again denied the motion.
7
The jury found Mr. Caraway guilty of being a felon in possession of a weapon. At the sentencing hearing that followed, Mr. Caraway conceded that the district court was required to sentence him as an armed career criminal under 18 U.S.C. § 924(e). Under the sentencing guidelines and the statute, Mr. Caraway's offense level was either a 33 or 34, depending on whether or not the firearm he was convicted of possessing was used in connection with a crime of violence. See U.S.S.G. § 4B1.4(b)(3) (2002). The district court found, over Mr. Caraway's objection, that despite the dismissal of the state criminal charges Mr. Caraway possessed the firearm in connection with a crime of violence. As a result, Mr. Caraway's guideline offense level was 34, with a sentencing range of 262 to 327 months. The district court sentenced Mr. Caraway to 302 months of imprisonment and three years of supervised release. This appeal followed.
II.
8
The evidence presented by the prosecution at trial was sufficient to establish the elements of the offense charged such that a rational juror could find Mr. Caraway guilty beyond a reasonable doubt. Therefore, Mr. Caraway's motions for a judgment of acquittal were properly denied. "When reviewing the sufficiency of the evidence to support 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.'" United States v. Wood, 364 F.3d 704, 716 (6th Cir.2004) (quoting Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979) (emphasis in original)).
9
In order for a defendant to be found guilty of being a felon in possession of a firearm, the government must prove: (1) that the defendant had a prior felony conviction; (2) that the defendant knowingly possessed the firearm, either actually or constructively; and (3) that the firearm had traveled in interstate commerce. See 18 U.S.C. § 922(g) (2000); United States v. Smith, 320 F.3d 647, 655 (6th Cir.2003). Here, the prosecutor presented: (1) evidence of Mr. Caraway's prior felony conviction; (2) the testimony of Lt. Porter and Officers Weddle and Holguin to establish that the gun recovered at the scene belonged to Mr. Caraway, including Officer Weddle's identification of Mr. Caraway; and (3) testimony that the gun and ammunition were manufactured outside of Tennessee. The evidence presented by the prosecutor was sufficient to establish the elements of the offense such that a rational trier of fact could convict Mr Caraway.
10
Mr. Caraway contends that Officer Weddle's identification of him was insufficient to support the possession element of the crime. He urges the court to abandon as "illogical" our well-settled position that "attacks on witness credibility are simply challenges to the quality of the government's evidence and not to the sufficiency of the evidence." United States v. Farley, 2 F.3d 645, 652 (6th Cir.1993) (emphasis in original). Mr. Caraway argues that a court should not blindly adhere to the conclusion of guilt by a jury where the conviction hinges almost solely on the testimony of a seriously impeached witness. However, as the Supreme Court has stated, "[t]he Anglo-Saxon tradition of criminal justice, embodied in the United States Constitution and in federal statutes, makes jurors the judges of the credibility of testimony offered by witnesses. It is for them, generally, and not for appellate courts, to say that a particular witness spoke the truth or fabricated a cock-and-bull story." United States v. Bailey, 444 U.S. 394, 414-15, 100 S.Ct. 624, 62 L.Ed.2d 575 (1980). Officer Weddle identified Mr. Caraway in court and was cross-examined by defense counsel regarding any infirmities in his testimony. That the jury determined Officer Weddle spoke the truth is sufficient to establish that Mr. Caraway possessed the firearm.
11
It is true that courts need not blindly accept implausible stories swallowed by jurors. As the Second Circuit stated in United States v. Sanchez, 969 F.2d 1409, 1414 (2d Cir.1992), "[w]here testimony is patently incredible or defies physical realities, it may be rejected by the court, despite the jury's evaluation." But in this case the inability of Officer Weddle to identify Mr. Caraway at the state court proceeding did not make his identification of Mr. Caraway at the federal trial patently incredible, and his later identification was certainly not beyond the realm of physical possibility. Thus this case does not represent that extraordinarily rare occasion where a court might properly override the jury's determination of a witness's credibility.
12
Even if Officer Weddle were deemed to have been unable to identify Mr. Caraway in court, a jury could easily conclude that Mr. Caraway possessed the gun that evening. There was sufficient evidence beyond Officer Weddle's identification to allow the jury to infer that Mr. Caraway possessed the firearm. Officer Weddle observed an individual point a gun at him, then turn, flee over a fence and hide under an SUV. Officer Holguin and Lt. Porter testified that the individual that was found under the SUV was Mr. Caraway. Thus, the jury could infer in the absence of the identification that Mr. Caraway possessed the gun from the testimony presented.
III.
13
The district court did not abuse its discretion by allowing the prosecution to introduce the jacket and shirt into evidence to rebut the impression that Mr. Caraway was not wearing those items when he was arrested. The decision of the trial court to admit evidence on rebuttal is reviewed for abuse of discretion. United States v. Chance, 306 F.3d 356, 385 (6th Cir.2002); United States v. Tejada, 956 F.2d 1256, 1266 (2d Cir.1992). Generally, a district court must exercise reasonable control over the mode and order of presenting evidence with the goal that the presentation be effective for ascertaining the truth. FED. R. EVID. 611(a). Evidence introduced on rebuttal serves to "rebut new evidence or new theories proffered in the defendant's case-in-chief," and is not limited by the fact that the plaintiff could have introduced the proffered evidence in his case-in-chief. Benedict v. United States, 822 F.2d 1426, 1428 (6th Cir.1987); see also Tejada, 956 F.2d at 1266-67.
14
The district court has broad discretion to determine the scope of rebuttal in admitting evidence, and in this case it was clearly within the district court's discretion to admit the evidence in question. Id. When Mr. Caraway raised the inference of misidentification through the testimony of the property clerk who described the items Mr. Caraway was wearing when he was booked, the government was entitled to introduce the jacket and shirt to rebut that inference. The Government did not have to negate the testimony of the property clerk in its case-in-chief and the district court did not abuse its discretion by allowing the jacket and shirt into evidence to question the defense's theory of misidentification.
IV.
15
While we affirm Mr. Caraway's conviction, at oral argument the Government conceded that under Sixth Circuit precedent the case must be remanded for resentencing. See United States v. Booker, ___ U.S. ___, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005); United States v. Oliver, 397 F.3d 369 (6th Cir.2005). Therefore, based on the foregoing, we AFFIRM Mr. Caraway's conviction, but VACATE his sentence and REMAND the case to the district court for resentencing.
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Case: 10-15702 Date Filed: 10/23/2012 Page: 1 of 4
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 10-15702
Non-Argument Calendar
________________________
D.C. Docket Nos. 2:08-cv-00418-WHA-SRW, 2:06-cr-00012-UWC-SRW-4
DEMETRIUS J. HAWKINS,
lllllllllllllllllllllllllllllllllllllll Petitioner-Appellant,
versus
UNITED STATES OF AMERICA,
llllllllllllllllllllllllllllllllllllllll Respondent-Appellee.
________________________
Appeal from the United States District Court
for the Middle District of Alabama
________________________
(October 23, 2012)
Before BARKETT, PRYOR and BLACK, Circuit Judges.
PER CURIAM:
Case: 10-15702 Date Filed: 10/23/2012 Page: 2 of 4
Demetrius J. Hawkins, a federal prisoner, appeals the denial of his motion to
vacate his sentence, pursuant to 28 U.S.C. § 2255, and his request for an
evidentiary hearing. We granted a certificate of appealability to determine
whether the district court erred when it denied Hawkins’ claim that counsel
provided ineffective assistance for failing to move to exclude the testimony of
Toby Boutwell, a records custodian for a cellular telephone company. Hawkins
contends his counsel was ineffective for failing to move to exclude this testimony
because the records were unfairly prejudicial under Federal Rule of Evidence 403.1
The cell phone records introduced through Boutwell’s testimony supported
Hawkins’ participation in the drug conspiracy of which he was convicted. After
review, we affirm the district court.
In a § 2255 proceeding, we review a district court’s legal conclusions de
novo and its factual findings for clear error. Devine v. United States, 520 F.3d
1286, 1287 (11th Cir. 2008). Whether counsel was ineffective is a mixed question
of law and fact that we review de novo. Id. In order to prevail on an ineffective
assistance of counsel claim, Hawkins must establish: (1) his counsel’s
1
Hawkins also argues the cell phone records lacked proper foundation and were not
authenticated. However, because these arguments were not raised below, we decline to address
them on appeal. See Johnson v. United States, 340 F.3d 1219, 1228 n.8 (11th Cir. 2003) (stating
that arguments not raised in the district court are waived on appeal).
2
Case: 10-15702 Date Filed: 10/23/2012 Page: 3 of 4
performance was deficient; and (2) he suffered prejudice as a result of the
deficient performance. Strickland v. Washington, 104 S. Ct. 2052, 2064 (1984).
As to deficient performance, Hawkins is unable to show his counsel’s
representation fell below an objective standard of reasonableness under prevailing
professional norms. Green v. Nelson, 595 F.3d 1245, 1249 (11th Cir. 2010).
Counsel’s decision not to move to exclude the testimony of the records custodian
was a reasonable strategic choice, since there was little evidentiary basis on which
to exclude the evidence. Strickland, 104 S. Ct. at 2066. Therefore, Hawkins has
not overcome the strong presumption that his counsel provided professionally
reasonable assistance. Dingle v. Sec’y for Dept. of Corr., 480 F.3d 1092, 1099
(11th Cir. 2007).
As to prejudice, Hawkins has not established “there is a reasonable
probability that, but for counsel’s unprofessional errors, the result of the
proceeding would have been different.” Id. at 2068. First, Hawkins cannot show
that, if his counsel had objected to the admissibility of the evidence, the district
court should have excluded it under Federal Rule of Evidence 403. In light of the
undisputed fact that Rapp testified he found a cell phone with the number 404-
660-6042 on Hawkins after he was arrested, the cell phone record evidence was
highly probative and Hawkins was unable to show he was unfairly prejudiced by
3
Case: 10-15702 Date Filed: 10/23/2012 Page: 4 of 4
its admissibility. See Fed. R. Evid. 403. Second, Hawkins cannot establish the
exclusion of this evidence would have changed the result of the proceeding. Other
evidence introduced at trial, including the testimony of Rapp and Canady, directly
linked Hawkins to the marijuana conspiracy. Moreover, the fact that the cell
phone evidence was not introduced at the first trial, which resulted in a mistrial,
does not conclusively establish Hawkins was prejudiced by introduction of the cell
phone records at the second trial, which resulted in Hawkins’ conviction.
We conclude the district court did not err when it denied Hawkins’ claim
that counsel provided ineffective assistance for failing to move to exclude
Boutwell’s testimony. Moreover, we find an evidentiary hearing is not required
since the motion, files, and records of the case conclusively establish Hawkins is
not entitled to relief. See Aron v. United States, 291 F.3d 708, 714 n.5 (11th Cir.
2002). Accordingly, we affirm the decision of the district court.
AFFIRMED.
4
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ILLINOIS OFFICIAL REPORTS
Appellate Court
People v. Gray, 2013 IL App (1st) 112572
Appellate Court THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v.
Caption MARCOS GRAY, Defendant-Appellant.
District & No. First District, Fourth Division
Docket No. 1-11-2572
Filed April 11, 2013
Held Defendant’s petition under section 2-1401 of the Code of Civil Procedure
(Note: This syllabus alleging that his mandatory life sentence for first degree murder was void
constitutes no part of on the ground that it violated the prohibition against cruel and unusual
the opinion of the court punishment pursuant to Miller because defendant was 16 at the time of
but has been prepared his offense was properly dismissed, since his sentence was merely
by the Reporter of voidable, not void, and he did not file his petition within the two-year
Decisions for the statutory limitation, but defendant may raise the issue before a
convenience of the postconviction court.
reader.)
Decision Under Appeal from the Circuit Court of Cook County, No. 93-CR-20392-02; the
Review Hon. Colleen Ann Hyland, Judge, presiding.
Judgment Affirmed.
Counsel on Michael J. Pelletier, Alan D. Goldberg, and Rachel Moran, all of State
Appeal Appellate Defender’s Office, of Chicago, for appellant.
Anita M. Alvarez, State’s Attorney, of Chicago (Alan J. Spellberg,
Assistant State’s Attorney, of counsel), for the People.
Panel PRESIDING JUSTICE LAVIN delivered the judgment of the court, with
opinion.
Justices Epstein and Pucinski concurred in the judgment and opinion.
OPINION
¶1 Defendant Marcos Gray appeals from the dismissal of his petition filed under section 2-
1401 of the Code of Civil Procedure (735 ILCS 5/2-1401 (West 2010)). Following a jury
trial, defendant was convicted via accountability theory of the 1993 first degree murder and
attempted armed robbery of Sheila Doyle committed when defendant was age 16. Having
previously been convicted of first degree murder, defendant was sentenced to a mandatory
term of life imprisonment on his murder conviction and 15 years’ imprisonment on his
attempted armed robbery conviction. Relying on Miller v. Alabama, 567 U.S. ___, 132 S. Ct.
2455 (2012), defendant now contends his mandatory life sentence is void because it violates
the federal constitution’s prohibition against cruel and unusual punishment. The State
responds that Miller does not render defendant’s sentence void and, regardless, Miller
constitutes a new rule of law that cannot be applied retroactively on collateral review. We
affirm, while noting that defendant may raise this issue before the postconviction court.
¶2 BACKGROUND
¶3 Via various procedural peregrinations, defendant’s case has resolutely moved through
the interstices of the justice system. Following defendant’s first jury trial, this court reversed
and remanded the cause for a new trial after concluding the trial court had erred in denying
defendant’s motion to suppress. See People v. Gray, No. 1-96-0278 (1998) (unpublished
order under Supreme Court Rule 23). Evidence at retrial showed that defendant and two
friends followed the victim, Doyle, in their car until she parked in her garage on the south
side of Chicago. Defendant and codefendant Antwon Tyler entered the garage, a gunshot
issued, and when they reemerged, Tyler informed the third cohort that he had shot Doyle,
whose body was later discovered in the trunk of her car. Fingerprints and palm prints from
codefendant and defendant were also found on the trunk lid. As stated, the jury found
defendant guilty via accountability of first degree murder and attempted armed robbery.
Because defendant already had been convicted of first degree murder, which he committed
as a principal mere months before Doyle’s murder, the trial court sentenced defendant in
-2-
2000 to a mandatory life term, as well as 15 years for attempted armed robbery to run
concurrently. See 730 ILCS 5/5-8-1(a)(1)(c)(i) (West 1992); People v. Gray, No. 1-95-2932
(1998) (unpublished order under Supreme Court Rule 23). This court affirmed defendant’s
convictions on direct appeal. See People v. Gray, No. 1-00-4122 (2002) (unpublished order
under Illinois Supreme Court Rule 23).
¶4 In December 2001, defendant filed a pro se petition under the Post-Conviction Hearing
Act (725 ILCS 5/122-1 et seq. (West 2010)) alleging that his appellate counsel was
ineffective for failing to raise certain issues on appeal and trial counsel was ineffective for
failing to file pretrial motions. The petition reached second-stage proceedings and lingered
in the system for some eight years before the circuit court dismissed the petition in April
2010. Defendant appealed from that dismissal arguing that the circuit court violated his right
to represent himself pro se in postconviction proceedings when it denied his requests to
proceed pro se and struck his pro se amendments to his petition. This court very recently
agreed, concluding the circuit court abused its discretion by failing to properly consider
defendant’s request to proceed pro se. People v. Gray, 2013 IL App (1st ) 101064, ¶ 27. We
remanded the case for further consideration consistent with our opinion. Id.
¶5 Meanwhile, in the midst of his postconviction appeal, in December 2010, defendant,
acting pro se, filed this section 2-1401 petition in which he asserted his conviction and
sentence were void. Defendant argued the trial court lacked subject matter jurisdiction over
his case because the indictment cited the Illinois Revised Statutes rather than the Illinois
Compiled Statutes in reference to the murder charge. The State filed a motion to dismiss,
arguing defendant’s conviction and sentence were not void and the petition was not
otherwise filed in a timely manner, thus effecting waiver and barring any relief. The circuit
court granted the State’s motion, and this appeal followed.
¶6 ANALYSIS
¶7 Section 2-1401 establishes a comprehensive statutory procedure allowing for vacatur of
a final judgment older than 30 days. 735 ILCS 5/2-1401 (West 2010); People v. Vincent, 226
Ill. 2d 1, 7 (2007). To obtain relief, the defendant must show proof of a defense or claim that
would have precluded entry of the judgment in the original action and diligence in
discovering that defense or claim and presenting the petition. Id. at 7-8. The statute ordinarily
is used to correct errors of fact (People v. Lawton, 212 Ill. 2d 285, 297 (2004)), and with
certain exceptions not applicable here, the statute provides that petitions must be filed not
later than two years after entry of the order or judgment. Id. The two-year limitation,
however, does not apply to petitions brought on voidness grounds. People v. Moran, 2012
IL App (1st) 111165, ¶ 13. Our review of the dismissal in this case is de novo. See Vincent,
226 Ill. 2d at 18.
¶8 Here, for the purposes of analyzing defendant’s claim under section 2-1401, defendant’s
conviction became final in 2000, when he was sentenced pursuant to section 5-8-1(a)(1)(c)(i)
of the Unified Code of Corrections (730 ILCS 5/5-8-1(a)(1)(c)(i) (West 1992)), which
provides that if a defendant is facing his second murder conviction, “the court shall sentence
the defendant to a term of natural life imprisonment.” Ten years later, in 2010, defendant
-3-
filed the instant section 2-1401 petition. In his petition, defendant acknowledged the two-year
statutory limitation, but essentially maintained it did not apply because he was challenging
his conviction and sentence as void on the basis of a miscited statute in the indictment. On
appeal, defendant admittedly has abandoned that specific reasoning, and now argues his
sentence is void under Miller v. Alabama. Defendant reasons that a sentence which exceeds
statutory maximums or violates the constitution is void from its inception and may be
challenged at any time.
¶9 In Miller v. Alabama, the United States Supreme Court recently held that mandatory life
without parole for those under the age of 18 at the time of their crimes violates the eighth
amendment’s prohibition against cruel and unusual punishments. Miller, 567 U.S. at ___,
132 S. Ct. at 2460. In so holding, the court did not foreclose a sentencer’s ability to impose
life without parole on juvenile offenders, although it expected “this harshest possible penalty
will be uncommon.” Id. at ___, 132 S. Ct. at 2469. Rather, the court stated a sentencing judge
must take into account how children are different from adults before imposing a lifetime of
incarceration. Id. at ___, 132 S.Ct. at 2469. Consistent with Miller v. Alabama, in People v.
Miller, 202 Ill. 2d 328 (2002), our supreme court had already held that imposing a mandatory
sentence of life without parole on a juvenile offender convicted of murdering more than one
victim under a theory of accountability, and without considering the facts of the crime,
including the defendant’s age, offended the Illinois Constitution’s proportionate penalties
clause and thus was unconstitutional as applied. As in the federal Miller v. Alabama opinion,
our court emphasized the decision “does not imply that a sentence of life imprisonment for
a juvenile offender convicted under a theory of accountability is never appropriate.” Miller,
202 Ill. 2d at 341.
¶ 10 While the State acknowledges the holding in Miller v. Alabama, the State contends that
case does not render defendant’s sentence void. Indeed, a judgment is void, as opposed to
voidable, only if the court that entered it lacked jurisdiction. People v. Mescall, 379 Ill. App.
3d 670, 673 (2008). Jurisdictional failure can result from a court’s lack of personal or subject
matter jurisdiction or, relevant to this case, the court’s lack of power to render the particular
judgment. Id. Jurisdiction or the power to render a particular judgment does not necessarily
mean that the judgment rendered must be one that should have been rendered; indeed, the
power to decide carries with it the power to decide wrong, as well as right, and a court will
not lose jurisdiction merely because it makes a mistake in the law, the facts, or both. Moran,
2012 IL App (1st) 111165, ¶ 17. The principle follows: that which is unconstitutional is not
necessarily void. People v. Morfin, 2012 IL App (1st) 103568, ¶ 31. A statute that is
unconstitutional on its face–that is, where no set of circumstances exists under which it
would be valid–is void ab initio, while a statute that is merely unconstitutional as applied is
not. Id.
¶ 11 As this court noted of late, Miller v. Alabama does not affect the validity of the natural
life imprisonment statute as to nonminor defendants, so that the statute is not
unconstitutional on its face. See Morfin, 2012 IL App (1st) 103568, ¶ 40; see also People v.
Williams, 2012 IL App (1st) 111145, ¶ 47 (holding same). Moreover, Miller does not deprive
or divest any state or court of the authority to sentence a defendant who was a minor at the
time of his offense, like defendant, to a natural life of imprisonment for committing homicide
-4-
after already having obtained a murder conviction. See Morfin, 2012 IL App (1st) 103568,
¶ 40. Thus, although the mandatory imposition of a life sentence might have violated
defendant’s constitutional rights, that violation did not divest the trial court of jurisdiction
over him. See Mescall, 379 Ill. App. 3d at 674; see also People v. Davis, 156 Ill. 2d 149, 157
(1993) (noting that there are many rights belonging to litigants which a court may not
properly deny and, yet, if denied, do not oust the court of jurisdiction or render the
proceedings null and void); cf. People v. Santana, 401 Ill. App. 3d 663, 666 (2010)
(affirming dismissal of untimely section 2-1401 petition in spite of potential Whitfield
violation because the “trial court clearly had the power to impose the sentences” and, thus,
the defendant’s sentence was not void). As such, defendant’s sentence is merely voidable if
challenged in a timely manner. See Mescall, 379 Ill. App. 3d at 673-74.
¶ 12 Therein lies the procedural rub. Defendant did not challenge his conviction under section
2-1401 in a timely manner. The State argued this below and, in his petition, defendant
essentially conceded this point, instead contending the viability of his petition rested on
defendant’s assertion of voidness. Because we have concluded that defendant’s sentence is
not void and because defendant did not file his section 2-1401 petition within the two-year
statutory limitation, we cannot grant defendant the relief he seeks. See People v. Caballero,
179 Ill. 2d 205, 210-11 (1997) (where a section 2-1401 petition is filed beyond two years
after the judgment, it cannot be considered absent a clear showing that the exceptions apply).
We would add that the original claim set forth in defendant’s section 2-1401 petition is
different from the claim before us on appeal and, had the State argued this issue now, it
would be another basis for affirming the dismissal of defendant’s section 2-1401 petition.
See People v. Bramlett, 347 Ill. App. 3d 468, 475 (2004) (finding that the defendant failed
to raise the issue in his petition, thus forfeiting it for consideration on appeal). In that sense,
we disagree with the just-issued People v. Luciano, 2013 IL App (2d) 110792, ¶ 48, which
determined that the defendant relying on Miller v. Alabama had raised “a proper voidness
challenge to his sentence,” because “a sentence that contravenes the Constitution may be
challenged at any time.” The court reached this conclusion even though the defendant had
not raised that argument below or in his postconviction petition. While it might be true that
generally a constitutional challenge to a criminal statute can be raised for the first time on
appeal (see In re J.W., 204 Ill. 2d 50, 61 (2003)), our research has not disclosed the
application of that principle to the situation before us, where the defendant filed an untimely
section 2-1401 petition, failed to establish an exception to the untimeliness, and also failed
to establish a claim of voidness. But see People v. Wagener, 196 Ill. 2d 269, 279-80 (2001)
(as-applied challenge involving Apprendi sentencing statute was not waived on direct review
because a party may challenge the constitutionality of a statute at any time); cf. In re
Parentage of John M., 212 Ill. 2d 253, 268 (2004) (concluding a court of review is not
capable of making an “as applied” determination of unconstitutionality when there has been
no evidentiary hearing and no findings of fact below, making such a constitutional challenge
premature); People v. Spencer, 2012 IL App (1st) 102094, ¶ 32 (holding same). As stated,
logic does not dictate that an as-applied constitutional violation necessarily ousts a court of
jurisdiction making a defendant’s sentence void. In the specific context of section 2-1401,
Luciano’s conclusion simply is not viable.
-5-
¶ 13 We emphasize that our disposition does not mean defendant is without recourse, to the
extent any error might have occurred in this case. Defendant may raise the present sentencing
issue before the circuit court through the Post-Conviction Hearing Act (see 725 ILCS 5/122-
1 (West 2010)), which permits a defendant to challenge his conviction based on a deprivation
of constitutional rights. In fact, defendant already argued in his pro se amendment to his
initial postconviction petition, an amendment filed in January 2010, that his natural life
sentence was improper because he did not kill Doyle and was unaware of any plan to rob
Doyle. See Gray, 2013 IL App (1st) 101064, ¶ 17. As stated, this court remanded that case
to the circuit court to reconsider defendant’s petition in light of his request to proceed pro
se. Should defendant argue the impropriety of his sentence in the context of Miller, it would
behoove the circuit court to consider the precedent surrounding Miller in light of the direct
appeal record, which demonstrates for all intents and purposes that defendant received a
sentencing hearing, including argument in mitigation and aggravation, as well as the
presentation of victim impact statements and defendant’s own elocution. Although the trial
court declared defendant deserving of a life sentence at the conclusion of the sentencing
hearing, on denying defendant’s motion to reduce his sentence, the court stated: “I do not
have any discretion, that with the prior conviction, the murder, and the Defendant, after being
found guilty by the jury on this case, that is the only sentence I could impose, and that is the
sentence I did impose.” If defendant raises this issue in postconviction proceedings and if
that court determines the trial court sentenced defendant solely based on the mandatory
nature of the statute, we lastly observe that a sentencing hearing in which the trial court
believes a life sentence is mandatory differs markedly from a sentencing hearing in which
the court knowingly exercises discretion between imposing natural life and a term of years.
¶ 14 CONCLUSION
¶ 15 For the reasons stated, we affirm the dismissal of defendant’s section 2-1401 petition.
¶ 16 Affirmed.
-6-
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F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
FEB 11 2002
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 01-5061
(D.C. No. 99-CR-126-H)
JERRY GREENHAW, (N.D. Okla.)
Defendant-Appellant.
ORDER AND JUDGMENT *
Before TACHA , Chief Judge, PORFILIO , Circuit Judge, and BRORBY , Senior
Circuit Judge.
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.
*
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.
Jerry Greenhaw was convicted, following the entry of a guilty plea, of
conspiracy to possess with intent to distribute a controlled substance and criminal
forfeiture, for which he was sentenced to 161 months incarceration. He contends
on appeal that the district court erred in assigning a criminal history category of
II, and that the government breached the plea agreement by failing to file a USSG
§ 5K1.1 motion for downward departure to a prison term of 96 months. The
government has filed a motion to dismiss, arguing that Mr. Greenhaw waived his
appellate rights in the plea agreement. We agree with the government, and,
accordingly, dismiss this appeal.
The written plea agreement states:
(b) Appellate Rights; Limitations
As set forth below, you understand that the stipulated
sentence in your case will be a term of imprisonment
within the range of Offense Level THIRTY-THREE
(33), as calculated according to the appropriate Criminal
History Category. You further understand that
18 U.S.C. § 3742 gives you the right to appeal the
sentence imposed by the Court. Should the Court accept
your guilty plea and impose a sentence within the
stipulated Guideline range, you knowingly and
voluntarily waive your right to appeal the sentence
imposed and the manner in which the sentence is
determined. This agreement does not effect the
appellate rights of the United sates Attorney’s Office,
as set forth in 18 U.S.C. § 3742(b).
-2-
This court will hold a defendant to the terms of a lawful plea agreement.
United States v. Atterberry , 144 F.3d 1299, 1300 (10th Cir. 1998).
“‘A defendant’s knowing and voluntary waiver of the statutory right to appeal his
sentence is generally enforceable.’” Id. (quoting United States v. Hernandez ,
134 F.3d 1435, 1437 (10th Cir. 1998)). Such agreements waiving the right to
appeal are subject to certain exceptions, including whether the agreement was
involuntary or unknowing. United States v. Cockerham , 237 F.3d 1179, 1182
(10th Cir. 2001), cert. denied , 122 S.Ct. 821 (2002). Mr. Greenhaw does not
contend that either the plea agreement or waiver of the statutory right to appeal
was unknowing or involuntary. See Hernandez , 134 F.3d at 1337-38 (holding that
the defendant clearly waived his right to appeal where there was “no suggestion”
that the defendant did not knowingly and voluntarily enter into the plea agreement
and the waiver of the statutory right to appeal).
Rather, Mr. Greenhaw argues that the government breached the agreement.
The waiver provision may be unenforceable if the government breaches the terms
of the plea agreement. See United States v. Branam , 231 F.3d 931, 931 n.1
(5th Cir. 2000) (“We consider whether the Government breached the plea
agreement despite an appeal-waiver provision in the plea agreement.”); United
States v. Wilkerson , 179 F.3d 1083, 1084, n. 2 (8th Cir. 1999) (waiver provision
does not bar an appeal if the government has breached the agreement) ; United
-3-
States v. Rosa , 123 F.3d 94, 98 (2d Cir. 1997) (“‘By opposing the acceptance of
responsibility adjustment, the government by its breach of the agreement released
[defendant] from his promise ... not to appeal.’” (quoting United States v.
Gonzalez , 16 F.3d 985, 990 (9th Cir. 1993)). See also Atterberry , 144 F.3d
at 1301, n.3 (indicating that government’s breach of agreement may render
waiver unenforceable).
We agree with the government that it did not breach the plea agreement.
In determining whether the government breached a plea agreement, this court
examines the nature of the government’s promise, and evaluates the promise in
light of the defendant’s reasonable understanding of the promise at the time the
guilty plea is entered. United States v. Peterson , 225 F.3d 1167, 1170-71
(10th Cir. 2000), cert. denied , 531 U.S. 1131 (2001). In assessing whether the
government has breached the agreement this court looks to the express terms of
the agreement. Id.
In the agreement, the parties stipulated that Mr. Greenhaw’s base offense
level was 38; that a two-level upward adjustment under USSG § 2D1.1(b)(1) was
applicable because Mr. Greenhaw had possessed a firearm; and that a two-level
downward departure under § 3E1.1(a) was warranted because he had accepted
responsibility. The government agreed to move for a 5-level downward departure
-4-
under 5K1.1 if Mr. Greenhaw provided substantial assistance. Accordingly, the
parties then stipulated to an adjusted offense level of 33.
The government also agreed to move for a further departure, up to 5 levels,
based on Mr. Greenhaw’s cooperation against individuals not named in the
indictment. The government subsequently moved for a two-level departure.
However, in spite of vigorous argument by the government’s counsel, the district
court only granted a one-level departure to 32.
The government did not agree, as argued by the defendant, that it would
move for a departure to an offense level of 28 and a sentence of 96 months. The
government merely agreed that, should the court depart downward to an offense
level of 28, it would recommend a 96-month sentence. Since the court did not
depart to 28, the government was not obligated to recommend the 96-month
sentence.
Mr. Greenhaw also argues that he did not waive his right to appeal the trial
court’s determination of his criminal history category. This argument is without
merit. The waiver provision, set forth above in its entirety, shows that the
defendant waived his right to appeal a term of imprisonment within the offense
level of 33 “as calculated according to the appropriate Criminal History
Category.” Moreover, the plea agreement states that there is no stipulation as to
the defendant’s Criminal History Category. In addition, the district court
-5-
explained to Mr. Greenhaw at the change of plea hearing that he was giving up
any appellate rights if he is sentenced at an offense level of 33 or less.
Mr. Greenhaw indicated that he understood and had discussed it with his attorney.
Accordingly, because Mr. Greenhaw has waived his right to appeal, this
appeal is DISMISSED .
Entered for the Court
Deanell Reece Tacha
Chief Judge
-6-
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538 U.S. 908
BROWNv.LI ET AL.
No. 02-1039.
Supreme Court of United States.
March 10, 2003.
1
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.
2
C. A. 9th Cir. Certiorari denied. Reported below: 308 F. 3d 939.
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52 F.Supp.2d 1170 (1999)
Gretchen DUMAS, as Guardian ad litem for Nicholas Chaset, and Irene Torres, as Guardian ad litem for Jon Rodriques, On Behalf of Themselves and All Others Similarly Situated, Plaintiffs,
v.
MAJOR LEAGUE BASEBALL PROPERTIES, INC., Major League Baseball Players Association, NBA Properties, Inc., National Football League Players Association d/b/a NFL Players, Inc., and Players, Inc., National Hockey League Enterprises, NHL Players Association and The Walt Disney Company, Defendants.
No. 98 CV 1772-B (AJB).
United States District Court, S.D. California.
May 14, 1999.
*1171 Kevin P. Roddy, Los Angeles, CA, William S. Lerach, Alan M. Mansfield, Randall J. Baron, James Swiderski, San Diego, CA, Melvyn I. Weiss, Micheal C. Spencer, New York City, Milberg Weiss Bershad Hynes & Lerach, Neil J. Moritt, Alan S. Hock, Moritt, Hock & Hamroff, Garden City, NY, Henry R. Rossbacher, Rossbacher & Associates, Los Angeles, CA, for plaintiffs.
*1172 K. Jill Osmars, Duckor Spradling & Metzger, San Diego, CA, Bruce S. Meyer, Michael Bresnick, Weil, Gotshal & Manges LLP, New York City, for National Football League Players Association.
Douglas B. Adler, Mark A. Snyder, Los Angeles, CA, Shepard Goldfein, Peter S. Julian, New York City, Skadden, Arps, Slate, Meagher & Flom, LLP, for Major League Baseball Properties, Inc., National Football League Properties, Inc, NBA Properties, Inc., and NHL Enterprises, L.P.
Michael Lipman, Coughlan, Semmer & Lipman, LLP, San Diego, CA, Harold F. McGuire, Jr., McGuire, Kehl & Nealon, LLP, New York City, Steven A. Fehr, Jolley Walsh Hurley Raisher & Roher, P.C., Kansas City, MO, for Major League Baseball Players Association.
Edward J. McIntyre, Solomon Ward Seidenwurm & Smith, LLP, San Diego, CA, John McCambridge, Michael P. Conway, Darlene K. Alt, Grippo & Elden, Chicago, IL, for National Hockey League Players Association.
Linda Dakin-Grimm, Los Angeles, CA, Eric J. Lobenfeld, New York City, Chadbourne & Parke, LLP, for The Walt Disney Company.
ORDER DENYING MOTION TO DISMISS PURSUANT TO FED.R.CIV.P. 12(b)(6)
BREWSTER, Senior District Judge.
I. Introduction
This case raises the question whether licensors of intellectual property may be liable for the subsequent use of that property by manufacturers in a practice the use of "chase" or "insert" cards that this Court has stated may constitute an illegal form of gambling. See Schwartz v. Upper Deck (I), 956 F.Supp. 1552 (S.D.Cal.1997); Schwartz v. Upper Deck (II), 967 F.Supp. 405 (S.D.Cal.1997). Specifically, Plaintiffs, as proposed class representatives, contend that Defendant Licensors are in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968, and the California Unfair Business Practices statute, Cal.Bus. & Prof.Code § 17200 et seq., based on Defendants' "conduct or participation in the conduct of illegal gambling enterprises through their licensing of names, likenesses, logos, and other copyrighted property or licensable rights to be manufacturers of sports and entertainment trading card packages, some of which contain randomly inserted `chase' cards ... of substantial value." See Compl. ¶ 1. Plaintiffs further allege that "the Licensors and the Manufacturers have conducted the affairs of the illegal gambling enterprises described herein as `partners,' with the Licensors intimately involved in all phases of conceptualizing, designing, approving, marketing, advertising, and distributing sports and entertainment trading cards manufactured and distributed by the Manufacturers." Id. at ¶ 4.
Plaintiffs allege that the Licensors' illegal gambling activities include:
(a) licensing of names, likenesses, and other copyrighted properties and licensable rights to the Manufacturers;
(b) pursuant to licensing agreements negotiated and executed with the Manufacturers, retaining and exercising the right to review and approve all sports and entertainment trading card products and packages manufactured and distributed by the Manufacturers;
(c) pursuant to such license agreements, retaining and exercising the right to review and approve all advertising and promotional activities undertaken by the Manufacturers in connection with the sales and distribution of such trading cards;
(d) engaging in their own promotional and advertising activities in conjunction with the sales and distribution of such trading cards and
(e) receiving and distributing to their member teams and/or players millions of dollars in royalty payments received from the Manufacturers as payment for such licenses. See Compl. ¶ 37.
*1173 Plaintiffs make specific allegations regarding some of the Defendants, though the language of each allegation is the same. One particular facet of each allegation best provides the basis for a RICO claim. Plaintiffs claim that each Defendant "(c) approves of the practice of using randomly inserted chase cards, often with displayed odds, in the marketing, distribution, advertisement, promotion, and sale of [Defendant]-licensed sports cards." See Compl. ¶ 62, 69, 73.
Based on the above allegations, Plaintiffs assert that the Defendants have formed various associations-in-fact sufficient to satisfy § 1961(4) of RICO, see Compl. ¶ 78-79, that the Defendants have engaged in a pattern of racketeering activity under § 1961(1), see Compl. ¶ 80-91, and thus are in violation of §§ 1962(c) and (d) of RICO. Plaintiffs also contend that the Licensors are in violation of Cal.Bus. & Prof.Code § 17200 et seq.
II. Analysis
A. Standard of Law
A motion to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6) tests the legal sufficiency of the claims in the complaint. A claim can only be dismissed without leave to amend if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). This court must accept as true all material allegations in the complaint, as well as reasonable inferences to be drawn from them, and must construe the complaint in the light most favorable to plaintiff. See Parks School of Business, Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir.1995). The court need not, however, accept every allegation in the complaint as true; rather, the court "will examine whether conclusory allegations follow from the description of facts as alleged by the plaintiff." Holden v. Hagopian, 978 F.2d 1115, 1121 (9th Cir.1992) (citation omitted).
B. Analysis
Defendants, either jointly or on a independent basis, raise several bases on which the complaint should be dismissed. Each is considered in turn.
1. Standing
Section 1964(c) of RICO requires plaintiffs to allege (1) that they have suffered injury to their business or property and (2) that defendants' violations of § 1962 caused their injury.[1] "Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor ... and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee." 18 U.S.C. § 1964(c). In Schwartz v. Upper Deck (II), this Court stated "[p]laintiffs have suffered a tangible loss in that they have spent a fixed amount on chance to receive chase cards.... Plaintiffs have lost property, their money, and can recover that lost property under RICO." 967 F.Supp. at 414-15.
Defendants first argue that Plaintiffs do not have standing to pursue their claim because Plaintiffs are not "direct purchasers" as required by Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968), and Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), incorporated into the "standing" requirement by Associated General Contractors of California v. California State Council of Carpenters, 459 U.S. 519, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983), and as applied to RICO cases by Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 268, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992).
In brief, these cases hold that "indirect" purchasers do not have standing to pursue a RICO cause of action because they have not been "injured in his business or property." The rationale behind the holdings lay in concerns that tracing injuries too far *1174 "downstream" would prove intractable and engage courts in undesirable line-drawing. In Holmes, the Court stated: "[R]ecognizing claims of the indirectly injured would force courts to adopt complicated rules apportioning damages among plaintiffs removed at different levels of injury from the violative acts, to obviate the risk multiple recoveries.... [T]he need to grapple with these problems is simply unjustified by the general interest in deterring injurious conduct, since directly injured victims can generally be counted on to vindicate the law as private attorneys general, without any of the problems attendant upon by plaintiffs injured more remotely." Holmes, 503 U.S. at 269-70, 112 S.Ct. 1311 (citations omitted). See also Hanover Shoe, 392 U.S. at 493, 88 S.Ct. 2224 (expressing concern that ascertaining damages would "require additional long and complicated proceedings involving massive evidence and complicated theories."). As such, only "direct purchasers" immediately downstream from the alleged violator may bring a RICO action.
Defendants attempt to shoehorn the Complaint's statement that "gambling activities detailed in this Complaint have been extremely remunerative, both for Licensors and the Manufacturers with whom they have entered into license agreements" into this "pass-on" defense by inferring that the Manufacturers have increased trading card prices to their wholesale distributors, who in turn have passed these overcharges down the line to retailers and eventually to the consumers. The Court is unable to discern the same inference. Paragraph 28, cited by Defendants, is hardly support for such an inference. It merely alleges that the Manufacturers sell, transport, and distribute their trading cards throughout the United States and thus engage in interstate commerce. That is hardly a statement regarding overcharges or how those overcharges, if any, might have been "passed on."
More important, as alleged, this case is not about removed, indirectly injured plaintiffs. The alleged class is directly injured. The chase cards scheme is not targeted at intermediaries, but directly at consumers. These consumers are the first victims. It is consumers who immediately engage in the alleged lottery in their search for chase cards. Thus, concerns regarding indirect, remote plaintiffs are not at issue. In fact, as stated by the Court in its Order Denying Class Certification in Schwartz, there is no cause of action at all unless a consumer can demonstrate purchase of the cards because of the hope of obtaining a chase card. See Schwartz v. Upper Deck (III), 183 F.R.D. 672, 682 (S.D.Cal.1999). Thus, intermediate parties such as retailers may have no cause of action. As only one level of purchasers is alleged to be injured, and, in fact, is injured, the Court need not be concerned about "complicated rules apportioning damages among plaintiffs removed at different levels of injury from the violative acts." Holmes, 503 U.S. at 269, 112 S.Ct. 1311.
Furthermore, Holmes' concern regarding "the general interest in deterring injurious conduct," id., is very much implicated in the present case as the purportedly injured wholesalers and retailers cannot be counted on "to vindicate the law as private attorneys general." Id. at 270, 112 S.Ct. 1311. Unless demonstrated otherwise, the Court assumes that wholesalers and retailers benefit from the sales to those who buy trading cards in the hope of finding chase cards. Simple economics as inferred from the Complaint suggest that the lure of chase cards has driven up demand, leading to price increases. See, e.g., Compl. ¶ 45 ("The engine that currently drives the Manufacturers' ability to sell their huge inventories is the lure of `chase' or `insert' cards ... As a result of this trend, the average retail price of a package of trading cards has increased from 75 cents in 1990 to $3.00 in 1996, a period of low annual inflation rates.") and ¶¶ 46-48. Wholesalers and retailers presumably benefit from the increased demand and price inflation. They thus may not be injured in the first place. Moreover, as likely beneficiaries of the allegedly *1175 illegal conduct, they are improbable plaintiffs to be relied upon to bring suit on behalf of consumers.
In sum, neither the facts nor the policy concerns of any of the Supreme Court's "direct purchaser" cases are presented in the instant matter. Quite the opposite is true; to apply the "direct purchaser" rule to bar this class of Plaintiffs standing would likely mean that no plaintiff would step forward to challenge what is alleged to be illegal conduct. The Court sees no reason to upset its holding in Schwartz v. Upper Deck.
2. Direct, Operate, or Manage a RICO Enterprise
Section 1962(c) of RICO provides: "It shall be unlawfully for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprises' affairs through a pattern of racketeering activity." In turn, § 1961(4) defines "enterprise" as "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity."
Defendants attack Plaintiffs' allegations on three fronts: (1) Plaintiffs fail to allege sufficient facts, as opposed to allegations, to support their claim; (2) Plaintiffs fail to allege the minimum requirements necessary for the existence of an association-in-fact; and (3) even if there is an enterprise, the Complaint falls to allege that the Licensors participated in the operation or management of such an enterprise.
a. Sufficient Factual Allegations
Defendant Walt Disney ("Disney") argues that Plaintiffs have failed to plead sufficient facts to demonstrate that the Defendants directed, operated, or managed a RICO enterprise. Disney asserts that conclusory allegations are insufficient to meet the Plaintiffs' burden. See, e.g., Comwest, Inc. v. American Operator Servs., 765 F.Supp. 1467, 1475 (C.D.Cal. 1991); see also Elliott v. Foufas, 867 F.2d 877, 881 (5th Cir.1989) ("In order to avoid dismissal for failure to state a claim, a [RICO] plaintiff must plead specific facts, not mere conclusory allegations, which establish the existence of an enterprise."). Disney argues "plaintiffs here have not alleged any facts or conduct on the part of Disney which would satisfy Reves. All Disney is doing is monitoring and approving of how their legally-protected characters are depicted by a licensee to the public at large .... the complaint does not contain an iota of information as to any other Disney conduct or activity and thus is insufficient to allege a RICO violation." See Disney Reply, p. 4.
Plaintiffs state that "[p]aragraphs 4, 13-17, 27-29, 31-37 and 38-74 allege that the Licensors and Manufacturers are `partners' and that the Licensors are intimately involved in all phases of conceptualizing, designing, approving, marketing, advertising, and distributing trading cards sold by the Manufacturers.... [T]hese allegations sufficiently charge that the Licensors `participate[d] in the operation or management of' the association-in-fact enterprises, in violation of § 1962(c)." While Plaintiffs do not provide the Court with copies of the licensing agreements, or even cite to any specific provisions of the licensing agreements which provide the Licensors with the authority to approve or disapprove of the practice of using chase cards, that is not their duty.[2] This Court must accept as true the Complaint's material allegations *1176 and the reasonable inferences to be drawn. See Parks, 51 F.3d at 1484. Plaintiffs have met their burden.
Taking the Complaint in its most favorable light possible, the Court must read into the allegation in ¶ 37(b) "retaining and exercising the right to review and approve all sports and entertainment trading card products and packages manufactured and distributed by the Manufacturers" as a right to approve of or to veto the manufacture, marketing, and distribution of chase cards.[3] The Court finds particular support in Plaintiffs' Exhibit 7, an advertisement with the caption, "Collect'em. Trade'em. Chase'em. Or just look at'em. But whatever you do, you've go to have'em." Along with this caption is the prominently displayed Major League Baseball logo. In sum, though sparse in supporting facts, Plaintiffs' allegations are sufficient to survive a motion to dismiss.
b. Association-in-Fact
The League Licensors argue that Plaintiffs do not allege as a matter of law the minimum requirements for the existence of an association-in-fact enterprises. An association-in-fact must "be `an entity separate and apart from the pattern of [racketeering] activity in which it engages.'" See Chang v. Chen, 80 F.3d 1293, 1298 (9th Cir.1996) (alteration in original) (quoting United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981)). More specifically, Defendants point the Court to Chang's statement that "[a]t minimum, to be an enterprise, an entity must exhibit `some sort of structure ... for the making of decision, whether it be hierarchical or consensual.' The structure should provide `some mechanism for controlling and directing the affairs of the group on an ongoing, rather than ad hoc, basis.'" Id. at 1299 (citing United States v. Riccobene, 709 F.2d 214, 222 (3d Cir.1983)). Based on this statement, Defendants argue that Plaintiffs make no allegation, nor can they make an allegation, that there is any "structure" to the approximately twenty association-in-fact enterprises alleged. Indeed, the Licensors contend that "the alleged `enterprise' is nothing more than the licensing agreement itself, the very conduct complained of as the racketeering activity." Lics.' Mem. P & A, p. 14. The Licensors argue that, at best, language in Plaintiffs' RICO Case Statement that each of the "alleged association-in-fact enterprise(s) consisting of the Licensors and the Manufacturers is an ongoing organization and its members function as a continuing unit," is conclusory and thus insufficient to survive a motion to dismiss. See Pls.' RICO Case Statement, p. 12-13.
The rationale behind Chang's holding lay in a concern that, absent allegations of a separate entity with a decisionmaking structure, § 1962(c)'s "enterprise" element would be rendered superfluous. Id. at 1299. If Chang were the only case on this matter, the Licensors would appear to have a conclusive argument. However, the case law on this matter is not so simply categorized. Indeed, Chang itself is a peculiar case in that the court reaffirmed the Ninth Circuit's rule put forth in United States v. Feldman, 853 F.2d 648, 660 (9th Cir.1988), that "involvement of a corporation which has an existence separate from its participation in the racketeering activity can satisfy the enterprise element's requirement of a separate structure." Chang, 80 F.3d at 1300. However, Chang sidesteps this holding by finding that the corporation alleged to be part of the association-in-fact, "played no role whatsoever, legal or fraudulent, in the operations of the alleged enterprise." Id. at 1301. Furthermore, Chang is a case in which the plaintiff *1177 apparently did not even include the corporation as a defendant.
Clearly, those are not the facts in the instant matter. Casting doubt on the utility of Chang, one treatise reads: "Unless the court overrules Feldman, it will be very easy for plaintiffs to avoid the same pleading mistake in the future. Thus, it remains to be seen whether Chang results in any significant tightening of the Ninth Circuit's definition of an association in fact." David B. Smith and Terrance G. Reed, Civil RICO, ¶ 3.06, p. 3-64 (Matthew Bender 1998). Here, Plaintiffs have not repeated the mistake of the plaintiff in Chang.
Defendants likewise fail to address River City Markets, Inc. v. Fleming Foods West Inc., 960 F.2d 1458, 1461-62 (9th Cir.1992). River City involved allegations under RICO that two supermarket chains conspired to "unload" unprofitable properties on plaintiff purchasers. Plaintiffs, as in the instant case, alleged that the two corporations combined to form an association-in-fact enterprise. 960 F.2d at 1460-61. Relying on Turkette, the court stated that "we have recognized that a group of individuals or corporations may together constitute a RICO enterprise even though they do not incorporate or otherwise form a legal entity." Id. at 1461. The court upheld the sufficiency of the plaintiffs' allegations:
The district court dismissed the RICO counts under the mistaken belief that Rae v. Union Bank, 725 F.2d 478 (9th Cir.1984), requires that a RICO enterprise `must be an entity separate and distinct from the defendants.' ... Rae does not so hold, and we find nothing in our RICO case law which instructs that two contracting business entities cannot form an `enterprise' for RICO purposes and still be named as individual RICO defendants, provided the enterprise falls within the statutory proscriptions. (¶) Rae ... stands for the proposition that a single individual or entity cannot be both the RICO enterprise and an individual RICO defendant. Rae simply embodies the maxim that an individual cannot associate or conspire with himself.... [P]laintiffs do not allege that either Alpha Beta or Fleming is simultaneously a RICO enterprise and a RICO defendant. Each of the plaintiffs' complaints pleads the existence of a RICO enterprise as follows: `... [Alpha Beta and Fleming] associated together to form an enterprise within the meaning of Section 1961(4) which devised a scheme to defraud Plaintiffs and other members of the public by inducing them to purchase ALPHA BETA stores....' What plaintiffs allege is that Alphas Beta and Fleming associated together in a business relationship akin to a joint venture to market the grocery stores, and that it was this `enterprise' with which each individual defendant interacted in conducting the alleged pattern of mail and wire fraud activities.
Plaintiffs' allegations in the instant matter are of the same nature.
Next, Plaintiffs rebut the alleged deficiencies in the Complaint regarding the supposed lack of distinction between the association-in-fact enterprises and the pattern of racketeering activity. Plaintiffs argue that because each of the Licensors is a corporation,[4] it is sufficient of itself to give an enterprise structure apart from the racketeering activity, citing Webster v. Omnitrition Int'l, 79 F.3d 776, 786 (9th Cir.1996) ("The participation of a corporation in a racketeering scheme is sufficient, of itself, to give the enterprise a structure separate from the racketeering activity: *1178 `corporate entities have a legal existence separate from their participation in the racketeering, and the very existence of a corporation meets the requirement for a separate structure.'") and United States v. Kirk, 844 F.2d 660, 664 (9th Cir.1988) ("[T]he existence of a corporation fulfills the requirements of an ascertainable structure apart from the predicate racketeering activity.").
Webster involved civil RICO allegations against corporate participants in a "multilevel marketing," or "pyramid," scheme. One defendant argued that the plaintiff "must show the existence of an ascertainable structure of the enterprise apart from the alleged racketeering activity (i.e. the operation of a pyramid scheme)." The court rejected this argument: "The participation of a corporation in a racketeering scheme is sufficient, of itself, to give the enterprise a structure separate from the racketeering activity: `corporate entities ha[ve] a legal existence separate from their participation in the racketeering, and the very existence of a corporation meets the requirement for a separate structure,'" 79 F.3d at 786 (alteration in original) (citation omitted).
The tension between Chang and Webster is obvious. One district court has attempted to reconcile the conflict with the following logic: "an enterprise must have `an existence beyond that which is merely necessary to commit the predicate acts of racketeering' and `some sort of structure for the making of the decisions,' but this requirement may be fulfilled by the simple inclusion of a corporation as a participant in the enterprise." See Pharmacare v. Caremark, 965 F.Supp. 1411, 1423 (D.Hawaii 1996). The logic in Pharmacare is not mutually exclusive. The "enterprise" element requiring an existence beyond the predicate acts is not necessarily forwarded solely by inclusion of a corporate defendant as one or even both of the alleged RICO violators. That inclusion turns the focus away from the enterprise issue and back to the individual actor. The structure should be that of the enterprise, not the inherent structure of an individual participating in the alleged enterprise. The argument would be that there has to be an enterprise, but no enterprise is necessary if one of the participants in the RICO scheme is a corporation. From this Court's perspective, this gloss on the statute effectively reads out of existence altogether the requirement that there be an "enterprise."
Likewise, Webster is factually distinguishable from the instant matter because, as the Licensors note, the corporate defendant in Webster was established solely to conduct the alleged illegal activities. The situation is arguably different when an otherwise legitimate corporation is alleged to be part of an association-in-fact.
However, such doubts aside, this Court is constrained to follow Ninth Circuit case authority. In light of the holdings of Feldman and Kirk that mere inclusion of a corporation as a defendant satisfies the separate existence requirement,[5] and because this case cannot fit into the peculiar box of Chang (which, of course, reaffirmed Feldman), the Court finds Plaintiffs have sufficiently alleged associations-in-fact. Perhaps only this much can be said: "Since the `separate existence' inquiry belongs to the realm of medieval scholasticism this view is as valid as any other." Civil RICO, supra, ¶ 3.06, p. 3-62.
c. Participation in Operation or Management of a RICO Enterprise.
Even if Plaintiffs have sufficiently plead various associations-in-fact, Defendants further argue that Plaintiffs fail to sufficiently allege that the Licensors "conduct or participate, directly or indirectly," in the operation or management of association-in-fact enterprises as required by § 1962(c), as interpreted by Reves v. Ernst & Young, 507 U.S. 170, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993). The Licensors interpret Reves as standing for the principle that "a defendant that does not participate *1179 in the operation or management of the alleged enterprise may not be held liable under RICO, even if the defendant knew of the alleged unlawful activities and benefitted from those activities." Lics.' Mem. P & A, p. 15.
More specifically, the Licensors argue:
Although the allegations of the plaintiffs' complaint clearly allege a business relationship between the Licensors and the Manufacturers, they do not, and cannot, allege that the Licensors participate in the operation or management of an alleged RICO enterprise.... At best, however, plaintiffs allege that each of the Licensors' licensing agreement contains standard quality control provisions that give the Licensor the right to ensure that all licensed products ... meet and conform to high standards of style, quality, and appearance.... To suggest that the legal duty imposed on intellectual property owners to oversee the quality of their licensees' products satisfies the `operation or management' requirement of Reves would unfairly expose all intellectual property licensors to RICO liability for the conduct of their licensees. See Lics.' Mem. P & A, p. 16-17.
In Reves, the Supreme Court stated: "An enterprise also might be `operated' or `managed' by others `associated with' the enterprise who exert control of it as, for example, by bribery.... (¶) [Section] 1962(c) cannot be interpreted to reach complete `outsiders' because liability depends on showing that the defendants conducted or participated in the conduct of the `enterprise's affairs,' not just their own affairs. Of course, `outsiders' may be liable under § 1962(c) if they are `associated with' an enterprise and participate in the operation or management of the enterprise itself...." 507 U.S. at 184-85, 113 S.Ct. 1163 (emphasis in original).
The parties have fundamental differences over the very meaning of Reves. The critical question appears to be whether the various Licensors "approved" of the practice of insert or chase cards. If true, would such approval rise to the level of "directing" or "conducting" the operation or management of a RICO enterprise? To put the question another way, is the Reves test useful solely in limiting the reach of RICO liability to "outsiders" performing services for alleged RICO enterprises? On one occasion, this Court has so interpreted Reves. "The Reves test is intended to protect outsider, professional service provides who might assist a racketeering enterprise." Gutierrez v. Givens, 1 F.Supp.2d 1077, 1086 (S.D.Cal.1998).
Plaintiffs echo this insider-outsider distinction, claiming that, "Reves does not save the Licensors from liability where (as here) the enterprises are alleged to be associations-in-fact of the Licensors and Manufacturer and each one of the defendants is alleged to be an enterprise `insider,' not an `outsider.'" Pls.' Mem. P & A, p. 9-10.
If the Court had found that Plaintiffs could not plead as a matter of law that the Licensors and Manufacturers formed several associations-in-fact, this would be a relatively easy question. Assuming that the licensing arrangements did not demand or give veto power over the use of chase cards, the Court would then be able to construe the Licensors as "outsiders," despite possible knowledge of the alleged racketeering activity, because the licensing relationship would be insufficient to demonstrate participation in the operation or management of the RICO enterprise.[6] However, Plaintiffs' allegations are sufficient to plead associations-in-fact. Thus, cases involving parties associated with enterprises who are in fact outsiders and not alleged to be members of the association-in-fact in almost every case, providers of professional services are inapposite.
*1180 For instance, Defendants rely heavily on Baumer v. Pachl, 8 F.3d 1341 (9th Cir. 1993). However, in Baumer, involving the liability of an attorney who participated to some extent in the alleged fraud, the court found "sporadic" activity, limited to providing legal services, insufficient to meet the requirement that one play "some part in directing the enterprise's affairs." See also University of Maryland at Baltimore, et al. v. Peat, Marwick, Main & Co., 996 F.2d 1534, 1539 (3d Cir.1993) ("Simply because one provides goods or services that ultimately benefit the enterprise does not mean that one becomes liable under RICO as a result. There must be a nexus between the person and the conduct in the affairs of an enterprise. The operation or management test goes to that nexus."). See also Biofeedtrac, Inc. v. Kolinor, 832 F.Supp. 585, 592 (E.D.N.Y.1993) ("[P]laintiff has adduced no facts to suggest that [the defendant's] actual or projected role was to `lead, run, manage, or direct' any part of the enterprise. Thus, he did not participate in the `conduct' of an enterprise and did not violate § 1962(c), even though he may have intentionally assisted a scheme to defraud.").
Defendants also rely on Goren v. New Vision Int'l, 156 F.3d 721 (7th Cir.1998). Goren involved the liability of a doctor who licensed the use of his name and an informational tape to an enterprise allegedly involved in an unlawful scheme to sell bogus health care products. Attractive because it involves the liability of a licensor, the holding of Goren is a re-affirmation of the rule that simply providing services without more is insufficient to be held liable under § 1962(c). However, the licensor point is not determinative. In fact, the Goren court took specific pains to distinguish its facts from the situation in which a plaintiff alleges an association-in-fact. Referring to MCM Partners, Inc. v. Andrews-Bartlett & Assocs., Inc., 62 F.3d 967, 977-979 (7th Cir.1995), the Goren court stated:
[In MCM Partners we] held that the defendants could be liable because they had knowingly implemented the decisions of upper management and thereby participated in the direction of the enterprise. In reaching that decision, we stressed that `[t]he primary fact leading us to this conclusion is the nature of the "enterprise" [plaintiff] has depicted, as both [defendants] are alleged to be members of an "association-in-fact" enterprise constituting the RICO enterprise.' In this case, by contrast, the enterprise alleged is New Vision, not an association-in-fact. Dr. Wallach, Direct, and October are not alleged to be part of the enterprise and therefore cannot be said to conduct the affairs of the enterprise by implementing the decisions of upper management. Instead, these defendants are best characterized as contractors hired by the enterprise to perform specific tasks. Id. at 728 n. 3.
Based on this language, the defining difference is whether or not a plaintiff pleads that individuals are members of the association-in-fact.
Defendants insist that this "outside" vs. "inside" distinction may be a false one. For instance, in Handeen v. Lemaire, 112 F.3d 1339, 1349 (8th Cir.1997), another case involving professional liability, the court stated: "Behavior prohibited by § 1962(c) will violate RICO regardless of the person to whom it may be attributed, and we will not shrink from finding an attorney liable when he crosses the line between traditional rendition of legal services and active participation in directing the enterprise." Likewise, Handeen diminishes the outsider/insider distinction in Reves: "The Court did reference the distinction between `outsiders' and `insiders' to a RICO enterprise, but only in response to an argument by amicus that the operation or management test exemplifies an overly crabbed reading of the Act which unnecessarily limits the liability of outsiders." Id. at 1349 n. 12.[7] The Court *1181 agrees that § 1962(c) liability should be based less on status, and more on acts of participation. It has so held. See Gutierrez v. Givens, 989 F.Supp. 1033 (S.D.Cal. 1997). But such a holding is based on imposing liability on outsiders who have committed acts to such a degree that they forfeit their outsider status. It is a different question when a plaintiff alleges a defendant to be part and parcel of the enterprise in the first place. It may seem an injustice that the Reves test could be so easily met merely by how one frames their allegations. Yet, for the purposes of a motion to dismiss, the Court is constrained by the overwhelming majority of case law on the subject.
Finally, Disney asserts that "courts have repeatedly held that a lawful contractual relationship (which is what Disney's license agreements are) cannot constitute participation in conducting an enterprise within the meaning of Reves, even if the contracting party is both essential to the RICO enterprise and is a direct participant in the scheme," citing Arenson v. Whitehall Convalescent & Nursing Home, Inc., 880 F.Supp. 1202, 1209 (N.D.Ill.1995) and Comwest, supra, 765 F.Supp. at 1475. See Disney Mem. P & A, p. 7. Disney's statement does not stand up to close examination. Arenson's statement, made in reference to one of the two alleged counts, that "[a]llegations of a simple supplier-purchaser relationship are insufficient to allege that [the corporation-purchaser] participated in the operation or management of [the supplier]," id. at 1209, is inapposite to the instant matter. In that situation, the court held that allegations of receipt of goods were insufficient to establish participation in the operation or management of the supplier. But the court upheld the alternative count where the supplier and purchaser were alleged to be the RICO enterprises. The latter situation is the one at hand. Likewise, in Comwest, the court stated that the "parties' agreements do not suggest that the parties contemplated any relationship beyond an arms-length transaction between two independent corporate entities." Id. at 1475. However, this statement did not apply to the plaintiff's association-in-fact cause of action. As such, it is not applicable in this matter.
In sum, an analysis of Reves and subsequent case law demonstrates that Plaintiffs' claims cannot be dismissed as a matter of law. Of course, in subsequent proceedings, Plaintiffs may be required to demonstrate to the Court how the Licensors on an individual basis[8] are involved in conducting or directing the affairs of each alleged association-in-fact.
d. Section 1962(d)
Because Plaintiffs have sufficiently alleged violations of § 1962(c), Plaintiffs § 1962(d) claim need not be dismissed.
3. Racketeering Activity
Plaintiffs allege that the Licensors committed and/or aided and abetted RICO predicate acts under 18 U.S.C. § 1961(1)(A) and (B).
1. Section 1961(1)(A); Misdemeanor vs. Felony Offenses
Defendants point out that even if the complained-of activity constitutes a violation of Cal.Penal Code § 319, that section is only a misdemeanor offense and thus insufficient to constitute a predicate act of racketeering activity under 18 U.S.C. § 1961(1)(A) (requiring that the alleged racketeering activity be "chargeable *1182 under State law and punishable by imprisonment for more than one year"). However, the Complaint alleges violations of New York Penal Code §§ 225.10(2) and 225.20(2) and New Jersey Stat.Ann. §§ 2C:37-2(a)-(b) and 2C:37-3(a)-(c).
In Schwartz I, 956 F.Supp. at 1557-59, and Schwartz II, 967 F.Supp. at 411-14, this Court held that the alleged conduct may have violated the gambling laws of both New York and New Jersey. The latter is not at issue in the instant matter as no plaintiff resides in that state or is alleged to have bought trading cards there.
At oral argument, Defendants suggested that the Court revisit its previous interpretation of New York law in Schwartz on the grounds that gambling losses are not recoverable under New York law except in the very limited circumstances that recovery may be had from the winner of the game, that the loss be in excess of $25 in any one sitting or at any one time, and that recovery be sought within three months of the gambling payment. See Fishman v. Marvel Entertainment Group, Inc., NO. CV-963757 (E.D.N.Y. Aug. 12, 1997) (included as Exhibit 3 in Klein Aff.).
It might be inferred that the court in Fishman held that gambling losses were not recoverable under New York law. Id., slip op. at 13-14. While concluding that New York does allow recovery of gambling losses, though perhaps on very limited and on an exceptional basis, the court did not specifically hold that the plaintiffs in that case could not recover gambling losses as a matter of law. Instead, the court found that recovery was precluded irrespective of the limitation of New York law because it construed plaintiffs' damages to be mere personal injuries. Id. at 14 ("Even if these limitations did not exist, however, the Court does not find that these statutes in and of themselves establish injury to plaintiffs under RICO."). Indeed, in Fishman, the court obviously regarded plaintiffs' allegations as a species of personal injuries rather than an injury to property, stating, "the core injury that drives [plaintiff's] complaint is their `habit,' of or `addiction' to purchasing trading card packs that may contain `chase' cards." Id., slip op. at 15. This Court has stated that "habit" injuries are not the gravamen of Plaintiffs' cause of action. Because Fishman is not based on a thorough analysis of New York law, Fishman lacks the instructive quality that might make this Court reconsider its construction of New York law.
2. Section 1961(1)(B); Federal Predicate Acts
For purposes of § 1961(1)(B), Plaintiffs need not allege violation of a state felony statute; violation of even state misdemeanor statutes is sufficient. See United States v. Polizzi, 500 F.2d 856, 873 n. 17 (9th Cir.1974). Plaintiffs have alleged violations of 18 U.S.C. §§ 1952, 1953, and 1955.[9] In its Order Denying Class Certification in Schwartz v. Upper Deck, this Court held that Plaintiffs' allegations of violations of various federal statutes are underpinned by its allegations of violations of state law. Even if Defendants are correct that the Court misinterpreted New York law in its previous orders, Plaintiffs have alleged a violation of California law, which, in turn, would form the basis of a violation of federal statute.
4. Cal.Bus. & Prof.Code § 17200: whether insert cards constitute gambling under California law
Defendants argue that Cal.Penal Code § 319.3 expanding the definition of an illegal lottery contained in § 319 to include "sports trading card grab bags" limited the reach of the Penal Code to these grab bags, i.e., originally packaged sports trading cards cannot constitute an unlawful lottery. Based on this interpretation, Defendants argue that the Plaintiffs' claim under Cal.Bus. & Prof.Code § 17200 et seq. must then fail for failure to allege an unlawful predicate act. See Hobby *1183 Indus. Ass'n of Am. v. Younger, 101 Cal.App.3d 358, 371, 161 Cal.Rptr. 601 (1980) (where predicate statute excludes particular behavior from its proscription, plaintiffs may not challenge that behavior under § 17200).
Defendants read clarity into the law where there is none. See Lics.' Mem & P & A, p. 20. Little indicates that § 319.3 was enacted to render all other possible uses of sports trading cards immune from liability. Review of the statutory language indicates that Defendants' statutory interpretation is misguided.' First, § 319.3(a) uses language of "[i]n addition to Section 319, a lottery also shall include ..." when referring to the illegal sports cards grab bags. (Emphasis added). Thus, it is language of inclusion, and not language that would lead one to conclude that the Legislature meant to exclude other sports cards activities that might otherwise constitute illegal lotteries under the more general definition of lottery. Second, in defining "sports trading card grab bag," the Legislature was careful to exclude only "procedure[s] for the distribution of any sports trading card of value by lot or by chance, which [are] not unlawful under other provisions of law." See § 319.3(b)(1) (emphasis added).
In contrast, § 319 itself uses broad language of prohibition, defining a lottery with terminology such as "any scheme" and "by whatever name the same may be known." Because the use of "chase" cards may violate § 319, the Court finds that Plaintiffs have stated a claim under Cal. Bus. & Prof.Code § 17200. No principle of expressio unius, exclusio alterius applies.
III. Conclusion
Upon review of the moving papers, and after oral argument, Defendants' Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(6) is DENIED.
IT IS SO ORDERED.
NOTES
[1] The latter is not disputed by Defendants.
[2] Disney asserts that Plaintiffs must have these licensing agreements in their possession, as the Complaint quote and paraphrase from them. As such, Disney asserts, the liberal treatment of a plaintiff's allegations normally applied in Rule 12(b)(6) motion should not be applied. Instead, a court is "not required to accept as true conclusory allegations which are contradicted by documents referred to in the complaint." Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1295-96 (9th Cir.1998). However, while Disney may see its own licensing agreements reflected in the Complaint, the Court has no such knowledge. Certainly, the Plaintiffs' references are not explicit.
[3] "Approval" and its implied veto might be limited to the design elements of the Manufacturers' cards. This is a possible inference from the overall context of the Complaint and its Exhibits. However, reading the Complaint liberally, i.e., in its most favorable light possible, dictates that such an inference remain an unassumed one. Still, the reach of the Licensors' "approval" may be a subject of future interest for the Court.
[4] Plaintiffs are incorrect that each licensor is a corporation. See, e.g., Saskin Aff. ¶ 2: "The NHLPA is an unincorporated association." Likewise, Plaintiffs' Complaint acknowledges that Defendant Major League Baseball Players Association is a non-profit organization. See Compl, ¶ 13(b). While not technically corporations, the Feldman rule would appear to apply to unincorporated associations and organizations alleged to be part of associations-in-fact should these non-corporations have a structure on par with a corporation. However, the Court will consider this an open question for purposes of any further motions.
[5] See also United States v. Blinder, 10 F.3d 1468, 1473-1475 (9th Cir.1993).
[6] However, Plaintiffs still might escape such an "easy" question because they plead conspiracy. Some courts have evaded the dictates of Reves on this ground. See, e.g., Madanes v. Madanes, 981 F.Supp. 241, 256-60 (S.D.N.Y.1997); Morin v. Trupin, 835 F.Supp. 126, 133-36 (S.D.N.Y.1993).
[7] Disney likewise asserts that "the term `outsiders' is found in the Reves decision only because it had been used in an amicus brief submitted in that case and the Court, rejecting the argument proposed by the amicus brief, referenced the term." Mem. P & A, p. 10. As well as that may be the case, the facts of Reves demonstrate it to be built on this insider vs. outsider distinction. Reves' progeny have distilled that factual distinction into a virtual rule of law.
[8] Though it has treated the individual defendants in the aggregate for purposes of testing the sufficiency of Plaintiffs' claims, the Court agrees with Defendant NHLPA that "lumping the defendants together and making generalized allegations against the group" may be insufficient for purposes of further motions.
[9] Plaintiffs imply that the Court's interpretation of § 1953 may be incorrect. The Court notes this objection and will, of course, reconsider any possible errors should the matter become pertinent at a later date.
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443 F.2d 1278
UNITED STATES of America, Plaintiff-Appellee,v.Richard Carl SMITH, Defendant-Appellant.
No. 71-1279.
United States Court of Appeals, Ninth Circuit.
June 7, 1971.
Bert E. Green, San Francisco, Cal., for defendant-appellant.
James L. Browning, Jr., U. S. Atty., Jerry Cimmet, Asst. U. S. Atty., F. Steele Langford, Chief, Crim. Div., San Francisco, Cal., for plaintiff-appellee.
Before HAMLIN and WRIGHT, Circuit Judges, and GOODWIN, District Judge.*
EUGENE A. WRIGHT, Circuit Judge:
1
Richard Carl Smith appeals his conviction for refusing induction into the Armed Services in violation of 50 U.S.C. App. § 462(a). We affirm.
2
On April 22, 1969, Smith's local board sent him an order to report for induction on May 14, 1969. He reported but refused to submit for induction.
3
Smith's principal contention on appeal is that the order to report was invalid because it was issued in violation of the order of call regulations, 32 C.F.R. § 1631.7. Pursuant to that defense, he placed in question the files of 33 registrants of his local board, all of whom were older than he and had not been ordered to report for induction. On appeal, eleven of these files remain in question, the government having conceded that one of the original 33 was improperly bypassed and Smith having conceded that the remainder were properly processed by the local board.
4
Under our decision in United States v. Baker, 416 F.2d 202, 204 (9th Cir. 1969), "the order of call affects registrants' substantial rights." Having thus established that the propriety of the order of call was sufficiently in question, the burden of proof shifted to the government to prove that Smith was not called out of order. See United States v. Weldon, 422 F.2d 800 (9th Cir. 1969), cert. denied 398 U.S. 941, 90 S.Ct. 1855, 26 L.Ed.2d 275 (1970); Rusk v. United States, 419 F.2d 133, 136 (9th Cir. 1969). To meet this burden, the government called Mary Spearman, Executive Secretary of Smith's local board, who explained why each of the eleven was not called ahead of Smith.
5
This case arose prior to the "lottery" regulations, 32 C.F.R. § 1631.7 (Jan. 1970). Under the regulations applicable at the time of Smith's order, the local board was directed to call (after volunteers), the oldest registrants who were (1) classified I-A, or I-A-O, (2) had been found acceptable for military service and (3) had been mailed a Statement of Acceptability (DD Form 62) at least 21 days prior to the date of induction.
6
Smith admits that none of the eleven registrants questioned here met all three requirements. All were older than Smith and classified I-A but none had yet been mailed the requisite Statement of Acceptability. Under these facts, the government urges that it has met its burden of proof by establishing that there were no other registrants fully qualified for induction who should have been ordered ahead of Smith. Smith, on the other hand, points to the fact that all eleven were older than he, were classified I-A, and would have been fully qualified had it not been for reasons peculiar to their individual processing by the local board.
7
We reject the government's position as to the proper standard of review when the order of call defense is raised. To accept it would be to sanction every kind of improper processing at the local board having the effect of delaying the induction of registrants who should be processed ahead of their peers. Local boards are required to deliver a specific number of registrants pursuant to orders from the State Director. Any "advantages" granted to some of its registrants operate to the substantial disadvantage of others. We cannot therefore adopt a rule which would leave the local boards free to perpetrate inequities through improper processing of favored registrants.
8
A registrant may rely upon improper processing of higher priority registrants in defending a criminal prosecution if he can establish (1) that his local board violated a specific regulation, and (2) that the result was to delay significantly the time when higher priority registrants became fully acceptable for induction.
9
Applying this standard to Smith, we note at the outset that he was the oldest of five registrants called on April 22. He must therefore show that there were at least four, in addition to the one conceded by the government, who were improperly bypassed in order to establish the prejudice necessary for reversal. United States v. Baker, supra. See also United States v. Lloyd, 431 F.2d 160 (9th Cir. 1970). Our analysis of the registrants involved here reveals only two additional men who, under the foregoing rule, were improperly bypassed by the local board.
10
Both had their processing improperly delayed because the local board failed to comply with 32 C.F.R. § 1626.14 which requires the local board to forward a registrant's file to the appeal board within five days after the lapse of the time for appeal. In one case the local board waited over seven months before forwarding the registrant's file to the appeal board. In the other case nearly two years elapsed before the appeal board received the file. 32 C.F.R. § 1626.14, in reason and in explicit language, is mandatory. It says that the file shall be forwarded "in no event" more than five days after the appeal period elapses. The reason is apparent. Local boards must hasten the processing of appeals so that higher priority registrants will be properly classified and inducted in turn. These two registrants were improperly processed.
11
However, none of the other registrants relied upon by Smith was processed in violation of any regulation. The government has met its burden of proof, and Smith's order of call defense must fail. While some delay in such matters as physical examinations and personal appearances is inevitable, no impropriety in the processing of the nondefendant registrants involved here has been established. Improved administrative efficiency is a goal that cannot be achieved by fiat. It is not the function of this court to undertake a full-scale review of administrative procedure, or to establish arbitrary time deadlines. Where the regulations provide such deadlines, they will be enforced. Otherwise, in the absence of intentional delay, discriminatory treatment, or favoritism, the administrative action will be upheld.
12
In summary, delays in processing one registrant cannot be relied upon by another registrant unless the allegedly prejudiced registrant can show that the delay was in direct violation of a specific regulation calling for local board action in a particular sequence (as with the physical examination regulations) or within a particular time (as with the regulation regarding the record on appeal). In addition, the registrant who refuses induction must convince the finder of fact that the higher priority registrant, if properly processed, would have been fully qualified for induction at the time of his order.
13
Smith's other contentions on appeal are without merit. His conviction is affirmed.
Notes:
*
Hon. Alfred T. Goodwin, United States District Court, District of Oregon, sitting by designation
HAMLIN, Circuit Judge (concurring):
14
I concur in the affirmance of appellant's conviction.
15
However, I cannot agree that the court should be placed in the role of a super draft board whose duty is to review and second guess all of the administrative decisions of the local board involving extensions of time for filing claims, postponements of induction for various reasons, failure to process registrants expeditiously and other similar actions.
16
The opinion states "* * * the government urges that it has met its burden of proof by establishing that there were no other registrants fully qualified for induction who should have been ordered ahead of Smith."
17
I would agree with that position absent convincing proof that the board arbitrarily or deliberately acted improperly to delay a registrant's induction with the intention or knowledge that the other registrants would be adversely affected.
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229 U.S. 187 (1913)
SWIGART
v.
BAKER.
No. 944.
Supreme Court of United States.
Argued April 9, 10, 1913.
Decided May 26, 1913.
APPEAL FROM THE CIRCUIT COURT OF APPEALS FOR THE NINTH CIRCUIT.
*188 Mr. Assistant Attorney General Knaebel, with whom Mr. S.W. Williams and Mr. W.W. Dyar were on the brief, for appellant.
Mr. W.T. Dovell for appellee.
*191 MR. JUSTICE LAMAR delivered the opinion of the court.
The Sunnyside Unit of the Yakima Irrigation Project was so far completed in 1909 that the Secretary of the Interior gave notice that water would be furnished for irrigation purposes and that "the charges would be in *192 two parts: 1. Building of the irrigation system, $52 per acre . .. 2. For operation and maintenance, 95 cents per acre per annum." The appellee, Baker, applied for a water right and paid the assessed charges until 1911, when he refused to pay the 95 cents per acre for maintenance and operation, on the ground that the Secretary had no authority to make such an assessment. The Reclamation officers thereupon threatened to cut off the supply of water and Baker at once filed, in the United States Circuit Court for the Eastern District of Washington, a Bill against them, alleging that the charge for maintenance was illegal, that his crops would be destroyed if water was not furnished and praying that the Reclamation officers should be perpetually enjoined from cutting off the supply of water because of his failure to pay the illegal assessment.
The defendants in their answer set up that the charge of 95 cents per acre, per annum, for maintenance and operation had been lawfully made by the Secretary of the Interior under the power conferred upon him by statute. The case was heard on Bill and Answer and the Bill dismissed. 196 Fed. Rep. 569. Baker took the case to the Circuit Court of Appeals, where, one judge dissenting, the decree was reversed (199 Fed. Rep. 865) on the ground that the Secretary of the Interior could not assess irrigable land with the cost of maintenance and operation.
Since its adoption in 1902 (32 Stat. 388, c. 1093) the act has always been differently construed by the Secretary of the Interior who, in granting water-rights, has uniformly assessed the landowners with the cost of maintenance. The contrary construction by the Circuit Court of Appeals raises a question of great importance to the owners of the land now irrigated. It is of equal importance to the Government and to that part of the public interested in the reclamation of those portions of the arid region which can be irrigated as soon as funds are available. For, by so much as the fund is depleted in the payment of *193 operating charges at one place, by so much is the reclamation of arid lands elsewhere postponed.
The statute provides that the cost of construction of the Project shall be charged against the land within the irrigable limits. The phrase is not expressly defined and being general in its terms is not necessarily limited to building, but may include the preservation and maintenance of what has been built. For example, a statute authorizing the levy of a tax to construct a sewer was held to empower the city to levy taxes for its maintenance. Power to construct a dock imposed the duty of operating it. Permission to "construct internal improvements" warranted the purchase of a plant already built, and authority to construct a road conferred power to maintain it. In re Fowler, 57 N.Y. 60; Seymour v. Tacoma, 6 Washington, 138; Attorney General v. Boston, 142 Massachusetts, 200; Pelham v. Woolsey, 16 Fed. Rep. 418; Atchison &c. Ry. v. McConnell, 25 Kansas, 370; Bell v. Maish, 137 Indiana, 226; Weston v. Hancock County, 98 Mississippi, 800, 54 So. Rep. 307. So, in the present case the statute provides that the Secretary may assess "the cost of construction of the project" without defining the term, and it may assist in arriving at the legislative intent to refer briefly to the facts leading up to the passage of the Reclamation Act.
The official reports show that, in 1902, there were in sixteen States and Territories 535,486,731 acres of public land still held by the Government and subject to entry. A large part of this land was arid, and it was estimated that 35,000,000 acres could be profitably reclaimed by the construction of irrigation works. The cost, however, was so stupendous as to make it impossible for the development to be undertaken by private enterprise, or, if so, only at the added expense of interest and profit private persons would naturally charge. With a view, therefore, of making these arid lands available for agricultural purposes by an expenditure of public money, it was proposed *194 that the proceeds arising from the sale of all public lands in these sixteen States and Territories should constitute a Trust Fund to be set aside for use in the construction of irrigation works the cost of each Project to be assessed against the land irrigated, and as fast as the money was paid by the owners back into the Trust, it was again to be used for the construction of other works. Thus the fund, without diminution except for small and negligible sums not properly chargeable to any particular Project would be continually invested and reinvested in the reclamation of arid land. See H.R. Report, No. 1468, 57th Congress, 1st session.
The general outline of this plan was approved by Congress, which, on June 17, 1902, passed "An Act appropriating the receipts from the sale and disposal of public lands in certain States and Territories to the construction of irrigation works for the reclamation of arid lands."[1] 32 Stat. 388, c. 1093.
*195 The statute provided that the money arising from the sales of the public lands in these States and Territories was to be known as the Reclamation Fund and was to be used for the purpose of reclaiming arid lands. Provision was made for preliminary surveys, and when the Secretary determined that a Project was practicable, he was authorized to make contracts for its construction, if there were funds available. The land capable of being irrigated was to be open only to homestead entry and (sec. 4) the Secretary was then to give notice "of the charges which should be made per acre and the number of installments, not exceeding ten, in which the charges should be paid; these charges to be determined with a view of returning to the Reclamation Fund the estimated cost of the construction of the project . . . and all moneys received from the above sources shall be paid into the Reclamation Fund. . . . The Secretary of the Interior is hereby authorized and directed to use the reclamation funds for the operation and maintenance of all reservoirs and irrigation works constructed under the *196 provisions of this act; provided that when the payments required by this act are made for the major portion of the lands irrigated from the waters of any of the works herein provided for, then the management and operation of such irrigation works shall pass to the owners of the lands irrigated thereby to be maintained at their expense; . . . provided that the title to and management and operation of the reservoirs and works necessary for their protection and operation shall remain in the Government until otherwise provided by Congress."
In pursuance of this act, various Works, including that of the Sunnyside Unit of the Yakima Project, were constructed and notice was given of the charges that would be made. At first they were stated in a lump sum, cost of building, maintenance and operation making up the total. After 1906, the charges were separately stated substantially thus: "1. For building, $____ per acre; 2. For maintenance and operation, $____ per acre per annum."[1a]
1. The contention that this last item could not be assessed against the irrigated land is based upon the fact *197 that § 4 authorizes the Secretary to make the estimated charges "with a view of repaying the cost of construction of the Project." But an analysis of the act shows that the charges were not limited to the building of the dam or the digging of the canals, but included the purchase of land needed for reservoirs and everything chargeable to "the cost of construction of the project," which Project was later to be turned over as a going concern to the landowners. The cost to the United States represented not only the expense of building but of maintenance up to the time it was surrendered to the water users. And as the Government collected no interest, the result would be that if the cost of maintenance was not returned there would be a constant and heavy diminution of the Reclamation Fund. That fund was the proceeds of public land and was not intended to be diminished for the benefit of any one project, but, without increase by interest and undiminished by local expenses, was again to be used for constructing other works. The cost of surveying those projects which were not developed and the administrative expenses not chargeable to any particular Project might not be repaid, but these sums were so small as to be negligible as against the fundamental idea of the Bill, that the proceeds of public land as a Trust Fund should be kept intact and again invested and reinvested for constructing new irrigation works. But if it should be taxed with cost of maintenance, it follows as a mere matter of mathematics that the Reclamation Fund would be greatly depleted if not entirely consumed and the proceeds of the public domain be thus diverted to the payment of local expenses.
2. If there could be any doubt as to the meaning of the statute, it disappears in the light of congressional construction which may properly be examined as an aid in its interpretation. Burridge v. Detroit, 117 Michigan, 557. The Secretary of the Interior annually made reports *198 to Congress in which these charges of maintenance and operation were shown. No adverse action was taken as to these assessments by the Secretary. On the contrary, Congress in several instances showed that it construed the act in the same way. This distinctly appears in statutes providing a method by which irrigable lands in Indian reservations might be opened to entry and brought within the limits of an irrigation project. In these cases it was provided that the person taking up such land should pay the amount due to the Indians "in addition to the charges for construction and maintenance of the irrigation system made payable into the reclamation fund by the provisions of the Reclamation Act." (Act March 6, 1906, 34 Stat. 53, c. 518, § 2.) A similar recital is found in the statute relating to the acquisition of irrigable land in the Blackfeet Reservation, where it was provided that if any such lands were "deemed practicable for an irrigation Project under the provisions of the Reclamation Act, said lands shall be disposed of under the provisions of said act and settlers shall pay, in addition to the cost of construction and maintenance provided therein, the appraised value of the Indian land." (March 1, 1907, 34 Stat. 1037, c. 2285.) See also 35 Stat. 85, c. 153; Id., 558, 562, c. 237; 36 Stat. 835, c. 407.
3. It is argued that though these expressions show that Congress, in 1906 and 1907, thought that the cost of maintenance was chargeable under the Reclamation Act of 1902; yet no effect should be given to such legislative interpretation since Congress is not authorized to exercise the judicial function and has no power to construe existing statutes. But these acts of 1906 and 1907 were passed before the appellee, Baker, applied for his water-rights in 1909, and there are cases (State v. Orphans' Home, 37 Oh. St. 275; Dequindre v. Williams, 31 Indiana, 444), which would support a holding that this language, as to future transactions, was legislative in character *199 and incorporated these provisions into the original act. We refer to them, however, as we do to the notices given and charges made by the Secretary of the Interior, as showing the repeated and practical construction which has been given the statute from the beginning, and in the light of which many water-rights have been granted and many hundreds of thousands of dollars for maintenance paid to the Government as a part of "the cost of construction of the project." This practical interpretation by Congress and the Secretary of the Interior accords with the provisions of the act taken in its entirety.
The decree of the Circuit Court of Appeals is reversed, that of the District Court is affirmed and the case remanded to the District Court.
Reversed.
Sec. 5. The entryman upon lands to be irrigated by such works shall, in addition to compliance with the homestead laws, reclaim at least one-half of the total irrigable area of his entry for agricultural purposes, and before receiving patent for the lands covered by his entry shall pay to the Government the charges apportioned against such tract, as provided in section four . . .. The annual installments shall be paid to the receiver of the local land office of the district in which the land is situated, and a failure to make any two payments when due shall render the entry subject to cancellation, with the forfeiture of all rights under this Act, as well as of any moneys already paid thereon. All moneys received from the above sources shall be paid into the reclamation fund. . . . Page 195 Sec. 6. The Secretary of the Interior is hereby authorized and directed to use the reclamation fund for the operation and maintenance of all reservoirs and irrigation works constructed under the provisions of this Act: Provided, That when the payments required by this Act are made for the major portion of the lands irrigated from the waters of any of the works herein provided for, then the management and operation of such irrigation works shall pass to the owners of the lands irrigated thereby, to be maintained at their expense under such form of organization and under such rules and regulations as may be acceptable to the Secretary of the Interior: Provided, That the title to and the management and operation of the reservoirs and the works necessary for their protection and operation shall remain in the Government until otherwise provided by Congress.
Sec. 10. The Secretary of the Interior is hereby authorized to perform any and all acts and to make such rules and regulations as may be necessary and proper for the purpose of carrying the provisions of this Act into full force and effect."
1. The building of the irrigation system, $52 per acre of irrigable land, payable in not more than 10 annual instalments. .. .
2. For operation and maintenance, which will as soon as the data are available, be fixed in proportion to the amount of water used, with the minimum charge per acre of irrigable land whether water is used or not. The operation and maintenance charge for the irrigation season of 1909, and until further notice, will be 95 cents per acre of irrigable land, for which water is ready in the irrigation season of 1909, whether water is used thereon or not.
NOTES
[1] The proceeds of the public land less certain deductions, were, sec. 1, "reserved, set aside, and appropriated as a special fund in the Treasury to be known as the `Reclamation Fund,' to be used in the examination and survey for and the construction and maintenance of irrigation works for the storage, diversion, and development of waters for the reclamation of arid and semiarid lands in the said States and Territories, and for the payment of all other expenditures provided for in this Act."
[1a] Examples of the form of Notice showing such division of charges, are to be found in "Report of Reclamation Service, 1908-1909," pp. 124, 130, 136, 163, 200. The Notice for the Sunnyside Project recites that water "will be furnished from the Sunnyside Project under the provisions of the Reclamation Act . . . and the charges which shall be made per acre of irrigable land which can be irrigated by the waters from said irrigation project are in two parts, as follows:
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Filed 7/22/16 pub. order 8/18/16 (see end of opn.)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
DANILO SESE,
Plaintiff and Appellant, C074663
v. (Super. Ct. No.
34201300144287CUWEGDS)
WELLS FARGO BANK N.A.,
Defendant and Respondent.
Appellant Danilo Sese seeks to challenge an order denying his motion for interim
attorney fees under Civil Code section 2924.12, a provision in the California Homeowner
Bill of Rights.1 Subdivision (i) of section 2924.12 provides that “[a] court may award a
prevailing borrower reasonable attorney’s fees and costs in an action brought pursuant to
this section. A borrower shall be deemed to have prevailed for purposes of this
subdivision if the borrower obtained injunctive relief or was awarded damages pursuant
to this section.” Having secured a preliminary injunction to enjoin the foreclosure sale of
1 Undesignated statutory references are to the Civil Code.
1
his residential real property, Sese moved for attorney fees of $100,865. The trial court
denied the motion on grounds section 2924.12, subdivision (i), does not provide for
interim attorney fees.
Sese contends the order must be reversed because section 2924.12 provides
attorney fees to a borrower immediately after successfully obtaining a preliminary
injunction. Respondent Wells Fargo Bank N.A. (Wells Fargo) asserts the appeal must be
dismissed because the trial court’s order is interlocutory in nature and nonappealable
under the one final judgment rule. After the completion of briefing, we asked the parties
to address the effect, if any, of this court’s decision in Monterossa v. Superior Court of
Sacramento County (2015) 237 Cal.App.4th 747, 751 (Monterossa) on the present
appeal. Sese did not file a supplemental brief. However, we have received and
considered a supplemental brief from Wells Fargo.
We conclude the trial court’s order is nonappealable because it is interlocutory in
nature. Accordingly, we dismiss the appeal.
FACTUAL AND PROCEDURAL HISTORY
In 2007, Sese received a $472,000 residential property loan from Wells Fargo’s
predecessor. Starting in 2009, Sese started missing regular monthly payments on the loan
and failed to pay taxes on the residential property. In 2012, Wells Fargo and Sese agreed
to modify the loan under the Home Affordable Mortgage Program. However, Sese
defaulted on the agreement shortly after it was executed.
The California Homeowner Bill of Rights became effective on January 1,
2013. (See Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 86,
fn. 14 [noting name and effective date of legislation at issue in this case].) Also in
January 2013, Wells Fargo recorded a notice of default with the Sacramento County
Recorder. Sese requested another modification of the loan, but did not submit the
financial documentation necessary for a modification. In May 2013, Wells Fargo
2
recorded a notice of trustee’s sale and the property was scheduled for sale on June 4,
2013.
On May 28, 2013, Sese filed a complaint against Wells Fargo that alleged
violations of the California Homeowner Bill of Rights. At the same time, Sese filed an
ex parte application for a temporary restraining order. The trial court granted the
temporary restraining order.
On June 3, 2013, Sese filed an application for a preliminary injunction to enjoin
the sale of the property. Wells Fargo opposed the application for preliminary injunction.
The trial court granted the preliminary injunction based on its findings Sese “met his
burden to demonstrate a likelihood of prevailing on the merits of his claims” and that he
“will undoubtedly suffer great injury if his residence is sold.” The trial court ordered
that, “[p]ursuant to . . . § 2924(a)(2), the injunction shall remain in place until the court
determines that Wells Fargo has corrected and remedied the dual tracking allegations”
advanced by Sese.
As the trial court explained, Sese’s dual-tracking allegations were that “[section]
2923.6(c) prohibits a lender from recording a notice of default or notice of sale, or
conducting a trustee’s sale while a loan modification is pending. A lender must make a
written determination that the borrower is not eligible for a loan modification before it
may proceed with the foreclosure process. (. . . §2923.6(c)(1).) [Sese’s] evidence
indicates that Wells Fargo issued the Notice of Trustee’s Sale before it issued any
determination of his eligibility for a loan modification. This is sufficient to demonstrate
Wells Fargo’s failure to comply with . . . §2923.6 and shift the burden to Wells Fargo to
refute [Sese’s] showing.”
With the preliminary injunction in place, Sese moved for attorney fees as the
prevailing party. Wells Fargo opposed the motion. During a hearing on the motion, the
trial court raised a question about the implication of Sese’s argument fees should be
awarded immediately after the granting of a preliminary injunction:
3
“THE COURT: So a minute ago in the last motion you were talking about how
the greedy banks are trying to take over the situation by imposing too high a bond [to
secure the preliminary injunction]. But here if the court’s granting of the preliminary
injunction was improvident, and so found at trial, hypothetically, what happens to that
money [awarded as attorney fees]?” Sese’s attorney responded Wells Fargo would be
entitled to recoup the fees. The trial court noted the “absurd” consequence the attorney
fee money would “keep[] floating back and forth.” The trial court denied the request for
interim attorney fees in an order issued on August 30, 2013. Shortly thereafter, Sese filed
a notice of appeal from the order.
DISCUSSION
I
Appeal from Order Denying Interim Attorney Fees under Section 2924.12
Wells Fargo contends the order denying Sese’s motion for interim attorney fees
under section 2924.12 is not an appealable order. We agree.
A.
The One Final Judgment Rule
The existence of an appealable order or judgment is a jurisdictional prerequisite
for appellate review. (Jennings v. Marralle (1994) 8 Cal.4th 121, 126.) As the California
Supreme Court has explained, “Under California’s ‘one final judgment’ rule, a judgment
that fails to dispose of all the causes of action pending between the parties is generally
not appealable. (Code Civ. Proc., § 904.1, subd. (a); Morehart v. County of Santa
Barbara (1994) 7 Cal.4th 725, 740-741 (Morehart).)” (Kurwa v. Kislinger (2013) 57
Cal.4th 1097, 1100, fn. omitted.) A final judgment “ ‘terminates the litigation between
the parties on the merits of the case and leaves nothing to be done but to enforce by
execution what has been determined.’ ” (Sullivan v. Delta Air Lines, Inc. (1997) 15
Cal.4th 288, 304, quoting Doudell v. Shoo (1911) 159 Cal. 448, 453.)
4
In some instances, an order itself may be appealable. However, “[g]enerally an
order is not a final order until the final judgment in the matter has been entered. ‘Unless
otherwise provided by statute, an appeal lies only from a judgment that terminates the
proceedings in the lower court by completely disposing of the matter in controversy
[citations].’ (Henneberque v. City of Culver City (1985) 172 Cal.App.3d 837, 841.) [¶]
[When] there is no final judgment . . . , the issue is whether the order from which the
appeal has been taken fits within an exception to the one final judgment rule codified
in [Code of Civil Procedure] section 904.1. (See Kinoshita v. Horio (1986) 186
Cal.App.3d 959, 962-963.) A recognized exception to the ‘one final judgment’ rule is
that an interim order is appealable if: [¶] 1. The order is collateral to the subject matter
of the litigation, [¶] 2. The order is final as to the collateral matter, and [¶] 3. The
order directs the payment of money by the appellant or the performance of an act by or
against appellant.” (Marsh v. Mountain Zephyr, Inc. (1996) 43 Cal.App.4th 289, 297-
298, italics added.)
B.
Appeal from the Denial of Interim Attorney Fees
Sese’s notice of appeal was filed before a final judgment. As the trial court noted,
a trial on the merits of the complaint might reveal the preliminary injunction was
improvidently granted. Consequently, we consider whether the order denying the motion
of interim attorney fees is itself appealable. Sese contends the order is appealable under
subdivisions (6), (8), (11), and (12) of Code of Civil Procedure section 904.1. We
disagree.
In pertinent part, Code of Civil Procedure section 904.1 provides that “(a) . . . An
appeal . . . may be taken from any of the following: [¶] . . . [¶] (6) From an order
granting or dissolving an injunction, or refusing to grant or dissolve an injunction. [¶] . . .
[¶] (8) From an interlocutory judgment, order, or decree, hereafter made or entered in an
action to redeem real or personal property from a mortgage thereof, or a lien thereon,
5
determining the right to redeem and directing an accounting. [¶] . . . [¶] (11) From an
interlocutory judgment directing payment of monetary sanctions by a party or an attorney
for a party if the amount exceeds five thousand dollars ($5,000). [¶] (12) From an order
directing payment of monetary sanctions by a party or an attorney for a party if the
amount exceeds five thousand dollars ($5,000).” Each of these subdivisions is
inapplicable.
Subdivision (6) of Code of Civil Procedure section 904.1 is not applicable because
Sese is not challenging the granting or denial of an injunction. He is not arguing the
preliminary injunction should be dissolved. Instead, he contends only that attorney fees
should be awarded. Subdivision (8) of section 904.1 does not help Sese either. Sese’s
complaint does not seek redemption of the residential property. Instead, his only cause of
action seeks relief under the California Homeowner Bill of Rights. He is not seeking to
redeem the property by paying the full amount owed on the property. (E.g., Peterson v.
State of California (1982) 138 Cal.App.3d 110, 112.) Subdivisions (11) and (12) of Code
of Civil Procedure section 904.1 do not apply because the order does not direct payment
of sanctions. In short, an order denying interim attorney fees under section 2924.12 is not
included among appealable orders in Code of Civil Procedure section 904.1.
The order denying interim attorney fees is also not appealable as a collateral order.
The order does not direct the payment of any money. Neither does it compel an act by or
against Sese. Instead, the order represents a denial of fees that is not appealable as a
collateral order. (Marsh v. Mountain Zephyr, Inc., supra, 43 Cal.App.4th at pp. 297-
298.)
We reject Sese’s reliance on the Second Appellate District’s decision in Moore v.
Shaw (2004) 116 Cal.App.4th 182. In Doe v. Luster (2006) 145 Cal.App.4th 139, the
Second District considered its earlier decision in Moore and held Moore should not be
construed to allow an appeal from an interim attorney fee award. As the Doe court
explained, “[I]n Moore v. Shaw, supra, 116 Cal.App.4th 182, Division Three of this
6
Court considered on the merits an appeal from the trial court’s denial of the defendant’s
special motion to strike under section 425.16 and the prevailing plaintiff’s cross-appeal
from the trial court’s order, made concurrently with the order denying the motion,
denying his request for attorney fees. (Moore at p. 186.) Although the court specifically
noted that the order denying a special motion to strike itself is appealable, citing both the
relevant subdivision of [Code of Civil Procedure] section 425.16 and section 904.1
(Moore, at p. 186, fn. 3), it did not address whether the order denying the request for
attorney fees, which was the subject of the cross-appeal, was also appealable. Because
the opinion does not suggest either that the parties raised the jurisdictional issue or that
the court considered it, Moore is not authority for [the] position that an interlocutory
order denying a request for attorney fees under [Code of Civil Procedure] section 425.16,
subdivision (c), is immediately appealable.” (Doe, supra, at pp. 149-150.) Thus, Moore
does not provide authority for holding an order granting interim attorney fees is
appealable.
We reject Sese’s reliance on Baharian–Mehr v. Smith (2010) 189 Cal.App.4th
265. Baharian–Mehr involved an appeal from a denial of a special motion to strike.
Because the merits of the special motion to strike were subject to review on appeal, the
Baharian–Mehr court also considered the propriety of the attorney fees granted to the
party that had opposed the motion. (Id. at pp. 274–275.) Baharian–Mehr did not
consider whether an attorney fee order is appealable by itself. (Ibid.) Thus, Baharian–
Mehr does not undermine our conclusion that the order denying interim attorney fees in
this case does not constitute an appealable order.
In another case involving the statutory interpretation of section 2924.12, this court
held a borrower who obtains only a preliminary, rather than permanent, injunction may
nonetheless be entitled to attorney fees. (Monterossa, supra, 237 Cal.App.4th at p. 751,
citing section 2924.12, subd. (i).) Because Monterossa came before us by writ petition,
we “expressly decline[d] to determine whether an order denying attorney fees and costs
7
under section 2924.12 is immediately appealable or is reviewable upon appeal from a
final judgment in the case.” (Monterossa, at p. 751, fn. 3.) Thus, Monterossa left open
the issue we decide in this appeal. And as we have explained, the order denying interim
attorney fees under section 2924.12 is not an appealable order.
DISPOSITION
The appeal is dismissed. Wells Fargo Bank, N.A., shall recover its costs on
appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)
/s/
HOCH, J.
We concur:
/s/
ROBIE, Acting P. J.
/s/
BUTZ, J.
8
Filed 8/18/16
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
DANILO SESE,
Plaintiff and Appellant, C074663
v. (Super. Ct. No.
34201300144287CUWEGDS)
WELLS FARGO BANK N.A.,
ORDER CERTIFYING
Defendant and Respondent. OPINION FOR PUBLICATION
[NO CHANGE IN JUDGMENT]
APPEAL from an order of the Superior Court of Sacramento County, David I.
Brown, Judge. Dismissed.
Aldon L. Bolanos, for Plaintiff and Appellant.
Anglin Flewelling Rasmussen Campbell & Trytten, Robert Collings Little and
Robin C. Campbell for Defendant and Respondent.
The Court:
The opinion in the above-entitled matter filed on July 22, 2016, was not
certified for publication in the Official Reports. For good cause it now appears the
opinion should be certified for publication in the Official Reports and it is so ordered.
1
There is no change in the judgment.
/s/
ROBIE, Acting P. J.
/s/
BUTZ, J.
/s/
HOCH, J.
2
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456 N.E.2d 709 (1983)
INDIANA EDUCATION EMPLOYMENT RELATIONS BOARD, Victor P. Hoehne, As Chairman of the Indiana Education Employment Relations Board, and Mill Creek Community School Corporation Board of School Trustees, Appellants (Respondents below)
v.
MILL CREEK Classroom TEACHERS Association, George Shepherd, and Linda Trout, Appellees (Petitioners below).
No. 1183S397.
Supreme Court of Indiana.
November 16, 1983.
*710 Linley E. Pearson, Atty. Gen. of Indiana, Jeffrey L. Simnick, Deputy Atty. Gen., Indianapolis, for appellants.
Richard J. Darko, Janet C. Knapp, Bayh, Tabbert & Capehart, Indianapolis, for appellees.
HUNTER, Justice.
This case is before this Court upon the petition to transfer of plaintiffs-appellees, Mill Creek Classroom Teachers Association. The Hancock Superior Court found in favor of the Teachers that the School Board had violated the provisions of Ind. Code § 20-7.5-1-12(e) (Burns 1975) by failing to maintain the status quo on teachers' salaries during contract negotiations. That decision was reversed by the Court of Appeals, Fourth District, in an unpublished opinion in which they found that this case was moot. We now grant transfer. The opinion and decision of the Court of Appeals are hereby vacated, and plaintiffs' petition to transfer is granted. The decision of the trial court is affirmed.
The essential facts are not in dispute and were succinctly summarized by the Court of Appeals:
"On August 25, 1977, the Mill Creek Classroom Teachers Association (Teachers) and the Mill Creek Community School Corporation (School Board) entered into a two year contract effective as of August 1, 1977. The contract was to remain in effect until July 31, 1979, except that salary, insurance and extra-curricular salary were to be reopened for bargaining in 1978. Appendix A of that agreement contained the salary schedule by which teachers were to be paid under the contract.[1] Essentially the schedule consists of three columns: one setting out the years of experience, the second a list of salary figures under the heading `Bachelor Degree' and the third a list of higher salary figures under the heading `Master Degree.' An individual teacher's salary is determined by finding that teacher's years of experience and then locating the corresponding figure under either the bachelor's or master's column. When a teacher receives a master degree that teacher is said to have made a `lane change' from the bachelor's lane to the master's lane. The increase in salary based on increased experience is called an `increment.'
"At the beginning of the 1978-79 school year, negotiations were continuing between the Teachers and the School Board on salary. As of August 31, 1978, which *711 was the School Board's budget submission date, no agreement had been reached. In that situation the provisions of Ind. Code 20-7.5-1-12(e) take effect. That subsection provides in part:
"If no agreement has been reached on the items to be bargained collectively fourteen [14] days prior to the submission date, the parties shall continue the status quo and the employer may issue tentative individual contracts and prepare its budget based thereon. During this status quo period in order to permit the successful resolution of the dispute, the employer may not unilaterally change the terms or conditions of employment that are issues in dispute.
"The School Board issued the first payroll check to its teachers based upon the 1977-78 salary schedule that had expired pursuant to the terms of the negotiated contract. The School Board paid its teachers the same dollar amounts of salary for the 1978-79 school year that they received for the 1977-78 school year. In collective bargaining parlance, the teachers were not given incremental or lane change adjustments to reflect their increased experience or training."
Indiana Education Employment Relations Board v. Mill Creek Classroom Teachers Association, (Oct. 28, 1982) No. 4-1081 A 139, slip op. at 2-3.
A complaint of an unfair labor practice was filed with the Indiana Education Employment Relations Board (IEERB) by the Teachers alleging that the School Board had refused to abide by the status quo as required by the statute when they failed to grant the incremental and lane change salary adjustments. The Hearing Examiner ruled in favor of the School Board, finding that the status quo had been maintained. The IEERB adopted the decision of the Hearing Examiner, but the Hancock Superior Court overruled the IEERB and found that the status quo had not been maintained.
Both the IEERB and the School Board appealed from the trial court's decision. Oral argument was held before the Court of Appeals on September 28, 1982, and at that time, the court sua sponte raised the issue of mootness. The court found that the instant dispute had been solved through the negotiation of a new contract which was signed on December 20, 1978, and which included the payment in full of all incremental and lane change raises withheld during the negotiation period. The court held that no substantive questions remained and there was no justiciable controversy before them. They further found that the case did not involve a question of great public interest and that there was no evidence the problem was capable of repetition. They held, therefore, that the case was moot and reversed the trial court for that reason.
The primary issue in this case which was resolved by the trial court in favor of the Teachers is whether the School Board violated the statutory provision requiring a maintenance of the status quo by withholding salary increases provided under a prior contract pending agreement on a new contract. We agree with appellees that although this issue is moot with respect to the parties in the instant case, it is an issue which does recur whenever negotiation on a new contract continues after the start of a new school year and also recurs in many school districts throughout the state. Appellees have introduced evidence to show that salary increments have been denied to teachers during the status quo period in at least twelve school corporations during the last two years.
It also is an issue of great public interest since violations of the statute governing collective bargaining between school corporations and their certified employees would necessarily undermine the bargaining relationship between school corporations and teachers and have a detrimental effect upon the overall educational environment. The legislative intent behind the school employee bargaining statute is to develop "harmonious and cooperative relationships between school corporations and their certified employees" and "to protect the public *712 by attempting to prevent any material interference with the normal public school educational process." Ind. Code § 20-7.5-1-1(a) and (c) (Burns 1975). Violations of this statute could not be in the public interest.
The law in Indiana is well settled that although a specific issue may be moot, the fact that it recurs year after year and is of great public interest is sufficient to allow the issue to be considered on its merits. State ex rel. Smitherman v. Davis, (1958) 238 Ind. 563, 151 N.E.2d 495; State ex rel. Branigin v. Morgan Superior Court, (1967) 249 Ind. 220, 231 N.E.2d 516; In re Estate of Cassner, (1975) 163 Ind. App. 588, 325 N.E.2d 487. Alleged violations of our statute are clearly against the general public interest since they are inconsistent with the statutory goal of encouraging harmonious labor relations between the government and its employees and have a detrimental effect on public education. These alleged violations are occurring throughout the state and recur on many occasions when there is bargaining on a new contract. Therefore, this case is appropriate for our review.
Turning to the merits of the issue, we must determine precisely what is the status quo within the meaning of the statute. While the term is not defined in the statute, the following is the generally accepted legal definition: "STATUS QUO: The existing state of things at any given date... . the last actual, peaceable, uncontested status which preceded the pending controversy." Black's Law Dictionary 1264 (rev. 5th ed. 1979).
In this case, it is apparent that the experience-based salary increases and lane change adjustments were part of the last uncontested contract of 1977-78. In order to maintain the status quo of that contract, the school board was required to maintain the status quo both as to the salary schedule and the increments which were a part of that schedule.
Furthermore, it is clear that one of the major factors in determining the status quo is the expectation of employees in the continuance of existing terms and conditions of their employment. Where the school corporation has consistently paid incremental wage increases based merely upon years of service or the attainment of an additional degree, employees still reasonably expect their accrued wage increases even though negotiations for a new agreement are pending. If school corporations are not required to pay the increments, they are free to use the increments as a bargaining tool.
For instance, an employer may be encouraged to prolong negotiations past the expiration of the existing agreement to gain bargaining leverage. In effect, this tactic would exact a penalty on the employees and their bargaining agent for exercising their rights under an existing agreement. The employees would be deprived of the present use of the increments to their salary even though they may later recover these increments as part of a new contract. Maintenance of the status quo after expiration of a contract and during negotiations for a new contract is important because it serves to continue the balance in the bargaining power of the parties as well as provide the flexibility necessary to reach agreement in the give and take inherent in the collective bargaining process.
Other jurisdictions have found that school corporations are legally required to pay wage increments which are part of an existing contract in order to maintain the status quo pending negotiation of a new contract. Nassau Teachers Association v. School Board of Nassau County, 8 FPER ¶ 13206 (Fla. 1982); In the Matter of Communications Workers of America and State of New Jersey, 7 NJPER ¶ 12235 (N.J. 1981); California School Employees Association v. Davis Unified School District, 4 PERC ¶ 11031 (Cal. 1980); Springfield Board of Education v. Springfield Education Association, 47 Ill. App.3d 193, 5 Ill.Dec. 374, 361 N.E.2d 697, 95 LRRM 3000 (4th DCA 1977); NLRB v. Allied Products Corp., 548 F.2d 644, 94 LRRM 2433 (6th Cir.1977).
*713 Our statute clearly provides the school corporation "may not unilaterally change the terms or conditions of employment that are issues in dispute" during the status quo period. Ind. Code § 20-7.5-1-12(e). Since the salary increments were part of the existing wage structure, they were part of the status quo. The trial court properly found that the denial of the scheduled increases was a failure to maintain the status quo and that the school corporation had committed an unfair labor practice.
The trial court also found as an alternative basis for its judgment that the school board's action violated the equal protection clause of the Fourteenth Amendment to the United States Constitution since the teachers' salaries in that school corporation were not based upon their years of experience and degree of training in contravention of the law of this state. We do not deal with this issue since we are affirming the trial court's judgment on the basis of the school board's failure to maintain the status quo.
It is our conclusion of law that the school corporation unilaterally changed an existing condition of employment, instead of maintaining the status quo, when they denied the teachers their experience-based and lane adjustment salary increases which were part of the 1977-1978 contract. The School Board, therefore, did violate our Certified Educational Employee Bargaining Statute. Ind. Code § 20-7.5-1-1 et seq. We affirm the trial court's judgment enjoining the School Board from further violations of Ind. Code § 20-7.5-1-12(e) and reversing the order of the IEERB in this case.
For all of the foregoing reasons, transfer is granted; the opinion and decision of the Court of Appeals are vacated, and the trial court's judgment is affirmed.
GIVAN, C.J., and DeBRULER, PRENTICE and PIVARNIK, JJ., concur.
NOTES
[1] "The salary schedule was set up as follows:
Yrs. Bachelor Master
Exp. Degree Degree
---------------------------------------------------
0 8905 9355
1 9155 9595
2 9375 9885
3 9595 10175
4 9815 10465
5 10035 10755
* * *
20 15605"
| {
"pile_set_name": "FreeLaw"
} |
270 F.3d 1137 (7th Cir. 2001)
U.S. Freightways Corp., f.k.a. TNT Freightways Corp., and Subsidiaries, Plaintiff-Appellant,v.Commissioner of Internal Revenue, Defendant-Appellee.
No. 00-2668
United States Court of Appeals,Seventh Circuit
Argued January 18, 2001Decided November 6, 2001
Appeal from the United States Tax Court. No. 459-98--Arthur L. Nims, III, Judge.
Before Bauer, Manion, and Diane P. Wood, Circuit Judges.
Diane P. Wood, Circuit Judge.
1
This is an appeal from the United States Tax Courts decision affirming the Commissioners determination that U.S. Freightways Corp. (Freightways) improperly deducted certain expenses during the 1993 tax year. Although we acknowledge that even after United States v. Mead Corp., 121 S.Ct. 2164 (2001), we owe some deference to the Commissioner's interpretation of his own regulations, we conclude here that the lack of any sound basis behind the Commissioner's interpretation, coupled with a lack of consistency on the Commissioner's own part, compels us to rule in favor of Freightways. Because the Tax Court did not reach the Commissioner's alternative argument that Freightways' method of accounting for the expenses in question did not clearly reflect its income, we remand for the limited purpose of allowing that court to consider this issue in the first instance.
2
* This case was tried before the Tax Court on stipulated facts. Freightways is a long-haul freight trucking company that operates throughout the continental United States. In 1993, it had a fleet of 14,766 trucks and was growing. Every year it is required to purchase a large number of permits and licenses and to pay significant fees and insurance premiums in order legally to operate its fleet of vehicles. These items are referred to collectively as FLIP expenses in the record, and we will follow that convention. During the 1993 tax year, Freightways' FLIP expenses totaled $5,399,062. None of the licenses and permits at issue was valid for more than twelve months, nor did the benefits of any of the fees and insurance premiums paid extend beyond a year from the time the expense was incurred. But because the various FLIP expenses were incurred at different times during the tax year, Freightways enjoyed the benefits of a substantial portion of them in more than one tax year. According to Freightways' own accounting, $2,984,197, or approximately 55%, of the FLIP expenses it incurred in 1993 actually benefitted the company during 1994.
3
Despite the subsequent tax year benefits of its FLIP expenses, Freightways, which otherwise uses the accrual accounting method for bookkeeping and tax reporting purposes, deducted the entire $5,399,062 in FLIP expenses on its 1993 federal income tax return. This had been its com mon practice for a number of years. After auditing Freightways' tax return, the Commissioner concluded that Freightways should have capitalized its 1993 FLIP expenses and deducted them ratably over the 1993 and 1994 tax years. Freightways disputed this conclusion and petitioned the Tax Court for a redetermination of the IRSs proposed judgment. The Tax Court sided with the Commissioner, concluding that under the relevant provisions of the tax code, Freightways, as an accrual method taxpayer, was required to capitalize these expenses. Given this holding, the court declined to reach the Commissioners alternative argument that Freightways' use of the accrual accounting method did not fairly reflect its income.
II
4
Whether a taxpayer is required to capitalize particular expenses is a question of law, and our review is therefore de novo. See Heffley v. Commissioner, 884 F.2d 279, 282 (7th Cir. 1989). In order to place the issues in context, we begin by addressing the Tax Court's resolution of the case. The court recognized that whether Freightways could properly deduct its FLIP expenses in full depends on whether they are ordinary and necessary business expenses as defined by I.R.C. § 162(a), or capital expenditures covered by § 263(a). Citing INDOPCO, Inc. v. Commissioner, 503 U.S. 79 (1992), the court explained, accurately, that the essential reason behind the need to distinguish between currently deductible expenses and those that are subject to capitalization is "to match expenses with the revenues of the taxable period to which they are properly attributable, thereby resulting in a more accurate calculation of net income for tax purposes." 503 U.S. at 84. Some mismatching is inevitable: it is not necessary to count every pencil on hand at the end of a tax year to determine whether it will be useful in the next tax year and, if so, to treat it as a capital asset. The critical consideration in determining whether an expense should be treated as a capital expenditure is whether the expenditure produces more than an incidental future benefit or, as the Treasury Regulations put it, whether a benefit for the taxpayer extends "substantially beyond the tax year." See, e.g., Treas. Regs. § § 1.263(a)-2, 1.461-1(a)(2).
5
This means that, but for the accident that Freightways' expense year does not correspond with its tax year, there would be no problem in treating the FLIP expenses as current. The licenses and fees Freightways purchased conferred a 12-month benefit on the company; if it had incurred those expenses on January 1 of each year and they had all expired on December 31 (the tax year for Freightways), no one would have argued that capitalization was required. But for reasons unrelated to taxation, that is not the way the FLIP expenses worked. The Tax Court's task was thus to unravel the tax implications of this quirk, which turn on the lines that must be drawn conceptually between deductible expenses and capital expenditures.
6
Turning to the question whether Freightways' FLIP expenses were deductible in full in the year they were incurred, the Tax Court understood Freightways to be arguing that it should be allowed to deduct its FLIP expenses in full under a "one-year rule" permitting the deduction of any current expense with a benefit that extends less than 12 months into the subsequent tax year. The application of this principle would rid the Commissioner's position of its intrinsic arbitrariness: under a one-year rule, nothing would turn on the accident of the date during a year when a one-year expenditure was made. The worst case (from the Commissioner's standpoint) one could imagine of a mis-match between the year of payment and the year of benefit would be the one in which a taxpayer bought all its licenses on December 31 of year 1 and deducted their entire cost in that year, even though the entire benefit accrued in year 2. (The worst for the taxpayer might be a case in which the license was purchased on February 1 of the first year and expired on January 31 of the next year, if the Commissioner regarded a full month as "substantial" enough to require capitalization.) The Tax Court rejected Freightways' reliance on a one-year rule for two reasons. First, it questioned whether such rule was, in fact, well established in the case law. Second, it found that Freightways had a "more fundamental problem," namely the fact that "even if such a 1-year rule were widely recognized, it would be inapplicable to an accrual method taxpayer." On these two grounds, and without further explanation, the court affirmed the Commissioner's deficiency judgment.
III
7
This is a difficult case because the language of the Code, the regulations, and the presumption in favor of capitalization to varying degrees support the Commissioner's position, but the rationale for distinguishing between immediate expenses that should be deducted from a single year's income and longer term expenses that are suitable for amortization strongly cuts in Freightways' direction. Furthermore, as we explain below, the Tax Court's alternative ruling that any judge-made "one year rule ought not logically to be available to accrual taxpayers" is not supportable. Because so much turns on the degree of deference we owe to the Commissioner in these circumstances, we begin with a brief discussion of that subject and then turn to the merits of the case.
A.
8
At the most general level, this case turns on which of two provisions of the Code itself should apply to Freightways' situation: section 162(a), which permits the deduction of ordinary and necessary business expenses, or § 263(a), which calls for the capitalization of all other expenditures. The Commissioner has issued notice-and-comment regulations that elaborate on the way this choice should be made. As we noted above, those regulations provide that expenditures producing nothing more than an "incidental" future benefit are eligible for current year deductions, while expenditures whose benefits extend "substantially" beyond the tax year must be capitalized. See Treas. Regs. § § 1.263(a)-2, 1.461-1(a)(2). But this is not a case where the regulations themselves fully answer the question before us. Instead, another layer of interpretation has been laid on top of the regulations: the Commissioner has informed the courts throughout the course of this litigation that the term "substantially" as used in the regulations should be interpreted to cover anything that extends more than a few days, or perhaps a month, into the second tax year. This is so regardless of the implications for the capitalization decision of the other factors normally used to draw the line between ordinary and capital expenses.
9
In the ordinary case, our focus is on the deference we must give to a regulation itself. After Mead, we know that we give full deference under Chevron v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), only to regulations that were promulgated with full notice-and-comment or comparable formalities. See Mead, 121 S. Ct. at 2171. We also know that deference to agency positions is not an all-or-nothing proposition; more informal agency statements and positions receive a more flexible respect, in which factors like "the degree of the agency's care, its consistency, formality, and relative expertness, and . . . the persuasiveness of the agency's position," are all relevant. Id. Finally, in the typical case where the validity of a regulation is at issue, we have explained before that Chevron requires us to apply a two- step analysis:
10
(1) We examine the text of the statute-- in this case, the relevant section of the tax code. If the plain meaning of the text either supports or opposes the regulation, then we stop our analysis and either strike or validate the regulation. But if we conclude the statute is either ambiguous or silent of the issue, we continue to the second step:
11
(2) We examine the reasonableness of the regulation. If the regulation is a reasonable reading of the statute, we give deference to the agency's interpretation.
12
Bankers Life & Cas. Co. v. United States, 142 F.3d 973, 983 (7th Cir. 1998).
13
In the present case, however, no one is arguing that the regulations the Commissioner has promulgated are invalid or that they are inconsistent with the text of the Code. The issue is instead whether the Commissioner's interpretation of his own regulations is a reasonable one. And as to that, there is no question but that the interpretive methodologies he has used have been informal. The interpretation with which we are concerned has emerged inferentially in the way the IRS has applied the rules to different cases and it has appeared through the litigating positions the Service has taken.
14
Both the informality of this interpretation and the context in which it has arisen persuade us that full Chevron deference is not appropriate here. Mead expressly disapproved of the exercise of such deference for the customs regulations that were at issue there, in part because of the boot- strapping that could otherwise occur. With full Chevron deference, agencies could pass broad or vague regulations through notice-and-comment procedures, and then proceed to create rules through ad hoc interpretations that were subject only to limited judicial review. All told, we think this is a clear case for the flexible approach Mead described, relying on the Supreme Court's earlier decision in Skidmore v. Swift & Co., 323 U.S. 134 (1944), and we thus proceed on that basis.
B.
15
One reason the Tax Court gave for accepting the Commissioner's disallowance of Freightways' deductions was that, even if there is some kind of one-year rule for deductible expenses, accrual taxpayers are never entitled to it. This, we conclude, is an unsustainable position. In flatly rejecting the one- year rule for accrual taxpayers, that court relied largely on implications from its own earlier decision in Johnson v. Commissioner, 108 T.C. 448 (1997). Johnson involved an accrual taxpayer that had purchased various insurance policies covering periods of one to seven years. The Tax Court held that regardless of the length of the policy, to the extent that part of the premiums paid was allocable to subsequent tax years, capitalization and amortization was required. We think the court read too much into Johnson, and from a broader point of view (since we at least are not bound by earlier Tax Court decisions) it confuses the time when income is generated or expenditures are incurred (when paid or received, versus when the rights accrue) with the length of the economic benefit they will yield. Although Johnson used broad language that could be interpreted to be inconsistent with the existence of a one-year rule, it did not link its holding to the taxpayer's method of accounting.
16
Moreover, Johnson relied on Commissioner v. Boylston Market Association, 131 F.2d 966 (1st Cir. 1942), for the proposition that "lump sum payments for multiyear insurance coverage generally are capital expenditures." See Johnson, 108 T.C. at 488. Boylston Market involved a cash basis taxpayer and specifically concluded that a taxpayer, "regardless of his method of accounting" must capitalize a three-year prepaid insurance policy because it is an asset having "a longer life than a single taxable year." Id. at 968. While Boylston Market's statement of the one-year rule may be ambiguous, the court clearly believed it applied to both accrual and cash basis taxpayers. In fact, the Tax Court commented in Johnson that Boylston Market supported a one-year rule for cash basis taxpayers, who, itacknowledged, could fully deduct insurance premiums covering a year or less. In Freightways' case, the Tax Court also found support for its position in Zaninovich v. Commissioner, 616 F.2d 429, (9th Cir. 1980). Zaninovich permitted a deduction for a rental payment that extended eleven months into the subsequent tax year and sought to reconcile its position with the Board of Tax Appeals' contrary holding in Bloedel's Jewelry, Inc. v. Commissioner, 2 B.T.A. 611 (1925), by pointing out that Bloedel's involved an accrual method taxpayer. 616 F.2d at 431-32 & nn. 5-6. This is a fairly weak reed for present purposes, as the effort to distinguish Bloedel's was unnecessary in any event to the Ninth Circuit's decision, and that court made no effort to think carefully about what consequences should flow from a taxpayer's choice of accounting methods.
17
In our view, the decision whether to expense or capitalize a particular item should not turn on whether the taxpayer uses the cash or accrual basis of accounting. As Freightways points out, even the Treasury Regulation on which the Commissioner has relied here, Treas. Reg. § 1.461-1(a), uses identical language in subpart (1) (relating to cash basis taxpayers) and in subpart (2) (relating to accrual basis taxpayers): both must capitalize an expenditure that results in the creation of an asset having a useful life which extends substantially beyond the close of the tax year. The mere fact that Freightways is an accrual method taxpayer thus does not disqualify it from expensing the short-term items at issue here.
C.
18
We turn thus to the central reason the Commissioner, as affirmed by the Tax Court, gave: that no matter what other characteristics an expenditure has, if it is made in one tax year and its useful life extends "substantially" (an undefined term) beyond the close of that year, then it must be capitalized. Perhaps this rule works in some simple cases. It relies on an implicit spectrum between things that are consumed immediately and those that last well beyond a year. Consumable office supplies, such as paper and pens, might not be thought to have a useful life that will extend substantially beyond a given year, even if they are acquired late in the year (though it depends on the pen-- some disposable pens bought in November might well be functioning four or five months into the new year). Something like computers or furniture, on the other hand, predictably will last beyond one tax year. The problem is that many things fall somewhere in the middle of this hypothetical spectrum. Some employers, for example, pay for employee training seminars, which surely create human capital that lasts for many years. Are the training expenses one-year deductible items? Must they be capitalized? What about a light bulb that the company expected would last for eight months, but turned out to be burning brightly after 14--or anything else whose useful life was estimated at approximately a year, but that might have failed sooner or lasted longer? The license fees, permit fees, and insurance premiums Freightways pays are, in a sense, easier to characterize as deductible expenses than the pens or the light bulbs because the issuing entities and insurance companies have strictly defined the useful life of the item to be exactly one year--not a minute more or less. The only reason that the FLIP expenses are also in the middle range of the spectrum is because the twelve-month period each one covers will usually lap across two tax years.
19
Looking at the language of Treas. Reg. § 1.263(a)-2, we find two somewhat contradictory clues. On the one hand, there is the simple word "substantially," which the Commissioner seems to interpret as meaning at least a month (or maybe two, three, or four months?) into a second tax year. We do not wish to quibble about the number of months because even Freightways appears to concede that nine, ten, or eleven months into a second year would qualify as "substantially," and some of the FLIP expenses might fit this pattern. Indeed, "substantially" could be defined instead as a ratio between the benefit in the year of deduction and the subsequent tax year. But, on the other side, Treas. Reg. § 1.263(a)-2 certainly suggests that the FLIP expenses are not similar to the kinds of expenditures that the IRS itself thinks must be capitalized. The most pertinent subsection of that regulation indicates that "[t]he cost of acquisition, construction, or erection of buildings, machinery and equipment, furniture and fixtures, and similar property having a useful life substantially beyond the tax year" should be capitalized. Id. at § 1.263(a)- 2(a). Followers of the interpretive maxim expressio unius est exclusio alterius would argue that the enumeration of items all of which seem to have a multiple-year life span implies that something that will expire or wear out in exactly a year should not be capitalized. We further note that these examples are all of expenses that become part of the basis of a capital good. There is no such capital good attached to the FLIP expenses. In this sense, Freightways' position is even more compelling than that of the petitioner in the leading case of PNC Bancorp, Inc. v. Commissioner, 212 F.3d 822 (3d Cir. 2000). PNC Bancorp relied on the language of § § 162(a) and 263(a) and the regulations enacted thereunder to hold that ordinary and necessary expenses incurred in the origination of loans could be deducted under § 162(a). It explained that recurring, administrative expenses that are necessary to the business activity of the petitioner fall too far "from the heartland of the traditional capital expenditure (a 'permanent improvement or betterment')," id. at 835, to require capitalization. That permanence is precisely what the FLIP expenses lack.
20
The regulation itself, it is evident, does not resolve this issue one way or the other. We turn then to the way the IRS has applied the regulation. It is not particularly useful in this connection to focus on whether some kind of "one-year" rule exists: it is clear that no such rule has been promulgated using notice- and-comment or other formal procedures, and thus at most we would be deciding whether it could be discerned in agency practice. The Commissioner denies that there is any such rule. Freightways, for its part, points to numerous Revenue Rulings, decisions of the Tax Court, and judicial opinions in which deductions have been allowed for expenditures whose value is limited to twelve months, even if two tax years are covered. See, e.g., Rev. Rul. 59-239, 1959-2 C.B. 55 (deduction allowed for cost of tires and tubes with average useful life of one year or less); Rev. Rul. 69-81, 1969-1 C.B. 137 (deduction allowed for cost of towels, garments, and gloves with useful life of one year or less); Mennuto v. Commissioner, 56 T.C. 910, 924 (1971) (deduction allowed for costs of installing leeching pit designed to last for one year); Bell v. Commissioner, 13 T.C. 344, 348 (1949) (current deduction allowed for insurance expense where policy covered part of 1945 and part of 1946); Encyclopedia Britannica v. Commissioner, 685 F.2d 212, 217 (7th Cir. 1982) (stating that a capital expenditure is anything that yields income beyond a period, typically one year, in which the expenditure is made); Clark Oil and Ref. Corp. v. United States, 473 F.2d 1217, 1219-20 (7th Cir. 1973) (also mentioning a useful life of one year as the normal dividing line between a capital expense and an ordinary expense).
21
The Commissioner replies, correctly in our opinion, that none of these decisions turned on the precise question now before us: whether there really is a rule under which all prepaid expenses with a useful life of only one year, but whose benefits extend substantially into a second tax year, are entitled to treatment as deductible ordinary expenses rather than capital expenditures. Furthermore, to the extent that we should consider statements made in earlier decisions in the context of the issues presented and the ultimate holdings of the cases, it is notable that in both Encyclopedia Britannica and in Clark Oil this court eventually rejected the taxpayer's argument that certain expenses were deductible and ruled that they had to be capitalized. See Encyclopedia Britannica, 685 F.2d at 218; Clark Oil, 473 F.2d at 1220-21. Even so, we are left with a point that cuts in Freightways' favor: there has been no consistent practice on the Commissioner's part under which capitalization of these expenditures has been required. Indeed, to the extent that agency practice exists at all, it appears that deductions have been allowed in a substantial number of cases.
22
Persuasiveness is another factor that Skidmore and Mead identify as important in this kind of case. This too favors Freightways. As the Commissioner's own examples in the regulation underscore, the policy behind the distinction between capitalization and expense tends to support Freightways. We know from the Supreme Court's decision in INDOPCO that it is difficult to draw decisive distinctions between current expenses and capital expenditures, because we are often dealing with differences of degree and not of kind. See 503 U.S. at 86. We also know that an income tax deduction is a matter of legislative grace and thus the burden of clearly showing the right to the claimed deduction is on the taxpayer. Interstate Transit Lines v. Commissioner, 319 U.S. 590, 593 (1943). Deductions are the exception to the norm of capitalization and are allowed only as there is a clear provision therefore. INDOPCO, 503 U.S. at 84 (internal quotations and citations omitted); A.E. Staley Mfg. Co. v. Commissioner, 119 F.3d 482, 486 (7th Cir. 1997). If an expenditure satisfies both the definition of 162 and the requirements of 263, the latter statutory provision takes precedence and the expense must be capitalized. Commissioner v. Idaho Power Co., 418 U.S. 1, 17 (1974); Fishman v. Commissioner, 837 F.2d 309, 312 (7th Cir. 1988). This presumption obviously favors the Commissioner in the instant case. At the same time, however, "the Court did not purport to be creating a talismanic test that an expenditure must be capitalized if it creates some future benefit." A.E. Staley Mfg. Co., 119 F.3d at 489 (discussing INDOPCO).
23
Even the Commissioner concedes the ordinariness of Freightways' FLIP expenses for companies in the trucking business. Not only are they ordinary, but as Freightways points out, they recur, with clockwork regularity, every year. Both this court and the IRS have recognized this type of regularity as something that tends to support a finding of deductibility. See Encyclopedia Britannica, 685 F.2d at 216-17; Tech. Adv. Mem. 9645002 (June 21, 1996). Recur rent expenses are more likely to be ordinary and necessary business expenses. See, e.g., Tech. Adv. Mem. 7401311140A (January 31, 1974) ("We believe the Davee principle concerning the recurrent nature of an expense serves as a useful basis for distinguishing ordinary business expenses from expenses that are in the nature of capital expenditures, regardless of what type of expense may be at issue."). Because they recur every year, there is less distorting effect on income from future tax year benefits over time. In every year, that is, while Freightways will be able to reap the tax advantage of deduction for some part of the following twelve months, it will have "lost" the deductions for the months covered by the prior year's licenses, for which it has already received the benefit. In a hypothetical last year of Freightways' corporate life, it would finally be entitled to only a prorated deduction for licenses (if any) that are acquired during that year, partially evening out the score with the first year of deductions. Freightways argues that this is exactly its situation: its FLIP expenses recur annually, and it has consistently deducted them in their entirety.
24
The Commissioner responds that some distortion remains as long as the expenses are not capitalized. Here, it is undisputed that the change from expensing to amortizing would have meant an increase in Freightways' 1993 tax income of $2,984,197, which corresponded to a tax deficiency of $1,712,070. The Commissioner was also prepared to introduce evidence of financial data for years after 1993, for the purpose of showing the distortion in income that Freightways' system was causing. In his appellate brief, the Commissioner asserts that expensing was allowing Freightways in a sense to borrow deductions from later years and thus to lower its tax burdens year after year: for the years 1993 through 1997, the Commissioner asserts, total deductions for FLIP expenses using Freightways' method exceeded the amount that capitalization would have allowed by $2,363,925. We agree with him that the mere fact that certain expenditures recur does not negate the distorting effect of expensing that predictably occurred here--the interest-free government loan that comes from the deduction remains the same regardless of whether the FLIP expenses are unchanged throughout the corporate life of Freightways.
25
But perfection is a lot to ask for, even in the administration of the tax laws, which we acknowledge endeavor "to match expenses with the revenues of the taxable period to which they are properly attributable, thereby resulting in a more accurate calculation of net income for tax purposes." INDOPCO, 503 U.S. at 84; Rev. Rul. 95-32, 1995-1 C.B. 9. We note again in this regard that Freightways' pattern of FLIP expenditures had nothing to do with tax planning; external agencies and companies controlled the time when its licenses, permits, and policies had to be renewed. As such, we do not expect its pattern of FLIP expenditures to change based on the outcome of this case. We find it significant that it was not Freightways that was manipulating the tax laws in order to obtain the implicit loans about which the Commissioner is concerned. It was external realities over which the taxpayer had no control.
26
Freightways' final point is that perfection in temporal matching comes at too high a price for these kinds of expenses. At some point the "administrative costs and conceptual rigor" of achieving a more perfect match become too great. Encyclopedia Britannica, 685 F.2d at 216. Here, there is a considerable administrative burden that Freightways and any similarly situated taxpayer will bear if it must always allocate one-year expenses to two tax years, year in and year out. It argues that the gain in precision for the taxing authorities is far outweighed by the administrative burden it will bear in performing this task. The Commissioner responds that, as an accrual taxpayer, Freightways is already reflecting on its financial accounting records precisely the allocation the Commissioner wants for tax purposes. But it is well known that financial accounting and tax accounting need not be handled in exactly the same way. See, e.g., United States v. Hughes Properties, Inc., 476 U.S. 593, 603 (1986) ("Proper financial accounting and acceptable tax acounting, to be sure, are not the same. . . . The Court has long recognized the vastly different objectives that financial and tax accounting have."). See also Peoples Bank and Trust Co. v. Commissioner, 415 F.2d 1341, 1343 (7th Cir. 1969). The kind of change in the company's tax accounting system for which the Commissioner is arguing will impose an administrative burden regardless of the way its financial accounts are kept.
27
We conclude that, for the particular kind of expenses at issue in this case-- fixed, one-year items where the benefit will never extend beyond that term, that are ordinary, necessary, and recurring expenses for the business in question-- the balance of factors under the statute and regulations cuts in favor of treating them as deductible expenses under I.R.C. § 162(a). We therefore reverse the Tax Court's ruling to the contrary.
IV
28
One final point remains to be decided. The Commissioner argued before the Tax Court that Freightways' method of accounting did not clearly reflect its income. When the Commissioner has made such a determination, he can require computation of taxable income under an alternative method that will accurately reflect income. I.R.C. § 446(b). See Hughes Properties, 476 U.S. at 603. Freightways concedes that the Tax Court did not reach this point, but it urges that we should decide as a matter of law that its method of accounting did clearly reflect its income. The Commissioner, however, possesses broad discretion in this area, and we are reluctant to decide the case as a matter of law on the state of the record as it now stands. We will instead remand the case to the Tax Court for the limited purpose of considering this alternative ground for the Commissioner's decision.
29
The judgment of the Tax Court is Reversed, and the case is Remanded to the Tax Court for further proceedings consistent with this opinion.
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367 F.2d 361
John H. EASLEY, Appellant,v.W. C. ALLEN, Appellee.
No. 22612.
United States Court of Appeals Fifth Circuit.
Oct. 12, 1966.
Gardner W. Beckett, Jr., Nelson, Beckett & Nelson, St. Petersburg, Fla., for appellant.
Thomas C. MacDonald, Jr., John I. Van Voris, Tampa, Fla., for appellee; Shackleford, Farrior, Stallings, Glos & Evans, Tampa, Fla., of counsel.
Before BROWN, GEWIN and GOLDBERG, Circuit Judges.
PER CURIAM:
1
The appellant Easley complains of the judgment of foreclosure entered by the United States District Court for the Middle District of Florida in an admiralty proceeding instituted by the appellee Allen to foreclose a purchase money note and mortgage executed and delivered by appellant Easley to appellee Allen on a sea-going fishing vessel. The case was heard and decided by the District Court sitting without a jury.
2
Initially, Allen the seller, and Easley the buyer, entered into a 'contract for sale of boat' but subsequent to the execution of the contract a number of disagreements developed between the parties relating to repairs to be made on the vessel, the condition of it at the time the contract of sale was executed, the time within which repairs were to be completed, the charging of supplies, equipment and repairs against the vessel, and the removal and sale of certain equipment belonging to the vessel. The contract was executed on January 18, 1964. Finally, on May 5, 1964, the note and mortgage in question were executed and delivered by Easley to Allen and title transfer papers were delivered by Allen to Easley. The mortgage and title transfer were dult recorded with the Collector of Customs at Tampa and this information was endorsed on the ship's deocuments in accordance with the Ship Mortgage Act, 1920, as amended, 46 U.S.C.A. 911 et seq. The purchase money note and mortgage did not follow the terms of the 'contract for sale of boat' as to the amount and time of payments. Moreover, the contract of sale was not performed in exact accordance with its terms.
3
After a full hearing the court found that the preferred ship mortgage had been executed and delivered for a valuable consideration, that Easley had defaulted in payment of the note and mortgage in accordance with their terms and that such default constituted a breach of the covenants of the preferred ship mortgage. In effect the court found that the note and mortgage were executed and delivered by Easley and accepted by Allen in settlement of the differences which had arisen between them with respect to the original contract of sale. In effect the court found a novation.1
4
Easley contends that Allen had orally agreed to allow him a credit on the first installments due on the note to offset the cost of engine repairs. The court found against him on this issue. Easley further contends that the original contract dated January 18, 1964, still governed the rights of the parties and that the district court was in error in finding a novation because there was no consideration to support the novation. Easely argues that no consideration flowed to him for the execution of the note and mortgage because, he contends, that he received no 'benefits' other than as provided by the original contract.
5
Our review of the record convinces us that the trial court did not commit error and that the evidence clearly supports the finding of a novation supported by an adequate and valid consideration. See Henderson v. Kendrick, 82 Fla. 110, 89 So. 635 (1921); Bryan, Keefe & Co. v. Howell, 92 Fla. 295, 109 So. 593 (1926); Bennett v. Senn, 106 Fla. 446, 144 So. 840 (1932); Dorman v. Publix-Saenger-Sparks Theatres, Inc., 135 Fla. 284, 184 So. 886 (1938); Miller-Dunn Co. v. Green, 154 Fla. 72, 16 So.2d 637 (1944); Lamborn v. Slack, 107 So.2d 277 (Fla.App.1958); City of Valparaiso v. Long, 141 So.2d 334 (Fla.App.1962); Restatement of Contracts 84; 1 Williston on Contracts, 131B at pp. 554-555.
6
The judgment is affirmed.
1
The following exchange was made between counsel for Easely and the Court during the hearing:
MR. BECKETT: * * * 'Now, it has been our position all along, Your, honor, that the note and mortgage did not represent a restatement of this agreement, it did not represent a termination of the old agreement and a novation, so to speak. This contract called for a note payable at the rate of $500 a month. This contract didn't call for a mortgage, but it did call for a lien which will attach to the boat until said note is paid.
THE COURT: Well, I have let it in because I wanted you to have an opportunity to get some presentment of your position. But I seriosly doubt that your position can be sustained. When you follow up a contract with a mortgage and a note, you are getting into a problem of novation, just what you mentioned.
MR. BECKETT: Yes, sir, precisely.
THE COURT: And ordinarily, that is what it is. Now, I haven't see wgere anybody took advantage of anybody here or anything to viod that entanglement. All I see here is straight proceedings between two businessmen. That is what bothers me here, Mr. Beckett, and I don't mind telling you.
MR. BECKETT: I can appreciate that.
That has bothered me about the case.'
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441 F.2d 212
UNITED STATES of America, Appellee,v.Arthur Peter DZIALAK, Appellant.
No. 345, Docket 34842.
United States Court of Appeals, Second Circuit.
Argued Nov. 12, 1970.Decided March 17, 1971.
1
L. F. Walentynowicz, Buffalo, N.Y., for appellant.
2
James W. Grable, Asst. U.S. Atty. (H. Kenneth Schroeder, Jr., U.S. Atty., W.D.N.Y.), for appellee.
3
Before SMITH and HAYS, Circuit Judges, and LEVET, District Jduge.1
LEVET, District Judge:
4
This is an appeal from a judgment of conviction entered on February 9, 1970 in the United States District Court for the Western District of New York (Henderson, D.J.) convicting the appellant, Arthur Peter Dzialak, after trial by jury on Counts II, III, IV and V of a five-count indictment. Counts II, IV and V charged appellant with possessing chattels valued in excess of $100.00 knowing the same to be stolen, which goods were part of an interstate shipment, in violation of 18 U.S.C. 659. Count III charged appellant with possessing chattels valued at less than $100.00, knowing the same to be stolen, in violation of 18 U.S.C. 659. Dzialak was sentenced to a prison terms of one year on the misdemeanor charge and three years on each of the felony charges, the terms to run concurrently. In addition, the court levied a fine of $5,000 on each felony count and of $1,000 on the misdemeanor.
5
Dzialak urges that his conviction on all four counts be reversed on the following grounds:
6
1. Certain evidence seized in the search of the trash in front of the premises of appellant was obtained by means of an unlawful search and seizure;
7
2. Probable cause was lacking for the issuance of the search warrant dated December 4, 1967 authorizing a search of the hoe of appellant;
8
3. The evidence seized in the search of appellant's premises on December 4, 1967 was obtained by means of an unlawful search and seizure;
9
4. The superseding indictment, upon which appellant's conviction rests, was returned by inadequate and incompetent evidence before the Grand Jury;
10
5. The reference to certain slips of paper first admitted and later withdrawn from evidence at trial constituted prejudicial error;
11
6. The trial judge improperly charged the jury with respect to Count II of the indictment;
12
7. The evidence was insufficient to sustain the conviction of appellant of the offense charged in Count II of the indictment;
13
8. The sentence imposed by the trial judge was illegal, excessive and arbitrary.
14
We affirm the judgment as to Counts II, III and V and reverse as to Count IV.
15
Dzialak was employed by the Railway Express Agency as a driver. Harold J. Poling was a security investigator for the Railway Express Agency. Poling began an investigation of appellant's activities on November 5, 1967 after learning that certain merchandise placed in the custody of Railway Express for delivery was not reaching its destination. Poling also received information from a fellow Railway Express employee that an unidentified person had reported that the wife of appellant was selling watches and clothing at low prices.
16
During the course of a surveillance of appellant's home at 35 Diane Drive in the town of Cheektowaga, New York, on November 24, 1967, Poling examined a cardboard box which was part of the trash left between the sidewalk and street in front of appellant's home. The carton bore an attached white copy of an invoice dated November 7, 1967 covering a shipment of several dozen hosiery shipped from a mill in Pennsylvania to a Sears, Roebuck store in Lockport, New York. Inside the box was found a pink copy of the same invoice as well as several torn pieces of a cardboard box which, when pieced together, formed a carton bearing the name 'Schwinn Bicycles,' and an address label bearing the notation 'Jimmy Mangum, 2594 Fontaine, Memphis, Tennessee, from John R. Dixon, 187 Brunswick, Buffalo, New York 14208.' The carton also contained three pieces of paper bearing references to shirts and shirt sizes.
17
Poling conducted a second surveillance of the premises of the appellant on November 30, 1967, at which time he again seized items from the trash in front of appellant's home. Among the items seized from the appellant's trash at this time was a white cardboard carton addressed to appellant's wife. Poling also seized a Schwinn bicycle guarantee stamped 'Heil Brothers, 640 Broadway, Buffalo, New York.' Poling conducted further investigation regarding these items, discovering that a number of them referred to items missing from various Railway Express shipments.
18
Poling turned this information oever to F.B.I. agent Thomas Gray on November 24, 1967. Gray applied for a search warrant before a United States Commissioner on December 4, 1967 to search the home of appellant at 35 Diane Drive in Cheektowaga, New York. In support of his application, Gray supplied a two-page list of certain property which he believed to be concealed on the premises of appellant at the time. This list included 27 1/2 dozen pairs of hosiery from PennWarrington Hosiery Mills, Inc. and identified by style, number, color and size; one Schwinn boy's bicycle and accompanying description as well as a description of one carton of binoculars.
19
Agent Gray presented a nine-page affidavit setting forth a detailed description of the investigation of Poling as well as Gray's own corroborative investigation. A warrant was issued for a search of both the home and automobile of appellant.
20
During a search of appellant's home, which lasted some four hours, the FBI, on December 4, 1967, seized one Schwinn boy's bicycle, five boxes of hosiery, 12 pieces of telescopic equipment, 21 Timex watches and five shipping papers pertaining to those watches and a great quantity of other items besides those described in the warrant.
21
Dzialak was indicted on December 8, 1967 and charged with three counts of violating 18 U.S.C. 659. These counts involved the unlawful possession of (1) four dozen sport shirts as a felony; (2) a carton of assorted hosiery as a felony; and (3) a bicycle as a misdemeanor.
22
On March 25, 1969 a superseding indictment was filed charging Dzialak with these original three counts plus two additional felony violations of 18 U.S.C. 659. The two additional counts were for the possession of 21 Timex watches as a felony and the possession of three opera glasses, two microscopes and seven telescopes as a felony.
23
Appellant's first claim is that the search by Harold Poling of the trash located in front of appellant's house was in violation of his right under the Fourth Amendment to be free from unreasonable searches and seizures. The District Court decided this question on a motion to suppress the items seized by Poling and held that the items taken had been abandoned by Dzialak and therefore that there was nothing unlawful about their seizure.
24
Appellant argues that this was incorrect and places reliance upon an ordinance of the Town of Cheektowaga, which was in effect at the time of the seizures, and which prohibits anyone, except authorized employees of the Town of Cheektowaga, to rummage into, pick up, collect, move or otherwise interfere with articles or materials placed on the right of way of any public street for collection. It is argued that Dzialak may very well have relied on this ordinance when placing his trash out in the street and that this goes to negative any intent to abandon the articles in question.
25
We are not persuaded. We think it abundantly clear that Dzialak abandoned the property. The town ordinance simply cannot change the fact that he 'threw (these articles) away' and thus there 'can be nothing unlawful in the Government's appropriation of such abandoned property.' Abel v. United States, 362 U.S. 217, 241, 80 S.Ct. 683, 698, 4 L.Ed.2d 668 (1960).
26
Appellant alleges further that the search warrants obtained December 4, 1967 were improperly issued. The first contention is that their issuance was based primarily on the fruits of what has been contended to be an illegal search and seizure by Poling. Since we have already held that the searches by Poling were legal, we need not concern ourselves with this part of the argument. It is contended further, however, that the warrants, which were issued on the basis of Gray's affidavit rather than Poling's, were issued without probable cause.
27
The standards for assessing the sufficiency of a warrant application were set forth in Spinelli v. United States, 393 U.S. 410, 89 S.Ct. 584, 21 L.Ed.2d 637 (1969). They are twofold: The warrant application must state 'some of the underlying circumstances' from which the informant drew his conclusions concerning the suspect's criminal activities and it must also disclose some of the reasons which gave assurance of the informant's reliability. Both Standards are met here.
28
The affidavit of Agent Gray set forth a very lengthy set of facts to substantiate Poling's conclusions about Dzialak's criminal activity. There was the material obtained in the search, the results of Poling's subsequent investigations, and the corroborative results of Gray's own independent investigation.
29
However, appellant's argument goes basically to the second of the Spinelli criteria, that is, whether there were sufficient facts to justify the Commissioner in deciding Poling was trustworthy as an informant. We conclude that here, too, the affidavit was sufficient to justify a finding of probable cause.
30
First of all, while the affidavit identified Poling only by his occupation, the fact that Poling was a railroad policeman and not just an ordinary private citizen gave him some degree of reliability as an informant. But of primary importance is the detail of information and descriptions provided by Poling together with the extent of corroboration by independent observation on the part of Gray. Besides Poling's own investigation, observations, and all the materials seized from appellant's trash, Gray himself personally contacted the local consignee of an Arrow shirt shipment and verified non-receipt of part of that shipment which became the subject of Count I of the indictment. He also verified non-delivery of the bicycle to the Tennessee consignee, which bicycle became Count III of the indictment. He also verified that a piece of paper taken from appellant's garbage on November 24, 1967 with the notation 'Don-- 4 shirts' contained two latent fingerprints identical to those of the appellant.
31
The elaborate detail of the information provided by Poling and the consistency of Gray's own findings support and confirm the Commissioner's conclusion that the informant was generally trustworthy. See United States v. Bozza, 365 F.2d 206 (2nd Cir. 1966).
32
Appellant's next point is more substantial. It challenges the extent of the search conducted by the police of the premises of appellant and the seizure of items not described in the search warrant. Appellant's conviction on Count IV was for the unlawful possession of 21 Timex watches as a felony. It is conceded by the government that the 21 watches were not at all described in the search warrant. Count V was for the unlawful possession of three opera glasses, two microscopes, and seven telescopes as a felony. No such items are described in the search warrant, although the warrant did authorize a search for a carton of binoculars.
33
The law in this area is quite clear. Both the Fourth Amendment and Rule 41(c), F.R.Crim.P., specifically state that any search warrant identify what is to be searched for and seized. Marron v. United States,275 U.S. 192, 48 S.Ct. 74, 72 L.Ed. 231 (1927), makes it clear that nothing is to be left to the discretion of the officer executing the warrant-- that if something is not described in the warrant, it cannot be seized.
34
The government urges that Warden v. Hayden, 387 U.S. 294, 87 S.Ct. 1642, 18 L.Ed.2d 782 (1967) confers this discretion upon police officers. This circuit specifically rejected such an argument in United States ex rel. Nickens v. LaVallee, 391 F.2d 123 (1968), holding that Warden v. Hayden was limited to its facts-- that is, the scope of searches incident to arrest (rather than subject to a warrant). Furthermore, the Supreme Court has on several occasions reiterated the strong stance it took in Marron against general searches. See, for example, Stanford v. Texas, 379 U.S. 476, 85 S.Ct. 506, 13 L.Ed.2d 431 (1965) and Berger v. New York, 388 U.S. 41, 87 S.Ct. 1873, 18 L.Ed.2d 1040 (1967), the latter of which postdated Hayden. In Stanford the court said, in referring to the Fourth Amendment requirement that a warrant 'particularly describ(e) the place to be searched, and the person or things to be seized':
35
'These words are precise and clear. They reflect the determination of those who wrote the Bill of Rights that the people of this new Nation should forever 'be secure in their persons, houses, papers, and effects' from the unbridled authority of a general warrant.' (Stanford v. Texas, supra, 379 U.S. at 481, 85 S.Ct. at 509)
36
The government cautions that to follow such a rule, however, is to provide a more confining rule for searches incident to a warrant than for those incident to an arrest and, therefore, to discourage the use of warrants. Such an argument first of all ignores the fact that searches incident to an arrest are also subject to considerable safeguards and that these safeguards have been made all the more exact since the Supreme Court's most recent ruling in Chimel v. California, 395 U.S. 752, 89 S.Ct. 2034, 23 L.Ed.2d 685 (1969).
37
Of far greater importance, however, is the fact that the burden placed upon the police by such a rule is minor indeed. As we said when dealing with a similar situation in LaVallee, the police had ample time and opportunity to seek another warrant for the additional items seized. They simply did not do so. While at one level it may be somewhat formalistic to demand they do secure such an additional warrant, the dangers inherent in a contrary rule are much too great. We are given at least a glimpse of such possible dangers by the facts of this very case. In executing what was a very precise warrant, the police spent more than four hours ransacking appellant's house for any possible incriminating evidence. On the items seized, those which were not described in the warrant far outnumbered those described. The rule we reaffirm today not only avoids such an abhorrent general search but encourages greater care in obtaining the magistrate's approval for a specific search.
38
As to the specific counts in question, we reverse as to Count IV which was based on the illegal seizure of the 21 Timex watches. As to Count V we affirm in that all the optical equipment may be considered to come under the 'binoculars' described in the warrant.
39
However, we reject appellant's further contention that he was prejudiced in his defense on the other three counts by the introduction of his illegally seized evidence as to Count IV. There was more than adequate evidence, all of it quite properly obtained, and all of it quite independent of the illegally seized watches, to convict appellant of the charges in Counts II, III and V, and there is nothing to indicate that the evidence pertaining to the watches affected in any way the jury's verdict as to those other counts.
40
Appellant further charges that the superseding indictment was based upon incompetent evidence. However, he concedes that those specific parts of the grand jury proceedings to which he takes exception are, in fact, '(not) sufficiently objectionable.' Instead, a general plea is made, questioning the impartiality of the grand jury and labeling it as a 'rubber stamp' for the prosecution. However, this claim is devoid of any substantiation.
41
We remind counsel of the general presumption of regularity afforded grand jury proceedings, United States v. Nunan, 236 F.2d 576 (2nd Cir. 1956), cert. denied 353 U.S. 912, 77 S.Ct. 661, 1 L.Ed.2d 665 (1957), and point in this case to the fact that both of the primary government witnesses, Harold Poling and Thomas Gray, testified at some considerable length before the grand jury. This court simply has no evidence in the record before it that would in any way go toward meeting the strong burden appellant bears in challenging the proceedings of the grand jury.
42
Appellant urges as still another error the reference at trial to certain slips of paper and their later withdrawal from evidence. This requires little discussion. The slips of paper fererred to bore references to shirts and shirt sizes. The trial court ultimately permitted the jury to consider those two exhibits only for the testimony about the fingerprints which were on them. A photograph of another slip of paper was also allowed to be considered by the jury solely for the fingerprint evidence.
43
It is clear that appellant could have suffered no prejudice from the introduction of these pieces of paper. Any possible inference from the papers that appellant was taking orders for stolen merchandise was obviously rejected in the final verdict. The jury acquitted appellant of the charge of unlawful possession of stolen shirts.
44
Appellant also urges that there was insufficient evidence to go to the jury on Count II and that the trial judge improperly instructed the jury as to this count. This claim is based on the fact that the charge was for unlawful possession of hosiery of a value in excess of $100.00 but that only about $11.50 worth of hosiery was found in appellant's house during the search. It is claimed that the count should have been submitted to the jury as a misdemeanor.
45
The court was quite careful, however, in instructing the jury that possession of 2 1/2 dozen pairs of hosiery was not necessarily sufficient proof that appellant possessed the 27 1/2 dozen pairs of hosiery charged in the indictment. The jury was further cautioned as to the permissible inferences to be drawn from all the circumstantial evidence. That there was sufficient circumstantial evidence here to go to the jury is clear. Besides the hosiery found in appellant's house there was the carton from which those specific pairs of hosiery came and which originally contained the full amount of hosiery charged as well as a packing invoice for exactly that amount of hosiery, both of which items were found in the trash in front of appellant's house. Thus, we find no error in the court's failure to direct a verdict for appellant.
46
Finally appellant claims that the sentence imposed upon him was arbitrary, excessive and illegal. Certainly there can be no such claim regarding the prison sentences, which were well within the statutorily prescribed limits. The maximum penalty under Counts II, IV and V was ten years' imprisonment and a $5,000 fine. The court imposed only a three year term of imprisonment under those counts and chose to impose concurrent rather than consecutive sentences.
47
However, the reason why the trial judge chose to impose the maximum fine on each count in addition to this long prison term is difficult to comprehend, particularly when one considers that the appellant is totally without any assets. It seems to stand as a definite impediment to rehabilitation on the part of appellant. As Judge Hincks said so ably in United States v. Doe, 101 F.Supp. 609 (D.Conn.1951):
48
'In my view, a fine known to be beyond the defendant's capacity to pay, is not in accordance with sound sentencing policy. Like any judicial order which is not enforced it breeds disrespect for the judicial process. It tends to encourage lack of executive diligence in the collection of fines which with due diligence are collectible. If accompanied by a sentence of confinement it constitutes an arbitrary obstruction of parole and creates undesirable coustodial problems. By obstructing economic rehabilitation, in the long run it operates to foment rather than to deter crime. And just as sound departmental policy requires that upon imposition of a fine a prompt and thorough collective effort should be made, so sound sentencing policy requires that if the fine imposed is then found to exceed the defendant's capacity to pay, report of that fact should be made to the court through the U.S. Attorney before the expiration of the sixty days within which under Rule 35 the court has power to abate the sentence.' (p.613)
49
While this court has no jurisdiction to review the severity of sentences imposed by the district court (see, for example, Jones v. United States, 117 U.S.App.D.C. 169, 327 F.2d 867, 869 (1963)), and while we do not suggest that the sentences imposed by the trial judge were contrary to the applicable law, we would nonetheless commend to the district court's sound discretion any timely motion made by appellant under Rule 35, F.R.Crim.P., for a reconsideration of the fine.
50
Affirmed in part, reversed in part.
HAYS, Circuit Judge (dissenting in part):
51
I dissent from that part of the majority decision which holds that the evidence used to convict appellant on count IV for possession of 21 Timex watches was obtained by an illegal search and seizure in violation of the Fourth Amendment.
52
The watches were the fruits of the crime upon which the warrant was based. When a valid warrant in good faith describes certain items to be seized and in the course of searching for those items, other articles are observed which are obviously fruits of the same crime as that upon which the warrant is based, there is no requirement that a new search warrant be obtained in order to seize those other articles. If a warrant particularly described 2 1/2 dozen pairs of stockings and 3 dozen were found, should the extra 1/2 dozen have to be left behind?
53
The police activity in the instant case was not, as the majority says, 'an abhorrent general search.' There is no indication that the police conducted any 'general search' at all. The articles not named in the warrant were found only in the course of looking for articles which were so named. We have been careful to distinguish between a general search and a search for specific articles. See United States v. Pino, 431 F.2d 1043 (2d Cir. 1970); United States v. Lozaw, 427 F.2d 911 (2d Cir. 1970).
54
The cases of United States ex rel. Nickens v. LaVallee, 391 F.2d 123 (2d Cir. 1968) and Marron v. United States, 275 U.S. 192, 48 S.Ct. 74, 72 L.Ed. 231 (1927), which the majority finds to be controlling here, are distinguishable. In neither of those cases was the seizure confined to the fruits of the very crime on which the warrant issued; on the contrary, objects such as ledgers, receipts and newspaper clippings which might serve as incidental evidence were seized.
1
United States District Court for the Southern District of New York, sitting by designation
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704 So.2d 667 (1997)
Robert G. CORNETTE, Appellant/Cross-Appellee,
v.
Terry L. CORNETTE, n/k/a Terry L. Chandler, Appellee/Cross-Appellant.
No. 96-01531.
District Court of Appeal of Florida, Second District.
December 10, 1997.
Rehearing Denied January 16, 1998.
Edward M. Brennan of Levine, Levine, Hirsch & Segall, P.A., Tampa, for Appellant/Cross-Appellee.
Karol K. Williams, Allison M. Perry, and Joe M. Gonzalez, Tampa, for Appellee/Cross-Appellant.
PATTERSON, Judge.
Robert Cornette (the husband) appeals from the equitable distribution aspects of the amended final judgment dissolving his marriage to Terry Cornette (the wife). We reverse and remand for the trial court to reevaluate the parties' assets and formulate a new equitable distribution scheme.
In June 1994, the wife filed a petition to dissolve the marriage. The petition sought *668 an equitable distribution of the parties' assets and liabilities, but it did not allege any special equity in property. When the Cornettes wed in 1988, the husband owned a number of properties and assets. The wife owned little of value other than her interest in a company the parties established before they married, Cornette Trailer Sales, Inc., which constructed and sold horse trailers. Both parties worked during the marriage and the trial court found that they "contributed equally to the marriage." The Cornettes established a comfortable standard of living, which the trial court attributed to "their mutual efforts with respect to the development of various business enterprises." In the course of operating those businesses, income from all sources, marital and non marital, was deposited into a single account, from which all expenses were paid.
Assets relevant to this appeal include three properties, located at 8801, 8809, and 8811 Gunn Highway, which the husband purchased prior to the marriage. These properties are titled in his name alone. Also at issue is the Cornette Trailer property located at 1023 Gunn Highway, which the parties purchased during the marriage. At the time of the final hearing, the 1023 Gunn Highway property was valued at $385,000 against a mortgage balance of $280,000.
The parties continued to operate Cornette Trailer after they were married. In 1992 or 1993, they made a shareholder loan to the company. In March 1993, the Cornettes sold the business to the Kromers, who continued to operate it at 1023 Gunn Highway. The Kromers gave the Cornettes a promissory note for the purchase of the business's assets and a promissory note for a noncompete agreement. They also paid rent on 1023 Gunn Highway. However, by the time of the final hearing, the Kromers had filed bankruptcy and had stopped making any payments to the Cornettes.
At trial, the wife's accountant assigned values to the Kromer notes based strictly on the remaining balances. However, given the Kromers' bankruptcy, he acknowledged that he did not know their true values. At the time of the final hearing, the corporation Cornette Trailer was no longer doing business. During trial, the parties stipulated that the wife would sell her interest in 1023 Gunn Highway to the husband for a $20,000 cash payment.
In its amended final judgment, the trial court assigned to the wife marital assets and liabilities with a stated net value of $286,250; the stated net value of the husband's share was $217,298. Attached to the amended final judgment is a chart reflecting the division of assets and liabilities. The trial court classified the 8811 Gunn Highway property as a marital asset and awarded it to the wife. The husband's share of assets included the 1023 Gunn Highway property, along with the Kromer promissory notes and the Cornette Trailer loan receivable. The husband appealed from the amended final judgment and challenges the classification, valuation, and distribution of assets as reflected in the trial court's equitable distribution chart.
First, we address the marital enhancement of nonmarital assets. The trial court erred by classifying the 8811 Gunn Highway property as a marital asset and awarding it to the wife. The husband purchased the property before the marriage, and it was titled in his name alone. The marital funds used to pay down the mortgage on the property, however, enhanced the value of the nonmarital asset; thus, the result ing equity in the property is a marital asset subject to equitable distribution. See § 61.075(5)(a)2., Fla. Stat. (1993); Cole v. Roberts, 661 So.2d 370 (Fla. 4th DCA 1995); Straley v. Frank, 612 So.2d 610 (Fla. 2d DCA 1992). The accountant testified that the marital estate had acquired $149,122 in equity in 8811 Gunn Highway. Also, as the husband candidly admits, the trial court erred in his favor by failing to credit the marital estate for the equity it acquired in his nonmarital property at 8001 Gunn Highway ($41,445) and 8809 Gunn Highway ($30,574). Thus, on remand the trial court must treat 8811 Gunn Highway as a nonmarital asset and reflect the marital enhancements of nonmarital properties as marital assets subject to distribution.
With respect to the valuation of marital assets, we note at the outset that a proper valuation of assets is essential to enable a trial court to make an equitable distribution *669 of the marital estate. See Cole, 661 So.2d 370. Here, several assets were improperly valued, while other items appear to have been inadvertently omitted from the trial court's equitable distribution chart. First, the trial court had ordered the husband to make a payment of $9,600 to the wife, but the chart does not reflect that amount as an asset of the wife or a liability of the husband.
Next, the chart reflects a net value of $105,000 for the 1023 Gunn Highway property. As the husband argues, however, the equity was on paper only because the property was in foreclosure, and the tenants had filed bankruptcy and were no longer paying rent. The parties agreed that the husband would buy the wife's interest for $20,000. Thus, for equitable distribution purposes, the property should have a net value of $40,000. The trial court reflected the $20,000 payment to the wife in her asset column, but neglected to show the corresponding $20,000 payment in the husband's liability column.
In addition, the trial court allocated as assets to the husband two promissory notes given by the Kromers for their purchase of Cornette Trailer. The chart shows a value of $192,897 for these notes receivable. The trial court also awarded the husband a loan receivable valued at $59,951 for a shareholder loan from Cornette Trailer. Again, these valuations are suspect because the Kromers had stopped making payments on the notes, and Cornette Trailer was no longer in business. The wife's accountant admitted that, due to the Kromers' bankruptcy, he did not know the true value of their notes.
Thus, we reverse the trial court's equitable distribution and remand for an evidentiary hearing and for the trial court to equitably distribute the assets based on their true values. Should the trial court make an uneven distribution, the court's judgment must set forth its reasoning in this respect. See Harreld v. Harreld, 682 So.2d 635 (Fla. 2d DCA 1996).
Reversed and remanded.
PARKER, C.J., and BLUE, J., concur.
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130 Ariz. 366 (1981)
636 P.2d 144
Sarah BAILEY, a single woman, Petitioner,
v.
The SUPERIOR COURT of the State of Arizona, In and For the COUNTY OF SANTA CRUZ, and the Honorable Richard J. Riley, a judge and Irene Castillo, a single woman, real party in interest, Respondents.
No. 2 CA-CIV 4061.
Court of Appeals of Arizona, Division 2.
September 30, 1981.
*367 Waterfall, Economidis, Caldwell & Hanshaw, P.C. by Peter Economidis, Tucson, for petitioner.
Thomas C. Reed, Nogales, for real party in interest.
OPINION
HOWARD, Judge.
Petitioner Bailey is the defendant in a defamation action brought by the real party in interest, Castillo. Petitioner's motion for summary judgment was denied and she has brought this special action to challenge this ruling. We believe special action intervention is appropriate since the challenged ruling is erroneous as a matter of law, Safeway Stores, Inc. v. Maricopa County Superior Court, 19 Ariz. App. 210, 505 P.2d 1383 (1973), and we therefore accept jurisdiction.
The parties agree that there is no material factual issue. They disagree only as to whether petitioner was entitled to summary judgment as a matter of law. The undisputed facts are as follows. Petitioner, a member of the State Bar of Arizona, filed a complaint with the Commission on Judicial Qualifications regarding Gilbert Soto, then justice of the peace in Nogales, Arizona. Her complaint against Judge Soto stated in part:
"In approximately March, 1977, a secretary to Soto [Irene Castillo] became pregnant. She was unmarried, age approximately 25, had previously had one or two children out of wedlock. She was known at that time and since to be a female of easy virtue. She approached one of the young men with whom she had been sleeping, told him she was pregnant and requested assistance either in the form of a hasty marriage or $250 for an abortion. He refused both. She apparently had the abortion and borrowed the money from a deputy County Attorney. Some four or *368 five months later, when she still had not repaid the loan, the attorney pressed for payment. Soto then called the man in on one of his `investigative subpoenas.' (This is an interesting procedure in the nature of a `one man jury' in which Soto decides to investigate, judge and render judgment on a given incident himself especially when he is personally involved.)" (Emphasis added)
Petitioner further stated in her complaint that Soto informed the young man that he was being charged with a criminal offense and that he had better get an attorney. She also alleged that when the man arrived at the justice court with his attorney, he was advised to pay the $250 for the abortion and also to pay the attorney $250 for representing him.
Petitioner moved for summary judgment on the ground that she had an absolute privilege with respect to the allegedly libelous statements about Castillo because the Commission on Judicial Qualifications exercises a judicial or quasi-judicial function. Castillo's position was that an absolute privilege did not extend to statements about her as she was not a party to the proceedings before the commission. The respondent court, in denying summary judgment, ruled that the emphasized remarks about Castillo were neither relevant nor material. We disagree.
An absolute privilege against a defamation charge arises in the context of judicial proceedings, legislative proceedings and administrative or executive functions of the government. Ross v. Duke, 116 Ariz. 298, 569 P.2d 240 (1976). Defamatory statements contained in pleadings are absolutely privileged if they are connected with or have any bearing on or are related to the subject of inquiry. Sierra Madre Development, Inc. v. Via Entrada Townhouses Association, 20 Ariz. App. 550, 514 P.2d 503 (1973). The Commission on Judicial Qualifications is an arm of the Arizona Supreme Court. Cf. Drummond v. Stahl, 127 Ariz. 122, 618 P.2d 616 (App. 1980). The Supreme Court has directed that written complaints against judges are to be filed with the commission. 17A A.R.S., Rules of Procedure for the Commission on Judicial Qualifications, rule 2(A). The public policy considerations that afford an absolute privilege for defamatory statements made in a complaint about a lawyer's conduct to the State Bar apply equally well to a complaint about a member of the judiciary.
The fact that Castillo was not a party to the proceedings before the commission does not bar assertion of the privilege. The defamatory statements can be about a stranger to the proceeding provided they bear a relationship to the proceedings. Ginsburg v. Black, 192 F.2d 823 (7th Cir.1951); Jones v. Trice, 210 Tenn. 535, 360 S.W.2d 48 (1962); Vieira v. Meredith, 84 R.I. 299, 123 A.2d 743 (1956); Donnell v. Linforth, 11 Cal. App.2d 25, 52 P.2d 937 (1936); 50 Am.Jur.2d Libel & Slander § 238; 53 C.J.S. Libel & Slander § 104(c)(3).
The defense of absolute privilege is available if the defamatory statements have some relation to the judicial proceedings, even though they may not constitute evidence relevant and material from a strictly legal evidentiary viewpoint. Todd v. Cox, 20 Ariz. App. 347, 512 P.2d 1234 (1973). A defamatory statement contained in pleadings is absolutely privileged if it is connected with, has any bearing on, or is related to the subject of inquiry. If the party is made the subject of a suit for defamation, all doubts as to relevancy should be resolved in his favor. Sierra Madre Development, Inc. v. Via Entrada Townhouses Association, supra.
The defamatory statements about Castillo had a bearing on the subject of inquiry, i.e., whether or not Soto's actions constituted willful misconduct in office. See Arizona Const. art. 6.1 § 4. Canon 2(B) of the Code of Judicial Conduct mandates that a judge not allow any relationship to influence his judicial conduct or judgment and that he not lend the prestige of his office to advance the private interests of others. 17A A.R.S., Sup.Ct.Rules, rule 45. The statements concerning Castillo which are at issue had some bearing upon whether *369 or not Soto's issuance of his "investigative subpoena" constituted willful misconduct.
The order denying petitioner's motion for summary judgment is vacated and the cause remanded with directions to enter summary judgment dismissing the defamation complaint.
BIRDSALL, J., and JACK T. ARNOLD, Superior Court Judge, concur.
NOTE: Chief Judge JAMES D. HATHAWAY having recused himself in this matter, Judge JACK T. ARNOLD was called to sit in his stead and participate in the determination of this decision.
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992 So.2d 935 (2008)
Jody Dwayne KOPNICKY
v.
CITGO PETROLEUM CORPORATION, et al.
Jonathan Wieley Alex, et al.
v.
Citgo Petroleum Corporation et al.
No. 2008-CC-1231.
Supreme Court of Louisiana.
September 19, 2008.
Denied.
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11 N.Y.3d 712 (2008)
MATTER OF BREVIS MUSIC, INC., (COMMISSIONER OF LABOR).
Court of Appeals of the State of New York.
Decided December 16, 2008.
Motion for leave to appeal denied.
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669 So.2d 128 (1995)
Ex parte Jason Sinclair ADAMS.
(Re State of Alabama v. Jason Sinclair Adams).
1941006.
Supreme Court of Alabama.
September 22, 1995.
*129 Thomas M. Haas, Mobile, for Petitioner.
Jeff Sessions, Atty. Gen., and Jean Therkelsen, Asst. Atty. Gen., John M. Tyson, Jr., District Atty., Mobile, for Respondent.
HORNSBY, Chief Justice.
Jason Sinclair Adams petitioned the Court of Criminal Appeals for a writ of mandamus directing the Mobile County Circuit Court to bar his further prosecution on an indictment that has previously resulted in two mistrials. The Court of Criminal Appeals denied the writ, without opinion. Ex parte Adams, [CR-94-0909, April 6, 1995] ___ So.2d ___ (Ala.Crim.App.1995) (table). Adams has now filed a similar petition in this Court. See Rule 21, Ala.R.App.P.
Adams was charged with manslaughter, pursuant to Ala.Code 1975, § 13A-6-3, and was tried on October 31, 1994. The trial was before a jury and Mobile Circuit Judge Robert G. Kendall. During the course of the trial, Adams's counsel moved for a mistrial after the prosecutor asked one of the witnesses about possible improprieties on the part of Adams's counsel. The trial court instructed the jury to disregard the prosecutor's questions implying impropriety by the defense on the ground that they were not supported by any evidence and were "utterly and completely improper." The trial court denied the motion for a mistrial. However, later in the trial, the prosecutor, during his cross-examination of one of Adams's witnesses, asked whether the witness had heard that Adams had made a particular statement containing a pejorative racial term. Adams's counsel objected. The trial court, on its own motion and without hearing arguments from the defense or the prosecution, declared a mistrial.
When the State sought to reprosecute Adams on the same charge, he filed a plea of former jeopardy and requested a jury trial on the question of former jeopardy. The trial court denied the request for a jury trial on that issue and denied the plea of former jeopardy.
The second trial began on December 5, 1994, before Judge Robert E.L. Key. The case was submitted to the jury on December 6, 1994. However, on December 7, 1994, one of the 12 jurors failed to return from an overnight recess. Although Adams agreed to allow the 11 remaining jurors to continue deliberations, the State refused. Therefore, the trial court declared a second mistrial.
As the court prepared for a third trial, Adams filed another plea of former jeopardy and again requested a jury trial on the question of former jeopardy. He also moved to dismiss the indictment, supporting his motion with affidavits from Adams's attorney, the foreman of the second jury, and excerpts from the court reporter's transcript from the second trial. The affidavits indicated that the jury in the second trial had not believed that Adams was guilty of manslaughter, but that the jury had been unable to agree whether it should find Adams guilty of criminally negligent homicide or should find him not guilty. Adams alleges that on the morning of December 7, 1994, in the trial judge's chambers, the prosecutor had agreed to try the case with 11 jurors, but objected to an 11-person jury after entering the courtroom and realizing that the jury was unlikely to convict Adams for manslaughter. After a hearing on January 13, 1995, the trial court denied Adams's second plea of former jeopardy, without allowing a jury trial on that plea.
We pretermit discussion of various other issues raised by Adams, because we conclude that the trial court erred in denying Adams's request for a jury trial on the question whether the prosecutor intentionally and improperly acted so as to provoke a mistrial in the first trial. If the prosecutor so acted, his actions would require a finding for Adams on his plea of former jeopardy. United States v. Fine, 644 F.2d 1018 (5th Cir.), rehearing denied, 647 F.2d 1123, cert. denied, 454 U.S. 1097, 102 S.Ct. 669, 70 L.Ed.2d 638 (1981).
In Oregon v. Kennedy, 456 U.S. 667, 102 S.Ct. 2083, 72 L.Ed.2d 416 (1982), the Court stated:
*130 "[T]he circumstances under which such a defendant [one who has successfully moved for a mistrial] may invoke the bar of double jeopardy in a second effort to try him are limited to those cases in which the conduct giving rise to the successful motion for a mistrial was intended to provoke the defendant into moving for a mistrial."
456 U.S. at 679, 102 S.Ct. at 2091. In Brannon v. State, 549 So.2d 532 (Ala.Crim.App. 1989), the trial court considered the prosecution's attempt to introduce inadmissible evidence before the jury to be so prejudicial that on the defendant's motion for a mistrial it gave the defendant "the option of having a mistrial declared or waiting for a jury verdict and receiving a new trial should the jury convict him." 549 So.2d at 536. The defendant chose the second alternative; after the jury returned a conviction, the trial court set the verdict aside and ordered a new trial. On appeal after a second conviction, the defendant argued that he should get the benefit of the Oregon v. Kennedy rule, contending that the prosecutor had improperly and deliberately provoked him into moving for a mistrial. The Court of Criminal Appeals held that the defendant had failed to show that in the first trial the prosecutor had improperly "intended" to provoke a mistrial; therefore, that court held that the retrial was not barred. In explaining its holding, the court reasoned:
"[T]he trial court ruled on its admissibility as a question of law. Obviously, both the prosecutor and the trial court thought there was a reasonable possibility that the statement was admissible because the court received it on the contingency that the prosecutor could show that it was indeed admissible. The court, had it perceived the evidence to be unquestionably inadmissible, could have, and would have, prohibited its admission right then and there. Indeed, had the court done so, there might be some basis for appellant's contention that the prosecutor had intentionally attempted to provoke appellant into moving for a mistrial. The record as it stands, however, is devoid of [evidence indicating] any such intent by the prosecutor."
Brannon, 549 So.2d at 536.
Adams makes a stronger showing than did the defendant in Brannon that there is a question as to whether the prosecutor improperly "intended" to provoke a mistrial. Ala.R.Crim.P. 15.4(b) states that "unless a jury trial of an issue of fact raised by [a motion raising defenses or objections made before trial pursuant to Rule 15] is waived, such issue shall be tried by a jury if a jury trial is constitutionally required." If Adams had the right to a jury trial, he did not waive it. Based on the particular facts before us, we believe Adams presented substantial evidence that the first mistrial was due to the prosecutor's intentional misconduct. These factual questions create the need for a trial by jury on that issue, pursuant to Rule 15.
During the first trial, the prosecutor asked a witness if Adams's defense counsel had suggested that the witness "lose" the gun that was allegedly used to commit the crime. The defense objected, and the trial court conducted a hearing on the matter. The record shows that when questioned as to his reason for asking that question, the prosecutor never justified asking it. Although the trial court held that the prosecutor's asking the question was not grounds for a mistrial, he found the prosecutor's question unsupported by the evidence and instructed the jury to disregard the question. Soon after, the following transpired:
"Q: Have you hear rumors or reports that Jason threatened to shoot an individual named Cory Martin?
"A: No, sir.
"Q: Have you heard rumors or reports that Jason brandished a pistol and said words to the effect that if any niggers in a particular area of town threatened him he would take care of it?
"Objection by defense counsel: I object to this, if the Court please.
"The Court: All right, [prosecutor], it now appears that you have injected race into this case for no purpose other than prejudicing this jury. What do you have to say about it?
*131 "Response by prosecutor: Judge, he is putting people onhe is putting people on the stand
"The Court: I declare a mistrial. I have had enough of this, and I ought to dismiss it with prejudice.
"Response by prosecutor: Judge, he is putting people as witnesses to say that this man has a good reputation. Now, when he does that he opens the door to all kinds of stuff.
"The Court: He does not open the door to your attempting to prejudice this jury with a racial remark, which you did, and because of it I declare a mistrial. This case is over for now. I will notify you of the resetting date."
This case is unlike Brannon, supra, in that, here, the trial court immediately stopped the proceedings and declared a mistrial based on the prosecutor's question. There is no evidence in the record that the prosecutor was prepared to submit proof that the defendant had ever made the statement the prosecutor asked about. There is no indication in the record that the prosecutor, in any subsequent motion or proceeding, was prepared to show that the question as to the defendant's statement had a factual basis. Under these circumstances, the prosecutor's actions during the first trial could support an inference that he intended to provoke a mistrial by presenting an inflammatory statement in the context of a question without factual support. The Court of Criminal Appeals has stated that "where the appellant's motion for mistrial is prompted by judicial or prosecutorial error intended to provoke the motion" or is otherwise prompted by bad faith actions taken by the prosecutor in an attempt "to harass or prejudice the defendant, then double jeopardy considerations may act to bar retrial." Oliver v. State, 479 So.2d 1385, 1390 (Ala. Crim.App.1985), citing Lee v. United States, 432 U.S. 23, 33-34, 97 S.Ct. 2141, 2147-48, 53 L.Ed.2d 80 (1977).
Adams also argues that although the prosecutor had a legal right to refuse the 11-person jury during the second trial, the facts surrounding that refusal would support an inference of a wrongful intent to provoke a mistrial in the first trial. To that end, Adams argues that the prosecutor's only reason for refusing to allow the 11 jurors to continue deliberations was that he knew there was a strong likelihood that the State would fail to obtain a manslaughter conviction. In fact, Adams suggests that the prosecutor changed his original agreement to allow a verdict when the prosecutor became aware that, during the deliberations on December 6, 1994, the jury had asked the trial court several questions that indicated that the jury was not going to return a manslaughter conviction. Defense counsel requested permission to record all the circumstances surrounding the second mistrial. He stated on the record the conversation that took place in the trial judge's chambers. The record shows that when the trial court asked the prosecutor why he would not accept an 11-person jury, the prosecutor answered that he was "afraid this jury [was] going to acquit the defendant.... I just feel that way about it in view of the questions they asked yesterday afternoon." The trial court also made a statement for the record at that time:
"Well, let me say this for the record. It appears to have been and to be the attitude of the assistant district attorney handling this case that it is his job to procure a conviction at any and all costs without consideration for the rights of the defendant or for the orderly administration of justice, and I find that reprehensible."
Adams argues that the prosecutor's intentional "choice" or "decision" to refuse an 11-person jury was the cause of the second mistrial. This Court has stated:
"The basic reason for allowing a plea of former jeopardy and not permitting a retrial has been to prevent `a prosecutor or judge from subjecting a defendant to a second prosecution by discontinuing the trial when it appears that the jury may not convict.'"
Ex parte Anderson, 457 So.2d 446, 448 (Ala. 1984), quoting Green v. United States, 355 U.S. 184, 188, 78 S.Ct. 221, 224, 2 L.Ed.2d 199 (1957). Adams argues that the prosecutor's intentional refusal to allow the 11 jurors to continue deliberations is relevant to the question whether the prosecutor's question *132 presenting a racial slur was intended to provoke the first mistrial. Adams also argues that he could present evidence as to the number of times the Mobile District Attorney's Office has refused to allow an 11-person jury to proceed with deliberations in other trials, and that this evidence would further support an inference that the prosecutor intentionally posed an improper question to provoke the first mistrial.
The State, citing Story v. State, 435 So.2d 1360 (Ala.Crim.App.1982), reversed on other grounds, 435 So.2d 1365 (Ala.1983), argues that the question of former jeopardy was a question of law, and, therefore, that a jury trial is not constitutionally required. We disagree. That case does not support the State's position. In Story, the appellant's plea of former jeopardy was based on two grounds:
"(1) whether a conviction for trafficking in marijuana will bar a subsequent prosecution for possession of methaqualone when both charges arose from the same circumstances and (2) whether a mistrial because of a hopelessly deadlocked jury will bar a subsequent prosecution for the same offense."
435 So.2d at 1364. The Court of Criminal Appeals correctly held that "[t]hese were questions of law which could be decided by the trial judge without a hearing." 435 So.2d at 1364. However, in Story, the Court of Criminal Appeals also wrote:
"Ordinarily, a court may not overrule a motion of autrefois convict, or plea of former jeopardy, without allowing the party an opportunity to submit supporting evidence. Berland v. City of Birmingham, 36 Ala.App. 488, 60 So.2d 377 (1952), cert. denied, 257 Ala. 571, 60 So.2d 378 (1952). An accused is entitled to a jury trial on the issues of fact raised by the plea and the issue of former jeopardy should be submitted for the jury's determination before submission of the issue of guilt. Kilpatrick v. State, 46 Ala.App. 290, 241 So.2d 132 (1970); Carter v. State, 43 Ala.App. 178, 184 So.2d 847 (1966); Inman v. State, 39 Ala.App. 496, 104 So.2d 448 (1958); Evans v. State, 24 Ala.App. 390, 135 So. 647 (1931)."
435 So.2d at 1364. All of these cases turn on the state and federal constitutional requirement that a defendant not be twice placed in jeopardy for the same offense.
Adams has raised factual, not legal, questions about whether the prosecutor acted improperly and intentionally to provoke the first mistrial. In light of the circumstances of this case raising a question of fact as to the prosecutor's conduct in the first trial, we hold, pursuant to Ala.R.Crim.P. 15.4, that a jury trial should have been granted to determine the factual issue of whether the prosecutor's conduct in the first trial was intentionally designed to provoke a mistrial.
Having determined that Adams has a right to a jury trial on the issue of former jeopardy, we must consider whether mandamus is the proper means for securing that right. Mandamus is a proper remedy to prevent injustice and to prevent an irreparable injury when there is no other adequate remedy at law. Ex parte Hartwell, 238 Ala. 62, 188 So. 891 (1939). However, the writ of mandamus is an extraordinary remedy, to be employed to see that justice is done, and it shall not issue if there is a doubt as to its necessity or propriety. Ex parte Garrison, 260 Ala. 379, 71 So.2d 33 (1954). Mandamus should be reserved for truly extraordinary situations and circumstances. Belcher v. Grooms, 406 F.2d 14 (5th Cir.1968). To justify the issuance of the writ, there must be a clear showing of injury to the petitioner. Ex parte Cox, 451 So.2d 235 (Ala.1985); Ex parte Jones, 447 So.2d 709 (Ala.1984).
The alternative to issuing the writ of mandamus would be to subject Adams to a third criminal trial before determining whether that trial was barred by the double jeopardy provisions of our state and federal constitutions. Under Alabama law, Adams's ordinary remedy would be to raise the former jeopardy argument on appeal after this third trial, if that trial results in a conviction. The United States Supreme Court has held that the rights conferred on an accused by the Double Jeopardy Clause of the United States Constitution would be significantly undermined if appellate review of double jeopardy claims were postponed until after conviction *133 and sentence. Abney v. United States, 431 U.S. 651, 97 S.Ct. 2034, 52 L.Ed.2d 651 (1977). The Supreme Court stated that "because of th[e] focus on the `risk' of conviction, the guarantee against double jeopardy assures an individual that, among other things, he will not be forced, with certain exceptions, to endure the personal strain, public embarrassment, and expense of a criminal trial more than once for the same offense." Abney, 431 U.S. at 661, 97 S.Ct. at 2041. The Supreme Court went on to hold that "if a criminal defendant is to avoid exposure to double jeopardy and thereby enjoy the full protection of the [double jeopardy] clause, his double jeopardy challenge to the indictment must be reviewable before the subsequent exposure occurs." Id.
This Court has generally denied mandamus relief to defendants challenging a trial court's ruling on a plea of former jeopardy. See, e.g., Ex parte Spears, 621 So.2d 1255 (Ala.1993). However, we have recognized an exception to that general rule when the defendant has been deprived of the constitutional right to a jury trial. Spears, citing Ex parte Rush, 419 So.2d 1388 (Ala.1982). Moreover, in Ex parte Roberts, 662 So.2d 229 (Ala.1995), this Court allowed review by mandamus of a double jeopardy claim. See also Ex Parte Ziglar, 669 So.2d 133 (Ala.1995).
Based on the foregoing, we issue the writ. The trial court is directed to order a trial by jury on the question whether the prosecutor intentionally and improperly acted so as to provoke the mistrial in the first trial.
WRIT GRANTED.
MADDOX, SHORES, KENNEDY, and COOK, JJ., concur.
HOUSTON, J., concurs in the result.
BUTTS, J., dissents.
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51 F.3d 1051
Housev.Bedsole***
NO. 94-6198
United States Court of Appeals,Eleventh Circuit.
Mar 27, 1995
1
Appeal From: S.D.Ala., No. 92-00409-CV-AH-C
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 11th Cir.R. 34-3
**
Local Rule 36 case
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FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
July 7, 2010
TENTH CIRCUIT Elisabeth A. Shumaker
Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
No. 08-3260
v.
(District of Kansas )
(D.C. No. 6:07-CR-10223-MLB-1 )
TODD R. GEHRINGER,
Defendant-Appellant.
ORDER AND JUDGMENT *
Before MURPHY, Circuit Judge, McWILLIAMS, Senior Circuit Judge, and
GORSUCH, Circuit Judge.
In a twelve count indictment filed in the United States District Court for the
District of Kansas on May 29, 2008, Todd Gehringer (“defendant’), was charged
with various counts of being a drug user in possession of firearms, possession of
drugs, possession of methamphetamine with intent to distribute, and possession of
a firearm during and in relation to a drug trafficking crime. These charges stem
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
from five separate incidents spanning from October 10, 2006 to May 25, 2007. A
jury trial was held and defendant was convicted on all counts. A Presentence
Report was prepared based on the 2008 Federal Sentencing Guidelines.
Defendant was sentenced to 240 months imprisonment.
Defendant has raised three issues on appeal. First, whether the district
court abused its discretion in refusing to sever Counts 3-6. Second, whether there
was sufficient evidence presented at trial to support a conviction. And, third,
whether the district court erred in failing to instruct the jury that Counts 3, 4, and
9 require a mandatory minimum sentence. We do not believe the court erred in
its disposition of these matters, and therefore affirm the conviction and sentence
below.
FACTS
In July 2006 ATF agents and the Harvey County Sheriff’s Department
traveled to a house in reference to an investigation of stolen guns. A check
revealed that defendant occupied the residence. Defendant gave consent to search
the house for the stolen weapons and during the search officers found marijuana,
cocaine and various other illegal drugs. On October 10, 2006, officers were
patrolling for a stolen vehicle when one matching the description was seen
speeding and being driven erratically. A traffic stop was initiated and the officers
saw defendant exit the driver’s side door. A woman was in the passenger seat and
pointed to where defendant was hiding. Defendant was found and taken into
2
custody. A search of defendant revealed $4000 in cash, and a search of the
vehicle revealed methamphetamine under the driver’s seat, other pills, empty
plastic baggies, a spoon, and an electric scale.
On December 19, 2006, Wichita police officers witnessed a vehicle strike a
signpost in a parking lot. The officers stopped the vehicle, driven by defendant,
and performed a sobriety test. Defendant was arrested for driving under the
influence. A firearm was observed in the passenger compartment as was
methamphetamine, marijuana, and prescription pills.
On February 2, 2007, Kansas Highway Patrol attempted to stop a pickup
driven by defendant after a check revealed the vehicle was stolen. Defendant did
not stop, and led troopers on a pursuit through numerous neighborhoods.
Defendant nearly hit two vehicles, and eventually jumped out of the moving
vehicle causing it to spin out of control. Defendant fled on foot, discarding a
black object as he ran. Defendant ran into a frozen river and fell through the ice.
He was arrested and a search of his person revealed a baggie of methamphetamine
and the discarded item was determined to be an electronic scale.
On February 26, 2007, agents of the Bureau of Alcohol Tobacco and
Firearms (ATF) contacted defendant in his driveway to question him about his
past arrests and drug use, and requested permission to search his residence for
firearms related to a burglary. Defendant did not want the agents to enter his
house. Eventually, defendant told agents he had three long guns and gave them
3
permission to go into the house to verify these guns were not used in the burglary.
In the search of the house, agents recovered several long guns, handguns,
marijuana, and prescription pills.
On May 25, 2007, Wichita Police Officers executed a search warrant at the
defendant’s residence and recovered a rifle, two shotguns, marijuana, small
amounts of methamphetamine and narcotics paraphernalia. On December 3,
2007, ATF agents were conducting surveillance of the defendant’s house in
anticipation of a search warrant for stolen firearms. Agents observed defendant
leave the house and go to a nearby restaurant. Agents went to defendant,
identified themselves, and defendant fled toward his residence. Defendant was
apprehended and taken to the ATF field office and interviewed. Defendant told
agents that he discarded narcotics during the chase and officers then found four
small clear plastic baggies containing methamphetamine and one baggie of
marijuana. During the interview defendant also gave agents permission to search
a storage unit, advising them that there was a backpack with four handguns inside
which he was given as payment for a car. During a search of the storage unit,
officers found six handguns, ammunition, and other items, all of which were
reported stolen in a previous burglary report received by WPD.
MOTION TO SEVER COUNTS
Defendant first argues that the district court abused its discretion in
refusing to sever counts 3-6. Defendant moved for separate trials on those charges
4
alleging that he would be prejudiced by trying all of the charges together.
Specifically, under Fed.R.Crim P. 14, a court may order separate trials if the
defendant is prejudiced by joinder of all counts and when a defendant can show
prejudice based on a willingness to testify on some counts but not others. United
States v. Martin, 18 F.3d 1515, 1518 (10th Cir. 1994). Defendant had proffered,
and ultimately testified at trial that he was not the driver of the vehicle that was
stopped on December 19, 2006 and that he did not know the vehicle contained
drugs or firearms which were the basis for Counts 3-6. In moving to sever
counts 3-6, defendant argued that the only way to defend himself on those counts
was to testify; however, in taking the witness stand for that purpose, he could be
subjected to cross-examination regarding his history of drug addiction which
would prejudice the jury on the other drug and firearm possession counts. In
denying the motion, the district court concluded that it had:
...heard Gehringer’s version of the events and cannot
imagine how he believes a jury would find his version to
be credible. In any event, his limited proffer does not
place Gehringer in a position in which he would have to
testify about controlled substances, unless Gehringer
placed himself in that position. Simply testifying that he
was not the person identified as driving the pickup does
not equate to testimony concerning whether Gehringer is
a drug addict.
A defendant bears a heavy burden of showing real prejudice from the
joinder of counts and “in establishing real prejudice, the defendant must
demonstrate that the alleged prejudice he suffered outweighed the expense and
5
inconvenience of separate trials.” United States v. Martin, 18 F.3d at 1518; see
also United States v. Muniz, 1 F.3d 1018, 1023 (10th Cir. 1993). The district
court did not abuse its discretion in denying severance.
SUFFICIENCY OF THE EVIDENCE
Defendant next argues that the evidence presented at trial was not sufficient
to sustain his conviction for possession with intent to distribute 5 grams or more
of methamphetamine as charged in Count 9. At trial, Officer Cooper of the
Wichita Police Department testified that he saw a truck matching the description
of a stolen vehicle and stopped it for failing to use a turn signal. According to the
officer, defendant exited the driver’s door and the officer then talked to the
passenger, Ms Starks. She told the officer where defendant was and the officer
spoke with him. Defendant appeared nervous and stated he was driving without a
valid licence. Other officers arrived on the scene and defendant was taken into
custody. When defendant was searched, close to $5000 was found in his pocket,
including ninety seven $20 bills. Officers also recovered several baggies of
methamphetamine underneath the driver’s seat. Ms. Starks testified that she was
the passenger in the car which was driven by defendant, and did not know of any
drugs in the car. The vehicle was not registered to the defendant but did have the
same licence plate as was on the vehicle involved in the incident which was the
basis for the charges in Counts 3-6.
Defendant argues that the government failed to prove constructive
6
possession of the methamphetamine because there was no “connection or nexus”
between the defendant and the contraband as required by United States v.
Heckard, 238 F.3d 1222 (10thCir. 2001) and his mere presence in the car was
insufficient. At trial the arresting officer testified that defendant was the driver of
the car. Ms. Starks also testified that she was picked up by the defendant, that
she did not know of any drugs in the car, and never used methamphetamine. The
jury was given a proper instruction on constructive possession and without re-
weighing the evidence, this Court must accept the jury’s decision that the
defendant possessed the methamphetamine.
As to Counts 3, 4, 5 and 6, defendant argues that there was insufficient
evidence that he was the “operator or owner of the pickup truck in this incident.”
Therefore, he argues, a jury could not have found he knowingly possessed the
drugs or guns involved. A rational jury could have found that defendant was the
sole occupant and driver of the truck based on Officer McVay’s testimony at trial.
Officer McVay testified that he followed the truck into a parking lot, and
identified the driver as defendant. The jury was entitled to believe and credit
officer McVay’s testimony that defendant was the driver and could have
rationally concluded and inferred that he was also the sole possessor of the drugs
and guns found inside. See United States v. Mills, 29 F.3d 545, 549 (10th Cir.
1994).
7
MANDATORY MINIMUM SENTENCE
At trial, defendant’s counsel requested that the court instruct the jury
regarding the fact that their verdict as to Counts 3, 4 and 9, if guilty, would
require mandatory minimum sentences. Defendant concedes that this Court has
held that “unless a statute specifically requires jury participation in determining
punishment, the jury shall not be informed of the possible penalties.” United
States v. Parrish, 925 F.2d 1293, 1299 (10th Cir. 1991); see also, United States v.
Greer, 620 F.2d 1383, 1384 (10th Cir. 1980). However, defendant argues that the
reasoning of United States v. Polizzi, 549 F.Supp.2d 308 (E.D. N.Y. 2008), that
under the Sixth Amendment of the Constitution, the jury should know the
sentencing impact of its decision, applies and should be considered. In light of
established Tenth Circuit and Supreme Court authorities, the district court had no
discretion to instruct the jury on the sentencing penalties, and therefore did not
abuse its discretion in denying the defendant’s request.
Judgment Affirmed.
ENTERED FOR THE COURT
ROBERT H. McWILLIAMS
Senior Circuit Judge
8
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129 F.3d 1482
Megan Han LEE, by her Mother and Next Friend, Deborah LynnLEE and Deborah Lynn Lee, Plaintiffs-Appellants,v.The UNITED STATES of America, Defendant-Appellee.
No. 97-5015.
United States Court of Appeals,Federal Circuit.
Dec. 4, 1997.
Peter Avers Wimbrow, III, Attorney, Ocean City, MD, for plaintiff-appellant. Of counsel was Robert A. Mazzoni, Attorney, Scranton, PA.
Harold D. Lester, Jr., Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, Washington, DC, for defendant-appellee. Of counsel were Frank W. Hunger, Assistant Attorney General, and David M. Cohen, Director. Also of counsel were Leo E. Boucher, Major, and Dru Brenner-Beck, Major, Legal Services Division, Tort Branch, Department of the United States Army, Arlington, VA.
Before CLEVENGER, SCHALL, and BRYSON, Circuit Judges.
ORDER
PER CURIAM.
1
A petition for rehearing having been filed by the APPELLEE,
UPON CONSIDERATION THEREOF, it is
2
ORDERED that rehearing be granted for the limited purpose of issuing a supplemental opinion on rehearing. The supplemental opinion accompanies this order. The petition for rehearing is otherwise denied.
ON PETITION FOR REHEARING
3
The government petitions for rehearing, arguing that the Court of Federal Claims did not have jurisdiction in this matter. The government contends that any judgment that the Lees might obtain could not be paid from appropriated funds, and that the Court of Federal Claims therefore lacked jurisdiction under the Tucker Act, 28 U.S.C. § 1491(a).
4
The Military Child Care Act of 1989, Pub.L. No. 101-189, §§ 1501-10, 103 Stat. 1352, 1589-95, which took effect in fiscal year 1990, made appropriated funds available to support the Army's Family Child Care (FCC) program. For that reason, the United States could thereafter be sued under the Tucker Act in the Court of Federal Claims for breaches of express and implied contracts entered into by the Army's Nonappropriated Fund Risk Management Program (RIMP). The government concedes that because of the Military Child Care Act and subsequent legislation, the United States can be sued for breaches of RIMP contracts entered into during or after fiscal year 1990. The government contends, however, that the United States cannot be sued for breaches of contracts formed in any prior fiscal year, such as the contract with Ms. Garner, the child-care provider in this case.
5
The "non-appropriated fund instrumentality" exception to Tucker Act jurisdiction is a narrow one. As our predecessor court explained, "[j]urisdiction under the Tucker Act must be exercised absent a firm indication from Congress that it intended to absolve the appropriated funds of the United States from liability" for acts of the alleged non-appropriated fund instrumentality. L'Enfant Plaza Properties, Inc. v. United States, 229 Ct.Cl. 278, 668 F.2d 1211, 1212 (1982). Moreover, "[t]he classification of funds as 'appropriated' has been read broadly, and exclusions narrowly. The non-appropriated funds doctrine applies only if the activity was 'specifically intended to operate without using appropriated funds.' " United States v. General Elec. Corp., 727 F.2d 1567, 1570 (Fed.Cir.1984), quoting Hughes Aircraft Co. v. United States, 209 Ct.Cl. 446, 534 F.2d 889, 907 (1976).
6
The Military Child Care Act does not reflect congressional intention to absolve the United States from liability for contracts entered into by the RIMP before fiscal year 1989. Instead, it reflects a general intention to make appropriated funds available to support the military child-care program, the needs of which include paying claims that arise from the program's offer of liability insurance to child-care providers. The legal effect of the Military Child Care Act was thus to waive sovereign immunity for actions based on contracts with the RIMP, regardless of whether the contracts were entered into before or after fiscal year 1990.
7
The government contends that our initial opinion incorrectly referred to section 612(c) of the Contract Disputes Act, 41 U.S.C. § 612(c), in the course of our analysis of the jurisdictional question in this case. After further consideration, we agree with the government that section 612(c) is inapplicable to this case because the contract between the RIMP and Ms. Garner was not subject to the Contract Disputes Act at the time the contract was formed. See 41 U.S.C. § 602(a). That conclusion, however, does not affect our decision with respect to the jurisdictional issue. Although the government contends that funds appropriated under the Military Child Care Act cannot be used to pay judgments stemming from contracts entered into in prior years, the judgment fund is available to pay judgments of the Court of Federal Claims against the United States when payment is not otherwise provided for. See 31 U.S.C. § 1304; 28 U.S.C. § 2517(a). While the judgment fund cannot be used to satisfy the obligations of non-appropriated fund instrumentalities, the RIMP was supported by appropriated funds at the time the complaint in this case was filed. The government has not pointed us to any authority holding that the judgment fund could not be used to pay a judgment arising from a contract that the RIMP entered into before appropriated funds became available to support it. We therefore conclude once again that the Court of Federal Claims correctly held that it had jurisdiction to entertain the Lees' complaint.
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COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
§
GARY EDWARD MORSE, No. 08-09-00046-CV
§
Appellant, Appeal from
§
v. 109th District Court
§
DANA ANN MORSE, of Winkler County, Texas
§
Appellee. (TC # 15,320)
§
OPINION
Gary Edward Morse appeals an order entered on a motion to compel execution of closing
documents and an original petition for post-divorce division of property. This court ordered the
parties to attend mediation pursuant to Section 154.021 of the Civil Practice and Remedies Code1
and they entered into an irrevocable mediated settlement agreement (MSA). Among other things,
the agreement required Gary to dismiss this appeal. Gary has instead filed a motion to set aside the
MSA. For the reasons that follow, we deny the motion and dismiss the appeal.
FACTUAL SUMMARY
Dana Morse filed a petition for divorce on July 20, 2007. The trial court signed a final decree
on September 25, 2008. Neither of the parties appealed. Dana later filed an original petition for
post-divorce division of property she alleged Gary had hidden during the pendency of the divorce.
She also filed a motion to compel execution of closing documents. On February 18, 2009, the trial
court entered an order addressing both the motion to compel and the petition for post-divorce
1
T EX .C IV .P RAC .&R EM .C O D E A N N . § 154.021 (Vernon Supp. 2009).
division of property. Gary filed notice of appeal indicating his intent to appeal from that order.2
Pursuant to our order, the parties attended mediation and, according to the status report filed by
Dana, they resolved all matters of controversy between them. Dana attached to her report a copy of
the MSA signed by the parties and their attorneys. Among other things, Gary agreed to dismiss his
appeal as part of the settlement agreement. He did not comply with the agreement but instead filed
a motion to set it aside on the ground that Dana had intentionally breached the agreement by
damaging some items of property awarded to him. Dana responds that because the MSA satisfies
the requirements of Section 6.602 of the Family Code, it is not subject to revocation by either party.
MEDIATED SETTLEMENT AGREEMENT
A mediated settlement agreement is immediately binding on the parties if the agreement: (1)
provides in a prominently displayed statement that is in boldfaced type, capital letters, or underlined,
that the agreement “is not subject to revocation”; (2) is signed by the parties; and (3) is signed by the
parties’ attorneys who are present at the time of signing. TEX .FAM .CODE .ANN . § 6. 602(b)(Vernon
2006). If an MSA meets these requirements, a party is entitled to judgment notwithstanding Rule
11 of the Texas Rules of Civil Procedure or another rule of law. TEX .FAM .CODE .ANN . § 6. 602(c).
Compliance with Section 6.602 makes the agreement an exception to Sections 7.001 and 7.006,
which allow revision and repudiation of settlement agreements. TEX .FAM .CODE ANN . §§ 7.001,
7.006; In re Joyner, 196 S.W.3d 883, 889 (Tex.App.--Texarkana 2006, pet. denied). A court is not
required to enforce an MSA if it is illegal in nature or procured by fraud, duress, coercion, or other
dishonest means. Joyner, 196 S.W.3d at 890; Boyd v. Boyd, 67 S.W.3d 398, 404-05 (Tex.App.--Fort
2
Gary also filed a notice of appeal which indicated his intent to appeal from a contempt order entered by the
trial court. W e lack jurisdiction to review a contempt order by direct appeal. Norman v. Norman, 692 S.W .2d 655, 655
(Tex. 1985)(per curiam); Tracy v. Tracy, 219 S.W .3d 527, 530 (Tex.App.--Dallas 2007, no pet.). Contempt orders
involving confinement may be reviewed by writ of habeas corpus; contempt orders that do not involve confinement may
be reviewed only through mandamus. Tracy, 219 S.W .3d at 530.
Worth 2002, no pet.)(holding that § 6.602 mediated settlement agreement may be subject to
rescission due to intentional nondisclosure.); In re Kasschau, 11 S.W.3d 305, 312 (Tex.App.--
Houston [14th Dist.] 1999, orig. proceeding)(holding that a mediated settlement agreement may be
set aside on the ground of illegality).
Gary does not dispute that the MSA meets all of the requirements of Section 6.602. Unless
he can establish a ground for revocation, it is binding. The only ground Gary alleges is that Dana
intentionally breached the settlement agreement with malice by damaging certain items of property.
He cites no authority that an MSA can be revoked due to a party’s alleged intentional breach.
Because Gary has failed to assert a viable ground for setting aside or revoking the MSA, we deny
his motion.
The terms of the MSA require Gary to dismiss this appeal. In the interest of judicial
economy, we will not require Gary to file a formal motion. Instead, we sua sponte dismiss the
appeal.
August 31, 2010
ANN CRAWFORD McCLURE, Justice
Before Chew, C.J., McClure, and Rivera, JJ.
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131 Mich. App. 764 (1984)
347 N.W.2d 715
FIRST BANK OF CADILLAC
v.
MILLER
Docket No. 66773.
Michigan Court of Appeals.
Decided February 6, 1984.
Warner, Norcross & Judd (by James H. Breay and Louis C. Rabaut), for plaintiff.
Korn, Burns & Hogg, P.C. (by Robert A. Burns), for defendant.
Before: DANHOF, C.J., and MacKENZIE and M.E. DODGE,[*] JJ.
M.E. DODGE, J.
This is an appeal from a money judgment rendered against plaintiff. The judgment was the result of litigation which began as an action for claim and delivery under GCR 1963, 757.
Defendant borrowed substantial sums from plaintiff, a state-chartered bank. The loans were secured by equipment used in defendant's business. Defendant defaulted on the loans. At about the same time, he filed a petition for bankruptcy. The trustee in bankruptcy was authorized to abandon the interest of the bankrupt's estate in the collateral securing plaintiff's loans, based on a decision that the estate's interest had no realizable value. On July 22, 1977, plaintiff filed its action for claim and delivery, seeking possession of the equipment used as collateral and a money judgment. Defendant, by agreement, surrendered possession of the collateral to plaintiff on July 25, 1977. The equipment was sold at a public sale for $135,000 on September 12, 1977. On September 22, 1977, defendant first answered plaintiff's complaint. In his answer, defendant claimed that the interest rates charged him by plaintiff had been usurious. Defendant sought to recover past interest *768 paid and the amount by which the proceeds of the sale of the equipment exceeded the amount owed after the usurious interest was subtracted. The judge agreed that the interest rates charged were usurious. After a nonjury trial, a judgment against plaintiff for $26,450.29 and attorney's fees were awarded to defendant.
On appeal, plaintiff has raised several unrelated issues. Because we agree with its claim that the rate of interest charged to defendant was not usurious, we do not address its claims concerning defendant's right as a bankrupt to assert the usury claim against plaintiff, defendant's surrender of possession as a bar to a claim for affirmative relief, and the effect of defendant's failure to answer the complaint in a timely fashion.
The written agreements between plaintiff and defendant provided for interest rates of 10% or 11% which rose as high as 15% after the due dates of the notes. At trial, the judge held that plaintiff's loans to defendant were limited by the rate of interest specified in MCL 438.31; MSA 19.15, that being 7%. MCL 438.31; MSA 19.15(1) is part of a general statute concerning usury which was enacted in 1966 (1966 PA 326). The statute's progenitor was first enacted in 1891; the present statutory usury rates were adopted in 1899.
On appeal, as at trial, plaintiff argues that it was allowed to charge the interest rates allowed to banks by MCL 487.491; MSA 23.710(191). We agree. In 1969, the Legislature enacted the Banking Code, MCL 487.301 et seq.; MSA 23.710(1) et seq. The code completely revised the state's usury laws as applied to banks. Herstein, Michigan Usury Law, 27 Wayne L Rev 435, 465 (1981). Section 191 of the Banking Code, MCL 487.491; MSA 22.710(191), provides that banks "may collect *769 interest and charges as follows". Subsections (a) through (c) govern bank interest rates on credit card arrangements and uniform installment loans (including motor vehicle loans). MCL 487.491(d); MSA 23.710(191)(d) states:
"On any loan not covered by subdivision (a), (b), or (c), a bank may charge, collect, and receive interest and other charges in the same manner and at up to the maximum rate or amount permitted by law for the same type of loans made by national banking associations authorized to do business in this state."
We believe that the trial judge erred by holding that plaintiff could not avail itself of the exceptions to the general usury rate for state banks contained in MCL 487.491; MSA 22.710(191). Where two statutes appear to be in conflict, the more specific statute will prevail especially if it was enacted subsequently to the more general one. Manville v Wayne State University Board of Governors, 85 Mich App 628, 636; 272 NW2d 162 (1978). State banks were exempted from the application of the interest rates in the usury statute by the provision of different interest rates in the Banking Code. Every word of a statute should be given meaning; no provision should be treated as surplusage or rendered nugatory. Baker v General Motors Corp, 409 Mich 639, 665; 297 NW2d 387 (1980). To apply the interest rates of the general usury statute to loans made by state banks, one must ignore the interest rates made specifically applicable to banks in the Banking Code. This would render the interest rate provisions of the Banking Code entirely nugatory. If the interest rates contained in the Banking Code are given effect, however, the interest rates in the general *770 usury statute will retain meaning because of their application to nonregulated lenders.
The trial judge reasoned that plaintiff's failure to qualify as a lender to a business entity under MCL 438.61; MSA 19.15 barred it from using the exceptions to the general interest rate contained in MCL 487.491; MSA 23.710(191). The "business entity exception" to the general interest rate of the usury law is one upon which all lenders may rely. There are many exceptions, however, that only limited classes of lenders may use. Herstein, Michigan Usury Law, supra, p 465. See also Conboy, Permissible Charges in Michigan, 62 Mich B J 540 (July, 1983). While a bank may avail itself of the "business entity exception", it may also rely on those exceptions specifically applicable to banks alone. One such exception is MCL 487.491(d); MSA 23.710(191)(d).
The loans to defendant clearly did not fall within subsections (a) through (c) of MCL 487.491; MSA 23.710(191). Plaintiff was allowed, therefore, to collect interest in the amount permitted by law for the same type of loan made by national banking associations authorized to do business in this state. This provision in the Banking Code, introduced by amendment in 1974, added great complexity to the law governing permissible interest rates for state banks because the federal laws which govern national banks incorporate state laws concerning permissible rates of interest. Herstein, Michigan Usury Law, supra, pp 465-466. To determine the highest permissible rate of interest allowed a state-chartered bank, one must first determine the highest rate allowed a national banking association. National banks may charge the greater of two interest rates: (a) the rate allowed by the laws of the state in which it is *771 located to other lenders within that state (this has become known as the "most favored lender" doctrine); or (b) 1% above the discount rate on 90-day commercial paper then in effect at the Federal Reserve Bank in the national bank's Federal Reserve District. 12 USC 85. Plaintiff in this case relies on its ability to emulate a national banking association using the "most favored lender" doctrine.
The "most favored lender" doctrine guarantees that national banking associations will not be placed at a competitive disadvantage with respect to any state-regulated lender. The doctrine was first adopted to allow a national bank to charge rates permitted only to natural persons acting as lenders in the State of Missouri. Tiffany v National Bank of Missouri, 85 US (18 Wall) 409; 21 L Ed 862 (1874). It has frequently been used to allow national banks to charge interest rates allowed by states only to small loan companies, credit card operations, and retail installment sellers. Fisher v First National Bank of Omaha, 548 F2d 255, 259-260 (CA 8, 1977); Fisher v First National Bank of Chicago, 538 F2d 1284, 1289-1290 (CA 7, 1976), cert den 429 US 1062; 97 S Ct 786; 50 L Ed 2d 778 (1977); First National Bank in Mena v Nowlin, 509 F2d 872 (CA 8, 1975); Acker v Provident National Bank, 512 F2d 729 (CA 3, 1975); Partain v First National Bank of Montgomery, 467 F2d 167 (CA 5, 1972); United Missouri Bank of Kansas City, NA v Danforth, 394 F Supp 774 (WD Mo, 1975); Keresey v Nevada National Bank, 98 Nev 316; 646 P2d 1224 (1982); State ex rel Turner v First of Omaha Service Corp of Omaha, 269 NW2d 409 (Iowa, 1978); Comm'r of Small Loans v First National Bank of Maryland, 268 Md 305; 300 A2d 685 (1973). See also Brophy, State Usury Laws and *772 National Banks, 31 Baylor L Rev 169 (1979), and Arnold & Rohner, The Most Favored Lender Doctrine for Federally Insured Financial Institutions What Are Its Boundaries?, 31 Cath U L Rev 1, 5-7 (1981).
The "most favored lender" doctrine has been used to allow national banks to charge the same rates of interest allowed to state savings and loan associations. Northway Lanes v Hackley Union National Bank & Trust Co, 464 F2d 855 (CA 6, 1972). The same position has been adopted by regulation by the Comptroller of the Currency. 12 CFR 7.7310(a). See also Herstein, Michigan Usury Law, supra, p 485, fn 297. The same regulation covers any "competing state-chartered or licensed lending institution". In a staff interpretive letter, the Comptroller has specifically taken the position that state-chartered credit unions are competing lenders for purposes of the application of the "most favored lender" doctrine. OCC Staff Interpretive Letter No 255, Fed Bk L Rep (CCH), ¶ 85,419, p 77,534 (January 19, 1983). See also Herstein, Michigan Usury Law, supra, p 485, fn 296. In a formal opinion, this state's Attorney General has agreed that national banks may consider state-chartered credit unions as competing lenders. OAG, 1981-1982, No 5894, p 157 (May 1, 1981).
Plaintiff argues that state-chartered credit unions are competing lenders for purposes of the application of the "most favored lender" doctrine. Although important distinctions exist between credit unions and banks, these distinctions do not prevent credit unions from competing for borrowers with national banks. A credit union is allowed by state law to make loans to members for "provident or productive" purposes. MCL 490.4(b); MSA *773 23.484(2). The proceeds of plaintiff's loans to defendant were used primarily for the operation of his forest products business. The operation of a small business is a productive purpose. Although defendant also testified that some of the loan proceeds were used for "personal business", e.g., the purchase of a pickup truck, the term "provident or productive" is sufficiently broad to encompass this purpose as well. The class of purposes for which credit unions may loan money ("provident" and "productive" ones) is sufficiently broad that credit unions might generally be considered to be competing lenders of national banks in the areas of consumer and small business credit.
We also believe that membership in credit unions is sufficiently large that national banks might be placed at a competitive disadvantage in a significant portion of the loan market if not allowed to loan money at the same rate of interest used by state credit unions. See Herstein, Michigan Usury Law, supra, p 486. We do not consider only the actual membership of credit unions, but also their potential membership. The potential for competition in the areas of business and personal loans is sufficiently great that state credit unions must generally be considered as competing lenders of national banks as a matter of federal law.
We note that the loans in this case were larger than those made by most state credit unions. See Herstein, Michigan Usury Law, supra, p 486. The limitations on amount used by credit unions are not, however, imposed by law. We believe that a national bank may rely on the "most favored lender" doctrine without showing that a specific competing state-regulated lender was willing to make the loan in question. We look instead to the statutory and regulatory scheme governing the *774 competing lender. If the statute allows the loan to be made by a competing lender at a specific interest rate, a national bank may avail itself of that rate so long as it complies with the "provisions of State law relating to such class of loans that are material to the determination of the interest rate". 12 CFR 7.7310. See Keresey v Nevada National Bank, 98 Nev 316; 646 P2d 1224 (1982).
Our conviction that state credit unions and national banks must be considered as competing lenders under 12 USC 85 is bolstered by the actions of Congress subsequent to the making of the loans in this case. In 1980, Congress enacted the Depository Institutions Deregulation and Monetary Control Act of 1980, 94 Stat 132 et seq.; 12 USC 226 (March 31, 1980). Sections 521 through 523 of that act extended the "most favored lender" doctrine to state-chartered banks, state- and federally chartered savings and loan associations and state-chartered credit unions whose deposits were insured. Opinion of the General Counsel, Federal Home Loan Bank Board, Fed Bk L Rep, ¶ 98,447, p 84,777-3, 1979-1980 Decisions Transfer Binder (September 19, 1980). See Conboy, Permissible Charges in Michigan, 62 Mich B J 540, 542-543 (July, 1983). But see Comment, Extension of the Most Favored Lender Doctrine Under Federal Usury Law: A Contrary View, 27 Villa L Rev 1077 (1981-1982). The inclusion of credit unions among the lenders protected by Congress's wide-ranging preemption of state usury laws is convincing proof that credit unions are to be considered competing lenders under the "most favored lender" doctrine. See Nicewander, The Laws of Usury As Applied to Texas Banks and Foreign Banks Lending in Texas, 14 Tex Tech L Rev 781, 791 (1983).
Because state credit unions and national banking *775 associations are competing lenders under the "most favored lender" doctrine, national banking associations may charge the same rate of interest allowed by law to be charged by state credit unions. This rate is 15%. MCL 490.14; MSA 23.494. With the exception of certain classes of loans (not relevant here), the maximum rates of interest which state banks may charge is the same as that allowed to national banks. See MCL 487.491(d); MSA 23.710(191)(d). The trial judge erred reversibly by holding that the rates of interest on the loans to defendant were limited to 7%. The maximum rate allowable by law was the same rate allowed at that time to state credit unions, 15%.
Reversed. No costs, a question of first impression.
NOTES
[*] Circuit judge, sitting on the Court of Appeals by assignment.
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467 F.2d 1170
174 U.S.P.Q. 382
ANSLEY WEST CORPORATION, Plaintiff-Appellee,v.ELCO CORPORATION, Defendant-Appellant.ANSLEY WEST CORPORATION, Plaintiff-Appellee-Cross-Appellant,v.ELCO CORPORATION, Defendant-Appellant-Cross-Appellee.
Nos. 25238, 25375 and 25394.
United States Court of Appeals,Ninth Circuit.
July 3, 1972.
Nathan Lavine (argued), of Adelman & Lavine, Philadelphia, Pa., Walton Eugene Tinsley, of Harris, Kiech, Russell & Kern, Los Angeles, Cal., David Roy Pressman, Philadelphia, Pa., for defendant-appellant.
Thomas M. Marshall (argued), New York City, Frank E. Mauritz, of Lyon & Lyon, Miketta, Glenny, Poms & Smith, Los Angeles, Cal., for plaintiff-appellee.
Before KOELSCH and HUFSTEDLER, Circuit Judges, and COPPLE,* District Judge.
KOELSCH, Circuit Judge:
1
The district court held that Claims 1 through 7 of plaintiff's patent (Griswold, U.S. Patent No. 3,155,809, issued November 3, 1964) were valid and infringed. Defendants appeal.1 We conclude that the claims lack invention on the now statutory ground that ". . . the differences between the subject matter . . . and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. . . ." 35 U.S.C. Sec. 103.
2
Claims 1 through 7 relate to a process and an apparatus for making, by "spot" welding (i. e., electrical resistance welding) electrical connections between electrical conductors, one or more of which is embedded in thermoplastic (heat sensitive) insulating material.
3
The process (claims 2, 3, 5 and 6) involves the following steps: First, the conductors that are to be welded together are juxtaposed and an electrode positioned at the outer side of each one. Second, the electrodes are then heated and are simultaneously pressed against the conductors. Finally, when the heat and pressure have softened and displaced the thermoplastic insulation and the conductors have made electrical (i. e., metal-to-metal) contact, a welding current is passed from the one electrode through the conductors to the other electrode, causing a welded electrical connection at the point of contact between the two conductors.
4
1. The record manifests that the process employed to effect such joinder is wholly within the ingenuity and skill of the ordinary mechanic in the art to which the subject matter pertains. Graham v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966). Several "prior art" patents are especially pertinent to this conclusion: U.S. Patent No. 1,613,959, issued in 1927 to Harry DeForrest Madden, relates to a method and machine to weld a coated (i. e., insulated) lead-in wire to the base of an incandescent lamp. "A preferable mode of practicing the present invention," says the patent description, "is to provide a heating element comprising a resistance body, such as a rod of carbon, tungsten or the like, and to pass a current therethrough to permit the resistant property of the element to generate the proper degree of heat therein. The heating element may be moved in contact with a wire positioned for welding in order to heat treat and render the coating non-resistant, after which suitable cooperating mechanism may be utilized to cause a welding operation by permitting a flow of electrical current through the bodies to be welded. The heating element may serve to impart heat to the body to be welded and as a terminal or electrode to carry a welding current."
5
U.S. Patent No. 2,977,672, issued in 1961 to T. A. Telfer, teaches a method to fabricate "bonded wire circuits" by electrically welding together electrical conductors separated by a "pressure deformable insulating member." The process specified "placing two or more electrical conductors in proximity, separating said conductors with a continuous pressure deformable insulating member, piercing said insulating member by applying pressure to said conductors and performing a welding operation at a conductor junction by forming a weld while said insulating material is pressure deformed to provide surface contact of said conductors."
6
British Patent No. 697,396, issued in 1953 to The General Electric Co., Ltd. and James Arthur Donelan, covering a process to weld together two metal members separated by insulating material in order to effect their electrical connection. Claim One is typical:
7
"1. A method of electric resistance welding together two metal members separated by an insulating material deformable by heat comprising applying heat to or generating heat in the region of the desired weld, displacing the heated insulating material from this region to permit the establishment of a conductive path between the two members and passing welding current between two electrodes to form a weld between the two members in the region where the insulation has been displaced."
8
Parenthetically we note that no reference was made in the patent in suit to the British patent2 and that all claims in issue "read on" the disclosures of the latter (save perhaps in one immaterial particular).3 As we read it, the above claim in the British patent teaches the same steps, carried out by essentially the same means and performed in the same sequence as those disclosed and claimed in Griswold.4
9
2. The apparatus described in Griswold claims 1, 4 and 7 consists of a pair of welding electrodes capable of applying pressure, means to heat and to position the electrodes and a means to produce a welding current.
10
These constituent elements are old; they are well known, and their combination is not a new one in this particular art. Both the Madden and the British patents, for example, brought them together. Thus, the apparatus fails to satisfy the severe test for combination patents declared in Graham v. John Deere, supra.
11
In sum, the judgments in Nos. 25,238 and 25,375 are reversed and the cause is remanded to the district court with directions to dismiss the action. The appeal in No. 25,394 is dismissed as moot.
*
Honorable William P. Copple, United States District Judge, Phoenix, Arizona, sitting by designation
1
The matter is here on defendant's appeals from the judgment of validity and infringement and from the supplemental judgment assessing damages and attorneys' fees and on plaintiff's cross-appeal from the latter judgment. The appeals were designated respectively Nos. 25,238, 25,375 and 25,394
2
Thus the statutory presumption of validity [35 U.S.C. Sec. 282] is "overcome," Westinghouse Elec. Corp. v. Titanium Metals Corp., 454 F.2d 515, 516 n. 2 (9th Cir. 1971)
3
The British patent refers to welding "members separated by a layer or sheet or coating of thermoplastic material." Griswold claims welding to a conductor "embedded in plastic material." Application of the process described in the British patent to conductors "embedded in plastic material" (Griswold) is not "unusual or surprising." Regimbal v. Scymansky, 444 F.2d 333, 339 (9th Cir. 1971)
4
The trial court, in assessing the level of skill and knowledge in the art, appears to have placed considerable reliance upon the testimony of a Mr. Lockie, one of plaintiff's expert witnesses. In its findings concerning the issue of obviousness, the court made the unequivocal assertion that "The testimony of Mr. Lockie clearly establishes that a man of ordinary skill in the art, i. e., an engineer involved in the design and engineering of electrical systems employing tape cable, would not have thought of, nor would it have been obvious to him, to employ heated electrodes in welding apparatus in order to achieve the interconnection of a conductor to a tape cable in 1961. This court believes and adopts Lockie's testimony that the use of heated welding electrodes was not obvious in 1961." (emphasis the lower court's)
The force of this finding, however, is greatly dissipated, if not wholly destroyed, because there was no evidence that Mr. Lockie was familiar with the teachings of any of the prior art patents mentioned in this opinion and especially the British patent.
This court, pointing out that "we must assume knowledge of [a prior patent] when considering obviousness," has characterized as "worthless" the opinion of an expert, whose testimony reveals his unfamiliarity with the prior art. Stevenson v. Diebold, Inc., 422 F.2d 1228, 1233 (9th Cir. 1970), cert. denied, 400 U.S. 832, 91 S.Ct. 65, 27 L.Ed.2d 64 (1970).
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 98-30681
Summary Calendar
TERRY FLEMING,
Petitioner-Appellant,
versus
BURL CAIN, Warden, Louisiana State Penitentiary,
Respondent-Appellee.
--------------------
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 97-CV-2065-H
--------------------
January 27, 2000
Before JOLLY, JONES, and BENAVIDES, Circuit Judges.
PER CURIAM:*
Terry Fleming, Louisiana prisoner #114500, appeals from the
denial of his application for federal habeas corpus relief.
Fleming contends that his guilty plea was not knowing and
voluntary because he was not informed of the specific intent
element of second-degree murder and because his counsel failed to
advise him that he could not be convicted of both felony murder
and armed robbery.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
No. 98-30681
-2-
We have reviewed the record, the briefs of the parties, and
the applicable law, and we find no reversible error. When, as in
this case, the record shows that the defendant understood the
charge and its consequences, the failure of the trial court to
explain the elements of the offense does not render the plea
involuntary. See DeVille v. Whitley, 21 F.3d 654, 657 (5th Cir.
1994). With respect to his assertion that counsel’s
ineffectiveness rendered his plea unknowing and involuntary,
Fleming fails to demonstrate a reasonable probability that he
would have insisted on going to trial but for counsel’s errors.
See Mangum v. Hargett, 67 F.3d 80, 84 (5th Cir. 1995). The state
court’s decision was not contrary to, or an unreasonable
application of, clearly established Federal law, as determined by
the Supreme Court. See 28 U.S.C. § 2254(d)(1).
AFFIRMED.
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396 F.3d 1018
UNITED STATES of America, Appellee,v.Harold FOX, also known as Rich, Appellant.
No. 03-3554.
United States Court of Appeals, Eighth Circuit.
Submitted: May 13, 2004.
Filed: January 31, 2005.
COPYRIGHT MATERIAL OMITTED Michael F. Maloney, argued, Omaha, NE, for appellant.
Maria R. Moran, argued, Asst. U.S. Attorney, Omaha, NE, for appellee.
Before LOKEN, Chief Judge, SMITH, Circuit Judge, and DORR,1 District Judge.
DORR, District Judge.
Harold Fox was charged in the United States District Court for the District of Nebraska with conspiracy to distribute 500 grams or more of methamphetamine and use of a firearm during or in relation to a drug trafficking crime. A jury convicted Fox on both counts and the district court2 sentenced Fox to 168 months of imprisonment on Count I and 60 months of imprisonment on Count II, to run consecutively. Fox appeals his conviction, arguing that the district court abused its discretion and violated his Sixth Amendment right to confrontation. For the reasons discussed below, we affirm Fox's conviction. Fox has also challenged his sentence based on the recent decision in Blakely v. Washington, ___ U.S. ___, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004). We remand Fox's sentence to the district court for further consideration in light of Blakely.
I. Background
On October 21, 2002, a two-count Indictment was filed in the United States District Court for the District of Nebraska charging Harold Fox with one count of conspiracy to distribute 500 grams or more of methamphetamine from December 1, 2001, up to and including August 23, 2002. The second count of the Indictment charged Fox with using a firearm during or in relation to a drug trafficking crime. Fox entered a plea of not guilty to the Indictment.
On May 19, 2003, the matter proceeded to a jury trial. During trial, ten witnesses testified in the government's case about Fox's receipt and distribution of methamphetamine during the time frame of the conspiracy. Six of these individuals — Tristan Carter, Timothy Noer, Jennifer Osborn, Ray Snover, Michael Karas, and Angel Arroyo — were cooperating witnesses. At the time of trial, several of the cooperating witnesses had already pled guilty and had been sentenced in connection with their involvement in the conspiracy. Carter had pled guilty to conspiring to distribute methamphetamine and use of a weapon and had been sentenced to 248 months of imprisonment. Karas had pled guilty to the same charges and was awaiting sentencing. Arroyo, Snover, and Noer had pled guilty to conspiracy to distribute methamphetamine. Arroyo had been sentenced to 138 months of imprisonment, Snover had been sentenced to nine years of imprisonment, and Noer was awaiting sentencing. The cooperating plea agreements of all of these individuals were received into evidence at trial.
Tristan Carter, a cooperating witness, testified at Fox's trial. Carter testified that he had been distributing methamphetamine in Omaha, Nebraska, from approximately January of 2002 until his arrest pursuant to a federal indictment on August 23, 2002.
On March 31, 2002, Carter and Fox were arrested in Kansas. An officer with the Nemaha County Kansas Sheriff's Department stopped a 1991 Mitsubishi driven by Harold Fox and occupied by Tristan Carter and a female. During the search of the vehicle, officers recovered .18 grams of methamphetamine, digital scales, a razor blade, and a propane torch. Officers searched Carter and found a sunglasses case containing 27.12 grams of methamphetamine. Carter testified that the methamphetamine found in the sunglasses case was his and the remainder of the methamphetamine belonged to Fox, although he had supplied it to Fox.
Carter described himself as Fox's "somewhat" partner in the distribution of methamphetamine. Carter and Fox were also both users of methamphetamine. Carter said that he and Fox pooled their money on two occasions to buy methamphetamine from Tim Noer. After their second combined purchase, Carter began purchasing methamphetamine from Noer and others on his own. Over the next several months, Carter purchased approximately 130 pounds of methamphetamine. Fox was one of Carter's customers. Initially, Carter sold Fox 8-ball amounts, increasing to one ounce amounts. Carter estimated that he sold Fox methamphetamine on fifty to 100 occasions. He estimated the total quantity of methamphetamine that he sold to Fox was around four to five pounds.
Carter testified that Fox was reselling at least some of the methamphetamine he received from Carter. Carter said that he went with Fox several times when Fox sold methamphetamine. Carter also testified that Fox carried a gun during some of the drug deals he had with him. Carter testified that Fox traded a . 357 handgun and a .25 handgun to him for methamphetamine and to pay off some of his debt to Carter.
On cross-examination, Carter testified that Jennifer Osborn was a friend of his and that he worked with her. He stated that Osborn knew about his drug deals and that he told her that he would kill her nephew if she ever talked to the police about what he was doing. Carter stated that he understood he would get some percentage reduction of his sentence for cooperating, but that he had no idea how much. He said that he had no understanding that his threat to Osborn could affect his sentence.
Following Carter's testimony, the jury heard testimony from other co-conspirators regarding Carter's dealings with Fox, as well as Fox's individual dealings. Tim Noer testified that Fox was with Carter when Carter received one-quarter pound of methamphetamine from Noer in Grand Island, Nebraska. Later on, Carter and Fox pooled their money to make another purchase of methamphetamine from Noer in Grand Island.
Noer testified that he saw Fox at Carter's residence two or three times. Noer stated that on one occasion Fox wanted to trade a .357 handgun to him for an ounce of methamphetamine. Fox later traded the .357 handgun to Carter for an ounce of methamphetamine. Noer said that he saw Fox with the .357 handgun three times before he traded it to Carter. Noer testified that he hoped to get his sentence reduced by cooperating and that he believed the reduction would be approximately fifty percent based on what he had read in the law library and heard from other people.
Jennifer Osborn testified under a non-prosecution agreement and said that she met Carter in July of 2001. She said that she was aware of Carter's drug dealing and that she would count the money Carter received from the sale of methamphetamine. Osborn testified that she saw Fox receive methamphetamine from Carter at Carter's residence at least thirty to forty times for a total of about one-half pound. She was also present on one occasion when Fox gave methamphetamine to his sister. Osborn said that she saw Fox with a handgun in the small of his back one time when he was at Carter's house for a drug transaction.
Ray Snover, Angel Arroyo, and Michael Karas all testified that they witnessed Carter deliver methamphetamine to Fox. Snover said that he saw Fox carrying a gun during one of these drug deals. Arroyo testified that he purchased methamphetamine from Fox between seven and ten times for a total of one-quarter pound and that he sold Fox a total of one-half pound of methamphetamine. Karas testified that he saw Fox receive methamphetamine from Carter and that he saw Fox trade the .357 handgun to Carter for methamphetamine.
During cross-examination, Karas was questioned about his plea agreement, the possible sentence he was facing, and the possible percentage reduction he was hoping to receive for testifying. Karas testified that he was facing a minimum 15-year sentence and that he had heard talk in the jail that a fifty percent reduction was possible for testifying.
On May 21, 2003, the jury found Fox guilty on both counts, and specifically found that Fox was responsible for at least fifty grams of methamphetamine but less than 500 grams of methamphetamine. During the sentencing hearing, the district court enhanced the guideline sentence based on the court's finding that 1.814 kilograms of methamphetamine were attributable to Fox. As a result, the district court sentenced Fox to 168 months of imprisonment on Count I and 60 months of imprisonment on Count II, to run consecutively.
II. Discussion
A. Carter's Testimony
Fox argues that the district court abused its discretion and violated his Sixth Amendment confrontation right by sua sponte asserting the attorney-client privilege on Carter's behalf. Fox contends that he was not allowed to fully cross-examine Carter regarding the benefits he had already received for his cooperation and further benefits he hoped to receive for testifying against Fox.
During cross-examination, Fox's counsel attempted to ask Carter about conversations he had with his attorney regarding the nature of his plea agreement and the potential sentence he could receive. Counsel stated it was his intent, "to talk to him about what his attorney told him about what the potential sentence is." The district court refused to allow defense counsel to inquire about communications between Carter and his attorney on the basis that such communications were privileged and confidential and that if Carter's attorney had been in court "as he was supposed to be" he would be asserting the privilege. However, the district court did allow Fox's counsel to inquire about what Carter's knowledge and understanding of his potential sentence and the guidelines was following his discussions of these issues with his attorney.
Defense counsel also inquired of Carter about the extent of departure a cooperating witness usually obtains for testifying. The government objected based on relevancy and the district court sustained the objection. Later, however, Carter testified that he understood that he would get some percentage reduction if he cooperated, but that he had no idea how much.
Generally, the attorney-client privilege is personal and cannot be asserted by anyone other than the client. See United States v. Hatcher, 323 F.3d 666, 674 n. 2 (8th Cir.2003) (citing United States v. Fortna, 796 F.2d 724, 732 (5th Cir.1986), cited with approval in United States v. Escobar, 50 F.3d 1414, 1422 (8th Cir.1995)). In this case, the district court sua sponte asserted the attorney-client privilege on behalf of Carter. Regardless of the appropriateness of the district court's assertion of the privilege, the question is whether the district court's limitation of defense counsel's cross-examination of Carter, resulted in a violation of the Confrontation Clause. Fox argues that he was not allowed to fully cross-examine Carter regarding the benefits he had already received for his cooperation and the additional benefits he hoped to receive for testifying. Fox suggests that he should have been able to explore whether Carter's attorney informed him of the customary reduction received for testifying against other parties.
A Confrontation Clause violation is shown when a defendant demonstrates that a reasonable jury might have received a significantly different impression of a witness's credibility had counsel been permitted to pursue the proposed line of cross-examination. Harrington v. Iowa, 109 F.3d 1275, 1277 (8th Cir.1997). A trial court's decision to limit cross-examination will not be reversed unless there has been a clear abuse of discretion and a showing of prejudice to the defendant. United States v. Brown, 110 F.3d 605, 611 (8th Cir.1997). The focus of the prejudice inquiry in determining whether the confrontation right has been violated is on the particular witness, not on the outcome of the trial as a whole. Delaware v. Van Arsdall, 475 U.S. 673, 690, 106 S.Ct. 1431, 89 L.Ed.2d 674 (1986).
In the event that there is a violation of the Confrontation Clause, the Court must consider whether the constitutional error was harmless beyond a reasonable doubt. Van Arsdall, 475 U.S. at 681, 684, 106 S.Ct. 1431. "The correct inquiry is whether, assuming that the damaging potential of the cross-examination were fully realized, a reviewing court might nonetheless say that the error was harmless beyond a reasonable doubt." Id. at 684, 106 S.Ct. 1431. In assessing whether the error was harmless, the Court must consider "the importance of the witness' testimony in the prosecution's case, whether the testimony was cumulative, the presence or absence of evidence corroborating or contradicting the testimony of the witness on material points, the extent of cross-examination otherwise permitted, and, of course, the overall strength of the prosecution's case." Id. at 684, 106 S.Ct. 1431; see also United States v. Caldwell, 88 F.3d 522, 525 (8th Cir.1996).
The record demonstrates that Fox's counsel engaged in a lengthy cross-examination of Carter. The district court permitted Fox's counsel to ask Carter about his understanding, after discussions with his attorney, about his potential sentence, the sentencing guidelines, and the benefits he would receive for cooperating. Fox's counsel also went through the applicable sentencing guidelines with Carter in detail. Carter testified that he understood that he would get some percentage off of his sentence for cooperating, but that he had no idea how much.
Further, defense counsel was able to question other cooperating witnesses about the percentage of sentence reduction typically expected for cooperating. Michael Karas, another cooperating witness, testified that there were "rumors" that a cooperating witness would receive a fifty percent reduction of their sentence for cooperating. In addition, Tim Noer testified that he believed, based on what he had read in the law library and heard from other people, that the reduction for cooperating would be approximately fifty percent. Regardless of the source of the information, Fox was able to put before the jury evidence that there could be a fifty percent reduction in sentence for cooperating. Fox's counsel specifically argued to the jury in regard to all the cooperating witnesses that "what they're really angling for is a 50 percent reduction in their sentences."
Based on the evidence of record, we conclude that Fox has not shown that a reasonable jury might have had a significantly different impression of Carter, his credibility, or his motivation for testifying had defense counsel been able to pursue the proposed line of questioning regarding Carter's conversations with his attorney. Clearly, there was substantial evidence before the jury regarding Carter's situation, the sentence he received, his credibility, his motivations for testifying against Fox, the fact that he hoped to receive a benefit for testifying against Fox, and the possibility that a sentence could be reduced by fifty percent for cooperation. To allow defense counsel to inquire about the substance of Carter's conversations with his counsel and to put such evidence before the jury would not have resulted in the jury having a significantly different impression of Carter than they already had. Therefore, there has been no showing of prejudice to Fox as a result of the limitation that was placed on defense counsel's cross-examination of Carter. See Brown, 110 F.3d at 611.
B. Carter's Presentence Investigation Report
Fox argues that Carter was the government's main cooperating witness and, although he threatened Osborn, he received a sentencing benefit in that he was not assessed an enhancement for obstruction of justice based on the threat. Additionally, Fox argues that the district court erred in failing to order the government to provide defense counsel with a copy of Carter's presentence investigation report. Fox contends that the presentence investigation report is discoverable under Brady v. Maryland, 373 U.S. 83, 87, 83 S.Ct. 1194, 1196-97, 10 L.Ed.2d 215 (1963), because it contains exculpatory evidence of a benefit conferred upon Carter by the absence of any mention of the threat to Osborn which, Fox argues, resulted in no enhancement of Carter's sentence for obstruction of justice. Fox argues that he had a right to explore whether Carter knew of this benefit and to show the jury, if Carter denied knowledge, that the benefit was conferred.
Fox's counsel requested that the government be required to provide him with a copy of Carter's presentence investigation report and divulge any conversations with Carter's attorney regarding the prosecution version that was submitted to probation. Defense counsel also suggested that there was an agreement between the prosecutor and Carter's attorney regarding the threat to Osborn.
The district court requested that the government disclose any conversations with Carter's attorney regarding the threat to Osborn or the prosecution version of the offense. The district court also ordered the government to disclose any communications, correspondence, or notes regarding any such conversations. The prosecutor stated on the record that there was no agreement with Carter's attorney as to the Osborn threat and disclosed one piece of correspondence from Carter's attorney pertaining to the plea agreement, which requested that Carter be allowed to plead to an ordinary firearm count rather than the brandishing count. The prosecutor advised that there was nothing else in the prosecution file with respect to Carter's plea, offer, plea negotiation, or sentencing.
The district court reviewed the presentence investigation report in camera and found that it did not contain any mention of an obstruction of justice or the Osborn threat. The district court concluded that the presentence investigation report was not discoverable because it was not a statement of an accused or witness and was a confidential court document. Further, the district court found that the presentence investigation report was not discoverable because it did not contain any exculpatory evidence, material, or information which Fox would be entitled to under Brady.
To prove a Brady violation, a defendant must show that the prosecution suppressed evidence that was favorable to the accused and that the evidence was material to the issue of guilt or punishment. United States v. Duke, 50 F.3d 571, 577 (8th Cir.1995) (citing Prewitt v. Goeke, 978 F.2d 1073, 1078 (8th Cir.1992)). Evidence is material if there is a reasonable probability that the disclosure of such evidence would have led to a different result at trial. Duke, 50 F.3d at 577.
Fox's attorney questioned Carter during cross-examination about whether he had an understanding that his threat to Osborn would have any consequence on his sentencing. Later, counsel asked if Carter understood that the probation office, during their presentence investigation, "may find that you obstructed justice because of your incident with Ms. Osborn." Carter's answer to both questions was "no." At the time of his testimony, the presentence investigation was completed and Carter had already been sentenced. It was only after Fox's counsel had rested his cross-examination of Carter and Carter was excused as a witness that counsel requested the trial court to compel the government to provide defendant with a copy of Carter's presentence investigation report. It is clear from the record that the presentence investigation report made no mention of the threat, any sentence enhancement for obstruction of justice, or any benefit conferred on Carter in relation to the threat. Therefore, the report itself would have added nothing in terms of additional evidence. Further, Fox's counsel questioned Carter about his understanding of whether or not he got a sentencing benefit related to the threat and the possible obstruction of justice enhancement. Therefore, there was nothing about the lack of information in the report that would have raised a reasonable probability that disclosure of the report would have led to a different result at trial. We conclude there was no Brady violation in regard to the government's decision to not produce a copy of Carter's presentence investigation report to defendant's counsel.
C. Impeachment of Carter for Bias
Fox also argues that the district court's alleged errors, individually or in combination, served to deny him of a full opportunity to impeach Carter for bias. The Court recognizes the importance of a defendant's opportunity to impeach a witness for bias. However, even if we assume that the district court erred as Fox has suggested, when we consider the factors relevant to the determination of whether such error is harmless we conclude that any such error by the district court was harmless beyond a reasonable doubt.
Clearly, Carter's testimony was important to the prosecution's case. He gave extensive testimony regarding his own purchases and sales of methamphetamine and his interaction with Fox in the acquisition and distribution of methamphetamine. However, he was not the only witness to testify about Fox's activities. Carter was one of six cooperating witnesses who testified. Angel Arroyo, Ray Snover, Timothy Noer, Jennifer Osborn, and Michael Karas also testified about Fox's activities regarding the purchase and sale of methamphetamine, and his dealings with Carter. A number of these witnesses testified that they observed Fox receive methamphetamine from Carter. Several of the cooperating witnesses saw Fox carry a firearm during drug deals, and Michael Karas testified that he was present when Fox traded the .357 handgun to Carter for methamphetamine. In addition, the district court allowed extensive cross-examination of Carter regarding his understanding or knowledge of his sentence and the benefits he hoped to receive through his cooperation, which clearly demonstrated Carter's motivation for testifying. Even if additional evidence regarding Carter's bias or motivation for testifying against Fox had come in it would, at best, have been cumulative and would not have changed the result because the government's case against Fox was overwhelming.
In light of the evidence of record, and our consideration of the foregoing factors, we conclude that any error by the district court on these issues was clearly harmless beyond a reasonable doubt.
D. Sentencing Arguments
Finally, Fox filed a supplemental pro se brief raising two points of error in regard to his sentence. First, Fox's pro se brief argues that the district court erred in the calculation of his criminal history category, and thereby his sentence, by including one point for a California conviction in 1999. Fox's argument regarding this matter was appropriately and exhaustively addressed by the district court. In fact, the district court adjusted Fox's criminal history category downward based upon the court's finding that there was an overstatement of his criminal history. This adjustment effectively negated this issue. Therefore, we find that Fox's argument on this point is without merit. Second, Fox's pro se brief argues that the district court erred when it failed to sentence him based upon the maximum sentence authorized by the jury verdict, which substantially limited the amount of drugs attributed to him.
In this case, the jury made a specific finding that Fox was responsible for at least 50 grams of methamphetamine, but less than 500 grams of methamphetamine. The presentence investigation report recommended that Fox be found responsible for 1.814 kilograms of methamphetamine. Fox filed an objection to this recommendation and argued the objection during the sentencing hearing before the district court. However, the district court overruled Fox's objection on this issue and found, based on a preponderance of evidence, that 1.814 kilograms of methamphetamine were attributable to Fox. This resulted in a significant enhancement to the applicable guideline range utilized by the trial court in assessing its sentence.
Oral argument in this matter was heard on May 13, 2004. Thereafter, the United States Supreme Court issued its decisions in Blakely v. Washington, ___ U.S. ___, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004) and United States v. Booker, ___ U.S. ___, 125 S.Ct. 738, ___ L.Ed.2d ___ (2005). Fox has preserved this sentencing issue, and, pursuant to Booker, is entitled to a new sentencing proceeding. See id. at ___, 125 S.Ct. 738 (Breyer, J. for the court) (noting that Booker applies to all cases on direct review). We remand for resentencing in accordance with Booker.
III. Conclusion
1
In summary, we conclude that Fox is not entitled to prevail on any of his arguments that the district court erred during trial as to the assertion of the attorney-client privilege, cross-examination of Carter, or disclosure of Carter's presentence investigation report. As previously stated, there has been no showing of prejudice to Fox based on the district court's actions and any error by the district court was clearly harmless beyond a reasonable doubt. Accordingly, Fox's conviction is affirmed.
2
However, we remand for resentencing in accordance with Booker.
Notes:
1
The Honorable Richard E. Dorr, United States District Judge for the Western District of Missouri, sitting by designation
2
The Honorable Thomas M. Shanahan, United States District Judge for the District of Nebraska
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 09-1727
SEAN PROA; MARGARET JORDAN; GARY S. SCHIFF,
Plaintiffs - Appellants,
v.
NRT MID-ATLANTIC, INCORPORATED, d/b/a Coldwell Banker
Residential Brokerage; NRT INCORPORATED; ANGELA SHEARER;
SARAH SINNICKSON,
Defendants - Appellees.
No. 09-1816
SEAN PROA; MARGARET JORDAN; GARY S. SCHIFF,
Plaintiffs - Appellants,
v.
NRT MID-ATLANTIC, INCORPORATED, d/b/a Coldwell Banker
Residential Brokerage; NRT INCORPORATED; ANGELA SHEARER;
SARAH SINNICKSON,
Defendants - Appellees.
No. 09-1969
SEAN PROA; MARGARET JORDAN; GARY S. SCHIFF,
Plaintiffs - Appellants,
v.
NRT MID-ATLANTIC, INCORPORATED, d/b/a Coldwell Banker
Residential Brokerage; NRT INCORPORATED; ANGELA SHEARER;
SARAH SINNICKSON,
Defendants - Appellees.
Appeals from the United States District Court for the District
of Maryland, at Baltimore. Andre M. Davis, District Judge.
(1:05-cv-02157-AMD)
Submitted: September 10, 2010 Decided: October 18, 2010
Before WILKINSON, Circuit Judge, HAMILTON, Senior Circuit Judge,
and Robert J. CONRAD, Jr., Chief United States District Judge
for the Western District of North Carolina, sitting by
designation.
Affirmed by unpublished per curiam opinion.
William T. Coleman, III, Sheryl S. Levy, BERGER & MONTAGUE, PC,
Philadelphia, Pennsylvania; Patrick J. Massari, LAW OFFICE OF
PATRICK J. MASSARI, Washington, D.C.,; Stephen A. Saltzburg,
GEORGE WASHINGTON UNIVERSITY LAW SCHOOL, Washington, D.C., for
Appellants. Joseph P. Harkins, Erik C. Johnson, Steven E.
Kaplan, LITTLER MENDELSON, PC, Washington, D.C., for Appellees.
Unpublished opinions are not binding precedent in this circuit.
- 2 -
PER CURIAM:
In this consolidated appeal, Sean Proa, Margaret Jordan,
and Gary Schiff (collectively Plaintiffs) challenge the district
court’s grant of summary judgment in favor of NRT Mid-Atlantic,
LLC (d/b/a Coldwell Banker Residential Brokerage), NRT Inc.,
Angela Shearer, and Sarah Sinnickson (collectively Defendants)
with respect to their discrimination and retaliation claims
under Title VII of the Civil Rights Act of 1964, as amended, 42
U.S.C. §§ 2000e to 2000e-17, and 42 U.S.C. § 1981. Plaintiffs
also challenge the denial of their discovery motion to compel
certain documents and the imposition of monetary sanctions by
the magistrate judge and the district court.
Having considered the parties’ briefs and the joint
appendix, we find no reversible error. Accordingly, we affirm
on the reasoning of the district court as set forth in its
carefully crafted and thorough opinions and order. See Proa v.
NRT Mid Atlantic, Inc., 633 F. Supp. 2d 209 (D.Md. July 1,
2009); Proa v. NRT Mid Atlantic, Inc., 618 F. Supp. 2d 447
(D.Md. May 27, 2009); Proa v. NRT Mid Atlantic, Inc., 608 F.
Supp. 2d 690 (D.Md. April 20, 2009); (J.A. 681-82) (Order filed
May 27, 2009, Docket Entry 227). We deny Plaintiffs’ motion for
a declaration that the appellate record include the Federal Rule
of Civil Procedure 30(b)(6) depositions and other papers
attached as exhibits to Plaintiffs’ emergency motion to
- 3 -
supplement the record filed with the district court. We also
deny Defendants’ motion to strike Plaintiffs’ claims for
violating Federal Rule of Appellate Procedure 28(a)(7) and
(9)(A).
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
- 4 -
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361 N.W.2d 508 (1985)
219 Neb. 106
Bobby CUMMINGS, Appellant,
v.
Bruce CURTISS, Appellee.
No. 83-736.
Supreme Court of Nebraska.
January 25, 1985.
*509 Bobby Cummings, pro se.
Jewell, Otte, Gatz & Collins, Norfolk, for appellee.
BOSLAUGH, WHITE and GRANT, JJ., McCOWN, J., Retired, and COLWELL, District Judge, Retired.
McCOWN, Justice, Retired.
This is an appeal from an order of the district court for Pierce County, Nebraska, granting summary judgment for the defendant. This action involved allegations that the defendant, a lawyer, had made fraudulent misrepresentations to the plaintiff client in connection with the settling of an estate. We affirm the judgment of the district court.
The testator, Ren J. Kroupa, died on March 24, 1979, leaving a will which he had made on a printed form. The plaintiff, who was not related to the decedent, and the decedent's brother, Frank E. Kroupa, engaged the defendant, an attorney, to probate the will which named them as sole beneficiaries of the estate.
After the will was filed for probate, other relatives of the decedent filed objections to the petition for probate. They alleged that the will was not properly signed, executed, or attested; that the deceased lacked testamentary intent; and that the decedent was the victim of undue influence. The contestants subsequently offered a "stipulation" under which both plaintiff and Kroupa would disclaim their one-half share each under the will and accept a one-fifth share each in exchange for the withdrawal of objections to probate. The contestants were to receive the remaining three-fifths of the estate.
The defendant encouraged the plaintiff to accept the proffered settlement and expressed reservations about the validity of the decedent's will. The plaintiff alleged that defendant told him the will was not properly signed by two witnesses, thus making it invalid. Plaintiff further alleged that defendant also stated that the will would not hold up in any court in Nebraska and that if the plaintiff, a nonrelative, hoped to receive anything from the estate, he should sign the stipulation, since "A fifth of something is better than nothing, isn't it?"
The defendant alleged that he had informed the plaintiff on several occasions that the will was of questionable validity. He stated that the will may not be valid as either a formal or a holographic will, and warned plaintiff that there might be a will contest. After informing the plaintiff of this, defendant suggested that plaintiff consider a settlement with the contestants, the terms of which are contained in the stipulation, and the plaintiff accepted them in order to avoid the uncertain outcome of litigation.
The will was admitted to probate in May of 1979, subject to the terms of the stipulation, and the estate was divided in accordance with the settlement agreement.
In December of 1982 the plaintiff "discovered" Neb.Rev.Stat. § 30-2328 (Reissue 1979) concerning holographic wills, and subsequently filed this action for fraudulent misrepresentation. Both parties moved for summary judgment, and the *510 district court granted defendant's motion and entered judgment accordingly. Plaintiff assigns as error the district court's failure to find that defendant's representations were false, that he used artifice to fraudulently conceal the truth, and contends that, under the circumstances, knowledge of the misrepresentation must be imputed to the defendant.
It is fundamental that the purpose of a summary judgment proceeding is to pierce allegations of pleadings and to show conclusively that the controlling facts are otherwise than alleged and that the moving party is entitled to judgment as a matter of law.... It is equally as fundamental that the granting of summary judgment is an extreme remedy and should be awarded only when the issue is clear beyond all doubt. Any reasonable doubt touching the existence of a material issue of fact must be resolved against the moving party.
Strong v. K & K Investments, 216 Neb. 370, 373, 343 N.W.2d 912, 915 (1984).
Fraudulent misrepresentation requires the plaintiff to prove:
(1) That a representation was made; (2) That the representation was false; (3) That when the representation was made it was known to be false or made recklessly without knowledge of its truth and as a positive assertion; (4) That it was made with the intention that the plaintiff should rely upon it; (5) That the plaintiff did rely upon it; and (6) That he suffered damage as a result. Ames Bank v. Hahn, 205 Neb. 353, 287 N.W.2d 687 (1980).
Gitschel v. Sauer, 212 Neb. 454, 461, 323 N.W.2d 93, 97 (1982).
In the present case plaintiff alleged that the defendant stated:
Our real problem is that Ren's will is not legal under Nebraska law because it did not have the two witnesses it must have to be legal and entitled to Probate in Nebraska and because of that Ren's will would not hold up in any court in Nebraska and that if I hoped to get any of Ren's estate I had better sign the Stipulation otherwise not being a blood relative I would not receive anything at all and a fifth of something is better than nothing, isn't it?
This statement was not false and known to be false. Neb.Rev.Stat. § 30-2327 (Reissue 1979) requires that all wills other than holographic wills be signed by at least two witnesses. In this instance, the decedent's will was signed only by the decedent and one witness, thus making it invalid unless proven to be a holographic will.
At the times involved here § 30-2328 (Reissue 1979) was in effect. It provided:
"A will which does not comply with section 30-2327 is valid as a holographic will, whether or not witnessed, if the signature, the material provisions, and an indication of the date of signing are in the handwriting of the testator." The statute does not specifically address the problem of printed will forms, and there is no Nebraska case law interpreting the statute. However, the comment to the statute does address the issue. "A valid holograph might even be executed on some printed will forms if the printed portion could be eliminated and the handwritten portion could evidence the testator's will."
Available case law based on similar statutes in other states indicates that only the portion of the will actually in the handwriting of the testator is to be considered. All other language is simply to be disregarded. Watkins v. Boykin, 536 S.W.2d 400 (Tex. Civ.App.1976); Succession of Burke, 365 So.2d 858 (La.App.1978); Matter of Estate of Johnson, 129 Ariz. 307, 630 P.2d 1039 (1981). The important determination is whether "the handwritten portion clearly express[es] a testamentary intent." Matter of Estate of Johnson, supra at 309, 630 P.2d at 1041. See, also, Estate of Christian, 60 Cal.App.3d 975, 131 Cal.Rptr. 841 (1976).
The handwritten portion of the document reads:
"Nebraska
Pierce
Ren J Kroupa *511 For helping me and taking care of me Frank Kroupa Jr. and Bobby Cummings w.r.o.s. the court who the courts decides Pierce Pierce Nebraska 29 Jan 79
Witness is chief of police Gordon Halbmayer [sic] who i gave this to keep safe for me.
Ren J Kroupa."
Based on this language alone, it is doubtful that the requisite testamentary intent was demonstrated and that all material portions of a will were present.
Resolving all reasonable doubts in plaintiff's favor, the record fails to establish any false representation. The defendant's statement, while not complete or thorough, did in fact reflect the general state of the law. The judgment of the district court was correct and is affirmed.
AFFIRMED.
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746 F.Supp. 1563 (1990)
In re SOUTHEASTERN EQUIPMENT COMPANY SEARCH WARRANT.
No. 89:M0037.
United States District Court, S.D. Georgia, Augusta Division.
September 10, 1990.
*1564 *1565 *1566 Richard E. Allen, Augusta, Ga., for SECO.
Michael Faulkner, Asst. U.S. Atty., Augusta, Ga., for the U.S.
*1567 ORDER
ALAIMO, District Judge.
Southeastern Equipment Company ("SECO") seeks the return of an address book taken pursuant to a March 16, 1989, search of its offices and of notes taken by one of the federal agents, Department of Defense Investigator Messersmith, who participated in that particular search. The motion is presently before the Court on the United States' appeal and SECO's cross-appeal of the magistrate's December 20, 1989, Order requiring the return of the address book to SECO and placing the notes under seal until further determination is made on appeal. For the reasons set forth below, this Court REVERSES and VACATES that Order.
FACTS
On March 16, 1989, the offices of Southeastern Equipment Company, an international company that deals in, among other things, the trade of certain military truck parts, the shipment of which was the focus of the underlying search, were searched pursuant to a validly issued search warrant.[1] Apparently, SECO, its officers, employees and others have been targeted by a grand jury investigation for violations of the Federal Mail and Wire Fraud Statutes and 50 U.S.C.App. § 2410 (Falsification of Customs Documents). This investigation led to the information serving as the basis of the search in question; namely, that certain military truck parts were being smuggled out of the country to the Philippines in containers with incomplete or improper documentation. Three specific transactions have been identified as improperly documented, consisting of shipments from SECO to four customers: Anco Merchandising, Hi-King Motor Parts, Barcelon Automotive Parts and Global Trading. Moreover, all three shipments in question involve the same salesman at SECO.
On the day of the search, some 16 federal agents, consisting primarily of federal Customs officials, entered the premises of SECO and within a time span of approximately 11 hours perused all of the documents in SECO's offices and finally seized about 20 to 27 boxes filled with documentation believed to relate to the three transactions in question. During a disputed four hours of the search, two Department of Defense agents (Defense Criminal Investigators) searched the private office of an employee named Rick Huntington, a salesman who had never dealt with any of the foreign companies suspected in the illegal transactions but who was involved in the export of military parts. One of the Department of Defense ("DOD") agents, Agent Messersmith, took down about two pocket-sized pages of notations concerning the information viewed in the documents found in his office. Because none of the notations has anything to do with the four companies involved in the transactions subject to the search, SECO sought the return of the "information" seized in the form of the notes.
In addition to the "seizure" of the notes, the agents also seized a telephone and address book from the office of President John Smith, several business cards from Philippine companies and other documentation relating to subsidiaries of both SECO and the other trading companies named in the warrant. The only materials under appeal presently are the notes taken from the documents scrutinized in Rick Huntington's office and the address book seized from John Smith's office.
The question as to the authority of the agents to seize documents relating to the subsidiaries of all companies named in the *1568 warrant has been answered by a previous Order made pursuant to SECO's initial motion for the return of its property. After the search of its premises, SECO filed a motion under Fed.R.Crim.P. 41(e), contending that both the search and the search warrant were too broad in that the items to be seized were not particularly described, thereby making the description broader than that allotted on the basis of the probable cause stated in the affidavit and that the overall execution of the warrant resulted in a general search. After an April 27, 1989, hearing on the motion, the magistrate, in his Report and Recommendation dated June 14, 1989, found, first, that the items were described with sufficient particularity as required by law and, second, that the removal of documents within the eleven categories listed in the warrant was not unreasonable, since a search may be as extensive as reasonably required to locate the items described in the warrant. The magistrate concluded that indeed this search was reasonable even though every nook and cranny may have been searched in the effort to discover items authorized to be seized under the warrant, since such detail was reasonably required under the totality of the circumstances.
SECO timely objected to the determinations made by the magistrate and the objections were subsequently examined by the district court de novo. The court considered the magistrate's Report and Recommendation, apparently agreeing with the magistrate except to the extent that some of the materials taken were related to subsidiaries of SECO. The court found that the search was executed in an overly broad fashion, since the proper scope of the warrant was limited to "records of transactions" occurring between a specified time frame and between SECO and the four named trading companies Anco Merchandising, Hi-King Motor Parts, Global Trading and Barcelon Automotive Parts. The court went on to say that the warrant further authorized the seizure of records of transactions relating to SECO and any subsidiary of the four trading companies listed in the warrant occurring during the same specified time frame, but did not authorize searches of the records of any subsidiaries of SECO.
Based on its conclusions, the court, on July 28, 1989, ordered the suppression of all materials seized by the Government during its search of SECO's offices that fell outside the proper scope of the warrant as outlined by the court. The court further ordered the return of those materials to SECO, an accounting to SECO of all items seized during the search and the provision to SECO of photocopies of all seized materials not required to be returned. The case was then remanded to the magistrate to conduct any further proceedings necessary for the fulfillment of the Order.
On the same day of the Order of July 28, 1989, the Government moved for reconsideration, contending that the search warrant did in fact cover records of subsidiaries of SECO and expressly did so in paragraph a. of the warrant. The court disagreed and, in its Order of August 9, 1989, held that its interpretation of paragraph a. of the warrant did not include subsidiaries of SECO.
As required by the Order of July 28, 1989, the Government returned all documents that it believed to be covered by the Order, in addition to the requisite accounting of items taken. Because the Government failed to return the notes made during the search of Rick Huntington's office and the address book found in John Smith's office, two items that SECO believes is covered by the Order, SECO, on October 18, 1989, filed a motion to compel the Government to comply with the court's Order and return both the address book and the notes. SECO contended that the Order limited the entire scope of the warrant to "records of transactions" between SECO and the four trading companies and, as such, the address book does not constitute a "record of transactions" and should therefore be returned. As far as the notes are concerned, SECO contended that they were illegally seized because they are completely irrelevant to the transactions forming the basis of the warrant and because the Government has failed to fulfill the requirements of any exception allowing for the warrantless seizure of items. The *1569 Government, on the other hand, contended that the Order does not limit the entire scope of the warrant to "records of transactions" but, instead, merely resolves the question of the applicability of the warrant to subsidiaries of SECO. Since address books were specifically named in the warrant, the Government contended that the seizure of John Smith's address book was allowed. Moreover, although the Government admitted that the notes are irrelevant to the issues presented under the warrant, it contended that the notes, if they constituted a seizure at all, were properly obtained pursuant to the plain-view doctrine.
After a hearing during which the magistrate heard arguments concerning both SECO's and the Government's contentions, the magistrate, on December 20, 1989, ordered the return of the address book to SECO. The magistrate found that, even though the warrant did specifically list address books as seizable items and that the July 28 Order did not limit the extent of the warrant beyond its applicability to SECO's subsidiaries, the address book should still be returned to SECO because the fact that the book contains numerous irrelevant entries in addition to references made to the four companies in question made the retention of the book prejudicial and therefore unreasonable. With respect to the notes, the magistrate ordered that they be placed under seal and given to neither party. He based his determination on the conclusion that the notes were a seizure of information that was not discovered in plain view and, as such, should not be kept by the Government. However, since a grand jury investigation is pending, the magistrate felt that the return of the notes would unduly thwart any further investigation and, finding no other alternative, placed the notes under seal in the record.
It is this Order by the magistrate that is now being appealed de novo before this Court. As no indictment has yet been issued, the Government contends that both the address book and the notes are necessary factors that must be made available for the grand jury investigation. SECO, on the other hand, contends that the address book is needed for the continuance of its business practices and the notes are needed so that it can see to what extent, if any, the Government's action has wrought harm. Otherwise, the contentions made by each party are about the same as those made to the magistrate.
DISCUSSION
The primary question before the Court is whether the address book and/or the notes should properly be returned to SECO. Before that question can be answered, however, some preliminary matters must first be considered. The Court must first determine whether the issue of the return of this property should even be reached, given the existence of an ongoing grand jury investigation. Then, assuming a Rule 41(e) motion or, for that matter, a motion to compel compliance with the grant of such a motion can be considered, the Court must decide whether the address book falls within the purview of the search warrant and whether the notations taken of information found within irrelevant documents constitutes a valid warrantless search under the plain-view doctrine. Finally, as requested by SECO, the Court must determine whether the Government should be denied further access to the ex parte proceedings. Since the granting of such proceedings are usually made with discretion on a case-by-case basis, the Court finds that such an overall grant or denial of access to the use of such proceedings would be beyond its power. Moreover, since the record is more than satisfactory with respect to the issues before this Court, it sees no need to entertain another hearing on the matter, ex parte or otherwise.
I. The Grand Jury Investigation
On January 8, 1974, the Supreme Court decided the landmark case United States v. Calandra, 414 U.S. 338, 94 S.Ct. 613, 38 L.Ed.2d 561 (1974), a decision that is often recognized as the beginning of the demise of the exclusionary rule. Under the facts of that case, Calandra, a witness subpoenaed by a federal grand jury, was asked questions regarding evidence that had been seized by Government agents pursuant to a search of his place of business. Although the search was executed under a warrant validly issued in connection with an extensive *1570 investigation of suspected illegal-gambling operations, no such evidence was found. Instead, a discovery was made of evidence demonstrating a suspected loan-sharking enterprise, and it was this evidence that was brought before the grand jury. Calandra refused to testify based on his Fifth Amendment privilege against self-incrimination. The Government requested a grant of immunity for Calandra, but Calandra instead requested and received a postponement of the hearing on immunity so that he could move for the suppression of the seized evidence.
Calandra moved under Fed.R.Crim.P. 41(e) for the suppression and return of the evidence seized, alleging an illegal search and seizure. The district court ordered the return and suppression of the evidence and subsequently held that Calandra was exempt from answering any questions before the grand jury based on that evidence. The Court of Appeals for the Sixth Circuit affirmed, holding that the district court properly entertained the suppression motion and properly found that the search and seizure were unlawful and that the exclusionary rule may be invoked to bar questioning on the illegally seized evidence.
The Supreme Court reversed the Court of Appeals, holding that a grand jury witness could not refuse to testify on the basis of an illegal search and seizure, because the exclusionary rule is not applicable to grand jury proceedings. Rationalizing that the Fourth Amendment exclusionary rule is nothing more than a judicially-created remedy designed to safeguard Fourth Amendment rights by deterring unlawful police misconduct, rather than a personal constitutional right of the aggrieved party, the Court refused to extend the exclusionary rule to grand jury proceedings and based its decision on the unique province of the grand jury. The Court remarked that the extension of the exclusionary rule to grand jury proceedings would unduly interfere with the effective and expeditious discharge of the grand jury's duties duties which have historically been unrestrained by the technical, procedural and evidentiary rules governing the conduct of criminal trials. In order to insure the adequate discharge of the grand jury's responsibilities and take into account the best interests of society, it is necessary to keep the grand jury's investigative powers broad, and thereby allow for a thorough and extensive investigation which can include all types of knowledge, from tips and rumors to the personal knowledge of the grand jurors and even to illegally seized evidence proffered by the Government. Id. 414 U.S. at 342-53, 94 S.Ct. at 617-22, 38 L.Ed.2d at 568-74.
In addition to the grand jury's need to be able to consider all the available evidence, the Court also focused on the minimal effect application of the exclusionary rule to grand jury proceedings would have on the deterrence of future police misconduct, something which is considered to be the prime purpose underlying the exclusionary rule. Rather than applying the rule in an overly broad manner, the Court noted that the use of the rule has always been restricted to situations where its remedial goals will have the most effect. Thus, the use of the rule has been limited to occasions where the Government has sought to use the evidence to incriminate the victim of the unlawful search, such as where a criminal sanction is likely to be imposed on the victim. The Court weighed the potential injury to the historic role and functions of the grand jury against the potential benefits of the rule as applied in the grand jury context and found that, not only would suppression hearings delay and disrupt grand jury proceedings and require extended litigation of tangentially related issues, but also any incremental deterrence which might occur through the use of the rule would be speculative at best since only investigations by the grand jury would be deterred, given the application of the rule during the actual criminal trial. Id. 414 U.S. at 351, 94 S.Ct. at 621, 38 L.Ed.2d at 573.
The Government in the case at bar has argued that the Calandra ruling applies equally as well here. It is gravely mistaken, however, in its interpretation of the Supreme Court case. Although the Court in Calandra remarked that Rule 41(e) is no broader than the exclusionary rule and therefore does not constitute a statutory expansion of the exclusionary rule, Calandra, *1571 414 U.S. at 348 n. 6, 94 S.Ct. at 620 n. 6, that language should not be considered out of context. The Supreme Court only addressed the issue of the application of the exclusionary rule when a grand jury witness sought to invoke it during questioning. On this basis, the Court held that a witness could not refuse to answer questions on the ground that the questions arose from information contained in illegally seized items. Thus, the Court only dealt with the question of suppression and, even though the case was brought under a Rule 41(e) motion, the Court did not address whether the illegally seized evidence could be returned when a grand jury proceeding was underway. That issue was not before the Court. The Government, when seeking review of the Court of Appeals' decision, did not challenge either the appellate court's finding that the district court properly found the search of Calandra's business and seizure of his property to be illegal or the district court's order directing the return of the illegally seized property. Calandra, 414 U.S. at 342 n. 2, 94 S.Ct. at 617 n. 2.[2]
Moreover, although the broad language in Calandra seems to require the delay of any action that may impede the progress of any grand jury proceeding through unnecessary mini-trials and preliminary showings, case law after Calandra has undoubtedly limited the Court's ruling to suppression hearings and not motions that are merely for the return of property. In re Warrantless Seizure, Barry Bernard Smith, 888 F.2d 167 (D.C.Cir.1989). Rule 41(e) was amended April 25, 1989,[3] to reflect this change in the law. Under the Rule before amendment, the return of property was only permitted in the event of an illegal search and seizure; and whenever property was ordered returned, the Rule required automatic suppression.[4] Now, the Rule precludes suppression as a de facto result of returning property, providing solely for the return of property when the motion is made pre-indictment, subject to the imposition of any reasonable conditions the Court feels are needed to protect the subsequent use of or access to the property.[5] This change has had the effect of *1572 separating the illegality of a search for the purposes of Rule 41(e) from the scope of the exclusionary rule, see Blinder, Robinson & Co. v. United States, 897 F.2d 1549 (10th Cir.1990), thereby allowing for the return of illegally seized property while at the same time reserving determinations respecting the scope of the exclusionary rule for judicial decisions. Notes of Advisory Committee on Rules, Fed.R.Crim.P. 41(e) (1990). Thus, with respect to the case at bar, it is evident that SECO may seek the return of its property prior to indictment, although the same may still be used in any grand jury proceeding.
II. Rule 41(e)[6]
The Government was correct, however, when it referred to the present proceeding as an equitable one. A motion made under Rule 41(e), regardless of the amendment made last year, has always been treated as one invoking the equitable jurisdiction of the Court. The Eleventh Circuit in particular has assumed jurisdiction over such motions, either in the form of requests under Rule 41(e) or simply through the Court's own inherent jurisdiction.[7] The basis for exercising this jurisdiction was first set out in Hunsucker v. Phinney, 497 F.2d 29 (5th Cir.1974), cert. denied, 420 U.S. 927, 95 S.Ct. 1124, 43 L.Ed.2d 397 (1975), and expounded on a little later in Richey v. Smith, 515 F.2d 1239 (5th Cir.1975). These cases interpreted the Court's jurisdiction as one deriving from the Court's supervisory power over its officers. Although Hunsucker and Phinney established jurisdiction over attorneys in general and IRS agents more specifically, it is evident that the Court's power extends to any other officer of the Court who attempts to retain information sought to be returned by its rightful owner. However, even where officers of the Court are involved, thereby making equitable jurisdiction exist, it does not necessarily follow that equitable jurisdiction should be exercised. Such jurisdiction is still within the discretion of the Court, to be exercised only with "caution and restraint." Hunsucker, 497 F.2d at 29. Equitable jurisdiction is deemed to be "extraordinary" and, thus, should not be exercised in every situation as to make such jurisdiction "ordinary." This is especially so at the pre-indictment stage, where it is necessary to consider what interruption, if any, such an exercise of jurisdiction would play on any ongoing investigations and proceedings.
In Hunsucker and Richey, the Fifth Circuit Court of Appeals listed a number of considerations for the district court to consider, in addition to the general principles of equity, when determining whether to exercise this equitable jurisdiction. First and foremost, the Court should consider whether the Government, in seizing the plaintiff's property, exercised a callous disregard for the constitutional rights of the plaintiff. In addition, the Court should consider whether the plaintiff has an individual interest in and need for the return of his property; whether the plaintiff will be irreparably injured by being denied the return of his property; and, whether the plaintiff has an adequate remedy at law for the redress of his grievance. The possibility of an indictment, among other things, *1573 was considered to constitute an irreparable injury in both Hunsucker and Richey because of the probable stigmatic effect. Recent case law in other circuits, however, has discarded this reasoning, focusing instead on the actual effect the particular indictment would have. Such cases have theorized that an indictment alone would be an ordinary injury everyone has the chance of suffering, rather than an extraordinary injury requiring equitable relief. Blinder, 897 F.2d at 1549; In re the Matter of the Search of Kitty's East, 905 F.2d 1367 (10th Cir.1990). Moreover, due to the recent amendment, some jurisdictions have also eliminated the "callous disregard" requirement. Under the new form of the Rule, an illegal search and seizure, although probably equitably mandated, is no longer the sole basis for the motion. Rather, a movant need only allege a "deprivation of property" by the Government to invoke the application of the Rule. Fed.R.Crim.P. 41(e) (1990); Kitty's East, 905 F.2d at 1371.
Regardless of the specific equities considered, it is evident that some consideration must be given to them before jurisdiction is appropriate. Because the issue of the return of SECO's property is before this Court under SECO's motion to compel compliance with the July 28, 1989, Order requiring the return of some materials, this Court is circumscribed by the determination of jurisdiction made in that Order. It is clear that the district court's initial jurisdiction over the original Rule 41(e) motion continues to flow to this present proceeding, United States v. Chapman, 559 F.2d 402 (5th Cir.1977), and accordingly, this Court will proceed with the question of whether the materials in question should be returned.
III. The Address Book
SECO contends that the address book of its President, John Smith, is not a "record of transactions" as interpreted in the July 28 Order and should therefore be returned. The Court disagrees not only with the movant's contention that the address book should be returned but, more importantly, disagrees with the company's interpretation of that ruling. In that Order, although the court did find that the warrant was executed in an overly broad fashion, the statement was qualified by an analysis of what the warrant did in fact provide. The court determined the proper scope of the warrant to be limited to records of transactions occurring between SECO and the four trading companies named in the warrant, during the time frame of December 1987 to August 1988. After this initial statement, the court expressly found that the warrant did not cover any records of SECO's subsidiaries, but only allowed the search and seizure of documents relating to transactions between SECO and any of the four named companies' subsidiaries. As the warrant expressly provides for the seizure of address books in paragraph a., it is obvious that the court only sought to clarify which companies and subsidiaries thereof were covered by the warrant during the specified time period. First, the court did not say that the warrant itself was overbroad, but only that the execution of it was. Thus, there was no reason to further limit what the warrant could include. Second, because the Order only qualified the warrant as to materials taken relating to subsidiaries of SECO, a reasonable interpretation of the Order, taken in conjunction with the statement regarding the overbroad execution, leads this Court to conclude that the Order was merely attempting to relieve the overbreadth effect by requiring the return of the documents concerning the subsidiaries of SECO. Finally, the Order of August 9, 1989, only encompasses when the subsidiaries of SECO were included in the warrant for purposes of the search. This further supports this Court's finding that the July 28 Order did no more than interpret the language of the warrant as a whole to exclude SECO's subsidiaries from being targets under the warrant.
Yet, even if the language of the July 28 Order could be inferred to be a limitation on the breadth of the warrant to include only "records of transactions," it would be unreasonable to assume that the court would completely disregard what was detailed in the warrant without any mention of the overbreadth of the warrant itself. First, the district court is obliged to give *1574 deference to the initial determination of probable cause made by the magistrate. Illinois v. Gates, 462 U.S. 213, 103 S.Ct. 2317, 76 L.Ed.2d 527 (1981). Since any narrow interpretation of the warrant would, in effect, alter the probable cause established to be sufficient by the magistrate, at least some reference as to why no deference was given should have been included in the Order. Second, it is more likely that, if the court was intending to interpret the warrant, the words "records of transactions" were simply meant to describe a catch-phrase that included all of the items listed explicitly in the warrant. Thus, under either interpretation of the July 28 Order, it is clear to this Court that the address book is an included item and thus was allowed to be seized.
The question of the Government's retention of the address book, however, is altogether different. Under the current form of Rule 41(e), the fact that the property was lawfully taken will no longer prevent the return of the property. Before the 1989 amendment, Rule 41(e) permitted persons to seek the return of their property if they were aggrieved by an unlawful search and seizure. If the Court chose to follow that old Rule, then it would be obligated to deny the return of the address book. However, since it would be just and reasonable to follow the amended version of the Rule under the circumstances, the Court is obligated to determine whether SECO should benefit from the return of the address book simply because it is aggrieved by the Government's continued possession of it.
Although the Rule fails to provide a standard for when property should be returned to a person aggrieved either by an unlawful seizure or by deprivation of the property, the Supreme Court has established that reasonableness under all of the circumstances is the test to be used. United States v. Place, 462 U.S. 696, 701, 103 S.Ct. 2637, 2641, 77 L.Ed.2d 110 (1983). Thus, in order to prevail, SECO must demonstrate that retention of the address book by the Government is unreasonable. Generally, however, if the Government has a need for the property in an investigation or prosecution, its retention of the property is usually reasonable. But, if the Government's legitimate interests can be satisfied even if the property is returned, continued retention of the property can become unreasonable. Committee Note to 1989 Amendment at 30, 124 F.R.D. at 428. This reasonableness approach, along with the deletion of the prior language requiring automatic suppression, evidences the Rule's attempt to avoid a hardcore all-or-nothing approach whereby the Government must either return everything, including copies, without use at subsequent proceedings or keep everything despite any hardship to the owner. The amended Rule takes into account the fact that reasonable accommodations can protect both the Government's interests and the property owner's rights. Thus, the Rule allows room for the return of documents and records that are relevant to ongoing or contemplated investigations and prosecutions where the Government can preserve a copy for future use, although in some circumstances equitable considerations may prevent any retention on the part of the Government, such as where an illegal search and seizure is involved. Id.
In the present situation, the court, in its July 28 Order, required the copying of all items lawfully seized and ordered those copies to be given to SECO. Moreover, with respect to the address book in particular, the Government has already offered to make copies upon request by SECO. With those copies, SECO could easily carry on its business. SECO alleges no other grievance regarding the Government's retention of the address book other than its inability to conduct business in general. Reason dictates, therefore, that the return of the original address book is not necessary. See Kitty's East, 905 F.2d at 1375 n. 8 (Government complied with company's request for copies of documents, so court did not order return). Despite the magistrate's belief that the Government's retention of the book would be unreasonable in light of the irrelevant entries and the redundancy of the information that was relevant, this Court finds that the question of prejudice or redundancy is a matter best left for trial if or when suppression is *1575 sought. The purpose behind Rule 41(e) and other restrictions on searches and seizures is to effectuate the Fourth Amendment by protecting against official invasions of privacy and security of property, and not exclude or otherwise dispose of evidence simply because it is deemed inherently unreliable or prejudicial. Jones v. United States, 362 U.S. 257, 80 S.Ct. 725, 4 L.Ed.2d 697 (1960), overruled on other grounds; United States v. Salvucci, 448 U.S. 83, 100 S.Ct. 2547, 65 L.Ed.2d 619 (1980). Since SECO will have an ample opportunity to litigate the prejudicial or cumulative effect of the address book if and when it is being sought to be introduced at trial, there is no need at this stage to consider the prejudice to SECO except as related to the reasonableness inquiry. Since the address book, specifically named in the warrant, contains references to the target companies and is necessary to the Government's investigation, it should presumptively be retained by the Government. The only effect such retention would have on SECO would be the necessity of the book in the company's everyday business. The availability of copies alleviates the company's business need for the book, and any other prejudice that may result from the use of unrelated entries has not been specified. Without such specification, the Court sees no need to order the return of the original, notwithstanding any copies made.
IV. The Notes
Since all parties agree that the notations made of the documents found in Rick Huntington's office were not covered by the warrant and were completely unrelated to the transactions in question, this Court will only address the question of the return of those notes under Rule 41(e) as amended. SECO's primary argument is that the seizure of the notes was illegal and, as such, the notes should be returned to the company not only to prevent the Government's unlawful use of them, but also to insure disclosure of what information has been obtained as fruits of that illegal seizure. Even though Rule 41(e) no longer requires illegality before a return is ordered, it is still an important consideration as far as determining whether the Government's retention of the notes would be reasonable.
To determine whether the seizure of the notes was illegal, as alleged by SECO, the Court must first determine whether taking the notes did in fact constitute a seizure. The Government attempts to deny the existence of a seizure by arguing that none of the documents from which the notes were recorded was seized but that, instead, mental impressions were made; therefore, the notes do not "belong" to SECO. The Government relies on the ongoing grand jury proceeding as a basis for its argument, distinguishing United States v. Gray, 484 F.2d 352 (6th Cir.1973), cert. denied, 414 U.S. 1158, 94 S.Ct. 916, 39 L.Ed.2d 110 (1974), by claiming that Gray dealt only with admissibility at trial and not disclosure during a grand jury investigation. What the Government fails to recognize, however, is the fact that the question of whether a seizure has occurred is one that can be answered irrespective of the stage of the proceedings. Whether a seizure has occurred has nothing to do with the ongoing grand jury investigation, and the fact of an investigation will not answer the question of whether the taking of the notes was a seizure. Rather, the question of whether a seizure has taken place must be answered by general search and seizure law. Cases such as Gray have clearly determined that the taking of notes does constitute a seizure, for it is the information itself that is seized. See LeClair v. Hart, 800 F.2d 692 (7th Cir.1986); Sovereign News Co. v. United States, 690 F.2d 569 (6th Cir.1982), cert. denied, 464 U.S. 814, 104 S.Ct. 69, 78 L.Ed.2d 83 (1983).
In each of the above cases, the respective courts found that the note-taking of observed information constituted a seizure. In Gray, police officers involved in a search for intoxicating liquors discovered some rifles while on the defendant's premises. They copied down the serial numbers of those rifles and later ran them through the computer of the National Crime Information Center, whereupon they discovered the rifles were stolen. Although the Government argued that there *1576 was no seizure because the rifles were not taken off the premises, the Court clearly found the copying down of the serial numbers to be a seizure. In fact, the seizure was considered to be that of the information itself the serial numbers. Gray, 484 F.2d at 356.
Similarly, in Sovereign News, the court considered the officers' note-taking of titles of films and magazines, in addition to other business records, to be a "seizure" within the scope of the Fourth Amendment. Finally, in LeClair, under facts very similar to those in the case at bar, IRS agents searched financial documents found on the plaintiff's premises, making oral dictation into a tape recorder and hand-written notes of their contents. The agents failed to remove the documents from the premises, but the court nevertheless found that the physical removal of the documents was not a necessary requirement for the tape recording and notes to constitute a "seizure" under the Fourth Amendment. LeClair, 800 F.2d at 695. These cases, among other analogous ones, make it clear that the Fourth Amendment embraces more than just the forced physical removal of tangible objects. Rather, the Fourth Amendment's purview encompasses the seizure of intangible items such as: the information contained in the financial documents which the IRS agents in LeClair copied; the note-taking of the titles of films and magazines in Sovereign News, the copying down of serial numbers from rifles in Gray; and even the information contained in the documents that DOD Agent Messersmith copied in the case at bar. Moreover, the method of copying chosen by the Government officials is unimportant. As the LeClair Court pointed out, it is the information itself, not the paper and ink or tape recorder or other copying utensil, that is actually seized. LeClair, 800 F.2d at 696 n. 5.
Yet, even if the notes in question are a "seizure" of information as described above, unless the notes were unreasonably taken, they do not amount to an illegal seizure. For example, in Gray, there was no nexus between the rifles whose serial numbers were copied and the crimes of selling or possessing intoxicating liquor without a license, evidence of which was the focus of the search warrant. Moreover, the officers could also not proceed under any exception to warrantless searches such as the plain-view doctrine, since the officers had no knowledge that the rifles were evidence of any other crime. In Sovereign News, on the other hand, the court did find a nexus between the information seized by the officers' notation of titles to obscene films and magazines and the focus of the search documents reflecting the importation, receipt and shipment of listed obscene material in interstate commerce by the U.S. Postal Service. Although the specific titles noted were not among the ones listed in the warrant, the court validated the seizure under the plain-view doctrine. The Government tries to do the same here.
The plain-view doctrine was first recognized in Coolidge v. New Hampshire, 403 U.S. 443, 91 S.Ct. 2022, 29 L.Ed.2d 564 (1971), as a method under which police officers can seize evidence when, acting pursuant to a valid search warrant, they discover objects not specifically named in the warrant but nevertheless of an incriminating character. The Court pointed out that, not only would it be inconvenient for an officer to have to ignore the evidence and obtain another warrant, but it is often necessary for an officer to seize immediately such evidence when ignoring it would place either the evidence or the officer in danger. As such, the doctrine is in reality a supplement to, or extension of, the original justification for the search, rather than a mere exception to the warrant requirement.
In order for the plain-view seizure to be considered a valid extension of the original justification for the search, three requirements must be met. First, the searching agents must lawfully be in the position where they viewed the disputed evidence, whether that original justification arose from a valid warrant or any of the other exceptions to the warrant requirement. Second, the searching agents must inadvertently discover the disputed evidence. Third, the incriminating nature of the disputed evidence must be immediately apparent on its face. Coolidge, 403 U.S. at *1577 464, 91 S.Ct. at 2037; United States v. Slocum, 708 F.2d 587 (11th Cir.1983). The basic contentions at issue here are whether the searching agent who took the notes was legally there and, if so, whether his discovery of the information contained in the notes was inadvertent. Whether the incriminating nature of information was immediately apparent to that agent does not appear to be in issue, although it is evident that the information that was noted while he perused the documents became immediately apparent to him as evidence pertinent to other investigations in which he was involved.
As far as the legality of Agent Messersmith's presence is concerned, SECO argues that his inclusion in the search was merely pretextual so that he could further his own separate investigation. SECO further contends that, if that is what occurred, Agent Messersmith was on the premises illegally, thereby making his seizure of the information contained in the notes illegal. The Government counters SECO's argument by contending that the Customs agents had a right to ask anyone they wished to accompany them on their search of SECO's offices. The Government is correct.
Generally, federal law allows a warrant to be executed by: (1) the person to whom the warrant is directed; (2) any officer authorized by law to execute a search warrant; or (3) some other person aiding a person under (1) or (2) who is present and acting in execution of the warrant. 18 U.S.C. § 3105; United States v. Martin, 600 F.2d 1175 (5th Cir.1979). Todd Petrie, as an agent of the U.S. Customs Service, was specifically authorized to execute and serve any warrant that is issued under the authority of the United States. 19 U.S.C. § 1589a. Since the warrant authorizing the search of SECO's premises was specifically directed to him, it is clear that he had the power to utilize the assistance of other officers in the execution of the warrant, provided he was present and participating in the warrant's execution. DOD Investigator Messersmith, therefore, had two avenues upon which he could validate his presence on SECO's premises, either as an agent authorized to execute search warrants or as an aid utilized by Agent Petrie in the execution of the warrant. In either situation, it is clear that Agent Petrie asked for Messersmith's participation in the search, and it is also clear that Petrie was available on the premises to answer any questions or solve any dilemmas that arose.
Despite any authority that Agent Messersmith might have had to participate in the execution of the warrant, SECO claims that Messersmith failed to remain within the parameters of the warrant and used Petrie's search as a subterfuge for his own independent investigation. SECO is correct in that, generally, when one is asked to participate in the execution of a warrant, he is obligated to remain within the warrant's parameters. But this is just a reflection of what is always required when a search takes place. If the Court merely limited itself to SECO's contentions, the valid exceptions to the warrant requirement would become obsolete. Of course, if in reality Messersmith's presence was a mere pretext, none of the exceptions would apply, since his presence would be illegal. The focus of whether subterfuge has been committed, to the extent that it invalidates the questionable search, depends on the officer's purpose for being present.
Case law has established that, where the search authorized by the warrant was carried out in good faith and was not designed as a pretense fabricated to mask the lack of probable cause to search for unrelated items found during the authorized search, the fact that those unrelated items were subsequently found will not invalidate the seizure of any of the items. United States v. Washington, 782 F.2d 807 (9th Cir.1986); United States v. Hare, 589 F.2d 1291 (6th Cir.1979); United States v. Lee, 581 F.2d 1173 (6th Cir.), cert. denied, 439 U.S. 1048, 99 S.Ct. 725, 58 L.Ed.2d 707 (1978); United States v. Sanchez, 509 F.2d 886 (6th Cir.1975). Hare and Sanchez, two Sixth Circuit cases, best demonstrate the difference between a valid discovery of unrelated items and a discovery made during a search that was merely pretextual. In *1578 Sanchez, a state law enforcement officer obtained a warrant pursuant to an informant's tip to search the defendant's premises for narcotics and, shortly thereafter, received a tip from the same informant that explosives were also present on those premises. He contacted a federal Alcohol, Tobacco and Firearms (ATF) agent, notified him of the presence of explosives and requested his assistance in executing the state warrant. The federal agent joined the search, but did not obtain a separate search warrant for the explosives, even though he had ample time to do so. During the search, explosives were found and seized by the federal agent, although no narcotics were discovered. The court found that two simultaneous but distinct searches had been conducted, one for narcotics that was pursuant to a valid warrant and another for explosives that was without a valid warrant but nevertheless made by an officer who had probable cause to believe that there were explosives on the premises. The court refused to validate the presence of the federal agent on the basis of the state officer's warrant for the very reason that the federal agent had both probable cause and the opportunity to obtain a separate search warrant for the unrelated property. Sanchez, 509 F.2d at 886. It is evident that, had the federal agent constrained himself to the search of narcotics and entered the premises without probable cause to believe the explosives were there, his presence would have been validated by the narcotics warrant even if he subsequently discovered the explosives during his good faith execution of the warrant.
Hare demonstrates the alternative proposition to Sanchez that is, the lawful participation of an officer who aids a search for one item and subsequently discovers another unrelated item without probable cause to believe that the unrelated item was there. In Hare, ATF agents obtained a warrant to search the defendant's premises for firearms. The agents were aware at the time of their investigation that DEA agents were also investigating the defendant for suspected narcotics violations. When they obtained the warrant, the ATF agents asked the DEA agents to accompany them to supply additional manpower and assist in identifying narcotics in the event any were found during the course of the search. The ATF agents did not have any probable cause to believe that any narcotics would be found, nor did the DEA agents. Moreover, during the search, the ATF agents did the actual searching, with the DEA agents standing guard. Guns and drugs, along with drug paraphernalia, were discovered during the course of the search. Although recognizing that there was a hint of subterfuge in that the DEA agents were using the ATF agents to gain access to a place which they could not search on their own, the court held that the DEA agents would not lose simply because they "did not earn" all their "points" themselves. Rather, the search on behalf of the ATF agents was held to be a serious, valid investigation of suspected gun-running, and there was no evidence that the warrant and search for weapons was a pretext under which the DEA could hide. Although the DEA and ATF agents expected that some drugs might be found, the fact was that the DEA agents did not have the probable cause necessary to obtain a warrant and thus could not have used the ATF agents' warrant with the intent to conduct their own independent investigation. Hare, 589 F.2d at 1296.
Cases since Sanchez and Hare have substantiated the Sixth Circuit's reasoning. In Washington, for example, the Ninth Circuit found that a local police search of the defendant's residence for evidence of narcotics sales was not a subterfuge for a search by FBI agents seeking evidence of prostitution. During the course of the search, the state agents seized evidence they believed would be of interest to the federal agents for their federal prostitution case. At some point during the search of the premises, the federal agents arrived, were given the evidence and within five minutes left to obtain their own warrant, leaving behind the state agents to guard the evidence. The court reasoned that, although evidence of prostitution was discovered, the state search was a bona fide search for evidence of narcotics and was not meant to pave the way for the *1579 federal agents to enter and search for evidence of prostitution. Washington, 782 F.2d at 816; see also United States v. Diecidue, 603 F.2d 535 (5th Cir.1979), cert. denied, Antone v. United States, 445 U.S. 946, 100 S.Ct. 1345, 63 L.Ed.2d 781 (1980), and cert. denied, Gispert v. United States, 445 U.S. 946, 100 S.Ct. 1345, 63 L.Ed.2d 781 (1980), and cert. denied, Miller v. United States, 446 U.S. 912, 100 S.Ct. 1842, 64 L.Ed.2d 266 (1980) (officers did not maneuver themselves into a position whereby they could obtain evidence without obtaining a search warrant for the object of their search). In addition, it should be noted that the question of whether one search was a pretext for another in each of these cases was inevitably tied to the question of inadvertence under the plain-view doctrine. Generally, when an officer is lawfully on the premises under 18 U.S.C. § 3105 and inadvertently discovers evidence that he had no probable cause to believe was there, that evidence is considered to be lawfully seized under the plain-view doctrine even though he had a suspicion, or even expected, that the evidence would be there.
Thus, it is evident under the facts before this Court that, not only was Messersmith lawfully on SECO's premises under 18 U.S.C. § 3105, his action of taking notes of information he believed to be relevant in other investigations does not indicate an attempt by him to use the plain-view doctrine and Petrie's warrant as a pretext for his own independent search in an effort to evade the warrant requirement. There is no evidence before this Court that Messersmith believed that the information he noted would be found on the premises. As discussed below, it is apparent that the information that was discovered was done so inadvertently. Moreover, the evidence does show that he acted in good faith in carrying out the terms of the warrant. In fact, it seems that he and Agent Petrie have been working together since April 1988 on the investigation of SECO, and their search together might even be seen as a cooperative venture, which is expressly authorized by statutory and case law. See 18 U.S.C. § 3105; Martin, 600 F.2d at 1175 (federal agents lawfully allowed to aid state agents in search for narcotics, although only state agents were authorized under state law to execute warrant). Even if Messersmith had a suspicion or expected the information unrelated to the search subject to appear, there is no evidence that he entered the premises for the purpose of discovering that material rather than for the purpose of aiding Petrie. Instead, the evidence shows that Messersmith only searched the office of Rick Huntington for a fraction of the total time of the search and that, during the search of the office, found materials relevant to transactions that were the subject of the search job cards with the names of Philippine companies on them. Thus, it is evident that he was carrying out the intent of the search while in the office of Rick Huntington. Additionally, the notes that he took in Huntington's office only represent a fraction of those taken during the course of the entire search. Since only the notes from Huntington's office are in dispute, the remainder seemingly valid, it is evident that during the remainder of his time spent at the search he fully complied with the intent of the warrant. The Court concludes, therefore, that Messersmith's presence on SECO's premises was valid and not a pretext for his own independent investigation.
In addition to lawfully being on the premises, for plain-view to apply, the officer must also have discovered the evidence inadvertently and it must have been immediately apparent to him that the items found in plain view were evidence of a crime. It has already been established that Messersmith apparently did not have probable cause to believe that the information he found in Huntington's office would be there. For inadvertence to apply, it is not necessary that the discovery be unanticipated or unexpected. Rather, the term "inadvertent" implies that the discovery be made unintentionally. Thus, if, in the course of a properly limited search, an officer comes across other incriminating evidence which he did not know he would find and therefore did not intend to seize, the discovery of the evidence is inadvertent. Moreover, the fact that the officer may have expected to find the evidence in a *1580 particular place does not make its discovery any less inadvertent. Hare, 589 F.2d at 1293-4; United States v. Bolts, 558 F.2d 316 (5th Cir.1977), cert. denied, Hicks v. United States, 434 U.S. 930, 98 S.Ct. 417, 54 L.Ed.2d 290 (1977), and cert. denied, Bolts v. United States, 439 U.S. 898, 99 S.Ct. 262, 58 L.Ed.2d 246 (1978) (fact that Government agents expected to find defendant's passport did not destroy inadvertence for the purposes of plain-view when they saw the passport on an open shelf during the arrest of the defendant at his home). This conclusion is based on the observation that officers often have some sort of expectation whether it is merely a hunch or more strongly a suspicion that evidence may be on the premises but nevertheless cannot lawfully obtain a warrant under the Fourth Amendment because expectations alone are insufficient. During the course of a search for which another legitimate purpose is authorized, therefore, where that hunch or suspicion is confirmed by actual observation, the officers are considered to be in the same position in which they would have been had they been completely surprised by the discovery. Since the officers did not have probable cause sufficient to obtain a warrant until they actually observed the evidence in connection with the otherwise justified search, the necessary exigent circumstances fully exist for plain-view to come into play. Hare, 589 F.2d at 1294.
Thus, under the facts before this Court, there is no reason for this Court to believe that Messersmith had probable cause sufficient to know that the information he discovered was going to be found in Huntington's office, nor is there evidence that he intended to search Huntington's office for that reason. He was searching Huntington's office as part of the overall search of the offices of SECO. This was not the only office Messersmith searched, and it is evident that this office was included in the overall search because Huntington was involved in the export end of the business. All such offices were searched in the belief that evidence pertaining to the transactions relevant in the warrant would be discovered. Moreover, although Messersmith's ongoing investigations may have given him a strong suspicion that evidence unrelated to the search at hand might be found, no mention is made in the record that he had probable cause to believe the evidence was there until he in fact discovered it. The fact that he may have had some suspicion as to the presence of the unrelated information no more lessens the existence of inadvertence than would total surprise.
Finally, in order for the notes to come fully within the plain-view doctrine, their relevance to a crime must have been immediately apparent to Messersmith when he came across the information. From the evidence presented at the ex parte hearing on December 15, 1989, this Court concludes that the information Messersmith noted while he perused the documents in search of information relevant under the warrant did become immediately apparent to him as important evidence for his other ongoing investigations. SECO does not dispute this. Instead, SECO makes a half-hearted contention that Messersmith's scrutiny of all the documents in Huntington's office took the subsequent seizure by note-taking out of plain-view. This Court has already established that Messersmith was properly on the premises and entitled to subject each document in the office to some degree of examination in order to ascertain whether a particular document fell within the warrant.[8] Moreover, there is no evidence that anything other than a brief perusal was made of the documents necessary to establish their relevance. Since Messersmith was allowed to examine each document until he discovered that the warrant was clearly inapplicable to the particular document, *1581 anything that he inadvertently discovered to have evidentiary value during the course of that examination falls under the plain-view doctrine. See Slocum, 708 F.2d at 587 (evidence discovered during the legal search of documents on defendant's premises fell under the plain-view doctrine as the agents were lawfully present, discovered the evidence inadvertently and reasonably believed that the evidence discovered from the documents was incriminating on their face); United States v. Heldt, 668 F.2d 1238 (D.C.Cir.), cert. denied, 456 U.S. 926, 102 S.Ct. 1971, 72 L.Ed.2d 440 (1982) (perusal of documents authorized under warrant must cease at the time the warrant's inapplicability to each document is clear).
However, the fact that the seizure of the notes was lawful[9] under the plain-view doctrine does not end the Court's discussion of whether the notes should be returned to SECO, since the deprivation of the property may be injurious even where the seizure is lawful. Given the equities in this situation, the Court does not find it unreasonable for the Government to retain possession of the notes. It is evident that they are important to ongoing grand jury proceedings and that the return of the information would be detrimental. SECO, on the other hand, still has the information on which the notes were taken and can continue to carry on its business. It seems that SECO's only basis for the return of the notes is so that it can see the extent to which those notes have aided any investigations. The target of a grand jury investigation generally has no right to know what evidence is being used against him nor, for that matter, does he even have a right to know whether he is in fact the target of the investigation.
Any disclosure of grand jury materials made by a court must be made pursuant to Fed.R.Crim.P. 6(e) and in accordance with the law interpreting that provision. The Supreme Court has justified such disclosures only when a particularized need for the requested disclosure is shown, and even then the access to the disclosed materials must be discrete and limited. United States v. Procter & Gamble Co., 356 U.S. 677, 78 S.Ct. 983, 2 L.Ed.2d 1077 (1958). The Eleventh Circuit has expounded on the particularized-need requirement by describing circumstances which, in any specific case, might demonstrate a particularized need. These circumstances include: (1) circumstances that have created certain difficulties peculiar to the specific case, which (2) could be alleviated by access to specific grand jury materials, without (3) doing disproportionate harm to the salutary purpose of secrecy embodied in the grand jury process. United States v. Liuzzo, 739 F.2d 541 (11th Cir.1984). SECO has demonstrated no such circumstances. Merely wishing to obtain information used in a grand jury investigation in order to see the extent of that use is not sufficient evidence of a particularized need. Therefore, the Court sees no reason to return the notes to SECO. Moreover, the Court sees no need to keep the notes under seal in the record, as ordered by the magistrate, where the Government has shown the importance of the notes in the present grand jury investigation of SECO.
CONCLUSION
Having considered all colorable claims on behalf of SECO and the United States, in addition to the magistrate's Order of December 20, 1989, this Court finds that the Government is entitled to retain both the address book and the notes in question at this stage of the proceedings. Because this Order is specifically limited to the return of the said property, it does not prevent SECO from seeking to suppress this *1582 evidence if it is later sought to be used at a trial. Accordingly, the Order of December 20, 1989, is hereby REVERSED and VACATED, and IT IS ORDERED that the Government may retain the address book and notes in question.
SO ORDERED.
NOTES
[1] The warrant was issued to federal Customs Agent Todd Petrie and any authorized agent of the United States based on the affidavit of Agent Petrie. The warrant specifically listed eleven categories of items that were potentially seizable. Among the items allowed to be seized, the warrant authorized in part the seizure of "all notebooks, address books, correspondence, telex messages, fax messages, memoranda and notes, telephone toll records, including any computerized data relating to the above documents regarding SECO and Anco Merchandising ...; Hi-King Motor Parts ...; Barcelon Automotive Parts ...; Global Trading ... and any related companies or subsidiaries thereof." Paragraph a. of the warrant. This appears to be the only relevant portion of the warrant under appeal and, as such, the Court's discussion will be limited to this section.
[2] In addition, the Court mentioned in another footnote the availability of the return of property which, although pertinent to this discussion, was left relatively unclear. The Court made a point of presenting other avenues of relief available to anyone who is unable to seek suppression under its ruling. Among the noted avenues of relief, the Court included the possibility for the return of the illegally seized property in addition to the exclusion of the property and its fruits from being used as evidence in a criminal trial. Calandra, 414 U.S. at 354 n. 10, 94 S.Ct. at 623 n. 10. From the Court's language in this footnote and the other things previously mentioned, it is apparent that the Court did not intend to prohibit the use of a Rule 41(e) motion to seek the return of illegally seized property during a grand jury proceeding.
[3] See 124 F.R.D. 397, 399 (1989). The amendments took effect on December 1, 1989, and "govern all proceedings in criminal cases thereafter commenced and, insofar as just and practicable, all proceedings in criminal cases then pending." Id. at 399. Because the Rule was amended primarily to conform to the practice in most districts and because the present motion does involve a proceeding, albeit a pre-indictment one, in a pending criminal case, it is more than appropriate to apply the amended Rule to the motion before this Court. The language of the Rule implicitly allows pre-indictment motions to be brought before the Court, and as the Rule is one under the Federal Rules of Criminal Procedure, it would defy the intent of the Supreme Court to say the new amendment did not apply to this proceeding. Moreover, since only a return of the property is sought and would most likely be the only remedy given due to the law established in Calandra, whether the old or new Rule is applied would not unreasonably alter the outcome.
[4] Prior to amendment, Rule 41(e) provided:
(e) Motion for Return of Property. A person aggrieved by an unlawful search and seizure may move the district court for the district in which the property was seized for the return of the property on the ground that such person is entitled to lawful possession of the property which was illegally seized. The judge shall receive evidence on any issue of fact necessary to the decision of the motion. If the motion is granted the property shall be restored and it shall not be admissible in evidence at any hearing or trial. If a motion for return of property is made or comes on for hearing in the district of trial after an indictment or information is filed, it shall be treated also as a motion to suppress under Rule 12.
Fed.R.Crim.P. 41(e) (1989).
[5] The Rule still provides that, if the motion is made post-indictment, it is to be treated as a motion to suppress and must therefore comply with the standards under Rule 12.
[6] Rule 41(e) now provides:
(e) Motion for Return of Property. A person aggrieved by an unlawful search and seizure or by the deprivation of property may move the district court for the district in which the property was seized for the return of the property on the ground that such person is entitled to lawful possession of the property. The court shall receive evidence on any issue of fact necessary to the decision of the motion. If the motion is granted, the property shall be returned to the movant, although reasonable conditions may be imposed to protect access and use of the property in subsequent proceedings. If a motion for return of property is made or comes on for hearing in the district of trial after an indictment or information is filed, it shall be treated also as a motion to suppress under Rule 12.
Fed.R.Crim.P. 41(e) (1990).
[7] As a matter of fact, Rule 41(e) is considered to be a "crystallization" of the principle of equity jurisdiction, Smith v. Katzenbach, 351 F.2d 810 (D.C.Cir.1965). As such, equity jurisdiction exists beyond the limits of Rule 41(e) to cover situations that had not been specifically covered by the Rule.
[8] In his Report and Recommendation of June 14, 1989, the magistrate stated that, following current case law, the search of SECO's premises was no more extensive than reasonably required to locate the items described in the warrant. He found that it was necessary for the Government to examine the documents in order to decipher what items were relevant to the underlying search, and subject to seizure, and what items were outside the scope of the warrant. Since the district court did not sustain any objection to this finding in its Order of July 28, and since this Court also does not disagree with that finding, the thoroughness of the SECO search is not in question.
[9] Even if the Court found the seizure of the notes to be illegal, it does not necessarily follow that they would be returned to SECO. Again, the equities of the situation would have to be weighed; and the Court doubts that, even if the seizure were illegal, it would return the notes. Given the pending grand jury investigation, it would most likely thwart the investigation to give the notes to SECO. It is firmly established that the party seeking return of illegally seized evidence should not be put in a better position than where he was before the seizure. The return of the notes would put SECO in such a position.
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148 F.2d 448 (1945)
UNITED STATES
v.
DES MOINES COUNTY, IOWA, et al.
No. 12962.
Circuit Court of Appeals, Eighth Circuit.
April 24, 1945.
Rehearing Denied May 23, 1945.
*449 Vernon L. Wilkinson, of Washington, D. C., Atty., Department of Justice (J. Edward Williams, Acting Head, Lands Division, Department of Justice, of Washington, D. C., Daniel F. Steck, Sp. Asst. to Atty. Gen., and Kelsey M. Mott, of Washington, D. C., Atty., Department of Justice, on the brief), for appellant.
J. A. Dailey, Jr., of Burlington, Iowa, and John Hale, Sp. Asst. Atty. Gen., of Iowa (B. C. Conn and J. C. Pryor, both of Burlington, on the brief), for appellees.
Before SANBORN, WOODROUGH, and RIDDICK, Circuit Judges.
SANBORN, Circuit Judge.
The question for decision is whether the United States, in condemning, for military purposes, public roads within the area of the Iowa Ordnance Plant, in Des Moines County, Iowa, is obliged to pay the appellees as just compensation (1) the value of the roads taken, or (2) the cost of providing necessary substitute roads, or (3) nominal damages.
The District Court, after the trial of the issue of just compensation or damages in this proceeding to condemn the roads, found as a fact: "That the full, fair, reasonable and actual value of the roads and highways * * * on the 1st day of March, 1941 [the date of taking], was the sum of One Hundred Seventy-five Thousand ($175,000) Dollars, which I find and award as just compensation for the taking of said roads and highways, with the bridges, culverts and improvements thereon." This award with interest resulted in a judgment for $208,687.50 against the United States. It has appealed.
The amount allowed the appellees by the District Court as just compensation for the taking of the roads in suit is not shown by the evidence to have any relation to any financial loss or out-of-pocket expense caused or which will be caused, by the taking. The amount apparently reflects the replacement value of reproduction cost of the roads taken, with interest added. If it is unnecessary to replace the roads or to provide substitutes for them, the appellees have suffered no money loss and have been relieved of the burden of maintaining the roads taken. If it is necessary for the appellees to provide substitute roads in order to readjust their system of highways, they are entitled to the cost of constructing the necessary substitute roads, whether that be more or less than the value of the roads taken. This cost will give to the appellees the actual money loss which will be occasioned by the condemnation, and is the proper measure of damages for the taking. United States v. Wheeler Township, 8 Cir., 66 F.2d 977, 984, 985; Jefferson County, Tenn. v. Tennessee Valley Authority, 6 Cir., 146 F.2d 564, 566, certiorari denied April 9, 1945, 323 U.S. ___, 65 S.Ct. 1016; Mayor and City Council of Baltimore v. United States, 1945, 4 Cir., 147 F.2d 786. In fairness to the trial judge, it should be said that the two cases last cited were decided after the entry of the judgment appealed from.
The United States contends that the appellees can in no event recover more than nominal damages, because the statutes of Iowa do not impose upon the appellees an enforceable duty to furnish substitute roads. We do not agree. Nothing can be gained by a discussion of the statutes of Iowa relating to roads. If the taking by the United States of the roads in suit necessitates the building or improvement of other roads, they will have to be built or improved by the appellees out of state funds unless the United States pays the expense. We have no doubt of the existence of the duty of the appellees to provide for a necessary readjustment of their road system. Whether the duty is express or implied or one which arises from necessity, we regard as of no legal consequence.
The appellees contend that the error complained of by the United States was *450 induced by it and may not be used in this Court as a ground for reversal. The error is too plain and vital to be ignored for procedural reasons where the public interest is involved. See Helvering v. Rubinstein, 8 Cir., 124 F.2d 969, 972, and cases cited.
The judgment appealed from is reversed. The case is remanded to the District Court with directions to take such further proceedings as are necessary in order to ascertain, and to award to the appellees (or to whichever of them is entitled thereto), the cost of providing the substitute roads, if any, which are needed to replace the roads taken by the United States in this proceeding.
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AFFIRM; and Opinion Filed January 28, 2015.
Court of Appeals
S In The
Fifth District of Texas at Dallas
No. 05-13-01567-CR
No. 05-13-01568-CR
CHARLES EUGENE PATTERSON, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 265th Judicial District Court
Dallas County, Texas
Trial Court Cause Nos. F10-31643-R and F10-62247-R
MEMORANDUM OPINION
Before Justices Lang, Brown, and Whitehill 1
Opinion by Justice Brown
Charles Eugene Patterson appeals two judgments revoking his community supervision.
In seven points of error, appellant contends the trial court abused its discretion in revoking his
community supervision. We affirm the trial court’s judgments.
Appellant was indicted for two offenses of failure to register as a sex offender. In
October 2012, appellant pleaded guilty to both offenses pursuant to plea bargain agreements.
The trial court found appellant guilty in each case and placed him on community supervision for
four years in accordance with the plea agreements.
1
The Honorable Kerry FitzGerald, Retired Justice, was a member of the panel at the time this case was submitted. Due to his retirement
from the Court on December 31, 2014, he did not participate in deciding this case. He was replaced on the panel by Justice Bill Whitehill. See
TEX. R. APP. P. 41.1(a).
In October 2013, the State moved to revoke appellant’s community supervision in each
case. In cause number F10-31643-R, the motion alleged that appellant violated conditions o and
q by failing to: complete community service hours as directed (condition o); participate in
counseling through an approved sex offender treatment provider within 45 days of referral
(condition q); and make an observable, deliberate, and diligent effort to comply with the
directions and instructions of the sex offender treatment provider during July 2013 through
September 20, 2013, resulting in unsuccessful discharge from treatment (also condition q). The
motion in cause number F10-62247-R alleged these same three violations and also alleged
appellant violated condition j by failing to pay community supervision fees.
At a hearing on the motions to revoke, appellant pleaded true to the State’s allegations
that he violated conditions j and o. Appellant pleaded not true to violating condition q.
Appellant’s signed written plea of true and stipulation of evidence was admitted into evidence.
Appellant’s probation officer and his sex offender treatment provider testified about the
difficulties they had working with appellant. Appellant’s wife testified on his behalf. The trial
court accepted appellant’s plea of true and found it was freely and voluntarily made. The court
found appellant violated the conditions set out in the State’s motions, granted the motions to
revoke, and assessed punishment at three years’ confinement in each case.
In seven points of error, appellant contends the trial court abused its discretion in
revoking his community supervision based on the three violations alleged in cause number F10-
31643-R and based on the four violations alleged in cause number F10-62247-R. He contends
his unsuccessful discharge from treatment and his failure to pay community supervision fees
were due to his inability to pay. Citing Bearden v. Georgia, 461 U.S. 660 (1983), appellant
maintains that, even when a defendant pleads true, only a willful failure to pay fees supports
revocation. He also contends his 45-day deadline for participating in counseling had been
–2–
extended and that he had begun community service hours and was not required to complete the
hours until the term of supervision ended.
We review an order revoking community supervision under an abuse of discretion
standard. Rickels v. State, 202 S.W.3d 759, 763 (Tex. Crim. App. 2006). A plea of true,
standing alone, is sufficient to support revocation of community supervision. See Cole v. State,
578 S.W.2d 127, 128 (Tex. Crim. App. [Panel Op.] 1979). Further, proof of any one violation is
sufficient to support revocation of community supervision. Lee v. State, 952 S.W.2d 894, 900
(Tex. App.—Dallas 1997, no pet.).
We need not reach appellant’s argument about his inability to pay the costs of sex
offender treatment or his community supervision fees. Appellant pleaded true to violating
condition o, which the State alleged he violated in both cases. That condition, regarding
community service hours, had nothing to do with appellant’s ability to pay. Appellant’s plea of
true to this violation, standing alone, is sufficient to support revocation. We therefore conclude
the trial court did not abuse its discretion in revoking appellant’s community supervision. We
overrule appellant’s points of error.
We affirm the trial court’s judgments.
/Ada Brown/
ADA BROWN
JUSTICE
Do Not Publish
TEX. R. APP. P. 47.
131567F.U05
–3–
S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
CHARLES EUGENE PATTERSON, On Appeal from the 265th Judicial District
Appellant Court, Dallas County, Texas
Trial Court Cause No. F10-31643-R.
No. 05-13-01567-CR V. Opinion delivered by Justice Brown. Justices
Lang and Whitehill participating.
THE STATE OF TEXAS, Appellee
Based on the Court’s opinion of this date, the judgment of the trial court is AFFIRMED.
Judgment entered this 28th day of January, 2015.
–4–
S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
CHARLES EUGENE PATTERSON, On Appeal from the 265th Judicial District
Appellant Court, Dallas County, Texas
Trial Court Cause No. F10-62247-R.
No. 05-13-01568-CR V. Opinion delivered by Justice Brown. Justices
Lang and Whitehill participating.
THE STATE OF TEXAS, Appellee
Based on the Court’s opinion of this date, the judgment of the trial court is AFFIRMED.
Judgment entered this 28th day of January, 2015.
–5–
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IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Derrick Williams, :
Petitioner :
:
v. : No. 1505 C.D. 2015
: Submitted: March 11, 2016
Pennsylvania Board of Probation :
and Parole, :
Respondent :
BEFORE: HONORABLE ROBERT SIMPSON, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE DAN PELLEGRINI, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY
SENIOR JUDGE PELLEGRINI FILED: March 30, 2016
Derrick Williams (Parolee) petitions pro se for review of the decision of
the Pennsylvania Board of Probation and Parole (Board) denying his request for
administrative relief from the Board’s order recalculating his maximum sentence
following his recommitment as a convicted parole violator and denying him credit for
the period at which he was at liberty on parole. We affirm.
I.
On June 1, 1989, Parolee was found guilty of two counts of aggravated
assault, one count of criminal conspiracy to commit aggravated assault, and one count
of possession of a controlled substance. His aggregated sentence ranged from 11
years and 10 months to 26 years of imprisonment, with a minimum release date of
March 25, 2001, and a maximum release date of May 25, 2015.
While serving his state sentence, Parolee was indicted by federal
authorities under the Racketeering and Influenced Corrupt Organization Act, 18
U.S.C. §§1961–1968. Count one of the federal indictment charged Parolee and 25
other individuals who were identified as members of a corrupt organization known as
the “Junior Black Mafia” with using violence and the threat of violence, including
aggravated assault, to maintain and expand control of the drug business in
Philadelphia. Though he served federal time on this charge, the record does not
contain his conviction or the terms of that sentence.
The Board constructively paroled Parolee from his original sentence on
March 13, 2002, and released him to a federal detainer sentence. On March 7, 2005,
Parolee was released from the federal sentence to active parole supervision with the
Board. On April 5, 2007, Parolee was arrested by the Philadelphia Police Department
for providing false identification during a traffic stop. The Board lodged its detainer
against Parolee on April 6, 2007. The following day, on April 7, 2007, Parolee was
returned to a state correctional facility. The new criminal charges were dismissed on
August 9, 2007, and Parolee was released back on active parole supervision on
August 16, 2007.
On August 2, 2011, Parolee was arrested on drug-related charges by the
Philadelphia Police Department and was charged with and detained by federal
authorities for violation of his federal probation. The federal criminal charges were
2
dismissed on January 12, 2012. However, due to Parolee’s violation of his federal
probation, his probation was revoked and he was recommitted into federal custody to
serve a period of 30 months of imprisonment. On June 11, 2012, while he was still in
federal custody, the Board lodged a detainer against Parolee for technically violating
his state parole given his drug charges. On October 6, 2013, Parolee was released
from federal custody and was placed into the Coleman Violator Center by the Board.
II.
By decision mailed on January 8, 2014, the Board recommitted Parolee
as a technical parole violator and sentenced him to serve six months. The Board
recalculated his maximum release date as September 22, 2016, and his automatic
reparole date as April 4, 2014. The Board then recalculated his maximum release
date as September 16, 2016, due to a change in sentence structure.1 In arriving at that
date, the Board determined that Parolee owed 1,078 days, or 2 years, 11 months, and
14 days of backtime. The Board also added 480 days to Parolee’s original maximum
release date of May 25, 2015, to account for the period he was confined in federal
custody from June 11, 2012, to October 4, 2013.
In February 2014, Parolee filed a pro se petition for administrative
review objecting to the recalculation of his maximum sentence date of September 16,
1
In January 2014, Parolee filed a pro se petition for administrative review, objecting to a
previously recalculated maximum release date of September 26, 2016. The Board responded,
explaining that before receiving his request, an error was discovered that changed his parole
violation maximum date to September 22, 2016. The Board added that a change in sentence
structure then changed his parole violation maximum date to September 16, 2016, and it dismissed
Parolee’s petition as moot.
3
2016, contending that his sentence was extended despite the fact that he was not
convicted of a crime. On April 4, 2014, the Board released Parolee on reparole from
his original state sentence. He was again arrested on June 12, 2014, for threatening a
police officer during a traffic stop. The charges were filed and bail was set, but
Parolee did not post it. That same day, the Board lodged its detainer against Parolee.
By decision mailed on August 28, 2014, the Board affirmed its
recalculation decision, explaining that when the Board lodged its detainer against
Parolee on June 11, 2012, he was unavailable for 480 days due to service of his
federal sentence, and that the Board has the authority to deny him credit for that time.
The Board further stated that adding the 480 days to his original maximum sentence
of May 25, 2015, yields a new maximum sentence date of September 16, 2016.
On October 17, 2014, Parolee was found guilty of terroristic threats with
the intent to terrorize another and sentenced to probation for a maximum period of 18
months. In February 2015, the Board conducted a revocation hearing.
By decision mailed on April 22, 2015, the Board recommitted Parolee as
a convicted parole violator, sentencing him to serve 12 months of backtime and
recalculating his parole maximum date to October 14, 2026. In recalculating the
maximum date, the Board credited him for 259 days of backtime, consisting of 127
days for the period he was incarcerated from April 6, 2007, to August 16, 2007, and
127 days for his incarceration from June 12, 2014, to October 17, 2014, to account
for the time he was incarcerated solely on the Board’s detainer. The Board did not
credit him for time spent at liberty on parole from April 4, 2014, to June 12, 2014,
4
and determined that he forfeited credit for the previous 3,743 days he was on parole
from his original sentence from March 11, 2002, to June 11, 2012.
Parolee filed seven pro se petitions for administrative review, objecting
to the Board’s recalculation of his parole violation maximum date of October 14,
2026. The Board subsequently denied Parolee’s petitions, reasoning that he did not
receive credit for the period he was at liberty on parole, including any prior time he
was on parole, and any time he was on parole from his state sentence but confined on
his federal charges.2 Further, the Board explained that given Parolee’s recommitment
2
In its denial of Parolee’s requests for administrative relief, the Board explained, in
pertinent part:
The Board paroled you from a state correctional institution on
April 4, 2014 with a max[imum] sentence date of September 16,
2016. This means you had a total of 896 days remaining on your
sentence at the time of parole. In light of your recommitment as a
convicted parole violator, the Board was authorized to recalculate
your sentence to reflect that you received no credit for the period you
were at liberty on parole. 61 Pa. C.S. §6138(a)(2). This includes any
prior time that you were on parole. Houser v. Pennsylvania Board of
Probation and Parole, 682 A.2d 1365 (Pa. [Cmwlth.] 1996)[, appeal
denied, 692 A.2d 568 (Pa. 1997)]. In this case, you were previously
on parole for 3743 days from March 13, 2002 to June 11, 2012.
Adding the 3743 days of prior parole liberty forfeited means you still
had 4639 days remaining on your sentence based on your
recommitment.
On June 12, 2014, the Board lodged its detainer against you.
On that same date, authorities arrested you for new criminal
offenses…. The record reflects that you did not post bail, nor do you
allege that you posted bail. On October 17, 2014, you were found
guilty of the new criminal charges, and the court sentenced you to a
term of probation that same date.
(Footnote continued on next page…)
5
as a convicted parole violator, it was authorized to recalculate his sentence without
providing him credit for the time spent pursuant to Section 6138(a)(2) of the Prisons
and Parole Code (Code), 61 Pa. C.S. §6138(a)(2). Accordingly, the Board affirmed
its recalculation decision and this appeal followed.
(continued…)
Based on these facts, the Board gave you 127 days of credit on
your original sentence for the period you were incarcerated from June
12, 2014 to October 17, 2014 because you were confined on the
Board detainer and there is no other sentence of imprisonment where
this time can be applied. Martin v. Pennsylvania Board of Probation
and Parole, 840 A.2d 299 (Pa. 2003). Additionally, the Board gave
you 132 days of credit on your original sentence for a prior period you
were incarcerated from April 6, 2007 to August 16, 2007, but not
recommitted. Subtracting this credit from the time you had remaining
left 4380 days remaining on your sentence. Also, because you only
received a sentence of probation for the new conviction, you became
available to commence service of your original sentence again on
October 17, 2014, when the court sentenced you on your new charges.
Adding 4380 days to that date yields a new maximum sentence date
of October 14, 2026.
Based on your subsequent conviction and recommitment as a
convicted parole violator, the Board had authority to deny you credit
for the period you were at liberty on parole. 61 Pa. C.S. §6138(a)(2).
This includes the period you were on parole from your [state]
sentence…but confined on your federal criminal charges.
Rosenberger v. Pennsylvania Board of Probation and Parole, 510
A.2d 866 (Pa. [Cmwlth.] 1986).
(Certified Record at 182-183.)
6
III.
A.
On appeal,3 Parolee argues that the Board erred in not awarding him
credit on his original sentence for the time he spent at liberty on parole from March
13, 2002, to June 11, 2012.
Pursuant to Section 6138 of the Code:
(a) Convicted violators.—
***
(2) If the parolee’s recommitment is so ordered, the
parolee shall be reentered to serve the remainder of the term
which the parolee would have been compelled to serve had
the parole not been granted and, except as provided under
paragraph (2.1), shall be given no credit for the time at
liberty on parole.
(2.1) The board may, in its discretion, award credit to
a parolee recommitted under paragraph (2) for the time
spent at liberty on parole, unless any of the following apply:
(i) The crime committed during the period of
parole or while delinquent on parole is a crime of violence
as defined in 42 Pa. C.S. §9714(g) (relating to sentences for
second and subsequent offenses) or a crime requiring
registration under 42 Pa. C.S. Ch. 97 Subch. H (relating to
registration of sexual offenders).
3
Our scope of review is limited to determining whether the Board’s decision is supported by
substantial evidence, whether an error of law was committed, or whether constitutional rights have
been violated. Section 704 of the Administrative Agency Law, 2 Pa. C.S. §704; Moroz v.
Pennsylvania Board of Probation and Parole, 660 A.2d 131, 132 (Pa. Cmwlth. 1995).
7
(ii) The parolee was recommitted under section
6143 (relating to early parole of inmates subject to Federal
removal order).
***
(c) Technical violators.—
(1) A parolee under the jurisdiction of the board who
violates the terms and conditions of his parole, other than
by the commission of a new crime of which the parolee is
convicted or found guilty by a judge or jury or to which the
parolee pleads guilty or nolo contendere in a court of
record, may be detained pending a hearing before the board
or waiver of the hearing or recommitted after a hearing
before the board or a waiver of the hearing….
***
(2) If the parolee is recommitted under this
subsection, the parolee shall be given credit for the time
served on parole in good standing but with no credit for
delinquent time and may be reentered to serve the
remainder of the original sentence or sentences.
61 Pa. C.S. §6138 (emphasis added).
Section 6138 of the Code clearly establishes that while technical parole
violators are entitled to credit for time at liberty on parole in good standing, convicted
parole violators are not. Richards v. Pennsylvania Board of Probation and Parole,
20 A.3d 596, 599 (Pa. Cmwlth.) (en banc), appeal denied, 29 A.3d 374 (Pa. 2011).
Instead, “when a parolee is recommitted due to criminal conviction, his maximum
sentence date may be extended to account for all street-time, regardless of good or
delinquent standing.” Id. Moreover, this Court has held that:
8
[T]ime spent in good standing prior to recommitment for
technical violations is not shielded from forfeiture where
the parolee subsequently commits a new crime and is
recommitted as a convicted parole violator. Thus, upon
recommitment as a convicted parole violator, in addition to
losing all time spent at liberty during the current parole, a
parolee will also forfeit all credit received for time spent in
good standing while on parole prior to his previous
recommitment as a technical parole violator.
Armbruster v. Pennsylvania Board of Probation and Parole, 919 A.2d 348, 351 (Pa.
Cmwlth. 2007) (citations omitted) (emphasis added).
Parolee was initially paroled from his original sentence on March 13,
2002. He was then detained by the Board for new criminal charges from April 6,
2007, to August 16, 2007, or 132 days. He remained on parole until June 11, 2012,
when the Board lodged a detainer against Parolee for a technical parole violation. As
such, Parolee was at liberty on parole for a total of 3,611 days between March 13,
2002, and June 11, 2012. Because the Board recommitted Parolee as a technical
parole violator, he was entitled to receive credit for time served on parole pursuant to
Section 6138(c)(2) of the Code, which the Board granted. However, because Parolee
was in federal custody and was unable to serve under the Board’s detainer from when
it was lodged on June 11, 2012, to October 4, 2013, the Board added those 480 days
to Parolee’s original maximum release date of May 25, 2015, to arrive at his new date
of September 16, 2016.
After the Parolee was recommitted as a convicted parole violator due to
his new criminal offense while on parole, he forfeited all credit received for time at
liberty on parole, including the period of time before his recommitment as a technical
9
parole violator. Given this, the Board properly recalculated Parolee’s maximum
release date to reflect the forfeiture of credit for the 3,611 days he was at liberty on
parole from March 13, 2002, to April 5, 2007, and from August 16, 2007, to June 11,
2012, before his technical parole violation. As such, Parolee had 896 days remaining
on his sentence from when he was reparoled by the Board on April 4, 2014, to his
maximum sentence date of September 16, 2016. The addition of 896 to 3,611 results
in 4,507 days left for Parolee to serve. The Board credited Parolee 127 days from his
incarceration solely on the Board’s detainer from June 12, 2014, to October 17, 2014.
Gaito v. Pennsylvania Board of Probation and Parole, 412 A.2d 568 (Pa. 1980).
Subtracting 127 days from 4,507 days left Parolee with 4,380 days to serve on his
sentence. Adding 4,380 to the October 17, 2014 availability date, the Board properly
calculated the new maximum date of October 14, 2026.
B.
Parolee also contends that he was not at liberty on parole from March
13, 2002, to March 7, 2005, because he was in custody on his federal sentence and,
thus, is entitled to credit for time served.
A prisoner on constructive parole is paroled from his original sentence to
immediately begin serving a new sentence. See Merritt v. Pennsylvania Board of
Probation and Parole, 574 A.2d 597, 598 (Pa. 1990); Hines v. Pennsylvania Board of
Probation and Parole, 420 A.2d 381, 383 (Pa. 1980). Constructive parole is
considered “time at liberty” for purposes of determining the credit a parolee is due
upon recommitment as a parole violator. Bowman v. Pennsylvania Board of
Probation and Parole, 709 A.2d 945, 948 (Pa. Cmwlth. 1998), appeal denied, 727
10
A.2d 1123; see also Merritt, 574 A.2d at 598. Under 61 Pa. C.S. §6138(a)(2), a
parolee’s time spent on constructive parole is forfeited upon the parolee’s
recommitment as a convicted parole violator. Bowman, 709 A.2d at 948.
Although Parolee remained incarcerated on his federal sentence from
March 13, 2002, to March 7, 2005, he is not entitled to credit because he was on
constructive parole from his original sentence, meaning he was at liberty on parole
during that time. Moreover, even if Parolee was owed credit for the time he was on
constructive parole, his later recommitment by the Board as a convicted parole
violator led to the forfeiture of this credit.
Accordingly, we affirm the Board’s decision.
____________________________________
DAN PELLEGRINI, Senior Judge
11
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Derrick Williams, :
Petitioner :
:
v. : No. 1505 C.D. 2015
:
Pennsylvania Board of Probation :
and Parole, :
Respondent :
ORDER
AND NOW, this 30th day of March, 2016, the order of the
Pennsylvania Board of Probation and Parole bearing a mailing date of July 17,
2015, is affirmed.
___________________________________
DAN PELLEGRINI, Senior Judge
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760 F.2d 264
Franksv.Fincastle Min., Inc.
84-1491
United States Court of Appeals,Fourth Circuit.
4/4/85
1
W.D.Va.
AFFIRMED
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338 Pa. Superior Ct. 560 (1985)
488 A.2d 34
COMMONWEALTH of Pennsylvania
v.
William Charles RAINEY, Appellant.
Supreme Court of Pennsylvania.
Argued September 19, 1984.
Filed February 8, 1985.
*561 Charles D. Daugherty, Carlisle, for appellant.
Theodore B. Smith, III, Carlisle, for Commonwealth, appellee.
Before WICKERSHAM, WIEAND and HESTER, JJ.
WIEAND, Judge:
William C. Rainey was convicted by a jury of having weapons or implements of escape in his possession while an inmate at the State Correctional Institution at Camp Hill.[1] He was sentenced to serve a consecutive sentence of imprisonment for not less than three nor more than twenty-six months. Both Rainey and the Commonwealth filed petitions requesting the court to reconsider the sentence. Upon doing so, the court determined that it had deviated from the sentencing guidelines without good cause.[2] Therefore, the *562 court imposed an increased prison sentence of not less than six nor more than thirty months.[3] On appeal, Rainey argues that the increased sentence violated principles of double jeopardy. We disagree and, accordingly, affirm the judgment of sentence.
In United States v. DiFrancesco, 449 U.S. 117, 101 S.Ct. 426, 66 L.Ed.2d 328 (1980), the Supreme Court of the United States considered a double jeopardy argument directed against provisions of the Dangerous Special Offenders Act, 18 U.S.C. § 3575 et seq., which permitted government appeals from sentences deemed too lenient. The Court held that the "Double Jeopardy Clause does not require that a sentence be given a degree of finality that prevents [review and] later increase."[4]Id. at 137, 101 S.Ct. at 437, 66 L.Ed.2d at 346. In so doing, the Court rejected contrary language in Ex Parte Lange, 85 U.S. (18 Wall.) 163, 21 L.Ed. 872 (1874) and United States v. Benz, 282 U.S. 304, 51 S.Ct. 113, 75 L.Ed. 354 (1931), to the effect that double jeopardy principles precluded a subsequent increase in a sentence already imposed.
Pa.R.Crim.P. 1410 makes provision for the Commonwealth to file a post-sentencing motion to modify a sentence. The allowance by the court of a modification petition filed by the Commonwealth is not proscribed by double jeopardy principles. Commonwealth v. Anderson, 304 Pa. Super. 476, 482, 450 A.2d 1011, 1014 (1982). "[N]o sentence," said the Court in Anderson, "is final until the right of appellate review has been exhausted or waived." Id. Thus, double jeopardy principles do not prevent a sentencing *563 court from correcting, modifying, or increasing a sentence which the same court previously imposed. See: Commonwealth v. Adams, 333 Pa.Super. 312, 482 A.2d 583 (1984).
In Commonwealth v. Bossche, 324 Pa.Super. 1, 471 A.2d 93 (1984), the defendant had entered pleas of guilty to charges of theft by deception and writing bad checks. He affirmatively represented to the court that the offenses to which he was pleading constituted first convictions. The trial court, therefore, imposed a sentence of probation. Later the same day, the Commonwealth filed a petition to reconsider the sentence and, during a hearing on the following day, established that defendant had previously entered three separate guilty pleas to similar charges. The trial court then modified the sentence and imposed a sentence of imprisonment for not less than one nor more than two years. On direct appeal, this Court held that the increased sentence did not violate the defendant's double jeopardy rights. "[T]he prohibition against multiple punishment . . . is inapplicable when the sentencing guideline is explicit and any sentence imposed thereunder is specifically subject to prosecutorial appeal." Id., 324 Pa.Superior Ct. at 6, 471 A.2d at 95, quoting Commonwealth v. Love, 295 Pa.Super. 276, 284-285, 441 A.2d 1230, 1234 (1982)[5] (Hoffman, J., concurring).
In Pennsylvania, the Sentencing Code, at 42 Pa.C.S. § 9781(a) and (b), specifically provides for a prosecution appeal from an inappropriate sentence. Pa.R.Crim.P. 1410 requires, however, that the sentencing court must first be given an opportunity to reconsider any sentence which the prosecution alleges to be inappropriate. An inappropriate sentence may be modified thereafter without offending constitutional principles of double jeopardy.
The judgment of sentence is affirmed.
NOTES
[1] This is made a misdemeanor by the provisions of 18 Pa.C.S. § 5122.
[2] Possession of weapons or implements for escape is a misdemeanor of the first degree. 18 Pa.C.S. § 5122(a)(2). Appellant had previously been convicted of murder of the second degree and at least one other felony, which gave him a prior record score of six (6). 204 Pa.Code § 303.7. Under these circumstances, the guidelines recommended a minimum range of 21 to 30 months and a mitigated minimum range of 16 to 21 months. 204 Pa.Code § 303.9(b).
[3] The increased sentence still is lower than the minimum mitigated range suggested in the guidelines.
[4] The double jeopardy clause of the Fifth Amendment is applicable to the states by virtue of the due process clause of the Fourteenth Amendment. Benton v. Maryland, 395 U.S. 784, 89 S.Ct. 2056, 23 L.Ed.2d 707 (1969).
[5] Overruled on other grounds by Commonwealth v. Anderson, supra.
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