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327 F.Supp. 80 (1971)
Sylvester RICE, Plaintiff,
v.
CHRYSLER CORPORATION, Defendant.
Civ. A. No. 35936.
United States District Court, E. D. Michigan, S. D.
May 12, 1971.
*81 William Daniel, Daniel & Poindexter, Detroit, Mich., for plaintiff.
Walter B. Maher, Detroit, Mich., Keith A. Jenkins, Highland Park, Mich., for defendant.
Vincent A. Fuller, Jr., Stuart I. Saltman, Regional Attys., Equal Employment Opportunity Comm., Cleveland, Ohio.
OPINION
FREEMAN, Chief Judge.
This is an action in which plaintiff, a black man, seeks injunctive relief and damages against the defendant, Chrysler Corporation, for alleged violation of his rights under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S. C. § 2000e et seq., and under the Civil Rights Act of 1866, 42 U.S.C. § 1981. Specifically, plaintiff alleges that defendant, through its general foreman and superintendent, administered its employment policies in such a manner as to discriminate against plaintiff solely on account of his race.
The chronology of events preceding the commencement of the present lawsuit do not appear to be disputed. Some time prior to instituting suit in this Court, plaintiff filed a complaint under Title VII of the Civil Rights Act of 1964 with the Equal Employment Opportunity Commission [Commission], alleging defendant had discriminated against him in its employment practices. *82 On November 4, 1970, plaintiff received from the Commission written notification that he had a right, within thirty days from receipt of its notification, to begin suit in a federal district court on his discrimination charge.
On November 5, 1970, the day after he received this notice, which stated, inter alia, "If you are unable to retain an attorney, the federal district court is authorized in its discretion to appoint an attorney to represent you and to authorize commencement of the suit without payment of fees, costs or security," plaintiff presented himself to the Clerk of the Federal District Court for the Eastern District of Michigan to request appointment of counsel. On November 16, 1970, plaintiff, pursuant to the Clerk's instructions, filed a formal Application for Appointment of Counsel and Authorization to Commence Suit Without Prepayment of Fees, Costs or Security, along with a supporting affidavit.
Subsequently, on November 23, 1970, Judge Talbot Smith of this Court executed an Order Appointing Counsel, designating William B. Daniel to represent the plaintiff and authorizing commencement of suit without prepayment of costs. Attorney Daniel received this order on December 2, 1970. A complaint, however, was not filed with this Court until January 14, 1971.
On the basis of this sequence of events, defendant has filed a motion to dismiss plaintiff's claim under Title VII of the Civil Rights Act of 1964 on the ground that this claim was not timely filed under the limitation period established by the Act. Defendant has also moved the Court to dismiss plaintiff's claim under 42 U.S.C. § 1981 on the ground that this section does not reach purely private racial discrimination in employment, or, in the alternative, that the enactment of Title VII of the Civil Rights Act of 1964[1] repealed whatever remedy for employment discrimination previously existing under § 1981.
I
MOTION TO DISMISS PLAINTIFF'S CLAIM UNDER TITLE VII OF THE CIVIL RIGHTS ACT OF 1964 AS UNTIMELY FILED
The limitation period applicable to the filing of a lawsuit under Title VII of the Civil Rights Act of 1964 is found in § 706(e) [42 U.S.C. § 2000e-5(e)] of that Act. This section provides, in relevant part, as follows:
"* * * the Commission shall so notify the person aggrieved and a civil action may, within thirty days thereafter, be brought against the respondent named in the charge * * *"
Defendant contends that since plaintiff did not commence his Title VII action until January 14, 1971, which was 71 days after he received notice from the Commission of his right to sue the action must be dismissed under the thirty-day limitation period contained in § 706(e). In support of its position, defendant relies on a recent decision of our Sixth Circuit Court of Appeals, affirming a trial court judge's dismissal of a Title VII suit because that suit was not filed in a federal district court until 31 days after receipt by the appellant of the Commission's Notice of Right to Sue. Goodman v. City Products Corp., 425 F.2d 702 (6th Cir., 1970). The Court, in Goodman, supra, specifically found that compliance with the thirty-day limitation period prescribed by § 706(e) of the 1964 Civil Rights Act "* * * is a prerequisite to the institution of a civil action based on the statute." 425 F.2d at 704.
In the Goodman case, however, the appellant had neither instituted suit nor initiated any other action in federal court until after the thirty-day limitation period had expired, while the present *83 plaintiff had filed an application for appointment of counsel and leave to file his action without prepayment of costs within thirty days from receipt of the Commission's notice, although his complaint was not filed until after the thirty-day period had lapsed. The Commission, in an amicus curiae brief, argues that this difference in facts justifies a different result than the Sixth Circuit Court of Appeals reached in Goodman, supra, and asks us to now rule that the filing of an application for counsel and leave to file an action without prepayment of costs within the thirty-day limitation period "* * * satisfied, the requirement that suit be commenced within the thirty days from receipt of the Notice." [Commission's Bri page 5].
Seven federal district courts have, in fact, held in recent cases that the filing of such an application in a federal court, as authorized under Title VII of the 1964 Civil Rights Act,[2] is sufficient compliance with the thirty-day requirement of § 706(e). Witherspoon v. Mercury Freight Lines, Inc., 59 CCH Lab.Cas. ¶ 9219 (S.D.Ala., 1968); Prescod v. Ludwig Industries, 325 F.Supp. 414 (N.D.Ill., March 12, 1971); Brock v. Southern Bell Telephone and Telegraph Company, C.A. No. 69-1685 (E.D.La., 1970); Shaw v. National Tank Co., C.A. No. 70-C-201 (N.D.Okl., April 12, 1971); Childress v. Plumbers, Local No. 27, C.A. No. 69-1423 (W.D.Pa., 1969); McQueen v. E. M. C. Plastic Company, 302 F.Supp. 881 (E.D.Tex., 1969); Austin v. Reynolds Metals Co., 62 CCH Lab.Cas. ¶ 9408 (E.D.Va., 1970). But three of these casesWitherspoon, supra, Prescod, supra, and McQueen, supra, involved extraordinary circumstances which are lacking in the present case.
In Witherspoon, supra, the court noted that defendant's motion to dismiss plaintiff's complaint under Title VII of the Civil Rights Act would normally be granted since the complaint was not filed within the thirty-day limitation period, although plaintiff's application for counsel was so filed. Nevertheless, the court denied the motion because it had "informed the plaintiff * * * when his Petition for Appointment of Counsel was filed, that such petition would be considered by the court as sufficient to institute his cause of action. The plaintiff relied upon this statement and filed his formal complaint the next month." No similar element of reliance is involved in the present case.
Although McQueen, supra, and Prescod, supra, did not involve an element of reliance, they did entail activities by the court to which plaintiff had applied for appointment of counsel, making it impossible for plaintiff to institute suit within the thirty day limitation period. In McQueen, supra, plaintiff filed her application for appointment of counsel and authorization to commence suit without prepayment of costs within the thirty-day limitation period, but the court failed to appoint counsel until the thirty-day period had expired. Subsequently, appointed counsel informed the court that he would not file suit on behalf of plaintiff because he did not believe her claim was justifiable. No decision, however, was ever made by the court on whether to appoint other counsel for plaintiff or to inform plaintiff that no additional counsel would be provided because the judge to whom plaintiff's application for counsel had been assigned died. It was primarily on account of this "* * * lack of judicial supervision over the case * * *" that the Federal District Court for the Eastern District of Texas concluded:
"* * * under the circumstances here shown the court considers the Application for Counsel by plaintiff to be sufficient compliance with the 30-day filing period." 302 F.Supp. 885.
*84 Similarly, in Prescod, supra, the court found that the "filing of a [Title VII] complaint within the thirty day period was rendered virtually impossible by the court which scheduled appointment of counsel for the last day of the time period." Hence, plaintiff's application for counsel, filed within thirty days after he received notice from the Commission of his Right to Sue, was found to be sufficient compliance with the thirty-day statute of limitations even though a formal complaint was not filed within that time since "the relevant delay was occasioned by the court."
In the present case, no delay by the court similar to that found in McQueen, supra, and Prescod, supra, interfered with the institution of plaintiff's cause of action within the thirty day limitation prescribed by § 706(e) of the 1964 Civil Rights Act. Indeed, counsel for plaintiff was appointed by a judge of this court well within the thirty-day limitation period.
Nevertheless, we do recognize that a person who must, because of his economic circumstances, apply to a federal court for its discretionary appointment of counsel and authorization to commence an action without prepayment of costs is effectively precluded from instituting suit until the court rules on his application. We further recognize that the more time a court takes to dispose of an application for counsel and authorization to proceed without prepayment of costs, the less time any counsel subsequently appointed, or retained, will have to draft a proper complaint on behalf of his client. Thus, unless § 706(e) is construed to require a tolling of the thirty-day limitation period while a court acts on such applications, the speed with which a court processes these applications may substantially affect the ability of an aggrieved person to assert his rights under Title VII. The court cannot believe that Congress ever intended delays attributable to the judiciary to interfere with the prosecution of Title VII actions when it adopted a thirty-day limitation period on these actions. We, instead, believe the thirty-day limitation period contained in § 706(e) should be tolled from the date on which a complainant files in federal court an application for counsel and leave to proceed without prepayment of costs, until the date on which the court either informs complainant or his counsel, if the court elects to appoint counsel, of its decision on this application.
In this case, plaintiff informally requested counsel be appointed by our court on November 5, 1970, which was the day after he received notice of his right to sue and, therefore, the day on which the thirty-day limitation period began to run. [Plaintiff subsequently filed a formal Application for Counsel and Leave to Commence an Action Without Prepayment of Costs on November 16, 1970.] The court appointed counsel for plaintiff and counsel was so notified on December 2, 1970. Hence, even if the thirty-day limitation period is tolled from the date on which plaintiff informally applied for counsel to the date on which counsel received notice of his appointment, the present suit had to be instituted within twenty-nine days[3] from December 2, 1970 to be timely. But plaintiff's Title VII action was not commenced until January 14, 1971, or forty-three days after counsel received notice of his appointment. Clearly, then, tolling the thirty-day limitation period in order to insure that the institution of a Title VII suit is not hampered by judicial delay in acting on an application for counsel does not avail the present plaintiff. His complaint was still not timely filed.
The Commission, however, correctly points out that four of the federal district court decisions, earlier cited, entailed facts almost identical to those *85 involved here, but those decisions held that the filing of an application for counsel commences a Title VII action for the purposes of the thirty-day limitation period. Brock v. Southern Bell Telephone and Telegraph Company, supra; Shaw v. National Tank Co., supra; Childress v. Plumbers, Local No. 27, supra; and Austin v. Reynolds Metals Co., supra. If we were to adopt this position, as the Commission urges, then plaintiff's Title VII action must be viewed as timely filed and defendant's motion to dismiss denied.
Nevertheless, this Court does not believe that § 706(e) of the 1964 Civil Rights Act is susceptible of such an interpretation. § 706(e), after establishing the thirty day limitation period, provides that:
"Upon application by the complainant and in such circumstances as the court may deem just, the court may appoint an attorney for such complainant and may authorize the commencement of the action without the payment of fees, costs or security." (Emphasis added)
Under this language, the complainant's application for counsel and his commencement of an action are clearly viewed as two separate procedures.
Moreover, if Congress wished to permit certain persons, i. e., those who must request appointment of counsel, to commence a lawsuit for the purposes of its thirty-day limitation period in some manner other than the traditionally recognized filing of a formal complaint, we believe it would have done this expressly. Since § 706(e) does not state, nor even suggest that a Title VII lawsuit should be deemed commenced without the filing of a formal complaint, we will not so construe it.
Finally, it is suggested that the Notice of Right to Sue Within Thirty Days which the Commission mailed to plaintiff was so misleading as to justify finding plaintiff had complied with the thirty-day limitation period at the time he filed his Application for Counsel and Leave to Commence an Action Without Prepayment of Costs. The relevant portions of that letter state:
"* * * you are hereby notified that you may within thirty (30) days of receipt of this communication, institute a civil action in the appropriate Federal District Court.
* * * * * *
If you are unable to retain an attorney, the Federal District Court is authorized in its discretion to appoint an attorney to represent you and to authorize commencement of the suit without payment of fees, costs or security.
If you decide to institute suit and find you need assistance, you may take this letter, along with any correspondence you have received from the Commission, to the Clerk of the Federal District Court nearest to the place where the alleged discrimination occurred, and request that a Federal District Judge appoint counsel to represent you."
Two federal district courts have, in fact, found that letters from the Commission similar to the one set forth above are ambiguous and likely to mislead the complainant into believing his Title VII action is instituted when he requests appointment of counsel from the appropriate federal court. Austin v. Reynolds Metals Co., 62 CCH Lab.Cas. ¶ 9408 (E. D.Va., 1970), Prescod v. Ludwig Industries, 325 F.Supp. 414 (N.D.Ill., March 12, 1971). Because of this supposed ambiguity in the Commission's instructions, both of these district courts ruled that it would be unjust to dismiss actions instituted outside the thirty-day period by appointed counsel, when the complainant had properly filed in federal court for the appointment of counsel within the thirty day limitation period.
We, however, do not find the Commission's Notice of Right to Sue Within Thirty Days to be so misleading as to justify ignoring the thirty-day limitation period of § 706(e). The letter plainly states that if a complainant wishes to *86 institute suit and finds he needs assistance in doing this, he can go to a federal district court which may appoint counsel to represent him. We do not believe this language suggests in any way that the institution of suit in federal court is synonymous with the filing of an application for appointment of counsel.
We, therefore, find that plaintiff's Title VII action was not timely commenced under § 706(e) of the Civil Rights Act of 1964. For this reason, defendant's motion to dismiss that claim is granted.
II
MOTION TO DISMISS PLAINTIFF'S CLAIM UNDER SECTION 1981 OF THE CIVIL RIGHTS ACT OF 1866
42 U.S.C. § 1981 provides that: "All persons within the jurisdiction of the United States shall have the same right in every state and territory to make and enforce contracts * * * as is enjoyed by white citizens * * *." Defendant maintains that plaintiff's claim for relief under 42 U.S.C. § 1981 must be dismissed because this section does not create a cause of action for private racial discrimination in employment, but, instead, requires some action by the state.
This restricted construction of § 1981, however, has recently been rejected by the Third, Fifth and Seventh Circuit Courts of Appeals in decisions holding that this section prohibits both public and private racial discrimination in employment. Young v. International Telephone & Telegraph Co., 438 F.2d 757 (3rd Cir. 1971); Boudreaux v. Baton Rouge Marine Contracting Co., 437 F.2d 1011 (5th Cir. 1971); Sanders v. Dobbs Houses, Inc., 431 F.2d 1097 (5th Cir. 1970); Waters v. Wisconsin Steel Works of International Harvester Company, 427 F.2d 476 (7th Cir. 1970). Such a conclusion would seem to be almost inescapable in light of the United States Supreme Court's decision in Jones v. Alfred H. Mayer Company, 392 U.S. 409, 88 S.Ct. 2186, 20 L.Ed.2d 1189 (1968). In Jones, supra, the Supreme Court construed 42 U.S.C. § 1982, which is derived from the same clause of the 1866 Civil Rights Act as § 1981, to prohibit "all racial discrimination, private as well as public, in the sale or rental of property * *" It was primarily because § 1981 and § 1982 are derived from the same section of the 1866 Act that the Third, Fifth and Seventh Circuit Courts of Appeals found the two sections should be "construed consistently, and * * * since § 1982 is enforceable against private entities, § 1981 is similarly enforceable." Sanders v. Dobbs Houses, Inc., supra, 431 F.2d at 1099. We agree.
Defendant also suggested on oral argument that the enactment of Title VII of the 1964 Civil Rights Act impliedly repealed any remedy for racial discrimination in employment which may have previously existed under § 1981. Again, the Courts of Appeals for the Third, Fifth and Seventh Circuits have already considered the same contention and rejected it:
"Defendants argue that Title VII was intended by Congress to eliminate racial discrimination in employment thereby automatically abolishing all rights previously existing under section 1981.
* * * * * *
Contrary to the assertions of the defendants, the legislative history of Title VII strongly demonstrates an intent to preserve previously existing causes of action. Thus Congress rejected by more than a 2-to-1 margin an amendment by Senator Tower to exclude agencies other than the EEOC from dealing with practices covered by Title VII. 110 Cong.Rec. 13650-52 (1964)" Waters v. Wisconsin Steel Works of International Harvester Co., supra, 427 F.2d at 484-485.
This interpretation of § 1981 finds additional support in Jones v. Alfred H. Mayer Company, supra, where the Supreme Court ruled that Title VIII of the Civil Rights Act of 1968 did not repeal by implication § 1982. Moreover, subsequently the Supreme Court stated in *87 Sullivan v. Little Hunting Park, Inc., 396 U.S. 229, 237, 90 S.Ct. 400, 405, 24 L.Ed. 2d 386 (1970):
"We noted in Jones v. Mayer Co., that the Fair Housing Title of the Civil Rights Act of 1968, 82 Stat. 81, in no way impaired the sanction of § 1982. 392 U.S., at 413-417 [88 S.Ct. 2186]. What we said there is adequate to dispose of the suggestion that the public accommodations provision of the Civil Rights Act of 1964, 78 Stat. 243, in some way supersedes the provisions of the 1866 Act. For the hierarchy of administrative machinery provided by the 1964 Act is not at war with survival of the principles embodied in § 1982."
So, too, we believe that the equal employment provisions of Title VII of the 1964 Act do not repeal any remedies available under § 1981, which is the sister provision to § 1982.
Nevertheless, although the equal employment provisions of the 1964 Civil Rights Act do not repeal any of the remedies available under 42 U.S.C. § 1981, it is possible that exhaustion of administrative remedies for private employment discrimination provided for under the 1964 Act may be a prerequisite to suit under § 1981. In fact, the Seventh Circuit Court of Appeals in Waters v. Wisconsin Steel Works of International Harvester Company, supra, 427 F.2d at 487, specifically held that an aggrieved person may proceed directly under § 1981 only if "* * * he pleads a reasonable excuse for his failure to exhaust EEOC remedies." Contra, Young v. International Telephone & Telegraph Co., supra; Boudreaux v. Baton Rouge Marine Contracting Co., supra; Sanders v. Dobbs Houses, Inc., supra.
In the present case, however, the complaint alleges that plaintiff exhausted his administrative remedies before the EEOC prior to bringing suit under 42 U.S.C. § 1981, and defendant does not attack this allegation. Hence, we need not now decide whether the failure of an aggrieved party to exhaust his administrative remedies before the EEOC under Title VII of the Civil Rights Act of 1964, should have any effect on his right to proceed under § 1981.
For the above reasons, defendant's motion to dismiss plaintiff's action under 42 U.S.C. § 1981 is denied.
An appropriate order may be submitted.
NOTES
[1] Defendant did not raise this alternative ground for dismissing plaintiff's claim under 42 U.S.C. § 1981 until oral arguments on its motion to dismiss.
[2] "Upon application by the complainant and in such circumstances as the court may deem just, the court may appoint an attorney for such complainant and may authorize the commencement of the action without the payment of fees, costs or security." § 706(e).
[3] One day of the thirty-day limitation period had elapsed at the time plaintiff filed his informal application for appointment of counsel and to commence an action without prepayment of costs. Thus, when the tolling period ended on December 2, plaintiff had only 29 days left in which to institute suit.
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FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS February 21, 2017
Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________
KELLER TANK SERVICES II, INC.,
Petitioner - Appellant,
v. No. 16-9001
COMMISSIONER OF INTERNAL
REVENUE,
Respondent - Appellee.
_________________________________
APPEAL FROM THE COMMISSIONER OF INTERNAL REVENUE
(CIR No. 11611-14 L)
_________________________________
A. Lavar Taylor, A. Lavar Taylor Law Offices, Santa Ana, California (Jonathan T.
Amitrano, A. Lavar Taylor Law Offices, Santa Ana, California; Allen J. White, Allen J.
White & Associates, Downers Grove, Illinois; and William Wise, Wise & Stracks,
Chicago, Illinois, with him on the briefs), appearing for Appellant.
Jennifer M. Rubin, Attorney, Tax Division (Caroline D. Ciraolo, Principal Deputy
Assistant Attorney General; Diana L. Erbsen, Deputy Assistant Attorney General; Gilbert
S. Rothenberg, Attorney, Tax Division; and Michael J. Haungs, Attorney, Tax Division,
with her on the brief), United States Department of Justice, Washington, DC, appearing
for Appellee.
_________________________________
Before HOLMES, MATHESON, and McHUGH, Circuit Judges.
_________________________________
MATHESON, Circuit Judge.
_________________________________
In this appeal, we address whether a taxpayer may challenge a tax penalty in a
Collection Due Process hearing (“CDP hearing”) after already having challenged the
penalty in the Appeals Office of the Internal Revenue Service (“IRS”).
Keller Tank Services II, Inc. (“Keller”), the taxpayer, participated in an employee
benefit plan and took deductions for its contributions to the plan. The IRS notified Keller
of (1) a tax penalty of $57,782 for failure to report its participation in the plan as a “listed
transaction” on its 2007 tax return, and (2) an income tax deficiency and related penalties
for improper deductions of payments to the plan. This case is about the $57,782 penalty
and Keller’s efforts to challenge it.
As more fully described below, Keller protested the tax penalty at the IRS Appeals
Office. It then attempted to do so in a CDP hearing but was rebuffed because it already
had challenged the penalty at the Appeals Office. Keller appealed the CDP decision to
the Tax Court, which granted summary judgment to the Commissioner of Internal
Revenue (“Commissioner”). Keller appeals that decision here. Exercising jurisdiction
under 26 U.S.C. § 7482(a)(1), we affirm.
I. BACKGROUND
To aid the reader, we provide definitions of various terms, set forth the pertinent
statutes and regulation, and offer a brief overview of the relevant tax enforcement process
and administrative structure. We then turn to the factual and procedural history of this
case.
-2-
A. Terms, Statutes, and Regulation
1. Key Terms
The following terms are used throughout the opinion and first appear in the order
presented here.1
Commissioner: the Commissioner of Internal Revenue is nominated by the
President and confirmed by the Senate, and has the duty to administer, manage,
conduct, direct, and supervise the execution and application of internal revenue
laws. Lawsuits by and against the IRS are conducted in the name of the
Commissioner, and are litigated by counsel of the IRS.
Liability: amount owed by a taxpayer under the tax laws. As used in this
opinion, a liability may be a penalty or deficiency.
Deficiency: the amount by which the tax value imposed by the IRS exceeds
the amount reported by the taxpayer on its return. The IRS’s determination of
a deficiency is a provisional determination. Accordingly, a notice of
deficiency affords the taxpayer a right to prepayment judicial review by the
Tax Court before the IRS assesses and collects the liability. The IRS cannot
attempt to collect the deficiency until the notice of deficiency has been mailed
to the taxpayer and the taxpayer has been given 90 days to file a petition in the
Tax Court. 26 U.S.C. § 6213.
Penalty: imposed on taxpayers by the IRS to encourage compliance with tax
laws. Certain penalties are considered assessable, which means the IRS may
assess them without providing an opportunity for prepayment judicial review
by the Tax Court. The penalty provision relevant to this case is § 6707A,
which imposes a penalty for failing to report transactions classified as
“reportable,” including “listed” transactions. 26 U.S.C. § 6707A(b)(2). A
§ 6707A penalty may be imposed for failure to report regardless of whether a
deficiency results. Internal Revenue Manual 4.32.4.1.1 ¶ 3.
Reportable Transaction: a transaction that must be disclosed on a taxpayer’s
return because the Secretary of Treasury (“Secretary”) has determined that type
of transaction has potential for tax avoidance or evasion. The maximum
penalty for failure to report a reportable transaction, other than a listed
transaction, is $50,000 for a corporation. 26 U.S.C. § 6707A(b)-(c).
1
Unless otherwise specified, all definitions are from Michael I. Saltzman and
Leslie Book, IRS Prac. & Proc. (2016).
-3-
Listed Transaction: a type of reportable transaction that is the same as, or
substantially similar to, a transaction specifically identified by the Secretary as
a tax avoidance transaction. The Secretary identifies listed transactions in
notices or other published guidance. The maximum penalty for failing to
report a listed transaction is $200,000 for a corporation. 26 U.S.C.
§ 6707A(b)-(c).
Assessment: the formal recording and establishment of a taxpayer’s liability,
fixing the amount owed by the taxpayer. The assessment is effectively a
judgment and triggers the IRS’s ability to collect on the liability via lien or
levy.
Levy: after a liability has been assessed, certain procedural requirements have
been met, and the taxpayer has neglected or refused to pay the assessed tax, the
IRS may attach, or encumber, the taxpayer’s property to seize and sell it as “a
prompt and convenient method for satisfying delinquent tax claims.” United
States v. Nat’l Bank of Commerce, 472 U.S. 713, 736 (1985) (quotations
omitted). This process is called a “levy.”
Rescission Request: the taxpayer may request the Commissioner to rescind all
or part of a penalty imposed under § 6707A for a non-listed reportable
transaction if doing so would promote compliance with the tax laws and
effective tax administration. The Commissioner, however, may not rescind a
penalty for a listed transaction. The IRS Appeals Office hears a taxpayer’s
request to rescind. No judicial review is available for the decision to grant or
deny rescission. 26 U.S.C. § 6707A(d)(2).
IRS Appeals Office: the administrative dispute resolution body of the IRS that
resolves tax controversies without litigation. The 1998 IRS Restructuring and
Reform Act emphasized that the Appeals Office must be an independent
bureau of the IRS and be impartial to the government and taxpayer. See
Robert v. United States, 364 F.3d 988, 990 (8th Cir. 2004).
Collection Due Process (“CDP”) Hearing: the procedure created by the 1998
IRS Restructuring and Reform Act to control overreaching in the IRS’s
collection activities. When the IRS decides to collect a liability through a lien
or levy, taxpayers first receive an opportunity to contest the collection through
an administrative CDP hearing before a CDP hearing officer (an independent
employee of the Appeals Office). The CDP hearing officer must have had no
prior involvement with the taxpayer. Section 6330 outlines the CDP hearing
procedures required before a levy may be made. 26 U.S.C. § 6330.
-4-
Tax Court: a specialized court established by Congress under Article I of the
Constitution to conduct prepayment judicial review of deficiencies. The Tax
Court also may review certain other administrative determinations by the IRS.
See, e.g., 26 U.S.C. § 6330.
Refund suit: a lawsuit brought by a taxpayer seeking a refund of a paid
liability alleged to be unlawfully collected. To challenge the IRS’s assessment
in a refund suit, the taxpayer must first pay the full amount of the tax liability
and file a claim for refund with the IRS. If the IRS issues an adverse decision,
the taxpayer may then institute a tax refund suit in either a federal district court
or the U.S. Court of Federal Claims.
2. Key Statutes and Regulation
The following statutes and regulation are the primary legal materials
applicable to this appeal.
a. 26 U.S.C. § 6707A: Penalty for failure to include reportable transaction
information with return
(a) Imposition of penalty
Any person who fails to include on any return or statement any information
with respect to a reportable transaction which is required under section 6011 to
be included with such return or statement shall pay a penalty in the amount
determined under subsection (b).
(b) Amount of penalty
(1) In general
Except as otherwise provided in this subsection, the amount of the
penalty under subsection (a) with respect to any reportable transaction
shall be 75 percent of the decrease in tax shown on the return as a result
of such transaction (or which would have resulted from such transaction
if such transaction were respected for Federal tax purposes).
(2) Maximum penalty
The amount of the penalty under subsection (a) with respect to any
reportable transaction shall not exceed—
(A) in the case of a listed transaction, $200,000 ($100,000 in the
case of a natural person), or
(B) in the case of any other reportable transaction, $50,000
($10,000 in the case of a natural person).
-5-
(3) Minimum penalty
The amount of the penalty under subsection (a) with respect to any
transaction shall not be less than $10,000 ($5,000 in the case of a
natural person).
(c) Definitions
For purposes of this section:
(1) Reportable transaction
The term “reportable transaction” means any transaction with respect to
which information is required to be included with a return or statement
because, as determined under regulations prescribed under section 6011,
such transaction is of a type which the Secretary determines as having a
potential for tax avoidance or evasion.
(2) Listed transaction
The term “listed transaction” means a reportable transaction which is
the same as, or substantially similar to, a transaction specifically
identified by the Secretary as a tax avoidance transaction for purposes
of section 6011.
(d) Authority to rescind penalty
(1) In general
The Commissioner of Internal Revenue may rescind all or any portion
of any penalty imposed by this section with respect to any violation if—
(A) the violation is with respect to a reportable transaction other
than a listed transaction, and
(B) rescinding the penalty would promote compliance with the
requirements of this title and effective tax administration.
(2) No judicial appeal
Notwithstanding any other provision of law, any determination under
this subsection may not be reviewed in any judicial proceeding.
b. 26 U.S.C. § 6330: Notice and opportunity for [a CDP] hearing before levy
26 U.S.C. § 6330(c)(2)(B) (“¶ (c)(2)(B)”):
(c) Matters considered at hearing
In the case of any hearing conducted under this section—
****
(2) Issues at hearing
(A) In general
The person may raise at the hearing any relevant issue
relating to the unpaid tax or the proposed levy, including—
(i) appropriate spousal defenses;
-6-
(ii) challenges to the appropriateness of collection
actions; and
(iii) offers of collection alternatives, which may
include the posting of a bond, the substitution of other
assets, an installment agreement, or an offer-in-
compromise.
(B) Underlying liability
The person may also raise at the hearing challenges to the
existence or amount of the underlying tax liability for any tax
period if the person did not receive any statutory notice of
deficiency for such tax liability or did not otherwise have an
opportunity to dispute such tax liability.
26 U.S.C. § 6330(c)(4)(A) (“¶ (c)(4)(A)”):
(c) Matters considered at hearing
In the case of any hearing conducted under this section—
****
(4) Certain issues precluded
An issue may not be raised at the hearing if—
(A)(i) the issue was raised and considered at a previous
hearing under section 6320 or in any other previous
administrative or judicial proceeding; and
(ii) the person seeking to raise the issue participated
meaningfully in such hearing or proceeding; or
(B) the issue meets the requirement of clause (i) or (ii) of
section 6702(b)(2)(A).
26 U.S.C. § 6330(d):
(d) Proceeding after hearing
(1) Petition for review by Tax Court
The person may, within 30 days of a determination under this
section, petition the Tax Court for review of such determination (and
the Tax Court shall have jurisdiction with respect to such matter).
****
(3) Jurisdiction retained at IRS Office of Appeals
The Internal Revenue Service Office of Appeals shall retain
jurisdiction with respect to any determination made under this
section, including subsequent hearings requested by the person who
requested the original hearing on issues regarding—
-7-
(A) collection actions taken or proposed with respect to such
determination; and
(B) after the person has exhausted all administrative
remedies, a change in circumstances with respect to such
person which affects such determination.
c. 26 C.F.R. § 301.6320-1(“Treas. Reg. § 301.6320-1”): Notice and opportunity
for [a CDP] hearing upon filing of notice of Federal tax lien
Treas. Reg. § 301.6320-1(e)(3):
(e) Matters considered at CDP hearing—(1) In general. . . . Appeals has the
authority to determine the validity, sufficiency, and timeliness of any CDP
Notice given by the IRS and of any request for a CDP hearing that is made
by a taxpayer. . . . The taxpayer may raise any relevant issue relating to the
unpaid tax at the hearing, including appropriate spousal defenses,
challenges to the appropriateness of the [proposed levy], and offers of
collection alternatives. The taxpayer also may raise challenges to the
existence or amount of the underlying liability, including a liability
reported on a self-filed return, for any tax period specified on the CDP
Notice if the taxpayer did not receive a statutory notice of deficiency for
that tax liability or did not otherwise have an opportunity to dispute the tax
liability. Finally, the taxpayer may not raise an issue that was raised and
considered at a previous CDP hearing under section 6330 or in any other
previous administrative or judicial proceeding if the taxpayer participated
meaningfully in such hearing or proceeding. Taxpayers will be expected to
provide all relevant information requested by Appeals, including financial
statements, for its consideration of the facts and issues involved in the
hearing.
****
(3) Questions and answers.
****
Q–E2. When is a taxpayer entitled to challenge the existence
or amount of the tax liability specified in the CDP Notice?
A–E2. A taxpayer is entitled to challenge the existence or
amount of the underlying liability for any tax period specified
on the CDP Notice if the taxpayer did not receive a statutory
notice of deficiency for such liability or did not otherwise
have an opportunity to dispute such liability. Receipt of a
statutory notice of deficiency for this purpose means receipt
in time to petition the Tax Court for a redetermination of the
deficiency determined in the notice of deficiency. An
-8-
opportunity to dispute the underlying liability includes a prior
opportunity for a conference with Appeals that was offered
either before or after the assessment of the liability. An
opportunity for a conference with Appeals prior to the
assessment of a tax subject to deficiency procedures is not a
prior opportunity for this purpose.
B. Legal and Administrative Background
The Internal Revenue Code (“Code” or “IRC”) requires taxpayers to file returns in
the manner prescribed by the IRS. 26 U.S.C. § 6011(a). The Code directs the
Secretary—acting through the IRS—to determine, assess, and collect federal taxes. See
id. §§ 6201(a), 6301. Under this authority, the Secretary has established a procedure for
the IRS to assess and collect penalties and deficiencies, and methods for the taxpayer to
dispute these liabilities.
1. Section 6707A Penalty and Administrative Procedure
Section 6707A of the Code, titled “Penalty for Failure to Include Reportable
Transaction Information with Return,” authorizes the imposition of a penalty on
taxpayers who fail to disclose information on their tax returns regarding “reportable”
transactions, including “listed” transactions. Id. § 6707A.
Penalties under § 6707A are not subject to the procedures the IRS has afforded for
deficiencies because they do not depend upon a deficiency; they are imposed solely for
the failure to disclose, even in cases involving an overpayment of tax. Smith v. Comm’r,
133 T.C. 424, 428-29 (2009). Because § 6707A penalties are not subject to deficiency
procedures, the taxpayer may not directly appeal a penalty to the Tax Court. See
Bartman v. Comm’r, 446 F.3d 785, 787 (8th Cir. 2006) (stating “[a] notice of deficiency
-9-
issued by the IRS pursuant to § 6212 is the taxpayer's jurisdictional ‘ticket to the Tax
Court.’” (citations omitted)); Spector v. Comm’r, 790 F.2d 51, 52 (8th Cir. 1986) (citing
Laing v. United States, 423 U.S. 161, 165 n.4 (1976)) (stating “the determination of a
deficiency and the issuance of a notice of deficiency is an absolute precondition to tax
court jurisdiction”).
Thus, contesting a § 6707A penalty takes a different course. Once an IRS
examiner proposes and receives approval from the IRS Territory Manager to impose a
penalty for failing to report a reportable transaction, the examiner issues a “30-day
Letter” before formally assessing the penalty. Internal Revenue Manual at 4.32.4.4. The
taxpayer has 30 days to agree to or protest the penalty to the Appeals Office after
receiving the “30-day Letter.” Id. In response to the taxpayer’s protest, the IRS offers
the taxpayer a pre-assessment review of the proposed § 6707A penalty by an IRS
Appeals Officer “[i]f possible.” See id. at 4.32.4.6. If a pre-assessment review is not
possible, the taxpayer is offered a post-assessment review. Id. The Appeals Officer may
decide to abate the penalty, rescind a penalty for a reportable transaction that is not a
listed transaction under § 6707A(d), or approve collection of the penalty. Id. at 4.32.4.8,
4.32.4.9.
2. Collection Due Process (“CDP”) Hearings
Once the IRS decides to levy to collect a penalty, it must notify the taxpayer in
writing of the right to a hearing under § 6330(a)(1), called a CDP hearing. Congress
created the CDP process as part of the 1998 IRS Restructuring and Reform Act, a
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“Taxpayer Bill of Rights” aimed to curb abuse of taxpayers. See Dalton v. Comm’r, 682
F.3d 149, 154 (1st Cir. 2012); Tucker v. Comm’r, 676 F.3d 1129, 1131 (D.C. Cir. 2012).
a. The 1998 IRS Restructuring and Reform Act and the CDP Process
Before 1998, the IRS could reach a taxpayer’s assets by lien or levy without
providing the taxpayer any process before the amount owed by the taxpayer was assessed
and collected. Dalton, 682 F.3d at 154. Congress created the CDP process to afford
taxpayers a pre-deprivation opportunity to contest the lien or levy before the IRS
proceeded with collection. Id. at 154-55. At the CDP hearing, the taxpayer may
challenge the propriety of a pending lien or levy, verify that collection is appropriate, and
offer alternatives to collection. Tucker, 676 F.3d at 1131.
CDP hearings take place in the Appeals Office. Id.; Gyorgy v. Comm’r, 779 F.3d
466, 472 (7th Cir. 2015). The Appeals Officer presiding over the hearing represents the
IRS and must have had no prior involvement with the liability at issue. Tucker, 676 F.3d
at 1131. CDP proceedings “are informal and may be conducted via correspondence, over
the phone or face to face.” Living Care Alts. of Utica, Inc. v. United States, 411 F.3d
621, 624 (6th Cir. 2005). No transcript, recording, or other direct documentation of the
proceeding is required. Id.
At the hearing, the Appeals Officer must do three things:
1) conduct a verification that the IRS has met all legal requirements and fulfilled
its procedural obligations to move forward with the lien or levy, 2) consider
defenses and collection alternatives proffered by the taxpayer and [] 3) make a
determination that the “proposed collection action balances the need for the
efficient collection of taxes with the legitimate concern of the person that any
collection action be no more intrusive than necessary.”
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Id. at 624-25 (emphasis omitted) (quoting 26 U.S.C. § 6330(c)(3)).
b. Matters Raised at the CDP Hearing
The 1998 IRS Restructuring and Reform Act lists the issues the taxpayer may
raise at the CDP hearing. The taxpayer may challenge its underlying tax “liability” only
if it “did not receive any statutory notice of deficiency for such tax liability or did not
otherwise have an opportunity to dispute such tax liability.” 26 U.S.C. § 6330(c)(2)(B)
(“¶ (c)(2)(B)”). Notably, the taxpayer need only have received an opportunity to dispute
its tax liability. Whether it took advantage of that opportunity is irrelevant. Thus, a
taxpayer is precluded from challenging liability at a CDP hearing when the taxpayer was
afforded, but failed to take advantage of, a prior opportunity to dispute the liability. See,
e.g., Chandler v. Comm’r, 327 F. App’x 763, 766 (10th Cir. 2009) (unpublished),2 Abu-
Awad v. United States, 294 F. Supp. 2d 879, 887-88 (S.D. Tex. 2003), Pelliccio v. United
States, 253 F. Supp. 2d 258, 261-62 (D. Conn. 2003).
The taxpayer may raise any other relevant “issue” relating to the unpaid tax—
including, but not limited to, challenges to the appropriateness of collection actions, and
alternative collection options—so long as the issue was not raised and considered in a
prior administrative or judicial proceeding where the taxpayer meaningfully participated.
26 U.S.C. § 6330(c)(4)(A) (“¶ (c)(4)(A)”).
2
Although not precedential, we find the reasoning of the unpublished cases
cited in this opinion instructive. See 10th Cir. R. 32.1 (“Unpublished decisions are
not precedential, but may be cited for their persuasive value.”); see also Fed. R. App.
P. 32.1.
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c. Appealing the CDP Hearing’s Findings and Conclusions
After the CDP hearing, the Appeals Office decides whether it is reasonable to
proceed with the intended collection action and issues a notice of determination
containing its findings and conclusions. Dalton, 682 F.3d at 155; Gyorgy, 779 F.3d at
472 (citing Treas. Reg. § 301.6330–1(e), Q & A–E8).
A taxpayer who is dissatisfied with the findings or conclusions of the CDP hearing
can appeal the determination to the Tax Court. Gyorgy, 779 F.3d at 472 (citing 26 U.S.C.
§ 6330(d)(1)). The Tax Court may review a § 6707A penalty when it is appealed from a
CDP proceeding under § 6330(d). Yari v. Comm’r, 143 T.C. 157, 162 (2014).
When the Tax Court receives an appeal from the CDP hearing, however, its
review is limited to issues that were properly raised during the CDP hearing. See Goza v.
Comm’r, 114 T.C. 176, 182-83 (2000); Perkins v. Comm’r, 129 T.C. 58, 67 (2007);
Konkel v. Comm’r, 2000 WL 1819417, at *3 (M.D. Fla. Nov. 6, 2000); see also Treas.
Reg. § 301.6330–1(f), Q & A–F3. Because liability challenges precluded by ¶ (c)(2)(B)
and issues precluded by ¶ (c)(4)(A) cannot be heard at a CDP hearing, the taxpayer may
not present them to the Tax Court on appeal from the CDP hearing. See Goza, 114 T.C.
at 182-83. If the taxpayer still wishes to contest those issues, it must instead pay the
asserted liability and file a refund suit in federal district court. See Gorospe v. Comm’r,
451 F.3d 966, 968 (9th Cir. 2006).
3. Tax Court
Congress established the Tax Court, an Article I court within the Executive
Branch, Samuels, Kramer & Co. v. Comm’r, 930 F.2d 975, 991 (2d Cir. 1991), to give
- 13 -
taxpayers a method to challenge IRS liability assessments without first having to pay an
alleged liability. Without this forum, the taxpayer’s only alternative would be to pay the
asserted liability and initiate a refund suit in federal district court. Bartman, 446 F.3d at
787.
The Tax Court’s jurisdiction is limited and is generally conferred by § 7442, but
other specific grants are interspersed throughout the Code. Internal Revenue Manual
35.1.1.1. Specifically, § 6213(a) confers jurisdiction on the Tax Court to redetermine
deficiencies and § 6330(d) confers jurisdiction to review penalties challenged at a CDP
hearing. As noted above, the Tax Court may only review issues that were properly
before the CDP proceeding.
Because CDP hearings typically produce a “scant record,” the Tax Court generally
conducts a deferential review of CDP determinations. See Olsen v. United States, 414
F.3d 144, 150 (1st Cir. 2005). If the underlying tax liability was properly at issue in the
CDP hearing, the Tax Court reviews that issue de novo. Tucker v. Comm’r, 135 T.C.
114, 139 (2010). But the Tax Court reviews all other CDP determinations for an abuse of
discretion. Id.
The Tax Court’s decision is subject to review in the appropriate circuit court of
appeals. See 26 U.S.C. § 7482(a)(1).
C. Factual and Procedural History
Keller participated in an employee benefit plan called the Sterling Benefit Plan
(“Plan”), but did not report its participation on its tax return. The IRS alleges Keller’s
failure to report violated § 6707A. The IRS also claims Keller took improper deductions
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on its income tax returns related to its participation in the Plan, resulting in a deficiency.
As a result, Keller has faced two parallel proceedings in which the IRS has sought: (1) a
penalty under § 6707A for Keller’s failure to report its participation in the Plan,3 which
the IRS considers a listed transaction (“penalty proceeding”); and (2) the income tax
deficiency from and resulting penalty for Keller’s alleged improper deduction of
payments to the Plan (“deficiency proceeding”).4 This case concerns the first penalty
proceeding and Keller’s efforts to challenge its liability for the § 6707A penalty. We
outline the relevant factual and procedural history below.
1. Section 6707A Penalty and Appeals Office Administrative Proceedings
The Commissioner proposed a $57,781.50 penalty against Keller under
§ 6707A for the 2007 tax year for Keller’s failure to disclose its participation in a
listed transaction. Keller filed a protest with the Appeals Office to seek rescission of
the penalty under § 6707A(d). On June 20, 2013, the Appeals Officer, Ms. Espinoza,
held a telephone conference with Keller. Keller sent no materials beyond its protest
to Ms. Espinoza for consideration before the conference but faxed three forms during
the conference. At the conference, Ms. Espinoza heard Keller’s liability arguments,
3
As noted above, § 6707A penalties do not depend on an underlying
deficiency.
4
The asserted penalties fall under § 6662(a) (“Imposition of Accuracy-Related
Penalty on Underpayments”) and § 6662A (“Imposition of Accuracy-Related Penalty
on Understatements with Respect to Reportable Transactions”). When determining
penalties for deficiencies stemming from reportable transactions, including listed
transactions, under § 6662A, the terms “reportable transaction” and “listed
transaction” have the respective meanings given to such terms by § 6707A(c). 26
U.S.C. § 6662A(d).
- 15 -
concluded Keller’s participation in the Plan was a “listed transaction,” and decided
the penalty should be sustained. She sent a fax to Keller stating, “If taxpayer
disagrees with the penalty and/or Appeals doesn’t hear from [Keller] by 7/9/2013,
Appeals will process the case for closure.” J. App. at 35. Because the Appeals
Office did not hear from Keller by July 9, 2013, it sustained the penalty and closed
the case.
2. CDP Hearing
The IRS sent Keller a final notice of its intent to levy and of Keller’s right to a
CDP hearing under § 6330. The letter stated that Keller must pay the assessed
penalty, make payment arrangements, or appeal the levy by requesting a CDP
hearing. Keller requested a CDP hearing, arguing the penalty was assessed “without
the opportunity to protest the determination of the underlying transaction . . . [to be] a
listed transaction.” J. App. at 45. Keller did not seek any collection alternatives or
propose payment arrangements.
A CDP Officer, Elizabeth DeAngelis, granted Keller’s request for a hearing
and sent a letter scheduling a telephone conference. Ms. DeAngelis explained that
the call would provide an opportunity to discuss the reasons Keller disagreed with the
collection action or alternatives to the collection action. She explained that she must
consider any legitimate issues Keller wished to discuss. But, tracking the language
of ¶ (c)(2)(B), the letter stated: “You are not able to dispute the [underlying tax]
liability in your CDP hearing because: Our records show you had a prior opportunity
to dispute the penalty when you had a 6707A Appeals hearing for this tax period.” J.
- 16 -
App. at 47. The letter also outlined how Keller could raise the issue of alternative
collection methods at the CDP hearing and said that if Keller did not agree with the
CDP’s determination, “[it] may appeal the case to the United States Tax Court.” J.
App. at 47.
Keller participated in a phone conference with Ms. DeAngelis on March 18,
2014. Keller attempted to contest its tax liability, but Ms. DeAngelis informed
Keller’s counsel that Keller was precluded from challenging its liability because Ms.
Espinoza had reviewed and sustained liability at the Appeals Office hearing. Keller
raised no other issues during the hearing. Ms. DeAngelis sustained the penalty. The
IRS sent Keller a Notice of Determination, which specified that Keller’s only
arguments at the CDP hearing attempted to dispute its liability for the penalty,
“however, you are unable to raise the liability within this hearing since you had a
prior opportunity to dispute the liability when you had the IRC 6707A Appeals
hearing for this same tax period. You raised no other issues.” J. App. at 52-53, 55.
3. Tax Court
Keller filed a petition with the Tax Court to challenge its liability for the
penalty.5 The Commissioner filed a motion for summary judgment, arguing that
Keller was precluded from contesting its liability for the penalty in its CDP hearing
5
In its petition to the Tax Court, Keller also argued that § 6707(d)(2), which
precludes judicial review of the Commissioner’s determination to rescind a penalty,
is unconstitutional as a deprivation of due process. Keller raised this argument again
in its Objection to the Commissioner’s Motion for Summary Judgment. The Tax
Court noted the argument in its decision, but did not address its merits. Keller has
not raised this argument on appeal.
- 17 -
under ¶ (c)(2)(B) because of its previous opportunity to challenge liability at the
Appeals Office hearing. After the Tax Court allowed the parties to supplement their
filings, the Commissioner amended its motion for summary judgment to challenge
Keller’s ability to challenge its liability under both ¶ (c)(2)(B) and ¶ (c)(4)(A).
The Tax Court granted summary judgment to the Commissioner on June 16,
2015. It determined that ¶ (c)(2)(B) precluded Keller from challenging its underlying
liability because Keller was afforded a prior opportunity to dispute its liability in its
hearing before the Appeals Office.6 The Tax Court further held that Treas. Reg.
§ 301.6320-1(e)(3) is a reasonable interpretation of ¶ (c)(2)(B) and applies to Keller
based on Lewis v. Commissioner, 128 T.C. 48 (2007). Because Keller did not raise
any non-liability challenges, the Tax Court sustained the levy.7 Keller filed two
motions for reconsideration, which the Tax Court denied.
Keller timely appealed the Tax Court’s June 16, 2015 order to this court.
6
As noted above, ¶ (c)(2)(B) precludes liability challenges at the CDP hearing
when the taxpayer had a prior opportunity to dispute liability. See supra, note 4.
Although the taxpayer need not have taken advantage of that opportunity to be
precluded from re-litigating its liability before the CDP hearing, we note, as the Tax
Court did, that Keller availed itself of that opportunity and contested its penalty
liability before Ms. Espinoza.
7
The Tax Court also distinguished Keller’s case from Yari v. Comm’r of
Internal Revenue, 143 T.C. 157 (2014). In Yari, the taxpayer’s previous Appeals
Office consideration of its liability was not considered a “prior opportunity” to
challenge its liability under ¶ (c)(2)(B) because an amendment to § 6707A, which
established the proper method for computing penalties, intervened after the
administrative hearing and before the Tax Court hearing. Without any intervening
change to the statute giving rise to Keller’s liability in this case, the Tax Court held
the Appeals Office had considered Keller’s liability before the CDP hearing, and
Keller therefore had a prior opportunity to challenge the existence or the amount of
the underlying liability, as required by ¶ (c)(2)(B).
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II. DISCUSSION
The Commissioner argues that Keller’s appeal is moot because Keller is
collaterally estopped from challenging its liability. Keller argues that Treas. Reg.
§ 301.6320-1(e)(3) unreasonably interprets ¶ (c)(2)(B) to preclude liability
challenges at the CDP hearing—and ultimately before the Tax Court—when the
taxpayer had a prior opportunity to dispute its liability before the Appeals Office.
We disagree with the Commissioner’s mootness arguments and with Keller’s
arguments regarding the scope of the CDP hearing and affirm the Tax Court’s grant
of summary judgment.
A. Mootness and Collateral Estoppel
The Commissioner’s mootness argument, as more fully explained below, stems
from Keller’s stipulation to be bound in its deficiency proceeding by the Tax Court’s
decision in a related case called Our Country Home Enterprises Inc., et al. v.
Commissioner, 145 T.C. 1 (2015). In Our Country Home, the Tax Court addressed
another taxpayer’s participation in the same Sterling Benefit Plan and determined
that participation in the Plan was a listed transaction. Based on Keller’s stipulation,
the Commissioner contends that the Tax Court’s decision in Our Country Home that
participation in the Plan was a listed transaction resolved all of Keller’s issues in this
appeal and that Keller is thereby collaterally estopped from challenging its liability,
mooting this case. We disagree for three reasons: (1) The Commissioner’s collateral
estoppel argument concerns the merits of Keller’s arguments, not our jurisdiction;
(2) Keller’s stipulation is binding only in Keller’s deficiency proceeding, not the
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§ 6707A penalty proceeding at issue in this appeal; and (3) even if Keller’s
participation in the Plan is a listed transaction, Keller contests other issues related to
this appeal.
1. Additional Procedural Background
In the second parallel proceeding mentioned above—the deficiency
proceeding—the Commissioner issued a notice of deficiency to Keller for its alleged
improper deductions based on payments to the Plan between 2006-2008 and assessed
penalties for that deficiency under § 6662(a) and § 6662A. Keller stipulated with the
IRS that its liability for any deficiency based on improper income deductions for the
tax years 2006, 2007, and 2008 would be resolved “on the same basis that similar
issues are resolved by the final decision . . . of Our Country Home.” Supp. App. at
16.
On July 13, 2015, the Tax Court published its decision in Our Country Home,
concluding that participation in the Plan was a listed transaction, any deductions
taken for payments to the Plan resulted in a deficiency, and this deficiency was
subject to a penalty under § 6662A. The Tax Court entered its final order on
February 8, 2016.
2. Additional Legal Background
a. Mootness
The “[c]onstitutional mootness doctrine is grounded in the Article III requirement
that federal courts may only decide actual ongoing cases or controversies.” Prier v.
Steed, 456 F.3d 1209, 1212 (10th Cir. 2006) (citations and quotations omitted); see Lewis
- 20 -
v. Cont’l Bank Corp., 494 U.S. 472, 477 (1990). This court lacks subject matter
jurisdiction if a case is moot. Brown v. Buhman, 822 F.3d 1151, 1165 (10th Cir. 2016).
The parties must continue to have a “personal stake in the outcome” of the lawsuit at all
stages of the litigation so the question decided affects the rights of the litigants in the case
before the court. Id. (citations and quotations omitted). The question is whether granting
relief for the issues before the court “will have some effect in the real world.” Id. at
1165-66 (citations and quotations omitted).
A case may become moot while pending, including on appeal. United States v.
De Vaughn, 694 F.3d 1141, 1157 (10th Cir. 2012) (quoting Church of Scientology v.
United States, 506 U.S. 9, 12 (1992)). An “actual controversy must be extant at all stages
of review, not merely at the time the complaint is filed . . . . If an intervening
circumstance deprives the plaintiff of a personal stake in the outcome of the lawsuit, at
any point during litigation, the action can no longer proceed and must be dismissed as
moot.” Brown, 822 F.3d at 1165 (citations and quotations omitted). ‘“Put another way, a
case becomes moot when a plaintiff no longer suffers actual injury that can be redressed
by a favorable judicial decision.”’ Id. at 1166 (quoting Ind v. Colo. Dep’t of Corr., 801
F.3d 1209, 1213 (10th Cir. 2015)). When a case is on appeal,
[I]t is proper for a party to provide additional facts when that party has an
objectively reasonable, good faith argument that subsequent events have
rendered the controversy moot. Indeed, we depend on the parties for such
information, and it is axiomatic that subsequent events will not be reflected
in the [lower] court record.
- 21 -
See Morganroth & Morganroth v. DeLorean, 213 F.3d 1301, 1309 (10th Cir. 2000),
overruled on other grounds by TW Telecom Holdings, Inc. v. Carolina Internet Ltd., 661
F.3d 495 (10th Cir. 2011).
We review mootness de novo as a legal question. Brown, 822 F.3d at 1168.
b. Collateral Estoppel
Collateral estoppel, or issue preclusion, concerns the merits of a case. It is an
affirmative defense that bars the re-litigation of an issue of law or fact after it is
determined by a valid, final judgment. Stan Lee Media, Inc. v. Walt Disney Co., 774 F.3d
1292, 1297 (10th Cir. 2014).
The party invoking collateral estoppel must prove four elements: (1) the issue
previously decided is identical to the present one; (2) the prior action was finally
adjudicated on the merits; (3) the party against whom the doctrine is invoked was a party
or in privity with a party to the previous adjudication; and (4) the party against whom the
doctrine is raised had a full and fair opportunity to litigate the issue in the previous
adjudication. Id. Regarding the third element, the Supreme Court generally holds that
collateral estoppel does not apply to nonparties in the prior action. Taylor v. Sturgell, 553
U.S. 880, 893 (2008). But “the [general] rule against nonparty preclusion is subject to
exceptions,” including that “[a] person who agrees to be bound by the determination of
issues in an action between others is bound in accordance with the [agreement’s] terms.”
Id. (quoting 1 Restatement (Second) of Judgments § 40, p. 390 (1980)). The litigated
issue must also be “essential to the judgment.” Stan Lee Media, 774 F.3d at 1297
(quoting Arizona v. California, 530 U.S. 392, 414 (2000)).
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3. Analysis
This case is not moot for three reasons.
First, the Commissioner’s attempt to base mootness on collateral estoppel is
misplaced. Unlike mootness, an Article III jurisdictional bar, collateral estoppel is an
affirmative defense. See United States v. Simons, 86 F. App’x 377, 380 (10th Cir. Jan.
22, 2004) (unpublished) (citing Kenmen Eng’g v. City of Union, 314 F.3d 468, 479 (10th
Cir. 2002)) (“the[] invocation of . . . collateral estoppel to support [a] position on the
merits does not introduce any jurisdictional element into the case; these are mere
affirmative defenses.”)); see also Fed. R. Civ. P. 8(c) (listing res judicata and estoppel as
affirmative defenses). When a collateral estoppel defense defeats a claim, it does so on
the merits, not by displacing jurisdiction. The Sixth Circuit’s explanation of the
interaction between the doctrines of mootness and collateral estoppel is instructive:
[T]he possibility that a party is collaterally estopped from pursuing a cause
of action does not entail that that cause of action is moot. . . . The doctrine
of mootness . . . in no way depends on the merits of the plaintiff’s
contention . . . . Stated differently, the court assumes that the plaintiff will
receive the relief that he requests in this litigation, and then proceeds to
determine whether there is a substantial likelihood that that relief will
redress his asserted injury.
Smith v. SEC, 129 F.3d 356, 363-64 (6th Cir. 1997) (quotations omitted). The
Commissioner cites no authority to the contrary.
Second, Keller’s stipulation was limited to its deficiency proceeding and did not
cover its § 6707A penalty proceeding, which is the only proceeding pertinent to this
appeal. Applying collateral estoppel to a nonparty on the basis of its agreement to be
bound by an action between others is limited to “the [agreement’s] terms,” Taylor, 553
- 23 -
U.S. at 893. The terms of Keller’s stipulation in the deficiency proceeding do not extend
to its liability in the penalty proceeding.
Third, even if the decision in Our Country Home were to collaterally estop Keller
from challenging that its participation in the Plan constituted a listed transaction, other
issues remain that the outcome of this appeal could affect. The Commissioner argues that
if Keller’s participation in the Plan is a listed transaction, this appeal is moot because
Keller would be “collaterally estopped from challenging its liability for the reporting
penalty on remand.” Aplee. Br. at 25.8 But Keller’s appeal contests the scope of the
CDP hearing, not the merits of its liability challenge. And the Commissioner’s argument
overlooks that Keller seeks to contest at the CDP hearing not only whether a penalty
should be imposed but also its proper calculation under § 6707A. Aplt. Br. at 8 (“Among
the issues considered by the Appeals Officer in this initial administrative appeal was
whether the IRS erred in computing the amount of the penalty for the year 2007 . . . .
Keller contended (and still contends) that any penalty assessed under § 6707A for the
2007 tax year should be [calculated differently.]”). The Our Country Homes stipulation
does not reach the calculation issue.
8
We question whether this appeal is the proper forum for the Commissioner to
raise a collateral estoppel argument. At the CDP, Keller would challenge whether it
should be subject to a penalty under § 6707A and how any such penalty should be
calculated. These issues are not before us on this appeal, which is limited to determining
whether Keller should be able to present those challenges at the CDP hearing. The
Commissioner argues that the Tax Court’s decision in Our Country Home establishes by
collateral estoppel that Keller’s participation in the Plan is a listed transaction and that the
penalty therefore cannot ultimately be rescinded. But that issue is not before us. The
collateral estoppel argument seems more appropriate for the CDP hearing or the Tax
Court.
- 24 -
For the reasons stated, this case is not moot.
B. Keller’s Liability Challenges
Keller argues that ¶ (c)(2)(B) should not preclude liability challenges in a CDP
hearing or the Tax Court when the taxpayer’s prior opportunity to dispute its liability
arose, as it did here, in an administrative setting.9 Keller contends that ¶ (c)(2)(B)’s
interpretive regulation, Treas. Reg. § 301.6330-1, which specifies that a conference
with the Appeals Office is a prior opportunity under ¶ (c)(2)(B), is an unreasonable
interpretation of ¶ (c)(2)(B).10 We disagree. The Tax Court properly held Keller
was precluded from challenging its liability at the CDP hearing under ¶ (c)(2)(B).
1. Standard of Review
“We review tax court decisions ‘in the same manner and to the same extent as
decisions of the district courts in civil actions tried without a jury.’” Katz v. Comm’r,
335 F.3d 1121, 1125-26 (10th Cir. 2003) (quoting Kurzet v. Comm’r, 222 F.3d 830,
833 (10th Cir. 2000); 26 U.S.C. § 7482(a)(1)). Thus, like our review of a district
court’s grant of summary judgment, we review the Tax Court’s grant of summary
9
Because the Tax Court’s decision was based on ¶ (c)(2)(B) and we conclude
Keller was precluded from raising its liability challenges at the CDP hearing under
that paragraph, we need not reach whether Keller was similarly precluded from doing
so under ¶ (c)(4)(A).
10
Keller also proposes a new interpretation of ¶ (c)(2)(B): unless the taxpayer
received a notice of deficiency, or a functional equivalent, the taxpayer may
challenge the merits of the underlying liability in a CDP case. Because we conclude
Treas. Reg. § 301.6330-1 reasonably interprets ¶ (c)(2)(B), we reject Keller’s
proposed, alternative interpretation.
- 25 -
judgment de novo. Scanlon White, Inc. v. Comm’r, 472 F.3d 1173, 1174 (10th Cir.
2006).
2. Additional Legal Background
This section outlines the legal framework for analyzing treasury regulations,
highlights the relevant portions of ¶ (c)(2)(B) and Treas. Reg. § 301.6330-1, and
summarizes the Tax Court’s analysis of Treas. Reg. § 301.6330-1 in Lewis v.
Commissioner.
a. Chevron deference
We defer to an agency’s regulation that reasonably interprets an ambiguous
statute. Chevron, U.S.A., Inc. v. Nat’l Res. Def. Council, Inc., 467 U.S. 837, 841-44
(1984). “[C]onsiderable weight should be accorded to an executive department’s
construction of a statutory scheme it is entrusted to administer.” Id. at 844; see also
Hydro Res., Inc. v. EPA, 608 F.3d 1131, 1145-46 (10th Cir. 2010) (en banc)
(“[C]ourts afford considerable deference to agencies interpreting ambiguities in
statutes that Congress has delegated to their care, including statutory ambiguities
affecting the agency’s jurisdiction.” (citations omitted)).
This deference applies to Treasury regulations. See Mayo Found. for Med.
Educ. & Research v. United States, 562 U.S. 44, 55 (2011) (clarifying that Chevron
applies “with full force in the tax context”). Here, the Secretary promulgated Treas.
Reg. § 301.6330-1 pursuant to express general authority under 26 U.S.C. § 7805(a)
after notice and comment. Id. § 7805(a) (“Secretary shall prescribe all needful rules
and regulations for the enforcement of this title, including all rules and regulations as
- 26 -
may be necessary by reason of any alteration of law in relation to internal revenue.”).
It follows that Treas. Reg. § 301.6330-1 is entitled to Chevron deference unless it is
“arbitrary or capricious in substance, or manifestly contrary to the statute.” Mayo
Found., 562 U.S. at 53 (quotations omitted).
The Chevron-deference analysis proceeds in two steps. Zen Magnets, LLC v.
Consumer Prod. Safety Comm’n, 841 F.3d 1141, 1160 (10th Cir. 2016). First,
“[w]hen Congress has spoken to the precise question at issue, we must give effect to
the express intent of Congress.” Id. (citations and quotations omitted). Second, “[i]f
the statute is silent or ambiguous, however, we defer to the agency's interpretation, if
it is a permissible one.” Id. (quotations omitted); see also Sierra Club, Inc. v.
Bostick, 787 F.3d 1043, 1056-57 (10th Cir. 2015).
In the first step, we employ the “traditional tools of statutory construction” to
determine whether the intent of Congress is clear from the statutory text and
“whether the [statutory] language . . . has a plain and unambiguous meaning with
regard to the particular dispute.” INS v. Cardoza-Fonseca, 480 U.S. 421, 446
(1987); Chevron, 467 U.S. at 842-43; Robinson v. Shell Oil Co., 519 U.S. 337, 340
(1997). The “plainness or ambiguity of statutory language is determined by reference
to the language itself, the specific context in which that language is used, and the
broader context of the statute as a whole.” Robinson, 519 U.S. at 341. If the statute
is not ambiguous, our inquiry ends there. Id. at 340. But if the statute is “capable of
being understood by reasonably well-informed persons in two or more different
- 27 -
senses,” we proceed to the second step of Chevron. McGraw v. Barnhart, 450 F.3d
493, 498 (10th Cir. 2006) (quotations omitted).
In the second step, if the statute is silent or ambiguous on the specific issue,
we defer to the agency’s interpretation if it is based on a permissible construction of
the statute. Chevron, 467 U.S. at 842-43; Sierra Club, 787 F.3d at 1057. For a
construction to be permissible, we need not conclude it was the only one the agency
could reasonably have adopted or that we would have rendered the same
interpretation if the question arose initially in a judicial context. Chevron, 467 U.S.
at 843 n.11. We look only to whether the implementing agency’s construction is
reasonable. Nat’l Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S.
967, 980 (2005).
b. Paragraph (c)(2)(B)
The Tax Court relied on ¶ (c)(2)(B) to determine that Keller was precluded
from challenging its liability at the CDP hearing. As outlined above, ¶ (c)(2)(B)
precludes a taxpayer from challenging the existence or amount of the underlying tax
liability at a CDP hearing if the taxpayer had a prior “opportunity to dispute” that
liability—i.e., the taxpayer received a statutory notice of deficiency or otherwise had
an “opportunity to dispute” the underlying tax liability. When ¶ (c)(2)(B) precludes a
taxpayer from challenging its liability at the CDP hearing, the Tax Court accordingly
lacks authority to review the liability determination because that issue was not
properly before the CDP hearing. Goza, 114 T.C. at 182-83.
- 28 -
c. Treas. Reg. § 301.6330-1
In Treas. Reg. § 301.6330-1, the IRS explained that ¶ (c)(2)(B)’s reference to
“opportunity to dispute” “includes a prior opportunity for a conference with Appeals that
was offered either before or after the assessment of the liability.” This clarification was
promulgated in response to public comment about the proposed regulation.
Miscellaneous Changes to Collection Due Process Procedures Relating to Notice and
Opportunity for Hearing Prior to Levy, 71 Fed. Reg. 60827-02, 60830 (Oct. 17, 2006) (to
be codified at 26 C.F.R. pt. 301) (“For liabilities not subject to deficiency procedures, the
offer of an Appeals conference prior to assessment constitutes an opportunity to dispute
the liability under section 6330(c)(2)(B).”). The IRS rejected the suggestion to limit this
restriction to prior judicial proceedings:
According to the comments, the only opportunity to dispute the tax liability
that is sufficient to prevent the taxpayer from challenging the liability in a
CDP hearing is the prior opportunity to dispute the liability in a judicial
forum. The IRS and the Treasury Department believe that the existing
regulations correctly include an opportunity for an Appeals conference as a
preclusive prior opportunity. The text of section 6330(c)(2)(B) does not
contain language limiting prior opportunities to judicial proceedings.
Moreover, it is consistent for a taxpayer who has had an opportunity to
obtain a determination of liability by Appeals in one administrative hearing
to be precluded from obtaining an Appeals determination in a subsequent
CDP administrative hearing with respect to the same liability. This
interpretation of section 6330(c)(2)(B) has been upheld by the courts. See,
e.g., Pelliccio v. United States, 253 F. Supp. 2d 258, 261-62 (D. Conn.
2003). Accordingly, the final regulations do not adopt this suggestion.
Id. (emphasis added).
- 29 -
d. Tax court interpretation
The Tax Court applied Chevron deference to Treas. Reg. § 301.6330-1 in Lewis v.
Commissioner and held the regulation was a reasonable interpretation of ¶ (c)(2)(B). In
Lewis, like here, the Tax Court affirmed summary judgment for the Commissioner
because the taxpayer had a prior opportunity to dispute his underlying tax liability in a
conference with the Appeals Office. 128 T.C. at 62.
Applying the first step of Chevron, the Tax Court held that ¶ (c)(2)(B)’s
“otherwise have an opportunity to dispute” language is ambiguous. See id. at 55. It
noted that neither the 1998 IRS Restructuring and Reform Act nor the Code defined the
phrase. Id. Moreover, the court said that the phrase could fairly be read to suggest
different possible meanings, each finding support in the context of the statute: (1) it
could include only judicial review or (2) it could also include challenges before the
Appeals Office. Id. at 55-56.
Moving to Chevron step two, the Tax Court examined the possible meanings of
the statute outlined above and concluded that Treas. Reg. § 301.6330-1’s interpretation of
¶ (c)(2)(B) was reasonable. Id. at 61. Addressing the contrary view that ¶ (c)(2)(B)
could be read to include only judicial review, the Tax Court said:
As we see it, if Congress had intended to preclude only those taxpayers
who previously enjoyed the opportunity for judicial review of the
underlying liability from raising the underlying liability again in a
collection review proceeding, the statute would have been drafted to clearly
so provide. The fact that Congress chose not to use such explicit language
leads us to believe that Congress also intended to preclude taxpayers who
were previously afforded a conference with the Appeals Office from raising
the underlying liabilities again in a collection review hearing and before
this Court.
- 30 -
Id.
The Tax Court also offered several rationales to justify including administrative
proceedings in the definition of prior “opportunities” that would bar a subsequent
challenge of the underlying tax liability at a CDP hearing and thus found Treas. Reg.
§ 301.6330-1 to be a reasonable interpretation of ¶ (c)(2)(B).11
3. Analysis
The Tenth Circuit has not addressed whether ¶ (c)(2)(B) precludes a challenge
to liability at a CDP hearing when the taxpayer’s prior opportunity to dispute liability
occurred at an administrative, non-judicial proceeding.12
a. Applying Chevron
Applying the two-step Chevron test, we conclude, as the Tax Court did in
Lewis, that ¶ (c)(2)(B)’s reference to a prior “opportunity to dispute” is ambiguous
11
The Eighth Circuit and Tax Court have similarly precluded liability
challenges at CDP hearings under ¶ (c)(2)(B) when the taxpayer had a prior
opportunity to dispute its liability before the Appeals Office. See, e.g., Hassell
Family Chiropractic, DC, PC v. Comm’r, 368 F. App’x 695, 696 (8th Cir. 2010)
(unpublished) (barring taxpayer from challenging liability before Tax Court under ¶
(c)(2)(B) where it had a prior conference with an IRS Appeals Officer); Bishay v.
Comm’r, T.C. Memo. 2015-105, at *6 (2015) (holding that a taxpayer had an
“opportunity” to dispute his liability when he received a Letter 1153 and had a
subsequent conference with the Office of Appeals, “precluding [the taxpayer] from
re-raising that argument at his CDP hearing” under ¶ (c)(2)(B)).
12
In Shaffer v. Comm’r, 55 F. App’x 532, 535 (10th Cir. 2003) (unpublished),
we applied ¶ (c)(2)(B) and barred reconsideration of the taxpayer’s liability when it
had previously raised the issue of liability in a Tax Court proceeding. We made no
comment in Shaffer about the statute’s application to a prior administrative
opportunity to dispute liability.
- 31 -
and that Treas. Reg. § 301.6330-1 is a reasonable interpretation of ¶ (c)(2)(B). We
therefore affirm the Tax Court’s grant of summary judgment.
i. Step one
In step one of the Chevron analysis, we determine whether the statute is
ambiguous. Here, ¶ (c)(2)(B) is ambiguous on its face and when analyzed within the
context of § 6330.
Keller and the Commissioner agree that the language of ¶ (c)(2)(B) does not
define which prior “opportunities” to dispute tax liability Congress intended to
include. The Tax Court in Lewis found that ¶ (c)(2)(B) was subject to competing
interpretations. 128 T.C. at 55. Looking at the language of ¶ (c)(2)(B), we agree that
what constitutes an “opportunity to dispute” is subject to more than one reasonable
interpretation: it may refer only to judicial review, only to administrative review, or
both.
Paragraph (c)(2)(B)’s surrounding text contributes to this ambiguity.
Paragraph (c)(4)(A) expressly precludes consideration of issues at a CDP hearing that
were raised and considered at any other “administrative or judicial proceeding”
(emphasis added). In contrast, ¶ (c)(2)(B) refers to prior “opportunity to dispute” but
is silent on what type of opportunity the phrase includes.
Paragraph (c)(2)(B)’s text is thus ambiguous. Neither the surrounding text of
§ 6330 nor the rest of the Code define what Congress intended by “otherwise have an
opportunity to dispute.” Accord Lewis, 128 T.C. at 55.
- 32 -
ii. Step two
In step two of the Chevron analysis, we determine whether the agency’s
interpretation is based on a permissible construction of the statute. Here, we
conclude that Treas. Reg. § 301.6330-1(e)(3)’s explanation that a prior ¶ (c)(2)(B)
“opportunity to dispute” includes “a prior opportunity for a conference with Appeals
that was offered either before or after the assessment of the liability” is a reasonable
interpretation of ¶ (c)(2)(B).
First, focusing on the text, ¶ (c)(2)(B) states:
The person may also raise at the hearing challenges to the existence or amount
of the underlying tax liability for any tax period if the person did not receive
any statutory notice of deficiency for such tax liability or did not otherwise
have an opportunity to dispute such tax liability.
The word “hearing” refers to the CDP hearing. Because the tax liability in this
case is a penalty and not a deficiency, the key language is “did not otherwise have an
opportunity to dispute such tax liability.” Nothing on the face of this text excludes
an administrative proceeding from an “opportunity to dispute” a tax penalty. And
nothing suggests that reading “opportunity to dispute” to include an administrative
proceeding is unreasonable. The text of the statute therefore supports the
reasonableness of Treas. Reg. § 301.6330-1(e)(3)’s interpretation of ¶ (c)(2)(B).
Second, considering the key language in the statute’s broader context,
¶ (c)(4)(A) bars taxpayers from raising an issue at a CDP hearing that was raised and
considered in a judicial or administrative forum. It is reasonable to conclude that
- 33 -
Congress regarded an administrative hearing as adequate to preclude CDP hearing
consideration under ¶ (c)(2)(B) as well.13
Third, we find the Tax Court’s reasoning in Lewis persuasive. There, the court
said it would be “possible to interpret ‘otherwise have an opportunity to dispute’ to refer
to those situations where a taxpayer was afforded one of the other, nondeficiency,
avenues for prepayment judicial review.” 128 T.C. at 56. But, after pointing out several
problems with this interpretation, the court concluded it was “unlikely that this was
Congress’s intent.” Id. at 61.
For example, the Tax Court observed that if Congress had intended to limit
¶ (c)(2)(B) to prior judicial review, it could simply have said “opportunity to seek
judicial review.” Id. at 57. Moreover, the judicial-only interpretation Keller proposes
would “encourage a taxpayer to wait until a collection action begins before disputing [a
nondeficiency] liability” to obtain judicial, rather than administrative, review of liability.
Id. at 58. But this would minimize the role of the Appeals Office and contradict the
purpose of the 1998 IRS Restructuring and Reform Act. Congress intended to provide
the taxpayer a means to seek review of a liability through an informal conference with the
Appeals Office, id. at 59—“a meaningful process, short of litigation, in which [the
taxpayer] could resolve tax disputes,” id. at 60; see also Giamelli v. Comm’r, 129 T.C.
107, 114 (2007).
13
See Bankers Life and Cas. Co. v. United States, 142 F.3d 973, 983 (7th Cir.
1998) (“In the second step [of Chevron], the court determines whether the regulation
harmonizes with the language, origins, and purpose of the statute.”).
- 34 -
We agree with these points and the Tax Court’s conclusion that “it is reasonable”
to read ¶ (c)(2)(B) “to conclude that Congress intended not only to address those
taxpayers who were previously provided an opportunity to litigate their liability, but also
those provided an opportunity to dispute the liability short of litigation.” 128 T.C. at 60.
Thus, under ¶ (c)(2)(B), “[a] conference with the Appeals Office provides a taxpayer a
meaningful opportunity to dispute an underlying tax liability.” Id. at 61. It follows that
the regulation interpreting ¶ (c)(2)(B) in this manner is a reasonable construction of the
statute.
b. Keller’s arguments
Keller argues Treas. Reg. § 301.6330-1 is an unreasonable interpretation of
¶ (c)(2)(B) because it (1) impermissibly limits the jurisdiction of the Tax Court and
the federal courts; and (2) is internally inconsistent. These arguments do not
persuade us that the regulation is unreasonable or “arbitrary, capricious, or manifestly
contrary to the statute,” Chevron, 467 U.S. at 844.
i. Limiting jurisdiction
Keller argues that Treas. Reg. § 301.6330-1 impermissibly limits the
jurisdiction of the Tax Court through a regulation and thus should not receive
Chevron deference. We disagree.
Treas. Reg. § 301.6330-1 does not diminish the jurisdiction of any court.
Section 6330(d) establishes the Tax Court’s jurisdiction to review CDP proceedings.
Treas. Reg. § 301.6330-1 limits only the scope of what may be heard at the agency’s
- 35 -
administrative CDP proceedings.14 Although the Tax Court has jurisdiction only to
hear matters that were properly before the CDP hearing, see Goza, 114 T.C. at 182-
83, Treas. Reg. § 301.6330-1 does not address the Tax Court. It addresses matters
that may be raised before an administrative CDP hearing.
Moreover, Treas. Reg. § 301.6330-1 has no impact on the taxpayer’s ability to
file a refund suit in federal district court. The jurisdiction of federal courts remains
available for a taxpayer to contest its liability.
ii. Inconsistencies
Keller argues that Treas. Reg. § 301.6330-1 contains internal inconsistencies
and is thus unreasonable. We disagree.
First, Keller contends Treas. Reg. § 301.6330-1 is inconsistent because it
precludes liability challenges at a CDP hearing even when the taxpayer failed to exercise
its opportunity to dispute liability at the Appeals Office and was therefore not actually
heard. But this is not an inconsistency. As explained previously, the statute and the
regulation refer only to an “opportunity,” not to an opportunity that was exercised. See
Chandler, 327 F. App’x at 766 (holding taxpayer was properly precluded from
challenging liability at a CDP hearing when it had a prior opportunity to dispute liability
and did not exercise it). Not only is the regulation internally consistent, it comports with
the purpose of encouraging taxpayers to use the Appeals Office process.
14
We agree with the IRS’s Office of Chief Counsel, who explained: “This
preclusive effect does not define the scope of the reviewing court’s jurisdiction but
defines only when a taxpayer can challenge his or her liability.” Collection Due
Process Cases, Office of Chief Counsel Notice, CC-2003-016, Internal Revenue
Service at 16 (May 29, 2003).
- 36 -
Second, Keller argues Treas. Reg. § 301.6330-1 is inconsistent because it
precludes liability challenges at a CDP hearing for some, but not all, prior administrative
opportunities. For example, Keller notes that Treas. Reg. § 301.6330-1’s explanation of a
prior “opportunity” does not include liability challenges previously heard at a conference
with the Examination Division of the IRS or by the Appeals Office in a pre-assessment
hearing for a liability subject to deficiency procedures. But again, Keller fails to show an
internal inconsistency. Nothing in the regulation mentions conferences with the
Examination Division or is inconsistent with allowing challenges at the CDP hearing for
liabilities subject to deficiency procedures. Moreover, Keller fails to show that drawing
distinctions among different administrative processes is unreasonable or arbitrary or that
it is inconsistent to treat different administrative proceedings differently. See Mayo
Found., 562 U.S. at 59 (“Regulation, like legislation, often requires drawing lines.”). In
particular, Keller has not shown that the prior Appeals Office opportunity addressed in
Treas. Reg. § 301.6330-1 is similar to or serves similar purposes as the other
administrative proceedings Keller cites as falling outside the regulation.
In short, Keller’s internal inconsistency arguments fall short of showing that
Treas. Reg. § 301.6330-1 is arbitrary, capricious, or manifestly contrary to the statute.
- 37 -
III. CONCLUSION
For the foregoing reasons, we affirm the Tax Court’s grant of summary
judgment.15
15
Keller and the Commissioner have each filed an unopposed motion
requesting judicial notice of certain materials. Keller’s motion tenders a document
regarding calculation of its penalty. Because we do not, and need not, reach this
issue, we deny Keller’s motion. The Commissioner’s motion provides a
supplemental appendix containing documents from Tax Court decisions relevant to
Keller’s appeal and comporting with Fed. R. Evid. 201(b)(2). See Estate of
McMorris v. Comm’r, 243 F.3d 1254, 1259 n.8 (10th Cir. 2001). Accordingly, we
grant the Commissioner’s motion.
- 38 -
| {
"pile_set_name": "FreeLaw"
} |
In the United States Court of Federal Claims
OFFICE OF SPECIAL MASTERS
*************************
IVORY ODOM, *
* No. 17-569V
Petitioner, * Special Master Christian J. Moran
*
v. *
* Filed: August 20, 2018
SECRETARY OF HEALTH *
AND HUMAN SERVICES, *
*
Respondent. *
*************************
ORDER CONCLUDING PROCEEDINGS1
On August 17, 2018, the petitioner filed a Notice of Dismissal in the above-captioned
case.
Accordingly, pursuant to Vaccine Rule 21(a), the above-captioned case is hereby
dismissed without prejudice. The Clerk of the Court is hereby instructed that a judgment shall
not enter in the instant case pursuant to Vaccine Rule 21(a).
IT IS SO ORDERED.
s/ Christian J. Moran
Christian J. Moran
Special Master
1
The E-Government Act, 44 U.S.C. § 3501 note (2012) (Federal Management and
Promotion of Electronic Government Services), requires that the Court post this decision on its
website. Pursuant to Vaccine Rule 18(b), the parties have 14 days to file a motion proposing
redaction of medical information or other information described in 42 U.S.C. § 300aa-12(d)(4).
Any redactions ordered by the special master will appear in the document posted on the website.
| {
"pile_set_name": "FreeLaw"
} |
77 N.W.2d 467 (1956)
162 Neb. 769
TOWN OF EVERETT, BURT COUNTY, Nebraska, Appellant,
v.
Paul TEIGELER, Appellee.
No. 33934.
Supreme Court of Nebraska.
June 8, 1956.
As Modified on Motion for Rehearing October 12, 1956.
*469 Richards, Yost & Schafersman, Fremont, for appellant.
Spear & Lamme, Fremont, for appellee.
Heard before CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE, and BOSLAUGH, JJ.
CHAPPELL, Justice.
Plaintiff, Town of Everett, a township in Burt County, brought this action seeking by mandatory injunction to require defendant Paul Teigeler to remove a dike and restore his adjoining land to its condition just before the dike was constructed. After hearing on the issues made by plaintiff's petition, defendant's answer, and plaintiff's reply, the trial court inspected the premises and rendered a judgment which found and adjudged the issues generally in favor of defendant and against plaintiff, and dismissed the action at plaintiff's costs. Plaintiff's motion for new trial was overruled, and it appealed, assigning that the judgment was contrary to the evidence and law. We sustain the assignment.
*470 As held in Wiskocil v. Kliment, 155 Neb. 103, 50 N.W.2d 786, 787: "Actions in equity, on appeal to this court, are triable de novo, subject, however, to the rule that when credible evidence on material questions of fact is in irreconcilable conflict, this court will, in determining the weight of the evidence, consider the fact that the trial court observed the witnesses and their manner of testifying, and must have accepted one version of the facts rather than the opposite."
Also, as held in Mader v. Mettenbrink, 159 Neb. 118, 65 N.W.2d 334, 337: "The trial court is required to consider any competent and relevant facts revealed by a view of the premises as evidence in the case, and a duty is imposed on this court on review of findings made by the trial court to give consideration to the fact that the trial court did view the premises; provided, that the record contains competent evidence to support the findings."
In the light of such rules and others hereinafter discussed, we have examined the evidence, which summarized fairly discloses the following: In 1943 plaintiff opened a 33-foot road in Burt County, running east and west between land in Section 11, Township 23, Range 8, owned by Alva Roscoe, whose land was adjacent to the road on the north, and land in Section 14, Township 23, Range 8, owned by defendant, whose land was adjacent to the road on the south. In a low spot in the road, about midway between such adjacent lands, plaintiff constructed a cement spillway for the passage of surface waters which naturally flowed south from Roscoe's land to a drainway on defendant's land, thence southward to a southern point on defendant's land where the water accumulated, and overflowed into Logan Creek, which drained it off in a south and southeast direction. Just south of the spillway, but on his own land, defendant constructed a dike running east and west, about 85 feet long and 2½ to 3 feet high, which not only diverted the water from his land back up over plaintiff's road, but also diverted it westward for some distance, thence north, back across the road where part of the water flowed back east in the north roadside ditch to the spillway, and part of it flowed northeast across Roscoe's land, thence back to the spillway and against defendant's dike. Thus, waters from defendant's diversion and from Roscoe's land dammed up over plaintiff's road for a distance of as much as 80 rods during heavy rains, making the road impassable and unable to be maintained. It is such dike that plaintiff sought to have removed by mandatory injunction, which relief we conclude the trial court should have granted.
Years ago both farms were owned by the same person, but operated separately. There was a private lane or road of a sort between them which was at times impassable at the low spot involved, and required detouring through adjoining fields. On both sides of such lane, there was hay land and pasture and a well-defined ditch with banks which continued from what is now the Roscoe land on into what is now defendant's land, thence on down toward the south into Logan Creek as a general drainage course. Whether the ditch was natural or man-made is not established with any certainty. In any event, for many years it carried water enough at times so that in early days men hunted along it and caught fish in it which had come back up out of Logan Creek. There is no dispute that waters falling on these lands had to drain through that territory toward the south and east, and that waters had always gone across the road in that direction where the spillway was later constructed.
Roscoe bought the north farm in 1920. At that time there was a small ditch on his land extending from northwest in a south or southeast direction into defendant's land at the location of the spillway. Roscoe farmed over that ditch but kept it cleaned out. In 1927 he broke up the hay meadow and pasture. A little later he tiled it, with the outlet running under the land now owned by defendant, into Logan Creek. Roscoe's land, from a point north of the road and west of the spillway, slopes downward to the east and northeast. Further *471 north it slopes downward to the east and southeast to the spillway. From there it slopes upward to the east both north and south. East of the spillway defendant's land slopes upward to the east, and west of the spillway defendant's land slopes to the north and east. It was from that portion of defendant's land that the dike diverted water back over Roscoe's land into the roadside ditch and over the road.
It is clear that the water from Roscoe's land formerly reached the low spot where the spillway is, and then flowed south and a little east across defendant's land. Part of it in the south end thereof might be stored on defendant's land until it evaporated, but if there was any considerable volume of water it went on south into Logan Creek over defendant's land.
In about 1927 Roscoe constructed a ditch across the north part of his farm toward the east, from about where his buildings are located, to Logan Creek. Such ditch drained off nearly all the water on about the north half of Roscoe's farm, which water had formerly gone down toward the spillway and on over defendant's land. Later, in 1942, Roscoe put a dike on the south side of that ditch and since that time, except in case of unusual floods, he has kept all waters upon such north half from flowing south, which has relieved the Roscoe land and defendant's land of waters which they had formerly received.
There is also a roadside ditch running east and west just north of plaintiff's road and west of the spillway, which Roscoe admitted he had cleaned out to improve drainage. There is no dispute that when Roscoe cleaned out that ditch and the one heretofore mentioned running from northwest to southeast, it did not result in any additional water being received by defendant, but it naturally made it reach the spillway faster.
Defendant bought the south farm in 1942. His land south of the spillway had been broken up in about 1928 or 1929. Contrary to a preponderance of credible evidence, he testified that there were no ditches on Roscoe's land that drained onto his land until about 1949, when Roscoe constructed them. He also testified that there was no drainway or watercourse 2 feet below the surrounding land on his land south of the spillway. He admitted that there was a swale on the south 80 rods of his land, which drained into Logan Creek. In 1952 he consulted conservation authorities and had a survey made. Later, with a Caterpillar tractor and scraper, defendant dug a ditch from a point 200 feet south of the spillway clear through, straight south to his south line. Connected therewith he also dug a ditch toward the east thereof, with a dike on its south side which carried waters from his land into Logan Creek. He also dug another ditch from near the north line of his land in a southeast direction and emptied it into Logan Creek. Water from heavy rains still flowed and accumulated an and over his land, so, without conservation advice, defendant built the dike here involved and extended his ditch up to it. Such dike admittedly holds back water coming down from the north toward the spillway and casts it back upon and over plaintiff's road. Defendant's contention that he was absolved from any liability because of the ditches claimed by him to have been constructed by Roscoe on his own land, together with Roscoe's manifest interest in this litigation, has no merit.
The soil conservation official who made the survey for defendant testified that there was no defined watercourse 2 feet below the surrounding land leading south from the spillway over defendant's land, but that he did not advise defendant to build the dike. Defendant's tenant testified that there was an impression of a waterway running south to defendant's south line from a point about 80 rods north thereof, and that the other 80 rods north of it up to the spillway was just naturally low where the water came down from the spillway and wound its way around through the lowest places until high enough to move on over into Logan Creek, but there was no watercourse 2 feet below the surrounding lands leading south from the spillway. During high water, he saw water flowing from Roscoe's land across into defendant's conservation *472 ditch from each side of the dike, thence right on over across defendant's land to its south end. He admitted that water went west from defendant's dike, then crossed the road back north to Roscoe's land, thence south to the spillway; and that even without any ditches on Roscoe's land, the water would wind its way slowly across where the spillway was, where it had washed out an impression on defendant's land to the south.
One witness for defendant testified that in the 1920's, there was a ditch or drainway on the lands of both Roscoe and defendant in which water ran on down into Logan Creek, and that even without any ditches the water would go south and east where it always went. Another such witness testified that a ditch ran in a straight line from northwest to southeast on Roscoe's land, then turned straight south on and over defendant's land. He never saw a watercourse 2 feet below the surface of the surrounding land, but the water did go on across defendant's land, with the size of the stream dependent upon the amount of the rain. From about 1929 they just farmed right on across the ditch, but the water still went in the same course south and east as it always did.
Throughout this case defendant, relying upon section 31-202, R.R.S.1943, has erroneously assumed, as the trial court must have done, that in order to be liable, the outlet from the spillway across south on defendant's land was required to be a depression or draw at least "two feet below the surrounding lands and having a continuous outlet to a stream of water, or river or brook". In doing so, defendant has doubtless overlooked the fact that sections 31-201 and 31-202, R.R.S.1943, must be construed and applied together. See Bussell v. McClellan, 155 Neb. 875, 54 N.W.2d 81, where we so construed and applied them. Such opinion is also authority for the rule that in cases such as that at bar, the flow of surface water in any welldefined course, whether it be a ditch, swale, or draw in its primitive condition, and whether or not it is 2 feet below the surrounding land, cannot be arrested or interfered with to the injury of neighboring proprietors.
In McGill v. Card-Adams Co., 154 Neb. 332, 47 N.W.2d 912, 913, this court held: "It is the duty of those who build structures across natural drainways to provide for the natural passage through such obstruction of all waters which may be reasonably anticipated to drain there. This is a continuing duty.
* * * * * *
"Where surface water resulting from rain and snow flows in a well-defined course, whether it be a ditch, swale, or draw in its primitive condition, its flow cannot be arrested or interfered with by a landowner to the injury of neighboring proprietors.
"For such an injury injunction is the proper remedy, and equity looks to the nature of the injury inflicted, together with the fact of its constant repetition, or continuation, rather than to the magnitude of the damage inflicted, as the ground of affording relief." See, also, Mader v. Mettenbrink, supra; Leaders v. Sarpy County, 134 Neb. 817, 279 N.W. 809.
As held in County of Scotts Bluff v. Hartwig, 160 Neb. 823, 71 N.W.2d 507, 508: "Surface water is a common enemy and the proprietor may by embankment or dike or otherwise defend himself against its encroachments and will not be liable in damages which may result from the deflection and repulsion defended against, provided that the proprietor in making defense on his own land himself exercised ordinary care, and provided he so uses his own property as not to unnecessarily and negligently injure another.
"The right of the owner, without negligence, to protect his land against surface water is a continuing one and the right is commensurate with the necessity for protection.
"While one may fight surface water and protect his premises against it by the use of reasonable means, he cannot *473 collect it in a large body and flow it onto the land of a lower proprietor to his injury."
Conversely, of course, the last rule aforesaid has application when a lower proprietor collects surface water in a large body and diverts it upon the land of an upper proprietor. For example, in Pospisil v. Jessen, 153 Neb. 346, 44 N.W.2d 600, 603, involving comparable circumstances, this court said: "As to the dike which defendant constructed it was in the natural course of drainage for water coming down from plaintiff's land. It was constructed for no other purpose than to prevent the flow of this water over his land and on down over a natural course to ultimately empty into a creek some miles away. The dike diverted the water from its natural course and caused it to back up and inundate plaintiff's land.
"This under the principles announced he had no right to do. The plaintiff was entitled unqualifiedly to have the dike removed to the extent that it interferes with the free flow of water in the natural course of drainage and to an injunction restraining its maintenance or reconstruction."
Therein we also held: "Water flowing in a well-defined watercourse cannot lawfully be diverted and cast upon the lands of another to his damage where it was not wont to run in the natural course of drainage."
Likewise, in Schomberg v. Kuther, 153 Neb. 413, 45 N.W.2d 129, 131, we held: "A proprietor may not collect surface waters on his estate into a ditch or drain and discharge them in a volume on the lands of his neighbor, nor can he divert them so they go in a direction different from the natural flow."
In Purdy v. County of Madison, 156 Neb. 212, 55 N.W.2d 617, 619, we said: "The question raised, therefore, is whether the county could properly cover up the culvert and dam the natural drainage course where the surface waters were wont to flow in a state of nature. In so doing, the county carried the water in the north road ditch, doing damage to the plaintiff's driveway and to his meadow land on the east side of his quarter. We have held many times that water cannot be so diverted from its natural drainage course as it existed in a state of nature to the damage of another." See, also, Jack v. Teegarden, 151 Neb. 309, 37 N.W.2d 387.
As early as Town v. Missouri P. Ry. Co., 50 Neb. 768, 70 N.W. 402, 403, this court held: "Surface waters may have such an accustomed flow as to have formed at a certain place a channel or course cut in the soil by the action of the water, with well-defined banks, and having many of the distinctive attributes of a water course; and though there are no exceptions to the general rule, except from necessity, this may constitute an exception, and, if the flow is stopped by the erection of an embankment across and in the channel, some provision may be necessary for the allowance of the regular flow of the surface waters."
In that connection, this court held in Muhleisen v. Krueger, 120 Neb. 380, 232 N.W. 735: "The rule in Town v. Missouri P. R. Co., 50 Neb. 768 [70 N.W. 402], examined, approved, and followed, this case not coming under the exception to the general common-law rule as to surface waters suggested therein, and as announced in Flesner v. Steinbruck, 89 Neb. 129 [130 N.W. 1040, 34 L.R.A.,N.S., 1055], and Aldritt v. Fleischauer, 74 Neb. 66 [103 N.W. 1084, 70 L.R.A. 301]."
In Flesner v. Steinbruck, 89 Neb. 129, 130 N.W. 1040, 34 L.R.A.,N.S., 1055, this court held: "Every interference by one landowner with the natural drainage to the injury of the land of another is unreasonable if not made by the former in the reasonable use of his own property.
"It is not a reasonable use of one's property to construct a dike across a natural drain upon farm lands for the sole purpose of preventing the flow of unpolluted water from a neighbor's land in the natural course of drainage, where such flow had theretofore at all times been uninterrupted.
*474 "A lower proprietor has no lawful cause for complaint because the upper proprietor in the exercise of good husbandry by the use of ditches changes the course of drainage upon his own premises, but permits the water to flow without an appreciable increase in volume upon the servient estate in a natural drain, where it would have appeared if the ditches had not been constructed.
"If an upper proprietor in the interest of good husbandry, and without negligence, collects in a ditch surface water which formerly spread over his premises, and accelerates its flow in the natural course of drainage through a natural drain onto the lands of his neighbor, he is not liable therefor."
Also, in Mapes v. Bolton, 89 Neb. 815, 132 N.W. 386, this court held: "A lower proprietor may not unnecessarily obstruct a natural drain upon his own premises without the upper proprietor's consent, so as to collect surface water and cast it back upon his neighbor's farm where it would not appear but for that obstruction, and to the injury of his neighbor's crops and land.
"Section 1, art. 3, c. 89, Comp.St. 1909, which authorizes a proprietor to drain his land by tile or open ditches so constructed as to discharge water into any depression or draw upon his own premises, does not authorize him to dam up and permanently obstruct a natural drain so as to prevent assembled surface water from flowing therein in the natural course of drainage, and so as to injure his neighbor's crops and land." Section 1, article III, chapter 89, Comp.St.1909, now appears as section 31-201, R.R.S.1943.
In the light of such rules and the evidence aforesaid, we conclude that the judgment of the trial court should be and it is hereby reversed and the cause is remanded with directions to render judgment against defendant and in favor of plaintiff as prayed in plaintiff's petition. All costs are taxed to defendant.
Reversed and remanded with directions.
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225 Ga. 36 (1969)
165 S.E.2d 708
PINION
v.
THE STATE.
24957.
Supreme Court of Georgia.
Argued December 9, 1968.
Decided January 9, 1969.
Rehearing Denied January 23, 1969.
John L. Respess, Jr., James R. Venable, H.G. McBrayer, Jr., for appellant.
G. Wesley Channell, Solicitor General, Arthur K. Bolton, Attorney General, Marion O. Gordon, Assistant Attorney General, Courtney Wilder Stanton, Deputy Assistant Attorney General, for appellee.
DUCKWORTH, Chief Justice.
This is a companion case to Park v. State, 224 Ga. 467 (162 SE2d 359), and arises out of the trial of an alleged co-conspirator for the murder of the same person as therein. The defendants were involved in an illegal liquor conspiracy in which it is alleged that this defendant and others conspired to kill the deceased. Reference is here made to the report of that case for a more complete statement of facts since the testimony in this case is, in substance, much the same. The review here will discuss the necessary evidence in this decision and a detailed account will not be set out. The accused was indicted, tried and convicted, and upon the recommendation of mercy he was sentenced to life imprisonment. Thereafter he filed a motion for new trial, which was later amended, and, after a hearing, overruled. The appeal is from the order and judgment denying him a new trial with some thirty grounds of error enumerated. Appellant's brief argues those grounds in approximately thirteen divisions. However, this opinion will review the case in seven parts, as follows: Held:
1. There being ample evidence to show conclusively a conspiracy between Pinion and others to violate the liquor laws of the state and to murder the deceased as a necessary result thereof, which was accomplished, such evidence supports the verdict and none of the general grounds of the motion for new trial is meritorious. Code § 38-306; Park v. State, 224 Ga. 467 (162 SE2d 359); Chappell v. State, 209 Ga. 701, 702 (75 SE2d 417); Fincher v. State, 211 Ga. 89 (4) (84 SE2d 76); Handley v. State, 115 Ga. 584 (41 SE 992); Gore v. State, 162 Ga. 267 (1a) (134 SE 36). Further, once a conspiracy has been shown to exist, it may be traced from its beginning *37 throughout its existence. Daniels v. State, 58 Ga. App. 599, 607 (199 SE 572).
2. The admissions of a co-conspirator during the pendency of the criminal project shall be admissible against all. Code § 38-306. Thus the acts, doings and sayings of the co-conspirators made before and after the killing as well as the testimony in regard to the investigation of the illegal liquor conspiracy, including the acts and doings of the murder victim relative thereto, which is original evidence under Code § 38-302, were properly allowed in evidence. The case of Bruton v. United States, 391 U. S. 123 (88 SC 1620, 20 LE2d 476), which, in effect, follows a holding that a confession by one of the co-conspirators after he has been apprehended is not in any sense a furtherance of the criminal enterprise and cannot be used as evidence against the other conspirators, is not controlling and has no bearing on this case. See Fiswick v. United States, 329 U. S. 211, 217 (67 SC 224, 91 LE 196). None of the enumerations of error complaining of the allowance in evidence of testimony of the various witnesses in regard to liquor raids, illegal liquor and beer sales, the seizure of whiskey, various arrests of liquor violators, and the padlocking of the "yellow house," complained of herein, and as shown above, is meritorious.
3. Evidence which, although incidentally involving the character of the accused, is competent and material to prove the conspiracy, and the testimony in regard to the withholding of illegal liquor receipts from the co-conspirators including the subsequent slapping of a female by the accused was properly allowed in evidence over the objection made since it showed the activities of the conspirators. Little v. State, 150 Ga. 728 (105 SE 359); Howell v. State, 162 Ga. 14 (134 SE 59); Hyde v. State, 196 Ga. 475 (26 SE2d 744); Calhoun v. State, 210 Ga. 180 (78 SE2d 425). None of the enumerations of error complaining of this evidence is meritorious.
4. Hypothetical questions involving evidence or requiring a response from a juror which might amount to a prejudgment of the case are improper and should be excluded from the examination of prospective jurors. Evans v. State, 222 Ga. 392, 401 (150 SE2d 240). Hence, the court did not err in refusing to allow counsel to ask prospective jurors that not having heard the evidence, "Do you, at the moment believe the defendant innocent?" We find no abuse of discretion *38 which would authorize us to interfere with the pre-trial examination of witnesses under Code Ann. § 59-705.
5. During the opening statement as to what the State intended to prove, the prosecuting attorney made a remark to the jury that "Pinion was his handmaiden, his torpedo man, his strong-arm man" and that the deceased had sought to stamp out the bootlegging business of which the accused was a part. Since the prosecution in its opening statement is permitted to state what it intends to prove and subsequently presented evidence to prove same, the statements of counsel did not require a reprimand or mistrial. Hyde v. State, 196 Ga. 475, supra; Thornton v. State, 209 Ga. 51 (70 SE2d 733); Sterling v. State, 89 Ga. 807 (15 SE 743); Herring v. State, 10 Ga. App. 88 (2) (72 SE 600); Daniels v. State, 58 Ga. App. 599, 605 (199 SE 572). The court did not err in refusing to grant the mistrial.
6. The object of all legal investigations, including criminal trials, is the ascertainment of the truth, and since it is the exclusive right of the jury to pass on the credibility of witnesses, the court did not err in refusing to exclude the testimony of the co-conspirator, Blackwell, because he was allegedly granted and promised a life sentence and his testimony was thus obtained under duress and stress. Code § 38-1805; Stone v. State, 118 Ga. 705 (6) (45 SE 630, 98 ASR 145); Lee v. State, 66 Ga. App. 613, 619 (18 SE2d 778); Williams v. State, 222 Ga. 208 (12), 216 (149 SE2d 449).
7. Having considered every enumeration of error argued in appellant's brief, we find no grounds of error sufficient to grant the motion for new trial, as amended, and the lower court did not err in denying the motion.
Judgment affirmed. All the Justices concur.
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395 F.3d 123
Napoleon Bonaparte AUGUSTE, Appellantv.Thomas RIDGE, Secretary, United States Department of Homeland Security; John Ashcroft, Attorney General of the United States; Michael Garcia, Assistant Secretary, Bureau of Immigration and Customs Enforcement (BICE); Anthony S. Tangeman, Director of Detention and Removal, BICE; John Carbone, Detention and Removal Field Office Director — New Jersey, BICE; Michael T. Abode, Warden, Middlesex County Adult Corrections Center.
No. 04-1739.
United States Court of Appeals, Third Circuit.
Argued November 1, 2004.
January 20, 2005.
COPYRIGHT MATERIAL OMITTED COPYRIGHT MATERIAL OMITTED COPYRIGHT MATERIAL OMITTED COPYRIGHT MATERIAL OMITTED Robert W. Brundige, Renee C. Redman (Argued), Sarah Loomis Cave, Laurence Burger, Hughes Hubbard & Reed LLP, New York, The Legal Aid Society, Janet Sabel, Supervising Attorney, Immigration Law Unit, Bryan Lonegan, New York, for Appellant, of counsel.
Christopher J. Christie, United States Attorney, District of New Jersey, Stuart A. Minkowitz (Argued), Assistant United States Attorney, District of New Jersey, Newark, Robert D. McCallum, Jr., Assistant Attorney General, Margaret Perry, Senior Litigation Counsel, Office of Immigration Litigation, U.S. Department of Justice, Civil Division, Washington, for Appellees.
Before ALITO, FUENTES, and BECKER, Circuit Judges.
OPINION OF THE COURT
FUENTES, Circuit Judge.
1
Napoleon Bonaparte Auguste appeals from the District Court's denial of his petition for writ of habeas corpus seeking relief under the United Nations Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (the "CAT" or "Convention"). Auguste, who is facing removal to Haiti, claims that he will be indefinitely detained upon his arrival in Haiti in prisons that are notorious for their brutal and deplorable conditions that have been compared to those existing on slave ships. There is no doubt that the prison conditions that Auguste and others like him may face upon their removal to Haiti are indeed miserable and inhuman. However, because we hold that in order to constitute torture, an act must be inflicted with the specific intent to cause severe physical or mental pain and suffering, the standard the President and Senate understood as applying when the United States ratified the CAT, we find that Auguste is not entitled to relief. Accordingly, we will affirm the decision of the District Court.
I. Background
2
Auguste, a twenty-seven year old male, is a native and citizen of Haiti who was admitted to the United States as a lawful permanent resident on December 8, 1987. His entire family lives in the United States. On April 4, 2003, Auguste was convicted of Attempted Criminal Sale of a Controlled Substance (cocaine) in the third degree in Queens County, New York, and sentenced to ten months imprisonment.
3
On July 3, 2003, the Department of Homeland Security, Bureau of Immigration and Customs Enforcement, issued a notice to appear charging Auguste with removal on two grounds: (1) as an alien who has been convicted of a controlled substance violation pursuant to § 237(a)(2)(B)(i) of the Immigration and Nationality Act (the "INA" or "Act"), 8 U.S.C. § 1227(a)(2)(B)(i), and (2) as an alien who has been convicted of an aggravated felony/attempted drug trafficking crime pursuant to § 237(a)(2)(A)(iii) of the Act, 8 U.S.C. § 1227(a)(2)(A)(iii).
4
Auguste did not contest his eligibility for deportation as charged and instead, as his defense, applied for deferral of removal under the CAT and its implementing regulations. With regards to his claim for relief under the CAT, Auguste argued that he was entitled to a deferral of removal on the grounds that he faces torture in Haiti because, as a deported drug offender, he will be detained by Haitian authorities for an indeterminate amount of time in harsh and intolerable prison conditions.
A. Conditions in Haitian Prisons
5
Since at least 2000, it has been the policy of the Haitian government to detain deported Haitians, who have incurred a criminal record while residing in the United States and who have already served their sentences, in preventive detention. The policy appears to have been motivated by the belief that criminal deportees pose a threat of recidivist criminal behavior after their return to Haiti. The length of the detention can vary, lasting in many instances upwards of several months. Auguste contends that release often depends on the family members of the deportees petitioning the Haitian Ministry of Interior for release and their ability to pay anywhere between $1,000 to $20,000.
6
Documentary evidence submitted by Auguste in support of his CAT claim describes the brutal and harsh conditions that exist in the Haitian prison system. We recount briefly some of these conditions. The prison population is held in cells that are so tiny and overcrowded that prisoners must sleep sitting or standing up, and in which temperatures can reach as high as 105 degrees Fahrenheit during the day. Many of the cells lack basic furniture, such as chairs, mattresses, washbasins or toilets, and are full of vermin, including roaches, rats, mice and lizards. Prisoners are occasionally permitted out of their cells for a duration of about five minutes every two to three days. Because cells lack basic sanitation facilities, prisoners are provided with buckets or plastic bags in which to urinate and defecate; the bags are often not collected for days and spill onto the floor, leaving the floors covered with urine and feces. There are also indications that prison authorities provide little or no food or water, and malnutrition and starvation is a continuous problem. Nor is medical treatment provided to prisoners, who suffer from a host of diseases including tuberculosis, HIV/AIDS, and Beri-Beri, a life-threatening disease caused by malnutrition. At least one source provided by Auguste likened the conditions in Haiti's prisons to a "scene reminiscent of a slave ship."
7
There are also reports of beatings of prisoners by guards. State Department reports on conditions in Haiti in 2001 and 2002 discussed police mistreatment of prisoners and noted that there were isolated allegations of torture by electric shock, as well as instances in which inmates were burned with cigarettes, choked, or were severely boxed on the ears, causing ear damage. The authorities' record of disciplining police misconduct was, however, inconsistent.
8
The Department of State reported that Haiti remains a "very poor" country, and that the prison system operates at or near the same budget level as in 1995. Despite attempts at increasing the budgetary allocation for prisons, political instability in Haiti was expected to cause a continuation of budgetary freezes.
B. The Convention Against Torture
9
Auguste seeks protection under Article 3 of the Convention. See Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, art. 3, opened for signature Dec. 10, 1984, S. Treaty Doc. No. 100-20 (1988), 1465 U.N.T.S. 85 (entered into force June 26, 1987). Because the history of ratification of the Convention by the United States will prove relevant to resolving Auguste's habeas claim, we recount that history in some detail.
10
The CAT was adopted by the United Nations General Assembly on December 10, 1984, with the stated purpose to "make more effective the struggle against torture and other cruel, inhuman or degrading treatment or punishment throughout the world." See Preamble to Convention, S. Treaty Doc. No. 100-20, 1465 U.N.T.S. 85. The CAT represented a continuing process in the codification of an international legal norm condemning the practice of torture by public officials, a norm first recognized in several prior multilateral agreements.1 As the preamble to the CAT recognizes, it is the obligation of nations under the United Nations Charter to "promote universal respect for, and observance of, human rights and fundamental freedoms." See Preamble to Convention, S. Treaty Doc. No. 100-20, 1465 U.N.T.S. 85. Since opening for signature in December 1984, over 130 countries have signed and/or become parties to the Convention.2
Article 1 of the CAT defines torture as:
11
[A]ny act by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person for such purposes as obtaining from him or a third person information or a confession, punishing him for an act he or a third person has committed or is suspected of having committed, or intimidating or coercing him or a third person, or for any reason based on discrimination of any kind, whether such pain or suffering is inflicting by or at the instigation of or within the consent or acquiescence of a public official or other person acting in an official capacity. It does not include pain or suffering arising only from, inherent in or incident to lawful sanctions.
12
Art. 1(1), S. Treaty Doc. No. 100-20, 1465 U.N.T.S. 85. In turn, Article 3 of the CAT states: "No State Party shall expel, return ("refouler") or extradite a person to another State where there are substantial grounds for believing that he would be in danger of being subjected to torture." Art. 3(1), S. Treaty Doc. No. 100-20, 1465 U.N.T.S. 85.
13
President Reagan signed the Convention on April 18, 1988, with the following reservation: "The Government of the United States of America reserves the right to communicate, upon ratification, such reservations, interpretive understandings, or declarations as are deemed necessary." See Ogbudimkpa v. Ashcroft, 342 F.3d 207, 211 (3d Cir.2003); see also Declarations and Reservations (visited Nov. 24, 2004) (http:// untreaty.un.org/ENGLISH/bible/englishinternetbible/partI/chapterIV/treaty14.asp). Approximately one month later, on May 20, 1988, the President transmitted the CAT to the Senate for its advice and consent with seventeen proposed conditions (four reservations, nine understandings, and four declarations). See Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, S. Exec. Rep. 101-30, at 2, 7 (1990).
14
In response to congressional and public concern regarding several of the proposed conditions, in January 1990 President George H.W. Bush submitted a revised and reduced list of proposed conditions. See id. at 2, 7-8; see also Ogbudimkpa, 342 F.3d at 212 n. 11. Of the proposed conditions, President Bush submitted several understandings, two of which are directly relevant to this case. First, with respect to Article 1 of the CAT, the President proposed the understanding that the "United States understands that, in order to constitute torture, an act must be specifically intended to inflict severe physical or mental pain or suffering." See S. Exec. Rep. 101-30, at 9, 36.3 This first understanding closely tracked a similar understanding initially submitted by President Reagan in 1988, which stated that the United States "understands that, in order to constitute torture, an act must be a deliberate and calculated act of an extremely cruel and inhuman nature, specifically intended to inflict excruciating and agonizing physical or mental pain or suffering." See S. Exec. Rep. 101-30, at 15.4 Second, with respect to Article 3 of the CAT, President Bush submitted an understanding, previously submitted by President Reagan, that the United States "understands the phrase `where there are substantial grounds for believing that he would be in danger of being subjected to torture,' as used in Article 3 of the Convention, to mean `if it is more likely than not that he would be tortured.'" See S. Exec. Rep. 101-30, at 16, 36.5
15
The Senate adopted a resolution of advice and consent to ratification of the CAT on October 27, 1990, subject to several reservations, understandings, and declarations. See 136 Cong. Rec. S17,486, S17491-92 (daily ed. 1990) ("Senate Resolution"). Importantly, the Senate adopted the two understandings proposed by President Bush with respect to Articles 1 and 3 of the Convention. Thus, the Senate explained that with reference to the definition of torture contained in Article 1 of the CAT, the "United States understands that, in order to constitute torture, an act must be specifically intended to inflict severe physical or mental pain or suffering." See Senate Resolution, supra, II.1(a). Moreover, the Senate explained that with reference to the standard of proof required in Article 3 of the CAT, the "United States understands the phrase `where there are substantial grounds for believing that he would be in danger of being subjected to torture,' as used in Article 3 of the Convention, to mean `if it is more likely than not that he would be tortured.'" See Senate Resolution, supra, II.2.
16
Finally, pursuant to Article 26 of the Convention, President Clinton deposited the instrument of ratification with the United Nations on October 21, 1994.6 See Regulations Concerning the Convention Against Torture, 64 Fed.Reg. 8478, 8478 (Feb. 19, 1999); see also Status of the [Convention] (visited Nov. 24, 2004) (http://www.un.org/documents/ga/docs/53/plenary/a53-253.htm). Notably, the President included the Senate understandings in the instrument of ratification. See 1830 U.N.T.S. 320, 321, 322 (1994); Declarations and Reservations made upon Ratification, Accession, or Succession (visited Nov. 24, 2004) (http:// untreaty.un.org/ENGLISH/bible/englishinternetbible/partI/chapterIV/treaty14.asp).
17
Because the resolution of advice and consent specified that the CAT was not self-executing, Congress proceeded to pass legislation in order to implement the United States' obligations under the Convention in 1998 with the Foreign Affairs Reform and Restructuring Act ("FARRA"). See Pub.L. No. 105-227, Div. G., Title XXII, § 2242, 112 Stat. 2681, 2681-822, codified as note to 8 U.S.C. § 1231.7 The first section of FARRA, § 2242(a), contained a general statement of congressional policy, providing that: "It shall be the policy of the United States not to expel, extradite, or otherwise effect the involuntary return of any person to a country in which there are substantial grounds for believing the person would be in danger of being subjected to torture." In turn, § 2242(b), which substantively implements the CAT, directed "the heads of the appropriate agencies" to "prescribe regulations to implement the obligations of the United States under Article 3 of the [Convention], subject to any reservations, understandings, declarations, and provisos contained in the United States Senate resolution of ratification of the Convention." See 8 U.S.C. § 1231 note.
18
In accordance with § 2242(b) of FARRA, the Department of Justice, of which the Immigration and Naturalization Service ("INS") at that time was a division, promulgated regulations setting forth the procedures by which individuals could seek relief pursuant to the CAT. See 64 Fed.Reg. 8478 (Feb. 19, 1999), codified at 8 C.F.R. §§ 208.16(c),.17, & .18(a) (2004). Section 208.18(a) sets out the definitions to be used in applying the United States' obligations under the CAT and states: "The definitions in this subsection incorporate the definition of torture contained in Article 1 of the [Convention], subject to the reservations, understandings, declarations, and provisos contained in the [Senate] resolution of ratification of the Convention." 8 C.F.R. § 208.18(a). Section 208.18(a)(1) proceeds then to adopt a basic definition of torture, mirroring the definition of torture in Article 1 of the CAT, which is then clarified by six additional provisions, several of which are relevant in this matter:
19
(a)(1) Torture is defined as any act by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person for such purposes as obtaining from him or her or a third person information or a confession, punishing him or her for an act he or she or a third person has committed or is suspected of having committed, or intimidating or coercing him or her or a third person, or for any reason based on discrimination of any kind, when such pain or suffering is inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity.
20
(a)(2) Torture is an extreme form of cruel and inhuman treatment and does not include lesser forms of cruel, inhuman or degrading treatment or punishment that do not amount to torture.
21
(a)(3) Torture does not include pain or suffering arising only from, inherent in or incidental to lawful sanctions....
22
(a)(5) In order to constitute torture, an act must be specifically intended to inflict severe physical or mental pain or suffering. An act that results in unanticipated or unintended severity of pain and suffering is not torture.
23
In addition to clarifying the definition of torture that is to apply in the domestic context, the Department of Justice also promulgated regulations specifying the elements and burden of proof for a CAT claim. Section 208.16(c)(2), which tracks the understanding proposed by the President and adopted by the Senate in its resolution of ratification, states that "[t]he burden of proof is on the applicant for withholding of removal to establish that it is more likely than not that he or she would be tortured if removed to the proposed country of removal."8 If an applicant establishes that he "more likely than not would be tortured" upon return to his home country, withholding of removal or deferral of removal is mandatory. See 8 C.F.R. §§ 208.16(c)(3) and (4). The objective evidence to be considered in evaluating a CAT claim includes "[e]vidence of past torture inflicted upon the applicant;" "[e]vidence of gross, flagrant or mass violations of human rights within the country of removal;" and "[o]ther relevant information regarding conditions in the country of removal." See 8 C.F.R. § 208.16(c)(3); see also 8 C.F.R. § 208.17(a).9
C. The Immigration Judge's Decision
24
On November 12, 2003, an immigration judge ("IJ") issued an oral decision finding Auguste ineligible for deferral of removal under the CAT. The IJ began by noting that Auguste had conceded that he had never been tortured in the past in Haiti, and that his application was based on the likelihood that he would be detained upon arrival and subject to harsh prison conditions. (J.A. 43.) In denying Auguste's claim for CAT relief, the IJ found that the matter was governed by the Board of Immigration Appeals' ("BIA") decision in Matter of J-E-, 23 I. & N. Dec. 291 (BIA 2002), a 13-5 decision interpreting the elements of a claim for relief under the CAT.
25
In Matter of J-E- the BIA considered the same issue raised by Auguste: whether Haiti's indefinite detention of criminal deportees, the deplorable prison conditions in Haiti, and the physical abuse of prisoners constitute "torture" as that term is defined under the Convention and the implementing regulations. Id. at 292. The BIA emphasized that the Convention itself expressly differentiates between "torture" and "other acts of cruel, inhuman or degrading treatment or punishment." Id. at 295.10 Only those acts that constitute torture under Article 1 trigger the requirement that an individual's return to the removal country be suspended. Id. In exploring the difference between "torture" and "other acts of cruel, inhuman or degrading treatment or punishment," the BIA noted that "the act [of torture] must cause severe pain or suffering, physical or mental. It must be an extreme form of cruel and inhuman treatment, not lesser forms of cruel, inhuman, or degrading treatment or punishment that do not amount to torture." Id. at 297 (citing 8 C.F.R. §§ 208.18(a)(1),(2)).
26
With reference to the regulations implementing the CAT, the BIA summarized a five-part test for determining whether an act rises to the level of torture:
27
For an act to constitute torture it must be: (1) an act causing severe physical or mental pain or suffering; (2) intentionally inflicted; (3) for a proscribed purpose; (4) by or at the instigation of or with the consent or acquiescence of a public official who has custody or physical control of the victim; and (5) not arising from lawful sanctions.
28
Matter of J-E-, 23 I. & N. Dec. at 297. As to the second element, that of intent, the BIA explained that the "act must be specifically intended to inflict severe physical or mental pain or suffering. This specific intent requirement is taken directly from the understanding contained in the Senate ratification resolution.... Thus, an act that results in unanticipated or unintended severity of pain or suffering does not constitute torture." Id. at 298 (citation omitted). The BIA went on to define "specific intent" with reference to its common legal definition: "specific intent is defined as the intent to accomplish the precise criminal act that one is later charged with while general intent commonly takes the form of recklessness." Id. at 301 (quoting Black's Law Dictionary 813-14 (7th ed.1999)).
29
In light of the requirements of 8 C.F.R. § 208.18(a), the BIA in Matter of J-E- considered whether any of the alleged state actions by Haiti — indefinite detention, inhuman prison conditions, and police mistreatment — constituted torture. First, with regards to the policy of indefinite detention, the BIA concluded that it appeared to be a "lawful enforcement sanction designed by the Haitian Ministry of Justice to protect the populace from criminal acts committed by Haitians who are forced to return to the country after having been convicted of crimes abroad." Id. at 300. Accordingly, the BIA concluded that the detention policy was a lawful sanction and, standing alone, did not constitute torture by virtue of 8 C.F.R. § 208.18(a)(3). See id. In addition, the BIA noted that "there is no evidence that Haitian authorities are detaining criminal deportees with the specific intent to inflict severe physical or mental pain or suffering" within the meaning of 8 C.F.R. § 208.18(a)(1). See id.
30
Second, with regards to the inhuman prison conditions in Haiti, even when coupled with the possibility of indefinite detention, the BIA again concluded that this did not constitute torture. In particular, the BIA noted that there was "no evidence that they are intentionally and deliberately creating and maintaining such prison conditions in order to inflict torture." Id. at 301 (citing 8 C.F.R. §§ 208.18(a)(1), (5)). The BIA noted that this specific intent requirement was drawn from the Senate's understanding, which accompanied the resolution of advice and consent, and was distinct from a general intent requirement. See id. To the contrary, the BIA concluded that the prison conditions were not the result of any specific intent to inflict severe physical or mental pain or suffering, but rather were the "result of budgetary and management problems as well as the country's severe economic difficulties." Id.
31
Finally, the BIA considered whether police mistreatment of prisoners constituted torture. The BIA noted that there had been reports of isolated instances of police mistreatment, some of which could rise to the level of torture. See id. at 302. In particular, the BIA noted that while certain "[i]nstances of police brutality do not necessarily rise to the level of torture ... deliberate vicious acts such as burning with cigarettes, choking, hooding, kalot marassa [severe boxing of the ears, which can result in eardrum damage], and electric shock may constitute acts of torture." Id. Although the alien in Matter of J-E- had shown that acts of torture have occurred in Haitian prisons, the BIA concluded that he had failed to satisfy the requisite burden of proof, i.e., that it was more likely than not that he would be tortured if returned to Haiti. See id. at 304.11 The alien had made no claim of past torture, and the basis of his CAT claim was premised on the possibility that he would be subject to police mistreatment when detained in a Haitian prison. Accordingly, the BIA concluded that the alien had failed to establish that the severe yet isolated instances of mistreatment were "so pervasive as to establish a probability that a person detained in a Haitian prison will be subject to torture, as opposed to other acts of cruel, inhuman, or degrading punishment or treatment." Id. at 304. In other words, the alien's evidence had failed to show that he as an individual in a Haitian prison was more likely than not to suffer "torture," as defined by the CAT, as opposed to "other acts of cruel, inhuman or degrading punishment or treatment." Id.12
32
Returning to the present matter, the IJ found Auguste's CAT claim to be virtually indistinguishable from the matter presented in Matter of J-E-, noting that counsel "for [Auguste] is not claiming here today that the situation in Haiti is somehow different from the situation that confronted the [alien] in [Matter of J-E-]." (J.A. 46.) Accordingly, the IJ denied Auguste's request for deferral of removal. Auguste appealed the IJ's decision to the BIA, which, on February 27, 2004, affirmed the IJ's decision without an opinion. Accordingly, the IJ's decision is the final agency determination for purposes of our review. See Dia v. Ashcroft, 353 F.3d 228 (3d Cir.2003) (en banc).
D. Auguste's Habeas Petition
33
On March 9, 2004, in the District of New Jersey, Auguste filed a Verified Petition for a Writ of Habeas Corpus and Complaint for Declaratory and Injunctive Relief, as well as a request for a stay of removal, on the grounds that the decision of the IJ, as affirmed by the BIA, erroneously denied him relief under the Convention for deferral of removal to Haiti. Count One of Auguste's petition alleged that his CAT claim was denied improperly based on Matter of J-E-'s interpretation of the phrase "specifically intended" in 8 C.F.R. § 208.18(a)(5) to require a showing of "specific intent" as that term is used in U.S. criminal law. In addition, Auguste contended that the BIA in Matter of J-E- erroneously concluded that the detention of criminal deportees in harsh and deplorable prison conditions did not constitute torture. Count Two of Auguste's petition alleged that his CAT claim was improperly denied because the Department of Justice had adopted regulations at 8 C.F.R. § 208.16(c)(2) that set the burden of proof for CAT relief higher than what was required by Article 3 of the Convention and FARRA.
34
The District Court began by noting that the conditions which Auguste would be subjected to in Haiti "can objectively be described as horrifying prison conditions which are inflicted upon anyone unfortunate enough to find themselves in custody in Haiti." (J.A. 14.) Nonetheless, the District Court denied Auguste's habeas petition on the merits, finding that the BIA in Matter of J-E- properly interpreted the intent requirement of 8 C.F.R. § 208.18(a)(5). The District Court noted that "we have circumstances here where we have simply the allegation of general prison conditions in Haiti. So it does not appear to me that [Auguste] has made any showing that his pain and suffering or physical or mental injury would be intentionally inflicted." (J.A. 15.) The District Court concluded that "there must be some sort of underlying intentional direction of pain and suffering against a particular petitioner, more so than simply complaining of the general state of affairs that constitute conditions of confinement in a place, even as unpleasant as Haiti." (J.A. 18.) The District Court, however, did not appear to reach the issue of whether the BIA's application of the burden of proof in 8 C.F.R. § 208.16(c)(2) was inconsistent with Article 3 of the CAT or FARRA.
35
This timely appeal followed.
II. JURISDICTION AND SCOPE OF REVIEW
36
As an alien convicted of an aggravated felony/drug trafficking crime and removable on such grounds, Auguste is statutorily barred from filing a petition for direct review from the BIA's decision to a court of appeals challenging his ineligibility for relief under the CAT. See 8 U.S.C. § 1252; see also Bakhtriger v. Elwood, 360 F.3d 414, 420 (3d Cir.2004). Several of the circuits, including this one, however, have concluded that aliens convicted of crimes retain the right to seek relief under the traditional habeas statute for alleged violations of the Convention. See Ogbudimkpa, 342 F.3d at 215-22; see also Cadet v. Bulger, 377 F.3d 1173, 1182 (11th Cir.2004); Saint Fort v. Ashcroft, 329 F.3d 191, 200-02 (1st Cir.2003); Wang v. Ashcroft, 320 F.3d 130, 140-43 (2d Cir.2003); Singh v. Ashcroft, 351 F.3d 435, 441-42 (9th Cir.2003). We have jurisdiction over appeals involving habeas petitions filed in the District Court pursuant to 28 U.S.C. §§ 1291, 2241, and 2253.
37
The scope of review of an alien's habeas petition is far narrower than that typically available to an alien who has filed a direct petition for review to a court of appeals. On direct petitions for review, we review factual findings made by an immigration judge or the BIA under the familiar substantial evidence standard. See Mulanga v. Ashcroft, 349 F.3d 123, 131 (3d Cir.2003); see also Dia, 353 F.3d at 247-48. However, on a habeas petition, our review does not extend so far. It is limited to constitutional issues and errors of law, including both statutory interpretations and application of law to undisputed facts or adjudicated facts, but does not include review of administrative fact findings or the exercise of discretion. See Bakhtriger, 360 F.3d at 425 ("In the wake of [INS v. St. Cyr, 533 U.S. 289, 121 S.Ct. 2271, 150 L.Ed.2d 347 (2001)] we are not aware of any cases that have upheld habeas review of factual findings or discretionary determinations in criminal alien removal cases."); Ogbudimkpa, 342 F.3d at 222; see also Cadet, 377 F.3d at 1184; Bravo v. Ashcroft, 341 F.3d 590, 592 (5th Cir.2003); Gutierrez-Chavez v. INS, 298 F.3d 824, 829-30 (9th Cir.2002), amended by 337 F.3d 1023; Carranza v. INS, 277 F.3d 65, 71-73 (1st Cir.2002); Sol v. INS, 274 F.3d 648, 651 (2d Cir.2001); Bowrin v. INS, 194 F.3d 483, 489-90 (4th Cir.1999).13
38
Keeping in mind the narrow scope of our habeas review, we now turn to consider Auguste's appeal.
III. ANALYSIS
39
In his appeal from the denial of his habeas petition, Auguste raises three arguments. First, Auguste contends that the BIA erred as a matter of law in Matter of J-E-, upon which the IJ relied in denying Auguste's application, in construing the definition of torture in 8 C.F.R. § 208.18(a)(1) and (a)(5) to require a showing of "specific intent" to inflict severe pain and suffering. Auguste contends that such a specific intent requirement is inconsistent with the Convention's commonly understood international interpretation as well as the Third Circuit's prior decision in Zubeda v. Ashcroft, 333 F.3d 463 (3d Cir.2003). Second, Auguste contends that the Department of Justice promulgated regulations at 8 C.F.R. § 208.16(c)(2), which require that an alien show "more likely than not that he or she would be tortured," that are inconsistent with Article 3 of the Convention, which only requires that an alien show that there are "substantial grounds for believing the person would be in danger of being subjected to torture." Finally, Auguste contends that even if the specific intent standard is the correct standard in defining torture, and even if the correct burden of proof is the "more likely than not" standard, he is nonetheless entitled to relief under the Convention because Haitian authorities knowingly and purposefully detain criminal deportees, such as him, in prison conditions that he contends are torturous.
40
We address each argument in turn.
41
A. The Standard of Intent Required for CAT Relief
1.
42
8 C.F.R. § 208.18(a)(5) states that in order for an act to constitute torture, "[it] must be specifically intended to inflict severe physical or mental pain or suffering. An act that results in unanticipated or unintended severity of pain and suffering is not torture." In Matter of J-E-, the BIA stated that the "ratification [history of the CAT] make it clear that this is a `specific intent' requirement not a `general intent' requirement." 23 I. & N. Dec. at 300-01. Thereafter, the BIA defined the term "specific intent" by its ordinary usage in American law as the "intent to accomplish the precise criminal act that one is later charged with." Id. at 301 (internal quotations omitted). Auguste, however, contends that the specific intent standard is at odds with the prevailing and commonly understood meaning of Article 1 of the Convention. Auguste argues that the infliction of severe pain and suffering, so long as the pain and suffering is not unanticipated or unintended, would satisfy the definition of torture under Article 1 of the Convention, and that the BIA's specific intent standard is in conflict with the more liberal standard he proposes. Auguste in effect suggests that a general intent standard would satisfy the requirements of Article 1 of the Convention, arguing that torture exists where the "actor had knowledge that the action (or inaction) might cause severe pain and suffering." Appellant's Br. at 25. Because this involves a pure question of law, we have habeas jurisdiction over the issue. See Bakhtriger, 360 F.3d at 425.14
43
The issue that we must resolve then is what the controlling standard for relief under the Convention is in the domestic context. Is it, as Auguste contends, the standard of intent that he believes is the prevailing requirement under international legal interpretations of the Convention? Or is it, as the Government contends, the specific intent standard which the Department of Justice adopted in the Convention's implementing regulations issued pursuant to FARRA, and interpreted by the BIA in Matter of J-E-? We approach this matter mindful of the sensitive considerations that are raised in Auguste's habeas petition. Auguste is asking this Court in effect to declare the administrative regulations implementing the United States' obligations under the Convention, and implicitly the understandings which accompanied the United States' ratification, to be inconsistent with the Convention.
44
In so doing, Auguste invites this Court to inquire into the meaning of Article 1 of the Convention, its drafting history, and the interpretation of Article 1 by various international tribunals. Should we do so, we would of course not be interpreting the treaty from scratch, and the Government's interpretation would be accorded some deference. "[A]lthough not conclusive," the interpretive views of the government agencies that have been charged with the negotiation and enforcement of a treaty are "entitled to great weight." See United States v. Stuart, 489 U.S. 353, 369, 109 S.Ct. 1183, 103 L.Ed.2d 388 (1989) (internal citations omitted); see also El Al Israel Airlines, Ltd. v. Tsui Yuan Tseng, 525 U.S. 155, 168, 119 S.Ct. 662, 142 L.Ed.2d 576 (1999) ("Respect is ordinarily due to reasonable views of the Executive Branch concerning the meaning of an international treaty.") (internal citations omitted); Kolovrat v. Oregon, 366 U.S. 187, 194, 81 S.Ct. 922, 6 L.Ed.2d 218 (1961). We, however, see no reason to be drawn into a debate about the appropriate interpretation of Article 1 of the Convention, or what the prevailing international understanding of the intent standard required under Article 1 of the Convention is. As will be discussed below, we believe that we must apply the standard clearly stated in the ratification record of the United States.
2.
45
In FARRA, Congress directed the appropriate agencies to implement the United States' obligations under the CAT "subject to any reservations, understandings, declarations, and provisos contained in the United States Senate resolution of ratification of the [CAT]." § 2242(b), codified at 8 U.S.C. § 1231 note. Congress passed FARRA because the Senate had explicitly included a declaration in its resolution of ratification that the Convention was not self-executing. See Ogbudimkpa, 342 F.3d at 212 (citing 136 Cong. Rec. 36,198 (1990)). Because the CAT was not self-executing, FARRA, at least in the domestic context, represented a clear statement on the part of Congress to incorporate into domestic law the understandings submitted by the President and adopted by the Senate in its resolution of ratification, including the understanding that "in order to constitute torture, an act must be specifically intended to inflict severe physical or mental pain or suffering." The Department of Justice, in promulgating the relevant regulations, adopted verbatim the understanding in defining the intent standard at 8 C.F.R. § 208.18(a)(5). Thus, in our opinion, FARRA codified the Senate's understandings into domestic law.
46
Auguste, however, contends that the United States' understanding regarding specific intent was without effect and could not be enacted into domestic law as part of FARRA. In particular, Auguste argues that because the understanding regarding specific intent was in conflict with the accepted international interpretation of the Convention as he believes it to be, it could not modify the United States' obligations under the Convention. Auguste appears to rely in part on Article 19 of the Vienna Convention on the Law of the Treaties, which states that reservations to a treaty ratification are prohibited where they are "incompatible with the object and purpose of the treaty." See Vienna Convention on the Law of Treaties, May 23, 1969, art. 19, 1155 U.N.T.S. 331.15 Auguste also contends more generally that an understanding "that conflicts with those of other signatory states [is] of little weight," suggesting at one point that the fact that the Netherlands objected to the United States' understanding as overly restrictive should weigh in this Court's analysis. Appellant's Reply Br. at 11, 14. Thus, according to Auguste, FARRA could not modify or abrogate the United States' obligations under the Convention merely by incorporating the understanding accompanying the United States' ratification of the Convention because that understanding was void under international norms governing treaty interpretation.16
47
The issue of whether and in what circumstances courts should give effect to reservations, declarations and understandings to treaties is a hotly contested area of academic debate. See Curtis A. Bradley & Jack L. Goldsmith, Treaties, Human Rights, and Conditional Consent, 149 U. Pa. L.Rev. 399, 401-02 (2000). To date, several courts have enforced reservations, understandings, or declarations, but we are not aware of any court that has considered their validity in any detail.17 However, we believe that resolution of this issue in this case is fairly straightforward.
48
We begin by noting that the Constitution vests the President and the U.S. Senate with the responsibility of making treaties, stating that the President "shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur." See U.S. Const. art. II, sec. 2, cl. 2.18 As part of its role in the advice and consent process, the U.S. Senate has routinely attached conditions to ratification known as reservations, understandings, and declarations.19
49
As we recounted at some length above in Part I.B, the specific intent standard was the standard accepted by both the President and the Senate during the ratification process. Both Presidents Reagan and Bush submitted nearly identical understandings containing the language stating that for an act to constitute torture, it must be specifically intended to inflict severe pain and suffering. See S. Exec. Rep. 101-30, at 9, 15. The Senate adopted the language of President Bush's understanding in its resolution of ratification. See Senate Resolution, supra, II.1(a). Moreover, when the President deposited the instrument of ratification with the United Nations, he did so with the relevant understanding relating to the specific intent requirement. See 1830 U.N.T.S. 320, 321; Declarations and Reservations made upon Ratification, Accession, or Succession (visited Nov. 24, 2004) (http:// untreaty.un.org/ENGLISH/bible/englishinternetbible/partI/chapterIV/treaty14.asp).
50
Thus, we are presented with a situation where both the President and the Senate, the two institutions of the federal government with constitutional roles in the treaty-making process, agreed during the ratification stage that their understanding of the definition of torture contained in Article 1 of the Convention included a specific intent requirement. In our view, this is enough to require that the understanding accompanying the United States' ratification of the Convention be given domestic legal effect, regardless of any contention that the understanding may be invalid under international norms governing the formation of treaties or the terms of the Convention itself. We think it so plain a proposition that the United States may attach an understanding interpreting the meaning of a treaty provision as part of the ratification process that, where as here there is clear consensus among the President and Senate on that meaning, a court is obliged to give that understanding effect.
51
We find support for this position in the Restatement (Third) of the Foreign Relations Law of the United States, a persuasive authority. Section 314(2) of the Restatement states: "When the Senate gives its advice and consent to a treaty on the basis of a particular understanding of its meaning, the President, if he makes the treaty, must do so on the basis of the Senate's understanding." See Restatement (Third) of the Foreign Relations Law of the United States § 314 (2004). Comment d to § 314 further states: "A treaty that is ratified or acceded to by the United States with a statement of understanding becomes effective in domestic law subject to that understanding." See § 314 cmt. d. Thus, we hold that, for purposes of domestic law, the understanding proposed by the President and adopted by the Senate in its resolution of ratification are the binding standard to be applied in domestic law.
52
In so holding, we should be clear what this case is not about. We are not presented with a situation where the President and the Senate took contradictory positions on the meaning of a treaty provision during the ratification process. Nor are we required to resolve the situation where the President is contending that a Senate conditionality of ratification is improper, infringes on executive authority, or is without domestic or international legal effect. Undoubtedly, these situations, and others like them, would present more difficult constitutional issues. Instead, we are presented with a situation where both the President and Senate shared an understanding as to the meaning of a treaty provision during the ratification process.
53
Thus, because we find that the governing standards to be applied in the domestic context are those in the understanding that accompanied the United States' ratification of the treaty, and which were later incorporated in FARRA's implementing legislation, we believe that Auguste's claim that a specific intent standard is in conflict with what he perceives to be the prevailing international consensus misses the point. Generally, it is true that courts should interpret treaties so as to give a "meaning consistent with the shared expectations of the contracting parties." See Air France v. Saks, 470 U.S. 392, 399, 105 S.Ct. 1338, 84 L.Ed.2d 289 (1985); see also MacNamara v. Korean Air Lines, 863 F.2d 1135, 1143 (3d Cir.1988) (noting that "our role in treaty interpretation is limited to ascertaining and enforcing the intent of the treaty parties"). Moreover, it is well-established that when construing international agreements, courts will often look to the drafting history of the agreement, as well as the intent of the other signatory parties, as Auguste now proposes. See Stuart, 489 U.S. at 366-69, 109 S.Ct. 1183; see also El Al Israel Airlines, Ltd., 525 U.S. at 167, 119 S.Ct. 662 ("Because a treaty ratified by the United States is not only the law of this land ... but also an agreement among sovereign powers, we have traditionally considered as aids to its interpretation the negotiating and drafting history (travaux preparatoires) and the postratification understanding of the contracting parties.") (citations omitted). However, we believe that where the President and the Senate express a shared consensus on the meaning of a treaty as part of the ratification process, that meaning is to govern in the domestic context.20
3.
54
Based on the ratification record, there is no doubt that the applicable standard to be applied for CAT claims in the domestic context is the specific intent standard, which was adopted verbatim by the Department of Justice in 8 C.F.R. § 208.18(a)(5) from the understanding accompanying ratification. We now consider whether the BIA's interpretation of the specific intent standard in Matter of J-E-, which defined the term by reference to its ordinary meaning in American law, was appropriate.21
55
Our resolution of whether the BIA's interpretation of the specific intent standard in 8 C.F.R. § 208.18(a)(5) was appropriate implicates two well-known principles of deference. First, the BIA's interpretation and application of immigration law are subject to Chevron deference. See Tineo v. Ashcroft, 350 F.3d 382, 396 (3d Cir.2003) ("There is no longer any question that the BIA should be accorded Chevron deference for its interpretations of the immigration laws.") (citing INS v. Aguirre-Aguirre, 526 U.S. 415, 424, 119 S.Ct. 1439, 143 L.Ed.2d 590 (1999)).22 Second, this Court owes deference to the agency's interpretation to the extent that the CAT involves issues of immigration law which may implicate questions of foreign relations. See INS v. Aguirre-Aguirre, 526 U.S. 415, 424, 119 S.Ct. 1439, 143 L.Ed.2d 590 (1999) (noting that "judicial deference to the Executive Branch is especially appropriate in the immigration context where officials exercise especially sensitive political functions that implicate questions of foreign relations") (citations omitted).
56
In light of these principles, we cannot say that the BIA erred in its interpretation of the "specific intent" requirement in Matter of J-E- by defining that term as it is ordinarily used in American criminal law. In other contexts, we have noted that "congressional intent is presumed to be expressed through the ordinary meaning of the statute's plain language." United States v. Whited, 311 F.3d 259, 263 (3d Cir.2002). We think that the same principle applies when interpreting an understanding proposed by the President and adopted by the Senate in its resolution of ratification. Thus, in light of the use of the phrase "specifically intended" in the understanding to ratification, the BIA acted reasonably in interpreting that language as mandating the use of a specific intent requirement and defining that term in accord with its ordinary meaning in American law. Matter of J-E-, 23 I. & N. Dec. at 301 ("specific intent is defined as the intent to accomplish the precise criminal act that one is later charged with while general intent commonly takes the form of recklessness") (internal quotations omitted).
57
Auguste's contention that the introduction of criminal law concepts into the standard for relief under the Convention was in error because the Convention is not about criminal prosecution, but rather about protecting the victims of torture, is besides the point. The specific intent standard is a term of art that is well-known in American jurisprudence. The Supreme Court has explained that in order for an individual to have acted with specific intent, he must expressly intend to achieve the forbidden act. See Carter v. United States, 530 U.S. 255, 269, 120 S.Ct. 2159, 147 L.Ed.2d 203 (2000). In contrast, the more relaxed general intent standard typically only requires that a defendant "possessed knowledge with respect to the actus reus of the crime." Carter, 530 U.S at 268, 120 S.Ct. 2159.23
58
Thus, in the context of the Convention, for an act to constitute torture, there must be a showing that the actor had the intent to commit the act as well as the intent to achieve the consequences of the act, namely the infliction of the severe pain and suffering. In contrast, if the actor intended the act but did not intend the consequences of the act, i.e., the infliction of the severe pain and suffering, although such pain and suffering may have been a foreseeable consequence, the specific intent standard would not be satisfied. Auguste's suggestion that torture exists where the "actor had knowledge that the action (or inaction) might cause severe pain and suffering," Appellant's Br. at 25, is inconsistent with the meaning of specific intent.
59
Nonetheless, despite what we think is the clear import of the use of the phrase "specifically intended" in 8 C.F.R. § 208.18(a)(5) and the understanding attached to ratification, the Government inserted a curious footnote in its Brief to this Court, stating that:
60
There has been some confusion about the [BIA's] reading of the specific-intent requirement. At one point in [Matter of J-E-] the majority stated that, "[a]lthough Haitian authorities are intentionally detaining criminal deportees knowing that the detention facilities are substandard, there is no evidence that they are intentionally and deliberately creating and maintaining such prison conditions in order to inflict torture." 23 I. & N. Dec. at 301. However, when read in light of the majority's other statements describing the intent requirement quoted above, it is clear that this was not a heightened strict-intent standard.
61
Nonetheless, one of the dissenting Board members [in Matter of J-E-] accused the [BIA] of imposing a requirement that an alien "pro[ve] ... an intent to accomplish a precise criminal act" and "the torture's [sic] specific intent to torture [the victim]." See Matter of J-E- at 315 (Rosenberg, L., dissenting). This is not what the majority concluded, given a full reading of its decision and the excerpts quoted above.
62
Appellee's Br. at 40. Not surprisingly, Auguste seizes on this statement, and argues that it merits reversal in this matter, stating that he finds "it difficult to believe that the [BIA] did not require a heightened specific-intent requirement" in Matter of J-E-. Appellant's Reply Br. at 15.
63
We see the source of the Government's concern. Standing alone, the problematic statement in Matter of J-E-, which the Government now disavows, could be read to impose a "heightened strict intent" or a "specific intent plus" standard. The statement can be broken down as follows: the Haitian authorities (1) intend the act of detaining deportees ("Haitian authorities are intentionally detaining criminal deportees knowing that the detention facilities are substandard") but (2) lack an intent to inflict severe pain and suffering ("there is no evidence that they are intentionally and deliberately creating and maintaining such prison conditions") and (3) lack an intent to inflict torture ("in order to inflict torture"). As the Government suggests, we think this last element goes too far and is not required under the specific intent standard. Section 208.18(a)(5) only requires that the act be specifically intended to inflict severe pain and suffering, not that the actor intended to commit torture. The two are distinct and separate inquiries.
64
However, we disagree with Auguste that this single troubling statement in Matter of J-E- renders the entire decision of the BIA in error. The statement should not be read out of context, and the rest of the opinion clearly indicates that the BIA appropriately understood 8 C.F.R. § 208.18(a)(5) to require only specific intent to inflict severe pain or suffering, not anything more. See Matter of J-E-, 23 I. & N. Dec. at 297 (stating that "for an act to constitute `torture' ... the act must cause severe physical or mental pain or suffering [and] ... be intentionally inflicted"); id. at 298 (quoting 8 C.F.R. § 208.18(a)(5) as requiring that "the act must be specifically intended to inflict severe physical or mental pain or suffering"); id. (noting that "the specific intent requirement is taken directly from the understanding contained in the Senate's ratification resolution"); id. (stating that "an act that results in unanticipated or unintended severity of pain or suffering does not constitute torture"); id. at 300 (determining that no conduct constituting "torture" took place based in part on the lack of evidence that "Haitian authorities are detaining criminal deportees with the specific intent to inflict severe physical or mental pain or suffering" (citing 8 C.F.R. § 208.18(a)(5)). Thus, we reject Auguste's contention that the BIA applied in Matter of J-E- a "heightened strict intent" or a "specific intent plus" standard.
4.
65
We must resolve one final issue before turning to the appropriate burden of proof. Auguste contends that this Court previously held in Zubeda v. Ashcroft, 333 F.3d 463 (3d Cir.2003), that a showing of specific intent is not required under the Convention or its implementing regulations. In Zubeda, an alien successfully obtained relief from an order of removal under the Convention on the grounds that she would likely be subject to rape upon her return to the Democratic Republic of Congo ("DRC"). Zubeda introduced evidence tending to show that her family had been persecuted in the DRC, that members of her family had been brutally murdered, and that she had been gang-raped by soldiers. However, the BIA reversed, finding that the record did not support the immigration judge's finding that Zubeda would likely be detained if returned to the DRC, or that she would be targeted for harm by the soldiers of the Congolese government. In addition, the BIA likened the case to Matter of J-E-, noting that reported isolated instances of mistreatment that may rise to the level of torture do not establish that the alien herself was more likely than not to be tortured.
66
Zubeda filed a petition for review to this Court, and we reversed. In particular, we were troubled by the cursory nature of the BIA's opinion and noted that the BIA "completely ignore[d] the basis of the Immigration Judge's decision." 333 F.3d at 475. For instance, we took issue with the BIA's assertion that the record did not support a finding that Zubeda would be likely detained upon her return to the DRC when the record clearly supported a contrary conclusion, a fact which the IJ had taken administrative notice of. Id. In addition, we held that the BIA erred when it relied on the IJ's adverse credibility finding, made in the context of Zubeda's asylum and withholding of deportation claims, to discredit her application for relief under the Convention. Id. at 476. We noted that because Zubeda's CAT claim was analytically separate from her other claims for relief, the BIA was required to provide a further explanation before relying on the IJ's adverse credibility finding. Id. Finally, we found the BIA's application of Matter of J-E- to Zubeda's CAT claim to be wholly unconvincing, noting that "[r]educing Zubeda's claim to an attack on the kind of inhumane prison conditions that formed the basis of the [BIA's] decision in Matter of J-E- totally ignores the fact that the record is replete with reports ... that detail what appear to be systematic incidents of gang rape, mutilation, and mass murder." Id. at 477.
67
In addition to our criticisms of the BIA's opinion in Zubeda, we discussed at length whether "rape can constitute torture" when it is inflicted with the requisite intent, imposed for one of the purposes specified under the Convention, and inflicted with the knowledge or acquiescence of a public official with custody or control over the victim. Id. at 473. With regards to the intent element, we considered the applicable regulations and stated:
68
Although the regulations [8 C.F.R. § 208.18] require that severe pain or suffering be `intentionally inflicted, we do not interpret this as a specific intent requirement.... The intent requirement [under § 208.18(a)(5)] therefore distinguishes between suffering that is the accidental result of an intended act, and suffering that is purposefully inflicted or the foreseeable consequence of deliberate conduct. However, this is not the same as requiring a specific intent to inflict suffering.'
69
Id. at 473 (emphasis added). We proceeded to note that "requiring an alien to establish the specific intent of his/her persecutors could impose insurmountable obstacles to affording the very protections the community of nations sought to guarantee under the [Convention]." Id. at 474 (citation omitted).
70
We recognize that this portion of Zubeda is in tension with our holding in this case, that based on the ratification record of the CAT, the appropriate standard to be applied in the domestic context is the specific intent standard. However, we believe that the quoted passage of Zubeda, upon which Auguste relies, is dicta. The basis of our holding in Zubeda was limited to the defects in the BIA's reversal of the IJ's ruling that Zubeda was entitled to relief under the CAT. In fact, the INS agreed that, in light of these defects, "the most appropriate resolution [was] to remand to the Immigration Judge for clarification and additional evidence." Id. at 465. Our discussion of the specific intent standard in 8 C.F.R. § 208.18(a)(5) was not necessary to our finding of the defects in the BIA's opinion. Moreover, it does not appear that the meaning of the specific intent standard was challenged in that case, as there is no discussion of the United States' ratification history of the Convention, nor a discussion of the understandings submitted by the President and agreed to by the Senate. Thus, we decline to follow that portion of the Zubeda opinion that is dicta. See Ponnapula v. Ashcroft, 373 F.3d 480, 488 n. 5 (3d Cir.2004); United Artists Theatre Circuit, Inc. v. Township of Warrington, 316 F.3d 392, 397 (3d Cir.2003).
71
B. The Burden of Proof Required to Prove a Claim for Relief under the CAT
72
Auguste argues that the BIA erroneously set the burden of proof in 8 C.F.R. § 208.16(c)(2) to require an alien seeking relief under the Convention to show that it is "more likely than not" that he would be tortured upon removal, rather than the standard Auguste contends is required under Article 3 of the Convention, which requires a showing of "substantial grounds for believing that he would be in danger of being subjected to torture." In particular, Auguste points to the drafting history of the Convention, which he argues shows that negotiators rejected a similar increased burden of proof on individuals seeking protection from torture. Moreover, Auguste points to several decisions of the Committee against Torture, an advisory body created by the Convention to monitor compliance with the terms of the treaty, that have used the "substantial grounds" standard of Article 3 in rendering opinions under the Convention. Because this involves a pure question of law, we have habeas jurisdiction over the issue. See Bakhtriger, 360 F.3d at 425.
73
We begin by noting that on several prior occasions, we have applied the "more likely than not" standard in evaluating claims for relief under the Convention. See, e.g., Berishaj v. Ashcroft, 378 F.3d 314, 332 (3d Cir.2004); Wang v. Ashcroft, 368 F.3d 347, 348 (3d Cir.2004); Mulanga, 349 F.3d at 132 (quotations omitted). Our prior uses of the "more likely than not" standard constitute precedent in this matter, and we are bound to apply the standard contained in 8 C.F.R. § 208.16(c)(2) to resolve Auguste's claim. See Third Circuit Internal Operating Procedure 9.1 ("It is the tradition of this court that the holding of a panel in a precedential opinion is binding on subsequent panels. Thus, no subsequent panel overrules the holding in a precedential opinion of a previous panel. Court en banc consideration is required to do so.").
74
Nor do we see any error in our prior decisions in this regard because it is plain that the "more likely than not" standard is the correct standard to be applied for CAT claims. The "more likely than not" standard has its origins in identical understandings submitted by Presidents Reagan and Bush with regards to Article 3 of the Convention, and adopted by the Senate in its resolution of ratification, stating that the "United States understands the phrase `where there are substantial grounds for believing that he would be in danger of being subjected to torture,' as used in Article 3 of the Convention, to mean `if it is more likely than not that he would be tortured.'" See Senate Resolution, supra, II.2. This standard was then codified into domestic law through § 2242(b) of FARRA, which directed the relevant agencies to adopt regulations implementing the United States' obligations under the Convention "subject to any reservations, understandings, declarations, and provisos contained in the United States Senate resolution of ratification of the Convention." See 8 U.S.C. § 1231 note. Accordingly, in evaluating Auguste's claim that he is entitled to relief under the Convention, we must apply the "more likely than not" standard contained in 8 C.F.R. § 208.16(c)(2).24
75
C. Whether Auguste is Entitled to Relief on his Habeas Petition
1.
76
Auguste argues that, even if the BIA adopted the correct intent and burden of proof standards in the implementing regulations, he is nonetheless entitled to relief under the CAT. Auguste contends that he will be subject to indefinite detention upon his return to Haiti, that the conditions in Haitian prisons are deplorable, and that the Haitian authorities are not only aware that their imprisonment policy causes severe pain and suffering, but purposely place deportees in the deplorable conditions in order to punish and intimidate them.
77
We review de novo the District Court's denial of Auguste's habeas petition. See De Leon-Reynoso v. Ashcroft, 293 F.3d 633, 635 (3d Cir.2002). However, because our evaluation of the merits of Auguste's habeas claim involves a review of the IJ's decision, which in turn relied on the BIA's decision in Matter of J-E-, our standard of review is far narrower because the BIA's interpretation and application of its own regulations is entitled to "great deference." See Abdille v. Ashcroft, 242 F.3d 477, 484 (3d Cir.2001). This deference "to the Executive Branch is especially appropriate in the immigration context where officials exercise especially sensitive political functions that implicate questions of foreign relations." Tineo, 350 F.3d at 396 (quoting Aguirre-Aguirre, 526 U.S. at 424, 119 S.Ct. 1439).
2.
78
Before considering the merits of Auguste's habeas petition, we address an issue related to the scope of our habeas review. As we noted above, our review is limited to errors of law, such as the application of law to undisputed facts or adjudicated facts, but does not include review of administrative fact findings. Thus, as an initial matter, we must identify what the undisputed facts are in this matter, and what administrative fact findings were made by the IJ.
79
The IJ found the factual situation presented by Auguste's application for deferral of removal to be indistinguishable from the matter presented in Matter of J-E-. The IJ's oral decision states:
80
Counsel for the respondent is not claiming here today that the situation in Haiti is somehow different from the situation that confronted the respondent in [Matter of J-E-] and that the Board had to consider in Matter of J-E-. So, we are dealing with essentially the same fact pattern, the respondent like the respondent in [Matter of J-E-] is a person from Haiti on the brink of deportation back to that country for criminal reasons, and the prison conditions are fundamentally the same today as they were just a year ago in Haiti, and so the claim is in this Court's view virtually the identical claim that was before the Board in Matter of J-E- both as a legal issue and in terms of the facts of the case.
81
(J.A. 46-47.) Thus, on habeas review, we are limited to the administrative factual findings of the IJ, which are essentially those that the BIA addressed in Matter of J-E-. In addition, the IJ found that, with regards to Auguste's predicament in particular, there was no evidence (nor was there any submitted) that Auguste's situation differed in any way from the alien in Matter of J-E-, or that he had faced torture in Haiti in the past. The District Court, in considering Auguste's habeas petition, does not appear to have made any independent findings of fact in this matter and instead relied on the facts presented in Matter of J-E-. Thus, at a minimum, the administrative facts in this matter are the same as those in the factual record the BIA considered in Matter of J-E-.25
82
The Government, however, contends that Auguste has introduced evidence in his habeas petition that conflicts with the factual findings made by the BIA in Matter of J-E-, and that this constitutes an attack on fact findings inappropriate on habeas review. The specific facts in dispute include a statement by a Haitian government official that acknowledges that the conditions in the prisons are "tough," as well as a statement that the purpose of Haiti's imprisonment policy is to intimidate and punish deportees, and to teach them a lesson about the true conditions in Haiti's prisons. Even assuming that we agree with the Government that these statements somehow are in conflict with the findings of the BIA in Matter of J-E-, we nonetheless see no reason to decide the question of whether the foregoing statements offered by Auguste may be considered on habeas review because they do not, in our opinion, strengthen Auguste's CAT claim or change our ultimate disposition of his petition. Accordingly, although we will discuss these facts below, nothing in this opinion should be construed as a holding that the disputed facts are properly before this Court.26
3.
83
"An applicant for relief on the merits under [Article 3] of the [Convention] bears the burden of establishing `that it is more likely than not that he or she would be tortured if removed to the proposed country of removal.'" See Sevoian v. Ashcroft, 290 F.3d 166, 174-75 (3d Cir.2002) (quoting 8 C.F.R. § 208.16(c)(2)). The standard for relief under the Convention "has no subjective component, but instead requires the alien to establish, by objective evidence, that he is entitled to relief." See id. (internal citations and quotations omitted); see also Elien v. Ashcroft, 364 F.3d 392, 398 (1st Cir.2004); Cadet, 377 F.3d at 1180.
84
For an act to constitute torture under the Convention and the implementing regulations, it must be: (1) an act causing severe physical or mental pain or suffering; (2) intentionally inflicted; (3) for an illicit or proscribed purpose; (4) by or at the instigation of or with the consent or acquiescence of a public official who has custody or physical control of the victim; and (5) not arising from lawful sanctions. See Matter of J-E-, 23 I. & N. Dec. at 297 (citing 8 C.F.R. § 208.18(a)); see also Cadet, 377 F.3d at 1192 (outlining the same requirements); Elien, 364 F.3d at 398 (same). An "alien's testimony, if credible, may be sufficient to sustain the burden of proof without corroboration." Zubeda, 333 F.3d at 471-72 (citing Mansour v. INS, 230 F.3d 902, 907 (7th Cir.2000)). "If an alien meets his/her burden of proof, withholding of removal under the Convention is mandatory just as it is for withholding of deportation under § 243(h)." Zubeda, 333 F.3d at 472 (citing INA § 241(b)(3) and 8 C.F.R. §§ 208.16 — 208.18).
85
We can discern at least three separate circumstances which Auguste contends constitute torture within the meaning of the Convention. First, Auguste contends that the indefinite detention of criminal deportees constitutes torture. Second, Auguste contends that the detention, coupled with the harsh and deplorable prison conditions, constitutes torture. Finally, Auguste contends that the fact that he may be subject to physical abuse and beatings by prison guards constitutes torture. We consider each in turn.
a. Indefinite Detention
86
As we discussed above in Part I.A, the government of Haiti uses a preventive detention policy for criminal deportees. The State Department's 2000 Country Report on Human Rights Practices in Haiti, which was submitted to the District Court as an exhibit to Auguste's habeas petition, states:
87
In the past, when the authorities received Haitian citizens deported from other countries for having committed crimes, they were generally processed in 1 week and then released. Since March 2000, criminal deportees who already have served sentences outside the country are kept in "preventive detention," with no fixed timetable for their eventual release. According to police officials, the deportees are held in order to prevent an increase in insecurity and to convince them that they would not want to risk committing crime because of prison conditions. The average period of preventive detention for these persons has decreased to approximately 1 month, compared to several months in 2000.
88
2000 Country Report.
89
The BIA found in Matter of J-E- as a factual matter that the Haitian government uses the detention procedure "to prevent the bandits from increasing the level of insecurity and crime in the country" and as a "warning and deterrent not to commit crimes in Haiti." Matter of J-E-, 23 I. & N. Dec. at 300 (internal citations and quotations omitted). The BIA also found that the detention policy "in itself appears to be a lawful sanction designed by the Haitian Ministry of Justice to protect the populace from criminal acts committed by Haitians who are forced to return to the country after having been convicted of crimes abroad." Id. Accordingly, the BIA concluded that the detention policy constituted a lawful sanction within the meaning of 8 C.F.R. § 208.18(a)(3), and was not otherwise intended to defeat the purpose of the Convention, and thus was not torture. Matter of J-E-, 23 I. & N. Dec. at 300.
90
Auguste, however, contends that the detention policy, whatever its deterrent purposes, is unlawful under Haiti's Constitution and criminal code and violates the international human rights law prohibition against indefinite and arbitrary imprisonment. Auguste, in effect, contends that whether a state policy is a lawful sanction within the meaning of 8 C.F.R. § 208.18(a)(3) hinges on the legality of that policy under the removal country's applicable law. This is undoubtedly an interesting but difficult issue.27
91
However, we note that in Matter of J-E-, the BIA made an alternative ruling why the policy of indefinite detention does not constitute torture, specifically that "there is no evidence that Haitian authorities are detaining criminal deportees with the specific intent to inflict severe physical or mental pain or suffering." 23 I. & N. Dec. at 300. As will be shown in the next section, we agree with that conclusion. Thus, even if we were to find that the detention policy was not a lawful sanction, we would conclude that the Haitian authorities lacked the requisite intent for a finding of torture. Thus, we see no need to address the lawful sanction issue arising under 8 C.F.R. § 208.18(a)(3) or be drawn into an inquiry as to the particularities of Haitian or international law on this matter.
b. Prison Conditions
92
Auguste contends that his detention in harsh and brutal prison conditions constitutes torture. We briefly described these conditions above in Part I.A, and there is no doubt that these conditions are objectively deplorable. In Matter of J-E-, the BIA found from the record that the Haitian prison conditions were "the result of budgetary and management problems as well as the country's severe economic difficulties." Matter of J-E-, 23 I. & N. Dec. at 301. In addition, the BIA found that "although lacking in resources and effective management, the Haitian Government is attempting to improve its prison systems," and that the Haitian Government "freely permitted the ICRC [International Committee of the Red Cross], the Haitian Red Cross, MICAH [International Civilian Mission for Support in Haiti], and other human rights groups to enter prisons and police stations, monitor conditions, and assist prisoners with medical care, food, and legal aid." Id. (citations omitted). However, the BIA found that placing detainees in these prison conditions did not constitute torture because there was no evidence that the Haitian authorities had the specific intent to create or maintain these conditions so as to inflict severe pain or suffering on the detainees. Id. The District Court, relying on Matter of J-E-, agreed, concluding that "we have circumstances here where we have simply the allegation of general prison conditions in Haiti. So it does not appear to me that [Auguste] has made any showing that his pain and suffering or physical or mental injury would be intentionally inflicted." (J.A. 15.)
93
Auguste, however, challenges the conclusion of the District Court and the BIA in Matter of J-E- that the Haitian authorities do not have the requisite specific intent under 8 C.F.R. § 208.18(a)(5). He contends that the Haitian authorities are not only aware that their imprisonment policy causes severe pain and suffering, but purposely place deportees in the brutal prison conditions in order to punish and intimidate them. The BIA's finding that the prison conditions are the result of budgetary and management problems is a factual finding that falls outside the scope of our habeas review. However, Auguste's contention that the BIA misapplied 8 C.F.R. § 208.18(a)(5) involves the application of law to facts and thus is appropriate on habeas review.
94
Keeping in mind the appropriate deference we must give to the BIA in the interpretation of its own regulations, we do not think the BIA acted outside of its authority or contrary to law in Matter of J-E- in concluding that the Haitian authorities lack the requisite specific intent to inflict severe pain and suffering on Auguste, or others like him, within the meaning of 8 C.F.R. § 208.18(a)(5). As we noted above, for an act to constitute torture, the actor must not only intend to commit the act but also intend to achieve the consequences of the act. In this case, the latter is lacking. As the BIA found in Matter of J-E-, the prison conditions, which are the cause of the pain and suffering of the detainees, result from Haiti's economic and social ills, not from any intent to inflict severe pain and suffering on detainees by, for instance, creating or maintaining the deplorable prison conditions. The mere fact that the Haitian authorities have knowledge that severe pain and suffering may result by placing detainees in these conditions does not support a finding that the Haitian authorities intend to inflict severe pain and suffering. The difference goes to the heart of the distinction between general and specific intent.
95
In effect, Auguste is complaining about the general state of affairs that exists in Haitian prisons. The brutal conditions are faced by all prisoners and are not suffered in a unique way by any particular detainee or inmate. We think it goes without saying that detainees and other prisoners face a brutal existence, experiencing pain and suffering on a daily basis. The conditions that we have described are among the worst we have ever addressed. But, the pain and suffering that the prisoners experience in Haiti cannot be said to be inflicted with a specific intent by the Haitian government within the meaning of 8 C.F.R. § 208.18(a)(5).28
96
In so holding, we caution that we are not adopting a per se rule that brutal and deplorable prison conditions can never constitute torture. To the contrary, if there is evidence that authorities are placing an individual in such conditions with the intent to inflict severe pain and suffering on that individual, such an act may rise to the level of torture should the other requirements of the Convention be met. Perhaps, as evidence is further developed on conditions in Haiti, the BIA may arrive at a different conclusion in the future. But, the situation that we are presented with, and the evidence that we must consider, do not support a finding that Auguste will face torture under the only definition that is relevant for our purposes — the definition contained in the Convention and the implementing regulations.
c. Physical Abuse
97
Finally, Auguste points to reports of physical beatings of prisoners by prison guards as evidence that he faces torture upon his removal to Haiti. In Matter of J-E-, the BIA noted that the reports of prisoner abuse have ranged from the beating with fists, sticks and belts to burning with cigarettes, choking, hooding, and kalot marassa. 23 I. & N. Dec. at 302. In Matter of J-E-, the BIA concluded that, although such acts may rise to the level of torture, the alien there had failed to meet his burden of proof that he would be more likely than not subject to torture. Id. at 302-03. In particular, the BIA noted that there were no claims by the alien of past torture. Id. at 303. Moreover, although there were reported instances of beatings of prisoners, the alien had failed to show that the beatings were "so pervasive as to establish a probability that a person detained in a Haitian prison will be subject to torture." Id. at 304. The situation here is no different. Auguste has not alleged any past torture, nor has he offered any evidence tending to show that he faces an increased likelihood of torture anymore than the alien in Matter of J-E-.
IV. CONCLUSION
98
The conditions that Auguste will likely face in Haiti's prisons, like those awaiting many other criminal deportees, are harsh and deplorable. However, in ratifying the Convention against Torture, the United States undertook its obligations subject to certain understandings on the proper intent and burden of proof standards. The Department of Justice thereafter adopted regulations that properly implemented those standards in the regulations governing CAT claims. Auguste has not satisfied those standards. Accordingly, we will affirm the order of the District Court.
Notes:
1
See, e.g., U.N. Charter, chap. IX, art. 55, para. c (directing United Nations member countries to promote "universal respect for, and observance of, human rights and fundamental freedoms for all"); Universal Declaration of Human Rights, art. 5, G.A. Res. 217A (III), U.N. Doc. A/810 (1948) (stating that "[n]o one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment"); International Covenant on Civil and Political Rights, Dec. 16, 1966, art. 7, 999 U.N.T.S. 171, 6 I.L.M. 368 (stating that "[n]o one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment"). See generally J Herman Burgers & Hans Danelius, The United Nations Convention against Torture: A Handbook on the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment 5-30 (1988).
2
See Status of the Ratification of the Convention against Torture (visited Nov. 24, 2004) (http://www.ohchr.org/english/law/cat-ratify.htm).
3
In a cover letter from Janet G. Mullins, Assistant Secretary, Legislative Affairs, Department of State, to Senator Claiborne Pell, Chairman of the Senate Committee on Foreign Relations, transmitting President Bush's revised reservations, understandings, and declarations to the CAT, it was stated that the revised understanding "maintains our position that specific intent is required for torture."See S. Exec. Rep. 101-30, at 35 (App.A).
4
A summary and technical analysis of the Convention submitted by President Reagan to the Senate further stated: "[T]he requirement of intent to cause severe pain and suffering is of particular importance in the case of alleged mental pain and suffering, as well as in cases where unexpectedly severe physical suffering is caused. Because specific intent is required, an act that results in unanticipated and unintended severity of pain and suffering is not torture for purposes of this Convention."See S. Exec. Rep. 101-30, at 13-14.
5
The Senate Report explains why this understanding was added:
Article 3 forbids a State Party from forcibly returning a person to a country where there are "substantial grounds for believing that he would be in danger of being subjected to torture."
Under U.S. immigration law, the United States can not deport an individual if "it is more likely than not that the alien would be subject to persecution." INS v. Stevic, 467 U.S. 407, 104 S.Ct. 2489, 81 L.Ed.2d 321 (1984). U.S. immigration law also provides that asylum may be granted to an alien who is unwilling to return to his home country "because of persecution or a well-founded fear of persecution." INS v. Cardoza-Fonseca, 480 U.S. 421, 107 S.Ct. 1207, 94 L.Ed.2d 434 (1987).
The administration's proposed understanding adopts the more stringent Stevic standard because the administration regards the nonrefoulement prohibition of article 3 as analogous to mandatory withholding of deportation. Therefore, article 3 would apply when it is "more likely than not" that the individual would be tortured upon return.
See S. Exec. Rep. 101-30, at 10.
6
Article 26 of the Convention states in pertinent part: "Accession shall be effected by the deposit of an instrument of accession with the Secretary-General of the United Nations."See art. 26, S. Treaty Doc. No. 100-20, 1465 U.N.T.S. 85.
7
Treaties that are not self-executing do not create judicially-enforceable rights unless they are first given effect by implementing legislationSee Ogbudimkpa, 342 F.3d at 218 (citing Mannington Mills, Inc. v. Congoleum Corp., 595 F.2d 1287, 1298 (3d Cir.1979)). Several circuits have already determined that the CAT is not self-executing. See, e.g., Reyes-Sanchez v. United States Attorney Gen., 369 F.3d 1239, 1240 n. 1 (11th Cir.2004); Saint Fort v. Ashcroft, 329 F.3d 191, 202 (1st Cir.2003); Wang v. Ashcroft, 320 F.3d 130, 140 (2d Cir.2003); Castellano-Chacon v. INS, 341 F.3d 533, 551 (6th Cir.2003). This Court, however, has not previously addressed whether the CAT is self-executing. See Ogbudimkpa, 342 F.3d at 218 n. 22 (noting that because Congress passed FARRA to implement the United States' obligations under the CAT, "we need not consider whether CAT is self-executing"). As noted later, we decide that the Convention is not self-executing.
On a side note, in Ogbudimkpa, we briefly considered whether a claim seeking relief from removal on the grounds of alleged future torture should be called a "CAT claim" or a "FARRA claim." 342 F.3d at 221 n. 24. We noted that, if it were true that the Convention was not self-executing, then strictly speaking an alien would seek relief under FARRA, and not the Convention. Id. Ultimately, however, given that the language of FARRA is virtually identical to the language of Article 3 of the Convention, we concluded that the difference between the terminology of a "CAT claim" versus a "FARRA claim" was inconsequential. Id. Accordingly, we used there, and we continue to use here, the colloquial reference to a "CAT claim" rather than a "FARRA claim" in discussing Auguste's requested relief. Id.
8
Auguste seeks deferral of removal, not withholding of removal. Regulations for withholding of removal are set out at 8 C.F.R. § 208.16, while regulations for deferral of removal are set out at 8 C.F.R. § 208.17. However, the general standards of eligibility for each are identical, i.e., a requirement that an alien establish that future "torture" is "more likely than not."See 8 C.F.R. § 208.16(c), .17(a); see also 64 Fed.Reg. 8478, 8481 (noting that " § 208.17(a) is subject to the same standard of proof and definitional provisions as § 208.16(c)").
9
Applications for relief under the CAT are not the only instance in which courts address torture-related claims. For instance, pursuant to Articles 4 and 5 of the Convention, the United States enacted §§ 2340-2340A of the U.S. Criminal Code, which criminalize torture in the United States and defines torture as any "act committed by a person acting under the color of law specifically intended to inflict severe physical or mental pain or suffering (other than pain or suffering incidental to lawful sanctions) upon another person within his custody or physical control." 18 U.S.C. §§ 2340-2340A
In addition, the Torture Victims Protection Act ("TVPA"), 28 U.S.C. § 1350 note (2000), provides a civil tort remedy for victims of torture. Torture is defined under the TVPA as:
any act, directed against an individual in the offender's custody or physical control, by which severe pain or suffering (other than pain or suffering arising only from or inherent in, or incidental to, lawful sanctions), whether physical or mental, is intentionally inflicted on that individual for such purposes as obtaining from that individual or a third person information or a confession, punishing that individual for an act that individual or a third person has committed or is suspected of having committed, intimidating or coercing that individual or a third person, or for any reason based on discrimination of any kind.
10
"Torture" is prohibited by Article 1 of the CAT, while "other acts of cruel, inhuman or degrading treatment or punishment" are prohibited by Article 16 of the CATId. at 295-96.
11
In considering whether an alien has satisfied his burden of proof, the BIA stated that:
all evidence relevant to the possibility of future torture shall be considered, including, but not limited to: (1) evidence of past torture inflicted upon the applicant; (2) evidence that the applicant could relocate to a part of the country of removal where he or she is not likely to be tortured; (3) evidence of gross, flagrant, or mass violations of human rights within the country of removal, where applicable; and (4) other relevant information regarding conditions in the country of removal.
Matter of J-E-, 23 I. & N. Dec. at 303 (citing 8 C.F.R. § 208.16(c)(3)).
12
It does not appear that the aggrieved alien inMatter of J-E- appealed the adverse decision of the BIA or otherwise filed a habeas petition.
13
We note that neither party has addressed whether the regulation-specific jurisdiction-stripping provision of § 2242(d) of FARRA affects our jurisdiction in this matterSee § 2242(d) ("[N]o court shall have jurisdiction to review the regulations adopted to implement this section."). In Ogbudimkpa, we held that a different aspect of § 2242(d), stating that "nothing in this section shall be construed as providing any court jurisdiction to consider or review claims raised under the Convention ... except as part of a review of a final order of removal," does not affect habeas review. See Ogbudimkpa, 342 F.3d at 215-16 (noting that "Ogbudimkpa does not challenge the regulations themselves, but the IJ's application of the regulations to his case, and thus [the regulation-specific jurisdiction-stripping] provision is not implicated"). The regulation-specific jurisdiction-stripping provision may be relevant insofar as any of Auguste's arguments may be construed as challenging the regulations themselves, instead of their application to his case.
We believe the rationale behind Ogbudimkpa applies here with the same force. In St. Cyr, the Supreme Court held that "at the absolute minimum, the Suspension Clause protects the writ [of habeas corpus] as it existed in 1789." 533 U.S. at 301, 121 S.Ct. 2271 (internal quotation omitted). The Court found that, at that time, "the issuance of the writ was not limited to challenges to the jurisdiction of the custodian, but encompassed detentions based on errors of law, including the erroneous application or interpretation of statutes." Id. at 302, 121 S.Ct. 2271. Thus, just as the wholesale jurisdiction-stripping provision of FARRA cannot eliminate habeas jurisdiction without what has been termed a "superclear statement" or "magic words," id. at 327, 121 S.Ct. 2271 (Scalia, J., dissenting) (characterizing the requirement set forth by the majority), the regulation-specific jurisdiction-stripping provision may not restrict that jurisdiction beyond its 1789 form without such an unmistakably clear statement, which is lacking in either provision of § 2242(d).
14
This, of course, is not the first instance in which this Court has applied the standards for relief under the CAT and its regulationsSee, e.g., Sevoian v. Ashcroft, 290 F.3d 166, 174-78 (3d Cir.2002) (denying alien facing deportation to Republic of Georgia relief under the CAT). However, we are not aware of a prior decision by this Court, or any other court, that has analyzed whether the Department of Justice or the BIA thereunder have faithfully implemented the United States' obligations under the Convention.
15
The United States has not ratified the Vienna Convention on the Law of Treaties. Nonetheless, several courts have stated that they look to it "as an authoritative guide to the customary international law of treaties."See, e.g., Ehrlich v. Am. Airlines, Inc., 360 F.3d 366, 373 n. 5 (2d Cir.2004).
16
Auguste makes a related argument: because the understandings were without effect, and thus the interpretation of the Convention he advocates was in effect upon ratification in the United States, a clear statement was required by Congress to modify or abrogate the treaty in FARRA to enact the specific intent standard. Auguste relies on the well-known rule that a "treaty will not be deemed to be abrogated or modified by a later statute unless such purpose on the part of Congress has been clearly expressed."See Trans World Airlines v. Franklin Mint Corp., 466 U.S. 243, 252, 104 S.Ct. 1776, 80 L.Ed.2d 273 (1984) (quotations omitted). In Auguste's view, Congress' statement in § 2242(b) of FARRA directing the appropriate agencies to implement the United States' obligations under the CAT "subject to any reservations, understandings, declarations, and provisos contained in the United States Senate resolution of ratification of the [CAT]," 8 U.S.C. § 1231 note, was not a clear enough statement to modify or abrogate the Convention as it was ratified by the United States. Because we ultimately conclude that the understandings must be given domestic legal effect, we need not address this argument.
17
See, e.g., Igartua De La Rosa v. United States, 32 F.3d 8, 10 n. 1 (1st Cir.1994) (enforcing declaration that the International Covenant on Civil and Political Rights was not self-executing); Ralk v. Lincoln County, 81 F.Supp.2d 1372, 1380 (S.D.Ga.2000) (same); Sandhu v. Burke, No. 97 Civ. 4608(JGK), 2000 WL 191707 (S.D.N.Y. Feb.10, 2000) (enforcing declaration that the CAT was not self-executing); Calderon v. Reno, 39 F.Supp.2d 943, 956 (N.D.Ill.1998) (same); White v. Paulsen, 997 F.Supp. 1380, 1387 (E.D.Wash.1998) (same).
18
In practice, the treaty-making process operates as follows. After the executive branch negotiates the terms of a treaty with foreign nations, and a completed draft is signed, the President thereafter transmits the treaty to the Senate for its advice and consent. If the treaty receives the required two-thirds vote, the Senate sends a resolution to the President approving the treaty. The President has the discretion at this point to ratify or not ratify the treaty. Should the President decide to ratify the treaty, he will sign the instrument of ratification and deposit it in a place typically specified by the treatySee Bradley & Goldsmith, supra, (citing Congressional Research Service, Treaties and Other International Agreements: The Role of the United States Senate, 103rd Congress, 1st Sess., at 75-120 (1993)).
19
Although we are aware of no cases construing the limits of the Senate's prerogative to attach reservations, understandings, and declarations as part of its advice and consent function to ratification, we note in passing that the Supreme Court has previously held that the Senate's ability to put forward its understanding of a treaty does not extend beyond the ratification processSee Fourteen Diamond Rings v. United States, 183 U.S. 176, 180, 22 S.Ct. 59, 46 L.Ed. 138 (1901) ("The meaning of the treaty cannot be controlled by subsequent explanations of some of those who may have voted to ratify it.").
20
In passing, we express some skepticism as to whether it is so obvious, as Auguste contends, that the United States' understanding of Article 1 of the Convention as requiring "specific intent" is inconsistent with the Convention, as he contends it is generally understood internationally
Auguste relies on several sources in support of his contention that a specific intent standard would be inconsistent with the common understanding of Article 1 of the Convention. For instance, he notes that during the negotiations of the treaty, a U.S. proposal for Article 1 that read "the offence of torture includes any act by which extremely severe pain and suffering, whether physical or mental, is deliberately and maliciously inflicted" was rejected. See Burgers and Danelius, supra, at 41-42. However, in our view, it does not follow necessarily that the final language of Article 1 was a repudiation of a specific intent standard.
We also believe it to be telling that both Presidents Reagan and Bush submitted the condition interpreting Article 1 with the "specifically intended" language as an understanding, and not as a reservation or declaration. This suggests to us that the commonly understood meaning at the time of ratification was that, at least to the United States, the specific intent standard was consistent with a reasonable interpretation of the language in Article 1.
In any event, we need not resolve this issue. Whether specific intent is or is not commonly understood to be part of Article 1's definition of torture is not relevant to our holding. But, as the CAT gains increased attention in light of recent events abroad, we are confident that the debate on this question will continue.
21
We note that this issue was itself a source of division within the BIA. InMatter of J-E-, one Board member, in dissent, wrote:
Contrary to what the majority suggests, the regulatory requirement that the torture be "specifically intended" does not mean that proof of specific intent, as that term is used in American criminal prosecutions, is required.... The majority's reading of the regulations functionally converts the Senate understanding that torture must be "specifically intended" into a "specific intent" requirement. I disagree. I can find no basis to conclude that the Senate understanding was intended to require proof of an intent to accomplish a precise criminal act, as the majority contends is required. Rather, the plain language of the text of 8 C.F.R. § 208.18(a)(5) reflects only that something more than an accidental consequence is necessary to establish the probability of torture.
Nowhere does the regulation state that the respondent must prove that the prospective torture he may face will result from the torturer's specific intent to torture him. Indeed, it would be difficult, if not impossible, to prove specific intent in a prospective context.
23
I. & N. Dec. at 315-16 (Rosenberg, Comm'r, dissenting)
Another Board member in dissent wrote: "We are in the early stages of the very difficult and thankless task of construing the Convention. Only time will tell whether the majority's narrow reading of the torture definition and its highly technical approach to the standard of proof will be the long-term benchmark for our country's implementation of this international treaty.... I do not believe the majority adequately carries out the language or the purposes of the Convention and the implementing regulations." Id. at 309 (Schmidt, Comm'r, dissenting).
22
Under the Chevron analysis, in determining whether an agency's interpretation of the statute which it administers is reasonable, the initial question is whether the statute is silent or ambiguous with respect to the specific issue. If the statutory language is clear, the court need not look any further, and the agency's interpretation fails if it is inconsistent with the plain language. If, however, the statute is silent or ambiguous, the question for the court is whether the agency's interpretation is based on a permissible construction of the statuteSee Chevron U.S.A. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).
Auguste contends that Chevron deference to the BIA's interpretation of the Convention is not appropriate because the BIA does not have any particular expertise in interpreting treaties. Whether agencies are to be given Chevron deference when interpreting and implementing treaties is an unsettled topic. See generally Curtis A. Bradley, Chevron Deference and Foreign Affairs, 86 Va. L.Rev. 649 (2000). We note that some courts have applied or suggested applying Chevron deference to agency interpretation and implementation of United States' treaty obligations. See, e.g., Hill v. Norton, 275 F.3d 98, 104 (D.C.Cir.2001) (applying Chevron framework to agency's interpretation of a treaty and an implementing statute); see also Collins v. Nat'l Transp. Safety Bd., 351 F.3d 1246, 1251 (D.C.Cir.2003) (applying some standard of deference to an agency construction of a treaty). However, in this matter, because we view the issue as one of the BIA interpreting and applying FARRA and its implementing regulations, and not the Convention per se, we do not believe that resolution of the issue is necessary. This is particularly so because we believe there is no ambiguity in the Convention for which we would need to afford the BIA any deference in the first place. Accordingly, unless there be any misunderstanding, we afford Chevron deference to the BIA's interpretation of FARRA and the implementing regulations in Matter of J-E- and no more.
23
In explaining the difference between specific and general intent, the Supreme Court used the following example to distinguish the two mental states:
[A] person entered a bank and took money from a teller at gunpoint, but deliberately failed to make a quick getaway from the bank in the hope of being arrested so that he would be returned to prison and treated for alcoholism. Though this defendant knowingly engaged in the acts of using force and taking money (satisfying "general intent"), he did not intend permanently to deprive the bank of its possession of the money (failing to satisfy "specific intent").
Carter, 530 U.S. at 268, 120 S.Ct. 2159 (citing United States v. Lewis, 628 F.2d 1276, 1279 (10th Cir.1980)).
24
Because we find that the applicable burden of proof to be applied for CAT claims is the "more likely than not" standard, we do not reach Auguste's arguments that the Department of Justice improperly incorporated the burden of proof used in claims arising under Article 33 of the United Nations Convention Relating to the Status of Refugees, July 28, 1951, 19 U.S.T. 6223, 189 U.N.T.S. 150, or whether we should resort to the rule of lenity as an aid in interpreting the Convention
25
The Government explains that the record before this Court is incomplete and does not include a copy of Auguste's pleadings before the IJ or the BIA. This is because the complete administrative record of the removal proceedings was not yet in evidence at the time the District Court denied the habeas petition on the merits. The only record we have is contained in the Joint Appendix, which contains the petition for writ of habeas corpus and attached exhibits, as well as an affidavit executed by counsel for Auguste with attached exhibits
26
As an additional matter, in his Brief to this Court, Auguste relies in part on the 2003 State Department Country Report on Human Rights Practices for Haiti ("2003 Report") which was released on February 25, 2004. Because the IJ decided this case on November 12, 2003, the 2003 Report was not part of the administrative record on which the IJ based his finding that Auguste was not eligible for CAT relief. In contrast, it appears that the 2001 and 2002 State Department Country Reports were before the IJ. The Government contends that the 2003 Report is not properly before this Court. However, after reviewing the 2003 Report submitted as part of Auguste's habeas petition, we believe that it contains no new evidence that strengthens Auguste's claim or which would change our ultimate disposition of his habeas petition. Accordingly, we need not decide whether the 2003 Report is properly before this Court
27
The District Court in this matter, relying on the BIA's finding inMatter of J-E- that the detention policy constituted a lawful sanction within the meaning of 8 C.F.R. § 208.18(a)(3), apparently found no violation or challenge to Haitian law by the use of the detention policy.
28
Although we do not think that the following list, contained in the record of the ratification of the Convention by the Senate, was intended to be exhaustive, we think the illustrative list of the acts which could constitute torture supports our analysis of the specific intent requirement of 8 C.F.R. § 208.18(a)(5):
The term `torture,' in United States and international usage, is usually reserved for extreme, deliberate and unusually cruel practices, for example, sustained systematic beating, application of electric currents to sensitive parts of the body, and tying up or hanging in positions that cause extreme pain.
See S. Exec. Rep. 101-30, at 14 (citations omitted).
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58 N.W.2d 337 (1953)
156 Neb. 867
WALSH
v.
WALSH et al.
No. 33288.
Supreme Court of Nebraska.
May 8, 1953.
*338 Chambers, Holland & Groth, Lincoln, for appellant.
Sterling F. Mutz, Lincoln, for interveners-appellees.
Heard before SIMMONS, C. J., and CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE and BOSLAUGH, JJ.
CARTER, Justice.
This is a suit for an injunction brought by Catherine A. Walsh, plaintiff, against John R. Walsh and William V. Walsh, defendants, praying that the defendants be perpetually enjoined from depriving plaintiff of the use of a road situated on the east side of the west half of Section 34, Township 8, Range 9, in Otoe County, Nebraska. Calvin R. McCoy and Katie R. McCoy intervened in the suit, alleging that they acquired title to the land involved which formerly belonged to John R. Walsh, and praying for an order quieting title in them and enjoining plaintiff from trespassing upon or claiming any right, title, or interest in such land. The trial court found for the interveners and against the plaintiff and defendants, and entered a decree quieting the title to the real estate brought into question in interveners, free from all claims of the plaintiff and defendants. The plaintiff appeals.
The record shows that Thomas B. Walsh was the owner of the northeast quarter, the southwest quarter, and south half of the northwest quarter, all in Section 34, Township 8, Range 9 East of the 6th P.M., in Otoe County, Nebraska, at the time of his death. The land was devised to his ten children to be divided equally among them. Five of the children sold and conveyed their interests in the real estate to the other five children. The latter group included the plaintiff and the two defendants. By a partition deed plaintiff became the owner of the south half of the northeast quarter and John R. Walsh became the owner of the south half of the northwest quarter. No reservations were made with reference to the road that brought about this litigation. The partition deed was executed on February 28, 1924. As to the south half of the northwest quarter, which was conveyed to John R. Walsh, the plaintiff was one of the grantors. It will be observed, also, that the west line of plaintiff's land was the east line of the John R. Walsh land. On March 7, 1944, John. R. Walsh sold and conveyed *339 his land to interveners McCoy. This deed contained no reservation of a road, nor the grant of an easement. The defendant William V. Walsh owned the east 80 acres immediately south of the McCoys. He appears to have no interest in this litigation.
The evidence shows that this action was commenced on January 27, 1944, before the McCoys became the owners of the land. A restraining order was issued which was kept in force until the case was heard on the merits by virtue of a stipulation of the parties to that effect made in open court. The interveners McCoy were not parties to the suit when it was originally filed. They assert that they never heard of the suit until 1950. The abstract of title failed to disclose the pendency of the suit.
It is the contention of the plaintiff that for many years she has used a road from the north along the quarter section line as a means of ingress and egress to the building on her 80 acres. The road follows the north and south quarter section line very closely until it reaches a point about 600 feet north of the south boundary of the McCoy land. At that point it follows an irregular course, veering onto the McCoy land as much as 73 feet. The plaintiff claims to be the owner of this road and the land between it and her 80 acres.
The record shows that the old family home of Thomas B. Walsh was located on the line of these two 80-acre tracts. In fact the old house which burned more than 20 years ago extended over onto the McCoy land. An old cave is shown to exist on what is now the McCoy land. The barn, a corn crib, and what is described as a shed, are located on plaintiff's land. It is quite evident that when the two tracts were under common ownership the farm yard extended onto the McCoy land to some extent. A row of mulberry trees in a north and south line approximately 45 feet over on the McCoy land are still evident and indicate the boundaries of an orchard that once existed. The road in question passes to the west of these trees and constitutes the point of maximum encroachment upon the McCoy land.
The evidence shows that the road north had been used for more than 50 years as a roadway into the old farm improvements. The road out to the east has not been used since automobiles and trucks became a common mode of transportation, because of a slough running through plaintiff's land. The road to the south is open but rough and unusable for all practicable purposes. The disputed road is not one of necessity, as plaintiff can get out to the north on her own land. John R. Walsh, the former owner of the McCoy land, testifies that he grubbed out the orchard on the disputed land when he obtained title. He testifies, also, that he took a part off the old house and moved it onto the disputed ground by permission from plaintiff, and that he paid all expenses in connection therewith. The McCoys testify that this shack was not occupied from the time they purchased the land until the time of the trial and that their tenant used it in which to store hay for cattle. This evidence is disputed by plaintiff, but the evidence of use by her is very fragmentary. The evidence of John R. Walsh is that all the family were to use the road and that it was understood and agreed that all members of the family, including the plaintiff, could use it. Parts of the evidence of plaintiff and interveners are uncorroborated and in irreconcilable conflict. Under such circumstances we invoke the rule that in an equity case tried de novo on appeal we will consider the fact that the trial judge saw and heard the witnesses and believed one version of the facts rather than the other. Killip v. Killip, 156 Neb. 573, 57 N.W.2d 147.
We think the trial court was correct in construing the evidence of plaintiff and John R. Walsh, the former owner, with regard to the use of the road to the north as being a permissive use. Plaintiff testified: "Q He consented that you use that when you needed to while you and he were on the adjacent properties, didn't he? A We agreed when we made the deal that we would use the north road Q Wait a minute! Didn't he consent to let you use that as long as you wanted to as long as he owned it? A Why, sure he *340 consented; he never stopped me." The language in Bone v. James, 82 Neb. 442, 118 N.W. 83, 85, is particularly applicable to the situation presented. We there said: "It is quite apparent from the whole testimony that the use of this road or way was commenced and continued by Meredith under license or permission from the plaintiff, and that no claim of right was ever asserted until made by the defendant a short time prior to commencement of this action. As stated in Atchison, T. & S. F. R. Co. v. Conlon, 62 Kan. 416, 63 P. 432, 53 L.R.A. 781: `Mere use under a naked license, however long continued, cannot ripen into a prescriptive right.'" There is no evidence in this record that plaintiff ever repudiated the verbal understanding had with John R. Walsh, or asserted a claim of title thereto until after the McCoys bought the John R. Walsh land on March 7, 1944. It is plain that the 10-year period has not expired in order to give plaintiff a prescriptive interest in the road since that date. Consequently, plaintiff has not acquired a prescriptive right to the property involved in this litigation.
An interest in real estate may be obtained in the land of another by open, notorious, peaceable, uninterrupted, adverse possession for the statutory period of 10 years. But where it appears that such possession was permissive until a date which excludes any possibility of the running of the statutory period of 10 years, no easement or other interest therein can be obtained by prescription. Such proof destroys any presumption that the possession was adverse for the statutory period. No such presumption can exist for another reason. As a former grantor, who claims to have remained in possession after a conveyance of the property, she subjects herself to the rule that after such conveyance and retention of possession her possession is presumed to be permissive and subject to the rights of the grantee, and in such case the possession cannot be adverse until notice of the adverse claim is brought home to the other party. Schields v. Horbach, 49 Neb. 262, 68 N.W. 524; Ross v. McManigal, 61 Neb. 90, 84 N.W. 610; Walter v. Walter, 117 Neb. 671, 222 N.W. 49; Gramann v. Beatty, 134 Neb. 568, 279 N.W. 204. We submit that any view of the evidence reveals that as late as March 7, 1944, plaintiff's possession of the lands in controversy was not adverse to John R. Walsh, nor to the interveners McCoy, the grantees of John R. Walsh. The decree of the district court must, therefore, be affirmed.
Affirmed.
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United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 09-2613
___________
United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the
* Western District of Missouri.
David M. Lablance, *
* [UNPUBLISHED]
Appellant. *
___________
Submitted: December 16, 2009
Filed: December 21, 2009
___________
Before BYE, BOWMAN, and BENTON, Circuit Judges.
___________
PER CURIAM.
David Lablance appeals the sentence imposed on him by the district court1 upon
revocation of his supervised release. Upon careful review, we conclude the revocation
sentence is not unreasonable, see 18 U.S.C. § 3583(e)(3); United States v. Tyson, 413
F.3d 824, 825 (8th Cir. 2005) (per curiam) (standard of review); United States v.
Thunder, 553 F.3d 605, 608-09 (8th Cir. 2009). We also find no merit to Lablance’s
argument that the district court erred by not awarding credit against his sentence for
time served. See United States v. Pardue, 363 F.3d 695, 699 (8th Cir. 2004) (although
1
The Honorable Gary A. Fenner, United States District Judge for the Western
District of Missouri.
18 U.S.C. § 3585(b) calls for defendant to receive credit for time served, calculation
of sentence is left to Bureau of Prisons and not sentencing court).
Accordingly, we affirm the judgment of the district court and grant counsel’s
motion to withdraw.
______________________________
-2-
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50 Cal.App.3d 896 (1975)
123 Cal. Rptr. 80
THE PEOPLE, Plaintiff and Respondent,
v.
MICHAEL ALLEN, Defendant and Appellant.
Docket No. 26683.
Court of Appeals of California, Second District, Division Two.
August 26, 1975.
*898 COUNSEL
Richard H. Levin, under appointment by the Court of Appeal, for Defendant and Appellant.
Evelle J. Younger, Attorney General, Jack R. Winkler, Chief Assistant Attorney General, S. Clark Moore, Assistant Attorney General, Lawrence P. Scherb II and Joyce Luther, Deputy Attorneys General, for Plaintiff and Respondent.
*899 OPINION
COMPTON, J.
Defendant appeals a judgment of conviction of burglary in the second degree entered after a jury verdict. The trial court found that defendant had suffered four prior felony convictions.
FACTS
On September 26, 1974, at 2:35 a.m., a Santa Barbara police officer observed defendant walking about a darkened used car lot. Believing that the presence of the defendant at the place and hour was unusual the officer decided to investigate. As he approached the defendant, and before parking the patrol car in an adjacent lot, the officer observed that the defendant hesitated, taking "kind of a stutter step," when he became aware of the approaching vehicle.
The officer alighted from his vehicle, approached the defendant and asked him for identification. Defendant identified himself as Michael Allen, and produced what was apparently a California identification card issued by the Department of Motor Vehicles. The name "Allen" struck a familiar chord with the officer since he knew that a number of persons named Allen had recently been arrested for burglary. He was, however, not certain that Michael Allen, the defendant, was one of those persons.
The officer asked Allen what he was doing in the area. Allen answered that he had been visiting a friend and was on his way back to the Travelers Hotel. The officer observed, however, that rather than walking toward the hotel the defendant was walking away from it. In response to a question defendant admitted that he had been released from prison just three weeks earlier. Coupling this information with the defendant's presence in the car lot the officer suspicioned that something illegal might be taking place.
At about this time the officer noticed that the defendant's pockets appeared to be bulging. Believing that the defendant might be carrying some kind of a weapon the officer patted down the outer surfaces of defendant's shirt and heavy levis. He felt a hard object in defendant's left front pants pocket which he was unable to identify. Thinking that it might be a weapon he pulled it out and saw that it was a set of three car keys solidly taped together.
The word "Dodge" was written on the tape indicating to the officer that the keys might belong to a car on the lot. There was in fact a Dodge *900 automobile sitting on the lot. The officer continued the "pat down" and found eight more sets of car keys, each set taped together. He then arrested defendant on suspicion of burglary.
On a previous trip by the car lot some 30 minutes earlier the officer had observed that the premises were intact. Since the area was a high crime area he repeated his visit to the scene at which time he discovered the defendant. After the arrest of defendant another officer appeared at the scene and the two officers then checked the used car lot. They discovered a broken office window, an open desk drawer and a number of keys laying about in disarray. Defendant told the officers that someone had given him the keys and that the police would be unable to find his fingerprints anywhere. The keys were later identified by the owner of the used car lot as belonging to the cars on the lot.
At trial the defendant testified that he had hitchhiked to Santa Barbara from his home in Santa Maria on September 25th in order to meet a court appearance the next morning. His ride had let him off near the used car lot. On his way to the Virginia Hotel defendant stopped at the rear of the used car lot to urinate. As he was relieving himself, he looked down at the ground and saw numerous keys scattered about. He picked them up intending to give them to his attorney later that morning. Shortly thereafter he was accosted by the officer. He admitted that he lied to the officer concerning the manner in which he acquired the keys.
CONTENTIONS ON APPEAL
Defendant contends that he was unlawfully detained and searched and that the evidence obtained thereby, i.e., the car keys, should have been suppressed. He also challenges the validity of one of the prior convictions.
THE DETENTION
(1) A police officer has the right to temporarily detain and question an individual on the street where the officer has a reasonable suspicion that some activity out of the ordinary is taking place, and there is some indication that the person detained is connected with the unusual activity and there is some suggestion that the activity is related to crime. (People v. Henze, 253 Cal. App.2d 986, 988 [61 Cal. Rptr. 545]; People v. Juarez, 35 Cal. App.3d 631 [110 Cal. Rptr. 865]; People v. Superior Court (Acosta), 20 Cal. App.3d 1085 [98 Cal. Rptr. 161].) The question of the reasonableness *901 of the officer's conduct is determined on the basis of all the information and knowledge possessed by that officer at the time the decision to detain is made. (People v. Superior Court (English) 266 Cal. App.2d 685 [72 Cal. Rptr. 261], cited in People v. Gale, 9 Cal.3d 788, at p. 795 [108 Cal. Rptr. 852, 511 P.2d 1204].)
(2) Although the test is whether under the circumstances it would appear to a reasonable man in the position of the officer that a temporary detention was necessary in the proper discharge of his duties, (People v. One 1960 Cadillac Coupe, 62 Cal.2d 92 [41 Cal. Rptr. 290, 396 P.2d 706]; People v. Anthony, 7 Cal. App.3d 751 [86 Cal. Rptr. 767]) an experienced police officer develops a certain expertise and unique ability to perceive the unusual and suspicious. (People v. Cowman, 223 Cal. App.2d 109, 117-118 [35 Cal. Rptr. 528].) The detention may not be based upon a "mere hunch" but if in light of the officer's experience or expertise the suspicion is a reasonable one, the detention is permissible. (People v. Gravatt, 22 Cal. App.3d 133 [99 Cal. Rptr. 287].)
(3) In the instant case the officer was patrolling in a high crime area. He saw the defendant at a late and unusual hour exiting from darkened private property (see People v. Rosenfeld, 16 Cal. App.3d 619 [94 Cal. Rptr. 380]) where valuable merchandise was located. The officer observed that, because of the presence of various barriers, traversing the car lot was necessarily more difficult than using the regular sidewalk.
Defendant's answers to the officer's questions justified further detention. The information that the defendant had recently been released from Chino together with the officer's knowledge that the name "Allen" was connected with recent burglaries justified a reasonable suspicion that the defendant was connected with criminal activity on the darkened parking lot. Further the fact that defendant was trespassing on private property was justification for, at least, prolonging the detention.
(4a) When the officer observed bulges in the clothing of the defendant and considering that he was alone at 2:30 in the morning with a recently released convict, he acted reasonably in patting down the defendant to ascertain that the person before him was not armed.
(5) It is well established that when an officer has reason to believe that his suspect is armed and dangerous he may conduct a superficial weapon search. (Adams v. Williams, 407 U.S. 143, 145 [32 L.Ed.2d 612, 616-617, 92 S.Ct. 1921]; Terry v. Ohio, 392 U.S. 1 [20 L.Ed.2d 889, 88 *902 S.Ct. 1868]; People v. Mickelson, 59 Cal.2d 448, 450 [30 Cal. Rptr. 18, 380 P.2d 658].)
The officer need not be absolutely certain that the individual is armed. The issue is whether a reasonably prudent man under the circumstances would be warranted in his belief that his safety or that of others was in danger. (Sibron v. New York, 392 U.S. 40, 65 [20 L.Ed.2d 917, 936, 88 S.Ct. 1889], cited in People v. Mosher, 1 Cal.3d 379, at 394 [82 Cal. Rptr. 379, 461 P.2d 659].) Any hard object which feels like a weapon may be removed from pockets of clothing. (Mosher, supra.) (4b) In the instant case the heavy levis worn by the defendant made it difficult for the officer to feel the outline of the hard object and prevented him from immediately determining what it actually was. However, a set of keys taped together could well give the feel of an object that could be used for assault. The officer's belief was therefore reasonable and he was justified in withdrawing the keys.
THE PRIOR CONVICTIONS
(6) Defendant maintains that the prosecution failed to prove the constitutional validity of one of the alleged priors which was used to impeach him, a conviction for petty theft with a prior petty theft.
The prior was established by introduction of a certified minute order showing that defendant had pleaded guilty to the charge of petty theft with a prior conviction of petty theft. The record showed that at the time of that plea defendant was represented by counsel and was fully advised of his constitutional rights. This plea admitted the validity of the prior conviction as well as guilt of the substantive offense. He cannot now raise the issue of the validity of the prior petty theft conviction embraced in the charge to which he pleaded guilty. (In re Yurko, 10 Cal.3d 857 [112 Cal. Rptr. 513, 519 P.2d 516].)
A defendant seeking to challenge a prior conviction may do so only through a clear allegation that he was neither represented by counsel nor waived the right to be so represented. (People v. Coffey, 67 Cal.2d 204 [60 Cal. Rptr. 457, 430 P.2d 15].) In the instant case the defendant merely asserts that by admitting the prior misdemeanor he did not admit the *903 constitutional validity thereof. He does not clearly allege lack of counsel or waiver.
The judgment is affirmed.
Fleming, Acting P.J., and Beach, J., concurred.
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91 Cal.Rptr.2d 135 (1999)
76 Cal.App.4th 1396
James L. McGILL, et al., Plaintiffs and Appellants,
v.
M.J. BROCK & SONS, INC., Defendant and Respondent.
No. E020452.
Court of Appeal, Fourth District, Division Two.
December 15, 1999.
As Modified on Denial of Rehearing January 13, 2000.
Review Denied March 22, 2000.[**]
*137 Wildish, Nialis & Bonetati, Daniel R. Wildish and Michael A. Reynolds, Orange, for Plaintiffs and Appellants.
Epstein & Turner, David B. Epstein, Los Angeles, and Michael R. Weiss, for Defendant and Respondent.
Certified for Partial Publication.[*]
*136 OPINION
McKINSTER, J.
The plaintiffs appeal from a summary judgment entered against them after the trial court determined that their action was barred by the statute of limitation. We reverse.
FACTUAL AND PROCEDURAL BACKGROUND
The plaintiffs own houses in a residential subdivision known as Rolling Ridge which is adjacent to State Route 71 ("Highway 71") in Chino Hills. With one exception, the plaintiffs purchased their homes in 1987 from the builder, M.J. Brock & Sons, Inc. ("Brock"). Plaintiffs Ben and Kristen Romero purchased their home in 1990 from the initial buyer.
The plaintiffs sued a variety of defendants, including Brock, in 1994. As amended, the complaint asserted 13 counts against Brock, seeking damages and rescission on theories of intentional, negligent or innocent misrepresentation (counts 1-8 & 25), mutual or unilateral mistake (counts 9 & 10), failure of consideration (count 11), and breach of contract (count 12). In substance, the plaintiffs alleged that when the plaintiffs bought their houses from Brock, Brock had affirmatively represented that buyers would enjoy peace, tranquillity and a pleasant view, and *138 that Brock had failed to disclose to the plaintiffs the plan to realign Highway 71 and to expand it from a two-lane road to a six-lane freeway.
In 1996, Brock moved for summary judgment.[1] It argued that the plaintiffs' action was barred by the applicable statute of limitation, that it owed no duty of disclosure to some of the plaintiffs, and that the plaintiffs could not have reasonably relied upon any failure to disclose. The trial court granted the motion on the first ground, and issued a judgment in favor of Brock. The plaintiffs appeal.
ISSUES
The only issues on appeal are two of those raised in the motion for summary judgment: Did the plaintiffs justifiably rely on Brock's failure to disclose? Are the plaintiffs' claims barred by the statute of limitation?[2]
ANALYSIS
A. BROCK HAS FAILED TO DEMONSTRATE THAT THE PLAINTIFFS COULD NOT HAVE JUSTIFIABLY RELIED UPON ITS FAILURE TO DISCLOSE CALTRANS'S PLANS TO EXPAND HIGHWAY 71.[**]
B. BROCK'S MOTION FAILED TO DEMONSTRATE THAT THE PLAINTIFFS' CLAIMS WERE BARRED BY THE STATUTE OF LIMITATION.
Code of Civil Procedure section 338, subdivision (d), provides for a three-year limitation period for any action for relief on the ground of fraud or mistake. If misrepresentation or mistake is the basis for the injury, the action is governed by that section, regardless of the form of the action or the type of relief sought. (3 Witkin, Cal. Procedure (4th ed. 1996) Actions, § 596, p. 767.) Thus, counts 1 through 10 and 25 are all governed by the three-year statute. Although count 12 is styled as one for breach of contract, it too is governed by this statute because the alleged breach is Brock's failure to disclose information concerning the realignment and expansion of Highway 71. Similarly, count 11 is alleged as one for rescission of a contract for failure of consideration. Rescission is proper "[i]f the consideration for the obligation of the rescinding party fails, in whole or in part, through the fault of the party as to whom he rescinds." (Civ.Code, § 1689, subd. (b)(2).) Brock's fault is alleged to be its misrepresentation. Therefore, count 11 is governed by Code of Civil Procedure section 338 as well.
*139 The three-year period does not begin to run as soon as the misrepresentation or mistake is made. Instead, the cause of action "is not to be deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake." (Code Civ. Proa, § 338, subd. (d).) But "`discovery' is not synonymous with actual knowledge." (People v. Zamora (1976) 18 Cal.3d 538, 561-562, 134 Cal.Rptr. 784, 557 P.2d 75.) "Every person who has actual notice of circumstances sufficient to put a prudent man upon inquiry as to a particular fact, has constructive notice of the fact itself in all cases in which, by prosecuting such inquiry, he might have learned such fact." (Civ.Code, § 19.) Accordingly, when the defrauded person has actual notice or knowledge of facts sufficient to make a reasonably prudent person suspicious of fraud, the victim has a duty to investigate. (Hobart v. Hobart Estate Co. (1945) 26 Cal.2d 412, 437-438, 159 P.2d 958; Bedolla v. Logan & Frazer (1975) 52 Cal.App.3d 118, 130, 125 Cal.Rptr. 59.) If the investigation would have disclosed the fraud, the victim "`will be charged with a discovery as of the time the inquiry would have given him knowledge.'" (Vai v. Bank of America (1961) 56 Cal.2d 329, 343, 15 Cal.Rptr. 71, 364 P.2d 247, quoting Victor Oil Co. v. Drum (1920) 184 Cal. 226, 240, 193 P. 243.)
On the other hand, if the known circumstances would not put a reasonable person on inquiry, no duty to inquire exists. (Vai v. Bank of America, supra, 56 Cal.2d at p. 343, 15 Cal.Rptr. 71, 364 P.2d 247; Hobart v. Hobart Estate Co., supra, 26 Cal.2d at pp. 438-139, 159 P.2d 958.) In that event, "`the mere fact that means of knowledge are open to a plaintiff, and he has not availed himself of them, does not debar him from relief when thereafter he shall make actual discovery.'" (Vai p. 343,15 Cal.Rptr. 71, 364 P.2d 247; Hobart, p. 438, 159 P.2d 958; accord, id., p. 442, 159 P.2d 958; Parsons v. Tickner (1995) 31 Cal.App.4th 1513, 1528-1529, 37 Cal. Rptr.2d 810.)
1. The Facts Stated in Brock's Separate Statement of Undisputed Facts Do Not Establish that the Plaintiffs' Claims Are Barred by the Statute of Limitation.
In its motion for summary judgment, Brock sought to establish as a matter of undisputed fact that the plaintiffs knew or were deemed to have known of the existence of the alleged misrepresentation or mistake more than three years before their action was filed. To support that conclusion, Brock asserted in its separate statement (Code Civ. Proa, § 437c, subd. (b)) that the following facts were undisputed:
All the plaintiffs except the Romeros purchased their lots during the period of January through August, 1987. The Romeros purchased their lot in November of 1990.
Highway 71 between State Highway 91 and Interstate Highway 10 is near the Rolling Ridge tract in which the plaintiffs' lots are located.
"On November 3, 1987 Bond Measure A, which was proposed to the voters of San Bernardino County to provide funds for the development of State Highway 71 between State Route 91 and Interstate 10, failed and did not pass."
"On November 7, 1989 Bond Measure I, which was proposed to the voters of San Bernardino County to provide funds for the development of State Highway 71 between State Route 91 and Interstate 10, the development of which is the subject of this lawsuit, was passed and enacted into law."[3]
*140 The plaintiffs did not file their complaint until June 16, 1994.
The plaintiffs did not dispute the truth of those facts, although they denied knowledge of the bond issues or of the planned expansion of Highway 71. The issue, therefore, is whether those few facts demonstrate that the plaintiffs were on inquiry notice of the planned expansion of Highway 71.
The trial court held that they do: "As a matter of law, the plaintiffs are deemed to have had constructive knowledge of the widening of Highway 71 as of the passage of Bond Measure I by the voters of San Bernardino County on November 7, 1989, placing them at least on inquiry notice. With the passage of Bond Measure I and its attendant publicity, the reality that Highway 71 would be expanded into a freeway became a matter of public record and public knowledge sufficient to put a reasonable person in plaintiffs' community on constructive notice of such facts, as a matter of law." It is mistaken.
To support its conclusion that the plaintiffs had constructive notice of those matters of public record, the trial court relied upon cases stating that "`when the plaintiff has notice or information of circumstances to put a reasonable person on inquiry, or has the opportunity to obtain knowledge from sources open to his investigation (such as public records or corporation books), the statute commences to run.'" (Baker v. Beech Aircraft Corp. (1979) 96 Cal.App.3d 321, 327-328, 157 Cal. Rptr. 779, quoting what is now 3 Witkin, Cal. Procedure, supra, § 602, p. 773; accord, Lee v. Escrow Consultants, Inc. (1989) 210 Cal.App.3d 915, 920, 259 Cal. Rptr. 117; Community Cause v. Boatwright (1981) 124 Cal.App.3d 888, 902, 177 Cal.Rptr. 657; emphasis added.)
That reliance is misplaced, because those authorities err by stating the rule in the disjunctive. The existence of the means to obtain information, such as through public records, is equivalent to actual knowledge of that information "only where there is a duty to inquire, as where plaintiff is aware of facts which would make a reasonably prudent person suspicious." (Hobart v. Hobart Estate Co., supra, 26 Cal.2d at p. 438, 159 P.2d 958.) In the absence of notice or knowledge of those suspicious circumstancesand of the duty to inquire that results from that notice or knowledgethe statute does not run merely because the means of discovery were available.[4](Id., p. 442, 159 P.2d 958; Vai v. Bank of America, supra, 56 Cal.2d at p. 343, 15 Cal.Rptr. 71, 364 P.2d 247; Eisenbaum v. Western Energy Resources, Inc. (1990) 218 Cal.App.3d 314, 325; 267 Cal.Rptr. 53 Witkin, supra, § 605, p. 778.) In short, regardless of the contents of public records, the statutory period does not begin to run until the plaintiffs either have actual knowledge of suspicious circumstances creating a duty of inquiry, or *141 at least receive actual notice of those circumstances.[5]
In its separate statement, Brock neither contended nor cited to any evidence that the plaintiffs had actual knowledge of the existence or passage of the bond measure. Nor did Brock cite to any evidence that the plaintiffs received notice of those facts. For instance, it did not contend or cite to any evidence that the plaintiffs were registered voters who would have received a sample ballot, voters' pamphlet, or other official notice of the election at which the bond measure was decided.
Thus, the existence of Measure I and its approval by the electorate do not, by themselves, commence the running of the limitation period. In the absence of evidence that the plaintiffs either knew or had received notice of the bond measure or its passage, those facts do not create a duty of inquiry. Accordingly, the facts listed in Brock's separate statement of undisputed facts do not establish that the statute of limitation had run on the plaintiffs' claims.
2. Newspaper Articles Did Not Put the Plaintiffs on Inquiry Notice.
Brock would have us uphold the summary judgment on the basis of factual contentions which are not set forth in its separate statement. In particular, Brock contends that the plan to expand Highway 71 and the passage of the bond measure were reported in various newspapers in 1989, that the plaintiffs should be deemed to have received notice of the expansion project from those reports, and that the limitation period began to run at the time of those articles. We reject that analysis for several alternative reasons.
First, Code of Civil Procedure section 437c requires the moving and opposing parties to prepare separate statements of undisputed facts, setting forth all the facts that the respective parties consider to be material. (Id., subd. (b).) The purpose of the separate statements is twofold: to afford due process to the opposing party by informing it of the evidence which must be disputed in order to defeat the motion, and to aid both trial and appellate courts in reviewing summary judgment motions by allowing them to determine quickly and efficiently whether material facts are disputed. (North Coast Business Park v. Nielsen Construction Co. (1993) 17 Cal.App.4th 22, 30, 21 Cal.Rptr.2d 104; United Community Church v. Garcin (1991) 231 Cal.App.3d 327, 335, 337, 282 Cal.Rptr. 368.) To promote both of those goals, we consider only those facts that are listed in the parties' separate statements. A fact omitted from the separate statements "`does not exist'" (United Community Church, p. 337, 282 Cal.Rptr. 368 [reversing summary judgment]), even if its existence is supported by evidence filed with the court (North Coast Business Park, pp. 30-31, 21 Cal.Rptr.2d 104).
Here, although Brock asked the trial court to take judicial notice of several newspaper articles, the publication of those articles is not listed as undisputed in its separate statement, nor are any of those articles cited as evidence supporting any *142 other fact listed as being undisputed. Accordingly, those articles are not among the facts that are considered in evaluating the ruling on the motion.
Second, even were we to overlook the omission of any mention of the newspaper articles from Brock's statement of undisputed facts, the articles cannot be considered unless we may properly grant Brock's request that we take judicial notice of them. It is unclear whether the facts that particular newspapers published articles on particular subjects on particular dates are either "of such common knowledge within the territorial jurisdiction of the court that they cannot reasonably be the subject of dispute" (Evid.Code, § 452, subd. (g)) or "are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy" (id., subd. (h)). (Compare People v. Massie (1998) 19 Cal.4th 550, 566, fn. 4, 79 Cal.Rptr.2d 816, 967 P.2d 29 [refusing to take judicial notice of newspaper articles] and People v. Ramos (1997) 15 Cal.4th 1133, 1167, 64 Cal.Rptr.2d 892, 938 P.2d 950 [affirming refusal to take judicial notice] with Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 408, 87 Cal.Rptr.2d 453 [taking judicial notice that a "controversy" had arisen in the popular press, without specifying the media involved], People v. Hardy (1992) 2 Cal.4th 86, 174, fn. 24, 5 Cal. Rptr.2d 796, 825 P.2d 781 [taking judicial notice of newspaper articles], and People v. Jurado (1981) 115 Cal.App.3d 170, 482, 171 Cal.Rptr.2d 509 [same].)
We need not resolve those conflicting decisions because even if we were to take judicial notice of the newspaper articles, there is no evidence that any of the plaintiffs read any of those articles or even received any of those newspapers. For instance, Brock offers no evidence that any of the plaintiffs have ever subscribed to any of those newspapers. Therefore, there is no evidence that the plaintiffs had notice of circumstances sufficient to give rise to a duty to investigate unless we accept Brock's contention that the plaintiffs' actual knowledge is irrelevant because after the passage of Measure I was reported in the news media, the plaintiffs may be deemed to have known facts sufficient to put them on inquiry notice.
Brock cites no California cases for that proposition. Instead, it relies upon Stutz Motor Car of America v. Reebok Intern., Ltd. (C.D.Cal.1995) 909 F.Supp. 1353, which in turn relies upon United Klans of America v. McGovern (5th Cir.1980) 621 F.2d 152. Both of those cases state that knowledge of an event may be imputed to a plaintiff, thereby commencing the running of a limitation period, if media reports of that event have been sufficiently widespread. (United Klans of America, p. 154; Stutz Motor Car of America, p. 1362.)
On matters of state law, federal court decisions not binding, although well-considered opinions may be persuasive. (9 Witkin, Cal. Procedure, supra, Appeal, § 943, pp. 984-985.) We are not persuaded by either United Klans of America v. McGovern or Stutz Motor Car of America v. Reebok Intern., Ltd., for three reasons. First, in both cases the discussion of knowledge of suspicious circumstances being imputed to a plaintiff by media reports was unnecessary dictum, because the plaintiffs were found to have had actual knowledge. (United Klans of America, 621 F.2d at p. 155; Stutz Motor Car of America, 909 F.Supp. at p. 1362.) Second, the rule stated in those cases is contrary to California statutory law, which provides that a person's duty of inquiry arises only from facts of which that person has "actual notice." (Civ.Code, § 19.) And third, even were the proposed rule not contradicted by statute, we question the wisdom or the justice promoted by a rule that allows the statute of limitation on a fraud claim to run, and thereby forecloses a plaintiff from having a trial on the merits of his or her claim, before the plaintiff has actual notice of facts creating a reasonable suspicion that he or she has been defrauded. That would be contrary to the purpose of the delayed-discovery rule, which is to protect those who are ignorant of their cause of action through no fault of their own. (April Enterprises, Inc. v. *143 KTTV (1983) 147 Cal.App.3d 805, 832, 195 Cal.Rptr. 421.) Real-life plaintiffs are motivated to file suit only by facts of which they have actual knowledge, not by facts as to which they have only constructive or imputed knowledge. Were we to stack the legal fiction of "imputed knowledge" upon that of "constructive knowledge," and thereby allow the duty to inquire to be triggered by facts of which a plaintiff has only imputed knowledge, we would run the risk of barring legitimate claims by deserving victims of actual fraud. For all of those reasons, we decline to follow either United Klans of America or Stutz Motor Car of America.
Finally, even if we were to follow those cases, the evidence offered by Brock fails to demonstrate that media coverage of the existence of the planned expansion of Highway 71 and of the passage of the bond measure funding that expansion was so widespread that every reasonable person in the plaintiffs' position would have seen those news reports. For instance, Brock offers no evidence that any news reports on this issue appeared in any news medium other than the newspapers. Given the ever-decreasing percentage of the populace which relies on the print media for its news coverage, as opposed to television, radio, and other electronic media, we question whether "any reasonable person" in today's world would necessarily have seen these newspaper articles.
Besides, of the nine newspaper articles offered by Brock, four of them refer solely to the bond measure, without mentioning the Highway 71 project at all. A fifth article, after discussing the passage of the bond measure, makes a single reference to the Highway 71 project in its fifteenth paragraph. Two other "articles" are legal notices published by Caltrans soliciting public comments on the final environmental impact statement prepared for the Highway 71 project. Only two of the nine articles are actual news reports concerning the plans to expand Highway 71, one of which appeared in the Chino Champion and the other in the Chino Valley News.
Given that only two news reports concerning the expansion of Highway 71 appeared in only two small newspapers, we cannot say that the news media reporting of that project was so pervasive that any reasonable person would have been aware of that project and would have been under a duty to investigate the potential impact of that project on that person's property.
For all of these reasons, Brock's motion failed to establish that the plaintiffs' claims are barred by the statute of limitation.
DISPOSITION
The judgment is reversed. The plaintiffs shall recover their costs on appeal.
RAMIREZ, P.J., and GAUT, J., concur.
NOTES
[*] Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for publication with the exception of part A.
[**] In denying review, the Supreme Court ordered that the opinion be not officially published. (See California Rules of CourtRules 976 and 977).
[1] Actually, Brock moved for summary adjudication, because the plaintiffs had also alleged other causes of action against it on a construction-defect theory. But because those other causes of action have since been voluntarily dismissed, we treat the motion as one for summary judgment.
[2] The parties also argue whether Brock, who was not the original subdivider, is bound by the duties of disclosure statutorily imposed upon sellers of subdivided lands. (Bus. & Prof.Code, § 11000, et seq.) But Brock has not sought to defend its judgment on the ground that it did not owe any duty of disclosure to the plaintiffs. In the absence of any argument that no duty of disclosure existed at all, we need not decide whether a particular statutory duty existed.
In its petition for rehearing, Brock argues that the plaintiffs' complaint is deficient because it does not adequately allege that the plaintiffs were unaware of facts that would have given rise to a duty of inquiry. We do not consider that issue because the alleged insufficiency of the plaintiffs' complaint was not raised in Brock's brief. "[P]oints made for the first time on petition for rehearing will not be considered." (A.F. Estabrook Co. v. Industrial Acc. Com. (1918) 177 Cal. 767, 771, 177 P. 848; Bank of America v. Superior Court (1990) 220 Cal.App.3d 613, 626, fn. 6, 269 Cal.Rptr. 596;, County of Sacramento v. Loeb (1984) 160 Cal.App.3d 446, 459-460, fn. 5, 206 Cal.Rptr. 626.) Our resolution of the points that were timely raised is without prejudice to Brock raising that new issue in the trial court by a motion for judgment on the pleadings.
[**] See footnote *, ante.
[3] Brock's suggestion that the sole purpose of the bond measures was to fund the expansion of Highway 71 is incorrect. Measure I imposed a county-wide one-half-of-one-percent sales tax to fund a variety of capital improvements by the San Bernardino County Transportation Authority. The anticipated projects included not only improvements to freeways, but also local and arterial streets and a commuter rail program. In addition to the project to expand Highway 71, the freeway projects included widening segments of Interstates 10 and 215 and of Highway 60, and extending the Highway 30 freeway. Given the broad scope of the projects to be funded by the measure, a reference to the bond measure cannot reasonably be equated with a reference to the project to convert Highway 71 into a freeway.
[4] After stating this limitation, the court in Hobart v. Hobart Estate Co., supra, 26 Cal.2d at pages 438 and 439, 159 P.2d 958 goes on to quote Lady Washington C. Co. v. Wood (1896) 113 Cal. 482, at page 487, 45 P. 809, for the proposition that the means of acquiring knowledge of particular facts is also equivalent to actual knowledge of those facts "`when the facts were presumptively within [the plaintiff's] knowledge....'" Neither Lady Washington C. Co. nor the cases that it cites in support of that rule explain when such knowledge will be presumed. But Hobart equates that presumptive knowledge with the knowledge which Civil Code section 2332 imputes to a principal when facts are actually known to the principal's agent: "It follows that plaintiff is not barred because the means of discovery were available at an earlier date provided he has shown that he was not put on inquiry by any circumstances known to him or his agents at any time prior to the commencement of the three-year period ending" with the filing of the complaint. (Hobart, p. 439, 159 P.2d 958; accord, Sun `N Sand, Inc. v. United California Bank (1978) 21 Cal.3d 671, 702, 148 Cal.Rptr. 329, 582 P.2d 920 [employer has presumptive knowledge of facts known to its honest agent].) Here, the plaintiffs have not been shown to have presumptive knowledge. In particular, there is no claim or evidence that there were any agents of the plaintiffs who had knowledge of facts of which the plaintiffs would be presumptively aware.
[5] For the same reasons, we decline to follow the case raised by Brock in its petition for rehearing. McKelvey v. Boeing North American, Inc. (1999) 74 Cal.App.4th 151, 86 Cal. Rptr.2d 645, to the extent that it may stand for the proposition that the means of obtaining actual knowledge is always equivalent to actual knowledge.
The amici supporting Brock's petition for rehearing note that the Supreme Court has applied an arguably different delayed-discovery rule in other contexts. (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1109, 245 Cal. Rptr. 658, 751 P.2d 923 [common law exception to Code Civ. Proa, § 340, subd. (3), regarding claims for personal injuries]; Sanchez v. South Hoover Hospital (1976) 18 Cal.3d 93, 101, 132 Cal.Rptr. 657, 553 P.2d 1129 [statutory discovery rule in Code Civ. Proa, § 340.5, governing claims for medical malpractice].) But those cases neither deal with the statutory discovery rule at issue here (Code Civ. Proa, § 338, subd. (d)) nor criticize the holdings of the Supreme Court cases that do (Vai v. Bank of America, supra, 56 Cal.2d 329, 15 Cal.Rptr. 71, 364 P.2d 247; Hobart v. Hobart Estate Co., supra, 26 Cal.2d 412, 159 P.2d 958). Unless and until Vai and Hobart are overruled, we must follow them.
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Dismissed and Opinion filed April 24, 2003
Dismissed and Opinion filed April 24, 2003.
In The
Fourteenth Court of Appeals
____________
NO.
14-02-01266-CR
____________
JEFREY CAMILE HUDDLESTON, Appellant
V.
THE STATE OF TEXAS, Appellee
On
Appeal from the 185th District Court
Harris County, Texas
Trial
Court Cause No. 911,349
M
E M O R A N D U M O P I N I O N
A written request to withdraw the notice of appeal, personally signed by
appellant, has been filed with this Court.
See Tex. R. App. P.
42.2. Because this Court has not
delivered an opinion, we grant appellant=s request.
Accordingly, we order the appeal dismissed. We direct the Clerk of the Court to issue the
mandate of the Court immediately.
PER CURIAM
Judgment rendered and Opinion filed
April 24, 2003.
Panel consists of Justices Yates,
Hudson and Frost.
Do not publish ‑ Tex. R. App. P. 47.2(b).
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297 B.R. 750 (2003)
In re Dale G. MARTIN and Shirley R. Martin, Debtors.
Dale G. Martin and Shirley R. Martin, Debtor Appellants,
v.
Paul W. Bucher, Trustee Appellee.
No. 03-6008 MN.
United States Bankruptcy Appellate Panel of the Eighth Circuit.
Submitted: August 19, 2003.
Filed: September 2, 2003.
Stephen J. Behm, Mankato, Minnesota, for appellant.
*751 Phong M. Luong, Rochester, Minnesota, for appellee.
Before, HILL, SCHERMER, and FEDERMAN, Bankruptcy Judges.
FEDERMAN, Bankruptcy Judge.
The Chapter 7 trustee objected to debtors Dale and Shirley Martin's claim of exemption for an annuity with a present value of $29,000. The bankruptcy court[1] sustained the objection and the Martins appeal that order. We affirm.
FACTUAL BACKGROUND
Debtors are self-employed farmers who also have non-farming occupations. At some point in time, Ms. Martin's parents conveyed to her a remainder interest (the Remainder Interest) in certain land. The Martins farmed and resided on their own property, and they also farmed the land identified in the Remainder Interest. Before filing for bankruptcy relief, Ms. Martin liquidated one of her retirement accounts and used the proceeds to prevent a foreclosure on the farm she and Mr. Martin own. She also sold to her son the Remainder Interest. Ms. Martin used the proceeds from that sale to purchase an annuity with a present value of $29,000 and an effective date of February 1, 2002. On February 5, 2002, the Martins filed a Chapter 7 bankruptcy petition. On May 7, 2002, debtors received a discharge.
The Chapter 7 trustee objected to the claim of exemption. On February 10, 2003, the bankruptcy court held a hearing on the trustee's objection, and on February 11, 2003, the court sustained the objection. Debtors filed this timely appeal.
STANDARD OF REVIEW
The right of debtors to claim exemptions are questions of law subject to de novo review.[2]
DISCUSSION
Relying on Deretich v. City of St. Francis[3] and In re Anderson,[4] the bankruptcy court found that the annuity was not exempt because the assets used to purchase it did not derive directly from the debtor's employment, and could not be traced to the ongoing generation of income.[5] The bankruptcy court stated that the exemption only applied to assets that resulted from a debtor's decision to defer the enjoyment of earned income, whether that income be from self employment or from third-party employment. It also found that the annuity at issue here was not funded from ongoing income; rather, it was funded by the liquidation of a capital asset. The court, thus, sustained the trustee's objection.
The Martins argue that the funds used to purchase the annuity were derived from the sale of a Remainder Interest in property that was used in their farming operation, therefore, the funds were generated by a self-employment endeavor.
In Minnesota debtors may elect to use either the exemptions set forth in *752 the Bankruptcy Code or the exemptions allowed under Minnesota's state statutes.[6] The Martins elected to use state exemptions. They claimed the annuity to be exempt pursuant to section 550.37 of Minnesota's Statutes Annotated. That statute permits debtors to exempt an annuity from the claims of creditors provided the annuity is "on account of" illness, disability, death, age, or length of service:
(1) The property mentioned in this section is not liable to attachment, garnishment, or sale on any final process, issued from any court.
. . . . .
(24) Employee benefits. (a) The debtor's right to receive present or future payments, or payments received by the debtor, under a stock bonus, pension, profit sharing, annuity, individual retirement account, Roth IRA, individual retirement annuity, simplified employee pension, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent of the debtor's aggregate interest under all plans and contracts up to a present value of $30,000 and additional amounts under all the plans and contracts to the extent reasonably necessary for the support of the debtor and any spouse or dependent of the debtor.[7]
The text of the statute simply states that an annuity is exempt. The heading of the statute, however, while not part of the statute, may be used to indicate what benefits the Minnesota legislature intended to exempt.[8] The benefits that debtors may claim under this statute are, therefore, those derived from an employment relationship or a self-employment endeavor.[9] Moreover, the court in In re Raymond found that the Minnesota legislature intended this statute to apply to annuities that derived from wages earned by the debtor and contributed by either the employer, the employee, or a self-employed person.[10] In addition, the annuity must be payable on account of illness, disability, death, age, or length of service.[11]
The Eighth Circuit construed this same statute in Deretich v. City of St. Francis.[12] It found that the statute only applied to assets that derived directly from the debtor's employment.[13] Likewise, we construed this same exemption statute in In re Anderson.[14] In so doing, we affirmed the bankruptcy court's holding that a debtor's interest in an IRA was not exemptible if he derived the interest from a property settlement in a dissolution proceeding rather than from his own employment.[15] The Martins attempt to distinguish both of these cases. They argue that the parties were not self employed in Deretich. And they argue that, even though the debtor was self employed in Anderson, the IRA at issue was issued in his wife's name and, therefore, derived from her efforts, not the joint efforts of both parties. Here the *753 Martins claim that as self-employed farmers, the funds used to purchase the annuity derived from a self-employment endeavor.
Thus, there are two issues before us. First, we must decide whether the sale of a capital asset is a self-employment endeavor. If so, we must decide if the sale was on account of illness, disability, death, age, or length of service.
In Westinghouse Credit Corporation v. J. Reiter Sales, Inc.,[16] the court refused to allow a self-employed general insurance agent to exempt the funds in his unfunded and unqualified deferred compensation plan.[17] The court found that the plan did not meet the requirements of the Internal Revenue Service because the money was not set aside in a trust or custodial account. Since the funds were, thus, available to the employer at all times, they were not exempt.[18] The court also denied the exemption based upon the fact that the funds did not derive from contributions based upon wages.[19] There is no evidence that the Martins ever segregated the funds used to purchase this annuity.
In re Raymond[20] is most instructive here because it also deals with funds that derived directly from the sale of capital assets. The debtor, who was 73 years old, and his non-debtor wife purchased an annuity with a value of $19,000 on the same day debtor filed a Chapter 7 bankruptcy petition.[21] Debtor sold his automobile and stock in order to generate the funds to purchase the annuity, which he then claimed as exempt. The court held that the funds used to purchase the annuity were not directly derived from an employment relationship or a self-employment endeavor, therefore, the annuity was not exempt.[22] In reaching this decision, the court agreed that the assets used to purchase the annuity could ultimately be traced to the fruits of the debtor's labors, but found that such tracing is allowed only when the source itself is exempt.[23] As the court stated, "[t]o allow an exemption simply because the money used to purchase the annuity was at one time earned income stemming from an employment relationship or self employment endeavor would only create an exemption which would swallow the entire rule."[24] In this case, Ms. Martin's Remainder Interest would not have been an exempt asset. Moreover, Ms. Martin's parents conveyed this interest to her, so the Martins did not purchase the interest with their earned income. We, therefore, conclude that the bankruptcy court correctly construed this Minnesota statute. The proceeds of the sale of a capital asset are not an employee benefit. Because we conclude the funds used to purchase the annuity were not an employee benefit, we need not reach the issue of whether the annuity was purchased on account of illness, disability, death, age, or length of service.
For the reasons stated above, we affirm the legal conclusions of the bankruptcy court.
NOTES
[1] The Honorable Gregory F. Kishel, Chief Judge, United States Bankruptcy Court for the District of Minnesota.
[2] Kaelin v. Bassett (In re Kaelin), 271 B.R. 316, 320 (8th Cir. BAP 2002), reversed on other grounds, 308 F.3d 885 (8th Cir.2002); Anderson v. Seaver (In re Anderson), 269 B.R. 27, 29 (8th Cir. BAP 2001); Abernathy v. LaBarge (In re Abernathy), 259 B.R. 330, 332 (8th Cir. BAP 2001).
[3] 128 F.3d 1209 (8th Cir.1997).
[4] 269 B.R. 27 (8th Cir. BAP 2001).
[5] Appellant's Appendix, Transcript of February 10, 2003, Hearing, at A-94 (citing Anderson, 269 B.R. at 31 and Deretich, 128 F.3d at 1212).
[6] Sholdan v. Dietz, 108 F.3d 886, 887 n. 2 (8th Cir.1997); 11 U.S.C. § 522(d); 11 U.S.C. § 522(b)(2).
[7] Minn.Stat. Ann. § 550.37(24)(a) (Supp.2003).
[8] In re Raymond, 71 B.R. 628, 630 (Bankr.D.Minn.1987).
[9] Id. See also Westinghouse Credit Corporation v. J. Reiter Sales, Inc., 443 N.W.2d 837, 839 (Minn.Ct.App.1989) (stating that in order to be exempt, the employee benefits must derive from contributions based upon wages).
[10] Raymond, 71 B.R. at 630.
[11] Id.
[12] 128 F.3d 1209 (8th Cir.1997).
[13] Id. at 1212.
[14] 269 B.R. 27 (8th Cir. BAP 2001).
[15] Id. at 31.
[16] 443 N.W.2d 837 (Minn.Ct.App.1989).
[17] Id. at 838.
[18] Id.
[19] Id. at 839 (citing In re Schuette, 58 B.R. 417, 422 (Bankr.D.Minn.1986)).
[20] 71 B.R. 628 (Bankr.D.Minn.1987).
[21] Id. at 629.
[22] Id. at 630.
[23] Id.
[24] Id.
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152 N.W.2d 138 (1967)
Nancy Louise STEPHENSON, a minor, appearing by Dorothy M. Stephenson, her guardian ad litem, Respondent,
v.
F. W. WOOLWORTH CO., Appellant.
No. 39984.
Supreme Court of Minnesota.
July 7, 1967.
*141 Winter, Lundquist & Sherwood, Wheaton, for appellant.
Olson & Kief, Bemidji, for respondent.
OPINION
KNUTSON, Chief Justice.
This is an appeal from an order denying defendant's motion for judgment notwithstanding the verdict or in the alternative for a new trial.
The action arises out of an injury sustained by plaintiff when she slipped and fell on the floor of defendant's store in Bemidji, Minnesota.
The front of defendant's store faces to the east and has two entrances, one on the southeast corner and another on the northeast corner. Near the entrances, inside the store, there are checkout counters. Between the checkout counters and the east wall there is an aisle running the full length of the store.
On December 21, 1961, plaintiff entered the northeast entrance of the store and stepped onto a rubber and steel floor mat inside the door. She observed a puddle of water on the floor, located immediately west of the mat, which the jury could find was approximately 2 inches deep, 3 to 4 feet long, and the width of the aisle that she entered. The weather had been inclement and people were dragging snow into the store on their feet. As plaintiff stepped *142 into the puddle she slipped and fell forward onto her hands and knees and experienced pain in both knees. She was treated by a doctor and remained inactive for about two weeks. She then returned to school with the aid of crutches and taxicab transportation.
On February 13, 1962, the doctor who attended plaintiff found her knees to be healed. She testified that she experienced weakness in both knees after that date and until May 27, 1962. On the latter date she and her sister were hitting a shuttlecock back and forth outdoors when she took a step backward and her legs collapsed. As a result of this fall plaintiff underwent an operation on June 8, 1962, for removal of cartilage in her left knee.
The jury returned a verdict of $13,000. The questions presented on appeal are: (1) Was plaintiff guilty of assumption of risk as a matter of law? (2) Did the court err in refusing to submit assumption of risk to the jury? (3) Is the verdict excessive?
1. It seems useless to continue to review our cases dealing with assumption of risk. We recently attempted to define the prerequisites to application of this defense in Knutson v. Arrigoni Bros. Co., 275 Minn. 408, 147 N.W.2d 561. We there said that essential to the application of the doctrine are knowledge of the danger and an intelligent acquiescence in it or a willingness to encounter the danger in spite of such knowledge.
It is doubtful whether the rules we follow can be stated better than they are in Minnesota Jury Instruction Guides. Instruction 135 reads:
"Assumption of risk is voluntarily placing (oneself) (one's property) in a position to chance known hazards. To find that a person assumed the risk you must find:
"1. That he had knowledge of the risk.
"2. That he appreciated the risk.
"3. That he had a choice to avoid the risk or chance it and voluntarily chose to chance it.
"[If a person has assumed the risk he cannot recover for any injury or damage sustained by him]."[1]
Instruction 136 reads:
"Assumption of risk should be distinguished from contributory negligence. Assumption of risk does not involve a failure to use reasonable care. A person who assumes the risk is one who voluntarily chooses to chance a danger which is known and appreciated. Contributory negligence does involve a failure to use reasonable care. A person who is contributorily negligent is one who has failed *143 to use that care which a reasonable person would use under like circumstances."[2]
In applying our decisions (which are not always easy to reconcile) to the facts of this case, about all that can be said is that if there is a safe alternative route and a party chooses the dangerous one, realizing the danger of so doing, or the danger is so evident that he is chargeable with knowledge thereof, the doctrine may apply as a matter of law.
Ordinarily it is a question for the jury whether a party exercised the judgment of an ordinarily prudent person in proceeding as he did, especially if there is an alternative, less dangerous, route which he could have taken. That is the situation here. Not only was there admitted knowledge of danger, but there was at least a jury question as to whether plaintiff could have chosen a safer route. The jury could find that she could have turned left and followed an aisle in the front of the store, even if she was not required to inspect the other entrance. The evidence is not so conclusive as to require application of assumption of risk as a matter of law, but it does present a jury issue. We are convinced, however, that even if it had been submitted the result would have been the same. The jury was adequately instructed on contributory negligence. This is one of those cases where assumption of risk as a jury issue becomes largely a question of whether she had a safer alternative route and in spite of it chose the more dangerous route with knowledge of the hazard involved in doing so. In view of the discussion to follow, we conclude that some other disposition of the case may arrive at a fair result without a new trial.
2. Plaintiff sued to recover $9,900. The jury returned a verdict for $13,000. Defendant now contends that if it is not to have a new trial, plaintiff should at least be limited to recovery of the amount prayed for in her complaint. No attempt was made to amend the complaint during the trial. Plaintiff moved to amend the complaint after the verdict but this motion was denied. Defendant's motion to reduce the verdict to the amount prayed for in the complaint was also denied.
Under our liberalized rules of pleading, ordinarily plaintiff is not limited to the recovery of the amount prayed for in the complaint. However, this rule ought to be cautiously applied where plaintiff sues for an amount less than he hopes to recover in order to deprive defendant of a right he would otherwise have. Defendant contends that by suing for $9,900 plaintiff prevented removal of the case to the Federal court on the grounds of diversity of citizenship. Where a claim is unliquidated a plaintiff may prevent removal to the Federal court by suing for an amount less than *144 the jurisdictional amount. Brady v. Indemnity Ins. Co. (6 Cir.) 68 F.2d 302.
3. The jurisdictional amount for removal is that which is claimed in the complaint. Bonnell v. Seaboard Air Line R. Co. (N.D.Fla.) 202 F.Supp. 53; Gaitor v. Peninsular & Occidental SS. Co. (5 Cir.) 287 F.2d 252.
4. Under 28 U.S.C.A. § 1446(b), a case which is not removable when commenced may become removable later by amendment of the pleadings. This section reads in part:
"If the case stated by the initial pleading is not removable, a petition for removal may be filed within twenty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable."[3]
5. Unless a defendant moves within the time limited by the Federal statute after the case becomes removable he waives the right to object after trial of the case. Great Northern Ry. Co. v. Alexander, 246 U.S. 276, 38 S.Ct. 237, 62 L.Ed. 713. See, 45 Am.Jur., Removal of Causes, §§ 30, 127; 76 C.J.S. Removal of Causes, § 28; Northern Pacific Ry. Co. v. Austin, 34 Minn. 473, 26 N.W. 607, affirmed, 135 U.S. 315, 10 S.Ct. 758, 34 L.Ed. 218.
It therefore seems that the rule is that a defendant cannot be deprived of the right of removal, if he takes action within the time limited by the statute, by the simple expedient of commencing an action for less than the jurisdictional amount and thereafter increasing it by amendment during the trial. In Ft. Smith & W. R. Co. v. Blevins, 35 Okl. 378, 130 P. 525, the court said:
"Where plaintiff amends his petition, increasing the amount sued for so as to constitute a removable cause to the proper federal court, the right to remove is thereby given, and, if the defendant by proper application in due time avails itself of that right, it cannot be denied."
The difficulty here is that no motion to amend the complaint was made until after the verdict. Defendant had no opportunity to take action for removal of the case to Federal court until that time. It seems that if action is to be taken to enlarge the ad damnum clause of the complaint to such amount as to make it removable, it ought to be done at the pleading stage rather than during trial. Where a plaintiff chooses to sue for less than the jurisdictional amount for removal he ought to be bound by that amount unless he moves to amend prior to the commencement of the trial[4] or at least within such time as will enable the defendant to assert its right of removal.
This issue becomes even more important in the realm of personal injury cases where the defendant has a limited insurance coverage. If the plaintiff sues for the amount of insurance coverage, the insured can be lulled into a false sense of security in believing he cannot be held for any excess above the amount of coverage. If there is a possibility of recovery for more than the insurance, the insured has the absolute right to have his own counsel represent him, to protect his rights as to such excess liability. If recovery is limited to the amount of the insurance, he is not interested in this aspect of the case. In such case, if the plaintiff chooses to sue for the amount of insurance coverage he should be bound by such choice.[5] To so *145 hold is to apply a rule analogous to that applicable to default judgments, where the party sued is entitled to rely on the fact that judgment may not be taken against him for more than the amount prayed for.
Rule 54.03, Rules of Civil Procedure, reads:
"A judgment by default shall not be different in kind from or exceed in amount that prayed for in the demand for judgment. Except as to a party against whom a judgment is entered by default, every other judgment shall grant the relief to which the party in whose favor it is rendered is entitled."
This rule superseded Minn.St.1949, § 548.01. It has been held in numerous cases that in default actions the defendant has the right to rely upon the prayer for relief, and judgment cannot be taken against him in excess of the prayer for relief.[6]
While ordinarily the court may grant full relief in other cases even if it goes beyond the prayer for relief, the rule contemplates that the judgment shall grant only the relief to which the party in whose favor it is rendered claims he is entitled. We think the holding here is consistent with the intent of this rule, in that where a plaintiff sues to recover for a specific amount for the purpose of depriving his opponent of a right which he would otherwise have, he is not entitled to recover more than the amount prayed for in his complaint.
6. We therefore hold that where a party chooses to sue for an amount that will or may deprive another party of a right he may have, the plaintiff is bound by such choice unless he takes action to amend his complaint within such time as will enable the defendant to assert the right which he has.
In such case, at the request of the party who may be prejudiced thereby, the court should instruct the jury that they may not return a verdict for more than the amount sued for. In the absence of such request the trial court should reduce the recovery, if greater than that sued for, to the amount demanded in the ad damnum clause of the complaint.
Plaintiff here claims that even if that be true the issue in this case was litigated by consent. There is merit in this contention. The amount plaintiff was entitled to recover was not raised by defendant until its motion for new trial. However, as a matter of trial strategy a defendant may not desire to have the court instruct the jury that it may not return a verdict for more than that demanded in the ad damnum clause, for fear that the jury will take such instructions as an indication that the court believes it should return a verdict for the maximum allowable amount. It is better to permit a defendant to decide whether he wishes such instruction. The court can always correct it if the jury exceeds the permissible limit. The trial court may then determine if defendant has been prejudiced.
7. Defendant contends that the verdict is excessive, insisting that there is no causal relationship between the injuries sustained in the second fall and those sustained in the first fall, for which defendant was held liable.
Ordinarily, the right to recover for a second injury following an original injury sustained as a result of a defendant's negligence depends on causal relationship between the two. The question is whether the second injury is a proximate consequence of the first injury.[7] Where weakness arising as a result of the injury in the ordinary course of affairs leads to *146 the second injury, the jury may infer a causal relationship. In Sporna v. Kalina, 184 Minn. 89, 237 N.W. 841, 76 A.L.R. 1280, we held there was no causal relationship. In that case Sporna was injured by an automobile driven by defendant. Both legs were fractured. Seven months later Sporna, who walked "wobbly," slowly, and carefully, with the aid of a cane, attempted to negotiate the steps of the basement in his home. When he reached midway of the stairs his legs seemed to give way, causing him to fall to the basement floor. He received a skull fracture from which he died shortly afterward. We held that while walking was a natural thing to do, there was no necessity for the decedent, knowing the weakness of his legs, to attempt to traverse a steep stairway.
Applying that rule to the facts of this case, the question would be whether plaintiff, knowing of the weakness in her knees, was doing something so extraordinary by playing badminton that her fall could not be held to be a proximate consequence of the original injury. Badminton ordinarily is not a strenuous game, or at least the jury could find that plaintiff was merely hitting a shuttlecock around and moving about very little. We think this question was for the jury and was properly submitted to it by the trial court.
In view of the fact that it was a technical error not to submit the issue of assumption of risk to the jury, we believe the proper disposition of this case is to order a remittitur or a new trial at the option of plaintiff.
It is therefore ordered that unless plaintiff within 10 days after the filing of this decision consents to a remittitur to the sum of $9,900, defendant shall have a new trial. In the event plaintiff consents to such remittitur, no disbursements will be allowed to defendant for printing the record.
NOTES
[1] As authority for these rules we find the following under this instruction: "The doctrine of assumption of risk is predicated upon a knowledge and appreciation of the risk involved and a voluntary choosing to incur the risk. The defendant must show that the plaintiff had knowledge of the risk, Guile v. Greenberg, 192 Minn. 548, 257 N.W. 649 (1934), appreciated it, Mayzlik v. Lansing Elevator Co., 241 Minn. 468, 63 N.W.2d 380 (1954); Lincoln v. Cambridge-Radisson Co., 235 Minn. 20, 49 N.W.2d 1 (1951), and, having opportunity either to incur it or avoid it, voluntarily chose to incur it. Zuber v. Northern Pac. Ry. Co., 246 Minn. 157, 74 N.W.2d 641 (1956); Guile v. Greenberg, supra. Volition to incur the risk requires that a free choice be available. If there is no available choice whereby the risk may be avoided, assumption of risk is not the proper defense. Donald v. Moses, 254 Minn. 186, 94 N.W.2d 255 (1959).
"Ordinarily the question of assumption of risk is for the jury. Logan v. Hennepin Ave. Methodist-Episcopal Church, 210 Minn. 96, 297 N.W. 333 (1941). See Aldes v. St. Paul Ball Club, Inc., 251 Minn. 440, 88 N.W.2d 94 (1958); Anderson v. Hegna, 212 Minn. 147, 2 N.W.2d 820 (1942).
"On the distinction between contributory negligence and assumption of risk, see generally Authorities, JIG 136."
[2] As authority for this rule we find the following: "Assumption of risk and contributory negligence are separate and distinct defenses and must be so treated in the instructions. Donald v. Moses, 254 Minn. 186, 94 N.W.2d 255 (1959). Assumption of risk involves knowledge and appreciation of the risk and a voluntary choice to incur the risk. Negligence in deciding to incur the risk is not involved. Nor is negligence in the performance of the assumed risk involved. A person may exercise extreme care in performing a hazardous act and be held to have assumed the risk although he is not contributorily negligent. On the other hand, a person may not have assumed the risk because his choice was not voluntary due to the absence of alternative routes, but he may still be charged with contributory negligence on the grounds that the risk was so great that a reasonable person under the circumstances would not have undertaken the risk. Similarly, a person may be negligent in the manner in which a risk is undertaken or performed and be charged with contributory negligence, even though the person did not have either volition or appreciation of the risk. See Donald v. Moses, supra; Mayzlik v. Lansing Elevator Co., 241 Minn. 468, 63 N.W.2d 380 (1954); Schrader v. Kriesel, 232 Minn. 238, 45 N.W.2d 395 (1950); Piscor v. Village of Hibbing, 169 Minn. 478, 211 N.W. 952 (1927)."
[3] For construction of this statute, see Gaitor v. Peninsular & Occidental SS. Co. (5 Cir.) 287 F.2d 252, 255.
[4] See, 15 U. of Miami L.Rev. 415.
[5] See, Phillips v. Rolston, 376 Mich. 264, 137 N.W.2d 158.
[6] Sache v. Wallace, 101 Minn. 169, 112 N.W. 386, 11 L.R.A.(N.S.) 803, 118 A.S.R. 612, 11 Ann.Cas. 348; Duenow v. Lindeman, 223 Minn. 505, 27 N.W.2d 421; Dockendorf v. Lakie, 240 Minn. 441, 61 N.W.2d 752.
[7] See, Annotation, 76 A.L.R. 1285.
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310 F.2d 738
Harry VOGELSTEIN, Trading as Baltimore Poster Company, Appellant,v.NATIONAL SCREEN SERVICE CORPORATION, Metro-Goldwyn-Mayer Inc. (Formerly Loew's Incorporated). TCF Film Corporation (Formerly Twentieth Century-Fox Film Corporation). United Artists Corporation, Paramount Film Distributing Corporation and Universal Film Exchanges, Inc.
No. 14056.
United States Court of Appeals Third Circuit.
Argued December 11, 1962.
Decided December 20, 1962.
Appeal from United States District Court for the Eastern District of Pennsylvania; Alfred L. Luongo, District Judge.
Francis T. Anderson, Philadelphia, Pa., for appellant.
Louis J. Goffman, Philadelphia, Pa. (Wolf, Block, Schorr & Solis-Cohen, Philadelphia, Pa., on the brief), for Warner Bros. Pictures Distributing Corp., appellee.
W. Bradley Ward, Philadelphia, Pa. (Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., Edward W. Mullinix, Shirley S. Bitterman, on the brief), for Metro-Goldwyn-Mayer Inc. (formerly Loew's Inc.), TCF Film Corp. (formerly Twentieth Century-Fox Film Corp.), United Artists Corp., Paramount Film Distributing Corp. and Universal Film Exchanges, Inc., appellees.
Walter S. Beck, New York City (Phillips, Nizer, Benjamin, Krim & Ballon, New York City, Louis Nizer, New York City, on the brief), for National Screen Service Corp., appellee.
Before KALODNER and FORMAN, Circuit Judges, and ROSENBERG, District Judge.
PER CURIAM.
1
Upon review of the record we find no error.
2
The Order of the District Court, 204 F.Supp. 591, will be affirmed.
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50 F.3d 15
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.Dennis PAXINOS, Plaintiff-Appellant,v.Donna E. SHALALA, Secretary of Health and Human Services,Defendant-Appellee.
No. 94-35261.
United States Court of Appeals, Ninth Circuit.
Submitted Feb. 8, 1995.*Decided March 15, 1995.
Before: WRIGHT, HALL, and WIGGINS, Circuit Judges.
1
MEMORANDUM**
OVERVIEW
2
Dennis Paxinos ("Appellant"), on behalf of Joe C. Maple (who is deceased), appeals the district court's grant of summary judgment in favor of the Secretary of Health and Human Services ("Secretary"). Appellant contends that the Secretary improperly denied disability benefits to Maple, and argues that Maple was disabled prior to the September 30, 1984 termination of his insured status. We have jurisdiction pursuant to 28 U.S.C. Sec. 1291 and 42 U.S.C. Sec. 405(g). We affirm.
FACTS
3
On October 5, 1989, Maple applied for disability benefits. The application alleges a disabling condition as of April 1, 1980 and seeks benefits for the period from April 1, 1980 to September 30, 1984, the date on which Maple's insured status terminated. The application describes various disabling conditions without expressly alleging a disability due to alcohol consumption. However, Maple's condition as an alcoholic during the relevant 1980 to 1984 period was at issue below and is argued on appeal.
4
The Administrative Law Judge ("ALJ") who conducted Maple's hearing in August 1990 concluded that Maple had failed to demonstrate a disabling condition during the relevant period. Specifically, the ALJ concluded that during that period, Maple could perform his past relevant work as a carpenter and could perform a full range of medium work. The ALJ thus denied Maple's application and also denied his request for various consultative examinations.
5
The Appeals Council refused to review the ALJ's decision, although Maple presented additional evidence to support his argument of disabling alcoholism. After the ALJ's decision but before the denial of review, Maple died of cirrhosis and alcoholism. The Appeals Council's denial of review rendered the ALJ's decision the final decision of the Secretary.
6
Appellant, on behalf of Maple, appealed the Secretary's decision in district court. A magistrate judge recommended affirming the ALJ, and the district court did so after thoroughly reviewing the record, including the additional evidence presented to the Appeals Council.
DISCUSSION
I. STANDARD OF REVIEW
7
The district court's grant of summary judgment in favor of the Secretary is reviewed de novo. See Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir.1994). The Secretary's denial of disability benefits "will be overturned only if it is not supported by substantial evidence or it is based on legal error." Matney ex rel. Matney v. Sullivan, 981 F.2d 1016, 1019 (9th Cir.1992). "Substantial evidence" is " 'more than a mere scintilla,' " but " 'less than a preponderance.' " Id. (quotations omitted).
8
II. SUBSTANTIAL EVIDENCE SUPPORTS THE SECRETARY'S DENIAL OF DISABILITY OF BENEFITS TO MAPLE
9
In order to receive disability benefits, Appellant must show that Maple was "disabled" prior to the termination of his insured status. See Morgan v. Sullivan, 945 F.2d 1079, 1080 (9th Cir.1991) (per curiam). It is not sufficient for Appellant to prove the existence of a physical or mental impairment; that impairment must result in an "inability to engage in any substantial gainful activity." 42 U.S.C. Sec. 423(d)(1)(A) (1988); see also Gamer v. Secretary of Health & Human Servs., 815 F.2d 1275, 1278 (9th Cir.1987).
10
We find a substantial basis for the ALJ's conclusion that Maple did not demonstrate that he was "disabled" under section 423 during the relevant period. Maple presented no evidence of his inability to work during the relevant period. Quite the contrary, Maple took college courses until financial constraints prevented it, he took care of his elderly mother, and he worked on cars at least into 1988. Moreover, his medical records during the relevant period did not indicate any limiting conditions that lasted anywhere near the statutorily required twelve months. See 42 U.S.C. Sec. 423(d)(1)(A). On the contrary, the records contained statements by Maple about his lack of symptoms related to any possible disabling condition, and an express statement by an examining physician that he could "resume all pre-hospital activities" following a leg injury.1
11
This court has previously rejected Appellant's argument that a claimant's burden of proof should be lowered because of the nature of an alcohol-induced disability. See, e.g., Clem v. Sullivan, 894 F.2d 328, 331-32 (9th Cir.1990); Johnson v. Harris, 625 F.2d 311, 312 (9th Cir.1980). A showing that Maple did not work during the relevant period therefore does not satisfy his burden of showing that he could not work. Appellant's additional argument that Maple is entitled to benefits because his alcoholism was a "latent disability" has also been rejected in this circuit. See Flaten v. Secretary of Health & Human Servs., 44 F.3d 1453 (9th Cir.1995) (rejecting "relation back" doctrine in context of a back injury, and criticizing the principal case relied upon by Appellant, Cassel v. Harris, 493 F.Supp. 1055, 1058 (D.Colo.1980)).
12
Finally, we conclude that the ALJ did not commit reversible error by denying Maple's request for consultative examinations. Even if such examinations would have indicated that Maple was an alcoholic prior to September 30, 1984, that would not have been sufficient to entitle him to benefits in light of the evidence described above, which indicates that he could perform relevant work while he was insured. See Tylitzki v. Shalala, 999 F.2d 1411, 1415 (9th Cir.1993) (" 'An uncontrollable addiction to alcohol may not prevent the person so addicted from undertaking gainful activity.' ") (quotation omitted).
CONCLUSION
13
For the foregoing reasons, the district court's grant of summary judgment in favor of the Secretary is AFFIRMED.
*
The panel finds this case appropriate for submission without argument pursuant to Fed.R.App.P. 34(a) and 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
The ALJ also described Maple's denials of alcohol use. The district court agreed with Appellant that the ALJ should not have credited Maple's denials. With or without the denials, however, the evidence of Maple's alcohol use does not demonstrate his inability to perform his previous occupation. See Young v. Heckler, 803 F.2d 963, 966-67 (9th Cir.1986) (per curiam) (although "relatively little weight" should be given to claimant's testimony minimizing the effects of his alcohol use, denial of benefits is proper where substantial evidence supported ALJ's conclusion that claimant's "pattern of heavy drinking did not disable him from performing his prior work")
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214 F.2d 413
OKEFENOKEE RURAL ELECTRIC MEMBERSHIP CORP.v.FLORIDA POWER & LIGHT CO. et al.
No. 14875.
United States Court of Appeals, Fifth Circuit.
July 9, 1954.
E. Kontz Bennett, Waycross, Ga., Chester Bedell, Jacksonville, Fla., J. Edwin Gay, Jacksonville, Fla., Bennett, Pedrick & Bennett, Waycross, Ga., Bedell & Bedell, Jacksonville, Fla., of counsel, for appellant.
Guy W. Botts, William M. Madison, City Atty., Jacksonville, Fla., Will M. Preston, Miami, Fla., Fleming, Jones, Scott & Botts, Jacksonville, Fla., Anderson, Scott, McCarthy & Preston, Miami, Fla., of counsel, for appellees.
Before HUTCHESON, Chief Judge, RIVES, Circuit Judge, and DAWKINS, District Judge.
RIVES, Circuit Judge.
1
The appellant, Okefenokee Rural Electric Membership Corporation, sued the appellees, Florida Power and Light Company, City of Jacksonville and J. D. Kennedy, the City's Commissioner of Utilities, for treble damages and for an injunction in an action based upon the Sherman and Clayton Anti-Trust Acts.1 The district judge granted defendants' several motions to dismiss and dismissed the action 'without leave to the plaintiff to amend'. This appeal is from the final judgment of dismissal and involves the single question of whether the complaint states a claim upon which relief can be granted.
2
According to the averments of the complaint, which must be considered as true in considering its dismissal, the following state of facts is disclosed.
3
Okefenokee finances its operations under the Rural Electrification Act, 7 U.S.C.A. § 901 et seq. Under that Act, loans are limited to the financing of lines or systems for the purpose of furnishing electric energy to persons in 'rural areas' which are defined so as to exclude any city or village having a population in excess of fifteen hundred inhabitants. 7 U.S.C.A. §§ 904, 913.
4
Okefenokee purchases its power wholesale in the State of Georgia from Georgia Power and Light Company and Georgia Power Company. It redistributes that power at retail in six counties in Georgia and, for more than twelve years has also served rural users in Baker, Duval and Nassau Counties in the State of Florida. The power so redistributed in Florida is purchased at wholesale in Georgia and carried through Okefenokee's own lines into the Florida areas of distribution.
5
Florida Power and Light Company operates electric generating and distribution lines in approximately one-half of the area of the State of Florida, including Duval and Nassau Counties.
6
The City of Jacksonville engages in furnishing electricity in territory beyond its territorial limits under a non-exclusive franchise, as well as in furnishing electricity within its limits.
7
The individual defendant, J. D. Kennedy, is Commissioner for Utilities of the City of Jacksonville.
8
The Yellow Bluff area in northeast Duval County has been without any electric service, the defendant City having refused to furnish such service, or having demanded the payment of from $1,000.00 to $1,500.00 per citizen to cover the cost of running electric lines to them, whereas service is extended by REA on an area basis at a cost of a membership of $5.00 per member. At the request of approximately 150 rural users, Okefenokee made a survey of the Yellow Bluff area, took applications for service and otherwise complied with conditions necessary to obtain a loan from REA to build a line to serve the Yellow Bluff area. This project was known as 'K' project.
9
In connection with 'K' project, Okefenokee arranged also to finance the construction of a line sufficiently heavy to carry additional power for better servicing of the Callahan and Dinsmore areas of Nassau and Duval Counties. During the twelve years in which Okefenokee has served those areas, there have been constantly increasing demands by Okefenokee member-users due to the increased use of modern appliances, such as refrigerators, washing machines, water pumps, television sets, etc.
10
Okefenokee's plan for servicing the 'K' project and supplying additional power for servicing the Callahan and Dinsmore areas contemplated the construction of a power line from Kingsland, Georgia, along Federal Highway No. 17 to a point where that highway connects with Yellow Bluff Road. From this point, which is more than eight miles north of the Jacksonville city limits, one line would run easterly into the Yellow Bluff section for servicing 'K' project; another line would be run in a westerly direction to connect with the lines already servicing the Callahan and Dinsmore areas.
11
The power so obtained in Kingsland, Georgia, would be obtained from the Georgia Power Company, which has a 'practically unlimited' supply of 'hydro and steam generated power' and which it can supply 'more cheaply' than Okefenokee's other supplier of power, Georgia Power and Light Company, whose power is 'diesel generated' and whose supply is limited.
12
Federal Highway 17 is the only feasible route, from an engineering and economic standpoint, upon which the new line from Kingsland can be built, due to the peculiar geography and topography of the marshy coastal area through which the line must pass.
13
Florida Power and the City have an illegal territory agreement whereby Florida Power is given exclusive rights in Nassau County north of the Nassau River, and whereby the City is given exclusive rights in Duval County, except those parts already being served by Florida Power.
14
Florida Power and the City, for the purpose of excluding Okefenokee from the area covered by the illegal territory agreement and for the purpose of destroying Okefenokee's investment in servicing the Callahan and Dinsmore areas, formed a conspiracy to place a 'road block' along Federal Highway 17 where Okefenokee expected to run its new line, knowing that if passage along this highway was blocked it would be impossible, from an economic and engineering standpoint, for Okefenokee to erect its line through the marshes, river bottoms and waste lands.
15
Defendants have been and now are engaged in an unlawful combination and conspiracy to monopolize and exercise exclusive control over the territory in Nassau and Duval Counties in unreasonable restraint and monopolization of interstate trade and commerce, in violation of the Sherman and Clayton Acts, the detailed facts including the following:
16
On January 25, 1952, Okefenokee staked its proposed line along Highway 17 from St. Mary's River south to Yellow Bluff Road and on February 26, 1952, applied to the Florida State Road Department for permission to construct its power line along that route.
17
While Okefenokee was waiting for permission from the State Road Department to construct its line along Highway 17, the City and Florida Power proceeded to build a 'spite line' along the highway 'on the exact location which had been previously staked by Okefenokee.' This was accomplished by Florida Power's building a line southerly to the north bank of Nassau River, where it was 'dead-ended' and by the City's building a line to the south bank of Nassau River. This spite line or road block was constructed 'for the sole purpose of taking the position that a power line was already along said highway' in opposition to Okefenokee's application for a permit; the only customers who could be served by Florida Power's line were two persons living at the Nassau River bridge; the only wire placed on the City's poles was a 'neutral strand.'
18
In pursuance of the conspiracy, the City made a false argument before the State Road Department that a line had already been extended along Highway 17 in order to furnish service to rural users, and that no new line should be built, well knowing that the line constructed by the City was built for spite purposes only and without any intention of serving customers in the Yellow Bluff area.
19
As a result of the building of the spite lines and the false arguments based thereon, the State Road Department denied a permit to Okefenokee to build its line along Highway 17.
20
As part of the conspiracy, the defendant Kennedy carried on a smear campaign in an effort to discredit Okefenokee. At Kennedy's direction, one of his engineers requested the County Commissioners of Duval County to establish regulations 'which would prevent a full-scale encroachment of the Rural Electrification Co-operative's power lines into the local utility's territory', and 'if legally permissible, to prohibit any other company from paralleling municipal installation.' In that connection, the City's engineer stated that 'the Municipal utility officials expect the REA to 'come right down Main Street Road and begin competition with the City's electric department',' well knowing that Okefenokee could not operate in the Jacksonville area. These requests and statements were publicized in the local press.
21
As a result of the City's smear campaign, the County Commissioners of Duval County passed discriminatory regulations applicable only to REA co-operatives and so designed as to prohibit Okefenokee from operating in Duval County.
22
As a result of defendants' unlawful activities, Okefenokee's investment in 'K' project has been rendered worthless and of no value; it has been obliged to attempt to service its new members in the Yellow Bluff area by a portable power plant at an operating cost substantially in excess of the cost of the power it had expected to purchase from Georgia Power Company, resulting in an operating loss and, unless defendants are restrained from continuing their illegal agreement and conspiracy, Okefenokee will be obliged to abandon 'K' project.
23
As a result of Okefenokee's inability to increase the power being supplied in the Callahan and Dinsmore areas sufficiently to adequately serve its users there, its entire investment in those areas is likely to dry up and become worthless.
24
The complaint prays for the assessment of treble damages and for a permanent injunction dissolving the conspiracy and restraining the defendants from engaging in any activity to prevent Okefenokee from exercising its rights in Nassau and Duval Counties, Florida.
25
The district court granted the motions to dismiss and dismissed the cause 'without leave to the plaintiff to amend.'2
26
The appellant vigorously, and with much show of authority, attacks each of the grounds upon which the district court relied, and also the grounds which the district court did not consider but which are again urged by appellees in brief, and appellant further insists that, laying aside its prayer for damages, the complaint is certainly sufficient as a predicate for injunctive relief. As dispositive of this appeal, however, we do not think that it is necessary to consider grounds supporting the district court's decision, other than the one which we have numbered 4 in the summary in footnote 2, supra, and with which we are in substantial agreement.
27
As a complaint for the recovery of damages under 15 U.S.C.A. § 15, it is of course essential that a legal injury be averred as a prerequisite to the recovery of 'threefold the damages by him sustained'. As a complaint for injunctive relief, it is essential that the averments disclose 'a dangerous probability that such injury will happen'. Bedford Cut Stone Co. v. Journeyman Stone Cutters' Ass'n, 274 U.S. 37, 54, 47 S.Ct. 522, 527, 71 L.Ed. 916.
28
The complaint avers,
29
'That Federal Highway 17 is the only feasible route from an engineering and economic standpoint along which said line can be built because of the peculiar geography and topography of the area through which said highway travels. Said Federal Highway 17 runs roughly parallel to the Atlantic coast line and most of the areas through which said highway runs are either inlets from the sea and marshy or the wide expanse of the many rivers which empty into the ocean along this part of the coast and consisting of the St. Mary's River and Nassau River and the tributaries leading into such rivers.'
30
In brief, all of the damages averred in the complaint and all that are shown to be probable have been suffered or will accrue from the denial of the right to use this 'only feasible route', which in turn results from the denial of a permit by the State Road Department of Florida, and from the rules and regulations governing the use of County roads by the Board of County Commissioners of Duval County, Florida. It is not claimed that either the State Road Department or the Board of County Commissioners was acting beyond its respective jurisdiction, or that for any other reason its action was invalid.
31
As so forcibly illustrated in Keogh v. Chicago & N. W. Ry. Co., 260 U.S. 156, 163, 43 S.Ct. 47, 49, 67 L.Ed. 183, 'Injury implies violation of a legal right.' The plaintiff had no legal right to use the state highway without a permit from the State Road Department, nor the county roads without permission of the Board of County Commissioners, and those authorities have decided against the plaintiff. So long as their decisions stand the plaintiff had not been legally injured, notwithstanding it may have been irreparably damaged. In the case mainly relied on by the appellant, Angle v. Chicago, St. Paul, etc., Railway, Co., 151 U.S. 1, 14 S.Ct. 240, 38 L.Ed. 55, the plaintiff's legal rights had been violated because the defendant had wrongfully induced another company to break its contract with plaintiff with resultant damages independent of the Legislature's action. In that case, there was a legal injury to plaintiff. Here there is no such injury and no probability of injury. Of the other cases relied on by appellant, American Tobacco Co. v. United States, 328 U.S. 781, 809, 66 S.Ct. 1125, 90 L.Ed. 1575, and United States v. New York Great Atlantic & Pacific Tea Co., 5 Cir., 137 F.2d 459, 464, were criminal prosecutions to the maintenance of which private injury was not essential.
32
If either the State Road Department or the Board of County Commissioners should reverse or change its position, or if another feasible route should be discovered, and legal injury should accrue or be probable from the alleged illegal territory agreement and unlawful conspiracy and combination, the plaintiff should be permitted to amend, or a new complaint might be filed, whereupon the other important questions presented by the motions to dismiss and which we have not considered may have to be considered and decided. For that purpose, the provision 'without leave to the plaintiff to amend' is stricken from the judgment, and as so modified the judgment is affirmed.
33
Modified and affirmed.
1
See particularly 15 U.S.C.A. §§ 1, 2, 15 and 26
2
The grounds of the district court's decision, stated in a memorandum, may be summarized as follows:
1
Although 'the power source of the plaintiff is located in Georgia and the transmission lines from that source run continuously into Florida,' 'I am not persuaded that when the sale and delivery of electric power to the ultimate consumer takes place in Florida, the transaction is one of interstate commerce.'
2
'* * * the trade and commerce, which the Complaint alleges the defendants attempted to monopolize, is confined wholly to the State of Florida' and 'I therefore find that no monopoly condemned by the Sherman and Clayton Acts is charged against the defendants in this case.'
3
Even 'if interstate commerce is involved, and if the alleged conspiracy of the defendants does in fact effect some restraint on interstate commerce, such restraint is insubstantial and indirect.'
4
The injury complained of by Okefenokee being the refusal of the State Road Department to grant it a permit to run its line down a state highway, and the adoption by the Duval County Commissioners of regulations invading its legal rights, the actions of those administrative bodies could not afford Okefenokee any right of action under the Anti-Trust Acts, since the orders complained of were the sole responsibility of the administrative boards, and the subject matter was exclusively within their jurisdiction; the validity of those orders could be attacked only in an action of mandamus or other such remedy in the state court and may not be collaterally attacked in this proceeding
5
Since all acts attributed to the individual Kennedy are alleged to have been done in his official capacity, and his acts are not shown to have been beyond the scope of his authority, he could not be personally liable even if the City were liable
6
'The defendants urged various other points in support of their Motions to Dismiss, including the argument that sale and distribution of electricity is a natural monopoly not intended to be controlled by the Anti-Trust Laws, that the City of Jacksonville cannot be sued as a defendant under the Sherman Anti-Trust Act, that as a pleading, the Complaint fails to contain the essential ingredients necessary to charge a conspiracy in restraint of trade or a monopoly, and that the City of Jacksonville cannot be a party to a conspiracy. Because the reasons discussed more fully require the dismissal of the Complaint, I have not considered there arguments of the defendants.'
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445 F.2d 1233
UNITED STATES of America, Appellee,v.James Franklin MORRIS, Jr., Appellant.
No. 20711.
United States Court of Appeals, Eighth Circuit.
July 21, 1971.
Robert A. Warder, Rapid City, S. D., for appellant.
William F. Clayton, U. S. Atty., Thomas P. Ranney, Asst. U. S. Atty., Sioux Falls, S. D., for appellee.
Before MATTHES, Chief Judge, GIBSON, Circuit Judge, and HENLEY, District Judge.*
MATTHES, Chief Judge.
1
This case is before us on appeal by James Franklin Morris, Jr. from judgment of conviction entered on a jury verdict finding him guilty under a two-count indictment of unlawfully and knowingly possessing, passing and uttering two counterfeit $100 Federal Reserve Notes in violation of 18 U.S.C. § 472.1
2
The sufficiency of the evidence to sustain the jury's verdict is not an issue; indeed there is no suggestion in appellant's brief that he did not commit the offenses as charged. For that matter, such a contention would be futile for the evidence of guilt is strong and overwhelming. We forego a detailed statement of the facts. The following brief résumé will suffice.
3
Appellant with three associates, two males and one female, left Little Rock, Arkansas, in April 1970, possessing counterfeit $100 Federal Reserve Notes totalling $40,000. They eventually reached the State of South Dakota. On May 11, 1970, in Rapid City, South Dakota, appellant tendered one of the $100 counterfeit notes in payment for merchandise and received the difference between the cost and the amount of the bill in genuine money. A similar transaction took place on the same day in Spearfish, South Dakota. The next day, May 12, appellant was arrested in Buffalo, Wyoming, by the Sheriff of Johnson County, Wyoming. In due time, appellant was returned to South Dakota where he was indicted, tried and found guilty. Appellant contends that he was illegally arrested in Wyoming and also asserts prejudicial error in the trial proceedings. We find no substance in any of the points presented and affirm the judgment.
I.
4
Although it is not entirely clear from the statement of issues presented on appeal, it seems apparent that appellant contends that he was arrested without probable cause, that the search and seizure made incidental to that arrest was invalid and that the court should have suppressed the articles seized.2
5
We start from the premise, as recognized by appellant, that the validity of the arrest must be determined by the law of the state where the arrest is made. United States v. Di Re, 332 U.S. 581, 589, 68 S.Ct. 222, 92 L.Ed. 210 (1948); Turk v. United States, 429 F.2d 1327, 1330 (8 Cir. 1970). Under Wyoming law, a state officer may, without a warrant, arrest one whom he has reasonable or probable grounds to suspect of having committed a felony. State v. George, 32 Wyo. 223, 231 P. 683, 690 (1924).
6
We are firmly convinced that the Sheriff of Johnson County, Wyoming, acted upon probable cause when he arrested the appellant. This record shows without contradiction that appellant, who was wearing flashy clothing, made purchases of merchandise in places of business in Rapid City and in Spearfish, South Dakota, on May 11. By reason of the suspicious appearance of the $100 bills, Sheriff McGrath of Lawrence County, South Dakota, was alerted. After consultation with the clerks who waited upon appellant, Sheriff McGrath contacted Sheriff Turk of Johnson County, Wyoming, and conveyed to him all of the pertinent information relating to appellant's mode of dress, his size, the fact that he had gold-filled teeth, long sideburns and other distinguishing features. Sheriff McGrath informed Sheriff Turk that a state warrant was being obtained for appellant's arrest.3 Acting upon the information which Sheriff Turk had received from a reliable source, to-wit, Sheriff McGrath, who had in turn obtained reliable information from the clerks who had ample time to view appellant when he passed the counterfeit notes, Sheriff Turk made the arrest on the late afternoon of May 12.
7
The facts pertinent to the arrest take this case outside the reach of Whiteley v. Warden, 401 U.S. 560, 91 S.Ct. 1031, 28 L.Ed.2d 306 (1971), where the Supreme Court found an arrest warrant invalid, because the complaint consisted of nothing more than the sheriff's conclusion that the individuals named therein perpetrated the offense described in the complaint. In Whiteley, the court also held that the arresting officer did not possess sufficient factual information to support a finding of probable cause for arrest without a warrant, where the officer had learned through a radio bulletin the description of the suspects, and the sheriff who issued the bulletin had acted on an informer's tip but where the record was devoid of any information which would support either the reliability of the informer or the informer's conclusion that the men were connected with the crime. Here, as noted, the officer issuing the bulletin, namely, Sheriff McGrath, was acting upon reliable information received from known and reliable persons.
8
We therefore conclude upon the authority of numerous decisions by this court (e. g., United States v. Wahlquist, 438 F.2d 219 (8th Cir.), cert. denied 402 U.S. 1010, 91 S.Ct. 2195, 29 L.Ed.2d 432 (1971); United States v. Mitchell, 425 F.2d 1353 (8th Cir.), cert. denied 400 U.S. 853, 91 S.Ct. 85, 27 L.Ed.2d 90 (1970); United States v. Lugo-Baez, 412 F.2d 435 (8th Cir. 1969), cert. denied 397 U.S. 966, 90 S.Ct. 1000, 25 L. Ed.2d 257 (1970)), that the Wyoming Sheriff acted upon probable cause in arresting appellant and that the search and seizure are immune from attack.
9
Neither do we find any basis for reversing on the ground of a violation of Rule 5(a) or Rule 40(b) of the Federal Rules of Criminal Procedure which provide that the arrested person shall be taken without unnecessary delay before the nearest available commissioner. This issue has been the subject of consideration in any cases. The requirements of the foregoing rules and the teachings of the Supreme Court in McNabb v. United States, 318 U.S. 332, 63 S.Ct. 608, 87 L.Ed. 819 (1943) and Mallory v. United States, 354 U.S. 449, 77 S.Ct. 1356, 1 L.Ed.2d 1479 (1957) are designed to frustrate law-enforcing officers from detaining the arrested person for an unnecessary period of time to enable the officer to extract a confession from the arrested individual. But this salutary principle is not applicable where the person under arrest is in the custody and under the control of local and not federal officers, unless, of course, the state officers are acting at the direction of or in concert with the federal officers, or there is collaboration between the federal and state authorities. See Grooms v. United States, 429 F.2d 839, 842-843 (8th Cir. 1970), and the numerous cases there cited. Here the teachings of McNabb and Mallory do not apply because the initial action was instituted by the South Dakota Sheriff without knowledge on the part of any government officers, and the arrest was made by the Wyoming state official again without knowledge by federal officials. A Secret Service Agent of the United States Government did not enter the picture until May 14, two days after the arrest. There is evidence to show that on the same day that the federal officer questioned appellant, he was taken before a United States Commissioner in Wyoming. In short, we find no rational basis for holding that the appellant's rights were in any respect prejudiced by the proceedings which occurred between his arrest by the Sheriff and the time that he was taken before a commissioner.
II
10
During the trial, the district judge interrogated witnesses. Appellant did not object or take exceptions to the court's action but now claims that the court's intervention constituted plain error. We disagree. It is true that Judge Bogue did on occasion interrogate the witnesses. A number of his inquiries occurred in hearings conducted out of the presence of the jury. In any event, we detect nothing offensive or prejudicial in the court's interrogation. It is manifest that the judge was probing for the purpose of ferreting out the truth of what occurred.4
III
11
Neither do we find any substance in the contention that the court erred in permitting the witnesses to make an in-court identification of the appellant. The court, out of an abundance of caution, conducted a pre-trial hearing for the purpose of determining whether the procedures promulgated by the Supreme Court in United States v. Wade, 388 U.S. 218, 87 S.Ct. 1926, 18 L. Ed.2d 1149 (1967); Gilbert v. California, 388 U.S. 263, 87 S.Ct. 1951, 18 L. Ed.2d 1178 (1967), and Stovall v. Denno, 388 U.S. 293, 87 S.Ct. 1967, 18 L.Ed.2d 1199 (1967) were violated when appellant was identified by one of the salesladies at the time that the appellant was in the custody of Sheriff Turk in Buffalo, Wyoming. The court decided this issue in favor of appellant but held that if the same witness could make an in-court identification independent of the so-called "line up" identification, and upon observations gained from her contacts with the appellant during the sale of the merchandise, that such testimony would be admissible.
12
Both of the clerks who sold appellant merchandise made in-court identifications and this record convinces us beyond question that the in-court identifications were in no way tainted or influenced by the line-up identification. We hold, therefore, that the in-court identification testimony was properly admitted. See and compare Williams v. Haynes, 440 F.2d 796 (8th Cir. 1971); United States v. Wright, 433 F.2d 671 (8th Cir. 1970); United States v. Ranciglio, 429 F.2d 228 (8th Cir.), cert. denied 400 U.S. 959, 91 S.Ct. 358, 27 L. Ed.2d 268 (1970).
IV
13
The appellant also asserts as error the admission of appellant's oral confession made to a United States Secret Service Agent, the specific contention being that appellant had not been fully apprised of his constitutional rights as delineated in Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L. Ed.2d 694 (1966).
14
The record fully and completely refutes this contention. The appellant was given the Miranda warnings, not once but twice, after which he made incriminatory statements to the effect that he along with his three accomplices had possessed and had passed a number of $100 counterfeit reserve notes, including the two above referred to which were used in purchasing merchandise in South Dakota. In connection with this claim, it is significant to note that although the appellant testified out of the hearing of the jury in regard to another matter, he did not see fit to deny that he had confessed to the charges, and neither did he testify that he was not fully warned of his rights.5
V
15
Appellant's final contention that the court erred in allowing introduction of government's exhibits 1 to 8 for lack of proper foundation has been fully considered and is utterly lacking in substance.
16
A careful canvass of the record demonstrates to our complete satisfaction that the appellant received a fair trial. His rights were fully protected in every respect. The court on motion of appellant's counsel authorized the taking of the deposition of appellant's two male accomplices. The deposition of one was taken at the penitentiary in the State of Mississippi and the other in a jail in the State of Louisiana. Both depositions entailed a substantial expense which was taxed against the government.
17
The judgment is affirmed.
Notes:
*
Chief Judge, United States District Court, Eastern District of Arkansas, sitting by designation
1
The indictment alleged and the evidence shows that appellant's correct name is James Franklin Morris, Jr., but he used the aliases of Frank Smith and Frank Wright. Appellant admitted in a hearing outside the presence of the jury that he had two prior felony convictions
2
It is settled law that an illegal arrest without more, i. e. a search and seizure; goes to the jurisdiction over the person of the defendant. Where the accused does not attack the jurisdiction of the court over his person after he is arrested, and he is personally before a court having jurisdiction of the subject matter, the court has jurisdiction over the accused regardless of how he may have been brought into the presence of the court. See Frisbie v. Collins, 342 U.S. 519, 72 S.Ct. 509, 96 L.Ed. 541 (1952); Sewell v. United States, 406 F.2d 1289, 1292-1293 (8th Cir. 1969); United States v. Turner, 442 F.2d 1146, fn. 1 (8th Cir. 1971). Here, appellant, while represented by counsel, consented to his removal from Wyoming to South Dakota
3
A warrant for the arrest of appellant was obtained from a court in Lawrence County, South Dakota, on May 12, upon a criminal complaint filed by the Sheriff of Lawrence County, South Dakota, which charged the appellant and John Doe and Jane Doe with passing counterfeit $100 bills contrary to South Dakota Compiled Laws § 22-39-26 (1967). The South Dakota warrant was taken by Sheriff McGrath to Wyoming and delivered to Sheriff Turk. However, this occurred shortly after appellant had been arrested
4
We observe in passing, however, that a trial judge should exercise restraint and caution in the interrogation of witnesses particularly before the jury so that the jury will not be improperly influenced
5
Judge Bogue conducted a hearing in accordance with the teachings of Jackson v. Denno, 378 U.S. 368, 84 S.Ct. 1774, 12 L.Ed.2d 908 (1964), found the confession had been voluntarily made, and also submitted the issue to the jury
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Matter of Danazah B.D. (Audrey B.) (2015 NY Slip Op 01633)
Matter of Danazah B.D. (Audrey B.)
2015 NY Slip Op 01633
Decided on February 25, 2015
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 February 25, 2015
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Second Judicial Department
PETER B. SKELOS, J.P.
RUTH C. BALKIN
L. PRISCILLA HALL
JOSEPH J. MALTESE, JJ.
2014-07503
(Docket No. N-26046-12)
[*1]In the Matter of Danazah B. D. (Anonymous), also known as Danazah B. (Anonymous). Administration for Children's Services, respondent;
andAudrey B. (Anonymous), appellant.
Chas Budnick, Brooklyn, N.Y. (Anne C. Reddy of counsel), for appellant.
Zachary W. Carter, Corporation Counsel, New York, N.Y. (Francis F. Caputo and Scott Shorr of counsel), for respondent.
Seymour W. James, Jr., New York, N.Y. (Tamara A. Steckler and Judith Stern of counsel), attorney for the child.
DECISION & ORDER
Appeal from an order of the Family Court, Kings County (Ilana Gruebel, J.), dated July 25, 2014. The order, in effect, denied, without a hearing, the mother's motion for the return of the subject child pursuant to Family Court Act § 1028.
ORDERED that the order is reversed, on the law, without costs or disbursements, and the matter is remitted to the Family Court, Kings County, for a hearing pursuant to Family Court Act § 1028 and a new determination of the mother's motion thereafter.
The Family Court has no discretion to deny, without a hearing, a parent's application pursuant to Family Court § 1028 if the conditions of the statute are satisfied (see Matter of Prince Mc. [Wendell Mc.], 88 AD3d 885, 886; Matter of Kristina R., 21 AD3d 560, 562-563; Matter of Cory M., 307 AD2d 1035, 1036). Here, since the conditions of the statute were satisfied (see Family Ct Act § 1028), the Family Court erred by, in effect, denying the mother's motion for return of the subject child pursuant to Family Court Act § 1028 without a hearing (see Matter of Prince Mc. [Wendell Mc.], 88 AD3d at 886; Matter of Cory M., 307 AD2d at 1036).
Accordingly, we remit the matter to the Family Court, Kings County, for a hearing pursuant to Family Court Act § 1028 and a new determination of the mother's motion thereafter.
SKELOS, J.P., BALKIN, HALL and MALTESE, JJ., concur.
ENTER:
Aprilanne Agostino
Clerk of the Court
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IN THE SUPREME COURT OF THE STATE OF MONTANA
IN RE THE MARRIAGE OF
ROYCE A. ROS, r
( y7
.
- -
Plaintiff and Respondent,
and
JERAL L. BOS,
Defendant and Appellant.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and for the County of Flathead,
The Honorable Michael Keedy, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Hash, O'Brien & Barlett; C. Mark Hash, ~alispell,
Montana
For Respondent:
Royce A. O'Erien, pro se, Tacoma, washington
submitted on ~riefs: Zune 16, 1989
Decided: July 24, 1989
-
Clerk
Mr. Justice William E. Hunt, Sr. delivered the Opinion of the
Court.
Jeral L . Bos (husband) appeals from the distribution
mandated in the dissolution of marriage decree entered by the
District Court of the Eleventh Judicial District, Flathead
County. We affirm.
The issue raised on appeal is whether the District Court
properly distributed the marital estate when it considered a
lump sum Workers' Compensation disability award.
Royce (wife) and Jeral (husband) Bos were married on
October 27, 1973. On February 13, 1986, wife filed a
petition for dissolution of the marriage and for the
equitable distribution of the marital estate. A hearing on
the matter was held on June 2, 1987. On February 18, 1988,
the District Court entered its findings of fact and
conclusions of law and decree dissolving the marriase and
dividing the marital property. The findings of fact and
conclusions of law were twice amended.
When dividing the marital property, the District Court
considered several facts pursuant to § 40-4-202, MCA. Among
the facts considered was a lump sum Workers' Compensation
award paid to husband which is the subject of this appeal.
On January 9, 1978, husband was injured while working as
a carpenter in Whitefish, Montana. On December 26, 1985, the
Workers' Compensation Division approved a final settlement
that resulted in a net award of $35,219.59. From that
amount, husband paid $26,039.55 in marital obligations and
the remainder on living expenses.
Upon distribution of the marital estate wife received
property with a net value of $24,608.25 and husband received
property with a net value of $24,037.69. Husband argues that
the District Court erred in the distribution because the
marital estate would have had a lesser net value had
husband's Workers' Compensation award not been applied to
reduce marital debts. We disagree.
In In re the Marriage of Jones (Mont. 1987), 745 P.2d
350, 44 St.Rep. 1834, we held that where a lump sum Workers'
Compensation award of husband was commingled in a marital
account and later used to reduce marital debts, such was
includable in the marital estate. Further, we upheld the
District Court's determination that wife was entitled to
one-half of the marital estate notwithstanding the reduction
of marital debts by application of husband's benefits.
In the present case, as in Jones, husband received a
Workers' Compensation award in which the funds were used to
reduce marital debts. In applying the funds to reduce the
marital debt, husband placed the funds in the marital estate
thus, commingling the funds.
Where the District Court based its distribution of
marital assets on substantial credible evidence, it will not
be overturned absent a clear abuse of discretion. In re the
Marriage of Stewart (Mont. 1988), 757 P.2d 765, 767, 45
St.Rep. 850, 852. In light of our holding in Jones, there
was no abuse of discretion.
Affirmed.
,/
/ A
We Concur:
/ CH5e.f Justice
/r
/ Justices
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This memorandum opinion was not selected for publication in the New Mexico Appellate Reports.
Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum
opinions. Please also note that this electronic memorandum opinion may contain
computer-generated errors or other deviations from the official paper version filed by the Court of
Appeals and does not include the filing date.
1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
2 STATE OF NEW MEXICO,
3 Plaintiff-Appellee,
4 v. No. 34,070
5 SUSAN LEE,
6 Defendant-Appellant.
7 APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
8 Charles W. Brown, District Judge
9 Hector H. Balderas, Attorney General
10 Santa Fe, NM
11 for Appellee
12 Jorge A. Alvarado, Chief Public Defender
13 Santa Fe, NM
14 Twila A. Hoon, Contract Appellate Defender
15 Socorro, NM
16 for Appellant
17 MEMORANDUM OPINION
1 BUSTAMANTE, Judge.
2 {1} Defendant appeals from an on-the-record district court judgment affirming her
3 metropolitan court conviction for DWI (first offense). We issued a calendar notice
4 proposing to affirm. Defendant has timely filed a memorandum in opposition,
5 pursuant to an extension of time. We affirm.
6 Issues 1, 2:
7 {2} Defendant continues to argue that the officer lacked reasonable suspicion to
8 stop her vehicle, and lacked probable cause to make the arrest. [MIO 5-10] “In
9 reviewing a trial court’s denial of a motion to suppress, we observe the distinction
10 between factual determinations which are subject to a substantial evidence standard
11 of review and application of law to the facts, which is subject to de novo review. We
12 view the facts in the manner most favorable to the prevailing party and defer to the
13 district court's findings of fact if substantial evidence exists to support those findings.
14 State v. Hubble, 2009-NMSC-014, ¶ 5, 146 N.M. 70, 206 P.3d 579 (alteration, internal
15 quotation marks, and citations omitted).
16 {3} With respect to the stop, “[q]uestions of reasonable suspicion are reviewed de
17 novo by looking at the totality of the circumstances to determine whether the detention
18 was justified.” Id. (internal quotation marks and citation omitted). With respect to the
19 arrest, probable cause exists when “facts and circumstances within the officer’s
2
1 knowledge, or on which the officer has reasonably trustworthy information, are
2 sufficient to warrant someone of reasonable caution to believe that an offense has been
3 or is being committed.” State v. Galloway, 1993-NMCA-071, ¶ 10, 116 N.M. 8, 859
4 P.2d 476.
5 {4} Here, an officer testified that Defendant disregarded a fixed stop sign. [MIO 1]
6 This was sufficient to justify the stop. See State v. Vandenberg, 2003-NMSC-030, ¶
7 21, 134 N.M. 566, 81 P.3d 19 (noting that suspicion of violating a traffic law supplies
8 initial justification for stopping a vehicle). We also note that Defendant stipulated that
9 there was reasonable suspicion to make the stop, in light of the fact that Defendant
10 was in a valid road block. [MIO 3; DS 1]
11 {5} With respect to the arrest, the officer testified that when he stopped Defendant,
12 he noticed that she had a strong odor of alcohol coming from her facial area, and had
13 bloodshot, watery eyes. [MIO 2] She also performed poorly on the field sobriety tests.
14 [MIO 2] This was sufficient probable cause that Defendant was under the influence
15 of intoxicating liquor while operating a motor vehicle, and that this affected his ability
16 to operate the vehicle to at least the slightest degree. NMSA 1978, § 66-8-102(A)
17 (2010); cf. State v. Soto, 2007-NMCA-077, ¶ 34, 142 N.M. 32, 162 P.3d 187 (holding
18 that there was sufficient evidence to support a conviction where officers observed the
19 defendant driving, where the defendant admitted to drinking, and where the defendant
3
1 had bloodshot watery eyes, smelled of alcohol, and slurred speech). To the extent that
2 Defendant is arguing [MIO 10] that her conduct was caused by something other than
3 alcohol consumption, the fact finder was free to reject her version of events. See State
4 v. Sutphin, 1988-NMSC-031, ¶ 21, 107 N.M. 126, 753 P.2d 1314.
5 Issue 3:
6 {6} Defendant claims that her original attorney was ineffective. [MIO 10] There
7 is a two-fold test for proving ineffective assistance of counsel; the defendant must
8 show (1) that counsel’s performance fell below that of a reasonably competent
9 attorney, and (2) that defendant was prejudiced by the deficient performance. State
10 v. Hester, 1999-NMSC-020, ¶ 9, 127 N.M. 218, 979 P.2d 729. The burden of proof
11 is on defendant to prove both prongs. Id.
12 {7} Defendant claims that counsel was ineffective for not allowing her to point out
13 conflicts in testimony and for preventing her from addressing the trial court at
14 sentencing. [MIO 11] These appear to be matters of strategy that do not establish a
15 prima facie showing of ineffective assistance of counsel. See State v. Baca,
16 1997-NMSC-59, ¶ 25, 124 N.M. 333, 950 P.2d 776 (stating that “a prima facie case
17 is not made when a plausible, rational strategy or tactic can explain the conduct of
18 defense counsel”). In addition, the communications between Defendant and counsel
19 are not matters of record subject to review on direct appeal. See State v. Hunter, 2001-
4
1 NMCA-078, ¶ 18, 131 N.M. 76, 33 P.3d 296 (“Matters not of record present no issue
2 for review.”).
3 {8} For the reasons set forth above, we affirm.
4 {9} IT IS SO ORDERED.
5 _______________________________________
6 MICHAEL D. BUSTAMANTE, Judge
7 WE CONCUR:
8
9 JAMES J. WECHSLER, Judge
10
11 J. MILES HANISEE, Judge
5
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756 F.2d 75
LINCOLN GRAIN, INC., Appellant,v.AETNA CASUALTY AND SURETY COMPANY, A Corporation, Appellee.
No. 84-1373.
United States Court of Appeals,Eighth Circuit.
Submitted Oct. 10, 1984.Decided March 6, 1985.
David M. Geier, Lincoln, Neb., for appellant.
Richard A. Knudsen, Lincoln, Neb., for appellee.
Before HEANEY, Circuit Judge, HENLEY, Senior Circuit Judge, and JOHN R. GIBSON, Circuit Judge.
JOHN R. GIBSON, Circuit Judge.
1
Lincoln Grain, Inc. appeals from a judgment in its favor against Aetna Casualty & Surety Company for approximately $44,000, claiming that it should have recovered $1.5 million on its fidelity bond claim. The district court1 held that a "trading loss" exclusion limited Lincoln's recovery. We conclude that the district court did not err in applying the exclusion and affirm its judgment.
2
Lincoln Grain's primary business is trading grain. This litigation centers on its Iowa Division, which bought and sold grain delivery contracts on its own behalf. Although it took title to the grain it bought and sold, it did not take possession. The grain remained in various outside elevators until the Iowa Division could arrange for shipment from the elevators to the buyers. The division's profits rested on its ability to sell delivery contracts at prices higher than it had paid for them. Lincoln Grain also had a Commodities Division, which did not buy or sell grain on its own behalf, but executed the orders of trading customers. Title to this grain rested solely in these customers.
3
In 1971, Aetna issued a fidelity bond to Lincoln that insured against fraudulent or dishonest acts by Lincoln employees. An employee named William Oler became general manager of the Iowa Division in 1973. Beginning in May of that year, Oler took responsibility for reporting the division's financial status to Lincoln headquarters. These reports were based on valuations of the division's inventories, determined solely by Oler. During July and August 1973, Oler found that the Iowa Division had suffered substantial losses. Disbelieving these signs, Oler altered his financial reports to show a profit, hoping that later inventories would prove him correct. These practices continued for two and a half years before they were detected. Eventually it was discovered that poor trades and hedges had resulted in losses of around $2.6 million.
4
Meanwhile, in October 1973 Aetna had begun to negotiate with Lincoln concerning the addition of a trading-loss exclusion to the fidelity bond. In June 1974, after considerable correspondence between the parties,2 Lincoln had accepted such an exclusion, effective April 1, 1974. Aetna had indicated that it would not renew Lincoln's bond unless the trading-loss endorsement (Endorsement 32) was added. This endorsement contained three critical provisions. First, the following words were printed at the top of the endorsement:
5
WHEN ISSUED TO ANY COTTON, COFFEE, GRAIN OR OTHER COMMODITY BROKERAGE HOUSE, TO EXCLUDE TRADING LOSSES WHETHER IN THE NAME OF THE INSURED OR IN A GENUINE OR FICTITIOUS ACCOUNT.
6
Second, Lincoln Industries, Inc.3 was the named insured. Finally, the body of the endorsement provided: "It is hereby agreed that: 1. Insuring Agreement I [employee dishonesty coverage] does not apply to any loss resulting directly or indirectly from trading, whether in the name of the insured or in a genuine or fictitious account.
7
Lincoln submitted a claim under the fidelity bond for the losses incurred by the Iowa Division, based on Oler's dishonest reports, which prevented it from closing down the division on September 30, 1973. The claim gave rise to this diversity action. Based on the pretrial stipulations of the parties, the court framed the issues as:
8
Whether Lincoln Grain, Inc. or the Iowa Division of Lincoln Grain, Inc. was a cotton, coffee, grain or other commodity brokerage house, and if not, whether Endorsement 32 applied to Lincoln Grain, Inc. or the Iowa Division of Lincoln Grain, Inc.
9
Whether the losses alleged by the plaintiff resulted directly or indirectly from trading as provided by Endorsement 32 to the bond.
10
Lincoln Grain, Inc. v. Aetna Casualty Insurance Co., No. CV77-L-102, slip op. at 11 (D.Neb. Feb. 16, 1984). The court found that the caption read together with the exclusion created an ambiguity. Interpreting the policy in light of extrinsic evidence, the court concluded that the endorsement covered Lincoln Grain as a whole, including the Iowa division. Thus, the court held that the trading-loss endorsement excluded the major portion of the claim.
11
On appeal Lincoln argues that the court erred in identifying and resolving the ambiguity raised by the caption. Aetna does not argue here that Oler's conduct was not "dishonesty" within the meaning of the bond. Lincoln contends, however, that the district court incorrectly concluded that the ambiguity was in the identity of the insured rather than the definition of the risk excluded. It argues that "commodity brokerage house" modifies the type of risk ("trading losses") rather than identifying the entities covered such that the endorsement applies only to trading losses sustained in commodity brokerage trading. Thus, Lincoln claims its losses should not have been excluded because the Iowa Division was not a "brokerage" since it did not deal in the property of others for commission. See Carey v. Humphries, 171 Neb. 578, 597, 107 N.W.2d 20, 31 (1961). Finally, Lincoln claims that the district court erred in concluding that Lincoln Grain as a matter of law was a commodity brokerage house.
12
The district court did not err in identifying or resolving the ambiguity raised by the caption. It found that Oler's conduct resulted in trading losses, in that these losses resulted from poor judgments in the buying and selling of grain delivery contracts. In reaching this conclusion, the court properly relied on common understandings in the industry. See note 4 infra; Research Equity Fund v. Insurance Co. of North America, 602 F.2d 200, 201 (9th Cir.1979), cert. denied, 445 U.S. 945, 100 S.Ct. 1344, 63 L.Ed.2d 780 (1980). Lincoln's argument that these losses were not a result of trading by a commodity brokerage house rests on an overly restrictive interpretation of the caption and ignores the remainder of the exclusion.
13
According to Lincoln's interpretation of the caption, only losses suffered by the Commodities Division would be excluded by the caption. Contrary to Lincoln's suggestion, however, the caption does not say that the endorsement excludes commodity brokerage trading losses. Rather, the caption states that when the endorsement is issued to a commodity brokerage house, trading losses are excluded. It is true that a portion of Lincoln's trading was undertaken on its own behalf (the Iowa Division's buying and selling). Nevertheless, Lincoln also engaged in commodity brokerage (the Commodities Division's trading the properties of its customers). Both divisions were capable of suffering trading losses.
14
In considering the endorsement as a whole, the district court interpreted the caption as raising an ambiguity. Lincoln, in contrast, treats the caption as the sole dispositive provision in the endorsement. This position ignores the remainder of the endorsement and the extrinsic evidence. See J. Appleman & J.A. Appleman, 12A Insurance Law and Practice Sec. 7387, at 168-69 (1976) (caption should be read with the contract as a whole and construed to carry out the parties intent). After considering the caption, endorsement, and extrinsic evidence, the district court applied the endorsement to Lincoln Grain and all its divisions rather than only the Commodities Division. The following reasons support the court's conclusion.
15
First, the endorsement was issued to Lincoln Grain, not just the Commodities Division. Lincoln Grain, slip op. at 14. Second, there was significant correspondence between the parties concerning the scope of the endorsement. The district court found no suggestion in this correspondence that the endorsement covered only the Commodities Division.4 Finally, and most importantly, the body of the endorsement "does not limit the exclusion's application to brokerage houses or any part of Lincoln Grain's overall operations." Id. at 15. Rather, the endorsement excludes trading "whether in the name of the insured or in a genuine or fictitious account." This language answers Lincoln's argument that only trading by a commodity brokerage house, or trading of property of others, is excluded. Based on these factors, the court concluded that "Lincoln Grain's interpretation of the insurance contract is not one which a reasonable insured in Lincoln Grain's position and with Lincoln Grain's knowledge would adopt." Id. at 17. The court found that the endorsement covered all the operations of Lincoln Grain rather than just the Commodities Division. These are factual findings because extrinsic evidence was utilized to interpret the ambiguous contract. See West v. Smith, 101 U.S. 263, 270, 11 Otto 263, 270, 25 L.Ed. 809 (1879); United Truck & Bus Service Co. v. Piggott, 543 F.2d 949, 950 (1st Cir.1976); Palmer v. Howard, 493 F.2d 830, 835 (10th Cir.1974); Olds v. Jamison, 195 Neb. 388, 390-94, 238 N.W.2d 459, 462-63 (1976). The findings are neither clearly erroneous nor a mistake as a matter of law. The court did not err in rejecting Lincoln's effort to carve out a portion of its corporate entity, the division engaged in commodities brokerage on behalf of customers, to be subject to the exclusion.
16
Lincoln also argues that the district court erred in finding Lincoln Grain a commodity brokerage house as a matter of law. The court found that Lincoln Grain as a whole was a brokerage house in part because either George Lincoln (the president of the company) or Lincoln Grain held a brokerage license. Lincoln argues that this finding is erroneous, in that Lincoln held only a seat on the Chicago Board of Trade rather than a license. Because the court's holding can be supported by other reasons in the record, we need not decide whether this narrow finding is mistaken. Moreover, we reject Lincoln's argument that the district court reached this conclusion "as a matter of law." The court's discussion of this issue was but a small part of the larger factual determination of whether the endorsement was intended to include Lincoln Grain as a whole.
17
We affirm the judgment of the district court.
1
The Honorable Warren K. Urbom, Chief Judge, United States District Court for the District of Nebraska
2
By letter dated October 19, 1973, Lincoln Grain's insurance agent, Leo Beck, asked Aetna whether the proposed endorsement would cover "the dishonest act on the part of an employee who is involved in trading losses with the employer's money, or the employer's credit." About one month later, Aetna responded:
"The trading loss exclusion * * * directs itself to trading operations. Essentially, it excludes trading losses that an insured may sustain in their [sic] hedging operation as a result of an unauthorized transaction by an employee with or without provable dishonest or fraudulent intent."
3
When the endorsement took effect, Lincoln Industries, Inc. was the parent company under which the Iowa and Commodities Divisions operated. Later, Lincoln Grain, Inc. became the parent company. The district court found that Lincoln Grain and Lincoln Industries were interchangeable for the purpose of determining coverage
4
Lincoln relies on the letter from Aetna dated October 19, 1973. Lincoln claims that it referred to only its Commodities Division as a "hedging operation," so the letter shows that the endorsement was not meant to cover the Iowa Division. The district court rejected this argument, relying on expert testimony that under industry usage, the Iowa Division would be considered a "hedging operation" because it made hedging decisions, rather than merely executing customer hedging-orders
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In the
United States Court of Appeals
For the Seventh Circuit
No. 00-2486
Michael Brandon, M.D.,
Plaintiff-Appellant,
v.
Anesthesia & Pain Management
Associates, Ltd., Kumar S. Ravi,
M.D., James R. Boivin, M.D., and
Kathleen H. Slocum, M.D.,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of Illinois.
No. 97-CV-1004--G. Patrick Murphy, Chief Judge.
Argued April 18, 2001--Decided January 18, 2002
Before Harlington Wood, Jr., Diane P. Wood,
and Williams, Circuit Judges.
Diane P. Wood, Circuit Judge. Dr. Michael
Brandon was employed as an
anesthesiologist by Anesthesia & Pain
Management Associates (APMA). After
discovering that certain APMA doctors
seemed to be falsifying the bills they
submitted to Medicare, he brought his
concerns to the attention of the APMA
shareholders. This led in short order
first to problems at work and later to
his discharge. Believing that the
discharge was in retaliation for his
airing of the Medicare issue, Brandon
filed a lawsuit claiming that the
defendants had committed the Illinois
tort of retaliatory discharge. A jury
found in his favor, but not long
afterward the district court granted
APMA’s motion for judgment as a matter of
law and vacated the jury verdict. The
court found as a matter of law that the
Illinois Supreme Court would not
recognize a retaliatory discharge claim
under the circumstances of Brandon’s
case. In our view, the district court was
mistaken on this critical question of
Illinois law; we therefore reverse the
grant of the Rule 50 motion and order the
jury’s verdict to be reinstated.
Furthermore, we conclude that the trial
court should not have dismissed the
punitive damage claims, which we remand
for further proceedings.
I
Brandon began working as an
anesthesiologist for APMA in September
1993. APMA provides anesthesia services
to patients at St. Elizabeth’s Hospital
in Belleville, Illinois; approximately
45% of its patients are Medicare
recipients. When Brandon was hired, APMA
had four shareholder/ anesthesiologists:
Dr. Kumar Ravi, Dr. Kathleen Slocum, Dr.
James Boivin, and Dr. Maurice Boivin.
(Maurice Boivin was no longer a
shareholder at the time Brandon filed his
complaint, which accounts for his absence
in the list of defendants.) After two
years on the job, Brandon was promoted to
an associate position. Along with the
promotion came a 42% pay raise and the
ability to begin the process of becoming
an APMA shareholder. Brandon also
received a substantial bonus at the end
of 1995.
As an associate, Brandon was now
responsible (along with the shareholder-
doctors) for filling out Medicare billing
reports. He soon began to suspect that
several of the shareholders were making
alterations to reports or otherwise
falsifying reports in order to receive
Medicare reimbursement at rates higher
than the rates to which APMA was entitled
by law. Under the governing regulations,
Medicare allows for more generous
reimbursements for procedures that an
anesthesiologist "medically directs"
(because the bill includes both the
doctor’s services and the services of
various assistants), than for procedures
that the doctor "personally performs."
There are limits, however, to the use of
the "medically directed" rate; most
importantly for present purposes, an
anesthesiologist may not oversee more
than four surgeries at a time. If she
does, then the provider may bill (at a
much lower rate) only for the services of
the assistants who are actually
performing the work.
In May or June 1996, Brandon contacted
Medicare to obtain a copy of its
regulations. After reviewing them, he
became convinced that his colleagues’
practices were improper. Some, he
thought, were falsifying the number of
operations they were supervising, so that
they could bill at the highest "medically
directed" rate; others were altering the
billing sheets to indicate that they were
performing work, even though they had
left the hospital for the day.
Accordingly, at the shareholders’ meeting
held in early July 1996, he brought these
issues to their attention and showed them
copies of the relevant Medicare rules.
The doctors seemed upset that he had
contacted Medicare and worried about what
he had told the Medicare authorities.
Brandon assured them that he had asked
Medicare only generic questions and had
not divulged any information about APMA’s
billing procedures. He also suggested
that the shareholders should hire another
anesthesiologist, which would make it
easier for them legitimately to meet the
Medicare requirements for billing at
higher rates. The shareholders told
Brandon that they would look into the
problem. (At trial, the shareholders
argued that Brandon did not complain
about Medicare fraud until November 1996.
But since the jury found in Brandon’s
favor, we are taking his version of the
facts as true.)
A few weeks later, on July 24, 1996, the
shareholders told Brandon that his job
performance was unsatisfactory, that they
had received complaints about him, and
that he should start looking for other
work. Brandon found this suspicious, as
no formal complaint had ever been filed
against him, he had recently been
promoted, and he had recently received a
substantial raise. He pressed the
shareholders for details about the
alleged complaints against him, but they
did not furnish any particulars. Around
the same time, Brandon began keeping a
journal documenting all of the cases in
which he thought that APMA shareholders
were improperly billing Medicare. He
periodically brought these occurrences to
the shareholders’ attention, but he took
no other action at that time.
On October 4, 1996, Slocum told Brandon
that the shareholders had decided that he
had to leave his job by the end of the
year. Brandon protested that the
shareholders were firing him only because
of his challenges to their Medicare
claims and that he planned to "take them
to court." Slocum answered, "We can do
what we want with you. You don’t have a
contract."
On October 21 and 22, Brandon again
brought his complaints to the attention
of the shareholders. His effort did
nothing but bring about a letter from the
shareholders dated October 23, 1996,
formally notifying him that he was
discharged effective at the end of the
year, but also giving him the option to
resign. On November 1, 1996, Brandon met
with the shareholders to discuss the
termination; he again accused the
shareholders of retaliating against him
for pointing out the billing fraud. With
strong, vulgar language, Slocum made it
plain that Brandon was finished, and
bluntly added, "You don’t have a signed
contract." At this time, Brandon, for the
first time, threatened to report the
alleged fraud to the government.
On November 4, the shareholders sent
Brandon another letter making his
termination effective immediately, but
still urging him to resign. They
suggested that if he did not resign, they
could make it very difficult for him to
find another job. Brandon refused to
resign, and so he was terminated. Ten
months after his termination, he reported
APMA’s billing practices to the U.S.
Attorney’s Office. (The record does not
reflect what use, if any, the U.S.
Attorney’s Office made of his report.)
Brandon (a citizen of Missouri) then
filed this diversity suit against APMA
and its current shareholders (all
Illinois citizens), alleging retaliatory
discharge under Illinois law. The trial
began on October 26, 1999. Two days
later, at the close of Brandon’s
evidence, the defendants filed a motion
for judgment as a matter of law pursuant
to Federal Rule of Civil Procedure 50(a);
they renewed their motion at the close of
all the evidence. The court reserved its
ruling on the motions; it also refused
Brandon’s request for a punitive damages
instruction. On November 3, 1999, the
jury returned a verdict in favor of
Brandon, awarding him $1,034,000 for lost
earnings and $1,000,000 for pain and
suffering and emotional distress.
But Brandon’s victory was short-lived.
About six months after the jury verdict,
the district court entered a final
judgment granting the defendants’ motion
for judgment as a matter of law, vacating
the jury verdict, and dismissing the
complaint. This appeal followed.
II
The jury concluded that Brandon was
fired for complaining about the
shareholders’ fraudulent billing
practices, and we are not asked to
overturn this determination. Rather, the
question for us is whether this discharge
was in retaliation for activities which
are protected by the clearly mandated
public policy of Illinois, and as such
was tortious under Illinois law.
Illinois is an at-will employment state,
which means that in general an employee
can be discharged at any time for any
reason or none at all. Pratt v.
Caterpillar Tractor Co., 500 N.E.2d 1001,
1002 (Ill. App. Ct. 1986). Nevertheless,
there are exceptions to that rule: one
obvious one is that a forbidden
characteristic such as race cannot be the
reason for the actions of someone
counting as an "employer." 775 Ill. Comp.
Stat. Ann. 5/2-102 (West 2001). The tort
of retaliatory discharge embodies another
exception. A discharged employee may sue
her employer for the common law tort of
retaliatory discharge if her discharge
was in retaliation for certain actions
that are protected by the public policy
of Illinois, including retaliation for
complaints about an employer’s unlawful
conduct. Pratt, 500 N.E.2d at 1002;
Hinthorn v. Ronald’s of Bloomington,
Inc., 519 N.E.2d 909, 911 (Ill. 1988).
Unlike the federal False Claims Act
("FCA"), 18 U.S.C. sec. 287, which we
discuss below, the Illinois tort does not
require that the employee have reported
the allegedly illegal conduct to the
authorities, as long as she reported it
to the employer, Lanning v. Morris Mobile
Meals, Inc., 720 N.E.2d 1128, 1130-31
(Ill. App. Ct. 1999). The tort also does
not require the employee to have been
correct about the unlawfulness of the
conduct, as long as she had a good-faith
belief that it was unlawful. See
Stebbings v. Univ. of Chicago, 726 N.E.2d
1136, 1144 (Ill. App. Ct. 2000).
As noted earlier, the district court did
not overturn the jury’s determination of
the reason for Brandon’s termination:
that he was fired for complaining about
the billing practices. Instead, it found
that Brandon’s claim failed on two other
grounds: (1) he "failed to show any clear
mandate of Illinois public policy which
his discharge contravenes," and (2) "even
if such public policy exists, other means
exist to vindicate it absent recognition
of the tort of retaliatory discharge in
this case." These are purely legal points
that we review de novo. Doe v. Howe
Military School, 227 F.3d 981, 990 (7th
Cir. 2000).
A. Public Policy Against Medicare Fraud
While the Illinois Supreme Court has
acknowledged that "[t]here is no precise
definition" of the term "clearly mandated
public policy," Palmateer v. Int’l
Harvester Co., 421 N.E.2d 876, 878 (Ill.
1981), the court has explained that
"public policy concerns what is right and
just and what affects the citizens of the
State collectively. . . . [A] matter must
strike at the heart of a citizen’s social
rights, duties, and responsibilities
before the tort will be allowed." Id. at
878-89.
Illinois courts have identified two
situations in which the "clear mandate of
public policy" standard is met: (1) when
an employee is fired for asserting a
workers’ compensation claim, Kelsay v.
Motorola, Inc., 384 N.E.2d 353, 357-59
(Ill. 1978); and (2) when an employee is
fired for refusing to engage in illegal
conduct or reporting the illegal conduct
of others ("whistle blowing" or "citizen
crime fighting"). Palmateer, 421 N.E.2d
at 879. Brandon’s claim rests upon the
latter of these two.
The defendants implicitly concede, as
they must, that Brandon believed that the
conduct about which he had complained
amounted to Medicare fraud. Medicare
fraud is covered by several federal
felony statutes, including the FCA, which
criminalizes the act of making false
claims to the federal government
(including overcharging for Medicare
reimbursements), the False Statements
Act, 18 U.S.C. sec. 1001, and the
criminal Medicare and Medicaid anti-fraud
and abuse provisions, 42 U.S.C. sec.
1320a-7 (West 2001).
Notwithstanding the fact that Illinois
has long had a public policy that
encourages citizens to report crimes, see
Palmateer, 421 N.E.2d at 880, the
district court took the rather narrow
view that these federal criminal statutes
could not provide a basis for Illinois
public policy. It stated that Brandon had
failed to prove "the existence of any
clear mandate of Illinois public policy
in favor of preventing health care fraud
against the federal government rather
than the State of Illinois," implying
that state public policy would not be
concerned with the defrauding of the
federal government and the violation of
federal statutes that make it a crime to
commit Medicare fraud.
In so holding, the court erred. To begin
with, under the Supremacy Clause of the
United States Constitution, the state is
required to treat federal law on a parity
with state law, and thus it is not
entitled to relegate violations of
federal law or policy to second-class
citizenship. See Claflin v. Houseman, 93
U.S. 130, 136-37 (1876). But we need not
escalate this case to the constitutional
level, because it is plain that the
courts of Illinois have done no such
thing. To the contrary, they have
explicitly stated that it is a clearly
established policy of Illinois to prevent
its citizens from violating federal law
and that the state’s public policy
encourages employees to report suspected
violations of federal law if that law
advances the general welfare of Illinois
citizens. Russ v. Pension Consultants
Co., 538 N.E.2d 693, 697 (Ill. App. Ct.
1989) ("The [Illinois] supreme court has
held that public policy may be found in
federal law. . . . [A]n Illinois
citizen’s obedience to the law, including
federal law, is a clearly mandated public
policy of this state. . . ."); Johnson v.
World Color Press, Inc., 498 N.E.2d 575,
576 (Ill. App. Ct. 1986) ("Public policy
can be found not only in the laws and
judicial decisions of Illinois, but can
also be found in federal law. Our supreme
court . . . held that a cause of action
for retaliatory discharge could be based
upon a clearly mandated public policy
which has been declared by Congress and
which is national in scope.") (citations
omitted).
There are many examples of Illinois
cases in which reports about violations
of federal law have given rise to valid
claims of retaliatory discharge. See,
e.g., Wheeler v. Caterpillar Tractor Co.,
485 N.E.2d 372 (Ill. 1985) (employee was
fired after reporting violations of
Nuclear Regulatory Commission policy);
Stebbings, 726 N.E.2d at 1145-46
(employee was fired for complaining about
violations of federal radioactive
materials regulations); Sherman v. Kraft
Gen. Foods, Inc., 651 N.E.2d 708, 712
(Ill. App. Ct. 1995) (employee was fired
for reporting violations of OSHA); Howard
v. Zack Co., 637 N.E.2d 1183, 1190-91
(Ill. App. Ct. 1994) (employee was fired
for reporting violation of federal record
keeping regulations); Johnson, 498 N.E.2d
575 (employee was fired for reporting
violations of federal securities laws).
Furthermore, the Illinois legislature
itself has explicitly articulated a state
policy against all public benefits fraud:
Because of the pervasive nature of public
assistance fraud and its negative effect
on the people of the State of Illinois
and those individuals who need public
assistance, the General Assembly declares
it to be public policy that public
assistance fraud be identified and dealt
with swiftly and appropriately
considering the onerous nature of the
crime.
305 Ill. Comp. Stat. Ann. 5/8A-1 (West
2001). Although in a highly technical
sense APMA may not have committed state
public benefits fraud, its discharge of
Brandon violated the statutory policy
against public benefits fraud in general.
See Stebbings, 726 N.E.2d at 1142
(statute from which public policy can be
inferred need not necessarily apply to
the specific conduct at hand). Finally,
the Illinois Supreme Court is
particularly sensitive to the public
policy underpinnings of statutes that
affect the health and safety of citizens.
United States ex rel. Chandler v. Hektoen
Inst. for Med. Research, 35 F. Supp. 2d
1078, 1083 (N.D. Ill. 1999).
In short, the Illinois courts are under
no illusions about the status of federal
law as a source of public policy for the
state of Illinois. The Illinois
legislature has stated that it is the
public policy of the state to identify
and end public benefits fraud; Illinois
has an undeniable interest in ensuring
that its citizens are obedient to federal
law and that its public benefits
recipients are not cheated out of proper
medical care or benefits. Taking all this
into account, we conclude that the
Illinois Supreme Court would find that
Brandon’s discharge was in violation of
the public policy of the state of
Illinois.
B. Alternative Means of Enforcement
Even if Brandon has established the
elements of a retaliatory discharge
claim, the Illinois courts have hinted in
dicta that the claim may still be
rejected if an adequate alternative
remedy exists to vindicate the
retaliatory discharge or otherwise to
deter the activity that is inconsistent
with public policy. "The tort of
retaliatory discharge was not intended to
serve as a substitute means for
enforcement of particular laws."
Stebbings, 726 N.E.2d at 1141. See also
Hamros v. Bethany Homes & Methodist
Hosp., 894 F. Supp. 1176, 1178-79 (N.D.
Ill. 1995) (no retaliatory discharge
claim for plaintiff fired for exercising
his rights under the Family and Medical
Leave Act (FMLA) since the FMLA already
prohibits retaliation and this discharge
presented a private matter between the
employer and the employee).
Taking its lead from these cases, the
district court also supported its
decision on the ground that the FCA,
which forbids the submission of knowingly
false claims for money to the federal
government, adequately protected the
state’s policy against public benefits
fraud and provided Brandon with a
sufficient remedy for the retaliatory
discharge. The FCA permits the federal
government to impose civil sanctions
against fraudulent parties. 31 U.S.C.
sec. 3730(a). It also allows a private
individual to bring a qui tam action for
fraud, on behalf of the federal
government, and to recover an award of up
to 30% of the proceeds of the action. See
31 U.S.C. sec. 3730(b)-(d).
But the existence of government-imposed
criminal and civil sanctions for unlawful
conduct cannot be the basis for inferring
that an employee cannot state a claim for
retaliatory discharge when the employer
fires her in retaliation for reporting
the unlawful conduct. In most "whistle-
blower" retaliatory discharge claims, the
employee is objecting to conduct by her
employer that carries criminal or civil
sanctions. See Johnson, 498 N.E.2d at 578
(employee who complains about violations
of the federal securities law is
protected from retaliation even though
the employer is subject to penalties for
such Securities Act violations). If the
district court’s view were correct, the
whole "citizen crime-fighter" species of
retaliatory discharge claim would become
extinct in Illinois. We see nothing in
the scraps of language from other courts
that would support such an important
shift in Illinois law, and the Illinois
Supreme Court itself has never taken such
a step.
To the extent that alternative remedies
are relevant, however, we disagree with
the district court that the anti-
retaliation provision of the FCA, 31
U.S.C. sec. 3730(h) (West 2001), is
enough to bar Brandon’s claim. Section
3730(h) states that:
Any employee who is discharged, demoted,
suspended, threatened, harassed, or in
any other manner discriminated against in
terms and conditions of employment by his
or her employer because of lawful acts
done by the employee on behalf of the
employee or others in furtherance of an
action under this section, including
investigation for, initiation of,
testimony for, or assistance in an action
filed or to be filed under this section,
shall be entitled to all relief necessary
to make the employee whole.
(Emphasis added). That relief includes
reinstatement, double back pay with
interest, "and compensation for any
special damages sustained as a result of
the discrimination, including litigation
costs and reasonable attorneys’ fees." 31
U.S.C. sec. 3730(h). The final phrase
permits recovery for emotional distress.
Neal v. Honeywell, Inc., 191 F.3d 827,
832 (7th Cir. 1999).
For Brandon to bring an action against
APMA based on his discharge under sec.
3730(h), he would have to show that (1)
his actions were taken "in furtherance of"
an FCA enforcement action and were
therefore protected by the statute; (2)
that the employer had knowledge that he
was engaged in this protected conduct;
and (3) that the discharge was motivated,
at least in part, by the protected
conduct. See United States ex rel.
Yesudian v. Howard Univ., 153 F.3d 731,
736 (D.C. Cir. 1998). The tort of
retaliatory discharge, as we have already
noted, does not require the employee to
have reported the allegedly illegal
conduct to the authorities. Lanning, 720
N.E.2d at 1131. People in Brandon’s
position, who choose to raise their
concerns privately within their firm or
company, rather than publicly, simply do
not qualify for the FCA claim.
This conclusion disposes of the question
whether there was an alternative path
available to Brandon, unless his
complaints could somehow be seen as
something "in furtherance of" a yet-to-
be-filed FCA enforcement action or
Illinois would regard the FCA as
"equivalent" even though it addresses a
smaller set of cases than the state tort.
The FCA covers "investigation for,
initiation of, testimony for or
assistance in an [enforcement] action
filed or to be filed." 31 U.S.C. sec.
3730(h). In Neal v. Honeywell, 33 F.3d
860 (7th Cir. 1994) (Honeywell I), this
court defined an "action" under sec.
3730(h) to include situations in which a
qui tam action is a "distinct
possibility," or "litigation could be
filed legitimately--that is, consistently
with Fed. R. Civ. P. 11." Id. at 864. We
did not, however, define "in furtherance
of" or otherwise describe the actions the
employee must have taken in relation to
the possibility of litigation. In Neal
itself, the plaintiff had provided enough
information to the government to trigger
an investigation and that the employer
was on notice of the investigation. Id.
Luckey v. Baxter Healthcare Corp., 183
F.3d 730 (7th Cir. 1999), shed little
light on this issue, stating simply that
"[o]nly investigation, testimony, and
litigation are protected." Id. at 733.
Luckey also established that a
retaliatory complaint had to be dismissed
if the employer did not know about the
whistle-blower’s report before it
discharged him.
What exactly had Brandon done that could
have been seen as protected conduct or a
"precursor to [FCA] litigation?" He had
notified the shareholders that he
wasconcerned about their billing
practices. He had contacted Medicare for
information about Medicare billing rules.
But were any of these actions "in
furtherance of" a qui tam action? Did any
of these actions put APMA on notice of
the "distinct possibility" of a qui tam
action? Under the circumstances here, we
cannot find that APMA would have realized
that it faced the "distinct possibility"
of such an action. It is true that
Brandon used terms like "illegal,"
"improper," and "fraudulent" when he
confronted the shareholders about the
billing practices. On the other hand,
Brandon had never explicitly told the
shareholders that he believed they were
violating the FCA and had never
threatened to bring a qui tam action. He
never threatened to report their conduct
to the government until after he was
discharged. Compare Eberhardt v.
Integrated Design & Constr., Inc., 167
F.3d 861, 867 (4th Cir. 1999). Brandon
was simply trying to convince the
shareholders to comply with the Medicare
billing regulations. Such conduct is usu
ally not protected by the FCA, see
Yesudian, 153 F.3d at 740; Zahodnick v.
Int’l Bus. Machs. Corp., 135 F.3d 911,
914 (4th Cir. 1997); United States ex
rel. Hopper v. Anton, 91 F.3d 1261, 1269
(9th Cir. 1996). Additionally, such
conduct usually does not put an employer
on notice of potential FCA litigation.
See United States ex rel. Ramseyer v.
Century Healthcare Corp., 90 F.3d 1514,
1523 (10th Cir. 1996) (Plaintiff’s
conduct in advising her superiors of non-
compliance with Medicaid program
requirements did not suggest to employer
that she intended to bring an FCA
action.).
It is more accurate to say that
Brandon’s investigation of the billing
reports was part of the general course of
his responsibilities. At trial, Ravi
testified that one of Brandon’s job
duties was to ensure that the billing
practices complied with Medicare rules
and regulations. Thus, the fact that
Brandon was alerting his supervisors to
the possibility of their non-compliance
with the rules would not necessarily put
them on notice that he was planning to
take a far more aggressive step and bring
a qui tam action against them or report
their conduct to the government. See
Eberhardt, 167 F.3d at 868 ("[I]f an
employee is assigned the task of
investigating fraud within the company,
courts have held that the employee must
make it clear that the employee’s actions
go beyond the assigned task" in order to
allege retaliatory discharge under the
FCA.); Ramseyer, 90 F.3d at 1523 n.7
(Persons whose jobs entail the
investigation of fraud "must make clear
their intentions of bringing or assisting
in an FCA action in order to overcome the
presumption that they are merely acting
in accordance with their employment
obligations.").
Looking at all of the facts, it is
unclear at best that Brandon engaged in
activity that might have supported a suit
under the FCA anti-retaliation provision.
In this kind of situation, the Illinois
Supreme Court has held that the employee
remains free to pursue a remedy under the
common law tort of retaliatory discharge.
See Wheeler, 485 N.E.2d at 376-77.
Following Wheeler and respecting the
difference between the Illinois tort and
the FCA claim, we conclude that allowing
a state remedy in conjunction with
thepotentially available federal remedy
does "no violence to the interests
protected by the Federal statute."
Fragassi v. Neiburger, 646 N.E.2d 315,
318 (Ill. App. Ct. 1995). There is
nothing in sec. 3730(h) to lead us to
believe that Congress intended to preempt
all state law retaliatory discharge
claims based on allegations of fraud on
the government.
Finally, even if there is some kind of
federal remedy available under sec.
3730(h) (though not the kind of remedy
Brandon wanted), it appears that the
Illinois Supreme Court looks at this fact
as one of many factors in a pragmatic
approach toward determining when the tort
of retaliatory discharge will lie. See
Fellhauer v. Geneva, 568 N.E.2d 870, 876
(Ill. 1991). Compare Schweiker v.
Chilicky, 487 U.S. 412, 424 (1988)
(denying a Bivens-type remedy to
claimants who were improperly denied
disability benefits even though "Congress
failed to provide for complete relief");
Bush v. Lucas, 462 U.S. 367, 388 (1983)
(refusing to provide a Bivens remedy
after acknowledging the congressional
remedy would not provide relief for the
plaintiff’s First Amendment injury). The
state thus seems to take a more exacting
approach to the availability of an
alternative remedy than the Supreme Court
has done for implied Bivens actions under
the federal constitution. As the final
authority on the common law of the state,
it is of course entitled to do so.
III
Brandon also challenges the district
court’s refusal to instruct the jury on
punitive damages. As a federal court
sitting in diversity, we look to the law
of Illinois to determine the
appropriateness of punitive damages.
Europlast, Ltd. v. Oak Switch Sys., Inc.,
10 F.3d 1266, 1276 (7th Cir. 1993). Under
Illinois law, "[w]hile the measurement of
punitive damages is a jury question, the
preliminary question of whether the facts
of a particular case justify the
imposition of punitive damages is
properly one of law," Kelsay, 384 N.E.2d
at 359, and our review is therefore de
novo. Europlast, 10 F.3d at 1276.
In general, the Illinois Supreme Court
does not favor punitive damages.
Nevertheless, they may be awarded where
"torts are committed with fraud, actual
malice, deliberate violence or
oppression, or when the defendant acts
willfully, or with such gross negligence
as to indicate a wanton disregard of the
rights of others." Kelsay, 384 N.E.2d at
359. See also Cornell v. Langland, 440
N.E.2d 985, 987 (Ill. App. Ct. 1982)
(punitive damages are appropriate where
conduct is "intentional, deliberate and
outrageous"). Punitive damages are an
important part of a retaliatory discharge
action:
In the absence of the deterrent effect of
punitive damages there would be little to
dissuade an employer from engaging in the
practice of discharging an employee for
filing a workmen’s compensation claim. .
. . The imposition on the employer of the
small additional obligation to pay a
wrongfully discharged employee
compensation would do little to
discourage the practice of retaliatory
discharge, which mocks the public policy
of this State.
Kelsay, 384 N.E.2d at 359; see also
Midgett v. Sackett-Chicago, Inc., 473
N.E.2d 1280, 1283-84 (Ill. 1984).
It is certainly important to recall, as
APMA notes, that punitive damages are not
appropriate in all retaliatory discharge
cases. See Dixon Distrib. Co. v. Hanover
Ins. Co., 641 N.E.2d 395, 400 (Ill. 1994)
(actual malice is not necessarily
established in every retaliatory
discharge case). Only where the evidence
offered by the plaintiff, if believed,
would support a finding of malice, should
a jury be given instructions on punitive
damages. See Cirrincione v. Johnson, 703
N.E.2d 67, 70-71 (Ill. 1998).
According to Brandon’s version of the
events, when he told APMA’s shareholders
that they could not terminate him in
response to his complaints, they
dismissed him as "fucked" because he did
not have a written contract and they told
him, "We can do what we want with you."
They fabricated complaints and made false
evaluations of his job performance. They
also took steps to prevent him from
filing suit, threatening to make it
difficult for him to find another job.
Rather than responding appropriately to
Brandon’s complaints, the shareholders
began a series of verbal and written
communications in which they threatened
to discharge him if he did not stop
complaining about their billing
procedures. These kinds of threats,
harassment, and coercive tactics show a
wilful and wanton disregard for Brandon’s
rights to investigate and report illegal
conduct and therefore could support a
jury award of punitive damages. See Cox
v. Doctor’s Assocs., Inc., 613 N.E.2d
1306, 1328 (Ill. App. Ct. 1993).
IV
Even though the tort of retaliatory
discharge is a narrow exception to
Illinois’s doctrine of at-will
employment, in appropriate cases it
protects important public policies.
"There is no public policy more important
or more fundamental than the one favoring
the effective protection of the lives and
property of citizens," Palmateer, 421
N.E.2d at 879, and APMA’s discharge of
Brandon for complaining about Medicare
fraud violated this policy. Accordingly,
we Reverse the district court’s grant of
judgment as a matter of law in favor of
the defendant and we Remand for
Reinstatement of the jury verdict in this
case. We Remand for a jury trial on
punitive damages.
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243 B.R. 602 (2000)
In re BLUE GROTTO, INC., Debtor.
Bankruptcy No. 96-12339.
United States Bankruptcy Court, D. Rhode Island.
January 14, 2000.
*603 Mark G. Sylvia, Salter, McGowan, Swartz & Sylvia, Providence, Rhode Island, Robert Resnick, President, Max Pollack & Co., Providence, Rhode Island, for Matthew McGowan, Chapter 7 Trustee.
Joseph P. Ferrucci, Ferrucci Law Office Ltd., Providence, Rhode Island, Sheryl Serreze, Asst. U.S. Trustee, Office of the United States Trustee, Providence, Rhode Island, for debtor.
DECISION AND ORDER
ATHUR N. VOTOLATO, Bankruptcy Judge.
Heard on the following applications for compensation:
(1) Matthew McGowan, Esq., Chapter 7 Trustee, commission and expenses of $7,799;
(2) Matthew McGowan, Esq., Counsel to the Chapter 7 Trustee, fees of $5,522; and
*604 (3) Max Pollack & Co. and Robert Resnick, "Business Custodian for the Chapter 7 Trustee," fees of $32,875.
No objections were voiced, so the Court is reviewing these requests independently. In re Bank of New England Corp., 134 B.R. 450, 453 (Bankr.D.Mass. 1991), aff'd, 142 B.R. 584 (D.Mass.1992) (citing In re First Software Corp., 79 B.R. 108 (Bankr.D.Mass.1987)) ("Even without regard to objections by other parties in interest, the court has an independent judicial responsibility to evaluate professionals' fees"); see also In re Swansea Consol. Resources, Inc., 155 B.R. 28, 31 (Bankr. D.R.I.1993).
BACKGROUND
On July 24, 1996, Blue Grotto, Inc., a popular Italian restaurant in Providence, Rhode Island, filed a petition for reorganization. On September 20, 1996, after less than two months in Chapter 11, the case was converted and a Chapter 7 Trustee was appointed. The United States Small Business Administration ("SBA") held a first priority security interest in all of the Debtor's assets, which by all accounts were worth far less than the $160,000 SBA debt. The Trustee agreed to operate the restaurant and to sell the entire operation as a going concern, in exchange for the SBA agreeing to a carve out for the junior secured creditor, Providence Economic Development Corporation, and a 10% dividend for unsecured creditors. The carve out consisted of ten percent of the anticipated net sale proceeds, after payment of Chapter 7 administrative expenses. See Consent Order Concerning Trustee's Revised Motion for Authority to Operate Business, Docket No. 34, Nov. 21, 1996. Under said Order the Trustee was to hire an independent person to "monitor the Debtor's operations," primarily to guard against "cash skimming" while the business was being marketed. Id. at 2, ¶ 6. Prior to said engagement, it was represented to the Court that this "overseer" would be on the premises at least one hour during peak dinner and lunch periods, to establish controls and to assure that cash receipts from operations were being properly accounted for. Id. The parties anticipated an initial operating period of not more than sixty days. Id. at 1, ¶ 2. On January 3, 1997, in accordance with the arrangement between the Trustee and SBA, we approved the Trustee's Application to Employ Max Pollack and Company as "business custodian," to assist the Trustee in the day-to-day operation of the business. Less than one month later, on January 13, 1997, the Trustee filed a notice to sell the Debtor's assets for $75,000, a sum far lower than anticipated. The sale was approved as the best, i.e., the only offer available. Notwithstanding the very low sale price, the closing was delayed for a long time because of disputes between the landlord and the purchaser. While the parties were feuding, the custodian continued to run the business for their convenience, but at the expense of the estate.
Now at the end of the day, if Chapter 7 administrative expenses are paid as requested, unsecured creditors will receive nothing and the Internal Revenue Service will receive only a pro-rata distribution on its Chapter 11 administrative expense priority claim.
Needless to say, the decision to operate this business in Chapter 7 did not turn out well, and probably was an error in business judgment by all concerned, including the Court. This is not to say that fiduciaries and court appointed officials are guarantors of the success of their decisions, but the issue here is whether such unsuccessful efforts should be compensated the same as professionals whose efforts do produce results that benefit the estate and creditors.
DISCUSSION
Compensation to professionals is governed by Bankruptcy Code Section 330 which states, inter alia:
(a)(1) After notice to the parties in interest and the United States Trustee *605 and a hearing, and subject to sections 326, 328, and 329, the court may award . . .
(A) reasonable compensation for actual, necessary services rendered by the trustee, examiner, professional person, or attorney and by any paraprofessional person employed by any such person; and
(B) reimbursement for actual, necessary expenses.
(2) The court may, on its own motion . . . award compensation that is less than the amount of compensation that is requested.
(3)(A) In determining the amount of reasonable compensation to be awarded, the court shall consider the nature, the extent, and the value of such services, taking into account all relevant factors, including
. . .
(C) whether the services were necessary to the administration of, or beneficial at the time at which the service was rendered toward the completion of, a case under this title;
. . .
(4)(A) Except as provided in subparagraph (B), the court shall not allow compensation for
(i) unnecessary duplication of services; or
(ii) services that were not
(I) reasonably likely to benefit the debtor's estate; or
(II) necessary to the administration of the case.
11 U.S.C. § 330. In considering a trustee's request for commission, the allowance of reasonable compensation pursuant to § 330 is subject to a ceiling calculated according to the formula set forth in § 326. See Garb v. Marshall (In re Narragansett Clothing Co.), 210 B.R. 493, 497 (1st Cir. BAP 1997). The Court in In re Stoecker, noted that "[s]ection 326(a) sets a ceiling on a trustee's fees, and does not create an entitlement to a commission in that amount" (citation omitted). 118 B.R. 596, 601 (Bankr.N.D.Ill.1990). "The maximum compensation allowable under § 326(a) is awarded to a Chapter 11 trustee only in cases in which the result obtained and the benefit realized by the estate are exemplary." Garb, 210 B.R. 493, at 497 citing Stoecker, 118 B.R. at 598.
In addressing fee applications generally, the Bankruptcy Appellate Panel for the First Circuit has recently stated:
The lodestar approach is the standard applied by courts in the First Circuit when reviewing applications for compensation. Boston & Maine Corp. v. Moore, 776 F.2d 2, 6-7 (1st Cir.1985); Furtado v. Bishop, 635 F.2d 915, 920 (1st Cir.1980); In re Bank of New England Corp., 142 B.R. 584, 586 (D.Mass. 1992). The lodestar is calculated by multiplying the number of hours reasonably incurred by the applicant by a reasonable hourly rate. Furtado, 635 F.2d at 920. After the lodestar is determined, the court may adjust the lodestar upward or downward based upon consideration of other factors, including the result or benefit to the Debtor's estate of the services performed by the professional seeking compensation, if this has not already been considered in determining the lodestar. Boston & Maine Corp. v. Moore, 776 F.2d at 7; Casco Bay Lines, 25 B.R. at 756; Swansea [Consol. Resources, Inc.], 155 B.R. [28] at 31 [(Bankr.D.R.I.1995)].
Garb v. Marshall (In re Narragansett Clothing Co.), 210 B.R. 493, 497-98 (1st Cir. BAP 1997). The number of hours reasonably expended involves the consideration of a number of factors and "the hours actually expended by an attorney do not necessarily constitute the hours reasonably expended. The court `should review the work done to see whether counsel substantially exceeded the bounds of reasonable effort.'" In re Casco Bay Lines, Inc., 25 B.R. 747, 755 (1st Cir. BAP 1982) (quoting, Pilkington v. Bevilacqua, 632 *606 F.2d 922, 925 (1st Cir.1980)). The result in this case highlights the principle that "the bankruptcy process is for the benefit of the debtor and the creditors, not the professionals." In re Gilead Baptist Church, 135 B.R. 38, 41 (Bankr.E.D.Mich. 1991), rev'd on other grounds, 806 F.Supp. 644 (E.D.Mich.1992).
Of major concern here is the fee application of Max Pollock & Co., the Chapter 7 Trustee business custodian,[1] seeking compensation for performing such services as personally handling daily food purchases, acting as maitre d', restaurant manager, and so on. Many of Mr. Resnick's activities should have been done by regular restaurant staff at their regular salary, under the direction of the Trustee, at no additional expense to the estate. The Trustee elected to operate this business and with that decision came the obligation to control those under his supervision. Allowing a business custodian to oversee every facet of the Debtor's business was unreasonable, of little or no benefit to this estate, and most importantly was not authorized. It was neither the intention nor the spirit of the order authorizing the Trustee to operate, that the so-called "business custodian" would be charging so many hours at rates of $50-$100 per hour, or would be so involved in the operation of the restaurant. The purpose of the order was to put in place a non-insider to monitor cash receipts not the imposition of another complete layer of full-time management. Put simply, this was overkill.
With that said, we must still tend to the distribution of a woefully inadequate fund, in a manner that fairly treats all concerned. Since we have no way of knowing whether the fault was with the Trustee in not monitoring and curtailing Mr. Resnick's "expanded" role, or just how the responsibility should be allocated, we leave that assessment to the parties who know best how it should be done, i.e., the applicants. With $60,262 on hand, in the circumstances of this case,[2] $20,000 is the largest amount that may be allocated for Chapter 7 administrative expenses, and still preserve a reasonable fund available for distribution to creditors (although less than anticipated when the operation of the business was authorized). The apportionment of said $20,000 is left to the applicants. If they cannot agree, a hearing will be scheduled.
Enter judgment consistent with this order.
NOTES
[1] Resnick testified that in addition to the time detailed in his application, he spent countless (un-billed) hours running the Debtor's business.
[2] The Trustee operated the business for only 33 days prior to approval of the sale. The fee requests amount to 77% of the estate. The facts do not support that type of treatment. (We calculate the period of operation starting on the day the Trustee was authorized to operate the business (11-21-96), through the day the Trustee's Notice of Sale was approved (2-3-97.)) With the exception of perhaps a short period to effectuate a closing, there is no good reason why the Trustee should have operated this business as long as he did, at least not at the expense of the estate.
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754 N.W.2d 849 (2008)
JOHNSON
v.
JENKINS.
No. 2006AP000940-W.
Supreme Court of Wisconsin.
June 10, 2008.
Petition for review denied.
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151 F.3d 1027
U.S.v.Ignazio Lena
NO. 97-7364
United States Court of Appeals,Third Circuit.
May 1, 1998
Appeal From: D.Del. ,No.89cr000493
1
Affirmed.
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177 F.3d 978
Venturav.Rescue Industries*
NO. 98-10558
United States Court of Appeals,Fifth Circuit.
March 25, 1999
Appeal From: N.D.Tex. , No.3:95-CV-2578-J
1
Affirmed.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34-2
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[NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 97-1158
GERMAIN RAMIREZ-FERNANDEZ,
Petitioner, Appellant,
v.
UNITED STATES OF AMERICA,
Respondent, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Gene Carter, U.S. District Judge]
Before
Torruella, Chief Judge,
Stahl and Lynch, Circuit Judges.
Germain Ramirez-Fernandez on brief pro se.
Jay P. McCloskey, United States Attorney, and F. Mark Terison,
Assistant United States Attorney, on brief for appellee.
December 22, 1997
Per Curiam. We have carefully reviewed the briefs
and the record on appeal. We affirm essentially for the
reasons given by Magistrate Judge in his Recommended
Decision, which was adopted by the District Court.
Affirmed. Loc. R. 27.1.
-2-
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James Bagnall, County Judge, et al. v. J.A. Breithaupt
IN THE
TENTH COURT OF APPEALS
No. 10-99-354-CV
JAMES BAGNALL,
COUNTY JUDGE, ET AL.,
Appellants
v.
J.A. BREITHAUPT,
Appellee
From the 13th District Court
Navarro County, Texas
Trial Court # 97-00-07853-CV
OPINION ON REHEARING
J. A. Breithaupt filed suit against James Bagnall, County Judge of Navarro County, and
Betty Armstrong, Olin Nickleberry, William Baldwin, and Paul Slaughter, the Commissioners
of Navarro County, (collectively, “Appellants”) alleging that they improperly classified
numerous county roads on and around his property. Appellants filed a “Motion for Summary
Judgment and Plea to the Jurisdiction” premised on sovereign immunity. The court granted
the motion in part. On original submission, this Court dismissed the appeal for want of
jurisdiction because the court’s order on its face does not appear to deny Appellants’ claim of
immunity as to any of Breithaupt’s causes of action.
Appellants have filed a Motion for Rehearing and to Permit Supplementation of the
Record. By this motion, they seek to supplement the record with correspondence between the
parties and the trial court and with proposed orders tendered to the court after it informed the
parties of its decision. They argue that this supplementation will clarify the court’s order and
will demonstrate that the court did deny their assertion of immunity as to several of
Breithaupt’s claims. Breithaupt responds that rehearing should be denied because Appellants
failed to object to the form of the court’s order, and thus they have failed to properly preserve
the matter for our review. Breithaupt also directs our attention to an e-mail communication
from Appellants’ counsel to the trial court informing the court that he had no objection to
deletion of an originally-proposed “Mother Hubbard” clause from the order.
Breithaupt asks
in the alternative that we further supplement the record with this e-mail communication and
other documents demonstrating that Appellants did not object to the form of the order
ultimately signed by the court.
The Supreme Court has held that a pre-order letter ruling does not provide competent
evidence of the basis for the court’s ruling. See Cherokee Water Co. v. Gregg County
Appraisal Dist., 801 S.W.2d 872, 878 (Tex. 1990); Mondragon v. Austin, 954 S.W.2d 191,
193 (Tex. App.—Austin 1997, pet. denied) (op. on reh’g). Appellants’ motion to supplement
the record and Breithaupt’s response demonstrate why this is a sound rule. The basis for a
trial court’s decision and the extent of the court’s ruling must be determined from the language
of the decree itself and not from the communications between the parties and the court during
the interim between the court’s initial pronouncement and the signing of the written order.
Accordingly, we deny both parties’ requests to supplement the record with communications of
this nature. Nevertheless, because our jurisdiction over this appeal is unclear, we will grant
Appellants’ motion for rehearing to further examine this issue.
Appellants cite to a 1996 decision of our Supreme Court in which the Court addressed one
of the means by which an appellate court can determine the finality of a judgment. Continental
Airlines, Inc. v. Kiefer, 920 S.W.2d 274 (Tex. 1996).
Finality “must be resolved by a determination of the intention of the court as
gathered from the language of the decree and the record as a whole, aided on occasion
by the conduct of the parties.”
Id. at 277 (quoting 5 Roy W. McDonald & Elaine G. Carlson, Texas Civil Practice §
27:4[a] (2d ed. 1999)); accord White v. CBS Corp., 996 S.W.2d 920, 922 (Tex. App.—Austin
1999, pet. denied).
Applying the Continental Airlines test still produces an uncertain result. The decree on its
face plainly does not deny Appellants’ assertion of immunity as to any of Breithaupt’s claims.
On the other hand, the post-judgment conduct of the parties (i.e., the positions they have taken
in their respective appellate briefs) indicates that both sides at least initially believed that the
court denied Appellants’ claim of immunity as to several of Breithaupt’s causes of action.
However, we do not believe that the conduct of the parties can be determinative in resolving
the issue of whether an appealable order has been signed.
In addition to our traditional appellate jurisdiction over civil and criminal cases, the
Constitution vests this Court with “such other jurisdiction, original and appellate, as may be
prescribed by law.” Tex. Const. art. V, § 6. Section 22.220(c) of the Government Code
provides that this Court “may, on affidavit or otherwise, as the court may determine, ascertain
the matters of fact that are necessary to the proper exercise of its jurisdiction.” Tex. Gov.
Code Ann. § 22.220(c) (Vernon 1988) (emphasis added).
Our jurisdiction over this appeal depends on the scope of the trial court’s intended ruling.
If the court did not deny Appellants’ assertion of immunity in any respect, then we do not have
jurisdiction over the appeal.
If the court did deny Appellants’ immunity claim in some
respect, then we may. The language of the order when juxtaposed with the conduct of the
parties presents a factual dispute which the trial court is best situated to resolve. See id.; see
also American Home Prods. Co. v. Clark, 3 S.W.3d 57, 57-58 (Tex. App.—Waco, order),
disp. on merits, 999 S.W.2d 908 (Tex. App.—Waco 1999, pet. granted).
Because the trial court’s order does not clearly indicate that the court denied Appellants’
assertion of immunity with respect to any of Breithaupt’s causes of action and because our
jurisdiction depends on whether the court did so, we abate this cause for that court to enter a
more specific order. See American Home Prods., 3 S.W.3d at 58. The court’s revised order
shall be filed with the Clerk of this Court in a supplemental clerk’s record within fifteen (15)
days after the date of this Opinion.
Appellant’s motion for rehearing is granted. The opinion and judgment of this Court
dated May 10, 2000 are withdrawn. This appeal is abated to the trial court for a revised order
clarifying the scope of its November 16, 1999 order.
PER CURIAM
Before Chief Justice Davis
Justice Vance and
Justice Gray
(Justice Gray dissenting with note: Believing that our original opinion is correct, I would
deny rehearing.)
Rehearing granted, appeal abated
Order issued and filed August 2, 2000
Do not publish
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People v Jelinek (2017 NY Slip Op 01006)
People v Jelinek
2017 NY Slip Op 01006
Decided on February 8, 2017
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 February 8, 2017
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Second Judicial Department
LEONARD B. AUSTIN, J.P.
JEFFREY A. COHEN
ROBERT J. MILLER
FRANCESCA E. CONNOLLY, JJ.
1993-03710
(Ind. No. 79452/91)
[*1]The People of the State of New York, respondent,
vRoger Jelinek, appellant.
Roger Jelinek, Malone, NY, appellant pro se.
Madeline Singas, District Attorney, Mineola, NY (Daniel Bresnahan and John B. Latella of counsel), for respondent.
N. Scott Banks, Hempstead, NY (Jeremy L. Goldberg of counsel), former appellate counsel.
DECISION & ORDER
Application by the appellant for a writ of error coram nobis to vacate, on the ground of ineffective assistance of appellate counsel, a decision and order of this Court dated February 26, 1996 (People v Jelinek, 224 AD2d 717), affirming a judgment of the County Court, Nassau County, rendered May 14, 1993.
ORDERED that the application is denied.
The appellant has failed to establish that he was denied the effective assistance of appellate counsel (see Jones v Barnes, 463 US 745; People v Stultz, 2 NY3d 277).
AUSTIN, J.P., COHEN, MILLER and CONNOLLY, JJ., concur.
ENTER:
Aprilanne Agostino
Clerk of the Court
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Moran v BAC Field Servs. Corp. (2018 NY Slip Op 05586)
Moran v BAC Field Servs. Corp.
2018 NY Slip Op 05586
Decided on August 1, 2018
Appellate Division, Second Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on August 1, 2018
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Second Judicial Department
CHERYL E. CHAMBERS, J.P.
SHERI S. ROMAN
BETSY BARROS
LINDA CHRISTOPHER, JJ.
2016-05541
(Index No. 5887/15)
[*1]James Moran, appellant,
vBAC Field Services Corporation, respondent, Omega Land Management, Inc., et al., defendants.
James Moran, Bethpage, NY, appellant pro se.
Winston & Strawn LLP, New York, NY (Heather E. Saydah and Jason R. Lipkin of counsel), for respondent.
DECISION & ORDER
In an action to recover damages for trespass and conversion, the plaintiff appeals from an order of the Supreme Court, Nassau County (Julianne T. Capetola, J.), dated April 12, 2016. The order granted the motion of the defendant BAC Field Services Corporation to dismiss the complaint insofar as asserted against it, denied the plaintiff's cross motion for leave to enter a default judgment against that defendant, denied the plaintiff's separate motion for leave to enter a default judgment against the defendant Omega Land Management, Inc., and, sua sponte, directed dismissal of the complaint insofar as asserted against the defendants Omega Land Management, Inc., and Patrick Boehm.
ORDERED that on the Court's own motion, the notice of appeal from so much of the order as, sua sponte, directed dismissal of the complaint insofar as asserted against the defendants Omega Land Management, Inc., and Patrick Boehm is deemed to be an application for leave to appeal from that portion of the order, and leave to appeal is granted (see CPLR 5701[c]); and it is further,
ORDERED that the order is modified, on the law, (1) by deleting the provision thereof granting the motion of the defendant BAC Field Services Corporation to dismiss the complaint insofar as asserted against it, and substituting therefor a provision denying that defendant's motion, and (2) by deleting the provision thereof denying the plaintiff's motion for leave to enter a default judgment against the defendant Omega Land Management, Inc., and substituting therefor a provision granting that motion, and (3) by deleting the provision thereof sua sponte directing the dismissal of the complaint insofar as asserted against Omega Land Management, Inc., and Patrick Boehm; as so modified, the order is affirmed; and it is further,
ORDERED that the plaintiff is awarded one bill of costs, payable by the defendant BAC Field Services Corporation.
By summons with notice, the plaintiff commenced this action to recover damages for trespass and conversion. The defendants BAC Field Services Corporation (hereinafter BAC) and Patrick Boehm served the plaintiff with timely notices of appearance and demands for a complaint. [*2]After the plaintiff served the complaint, he and BAC entered into agreement giving BAC until March 4, 2016, to respond to the complaint.
On Friday, March 4, 2016, BAC deposited a motion to dismiss the complaint insofar as asserted against it into the custody of Federal Express for weekday delivery to the plaintiff. On Monday, March 7, 2009, Federal Express returned the motion papers to BAC because no one was available to sign for the package at the delivery address. On March 9, 2016, BAC re-served its motion papers on the plaintiff.
On April 4, 2016, the plaintiff mailed a cross motion for leave to enter a default judgment against BAC, arguing that BAC was in default for failing to timely respond to the complaint. The motion and cross motion were returnable on April 11, 2016. The plaintiff also separately moved for leave to enter a default judgment against the defendant Omega Land Management, Inc. (hereinafter Omega), for its failure to timely appear in the action. By order dated April 12, 2016, the Supreme Court denied the plaintiff's motion and cross motion, granted BAC's motion to dismiss the complaint insofar as asserted against it, and, sua sponte, directed the dismissal of the complaint insofar as asserted against Omega and Boehm.
Contrary to the Supreme Court's determination, CPLR 2103(b)(2) does not apply to render BAC's motion timely since BAC did not attempt service of its motion by using "the post office or official depository under the exclusive care and custody of the United States Postal Service within the state" (CPLR 2103[f][1]). Rather, BAC utilized Federal Express. CPLR 2103(b)(6) provides that "[s]ervice by overnight delivery service shall be complete upon deposit of the paper . . . into the custody of the overnight delivery service for overnight delivery" (emphasis added). The record demonstrates that BAC failed to use Federal Express's overnight delivery service, and instead deposited its papers with Federal Express on Friday for weekday delivery on Monday. Accordingly, the court should have denied BAC's motion as untimely.
We agree with the Supreme Court's denial, as untimely, of the plaintiff's cross motion for leave to enter a default judgment against BAC, since the plaintiff failed to serve his cross motion within the time period required by CPLR 2215(b).
However, the Supreme Court should not have, sua sponte, directed the dismissal of the complaint insofar as asserted against Omega, and should have granted the plaintiff's separate motion for leave to enter a default judgment against Omega. " On a motion for leave to enter a default judgment pursuant to CPLR 3215, the movant is required to submit proof of service of the summons and complaint, proof of the facts constituting the claim, and proof of the defaulting party's default in answering or appearing'" (Dupps v Betancourt, 99 AD3d 855, quoting Atlantic Cas. Ins. Co. v RJNJ Servs., Inc., 89 AD3d 649, 651; see CPLR 3215[f]). Here, in support of his motion, the plaintiff met all of these requirements as to Omega. Further, Omega never appeared in the action and failed to move to vacate its default (see BAC Home Loans Servicing, LP v Reardon, 132 AD3d 790).
The Supreme Court also should not have, sua sponte, directed the dismissal of the complaint insofar as asserted against Boehm. There was no motion before the court seeking such relief, and the plaintiff was not on notice that such relief could be granted by the court (see Abinanti v Pascale, 41 AD3d 395).
CHAMBERS, J.P., ROMAN, BARROS and CHRISTOPHER, JJ., concur.
ENTER:
Aprilanne Agostino
Clerk of the Court
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486 F.3d 81
Victor McKEEVER, Appellantv.WARDEN SCI-GRATERFORD; Attorney General, Commonwealth of Pennsylvania; District Attorney, Erie County.
No. 05-2492.
United States Court of Appeals, Third Circuit.
Argued: February 1, 2007.
Filed: May 10, 2007.
1
Gene C. Schaerr, (Argued), Winston & Strawn LLP, Washington, D.C., for Counsel Appellant.
2
Andrea F. McKenna, (Argued), Office of Attorney General of Pennsylvania, Harrisburg, PA, Counsel for Appellees.
3
Before: BARRY, ROTH, Circuit Judges, and IRENAS,* Senior District Judge.
OPINION OF THE COURT
4
IRENAS, Senior District Judge.
5
Appellant Victor McKeever pleaded guilty in 1995 to drug-related charges, including two counts arising under the Pennsylvania Corrupt Organizations Act ("PACOA"), 18 Pa.C.S.A. § 911(b)(3). He was sentenced to 15-42 years' imprisonment. In 1996, the Supreme Court of Pennsylvania held that PACOA does not apply to individuals operating wholly illegitimate businesses. Commonwealth v. Besch, 544 Pa. 1, 674 A.2d 655 (1996). McKeever, falling within that class of persons, filed a habeas corpus petition on July 28, 2004, pursuant to 28 U.S.C. § 2254, in the Eastern District of Pennsylvania. He now appeals the District Court's Order granting his writ of habeas corpus and staying the writ for 180 days so that the Commonwealth of Pennsylvania could vacate McKeever's PACOA convictions and resentence him or, alternatively, release him from incarceration. For the reasons set forth below, we will affirm.
I.
6
The District Court had jurisdiction over McKeever's habeas petition under 28 U.S.C. § 2254. We have jurisdiction over his appeal pursuant to 28 U.S.C. §§ 1291, 2253. Because the District Court did not hold an evidentiary hearing on McKeever's sentencing claims, we review its legal conclusions de novo. See Outten v. Kearney, 464 F.3d 401, 413 (3d Cir.2006); Duncan v. Morton, 256 F.3d 189, 196 (3d Cir.2001).
II.
7
On January 13, 1995, the Commonwealth of Pennsylvania filed an 11-count Information against McKeever arising out of his possession and delivery of heroin. (16).1 He was charged with six counts of delivery of a controlled substance, one count of dealing in proceeds of unlawful activities, one count of criminal conspiracy to violate the state Drug Act, one count of possession of a controlled substance, and two counts of violating the Pennsylvania anti-racketeering statute, PACOA. McKeever pleaded guilty on July 24, 1995, to ten counts in exchange for the Commonwealth's promise not to object to a sentencing scheme set forth in the agreement.2 (21). Under the scheme, McKeever's two PACOA counts merged with each other, and were made concurrent with one of the six drug delivery counts. They did not have any effect on the actual length of his sentence. The drug delivery counts were made consecutive with each other, and concurrent with the criminal conspiracy and drug dealing charges.3
8
In 1996, the Supreme Court of Pennsylvania held that PACOA did not apply to individuals who operated wholly illegitimate businesses. Commonwealth v. Besch, 544 Pa. 1, 674 A.2d 655 (1996). Later that year, the Pennsylvania legislature, responding to this interpretation, amended PACOA to apply to businesses with wholly illegitimate operations. (34-40); 18 Pa. C.S.A. § 911 (1997). In 1999, however, the Supreme Court of Pennsylvania held that the amended act was to be applied prospectively only. Commonwealth v. Shaffer, 557 Pa. 453, 734 A.2d 840, 843 (1999).
9
McKeever, on January 23, 2003, collaterally challenged his sentence under the Pennsylvania Post Conviction Relief Act ("PCRA") asserting: (1) that his guilty plea was based upon mutual mistake of fact; (2) that he was not liable under PACOA because he operated a wholly illegitimate business; and (3) that his guilty plea should be rescinded.
10
The Court of Common Pleas, Erie County, dismissed the PCRA petition as untimely and not subject to any exceptions under 42 Pa.C.S.A. § 9545(b)(1). (80). It held that McKeever's petition would have been timely if filed by January 16, 1997, one year from the effective date of the amendments to PACOA.4 Because, however, it was filed on January 21, 2003, more than six years from that date, it was untimely. (82-83). The Superior Court of Pennsylvania affirmed. (87).
11
On July 28, 2004, McKeever filed a habeas corpus petition, pursuant to 28 U.S.C. § 2254, in the Eastern District of Pennsylvania. He alleged that under Pennsylvania statutory and case law, he was actually innocent of the two PACOA counts included in his plea agreement. (91-95). Magistrate Judge Hart issued a Report and Recommendation finding that the District Court had jurisdiction to hear the case, that McKeever should be excused from exhausting all state court remedies, that his petition was not time-barred, and that he was actually innocent of the two PACOA counts.5 (126-32). Magistrate Judge Hart recommended that the District Court grant McKeever's petition and order the state court to vacate the two PACOA convictions and resentence McKeever accordingly. (132). McKeever objected to the Report and Recommendation of Magistrate Judge Hart, and argued that the appropriate remedy was the rescission of the 1995 plea agreement. (133).
12
On March 23, 2005, Judge Diamond issued an Order, with an attached Memorandum, adopting the Report and Recommendation by Magistrate Judge Hart, granting the writ of habeas corpus relief, and staying execution of the writ for 180 days to permit the Commonwealth to fashion the appropriate remedy. (3-4). McKeever moved to alter or amend the Order on the ground that the Commonwealth did not attach the District Court's memorandum when filing a Motion for Resentencing Hearing in the State Court on March 29, 2005. He asserted that in its motion, the Commonwealth misrepresented the District Court's Order, in that the Commonwealth stated that the District Court ordered re-sentencing, rather than leaving the remedy to the state's discretion. (159-161). The District Court, on April 11, 2005, denied McKeever's motion, noting again that it does not have the power to order the state to provide a specific remedy. (156). McKeever now appeals the District Court's Order.
13
On April 26, 2005, McKeever was resentenced in the Court of Common Pleas of Erie County to an aggregate term of 15 to 42 years in prison. The Court of Common Pleas denied various motions filed prior to re-sentencing, including a motion to withdraw his guilty plea.6 (Appellee's App'x, Doc. A). McKeever appealed, and the Superior Court affirmed. (Appellee's App'x, Doc. B). McKeever then filed a petition for allowance of appeal, which was denied by the Supreme Court of Pennsylvania on September 13, 2006. Commonwealth v. McKeever, 589 Pa. 719, 907 A.2d 1101 (2006).
III.
14
McKeever contends that his guilty plea violated the Due Process Clause, U.S. Const. Amend. 14, because it was not knowing and voluntary in light of the fact that, based upon a subsequent judicial decision, he was actually innocent of the two PACOA counts to which he pled guilty, and that the appropriate remedy is rescission of his guilty plea in its entirety.
15
First, we note that the District Court was correct in granting McKeever's writ of habeas corpus but leaving the precise remedy in the hands of the Commonwealth. "Both the historic nature of the writ and principles of federalism preclude a federal court's direct interference with a state court's conduct of state litigation. . . . A habeas court does not have power to directly intervene in the process of the tribunal which has incorrectly subjected the petitioner to the custody of the respondent official." Barry v. Brower, 864 F.2d 294, 300-01 (3d Cir.1988) (internal citation omitted); see also, Dunn v. Colleran, 247 F.3d 450, 462 (3d Cir.2001); Dickerson v. Vaughn, 90 F.3d 87, 92 (3d Cir.1996)("[A] state should be given the opportunity to correct its own errors and federal remedies should be designed to enable state courts to fulfill their constitutional obligations to the defendant."); Heiser v. Ryan, 15 F.3d 299, 306 (3d Cir.1994).
16
In granting the writ of habeas corpus, the District Court left the choice of remedy to the state court. (11-13). McKeever argues that the District Court erroneously failed to order the state court to vacate his guilty plea in its entirety and either retry or release him. He contends that his guilty plea should be vacated in its entirety because it was premised on the belief of both parties that he was guilty of the two PACOA counts and was, therefore, neither voluntarily or intelligently made. However, Brady v. United States, 397 U.S. 742, 90 S.Ct. 1463, 25 L.Ed.2d 747 (1970), held that a plea need not be vacated due to a subsequent change in the statute upon which only part of the plea was premised.
17
[J]udgments may be made that in the light of later events seem improvident, although they were perfectly sensible at the time. The rule that a plea must be intelligently made to be valid does not require that a plea be vulnerable to later attack if the defendant did not correctly assess every relevant factor entering into his decision. A defendant is not entitled to withdraw his plea merely because he discovers long after the plea has been accepted that his calculus misapprehended the quality of the State's case or the likely penalties attached to alternative courses of action. More particularly, absent misrepresentation or other impermissible conduct by state agents, a voluntary plea of guilty intelligently made in the light of the then applicable law does not become vulnerable because later judicial decisions indicate that the plea rested on a faulty premise.
18
Brady, 397 U.S. at 756-57, 90 S.Ct. 1463 (internal citation omitted)(emphasis added). We decline to adopt a rule that renders a multi-count plea agreement per se invalid when a subsequent change in the law renders a defendant innocent of some, but not all, of the counts therein and reject the argument that such a plea could never be entered by a defendant voluntarily and intelligently.
19
McKeever suggests that because the plea agreement was based upon a mutual mistake, it should be rescinded. Ordinary contract law principles are applicable to disputes over plea agreements, provided that the defendant is also afforded the protections of due process. See United States v. Floyd, 428 F.3d 513, 516 (3d Cir.2005); see also, United States v. Bownes, 405 F.3d 634, 636 (7th Cir.2005); United States v. Brunetti, 376 F.3d 93, 95-96 (2d Cir.2004) (per curiam); United States v. Sar-Avi, 255 F.3d 1163, 1166-67 (9th Cir.2001); United States v. Giorgi, 840 F.2d 1022, 1025 (1st Cir.1988). The Restatement (Second) of Contracts § 152 (1981) defines mutual mistake as follows:
20
(1) Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under the rule stated in § 154.
21
(2) In determining whether the mistake has a material effect on the agreed exchange of performances, account is taken of any relief by way of reformation, restitution, or otherwise.
22
Id. (emphasis added).
23
First, this Court notes that contrary to McKeever's contention, the mistake here was one of law, not fact. Moreover, the mistake was not material. McKeever admits that had it not been for the mistake, he "may, or may not, have pleaded guilty rather than risk trial." (Appellant's Brief, 8). Pursuant to the Restatement (Second) of Contracts § 152 cmt. c (1981), "[i]t is not enough for [a party] to prove that he would not have made the contract had it not been for the mistake. He must show that the resulting imbalance in the agreed upon exchange is so severe that he can not fairly be required to carry it out." Based upon this standard and McKeever's own admission, the mistake of law clearly did not have a "material effect" on the plea agreement.
24
In Brady, the Supreme Court refused to vacate a plea agreement on the grounds that part of the statute to which petitioner pled was later deemed unconstitutional, despite the fact that petitioner may have relied upon it in informing his bargaining position. "[E]ven if we assume that Brady would not have pleaded guilty except for the death penalty provision of [the statute], this assumption merely identifies the penalty provision as a `but for' cause of his plea. That the statute caused the plea in this sense does not necessarily prove that the plea was coerced and invalid as an involuntary act." Brady, 397 U.S. at 750, 90 S.Ct. 1463.7 Thus, even if the PACOA counts informed McKeever's bargaining position, and were the "but for" cause of his decision to plead guilty, this does not rise to the level of materiality necessary to avoid the agreement in its entirety.
25
This conclusion is supported by the record, which reflects that the heart of McKeever's plea agreement was not the PACOA charges, but rather the drug trafficking charges. In fact, the bargain struck in the plea agreement resulted in a minimum sentence of fifteen years and a maximum of forty-two years. When resentencing, the Court sentenced McKeever to the same aggregate scheme, despite the removal of the PACOA counts. This occurred because, in the original sentencing scheme, the two PACOA counts were merged with each other and concurrent with a count for delivery of a controlled substance. They carried no mandatory minimum sentence, unlike each of Counts V through X, the delivery of a controlled substance counts. See 18 Pa.C.S.A. § 7508(a)(7)(i) and (ii). Nor did the PACOA counts carry a higher maximum sentence or a greater mandatory fine than Count I, which charged McKeever with dealing in the proceeds of unlawful activities. Moreover, the sentencing scheme and the nature of the crimes themselves make it clear that the prosecution of McKeever was fundamentally based upon his delivery of heroin.
26
The dissent assumes that the parties were mistaken as to the reach of PACOA at the time the plea was entered, and would require that the plea be voidable. The premise of the dissent's argument, however, is flawed. First, at the time the plea agreement was made, PACOA did, in fact, cover McKeever's conduct. No party was mistaken in his understanding of this. The law did not change until after McKeever pled and was sentenced.
27
In support of its theory, the dissent relies on United States v. Bradley, 381 F.3d 641 (7th Cir.2004). In Bradley, defendant pled guilty to both counts of his two-count indictment. The Court of Appeals held that there was a mutual mistake when "no one understood an essential element of the crime with which Mr. Bradley was charged" at the time of the plea agreement. Id. at 647. Similarly, the dicta in Bousley v. United States, 523 U.S. 614, 118 S.Ct. 1604, 140 L.Ed.2d 828 (1998), cited by the dissent, indicates that when a court accepts a guilty plea from a defendant to a crime, the elements of which neither he, his counsel, nor the court correctly understood, the plea would violate the Due Process Clause. Id. at 618-19, 118 S.Ct. 1604. Neither of these decisions address the due process implications of vacating counts based upon a subsequent change in the law that rendered the defendant actually innocent of those counts, and holding a defendant to his admissions of guilt on other properly charged and correctly understood counts for which there is no evidence of actual innocence.
28
Second, the dissent relies upon its understanding that all pleas are packages, and thus an infirmity as to part of the plea causes the entire plea to become voidable. This understanding is erroneous both as to the contours of the sentencing package doctrine as well as to the circumstances of McKeever's plea agreement. The sentencing package doctrine generally applies to sentences with interdependent, consecutive counts, and not to concurrent sentences. See United States v. Murray, 144 F.3d 270, 273-74 n. 4 (3d Cir.1998); United States v. Davis, 112 F.3d 118, 123 (3d Cir.1997). Here, the precise agreement reached also demonstrates that the two PACOA counts on which McKeever was sentenced were independent of the other counts. The Court of Common Pleas sentenced McKeever separately on all counts. (55-76). The two PACOA counts were concurrent with one of the six drug delivery counts, which were consecutive with each other. The PACOA counts and the drug delivery counts clearly were not interdependent.
29
Even assuming, however, that McKeever's sentence was a package, it is within the bounds of due process to resentence a defendant on remaining counts after some, but not all counts, are vacated. The decision in United States v. Barron, 172 F.3d 1153, 1158 (9th Cir.1999)(en banc), is squarely on point. Barron pled guilty to three counts: Count I, felon in possession of a firearm, carrying a maximum of ten years, or a minimum of fifteen years' imprisonment if defendant had previously engaged in certain criminal conduct; Count II, possession of twenty-one ounces of cocaine with intent to distribute, with a sentence range of ten years to life imprisonment; and Count III, possession of a firearm in relation to drug trafficking pursuant to 18 U.S.C. § 924(c)(1), with a sentence of five years consecutive to any term of imprisonment imposed. Three years after he was sentenced, the Supreme Court decided Bailey v. United States, 516 U.S. 137, 116 S.Ct. 501, 133 L.Ed.2d 472 (1995), which held that use of a gun under § 924(c)(1) requires "active employment" of the gun in relation to the drug offense. Because Barron admitted to concealing a gun, but not to using the gun, the parties agreed that the facts did not justify his conviction on Count III.
30
Barron filed a § 2255 petition seeking habeas relief. The district court held that "Barron could have the plea agreement set aside on the ground that it was not knowing and voluntary because of ignorance of the law declared by Bailey." Barron, 172 F.3d at 1156. A three-judge panel of the Ninth Circuit first affirmed,8 but was then reversed in an en banc decision which held that "the guilty plea to criminal acts can remain in force even as the sentence imposed upon an innocent act is set aside. . . . [There is no] reason for reducing § 2255 remedies to two (discharge or new trial) when a plea agreement is in force. . . . [T]he district court can distinguish the convictions that are still valid, reinstate the judgment, and resentence." Id. at 1158. It further held that "a collateral challenge to the legality of a particular count of conviction does not constitute a breach of or withdrawal from a plea agreement, and . . . the remainder of the plea agreement remains in effect." Id. at 1160. Similarly, in United States v. Watkins, 147 F.3d 1294, 1298 (11th Cir.1998), the court found no due process violation when defendant collaterally attacked one count of a package sentence imposed pursuant to a plea agreement, and the district court vacated that count and resentenced defendant on the remaining counts.
31
The dissent's reliance upon United States v. Lewis, 138 F.3d 840 (10th Cir. 1998), is misplaced. The plea in Lewis only covered one count. Thus, the issue of the constitutionality of vacating one count in a multi-count plea agreement simply was not before the court. Moreover, the Lewis court relied upon language in the Barron panel opinion, which had not yet been reversed en banc. Lewis, 138 F.3d at 841-43.
32
Contrary to McKeever's contention, rescission of the entire plea agreement was not the only appropriate remedy. This Court, in Spinetti v. Serv. Corp. Int'l, 324 F.3d 212, 219 (3d Cir.2003), cited to the Restatement (First) of Contracts § 603 (1932) for the proposition that a "bargain that is illegal only because of a promise or a provision for a condition, disregard of which will not defeat the primary purpose of the bargain, can be enforced with the omission of the illegal portion by a party to the bargain who is not guilty of serious moral turpitude unless this result is prohibited by statute." The Restatement (Second) of Contracts § 184 (1981), similarly states, "[i]f less than all of an agreement is unenforceable under the rule stated in § 178, a court may nevertheless enforce the rest of the agreement in favor of a party who did not engage in serious misconduct if the performance as to which the agreement is unenforceable is not an essential part of the agreed exchange." Because we hold that the PACOA charges were not an essential part of the agreed exchange, rescission of the plea is not necessary and the Commonwealth did not err in vacating the two PACOA counts and resentencing McKeever based upon the remainder of the plea agreement.9
33
Furthermore, the mistake here—a later change in law that was beneficial to the Defendant—is not of the type that is per se sufficient for avoidance of the plea agreement, as the allocation of risk of future changes is part of the bargaining process. See Bownes, 405 F.3d at 636 ("In a contract (and equally in a plea agreement) one binds oneself to do something that someone else wants, in exchange for some benefit to oneself. By binding oneself one assumes the risk of future changes in circumstances in light of which one's bargain may prove to have been a bad one. That is the risk inherent in all contracts; they limit the parties' ability to take advantage of what may happen over the period in which the contract is in effect."). Accordingly, in the circumstances of this case, vacating McKeever's plea agreement was not the only legally permissible remedy.10
IV.
34
We hold that the District Court did not err in granting McKeever's writ of habeas corpus and leaving the remedy to the Commonwealth.11 The Order of the District Court will be affirmed.
Notes:
*
Honorable Joseph E. Irenas, Senior United States District Judge for the District of New Jersey, sitting by designation
1
The referenced page numbers correspond to Appellant's Appendix
2
At the time of McKeever's plea, the Commonwealth withdrew Count XI, possession of a controlled substance. (49)
3
The details of the sentencing scheme as set forth in the plea agreement are as follows: Count I (dealing in proceeds of unlawful activities): 1-5 years concurrent with Count V; Count II (PACOA): 1-7 years merged with Count III and concurrent with Count V; Count III (PACOA): 1-7 years merged with Count II and concurrent with Count V; Count IV (criminal conspiracy): 2-7 years concurrent with Count V; Count V (delivery of a controlled substance): 2-7 years consecutive to McKeever's then current sentence; Count VI (delivery of a controlled substance): 2-7 years consecutive to Count V; Count VII (delivery of a controlled substance): 3-7 years consecutive to Count VI; Count VIII (delivery of a controlled substance): 2-7 years consecutive to Count VII; Count IX (delivery of a controlled substance): 3-7 years consecutive to Count VIII; Count X (delivery of a controlled substance): 3-7 years consecutive to Count IX
4
Pursuant to 42 Pa.C.S.A. § 9545, a PCRA petition must be filed within one year of the date the judgment becomes final. Under a proviso of the 1995 amendments to the PCRA, if the judgment of sentence becomes final before January 1996, the effective date of the amendments, a petitioner has one year from the effective date of the act to file a first PCRA petition. McKeever qualified for this proviso, but failed to file his petition by January 16, 1997. (88-89)
5
The Third Circuit has not yet decided whether a claim of actual innocence may equitably toll the one-year filing period under 28 U.S.C. § 2244(d). Because the Commonwealth conceded this issue, it is not before the Court at this time
6
In an opinion written by the Court of Common Pleas on June 29, 2005, the Court noted that McKeever's initial post-sentence motion on January 23, 2003, to withdraw his plea was untimely, and that even if it were timely, it should not now be granted because the plea was knowing, intelligent, and voluntary, and thus McKeever did not suffer prejudice as a result of the initial denial of this motion. (Appellee's App'x, 18-23)
7
The dissent attempts to distinguishBrady's strong holding by suggesting that it can be marginalized because it did not involve a situation where, due to a subsequent change in the law, defendant was actually innocent of a law to which he pleaded guilty. Rather, it involved a subsequent determination that a law was invalid because it allowed defendant to avoid the death penalty by pleading guilty. In Brady, however, defendant's decision to plead guilty was based, at least in part, on the opportunity to avoid the death penalty. His failure to anticipate the change in law clearly had a much greater impact than it did on McKeever, where the PACOA counts neither impacted the length of his sentence nor were a central component of the bargain.
8
United States v. Barron, 127 F.3d 890 (9th Cir.1997).
9
We also note that many of the cases the dissent relies upon involvehabeas petitions that arise out of federal prosecutions pursuant to 28 U.S.C. § 2255. Such petitions do not implicate the federalism and comity issues of habeas petitions under 28 U.S.C. § 2254 that, in this case, support a remand to the state judge for determination of remedy.
10
There may be a case in which events subsequent to a multi-count plea render the defendant innocent of a count which is so central to the bargain between the parties that vacating the plea is the only constitutionally permitted remedy. This is not such a case
11
We are not determining the validity of the Commonwealth's resentencing on remand. Rather, this ruling is limited to the validity of the District Court's order remanding the case to state court for a determination of the appropriate remedy
35
ROTH, Circuit Judge, Dissenting.
36
I respectfully dissent. I believe that the plea agreement here, negotiated and entered into on the basis of a shared misapprehension as to the reach of one of the statutes under which the defendant is charged, is voidable as based on a material mutual mistake.
I. Facts
37
Because one aspect of the procedural history in this case is important to this dissent and is not sufficiently set out in the majority's recitation of the facts, I briefly summarize it here. The District Court found that McKeever's conviction of the two PACOA counts violated McKeever's due process rights because PACOA, as later interpreted by the Supreme Court of Pennsylvania, did not reach wholly illegal organizations such as the one in which McKeever participated. The District Court then issued a writ of habeas corpus but stayed the writ for 180 days "to permit the Commonwealth to vacate the Petitioner's convictions related to the Pennsylvania Corrupt Organizations Statute and resentence him accordingly." Order Adopting the Magistrate Judge's Report and Recommendation, McKeever v. Warden SCI Graterford, No. 04-3567, 2005 WL 696893 (E.D.Pa. Mar.23, 2005).12
38
Subsequently, the state courts took several actions on McKeever's case. First, on April 26, 2005, the Erie County Court of Common Pleas denied as untimely McKeever's motion to withdraw his guilty plea. The court then vacated the PACOA convictions and resentenced McKeever to the same aggregate sentence as before. Com. v. McKeever, No. 2934 of 1994, slip. op. at 8 (Erie Ct. of Common Pleas June 29, 2005). In its later-filed opinion, the court reasoned that the motion was untimely; the plea was knowing, intelligent, and voluntary; and "if the federal court had intended for this [Court of Common Pleas] to permit Defendant to withdraw his guilty plea, that court would have so indicated in its Order." Id. at 3, 18. In January, 2006, the Superior Court affirmed, holding that the motion to withdraw the guilty plea "relate[d], directly and exclusively, to Appellant's PACOA convictions" and was therefore moot.13 Com. v. McKeever, 895 A.2d 649 (Table), No. 880 WDA 2005, slip op. at 3 (Pa.Super.Ct. Jan. 27, 2006).
II. The Sufficiency of the Remedy
39
The majority concluded that the District Court "was correct in granting McKeever's writ of habeas corpus but leaving the precise remedy in the hands of the Commonwealth." I do not agree that offering the state court the choice of fashioning a remedy is the proper solution because I find only one remedy—that of release unless McKeever is allowed to withdraw the entire plea agreement—is constitutionally sufficient.
40
Moreover, in its Order, the District Court—as the Court of Common Pleas observed—did not present the state courts with a choice of several sufficient constitutional remedies that would avoid McKeever's release. Rather, the Order suspended the granting of the writ on the condition that the state courts implement one specific remedy — vacatur of the PACOA counts. Contrary to the majority's view, I believe that a district court has the authority to issue a conditional writ as long as the condition offered embodies a remedy sufficient to cure the constitutional error. Only where more than one remedy is sufficient to cure that error, should the state court be permitted to choose the remedy.
41
The precedent invoked by the majority is not to the contrary. The majority cites Barry v. Brower for the proposition that "[a] habeas court does not have the power to directly intervene in the process of the tribunal which has incorrectly subjected the petitioner to the custody of the respondent official." 864 F.2d 294, 301 (3d Cir. 1988) (internal citation omitted). But Barry unremarkably stands for the proposition that a federal court's power is limited to ordering a prisoner released unless the state court takes certain actions and does not extend to directing the state to do anything. Barry, however, does not hold that a federal court is without power to say which actions will be sufficient to correct a constitutional infirmity and avoid the prisoner's release. Indeed, in Barry we held that the District Court did not have the power to direct the state to reinstate a prisoner's appeal but should instead have issued a conditional writ ordering him released unless the state court, within a certain time period, "enter[ed] an order reinstating [the prisoner's] appeal and permitting the public defender to represent him in that appeal." Id. at 301. Similarly, in Henderson v. Frank, 155 F.3d 159 (3d Cir.1998), we specified that "conditional writs must be tailored to ensure that all constitutional defects will be cured by the satisfaction of that condition." Id. at 168.14
42
Thus, the District Court was entirely within its authority in issuing a conditional writ of habeas corpus specifying that McKeever should be released unless the state courts adopted a specific remedy to correct the constitutional infirmity. Its error was not in naming a remedy, but in naming the wrong one because the remedy it identified was not sufficient. The court should have ordered McKeever released unless he was allowed to rescind the entire plea agreement.
43
III. Effect of Mutual Mistake on a Guilty Plea
44
This is not the first time that federal courts have been confronted with the question presented in this case — the effect on a guilty plea of a shared misapprehension as to the reach of a criminal statute. Rather, both the Supreme Court and several sister circuits faced this issue following the Supreme Court's decision in Bailey v. United States, 516 U.S. 137, 116 S.Ct. 501, 133 L.Ed.2d 472 (1995), which significantly narrowed the reach of the provision prohibiting the use of firearms in relation to the commission of a drug crime, 18 U.S.C. § 924(c). These decisions put forward two principles: first, where the parties involved are mistaken in the shared belief that a certain conduct is reached by a statute, the guilty plea to the counts arising under the specific statute is constitutionally invalid because the plea could not have been knowing or intelligent; and second, because a plea agreement comes about as a "package," a misapprehension shared by the defendant, his counsel, the prosecutor, and the trial court as to the reach of the statute constitutes a mutual mistake with material effects on the bargain, so that the entire plea agreement becomes voidable at the petitioner's request and the parties are returned to their pre-plea positions.15
45
In Bousley v. United States, 523 U.S. 614, 118 S.Ct. 1604, 140 L.Ed.2d 828 (1998), the Supreme Court held that, if a plea is to counts arising under a statute later found not to reach the defendant's conduct, that plea is constitutionally invalid. In Bousley, the petitioner challenged his plea of guilty to "using" a firearm in violation of 18 U.S.C. § 924(c)(1). The petitioner argued that because the District Court failed to inform him at the time of his plea that the statute required "active employment of the firearm" (as the Supreme Court later clarified in Bailey), his plea was not knowing or intelligent. Id. at 616, 118 S.Ct. 1604 (internal quotation marks and citation omitted). The Supreme Court did not reach the merits of Bousley's claim (rather, it remanded for clarification of whether Bousley could factually make out a claim of "actual innocence" to excuse procedural default), but it stated in strongly worded dictum that where a record "reveals that neither [the petitioner], nor his counsel, nor the court correctly understood the essential elements of the crime with which he was charged[, the] petitioner's plea [is] constitutionally invalid." Id. at 618-19, 118 S.Ct. 1604.
46
Although the petitioner in Bousley had pled guilty to multiple counts (as McKeever did in this case), he, unlike McKeever, did not challenge the entire plea on the basis of the shared misapprehension; rather he attacked only the validity of the specific plea to the Section 924(c) violation. Thus the issue of the potential invalidity of the entire plea agreement was not brought to the attention of the Court. Two sister circuits, however, have been confronted with this question and have held that, when the plea as to one violation is constitutionally invalid because the parties did not understand at the time that the statute did not reach the defendant's conduct, the entire plea agreement must be voided; courts should not simply "sever" the invalid pleas and treat the remainder of the plea agreement as valid.
47
In United States v. Lewis, 138 F.3d 840 (10th Cir.1998), the petitioner had been charged with eleven counts of offenses involving drugs and firearms but, under a plea agreement, had pled guilty to just one of the counts, use of a firearm in relation to a drug trafficking offense under 18 U.S.C. § 924(c). After the Supreme Court decided Bailey, Lewis attacked his conviction and sentence, arguing that he was unconstitutionally imprisoned because the statute under which he was convicted and sentenced did not reach his conduct. Lewis, however, did not request that the entire plea be voided (as that would leave him potentially vulnerable to prosecution on the other ten counts); rather, he requested immediate release, since he was imprisoned on the Section 924(c) count only. The Tenth Circuit held that, where a plea agreement is based on a mutual mistake as to the elements of a charge, the only appropriate remedy is to void the entire plea agreement, because a plea agreement is a "package" deal that a district court has the authority to "vacate . . . when a conviction that is part of the plea package is vacated." Id. at 842. Because the petitioner was "the party affected by the parties' mutual mistake[, h]is plea agreement with the government [was] voidable, if he so [chose]." Id. at 841. The court expressly declined to hold that the plea agreement was invalid only as to one part (Lewis's guilty plea to the 924(c) count) and not another (the dismissal of the other counts); if Lewis chose to pursue his habeas petition, the entire deal would be off and he could face prosecution on all the originally dismissed counts.16
48
In support of its reasoning, the Lewis court quoted approvingly the Ninth Circuit's opinion in United States v. Barron, 127 F.3d 890 (9th Cir.1997):
49
Given the realities of plea bargaining, it makes good sense to apply the sentence package concept when a petitioner challenges one of multiple convictions obtained under a plea agreement. . . . Because the district court cannot possibly know what convictions or sentences [a defendant] would have received had he not pleaded guilty to the section 924(c) count . . ., an appropriate remedy is to put [the defendant] in the position he was in before he entered into the plea agreement or before the district court accepted the plea based on conduct which did not constitute the crime charged.
50
Lewis, 138 F.3d at 843, quoting Barron, 127 F.3d at 895.17 See also United States v. Sandoval-Lopez, 122 F.3d 797, 802 (9th Cir.1997) (noting in dictum that where a defendant attacks a plea agreement, the attack is "directed at the entire agreement, and, if successful, may render the entire agreement void or voidable," so that the "proper remedy" in such a case might be "to vacate or allow withdrawal of the guilty pleas and reinstate" the charges dismissed under the plea agreement); United States v. Bunner, 134 F.3d 1000, 1005 (10th Cir.1998) (where defendant, relying on Bailey, had successfully attacked his conviction under Section 924(c), the underlying purpose of the plea agreement was frustrated, and the government's plea agreement obligations became dischargeable; thus, at the government's election, the parties could be returned to position they occupied before Bunner entered his guilty plea).
51
The Seventh Circuit Court of Appeals recently reached the same conclusion in United States v. Bradley, 381 F.3d 641 (7th Cir.2004). Bradley also involved a mutual mistake as to the reach of 18 U.S.C. § 924(c), although in this case it was independent of the Supreme Court's holding in Bailey. On direct appeal, the court held that Bradley should be allowed to withdraw his entire plea, not just the plea to the Section 924(c) count. It reasoned, first, that the specific plea to Section 924(c) was not knowing and voluntary, and second, that because there was no "meeting of the minds on all [the] essential terms" of the plea agreement, the entire plea agreement, and not just the plea as to Section 924(c), was "tainted." Id. at 647-48.
52
The Supreme Court's decision in Brady v. United States, 397 U.S. 742, 90 S.Ct. 1463, 25 L.Ed.2d 747 (1970), cited by the majority for the proposition that a plea agreement that fails to anticipate a change in the law is not per se unknowing and involuntary, is distinguishable from Bousley, Lewis, and Bradley. Brady had pled guilty to kidnaping (18 U.S.C. § 1201(a)) and had received a sentence of 50 years' imprisonment, later reduced to 30. Nine years later, the Supreme Court held in United States v. Jackson, 390 U.S. 570, 88 S.Ct. 1209, 20 L.Ed.2d 138 (1968), that the death penalty provision in Section 1201(a) — mandating the death penalty for defendants convicted under this statute, if the victim was not liberated unharmed and if the jury recommended it, but providing that the judge could not impose the death sentence if the defendant pled guilty — needlessly chilled the exercise of the right not to plead guilty and to go to trial, because the defendant could not be sentenced to death if he pled guilty, but faced a significant likelihood of capital punishment if he went to trial. Relying on Jackson, Brady then challenged his guilty plea to kidnaping, claiming among other things that his plea was not intelligent because his counsel had wrongly advised him that the jury had the power to condemn him to death (the power later found unconstitutional in Jackson).
53
The Court rejected Brady's argument, holding there was
54
no requirement in the Constitution that a defendant must be permitted to disown his solemn admissions in open court that he committed the act with which he is charged simply because it later develops that the State would have had a weaker case than the defendant had thought or that the maximum penalty then assumed applicable has been held inapplicable in subsequent judicial decisions.
55
Brady, 397 U.S. 742, 757, 90 S.Ct. 1463, 25 L.Ed.2d 747 (emphasis added). This phrasing (substantially repeated three times within two paragraphs of the opinion) clarifies the import of the more general proposition, also used on the same page, that "absent misrepresentation or other impermissible conduct by state agents . . . a voluntary plea of guilty intelligently made in the light of the then applicable law does not become vulnerable because later judicial decisions indicate that the plea rested on a faulty premise." Id. The Brady Court was not faced with a situation where the statute simply did not reach the defendant's admitted conduct but the parties did not know this; Brady's lack of knowledge regarded the possible sentence, not the fact that he was actually innocent of the charges against him. If the Court had been faced with a situation where defendants would "falsely condemn themselves" because of an offer of leniency, the Court admitted, a different decision might be required. Id. at 758, 90 S.Ct. 1463. Unlike Brady, McKeever did, in fact, "falsely condemn himself" — not because of an offer of leniency, but because nobody knew any better. McKeever's plea was unknowing in a far more basic sense than Brady's could have been.18
56
Our sister circuits' decisions in Lewis and Bradley, concluding that a plea agreement such as the one here is voidable in its entirety, are based on the widely agreed-upon notion that plea agreements must be construed according to the general principles of contract law. See United States v. Gebbie, 294 F.3d 540, 551 (3d Cir.2002) (rules of contract interpretation are applied to plea agreements); Dunn, 247 F.3d at 462 (if the government breaches a plea agreement, the remedy is either specific performance or rescission of the agreement and withdrawal of the entire plea); Houmis v. United States, 558 F.2d 182, 183 (3d Cir.1977) (plea was invalid where the record revealed substantial confusion as to whether habeas petitioner "had understood the agreement, and thus [left] doubt as to whether any `meeting of the minds' ever resulted from plea negotiations"). Under general principles of contract law, a contract based on a material mistake shared by the parties to the contract is voidable. See Restatement (Second) of Contracts § 152 ("[w]here a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake").
57
Of course, not all mistakes can lead to the voiding of a contract. The party wishing to void the contract "must show that the resulting imbalance in the agreed exchange is so severe that he can not fairly be required to carry it out. Ordinarily he will be able to do this by showing that the exchange is not only less desirable to him but is also more advantageous to the other party." Restatement (Second) of Contracts, § 152 cmt. c. The majority holds that the mutual misapprehension as to the reach of the PACOA was not a mistake of the kind that would require rescission of the plea agreement because, first, it is a mistake of law rather than fact, and second, it is not material because "the heart of the plea agreement was not the PACOA charges, but rather the drug trafficking charges" and the primary purpose of the plea agreement could be preserved by reforming the contract to conform to the actual state of the law (i.e., by severing the pleas to the PACOA counts). I disagree.
58
First, whether the misapprehension as to McKeever's innocence is characterized as a mistake of fact or law does not change its impact on the deal McKeever struck with the Commonwealth. As several commentators have noted, modern contract law has abandoned the strict view that "ignorance of the law is no excuse" and therefore mutual mistakes of law do not affect the validity of contracts even in situations that would give rise to inequity.19 See Restatement (Second) of Contracts § 151 (defining "mistake" as "a belief that is not in accord with the facts") and cmt. b ("[t]he rules stated in this Chapter do not draw the distinction that is sometimes made between `fact' and `law.' They treat the law in existence at the time of the making of the contract as part of the total state of facts at that time"); 27 Richard A. Lord, Williston on Contracts § 70:125 (4th ed.1990) (noting that in modern contract law, "[c]ourts generally disallow any distinction between mistakes of fact and law, treating both alike for purposes of equitable relief. . . . . To justify rescission, a mistake of law must have related to a question, the answer to which was assumed as part of the fundamental basis of the transaction."); 7-28 Joseph Perillo, Corbin on Contracts § 28.49 (revised ed.2002) ("[t]oday, the rule denying relief for mistake of law has little vitality. It has been eroded by so many qualifications and exceptions, varying from jurisdiction to jurisdiction. It is common to find cases where the issue is not even raised."); E. Allan Farnsworth, Contracts § 9.2 ("the modern view is that the existing law is part of the state of the facts at the time of agreement. Therefore, most courts will grant relief for such a mistake, as they would for any other mistake of fact.").
59
Moreover, whatever value this distinction may have in an ordinary commercial context, it is important to remember that plea agreements are "constitutional contracts" and unlike contracts in other spheres must "be construed in light of the rights and obligations created by the Constitution." Ricketts v. Adamson, 483 U.S. 1, 16, 107 S.Ct. 2680, 97 L.Ed.2d 1 (1987). A mistake of law in this context has a constitutional dimension and cannot be treated as tainting the validity of the bargain made by the parties any less than a mistake of fact.20
60
Second, to say that the plea to the two PACOA counts did not affect the sentence finally imposed and that therefore the PACOA counts could not constitute the heart of the plea agreement, is to beg the question. McKeever obtained from the prosecution a treatment for the two PACOA counts that amounted to no additional jail time in exchange for his pleas to the drug trafficking counts. That the drug trafficking counts constituted the heart of the sentence McKeever received does not necessarily mean that they also constituted the heart of the bargain. The mutual mistake as to the reach of the PACOA caused McKeever to accept something valueless (the merger and concurrent sentence on the PACOA counts) in partial exchange for something valuable (his agreement not to contest the other counts). The two PACOA counts represented a potential additional prison term of fourteen years; the mistake as to whether his conduct was criminal under the PACOA could not have been immaterial.21
61
Where a mistake regards a basic assumption on which the bargain is based, rescission of the contract is the preferred remedy; reformation is appropriate only when the mistake "is one as to expression." United States v. Williams, 198 F.3d 988, 994 (7th Cir.1999) (quoting Restatement (Second) of Contracts § 155 cmt. a).22 See also United States v. Sandles, 80 F.3d 1145, 1148 (7th Cir.1996) ("[w]here there is a mutual misunderstanding as to the material terms of a [plea agreement], the appropriate remedy is rescission, not unilateral modification."); 27 Williston on Contracts § 70.35 (4th ed.) ("reformation must yield to rescission where the error is in the substance of the bargain, not in its expression"). Spinetti v. Serv. Corp. Int'l, 324 F.3d 212, 219 (3d Cir.2003), cited by the majority, is not controlling because, first, it involved the reformation of a contract containing a provision that was contrary to public policy, not a contract grounded on a mistake of law; and second, the excised provision regarded a matter peripheral to the essence of the bargain (the allocation of attorney fees in a binding arbitration agreement). Where the parties have reached an agreement only part of which cannot be enforced, despite the parties' intent, because of the external constraints of public policy, it makes sense to allow the core of the contract to survive and invalidate only the sections that offend public policy. But where, as here, the parties are mistaken as to the nature of the bargain, the agreement should be set aside and the parties given the opportunity to renegotiate on the basis of the true value of the bargained-for promises — particularly where mistake as to the nature of the bargain is of constitutional significance; i. e., if the activity covered by the plea is not a criminal offense, can the plea be a knowing and intelligent one.
IV. Prejudice to the Commonwealth
62
I am mindful of the Commonwealth's argument that, if the plea were voided and McKeever chose to go to trial, the prosecution, through no fault of its own, would be significantly prejudiced by having to locate witnesses to drug transactions that were completed thirteen or fourteen years ago, even though McKeever has never contested his responsibility for them. However, even though a party's delay in declaring his intention to rescind a contract may preclude rescission in an ordinary contract case, the delay has less significance when the reason for rescission has constitutional implications.
63
Admittedly, McKeever did not act swiftly to put the Commonwealth on notice of his intention to rescind the plea when he learned of the mutual mistake. The initial decision of the Pennsylvania Supreme Court, holding the PACOA inapplicable to wholly illegitimate enterprises, was issued in 1996. See Commonwealth v. Besch, 544 Pa. 1, 674 A.2d 655 (1996). Even assuming that McKeever did not begin collateral review proceedings at that time because the Pennsylvania legislature promptly amended the statute so that it would clearly apply to illegitimate enterprises, he must have known at the latest by 1999 (when the Pennsylvania Supreme Court issued Commonwealth v. Shaffer, 557 Pa. 453, 734 A.2d 840 (1999)) that the amended statute did not apply retroactively to him.23 Yet, McKeever waited almost four years — until June 2003 — to seek collateral review of his conviction.
64
In general, a delay of this kind would weaken a party's right to rescission of the contract as an equitable remedy. See Grymes v. Sanders, 93 U.S. 55, 62, 23 L.Ed. 798 (1876) (holding, in the context of unilateral mistake, that the party desiring rescission "must, upon the discovery of the facts, at once announce his purpose, and adhere to it"). This conclusion would be strengthened by the prejudice inflicted on the Commonwealth by each intervening year. See id. at 62 ("A court of equity is always reluctant to rescind, unless the parties can be put back in statu quo. If this cannot be done, it will give such relief only where the clearest and strongest equity imperatively demands it").
65
In the context of constitutional violations, however, both the Supreme Court and this Court have declined the invitation to consider the prejudice to the prosecution of having to try — or retry — a defendant on the basis of stale evidence. In Vasquez v. Hillery, 474 U.S. 254, 106 S.Ct. 617, 88 L.Ed.2d 598 (1986), the Supreme Court upheld the grant of a new trial to a black petitioner who had been indicted by a grand jury from which blacks were systematically excluded. In dissent, Justice Powell argued relief was inappropriate where the violation occurred in the distant past (twenty-six years, in that case) and where the State could show it would be substantially prejudiced in its ability to retry the defendant. Id. at 279-282, 106 S.Ct. 617 (Powell, J., dissenting). The majority, however, rejected the dissent's "theory . . ., which would condition the grant of relief upon the passage of time between a conviction and the filing of a petition for habeas corpus, depending upon the ability of a State to obtain a second conviction." Id. at 264, 106 S.Ct. 617.24 See also United States v. Nahodil, 36 F.3d 323, 327-28, 330 (3d Cir.1994) (noting, in Section 2255 context, that although "prejudice to the government's ability to retry the case" is a factor to be considered in ruling on a motion to withdraw a plea under Fed. R.Crim.P. 11(d)(2)(B), "prejudice to the government's ability to bring a case to trial is not dispositive of a motion to withdraw the guilty plea if the original acceptance of the plea was improper or improvident").25
66
Therefore, I conclude that the District Court should have granted the writ and ordered McKeever released unless his entire plea was rescinded. I respectfully dissent from the majority's holding that vacating the PACOA convictions and resentencing was a sufficient remedy.
Notes:
12
This order identified as the remedy for the constitutional violation the vacatur of the two PACOA convictions and resentencing. This language is inconsistent with portions of the District Court's opinion, which suggest that the District Court would leave the choice of remedy—either vacatur of the PACOA convictions or rescission of the plea—to the Pennsylvania state courts since they were "in a better position to decide whether a `mutual mistake' denied Petitioner of [sic] the `benefit' of his `bargain' with the prosecution, and the legal significance, if any, of such a denial." McKeever v. Graterford, No. 04-3567, 2005 WL 696893, at *4 (E.D.Pa. Mar.23, 2005). We note that in its discussion about permitting the state court to choose the applicable remedy, the District Court cited cases where the basis for habeas relief was breach of the plea agreement, not a plea to activities which did not constitute a criminal offense. In such a situation, there may be more than one constitutionally sufficient remedy. See Santobello v. New York, 404 U.S. 257, 263, 92 S.Ct. 495, 30 L.Ed.2d 427 (1971); Dunn v. Colleran, 247 F.3d 450 (3d Cir.2001).
13
McKeever had moved for other forms of relief; none of the other motions was granted or is relevant here
14
As mentioned above, where more than one remedy would be adequate to correct the conditional defect, it is appropriate for the federal court to offer the state a choice between releasing the petitioner and adopting one of the several remedies identified as sufficientSee Dunn, 247 F.3d 450 (where a plea agreement was breached by the prosecution, breach could be remedied either by ordering specific performance of the agreement or by voiding it); Dickerson v. Vaughn, 90 F.3d 87, 92 (3d Cir.1996) (remanding with directions that petitioners be released unless the Commonwealth of Pennsylvania adopted one of two remedies either of which could cure the constitutional infirmity). However, as discussed below, I conclude that only one remedy is appropriate here.
15
The majority takes the somewhat puzzling position that nobody was, in fact, mistaken at McKeever's plea because at that time "PACOA did . . . cover McKeever's conduct. . . . The law did not change until after McKeever pled and was sentenced." But the Pennsylvania Supreme Court's announcement of the correct interpretation of the PACOA statute is not a "change" in the law — it is simply what the law always was, except that it had been misunderstoodSee Kendrick v. District Attorney, 916 A.2d 529, 538 (Pa.2007) ("this Court's interpretation of the term `enterprise' [as used in the PACOA] was not a `new rule,' but must be deemed to have merely explicated the meaning and scope of the term from the Pa.C.O.A.'s original enactment in 1973"); see also Rivers v. Roadway Express, 511 U.S. 298, 312-12, 114 S.Ct. 1510, 128 L.Ed.2d 274 (1994) ("judicial construction of a statute is an authoritative statement of what the statute meant before as well as after the decision of the case giving rise to that construction.") The fact that the interpretation pursuant to which McKeever entered his plea was generally shared in the legal community does not make it any less of a mistake.
16
The majority argues thatLewis is irrelevant to our purposes because the plea covered only one count and therefore "the constitutionality of vacating one count in a multi-plea agreement was simply not before the court." But the point in Lewis is that when there is a plea bargain, the court must look to the entire agreement and not simply to the end result. Thus the Lewis court recognized that the defendant's plea to one count was inextricably tied to the dismissal of the other counts, because that dismissal was implicitly part of the bargain.
17
Barron held under similar circumstances that, although the habeas petitioner had simply requested resentencing once the prosecution had conceded that his conviction under Section 924(c) was invalid, the petition must be understood as an attack on the plea itself and the correct remedy was to set aside the entire plea. This decision was later vacated, however, and on rehearing en banc the Ninth Circuit held that since the petitioner had challenged his incarceration on one ground out of several allowed by Section 2255, the District Court was bound by the statutory language allowing four possible remedies ("discharge the prisoner or resentence him or grant a new trial or correct the sentence as may appear appropriate"); it could not "eliminat[e] the two possibilities of resentencing or of correcting the sentence." United States v. Barron, 172 F.3d 1153, 1157 (9th Cir.1999) (en banc). Thus the district court had erred in reasoning that "the only way Barron's motion could be granted was by construing it as an attack on the plea agreement" and granting the motion on condition that Barron agree to withdraw the plea. Id. The majority argues that the Barron en banc decision is "squarely on point" and invalidates the panel's reasoning (and Lewis, which relied on it). It is true that the Ninth Circuit, in its en banc decision, expressed doubts about the applicability of contract law to plea agreements, but these doubts are not the basis of its decision. Rather, the Ninth Circuit was primarily concerned with the propriety of the District Court's sua sponte modification of the petitioner's request for vacatur of a single conviction into a motion attacking the plea agreement. See Barron, 172 F.3d at 1158 ("It is only the analysis of the district court that turned this simple motion into something more, a challenge to the plea agreement. The district court had no authority to invent a new basis for Barron's motion and erred in doing so.") Indeed, the Barron en banc opinion explicitly recognized that "the argument that plea bargains must be treated as a package logically applies only in cases in which a petitioner challenges the entire plea as unknowing and involuntary," which is the case for McKeever but not for Barron. Id. at 1160. In doing so, Barron cited United States v. Sandoval-Lopez, 122 F.3d 797 (9th Cir.1997), which again makes the same point: "Defendants sometimes bring collateral attacks on the plea agreements qua plea agreements, but claiming that their pleas were not `knowing' or `voluntary,' or were otherwise defective. Such attacks are directed at the entire agreement and, if successful, may render the entire agreement void or voidable." Id. at 802 (emphasis added). The reasoning in the Barron en banc decision thus does not directly affect the conclusion that, if a prisoner attacks the validity of a plea on the grounds of mutual mistake, the proper remedy is to void the plea; it merely stands for the proposition that under Section 2255, a prisoner may attack his imprisonment on a variety of grounds and the district court has discretion to fashion a remedy according to the statute, but not to transform the petition into something it is not.
18
In the wake ofBrady, the Supreme Court held a variety of other misapprehensions insufficiently important to invalidate a guilty plea, see United States v. Ruiz, 536 U.S. 622, 630-31, 122 S.Ct. 2450, 153 L.Ed.2d 586 (2002), but none of these cases involved something as central as the element of the crime. United States v. Bownes, 405 F.3d 634 (7th Cir.2005), cited by the majority, is also not controlling, since it merely held that a broadly worded waiver of appeal in the defendant's plea agreement was effective even if the parties to the agreement had failed to anticipate the Supreme Court's decision in Booker, which might have provided the defendant with grounds for appeal. Id. at 636. The court in Bownes explicitly referred to the "absence of an explicit escape clause" as indicative of the parties' intention not to allow for any flexibility in the waiver. A misapprehension about the defendant's right to appeal his sentence is not of the same order as a misapprehension about whether he can be guilty of a charge.
19
It goes without saying that it would not be practical to insist on "knowledge" of the law in a case like this, since the proper interpretation of the statute had not yet been declared
20
In decidingLewis and Bradley, our sister circuits declined to define the mistake as one of law or of fact, but it is clear that they understood it as one of law or, at most, a mixed one. See Bradley, 381 F.3d at 647 (the mistake was a "misunderstanding of the nature of the charge"); Lewis, 138 F.3d at 841 (the parties had a "mutually mistaken belief . . . that the evidence supported the section 924(c) count").
21
The majority discusses the "sentencing package" doctrine to reach the conclusion that because McKeever was sentenced separately on the drug counts and the PACOA counts there is no need to resentence him upon a finding that he entered a plea on the basis of a mistake as to whether he could be guilty of the PACOA counts. This argument, however, misapprehends my position, which is not that thesentence was a package, but that the plea agreement was. A contract is no less a unified document because a party is charged separately for each item bought.
22
InWilliams, the defendant and the prosecutor both erroneously believed he faced a maximum sentence of ten years, rather than the fifteen he was, in fact, exposed to. When this was discovered, the District Court offered Williams the opportunity to withdraw his guilty pleas, but Williams felt this would not benefit him in any way; since he had already cooperated with the government, he would have no bargaining power to negotiate a new deal. On appeal, Williams argued the court should reform the plea agreement to conform to the parties' intent by forcing the government to drop two counts. The Court of Appeals affirmed the District Court's decision to offer Williams the opportunity to rescind the contract in its entirety, holding this was the only possible remedy.
23
McKeever concedes as much when he asserts that he "relied onShaffer" when he sought collateral review.
It could be argued that McKeever did not act dilatorily, but rather prematurely, since the Pennsylvania Supreme Court has only recently held that Besch applies retroactively to cases on collateral review. See Kendrick v. District Attorney, 916 A.2d 529 (Pa. Feb.20, 2007). Unlike McKeever, however, Kendrick sought collateral review of his conviction on Besch grounds by amending his PCRA petition immediately after Besch was decided, and timely pursued federal remedies after exhausting the state PCRA process. Id. at 531-32.
24
The majority inVasquez justified its position, among other things, on the absence of a statute of limitations for Section 2254 petitions and on Congress' unwillingness to amend the wording of 28 U.S.C. § 2254 Rule 9(a) (repealed 2004), which provided a defense to the State where it was "prejudiced in its ability to respond to the petition by delay in its filing," but not where the prejudice concerned its ability to bring the petitioner to justice. These considerations have less weight since the adoption of the AEDPA statute of limitations and the repeal of Rule 9(a). However, to allow McKeever to escape the AEDPA statute of limitations on the grounds of "actual innocence" and then deny him the appropriate relief because of his delay in filing his petition would amount to reviving a stricter version of Rule 9(a) by judicial action. I do not believe this would be appropriate.
25
We are not faced here with a situation where the plea agreement contained an explicit waiver on the part of the defendant of his right to challenge the entire plea if one or more of the statutes under which he was charged are subsequently interpreted not to reach his conduct. I therefore express no view as to whether this might be an effective way to ensure that prosecutors acting in good faith avoid the problems that arose here and that defendants receive the benefits of their bargain
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ACCEPTED
06-14-00079-CR
SIXTH COURT OF APPEALS
TEXARKANA, TEXAS
NO. 06-14-00079-CR 2/19/2015 9:10:49 PM
DEBBIE AUTREY
CLERK
JUSTIN SANDERS * ON APPEAL FROM THE
Appellant *
FILED IN
* 102ND6th COURT OF
JUDICIAL APPEALS
DISTRICT
TEXARKANA, TEXAS
VS. * 2/19/2015 9:10:49 PM
STATE OF TEXAS * COURT OFDEBBIE
BOWIEAUTREY
COUNTY
Clerk
Appellee * TEXAS
SECOND MOTION TO EXTEND TIME FOR FILING STATE’S BRIEF
TO THE HONORABLE JUSTICES OF SAID COURT:
COMES NOW the State of Texas by and through her below named Assistant Criminal
District Attorney and pursuant to the Texas Rules of Appellate Procedure and hereby requests a thirty
(30) day extension of the time period for the filing of the State’s Brief and in support of the same
would show the Court as follows:
I.
1. This case is pending from the 102nd Judicial District of Bowie County, Texas. The date of
the judgment is April 2, 2014.
2. The case is styled State of Texas v. JUSTIN SANDERS, Cause Number 13F-1051-102.
3. Appellant was convicted of the offenses of MURDER
4. Punishment was assessed at thirty (30) years in the Institutional Division of the Texas
Department of Criminal Justice and a $5,000 fine.
5. Appellant’s Brief was filed on December 19, 2014, making the State’s Brief originally due
on or about January 19, 2015.
6. The State has previously requested a thirty (30) day extension of time for filing the State’s
Brief on January 19, 2015. The State’s motion was granted, making the State’s Brief due on or about
February 19, 2015.
7. The Brief was not timely prepared in this matter due to the press of the business. Said
business includes, but is not limited to, the following since Appellant’s brief was filed:
Prepare for and attend docket for the 5th District Court on January 26, 2015.
Prepare for and attend docket for the 202nd District Court on February 2, 2015.
Prepare for and attend docket for the 102nd District Court on February 5, 2015.
Prepare for and present cases to the Grand Jury on February 5, 2015.
Preparation of the following case set for a bond hearing on February 5, 2015 by
Judge Leon Pesek of the 202nd District Court: 14F-0980-202, Brandon Henderson –
Burglary of a Habitation.
Prepare for and attend docket for the 5th District Court on February 6, 2015.
Prepare for and attend docket for the 102nd District Court on February 12, 2015.
Prepare for and attend docket for the 5th District Court on February 17, 2015.
Preparation of the following cases set for trial on February 17, 2015 by Judge Bobby
Lockhart of the 102nd District Court: 14F-0133-102, Richard Darby – Aggravated Robbery;
14F-0179-102, Richard Darby – Aggravated Robbery; 14F-0252-102, Richard Darby –
Aggravated Robbery; 14F-0521-102, 14F-0098-102, Richard Darby – Evading Arrest of
Detention in a Motor Vehicle; and 14F-0180-102, Richard Darby – Theft ($1,500 –
20,000). The defendant entered pleas of guilty, and the elected for the jury to assess
punishment. A jury was selected on February 17, 2015. Testimony began on February 18,
2015 and will continue through February 20, 2015.
Preparation of the following case set for a bond hearing on February 20, 2015 by
Judge Bill Miller of the 5th District Court: 14F-1063-005, James Foster – Theft of a Firearm
and 09F-0052-005, James Foster – Deadly Conduct.
Preparation of the State’s Brief in Shawn Smith v. State of Texas, which is due on or
about March 11, 2015.
II.
The State’s attorney has been diligent in pursuing this appeal and is not seeking this
extension for the purpose of delay.
PRAYER
WHEREFORE, on the bases of Rule 73 of the Texas Rules of Appellate Procedure, the State
respectfully requests this Court to grant the Motion for Extension of Time for the filing of the State’s
Brief.
Respectfully submitted,
/s/ Samantha J. Oglesby
SAMANTHA J. OGLESBY
Texas Bar No. 24070362
601 Main Street
Texarkana, TX 75501
ATTORNEY FOR THE STATE
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the above and foregoing Motion to Extend
Time for Filing State’s Brief was forwarded to Mr. Craig Henry, counsel for Appellant, on this the
19th day of February, 2015.
/s/ Samantha J. Oglesby
SAMANTHA J. OGLESBY
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109 F.3d 74
Astrid L. PORTELA-GONZALEZ, et al., Plaintiffs, Appellants,v.SECRETARY OF THE NAVY, et al., Defendants, Appellees.
No. 96-1460.
United States Court of Appeals,First Circuit.
Heard March 5, 1997.Decided March 26, 1997.Rehearing and Suggestion for Rehearing En Banc Denied May 27, 1997.
Alex Gonzalez, San Juan, PR, with whom Gonzalez & Vilella was on brief, for Plaintiffs, Appellants.
Isabel Munoz Acosta, Assistant United States Attorney, Guaynabo, PR, with whom Guillermo Gil, United States Attorney, was on brief, for Defendants, Appellees.
Before TORRUELLA, Chief Judge, SELYA and STAHL, Circuit Judges.
SELYA, Circuit Judge.
1
In this appeal, plaintiff-appellant Astrid L. Portela-Gonzalez (Portela) challenges a summary judgment entered in favor of the Navy.1 Although our reasoning differs in one salient respect from that employed by the court below, we affirm the judgment. See Hachikian v. FDIC, 96 F.3d 502, 504 (1st Cir.1996) (explaining that an appellate court is not committed to the trial court's rationale, but may affirm on any alternative ground made manifest by the record).
I. BACKGROUND
2
The facts essential to our review are largely uncontested. Portela worked for nearly three decades as a civilian employee at the Roosevelt Roads Naval Station. From 1985 forward, she occupied the position of sales manager at the Navy Exchange. She had an unblemished employment record and achieved consistently high performance ratings.
3
On December 14, 1989, Portela placed 28 articles of clothing on layaway at the Exchange, 25 of which were clearance sale items (known colloquially as "red tag" items). The anticipated purchase price of the merchandise was $484.10. When the Exchange slashed the prices of all red tag items even more drastically during the post-Christmas lull, Portela spied an opportunity for increased savings, canceled her layaway arrangement (paying a $5.00 penalty), and simultaneously repurchased the articles she had removed from layaway status for a price of $330.79. Portela contends that these machinations did not transgress any policy, rule, or regulation of the Exchange; the Navy contends otherwise.
II. THE AFTERMATH
4
On April 9, 1990, L.H. Arcement, Jr., the Officer in Charge (OIC) of the Navy Exchange, suspended Portela without pay pending anticipated disciplinary action. On May 29, Arcement notified Portela that she would be terminated for "applying an unauthorized 40% price reduction to red tagged clothing items you had placed on layaway in violation of the Exchange's layaway policy, resulting in a loss to the Exchange of $197.32."2 Pursuant to the controlling administrative procedure, contained in a Secretary of the Navy Instruction (SECNAVINST), the letter informed Portela of the charges against her and outlined her procedural rights.
5
Portela contested the proposed disciplinary action. On June 22, 1990, the OIC overrode Portela's grievance and terminated her employment as of July 3, 1990. The Navy advised Portela of her right to appeal this decision and she proceeded to do so. Her first appeal was heard pro forma by the OIC who, not surprisingly, affirmed his original determination. Her second appeal culminated in a full evidentiary hearing, following which Michael F. O'Brien, the Commanding Officer of the Roosevelt Roads Naval Station, upheld her termination.
6
Portela pursued the appellate process to the next level. On March 25, 1991, Rear Admiral H.D. Weatherson, Commander of the NRSSO, headquartered at Staten Island, New York, affirmed her termination. This decision informed Portela of her right to take a final administrative appeal to the Deputy Assistant Secretary of the Navy, Civilian Personnel Policy, Equal Employment Opportunity Office, in Washington, D.C. Rather than pursue this fourth level of administrative redress, Portela filed suit.
7
After some preliminary skirmishing, not relevant here, the district court addressed the Navy's motion for summary judgment. The court ruled that Portela had failed to exhaust available administrative remedies but nonetheless reached the merits of her suit in the exercise of its perceived discretion. See Portela Gonzalez v. Secretary of Navy, 913 F.Supp. 122, 126-28 (D.P.R.1996). Portela's victory proved ephemeral, however, as the court concluded that the Navy's actions were neither arbitrary nor capricious. See id. at 128. This appeal ensued.
III. DISCUSSION
8
We agree with the district court that Portela impermissibly failed to exhaust her administrative remedies. We disagree, however, that the court had discretion, in the circumstances of this case, to relieve her of the onus of her omission.
9
A. The Exhaustion Doctrine.
10
Starkly contoured, the exhaustion doctrine holds that "no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted." Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-51, 58 S.Ct. 459, 463, 82 L.Ed. 638 (1938). In practice, the doctrine has softer edges than this language implies. See Kenneth Culp Davis & Richard J. Pierce, Jr., II Administrative Law Treatise § 15.2, at 307 (3d ed.1994). Although exhaustion of administrative remedies is absolutely required if explicitly mandated by Congress, see McCarthy v. Madigan, 503 U.S. 140, 144, 112 S.Ct. 1081, 1086, 117 L.Ed.2d 291 (1992), courts have more latitude in dealing with exhaustion questions when Congress has remained silent, see Darby v. Cisneros, 509 U.S. 137, 153-54, 113 S.Ct. 2539, 2548, 125 L.Ed.2d 113 (1993); McCarthy, 503 U.S. at 144, 112 S.Ct. at 1086. In such purlieus, the court of first instance possesses a modicum of discretion to relax the exhaustion requirement. See Salus v. GTE Directories Serv. Corp., 104 F.3d 131, 138 (7th Cir.1997).
11
The Court's opinion in McCarthy is integral to an understanding of the parameters of this discretion. Although recognizing that the exhaustion doctrine ordinarily "serves the twin purposes of protecting administrative agency authority and promoting judicial efficiency," and, thus, should customarily be enforced, the Court identified "three broad sets of circumstances in which the interests of the individual weigh heavily against requiring administrative exhaustion." McCarthy, 503 U.S. at 145, 146, 112 S.Ct. at 1086, 1087.
12
First, a court may consider relaxing the rule when unreasonable or indefinite delay threatens unduly to prejudice the subsequent bringing of a judicial action. See id. at 146-47, 112 S.Ct. at 1087-88. And, relatedly, if the situation is such that "a particular plaintiff may suffer irreparable harm if unable to secure immediate judicial consideration of his claim," exhaustion may be excused even though "the administrative decisionmaking schedule is otherwise reasonable and definite." Id. at 147, 112 S.Ct. at 1087.
13
Second, McCarthy acknowledges that it sometimes may be inappropriate for a court to require exhaustion if a substantial doubt exists about whether the agency is empowered to grant meaningful redress. See id. at 147-48, 154, 112 S.Ct. at 1087-88, 1091; see also Gibson v. Berryhill, 411 U.S. 564, 575 n. 14, 93 S.Ct. 1689, 1696 n. 14, 36 L.Ed.2d 488 (1973). An agency, for example, may lack authority to grant the type of relief requested. See, e.g., McNeese v. Board of Educ., 373 U.S. 668, 675, 83 S.Ct. 1433, 1437-38, 10 L.Ed.2d 622 (1963).
14
Finally, McCarthy teaches that the exhaustion rule may be relaxed where there are clear, objectively verifiable indicia of administrative taint. Thus, if the potential decisionmaker is biased or can be shown to have predetermined the issue, failure to exploit an available administrative remedy may be forgiven. See McCarthy, 503 U.S. at 148, 112 S.Ct. at 1088.
15
B. Application of the Doctrine.
16
Congress has excluded Navy Exchange personnel from the strictures of the Administrative Procedure Act, see 5 U.S.C. § 2105(c), and has not otherwise mandated that such employees always must exhaust administrative remedies as a condition precedent to suit. Accordingly, Portela's admitted failure to exercise the final level of available administrative review is not necessarily fatal to her claim; the effect of her omission depends instead upon whether the circumstances of her case can justify that omission.
17
1. The Availability of Fourth-Level Review. We start this phase of our analysis by addressing Portela's halfhearted argument, raised for the first time on appeal, that a fourth level of review was not in fact available to her. The argument is bogus.
18
The facts are as follows. The original administrative procedure, SECNAVINST 5300.22A, did not mention a fourth level of review. On November 15, 1989, however, the Secretary of the Navy promulgated SECNAVINST 5300.22B, directing subordinate commands to implement it within 120 days. The new regulation (5300.22B) explicitly canceled the old regulation (5300.22A). Nevertheless, on January 24, 1990, the Director, Officer of Civilian Personnel Management, granted an extension to the NRSSO, deferring the effective date of SECNAVINST 5300.22B until July 15, 1990. Thus, the notice of suspension issued to Portela on April 9, 1990, the notice of proposed disciplinary action issued to her on May 29, 1990, and the notice of decision dated June 22, 1990, all referenced SECNAVINST 5300.22A as the controlling regulation.
19
From that point forward, however, Portela clearly understood--indeed, urged--that SECNAVINST 5300.22B, which unarguably contains a fourth level of administrative review, governed her case. She mentioned it in her second appeal, dated August 12, 1990, and at the ensuing evidentiary hearing her counsel insisted that 5300.22B, rather than 5300.22A, controlled her case. While the hearing officer did not rule on the question, the ultimate decisionmaker at that level (the Commanding Officer of the Roosevelt Roads Naval Station) accepted Portela's argument and reviewed the hearing transcript in accordance with SECNAVINST 5300.22B. Throughout the remainder of the administrative process, both sides proceeded under that regulation.3
20
We do not aspire to add hues to a rainbow. By its terms, SECNAVINST 5300.22B applies here. And, moreover, since Portela consistently argued for its application during the latter stages of the administrative process, she cannot now be heard to complain that the agency surrendered to her exhortation. Equitable doctrines of estoppel apply in administrative and judicial fora, see generally Davis & Pierce, supra, §§ 13.1 to 13.5, and a party cannot take one position in an underlying administrative proceeding and then disclaim it in a subsequent suit arising out of the agency proceedings. Cf. Patriot Cinemas, Inc. v. General Cinema Corp., 834 F.2d 208, 212 (1st Cir.1987) (explaining that the doctrine of judicial estoppel "precludes a party from asserting a position in one legal proceeding which is contrary to a position it has already asserted in another").
21
2. The Futility Exception. The only question that remains is whether Portela's failure to mount the final rung of the administrative ladder is fatal to the court case. She argued below that the court should excuse her omission, asseverating that a final appeal to the Deputy Assistant Secretary of the Navy would have been a futile gesture because it would have resulted in an automatic affirmance of her dismissal. In theory, this is a good argument. Consistent with the exceptions limned by the McCarthy Court, we have recognized the inappropriateness of requiring exhaustion when further agency proceedings would be futile. See, e.g., Pihl v. Massachusetts Dep't of Educ., 9 F.3d 184, 190 (1st Cir.1993); Christopher W. v. Portsmouth Sch. Comm., 877 F.2d 1089, 1095 (1st Cir.1989); Ezratty v. Commonwealth of P.R., 648 F.2d 770, 774 (1st Cir.1981).
22
But the futility exception is not available for the asking. Reliance on the exception in a given case must be anchored in demonstrable reality. A pessimistic prediction or a hunch that further administrative proceedings will prove unproductive is not enough to sidetrack the exhaustion rule. See Christopher W., 877 F.2d at 1095-96; see also Gilbert v. City of Cambridge, 932 F.2d 51, 61 (1st Cir.1991) (admonishing that "the mere possibility, or even the probability, that the responsible agency may deny [a] permit should not be enough to trigger the [futility exception]"). Accordingly, "[a]n essential element of the claim of futility ... is that all reasonable possibilities of adequate administrative relief have been effectively foreclosed." Tucker v. Defense Mapping Agency Hydrographic/Topographic Ctr., 607 F.Supp. 1232, 1243 (D.R.I.1985). Indeed, the Seventh Circuit has held that claimants who seek safe harbor under the futility exception "must show that it is certain that their claim will be denied on appeal, not merely that they doubt an appeal will result in a different decision." Smith v. Blue Cross & Blue Shield United, 959 F.2d 655, 659 (7th Cir.1992).4
23
Portela cannot surmount this hurdle. The claim of futility is merely a self-serving pronouncement in the circumstances of this case. The evidence is uncontradicted that the Deputy Assistant Secretary is an impartial official who has reversed termination decisions affecting Navy Exchange personnel in the past. Though the prognosis for Portela's unused administrative appeal may have been poor and her expectations modest, neither courts nor litigants are allowed to equate pessimism with futility. See Hodges v. Callaway, 499 F.2d 417, 424 (5th Cir.1974). Because there is nothing in the record to suggest that Portela's lack of success at the previous levels of review necessarily signified that the final level of review would be an empty gesture, her failure to exhaust an available administrative remedy cannot be overlooked on the ground of futility.
24
3. The District Court's Rationale. To this point, we are in agreement with the court below. See Portela, 913 F.Supp. at 126-27 (declaring that alleged futility did not excuse Portela's nonexhaustion). After finding the plaintiff's futility argument futile, however, the district judge nonetheless elected to relax the exhaustion requirement "[i]n the interests of minimizing cost and delay in the judicial system and avoiding the waste of resources." Id. at 127. The judge reasoned that a perceived waste of resources, in and of itself, can justify excusing nonexhaustion of administrative remedies. We think not.5
25
Were we to adopt the lower court's reasoning, the resulting exception would swallow the exhaustion rule in a single gulp. Once an aggrieved party has brought suit, forcing her to retreat to any unused administrative appeal potentially wastes resources. The Supreme Court has disavowed such a resupinate approach. In McKart v. United States, 395 U.S. 185, 193, 89 S.Ct. 1657, 1662, 23 L.Ed.2d 194 (1969), the Court explained that a "primary purpose" of the exhaustion doctrine is "the avoidance of premature interruption of the administrative process." Consequently, it is generally inefficient to permit a party to seek judicial recourse without first exhausting her administrative remedies. See id. at 194, 89 S.Ct. at 1662-63. Following this train of thought, the Court has concluded that, by and large, concerns regarding efficiency militate in favor of, rather than against, strict application of the exhaustion doctrine. See McCarthy, 503 U.S. at 145, 112 S.Ct. at 1086-87; McKart, 395 U.S. at 195, 89 S.Ct. at 1663; see also Ezratty, 648 F.2d at 774 (acknowledging that the exhaustion doctrine "serves interests of accuracy, efficiency, agency autonomy and judicial economy").
26
This view is steeped in real-world wisdom. Insisting on exhaustion forces parties to take administrative proceedings seriously, allows administrative agencies an opportunity to correct their own errors, and potentially avoids the need for judicial involvement altogether. Furthermore, disregarding available administrative processes thrusts parties prematurely into overcrowded courts and weakens an agency's effectiveness by encouraging end-runs around it. See McCarthy, 503 U.S. at 145, 112 S.Ct. at 1086-87; McKart, 395 U.S. at 195, 89 S.Ct. at 1663.
27
4. The Bottom Line. To sum up, the futility exception is unavailable to Portela and the district court's professed reason for excusing her failure to exhaust administrative remedies neither passes muster on its own terms nor falls within any of the hallmark McCarthy exceptions.6 Those conclusions dictate the result we must reach. The plaintiff left an available administrative remedy untapped and the record in this case, howsoever construed, reveals no sufficiently excusatory circumstances to warrant spurning that remedy.
28
First, there is no indication that full exhaustion would have caused undue prejudice, irreparable harm, or unusual hardship of any sort. Although Portela had already pursued a fairly lengthy administrative process, it had moved celeritously--the pavane began when the OIC terminated Portela's employment as of July 3, 1990, and ended when the NRSSO, in the person of Rear Admiral Weatherson, denied her penultimate administrative appeal on March 25, 1991--and the Deputy Assistant Secretary would have been required to respond to her final appeal "within 60 calendar days of receipt of the official record." SECNAVINST 5300.22B Ch.V (9)(d)(3). Second, the agency (here, the Navy) was fully capable of granting all the relief that Portela originally sought, namely, reinstatement, reassignment, and quashing the charges against her. Third, there is no meaningful indication of any institutional bias. Fourth, the plaintiff has not identified any other special circumstance warranting relaxation of the exhaustion rule, and our careful perlustration of the record reveals none. It follows that the district court should have dismissed the complaint for failure of the plaintiff to exhaust available administrative remedies.
IV. CONCLUSION
29
It may seem hypertechnical to some that a person who believes herself aggrieved by agency action must jump through a series of hoops before she can seek out a judicial forum. But long-recognized concerns regarding agency autonomy and judicial efficiency weigh heavily in favor of requiring complete exhaustion of administrative remedies. When all is said and done, our system of justice depends on litigants' adherence to well-defined rules. Where, as here, a party decides unilaterally to forsake those rules, she does so at her peril.
30
We need go no further. The short of it is that Portela lacked a legally sufficient reason for leaping prematurely to a judicial venue. Thus, the district court should have dismissed her complaint for failure to exhaust available administrative remedies. In the end, however, the district court's error is of no moment; though the court entered judgment in favor of the Navy on an inappropriate ground, the Navy is nonetheless entitled to judgment.
31
Affirmed.
1
Portela's husband, Juan Enrique Del Valle, and their conjugal partnership are also plaintiffs; the Secretary of the Navy and the Naval Resale and Services Support Office (NRSSO) are additional defendants. For simplicity's sake, we treat the case as involving only Portela and the Navy
2
While simple arithmetic indicates that this figure is in the vicinity of 40% of the original purchase price, the record sheds no further light on its genesis. We need not probe the point, however, because Portela does not challenge the amount
3
We cite two episodes which confirm this conclusion. In her third-level notice of appeal, Portela stated expressly that "[t]his appeal arises under SECNAVINST 5300.22B." By like token, in resolving that appeal adversely to Portela, the NRSSO commandant specifically informed Portela of her right to a fourth-level appeal under SECNAVINST 5300.22B
4
For our part, we are tempted to set the benchmark slightly below absolute certainty, cf. Gilbert, 932 F.2d at 61 ("To come within the exception, a sort of inevitability is required: the prospect of refusal must be certain (or nearly so)."), but the case at hand does not require us to choose between these two formulations
5
To be sure, we stated in Ezratty that "[s]ometimes to require exhaustion will not only waste resources but also work severe harm upon a litigant." 648 F.2d at 774. Taken in context, this statement is entirely compatible with the "undue prejudice/irreparable harm" consideration outlined by the McCarthy Court in its discussion of the first potential exception to the exhaustion rule. 503 U.S. at 146-47, 112 S.Ct. at 1087-88. In the case at bar, there is no hint that taking an appeal to the Deputy Assistant Secretary would have caused Portela irreparable harm or otherwise seriously prejudiced her rights
6
We do not suggest that the three exceptions to the exhaustion rule delineated by the McCarthy Court comprise an exclusive compendium. But to the extent that other exceptions appropriately may lie, they must be on a par with the exceptions described by the Court. As explained in the text, the record here contains nothing which suggests a plausible basis for a further exception
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935 F.2d 1106
19 Fed.R.Serv.3d 1217
Kenneth E. HALL, Jr., Plaintiff-Appellant,v.Henry BELLMON, Governor; Robert H. Henry, Attorney General;Gary Maynard; Steven Kaiser; Captain E. Smith;Sgt. B. Jones; Buddy Honaker; TwoUnnamed Guards, Defendants-Appellees.
No. 90-6326.
United States Court of Appeals,Tenth Circuit.
June 3, 1991.
Kenneth E. Hall, Jr., pro se.
Robert H. Henry, Atty. Gen. of Okl., and Karin M. Kriz, Asst. Atty. Gen. of Okl., Oklahoma City, Okl., for defendants-appellees.
Before LOGAN, MOORE and BALDOCK, Circuit Judges.
LOGAN, Circuit Judge.
1
Pro se plaintiff Kenneth E. Hall, Jr. appeals the district court's dismissal of his claim that the policies and procedures of the Lexington Assessment and Reception Center (LARC), as well as the actions of LARC employees, violated his First Amendment right to free exercise of religion. He contends that the district court applied the wrong legal standards in dismissing his case, improperly relied on evidence not in the pleadings, and failed to give proper notice and opportunity for discovery.1
2
* Because all are relevant to our discussion of the issues, we summarize here the procedure and law applicable to the three most common pretrial points at which a district court may dispose of a pro se complaint.
3
* First, if the plaintiff is proceeding in forma pauperis, a court "may dismiss the case if the allegation of poverty is untrue, or if satisfied that the action is frivolous or malicious." 28 U.S.C. Sec. 1915(d). A Sec. 1915(d) dismissal may be sua sponte when "on the face of the complaint it clearly appears that the action is frivolous or malicious." Henriksen v. Bentley, 644 F.2d 852, 854 (10th Cir.1981); see also Neitzke v. Williams, 490 U.S. 319, 324, 109 S.Ct. 1827, 1831, 104 L.Ed.2d 338 (1989).2 The term "frivolous" refers to "the inarguable legal conclusion" and "the fanciful factual allegation." Neitzke, 490 U.S. at 325, 109 S.Ct. at 1831. The purpose of Sec. 1915(d) is "to discourage the filing of, and waste of judicial and private resources upon, baseless lawsuits that paying litigants generally do not initiate...." Id. at 327, 109 S.Ct. at 1832-33.
4
In contrast to Fed.R.Civ.P. 12(b)(6), which authorizes dismissal whenever a complaint fails to state a claim on which relief can be granted "without regard to whether [the claim] is based on an outlandish legal theory or on a close but ultimately unavailing one," Sec. 1915(d) authorizes dismissal of "a claim based on an indisputably meritless legal theory." Neitzke, 490 U.S. at 327, 109 S.Ct. at 1833. "[W]henever a plaintiff states an arguable claim for relief, dismissal for frivolousness under Sec. 1915(d) is improper, even if the legal basis underlying the claim ultimately proves incorrect." McKinney v. Oklahoma, 925 F.2d 363, 365 (10th Cir.1991) (emphasis in original) (citing Neitzke, 490 U.S. at 328, 109 S.Ct. at 1833). Examples of claims based on inarguable legal theories include those against which the defendants are undeniably immune from suit and those alleging an infringement of a legal interest that clearly does not exist. Neitzke, 490 U.S. at 327, 109 S.Ct. at 1832-33.
5
Section 1915(d) also gives the district court "the unusual power to pierce the veil of the complaint's factual allegations and dismiss those claims whose factual contentions are clearly baseless." Id. Clearly baseless factual allegations are those that are "fantastic" or "delusional." Id. at 327-28, 109 S.Ct. at 1832-33. The concern that pro se litigants have notice and opportunity to avoid dismissal of their legitimate claims by amending and supporting their pleadings militates against equating Sec. 1915(d) and Rule 12(b)(6) standards, id. at 329-30, 109 S.Ct. at 1834; that same concern forbids equating Sec. 1915(d) and Fed.R.Civ.P. 56 summary judgment standards. A plausible factual allegation, even if it lacks evidentiary support, is not "frivolous" as contemplated by Sec. 1915(d), even though it may not survive a motion for summary judgment.
6
When the pro se plaintiff is a prisoner, a court-authorized investigation and report by prison officials (referred to as a Martinez report) is not only proper, but may be necessary to develop a record sufficient to ascertain whether there are any factual or legal bases for the prisoner's claims. Martinez v. Aaron, 570 F.2d 317, 318-19 (10th Cir.1978); see also Gee v. Estes, 829 F.2d 1005, 1007 (10th Cir.1987). Telephone evidentiary hearings before a judge or magistrate may serve the same purpose as a Martinez report. Gee, 829 F.2d at 1008. Although a court may consider the Martinez report in dismissing a claim pursuant to Sec. 1915(d), id. at 1007, it cannot resolve material disputed factual issues by accepting the report's factual findings when they are in conflict with pleadings or affidavits. Reed v. Dunham, 893 F.2d 285, 287 n. 2 (10th Cir.1990); El'Amin v. Pearce, 750 F.2d 829, 832 (10th Cir.1984); Sampley v. Ruettgers, 704 F.2d 491, 493 n. 3 (10th Cir.1983). A bona fide factual dispute exists even when the plaintiff's factual allegations that are in conflict with the Martinez report are less specific or well-documented than those contained in the report. Because pro se litigants may be unfamiliar with the requirements to sustain a cause of action, they should be provided an opportunity to controvert the facts set out in the Martinez report.
B
7
Second, the court may dismiss a complaint for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). The complaint should not be dismissed for failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) (footnote omitted); Meade v. Grubbs, 841 F.2d 1512, 1526 (10th Cir.1988); Grider v. Texas Oil & Gas Corp., 868 F.2d 1147, 1148 (10th Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 76, 107 L.Ed.2d 43 (1989). A court reviewing the sufficiency of a complaint presumes all of plaintiff's factual allegations are true and construes them in the light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Meade, 841 F.2d at 1526; Morgan v. City of Rawlins, 792 F.2d 975, 978 (10th Cir.1986). If matters outside the pleadings are considered by the court, the Rule 12(b)(6) motion is treated as a motion for summary judgment and disposed of pursuant to Fed.R.Civ.P. 56. Fed.R.Civ.P. 12(b); Reed, 893 F.2d at 287 n. 2. Although dismissals under Rule 12(b)(6) typically follow a motion to dismiss, giving plaintiff notice and opportunity to amend his complaint, a court may dismiss sua sponte "when it is 'patently obvious' that the plaintiff could not prevail on the facts alleged, and allowing him an opportunity to amend his complaint would be futile." McKinney, at 365 (citations omitted).
8
A pro se litigant's pleadings are to be construed liberally and held to a less stringent standard than formal pleadings drafted by lawyers. Haines v. Kerner, 404 U.S. 519, 520-21, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972); see also Estelle v. Gamble, 429 U.S. 97, 106, 97 S.Ct. 285, 292, 50 L.Ed.2d 251 (1976); Gillihan v. Shillinger, 872 F.2d 935, 938 (10th Cir.1989). We believe that this rule means that if the court can reasonably read the pleadings to state a valid claim on which the plaintiff could prevail, it should do so despite the plaintiff's failure to cite proper legal authority, his confusion of various legal theories, his poor syntax and sentence construction, or his unfamiliarity with pleading requirements.3 At the same time, we do not believe it is the proper function of the district court to assume the role of advocate for the pro se litigant.
9
The broad reading of the plaintiff's complaint does not relieve the plaintiff of the burden of alleging sufficient facts on which a recognized legal claim could be based. Not every fact must be described in specific detail, Conley, 355 U.S. at 47, 78 S.Ct. at 102-03, and the plaintiff whose factual allegations are close to stating a claim but are missing some important element that may not have occurred to him, should be allowed to amend his complaint, Reynoldson v. Shillinger, 907 F.2d 124, 126-27 (10th Cir.1990). Nevertheless, conclusory allegations without supporting factual averments are insufficient to state a claim on which relief can be based. Dunn v. White, 880 F.2d 1188, 1197 (10th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 871, 107 L.Ed.2d 954 (1990); Sooner Products Co. v. McBride, 708 F.2d 510, 512 (10th Cir.1983); Clulow v. Oklahoma, 700 F.2d 1291, 1303 (10th Cir.1983), overruled on other grounds sub nom, Garcia v. Wilson, 731 F.2d 640 (10th Cir.1984), aff'd, 471 U.S. 261, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985); Wise v. Bravo, 666 F.2d 1328, 1333 (10th Cir.1981); Lorraine v. United States, 444 F.2d 1, 2 (10th Cir.1971). This is so because a pro se plaintiff requires no special legal training to recount the facts surrounding his alleged injury, and he must provide such facts if the court is to determine whether he makes out a claim on which relief can be granted. Moreover, in analyzing the sufficiency of the plaintiff's complaint, the court need accept as true only the plaintiff's well-pleaded factual contentions, not his conclusory allegations. Dunn, 880 F.2d at 1190 (quoting Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir.1984)).
C
10
Third, the court may grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A motion for summary judgment that is supported by affidavits or other materials provided under oath gives the adverse party notice that summary judgment is possible; the adverse party must respond with affidavits or other evidence to show a genuine issue of material fact. Jaxon v. Circle K Corp., 773 F.2d 1138, 1139 (10th Cir.1985). A motion to dismiss pursuant to Rule 12(b)(6) is treated as a motion for summary judgment when premised on materials outside the pleadings, and the opposing party is afforded the same notice and opportunity to respond as provided in Rule 56.4 Fed.R.Civ.P. 12(b); Reed, 893 F.2d at 287 n. 2. "The provisions of Rule 56(c) for notice to the opposing party and an opportunity for him to serve opposing affidavits are mandatory. Noncompliance therewith deprives the court of authority to grant summary judgment." Torres v. First State Bank of Sierra County, 550 F.2d 1255, 1257 (10th Cir.1977) (citation omitted). Furthermore, " '[d]istrict courts must take care to insure that pro se litigants are provided with proper notice regarding the complex procedural issues involved in summary judgment proceedings.' " Jaxon, 773 F.2d at 1140 (quoting Garaux v. Pulley, 739 F.2d 437, 439 (9th Cir.1984)); see also Roseboro v. Garrison, 528 F.2d 309, 310 (4th Cir.1975) (pro se plaintiff should "be advised of his right to file counter-affidavits or other responsive material and alerted to the fact that his failure to so respond might result in the entry of summary judgment against him").
11
Material factual disputes cannot be resolved at summary judgment based on conflicting affidavits.5 See, e.g., Sampley, 704 F.2d at 496. To come within the protection of this rule, however, the nonmovant's affidavits must be based upon personal knowledge and set forth facts that would be admissible in evidence; conclusory and self-serving affidavits are not sufficient. See Fed.R.Civ.P. 56(e); Palucki v. Sears, Roebuck & Co., 879 F.2d 1568, 1572 (7th Cir.1989). Likewise, only material factual disputes preclude summary judgment; factual disputes about immaterial items are irrelevant. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Affidavits or other evidence offered by a nonmovant must create a genuine issue for trial; viewing the evidence in the light most favorable to the nonmovant, it is not enough that the evidence be "merely colorable" or anything short of "significantly probative." Id. at 249-50, 106 S.Ct. at 2510-11. This is because when "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is 'no genuine issue for trial.' " Matsushita Elec. Indust. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (quoting First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 289, 88 S.Ct. 1575, 1592-93, 20 L.Ed.2d 569 (1968)).
12
A Martinez report is treated like an affidavit, and the court is not authorized to accept the factual findings of the prison investigation when the plaintiff has presented conflicting evidence. See Sampley, 704 F.2d at 493 n. 3. The plaintiff's complaint may also be treated as an affidavit if it alleges facts based on the plaintiff's personal knowledge and has been sworn under penalty of perjury. Jaxon, 773 F.2d at 1139 n. 1 (citing, inter alia, Gordon v. Watson, 622 F.2d 120, 123 (5th Cir.1980)) ("In certain circumstances a verified pleading may itself be treated as an affidavit in support of a motion for summary judgment, but only if it satisfies the standards for affidavits set out in Rule 56(e).").
II
13
In the instant case, plaintiff, a state prisoner, alleges three separate violations of his First Amendment right to free exercise of religion while an inmate at LARC, in that LARC officials (1) confiscated his medicine bag and talisman, which are used in the practice of his Native American religion; (2) improperly destroyed the medicine bag and talisman; and (3) cut his hair, without giving him an opportunity to apply for an exemption, in violation of his religious beliefs.
14
In a thorough memorandum opinion, the district court considered and dismissed each of plaintiff's claims pursuant to Fed.R.Civ.P. 12(b)(6). Plaintiff contends that the district court improperly dismissed his complaint as frivolous under Sec. 1915(d). Although the court did say that it had "also reviewed the complaint under 28 U.S.C. Sec. 1915(d)," R. tab 52 at 2-3 (emphasis added), it never characterized plaintiff's claims as frivolous. The only plausible reading of the district court's opinion is that the court dismissed plaintiff's case for failure to state a claim on which relief can be granted.
15
* Plaintiff argues that his claim regarding confiscation of his religious items should not have been dismissed because the court considered and referred to the Martinez report.6 As noted above, when the court does not exclude materials outside the pleadings, a Rule 12(b)(6) motion is treated as one for summary judgment and the plaintiff must be given notice and the opportunity to respond with affidavits or similar evidence. Fed.R.Civ.P. 12(b); Reed, 893 F.2d at 287 n. 2. Here, plaintiff was not provided with the notice and opportunity to respond required by Fed.R.Civ.P. 56.
16
We hold, however, that in particular circumstances the Martinez report may be considered part of the pleadings for purposes of Fed.R.Civ.P. 12(b). A written document that is attached to the complaint as an exhibit is considered part of the complaint and may be considered in a Rule 12(b)(6) dismissal. Fed.R.Civ.P. 10(c); Chester County Intermediate Unit v. Pennsylvania Blue Shield, 896 F.2d 808, 812 (3d Cir.1990); Morton v. Becker, 793 F.2d 185, 187 (8th Cir.1986); Sullivan v. United States, 788 F.2d 813, 815 n. 3 (1st Cir.1986); Quiller v. Barclays Am./Credit, Inc., 727 F.2d 1067, 1069 (11th Cir.1984), cert. denied, 476 U.S. 1124, 106 S.Ct. 1992, 90 L.Ed.2d 673 (1986); Amfac Mortgage Corp. v. Arizona Mall of Tempe, 583 F.2d 426, 429-30 (9th Cir.1978). One circuit court, however, has held that affidavits, in contrast to other written documents attached to the complaint, may not be considered in dismissing under Fed.R.Civ.P. 12(b)(6). Rose v. Bartle, 871 F.2d 331, 339-40 n. 3 (3d Cir.1989); contra Schnell v. City of Chicago, 407 F.2d 1084, 1085 (7th Cir.1969) (holding that affidavits attached to the complaint are part thereof). The Martinez report is often treated like an affidavit. See, e.g., Sampley, 704 F.2d at 493 n. 3. Further, here the Martinez report was attached not to plaintiff's complaint, but to defendants' brief in support of their motion to dismiss. See Goldman v. Belden, 754 F.2d 1059, 1066 (2d Cir.1985) (holding Rule 12(b)(6) consideration of documents attached to defendants' motion to dismiss improper).
17
Nevertheless, we have authorized the district courts to require a Martinez report to develop a basis for determining whether a prisoner plaintiff has a possibly meritorious claim. The purpose of the Martinez report is to identify and clarify the issues plaintiff raises in his complaint. Martinez, 570 F.2d at 319; Gee, 829 F.2d at 1007. It also aids the court in its broad reading of the pro se litigant's pleadings under Haines, 404 U.S. at 520-21, 92 S.Ct. at 595-96, by supplementing a plaintiff's often inadequate description of the practices that he contends are unconstitutional. See Gee, 829 F.2d at 1007. When the plaintiff challenges a prison's policies or established procedures and the Martinez report's description of the policies or procedures remains undisputed after plaintiff has an opportunity to respond, we should, and will, treat the portion of the Martinez report describing the policies or procedures like a written document that has been attached to plaintiff's complaint. Thus, the court appropriately considered the Martinez report.
18
In the instant case, plaintiff essentially is challenging a policy of the LARC not to allow prisoners to have sharp items that can be used as weapons or items that can be worn around the neck, which can be used to choke inmates or guards or to commit suicide. Plaintiff's talisman is a sharp bear tooth necklace, and his medicine bag has a thong which could be used for wearing around the neck. The court referred only to those portions of the Martinez report that describe the challenged policy and the reasons for it; the court does not use the report to resolve factual issues or to find that there are no disputed facts. Plaintiff had the opportunity to respond to the Martinez report, R. tab 37, and he did respond, R. tabs 40 & 47. He does not challenge the Martinez report's description of the policy or its reasons; instead he disputes the reasonableness of the policy in light of his constitutional right to free exercise of his religion, a legal question appropriately resolved in a 12(b)(6) ruling.
19
Although plaintiff retains his fundamental right to practice his religion in prison, prison regulations may constitutionally impinge on plaintiff's right if "the regulation is 'reasonably related to legitimate penological interests.' " Washington v. Harper, 494 U.S. 210, 110 S.Ct. 1028, 1037, 108 L.Ed.2d 178 (1990) (quoting Turner v. Safley, 482 U.S. 78, 89, 107 S.Ct. 2254, 2261, 96 L.Ed.2d 64 (1987)); see also O'Lone v. Estate of Shabazz, 482 U.S. 342, 349, 107 S.Ct. 2400, 2405-05, 96 L.Ed.2d 282 (1987); Dunn, 880 F.2d at 1197. Turner set forth four factors that the court is to consider in reviewing a challenged prison regulation.
20
"First, there must be a 'valid, rational connection' between the prison regulation and the legitimate governmental interest put forward to justify it.... A second factor ... is whether there are alternative means of exercising the right that remain open to prison inmates.... A third consideration is the impact accommodation of the asserted constitutional right will have on guards and other inmates, and on the allocation of prison resources generally.... Finally, the absence of ready alternatives is evidence of the reasonableness of a prison regulation."
21
Turner, 482 U.S. at 89-90, 107 S.Ct. at 2262 (citations omitted).
22
The district court found that the LARC regulations which prohibit any inmate from possessing sharp objects or items that can be worn around the neck, including religious items, were, on their face, reasonably related to the legitimate penological interest in protecting the safety of other inmates and prison personnel and preventing suicide attempts. The court also noted that the regulations guarantee inmates other avenues for the practice of their respective religions, including Native American beliefs. We are convinced that the district court correctly applied the proper standards and that plaintiff cannot state a claim for relief on the facts alleged.
B
23
Plaintiff also challenges the dismissal of his claim for the destruction of his religious items. The district court found that plaintiff must allege intentional destruction of his property to sustain a Sec. 1983 action and that plaintiff's conclusory allegations of intent are insufficient. We agree. A valid claim for loss of prisoner's property in violation of the Due Process Clause of the Fourteenth Amendment must include allegations of deliberate conduct by state actors. See Daniels v. Williams, 474 U.S. 327, 333-34, 106 S.Ct. 662, 666-67, 88 L.Ed.2d 662 (1986); Archuleta v. McShan, 897 F.2d 495, 497-99 (10th Cir.1990). Although plaintiff need not allege every element of his action in specific detail, Conley, 355 U.S. at 47, 78 S.Ct. at 102-03, he cannot rely on conclusory allegations, Dunn, 880 F.2d at 1197; Sooner Products, 708 F.2d at 512; Clulow, 700 F.2d at 1303; Wise, 666 F.2d at 1333; Lorraine, 444 F.2d at 2. Plaintiff's mere words "with malous [sic] and forthougth [sic]" are insufficient without any facts to support the conclusion. Plaintiff has not even presented his theory as to why defendants would intentionally destroy his property.
C
24
Finally, we consider the dismissal of plaintiff's claim regarding the cutting of his hair in violation of his religious beliefs. LARC policy requires that the hair of all new inmates be cut. The justifications advanced to support the requirement, that we believe have merit, are that it prevents inmates from hiding weapons in long hair and from easily changing their appearance should they escape, and it facilitates good hygiene. The court found the policy, as set forth in the Martinez report, reasonably related to a legitimate penological interest. The nature of the policy is undisputed, and plaintiff had the opportunity to respond. Thus, the district court properly considered this portion of the Martinez report as if it were part of plaintiff's complaint.
25
The district court also appears to have accepted the Martinez report's assertions that LARC's status as an intake facility, in which inmates stay only ten days on average, makes an exemption process for religious beliefs unfeasible. The lack of alternatives to a regulation that otherwise violates a prisoner's constitutional rights is relevant to determining the validity of the regulation. Turner, 482 U.S. at 90, 107 S.Ct. at 2262. Whether the existence of alternatives to the regulation renders the regulation unreasonable is a legal question appropriately resolved on a Rule 12(b)(6) motion.
26
Plaintiff disputes defendants' assertion that there is no reasonable opportunity for religious exemptions to the haircut requirement. He states that he was an inmate at LARC for thirty-one days, which was the norm at the time his hair was cut--in contrast to the Martinez report's ten days. R. tab 47 at 2. Thus, if the time difference is important to a determination whether an exemption process for religious beliefs is feasible, the district court, by accepting the ten-day average stay assertion in the Martinez report, has improperly resolved a factual dispute more properly the subject of a summary judgment proceeding or a trial.
27
We do not believe, however, that the ten-day, thirty-one-day difference is legally significant. LARC is still a temporary detention facility, receiving and processing for redeployment to other facilities many inmates incarcerated for different crimes. That some or even many are kept for a month does not require, we hold, establishment of a haircut exemption procedure. Thus, the district court permissibly rejected this claim under a 12(b)(6) ruling.
28
AFFIRMED.
1
After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed.R.App.P. 34(a); 10th Cir.R. 34.1.8. The cause is therefore ordered submitted without oral argument
2
The court may dismiss pursuant to Sec. 1915(d), even if defendants have sought dismissal on Rule 12(b)(6). Taylor v. Wallace, 931 F.2d 698, 700 (10th Cir.1991)
3
The Haines rule applies to all proceedings involving a pro se litigant, including Sec. 1915(d) and summary judgment proceedings. See, e.g., Reed, 893 F.2d at 286 (liberally construing pleadings dismissed under Sec. 1915(d)); Overton v. United States, 925 F.2d 1282 (10th Cir.1990) (liberally construing pro se pleadings in review of summary judgment). In addition, pro se litigants are to be given reasonable opportunity to remedy the defects in their pleadings. See, e.g., Reynoldson v. Shillinger, 907 F.2d 124, 126 (10th Cir.1990); Jaxon v. Circle K Corp., 773 F.2d 1138, 1140 (10th Cir.1985)
4
We will treat a dismissal as proper under Rule 12(b) even when the district court does not exclude materials outside the pleadings if the court does not refer to or rely on the outside materials in its order and if, as a matter of law, the complaint is insufficient. Childers v. Independent School Dist. No. 1 of Bryan County, 676 F.2d 1338, 1340 (10th Cir.1982); Torres v. First State Bank of Sierra County, 550 F.2d 1255, 1257 (10th Cir.1977)
5
A movant is not always required to come forward with affidavits or other evidence to obtain summary judgment; once the movant points out an absence of proof on an essential element of the nonmovant's case, the burden shifts to the nonmovant to provide evidence to the contrary. See Celotex v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986)
6
The court requested LARC officials to investigate plaintiff's claims and prepare a Martinez report. The court found the original report, which was filed with defendants' brief in support of their motion to dismiss, R. tab 35, to be deficient in certain respects and ordered defendants to prepare a supplemental report, R. tab 41 at 3 and 4. The supplemental report was filed with defendants' supplemental brief in support of their motion to dismiss. R. tabs 44, 45. The court referred to both reports in its Memorandum Opinion of September 28, 1990. R. tab 52. The term "Martinez report" is used here to mean both reports taken together
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543 U.S. 866
HUDLERv.DRETKE, DIRECTOR, TEXAS DEPARTMENT OF CRIMINAL JUSTICE, CORRECTIONAL INSTITUTIONS DIVISION.
No. 03-11062.
Supreme Court of United States.
October 4, 2004.
1
C. A. 5th Cir. Certiorari denied. Reported below: 79 Fed. Appx. 674.
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370 S.E.2d 311 (1988)
Joan Hamilton SCHMIDT
v.
Joseph William SCHMIDT, Jr.
Record No. 0694-87-3.
Court of Appeals of Virginia.
July 5, 1988.
*312 H. Gregory Campbell, Jr. (Gilmer, Sadler, Ingram, Sutherland & Hutton, Blacksburg, on briefs), for appellant.
Richard W. Davis, Radford, for appellee.
Present: COLEMAN, DUFF and HODGES, JJ.
COLEMAN, Judge.
Joan Schmidt appeals the trial court's decision denying her a judgment for child support arrearages. She argues that a 1983 decree ordering Joseph Schmidt to pay $900 "until further order of the Court" supplanted the reduction provisions of a 1981 separation agreement which had been incorporated into the final divorce decree. She contends that an arrearage resulted from Joseph Schmidt paying an amount based upon the reduction provisions in the contract rather than the obligation as directed by the court's decree. Mr. Schmidt responds that the 1983 decree merely modified the amount of the monthly child support payments established by the separation agreement so that $900 rather than $800 as provided in the agreement was the figure from which the contract reductions would be taken. We agree with Mr. Schmidt and affirm the trial court's decision.
The Schmidts were divorced in July of 1981. A separation agreement between them provided that Mr. Schmidt would pay $800 per month child support. The child support payment would decrease by $100 per month when Mrs. Schmidt sold the marital residence which she acquired under the agreement, and would further decrease by $100 per month when each child graduated from high school. The divorce decree affirmed and incorporated the separation agreement.
In February 1983, Mrs. Schmidt petitioned to increase the child support. The court granted an increase, ordering,
And it further appearing that the Defendant has been voluntarily paying to the Plaintiff the sum of $900 per month for support of the infant children, and it appearing that such sum is at this time sufficient for the proper care and maintenance of the children, it is accordingly ADJUDGED, ORDERED and DECREED that the Defendant continue, until further order of this Court, to pay to the Plaintiff for support of the infant children the sum of $900 per month, such sum being due and payable on the last day of each month.
Mr. Schmidt continued to pay $900 per month, less the reductions in the separation agreement as the specified events occurred. In November 1986, Mrs. Schmidt filed a petition alleging Mr. Schmidt was in arrears in the amount of $5,310 because the decree increasing child support to $900 per month superseded the contractual reduction provisions. The trial court held that the 1983 decree only increased the monthly amount due under the agreement from $800 to $900 and that all other provisions of the contract which had been approved and incorporated in the final divorce decree remained intact. Thus, the court held that Mr. Schmidt was not in arrears.
Although courts view favorably the efforts of parties to resolve their disputes amicably, the legislature and the courts have recognized in domestic relations matters the need to reserve authority with the courts to modify child support awards as the circumstances may require where the interests of children are at stake. Code § 20-108; Osborne v. Osborne, 215 Va. 205, 212, 207 S.E.2d 875, 882 (1974). This jurisdiction remains with the court despite any agreements between the parents. Parrillo v. Parrillo, 1 Va.App. 226, 231, 336 S.E.2d 23, 26 (1985). This is so even when the agreement between the parents has been ratified and incorporated into the divorce decree. Edwards v. Lowry, 232 Va. 110, 112, 348 S.E.2d 259, 261 (1986). The court had the authority in this case, therefore, to modify the agreement in part or to supplant it altogether, as the best interests of the children would dictate.
*313 Mrs. Schmidt argues that the provision "until further order of the Court" is a plain and unambiguous directive, which necessarily required that the 1983 decree superseded the 1981 agreement with respect to the child support payment. She relies upon a line of cases which hold that a spouse must pay according to the terms of a court's decree, that the right to payments becomes vested when due, and that the remedy to an inequitable award is to petition the court for a modification of the support provisions. See, e.g., Fearon v. Fearon, 207 Va. 927, 154 S.E.2d 165 (1967); Cofer v. Cofer, 205 Va. 834, 140 S.E.2d 663 (1965); Newton v. Newton, 202 Va. 515, 118 S.E.2d 656 (1961). We agree that a former spouse must make payments according to the court's decree; a spouse's delay in pursuing enforcement, or acquiescence by accepting a lesser amount than the court award, or an agreement to accept a lesser sum than the award, will not relieve the obligor nor will it prevent accumulation of an arrearage. See Richardson v. Moore, 217 Va. 422, 229 S.E.2d 864 (1976). However, we do not agree that the phrase "until further order of this Court" was a directive which necessarily superseded all the provisions of the ratified and incorporated separation agreement. The scope and effect of the 1983 decree upon the court's prior approval and incorporation of the contract provisions into the 1981 decree depends upon the intent of the trial court at the time. The chancellor must construe the 1983 decree in light of the circumstances of the case at the time to determine whether the decree was intended to supplant the reduction provisions of the original agreement or whether it merely modified the amount of monthly support.
"[W]hen the contract is incorporated in the divorce decree, a subsequent order revising the amount of the monthly payment does not necessarily `supplant' the contract provisions regarding child support." Gazale v. Gazale, 219 Va. 775, 778-79, 250 S.E.2d 365, 367 (1979). In Gazale, the separation agreement which was affirmed, ratified, and incorporated by the divorce decree, provided that husband would pay monthly child support of $267 per child until each child attained the age of twentyone years, got married, or became self-supporting. Approximately a year later, the chancellor entered a consent decree awarding husband custody of one child and reducing the support payment by $267 "until the further Order of this Court." Three years later, custody of that child was returned to the wife and the monthly payment was restored for the period set out in the contract. The husband argued that since the consent decree supplanted the contract, the court was without jurisdiction to order support beyond age eighteen, the legal age of majority. The Virginia Supreme Court held that the decree did not supplant the contract in light of the fact that the monthly payment was only one of several provisions related to child support. Recognizing that the consent decree was a court order, the Court also noted that it was contractual in nature and concluded that the decree amended the contract rather than supplanted it, and that the period of support intended by the contract would control. See also Mack v. Mack, 217 Va. 534, 229 S.E.2d 895 (1976) (court order to pay $225 "until the further order of [the] Court" did not supplant the contract).
Although the decree in the case before us was not styled a "consent decree," as it was in Gazale, the trial court noted that the husband voluntarily had been paying $900 instead of $800 as required by the agreement, and that the decree ordered only that he continue to do so. Thus, the parties were apparently in agreement before the decree; the decree merely formalized the obligations already assumed. Further, as in Gazale, the monthly support payment was only one of a number of provisions related to child support. All of those provisions, including the reduction provisions, were incorporated into the divorce decree and were enforceable by decree. The 1983 order touched only one of those provisions and did not require that any others be changed to give the order effect. We will not construe the general language from the 1983 decree, "until further order of the court," as evincing an intention by the trial judge to supersede *314 other specific provisions from a former decree unless they are necessarily affected by the amendments. Here the 1983 amendment does not necessarily conflict with the reduction provisions which had been incorporated in the 1981 final decree. Where the court's decree does not expressly or by necessity supplant the provisions of the former decree incorporating the agreement or where the two are not incompatible, the valid provisions of both decrees will be enforced. Additionally, while a chancellor's construction of his own decree is not conclusive of the court's intention at the time, we deem it significant that the same judge who issued the decree in 1983 held in 1987 that his intention in 1983 was to modify the contract and decree so that $900 would become the amount of monthly child support from which the reductions incorporated in the 1981 decree would be applied.
The trial judge did not issue the 1983 decree in a vacuum, nor will we construe it in one. When he ordered the increase in child support in 1983, he did so with full knowledge of the affirmed and incorporated contract, including the self-executing reduction provisions. The 1983 decree affected only the amount of monthly child support; it did not address, supplant, or supersede the other child support provisions in the contract or the decree incorporating its provisions. The effect of the 1983 decree was to continue by court order what the husband was doing voluntarily. In the context of the agreement and these circumstances, we hold that the 1983 decree did not supplant the contract, but served rather to amend it. The decree amended the contract to require the father to pay $900 per month for the support of his children, less the reductions as they were authorized by the contract. The trial court so held, and we affirm that decision.
Affirmed.
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15 A.3d 884 (2011)
GREENWOOD GAMING AND ENTERTAINMENT, INC., Petitioner
v.
PENNSYLVANIA GAMING CONTROL BOARD, Respondent.
Valley Forge Convention Center Partners, L.P., Intervenor.
No. 106 MM 2009.
Supreme Court of Pennsylvania.
Argued October 21, 2009.
Decided March 8, 2011.
*885 Scott Thomas Wyland, Kevin James McKeon, Hawke McKeon & Sniscak, L.L.P., Mark Scott Stewart, Alan C. Kohler, LeRoy S. Zimmerman, Eckert Seamans *886 Cherin & Mellott, LLC, Harrisburg, for Greenwood Gaming and Entertainment Inc.
Raymond Adam Quaglia, Jason A. Leckerman, Adrian Renz King, Jr., Robert P Krauss, Arthur Makadon, Ballard Spahr Andrews & Ingersoll, L.L.P., Philadelphia, Amy Ann Underwood, for Valley Forge Convention Center Partners, LP.
Richard Douglas Sherman, David Cornelius Hittinger, Jr., Stephen S. Cook, PA Gaming Control Board, for Pennsylvania Gaming Control Board.
BEFORE: CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, GREENSPAN, JJ.
OPINION
Justice McCAFFERY.
In this appeal, we consider whether Appellee, the Pennsylvania Gaming Control Board (the "Board"), properly approved a Category 3 slot machine license application submitted by Intervenor, Valley Forge Convention Center Partners, L.P. ("Valley Forge Partners"), pursuant to the Race Horse Development and Gaming Act (the "Gaming Act"), 4 Pa.C.S. §§ 1101-1904. Upon careful review of the record, the briefs of the parties, and the relevant law, we determine that the Board properly approved the Category 3 slot machine license, and we affirm.
On June 29, 2007, Valley Forge Partners submitted an application to the Board for a Category 3 slot machine license to operate no more than 500 slot machines at the Valley Forge Convention Center in King of Prussia, Montgomery County. Appellant, Greenwood Gaming and Entertainment, Inc. ("Greenwood"), which owns and operates Parx Racing and Casino, a thoroughbred racetrack and casino with 3,300 slot machines in Bensalem, Bucks County, challenged Valley Forge Partners' eligibility to obtain the license under the Gaming Act. A number of hearings were conducted and a voluminous documentary and testimonial evidentiary record was created, including evidence that access to the gaming area would be limited to those individuals who were overnight guests at or patrons of the Convention Center's amenities. There was also evidence submitted to support a showing that Valley Forge Partners had adequate financing for the project, and that the Convention Center is more than fifteen miles from any other licensed slots facility in Pennsylvania.
On May 8, 2009, the Board approved the application and issued a written adjudication that, among many other things, determined that Valley Forge Partners is the owner of the Valley Forge Convention Center, and that the Valley Forge Convention Center is a well-established resort hotel under the Gaming Act. On June 5, 2009, Greenwood filed a petition for review in the nature of an appeal from a final adjudication, requesting that this Court reverse the Board's order approving the application, citing this Court's exclusive jurisdiction over the appeal pursuant to Section 1204 of the Gaming Act.
The Gaming Act gives the Board extensive powers over gaming in Pennsylvania, including the specific power and duty, "[a]t its discretion, to issue, approve, renew, revoke, suspend, condition or deny issuance or renewal of slot machine licenses." 4 Pa.C.S. § 1202(b)(12). The Gaming Act further provides that, notwithstanding statutory provisions relating to judicial review of Commonwealth agency actions and direct appeals from government agencies, this Court's review of Board decisions is limited to determining whether the Board: (1) erred as a matter of law; or (2) acted arbitrarily and in capricious disregard of *887 the evidence. 4 Pa.C.S. § 1204; Pocono Manor Investors, L.P. v. Pennsylvania Gaming Control Board, 592 Pa. 625, 927 A.2d 209, 216 (2007). If the Board has not committed an error of law or acted arbitrarily and in capricious disregard of the evidence, we must affirm. 4 Pa.C.S. § 1204.[1] Capricious disregard entails a "willful and deliberate disregard of competent testimony and relevant evidence which one of ordinary intelligence could not possibly have avoided in reaching a result." Riverwalk Casino L.P. v. Pennsylvania Gaming Control Board, 592 Pa. 505, 926 A.2d 926, 929 (2007). The Board's decision is to be given great deference, and this Court is not to substitute its judgment for the Board's nor intrude upon the Board's fact-finding role and discretionary decision-making authority. Station Square Gaming, L.P. v. Pennsylvania Gaming Control Board, 592 Pa. 664, 927 A.2d 232, 238 (2007). Under the capricious disregard standard, relief will rarely be warranted. Id. at 237-38.
On appeal, Greenwood raises the following issues, which we reproduce verbatim, but have re-ordered for ease of discussion:
1. Did the Board err as a matter of law, and act arbitrarily and in capricious disregard of the evidence, by concluding that the Valley Forge Convention Center is a well-established resort hotel?
2. Did the Board commit an error of law by awarding a Category 3 Slot Machine license to an Applicant that is not an owner of the well-established resort hotel?
3. Assuming arguendo equitable ownership is legally sufficient and present, did the Board err as a matter of law by awarding a license to the Applicant where such equitable ownership admittedly did not exist at the time of the application?
4. Did the Board commit an error of law and capriciously disregard the evidence in relation to the Applicant's plan limiting access to the gaming floor to overnight guests and patrons of the amenities?
5. Was the Board's decision that the Applicant was suitable for licensure arbitrary and in capricious disregard of the evidence?
Appellant's Brief at 5.
The Gaming Act provides, in relevant part, as follows:
A person may be eligible to apply for a Category 3 license [500 or fewer slot machines] if ... the person is seeking to locate a Category 3 licensed facility in a well-established resort hotel having no fewer than 275 guest rooms under common ownership and having substantial year-round recreational guest amenities.
*888 The applicant ... shall be the owner or a wholly owned subsidiary of the owner of the established resort hotel. A Category 3 license may only be granted upon the express condition that an individual may not enter the gaming area of the licensee if the individual is not a registered overnight guest of the established resort hotel or if the individual is not a patron of one or more of the amenities provided by the established resort hotel....
4 Pa.C.S. § 1305(a)(1).
In support of its first issue on appeal, Greenwood argues that the Board ignored the fact that the Valley Forge Convention Center does not hold itself out as a resort, and ignored the allegedly consensus opinion of multiple experts that the Convention Center is not a resort hotel, but is instead, a convention hotel.[2] Central to its argument is the contention that the Valley Forge Convention Center "has always and continues to hold itself out as a convention center and not a resort. The applicant's name, the facility's name, its marketing materials, letterhead and internal signage all call itself a Convention Center. There is not a single mention of the facility as a resort." Appellant's Brief at 34 (emphasis in original). Thus, Greenwood contends the Board's decision was arbitrary and in capricious disregard of the evidence, and that the Convention Center is, as a matter of law, a convention hotel, and not a resort hotel.
The Board responds that the Valley Forge Convention Center provides numerous amenities that would typically be found at a resort hotel, and that expert testimony at the hearings established that there is significant overlap, according to industry standards, between a resort hotel and a convention hotel. The Board points out that Greenwood did not present any expert testimony on the Convention Center's status as a resort hotel, and that the testimony of the only expert who did testify on the subject, Peter Tyson, Vice President of PKF Consulting, established that the Convention Center meets the "substantial year-round amenities test" under the Gaming Act. Appellee's Brief at 31-32.
The Gaming Act does not define "well-established resort hotel." In concluding that the Valley Forge Convention Center is a well-established resort hotel that offers substantial year-round recreational guest amenities, the Board considered the criteria it had adopted by regulation, as follows:
To qualify as a well-established resort hotel with substantial year-round recreational guest amenities, the resort hotel must offer at the resort hotel a complement of amenities characteristic of a well-established resort hotel, including but not limited to the following:
(1) Sports and recreational activities and facilities such as a golf course or golf driving range.
(2) Tennis courts.
(3) Swimming pools or a water park.
(4) A health spa.
(5) Meeting and banquet facilities.
(6) Entertainment facilities.
(7) Restaurant facilities.
(8) Downhill or cross-country skiing facilities.
(9) Bowling lanes.
(10) Movie theaters.
58 Pa.Code § 441a.23(a) (emphasis supplied).
*889 Here, the Board found that the Valley Forge Convention Center possessed the following complement of amenities characteristic of a well-established resort hotel: 1) two hotels with a combined total of 488 guest rooms, 58 of which were fantasy-themed suites, and 220 of which featured Jacuzzi-style bathtubs; 2) an outdoor swimming pool; 3) a 3,000 square foot fitness facility with equipment, steam rooms, saunas, and racquetball courts; 4) an exhibition and meeting space of 108,000 square feet; 5) a ballroom of 8,000 square feet, utilized for weddings, corporate meetings, live shows, entertainment, and other social events; 6) three full-service restaurants; and 7) a nightclub. Board's Adjudication, dated 5/8/09, at 30-32. The Board noted that the definition of a resort, as contained in a leading trade publication, is "a hotel, usually in a suburban or isolated rural location, with special recreational amenities." The Board found that the Valley Forge Convention Center is adjacent to Valley Forge National Park and that it has been under the control of the same ownership interests since 1994. Id. at 39. The Board explicitly determined that a facility featuring the specific complement of amenities set forth above, that has been in existence for at least 15 years under the same ownership, is a well-established resort hotel.
We cannot conclude that the Board committed legal error or acted arbitrarily in capricious disregard of the evidence simply because the applicant has historically marketed itself more as a "convention center" than as a "resort hotel." That the Valley Forge Convention Center focused its self-promotion on its convention center attributes and did not market its resort amenities as heavily does not mean that the two aspects are mutually exclusive. They are not. Further, the long-standing existence of the Valley Forge Convention Center is not subject to question, and it cannot be gainsaid that Valley Forge Partners presented competent evidence that the Convention Center provides a complement of amenities characteristic of a resort hotel. Thus, the Board's conclusion that the Valley Forge Convention Center is a well-established resort hotel is not arbitrary. Moreover, the record demonstrates that the Board did not capriciously disregard Greenwood's evidence. Instead, the record shows that the Board appropriately weighed competing evidence and found in favor of the applicant. That the applicant's marketplace branding strategy does not employ the word "resort" is not determinative of the legality or reasonableness of the Board's decision to award it a Category 3 slot machine license, and we thus determine that Greenwood's first issue does not merit relief.
Greenwood's second and third issues challenge the Board's determination that Valley Forge Partners is the owner of the Convention Center. At the time of application, the owner of the Convention Center was Valley Forge Colonial, L.P. ("Colonial"). Valley Forge Partners subsequently arranged a merger of Colonial into Valley Forge Partners, and signed an agreement of sale to purchase the Convention Center from Colonial. These transactions occurred because some of the limited partners in Colonial did not want to be part of the slot machine venture. The principal partner in control of both entities (Valley Forge Partners and Colonial) was the same person, Ira Lubert.
The agreement of sale had contained a condition precedent that the sale would not be consummated if Valley Forge Partners did not receive license approval. At the insistence of the Board, however, the parties to the agreement of sale waived this condition. The Board concluded that even though title to the Convention Center had *890 not passed to Valley Forge Partners by the time the license was approved, Valley Forge Partners was the owner of the Convention Center under the doctrine of equitable conversion, which provides that an unconditional agreement of sale vests equitable ownership in the purchaser. Additionally, the Board determined that, "consistent with its past practice of allowing applicants in this nascent industry in the Commonwealth to amend their application when deficiencies, including eligibility deficiencies, are noted," Valley Forge Partners' equitable ownership was retroactive to its application date of June 27, 2007. Board's Adjudication at 36.
Pennsylvania jurisprudence has long recognized that during the interval between the execution of a real estate sales agreement and the conveyance of title, the purchaser of the real estate is considered the equitable owner of the real estate. Allardice v. McCain, 375 Pa. 528, 101 A.2d 385, 389 (1953). Greenwood takes no serious issue with the law of equitable ownership. Instead, it argues that where satisfaction of a condition precedent to performance under an agreement of sale is under the control of a third party, equitable ownership cannot vest. Appellant's Brief at 18. Specifically, it contends that Valley Forge Partners is not the owner of the Convention Center because, despite its waiver of the license condition, the record shows that, in fact, the agreement of sale and the merger agreement are contingent upon license approval by the Board. The gravamen of Greenwood's argument is that even though Valley Forge Partners expressly waived license approval as a condition precedent to closing under Article 6 of the agreement (Conditions) and under Article 10.22 of the agreement (Purchaser's Approvals Contingency), no express waiver was included in Article 7 of the agreement (Closing). Thus, Greenwood argues the condition precedent remains in place, and that the Board committed an error of law in concluding Valley Forge Partners is the owner of the Valley Forge Convention Center.
Article 7 of the sales agreement chiefly addresses the timing of closing. Article 7.1(a) states that "[t]he closing shall occur on a date agreed to by Seller and Purchaser which date shall be promptly after Purchaser's receipt of the Approvals." Agreement, Article 7.1(a). Article 7.1(b) requires that closing was to occur by December 31, 2010, and if it did not, the Seller has the right to terminate the agreement whether or not the Purchaser has obtained all of the approvals.[3] Moreover, the agreement of sale provides for a penalty of $1,375,000 that Valley Forge Partners must pay to Colonial should Colonial terminate the agreement if closing did not occur by the specified date. In view of this deadline and the significant penalty for failing to close, the Board stated, "it can hardly be said that closure of the transaction after awarding a Category 3 license is a de facto condition precedent." Board's Adjudication at 35.
We agree with the Board's determination that license approval was not a condition precedent here. Rather, license approval was expressly waived by the parties to the sales agreement, and the provision that Greenwood characterizes as a condition precedent is actually an expression that the transaction must close by a date certain, with or without a Category 3 slot machine license. The Board committed no error of law in determining that equitable ownership of the Convention Center was in Valley Forge Partners as purchasers under an unconditional agreement of sale, and that Valley Forge Partners' equitable *891 ownership was retroactive to the date of the Category 3 slot machine license application.
In its fourth issue on appeal, Greenwood asserts that Section 1305(a)(1) of the Gaming Act permits the Board to grant a license upon the express condition that only registered guests and patrons of amenities be allowed in the gaming area. Greenwood posits that the Board's order itself must contain this condition, and here it does not. In addition, Greenwood contends that the Board failed to approve Valley Forge Partners' amenities plan before granting it a license. Thus, it contends that the Board committed an error of law. In the alternative, Greenwood contends that the Board capriciously disregarded evidence that Valley Forge Partners is allegedly skirting the Gaming Act's access limitations by simply requiring any person to pay a $10 fee to enter the gaming area.
The Board responds that the Gaming Act does not require pre-license approval of a particular plan for assuring that the gaming area restriction is met. Rather, an access plan is part of an applicant's internal controls, which must be submitted to the Board for approval 90 days before the commencement of gaming operations. 58 Pa.Code §§ 441a.23 and 465a.2(a). Moreover, the Board points out a distinction between approval of a license and issuance of a license. Issuance occurs only after all conditions have been satisfied and all plans finalized and approved.
During the numerous hearings that were conducted during the application process, both the principal partner of Valley Forge Partners, Ira Lubert, and a high-level employee of the partnership, C. Patrick McCoy, testified that the proposed gaming areas would be available only to Convention Center guests and patrons of the Convention Center's amenities. Specifically, at the hearing on October 16, 2007, McCoy testified that Valley Forge Partners planned to develop a computerized system to provide guests and patrons of the Convention Center with access passes allowing them entry into the gaming area, and Lubert specifically denied that there would be any entrance fees, admission kiosks, or entrance gates with flat-fee admission charges. Rather, a guest or patron must spend $10 or more on some specific Convention Center amenity in order to satisfy the "non-de minimis" consideration requirement set forth by the Gaming Act. 4 Pa.C.S. § 1305(a)(1), (e).
Given this testimony and the fact that the Board still has ultimate authority to issue or deny a gaming license upon final review of the amenities plan, we cannot say that the Board committed an error of law or capriciously disregarded evidence relating to the access plan in approving Valley Forge Partners' application, and we reject Greenwood's fourth issue as unavailing.
In its final issue, Greenwood alleges that the Board's determination that Valley Forge Partners is financially suitable for licensure was arbitrary and in capricious disregard of the evidence. Specifically, Greenwood asserts that there was incontrovertible evidence presented that financing of the project was not secure, and that the operation of the slot machines at the Convention Center would reduce gaming revenue at other area licensed slot machine facilities and racetracks.
With respect to the financing of the project, Section 1313(a) of the Gaming Act provides that "[t]he Board shall require each applicant ... to produce the information, documentation and assurances concerning financial background and resources as the board deems necessary to establish by clear and convincing evidence *892 the financial stability, integrity and responsibility of the applicant...." 4 Pa. C.S. 1313(a). Here, Valley Forge Partners presented evidence to show that approximately 50% of the financing for the project would come from various lenders, and that the remaining equity necessary to complete the project would be provided by Ira Lubert personally. Greenwood now argues that the evidence was less than clear and convincing that these resources will be available, because, although Mr. Lubert testified that he was "committed" to providing the remaining equity, his commitment was not a "guarantee."
The Board specifically set forth in its adjudication that an assessment of financial suitability was conducted by the Financial Suitability Task Force of the Board's Bureau of Investigation and Enforcement, and that the process for determining the financial suitability of Valley Forge Partners "entailed extensive document review." Board's Adjudication at 13. Based on its review of a financial fitness report submitted by the Task Force, the Board determined that there was "nothing... that would indicate that the applicant or its principles are not financially suitable[.]" Id. at 15.
With respect to direct competition for gaming revenue and the potential negative financial impact new gaming licenses may place on other nearby gaming facilities and racetracks, the Act requires only that a new gaming facility not be located within 15 miles of another gaming facility. There is no question that the location of the Convention Center satisfies this distance requirement. Nevertheless, Greenwood presented the testimony of its representative, Thomas C. Bonner, that its "fundamental concern is that the Philadelphia area market for slots gaming is already saturated and that granting Valley Forge a Category Three license will merely redistribute existing slot revenues[.]" Hearing, 10/22/08, at 88. Valley Forge Partners, on the other hand, presented expert testimony that any potential negative impact that the Convention Center slot machines might place upon nearby gaming facility revenues would be de minimis in nature.
Based on the foregoing, we cannot conclude that the Board acted arbitrarily or capriciously disregarded Greenwood's evidence in determining that Valley Forge Partners is financially suitable for licensure, and we reject Greenwood's claim to the contrary.
Accordingly, for the reasons set forth above, we affirm the order of the Board that approved the application of Valley Forge Partners for a Category 3 slot machine license.
Chief Justice CASTILLE and Justice GREENSPAN did not participate in the decision of this case.
Justices BAER and TODD join the opinion.
Justice SAYLOR files a dissenting opinion.
Justice EAKIN files a dissenting opinion.
Justice SAYLOR, dissenting.
I respectfully differ with the majority's reasoning and holding on the threshold legal question of what the Legislature meant when it employed the term "well-established resort hotel" as the litmus for Category 3 license eligibility. 4 Pa.C.S. § 1305(a)(1).
In the first instance, the majority recognizes that this term is undefined in the statute. See Majority Opinion, at 888-89. Nevertheless, in spite of the apparent ambiguity, the majority offers little or no *893 analysis of the term, other than to accept the Board's interpretation that the Valley Forge Convention Center qualifies. See id. at 888-89. For my part, I believe a more probing inquiry on this pivotal question of statutory construction is necessary to an appropriate resolution of this licensing appeal. See Nationwide Ins. Co. v. Schneider, 599 Pa. 131, 145 n. 8, 960 A.2d 442, 450 n. 8 (2008) (explaining that "this Court ultimately maintains the final responsibility to interpret or construe statutes").
The Board's regulations define a well-established resort hotel, somewhat tautologically, as "[a] resort hotel ... having substantial year-round recreational guest amenities." 58 Pa.Code § 441a.1. This, however, is plainly insufficient to capture the legislative intent, since it affords no meaning to the qualifier that the resort hotel must be "well-established" to support a Category 3 license. 4 Pa.C.S. § 1305(a)(1). Indeed, contrary to the presumption that the General Assembly does not intend to include superfluous language, see 1 Pa.C.S. § 1922(2), neither the Board's definition, nor its adjudication, gives any attention to this qualifying term.
Furthermore, the Board appears to read the statutory proviso that the established resort hotel offer "substantial year-round recreational guest amenities," 4 Pa. C.S. § 1305(a)(1), as if this criterion defines a well-established resort. In the statute, however, the year-round proviso is positioned remotely from the "well-established" qualifier and an independent purpose is readily discernable. In this regard, core amenities offered at many resorts (such as skiing and golfing) are seasonal in nature. Thus, for example, a hotel might enjoy the status of a well-established resort but not meet the independent requirement to provide substantial year round amenities.[1] Moreover, a newly-constructed hotel may offer year-round amenities but cannot fairly be characterized as well established. For these reasons, status as a well-established resort must entail more than the provision of year-round amenities.
In considering the purpose of the "well-established" qualifier, I recognize that it is possible that the Legislature intended it to relate only to status as a hotel (which appears to be the majority's understanding, see Majority Opinion, at 889), as opposed to encompassing the resort term as well. The legislative history related by one of Applicant's attorneys, however namely, that the definition was crafted with two of Pennsylvania's long-standing, landmark resort hotels as the models strongly favors the latter understanding. Specifically, the attorney explained:
Now, I think what's more important here ..., Section 1305 of the Act was substantially amended in November of '06, veryalmost the whole thing was rewritten.... The Act was written originally with two resorts in mind. There's no doubt about that. Both of those resorts originally applied to you, and they both withdrew. You then held your own hearing to try to figure out how to get other applicants to be interested. And the legislature knew when it amended the Act in November of '06, Nemacolin [Woodlands Resort] had already withdrawn and Seven Springs [Mountain Resort], *894 those of us in the industry knew they were going to withdraw.
N.T., Oct. 22, 2008, at 80. While the attorney also indicated that the General Assembly had subsequently modified the Gaming Act in 2006 and expanded the range of qualifying hotels, see id., in point of fact, the language of Section 1305(a)(1) was unaltered by the 2006 amendments. Compare Act of July 5, 2004, P.L. 572, No. 71, § 1305(a), with Act of Nov. 1, 2006, P.L. 1243, No. 135, § 1305(a)(1). Moreover, the stronger variant of the "well-established" qualifieri.e., that attaching to both "resort" and "hotel"is consistent with the apparent legislative intent to closely limit the availability and scope of Category 3 licenses.[2]
Taking into account that a degree of deference is due the Board's construction of Section 1305, see Schneider, 599 Pa. at 145 n. 8, 960 A.2d at 450 n. 8, I am simply unable to accept it, because the Board's regulation and adjudication afford no role to the "well-established" qualifier. Thus, I find that the Board committed an error of law, and its adjudication cannot be sustained for that reason. See 4 Pa.C.S. § 1204. Moreover, as Appellant develops at length, there is little or no record evidence that Applicant so much as markets itself as a resort hotelcertainly, there is no dispute that the convention center is the predominate marketing focus.[3] I find substantial force in Appellant's argument that Valley Forge Convention Center cannot be well established in the public eye as a resort, where it does not appear even to perceive itself as such.
I have no doubt that industry definitions may overlap or of the desire among hotel establishments to serve as many things to many people. However, I am unable to accept that a convention center complex which does not broadly portray itself to the public as a resort qualifies as a "well-established resort hotel," along the lines of the Nemacolin or Seven Springs resort properties. Accord Brief for Appellant at 30 ("Lacking from [the] litany of the ordinary [amenities associated with the property] are those `special' or `substantial' amenities that are the hallmarks of a true well-established resort hotel and that were plainly envisioned by Section 1305 of the Gaming Act. The Valley Forge Convention Center fails to offer its guests such on-site amenities as golf courses, lakes, boating, winter sports activities, tennis, hiking, biking, horseback riding, art galleries, museums and more.").[4]
Finally, I am sympathetic to the Board's efforts to advance the aims underlying the Gaming Act through the prompt issuance of the finite number of licenses subject to its charge.[5] I also recognize the benefits *895 to the local area associated with a Category 3 approval for Applicant's facility, as amply developed in its evidence, as well as the wide-scale support Applicant enjoys from its community. Indeed, in light of the experience of attrition among Category 3 applicants, it may very well be that the Legislature may wish to revisit the prevailing restrictions.[6] With all due deference, however, I believe the Board committed legal error by failing to implement, appropriately, the existing statutory prerequisites to the approval of a Category 3 license.
Justice EAKIN, dissenting.
Our question is whether the Valley Forge Convention Center is a "well-established resort hotel." That term, though modified by further requirements of room and recreational amenities, is entirely undefined in the statute, but much like pornography, we need not define it to know it when we see it[1]and anyone who has seen this excellent complex knows what it is, and what it is not.[2]
For all the expert testimony of pools and "theme rooms," let me suggest the matter can be settled by a simple common sense test. Let each member of the Pennsylvania Gaming Control Board say to his or her significant other, "Honey, I'm taking you for a romantic weekend at a `well-established resort hotel.'" Then put the suitcases in the car, get on the turnpike or the Schuylkill Expressway and drive to the front of the Valley Forge Convention Center. Get out, smile, say "Honey, we're here!", and see what your loved one says.
The Convention Center is a fine place, and I do not suggest otherwise. It is more than suitable for many things and with many features justifying its obvious successindeed, until very recently, our Court's Bar Examiners held the bar exam at the Convention Center. It is many things, but it simply is not a resort. It is enclosed by the turnpike and major arteries, surrounded by apartment complexes, office parks, and sprawling shopping malls. The area is overrun with traffic, and the center is populated by conventioneers with nametags meeting in the commodious rooms built for the purpose of conventioneering. It is a wonderful and centrally located convention center and attracts visitors by the busload. I do not know why the statute created a license issuable only to a well-established resort instead of a convention center, but it did, and we should not perpetuate the deceit of calling this facility something it is not.
*896 You can call a duck a goose. You can point to its size, its aquatic lifestyle and its diet, its bill and its cry, its feathery wings and its webbed feet. There are similarities to be sure, but at the end of the day, it is still a duck. No matter what the Board here tried to shoehorn into the term, we know a duck when we see one, and for better or worse, the Convention Center is a duck, not a goose.
Respectfully, I dissent.
NOTES
[1] Section 1204 of the Gaming Act provides:
§ 1204. Licensed gaming entity application appeals from board
The Supreme Court of Pennsylvania shall be vested with exclusive appellate jurisdiction to consider appeals of any final order, determination or decision of the board involving the approval, issuance, denial or conditioning of a slot machine license or the award, denial or conditioning of a table game operation certificate. Notwithstanding the provisions of 2 Pa.C.S. Ch. 7 Subch. A (relating to judicial review of Commonwealth agency action) and 42 Pa.C.S. § 763 (relating to direct appeals from government agencies), the Supreme Court shall affirm all final orders, determinations or decisions of the board involving the approval, issuance, denial or conditioning of a slot machine license or the award, denial or conditioning of a table game operation certificate unless it shall find that the board committed an error of law or that the order, determination or decision of the board was arbitrary and there was a capricious disregard of the evidence.
4 Pa.C.S. § 1204.
[2] Greenwood did not present expert testimony on this issue, but relied on several "letter opinions" of industry experts submitted by another Category 3 slot machine license applicant.
[3] The Merger Agreement contains a provision parallel to Article 7.1(b).
[1] Considering the purposes of the Gaming Act (including the clear intent to restrict Category 3 licenses and the gaming activities authorized thereunder), the year-round-amenities requirement may have been added to assure that gaming activities would not be the only substantial attraction during off-season periods, thus converting a resort offering gaming amenities into, effectively, a "casino."
[2] See 4 Pa.C.S. § 1305. Indeed, if anything, the Legislature subsequently has strengthened the qualifiers by modifying the statute, in 2010, to repeat the "well-established" criterion four additional times. See Act of Jan. 7, 2010, P.L. 1, No. 1, § 1305(a)(1).
[3] As Appellant highlights, all of the facility's signage, letterheads, and marketing and guest materials reflect that it is a convention center and are devoid of a single reference to resort status. See R.R. at 262a-263a, 806a-826a.
[4] Appellant also argues that the Board ignored or misconstrued key factors, such as the percentage of leisure guests and their average length of stay, in making its decision. In this regard, I also question the inclusion of convention-center guests within the leisure segment for purposes of determining resort-hotel status.
[5] Some insight into what appears to be an evolving understanding of what constitutes a well-established resort hotel on the part of the Board are encapsulated in a commissioner's comments at the licensing hearing, as follows: "Well, they're not exactly standing in line to come in for a Category Three license. And we do have another obligation is [sic] to get gaming up and running in Pennsylvania." N.T., Oct. 22, 2008, at 97.
[6] Of course, concerns with saturation of the Greater Philadelphia market maintained by Appellant also would be relevant to any such legislative inquiry. See N.T., Oct. 22, 2008, at 86-89, 93 (expressing Appellant's concerns over "cannibalizing" existing gaming revenues via oversaturation).
[1] Jacobellis v. Ohio, 378 U.S. 184, 197, 84 S.Ct. 1676, 12 L.Ed.2d 793 (1964) (Stewart, J., concurring).
[2] There are additional issues with the majority opinion. First, a newly-created partnership, Valley Forge Convention Center Partners, L.P., is actually the one seeking license approval, not the previous 15-year owner. See Majority Op., at 889. Further, the sales agreement between Valley Forge Convention Center Partners, L.P. and the former owner, Colonial, contained a condition precedent that the sale would not be consummated if Valley Forge Convention Center Partners, L.P. did not receive license approval. However, at the Board's insistence, the parties waived this condition. This further evidences Valley Forge Convention Center Partners, L.P. was the owner of the Convention Center merely from the date of its license application, and not for 15 years, as the Board and majority surmise. See id., at 889-90 (citing Board's Adjudication, at 36 (Valley Forge Convention Center Partners, L.P.'s "equitable ownership through equitable conversion should be applied retroactive to the ... application date ...")).
| {
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FILED
May 6, 2014
In the Office of the Clerk of Court
W A State Court of Appeals, Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
In re the Detention of: )
) No. 30853-7-111
)
ERNESTO LEYVA, )
) UNPUBLISHED OPINION
)
Appellant. )
SIDDOWAY, C.J. Ernesto Leyva appeals his civil commitment under the
sexually violent predator (SVP) statute, chapter 71.09 RCW. He raises constitutional
challenges to the SVP statute as vague, to the State's evidence as falling short ofthat
required by due process, and to the court's evidentiary rulings and instructions. Most of
his challenges are predicated on the fact that the State's evidence, in a commitment
proceeding that the State initiated when Mr. Leyva was 18 years old, was largely of
sexual misconduct he committed as a juvenile.
No scientific consensus supports Mr. Leyva's contention that sexual misconduct
committed as ajuvenile is irrelevant in assessing a person's future inability to control
behavior. Because we fmd no error or abuse of discretion, we affirm.
No. 30853-7-111
In re Det. ofLeyva
FACTS AND PROCEDURAL BACKGROUND
The State filed a petition to commit Ernesto Leyva as a sexually violent predator 1
6 months after his 18th birthday, in June 2009.
By age 18, Mr. Leyva had been charged with and pleaded guilty to the crime of
indecent exposure occurring when he was age 14 and in the eighth grade, receiving
6 months of community supervision. Very shortly thereafter he exposed himself again,
this time entering into a diversion agreement requiring community service. In 2006, he
was charged with two counts of first degree child molestation for molesting two young
girls at his church the prior year (also when he was age 14), to which he pleaded guilty to
one count of child molestation in the first degree and qualified for a special sex offender
disposition alternative (SSODA) sentence, provided by RCW 13.40.162. While staying
with a family during the community treatment portion of his SSODA for the molestation
conviction, he was arrested and charged with second degree rape of a 16-year-old
daughter of the family. His SSODA was revoked and he ultimately pleaded guilty to rape
in the third degree.
In addition to the conduct for which Mr. Leyva was criminally charged, these and
other acts of sexual misconduct committed while in the seventh and eighth grades led to
1A "sexually violent predator" is "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 ifnot confined in a secure facility." RCW 71.09.020(18).
2
No. 30853-7-111
In re Det. ofLeyva
his being suspended from school and later, after his fourth act of sexual misconduct,
expelled.
Mr. Leyva was interviewed about his sexual history three times by Donald King, a
law enforcement consultant. The first and second interviews followed Mr. Leyva's arrest
on his third charge for a sexual crime; Mr. Leyva's defense lawyer engaged Mr. King to
interview her client in support of the request for SSODA sentencing. The third interview
was after the SSODA was imposed and Mr. Leyva was under the supervision of the Grant
County Superior Court.
Mr. Leyva revealed to Mr. King that he had been sexually victimized by as many
as three individuals. He had no recollection of the first, but had been told by his mother
and pastor that a man who used to live in the family home might have molested him. He
recalled the second: sometime between ages 5 and 7, he was molested by a 16- or 17
year-old neighbor girl who would undress him and engage in sexual touching. The third
was at age 12, when he was molested by a 16- or 17-year-old boy with whom he engaged
in penile/anal intercourse that was repeated a number of times thereafter. Mr. Leyva
ultimately viewed it as consensual.
Mr. Leyva revealed to Mr. King that he had engaged in many other acts of sexual
misconduct with two of his sisters and other children, for which he was never caught or
charged. The misconduct included completed or attempted acts of vaginal and anal
3
No.30853-7-II1
In re Det. a/Leyva
intercourse, fellatio, digital penetration, exposing his erect penis, and touching girls on
their breasts and buttocks.
A commitment trial under chapter 71.09 RCW was held in April 2012. The State
presented the testimony of Mr. Leyva by video deposition and called, as other witnesses,
Mr. King; Scott Ramsey, who served as principal of Mr. Leyva's junior high school
during the time Mr. Leyva was in seventh and eighth grade; and its retained expert, Brian
Judd Ph.D., a neuropsychologist.
Dr. Judd expressed his opinion that Mr. Leyva had a mental abnormality that made
him more likely than not to reoffend ifnot confined to a secure facility. He told the jury
that he had diagnosed Mr. Leyva with paraphilia not otherwise specified (NOS)
(non consent) and had made a provisional diagnosis of exhibitionism and frotteurism. He
testified that Mr. Leyva's condition affected his emotional or volitional capacity as
evidenced by Mr. Leyva's reports that he could not help himself when tempted; had
difficulty controlling his urges; and continued to offend even after being caught and
punished, both judicially and nonjudicially.
Mr. Leyva called two witnesses in his defense: his father, Emesto Leyva Sr., and
his retained expert, Richard Wollert Ph.D. Dr. Wollert testified that Mr. Leyva did not fit
the statutory criteria of mental abnormality or the requirements of difficulty controlling
behavior and risk ofreoffense. He testified that Mr. Leyva's sexual conduct before age
18 had all taken place during a period of psychosocial immaturity, when the decision
4
No. 30853-7-III
In re Det. ofLeyva
making and emotional control centers of his brain had not reached maturity. As a result,
he testified, Mr. Leyva's conduct as a juvenile was not an indicator of his ability to
exercise volitional control in the future.
The jury returned a verdict that the State had proved that Mr. Leyva is a sexually
violent predator and the trial court entered an order of commitment. Mr. Leyva appeals.
ANALYSIS
Mr. Leyva makes five assignments of error on appeal. He argues that (1) the SVP
statute's definition and use of the term "mental abnormality" is unconstitutionally vague
as applied to him, given Dr. Judd's diagnosis; (2) his commitment violates due process
where it was predicated on his conduct as a juvenile; (3) the trial court violated his right
to present a defense by limiting Dr. Wollert's testimony; (4) by permitting SVP
commitment based upon a showing that a person "more probably than not" will engage in
acts of sexual violence ifnot confined, the SVP statute violates the requirement of
Addington v. Texas 2 that criteria for civil commitment be proved by clear and convincing
evidence; and (5) the trial court's failure to provide a Petrich 3 instruction violated his
right to jury unanimity.
We address his assignments of error in tum.
2441 U.S. 418, 99 S. Ct. 1804,60 L. Ed. 2d 323 (1979).
3State v. Petrich, 101 Wn.2d 566,569,683 P.2d 173 (1984).
5
No. 30853-7-111
In re Det. ofLeyva
1. Vagueness Challenge
"Freedom from bodily restraint has always been at the core of the liberty interest
protected by the due process clause of the fourteenth amendment to the United States
Constitution. Commitment for any reason constitutes a significant deprivation of liberty
triggering due process protection." In re Det. ofThorell, 149 Wn.2d 724, 731, 72 P.3d
708 (2003) (citing Foucha v. Louisiana, 504 U.S. 71, 80, 112 S. Ct. 1780, 118 L. Ed. 2d
437 (1992)). "The institutionalization of an adult by the government triggers heightened,
substantive due process scrutiny. There must be a 'sufficiently compelling'
governmental interest to justify such action, usually a punitive interest in imprisoning the
convicted criminal or a regulatory interest in forestalling danger to the community."
Reno v. Flores, 507 U.S. 292, 316,113 S. Ct. 1439, 123 L. Ed. 2d 1 (1993) (O'Connor,
1., concurring) (quoting United States v. Salerno, 481 U.S. 739, 748, 107 S. Ct. 2095, 95
L. Ed. 2d 697 (1987)). The civil commitment of a sexually violent predator satisfies due
process if the standards and procedure applied couple "proof of dangerousness with proof
of an additional element, such as 'mental illness,' because the additional element limits
confinement to those who suffer from an impairment 'rendering them dangerous beyond
their control.'" Thorell, 149 Wn.2d at 731-32 (quoting Kansas v. Hendricks, 521 U.S.
346,358,117 S. Ct. 2072,138 L. Ed. 2d 501 (1997)).
To commit an individual as a sexually violent predator, Washington's SVP statute
requires that the State prove each of the following elements beyond a reasonable doubt:
6
No.30853-7-III
In re Det. ofLeyva
"( 1) That the respondent has been convicted of or charged with a crime of
sexual violence; and
"(2) That the respondent suffers from a mental abnormality or personality
disorder; and
"(3) That such mental abnormality or personality disorder makes the
respondent likely to engage in predatory acts of sexual violence if not
confined in a secure facility."
Id. at 742 (adapted from the Washington pattemjury instruction); RCW 71.09.020(18)
,.
I (statutory definition of "sexually violent predator"); cj. 6A WASHINGTON PRACTICE:
WASHINGTON PATTERN JURY INSTRUCTIONS: CIVIL 365.10, at 568 (6th ed. 2012) (WPI).
"Mental abnormality" is defined by statute as "a congenital or acquired condition
affecting the emotional or volitional capacity which predisposes the person to the
commission of criminal sexual acts in a degree constituting such person a menace to the
health or safety of others." RCW 71.09.020(8).
Mr. Leyva argues that Dr. Judd's testimony that Mr. Leyva suffers from
"'paraphilia not otherwise specified, non-consent with the consideration and the rule out
of pedophilia, sexually attracted to both, non-exclusive type,'" is a "compound
diagnosis," not specified in the American Psychiatric Association, Diagnostic and
Statistical Manual ofMental Disorders: DSM-IV-TR (4th rev. ed. 2000) (DSM-IV -TR),
and "a determination of the expert's own creation." Br. of Appellant at 1-2. If the
statutory definition of "mental abnormality" is deemed to include such a diagnosis, he
argues that it is so lacking in ascertainable standards for enforcement that it is
constitutionally vague as to him. A statute is unconstitutionally vague if it is "framed in
7
No. 30853-7-111
In re Det. 0/Leyva
terms so vague that persons' of common intelligence must necessarily guess at its
meaning and differ as to its application.'" Haley v. Med. Disciplinary Bd., 117 Wn.2d
720, 739, 818 P.2d 1062 (1991) (quoting Connally v. Gen. Constr. Co., 269 U.S. 385,
391,46 S. Ct. 126, 70 L. Ed. 322 (1926)). We review alleged constitutional violations de
novo. In re Det. o/Strand, 167 Wn.2d 180, 186,217 P.3d 1159 (2009).
For decades, courts of this state and the United States Supreme Court have
differentiated legal standards of culpability and dangerousness supporting civil
commitment from professional standards of medical diagnosis, recognizing "the
uncertainty of diagnosis in [the field of psychiatry] and the tentativeness of professional
judgment." Greenwoodv. United States, 350 U.S. 366, 375, 76 S. Ct. 410,100 L. Ed.
412 (1956). Psychiatry "is not ... an exact science, and psychiatrists disagree widely and
frequently on what constitutes mental illness, on the appropriate diagnosis to be attached
to given behavior and symptoms, on cure and treatment, and on likelihood of future
dangerousness." Ake v. Oklahoma, 470 U.S. 68, 81, 105 S. Ct. 1087, 84 L. Ed. 2d 53
(1985); accord In re Pers. Restraint o/Young, 122 Wn.2d 1, 57, 857 P.2d 989 (1993) (the
diagnosis of mental illness and disorder is not amenable to types of precise and verifiable
cause and effect). The science of psychiatry therefore informs the court but does not
control ultimate legal determinations. Kansas V. Crane, 534 U.S. 407, 413, 122 S. Ct.
867, 151 L. Ed. 2d 856 (2002).
8
No. 30853-7-111
In re Det. ofLeyva
A constitutional challenge was made to Washington's SVP statute in Young-over
20 years ago, and shortly after the statute was enacted. One objection raised was that the
statute failed to require proof that a respondent was both mentally ill and dangerous as
required by substantive due process. The Washington Supreme Court acknowledged that
Addington, Foucha, and other United States Supreme Court decisions dealing with
commitment had spoken of a respondent's being "mentally ill" or "mentally disordered,"
while the Washington SVP statute required proof of a "'mental abnormality or
personality disorder.'" 122 Wn.2d at 27 (quoting former RCW 71.09.020(1) (1990)).
The challenge in Young was to the State's reliance on a diagnosis of paraphilia
NOS, which the court recognized as being a residual category in the then-current DSM
III-R,4 and to the State's experts' testimony that the respondents whose commitment was
at issue suffered from '''rape as paraphilia. '" Id. at 29. The court was not troubled by its
residual category status:
"The fact that pathologically driven rape, for example, is not yet listed in
the DSM-IJJ-R does not invalidate such a diagnosis. The DSM is, after all,
an evolving and imperfect document. Nor is it sacrosanct. Furthermore, it
is in some areas a political document whose diagnoses are based, in some
cases, on what American Psychiatric Association ... leaders consider to be
practical realities. What is critical for our purposes is that psychiatric and
psychological clinicians who testify in goodfaith as to mental abnormality
are able to identify sexual pathologies that are as real and meaningful as
other pathologies already listed in the DSM."
4 American Psychiatric Association, Diagnostic and Statistical Manual ofMental
Disorders: DSM-JJI-R (3d rev. ed. 1987) (DSM-III-R).
9
No. 30853-7-111
In re Det. 0/Leyva
Id. at 28 (quoting Alexander D. Brooks, The Constitutionality and Morality o/Civilly
Committing Violent Sexual Predators, 15 U. PUGET SOUND L. REv. 709, 733 (1991
1992)). The court concluded that the statute was not so vague as to deny due process
because "[t]he definitional section sets out precise standards, and defines 'mental
abnormality,'" and "[a]s the record indicates, the experts who testified at the commitment
trials adequately explained and gave meaning to this term within a psychological
context." Id. at 49-50. It continued that "[t]he application of these standards to a
particular set of facts is, of course, a determination for the factfinder, but the definitions
provide sufficient guidance to do so properly." Id. at 50.
Despite this well settled law that legal standards for civil commitment are not
rendered vague by controversies over medical diagnoses that inform the fact finder, Mr.
Leyva takes issue with Dr. Judd's diagnosis of paraphilia NOS (nonconsent). He cites
two decisions of the Seventh Circuit Court of Appeals as authority that the diagnosis is a
"controversial" and "minimally sufficient" basis for commitment. Br. of Appellant at 18
19 (citing McGee v. Bartow, 593 F.3d 556,579 (7th Cir. 2010) ("Even its most ardent
advocates acknowledge that the diagnosis is 'probably ... the most controversial among
the commonly diagnosed conditions within the sex offender civil commitment realm'"
(alteration in original) (quoting Dennis M. Dore, Evaluating Sex Offenders: A Manual/or
Civil Commitments and Beyond at 63 (2002))); Brown v. Watters, 599 F.3d 602, 612 (7th
Cir. 2010) (describing the diagnosis as "minimally sufficient for due process purposes")).
10
No.30853-7-II1
In re Det. ofLeyva
As the State points out, both decisions held that the diagnosis was, in fact,
sufficient for due process purposes. Watters, summing up the court's conclusions in both
cases, observed that'" a particular diagnosis may be so devoid of content, or so near-
universal in its rejection by mental health professionals, that a court's reliance on it to
satisfY the "mental disorder" prong of the statutory requirements for commitment would
violate due process,'" but found, consistent with McGee, that "the diagnosis of paraphilia
NOS nonconsent [does] not cross this line." 599 F.3d at 612 (quoting McGee, 593 F.3d
at 577).
Division One of our court more recently rejected a defense argument that a Frye 5
hearing should be conducted before the State offered a diagnosis of paraphilia NOS
(nonconsent) as a basis for confinement. In re Det. ofBerry, 160 Wn. App. 374, 248
P.3d 592 (2011). Frye applies when a party seeks to admit evidence based upon novel
scientific procedures. Id. at 379. As Berry points out, "[t]he courts of this state have
repeatedly upheld SVP commitments based upon [the paraphilia NOS (nonconsent)]
diagnosis" and Mr. Berry had demonstrated at most that there are critics of the reliability
of the diagnosis, not that it is no longer generally accepted. Id. at 380. The court
concluded that no Frye hearing was required and that due process was satisfied where
5 Frye v. United States, 54 App. D.C. 46, 293 F. 1013, 1014 (1923).
11
No.30853-7-II1
In re Det. ofLeyva
Mr. Berry had the opportunity to cross-examine the State's expert and present his own
expert to testifY to shortcomings of the diagnosis.
Faced with this consistent authority that commitment on the basis of a diagnosis of
paraphilia NOS (nonconsent) does not violate due process, Mr. Leyva argues that Dr.
Judd's diagnosis was "rendered even more unreliable" because he appended a "rule-out"
of pedophilia. Reply Br. of Appellant at 6.
Dr. Judd testified at trial that "rule out" means
there was consideration of [the pedophilia] diagnosis and I believe that the
evidence does support the diagnosis, but there may be some deviation from
the criteria in some specific way which doesn't permit the full-making the
diagnosis at that point in time.
Report of Proceedings (RP) at 209. He explained that he treated pedophilia as a rule out
diagnosis because DSM-IV-TR criteria require that a pedophile is at least 16 years old
and at least 5 years older than the objects of his fantasies, urges, or behaviors, while Mr.
Leyva was not yet 16 when he offended against the 7 victims who were more than 5
years younger than him. According to Dr. Judd, pedophilia was properly included as a
rule out diagnosis "[b]ecause I think it's important to-----to clarifY that there's
consideration of a full range of diagnoses" and that when there was "some small
deviation" from the DSM criteria it "is an obvious clinical consideration." RP at 211.
On cross-examination, Dr. Judd agreed that the DSM-IV-TR does not mention
"rule out" diagnoses. He repeated that Mr. Leyva did not meet the criteria for pedophilia
12
No.30853-7-III
In re Det. o/Leyva
under the DSM-IV-TR. He justified including the rule out diagnosis by pointing to
discussion in the DSM-IV-TR about ways of indicating diagnostic uncertainty.
Dr. Judd's reason for identifying pedophilia as a rule out diagnosis was explained
to the jury and Mr. Leyva had the opportunity in cross-examination to attack Dr. Judd for
including it as part of his diagnosis. The rule out of pedophilia did not take Dr. Judd's
otherwise sufficient diagnosis of paraphilia NOS (nonconsent) across the due process
violation line.
II. Due Process Implications o/Commitment Based on Conduct as a Juvenile
Mr. Leyva next argues that because his brain had not yet reached volitional
maturity at the time of the misconduct relied upon by the State, it violates substantive due
process for the State to rely on that misconduct as a basis for civil commitment. As
discussed earlier in addressing Mr. Leyva's vagueness challenge, substantive due process
requires that civil commitment be confined to persons shown to be both mentally ill and
dangerous. Hendricks, 521 U.S. at 358. It is undisputed that the State must provide some
proof that an individual has a serious lack of control over his or her behavior. Thorell,
149 Wn.2d at 735-36 (citing Crane, 534 U.S. at 413).
The State agrees it is a "widely-accepted premise" that a juvenile's brain is not
fully formed and appears to develop until a person's mid-twenties. Br. ofResp't at 19. It
disputes Mr. Leyva's contention that acts of sexual misconduct as a juvenile are not
evidence bearing on a person's future inability to control behavior, however.
13
No.30853-7-III
In re Del. a/Leyva
In arguing that the State presented constitutionally insufficient proof, Mr. Leyva
relies on three decisions of the United States Supreme Court: Roper v. Simmons, 543 U.S.
551, 125 S. Ct. 1183, 161 1. Ed. 2d 1 (2005); Graham v. Florida, 560 U.S. 48, 130 S. Ct.
2011,1761. Ed. 2d 825 (2010); and Miller v. Alabama, _ U.S. _,132 S. Ct. 2455,183
1. Ed. 2d 407 (2012). All were concerned with questions presented under the Eighth
Amendment to the United States Constitution when harsh punishment of crimes
committed by juveniles is prescribed or imposed without taking into consideration their
relative lack of volitional control.
In Graham, Justice Kennedy, writing for the majority, reviewed the scientific
understanding relied upon by the Supreme Court in Roper, as to which the high court
majority's view had not changed:
[D]evelopments in psychology and brain science continue to show
fundamental differences between juvenile and adult minds. For example,
parts of the brain involved in behavior control continue to mature through
late adolescence. Juveniles are more capable of change than are adults, and
their actions are less likely to be evidence of "irretrievably depraved
character" than are the actions of adults. Roper, 543 U.S. at 570, 125 S. Ct.
1183. It remains true that "[:Ilrom a moral standpoint it would be
misguided to equate the failings of a minor with those of an adult, for a
greater possibility exists that a minor's character deficiencies will be
reformed." Ibid.
560 U.S. at 68 (second alteration in original) (citations omitted). In Miller, the court
indicated that the science and social science supporting findings that juveniles exhibit
14
No.30853-7-III
In re Det. ofLeyva
..
transient rashness, proclivity for risk, and inability to assess consequences, had "become
even stronger." 132 S. Ct. at 2464-65 & n.5.
Unlike the criminal prosecutions under review in the three Supreme Court cases,
however, a civil commitment proceeding does not raise an issue of cruel and unusual
punishment forbidden by the Eighth Amendment. A criminal prosecution is backward-
looking and metes out an appropriate punishment, while a civil commitment proceeding
is forward-looking in order to protect the public. A civil commitment proceeding looks
back at a respondent's past as a source of relevant evidence-"either to demonstrate that
a 'mental abnormality' exists or to support a finding of future dangerousness."
Hendricks, 521 U.S. at 362. Because juvenile misconduct is only evidence and not a
basis for punishment in civil commitment proceedings, current brain science raises a
substantive due process issue only if it reveals that a respondent's inability to control
sexual conduct while a juvenile is not relevant to his or her present or future inability to
control behavior.
Mr. Leyva's expert, Dr. Wollert, subscribes to the view that conduct as a juvenile
is not relevant. In the trial below and on appeal, the State has pointed to Dr. Wollert's
policy paper entitled '" Juvenile Offenders are Ineligible for Civil Commitment as Sexual
Predators,'" in which he argues that the American Psychological Association should take
a stand against the civil commitment ofjuvenile offenders. Clerk's Papers (CP) at 399.
At trial, he testified that "[j]uvenile only sex offenders are much different than adults,"
15
No. 30853~ 7-111
In re Det. ofLeyva
and that among the ramifications of their psychosocial immaturity is that they "are less
likely to recidivate, no matter what their actuarial score, if one believes that an actuarial
instrument is applicable." RP at 373. He cited several studies suggesting a low rate of
recidivism for juveniles committing sex offenses.
The State's expert, Dr. Judd, disagreed. He testified to studies indicating that
while some juveniles desist from offending as they reach adulthood, others do not. He
testified that studies relied upon by Dr. Wollert as supporting low recidivism rates for
juvenile offenders relied on too few years of follow up, and that longer-term studies had
shown higher recidivism rates. Apart from overall rates of recidivism, he testified that
risk factors associated with sexual recidivism in adolescents-risk factors that he
contends are presented by Mr. Leyva-are similar to those that are associated with sexual
recidivism in adults. When asked whether there was any literature in the field that said
that the actuarial tools he had relied upon in assessing Mr. Leyva should not be used on
individuals under the age of 23 because their brains are not fully developed, Dr. Judd
testified that "[t]here is no literature that indicates that whatsoever." RP at 557.
To demonstrate a deprivation of due process, Mr. Leyva must back up his
contention that evidence of sexual misconduct as a juvenile has no probative value in
deciding whether a respondent presents a risk of reoffending if not confined in a secure
facility. At best, he points to scientific evidence that juveniles' brains are in a state of
maturation that increases their prospect of rehabilitation. That does not equate to
16
No.30853-7-II1
In re Det. ofLeyva
evidence that acts committed while a juvenile are irrelevant to assessing the risk of their
future inability to control behavior.
Here, the defense had the opportunity to cross-examine Dr. Judd and to offer Dr.
Wollert's testimony. That is all that due process required.
III. Denial ofRight to Present a Defense
Mr. Leyva next assigns error to the trial court's rulings limiting Dr. Wollert's
testimony and striking a portion of his opinion expressed during trial.
Ordinarily, we review a trial court's ruling on the admissibility and scope of expert
testimony for an abuse of discretion. Christensen v. Munsen, 123 Wn.2d 234,241,867
P .2d 626 (1994). Mr. Leyva argues that in this case the limitations imposed on Dr.
Wollert's testimony by the trial court denied his constitutional right to present a defense.
State rule makers have broad latitude to establish rules excluding evidence from
criminal trials, but "[t]his latitude ... has limits. 'Whether rooted directly in the Due
Process Clause of the Fourteenth Amendment or in the Compulsory Process or
Confrontation Clauses of the Sixth Amendment, the Constitution guarantees criminal
defendants "a meaningful opportunity to present a complete defense."'" Holmes v. South
Carolina, 547 U.S. 319, 324,126 S. Ct. 1727, 164 L. Ed. 2d 503 (2006) (quoting Crane
v. Kentucky, 476 U.S. 683, 690, 106 S. Ct. 2142, 90 L. Ed. 2d 636 (1986) (quoting
California v. Trombetta, 467 U.S. 479, 485,104 S. Ct. 2528, 81 L. Ed. 2d 413 (1984))).
17
No.30853-7-II1
In re Det. ofLeyva
Evidentiary rules can impermissibly abridge a criminal defendant's right to present
a defense if they are '''arbitrary or disproportionate' and 'infringer ] upon a weighty
interest of the accused.'" State v. Rafay, 168 Wn. App. 734, 796, 285 P.3d 83 (2012)
(alteration in original) (internal quotation marks omitted) (quoting United States v.
Scheffer, 523 U.S. 303, 308, 118 S. Ct. 1261, 140 L. Ed. 2d 413 (1998)), review denied,
176 Wn.2d 1023, cert. denied, 134 S. Ct. 170 (2013). The constitutional concern is with
evidence that is relevant but excluded by rules that serve no legitimate purpose or that are
disproportionate to the ends they are asserted to promote; a criminal defendant has no
constitutional right to have irrelevant evidence admitted in his or her defense. Scheffer,
523 U.S. at 308; State v. Hudlow, 99 Wn.2d 1,14-15,659 P.2d 514 (1983). Article I,
section 22 of the Washington Constitution guarantees criminal defendants a right to
present testimony in their defense that is equivalent to the right guaranteed by the United
States Constitution. See Hudlow, 99 Wn.2d 1.
The State filed a pretrial motion in limine asking the trial court to exclude
evidence of Dr. Wollert's political and legal view that "juvenile only" sex offenders
should not be civilly committed because of his categorical view of their lack of volitional
capacity. It asked that his testimony be limited to providing "an opinion as to whether
Mr. Leyva has a mental abnormality or personality disorder that makes him likely to
engage in predatory acts of sexual violence" and that he be required "to appl[y] the facts
18
No.30853-7-II1
In re Det. ofLeyva
of this case to his opinion under Washington law-as it is written today-not as he would
like to see it in the future and not as he believes it should be." CP at 401.
The trial court granted the State's motion, ruling (among other limitations) that Dr.
Wollert could not testify "regarding his political or legal opinion as to the eligibility of
juvenile offenders for civil commitment," that the title of his paper should not be
mentioned, and that he could not testify that an individual must have reached a
'"baseline''' of developmental capacity in order to be an SVP. CP at 552-53 (boldface
and capitalization omitted).
During his direct examination at trial, Dr. Wollert testified that
[p]sychosocial immaturity means that juveniles, those that commit the
crimes as juveniles, have not reached volitional capacity. They can't suffer
from something that affects their volitional capacity, because by definition
of the developmental age, they're immature. So this shows how difficult it
is to say that somebody who is a juvenile at the time they commit their
crimes has an affected volitional capacity, because they never reached
volitional capacity. It's for older persons.
RP at 385. The State objected to the testimony as violating the in limine order. The trial
court heard argument from the parties outside the presence of the jury and then struck the
testimony stating,
[Dr. Wollert] can't testify that juveniles can never have volitional capacity.
He can testify that Mr. Leyva can't because he's a juvenile .... That's
what would help the jury, that opinion, Mr. Leyva, not juveniles in general.
And I'm finding that an expert can't give an opinion unless it's helpful to
the jury, and his opinion about juveniles in general and his opinion about
they can never have volitional capacity is not helpful to the jury. His
opinion about Mr. Leyva being affected by his age is helpful.
19
No. 30853-7-111
In re Del. ofLeyva
RP at 390.
Mr. Leyva argues that the trial court's rulings prevented him from presenting
evidence that would "defeat the State's claim of mental abnormality causing difficulty
controlling behavior." Br. of Appellant at 37. He describes the testimony of Dr. Wollert
that he was prevented from offering as being that
[p]ersons of his young developmental age, by medical definition, have not
yet reached the age at which a sexual paraphilia can possibly be diagnosed,
because impaired volitional capacity and a consequent medical drive to act
in a given sexual manner is never developed until a much later age.
Reply Br. of Appellant at 11. In other words, no one can be found on the basis of
juvenile sexual misconduct, however repeated, to suffer from a mental abnormality or
personality disorder which causes serious difficulty in controlling his sexually violent
behavior: all juveniles have immature volitional capacity; hence, no juvenile'S volitional
capacity can ever be said to have been impaired.
Dr. Wollert's views to the contrary, Washington's SVP statute explicitly permits
civil commitment on the basis of conduct committed as a juvenile. RCW
71.09.025( 1)(a)(ii) requires agencies with jurisdiction over a juvenile in total confinement
to notify the county prosecutor and attorney general three months before the juvenile'S
anticipated release ifhe or she committed a sexually violent act as a juvenile and "may
meet the criteria of a sexually violent predator." RCW 71.09 .030( 1)(b) provides that a
petition for civil commitment alleging that the respondent is an SVP may be filed when it
20
No.30853-7-III
In re Det. ofLeyva
appears that "a person found to have committed a sexually violent offense as a juvenile is
about to be released from total confinement."
Substantial authority allows a state to take sides in a medical debate, even when
fundamental liberty interests are at stake and even when leading members of the
profession disagree with the conclusions drawn by the legislature. Stenberg v. Carhart,
530 U.S. 914, 970, 120 S. Ct. 2597, 147 L. Ed. 2d 743 (2000) (Kennedy, J., dissenting)
(collecting cases). In Jones v. United States, 463 U.S. 354,103 S. Ct. 3043, 77 L. Ed. 2d
694 (1983) the petitioner, a paranoid schizophrenic, had been charged in the District of
Columbia with petit larceny, to which he pleaded not guilty by reason of insanity. Under
federal law, his insanity acquittal led to his being civilly committed. He later challenged
his involuntary confinement and argued that his insanity acquittal was not predictive of
future dangerousness, complaining that "'[w]hen Congress enacted the present statutory
scheme, it did not cite any empirical evidence indicating that mentally ill persons who
have committed a criminal act are likely to commit additional dangerous acts in the
future'" and that the available research failed to support the predictive value of prior
dangerous acts. 463 U.S. at 364 n.13 (alteration in original).
The Court responded that it did "not agree with the suggestion that Congress'
power to legislate in this area depends on the research conducted by the psychiatric
community," adding that it had "recognized repeatedly" the uncertainty of diagnosis in
this field and the tentativeness of professional judgment. Id. The lesson drawn, the Court
21
No.30853-7-III
In re Det. ofLeyva
said, "is not that government may not act in the face of this uncertainty, but rather that
courts should pay particular deference to reasonable legislative judgments." Id.
The same deference is accorded civil commitment laws enacted by state
legislatures. In Hendricks, the Court stated that disagreements among psychiatric
professionals
do not tie the State's hands in setting the bounds of its civil commitment
laws. In fact, it is precisely where such disagreement exists that legislatures
have been afforded the widest latitude in drafting such statutes. As we have
explained regarding congressional enactments, when a legislature
"undertakes to act in areas fraught with medical and scientific uncertainties,
legislative options must be especially broad and courts should be cautious
not to rewrite legislation."
521 U.S. at 360 n.3 (citation omitted) (quoting Jones, 463 U.S. at 370).
As a matter of state evidence law, the trial court has discretion as to the
admissibility of expert testimony and if the reasons for admitting or excluding the
opinion evidence are fairly debatable the trial court's exercise of discretion will not be
reversed on appeal. Grp. Health Coop. ofPuget Sound, Inc. v. Dep 't ofRevenue, 106
Wn.2d 391,398, 722 P.2d 787 (1986). In reviewing Mr. Leyva's constitutional claim
that he was denied his right to present a defense, we review whether the evidence Mr.
Leyva sought to offer was relevant and was excluded for a reason that was arbitrary or
disproportionate and infringed upon an interest on his part that was weighty. Under
either standard, the trial court did not err in ruling that Dr. Wollert could not testify that
no juvenile has a volitional capacity that can ever be said to have been impaired. It did
22
No. 30853-7-111
In re Det. ofLeyva
not err in striking the testimony that violated its in limine ruling. The testimony that Mr.
Leyva sought to offer conflicted with the Washington SVP statute. The fact that Dr.
Wollert disagrees with the legislature does not demonstrate that the statute reflects an
unreasonable legislative judgment.
Although confident that the trial court's rulings were proper, we also note that any
error would have been harmless. Dr. Wollert was given broad latitude to testify about
brain development, the impulsivity and immaturity that contribute to criminal acts
committed by juveniles, and the likelihood that once brain maturation has occurred, those
same crimes will not be committed. He was allowed to testify to his reliance on studies
of psychosocial immaturity by Dr. Laurence Steinberg. He testified that juveniles "reach
psychosocial maturity over a protracted period," and that Mr. Leyva's history reflected
that he committed his offenses because of that immaturity. RP at 396. He even testified
that the theory of psychosocial immaturity was not specific to Mr. Leyva and in fact was
a "general theory." RP at 494-95.
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.2d 383, 410,
256 P 3d 302 (2011). An exclusion of evidence that a defendant claims deprived him of
the right to present a defense is harmless if the untainted, admitted evidence is so
overwhelming as to necessarily lead to the same result. State v. Lord, 161 Wn.2d 276,
295-96 & n.17, 165 P.3d 1251 (2007). Given Dr. Wollert's extensive testimony, it is
23
No. 30853-7-111
In re Det. ofLeyva
highly unlikely that additional testimony from him would have materially affected the
trial's outcome.
IV. Showing That a Person "More Probably Than Not" Will Engage in
Acts ofSexual Violence If Not Confined As Violating Addington v. Texas
In Addington, the United States Supreme Court held that due process requires that
in a civil commitment proceeding, the State prove a respondent's required mental illness
and danger to others by at least clear and convincing evidence. In his fourth assignment
of error, Mr. Leyva argues that the statutory requirement that the State prove that a
respondent's mental abnormality or personality disorder makes him or her "likely to
engage in predatory acts of sexual violence ifnot confined in a secure facility," violates
due process by imposing a lower burden of proof. RCW 71.09.020(18) (emphasis
added). Elsewhere, the statute provides that the language "'[l]ikely to engage in
predatory acts of sexual violence if not confined in a secure facility' means that the
person more probably than not will engage in such acts if released unconditionally from
detention on the sexually violent predator petition." RCW 71.09.020(7) (emphasis
added).
Our Supreme Court rejected this same argument more than a decade ago, pointing
out that it confuses the burden of proof, which is the degree of confidence the trier of fact
should have in the correctness of its conclusions, with a fact to be proved-which, in the
case of this element, is couched in terms of statistical probability. In re Det. ofBrooks,
24
No.30853-7-III
In re Det. ofLeyva
145 Wn.2d 275,297,36 P.3d 1034 (2001), overruled on other grounds by Thorell, 149
Wn.2d 724. The court pointed out that "RCW 71.09.060(1)'s demand that the court or
jury determine beyond a reasonable doubt that a defendant is an SVP means that the trier
of fact must have the subjective state ofcertitude in the factual conclusion that the
defendant more likely than not would reoffend if not confined in a secure facility.;; Id. at
297 -98 (emphasis added). One of the "fact [s] to be determined" is "not whether the
defendant will reoffend, but whether the probability of the defendant's reoffending
exceeds 50 percent." Id. at 298. Yet the SVP statute still requires that the fact finder
have the subjective belief that it is at least highly probable that this fact is true. Id.
Mr. Leyva acknowledges that Brooks rejected his argument but nonetheless asks
that we reexamine Brooks in light of later federal and state case law recognizing that
involuntary commitment is unconstitutional absent proof that an individual has serious
difficulty in controlling behavior. He points to the United States Supreme Court's
decision in Kansas v. Crane and our Supreme Court's decision in Thorell.
It is not this court's place to "reexamine" a decision by the Washington Supreme
Court that it has not overruled. State v. Gore, 101 Wn.2d 481, 487,681 P.2d 227 (1984)
(citing Godefroy v. Reilly, 146 Wash. 257, 259, 262 P. 639 (1928». We would also point
out that the decision in Thorell implicitly rejects Mr. Leyva's suggestion that the State's
burden to prove an individual's serious difficulty controlling behavior has ramifications
for the State's burden of proving that the individual is "likely to engage in predatory acts
25
No.30853-7-III
In re Det. ofLeyva
of sexual violence ifnot confined in a secure facility." Thorell explicitly approves the
language of a to-commit instruction similar to the pattern instruction in use at the time of
Mr. Leyva's commitment trial. 149 Wn.2d at 742; cf WPI 365.10. The instruction
approved in Thorell includes the same "likely to engage in predatory acts" element to
which Mr. Leyva objects and that he asks us to reexamine. Yet, according to Thorell, the
instruction continues to pass constitutional muster "[b]ecause [it] requires the fact finder
to find a link between a mental abnormality and the likelihood of future acts of sexual
violence if not confined in a secure facility." 149 Wn.2d at 743.
V. Failure To Provide a Petrich Instruction
Finally, Mr. Leyva contends that because Dr. Judd testified to provisional
diagnoses of exhibitionism and frotteurism in addition to his diagnosis of paraphilia NOS
(nonconsent), individual jurors might have relied for their finding of a mental
abnormality on different evidence. Citing Petrich, 101 Wn.2d at 569, he argues that in
the absence of an election by the State of the mental abnormality relied upon, the jury
should have been instructed that it was required to unanimously agree on the mental
abnormality.
Where a respondent in an SVP commitment proceeding elects trial by jury,
commitment must rest upon a unanimous verdict. Young, 122 Wn.2d at 48; RCW
71.09.060(1). In criminal cases, the due process clause protects the accused against
conviction except upon proof beyond a reasonable doubt of every fact necessary to
26
No.30853-7-III
In re Det. ofLeyva
constitute the crime charged. In re Winship, 397 U.S. 358, 364, 90 S. Ct. 1068,25 L. Ed.
2d 368 (1970). Washington law likewise requires the State to prove each element
required for civil commitment of SVPs beyond a reasonable doubt. In re Det. ofTuray,
139 Wn.2d 379, 407, 986 P.2d 790 (1999).
The manner in which the law safeguards these requirements at trial and on appeal
depends upon where a particular determination by ajuror fits in a hierarchy of the jury's
decision process. On the ultimate issue of whether the crime charged has been
committed, Washington law provides that jury unanimity be protected any time the State
presents evidence of several distinct criminal acts but the defendant is charged with only
one count of criminal conduct through one of two procedures: the State must either elect
the act on which it will rely for a finding of guilt or the jury must be instructed that all 12
must agree that the same underlying criminal act has been proved beyond a reasonable
doubt-what has come to be known as a "Petrich instruction." Petrich, 101 Wn.2d at
569.
Mr. Leyva's argument presumes that his civil commitment proceeding, like a
"multiple acts" case, implicates the alternatives required by Petrich: State election of a
specific act, or a unanjmity instruction. But the alternatives required by Petrich have no
application here. The purpose of the Petrich alternatives is to safeguard unanimity as to
the ultimate verdict where there is a risk that some jurors will base their guilty verdict on
one criminal act while others will base their verdict on a different criminal act.
27
No.30853-7-III
In re Det. a/Leyva
The ultimate verdict the jury was required to reach in this case was whether the
State had proved that Mr. Leyva was a sexually violent predator. While there was
certainly the possibility that jurors could place more or less reliance on different pieces of
evidence presented by the State, there was no risk that they would arrive at a verdict
based on entirely different subject matters.
The alternative diagnoses offered by Dr. Judd were two steps removed in the
decisional hierarchy from the mUltiple acts that were a concern in Petrich. An
intermediate step in that decisional hierarchy are jury findings of elements that the
legislature has provided may be proved by alternative means. Where alternative means
are presented, the State is not required to elect a means nor does the jury need to be
instructed that it must agree on the means. Unanimity and proof beyond a reasonable
doubt are safeguarded by instruction on the elements and by substantial evidence review.
In the case of these elements, however, we test whether the evidence was sufficient to
prove each of the alternative means because we cannot know the means that individual
jurors relied upon. State v. Arndt, 87 Wn.2d 374,378,553 P.2d 1328 (1976).
In In re Detention a/Halgren, 156 Wn.2d 795,811,132 P.3d 714 (2006), the
Washington Supreme Court held that having a "mental abnormality" and "personality
disorder" are alternative means by which the State can prove the required element that the
respondent in an SVP proceeding suffers from a mental abnormality or personality
disorder. Accordingly-and not knowing which means individual jurors relied on-the
28
No.30853-7-III
In re Det. ofLeyva
court conducted substantial evidence review for both means that had been presented by
the State. Finding that there was substantial evidence to justify a finding beyond a
reasonable doubt that Halgren had both a mental abnormality and a personality disorder,
the court held that the trial court did not violate his right to unanimity.
An even more preliminary step in the hierarchy ofjuror decision making is the
individual jurors' consideration of pieces of evidence, including their consideration of
any means within a means that are offered to prove an element of the crime. As
recognized in In re Detention ofSease, 149 Wn. App. 66, 201 P.3d 1078 (2009) and In re
Detention ofPouncy, 144 Wn. App. 609,184 P.3d 651 (2008), aff'd, 168 Wn.2d 382,229
P.3d 678 (2010), the State's presentation in an SVP proceeding of diagnoses of multiple
personality disorders or diagnoses of mUltiple mental abnormalities is means within a
means evidence that does not implicate the requirements of Petrich or even the
requirements of Arndt.
No Petrich instruction was required by the fact that Dr. Judd testified to both his
primary diagnosis and provisional diagnoses.
Affirmed.
A majority of the panel has determined that this opinion will not be printed in the
29
No.30853-7-II1
In re Del. ofLeyva
Washington Appellate Reports but it will be filed for public record pursuant to RCW
2.06.040.
Sidd~' C-J=
WE CONCUR:
Kulik, J.P.T.
30
| {
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} |
151 F.2d 666 (1945)
YOUST
v.
UNITED STATES.
No. 11352.
Circuit Court of Appeals, Fifth Circuit.
November 8, 1945.
Flay E. Randle, of Springfield, Mo., for appellant.
H. S. Phillips, U. S. Atty., of Tampa, Fla., and Fred Botts, Asst. U. S. Atty., of Miami, Fla., for appellee.
Before HUTCHESON, WALLER, and LEE, Circuit Judges.
LEE, Circuit Judge.
On August 1, 1941, appellant was convicted on both counts of an indictment jointly charging him and three others with conspiring, in violation of 18 U.S.C.A. § 88, to transport certain women in interstate commerce for immoral purposes, in violation of 18 U.S.C.A. § 398. On or about the same date he was found guilty on each of eight counts in a second indictment charging him with unlawfully transporting and causing to be transported certain women in interstate commerce for immoral purposes, in violation of 18 U.S.C.A. § 398. On each of the counts of the conspiracy indictment he was sentenced to serve two years in the penitentiary and to pay a fine of $1,000, said sentences to run consecutively. On the first four counts of the second indictment he was sentenced to serve two years in the penitentiary and to pay a fine of $1,000, and to serve a like sentence and pay a like fine on the last four counts of that indictment, said sentences to run consecutively, the first to begin with the expiration of the sentences imposed on Counts 1 and 2 of the conspiracy indictment. On August 4, 1941, appellant was delivered to the warden of the penitentiary in Atlanta, Georgia, to begin serving said sentences.
On January 23, 1945, by written motion he petitioned the United States District Court for the Southern District of Florida to vacate the judgment and sentence on the second count of the conspiracy indictment for the reason that it was illegal and void in that the conspiracy alleged in the second count arose out of the same agreement which constituted the conspiracy *667 alleged in the first count, and that for one conspiracy only one sentence could be lawfully imposed. The court below overruled the motion, and appellant prosecuted this appeal, assigning as error the refusal of the court below to vacate the judgment and sentence on Count 2 of the conspiracy indictment for the reason set out in the motion.
Here appellant urges that the four corners of the indictment clearly show that the two counts have to do with one conspiracy, and that the indictment on its face alleges only a single agreement to violate the White-Slave Traffic Act, 18 U.S. C.A. § 397 et seq. Appellee meets this contention by urging first that the question is moot, as appellant has served the sentences imposed upon him on Counts 1 and 2 of the indictment; and second, if not moot, then in the absence of all evidence from the record we must assume that the evidence proved two separate conspiracies, not one, and so assuming must affirm the judgment appealed from.
The two counts, identical in many respects, differed in that Count 1, in the main, alleged the offense of unlawful transportation of three women from Chattanooga, Tennessee, to Dade County, Florida; whereas Count 2, in the main, alleged the offense of unlawful transportation of two women from Atlanta, Georgia, to Dade County, Florida. Specifically, each count set forth in identical language that during January, 1939, and continuously at designated times thereafter up to and including April 8, 1940, in Dade County, Florida, and at divers other places in Georgia and Tennessee appellant unlawfully conspired and agreed to commit certain offenses against the United States of America, in particular, unlawfully to transport and cause to be transported in interstate commerce certain women for the purpose of debauchery; Count 1 named three women as having been transported from Chattanooga, Tennessee, to Dade County, Florida; Count 2 named two women as having been transported from Atlanta, Georgia, to Dade County, Florida.
Seven overt acts are set forth as having effected the conspiracy charged in Count 1, and six, as having effected the conspiracy charged in Count 2. Comparison shows that five of the seven overt acts set forth in Count 1 are identical with five of those set forth in Count 2; one of the remaining overt acts in Count 1 differs from the remaining overt act in Count 2 only in the persons transported and the places from which the transportation originated. These latter acts occurred on the same date and were performed by the same defendant, one of appellant's coconspirators, in an automobile apparently starting in Chattanooga, Tennessee, with three women, passing through Atlanta, Georgia, where two other women were picked up, and terminating the journey in Dade County, Florida. The sole overt act not common to both counts has reference to newspaper advertisements designed and intended to attract and secure female dancers and hostesses for employment in a night club.
That the conspiracy referred to in each count of the indictment was one and the same conspiracy is plain. A mere reading of the indictment makes such conclusion inescapable, for while several violations of the White-Slave Traffic Act were allegedly committed, they were committed in furtherance of a single agreement, and it is the single agreement constituting the conspiracy which is condemned and made punishable by the Act. 18 U.S.C.A. § 88. The fact that several offenses were evidenced by the unlawful transportation in interstate commerce of several women for immoral purposes does not change the single agreement to commit such offenses into several agreements or several conspiracies. Since the indictment alleged but a single conspiracy, appellant could not be given a prison sentence of more than two years, the maximum for a single violation of the conspiracy statute. Braverman v. United States, 317 U.S. 49, 63 S.Ct. 99, 87 L.Ed. 23. The imposition of sentence, therefore, of two years imprisonment on Count 1 and two years imprisonment on Count 2, to run consecutively, was, as to the sentence on Count 2, illegal, null, and void.
The contention of the Government that the question is moot since appellant, if he has been credited with good time, has served out the sentences imposed is wholly without merit. Appellant was sentenced to terms of two years each, to run consecutively, on Counts 1 and 2 of the conspiracy indictment, and on Counts 1 to 4 inclusive, and Counts 5 to 8, inclusive, of the unlawful transportation indictment. It is clear, therefore, that appellant is entitled to have a legal sentence imposed on the conspiracy indictment, and to have the court which imposed *668 the sentences originally vacate the illegal sentence imposed on Count 2 of that indictment. Hammers v. United States, 5 Cir., 279 F. 265; Garrison v. Reeves, 8 Cir., 116 F.2d 978.
The fact that appellant may have served a period of time equal to or in excess of sentences imposed on Counts 1 and 2 of the conspiracy indictment may not affect the right of the appellant to insist that the aggregate of the several sentences imposed on the two indictments be reduced from eight to six years and to have the time served applied to the legal sentences; nor may it affect his right to deductions for good conduct from August 4, 1941, the date of his commitment, to be computed on the basis of the aggregate of the several legal sentences. 18 U.S.C.A. § 710.
In Holiday v. Johnston, 313 U.S. 342, 349, 550, 61 S.Ct. 1015, 85 L.Ed. 1392, 1396, the Supreme Court said that the remedy, where two sentences for a single offense are imposed, is to apply for vacation of the sentence and a resentence in conformity to the statute under which the defendant was adjudged guilty.
The procedure followed in the Eighth Circuit in such circumstances is clearly set forth in the syllabus in Garrison v. Reeves, supra, in the following words: "Where district judge had sentenced petitioners to imprisonment under each of two counts in indictment, the terms of imprisonment to be served consecutively and sentence imposed under one count was invalid, district judge was bound to vacate invalid sentence and to transmit to warden of penitentiary wherein petitioners were confined an authenticated record of entry vacating invalid sentence, notwithstanding that term of court at which sentence was imposed had passed, and it was not necessary that petitioners be brought before court when invalid sentence was vacated, since no correction of sentence was involved."
We subscribe to this procedure. The motion to vacate should have been sustained.
The judgment appealed from is, therefore, reversed, and the cause is remanded with directions to vacate the invalid sentence and transmit to the warden of the penitentiary wherein appellant is confined an authentic record of entry vacating the same.
Reversed and remanded with directions.
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TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-11-00312-CV
Dr. Glenn Martin Haluska, Individually and as Trustee of the Carolyn Ann Saylor
Haluska Spouse’s Trust and the Carolyn Ann Saylor Haluska Family Trust, Appellant
v.
Elizabeth Ann Haluska-Rausch and William Andrew Haluska, Appellees
FROM THE PROBATE COURT NO. 1 OF TRAVIS COUNTY
NO. C-1-PB-10-001523, HONORABLE GUY S. HERMAN, JUDGE PRESIDING
MEMORANDUM OPINION
Appellees William Andrew Haluska and Elizabeth Haluska-Rausch (“the Haluska
children”) have filed a motion to dismiss the appeal, arguing that it is interlocutory and does not fall
within any exceptions to the general rule that appeals may only be taken from final judgments. We
agree and dismiss the appeal for want of jurisdiction.
This case arises out of a suit filed by the Haluska children against their father,
appellant Dr. Glenn Haluska (“Glenn”), seeking to have him removed as trustee of two trusts created
by their mother in her last will and testament. The Haluska children alleged that Glenn had breached
his fiduciary duties owed as trustee. They sought to have Glenn removed, to be appointed as
successor co-trustees, and to recover attorney’s fees under the Texas Trust Code. The trial court
signed an order “granting plaintiffs’ motion for partial summary judgment,” which removed Glenn
as trustee and appointed the Haluska children as successor co-trustees. The order did not address
the Haluska children’s claim for attorney’s fees. Glenn filed a notice of accelerated appeal, stating
that section 51.014(a)(1) of the civil practice and remedies code “authorizes an accelerated appeal
from an interlocutory order ‘appointing a trustee.’” See Tex. Civ. Prac. & Rem. Code Ann.
§ 51.014(a)(1) (West 2008). Several months later, the trial court held a hearing and heard argument
from the parties about whether the Haluska children had improperly administered the trusts’ accounts
or had “shown an inability to administer financial matters.” In response, the trial court signed
another order appointing an “interim trustee.”
The Haluska children contend in their motion to dismiss that they did not seek and
the trial court did not grant summary judgment on their claim for attorney’s fees and, therefore, an
issue remains live in the trial court. They further argue that although section 51.014(a)(1) allows for
an interlocutory appeal from an order appointing an original trustee, it does not permit an
interlocutory appeal from an order appointing a successor trustee. Glenn responds that the order
addressed the Haluska children’s substantive claims, which sought his removal and their
appointment. Because the only issue remaining is for attorney’s fees, he argues, we should consider
the trial court’s order to be final and appealable. He further argues that even if the order is
interlocutory, section 51.014 and the probate code allow for the appeal.
In McNally v. Guevara, the supreme court examined whether a document entitled
“judgment,” which granted the defendants’ motion for summary judgment “in all things” and
awarded costs against the plaintiff, should be considered final and appealable. 52 S.W.3d 195, 195-96
(Tex. 2001). The motion for summary judgment addressed only the defendants’ counterclaim for
an easement and did not address their claim for attorney’s fees; the court’s conclusion that the
2
defendants should prevail on their easement claim necessarily addressed the plaintiff’s original
claim. See id. The court stated that nothing in the judgment, other than the costs award, suggested
that the trial court “intended to deny the defendants’ claim for attorney’s fees,” and concluded,
“[b]ecause the judgment does not appear final on its face, and because it did not dispose of the
defendants’ claim for attorney fees, it was not an appealable judgment.” Id. at 196.
The order here is very similar. It is captioned, “Order Granting Plaintiffs’ Motion for
Partial Summary Judgment,” it does not address the Haluska children’s claim for attorney’s fees, and
does not contain any language showing that the trial court intended the order to be final and
appealable. See id. We conclude that the order Glenn seeks to appeal is interlocutory, and thus can
only be appealed if it falls within section 51.014 or another exception.1
Section 51.014(a)(1) allows for an interlocutory appeal from an order that “appoints
a receiver or trustee.” Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a). Courts that have addressed
the issue of whether this provision encompasses orders appointing successor receivers or trustees
have concluded that it does not, reasoning that appellate courts must strictly construe statutes
granting jurisdiction over interlocutory appeals. See Epstein v. Hutchinson, No. 01-03-00797-CV,
2004 Tex. App. LEXIS 6899, at *6 (Tex. App.—Houston [1st Dist.] July 23, 2004, pet. denied)
(mem. op.) (citing Ahmed v. Shimi Ventures, L.P., 99 S.W.3d 682, 688 (Tex. App.—Houston
[1st Dist.] 2003, no pet.)); In re Estate of Dillard, No. 07-00-00504-CV, 2001 Tex. App. LEXIS 775,
at *4 (Tex. App.—Amarillo Feb. 5, 2001, no pet.) (not designated for publication) (“Although the
1
Our conclusion is further bolstered by the court’s later order appointing an interim trustee
to sort out whether the children had mismanaged the trusts since being named successor trustees.
3
appointment of a trustee is an appealable interlocutory order pursuant to section 51.014(a)(1), the
grandchildren note that an order appointing a successor trustee, as here, is not appealable under
section 51.014(a).”); Swate v. Johnston, 981 S.W.2d 923, 925 (Tex. App.—Houston [1st Dist.] 1998,
no pet.) (“Texas courts have consistently held, when construing predecessor statutes with identical
language, that an interlocutory order appointing a successor to a permanent receiver is not
appealable.”).2 Thus, section 51.014(a)(1) does not bestow jurisdiction over this appeal.
Finally, we address Glenn’s argument that this should be considered an appealable
order because it disposes of all the issues in a particular phase of a probate proceeding. See Logan v.
McDaniel, 21 S.W.3d 683, 688 (Tex. App.—Austin 2000, pet. denied) (quoting Crowson v.
Wakeham, 897 S.W.2d 779, 783 (Tex. 1995)). In most kinds of trial proceedings, there is only one
final order or judgment rendered. Lehmann v. Har-Con Corp., 39 S.W.3d 191, 192 (Tex. 2001).
Probate proceedings are an exception to this general rule because a probate court must make a series
of decisions throughout the administration of an estate. See Logan, 21 S.W.3d at 688. However,
that exception does not apply here. First, this proceeding concerns the administration of trusts and
could have been brought in the district court as well as the probate court. See Tex. Prop. Code Ann.
§ 115.001 (West Supp. 2011). Second, even if the probate exception applied to this cause, the orders
2
See also First Nat’l Bank v. First State Bank, 456 S.W.2d 173, 174 (Tex. Civ.
App.—Texarkana 1970, writ dism’d) (“Two Texas Civil Appeals Courts, considering language in
a predecessor statute that is identical with that of the first section of the present statute governing
appeals from interlocutory orders in receivership proceeding, concluded an order appointing a
successor to a permanent receiver is not appealable.”); Benningfield v. Benningfield, 155 S.W.2d 827,
828 (Tex. Civ. App.—Austin 1941, no writ) (“the right of appeal is given to test the validity of the
[original] order taking custody of the property by a receiver, not the propriety of the particular
selection of the receiver so appointed”).
4
in place have not disposed of all of the issues raised by the children. See Logan, 21 S.W.3d at 688.
The children sought Glenn’s removal, their appointment, and attorney’s fees. As the case stands
now, the trial court has removed Glenn and appointed an interim trustee, leaving the children named
as trustees but without the actual authority to act as trustees; the issue of attorney’s fees has not been
addressed. Thus, even if the probate exception to the one-judgment rule applied here, the court has
not rendered a judgment disposing of all of the issues raised in this “phase” of the proceeding. See
Caroom v. Coleman, No. 03-10-00837-CV (Tex. App.—Austin July 22, 2011, n.p.h.). Thus, we
may not exercise jurisdiction under the probate exception to the one-judgment rule.
Because the order is interlocutory, not final and appealable, and because section
51.014(a)(1) does not permit us to exercise jurisdiction from interlocutory appeals of orders
appointing successor trustees or receivers, we must dismiss the appeal for want of jurisdiction.
__________________________________________
David Puryear, Justice
Before Justices Puryear, Henson and Goodwin
Dismissed for Want of Jurisdiction
Filed: January 24, 2012
5
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7 F.3d 219
NOTICE: First Circuit Local Rule 36.2(b)6 states unpublished opinions may be cited only in related cases.UNITED STATES, Appellee,v.Hernando Duque JARAMILLO, Defendant, Appellant.
No. 93-1289.
United States Court of Appeals,First Circuit.
October 5, 1993
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO
Hernando Duque Jaramillo, on brief pro se.
Charles E. Fitzwilliam, United States Attorney, Jose A. Quiles-Espinosa, Senior Litigation Counsel, and Warren Vazquez, Assistant United States Attorney, on brief for appellee.
D. Puerto Rico.
AFFIRMED.
Before Cyr, Boudin and Stahl, Circuit Judges.
Per Curiam.
1
On January 16, 1990, appellant Hernando Duque-Jaramillo was sentenced to 60 months in prison for drug offenses. At sentencing, Duque-Jaramillo received a two-level reduction in base offense level for acceptance of responsibility. Effective November 1, 1992, the United States Sentencing Commission amended sentencing guideline § 3E1.1 to permit an additional one-level reduction in base offense level for persons eligible for the two-level reduction for acceptance of responsibility. Duque-Jaramillo sought to reduce his sentence pursuant to the amended guideline, claiming that the amendment should be applied retroactively. The district court denied his request. Because we have decided that the amendment in question is not retroactive, see DeSouza v. United States, 995 F.2d 323, 324 (1st Cir. 1993), we affirm the district court's denial of Duque-Jaramillo's request for a sentence reduction under amended § 3E1.1.
2
Affirmed.
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FILED
United States Court of Appeals
Tenth Circuit
November 27, 2007
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
WARD WILSON,
Plaintiff-Appellant,
v. No. 06-1431
TITAN INDEMNITY COMPANY, a
Texas corporation,
Defendant-Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. No. 05-cv-02026-RPM)
Frances R. Johnson (Robert B. Carey with her on the briefs), The Carey Law
Firm, Colorado Springs, Colorado, for Plaintiff-Appellant.
Michael D. Alper (John M. Vaught with him on the briefs), Wheeler Trigg
Kennedy LLP, Denver, Colorado, for Defendant-Appellee.
Before HARTZ, McKAY, and TYMKOVICH, Circuit Judges.
McKAY, Circuit Judge.
Plaintiff appeals the district court’s order denying Plaintiff’s motion for
partial summary judgment and granting Defendant’s motion for summary
judgment on Plaintiff’s claims for reformation of his automobile insurance policy,
breach of contract, and common law and statutory bad faith. The district court
had diversity jurisdiction over this case pursuant to 28 U.S.C. § 1332. Our
jurisdiction is based on 28 U.S.C. § 1291.
Plaintiff purchased an automobile insurance policy from Defendant in
February 1999. Under Colorado’s now-repealed Auto Accident Reparations Act,
Colo. Rev. Stat. §§ 10-4-701 to -726 (repealed 2003), Defendant was required to
offer Plaintiff the option of purchasing enhanced personal injury protection
(“PIP”) coverage extending to four classes of persons: “1) the named insured, 2)
resident relatives of the named insured, 3) passengers occupying the insured’s
vehicle with the consent of the insured, and 4) pedestrians who are injured by the
covered vehicle.” Brennan v. Farmers Alliance Mut. Ins. Co., 961 P.2d 550, 553
(Colo. Ct. App. 1998). Plaintiff concedes that Defendant offered him the option
of purchasing enhanced PIP coverage; however, Plaintiff contends that this offer
did not comply with the statute because it did not cover passengers or pedestrians.
Plaintiff elected to purchase limited basic PIP coverage for a reduced premium.
Plaintiff was injured in an automobile accident in October 1999 while
driving his insured vehicle, and Defendant paid him the limited PIP benefits
provided under his policy. Plaintiff subsequently filed the instant lawsuit seeking
reformation of his insurance policy as well as damages for breach of contract and
bad faith based on Defendant’s alleged failure to extend to Plaintiff a statutorily
compliant offer of enhanced PIP coverage and subsequent failure to provide
-2-
Plaintiff with enhanced PIP coverage for his accident-related injuries and other
losses.
The district court granted Defendant’s motion for summary judgment on the
ground that Plaintiff lacked standing. The court concluded that Plaintiff would
not be personally affected by reformation of his policy because reformation would
only extend enhanced PIP coverage to passengers and pedestrians, not to Plaintiff
as the named insured. 1 The court then held that because all of Plaintiff’s claims
for relief depended upon his reformation claim, the action should be dismissed in
its entirety.
We review the district court’s grant of summary judgment de novo,
applying the same standard as the district court. Allstate Ins. Co. v. Murray
Motor Imports Co., 357 F.3d 1135, 1138 (10th Cir. 2004). “Summary judgment is
proper ‘if the pleadings, depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any, show that there is no genuine issue as
to any material fact and that the moving party is entitled to judgment as a matter
of law.’” Id. (quoting Fed. R. Civ. P. 56(c)). Colorado law governs our analysis
of Plaintiff’s underlying claims. Hill v. Allstate Ins. Co., 479 F.3d 735, 739 (10th
Cir. 2007).
In Brennan, 961 P.2d at 554, the Colorado Court of Appeals held that
1
Plaintiff is no longer insured by Defendant.
-3-
“when . . . an insurer fails to offer the insured optional coverage that satisfies the
[statute], additional coverage in conformity with the offer mandated by statute
will be incorporated into the policy.” According to Plaintiff’s interpretation of
this holding, reformation requires incorporation of the complete coverage option
that the insurer should have offered to the insured, covering all four categories of
persons listed in Brennan. Plaintiff therefore argues that he has standing because
reformation under Brennan would provide Plaintiff as the named insured with
enhanced PIP coverage, redressing the injury allegedly caused by Defendant’s
violation of Plaintiff’s right to receive a compliant offer of coverage. 2
We hold that Plaintiff had standing to bring this action. At the time
Plaintiff filed suit, his argument was not foreclosed by precedent and was based
on at least a colorable reading of Colorado law. See Nova Health Sys. v. Gandy,
416 F.3d 1149, 1154 (10th Cir. 2005) (“Standing is determined as of the time the
action is brought.”). By holding that Plaintiff had no standing because
reformation would not entitle Plaintiff to enhanced PIP benefits for his own
2
Although Defendant argues that Plaintiff would not have accepted
compliant PIP coverage in any event, Plaintiff points out that the Colorado Court
of Appeals has held that reformation cannot be avoided by evidence suggesting
that the insured would not have purchased compliant coverage had it been
offered. Thompson v. Budget Rent-A-Car Sys., Inc., 940 P.2d 987, 990 (Colo. Ct.
App. 1996); see also Fincher v. Prudential Prop. & Cas. Ins. Co., 76 F. App’x
917, 921-22 (10th Cir. 2003) (refusing to consider the defendant’s argument that
the insured drivers would have rejected compliant enhanced PIP coverage because
they were on a fixed income and declined other offers of extended coverage in
order to avoid paying a higher premium).
-4-
injuries, the district court “put the merits cart before the standing horse.”
Initiative and Referendum Inst. v. Walker, 450 F.3d 1082, 1093 (10th Cir. 2006)
(en banc). The court erred in concluding that Plaintiff lacked standing because
Colorado law, properly interpreted, did not entitle Plaintiff to the damages he
claimed. See id. Rather, the court should have “taken as correct for purposes of
standing” Plaintiff’s “non-frivolous contention” regarding the interpretation of
Brennan. Info. Handling Servs., Inc. v. Defense Automated Printing Servs., 338
F.3d 1024, 1030 (D.C. Cir. 2003). Taking his contention as correct for purposes
of standing, we conclude that Plaintiff “alleged such a personal stake in the
outcome of the controversy as to warrant his invocation of federal-court
jurisdiction.” Warth v. Seldin, 422 U.S. 490, 498 (1975) (internal quotation
marks omitted).
Although we hold that Plaintiff had standing, we conclude that his claim
fails on the merits. 3 This court recently held in Stickley v. State Farm Mutual
Automobile Insurance Co., — F.3d —, 2007 WL 2938380, at *7 (10th Cir. Oct.
10, 2007), that Brennan does not entitle the insured to “reformation of the entire
policy to provide enhanced PIP benefits for all categories of people.” Rather,
“when an insurance policy is found to violate [the Colorado Auto Accident
3
We may affirm the district court’s ruling for any reason that finds support
in the record, even if it is different from the stated basis for the ruling below.
Mallinson-Montague v. Pocrnick, 224 F.3d 1224, 1233 (10th Cir. 2000).
-5-
Reparations Act], only the defective portion of the policy is reformed to comply
with [the statute]. It does not wipe the slate clean and give the insured the fullest
amount of benefits available for every category possible.” Id. at *8. Based on
Stickley, we conclude that reformation of Plaintiff’s policy would not entitle him
to enhanced PIP benefits for his own injuries as the named insured because the
alleged defect in Defendant’s offer of coverage concerned only passengers and
pedestrians. See Wankier v. Crown Equip. Corp., 353 F.3d 862, 866 (10th Cir.
2003) (“[W]hen a panel of this Court has rendered a decision interpreting state
law, that interpretation is binding on . . . subsequent panels of this Court, unless
an intervening decision of the state’s highest court has resolved the issue.”); see
also Campbell v. Allstate Ins. Co., 2007 WL 3046304, at *6-7 (10th Cir. Oct. 18,
2007) (stating in dicta that the named insured could not obtain PIP coverage for
injuries she sustained in an automobile accident because she only alleged that the
policy excluded enhanced PIP coverage for pedestrians and passengers). We
therefore hold that Plaintiff is not entitled to any relief on his claim for
reformation.
Plaintiff does not challenge the district court’s conclusion that his other
claims all depend upon his claim for reformation. Because we conclude that
Plaintiff is not entitled to any relief on that claim, we AFFIRM the district
court’s grant of summary judgment in favor of Defendant.
-6-
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131 F.Supp.2d 232 (2001)
Desiree CARONE-FERDINAND et al., Plaintiffs,
v.
CENTRAL INTELLIGENCE AGENCY et al., Defendants.
No. CIV.A.00-403(RMU).
United States District Court, District of Columbia.
February 27, 2001.
Raymond D. Kohlman, Attleboro, MA, Desiree Carone-Ferdinand, Thomas E. Ferdinand, Corrales, NM, for Plaintiffs.
G. Michael Harvey, Assistant United States Attorney, Washington, DC, Robert R. Fuentes, Fuentes & Associates, P.C., Rio Rancho, NM, for Defendants.
MEMORANDUM OPINION
GRANTING THE DEFENDANTS' MOTION TO DISMISS
URBINA, District Judge.
I. INTRODUCTION
This case comes before the court on the defendants' motion to dismiss. The plaintiffs, Desiree Carone-Ferdinand and Thomas Ferdinand, seek $38 million from the Central Intelligence Agency ("CIA") and the United States Army (collectively the "Federal Defendants"), Robert Fuentes, Oliver North, and James Robert Strauss for alleged theft of insurance policies, bank accounts, and other property. The plaintiffs claim that the defendants knowingly diverted the personal property of Albert V. Carone, Desiree Carone-Ferdinand's father, for their own or other persons' use through, inter alia, fraud, larceny, and embezzlement. Specifically, the plaintiffs claim that the defendants took these steps to cover up Mr. Carone's *233 participation in government-sanctioned illegal activity. For the reasons that follow, the court holds that the plaintiffs' claims are fictitious. Thus, the court will dismiss the complaint for lack of subject-matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1).
II. BACKGROUND
The plaintiffs' allegations encompass events spanning the last 60 years, and involve organized crime families, two previous Directors of Central Intelligence ("DCI"), and three former United States Presidents. The plaintiffs claim that 10 years ago, the federal government killed Ms. Carone-Ferdinand's father and stole the property at issue in this lawsuit to cover up Mr. Carone's role in various government covert operations.
The plaintiffs paint a colorful portrait of Mr. Carone's past. According to the plaintiffs, Mr. Carone had a very diverse resume that included stints as, at various times, a "made" member of the Genovese Crime Family, a detective in the New York Police Department ("NYPD"), a Colonel in the U.S. Army Military Intelligence-Counter Intelligence Corps, and a CIA operative. See Compl. at 2-17.
As recounted in the complaint, the events leading up to the CIA's alleged misappropriation of the plaintiffs' property began during World War II. See id. At that time, a young go-getter and "charismatic patriot" named Albert Carone was working as an officer in the Office of Strategic Services (the predecessor to the CIA) when he was introduced to Mr. William Colby and Mr. William Casey, both of whom would go on to serve as DCI. See Decl. of William J. Casey ("Casey Decl.") at 1-2. Duly impressed with Mr. Carone's charisma and patriotism, as well as his dual status as a member of the Genovese Crime family and an NYPD detective, the CIA allegedly recruited Mr. Carone to act as a liaison between the CIA and "certain Chinese and Italian businessmen in New York City." See Decl. of Albert V. Carone ("Carone Decl.") at 1.
The plaintiffs claim that for the next 40-odd years, Mr. Carone helped import cocaine into the United States on direct orders from the CIA. The profits from the cocaine sales were then laundered through organized crime operations, and were ultimately funneled to CIA-sanctioned, covert, anti-communist activities. One of the largest shipments that Mr. Carone allegedly facilitated was the importation of more than one million pounds of cocaine between 1976 and 1981. See Casey Decl. at 1-2. This cocaine was allegedly brought into the United States by way of Mena, Arkansas, population 5,475. See Casey Decl. at 2. Though one might think that the importation of more than $40 billion worth of cocaine into one municipal airport over a five-year period would arouse suspicion, law enforcement was kept at bay through the efforts of one William Jefferson Clinton. See Casey Decl. at 2. At the time in question, Mr. Clinton was the Attorney General of the State of Arkansas.
The complaint also indicates that Mr. Carone's duties were not only limited to drug trafficking. In one memorable assignment, Mr. Carone was ordered to assassinate President John F. Kennedy. See Supp. Aff. of Thomas E. Ferdinand ("Ferdinand Supp. Aff.") at 2. While Mr. Carone managed to situate himself on the roof of the "Dallas Airport," he was unable to complete his mission because other people accompanying the president were standing in the line of fire. See id.
According to the plaintiffs, Mr. Carone's affiliation with the CIA ended in 1985. See Decl. of Desiree Ferdinand ("Decl.D.Ferdinand") at 2. During a two-week trip to Chapatulla, Mexico with defendant Strauss, Mr. Carone "destroyed an entire village of men, women and children." See id. Apparently, after this incident (about which the plaintiffs offer no proof), Mr. Carone had a change of heart, and decided that he would no longer assist the CIA in its assassinations and drug *234 trafficking. See id. The plaintiffs believe that as a result, the CIA or people affiliated with the CIA poisoned Mr. Carone, leading to his death in 1990.
After Mr. Carone's death, Ms. Carone-Ferdinand was named executrix of Mr. Carone's estate. See Compl. at 2. The plaintiffs claim that they transmitted several life insurance policies, proof of joint ownership of several bank accounts, proceeds from the sale of a coin collection, and access to several storage units containing Mr. Carone's personal property to defendant Robert Fuentes, an attorney operating out of Rio Rancho, New Mexico. See Compl. at 14. According to the plaintiffs, shortly after they transferred the property to Mr. Fuentes, defendant James Robert Strauss, on orders from the CIA, approached defendant Fuentes, who then surrendered Mr. Carone's estate in exchange for a monetary reward. See id.
The plaintiffs claim that in 1996 they located a William M. Tyree, who verified much of Mr. Carone's story. See Ferdinand Supp. Aff. at 2. Additionally, after further inquiry, the plaintiffs allege that they were able to determine that the named defendants stole Mr. Carone's estate to cover up his role in the Iran-Contra affair and other classified operations. See Compl. at 16.
On February 29, 2000, the plaintiffs filed a six-count complaint alleging, inter alia, larceny, conversion of Mr. Carone's estate, and constitutional violations. The complaint also stated a claim of negligence against defendant Fuentes.
The defendants attack the complaint on a wide array of substantive and procedural grounds. The defendants move to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction, under Rule 12(b)(6) for failure to state a claim upon which relief can be granted, under Rule 9(b) for failing to aver fraud with particularity, and under Rule 8(a) for failure to contain a short and plain statement of jurisdiction. In addition, the federal defendants argue that the plaintiffs' tort claims are barred by various provisions of the Federal Tort Claims Act, sovereign immunity, failure to exhaust administrative remedies, and applicable statutes of limitations. All defendants seek, in the alternative, a transfer to the United States District Court for the District of New Mexico.
For the reasons that follow, the court will grant the defendants' motion to dismiss for lack of subject-matter jurisdiction pursuant to Rule 12(b)(1).
III. ANALYSIS
A. Legal Standard
It is well-settled law that "the federal courts are without power to entertain claims otherwise within their jurisdiction if they are `so attenuated and unsubstantial [sic] as to be absolutely devoid of merit.'" Hagans v. Lavine, 415 U.S. 528, 536-37, 94 S.Ct. 1372, 39 L.Ed.2d 577 (1974) (quoting Newburyport Water Co. v. Newburyport, 193 U.S. 561, 579, 24 S.Ct. 553, 48 L.Ed. 795 (1904)). This Circuit has stated that dismissal under 12(b)(1) is appropriate "when the complaint is `patently insubstantial' presenting no federal question suitable for decision." Best v. Kelly, 39 F.3d 328, 330 (D.C.Cir.1994) (quoting Neitzke v. Williams, 490 U.S. 319, 327 n. 6, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989)); accord O'Brien v. United States Dep't of Justice, 927 F.Supp. 382, 384 (D.Ariz. 1995); Shoemaker v. United States, 1997 WL 96543, *5 (S.D.N.Y.1997); O'Connor v. United States, 159 F.R.D. 22, 25 (D.Md. 1994). The D.C. Circuit explained that for claims to be considered patently insubstantial, they cannot merely be doubtful or questionable, but rather they have to be "essentially fictitious." See Best, 39 F.3d at 330. Examples of essentially fictitious claims are "bizarre conspiracy theories," "fantastic government manipulations of [one's] will or mind," and "any sort of supernatural intervention." See id.
*235 B. The Court Will Dismiss the Complaint Pursuant to Rule 12(b)(1)
Under the factors laid out by the Supreme Court and the D.C. Circuit, the complaint cannot survive the defendants' motion to dismiss under Rule 12(b)(1). Consequently, the court need not address the alternate defenses raised by the defendants. To support the allegations in their complaint, the plaintiffs have presented affidavits from Mr. Albert Carone, Mr. William Tyree, Mrs. Desiree Carone-Ferdinand, Mr. Thomas Ferdinand, Mr. William Casey, and a book excerpt that appears to be based largely upon declarations similar to those in Mrs. Carone-Ferdinand's affidavit.
When facts that form the basis of subject-matter jurisdiction are in controversy, a district court has authority to weigh the conflicting evidence to determine if subject-matter jurisdiction exists. See Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir.1990); accord Williamson v. Tucker, 645 F.2d 404, 412-13 (5th Cir.1981); Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir.1977). After examining the plaintiffs' evidence in this case, the court finds that the plaintiffs' claims are "essentially fictitious." Thus, the court lacks subject-matter jurisdiction over the controversy.
On its face, the complaint appears to be the very type of "bizarre conspiracy theory" that the D.C. Circuit has said warrants dismissal under Rule 12(b)(1). For example, the declaration of former Director of Central Intelligence William Casey is so obviously false as to cast doubt on the plaintiffs' entire case. As the federal defendants aptly stated:
Plaintiffs' submission of an alleged declaration of now-deceased CIA Director William Casey supposedly witnessed by a former President only further verifies the fictitiousness of plaintiffs' claims. This document's frequent misspellings, absence of grammar, bizarre free-association, and flippant admission of criminal activity by high-ranking government officials, including Mr. Casey himself, establishes its own falsity and the patent absurdity of plaintiffs' claims.
Federal Defendants' Motion to Dismiss or in the Alternative for Transfer ("Fed. Defs.' Mot.") at 10-11 (emphasis in the original).
In addition, the defendants have also submitted declarations from former CIA General Counsel David P. Doherty, who served as General Counsel at the time Director Casey allegedly made the declaration, and from the current Information Review Officer for the Director of Central Intelligence Area, Ms. Martha M. Lutz. Mr. Doherty stated that he had no recollection of the alleged Casey declaration, and that:
In the ordinary course of business during my tenure as CIA General Counsel, any official declaration by DCI Casey would have been prepared by the CIA's Office of General Counsel. A declaration by DCI Casey of this apparent significance and national security sensitivity in which, on its face anyway, he freely acknowledges violations of law should necessarily have come to my attention as the senior attorney in the Agency at that time ... Moreover, I have no recollection of Richard Nixon in this context, presumably the former U.S. President ever serving as a witness to any official declaration made by DCI Casey during my tenure as CIA General Counsel. I am confident that I would recall such a notable and memorable event had it ever occurred.
Decl. of David P. Doherty ("Doherty Decl.") at 2-3. In her declaration, Ms. Lutz stated that after conducting a thorough search of the CIA's records, she found no such declaration from Director Casey, and that if the Casey Declaration were genuine, it almost certainly would have been located during the search. See *236 Decl. of Martha M. Lutz ("Lutz Decl.") at 4.
According to their declarations, the plaintiffs would have this court believe that Mr. Carone has played the role of Forrest Gump, popping up as a key player in virtually every prominent government conspiracy theory promulgated over the past 50 years. This court simply cannot view any of the plaintiffs' claims as plausible, especially in light of the complete lack of even a scintilla of evidence except for one patently forged document and self-serving declarations. While the complaint may be worth entering in a creative writing contest, it was not worth entering in a court of law. Accordingly, the court dismisses the case pursuant to Rule 12(b)(1).
IV. CONCLUSION
For all of these reasons, the court grants the defendants' motion to dismiss. An order directing the parties in a fashion consistent with this Memorandum Opinion is separately and contemporaneously issued this 27 day of February, 2001.
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231 N.W.2d 178 (1975)
BOTTINEAU PUBLIC SCHOOL DISTRICT NO. 1, Plaintiff-Appellee,
v.
Loren ZIMMER, Defendant-Appellant.
Civ. No. 9074.
Supreme Court of North Dakota.
April 30, 1975.
Rehearing Denied June 24, 1975.
*179 Daniel J. Chapman, Bismarck, for defendant-appellant.
A. S. Benson, Benson & Schell, Bottineau, for plaintiff-appellee.
PAULSON, Judge.
This is an appeal from a judgment of the Ward County District Court awarding the plaintiff-appellee, Bottineau Public School District No. 1 [hereinafter "school district"], the sum of $500 in damages for the breach of an employment contract by the defendant-appellant, Loren Zimmer.
The facts of this case are not in dispute and are as follows:
The school district employed Mr. Zimmer as a teacher commencing with the school year 1966-1967. Mr. Zimmer continued to teach in Bottineau and signed a contract in the spring of 1973 for the 1973-1974 school year. The contract set forth that Mr. Zimmer would teach business education and commerce as well as assist in basketball. The contract also provided that "The Board Policies shall be construed to be a part of this contract".
On November 30, 1973, Mr. Zimmer wrote to the school board, requesting a release from his contract. The release was denied at the December 1973 meeting of the school board, but was finally granted in January of 1974, subject to the liquidateddamages clause, which is referred to in the teacher's contract as "Board Policies", which clause, in pertinent part, reads as follows:
"Because it is impractical or extremely difficult to fix the actual cost to be incurred at the time of the release request, the parties, hereto, agree that the amount presumed to be the cost of replacement shall be fixed as follows:
"Time of Release Request Cost of Replacement
"Within the first 3 days after
contract due date $ 180.00
Between 3 days after the contract
due date prior to end of present
school term 250.00
Between end of present school
term to the termination date of
this contract $ 500.00
"Nothing herein stated shall be construed as meaning that the Board must release the teacher upon payment of the above costs.
"The fee may be waived by the Board if the teacher's resignation is due to ill health, military service or a hardship case."
Mr. Zimmer refused to pay the $500 required by the contract. Suit was commenced by the school district against him for that sum and, after a trial, judgment for that amount was awarded to the school district.
Mr. Zimmer raises several issues on appeal, but primarily emphasizes his contention that the liquidated-damages clause contained in his employment contract is rendered void by the application of § 9-08-04, N.D.C.C., which provides:
"Fixing damages for breach voidException.Every contract by which the amount of damages to be paid, or other compensation to be made, for a breach of an obligation is determined in anticipation thereof is to that extent void, except that the parties may agree therein upon *180 an amount presumed to be the damage sustained by a breach in cases where it would be impracticable or extremely difficult to fix the actual damage."
Mr. Zimmer urges that the liquidateddamages clause in this case is void because the damages caused by his breach are not difficult to ascertain.
He further asserts that the clause is being used to insure performance of the contract rather than to pre-determine damages. To support this contention, Mr. Zimmer asserts that the liquidated-damages clause applies to all teachers and that, if the clause was validly used to estimate damages, the amounts so estimated would vary with the individual teachers.
Insofar as Mr. Zimmer contests the validity of the liquidated-damages clause, this case is governed by our decision in Bowbells Public School District No. 14 v. Marcia Walker, 231 N.W.2d 173 (N.D. 1975), a case consolidated for the purpose of oral argument with the instant case. In Bowbells, we upheld a liquidated-damages clause which provided for a graduated percentage of the contract amount to be paid to the school district by a teacher who breached an employment contract. The amount of damages agreed upon in the Bowbells case was $252. We do not find the $500 assessed pursuant to the board policy in this case to be unreasonable, especially in light of Mr. Zimmer's status as one of approximately 40 certified teachers in the field of distributive education in the State of North Dakota.
Nor do we find a meaningful distinction in the fact that, unlike in the Bowbells case, the liquidated-damages clause in this case was not the product of an agreement negotiated by the faculty and the school district. Mr. Zimmer entered into his contract of his own free will and with full knowledge of the provisions of the contract, which contract incorporated the Board Policies therein. Prior to signing his 1973-1974 contract with the school board, Mr. Zimmer had been a former member of a faculty negotiation team which was authorized by the faculty to review and accept the provisions of teachers' contracts with the school board.
Of the issues presented and argued by Mr. Zimmer, we find but one that is not covered, directly or by necessary implication, in the Bowbells case. That is Mr. Zimmer's contention that the school district may not recover the damages stipulated in the contract because it found a replacement for Mr. Zimmer at a lower salary and, thus, suffered no actual damage. We find this contention to be unpersuasive. If accepted, it would emasculate the concept and function of liquidated-damage provisions. When parties make a valid stipulation of damages, they are bound by it, regardless of the amount of actual damages incurred. Dave Gustafson & Co. v. State, 83 S.D. 160, 156 N.W.2d 185 (1968); 22 Am.Jur.2d, Damages § 235, p. 321.
The decision of the district court is affirmed.
ERICKSTAD, C.J., and PEDERSON, VOGEL and SAND, JJ., concur.
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349 F.Supp. 806 (1972)
Max E. KAHN and J. M. Hertz, as Executors of the Estate of Max Jerald Kahn, Deceased,
v.
The UNITED STATES of America.
Max E. KAHN, as Administrator of the Estate of Gail O. Kahn, Deceased,
v.
The UNITED STATES of America.
Civ. A. Nos. 15738, 15739.
United States District Court, N. D. Georgia, Atlanta Division.
August 31, 1972.
Sutherland, Asbill & Brennan, Michael J. Egan, Jr., R. Kent Frazier, John B. Miller, Jr., Atlanta, Ga., for plaintiffs.
Scott P. Crampton, Asst. Atty. Gen., Jerome Fink and Lawrence R. Jones, Jr., *807 Attys., Dept. of Justice, Washington, D. C., John W. Stokes, Jr., U. S. Atty., Atlanta, Ga., for defendant.
OPINION
EDENFIELD, District Judge.
These consolidated cases, which were tried before the court sitting without a jury, involve a close question of federal estate tax law which has been the subject of much recent litigation. Convinced that a young married couple in excellent health facing a bright and secure future contemplated everything but the angel of death and his tax law counterpart, the court will order the Government to refund to their estate money it has erroneously collected.
The facts, both as stipulated and as found by the court, are that in 1962 Meyer Balser, an insurance broker, suggested to Max E. Kahn, head of Empire Distributors, Inc. ["Empire"], that Empire take out a group insurance policy for key personnel covering accidental death, dismemberment, and disability. Balser did not approach any other officers or employees of Empire about this matter. Mr. Kahn thought the suggestion was in the best interests of Empire and he, alone, made the decision to accept it on behalf of the company. Balser placed the insurance with the Insurance Company of North America ["INA"] and the policy was taken out jointly by Empire and two other corporations controlled by Empire's stockholders. Coverage was offered in varying amounts to all employees of the three corporations and their spouses, other than warehouse personnel, and a total of 62 persons were eventually covered. All premiums due under the INA policy were paid by the three corporate employers and no contributions were made by any employee or spouse.
Among the persons eligible for coverage under the INA policy were Max Jerald Kahn ["Jerry"] and his wife Gail O. Kahn ["Gail"]. Jerry, the eldest son of Max E. Kahn, was being groomed by his father to take over the family businesses. He was a vice-president of Empire and worked in the sales division. At the time the INA policy was taken out by Empire and the other corporations, Jerry was 26 years old, Gail was 25, and both were in excellent health. Jerry was a sports enthusiast but he did not engage in any hazardous activities, and Gail spent most of her time at home with their two children. A third child was born to them in August, 1963. At the time, Jerry owned several policies of insurance covering his life which had a total face amount exceeding $193,000 and which named Gail as primary beneficiary. Gail owned no life insurance at the time, but in April 1963 she purchased a policy in the face amount of $10,000 which named Jerry as primary beneficiary. In 1959, when Jerry purchased a home, his family attorney advised him to execute a will and later mailed Jerry a draft will for his consideration. Nevertheless, Jerry had not executed a will at the time the INA policy took effect and did not get around to doing so until May 1963. Gail never executed a will.
After Empire and the other corporations had taken out the INA policy, Balser distributed some forms to a number of Empire employees who were eligible for coverage. Each form was entitled "Certificate of Insurance" and consisted of a description of the coverage and an application for coverage under the terms of the master policy. The employee merely had to fill in his name, address, place and date of birth, occupation, amount of insurance and method of settlement desired, beneficiary, and beneficiary's relationship, date of application, and signature. The name of the policyholder (Empire), the number of the policy, and a policy aggregate limit for a particular type of accident were already inserted on each form when the employee received it.
Mr. Balser, who was a close friend of Gail's family and knew both Gail and Jerry from their youth, personally delivered the INA forms to Jerry. He told Jerry that Jerry should make Gail the *808 owner of the certificate and beneficiary under the policy covering Jerry and that Gail should make Jerry the owner of the certificate and beneficiary under the policy covering her. Balser did not give Jerry any reason for his recommendation, nor did Jerry ask for one. Jerry merely said something to the effect, "Meyer, I'll leave it all up to you." Balser had never had a serious discussion with Jerry about estate planning, although he did at one time compile a life insurance analysis for him, and he made no mention of either estate planning or estate taxes to Jerry on this occasion or thereafter. Mr. Balser had no discussion with Gail about the INA forms, and he never discussed estate planning or estate taxes with her. Although as an insurance agent Mr. Balser did discuss estate planning with his clients insofar as it related to their insurance programs, he did so only when it was appropriate to the client's age and estate, and he felt since Jerry and Gail were young and their estate relatively modest there was no need to discuss estate planning with them. Neither Jerry nor Gail asked Mr. Balser about the estate tax effect of his recommendation concerning the INA forms.
On November 6, 1962, Jerry applied for insurance in the principal sum of $100,000 covering accidental loss of life, limb, or sight as well as permanent total disability as defined in the master policy, and Gail applied for insurance in the principal sum of $50,000 covering accidental loss of life, limb, or sight. Both Jerry and Gail left blank spaces next to the words "beneficiary" and "relationship" on the application portion of the INA forms, although otherwise they completed the application forms in full. On November 18, coverage under the INA master policy commenced. Since the previous group policy covering the employees of Empire and the other two corporations had expired November 18, 1962, the three corporations had purchased interim coverage under the INA policy from November 18 to December 1, 1962 which was evidenced by a separate rider. On November 28, 1962 Jerry and Gail executed INA forms entitled "Beneficiary Designation." Jerry designated Gail as owner of the certificate of insurance for which he had applied and beneficiary under the policy, and Gail designated Jerry as owner of the certificate for which she had applied and beneficiary under the policy. INA acknowledged receipt of these forms that same day. On December 1, 1962 the INA policy became fully effective.
On December 29, 1963, while they were visiting Jacksonville, Florida on a pleasure trip, Jerry and Gail Kahn died simultaneously in a fire at the Hotel Roosevelt. The proceeds under the INA policy were paid in equal shares to the contingent beneficiaries, their three children.
Timely estate tax returns were filed on behalf of the two estates by the legal representatives and the two INA certificates of insurance were disclosed on those returns as having no ascertainable value at the time of death. Following an audit, the Commissioner of Internal Revenue assessed a deficiency of $13,995.67 plus interest of $2,436.78 against Jerry's estate on the theory that the proceeds of the policy covering Gail were includable in Jerry's estate as owner-beneficiary and increased its value by $50,000, and assessed a deficiency against Gail's estate in the amount of $27,917.75 plus interest of $4,890.19 on the theory that the proceeds of the policy covering Jerry were includable in Gail's estate as owner-beneficiary and increased its value by $100,000. The deficiency assessments were paid, and the timely claims for refund filed by the representatives of the two estates were disallowed by the District Director of Internal Revenue in Atlanta. The representatives brought suit in this court pursuant to 28 U.S.C. § 1346(a)(1) (1970).
The Government does not seek to support the deficiency assessments on the grounds asserted by the Commissioner. Instead, the Government contends that the $100,000 INA certificate of insurance *809 covering Jerry was transferred by him to Gail in contemplation of death within the meaning of Section 2035 of the Internal Revenue Code of 1954 and that the $50,000 INA certificate covering Gail was similarly transferred by her to Jerry. Under this theory, the $100,000 proceeds payable by reason of Jerry's death were includable in Jerry's estate rather than Gail's and the $50,000 proceeds payable by reason of Gail's death were includable in Gail's estate rather than Jerry's. Plaintiffs contend that there were no transfers of anything in these cases, but that even if the certificates were transferred they were not transferred in contemplation of death within the meaning of Int.Rev.Code of 1954, § 2035.
Section 2035 provides as follows:
"(a) General Rule.The value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money's worth), by trust or otherwise, in contemplation of his death.
"(b) Application of General Rule. If the decedent within a period of three years ending with the date of his death (except in case of a bona fide sale for an adequate and full consideration in money or money's worth) transferred an interest in property, relinquished a power, or exercised or released a general power of appointment, such transfer, relinquishment, exercise, or release shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this section and sections 2038 and 2041 (relating to revocable transfers and powers of appointment); but no such transfer, relinquishment, exercise, or release made before such three-year period shall be treated as having been made in contemplation of death."
Treasury Regulation § 20.2035-1 (1958) provides:
"(c) Definition. The phrase `in contemplation of death', as used in this section does not have reference to that general expectation of death such as all persons entertain. On the other hand, its meaning is not restricted to an apprehension that death is imminent or near. A transfer `in contemplation of death' is a disposition of property prompted by the thought of death (although it need not be solely so prompted). A transfer is prompted by the thought of death if (1) made with the purpose of avoiding death taxes, (2) made as a substitute for a testamentary disposition of the property, or (3) made for any other motive associated with death. The bodily and mental condition of the decedent and all other attendant facts and circumstances are to be scrutinized in order to determine whether or not such thought prompted the disposition."
The court agrees with the Government that on November 28, 1962 Jerry transferred his INA certificate of insurance to Gail and she transferred her INA certificate to him within the meaning of Section 2035. The application for a policy of insurance made by Empire to INA, which formed part of the contract of insurance between Empire and INA, bound INA to insure from the effective date of coverage all eligible employees and spouses who made their own written applications on or before that date. Under the policy and the rider attached thereto the effective date of coverage was November 18, 1962. Since both Jerry and Gail made applications for certificates of insurance on November 6, it would appear that INA was bound to insure them as of November 18 and that as of that date Jerry had a vested interest and "owned" the INA certificate of insurance for which he had applied and Gail had a vested interest and "owned" the INA certificate for which she had applied. Although neither of them had, at that point, designated a beneficiary, *810 they each had the power to do so. If either or both had suffered accidental loss of life or limb between November 18 and November 27, 1962, INA would have paid the proceeds in a manner described in the certificate of insurance. Accordingly, when Jerry, on November 28, designated Gail as the owner of his certificate and beneficiary under the policy, he "transferred an interest in property" to her. Similarly, when Gail, that same day, designated Jerry as the owner of her certificate and beneficiary under the policy, she "transferred an interest in property" to him.
Even if Jerry and Gail had not possessed incidents of ownership in their respective certificates the court would hold that they transferred an interest in property to each other within the meaning of § 2035. In Bel v. United States, 452 F.2d 683, 691 (5th Cir. 1971), cert. denied, 406 U.S. 919, 92 S.Ct. 1770, 32 L.Ed.2d 118 (1972), the decedent executed an insurance application for an accidental death policy, paid all the premiums from community funds, and placed ownership of the policy in his three children. The Fifth Circuit, defining the term "transfer" in § 2035 to include "the transfer of property procured through expenditures by the decedent with the purpose, effected at his death, of having it pass to another", Chase National Bank of City of New York v. United States, 278 U.S. 327, 337, 49 S.Ct. 126, 128, 73 L.Ed. 405 (1929), held that the decedent had transferred the policy to his children within the meaning of § 2035 by designating ownership and creating in the children all of the contractual rights to the insurance benefits. The court stated that the decedent, who had paid the premiums on the policy and then "beamed" it at his children, could not evade § 2035 by funneling the property through a third-party conduit.
Similarly, in the present case Jerry designated ownership of the INA certificate for which he had applied in Gail and created in her all of the contractual rights flowing from that certificate when he completed the "Beneficiary Designation" form on November 28, and Gail designated ownership of the INA certificate for which she had applied in Jerry that same day in the same manner. True, neither had "procured" the certificates for which they applied "through expenditures" such as the payment of premiums. However, Jerry received the certificate-application only because he continued in the employ of Empire, and Gail received a certificate-application only because she continued as the spouse of an eligible employee. Thus each gave consideration for the certificates, even though Empire paid the premiums. See Estate of Porter v. C.I.R., 442 F.2d 915 (1st Cir. 1971).
Having concluded that Jerry and Gail effectuated transfers within three years of the date of their deaths, the court must determine whether those transfers represented testamentary substitutes. Bel v. United States, supra. In this regard the statutory presumption created by death within three years of the transfer is not evidence of a motivation to effect a testamentary substitute, Hull's Estate v. C.I.R., 325 F.2d 367 (3d Cir. 1963), but merely casts upon plaintiffs the burden of persuading the court by a preponderance of the evidence that the thought of death or purposes associated with the distribution of property in anticipation of death were not the dominant, controlling, or impelling motives behind the transfers. Allen v. Trust Co. of Georgia, 326 U.S. 630, 66 S.Ct. 389, 90 L.Ed. 367 (1946); Bel v. United States, supra; Hull's Estate v. C.I.R., supra. The focus of the court's inquiry must be upon the state of mind of Jerry and the state of mind of Gail at the time the transfers were made, United States v. Wells, 283 U.S. 102, 117, 51 S.Ct. 446, 75 L.Ed. 867 (1931), and circumstantial evidence may be determinative. See Landorf v. United States, 408 F.2d 461, 473, 187 Ct.Cl. 99 (1969).
At the time of the transfers both Jerry and Gail were young and perfectly healthy. Jerry had a reasonable life expectancy of an additional 44.5 years and *811 Gail an additional 51.9 years. They had two children, aged two years and one year, and a third child was born only nine months later. Neither had engaged in any significant estate planning. Jerry had not executed a will, even though he owned a home, had two children, and was expecting a third, and neither had Gail. Although insurance policies in the aggregate face amount of over $193,000 covering Jerry's life were in force at the time, all of those policies were owned by Jerry and were eventually included in his gross estate and subjected to tax. These factors portray a couple contemplating continued, vigorous life, not death or death taxes.
Neither Jerry nor Gail made an independent effort to seek coverage under the INA policy. It was only as a result of Mr. Balser's initiative that Jerry's father, on behalf of Empire and the other companies, considered obtaining coverage under that policy for his key employees and their spouses. All negotiations concerning the INA policy were conducted solely between Mr. Balser and Max E. Kahn, and it was Max E. Kahn's decision to give coverage to the employees and their spouses. Jerry and Gail were but two of 62 persons upon whom Empire bestowed the free bonus of coverage under the INA policy and to whom the certificate-application forms were distributed as a matter of course. Their decision to "apply" for coverage under the master policy cannot, under the circumstances, be associated with any thought of death.
It is uncontroverted that Jerry did not seek advice from either his family attorney or Mr. Balser as to how he and Gail should complete the INA certificate-application forms. It is also uncontroverted that Mr. Balser did not give Jerry any reason for telling him that he should place ownership of his INA certificate in Gail and that she should place ownership of her INA certificate in Jerry. Neither Jerry nor Gail discussed any aspect of estate planning with Mr. Balser at the time the transfers were suggested and made, nor did either of them ask Mr. Balser to explain why he had suggested that they transfer ownership of the certificates. Whatever may have been in Balser's mind when he made the suggestion was not communicated to Jerry or Gail and Balser's motives cannot be imputed to them. Estate of Nathalie Koussevitsky, 5 T.C. 650, 663-664 (1945), acquiesced in, 1945 Cum.Bull. 4. See Hoover v. United States, 180 F.Supp. 601, 148 Ct. Cl. 645 (1960). The court is fully persuaded by all the facts and circumstances that neither the thought of death nor any purposes associated with the distribution of property in anticipation of death, including the avoidance of estate taxes, were the "dominant, controlling, or impelling" motives behind the transfers.
The Government has argued that the implication of the Bel case is that the purchase and transfer of an accidental death policy is, by the very nature of the policy, a transfer in contemplation of death within the meaning of § 2035. It contends that since accidental death policies provide no benefits until death, and most, including the INA master policy in the instant cases, do not have cash surrender or loan values, it is almost inconceivable that a "life" motive could exist for their purchase or transfer.
The court cannot accept this argument. In the first place, the INA policy coverage was not limited to accidental death but covered loss of limb and, in Jerry's case, disability as well. The loss of limb and disability benefits were, of course, payable during the life of the insured. The nature of the INA policy certainly does not compel the conclusion that the "purchase" of the INA certificates by Jerry and Gail was motivated by the thought of death. In the second place, the Fifth Circuit, citing Bel, has repudiated the notion that the transfer of a policy insuring against the death of the insured is always inherently a transfer in contemplation of death within the meaning of § 2035. First National Bank at Lubbock v. United States, 463 F.2d 716 (5th Cir. 1972); Bintliff v. United *812 States, 462 F.2d 403 (5th Cir. 1972). Indeed, the Government's contention that the presumption clause in § 2035 is irrebuttable when a certain class of property is transferred runs squarely afoul of the Supreme Court's decision in Heiner v. Donnan, 285 U.S. 312, 52 S.Ct. 358, 76 L.Ed. 772 (1932), which declared unconstitutional such an irrebuttable presumption clause in a predecessor statute on the ground that it violated the due process clause of the Fifth Amendment.
The Government also argues that plaintiffs have the burden of proving affirmatively that "life" motives were the "dominant, controlling, or impelling" motives behind the transfers and that they have not met their burden. Although § 2035 implies that the taxpayer may prevail even if he only disproves a "death" motive, certain language in the cases supports the Government's position that the taxpayer must affirmatively prove a "life" motive. Allen v. Trust Co. of Georgia, supra, 326 U.S. 635-636, 66 S.Ct. 389; First National Bank at Lubbock v. United States, supra; Bintliff v. United States, supra; Landorf v. United States, supra, 408 F.2d 472.
The language relied upon by the Government is evidently premised on the assumptions that (1) people transfer property only as a result of concrete motivation and (2) such motivation may be generally categorized as either "life" or "death" motivation. Although the court questions the correctness of these assumptions, it is satisfied that plaintiffs have proven "life" motives for the transfers. The circumstantial evidence in these cases leads the court to find that Jerry transferred ownership of his INA certificate to Gail simply because Meyer Balser told him to do so, and Gail transferred her INA certificate to Jerry simply because Jerry told her to do so. Jerry had every reason to perfunctorily follow Mr. Balser's suggestion because Mr. Balser was both an old friend of the family and an insurance specialist. Since there were no "death" motives involved in the transfers, it follows that the real "motives" for the transfers Jerry's trust in Mr. Balser and his perfunctory acceptance of Mr. Balser's advice, and Gail's trust in Jerry and perfunctory acceptance of his advicewere "life" motives.
For the foregoing reasons the court concludes that the Government erroneously refused to refund to plaintiffs the money they claim, and plaintiffs should now prepare an appropriate order detailing the extent of their recovery for approval so that judgment may be entered in their favor.
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United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 09-2463
___________
Erik Becerra, *
*
Appellant, *
* Appeal from the United States
v. * District Court for the
* District of Minnesota.
John Doe, Woodbury Supervisor of *
Police Officers; Police Officer John * [UNPUBLISHED]
Doe, Woodbury; Police Officer John *
Doe, Woodbury; S. Schnieder, MN *
State Trooper; Fran Schmitz; Nicholas *
Krueger, St. Croix Wis. Police Officer, *
*
Appellees. *
___________
Submitted: March 5, 2010
Filed: March 25, 2010
___________
Before BYE, RILEY, and SHEPHERD, Circuit Judges.
___________
PER CURIAM.
In this 42 U.S.C. § 1983 action involving allegations that law enforcement
officers used excessive force in arresting him, Erik Becerra appeals the district
court’s1 adverse grant of summary judgment. Following careful de novo review, see
1
The Honorable James M. Rosenbaum, United States District Judge for the
District of Minnesota, adopting the report and recommendations of the Honorable
Jeanne J. Graham, United States Magistrate Judge for the District of Minnesota.
Ramlet v. E.F. Johnson Co., 507 F.3d 1149, 1152 (8th Cir. 2007), we conclude that
Becerra did not establish a genuine issue of material fact regarding the objective
reasonableness of defendants’ use of force, see Nance v. Sammis, 586 F.3d 604, 609-
10 (8th Cir. 2009) (claim that officers used excessive force during arrest properly
analyzed under Fourth Amendment; objective reasonableness of officers’ use of force
is evaluated by looking at totality of circumstances confronting officers, including
severity of crime at issue, whether suspect poses immediate threat to safety of officers
or others, and whether he is actively resisting arrest or attempting to evade by flight);
Wertish v. Krueger, 433 F.3d 1062, 1066-67 (8th Cir. 2006) (given driver’s erratic and
dangerous driving for many miles on public highway, ignoring flashing lights and
wailing siren, officer could reasonably have suspected driver was fleeing under
influence of drugs or alcohol and therefore posed serious threat to public safety; minor
bruises and scrapes and aggravation of previous condition were de minimis injuries
that supported conclusion that officer did not use excessive force); cf. Wilkins v.
Gaddy, 2010 WL 596513, *1 (U.S. Feb. 22, 2010) (No. 08-10914) (per curiam) (in
prisoner’s § 1983 action, reaffirming holding that nature of force, and not extent of
injury, is what ultimately counts in excessive force case). In addition, the court cited
the appropriate criteria and did not abuse its discretion in denying Becerra’s motion
for appointed counsel. See Phillips v. Jasper County Jail, 437 F.3d 791, 794 (8th Cir.
2006) (standard of review; relevant criteria).
Accordingly, we affirm. See 8th Cir. R. 47B.
______________________________
-2-
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551 So.2d 914 (1989)
Ernest B. OGLE and Patricia Evans
v.
Jeffrey K. LONG and Preferred Risk Mutual Insurance Company.
87-1376.
Supreme Court of Alabama.
April 28, 1989.
Rehearing Denied September 1, 1989.
David A. Kimberley of Floyd, Keener, Cusimano & Roberts, Gadsden, for appellants.
J. Bentley Owens III of Starnes & Atchison, Birmingham, for appellees.
ADAMS, Justice.
Ernest B. Ogle and Patricia Evans appeal from the denial of their motion for new trial after the trial court entered judgment on a directed verdict in favor of Preferred Risk Mutual Insurance Company on Ogle and Evans's claim, following an automobile accident in Etowah County, against Preferred Risk for payment of uninsured motorist benefits.
Ogle, while driving an automobile owned by his common-law wife Evans (who was a passenger), collided with a tractor-trailer truck driven by Jeffrey K. Long on U.S. Highway 431 near Attalla. After filing a complaint in circuit court against Long and *915 fictitious defendants, alleging negligence in causing the accident, Ogle and Evans attempted service on Long at a post office box in Stantonville, Tennessee. The complaint was returned, however, marked "unclaimed," and Ogle and Evans made service by publication pursuant to Rule 4.2(b)(1)(C) and Rule 4.3, A.R.Civ.P. Long subsequently failed to answer the complaint, and a default judgment was entered against him on July 15, 1987.
Preferred Risk moved to intervene in the lawsuit and to set aside the default judgment after Evans notified it of her intention to file a claim for uninsured motorist coverage under the terms of her insurance policy. The trial court granted Preferred Risk's motion, set aside the default judgment, and joined Preferred Risk as a party defendant. On October 21, 1987, Preferred Risk filed its cross-claim against Long, demanding judgment for any amount recovered against it by Ogle and Evans; service was attempted at Long's Stantonville, Tennessee, post office box (the record does not indicate whether this service was successful.) After discovery, the lawsuit moved to trial on April 4, 1988, without Long appearing.
At the close of plaintiffs' evidence, Preferred Risk moved for a directed verdict on grounds that Ogle and Evans had failed to prove that Long was uninsured at the time of the accident. The trial court denied the motion before hearing Preferred Risk's evidence, but granted the motion when it was renewed by Preferred Risk at the close of the evidence, and after hearing argument from both parties. Ogle and Evans's motion for new trial, based on grounds that evidence existed to infer that Long was uninsured at the time of the accident, was denied. The issue for our review is whether the trial court properly denied the motion for new trial after entering judgment on a directed verdict for Preferred Risk.
Although Ogle and Evans challenge by motion for new trial the weight of the evidence as considered by the trial court in making its determination that they failed to prove Long's status as uninsured, we must return to the directed verdict to test the sufficiency of the evidence surrounding Long's status. The standard of appellate review applicable to a motion for directed verdict is identical to the standard used by the trial court in granting or denying the motion initially. Thus, when reviewing the trial court's ruling on the motion, we determine whether there was sufficient evidence to produce a conflict warranting jury consideration. And, like the trial court, we must view any evidence most favorably to the nonmovant. Bussey v. John Deere Co., 531 So.2d 860 (Ala.1988).
The threshold question is whoOgle and Evans or Preferred Riskbore the burden of proving the uninsured status of Long. Preferred Risk argues that the burden of proof lies with Ogle and Evans, and that they failed to present any evidence of Long's status; Ogle and Evans argue that the cumulative effect of Long's failure to answer the complaint, to respond to discovery, and to appear for trial; their attempts to investigate Long's status as uninsured; and Preferred Risk's failure to present any evidence contradicting their allegation that Long was uninsured, raise a presumption of uninsured status that Preferred Risk must rebut.
Although Ala.Code 1975, § 32-7-23 ("Uninsured motorist coverage; `uninsured motorist' defined; limitation on recovery") is silent on this point, the plaintiff generally has the burden of proving that the tort-feasor was uninsured. Appleman, Insurance Law and Practice § 5087 (1981). This burden of proof is recognized in Alabama. Barnes v. Tarver, 360 So.2d 953 (Ala.1978) ("[e]very jurisdiction which has considered the issue holds that the burden of proving entitlement to coverage under an uninsured motorist endorsement is upon the claimant"). (Citations omitted.) See, also, Lefeve v. State Farm Mut. Auto. Ins. Co., 527 F.Supp. 492 (N.D.Ala.1981) ("It is clear that a party making a claim for uninsured motorist coverage must prove that the vehicle which injured him was in fact uninsured. See generally, Annot., 26 A.L. R.3d 883, 892 (1969)").
An exception is recognized, however, if the plaintiff used reasonable diligence to *916 ascertain the uninsured status of the tort-feasor and such information was unobtainable. The burden of going forward with the evidence is then cast upon the defendant. Appleman, Insurance Law and Practice, supra. In State Farm Mutual Automobile Ins. Co. v. Matlock, 462 S.W.2d 277 (Tex.1970), the Texas Supreme Court held that where an insured claiming benefits under uninsured motorist coverage presents proof that all reasonable efforts have been made to ascertain the insured status of the tort-feasor and that such efforts have proven fruitless, in the absence of affirmative proof by the insurer an inference may be drawn that there is in fact no insurance policy covering the tort-feasor. This exception was applied by the Court of Civil Appeals in State Farm Mutual Automobile Ins. Co. v. Griffin, 51 Ala.App. 426, 286 So.2d 302 (1973).
Consequently, our review shifts to the question of what actions constitute "reasonable diligence" by the insured to ascertain the insured status of the tort-feasor:
"The evidence of noninsurance may be sufficient where there appears in evidence an admission of the insurer, its claims manager, or agent. Since it is the task of an adjuster to seek out all relevant information, his statement that he could find no evidence of insurance certainly should have probative value. ...
"When it comes to matters of proof, it seems obvious that the ones having the greatest knowledge upon this subject are the owner and driver of the vehicle which injured the persons insured under the UM coverage. That being true, certainly an affidavit, deposition, or even letter to the effect that they were uninsured at the time of the occurrence should control, although it must pertain to the time of the occurrence. ...
"While it has been held that the records of a state department may properly be received in evidence, one court held that evidence of an employee of the state insurance department that there were no records of any insurance coverage upon the tortfeasor would not suffice. This result clearly would be proper where one might be covered by private insurance not required to be registered; in any situation where a record should be on file, this would seem to be the only method of proving a negative. It is proper to show an order of revocation, which is presumed to continue in the absence of evidence to the contrary. ..."
Appleman, Insurance Law and Practice §§ 5087.15, 5087.25, and 5087.35 (1981).
The record reflects that Ogle and Evans unsuccessfully attempted to serve Long at a Stantonville, Tennessee, post office box and took a default judgment against him after he failed to answer the complaint following service by publication. It appears from the record that after intervention by Preferred Risk and the focusing of the lawsuit on the insured status of Long, Ogle and Evans undertook no further investigation of Long to determine his status. In fact, at trial, counsel for Ogle and Evans argued, "[I]f [Long] will not respond to my lawsuit, I certainly can't take his deposition. That ends my responsibility. All I have got to do is file my lawsuit and wait for his response, or his carrier's response. And in that I had the request for admissions, `Are you insured?' It was ignored as well."
We do not believe that merely filing the lawsuit and taking a default judgment against the tort-feasor after he fails to answer the complaint and respond to discovery is sufficient to demonstrate "reasonable diligence" in ascertaining and proving the tort-feasor's status as uninsured. The claimant must go further to meet his burden. For example, in State Farm Mutual Automobile Ins. Co. v. Griffin, supra, the Court of Civil Appeals held that testimony by the insurer's adjuster that he investigated the collision involving the plaintiff's vehicle and did not find a policy of liability insurance in force on the defendant's vehicle was sufficient to provide a scintilla of evidence on the defendant's status as uninsured. Our record in the instant case reflects that Ogle and Evans failed to call Preferred Risk's adjuster to testify as to his investigation of Long's status.
Further, Ogle and Evans developed testimony at trial that Long, at the scene *917 of the accident, had produced a number of insurance papers from Harco National Insurance Company for the investigating state trooper. They failed, however, to procure an affidavit or letter from any officer or employee of Harco National as to Long's insured status. In fact, Ogle and Evans brought such an affidavit to the trial court's attention only in support of their motion for new trial, after judgment had been entered. Finally, Ogle and Evans did not contact insurance or motor vehicle authorities in Tennessee to investigate if or when Long had obtained liability coverage (notwithstanding the fact that insurance could have been obtained in another state, searching in Tennessee would be sufficient to demonstrate an effort to investigate Long's status).[1]
Therefore, viewing the evidence most favorably to them, we hold that Ogle and Evans failed to produce any evidence of a reasonably diligent investigation sufficient to raise a presumption that Long was uninsured and to cast upon Preferred Risk the burden of going forward with the evidence. Thus, insufficient evidence existed to produce a conflict warranting jury consideration. Further, we hold that the trial court was not in error in refusing to consider as newly discovered evidence an affidavit from Harco National in support of Ogle and Evans's motion for new trial. With any amount of diligence, the affidavit could have been procured and produced during the trial of the lawsuit, and Ogle and Evans fail to demonstrate that the trial court abused its discretion in its ruling. Beaty v. Head Springs Cemetery Ass'n, Inc., 413 So.2d 1126 (Ala.1982).
AFFIRMED.
MADDOX, ALMON, HOUSTON and STEAGALL, JJ., concur.
HORNSBY, C.J., and JONES, SHORES and KENNEDY, JJ., dissent.
HORNSBY, Chief Justice (dissenting).
The standard of review for a directed verdict is:
"A directed verdict is proper only where there is a complete absence of proof on an issue material to the claim or where there are no disputed questions of fact on which reasonable people could differ. Deal v. Johnson, 362 So.2d 214 (Ala.1978). ...
"In addition, the trial court must view the entire evidence, and all reasonable inferences which a jury might have drawn therefrom, in the light most favorable to the non-moving party. Alabama Power Company v. Taylor, 293 Ala. 484, 306 So.2d 236 (1975); Vintage Enterprises, Inc. v. Cash, 348 So.2d 476 (Ala. 1977)."
Caterpillar Tractor Co. v. Ford, 406 So.2d 854, 856 (Ala.1981). See also Ritch v. Waldrop, 428 So.2d 1 (Ala.1982). The plaintiffs were required to submit a scintilla of evidence in support of their claim that the tort-feasor was not insured.[1] I agree with the majority that the proper standard is whether the plaintiffs used reasonable diligence to ascertain the uninsured status of the tort-feasor.
"The question of the burden of proof to establish that a motorist is uninsured is one of first impression with this court. The majority of jurisdictions which have considered the question have consistently placed the initial burden of proving the motorist was uninsured on the claimant. Mindful of the difficulty of proving a negative, many courts have relaxed the burden by adjusting the quantum of proof necessary. For a discussion of the nature of the problem and an analysis of the recent decisions, see Widiss, A Guide to Uninsured Motorist Coverage, § 2.39, p. 77. Typical of the reasoning adopted *918 by many courts is the following statement in [Merchants Mut. Ins. Co. v. Schmid,] 56 Misc.2d 360, 288 N.Y.S.2d 822 [Sup.Ct.1968]:
"`Since the absence of insurance upon the offending vehicle and its driver is a condition precedent to the applicability of the uninsured driver indorsement, we hold that the burden of proving such absence is upon the claimant. However, we must keep in mind that proving a negative is always difficult and frequently impossible and that, consequently, the quantum of proof must merely be such as will convince the trier of the facts that all reasonable efforts have been made to ascertain the existence of an applicable policy and that such efforts have proven fruitless. In such an event, and absent any affirmative proof by petitioner, the inference may be drawn that there is in fact no insurance policy in force which is applicable." (pp. 362, 363, 288 N.Y.S.2d p. 825).'"
Van Hoozer v. Farmers Insurance Exchange, 219 Kan. 595, 611-12, 549 P.2d 1354, 1367 (1976); Appleman, Insurance Law and Practice, § 5087 (1981); Annot., Insurance"Uninsured" Motorist, 26 A.L.R.3d 883 (1969).
I believe that the plaintiffs met their burden and presented sufficient evidence to take the case to the jury.[2] While the evidence and arguments presented suggesting the lack of diligence on the plaintiffs' behalf would justify the jury's determining that the plaintiffs did not exercise due diligence, I can not say that the plaintiffs' claim should be denied as a matter of law. Plaintiffs presented evidence showing that the tort-feasor initially could not say whether he was insured. Trooper Bryant testified that an investigation of papers contained in the tort-feasor's vehicle was initially inconclusive on the question of whether the tort-feasor was insured, but Bryant eventually concluded that he was. In addition, the tort-feasor failed to file an answer to the plaintiffs' complaint and request for admissions as to the existence of insurance, and the plaintiffs took a default judgment. While various inferences could be drawn from this fact, I believe the jury was free to infer that the tort-feasor did not respond because he was uninsured.
In summary, I believe that the plaintiffs presented sufficient evidence to withstand the defendant's motion for a directed verdict.
JONES, SHORES and KENNEDY, JJ., concur.
NOTES
[1] We note that our holding in this case does not affect our "hit and run" phantom-driver rule, whereby the unknown owner or operator of a vehicle causing an accident is presumed uninsured. See Wilbourn v. Allstate Insurance Co., 293 Ala. 466, 305 So.2d 372 (1974). We also note that Ogle and Evans's counsel on appeal did not serve as counsel during the trial of this case.
[1] This action was filed before June 11, 1987; therefore the "scintilla rule" applied. See Code 1975, § 12-21-12.
[2] While I agree that the plaintiff has the burden of proof, the quantum of proof necessary to create a jury question must not be overly burdensome. If the insurer must pay, it presumably has subrogation rights. If there is an erroneous finding that the tort-feasor is uninsured, i.e., if in fact he is insured, the uninsured motorist coverage carrier can easily recover against the tort-feasor's insurer.
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FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT December 21, 2018
_________________________________
Elisabeth A. Shumaker
Clerk of Court
FREIDA L. MITCHELL,
Plaintiff - Appellant,
No. 18-1409
v. (D.C. No. 1:18-CV-02071-LTB)
(D. Colo.)
JESSICA LIETAER, Esq.,
Defendant - Appellee.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before LUCERO, HARTZ, and McHUGH, Circuit Judges.
_________________________________
Plaintiff Freida Mitchell, a pro se litigant, appeals the dismissal of her action by
the United States District Court for the District of Colorado for lack of subject-matter
jurisdiction. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.
Ms. Mitchell filed a complaint against Jessica Lietaer—an attorney who
represented the United States Postal Service (USPS) in an administrative proceeding
brought by Ms. Mitchell before the Equal Employment Opportunity Commission. The
*
After examining the briefs and appellate record, this panel has determined unanimously
that oral argument would not materially assist in the determination of this appeal. See
Fed. R. App. P. 34(a)(2); 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. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R.
32.1.
complaint purportedly sets forth claims under Title VII of the Civil Rights Act of 1964.
But it merely alleges a legal-malpractice or professional-misconduct claim insufficient to
invoke the court’s federal-subject-matter jurisdiction and fails to provide a basis for
exercising diversity jurisdiction.
Federal district courts “have original jurisdiction of all civil actions arising under
the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. “For a case to
arise under federal law within the meaning of § 1331, the plaintiff’s well-pleaded
complaint must establish one of two things: either that federal law creates the cause of
action or that the plaintiff’s right to relief necessarily depends on resolution of a
substantial question of federal law.” Firstenberg v. City of Santa Fe, 696 F.3d 1018,
1023 (10th Cir. 2012) (internal quotation marks omitted). “[J]urisdiction under § 1331
exists only where there is a ‘colorable’ claim arising under federal law.” See McKenzie v.
U.S. Citizenship & Immigration Servs., Dist. Dir., 761 F.3d 1149, 1156 (10th Cir. 2014).
“[A] court may dismiss for lack of subject-matter jurisdiction when the claim is so
insubstantial, implausible, foreclosed by prior decisions of this Court, or otherwise
completely devoid of merit as not to involve a federal controversy.” Id. at 1156–57.
(internal quotation marks omitted).
Ms. Mitchell fails to allege a “colorable” claim arising under federal law. As an
initial matter, we note that her complaint’s stated basis for jurisdiction is “Legal
Malpractice, 18 U.S.C. § 1332.” R. at 36. But she does not cite any federal law
providing a cause of action for legal malpractice, and we are aware of none. And
although elsewhere in her complaint she alleges that Title VII gives rise to subject-matter
2
jurisdiction in her case, she fails to allege anything close to discrimination by an
employer. Indeed, she even fails to allege that Ms. Lietaer was her employer or a
supervisory employee liable in an official capacity. See Haynes v. Williams, 88 F.3d 898,
901 (10th Cir. 1996) (individual supervisor cannot be held personally liable under Title
VII). We note that Ms. Mitchell previously appealed the dismissal of her Title VII claim
against USPS, which we dismissed as frivolous. See Mitchell v. Brennan, 728 F. App’x
876, 876 (10th Cir. 2018). Any claim under Title VII here would be so “devoid of merit”
that jurisdiction under § 1331 does not exist. McKenzie, 761 F.3d at 1157 (internal
quotation marks omitted).
Nor can Ms. Mitchell invoke diversity jurisdiction. Diversity jurisdiction exists if
“the matter in controversy exceeds the sum or value of $75,000 . . . and is between . . .
citizens of different States.” 28 U.S.C. § 1332(a)(1). But Ms. Mitchell does not
allege diversity of citizenship and the addresses provided in her complaint for both
herself and Ms. Lietaer are in Colorado.
I. CONCLUSION
We AFFIRM the district court’s order of dismissal and DENY Ms. Mitchell’s
motion to proceed in forma pauperis.
Entered for the Court
Harris L Hartz
Circuit Judge
3
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588 S.E.2d 467 (2003)
357 N.C. 650
Thomas William HILL
v.
Bobby MEDFORD, Individually and as Sheriff of Buncombe County; and Western Surety Company.
No. 389A03.
Supreme Court of North Carolina.
December 5, 2003.
*468 Long, Parker, Warren & Jones, P.A., by Robert B. Long, Jr., and W. Scott Jones, Asheville, for defendants-appellants.
Carter & Kropelnicki, P.A., by Steven Kropelnicki, Jr., Asheville, for plaintiff-appellee.
Womble Carlyle Sandridge & Rice, P.L.L.C., by Mark A. Davis, Raleigh, for amicus curiae North Carolina Association of County Commissioners.
PER CURIAM.
For the reasons stated in the dissenting opinion, the decision of the Court of Appeals is reversed.
REVERSED.
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942 F.2d 585
UNITED STATES of America, Plaintiff-Appellee,v.Kenneth BARKER, Defendant-Appellant.
Nos. 89-10105, 89-10228.
United States Court of Appeals,Ninth Circuit.
Argued and Submitted June 7, 1990.Decided April 17, 1991.As Amended on Denial of Rehearing Aug. 7, 1991.
Opinion, 930 F.2d 1408, superseded.
Charles Morgan, San Francisco, Cal., for defendant-appellant.
Daniel S. Linhardt, Asst. U.S. Atty., Sacramento, Cal., for plaintiff-appellee.
Appeal from the United States District Court for the Eastern District of California.
Before CANBY, NOONAN, and RYMER, Circuit Judges.
ORDER
1
The opinion filed April 17, 1991 and reported at 930 F.2d 1408 is amended by deleting at 1410, right column, first full paragraph the second sentence beginning "The jury reviewed Lionsgate's accounting documents ..." and replacing it with the following:
2
The jury reviewed an accounting document prepared by Lionsgate's accountant for an appearance before the government Contract Board of Appeals, and this document was capable of being construed to support the government's double-billing contention.
3
With this amendment the petition for rehearing is denied. Judge Noonan dissents; he would grant the petition for rehearing.
OPINION
CANBY, Circuit Judge:
4
Kenneth Barker was president and general manager of Lionsgate Corporation, a family construction business. The Army Corps of Engineers contracted with Lionsgate to construct a quarter mile concrete channel for flood control purposes. Lionsgate performed work beyond the scope of the contract because of changed site conditions, design errors, and changes in government plans. Barker submitted 74 claims to the government for claimed extra costs.
5
The government, in turn, charged Barker with sixty-four counts of presenting false, fictitious, or fraudulent claims to the United States, in violation of 18 U.S.C. § 287.1 A jury found Barker guilty on three counts2, was unable to reach a verdict on twenty-two counts, and acquitted him on the remaining counts. The district court granted a judgment of acquittal on two of the counts on which the jury reached no verdict. On the three counts of conviction, the district court denied Barker's post-verdict motion for a judgment of acquittal and his alternative motion for a new trial.
6
Barker contends that the evidence is insufficient to support the conviction, and that the district court therefore improperly denied his motion for judgment of acquittal and his motion for a new trial. Barker further contends that the jury should have been instructed that section 287 is not violated when a false charge is offset by an undercharge on the same claim. In addition, Barker argues that the district court erred by allowing an unqualified witness to testify as an expert. And finally, Barker contends that section 287 violates his First Amendment right to petition the government for redress of grievances.
7
We affirm the judgment of the district court.
ANALYSIS
I. Sufficiency of the Evidence
8
Barker contends that there was insufficient evidence to support a conviction on counts 33(b), 48(b), and 57(b). In addressing this contention, we must determine whether the evidence, viewed in the light most favorable to the Government, would permit any rational trier of fact to conclude that the defendant was guilty beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 318-19, 99 S.Ct. 2781, 2788-89, 61 L.Ed.2d 560 (1979); United States v. Nelson, 419 F.2d 1237, 1241 (9th Cir.1969).
9
Count 33(b) involves a claim made by Barker that he and his sons, Wayne and Paul, worked on Sunday, May 25, 1990. The Barkers testified that all three of them had worked all that weekend, but the government introduced documentary evidence to the contrary. Barker responds that the daily job report, which indicates that only one person had worked that day, also shows three pickup trucks at the site. Barker argues that the entry showing one worker must be in error because one worker could not use three trucks. The jury was entitled, however, to conclude that if there was any error it was in the entry regarding the pickup trucks. Its conclusion was supported as well by a quality control report indicating that only one supervisor worked all three days of the Memorial Day weekend in issue.
10
Counts 48(b) and 57(b) required the jury to determine whether Barker was double billing the government by calculating his compensation as both a direct cost and as part of overhead. The jury reviewed an accounting document prepared by Lionsgate's accountant for an appearance before the government Contract Board of Appeals, and this document was capable of being construed to support the government's double-billing contention. In addition, the jury heard testimony by a government's witness and by Lionsgate's accountant regarding the computation of overhead and direct charges. The government's witness testified that Lionsgate's accountant had in an earlier proceeding admitted that Barker's salary was included in overhead.3 Lionsgate's accountant testified that, when a person who is normally charged in overhead is being charged as a direct cost, the percent of overhead for the project should show a decrease, yet exhibits here showed no decrease in the overhead percentage when Barker's services were directly billed.
11
Although the evidence presented at trial was open to alternative interpretations, it was not so unreliable as to cause us to depart from the rule that determining the credibility of witnesses and assessing conflicting evidence is a matter for the jury. See United States v. Taylor, 716 F.2d 701, 711 (9th Cir.1983). The evidence was sufficient to support the verdicts against Barker. Likewise, the weight of the evidence, though not overwhelming, justifies the district court's decision to deny Barker's motion for a new trial.4 See United States v. Pimentel, 654 F.2d 538, 545 (9th Cir.1981). (In applying abuse-of-discretion standard, a motion for a new trial is granted only in exceptional circumstances in which the evidence weighs heavily against the verdict).
II. Offsetting Undercharges
12
Barker also contends that the district court erred in denying his proposed instruction that required the jury to determine whether the claim contained undercharges that would offset any overcharges.5 A defendant is entitled to an instruction concerning his theory of the case if it is supported by law and has some foundation in the evidence. United States v. Echeverry, 759 F.2d 1451, 1455 (9th Cir.1985). Here, we conclude that Barker's proposed instruction is not supported by law.6
13
Section 287 provides for the punishment of any person who presents a claim to the United States "knowing such claim to be false, fictitious, or fraudulent." Barker draws from this language a requirement that the total amount claimed, after other corrections and adjustments, must itself be fraudulently overstated. We disagree. Section 287 contains no requirement that the intent, purpose, or effect of the false claim must be to cause the government a loss.7 "[T]he purpose of 18 U.S.C. § 287 would be frustrated if criminal prosecutions were limited merely to those instances 'where the defendant is motivated solely by an intent to cheat the government or to gain an unjust benefit.' " United States v. Milton, 602 F.2d 231, 234 (9th Cir.1979) (quoting United States v. Maher, 582 F.2d 842, 847 (4th Cir.1978), cert. denied, 439 U.S. 1115, 99 S.Ct. 1019, 59 L.Ed.2d 73 (1979)).
14
The instructions that were given to the jury made it clear that Barker could not be convicted unless he had made the false or fraudulent statements with the knowledge of their falsity or fraudulency, and that he had made them willfully with a bad purpose. When a claim is made to the government, the government must be able to verify the claim by scrutinizing the information that the claimant has supplied. Willfully false statements obviously frustrate that function. Such an intentional impairment of a legitimate governmental function satisfies any requirement of fraud in section 287. Maher, 582 F.2d at 848.
15
"The plain purpose of section 287 is to assure the integrity of claims and vouchers submitted to the government." Id. at 847-48. That purpose would not be served by permitting a claimant who had knowingly and willfully submitted a false item in a claim to escape all consequences if he is able to demonstrate an unrelated, previously unstated, and possibly quite inadvertent offsetting undercharge. See id. We conclude, therefore, that the district court did not err in refusing to give Barker's requested instruction.
III. Competency of an Expert
16
Barker further contends that a government witness, Steven Rowe, was not qualified to testify as an expert witness under Federal Rule of Evidence 702.8 Whether to admit expert testimony in a criminal trial is a decision left to the discretion of the trial judge, and we will not overturn that decision in the absence of an abuse of such discretion. See United States v. Marabelles, 724 F.2d 1374, 1381 (9th Cir.1984).
17
Here, Rowe was a civil engineer working for the Corps of Engineers as a claims analyst. He had analyzed claims and reviewed contractor's documents for approximately seven years. His testimony may well have assisted the jury in understanding the evidence or determining a fact in issue. See United States v. Binder, 769 F.2d 595, 602 (9th Cir.1985). It was not an abuse of discretion for the trial judge to admit Rowe's testimony.
18
IV. The Right to Petition for the Redress of Grievances
19
Finally, Barker contends that the government violated his First Amendment right to petition for redress of grievances. Barker argues that the First Amendment right will be chilled because anyone who files a claim against the government does so knowingly, and if subsequently a trier of fact determines the claim to be false, that person will have violated section 287. This is an improper construction of the law. For a claimant to be in violation of section 287, the trier of fact must determine that the claimant knew he was filing a false claim, not that he merely knew he filed a claim. There is simply no constitutional right to file a false claim.9 This rule poses no conflict with the constitutional right legitimately to petition the government for the redress of grievances.10 Barker's claims, filed with the knowledge that they were false, are not protected by the First Amendment. See Bill Johnson's Restaurants v. NLRB, 461 U.S. 731, 743, 103 S.Ct. 2161, 2170, 76 L.Ed.2d 277 (1983) (baseless litigation is not immunized by the First Amendment right to petition).
CONCLUSION
20
The district court's denial of Barker's motion for acquittal and motion for a new trial was proper; the evidence was sufficient to support the jury's verdict. The jury instructions correctly interpreted section 287 to prohibit a petitioner from knowingly submitting any false item in a claim submitted to the government for monetary reimbursement. Such a construction of the statute does not run afoul of the First Amendment. Finally, the government's witness had sufficient experience and expertise for the district court, in its discretion, to allow him to testify as an expert.
21
AFFIRMED.
NOONAN, Circuit Judge, dissenting:
22
It is a fundament of our law that no one should bear the onus of conviction of a crime unless the existence of every element of the crime has been established by proof beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 316, 99 S.Ct. 2781, 2787, 61 L.Ed.2d 560 (1979). The convictions in this case are unsupported by evidence necessary to prove beyond a reasonable doubt the existence of the elements of the crimes with which the defendant was charged. We have an obligation of the most serious kind to right the wrong done by a judicial system for which we bear at least partial responsibility.
23
Background. Kenneth Barker, the defendant, is a civil engineer with extensive experience in large construction projects. For many years he worked for Bechtel Corporation, most notably as construction manager for the northern half of the Alaska pipeline. He also had governmental experience as construction division manager of the Central Sanitary District of Contra Costa County. Ultimately he went into the construction business for himself as president of Lionsgate Company, a firm owned by himself, his wife and sons.
24
In 1985 Lionsgate bid on the construction of the San Ramon Channel By-pass, a flood control project of the United States Army Corps of Engineers (the Corps). Lionsgate was not the low bidder--a fact of significance because it was later suggested that Lionsgate had bid unrealistically in order to get the contract and then cheated to recoup its losses. The low bidder was a subsidiary of a large corporation. As the project was set aside for small business, the low bidder was disqualified, and Lionsgate, a genuine small business, got the job.
25
On inspecting the site, Barker discovered that substantial changes had occurred between his bid and the award. He immediately notified the Corps that the changes in the site required changes in the contract. The consequent dispute led to Barker beginning work on the project in an atmosphere of animosity.
26
Relations with the Corps did not improve. What happened is relevant here only as explanatory of why the Corps eventually turned its differences with Barker into a criminal investigation. Barker made an end-run around the local Corps officials: that made them mad. Barker requested that one Corps employee be taken off the job because his practices were unsafe; the Corps retaliated by accusing one of the Barker boys of unsafe conduct. The Barker family was scarcely on speaking terms with another local Corps authority. Instead of consolidating his claims in connection with change orders, Barker filed them singly: the resulting 76 claims created an enormous backlog that the Corps failed to process within the period specified by law. Bad blood boiled between the parties. Barker saw himself, as he said at trial, as "a one-man army against the Federal Government." He charged Corps employees with making "phoney," "fabricated" and "totally false" records of his work. The Corps came to see Barker as an intolerable pain in the butt. It repaid Barker's rhetoric and brought allegations of false claims against Barker to the United States Attorney in Sacramento.
27
The United States has assured the court that it did not rubber stamp the Corps' complaints, but took an independent look. No doubt a different set of government officials reviewed the facts. The prosecutor, however, as his case was to show, essentially relied on a local Corps employee for an analysis of Barker's claims and proof of his criminal liability.
28
The Government's $769,078 Case. Barker was indicted on 64 counts of making false claims against the United States in violation of 18 U.S.C. § 287. Of the 76 claims he had filed for Lionsgate, 47 were said to be false. He was alleged to have falsely claimed rates for equipment; falsely inflated costs of leased vehicles; falsely claimed for equipment which was not used the number of hours claimed; falsely claimed for equipment on standby, when it was not on standby; falsely charged time for the same vehicles and equipment; falsely inflated costs for employees; falsely claimed overtime paid to employees that was not paid; falsely claimed twice for the same employees; falsely claimed for a person not employed on the project; falsely claimed for standby time when employees were not standing by; falsely doublebilling overhead. The total of alleged false claims was $769,078.
29
The 64 counts were further refined by being subdivided into parts, each part charging a separate and specific crime. In all, Barker was charged with the commission of 104 felonies against the United States, all committed between July 1986 and August 1987.
30
How the Government Proved Its Case. The government's principal witness as to whether there were in fact any false claims was Stephen Rowe. Rowe held a college degree in civil engineering from San Diego State University, although he was not registered as a civil engineer. He had no formal training in accounting. He had worked for seven years in the Contract Administration section of the Corps as "a claims analyst"; his job was to review documents. Over the defendant's objection, Rowe was permitted to present a chart on which he had marked his conclusions as to each claim for which Barker was indicted. The basis for his conclusions was, usually, a document or documents of Lionsgate that he had reviewed. At the beginning of his testimony he was introduced by the government as "a summary witness" [TR., Nov. 17, P. 15]. The court noted that his summary had to be based on admissible documents. There was no attempt by the government to qualify him as an expert. There was no suggestion by the government that he had any information about the motivations or intentions of Barker. Rowe just looked at this or that piece of paper and pronounced it to be an overcharge or doublebilling.
31
The government buttressed Rowe with the testimony of Eugene Shy, chief of the Contract Administration Section, Construction Branch, Construction Operations Division of the Corps in Sacramento. Shy testified that Barker told him that he expected the final cost of the contract to be $5 million. The contract, as written, was for $2.6 million. Barker, Shy testified, had submitted claims of $2.4 million. The inference was possible that Barker was filing claims for change orders with the intent of reaching his announced goal of $5 million. There was, however, no testimony linking this inferred intent to specific claims or to the $1.6 million of claims that the government was not charging to be false. Shy's testimony proved expectation and prediction by Barker; it did not show his specific intent as to any claim.
32
As to count 33a the following documents were put in evidence by the government.
33
(1) the Daily Construction Quality Control Report for May 25, 1986. Thereport was prepared by Barker's son, Wayne, the designated "assistant contractor quality control inspector." The report showed that 1 supervisor and 3 pick-up trucks had been at work on this date, which was Sunday of the Memorial Day weekend. An asterisk and a 1 after the entry for pick-up trucks indicated that 1 pick-up had not been used.
34
(2) the Daily Job Report for May 24, May 25, May 26. The report showed Wayne Barker as "supervisor." It also showed Kenneth Barker and his two sons, Wayne and Paul, as "employees" all three days. The initials K.B., W.C.B., and P.B. and the number 8 X 3 all appear on the sheet.
35
(3) The Daily Job Report for Tuesday, May 27. Under changes it had a note reading: "K.B., W.C.B., P.R.B. survey Sat.-Mon., W.C.B. recalculates elev. on Sunday due to directive from corps about [illegible] materials." On the following page of the Tuesday report under the space for Additional Comments, it was written "Extra Work ... surveying over weekend W.C.B., P.R.B., K.B."
36
On the basis of these documents it was Stephen Rowe's testimony that the Tuesday report said that all three Barkers worked only on Saturday and Monday. To reach this conclusion Rowe apparently read what was either a dash or ampersand between "Sat.-Mon." as an ampersand and apparently disregarded the Daily Job Report for May 25 and the additional comment on the Tuesday report. He concluded that $800 had been charged for time on Sunday that had not been worked by Barker and his son Paul.
37
On cross-examination Rowe, in effect, recanted. His testimony was as follows:
38
I am not saying they did not work on those days. I am--the daily journals do not support the hours requested [TR. Nov. 29, p. 251].
39
As to counts 48A and 57B, Rowe testified that in each of these were charges under "labor" for the time of the general manager that were "improperly" there. Each was "a duplicate charge." Rowe reached this conclusion because, he said, according to Mr. Traillee, Lionsgate's accountant, the general manager is always in the overhead.
40
Earlier, Rowe had been asked by the government if he knew what items made up the defendant's overhead. He had answered affirmatively, and he was then asked by the government, "How do you know that?" His answer was:
41
"The contractor, as the basis of his $1,085 a day extended overhead, presented a derogation of the costs within his G & A overhead pool."
42
What this answer meant was never explained. The defendant strongly objected to Rowe's competency to testify as to overhead.
43
Later, Rowe testified that he had been at a hearing before the Corps' Board of Contract Appeals in October 1987 and heard Traillee, Lionsgate's accountant, say that Barker's wages were always included in overhead. Rowe further testified that Traillee had prepared Exhibit 3-0, a document submitted in evidence by the government. This unsigned sheet of paper is entitled "Lionsgate Salaries, FY 1984, 1985, 1986." Under Wages for "Ken" for the fiscal year ending November 30, 1986 a total of $125,000 is shown, of which $12,500 is attributed to "Direct," $81,250 to "Indirect," and $31,250 to "Home Office." Surprisingly, Rowe testified that this document showed that Barker's wages were always in overhead.
44
On cross-examination Rowe recanted. He conceded that $12,500 of Barker's wages were shown by this document to be charged directly. He admitted he had no way of knowing whether the amount he said was doublebilled was not in fact a direct charge for Barker, reflected in the $12,500 "capital direct" category and not included in "overhead." He further undermined his direct testimony by acknowledging that there are two kinds of overhead--G & A (General and Administrative) and "job-site." He had no means of knowing whether Traillee had spoken of G & A or job site overhead when Rowe had overheard him. The prosecution made no attempt to clarify what kind of overhead Traillee was talking about.
45
The Defendant's Case. In addition to cross-examining Rowe and leading him to recant, the defense put on the witness stand the defendant himself, his two sons, and his accountant, Traillee.
46
All three Barkers testified that all of them had worked all three days of the Memorial Day weekend. The necessity had arisen because the Corps had changed its mind about the use of sand filter. A great many calculations had to be redone, so that the project could go ahead on Tuesday. The recalculations were tedious, time-consuming work that needed three men to complete. Not all of it had to be done at the job site. The records, prepared by Wayne Barker, accurately showed that all three had worked although all three were not at the job site all of Sunday.
47
Kenneth Barker testified that there had been no doublebilling of his time. As to each of the claims involved in this appeal, he further testified that there had been undercharges, which, if taken into account as they should be, meant that the government far from being overcharged had not been charged enough.
48
Traillee, an independent certified public accountant, testified that for extra work as a result of a change order there could be a charge for job site overhead that was distinct from G & A overhead. His testimony effectively contradicted the hearsay reported by Rowe, that all Kenneth Barker's wages were in "the overhead." The government--which had preferred Rowe's hearsay to Traillee as a witness--made no attempt to rehabilitate Rowe by cross-examining Traillee on overhead.
49
The Jury's Verdict. The jury deliberated over 4 days. Of the 104 felony charges against Barker, the jury found him not guilty of 80, was unable to agree as to 21, and found him guilty of 3. The government had charged him with over $760,000 in false claims. They had persuaded the jury as to a total of less than 1 percent of what the government said was false.
50
The Trial Court's Reaction. On motions by the defendant for acquittal or a new trial, the court observed: "From the outset it's a sad case--sad because it was somewhat blown out of proportion by the number of counts that were filed, but even more sad from the ultimate result."
51
As to count 33, the trial judge stated that he would have acquitted. He was, he stated, "surprised, even shocked by the finding." But he declined to set aside the verdict because he could not find "a miscarriage of justice." [TR, Feb. 15, P. 2834].
52
As to the counts of conviction based on doublebilling for overhead, the trial judge engaged in a pun that was a putdown of the government's only witness on overhead. "Rowe," he stated, "was in over his head." [Id., P. 2385]. The trial judge also said, "We should have had better competent witnesses before the Court," and, again, "We should have had accountants here. We should have had better investigation and better providing of evidence before the court in regard to the overhead and the deduction of base salary as an amendment always applied to overhead, etcetera, etcetera. We didn't have that. What we had was shortcutting, and Mr. Rowe making some assumptions on the testimony of, I believe, his name was Mr. Traillee, the accountant for Lionsgate." [Id., p. 2836]. Again, the trial judge declined to find "a miscarriage of justice." But as an afterthought, he said: "I still confess I am somewhat confused on the issue of overhead" and added, almost as a plea to this court: "I don't have the thousands of pages of court reporter's transcript in front of me that the Ninth Circuit will certainly have so that they can make the intricate computations that in fact Mr. Morgan has made." [Id., p. 2838].
53
As to the 21 counts on which the jury had not reached agreement, the trial court expressed the vehement hope that the government would not retry them, adding, "I think it would be a waste of taxpayers' money." To retry Barker would not be, legally, "cruel and unusual punishment," but "would be something along those lines." [Id., p. 2830].
54
The trial court then went on to focus on counts 63 and 64 where Barker was charged with false claims totalling over $317,000. The court described these claims as "the largest claims pending" and "theclaims we're really here for." The jury had been unable to agree on them. The trial court now granted the motion for acquittal on them. [Id., p. 2841].
55
The court left standing the felony conviction for $800 of overcharge for the Sunday of the Memorial Day weekend and the felony convictions for the doublebilling of overhead on two occasions amounting to a total of $5,550.
56
The Appeal. The defendant appealed, challenging the sufficiency of the evidence and the competency of Rowe's testimony and contending as well that the jury was improperly instructed because they were not told to offset any overcharge by an undercharge on the claim. The defendant also raised on appeal, as he had at trial, the contention that the First Amendment safeguarded his right to file claims without retaliation by criminal prosecution.
57
The appeal was directed only to the counts of conviction. The government had accepted the trial court's advise not to retry the counts where the jury had been hung.
ANALYSIS
58
1. What is a claim? The government cites cases holding that the government does not have to show loss to prevail under the statute. On that point, there is no disagreement. A claim is criminal if it obstructs a governmental function although it causes no loss. See United States v. White, 765 F.2d 1469, 1472-73 (11th Cir.1985). It is common ground that what the government had to prove was not the intent to defraud the government but the intent to make a false claim, knowing it to be false. United States v. Milton, 602 F.2d 231 (9th Cir.1979); United States v. Maher, 582 F.2d 842 (4th Cir.1978), cert. denied, 439 U.S. 1115, 99 S.Ct. 1019, 59 L.Ed.2d 73 (1979).
59
The argument made by Barker that the jury should have considered the undercharges depends on what constitutes "a claim" under 18 U.S.C. § 287. The statute itself sheds no light. The contract between the Corps and Lionsgate, however, details the procedure for the contractor to use in submitting a claim. A claim means "a written demand or written assertion by one of the contracting parties seeking as a matter of right the payment of money in a certain sum." [TR, Nov. 9, p. 199]. It is reasonable to conclude that what is a claim for purposes of the contract is a claim for purposes of criminal prosecution for filing false claims under the contract.
60
Under this definition it is the bottom line that counts, not the supporting explanation. The entire document making up one claim runs for many pages and has multiple appendices. To hold that falsity in any particular of the document is criminal would be to expand enormously the scope of the statute. The crime is to assert in writing a demand for more money than the contractor is entitled to.
61
By the same token, if the contractor asks for less money than he is entitled to, he has not made a false claim. Hence the testimony as to undercharging had to be weighed before the jury could conclude that any false claim had been made. Denial of the requested instruction on this point was fatal error.
62
The conclusion that "the claim" for purposes of the criminal statute means the bottom line is reinforced by the provision in the contract that "if the claim" is for over $50,000, the contractor must certify "that the claim is made in good faith that the supporting data are accurate and complete to the best of the contractor's knowledge and belief and the amount requested accurately reflects the contract adjustments for which the contractor believes the government is liable." [TR, Nov. 9, p. 200].
63
A clear distinction is made between "supporting data" and "the claim". The claim is monetary. The supporting data are the statements and schedules justifying the claim. Only when the claim is over $50,000 does the government require the contractor's certification as to the supporting data. It would be strange indeed that if what is required civilly and contractually only as supporting data for large claims should be subsumed automatically under a criminal statute applying to all claims. No reason exists to expand "claim" under the statute to include the supporting data.
64
This distinction between "the claim" and supporting materials has been consistently upheld in cases construing what is "a false claim" for the imposition of criminal or civil liability. In United States v. Cohn, 270 U.S. 339, 46 S.Ct. 251, 70 L.Ed. 616 (1926) the defendant was charged with violating the criminal False Claims Act because he had caused false statements to be made to Customs officials in order to obtain non-dutiable merchandise from Customs. The Supreme Court held the indictment to be bad. Writing for a unanimous court, Justice Sanford declared: "[A] 'claim upon or against' the Government relates solely to the payment or approval of a claim for money or property to which a right is asserted against the Government, based upon the Government's liability to the claimant." Id. at 345-46, 46 S.Ct. at 252-53 (emphasis supplied). This case did not focus upon the precise issue before us. The emphasized language, nonetheless, clearly indicates that a "claim" consists solely in the assertion of a right against the government, not in what precedes assertion of that right.
65
We have reached the same result in cases where the issue was recovery of a civil penalty by the government for the assertion of a false claim against it. Thus, where the government attempted to recover the penalty for each false document attached to an application for government funds, we held that the government could recover, not for each false paper, but only "for each false separate claim for money." United States v. Woodbury, 359 F.2d 370, 378 (9th Cir.1966) (Duniway, J.). Similarly, where the government sought recovery of a penalty for each false invoice filed, we held that it could have the penalty only for each false voucher filed, not for each of the attached false invoices. United States v. National Wholesalers, 236 F.2d 944, 950 (9th Cir.1956) (Chambers, J.).
66
Finally, this concept of a claim under the false claim statute converges with the existence of a separate statute which criminalizes "false, fictitious or fraudulent statements or representations" made to the United States, 18 U.S.C. § 1001. It would be very strange if the false claim statute duplicated the statutory prohibition of section 1001; it once formed part of the False Claims Act, 40 Stat. 1015 (1918). Section 1001 prohibits a false statement "that is capable of affecting or influencing the exercise of a government function." U.S. v. Goldfine, 538 F.2d 815, 820 (9th Cir.1976). Under § 1001 the government must prove the materiality of the statement but no demand for payment by a claimant. U.S. v. White, 765 F.2d 1469, 1472-73 (11th Cir.1985). Construing § 287 as prohibiting false statements renders § 1001 superfluous--a result contrary to a fundamental canon of statutory construction. See, e.g., Nieto v. Ecker, 845 F.2d 868, 873 (9th Cir.1988); Beisler v. Commissioner, 814 F.2d 1304, 1307 (9th Cir.1987). See also U.S. v. Johnson, 284 F.Supp. 273, 278 (D.Mo.1968) (distinguishing § 287 and § 1001 and stating Congress intended to treat as separate and distinct offenses).
67
Barker is entitled to a new trial on the ground of flawed instructions alone; but there are further aspects of his appeal to be considered.
68
2. The Evidence of Inaccuracy. For a claim to be false it must first be shown not to be in accord with the facts. No reasonable trier of fact could conclude that the three claims at issue here were proved to be inaccurate beyond a reasonable doubt. Accepting all inferences favorable to the government but looking at all the evidence before the jury, one cannot find proof of inaccuracy beyond a reasonable doubt.
69
As to the work done on Sunday of the Memorial Day holiday, we put to one side the Barkers' testimony and look solely at what the government produced. It produced one contemporaneous report, that of May 25, 1986, which showed only 1 supervisor had worked on Sunday. The report itself was self-contradictory because it showed two pickups had been used all day--an impossibility for one man. The report was contradicted further by the other contemporaneous documents the government itself introduced--the Daily Job Reports for May 24, 25, 26, and 27, all of which showed all three Barkers worked on Sunday. There was one document, that of May 27, 1986 containing a mark that could have been read as either a dash or ampersand. If it was an ampersand, it was contradicted by the rest of the document which stated that all three Barkers had worked on all three days. No other evidence was offered. Rowe, the government's only witness, explicitly conceded that he had no way of knowing whether the Barkers worked or not.
70
The jury, the judge, and we on appeal are in exactly the same situation as Rowe. We do not and cannot know whether the Barkers worked on Sunday, May 25, 1986. A self-contradictory report, contradicted on the vital point by all the other contemporary reports, proves nothing. There is not merely a reasonable doubt as to Barker's guilt; there is total uncertainty as to what in fact is the truth, and that conclusion is reached from the government's evidence, drawing all inferences that might be drawn in the government's favor.
71
The jury itself gave contradictory responses to the count that presented this issue. The jury was unable to agree on count 33a which charged Barker with overcharging for two three-quarter ton pick-ups, each used 8 hours on Sunday, May 25, 1986. The jury convicted Barker of count 33b for billing 3 men, instead of 1, on the same date. How did one man use 2 pick-up trucks all day? To have been in doubt on the pick-ups, the jury had to be in the dark as to the men.
72
The same conclusion must be reached as to the doublebilling of overhead. The one document on which Rowe relied shows the allocation of part of Barker's salary to direct charges distinct from the indirect charges constituting overhead. The document undermines the hearsay report that all of Barker's wages were in overhead. Even putting aside Traillee's actual testimony distinguishing G & A and job site overhead, the document itself is entirely ambiguous. It does not show what Rowe once thought it did show, that any wages claimed by Barker must have been doublebilled because he always was paid through overhead.
73
Rowe had no basis as an expert for analyzing overhead. Rowe spoke gobbledygook when he did testify about overhead. Rowe did not know what Lionsgate billed for overhead. The jury and judge could not have known, nor can we. A man cannot rationally be convicted of claiming wages for which he was already paid when no one can say whether or not he had been already paid.
74
It was not the trial court's duty to say whether there was "a miscarriage of justice" (a rhetorical term whose metaphorical force may exaggerate what must be found in order to set aside the verdict). The court's duty was to determine whether the evidence was "sufficient to sustain a conviction." Federal Rules of Criminal Procedure 29. If it was not sufficient, the court had no choice but to annul the verdict. A "mere modicum" of evidence making the existence of each element of the crime more probable than not was not the kind of evidence that could sustain a conviction. Jackson v. Virginia, 443 U.S. at 320, 99 S.Ct. at 2789. Where the evidence did not establish guilt beyond a reasonable doubt the defendant was entitled to acquittal. Id.
75
The Evidence of Intent. The evidence of intent is, if possible, even less than the evidence of inaccuracy. To be false, a claim must not only be inaccurate but consciously so. As the judge charged the jury, Barker must have had the specific intent to file a claim he knew to be false. The verdict implies that the jury found he had such intent. But there is zero evidence to support the jury's findings.
76
Rowe knew nothing of Barker's intent. Shy believed he wanted to get $5 million out of the contract--no evidence at all of an intent to falsifying a few thousand dollars worth of claims. Apart from Shy, not a scintilla of evidence on intent was offered.
77
The government may have assumed that it could prove such a pattern of unjustified charges that an intent to falsify might be inferred from their number. See United States v. National Wholesalers, 236 F.2d at 950. Whatever the government's hope in this regard, when it failed to prove over 99% of its dollar claims and when the trial judge ordered a judgment of acquittal on the counts "that we are really here for," no inference was warranted as to the intentgoverning the three alleged inaccuracies. On over $760,000 of claims that the government said were false and on over an additional $1.6 million that the government did not even challenge, Barker appears to have been entirely honest. Without concrete proof no reasonable trier of fact could find that on some $6,000 worth of claims he had an intention of falsifying.
78
It is hard to believe but it must be the government's theory that if a contractor submits supporting data for a claim, and that supporting data is not accurate, then the claim is criminally false--that the very existence of inaccuracy establishes the knowledge and therefore the intent to falsify the claim. If this is the government's theory, it is not the law.
79
We are not dealing here with a regulatory statute that imposes absolute liability regardless of intent. We are dealing with ordinary criminal law where the ordinary common law rule applies: intent is part of the crime and intent must be proved. Morissette v. United States, 342 U.S. 246, 72 S.Ct. 240, 96 L.Ed. 288 (1952); United States v. National Wholesalers, 236 F.2d at 950.
80
A moment's reflection will suggest what the government's theory would mean for the practice of law. Every lawsuit against the United States ends in a written assertion or demand for payment of a certain sum of money by the United States. If inaccuracy in any statement forming part of the complaint constitutes the filing of a false claim, a great many lawyers will be subject to prosecution under 18 U.S.C. § 287. The supposition is a reductio ad absurdum. If some lawyers and judges think Fed.R.Civ.P. 11 is too severe, what would any lawyer or judge think of criminalizing federal civil practice under the Federal False Claims Act? But there is no way of distinguishing what the government has done here and what, if it is right, it could do to any lawyer that aroused its indignation by inaccuracy in a suit in tort or what the government could do to any appointed defense counsel in a criminal case who carelessly misstated the hours he had worked. On the government's theory, successfully prosecuted to a jury verdict here, the statement of support for a demand for money that is not factually accurate must be consciously false. Intent is proved by the asking of the claim. And in the expansive reading of "claim" by the government the inaccuracy in supporting data is criminal.
81
There is no need to address Barker's appeal to the First Amendment. It is plain that his conviction cannot stand. This sad case must be brought to an end. The Corps has, perhaps, made a point dear to bureaucracy: You don't fight City Hall. It is not for the federal courts to impose a criminal penalty on Barker for being a person who did not go along with the Corps.
1
18 U.S.C. § 287 provides:
"Whoever makes or presents to any person or officer in the civil, military, or naval service of the United States, or to any department or agency thereof, any claim upon or against the United States, or any department or agency thereof, knowing such claim to be false, fictitious, or fraudulent, shall be fined not more than $10,000 or imprisoned not more than five years, or both."
2
Count 33(b) charged the billing of labor time not actually worked. Counts 48(b) and 57(b) charged the billing of Barker's salary both directly and in overhead
3
Barker contends that the court erred in admitting the evidence of this witness because it was not corroborated and it was vital to the Government's case. Because the jury could have based its verdict on the other evidence presented, we need not address the issue of whether the admission must be corroborated. See Smith v. U.S., 348 U.S. 147, 155, 75 S.Ct. 194, 198, 99 L.Ed. 192 (1954)
4
Because the trial judge at one point opined that he probably would not have convicted Barker if he had been the trier of fact, Barker contends that the verdict must have been against the great weight of the evidence. We disagree. The two positions are quite distinct, and the trial judge clearly, stated that he could not say that the verdict was against the weight of evidence, or that the jury had been wrong
5
Barker's Proposed Instruction No. 16 stated:
"In determining whether a claim is false you should consider the entire claim. If there are any undercharges that offset any overcharges then, in that event the claim can not be false, fictitious or fraudulent."
6
Our cases have not been consistent regarding the proper standard for reviewing a district court's denial of a proposed jury instruction on the defendant's theory of the case. See United States v. Sotelo-Murillo, 887 F.2d 176, 179-80 (9th Cir.1989). With regard to the determination whether the proposed instruction is supported by law, review de novo appears to be more appropriate than review for abuse of discretion. See id. We need not decide that question here, however, for our conclusion would be the same under either standard
7
A rough parallel may be drawn between section 287 and 26 U.S.C. § 7207, which prohibits submission of tax returns or statements known by the submitter to be fraudulent or false as to any material matter. Unlike some other sections of the Internal Revenue Code, section 7207 contains no requirement of intent to evade taxes. "Conduct could therefore violate § 7207 ... where the false statement, though material, does not constitute an attempt to evade or defeat taxation because it does not have the requisite effect of reducing the stated tax liability. This may be the case, for example, where a taxpayer understates his gross receipts and he offsets this by also understating his deductible expenses." Sansone v. United States, 380 U.S. 343, 352, 85 S.Ct. 1004, 1010, 13 L.Ed.2d 882 (1965)
8
Federal Rules of Evidence 702 permits a witness who is "qualified as an expert by knowledge, skill, experience, training, or education ..." to testify as to his opinion
9
The constitutionality of statutes criminally forbidding false statements has been upheld on numerous occasions. See, e.g., United States v. Des Jardins, 772 F.2d 578, 580 (9th Cir.1985) (upholding 18 U.S.C. § 1001); United States v. Staats, 49 U.S. (8 How.) 41, 12 L.Ed. 979 (1850) (upholding 18 U.S.C. § 289)
10
United States v. Hylton, 710 F.2d 1106 (8th Cir.1983), relied on by Barker, is not to the contrary. In that case, Hylton had filed factually accurate criminal complaints against federal agents, and the government retaliated by charging her with the crimes of corruptly endeavoring to impede IRS agents in the exercise of their duties and of obstruction of justice. In holding that the government's retaliatory action violated Hylton's First Amendment rights, the court stated that "were it demonstrated that Hylton's complaints were frivolous and based upon contrived allegations, a totally different result might follow." Id. at 1112
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358 N.W.2d 125 (1984)
STATE of Minnesota, Respondent,
v.
Mary Lou SPANYARD, a.k.a. Mary Lou Einberger, Appellant.
No. C3-84-910.
Court of Appeals of Minnesota.
November 20, 1984.
Review Denied February 27, 1985.
*126 Hubert H. Humphrey, III, Atty. Gen., Robert A. Stanich, Sp. Asst. Atty. Gen., St. Paul, Roger S. Van Heel, Stearns County Atty., St. Cloud, for respondent.
C. Paul Jones, Minn. State Public Defender, Mary C. Cade, Asst. State Public Defender, Minneapolis, for appellant.
Considered and decided by POPOVICH, C.J., and SEDGWICK and LANSING, JJ., with oral argument waived.
OPINION
LANSING, Judge.
Mary Lou Spanyard contends the trial court abused its discretion by finding she had violated a probation condition and by imposing sentence on a conviction that had previously been stayed. We affirm.
FACTS
On September 12, 1983, Spanyard pleaded guilty to receiving stolen property in violation of Minn.Stat. § 609.53, subd. 1(1) (1982), after police seized numerous items at Spanyard's home that had been stolen in a series of burglaries in St. Cloud, Minnesota. Spanyard testified that a friend had brought the property into her house, she knew it was stolen, and she took no steps to notify the authorities. The trial court stayed imposition of sentence and placed her on probation for ten years subject to certain special conditions and to the general condition that she obey all state and federal laws and local ordinances.
In February 1984 Spanyard moved out of a trailer home she had rented in Pine City, Minnesota, and the landlord found that the drapes, smoke alarm and fire extinguisher were all missing. He notified Spanyard's Pine County probation officer, who passed the information on to Spanyard's present probation supervisor.
A few days later the probation supervisor accompanied a Red Wing police officer to Spanyard's new apartment. They found the smoke alarm and fire extinguisher on a kitchen wall, and the drapes were hanging in the living room.
The probation supervisor subsequently filed a probation violation report and a probation revocation hearing was held. Spanyard testified that the landlord told her that he did not want the drapes back. She said some friends did the packing when she moved in February and they removed the extinguisher and the smoke alarm from the trailer. She claimed she was planning to return the property and had only installed the items in her new apartment to keep them out of her daughter's reach. The landlord testified that he never told her she could take the drapes and that all the property was taken without his permission.
At the conclusion of the hearing the trial court stated:
I make as a finding [of] fact that there is clear and convincing evidence that the defendant has violated the provisions of her probation. * * * [T]here certainly is no question, even based on her own testimony [that] she realized * * * the fire [extinguisher] and the smoke alarm were not her property and exercised dominion over them by putting them up on the wall, * * * which to me makes the rest of her story that she intended at some unknown future time to return them really beyond belief.
* * * I'm particularly concerned [that] * * * this violation is essentially the same as the original felony for which she was here. At that time she said somebody *127 else was responsible for bringing things into her home, that she didn't do anything about it, and she knew they were stolen but she doesn't seem to care whether property is stolen or not stolen as long as she has the use and the benefit of it. Obviously she was * * * intending to keep and retain the fire extinguisher and the smoke alarm.
The trial court then vacated the previous stay of imposition and imposed but stayed execution of the presumptive sentence for the original felony and continued her probation with the condition that she serve 30 days in the county jail. The trial court removed her prior obligation to perform community service work.
ISSUE
Did the trial court abuse its discretion in finding Spanyard had violated a probation condition and imposing but staying execution of a sentence with a condition that she serve 30 days in jail?
ANALYSIS
The trial court has broad discretion in determining if there is sufficient evidence to revoke probation and should be reversed only for clear abuse of that discretion. State v. Austin, 295 N.W.2d 246, 249-50 (Minn.1980).
Spanyard claims the probation revocation hearing should not have been held unless she was criminally charged with taking the landlord's property. This claim has little merit. Moreover, the issue was not raised at the revocation hearing and is therefore waived. See id. at 252 (citing Pearson v. State, 308 Minn. 287, 241 N.W.2d 490 (1976)).
Spanyard contends the evidence was insufficient to prove a violation by clear and convincing evidence, as required by Minn.R.Crim.P. 27.04, subd. 3(2). However, the landlord testified that the drapes, fire extinguisher and smoke alarm were taken without his permission; Spanyard herself acknowledged this to be true with respect to the extinguisher and the smoke alarm. The trial court could conclude that Spanyard was exercising dominion over the property by installing it in her apartment rather than setting it aside to be returned at a later date.
The trial court did not believe Spanyard's explanations for failing to return the property. Given that the function of the factfinder is to weigh the credibility of witnesses, State v. Pieschke, 295 N.W.2d 580, 584 (Minn.1980), the record supports the trial court's finding that Spanyard violated the terms of her probation.
Spanyard also claims the sentence imposed by the trial court was unjust. The trial court had the authority to impose sentence and further stay execution on the condition that she serve 30 days in jail. Minn.R.Crim.P. 27.04, subd. 3(3)(a); Minn. Stat. § 609.135, subd. 4 (1982). Furthermore, Spanyard's violation was not caused by her financial circumstances or brought about through no fault of her own. See Bearden v. Georgia, 461 U.S. 660, 103 S.Ct. 2064, 2070, 76 L.Ed.2d 221 (1983). We therefore find no abuse of discretion.
DECISION
Affirmed.
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152 Ill. App.3d 361 (1987)
504 N.E.2d 115
THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee,
v.
JOSEPH YOUNG, Defendant-Appellant.
No. 84-1838.
Illinois Appellate Court First District (1st Division).
Opinion filed January 20, 1987.
Jenner & Block, of Chicago (Thomas K. McQueen and Robert D. Nachman, of counsel), for appellant.
Richard M. Daley, State's Attorney, of Chicago (Joan S. Cherry, Richard A. Stevens, and James P. Stevenson, Assistant State's Attorneys, of counsel), for the People.
Judgment affirmed.
*362 JUSTICE BUCKLEY delivered the opinion of the court:
In December 1981, defendant Joseph Young appealed his convictions and sentence for murder and armed robbery to this court. Thereafter, in an order pursuant to Supreme Court Rule 23 (87 Ill.2d R. 23), this court affirmed the convictions, but remanded the case to the trial court for reconsideration of the sentence. On remand, the trial court reimposed the same sentence: a term of natural-life imprisonment on the murder conviction and a concurrent term of 60 years on the armed-robbery conviction. Defendant again appeals, arguing: (1) the trial court's refusal to consider evidence of his activities since his first sentencing hearing violated his constitutional and statutory rights; (2) his sentence should be reduced by this court in light of his rehabilitative potential; (3) the imposition of an extended-term sentence for armed robbery violated the Uniform Code of Corrections (the Code); and (4) if this court remands the case for a new sentencing hearing, it should be remanded to a different judge.
The record shows that following a bench trial, defendant was convicted of the strangulation murder of a 63-year-old woman who was the mother of defendant's former stepmother. Defendant's written confession had been admitted into evidence at trial. In his confession, defendant stated that he left his house, taking with him an electrical extension cord, and went to the victim's house intending to strangle her. He was invited into the home by the victim, ate lunch with her, and then walked up behind the victim and strangled her by putting the electrical cord around her neck and holding it there for five minutes. Defendant's statement was corroborated by physical evidence and testimony of his friend who helped him remove items from the victim's apartment the day following the murder.
The record also shows that in 1977, prior to the instant offense, defendant had been adjudged delinquent and placed on nine months' juvenile probation for the aggravated battery of a mentally handicapped female. The victim in that case was stabbed with a butcher knife and suffered more than 50 lacerations to her head and hand. She ultimately lost the use of two fingers as a result of the attack. Defendant was 16 years old at the time of the stabbing. Thereafter, in 1980, defendant was convicted of residential burglary and placed on two years' felony probation. Defendant was released on probation for the burglary when he committed the present murder.
In our prior Rule 23 order affirming defendant's murder conviction, this court reviewed defendant's criminal history and found that defendant "has very little, if any, potential for rehabilitation." We nevertheless remanded the cause for reconsideration of defendant's *363 sentence in view of the defendant's youth and the fact that the sentence carried no possibility of parole. See Ill. Rev. Stat. 1981, ch. 38, par. 1003-6-3(a)(2).
On remand, at the hearing to reconsider the sentence, defendant filed a written motion urging the court to consider evidence of his behavior subsequent to the initial sentencing hearing. The trial court denied the motion, but allowed defendant to introduce evidence of his good prison conduct and rehabilitative potential in order to make a record for this appeal.
At the hearing, Donald Wasson, a Pontiac Correctional Center educator who had taught defendant English and social studies at the institution, described defendant as an "excellent student." He testified that defendant had become quite interested in religion and that he believed defendant could be rehabilitated. Wasson, however, admitted he had not been aware of defendant's aggravated battery of a mentally handicapped girl.
Defendant also called as a witness William Singleton, superintendent of industry at Pontiac Correctional Center. Singleton testified that defendant had been working in the prison's sheet metal plant for approximately eight months. He stated that he would hire defendant for his own business, if he had one, outside of prison. Singleton also admitted, however, that he did not know the details of defendant's prior stabbing.
Marla Sims, the mother of defendant's three-year-old daughter, testified that defendant sends home $20 every two months for their daughter's support. He also writes letters, and she visits him at the prison. Marla Sims' mother, Lois Sims, testified she keeps in contact with defendant and spoke of his increased interest in religion.
To complete his offer of proof, defendant introduced four letters from the prison staff and six letters from teachers. The letters indicated that defendant has adapted well to prison life and has behaved in a polite and courteous manner.
After hearing arguments, the trial judge stated that he knew defendant was 20 years old at the time of the sentencing and had considered that fact when he initially sentenced him. The judge further stated that he had considered defendant's history and background, noting that defendant had a history of "preying" on the elderly and infirm, and that his crimes were escalating in nature. The court reviewed the details of defendant's murder of a "63-year-old woman who considered him [defendant] and treated him as her grandson," and observed:
"This, to me, indicates somebody who has a history of violence. *364 It indicates to me somebody who has a propensity to reap that violence on the weak and the aged and the affirm [sic], and it is one who has not accepted any potential for rehabilitation that somebody else has shown in him."
The judge then reaffirmed the sentences.
On appeal, defendant argues first that the trial court should have at least considered the proffered evidence of rehabilitative potential since the initial sentencing hearing. Our State constitution and the Unified Code of Corrections mandate that penalties be determined according to both the seriousness of the offense and the rehabilitative potential of the offender, with the intent to restore him to useful citizenship. (Ill. Const. 1970, art. I, sec. 11; Ill. Rev. Stat. 1985, ch. 38, par. 1001-1-2.) In our prior Rule 23 order, we found that the record indicated that defendant has very little, if any, potential for rehabilitation, but remanded for resentencing in view of defendant's age and the preclusion of parole. This court specifically declined to exercise its power to reduce or vacate the sentence.
On remand, the trial court acted in accordance with the mandate of this court. The court reconsidered the sentence in view of defendant's age and the preclusion of parole, and reaffirmed the same sentence. We note that even if this court had vacated the original sentence, the trial court would still not have been required to consider the behavior of defendant during his incarceration. In this regard, the Code provides that where an original sentence has been vacated, the trial court shall hold another sentencing hearing which "may" include evidence of defendant's life, moral character and occupation during the time since the original sentence was passed." (Emphasis added.) (Ill. Rev. Stat. 1985, ch. 38, par. 1005-5-3(d).) Hence, the language of the statute is discretionary, not mandatory.
The recent Supreme Court case, Skipper v. South Carolina (1986), 476 U.S. 1, 90 L.Ed.2d 1, 106 S.Ct. 1669, does not mandate consideration of a defendant's good prison conduct in this case. Skipper held that in a death sentence case it is reversible error for a court not to consider post-arrest behavior at a sentencing hearing. The court reasoned that in a death sentence case a defendant's prison conduct is highly probative of his ability to function in a structured environment. Such evidence could weigh heavily in the jury's decision to impose the death sentence or natural life in prison and accordingly should be presented.
The Supreme Court in Lockett v. Ohio (1978), 438 U.S. 586, 604, 57 L.Ed.2d 973, 990, 98 S.Ct. 2954, 2964-65, highlighted the difference between the factors to be considered in a capital case and a case *365 involving a sentence for a term of years or life imprisonment. Lockett recognized that in a capital case "the sentencer * * * not be precluded from considering, as a mitigating factor, any aspect of defendant's character or record * * * as a basis for a sentence less than death." (Emphasis in original.)
1 We further observe that even though the trial court indicated during the hearing that it would not consider evidence of defendant's good prison conduct, the record shows that the court ultimately did consider such evidence when it stated:
"All that has been shown to me here today is that Mr. Young has demonstrated a capacity to function in a structured society, whereas he did not demonstrate that capacity in an open society. And this is absolutely in keeping with my original sentencing determination."
Thus, the trial court did in fact take into account the evidence of rehabilitation offered by defendant at the hearing. Accordingly, we find no error as to this matter.
2 Defendant further argues that this court should reduce his sentence in light of the evidence adduced at the hearing. It is held that the trial court is in the best position to assess and weigh all factors relevant to sentencing and unless an abuse of discretion can be shown, the reviewing court will not disturb a defendant's sentence. People v. La Pointe (1981), 88 Ill.2d 482, 492-93, 431 N.E.2d 344, 348-49.
3 Next, defendant argues that the trial court erred in imposing an extended-term sentence for his armed-robbery conviction because it violates the extended-term statute. Defendant made no objection on this basis at the time of sentencing and the question was not raised in a motion for a new trial. Nor was the issue raised in defendant's initial appeal of his conviction and sentence. The issue now presented is raised for the first time on this second appeal and is therefore waived for review. In re Lamb (1975), 61 Ill.2d 383, 387, 336 N.E.2d 753, 756.
Even if this issue had not been waived, we nevertheless find no merit to defendant's claim. The extended-term statute provides:
"A judge shall not sentence an offender to a term of imprisonment in excess of the maximum sentence authorized by Section 5-8-1 for the class of the most serious offense of which the offender was convicted unless the factors in aggravation set forth in paragraph (b) of Section 5-5-3.2 were found to be present. Where the judge finds that such factors were present, he may sentence an offender to the following:
(1) for murder, a term shall be not less than 40 years and *366 not more than 80 years;
(2) for a Class X felony, a term shall be not less than 30 years and not more than 60 years; * * *" (Ill. Rev. Stat. 1981, ch. 38, par. 1005-8-2(a).)
Defendant argues that the statute does not permit an extended-term sentence for his armed-robbery conviction because that offense is not in the class of the most serious offense of which he was convicted, murder.
4 An argument similar to the one now before us was recently addressed by our supreme court in People v. Neal (1985), 111 Ill.2d 180, 489 N.E.2d 845, cert. denied (1986), 476 U.S. 1165, 90 L.Ed.2d 733, 106 S.Ct. 2292. In Neal, the defendant was sentenced to death for a murder conviction and received an extended-term sentence for the lesser offense of armed robbery. There, as here, the defendant argued that the statute does not allow an extended-term sentence for armed robbery since that offense was not in the class of the most serious offense of which he was convicted. The supreme court rejected that argument, reasoning as follows:
"The defendant's contention would be valid if he had been given an extended-term sentence of imprisonment on the murder conviction. (See People v. Jordan (1984), 103 Ill.2d 192, 203-06.) The sentence here, however, was not for a term of years. A death sentence was imposed, and the extended-term statutory provision was not applicable." (111 Ill.2d 180, 204, 489 N.E.2d 845.)
Here, as in Neal, defendant was not given an "extended-term sentence" on the murder conviction as that term is used in the statute. The extended-term sentences set forth in the statute are all for a term of years. (See Ill. Rev. Stat. 1985, ch. 38, par. 1005-8-2(a).) In this case, defendant's sentence of life imprisonment without possibility of parole is not a sentence to a term of years, but is by its very nature a sentence of undetermined length. Accordingly, under Neal, we find that the imposition of the extended-term sentence for the armed robbery was not precluded in this case by statute.
Given our disposition above, we need not consider defendant's remaining argument that if the cause is remanded for a new sentencing hearing it should be remanded to a different judge.
For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed.
Affirmed.
*367 CAMPBELL, J., concurs.
PRESIDING JUSTICE QUINLAN, dissenting:
I dissent because I believe that the trial judge was required to consider the evidence regarding defendant Young's conduct subsequent to the initial sentencing hearing. In our original Rule 23 order, we remanded the matter back to the trial court for reconsideration of the sentence, observing that the record before us at that time indicated very little, if any, potential for rehabilitation, but because of the defendant's age and the fact that the sentence as imposed precluded the possibility of parole, the sentence should be reconsidered. Under such circumstances, it seems clear to me that the trial judge was obligated to consider any relevant evidence regarding the defendant's potential for rehabilitation, and the evidence proffered here by the defendant concerning his good prison behavior and conduct since his initial sentencing was certainly relevant concerning this issue.
In People v. Johnson (1975), 29 Ill. App.3d 763, 331 N.E.2d 306, this court vacated the sentence imposed upon remand of a conviction for murder and three counts of armed robbery where the death penalty had been imposed along with the imposition of a concurrent term of years on the armed-robbery convictions. We found the minimum sentence imposed by the trial judge on remand of four concurrent terms of 40 years' to 60 years' imprisonment improper in view of our statutorily and constitutionally required consideration of not only the seriousness of the offense, but also a defendant's potential for rehabilitation. We further found that there had been particularly relevant evidence introduced there concerning the defendant's potential for rehabilitation, viz., testimony concerning the defendant's behavior and manifest rehabilitation during the almost six years in the penitentiary following his conviction. Because of the persuasiveness of this testimony concerning the defendant's rehabilitation during his period of incarceration and his potential for future rehabilitation, and, the additional fact, that the record did not indicate that the court there had properly taken this evidence into consideration in resentencing, we concluded that the minimum sentence imposed had to be vacated and the matter remanded for resentencing.
While I agree with the majority that the recent United States Supreme Court case of Skipper v. South Carolina (1986), 476 U.S. 1, 90 L.Ed.2d 1, 106 S.Ct. 1669, which required, as a matter of constitutional law, a court to consider post-arrest behavior in sentencing was limited by the court to death cases, the reason for requiring the consideration of this evidence in those cases is persuasive here also. The Supreme *368 Court stated that it could hardly be disputed that the testimony offered regarding the defendant's good behavior while in jail awaiting trial was relevant evidence in mitigation of punishment. Also, the court observed that while consideration of a defendant's past conduct as an indication of his probable future conduct was inevitable and not an undesirable element of criminal sentencing, any sentencing authority must predict a convicted person's probable future conduct when it engages in the process of determining what sentence to impose, and evidence concerning the defendant's future conduct, e.g., whether the defendant posed a danger to society in the future, or that he would not, was proper evidence also. That type of evidence, i.e., evidence of possible future conduct, the court stated, must be considered by the sentencer in a death case. The Supreme Court found that the exclusion of such relevant mitigation evidence would prevent a trial court from carrying out its task of considering all relevant facets of the character and record of the individual offender. 476 U.S. 1, ___, 90 L.Ed.2d 1, 9, 106 S.Ct. 1669, 1673.
This is properly the function of the sentencing judge in all criminal cases, as the Supreme Court in Williams v. New York (1949), 337 U.S. 241, 247, 93 L.Ed. 1337, 1342, 69 S.Ct. 1079, 1083, observed:
"A sentencing judge, however, is not confined to the narrow issue of guilt. His task within fixed statutory or constitutional limits is to determine the type and extent of punishment after the issue of guilt has been determined. Highly relevant if not essential to his selection of an appropriate sentence is the possession of the fullest information possible concerning the defendant's life and characteristics."
Additionally, in determining a proper sentence following a retrial, the court found in North Carolina v. Pearce (1969), 395 U.S. 711, 23 L.Ed.2d 656, 89 S.Ct. 2072, that a defendant's conduct subsequent to his initial sentence hearing was also relevant to resentencing:
"A trial judge is not constitutionally precluded * * * from imposing a new sentence, whether greater or less than the original sentence, in the light of events subsequent to the first trial that may have thrown new light upon the defendant's `life, health, habits, conduct, and mental and moral propensities.' Williams v. New York, 337 U.S. 241, 245. Such information may come to the judge's attention from evidence adduced at the second trial itself, from a new presentence investigation, from the defendant's prison record, or possibly from other sources. The freedom of a sentencing judge to consider the defendant's conduct subsequent to the first conviction in imposing a new sentence is no *369 more than consonant with the principle, fully approved in Williams v. New York, supra, that a State may adopt the `prevalent modern philosophy of penology that the punishment should fit the offender and not merely the crime.' Id., at 247." 395 U.S. 711, 723, 23 L.Ed.2d 656, 668, 89 S.Ct. 2072, 2079-80.
While, as I have stated, Skipper was limited to death cases, I, nevertheless, believe that the Skipper case is analogous to the case here, since the defendant was sentenced to life imprisonment with no possibility of parole, which was, in a real sense, a death sentence for the defendant concerning his life in the community or society from which he had come. Furthermore, the court here, as had the trial court in Skipper, failed to consider the defendant's relevant mitigating evidence of his rehabilitation while incarcerated and thus his potential for future rehabilitation contrary to the trial court's obligation to consider all relevant facets of the character and record of the defendant in imposing a sentence. In Skipper, the court found that this violated the Federal Constitution. I submit, the requirements of our statute and constitution here (see Ill. Rev. Stat. 1985, ch. 38, pars. 1005-4-1(a)(3), 1005-5-3.1(a)(9), 1005-5-3.1(b), 1005-5-3(d); Ill. Const. 1970, art. I, sec. 11), similar to the requirements of the eighth and fourteenth amendments to the Federal Constitution in death cases, were violated.
In Lockett v. Ohio (1978), 438 U.S. 586, 57 L.Ed.2d 973, 98 S.Ct. 2954, and Eddings v. Oklahoma (1982), 455 U.S. 104, 71 L.Ed.2d 1, 102 S.Ct. 869, the Supreme Court found that the eighth and fourteenth amendments to the Federal Constitution required that a sentencer not be precluded from considering, as a mitigating factor, any aspect of a defendant's character or record and any circumstances of the offense that the defendant proffers as a basis for a sentence less than death. Thus, a statute may not preclude a sentencer from consideration of any mitigating factors, nor may the sentencer himself refuse to consider, as a matter of law, any relevant mitigating evidence. This is so because the risk is great that the death penalty will be imposed when a less severe penalty would properly have been imposed if the mitigating evidence had been received and considered. Such a risk is not acceptable under the eighth and fourteenth amendments to the United States Constitution where a capital crime is involved.
I believe this risk is also unacceptable under the provision of our Unified Code of Corrections (see Ill. Rev. Stat. 1985, ch. 38, par. 1001-1-2(a) et seq.) and the Illinois Constitution (Ill. Const. 1970, art. I, sec. 11), in the circumstances posed by the situation here where the defendant faces a sentence of life imprisonment without the possibility *370 of parole.
Also, while I do concur with the majority's resolution concerning defendant's extended-term sentence for armed robbery based on the Illinois Supreme Court's decision in People v. Neal (1985), 111 Ill.2d 180, 489 N.E.2d 845, cert. denied (1986), 476 U.S. 1165, 90 L.Ed.2d 733, 106 S.Ct. 2292), I do, however, find the majority's reasoning a bit ironic. The Neal case upheld the extended-term sentence for the burglary conviction there under the extended-term statute even though the court had imposed a death sentence on the murder conviction. Interestingly, the basis for the majority's conclusion here, that the Neal case was controlling, is that the imposition of the life sentence in the present case was analogous to the death sentence in Neal for purposes of considering the extended-term sentence. Nevertheless, the majority found the defendant's life sentence, without possibility of parole, not analogous to the death penalty sentence in Skipper for purposes of considering mitigating evidence regarding the defendant's rehabilitation and potential for rehabilitation.
Contrary to the majority's differentiation, I believe that the imposition of the death sentence and the defendant's life sentence without the possibility of parole are analogous in both situations and particularly so for purposes of requiring the sentencing judge to consider proffered relevant mitigating evidence before imposing a life sentence without the possibility for parole. Of course, the weight to be given to the mitigating evidence is for the trial judge to determine. (See Eddings v. Oklahoma (1982), 455 U.S. 104, 114-15, 71 L.Ed.2d 1, 11, 102 S.Ct. 869, 877). However, to not require a trial judge to consider such relevant evidence would allow the judge to disregard the sentencing scheme set forth in the Code of Corrections and required by our constitution. (Cf. Williams v. New York (1949), 337 U.S. 241, 245, 93 L.Ed. 1337, 1341, 69 S.Ct. 1079, 1083.) Mr. Young was entitled to have a sentence imposed that takes into account his potential, if any, to be rehabilitated and to reenter society, if possible, as a productive individual. The failure to consider the evidence proffered by the defendant here did not offer him this opportunity.
Accordingly, I would vacate the sentence imposed by the trial court and remand the matter for resentencing of the defendant consistent with the views expressed herein. I would also require that this case be assigned to a judge other than the original sentencing judge for purposes of the resentencing. See People v. Kendrick (1982), 104 Ill. App.3d 426, 432 N.E.2d 1054; People v. Mac Rae (1979), 78 Ill. App.3d 266, 397 N.E.2d 509; People v. Luttmer (1977), 48 Ill. App.3d 303, 362 N.E.2d 1093.
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79 So.3d 37 (2012)
SHAHGODARY
v.
DEPARTMENT OF REVENUE EX REL. MILLE.
No. 4D11-356.
District Court of Appeal of Florida, Fourth District.
February 15, 2012.
DECISION WITHOUT PUBLISHED OPINION
Affirmed.
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369 F.Supp. 1082 (1972)
UNITED STATES of America, Plaintiff,
v.
ONE REEL OF 35MM COLOR MOTION PICTURE FILM ENTITLED "SINDERELLA" SHERPIX, INC., Claimant.
No. 72-C-804.
United States District Court, E. D. New York.
December 29, 1972.
O'Brien, Raftery, Rosenbloom & Grainger, New York City by Edmund C. Grainger, Jr., New York City, for claimant.
Robert A. Morse, U. S. Atty., Brooklyn, N. Y. by Carl L. Stewart, Asst. U. S. Atty., for plaintiff.
*1083 MEMORANDUM OF DECISION
MISHLER, Chief Judge.
Sherpix, Inc., the claimant in this proceeding, imported a cartoon film titled "Sinderella." It arrived at John F. Kennedy International Airport on May 27, 1972. The film was offered for entry on May 31, 1972 by claimant's customs broker. It was seized by customs agents on June 6, 1972 after viewing the filming as obscene under the authority of section 305 of the Tariff Act (19 U.S.C. § 1305). The government instituted this proceeding by filing a complaint in the office of the Clerk of this court on June 16, 1972.
The sole issue on the merits of the claim is whether the film is obscene.
The government's case was a showing of the film. The claimant offered the opinion of three experts and the testimony of Louis Sher, president of the claimant corporation.
"Sinderella" is an animated cartoon with accompanying sound. The running time of the film is about 6½ minutes. The general outline of the plot is the story of Cinderella interspersed with bits and parts of Little Red Riding Hood, Puss N' Boots and Goldilocks and The Three Bears. While the narrator recites the script with the tonal wonderment of a fairy tale free from vulgarity, the film depicts sexual organs and sexual acts. The first scene shows Sinderella in the woods; she finds something on the ground which upon her urging becomes an erect phallus, she then inserts it between her legs in masturbation. Other scenes depict Sinderella performing sexual acts with the above-mentioned fairy-tale characters as well as with the prince in a bedroom of the palace and shadowy outlines indicating The Three Bears having sexual relations with Sinderella in rapid succession. There is hardly a frame of the film that does not show genital organs, the sexual act, or movement from which sexual activity is suggested.
Professor Charles Winick, a professor of sociology and a licensed psychologist, conducted a consumer study of viewers of sexually explicit materials authorized by the President's Commission on Obscenity and Pornography. He interviewed 5,000 consumers in that study and wrote on changing attitudes toward sexual behavior of the American public since 1945. He made a study for the National Association of Broadcasters to develop a method for quantifying the contents of cartoons. He testified that cartoons almost always tend to be humorous and their visual stimuli of movement and action and wit interest all age groups. Professor Winick found redeeming social value in the wit and humor of the film. He found that combining aspects of the four fairy tales ". . . in the cartoon format of a modern version of these several elements of folklore and fairy tales" was witty and clever. In his opinion the film is not likely to stimulate sexual fantasies because viewers do not identify with the semi-abstract shapes and figures of a cartoon.
Professor Frank Hoffman is a professor of English at the State University College in Buffalo and is in charge of a program in folk-lore and motion pictures. He found that the film followed ". . . the outline of the traditional story of Cinderella developed in a humorous, witty, satirical manner with an orientation towards sex." He states that portrayal of an erect phallus and sexual acts "adds humor, satire, wit to the tale." Professor Hoffman opined that the film's depiction of sexual acts does not offend contemporary national community standards.
Professor Richard Brown is a professor at New York University. He teaches various courses relating to the history and production of motion picture films. He too found redeeming social value in the humor and satire of the film and felt that it did not affront contemporary community standards.[1]
*1084 Louis Sher testified that he intended showing the cartoon in combination with an X rated picture.[2] The claimant is the sole distributor of the film in the United States.
The test to determine obscenity as defined in Roth v. United States, 354 U.S. 476, 489, 77 S.Ct. 1304, 1311, 1 L.Ed.2d 1498 (1957), is "[W]hether to the average person, applying contemporary community standards, the dominant theme of the material taken as a whole appeals to prurient interest." Referring to the definition in Roth the Court stated in A Book, etc. v. Attorney General of Com. of Mass., 383 U.S. 413, 418, 86 S.Ct. 975, 977, 16 L.Ed.2d 1 (1966):
"Under this definition, as elaborated in subsequent cases, three elements must coalesce: it must be established that (a) the dominant theme of the material taken as a whole appeals to a prurient interest in sex; (b) the material is patently offensive because it affronts contemporary community standards relating to the description or representation of sexual matters; and (c) the material is utterly without redeeming social value."
The difficulty in applying the test laid down by the Court is demonstrated in United States v. One Carton Positive Motion Picture Film, 367 F.2d 889 (2d Cir. 1966).[3] Circuit Judge Moore, writing for the court, quoted with approval a statement from a Swedish psychiatrist as follows:
"A society which is unable to endure `491' is a sick society; a society which is prepared to learn from it will become a sounder one." (p. 891).
Chief Judge Lumbard in dissent wrote:
"The strongest evidence in support of its obscenity is the picture itself. Judge Waterman, Judge Moore and I had the distasteful experience of watching this film through its run of 110 minutes. No one would recognize the picture from Judge Moore's opinion as he omits any synopsis of what the cameras show." (p. 905).
Circuit Judge Waterman, concurring, found with real regret that "the film cannot truthfully be said to be utterly without redeeming social importance." He stated:
"Though the theme of the film is patently offensive to me and some of the shots would surely be beyond the limits of permissible candor if standards today were the standards of the less sophisticated era and area into which I was born and wherein I was reared, I agree that it cannot now be said that the standards of taste we would like are the standards of taste under which we now live." (p. 905).
The burden of proving obscenity is on the government. Though forfeiture is penal in character, the burden of proof is that of a civil proceeding, i. e. a preponderance of the evidence. Compton v. United States, 377 F.2d 408 (8th Cir. 1967); D'Agostino v. United States, 261 F.2d 154 (9th Cir. 1958), cert. denied, 359 U.S. 953, 79 S.Ct. 739, 3 L.Ed.2d 760. It is not essential to every case (as contended by claimant) that expert testimony support the government's claim. United States v. Manarite, 448 F.2d 583, 593 (2d Cir. 1971), cert. denied sub nom. Portela v. United States, 404 U.S. 947, 92 S.Ct. 281, 30 L.Ed.2d 264. United States v. Klaw, 350 F.2d 155, 168 (2d Cir. 1965), did no more than indicate that in some cases where the jury had "absolutely no evidentiary basis from which to `recognize' any appeal to *1085 the prurient interest of the deviate or the typical recipient," expert testimony was essential. United States v. One Carton Positive Motion Picture Film, 367 F.2d 889, 893(2d Cir. 1966), stated that "[m]indful of the admonition that we are judges and not literary experts or philosophers, we turn to the witnesses for guidance in our own ultimate judgment." It requires, however, no particular expertise to uncover the appeal of "Sinderella." There is enough apparent in the film itself from which its appeal to prurient interest is evident.
The claimant in its trial brief cites two films held by the Second Circuit Court of Appeals to come within the constitutionally protected area, i. e. United States v. A Motion Picture Film Entitled "I Am Curious Yellow", 404 F.2d 196 (2d Cir. 1968), and United States v. 35 MM Motion Picture Film Entitled "Language of Love", 432 F.2d 705 (2d Cir. 1970). It is clear from Chief Judge Lumbard's dissenting opinion and Judge Friendly's concurring opinion that they found the film offended contemporary community standards. The film was found not obscene because Judge Friendly held that the film was not wholly without redeeming social value. Judge Moore wrote for a unanimous court in Language of Love in which he found that the film did not as a whole appeal to prurient interests. In comparing the film to "I Am Curious Yellow" he declined ". . . to tally the instances and methods of sexual accomplishment and compare score sheets in dealing with these films."
The sole interest of the film at bar is in the display of genitals and sexual activity. The entire 6½ minutes of the film displays such activity. The "plot" and "characters" are merely vehicles for carrying the subject to the screen, "depicting [acts of sexual intercourse] . . . in an exaggerated fashion." Ginzburg v. United States, 383 U.S. 463, 499 n. 3, 86 S.Ct. 942, 957, 16 L.Ed.2d 31 (Stewart, J., dissenting). Mr. Justice Stewart indicates that animated cartoons should not be treated differently than other types of film.
Though it is difficult to make such a subjective determination, United States v. 35 MM Motion Picture Film Entitled Language of Love, 432 F. 2d at 712, I find that the film was produced with a view to the commercial exploitation of its prurient appeal. Memoirs v. Massachusetts, 383 U.S. 413, 420, 86 S.Ct. 975, 978, 16 L.Ed.2d 1. The court is not bound by testimony of experts. To the contrary, Chief Judge Lumbard, dissenting in United States v. One Carton Positive Motion Picture Film, 367 F.2d at p. 906, said:
"Nor do the opinions of the experts whose business it is to find `sermons in stones and good in everything,' Shakespeare, `As You Like It,' 2:1:17 (Cam. ed. 1959), count for much on this point."
Mr. Sher testified that only adults would be permitted to view the film under the self-imposed X-rating. Though such a limitation on the class would satisfy the additional conditions found in Redrup v. New York, 386 U.S. 767, 769, 87 S.Ct. 1414, 1415, 18 L.Ed.2d 515 (1967), i. e. concern for minors and unwilling viewers, it does not satisfy the second element of the Roth test. Claimant argues that the relevant community standards are established with reference to the public who view X-rated movies. This concept is discussed by analogy in Mishkin v. State of New York, 383 U.S. 502, 508-509, 86 S.Ct. 958, 963-964, 16 L.Ed.2d 56 (1966). In Mishkin the intended recipients were various deviant sexual groups. The Court said:
"Where the material is designed for and primarily disseminated to a clearly defined deviant sexual group, rather than the public at large, the prurient-appeal requirement of the Roth test is satisfied if the dominant theme of the material taken as a whole appeals to the prurient interest in sex of the members of that group. * * * We adjust the prurient-appeal requirement *1086 to social realities by permitting the appeal of this type of material to be assessed in terms of the sexual interests of its intended and probable recipient group. * * *"
See also United States v. 56 Cartons Containing 19,500 Copies of Mag. ("The Hellenic Sun"), 373 F.2d 635, 640-41 (4th Cir. 1967), citing Mishkin.[4]
Mishkin does not teach us that when sex-oriented materials are intended to appeal to a group other than the general community the prong of the Roth test relating to prurient interest is not used, but rather that the prong relates to the interest of the particular group. It may be that material will have an entirely different appeal to members of a particular group as opposed to the general community. What may rouse the prurient interest of one may merely sicken and disgust another. What may be tolerable or inoffensive to the general community may affront the sensibilities of members of a particular group.
While we do not imply that those who view X-rated movies are sexual deviates, we understand Mishkin to direct our attention to the particular group to which the cartoon is addressed, not to ascertain whether they find it offensive or inoffensive, but rather to ascertain whether it appeals to their prurient interests. The dominant theme of this film taken as a whole does indeed appeal to the prurient interest in sex of the theatre-going public which views X-rated pictures.
The question remains as to whether the film is utterly without redeeming social value. Exhibitions of genitals or normal or abnormal sexual acts are not obscene if the material advocates ideas or is of some literary or scientific artistic value. Memoirs v. Massachusetts (Fanny Hill), 383 U.S. at 419, 86 S.Ct. at 978. Here the claimant urges that the cartoon's wit, humor and satire save it from condemnation. Humor in material otherwise obscene has social value. The humor of "Sinderella" is said to lie in the incongruity between the sound track and the action on the screen and in the injection of identifiable parts of other fairy tales into the story of Sinderella. (tr. p. 107). In attempting to gauge the reaction of the viewing public to the purported "humor" in the cartoon, I believe few if any could find humor or wit in it. Incongruity alone, devoid of underlying intellectual or ideological content, is a mere gimmick. It does not infuse this cartoon with enough social value to retrieve it from the trash can.
Judgment is granted in favor of plaintiff forfeiting and condemning the film entitled "Sinderella" as provided in section 305 of the Tariff Act.
This memorandum of decision constitutes findings of fact and conclusions of law required by Rule 52 of the Federal Rules of Civil Procedure.
The Clerk is directed to enter judgment forfeiting the film entitled "Sinderella" as provided in section 305 of the Tariff Act.
NOTES
[1] Professor Brown found novelty in the method of production of the film. It was produced in a style called Feltboard animations. The court finds the novelty in production methods irrelevant to the issues.
[2] An exhibitor, under the rules promulgated in the industry need not apply for a rating if he rates the motion picture "X." The X rating permits only adults to view the film.
[3] The film entitled "491" is a story of 6 youthful delinquents who are placed in a private home instead of a penal institution as a sociological experiment. Instead of punishment they are offered kindness, forgiveness and understanding. The youths reject the outstretched hand and turn to violence and sadism. They steal and sell the possessions of their preceptor, they maim themselves and cause one to commit suicide. The film depicts sodomy, sexual intercourse with a prostitute, a homosexual act, and intercourse between the prostitute and a dog.
[4] Reversal sub nom. Potomac News Co., etc. v. United States, 389 U.S. 47, 88 S.Ct. 233, 19 L.Ed.2d 46 (1967).
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427 F.2d 1176
Max DRITZ as Administrator of the Estate of Max Dritz and of Helen Dritz, Deceased, Petitioners-Appellants,v.COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
No. 28966.
United States Court of Appeals, Fifth Circuit.
June 17, 1970.
Sidney A. Soltz, Miami, Fla., for appellants.
Johnnie M. Walters, Asst. Atty. Gen., Lee A. Jackson, Atty., Tax Div., U.S. Dept. of Justice, K. Martin Worthy, Chief Counsel, Richard P. Milloy, Thomas L. Stapleton, Gary R. Allen, Attys., Internal Revenue Service, Washington, D. C., for appellee.
Before JONES, WISDOM, and COLEMAN, Circuit Judges.
PER CURIAM:
1
Largely because they failed to file federal income tax returns for the calendar years of 1962 and 1963, Max Dritz and his wife, Mrs. Helen Dritz, fell into a sea of difficulties with the Commissioner of Internal Revenue with reference to tax liabilities for the years 1958 to 1963. They filed four petitions in the United States Tax Court for redetermination of the deficiencies asserted against them. The cases were consolidated. The liability of the taxpayers was determined in findings of fact and an opinion of the Tax Court issued on August 27, 1969.1
2
The taxpayers produced no records or documentation as to their income for the years in suit. Max Dritz did not testify. Mrs. Dritz testified, but the Court found her testimony to be evasive, inconsistent, and generally implausible.
3
We are now asked to reverse the Tax Court on the argument that the determinations of the Commissioner of Internal Revenue were arbitrary, that this put the burden of proof as to the various issues on the Commissioner, and hence the Tax Court resolved the factual issues by the wrong standard.
4
This argument fails. In view of all the facts, as duly found and for which there is substantial support in the record, there is no basis for saying that the determinations of the Commissioner were arbitrary. Nor do we find any other basis for reversal.
5
The decision of the Tax Court is, on all issues, affirmed.
6
Affirmed.
Notes:
1
Paragraph 69, 175 P-H Memo TC
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615 S.W.2d 912 (1981)
Lee SHELTON et al., Appellants,
v.
H. Frank TAYLOR et al., Appellees.
No. 5555.
Court of Civil Appeals of Texas, Eastland.
April 23, 1981.
Rehearing Denied May 14, 1981.
*913 Clyde W. Woody, Houston, for appellants.
J. Alan Gray, Rentzel, Wise & Gray, Dallas, Steve Suttle, McMahon, Smart, Wilson, Surovik & Suttle, Robert M. Rutledge, Rutledge, Rutledge & Connally, Roger Garrett, Abilene, for appellees.
DICKENSON, Justice.
The controlling question is whether a 1948 oil and gas lease terminated when production ceased for more than 30 days in 1972. It was stipulated that the lease and the term royalty interests were extended through 1971 by production, and there is evidence of continuous production from June of 1972 through the date of trial.
Plaintiffs, Lee Shelton and wife, Erma Shelton, sued all of the parties who owned or claimed any interest in the lease and the owners of term royalty interests, seeking a judgment declaring that the lease had terminated and other relief. Following a trial by jury, judgment was rendered on the verdict that Plaintiffs take nothing and declaring that the oil and gas lease is in full force and effect. Plaintiffs appeal. We affirm.
The controlling issues may be summarized as:
1. During 1972 production in commercial quantities ceased on the lease in question.
2. Such cessation of production was temporary.
3. Oil and gas wells on adjacent property are not draining condensate, gas or oil from under Plaintiffs' land.
*914 6. Dallas International Bank did not fail to develop the lease in the manner in which a reasonably prudent operator would under the same or similar circumstances.
8. Plaintiffs knowingly recognized, ratified and confirmed the validity of the oil and gas lease.
Plaintiffs have briefed 15 Points of Error. Point 1 argues that the trial court erred in overruling Plaintiffs' objection to the question regarding the price paid for their 648 acre ranch. Any error in this ruling was harmless error under Tex.R.Civ.P. 434. Before the objection was made Lee Shelton had testified on direct examination that he bought the property in 1971 and that it was subject to the oil and gas lease involved in this lawsuit. He also testified that he had run over 600 head of cattle. Plaintiffs also proved the price which Humble was paid for its assignment of the lease in question. There is also evidence of Plaintiffs' royalty income from the property. Plaintiffs' expert gave opinion testimony of past drainage of oil and gas worth $1,427,511.35 and future loss of oil and gas worth $2,760,120.00. Plaintiffs' expert also estimated a cost of $200,000 per well for the six wells which he felt should be drilled. Point 1 contends that reversible error is shown by the following:
Q (Mr. Suttle): How much did you pay per acre for that land?
A (Mr. Shelton): I figured I don't have to give my personal deal here in the Court.
OBJECTION (by Mr. Shelton's lawyer): Your Honor, we will object to that question as being immaterial in the matter pending before the Court.
RESPONSE (by Mr. Suttle): I think it will be material, Your Honor, in demonstrating the benefits that the man has received from the property, and showing the magnitude of those benefits.
CONTINUED OBJECTION (by Mr. Shelton's lawyer): The amount he paid for the property is immaterial.
THE COURT: I will overrule the objection. There are no secrets here. Overrule the objection. You may answer.
Q (Mr. Suttle): How much did you pay for the property, Mr. Shelton?
A (Mr. Shelton): The fact of the business, I would have to go and look and see. I don't remember.
Q (Mr. Suttle): Just the approximate amount?
A (Mr. Shelton): Oh, $125.00 or $100.00 an acre, somewhere around there.
There was no proof as to whether the property was purchased for cash or on credit, and we hold that the objection that the amount paid for the land by Plaintiffs was "immaterial" does not preserve the objection which they seek to raise for the first time on appeal, that "It is improper to contrast the wealth of the parties in a suit, in an effort to prejudice the jury against one of such parties." Moreover, Plaintiffs have not discharged their burden of showing that the jury's knowledge that Plaintiffs paid $64,800 to $81,000 for the land "was reasonably calculated to cause and probably did cause the rendition of an improper judgment" as required by Tex.R. Civ.P. 434.
Points 2, 3 and 4 challenge the jury's answer to Special Issue No. 2. Points 5, 6 and 7 challenge the jury's answer to Special Issue No. 3. Points 8, 9 and 10 challenge the jury's answer to Special Issue No. 6. Under the test stated in Martinez v. Delta Brands, Inc., 515 S.W.2d 263, at 265 (Tex. 1974), we find that there is evidence to support Special Issues 2, 3 and 6. Consequently, Points 2, 5 and 8 are overruled. We also find that the evidence is factually sufficient and that those answers are not "so against the great weight and preponderance of the evidence as to be manifestly unjust." In re King's Estate, 150 Tex. 662, 244 S.W.2d 660 (1951). The jury was the exclusive judge of these disputed facts. Neither the trial court nor the appellate court is authorized to substitute its judgment *915 for that of the jury when as here, there is evidence from which the jury could have believed either side's version on the disputed issues. Benoit v. Wilson, 150 Tex. 273, 239 S.W.2d 792 (1951). Consequently, Points 3, 4, 6, 7, 9 and 10 are overruled.
As to the temporary cessation of production, we note that the Railroad Commission records for 1972 show the following production of oil under the disputed lease:
January 244 bbls
February 228 bbls
March 27 bbls
April 0 bbls
May 1 bbl
June 230 bbls
July 259 bbls
August 225 bbls
September 274 bbls
October 344 bbls
November 249 bbls
December 284 bbls
There is testimony that the pump on the well failed and that the lessee sold the lease to another operator who restored the production.
Watson v. Rochmill, 137 Tex. 565, 155 S.W.2d 783, at 784 (1941), states in its discussion of an oil and gas lease:
It appears to be very well settled that under the terms of the lease, upon cessation of production after termination of the primary term, the lease automatically terminates.... The strictness of the above rule has been modified where there is only a temporary cessation of production due to sudden stoppage of the well or some mechanical break down of the equipment used in connection therewith, or the like. Under such circumstances there are authorities which hold that the lessee is entitled to a reasonable time in which to remedy the defect and resume production. (Emphasis added; authorities omitted)
Amoco Production Company v. Braslau, 561 S.W.2d 805, at 808 (Tex.1978), discussing the "determinable fee" of a term royalty which is analogous to the "determinable fee" of an oil and gas lease, stated:
(I)f "production" ceases, the interest terminates by its own terms. The courts have ingrafted upon that concept the holding that temporary cessation of production will not trigger the extinction of the interest.
See also Stuart v. Pundt, 338 S.W.2d 167 (Tex.Civ.App.San Antonio 1960, writ refused), Casey v. Western Oil & Gas, Inc., 611 S.W.2d 676 (Tex.Civ.App.Eastland 1980, writ filed), and R. Hemingway, The Law of Oil and Gas § 6.4(B) (1971).
Plaintiffs rely on the dissenting opinion in Sun Oil Company v. Samano, 607 S.W.2d 46 (Tex.Civ.App.Tyler 1980, writ granted). While we think the majority opinion in Samano is correct, that case is factually distinguishable from this case. In Samano the sixty-day reworking provision was in the same sentence as the lease term's definition. In this case the lease term is defined, after the property description and before the lessee's covenants and agreements, in the following language:
It is agreed that this lease shall remain in force for a term of 10 years from this date, and as long thereafter as oil, gas or casinghead gas, or either of them is produced from said land by lessee in commercial quantities.
On the next page of the lease, after the royalty provision, delay rental agreements, and offset well and development agreements, the lease states:
If at the expiration of the primary term, oil, gas or other minerals (sic) is not being produced on said land but Lessee is then engaged in drilling or reworking operations thereon, the lease shall remain in force for so long as operations are prosecuted with no cessation of more than thirty (30) consecutive days, and if they result in the production of oil, gas or other minerals (sic), so long thereafter as oil, gas or other mineral (sic) is produced from said land.
We hold that the continuous operations provision does not modify the lease agreement as to its term. Consequently, the general rule stated in Watson v. Rochmill, *916 supra, and Amoco Production Company v. Braslau, supra, is applicable. That rule supports the judgment of the trial court. We note that the trial court correctly instructed the jury that "temporary cessation" means "cessation of production due to sudden stoppage of the well or some mechanical breakdown of the equipment used in connection therewith, or the like, accompanied by such time as is reasonably necessary for a prudent operator to reinstate production with due diligence." The jury's finding of "temporary" cessation of production is supported by the evidence, and the trial court correctly held that the oil and gas lease is in full force and effect.
Concerning the question of drainage, Plaintiffs' expert testified to extensive drainage; however, Defendants' experts testified that there was little or no drainage and that additional development was not needed. The jury resolved the experts' disagreement. The testimony of John R. Thompson (petroleum engineer), Dorman Farmer (geologist), Frank Conselman, Ph.D. (geologist), and R. John Catlett (petroleum engineer) is legally and factually sufficient to support the jury's verdict as to drainage and reasonable development. See the authorities discussed in Vega Petroleum Corporation v. Hovey, 604 S.W.2d 388 (Tex. Civ.App.Eastland 1980, no writ).
Point 11 challenges the submission of Special Issue No. 8. This point is overruled because there was no timely objection to the submission of this issue. Moreover, any error is harmless in view of the jury's answer to Special Issue No. 2. Since the temporary cessation of production did not cause the lease to terminate under our Supreme Court's holdings in Rochmill and Braslau, the jury's finding of ratification is immaterial. Consequently, any error in the submission of the issue as to ratification would be harmless under the test stated in Tex.R.Civ.P. 434.
Point 12 asserts reversible error because the trial court permitted two lawyers for one Defendant to cross-examine the same witness. This point is overruled because Tex.R.Civ.P. 265(g) permits the trial court to grant leave for more than one counsel on each side to examine or cross-examine the same witness. Moreover, there is no showing of prejudice under Tex.R.Civ.P. 434.
Points 13 and 14 complain about the introduction of certain exhibits into evidence, and Point 15 argues that the cumulative effect of the asserted errors require reversal of the trial court's judgment. These points of error are also overruled. Most of the exhibits were cumulative of other evidence. The exhibits from the business records of Permian Corporation were properly admitted under Tex.Rev.Civ.Stat. Ann. art. 3737e (Vernon Supp. 1980). There is no showing of reversible error in accordance with the requirements of Tex.R.Civ.P. 434.
The judgment of the trial court is affirmed.
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944 P.2d 1114 (1997)
88 Wash.App. 470
STATE of Washington, Appellant,
v.
Leona Joan LIGHTLE and John Joseph Horner, Respondents.
Nos. 15871-3-III, 15872-1-III.
Court of Appeals of Washington, Division 3, Panel Eight.
October 14, 1997.
*1115 John V. Jensen, Deputy Prosecuting Attorney, Kennewick, for Appellant.
Larry C. Stephenson, Kennewick, for Respondents.
James W. Williams, Tribal Attorney, Confederated Tribes of Umatilla Indian Reservation, Pendleton, OR, for Amicus Curiae.
Lawrence C. Watters, Counsel, Columbia River Gorge Commission, White Salmon, for Amicus Curiae.
BROWN, Judge.
The issue in this case is whether a statute which makes it a crime to knowingly remove, dig into, or damage any historic or prehistoric archeological resource or site, or remove any archeological object from such site, is unconstitutionally vague. We hold it is not and reverse.
FACTS
A citizen complained that two individuals, later identified as Leona Lightle and John Horner, had been digging for arrowheads on Plymouth Island for three years. An archeologist has since identified the area as an Indian Burial site. Ms. Lightle and Mr. Horner were charged by amended information with violating RCW 27.53.060(1), which prohibits removing archeological objects from any archeological resource or site.[1] The trial court concluded the statute is unconstitutionally vague and dismissed the charges. The State appeals.
ISSUE
The issue presented is whether RCW 27.53.060(1) is void for vagueness.
ANALYSIS
A party challenging a penal statute as unconstitutionally vague bears the burden of proof beyond a reasonable doubt. State v. Myles, 127 Wash.2d 807, 812, 903 P.2d 979 (1995). When confronted with the issue the court must first determine whether the challenge involves a First Amendment right. If *1116 so, a facial challenge is presented. Otherwise, the court examines the issue in the context of the case by applying the statute to the particular facts of the case. City of Spokane v. Douglass, 115 Wash.2d 171, 181-82, 795 P.2d 693 (1990). Here, we have an applied challenge. Although the record is not clear, apparently the trial court used a facial analytical format to this problem. The correct analytical framework is "as applied."
To withstand a due process challenge for vagueness in this analytical framework, a statute must satisfy two prongs: it must define prohibited conduct with sufficient specificity to put citizens on notice of what conduct they must avoid, and preclude arbitrary and discriminatory law enforcement by defining standards which are not inherently subjective. State v. Coria, 120 Wash.2d 156, 163-64, 839 P.2d 890 (1992).
In determining whether a statute defines the prohibited conduct with sufficient specificity, the court considers whether the terms used "are so vague that persons of common intelligence must necessarily guess at its meaning...." See City of Tacoma v. Luvene, 118 Wash.2d 826, 844, 827 P.2d 1374 (1992). The statute is evaluated in light of the particular facts of the case, "inspecting the actual conduct of the party who challenges the ordinance and not by examining hypothetical situations at the periphery of the ordinance's scope." State v. Sigman, 118 Wash.2d 442, 446, 826 P.2d 144 (1992) (quoting City of Spokane v. Douglass, 115 Wash.2d 171, 182-83, 795 P.2d 693 (1990)).
The challenged statute provides: "On the private and public lands of this state it shall be unlawful for any person ... to knowingly remove, alter, dig into ... or destroy any historic or prehistoric archeological resource or site, or remove any archeological object from such site ... without having obtained a written permit from the director for such activities." RCW 27.53.060(1).
The term "archeological resource" is defined by RCW 27.53.040: "All sites, objects, structures, artifacts, implements, and locations of prehistorical or archeological interest, whether previously recorded or still unrecognized, including, but not limited to, those pertaining to prehistoric and historic American Indian or aboriginal burials, campsites, dwellings, and habitation sites, ... their artifacts and implements of culture such as projectile points, arrowheads, ... and other implements and artifacts of any material ... are hereby declared to be archeological resources."
The evidence showed Ms. Lightle and Mr. Horner were engaged in digging for and gathering arrowheads, items specifically mentioned in the definition of archeological resources. The statutory language is sufficient to put ordinary citizens on notice that such conduct is prohibited.
A statute is also unconstitutionally vague if it fails to "provide ascertainable standards of guilt to protect against arbitrary enforcement." Douglass, 115 Wash.2d at 178, 795 P.2d 693. This occurs when a statute uses inherently subjective terms. State v. Russell, 69 Wash.App. 237, 246, 848 P.2d 743, review denied, 122 Wash.2d 1003, 859 P.2d 603 (1993). While the term "of archeological interest" may involve a subjective judgment, the judgment would be that of an archeologist, not a law enforcement officer. Thus, the term does not create a risk of arbitrary enforcement.
CONCLUSION
The statute is not unconstitutionally vague.
Reverse and remand for trial.
SWEENEY, C.J., and KURTZ, J., concur.
NOTES
[1] The briefs appear to imply that a person may be charged under this statute with the felony of disturbing an Indian gravesite. That crime is properly charged under RCW 27.44.040. Violation of RCW 27.53.060(1) is a misdemeanor. RCW 27.53.090(1).
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790 P.2d 920 (1989)
117 Idaho 627
Patrick CONLEY, Petitioner-Appellant,
v.
Larry LOONEY, Carol Dick, Darwin Young, Wm. G. Carringer, Richard Van Zante, Marsha Wilke, John Doe (more readily identified as members of the State Tax Commission), Defendants-Respondents.
No. 17509.
Court of Appeals of Idaho.
December 1, 1989.
Petition for Review Denied May 17, 1990.
*921 Patrick Conley, Boise, Pro se.
Quane, Smith, Howard & Hull, Boise, for defendants-respondents. Allyn L. Sweeney argued.
WESTON, Judge Pro Tem.
Patrick Conley asks us to review a summary judgment dismissing a tort action he brought against the members of the State Tax Commission. Conley alleged that the Commissioners had acted improperly and with malice in their determination of his sales tax liability on an automobile. The district court dismissed Conley's suit and imposed a $1,000 sanction under I.R.C.P. 11. On appeal, Conley contends that (1) he was entitled to a default judgment because the Commissioners failed to answer his complaint within 20 days; (2) the district court erred in failing to grant his motion to remove the Commissioners' attorney; (3) the Commissioners did not correctly apply the Idaho Sales Tax Act, which Conley claims to be unconstitutional; and (4) the $1,000 sanction was improperly imposed against him. We uphold the dismissal of Conley's complaint, but remand for findings on the imposition of the sanction.
In 1983 Conley claimed an exemption from the payment of Idaho sales tax on an automobile purchased in Boise. The basis for the exemption was that he lived in Oregon and the automobile was to be used only in that state. Conley listed an Ontario, Oregon, address on his claim of exemption. In the same year, however, he filed an Idaho resident income tax return and claimed a homeowner's tax exemption on a residence in Ada County. In January, 1986, Conley received a Notice of Deficiency Determination for sales tax claimed due on the purchased automobile, together with penalties and interest.
In a twelve page letter, Conley objected to the Notice of Deficiency Determination. He charged the Tax Commission with various constitutional violations, extortion and general lawlessness. The Tax Commission acknowledged the filing of a protest and set the matter for an informal hearing. Following the hearing, the Tax Commission informed Conley that a sales tax was due on the automobile. Conley was also informed of his right to appeal the Tax Commission decision either to the district court or to the Idaho State Board of Tax Appeals. Conley did not appeal.
*922 In late December, 1987, more than sixteen months after the Tax Commission decision was rendered, and well after the time for any appeal from such decision, Conley filed this lawsuit. The complaint sought money damages from members of the Tax Commission acting in their individual capacities. Conley alleged that the defendants violated his constitutional rights and engaged in other "tortious conduct" in the determination of the tax deficiency. On February 9, 1987, Conley caused to be filed a "Notice of Intent to File Tort Claim" with the Secretary of State. Nonetheless, in both the trial court and on appeal Conley later argued that this case is not a claim under the state tort claims act because he is suing the members of the Tax Commission as individuals.
After the complaint was filed, the defendants' attorney filed a motion to dismiss or in the alternative for summary judgment, which was supported by a Tax Commission attorney's affidavit. Conley then filed motions for default judgment and for "dismissal" of the defendants' attorney. The defendants moved the trial court for sanctions under I.R.C.P. 11, contending that Conley's motions were frivolous. After a hearing, the trial court denied Conley's two motions, but granted the defendants' motion to dismiss or in the alternative for summary judgment. The defendants' motion for I.R.C.P. 11 sanctions was also granted upon the court's finding that Conley's motions and the entire action were frivolous. This appeal followed.
I
MOTION FOR DEFAULT
Conley's complaint was filed on December 18, 1987. The defendants' attorney filed a notice of appearance on January 12, 1988, and a motion to dismiss or in the alternative for summary judgment on February 1, 1988. Conley then filed a motion for default judgment on February 11. As noted, his motion for entry of default was denied by the trial court.
The trial court's denial of this motion was not error. The motion for default was filed after the defendants had appeared in the case and had moved either for the dismissal of the action or for summary judgment. Although Conley rejects this pleading as not being an "answer" in the form required by I.R.C.P. 8(b), his argument ignores the plain wording of I.R.C.P. 12(b). Under that rule, a party may raise the failure to state a claim for relief by motion rather than by answer. If the defense is raised by motion, then an answer need not be filed until ten (10) days after the motion is denied. Thus, the filing of the motion to dismiss or for summary judgment not only constituted an appearance but also extended the twenty day answer period. Bissett v. Unnamed Members of the Political Compact, 111 Idaho 863, 727 P.2d 1291 (Ct.App. 1986) (review denied). Conley was not entitled to a default judgment.
II
REMOVAL OF DEFENDANTS' ATTORNEY
The appellant also moved the trial court to "dismiss" the defendants' attorney. Although the fact does not appear of record, Conley contends that the defendants' attorney was hired by the State of Idaho. He argues that the state could not hire the attorney because the state itself was not a named defendant in the action and because the named defendants were not sued in their capacity as state employees.
The trial court denied the motion to "dismiss" counsel as frivolous. We agree. The complaint was brought against the defendants for actions performed by them in their capacity as members of the Tax Commission. The alleged "tortious conduct" giving rise to the suit was the determination of the tax deficiency and the evaluation of the appellant's objection to the deficiency. Thus, it manifestly appears that the defendants were sued as state employees for acts or omissions committed within the course and scope of their employment. Pursuant to I.C. § 6-903(b), the state had an affirmative duty to furnish legal counsel for the defendants. Under that code section, *923 governmental entities have a duty to defend any employee who is sued for acts committed within the course and scope of his or her employment. Since I.C. § 6-903 is dispositive of this issue, we need not consider whether Conley had standing to object to the defendants' attorney or whether "dismissal" of the defendants' attorney would have been a remedy available to the trial court.
III
DISMISSAL OF THE COMPLAINT
The gravamen of Conley's complaint was that the determination and collection of a sales tax in this case was unconstitutional and thus tortious. Conley also asserted that even if the Tax Commission followed statutory procedures, the procedures themselves were unconstitutional. Conley asked the district court to hold that in attempting to collect an unconstitutional tax in an unconstitutional manner, the defendants were "joint tort-feasors."
Pursuant to I.C. § 63-3049, after the Tax Commission determined the tax deficiency, Conley could have filed an action in the district court or could have taken an administrative appeal. It is clear from the record that he did not avail himself of either right. Having failed to exercise those rights, he cannot now collaterally attack the tax deficiency determination in an independent action. Bills v. State Dept. of Revenue and Taxation, 110 Idaho 113, 714 P.2d 82 (Ct.App. 1986) (review denied); Parsons v. Idaho State Tax Commission, 110 Idaho 572, 716 P.2d 1344 (Ct. App. 1986).
Conley argues that this action does not seek to relitigate issues that were extant in the administrative determination, but is instead an independent action raising tort issues. The argument is not persuasive. The basis of his claim is that the sales taxes assessment and collection statutes are unconstitutional and that the defendants' conduct is therefore tortious. The constitutionality of a sales tax obligation must be raised and pursued in the assessment and collection proceeding. State Tax Commission v. Western Electronics, Inc., 99 Idaho 226, 580 P.2d 72 (1978). Moreover, even if the appellant's action were somehow viewed as an independent tort action, it would be without merit. Conley has questioned the constitutionality of the sales tax statutes and regulations; he has not claimed that the defendants failed to follow those statutes and regulations. Absent such a claim, there is no basis to postulate personal misconduct by the defendants giving rise to any potential tort liability. Therefore, we uphold the dismissal of Conley's complaint.
IV
I.R.C.P. 11 SANCTION
As we have mentioned, the defendants filed a motion for I.R.C.P. 11 sanctions because of Conley's unsuccessful motion to "dismiss" the defendants' attorney and motion for default judgment. The trial court specifically found that each of Conley's motions was frivolous. Next, the trial court found that the entire action was frivolous. Specifically, the judge stated:
And I just from reading these matters I think this whole thing is frivolous, and I don't think you read the law, and I don't think you did it properly, and I'm going to assess a thousand dollars attorney fees under the motion for sanctions. I think the record will amply bear out this statement.
The trial court then imposed a sanction against Conley in the form of an attorney fee award of $1,000. It cannot be discerned from the record whether the trial court imposed this sanction only because of the two motions (and merely noted in passing that the entire action was frivolous) or whether the sanction was imposed, at least in part, because the entire action was deemed frivolous.
This Court recently decided that I.R.C.P. 11 sanctions should not be applied to make a "lump-sum compensatory attorney fee award." Kent v. Pence, 116 Idaho 22, 773 P.2d 290 (Ct.App. 1989). The Kent court further stated that "[i]n our view, Rule 11(a)(1) is not a broad compensatory law. *924 It is a court management tool. The power to impose sanctions under this rule is exercised narrowly, focusing on discrete pleading abuses or other types of litigative misconduct within the overall course of a lawsuit." Id. at 23, 773 P.2d at 291. Here, it is impossible to determine from the record whether or not the I.R.C.P. 11 sanction was imposed for particular litigative misconduct (the filing of frivolous motions) or as a broad form of compensation in the form of an award of attorney fees incurred to defend the entire action. As noted in Kent, such an attorney fee award could be made in a tort claim case only in compliance with I.C. § 6-918A.
Accordingly, the order imposing this sanction is vacated, and the case is remanded for further proceedings on that issue. In all other respects, the summary judgment dismissing Conley's complaint is affirmed. Costs (exclusive of attorney fees) to respondents.
BURNETT, Acting C.J., and SWANSTROM, J., concur.
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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 11-12947 MAY 23, 2012
Non-Argument Calendar JOHN LEY
________________________ CLERK
D.C. Docket No. 2:09-cv-00329-SPC
RELIABLE SALVAGE AND TOWING, INC.,
Plaintiff-Appellee,
versus
MICHAEL BIVONA,
in personam,
Defendant-Appellant.
___________________________
Appeal from the United States District Court
for the Middle District of Florida
____________________________
(May 23, 2012)
Before BARKETT, PRYOR and JORDAN, Circuit Judges.
PER CURIAM:
I
On Easter Sunday, March 21, 2008, Michael Bivona, ran his vessel—a 35-foot
Sea Ray—into a shoal in Gasparilla Pass near Boca Grande, Florida. The incident left
the Sea Ray listing 30 degrees in 10 inches of water. Although the weather at the time
was calm, a cold front and associated storm were expected that evening or the next
day, and the high tide in the area would not bring sufficient amounts of water to float
the Sea Ray free for several days. After being summoned by Mr. Bivona, Reliable
Salvage and Towing, Inc. successfully towed the Sea Ray from the shoal into deeper
water with the use of several vessels.
Reliable sent an invoice to Mr. Bivona’s insurer in the amount of $7,523.10 for
the salvage operation, but the insurer did not pay the invoice because the insurance
policy had lapsed. Reliable then asked Mr. Bivona to pay the invoice. Mr. Bivona,
however, maintained that the insurer’s denial must have been a mistake. But even
after he was unsuccessful in getting the insurer to cover the salvage by Reliable, Mr.
Bivona did not make any payment to Reliable.
Invoking admiralty jurisdiction, Reliable filed a complaint in May of 2009
against Mr. Bivona in personam and the Sea Ray in rem, asserting a claim for salvage
(based on contract salvage and pure salvage theories) and for a maritime lien.1 A
1
The resolution of the in rem claim against the Sea Ray is not at issue in this appeal.
2
salvage claim may be based on either a contract or on the theory of pure salvage. In
order to establish a claim for pure salvage, “a salvor must establish three elements:”
a “marine peril;” “service voluntarily rendered when not required as an existing duty
or from a special contract;” and “success in whole or in part, or ... service ...
contribut[ing] to such success.” Flagship Marine Servs. v. Belcher Towing, 966 F.2d
602, 605 (11th Cir. 1992) (quoting The Sabine, 101 U.S. 384, 384 (1879)).
After a bench trial, the district court concluded that the Reliable salvage
contract signed by Mr. Bivona was not enforceable because it was missing essential
terms, including the actual rate and costs of the salvage operation. The district court,
however, found in favor of Reliable on a pure salvage theory and ordered Mr. Bivona
to pay $14,000 for the towing of the Sea Ray. The district court also granted
Reliable’s motion for attorney’s fees ($35,592.50) and costs ($991.33), finding that
Mr. Bivona’s defense on the salvage claim was frivolous and in bad faith.
Mr. Bivona now appeals the award of attorney’s fees and costs. Because we
find no abuse of discretion, see Compania Galeana, S.A. v. M/V Caribbean Mara,
565 F.2d 358, 360 (5th Cir. 1978) (reviewing denial of attorney’s fees and costs in
admiralty case for abuse of discretion), we affirm.
II
The general rule in admiralty is that, absent a governing statute or applicable
3
contractual provision, each party (including a prevailing party) will bear its own
attorney’s fees and costs. See, e.g., Misener Marine Construction, Inc. v. Norfolk
Dredging Co., 594 F.3d 832, 838 (11th Cir. 2010). But this general rule, like most,
is subject to some exceptions. One exception is that attorney’s fees and costs may be
awarded against a party who “acted in bad faith in the course of the litigation.” See
id. (internal quotation marks and citations omitted). See also Offshore Marine
Towing, Inc. v. MR23, 412 F.3d 1254, 1256 (11th Cir. 2005) (“Attorney’s fees have
been awarded [in admiralty actions] when the losing party has acted in bad faith or
vexatiously.”). For example, in Vaughan v. Atkinson, 369 U.S. 527, 530-31 (1962),
the Supreme Court held that an injured seaman who had been denied maintenance and
cure for a number of years could recover attorney’s fees and costs (described as a
species of damages) as a matter of equity under admiralty law because the
employer/ship owner had not conducted an investigation and had refused to admit or
deny the claim prior to trial, thereby forcing the seaman to hire counsel and file a
lawsuit.
A
Mr. Bivona, in an attempt to demonstrate that he litigated in good faith, points
to the district court’s finding that there was no valid contract for salvage. But the
existence of a valid defense to one of Reliable’s theories does not mean that Mr.
4
Bivona’s defense to the pure salvage claim could not be found to be frivolous. Cf.
Reed v. The Great Lakes Companies, Inc., 330 F.3d 931, 936 (7th Cir. 2003) (“The
fact that Reed’s accommodation claim ... was not frivolous would be no bar to
imposing sanctions for putting his opponent to the expense of opposing a frivolous
claim (or defense) just because he had a nonfrivolous claim as well.”).
In addition, Mr. Bivona asserts that the unliquidated value of a “pure salvage”
award could only be determined by the district court after consideration of many
factors. As Mr. Bivona puts it, “[r]equiring Reliable to meet its burden of proof at
trial on its claim for pure salvage is not evidence of bad faith or inequitable conduct.”
On this record, and given the applicable standard of review, we disagree.
In opening statement and in closing argument, Mr. Bivona asserted that the Sea
Ray was not in peril because the vessel was not taking on water and there was no
inclement weather. As a result, he argued, Reliable failed to satisfy one of the
elements of its pure salvage claim. See R2 at 472-73, 662. This argument, however,
was not well-founded given the weather conditions the Sea Ray would be facing for
several days had it not been assisted by Reliable. See, e.g., The Leonie O. Louise, 4
F.2d 699, 700 (5th Cir. 1925) (230-ton vessel which went aground on a river bank
due to a storm, with five feet of water under its stern at low tide, was in peril, so that
salvage award was proper: “Although the danger was not imminent, it was reasonably
5
to be apprehended, and there was a pressing necessity for prompt action to return the
[vessel] to the water.”); Fort Myers Shell & Dredging Co. v. Barge NBC512, 404 F.2d
137, 139 (5th Cir. 1968) (refusing to hold, as a matter of law, that barges which had
run aground on beaches in the Gulf of Mexico were not in peril for purposes of
salvage claim, as there were pilings nearby and there were sudden storms in the Gulf
at all times of the year). Moreover, when he testified, Mr. Bivona conceded that
Reliable Salvage had performed a “service and ... should be entitled to payment.” R2
at 564. He also acknowledged that his insurer had not made any payment in the three
years since the incident, and that if his insurance claim failed, “it is my obligation.”
See R2 at 565. See also R2 at 646. Finally, he said that it should have taken him only
six to eight weeks following the insurer’s denial of the claim to get together with
Reliable and make some type of arrangement for payment. See R2 at 648.2
We also note that this is not a case where a vessel owner refused to pay the
exorbitant and unjustified demand of a salvor and was forced to go to trial. Mr.
Bivona never argued that the sum billed by Reliable was excessive, and the district
court ended up awarding Reliable more than the amount invoiced.
B
2
Mr. Bivona testified that he had made several offers to Reliable, but those offers were all
rejected. See R2 at 648-49. As far as we can tell, there is no evidence in the trial record about the
substance of those offers.
6
Mr. Bivona relies on Galveston County Navigation District No. 1 v. Hopson
Towing Co., Inc., 92 F.3d 353 (5th Cir. 1996), but that case does not support his
position. In Galveston County, a lawsuit ensued after a barge being pushed by the
defendants’ tug boat allided with a drawbridge owned by the plaintiff. See id. at 354.
Although the parties agreed to the amount of damage to the bridge, they could not
agree on the apportionment of fault. See id. Following a bench trial, the district court
entered judgment for the plaintiff and ordered the defendants to pay the plaintiff’s
attorney’s fees because they did not act in an “equitable manner” by failing to pay for
damages that the tug boat had caused and that the defendants had agreed were
reasonable. The Fifth Circuit reversed the district court’s award of attorney’s fees,
holding that the failure to act in an “equitable manner” does not support an award of
attorney’s fees and that the defendants’ defense—i.e., that the plaintiff’s failure to
timely open the bridge wholly or partially contributed to the allision—was “legally
reasonable” and supported with evidence at trial. As a result, the defense was not
frivolous or asserted in bad faith. Id. at 360.
In contrast, Mr. Bivona conceded Reliable was owed a salvage fee for its
services and never argued that the amount originally billed by Reliable was
unreasonable. He also failed to pay Reliable when his insurer denied the claim,
though he recognized it was then his obligation to do so.
7
III
The abuse of discretion standard “recognizes there is a range of choice within
which we will not reverse the district court even if we might have reached a different
decision.” Forsyth County v. U.S. Army Corps of Engineers, 633 F.3d 1032, 1039
(11th Cir. 2011) (internal quotation marks and citation omitted). Under this standard,
no reversible error has been shown, and the district court’s rulings and judgment are
therefore affirmed.
AFFIRMED.
8
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66 F.3d 334
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.Richard M. FATHER, Plaintiff-Appellant,v.The BOEING COMPANY; Seattle Professional EngineeringEmployees Association; Department of Social andHealth Services of the State ofWashington, Defendants-Appellees.
No. 95-35029.
United States Court of Appeals, Ninth Circuit.
Submitted Aug. 16, 1995.*Decided Sept. 8, 1995.
Before: ALARCON, FERNANDEZ, and RYMER, Circuit Judges.
1
MEMORANDUM**
2
Richard M. Father, a naturalized United States citizen born in Poland, appeals pro se the district court's grant of summary judgment for defendants on his claims brought pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C. Secs. 2000e-2000e-17 ("Title VII"), and the Americans with Disabilities Act of 1990, 42 U.S.C. Secs. 12111-12117 ("ADA"). We dismiss the appeal for lack of jurisdiction.
3
We have jurisdiction only over final orders of the district court. See 28 U.S.C. Sec. 1291. Without a Rule 54(b) certification, orders dismissing some but not all of the claims are not final orders appealable under 28 U.S.C. Sec. 1291. See Fed.R.Civ.P. 54(b); Frank Briscoe Co. v. Morrison-Knudsen Co., 776 F.2d 1414, 1416 (9th Cir.1985). Here, the district court did not rule on Father's ADA claim against Boeing and then denied Father's motion for certification under Fed.R.Civ.P. 54(b). Accordingly, we lack jurisdiction to consider the appeal. See Frank Briscoe Co., 776 F.2d at 1416.
DISMISSED.1
*
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 remand, the district court should consider Father's pending motions for reconsideration filed pursuant to Fed.R.Civ.P. 60(b). See Fed.R.App.P. 4(a)(4); Tripati v. Henman, 845 F.2d 205, 206 (9th Cir.) (per curiam), cert. denied, 488 U.S. 982 (1988); Davis v. United States, 667 F.2d 822, 824 (9th Cir.1982)
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30 So.3d 757 (2009)
Paul DeBOURGH
v.
B & N ROOFING.
No. 2009 CA 0953.
Court of Appeal of Louisiana, First Circuit.
December 23, 2009.
*758 Alfred F. McCaleb, III, Livingston, LA, for Plaintiff-Appellee Paul DeBourgh.
Stephen E. Broyles, Baton Rouge, LA, for Defendant-Appellant Tangi Construction Co., Inc.
Douglas T. Curet, Hammond, LA, for Defendant-Appellee B & N Roofing.
Before WHIPPLE, HUGHES, and WELCH, JJ.
WELCH, J.
Defendant, Tangi Construction Company, Inc., (Tangi) appeals the denial of its cross-claim for indemnification against co-defendant B & N Roofing, Inc. We reverse and render judgment recognizing Tangi's right to indemnification.
BACKGROUND
On December 13, 2006, Paul DeBourgh was working on a roof when he lost his balance and fell to the ground, sustaining numerous injuries as a result. At the time, Mr. DeBourgh was working for B & N Roofing, which had been engaged to install a roof on a home being constructed by Tangi.
On April 5, 2007, Mr. DeBourgh filed this disputed claim for compensation in the Office of Workers' Compensation (OWC) against Tangi and B & N Roofing. Tangi and B & N Roofing denied liability and filed cross-claims against each other. In its cross-claim, Tangi asserted that if it was found liable to pay benefits to Mr. DeBourgh, it was entitled to full indemnification for all amounts paid or to be paid pursuant to La. R.S. 23:1063. In its cross-claim and answer to Tangi's cross-claim, B & N Roofing urged that it had been told by Tangi that B & N Roofing was covered by Tangi's workers' compensation insurance and relied on these representations. B & N Roofing sought damages resulting from Tangi's alleged breach of contract and its failure to provide B & N Roofing with a defense, economic losses caused by Tangi's failure to resolve Mr. DeBourgh's claim, and expenses incurred in defending the main demand.
Tangi and B & N Roofing sought to establish at trial that Mr. DeBourgh had been drinking prior to his fall and that Mr. DeBourgh committed fraud resulting in a forfeiture of his benefits. B & N Roofing also claimed that Mr. DeBourgh was an independent contractor rather than its employee. B & N Roofing did not present any evidence in support of its assertion that Tangi agreed to provide it with workers' compensation coverage. There was no evidence that either B & N Roofing or *759 Tangi had ever paid Mr. DeBourgh wage benefits, and while there was some testimony that B & N Roofing may have paid for some of Mr. DeBourgh's medications, there were no specifics as to the amounts paid.
The workers' compensation judge (WCJ) determined that the evidence showed there was a job related accident, the result of which Mr. DeBourgh suffered serious injuries preventing him from obtaining gainful employment for at least one year. The WCJ concluded that Mr. DeBourgh was an employee of B & N Roofing at the time of the accident and that Tangi was his statutory employer. The defenses raised by Tangi and B & N Roofing were rejected, and judgment was entered in favor of Mr. DeBourgh and against Tangi & B & N Roofing jointly, severally and in solido. Mr. DeBourgh was awarded indemnity benefits in the amount of $176.76 per week from December 20, 2006 through January 18, 2008, past and future medical benefits, $2,000.00 in penalties for the failure of Tangi and B & N Roofing to reasonably controvert the claim, and $5,000.00 in attorney fees. The WCJ also denied Tangi and B & N Roofing's cross-claims, dismissing those claims with prejudice.
Tangi appealed, contesting only the WCJ's denial of its Section 1063 indemnification claim against B & N Roofing.
DISCUSSION
Tangi submits that the WCJ committed legal error in refusing to grant judgment in its favor for indemnification against B & N Roofing. We agree.
Louisiana Revised Statutes 23:1063(A) provides that a principal contractor, when sued by an employee of a subcontractor, shall be entitled to indemnity from his subcontractor for compensation payments made by the principal contractor on account of accidental injury to the subcontractor's employee. The WCJ determined that Tangi was Mr. DeBourgh's statutory employer, B & N Roofing was Mr. DeBourgh's direct employer, and they were solidarity liable for workers' compensation benefits. Under similar circumstances, the Louisiana Supreme Court held that it was error to fail to render judgment in favor of a statutory principal-employer on its indemnification claim against a direct employer. In Jones v. Southern Tupelo Lumber Company, 257 La. 869, 244 So.2d 815 (1971), the court held that pursuant to La. R.S. 23:1063, a statutory employer was entitled to judgment against the injured workers' immediate employer for any and all workers' compensation benefits paid by the statutory employer to the injured worker, and rendered judgment for all sums heretofore or hereafter paid by the statutory employer under the judgment on the principal demand. Jones, 257 La. at 875-876, 244 So.2d at 817.
The record shows that Tangi did not pay any compensation benefits to Mr. DeBourgh prior to the time the WCJ entered judgment dismissing Tangi's crossclaim. Nevertheless, the WCJ should have recognized Tangi's statutory right to indemnification from B & N Roofing for compensation payments made by Tangi to Mr. DeBourgh pursuant to the judgment rendered on the principal demand. Therefore, the WCJ's dismissal of Tangi's cross-claim against B & N Roofing must be reversed.[1]
CONCLUSION
For the foregoing reasons, judgment is entered in favor of Tangi Construction *760 Company, Inc. against B & N Roofing for all compensation payments heretofore or hereafter paid by Tangi Construction Company, Inc., to plaintiff, Paul DeBourgh, under the judgment on the principal demand. All costs of this proceeding are assessed to B & N Roofing.
REVERSED AND RENDERED.
NOTES
[1] A settlement entered into between Mr. DeBourgh and Tangi after the entry of judgment in the OWC appears in the record. The OWC is the proper forum to determine the value of Tangi's indemnification claim and should the need arise, Tangi may seek a judgment setting the amount of its indemnification claim in the OWC.
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Abel /s
Fourth Court of Appeals
San Antonio, Texas
August 5, 2014
No. 04-13-00593-CV
Venus MINSAL,
Appellant
v.
Abel H. GARCIA,
Appellee
From the 166th Judicial District Court, Bexar County, Texas
Trial Court No. 2012-CI-18466
Honorable Antonia Arteaga, Judge Presiding
ORDER
On July 28, 2014, appellee filed a motion titled, “Motion to Reconsider Order Granting
Appellant’s Motion to Amend Brief and Alternatively Motion for Additional Time to Respond to
Amended Brief and for Attorney’s Fees.”
Appellee’s motion for reconsideration of our previous order permitting appellant to
amend her brief is DENIED. Appellee’s motion for attorney’s fees is DENIED. Appellee’s
motion for additional time to respond to appellant’s amended brief is GRANTED as follows:
appellee may file an amended or a supplemental brief responding to appellant’s amended brief
no later than September 4, 2014.
_________________________________
Karen Angelini, Justice
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the said
court on this 5th day of August, 2014.
___________________________________
Keith E. Hottle
Clerk of Court
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85 F.3d 363
UNITED STATES of America, Appellee,v.Kanchan Bala SHARMA, also known as Kay Bala, also known asKay Daken, also known as Kanchan B. Daken, Appellant.
No. 95-2432.
United States Court of Appeals,Eighth Circuit.
Submitted Dec. 12, 1995.Decided June 4, 1996.
Bruce C. Houdek, Kansas City, MO, argued, for appellant.
Linda L. Parker, Asst. U.S. Atty., Kansas City, MO, argued, for appellee.
Before FAGG, HEANEY, and WOLLMAN, Circuit Judges.
WOLLMAN, Circuit Judge.
1
Defendant Kanchan Bala Sharma appeals from the imposition at sentencing of a fine of $100,000. We vacate the district court's fine assessment and remand for reconsideration of the fine.
I. Background
2
On May 13, 1991, FBI agents received information from the Department of Housing and Urban Development (HUD) that more than one million dollars had been skimmed from seven different HUD-insured and/or co-insured multi-family housing projects that were owned and operated by Sharma and several of her family members.
3
Sharma pleaded guilty to a one-count information charging her with program fraud in the amount of $101,467.89 in violation of 18 U.S.C. §§ 666, and 2. Her offense level was calculated to be twelve, with a criminal history category of one, providing for a sentencing range of ten to sixteen months' imprisonment (part of the term of which may be satisfied by supervised release) and a fine of $3,000 to $30,000. See U.S.S.G. §§ 5C1.1(d) and 5E1.2(c)(3).
4
The district court initially sentenced Sharma to five months' imprisonment and three years' supervised release. It ordered her to pay $101,467.89 in restitution and assessed a fine of $100,000. In a motion for correction of sentence, Sharma contested the $100,000 fine as an improper departure from the Guidelines. In response to this motion, the district court vacated the first sentence and gave the required notice that the court was considering an upward departure with respect to the fine. See Burns v. United States, 501 U.S. 129, 138, 111 S.Ct. 2182, 2187, 115 L.Ed.2d 123 (1991) (requiring a district court to give notice of intent to depart from Guidelines). The court then entered an order clarifying that the sentence was not an upward departure under the Guidelines, but again noted that if the fine were construed to be a departure the order was notice that the court was contemplating such a departure. Upon resentencing, in addition to imprisonment, supervised release, and restitution, a $100,000 fine was again imposed. Sharma appeals that fine, arguing that it falls outside the applicable guidelines range; that the court failed to adequately justify its upward departure from that range; and that even if the fine does not constitute an upward departure, the court failed to consider the required factors set forth in U.S.S.G. § 5E1.2(d), before setting the amount of the fine.
II. The Fine
5
The Guidelines set out a procedure for a district court to follow in determining the amount, if any, that a defendant should be fined. Section 5E1.2(a) specifies that "the court shall impose a fine in all cases, except where the defendant establishes that he is unable to pay and is not likely to become able to pay any fine." If the district court determines that a fine is appropriate, it must then look to section 5E1.2(c) for the appropriate fine range. The Guidelines further require the court to consider a list of specified factors in determining the amount of the fine. See U.S.S.G. § 5E1.2(d).
6
The fine imposed must be within the specified range unless: 1) the defendant establishes an inability to pay; 2) the fine is insufficient to pay the government's costs in relation to defendant's incarceration; 3) a statute requires otherwise; or 4) the district court determines that departure is appropriate. U.S.S.G. § 5E1.2(b),(f),(i), and application note 4.
7
In addition to the requirement that the district court consider the section 5E1.2(d) factors--a prerequisite to the imposition of any fine--the district court's burden is enhanced when it decides to depart from the specified guidelines range. Departure from the applicable range is permissible only upon a finding that "there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines that should result in a sentence different from that described." 18 U.S.C. § 3553(b); see also United States v. Duranseau, 26 F.3d 804, 811 (8th Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 341, 130 L.Ed.2d 298 (1994). To aid in this analysis, the Sentencing Commission has provided a non-restrictive list of certain factors that were not fully considered in formulating the Guidelines and would thus serve as an appropriate basis for departure. See U.S.S.G. § 5K2. Departure is appropriate "only in the extraordinary case--the case that falls outside the heartland for the offense of the conviction." United States v. McFarlane, 64 F.3d 1235, 1239 (8th Cir.1995) (quoting United States v. Jackson, 30 F.3d 199, 201 (1st Cir.1994)). The statutory maximum, which is set out in 18 U.S.C. § 3571(b) for various categories of offenses, establishes a ceiling above which the district court may not depart.
8
The district court's imposition of a fine above the applicable $3,000 to $30,000 range constitutes an upward departure.1 Accordingly, we review the fine using the three-step analysis applicable to an upward departure. See United States v. Otto, 64 F.3d 367, 371 (8th Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 956, 133 L.Ed.2d 879 (1996). We consider: (1) whether, as a question of law, the circumstances the district court relied on for departure are sufficiently unusual in a kind or degree to warrant departure; 2) whether, as a question of fact, the circumstances justifying departure actually exist; and 3) whether the sentence is reasonable. Id.
9
With respect to the first two questions, the district court justified its upward departure on the grounds that "the Guidelines fail in any measure to reflect the willful, deliberate, and repetitious malfeasance of defendant in the management of the property and its woefully deplorable condition when she returned it to HUD." Articulated as such, the district court's reason for departure may very well have been appropriate. The record, however, is devoid of any factual support for the court's reasoning.
10
The government arrived at Sharma's resentencing hearing prepared to offer the testimony of a witness who would establish the condition of the property when it was returned to HUD. At that point, Sharma's counsel requested a continuance to prepare rebuttal evidence on the issue. The request was denied, and the $100,000 fine was imposed without hearing evidence from either party on the issue.
11
Without record support, the district court's conclusory statements justifying the departure do not afford us an adequate basis to determine whether an upward departure from the fine range was based on a factor not adequately considered in the Guidelines. See United States v. Cammisano, 917 F.2d 1057, 1064 (8th Cir.1990). Thus, we vacate the imposition of the fine and remand the case for the entry of further findings following the introduction of such evidence as the parties may offer concerning the appropriateness of an upward departure. In addition to a consideration of the factors set forth in section 5E1.2(d) of the Guidelines, any decision to depart upward from the guideline range will, of course, include an explanation for both the district court's decision to depart and the extent of the departure. Id. at 1064.
12
The fine is vacated, and the case is remanded to the district court for further proceedings consistent with this opinion.
1
We reject the argument that the alternative maximum fine provision of U.S.S.G. § 5E1.2, application note 2, trumps the applicable Guidelines range and thus renders the fine of $100,000 not a departure. Although the Guidelines commentary does provide that a departure may be warranted when two times either the amount of gain to the defendant or the amount of loss caused by the defendant exceeds the maximum of the fine guideline range, such a deviation remains a departure, and as such must be justified under the provisions of 18 U.S.C. § 3553. See U.S.S.G. § 5E1.2, application note 4
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 08-7698
DAVID CHARLES WILLIS,
Plaintiff - Appellant,
v.
NEWMAN, Officer; GOINS; FRANCIS, Sgt.; RANSOM, Officer;
LAWSON, Sgt.; KILLINSON, Officer; DOCTOR MUSSELMAN; JENKINS,
Lt.; MOORE, Capt.; BRUBAKER, Major,
Defendants - Appellees.
Appeal from the United States District Court for the Western
District of Virginia, at Roanoke. Jackson L. Kiser, Senior
District Judge. (7:08-cv-00422-jlk-mfu)
Submitted: January 15, 2009 Decided: January 22, 2009
Before MOTZ and SHEDD, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Affirmed by unpublished per curiam opinion.
David Charles Willis, Appellant Pro Se.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
David Charles Willis appeals the district court’s
order dismissing his 42 U.S.C. § 1983 (2000) complaint under 28
U.S.C. § 1915A(b) (2006). We have reviewed the record and find
no reversible error. Accordingly, we affirm for the reasons
stated by the district court. Willis v. Newman, No. 7:08-cv-
00422-jlk-mfu (W.D. Va. July 28, 2008). 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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<HEAD>
<META NAME="Generator" CONTENT="WordPerfect 9">
<TITLE></TITLE>
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<BODY TEXT="#000000" LINK="#0000ff" VLINK="#551a8b" ALINK="#ff0000" BGCOLOR="#c0c0c0">
<P><SPAN STYLE="font-size: 14pt"><STRONG><CENTER>TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN</STRONG></SPAN></CENTER>
</P>
<BR WP="BR1"><BR WP="BR2">
<BR WP="BR1"><BR WP="BR2">
<P><HR ALIGN="CENTER" WIDTH="26%">
</P>
<STRONG><CENTER>NO. 03-9<A NAME="1">9</A>-00<A NAME="2">284</A>-CV</CENTER>
</STRONG>
<P><HR ALIGN="CENTER" WIDTH="26%">
</P>
<STRONG></STRONG><CENTER><A NAME="3">Bobby E. Haley</A>, Appellant</CENTER>
<BR WP="BR1"><BR WP="BR2">
<P><STRONG><CENTER>v.</CENTER>
</STRONG></P>
<BR WP="BR1"><BR WP="BR2">
<P><STRONG><CENTER><A NAME="4">Associates Commercial Corporation</A>, Appellee</CENTER>
</STRONG></P>
<BR WP="BR1"><BR WP="BR2">
<BR WP="BR1"><BR WP="BR2">
<BR WP="BR1"><BR WP="BR2">
<P><STRONG><HR SIZE="3">
</STRONG></P>
<SPAN STYLE="font-size: 11pt"><STRONG><CENTER>FROM THE DISTRICT COURT OF <A NAME="5">BELL</A> COUNTY, <A NAME="6">169TH</A> JUDICIAL DISTRICT</CENTER>
</STRONG></SPAN>
<P><SPAN STYLE="font-size: 11pt"><STRONG><CENTER>NO. <A NAME="7">172,363-C</A>, HONORABLE <A NAME="8">SUE BARTON LYKES</A>, JUDGE PRESIDING</STRONG></SPAN><STRONG></CENTER>
</STRONG></P>
<P><STRONG><HR SIZE="3">
</STRONG></P>
PER CURIAM
<BR WP="BR1"><BR WP="BR2">
<P> Because there is no final judgment from the trial court in this matter, we will
dismiss the appeal for want of jurisdiction. <EM>See</EM> Tex. R. App. P. 42.3(a).</P>
<P> Appellant submitted his Notice of Appeal to the trial court on May 7, 1999. By
letter dated July 9, 1999, this Court notified all parties that it did not appear that a final judgment
existed in this matter, and that appellant was requested to obtain a final judgment from the trial
court and submit same to this office by August 19, 1999. Thus far, appellant has failed to
respond.</P>
<P> On September 17, 1999, the district clerk's office of Bell County informed the
Clerk's Office of this Court that the case had been abated on March 19, 1999, and that the
abatement remains in effect.</P>
<P> Accordingly, we dismiss this appeal for want of jurisdiction on our own motion.</P>
<BR WP="BR1"><BR WP="BR2">
<P>Before Justices Jones, Kidd and Patterson</P>
<P>Dismissed for Want of Jurisdiction</P>
<P>Filed: September 23, 1999</P>
<P>Do Not Publish</P>
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525 F.Supp. 940 (1981)
FAMOLARE, INC., Plaintiff,
v.
EDISON BROTHERS STORES, INC., Defendant.
FAMOLARE, INC., Plaintiff,
v.
SCOA INDUSTRIES, INC., Defendant.
Civ. Nos. S-78-86 LKK, S-77-387 LKK.
United States District Court, E. D. California.
June 4, 1981.
*941 *942 Wilke, Fleury, Hoffelt & Gray, Sacramento, Cal., Hosier, Niro & Daleiden TLD, Chicago, Ill., for defendant Edison Bros. Stores, Inc.
Charles Townsend, San Francisco, Cal., Theodore Marois, Sacramento, Cal., Robert Bennett, Dewey, Ballantine, Bushby, Palmer, Wood, New York City, for plaintiff Famolare, Inc.
A. Yates Dowell, Arlington, Va., for defendant SCOA, Industries, Inc.
ORDER
KARLTON, District Judge.
Plaintiff in the above-entitled related actions is the owner of United States Patent No. 235,819 ('819), which is the patent on the shoe sole design used on the plaintiff's shoes marketed as the "Hi There" style. In these related suits the plaintiff has alleged that defendants have infringed upon its patented design for shoe soles. The matters are now before the Court on the following motions of the parties:
1. Defendants' motions for summary judgment on the grounds that the plaintiff's patent is obvious and therefore invalid pursuant to 35 U.S.C. § 103.
2. Defendants' motion for summary judgment on the grounds that the plaintiff's design patent primarily serves a utilitarian purpose and is therefore invalid.
3. Plaintiff's motion for a preliminary injunction prohibiting the defendants from selling, offering, or distributing the alleged infringing shoes during the pendency of this litigation.
4. Plaintiff's motion for a more definite statement of defendant EDISON BROTHER's counterclaim.
5. Plaintiff's motion to sever and stay defendant EDISON BROTHER's counterclaim from these actions.
Because the resolution of the defendants' motion for summary judgment on the grounds that the plaintiff's patent is obvious may well dispose of a number of issues raised by the motions listed above, I will address that motion initially.
I
DEFENDANTS' MOTION FOR SUMMARY JUDGMENT PURSUANT TO 35 U.S.C. § 103
A. Obviousness
In essence Congress has required that an invention to be patentable must be inventive.[1] By their motion for summary judgment defendants argue that plaintiff's design patent was not inventive but obvious and thus not patentable. I begin by seeking the applicable legal standard employed in determining whether a given product is obvious.
The beginning point in ascertaining the applicable legal standards is the terms of the applicable statutes. Design patents are granted pursuant to 35 U.S.C. § 171, which provides as follows:
Whoever invents any new, original and ornamental design for an article of manufacture may obtain a patent therefor, subject to the conditions and requirements of this title.
*943 The provisions of this title relating to patents for inventions shall apply to patents for designs, except as otherwise provided.
By incorporating the other provisions of Title 35, Section 171 also requires that a design patent be novel, 35 U.S.C. § 102[2] and non-obvious, 35 U.S.C. § 103. Section 103 provides as follows:
Conditions for patentability; non-obvious subject matter
A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented 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. Patentability shall not be negatived by the manner in which the invention was made.
Several general principles developed in the case law are applicable to the matters currently under consideration. The courts have consistently held that the ultimate question of patent validity is one of law, Graham v. John Deere Co., 383 U.S. 1, 17, 86 S.Ct. 684, 693, 15 L.Ed.2d 545 (1966); M-C Industries, Inc. v. Precision Dynamics, Corp., 634 F.2d 1211, 1213 (9th Cir. 1980); Austin v. Marco Dental Products, 560 F.2d 966, 970 (9th Cir. 1977), cert. denied 435 U.S. 918, 98 S.Ct. 1477, 55 L.Ed.2d 511 (1978).[3] Moreover and more puzzling is the doctrine that whether or not an invention is "obvious" is a question of law for the court, not a question of fact. M-C Industries, Inc., supra at 1213; See Walker v. General Motors Corp., 362 F.2d 56 (9th Cir. 1966).[4]*944 Nonetheless, the legal conclusion as to the issue of patentability must be resolved against the background of three factual inquires:
1. The scope and content of the prior art;
2. The differences between the prior art and the patent at issue; and
3. The level of skill in the pertinent art.
Graham v. John Deere Co., supra, 383 U.S. at 18, 86 S.Ct. at 694; Mayview Corp. v. Rodstein, 620 F.2d 1347, 1354 (9th Cir. 1980); Penn International Industries v. Pennington Corp., 583 F.2d 1078, 1080-81 (9th Cir. 1978).[5]
In the case of a design patent the factual inquiry noted above takes on a somewhat different cast than in the case of a utility patent because the term "level of skill in the pertinent art" is defined differently in each context. When determining the level of skill in the pertinent art in a design patent context the appropriate viewpoint is that of an ordinary person with ordinary acuteness examining the article upon which the design has been placed with the degree of observation that a person of ordinary intelligence would give. Mayview Corp. v. Rodstein, supra at 1355; Schwinn Bicycle Co. v. Goodyear Tire & Rubber Co., 444 F.2d 295, 299 (9th Cir. 1970). The application of this standard requires a finding that a design patent is invalid when "considering the scope and the content of the prior art and the differences between the prior art and the design covered by the patent, from the point of view of the ordinary intelligent man there is `substantial similarity in the overall appearance' between the patented design and the prior art relied upon. Schwinn Bicycle Co. v. Goodyear Tire & Rubber Co., 444 F.2d at 299." Mayview Corp. v. Rodstein, supra at 1355.[6] It is against these standards characterized by binding authority as "legal standards" that the obviousness of the plaintiff's design patent must be determined.
The defendants rely upon four items of printed prior art which were published and in existence more than a year prior to the filing of Famolare's '819 design patent on *945 August 22, 1974, as required by 35 U.S.C. § 102(b). See Exhibits A-D.[7] Plaintiff has conceded that these exhibits constitute printed publications, published as of the dates that appear on the publications. See Famolare's Response to Documents of February 18, 1981. It is undisputed that there were three items of prior art before the patent examiner at the time the '819 patent was issued. See Exhibits Filed in Support of Defendants' Motions for Summary Judgment, Exhibits H-L. Moreover, defendants argue that it cannot be disputed that the prior art not before the Patent Office is more pertinent to and more closely resembles the Famolare patented design than the prior art that the patent examiner considered. Finally, defendants conclude that if the prior art not considered by the Patent Office is compared to the Famolare patented design from the point of view of an ordinary intelligent person there can be no doubt that there is a substantial similarity in overall appearance and thus the plaintiff's design patent must be declared invalid as a matter of law.
Plaintiff opposes the defendants' motion for summary judgment primarily on the basis that the question of obviousness is a poor candidate for summary judgment, citing Schroeder v. Owens-Corning Fiberglass Corporation, 514 F.2d 901 (9th Cir. 1975). The plaintiff also argues that its design patent is to be presumed valid under 35 U.S.C. § 282 and that defendants have not presented sufficient evidence to overcome that presumption. In this regard the plaintiff asserts that the defendants' prior art, while admittedly published before the filing of the '819 patent application, does not provide a sufficient basis for a finding of obviousness.[8] Finally, the plaintiff contends that consideration of secondary factors such as the unsuccessful efforts by others, widespread copying of design, and the commercial success of the design in question indicates that the '819 patent was not obvious at the time of application. In support of this argument plaintiff submits the affidavits of a shoe designer, a retailer, and the plaintiff who attest to the commercial success of the '819 patented design and that said design was not obvious to an ordinary shoe designer at the time the patent application was filed. See Affidavit of Roger L. Cook filed July 29, 1980, Exhibits H, I and J.
B. Appropriateness of Summary Judgment
The question of when a patent infringement case is suitable for summary judgment disposition has been the subject of considerable debate and confusion. The Ninth Circuit has recently stated:
Patent claims are ones in which issues of fact often dominate the scene and summary judgment is allowed only with `great caution'. [citations omitted]. Summary judgment is clearly the exception and not the rule in patent infringement cases. Hycon Mfg. Co. v. H. Koch & Sons, 219 F.2d 353 (9th Cir. 1955).
Garter-Bare Co. v. Munsingwear, Inc., 622 F.2d 416 (9th Cir. 1980). See also Schroeder v. Owens-Corning Fiberglass Corp., supra at 902; Groen v. General Foods Corp., 402 F.2d 708, 709-10 (9th Cir. 1968). Nonetheless, under certain circumstances and even where caution is exercised, summary judgment disposition is proper in patent infringement cases. See Schwinn Bicycle Company v. Goodyear Tire & Rubber Co., supra; Ashcroft v. Paper Mate Manufacturing *946 Company, 434 F.2d 910 (9th Cir. 1970); Flexible Plastics Corporation v. Black Mountain Spring Water Incorporated, 357 F.Supp. 554 (N.D.Cal.1972).
Certain principles emerge from the case law which assist in determining whether a patent infringement case is suitable for summary judgment disposition. The caution which is required to be exercised when summary judgment is sought in the patent context is necessitated by the fact that such cases often involve highly technical or scientific processes which simply cannot be adequately understood without the aid of expert testimony. See Garter-Bare Co. v. Munsingwear, Inc., supra at 423; Schroeder v. Owens-Corning Fiberglass Corp., supra at 903. Accordingly, the test of whether a patent infringement action is capable of summary judgment should involve the nature of that patent and should thus distinguish between design patents and utility or mechanical patents (given the fact that "obviousness" is treated as a legal judgment). In the context of a design patent obviousness is determined by inquiring whether from the point of view of the ordinary intelligent person there is a substantial similarity in the overall appearance between the patented design and the prior art relied upon. See Mayview v. Rodstein, supra at 1355. Because the issue of obviousness in a design patent case is determined by viewing the design in question and the prior art as an ordinary intelligent person, the complex technical or scientific issues which make summary judgment inappropriate in most mechanical or utility patent cases are not present where a design patent is at issue.[9] Thus, it is a well established rule that where the standards set forth in Federal Rule of Civil Procedure 56[10] are met and the court, without the aid of expert testimony can understand the prior art and the patent claims, summary judgment is proper. Penn International Industries v. Pennington Corp., supra at 1082; Grayson v. McGowan, 543 F.2d 79, 80 (9th Cir. 1976).
The shoe design at issue in this case is not, in my subjective judgment, complex (though what I know about shoe design is another question). Moreover, the defendants rely upon only four examples of prior art in alleging the plaintiff's patent obvious, all of which are easily understood. Thus, the scope and content of the prior art is not at issue. As noted above, the level of skill in the pertinent art is that of the reasonably intelligent person. Finally, the differences between the prior art and the patented design are to be determined on the basis of whether the reasonably intelligent person would find a substantial similarity between the two. In the circumstances of this case there are clearly no issues of fact (see fns. 4, 6, and 10) genuinely in dispute, the resolution of which is necessary to decision of the case and therefore summary judgment is appropriate. Any disputed issues *947 presented by the plaintiff are simply not issues of material fact.[11]
C. The Presumption of Validity
As noted above, the plaintiff has argued that the '819 design patent is to be presumed valid under 35 U.S.C. § 282. It is appropriate that I address this argument before commencing my analysis of whether the patent is obvious.
The statutory presumption of patent validity is based upon the presumed expertise of the Patent Office.[12]Speed Shore Corporation v. Denda, 605 F.2d 469, 471 (9th Cir. 1979). This statutory presumption may be overcome only by presentation of clear and convincing proof. Santa Fe-Pomeroy, Inc. v. P & Z Company, Inc., 569 F.2d 1084, 1091 (9th Cir. 1978). When the party attacking the validity of a patent produces alleged prior art that is cumulative to the art cited by the Patent Office the presumption of validity is not weakened or destroyed. Saf-Gard Products, Inc. v. Service Parts, Inc., 532 F.2d 1266, 1271 (9th Cir. 1976). Nonetheless, the presumption of validity may be overcome, or at least substantially dissipated, by a showing that pertinent prior art was not brought to the attention of or considered by the Patent Office. See Kamei-Autokomfort v. Eurasian Automotive Products, 553 F.2d 603, 605 (9th Cir. 1977); Deere & Co. v. Sperry Rand Corp., 513 F.2d 1131 (9th Cir.), cert. denied 423 U.S. 914, 96 S.Ct. 218, 46 L.Ed.2d 142 (1975); Hewlett-Packard Company v. Tel-Design, Inc., 460 F.2d 625, 628 (9th Cir. 1972); Jaybee Manufacturing Corp. v. Ajax Hardware Manufacturing Corp., 287 F.2d 228, 229 (9th Cir. 1961).
In the present case the Patent Office was presented with three examples of prior art which it considered during the prosecution of plaintiff's '819 design patent. See Defendants' Exhibits H, I, J, K, and L. Observation of these prior art references reveals that, unlike the prior art presented by the defendants (see D, below), the prior art before the Patent Office did not resemble the plaintiff's design in overall appearance. Thus, I find that there was prior art more pertinent than that considered by the Patent Office in issuing plaintiff's '819 design patent. Accordingly, the defendants have overcome the statutory presumption of patent validity by clear and convincing proof.
D. The Validity of Plaintiff's '819 Patent
The defendants have submitted four exhibits as relevant examples of prior printed art not before the Patent Office when the '819 patent was granted to the plaintiff. These exhibits may be identified as follows: (a) A style entitled P.M.B. (printed advertisement *948 appearing in Moda In Pelle in December of 1972); (b) A Carber Enterprises shoe style called the Uomo Casadei collection (printed advertisement appearing in Footwear News of August 17, 1972); (c) A Carber shoe entitled the Casadei (printed advertisement appearing in Footwear News of January 25, 1973); and (d) a Casadei shoe style (advertisement appearing in ARS Sutoria of March 1973). Each of these publications depict a shoe style with a rather large, chunky heel and sole made up of three waves. All of the advertisements in question were published prior to plaintiff's '819 patent application on August 22, 1974. Because the test for obviousness of a design patent is whether there exists a "substantial similarity in overall appearance" a more detailed description of the appearance of the prior art is not relevant or necessary.
Observing the prior art submitted by the defendants and the plaintiff's patented design as the ordinary intelligent person would is an exercise which by its nature results in a subjective conclusion by the Court as to the similarity in overall appearance of the designs in question. Nonetheless, it is just such a subjective judgment which the law requires the Court to make. See Schwinn Bicycle Co. v. Goodyear Tire & Rubber Co., supra at 300; see also Flexible Plastics Corp. v. Black Mountain Spring Water Inc., supra at 555. In the present case application of the "legal" standard leads the Court to the conclusion that the prior art not before the Patent Office in granting plaintiff's patent application is substantially similar in overall appearance to the patented design and thus renders the plaintiff's '819 patent invalid due to obviousness. This conclusion is based in substantial part upon a comparison of the plaintiff's patented design to the Carber Casadei model appearing in the Footwear News of January 25, 1973, the Casadei shoe design appearing in the ARS Sutoria publication of March 1973, and one of the Carber Uomo Casadei shoe styles (the shoe in the middle of the advertisement) appearing in the Footwear News of August 17, 1972. It is my conclusion that the ordinary intelligent observer would find those shoe designs practically identical to the design patented by the plaintiff and thus would find a substantial similarity in overall appearance between the various designs. What all this legal conclusion means when finally reduced to its essence is "Gee, they look pretty much the same to me." While I have no particular difficulty in making this judgment, I cannot help wondering why I am making it rather than a jury. Having said as much, I recognize that this issue has also been authoritatively determined inconsistent with my own analysis. Bentley v. Sunset House Distributing Corp., 359 F.2d 140 (9th Cir. 1966).
E. Secondary Considerations
Plaintiff also relies on the proposition that examination of secondary considerations such as commercial success of the patent at issue, satisfaction of long felt need, the failure of others and widespread copying of the patent in question leads to the conclusion that the plaintiff's patent was non-obvious when issued.
Use of the factors referred to by plaintiff to shed light on the issue of obviousness has been approved by the Supreme Court. The Court stated, however, that these merely "secondary considerations" may have relevancy as "indicia of obviousness or non-obviousness" where that issue was in doubt. Graham v. John Deere Co., supra, 383 U.S. at 17-36, 86 S.Ct. at 693-703; see also Walker v. General Motors Corporation, 362 F.2d 56, 60 (9th Cir. 1966). Moreover, it is well established that consideration of these secondary factors can never establish inventiveness where, as is the case here, in the subjective judgment of the judge obviousness is clear. Walker v. General Motors Corp., supra at 60. It is also appropriate to note that particularly in the case of patented subject matter such as a shoe design these secondary factors may not be particularly helpful in determining obviousness. The success or failure of items of fashion, such as shoes, are especially subject to the whims of the public. Fashions *949 change from year to year. The fact that a particular design is inventive may well have nothing to do with its commercial success. Rather, it may be that commercial success is hinged upon being at the "right place at the right time," i. e. when the public taste eventually accepts a certain design, advertising, or other facts unrelated to inventiveness. Thus, it appears to me that the principle that commercial success without invention will not establish patentability is particularly applicable to the matter before me. See M-C Industries, Inc. v. Precision Dynamics, Corp., supra at 1214; Hewlett-Packard Co. v. Tel-Design, Inc., supra at 630.
Accordingly, the defendants' motion for summary judgment on the grounds that the plaintiff's patent is invalid due to obviousness is granted.[13]
II
PLAINTIFF'S MOTION FOR A MORE DEFINITE STATEMENT OF DEFENDANT EDISON'S COUNTERCLAIM
On January 5, 1981, defendant EDISON BROTHERS filed its answer and counterclaim alleging that the plaintiff's patent was invalid and that the plaintiff had engaged in unfair competition. The plaintiff now moves for a more definite statement of defendant EDISON BROTHER's counterclaim pursuant to Federal Rule of Civil Procedure 12(e). In this regard the plaintiff asserts that it cannot reasonably be required to frame a responsive pleading without a more definite statement of the defendant's claims. Specifically, plaintiff requests that the defendant be required to separately state each count within its unfair competition claim and to indicate the dates of the alleged wrongdoing of the plaintiff. Plaintiff asserts that this information is necessary to enable it to determine whether the statute of limitations should be pled as an affirmative defense to the counterclaim. Defendant responds that its counterclaim meets the liberal pleading standards established by Federal Rule of Civil Procedure 8. Moreover, defendant contends that a motion for a more definite statement should not be used as a substitute for discovery which is the means by which the plaintiff should obtain the information it seeks through this motion.
A motion for a more definite statement should not be granted unless the defendant cannot frame a responsive pleading. See Boxall v. Sequoia Union High School District, 464 F.Supp. 1104, 1114 (N.D.Cal.1979); Wright and Miller, Federal Practice and Procedure, Civil § 1377 at p. 750 (1969). Due to the liberal pleading standards in the federal courts embodied in Federal Rule of Civil Procedure 8(e) and the availability of extensive discovery, the availability of a motion for a more definite statement has been substantially restricted. Wright and Miller, Federal Practice and Procedure, Civil § 1376 at pp. 730-747. In particular, where the information sought by the moving party is available and/or properly sought through discovery the motion should be denied. See Steinberg v. Guardian Life Insurance Co. of America, 486 F.Supp. 122 (E.D.Pa.1980); Wright and Miller, Federal Practice and Procedure, Civil § 1377 at p. 750.
In the present case the plaintiff essentially requests that the defendant reveal the exact dates of its alleged misconduct. Such specificity in pleading is not required by Federal Rule of Civil Procedure 8(e). This is exactly the sort of information which should be obtained through the discovery process. Moreover, subsequent to the filing of this motion the plaintiff apparently served defendant EDISON BROTHERS with contention interrogatories requesting the same information which they seek through this motion. In serving these *950 interrogatories the plaintiff has adopted the proper means of obtaining the desired information. Therefore, the plaintiff's motion for a more definite statement is denied.
III
CONCLUSION
Authoritative precedent does not gag a trial court but it does bind it, accordingly it is hereby ordered as follows:
1. The defendants' motion for summary judgment on the grounds that the plaintiff's design patent is obvious and therefore invalid is granted;
2. The plaintiff's motion for a preliminary injunction is denied;
3. The plaintiff's motion for a more definite statement of defendant EDISON BROTHER's counterclaim is denied;
4. The plaintiff's motion to sever and stay defendant EDISON BROTHER's counterclaim is denied;
5. A further Status Conference is now set for July 27, 1981, at 3:00 p. m.
IT IS SO ORDERED.
NOTES
[1] The formulations "inventive," "novel," or the like, are conclusory labels for products of "ingenuity and skill" (Hotchkiss v. Greenwood, 11 How. 248, 267, 52 U.S. 248, 13 L.Ed. 683 (1850)) which society believes worthy of encouragement and protection because of a qualitative difference in that skill and that displayed by the ordinary practitioner in the field. The latter's work may be sufficient to warrant commercial success but not the law's protection. See, e. g. Graham v. John Deere Co., 383 U.S. 1, 17, 86 S.Ct. 684, 693, 15 L.Ed.2d 545 (1966); M-C Indus. v. Precision Dynamics Corp., 634 F.2d 1211, 1214 (9th Cir. 1980).
[2] 35 U.S.C. § 102 provides as follows:
A person shall be entitled to a patent unless
(a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent, or
(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States, or
(c) he has abandoned the invention, or
(d) the invention was first patented or caused to be patented by the applicant or his legal representatives or assigns in a foreign country prior to the date of the application for patent in this country on an application filed more than twelve months before the filing of the application in the United States, or
(e) the invention was described in a patent granted on an application for patent by another filed in the United States before the invention thereof by the applicant for patent, or
(f) he did not himself invent the subject matter sought to be patented, or
(g) before the applicant's invention thereof the invention was made in this country by another who had not abandoned, suppressed, or concealed it. In determining priority of invention there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other.
[3] As will soon become apparent, I have much difficulty in understanding certain divisions of phenomena in the patent field between law and fact. The ultimate question of patentability as a question of law is not one of those problems. As I note elsewhere, one function of law is to order physical phenomena and another is to give them a social consequence. "The requirement is for phrases which shall set off in one class the generality that the State sanctions and will habitually enforce a relation of a specific content, and in another class the concrete occurrence constituting the contingency in which the State predicates this relation. In the former class we are dealing with the abstract formulated body of legal principles; in the latter, with all concrete phenomena designated in the terms of the law." I Wigmore on Evidence, 3d Ed. p. 2. Since as I have just noted, patentability is a conclusion that a product is worthy of the law's protection it is properly classifiable as a legal, rather than factual, determination.
[4] The issue of whether a given question is one of law or fact is a persistent and difficult one. Because I do not write upon a clean slate, my own conclusion as to a proper characterization of the question of "obviousness" is beside the point. Nonetheless, I am compelled to note that utilizing the traditional modes of distinguishing between law and fact, the process of determination appears to be of the latter kind. Law traditionally is viewed as society's judgment as to competing values and thus a way of meaningfully ordering events in the physical universe. Facts, on the other hand, are instances in the physical universe about which judgments are made. See I Wigmore, supra. To the degree that "obviousness" requires a subjective judgment concerning events in the physical universe (e. g. in this case comparisons of plaintiff's shoe design with the prior art) it may be that obviousness is the legal standard, but the comparison itself is a process of sifting evidence and thus a factual determination. While recognition that the distinction between law and fact is a distinction between rule and event is quite subtle, and indeed underlies much of the dispute in modern philosophy (see and compare Lord Russell and Ludwig Wittgenstien's work on the meaning of meaning), in this particular example the resolution does not appear to be all that subtle. Nonetheless, like the legions in the "Charge of the Light Brigade" I will ride into the valley where I have been ordered to go without pausing long over the issue of whether it makes any sense to be there. But see fn. 6, below.
[5] This approach to be taken in analyzing the question of obviousness was first introduced by the Supreme Court in Graham v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966), in the context of a utility or mechanical patent case. For this reason some of the language contained in the factors to be considered do not coincide with the usual design patent case. Nonetheless, the approach taken in Graham has been found to be the proper one for design patent cases where obviousness is at issue. Schwinn Bicycle Co. v. Goodyear Tire & Rubber Co., 444 F.2d 295, 298 (9th Cir. 1970).
[6] Again, I feel compelled to observe that obviousness, especially as determined in the design patent context, would appear to be a factual inquiry. The relevant inquiry is posed in the form of what the ordinary, intelligent person would conclude. Not only as a theoretical matter but as a practical one, the point of view of the ordinary person would seem particularly well suited for submission to the trier of fact. Nonetheless, the courts have consistently held that this is a question of law for the court. Indeed, the recognition that in a design patent uniqueness is in the eye of the beholder does not preclude summary judgment. "We are not unaware that this determination is largely subjective and susceptible of individual differences and interpretations. However, `the determination of patentability in design cases must finally rest on the subjective conclusion of each judge' ...." Schwinn Bicycle Co. v. Goodyear Tire & Rubber, 444 F.2d 295, 299-300 (9th Cir. 1970). Traditionally, of course, the law classifies such judgments as one of fact because like all subjective states, what is involved is a comparison of events in the physical universe (see fn. 4, above).
[7] As the parties are aware, a procedure was established for the filing of exhibits to be considered with regard to the defendants' motions for summary judgment in this Court's order of January 27, 1981. Under that procedure each party was allowed to submit its exhibits and objections to those submitted by the other parties on the grounds of lack of foundation, relevancy, etc. The exhibits referred to in this Order were ruled admissible prior to oral argument on the motions themselves.
[8] The plaintiff's position is apparently based upon the argument that the defendants' prior art references all consist of printed publications which may not reflect shoes in actual existence. Prior art appearing in printed publications is clearly admissible as evidence of the obviousness of a patent. See 35 U.S.C. § 102(b); Schwinn Bicycle Co. v. Goodyear Tire & Rubber Co., supra.
[9] This distinction has lead the Ninth Circuit to observe as follows:
It is true that summary judgment is seldom used in patent cases. This is largely a result of the technological problems which ordinarily arise in litigation involving a utility (as opposed to design) patent. In such cases, the trial court often needs the assistance of expert testimony to determine the nature of the patented device as well as the scope and content of the pertinent prior art. There is no such need for expert testimony in litigation involving a design patent of this type where no special technological problems are presented and the legal issues, as will be seen hereinafter, are particularly adapted to summary disposition. Schwinn Bicycle Co. v. Goodyear Tire & Rubber Co., supra at 297-98.
[10] Federal Rule of Civil Procedure 56 requires that there be "no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." On a motion for summary judgment the moving party has the burden of demonstrating that no material issue of fact exists. Because the burden is on the moving party, the evidence presented must be viewed in favor of the party opposing the motion and all favorable inferences are to be drawn in its favor. Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). Moreover, the facts asserted by the opposing party must be taken as true. Bushie v. Stenocord Corp., 460 F.2d 116 (9th Cir. 1972). Of course, what is a material fact in this field is circumscribed by the court's determination that obviousness is a question of law. See fns. 4 and 6, above.
[11] For instance, plaintiff has asserted that the line drawings and other depictions of the prior art and the patented design are unclear, illegible and form an insufficient basis for a determination of the issue of obviousness of design. Printed art is clearly admissible as evidence of obviousness. See infra, n. 8. Moreover, the defendants have submitted as an exhibit an actual shoe upon which plaintiff's patented sole design appears. See Defendants' Exhibit N. Finally, I find that the prior art submitted in the form of printed publications is without question clear and legible and may serve as relevant prior art references. Likewise, the plaintiff's affidavit from a shoe designer stating that the '819 design would not have been obviousness to the "ordinary shoe designer" in 1974 could not be read as raising a material issue of fact. See Plaintiff's Opposition of July 29, 1980, Exhibit J. First, the affidavit represents a mere legal conclusion on the part of the affiant and cannot be considered by the Court. See Wright & Miller, Federal Practice and Procedure, Civil § 2722, p. 484-485 (1969). Moreover, the affiant has applied a legal standard for the determination of obviousness in the design patent context not applicable in the Ninth Circuit. See infra I.A.
[12] It is not even clear that the presumption of validity normally accorded patents applies in the context of design patents. The presumption is based in large part upon the expertise of the Patent Office in technical skills necessary to evaluate the patent application and the scope and content of prior art in the utility/mechanical patent area. Under this Circuit's standard no such expertise is required since the test of similarity is in the "eyes of the ordinary observer." Thus, the presumption may have little or no weight in the case before the Court. See Schwinn Bicycle Co. v. Goodyear Tire & Rubber Co., supra at 300.
[13] Granting of the defendants' motion for summary judgment on the grounds that plaintiff's patented design was obvious and therefore invalid renders moot the defendants' motion for summary judgment on the issue of functionality as well as the plaintiff's motions for a preliminary injunction and to sever and stay defendant Edison Brother's counterclaim. The plaintiff's motions, therefore, are denied.
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575 F.Supp.2d 845 (2008)
Kathryn PRICE, Plaintiff,
v.
Corey TAYLOR, et. al, Defendant.
No. 3:08CV420.
United States District Court, N.D. Ohio, Western Division.
August 6, 2008.
*848 Francis J. Landry, Wasserman, Bryan, Landry & Honold, Toledo, OH, for Plaintiff.
Sarah A. McHugh, Maloney, McHugh & Kolodgy, Toledo, OH, for Corey Taylor, Midwest Financial & Mortgage Services.
Elizabeth A. Ratliff, John Winship Read, Marcel C. Duhamel, Vorys, Sater, Seymour & Pease, Cleveland, OH, for HSBC Mortgage Services, Inc., Intervale Mortgage Corp.
Janet E. Hales, Stuart J. Goldberg, Eastman & Smith, Toledo, OH, for Select Appraisal, LLC.
ORDER
JAMES G. CARR, Chief Judge.
This is a contract dispute between a borrower and a lender. Plaintiff Kathryn Price alleges that Defendants HSBC Mortgage Services, Inc. [HSBC], an Illinoisbased lender and purchaser of residential mortgage loans, and Intervale Mortgage Corporation [Intervale], a New Jerseybased lender and purchaser of residential mortgage loans, illegally extended her a loan she could not afford to repay. She asserts violations of the Fair Housing Act, 42 U.S.C. § 3601 et seq., and state law causes of action for fraud, negligence, and breach of fiduciary duty. Price also alleges that the arbitration agreement she executed with the loan is unconscionable. Jurisdiction is proper under 28 U.S.C. § 1331 and § 1367.
Defendant Midwest Financial and Mortgage Services [Midwest] is an Ohio-based provider of mortgage products, insurance products and investment services. Defendant Select Appraisal LLC [Select] is an Ohio-based appraiser of residential homes. Defendant Corey Taylor, a mortgage broker, is a former employee of Midwest.
Pending is defendants' joint motion to stay litigation pending arbitration.[1] [Doc. *849 15]. Price opposes the motion and requests this court grant leave for discovery. [Doc. 20]. For the reasons discussed below, defendant's motion shall be granted, and plaintiffs request for discovery shall be denied.
Background
In 2001, Price purchased a house in Toledo, Ohio. In August 2002, Select appraised Price's house. Subject to the appraisal, Midwest extended Price an adjustable-rate loan. Price alleges that the loan payments soon "ballooned," forcing her to file for bankruptcy in 2005. [Doc. 1].
On or about April 10, 2006, Price executed a note and mortgage with Intervale refinancing the 2002 loan on her house. She also signed an arbitration agreement [Agreement] accompanying her new loan.
The Agreement provides:
This Arbitration Agreement, if signed and therefore accepted by You, is made a part of Your Loan Agreement with Lender. By signing this Arbitration Agreement, in consideration of the mutual promises contained herein, you agree that, upon election by Lender or by You, any Claim shall be resolved by binding arbitration pursuant to this Arbitration Agreement and the applicable rules then in effect of the Arbitration Administer selected at the time the Claim is initiated. Acceptance of this Arbitration Agreement by you is voluntary.
[Doc. 15, Ex. A].
Regarding its scope, the Agreement states, "any Claim shall be resolved by binding arbitration pursuant to this Arbitration Agreement...." Further, it explains:
"Claim" is to be given the broadest possible meaning, and shall mean any claim, dispute, or controversy, whether based upon contract, tort (intentional or otherwise), constitution, statute, common law, regulation, ordinance or equity and whether preexisting, present or future, including initial claims ... and claims seeking relief of any type, including damages and/or injunctive, declaratory or other equitable relief, arising from or relating to Your Loan with Lender or the Loan Agreement, the relationships which result from Your Loan with Lender or the Loan Agreement, or any products or services offered in connection with Your Loan with Lender or the Loan Agreement, including, but not limited to, any dispute or controversy concerning, the validity or enforceability of this Arbitration Agreement, any party thereof or the entire Loan Agreement, and whether or not the Claim is subject to arbitration.
[Id.]
The Agreement, however, excludes:
1) any individual action brought by the You in small claims court or in your state's equivalent court, unless such action is transferred, removed or appealed to a different court; 2) any action to effect a judicial or quasi-judicial foreclosure; 3) any eviction or other summary proceeding to secure possession of real property securing a loan; 4) any action to assert, collect, protect, realize upon or obtain possession of the collateral for a loan in any bankruptcy proceeding; 5) any action to quiet title; 6) any action insofar as it seeks ancillary or provisional remedies in connection with any of the foregoing; and 7) any action to determine the validity and effect of Section 7.
[Id.]
The Agreement also allocates costs:
If Lender files a claim, Lender shall pay all filing costs. If You file a Claim, filing costs and administrative fees (other than hearing fees) shall be paid as *850 follows unless otherwise provided by state law: (a) You agree to pay for the initial cost of filing the Claim up to the maximum amount of $100.00; and (b) at your request, or if required by the Arbitration Administrator's rules, Lender will pay for filing costs over $100.00 and for any administrative fees charged by the Arbitration Administrator for a claim less than or equal to Your loan amount. Any filing costs and/or administrative fees assessed for a claim in excess of Your loan amount shall be paid by You. Lender shall pay the cost of one full day of arbitration hearings. Fees for subsequent hearing days request by You or by Lender will be paid by the requesting party. If the arbitrator requests more than one day of hearing, the parties shall share the cost of the additional days, unless another fee arrangement is directed by the arbitrator.
[Id.]
The arbitrator must hold the hearing in the city nearest the borrower's residence in which a federal district court is located, in the absence of a contrary agreement. The party initiating arbitration may choose either the National Arbitration Forum or the American Arbitration Association to govern the proceeding.
On the Agreement's last page, a warning appears directly over the signature line:
BY SIGNING BELOW, THE PARTIES ACKNOWLEDGE THAT THEY HAD A RIGHT TO LITIGATE CERTAIN CLAIMS THROUGH A COURT BEFORE A JUDGE OR JURY, AND THAT THEY WILL NOT HAVE THAT RIGHT IF EITHER PARTY ELECTS ARBITRATION PURSUANT TO THIS AGREEMENT, EXCEPT AS PROVIDED OTHERWISE HEREIN. THE PARTIES HEREBY KNOWINGLY AND VOLUNTARILY WAIVE THEIR RIGHTS TO LITIGATE SUCH CLAIMS UPON ELECTION OF ARBITRATION BY ETHER PARTY. THE PARTIES FURTHER ACKNOWLEDGE THAT THEY HAVE READ THIS ENTIRE ARBITRATION AGREEMENT CAREFULLY, THAT THEY RECEIVED A DUPLICATE COPY OF THIS AGREEMENT, AND THAT THEY ARE ENTERING INTO THIS AGREEMENT VOLUNTARILY AND NOT IN RELIANCE ON ANY PROMISES OR REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THE ARBITRATION AGREEMENT.
[Id.]
Subsequently, Intervale sold the 2006 loan to HSBC, making HSBC the successor in interest to Intervale's rights under Price's mortgage.
Price alleges that, in June, 2007, an attorney informed her "of the fraudulent nature of the 2002 loan and the fraudulent [August 2002] appraisal." [Doc. 1].
On April 20, 2008, Price filed suit seeking compensatory and punitive damages in excess of $100,000.
On April 22, 2008, defendants filed a Joint Motion to Stay Litigation pending arbitration, contending that Price agreed to arbitrate her disputes.
On May 27, 2008, Price filed her Opposition to Defendant's Motion. In it, Price requested this court grant the parties leave to conduct discovery on issues of unconscionability, mutuality, limitations on remedies, and costs of arbitration.
Discussion
Through the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., Congress has declared a national policy favoring arbitration. Southland Corp. v. Keating, 465 U.S. 1, 10, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984). A written agreement to arbitrate *851 "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or equity for the revocation of any contract." 9 U.S.C. § 2. The FAA provides:
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under any agreement in writing for such arbitration, the court shall ... on application of one of the parties stay the trial of the action until such arbitration had been had in accordance with the terms of the agreement.
Id. § 3.
As arbitration is a matter of contract, a court cannot require a party "to submit to arbitration any dispute which it has not agreed so to submit." AT & T Techs. v. Communications Workers of America, 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986).
Accordingly, to grant a motion to stay proceedings and compel arbitration, a court must find that: 1) the parties agreed to arbitrate; 2) the claims fall within the arbitration agreement's scope; and 3) Congress did not intend to preclude any federal statutory claims being raised by the parties from arbitration. Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir.2000).
A. Scope of Arbitration
Price asserts violations of the Fair Housing Act and state law causes of action for fraud, negligence, and breach of fiduciary duty. The Agreement does not exclude these claims from the scope of arbitration.
In determining whether claims are within the arbitration agreement's scope, the strong federal policy for arbitration demands that "any ambiguities or doubts as to the parties' intentions ... be resolved in favor of arbitration." Stout, supra, 228 F.3d at 714.
The Agreement, without qualification, states that the parties shall resolve any claim through arbitration. It, furthermore, defines "claim" in the broadest possible terms, explaining that it covers "any claim, dispute, or controversy, whether based upon ... contract, tort (intentional or otherwise), constitution, statute, common law[.]" This broad language clearly shows the parties' intent to include any claim that would arise between them. Price's claims cannot escape such encompassing language in the absence of an express or implied agreement to the contrary. Therefore, the arbitration clause covers all of Price's claims.
B. Valid Agreement
Price alleges that her assent to the Agreement was invalid because defendants' fraud in 2002 induced her acceptance of the original loan. Price, alternatively, alleges that the Agreement is unconscionable.
In determining whether the parties formed a valid arbitration agreement, "state law may be applied if that law arose to govern issues concerning the validity, revocability, and enforceability of contracts generally, although the FAA preempts `state laws applicable to only arbitration provisions.'" Great Earth Cos. v. Simons, 288 F.3d 878, 889 (6th Cir.2002) (quoting Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 686-87, 116 S.Ct. 1652, 134 L.Ed.2d 902, (1996)). "State law governs `generally applicable contract defenses [to an arbitration clause], such as fraud, duress, or unconscionability.'" Id. at 889 (quoting Casarotto, supra, 517 U.S. at 687, 116 S.Ct. 1652).
A federal district court "may consider only claims concerning the validity *852 of the arbitration clause itself, as opposed to challenges to the validity of the contract as a whole. Once the district court determines that a valid agreement to arbitrate exists, the arbitrator will decide challenges to the contract containing the arbitration clause." Cook v. All State Home Mortg., Inc., 2008 WL 918454, at *5 (N.D.Ohio) (citing Burden v. Check Into Cash of Kentucky, LLC, 267 F.3d 483, 488 (6th Cir.2001)).
Price's allegations of fraud center solely on the 2002 agreement's allegedly illegal nature. Price does not independently claim that fraud induced the 2006 agreement. Rather, she alleges that the Agreement is invalid because it followed a separate allegedly unfair agreement. [Doc. 20]. Accordingly, Price's claim for fraud does not effect the Agreement's validity.
C. Unconscionability
Separately, Price claims the Agreement is unconscionable. She specifically alleges that: 1) the arbitration agreement lacked mutuality; 2) enforcement will result in prohibitive costs; and 3) the clause unreasonably limits her remedies. I find none of these claims well-taken.
Under Ohio contract law, for an arbitration clause to be unenforceable, it must be both procedurally and substantively unconscionable. Id. Anderson v. Delta Funding Corp., 316 F.Supp.2d 554, 564 (N.D.Ohio 2004). Generally, a contract is procedurally unconscionable when there is an absence of meaningful choice on the part of one of the parties to a contract, and substantively unconscionable when the contract's terms are unreasonably favorable to the other party. Collins v. Click Camera & Video, 86 Ohio App.3d 826, 621 N.E.2d 1294 (1993).
1. Procedural Unconscionability
In determining whether a contract is procedurally unconscionable, Ohio courts focus on several factors, including: the parties' age, education, `intelligence, business expertise and experience, and relative bargaining power; which, in turn, involves consideration of which party drafted the contract; whether the contract's terms were explained to the weaker party; and whether the parties could modify the printed terms. Collins, supra, 86 Ohio App.3d at 834, 621 N.E.2d 1294. "The crucial question is whether `each party to the contract, considering his obvious education or lack of it, [had] a reasonable opportunity to understand the terms of the contract, or were the important terms hidden in a maze of fine print[.]" Ohio Univ. Bd. of Trs. v. Smith, 132 Ohio App.3d 211, 220, 724 N.E.2d 1155 (1999) (quoting Williams v. Walker-Thomas Furniture Co., 350 F.2d 445, 449 (D.C.Cir.1965)).
Price's allegations are insufficient to support a claim of procedural unconscionability. She has not advanced that her age, education, or intelligence prevented her from understanding the Agreement. Nor does she argue that defendants rushed or forced her to sign it.
Furthermore, the agreement is clear and explicit. The waiver of trial rights is typed in twelve-point font, and placed directly above Price's signature on a separate page. Price signed every page of the Agreement. The Agreement was not procedurally unconscionable.
2. Substantive Unconscionability
A contract is substantively unconscionable when its terms are commercially unreasonable. No set of general factors governs commercial unreasonableness; rather considerations will vary on a case by case basis. Dorsey v. Contemporary Obstetrics & Gynecology, Inc., 113 Ohio App.3d 75, 80, 680 N.E.2d 240 (1996) (citing Collins, supra, 86 Ohio App.3d 826 *853 at 834, 621 N.E.2d 1294). Price's allegations regarding lack of mutuality, prohibitive cost, and unfair limitation of remedies are factors a court may consider. See Morrison v. Circuit City Stores, Inc., 317 F.3d 646, 666 (6th Cir.) (analyzing mutuality, prohibitive cost, and remedy limitation arguments under substantive unconscionability prong).
a. Mutuality
Price claims the Agreement lacks mutuality because it exempts from arbitration certain claims which she alleges only the defendants would bring. I find the mutuality doctrine does not apply here.
In Ohio, a valid arbitration clause does not fail for lack of mutuality, as long as consideration supports the contract. Anderson v. Delta Funding Corp., 316 F.Supp.2d 554, 566-67 (2004); Fazio v. Lehman Bros., 340 F.3d 386, 396-97 (2003). Valid consideration requires that the parties bargain for performances or return promises. Harmon v. Philip Morris, Inc., 120 Ohio App.3d 187, 190, 697 N.E.2d 270 (1997).
A performance or return promise is bargained for if the promisor sought it in exchange for the other party's promise and gave his/her promise in exchange for the procured promise. Id. (quoting Restatement (Second) of Contracts § 71(2) (1981)).
Performance may consist of: "1) an act other than a promise; 2) a forbearance; or 3) the creation, modification, or destruction of a legal relation." Id. Valid consideration may consist of either a benefit to the promisor or a detriment to the promisee. Id. (quoting Brads v. First Baptist Church, 89 Ohio App.3d 328, 336, 624 N.E.2d 737 (1993)). A benefit may consist of some right, interest or profit accruing to the promisor, while a detriment may consist of the promisee's forbearance, loss or acceptance of responsibility. Id.
Valid consideration supports the Agreement. Both parties promised that they would submit all disputes, not excluded by the Agreement's terms, to arbitration.[2]
That the parties agreed to exclude certain claims which Price believes the defendants are more likely to bring is irrelevant. This is not a question of mutuality, but of adequacy of consideration. A court generally will not inquire into whether each party's legal detriment was sufficiently adequate. Rogers v. Runfola and Assoc., Inc., 57 Ohio St.3d 5, 6, 565 N.E.2d 540 (1991); see also, 3 Williston, Contracts (4th ed), § 7:21, pp. 383-386. Regardless, courts have upheld arbitration agreements allowing one party to avoid arbitration under limited circumstances.[3] See Morrison v. Circuit City Stores, Inc., 70 F.Supp.2d 815, 823 (S.D.Ohio 1999) ("Both [p]laintiff and [d]efendant signed the Agreement within the short job application, and even though [d]efendant could alter or terminate *854 the Agreement or the Rules and Procedures, [d]efendant could only do so at certain times and only after providing 30 days' notice to employees.").
b. Prohibitive Costs
Price also contends that arbitration will be prohibitively costly, but does not offer any evidence to support this claim.
A party seeking to invalidate an arbitration agreement on the grounds of prohibitive costs must prove the likelihood of incurring such costs. Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St.3d 352, 365, 884 N.E.2d 12 (2008). Without any support from the record, mere proof of arbitration costs alone will not render an agreement unconscionable. Garcia v. Wayne Homes, LLC, 2002 WL 628619, at * 13 (Ohio Ct.App.) (stating that plaintiffs failure to produce sufficient facts or allegations showing difference in costs between arbitration and litigation in court did not invalidate arbitration).
Price's unsupported allegations are insufficient to support her claim that the cost-splitting provisions render the arbitration agreement substantively unconscionable. She simply asserts that the Agreement requires that she pay costs for claims in excess of the loan amount while the defendants must only pay for one day of hearing fees.[4] [Doc. 20]. Price does submit any evidence or allegations regarding her own financial situation. Taylor Bldg. Corp. of Am., supra, 117 Ohio St.3d at 365, 884 N.E.2d 12 (rejecting prohibitive costs argument where plaintiffs "failed to show that mediation or arbitration costs would be prohibitively high for [them]."). Nor does she present any evidence regarding the cost of arbitration for similar cases. By merely pointing out the provisions she finds unfair, she, at most, suggests a risk of incurring extra costs under arbitration. See Green Tree, supra, 531 U.S. 79, 121 S.Ct. 513, 148 L.Ed.2d 373 (ruling that a mere risk that costs will be excessive is not sufficient to render an arbitration agreement unconscionable). In light of the lack of evidence in the record, I find that Price has not proved that arbitration would be unconscionably costly.[5]
c. Remedies
Price, lastly, alleges that the arbitration agreement is unconscionable because it limits her legal remedies, specifically the ability to bring a class action, join in claims with others, or act as private attorney general. Limitations on remedies in arbitration agreements are invalid if they violate a plaintiffs statutory rights. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26-27, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). An agreement does not violate a plaintiffs rights merely because it precludes a limited number of remedies. See Copeland v. Katz, 2005 WL 3163296 (E.D.Mich.) (finding class action waiver in arbitration agreement not unconscionable); Pivoris v. TCF Fin. Corp., 2007 WL 4355040 (N.D.Ill.) (compelling arbitration where plaintiffs right to act as private attorney general limited).
*855 Price does not point out any statutory remedies which would be unavailable if I ordered Price to arbitrate her claims. Nor does Price argue that Congress intended to exclude any of the claims she raises from an arbitral forum. Furthermore, courts have found agreements circumscribing the rights Price lists conscionable.
Accordingly, I find the preclusion of the remedies Price identifies a valid restraint.
Conclusion
Price does not present any evidence that the Agreement is either procedurally or substantively unconscionable. Accordingly, as the Agreement's broad terms encompass Price's contractual claims, the Agreement entitles defendants to have an arbitrator decide them.
For the foregoing reasons, it is hereby
ORDERED THAT:
1. Defendant's motion for a stay pending the completion of arbitration be, and the same hereby is granted; parties to file status report[s] within two weeks of the completion of arbitration proceedings; and
2. Plaintiffs request for discovery be, and the same hereby is denied.
So ordered.
NOTES
[1] Midwest Mortgage Services, Select Appraisal, L.L.C. and Corey Taylor are also named defendants in Price's complaint; however, they have not joined defendants' Joint Motion to Stay Litigation Pending Arbitration.
[2] Price bases her argument on the court's decision in Harmon. There, the court found that consideration was absent from an arbitration agreement which required employees to arbitrate all claims against the employer, but allowed the employer to modify the agreement at any time and, thereby, avoid arbitration of any of its claims against its employees. See Harmon, supra, 120 Ohio App.3d at 190, 697 N.E.2d 270. Accordingly, the court found that the employer had not bargained away any rights under the Agreement. In this case, defendants retain no such rights. Defendants must arbitrate all claims except those the arbitration clause exempts. This requirement constitutes valid consideration.
[3] Price's adequacy argument also overlooks the fact that the Agreement reserves for her, exclusively, the right to proceed in small claims court.
[4] Plaintiff's assertion misreads the Agreement. The Agreement provides that she will have to pay costs for hearings after the first day only if she alone requests them. If the arbitrator requests them, the parties shall share the fees. Likewise, if the lender requests them, it will pay any such costs.
[5] Nor am I convinced that discovery would be appropriate as to the cost of arbitration. As discussed above, Price must prove that the Agreement is both procedurally and substantively unconscionable'. As she has failed to allege that the Agreement was procedurally unconscionable, her unconscionability claim would fail regardless.
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178 F.3d 1278
Dumarc Shipping Company S.A.v.C.I.T. Group, a Corporations
NO. 98-6019
United States Court of Appeals,Third Circuit.
March 03, 1999
Appeal From: D.N.J. ,No.97cv04967
1
Affirmed.
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IN THE COURT OF APPEALS OF THE STATE OF IDAHO
Docket No. 43105
IN THE MATTER OF THE ESTATE )
OF: GORDON THOMAS LANHAM, )
Deceased. )
JUDD LANHAM, ) 2016 Opinion No. 13A
)
Personal Representative- ) Filed: February 25, 2016
Respondent-Respondent on )
Appeal, ) Stephen W. Kenyon, Clerk
)
v. ) AMENDED OPINION
) THE COURT’S PRIOR OPINION
THOMAS E. LANHAM, ) DATED FEBRUARY 24, 2016,
) IS HEREBY AMENDED
Respondent-Appellant-Appellant )
on Appeal. )
)
Appeal from the District Court of the Third Judicial District, State of Idaho, Gem
County. Hon. D. Duff McKee, District Judge; Hon. Tyler D. Smith, Magistrate.
Intermediate appellate decision dismissing appeal, affirmed.
Foley Freeman, PLLC; Patrick J. Geile and Matthew G. Bennett, Meridian, for
respondent-appellant-appellant on appeal. Matthew G. Bennett argued.
Law Offices of Nancy L. Callahan; Nancy L. Callahan and Rolf M. Kehne,
Emmett, for personal representative-respondent-respondent on appeal. Rolf M.
Kehne argued.
________________________________________________
HUSKEY, Judge
Thomas E. Lanham (Appellant) appeals from the district court’s order dismissing the
appeal filed in this case, arguing that his appeal to the district court was timely. For the reasons
set forth below, we affirm.
1
I.
FACTUAL AND PROCEDURAL BACKGROUND
After Gordon Thomas Lanham’s (Testator) death, Judd Max Lanham (Respondent) filed
an application for informal probate and was appointed personal representative. Subsequently,
Appellant filed a petition for order restraining the Respondent. After a hearing, the magistrate
denied Appellant’s motion.
Appellant then filed a motion for summary judgment. Respondent filed a cross-motion
for summary judgment and motion to dismiss. At the hearing on June 10, 2014, the magistrate
granted summary judgment in favor of the Respondent. On June 20, 2014, Appellant filed a
motion for reconsideration, but the motion neither included a notice of hearing nor indicated
whether Appellant desired oral argument; both requirements under Idaho Rule of Civil Procedure
7(b).1 On June 25, 2014, the magistrate filed both an order granting the Respondent’s cross-
motion for summary judgment and a judgment. In the judgment, the magistrate did not
acknowledge the motion for reconsideration. Appellant did not pursue the motion for
reconsideration after the final judgment was filed.
On August 13, 2014, Appellant appealed to the district court. Respondent filed a motion
to dismiss, arguing that Appellant’s appeal was untimely filed. The district court held that the
notice of appeal was filed outside the forty-two-day period and that the motion for
reconsideration did not toll the time for appeal because it was filed before the magistrate entered
the judgment. Appellant timely appeals.
II.
STANDARD OF REVIEW
Whether an appeal to the district court was timely filed is a question of law. Goodman
Oil Co. v. Scotty’s Duro-Bilt Generator, Inc., 147 Idaho 56, 58, 205 P.3d 1192, 1194 (2009).
Over questions of law, we exercise free review. Kawai Farms, Inc. v. Longstreet, 121 Idaho
610, 613, 826 P.2d 1322, 1325 (1992); Cole v. Kunzler, 115 Idaho 552, 555, 768 P.2d 815, 818
(Ct. App. 1989).
1
Unless a motion may be heard ex parte, I.R.C.P. 7(b)(3)(A) requires a written motion
and a notice of hearing to be filed with the court. I.R.C.P. 7(b)(1) requires a party to indicate on
the face of the motion whether the party desires to present oral argument.
2
III.
ANALYSIS
Appellant argues the magistrate’s judgment was not a valid final judgment. Appellant
also argues that his motion for reconsideration should be treated like a motion to alter or amend
judgment and that his motion tolls the period for appeal.
A. The Magistrate’s Judgment was a Valid Final Judgment
Appellant argues the magistrate’s judgment was not a valid judgment because it, inter
alia, contains a recital of the pleadings, in contravention of I.R.C.P. 54(a). Appellant cites
Wickel v. Chamberlain, 159 Idaho 532, 363 P.3d 854 (2015), in support of his position.
In Wickel, the appellant filed a complaint against the respondent for medical malpractice.
The Respondent filed a motion for summary judgment, which the district court granted on
July 25, 2013. The district court entered a purported final judgment on July 30, 2013. The
Appellant filed a motion for reconsideration on August 12, 2013, which the district court denied.
Appellant timely appealed. On October 28, 2013, the Supreme Court remanded the matter to the
district court because the July 2013 order was not a final judgment as defined by I.R.C.P. 54(a).
On October 30, 2013, the Appellant filed a second motion for reconsideration. The district court
entered a proper final judgment on October 31, 2013. On December 18, 2013, the district court
determined it did not have jurisdiction to consider the second motion for reconsideration because
it was filed more than fourteen days after the entry of the July 2013 judgment. The appellant
again appealed to the Supreme Court. The Supreme Court noted the July 2013 judgment was not
a valid final judgment but, instead, was an interlocutory order. The second motion for
reconsideration was timely because it was filed before or within 14 days of the entry of the actual
final judgment entered in October 2013. The Supreme Court remanded the case to the district
court on December 23, 2015.
Of note, on February 12, 2015, the Supreme Court entered an order entitled In Re:
Finality of Judgments Entered Prior to April 15, 2015 (Standing Order). In pertinent part, the
order stated that “any judgment, decree or order entered before April 15, 2015, that was intended
to be final but which did not comply with Idaho Rule of Civil Procedure 54(a) . . . shall be
treated as a final judgment.”
Wickel neither overrules nor contradicts the Standing Order. The doctrine of the law of
the case provides that upon:
3
an appeal, the Supreme Court, in deciding a case presented states in its opinion a
principle or rule of law necessary to the decision, such pronouncement becomes
the law of the case, and must be adhered to throughout its subsequent progress,
both in the trial court and upon subsequent appeal.
Swanson v. Swanson, 134 Idaho 512, 515, 5 P.3d 973, 976 (2000). In Wickel, the Supreme Court
determined that the initial judgment was not a final judgment almost two years before it issued
the Standing Order. Wickel, 159 Idaho 537, 363 P.3d at 859. Therefore, under the law of the
case, as of October 2013, when the second motion for reconsideration was filed, the July 2013
order was not a valid final judgment. Even though the opinion on the second Wickel appeal was
issued after the Standing Order, the Supreme Court was obligated to follow the law of the case
established in the previous appeal. To allow the parties to relitigate the finality of the initial
purported final judgment would transgress the purpose of the doctrine of the law of the case.
Therefore, we hold that Wickel is not controlling precedent in this case and this Court will defer
to the Standing Order as the controlling authority.
Although the final judgment issued in this case did not comply with I.R.C.P. 54(a), it
became a valid final judgment by virtue of the Standing Order.
B. The Magistrate Presumptively Denied Appellant’s Motion by Entering the Final
Judgment
Appellant argues that his motion can be treated as either a motion for reconsideration
under I.R.C.P. 11(a)(2)(B) or a motion to alter or amend judgment under I.R.C.P. 59(e).
Appellant further argues that his motion, under either rule, tolled the period for appeal.
Respondent argues Appellant’s motion was a motion for reconsideration pursuant to
I.R.C.P. 11(a)(2)(B) and cannot toll the period of appeal because it was not timely filed. We
hold that although Appellant’s motion was a timely filed motion for reconsideration under
I.R.C.P. 11(a)(2)(B), it was presumptively denied when the magistrate entered the final
judgment. Because the motion for reconsideration was presumptively denied, it did not toll the
time for appeal.
1. Appellant’s motion was a motion for reconsideration under
I.R.C.P. 11(a)(2)(B)
We begin by determining whether Appellant’s motion is actually a motion for
reconsideration under I.R.C.P. 11(a)(2)(B) or a motion to alter or amend judgment under
I.R.C.P 59(e). A motion for reconsideration allows a party to move a court to reconsider an
interlocutory order. I.R.C.P. 11(a)(2)(B). An interlocutory order is an order that is temporary in
4
nature or does not completely adjudicate the parties’ dispute. Boise Mode, LLC v. Donahoe Pace
& Partners Ltd., 154 Idaho 99, 107, 294 P.32 1111, 1119 (2013). When an order granting
summary judgment is filed before a final judgment, the order granting summary judgment is an
interlocutory order. Agrisource, Inc. v. Johnson, 156 Idaho 903, 911, 332 P.3d 815, 823 (2014).
Here, Appellant moved the court to reconsider its ruling on Respondent’s cross-motion
for summary judgment, not the final judgment. Because Appellant filed the motion prior to entry
of the final judgment and was only challenging the order granting summary judgment, an
interlocutory order, Appellant’s motion is a motion for reconsideration under
I.R.C.P. 11(a)(2)(B), rather than a motion to alter or amend judgment under I.R.C.P. 59(e).
2. Appellant’s motion for reconsideration was timely filed
Having determined that Appellant’s motion was a motion for reconsideration under
I.R.C.P. 11(a)(2)(B), we now determine whether Appellant’s motion was timely filed. A motion
for reconsideration of any interlocutory order of the trial court may be made at any time before
the entry of final judgment, but not later than fourteen days after the entry of the final judgment.
I.R.C.P. 11(a)(2)(B). When judgment has been pronounced in open court, requiring a litigant to
wait to seek reconsideration until the court clerk has file-stamped the written order would be
hyper-technical and violate the spirit of the rules of civil procedure. See Willis v. Larsen, 110
Idaho 818, 821, 718 P.2d 1256, 1259 (1986). Therefore, Appellant’s motion was timely filed,
even though it was filed prior to entry of the written order.
3. Appellant’s motion for reconsideration was presumptively denied by entry of
the final judgment
A final judgment is “an order or judgment that ends the lawsuit, adjudicates the subject
matter of the controversy, and represents a final determination of the rights of the parties. It
must be a separate document that on its face states the relief granted or denied.” T.J.T., Inc. v.
Mori, 148 Idaho 825, 826, 230 P.3d 435, 436 (2010). The purpose of a rule requiring that every
judgment be set forth on a separate document is to eliminate confusion about when the clock for
an appeal begins to run. Spokane Structures, Inc. v. Equitable Inv., LLC, 148 Idaho 616, 619,
226 P.3d 1263, 1266 (2010). A final judgment that does not dispose of outstanding issues in a
case does not fulfill its purpose. Therefore, where a trial court fails to rule on a motion for
reconsideration filed prior to the entry of a final judgment, we presume the district court denied
the motion when it entered a final judgment. See State v. Wolfe, 158 Idaho 55, 61, 343 P.3d 497,
503 (2015).
5
In Wolfe, the appellant was convicted of first degree murder in 1982. In 2004, he filed an
Idaho Criminal Rule 35 motion to correct an illegal sentence. Id. at 58, 343 P.3d at 500. The
motion was denied as untimely; the appellant filed a timely motion for reconsideration. Id.
While the motion for reconsideration was pending, the appellant filed a petition for post-
conviction relief. Id. Thereafter, the district court ordered that the motion for reconsideration
and the petition for post-conviction relief be decided in one civil case. Id. at 61, 343 P.3d at 503.
The district court subsequently issued its memorandum decision and order advising the parties
that the appellant’s claims would be dismissed as untimely but did not separately or explicitly
rule on the motion for reconsideration. Id. at 59, 343 P.3d at 501. The district court then entered
its order dismissing the appellant’s civil case. Id. Four years later, the appellant moved the
district court for a hearing on his seven-year-old motion for reconsideration. Id. The district
court denied the appellant’s motion for a hearing; a timely appeal followed. Id.
The Supreme Court held the district court did not err when it denied the appellant’s
motion for a hearing on the motion for reconsideration. Id. at 61, 343 P.3d at 503. The Court
presumed, under the doctrine of the presumption of regularity and validity of judgments, that the
district court considered the appellant’s motion for reconsideration when it issued its
memorandum decision and order. Id. The Court further noted, “[W]e have held that where a
district court fails to rule on a motion, we presume the district court denied the motion.” Id.
Because the district court did not rule on the appellant’s motion for reconsideration, the Supreme
Court presumed the district court denied the motion. Id. at 62, 343 P.3d at 504. The Court noted
that the presumption became a conclusion because the subsequent order dismissed the entire civil
case. Id. The Court then held, because the order dismissed the entire case and the appellant
failed to file a notice of appeal within forty-two days, the district court did not err in denying the
motion for a hearing. Id.
As in Wolfe, Appellant filed a motion for reconsideration that was neither explicitly ruled
on nor mentioned in the final judgment. However, as in Wolfe, we presume the court denied the
motion when it failed to rule on it. The presumption became a conclusion when the final
judgment was entered. Additionally, presumptively denying outstanding motions by entering
final judgment ensures that a final judgment actually ends the lawsuit, adjudicates the subject
matter of the controversy, and represents a final determination of the rights of the parties, while
simultaneously avoiding confusion about when the time for an appeal begins to run.
6
As noted above, Appellant’s motion for reconsideration failed to comply with several
sections of I.R.C.P. 7. The failure to comply with I.R.C.P. 7(b)(3)(A) and I.R.C.P. 7(b)(1) was
further exacerbated by Appellant’s failure to pursue his motion for reconsideration at any time
prior to the filing of the notice of appeal or acknowledge his motion for reconsideration in his
opening appellate brief to the district court.2 If Appellant was interested in pursuing the motion
for reconsideration, it was incumbent upon Appellant to bring the motion to the attention of the
court. See Wolfe, 158 Idaho at 62 n.3, 343 P.3d at 504 n.3. Because Appellant waited forty-nine
days after the entry of judgment to file his appeal, the appeal is untimely. I.R.C.P. 83(e).
Moreover, fairness and equity do not allow Appellant to destroy the finality of a
judgment by failing to pursue the motion in this case and then claim that failure tolled the time
for appeal. The rules of civil procedure shall be liberally construed to secure the just, speedy,
and inexpensive determination of every action and proceeding. I.R.C.P. 1(a). But to allow a
motion that did not comply with I.R.C.P. 7, and which Appellant did not pursue, to toll the
period for appeal does not advance those goals.3 Instead, it allows a party to attempt to
indefinitely toll the period of appeals and can create confusion about when the time for an appeal
begins to run.
Accordingly, we hold that an outstanding motion for reconsideration is presumptively
denied when a trial court enters a final judgment and thus, does not toll the time for filing an
appeal.
C. Attorney Fees on Appeal
Appellant seeks an award of costs and attorney fees under Idaho Code §§ 15-8-208 and
12-121. In addition to those statutes, Respondent seeks costs and attorney fees under
I.C. § 12-123, I.R.C.P. 11, and Idaho Appellate Rule 11.2.
2
Even if we did not presume the magistrate denied Appellant’s motion for reconsideration,
Appellant abandoned that motion by not pursuing it at any point between the entry of the final
judgment and the filing of the notice of appeal. Appellant had the burden to pursue the motion
for reconsideration in the event the district court failed to rule on it. Because he failed to pursue
the motion, Appellant abandoned the motion. See Wolfe, 158 Idaho at 62 n.3, 343 P.3d at 504
n.3; see also Worthington v. Thomas, 134 Idaho 433, 437, 4 P.3d 545, 549 (2000).
3
In addition to the civil rules mentioned above, Appellant also failed to state that his
motion for reconsideration was based on I.R.C.P. 11(a)(2)(B). I.R.C.P. 7(b)(1) (a motion shall
state with particularity the ground therefor, including the number of the applicable civil rule).
7
On appeal, Appellant did not act frivolously. Therefore, neither party is entitled to fees
under I.C. §§ 12-121 and 12-123, I.R.C.P. 11, or I.A.R. 11.2. Under I.C. § 15-8-208, an
appellate court may, in its discretion, award costs or attorney fees to any party. We hold that
neither party is entitled to costs or attorney fees on appeal.
IV.
CONCLUSION
Based on the foregoing, the district court’s intermediate appellate decision dismissing
appeal is affirmed.
Chief Judge MELANSON and Judge GUTIERREZ CONCUR.
8
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172 F.2d 298 (1949)
UNTERSINGER
v.
UNITED STATES.
No. 17, Docket 20989.
United States Court of Appeals Second Circuit.
February 1, 1949.
*299 Paul C. Matthews, of New York City (Archibald F. McGrath, of New York City, of counsel), for appellant.
Kirlin, Campbell, Hickox & Keating, of New York City (Joseph M. Cunningham, Raymond Parmer and Charles N. Fiddler, all of New York City, of counsel), for appellee.
Before L. HAND, Chief Judge, and SWAN and CHASE, Circuit Judges.
SWAN, Circuit Judge.
This is a libel in personam to recover damages, as well as maintenance and cure, resulting from injuries alleged to have been sustained by the libellant while employed as a messman on the S. S. Bull Run, a merchant vessel owned by the United States and operated for its account. At a pre-trial hearing the respondent moved for dismissal of the libel on the ground that the court lacked jurisdiction because the suit was not brought in the proper district. The motion was granted pursuant to an opinion.[1] From the resulting decree of dismissal the libellant has appealed. The correctness of the decision depends upon whether or not the United States waived the defect in venue by answering to the merits, when its answer also set up defenses alleging lack of jurisdiction because the vessel was not within the United States when the libel was filed, and improper venue.[2]
The Suits in Admiralty Act, §§ 1-12, 46 U.S.C.A. §§ 741-752, provides the exclusive remedy in admiralty against the United States for a maritime tort. Brady v. Roosevelt S. S. Co., 317 U.S. 575, 577, 63 S.Ct. 425, 87 L.Ed. 471. Section 742 directs that a libel in personam shall be brought either in the district in which the libellant resides or has his principal place *300 of business, or in the district in which the vessel charged with liability is found. The libel contained no allegation as to the residence of the libellant or the whereabouts of the vessel. At the pre-trial hearing it appeared that the libellant was not a resident of the southern district of New York when the libel was filed, January 29, 1946, nor at any time during the pendency of the suit; and that the steamer Bull Run was not within the United States at the time the libel was filed.
When the district court rendered its decision, it had not been authoritatively determined whether the statutory provisions as to the place of bringing suit pertained to jurisdiction or to venue. But on November 8, 1948, in Hoiness v. United States, 335 U.S. 297, 69 S.Ct. 70, 73, the Supreme Court held that such provisions are not jurisdictional but relate merely to venue; and the opinion concluded: "But if the United States is willing to defend in a different place, we find nothing in the Act to prevent it." In the Hoiness case the United States had demonstrated such willingness; no exceptions to the libel and no motion to dismiss were filed, the case was heard on the merits, and after submission the trial judge sua sponte dismissed it for lack of jurisdiction. Hoiness v. United States, D.C.N.D.Cal., 75 F.Supp. 289. Plainly any defect in venue was waived by going to trial.
The appellant insists that the defect in venue, which the pre-trial hearing developed, was waived by the answer previously filed by the respondent. If the test of waiver is, as suggested by the Supreme Court in the Hoiness opinion, the willingness of the United States to defend in a district other than those specified in the statute, it is clear that the answer negatived any such willingness, for it expressly alleged lack of jurisdiction and improper venue, notwithstanding that it also answered the merits. Hence waiver, if it exists, must be found in the technical rule that a general appearance or answer to the merits precludes a special appearance for the purpose of objecting to venue. Texas & Pacific Railway Co. v. Cox, 145 U.S. 593, 603, 12 S.Ct. 905, 36 L.Ed. 829. This was, indeed, the old common law rule and was apparently based on the motion that by pleading to the merits a defendant came before the court and could not thereafter say that he was not in court. Chitty on Pleadings, 16th Am.Ed., Vol. 1, pp. 443-4. This highly technical rule of the common law was applied by this court in a libel brought under the Suits in Admiralty Act in Kunglig Jarnvagsstyrelsen v. United States, 2 Cir., 19 F.2d 761, 763 where we held that exceptions which were a plea to the merits, although coupled with objections to venue, constituted a waiver of the defect in venue. There may be some doubt whether this decision accorded with the general practice in admiralty.[3] But however that may be, the appellee contends that the Kunglig case should no longer be followed, since the common law rule, on which the decision rested, no longer obtains in civil actions in the federal courts because of the adoption of the Federal Rules of Civil Procedure, 28 U.S.C.A. Under Rule 12(b) the joining of objections to venue with a plea to the merits does not constitute a waiver of improper venue. Orange Theatre Corporation v. Rayherstz Amusement Corporation, 3 Cir., 139 F.2d 871, 874; Blank v. Bitker, 7 Cir., 135 F.2d 962, 966. We think the appellee's position is well taken.
It has long been recognized that "the rules of pleading in the admiralty are exceedingly simple and free from technical requirements." Dupont de Nemours & Co. v. Vance, 19 How. 162, 171, 15 L.Ed. 584; see also 2 Benedict on Admiralty, 6th ed., § 223. In Boston Ins. Co. v. City of New York, 2 Cir., 130 F.2d 156, this court stated that although the Federal Rules of Federal Procedure have not yet been extended to admiralty, the "practice in admiralty is concededly extremely plastic *301 and always has been so", citing the Dupont case, supra, "and it is legitimate to treat it as not immune to some of the changes in procedure elsewhere." Now that the highly technical and somewhat metaphysical rule of waiver has been done away with in civil actions in the federal courts, we think that a similar liberalization should by analogy be recognized in admiralty procedure. We find nothing in the General Admiralty Rules promulgated by the Supreme Court, 28 U.S.C.A., to stand in the way. In 2 Benedict on Admiralty, 6th ed., § 233, the author, after referring to general and special appearances and stating that a general appearance will, if practicable, be regarded as a waiver of any personal exemption or privilege, continues: "There is no rule on the point; it has been sufficiently settled by the cases and the customary practice. The Civil Rules are to the same effect; lack of jurisdiction of the person must be raised by objection, and is waived if not raised by motion, answer or reply: Rule 12(b) and (h)." As previously stated, the Hoiness opinion suggests that the inquiry as to waiver should be whether the United States has done anything in the suit to indicate its willingness to defend, despite the bringing of the suit in the wrong district. Certainly the answer did not show such willingness; it showed the opposite. The libel did not disclose whether the venue was proper or improper. Waiver presupposes knowledge of the defect which is waived. Abbott v. United States, D.C.S.D.N.Y., 61 F.Supp. 989, 991. The facts which disclosed the defect were brought out at the pre-trial hearing and a motion to dismiss was then made. Very recently Judge Follmer held in Walsh v. United States, D.C.E.D.Pa., 81 F.Supp. 667, that there was no waiver where an objection to venue had been made in the answer which also pleaded to the merits. We agree with this decision.
Accordingly the decree is affirmed, but with leave granted to the libellant, if he so desires, to apply within 30 days to the district court, under § 1404 of Title 28 U.S. C.A., 1948 revision, to transfer the action to any other district where it might have been brought. Whether that section is applicable to the present cause and whether the action should be transferred are questions for the district court upon which we intimate no opinion.
NOTES
[1] "Inasmuch as the infant on whose behalf this suit was brought is a non-resident of this district, and since the merchant ship on which he was injured and which was owned by the United States, was not within this jurisdiction when suit was brought, the libel must be dismissed. Sawyer v. United States, D.C., 66 F.Supp. 271 [1946 A.M.C. 420]; Abbott v. United States, D.C., 61 F.Supp. 989 [1945 A.M. C. 728]. Respondent has not waived any right with respect either to venue or jurisdiction. It has insisted from the outset that this court is without authority to pass on the merits of libelant's claim. Unfortunate as is the result, there is no alternative to a dismissal." [74 F.Supp. 155]
[2] The fourth defense read as follows:
"Respondent objects to the exercise by this Court of jurisdiction in this action on the ground that the action has not been brought in the proper District."
[3] In The Troy Socony, D.C.E.D.N.Y., 18 F.2d 629, 631, Judge Campbell said:
"The contention of the petitioner that the respondent, having pleaded in the fourth exception to the merits, has waived its exceptions on jurisdictional grounds, while well supported as to cases on the law side of the court, finds no support in admiralty, in which it is not uncommon to join exceptions with the answer." See also The Elisabeth Van Belgie, D.C.S.D. Fla., 248 F. 1006, 1007; The Lindrup, D. C.Minn., 70 F. 718, 719.
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318 S.W.3d 795 (2010)
Ivan DIZDAR, Appellant,
v.
CITY OF ST. LOUIS, Respondent.
No. ED 93721.
Missouri Court of Appeals, Eastern District, Division Three.
August 31, 2010.
Thomas A. Connelly, St. Louis, MO, for appellant.
Christine Hodzic, St. Louis, MO, for respondent.
Before SHERRI B. SULLIVAN, P.J., CLIFFORD H. AHRENS, J., and LAWRENCE E. MOONEY, J.
ORDER
PER CURIAM.
Ivan Dizdar appeals from the trial court's judgment in this action for tortious injury to a structure. An opinion would have no precedential value. We have furnished the parties with a memorandum, for their information only, explaining the reasons for our decision. We affirm. Rule 84.16(b)(1).
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24 B.R. 1014 (1982)
In re COLONIAL FORD, INC., Debtor.
Bankruptcy No. 82M-00778.
United States Bankruptcy Court, D. Utah.
November 29, 1982.
Kim R. Wilson, Bryce D. Panzer, Snow, Christensen & Martineau, Salt Lake City, Utah, for Ford Motor Credit Co.
David E. Leta, Roe & Fowler, Salt Lake City, Utah, for debtor.
MEMORANDUM OPINION
RALPH R. MABEY, Bankruptcy Judge.
INTRODUCTION AND BACKGROUND
The Bankruptcy Code contains several provisions which promote the private, cooperative, negotiated rebuilding of financially distressed debtors. One of these measures, 11 U.S.C. Section 305(a)(1), is the subject of inquiry in this case. The facts relevant to this inquiry, briefly summarized, are as follows.
In January, 1977, Colonial Ford, Inc., the debtor, ceased operation as an automobile dealership. Since May, 1975, it has been embroiled in litigation with Ford Motor Company, Ford Motor Credit Company, the United States Small Business Administration, and other creditors. This litigation embraces three lawsuits, one of which has journeyed to the Tenth Circuit Court of Appeals and back and resulted in a judgment for $2,897,125 in favor of Ford Credit and against Colonial. Execution on this judgment and liquidation of the former dealership site, which Colonial continues to hold and lease to others, was enjoined by the district court pending resolution of these cases.
In July, 1981, Colonial and its creditors settled their differences.[1] The agreement, in essence, accomplished two objectives. First, with the exception of a single crossclaim, *1015 it concluded all three lawsuits. Second, creditors reduced their claims and gave Colonial nine months to sell or refinance the dealership site; if this did not occur, a decree of foreclosure would be entered. Creditors, in other words, were willing to take less in exchange for an end to the litigation and swifter realization on their claims.[2]
Colonial was unable to sell or refinance the property and filed a petition under Chapter 11 on March 30, 1982. Ford Credit filed a motion to abstain pursuant to Section 305(a)(1) on June 1. This was heard July 15. The court ruled from the bench August 24. An order was entered September 27. This memorandum decision elaborates the basis for that ruling.[3]
THE POLICY OF ENCOURAGING WORKOUTS
Section 305(a)(1) reflects a policy, embodied in several sections of the Code, which favors "workouts": private, negotiated adjustments of creditor-company relations.[4] Congress designed the Code, in large measure, to encourage workouts in the first instance, with refuge in bankruptcy as a last resort. As noted in the legislative history: "Most business arrangements, that is, extensions or compositions (reduction) of debts, occur out-of-court. The out-of-court procedure, sometimes known as a common law composition, is quick and inexpensive. However, it requires near universal agreement of the business's creditors, and is limited in the relief it can provide for an overextended business. When an out-of-court arrangement is inadequate to rehabilitate a business, the bankruptcy laws provide an alternative. An arrangement or reorganization accomplished under the Bankruptcy Act binds nonconsenting creditors, and permits more substantial restructuring of a debtor's finances than does an out-of-court work-out." H.R.Rep. No. 95-595, 95th Cong., 1st Sess. 220 (1977), U.S. Code Cong. & Admin.News 1978, pp. 5787, 6179-6180. The reasons for blessing the workout are at least threefold.
*1016 First, the workout is expeditious. Debtors and creditors, unbridled by bankruptcy, enjoy a flexibility conducive to speed. By contrast, the "bankruptcy machinery [of] today," may be "a very time-consuming and hydraheaded kind of delaying structure" which "frequently works to the detriment of creditors." Hearings on S. 2266 and H.R. 8200 Before the Subcomm. on Improvements in Judicial Machinery of the Senate Comm. on the Judiciary, 95th Cong., 1st Sess. 599 (1977). Indeed, it has been noted, appropos the settlement in this case, that "delay .... is the most costly element in any bankruptcy proceeding and particularly in a business reorganization. The same amount of money received by the senior creditors 4 years from now is worth probably less than half of what would be an amount of money received today. In other words, if [a creditor] can anticipate, after this elaborate procedure, [that he] will receive $1 million, then he would be well-advised and usually is anxious to take $500,000 today because it's worth more to him. He has to consider the investment value and the ravages of inflation. This is worth more than the prospect of getting $1 million 4 years from now." Id. at 490. Many provisions in the Code were fashioned in response to this testimony and as inducements to alacrity in reorganization, including the expansive jurisdiction of the court, the opportunity for creditors to file plans, and modification of the absolute priority rule, to name three.[5] The assist to workouts complements these features of the Code.
Second, workouts are economic. Economy, of course, is improved through expedition, as noted above. But the workout is economic because it avoids the superstructure of reorganization: trustees, committees, and their professional representatives. These and other costs of administration push junior interests "under water," and because they must be paid at confirmation, diminish prospects for a plan. Moreover, bankruptcy may shipwreck relationships necessary to keep a business afloat. Customers are reluctant to deal with the manufacturer who may not survive to honor the warranty of his product or with the lessor who cannot guarantee the habitability of his premises. The cost of overcoming this reluctance, through marketing campaigns and the like, may be high. Sales will be difficult; prices may be low. Suppliers may dwindle. Costs of credit may increase. "[W]hen word of financial difficulty spreads, the debtor's own debtors often decline to pay as they would have in the ordinary course, suddenly reporting that the dresses were the wrong size, were the wrong color, or were not ordered." Coogan, Broude and Glatt, "Comments on Some Reorganization Provisions of the Pending Bankruptcy Bills," 30 Bus.Law. 1149, 1155 (1975). Likewise, "accounts receivable can deteriorate to an unbelievable extent as soon as word gets around that the debtor is headed for the cemetery." Hearings on H.R. 31 and H.R. 32 Before the Subcomm. on Civil and Constitutional Rights of the House Comm. on the Judiciary, 94th Cong., 1st Sess., Ser. 27, pt. 1, at 483 (1975). These circumstances, among others, handcuff a debtor doing business in Chapter 11.
Third, the workout is sensible. Workouts contemplate, indeed depend upon, participation from all parties in interest, good faith, conciliation, and candor. The alternative is litigation and its bedfellows bluff, pettifoggery, and strife. Moreover, the parties who are "on-site," and prepared by education or experience, are more able than a judge, ill-equipped in resources and training, to rescue a beleagured corporation. "The courtroom," after all, "is not a boardroom." The judge is not a business consultant." In re Curlew Valley Associates, 14 B.R. 506, 511 (Bkrtcy.D.Utah 1981). The problems of insolvency, for the most part, are matters for extra-judicial resolution, calling for "business not legal judgment." Id.
With these advantages in mind, the authors of the Code encouraged workouts in at least two ways.
*1017 First, the Code, "[l]ike a `fleet-in-being' ... may be a force towards mutual accommodation," and as such, sets parameters for negotiations preceding a workout. Hearings on H.R. 31 and H.R. 32 Before the Subcomm. on Civil and Constitutional Rights of the House Comm. on the Judiciary, 94th Cong., 1st Sess., Ser. 27, pt. 1, at 396 (1975). Thus, for example, a creditor may be chary of dictating terms where this might result in the subordination of his claim. Cf. Douglas-Hamilton, "Creditor Liabilities Resulting From Improper Interference with the Management of a Financially Troubled Debtor," 31 Bus.Law. 343, 347-352 (1975); In re American Lumber Co., 5 B.R. 470 (D.Minn.1980). A creditor must weigh the possibility that execution on a judgment will be effort wasted if bankruptcy ensues and his preference is avoided, see, e.g., Hearings on H.R. 31 and H.R. 32 Before the Subcomm. on Civil and Constitutional Rights of the House Comm. on the Judiciary, 94th Cong., 1st Sess., Ser. 27, pt. 1, at 394-397 (1975), or that foreclosure will be for naught if the property must be turned over to the trustee, see, e.g., id. at 490-491. A debtor, likewise, may not break faith with creditors by preferring some over others, or by secreting assets, lest they file an involuntary petition.
Second, the Code, in several specific respects, contemplates that workouts will be a prelude to, yet consummated in, bankruptcy. Thus, for example, 11 U.S.C. Section 1102(b)(1), under certain circumstances, allows the continuation, as the official creditors committee, of a prepetition creditors committee. Similarly, 11 U.S.C. Section 1126(b), in some instances, validates prepetition acceptances of a plan. "Congress," according to one authority, "rejecting the opposition of the Securities and Exchange Commission, has provided a flexible reorganization procedure which accommodates prefiling reorganization procedures for both public and private corporations. A plan may be filed with the petition commencing a Chapter 11 case or at any subsequent time. Acceptances obtained before the commencement of the filing may be counted in the voting if there was adequate prepetition disclosure and, if necessary, `compliance with any applicable nonbankruptcy law .... governing the adequacy of disclosure.'" Trost, "Business Reorganizations Under Chapter 11 of the New Bankruptcy Code," 34 BUS.LAW. 1309, 1325 (1979). Indeed, incentives to use "prepackaged plans" are "written all through the new Act." They lead to a "revolving door" in and out of Chapter 11. Aaron, "The Bankruptcy Reform Act of 1978: The Full-Employment-for-Lawyers Bill: Part V: Business Reorganization," 1982 Utah L.Rev. 1, 38.[6]
SECTION 305(a)(1) AND THE POLICY OF ENCOURAGING WORKOUTS
Thus, the Code encourages workouts outside, or concluded inside, Chapter 11. Encouragement on both fronts is necessary because dissent from a workout may assume a variety of shapes. Creditors who would otherwise pursue their rights under state law are kept in tow because preferences may be undone following a petition in bankruptcy. Others may be bound, assuming a consensus in number and amount, through confirmation of a plan. What, however, of the maverick who threatens prematurely to disrupt out-of-court negotiations by an involuntary petition, or the party, creditor or debtor, who has "buyer's remorse" and seeks a recapitulation of the *1018 settlement in bankruptcy? This form of dissent is the target of Section 305(a)(1) which provides:
(a) The Court, after notice and a hearing, may dismiss a case under this title, or may suspend all proceedings in a case under this title, at any time if
(1) The interests of creditors and the debtor would be better served by such dismissal or suspension.
Section 305(a)(1) evolved from Section 4-208(a) of the Commission proposal which permitted dismissal of an involuntary, but not a voluntary, petition which was not in the "best interests of the debtor and its creditors."[7] The Commission relaxed the standards for involuntary bankruptcy in the belief that early, albeit involuntary, relief against marginal enterprises would increase dividends available to creditors. Section 4-208(a) was the counterweight to this reform, safeguarding against the precipitate or malicious involuntary petition.[8]
Congress realized, however, at some point in the study and revision of the Commission bill, that abuse could occur in connection with voluntary as well as involuntary petitions. Hence, it rewrote Section 4-208(a) and moved it to Section 305(a)(1).[9] Moreover, it added Section 305(c) which makes any decision under Section 305(a)(1) nonappealable. This measure insulates the workout *1019 from time-consuming and expensive litigation and thus underscores the role of Section 305(a)(1) in furthering out-of-court solutions to the rehabilitation of debtors.[10]
*1020 APPLICATION OF SECTION 305(a)(1) IN THIS CASE
Colonial questions the applicability of Section 305(a)(1) in voluntary cases, and whether dismissal, under the circumstances of this case, "better serves" the interests of creditors and the debtor.[11]
The Applicability of Section 305(a)(1) in Voluntary Cases
Section 305(a)(1) applies in any case, voluntary or involuntary, "under this title." This is consistent with the evolution of the statute, noted above, beginning as a bylaw in Section 4-208(a), and moving to general applicability in Chapter 3 of the Code.[12] Moreover, this reading is consistent with the policy to encourage workouts. It would be anomalous to protect workouts from involuntary petitions while leaving them vulnerable to voluntary petitions. Creditors would be protected from the renegades in their number who sought involuntarily to commit a debtor to bankruptcy, but they would have no similar check against debtors who compose their debts with the promise that matters will be left out of court and then stage an ambush in Chapter 11.
Whether the Interests of Creditors and the Debtor are Better Served by Dismissal
Section 305(a)(1) permits dismissal where it will "better serve" the interests of creditors and debtors. The statute affords no guidance in defining the "interests" to be considered, nor does it delineate criteria for determining when parties will be better served in or out of bankruptcy.[13] Given the policies underlying Section 305(a)(1), however, the standards for dismissal may include speed, economy, and freedom from litigation. Other considerations may be fairness, priorities in distribution, capacity for dealing with frauds and preferences, and the importance of a discharge to the debtor. Cf. Kennedy, "The Commencement of a Case Under the New Bankruptcy Code," 36 Wash. & Lee L.Rev. 977, 1023 (1979). Not all of these factors will be *1021 involved, nor will they assume equal importance, in every case. Hence, Congress intended the court to exercise considerable discretion in sifting and weighing grounds for dismissal under Section 305(a)(1). See, e.g., H. Miller and M. Cook, A Practical Guide to the Bankruptcy Reform Act 79 (1979). Cf. Cook, "Involuntary Bankruptcy and the Proposed Bankruptcy Act of 1973: Reform at Last," 20 N.Y.L.F. 97, 117, 119 (1974); Note, "Involuntary Bankruptcy Under the Proposed Bankruptcy Act," 63 Geo. L.J. 187, 198-201 (1974) (critical of broad discretion and "substantial unresolved policy questions for judicial determination").[14]
The Interests of Creditors
In this case, the interests of creditors are better served by dismissal. They agreed to a workout because it ended the litigation, and although they compromised their claims, the present value of the amounts to be realized at payout or foreclosure exceeded what they might have gained over time. This was not a workout where debt is rolled over with an eye to recovery, while recognizing the possibility of bankruptcy. Nor was it a workout where a deal was struck prepetition to be confirmed under the auspices of Chapter 11. Here the out-of-court composition was comprehensive, including virtually all creditors and the debtor. It was also final. A business which had lain dormant for years was not to be revived without the elimination of prior debt and the infusion of fresh capital.[15]
The Interests of Colonial
Colonial argues that its interests are better served in Chapter 11; otherwise it would not have filed a petition. This argument, however, may be astigmatic for at least two reasons.
First, it ignores the question of who is the debtor for purposes of Section 305(a)(1). If the case is in Chapter 11, for example, the debtor will be a debtor in possession, and hence the trustee or fiduciary for the estate. The interests of the debtor, under these circumstances, are coincidental with the interests of creditors. Indeed, no debtor is an island, self-existent apart from its creditors who supply the capital, goods, and services necessary to his survival. This idea finds expression, not only in the construct of a debtor in possession, but also at common law where insolvent entities became funds managed in trust for the benefit of creditors. From this standpoint, the interests of creditors receive double weight under Section 305(a)(1), once from a partisan *1022 and again from a fiducial perspective.[16] In any event, the corporate debtor will be a complex of constituencies, including not only creditors but also a board of directors, management, and shareholders. These parties may be divided on some issues; even when united, their views may change from circumstance to circumstance, or from time to time. To say, with Colonial, that the debtor speaks with one voice on all occasions, and that its interests are circumscribed in the management's act of filing a petition, is oversimple.[17]
Second, it overlooks the benefits which debtors in general may derive from out-of-court workouts and which Colonial in particular obtained in this settlement. The choice to settle out of court rather than to file for reorganization, more often than not, will be enlightened. Management eager for asylum in bankruptcy may pause if faced with displacement by a trustee. Shareholders likewise must reckon with the prospect of a creditor's plan, wresting control of the business and eliminating their interest. Moreover, their equity, already thin or nonexistent, may not survive the burden of administrative debt. Debtors, as well as creditors, are familiar with the old saw that a "good" liquidation out of court is better than a "bad" reorganization in Chapter 11. Since the odds are stacked against obtaining confirmation of a plan,[18] and in light of the probability of conversion to Chapter 7, debtors may be well-advised, where their creditors are cooperative, to forego the dislocations and trauma, the depressed markets, the higher cost of money, and other disadvantages of bankruptcy, and work out an arrangement, even if it contemplates an eventual liquidation.
Colonial (or its shareholder, if she is the debtor) garnered these general benefits and two additional bonuses from its settlement. (1) Mrs. Belnap, by paying the SBA, may assume its right of redemption upon foreclosure of the property. This assumption, if exercised, is free and clear of any claim by Colonial or its creditors. This option, given the dictates of 11 U.S.C. Section 1129(b)(2)(B), might be unavailable to her in Chapter 11.[19] (2) Colonial may have grown weary of the protracted litigation, and realizing that it had reached a point of diminishing returns in court, sought disentanglement from its adversaries through the settlement. Colonial now seeks to keep the benefits of this compact, the reduction in debt, and avoid its burdens, the foreclosure, *1023 but this may not be done. An accord, with no satisfaction, releases parties from any duty to honor the compromise, and returns them to the status quo ante. The petition, therefore, may have revived the litigation in district court, with the risks and imponderables which prompted settlement in the first instance. There is no assurance that changing forums and prolonging the fight for another 7 years will produce a better bargain for Colonial.
These reasons motivated Colonial to make an agreement with its creditors which composed the debt and provided for sale, refinancing, or foreclosure of the property. The alternative of bankruptcy was available then, as now, and entered the calculus of decisionmaking, but was rejected in favor of the settlement. Colonial asserts, however, that reorganization better serves its interests at present. Attempting to divine the interests of Colonial, given this doublemindedness, is problematical. But even if full credit is given to its present protestations, these do not counterbalance the reasons for avoiding bankruptcy. Even assuming that the protestations and the reasons have equal weight, the policy of encouraging out-of-court workouts, embodied in Section 305(a)(1), dictates that the interests of Colonial are "better served" by the settlement than by a petition in Chapter 11.
CONCLUSION
The Code encourages out-of-court workouts. Section 305(a)(1) is one of several instruments useful in achieving this goal. Because an order of dismissal under Section 305(a)(1) is nonreviewable, the statute should be invoked sparingly. Indeed, Section 305(a)(1) permits "suspension" as well as dismissal of a case, suggesting the possibility that efforts toward settlement may proceed on more than one front at the same time. Where, however, the workout is comprehensive, and designed to end, not perpetuate, the creditor-company relations, dismissal under Section 305(a)(1) is appropriate. One "reorganization," under these circumstances, is enough. Section 305(a)(1) precludes an encore, thereby furthering the policies of expedition, economy, and good sense.
NOTES
[1] Details of the claims asserted and positions taken in this litigation, while reviewed by the parties in their memoranda in order to show the "bad faith" of one another, is not repeated. The ruling of the court, given below, is based upon the purpose of Section 305(a)(1) to further out-of-court workouts. Section 305(a)(1), while designed to prevent abusive filings of a particular variety and under special circumstances, does not require an analysis of "good faith" on the facts of this case. Moreover, the "bad faith," if any, was accounted for and superseded in the settlement. Thus, the background to the litigation has no significance. The progress from litigation to settlement, however, is important.
[2] These reductions, with other concessions, were substantial. Ford Credit, for example, held a judgment for $2,897,125. An injunction barring execution, however, had prevented collection from the fall of 1976 until the settlement in 1981. The settlement reduced the judgment to $1,250,000, provided a moratorium on interest for all but $50,000 of this amount, and postponed foreclosure another nine months. All but three creditors, by default or acquiescence, are dealt with in the settlement. One of these, Ken Rothey, is counsel to and an officer of Colonial. He holds an attorneys lien on the unsettled cross-claim. The others, LeGrande Belnap and Doris Belnap, shareholders of Colonial, have a claim for wages.
[3] Ford Credit also sought dismissal of the case for want of "good faith" under 11 U.S.C. Section 1112(b) and relief from the stay under 11 U.S.C. Section 362(d). By stipulation of the parties, these matters were heard with the motion to abstain under Section 305(a)(1) on July 15. At that time, Colonial was prepared to demonstrate, by calling five witnesses, its "good faith" and prospects for reorganization. The court, however, was unable to adjust its calendar to accomodate this amount of testimony and confined the parties to the time which had been allocated. Colonial expressed concern that this procedure would prejudice its case. The court observed that, if necessary, a subsequent hearing might be held.
The court is satisfied that it was appropriate to rule on the question of abstention without reconvening the hearing and receiving more evidence. The court assumed, for purposes of its ruling, that Colonial was in "good faith" and had a reasonable prospect for rehabilitation, and dismissal would not have been allowed for these reasons under either Section 305(a)(1) or Section 1112(b). Likewise, the court assumed that relief from the stay would not have been allowed under Section 362(d). Thus, the inability of Colonial to present evidence on these points was immaterial.
[4] For a description and analysis of workouts, see generally, Billig, "What Price Bankruptcy: A Plea for `Friendly Adjustment,'" 14 Cornell L.Q. 413 (1929); Coogan, Broude and Glatt, "Comments on Some Reorganization Provisions of the Pending Bankruptcy Bills," 30 Bus. Law. 1149, 1154-1160 (1975); Roberts and Lazarus, "When the Workout Doesn't Work Out An Outline," 12 Real Prop.Prob.Tr.J. 437 (1977); Rome, "The Business Workout A Primer for Participating Creditors," 11 U.C.C.L.J. 183 (1978); Statement of Peter F. Coogan, Hearings on H.R. 31 and H.R. 32 Before the Subcomm. on Civil and Constitutional Rights of the House Comm. on the Judiciary, 94th Cong., 1st Sess., Ser. 27, pt. 1, at 394-397 (1975); Statement of Patrick A. Murphy, id. at 436-438, 478-488.
[5] Other antidotes for delay are detailed in In re South Village, Inc., 25 F.Supp. 987 (D.Utah 1982).
[6] As stated by the sponsors of the Code: "One cannot overemphasize the advantages of speed and simplicity to both creditors and debtors. Chapter XI allows a debtor to negotiate a plan outside of court and, having reached a settlement with a majority in number and amount of each class of creditors, permits the debtor to bind all unsecured creditors to the terms of the arrangement. From the perspective of creditors, early confirmation of a plan of arrangement: first, generally reduces administrative expenses which have priority over the claims of unsecured creditors; second, permits creditors to receive prompt distribution on their claims with respect to which interest does not accrue after the filing date; and third, increases the ultimate recovery on creditor claims by minimizing the adverse effect on the business which often accompanies efforts to operate an enterprise under the protection of the Bankruptcy Act." 124 Cong.Rec. H11,102 (daily ed., September 28, 1978).
[7] Section 4-208(a) provided: "Upon the filing of an involuntary petition under section 4-205(c)(1) or (2), unless the debtor consents to relief or defaults, the court shall as soon as possible, in accordance with the Rules of Bankruptcy Procedure, hold a hearing to determine whether the relief sought is in the best interests of the debtor and its creditors. The petitioner shall have the burden of proving that relief is in the best interests of the debtor and its creditors. If the court determines that it is not, the case shall be dismissed. The court may require that the petitioner file a bond in such amount as the court may determine to indemnify the person against whom the petition is filed for such costs, counsel fees, expenses, and damages as may be allowed." Report of the Commission on the Bankruptcy Laws of the United States, H.Doc. No. 93-137, pt. II, at 77 (1973).
[8] The notes to the Commission proposal observed: "Subdivision (a) recognizes that involuntary relief has been facilitated under the proposed Act. This has been done to allow creditors to force timely proceedings and to encourage voluntary proceedings while there is still a possibility of rehabilitation or before all assets are dissipated. It is also hoped that litigation will be avoided and expenses thereby saved. On the other hand, the need for protection of a business debtor from the devastating impact of the mere filing of an involuntary petition is recognized. This section supplies safeguards that are not found in the present Act, except as indirectly provided, both to debtors that should and those that should not be in proceedings, by technical niceties and the expense of litigation. The judge is given broad discretion to dismiss a case after hearing. The case may be dismissed even though the requirements of § 4-205(c)(1) or (2) are met. This is necessary since a debtor may temporarily be unable to pay debts or one creditor might properly force a liquidation that would harm creditors. The judge can best deal with these difficult cases, given adequate discretion. It is anticipated that Rules of Bankruptcy Procedure will treat the filing of the petition like the situation where there has been the issuance of a temporary restraining order and establish procedures similar to those found in Rule 65 of the Federal Rules of Civil Procedure. The petitioner must furnish a bond, if required by the court, indemnifying the debtor for damages allowed pursuant to § 4-210(f) if the case is dismissed." Report of the Commission on the Bankruptcy Laws of the United States, H.Doc. No. 93-137, pt. II, at 78 (1973).
[9] The legislative history, by way of illustration, not prescription, points to an involuntary petition filed by a "few recalcitrant creditors." "A principle of the common law requires a court with jurisdiction over a particular matter to take jurisdiction. This section recognizes that there are cases in which it would be appropriate for the court to decline jurisdiction. Abstention under this section, however, is of jurisdiction over the entire case. Abstention from jurisdiction over a particular proceeding in a case is governed by proposed 28 U.S.C. § 1471[(d)]. Thus, the court is permitted, if the interests of creditors and the debtor would be better served by dismissal of the case or suspension of all proceedings in the case, to so order. The court may dismiss or suspend under the first paragraph, for example, if an arrangement is being worked out by creditors and the debtor out of court, there is no prejudice to the rights of creditors in that arrangement, and an involuntary case has been commenced by a few recalcitrant creditors to provide a basis for future threats to extract full payment. The less expensive out-of-court workout may better serve the interests in the case." H.R.Rep. No. 95-595, supra at 325, U.S. Code Cong. & Admin.News, p. 6281.
[10] Published opinions by appellate courts which have been invited to review orders under Section 305(a)(1) are silent on the policy of encouraging workouts and its effectuation through Section 305(c). The Seventh Circuit, in In the Matter of Covey, 650 F.2d 877 (7th Cir.1981), declined to review a refusal to dismiss an involuntary petition, describing the request for review as "meritless," and pointing to "the plain language" of Section 305(c). Id. at 879. The Eighth Circuit, in Buffington v. First Service Corporation, 672 F.2d 687 (8th Cir. 1982), confronted the dismissal of a voluntary petition. The statement of facts reveals that the district court had affirmed the dismissal, but only after an examination on the merits, ignoring Section 305(c). The circuit court rejected the appeal as "essentially frivolous," and as "repetitious litigation," awarding double costs against the debtor and his counsel, id. at 690, but left the question of appealability under Section 305(c) in doubt by dealing with certain items of procedure and standing. A district court, in Farmer v. First Virginia Bank of Fairfax County, 22 B.R. 488 (E.D.Va.1982), faced with the dismissal of an involuntary petition, held that Section 305(c) was unconstitutional insofar as it proscribed review of constitutional issues, and that orders under Section 305(a)(1) raise questions of substantive due process and hence are appealable notwithstanding Section 305(c). But cf. Harlow v. Sargent, 14 B.R. 267, 8 B.C.D. 162 (D.Vt.1981) (disallowance of appeal under 28 U.S.C. Section 1471(d) is constitutional). Farmer appears to vitiate Section 305(c), since any party may obtain review of an order under Section 305(a)(1) by alleging that it violates substantive due process. Commentators, who like the district court in Farmer may be uneasy with a nonreviewable power of dismissal in bankruptcy courts, have questioned whether review may be available where the court bases its decision on factors other than the interests of creditors and the debtor, see, e.g., Reed, Sagar and Granoff, "Subject Matter Jurisdiction, Abstention and Removal Under the New Federal Bankruptcy Law," 56 Am. Bank.L.J. 121, 142 (1982), or whether it may be obtained by mandamus, see, e.g., Gaffney, "Bankruptcy Petitions Filed in Bad Faith: What Actions Can Creditor's Counsel Take?" 12 U.C.C.L.J. 205, 238 n. 165 (1979); Levin, "Bankruptcy Appeals," 58 No.Car.L.Rev. 967, 993-994 n. 200 (1980). But see, 1 Norton Bankruptcy Law and Practice § 9.16, at Part 9-Page 31 (1981). These questions may underlie the prediction of other authorities that "[a]lthough [Section 305(c)] is apparently designed to avoid delay, it may generate further litigation. For example, when a case is dismissed, petitioning creditors may challenge Congress'[s] sweeping attempt in Section 305(c) to preclude all forms of judicial review, even in extraordinary cases." H. Miller and M. Cook, A Practical Guide to the Bankruptcy Reform Act 79 (1979).
That courts have overlooked the bias for workouts and against litigation reflected in Section 305(c) is remarkable, not only because of the plain meaning of the statute, but also because it is one of several measures where Congress interdicts appeals in favor of expedition and economy in the Code. Thus, 28 U.S.C. Section 1471(d) permits abstention in proceedings, as distinct from cases, and 28 U.S.C. Section 1478(b) allows remand of a proceeding removed from state or federal forums, with either decision being nonreviewable. See, e.g., Levin, supra at 992-993.
Other measures, while not strictly analogous, are nevertheless instructive on the point of nonappealability, expedition, and economy. For example, 11 U.S.C. Section 1109(a) permits the United States Securities and Exchange Commission to raise and be heard on any issue, but forbids it the right to appeal from any decision in a case. This principle is restated and amplified in 11 U.S.C. Section 1125(d) which allows the SEC or any other "agency or official whose duty is to administer or enforce" a law governing disclosure to comment on a disclosure statement, but denies the SEC, agency, or official the right to "appeal from an order approving a disclosure statement." As noted in the House Report: "The SEC and State agencies will not have a right of appeal on the adequacy of disclosure, either in the role of an advisor to the court in reorganization cases, or in the role of the agency responsible for the enforcement of the securities laws generally. The disclosure hearing is the central hearing in the case, and in a case of any size will be a relatively long process. An appeal by an agency that had no direct interest in the case when none of those with money involved can be persuaded to take an appeal could cause delay to the detriment of the debtor, the creditors, and the stockholders. The denial of the right to appeal does not deny a right to participate in an appeal taken by a party in interest. It merely prohibits the SEC from initiating the appeal and being the only appealing party. As had frequently been pointed out in connection with the need for a valuation hearing, or diagnosis of the debtor, the patient may die on the operating table while the lawyers are diagnosing. The public protection policy of the securities laws must be balanced with the protection of creditors rights in bankruptcy cases, which is frequently facilitated by speed in the reorganization process." H.R.Rep. No. 95-595, supra at 229, U.S.Code Cong. & Admin.News, p. 6188. See, e.g., Levin, supra at 979-981.
[11] Colonial also argues that abstention is inappropriate because its composition occurred in federal not state court. Some cases have suggested that Section 305(a)(1) may be invoked only where insolvency proceedings have been initiated in a nonfederal forum. See, e.g., In the Matter of Lang, 5 B.R. 371, 374 n. 4 (Bkrtcy.S.D.N.Y.1980); In the Matter of Nina Merchandise Corporation, 5 B.R. 743, 747 (Bkrtcy.S.D.N.Y.1980). But see, In re Michael S. Starbuck, Inc., 14 B.R. 134 (Bkrtcy.S.D.N.Y. 1981) (SEC receivership in federal district court). This proposition, however, draws no support from the statute, and is contradicted by the legislative history, which far from centering on a particular forum, states a preference for settlements "worked out by creditors and the debtor out-of-court." H.R.Rep. No. 95-595, supra at 325, U.S.Code Cong. & Admin. News, p. 6281. (Emphasis supplied.)
[12] The authorities which have addressed this point concur. See, e.g., Kennedy, "The Commencement of a Case Under the New Bankruptcy Code," 36 Wash. & Lee L.Rev. 977, 1023 (1979) ("The authority of the court to abstain under Section 305 extends to a case filed under Section 301, 302, 303, or 304"); Reed, Sagar and Granoff, "Subject Matter Jurisdiction, Abstention and Removal Under the New Federal Bankruptcy Law," 56 Am.Bank.L.J. 121, 145 (1982) ("Although 305 will probably have its widest applications in involuntary cases, the provision by its terms applies as well to voluntary cases"). Cf. Samuels, "Unregulated Foreign Banks in Bankruptcy: Section 4 of the Bankruptcy Act," 23 N.Y.L.S.L.Rev. 47, 90-91 (1977).
Approximately 35 published opinions have dealt with Section 305(a)(1). None has expressly ruled that Section 305(a)(1) is applicable or inapplicable in voluntary cases. Several voluntary cases have been dismissed, however, under the aegis of Section 305(a)(1).
[13] This paucity of guidelines has led to speculation over the scope of Section 305(a)(1). "It appears that in every case the court under § 305 must consider the interests of creditors and the debtor. Yet the word `may' in § 305(a) suggests that the court may abstain or decline abstention even when it is doubtful that the interests of creditors and the debtor will be better served by the court's decision. Thus, the court arguably could consider factors other than the interests of creditors and the debtor in making its determination. Such other factors might include the views of regulatory authorities." Reed, Sagar and Granoff, "Subject Matter Jurisdiction, Abstention and Removal Under the New Federal Bankruptcy Law," 56 Am. Bank.L.J. 121, 142 (1982). (Emphasis in original.)
[14] It could be argued that a court should be more cautious where an involuntary case is brought under 11 U.S.C. Section 303(h)(2) which provides for the entry of an order for relief if "within 120 days before the date of the filing of the petition, a custodian, other than a trustee, receiver, or agent appointed or authorized to take charge of less than substantially all of the property of the debtor for the purpose of enforcing a lien against such property, was appointed or took possession." The legislative history observes that "once a proceeding to liquidate assets has been commenced, the debtor's creditors have an absolute right to have the liquidation (or reorganization) proceed in the bankruptcy court and under bankruptcy laws with all of the appropriate creditor and debtor protections that those laws provide." H.R.Rep. No. 95-595, supra at 323-324, U.S. Code Cong. & Admin.News, p. 6280 (emphasis supplied). The Commission bill, according to one observer, did not permit abstention from an involuntary case "where there has been a general assignment for the benefit of creditors or where a receiver, trustee, or a liquidating agent has been appointed to take charge of the debtor's property. Apparently, the Commission believes that in such a case, a liquidation was contemplated, and that creditors should be able to obtain the safeguards available under the Bankruptcy Act." Cook, "Involuntary Bankruptcy and the Proposed Bankruptcy Act of 1973: Reform at Last," supra at 117-118. The observer concludes that this is "sound" but "not convincing," since even in these cases, given certain facts, dismissal may be appropriate. Id. at 118. The Code may adopt these views, permitting dismissal under Section 305(a)(1) in a case involving Section 303(h)(2), but only in exceptional circumstances.
[15] Indeed, Ford Credit, in reliance upon the settlement, has made payments of $50,000 in attorneys fees to Colonial, and $85,000 in property taxes to its shareholder. Colonial has not offered to refund these monies or otherwise unscramble performance under the agreement.
[16] Where the court decides whether to excuse a custodian from turnover under 11 U.S.C. Section 543(d), it must consider the interest of "equity security holders," if "the debtor is not insolvent." The legislative history notes that this provision "reinforces the general abstention policy in Section 305." H.R.Rep. No. 95-595, supra at 370, U.S.Code Cong. & Admin. News, p. 6326. This may imply that the interests of solvent and insolvent debtors, or at least the interests of shareholders in solvent or insolvent debtors, should receive different weight under Section 305(a)(1). But cf. 4 Collier on Bankruptcy ¶ 543.01, at 543-6 (15th ed.1981).
[17] The fragmentation of the interest of a debtor under Section 305(a)(1) may explain, in part, those cases where abstention has been allowed because of intracompany disputes. Compare, e.g., In The Matter of Win-Sum Sports, Inc., 14 B.R. 389 (Bkrtcy.D.Conn.1981) with In re Donaldson Ford, Inc., 19 B.R. 425, 6 C.B.C.2d 564 (Bkrtcy.N.D.Ohio 1982); In The Matter of Nina Merchandise Corporation, 5 B.R. 743 (Bkrtcy.S. D.N.Y.1980).
[18] Statistics are sparse. In this district, however, 261 petitions under Chapter 11 had been filed and were pending for over 6 months as of September 30, 1982. Of these, 43 or 16 percent had achieved confirmation. R. Wily, Estate Administrator's Report of Chapter 11 Cases iii (United States Bankruptcy Court, District of Utah, Third Quarter, 1982).
[19] Unless the class of unsecured claims consents, Colonial would have to pay unsecured claims in full or eliminate any option to Mrs. Belnap. See, 11 U.S.C. Section 1129(b)(2)(B). It might be argued that Section 1129(b)(2)(B) codifies the absolute priority rule of former law, and therefore, insofar as Mrs. Belnap contributes "money or money's worth," she may participate notwithstanding failure to pay unsecured claims in full. See, e.g., Carr, "When Can the Owners Participate in the Reorganized Debtor? Cram Down as a `Shield' for Creditors," 15 Ind.L.Rev. 547, 556-560 (1982). It may be questioned, however, whether the subrogation of Mrs. Belnap to the rights of the SBA, so that she can redeem for her own benefit, would constitute the payment of money or money's worth to the reorganized debtor.
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515 S.W.2d 608 (1974)
STATE of Missouri, Plaintiff-Respondent,
v.
Walter Eugene MORSE, Defendant-Appellant.
No. 9613.
Missouri Court of Appeals, Springfield District.
October 29, 1974.
*609 John C. Danforth, Atty. Gen., Paul Robert Otto, Asst. Atty. Gen., Jefferson City, for plaintiff-respondent.
John L. Woodward, Steelville, for defendant-appellant.
TITUS, Judge.
A jury convicted defendant of second degree burglary of and stealing from Carl Willhite's house located on Highway 95 north of Dawson, Missouri. Having been tried under the habitual criminal law, the court sentenced defendant to 10 years for burglary and 5 years for stealing. The state's proof was purely circumstantial; none was offered by defendant. We reverse and order defendant discharged.
Recounted most favorable to the state, the facts are: At 10 p. m. September 5, 1971, Willhite locked his house and departed. He did not return again until 6 p. m. September 7, 1971, at which time he found his home had been forcibly entered and that several household items were missing. These items (television, refrigerator, washer, dryer, sofa and chair) were never recovered. Four muddy tire marks, made by rear dual wheels, were observed on the concrete patio. The authorities testified that three weeks after the crimes were discovered, a truck was found in defendant's possession at Rolla, Missouri, and that three of the truck's four rear tires had treads identical to three of the four tire marks discovered on the patio. A witness told the jury that at 2 a. m. September 6, 1971, he saw defendant "a mile or mile and a half" from the Willhite residence standing on a road near a truck. The witness related the truck was similar in type to defendant's vehicle but that he did not see what, if anything, was in the truck.
In deciding the sufficiency of the foregoing evidence to sustain the conviction, we must accept it, and all inferences reasonably to be drawn therefrom, as true. State v. Walker, 365 S.W.2d 597, 599 [2] (Mo.1963). The inquiry, therefore, is: What did the state's evidence establish? It established: (1) At some unknown time between 10 p. m. September 5, 1971, and 6 p. m. September 7, 1971, a burglary and stealing occurred at the Willhite house; (2) at some unknown time between the times and dates just mentioned, defendant's truck was on the Willhite premises; and (3) at 2 a. m. September 6, 1971, defendant was at a point one to one and a half miles from Willhite's home. However, the evidence did not establish: (a) What time or approximate time the crimes were committed during the two days involved; (b) that the crime of burglary and the crime of stealing were committed at the same time; (c) that the person or persons who committed the crime of burglary were one and the same person or persons who committed the crime of stealing; (d) that defendant's truck was on the Willhite property at the time the crimes were committed; (e) that defendant was present at the Willhite house when the crimes were committed or at any other time; (f) that defendant's presence on the road a mile or a mile and a half from Willhite's home at 2 p. m. September 6, 1971, occurred at a time reasonably close to the time the crimes were committed; *610 or (g) that the stolen items were ever on defendant's truck or in defendant's possession.
When evidence of defendant's agency in connection with a charged crime is entirely circumstantial, the facts and circumstances relied on to establish guilt must not only be consistent one to another and with the hypothesis of guilt, they must also be irreconcilable and inconsistent with defendant's innocence and must so satisfactorily and clearly point to his guilt as to exclude every reasonable hypothesis of innocence. State v. Thomas, 452 S.W.2d 160, 162 (Mo.1970). "Measured by this test, can it be said that the showing relied on by the state is irreconcilable with the hypothesis of the innocence of the accused? We think not. It may be conceded, for present purposes, that the evidence is sufficient to justify the inference that the [defendant's truck was employed to haul away the items stolen from Willhite's home]. But this is not enough. In order to directly connect defendant with the crime it is necessary to infer, also, that from his . . . ownership of the [truck] he was present and participated in the [burglary and] larceny; and this, we hold, is not a permissible inference." State v. Schrum, 347 Mo. 1060, 1065, 152 S.W.2d 17, 19-20 [3] (1941). Moreover, the fact that the defendant may have been present at the scene of the crime (and there was no evidence in this case that he ever was) or that he may have possessed the opportunity to commit the crime, is not circumstantial evidence sufficient to justify a conviction. State v. Lane, 497 S. W.2d 207, 209 [2] (Mo.App.1973). The mere fact that defendant was seen at 2 a. m. September 6, 1971, within a mile or a mile and a half of the Willhite house and that his truck was on the Willhite premises at some time during the absence of Willhite from his home, does nothing more than raise a suspicion of defendant's guilt. Of course, a verdict based on suspicion, conjecture or on surmise, however strong, is not sufficient to permit a criminal conviction. State v. Eye, 492 S.W.2d 166, 168 (Mo.App.1973). There being no substantial evidence of defendant's guilt, his motion for judgment of acquittal should have been sustained. Accordingly, the judgment is reversed, and as it does not appear that upon another trial a submissible case might be made [State v. Goodman, 449 S.W.2d 656, 662 [16] (Mo.1970)], defendant is ordered discharged.
HOGAN, C. J., and STONE, BILLINGS and FLANIGAN, JJ., concur.
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67 F.3d 300
NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.UNITED STATES of America, Plaintiff-Appellee,v.David Michael THOMAS, Defendant-Appellant.
No. 94-2401.
United States Court of Appeals, Sixth Circuit.
Oct. 2, 1995.
Before: MARTIN and BOGGS, Circuit Judges; and HOOD, District Judge.*
PER CURIAM.
1
On December 16, 1993, David Michael Thomas was indicted by a federal grand jury on one count of illegal possession of a firearm by a felon in violation of 18 U.S.C. Sec. 922(g) and one count of possession of an unregistered shotgun with a barrel length of less than eighteen inches, in violation of 26 U.S.C. Sec. 5861(d). Following a two-day jury trial in July of 1994, Thomas was convicted on both counts. Later that year, he was sentenced to concurrent prison terms of eight years. Thomas filed a timely notice of appeal.
2
On appeal, Thomas claims that there was insufficient evidence to show that he knew that the shotgun barrel at issue was less than eighteen inches, which would require a reversal of his conviction for possession of an unregistered firearm. He also argues that his sentence fails to reflect properly his acceptance of responsibility for possession of the shotgun. Thomas does not challenge his conviction on count one.
3
In the winter of 1992, Thomas and a friend, Joe Green, helped Mike "Dweeb" Bagyski move his belongings into Thomas' apartment. Among Bagyski's possessions was a shotgun with a barrel that was sawed off sometime during the next several months by Thomas and Bagyski. In May or June of 1993, Thomas moved into an apartment in Walenda Green's residence. During that time, Thomas lived with Walenda's son, Joe Green, and kept the sawed-off shotgun under a couch in the apartment.
4
After only three weeks, Thomas vacated the premises at Green's request, but left his possessions behind. When Walenda Green was unsuccessful in having Thomas remove his belongings, she moved his couch and discovered the shotgun. Knowing that possession of such a firearm was illegal, Walenda Green turned it in to the police. The police delivered the weapon to the federal Bureau of Alcohol, Tobacco and Firearms (ATF). An ATF agent determined that the shotgun worked, and that the barrel was only sixteen and one-half inches long. ATF agents also determined that Thomas had a prior felonious assault conviction and took him into custody. At the time of his arrest, Thomas admitted witnessing Bagyski saw the barrel off, and to possessing the gun between January and July of 1993.
5
Thomas now argues that there was insufficient evidence for the jury to convict him of possession of an unregistered firearm. Under 26 U.S.C. Sec. 5861(d), it is unlawful to possess a firearm that is not registered in the National Firearms Registration and Transfer Record. A firearm includes "a shotgun having a barrel of less than 18 inches in length." 26 U.S.C. Sec. 5845(a)(1).
6
To obtain a conviction under Section 5861(d), the United States must prove that a defendant "knew of the features of his [weapon] that brought it within the scope of the Act." Staples v. United States, 114 S.Ct. 1793, 1804 (1994). Thus, the Supreme Court has read into this statute a mens rea element. As the Court stated, silence "does not suggest that Congress dispensed with mens rea for the element ... at issue here." Id. at 1804. Following Staples, the district court in this case instructed the jury that Thomas' knowledge of the length of the shotgun's barrel was an element of the offense to be proven beyond a reasonable doubt.
7
Thomas argues that the evidence presented at trial was insufficient to support his conviction on count two because the United States failed to show that he knew the barrel was less than eighteen inches long. In support of his claim that he could not have known what the barrel's length was without measuring it himself, Thomas points to the fact that an ATF agent testified to an inability to tell the precise length of the barrel without measuring it. Thomas argues that his presence alone during the sawing off of the barrel was insufficient to prove, beyond a reasonable doubt, that he knew the barrel was unlawfully short.
8
The fact that the United States is required to prove Thomas' knowledge as an element of the offense, however, does not mean that it is restricted to using only direct evidence to prove its case. Circumstantial evidence may also be used, either in whole or in part, to support a jury's decision. This Court has long held that a guilty verdict can be sustained by "circumstantial evidence alone." United States v. Peters, 15 F.3d 540, 544 (6th Cir.1994). In determining whether evidence is sufficient to support a guilty verdict, "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 element of the crime beyond a reasonable doubt." United States v. Sanchez, 928 F.2d 1450, 1457 (6th Cir.1991) (citing Jackson v. Virginia, 443 U.S. 307, 319 (1979)). A conviction must be affirmed by the appellate court where there is "sufficient competent evidence on the record to justify a rational juror's conclusion that every element of the offense has been established beyond a reasonable doubt." United States v. Tilton, 714 F.2d 642, 645-46 (6th Cir.1983).
9
The record shows that the United States presented sufficient circumstantial evidence to enable a rational trier of fact to find the essential elements of the offense beyond a reasonable doubt. In particular, Thomas admitted to being present while the gun was being shortened, and of possessing the shotgun knowing he was a felon. Therefore, Thomas' challenge to the sufficiency of the evidence for his conviction on charge two fails.
10
Thomas' second argument on appeal is that the district court improperly failed to credit him with a two-level reduction for acceptance of responsibility under USSG Sec. 3E1.1 in the sentencing determination. That section states that a defendant can qualify for a two-level offense level reduction if he "clearly demonstrates acceptance of responsibility for his offense." USSG Sec. 3E1.1(a).
11
The commentary to Section 3E1.1 also indicates that the "sentencing judge is in a unique position to evaluate a defendant's acceptance of responsibility," thus entitling the judge to great deference on review. For that reason, review of a district court's decision to deny a sentencing reduction for acceptance of responsibility involves application of a clearly erroneous standard. United States v. Hernandez, 31 F.3d 354, 361 (6th Cir.1994). This standard "will nearly always sustain the judgment of the district court in this area" due to the credibility assessments necessarily made by the trial court. Id. at 361 (quoting United States v. Wilson, 878 F.2d 921, 923 (6th Cir.1989)).
12
In support of his claim, Thomas emphasizes that, at the time of his arrest, he made a statement to the ATF indicating that he witnessed the owner of the shotgun sawing it down, and that he had been in possession of the shotgun. In addition, Thomas also claims that he was denied the appropriate reduction because he exercised his right to go to trial.
13
The trial judge acted within his sound discretion in denying a two-level reduction for an acceptance of responsibility. The district court's conclusion that Thomas was not truly remorseful and should not receive the base offense level reduction is supported by the record and is not clearly erroneous. Factors taken into account by the trial court were that Thomas did not admit to participating in the sawing off of the shotgun or to displaying it as his own while it was in his possession; Thomas contested his factual guilt at trial; and Thomas was arrested while out on bond for "macing" an undercover officer with whom he had been negotiating a purchase of marijuana. In addition, there is no indication that Thomas' admission at the time of his arrest was improperly discounted in order to penalize him for exercising his right to go to trial.
14
For the foregoing reasons, we AFFIRM Thomas' conviction on count two and the sentence imposed by the district court.
*
The Honorable Joseph M. Hood, United States District Judge for the Eastern District of Kentucky, sitting by designation
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940 So.2d 1130 (2006)
SCOTT
v.
STATE
No. 1D06-4864
District Court of Appeal of Florida, First District
October 27, 2006.
Decision without published opinion. Affirmed.
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Opinion filed May 3, 2007
Opinion filed May 3, 2007
In The
Eleventh Court of Appeals
__________
No. 11-05-00183-CR
__________
VERA FAY HAVELKA, Appellant
V.
STATE
OF TEXAS,
Appellee
On
Appeal from the 39th District Court
Haskell County, Texas
Trial
Court Cause No. 6003
O
P I N I O N
The jury convicted Vera Fay Havelka of unlawful
use of a criminal instrument. Tex. Pen. Code Ann. _
16.01 (Vernon 2003). The trial court
assessed punishment at two years imprisonment, probated for five years, and a
fine of $2,400. The judgment of the
trial court is modified to reflect that the conviction is a Class A
misdemeanor. As modified, the judgment
is affirmed as to the conviction. The
portion of the judgment assessing punishment is reversed, and the cause is
remanded for a new trial as to punishment only.
In her first two issues on appeal, appellant
argues that the evidence is both legally and factually insufficient to support
the verdict. Appellant asserts in her
third issue that, if convicted at all, she should have been convicted of no
more than a Class A misdemeanor.
To determine if the evidence is legally
sufficient, we must review all of the evidence in the light most favorable to
the verdict and determine whether any rational trier of fact could have found
the essential elements of the crime beyond a reasonable doubt. Jackson v. Virginia,
443 U.S. 307 (1979); Jackson v. State, 17 S.W.3d 664 (Tex. Crim. App. 2000).
To determine if the evidence is factually sufficient, the appellate court
reviews all of the evidence in a neutral light.
Watson v. State, 204 S.W.3d 404, 414 (Tex. Crim. App. 2006)
(overruling in part Zuniga v. State, 144 S.W.3d 477 (Tex. Crim. App.
2004)); Johnson v. State, 23 S.W.3d 1, 10-11 (Tex. Crim. App. 2000); Cain
v. State, 958 S.W.2d 404, 407-08 (Tex. Crim. App. 1997); Clewis v. State,
922 S.W.2d 126, 129 (Tex. Crim. App. 1996).
Then, the reviewing court determines whether the evidence supporting the
verdict is so weak that the verdict is clearly wrong and manifestly unjust or
whether the verdict is against the great weight and preponderance of the
conflicting evidence. Watson, 204
S.W.3d at 414-15; Johnson, 23 S.W.3d at 10-11. The jury, as the finder of fact, is the sole
judge of the weight and credibility of the witnesses=
testimony. Tex. Code Crim. Proc. Ann. art. 36.13 (Vernon 2007), art.
38.04 (Vernon
1979).
Ammonia is a hazardous chemical compound rich in
nitrogen that is used as fertilizer in farming operations. Anhydrous ammonia is a form in which it is
used. AAnhydrous@ simply means that the ammonia is not
mixed with water. Normally, after it
leaves the vendor=s storage
facility, anhydrous ammonia is stored in tanks in areas close to where it will
be used.
Anhydrous ammonia is also used in the illegal
manufacture of methamphetamine.
Sometimes anhydrous ammonia is stolen from field tanks on the
farms. One method of stealing the
anhydrous ammonia involves the use of empty, smaller propane tanks.[1] The smaller tanks require modification before
they can be used to steal and transport anhydrous ammonia. Tape is placed around the threads of a soda
bottle, and the soda bottle is screwed into a hole in the propane tank. That bottle is then used to function as a
funnel in filling the propane tank from the larger field tank. When the smaller tank has been filled, the
soda bottle is removed, and a water faucet is screwed into the tank in its
place.
On June 12, 2004, Haskell County Deputy Sheriff
Winston Stephens was at a rural location conducting surveillance in connection
with some thefts of anhydrous ammonia from field tanks. There had been twelve prior thefts of
anhydrous ammonia from the tanks. At
about 2:00 a.m., while Deputy Stephens was conducting his surveillance, he
noticed that someone was driving into the area.
He saw the headlights of the vehicle.
He drove up to the moving vehicle, a pickup. He saw several containers in the back of the
pickup. Deputy Stephens recognized the
containers as being the type used to steal anhydrous ammonia, and he stopped
the vehicle. Appellant told Deputy
Stephens that one of the containers he had seen was a gas tank and that the
other was a water tank.
Although there was nothing in the area except for
the tanks and an uninhabited house, appellant told Deputy Stephens that they
were on the way to the town of Throckmorton. The evidence shows that the road led to the
tanks, not to Throckmorton.
Deputy Stephens saw something that was covered up
on the passenger=s side of
the pickup. Appellant=s passenger denied knowing what it
was. When the passenger uncovered it,
Deputy Stephens found a propane tank with a hole in it and a soda bottle
screwed into the top of it, like the ones used to steal anhydrous ammonia.
Deputy Stephens arrested appellant and the
passenger. Other items were located
during an inventory search of the pickup, including an outside water faucet
wrapped in the same tape as the soda bottle on the propane tank, a pipe wrench,
and flashlights. The faucet had a
bluish-green discoloration, a reaction associated with oxidation that occurs
during the handling of anhydrous ammonia.
Appellant asserts that the evidence is legally
insufficient because Athe
State must produce evidence that affirmatively links the contraband to
[a]ppellant in such a way that a reasonable inference may arise that the
defendant knew of its existence and exercised control over it.@
The Alinks@ rule is not an independent test for
legal sufficiency but is merely a shorthand catchphrase for the myriad variety
of circumstantial evidence that may establish knowing Apossession@ or Acontrol,
management, or care@ of
contraband. Evans v. State, 202
S.W.3d 158, 161-62 n.9 (Tex. Crim. App. 2006).
A nonexclusive list of factors that may circumstantially establish the
legal sufficiency of the evidence to prove a knowing possession include the
following: (1) the defendant=s
presence when a search is conducted; (2) whether the contraband was in plain
view; (3) the defendant=s
proximity to and the accessibility of the contraband; (4) whether the defendant
was under the influence of narcotics when arrested; (5) whether the defendant
possessed other contraband or narcotics when arrested; (6) whether the
defendant made incriminating statements when arrested; (7) whether the
defendant attempted to flee; (8) whether the defendant made furtive gestures;
(9) whether there was an odor of contraband; (10) whether other contraband or
drug paraphernalia were present; (11) whether the defendant owned or had the
right to possess the place where the contraband was found; (12) whether the
place where the contraband was found was enclosed; (13) whether the defendant
was found with a large amount of cash; and (14) whether the conduct of the
defendant indicated a consciousness of guilt.
Id.
at 162 n.12.
After reviewing the evidence in the light most
favorable to the jury=s
verdict, we hold that it is legally
sufficient to support the conviction. We
also hold that the evidence supporting the verdict is not so weak that the
verdict is clearly wrong and manifestly unjust and that the verdict is not
against the great weight and preponderance of the conflicting evidence. The evidence is legally and factually
sufficient to support the judgment.
Appellant=s first
two issues on appeal are overruled.
A grand jury indicted appellant for possession of
a propane tank modified so that it would serve to receive anhydrous ammonia for
use in the manufacturing of methamphetamine.[2] The grand jury indicted appellant under
Section 16.01 of the Texas Penal Code.
That section contains the following language:
(a) A person commits an offense if:
(1) he possesses a criminal instrument with intent
to use it in the commission of an offense.
.
. . .
(c) An offense under Subsection (a)(1) is one
category lower than the offense intended. An offense under Subsection (a)(2) is
a state jail felony.
Section 16.01(a)(1), (c).
At the outset, we note that neither party has
provided, nor have we been able to locate, any case in which this statute was
used in a prosecution in a case of this nature.
This prosecution involves Section 16.01(a)(1). Section 16.01(c) informs us that an offense
under 16.01(a)(1) is one category lower than the offense intended. If the offense had been under 16.01(a)(2),
the statute makes it clear that the offense would have been a state jail
felony. Rather than determine the
punishment applicable to a conviction for this crime, we must first determine
the grade of the offense. The offense in
which the criminal instrument would be used in this case is the illegal
manufacture of methamphetamine.[3]
Tex. Health
& Safety Code Ann. '
481.112 (Vernon 2003) addresses the various levels of offenses involving the
manufacture, delivery, or possession with intent to deliver
methamphetamine. The most serious
offense is one punishable for life or for a term of not more than 99 years or
less than 15 years, and a fine not to exceed $250,000, if the amount of the
controlled substance to which the offense applies is, by aggregate weight,
including adulterants or dilutants, 400 grams or more. There are other intermediate offenses, all of
which provide for a punishment dependent upon the amount of methamphetamine
manufactured, delivered, or possessed with the intent to deliver. The least serious offense is a state jail
felony if the amount is less than one gram.
The proof contemplated in Section 481.112
involves, in part, the amount of the
methamphetamine manufactured, delivered, or possessed with the intent to
deliver. The offense in this case,
possession of a criminal instrument, is one degree less than the offense for
which the use of the criminal instrument is intended. The classification of this offense,
therefore, depends upon how much methamphetamine appellant intended to
manufacture. There is no evidence, nor
can there in reason be any evidence, regarding the amount of methamphetamine to
be manufactured. Under these
circumstances and under the statute, it would be rare indeed that such proof
would be available.
When the classification of a controlled substance
offense is dependent upon the amount of the controlled substance, the amount
need not be pleaded and proven to sustain a conviction for the lowest
classification. Stockton v. State,
756 S.W.2d 873 (Tex. App.CAustin
1988, no writ) (citing Suarez v. State, 532 S.W.2d 602 (Tex. Crim App.
1976)). The lowest classification for
the manufacture of methamphetamine is a state jail felony. Section 16.01(c) provides that possession of
a criminal instrument should be one degree less than the offense intended. In the absence of proof of the amount
intended to be manufactured, which would be difficult to prove at best,
manufacture of methamphetamine would be classified as a state jail felony. One degree less than that would be a Class A
misdemeanor. Appellant was convicted of
a state jail felony; appellant should have been convicted of a Class A
misdemeanor. Appellant=s third issue is sustained.
The judgment of the trial court is modified to
reflect that the conviction is a Class A misdemeanor. As modified, the judgment is affirmed as to
the conviction. The portion of the
judgment assessing punishment is reversed, and the cause is remanded for a new
trial as to punishment only.
JIM R. WRIGHT
CHIEF JUSTICE
May 3, 2007
Publish. See Tex. R. App. P. 47.2(b).
Panel
consists of: Wright, C.J.,
McCall,
J., and Strange, J.
[1]We note that the tank in the record is referred to both
as a butane tank and a propane tank.
Appellant was indicted for possession of a propane tank modified to
receive anhydrous ammonia.
[2]The indictment charges that appellant:
[W]ith
intent to use it in the commission of an offense, namely, Manufacture of a
Controlled Substance, namely Methamphetamine, intentionally or knowingly
possess a criminal instrument, to-wit: a
propane tank modified so that it would serve to receive anhydrous ammonia, that
was specially designed, made, or adapted for use in the commission of said
offense.
[3]We note that the indictment in this case did not charge
appellant with possession of the tank with intent to commit an offense under Tex. Health & Safety Code Ann. ' 481.124 (Vernon Supp. 2006) (possession of anhydrous
ammonia with intent to manufacture methamphetamine). Under Section 481.124, the possession of
anhydrous ammonia in a container that is not designed to hold anhydrous ammonia
is a second-degree felony. Therefore, if
appellant had been charged with possessing the tank with intent to possess or
transport anhydrous ammonia, the offense in this case would have been a
third-degree felony.
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94 F.3d 649
NOTICE: Eighth Circuit Rule 28A(k) governs citation of unpublished opinions and provides that they are not precedent and generally should not be cited unless relevant to establishing the doctrines of res judicata, collateral estoppel, the law of the case, or if the opinion has persuasive value on a material issue and no published opinion would serve as well.Edward RONWIN, Appellant,v.Dori ALTMAN, Appellee.
Nos. 96-1068, 96-3564.
United States Court of Appeals, Eighth Circuit.
Submitted July 26, 1996.Decided Aug. 12, 1996.
Before BOWMAN, BEAM, and LOKEN, Circuit Judges.
PER CURIAM.
1
Edward Ronwin sued Dori Altman for personal injuries alleged to have resulted from a low-speed, rear-end automobile collision. A jury returned a verdict in favor of Altman, and judgment was entered on that verdict. The District Court1 denied Ronwin's post-trial motions. Ronwin appeals, seeking reversal on several grounds.
2
Having considered all the issues Ronwin has raised in these appeals, we conclude that the District Court committed no error of law and did not abuse its discretion in denying Ronwin's post-trial motions. Because the case lacks precedential value, we affirm the judgment below without further discussion.
3
AFFIRMED. See 8th Cir. R. 47B.
1
The Honorable John B. Jones, United States District Judge for the District of South Dakota
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NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued July 9, 2008
Decided August 21, 2008
Before
RICHARD A. POSNER, Circuit Judge
DIANE S. SYKES, Circuit Judge
JOHN DANIEL TINDER, Circuit Judge
No. 07-3482
ESSELONA JANE LARSON, Appeal from the United States District
Plaintiff-Appellant, Court for the Northern District of Indiana,
v. Hammond Division.
PORTAGE TOWNSHIP SCHOOL No. 2:05cv431
CORPORATION,
Defendant-Appellee. Philip P. Simon,
Judge.
ORDER
Portage Township School Corporation decided not to renew the contract of Esselona
Larson, as principal of Myers Elementary School, after the 2004-2005 school year. The
reasons stated for this decision were essentially Larson’s poor leadership, poor decision
making and insubordination. Larson then sued the township under Title VII of the Civil
Rights Act of 1964, 42 U.S.C. § 2000e-2, alleging religious discrimination. The district court
granted summary judgment for Portage Township, and Larson appeals. Because Larson
No. 07-3482 Page 2
has not shown a genuine factual dispute of unequal treatment, we affirm the district court’s
grant of summary judgment.
The facts are construed in the light most favorable to Larson. See Maclin v. SBC
Ameritech, 520 F.3d 781, 786 (7th Cir. 2008). In July 2003 Portage Township Schools hired
Larson as principal of Myers Elementary School. Almost immediately after being hired,
Larson began having minor disputes with Diane Zuick, a Jewish teacher at the school, and
so both began documenting the conflicts.
The conflict between Larson and Zuick reached a boiling point in November when,
at a staff meeting, Larson said, with an outstretched hand, “Heil Hitler” in response to
several staff members having raised their hands. Larson, though, denied making the
comment with a raised hand and claimed that she made it under her breath only because
she was “nervous.” Regardless, many of the teachers took issue with her comment. One
teacher approached Larson after the meeting and told her that Zuick was Jewish and that
some of Zuick’s family members had perished in the Holocaust. Shortly thereafter Zuick
approached Larson to inform her how “uncomfortable, painful, and offensive it was to see
her salute Hitler.” Larson apologized to Zuick for the comment, yet the conflict continued
into the remainder of the school year.
In December 2003, Zuick complained to Larson about the Christian Christmas carols
that were being played over the intercom in the classrooms. In response to Zuick’s
complaints, the carols were turned off in Zuick’s classroom. The next day, unbeknownst to
Larson, a school site-based team visited Zuick in her classroom to ask what she had against
Christmas and to determine why she was “over-reacting to the Heil Hitler incident.”
Several teachers objected to the meeting and complained about it to Larson. On December
15, Zuick emailed Larson asking to be excused from the “All Student Sing-along” because
“the majority of the songs are Christmas carols.” Zuick also informed Larson in the email
that, regarding the upcoming, first-ever “Staff Ham Breakfast,” she “adhere[s] to the Jewish
dietary laws.” Larson responded that the music at the sing-along would be the same as in
previous years, that there would be alternative menu items at the breakfast, and that she
would not excuse Zuick from either event. The next day Richard Miller, the Indiana State
Teachers Association (ISTA) UniServ Director, wrote to Superintendent George McKay on
behalf of Zuick, raising concerns about the religious hostility Zuick had allegedly suffered
and seeking a meeting to resolve the matter. And, at about the same time, the Jewish
Federation of Northwest Indiana (JFNI) sent a letter to the Portage School Board Chairman
demanding an inquiry into the Heil Hitler incident.
On December 18, Assistant Superintendent Barb Howe wrote Zuick a letter,
assuring her that she could skip the “All Student Sing-along,” explaining that her presence
at the “Staff Ham Breakfast” was necessary but that she need not eat anything that would
No. 07-3482 Page 3
make her “uncomfortable,” and informing her that he had directed the school’s staff to play
only secular music on the school’s intercom. A month later, Howe met with Larson to
emphasize that Portage Township Schools did not condone her “Heil Hitler” remark and
found it “inappropriate, offensive, and unacceptable.” Howe also sent Larson a letter
stating that although she did not purposefully intend to hurt Zuick and did not have a
pattern of such behavior, Larson was expected to “adhere to School Board Policies and
conduct [herself] in such a way that fosters acceptance of diversity.”
On February 3, 2004, however, Zuick emailed her ISTA UniServ Director, Richard
Miller, telling him that Larson was “incapable of changing her ways” and that nothing had
changed. She claimed that Larson ignored her requests, refused to get back to her on
pressing issues, and embarrassed her in front of other teachers. The dispute continued
throughout the winter and into the spring, resulting in a meeting on March 15 between
Larson, Zuick, Howe, Miller, David Lesich (ISTA President), and Dan Friel (the township’s
attorney). Howe’s memorandum of the meeting laid out a set of expectations and
guidelines for Zuick and Larson to follow when dealing with one another. Shortly
thereafter, at her annual evaluation with Howe in May, Larson received a mixed review.
Although she achieved all four of her listed goals, Larson also received a “Needs
Improvement” mark, the lowest possible, in eight categories. Further, Howe noted that
Larson “had a tendency to become defensive and then on the offensive . . . [and] would be
well served to consider the problem rather than regarding each situation as an attack.”
In July Superintendent McKay retired and was replaced by Michael Berta, who had
taught with Zuick at Myers Elementary School in the 1970s. Within a few weeks of
beginning the new position, Berta received several emails from Zuick about her ongoing
dispute with Larson. As a result, Berta scheduled yet another meeting between Zuick,
Larson, Friel, Miller, and Lesich. During the meeting the school’s policies and expectations
were once again reiterated. Larson, though, felt as if the participants had allowed Zuick to
“personally attack” her at the meeting. The next day Miller sent Berta a memorandum
explaining that Larson seemed unable “to accept responsibility for the fall out for some of
her actions” while Zuick had “boundary issues.” Over the next few months, Zuick and
Larson failed to resolve their dispute, and thus a third meeting was held between the two
parties where not much, if anything, was achieved. Berta then had Howe meet
individually with Larson and Zuick, and used Howe’s findings to issue another set of
expectations, which warned of adverse consequences and required a signature from both
parties. The dispute deteriorated even further on November 22 when Zuick filed a formal
complaint of harassment against Larson, claiming that she had been harassed for the past
16 months “because I am Jewish.”
No. 07-3482 Page 4
In December Berta instructed Howe to standardize the township’s 2004 holiday
program so that every elementary school would perform the same songs. Based on this
decision, Howe worked with the music teachers to develop a song list that included a
Hanukkah song, a Kwanza song, and several popular Christmas carols. Immediately after
receiving the list of songs, Larson emailed Howe to suggest that the list include “a
Christian Christmas song.” On December 7 Berta responded to Larson’s suggestion,
stating that her response concerned him because it might be interpreted as “another action
to irritate Ms. Zuick” and “another indirect attempt to put Diane Zuick in her place.” Berta
further explained that the issue was not whether Christian songs should be included but
whether Larson, as principal, “exercised good judgment in making the recommendation”
to include the songs. Three days later, Larson informed Berta that his interpretation was
“erroneous” and that her suggestion to include Christian songs was “on behalf of the staff”
and not merely her own personal view. Berta, viewing Larson’s memorandum in the
context of her overall dispute with Zuick, determined that it constituted the ”final straw.”
He therefore informed Larson on December 17 that the township would not be renewing
her contract because of her “minimal” leadership skills and inability to accept constructive
criticism.
On January 24, 2005, the Portage Township Schools Board of Trustees voted to
“nonrenew” Larson’s contract as principal of Myers Elementary School. (It should be
noted that although Larson was not continued in the administration leadership position as
a principal, she was allowed to remain in the school system as a tenured teacher. Rather
than accept that assistance, Larson abandoned her employment with the system.) In
November Larson sued Portage Township under Title VII, alleging unlawful termination.
In response to Portage Township’s motion for summary judgment, Larson argued that she
had established a prima facie case of discrimination under the indirect, burden-shifting test
by showing that (1) she is a member, as a Christian, of a protected class; (2) she met Portage
Township’s legitimate job expectations; (3) she suffered an adverse employment action;
and (4) Zuick, a similarly situated non-Christian employee, was treated more favorably.
Larson also contended that Portage Township’s reasons for its decision to fire her were
merely a pretext for religious discrimination based on her having recommended a Christian
Christmas song for the holiday program.
In September 2007 the district court held that Larson could not make out a prima
facie case of religious discrimination. It reasoned that Larson and Zuick were not similarly
situated because Zuick was a teacher at Myers Elementary whereas Larson was principal.
And the court, intertwining its analyses of pretext and legitimate job expectations,
determined that Larson failed to show any evidence of pretext or improper motive. The
court therefore granted summary judgment to Portage Township. Larson now appeals.
No. 07-3482 Page 5
Larson renews her arguments that she satisfied her prima facie case as set forth in
McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973), and that she submitted sufficient
evidence of pretext. We review a grant of summary judgment de novo, construing the facts
and inferences in Larson’s favor. See Maclin v. SBC Ameritech, 520 F.3d 781, 786 (7th Cir.
2008).
We have stated that where an employer offers a legitimate, nondiscriminatory
reason for firing an employee, it simply “doesn’t matter” whether the plaintiff presented a
prima facie case of discrimination. See Brewer v. Bd. of Tr. of the Univ. of Ill., 479 F.3d 908,
915-16 (7th Cir. 2007) (citing St. Mary’s Honor Ctr. v. Hicks, 509 U.S. 502, 510-11 (1993)). The
issue, instead, becomes whether the plaintiff has created a genuine issue of fact about the
sincerity of that explanation and, in turn, whether the defendant discriminated against her.
See Hicks, 509 U.S. at 511; Hague v. Thompson Distribution Co., 436 F.3d 816, 823 (7th Cir.
2006). Here, Portage Township has offered a legitimate, nondiscriminatory reason for
terminating Larson—she possessed “minimal” leadership skills, could not accept or
understand suggestions, and treated her supervisors as adversaries. Since, in this case, that
explanation is the same as the second prong of the prima facie test, we address the second
prong and pretext analysis at the same time.
Larson argues that her job was not in jeopardy in November 2004 and therefore the
timing of Portage Township’s decision to nonrenew her contract was suspicious because it
coincided with her suggestion to include a Christian song in the 2004 holiday program. An
employer’s explanation for a termination is pretextual if it is “not the true ground” for its
decision. Griffin v. Sisters of Saint Francis, Inc., 489 F.3d 838, 845 (7th Cir. 2007). The focus of
the inquiry is whether the employer’s stated reason for the termination was honest. See
Hague, 436 F.3d at 823. As here, this analysis often overlaps with the second element of the
prima facie case. See id. at 822-23; Fortier v. Ameritech Mobile Commc’ns, Inc., 161 F.3d 1106,
1113 (7th Cir. 1998).
Larson, who bears the burden of proving pretext, has not countered Portage
Township’s explanation for her termination with any evidence sufficient to create a factual
dispute regarding whether it was the true ground for its decision. See Gates v. Caterpillar,
Inc., 513 F.3d 680, 689 (7th Cir. 2008) (plaintiff has burden of rebutting employer’s proffered
reason by showing it to be untrue rather than merely unfair or incorrect). There is ample
evidence in the record demonstrating Portage Township’s issues with Larson dating back
to the beginning of the 2003 school year when she received a written reprimand for making
the “Heil Hitler” comment in front of several teachers. Following the reprimand, Larson
participated in several meetings regarding her performance as a result of her dispute with
No. 07-3482 Page 6
Zuick. In May 2004 she received eight low grades on her performance evaluation in the
areas concerning communication, organization, and competency. By November Larson
had participated in numerous meetings with Zuick and Portage Township officials, all to
no avail. And in November 2004, when Larson says that her job was not in jeopardy, Berta
was “questioning deeply her ability to lead” Myers Elementary School. Larson’s December
2004 actions concerning the inclusion of a Christian song in the holiday program defied
Portage Township’s prepared song list and were deemed yet “another indirect attempt to
put Diane Zuick in her place.” Larson has not created a genuine factual dispute on
whether Portage Township’s reasons for her termination were a pretext for religious
discrimination, and she has not shown that she was meeting Portage Township’s legitimate
expectations.
Larson also challenges the district court’s ruling on the fourth element of her prima
facie case. To determine whether employees are similarly situated, we ask whether “there
are enough common features between the individuals to allow a meaningful comparison.”
Humphries v. CBOCS West, Inc., 474 F.3d 387, 405 (7th Cir. 2007), aff’d, 128 S. Ct. 1951 (2008).
A common sense determination, this inquiry typically examines whether the individuals
dealt with the same supervisor, were subject to the same standards, or engaged in similar
conduct. See, e.g., Peirick v. Ind. Univ. Purdue Univ.-Indianapolis Athletics Dep’t, 510 F.3d 681,
688 (7th Cir. 2007). Here, Larson was in no way similarly situated to Zuick. As teacher and
principal, they both had entirely different levels of experience and job responsibility, and
they dealt with different supervisors. Moreover, Larson’s contract was “nonrenewed”
because of her minimal leadership skills and inability to accept suggestions, issues that
Zuick simply did not have, particularly because it was not her responsibility as a teacher to
lead the school. Larson has offered no evidence, other than the fact that both parties
occasionally met with one another to discuss school matters and resolve their differences,
that teachers at Myers Elementary School are subject to the same standards as the principal.
Accordingly, we AFFIRM the district court’s grant of summary judgment in favor of
Portage Township.
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490 F.Supp. 123 (1980)
Ronald J. BECKLEY and June C. Beckley, Plaintiffs,
v.
UNITED STATES of America, Defendant.
Civ. A. No. 178-149.
United States District Court, S. D. Georgia, Augusta Division.
March 27, 1980.
*124 Barnee C. Baxter, Jr., Augusta, Ga., for plaintiffs.
William T. Moore, Jr., U.S. Atty., Savannah, Ga., John F. Murray, Chief, Civ. Trial Division, Lawrence Sherlock, Tax Div., Dept. of Justice, Washington, D.C., for defendant.
MEMORANDUM OPINION AND ORDER
BOWEN, District Judge.
Plaintiffs seek a refund of taxes paid for the taxable year 1974. They claim the right to deduct certain expenses incurred for flight training by plaintiff Ronald J. Beckley. The case was tried before the Court on February 14, 1980. The facts are largely undisputed. Having considered the pleadings, the evidence, and the arguments of counsel, the Court hereby enters, in narrative form, the following
FINDINGS OF FACT
Ronald J. Beckley and June C. Beckley are married and filed a joint federal income tax return for the year 1974. Ronald J. Beckley [Beckley] began his employment as a special agent for the Federal Bureau of Investigation [FBI] in November, 1970. At that time, he held a private pilot's certificate and the FBI was so advised. A private pilot's certificate is the basic pilot's license issued by the Federal Aviation Administration. It permits a pilot to carry passengers, but not for hire. It does not authorize the pilot to operate an aircraft in poor or "instrument" weather conditions.
In the course of his employment as a special agent for the FBI, Beckley was called upon to act as a pilot on official business on approximately 20 occasions from 1970 to 1974. Often, his missions had to be canceled or the flight aborted because of adverse weather conditions.
In 1971, Beckley sought and obtained a certificate of eligibility for a program of education or flight training from the Veterans Administration [VA]. In his application, he requested VA benefits which would enable him to attend virtually any flying school and receive all of the instructions which was necessary to qualify him as an airline pilot. Beckley did not intend to become an airline pilot, but he did intend to use his VA eligibility to take as many flying courses as he could. He did not use the certificate of eligibility which was issued in 1971.
After he was assigned to his present duty station, Beckley applied again for a certificate of eligibility and received same. It was virtually identical to the first certificate. Pursuant to the second certificate of eligibility for VA educational benefits, Beckley studied for and obtained pilot's certificates and ratings in the following order: (1) instrument rating, (2) commercial pilot's certificate, (3) certified flight instructor's rating. The commercial pilot's certificate was obtained by Beckley almost immediately after he received his instrument rating. Because of the training he had received in obtaining his instrument rating, he had only *125 to take a flight test to receive his commercial certificate. Beckley's training for the instrument rating greatly improved his theoretical and practical flying abilities and enabled him to take and pass all of the exams required for the commercial pilot's certificate without extra study or training.
After receiving his instrument rating and commercial pilot's certificate, Beckley's flight activities for the FBI increased markedly. Recognition of his increased ability and contribution to his job performance was reflected in his annual performance ratings.
Since becoming a certified flight instructor, Beckley has given flight instruction to other special agents and to some members of the public for which he has received compensation. He has instructed the public in a continuing effort to maintain his license and ratings in a current status.
The deductions sought by the plaintiffs affect their return for the year 1974 only.
The FBI formally recognized the importance of flight capability in its investigatory duties in 1975 and promulgated guidelines for FBI flight operations. These guidelines are in evidence as P-1. The role of aviation in connection with FBI activities has steadily increased. During the last year, plaintiff has been engaged in flying and flying-related activities on official business for the majority of his time. He has even operated an airport in an undercover capacity. Beckley is a designated pilot-incommand for his district.
When Beckley received the instrument rating, he had only a private pilot's certificate. At that point in time, he was not lawfully able to fly an airplane or carry passengers for hire. After he received his commercial pilot's certificate, he was lawfully entitled to carry passengers for hire in an airplane. The instruction and training which Beckley received prior to obtaining his instrument rating enabled him to pass, without further study, his commercial pilot tests. The instrument instruction however, did not necessarily lead to his qualification as a commercial pilot. To obtain an instrument rating, whether on a private or commercial certificate, is a feat of far greater significance than to pass a commercial pilot test. An instrument rating is not a necessary step toward obtaining a commercial pilot's certificate. The flight training program in which Beckley was engaged was designed to provide to veterans all of the necessary training to obtain the instrument rating and commercial pilot certificate. The program was not designed by Beckley.
Upon the foregoing findings of fact, the Court has applied the following
CONCLUSIONS OF LAW
This Court has jurisdiction of this case pursuant to the provision of 28 U.S.C. § 1346(a)(1). The fact that most of the cost of Beckley's flight training was paid by the Veterans Administration does not affect his entitlement to a deduction if the right otherwise exists. Revenue Ruling 62-205.
For the purposes of computing taxable income, trade or business expenses are allowed as deductions under § 162 of the Internal Revenue Code. An educational expense such as flight training is deductible from gross income if it is required for the maintenance or improvement of skills required in an individual's employment. However, a deduction may not be taken for training which is required to meet the minimum educational requirements for the position in which the taxpayer is employed. Also, educational expenses cannot be deducted from gross income if they qualify the taxpayer for a new trade or business. 26 C.F.R. § 1.162-5.
There are some indications to the effect that the taxpayer Beckley would ultimately receive training in the VA program which would equip him for a new trade or business, that being a commercial pilot or flight instructor. However, his real intent was to improve his flying skills and to enhance his job performance as a special agent for the FBI.
When he received the instrument rating on his existing private pilot's certificate, Beckley was not entitled to fly or carry passengers for hire. 14 C.F.R. § 61.118, *126 § 61.139. The fact that he subsequently received his commercial pilot's certificate does not vitiate the deductibility of all expenses for flight training previously received by him. The fact that he was coincidentally prepared to take a test which would subsequently qualify him to fly for hire is not disqualifying.
Beckley's passage of the commercial pilot's certificate test was nothing more than a mere demonstration of his prowess as a pilot. His intent was to gain the knowledge and expertise to operate an aircraft in adverse weather conditions. This ability would greatly enhance his job performance. He was often called upon by the FBI to operate aircraft on official business in surveillance and other activities. Hence, the improvement of his skill as a pilot was the improvement of the skill required of Beckley in his employment. His receipt of the commercial pilot's certificate did nothing to increase or diminish his skill to operate an airplane in bad weather.
Virtually all of the flight training and skills which Beckley has received in the VA flight training program has improved his skills and proficiency as a special agent for the FBI. While it is implicit that the acquisition of an instrument rating is beneficial to a commercial pilot for employment purposes, the rating is not essential. It is the actual certification as a commercial pilot or flight instructor which explicitly permits the holder of the certificate to charge and receive compensation for pilot services. There is nothing in an instrument rating which entitles one to compensation.
Beckley's training for the instrument rating, while coinciding with much of the training to pass the commercial pilot's test, is legitimately directed toward the improvement of his skills as an FBI special agent frequently called upon to fly. The fact that the educational training received by a taxpayer concurrently prepared him to successfully undergo examinations which would ultimately enable him to hold another job does not necessarily lead to qualifying him in a new trade or business.
Here the taxpayer has shown that the training required to obtain an instrument rating on his private pilot's certificate was done to improve his skill and proficiency as a pilot and special agent for the FBI. Absent a showing of any intent to change professions, the educational expense for this legitimate purpose of improvement of employment skills should be permitted. The expense for the training required in obtaining an instrument rating should not be disallowed solely because an enthusiastic and ambitious agent later chose to further demonstrate his pilot's proficiency by easily obtaining additional certificates. Of course, plaintiffs are not entitled to a deduction for the subsequent expenses incurred in training Beckley to receive these additional certificates, since a commercial pilot's license or a flight instructor's license certainly qualifies him for a new trade.
It should also be noted that while the taxpayer cannot deduct the cost of education and training subsequent to obtaining the instrument rating, the FBI and the government have received benefit from this taxpayer's additional training and qualification in that he provides flight instruction without charge to other FBI special agents.
The government contends that all flight instruction is an indivisible unit. It argues that the instrument rating "led to" the qualification for a new trade or business as business as contemplated by the words of Treasury Regulation 1.162-5. I find no precedent which differentiates between expenses incurred by a taxpayer for education to improve job skills which are coincidental or common to skills required in another trade, and those which are incurred in a program which leads the taxpayer to qualify in a new trade or business. The program of instruction for the instrument rating, while in some ways coincidental with that for the commercial pilot's certificate, includes a much broader scope of theoretical and practical training for the pilot. One's training as a commercial pilot would not necessarily equip a pilot to successfully pass the examinations and practical tests required for an instrument rating.
*127 To disallow Beckley's expenses in obtaining his instrument rating solely because he later received a commercial pilot's certificate would unnecessarily penalize his ambition, intelligence, and diligence without an economical or a logical reason. To hold that the instrument training received by Beckley led to his commercial pilot status would require the conclusion that but for his instrument training, his certification as a commercial pilot could not have occurred. Such a conclusion would be an exercise in backwards logic. His instrument training was not an element or a portion of his commercial pilot's certification; rather, such certification was based upon a lesser and included bank of knowledge which he could tap at will.
The educational process is but one more human experience. What one learns cannot be easily sifted and separated into specific categories. Beckley simply learned something in his instrument course which would be useful in another profession, but such knowledge did not necessarily lead to another profession, and does not render the instrument training expense nondeductible.
Because Beckley's intent was to improve his job-related skills by pursuing the instrument training, and because the nature of the training made the acquisition of a commercial certificate a convenience, the expenses related to the instruction necessary for the instrument rating are legitimate items for deduction from his 1974 gross income.
ORDER
Upon the foregoing findings of fact and conclusions of law, IT IS HEREBY ORDERED, adjudged and decreed, that the plaintiffs are entitled to deduct from gross income for the taxable year 1974 any and all expenses of Ronald J. Beckley in his training and education for the purpose of obtaining and receiving an instrument rating to his private pilot's certificate;
FURTHER ORDERED that no expense for education or training required for the issuance of a commercial pilot's certificate to the said Ronald J. Beckley shall be deducted in determining the taxable income of the plaintiffs for 1974, nor shall any such deduction be allowed with respect to any training or education related to Beckley's certification as a flight instructor;
FURTHER ORDERED that plaintiffs shall file with the Court within fifteen (15) days from the entry of this order a verified amendment to the complaint showing the amount and nature of all expenses incurred by Ronald J. Beckley for education and training in a course of study leading to his instrument rating aforementioned;
FURTHER ORDERED that the amendment required in the preceding paragraph shall be presented for the purposes of computing the amount of judgment to be rendered in favor of the plaintiffs and against the defendant and that the defendant shall have thirty (30) days after the filing of such an amendment to examine all and any documentation maintained by the plaintiffs and used in the preparation of such amendment, and to file any objection or motion with respect to such amendment or computation of judgment based thereon.
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930 F.2d 910
Mackv.Downes
NO. 90-7975
United States Court of Appeals,Second Circuit.
MAR 08, 1991
1
Appeal From: D.Conn.
2
AFFIRMED.
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[Cite as State v. Robinson, 2018-Ohio-1166.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
State of Ohio, :
Plaintiff-Appellee, :
No. 17AP-707
v. : (C.P.C. No. 12CR-1868)
William L. Robinson, Jr., : (ACCELERATED CALENDAR)
Defendant-Appellant. :
D E C I S I O N
Rendered on March 29, 2018
On brief: Ron O'Brien, Prosecuting Attorney, and Michael P.
Walton, for appellee.
On brief: William Leslie Robinson, Jr., pro se.
APPEAL from the Franklin County Court of Common Pleas
DORRIAN, J.
{¶ 1} Defendant-appellant, William L. Robinson, Jr., appeals, pro se, from a
judgment of the Franklin County Court of Common Pleas denying his motion for new trial
and modification of verdict/sentence. For the following reasons, we affirm.
I. Facts and Procedural History
{¶ 2} The facts and procedural history of this case are outlined in our decision
regarding appellant's direct appeal of his case in State v. Robinson, 10th Dist. No. 13AP-
563, 2014-Ohio-520, and will only be repeated here as relevant to our discussion. In
Robinson, appellant asserted that: (1) the jury verdicts in the case were not supported by
the manifest weight of the evidence, and (2) the trial court erred in imposing consecutive
sentences without making the necessary findings mandated by R.C. 2929.14(C)(4). We
overruled both assignments of error and affirmed the trial court judgment.
No. 17AP-707 2
{¶ 3} Subsequently, appellant filed with this court an application for delayed
reopening of the appeal. We denied appellant's application noting that appellate counsel
had provided appellant with copies of the appellate briefs in a timely fashion and, therefore,
appellant had the opportunity to notify counsel or this court of any additional issues before
the case was submitted to a panel of the court for a decision. We also noted appellant was
convicted of aggravated burglary and sexual battery based on eye witness testimony
supported by DNA evidence, and nothing before us indicated that any of his lawyers
rendered ineffective assistance of counsel. State v. Robinson, 10th Dist. No. 13AP-563,
2015-Ohio-3486.
{¶ 4} On August 22, 2016, appellant filed a petition for postconviction relief. The
trial court denied the petition on December 8, 2016, and we affirmed the trial court's denial
on May 15, 2017. State v. Robinson, 10th Dist. No. 16AP-887, 2017-Ohio-2773.
{¶ 5} On August 18, 2017, appellant filed a motion for new trial and modification
of verdict and sentence alleging ineffective assistance of counsel. The trial court denied the
petition finding it to be not well-taken. Appellant timely appealed.
II. Assignment of Error
{¶ 6} Although not expressly articulated, having reviewed his brief it appears
appellant asserts a single assignment of error: that the trial court erred in denying his
motion for new trial. In support, he makes several arguments including: (1) the verdicts of
guilty of sexual battery and aggravated burglary were not supported by sufficient evidence,
(2) the judge abused its discretion by not instructing jurors on lesser-included offenses,
(3) the judge abused its discretion by admitting certain evidence which was prejudicial to
appellant in violation of the Rules of Evidence, (4) the prosecutor engaged in misconduct,1
and (5) his trial counsel was ineffective in not timely bringing this motion for new trial.
III. Discussion
{¶ 7} We begin by considering appellant's arguments regarding the timeliness of
his motion. Appellant asserts he filed the motion pursuant to Crim.R. 33. An appellate
court applies an abuse of discretion standard in reviewing a trial court's denial of a motion
for leave to file a delayed motion for new trial. State v. Anderson, 10th Dist. No. 12AP-133,
1 We note appellant's motion did not contain an affidavit regarding prosecutorial misconduct which is required
by Crim.R. 33(C).
No. 17AP-707 3
2012-Ohio-4733, ¶ 9. Although an abuse of discretion is typically defined as an
unreasonable, arbitrary, or unconscionable decision, no court has the authority, within its
discretion, to commit an error of law. State v. Moncrief, 10th Dist. No. 13AP-391, 2013-
Ohio-4571, ¶ 7.
{¶ 8} Crim.R. 33(B) states:
Application for a new trial shall be made by motion which,
except for the cause of newly discovered evidence, shall be
filed within fourteen days after the verdict was rendered, or
the decision of the court where a trial by jury has been waived,
unless it is made to appear by clear and convincing proof that
the defendant was unavoidably prevented from filing his
motion for a new trial, in which case the motion shall be filed
within seven days from the order of the court finding that the
defendant was unavoidably prevented from filing such motion
within the time provided herein.
Motions for new trial on account of newly discovered evidence
shall be filed within one hundred twenty days after the day
upon which the verdict was rendered, or the decision of the
court where trial by jury has been waived. If it is made to
appear by clear and convincing proof that the defendant was
unavoidably prevented from the discovery of the evidence
upon which he must rely, such motion shall be filed within
seven days from an order of the court finding that he was
unavoidably prevented from discovering the evidence within
the one hundred twenty day period.
{¶ 9} In State v. Jama, 10th Dist. No. 11AP-210, 2012-Ohio-2466, ¶ 21, we
observed some courts have held a trial court cannot consider the merits of a motion for new
trial until it makes a finding regarding timeliness. See id., reference to State v. Lanier, 2d
Dist. No. 2009 CA 84, 2010-Ohio-2921, ¶ 17 (a defendant may file a motion for new trial
along with the request for leave to file said motion, but the court cannot consider the merits
of the motion for a new trial until it makes a finding of unavoidable prevention). We also
noted in Jama the trial court never made a finding of unavoidable prevention or issued an
order to that effect because Jama failed to properly seek leave before filing his motion. Such
is the case here, as appellant never sought leave to file his motion before filing the same and
in ultimately denying appellant's motion, the trial court did not address the timeliness of
the motion. Rather, the court indicated that "after full and careful consideration, [the
No. 17AP-707 4
court] finds said motion not well taken and hereby denies the same." (Emphasis omitted.)
(Jgmt. Entry.)
{¶ 10} Nevertheless, we find appellant's motion to be untimely as the verdict was
rendered on May 10, 2013, and the motion for new trial was filed well beyond the 14-day
deadline outlined in Crim.R. 33.
{¶ 11} As noted above, Crim.R. 33 provides for the filing of an untimely motion for
new trial: (1) when it is made to appear by clear and convincing proof that the defendant
was unavoidably prevented from filing his motion for new trial, and (2) in the case of newly
discovered evidence, when certain criteria are met.
{¶ 12} "A party is 'unavoidably prevented' from filing a motion for a new trial if the
party had no knowledge of the existence of the ground supporting the motion and could not
have learned of that existence within the time prescribed for filing the motion in the exercise
of reasonable diligence." State v. Hoover-Moore, 10th Dist. No. 14AP-1049, 2015-Ohio-
4863, ¶ 13; State v. Walden, 19 Ohio App.3d 141, 145-46 (10th Dist.1984).
{¶ 13} "Clear and convincing proof that the defendant was 'unavoidably prevented'
from filing 'requires more than a mere allegation that a defendant has been unavoidably
prevented from discovering the evidence he seeks to introduce as support for a new trial.' "
State v. Lee, 10th Dist. No. 05AP-229, 2005-Ohio-6374, ¶ 9, quoting State v. Mathis, 134
Ohio App.3d 77, 79 (1st Dist.1999). The requirement of clear and convincing evidence puts
the burden on a defendant to prove he was unavoidably prevented from discovering the
evidence in a timely manner. State v. Rodriguez-Baron, 7th Dist. No. 12-MA-44, 2012-
Ohio-5360, ¶ 11.
{¶ 14} Appellant stated he brought the motion and the appeal "along with
arguments of fact that are supported by evidence that was presented at trial." (Emphasis
added.) (Appellant's Brief at 7.) Therefore, by his own admission, appellant did not bring
the motion on grounds of newly discovered evidence. Review of his motion supports that
his motion is supported by evidence presented at trial and not newly discovered evidence.2
{¶ 15} In his motion for new trial, appellant stated he was unavoidably prevented
from filing a Crim.R. 33 motion because his trial counsel never informed him that she could
2 We reject appellant's argument at page eight of his brief before this court that the lack of jury instructions on
lesser-included offenses constitutes "new discovered evidence" because these instructions were not part of the
trial court record. (Appellant's Brief at 8.)
No. 17AP-707 5
or would file a motion for new trial or a modification of sentence. Appellant further argues
the lack of jury instructions on lesser-included offenses "being ignored by the court"
appellant's counsel "still does not take these arguments to the next level by motioning the
court for a new trial or sentence modification * * * which shows her incompetence and
deficiency in not doing so." (Mot. for New Trial at 28.) We do not accept this as evidence
of being unavoidably prevented from filing the motion as the lack of jury instructions on
lesser-included offenses was known to trial counsel and appellant at the time of trial. At
the time of trial and within the time prescribed for filing the motion, appellant was aware
of the grounds he asserts in support of his motion.
{¶ 16} Finally, appellant argues that his motion cannot be barred for untimeliness
pursuant to Jama. In Jama, we noted the defendant did not file a timely motion and we
found the trial court erred in modifying the verdict without providing some reference to a
valid authority which permits such a review and modification. We are not persuaded Jama
supports a finding that appellant was unavoidably prevented from filing his motion in a
timely manner.
{¶ 17} Accordingly, we find appellant's motion was not timely filed and, therefore,
the trial court did not abuse its discretion in denying the motion.
{¶ 18} Having found appellant's motion to be untimely filed, it is not necessary for
this court to address appellant's remaining arguments which address the merits of his
motion.
IV. Conclusion
{¶ 19} In conclusion, we overrule appellant's single assignment of error. The
judgment of the Franklin County Court of Common Pleas is affirmed.
Judgment affirmed.
BROWN, P.J., and LUPER SCHUSTER, J., concur.
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United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 06-2021
___________
Richard Osborne; Jerome Sammon, *
*
Plaintiffs - Appellants, *
*
v. * Appeal from the United States
* District Court for the
Arlyn Grussing, in his individual * District of Minnesota.
capacity and in his official capacity as *
Director of the Rice County Department *
of Planning and Zoning, et al., *
*
Defendants - Appellees. *
___________
Submitted: November 15, 2006
Filed: February 26, 2007
___________
Before LOKEN, Chief Judge, LAY* and MELLOY, Circuit Judges.
___________
LOKEN, Chief Judge.
Richard Osborne and Jerome Sammon own residential property on Circle Lake
in Rice County, Minnesota. They commenced this § 1983 suit against Rice County
and four County officials, alleging that defendants were selectively enforcing
provisions of the Rice County Zoning Ordinance in retaliation for plaintiffs’ public
*
The HONORABLE DONALD P. LAY assumed permanent disability
retirement status on January 3, 2007. This opinion is being filed by the remaining
judges of the panel pursuant to 8th Cir. R. 47E.
criticism of the County’s lax enforcement of environmental and zoning regulations
against a substantial Circle Lake housing development. After the County was
dismissed by stipulation, the remaining parties filed cross motions for summary
judgment. The district court1 granted defendants summary judgment. Osborne and
Sammon appeal. We affirm.
I.
In early 2004, Osborne and Sammon repeatedly criticized the Rice County
Planning Commission (the “Commission”) and the Rice County Planning and Zoning
Office (“P&Z”) for failing to enforce environmental and zoning regulations against
a lakeshore housing project being developed by local businessmen Jerry Anderson and
Dan Wenstrom. In early July, Melissa Bokman, a P&Z environmental planner, and
employees of the state Department of Natural Resources (DNR) investigated formal
complaints by Anderson and Wenstrom that Osborne and Sammon had each violated
environmental regulations and county ordinances two to three years earlier when
Osborne installed rock fill (“rip-rap”) along his shoreline and Sammon built a
retaining wall within the “shore impact zone” of his property. The investigators
concluded that Osborne and Sammon each used more than ten cubic yards of fill for
his project and therefore violated the ordinance requiring a grading and filling permit.
See Rice County, Minn., Zoning Ordinance § 506.11(B)(3)(a). DNR and P&Z staff
agreed that Rice County would “take the lead on resolving both violations.”
When notified of the alleged violations, Osborne and Sammon applied for
“after-the-fact” conditional use permits for their shoreline improvements. The
Commission took up the applications as separate agenda items at its meeting on
October 7, 2004. A transcript of that meeting is part of the summary judgment record
1
The HONORABLE JOHN R. TUNHEIM, United States District Judge for the
District of Minnesota.
-2-
on appeal. When Osborne spoke, Commission Chairman Ross Nelson said, “You’re
a lawyer; and you didn’t know a permit was required for this work,” “You have a
higher obligation to know the law,” and “Shame on you for seeking a permit two and
a half years after the fact.” Commissioner Jim Brown said it was “ironic” and
“insulting” for Osborne to have criticized P&Z while violating the zoning ordinances
himself. Osborne accused the Commission and P&Z of selectively enforcing the
ordinance in retaliation for his on-going criticism. The Commissioners insisted they
were treating Osborne the same way they treated others.
When Sammon spoke, he objected to removing his retaining wall, as the current
ordinance requires, because the ordinance in effect when he built his wall without the
required permit did not ban retaining walls. The Commissioners responded that,
having initially failed to comply with the zoning ordinance, Sammon must comply
with the ordinance in effect when he applied for an after-the-fact permit. One
Commissioner commented, “Mr. Osborne says we’re not enforcing things in the
ordinance. Maybe we’re starting to enforce the things in the ordinance.”
After lengthy discussions with both Osborne and Sammon, the Commission
adopted the recommendations of P&Z staff and granted Osborne and Sammon after-
the-fact permits subject to numerous costly conditions, including the likely removal
of Osborne’s rip-rap and the mandatory removal of Sammon’s retaining wall. Rather
than complying with these conditions or challenging the County’s actions in state
court, Osborne and Sammon filed this § 1983 action seeking damages and injunctive
relief for defendants’ alleged retaliation against plaintiffs’ First Amendment-protected
criticism of the Commission and the P&Z. The district court granted the individual
defendants summary judgment on the ground that Osborne and Sammon “have failed
to set forth facts showing a causal connection between their protected First
Amendment activity and the County’s investigation and enforcement of environmental
regulations.”
-3-
II.
It is well-settled that “as a general matter the First Amendment prohibits
government officials from subjecting an individual to retaliatory actions, including
criminal prosecutions . . . on the basis of his constitutionally protected speech.”
Hartman v. Moore, 126 S. Ct. 1695, 1701 (2006) (citation and quotation omitted). To
prevail in an action for First Amendment retaliation, “plaintiff must show a causal
connection between a defendant’s retaliatory animus and [plaintiff’s] subsequent
injury.” Id. at 1703. In this case, it is clear that Osborne and Sammon engaged in
First Amendment-protected activity when they publicly criticized the County’s
enforcement practices, and that regulatory actions forcing them to obtain costly after-
the-fact grading and filling permits were sufficient injury to support a First
Amendment retaliation claim.2 Thus, as the district court recognized, the crucial
summary judgment issue is whether Osborne and Sammon made a sufficient showing
of causation.
Osborne and Sammon concede that the alleged retaliatory injury -- the costs of
complying with after-the-fact permit conditions -- result from their earlier violations
of the Rice County Zoning Ordinance in installing rip-rap and building a retaining
wall without the required grading and filling permits. This complicates the causation
2
Osborne and Sammon further allege that they were embarrassed by the verbal
tongue-lashings they received at the October 2004 Planning Commission meeting.
These remarks are of course relevant in assessing defendants’ motives for taking
enforcement action. But the remarks themselves were not actionable injury because
they would not “deter a person of ordinary firmness from continuing to speak out.”
Naucke v. City of Park Hills, 284 F.3d 923, 928 (8th Cir. 2002); see Carroll v. Pfeffer,
262 F.3d 847, 850 (8th Cir. 2001), cert. denied 536 U.S. 907 (2002). Plaintiffs’
assertions that other after-the-fact permit applicants received a friendlier reception at
the June 17, 2004, Commission meeting are inadmissible hearsay. See Herr v.
Airborne Freight Corp., 130 F.3d 359, 361 n.4 (8th Cir. 1997).
-4-
inquiry. As the Supreme Court explained in Mt. Healthy City School Dist. v. Doyle,
429 U.S. 274, 285 (1977):
A rule of causation which focuses solely on whether protected conduct
played a part, “substantial” or otherwise, in a decision [to enforce a
regulatory ordinance] could place [the violator] in a better position as a
result of the exercise of constitutionally protected conduct than he would
have occupied had he done nothing.
Accordingly, the Court held in Mt. Healthy that plaintiff, a school teacher, could not
recover by proving that his First Amendment-protected telephone call to a local radio
station played a “substantial part” in the defendant school board’s decision not to
renew his contract, if the school board then proved “by a preponderance of the
evidence that it would have reached the same decision . . . even in the absence of the
protected conduct.” Id. at 287. As the Court has recently explained, this is a but-for
causation standard. “If there is a finding that retaliation was not the but-for cause of
the discharge, the claim fails for lack of causal connection between unconstitutional
motive and resulting harm, despite proof of some retaliatory animus in the official’s
mind.” Hartman, 126 S. Ct. at 1704.
This case does not involve a public employee seeking to reverse an adverse
employment action. We deal here with retaliation claims by citizens seeking to avoid
the consequences of their illegal actions. In a regulatory enforcement situation, the
government has an even stronger interest in not putting the violator “in a better
position as a result of the exercise of constitutionally protected conduct,” so it is not
surprising that later cases point toward a stricter causation requirement in this context
than the burden-shifting standard adopted by Mt. Healthy in the public employment
context. For example, the Supreme Court held in Hartman that, when the alleged
retaliatory injury is a criminal prosecution, proof that the prosecutor lacked probable
cause to commence the prosecution is an affirmative element of the plaintiff’s case.
126 S. Ct. at 1706-07. Similarly, we have repeatedly held that a prisoner fails to state
-5-
a claim for retaliatory discipline “when the alleged retaliation arose from discipline
imparted for acts that a prisoner was not entitled to perform,” i.e., for violations of
prison rules. Goff v. Burton, 7 F.3d 734, 738 (8th Cir. 1993) (quotation omitted), cert.
denied, 512 U.S. 1209 (1994).
Recognizing that we must craft a causation standard “with details specific to”
this type of case, Hartman, 126 S. Ct. at 1703, we conclude that a plaintiff who seeks
relief from valid adverse regulatory action on the ground that it was unconstitutional
retaliation for First Amendment-protected speech must make the same showing that
is required to establish a claim of selective prosecution -- “that he has been singled out
for prosecution while others similarly situated have not been prosecuted for conduct
similar to that for which he was prosecuted [and] that the government’s discriminatory
selection of him for prosecution was based upon . . . his exercise of his first
amendment right to free speech.” United States v. Catlett, 584 F.2d 864, 866 (8th Cir.
1978), citing United States v. Berrios, 501 F.2d 1207, 1211 (2d Cir. 1974).
Applying this standard, we agree with the district court that Osborne and
Sammon failed to show that the Commission and P&Z staff selectively enforced the
Rice County Zoning Ordinance. It is undisputed that, due to inadequate resources,
P&Z staff investigate violations of the ordinance only when a citizen files a complaint
against a particular landowner. Though acknowledging formal complaints were filed
against them, Osborne and Sammon note the complaints were filed by Anderson and
Wenstrom, developers with a motive to retaliate because Osborne and Sammon had
publicly opposed the developers’ housing project. But regulatory and law
enforcement agencies routinely act on the basis of information provided by private
parties who harbor a grudge or who hope to benefit personally from their complaints,
such as jealous competitors, disgruntled former employees, confidential informants,
and cooperating co-conspirators. When such a complaint results in enforcement
action, we do not impute the complainant’s ulterior motive to the government
enforcers. Thus, absent proof that one or more defendants induced Anderson and
-6-
Wenstrom to file complaints in order to camouflage a governmental intent to retaliate,
the source of the accurate complaints that Osborne and Sammon were violating the
ordinance is irrelevant.3
Osborne and Sammon also complained that they were the first Circle Lake
landowners to be cited for installing rip-rap or building a retaining wall without a
grading and filling permit. At the October 2004 hearing, the Commissioners
responded that similar after-the-fact permit requirements had been imposed on
landowners at other Rice County lakes. Osborne and Sammon submitted no summary
judgment evidence to the contrary. To support his after-the-fact permit application,
Osborne submitted photographs of rip-rap installed by other Circle Lake landowners.
When he complained of selective enforcement at the October 2004 hearing, the
Commissioners asked whether he had filed the photos as complaints. Osborne said,
“I hadn’t at the time. But if you want me to, then I’ll file them as a complaint right
now.” Plaintiffs did not dispute defendants’ summary judgment affidavits averring
that Osborne’s complaints were then investigated.
Nor is there evidence that defendants enforced after-the-fact grading and filling
permit requirements more harshly because Osborne and Sammon engaged in First
Amendment-protected activity. At the October 2004 hearing, when Osborne
complained of selective enforcement, P&Z staff and the Commissioners explained that
the same conditions had been imposed on other after-the-fact permit applicants, and
that one condition was based upon DNR shoreline restoration requirements. The
3
In the district court, defendants submitted affidavits by Anderson and
Wenstrom declaring that they filed the complaints on their own initiative. Osborne
and Sammon complain that the district court granted summary judgment before they
could conduct discovery on whether there was collusion between defendants and these
complainants. But plaintiffs filed a cross motion for summary judgment and never
filed a Rule 56(f) motion asking for a continuance to permit additional discovery.
Thus, the discovery issue was not properly preserved.
-7-
Commissioners also noted a letter from the DNR advising that if Rice County did not
require removal of Sammon’s retaining wall, “then the DNR will.” In responding to
defendants’ motion for summary judgment, Osborne and Sammon failed to refute this
concrete evidence of equal, non-discriminatory enforcement action.
Thus, the summary judgment record establishes that this case is a polar opposite
of Garcia v. City of Trenton, 348 F.3d 726 (8th Cir. 2003), which Osborne and
Sammon cite as “strikingly similar.” In Garcia, the city had a policy of only enforcing
parking restrictions in response to citizen complaints. Despite the absence of such
complaints, the mayor issued a shopowner multiple parking tickets after she
complained about the failure to enforce an unrelated ordinance. The proof of
improper retaliation was clear; the issue in Garcia was whether $35 in parking tickets
was sufficient injury to deter a person of ordinary firmness from continuing to speak
out. Here, by contrast, defendants’ enforcement actions were consistent with their
policy of only investigating citizen complaints, and Osborne and Sammon presented
no evidence that defendants failed to investigate similar complaints or to take similar
enforcement actions against other Rice County landowners.
We review a grant of summary judgment de novo, taking the record in the light
most favorable to the non-moving parties. See Revels v. Vincenz, 382 F.3d 870, 874
(8th Cir. 2004), cert. denied 126 S. Ct. 371 (2005). In their motion for summary
judgment, defendants presented uncontradicted evidence that Rice County only
investigates zoning ordinance violations when a formal complaint is filed; that all
formal complaints are investigated; that formal complaints were filed against Osborne
and Sammon by private citizens acting on their own initiative; that P&Z staff and the
DNR investigated and found permit violations; and that the Commission after a
hearing approved after-the-fact permit applications subject to costly but non-
discriminatory conditions. In response, Osborne and Sammon failed to present
probative evidence that defendants have not enforced the zoning ordinance in the
-8-
same manner against other similarly situated landowners. Therefore, summary
judgment was properly granted. The judgment of the district court is affirmed.
______________________________
-9-
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658 S.E.2d 901 (2008)
McDONALD
v.
H & S HOMES, LLC.
No. A07A1621.
Court of Appeals of Georgia.
March 7, 2008.
*902 Hall, Bloch, Garland & Meyer, F. Kennedy Hall, Macon, for appellant.
Bovis, Kyle & Burch, Steven J. Kyle, John H. Peavy Jr., Atlanta, for appellee.
BARNES, Chief Judge.
Christina L. McDonald sued H & S Homes, LLC ("H & S") in Alabama for fraud relating to her purchase of a mobile home. Pursuant to an arbitration agreement executed at the time of sale, H & S required McDonald to arbitrate her claims. On April 9, 2004, an arbitrator awarded McDonald $500,000 plus costs, and the Alabama court entered judgment based on the award later that month.
In May 2005, McDonald petitioned to domesticate the Alabama judgment in the Superior Court of Putnam County, H & S's last known county of residence. H & S objected, asserting that the arbitration award and resulting judgment were obtained through fraud and misconduct. Agreeing with H & S, the trial court refused to enforce the foreign judgment. McDonald appeals, and for reasons that follow, we reverse.
H & S attacked the Alabama judgment under OCGA § 9-11-60(d)(2), which authorizes a trial court to set aside a judgment based on "[f]raud, accident, or mistake or the acts of the adverse party unmixed with the negligence or fault of the movant." See Arrowhead Alternator v. CIT Communications Finance Corp., 268 Ga.App. 464, 466, 602 S.E.2d 231 (2004) ("The proper method for attacking a foreign judgment . . . is a motion to set aside under OCGA § 9-11-60(d)."). According to H & S, McDonald fraudulently manipulated the arbitrator selection process to obtain a partial arbitrator with close ties to her attorney.[1]
This case, however, does not simply involve domestication of a foreign judgment. At the heart of that judgment is an arbitration award conducted under the Federal Arbitration Act ("FAA"), 9 USC § 1 et seq. In essence, H & S asks us to set aside that award.
The United States Congress has adopted a liberal policy favoring arbitration, a swift and inexpensive means for dispute resolution. Wise v. Tidal Constr. Co., 261 Ga.App. 670, 673(1), 583 S.E.2d 466 (2003); see also Bryan County v. Yates Paving etc. Co., 281 Ga. 361, 363, 638 S.E.2d 302 (2006). To further this policy, Congress limited the avenues for challenging an arbitration award under the FAA. See 9 USC § 10. A party may move to vacate an award based on fraud, corruption, or partiality of the arbitrator. 9 USC § 10(a). Notice of the motion, however, must be served on the opposing party or attorney "within three months after the award is filed or delivered." 9 USC § 12. This relatively short limitation period is intended "`to accord the arbitration award finality in a timely fashion.'" Olson v. Wexford Clearing Svcs., 397 F.3d 488, 492 (7th Cir.2005); see also Galindo v. Lanier Worldwide, 241 Ga.App. 78, 84(4), 526 S.E.2d 141 (1999) (motion to vacate properly denied for failure to comply with 9 USC § 12).
The record shows that following the arbitration, H & S did not move to vacate the award under the procedures established by the FAA. Instead, it appealed the award to the Alabama Supreme Court, asserting that the arbitrator manifestly disregarded the law in several respects. See H & S Homes v. McDonald, 910 So.2d 79, 81 (Ala.2004). The *903 Alabama Supreme Court found no manifest disregard and affirmed the award in December 2004. See id. at 85.
McDonald subsequently petitioned to domesticate the Alabama judgment in Georgia. At that point, H & S asserted for the first time that the award resulted from fraud, corruption, and partiality the exact allegations on which Congress placed a three-month time limitation. Without dispute, H & S failed to raise this claim within the period established by 9 USC § 12. It suggests, however, that the time limitation does not apply because it moved to set aside the judgment under OCGA § 9-11-60(d), rather than the FAA.
We disagree. A party to arbitration cannot circumvent the statute of limitation governing arbitration awards simply by raising its claim through OCGA § 9-11-60.[2] To find otherwise would undermine the intent of Congress, which explicitly restricted the time period for challenging such awards. See Langfitt v. Jackson, 284 Ga.App. 628, 635(3), 644 S.E.2d 460 (2007) ("To the extent that state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress, it will be preempted by the FAA.") (punctuation omitted).
Thus, regardless of the procedural vehicle used to attack an arbitration award, the attack must be brought within the FAA's three-month limitation period. See Lafarge Conseils et Etudes, S.A. v. Kaiser Cement etc. Corp., 791 F.2d 1334, 1339 (9th Cir.1986) (after expiration of three-month period, a party may not "collaterally attack [an arbitration] award under the guise of a motion to set aside the judgment confirming the award"); Corey v. New York Stock Exchange, 691 F.2d 1205, 1212 (6th Cir.1982) (failure to comply with three-month period foreclosed judicial review of claims of wrongdoing, fraud, and corruption during arbitration proceeding); ML Park Place Corp. v. Hedreen, 71 Wash.App. 727, 862 P.2d 602, 611 (1993) (motion to set aside judgment cannot be used as an "alternative route" to attack an arbitration award after expiration of three-month challenge period); see also Tampa Motel Mgmt. Co. v. Stratton of Florida, 186 Ga.App. 135, 140(3), 366 S.E.2d 804 (1988) ("Once the three-month period following the filing or delivery of the arbitration award has expired, any attempt to vacate or modify the award . . . cannot be made.") (physical precedent only).
On appeal, H & S argues that it did not discover the alleged collusion and resulting partiality until after the limitation period expired, when McDonald moved to domesticate the Alabama judgment in Georgia. But H & S does not specifically claim that the time period should be tolled pending discovery of fraud or misconduct. See Olson, supra, 397 F.3d at 490 ("The plain language of § 12 does not provide for any exceptions to the three-month window and says nothing about tolling."). Moreover, pretermitting whether a discovery rule might apply in some cases, the facts do not support tolling here.
According to H & S, the arbitrator's undisclosed personal and business relationship with McDonald's counsel apparently they were friends, had previously referred cases to each other, and had tried a case together[3] made the arbitrator partial toward McDonald. Their relationship, however, was not secret. The two local attorneys who represented H & S in the Alabama proceeding were also friends with both the arbitrator and McDonald's attorney. Furthermore, the local legal community had a regular practice of referring cases among lawyers, generally resulting in a fee for the referring attorney, and the arbitrator had referred cases to or received referrals from defense counsel.
H & S claims that it was "shocked" by the size of the arbitration award. Nevertheless, it waited until well after the limitation period ended to explore whether the known friendship between McDonald's counsel and the *904 arbitrator, or the collaborative environment within the local legal community, somehow infected the award. Under these circumstances, H & S cannot establish that it acted with reasonable diligence in discovering the arbitrator's relationship with McDonald's attorney or in challenging the arbitration award. Even if a discovery rule applied, therefore, the limitation period would not be tolled here. See Cullen v. Paine, Webber, Jackson & Curtis, 863 F.2d 851, 854 (11th Cir.1989) (untimely motion to vacate arbitration award properly denied; even if "due diligence" exception applied to three-month limitation period, movant failed to demonstrate that he exercised diligence in failing to file timely motion); Small v. Savannah Intl. Motors, 275 Ga.App. 12, 17(6), 619 S.E.2d 738 (2005) (to take advantage of federal discovery rule, claimant must exercise reasonable diligence in discovering fraud).
H & S's collateral attack on the arbitration award was untimely. See 9 USC § 12; Tampa Motel Mgmt. Co., supra, 186 Ga.App. at 139-140(3), 366 S.E.2d 804. Accordingly, the trial court erred in refusing to enforce the Alabama judgment based on this attack. See ML Park Place Corp., supra, 862 P.2d at 611 (parties disappointed by an arbitration result should not be allowed to "embroil their adversaries in costly and time-consuming postjudgment judicial proceedings").
Judgment reversed.
SMITH, P.J., and MILLER, J., concur.
NOTES
[1] Under the arbitration agreement, H & S had no voice in the selection of the arbitrator. Instead, the arbitrator was to be chosen by Green-Point Credit, LLC the assignee of the retail installment contract underlying the mobile home purchase and consented to by McDonald. See McDonald v. H & S Homes, 853 So.2d 920, 924-925 (Ala.2003). H & S claims that McDonald's counsel "coerced" GreenPoint into selecting counsel's friend as an arbitrator in exchange for counsel's agreement not to add GreenPoint to the lawsuit.
[2] McDonald argues that OCGA § 9-11-60(d) can never be used to challenge an arbitration award governed by the FAA. Because we have resolved the appeal on other grounds, we need not address this argument.
[3] The arbitrator is a practicing plaintiffs' attorney in Alabama.
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659 F.2d 1090
U. S.v.Floersheim
80-5444
UNITED STATES COURT OF APPEALS Ninth Circuit
7/23/81
1
C.D.Cal.
AFFIRMED
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UNITED STATES NAVY-MARINE CORPS
COURT OF CRIMINAL APPEALS
WASHINGTON, D.C.
Before
R.Q. WARD, K.M. MCDONALD, J.P. LISIECKI
Appellate Military Judges
UNITED STATES OF AMERICA
v.
KEVIN D. MOORE
INFORMATION SYSTEMS TECHNICIAN THIRD CLASS (E-4), U.S. NAVY
NMCCA 201400001
SPECIAL COURT-MARTIAL
Sentence Adjudged: 3 September 2013.
Military Judge: CDR Michael J. Luken, JAGC, USN.
Convening Authority: Commanding Officer, USS DWIGHT D.
EISENHOWER (CVN 69).
Staff Judge Advocate's Recommendation: LCDR G.J. Nadella,
JAGC, USN.
For Appellant: Maj Michael Berry, USMC.
For Appellee: Mr. Brian Keller, Esq.
20 March 2014
---------------------------------------------------
OPINION OF THE COURT
---------------------------------------------------
After careful consideration of the record, submitted
without assignment of error, we affirm the findings and sentence
as approved by the convening authority. Art. 66(c), Uniform
Code of Military Justice, 10 U.S.C. § 866(c).
For the Court
R.H. TROIDL
Clerk of Court
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32 F.3d 253
40 Fed. R. Evid. Serv. 1475
UNITED STATES of America, Plaintiff-Appellee,v.Francisco ESPINO, Defendant-Appellant.
No. 93-3814.
United States Court of Appeals,Seventh Circuit.
Argued June 14, 1994.Decided Aug. 8, 1994.
William J. Lipscomb, Office of U.S. Atty., Milwaukee, WI (argued), for U.S.
Robert J. Dvorak, Dvorak & Fincke, Milwaukee, WI (argued), for Francisco Espino.
Before ESCHBACH, COFFEY, and FLAUM, Circuit Judges.
FLAUM, Circuit Judge.
1
A jury convicted Francisco Espino of conspiring to distribute cocaine and marijuana in violation of 21 U.S.C. Secs. 841(a)(1) and 846 (Count I), of money laundering in violation of 18 U.S.C. Sec. 1956(a)(1)(B)(i) (Count II), and of possessing with intent to distribute marijuana and cocaine in violation of 18 U.S.C. Sec. 841(a)(1) (Counts III and IV). The district court sentenced Espino to a total of 211 months' imprisonment to be followed by a five-year term of supervised release. On appeal, Espino claims error in the admission of his opinion testimony, in the jury instruction on conspiracy, and in the prosecutor's closing argument. We affirm because the district court's decision to admit the defendant's testimony was harmless error, and because the remaining claims were waived.
I.
2
On October 14, 1992, Espino, along with Alfredo Santos, Augustine Munoz, and Oscar Sandoval, was charged in a seven-count superseding indictment. The indictment charged Espino with conspiracy to distribute more than five kilograms of cocaine and marijuana (Count I), money laundering (Count II), and possession with intent to distribute approximately twelve ounces of cocaine and nineteen pounds of marijuana (Counts III and IV). Espino entered pleas of not guilty to the charges.
3
On December 14, 1992, Espino proceeded to a five-day jury trial with co-defendant Alfredo Santos.1 The government's case against Espino was presented primarily through the testimony of four cooperating witnesses: Johnny Robles, Anthony Glapa, Lafayette Grady, and Thomas Alvarez. The testimony of the witnesses reflected two time periods of the charged conspiracy. The first period was from 1987 through 1989, while the second period was from 1990 through 1991. Robles, Grady, and Alvarez testified that during the first period, they ordered cocaine from Espino on a regular basis. The cocaine was delivered by either Espino, Augustine, or a person known to them as "Jose." Robles and Glapa testified that during the second period, Espino supplied them both with cocaine and marijuana on a continuing basis.
4
Thomas Alvarez testified that he began selling cocaine in early 1987. Alvarez identified Espino, whom he knew as "Pancho," as the source of his cocaine. Alvarez met Espino at the Indios Tavern on Milwaukee's south side where Espino worked as a manager and bartender. On his first deal Alvarez asked Espino to "front" him one-half of a kilogram of cocaine, that is, to supply the cocaine against Alvarez's promise of payment from the proceeds of resale. Espino agreed to this arrangement and introduced Alvarez to a man named "Jose" who delivered the cocaine to Alvarez at his home in Waukesha, Wisconsin. Alvarez also identified Augustine Munoz as a person who worked with Espino in the drug business.
5
After the first deal, Alvarez testified that he received one kilogram of cocaine per week from either Espino, Jose, or Augustine. The most cocaine that Alvarez received in one week was three kilograms of cocaine. Alvarez usually called "Jose" or Augustine on a beeper number to arrange for a cocaine delivery. If Alvarez was unable to reach "Jose" or Augustine, he would call Espino, either at home, the tavern, or through Espino's beeper number, because Espino usually knew where "Jose" and Augustine were. "Jose" or Augustine delivered the cocaine to Alvarez who paid them for the cocaine. While Alvarez was initially fronted the cocaine, he eventually was able to pay for the cocaine upon delivery.
6
Alvarez testified that in 1989, he traded a 1976 Corvette to Espino for twelve ounces of cocaine. Alvarez negotiated the deal with Espino at Espino's home in Milwaukee. Three or four days later, Augustine and "Jose" brought the cocaine to Alvarez in exchange for the car. The title records introduced into evidence showed that on August 25, 1989, a 1976 Corvette was transferred from Alvarez's wife to Espino. Based on all the circumstances, Alvarez concluded that "Jose" and Augustine worked for Espino because Espino was the one who originally supplied Alvarez with cocaine and who introduced Alvarez to "Jose" and Augustine.
7
Johnny Robles testified that he met Espino and Augustine in late 1986 while working at a Milwaukee, Wisconsin meat packing plant. Robles knew that Espino and Augustine were "affiliated" in the drug business, and he became involved with them in the sale of cocaine. (Tr. 637). Robles initially received the cocaine from Augustine even though he knew that Espino was the source of the cocaine. From late 1986 until mid-1987, Robles received from Augustine and Espino two to four ounces of cocaine twice a month for a total of approximately twenty deals. Most of Robles' deals were with Augustine, although he contacted "Jose" or Espino if he could not reach Augustine. Robles usually paid Augustine or "Jose" for the cocaine but sometimes he would pay Espino directly. In 1987, Robles temporarily quit the drug-trafficking business because he was worried about getting caught and because he was having difficulty paying his drug debts. Prior to his respite from the drug business, Robles introduced Lafayette Grady, his most reliable customer, to Augustine. Robles testified that Augustine and Espino wanted Grady as a customer.
8
Lafayette Grady testified that he was a cocaine customer of Robles beginning in 1986. Grady met Espino through Robles who told Grady that if he still wanted to deal in cocaine, he could do so through Espino. Grady had previously heard Robles speak of Espino as the source of his cocaine. At Grady's first meeting with Espino, Augustine was also present. Espino gave Grady a telephone number to use when he wanted cocaine. Grady arranged with Espino to purchase three to four ounces of cocaine. From late 1987 until the end of 1988, Grady engaged in three to four cocaine transactions with Espino, who usually met him at a park in Milwaukee. On one occasion Augustine accompanied Espino during the delivery. Grady testified that when he could not reach Espino at home, Augustine would answer Espino's telephone and deliver the cocaine. Grady estimated that on four or five occasions he obtained cocaine from Augustine because Espino was unavailable.
9
By the spring of 1990, Robles had returned to the drug trafficking business. Between March 1990 and August 1990, Robles sold cocaine and marijuana, primarily to Anthony Glapa. Robles again used Espino as his source for the cocaine and marijuana. This time, however, "Jose" and Augustine were no longer involved. Robles testified that they were "apparently on their own." (Tr. 650). Robles concluded that Oscar Sandoval was working with Espino because Sandoval was frequently around Espino, and because Sandoval once delivered fifty pounds of marijuana to Robles at Espino's direction.
10
Robles testified that he received marijuana from Espino in quantities ranging from ten to fifty pounds. Glapa testified that he observed Robles pick up the marijuana from Espino. Robles paid Espino directly for the marijuana. Robles and Glapa both testified that Robles also received from Espino quarter, half, and whole kilograms of cocaine which Robles conveyed to Glapa. Robles estimated that from late 1990 until May 1991, he engaged in at least five cocaine and five marijuana deals with Espino. Robles regularly owed Espino money for prior deals, receiving the cocaine and marijuana up front. Robles recalled contacting Espino at phone numbers given to him by Espino for the Indios Tavern, two residences, and a beeper.
11
Robles recalled that in late 1990, he transferred a 1984 Corvette to Espino for $6,000 in cash and six pounds of marijuana. Espino titled the car in co-defendant Santos' name because "[Espino] couldn't show for it more or less what he paid for it or how he paid for it." (Tr. 661-62). Robles and Glapa both testified that in March 1991, they transferred Glapa's 1988 Corvette to Espino in exchange for a seventeen-pound marijuana debt. Espino also titled this car in Santos' name. Santos admitted that, at Espino's request, he titled both vehicles in his name.
12
On March 5, 1992, pursuant to an investigation of drug trafficking in the community, agents from the Drug Enforcement Agency contacted Espino and received his consent to search his apartment. In the course of the search, the agents found over $19,000 in cash, approximately $16,000 of which was found in the freezer; a nine-millimeter pistol lying on a table; two loaded magazines next to the pistol; a beeper; and assorted personal papers.
13
Espino took the stand and testified in his own defense. On direct examination Espino denied knowing Grady, and denied transacting drug deals with either Glapa or Alvarez. Espino claimed that the cash, the gun, and the beeper found in his apartment were part of his tavern business. Espino admitted that he obtained twelve pounds of marijuana for Robles on one occasion during the spring of 1991 in exchange for a 1988 Corvette. Espino also admitted that he obtained a second car, a 1984 Corvette, from Robles but denied that the deal involved drugs. Espino acknowledged that he titled both cars in Santos' name, explaining that he did so to hide those assets from his wife during divorce proceedings.
14
On cross-examination, Espino again admitted to selling twelve pounds of marijuana to Robles. Espino initially claimed that this was the only drug transaction in which he was involved. On further questioning, Espino conceded that in the spring of 1991 he transacted two other deals with Robles that involved a total of three-quarters of a kilogram of cocaine as well as marijuana. Espino testified that his source for the drugs was a man named Ruben who came from Waukegan, Illinois. Espino asserted that his co-defendant, Santos, was not involved in any drug trafficking or money laundering.
15
On December 21, 1992, the jury found Espino guilty on all four counts of the superseding indictment. On November 12, 1993, the district court sentenced Espino to 211 months' imprisonment on Counts I through III and 60 months' imprisonment on Count IV, all sentences to run concurrently, followed by five years of supervised release, and imposed a $5,000 fine. Espino appeals.2
II.
16
A. Admissibility of Espino's Opinion Testimony
17
Rule 701 of the Federal Rules of Evidence provides:
18
If the witness is not testifying as an expert, the witness' testimony in the form of opinions or inferences is limited to those opinions or inferences which are (a) rationally based on the perception of the witness and (b) helpful to a clear understanding of the witness' testimony or the determination of a fact in issue.
19
Fed.R.Evid. 701. In addition, Rule 704(a) provides that "testimony in the form of an opinion or inference otherwise admissible is not objectionable because it embraces an ultimate issue to be decided by the trier of fact." Fed.R.Evid. 704(a). The decision to admit lay opinion testimony under Rule 701 is committed to the district court's discretion and is reversed only for an abuse of that discretion. United States v. Stormer, 938 F.2d 759, 761 (7th Cir.1991) (quoting United States v. Towns, 913 F.2d 434, 445 (7th Cir.1990)).
20
On cross-examination Espino testified as follows:
21
Q. Okay. But you did deals with Robles involving cocaine and marijuana?
22
A. That's right.
23
Q. You had a continuing relationship with Mr. Robles where you supplied him with drugs in the spring of 1991?
24
A. That was three times that I gave him drugs.
25
Q. So that's a continuing relationship; correct?
26
A. Well, after that he disappeared and I never knew what happened to him.
27
Q. Okay. But it was more than one deal; right?
28
A. I am telling you very clearly that it was three times.
29
Q. Essentially what you're doing here today, Mr. Robles, is you're admitting the conspiracy; aren't you?
30
A. First of all, I'm not Mr. Robles.
31
Q. Mr. Espino.
32
A. Well, if--
33
MS. BOWE: I object to this question and answer. It's a legal conclusion and I object to any questions continuing to call for legal conclusions. It's beyond the scope of this witness.
34
THE COURT: That's--
35
MR. LIPSCOMB: It goes to his motive for testifying right now, Judge.
36
THE COURT: The objection is overruled. The witness is instructed to answer the question as best he can.
37
A. Well, if you call three times a conspiracy, fine.
38
(Tr. 1172-73) (emphasis added). Espino argues that the district court abused its discretion by requiring him to answer whether he was "admitting the conspiracy" because the question demanded a legal conclusion and created the danger that the jury gave his response undue weight.
39
Our decision in United States v. Baskes, 649 F.2d 471 (7th Cir.1980), cert. denied, 450 U.S. 1000, 101 S.Ct. 1706, 68 L.Ed.2d 201 (1981), supports Espino's position, and we believe the reasons articulated there proscribe the admission of his testimony under Rule 701. In Baskes, we held that the district court acted within its discretion in prohibiting cross-examination of a key prosecution witness as to whether he "unlawfully, knowingly and wilfully conspire[d]" with the defendant and others to defraud the United States. 649 F.2d at 478. We reasoned that this questioning contained legal terms of art and called for improper opinion testimony by a non-expert witness:
40
When, as here, a witness is asked whether the conduct in issue was "unlawful" or "wilful" or whether the defendants "conspired," terms that demand an understanding of the nature and scope of the criminal law, the trial court may properly conclude that any response would not be helpful to the trier of fact. The witness, unfamiliar with the contours of the criminal law, may feel that the legal standard is either higher or lower than it really is. If either event is true the jury may accord too much weight to such a legal conclusion.
41
Id. Similarly, the question posed to Espino, "[Y]ou're admitting the conspiracy, aren't you," required a conclusion regarding the legal implications of his conduct. Espino's lay answer to this question was therefore objectionable as being unhelpful opinion testimony and should have been excluded. A more appropriately phrased question, such as whether Espino had an "agreement" with Robles to supply cocaine, could have avoided the problem of compelling the defendant to offer testimony requiring a legal conclusion. See Baskes, 649 F.2d at 478 n. 5 (citing United States v. Standard Oil Co., 316 F.2d 884 (7th Cir.1963)). The district court thus erred in allowing the testimony under Rule 701. Nevertheless, in light of the other, compelling evidence against Espino, which consisted of the interlocking testimony of the four cooperating witnesses, the documentary and physical evidence, as well as his own admissions, the error was harmless. Fed.R.Crim.P. 52; see, e.g., United States v. Dominguez, 992 F.2d 678, 681 (7th Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 250, 126 L.Ed.2d 203 (1993).
42
United States v. Castro, 788 F.2d 1240 (7th Cir.1986), on which the government relies, is not inconsistent with Baskes. The district court there refused to allow the defendant to answer the following questions at the beginning of the direct examination: "Ms. Castro, have you ever conspired or agreed with your husband or anybody to sell or possess drugs?", and "Did you during that period of time agree with anybody to sell or possess drugs?". 788 F.2d at 1249. We held that the defendant should have been allowed to answer these questions:
43
In her argument before this court, appellant claims that the trial judge sustained the government's objection on the ground that the question sought an answer to the ultimate issue of the case. It is not clear from the record that this was the basis of the trial court's ruling. If it was the basis of the court's ruling, we cannot agree. We believe that the defendant should have been allowed to answer the questions. Fed.R.Evid. 704 clearly permits testimony on the ultimate issue whenever it would be helpful to the jury. Except in the most unusual circumstances, we do not believe that the defendant ought to be deprived of the opportunity to deny explicitly the elements of the offense charged.
44
Id. We went on to conclude, however, that it was not reversible error to prevent the defendant from answering the questions because her attorney was able to elicit her detailed testimony on all the allegations in the indictment. Id. In contrast, the prosecutor's question here did not present Espino with the opportunity to deny the elements of the charged conspiracy. Rather, it sought to elicit his opinion on whether he "conspired" with Robles, and therefore was objectionable under Baskes.
45
To the extent Espino argues that the district court should have given buyer-seller and limiting instructions, the record does not indicate that he requested either one, so any objection is waived.3 United States v. Olano, --- U.S. ----, ---- - ----, 113 S.Ct. 1770, 1776-77, 123 L.Ed.2d 508 (1993); United States v. Lakich, 23 F.3d 1203, 1207-09 (7th Cir.1994). Even in the absence of a waiver, the defendant has failed either to explain the efficacy of a limiting instruction or to justify a buyer-seller instruction.
B. Propriety of Conspiracy Instruction
46
When charging the jury on Count I of the indictment, the district court followed our pattern instruction Sec. 5.11, and stated that "[i]n determining whether the alleged conspiracy existed, and whether a particular defendant became a member of the conspiracy, you may consider the actions and statements of all the alleged participants. The agreement may be inferred from all the circumstances and the conduct of all the alleged participants." The instruction further stated that "[i]n determining whether a particular defendant became a member of the conspiracy you may consider only the acts and statements of that particular defendant." Espino argues that this instruction was erroneous because the district court failed to instruct the jury that they were not to consider the testimony of Lafayette Grady, Anthony Glapa, and Senovio Rodriguez, which pointed to Espino as the source of the cocaine, in deciding whether Espino joined the conspiracy. Because Espino did not object to the jury instruction at trial pursuant to Fed.R.Crim.P. 30,4 he has waived the argument,5 and the plain error rule does not apply. Lakich, 23 F.3d at 1207-08.
47
Even if the court were to apply a plain error analysis, Espino would not be entitled to relief. In United States v. Martinez de Ortiz, 907 F.2d 629 (7th Cir.1990) (en banc), cert. denied, 498 U.S. 1029, 111 S.Ct. 684, 112 L.Ed.2d 676 (1991), we ruled that this circuit's pattern instruction Sec. 5.11 was misleading because, in light of Fed.R.Evid. 104 and Bourjaily v. United States, 483 U.S. 171, 107 S.Ct. 2775, 97 L.Ed.2d 144 (1987), the jury was allowed to consider declarations of co-conspirators against the defendant. 907 F.2d at 633-34. While the jury instruction in this case misstated the law, it worked to Espino's advantage by preventing the jury from considering incriminating evidence of his participation in the conspiracy. Martinez de Ortiz, 907 F.2d at 635; United States v. Brown, 940 F.2d 1090, 1094 (7th Cir.1991). In addition, the district court's instructions requiring that Espino "wilfully participate" in the conspiracy, that the jury give "separate consideration to each defendant," and that the jury consider the witnesses' testimony "with caution and great care," indicated to the jurors that they should focus on whether Espino's acts and words established his involvement in the conspiracy. United States v. Goines, 988 F.2d 750, 773 (7th Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 241, 126 L.Ed.2d 195 (1993). Consequently, no plain error resulted from the use of this instruction.6
III.
48
We conclude that the admission of Espino's opinion testimony was harmless error. We also conclude that the objections to the conspiracy instruction and the prosecutor's closing argument were waived. Accordingly, we affirm the judgment of the district court entered pursuant to the jury's verdict.
49
AFFIRMED.
1
The case against co-defendant Oscar Sandoval was dismissed by the government prior to trial. Co-defendant Augustine Munoz was a fugitive at the time of the trial
2
This court affirmed the conviction of co-defendant Santos in United States v. Santos, 20 F.3d 280 (7th Cir.1994)
3
For this same reason, the defendant has waived his argument that the prosecutor's closing statement contained an inaccurate and misleading analogy, "comparing a conspiracy to two people agreeing to go to the store and buy milk." (Tr. 1206). Waiver aside, the court explicitly instructed the jury to base its decision on the evidence alone, and not on the lawyers' opening and closing statements
4
Rule 30 provides in part: "No party may assign as error any portion of the charge or omission therefrom unless that party objects thereto before the jury retires to consider its verdict, stating distinctly the matter to which the party objects and the grounds of the objection." Fed.R.Crim.P. 30
5
A review of the trial transcript reveals that counsel for the defendant knowingly approved of the conspiracy instruction. United States v. Lakich, 23 F.3d 1203, 1207-08 (7th Cir.1994). Counsel received a draft of the district court's instructions on the fourth day of the trial and had overnight to consider them. The following afternoon, the court elicited responses from defense counsel regarding the instructions. Counsel for the defendant made no comment about the conspiracy instruction at that time. Once the instructions were given and the jury began its deliberations, the court received a note from one of the jurors asking, "Does count one address the conspiracy in total or is it a broken-out count just related to the possession with intent to distribute in excess ... controlled substances?". The court, after conferring with defense counsel, responded to the question by drawing the jury's attention to the conspiracy instruction it gave, and by reminding the jury that the elements for the conspiracy charged in Count One were different from the elements for the conspiracy charged in Count Six. Counsel for the defendant agreed to this response, stating that the language of the conspiracy instruction was "acceptable." (Tr. 1296)
6
Perhaps it bears reemphasizing that "[d]istrict courts could avoid the need for this line of review by carefully instructing juries on this confusing but important issue, guided by the analysis in de Ortiz. " Goines, 988 F.2d at 773
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128 N.J. 270 (1992)
607 A.2d 1307
IN THE MATTER OF FRANCIS A. BOCK, AN ATTORNEY AT LAW.
The Supreme Court of New Jersey.
Argued March 17, 1992.
Decided June 26, 1992.
*271 John J. Janasie, Deputy Ethics Counsel, argued the cause on behalf of Office of Attorney Ethics.
Martin Newmark argued the cause for respondent (Broderick, Newmark & Grather, attorneys).
PER CURIAM.
This attorney discipline matter arises from a Report and Recommendation of the Disciplinary Review Board (DRB) that respondent be suspended from the practice of law for a period of three months. Three members of the DRB disagreed and concluded that a public reprimand, coupled with a requirement of certain supervisory practices, would constitute sufficient punishment. The majority recommendation is based on findings of the District X Ethics Committee, concurred in by the DRB, that respondent had engaged in unethical conduct in violation of RPC 8.4(c) and (d), conduct involving dishonesty, fraud, deceit, or misrepresentation, and conduct prejudicial to the administration of justice. That finding was based on respondent's feigning his own death by drowning and compounding that act by concealing his whereabouts for five weeks, despite knowledge of an official investigation to locate him.
Respondent does not deny the essential facts but asserts that the acts of misconduct resulted from a psychological disorder and neither were intended to nor did they result in personal gain. Respondent thus contends that the Court should not follow the Board's recommendation that he be suspended from the practice of law.
Based on our independent review of the record, we find clear and convincing evidence that respondent engaged in conduct proscribed by RPC 8.4(c) and (d) and that a six-month period of suspension is warranted.
I
As noted, to his credit, respondent did not deny the material factual allegations of the complaint but rather questioned only *272 whether the facts established an ethical violation. Respondent's version of the facts is as follows: Respondent had been practicing law in New Jersey with an unblemished record for thirty years when the events that gave rise to this complaint occurred. On November 7, 1989, depressed as a result of his wife's incessant and repeated interrogations concerning a recently-disclosed extra-marital affair with Martha Heath, respondent arranged with Ms. Heath to leave New Jersey. After leaving contrived evidence on Long Beach Island designed to give the impression that he had drowned, Ms. Heath drove respondent to New Brunswick where he boarded a train to Baltimore. He took an apartment near Easton, Maryland under an assumed name. Respondent remained there for approximately five weeks before returning to New Jersey on December 14, 1989, after the Morris Plains Police Department and the Morris County Prosecutor's Office located him.
At the time of his "disappearance," respondent was a part-time municipal court judge in the Borough of Morris Plains, and was engaged in the practice of law in Morris Plains with a partner and associate. He was responsible for sixty to seventy files. Respondent asserts that although he told neither his partner, associate, nor clients that he was leaving New Jersey for an indefinite period, he knew that his partner and associate could handle his caseload in his absence. As it turned out, no client left the firm as a result of respondent's conduct. He was removed from office as a municipal court judge by order of the Superior Court.
Respondent argues that this case presents a novel situation in which the Court must decide whether conduct that would otherwise be personal and private may form the basis of an ethical violation. He argues that except for the public expenditure of funds, which the respondent never anticipated, respondent caused no injury except for that suffered by his family. Further, respondent argues that his psychotherapist's testimony established that his conduct not only was aberrational but was the product of a psychiatric disorder. That disorder, stemming from his torn desire at once to join his life with Ms. *273 Heath, yet to avoid causing the pain to his wife or children attendant to a divorce, prevented him at the time from understanding the options open to him. Those actions, which were doomed to failure from the start, were the result of respondent's confused state and were not rationally thought out.
In a long series of cases, the Court has examined the extent to which evidence of compulsion may tend to exculpate conduct that would otherwise be unethical. Although those cases usually have arisen in the context of knowing misappropriation of clients' funds, the principles are applicable here. We start with the proposition that "there may be circumstances in which an attorney's loss of competency, comprehension, or will may be of such a magnitude that it would excuse or mitigate conduct that was otherwise knowing and purposeful." In re Goldberg, 109 N.J. 163, 168, 536 A.2d 224 (1988) (citing In re Jacob, 95 N.J. 132, 137, 469 A.2d 498 (1984)).
Almost invariably, however, we find that the attorney has not lost comprehension or competency but rather has yielded to the compulsion, and whether the compulsion is due to drugs, gambling, or alcohol, "dependent attorneys retain an area of volition sufficient that we cannot distinguish these attorneys from those who yield to the equally human impulse to avert shame, loss of respect, or family suffering." In re Lobbe, 110 N.J. 59, 66, 539 A.2d 729 (1988). Although we understand that compulsive behavior may lead to misconduct, we will not allow the public to go unprotected, especially those who are clients. Thus, in In re Yaccarino, 117 N.J. 175, 196, 564 A.2d 1184 (1989), we measured the attorney's misconduct by whether he had "known that what he was doing was unethical and improper, and that he could have refrained or desisted from doing what he did." We note that in this case there is no psychiatric evidence that respondent was at any time out of touch with reality or unable to appreciate the ethical quality of his acts. His medical expert conceded that he "did understand what he was doing and [the] potential consequences of what he was doing." He may have been under a severe compulsion to *274 engage in the conduct but he did not lack the ability to understand the nature of his acts.
We recognize that in some instances lawyers may fall victim to a desire to encourage a relationship with another and thus may engage in conduct that is "aberrational and not likely to occur again." In re Farr, 115 N.J. 231, 236, 557 A.2d 1373 (1989). Accord In re Giordano, 123 N.J. 362, 368, 587 A.2d 1245 (1991) (desire to gain favor with young woman was isolated act that was an aberration in an otherwise unblemished career). That mitigation served only to prevent the imposition of the most severe sanctions. Those attorneys, however, did receive substantial periods of suspension.
The District Ethics Committee found, and we agree, that the respondent had willingly and voluntarily staged his death. Whatever credence one may give to the effect of the stress-induced anxiety of a troubled marriage and the impulsive nature of the act, unravels in light of respondent's calculated disappearance (he left a note for his wife designed to alert her to the place of his disappearance and tied that in with a reference to available funds) and his five-week continuation of the plan.
II
We turn, then, to the issue of appropriate discipline. The attorney-disciplinary system is designed primarily to preserve public confidence in the legal system. In re Spitalnick, 63 N.J. 429, 431-32, 308 A.2d 1 (1973). The goal of the disciplinary proceedings is not to punish, of course, but to protect the interests of the public and the bar, mindful of the interests of the individual involved. In re Infinito, 94 N.J. 50, 57, 462 A.2d 160 (1983). Even the private conduct of attorneys may be the subject of public discipline. In In re Mattera, 34 N.J. 259, 168 A.2d 38 (1961), this Court stated:
[T]he disciplinary power is not confined to the area covered by the canons. It has long been settled here and elsewhere that any misbehavior, private or *275 professional, which reveals lack of the character and integrity essential for the attorney's franchise constitute a basis for discipline. The reason for this rule is not a desire to supervise the private lives of attorneys but rather that the character of a man is single and hence misconduct revealing a deficiency is not less compelling because the attorney was not wearing his professional mantle at the time. Private misconduct and professional misconduct differ only in the intensity with which they reflect upon fitness at the bar. This is not to say that a court should view in some prissy way the personal affairs of its officers, but rather that if misbehavior persuades a man of normal sensibilities that the attorney lacks capacity to discharge his professional duties with honor and integrity, the public must be protected from him.
[Id. at 264, 168 A.2d 38 (citations omitted).]
The principles that we apply in measuring discipline are equally familiar. We consider the nature and severity of the offense and whether it is related to the practice of law. We consider evidence of an attorney's good reputation, prior trustworthy professional conduct, and general good character.
In applying those principles to the underlying facts, we find that although the offense did not directly touch on the practice of law, it had an effect on respondent's practice of law and his municipal court office. See In re Kotok, 108 N.J. 314, 333, 528 A.2d 1307 (1987) (misrepresentation by attorney who is a municipal court judge adversely reflects on his judicial role). In the context of application for admission to the bar, we have said that an applicant "must possess a certain set of traits honesty and truthfulness, trustworthiness and reliability, and a professional commitment to the judicial process and the administration of justice." In re Matthews, 94 N.J. 59, 77, 462 A.2d 165 (1983). Those traits require adherence to the disciplinary rules that govern attorney conduct. We have described those rules as the "fundamental norms that control the professional and personal behavior of those who as attorneys undertake to be officers of the court." Id. at 78, 462 A.2d 165. In this case, we find a clear transgression of those fundamental norms. Respondent candidly admits that staging his death was an act of dishonesty that conveyed to his family and the public a fact that was not true. His abandonment of his municipal court *276 office, his law partner, associate, and clients demonstrated a lack of trustworthiness and reliability.
Respondent emphasizes the essential personal nature of his transgression and that his clients were not, in fact, injured, nor was the administration of justice in Morris Plains injured. He analogizes the case to that of an attorney having an affair. Surely such conduct contains an element of misrepresentation but not one that should concern our ethics boards. But, as we have seen, there was more to this incident than a private liaison. He argues further that he could not have foreseen the intensive police manhunt that followed his "disappearance" with the attendant expenditure of public funds and diversion of police from needed public-safety measures. Even if we were to credit this last theory, there was evidence to refute this claim. Respondent met with Ms. Heath several times in Maryland and was aware that authorities were questioning her. Respondent must have realized that Ms. Heath was being questioned because the authorities were looking for him. We were informed at oral argument that the public authorities thought the episode sufficiently serious to convict Ms. Heath of obstructing justice. To find Ms. Heath guilty of obstructing justice and to excuse respondent's conduct in this affair would reverse the roles that they actually played. There is no evidence that Ms. Heath was the protagonist in this affair.
Nor can we agree that partners, clients, and the public are not injured when the conduct of a lawyer and part-time municipal court judge causes weeks of uncertainty and disruption. In measuring discipline, then, we need not take into account the consequences of respondent's misrepresentation on his now-supportive family. We have long and firmly held that "`[i]n the legal profession there must be a reverence for the truth.'" In re Jenkins, 94 N.J. 458, 470, 467 A.2d 1084 (1983) (quoting In re Hyra, 15 N.J. 252, 254, 104 A.2d 609 (1954)). A false certification by an attorney in a legal matter is a serious offense. See In re Pleva, 106 N.J. 637, 645, 525 A.2d 1104 (1987) (noting instances of suspension for such misconduct). *277 Thus, a lack of candor even when "no one was seriously hurt, and the court was not actually misled," may warrant a suspension. In re Kernan, 118 N.J. 361, 368, 571 A.2d 1282 (1990) (three-month suspension). Although the misrepresentation here did not occur in a legal matter it had significant effects.
Finally, we must take account of the fact that respondent's conduct occurred while he was a municipal court judge and thus adversely reflects on his judicial role. In re Kotok, supra, 108 N.J. at 333, 528 A.2d 1307. He abandoned his judicial office and disappeared from the community. He expressed unambiguously thereby his abandonment, albeit temporarily, of the traits that bear on the fitness to practice law, namely, honesty, truthfulness, trustworthiness, and reliability, and a professional commitment to the judicial process and the administration of justice. In In re Kotok, we would have imposed a one-year suspension for offenses that included an earlier misrepresentation by one serving as a municipal court judge but for the remoteness of the charges (almost ten years before the proceedings). 108 N.J. at 331-32, 528 A.2d 1307.
A suspension of six months is warranted. Respondent shall reimburse the Ethics Financial Committee for appropriate administrative costs.
So ordered.
For suspension Chief Justice WILENTZ and Justices HANDLER, O'HERN, GARIBALDI, and STEIN 5.
Opposed None.
ORDER
It is ORDERED that FRANCIS A. BOCK of MORRISTOWN, who was admitted to the bar of this State in 1959, is hereby suspended from the practice of law for a period of six months for engaging in conduct involving dishonesty, fraud or *278 misrepresentation, and conduct prejudicial to the administration of justice, in violation of RPC 8.4(c) and (d), effective July 20, 1992, and until the further Order of the Court; and it is further
ORDERED that respondent shall be restrained and enjoined from practicing law during the period of his suspension and that he shall comply with Administrative Guideline 23 of the Office of Attorney Ethics, which governs suspended attorneys; and it is further
ORDERED that respondent shall reimburse the Ethics Financial Committee for appropriate administrative costs incurred in the prosecution of this matter.
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55 U.S. 334 (1852)
14 How. 334
BENJAMIN D. HARRIS, PLAINTIFF IN ERROR,
v.
WILLIAM HARDEMAN, HENRY R.W. HILL, COTESWORTH P. SMITH, AND HENRY A. MOORE.
Supreme Court of United States.
It was argued by Mr. Nelson for the plaintiff in error, and Mr. Freeman for the defendant.
*337 Mr. Justice DANIEL delivered the opinion of the court.
The defendants in error moved the Circuit Court to quash a forthcoming bond, executed by the defendants to the plaintiff; and to set aside the judgment on which the bond was founded, upon the grounds that the forthcoming bond was taken in execution of a judgment entered against the defendant Hardeman, as by default, when in truth there had been no service of original or mesne process upon him to warrant such a judgment. The facts and proceedings in this case, as disclosed by the record, are as follow: The plaintiff in error, in March, 1839, instituted in the Circuit Court an action on a promissory note against the defendant and three others; and upon the writ sued out in that action, the marshal, on the 9th of April, made a return in these words: "Executed on the defendant Hardeman, by leaving a true copy at his residence." Upon this return of the officer, at the next succeeding or return term of the court, in May, 1839, a judgment by default for want of appearance, was taken against the defendant Hardeman for the amount of the note, with interest and costs. Amongst other proceedings upon this judgment, a writ of fieri facias was sued out in March, 1840, was levied on sundry slaves, the property of Hardeman, and the forthcoming bond in question executed by him on the 20th of April, 1840. In pursuance of this forthcoming bond another fieri facias was sued out on the 11th of June, 1840, and upon this last writ was indorsed on the 8th of October, 1840, a cessat executio by the plaintiff's attorney.
By the statute of Mississippi regulating proceedings in courts of law, the following modes for the service of process in certain cases, are prescribed: "All writs of scire facias and capias ad respondendum, where no bail is required, may be served in the following manner: Where the defendant cannot be found, it shall be deemed sufficient service of such writ for the sheriff or *338 other officer to whom the same is directed, to leave a copy thereof with the wife of the defendant or some free white person above the age of sixteen years, then and there being one of the family of the defendant, and found at his usual place of abode, or to leave a copy thereof at some public place at the dwelling-house, or other known place of residence of such defendant, he being from home, and no such free white person being found there willing to receive the same."
On the 18th of June, 1838, the District Judge for the Southern District of Mississippi, in the absence of the circuit or presiding Judge, caused to be entered on the minutes of the Circuit Court, as a rule of proceeding in that court, an order in the following words, viz., "The capias ad respondendum shall be served by arresting the defendant, unless bail be waived; or where bail be waived, or a summons shall issue, the same shall be served personally, or if the defendant be not found, by leaving a copy thereof at his or her residence, or usual place of abode, at least twenty days before the return day thereof, to entitle the plaintiff to a trial or judgment by default at the return term."
The action in this case was commenced by a summons, and the marshal's return of the service of that process, and the judgment thereupon by default at the return term, and the subsequent proceedings upon that judgment, were as have been already stated.
Upon the application of the defendant Hardeman, at the May term of the Circuit Court, in the year 1850, until which time the proceedings in this case had been stayed, the court quashed the forthcoming bond and fieri facias sued out thereon, and set aside the judgment purporting to be a judgment by default against the defendant, as being unwarranted upon the face of the proceedings, and therefore void.
In reviewing the decision of the Circuit Court, it should be borne in mind, as a rule to guide and control our examination, that the judgment impugned before that court was a judgment by default, and that in all judgments by default, whatever may affect their competency or regularity, every proceeding indeed, from the writ and indorsements thereon, down to the judgment itself, inclusive, is part of the record, and is open to examination. That such cases differ essentially, in this respect, from those in which there is an appearance and a contestatio litis, in which the parties have elected the grounds on which they choose to place the controversy, expressly or impliedly waiving all others. In support of the rule just stated, many authorities might be adduced; we cite for it the cases of Nadenbush v. Lane, 4 Ran. 413, and of Wainwright v. Harper, 3 Leigh, 270.
Within the scope of this rule, two inquiries present themselves *339 in connection with the decision of the Circuit Court. The first is this, whether the court in which the judgment by default was taken, ever had jurisdiction as to the defendant, so as to warrant the judgment entered against him by default. And the second inquiry is, whether, upon the hypothesis that the court had not jurisdiction of the person of the defendant, and that the judgment against him was not binding, it was competent for the Circuit Court, in the mode adopted by it, to set aside the judgment, and to quash the proceedings consequent thereupon.
In reference to the first inquiry, it would seem to be a legal truism, too palpable to be elucidated by argument, that no person can be bound by a judgment, or any proceeding conducive thereto, to which he never was party or privy; that no person can be in default with respect to that which it never was incumbent upon him to fulfil. The court entering such judgment by default could have no jurisdiction over the person as to render such personal judgment, unless, by summons or other process, the person was legally before it. A court may be authorized to exert its powers in reference either to persons or things may have jurisdiction either in personam, or in rem, and the existence of that jurisdiction, as well as the modes of its exercise, may vary materially in reference to the subject-matter to which it attaches. Nay, they may be wholly inconsistent; or at any rate, so much so, as not to be blended or confounded. This distinction has been recognized in a variety of decisions, in which it has been settled, that a judgment depending upon proceedings in personam can have no force as to one on whom there has been no service of process, actual or constructive; who has had no day in court, and no notice of any proceeding against him. That with respect to such a person, such a judgment is absolutely void; he is no party to it, and can no more be regarded as a party than can any and every other member of the community. As amply sustaining these conclusions of law, as well as of reason and common sense, we refer to the following decisions. In Borden v. Fitch, (15 Johnson's Rep. 141,) Thompson, Chief Justice, says: "To give any binding effect to a judgment, it is essential that the court should have jurisdiction of the person and the subject-matter; and the want of jurisdiction is a matter that may always be set up against a judgment when sought to be enforced, or where any benefit is claimed under it. The want of jurisdiction makes it utterly void and unavailable for any purpose. The cases in the English courts, and in those of our sister States, are very strong to show that judicial proceedings against a person not served with process to appear, and not being within the jurisdiction of the court, and not appearing in *340 person or by attorney, are null and void. In Buchanan v. Rucker, (9 East, 192,) the Court of King's Bench declared that the law would not raise an assumpsit upon a judgment obtained in the Island of Tobago by default, when it appeared upon the face of the proceedings that the defendant was not in the island when the suit was commenced, and that he had been summoned by nailing a copy of the declaration on the court-house door. The court said it would have made no difference in the case if the proceedings had been admitted to be valid in the Island of Tobago. In the Supreme Court of Massachusetts, Chief Justice Parsons, in Bissell v. Briggs, 9 Mass. Rep. 464, lays down the principle very clearly and distinctly, that before the adoption of the Constitution of the United States, and in reference to foreign judgments, it was competent to show that the court had no jurisdiction of the cause; and if so, the judgment, if set up as a justification for any act, would be rejected without inquiring into its merits.' After citing a number of cases, the learned Judge proceeds to say: "We have refused to sustain an action here upon a judgment in another State, where the suit was commenced by attachment, and no personal summons or actual notice given to the defendant, he not being at the time of the attachment, within the State. In such cases, we have considered the proceedings as in rem, and only bidding the goods attached, and the judgment having no force in personam. This principle is not considered as growing out of any thing peculiar to proceedings by attachment, but is founded on more enlarged and general principles." It is said by the court, "that to bind a defendant personally by a judgment, when he was never personally summoned, nor had notice of the proceedings, would be contrary to the first principles of justice."
It is worthy of notice, in this place, that the cases from 9 East, and 9 Massachusetts Reports, cited by Chief Justice Thompson, were not instances in which the validity of those judgments was examined upon appeal or writ of error, but were instances in which that validity was inquired into collaterally, before other tribunals in which they were adduced as evidence to sustain other issues there pending.
In the case of Starbuck v. Murray, 5 Wendell, 156, the Supreme Court of New York say: "The courts of Connecticut, Pennsylvania, New Hampshire, New Jersey, and Kentucky, have also decided, that the jurisdiction of the court rendering a judgment, may be inquired into, when a suit is brought in the courts of another State, on that judgment;" and, after citing the cases of Thurber v. Blackburne, (1 New Hampshire Reports, 246); Benton v. Bengot, (10 Sergeant & Rawle, 240); Aldrech v. Henney, (4 Conn. Rep. 280); Curtis v. Gibbs, (Pa. Rep. 405,) *341 they say: "This doctrine does not depend merely upon adjudged cases; it has a better foundation; it rests upon a principle of natural justice. No man is to be condemned without the opportunity of making a defence, or to have his property taken from him by a judicial sentence, without the privilege of showing, if he can, the claim against him to be unfounded." The court then proceed to say, "But it is contended, that if other matter may be pleaded by the defendant, he is estopped from asserting any thing against the allegation contained in the record. It imports perfect verity, it is said, and the parties to it cannot be heard to impeach it. It appears to me, that this proposition assumes the very fact to be established, which is the only question in issue. For what purpose does the defendant question the jurisdiction of the court? Solely to show that its proceedings and judgment are void, and, therefore, the supposed record is, in truth, no record. If the defendant had not proper notice of, and did not appear to, the original action, all the State courts, with one exception, agree in opinion, that the paper introduced as to him, is no record, but, if he cannot show, even against the pretended record, that fact, on the alleged ground of the uncontrollable verity of the record, he is deprived of his defence, by a process of reasoning that, to my mind, is little less than sophistry. The plaintiffs, in effect, declare to the defendant the paper declared on is a record, because it says you appeared; and you appeared, because the paper is a record. This is reasoning in a circle. The appearance makes the record uncontrollable verity, and the record makes the appearance an unimpeachable fact. Unless a court has jurisdiction, it can never make a record which imports uncontrollable verity to the party over whom it has usurped jurisdiction, and he ought not, therefore, to be estopped from proving any fact which goes to establish the truth of a plea alleging the want of jurisdiction."
By the same court, this doctrine is affirmed, in the case of Holbrook v. Murray, 5 Wendell, 161. In the case of Denning v. Corwin & Roberts, 11 Wendell, 648, it was ruled, "That a judgment in partition, under the statute, where part of the premises belonged to owners unknown, was not valid, unless it appear, upon the face of the record, that the affidavit required by the statute, that the petitioner, or plaintiff in partition, is ignorant of the names, rights, or titles of such owners, was duly presented to the court, and that the notice, also, required in such cases, was duly published." And Chief Justice Savage, in delivering the opinion of the court, said: "On the part of the plaintiff, it is contended that the judgment in partition is void, for want of jurisdiction in the court, the requirements of the statute not having been complied with; and, on the part of the *342 defendants, it is insisted that it is conclusive until reversed to set aside, that it cannot be attacked collaterally, and that the defendants, being bonâ fide purchasers, are entitled to protection. That a judgment is conclusive upon parties and privies, is a proposition not to be denied; but if a court has acted without jurisdiction, the proceeding is void, and if this appear on the face of the record, the whole is a nullity." After quoting the opinion of Chief Justice Thompson, in Borden v. Fitch, 15 Johnson, 121, Chief Justice Savage goes on to say: "With respect to the proceedings in partition, now the subject of consideration, there can be no doubt that the court, in which the judgment was rendered, had jurisdiction of the subject of partition; but, to authorize a judgment of partition, the parties must be before the court, or it must be shown to the court that some of them are unknown; and this must appear by the record, where the proceeding is against owners unknown; it is a proceeding in rem, and nothing is to be taken by intendment. There is avowedly nothing like personal notice to the parties interested as defendants; they are not even named; and the right of the plaintiff depends entirely upon the fact, to be proved by affidavit, that the owners are unknown." The Chief Justice, after showing the insufficiency, by proof of the affidavit, according to the requisition of the statute, says: "The record then states, that at a subsequent day the plaintiffs appear, by their attorney, and the parties unknown being solemnly demanded, come not, but make default. The statute gives the court no jurisdiction to take any steps against unknown owners, until notice has been published according to the statute. Should not the record, therefore, show that it had been made to appear to the court, by affidavit, that the owners were unknown to the plaintiffs, and that such notice as the statute requires, had actually been given? Suppose a judgment record is produced, in which the plaintiff declares upon a promissory note, and the record does not show that the defendant is in custody, or has been served with process, and yet the court render judgment by default, would not such a record be an absolute nullity?" In the case of Wilson et al. v. The Bank of Mount Pleasant, reported in the 6th of Leigh, Tucker, President of the court, thus announces the law: "This is an action upon a judgment of the State of Ohio, which, it is contended, is conclusive in the courts of Virginia, upon the principles of the Constitution of the United States. It is unnecessary, in this case, to go into the question of the construction of that clause of the federal compact which relates to the effect of judicial proceedings of the several States in other States, for it seems to be agreed, on all hands, that the doctrine of the conclusiveness of the judgments of the several *343 States, is to be taken with the qualification, that, where the court has no jurisdiction over the subject-matter, or the person, or where the defendant has no notice of this suit, or was never served with process, and never appeared to the action, the judgment will be esteemed of no validity." With this doctrine entirely agrees another doctrine of the Supreme Court of Virginia, in the case of Wynn v. Wyat's Admr', 11 Leigh, 584, in which last case the court say, "That the appearance of the defendant, in term, and his motion to quash the attachment irregularly issued, and to set aside the proceedings at the rules, founded upon it, was not an appearance to the action, dispensing with farther and proper process; that the award of the alias summons was proper and necessary; and that the proceedings on that subsequent process cannot be sustained, since, confessedly, it was not duly served." But the decision which should be decisive upon the question now before us, is a decision of this court, in the case of Hollingsworth v. Barbour et al., in the 4th of Peters, p. 466. That was a case exhibiting the following features. A title had been made to land, by deed from a Commissioner, acting under a decree in Chancery, in the State Court in Kentucky, in which the "unknown heirs" of a person from whom title was deduced, were made defendants, and the decree, as against those heirs, was taken by default, after order of publication. The grantee of the Commissioner filed his bill, to obtain possession of the lands, against various persons who had taken possession thereof. The Circuit Court of the United States dismissed the bill, upon the grounds that, at the date of the proceedings in the State Court, (under which the conveyance of the Commissioner purported to have been made,) there was no law of the State authorizing those proceedings against the unknown heirs of the original owner of the land, and the decree taken upon those proceedings, by default against them, and, as they never had personal notice of the suit, the decree by default and the title made by the Commissioner, were null, as respected either those heirs, or the persons in possession of the lands. The very lucid argument of Mr. Justice Trimble, in the Circuit Court, which was adopted literally and in extenso, by this court, is too long for insertion here, but one or two of the conclusions reached by him, and affirmed by this court, in the words of that Judge, may be noticed. "The principle," said that Judge, and said this court in confirmation, "is too well settled, and too plain to be controverted, that a judgment or decree, pronounced by a competent tribunal, against a party having actual, or constructive notice, of the pending of the suit, is to be regarded by every other coordinate tribunal, and that, if the judgment or decree be erroneous, *344 the error can be corrected only by a supreme appellate tribunal. The leading distinction is between judgments and decrees merely void, and such as are voidable only. The former are binding nowhere, the latter everywhere, until reversed by a superior authority. The suit and decree are against the unknown heirs of John Abel Hamblin. Instead of personal service of process upon the defendants in the suit, an order of publication was made against them; and, upon a certificate of the publication of this order, for eight weeks, in an unauthorized newspaper, being produced and filed in the cause, the bill was taken pro confesso, and, at the next succeeding term, the final decree was entered, directing the conveyance of the land to the complainant. Again, that Judge and this court speaking through him, say: "It would seem that the court acted without authority, and that the decree is void, for want of jurisdiction in the court. But if not void as being coram non judice, it is void and wholly ineffectual to bind or prejudice the rights of Hamlin's heirs, against whom the decree was rendered, because they had no notice, either actual or constructive. The principle of the rule, that decrees and judgments bind only parties and privies, applies to the case; for, though the unknown heirs of Hamlin are affected to be made parties in the bill, there was no service of process, nor any equivalent, to bring them before the court, so as to make them, in the eye of the law and justice, parties to the suit." Here, again, it should be borne in mind, that this is not an instance of reversal by an appellate tribunal, for error or irregularity in an inferior court, but a test, collaterally applied by an independent authority, to the character of proceedings, as void or voidable in their nature.
At this point it is proper to advert to the character and effect of the process in the suit of Harris and Hardeman, as constituting service upon the defendants in that suit, and thereby investing the court with jurisdiction over their rights. If the rule prescribed by the statute of Mississippi, already referred to, is to govern in this case, it is presumed that a doubt will, or can hardly be raised as to the insufficiency of the service, as there are not less than three instances in which the requisites of the statute have not been complied with. In the first place, it is not shown, by the return, that the defendant could not be found, which should have been shown, in order to justify the substitution of any other in lieu of personal service. Secondly, it is not shown that a copy of the process was left, either with the wife of the defendant, or with some other free white person above the age of sixteen years, being one of the family of the defendant. Thirdly, it is not stated or proved that a copy was left at some public place of the dwelling-house of the defendant, *345 he being from home, and no free white person, as above described, being found there, willing to receive the process. But it has been contended, that by a rule adopted by the Judge of the District Court, a mode for the service of process has been prescribed, differing from that ordained by the statute of Mississippi, and dispensing with several of the requisites insisted on by the statute, and that the service in the suit in the Circuit Court was in conformity with the rule of the District Judge. Forbearing, for the present, any inquiry as to the validity of the rule made by the District Judge, under the decision of this court, in the case of Amis v. Smith, 16 Peters, 303, we proceed to compare the proof of service as apparent upon the return of the marshal, with the requirements of the rule in question. This rule has been already quoted. The return of the marshal has also been given totidem verbis. It will be seen that the reason assigned in the rule, as forming the justification for dispensing with personal service, is not stated in the return of the officer, and there is an entire omission to give the date or time preceding the term of the court to which the process was returnable, so as to show that the plaintiff was authorized to take a judgment by default, in virtue of a legal constructive notice, and a failure of appearance. Whether, therefore, the statute of Mississippi, or the rule made by the District Judge, be regarded as operative, there was, in the suit in the Circuit Court, neither notice by personal service of process, nor notice by legal construction. The judgment by default, therefore, must be regarded as obnoxious to every impeachment of its efficacy which can flow from its having been entered against one who was never a party in court, with respect to the proceedings upon which that judgment was taken. But there is another view of the questions raised in this cause, which is equally, or even more conclusive in favor of the decision now under review. At the time of the motion to the Circuit Court to quash the forthcoming bond and to set aside the judgment by default, that judgment was still unsatisfied, and was in the progress of execution, and the forthcoming bond, filed in the clerk's office, according to the laws of the State, was properly a part of the process of execution, the fieri facias being sued out therein from the office without any order of the court. The proceedings then, still being as it were in fieri, and not terminated, it was competent for the court to rectify any irregularity which might have occurred in the progress of the cause, and to do this either by writ of error coram vobis, or by audita querela if the party choose to resort to the latter mode. If this position be maintainable, then, there would seem to be an entire removal of all exception to the judgment of the Circuit Court, *346 as it is believed to be the settled modern practice, that in all instances in which irregularities could formerly be corrected upon a writ of error coram vobis or audita querela, the same objects may be effected by motion to the court, as a mode more simple, more expeditious, and less fruitful of difficulty and expense. In this case the cause was still under the control and correction of the court, for the enforcement of its judgment and the supervision of its own process, and in the exercise of this function, it was competent for it to look back upon the entire progress of the case, up to the writ and indorsements thereon, under the rule already stated, as applicable to judgments by default, and to correct any irregularities which might be detected. In the present case there is less show of objection to such action, on the part of the court, as it affects the rights of no third parties, but is limited in its consequences to the parties to the suit only. We order the judgment of the Circuit Court to be affirmed.
Mr. Justice McLEAN, Mr. Justice WAYNE, and Mr. Justice GRIER, dissented.
Order.
This cause came on to be heard on the transcript of the record from the Circuit Court of the United States for the Southern District of Mississippi, and was argued by counsel. On consideration whereof, it is now here ordered and adjudged by this court, that the judgment of the said Circuit Court, on the motion to quash the forthcoming bond and to set aside the original judgment as set forth in the record of this cause, be and the same is hereby, affirmed with costs.
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905 F.2d 1466
UNITED STATES of America, Plaintiff-Appellee,v.John WEAVER, Thomas D. Sikes, Defendants-Appellants.
No. 88-6032.
United States Court of Appeals,Eleventh Circuit.
July 13, 1990.
1
Michael Hursey, P.A., Ft. Lauderdale, Fla., for John Weaver.
2
Alvin E. Entin, Entin, Schwartz, Margules & Schwartz, Miami, Fla., for Thomas D. Sikes.
3
Dexter W. Lehtinen, U.S. Atty., Eileen M. O'Connor, Dawn Bowen, Asst. U.S. Attys., for plaintiff-appellee.
4
Appeals from the United States District Court for the Southern District of Florida.
5
Before KRAVITCH and JOHNSON, Circuit Judges, and KAUFMAN*, Senior District Judge.
FRANK A. KAUFMAN, Senior District Judge:
6
Thomas Sikes and John Weaver appeal from their convictions in the United States District Court for the Southern District of Florida and the sentences imposed upon them for conspiracy to import cocaine in violation of 21 U.S.C. Sec. 963 and conspiracy to possess with intent to distribute cocaine in violation of 21 U.S.C. Sec. 846. We affirm.
7
On September 23, 1987, twenty-one defendants, including the two appellants, were indicted upon twenty-nine counts for various cocaine and marijuana offenses. The indictment contained twenty-one counts charging substantive cocaine-related offenses (Counts 1-3; 12-29). All twenty-one defendants were charged with one or more cocaine related offenses. Count One charged Sikes with conducting a criminal enterprise in violation of 21 U.S.C. Sec. 848.1 Count Two charged Sikes and Weaver and seventeen other defendants with conspiracy to import at least one kilogram of cocaine, in violation of 21 U.S.C. Sec. 963. Count Three charged all defendants with conspiracy to possess with intent to distribute at least one kilogram of cocaine in violation of 21 U.S.C. Sec. 846.2 In addition to the cocaine counts, the indictment included eight counts charging eleven defendants, but not Sikes or Weaver, with substantive marijuana-related offenses (Counts 4-11). After certain defendants entered pleas of guilty, the case proceeded to trial against nine defendants,3 only two of whom, Robert Bradley and Norman Speck, were charged in any of the marijuana counts. After four and one-half days of trial, the court severed the marijuana charges and continued the trial as to the nine defendants solely with respect to the cocaine charges. At the conclusion of the trial, Sikes and Weaver were found guilty under Counts Two and Three. As to the other counts in which Sikes and Weaver were charged, the jury failed to reach verdicts.4
8
Weaver was sentenced to concurrent six-year terms of incarceration in connection with his convictions upon Counts Two and Three. Sikes was sentenced to two concurrent thirty-six year terms of imprisonment in connection with his convictions upon Counts Two and Three, those terms to run consecutively with a sentence imposed in a prior case. In addition, Sikes was fined $1,000,000.
9
In this appeal, the following questions are presented: (1) whether Sikes was properly prosecuted for offenses he committed during 1986; (2) whether the district court properly admitted evidence at trial relating to Sikes' 1985 offenses; (3) whether the joinder of the marijuana and cocaine offenses was proper; (4) whether there was sufficient evidence to support Weaver's convictions; (5) whether the testimony regarding certain threats constituted undue prejudice; and (6) whether Sikes' enhanced sentence was proper.
I. EVIDENCE AT TRIAL5
10
From 1983 until May 1985, certain persons, several of whom subsequently cooperated with the government and are alleged to be unindicted co-conspirators in the aforementioned marijuana and cocaine conspiracies, smuggled marijuana by boat and plane from the Bahamas, Jamaica, and Belize into the United States. In May 1985, Sikes conspired with some of those persons to import cocaine from Columbia into the United States and became a leading figure--if not the leading figure--in that effort. That conspiracy involved, inter alia, arrangements for the use of Florida-based airplanes to fly cocaine on four occasions from Columbia to safe landing areas in Louisiana and Florida, and then to transport that cocaine by automobile to safe locations in Florida. Weaver was one of the persons hired and paid by Sikes to offload the planes and transport the cocaine to Florida on two of the four occasions.
11
II. EVIDENCE IN THE PRETRIAL HEARING REGARDING THE PLEA AGREEMENT
12
In January, 1983, Sikes was convicted in the court below in an earlier case for drug-related offenses committed between 1978 and 1981. That conviction was affirmed in United States v. Van Horn, 789 F.2d 1492 (11th Cir.), cert. denied, 479 U.S. 886, 107 S.Ct. 279, 93 L.Ed.2d 255 (1986). Sikes, who was at liberty on an appeal bond in connection with certain matters in that case after the Supreme Court's said denial of a writ of certiorari, contacted, through an attorney, Alvin Entin, Special Agent Devlin of the Drug Enforcement Administration (DEA). On April 10, 1987, at a meeting with DEA Agents Devlin and Benisek, and with Sikes present, Entin stated that Sikes wanted to work with the DEA in exchange for immunity for Sikes from prosecution for three cocaine smuggling ventures in which Sikes had participated with individuals named "Carlos" and "Sammy," later further identified as Carlos Betancourt and Serviano Manga. During that meeting, the specifics of those offenses were not discussed, but there was some discussion about the years in which the offenses were committed. According to Entin, he represented that Sikes engaged in criminal activity with "Carlos" and "Sammy" in 1984 and 1985, and may have engaged in criminal conduct in 1986. According to Devlin and Benisek, the general time frame under discussion was 1981 through 1985, and the three smuggling ventures were represented to have occurred in 1984 and 1985. The latter representation was memorialized by Agent Benisek in a DEA-6 report of the meeting. Sikes stated that if the government agreed not to prosecute him for the offenses mentioned by Sikes during that April 10, 1987 meeting, he would assist the DEA in the interdiction of an importation of cocaine from Columbia which "Carlos" and "Sammy" were planning. Devlin informed Entin and Sikes that he was amenable to such an agreement subject to two conditions: 1) verification that Sikes was not currently under investigation; and 2) approval of the agreement by an Assistant United States Attorney.
13
Benisek checked the government's NADDIS6 information system to determine whether Sikes was under investigation and received a negative response.7 Devlin discussed Sikes' proposal with Assistant United States Attorney Neil Karadbil, who had prosecuted Sikes in 1982-83, and told Karadbil that Sikes wanted immunity from prosecution for three smuggling offenses committed between 1981 and 1985 in exchange for Sikes' full cooperation with the DEA.
14
Subsequently, Entin drafted a proposed written agreement dated April 20, 1987, which he sent to Karadbil. The letter stated, in pertinent part:
15
In return for [Sikes'] assistance, the Government has agreed that Mr. Sikes has disclosed participation in approximately three cocaine operations which took place from 1981 to 1985. With regard to these approximately three operations, the Government has agreed not to prosecute Mr. Sikes for his participation in same in any Federal Court. As each of these matters involved in some way the Southern District of Florida, your office may appropriately act in this matter.
16
Karadbil signed the agreement and returned it to Entin.
17
Between April 10 and May 13, 1987, Sikes introduced an undercover DEA agent to "Carlos" and "Sammy" in Miami. Plans were made for an airplane to fly to Columbia to pick up the cocaine on May 15th and return to Florida.
18
Unbeknownst to Devlin, Benisek and Karadbil, DEA Agent Mangiamele and Assistant United States Attorney Eileen O'Connor were at that time investigating Sikes' drug trafficking activities occurring after 1982. On approximately May 12, 1987, Mangiamele became aware of the agreement between Sikes and the government, and notified O'Connor and Karadbil of the situation.
19
On May 13th or 14th, Sikes told Entin that some people in Miami knew that he was cooperating with the authorities and accused Entin of leaking the information. According to Entin, Sikes also stated that Sikes did not believe that the agreement accurately reflected the time period to be encompassed by the non-prosecution portion of the agreement. On May 14th, Entin sent Karadbil a letter stating that the original agreement contained a typographical error in that Sikes was to receive immunity from prosecution for offenses committed between 1981 and 1986, rather than 1981 through 1985.
20
On May 15th, the planned cocaine importation was aborted when the pilots were unable to locate the airstrip in Colombia. That same day, Sikes, who had stated that he would be readily available to assist the DEA, left Miami and the agents were unable to locate him. Sikes later claimed that he left because of a family emergency.
21
On May 20th, Benisek and Devlin, together with another DEA agent, Shea, confronted Sikes concerning his disappearance on May 15th. The agents did not find Sikes' explanation plausible and informed him that he was "back to square one" in terms of fulfilling his cooperation requirement pursuant to the agreement. Sikes offered to introduce the agents to a cocaine dealer named "Manny." Sikes then placed a telephone call to "Manny" and, later that day, met "Manny" alone while under surveillance by DEA agents.
22
On May 21st, O'Connor, Mangiamele and Mangiamele's supervisor met with Benisek and Devlin and their supervisors. O'Connor instructed the latter two agents to "debrief" Sikes as to the specifics of the three smuggling ventures Sikes had referred to on April 10th.8 O'Connor further instructed the agents to terminate Sikes as an informant following that interview.
23
Benisek and Devlin met with Sikes on May 29, 1987. Sikes told those two agents that the three ventures involved Carlos Betancourt, Serviano Manga, and an individual named "Gore," that he could not remember any other persons involved in the smuggling ventures, and that the three offenses did not take place between 1981 and 1985, but instead occurred in 1985 and 1986.9 Sikes was also questioned about "Manny."
24
In a letter dated June 2, 1987, Karadbil, responding to Entin's May 14th letter, stated that Entin's letter was an attempt to extend Sikes' immunity for criminal conduct falling outside the originally agreed-upon time frame. Karadbil also stated that Sikes had violated the cooperation terms of the agreement, rendering the agreement null and void.
25
Sikes was subsequently charged in twelve counts of the twenty-nine count indictment in this case as a result of the investigation conducted by O'Connor and Mangiamele. The criminal acts for which Sikes was so charged occurred in 1985 and 1986. Sikes filed a motion to dismiss the indictment alleging that the non-prosecution agreement covered the offenses charged in the indictment.
26
At the conclusion of an evidentiary hearing, the court below concluded that: (1) the parties' agreement was embodied in the letter agreement dated April 20, 1987; (2) the agreement was binding on the government; (3) Sikes had not breached the agreement; but (4) Entin's letter of May 14th constituted an attempt to modify the terms of the agreement and the government had no obligation to accept such a modification. Therefore, Sikes was entitled to immunity from prosecution for offenses committed between 1981 and 1985, but not for offenses committed in 1986. The indictment was redacted to conform to that determination by the trial court.
27
In this appeal, Sikes challenges those conclusions reached by the court below.
III. PROSECUTION FOR 1986 OFFENSES
28
Although Sikes acknowledged in his initial brief filed in this appeal that the record supports the district court's determination that the initial agreement of April 20, 1987 only granted immunity from prosecution for offenses committed between 1981 and 1985, in his reply brief and at oral argument in this court, Sikes asserted that the April 20, 1987 agreement is ambiguous as to whether Sikes was granted immunity from prosecution for crimes committed in 1986. Further, Sikes argues that the trial court's ruling that the May 14, 1987 letter from Sikes' counsel to the government was an attempt on Sikes' behalf to extend the period of immunity was clearly erroneous. According to Sikes, the May 14th letter was written by his attorney for the purpose of correcting a typographical error in the April 20th letter of agreement. Sikes further states that the failure of the government either to respond negatively to the May 14th letter or immediately to cease using Sikes' services as an informant estops the government from denying that the subsequent letter modified the April 20th agreement to include immunity for the year 1986. Finally, Sikes takes the position that the government's failure to respond to his counsel's letter of May 14th until after Sikes had concluded his cooperation with the DEA agents constitutes the type of egregious conduct which required the district court to impose "equitable immunity" for the year 1986, or at least to conclude that the government's failure to respond rendered the agreement ambiguous as to the year 1986. We find none of those arguments persuasive.
29
Both Sikes and the government agree that the April 20, 1987 letter of agreement constituted a grant of immunity in exchange for Sikes' cooperation with the government in its ongoing investigation. Federal prosecutors may enter into such agreements. See, e.g., United States v. Harvey, 869 F.2d 1439 (11th Cir.1989) (en banc ). As Judge Kravitch wrote in that case, "[d]ue process requires the government to adhere to the terms of any plea bargain or immunity agreement it makes," and courts will enforce such agreements "when the defendant or witness has fulfilled his side of the bargain." Id. at 1443-44 (citations omitted).
30
Determination of the extent of immunity afforded by the April 20 and May 14, 1987 letters requires the application of basic principals of contracts law. See Rowe v. Griffin, 676 F.2d 524, 528 (11th Cir.1982) ("contractual analysis applies equally well to promises of immunity from prosecution"); United States v. Harvey, 791 F.2d 294, 300 (4th Cir.1986) ("[p]rivate law interpretive principles may be wholly dispositive in an appropriate case"). See also Santobello v. New York, 404 U.S. 257, 262, 92 S.Ct. 495, 498, 30 L.Ed.2d 427 (1972). A basic tenet of contract law is that a written agreement which is unambiguous on its face should be interpreted and enforced accordingly.
31
For example, whether a written agreement is ambiguous or unambiguous on its face should ordinarily be decided by the courts as a matter of law. If it is unambiguous as a matter of law, and there is no suggestion of government overreaching of any kind, the agreement should be interpreted and enforced accordingly. Neither side should be able, any more than would be private contracting parties, unilaterally to renege or seek modification simply because of uninduced mistake or change of mind. Such an approach is conformable not only to the policies reflected in private contract law from which it is directly borrowed, but also to constitutional concerns of fundamental fairness in "bargaining" for guilty pleas, and to the wider concerns expressed in the exercise of supervisory jurisdiction over the administration of federal criminal justice.
32
United States v. Harvey, 791 F.2d at 300 (citations omitted). Also, reformation of a written agreement is warranted only when the evidence demonstrates that the parties' mutual mistake resulted in a written document which does not accurately reflect the terms of their agreement. See Restatement (Second) of Contracts Sec. 155 (1979). Consequently, reformation is generally, without more, not an available remedy where the evidence demonstrates mistake or change of mind of only one of the contracting parties. See id. at Sec. 153.
33
Sikes contends that the April 20, 1987 letter of agreement is ambiguous on its face because the clear intent of both parties in the letter was to grant immunity from prosecution for "approximately three cocaine operations," not to restrict immunity to the years 1981 through 1985.10 We disagree and conclude that the April 20th agreement limiting the grant of immunity to the period 1981 to 1985 is unambiguous.
34
The evidence adduced at the motions hearing showed that during the April 10th meeting, Sikes' attorney specifically referred to three cocaine operations which occurred during 1984 and 1985, and that the government agreed to grant Sikes immunity from 1981 to 1985 in exchange for his cooperation. Notes taken by both sides during the meeting and a DEA report produced shortly after the meeting confirm that the agreement related to the 1981 to 1985 dates. Moreover, Sikes' attorney, who had conducted negotiations on behalf of and in the presence of his client, personally drafted the April 20th document which unambiguously stated that the cut-off date for non-prosecution was 1985. Thus, in refusing to extend immunity for the year 1986, the district court properly measured the terms of the immunity agreement "by objective standards, not the subjective beliefs of the parties." See, with regard to plea agreements, United States v. Calimano, 576 F.2d 637, 640 (5th Cir.1978); Johnson v. Beto, 466 F.2d 478, 480 (5th Cir.1972). In addition, having concluded that there was no mutual mistake as to the intended scope of the contract, the district court correctly concluded that reformation was unwarranted and that Sikes' May 14, 1987 letter constituted a unilateral attempt to modify the terms of the agreement. Sikes' further contention that the government was obligated to accept the proposed modification because the government would likely have been willing in the first instance to include 1986 in the agreement is equally unpersuasive.11 Assuming arguendo only that the government would have initially agreed to include 1986 in the terms of the agreement, it is irrelevant, in determining the terms actually agreed on, that either of the parties may subjectively have harbored a willingness to accept different terms. What controls is upon what the parties agreed, not upon what they did not agree. The contract, once created, is to be interpreted in accordance with the objective import of its unambiguous terms. See Johnson v. Beto at 480.
35
Sikes' insistence that the government was obligated to accept the terms of the May 14, 1987 letter as a result of the prosecutor's failure to respond is unavailing in light of the government's letter of June 2, 1987 which expressly rejected the proposed modification.12 Thus, even assuming that the May 14th letter can be construed as an offer to renegotiate the terms of the agreement, it did not bind the government because an offer, in the absence of an acceptance, has no legal consequence. See Calimano, 576 F.2d at 639-40. Nor does the fact that the government continued to use Sikes' services as an informant after the government's receipt of, but before its rejection of, the May 14th letter bind the government to renegotiate the terms of the April agreement. The doctrine of estoppel may be invoked to prevent "a person from showing the truth contrary to a representation of fact made by him after another has relied on the representation." Restatement (Second) of Contracts, Sec. 90 comment a. For the government to be estopped from prosecuting Sikes for crimes committed in 1986, Sikes would have to show that his cooperation after May 14th was as a result of the government's representation that he would not be prosecuted for criminal acts committed in 1986. In this case, Sikes has not presented or proffered any such evidence. Under such circumstances, a person such as Sikes may not prevail upon an alleged existence of an agreement of the type involved in this case based solely on the defendant's subjective impression that a promise had been made; instead, objective standards are utilized. See Calimano 576 F.2d at 640. See also United States v. Weiss, 599 F.2d 730, 736-38 (5th Cir.1979).13 By contrast as to result, but in accordance with the same principles of law, this court, in Rowe v. Griffin, 676 F.2d at 528, affirmed the district court's dismissal of an indictment upon a prima facie showing that the government had promised the defendant immunity from prosecution for certain offenses in return for his cooperation and that the defendant had complied in good faith with the terms of the agreement. Applying the rationale employed in Calimano, Weiss, and Rowe to the facts of the instant case, since the government made no promises that Sikes would not be prosecuted for any offenses committed in 1986, the doctrine of promissory estoppel is of no aid herein to Sikes. See Johnson v. Beto, 466 F.2d at 480 (discussing promissory estoppel in a plea agreement setting).
36
Sikes' contention of abuse of prosecutorial discretion and his reliance upon the doctrine of equitable immunity are similarly unpersuasive. In Weiss, the Fifth Circuit suggested that dismissal of an indictment may be justified in some circumstances as a matter of equitable immunity where the prosecutor abused his discretion by deciding to prosecute in the face of a promise not to do so and the defendant's resultant cooperation, where the defendant's cooperation was such that he (the defendant) should not be prosecuted, or where the government's conduct was so egregious as to offend due process. 599 F.2d at 735 n. 9. None of those reasons exists in this case. Accordingly, the prosecution for crimes committed in 1986 did not violate the government's agreement with Sikes. However, the government also prosecuted Sikes for offenses occurring prior to 1986. Those offenses were covered by the April 20th letter of agreement. That latter governmental action was based upon Sikes' alleged breach of his obligations under that agreement. When the government contests the defendant's good faith compliance with the terms of an agreement and proceeds with its case by way of indictment, the defendant is entitled to a judicial determination as to whether the government may so withdraw from the agreement. In this case, the inclusion of the 1985 offenses in the indictment called for the question of Sikes' good faith compliance with the April, 1987 agreement to be reviewed by the district court and, in and of itself, did not constitute a breach of that agreement or bad faith prosecution. When that question was presented after indictment, the court below concluded that Sikes had not breached the terms of the agreement so as to permit prosecution of him for the pre-1986 offenses. Accordingly, the indictment was redacted as to the pre-1986 offenses and Sikes received the full benefit of the April, 1987 agreement.
37
As to Sikes' contention that his good faith cooperation with the agreement entitles him to equitable immunity for offenses committed in 1986, that claim lacks any merit. Sikes' cooperation was a prerequisite to his entitlement of immunity promised him pursuant to the April 20th agreement. The fact that the district court determined that he had performed his side of the bargain under that agreement does not entitle Sikes to benefits beyond those which were promised to him. Although Sikes may have hoped that his continued cooperation would ultimately induce the government to extend the terms of his immunity, the government was not responsible for that unfounded expectation. Thus, this is not a case in which promises made in bad faith may constitute trickery so flagrant as to violate a defendant's constitutional rights. United States v. Battle, 467 F.2d 569, 570 (5th Cir.1972). Finally, Sikes' cooperation was not related to the charges for which he was prosecuted; nor were statements which Sikes made during the course of his cooperation subsequently used against him. Consequently, Sikes can show no prejudice in this appeal resulting from his cooperation with the government. See United States v. Donahey, 529 F.2d 831, 832-33 (5th Cir.), cert. denied, 429 U.S. 828, 97 S.Ct. 85, 50 L.Ed.2d 91 (1976).
38
In sum, the district court's determination that the April, 1987 immunity agreement did not include the year 1986 is based on "a fair, thorough, and objective examination of the evidence," Calimano, 576 F.2d at 640, and certainly is not clearly erroneous. Id.
39
IV. EVIDENTIARY USE AT TRIAL OF PRE-1986 OFFENSES
40
While Sikes was not prosecuted for any pre-1986 offenses, the government was permitted to introduce at trial evidence relating to 1985 offenses subject to an instruction to the jury that the 1985 evidence was not to be considered as to the charges against Sikes, but only as to the charges against other defendants. Sikes asserts that the immunity he received from the government in exchange for his cooperation protected him from either the direct or indirect use at trial of any evidence of events which occurred between 1981 and 1985.
41
Before the trial commenced, the indictment, as indicated supra, was redacted to exclude reference to pre-1986 offenses. Further, in accordance with Karadbil's June 2, 1987 letter, "[n]one of the information obtained from Mr. Sikes, however limited, [was] used against Mr. Sikes," and as per that letter, none of the information provided by Sikes was made known to O'Connor, who prosecuted the case, or Mangiamele, the government's agent-in-chief. Moreover, during the hearing with regard to Sikes' motion to dismiss, Sikes' attorney stated that he was not making any Kastigar14 motion because he believed that the prosecutor had properly insulated herself. In Kastigar, the Supreme Court stated that: "Transactional immunity ... accords full immunity from prosecution for the offense to which ... compelled testimony relates...." Kastigar v. United States, 406 U.S. 441, 453, 92 S.Ct. 1653, 1661, 32 L.Ed.2d 212 (1972). In United States v. Harvey, 869 F.2d at 1446, Judge Kravitch recently addressed, for the majority of an en banc court, the subjects of both transactional and use immunity:
42
[T]ransactional and use immunity are coterminous with the fifth amendment privilege [against self-incrimination] in all respects other than their effect on the government in the future. A grant of use immunity prohibits the government from using evidence disclosed either directly or derivatively, while a grant of transactional immunity prohibits the government from prosecuting the witness at any time with respect to the incriminating matters the witness disclosed.
43
In this instance, the government and Sikes' counsel agree that the prosecutor was properly insulated from all of Sikes' disclosures to the government pursuant to the April, 1987 letter of agreement. Therefore, Sikes' use immunity was not violated. See generally Kastigar 406 U.S. at 460-62, 92 S.Ct. at 1664-66. Sikes received the full benefit of the grant of use immunity because the government's evidence relating to the 1985 offenses was derived only from legitimate sources other than his cooperation with the government pursuant to the April, 1987 agreement.
44
As to Sikes' claim that the grant of transactional immunity protected him from the direct or indirect use of any evidence relating to events which transpired prior to 1986, Sikes received the full benefit of his grant of transactional immunity because he was not prosecuted with respect to the incriminating matters which he disclosed. The government's introduction of evidence relating to the 1985 offenses, with an instruction given several times to the jury by the district court that such evidence should not be considered against Sikes, was not a violation of the terms of the agreement. In the immunity agreement, the government agreed not to prosecute Sikes for those offenses, and further agreed not to use his disclosures against him. The use of the disclosures by Sikes as evidence against others did not violate the government's agreement with Sikes.15
45
The instructions of the court below to the jury effectively gave to Sikes the protection to which he was entitled. In that context, it is not to be assumed that the jury will be unable to follow the trial court's instructions. See Lakeside v. Oregon, 435 U.S. 333, 340 n. 11, 98 S.Ct. 1091, 1095 n. 11, 55 L.Ed.2d 319 (1978).
V. JOINDER
46
Both Sikes and Weaver contend that the joinder of the marijuana and cocaine counts, particularly the conspiracy counts, in the same indictment was improper under Fed.R.Crim.P. 8(b) since the two conspiracies were separate and each of them as defendants was only charged in the cocaine conspiracy. In that regard, both appellants assert that they were prejudiced by that improper joinder because the jury was allowed to hear evidence regarding a marijuana conspiracy in which their co-defendants, but neither of them, were involved. The answer, however, to that contention is that "[s]eparate conspiracies with different memberships may still be joined if they are part of the same series of acts or transactions." United States v. Grassi, 616 F.2d 1295, 1303 (5th Cir.), cert. denied, 449 U.S. 956, 101 S.Ct. 363, 66 L.Ed.2d 220 (1980).
47
Twenty-one defendants were charged in the twenty-nine count indictment in this case. Of those twenty-one defendants charged, all were charged in the cocaine conspiracy and eleven were also charged in the marijuana conspiracy. In addition to those named, two unindicted co-conspirators were purportedly involved in both the marijuana and cocaine conspiracies. Owing to pleas of guilty and the fugitive status of two of the defendants, only two defendants, Bradley and Speck, were confronted at trial with marijuana charges, while all nine of the remaining defendants who went to trial faced cocaine counts.16
48
According to the indictment and the evidence at trial, the marijuana conspiracy which originated in 1983 gradually expanded and switched to cocaine as the drug of popular choice in 1985. However, many of the participants and facts surrounding both of those conspiracies were substantially interrelated.
49
Joinder of parties and defendants under Rule 8 is designed to promote judicial economy and efficiency. Accordingly, as Judge Roney has written, Rule 8 "is broadly construed in favor of the initial joinder." United States v. Davis, 773 F.2d 1180, 1181 (11th Cir.1985). The question of whether initial joinder is proper under Rule 8(b) is to be determined before trial by examination by the trial court of the allegations stated on the face of the indictment.17 However, whether joinder is improper based upon evidence proffered before or adduced during trial is governed by Rule 14.18 United States v. Morales, 868 F.2d 1562, 1567-68 (11th Cir.1989). Thus, we must first look to the indictment in order to determine if appellants' initial joinder was proper under Rule 8(b). Id. If improper joinder under Rule 8(b) occurred, reversal is not required if the misjoinder was harmless error. United States v. Lane, 474 U.S. 438, 449, 106 S.Ct. 725, 732, 88 L.Ed.2d 814 (1986). The improper joinder is harmless unless it "results in actual prejudice because it 'had substantial and injurious effect or influence in determining the jury's verdict.' " Id., quoting Kotteakos v. United States, 328 U.S. 750, 776, 66 S.Ct. 1239, 1253, 90 L.Ed. 1557 (1946). "Consequently, the question of whether it is proper to restrict a Rule 8(b) inquiry to the indictment is largely academic because in deciding whether reversal is required, assuming the joinder was improper, the reviewing court must necessarily look to the evidence adduced at trial to determine whether the defendant has been prejudiced." Morales, 868 F.2d at 1567 n. 3. Thus, in many instances, a reviewing court may "simply [look] to the prejudice component of defendant's claim and only in the rare case where the defendant has demonstrated prejudice will the court be required to address the issue of whether the joinder was actually proper." Id.
50
The face of the indictment discloses that the marijuana conspiracy and the subsequent cocaine conspiracy were improperly joined in this case in the same indictment. The two conspiracies did not overlap temporally; the cocaine conspiracy did not begin until the marijuana conspiracy had ended. The two conspiracies were separately charged in the indictment and the government concedes that they represented separate transactions. Moreover, although eleven of the twenty-one defendants charged in the cocaine conspiracy were also charged in the marijuana conspiracy in the initial indictment, only two of the nine remaining defendants went to trial with regard to the marijuana conspiracy.
51
Although one of the goals of joinder is to promote judicial economy, a countervailing purpose of Rule 8(b) "is to prevent the 'cumulation of prejudice [growing out of] charging several defendants with similar but unrelated offenses.' " United States v. Bova, 493 F.2d 33, 35 (5th Cir.1974), quoting Cupo v. United States, 359 F.2d 990, 993 (D.C.Cir.1966), cert. denied, 385 U.S. 1013, 87 S.Ct. 723, 17 L.Ed.2d 549 (1967). "Rule 8(b) permits joinder of defendants 'if they are alleged to have participated in the same act or transaction or in the same series of acts or transactions constituting an offense or offenses.' " Grassi, 616 F.2d at 1303. However, as Judge Fay has written, "when ... the connection between different groups is limited to a few individuals common to each but those individuals commit separate acts which involve them in separate offenses with no common aim, then the requisite substantial identity of facts or participants is not present." United States v. Nettles, 570 F.2d 547, 551 (5th Cir.1978). Similarly,
52
[w]hile criminal acts of several defendants may be similar in nature, these acts cannot be properly joined in a multiple defendant trial if different facts and circumstances must be established to support the alleged violations. But when the facts underlying each offense are so closely connected that proof of such facts is necessary to establish each offense, joinder of defendants and offenses is proper.
53
United States v. Gentile, 495 F.2d 626, 630 (5th Cir.1974).
54
In Gentile, the Fifth Circuit found that improper joinder had occurred where an illegal sale of LSD charged against one of two jointly tried defendants, but not against the other, occurred nearly three weeks after the sale of PCP in which both defendants were allegedly involved. The court noted that "the sales took place at different locations, the transactions involved different drugs" procured from different sources, and the sale of the LSD was not part of the same "series of acts or transactions" as the sale of the PCP. Id. at 630-31. Similarly, in the instant case, the facts underlying the various acts relating to the marijuana conspiracy and to the cocaine conspiracy are not "so closely connected that proof of such facts is necessary to establish each offense," id. at 630; nor is there a "substantial identity of facts and participants" involving similar acts in furtherance of a common plan. Nettles, 570 F.2d at 551. Thus, the two conspiracies were separate and distinct transactions. Consequently, initial joinder of the marijuana and cocaine conspiracies was improper under Rule 8(b).
55
Having decided that initial joinder was improper, we must now address whether that error was harmless. Lane, 474 U.S. at 449, 106 S.Ct. at 732. From a review of the allegations contained in the indictment and the evidence in the record, we conclude that the error was harmless.
56
During the trial, Sikes and Weaver joined in pressing co-defendant Fowlkes' pretrial motion to sever the marijuana counts. Initially, the court did not rule on any of those motions prior to trial. However, during trial, the court repeatedly gave cautionary instructions to the jury to consider the marijuana conspiracy evidence only as to co-defendants Speck and Bradley, and not against any of the other defendants. Nevertheless, during the fifth day of testimony, the trial court, over the government's objection, severed the marijuana counts from the cocaine charges, pursuant to Rule 14, and continued the trial on the cocaine counts against Sikes and Weaver and the seven other defendants. In granting the severance motions of defendants Fowlkes, Sikes and Weaver, the district court instructed the jury that the marijuana evidence applied, if at all, only to Speck and Bradley, and then only as similar act evidence. The court further explained how the jury was to consider that similar act evidence.19 The court also cautioned the jury not to consider such evidence for the purpose of corroborating or buttressing the testimony of other witnesses.
57
Sikes and Weaver have not shown how they were prejudiced by the fact that the district court did not earlier sever out the marijuana charges. This is not a case in which "the jury could not follow the trial court's instructions and separate the evidence relevant to each appellant." United States v. Leavitt, 878 F.2d 1329, 1340 (11th Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 415, 107 L.Ed.2d 380 (1989). "Instead, it is presumed that cautionary instructions to the jury to consider the evidence separate as to each defendant will adequately guard against prejudice." Id. "Absent evidence to the contrary, we presume that the jury was able to follow the court's instructions and evaluate the evidence against each defendant independently." United States v. Badia, 827 F.2d 1458, 1466 (11th Cir.1987), cert. denied, 485 U.S. 937, 108 S.Ct. 1115, 99 L.Ed.2d 275 (1988).
58
Throughout the trial, the district court gave limiting instructions to the jury concerning the marijuana evidence. Had any prejudice resulted from the jury's hearing the evidence concerning the marijuana loads, it would have had its most prejudicial impact upon Speck and Bradley, the only defendants at trial charged with both the marijuana and cocaine conspiracies. Seemingly, the jurors were able to consider the evidence and follow the court's instruction since they acquitted Speck on the cocaine counts and were unable to return any verdicts as to Bradley. See, e.g., United States v. Morales, 868 F.2d at 1571; United States v. Walker, 720 F.2d 1527, 1534-35 (11th Cir.1983), cert. denied, 465 U.S. 1108, 104 S.Ct. 1614, 80 L.Ed.2d 143 (1984).
59
Finally, the evidence introduced at trial implicating Sikes and Weaver in the cocaine conspiracy was compelling. Given the "overwhelming evidence of guilt" adduced against Sikes and Weaver and for the other reasons set forth infra in this opinion, the improper joinder was harmless error. Lane, 474 U.S. at 450, 106 S.Ct. at 732.
VI. SUFFICIENCY OF TRIAL EVIDENCE
60
Appellant Weaver asserts that the government failed to prove that he knew the substance he offloaded and drove was cocaine, and also that there is no evidence that he agreed with anyone to import cocaine or to transport it after it was in the United States. Although he admits that the evidence established the existence of a conspiracy, Weaver asserts that the government did not demonstrate his knowledge of the existence of the conspiracy or his participation in it. We disagree.
61
In judging the sufficiency of the evidence, we must determine whether the evidence, when viewed in the light most favorable to the government, is such that a reasonable jury could find that it establishes guilt beyond a reasonable doubt as to the appellant.20
62
The sole determination which this court must make is whether a reasonably-minded jury could have found Weaver guilty beyond a reasonable doubt. United States v. Vera, 701 F.2d 1349, 1357 (11th Cir.1983). Challenges to the sufficiency of the evidence are measured by the following standard:
63
"[I]t is not necessary that the evidence exclude every reasonable hypothesis of innocence or be wholly inconsistent with every conclusion except that of guilt, provided a reasonable trier of fact could find that the evidence established guilt beyond a reasonable doubt. A jury is free to choose among reasonable constructions of the evidence."
64
Id., quoting United States v. Bell, 678 F.2d 547, 549 (5th Cir.1982), aff'd, 462 U.S. 356, 103 S.Ct. 2398, 76 L.Ed.2d 638 (1983) (footnote omitted).
65
To support a conviction for conspiracy, the government must show beyond a reasonable doubt "that the conspiracy existed" between two or more persons to commit a crime, "the accused knew of it, and that, with knowledge, the accused voluntarily became a part of it." United States v. Rackley, 742 F.2d 1266, 1272 (11th Cir.1984). "Close association with a co-conspirator or mere presence at the scene of the crime is insufficient evidence of knowing participation in a conspiracy. However, direct evidence of the elements of a conspiracy is not required." Vera, 701 F.2d at 1357 (citations omitted). In fact, "[t]here is 'rarely any direct evidence of an agreement to join a criminal conspiracy.' " United States v. Miller, 693 F.2d 1051, 1053 (11th Cir.1982), quoting United States v. Middlebrooks, 618 F.2d 273, 278, modified in part, 624 F.2d 36 (5th Cir.), cert. denied, 449 U.S. 984, 101 S.Ct. 401, 66 L.Ed.2d 246 (1980). Rather, "[a] defendant's knowing participation in a conspiracy may be established through proof of surrounding circumstances such as acts committed by the defendant which further the purpose of the conspiracy." Vera, 701 F.2d at 1357.
66
Weaver argues that the government failed to prove that he knew the substance he offloaded and drove was cocaine. However, the evidence adduced at trial supports the conclusion that Weaver, a Florida resident, traveled on two occasions to LaFayette, Louisiana as per arrangements between Weaver and Sikes. Before both offloadings, Weaver and the other offloaders visited the clandestine airstrip. Before the 1985 offload, Weaver, Sikes and all of the other offload crewmembers met, discussed and planned how each vehicle would proceed to the actual landing strip. Each time the plane flew in late at night, it quickly dumped both its duffle bags of cocaine and its extra fuel tanks and immediately took off. Weaver and the other offloaders threw the duffle bags into their vehicles and quickly drove away while others insured that no intruders entered the area. According to Sikes, Weaver was paid $25,000 for each successful offload of cocaine. The evidence supports the finding that Weaver was a trusted participant in the cocaine smuggling and transportation venture and was chosen for his role by the lead defendant, Sikes. That evidence, coupled with the telephone toll records involving Weaver and the other co-defendants, could have led a reasonable jury to the conclusion that Weaver was a knowing and intentional participant.
67
The jury could also reasonably conclude that in the course of transporting large quantities of valuable, readily marketable cocaine " 'through channels that wholly lack the ordinary protection of organized society, a prudent smuggler is not likely to suffer the presence of unaffiliated bystanders.' " United States v. Quintero, 848 F.2d 154, 156 (11th Cir.1988), quoting United States v. Cruz-Valdez, 773 F.2d 1541, 1547 (11th Cir.1985), cert. denied, 475 U.S. 1049, 106 S.Ct. 1272, 89 L.Ed.2d 580 (1986). In sum, the jury's verdict is supported in this case by more than sufficient evidence.
68
VII. ALLEGED PREJUDICIAL TESTIMONY REGARDING THREATS
69
During cross-examination of Richard Sommers, an unindicted co-conspirator who was testifying as a government witness, Sommers was asked numerous questions designed to establish that he had violated his plea agreement by lying to the government about his finances. Sommers was asked about a wall built around his home. On re-direct examination, the prosecutor inquired about the cost of the wall and its purpose. Sommers responded that he built the wall "because of threats and beliefs that I have about dangers to my family." The prosecutor then asked: "You didn't receive any specific threats from anybody in this, that's sitting over there, did you?" Answer: "Specific threat?" Defense counsel objected and the court instructed the jury to disregard the question and answer. The prosecutor sought to rectify any adverse inference which may have been drawn from Sommers' answer and the court agreed it was appropriate to clear up the matter. Sommers was brought into the courtroom outside the jury's presence and was asked by the court whether any of the defendants had threatened him directly or indirectly. Sommers responded: "No." A few moments later the same question was asked of Sommers before the jury. Sommers responded that he was not threatened directly, but equivocated as to indirect threats. Immediately, in the presence of the jury, the court cross-examined Sommers with his prior in camera response. In addition, Sommers' earlier testimony that none of the defendants had threatened him directly or indirectly was read back to the jury.
70
That series of questions and answers may well have impeached Sommers and adversely affected the government rather than appellants. In any event, that testimony was hardly very consequential insofar as Sikes or Weaver is concerned when one considers the length of the trial. Even assuming, arguendo only, that there was an error as to Sikes or Weaver--and in this court's view there was no such error--a mistrial was not mandated because, in the absence of actual prejudice and in light of the evidence against Sikes and Weaver, the likelihood of substantial impact on the jury was minimal. United States v. Anderson, 782 F.2d 908, 916 (11th Cir.1986). Thus, such error, if any, was harmless.
VIII. SENTENCE ENHANCEMENT
71
Finally, Sikes contends that the imposition by the court below of an enhanced sentence under 21 U.S.C. Sec. 851 is erroneous because (1) the government failed to give adequate and timely notice of its intent to rely on a prior drug conviction as required by that statute; and (2) the district court neither informed Sikes that he must challenge the validity of any prior conviction underlying the enhancement information nor determined whether Sikes in fact had a prior drug conviction.
Section 851 provides, in pertinent part:
72
(a)(1) No person who stands convicted of an offense under this part shall be sentenced to increased punishment by reason of one or more prior convictions, unless before trial, or before entry of a plea of guilty, the United States attorney files an information with the court (and serves a copy of such information on the person or counsel for the person) stating in writing the previous convictions to be relied upon. Upon a showing by the United States attorney that facts regarding prior convictions could not with due diligence be obtained prior to trial or before entry of a plea of guilty, the court may postpone the trial or the taking of the plea for a reasonable period for the purpose of obtaining such facts. Clerical mistakes in the information may be amended at any time prior to the pronouncement of sentence.
73
....
74
(b) If the United States attorney files an information under this section, the court shall after conviction but before pronouncement of sentence inquire of the person with respect to whom the information was filed whether he affirms or denies that he has been previously convicted as alleged in the information, and shall inform him that any challenge to a prior conviction which is not made before sentence is imposed may not thereafter be raised to attack the sentence.
75
(Emphasis added). The procedural requirements of section 851 apply with respect to any proceeding to enhance a convicted defendant's sentence under both 21 U.S.C. Sec. 841 and Sec. 962, the sentencing provisions applicable to convictions under 21 U.S.C. Sec. 846 and Sec. 963, respectively.
76
This circuit has insisted upon strict compliance with the mandatory language of the procedural requirements of section 851(a) and (b). United States v. Noland, 495 F.2d 529, 533 (5th Cir.), cert. denied, 419 U.S. 966, 95 S.Ct. 228, 42 L.Ed.2d 181 (1974); United States v. Cevallos, 538 F.2d 1122, 1126-27 (5th Cir.1976). This is particularly true with respect to the timing of the government's filing with the court and service on the defendant of an information signifying the government's intent to rely on a prior drug conviction. Noland, 495 F.2d at 533. Even when the defendant is not surprised by the enhanced sentence, was aware from the outset that his previous conviction could lead to an enhanced sentence, never challenged the validity of the prior conviction, and admitted it at the sentencing hearing, the statute prohibits an enhanced sentence unless the government first seeks it by properly filing an information prior to trial. Id. "Provision for enhanced sentencing is a legislative decision, and the procedure the legislature prescribes to effectuate its purpose must be followed." Id. Significantly, "[t]he doctrine of harmless error does not apply" with respect to failures to follow the statutory scheme of Sec. 851. United States v. Olson, 716 F.2d 850, 852 (11th Cir.1983).
77
According to the certificate of service attached to the information notifying Sikes of the government's intention to rely upon a prior drug conviction for purposes of sentence enhancement, Sikes' counsel was personally served with the information on June 13, 1988, prior to selection of the trial jury. However, the information itself reveals a filing date of June 17, 1988, which was the fourth day after the start of trial. In addition, the record reflects that the information was docketed on June 17, 1988. If filing of the information took place after the commencement of the trial, it would appear to run afoul of the mandatory requirement that the information be filed with the court before trial. But, in this case, the transcript of June 13, 1988 reveals that, prior to jury selection, the following statement to the court by the prosecutor. "Ms. O'Connor: Just as a housekeeping matter, also the government is filing an information on Mr. Sikes, notice of a prior conviction, in order to double the maximum penalty. Defense counsel and Mr. Sikes have received a copy." Neither at that time nor at any time prior to sentencing did Sikes note any objection as to the timing or form of the government's notice. By personally serving Sikes and his counsel with a copy of the information prior to trial, and by advising the court orally that it was filing an information for purposes of sentence enhancement, the government complied with the mandatory requirements of section 851.
78
Sikes further contends that his sentence was improper because the district court failed to inquire whether he affirmed or denied that he had a prior drug conviction, as alleged in the information, pursuant to 21 U.S.C. Sec. 851(b). Indeed, a review of the sentencing transcript reveals that the district court did not specifically ask Sikes whether he had in fact been previously convicted. However, that is understandable when considered in context. During his opening statement to the jury, counsel for Sikes admitted that Sikes had a prior drug conviction. In addition, during the sentencing proceeding, the court reviewed with Sikes' attorney the Pre-Sentence Report (PSI) prepared by the probation officer. In discussing the prior arrests and convictions contained in the PSI, which included the prior convictions for conspiracy to import marijuana and conspiracy to possess with intent to distribute marijuana contained in the government's information (Case No. 82-73-Cr-SMA), counsel for Sikes took the position that the "court should not take into consideration anything other than convictions." In advocating that the prior arrests should be stricken, Sikes' counsel argued that the PSI should only contain "the number of convictions that's referred to." Later in the proceeding, when the court referred to Sikes being convicted when he was out on bond, and spoke of a proposed doubling of Sikes' sentence, Sikes' counsel raised no objection. Not only did Sikes fail to object to the prior convictions contained in the government's information and in the PSI, but, by implication, he agreed that the prior convictions stated in the PSI were correct. Thus, far from challenging the prior convictions, Sikes' counsel all but affirmed Sikes' previous drug convictions.
79
The convictions which formed the basis of the enhancement were more than five years old. Sikes was convicted of conspiracy to import marijuana and conspiracy to possess with intent to distribute marijuana on January 31, 1983.21 The government's enhancement information which relied on those convictions was filed on June 13 or June 17, 1988, more than five years after those convictions. As such, challenge to the validity of Sikes' convictions was barred by Sec. 851(e):
80
No person who stands convicted of an offense under this part may challenge the validity of any prior conviction alleged under this section which occurred more than five years before the date of the information alleging such prior conviction.
81
A trial court is not required "to adhere to the rituals of Sec. 851(b) where a defendant, as a matter of law, is precluded from attacking the conviction forming the basis of the enhancement information." United States v. Nanez, 694 F.2d 405, 413 (5th Cir.1982), cert. denied, 461 U.S. 909, 103 S.Ct. 1884, 76 L.Ed.2d 813 (1983). Thus the trial court's imposition of an enhanced sentence as to Sikes, pursuant to 21 U.S.C. Sec. 851, would not, in any event, be subject to successful attack in this appeal even if that court had not done all it was required to do under the statute.
IX. CONCLUSION
82
For the reasons stated in this opinion, the convictions and sentences of Sikes and Weaver are AFFIRMED.
*
Honorable Frank A. Kaufman, Senior U.S. District Judge for the District of Maryland, sitting by designation
1
A superseding indictment was filed on June 8, 1988 in which, in relation to the forfeiture provisions of Count One, certain additional property not mentioned in the original indictment is specified
2
Also, Sikes was charged in Counts Twelve, Fourteen, Sixteen and Twenty with the importation of at least one kilogram of cocaine, in violation of 21 U.S.C. Sec. 952(a); in Counts Thirteen, Fifteen, Seventeen and Twenty-one with possession with intent to distribute at least one kilogram of cocaine, and in Count Twenty-six with distribution of at least one kilogram of cocaine, in violation of 21 U.S.C. Sec. 841(a)(1). Weaver was charged in Counts Twelve and Fourteen with the importation of at least one kilogram of cocaine, in violation of 21 U.S.C. Sec. 952(a), and in Counts Thirteen and Fifteen with possession of with intent to distribute at least one kilogram of cocaine, in violation of 21 U.S.C. Sec. 841(a)(1)
3
The trial related to charges against the following nine defendants: Thomas Sikes, John Weaver, Robert Bradley, Norman Speck, Charles Craig, Herman Harley Wilson, Robert Fowlkes, Francis Scara, and Alfredo Castello. Because two other defendants were fugitives, the trial did not involve charges against them
4
As to the remaining defendants, Speck was found not guilty as to all counts upon which he was charged; Wilson and Craig were found guilty as to Counts Two and Three; and Castello was found guilty as to Count Two. The jury failed to reach verdicts as to the remaining counts against those defendants. In addition, the jury also failed to reach verdicts with respect to any count as to defendants Bradley, Fowlkes and Scara. In a separate opinion bearing today's date, we deal with certain double jeopardy issues raised by Bradley and Speck in their attempt to bar a new trial upon the severed marijuana counts
5
The facts stated in sections I and II of this opinion are stated in accordance with the standard set forth in Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942), namely, that in judging the sufficiency of the evidence, this court must view the evidence in the light most favorable to the government. Moreover, all reasonable inferences and credibility choices must be drawn in favor of the jury's verdict. United States v. Leavitt, 878 F.2d 1329, 1335 (11th Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 415, 107 L.Ed.2d 380 (1989)
6
NADDIS is the Narcotic and Dangerous Drug Information System
7
That response was erroneous as information had in fact been placed into the NADDIS system reflecting that Sikes was under investigation on or about April 10, 1987
8
O'Connor wanted the agents to ascertain the specifics of those offenses so that if litigation ensued and the court decided that Sikes had not breached the agreement, there would be no question about the offenses to which Sikes was entitled to receive immunity from prosecution. She also instructed the agents not to question Sikes about any offenses occurring after 1985, as she believed that Sikes had no immunity for those offenses under the agreement
9
Specifically, Sikes stated that the cocaine ventures occurred in August, 1985 (360 kilograms); February, 1986 (450 kilograms); and July or August, 1986 (500 kilograms). At O'Connor's instruction, she and Mangiamele were not advised of the specifics of Sikes' disclosures at either the April 10th or the May 29th meeting
10
The government stated during oral argument before us that the 1986 criminal activity for which Sikes was indicted and subsequently convicted was not necessarily one of the "approximately three cocaine operations" for which Sikes was granted immunity. According to the government, the three narcotics transactions Sikes referred to in his May 29, 1987 debriefing do not match up with the allegations contained in the indictment with regard to the 1986 operation. For instance, at the debriefing, Sikes told the agents that the three drug ventures in which he participated and for which he sought immunity involved two individuals named Carlos Betancourt and Serviano Manga. In that regard, the government points out that the indictment contains no mention of those two individuals, and that no evidence was introduced at trial regarding them. Thus, the government suggests that the 1986 offenses for which Sikes was prosecuted were not covered by the agreement because they were not part of the "approximately three narcotics transactions" covered by the April, 1987 agreement. That approach by the government, while not unpersuasive, need not be relied upon by this court in view of the evidence relied upon by the court below and which supports that court's determination
11
The government has not denied that it might, at the April 10, 1987 meeting, have accepted an expansion in the scope of immunity granted to Sikes to include 1986 if that date had been requested. However, relying on principles of contract law, the district court appropriately rejected Sikes' contention that the government was subsequently obligated to extend the grant of immunity to 1986 merely because it might have agreed in the first instance to include that date
12
The approximate two-week delay between the government's receipt of the May 14th letter and its written response on June 2nd did not operate to bind the government to its proposed terms. Such silence, in and of itself, is not tantamount to acceptance of an offer; an offeror does not have the power to cause the mere silence of an offeree to operate as an acceptance. Restatement (Second) of Contracts, Sec. 69 comment a and c
13
Calimano (1978) and Weiss (1979), which are opinions of the Fifth Circuit filed prior to October 1, 1981, are binding as precedent in this circuit. Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir.1981) (en banc )
14
In Kastigar v. United States, 406 U.S. 441, 460-61, 92 S.Ct. 1653, 1664-65, 32 L.Ed.2d 212 (1972), the Supreme Court held that once a person is compelled to give testimony under a grant of immunity from the use in any criminal case of such testimony or any evidence derived therefrom, the government bears the burden of proof, in a subsequent criminal prosecution for an offense to which the compelled testimony relates, to show that the evidence upon which the government relies "is derived from a legitimate source, wholly independent of the compelled testimony." Id. at 460, 92 S.Ct. at 1665
15
In United States v. Van Horn, 789 F.2d at 1509-10, the defendant asserted that admission against him in a subsequent proceeding of certain evidence as prior similar act evidence violated an agreement in which the federal government agreed not to pursue any criminal or civil liability arising out of a prior arrest and conviction for state drug charges in return for the defendant's agreement to forfeit a vessel to the United States. In rejecting that argument, Judge Kravitch noted that "[t]he government did not agree to never use the arrest as evidence in a prosecution for subsequent criminal activity." Id. at 1510
16
As indicated earlier in this opinion, see note 4, Bradley and Speck have separately appealed
17
Federal Criminal Rule 8(b) provides:
Two or more defendants may be charged in the same indictment or information if they are alleged to have participated in the same act or transaction or in the same series of acts or transactions constituting an offense or offenses. Such defendants may be charged in one or more counts together or separately and all of the defendants need not be charged in each count.
18
Federal Criminal Rule 14 provides:
If it appears that a defendant or the government is prejudiced by a joinder of offenses or of defendants in an indictment or information or by such joinder for trial together, the court may order an election or separate trials of counts, grant a severance of defendants or provide whatever other relief justice requires. In ruling on a motion by a defendant for severance the court may order the attorney for the government to deliver to the court for inspection in camera any statements or confessions made by the defendants which the government intends to introduce in evidence at the trial.
19
The court instructed the jurors that they could use the marijuana testimony, not to prove that defendants Speck and Bradley did the acts charged in the case, but only to prove state of mind, i.e., that those defendants acted with the necessary intent and not through accident or mistake
20
See note 5, supra
21
See Judgment and Conviction Order for defendant Thomas Sikes dated January 31, 1983, 82-73-Cr-SMA, Docket No. 1450. Sikes' conviction was affirmed by this circuit in United States v. Van Horn, supra
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583 F.2d 132
18 Fair Empl.Prac.Cas. 1220, 18 Empl. Prac.Dec. P 8709
Harris A. PARSON, Plaintiff-Appellant,v.KAISER ALUMINUM & CHEMICAL CORP., and Local 13000, UnitedSteelworkers of America, AFL-CIO, CLC, Defendants-Appellees.
No. 74-3468.
United States Court of Appeals,Fifth Circuit.
Nov. 1, 1978.
Nils R. Douglas, New Orleans, La., Richard B. Sobol, Anne P. Buxton, Washington, D. C., for plaintiff-appellant.
Carl J. Schumacher, Jr., New Orleans, La., Robert J. Allen, Jr., Kaiser Center, Oakland, Cal., for Kaiser Aluminum, etc.
Jerry L. Gardner, Jr., New Orleans, La., for Local 225.
Alfred D. Trehene, Washington, D. C., Donald R. Mintz, New Orleans, La., John C. Falkenberry, Birmingham, Ala., Burk & Burk, New Orleans, La., Michael H. Gottesman, Washington, D. C., for defendants-appellees.
Appeal from the United States District Court for the Eastern District of Louisiana.
ON PETITION FOR REHEARING AND PETITION FOR REHEARING EN BANC
(Opinion July 10, 1978, 5 Cir., 575 F.2d 1374)
Before BROWN, Chief Judge, THORNBERRY, Circuit Judge, and MILLER*, Associate Judge.
PER CURIAM:
1
In their petitions for rehearing and rehearing en banc in this Title VII racial discrimination suit, the employer (Kaiser Aluminum & Chemical Corp.) and the union (Local 13000, United Steel Workers of America, AFL-CIO, CLC) assail the decision and opinion of the panel, 575 F.2d 1374, on a number of points. We fully adhere to our decision, but feel that clarification of our original opinion is desirable with respect to two of those points.
2
Contrary to the assertion of Kaiser and the Union, we are fully aware that the decision of the Supreme Court in International Brotherhood of Teamsters v. United States, 1977, 431 U.S. 324, 97 S.Ct. 1843, 52 L.Ed.2d 396, holds that § 703 (h) of Title VII, 42 U.S.C. § 2000e-2(h), immunizes from liability even those seniority systems that preserve the effects of past discrimination, so long as an intent to discriminate has not entered into their negotiation, genesis, or maintenance. See 431 U.S. at 353-56, 97 S.Ct. 1843; See also Pettway v. American Cast Iron Pipe Co., 5 Cir., 1978, 576 F.2d 1157, 1188-92; James v. Stockham Valves & Fittings Co., 5 Cir., 1977, 559 F.2d 310, 349-52, Cert. denied, 1978, 434 U.S. 1034, 98 S.Ct. 767, 54 L.Ed.2d 781. None of our findings that plaintiffs had established a Prima facie case of illegal discrimination rested upon a theory of liability repudiated in Teamsters, although our discussion of the system of interdepartmental transfers established by the Kaiser-Union collective bargaining agreement, See 575 F.2d at 1387-89, might have been somewhat more explicit in this regard. We did, however, hold clearly and unmistakably that the central problem with the system of interdepartmental transfers was the ten-day bottom entry requirement, the result of which is that employees can use their plant seniority to bid for jobs in a new department only if they are willing to take the risk of being frozen in an entry level position with lower pay for an indefinite amount of time because some other employee already in the new department and with more plant seniority bids for the vacancy after the required ten-day waiting period. While the rules for bidding for vacancies Within a department are governed by seniority and thus by Teamsters, the ten-day bottom entry requirement is not a seniority rule at all. Rather, it is a condition upon Transfer wholly extraneous to the prevailing seniority system, and, as such, is Not immunized by § 703(h) and Teamsters. Cf. Pettway, supra, 576 F.2d at 1193-94.
3
The Union objects to the suggestion in our original opinion, See 575 F.2d at 1389, that if upon remand the District Court finds the Prima facie illegal transfer system to fail the "business necessity" justification, the Union must share liability for the Title VII violation and contribute to any monetary relief. Although our view is that the Union has a major operational responsibility for the transfer rules established by the collective bargaining agreement, we have previously approached the attribution of liability and the apportionment of damages as between employer and union on a flexible basis with regard to the comparative equities, See James, supra, 559 F.2d at 353-54; Guerra v. Manchester Terminal Corp., 5 Cir., 1974, 498 F.2d 641, 655-56; Johnson v. Goodyear Tire & Rubber Co., 5 Cir., 1974, 491 F.2d 1364, 1381-82, and we do not mean to foreclose the District Court's discretion in this regard.
4
On remand, the District Court must of course be sensitive to the changes wrought in Title VII law both with respect to liability and to the scope of relief in the four years since this case was last before it. We particularly direct attention, in addition to our decision on appeal, to Teamsters, supra; Franks v. Bowman Transp. Co., 1976, 424 U.S. 747, 96 S.Ct. 1251, 47 L.Ed.2d 444; Pettway, supra ; and James, supra. But in the midst of jurisprudential change and complexity, the Court should not lose sight of its primary obligation, which is to ensure that the victims of illegal racial discrimination receive the full measure of relief to which the law entitles them.
5
The petition for rehearing is DENIED and no member of this panel nor Judge in regular active service having requested that the Court be polled on rehearing en banc, (Rule 35 Federal Rules of Appellate Procedure; Local Fifth Circuit Rule 12) the petition for rehearing en banc is DENIED.
*
Associate Judge U.S. Court of Customs and Patent Appeals sitting by designation
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568 S.E.2d 491 (2002)
256 Ga. App. 374
SECURITY STATE BANK
v.
VISITING NURSES ASSOCIATION OF TELFAIR COUNTY, INC.
No. A02A0142.
Court of Appeals of Georgia.
May 21, 2002.
Certiorari Denied September 16, 2002.
Reconsideration Denied July 8, 2002.
*492 Straughan & Straughan, Mark W. Straughan, McRae, for appellant.
William E. Moore, Jr., Saleem D. Dennis, Valdosta, for appellee.
SMITH, Presiding Judge.
We granted the Security State Bank's application for interlocutory appeal of the trial court's denial of its motion for partial summary judgment in an action filed by Visiting Nurses Association of Telfair County, Inc. (VNA). Because we conclude that the bank's motion should have been granted, we reverse.
The record shows that VNA maintained a checking account at the bank. Wanda Williamson was employed as a clerk by VNA, responsible for billing and making bank deposits. Over a four-year period, Williamson embezzled more than $250,000 from VNA by forging VNA's endorsement on checks made payable to VNA or its signature on checks, cashing them at the bank, and keeping a portion of the proceeds, although she was not a signatory on VNA's account. After a Georgia Bureau of Investigation (GBI) investigation, Williamson pled guilty and was sentenced to a prison term and ordered to pay restitution. VNA then brought this suit against the bank, alleging several different theories of recovery, including federal and Georgia Racketeer Influenced and Corrupt Organizations (RICO) Act claims, negligence, breach of contract, and conversion. The bank moved for summary judgment as to the RICO claims on the ground that a total absence of evidence existed that the bank conspired with Williamson. The bank also moved for partial summary judgment on the negligence claims on the ground that VNA was precluded by the time bars in OCGA § 11-4-406 from recovering on checks with forged endorsements, as well as by a bar in the contract itself on the claim for breach of contract. VNA opposed the motion. The trial court denied the entire motion, finding that the bank had "not met its burden in that genuine issues of fact remain to be determined by the jury."
1. The bank correctly points out that the sole factual issue in this case is whether the bank participated in a criminal scheme with Williamson to cash checks fraudulently. In two enumerations, the bank contends the trial court erred in concluding that a genuine issue of fact remained as to this issue. The parties' briefs are largely devoted to arguing about whether the affidavits VNA submitted in support of its opposition to the bank's motion should have been admitted into evidence and whether they are dispositive, or even probative. In those affidavits, two persons state they each heard Williamson say that she conspired with an unnamed bank employee to commit the crimes. The bank argues that these affidavits were untimely, that they were not probative because they were pure hearsay, and that even if admitted they do not serve to rebut the bank's affirmative evidence that no co-conspirator existed: Williamson herself was deposed in prison, and she testified on her deposition that she did not tell anyone she worked with a teller and that all she had said was that a certain teller was the first person to approve one of the forged checks and "[p]eople tried I think to get her caught up in it and, you know, there's nobody at Security Bank that should definitely be tied up because I didn't have a specific person that I went to." The GBI conducted an investigation, and the lead investigative officer stated in his affidavit that the investigation disclosed no co-conspirator. *493 In addition, three bank officers executed affidavits in which they stated that an internal investigation revealed no co-conspirators and no unexplained accounts or funds in the existing accounts of any bank employee. VNA claims its affidavits are admissible under Gibbons v. State, 248 Ga. 858, 862, 286 S.E.2d 717 (1982), as a prior inconsistent statement.
We need not decide any of these questions, because even if the affidavits were admissible, probative, and sufficient to rebut the bank's affidavits, VNA could not recover on its RICO claims for a different reason.[1]
VNA alleges that a bank employee conspired with Williamson to defraud it. The bank therefore may only be held liable for a RICO violation under a theory of respondeat superior. The U.S. Court of Appeals for the Eleventh Circuit has held that "respondeat superior liability may be applied in the context of 18 USC § 1962(b) only when an enterprise has derived some benefit from the RICO violation. [Cit.]" Quick v. Peoples Bank &c., 993 F.2d 793, 797(II) (11th Cir.1993). The Georgia RICO Act follows suit. OCGA § 16-14-2(b) provides that the Act applies "to an interrelated pattern of criminal activity motivated by or the effect of which is pecuniary gain or economic or physical threat or injury." "[I]t is clear that RICO applies to a pattern of criminal activity where it is directed towards acquiring or maintaining something of pecuniary value." Sevcech v. Ingles Markets, 222 Ga.App. 221, 222(1), 474 S.E.2d 4 (1996).
The record in this case includes absolutely no evidence that the bank profited from Williamson's crimes; in fact, it is clear that Williamson is the only one who profited. Even if we assume that a bank employee was a co-conspirator, the bank cashed the checks; it received no value in return. The funds were not deposited. By cashing the checks, the bank actually caused a potential pecuniary loss to itself. VNA therefore cannot prove an essential element necessary for recovery under its RICO claim. When a "plaintiff cannot establish an essential element of his claim, the defendant is entitled to summary judgment." Sherrill v. Stockel, 252 Ga.App. 276, 279, 557 S.E.2d 8 (2001). The trial court should have granted the bank's motion for summary judgment as to this claim.
2. The trial court also erred in not applying the statutory bars of OCGA § 11-4-406(f) to the facts, limiting VNA's recovery at most to those checks wrongfully cashed within the statutory time periods preceding notice to the bank.
OCGA § 11-4-406(f) provides:
Without regard to care or lack of care of either the customer or the bank, a customer who does not within 60 days after the statement or items are made available to the customer ... discover and report the customer's unauthorized signature on or any alteration on the face of the item or who does not within one year from that time discover and report any unauthorized indorsement or alteration on the back of the item is precluded from asserting against the bank the unauthorized signature, indorsement, or alteration.
The term "unauthorized endorsement" includes a missing endorsement and a forgery. Trust Co. Bank v. Atlanta IBM Employees Fed. Credit Union, 245 Ga. 262, 264-265, 264 S.E.2d 202 (1980). See also OCGA § 11-1-201(43). It is undisputed that the bank sent VNA a monthly statement during the four-year period that Williamson was fraudulently cashing checks. The bank is therefore entitled to invoke the limitation periods in OCGA § 11-4-406.
VNA argues that these limitation periods do not apply because OCGA § 11-3-405, addressing the effectiveness of an improper endorsement, rather than OCGA § 11-4-406, is the applicable statute. Contrary to VNA's argument, OCGA § 11-3-405 is not applicable here. Article 3 of the Uniform Commercial Code addresses the issue of the negotiability *494 of commercial paper, while Article 4 addresses the relationship between banks and their customers. The trial court should have granted the bank's motion for partial summary judgment on this ground.
3. Similarly, the bank points out that contractual provisions limited the bank's liability. Under OCGA § 11-4-103(a), a bank and its customer may vary the provisions of Article 4 by contract. See also Karrer v. Ga. State Bank &c., 215 Ga.App. 654, 659(2), 452 S.E.2d 120 (1994). In this case, the contract provided for a 14-day time limit to assert an altered or unauthorized signature. It also provides that the bank loses this protection if it did not exercise ordinary care unless it received no notification within 60 days. The record shows without dispute that more than 60 days passed before the bank was notified as to a majority of the checks. The trial court should have granted the bank's motion for partial summary judgment on this ground as well.
Judgment reversed.
ELDRIDGE and ELLINGTON, JJ., concur.
NOTES
[1] Because the Georgia RICO Act, OCGA §§ 16-14-1 through 16-14-15, is modeled after the federal statute, 18 USC §§ 1961 through 1968, we look to federal authority as to both. Gentry v. Volkswagen of America, 238 Ga.App. 785, 791(4), n.5, 521 S.E.2d 13 (1999). Although differences exist, Chancey v. State, 256 Ga. 415, 416, 349 S.E.2d 717 (1986), they are not material here.
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FILED
NOT FOR PUBLICATION
AUG 25 2020
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
HO SANG YIM, AKA Alez Suk Peter No. 17-70624
Yim Yoon,
Agency No. A037-993-102
Petitioner,
v. MEMORANDUM*
WILLIAM P. BARR, Attorney General,
Respondent.
On Petition for Review of an Order of the
Board of Immigration Appeals
Argued and Submitted June 5, 2020
Pasadena, California
Before: CALLAHAN and IKUTA, Circuit Judges, and BENCIVENGO,** District
Judge.
Ho Sang Yim petitions for review of the Board of Immigration Appeals
order of removal. In a concurrently filed opinion, we hold that perjury under
section 118(a) of the California Penal Code is an “offense relating to . . . perjury”
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Cathy Ann Bencivengo, United States District Judge
for the Southern District of California, sitting by designation.
and is thus an “aggravated felony.” 8 U.S.C. § 1101(a)(43)(S). Yim was
convicted under section 118(a), and we therefore lack jurisdiction over his petition
for review. See 8 U.S.C. § 1252(a)(2)(C).
PETITION DISMISSED.
2
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232 A.2d 298 (1967)
DISTRICT OF COLUMBIA, Appellant,
v.
Thomas JORDAN, Appellee.
No. 4176.
District of Columbia Court of Appeals.
Argued April 24, 1967.
Decided July 25, 1967.
David P. Sutton, Asst. Corp. Counsel, with whom Charles T. Duncan, Corp. Counsel, and Hubert B. Pair, Principal Asst. Corp. Counsel, were on the brief, for appellant.
Mabel D. Haden, Washington, D. C., for appellee.
Before HOOD, Chief Judge, MYERS, Associate Judge, and CAYTON (Chief Judge, Retired).
HOOD, Chief Judge.
The District of Columbia appeals from an order of the trial court dismissing an information charging that appellee did on a certain date and at a certain place "engage in disorderly conduct, to wit: was then and there a peeping Tom."
Dismissal of the information appears to have been on two grounds. The trial court first questioned the manner in *299 which appellee was brought into court.[1] We have ruled on more than one occasion that a court will not inquire into the manner in which an accused is brought before it, and that the legality or illegality of an arrest is material only on the question of suppressing evidence obtained by the arrest.[2] The manner in which appellee was brought into court furnished no basis for dismissing the information.
The second ground advanced by the trial court for dismissing the information was that the information was fatally defective in that it did not charge that appellee acted with an intent to provoke a breach of the peace or under circumstances such that a breach of the peace might be occasioned thereby.
Our disorderly conduct statute[3] provides that
Whoever, with intent to provoke a breach of the peace, or under circumstances such that a breach of the peace may be occasioned thereby
(1) acts in such a manner as to annoy, disturb, interfere with, obstruct, or be offensive to others;
* * * * * *
shall be fined not more than $250 or imprisoned not more than ninety days, or both.
While one of the elements of the offense of disorderly conduct under our statute is that the conduct must occur with intent to provoke a breach of the peace or occur under circumstances such that a breach of the peace may be occasioned thereby, it is not necessary in every case for the information to follow the precise language of the statute. Here the information specified the exact conduct, that of a peeping Tom. Peeping Tom is a term generally understood to describe a person who stealthily peeps in windows to observe women.[4]
The allegation that appellee was then and there a peeping Tom sufficiently charged that his conduct was under circumstances such that a breach of the peace might be occasioned thereby. "The offense known as breach of the peace embraces a great variety of conduct destroying or menacing public order and tranquility." Cantwell v. State of Connecticut, 310 U.S. 296, 308, 60 S.Ct. 900, 905, 84 L.Ed. 1213 (1940). The activities of a peeping Tom would certainly constitute a menace to the tranquility of a neighborhood.
The modern concept of criminal pleading, as embodied in the Federal Rules of Criminal Procedure, is that an information need only allege a plain, concise and definite statement of the essential facts constituting the offense charged.[5] It is our opinion that the information here meets the requirements of that concept.
The order dismissing the information is reversed.
NOTES
[1] It was admitted by the prosecution that appellee was "summoned" to appear in the Corporation Counsel's Office for what may be considered misleading reasons.
[2] Williamson v. United States, D.C.App., 224 A.2d 309 (1966); District of Columbia v. Perry, D.C.App., 215 A.2d 845 (1966); Smith v. United States, D.C. Mun.App., 173 A.2d 739 (1961); Howard v. District of Columbia, D.C.Mun. App., 132 A.2d 150 (1957); United States v. McNeil, D.C.Mun.App., 91 A. 2d 849 (1952).
[3] D.C.Code 1961, § 22-1121.
[4] See Carey v. District of Columbia, D.C. Mun.App., 102 A.2d 314 (1954).
[5] See Fed.R.Crim.P. 7(c).
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542 U.S. 933
WELDONv.CALIFORNIA.
No. 03-8316.
Supreme Court of United States.
June 21, 2005.
1
Petitions for rehearing denied. Reported below: 541 U. S. 909.
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439 F.2d 706
Willis B. SMITH and Amelia M. Smith, Plaintiffs-Appellants,v.CITY OF LAS VEGAS et al., Defendants-Appellees.
No. 24739.
United States Court of Appeals, Ninth Circuit.
March 22, 1971.
Raymond E. Sutton, Las Vegas, Nev., for plaintiffs-appellants.
Earl P. Gripentrog, Las Vegas, Nev., for defendants-appellees.
Before KOELSCH and CARTER, Circuit Judges, and BYRNE,* Senior District Judge.
PER CURIAM:
1
The district court granted a motion to dismiss as to the City of Las Vegas, (1) for failure to prosecute under local rule 9(b) and (2) because no substantial federal question was presented.
2
Appellants, on September 7, 1967, filed their complaint. Summons was issued but process was not served. On December 1, 1967 appellants filed an amended complaint and on December 29, 1969, the City of Las Vegas was served with process.
3
Local Rule 9(b) of the District of Nevada, provides an action may be dismissed when it has been "pending * * * for more than twelve months without any proceeding having been taken therein during such period * * *" The district court did not abuse its discretion in dismissing under the local rule.
4
The complaint alleged that the action arose under Amendment XIV, Sec. 1 of the United States Constitution; that appellants, as lessors, had leased a parking lot to a bus company for ten years; that the City of Las Vegas obtained a permanent injunction in the Nevada courts, enjoining the use of the property for parking of busses in violation of zoning restrictions; and that the bus company was thereby caused to break its lease with appellants, causing them monetary damage in loss of rentals.
5
Appellants had their day in court in the Nevada state proceedings and their contentions that the actions of the City of Las Vegas were arbitrary, capricious, discriminatory or malicious could have been raised and determined in that proceeding. There was clearly lacking a substantial federal question.
6
The judgment is affirmed.
Notes:
*
Honorable William M. Byrne, United States District Judge, Central District of California
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368 B.R. 334 (2007)
In re GENERAL MEDIA, INC., Debtor.
Jane Homlish Krynicki, Plaintiff,
v.
Penthouse Media Group, Inc., Marc Bell, Charles Samel, Jason Galanis, Daniel Staton, Internet Billing Company, LLC, John Does 4-8 and ABC Companies 2-4, Defendants.
Bankruptcy No. 03-15078 (SMB), Adversary No. 05-03658.
United States Bankruptcy Court, S.D. New York.
May 9, 2007.
*335 *336 *337 Dines & English, L.L.C., Patrick C. English, of counsel, Clifton, NJ, for plaintiff.
Berkman, Henoch, Peterson & Peddy, P.C., Ronald M. Terenzi, of counsel, Garden City, NY, for defendants Penthouse Media Group, Inc., Marc Bell and Daniel Staton.
MEMORANDUM DECISION GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS AND DENYING MOTION FOR SANCTIONS
STUART M. BERNSTEIN, Chief Judge.
The plaintiff commenced this adversary proceeding primarily to recover severance benefits from the reorganized debtor and certain individuals, based on claims sounding in contract and tort. The defendants Penthouse Media Group, Inc. ("Penthouse"), Marc Bell and Daniel Staton (collectively, the "Movants") moved to dismiss the Amended Complaint for failure to state a claim on which relief can be granted, 12(b)(6), and for failure to satisfy the pleading requirements of FED. R.Civ.P. 9(b). They also sought sanctions. For the reasons that follow, the second and third counts of the Amended Complaint are dismissed as against these Movants. Count 1 is also dismissed as against the Movants to the extent that it alleges a breach of the Guccione Agreements, described below. The motions are otherwise denied.
BACKGROUND[1]
A. The Contracts
Penthouse is the successor in interest to General Media, Inc., a reorganized chapter *338 11 debtor, (Amended Complaint, ¶ 2) (ECF Doc. # 45 filed in Adv. Proc. No. 05-03658), and the two are referred to collectively as the Debtor. The Debtor had employed the plaintiff in various capacities for approximately 33 years. (Id., at ¶ 14.) The Debtor induced the plaintiff to continue to work by promising that it would pay the educational expenses of her children, grant her vacation time, and pay severance benefits. In addition, after the Debtor filed for bankruptcy (in August 2003), she was promised continued employment as part of the reorganization plan. (Id., at ¶ 15.)
The Debtor confirmed the Fourth Amended Joint Plan of Reorganization (the "Plan") (ECF Doc. # 642)[2] by order dated August 13, 2004 ("Confirmation Order"). (ECF Doc. # 649.) The Plan incorporated a Fourth Amended Plan Supplement, dated Aug. 12, 2004 ("Plan Supplement")(ECF Doc. # 644) that included two unsigned agreements central to the plaintiff's tort claims.[3] Under the first, a Consulting Agreement between the Debtor and General Media International, Inc. ("GMII"), a non-debtor affiliate, the Debtor agreed to engage GMII to provide the consulting services of GMII's principal, Robert C. Guccione, for 10 years. The Consulting Agreement did not mention the plaintiff, and contained a negating clause to the effect that the parties did not intend to create enforceable rights on behalf of any third parties:
No party shall assign this Agreement without the prior written consent of the other party. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective heirs, legal representatives, successors and assigns, but no other person shall acquire or have any rights under or by virtue of this Agreement.
(Consulting Agreement, at § 8.04)(emphasis added.)
The second agreement, a Letter Agreement between Guccione and the Debtor, which was attached as Exhibit A to the Consulting Agreement, is the more important one. Paragraph 4 stated in pertinent part:
The Company [the Debtor] shall provide Consultant [Guccione] with one full-time assistant, namely Jane Homlish [the plaintiff] (or such other person as Consultant shall designate). . . . In any event, the Company shall employ Ms. Homlish (on condition that she is willing to be so employed) in a position having substantially similar duties with salary and comparable benefits to those she currently enjoys. . . .
(emphasis added.) Despite this language, the Letter Agreement, like the Consulting Agreement, included a negating clause:
This Agreement shall be. binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective heirs, legal representatives, successors and assigns, but no other person shall acquire or have any rights under or by virtue of this Agreement. *339 (Letter Agreement, at ¶ 13)(emphasis added.)
The Confirmation Order expressly authorized and approved the Consulting Agreement and the Letter Agreement (collectively, the "Guccione Agreements"), but they were never executed. (Confirmation Order, at ¶ 10.) On October 6, 2004, the Debtor filed a statement declaring that the Plan had become effective one day earlier, and that the Debtor had not consummated the Guccione Agreements, and did not expect to. (See ECF Doc. # 742.) The next day, October 7, 2004, the Debtor fired the plaintiff. (Amended Complaint, at ¶ 17.) The plaintiff demanded the payment of her severance benefits, but the Debtor refused. (Id., at ¶¶ 18-21.)
B. The Tortious Conduct
The reasons underlying the plaintiffs termination, and the failure to execute the Guccione Agreements, were spelled out in the Amended Complaint and in a pleading from another action brought by Guccione in New York state court (the "Guccione Complaint") attached as Exhibit C to the Amended Complaint. The Guccione Complaint spans 35 pages, but at oral argument, the plaintiff's attorney identified the important allegations. Bell and Staton were looking to take over the Debtor. According to the Guccione Complaint, the defendant Bell told Guccione on August 6, 2004, that he and the defendant Staton were prepared to go forward with a version of Bell's former plan on the condition that the new plan was confirmed within a week. (Guccione Complaint, at ¶ 64.) Bell reaffirmed that he would provide Guccione with a deal worth $500,000 per year for 10 years, plus another $250,000 annually for benefits and a staff, plus the right to possess certain personal property. (Id.) Guccione had no alternative but to support the Plan. (Guccione Complaint, at ¶ 69.)
Bell and Staton had ulterior motives in making the promises to Guccione, which they did not intend to honor. They needed the approval of the Debtor's board of directors to confirm the Plan. The Debtor's board consisted of three members, two of whom were Guccione and his daughter. Bell and Staton made the false promises to Guccione to induce him to support their plan in his capacity as a director of the Debtor. (Id., at ¶ 65.) Their plan was ultimately approved, as Bell and Staton were the only potential sources of re-financing at the time. (Id., at ¶ 67.) On the effective date, Bell and Staton became the two directors of the Debtor, (see Plan, at § 8.3.1), and respectively, its the president and treasurer/secretary. (Plan Supplement, Ex. # 3.)
Bell and Staton engineered an excuse to avoid signing the Guccione Agreements by linking them to another transaction. In early August 2004, and while they were negotiating the Plan and the Guccione Agreements, they asked Guccione to include certain UK trademarks in the overall deal. Although the defendants Samel and Galanis had asserted claims to the UK trademarks, Guccione believed that those claims were invalid, and agreed to a separate deal concerning the UK trademarks with Bell and Staton. (Guccione Complaint, at ¶ 73.) Thus, Bell and Staton agreed to engage Guccione as a consultant for the aggregate amount of $750,000 annually, including an assistant and a secretary, and Guccione agreed, among other things, to transfer the UK trademarks to the Debtor on or after the effective date. (Id., at ¶ 74.)
The deal was a pretense; the UK trademark transaction was orchestrated with the assistance of Samel and Galanis "for the express purpose of getting the Fourth [Amended Joint] Plan of Reorganization confirmed and dividing the spoils of that *340 conquest without ever paying Guccione." (Id., at ¶ 75.) Bell and Staton used the promise of the Consulting Agreement to induce Guccione to support the Plan, and thereafter, they used the alleged unavailability of the UK trademarks "as a contrived excuse not to honor that deal." (Id.) Upon information and belief, this was part of a wide-ranging conspiracy among Bell, Staton, Samel and Galanis. (Id. at ¶ 77.) Immediately after confirmation, Bell and Staton offered Samel and Galanis the chance to acquire a 37% stake in the reorganized debtor. The latter raised the necessary money by falsely representing to third parties that they controlled the UK trademarks. (Id.)
The Amended Complaint added several allegations, many conclusory, which were consistent with the scheme described in the Guccione Complaint. It charged that the Plan was based upon a fraud. The failure to consummate the Plan was part of a "secret alliance," an "illicit alliance," and a "secret deal" between and among Samel, Galanis, Bell and Staton to "avoid honoring" the Guccione Agreements, which were part of the Plan and would have ensured the Plaintiff's continued employment and historical benefits. (Amended Complaint, at ¶ 27.) They conspired to take over the Debtor, and never intended to honor the Plan as it pertained to the employment of Guccione or the plaintiff. (Id.) The plaintiff was never told (until she was fired) that her employment and severance benefits would be terminated. (Id., at ¶ 28.) These defendants knew about the plaintiffs rights, and interfered with them in a manner that was "intentional and improper," went "far beyond the bounds of legitimate business activities," was a "done as part of a wrongful act," and lacked any "legal or social justification." (Id., at ¶ 29.)
C. The Plaintiff's Claims for Relief
The Amended Complaint asserted three causes of action. Count 1 sounded in contract, and alleged that the `Debtor breached its pre-petition promise, affirmed postpetition but pre-confirmation, to pay the benefits that had been promised during the 33 years of the plaintiff's employment. In particular, this included her claim for severance pay. It is not clear whether Count 1 was also intended to allege a contract claim under the Guccione Agreements. Count 2 charged all of the defendants other than the Debtor with tortious interference with the contract rights. Count 2 referred to the accrued pre-petition contract rights, reaffirmed post-petition and pre-confirmation, but primarily focused on the rights granted under the Guccione Agreements. Finally, Count 3, pleaded in the alternative, alleged that if the plaintiff did not acquire contract rights (presumably referring to the Guccione Agreements), the defendants (other than the Debtor) tortiously interfered with the plaintiffs prospective economic advantage.
The Movants moved to dismiss the Amended Complaint, arguing that the bankruptcy discharge barred the pre-petition contract claim, and there never was a post-petition contract to breach or interfere with. In addition, they contended that the allegations in the tort claims failed to meet the pleading requirements imposed under FED.R.CIV.P. 9(b).
DISCUSSION
A. Count 1 Breach of Contract
Under New York law, a party claiming a breach of contract must prove "(1) a contract; (2) performance of the contract by one party; (3) breach by the other party; and (4) damages." Rexnord Holdings v. Bidermann, 21 F.3d 522, 525 (2d Cir.1994); accord First Investors Corp. v. Liberty Mut. Ins. Co., 152 F.3d 162, 168 (2d Cir.1998). The Amended Complaint identified two possible contracts, the plaintiffs pre-petition employment agreement *341 and the plaintiff's post-confirmation employment contract as embodied in the Guccione Agreements. It was not always easy to determine precisely which contract was the subject of each count, and I have assumed that each count implicates both.
1. The Employment Agreement
Count 1 adequately pleads a claim for breach of the plaintiff's pre-petition employment agreement. The plaintiff worked for the Debtor for approximately 33 years. She was promised certain benefits, including severance pay, in connection with that employment agreement. The Debtor terminated her employment on October 7, 2004, and refused to pay those benefits. The claim that the Debtor agreed to continue to employ her, or induced her to continue to work on the same terms, is subsumed by her pre-petition employment contract claim.[4]
Count 1 does not allege a breach of contract claim based on the plaintiff's termination. The plaintiff does not contend that she had a right to lifetime employment or a right to employment for a specific duration, at least prior to the effective date. Under New York law, she was an at-will employee, and has no claim for breach of contract based solely upon her termination. See Sherman v. Harper-Collins Publishers, Inc., No. 98 Civ. 2809(AJP)(MBM), 1998 WL 437158, at *2 (S.D.N.Y. July 31, 1998)(citing cases). The Debtor was free to fire her, and her contract claim is one for breach of the obligation to pay benefits accruing on the termination.
As noted, the Movants contend that the bankruptcy discharge bars the plaintiff's claim for severance pay. The Plan rejected certain executory contracts listed on a Schedule 7.1B, and directed the non-debtor party to file its rejection damage claim within 30 days of the notice of the order approving the rejection (the "Rejection Claims Bar Date"). Any claims not filed within that time would be barred:
7.1 Assumption or Rejection of Executory Contracts and Unexpired Leases 7. 1.1 Executory Contracts and Personal Property Leases. Except as otherwise provided herein or by the Confirmation Order, as of the Effective Date, . . . All executory contracts and personal property leases set forth in Schedule 7.1B filed simultaneously herewith shall be deemed rejected as of the Effective Date. No executory contracts or personal property leases, other than those listed in Schedule 7.1B, shall be rejected after the Confirmation Date. . . .
. . . .
7.1.5 Bar Date for Filing Proofs of Claim Relating to Executory Contracts or Personal Property Leases Rejected Pursuant to the Plan. Unless the Bankruptcy Court fixes a different time period pursuant to an order approving the rejection of a contract or lease, Claims arising out of the rejection of an executory contract or personal property lease pursuant to this Section 7.1 and Schedule 7.1B must be filed with the Bankruptcy Court no later than thirty (30) days after notice of entry of an order approving the rejection of such contract or lease (the "Rejection Claim Bar Date"). Any Claims not filed within such time will be forever barred from assertion against the estates, the Reorganized Debtors and their property and will not receive any distributions under the Plan.
Paragraph 15 of the Confirmation Order required the Debtor to serve notice of the *342 Rejection Claims Bar Date on the non-debtor party to a contract rejected under section 7. 1, and repeated the effect of the failure to meet the claim filing deadline:
Proof of any claim for breach of an executory contract rejected pursuant to section 7. 1.1 and Schedule 7.1(B) of the Fourth Amended Plan shall be served and filed with the Court no later than thirty (30) days after notice of entry of the Confirmation Order (the "Rejection Claims Bar Date"), or it shall be forever barred and discharged. On or before the tenth (10th) Business Day following the date of entry of this Confirmation Order, the Debtors shall electronically file with the Bankruptcy Court and serve notice, in the form attached hereto as Exhibit A, of entry of this Confirmation Order and the Rejection Claims Bar Date upon those parties to executory contracts rejected pursuant to section 7. 1.1 and Schedule 7.1(B) of the Fourth Amended Plan.
Once again, the Rejection Claims Bar Date was limited to those contracts listed on Schedule 7.1(B) and rejected pursuant to section 7. 1.1 of the Plan.
The plaintiffs pre-petition employment agreement was not listed on Schedule 7.1(B), (see Plan Supplement, Ex. 5), or rejected under section 7. 1.1 of the Plan. Instead, the Plan dealt separately with severance claims in section 7.3:
7.3. Compensation and Benefit Programs. All employment and severance practices and policies, and all compensation and benefit plans, policies, and programs of each Debtor applicable to its directors, officers or employees, including, without limitation, all savings plans, retirement plans, health care plans, severance benefit plans, incentive plans, workers' compensation programs and life, disability and other insurance plans are treated as executory contracts under the Plan and are hereby rejected pursuant to Section 365(a) of the Bankruptcy Code, except for those specified in Schedule 7.1 hereto to be filed simultaneously herewith in the Fourth Amended Plan Supplement, which executory contracts shall be deemed assumed as of the Effective Date.
It appears from the face of the Plan and the Confirmation Order that the Rejection Claims Bar Date did not apply to the plaintiffs severance pay claim, and no other bar date covered severance claims. But even if the Rejection Claims Bar Date covered to the Debtor's claim, the affidavit of service of the notice of rejection and Rejection Claims Bar Date filed with the Court does not include the plaintiffs name. (See Affidavit of Service [of Notice of Rejection Claims Bar Date and Entry of Confirmation Order], sworn to Aug. 20, 2004 (ECF Doc. # 671.)) Thus, it appears that the Debtor failed to comply with the direction in the Confirmation Order to serve the plaintiff with notice of the Refection Claims Bar Date.
Accordingly, the motion to dismiss the pre-petition employment contract claim is denied.
2. The Guccione Agreements
The Amended Complaint does not state a claim on behalf of the plaintiff for breach of the Guccione Agreements. First, the Guccione Agreements were never signed. Second, even if they had been, they did not give the plaintiff any enforceable rights. Only an intended beneficiary may assert a contract claim as a third party beneficiary. Mortise v. United States, 102 F.3d 693, 697 (2d Cir. 1996). A third party is an intended beneficiary when either (1) no one other than the third party can recover if the promisor breaches the contract, or (2) the language of the contract clearly evidences an intent to permit the third party to enforce *343 it. Piccoli v. Calvin Klein Jeanswear Co., 19 F.Supp.2d 157, 162 (S.D.N.Y.1998); Fourth Ocean Putnam Corp. v. Interstate Wrecking Co., Inc., 66 N.Y.2d 38, 495 N.Y.S2d 1, 485 N.E.2d 208, 212 (N.Y.1985). If the third party is not an intended beneficiary, she is, at most, an incidental beneficiary. Id. ("An incidental beneficiary is one who is not an intended beneficiary." (citing RESTATEMENT [SECOND] OF CONTRACTS § 302[2] ).)
The plaintiff fails the first prong because Guccione (or GMII) could have enforced the breach of the Guccione Agreements. She also fails the second prong. The Guccione Agreements stated that "no other person shall acquire or have any rights under or by virtue of this Agreement." (See Consulting Agreement, at ¶ 8.04; Letter Agreement, at ¶ 13.) "Under New York law, the effectiveness of a negating clause to preclude third-party beneficiary status is well-established: `[w]here a provision exists in an agreement expressly negating an intent to permit enforcement by third parties, . . . that provision is decisive.'" India.com, Inc. v. Dalal, 412 F.3d 315, 321 (2d Cir.2005)(quoting Nepco Forged Prods., Inc. v. Consolidated Edison Co. of N.Y., Inc., 99 A.D.2d 508, 470 N.Y.S.2d 680, 681 (N.Y.App. Div., 2d Dep't 1984)); accord Morse/Diesel, Inc. v. Trinity Indus., Inc., 859 F.2d 242, 249 (2d Cir.1988)("Under New York law, where a provision in a contract expressly negates enforcement by third parties, that provision is controlling."). Notwithstanding the language in the Letter Agreement, these clauses expressly negate any intent to benefit the plaintiff. She is an incidental beneficiary, and has no enforceable rights.
Finally, the plaintiffs attempt to distinguish India.com is unconvincing. There, one of the plaintiffs (EasyLink) hired the defendant to act as a broker to sell an EasyLink subsidiary. The defendant located a buyer, and EasyLink and the buyer entered into a stock purchase agreement. The stock purchase agreement acknowledged the brokerage agreement, and stated that the defendant was entitled to fees payable pursuant to its provisions. The stock purchase agreement also contained a negating clause stating that it was not intended to create any right or claim in favor of any nonparty. 412 F.3d at 317-18. The buyer needed to obtain certain regulatory approvals to close, and required EasyLink's help to get them. EasyLink allegedly failed to cooperate, and terminated the stock purchase agreement on the ground that the buyer failed to obtain the approvals by the deadline specified in the contract. Id. at 318.
The broker sued as a third-party beneficiary for breach of the stock purchase agreement. The Court of Appeals rejected the claim, and ruled in accordance with the settled New York law discussed above, that the negating clause prevented the broker from acquiring rights under the stock purchase agreement, even though the latter mentioned his brokerage agreement. Id. at 322.
The broker also sued for breach of the brokerage agreement. He argued that EasyLink had wrongfully terminated the stock purchase agreement to avoid paying the brokerage commission. Id. at 323. The Court ruled that a seller could be liable for the commission, even in the absence of a closing, if the seller was responsible for the failure of the condition. Id. at 324. Seizing on this last point, the plaintiff implies that she is entitled to recover under the Guccione. Agreements because the defendants were responsible for the failure to execute them. (Plaintiffs Supplemental Memorandum in Opposition to Defendants' Motion to Dismiss on the Pleadings, dated Apr. 17, 2007, at ¶¶9-10) *344 (ECF Doc. # 58 filed in Adv. Proc. No. 05-3658.)
Her argument misses the point. In India.com, the broker was allowed to pursue his claims against EasyLink under the separate brokerage agreement that both parties had signed, although he could not pursue a third-party beneficiary claim under the stock purchase agreement. It did not matter that EasyLink prevented the consummation of the stock purchase agreement because the defendant did not have any rights under that agreement. Here, too, the plaintiff may pursue claims under her employment agreement with the Debtor, but cannot pursue third-party beneficiary claims under the Guccione Agreements, even if the Debtor prevented their execution. India.com does not support the argument that she can sue as a third-party beneficiary of the Guccione Agreements.
B. Count 2 Tortious Interference With Contract
To prevail on a claim for tortious interference with contract, a plaintiff must establish: (1) the existence of a valid contract between plaintiff and a third party; (2) the defendant's knowledge of that contract; (3) the defendant's intentional procuring of the breach, and (4) damages. White Plains Coat & Apron Co., Inc. v. Cintas Corp., 460 F.3d 281, 285 (2d Cir. 2006); Albert v. Loksen, 239 F.3d 256, 274 (2d Cir.2001); Foster v. Churchill, 87 N.Y.2d 744, 642 N.Y.S.2d 583, 665 N.E.2d 153, 156 (N.Y.1996). In addition, Rule 9(b) of the Federal Rules of Civil Procedure requires that allegations involving fraud must state the circumstances constituting fraud with particularity. Even where fraud is not an element of the claim, the allegations must satisfy FED. R. Civ. P. 9(b) if the claim is based on fraudulent conduct. Krause v. Forex Exch. Mkt., Inc., 356 F.Supp.2d 332, 338 n. 49 (S.D.N.Y.2005); see Rombach v. Chang, 355 F.3d 164, 171 (2d Cir.2004). Lastly, a pleader cannot allege fraud based upon information and belief unless the facts are "peculiarly within the opposing party's knowledge." Schlick v. Penn-Dixie Cement Corp., 507 F.2d 374, 379 (2d Cir.1974), cert. denied, 421 U.S. 976, 95 S.Ct. 1976, 44 L.Ed.2d 467 (1975); accord Campaniello Imports, Ltd. v. Saporiti Italia S.p.A., 117 F.3d 655, 664 (2d Cir.1997). In those cases, the pleader must nonetheless allege facts upon which the belief is founded. Id.
1. Plaintiff's At-Will Employment
Generally, an at-will employee cannot assert a claim for tortious interference with that employment. Albert v. Loksen, 239 F.3d at 274; Ingle v. Glamore Motor Sales, Inc., 73 N.Y.2d 183, 538 N.Y.S.2d 771, 535 N.E.2d 1311, 1313 (N.Y.. 1989)("the plaintiff here cannot be allowed to evade the employment at-will rule and relationship by recasting his cause of action in the garb of a tortious interference with his employment"). New York law recognizes a limited exception where "a third party used wrongful means to effect the termination such as fraud, misrepresentation, or threats, that the means used violated a duty owed by the defendant to the plaintiff, or that the defendant acted with malice." Albert v. Loksen, 239 F.3d at 274 (quoting Cohen v. Davis, 926 F.Supp. 399, 403 (S.D.N.Y.1996).) The defendant cannot be a party to the contract, and the employees of a corporate party are considered parties to the contract for this purpose. See id., 239 F.3d at 274. A co-employee can only be liable for tortious interference with an at-will employment agreement if he acted beyond the scope of his authority or committed an independent tortious act against the plaintiff. Id. at 275.
Here, the plaintiff's at-will employment with the Debtor was terminated *345 after the effective date. By then, Bell and Staton were `officers and directors of the Debtor. Thus, they were co-employees with the plaintiff, and Bell clearly had the authority to fire her and refuse to pay her severance claim. Since Staton was acting with Bell, he had the same authority.
The plaintiff also failed to allege that Bell or Staton committed an independent tortious act against her. The only arguable independent tort concerned the misrepresentations made to Guccione regarding his post-confirmation consulting package. Under New York law, the elements of a fraud claim are (1) a misrepresentation by the defendant, (2) made with knowledge of the falsity and the intent to deceive (3) justifiable reliance by the plaintiff and (4) injury. Guilbert v. Gardner, 480 F.3d 140, 147 n. 5 (2d Cir.2007); May Dep't Stores Co. v. Int'l Leasing Corp., 1 F.3d 138, 141 (2d Cir.1993); Katara v. D.E. Jones Commodities, Inc., 835 F.2d 966, 970-71 (2d Cir.1987). The Amended Complaint does not allege that the Bell or Staton made any misrepresentations to the plaintiff; they made their alleged misrepresentations to Guccione. Thus, they could not have intended that the plaintiff would rely on what they said to him. Moreover, although the plaintiff indicates that she relied on the promise of future employment contained in the Guccione Agreements, (Amended Complaint, at 1125), those agreements were attached to a Plan Supplement that was signed by Guccione, not Bell or Staton. Furthermore, while the plaintiff alleges that "authorized representatives" of the Debtor promised her numerous employment benefits, the representations spanned a 33-year period, and the plaintiff does not allege that they were false when made.
Finally, the allegations of fraud fail to satisfy FED.R.Civ.P. 9(b). Although styled as a claim for tortious interference with contract, Count 2 is premised on the fraud committed by the defendants. She must prove that fraud to prevail on her claim. The plaintiff did not identify who made representations to her about her continued employment or when they were made. Moreover, the plaintiff did not allege facts sufficient to support the inference of scienter concerning the representations of continued employment made to her. Finally, some of the allegations in the Guccione Complaint as well as the Amended Complaint are alleged upon information and belief. (See Amended Complaint, at ¶ 25.)
2. The Guccione Agreements
The plaintiff also failed to allege a tortious interference with existing rights under the Guccione Agreements. As noted, the Guccione Agreements were never signed. Furthermore, an incidental beneficiary cannot maintain a claim for tortious interference with her rights under a contract that did not grant her any enforceable rights in the first place. See Tasso v. Platinum Guild Int'l, No. 94 Civ. 8288(LAP), 1998 WL 841489, at *4 (S.D.N.Y, Dec. 3, 1998)("New York courts have declined to recognize the right of incidental beneficiaries to sue for tortious interference of contract"); Alvord & Swift v. Stewart M. Muller Constr. Co., 46 N.Y.2d 276, 413 N.Y.S.2d 309, 385 N.E.2d 1238, 1241 (N.Y.1978)("There exists . . . no tort liability to incidental beneficiaries not in privity.").
Accordingly, Count 2 is dismissed.
C. Count 3 Tortious Interference With Prospective Economic Advantage
The plaintiff's final claim, pleaded in the alternative, asserts that absent the wrongdoing by the non-Debtor defendants, she would have enjoyed a contractual relationship with the Debtor, "and/or would have received the benefits due to her." *346 (Amended Complaint, at ¶ 34.) Their actions were "prompted by legal malice, were morally culpable, and far exceeded the bounds of legitimate, robust business practices," and "were part of a fraudulent scheme to obtain control over" the Debtor. (Id. at ¶ 35.) In other words, the defendants tortiously interfered with the rights that the plaintiff would have acquired under the Guccione Agreements.[5]
To establish a claim for tortious interference with prospective business relations, the plaintiff must allege "1) that the defendant interfered with a business relationship between, and belonging to, plaintiff and a third party; 2) with the sole purpose of either harming the plaintiff, or by means which are dishonest, unfair or otherwise improper; and 3) that plaintiff would have entered into a contract with the third party but for the defendant's interference." Tasso, 1998 WL 841489, at *4. The plaintiffs expectation in prospective business relations is entitled to less protection than existing contracts or business relations. Consequently, the plaintiff must also show that the defendant used wrongful means. NBT Bancorp Inc. v. Fleet/Norstar Fin. Group, Inc., 87 N.Y.2d 614, 641 N.Y.S.2d 581, 664 N.E.2d 492, 496 (N.Y.1996); Guard-Life Corp. v. Parker Hardware Mfg. Corp., 50 N.Y.2d 183, 428 N.Y.S.2d 628, 406 N.E.2d 445, 449 (N.Y.1980).
The plaintiff was neither a party nor an intended beneficiary of the Guccione Agreements, and cannot satisfy the last element. Furthermore, the claim fails because the Amended Complaint and the Guccione Complaint described a scheme by Bell and Staton to take over the Debtor rather than to harm the plaintiff. See Lobel v. Maimonides Med. Ctr., 2007 WL 1052823, at *1 (N.Y.App.Div. Apr. 10, 2007)("Nor . . . did plaintiff's allegations concerning statements purportedly defaming her set forth grounds for a tortious interference claim, since it is clear that any motivation on defendant Grazi's part was based on economic self-interest and not for the sole purpose of harming plaintiff'). Lastly, the Amended Complaint failed to allege that Bell and Staton committed any tortious acts against the plaintiff. Finally, Count 3 fails to satisfy Rule 9(b) for the same reasons as Count 2.
Based on the foregoing, Count 3 is dismissed.
D. Sanctions,
The moving defendants seek sanctions against the plaintiff and her counsel for filing the Amended Complaint. This requires some more background. The plaintiff's original complaint, (see Attachment # 3 to ECF Doc. # 26 filed in Adv. Proc. No. 05-03658)(the "Complaint"), included several conclusory tort allegations, and lacked specificity. For example, Count 2 charged that "Bell . . . maliciously without just cause [has] interfered with the payment of the contractual entitlement due to plaintiff." (Complaint, at ¶ 17.) Count 3 alleged that the Debtors "engaged in fraud by and through its representations to plaintiff." (Id., at ¶ 20.) Finally, the plaintiff contended in Count 4 that "the actions of defendants in denying severance benefits and/or causing the denial of severance benefits are without justification and are malicious in nature which have caused foreseeable damage to plaintiff, including but not limited to economic damages and damages from emotional distress." (Id., at ¶ 29.)
*347 The Debtor and. Bell moved for summary judgment on September 15, 2006. The central premise of the motion was that the severance claim was barred by the bankruptcy discharge. In addition, they argued that the tort claims were not adequately pleaded. The Court conducted a hearing on January 25, 2007, at which it essentially denied summary judgment on the severance pay claim.[6] The plaintiff had presented evidence that the Debtor's counsel had assured her that it was unnecessary to file a claim because she would continue to work for the Debtor, and she relied on that representation. This raised an issue of equitable estoppel. (Transcript of hearing held Jan. 25, 2007, at 4-6, 7-8, 10) (ECF Doc. # 47, filed in Adv. Proc. No. 05-03658.)
The Court and the parties then turned their attention to the tort claims. I reiterated my earlier impression that the plaintiff had not pleaded the fraud claims, including the tortious interference claims that sounded in fraud or depended on proof of fraud, with sufficient specificity. (Id. at 12.) On that prior occasion, I had suggested to the plaintiff that she amend the tort claims because they did not pass muster under the pleading requirements. (Id. at 13.) In the end, I granted the plaintiff leave to replead her complaint.
The Amended Complaint was slightly more informative. It added additional defendants, included extra allegations, and attached and/or incorporated by reference the Guccione Agreements, the Guccione Complaint, and possibly, the Plan. After receiving the Amended Complaint, Bell, Staton and the Debtor responded with a "safe harbor" letter, dated February 12, 2007. (See Application in Support of an Order Imposing Sanctions Against Plaintiff and Her Counsel, dated Feb. 28, 2007 ("Sanctions Motion"), Ex. A (see ECF Doc. # 50 filed in Adv. Proc. No. # 05-03658.)) They insisted that the Amended Complaint repeated the same deficient allegations, and ignored the Court's warning regarding those deficiencies; the only difference, they said, was that the plaintiff attached the Guccione Complaint, which did not mention the plaintiff, to her Amended Complaint. Contending that the claims were unwarranted under existing law and intended to harass, they demanded that the plaintiff withdraw the Amended Complaint or face a motion under FED. R. BANKR.P. 9011. The plaintiff declined the invitation in a terse reply sent ten days later, (Sanctions Motion, Ex. B), and the Movants filed the Sanctions Motion on March 1, 2007.
Rule 9011 of the Federal Bankruptcy Rules governs the imposition of sanctions. The party that presents a pleading to the court makes the four certifications set forth in subparagraph (b):
(b) Representations to the Court.
By presenting to the court (whether by signing, filing, submitting, or later advocating) a petition, pleading, written motion, or other paper, an attorney or unrepresented party is certifying that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances,
(1) it is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation;
(2) the claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or *348 reversal of existing law or the establishment of new law;
(3) the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and
(4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on a lack of information or belief.
If a party violates the provisions of subparagraph (b), the court may impose the sanctions set forth in Rule 9011(c).
I decline to impose sanctions against the plaintiff or her counsel for several reasons. She adequately pleaded a claim for severance pay under her at-will employment agreement. Moreover, there is a substantial question whether the bankruptcy discharge bars that claim for the reasons already stated. Lastly, there is some evidence supporting the plaintiffs contention that the Debtor may be estopped from relying on the discharge. According to the plaintiff, the Debtor's attorney told her that she did not have to file a claim because the Debtor would continue to employ her.
It is true that the Amended Complaint again failed to plead legally sufficient tort claims, but it is inaccurate to suggest that it was a mirror image of the original Complaint with the Guccione Complaint added on. First, the Guccione Complaint had some value, and explained the misrepresentations allegedly made to Guccione, and the motive for those statements. The plaintiffs problem is her inability to latch on to Guccione's tort claim. Second, the Amended Complaint contained additional allegations and new theories. Third, the substantive deficiency with the tort claims in the Amended Complaint the plaintiffs status as an incidental beneficiary as well as her at-will employment was not even apparent to the Movants until the Court requested briefing on the issue. Under the circumstances, I do not conclude that the Amended Complaint was interposed for an improper purpose, designed to harass or lacking in a legal or' factual basis.
CONCLUSION
The motion to dismiss Count 1 is denied to the extent that the claim for severance pay is based on the pre-petition at-will employment agreement, and is otherwise granted. Count 2 and Count 3 are also dismissed. The motion for sanctions is denied. Finally, to clarify a hole in the record, the earlier summary judgment motion is denied. Counsel should settle three orders addressing the disposition of the three motions. In addition, counsel should contact chambers to arrange a conference to discuss, among other things, the status of the claims against the other defendants in this adversary proceeding, the effect of the jury demand and the disposition of this adversary proceeding.
NOTES
[1] The parties have made assertions and submitted a substantial amount of material that go well beyond the pleadings, and disclose disputed facts. On a motion under Rule 12(b)(6), however, the Court may only consider the pleadings in addition to the contents of any documents attached to the complaint, incorporated by reference, or relied on in drafting the complaint, Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.2002), as well as matters of which judicial notice may be taken. Brass v. American Film Techs., Inc., 987 F.2d 142, 150 (2d Cir.1993).
[2] Unless otherwise stated, the citations to "ECF" refer to the electronic docket in the main case, No. 03-15078.
[3] The Amended Complaint alleged that the Plan included a continuation of her, employment and benefits, (Amended Complaint, at ¶ 25), and referred to a Consulting Agreement that was part of the Plan. (Id., at ¶¶ 27, 28.) Oral argument clarified that the plaintiff was referring to the Consulting Agreement and the Letter Agreement, described in the succeeding text. The two agreements were attached as Exhibit 8 to the Plan Supplement.
[4] At oral argument, plaintiff's counsel described these continuing promises, made between the petition date and the confirmation date, as a "reaffirmation" of her pre-petition agreement.
[5] Since the plaintiff had existing pre-petition employment contract rights, this Count cannot be read to encompass that agreement. To the extent that Count 3 is read to allege that Bell and Staton interfered with her right to severance pay by causing the Debtor not to pay it, it merely duplicates the breach of contract claim in Count 1.
[6] The Court never formerly ruled on the summary judgment motion or asked "either party to submit an order.
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Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
8-28-2007
Gen Refractories Co v. First State Ins Co
Precedential or Non-Precedential: Precedential
Docket No. 05-4708
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Recommended Citation
"Gen Refractories Co v. First State Ins Co" (2007). 2007 Decisions. Paper 485.
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 05-4708
GENERAL REFRACTORIES COMPANY,
Appellant
v.
FIRST STATE INSURANCE CO.; WESTPORT INSURANCE
CORPORATION, SUCCESSOR TO, OR formerly known as
PURITAN INSURANCE COMPANY;
LEXINGTON INSURANCE COMPANY; CENTENNIAL
INSURANCE COMPANY; GRANITE STATE INSURANCE
COMPANY; POTOMAC INSURANCE COMPANY
OF ILLINOIS; HARTFORD ACCIDENT & INDEMNITY CO.;
GOVERNMENT EMPLOYEES INSURANCE CO.; REPUBLIC
INSURANCE CO.; SENTRY INSURANCE COMPANY,
SUCCESSOR TO, OR formerly known as VANLINER
INSURANCE COMPANY formerly known as GREAT SW FIRE
INSURANCE CO.; AMERICAN INTERNATIONAL INS. CO.; AIU
INSURANCE COMPANY; HARBOR INSURANCE COMPANY;
ST. PAUL TRAVELERS CO., SUCCESSOR TO, OR formerly
known as AETNA CASUALTY & SURETY COMPANY;
AMERICAN EMPIRE INSURANCE CO.; ACE USA INC., AS
SUCCESSOR TO INTERNATIONAL INSURANCE COMPANY
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civ. No. 04-3509)
Honorable Edmund V. Ludwig, District Judge
Argued June 14, 2007
BEFORE: FUENTES, GREENBERG and
NYGAARD, Circuit Judges
1
(Filed: August 28, 2007)
Barry L. Katz (Argued)
225 City Avenue, Suite 14
Bala Cynwyd, PA 19004
Attorney for Appellant General Refractories Co.
John N. Ellison
Michael Conley (Argued)
Jocelyn A. Gabrynowicz
Anderson Kill & Olick, P.C.
1600 Market Street, Suite 2500
Philadelphia, PA 19103
Amy Bach
42 Miller Ave.,
Mill Valley, CA 94941
Attorneys for Amicus Curiae United Policyholders
in support of General Refractories Co.
Francis P. Maneri (Argued)
Dilworth Paxson LLP
3200 Mellon Bank Center
1735 Market Street
Philadelphia, PA 19103-7595
Attorneys for Appellee Westport Insurance Corp.
(successor to Puritan Insurance Co.)
Paul M. Hummer
Joseph Monahan
Saul Ewing LLP
Centre Square West
1500 Market Street, 38th Floor
Philadelphia, PA 19102-2186
Attorneys for Appellee American Empire
Surplus Lines Insurance Company
Marc P. Gorfinkel
2
Rivkin Radler, LLP
926 RexCorp Plaza
Uniondale, NY 11556-0926
Wendy H. Koch
Koch & Corboy
101 Greenwood Avenue
Suite 460
Jenkintown Plaza, PA 19046
Attorneys for Appellee Sentry Insurance Co.
Cynthia Ruggerio
Christie, Pabarue, Mortensen & Young
1880 John F. Kennedy Boulevard, 10th Floor
Philadelphia, PA 19103
Attorneys for Appellee One Beacon America Insurance
Company, as successor in interest to Potomac
Insurance Company (improperly identified as
Potomac Insurance Company of Illinois)
Kevin E. Wolff
Karen H. Moriarty
Couglin Duffy, LLP
350 Mount Kemble Avenue
Morristown, NJ 07962-1917
Attorneys for Appellee Centennial Insurance Company
OPINION OF THE COURT
GREENBERG, Circuit Judge.
I. INTRODUCTION
Plaintiff General Refractories Company (“GRC”) appeals
from the district court’s dismissal of its declaratory judgment and
3
breach of contract action against 16 defendant insurance companies1
for failure to join parties as defendants pursuant to Federal Rule of
Civil Procedure 12(b)(7). In particular, it asks us to consider whether
the district court erred in determining that various insurers GRC did
not name in its complaint as defendants, i.e., the absent insurers, were
both “necessary” and “indispensable” to this action as Federal Rule of
Civil Procedure 19 defines those terms. For the reasons that follow,
we conclude that they were neither, and, accordingly, we will reverse.
II. FACTS AND PROCEDURAL HISTORY
GRC is a manufacturer, distributor, and seller of asbestos-
1
In its complaint GRC named as defendants the following 16
insurance companies: First State Insurance Co. (i/c/o Hartford Accident
& Indemnity Co.); Westport Insurance Co. (f/k/a Puritan Insurance Co.);
Lexington Insurance Co.; Centennial Insurance Co.; Granite State
Insurance Co.; Potomac Insurance Co. of Illinois; Hartford Accident and
Indemnity Co.; Government Employees Insurance Co.; Republic
Insurance Co.; Sentry Insurance Co. (f/k/a Vanliner Insurance Co. and
Great Southwest Fire Insurance Co.); American International Insurance
Co.; AIU Insurance Co.; Harbor Insurance Co.; St. Paul Travelers (f/k/a
Aetna Casualty & Surety Co.); American Empire Insurance Co.; and
ACE USA (as successor to International Insurance Co.). J.A. at 59a-
61a.
In its brief before this court, defendants make a distinction
between “certain defendants” (i.e., those defendants responding to
GRC’s appeal) and “defendants” generally (i.e., those defendants named
by GRC in its complaint). The term “certain defendants” is defined as
including: Puritan Insurance Co. (n/k/a Westport Insurance Corp.);
OneBeacon America Insurance Co. (successor-in-interest to Potomac
Insurance Co., which company is identified by appellants as Potomac
Insurance Co. of Illinois); Sentry Insurance Co.; Centennial Insurance
Co.; and American Empire Surplus Lines Insurance Co. Appellees’ br.
at 1 n.1. We nevertheless regard all defendants as appellees as the
district court dismissed the action as to all of them, though we
sometimes use the term “defendants” as including only the appellees
participating in this appeal. The context makes clear how we are using
the term.
4
containing products that plaintiffs have named as a defendant in
thousands of asbestos-related lawsuits filed throughout the United
States in both state and federal courts. GRC maintains that from 1979
to 1986, it purchased excess and umbrella liability insurance policies
from either defendants or their predecessors-in-interest.2
Notwithstanding its acquisition of these policies, GRC’s attempts to
obtain coverage from defendants for asbestos claims filed against it
have met with little success thus far.3 See Gen. Refractories Co. v.
First State Ins. Co. (“GRC”), 234 F.R.D. 99, 100 (E.D. Pa. 2005)
(“Plaintiff submitted these claims to its comprehensive general
liability insurers, which tendered defenses and indemnification until
their policy limits were exhausted. On one basis or another, all of
defendants’ policies purport to exclude asbestos-related personal
injury claims; and defendants denied coverage.”) (internal citations
omitted).
On July 23, 2004, GRC filed a two-count complaint in the
district court against defendants. First, GRC sought a declaratory
judgment “that any asbestos-related exclusions in [defendants’]
Policies [we]re invalid and unenforceable” and that defendants were
required “to pay for GRC’s defense of the Underlying Actions, and to
reimburse GRC for, or pay on behalf of GRC, any and all judgments
or settlements reached in the Underlying Actions, until such time as
the total aggregate limits of each of the foregoing insurance policies
have been exhausted.” J.A. at 69-70. Second, GRC stated a breach of
contract claim, alleging that defendants had “refused to honor their
obligations to provide GRC with a defense or indemnification in and
for the Underlying Actions” and seeking, among other things, “[t]he
entry of an award requiring the Defendants to pay GRC all monetary
damages suffered by GRC caused by their breaches, including,
without limitation, compensatory damages, consequential damages,
prejudgment interest, post-judgment interest, and attorneys’ fees and
costs.” Id. at 70-71. It is undisputed that GRC expressly chose not to
name all of the insurers that provided it with coverage because it
believed that some of the policies were subject to releases, their limits
2
Excess insurers are those who contract to provide coverage only
when the amount of the claim is beyond that of a primary insurer.
3
It appears GRC did not seek coverage from its excess and
umbrella insurers until after it had exhausted its coverage under those
policies not containing asbestos-related exclusions. See Appellant’s br.
at 3 & n.1.
5
had been exhausted, or the insurers who had issued the policies were
insolvent or non-diverse from GRC.4
After GRC filed its complaint, five of the 16 excess and
umbrella insurance companies named as defendants moved to dismiss
the same pursuant to Federal Rule of Civil Procedure 12(b)(7) for
failure to join indispensable parties under Federal Rule of Civil
Procedure 19. Defendants predicated their motions on the theory that
GRC had failed to name all of the excess and umbrella insurers that
had provided it with coverage from 1979 to 1986, and that these
absent insurers were indispensable to the action.5 Significantly, if
GRC had joined the absent insurers in the action, the district court
would not have had subject matter jurisdiction as some of these
insurers were non-diverse.
The district court agreed with defendants in an order issued
September 27, 2005. In the order the court reached two particularly
significant conclusions for present purposes: First, insofar as GRC
acknowledged that “at least one of the policies in dispute follows
form to a policy issued by an Absent Insurer [i.e., Century Indemnity
Co.],” the court concluded that the absent insurer was a “necessary”
party under Rule 19(a).6 GRC, 234 F.R.D. at 101. The court went on
to observe that:
4
GRC subsequently, without objection from defendants, obtained
an order of the district court dismissing one named defendant on grounds
that it was non-diverse.
5
The district court listed the following companies as “absent
insurers”: National Union Fire Insurance Co. of Pittsburgh; The
American Insurance Co.; California Union Insurance Co.; Granite State
Insurance Co.; Mission Insurance Co.; Old Republic Insurance Co.;
Century Indemnity Co.; Insurance Co. of the State of Pennsylvania;
American Centennial Insurance Co.; and The Protective National
Insurance Co. of Omaha. GRC, 234 F.R.D. at 101 n.2. According to the
district court, “[t]he extent of the Absent Insurers’ coverage is as much
as $155 million; the named defendants, as much as $221 million.” Id.
6
Specifically, the district court cited GRC’s acknowledgment that
a policy issued by Great Southwest Fire Insurance Co. followed form to
a policy issued by Lexington Insurance Co., which, in turn, followed
form to a policy issued by Century Indemnity Co. GRC, 234 F.R.D. at
101 n.7.
6
Without the Absent Insurers, it is highly unlikely that a
judgment could be fashioned that would not be either
unduly favorable or prejudicial to . . . some of the other
parties. It is also unlikely that a plaintiff’s award
would be adequate if rendered against fewer than all
potentially responsible insurers. No shaping of the
judgment could avoid these coverage issue
possibilities.
Id. at 102. Accordingly, the court found that all the absent insurers,
rather than just Century Indemnity Co., were “indispensable” parties
under Rule 19(b). Id. The court thus dismissed GRC’s complaint as
joining the absent insurers would destroy diversity of citizenship
jurisdiction. It indicated, however, that GRC could refile the action in
state court “where all defendants may be joined in one action and
complete relief afforded.” Id. GRC moved for reconsideration of that
order, but the court denied that motion on October 27, 2005. GRC
has appealed from these two orders.
III. JURISDICTION
The district court had diversity of citizenship jurisdiction over
this declaratory judgment and breach of contract action pursuant to 28
U.S.C. § 1332. We have jurisdiction over the final order of the
district court dismissing GRC’s complaint and the order denying
reconsideration of that order pursuant to 28 U.S.C. § 1291.
To the extent that the district court premised its Rule 19(a)
determination that the absent insurers’ joinder was necessary on a
conclusion of law, our review is plenary. Janney Montgomery Scott,
Inc. v. Shepard Niles, Inc., 11 F.3d 399, 404 (3d Cir. 1993). By
contrast, we would review any subsidiary findings of fact for clear
error only. Id.7 Our review of the district court’s Rule 19(b)
determination that the absent insurers were indispensable, and
dismissal is required because their joinder would destroy subject
7
We note, however, that we are not reaching our result by
rejecting the findings of historical facts underlying the district court’s
order of dismissal or order denying reconsideration. Thus, our opinion
depends on our conclusions of law rather than on the resolution of
disputed findings of fact.
7
matter jurisdiction in diversity, is for abuse of discretion. Id. at 403;
see also Koppers Co. v. Aetna Cas. & Sur. Co., 158 F.3d 170, 174 (3d
Cir. 1998).
IV. DISCUSSION
Federal Rule of Civil Procedure 19 specifies the circumstances
in which the joinder of a particular party is compulsory. In reviewing
the district court’s conclusion in this regard, we first must determine
whether the absent insurers should be joined as “necessary” parties
under Rule 19(a). If they should be joined, but their joinder is not
feasible inasmuch as it would defeat diversity of citizenship (as would
be the case here), we next must determine whether the absent parties
are “indispensable” under Rule 19(b).8 Should we answer this
question in the affirmative, the action cannot go forward. Janney
Montgomery Scott, 11 F.3d at 404 (citing Bank of Am. Nat’l Trust &
Sav. Ass’n v. Hotel Rittenhouse Assocs., 844 F.2d 1050, 1053-54 (3d
Cir. 1988)). Relatedly, should we decide that the district court erred
in its conclusion that the absent insurers were “necessary” parties
under Rule 19(a), we need not reach or decide the question of whether
it abused its discretion by holding the absent insurers were
“indispensable” under Rule 19(b), though we are not precluded from
doing so to reach an alternative basis for our result. Id.
A. Rule 19(a)
Under Rule 19(a), the joinder of parties is compulsory or
“necessary” if their joinder is “feasible.” Specifically, the rule states
in material part:
A person who is subject to service of process and
whose joinder will not deprive the court of jurisdiction
over the subject matter of the action shall be joined as
a party in the action if (1) in the person’s absence
complete relief cannot be accorded among those
8
We note that GRC did not join insurers who were insolvent or
whose policies had been exhausted. GRC should be commended for
omitting them as a plaintiff should not make a person a party to a
lawsuit, and thereby require it to incur defense expenses, unless there is
a good reason to do so.
8
already parties, or (2) the person claims an interest
relating to the subject of the action and is so situated
that the disposition of the action in the person’s
absence may (i) as a practical matter impair or impede
the person’s ability to protect that interest or (ii) leave
any of the persons already parties subject to a
substantial risk of incurring double, multiple, or
otherwise inconsistent obligations by reason of the
claimed interest.
Courts treat clauses (1) and (2) in the disjunctive just as the rule
phrases them. See Koppers, 158 F.3d at 175 (“As Rule 19(a) is stated
in the disjunctive, if either subsection is satisfied, the absent party is a
necessary party that should be joined if possible.”). Additionally, and
as we discussed above, a holding that joinder is compulsory under
Rule 19(a) is a necessary predicate to a district court’s discretionary
determination under Rule 19(b) that it must dismiss a case because
joinder is not feasible (i.e., will defeat diversity) and the party is
indispensable to the just resolution of the controversy. See Janney
Montgomery Scott, 11 F.3d at 405.
1. Rule 19(a)(1)
Under Rule 19(a)(1) we ask whether complete relief may be
accorded to those persons named as parties to the action in the
absence of any unjoined parties. As should be apparent, we
necessarily limit our Rule 19(a)(1) inquiry to whether the district
court can grant complete relief to persons already named as parties to
the action; what effect a decision may have on absent parties is
immaterial. Angst v. Royal Maccabees Life Ins. Co., 77 F.3d 701,
705 (3d Cir. 1996) (“Completeness is determined on the basis of those
persons who are already parties, and not as between a party and the
absent person whose joinder is sought.”); Janney Montgomery Scott,
11 F.3d at 405 (same).
The district court, relying on Gould, Inc. v. Arkwright Mutual
Insurance Co., No. 3 CV-92-403, 1995 WL 807071 (M.D. Pa. Nov. 8,
1995), found that because “at least one of the policies in dispute
follows form to a policy issued by an Absent Insurer [i.e., Century
Indemnity Co.],” it was necessary to determine whether that absent
insurer “or any other” absent insurer was indispensable under Rule
19(b). GRC, 234 F.R.D. at 101. We hold that the court erred in its
9
conclusion.9
Pennsylvania law, which the parties agree governs the
substantive aspects of this action to the extent of establishing the
scope of defendants’ liability, plainly holds that once multiple
policies have been triggered for an indivisible loss (as is the case
here), the insured is “free to select the policy or policies under which
it is to be indemnified.” J.H. France Refractories Co. v. Allstate Ins.
Co., 626 A.2d 502, 508 (Pa. 1993) (determining whether various
insurance companies were liable for the defense and indemnification
of an insured for asbestos-related claims and, if so, how that liability
should be apportioned). Further, “[w]hen the policy limits of a given
insurer are exhausted,” the insured “is entitled to seek indemnification
from any of the remaining insurers which was on the risk.” Id.
Cognizant of insurers’ fear that a single company might be “stuck”
with full liability for an injury, the Pennsylvania Supreme Court
added that its opinion “does not alter the rules of contribution or the
provisions of ‘other insurance’ clauses in the applicable policies.
There is no bar against an insurer obtaining a share of indemnification
or defense costs from other insurers under ‘other insurance’ clauses or
under the equitable doctrine of contribution.” Id. Given these legal
precepts, there can be no doubt that, as in J.H. France, liability for
coverage in the instant matter is similarly joint and several. See also
Koppers Co. v. Aetna Cas. & Sur. Co., 98 F.3d 1440, 1449 (3d Cir.
1996) (noting that in J.H. France the Pennsylvania Supreme Court
held that “the insurers whose coverage had been triggered were
jointly and severally liable for the full amount of the claim up to
policy limits, and . . . the insured was entitled to select the policy or
policies under which it would be indemnified”).
We have recognized that where liability is joint and several
among multiple parties, a court may grant complete relief with respect
to any one of them subject, of course, to policy limits. Janney
Montgomery Scott, 11 F.3d at 406 (citing cases for proposition that
where liability is joint and several, a plaintiff may sue them separately
in federal court). Accordingly, it follows that the absent insurers
9
In its order, the district court did not indicate the subsection of
Rule 19(a) on which it based its conclusion that either Century
Indemnity Co. or any of the other absent insurers were “necessary”
parties to this action. GRC, 234 F.R.D. at 101. The court’s reliance on
Gould provides no further illumination on the matter. See 1995 WL
807071, at *3-4. We thus consider each of the subsections in turn.
10
generally, and Century Indemnity Co. in particular, are not
“necessary” parties under subsection (a)(1) of Rule 19 as the court
can grant complete relief to GRC from any insurer it named as a party
to this action.10 See id.; see also UTI Corp. v. Fireman’s Fund Ins.
Co., 896 F. Supp. 389, 393 (D.N.J. 1995) (noting “where liability is
several, complete relief may be granted in a suit against any one of
the severally liable parties”).
Defendants rely on a district court’s decision in City of
Littleton v. Commercial Union Assurance Cos., 133 F.R.D. 159 (D.
Colo. 1990), to support their argument, but that case is not
inconsistent with our conclusion that GRC may obtain complete relief
in this case without the joinder of the absent insurers.11 In City of
Littleton the plaintiffs sued one of their primary insurance carriers as
well as two excess insurance carriers, seeking coverage for potential
hazardous waste cleanup liability. The defendants moved to dismiss
the complaint, alleging that two of the plaintiffs’ primary insurance
carriers not named to the suit were “indispensable” parties under Rule
19. In conducting its Rule 19(a)(1) analysis, the district court agreed
that, at least with respect to the excess insurers, the absent primary
insurers were “necessary” parties to the suit as otherwise it could not
accord complete relief to the plaintiffs. Id. at 163.
In particular, the City of Littleton court deemed significant the
circumstances that (1) the liability of at least one excess insurer was
dependent upon a determination of whether the absent primary
insurers’ policies provided coverage; (2) one of the excess insurer’s
policy provisions could not be triggered until the obligations of all the
primary insurers had been determined; and (3) one of the plaintiffs
10
Notably, neither side disputes that at least some of the policies
issued by defendants in GRC’s complaint do not follow form to those of
the absent insurers. See appellees’ br. at 5 (“A number of the insurers
that GRC named as defendants provided coverage that either follows
form to, or otherwise refers to definitions, terms and conditions of one
or more of these absent underlying policies.”) (emphasis added). Given
the rules of joint and several liability, regardless of what the district
court believed with respect to Century Indemnity Co., it is difficult to
understand why the court did not hold that at least these other parties
were not “necessary” under Rule 19(a)(1).
11
Of course, City of Littleton would not bind us even if it
involved a situation not distinguishable from that at issue here.
11
purportedly was breaching a contract provision by failing to proceed
against all primary carriers.12 Id. Accordingly, the court concluded
that issuance of a declaratory judgment would fail to dispose of the
controversy and would not serve a useful purpose. Id. On this point,
it explained that:
Although I could construe the absent insurers’ policies,
any declaration on [their] liability would not bind
them, the plaintiffs or the named defendants. Thus, the
finality of any judgment as to the excess insurers’
liability would be entirely contingent on judgment in a
necessary, parallel state court suit between the
plaintiffs and the absent insurers. The present
defendants likely would be joined in that suit in which
issues identical to those presented here would be
considered. In a Rule 19(a)(1) inquiry, I must consider
the public’s interest in avoiding repeated lawsuits on
the same subject matter. . . . No useful purpose would
be served by a partial judgment when there is a
substantial risk of duplicative litigation.
Id. (citations omitted).
To be sure, in making its analysis under Rule 19(a)(1), a court
should consider the interests of “the public in avoiding repeated
lawsuits on the same essential subject matter.” Fed. R. Civ. P. 19
advisory committee’s notes. Rule 19(a)(1), however, similarly
“stresses the desirability of joining those persons in whose absence
the court would be obliged to grant partial or ‘hollow’ rather than
complete relief to the parties before the court.” Id. In this case,
considering Pennsylvania’s joint and several liability rules which
supply the governing substantive law, GRC’s failure to name the
absent insurers to its suit plainly will not result in it obtaining
“partial” or “hollow” relief if it is successful in its suit. See Janney
Montgomery Scott, 11 F.3d at 406 (recognizing that where liability is
joint and several among multiple parties, complete relief may be
granted with respect to any one of them). To this end, the advisory
12
Although the district court focused on a policy issued by
American Excess Insurance Company in its analysis, it observed that the
policy of Granite State Insurance Company (the other excess carrier
named as a defendant in the action) “similarly conditions coverage.”
City of Littleton, 133 F.R.D. at 163.
12
committee’s notes to Rule 19 “note[] particularly” that “the
description [of persons to be joined under subdivision (a)] is not at
variance with the settled authorities holding that a tortfeasor with the
usual ‘joint-and-several’ liability is merely a permissive party to an
action against another with like liability.” Fed. R. Civ. P. 19 advisory
committee’s notes (internal citation omitted). The fact that the public
might be subject to “repeated suits on the same subject matter” thus
poses no bar to our conclusion that the absent insurers are not
“necessary” parties to this case under Rule 19(a)(1).13
Finally, defendants express some concern that because GRC
has failed to produce proof that it has exhausted the absent underlying
insurance policies, they would be prejudiced if the action were to
proceed. See Gould, 1995 WL 807071, at *1, 4 (finding plaintiff
could proceed against its excess insurance carriers only if the policy
limits of its absent underlying insurance carrier had been exhausted
and, thus, that the absent underlying insurance carrier was a necessary
party under Rule 19(a)). Our holding in Koppers, 158 F.3d 170,
which is binding precedent, and which we decided after Gould, which
is not binding precedent, makes clear that defendants’ concerns are
largely unfounded.
In Koppers, we considered whether INA, a non-diverse excess
insurer, was a necessary and indispensable party to an action brought
by the appellant, Koppers, against the appellees, certain underwriters
from Lloyd’s of London and certain London market insurance
companies (the “London Insurers”), under Rule 19. The London
Insurers urged that we answer this question in the affirmative, arguing
13
We also point out that it would be completely speculative to
conclude that GRC ever will bring additional coverage actions similar
to that here. At the very least, the parties’ briefs do not indicate that
GRC has such an action pending although they do reference earlier
actions GRC brought seeking coverage. GRC indicates, however, that
the policies involved in those cases did not have “asbestos-related
exclusions.” Appellant’s br. at 3 n.1. In any event, given Vale
Chemical Co. v. Hartford Accident & Indemnity Co., 516 A.2d 684 (Pa.
1986), a case we discuss below, we do not believe that there is any
chance that GRC would sue the defendants here and the non-diverse
Pennsylvania absent insurers in the Pennsylvania state courts seeking
similar relief. Indeed, it appears that if we affirm, GRC’s opportunity
to assert that it is entitled to recover from any of the defendants will be
gone forever.
13
they could not be held “liable to pay on their excess policies unless
and until the underlying insurers–including INA–have paid or have
been held liable to pay the full amount of their underlying policies.”
Id. at 174. To this end, the London Insurers submitted that “their
policies [we]re directly excess to [the INA policies] and contingent
upon their liability under them . . . and that payment or liability under
the underlying policies is a condition precedent to any obligations that
the London Insurers might incur.” Id. (internal quotations and
citation omitted). Upon reviewing the relevant policies, we found that
satisfaction of a $1,050,000 deductible to be paid by Koppers or INA,
among others, was required before the London Insurers’ excess policy
was triggered. Id. at 176. Based on this understanding (i.e., that any
liability on the London Insurers’ part was independent of INA’s), we
held that “insofar as liability under the London Policies is concerned,
complete relief can be accorded to the parties present to this litigation
without the joinder of INA. Accordingly . . . INA is not a necessary
party under Rule 19(a)(1).” Id.
Defendants in this action have provided no reason – and we
can perceive of none – why we should not reach the same result here
as we did in Koppers. At most, the question of whether the
underlying policies have been exhausted to the extent that their
exhaustion is a condition prerequisite to defendants’ monetary
liability to make payments on their policies will be an issue at trial.
In this regard, we point out that we are not holding who is or is not
ultimately liable in this case. Rather, we are determining the question
of who are necessary and indispensable parties.
2. Rule 19(a)(2)
Notwithstanding a determination that complete relief may be
accorded to those persons already named as parties to an action, a
court still may deem a party “necessary” under subsection (a)(2) of
Rule 19. Unlike subsection (a)(1), subsection (a)(2) requires the court
to take into consideration the effect that resolution of the dispute
among those parties before it may have on any absent parties. See
Fed. R. Civ. P. 19(a)(2).
a. Rule 19(a)(2)(i)
Under Rule 19(a)(2)(i), the court must decide whether
determination of the rights of those persons named as parties to the
action would impair or impede an absent party’s ability to protect its
interest in the subject matter of the litigation. Fed. R. Civ. P.
14
19(a)(2)(i); see also Janney Montgomery Scott, 11 F.3d at 409 (“[I]t
must be shown that some outcome of the federal case that is
reasonably likely can preclude the absent party with respect to an
issue material to the absent party’s rights or duties under standard
principles governing the effect of prior judgments.”). Defendants
argue that the “absent insurers whose policies must be interpreted in
[this] declaratory judgment action have an interest relating to the
subject of the action – the interpretation of their policies – and the
disposition of the action in their absence might, as a practical matter,
impair their ability to protect the interpretation of their policies.”
Appellees’ br. at 17. As our holding in Janney Montgomery Scott
makes clear, defendants’ position is without support.
In Janney Montgomery Scott, the defendant and its parent
corporation were co-obligors on a contract with the plaintiff.
Claiming that the contract had been breached, the plaintiff filed a suit
in the district court against the defendant and in state court against the
defendant and its parent corporation. In a situation similar to that
facing GRC here with respect to non-diverse parties, the defendant’s
parent corporation was a citizen of Pennsylvania. Consequently, its
joinder to the district court case would have resulted in the case’s
dismissal inasmuch as the district court’s jurisdiction was based on
diversity of citizenship and the plaintiff was a Pennsylvania citizen.
Janney Montgomery Scott, 11 F.3d at 401-02. The defendant
subsequently filed a motion for judgment on the pleadings predicated
on the plaintiff’s failure to join the defendant’s parent corporation in
the action as a defendant under Rule 19. The district court granted
the motion, in part based on its holding that the defendant’s parent
corporation was a “necessary” party to the suit under Rule 19(a)(2)(i)
because “it was likely that any decision reached in the federal action
would affect the pending state court action . . . as persuasive
precedent against [the absent parent corporation].” Id. at 406
(internal quotations and citation omitted).
The plaintiff appealed and we disagreed with the district
court’s conclusion, explaining:
We are not sure what the district court means by the
phrase ‘persuasive precedent.’ To the extent it
involves the doctrine of stare decisis, we are not
inclined to hold that any potential effect the doctrine
may have on an absent party’s rights makes the absent
party’s joinder compulsory under Rule 19(a) whenever
‘feasible.’ Such a holding would greatly expand the
15
class of ‘necessary’ or compulsory parties Rule 19(a)
creates. Moreover, to whatever extent the rule’s
phrase ‘as a practical manner impair or impede’ has
broader meaning than that given by principles of issue
preclusion, we think the effect of the federal decision
must be more direct and immediate that the effect a
judgment in [defendant’s] favor would have on [its
absent parent corporation] here. . . . In any event, we
do not believe any possibility of a ‘persuasive
precedent’ requires joinder under subsection
19(a)(2)(i).[14]
Id. at 407; see also UTI, 896 F. Supp. at 393 (“In Janney, the Third
Circuit expressly rejected the proposition that where a piece of
litigation may result in a ‘persuasive precedent’ against an absent
party, the disposition of the action in that party’s absence would
impair or impede that party’s ability to protect its interest within the
meaning of Rule 19(a)(2)(i).”). Inasmuch as defendants proffer
nothing more than a reincarnation of the “persuasive precedent”
argument we have rejected, we similarly do not deem the absent
insurers in this case to be “necessary” parties to GRC’s suit under
Rule 19(a)(2)(i).
b. Rule 19(a)(2)(ii)
Finally, under Rule 19(a)(2)(ii), a court must decide whether
continuation of the action would expose named parties to the
“substantial risk of incurring double, multiple, or otherwise
inconsistent obligations by reason of the claimed interest.”
According to defendants, the very real possibility of prejudice arises
from the likelihood that subsequent litigation will produce
inconsistent obligations with those a court may determine they have
here. For example, defendants contend that the district court in this
case could determine that the exclusions contained in the policies are
unenforceable, requiring them to indemnify GRC for its asbestos-
related losses in the underlying actions, while a second court in a later
14
In Janney, we phrased the Rule 19 question as follows:
“[W]hether the district court could give complete relief to the parties
before it without prejudice to them or the absent person, [the parent
corporation], in a breach of contract action against only one of the two
co-obligors that might be liable to [plaintiff], the obligee on the
contract.” Janney Montgomery Scott, 11 F.3d at 402.
16
action against the absent insurers for contribution and/or
indemnification could reach a contrary conclusion, thus foreclosing
recovery by defendants for their losses in whole or in part. Similarly,
defendants hypothesize:
The same problem would exist if, following a trial in
federal court and a victory for GRC, GRC were to
select one of the policies issued by a Defendant in this
matter covering Year A for coverage and the chosen
insurer then sued Absent Insurer No. 1 covering Year
B for contribution in state court. In the state court
action, the [asbestos-related] exclusion might well be
honored, thereby defeating the contribution claim[,]
which could not happen if all insurers’ rights were
determined in the same action.
Appellees’ br. at 22. Again, we reject defendants’ position given our
holding in Janney Montgomery Scott.
In addition to its finding that the defendant’s parent
corporation was a “necessary” party to the suit under Rule 19(a)(2)(i),
the district court in Janney Montgomery Scott made the same
determination under Rule 19(a)(2)(ii). Specifically, the district court
reasoned that “continuation of this action in [the parent corporation’s]
absence may expose [the defendant] to a substantial risk of incurring
double or inconsistent obligations because [the defendant] may be
found liable under the Agreement in the federal action while [the
parent corporation] may be found not liable in the state court action.”
Janney Montgomery Scott, 11 F.3d at 411 (internal quotations and
citation omitted).
Even though we acknowledged that “[i]t is, of course, possible
. . . that if [the defendant] is held liable in the federal action, it may
ultimately be responsible for the entire claim if [its parent
corporation] is found not liable in the State Court Action,” we
nonetheless concluded that “[t]his is not . . . the double liability that
Rule 19(a)(2)(ii) refers to.” Id. (internal quotations and citation
omitted). On this point, we explained first that the district court’s
conclusion necessarily was grounded on the unstated premise that if
the defendant was found liable on the agreement, its parent
corporation must be as well. We rejected this premise inasmuch as it
was “contradicted by the law’s refusal to consider the real possibility
that one court could find [the defendant] liable while another was
finding [the absent parent corporation] not liable in separate
17
proceedings to which the rules of claim or issue preclusion do not
apply.” Id.; see also Field v. Volkswagenwerk AG, 626 F.2d 293,
301-02 (3d Cir. 1980) (“[T]he possibility of a subsequent adjudication
that may result in a judgment that is inconsistent as a matter of logic,
[does not] trigger the application of Rule 19.”), disagreed with on
other grounds by Newman-Green, Inc. v. Alfonso-Larrain, 490 U.S.
826, 833 n.7, 109 S.Ct. 2218, 2223 n.7 (1989). We added that:
The possibility that [the defendant] may bear the whole
loss if it is found liable is not the equivalent of double
liability. It is instead a common result of joint and
several liability and should not be equated with
prejudice. Inherent in the concept of joint and several
liability is the right of a plaintiff to satisfy its whole
judgment by execution against any one of the multiple
defendants who are liable to him, thereby forcing the
debtor who has paid the whole debt to protect itself by
an action for contribution against the other joint
obligors.
Janney Montgomery Scott, 11 F.3d at 412. To this end, we explicitly
noted that “[a]n outcome adverse to [the defendant] in [the plaintiff’s]
present action against it does not have any legal effect on whatever
right of contribution or indemnification [the defendant] may have
against [its parent corporation].” Id.
Our holding in Janney Montgomery Scott squarely addresses,
and defeats, those arguments defendants make with respect to why the
absent insurers should be deemed “necessary” parties to GRC’s suit
under Rule 19(a)(2)(ii). As we outlined above, defendants’ primary
concern is that inconsistent judgments from the state and federal
courts effectively could foreclose their indemnification and/or
contribution claims against the absent insurers. However, Janney
Montgomery Scott makes clear that the possibility defendants may
have to shoulder the entire loss if found liable is a necessary
consequence of joint and several liability. Further, it bears noting that
the imposition of joint and several liability is intended to ensure that
GRC, and not defendants, be afforded the coverage for which it
contracted. See J.H. France Refractories, 626 A.2d at 508 (“In order
to accord [the insured] the coverage promised by the insurance
policies, [the insured] should be free to select the policy or policies
under which it is to be indemnified.”). Accordingly, defendants
similarly cannot be deemed “necessary” parties under Rule
19(a)(2)(ii). See also UTI, 896 F. Supp. at 394.
18
B. Rule 19(b)
Even if we assumed that the district court correctly concluded
that the absent insurers were “necessary” parties under Rule 19, we
nonetheless would find that they were not “indispensable” under that
rule. As we noted above, when a party is deemed “necessary” under
Rule 19(a), joinder must occur if feasible. If joinder of a “necessary”
party would divest the district court of subject matter jurisdiction (i.e.,
destroy diversity), a court must determine whether “in equity and
good conscience” the action should proceed without that party, or
whether the court should dismiss it, “the absent person being thus
regarded as indispensable.” Fed. R. Civ. P. 19(b). Put another way, a
finding of indispensability under Rule 19(b) necessitates dismissal for
lack of subject matter jurisdiction.
Under Rule 19(b), the four factors listed, though not
exhaustive, are “the most important considerations” in determining
whether a party is indispensable. Gardiner v. V.I. Water & Power
Auth., 145 F.3d 635, 640 (3d Cir. 1998). These factors are:
first, to what extent a judgment rendered in the
person’s absence might be prejudicial to the person or
those already parties; second, the extent to which, by
protective provisions in the judgment, by the shaping
of relief, or other measures, the prejudice can be
lessened or avoided; third, whether a judgment
rendered in the person’s absence will be adequate;
fourth, whether the plaintiff will have an adequate
remedy if the action is dismissed for nonjoinder.
Fed. R. Civ. P. 19(b).
Though it did not consider the four factors explicitly the
district court found with respect to Rule 19(b):
Without the Absent Insurers, it is highly unlikely that a
judgment could be fashioned that would not be either
unduly favorable or prejudicial to . . . some of the other
parties. It is also unlikely that a plaintiff’s award
would be adequate if rendered against fewer than all
potentially responsible insurers. No shaping of the
judgment could avoid these coverage issue
possibilities.
19
GRC, 234 F.R.D. at 102. The district court added that GRC could
refile its action in a state court “where all defendants may be joined in
one action and complete relief afforded.” Id. We conclude again that
the district court was mistaken.
The first and second factors under Rule 19(b) are “to what
extent a judgment rendered in the person’s absence might be
prejudicial to the person or those already parties,” and to what extent
such prejudice “can be lessened or avoided.” Notably, the first factor
under Rule 19(b) “overlaps considerably with the Rule 19(a)
analysis.” Gardiner, 145 F.3d at 641 n.4 (citing Wright, Miller &
Kane, Federal Practice & Procedure § 1608 at 91). As we discussed
above, given the rules of joint and several liability, it is possible that
GRC can recover fully from those insurers it already has named as
defendants in the present action. Id. at 641 (finding no prejudice to
either plaintiff or absent party where plaintiff could recover fully from
defendant, the party with whom plaintiff claimed it had a contract,
and defendant failed to present specific evidence of prejudice); see
also UTI, 896 F. Supp. at 395 (noting defendant insurance company’s
potential liability for the entire loss “results from [the plaintiff’s]
absolute right under the Pennsylvania Supreme Court’s decision in
J.H. France to select the policy or policies under which it is to be
indemnified” and thus does not constitute prejudice within the
meaning of Rule 19(b)) (internal quotations and citation omitted).
We also take note of our particularly relevant precedent for
present purposes that, “‘[a] defendant’s right to contribution or
indemnity from an absent non-diverse party does not render that
absentee indispensable pursuant to Rule 19.’” Janney Montgomery
Scott, 11 F.3d at 412 (quoting Bank of Am. Nat’l Trust & Sav. Ass’n,
844 F.2d at 1054). Indeed, defendants are free to pursue any claim
for contribution or indemnification they might have against the absent
insurers in a separate action.15 While “[w]e recognize that this is a
15
As we noted during oral argument, defendants alternatively
might consider “vouching in” the absent insurers in the current action.
Under this common law practice:
[A] defendant in an action gives notice of the suit to
another person who is liable over to the defendant in
respect to the matter sued upon, whether by contract or
by implication of law, offering the other person the
opportunity to appear and defend the action. If the liable
20
less convenient remedy for [defendant],” it is nonetheless “a means of
resolving [defendant’s] claim of the risk of inconsistent obligations.”
Gardiner, 145 F.3d at 642.
The third factor under Rule 19(b) is “whether a judgment
rendered in the person’s absence will be adequate.” Specifically, this
element allows the court to consider whether the relief it grants will
prove an adequate remedy for the plaintiff. Provident Tradesmens
Bank & Trust Co. v. Patterson, 390 U.S. 102, 112, 88 S. Ct. 733, 739
(1968). Certainly with respect to defendants, the court can resolve
GRC’s claim in the present action and this factor weighs in GRC’s
favor. See Gardiner, 145 F.3d at 642. Additionally, and also as we
noted above, “the possibility that the defendant[s] may have a claim
for contribution or indemnity does not render an absentee
indispensable. The right to contribution and indemnity should not,
therefore, be considered to cause inadequacy of the resulting
judgment.” Id. Moreover, as the Court indicated in Provident, the
adequacy criterion “refer[s] to [the] public stake in setting disputes by
wholes,” 390 U.S. at 111, 88 S.Ct. at 739, and we surely will not hold
that this stake is so great that it trumps the rules not otherwise
requiring a plaintiff to join all potentially liable parties in joint and
several liability situations.
Finally, the fourth Rule 19(b) factor – whether the plaintiff has
a remedy if the action is dismissed – similarly “counsels strongly
against dismissal in this case.” Gardiner, 145 F.3d at 642. In Vale
Chemical Co. v. Hartford Accident & Indemnity Co., 516 A.2d 684,
person does not avail himself or herself of the
opportunity to defend, he or she may be precluded from
relitigation issues decided in the action.
59 Am. Jr. 2d Contracts § 262 (2007); see also Glick v. White Motor
Co., 458 F.2d 1287, 1292 n.8 (3d Cir. 1972). Significantly, although
vouching in has “largely been supplanted by the modern third party
practice,” it has not been eliminated, but rather has been “supplemented
thereby.” U.S. Wire & Cable Corp. v. Ascher Corp., 167 A.2d 633, 636
(N.J. 1961). We think that in view of the simplicity of the procedure and
its capacity to by pass jurisdictional hurdles, it is surprising that
defendants do not attempt to use it more frequently. We, of course,
express no opinion on the question of whether it would be feasible “to
vouch in” the absent insurers, as defendants have not done so. We only
advance that possibility which seems to have escaped them.
21
686 (Pa. 1986), the Pennsylvania Supreme Court reiterated its oft-
stated precedent that “where claims are asserted against an insured,
the persons asserting the claims are indispensable parties in a
declaratory judgment action on the issue of coverage between the
insured and the insurance carrier. The failure to join a claimant
whose interests would be affected has been held to be fatal error.”
Relying on this pronouncement from the Pennsylvania Supreme Court
in Vale, GRC argues that if forced to refile its action in a
Pennsylvania state court, the state in which defendants themselves
believe that GRC should have brought this action and now can
proceed, GRC necessarily would be required to add the tens of
thousands of plaintiffs that have sued it throughout the country. GRC
asserts that the impracticality of such a requirement plainly would
affect its ability to proceed.16 Defendants answer that Rule 19, rather
than Pennsylvania state law as set forth in Vale, should govern our
analysis. For the following reasons, we conclude that defendants’
position is mistaken.
To be sure, “in a diversity case the question of joinder is one
of federal law.” Provident Tradesmens Bank & Trust Co., 390 U.S. at
125 n.22, 88 S.Ct. at 125 n.22. State law, however, is not wholly
irrelevant to the court’s analysis. See Shetter v. Amerada Hess Corp.,
14 F.3d 934, 937 (3d Cir. 1994) (noting “state law may provide
assistance in determining the interests of the party in question”).
Here, state law, as expressed by the Pennsylvania Supreme Court in
Vale, indicates that, practically speaking, GRC would be left without
a remedy if we affirm the dismissal of this action. After all, even
though, as defendants point out, Vale does not control a Rule 19
determination, certainly it would be applicable in a subsequent action
in the Pennsylvania courts. Inasmuch as Rule 19 counsels that courts
should consider whether there is any assurance that the plaintiff, if
dismissed, could sue effectively in another forum where better joinder
would be possible,” this factor weighs in GRC’s favor and tends to
show that the district court abused its discretion in finding the absent
insurers to be indispensable as GRC could not bring the Pennsylvania
state court action that the district court believed would give it an
16
United Policyholders, which has filed an amicus curiae brief,
contends that it might be more than merely impractical to sue all the
plaintiffs in the underlying actions in the Pennsylvania state courts.
Rather, it would be impossible because “[m]any of these claimants have
no connection to Pennsylvania and cannot be sued there.” Amicus
Curiae br. at 17.
22
adequate remedy. See Fed. R. Civ. P. 19 advisory committee’s notes.
With the above considerations in mind, we conclude that the
district court abused its discretion in finding the absent insurers
“indispensable” under Rule 19(b).
V. CONCLUSION
For the foregoing reasons, we will reverse the district court’s
order of September 27, 2005, dismissing this action as well as the
order of October 27, 2005, denying reconsideration of the order of
September 27, 2005, and will remand the case to the district court for
further proceedings consistent with this opinion.17
17
Though we are taxing costs in GRC’s favor we direct that only
defendants who moved to dismiss this action in the district court, joined
in such a motion, or participated as appellees on this appeal by filing a
brief or their attorneys entering an appearance that was not withdrawn,
should be responsible for them.
23
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Cite as 2015 Ark. App. 146
ARKANSAS COURT OF APPEALS
DIVISION I
No. CV-14-325
Opinion Delivered MARCH 4, 2015
WHITEY’S TRUCK CENTER, INC. APPEAL FROM THE PULASKI
APPELLANT COUNTY CIRCUIT COURT, THIRD
DIVISION
V. [NO. 60CV-13-1342]
HONORABLE JAY MOODY, JUDGE
TODD ROBINSON
APPELLEE AFFIRMED
DAVID M. GLOVER, Judge
Todd Robinson sued Whitey’s Truck Center, alleging that Whitey’s failed to properly
repair his diesel truck and damaged the truck in attempting to repair it, keeping the truck over
a two-year period. Whitey’s denied that it had damaged the truck and counterclaimed,
seeking payment for the truck repair and storage fees, alleging the fees were precipitated by
an insufficient check issued by Robinson. The case was tried to a jury. Following Robinson’s
case in chief and at the conclusion of the trial, Whitey’s moved for a directed verdict on
Robinson’s claims based on deceptive trade practices, conversion, and breach of contract. The
trial court denied the motion regarding breach of contract but granted it on the claims for
deceptive trade practices and conversion. The jury found in favor of Robinson on his breach-
of-contract claim and against Whitey’s on its counterclaim. On December 4, 2013, Whitey’s
Cite as 2015 Ark. App. 146
moved for JNOV or, alternatively, for a new trial. By judgment entered on January 6, 2014,
Robinson was awarded $25,000 in damages. On January 16, 2014, Whitey’s filed its notice
of appeal. On January 17, 2014, Robinson responded to Whitey’s motion for JNOV/new
trial.
Whitey’s submitted a proposed order that would have the trial court grant the motion
for new trial. Robinson raised objections to it. On February 11, 2014, which was
undisputedly beyond the deemed-denied deadline for doing so, the trial court entered the
order granting a new trial. Robinson then also filed a notice of appeal, lodged the record in
this case, and submitted an opening brief that challenged the order granting a new trial by
contending that it was not timely entered. Whitey’s countered by asserting that a series of
winter storms swept through Arkansas between February 4 and February 11, 2014.
Our court entered a per curiam order on September 17, 2014, granting Robinson’s
request to realign the parties to name Whitey’s as appellant and Robinson as appellee. As
appellant, Whitey’s raises three points of appeal: 1) the jury erred in the amount of the
recovery by improperly including consequential damages as part of the award and the verdict
was clearly contrary to the preponderance of the evidence, requiring reversal and remand for
a new trial; 2) if this case is reversed, the entire case should be reversed, not just the damage
award; and 3) extenuating circumstances resulted in the circuit court not entering the order
granting a new trial until after the expiration of the thirty-day deadline. We affirm the January
6, 2014 judgment.
2
Cite as 2015 Ark. App. 146
Point I
For ease of discussion, we first address Whitey’s third point, contending that the trial
court’s untimely February 11, 2014 order granting a new trial should be given effect because
of extenuating bad-weather circumstances. We disagree.
Rule 59(b) of the Arkansas Rules of Civil Procedure provides:
(b) Time for Motion. A motion for a new trial shall be filed not later than 10 days
after the entry of judgment. A motion made before entry of judgment shall become
effective and be treated as filed on the day after the judgment is entered. If the court
neither grants nor denies the motion within 30 days of the date on which it is filed or treated as
filed, it shall be deemed denied as of the 30th day.
(Emphasis added.)
Rule 6 of the Arkansas Rules of Civil Procedure provides in pertinent part:
(a) Computation. In computing any period of time prescribed or allowed by these
rules, by order of the Court or by any applicable statute, the day of the act, event or
default from which the designated period of time begins to run shall not be included.
The last day of the period so computed shall be included, unless it is a Saturday, Sunday,
legal holiday, or other day when the clerk’s office is closed, in which event the period runs until
the end of the next day that the clerk’s office is open. When the period of time prescribed or
allowed is less than fourteen (14) days, intermediate Saturdays, Sundays, or legal
holidays shall be excluded in the computation. As used in this rule and Rule 77(c),
“legal holiday” means those days designated as a holiday by the President or Congress
of the United States or designated by the laws of this State.
(Emphasis added.)
On December 4, 2013, Whitey’s moved for JNOV or, alternatively, for a new trial,
i.e., before the judgment was entered. By judgment entered on January 6, 2014, Robinson
was awarded $25,000 in damages. On January 16, 2014, Whitey’s filed its notice of appeal.
On January 17, 2014, Robinson responded to Whitey’s motion for JNOV/new trial.
3
Cite as 2015 Ark. App. 146
Applying Rule 59(b) to these facts, we treat the motion for new trial as filed on the
day after judgment was entered, i.e., as filed on January 7, 2014. Thirty days after that falls
on Thursday, February 6, which would be the date that the order should have been deemed
denied. It was at that point that the trial court lost jurisdiction to act on the motion for a
new trial. However, the trial court entered an order granting the motion for new trial on
Tuesday, February 11. On February 18, 2014, Robinson filed his “amended notice of
appeal” from the February 11 order.
Whitey’s wants our court to take judicial notice of a winter storm in the Little Rock
area from February 5 through February 11, 2014, and surmise that travel was too treacherous
for the judge until February 11 (not even contending that the courthouse was closed), or,
alternatively, he wants us to remand for a factual determination on that issue, arguing:
Obviously, travel from the judge’s home to his office and back would have been
treacherous, at best, and likely was the reason he did not sign and then enter the order
granting the new trial until the weather improved on February 11, 2014, the date the
order was entered. If the court will not take judicial notice of the weather conditions
then the fair procedure would be to remand this case to take additional proof to
supplement and correct the record, as was previously requested by WTC in a motion
to this court.
(Emphasis added.)
Whitey’s acknowledges that the February 11 order “on its face would suggest that
it was entered a couple of days past the thirty (30) day deemed denied rule,” but wants us to
decide that the trial court’s order granting a new trial was timely filed because weather
prevented an earlier, timely entry under the rule. We decline to do so. Rules 59(b) and 6
of the Arkansas Rules of Civil Procedure are clear. The trial court lost jurisdiction to rule
4
Cite as 2015 Ark. App. 146
on the motion for new trial on February 6, and Whitey’s has not presented us with anything
that justifies a deviation from Rule 59(b) or that supports a remand to develop facts
concerning the winter storm. There is not even an assertion that the courthouse was closed
on any critical filing date, and the supposition that travel was likely treacherous for the judge
until February 11, 2014, is not pertinent under the rule.
Points II and III
We now return to the first two points raised by Whitey’s. In the first, it contends that
the jury erred in the amount of the recovery by improperly including consequential damages
as part of the award and that the verdict was clearly contrary to the preponderance of the
evidence, requiring reversal and remanding for a new trial. We disagree.
Our standard of review in these matters involves the following considerations:
A directed-verdict motion is a challenge to the sufficiency of the evidence, and
when reviewing the denial of a motion for a directed verdict, we determine whether
the jury’s verdict is supported by substantial evidence. Spann, [v. Lovett & Co., 2012
Ark. App. 107, 389 S.W.3d 77]. The same rule applies to motions for JNOV.
Gassman v. McAnulty, 2009 Ark. App. 471, 325 S.W.3d 897. Substantial evidence is
evidence that is of sufficient force and character that it will, with reasonable certainty,
compel a conclusion one way or the other, without having to resort to speculation
or conjecture. Spann, supra. When determining the sufficiency of the evidence, we
review the evidence and all reasonable inferences arising therefrom in the light most
favorable to the party on whose behalf judgment was entered. Id. We do not try issues
of fact but examine the record to determine whether there is substantial evidence to
support the jury’s verdict. Id. Thus, when testing the sufficiency of the evidence on
appellate review, we need only consider the testimony of appellees and evidence that
is most favorable to appellees. Id. We defer to the jury’s resolution of the issue unless
we can say that there is no reasonable probability to support the appellee’s version. Id.
Acker Constr. LLC v. Tran, 2012 Ark. App. 214, at 8-9, 396 S.W.3d 279, 287 (2012).
This case went to the jury on Robinson’s breach-of-contract claim and on Whitey’s
5
Cite as 2015 Ark. App. 146
counterclaim for truck-repair payment and truck-storage fees. The jury found in favor of
Robinson on both. The verdict form provides:
3. On Todd Robinson’s claim of Breach of Contract and Damages, do you find from
a preponderance of the evidence that Whitey’s Truck Center, Inc. breached its
contract with Todd Robinson?
____yes_____________YES ___________________NO
4. If the answer to Interrogatory No. 3 is YES, then please state the amount of
damages which you find that Todd Robinson is owed.
A. DAMAGES FOR LOSS OF EARNINGS OR PROFITS
$7,750 ;
B. DAMAGES FOR DAMAGE TO VEHICLE (INCLUDING LOSS OF USE)
$17,250 ;
(Emphasis added.) Additionally, the jury was given the following instruction:
If an interrogatory requires you to assess the damages of Todd Robinson, you must
then fix the amount of money which will reasonably and fairly compensate him for
any of the following elements of damage sustained which you find were proximately
caused by the fault of Whitey’s Truck Center, Inc. First, the value of any earnings,
profit, salary, or working time lost; and B, the difference in the fair market value of his
truck immediately before and immediately after the occurrence, plus an amount of
loss of use. In determining any difference in market value, you may take into
consideration the reasonable cost of repairs.
(Emphasis added.) Whitey’s did not object to the verdict forms or to this instruction. In
addition, it did not request the model instruction on consequential damages that explains the
“tacit agreement rule,” yet it relies upon that rule in urging reversal. We conclude that
Whitey’s did not properly preserve at trial the arguments it now wishes to assert on appeal.
6
Cite as 2015 Ark. App. 146
Likewise, although Whitey’s argues that it had no contractual obligation to Robinson when
his check to them bounced, we merely note that Whitey’s lost on its counterclaim seeking
payment for the truck repair and has not cross-appealed on that point.
Whitey’s also contends that the damages awards are not supported by the evidence
presented at trial. We disagree. Robinson testified that he is a brick mason; that he relies on
his truck for his livelihood; that he was without his truck for almost two years; that he lost
several jobs due to his lack of transportation and lost money because of the slowed
productivity; and that he had to rent a truck from a commercial company at $100/day and
from his brother at $50/day, thereby diminishing his earnings. The jury clearly credited his
testimony, and it constituted sufficient evidence on which the jury could determine his loss.
Further, there was testimony from two truck mechanics concerning the check valve and
failed bearings—i.e., that the check valve was missing from Robinson’s truck and the missing
check valve and the failed bearings caused engine damage, and refuting allegations that the
truck would not have started if the check valve was missing. We conclude that this
testimony constitutes sufficient evidence to support the jury’s damages verdict.
Because we have concluded that Whitey’s has not established a basis for reversal of the
January 6, 2014 judgment, its remaining point, seeking reversal of the entire case and not just
the damages award if we were to find reversible error regarding the damages award, is moot.
Affirmed.
VIRDEN and GRUBER, JJ., agree.
Ed Daniel, IV, P.A., by: Ed Daniel IV, for appellant.
Jeff Rosenzweig, for appellee.
7
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Reversed and Remanded in Part and Affirmed in Part and Opinion filed
November 30, 2004
Reversed and Remanded in Part and
Affirmed in Part and Opinion filed November 30, 2004.
In The
Fourteenth Court of Appeals
_______________
NO. 14-02-00998-CV
_______________
GENERAL STAR INDEMNITY
COMPANY, Appellant
V.
SPRING
CREEK VILLAGE APARTMENTS PHASE V, INC. AND
LASALLE NATIONAL BANK, TRUSTEE, Appellees
____________________________________________________
On Appeal from the 334th District Court
Harris County, Texas
Trial Court Cause No. 98‑28666
____________________________________________________
O P I N I O N
General Star Indemnity Company (AGeneral Star@) appeals a judgment in favor of
Spring Creek Village Apartments (ASpring Creek@) on the grounds that (1) the trial
court erred in granting partial summary judgment ordering that the appraisal
award was binding as to the amount of loss, (2) the evidence is insufficient to
support the jury=s finding that General Star failed to comply with the
insurance policy, (3) the trial court erred in directing a verdict on the issue
of mitigation of damages, (4) the trial court erred in rendering judgment on
the jury=s verdict that General Star violated
provisions of the Texas Insurance Code and the Deceptive Trade Practices Act (ADTPA@), (5) the trial court erred in
awarding damages based on replacement cost value, and (6) the trial court erred
in severing claims against Reliance Insurance Company. In a cross-point of error, Spring Creek
contends the trial court erred in rendering summary judgment against Spring
Creek on its common-law bad faith claim.
Because we find fact issues with regard to whether Spring Creek=s appraiser was impartial, we reverse
the judgment and remand for proceedings consistent with this opinion. We affirm the summary judgment on Spring
Creek=s bad faith claim.
Background
On February 10, 1998, a windstorm caused damage to the Spring
Creek Village Apartments. Spring Creek
had primary insurance coverage with Reliance Insurance Company of Illinois (AReliance@) for property damage and loss of
business income up to $1 million. Spring
Creek also had excess coverage exceeding the $1 million primary policy limit
through General Star. By its terms, the
General Star policy only applied after the coverage provided by Reliance was
exhausted. Otherwise, the General Star
policy followed the terms, conditions, and definitions of coverage and recovery
stated in the Reliance policy.
Spring Creek filed a claim for property damage and loss of
business income, as a result of the windstorm, with Reliance. Because Spring Creek and Reliance could not
agree on the amount of loss, Spring Creek invoked the appraisal provision of
the Reliance primary policy, which provides that if Reliance and Spring Creek
disagreed as to the amount of loss, either party could demand an
appraisal. Pursuant to the appraisal
provision, both parties were required to Aselect a competent and impartial
appraiser,@ and the two appraisers would select
an umpire. A decision agreed to by any
two of the three would be binding as to the amount of loss. Because General Star owed no obligation to
Spring Creek until the loss exceeded $1 million, General Star did not
participate in the appraisal process.
Spring Creek hired Steve Edwards d/b/a City Wide Construction
as its appraiser; Reliance hired John Lochridge, and Lynn Taylor was selected
as the umpire. Edwards estimated the
amount of loss to Spring Creek at $5,286,000.
Lochridge estimated the amount of loss at $367,842. The umpire issued an award that found
replacement cost value of the loss to be $2,105,790.98 and actual cash value to
be $1,566,673.51.
Reliance subsequently filed a declaratory judgment action
seeking to have the appraisal award declared invalid. Reliance contended the appraisal award
contained items not covered under the policy and that the umpire exceeded his
authority in making causation and coverage determinations. Spring Creek filed a counterclaim seeking
enforcement of the award. Several months
later, Spring Creek filed a third-party action against General Star. LaSalle National Bank (ALaSalle@), Spring Creek=s lender, intervened and sued
Reliance.[1]
In November 2000, the trial court granted a partial summary
judgment in favor of Spring Creek that the appraisal award was binding. The trial court=s ruling left undecided the question
of whether Spring Creek had failed to mitigate its damages. The trial court subsequently bifurcated the
trial of Spring Creek=s remaining causes of action.
Spring Creek=s claim that Reliance and General Star had breached their
contracts was tried separately from Spring Creek=s claim that the insurance companies
had violated provisions of the Insurance Code and the DTPA. In December 2000, the trial court granted a
summary judgment in favor of General Star that Spring Creek had no cause of
action against General Star for breach of the duty of good faith and fair
dealing.
In the first trial, the jury found in favor of Spring Creek
on its breach of contract claims and awarded damages for loss of business
income and attorneys= fees. The judgment
further awarded Spring Creek replacement cost value based on the appraisal
award. Following the first trial, a
Pennsylvania court declared Reliance insolvent and placed it in
liquidation. Pursuant to the
Pennsylvania court=s order, the Texas Commissioner of Insurance designated
Reliance as an impaired insurer. See
Tex. Ins. Code Ann. art. 21.28BC, ' 17 (Vernon Supp. 2004B05).
On Spring Creek=s motion, the trial court severed Reliance from the case and
permitted the extra-contractual claims to proceed against General Star. In the second trial, the jury found that
General Star violated provisions of the Texas Insurance Code and the DTPA. The trial court entered a final judgment in
which it awarded Spring Creek damages pursuant to the appraisal award,
penalties under the Insurance Code and the DTPA, and attorneys= fees.
Spring Creek=s Partial
Summary Judgment
In its first issue, General Star contends the trial court
erred in granting partial summary judgment that the appraisal award was
binding. Spring Creek filed a motion for
partial summary judgment seeking to enforce the provision of its insurance
contract that expressed the appraisal award is binding as to the amount of
loss. General Star responded to the
motion asserting fact issues with respect to whether (1) Spring Creek breached
its contract by failing to select an impartial appraiser, (2) the appraisal
award included damage that was excluded from coverage or not caused by the
storm, and (3) the umpire exceeded his authority under the policy. The trial court granted the partial summary
judgment, but left open the issue of whether Spring Creek had acted to mitigate
its damages.
Standard of Review
We review a traditional summary judgment to determine whether
the record establishes there is no genuine issue of material fact and the
movant is entitled to judgment as a matter of law. Tex.
R. Civ. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546,
548 (Tex. 1985). In deciding whether the
summary judgment record established the absence of a genuine issue of material
fact, we view as true all evidence favorable to the non-movant and indulge
every reasonable inference, and resolve all doubts, in its favor. Nixon, 690 S.W.2d at 548B49.
The non-movant can defeat summary judgment by producing evidence
sufficient to raise a fact issue. Walker
v. Harris, 924 S.W.2d 375, 377 (Tex. 1996).
An appraisal award made under the terms of an insurance
policy is generally binding as to the amount of loss. Gardner v. State Farm
Lloyds, 76 S.W.3d 140, 142 (Tex. App.CHouston [1st Dist.] 2002, no
pet.). An appraisal award may be
disregarded when it was (1) not made in substantial compliance with the policy,
(2) the result of fraud, accident, or mistake, or (3) made without authority. Id.; Wells v. Am. States Preferred
Ins. Co., 919 S.W.2d 679, 683 (Tex. App.CDallas 1996, writ denied). Although every reasonable presumption will
typically be made in favor of an appraisal award, in reviewing a summary
judgment this rule Amust yield to the degree its application conflicts with the
presumptions required to be made in favor of a non-movant.@
Hennessey v. Vanguard Ins. Co., 895 S.W.2d 794, 798 (Tex. App.CAmarillo 1995, writ denied).
Financial Interest of Spring Creek=s Appraiser
The insurance contract between Reliance and Spring Creek
contains an appraisal provision, which provides that if the parties disagree on
the amount of loss, Aeach party will select a competent and impartial appraiser.@
Attached to General Star=s response to Spring Creek=s motion for summary judgment is the
appraisal agreement entered into between Spring Creek and Steve Edwards d/b/a
City Wide Construction. In that
agreement, Spring Creek agrees to Acompensate City Wide for its time and
costs incurred in this process, for an amount not to exceed [five] (5%) percent
of the gross settlement amount.@ Spring Creek further
agreed to compensate City Wide for additional time and costs as follows: AIn the event that the minimum gross
settlement amount of the Spring Creek Village Apartments, Phase V., Inc=s loss is at least TWO MILLION
($2,000,000.00) DOLLARS, Spring Creek hereby agrees to reimburse City Wide for
its additional time and costs and hereby assigns those costs to City Wide, per
its final invoice, up to but not in excess of, Six (6%) percent of the gross
settlement amount. Additionally, for
every million dollars awarded above Two Million Dollars, City Wide will be entitled
to reimbursement for its time and costs for appraising that additional amount
but not in excess of another one (1%) percent of the gross settlement amount[.]@
Because Edwards had a financial interest in insuring the
appraisal award exceeded $2 million, General Star raised a fact issue with
regard to whether Edwards was impartial.
An appraiser with a financial interest in the outcome of the appraisal
is not impartial. Delaware
Underwriters v. Brock, 211 S.W. 779, 780B81 (Tex. 1919); cf. Gardner,
76 S.W.3d at 143 (in finding appraiser impartial, court noted he did not have a
financial interest in the claim); see also Central Life Ins. Co. v. Aetna
Cas. & Surety Co., 466 N.W.2d 257, 261B62 (Iowa 1991) (AThe appointment of an appraiser with
a concealed pecuniary interest in the outcome is a sufficient ground for
voiding the award as a matter of law without a showing of prejudice.@). The question of Edwards=s lack of impartiality raised a fact
question, which should have been submitted to a jury. If the jury finds the appraiser is impartial,
it follows that the appraisal award was not in compliance with the insurance
policy and is not binding.
Spring Creek contends all appraisers are Apartisans, within bounds,@ and Edwards=s financial interest in the outcome
of the appraisal does not show Edwards was impartial in contravention of the
insurance contract. Spring Creek
contends the contingent fee was merely a method to control the costs of the
appraiser by placing a cap on the amount Edwards could earn. While an appraiser may represent the party
appointing him, the addition of a pecuniary interest in the appraisal award
raises a fact issue with regard to Edwards=s impartiality.
Spring Creek further argues that if General Star has raised a
fact issue, it has not raised a genuine issue of material fact because
it failed to meet its burden of showing it was prejudiced by Edwards=s impartiality. The summary judgment proof shows Reliance=s appraiser determined the amount of
loss to be $367,842; Edwards found the amount of loss to be $5,286,000. Edwards=s fee increased if he estimated the
loss at over $2 million and increased further for each $1 million above $2
million. Taylor, the umpire, submitted
an affidavit in which he stated he relied, in part, on the appraisers= determinations of loss in issuing
his award. General Star, as an excess
insurer, would not be liable for any amount under $1 million. The disparity between the two appraisals is
sufficient to show that General Star was prejudiced if Edwards lacked
impartiality. We find General Star
raised a genuine issue of material fact with regard to whether Spring Creek=s appraiser was impartial in
compliance with the insurance policy. Therefore, the trial court erred in
granting partial summary judgment.
General Star=s Summary
Judgment
In a conditional cross-point, Spring Creek contends the trial
court erred in granting summary judgment dismissing Spring Creek=s claim that General Star breached
the duty of good faith and fair dealing.
General Star moved for summary judgment on Spring Creek=s common‑law bad faith claim on
the ground that the duty of good faith and fair dealing does not apply to an
excess carrier. No Texas court has
applied the duty of good faith and fair dealing to an excess insurer. Emscor Mfg., Inc. v. Alliance Ins. Group,
879 S.W.2d 894, 909 (Tex. App.CHouston [14th Dist.] 1994, writ denied). Spring Creek admits Texas law does not impose
a duty of good faith on an excess carrier, but contends, without citation to
authority, that we should impose this duty on General Star. As an intermediate court, we decline Spring
Creek=s invitation to forge a new cause of
action. Because Texas law does not
impose a duty of good faith and fair dealing on an excess carrier, we conclude
the trial court properly granted summary judgment. That portion of the trial court=s judgment is affirmed.
Conclusion
Because we find error in the partial summary judgment, we
reverse the remainder of the trial court=s judgment. General Star is an excess insurer and only
liable to Spring Creek if the amount of loss exceeds $1 million. The first jury trial on breach of contract
was premised on the summary judgment that the appraisal award was binding and
Spring Creek was entitled to recover more than $1 million. The second jury=s findings in the trial of Insurance
Code and DTPA violations were premised on the first jury=s finding that General Star breached
the contract. Therefore, until the
question of the binding nature of the appraisal award is determined, General
Star is not liable under its excess insurer policy. The judgment of the trial court is reversed
and remanded for proceedings consistent with this opinion. The summary judgment in favor of General Star
is affirmed.
/s/ Charles W. Seymore
Justice
Judgment rendered
and Opinion filed November 30, 2004.
Panel consists of Justices Fowler, Edelman and
Seymore. (Edelman, J., concurs in result
only.)
[1] After the
first trial, Spring Creek=s owner, Creekwood Landing Corporation, sold the
Spring Creek complex. Because LaSalle
had no further interest in the suit after the sale, it assigned its attorneys= fees award to Spring Creek.
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499 So.2d 840 (1986)
Delphine MEUS and Erith Meus, Appellants,
v.
EAGLE FAMILY DISCOUNT STORES, INC., a Florida Corporation, Appellee.
No. 85-2701.
District Court of Appeal of Florida, Third District.
August 12, 1986.
David C. Arnold, Miami, for appellants.
Richard E. Hardwick, Daniels and Hicks, Bambi G. Blum, Miami, for appellee.
Before HUBBART, BASKIN and DANIEL S. PEARSON, JJ.
ON MOTION TO DISMISS
DANIEL S. PEARSON, Judge.
The defendant-appellee moves to dismiss the plaintiffs' appeal as untimely. It asserts, in essence, that the trial court's entry of a directed verdict against the plaintiffs, rather than the later entry of judgment thereon, started the ten-day clock running for the plaintiffs and that, therefore, the plaintiffs' new trial motion filed *841 eighteen days after the directed verdict, being untimely, did not stay the time for taking an appeal. While we find the appellee's motion inventive and provocative, we conclude, as will be seen, that because a directed verdict is not tantamount to the return of the verdict, the motion to dismiss the appeal must be denied.
On September 12, 1985, during jury trial of this matter, the trial court, at the conclusion of the plaintiffs' case, granted the defendant's motion for directed verdict and immediately thereafter discharged the jury. The directed verdict was entered in the trial minutes on that date. The trial court signed a final judgment on the verdict on September 18, 1985, and filed the judgment on September 19, 1985. The plaintiffs served their motion for new trial on September 30, 1985, and the trial court denied it as untimely on November 4, 1985. The plaintiffs filed their notice of appeal on December 3, 1985.
The defendant's position is straightforward. It submits that the verdict was "returned" within the contemplation of Florida Rule of Civil Procedure 1.530(b)[1] on September 12, 1985, when the trial court entered a directed verdict in the defendant's favor. That being so, the argument goes, the ten-day period for service of the plaintiffs' motion for new trial began on that date, making the last permissible day for service of the motion September 23, 1985.[2] And since the motion for new trial was not served until September 30, 1985, it was, according to the defendant, untimely and thus did not toll the time for taking an appeal. Therefore, the defendant concludes, the plaintiffs' notice of appeal was required to be filed on or before October 14, 1985,[3] not December 3, 1985,[4] as it was.
In earlier times when a trial court decided that the outcome of the trial could not possibly be a matter of dispute among the jurors, its practice was to direct the jury through an instruction or charge to return a specific verdict. This process of directing the jury to find a mandated result caused "embarrassment to the jurors and to the court." Blume, Origin and Development of The Directed Verdict, 48 Mich.L.Rev. 555, 589 (1950) (Blume). Today, the practice has been discontinued although the lyric lingers on and courts enter "directed verdicts" without the formality of a jury returning the preordained verdict. Indeed, as Florida Rule of Civil Procedure 1.480(a) provides, "[t]he order directing a verdict is effective without any assent of the jury."
But form aside, a directed verdict is today, as it has always been, a substantive ruling that "no verdict of any kind is necessary when the judge determines that there is no issue for a jury to try." Blume, supra at 590. Like its pretrial counterpart the summary judgment the directed verdict is a ruling that a reasonable-minded jury could not differ as to the existence of a material fact, that therefore no factual determination is required, and that judgment must be entered for the movant as a matter of law. In this respect, the motion which triggers the ruling is indistinguishable from its more modern criminal counterpart, the motion for judgment of acquittal. See Fla.R.Crim.P. 3.380; Fed.R. Crim.P. 29. The difference between the names used in criminal and civil practice is "purely one of nomenclature," not one of substance. Wright, 2 Federal Practice and Procedure § 461 at 636 (Criminal) (2d ed. 1982).
*842 This judicial determination that there is "no issue for a jury to try," Blume, supra at 590, is, as we have noted, a determination that there is no verdict to be returned. Thus, despite its name, a directed verdict does not function as a verdict, and indeed is the very antithesis of one.[5]
That a directed verdict is not a species of a verdict is perhaps more readily seen when both occur in the same action as when the trial court, having initially denied a motion for directed verdict or having deferred ruling thereon, grants a renewed motion for directed verdict after the jury has rendered a verdict against the moving party.[6] Surely in that situation it is clear that the directed verdict cannot be deemed the return of the verdict. Simply stated, a verdict is "[t]he formal decision or finding made by a jury" concerning matters of fact, Black's Law Dictionary 1398 (5th ed. 1979); see also Menfi v. Exxon Co. U.S.A., 433 So.2d 1327, 1329 (Fla. 3d DCA 1983) ("a verdict ... is rendered by the jury"), not a judicial ruling that there is nothing for the jury to resolve.
Accordingly, the motion to dismiss appeal is
Denied.
NOTES
[1] Florida Rule of Civil Procedure 1.530(b) provides in pertinent part: "A motion for new trial or for rehearing shall be served not later than 10 days after the return of the verdict in a jury action or the date of filing of the judgment in a non-jury action."
[2] September 22, 1985, was a Sunday, and thus, the time for service would have been extended to the following non-holiday day. See Fla.R. Civ.P. 1.090(a).
[3] October 12 and 13, 1985, were, respectively, a Saturday and Sunday, and thus, the time for service would have been extended to Monday, October 14, 1985. See supra note 2.
[4] December 3, 1985, is within thirty days of the trial court's denial of the plaintiffs' motion for new trial as untimely on November 4, 1985.
[5] We acknowledge, of course, that the author's comment to Florida's directed verdict rule and the committee note to the comparable federal rule contain language which arguably suggests that a directed verdict is one type of verdict. See Author's Comment 1967 to Rule 1.480, 30A Fla. Stat. Ann. 299 (1985) (the directed verdict "enables the court to determine whether there was any question of fact to be submitted to the jury and whether any verdict other than the one directed would be erroneous as a matter of law." (emphasis supplied)); Notes of Advisory Committee on Rules to Fed.R.Civ.P. 50 ("The practice after the court has granted a motion for a directed verdict, requiring the jury to express assent to a verdict they did not reach by their own deliberations serves no useful purpose... ." (emphasis supplied)). The language is as imprecise as the continued use of the term directed verdict to describe a judicial ruling that obviates the need for a verdict, rather than directs one.
[6] The judgment entered upon such a motion is a judgment in accordance with the motion for directed verdict, although it is often mislabeled a judgment non obstante veredicto, j.n.o.v., or judgment notwithstanding the verdict. See McCabe v. Watson, 225 So.2d 346 (Fla. 3d DCA 1969); DeMendoza v. Board of County Commissioners, 221 So.2d 797 (Fla. 3d DCA 1969).
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