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TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-96-00690-CV
David S. Minter, Appellant
v.
Systex, Inc., Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 126TH JUDICIAL DISTRICT
NO. 96-02033-A, HONORABLE PAUL DAVIS, JUDGE PRESIDING
PER CURIAM
This is an appeal from a summary judgment in favor of appellee Systex, Inc. Appellant
David S. Minter asks this Court to determine whether the trial court properly granted summary judgment
in a suit for the alleged breach of a consulting agreement by concluding that the agreement was
unambiguous as a matter of law and that it had expired under its own terms. We will affirm the judgment
of the trial court.
SUMMARY OF FACTS
In May 1993, Minter entered into a consulting agreement with The Paddocks at Commons
Ford Corporation (the "Paddocks") (1) for the purpose of developing fourteen residential lots owned by the
corporation and located on Commons Ford Road in Travis County. (2) In addition to a consultant fee of
$4,200.00 per month for a period of twelve months, the agreement also provided Minter with the following
additional compensation: (1) the right to live in a house on the property; (2) an option to purchase that
house; and (3) a forty percent interest in the net profits received from the sale of each of the subdivided lots.
Pursuant to the terms of the agreement, Minter exercised his option to purchase a house.
In an effort to finance his purchase, a note was executed in the amount of $117,900 to the Paddocks. The
note was secured by a lien on the house and lot. Minter completed his work on the project but before he
was fully compensated, the Paddocks sold the development to Systex, which continued to market the
subdivided lots but declined to make any payments to Minter. Minter was unable to make continued
payments on the note and subsequently, the Paddocks foreclosed on the note causing Minter to lose his
equity in the property and the house. Minter filed suit against the Paddocks and its president, E. Lynn
Thompson, and against Systex, seeking an accounting and compensation under the agreement for work
performed prior to the sale. Systex responded by general denial and filed a motion for summary judgment
asserting that section 2.01 of the agreement, which sets forth the term of the agreement, absolves it of any
obligation to Minter. Summary judgment was granted in favor of Systex, and Minter appeals by asserting
two points of error in which he urges that (1) the contract bound Systex as a successor-in-interest, or, in
the alternative (2) a genuine issue of material fact exists therefore precluding summary judgment.
STANDARD OF REVIEW
The function of summary judgment is not to deprive a litigant of its right to a full hearing on
the merits of any real issue of fact but is to eliminate patently unmeritorious claims and untenable defenses.
Gulbenkian v. Penn, 252 S.W.2d 929, 931 (Tex. 1952). The standards for reviewing summary judgment
are well established: (1) the movant for summary judgment has the burden of showing that there is no
genuine issue of material fact and that it is entitled to judgment as a matter of law; (2) in deciding whether
there is a disputed material fact issue precluding summary judgment, evidence favorable to the nonmovant
will be taken as true; and (3) every reasonable inference must be indulged in favor of the nonmovant and
any doubts resolved in its favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49
(Tex. 1985). The purpose of the summary judgment rule is not to provide either a trial by deposition or
a trial by affidavit but to provide a method of summarily terminating a case when it clearly appears that only
a question of law is involved and that no genuine issue of material fact remains. Gaines v. Hamman, 358
S.W.2d 557, 563 (Tex. 1962).
Summary judgment is proper for a defendant if its summary judgment proof establishes,
as a matter of law, that there exists no genuine issue of material fact concerning one or more of the essential
elements of the plaintiff's cause of action. Gray v. Betrand, 723 S.W.2d 957, 958 (Tex. 1987); see
Valles v. Texas Comm'n on Jail Standards, 845 S.W.2d 284 (Tex. App.--Austin 1992, no writ).
Summary judgment is proper in cases involving the construction of a written instrument when the instrument
is determined to be unambiguous. See Preston Ridge Fin. Servs. v. Tyler, 796 S..2d 772, 775 (Tex.
App.--Dallas 1990, writ denied). Whether a contract is ambiguous is a question of law for the court to
decide by looking at the contract as a whole in light of the circumstances present when the contract was
entered. Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983).
ANALYSIS
In Minter's first point of error, he asserts that the trial court erred in granting Systex's
motion for summary judgment because, as a matter of law, the contract at issue bound Systex as a
successor-in-interest. In support of his argument, Minter relies on section 5.03 of the contract which
provides the following
:
This Agreement shall be binding on and inure to the benefit of the respective heirs,
successors-in-interest, executors, administrators of the parties, except to the extent of
any contrary provision in this Agreement. For purposes of this Agreement, successors-in-interest shall be the surviving corporation in the event of the merger of any party hereto,
the shareholders of any party thereto in the event of dissolution, and the purchaser in the
event of a sale of assets by any party hereto.
(Emphasis added.) We can not construe the meaning of this provision without also considering the
agreement in its entirety. See Universal C.I.T. Credit Corp. v. Daniel, 243 S.W.2d 154, 158 (Tex.
1951). No single provision taken alone will be given controlling effect; rather, all of the provisions must
be considered with reference to the whole instrument. Myers v. Gulf Coast Minerals Management
Corp., 361 S.W.2d 193, 196 (Tex. 1962).
Section 2.01 addresses the term of the agreement and provides as follows:
The term of this Agreement shall be for so long as Company shall own any of the
Properties or for the duration of Consultant's life, whichever comes first, commencing on
the effective date hereof.
(Emphasis added.) Courts must fa5vor an interpretation that affords some consequence to each part of
the instrument so that none of the provisions will be rendered meaningless. Coker v. Coker, 650 S.W.2d
391, 394 (Tex. 1983). In harmonizing these provisions, terms stated earlier in an agreement must be
favored over subsequent terms. Id. at 394.
The plain language of section 2.01 provides that the consulting agreement between the
parties terminates upon the alienation of all of the properties owned by the Paddocks. The record that was
before the trial court clearly demonstrates that the basis of Minter's claims was the Paddocks' sale of their
"principal assets" to Systex and that those assets included the properties at issue. We, therefore, conclude
that section 2.01 is clear and unambiguous in its meaning that the terms of the consulting agreement
terminated upon the sale of the properties at issue to Systex. Minter's assertion that Systex is a successor-in-interest to the provisions of the agreement fails because section 5.03 specifically provides that it is only
effective to the extent that it is not in conflict with any contrary provision in the agreement. Because we
have previously concluded that section 2.01 is clear and unambiguous, we also conclude that its provisions
are controlling.
The trial court correctly concluded that the provisions of the consulting agreement are
unambiguous as a matter of law. Minter's first point of error is overruled. (3)
CONCLUSION
The judgment of the trial court is affirmed.
Before Chief Justice Carroll, Justices Aboussie and B. A. Smith
Affirmed
Filed: May 1, 1997
Do Not Publish
1. The Paddocks at Commons Ford is a defendant in trial court cause number 96-02033, Minter
v. The Paddocks at Commons Ford, et. al., from which this case was severed.
2. Although the agreement was subsequently modified, the modifications do not affect the primary
obligation that formed the basis of Minter's suit.
3. Because we have concluded that the provisions of the agreement expired by its own terms, we
decline to address Minter's second point of error.
57, 958 (Tex. 1987); see
Valles v. Texas Comm'n on Jail Standards, 845 S.W.2d 284 (Tex. App.--Austin 1992, no writ).
Summary judgment is proper in cases involving the construction of a written instrument when the instrument
is determined to be unambiguous. See Preston Ridge Fin. Servs. v. Tyler, 796 S..2d 772, 775 (Tex.
App.--Dallas 1990, writ denied). Whether a contract is ambiguous is a question of law for the court to
decide by looking at the contract as a whole in light of the circumstances present when the contract was
entered. Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983).
ANALYSIS
In Minter's first point of error, he asserts that the trial court erred in granting Systex's
motion for summary judgment because, as a matter of law, the contract at issue bound Systex as a
successor-in-interest. In support of his argument, Minter relies on section 5.03 of the contract which
provides the following
:
This Agreement shall be binding on and inure to the benefit of the respective heirs,
successors-in-interest, executors, administrators of the parties, except to the extent of
any contrary provision in this Agreement. For purposes of this Agreement, successors-in-interest shall be the surviving corporation in the event of the merger of any party hereto,
the shareholders of any party thereto in the event of dissolution, and the purchaser in the
event of a sale of assets by any party hereto.
(Emphasis added.) We can not construe the meaning of this provision without also considering the
agreement in its entirety. See Universal C.I.T. Credit Corp. v. Daniel, 243 S.W.2d 154, 158 (Tex.
1951). No single provision taken alone will be given controlling effect; rather, all of the provisions must
be considered with reference to the whole instrument. Myers v. Gulf Coast Minerals Management
Corp., 361 S.W.2d 193, 196 (Tex. 1962).
Section 2.01 addresses the term of the agreement and provides as follows:
The term of this Agreement shall be for so long as Company shall own any of the
Properties or for the duration of Consultant's life, whichever comes first, commencing on
the effective date hereof.
(Emphasis added.) Courts must fa5vor an interpretation that affords some consequence to each part of
the instrument so that none of the provisions will be rendered meaningless. Coker v. Coker, 650 S.W.2d
391, 394 (Tex. 1983). In harmonizing these provisions, terms stated earlier in an agreement must be
favored over subsequent terms. Id. at 394.
The plain language of section 2.01 provides that the consulting agreement between the
parties terminates upon the alienation of all of the properties owned by the Paddocks. The record that was
before the trial court clearly demonstrates that the basis of Minter's claims was the Paddocks' sale of their
"principal assets" to Systex and that those assets included the properties at issue. We, therefore, conclude
that section 2.01 is clear and unambiguous in its meaning that the terms of the consulting agreement
terminated upon the sale of the properties at issue to Systex. Minter's assertion that Systex is a successor-in-interest to the provisions of the agreement fails because section 5.03 specifically provides that it is only
effective to the extent that it is not in conflict with any contrary provision in the agreement. Because we
have previously concluded that section 2.01 is clear and unambiguous, we also conclude that its provisions
are controlling.
The trial court correctly concluded that the provisions of the consulting agreement are
unambiguous as a matter of law. Minter's first point of error is overruled. (3)
CONCLUSION
The judgment of the trial court is affirmed.
Before Chief Justice Carroll, Justices Aboussie and B. A. Smith
Affirmed
Filed: May 1, 1997 | {
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} |
NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
IN RE: MH2018-004459
No. 1 CA-MH 18-0061
FILED 6-13-2019
Appeal from the Superior Court in Maricopa County
No. MH2018-004459
The Honorable Thomas Marquoit, Judge Pro Tempore
AFFIRMED
COUNSEL
Maricopa County Attorney’s Office, Phoenix
By Anne C. Longo, Joseph J. Branco
Counsel for Appellee
Maricopa County Legal Defender’s Office, Phoenix
By Anne H. Phillips
Counsel for Appellant
IN RE MH2018-004459
Decision of the Court
MEMORANDUM DECISION
Judge Maria Elena Cruz delivered the decision of the Court, in which
Presiding Judge Jennifer B. Campbell and Judge James B. Morse Jr. joined.
C R U Z, Judge:
¶1 Appellant appeals the superior court’s order committing him
to involuntary treatment for a period not to exceed 365 days, with inpatient
treatment not to exceed 180 days. Appellant argues the order should be
vacated because he enjoyed a confidential professional-client relationship
with one of two acquaintance witnesses who testified at the hearing. For
the following reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
¶2 Appellant was arrested and charged with felony criminal
damage for throwing rocks at a Phoenix Public Library window. Following
a Rule 11 evaluation and participation in the Maricopa County Correctional
Health Services Restoration to Competency Program, in the Final
Competency Report the doctors concluded Appellant was not competent to
stand trial and not restorable. The superior court ordered the criminal
charges dismissed and that Appellant be transported to Desert Vista
Hospital for psychiatric evaluation.
¶3 The county attorney filed an application for involuntary
evaluation, pursuant to the superior court’s order. After evaluating
Appellant, one treating doctor filed a petition for court-ordered treatment
alleging that Appellant was persistently or acutely disabled and unwilling
to accept voluntary treatment. As required by Arizona Revised Statutes
(“A.R.S.”) section 36-544(B), the petition was supported by the affidavits of
Drs. H. and G. Their probable diagnoses were “Schizoaffective Disorder”
and “Unspecified Schizophrenia Spectrum and Other Psychotic Disorder.”
Both doctors concluded that Appellant required inpatient psychiatric
treatment and attached addendums to the affidavits explaining how
Appellant was persistently or acutely disabled.
2
IN RE MH2018-004459
Decision of the Court
¶4 In the affidavit, Dr. H. explained Appellant’s thought process
was “grossly disorganized and loose” and this “thought content included
paranoia, bizarre delusions, and ideas of reference.” Dr. H. also noted
Appellant’s history of non-compliance with medication. Dr. H. stated in
the addendum Appellant is “currently suffering from symptoms of severe
psychosis,” which made him “unable to make an informed decision
regarding treatment.”
¶5 In the second affidavit, Dr. G. explained that Appellant had
“difficulty maintaining a coherent thought” and showed “loosening of
associations.” Dr. G. also explained Appellant had “numerous symptoms
of psychosis,” including “hallucinations, delusions, and disorganization of
thought and speech.” Further, Dr. G. noted in the addendum that
Appellant refused medication, not recognizing the severity of Appellant’s
illness.
¶6 The court held a hearing on the petition for court-ordered
treatment on July 27, 2018. Two witnesses testified at the hearing, including
B.O., a Desert Vista employee who observed and treated Appellant while
he was a patient, and J.D., a mental health associate with Maricopa County
Correctional Health Services. Appellant objected to J.D. testifying as an
acquaintance witness, arguing J.D. had a confidential professional-client
relationship with Appellant pursuant to A.R.S. § 32-3283(A). The court
allowed J.D.’s testimony, finding she did not provide behavioral health
services to Appellant. The court accepted Appellant’s belief that his
conversation with J.D. was confidential, but found J.D. reliable when she
testified that Appellant signed a confidentiality waiver at intake when
booked in the jail.
¶7 Based on the evidence presented, the court found by clear and
convincing evidence that as a result of a mental disorder, Appellant was
persistently or acutely disabled, in need of psychiatric treatment, and
unwilling or unable to accept treatment voluntarily. The court also found
there were “no appropriate and available alternatives other than court
ordered treatment at this time.” The court ordered Appellant to undergo a
combined inpatient/outpatient treatment program for no longer than 365
days, with a maximum inpatient treatment of 180 days.
¶8 Appellant timely appealed. We have jurisdiction pursuant to
A.R.S. §§ 12-2101(A)(10)(a) and 36-546.01.
3
IN RE MH2018-004459
Decision of the Court
DISCUSSION
¶9 On appeal, Appellant does not challenge the physicians’
affidavits or conclusions. Appellant argues only that the involuntary
treatment order should be vacated because the court erred by allowing
improper acquaintance witness testimony. We disagree.
¶10 We review the facts in the light most favorable to upholding
the superior court’s judgment and will not set aside the court’s findings
unless clearly erroneous. In re MH 2008-002596, 223 Ariz. 32, 35, ¶ 12 (App.
2009) (citation omitted). Because involuntary treatment strongly implicates
the patient’s liberty interests, “statutory requirements must be strictly
construed and followed.” Id. (citation omitted). We review issues of
statutory interpretation de novo. In re MH 2001-001139, 203 Ariz. 351, 353,
¶ 8 (App. 2002).
¶11 Appellant contends that J.D. was not a qualified acquaintance
witness because she had a professional-client relationship with Appellant
under A.R.S. § 32-3283(A), and testifying would violate confidentiality.
Section 32-3283(A) states, a
confidential relationship between a client and a licensee, . . .
is the same as between an attorney and a client. Unless a
client waives this privilege in writing or in court testimony, a
licensee shall not voluntarily or involuntarily divulge
information that is received by reason of the confidential
nature of the behavioral health professional-client
relationship.
Section 32-3251(2) defines client as a “patient who receives behavioral
health services from a person licensed pursuant to this chapter;” and A.R.S.
§ 32-3251(8) provides, the “[p]ractice of behavioral health” includes
“professional counseling.”
¶12 Under A.R.S. § 36-539(B), evidence presented at the treatment
hearing “shall include the testimony of two or more witnesses acquainted
with the patient at the time of the alleged mental disorder.” The
acquaintance witness requirement is designed to supplement the
psychiatric evaluations with an “informal, day-to-day observation of [the
patient],” to “give the court a perspective of the patient different from that
of the professionals who examined the patient as part of the commitment
evaluation process.” MH 2001-001139, 203 Ariz. at 355, ¶¶ 24-25.
Acquaintance testimony of medical personnel who are not part of the
statutorily defined evaluation team satisfies the requirements under A.R.S.
4
IN RE MH2018-004459
Decision of the Court
§ 36-539(B). See In re Commitment of an Alleged Mentally Disordered Person,
MH-1425, 181 Ariz. 290, 293 (1995); In re MH 2001-001139, 203 Ariz. at 355,
¶¶ 24-25.
¶13 J.D. was one of two acquaintance witnesses; she worked as a
mental health associate at the Lower Buckeye Jail. J.D. testified that during
Appellant’s stay at the unit, she met with him once for five minutes in the
medical clinic, and asked about his sleep, appetite, and mood. This meeting
was to check in with Appellant and ensure “safety and stability in the jail
setting for the inmates,” not to provide Appellant counseling or
psychotherapy. During their meeting, she observed bizarre behavior, and
believed Appellant needed mental health stabilization. Based on her
observations, she concluded that he was not capable of getting help on his
own. J.D. was not part of the statutorily defined evaluation team. See MH
2001-001139, 203 Ariz. at 355, ¶ 23. Nothing in the record suggests that J.D.
provided behavioral health services to Appellant thereby establishing a
confidential relationship. Nor does the record suggest that J.D. and
Appellant’s interaction rose to the level of behavioral health services. And
Appellant cites no authority or support in the record suggesting otherwise.
Accordingly, the superior court did not err.
¶14 Appellant next argues the superior court erred because “the
petitioner only presented one acquaintance witness who qualified under
A.R.S. § 36-539(B).” Because we conclude that J.D.’s testimony met the
statutory standard and the superior court did not err by allowing her
testimony, the A.R.S. § 36-539(B) requirement of two or more acquaintance
witnesses is met and Appellant’s argument fails.
CONCLUSION
¶15 For the foregoing reasons, we affirm.
AMY M. WOOD • Clerk of the Court
FILED: AA
5
| {
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} |
834 F.2d 1277
24 Fed. R. Evid. Serv. 370
UNITED STATES of America, Plaintiff-Appellee,v.Willie Joseph CAUSEY, Jr., Defendant-Appellant.
No. 86-1992.
United States Court of Appeals,Sixth Circuit.
Argued Oct. 8, 1987.Decided Dec. 8, 1987.Rehearing and Rehearing En Banc Denied Jan. 25, 1988.
Martin Geer (argued), Ann Arbor, Mich., for defendant-appellant.
Michael J. Lavoie, Asst. U.S. Atty., Detroit, Mich., Phyllis M. Golden, Jane Shallal (argued), for plaintiff-appellee.
Before KEITH and MILBURN, Circuit Judges, and EDWARDS, Senior Circuit Judge.
MILBURN, Circuit Judge.
1
Defendant-appellant Willie Joseph Causey, Jr., appeals his conviction for armed bank robbery in violation of 18 U.S.C. Sec. 2113(a) and (d)(2). The principal arguments on appeal are: (1) whether the government's violation of Rule 12.1 of the Federal Rules of Criminal Procedure mandates a new trial, (2) whether the prosecution was permitted to conduct improper impeachment and vouching of its witnesses without limiting instructions, (3) whether the prosecutorial misconduct throughout the trial denied Causey a fair trial, (4) whether the pretrial and in-court identifications should have been excluded, and (5) whether Causey was denied a fair trial because of his joinder with other codefendants. For the reasons that follow, we affirm.
I.
2
On March 21, 1986, at 10:30 a.m., four men robbed the Michigan National Bank of Macomb, in Warren, Michigan. One of the men, Kevin Crumbie, entered the area behind the teller cage while a second man, Aundray Bradley, jumped onto teller counter number two. Several witnesses identified a third man, who stood against the west wall underneath a clock, as defendant Causey. The man identified as Causey was wearing a Detroit Tigers baseball cap and was observed pointing a sawed-off shotgun at those inside the bank. The fourth man, whose identity is unknown, stood in the doorway as a lookout. None of the men's faces were concealed in any manner.
3
After the robbery, the four men exited the bank through the same door from which they entered, taking with them over $20,000.00 in cash. They sped away in a brown compact car, driving south toward Detroit. Several bank customers followed the car and obtained the license plate number. While following the brown car, they observed red powder filling the inside of the car and blowing out of the windows, as a red dye pack in the money they had stolen exploded. At that point, apparently stunned by the explosion, the robbers inside the car began to throw stolen money out the car's windows and onto the street.
4
On April 17, 1986, the defendant and the two others who were identified were indicted by a federal grand jury for the bank robbery. A jury trial commenced on June 11, 1986. Several different witnesses were able to provide eyewitness identification of Causey as the man under the clock wearing the Tigers baseball cap.
5
Kathleen Firestone, the bank's customer service representative, testified that she could identify the person standing under the clock. Although unable to identify anyone in a photo array, she was able to positively identify Causey among the three defendants sitting in the courtroom as the man who stood underneath the clock.
6
Tamara Furnari, who was working the drive-in window on the morning of the robbery, selected Causey out of a photographic array, indicating that he strongly resembled the man standing underneath the clock. She was also able to make a positive in-court identification by pointing out Causey among the three men in the courtroom as the robber underneath the clock.
7
Two other tellers were able to identify Causey out of a photo array, as well as in court, as the man standing underneath the clock. Another teller testified that she was able to get a good look at the face of the man standing underneath the clock holding a shotgun, as he stood directly in front of her, and she pointed Causey out in the courtroom as the man under the clock.
8
A police investigation revealed that the license plate number taken from the brown compact car was registered to Joseph Anderson of Detroit for a 1979 Plymouth automobile. However, FBI agents were unsuccessful in locating the car. After talking to Anderson, the FBI agents found the car disabled and absent any license plate. Anderson, who had known Causey for almost twenty years, indicated that Causey had come to his house the evening before the robbery looking for codefendant Bradley, who was living with Anderson at the time.
9
Defendants Crumbie and Bradley were seen together by a number of people, both on the day of the robbery and several days afterward, driving a brown-colored car and in possession of large sums of money. The day after the robbery, Causey was observed by Martin Hall sitting inside a parked car and later driving away with defendant Crumbie.
10
On March 23, 1986, Detroit police arrested defendant Bradley and recovered a brown paper bag containing a revolver and Bradley's identification. A telephone number assigned to Anita Jones was written on the exterior of this brown paper bag. Jones, who knew Bradley, indicated that she had not heard from nor seen him in over three years. However, proof was introduced that Causey used Jones' telephone number as a location where he could have telephone messages taken.
11
In his defense, Causey relied primarily upon the alibi testimony of Aubrey Jackson, who testified that Causey was with him at the time of the robbery. However, on the day before Jackson was to testify, his wife, Maxine Jackson, allegedly called the FBI and requested that they remind her husband of the penalties for perjury. She further stated that her husband had told her that he had been informed by Causey of the bank robbery, and that Causey had given her husband $50.00 for repayment of a debt, plus an additional $100.00 allegedly taken in the robbery.
12
Mrs. Jackson allegedly further stated that she and other family members had attempted to talk to her husband concerning his testimony, and that she was not certain of what her husband intended to say when he was called to testify on Causey's behalf. When asked whether or not she would be willing to testify, Mrs. Jackson responded that she was fearful that the fourth robber, whom she also knew, might harm either her or her child, as he had previously threatened her son. She further indicated that family members were still talking to her husband and that her testimony might not be needed.
13
After her husband's testimony on July 23, 1986, that Causey was with him at the time of the robbery, the prosecution sought to obtain Mrs. Jackson's testimony. When the prosecutor attempted to subpoena her, Mrs. Jackson would neither answer the door nor acknowledge the presence of the officers. The next day, July 24, 1986, Causey's counsel was notified about Mrs. Jackson. The district court then issued a bench warrant and had her brought before the court. Causey's attorney did not object to lack of notice nor request a continuance.
14
When called as a witness, Mrs. Jackson claimed that she did not remember any conversation with the FBI nor any conversation concerning what her husband told her. After her testimony, the government called FBI Agent James Harrington, the agent who took Mrs. Jackson's telephone call, and he testified as to what Mrs. Jackson had told him over the telephone.
15
We also note from the record that during the course of the trial, alleged threats were made against many of the government's witnesses. It was unclear whether the alleged threats were being made by the unknown bank robber or by the defendants. As a result of the alleged threats, however, the district judge had Causey's telephone privileges revoked.
16
After several days of testimony, the jury convicted all three defendants. In this appeal, defendant Causey presents numerous issues for our review. As earlier indicated, we find all of them to be without merit.
II.
A. Noncompliance with Rule 12.1
17
Causey claims that the trial court erred in allowing testimony of a government alibi rebuttal witness when Rule 12.1 of the Federal Rules of Criminal Procedure was technically violated. Rule 12.1 provides in relevant part:(a) NOTICE BY THE DEFENDANT. Upon written demand of the attorney for the government stating the time, date, and place at which the alleged offense was committed, the defendant shall serve within ten days, or at such different time as the court may direct, upon the attorney for the government a written notice of the defendant's intention to offer a defense of alibi. Such notice by the defendant shall state the specific place or places at which the defendant claims to have been at the time of the alleged offense and the names and addresses of the witnesses upon whom the defendant intends to rely to establish such alibi.
18
"[O]nce the government has requested notice of a defendant's alibi defense, both the defendant and the government are under a duty to disclose the names and addresses of its witnesses on the alibi issue." United States v. Wood, 780 F.2d 555, 560 (6th Cir.) (per curiam), cert. denied, 475 U.S. 1111, 106 S.Ct. 1522, 89 L.Ed.2d 920 (1986). Further, "[b]oth parties are also under a continuing duty 'promptly' to disclose any such information discovered prior to or during trial." Wood, 780 F.2d at 560; Fed.R.Crim.P. 12.1(c).
19
The sanction for failing to comply is provided in Rule 12(d), which provides in relevant part:
20
(d) FAILURE TO COMPLY. Upon the failure of either party to comply with the requirements of this rule, the court may exclude the testimony of any undisclosed witness offered by such party as to the defendant's absence from or presence at the scene of the alleged offense.
21
However, the rule provides that "[f]or good cause shown, the court may grant an exception to any of the requirements of subdivisions (a) through (d) of this rule." Fed.R.Crim.P. 12(e).
22
In the present case, there is no dispute that the government did not technically comply with Rule 12.1. However, Causey did not object to the use of the testimony at the time it was given.1 In the absence of a timely and proper objection, Causey's claim will be reviewed only to the extent that it constitutes plain error under Fed.R.Crim.P. 52(b). United States v. Ortega-Chavez, 682 F.2d 1086 (5th Cir.1982). In Wood, after noting that a contemporaneous objection is generally required, this court held that "[b]ecause of the explicit nature of the government's obligation under Fed.R.Crim.P. 12.1, and because the Supreme Court has ruled that reciprocal disclosure by the government may at least to some extent be constitutionally required in a notice-of-alibi rule, we discussed the merits of defendant's claim." Wood, 780 F.2d at 560 n. 5. (citation omitted). However, implicit in our use of the abuse of discretion standard in Wood is a recognition that the trial judge in that case was on notice of an objection to the use of alibi rebuttal testimony. This is the only way an abuse of discretion standard of review could be properly used. From the record in the present case, there was no objection of any sort, and, therefore, the trial judge was unaware of any objection to the evidence at the time it was admitted. In the absence of any objection of any kind, we are not willing to find that the trial court should have sua sponte excluded the evidence absent any indication that failure to do so constituted plain error.
23
Plain errors are limited to those harmful ones that are so rank that they should have been apparent to the trial judge without objection, or that strike at the fundamental fairness, honesty, or public reputation of the trial. United States v. Perez, 651 F.2d 268 (5th Cir.1981); see also United States v. Mendez-Ortiz, 810 F.2d 76 (6th Cir.1986), cert. denied, --- U.S. ----, 107 S.Ct. 1384, 94 L.Ed.2d 697 (1987). We do not find plain error.
24
Assuming, arguendo, that we were to apply the abuse of discretion standard of review employed by this court in Wood, we find adequate support in the record for the trial court's determination, in ruling upon defendant Causey's motion for a new trial, that under the totality of the circumstances the government had good cause for noncompliance with Rule 12.1, and, therefore, the government's noncompliance would be excused pursuant to the exception contained in Rule 12.1(e).2 Initially, we note that Rule 12.1(d) provides that the trial court may exclude testimony if there is a failure to comply with the rule. Thus, exclusion "is neither mandatory nor absolute under the rule in every instance." United States v. Carter, 756 F.2d 310, 311 (3d Cir.1985), cert. denied, --- U.S. ----, 106 S.Ct. 3307, 92 L.Ed.2d 721 (1986).
25
In the present case, notice was provided within forty-eight hours of the time the government became aware of Mrs. Jackson's potential testimony, and within twenty-four hours of the government's decision to call her. Further, the record indicates that threats were being made to witnesses in an effort to preclude their testimony. In such a situation, the physical safety and protection of potential witnesses constitutes a proper consideration of a trial court in determining whether good cause exists to justify nondisclosure of witnesses to opposing counsel and thus noncompliance with Rule 12.1. See United States ex rel. Veal v. DeRobertis, 693 F.2d 642 (7th Cir.1982).
26
While it is possible that Causey may have been prejudiced by the government's noncompliance with Rule 12.1, the failure of Causey's counsel to contemporaneously object to the admission of the testimony, his failure to request a continuance, his failure to voir dire the witness prior to her testimony, and the fact that no motion to strike the testimony was made militates against any presumption of prejudice. At the hearing on defendant Causey's motion for a new trial, the trial judge, after considering all the circumstances, found that the government first became aware of Mrs. Jackson's potential as an alibi rebuttal witness on July 22, 1986, the day before her husband was to testify. The next day, the 23rd, the government decided to call Mrs. Jackson as a witness and unsuccessfully attempted to subpoena her. The trial court properly concluded that, as the case was moving fast at the time, the government had adequate cause for failing to disclose until the morning of July 24, 1986. Under the totality of the circumstances, the trial court did not abuse its discretion in finding an exception in admitting Mrs. Jackson's testimony pursuant to Rule 12.1(e).
B. Improper Impeachment
27
The defendant also claims that the district judge committed reversible error in allowing the government to call FBI Agent Harrington to impeach Mrs. Jackson, the government's alibi rebuttal witness. When the government called Agent Harrington, Causey objected on the grounds that this was improper because it was impeachment of impeachment. However, "[u]nder Rule 607 of the Federal Rules of Evidence, the credibility of a witness can be attacked by any party, including the party calling the witness." United States v. Townsend, 796 F.2d 158, 162 (6th Cir.1986).
28
On appeal, Causey now argues that the testimony of Agent Harrington was hearsay and therefore inadmissible. In essence, Causey argues that as Mrs. Jackson claimed only an inability to recall, the testimony of Agent Harrington was therefore not technically inconsistent with her statement. That contention is without merit. A "trial judge has considerable discretion in determining whether testimony is 'inconsistent' with prior statements[,]" United States v. Dennis, 625 F.2d 782, 795 (8th Cir.1980), and inconsistencies can be found in changes in positions implied through silence or a claimed inability to recall. United States v. McCrady, 774 F.2d 868, 873 (8th Cir.1985); United States v. Rogers, 549 F.2d 490, 495-96 (8th Cir.1976), cert. denied, 431 U.S. 918, 97 S.Ct. 2182, 53 L.Ed.2d 229 (1977). Therefore, the district judge properly admitted the testimony of Agent Harrington reiterating what Mrs. Jackson told him as her prior statement constituted a statement inconsistent with her testimony and, therefore, proper impeachment. See Fed.R.Evid. 613.
C. Improper Vouching
29
Defendant Causey also argues that the leading nature of the questions concerning the prior inconsistent statement upon which Mrs. Jackson was examined and the later testimony of FBI Agent Harrington constituted improper vouching as it improperly put the credibility of the United States Attorney's office in issue in the trial. Again, the defendant's counsel did not object to this testimony or the questioning at the trial. Therefore, our review is limited to whether plain error occurred.
30
"The test for improper vouching is whether the jury could reasonably believe that the prosecutor was indicating a personal belief in the witness' credibility." United States v. Dennis, 786 F.2d 1029, 1046 (11th Cir.1986) (quoting United States v. Sims, 719 F.2d 375, 377 (11th Cir.1983), cert. denied, 465 U.S. 1034, 104 S.Ct. 1304, 79 L.Ed.2d 703 (1984)). Upon a review of the record, we find that the testimony was not so clearly improper vouching that the trial court should have sua sponte moved to exclude the testimony and questioning. If such did constitute improper vouching, it would be impossible for any witness to be questioned at any trial concerning an inconsistent statement made to a government agent. Therefore, we find no merit in the defendant's contention.
D. Prosecutorial Misconduct
31
The defendant also claims that the prosecutor breached the standards of proper prosecutorial conduct by (1) deliberately misstating to the jury its permissible use of impeachment evidence; (2) deliberately withholding the identity of a crucial witness and witness statements; and (3) improperly interjecting the credibility of the United States Attorney's office in the examination of Maxine Jackson and the subsequent impeachment testimony of the FBI agent. As we have already held that the second and third incidents of alleged prosecutorial misconduct were not improper, we will now consider the prosecutor's allegedly improper final argument.
32
In final argument, with reference to the defendant, the prosecutor stated:
33
PROSECUTOR: He made a statement to Aubrey Jackson, as his wife stated, he made a statement that he robbed a bank.
34
DEFENSE COUNSEL: Objection. There is no statement that he made a statement to his wife. She denied that.
35
THE COURT: The jury has heard the testimony.
36
PROSECUTOR: Defendant Causey made a statement to Aubrey Jackson. Told him that he robbed the bank. Told him about the dye pack exploding, he told him about the chase and he gave him an extra hundred dollars, and that was in March of 1986. He furthermore had a wad of money on him at the time.
37
Thus, the prosecutor improperly argued impeachment testimony as substantive fact.
38
It is important to note that when the prosecutor misspoke, the defense counsel did not object on the grounds that the evidence could only be used to impeach Mrs. Jackson's credibility and not for any substantive purpose. "It is this Court's inveterate rule not to reverse on grounds not raised in the district court." United States v. McDowell Contractors, Inc., 668 F.2d 256, 257 (6th Cir.1982) (per curiam). See United States v. Cardinal, 782 F.2d 34, 36-37 (6th Cir.), cert. denied, 476 U.S. 1161, 106 S.Ct. 2282, 90 L.Ed.2d 724 (1986). Therefore, our review is limited to whether or not plain error occurred. Id.
39
As the Supreme Court noted in United States v. Young, 470 U.S. 1, 105 S.Ct. 1038, 84 L.Ed.2d 1 (1985), "the adversary system permits the prosecutor to 'prosecute with earnestness and vigor[,]' " and a prosecutor may " 'strike hard blows' " as long as he does not " 'strike foul ones.' " Young, 470 U.S. at 7, 105 S.Ct. at 1042 (quoting Berger v. United States, 295 U.S. 78, 55 S.Ct. 629, 79 L.Ed. 1314 (1935)). "[A] criminal conviction is not to be lightly overturned on the basis of a prosecutor's comments standing alone, for the statements or conduct must be viewed in context; only by so doing can [a court] determine[ ] whether the prosecutor's conduct affected the fairness of the trial." Young, 470 U.S. at 11, 105 S.Ct. at 1044. Regarding plain error, the Supreme Court held that the plain error rule:
40
[A]uthorizes the Courts of Appeals to correct "only particularly egregious errors," those errors that "seriously affect the fairness, integrity or public reputation of judicial proceedings." In other words, the plain error exception to the contemporaneous objection rule is to be "used sparingly, solely in those circumstances in which a miscarriage of justice would otherwise result."
41
Young, 450 U.S. at 15, 105 S.Ct. at 1046-47 (citations omitted).
42
In reviewing alleged prosecutorial misconduct for plain error, "it is necessary that the error be measured not within the narrow confines of the argument but against the entire record." United States v. Ebens, 800 F.2d 1422 (6th Cir.1986). "To warrant a new trial, however, prosecutorial misconduct 'must be so pronounced and persistent that it permeates the entire atmosphere of the trial.' " United States v. Krebs, 788 F.2d 1166, 1177 (6th Cir.), cert. denied, --- U.S. ----, 107 S.Ct. 400, 93 L.Ed.2d 353 (1986) (quoting United States v. Lichenstein, 610 F.2d 1272, 1281 (5th Cir.), cert. denied, 447 U.S. 907, 100 S.Ct. 2991, 64 L.Ed.2d 856 (1980)). In the present case, the remark of the prosecutor was very isolated, and the trial court instructed that "the jury has heard the testimony," the clear implication being that the jury would remember what the testimony was. Therefore, although improper, we do not believe that the isolated remark standing alone is "sufficiently prejudicial to rise to the level of plain error." United States v. Calandrella, 605 F.2d 236, 254 (6th Cir.), cert. denied, 444 U.S. 991, 100 S.Ct. 522, 62 L.Ed.2d 420 (1979).
E. Identification Testimony
43
Defendant Causey also argues that the pretrial identification procedures employed in the present case created a likelihood of misidentification which denied him a fair trial.
1. Martin Hall's Identification Testimony
44
Initially Causey argues that the in-court identification of him by witness Martin Hall was the result of a suggestive single photo identification and should therefore have been suppressed. Martin Hall, who testified under grant of immunity, stated that he saw Causey in an automobile with codefendant Crumbie within a few days of the robbery. This was said to have occurred at the Hall residence. He further testified that he did not know Causey and only saw him once before trial, through the window of his house, while Causey was allegedly sitting in a car parked out in the street. When interviewed by FBI agents, Hall described the vehicle to the FBI agents and was shown a mug shot of Causey, whom he identified as one of the men in the car traveling with codefendant Crumbie. Causey argues that this single photo identification procedure was unnecessarily suggestive and the trial court erred in not suppressing the photographic identification and subsequent in-court identification of him by Hall.
45
In Manson v. Brathwaite, 432 U.S. 98, 97 S.Ct. 2243, 53 L.Ed.2d 140 (1977), the United States Supreme Court refused to adopt a per se rule that an identification based upon examination of a single photograph would be inadmissible at trial. The Court held that a trial court should adhere to the factors articulated in Neil v. Biggers, 409 U.S. 188, 199-200, 93 S.Ct. 375, 382-383, 34 L.Ed.2d 401 (1972), to determine whether the identification has indicia of reliability such as there is no substantial likelihood of irreparable misidentification. Manson, 432 U.S. at 114, 97 S.Ct. at 2253. In sum, the essential question is " 'whether under the "totality of the circumstances" the identification was reliable even though the confrontation procedure was suggestive.' " United States v. Tyler, 714 F.2d 664, 667 (6th Cir.1983) (quoting Neil, 409 U.S. at 192, 93 S.Ct. at 378).
46
In Smith v. Perini, 723 F.2d 478 (6th Cir.1983), cert. denied, 466 U.S. 941, 104 S.Ct. 1920, 80 L.Ed.2d 466 (1984), we reviewed a single person showup of the defendant before a rape victim from her hospital bed, after she had been shown two photo spreads in which she made one selection of some other person and a second selection of the defendant. We held that despite the suggestive nature of the identification procedure, the witness had an independent basis for making the identification, and, therefore, the evidence was properly admitted. We noted that " '[a] defendant is denied due process only when the identification evidence is so unreliable that its introduction renders a trial unfair. As long as there is not a substantial likelihood of misidentification, it is the function of the jury to determine the ultimate weight to be given the identification.' " Smith, 723 F.2d at 482 (quoting Summit v. Bordenkircher, 608 F.2d 247, 253 (6th Cir.1979)).
47
In evaluating the reliability of an identification, there are five factors to consider:
48
[T]he opportunity of the witness to view the criminal at the time of the crime, the witness' degree of attention, the accuracy of the witness' prior description of the criminal, the level of certainty demonstrated by the witness at the confrontation, and the length of time between the crime and the confrontation.
49
Neil, 409 U.S. at 199, 93 S.Ct. at 382.
50
In the present case, defendant Causey argued that the single photo identification was unreliable for several reasons: (1) no attempt was made to elicit a detailed description before showing the photo; (2) the government did not provide a lineup or other photo array; (3) Hall only saw the person sitting in the car for a short period of time and did not know Causey before then; (4) Hall could not testify to vital descriptive details of the person he saw in the automobile; and (5) on other occasions Hall indicated that he could not identify Causey as the person in the car. In reviewing those claims, we find that they simply go to the weight the testimony should be given by the jury and do not render the testimony so unreliable as to mandate its exclusion. The record indicates that the vehicle in which Causey was allegedly sitting was 20 to 30 feet from the window, and Hall's view was unobstructed looking inside the car. Further, Hall's description of the man in the car was unequivocal and very accurate, matching the description of the defendant, including race, sex, appropriate age, hair length, and noticeable facial features such as facial hair, all of which provide some indicia of reliability. Thus, the government provided clear and convincing evidence that the in-court identification had an origin independent of the single photo showing. See Marshall v. Rose, 499 F.2d 1163 (6th Cir.1974).
51
After reviewing all of the factors concerning the single photo identification, we conclude that the identification did not give rise to a substantial likelihood of irreparable misidentification. Further, while Causey can point to several reasons why the accuracy of Hall's testimony is questionable, we find that they go to the weight of the testimony and are not enough to render the testimony inadmissible. The trial court properly allowed the jury to hear Hall's testimony and to give his testimony whatever weight the jury deemed proper. Therefore, Martin Hall's testimony was properly admitted. Moreover, in view of the overwhelming evidence of guilt presented at the trial against defendant Causey, error, if any, concerning the single photo identification would in our view be harmless beyond a reasonable doubt.3
52
2. Bank Employee Pretrial and In-Court Identifications
53
Defendant Causey argues that the bank employees' in-court and pretrial identifications should have been excluded, as the length of time between the robbery and the identifications, coupled with the fact that the robbery lasted only a few minutes and all the robbers were black, renders the identifications unreasonably suspect. Further, Causey claims that he was prejudiced because the police did not conduct a lineup identification, and that the photo array used was defective because it only contained suspects wearing beards, while Causey claims he did not have one at the time of the robbery.4 Finally, Causey claims that the pretrial photo array was prejudicial because it showed him with a small chain or necklace around his neck while the others in the array did not have such a chain.
54
We conclude that the trial court properly admitted the pretrial and in-court identifications into evidence. A three to four-month delay between the crime and the identification does not render the identification inherently unreliable. See United States v. Marchand, 564 F.2d 983 (2d Cir.1977), cert. denied, 434 U.S. 1015, 98 S.Ct. 732, 54 L.Ed.2d 760 (1978) (nine-month delay upheld); United States ex rel. Clark v. Fike, 538 F.2d 750 (7th Cir.1976), cert. denied, 429 U.S. 1064, 97 S.Ct. 791, 50 L.Ed.2d 781 (1977) (five-month delay upheld). Further, the government is not required to conduct a lineup, see Marchand, 564 F.2d at 995, and the availability of time for a lineup plays no part in determining whether a photographic spread is impermissibly suggestive. See United States v. Allison, 616 F.2d 779 (5th Cir.) (per curiam), cert. denied, 449 U.S. 857, 101 S.Ct. 156, 66 L.Ed.2d 72 (1980). Thus, we find that neither the delay between the crime and the identification nor the failure of the government to conduct a lineup rendered the testimony unreliable.
55
Further, we find that the photographic array employed was not defective or improper. First, the fact that all people in the photographic array had beards or facial hair does not render the array prejudicial. See United States v. Valenzuela, 722 F.2d 1431 (9th Cir.1983) (a photograph of a defendant in a photo spread showing him wearing a moustache when bank surveillance photos showed the bandit to be clean-shaven was not impermissibly suggestive). The defendant cannot indicate what, if any, adverse inference or prejudice resulted from the depiction of him wearing a chain around his neck. Having viewed the photo array, we conclude that it simply is not of such magnitude as to draw attention to that particular photo. Moreover, the question is not whether the photographic array is suggestive, but rather whether it is impermissibly suggestive. United States v. Tyler, 714 F.2d 664, 667 (6th Cir.1983). In this case, the photo was not suggestive, much less impermissibly suggestive.
56
Finally, defendant Causey claims that the eyewitness testimony of the tellers who were unable to pick him out of a photo array prior to their in-court identification renders their in-court identifications unreasonably unreliable, and, therefore, improperly admitted. In United States v. Toney, 440 F.2d 590, 591 (6th Cir.1971), we held that:
57
The fact that a witness cannot identify an accused from a photograph is no reason for excluding his testimony identifying the accused in court. When a man is actually seen in court, his expression, the glance from his eyes, the movement of his facial features may be, to a witness, much more convincing that he has seen that man before than observations of a photograph taken of the accused, or views of him at a "line-up" or police "show-up."
58
The prior failure of the witness to identify the defendant goes only to the weight to be accorded testimony, not its admissibility. See United States v. Hamilton, 684 F.2d 380, 383 (6th Cir.), cert. denied, 459 U.S. 976, 103 S.Ct. 312, 74 L.Ed.2d 291 (1982). In sum, we find that while certain factors may put the accuracy of the identifications in question, the factors are not substantial enough for us to hold that the identifications should have been excluded. The questions raised go to the weight to be given that testimony and not to its admissibility.
F. Improper Joinder
59
The defendant's final contention is that he was denied a fair trial because of his joinder with the other codefendants. As a general rule, persons jointly indicted should be tried together. See United States v. Stull, 743 F.2d 439, 446-47 (6th Cir.1984), cert. denied, 470 U.S. 1062, 105 S.Ct. 1779, 84 L.Ed.2d 838 (1985). When a defendant seeks severance, he has a heavy burden of showing specific and compelling prejudice, and denial of severance will be overruled on appeal only for a clear abuse of discretion. United States v. Bibby, 752 F.2d 1116, 1123 (6th Cir.1985), cert. denied, 475 U.S. 1010, 106 S.Ct. 1183, 89 L.Ed.2d 300 (1986); United States v. Licavoli, 725 F.2d 1040, 1051-52 (6th Cir.), cert. denied, 467 U.S. 1252, 104 S.Ct. 3535, 82 L.Ed.2d 840 (1984). A request for severance should be denied if a jury can properly compartmentalize the evidence as it relates to the appropriate defendants. We note that the present case is not one of such complexity that the jury could not compartmentalize the evidence. Further, the trial court went to great degree and detail to instruct the jury to consider each defendant separately, as the jury charge makes explicitly clear.
60
Defendant Causey presents three independent arguments to illustrate the alleged improper joinder. First, he claims that because of the joinder, his attorney could not comment on the failure of the other two defendants to testify, citing De Luna v. United States, 308 F.2d 140 (5th Cir.1962), wherein the Fifth Circuit held that in such an instance, it is a trial court's duty to order the defendants to be tried separately. De Luna, 308 F.2d at 141. Causey's reliance upon De Luna is misplaced. In United States v. McKinney, 379 F.2d 259 (6th Cir.1967), we rejected the Fifth Circuit's majority holding in De Luna, holding that even if separate trials were held, defense counsel could not comment upon another defendant's failure to testify in a separate trial. McKinney, 379 F.2d at 264-65.
61
Defendant Causey argues that even if he could not comment on the failure of one or the other defendants to testify, if tried in a separate proceeding one of the codefendants would have given exculpatory testimony. However, a motion for severance on the ground of absence of a codefendant's testimony must be accompanied by more than a basic, unsupported contention that a separate trial would afford the defendant exculpatory testimony. See United States v. Butler, 611 F.2d 1066 (5th Cir.), cert. denied, 449 U.S. 830, 101 S.Ct. 97, 66 L.Ed.2d 35 (1980). A stringent test is to be employed in ruling on a motion for severance in order to obtain a codefendant's testimony. The defendant "must demonstrate: (1) a bona fide need for the testimony, (2) the substance of the testimony, (3) its exculpatory nature and effect, and (4) that the codefendant will in fact testify if the cases are severed." Butler, 611 F.2d at 1071; United States v. Jackson, 549 F.2d 517 (8th Cir.), cert. denied, 430 U.S. 985, 97 S.Ct. 1682, 52 L.Ed.2d 379 (1977).
62
A review of Causey's motion for severance reveals that he provided no bona fide need for the testimony, could not tell the court which of the two codefendants would take the stand and testify on his behalf, and did not demonstrate that any of the codefendants would have waived their Fifth Amendment privilege against self-incrimination if the case were severed. Therefore, the trial court did not abuse its discretion in refusing to grant the motion.
63
Finally, defendant Causey argues that his trial should have been severed from the codefendants because of the disparate evidence and the danger of transference of guilt or guilt by association. See Kotteakos v. United States, 328 U.S. 750, 66 S.Ct. 1239, 90 L.Ed. 1557 (1946). However, a defendant is not entitled to a severance simply because the evidence against a codefendant is far more damaging than the evidence against him. As we noted in United States v. Warner, 690 F.2d 545, 553 (6th Cir.1982):
64
We recognize that, in a joint trial, there is always a danger that the jury will convict on the basis of the cumulative evidence rather than on the basis of the evidence relating to each defendant. However, we adhere to the view, as previously stated by our court, that "[t]he jury must be presumed capable of sorting out the evidence and considering the case of each defendant separately."
65
Id. (citations omitted). The presentation of evidence applicable to more than one defendant is simply a fact of life in multiple defendant cases. Jackson, 549 F.2d at 525.
66
We find that defendant Causey has not met his very significant burden in demonstrating specific and compelling prejudice from being tried with his codefendants. The evidence against the various defendants consisted of substantially the same witnesses and documents, and there was proof of the defendants' working together. Further, the trial court fully instructed the jury to consider the defendants individually. Therefore, the trial court did not abuse its discretion in failing to grant the defendant's motion for severance.
III.
67
Accordingly, for the reasons stated, the judgment of the district court is AFFIRMED.
68
KEITH, Circuit Judge, concurring in part, dissenting in part:
69
I concur in the portion of the majority opinion which finds that there was no improper impeachment or identification, or other prosecutorial misconduct. However, as I believe the majority erroneously resolves the question of whether the government's violation of Fed.R.Crim.P. 12.1 was plain error and warrants a new trial, I dissent.
70
I agree with the majority that the trial court might not have been sufficiently prescient to divine the possible objections to Mrs. Jackson's testimony, and that this would have been an "easier case" if defense counsel had objected to the testimony on the record. Nonetheless, I believe the majority misconstrues the plain error standard. Plain error is not predicated upon a trial judge's on-the-spot ability to detect an error at trial the moment it occurs. It is not necessarily an error that causes observers instantly to gasp in recognition. The plain error rule was devised to protect a defendant's substantial rights. The case law is clear that the analysis centers upon the degree of injustice to the defendant, not the degree of obviousness to the judge at the time of the error. See, e.g., United States v. Martin, 757 F.2d 770, 771 (6th Cir.), cert. denied, 472 U.S. 1029, 105 S.Ct. 3506, 87 L.Ed.2d 636 (1985) (plain errors are those which would produce a substantial miscarriage of justice to the defendant if not corrected); Fed.R.Crim.P. 52(b) (plain errors affect a defendant's "substantial rights").
71
Moreover, in United States v. Wood, 780 F.2d 555, 559-60 n. 5 (6th Cir.), cert. denied, 475 U.S. 1111, 106 S.Ct. 1522, 89 L.Ed.2d 920 (1986), this court noted that "the explicit nature of the government's obligation under Fed.R.Crim.P. 12.1" may trump the lack of objection by defendant. Thus, I believe that the admission of the testimony was plain error because the failure to disclose this rebuttal alibi witness strikes solidly at the fundamental fairness of this trial, where the defendant relied exclusively on an alibi defense. See United States v. Mendez-Ortiz, 810 F.2d 76, 78 (6th Cir.1986), cert. denied, --- U.S. ----, 107 S.Ct. 1384, 94 L.Ed.2d 697 (1987); United States v. Perez, 651 F.2d 268, 273 (5th Cir.1981).
72
I also believe that the trial court abused its discretion in determining that the government was excused from noncompliance with Rule 12.1 for "good cause" under the exception to the Rule articulated in 12.1(e).
73
First, the government admitted on the record that it could think of no excuse for its failure to alert defense counsel to Mrs. Jackson's rebuttal testimony. When the court asked why no notice was given, the assistant United States attorney replied, "your Honor, I really can't say. I don't know if it was oversight on my part." This court should not absolve government "oversight" that conveniently violates a rule and results in conviction. The judiciary should not be made an accomplice to this prosecutorial indiscretion.
74
Second, it was only at the post-trial stage of the proceedings that the government molded its ex post facto reasons to justify its violation of Rule 12.1. I believe these rationalizations are too feeble and too late.
75
The majority approvingly observes that notice to defendant was provided within forty-eight hours of the time the government became aware of Mrs. Jackson's testimony. Two days is a long time in the life of a trial, where the attorneys are rooted in the same small courtroom and are in constant contact. It would have taken little time or effort for the government to have complied with the Rule, simply by mentioning to defense counsel--either in court during the day's trial, or in the evening via a three minute phone call--that it was attempting to bring Mrs. Jackson to the stand.1 Instead, defense counsel was apprised of Mrs. Jackson's testimony only just prior to when the witness took the stand. The prosecution knew too well that Mr. Causey's case rested solely on his alibi defense, and that by bringing Mrs. Jackson as a surprise witness, they were decimating his defense.
76
The majority does not attempt to reconcile with their opinion the holdings in United States v. Myers, 550 F.2d 1036 (5th Cir.1977), later appealed, 572 F.2d 506 (5th Cir.), cert. denied, 439 U.S. 847, 99 S.Ct. 147, 58 L.Ed.2d 149 (1978), and United States v. White, 583 F.2d 899 (6th Cir.1978). In those cases, the courts found error in the failure to provide notice of an alibi witness. Here, as in Myers, "the prejudice to the defense was substantial and remained unabated." Myers, 550 F.2d at 1043. Defense counsel was deprived of the opportunity to interview Mrs. Jackson, to reassess Mr. Causey's story in light of the additional evidence, to re-evaluate his trial strategy, and most importantly, to reconsider his decision to put Mr. Jackson on the stand. See id. This is prejudice of the most fundamental sort: the defense counsel had absolutely no opportunity to prepare for the bombshell that was to blow his ego apart.
77
The trial judge gave as another reason to justify the failure to give notice the fact that certain witnesses in the case had received threats. Even so, the trial court could have granted a protective order for Mrs. Jackson if she had actually felt threatened; protective orders are a daily occurrence in criminal trials. Moreover, there is no evidence that this particular witness had received any threats.
78
Because I do not believe this court should condone the government's convenient "oversight," I believe the violation of Rule 12.1 mandates a new trial.
79
Accordingly, I respectfully dissent.
1
Causey's counsel claims that objection was made off the record in chambers. However, the district judge in ruling on Causey's motion for a new trial stated that he recalled no objection being made in chambers as claimed. J.A. at 335. Thus, our review is limited to the record which is devoid of objection. If Causey did object in chambers, his failure to have that objection noted in the record limits our review to whether or not plain error was committed
2
In exercising its discretionary power to exclude the testimony of undisclosed witnesses for violation of Rule 12.1, "a district court should consider (1) the amount of prejudice that resulted from the failure to disclose, (2) the reason for nondisclosure, (3) the extent to which the harm caused by nondisclosure was mitigated by subsequent events, (4) the weight of the properly admitted evidence supporting a defendant's guilt, and (5) other relevant factors arising out of the case." United States v. White, 583 F.2d 899, 902 (6th Cir.1978) (quoting United States v. Myers, 550 F.2d 1036, 1043 (5th Cir.1977), cert. denied, 439 U.S. 847, 99 S.Ct. 147, 58 L.Ed.2d 149 (1978))
3
Causey was overwhelmingly identified by witnesses to the robbery as the man holding the shotgun. Further, the jury was able to examine and compare the bank surveillance photos, which included Causey's picture, to Causey as he appeared in court
4
There appears to be a factual dispute as to whether or not the robber identified as Causey had facial hair at the time of the robbery. The witnesses testified that the man standing under the clock had facial hair. At the time of his arrest, Causey had similar facial hair. Causey claims at the time of the robbery he was clean-shaven. However, the bank surveillance photos which were also admitted into evidence clearly show that Causey had facial hair at the time of the robbery
1
The government argues that it should be excused from the requirement because it was having difficulty subpoening Mrs. Jackson. This circuit has expressly held that Fed.R.Crim.P. 12.1 only requires disclosure of the "identity" of the alibi witness and does not excuse notice simply because a witness is somehow indisposed. United States v. White, 583 F.2d 899, 902 (6th Cir.1978)
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10-3129-pr
Styles v. Goord
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO
A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS
GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S
LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED
WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY
CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT
REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for
the Second Circuit, held at the Daniel Patrick Moynihan United States
Courthouse, 500 Pearl Street, in the City of New York, on the 23 rd day
of June, two thousand eleven.
PRESENT:
BARRINGTON D. PARKER,
DENNY CHIN,
Circuit Judges,
EDWARD R. KORMAN,
District Judge.*
- - - - - - - - - - - - - - - - -x
ANDREW STYLES,
Plaintiff-Appellant,
-v.- 10-3129-pr
GLENN S. GOORD, Commissioner of
the State of New York, Department
of Correctional Services,
LESTER WRIGHT, Deputy Commissioner
of Health Services, Department
of Correctional Services,
Defendants-Appellees.
- - - - - - - - - - - - - - - - -x
*
The Honorable Edward R. Korman, United States District
Judge for the Eastern District of New York, sitting by
designation.
FOR PLAINTIFF-APPELLANT: ANDREW STYLES, pro se, New York,
New York.
FOR DEFENDANT-APPELLEE: MARTIN A. HOTVET, Assistant
Solicitor General (Andrea Oser,
Deputy Solicitor General, on the
brief), for Eric T. Schneiderman,
Attorney General for the State of
New York, Albany, New York.
Plaintiff-Appellant Andrew Styles, proceeding pro se,
appeals a post-judgment order of the United States District Court
for the Northern District of New York (Mordue, C.J.) denying his
motion, pursuant to Federal Rule of Civil Procedure 60, to vacate
the judgment dismissing his 42 U.S.C. § 1983 complaint, pursuant
to Fed. R. Civ. P. 41(b).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the order of the district court is AFFIRMED.
We assume the parties' familiarity with the underlying
facts, the procedural history of the case, and the issues on
appeal. We review a district court order denying a Rule 60(b)
motion for abuse of discretion, see Transaero, Inc. v. La Fuerza
Aerea Boliviana, 162 F.3d 724, 729 (2d Cir. 1998), and relief
pursuant to Rule 60(b) is available only in "exceptional
circumstances," Ruotolo v. City of New York, 514 F.3d 184, 191
(2d Cir. 2008) (internal quotation marks omitted).
The district court had dismissed Styles' § 1983
complaint, pursuant to Rule 41(b), for failure to comply with an
order to keep the district court apprised of his current address.
Although a district court's Rule 41(b) dismissal is reviewed for
-2-
abuse of discretion, see Spencer v. Doe, 139 F.3d 107, 112 (2d
Cir. 1998), we have emphasized that district courts "should be
especially hesitant" to dismiss a pro se litigant's complaint for
procedural deficiencies, and "deference is due to the district
court's decision to dismiss a pro se litigant's complaint only
when the circumstances are sufficiently extreme." Lucas v.
Miles, 84 F.3d 532, 535 (2d Cir. 1996).
In this case, the district court abused its discretion
when it concluded that relief from the Rule 41(b) dismissal was
not warranted. See United States ex rel. Drake v. Norden Sys.,
Inc., 375 F.3d 248, 254 (2d Cir. 2004) (listing factors this
Court considers in reviewing a Rule 41(b) dismissal). The
district court's conclusion was based upon a failure-to-prosecute
analysis, first articulated in the order denying the Rule 60
motion. But the record shows that Styles was intent on
prosecuting the case. He submitted two sets of opposition to
defendants' summary judgment motion and a change of address form
when he was released from prison. Moreover, the district court
failed to consider ruling on the pending, fully-submitted summary
judgment motion as an alternative to dismissing under Rule 41(b).
As this Court has emphasized, "resolutions on summary judgment
. . . are generally to be preferred to dismissals under Rule
41(b)." LeSane v. Hall's Sec. Analyst, Inc., 239 F.3d 206, 211
(2d Cir. 2001).
In addition, Styles' failure to ensure that he was able
to receive mail at the new address does not appear to have caused
-3-
any delay in the adjudication of the action. Defendants' summary
judgment motion was fully submitted and pending throughout the
period between the October 2008 notice of change of address and
the March 2009 dismissal. Any additional delay was not likely to
increase meaningfully defendants' litigation costs or reduce
their ability to defend the case on the merits. Id. at 210.
Nonetheless, we affirm the post-judgment order because
a review of the record below demonstrates that the district court
should have granted summary judgment in favor of defendants. See
Beth Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of
N.J., Inc., 448 F.3d 573, 580 (2d Cir. 2006) ("This Court may
affirm an appealed decision on any ground which finds support in
the record, regardless of the ground upon which the trial court
relied." (internal quotation marks omitted)). Summary judgment
is appropriate "[w]here the record taken as a whole could not
lead a rational trier of fact to find for the non-moving party."
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986). Personal involvement of the defendants in an alleged
constitutional deprivation is a prerequisite to an award of
damages under § 1983. See Richardson v. Goord, 347 F.3d 431, 435
(2d Cir. 2003). The mere fact that a defendant possesses
supervisory authority is insufficient to demonstrate liability
for failure to supervise under § 1983. See Colon v. Coughlin, 58
F.3d 865, 874 (2d Cir. 1995); see also Richardson, 347 F.3d at
435 ("mere linkage in the prison chain of command is insufficient
to implicate a state commissioner of corrections or a prison
superintendent in a § 1983 claim" (internal quotation marks
omitted)).
-4-
In his complaint, Styles alleged that Goord and Wright,
two high-ranking prison officials, were grossly negligent in
failing to supervise unspecified subordinates who concealed
Style's medical condition from him and thus delayed any
treatment. Although Styles alleged that Goord and Wright
personally established certain state prison health policies, he
never explained how those policies related to his claims.
Notably, Styles did not allege, or submit evidence demonstrating,
any facts concerning Goord or Wright's particular conduct in
supervising their subordinates. In sum, Styles' claims were
premised on a theory of supervisory liability, and he did not
show that there was a question of fact suggesting that either
Goord or Wright was personally involved in any conduct related to
his medical condition that could give rise to § 1983 liability.
See Richardson, 347 F.3d at 435. Accordingly, we affirm the
denial of the Rule 60 motion because, even though Styles was
entitled to relief from the Rule 41(b) dismissal, the district
court should have granted the defendants' motion for summary
judgment.
We have considered Styles' remaining arguments and find
them to be without merit. Accordingly, we AFFIRM the order of
the district court.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
-5-
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Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
04/23/2020 10:11 AM CDT
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Nebraska Supreme Court Advance Sheets
305 Nebraska Reports
STATE v. A.D.
Cite as 305 Neb. 154
State of Nebraska, appellee,
v. A.D., appellant.
State of Nebraska, appellee,
v. C.M., appellant.
___ N.W.2d ___
Filed February 28, 2020. Nos. S-19-583, S-19-678.
1. Judgments: Jurisdiction: Appeal and Error. A jurisdictional question
that does not involve a factual dispute is determined by an appellate
court as a matter of law, which requires the appellate court to reach a
conclusion independent of the lower court’s decision.
2. Statutes: Appeal and Error. Statutory interpretation is a question of
law, which an appellate court resolves independently of the trial court.
3. Statutes. Where it is possible to harmonize apparently conflicting stat-
utes, a court should do so.
4. Jurisdiction: Appeal and Error. When a lower court lacks the power,
that is, the subject matter jurisdiction, to adjudicate the merits of a
claim, issue, or question, an appellate court also lacks the power to
determine the merits of the claim, issue, or question presented to the
lower court.
5. ____: ____. When an appellate court is without jurisdiction to act, the
appeal must be dismissed.
Appeals from the County Court for Sarpy County: Robert
C. Wester and Todd J. Hutton, Judges. Appeals dismissed.
Dennis P. Marks, Deputy Sarpy County Public Defender,
and Mitchell S. Sell, Senior Certified Law Student, for appel-
lant A.D.
Todd A. West, Sarpy County Public Defender, Dennis P.
Marks, Deputy Sarpy County Public Defender, and Mitchell S.
Sell, Senior Certified Law Student, for appellant C.M.
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STATE v. A.D.
Cite as 305 Neb. 154
Douglas J. Peterson, Attorney General, and Siobhan E.
Duffy for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Papik, J.
Appellants in both of these consolidated appeals contend
that the county court erred by concluding it lacked jurisdic-
tion to decide motions to transfer their felony criminal cases
to juvenile court. We conclude that the county court correctly
found it lacked jurisdiction over the motions to transfer to
juvenile court. Because the county court lacked jurisdic-
tion, we find that we too lack jurisdiction and dismiss the
appeals.
BACKGROUND
In both of these consolidated cases, the State filed com-
plaints in county court charging appellants with felonies. The
State charged A.D. with first degree sexual assault, a Class II
felony. The State charged C.M. with possession of a stolen
firearm, a Class IIA felony. Both offenses were alleged to have
been committed when appellants were older than 14 years old
but younger than 18 years old.
Both A.D. and C.M. filed motions asking the county court
to transfer their respective cases to juvenile court under Neb.
Rev. Stat. §§ 29-1816 (Cum. Supp. 2018) and 43-276 (Reissue
2016). In both cases, the State argued that the county court did
not have jurisdiction to decide a motion to transfer to juvenile
court in felony cases. And in both cases, after a hearing, the
county court issued orders stating that it did not have juris-
diction to rule on a motion to transfer to juvenile court and
scheduled preliminary hearings.
Before a preliminary hearing was held in either case,
appellants filed notices of appeal. We moved the appeals
to our docket and consolidated them for oral argument and
disposition.
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ASSIGNMENTS OF ERROR
Both appellants claim that the county court erred in one
respect: by holding that it lacked jurisdiction to rule on their
respective motions to transfer to juvenile court.
STANDARD OF REVIEW
[1] A jurisdictional question that does not involve a factual
dispute is determined by an appellate court as a matter of law,
which requires the appellate court to reach a conclusion inde-
pendent of the lower court’s decision. Green v. Seiffert, 304
Neb. 212, 933 N.W.2d 590 (2019).
[2] Statutory interpretation is a question of law, which
an appellate court resolves independently of the trial court.
Griffith v. Nebraska Dept. of Corr. Servs., 304 Neb. 287, 934
N.W.2d 169 (2019).
ANALYSIS
This case presents multiple jurisdictional arguments.
Appellants argue that the county court erred by finding it
lacked jurisdiction to decide their motions to transfer to juve-
nile court. The State contends that the county court correctly
determined it lacked jurisdiction of the motions to transfer to
juvenile court in felony cases. Alternatively, the State contends
that the orders at issue are not final and appealable, an argu-
ment we discuss briefly below.
Final Order.
In State v. Bluett, 295 Neb. 369, 889 N.W.2d 83 (2016),
we held that a trial court’s denial of a motion to transfer to
juvenile court was not a final, appealable order. In response
to our decision, the Legislature amended § 29-1816 to provide
that “[a]n order granting or denying transfer of [a] case from
county or district court to juvenile court” may be appealed
to the Nebraska Court of Appeals, provided a party files a
notice of appeal within 10 days of the entry of such an order.
§ 29-1816(3)(c). See 2017 Neb. Laws, L.B. 11, § 1. See, also,
State v. Uhing, 301 Neb. 768, 919 N.W.2d 909 (2018). Both
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STATE v. A.D.
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appellants filed notices of appeal within 10 days of the county
court orders at issue, but the State argues that the county court
declined to rule on the motions to transfer, as opposed to grant-
ing or denying them, and that thus, the orders are not covered
by § 29-1816(3)(c) and are not appealable.
It is unnecessary to resolve whether the orders appealed from
were orders “denying transfer” for purposes of § 29-1816(3)(c).
Even if they were, we find that we lack jurisdiction over these
appeals and are obligated to dismiss them for another reason,
as we explain in more detail below.
County Court Jurisdiction Over
Motions to Transfer Felony
Cases to Juvenile Court.
As noted above, appellants’ central argument in these appeals
is that county courts have jurisdiction to decide motions to
transfer felony cases to juvenile court. Any case in which the
scope of a county court’s authority is at issue must begin with
the understanding that county courts are statutorily created
courts which possess limited jurisdiction. See In re Estate of
Evertson, 295 Neb. 301, 889 N.W.2d 73 (2016). More spe-
cifically, county courts have only that jurisdiction which has
been granted to them through specific legislative enactment.
See id. And while county courts have been given jurisdiction
of criminal matters classified as misdemeanors or infractions
via Neb. Rev. Stat. § 24-517 (Cum. Supp. 2018), that statute
does not provide for county court jurisdiction over felonies. In
State v. Schanaman, 286 Neb. 125, 835 N.W.2d 66 (2013), we
cited § 24-517 for the proposition that county courts cannot try
felony cases.
While we were correct in Schanaman to note that § 24-517
does not generally grant county courts jurisdiction over felo-
nies, other statutes do authorize county court judges to play
a role in felony matters. For example, in those counties that
do not have separate juvenile courts, county court judges
can, sitting as a juvenile court, preside in proceedings against
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STATE v. A.D.
Cite as 305 Neb. 154
juveniles who are alleged to have committed a felony. See,
Neb. Rev. Stat. § 43-245(12) (Supp. 2019); Neb. Rev. Stat.
§ 43-246.01(1)(d) and (2)(b) (Reissue 2016). See, also, In re
Interest of Tyrone K., 295 Neb. 193, 887 N.W.2d 489 (2016).
Another statute authorizes county court judges to act as a dis-
trict judge in Class IV felony cases, even without the consent
of the parties. See Neb. Rev. Stat. § 24-312 (Reissue 2016).
The authority of the county court to act as a juvenile court or
district court as described is not at issue in these appeals.
Our opinion in Schanaman, supra, discussed another func-
tion county courts are authorized to serve in felony cases. As
we noted, “a felony charge generally originates by complaint
in county court, but after a preliminary hearing and prob-
able cause finding, the county court must bind the defendant
over to the district court.” Id. at 131, 835 N.W.2d at 70. The
authority of county courts to conduct preliminary hearings
in felony cases referred to in Schanaman is derived from
other statutes. As we explained in State v. Wilkinson, 219
Neb. 685, 686, 365 N.W.2d 478, 479 (1985), when a county
court judge conducts a preliminary hearing, he or she is act-
ing as an “examining magistrate,” pursuant to Neb. Rev. Stat.
§§ 29-201, 29-504, and 29-506 (Reissue 2016), and has only
the authority to discharge the defendant or, upon a probable
cause finding, bind the defendant over to the district court for
further proceedings.
The county court concluded in these matters that its author-
ity was limited to conducting a preliminary hearing and that
thus, a motion to transfer to juvenile court could only be
decided by the district court in the event probable cause was
found and the case was bound over. Appellants argue that the
county court misunderstood its authority and that it is autho-
rized to decide a motion to transfer to juvenile court even in
felony cases.
In support of this argument, appellants rely on several
statutes that they contend provide such authority. First, they
direct us to § 43-246.01(3), a statute that provides that juvenile
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305 Nebraska Reports
STATE v. A.D.
Cite as 305 Neb. 154
courts shall have “[c]oncurrent original jurisdiction with the
county court or district court” in several categories of cases.
One such category is cases involving juveniles that were
younger than 18 years old and were 14 years old or older
“when an alleged offense punishable as a Class I, IA, IB, IC,
ID, II, or IIA felony was committed.” § 29-1816(1)(a)(ii). See
§ 43-246.01(3)(c).
Appellants also find support for their position in § 29-1816,
the statute discussing motions to transfer to juvenile court, and
invoke the following portions of that statute:
(1)(a) The accused may be arraigned in county court or
district court:
(i) If the accused was eighteen years of age or older
when the alleged offense was committed;
(ii) If the accused was younger than eighteen years
of age and was fourteen years of age or older when an
alleged offense punishable as a Class I, IA, IB, IC, ID, II,
or IIA felony was committed;
(iii) If the alleged offense is a traffic offense as defined
in section 43-245; or
(iv) Until January 1, 2017, if the accused was seven-
teen years of age when an alleged offense described in
subdivision (1) of section 43-247 was committed.
(b) Arraignment in county court or district court shall
be by reading to the accused the complaint or informa-
tion, unless the reading is waived by the accused when
the nature of the charge is made known to him or her. The
accused shall then be asked whether he or she is guilty or
not guilty of the offense charged. If the accused appears
in person and by counsel and goes to trial before a jury
regularly impaneled and sworn, he or she shall be deemed
to have waived arraignment and a plea of not guilty shall
be deemed to have been made.
(2) At the time of the arraignment, the county court or
district court shall advise the accused, if the accused was
younger than eighteen years of age at the time the alleged
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STATE v. A.D.
Cite as 305 Neb. 154
offense was committed, that the accused may move the
county court or district court at any time not later than
thirty days after arraignment, unless otherwise permitted
by the court for good cause shown, to waive jurisdiction
in such case to the juvenile court for further proceedings
under the Nebraska Juvenile Code.
Appellants contend that §§ 43-246.01 and 29-1816 give
county courts the power to decide motions to transfer to
juvenile court in felony cases. They contend that by its plain
language, § 43-246.01(3)(c) gives county courts concurrent
jurisdiction of cases involving juveniles charged with the enu-
merated felonies. If that were not enough, they contend that
§ 29-1816(1)(a) authorizes county courts to conduct arraign-
ments in those cases. And finally, they argue that the advise-
ment at arraignment required by § 29-1816(2) indicates that
the accused may seek transfer in either county court or dis-
trict court.
The State interprets each of these statutes differently. It
argues that each time the statutes mentioned above refer to
“county court or district court,” they do so against the back-
drop of the jurisdiction that has been granted to those respec-
tive courts. So, according to the State, § 43-246.01(3)(c)
should not be read to give county courts and district courts
(along with juvenile courts) concurrent jurisdiction over all of
the enumerated categories of cases, but to give juvenile courts
concurrent jurisdiction with county courts over those cases for
which the county court has jurisdiction and concurrent jurisdic-
tion with district courts over those cases for which the district
court has jurisdiction.
The State urges us to interpret § 29-1816 in a similar fash-
ion. It argues that statute should be understood to give county
courts the authority to arraign defendants and decide motions
to transfer to juvenile court in cases in which it has jurisdic-
tion over the underlying charge and to give district courts the
same authority in cases in which it has jurisdiction over the
underlying charge. Under the State’s interpretation, the county
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STATE v. A.D.
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court could not entertain the motions to transfer to juvenile
court, because it did not have jurisdiction to try these cases
in which appellants were charged with Class II and Class IIA
felonies. Although it does not appear we were addressing this
particular issue, language in one of our recent opinions is con-
sistent with the State’s interpretation. See State v. Tyler P., 299
Neb. 959, 967, 911 N.W.2d 260, 266-67 (2018) (“in deciding
whether to grant the requested waiver and to transfer the pro-
ceedings to juvenile court, the court having jurisdiction over
a pending criminal prosecution must carefully consider the
juvenile’s request in the light of the criteria or factors set forth
in § 43-276”) (emphasis supplied).
Appellants contend that their interpretation gives effect to
the plain language of the statutes at issue and that the State’s
does not. In our view, however, both sides present plausible
interpretations of the plain language of the statutes if that lan-
guage is viewed in isolation. Statutes, however, are not prop-
erly interpreted in isolation. See State v. Jedlicka, ante p. 52,
___ N.W.2d ___ (2020). Rather, when interpreting a statute,
well-established principles of statutory interpretation require a
court to take account of context and of other statutes pertaining
to the same subject. See id. As we will explain below, those
principles lead us to conclude that the State’s interpretation is
correct and that county courts have not been given authority to
decide motions to transfer to juvenile court in cases in which
they lack jurisdiction to try the case.
First, we note that the interpretations offered by appel-
lants sweep much more broadly than they are willing to
acknowledge. Appellants assert repeatedly that § 43-246.01(3)
gives county courts concurrent jurisdiction over cases involv-
ing juveniles who are between 14 and 18 years old accused
of Class I and Class II felonies. Appellants attempt to cabin
their argument, however, by conceding that county courts can-
not decide the merits of these felony cases and contending
that this case involves only the authority of a county court to
decide a motion to transfer to juvenile court. But appellants’
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STATE v. A.D.
Cite as 305 Neb. 154
textual argument cannot logically stop at a motion to transfer
to juvenile court. If county courts truly have concurrent juris-
diction over cases in which juveniles are accused of Class I
and Class II felonies, they have jurisdiction to decide not only
motions to transfer but also the merits of such cases.
In addition, if, as appellants contend, the authority to
arraign defendants given to county courts and district courts in
§ 29-1816(1)(a) is made without reference to existing jurisdic-
tional limitations, county courts’ authority would be expanded
in another way. One type of case listed in that statute is one in
which “the accused was eighteen years of age or older when
the alleged offense was committed.” § 29-1816(1)(a)(i). Under
appellants’ interpretation then, county courts would have the
authority to conduct an arraignment and, presumably, accept a
guilty plea in any case in which a defendant 18 years of age or
older was charged with a felony.
Interpreting the statutes discussed above as appellants sug-
gest would significantly expand the authority of county courts
over felony cases. While § 24-517 does not confer jurisdiction
over felony cases to county courts, appellants’ interpretations
would result in county courts having jurisdiction to try cer-
tain felony cases and to conduct arraignments in many oth-
ers. One would expect such significant expansions of county
court authority to be stated in much clearer terms. As the U.S.
Supreme Court memorably observed, legislative bodies do “not
alter the fundamental details of a regulatory scheme in vague
terms or ancillary provisions—[they do] not, one might say,
hide elephants in mouseholes.” Whitman v. American Trucking
Assns., Inc., 531 U.S. 457, 468, 121 S. Ct. 903, 149 L. Ed. 2d
1 (2001).
Appellants’ interpretation has other problems. As the State
points out, it creates conflicts with other statutes. Section
43-246.01(3)(b) states that the juvenile court shall have con-
current original jurisdiction with the county court or district
court as to juveniles described in Neb. Rev. Stat. § 43-247(9)
(Reissue 2016). That section refers to adoption or guardianship
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proceedings for a child over which the juvenile court already
has jurisdiction. Under appellants’ interpretation of § 43-246.01,
the district court would have concurrent jurisdiction over such
adoption proceedings. Section 24-517(11), however, provides
that if a separate juvenile court already has jurisdiction over
the child to be adopted, the county court has concurrent juris-
diction with the separate juvenile court. No mention is made of
the district court.
[3] Where it is possible to harmonize apparently conflicting
statutes, a court should do so. Salem Grain Co. v. City of Falls
City, 302 Neb. 548, 924 N.W.2d 678 (2019). Interpreting the
references to “county court or district court” in §§ 43-246.01
and 29-1816, in light of the jurisdiction granted to those courts
elsewhere, results in no such conflicts. This interpretation also
still allows juvenile offenders to seek transfer to juvenile court
when the county court does not have jurisdiction to decide the
case. It merely requires that in such cases, they seek transfer in
the district court after the case is bound over.
Perhaps recognizing the problems posed by their reliance on
§§ 43-246.01 and 29-1816, appellants shifted course in their
reply brief and primarily argued that county courts have juris-
diction to decide motions to transfer to juvenile court in felony
cases by analogizing to county courts’ authority to conduct
preliminary hearings in felony cases. Appellants suggest that
just as a county court can find probable cause and bind over
a felony case to district court for disposition of the merits, it
should be able to decide that a case alleging a felony should
be transferred to juvenile court for further proceedings. But
appellants’ analogy is flawed. As noted above, county courts
have authority to conduct preliminary hearings in felony cases
because statutes specifically authorize them to do so. Those
same statutes cannot be interpreted to authorize county courts
to decide motions to transfer to juvenile court. See §§ 29-201,
29-504, and 29-506.
Finally, we note that throughout their briefing and again in
oral argument, appellants have emphasized that juveniles will
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benefit from having a transfer motion decided as soon as pos-
sible and that such motions can be resolved sooner in felony
cases if they can be decided in county court. All of this may
be true, but it is also a policy argument about whether county
courts should have the power to decide motions to transfer
to juvenile court in felony cases. That is a question for the
Legislature to resolve rather than this court. See Rogers v.
Jack’s Supper Club, 304 Neb. 605, 614, 935 N.W.2d 754, 762
(2019) (“[b]ut we are not tasked with selecting what we believe
is the best policy”). Our role is limited to deciding whether
the Legislature has given county courts the authority to decide
motions to transfer to juvenile court in these cases. For all the
reasons discussed herein, we conclude it has not.
[4,5] When a lower court lacks the power, that is, the sub-
ject matter jurisdiction, to adjudicate the merits of a claim,
issue, or question, an appellate court also lacks the power to
determine the merits of the claim, issue, or question presented
to the lower court. In re Estate of Evertson, 295 Neb. 301, 889
N.W.2d 73 (2016). When an appellate court is without juris-
diction to act, the appeal must be dismissed. Id. Because the
county court lacked jurisdiction over the motions to transfer,
we lack jurisdiction over these appeals and must dismiss.
CONCLUSION
Because we conclude we lack jurisdiction, we dismiss the
appeals.
Appeals dismissed.
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867 F.2d 605
Phillips (Paul T.)v.U.S. Department of Energy
NO. 88-1289
United States Court of Appeals,First Circuit.
NOV 01, 1988
1
Appeal From: D.Mass.
2
AFFIRMED.
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
September 8, 2009
No. 08-30757 Charles R. Fulbruge III
Clerk
DAVID D. CLIFFORD, also known as Michael J. Coleman
Plaintiff-Appellant
v.
STATE OF LOUISIANA; KATHLEEN BLANCO, Governor;
LOUISIANA LEGISLATURE; CHARLES FOTI, Attorney General,
LOUISIANA DEPARTMENT OF PUBLIC SAFETY AND CORRECTIONS;
RICHARD STALDER, Secretary, Department of Public Safety and Corrections;
N BURL CAIN, Warden;
#1 J DOE, Mailroom (LSP) Supervisor;
#2 J DOE, Judge, 20th Judicial District Court
Defendants-Appellees
Appeal from the United States District Court
for the Middle District of Louisiana
USDC No. 3:07-CV-955
Before JONES, Chief Judge, and GARZA and STEWART, Circuit Judges.
PER CURIAM:*
Louisiana prisoner David Clifford (“Clifford”) sued a variety of defendants
on two unrelated claims. His first claim alleges that various defendants
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
No. 08-30757
mishandled his prison mail in violation of the First Amendment. The second
challenges the constitutionality of the Louisiana Prison Litigation Reform Act,
which Clifford argues violates both the federal and state constitutions by
dismissing civil suits brought by prisoners who cannot pay the filing fees within
three years. The district court adopted the magistrate judge’s recommendations
and dismissed the first claim for failure to exhaust administrative remedies and
the second as frivolous. Clifford appeals. Because the district court incorrectly
found that Clifford failed to exhaust his administrative remedies, we vacate the
dismissal of that claim and remand but affirm in all other respects.
First Amendment Claim
The district court found that this claim was not administratively
exhausted because Clifford’s complaint acknowledged that at the time of suit he
had received no response from the first step of the administrative process. This
court reviews the district court’s dismissal for failure to exhaust administrative
remedies de novo. Carbe v. Lappin, 492 F.3d 325, 327 (5th Cir. 2007).
Clifford filed an administrative grievance on October 1, 2007. Louisiana
regulations require the warden to respond to an inmate’s grievance within 40
days. La. Admin. Code tit. 22, § 325(G)(1)(a). The regulations state, “expiration
of response time limits shall entitle the inmate to move on to the next Step in the
process.” Id. § 325(G)(4)(a). Accordingly, after the 40 days expired, Clifford
attempted to move to the second stage of the administrative remedies process.
Clifford finally received a response to his initial grievance in January, which he
refused to sign. According to Clifford, he was told by prison officials that he
could not proceed to the second step of the grievance process because he did not
sign the response to the first.
No procedural rule clearly requires a prisoner to sign an untimely first
stage grievance before proceeding to the second. Instead, the regulations
indicate that the expiration of time limits, alone, enables an inmate to proceed
2
No. 08-30757
to the next step in the grievance process. Clifford was thus entitled to proceed
to the second stage of the grievance process and the prison erroneously did not
allow him to do so. Under these circumstances, a prisoner’s administrative
remedies are deemed exhausted. See Powe v. Ennis, 177 F.3d 393, 393 (5th Cir.
1999) (involving failure of the state to comply with deadlines in the
administrative process).
While the complaint may ultimately be appropriately dismissed on other
grounds, the district court erred in dismissing this claim for failure to exhaust
administrative remedies. We vacate and remand this portion of the district
court’s order.
Louisiana Prisoner Litigation Reform Act
In an unrelated claim, Clifford challenges the Louisiana Prisoner
Litigation Reform Act (“LPLRA”). Unlike the federal Prisoner Litigation Reform
Act (“PLRA”), the LPLRA will eventually dismiss a suit filed by an in forma
pauperis (“IFP”) prisoner who cannot pay filing fees within three years.
Compare La. Rev. Stat. 15:1186(B)(2)(c) (“If the prisoner does not pay the full
court costs or fees within three years from when they are incurred, the suit shall
be abandoned and dismissed without prejudice.) with 28 U.S.C. § 1915(b)(4) (“In
no event shall a prisoner be prohibited from bringing a civil action or appealing
a civil or criminal judgment for the reason that the prisoner has no assets and
no means by which to pay the initial partial filing fee.”). Clifford filed a medical
malpractice suit against various prison officials, which has been stayed and, he
asserts, will presumably be dismissed under the LPLRA. He alleges that this
dismissal violates the equal protection clause of the Fourteenth Amendment, the
due process clause of the Fourteenth Amendment, and the open access clause of
the Louisiana Constitution.
The district court dismissed this claim as frivolous as a matter of law
under 28 U.S.C. § 1915(e)(2)(B)(I), which it may do where the claim lacks an
3
No. 08-30757
arguable basis in law or fact. Geiger v. Jowers, 404 F.3d 371, 373 (5th Cir. 2005).
This court reviews the dismissal of the suit as frivolous for abuse of discretion.
Id.
The open courts provision of the Louisiana Constitution provides:
All courts shall be open, and every person shall have an adequate
remedy by due process of law and justice, administered without
denial, partiality, or unreasonable delay, for injury to him in his
person, property, reputation, or other rights.
La. Const. art. I, § 22. This provision provides the same protections as the
Fourteenth Amendment to the United States Constitution, and “the legislature
is free to restrict access to the judicial machinery if there is a rational basis for
that restriction” where no fundamental right is at stake. Safety Net for Abused
Persons v. Segura, 692 So.2d 1038, 1042 (La. 1997) (Louisiana Constitution); see
also Carson v. Johnson, 112 F.3d 818, 821 (5th Cir. 1997) (holding that the
Constitution requires waiving filing fees only where a fundamental interest is
involved).
In the face of arguments identical to those made by Clifford now, a panel
upheld the constitutionality of the three-strikes provision of the PLRA in
Carson. Clifford’s right to recover for medical malpractice does not fall within
the fundamental interests recognized by the Supreme Court. See Carson,
112 F.3d at 821 (divorce and termination of parental rights involve fundamental
interests; bankruptcy and welfare benefit determination do not). Clifford
therefore has no constitutional right to a waiver of filing fees for his suit. Id.
Carson disposes of Clifford’s equal protection claims as well. “Neither
prisoners nor indigents constitute a suspect class,” and this statute therefore
receives rational basis review. Id. at 821–22. Requiring the payment of filing
fees to “deter[] frivolous and malicious lawsuits, and thereby preserv[e] scarce
judicial resources, is a legitimate state interest,” and “prisoners have abused the
judicial system in a manner that non-prisoners simply have not.” Id. at 822.
4
No. 08-30757
The LPLRA’s requirement that all inmates pay filing fees is rationally related
to a legitimate state interest and does not violate the Constitution. The district
court did not abuse its discretion by dismissing Clifford’s challenges to the
LPLRA as frivolous.
Because the district court erroneously dismissed Clifford’s First
Amendment claims for failure to exhaust administrative remedies, that portion
of the order is VACATED and REMANDED, and the remainder is
AFFIRMED.
5
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FILED
NOT FOR PUBLICATION DEC 21 2016
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 16-30026
Plaintiff-Appellee, D.C. No. 2:15-cr-00031-JLQ
v. MEMORANDUM*
JOHN EARL LELAND,
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of Washington
Justin L. Quackenbush, District Judge, Presiding
Submitted December 14, 2016**
Before: WALLACE, LEAVY, and FISHER, Circuit Judges.
John Earl Leland appeals from the district court’s judgment and challenges
the ten-year supervised release term imposed following his guilty-plea conviction
for conspiracy to distribute methamphetamine, in violation of 21 U.S.C.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
§§ 841(a)(1), (b)(1)(B)(viii), and 846. We have jurisdiction under 28 U.S.C.
§ 1291, and we affirm.
Leland contends that the district court procedurally erred by failing to
calculate the Guidelines range for the supervised release term, and by failing to
explain the ten-year term adequately. We review for plain error, see United States
v. Valencia-Barragan, 608 F.3d 1103, 1008 (9th Cir. 2010), and hold that there is
none. Even if the court erred, there is no reasonable probability that it would have
imposed a different term absent the error. See United States v. Dallman, 533 F.3d
755, 762 (9th Cir. 2008). The court considered the parties’ joint recommendation
for a five-year supervised term, which is the high end of the Guidelines range, and
concluded that it was insufficient. It is clear from the record that the court believed
that a ten-year term was necessary in light of Leland’s lengthy criminal history.
See United States v. Carty, 520 F.3d 984, 992 (9th Cir. 2008) (en banc) (adequate
explanation can be inferred from the record).
Leland also contends that the ten-year term of supervised release is
substantively unreasonable. The court did not abuse its discretion. See Gall v.
United States, 552 U.S. 38, 51 (2007). The supervised release term is
substantively reasonable in light of the 18 U.S.C. § 3553(a) sentencing factors and
2 16-30026
the totality of the circumstances, including Leland’s criminal record. See Gall, 552
U.S. at 51.
AFFIRMED.
3 16-30026
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788 N.W.2d 4 (2010)
PEOPLE of the State of Michigan, Plaintiff-Appellee,
v.
Anthony Martel JORDAN, Defendant-Appellant.
Docket No. 140982. COA No. 295171.
Supreme Court of Michigan.
September 9, 2010.
Order
On order of the Court, the application for leave to appeal the March 12, 2010 order of the Court of Appeals is considered, and it is DENIED, because we are not persuaded that the questions presented should be reviewed by this Court.
DAVIS, J., not participating.
I recuse myself and am not participating because I was on the Court of Appeals panel in this case. See MCR 2.003(B).
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79 F.2d 613 (1935)
In re POTTASCH BROS. CO., Inc.
CENTRAL ILLINOIS CO.
v.
IRVING TRUST CO.
No. 91.
Circuit Court of Appeals, Second Circuit.
November 12, 1935.
*614 Kirlin, Campbell, Hickox, Keating & McGrann, of New York City (Addison S. Pratt and Delbert M. Tibbetts, both of New York City, of counsel), for appellant.
Earl D. Deremer, of New York City (R. John Urevich, of New York City, on the brief), for appellee.
Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.
L. HAND, Circuit Judge.
The trustee appeals from an order which granted a petition in reclamation of the assignee of a creditor, in the following circumstances: At petition filed the Central Trust Company of Illinois was the largest creditor of the bankrupt; with the Chase Bank it held over ninety per cent. of the claims. It had security of various sorts not important here, except that as collateral to a note of $12,500 there had been assigned to it claims against the United States in large amounts, for the repayment of customs duties erroneously collected. Neither the bankrupt, nor the bank appears to have known that the pledge of these claims was invalid because of Rev. St. § 3477 (31 USCA § 203 and note). During the administration of the estate the trustee negotiated a settlement with the two banks, by which it agreed to assign to them all the accounts receivable and notes receivable on the bankrupt's books, and all claims which it had against other bankrupt estates, in consideration of which they were to withdraw their claims. The first of the two letters of the Central Trust Company in this negotiation that of January 27, 1932 does not suggest that title to any collateral already held by the banks should be confirmed in them; but the second that of March 15th did so; it asked that "title to all items assigned to them as collateral would be confirmed in them." These are the only evidence of the negotiations in the record; they were followed by a petition to the referee, drawn by the trustee, praying leave under section 27a of the Bankruptcy Act (11 USCA § 50) to make the proposed settlement. It recited the reasons why this was desirable, described the consideration going to the banks as an assignment of the "accounts receivable, notes receivable and claims in bankruptcy," and concluded that "this estate shall have no further claim to any collateral held or claimed to be held by them," i. e., the banks. The prayer for relief was in the same terms. At the creditors' meeting held to consider the proposal the banks' counsel stated this term of the settlement as "confirming * * * all title to all collateral assigned to it by Pottasch Brothers, Inc., or delivered to it by Pottasch Brothers, Inc." The referee said that he understood that "the collateral in the hands of the two banks at the present time shall be deemed to be properly held by them." He approved the settlement, and the trustee drew an order authorizing it to assign the accounts, notes and claims in bankruptcy, but concluding that upon withdrawal of the claims the trustee should "have no further claim to any collateral pledged and now held" by them "as security for their claims." This order the referee signed on April 15, 1932, the accounts, etc., were assigned, the estate was *615 thereafter closed and the trustee discharged.
Nobody had thought about the claims for the refund of customs duties, and the trustee's attorney did not even know of them, although they were mentioned in the claim as filed. Most of them were eventually dismissed, but in due course some were allowed to the extent of about $11,000. Thereupon the estate was reopened in the autumn of 1934, and the trustee was reappointed so that the recovery might be distributed. The assignee of the Central Trust Company, the present petitioner, intervened claiming the award by virtue of the settlement. It will, however, be noted that the referee's order had not followed the terms of the prayer in the petition; it omitted the words, "or claimed to be held," out of the phrase, "held or claimed to be held"; and the trustee insisted that it did not therefore cover the award, whose pledge had been invalid under Rev. St. § 3477 (31 USCA § 203 and note). The bank had never "held" the claim for refund it asserted, and, having no title, there was nothing to confirm. Thereupon the petitioner asked the referee to amend the order so that it should conform to the petition; but the referee refused to do so, holding that he was without power to vacate or modify any of his orders. Since he construed the word, "held," as comprising only collateral which had been actually transferred, he thereupon dismissed the petition, although he found in fact that the purpose of the parties had been that the order should follow the petition. On appeal the District Judge reversed the referee not because he differed from him in his holding that the order was not enough as it stood, but because, though he assumed without deciding that a referee might not amend his orders in substance, he thought that the amendment in question was merely to make the order speak the original true intent of the court, and that all courts had power to do as much at any time. He therefore amended the order to read, "held or claimed to be held," and directed the trustee to pay the award to the petitioner. The trustee thereupon appealed to this court.
If the order be amended to read as the bank wishes, it is not subject to Rev. St. § 3477, for it then transfers the claims ex proprio vigore. Western Pacific R. Co. v. United States, 268 U. S. 271, 45 S. Ct. 503, 69 L. Ed. 951. True, it does not undertake formally to pass title to the collateral, but only to bar the estate from any claim to it, and it might be argued under the dictum in St. Paul & D. R. Co. v. United States, 112 U. S. 733, 5 S. Ct. 366, 28 L. Ed. 861, that for this reason as the pledge was the only effective act of transfer, and as it was obnoxious to Rev. St. § 3477, the order, as mere foreclosure of the equity, was not a transfer by operation of law. It is perhaps a little doubtful whether anything remains of the dictum in St. Paul & D. R. Co. v. United States, supra, after Western Pac. R. Co. v. United States, supra, but we need not answer that somewhat embarrassing question; for it is plain that the phrase, "held or claimed to be held," must have been meant to cover not only valid but invalid pledges, and to assure to the banks all the collateral to which they asserted any claim regardless of their title. In no other way can any effect be given to the words, "or claimed to be held"; for "held" alone certainly covered all collateral validly pledged; indeed it might even be argued that it was enough to include all to which the banks laid claim. Furthermore, if "claimed to be held" was intended to assure to the bank collateral whose title had not been transferred, it could do so only by the fiat of the court, and that would be a transfer wholly "by operation of law" and therefore valid, notwithstanding Rev. St. § 3477. Thus the only other questions are whether the order (1) should be, and (2) could be, so amended.
As to the first, there cannot be any fair doubt that as entered it did not express the settlement actually intended by the parties; the referee thought so, and so did the judge. The confirmation of the banks' title, when it first appeared as an element in the negotiation in the letter of March fifteenth, might on its face seem equivocal; "all items assigned to them," might be fairly construed as "items validly assigned to them." But the bank certainly intended by the phrase to include the claims for refund, because it had no idea that they were not "validly assigned." In any case the parties construed the settlement more broadly; certainly the trustee did, else it could not have drawn the petition in the language which it chose; the verbal opposition must have been deliberate. It makes not the slightest difference whether *616 or not its attorney knew of the claims for refund; the language and the purpose was perfectly general. There was not even a unilateral mistake, for it does not appear that the trustee would not have used the same words, if its attorney had known of the claims for refund. They were wholly speculative, and, for all we know, considered valueless. Besides, though the trustee had been mistaken, the bank was not; it remembered the collateral and expected to include it because, as we have said, it thought the pledge valid. It is clear therefore that the order should be amended, unless the referee had no power to amend it; it did not embody the parties' intent. It did not embody the referee's intent either; but on that we do not rest. The only question therefore is whether the referee had power to amend it.
There is indeed considerable authority for the opinion that a referee has no such power. So far as we can find, it had its origin in Judge McPherson's ruling in Re Greek Manufacturing Co. (D. C. 1908) 164 F. 211, and arose from what with deference seems to us a mistaken understanding of General Order 27 (11 USCA following section 53). That order governs petitions to the District Court to review orders of referees, and it is indeed amply well settled that they may not be reviewed in any other way. Many of the authorities relied upon in support of the doctrine merely decide as much, and they are altogether beside the point, unless one assumes that the reconsideration by a court of its own judgments or decrees is a review within the intent of the General Order, which is the very question at issue. Nobody to-day would think of an order of the court itself vacating a judgment as an appeal, whatever were the archaic notions about it; and the General Order only lays down the procedure upon appeals to the District Court. This is apparent from the very form of the order which speaks of "review by the judge"; it fills a gap in the statute otherwise unprovided for, except as may be implied from section 39a (5), Bankr. Act (11 USCA § 67 (a) (5). On the other hand, if a referee is a court at all, there is no warrant for saying because an appeal lies from his orders, that he has not the ancient and elementary power to reconsider those orders, nor the faintest reason why he should not do so. That power is of course limited in duration when there are terms of court, but in bankruptcy there are none. In re Burr Mfg. & Supply Co., 217 F. 16 (C. C. A. 2); Hume v. Myers, 242 F. 827, 829 (C. C. A. 4). As to a referee's being a court, not only "may" he be the "court of bankruptcy," section 1a (7), 11 USCA § 1 (7), but under section 38a, 11 USCA § 66, he is affirmatively "invested * * * with jurisdiction to * * * perform such part of the duties * * * as are by this act [title] conferred on courts of bankruptcy and as shall be prescribed by rules or orders of the courts of bankruptcy of their respective districts." Rule 20 of the Bankruptcy Rules for the Southern District of New York is such a "rule or order"; it declares that "the referee designated shall, after adjudication, have jurisdiction of all proceedings." All applications must be made to him, and the court is forbidden to hear any motion in the cause thereafter. General Order 12 (1), 11 USCA following section 53 is to the same effect; after an order of reference "all the proceedings * * * shall be had before the referee." Thus it seems to us a perversion of General Order 27 (11 USCA following section 53) to seize upon the mere chance that appeals from referees were called "reviews," and use it to strip them of powers so common and so necessary to the reasonable exercise of their jurisdiction. Why it is desirable that their orders, ruat coelum, should be as immutable as the Twelve Tables, once the ink is dry, we cannot understand.
The authorities which support such a conclusion are not numerous, and they merely repeat the original reasoning. Judge McPherson in Re Marks (D. C.) 171 F. 281, followed his earlier ruling, but that adds little. In International Agricultural Corporation v. Cary (C. C. A.) 240 F. 101, the Sixth circuit did indeed give the doctrine its obiter approval, but it was an afterthought, added to a decision which had dealt with the merits of the original order that a later referee had undertaken to vacate. Except for this the only decisions of Circuit Courts of Appeal which have so decided are in the Ninth circuit. In re Faerstein, 58 F.(2d) 942, and Patents Process, Inc., v. Durst, 69 F. (2d) 283. The first repeated the reasoning of Judge McPherson and cited some other decisions, which decided only that appeals from orders of a referee must be under General Order 27, which, as we have said, is irrelevant. The second case contained the merest dictum. We do not forget Kelly v. National City Bank of New *617 York, 71 F.(2d) 689 (C. C. A. 3), an appeal by a bankrupt from an order reversing an order of a referee which vacated an earlier order for examination under section 21a (11 USCA § 44 (a). In the District Court (In re Kelly, 7 F. Supp. 379), Judge Avis did indeed follow In re Greek Manufacturing Co., supra, 164 F. 211, but the Circuit Court of Appeals did not so dispose of the appeal. They treated it as though the bankrupt were appealing from the order for his examination and decided it on the merits. Fazakerly v. Kahn's Sons Co. (C. C. A.) 75 F.(2d) 110, is at best an exception to the doctrine, and approves it no further than so far as it does not disapprove it. In re Renshaw's Sons, 3 F.(2d) 75 (D. C. S. D. Ill.), really concerns the right to appeal, which had not been taken in time; so far as it touched the question, it was to decide that the referee's oral statement that he would not change his opinion was not an appealable order. In re Dixie Canden Oil Co., Ltd. (D. C.) 3 F. Supp. 534, being in the Ninth circuit, necessarily followed In re Faerstein, supra, 58 F.(2d) 942, and adds nothing to it. What we said in Re Crosby Stores, Inc., 65 F.(2d) 360, 362, was indeed obiter, but upon deliberation we remain of that opinion. We hold that a referee has the same power over his orders as the District Judge has over his. Hence it is not necessary to consider whether there is an exception to the supposititious doctrine by which a referee may correct his orders for misprision of the clerk, as a court may correct its judgment after the expiration of the term.
Order affirmed.
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204 Mich. App. 525 (1994)
516 N.W.2d 516
SCHOOL DISTRICT OF THE CITY OF PONTIAC
v.
DEPARTMENT OF EDUCATION
Docket No. 139565.
Michigan Court of Appeals.
Submitted April 14, 1993, at Lansing.
Decided April 18, 1994, at 9:05 A.M.
Hardy, Lewis, Pollard & Page, P.C. (by Neil H. Goodman), for the plaintiff.
Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, and Paul J. Zimmer and Jane D. Woodfin, Assistant Attorneys General, for the defendant.
Before: WHITE, P.J., and CAVANAGH and JANSEN, JJ.
WHITE, P.J.
Plaintiff School District of the City of Pontiac appeals as of right from the March 15, 1991, order of the Oakland Circuit Court denying *527 its motion for summary disposition and granting defendant Department of Education's motion for summary disposition. Plaintiff sought declaratory and injunctive relief concerning defendant's calculation of the amount of school aid forfeited because plaintiff failed to provide 180 days of student instruction in its general education program during the 1988-89 school year. We reverse.
The question is whether the Legislature intended (1) that a school district meeting the 230-day requirement in its special education program forfeit school aid for special education because of its failure to meet the 180-day requirement in its general education program, and (2) that federal insurance collection act (FICA) reimbursement payments by the state to the school district, which did not, in fact, include payments for the days when school was not in session, be included in the "total school aid," which is reduced by a percentage figure based on the number of days the school district falls short of the 180-day requirement. We hold that the Legislature did not so intend.
Plaintiff is a third-class school district organized under the School Code, MCL 380.1 et seq.; MSA 15.4001 et seq. Defendant is the governmental unit responsible for administering and implementing the State School Aid Act, MCL 388.1601 et seq.; MSA 15.1919(901) et seq. MCL 380.1284(1); MSA 15.41284(1) and MCL 388.1701(2); MSA 15.1919(1001)(2) provide that a school district must provide a minimum of 180 days of pupil instruction or forfeit 1/180 of its total state aid appropriation for each day it fails to meet the 180-day requirement.
At the beginning of the 1988-89 school year, teachers went on strike in the Pontiac School District, resulting in fourteen days of lost student instruction that plaintiff did not make up. Thus, *528 plaintiff provided only 166 days of pupil instruction. In August 1989, plaintiff certified to defendant the number of days of student instruction it provided in the previous school year, as required by MCL 388.1701(2); MSA 15.1919(1001)(2). Plaintiff also informed defendant that its special education programs satisfied the minimum requirement of 230 days of pupil instruction. See 1989 AACS, R 340.1738(b) and R 340.1748(b).
Defendant informed plaintiff that the forfeited amount would be calculated on the basis of a total state aid figure that included amounts allocated for FICA reimbursements provided under MCL 388.1746; MSA 15.1919(1046), and that a total forfeiture amount of $1,599,344.76 would be deducted from plaintiff's state aid payment.
Defendant calculated the total forfeiture amount by adding plaintiff's 1988-89 state aid, $16,940,674.69, and its 1988-89 FICA reimbursements, $3,622,200.84, for a total of $20,562,874.53, dividing that amount by 180, and determining a per diem forfeiture amount of $114,238.19. Defendant then multiplied the per diem amount by the fourteen days plaintiff fell short of the 180-day requirement, for a total forfeiture amount of $1,599,334.76.
The total 1988-89 school aid figure used by defendant included $1,637,472.25 for special education programs. The amount of the total reduction attributable to funds received for special education was $127,358.95, and the reduction attributable to FICA reimbursements was $281,726.73. In the circuit court, plaintiff argued that the reductions attributable to special education programs and FICA reimbursements were improper. The circuit court concluded, however, that defendant correctly calculated the amount forfeited on the basis of its construction of the statutory language ("total state *529 aid") as including the amount of defendant's state school aid appropriation for special education and for reimbursement of plaintiff's share of its FICA liabilities. Section 1284(1) of the School Code provides:
The board of a school district shall determine the length of the school term. The minimum number of days of student instruction shall be 180. Except as provided in section 101 of the state school aid act of 1979, being section 388.1701 of the Michigan Compiled Laws, a district failing to hold 180 days of student instruction shall forfeit 1/180 of its total state school aid for each day of failure. Not later than August 1, the board of each district shall certify to the state board the number of days of student instruction in the previous school year. If the district did not hold at least 180 days of student instruction, the deduction of state school aid shall be made in the following fiscal year from the first payment of state school aid. Days lost because of strikes or teachers' conferences shall not be counted as days of student instruction. [MCL 380.1284(1); MSA 15.41284(1).]
Similarly, § 101(2) of the State School Aid Act provides:
(2) Each district shall provide a minimum of 180 days of pupil instruction. Except as provided in subsections (3) and (5), a district failing to hold 180 days of pupil instruction shall forfeit 1/180 of its total state aid appropriation for each day of failure. A district failing to comply with rules promulgated by the state board, which rules establish the minimum time pupil instruction is to be provided to pupils for the regular school year, shall forfeit from its total state aid allocation an amount determined by applying a ratio of the time duration the district was in noncompliance in relation to the minimum time pupil instruction is required. A district failing to meet both the minimum 180 *530 days of pupil instruction requirement and the prescribed time of pupil instruction requirement shall be penalized only the higher of the 2 amounts calculated under the forfeiture provisions of this subsection. Not later than August 1, the board of each district shall certify to the department the number of days of pupil instruction in the previous school year. If the district did not hold at least 180 days of pupil instruction, the deduction of state aid shall be made in the following fiscal year from the first payment of state school aid. Days lost because of strikes or teachers' conferences shall not be counted as days of pupil instruction. A district not having the specified percentage of the district's membership in attendance on any day shall receive state aid in that proportion of 1/180 that the actual percent of attendance bears to the specified percentage. The specified percentage to be used for this requirement shall be 70% for 1991-92 and 75% for each subsequent state fiscal year. The state board shall promulgate rules for the implementation of this subsection. [MCL 388.1701(2); MSA 15.1919(1001)(2).]
Defendant argues that the terms "total state aid" and "total state school aid" are clear and unambiguous and can only mean the total of all sums paid by the state to the school district in support of public schools. We disagree. The term "school aid" is not defined in the State School Aid Act. It is defined in the School Code generically to mean "allotments from the general appropriating act for the purpose of aiding in the support of the public schools of the state." MCL 380.6(11); MSA 15.4006(11). The terms "total state school aid" and "total state aid allocation" are not defined to include or exclude the payments at issue here.
The question is one of legislative intent. The School Code and the State School Aid Act address special education in separate statutory articles, Article 3 of the School Code and Article 5 of the *531 State School Aid Act. MCL 380.1701 et seq.; MSA 15.41701 et seq. and MCL 388.1651 et seq.; MSA 15.1919(951) et seq. The Legislature requires that school districts provide special education programs to students who need them and set forth distinct statutory provisions regarding reimbursement for expenses incurred in providing such programs.[1]
The Department of Education promulgated administrative rules requiring that special education programs be conducted for a minimum of 230 days. 1989 AACS, R 340.1738(b), R 340.1748(b). This requirement is separate and distinct from the 180-day requirement pertaining to general education programs. We do not believe the Legislature intended to penalize a school district that met the 230-day requirement in its special education program because it failed to meet the 180-day requirement in its general educational program.
The purpose of the forfeiture provisions is to assure that school districts that do not hold school for the required 180 days do not receive school aid as if they had met the requirement. It is beyond the purpose of the statutes and inconsistent with their purpose to penalize the special education program of a school district that held a full 230-day special education program because the district's general education program failed to meet the 180-day requirement.
With respect to FICA reimbursement, we are also of the opinion that defendant's position is not consistent with the legislative purpose. The statutory scheme operates to reimburse school districts only for FICA actually paid. Thus, the amount the school district saved by not paying FICA on salaries *532 that were not earned during the strike was already deducted by defendant in computing the amount of FICA reimbursement the school district was entitled to receive. The amount actually paid in reimbursement by defendant thus did not include FICA on unpaid compensation. We do not read the statutes as requiring that the amounts that would otherwise be paid to the school district to reimburse for FICA expenses incurred by the district be proportionally reduced on account of the fourteen days by which the district failed to meet the 180-day requirement where the amount that would otherwise be paid does not include amounts for those fourteen days. If such a reduction is required, the district will not be reimbursed for its FICA expenses, a result which is contrary to the legislative purpose in providing for FICA reimbursement.
Reversed.
NOTES
[1] Amounts paid to a school district for special education reimbursement may include amounts paid on behalf of or on account of students who do not live in that district and who may be assigned to that district by outside agencies or authorities. MCL 388.1653(1); MSA 15.1919(953)(1).
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TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-05-00077-CV
J. Stephen Spencer and Kippling L. Spencer, Appellants
v.
Noel Douglas Vaughn, Catherine Gay Vaughn and Scott Alan Yeats, Appellees
FROM THE DISTRICT COURT OF HAYS COUNTY, 274TH JUDICIAL DISTRICT
NO. 2003-0161, HONORABLE DON B. MORGAN, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
Appellants J. Stephen Spencer and Kippling L. Spencer appeal from the trial court's
orders, entered after a jury trial, granting appellees Noel Douglas Vaughn and
Catherine Gay Vaughn, Kippling Spencer's parents, access to their grandchildren M.N.Y. and S.N.S.
They argue that the grandparent visitation statute then in effect is unconstitutional on its face and as
applied to them. They further argue that it was an abuse of discretion to modify M.N.Y.'s
conservatorship and to award $100,000 in attorney's fees. We affirm the trial court's orders.
Factual and procedural background
M.N.Y. was born in December 1994, and S.N.S. was born in August 1997.
Mrs. Spencer is the mother of both children. Appellee Scott Alan Yeats is M.N.Y.'s biological
father. Mr. Yeats and Mrs. Spencer were divorced in early 1996, and Mrs. Spencer was appointed
sole managing conservator of M.N.Y., while Mr. Yeats was named possessory conservator and given
weekend and summer visitation consistent with the family code. See Tex. Fam. Code Ann.
§§ 153.312 (West Supp. 2007), .313 (West 2002). After the divorce, Mrs. Spencer and M.N.Y. lived
with the Vaughns for a while before she married Mr. Spencer in July 1996. Mr. Spencer is S.N.S.'s
biological father and M.N.Y.'s stepfather.
Relations between the Vaughns and their daughter soured after her marriage to
Mr. Spencer, and in 1998, the Vaughns sued for grandparent access under former sections 153.432
and 153.433 of the family code. See Act of May 27, 2005, 79th Leg., R.S., ch. 484, §§ 3, 4,
2005 Tex. Gen. Laws 1345, 1345-46 (amending sections 153.432 and 153.433; current versions at
Tex. Fam. Code Ann. §§ 153.432, .433 (West Supp. 2007)). (1) The Spencers and the Vaughns settled
their dispute, and on August 20, 1998, the trial court signed an order agreed to by the Spencers, the
Vaughns, and Mr. Yeats. Under the agreed order, the Vaughns were given access to the children
as follows: for the first six months, the Vaughns were granted one full day of visitation with M.N.Y.
each month, the first three hours of which were to occur in the Spencers' home and were to overlap
with the Vaughns' visitation with S.N.S., with whom they also had another half-day of separate and
in-home visitation later in the month. After six months, the Vaughns were to have one full day with
both children once a month and two forty-eight-hour periods each year with thirty days' notice to the
Spencers, provided that the two-day visits did not conflict with the Spencers' plans or Mr. Yeats's
visitation with M.N.Y. If the Vaughns' proposed forty-eight hours conflicted with existing plans,
the Spencers were to notify the Vaughns within five days and seek a substitute period. The Vaughns
were to reimburse the Spencers $211 in court costs and were ordered to "allow" the Spencers to
retrieve a television set, two bicycles, and any other property that was in the Vaughns' possession.
The parties agreed to enter into a confidentiality agreement and to notify each other sixty days before
any intended change of address or, if such notice was impossible, soon after learning of the change. (2)
At the time the order was signed, the Spencers, the Vaughns, and Mr. Yeats all lived in Texas. At
the time of trial, the Spencers lived in Dripping Springs, the Vaughns lived in Corpus Christi, and
Mr. Yeats had remarried and lived in League City.
Very soon after signing the agreed visitation order, the Spencers moved to Utah
without informing the Vaughns, who learned of the move when they arrived for their first visitation
under the order. Mrs. Vaughn testified that the Spencers did not provide a mailing address until
October 26, 1998, when Mr. Spencer provided a post office box address in Roy, Utah. The Spencers
did not provide a phone number or physical address, and the Vaughns tried unsuccessfully to find
a phone number for the Spencers in Roy. In July 1999, Mr. Spencer informed the Vaughns that "our
family's physical address is: 203 North 1600 West," but did not provide a city, state, or zip code.
A letter sent to that address in Roy was returned, stamped, "No such address." In affidavits signed
in March 2003, the Spencers stated that their physical address had been in West Point, Utah.
Mr. Yeats testified that on August 27, 1998, one week after the trial court signed the
agreed order, the Spencers informed him that they were moving to Utah in three days. Mr. Yeats
visited M.N.Y. in Utah in September and testified that the Spencers threatened several times to move
and not tell him where they lived if he told anyone their address. Mr. Spencer told Mr. Yeats that
they had moved to Utah to get away from the Vaughns.
Mr. Spencer wrote the Vaughns several letters in 1998 and 1999 complaining that the
Vaughns had not returned the Spencers' property and were obligated to ship the property to the
Spencers in Utah, had failed to pay $211 in court costs, (3) and had breached the confidentiality
agreement. Mrs. Vaughn testified that the agreed order required the Vaughns to allow the Spencers
to pick up their property, but that the Spencers never did so and that the items were still in the
Vaughns' possession. In May 1999, Mr. Spencer wrote again, stating that because the Vaughns had
not paid the court costs or shipped the Spencers' property, they were barred from contacting, visiting,
or "attempt[ing] to carry on a relationship" with the children.
In early August 1999, the Vaughns sent the Spencers a letter providing thirty days'
notice that they intended to exercise their visitation rights by coming to Utah for a weekend in
September 1999. This letter was sent by certified and regular mail to the Spencers' post office
box in Roy, Utah, and the certified letter was returned to the Vaughns as unclaimed.
On August 27, 1999, Mr. Spencer wrote the Vaughns, stating that the Spencers had not received the
Vaughns' letter until August 27 because the Spencers had been out of town. Mr. Spencer said they
had other plans for the weekend proposed by the Vaughns but did not propose alternative dates.
Mr. Spencer also said that because the Vaughns had not complied with the agreed order's visitation
schedule for the first six months following its issuance, the Vaughns were "not entitled to
see" the children.
The Spencers returned to Texas in late 1999 or early 2000, but the Vaughns did not
learn of the Spencers' new address until several years later. Mr. Yeats testified that although he
knew the Spencers had moved back to Texas, they did not provide him with a new physical address
until late 2002. Mr. Yeats thought the Vaughns learned that the Spencers had returned to Texas
when the Spencers sued Mr. Yeats for increased child support in early January 2003. In
January 2003, the Vaughns wrote the Spencers that they intended to begin weekend visitation in
accordance with the agreed order in February but stated that if the planned weekend was
inconvenient, they would come another Saturday. The Spencers apparently informed the Vaughns
that the proposed date conflicted with M.N.Y.'s plans, and in mid-February 2003, the Vaughns
wrote again, pointing out that the Spencers had not provided an alternative date for visitation and
saying that they would visit S.N.S. alone in February and would visit both girls on March 8.
The Vaughns stated that they were not required to give notice before exercising their day visitations
and that they intended to visit the girls every second Saturday as provided in the agreed order.
Mrs. Spencer replied that the Vaughns had provided "deficient" notice of their planned visit
and that the March date conflicted with Mr. Yeats's visitation. Therefore, she concluded, the
visitations were "excluded."
In March 2003, the Spencers filed a petition seeking to modify and vacate the agreed
order, alleging that the Vaughns were harassing them and demanding access to the children in
violation of the order and had violated provisions related to confidentiality and Mrs. Vaughn's
mother. The Vaughns filed a motion for contempt, and the Spencers responded with a motion for
contempt against the Vaughns. The Vaughns also sued for interference with their possessory rights
to the children. Meanwhile, Mr. Yeats filed a petition seeking to be named M.N.Y.'s sole managing
conservator and suing for interference with his possessory interest, asking to consolidate all the
motions to modify. Mr. Yeats and Mrs. Spencer eventually agreed that they should be named joint
managing conservators of M.N.Y., but disagreed about M.N.Y.'s primary place of residence.
At trial, Mrs. Vaughn testified that she and her husband never saw the children from
the date of the agreed order in late August 1998 until June 2003. Mrs. Vaughn testified that it was
in the children's best interests for her and Mr. Vaughn to have visitation so the girls could build
relationships with their grandparents and their extended family. She testified that she and her
husband had paid their current attorney about $43,000 and that they still owed about $40,000 for fees
incurred leading up to the trial.
Sandra Perrenot, Mrs. Vaughn's sister and Mrs. Spencer's aunt, testified that her
grandchildren spent a good deal of time at the Vaughns' house and that the Vaughns were very good
with the children. She thought it was in M.N.Y.'s and S.N.S.'s best interest to have contact with
their grandparents because the Vaughns can "teach them so much" and "show them so much
different kind of love a parent can't show them." She did not think it was in M.N.Y.'s best interest
to stay with the Spencers and testified that shortly after S.N.S.'s birth in 1997, Mr. Spencer showed
her a framed and "frontal nude" photograph of three-year-old M.N.Y., "standing there stark naked."
Mrs. Perrenot said she was "appalled" but did nothing because she "didn't know what to say."
Stacey Gurleski, Mrs. Vaughn's niece and the Vaughns' next-door neighbor, testified
that her daughter, who is the same age as S.N.S., loved the Vaughns, and that she allowed her
daughter to walk to the Vaughns' house "all the time." She said the Vaughns are "very loving and
nurturing and supportive people" and could not imagine her daughter "not having them in her life."
She testified that when she went through chemotherapy while her husband was traveling, her
daughter spent most of her time with the Vaughns. Mrs. Gurleski was very close to Mrs. Spencer
growing up, but since the Spencers married, she has had almost no contact with Mrs. Spencer.
Mr. Yeats testified about difficulties he had with the Spencers related to visitation and
M.N.Y.'s health insurance. He testified that in the summer of 2002, he agreed to delay the beginning
of his forty-day summer visitation with M.N.Y. because the Spencers said they were taking the girls
to Disney World. However, the Spencers postponed the trip without telling Mr. Yeats and later tried
to delay his visit further because they wanted to take the girls to New Mexico. Mr. Yeats objected
and insisted on having M.N.Y. for the remaining seven days of visitation, and he said that it was at
that point that things got "really nasty." Mr. Yeats also testified that the Spencers sometimes told
M.N.Y. that he was supposed to pick her up earlier than had been arranged in order to make her think
he was late. On several occasions, he told the Spencers about plans he had made to take M.N.Y. to
sporting events or concerts, only to have the Spencers tell him there was a conflict just before the
event or to simply be away from home when he arrived to pick her up.
Mr. Yeats further testified that the Spencers never sent him copies he requested of
M.N.Y.'s report cards and that he believed many of the gifts he gave M.N.Y. had been given away
or returned. Mr. Yeats testified that although M.N.Y.'s last name is Yeats, he has learned that the
Spencers taught M.N.Y. that her last name was Spencer "from the time when she was little" and used
Spencer as her last name on medical bills and school enrollment forms. Mr. Yeats provided the
school with M.N.Y.'s birth certificate, and as a result, her last name has been corrected and he is
finally receiving her report cards from the school. Mr. Yeats also discovered that the Spencers had
filed an affidavit with the school saying that it was against their religion for M.N.Y. to be
immunized. The Spencers said they were afraid the shots would endanger M.N.Y. but never gave
Mr. Yeats the names of any doctors they had consulted or any medical reports. He testified that he
was concerned when the Spencers did not arrange for M.N.Y. to get timely vaccinations, including
a tetanus shot; that there had been problems with M.N.Y. not getting proper dental care until he took
her to a dentist during a visitation; and that the Spencers allowed her to drink too much caffeinated
soda, which he believed interfered with her sleep. He testified that M.N.Y. was tall for her age and
worried about her weight. He believed he could help with her body image issues because he has
dealt with the same problems.
Mr. Yeats testified that he had allowed the Spencers to play games with him for years
because M.N.Y. was unaware of the turmoil between her parents. Now, however, "it's getting to
where it's affecting family life and . . . it's affecting her other ways that you can't even name." He
said he was seeking to change M.N.Y.'s living arrangements because "I have to save my kid." Mr.
Yeats testified that he was "very much in favor" of allowing the Vaughns to have contact with
M.N.Y., saying he believed that it was "crucial" for her to have a relationship with the Vaughns and
her extended family. He testified that the Vaughn family was very close and supportive and that he
did not believe the visitation should be terminated, saying, "[I]f anything, they should get more
visitation than they already ordered."
Social worker Carol Robison testified about a home study she prepared for this case
in 2004, and the Vaughns introduced her report into evidence. Ms. Robison stated in her report that
Mr. Yeats and the Vaughns were cooperative, provided the information she requested, and seemed
to "truly have the 'best interest' of the children at heart." The Spencers, however, did not provide
information until ordered to do so and, although they "wished to portray themselves as being the only
ones . . . that wished to fully cooperate with the Court and this investigator, they were indeed the
only ones that did not want to provide information requested." In one instance, the Spencers told
Ms. Robison that they had mailed certain forms and documents months before they were ordered to
provide the information, but Ms. Robison noted that the forms provided by the Spencers upon a court
order were originals, saying, "The couple stated that they were copies, but they are not photocopied
documents and are originals filled out in ink. The information contained in them, such as ages,
would also indicate that they were not completed in the spring and mailed, as the couple has so
alleged." Ms. Robison also testified that Mr. Spencer was reluctant to provide documentation about
his military career and told Ms. Robison that his military records were sealed and that she "was not
to release that to anyone," making that a condition of providing her the records. Ms. Robison
observed in her report, however, that none of the documents he provided indicated that the
records were sealed.
Ms. Robison said that the children were in good physical health but that M.N.Y. was
very sensitive, appeared to be "under a great deal of stress and pressure," had been inappropriately
informed of and involved in the legal proceedings, and was depressed as a result of her knowledge
of the case. Ms. Robison believed the Spencers have involved M.N.Y. in their battles with
Mr. Yeats and the Vaughns and reported, "It is strongly felt that Mr. Spencer has been greatly
responsible for the decline in the relationships between [Mrs. Spencer] and her parents as well as
between [Mrs. Spencer] and [Mr. Yeats]. . . . It is apparent that [Mr. Spencer] has total disregard for
the Yeats and the Vaughns and it is perceived that [M.N.Y.] has been influenced by her step-father's
attitude toward them." Mrs. Spencer discussed allegations about Mr. Spencer bathing with the girls
and told Ms. Robison that Child Protective Services had instructed the Spencers not to bathe with
the girls. Although Ms. Robison had not seen the nude photograph of M.N.Y., she testified that
Mrs. Perrenot's description made the photo sound "very inappropriate" and raised a "red flag."
Ms. Robison testified that M.N.Y. and S.N.S. are very close and that she thought it
was in their best interest to stay together. If splitting the children was not an issue, however,
Ms. Robison testified that she would recommend that M.N.Y. live with her father. She said the
Vaughns are "very kind, gracious, obviously have a deep concern for the welfare of their
grandchildren" and she felt "strongly" that the children should have visitation with the Vaughns and
their extended family at the Vaughns' home.
Mr. Spencer testified that he has not allowed the Vaughns to see the girls because
"Mrs. Vaughn is so violently opposed to my marriage to Kippling she's been a horrible influence on
the girls when they have been around them." He testified that the Vaughns had been very controlling
of Mrs. Spencer before the Spencers' marriage and that they sued for visitation because the Spencers
decided to move away from the Vaughns. He said he did not control his wife and never asked her
to choose between him and her family.
Mr. Spencer disputed Mrs. Perrenot's testimony about the picture of M.N.Y., calling
Mrs. Perrenot a "liar." He testified that the photo was unframed and had been taken when M.N.Y.
was a toddler and had a "soap bucket, or sand bucket, or something in front of her." He said that he
did not show it to Mrs. Perrenot and that she heard about it from someone else. Mr. Spencer also
testified that he had bathed with the girls but that it "was a long time ago when they were little." He
said that M.N.Y.'s legal name is Yeats but that she had gone by Spencer for years, saying, "I'm just
not going to argue with that, if she wants to use my name, I'm proud to have her do it."
Mr. Spencer testified that he left the Air Force in the early 1990s after he and several
co-workers were wrongfully accused of sexually molesting a child. He was initially given a general
discharge with honorable conditions, but prevailed in a contest, resulting in a full honorable
discharge and a confidential settlement. He denied extracting any promises from Ms. Robison before
providing his military records, saying he only asked if her file would be confidential.
Mr. Spencer also testified about a felony insurance fraud charge brought against him
in Utah to which he pled no-contest. He explained that after Mrs. Spencer was involved in a serious
car accident, he filed an insurance claim seeking $37,000 for a diamond that he said was dislodged
from her wedding ring. Mr. Spencer testified that the insurance company decided to fight the claim,
and that because he "did not have the wherewithal financially, emotionally, physically" to fight back,
he pled no-contest to the fraud charge. In Mr. Spencer's plea documents, he said:
The states [sic] evidence would support that I submitted a false claim . . . claiming
that a 2.2.-carat diamond from my wife's wedding ring was dislodged and lost during
a motor vehicle accident. The states [sic] evidence would show the diamond had not
dislodged and infact [sic] was intact. I claimed that the worth of the diamond was
over $37,000.00. That the states [sic] evidence would show that I made
misrepresentations and misleading statements during the claim process.
Mrs. Spencer was asked when she and her family returned from Utah, and she
testified that starting in 1999, they had homes in both states, that they "weren't completely back here
in '99," and that they moved here "[o]fficially with furniture, probably early 2000." Mrs. Spencer
signed a contract to teach in Hays County beginning in August 1999, and testified that, although she
contracted to teach in the 1999-2000 school year, at the time she was in "intensive therapy" due to
her car accident and that she could not remember whether she worked in Hays County in 1999. She
testified that she did not breach her contract, but she also testified that she "probably was not there
in August of 1999." Later in her testimony, she said she was "commuting back and forth" between
Texas and Utah in 1999. Still later, she said, "I was in and out at the beginning of the [1999-2000]
school year, and I started officially being there full time mid October till late--early November."
Mrs. Spencer taught until 2002, when a dispute arose with the district; her departure was covered
by a confidentiality agreement with the school district.
Mrs. Spencer said she provided the school district with a baptismal certificate
showing M.N.Y.'s last name as "Spencer," not "Yeats," because she did not have a copy of M.N.Y.'s
birth certificate and so provided the baptismal certificate to enroll M.N.Y. in kindergarten.
Similarly, Mrs. Spencer said she signed a false affidavit stating that it was against her family's
religion to vaccinate the children because she "didn't have [M.N.Y.'s] shot records at the time, and
it allowed her to be in kindergarten when she was supposed to be."
Mrs. Spencer testified about the photograph mentioned by Mrs. Perrenot, saying it
was not pornographic in nature but was the kind of picture "every parent has." She also denied any
inappropriate behavior when Mr. Spencer bathed or took care of the girls and said that CPS came
to the house, interviewed the Spencers for several hours, and then "took no action."
Mrs. Spencer testified that M.N.Y. and S.N.S. were very close and that S.N.S. "hates"
when M.N.Y. has to leave to visit Mr. Yeats. Mrs. Spencer did not believe it was in M.N.Y.'s best
interest to live with Mr. Yeats because she has lived in Dripping Springs for several years and has
a group of close friends there. She said that she wanted M.N.Y. and Mr. Yeats to have a good
relationship and that she often reminded M.N.Y. to call Mr. Yeats. She denied that Mr. Spencer
controlled her and said that visitation with the Vaughns was not in the children's best interest
because, "I'm the mother of those children. I know what's best for them. And if I don't feel that it's
good for them to be around people who are going to be negative about me and my husband, then I
don't want her around them." She had no problems with the children's other grandparents.
Dr. Allison Wilcox, a child psychologist, treated M.N.Y. from April 2004 through
August 2004. Dr. Wilcox testified that M.N.Y. is very articulate and intelligent but also anxious and
depressed. Dr. Wilcox said Mr. Yeats was upset when he learned M.N.Y. had been prescribed
antidepressants and felt that M.N.Y.'s sleep disturbances were instead due to too much caffeine and
sugar. Mr. Yeats told Dr. Wilcox that he would try to bring M.N.Y. to Dripping Springs for therapy
during his summer visitation in League City but never did so. Dr. Wilcox testified that M.N.Y. told
her that she loved her father but did not like visiting him in Houston because it was far away and
boring. M.N.Y. worried that her mother would get in trouble or even be arrested if M.N.Y. did not
want to go to Houston to visit her father. Dr. Wilcox testified that she thought the children should
stay together but made no recommendations related to the Vaughns.
The jury found: it was in M.N.Y.'s and S.N.S.'s best interests to modify the agreed
order related to grandparent access; material and substantial change in the circumstances of a child,
conservator, or the Vaughns since the agreed order was signed in 1998; it was in M.N.Y.'s best
interest for Mr. Yeats to designate her primary residence; material and substantial change in the
circumstances of Mrs. Spencer, Mr. Yeats, or M.N.Y. since the 1997 conservatorship order between
Mrs. Spencer and Mr. Yeats; both the Spencers concealed and aided or abetted in the concealment
of the girls from the Vaughns and from Mr. Yeats; the Vaughns were injured by the concealment of
the children; Mr. Yeats was injured by the concealment of M.N.Y.; and $1,000 would compensate
Mr. Yeats for the Spencers' concealment of M.N.Y. The jury also recommended that M.N.Y. should
be informed that when she is twelve years old she can choose which parent to live with; the
Vaughns' access should not be reduced and they should have "longer duration visitations, perhaps
over the weekend, fewer times"; and the children should visit the Vaughns together, have "minimum
exposure" to the conflict between the parties, and receive counseling and therapy.
The trial court signed a final order naming Mr. Yeats and Mrs. Spencer M.N.Y.'s
joint managing conservators; giving Mr. Yeats the right to determine M.N.Y.'s primary residence;
giving Mrs. Spencer visitation; finding that it was in M.N.Y.'s best interest to change her
conservatorship; granting the Vaughns "access, visitation and/or possession" of both children one
weekend every other month and one week each summer; and requiring the Spencers to find a
substitute period for the Vaughns' summer visitations if the Vaughns' proposed dates conflicted with
the Spencers' plans. The court found that it was in the children's best interest to have visitation
together with the Vaughns, ordered the Spencers and Mr. Yeats not to interfere with the Vaughns'
visitation, ordered the parties not to talk to the children about the parties' conflicts, ordered that both
children receive counseling and therapy, and ordered the parties to notify each other and the court
promptly of any change of address or phone number. Finally, the court ordered the Spencers to pay
$50,000 in attorney's fees to the Vaughns and $50,000 in attorney's fees to Mr. Yeats.
The trial court entered the following findings of fact and conclusions of law: it was
in the children's best interest for the Vaughns to have access to and visitation with the children; the
testimony of Mr. and Mrs. Spencer was "not believable"; there was good cause to award Mr. Yeats
and the Vaughns $50,000 in attorney's fees as damages for the interference with their possessory
interests; the two attorney's fees awards were reasonable and necessary; and the Spencers each
willfully and contemptuously disobeyed the agreed order sixty times with relation to each child. The
court assessed a total of $12,000 in fines against each of the Spencers and ordered Mr. Spencer
confined to jail for 1,200 days, suspending the sentences if the Spencers each paid $100, Mr. Spencer
spent ten days in jail, and the Spencers obeyed the order's provisions related to the Vaughns'
possession of and access to the children. The trial court denied the Spencers' motion for judgment
notwithstanding the verdict and motions for new trial.
On appeal, the Spencers contend that former section 153.433 is unconstitutional on
its face and as applied to them and that, even if the statute is constitutional, the trial court exceeded
its statutory authority by granting the Vaughns possession of the children, rather than mere access.
They further argue that the trial court abused its discretion in giving Mr. Yeats the right to decide
M.N.Y.'s primary residence because there was insufficient evidence to show that the modification
was in M.N.Y.'s best interest. Finally, the Spencers argue that the trial court abused its discretion
in awarding attorney's fees to Mr. Yeats and the Vaughns without competent expert testimony.
Grandparent visitation
The Spencers challenge the constitutionality of former section 153.433, both on its
face and as applied to them. However, this appeal concerns not the original grandparent visitation
suit but instead the Spencers' motion to modify the agreed order. The supreme court has established
that the presumptions in favor of parents set out in chapter 153 of the family code do not apply to
modification proceedings under chapter 156. In re V.L.K., 24 S.W.3d 338, 343 (Tex. 2000); see also
In re M.N.G., 113 S.W.3d 27, 35-36 (Tex. App.--Fort Worth 2003, no pet.). As the court explained,
"Chapter 153 and Chapter 156 are distinct statutory schemes that involve different issues."
In re V.L.K., 24 S.W.3d at 343. In an original suit under chapter 153, the parent "has the benefit of
the parental presumption," but "[b]ecause the Legislature did not express its intent to apply the
presumption in Chapter 156 modification suits, courts should not apply the presumption in those
cases." Id. Instead, modification proceedings should ask only whether the requirements of section
156.101 of the family code are met, "which requires the parties to show that (1) circumstances of a
party affected by the order have materially and substantially changed; and (2) modification would
be a positive improvement for the child." Id.; see Tex. Fam. Code Ann. § 156.101 (West Supp.
2007). In this modification proceeding under chapter 156, therefore, chapter 153 presumptions in
favor of the Spencers do not apply. See In re V.L.K., 24 S.W.3d at 343. Further, the Spencers agreed
to the order granting the Vaughns' visitation and never challenged the order or the statute's
constitutionality until filing this motion to modify. The trial court did not grant the Vaughns
visitation over the Spencers' objections by relying on former section 153.433. The same policy
considerations underlying In re V.L.K. apply to motions to modify in grandparent visitation cases. (4)
See id.; In re M.N.G., 113 S.W.3d at 33, 36. Therefore, the Spencers are bound by In re V.L.K. and
the burdens of proof set out in chapter 156 rather than the chapter 153 presumptions and Troxel
v. Granville. (5) See 530 U.S. 57, 66-67 (2000) (holding Washington grandparent-visitation statute is
unconstitutional).
A trial court with continuing, exclusive jurisdiction may modify an order regarding
conservatorship or the "possession of and access to" a child. Tex. Fam. Code Ann. § 156.001
(West 2002). A court may modify such an order if the evidence shows (1) a material and substantial
change in the circumstances of the child or other party affected by the order and (2) that the change
would be in the child's best interest. Id. § 156.101(1). We review a trial court's modification order
for an abuse of discretion. See, e.g., In re J.E.P., 49 S.W.3d 380, 386-87 (Tex. App.--Fort Worth
2000, no pet.); Maixner v. Maixner, 641 S.W.2d 374, 376 (Tex. App.--Dallas 1982, no writ). (6) "The
trial court is in the best position to observe the demeanor and personalities of the witnesses and can
'feel' the forces, powers, and influences that cannot be discerned by merely reading the record," and
a trial court does not abuse its discretion if some substantive, probative evidence supports its
decision. Echols v. Olivarez, 85 S.W.3d 475, 477 (Tex. App.--Austin 2002, no pet.) (citing
Jeffers v. Wallace, 615 S.W.2d 252, 253 (Tex. Civ. App.--Dallas 1981, no writ)) (considering
modification of terms governing joint managing conservatorship). When applying an abuse-of-discretion standard to a trial court's modification of provisions related to possession and custody of
children, we ask first whether the trial court had sufficient information on which to exercise its
discretion, applying a traditional sufficiency review, and if so, whether it acted reasonably in the
application of its discretion. Id. at 477-78. The parties do not dispute that there was a change in
circumstances, and it was the Spencers who sought the modification. The only question, therefore,
is whether the record supports a finding that it was in the children's best interest for the Vaughns to
have continued access to them through fewer but longer visits.
The Spencers testified that the Vaughns disliked Mr. Spencer and acted
inappropriately and said negative things about him in front of the children. Ms. Robison, however,
believed that it was the Spencers, not the Vaughns, who had shared details about the parties' dispute
with the children and that the Vaughns truly had the children's best interests in mind. The other
witnesses, including Mr. Yeats, testified that it would be beneficial for the children to have visitation
with the Vaughns and their extended family. The jury determined that it was in the children's best
interests to have contact with the Vaughns and recommended that the Vaughns have fewer but longer
visits. The trial court, which had the opportunity to observe the witnesses, found that the Spencers
were not credible witnesses and that it was in the children's best interests to have visitation with the
Vaughns. The trial court did not err in refusing to terminate the Vaughns' visitations. (7)
The Spencers further argue that the trial court erred in allowing the Vaughns to have
possession of the girls, rather than mere "access" to the girls. We disagree.
We recognize the distinction between "possession" and "access," see In re L.M.M.,
No. 03-04-00452-CV, 2005 Tex. App. LEXIS 7191, at *34 (Tex. App.--Austin Aug. 31, 2005,
no pet.) (mem. op.) (access allows conservator to visit and communicate with child; possession
allows conservator to exercise control over child to exclusion of others), but note once more that this
is a modification proceeding, not an original grandparent access suit. We differ with our sister court,
which in E.C., Jr., ex rel. Gonzales v. Graydon determined that former section 153.433 allowed
grandparent "access," not "possession." 28 S.W.3d 825, 831-32 (Tex. App.--Corpus Christi 2000,
no pet.). In making that determination, the court looked to the same version of section 153.433 that
is applicable to this case, which provided that a trial court should "order reasonable access to a
grandchild" if certain requirements were met. See Act of May 27, 2005, ch. 484, § 4, 2005
Tex. Gen. Laws at 1345. The court did not note, however, that section 153.433 was titled,
"Possession of and Access to Grandchild." See id. (emphasis added). Further, Gonzales was
decided before 2005, when the legislature amended the statute to provide that a grandparent may
obtain "reasonable possession of or access to a grandchild." Tex. Fam. Code Ann. § 153.433. In
a bill analysis prepared in 2005 to explain the purpose and effect of the amendment, the Committee
on Juvenile Justice & Family Issues stated that the amendment "make[s] consistent the language
throughout Subchapter H [governing rights of grandparents] that the suit is for possession of or
access to the child and not merely for access to the child, terminology which is currently
inconsistently applied." (8) House Comm. on Juvenile Justice & Family Issues, Bill Analysis, C.S.H.B.
261, 79th Leg., R.S. (2005). Finally, in cases involving grandparent access under former section
153.433, grandparents were frequently granted possession rather than mere access. See, e.g., In re
N.A.S., 100 S.W.3d 670, 671 (Tex. App.--Dallas 2003, no pet.); Sailor v. Phillips, No. 03-00-00725-CV, 2001 Tex. App. LEXIS 7492, *2-3 (Tex. App.--Austin Nov. 8, 2001, no pet.) (not designated
for publication); Goolsbee v. Heft, 549 S.W.2d 34, 34-35 (Tex. Civ. App.--Tyler 1977, no writ). (9)
The court did not abuse its discretion in allowing the Vaughns possession of the girls.
The Spencers further contend that the trial court improperly submitted to the jury
issues related to the Vaughns' visitation. We disagree. Section 105.002 governs jury trials in suits
affecting the parent-child relationship, including suits "to modify access rights," Martin v. Martin,
776 S.W.2d 572, 574 (Tex. 1989) (considering predecessor to section 105.002), and allows a party
to demand a jury trial in a suit affecting a parent-child relationship unless the suit seeks adoption or
to adjudicate parentage. See Tex. Fam. Code Ann. § 105.002(a), (b) (West Supp. 2007). In
February 2003, at the time the Spencers filed their petition for modification, subsection 105.002(c)
provided that a party was entitled to a jury verdict on issues related to conservatorship and the
determination of a child's primary residence. See Act of May 27, 2003, 78th Leg., R.S., ch. 1036,
§ 2, 2003 Tex. Gen. Laws 2987, 2987-88 (amending section 105.002(c)). A party was not entitled
to a jury verdict on issues of "a specific term or condition of possession to the child" or a
conservator's rights or duties other than the issue of primary residence, but under former subsection
105.002(c)(3), the court was permitted to submit such issues to the jury, although under former
subsection 105.002(d) the jury's answer on those issues was "advisory only." See Act of
May 8, 1997, 75th Leg., R.S., ch. 180, § 1, 1997 Tex. Gen. Laws 1033, 1033-34. In 2003, the
legislature amended subsection 105.002(c) and repealed subsection 105.002(d), but the amendments
to subsection 105.002(c) apply only to a suit filed on or after September 1, 2003. See Act of
May 27, 2003, ch. 1036, § 2 (amending section 105.002(c)), § 22 (repealing section 105.002(d)),
§ 23(c) (changes to section 105.002(c) apply only to cases filed after effective date), 2003 Tex. Gen.
Laws at 2987-88, 2994. (10) Therefore, although the Vaughns may not have been entitled to a jury
answer related to a "specific term or condition of possession of or access," the trial court had the
discretion to submit such issues to the jury. Further, the trial court asked only whether it was in the
children's best interests to modify the agreed order and whether the parties' circumstances had
changed; it did not ask about a "specific term or condition of access to or possession of" the children.
See Tex. Fam. Code Ann. § 105.002(c)(2)(B) (West Supp. 2007). The trial court did not abuse its
discretion in submitting those questions to the jury and using the jury's answers and
recommendations in an advisory capacity.
Based on this record, we hold that the trial court did not abuse its discretion in
modifying the agreed order to allow the Vaughns to have weekend visitations at their home with the
children every other month and for one week in the summer. We overrule the Spencers' first,
second, and third issues.
Conservatorship of M.N.Y.
We now turn to the Spencers' fourth issue, complaining that the trial court abused its
discretion by giving Mr. Yeats the right to determine M.N.Y.'s primary place of residence. To
support modification of the 1997 conservatorship order, Mr. Yeats had the burden to prove that
modification was in M.N.Y.'s best interest and that "the circumstances of the child, a conservator,
or other party affected by the order [had] materially and substantially changed since the date of the
rendition of the order." See Tex. Fam. Code Ann. § 156.101(1). (11) The Spencers do not challenge
the jury's finding on the second element, changed circumstances since the 1997 order. They
complain that the evidence is both legally and factually insufficient to support a finding that giving
that right to Mr. Yeats was in M.N.Y.'s best interest.
Initially, we note that under former section 105.002(c)(1) of the family code, a party
was entitled to a jury verdict on the issue of "the determination of the primary residence of the child"
and the trial court "may not contravene" the jury's verdict on that issue. Act of May 8, 1997,
ch. 180, § 1, 1997 Tex. Gen. Laws at 1034. (12) Thus, unless there was legally insufficient evidence
to support the jury's determination that Mr. Yeats should be allowed to determine M.N.Y.'s primary
residence, the trial court could not have entered a judgment contravening the jury's decision. See
Lenz v. Lenz, 79 S.W.3d 10, 20 (Tex. 2002); Harris v. Texas Dep't of Family & Protective Servs.,
228 S.W.3d 819, 823 (Tex. App.--Austin 2007, no pet.); Brunson v. Brunson, 502 S.W.2d 578, 579
(Tex. Civ. App.--Fort Worth 1973, no writ). (13)
We therefore consider whether the evidence was legally sufficient to support the
jury's finding that it was in M.N.Y.'s best interest for Mr. Yeats to determine her primary residence.
See Harris, 228 S.W.3d at 822-23. Mr. Yeats sought the modification related to M.N.Y.'s primary
residence and so had the burden to establish by a preponderance of the evidence that it would be
harmful to M.N.Y. to maintain the status quo and that the change would be a positive improvement
for her. See In re L.M.M., 2005 Tex. App. LEXIS 7191, at *25-26. Because the Spencers did not
have the burden of proof, we ask whether there was any evidence to support the finding. See Harris,
228 S.W.3d at 823. We view the evidence in the light most favorable to the jury's finding, indulging
every reasonable inference that supports it, crediting favorable evidence if reasonable jurors could,
and disregarding contrary evidence unless reasonable jurors could not. City of Keller v. Wilson,
168 S.W.3d 802, 807, 821-22 (Tex. 2005); Harris, 228 S.W.3d at 823. If reasonable people could
differ in their conclusions, we will not substitute our judgment for the jury's, and we must defer to
the jury's reasonable determinations of the credibility of the witnesses, the weight to be given the
testimony, and the resolution of evidentiary conflicts. City of Keller, 168 S.W.3d at 819-20, 822;
Harris, 228 S.W.3d at 823.
Although Ms. Robison recommended that M.N.Y. remain with the Spencers because
M.N.Y. and S.N.S. have a close relationship, she also testified that if not for the relationship between
the sisters, she would recommend that M.N.Y. live primarily with Mr. Yeats. There was testimony
that the Spencers were uncooperative with Ms. Robison, Mr. Yeats, and the Vaughns and that they
interfered with Mr. Yeats's visitation with M.N.Y., including trying to make M.N.Y. think that
Mr. Yeats was late for visits. Ms. Robison and others believed that M.N.Y. was stressed and
depressed because the Spencers put M.N.Y. in the middle of their disputes with others. There were
allegations that Mr. Spencer might have engaged in inappropriate behavior in the past, although both
Spencers strongly denied it. (14) Mrs. Spencer admitted to signing a false affidavit related to M.N.Y.'s
vaccinations, which Mr. Yeats believed put M.N.Y.'s health at risk; the Spencers improperly used
"Spencer" as M.N.Y.'s last name in school registration and health insurance documents; and
Mr. Spencer pleaded no-contest to charges of insurance fraud. The Spencers moved to Utah without
informing the Vaughns, with whom the Spencers had just signed a visitation agreement, they
threatened to move and not tell Mr. Yeats their new address if he told anyone where they were, and
they made it difficult for Mr. Yeats to see his daughter. They moved back to Texas in 1999 or early
2000, but did not inform Mr. Yeats or the Vaughns of their address until about three years later. In
letters to the Vaughns, the Spencers misstated the terms of the agreed order, improperly using what
they perceived as the Vaughns' failure to meet the order's requirements as grounds for "excluding"
the Vaughns from seeing the children as agreed. Mr. Yeats testified that he had problems with the
Spencers related to M.N.Y.'s health insurance, that he worried the Spencers were not properly caring
for M.N.Y.'s health, and that he was sensitive to and wanted to help with M.N.Y.'s weight concerns
because he had faced similar issues himself.
Having M.N.Y. live primarily with Mr. Yeats will result in the sisters living in
different households. However, the relationship between the sisters, as important as it is, is not the
only factor that the jury could have considered. See In re K.L.R., 162 S.W.3d 291, 306
(Tex. App.--Tyler 2005, no pet.) ("Split custody of two or more children of the same marriage is
a factor, among many, to consider in determining the best interest of a child. Courts have
traditionally applied the policy of keeping siblings together in custody decisions only to children of
the same marriage." (citations omitted)). The Spencers' behavior related to other adults, their
credibility or lack thereof, and their behavior in placing M.N.Y. squarely in the middle of their
disputes with Mr. Yeats and the Vaughns were all valid concerns for the jury in making their
determination about M.N.Y.'s primary residence. Despite the recommendations of Ms. Robison and
Dr. Wilcox, we cannot hold that the jury's verdict is not supported by any evidence. We overrule
the Spencers' fourth issue on appeal.
Attorney's fees
Finally, the Spencers argue that the trial court abused its discretion by awarding
attorney's fees because the awards are not supported by competent evidence. We disagree.
"The award of attorney's fees in a suit affecting the parent-child relationship is within
the trial court's discretion." Bruni v. Bruni, 924 S.W.2d 366, 368 (Tex. 1996); see Tex. Fam. Code
Ann. § 106.002(a) (West Supp. 2007) (in a suit affecting parent-child relationship, "the court may
render judgment for reasonable attorney's fees and expenses"). The determination of what is a
reasonable amount of attorney's fees is a fact question, and the reasonableness and necessity of the
fees must be supported by competent evidence. In re T.L.K., 90 S.W.3d 833, 841
(Tex. App.--San Antonio 2002, no pet.); see Woollett v. Matyastik, 23 S.W.3d 48, 52-53
(Tex. App.--Austin 2000, pet. denied). The parties may, however, agree to documentary evidence,
eliminating the need for live expert testimony. See Lohmann v. Lohmann, 62 S.W.3d 875, 880-81
(Tex. App.--El Paso 2001, no pet.) (parties agreed to submit attorney's fees to court and that
attorneys' bills were fair and reasonable); Armstrong v. Steppes Apts., Ltd., 57 S.W.3d 37, 50
(Tex. App.--Fort Worth 2001, pet. denied) ("By agreement, the parties below submitted their
attorneys' fee evidence by affidavit.").
The Spencers never complained about the sufficiency or form of the evidence
establishing the Vaughns' and Mr. Yeats's attorney's fees. Mrs. Spencer was represented by counsel
at trial, and Mr. Spencer represented himself pro se. After the parties had rested, the trial court held
a hearing outside the jury's hearing to discuss the jury charge and attorney's fees. The court stated,
"Counsel informed the Court that they're submitting the attorneys' fees issue to the Court, and each
is making no argument. And I take it that you, Mr. Spencer, dispute either the necessity or
reasonableness of Mr. Bell [the Vaughns' attorney] and Mr. Cheatham's [Mr. Yeats's attorney]
attorney's fees[.]" (15) The record does not reflect that Mr. Spencer responded to the trial court to either
agree or disagree, much less that he clarified whether he challenged the fees' necessity or
reasonableness or both or that he obtained a ruling on his complaint. Indeed, although Mr. Spencer
articulated several complaints related to the jury's charge during this hearing, he did not voice any
objections to the evidence related to attorney's fees or raise the issue later in a written motion,
including his motions for new trial. (16) Mrs. Spencer's attorney agreed when the trial court asked,
"[I]n considering the issue of attorney's fees by the Court rather than to the jury, all you're asking
me to do is to consider the fees as represented by the various exhibits, and then determine both
reasonableness and necessity as to Mr. Bell and Mr. Cheatham; is that where we stand?" The
Vaughns' attorney submitted detailed invoices showing that from March 2003 through September
2004, one month before trial, the Vaughns had incurred more than $73,000 in attorney's fees and had
paid $44,500. Mr. Yeats's attorney submitted affidavits and detailed statements showing that
Mr. Yeats had incurred more than $139,000 in attorney's fees through late September 2004 and had
paid more than $63,000. Mr. Spencer offered into evidence a bill by an attorney who assisted the
Spencers in an earlier mandamus proceeding. He never, however, voiced a complaint about the
sufficiency of the Vaughns' or Mr. Yeats's evidence.
To preserve a complaint for our review, a party must timely raise his complaint before
the trial court, stating the grounds for his complaint "with sufficient specificity to make the trial court
aware of the complaint," and obtain a ruling from the trial court. Tex. R. App. P. 33.1(a).
Mrs. Spencer stipulated to the Vaughns' and Mr. Yeats's evidence of their attorney's fees, and
Mr. Spencer did not raise any complaint, much less one that can be considered specific, nor obtain
the trial court's ruling. See id. Had either of them done so, the trial court would have known not to
accept the attorneys' documents as the only evidence, and the Vaughns and Mr. Yeats could have
presented live expert testimony from their attorneys. Because the Spencers never complained about
the form of the evidence supporting an attorney's fee award, either at the hearing or in a motion for
a new trial or other motion, the Spencers have waived any complaint related to the sufficiency of the
evidence supporting the trial court's awards. See Reagan Nat'l Adver. of Austin, Inc. v. Capital
Outdoors, Inc., 96 S.W.3d 490, 497 (Tex. App.--Austin 2002, pet. granted, judgm't vacated w.r.m.);
L & F Distribs. v. Cruz, 941 S.W.2d 274, 285-86 (Tex. App.--Corpus Christi 1996, writ denied).
The evidence presented amounts to some evidence of the reasonableness and necessity of the parties'
attorney's fees. Hall v. Hubco, Inc., No. 14-05-00073-CV, 2006 Tex. App. LEXIS 1037, *22-23
(Tex. App.--Houston [14th Dist.] Feb. 9, 2006, pet. denied); Jackson v. Barrera, 740 S.W.2d 67,
68-69 (Tex. App.--San Antonio 1987, no writ). The trial court awarded the Vaughns and Mr. Yeats
lower sums than they had been billed. We cannot hold that the trial court abused its discretion in
making its attorney's fees awards. We overrule the Spencers' fifth issue on appeal.
Conclusion
Having overruled the Spencers' issues on appeal, we affirm the trial court's orders.
__________________________________________
David Puryear, Justice
Before Justices Patterson, Puryear and Waldrop
Affirmed
Filed: March 6, 2008
1. The 2005 amendments do not apply to this case. See Act of May 27, 2005, 79th Leg., R.S.,
ch. 484, § 7, 2005 Tex. Gen. Laws 1345, 1346.
2. The agreed order states:
EACH PERSON . . . IS ORDERED TO NOTIFY EACH OTHER PARTY WITHIN
10 DAYS AFTER THE DATE OF ANY CHANGE . . . . THE PARTY IS
ORDERED TO GIVE NOTICE OF AN INTENDED CHANGE . . . ON OR
BEFORE THE 60TH DAY BEFORE THE INTENDED CHANGE. IF THE PARTY
DOES NOT KNOW OR COULD NOT HAVE KNOWN OF THE CHANGE IN
SUFFICIENT TIME TO PROVIDE 60-DAY NOTICE, THE PARTY IS ORDERED
TO GIVE NOTICE OF THE CHANGE ON OR BEFORE THE FIFTH DAY
AFTER THE DATE THAT THE PARTY KNOWS OF THE CHANGE.
3. Mrs. Vaughn testified that she wrote a check shortly after the agreed order was signed and
gave it to Duncan Neblett, their attorney, believing he would transmit it to the Spencers. In
June 1999, Mrs. Vaughn wrote to Neblett, stating that she had sent him a check for $166, which she
realized should have been for $211, and that although she thought he would forward it to the
Spencers, it had not been cashed. In March 2003, the Vaughns' new attorney, Henry Bell, wrote a
letter to the Spencers' attorney, explaining that Neblett failed to send the Vaughns' check to the
Spencers. Bell enclosed a check for $211, but Mrs. Vaughn did not think it had been cashed.
4. In re V.L.K. concerned an order related to conservatorship, not grandparent visitation.
24 S.W.3d 338, 340 (Tex. 2000). However, the reasoning applies with equal force to this
modification proceeding related to grandparent access. See id. at 343 (court did not distinguish
between kinds of suits available under chapter 153 in concluding that chapter 153 presumptions do
not carry into chapter 156); In re M.N.G., 113 S.W.3d 27, 35-36 (Tex. App.--Fort Worth 2003,
no pet.) (parental presumption did not apply in modification proceeding by grandparent seeking
conservatorship of child against father, who was granted sole managing conservatorship in original
divorce proceeding).
5. The Spencers cite to In re T.J.K., 62 S.W.3d 830 (Tex. App.--Texarkana 2001, no pet.),
to support their contention that they should be able to seek review of the agreed order under Troxel
v. Granville, 530 U.S. 57 (2000), in which the Supreme Court considered the constitutionality of
Washington's grandparent-visitation statute. However, we believe that In re V.L.K. governs this
appeal, which concerns not an original grandparent visitation suit but instead the Spencers' petition
to modify the agreed order. The T.J.K. court held that a father who entered into an agreed order
allowing grandparent visitation did not waive his right to complain about the grandparent-visitation
statute's constitutionality in a later modification proceeding. 62 S.W.3d at 831-33. The court
ignored the fact that the father sought to challenge the statute through a petition to modify, however,
and placed no importance on the fact that the father agreed to the visitation order. Id. We believe
both issues are important. See In re M.N.G., 113 S.W.3d at 33-36 (holding that "Troxel does not
support the trial court's placing of the burden on Grandmother to show unfitness of Father or harm
or potential harm to the child as predicates for modification" and declining to accept "Father's
argument, which flies in the face of V.L.K., that the parental presumption must apply in the
modification context"); In re M.A.S., No. 04-06-00629-CV, 2007 Tex. App. LEXIS 7436, *4
(Tex. App.--San Antonio Sept. 12, 2007, no pet.) (mem. op.) (trial court erred in applying parental
presumption in modification proceeding related to grandmother's possessory rights; "The correct
standard is contained in section 156.101, which places the burden on the person seeking modification
of an existing custody order to show that modification would be in the best interest of the child and
that the circumstances of at least one of the parties affected by the order have materially and
substantially changed since the order took effect."); see also In re C.A.M.M., No. 14-06-00279-CV,
2007 Tex. App. LEXIS 8585, *10-12 (Tex. App.--Houston [14th Dist.] Oct. 30, 2007, no pet. h.)
("the ramifications of the modification statutes can be far-reaching and troubling, but any changes
to the statutory scheme must come from the Legislature").
6. See In re J.R.D., 169 S.W.3d 740, 746-52 (Tex. App.--Austin 2005, pet. denied) (Puryear,
J., concurring) (arguing that standards of review applied to conservatorship issues are inconsistent
with constitutional nature of parental rights and for application of clear-and-convincing standard).
7. Even if we were to apply Troxel, we would hold that former section 153.433 is not facially
unconstitutional, see Lilley v. Lilley, 43 S.W.3d 703, 713 (Tex. App.--Austin 2001, no pet.);
Op. Tex. Att'y Gen. No. GA-0260 (2004), and the record does not reflect that the trial court failed
to consider and give "special weight" to the Spencers' wishes for the children. See Troxel, 530 U.S.
at 69; In re C.P.J., 129 S.W.3d 573, 578-79 (Tex. App.--Dallas 2003, pet. denied). The trial court
heard from the Spencers, who argued against visitation after having agreed earlier that visitation was
appropriate, and from Mr. Yeats, the Vaughns, and other witnesses, all of whom testified it was in
the children's best interests to have visitation with the Vaughns and the children's extended family.
Further, the court specifically found that the Spencers' testimony was "not believable." Unlike
Troxel, the Spencers wish to cut off the Vaughns from all contact with the girls. See 530 U.S. at 71.
Finally, the Spencers themselves conceded that it was in the children's best interests to have contact
with the Vaughns when they entered into the agreed order in 1998. The trial court did not violate
the Spencers' constitutional rights by determining that the Spencers were not currently acting in the
children's best interest and that withholding visitation with the Vaughns would harm the girls' best
interests. See In re C.P.J., 129 S.W.3d at 578-79 (trial court did not deny parent due process or
disregard his parental rights where parent agreed to earlier grandparent visitation order and sought
not to cut off visitation, but to reduce it; trial court's order attempted to resolve conflicts, and
appellate court concluded that trial court "was able to craft its decision by according 'at least some
special weight to the parent's own determination'").
8. Before being amended in 2005, subchapter H, which was titled, "Rights of Grandparent,"
seemed to use "access" and "possession" interchangeably. Section 153.432, titled, "Suit for Access,"
allowed a grandparent to sue for "access" by filing an original suit or a petition to modify. Act of
April 6, 1995, 74th Leg., R.S., ch. 20, § 1, 1995 Tex. Gen. Law 113, 157. Section 153.433, titled,
"Possession of and Access to Grandchild," provided for grandparent "access" if certain conditions
were met. Act of May 26, 1997, 75th Leg., R.S., ch. 1397, § 1, 1997 Tex. Gen. Laws 5250, 5250-51.
Finally, section 153.434, titled, "Limitation on Right to Request Access," barred grandparents from
requesting "possession of or access to" their grandchildren under certain circumstances. Act of
May 30, 1999, 76th Leg., R.S., ch. 1390, § 13, 1999 Tex. Gen. Laws 4696, 4699.
9. We note that in the agreed order, the Spencers agreed that the Vaughns could have
possession of the girls away from the Spencers' home. The agreed order provided that for six months
after the signing of the order, the Vaughns were to have six hours of "access" to M.N.Y. and S.N.S.
each month. The first three hours of their time with M.N.Y. and all of their time with S.N.S. were
to occur at the Spencers' home, but the other three hours with M.N.Y. were not limited to the
Spencers' house. After the first six months, the Vaughns were allowed to have "access" to both girls
for forty-eight hour visits twice a year as well as day-long visits once a month; those visits were not
required to be exercised at the Spencers' home. The agreed order also refers to the Vaughns as
having "possession" of the children during their designated visitation times and includes provisions
governing the Vaughns' return of the children to the Spencers.
10. The current version of section 105.002 provides that except for suits for adoption or to
adjudicate parentage, a party may demand a jury trial and is entitled to a jury verdict, which the trial
court may not contravene, on the appointment of a sole managing conservator, joint managing
conservators, or a possessory conservator; which joint managing conservator should have the right
to designate the child's primary residence; and whether to impose a geographic restriction on the
joint managing conservators. Tex. Fam. Code Ann. § 105.002(a), (b), (c)(1) (West Supp. 2007).
The trial court may not submit to the jury questions on the issues of child support, "a specific term
or condition of possession of or access to the child," or a conservator's rights or duties other than
which conservator may designate the child's primary residence. Id. § 105.002(c)(2).
11. Section 156.101 also provides that a conservatorship order may be modified if it is in the
child's best interest and: (1) the child is at least twelve years old and has filed with the court a
statement naming the person the child prefers to have the exclusive right to determine the child's
primary residence, or (2) the conservator with the exclusive right to determine the child's primary
residence voluntarily relinquishes the primary care and possession of the child to another for at least
six months. See id. § 156.101(2), (3) (West Supp. 2007).
12. The provision governing a party's entitlement to a jury verdict on which joint managing
conservator has the right to designate a child's primary residence remains substantially the same
under the 2003 amendments. See id. § 105.002(c)(1)(D).
13. We disagree with Corrales v. Department of Family & Protective Services, in which our
sister court reviewed a trial court's refusal to contravene a jury's verdict and held that "the
appropriate challenge must be directed to a traditional sufficiency review: Is the evidence legally
and factually sufficient to support the jury's finding that appointing the Department as the children's
managing conservator was in their best interest?" 155 S.W.3d 478, 488 (Tex. App.--El Paso 2004,
no pet.). As in other civil cases involving a trial court's granting of a judgment notwithstanding the
verdict, we believe the inquiry must be limited to whether there was legally sufficient evidence. See
Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 227 (Tex. 1990) ("In order to uphold a trial court's
judgment notwithstanding the verdict, an appellate court must determine that no evidence supports
the jury's findings."); John Paul Mitchell Sys. v. Randalls Food Mkts., Inc., 17 S.W.3d 721, 728
(Tex. App.--Austin 2000, pet. denied) ("We will uphold a trial court's judgment notwithstanding
the verdict only if we determine that there is no evidence to support the jury's findings."). To go
further and inquire into factual sufficiency would render meaningless section 105.002's provision
barring a trial court from contravening a jury's verdict on certain issues related to a child's care. See
Lenz v. Lenz, 79 S.W.3d 10, 20 (Tex. 2002) ("because we have concluded that there is legally
sufficient evidence to support the jury's verdict in this case, we further conclude that the trial court
improperly contravened the jury's verdict"). But see In re J.A.J., No. 07-0511, 2007 Tex. LEXIS
978, *13 n.5 (Tex. Nov. 2, 2007) (citing Corrales and stating that "[i]n a jury trial, a trial court may
not render an order in contravention of the jury's findings. Tex. Fam. Code Ann. §
105.002(c)(1)(A). Jury findings underlying a conservatorship appointment are subject to ordinary
legal and factual sufficiency review.").
14. We disagree with the Spencers that "[m]ere allegations of abuse are no evidence of abuse,
and the jury was not entitled to give them any weight." Certainly the allegations made in this case
would not be "clear and convincing" evidence that would support a termination of parental rights.
See In re S.A.P., 169 S.W.3d 685, 704-05 (Tex. App.--Waco 2005, no pet.). However, it was for
the jury to consider the credibility of the witnesses putting forth and denying those allegations and
determine whether to give the allegations any weight at all. See City of Keller v. Wilson, 168 S.W.3d
802, 819, 821-22 (Tex. 2005); In re S.A.P., 169 S.W.3d at 704-05 ("sensational and unproven
allegation" was "scant evidence" that father had endangered child).
15. The reporter's record does not include punctuation at the end of the trial court's statement,
making it unclear whether this was a statement or a question. In its findings of fact and conclusions
of law, the court stated that the parties "agreed to submit their requests for attorneys fees to the
Court" and that the Spencers "agreed in open court that the issues of contempt and attorneys fees be
heard by the Court."
16. The Spencers filed a total of three motions for new trial-one by Mrs. Spencer through her
attorney and two by Mr. Spencer. The Spencers both stated without explanation or argument that
"[t]he damages awarded by the jury against Petitioner are excessive." In its answers, the jury found
that $1000 would compensate Mr. Yeats for the Spencers' concealment of M.N.Y.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 16-7447
ANTOINE MONTEZ MILES,
Plaintiff - Appellant,
v.
DAVID GUICE; GEORGE SOLOMON; LARRY DUNSTON; KIERAN SHANAHAN,
Secretary of the Department of Public Safety; BETTY BROWN,
Director of Chaplaincy; FRANK PERRY,
Defendants - Appellees,
and
GWEN NORVEIL,
Defendant.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh. Louise W. Flanagan,
District Judge. (5:13-ct-03193-FL)
Submitted: March 21, 2017 Decided: April 21, 2017
Before GREGORY, Chief Judge, WILKINSON, Circuit Judge, and
DAVIS, Senior Circuit Judge.
Affirmed in part, vacated in part, and remanded by unpublished
per curiam opinion.
Antoine Montez Miles, Appellant Pro Se. Kimberly D. Grande,
NORTH CAROLINA DEPARTMENT OF JUSTICE, Raleigh, North Carolina,
for Appellees.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
Antoine Montez Miles, a North Carolina prisoner and member
of the Nation of Gods and Earths (NGE), sued officials of the
North Carolina Department of Public Safety under 42 U.S.C.
§ 1983 (2012). He alleged that certain officials violated his
rights under the Religious Land Use and Institutionalized
Persons Act (RLUIPA), 42 U.S.C. §§ 2000cc to 2000cc-5 (2012),
and the First, Eighth, and Fourteenth Amendments by designating
NGE as a Security Threat Group, not a religion. The designation
resulted from NGE’s ties to a gang, the United Blood Nation, but
NGE members do engage in practices often associated with
religions. In his § 1983 complaint, Miles sought to engage in
certain of those practices, including eating a vegan diet,
fasting on NGE holy days, and studying NGE texts.
In response to Miles’ claims, the officials moved for
summary judgment, and the district court granted the motion. We
review a district court’s award of summary judgment de novo,
viewing the facts and inferences reasonably drawn from those
facts in the light most favorable to the nonmoving party. Core
Commc’ns, Inc. v. Verizon Md. LLC, 744 F.3d 310, 320 (4th Cir.
2014). A court may only award summary judgment when no genuine
dispute of material fact remains and the record shows that the
moving party is entitled to judgment as a matter of law. Fed.
R. Civ. P. 56(a). On appeal, Miles challenges the district
3
court’s grant of summary judgment on his claims under RLUIPA,
the Eighth Amendment, and the Equal Protection Clause of the
Fourteenth Amendment.
Section 3 of RLUIPA protects prisoners’ right to exercise
their religion. 42 U.S.C. § 2000cc-1(b)(1). To prevail under
RLUIPA, a prisoner must first make a prima facie showing that a
state substantially burdened his religious exercise. See
Lovelace v. Lee, 472 F.3d 174, 187 (4th Cir. 2006). “[A]
substantial burden on religious exercise occurs when a state or
local government, through act or omission, ‘put[s] substantial
pressure on an adherent to modify his behavior and to violate
his beliefs.’” Id. at 187 (citing Thomas v. Review Bd. of Ind.
Employment Sec. Div., 450 U.S. 707, 718 (1981)). After a
prisoner makes a prima facie showing of a substantial burden,
the government’s position must survive strict scrutiny. Id. at
186. Strict scrutiny requires the state to show that its policy
is the “least restrictive means of furthering a compelling
governmental interest.” Id. at 189.
The district court assumed that NGE qualifies as a
religion, but ruled that the policies toward NGE practices did
not substantially burden Miles’ exercise of religion. Neither
the lack of access to the vegan diet, see Acoolla v. Angelone,
No. 7:01-CV-01008, 2006 WL 2548207, at *8 (W.D. Va. Sept. 1,
2006), aff’d, 235 F. App’x 60 (4th Cir. 2007), nor to the NGE
4
texts, which were not subject to a blanket ban, are substantial
burdens. Failing to accommodate fasting on holy days, however,
is a substantial burden. Lovelace, 472 F.3d at 187.
The district court did not apply strict scrutiny to the
policy for NGE fasts, and the record does not sufficiently show
that the policy satisfies strict scrutiny. We therefore vacate
the district court’s grant of summary judgment on the fasting
claim and remand it for consideration under the strict scrutiny
standard.
Next, we turn to Miles’ Eighth Amendment claim. While
prisoners have the right to nutritionally adequate food under
the Eighth Amendment, they must prove deliberate indifference,
meaning that a prison official must have known of and
disregarded an objectively serious condition. Farmer v.
Brennan, 511 U.S. 825, 832, 837 (1994). Miles failed to
establish deliberate indifference.
Miles also sued under the Equal Protection Clause of the
Fourteenth Amendment, which requires a plaintiff to make a prima
facie showing that the state treated him differently than it
treated similarly situated prisoners and that such unequal
treatment resulted from intentional or purposeful
discrimination. See Veney v. Wyche, 293 F.3d 726, 730-31 (4th
Cir. 2002). We conclude that Miles failed to make the required
5
showing because the record shows that other religious groups
were not similarly situated to NGE, which has ties to a gang.
Because the officials did not violate Miles’ Eighth or
Fourteenth Amendment rights, we conclude that they are entitled
to qualified immunity on those claims. See Harlow v.
Fitzgerald, 457 U.S. 800, 818 (1982) (providing government
officials qualified immunity from civil damages if plaintiff has
failed to establish violation of constitutional right).
Finally, Miles contests the district court’s denial of his
motion for appointment of counsel. We conclude that the
district court did not abuse its discretion when it denied that
motion because no exceptional circumstances existed to warrant
appointment of counsel. Whisenant v. Yuam, 739 F.2d 160, 163
(4th Cir. 1984), abrogated in part on other grounds by
Mallard v. U.S. Dist. Court for S. Dist. of Iowa, 490 U.S. 296,
300 n.2 (1989).
In sum, we affirm the district court’s ruling under RLUIPA
on Miles’ claims for a vegan diet and access to NGE texts;
vacate the ruling under RLUIPA for Miles’ fasting claim and
remand for further proceedings; affirm the ruling on Miles’
Eighth and Fourteenth Amendment claims; and affirm the district
court’s denial of Miles’ motion for appointment of counsel. We
also deny Miles’ pending motion for appointment of counsel. We
dispense with oral argument because the facts and legal
6
contentions are adequately presented in the materials before
this court and argument would not aid the decisional process.
AFFIRMED IN PART,
VACATED IN PART,
AND REMANDED
7
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USCA1 Opinion
October 20, 1994 [NOT FOR PUBLICATION] UNITED STATES COUSRT OF APPEALS FOR THE FIRST CIRCUIT ____________________ No. 93-2256 UNITED STATES, Appellee, v. WILFIN ODALIS VIDAL-MEJIA, Defendant, Appellant. ____________________ APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Douglas P. Woodlock, U.S. District Judge] ___________________ ____________________ Before Selya, Circuit Judge, _____________ Campbell, Senior Circuit Judge, and ____________________ Boudin, Circuit Judge. _____________ ____________________ James B. Krasnoo on brief for appellant. ________________ Donald K. Stern, United States Attorney, and James F. Lang, _________________ ______________ Assistant United States Attorney, on brief for appellee. ____________________ ____________________ Per Curiam. Appellant, Wilfin Odalis Vidal-Mejia, ___________ appeals from his conviction and sentence. His court- appointed counsel has filed a brief in conformance with Anders v. California, 386 U.S. 738 (1976). Vidal-Mejia was ______ __________ informed by counsel of his right to submit a supplemental pro se brief, but has not done so. We affirm. Background __________ In April, 1993, Vidal-Mejia was charged in a one-count indictment with illegal reentry after deportation in violation of 8 U.S.C. 1326(a) and (b)(2). Specifically, the indictment charged that after having been previously arrested and deported following a conviction for commission of an aggravated felony, Vidal-Mejia was found in the United States on or about March 7, 1993, without having received the permission of the Attorney General to reapply for admission. Vidal-Mejia initially pleaded not guilty but changed his plea to guilty at a hearing before the district court on July 6, 1993. Although there was no written plea agreement, the government informed the court that it had agreed to recommend a three-level reduction in the offense level for acceptance of responsibility. A presentence report ("PSR") was prepared, computing a total offense level of 21 and a criminal history category of III. The base offense level of 8 was increased by 16 levels because Vidal-Mejia had been deported follwing conviction of an aggravated felony. There was a three-level reduction for acceptance of responsibility. The resulting guideline imprisonment range was 46 to 57 months. Vidal-Mejia moved for a downward departure from the guidelines, arguing that his sentence should not exceed two years. One of the grounds for his motion was that the government was estopped from imposing a sentence in excess of two years because an INS notice given to him at the time of his deportation stated that illegal reentry was penalized by a maximum of two years' imprisonment. In fact, at the time of appellant's deportation, 8 U.S.C. 1326(b)(2) provided for a maximum sentence of fifteen years for illegal reentry by an alien deported following conviction of an aggravated felony. The district court denied the motion and sentenced Vidal-Mejia at the low end of the guideline range, to 46 months' imprisonment. Vidal-Mejia appeals from that sentence and his conviction. Discussion __________ Counsel for appellant identifies the following issues that might arguably support an appeal: 1) the district court mistakenly believed that it lacked the authority to depart from the guidelines on the ground of the erroneous INS notice; 2) the government is estopped from imposing a sentence in exess of two years; 3) a sentence in excess of two years violates the Due Process Clause of the Fifth -3- Amendment to the Constitution; and 4) the district court failed to comply with Fed. R. Crim. P. 11 in accepting appellant's guilty plea. We agree with the government that none of these arguments has merit. 1) Failure to Depart. In denying appellant's motion for _________________ a downward departure on the basis of the erroneous INS notice, the district court concluded that "deterrence necessitates a more severe sentence than that to which the defendant asked me to depart," and that "I have no basis for departure in the law." We conclude from this record that the district court determined that it lacked the legal authority to consider a departure on the basis of the INS notice. We therefore have jurisdiction to review, de novo, the correctness of that determination. See United States v. ___ ______________ Smith, 14 F.3d 662, 666 (1st Cir. 1994). We addressed the _____ identical question in Smith and concluded that the erroneous _____ INS notice "does not present the kind of circumstance a sentencing court should consider to support a downward departure." Id. at 666. Therefore, the district court's ___ denial of Vidal-Mejia's motion for a departure on that basis was entirely proper. 2) Estoppel. Appellant argues that the doctrines of ________ entrapment by estoppel and equitable estoppel bar the imposition of a sentence in excess of two years. The "entrapment by estoppel" argument is foreclosed by our -4- decision in United States v. Troncoso, 23 F.3d 612, 615 (1st _____________ ________ Cir. 1994) (rejecting "entrapment by estoppel" argument under almost identical circumstances because "[a]ppellant cannot show that a government official erroneously advised him the particular act for which he was convicted was actually legal at the time that it was committed"). In United States v. Troncoso, supra, we also rejected an _____________ ________ _____ equitable estoppel argument, but on the ground that there was no material misrepresentation. In that case, unlike this one, the two-year maximum contained in the INS notice was an accurate rendition of the law as it existed at the time of appellant's deportation. We cited our holding in Smith, _____ however, to suggest that even had appellant been misinformed of the consequences of unlawful reentry and purportedly relied thereon in deciding to return, "[t]he sentencing court cannot countenance Smith's purposeful decision to engage in felonious conduct, and grant him the benefit of a downward departure, because Smith understood the penalty he would face to be relatively minor." Smith, 14 F.3d at 666. See also _____ ___ ____ Troncoso, 23 F.3d at 616. ________ In United States v. Perez-Torres, 15 F.3d 403 (5th Cir. _____________ ____________ 1994), the Fifth Circuit refused to apply the doctrine of equitable estoppel under identical circumstances. Noting that "'he who comes into equity must come with clean hands,'" id. at 407 (quoting Precision Instrument Mfg. Co. v. ___ ________________________________ -5- Automotive M.M. Co., 324 U.S. 806 (1945)), the Fifth Circuit ___________________ concluded that the willful and knowing commission of a felony (illegal reentry) cannot constitute the reasonable reliance required by the equitable estoppel doctrine. Perez-Torres, 15 ____________ F.3d at 407. See also Akbarin v. Immigration and ___ ____ _______ ________________ Naturalization Service, 669 F.2d 839, 844 (1st Cir. 1982) _______________________ (noting that a "petitioner's unclean hands . . . may preclude him from asserting estoppel against the Government"). We agree with the Fifth Circuit and conclude that because appellant cannot show "reasonable reliance," his equitable estoppel argument is without merit. 3) Due Process. This court has not previously addressed ___________ the argument that the imposition of a penalty in excess of the two year maximum contained in the INS notice violates due process. In rejecting this argument, however, we follow the approach of all the circuits that have addressed it. See ___ United States v. Samaniego-Rodriguez, Nos. 93-3015 and 93- _____________ ___________________ 4035, 1994 U.S. App. Lexis 20311 at *5 (7th Cir. Aug. 4, 1994); United States v. Meraz-Valeta, 26 F.3d 992, 996 (10th _____________ ____________ Cir. 1994); United States v. Ullyses-Salazar, 28 F.3d 932, _____________ _______________ 936 (9th Cir. 1994); Perez-Torres, 15 F.3d at 406. We agree ____________ with the following reasoning of the Fifth Circuit: As [appellant] concedes, section 1326 clearly and unambiguously articulated the penalties associated with a reentry offense. Thus, regardless of the inaccuracy of Form I-294, the statute under which _______ Perez was convicted provided notice adequate to satisfy the requirements of due process. -6- Id. at 406 (emphasis in original). ___ 4) Rule ll. Appellant's final argument is that his _______ guilty plea should be vacated because the district court failed to comply with the mandates of Fed. R. Crim. P. 11. Specifically, he argues that the district court violated Rule 11 by failing adequately to explain and ensure that he understood that the maximum sentence he could receive was fifteen years and that he was pleading guilty to two separate charges contained in one indictment. At the change of plea hearing, appellant was represented by counsel and aided by an interpreter. At the district court's request, the government explained that the maximum term of imprisonment that appellant could receive was fifteen years. (The government also recited the maximum fine, supervised release and special assessment that could be imposed.) The court then asked appellant whether he understood that "that's the maximum penalty that can be imposed in this case?" The appellant answered "yes." Appellant's contention that the district court did not fulfill its obligation under Rule 11(c) to ensure that he understood the charges against him is belied by the record. Rule 11 "requires the court both to inform the defendant of the nature of the charge and make a determination that he understands it." United States v. Allard, 926 F.2d 1237, 1244 _____________ ______ -7- (1st Cir. 1991). The district judge summarized the charge as follows: Now, before I can find you guilty of the offense, even on your plea, I have to be satisfied beyond a reasonable doubt that there is sufficient evidence from which the Government could prove you guilty of the offense of being an illegal alien illegally reentering the United States after having been deported. The Government has to prove that you knowingly and willfully reentered the United States without having received the express consent of the Attorney General, that it didn't happen by inadvertence or mistake, but that you really meant to be here knowing that you were a deported alien. At the court's request, the government then stated what its evidence would be if the case were to proceed to trial. The district court's description of the charge did not specify that 1326(b) enhances the penalty for deportation following conviction of an aggravated felony. The government, however, specifically outlined the previous convictions as part of the recitation of its proof at the hearing. This cured the omission. See Allard, 926 F.2d at ___ ______ 1246 (explanation of charge may come from the prosecutor in the court's presence). Moreover, in United States v. Forbes, _____________ ______ 16 F.3d 1294, we held that 1326(a) and 1326(b) do not describe separate criminal offenses with different elements and maximum penalties. Instead, we concluded that 1326 (b) should be construed as a sentence enhancement provision. Id. ___ at 1297-1300. Therefore, the alleged failure specifically to inform appellant of the prior aggravated felony aspect of 1326(b) did not violate Rule 11 where the court ensured that -8- appellant understood that the maximum penalty was fifteen years. Appellant's brief indicates that counsel conducted the requisite review and analysis of the case. See Anders, 386 ___ ______ U.S. at 744. Having carefully reviewed the record in accordance with our obligation under Anders, we agree that ______ the appeal is indeed without merit. The conviction and sentence are summarily affirmed pursuant to Loc. R. 27.1. ________ -9-
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5 F.3d 1496
In Matter of Graham (John C.)*
NO. 93-4850
United States Court of Appeals,Fifth Circuit.
Sept 30, 1993
1
Appeal From: E.D.Tex.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
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NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
ROBERT M. MILLER,
Petitioner
v.
FEDERAL DEPOSIT INSURANCE CORPORATION,
Respondent
______________________
2016-1137
______________________
Petition for review of the Merit Systems Protection
Board in No. SF-4324-14-0598-I-3.
______________________
Decided: August 11, 2016
______________________
ROBERT M. MILLER, Fairfax, VA, pro se.
CORINNE ANNE NIOSI, Commercial Litigation Branch,
Civil Division, United States Department of Justice,
Washington, DC, for respondent. Also represented by
BENJAMIN C. MIZER, ROBERT E. KIRSCHMAN, JR., CLAUDIA
BURKE; KATHRYN R. NORCROSS, MICHELLE OGNIBENE,
Federal Deposit Insurance Corporation, Arlington, VA.
______________________
2 MILLER v. FDIC
Before PROST, Chief Judge, CHEN, and STOLL, Circuit
Judges.
PER CURIAM.
Robert Miller appeals from a decision of the Merit
Systems Protection Board (“Board”) denying his request
for corrective action under the Uniformed Services Em-
ployment and Reemployment Rights Act (USERRA).
Miller v. Fed. Deposit Ins. Corp., No. SF-4324-14-0598-I-3
(M.S.P.B. July 24, 2015). For the reasons below, we
affirm. 1
BACKGROUND
Dr. Miller is a preference-eligible disabled veteran
and was employed as a Financial Analyst with the Divi-
sion of Insurance and Research of the Federal Deposit
Insurance Corporation (“agency”) at the time of his non-
selection for a Financial Economist position with the
agency. When Dr. Miller expressed interest in applying
for the Financial Economist position, he was informed
that the vacancy announcement for the position had
closed. Dr. Miller informed the agency that his prefer-
ence-eligible status entitled him to apply to the closed
position. The agency then forwarded him an application
packet and requested he return the completed application
by the end of the next business day. The application
included a questionnaire regarding the applicant’s quali-
fications; the vacancy announcement explained that the
applicant’s resume must substantiate responses to the
questionnaire.
1 Dr. Miller filed a motion seeking to supplement
the record and seeking sanctions against the agency.
Miller v. Fed. Deposit Ins. Corp., No. 16-1137, Dkt. No. 43.
We grant-in-part and deny-in-part. We grant Dr. Miller’s
request to supplement the record but deny his request for
sanctions.
MILLER v. FDIC 3
The agency reviewed applications for the position and
placed applicants into categories A–C. Within each
category, preference-eligible veterans would receive
selection priority. Dr. Lee, a subject matter expert for the
agency, reviewed Dr. Miller’s application. Per Dr. Lee’s
assessment, several of Dr. Miller’s questionnaire respons-
es were not substantiated by his resume. As such,
Dr. Miller’s responses were downgraded, and the agency’s
scoring algorithm placed Dr. Miller in category B. Only
applicants in category A were referred to the selecting
official.
Dr. Miller sought information from the agency regard-
ing the basis for his category B placement. Dissatisfied
with the agency’s response, Dr. Miller filed a USERRA
appeal with the Board.
The administrative judge (“AJ”) found that Dr. Miller
failed to meet his burden to show, by a preponderance of
evidence, that the agency discriminated against him on
the basis of his military service in connection with his
non-selection. Dr. Miller did not seek review by the full
Board, and the AJ’s decision became final.
DISCUSSION
The scope of our review in an appeal from a decision
of the Board is limited. We must affirm the Board’s
decision unless it is “(1) arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law;
(2) obtained without procedures required by law, rule, or
regulation having been followed; or (3) unsupported by
substantial evidence.” 5 U.S.C. § 7703(c). USERRA
prohibits employers from discriminating against employ-
ees or prospective employees on the basis of their military
service. 38 U.S.C. § 4311(a). In relevant part, it provides:
A person who is a member of, applies to be a
member of, performs, has performed, applies to
perform, or has an obligation to perform service in
4 MILLER v. FDIC
a uniformed service shall not be denied initial
employment, reemployment, retention in em-
ployment, promotion, or any benefit of employ-
ment by an employer on the basis of that
membership, application for membership, perfor-
mance of service, application for service, or obliga-
tion.
Id.
USERRA discrimination claims are analyzed under a
burden-shifting framework. Sheehan v. Dep’t of the Navy,
240 F.3d 1009, 1013 (Fed. Cir. 2001). Under this frame-
work, an individual who makes a USERRA discrimination
claim bears the initial burden to show, by a preponder-
ance of evidence, that his military service was a substan-
tial or motivating factor in the adverse employment
action. Id. This burden can be met by either direct or
circumstantial evidence:
Discriminatory motivation under the USERRA
may be reasonably inferred from a variety of fac-
tors, including proximity in time between the em-
ployee’s military activity and the adverse
employment action, inconsistencies between the
proffered reason and other actions of the employ-
er, an employer’s expressed hostility towards
members protected by the statute together with
knowledge of the employee’s military activity, and
disparate treatment of certain employees com-
pared to other employees with similar work rec-
ords or offenses.
Id. at 1014. “In determining whether the employee has
proven that his protected status was part of the motiva-
tion for the agency’s conduct, all record evidence may be
considered, including the agency’s explanation for the
actions taken.” Id. If this initial burden is satisfied by
the appellant, the burden shifts to the employer to show,
by a preponderance of evidence, that the employer would
MILLER v. FDIC 5
have taken the same action for a valid reason. Id. at
1013.
Dr. Miller challenges the Board’s procedural rulings
and the merits of its conclusions, and he alleges bias of
the AJ. Dr. Miller also supplemented the record with
newly-discovered documents. We address each of these
issues in turn.
A.
Dr. Miller alleges several procedural errors by the AJ,
including refusing to allow expert testimony, refusing to
compel production of applications from veterans who were
also placed in category B, and admitting into evidence
applications of non-veterans Dr. Lee deemed ineligible.
We find that the AJ did not abuse his discretion in mak-
ing these determinations.
First, regarding the AJ’s refusal to allow testimony
from Dr. Miller’s proffered expert, the AJ explained that
Dr. Miller’s proffered expert did not have sufficient exper-
tise with respect to the qualifications of candidates for the
position at issue. Dr. Miller does not demonstrate that
the expert possessed expertise in governmental hiring
processes or the particular Financial Economist position
at issue. As such, the AJ did not abuse his discretion by
precluding testimony from the expert.
With respect to the AJ’s denial of Dr. Miller’s motion
to compel production of applications from other veterans
in category B, the AJ found these applications were not
relevant. Specifically, the AJ determined that because
Dr. Lee reviewed Dr. Miller’s application, only applica-
tions reviewed by Dr. Lee were relevant to Dr. Miller’s
discrimination claim. As Dr. Lee did not review the
applications that were the subject of the motion to compel,
the AJ refused to compel their production. Despite
Dr. Miller’s arguments to the contrary, the AJ did not
abuse his discretion by finding only applications reviewed
6 MILLER v. FDIC
by Dr. Lee relevant to Dr. Miller’s appeal, which was
based on alleged discrimination by Dr. Lee.
Dr. Miller also challenges the AJ’s decision allowing
the agency to admit evidence that Dr. Lee deemed several
non-veterans ineligible for the position. Dr. Miller asserts
that this evidence was irrelevant because, unlike him,
these non-veterans lacked basic qualifications for the
position, rendering them ineligible. While Dr. Miller’s
arguments may go to the weight this evidence should be
given, the AJ’s decision to admit the evidence was not an
abuse of discretion.
B.
We next consider Dr. Miller’s argument that he met
his burden of showing that his non-selection was motivat-
ed by discrimination. Although Dr. Miller raises numer-
ous disputes with the merits of the AJ’s findings, we find
that substantial evidence supports the ultimate conclu-
sion that Dr. Miller failed to meet his burden of proof.
According to Dr. Miller, the agency discriminated
against him for exercising his right as a disabled veteran
to apply late for the Financial Economist position. As
support, he points to the closeness in time between exer-
cising his right to apply late and Dr. Lee’s discounting of
some of his questionnaire responses, asserting a connec-
tion between those two actions. But the AJ explained
that there was no evidence that Dr. Lee was aware that
Dr. Miller had applied late based on his disabled veteran
status. While Dr. Miller posits reasons why Dr. Lee could
have known the reason for his late application, he con-
cedes the lack of evidence in the record. Petitioner’s
Br. 18–19. Dr. Miller also points to the agency’s request
that he submit his completed application within one
business day of receiving the application packet, impeding
his ability to submit a more thorough application. But
Dr. Miller does not dispute that he had a month’s notice of
MILLER v. FDIC 7
the vacancy, asserting only that he initially lacked inter-
est in the position.
Dr. Miller also argues that the AJ erred in weighing
the evidence. He asserts the AJ weighed the following
evidence too heavily: (1) the fact that the agency ultimate-
ly selected a veteran for the position; (2) testimony from
certain individuals involved in the review of his applica-
tion that they had ties to and positive views of the mili-
tary; and (3) the fact that Dr. Lee deemed ineligible
several non-veterans lacking basic qualifications for the
position. We agree with the AJ that these are all relevant
considerations in a USERRA appeal, and weigh in favor of
the AJ’s determination that Dr. Miller’s non-selection was
not motivated by discrimination prohibited by USERRA.
Dr. Miller next challenges Dr. Lee’s rationale for dis-
crediting some of his responses to the questionnaire while
crediting those of certain non-veterans. He argues that
Dr. Lee failed to credit certain experience she found
unsupported by his resume, yet credited other applicants
with experience not well supported by their resumes. In
Dr. Miller’s view, Dr. Lee’s evaluation of his and other
applications was so inconsistent and illogical that the only
reasonable conclusion is that Dr. Lee discriminated
against him because he is a veteran. The AJ considered
this argument and determined, however, that Dr. Lee
provided a reasoned basis for her evaluations. Specifical-
ly, the AJ concluded that to the extent Dr. Lee treated
applicants differently, it was due to her own professional
background and expertise. When applicants had profes-
sional and educational experience similar to Dr. Lee’s, she
was more willing to infer relevant experience from their
resumes. For example, applicants who completed their
doctoral studies in the field of Labor Economics, the same
field studied by Dr. Lee, were at times credited with
experience not explicitly detailed in their resumes. While
Dr. Miller clearly disagrees with the accuracy and con-
sistency of Dr. Lee’s assessments, this evidence does not
8 MILLER v. FDIC
demonstrate that Dr. Lee discriminated based on
Dr. Miller’s military service.
Finally, Dr. Miller disputes the AJ’s credibility de-
terminations regarding agency witnesses. But “an evalu-
ation of witness credibility is within the discretion of the
Board” and in general such credibility determinations
“are ‘virtually unreviewable’ on appeal.” Kahn v. Dep’t of
Justice, 618 F.3d 1306, 1313 (Fed. Cir. 2010) (quoting
King v. Dep’t of Health & Human Servs., 133 F.3d 1450,
1453 (Fed. Cir. 1998)). We do not find the AJ’s credibility
determinations arbitrary or capricious.
C.
Dr. Miller next claims the AJ who presided over his
appeal exhibited bias against him. Dr. Miller asserts bias
because the same AJ presided over all six of his appeals to
the Board and ruled against him in each one. The AJ’s
bias, according to Dr. Miller, is further demonstrated by
the AJ’s numerous rulings against Dr. Miller on proce-
dural motions. To show bias, an appellant must meet a
high standard:
[O]pinions formed by the judge on the basis of
facts introduced or events occurring in the course
of the current proceedings, or of prior proceedings,
do not constitute a basis for bias or partiality mo-
tion unless they display a deep-seated favoritism
or antagonism that would make fair judgment im-
possible. Thus, judicial remarks during the course
of a trial that are critical or disapproving of, or
even hostile to, counsel, the parties, or their cases,
ordinarily do not support a bias or partiality chal-
lenge.
Beiber v. Dep’t of Army, 287 F.3d 1358, 1362 (Fed. Cir.
2002) (alteration in original) (quoting Liteky v. United
States, 510 U.S. 540, 555 (1994)). While we appreciate
Dr. Miller’s frustration resulting from his lack of success
MILLER v. FDIC 9
in appeals to the Board, we detect no reasonable basis for
finding the AJ’s decisions in this case reflect bias against
Dr. Miller.
D.
Finally, Dr. Miller has supplemented the record with
recently acquired documents. While we have considered
these documents, we find they do not establish any error
in the Board’s decision. First, an email exchange and
agency scoring rubric confirm that Dr. Miller would have
been placed in category A if his questionnaire responses
had not been downgraded by Dr. Lee. Because the AJ
assumed as much, the confirmation provided in these
documents has no impact on the AJ’s analysis and conclu-
sions. Dr. Miller also supplements the record with the
application files of other veterans that were placed in
category B. But because there is no evidence these appli-
cations were reviewed by Dr. Lee, the basis for their
placement in category B is not probative of the reasons
Dr. Lee downgraded Dr. Miller’s application.
CONCLUSION
We have considered Dr. Miller’s remaining arguments
and find them unconvincing. The AJ did not abuse his
discretion in his procedural rulings. The AJ’s determina-
tion that Dr. Miller did not meet his burden of showing
discrimination toward his military service or status as a
disabled veteran was a motivating factor in his non-
selection is supported by substantial evidence and is not
arbitrary or capricious. Because Dr. Miller failed to meet
his burden, we need not consider whether the agency
would have taken the same action for a valid reason. The
decision of the Board is therefore affirmed.
AFFIRMED
COSTS
No costs.
| {
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128 F.2d 104 (1942)
UNITED STATES RUBBER CO.
v.
GENERAL TIRE & RUBBER CO.
No. 8899.
Circuit Court of Appeals, Sixth Circuit.
May 7, 1942.
*105 F. O. Richey, of Cleveland, Ohio (C. T. Neal, of Springfield, Mass., Richey & Watts, of Cleveland, Ohio, and Chapin & Neal, of Springfield, Mass., on the brief), for appellant.
Albert L. Ely, of Cleveland, Ohio (Wm. C. McCoy, Frank S. Greene, and Evans & McCoy, all of Cleveland, Ohio, on the brief), for appellee.
Before SIMONS, MARTIN, and McALLISTER, Circuit Judges.
MARTIN, Circuit Judge.
This opinion should be read as supplementary to General Tire & Rubber Company v. Fisk Rubber Corporation, 6 Cir., 104 F.2d 740, where claims 1 to 10, inclusive, and claim 14 of Midgley Patent No. 1,742,777 were held valid and infringed.
Some four months after entry in the district court of an interlocutory decree and injunction pursuant to the mandate of this court, the United States Rubber Company, as successor in right, title and interest to the entire patent rights, assets, business and goodwill of the Fisk Rubber Corporation and as substituted plaintiff, moved for a supplemental injunction against the General Tire & Rubber Company to prevent the manufacture, sale and use of a machine termed in the record "defendant's third apparatus," and to enjoin the use of the method employed in that machine. There has been no previous issue presented concerning this so-called "third apparatus."
The motion for the supplemental injunction was referred to the same special master who had served as such throughout the litigation and whose previous findings had been upheld both here and in the district court. The special master found in the "third apparatus" no infringement of the Midgley patent claims and, accordingly, recommended denial of the motion. The district judge overruled exceptions to the special master's report, confirmed the report, and denied the motion for the supplemental injunction. The United States Rubber Company has appealed.
The "defendant's third apparatus" is a four-roll calendar machine, in which three of the rolls are in vertical plane and one of the upper rolls is offset horizontally toward the side from which the sheet of cords advances in an almost horizontal plane and passes downward underneath the offset roll in contract with its under surface. Heat is imparted to the cords from the offset calender roll. After passing under this offset roll, the cords pass over a supporting bar, with a narrow upper edge, then under a spacer bar which has numerous grooves spaced closely to maintain the cords in alignment at correct distances. The cords next slide under a finely tapered, smooth polished steel shoe, or plate. This steel shoe extends close to the bight between the upper and middle vertically placed rolls, and guides the *106 cords until they meet two sheets of rubber; one of which from a bank comes between the two lower vertical rolls, passes up over the middle roll, contacts the cords, which then lie on top of the sheet, and the other of which from another bank comes between the offset roll and the upper vertical roll, passes down around the under side of the latter and against the upper side of the sheet of cords. The cords contact the two sheets of rubber simultaneously, and the united cords and sheets then pass with the middle calender roll around almost one-fourth of the circumference of that roll until the composite sheet passes through the bight of the middle roll and an adjacent small pressure and take-off roll.
In its passage between the upper and middle vertical rolls, the cord is laid upon the rubber sheet carried by the middle roll and, at heavy pressure to form the fabric sheet, is pressed down against the rubber sheet by the top roll, carrying the other rubber sheet. The fabric then proceeds, as described, to the point where it receives added pressure from a smaller roll, which serves also as a take-off roll.
Appellant's expert witness likened the "defendant's third apparatus" to the machine of the Midgley Patent No. 1,172,777, and to the appellee's infringing machine, in that each takes a sheet of hot cords, feeds the cords in spaced and parallel relation to a sheet of rubber on one of the rolls of a calender; applies pressure between the cords and the sheet of rubber by means of a roll which, in function, is alike in each machine; applies tension to the cords in similar manner; feeds a second sheet of rubber to the cords lying on the sheet of the rubber which is supported by one of the rolls; and applies final pressure by two calender rolls as the two sheets of rubber with the cords between them pass through the bight of the last mentioned rolls. The expert made the added point that, in each machine, there is a substantial are between the two bights, over which the cords are stretched in contact with the sheet of rubber on which they rest.
Appellant contends that the infringing machine, the use of which has been enjoined, and the accused "third apparatus" are alike in that, in both, product and results are identical; that the speed of the two machines is the same; that there are two bights in each machine and an intervening arc of approximately ninety degrees; that rubber and cords pass through each bight and around the arc in each machine; that there is cord embedding and sheet reducing pressure in each bight; that there is pull on the outgoing end of the fabric in each machine; that the cords are embedded in the lower sheet over the arc in each; that sheets of rubber are formed between bights in similar manner in each machine; that, in each, a tension is maintained beyond the point of entry of the cords into the bight of the pressure rolls, aiding in the affixing of the cords in the rubber; and that pressure is placed upon the off-take roll in the "third apparatus" to cause reduction in the sheet and embedment of the cords in the fabric.
In rejoinder, the appellee insists that its "third apparatus" lacks the vital element of the Midgley Patent combination, which was present in its infringing first apparatus. It is pointed out that in the Midgley Patent the cord-placing roller is in contact with the sheet of rubber on the surface of the next-to-the-top calender roll; the cords are fed over the cord-placing roller and pressed and anchored into the rubber sheet, and thus anchored are carried by the sheet through the arc on the calender roll to the bight between it and the next-to-the-bottom calender roll, where a second sheet of rubber is met on the last mentioned roll and the calender bight pressure is applied. Upon comparison, it is shown that the same combination and arrangement of elements appear in the adjudicated infringing apparatus, but it is urged that the "third apparatus" reveals an entirely different organization of elements. It is admitted that the four calender rolls, each pair forming a sheet of rubber with the two sheets meeting at the bight between the top roll and the middle roll of the vertically placed calender rolls, are present in the "third apparatus".
But it is emphasized that the Midgley grooved roll 62, which presses the hot cords directly into the rubber sheet and holds them therein at the bight between roll B and roll 62, as depicted by Midgley, is conspicuous by its absence from the "third apparatus." As the appellee points out, there is in the "third apparatus" no preliminary application of the cords to the sheet of rubber on either of the two top vertically placed calender rolls before the cords enter the bight between them, nor is there an arc through which the underlying layer of rubber and layer of cords are carried *107 before entering the bight, affording no opportunity, therefore, for the cords to be anchored in one sheet of rubber or to embed themselves therein before encountering pressure at the calender bight. The argument runs that the designer of the "third apparatus" devised an entirely different method of holding the cords in position under heavy pressure at the calender bight, in that the mechanical guides provided by the "third apparatus" hold the cords so firmly and accurately that although both sheets of rubber are met simultaneously at the bight the cords "stay put"; while Midgley relied upon the anchoring effect of the cords in the first sheet of rubber and counteracted the disturbing effect of the calender pressure in the bight by using the one sheet of rubber as an anchorage or foundation for the bank of cords, so that the cords would be held therein and prevented by the rubber from floating around in the calender bight.
It is argued further that Midgley roll 62 and the small roll of the infringing apparatus each performed the office of leading the cords to the rubber sheet on the calender roll in advance of the bight, while in the "third apparatus" this step, essential to Midgley and to the adjudged infringing machine, is omitted entirely and the cords are led directly into the calender bight, arriving there simultaneously with the two sheets of rubber and being subjected to a heavy pressure which would disarrange the cords, unless held right up to the bight by the mechanical guides. It is stressed that, in the "third apparatus" there is no point such as is found in Midgley where there is a layer of rubber on a calender roll and a layer of cords on top of the rubber and exposed over an arc of the roll before meeting the second layer of rubber.
The special master, as did the district judge, found validity in this argument of the appellee. The master stated in his memorandum opinion that, in upholding the apparatus and method claims of the Midgley patent, he had considered that their validity rested upon the concept of causing the cords to meet and adhere firmly to one of the rubber sheets on the calender roll at some distance from the bight of the rolls, and that the means of Midgley were novel in the combination of elements accomplishing his result, particularly in view of his arrangement and positioning of the grooved pressure roll in its relation to the calender.
Applying the language of this court that Midgley's "manner of application of the heated cords to the hot rubber sheet is the key to invention, if any," the master found that the "third apparatus" has provided a method not inclusive of Midgley's novel step of causing the cords to be affixed upon one sheet of rubber at a point substantially in advance of the bight of the calender rolls between which pressure is applied to unite under high pressure the two rubber sheets and the cords into one fabric sheet; but that in the "third apparatus" the cords are fed directly between the two sheets of rubber, where they unite at the bight of the rolls and heavy pressure is applied to form the fabric sheet, which then proceeds upon the lower roll to a point where the fabric is met by a second pressure roll serving also as a take-off roll. Inasmuch as the "third apparatus" obtained its result without use of the Midgley novel method step and in view of the prior art teaching, the master was of opinion that the Midgley Patent should be closely confined to the apparatus described by the inventor. He found that all of Midgley's claims contemplated means of pressing the hot cords to the rubber sheet upon one of the rolls in advance of the bight of the rolls, and carrying the cords upon that sheet to the bight where another sheet of rubber is pressed upon the cord-carrying sheet to form the completed cord fabric product. The master stressed the difficulty which the art had encountered in the manufacture of weftless cord fabric for automobile tires, in placing the cords in the rubber so that they would "stay put," and concluded his report:
"The defendant seems to have gotten its result by maintaining a tension beyond the point of entry of the cords into the bight of the pressure rolls, while Midgley secured a like result by affixing them to one only of the sheets of plastic before the bight of the rolls is reached. The result is the same and it is probable that Midgley's teaching has prompted the defendant's effort. But as I see it, neither the combination of means nor the method are the same, and I must conclude that the defendant's `third apparatus' does not infringe claim 10 of Midgley and that its use does not infringe any of the Midgley method claims. This finding and conclusion necessarily disposes of the plaintiff's motion for a supplemental injunction to restrain the defendant from the use of the `third apparatus,' which motion is denied."
*108 In confirming the report of the master and denying the motion for a supplemental injunction, the district judge said, 40 F. Supp. 247, 248:
"It was essential to the validity of the Midgley claims that they provide for adherence of rubber sheet and cords prior to passage between the bight of the calender rolls. This was an important element in the definite sequence of operation claimed. The plaintiff's method and means for accomplishing disclosed a definite sequence of operation with the distinguishing and novel feature of indirect feeding and adherence between rubber and cord before imbedding pressure of calender rolls. To extend the patent monopoly beyond the claims, as is sought here, would be to run afoul of earlier art and anticipation. Confining the Midgley claims within their bounds, I am unable to find that the defendant's `third apparatus' infringes."
The issue of infringement is a question of fact and the concurrent findings of non-infringement by the court and the special master are not lightly to be rejected. Aluminum Company of America v. Thompson Products, Inc., 6 Cir., 122 F. 2d 796, 799.
The burden of proving infringement ordinarily rests upon the plaintiff in an action for patent infringement. Automotive Parts Co. v. Wisconsin Axle Co., 6 Cir., 81 F.2d 125, 127; Aluminum Company of America v. Thompson Products, Inc., supra. No reason appears for lightening this burden to be carried by the plaintiff-appellant in the instant case.
All matters adjudicated in our former opinion became, of course, the law of the case, which the district court was in duty bound to follow. Monroe Body Company v. Herzog, 6 Cir., 13 F.2d 705, 706; Bissell Carpet-Sweeper Company v. Goshen Sweeper Company, 6 Cir., 72 F. 545. It is manifest from the record that faithful adherence to the law of the case was earnestly attempted below.
Appellant complains that the master and the district judge committed fundamental error in comparing the "third apparatus" with the patent in suit rather than with the adjudicated infringing apparatus. It is true, as contended, that a proceeding for contempt for violation of an injunction against infringement does not involve an original interpretation of the claims of the patent. Wadsworth Electric Mfg. Co. v. Westinghouse Electric & Mfg. Co., 6 Cir., 71 F.2d 850, 851. But it is also true, as appears from the cited case, that in an action between the parties presenting a controversy over a modified structure the question "is only whether the modified structure is equivalent to the original in relation to the patent in suit." Wadsworth Electric Mfg. Co. v. Westinghouse, etc., Co., supra, 71 F.2d at page 851. See, also Field Body Corporation v. Highland Body Manufacturing Company, 6 Cir., 13 F.2d 626, 627.
In an action in the Eighth Circuit concerning the infringement by a modified structure of a patent previously adjudged valid and infringed, the former decree was held conclusive as to the validity of the patent; but, inasmuch as the defendant's modified structure had not been in issue or considered in the earlier case, the question presented in the later controversy was deemed to be whether, in the light of the former decision, the modified structure also infringed. T. L. Smith Company v. Cement Tile Machinery Company, 257 F. 423, 424. Moreover, in Mills Novelty Company v. Monarch Tool & Manufacturing Company, 6 Cir., 76 F.2d 653, 654, we expressed the thought that "* * * decision on infringement may readily be reached upon a consideration of all of the factors contributing to solution." In comparing, for the purpose of adjudication upon the issue of infringement, the defendant's "third apparatus" with the apparatus and method claims of Midgley, which had already been held valid, the master pursued the authoritatively established, appropriate course.
Appellant correctly asserts that even where the invention must be restricted in view of the prior art to the form shown and described by the patentee without extension to embrace a new form constituting a substantial departure, there is infringement where the departure is merely colorable. E. H. Bardes Range & Foundry Company v. American Engineering Company, 6 Cir., 109 F.2d 696, 698; Duff v. Sterling Pump Company, 107 U.S. 636, 639, 2 S.Ct. 487, 27 L.Ed. 517; Sanitary Refrigerator Company v. Winters, 280 U.S. 30, 41, 50 S.Ct. 9, 74 L.Ed. 147. Furthermore, except where form is of the essence of the invention, one device is an infringement of another "if it performs *109 substantially the same function in substantially the same way to obtain the same result." Union Paper Bag Machine Company v. Murphy, 97 U.S. 120, 125, 24 L.Ed. 935. It is also well settled that, although some change in form and position is apparent, a close copy which uses the substance of an invention, employs the same device, performing the same offices with no change in principle, constitutes infringement of the invention. Ives v. Hamilton, 92 U.S. 426, 430, 23 L.Ed. 494; E. H. Bardes Range & Foundry Company v. American Engineering Company, supra. Infringement is not avoided by change in degree, so long as the distinguishing function is retained, or by adding elements to the complete structure of the patent claim. Murray v. Detroit Wire Spring Company, 6 Cir., 206 F. 465, 468. Inasmuch as specifications and claims are addressed to persons skilled in the art, the claims of a patent should be construed liberally to uphold and not to destroy the rights of the inventor. National Battery Company v. Richardson Company, 6 Cir., 63 F.2d 289, 293.
In Walker on Patents (Deller's Edition), Vol. 3, Sec. 482, pages 1728, 1729, the author says:
"A combination of old elements which accomplishes a new and beneficial result, or attains an old result in a more facile, economical or efficient way, may be protected by a patent as securely as a new machine or composition of matter. * * * And the doctrine of mechanical equivalents is governed by the same rules and has the same application when the infringement of a patent for a combination is in question as when the issue is over the infringement of a patent for any other invention."
In determining the issue of infringement, a court should consider whether the elements of the defendant's device are merely mechanical equivalents of the elements enumerated in the plaintiff's claim. If elements of the claim are omitted from an accused device, and the mode and manner of operation of the latter are substantially different from the patentee's apparatus, the accused device will be held not to infringe. Directoplate Corporation v. Donaldson Lithographing Company, 6 Cir., 51 F.2d 199, 201, 202.
Infringement of a combination patent is not proved unless it appears that the alleged infringer used the entire combination. Wood v. Peerless Motor Car Corporation, 6 Cir., 75 F.2d 554, 556; Cimiotti Unhairing Company v. American Fur Refining Company, 198 U.S. 399, 410, 25 S.Ct. 697, 49 L.Ed. 1100; Dunbar v. Myers, 94 U.S. 187, 202, 24 L.Ed. 34; Cf. Philadelphia Rubber Works Company v. Portage Rubber Company, 6 Cir., 241 F. 108, 110. A claim is not infringed, if one of its elements is omitted without the substitution of an equivalent. Russell Grader Manufacturing Company v. F. B. Zeig Manufacturing Company, 6 Cir., 259 F. 575, 577.
It is a truism that an apparatus, disclosing invention and not anticipated, may be infringed by one machine and not infringed by another. See Grever v. United States Hoffman Company, 6 Cir., 202 F. 923, which, upon its facts, is somewhat analogous to the case at bar. Cf. Vanmanen v. Leonard, 6 Cir., 248 F. 939.
Infringement of a process claim is not established merely by showing that the defendant has accomplished the same result, if he has followed substantially different procedure. The test is whether he has, in all substantial aspects, followed the method claimed. Vacuum Oil Company v. Grabler Manufacturing Company, 6 Cir., 62 F.2d 54, 55, 56.
In our view, first the master and subsequently the district judge correctly applied the principles of patent law which have been discussed. Moreover, the law of the case as established by our former opinion [General Tire & Rubber Co. v. Fisk Rubber Corp., 6 Cir., 104 F.2d 740] was, in our judgment, correctly applied.
We are in accord with the reasoning and conclusions of the master, approved by the district court, that the method used and revealed in the accused "third apparatus" does not include the key to Midgley's invention, consisting in his novel step of affixing hot cords upon a sheet of rubber at a point well in advance of the bight of the two calender rolls, between which high pressure is applied to unite the cords and the two rubber sheets into a single fabric sheet.
The decree and order of the district court is affirmed.
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193 S.W.3d 677 (2006)
Patrick Stephen MARTIN, Appellant,
v.
Dennis H. BIRENBAUM, Appellee.
No. 05-04-00939-CV.
Court of Appeals of Texas, Dallas.
April 19, 2006.
Rehearing Overruled June 22, 2006.
*679 Julia F. Pendery, Robert C. Wiegand, Shawn M. McCaskill, Donald E. Godwin, Godwin Gruber, LLP, Dallas, for appellant.
Dennis Birenbaum, Stephen F. Malouf, The Law Office of Stephen F. Malouf, P.C., Ernesto D. Sigmon, Law Office of Ernesto D. Sigmon, Dallas, for appellee.
Before Justices WHITTINGTON, FRANCIS and LANG.
OPINION
Opinion by Justice FRANCIS.
A jury awarded Patrick Stephen Martin actual damages plus attorney's fees for Dennis H. Birenbaum's breach of a contract to purchase appellant's residence. Appellee then filed a motion for judgment non obstante verdicto contending appellant elected to accept liquidated damages, and waived his right to sue for actual damages. The trial court granted JNOV, and this appeal ensued.
In his sole issue, appellant contends the trial court erred in awarding JNOV because more than a mere scintilla of evidence supports the jury's findings in his favor, and appellee failed to establish conclusively his waiver defense or an election of remedies. We reverse the judgment and remand this appeal for entry of judgment in accordance with the jury's verdict.
A trial court may grant JNOV if a directed verdict would be proper or if no evidence supports one or more of the jury findings necessary to liability. See TEX.R. Civ. P. 301; Tiller v. McLure, 121 S.W.3d 709, 713 (Tex.2003); Fort Bend County Drainage Dist. v. Sbrusch, 818 S.W.2d 392, 394 (Tex.1991). A directed verdict for a defendant would be proper if the plaintiff *680 failed to present evidence raising a fact issue essential to his right of recovery or if he admits, or the evidence conclusively establishes, a defense to his cause of action. Prudential Ins. Co. of Am. v. Financial Review Servs., Inc., 29 S.W.3d 74, 77 (Tex.2000). A defense is considered conclusively established if reasonable minds could not differ as to the truth of the controlling facts. See Brown v. Zimmerman, 160 S.W.3d 695, 702 (Tex.App.-Dallas 2005, no pet.).
In reviewing a JNOV, we view the evidence in the light most favorable to the jury's findings, considering only the evidence and inferences from the evidence that support the findings, and disregarding all evidence and inferences to the contrary. Tiller, 121 S.W.3d at 713. We will reverse the JNOV if there is more than a mere scintilla of probative evidence supporting the challenged findings. Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 228 (Tex.1990); Toles v. Toles, 45 S.W.3d 252, 259 (Tex. App.-Dallas 2001, pet. denied). The evidence exceeds a scintilla when it "rises to a level that would enable reasonable and fair-minded people to differ in their conclusions." Merrell Dow Pharmaceuticals, Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997). When a party moves for JNOV on multiple grounds and the trial court grants JNOV without specifying which ground it found decisive, the appellant must show that JNOV was not proper on any of the asserted grounds. See Sbrusch, 818 S.W.2d at 394.
At the conclusion of trial, the trial court submitted seven questions to the jury. Because the jury found in appellant's favor, it did not answer the three questions addressing appellant's liability. In answering the other four questions, the jury found appellee failed to comply with the contract, his noncompliance was not excused by either appellant's noncompliance or waiver of compliance, and appellant was entitled to actual damages in the amount of $826,232.58 plus attorney's fees in the amount of $140,000. In the event appellee appealed the judgment, the jury awarded appellant an additional $20,000 for the appeal to this Court, and $10,000 if he appealed to the Texas Supreme Court. More than a mere scintilla of evidence supports each of the jury's findings.
The trial evidence shows that on May 10, 2002, the parties signed a contract obligating appellee to buy appellant's house for $3,600,000. Pursuant to the contract, appellee deposited $25,000 earnest money in escrow with American Title Company. At closing, the earnest money would fund appellee's down payment and expenses, with any remainder returned to him. If appellee defaulted, paragraph 15 of the contract authorized appellant to "(a) enforce specific performance, seek other relief as may be provided by law, or both, or (b) terminate this contract and receive the earnest money as liquidated damages, thereby releasing both parties from this contract." All notices between the parties were to be in writing.
While the contract was pending, appellee arranged to purchase a different residence. By letter dated July 9, 2002, appellee notified appellant and escrow officer Kaki Roach that he was terminating the contract, and he demanded the return of his earnest money. The contract specified that if one party demanded the earnest money, the other party would have thirty days to deliver a written objection to the escrow agent. Absent a timely, written objection from appellant, Roach had discretionary authority to release the earnest money to appellee.
Appellant did not deliver a written objection. However, when appellee failed to appear at the scheduled July 15, 2002 closing, appellant orally instructed Roach not *681 to release the earnest money to appellee. Although appellant did not demand the money for himself, Roach decided that, under the circumstances, she would not release the money to either party. American Title retained the earnest money through the date of trial.
By letter dated July 30, 2002, appellant demanded specific performance and threatened to sue appellee for breach of contract. On August 13, 2002, appellant filed suit against appellee for specific performance and breach of contract. Appellee subsequently filed a counterclaim.
In October 2002, appellant sold the property to a third party for $2,368,000. In connection with the sale, appellant averred to the purchaser that there were no other pending contracts on the property. Either during the October 2002 closing or in a telephone conversation around that time, appellant again instructed Roach not to return appellee's earnest money. On February 20, 2003, appellant non-suited his claim for specific performance.
We conclude, and appellee does not dispute, that the evidence described above provides more than a scintilla of evidence to support the jury's findings regarding appellee's breach of the contract and appellant's damages. See Tiller, 121 S.W.3d at 713; Toles, 45 S.W.3d at 259. We therefore turn to the question of whether the evidence supports the jury's finding adverse to appellee on his waiver affirmative defense.
Waiver is an affirmative defense available against a party who either (1) intentionally relinquishes a known right, or (2) engages in intentional conduct inconsistent with claiming that right. Tenneco, Inc. v. Enterprise Prods. Co., 925 S.W.2d 640, 643 (Tex.1996). Waiver may be established by showing a party has expressly renounced a known right. Motor Vehicle Bd. v. El Paso Indep. Auto. Dealers Ass'n, Inc., 1 S.W.3d 108, 111 (Tex.1999). Waiver may also be established by showing a party's prolonged silence or inaction in asserting a known right. Id. Courts will not find an implied waiver through a party's actions unless the intent to waive the party's right is clearly demonstrated by the surrounding facts and circumstances. See id. Ordinarily, waiver is a factual issue, but it may be established as a matter of law "when the facts and circumstances are admitted or clearly established." Id.
The jury answered "no" to the following question submitted on the waiver defense:
Was [appellee's] failure to comply with the Contract excused by waiver?
[Appellee's] failure to comply with the Contract would be excused if compliance was waived by [appellant]. Waiver is an intentional surrender of a known right or intentional conduct inconsistent with claiming the right.
In a critical portion of appellant's cross-examination, partially reprinted in appellee's brief, appellant testified about his options and intentions:
[Counsel]: [Appellant], in the event that you believed that [appellee] breached the contract, you had two options, you could either file a lawsuit, or you could keep the earnest money and release [appellee], correct?
[Appellant]: No, I wouldn't keep the earnest money, because the earnest money was put up for performance, and he did not perform. I didn't want the earnest money.... Do you think that that would anywhere near compensate me for the money he cost me, moving my antiques, delays, now you see me, now you don't? No way. Thethe earnest money isis being blown out of proportion. It's $25,000. I've got one antique that's worth $500,000, so whatwhat am I going to *682 do? Wewe are justwe are not addressing the facts. The man welshed.
....
[Counsel]: What it says here, it says, if buyer fails to comply with the contract, buyer will be in default. That in this case will be [appellee]; correct?
[Appellant]: Yes.
[Counsel]: All right. And it says and seller may, A, enforce specific performance, seek other relief as may be provided by law, or both, correct?
[Appellant]: Yes.
[Counsel]: And what that means is you can come in here and you can file a lawsuit, right?
[Appellant]: Yes.
[Counsel]: All right. Now, it also says, or, B, you can terminate this contract and receive the earnest money as liquidated damages, thereby releasing the parties from the contract, correct?
[Appellant]: That's what it says.
[Counsel]: All right. Now, there is no doubt in your mind that [appellee] wanted the earnest money back. Correct?
[Appellant]: Right.
[Counsel]: All right. He sent you a letter that said that?
[Appellant]: But there's also no doubt in my mind that he didn't deserve it, he didn't perform.
[Counsel]: I understand you believe that he didn't deserve it.
[Appellant]: Okay.
[Counsel]: And you told the title companyyou told Cathy [sic] Roach at the title company, I don't want [appellee] ever to see that money. You told her not the [sic] give that money to [appellee], didn't you?
[Appellant]: Absolutely.
[Counsel]: All right. So you made the decision yourself not to let that money go back to [appellee]; correct?
[Appellant]: The deed was done. I'd been faulted.
[Counsel]: All right. And then why not after you'd said you can't have the money back, why didn't you just do what the contract says and said, you're hereby released. I'm going to keep the $25,000 and then we'll go down our road?
[Appellant]: I didn't read it that way at all. The earnest money is exactly what it says. I am in earnest to follow through on this contract and address and respect the contract. Now, that's how I saw it, and that's all I am going to say about it.
[Counsel]: All right. And so you'll agree with me that you filed this lawsuit and sued [appellee] and you said, in no uncertain terms do not give that earnest money back to [appellee].
[Appellant]: You're emphasizing it for your purpose, but for all practical purposes I requested that the title company did not refund him the money because he didn't perform. Now, that's all of
[Counsel]: I am emphasizing it, but I am also correct. Aren't I, [appellant]?
[Appellant]: So am I correct. Aren't I, [counsel]?
[Counsel]: Well, you didn't give him the money back, did you?
[Appellant]: I sure didn't.
[Counsel]: And you filed a lawsuit.
[Appellant]: And he didn't follow through and close on the contract either, did he?
[Counsel]: You filed the lawsuit, didn't you, [appellant]?
[Appellant]: I sure did. Had no choice.
*683 Appellee contends that appellant's admission on cross-examination that he prevented the return of appellee's earnest money establishes that he waived the right to sue for actual damages. Appellant characterizes his actions as efforts to induce appellee to comply with the contract rather than a waiver of his contractual rights. We conclude that more than a mere scintilla of evidence supports appellant's position and the jury's finding on waiver.
Although appellant admitted he acted to prevent the return of the earnest money to appellee because appellee did not perform the contract and did not deserve it, he also testified that he did not want the earnest money, that the earnest money was insufficient, and that he had no choice but to sue appellee because appellee had not performed the contract. In fact, the record shows appellant notified appellee in writing of his intent to pursue specific performance of the contract and, if necessary, a lawsuit for breach of contract. In contrast, nothing shows appellant provided any similar express notice, either oral or written, of an intent to accept the earnest money as liquidated damages. Moreover, after appellee failed to specifically perform the contract as demanded, appellant filed a lawsuit seeking specific performance and damages for breach of contract.
In other parts of his testimony, appellant disdained the earnest money as "insignificant" and "a joke." Appellant also testified that he instructed Roach not to return the earnest money to appellee because he believed it was necessary to preserve the earnest money for specific performance of the contract.
There is more than a mere scintilla of evidence showing that appellant intended to sue appellee rather than accept liquidated damages. More than a mere scintilla of evidence exists to show that appellant instructed Roach to retain the earnest money in order to facilitate specific performance of the contract rather than to obtain the earnest money for himself. Thus, we cannot conclude that appellee clearly established that appellant intentionally relinquished his right to sue or engaged in intentional conduct inconsistent with claiming the right to sue. See Tenneco, 925 S.W.2d at 643. We conclude that the record supports the jury's finding that there was no waiver. See Tenneco, 925 S.W.2d at 643; Motor Vehicle Bd., 1 S.W.3d at 111.
Having concluded that the record supports the jury's finding that there was no waiver, we must also reject appellee's contention that the evidence conclusively establishes appellant's contractual election to accept liquidated damages. Appellee chose to submit the waiver issue to the jury but did not submit a question regarding election of remedies. Therefore, unless the record conclusively establishes that appellant elected to receive liquidated damages, appellee has waived his election contention for appeal. See TEX.R. CIV. P. 279; Brown, 160 S.W.3d at 702.
Appellee contends that merely applying appellant's testimonial "admissions" to the unambiguous language of paragraph 15 of the contract conclusively establishes that appellant chose to accept liquidated damages. Appellee argues that appellant terminated the contract by selling the property to a third party. Although appellant did not physically receive the earnest money, appellee contends he constructively received it by exercising "dominion and control" over it in a manner analogous to a conversion. See Waisath v. Lack's Stores, Inc., 474 S.W.2d 444, 446-47 (Tex.1971) (concluding conversion may occur without a physical taking if one without authorization wrongfully assumes and exercises dominion and control over personal property *684 of another to exclusion of rightful owner). We disagree with appellee's contentions.
Appellant's sale of the property to a third party does not conclusively establish that he terminated the contract. By not closing the transaction, appellee materially breached the contract. See Methodist Hospitals of Dallas v. Corporate Communicators, Inc., 806 S.W.2d 879, 882 (Tex.App.-Dallas 1991, writ denied). Appellee's breach excused appellant's further performance. See Mustang Pipeline Co., Inc. v. Driver Pipeline Co., Inc., 134 S.W.3d 195, 196 (Tex.2004). Thus, appellant was free to sell the property to a third party and assure the purchaser that there were no competing contracts on the property. After selling the property, appellant amended his pleadings to drop his request for specific performance, but he continued to pursue damages for breach of contract. Thus, we cannot conclude as a matter of law that appellant terminated the contract within the meaning of paragraph 15.
Likewise, the evidence does not conclusively establish that appellant "received" the earnest money. The contract does not contemplate constructive receipt of the earnest money. Nor does the contract mandate an interpretation that objecting to a demand for the earnest money made outside the normal closing process constitutes an election under paragraph 15. Furthermore, because appellant did not object in writing, the contract authorized Roach to release the earnest money to appellee at any time after thirty days from the issuance of appellee's written demand. We conclude the evidence does not conclusively establish appellee's election defense so as to entitle him to JNOV. See Prudential, 29 S.W.3d at 77; Brown, 160 S.W.3d at 702. In the absence of conclusive evidence, appellee waived the election issue by failing to submit it to the jury for determination. See TEX.R. CIV. P. 279.
In two responsive issues, appellee questions (1) whether the "election-of-remedies clause" of the contract permits an aggrieved seller to sue for damages while also preventing the buyer from retrieving his earnest money and (2) whether such actions waive the seller's right to sue. Because the contract at issue is a standardized Texas Real Estate Commission form, appellee further contends that resolving this case in appellant's favor would adversely impact public policy because aggrieved sellers will henceforth always choose both to withhold the earnest money and to sue for damages.
All three contentions presuppose that appellant withheld the earnest money from him and thus, effectively chose both remedies for default. The record, however, contains more than a mere scintilla of evidence showing that Roach, rather than appellant, chose not to release the earnest money to appellee. Because there are no jury findings regarding appellant's choice of remedies, we conclude that there is nothing for us to review. See TEX.R. CIV. P. 279. Therefore, we overrule appellant's responsive issues.
More than a mere scintilla of evidence supports the jury's express finding that appellant did not waive appellee's performance of the contract. Appellee has not shown that he is entitled to judgment as a matter of law on the waiver and election defenses he raised in seeking JNOV. Thus, we sustain appellant's sole issue for appeal.
We reverse the trial court's June 30, 2004 final judgment, reinstate the jury's verdict, and remand this case to the trial court for entry of judgment in the amount of $986,232.58, being the sum of actual damages and attorney's fees awarded by the jury for proceedings through the conclusion *685 of this appeal, and for calculation of pre- and post-judgment interest, if any.
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413 F.2d 65
UNITED STATES of America, Plaintiff-Appellee,v.Ismael PEREA, Defendant-Appellant.
No. 131-68.
United States Court of Appeals Tenth Circuit.
July 11, 1969.
Joseph D. Beaty, Albuquerque, N.M. (William C. Marchiondo, Albuquerque, N.M., on the brief), for appellant.
Leon Taylor, Asst. U.S. Atty., Albuquerque, N.M. (John Quinn, U.S. Atty., and John A. Babington, Asst. U.S. Atty., on the brief), for appellee.
Before MURRAH, PICKETT and HOLLOWAY, Circuit Judges.
PICKETT, Circuit Judge.
1
Appellant Perea was charged in a two-count indictment with receiving and concealing a quantity of heroin in violation of 21 U.S.C. 174, and with selling the same without a written order on a form issued by the Secretary of the Treasury in violation of 26 U.S.C. 4705(a). He was convicted by a jury and received concurrent five-year sentences on each count.
2
The evidence material to Perea's conviction showed that on April 22, 1967 federal and local narcotics agents met at a prearranged location in Albuquerque, New Mexico with a former addict turned informer. After searching the informer and his vehicle, five $20-bills, the serial numbers of which had been previously recorded, were given to the informer by the agents for the purpose of effecting a purchase of narcotics from Perea. The informer, followed closely by the agents, then proceeded a short distance to Perea's residence. He drove directly to the front of the residence, while the agents drove to a hill at the rear thereof. From this vantage point the agents observed a transaction between the informer and Perea at the rear of a carport which was situated at the side of the house. The informer, again closely followed by the agents, returned to the previous meeting place where the agents repeated their search and took custody of a tinfoil package. The five $20-bills were not found. Upon analysis, the substance contained therein was found to be heroin. Perea was not arrested until two months later because the informer was being used to aid in other narcotics investigations.
3
Initially, Perea attacks the jurisdiction of the trial court, arguing that under 21 U.S.C. 174 illegal importation of the heroin was a jurisdictional fact, proof of which was a prerequisite to the vesting of jurisdiction in the trial court. Without a preliminary showing of subject matter jurisdiction over the offense charged, it is contended, the trial court was powerless to proceed with the trial.
4
18 U.S.C. 3231 lodges original jurisdiction of all offenses against the United States in the district courts. Authority for the bifurcated method of proceeding contended for does not exist. The indictment charged offenses against the United States in language similar to that of the statutes. Subject matter jurisdiction was vested in the district court upon the filing of the indictment.1 Young v. United States, 10 Cir., 354 F.2d 449, cert. denied, 384 U.S. 912, 86 S.Ct. 1355, 16 L.Ed.2d 364; cf. Mosher v. City of Phoenix, 287 U.S. 29, 53 S.Ct. 67, 77 L.Ed. 148; Thompson v. Terminal Shares, Inc., 8 Cir., 89 F.2d 652, cert. denied sub nom. Guaranty Trust Co. v. Thompson, 302 U.S. 735, 58 S.Ct. 121, 82 L.Ed. 568; 22 C.J.S. Criminal Law 143.
5
Appellant next attacks the constitutionality of the 'presumption' relating to the unexplained possession of narcotics created by 21 U.S.C. 174.2 The argument is that subsequent to the enactment of 174, Congress legalized under certain regulated conditions the domestic production of opium (21 U.S.C. 188-188n), thereby rendering the inference of knowledge of illegal importation from possession alone obsolete. But Congress expressly provided that 174, among others, was not being repealed. 21 U.S.C. 188h; United States v. Williams, 7 Cir., 175 F.2d 715.
6
Congress established a comprehensive scheme by which opium for medical and scientific purposes could be grown by persons licensed by the Secretary of the Treasury. 21 U.S.C. 188e(c). And 188c prohibits sale or purchase without a license. Perea does not claim to have possessed the necessary license.
7
The trial court record is devoid of evidence that domestically produced opium or its derivative, heroin, in fact constitutes a portion of the illegal domestic market in that drug. As a result, no factual basis exists for this court to upset the presumption of illegal importation, and in turn, no basis for upsetting the presumption of knowledge of illegal importation. See Leary v. United States, 395 U.S. 6, 89 S.Ct. 1532, 23 L.Ed.2d 57. As indicated in Leary at F.N. 92, absent a basis for a 'detailed inquiry into the available facts about the state of mind of' 'hard' narcotics users or sellers, this court continues to be bound by Yee Hem, and therefore, the presumption remains valid.
8
Perea admitted upon cross-examination that he had been convicted of drunken driving in 1948. Defense counsel objected when the prosecution continued to delve into the matter of a prior conviction. The trial court excused the jury,3 and upon subsequent inquiry it became apparent that the prosecution was attempting to impeach Perea's credibility by demonstrating a specific act of misconduct; namely, that Perea had perjured himself at his earlier trial. The trial court sustained objection to this line of questioning on the ground that Perea's denial of involvement in the accident and his failure to convince the jury of his noninvolvement would only raise an inference of perjury, and in doing so exceed the scope of proper impeachment. No further inquiry into Perea's past criminal record occurred after cross-examination had resumed in the presence of the jury. By electing to testify, Perea submitted himself to impeachment as any other witness, Martin v. United States, 10 Cir., 404 F.2d 640; Burrows v. United States, 10 Cir., 371 F.2d 434, and cases cited therein; Coulston v. United States, 10 Cir., 51 F.2d 178; see Butler v. United States, 10 Cir., 408 F.2d 1103; and the limitation imposed by the trial court upon the prosecution's inquiry was timely, within the trial court's discretion, and effectively prevented prejudice to the accused. See Gordon v. United States, Cir., 127 U.S.App.D.C. 343, 383 F.2d 936, cert. denied, 390 U.S. 1029, 88 S.Ct. 1421, 20 L.Ed.2d 287; Hood v. United States, 125 U.S.App.D.C. 16, 365 F.2d 949; Luck v. United States, 121 U.S.App.D.C. 151, 348 F.2d 763.
9
During the prosecution's case-in-chief, counsel for Perea, upon cross-examination, elicited information concerning a contact between the informer and Perea in May, 1967. Subsequently, Perea acknowledged having been acquainted with the informer, but denied having seen him between January and August, 1967.4 On rebuttal, over objection that this was a collateral matter, the government was permitted to show that the two men had been observed conversing in Perea's bar on May 10, 1967. To avoid prejudice to the accused, the trial court was solicitous in limiting unsubstantiated evidence of related crimes, and the court instructed the jury that it could consider the evidence of a contact between the informer and Perea subsequent to the date of the offense charged as only bearing upon the nature of their relationship. Counsel for the accused opened up the matter and the accused made an issue out of it by his denial. It thus became a proper subject for rebuttal by the government. See Humes v. United States, 10 Cir., 186 F.2d 875; United States v. Garelli, 7 Cir., 333 F.2d 649, cert. denied, 380 U.S. 917, 85 S.Ct. 904, 13 L.Ed.2d 801; White v. United States, 9 Cir., 317 F.2d 231; United States v. Johnson, 2 Cir., 208 F.2d 404, cert. denied, 347 U.S. 928, 74 S.Ct. 531, 98 L.Ed. 1080; United States v. Pincourt, 3 Cir., 159 F.2d 917.
10
Error is alleged from the failure of the trial court to give an offered instruction which made specific reference to prejudice against individuals of Spanish-American descent. It is urged that because of Perea's earlier challenge to the array of the jury based on the small number of Spanish surnamed individuals included therein, and because of the frequent involvement in New Mexico of persons with Spanish surnames with narcotics offenses, the offered instruction should have been given. We find nothing in the record which warranted calling attention to the appellant's ancestry. An instruction defining the province of the jury cautioned the jurors against allowing their prejudices to affect their verdict. The question of impartiality had been covered as well by the court on voir dire. The requested instruction would have unnecessarily belabored the point. Unless otherwise shown, it must be presumed that the jurors abided by the court's instruction. Baker v. Hudspeth, 10 Cir., 129 F.2d 779.
11
Lastly, the alleged error in the trial court's refusal to grant a motion for a new trial on the basis of newly discovered evidence merits little discussion. Subsequent to the trial it was learned that on the date of the offense certain construction work was being performed on the route taken by the informer and the narcotics agents to Perea's residence. No mention of this had been made at trial, but at the hearing on Perea's motion it became clear that although the road had been partially obstructed, it had not been impassable. We are satisfied that had the evidence presented at the hearing been available at the trial, it would not have produced a different result and the trial judge did not plainly abuse his discretion. See King v. United States, 10 Cir.,402 F.2d 289, and cases cited therein.
12
Affirmed.
1
'The object of the indictment is, first, to furnish the accused with such a description of the charge against him as will enable him to make his defence, and avail himself of his conviction or acquittal for protection against a further prosecution for the same cause; and, second, to inform the court of the facts alleged, so that it may decide whether they are sufficient in law to support a conviction, if one should be had.' United States v. Cruikshank, 92 U.S. 542, at 558, 23 L.Ed. 588
2
The constitutionality of 174 has been frequently upheld by this and other courts. Yee Hem v. United States, 268 U.S. 178, 45 S.Ct. 470, 69 L.Ed. 904; Garcia v. United States, 10 Cir., 373 F.2d 806; Maestas v. United States, 10 Cir., 341 F.2d 493; Cordova v. United States, 10 Cir., 303 F.2d 454; Morgan v. United States, 9 Cir., 391 F.2d 237, cert. denied, 393 U.S. 853, 89 S.Ct. 91, 21 L.Ed.2d 122. The same argument presented here concerning the effect of 188-188n had been raised in the trial court in Morgan
3
In the presence of the jury cross-examination of the defendant relative to this point had proceeded as follows:
'Q. Mr. Perea, did you have, in May of 1948, in California, did you have an accident where a man was injured by accident?
'MR. MARCHIONDO: Now, we're going to object to this, if the Court please, as being an improper question, on the grounds we have previously stated to the Court, and the question is improperly framed.
'THE COURT: I agree on the latter.
'MR. LOVE: I was going to lead up to the specific question. These were preliminary questions.
'THE COURT: Well, I'll-- I agree that the form of the question is improper.
'Q. Mr. Perea, in May-- in 1948, in California, were you convicted of hit and run, a felony?
'MR. MARCHIONDO: Now, we object to this question, if the Court please, on the grounds previously stated.
'THE COURT: Fine, the objection is overruled, it's admissible for such weight as the jury wants to give it, on the question of credibility.
'A. Yes, sir, I was convicted of drunken driving.
'Q. And you were tried, is that correct?
'A. Yes, sir.
'Q. Were you guilty of it?
'MR. MARCHIONDO: Now, if the Court please, I'm going to object to this-- just a minute-- '
4
Perea's testimony was that his only contacts with the informer had been at his bar where the informer had been involved in altercations on two separate occasions and in the United States Court House where the informer allegedly solicited a bribe while Perea was awaiting the calling of his case
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4 So.3d 1224 (2009)
FINCH
v.
STATE.
No. 1D06-2067.
District Court of Appeal Florida, First District.
March 9, 2009.
Decision without published opinion. Affirmed.
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People v DeJesus (2015 NY Slip Op 03304)
People v DeJesus
2015 NY Slip Op 03304
Decided on April 21, 2015
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on April 21, 2015
Acosta, J.P., Saxe, Richter, Gische, Kapnick, JJ.
14903 5205/09
[*1] The People of the State of New York, Respondent,
vRoberto DeJesus, Defendant-Appellant.
Robert S. Dean, Center for Appellate Litigation, New York (Marisa K. Cabrera of counsel), for appellant.
Robert DeJesus, appellant pro se.
Cyrus R. Vance, Jr., District Attorney, New York (Susan Gliner of counsel), for respondent.
Judgment, Supreme Court, New York County (Ruth Pickholz, J. at suppression hearing; Thomas Farber, J. at jury trial and sentencing), rendered October 7, 2011, as amended October 26, 2011, convicting defendant of robbery in the second degree (four counts), criminal impersonation in the first degree (two counts) and criminal possession of a weapon in the fourth degree, and sentencing him, as a persistent violent felony offender, to an aggregate term of 18 years to life, unanimously affirmed.
The trial court providently exercised its discretion when it replaced a juror who, after repeated phone calls from the court, finally called the court almost two hours after the trial's scheduled starting time, and stated that he had overslept after a night of drinking. "The Court of Appeals has held that the two-hour rule' gives the court broad discretion to discharge any juror whom it determines is not likely to appear within two hours" (People v Kimes, 37 AD3d 1, 24 [1st Dept 2006], lv denied 8 NY3d 881 [2007], citing People v Jeanty, 94 NY2d 507, 517 [2000]). Here, it was certain that the juror would not appear within the two-hour period, and the court providently chose not to delay the trial any further. Defendant's claim that the court should not have had an ex parte phone conversation with the juror is unpreserved and we decline to review it in the interest of justice. As an alternative holding, we reject it on the merits, and we also find that there was no mode of proceedings error. Phone contact with a juror regarding the juror's absence or lateness is a quintessentially ministerial matter, frequently handled by nonjudicial staff, and it is very different from the type of inquiry contemplated by People v Buford (69 NY2d 290 [1987]).
The court properly denied defendant's motion to suppress evidence recovered subsequent to his stop, frisk, and resulting arrest. There is no basis for disturbing the court's credibility determinations. The court also properly denied defendant's motion to suppress statements. There was no coercive police conduct, and the totality of the circumstances establishes that the statements were voluntarily made (see Arizona v Fulminante, 499 US 279, 285-288 [1991]; People v Anderson, 42 NY2d 35, 38-39 [1977]). Although the statements were obtained over a lengthy period of time, only a small part of this time was spent on interrogation. Defendant had ample time to sleep if he so chose, took several naps, and received food and an opportunity to talk to his child's mother. Accordingly, the People established that the statements were voluntary (see e.g. People v Salley, 25 AD3d 473, 474 [1st Dept 2006], lv denied 6 NY3d 838 [2006]).
The court properly admitted evidence of an uncharged Brooklyn robbery that defendant committed shortly before one of the charged crimes. The charged and uncharged robberies were inextricably interwoven, they were supported by overlapping evidence, and they constituted a single chain of events and a common scheme or plan (see People v Dorm, 12 NY3d 16, 19 [2009]; People v Alvino, 71 NY2d 233, 242 [1987]; People v Vails, 43 NY2d 364, 368-369 [*2][1977]). The probative value of this evidence outweighed any potential prejudice, which the court minimized by way of thorough limiting instructions.
By delivering an adverse inference charge, the court provided an adequate remedy for the People's loss of the recording of a robbery victim's 911 call (see People v Martinez, 71 NY2d 937, 940 [1988], and it properly exercised its discretion in denying defendant's requests for other relief. We note that defendant was provided with the Sprint report of the call.
We perceive no basis for reducing the sentence.
We have considered and rejected defendant's pro se claims.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: APRIL 21, 2015
CLERK
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603 F.Supp. 490 (1984)
WATERMAN STEAMSHIP CORPORATION, Plaintiff,
v.
350 BUNDLES OF HARDBOARD, V/O Exportles, and Allied International, Inc., Defendants.
Civ. A. No. 82-0626-S.
United States District Court, D. Massachusetts.
April 13, 1984.
*491 DeLane F. Anderson, Jr., Hoch, Flanagan & Snyder, Boston, Mass., for plaintiff.
Michael T. Cetrone, Nutter, McClennan & Fish, Boston, Mass., for defendants.
MEMORANDUM AND ORDER
SKINNER, District Judge.
The plaintiff, Waterman Steamship Corporation, seeks to recover freight charges allegedly due on a shipment of hardboard originating in the Soviet Union and discharging in at least three United States ports. The Soviet exporter, V/O Exportles, initially paid freight charges on the shipment, but the plaintiff now alleges that the charges were improperly computed. The plaintiff has complained against V/O Exportles and the American purchaser of the hardboard, Allied International, Inc. for the deficiency. The plaintiff has moved for summary judgment against Allied. Allied has moved for summary judgment of dismissal.
*492 Allied argues that it is not liable for the freight charge deficiency. The Carriage of Goods by Sea Act does not impose a duty upon a consignee to pay freight charges. States Marine International, Inc. v. Seattle-First National Bank, 524 F.2d 245, 247-248 (9th Cir.1975). Liability arises only on the shipping contract or under general principles of law.
To ascertain what contract was entered into, we look primarily to the bills of lading, bearing in mind that the instrument serves both as a receipt and as a contract.
Louisville & Nashville R.R. v. Central Iron Co., 265 U.S. 59, 67, 44 S.Ct. 441, 443, 68 L.Ed. 900 (1924).
The bill of lading is unambiguous as to the consignee's liability to pay freight charges. The fine print on the reverse of the shipper's form includes the following language:
The shipper and consignee shall be jointly and severally liable to the carrier for the payment of all charges and for the performance of the obligations of each of them hereunder.
It is true that
The mere designation in the bill of lading of the consignee as the one liable for the freight charges does not create a contractual relationship between the carrier and the consignee, rendering the latter liable therefor, but rather the consignee becomes liable therefor when an obligation arises on his part from presumptive ownership, acceptance of goods and the services rendered, and the benefits conferred by the carrier for such charges.
States Marine, supra at 248 (quoting Arizona Feeds v. Southern Pacific Transportation Co., 21 Ariz.App. 346, 519 P.2d 199, 206 (1974)). The defendant is liable on the contract because it accepted the goods. Under common law,
The weight of the authority seems to be that the consignee is prima facie liable for the payment of the freight charges when he accepts the goods from the carrier.
Pittsburg, Cincinnati, Chicago and Saint Louis Railway Company v. Fink, 250 U.S. 577, 581, 40 S.Ct. 27, 27, 63 L.Ed. 1151 (1919).
Even where there is no actual acceptance of the goods by the named consignee, presumptive ownership may arise from his exercise of dominion and control over the shipment. [Citing cases].
States Marine, supra at 248. At a minimum, these cases indicate that Allied agreed to be bound by the bill of lading when it accepted the goods.
Allied argues, however, that the markings "C & F" and "Freight prepaid" which appear on the front of the bill represent contractual terms which override the language on the reverse. The term "C & F" in a contract between a shipper and a purchaser indicates that the shipper assumes the responsibilities (1) to pay the freight, and (2) to deliver to the purchaser a receipt from the carrier indicating that the freight has been paid. U.C.C. § 2-320 and Official Comment (1). The bill of lading may include the receipt. U.C.C. § 2-320(2)(b). I find that as they appear on the bills of lading in this case, the terms acknowledge receipt of the original freight charge calculated by V/O Exportles. They do not control the plain language of the bills of lading insofar as they have become contracts between Waterman and Allied.
Finally, Allied argues that the plaintiff should be estopped from proceeding against it, because of the representations "C & F" and "Freight prepaid" on the bill of lading.
In the cases applying the doctrine of estoppel we find not only a bill of lading marked "prepaid", but also absence of any initial conduct on the part of the carrier that would indicate to the consignee that the carrier was looking to it for payment.
Arizona Feed v. Southern Pacific Transportation, 21 Ariz.App. 346, 519 P.2d 199, 207 (1974). Cf. Southern Pacific Transportation Company v. Campbell Soup Company, 455 F.2d 1219 (8th Cir.1972); Consolidated Freightways Corporation of *493 Delaware v. Admiral Corporation, 442 F.2d 56 (7th Cir.1971); Missouri Pacific Railroad Company v. National Milling Company, Inc., 409 F.2d 882 (3d Cir.1969).
The principal concern in the railroad cases is to prevent the use of estoppel as a cover for freight rate discrimination prohibited by the Interstate Commerce Act. See Campbell Soup, supra at 1222. Although this case is a maritime case, not a railroad case, the policy considerations disfavoring estoppel apply equally. The Carriage of Goods by Sea Act, which the defendant concedes is applicable to this case, also prohibits rate discrimination. 46 U.S.C. §§ 812, 815.
Although the defendant had full notice of the plaintiff's claim when it took possession of the two shipments which the plaintiff had attached in Boston, it is unclear what the defendant knew several months earlier when it accepted the shipments which arrived in Jacksonville and New Orleans. The record does not show when Allied paid V/O Exportles for the shipments. Waterman brings this action on the bill of lading contract. Estoppel is an affirmative defense in a contract action. The defendant bears the burden of asserting facts which would support the defense.
When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall enter against him.
Fed.R.Civ.P. 56(e). The defendant has not produced affidavits or other materials beyond his pleadings which would establish this affirmative defense of estoppel. Accordingly, I find the defendant liable on the bill of lading.
Allied also raises a second allegation of estoppel as to the amount of the deficiency. Allied alleges that the volume of the shipment was properly calculated on a net basis, and that in its long course of prior dealings with the plaintiff, freight charges had always been computed on net volume. According to Allied, the deficiency arises because the plaintiff recalculated the charges on the contested shipments on a gross basis.
Plaintiff relies on the fourteenth article of its bills of lading, which provides in part as follows:
FREIGHT AND OTHER CHARGES: Freight shall be payable on actual gross intake weight or measurement, or at the carrier's option, on actual gross discharged weight or measurement. Freight may be calculated on the basis of the shipper's particulars but the carrier may at any time open the packages and examine, weight, measure and value the goods and if such particulars are found to be erroneous and additional freight is payable, the shipper, consignee and the goods shall be liable also for any expense thereby incurred.
The existence of estoppel by course of conduct is a mixed question of law and fact, and to the extent it is an issue of fact, it is apparently genuinely disputed in this case.
Accordingly, no complete summary judgment is appropriate. Partial summary judgment establishing the liability of Allied for any deficiency is warranted on this record and the plaintiff's motion is ALLOWED to this extent. Both motions are otherwise DENIED. The case shall stand for trial on the issue of the existence and amount of any deficiency, and Allied shall have the burden of proving estoppel by course of conduct.
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NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Courtof Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted January 21, 2010
Decided January 21, 2010
Before
JOHN L. COFFEY, Circuit Judge
JOEL M. FLAUM, Circuit Judge
MICHAEL S. KANNE, Circuit Judge
No. 09‐3199
UNITED STATES OF AMERICA, Appeal from the United States District
Plaintiff‐Appellee, Court for the Eastern District of Wisconsin.
v. No. 01‐CR‐16
WILLIE HOLLAND, JR., Rudolph T. Randa,
Defendant‐Appellant. Judge.
O R D E R
Willie Holland was sentenced to a total of 77 months’ imprisonment and 3 years’
supervised release after he pleaded guilty to possession of a firearm by a felon, 18 U.S.C.
§ 922(g)(1). Two months into his supervised release, Holland was arrested for possessing
cocaine with intent to distribute and, after pleading guilty in state court, was sentenced to a
year in prison. The district court then revoked his supervised release and ordered him to
serve another 24 months’ imprisonment. Holland appeals, but his appointed counsel has
concluded that the case is frivolous and moves to withdraw. See Anders v. California , 386
U.S. 738, 744 (1967). Holland opposes counsel’s motion. See CIR. R. 51(b). We confine our
review to the potential issues outlined in counsel’s facially adequate brief and Holland’s
response. See United States v. Schuh, 289 F.3d 968, 973‐74 (7th Cir. 2002).
No. 09‐3199 Page 2
At his revocation hearing Holland stipulated that he violated the conditions of his
supervised release by committing the state drug crime, and the only conceivable ground for
appeal identified by counsel is whether 24 months is too much time. We will uphold a term
of reimprisonment imposed on revocation of supervised release unless it is “plainly
unreasonable,” a very narrow standard. United States v. Kizeart, 505 F.3d 672, 674‐75 (7th
Cir. 2007). In selecting an appropriate prison term to follow revocation, district courts must
consider the policy statements in the guidelines, see U.S.S.G. ch. 7, pt. B, and the sentencing
factors set out in 18 U.S.C. § 3553(a). United States v. Neal, 512 F.3d 427, 438 (7th Cir. 2008).
In this case the court, by statute, could not imprison Holland for more than two years, see 18
U.S.C. §§ 3583(e)(3), 3559(a)(3), 922(g)(1), even though his Grade A violation and criminal
history category of VI yielded a guidelines range of 33 to 41 monthsʹ reimprisonment, see
U.S.S.G. §§ 7B1.1(a)(1), 7B1.4(a). In selecting 24 months the court weighed the § 3553(a)
factors, including the nature of the underlying drug violation and the need to protect the
public and promote respect for the law—especially in light of how quickly Holland had
reoffended once released from prison. As counsel notes, it would be frivolous to contend
that the courtʹs evaluation of the statutes and guidelines factors was inadequate.
Counsel questions whether Holland could argue that his term of reimprisonment is
unreasonable in light of his time already served in state custody. Before pleading guilty in
state court, Holland already had spent almost 18 months in state custody, most of which
was credited against his state sentence. He argued at the revocation hearing that the district
court should imprison him for just 6 months to account for the time in state custody, but the
court declined to award any reduction below the 24‐month statutory maximum.
District courts are not required to shorten a term of reimprisonment to annul time
served in state custody for misconduct underlying the revocation, see U.S.S.G. § 7B1.3(f);
United States v. Huusko, 275 F.3d 600, 603 (7th Cir. 2001); United States v. Harvey, 232 F.3d
585, 588‐89 (7th Cir. 2000). In this case the court emphasized that it would have imposed a
longer term of reimprisonment if the statutory maximum was higher. The court explained
that Holland already had received a break from having a statutory maximum well below
the bottom of the guidelines range. And the court correctly noted that postrevocation
reimprisonment is part of the penalty for the original offense and separate from any
punishment for an offense underlying revocation. See United States v. Johnson, 529 U.S. 694,
700‐01 (2000). Any challenge to the length of Hollandʹs term on this ground would be
frivolous.
In his Rule 51(b) response, Holland questions whether he is entitled to credit under
18 U.S.C. § 3585(b) for the almost 6 months in state custody that was not applied to his state
sentence. But it is the Bureau of Prisons, not the sentencing court, that computes the credit
No. 09‐3199 Page 3
due under § 3585(b). United States v. Wilson, 503 U.S. 329, 334‐35 (1992); United States v. Ross,
219 F.3d 592, 594 (7th Cir. 2000). A claim based on § 3585(b) would thus be frivolous in this
appeal.
Accordingly, we GRANT counselʹs motion to withdraw and DISMISS the appeal.
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United States Court of Appeals
For the First Circuit
Nos. 14-1050
14-1052
DAMARIS APONTE-RAMOS; ELIZABETH DE JESUS-AFANADOR; OSVALDO
DE LA ROSA-VIDAL; MARTA I. FELICIANO-MONTILLA; JOSE
ARNALDO FLORES-GARCIA; WANDA I. GONZÁLEZ-SEGARRA; MARITZA
LEBRÓN-GARCÍA; DAMARIS MARTÍNEZ-GONZÁLEZ; SYLVIA
MARTÍNEZ-MARTÍNEZ; LUCY A. ORTIZ-RIVAS; DAVID PÉREZ-VÁZQUEZ;
NEIDA I. RAMOS-TORRES; LORNA S. RIVERA-CORREA; LYDIA
PRINCIPE-RODRIGUEZ; CARLOS J. RIVERA-RIVERA; WANDA J.
SANTIAGO-SERRANO; MARYLIN SIERRA-GARCIA; EDGARDO
TORRES-CABRERA; MARIA D. TORRES-HERNANDEZ; JUAN L.
VÁZQUEZ-LOPEZ; RAFAEL ZAYAS-MORALES; CATHERINE
GONZÁLEZ-RIVERA; MAYRA L. ALMODOVAR-CORTÉS; HUMBERTO
VERGARA-AGOSTINI; ABRAHAM PÉREZ-VALENTÍN; LILLIAN
GARCIA-CHANTA; LUZ E. BURGOS-RAMÍREZ; LUIS R. RAMOS-NAVARRO;
FRANCISCO ESPINOSA-HUERTAS; IVETTE DÍAZ-VÁZQUEZ; JOSÉ O.
RODRÍGUEZ-POMALES; ORLANDO ALDEBOL-BORRERO,
Plaintiffs, Appellants,
FABIÁN LABOY-RODRÍGUEZ; OSVALDO DE LA ROSA-VIDAL; HÉCTOR
RIVERA-RIVERA; HÉCTOR TORRES-RESTO; MARITZA VÁZQUEZ-RAMOS;
ANTONIO SEDA-ZACOUR; HUMBERTO VERGARA-AGOSTINI; OMAR
NEGRÓN-SANTIAGO,
Plaintiffs,
v.
ZOIMÉ ÁLVAREZ-RUBIO, in her personal and official capacity as
Executive Director of the State Insurance Fund; SAÚL
RIVERA-RIVERA, in his personal and official capacity as
Human Services Director of the State Insurance Fund;
STATE INSURANCE FUND CORPORATION,
Defendants, Appellees.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Gustavo A. Gelpí, U.S. District Judge;
Hon. Marcos E. López, U.S. Magistrate Judge]
Before
Lynch, Chief Judge,
Howard and Kayatta, Circuit Judges.
Jorge Martínez-Luciano, with whom Emil Rodríguez-Escudero
and Martínez-Luciano & Rodríguez-Escudero Law Office were on brief,
for appellants.
Damaris Ortiz-González, with whom Sifre & Muñoz-Noya PSC
was on brief, for appellee State Insurance Fund Corporation.
Tanaira Padilla-Rodriguez, with whom Susana I.
Peñagarícano-Brown, Assistant Solicitor General, and Margarita
Mercado-Echegaray, Solicitor General, were on brief, for appellees
Zoimé Álvarez-Rubio and Saúl Rivera-Rivera.
April 3, 2015
LYNCH, Chief Judge. These two appeals arise out of
similar lawsuits in which plaintiffs, current and previous
employees of the Puerto Rico State Insurance Fund Corporation
(SIFC), have alleged that defendants, the SIFC and its high-level
administrators, selectively enforced Puerto Rico's merit principle
against them. This "selective enforcement" is said to be in
violation of the Equal Protection Clause. U.S. Const. amend. XIV,
§ 1.
Plaintiffs were appointed from 2001 to 2008 to career
managerial positions at the SIFC. Control of the Puerto Rico
government changed parties in early 2009. A later 2009 audit
revealed that these plaintiffs were appointed through internal job
postings, rather than through open announcements as required by
SIFC regulation. Finding the appointments to have violated the
merit principle, the new administration annulled the appointments.
The Equal Protection Clause does not provide a basis to
undo these employment actions. Rather, this case can be viewed as
an effort to circumvent the limits imposed on First Amendment
claims. Indeed, we recently affirmed entry of summary judgment for
defendants in a suit by a former employee alleging that a similar
annulment constituted political discrimination in violation of the
First Amendment. Reyes-Pérez v. State Ins. Fund Corp., 755 F.3d
49, 50-52, 55 (1st Cir. 2014). These plaintiffs challenge the
annulment under the Equal Protection Clause, expressly disavowing
-3-
any First Amendment claim. The district courts granted summary
judgment to defendants because plaintiffs failed to identify
similarly situated individuals treated differently by defendants.
We affirm on the same basis.
I.
When reviewing a grant of a motion for summary judgment,
"we recite the facts in the light most favorable to the non-moving
party, drawing all reasonable inferences in his favor." Id. at 50.
Plaintiffs are thirty-seven individuals who were
appointed to career managerial positions at the SIFC, the Puerto
Rico government entity that administers the local workers'
compensation program, between January 1, 2001, and December 31,
2008. A "career managerial employee" is one of five employee
categories at the SIFC. The term is defined as a permanent
employee of the SIFC "who is assigned semi-skilled and unskilled
technical professional duties and who does not belong to any of the
appropriate bargaining units for purposes of collective contracting
existing in the [SIFC]." For example, one of the plaintiffs here,
José O. Rodríguez-Pomales, held a career managerial position of
Budget Officer.
Plaintiffs were appointed while one of Puerto Rico's two
major political parties, the Popular Democratic Party (PDP), was in
power. In 2009, when the New Progressive Party (NPP) came to
-4-
power, the new administration performed an audit of all personnel
transactions that had occurred between January 1, 2001, and
December 31, 2008. Defendants reviewed the personnel files of all
3,835 employees at the SIFC. According to the October 28, 2009,
audit report, 232 appointments of career managerial employees --
including those of the plaintiffs -- were made through internal job
postings rather than public announcements. In the SIFC's view,
this exclusion of outside candidates contravened Article 14.1 of
the SIFC Employee Manual, which, implementing Puerto Rico's "merit
principle," requires that positions be filled "by means of open
competition."1 See P.R. Laws Ann. tit. 3, § 1461(42) (2011)
(defining the "merit principle" as the "concept on which basis all
public employees shall be selected, promoted, retained and treated
in all matters concerning their employment based upon their
capability and without discrimination"). In January 2010, the SIFC
began to annul all of those appointments, including those of the
plaintiffs, regardless of the appointee's party affiliation. See
generally González-Segarra v. State Ins. Fund Corp., 188 P.R. Dec.
1
In 2003, the SIFC Administrative Director had recommended
that the SIFC begin using internal job posting to recruit
managerial employees in part because employees had complained that
they were consistently losing out to candidates outside the SIFC
when seeking managerial positions. There is no suggestion that
this is the type of exception to the merit principle authorized by
Puerto Rico law. See González-Segarra v. State Ins. Fund Corp.,
188 P.R. Dec. 252, __ P.R. Offic. Trans. __ (P.R. 2013) (discussing
the scope of exceptions to the merit principle and finding that
none applied to the parties' appointments from the 2009 audit).
-5-
252, __ P.R. Offic. Trans. __ (P.R. 2013) (describing the events
giving rise to the annulments and holding that plaintiffs'
appointments made through closed job announcements violate the
merit principle).
The Aponte-Ramos plaintiffs filed suit in federal
district court in Puerto Rico on December 7, 2010,2 and the Díaz-
Vázquez plaintiffs did so on April 29, 2011. Using 42 U.S.C.
§ 1983, plaintiffs sued the SIFC, its executive director, and its
director of human resources, in both their official and personal
capacities, seeking compensatory and punitive damages, as well as
injunctive relief reinstating plaintiffs. Both sets of plaintiffs
alleged that defendants selectively enforced the merit principle
against them, in violation of Equal Protection Clause, along with
several other federal and Puerto Rico law claims.3 The district
court in Díaz-Vázquez granted summary judgment for the defendants
on October 22, 2013, and denied a motion for reconsideration on
December 4, 2013, finding that the plaintiffs had not identified
similarly situated individuals who had been treated differently by
defendants. See Díaz-Vázquez v. Álvarez-Rubio, Civ. No. 11-1405
2
A second case, filed on May 16, 2011, was consolidated in
the district court with Aponte-Ramos on July 6, 2011.
3
The Díaz-Vázquez plaintiffs asked the district court for
voluntary dismissal of their other constitutional claims, which the
district court granted. The Díaz-Vázquez district court then
declined to exercise supplemental jurisdiction over the state law
claims. In both cases, plaintiffs have appealed only on the Equal
Protection claim.
-6-
(MEL), 2013 WL 6281455, at * 11 (D.P.R. Oct. 22, 2013) (granting
summary judgment); Díaz-Vázquez v. Álvarez-Rubio, Civ. No. 11-1405
(MEL), 2013 WL 6282309, at *3 (D.P.R. Dec. 4, 2013) (denying
reconsideration). The district court in Aponte-Ramos granted
summary judgment for the defendants on December 10, 2013, adopting
the reasoning of the Díaz-Vázquez court. This appeal followed.
II.
We review a district court's grant of summary judgment de
novo. Klunder v. Brown Univ., 778 F.3d 24, 30 (1st Cir. 2015). In
so doing, we "scrutiniz[e] the facts in the light most agreeable"
to plaintiffs and "draw[] all reasonable inferences in [their]
favor." Id. (quoting Foote v. Town of Bedford, 642 F.3d 80, 82
(1st Cir. 2011)) (internal quotation marks omitted). "Summary
judgment is proper only when no genuine issue of material fact
exists and the moving party is entitled to judgment as a matter of
law." Tobin v. Fed. Express Corp., 775 F.3d 448, 450 (1st Cir.
2014).
It is generally true that "[u]nder the Equal Protection
Clause, persons similarly situated must be accorded similar
governmental treatment." Marrero-Gutierrez v. Molina, 491 F.3d 1,
9 (1st Cir. 2007) (citing City of Cleburne v. Cleburne Living Ctr.,
-7-
473 U.S. 432, 439 (1985)).4 In order to prove an Equal Protection
violation, plaintiffs must establish that, compared with other
similarly situated individuals, they were "selectively treated
. . . based on impermissible considerations such as race, religion,
intent to inhibit or punish the exercise of constitutional rights,
or malicious or bad faith intent to injure a person." See id.
(alteration in original) (quoting Rubinovitz v. Rogato, 60 F.3d
906, 910 (1st Cir. 1995)) (internal quotation marks omitted).5
"The formula for determining whether individuals or
entities are 'similarly situated' for equal protection purposes is
not always susceptible to precise demarcation." Id. "[T]he test
is whether a prudent person, looking objectively at the incidents,
would think them roughly equivalent and the protagonists similarly
situated. Much as in the lawyer's art of distinguishing cases, the
4
The individual defendants argue that we should construe
plaintiffs' claims as First Amendment political discrimination
claims, rather than as Fourteenth Amendment selective enforcement
claims. See, e.g., Uphoff Figueroa v. Alejandro, 597 F.3d 423, 430
n.8 (1st Cir. 2010) ("An equal protection claim alleging political
discrimination merely restates a First Amendment political
discrimination claim and . . . should [be] considered under the
First Amendment."). Plaintiffs respond that our cases say only
that plaintiffs bringing First Amendment claims may not "double-
dip" with a selective enforcement claim based on the same legal
theory. The argument is beside the point. It is clear that
plaintiffs cannot succeed under their asserted selective
enforcement theory.
5
The government has not argued that this claim should be
understood as a class-of-one theory, which is barred in the public
employment context, see Engquist v. Or. Dep't of Agric., 553 U.S.
591 (2008), so we do not address that argument.
-8-
'relevant aspects' are those factual elements which determine
whether reasoned analogy supports, or demands, a like result."
Barrington Cove Ltd. P'ship v. R.I. Hous. & Mortg. Fin. Corp., 246
F.3d 1, 8 (1st Cir. 2001) (quoting Dartmouth Review v. Dartmouth
Coll., 889 F.2d 13, 19 (1st Cir. 1989), overruled on other grounds
by Educadores Puertorriqueños en Acción v. Hernández, 367 F.3d 61
(1st Cir. 2004)) (internal quotation marks omitted). The cases
must be similar "in all relevant respects": "[e]xact correlation is
neither likely nor necessary, but the cases must be fair congeners.
In other words, apples should be compared to apples." Id. (quoting
Dartmouth Review, 889 F.2d at 19) (internal quotation marks
omitted).
Plaintiffs do not argue that there are individuals hired
to career managerial positions in violation of the merit principle
from 2001 to 2008 whose appointments were not annulled. Rather,
they point to two other categories of individuals, appointed
earlier by other decisionmakers: (1) a group of individuals
appointed without any job announcement, open or closed, in the
1990s, and (2) several physicians appointed to career managerial
positions without any job announcement in 1995-1996. They also
point to a third category appointed after the time period covered
by the audit: union employees appointed though closed job
announcements after 2009. These obviously dissimilar appointments
simply present different factual situations to which the open
-9-
competition requirement may, or may not, apply. Indeed, the
Supreme Court of Puerto Rico has rejected any notion that the merit
principle applies in the same manner across the board, without
regard to context or circumstance. González-Segarra, __ P.R.
Offic. Trans. at __.
The first two groups were allegedly appointed to SIFC
positions without open job announcements, also allegedly in
violation of the merit principle. To plaintiffs, that is
similarity enough. Not so. First, plaintiffs have not established
that the open competition requirement applied to these individuals
at all. Díaz-Vázquez, 2013 WL 6282309, at *1 & n.1.
Plaintiffs fail to identify employees of a similar
category hired, promoted, or otherwise appointed in a similar way
who were not annulled following a similar audit. They rely
primarily on a collection of appointment letters and change reports
with dates ranging from 1993 to 1999.6 The appointments and
changes identified in the collection of letters fall into four
categories: promotions from temporary status to regular status
based on positive performance evaluations, appointments to
6
Plaintiffs also rely on an affidavit from a former SIFC
Human Resources employee who states that he has personal knowledge
of two categories of appointments, along with individuals appointed
to career managerial positions before 2001 without open job
announcements. The district court found these allegations "non-
specific and insufficient to carry plaintiffs' burden," as they
provide "[n]o details about these individuals or the circumstances
surrounding their appointments." Díaz-Vázquez, 2013 WL 6281455, at
*9 n.3. We agree.
-10-
temporary positions, salary increases, and a simple promotion.
There is no indication that these appointments involved career
managerial employees and were made through internal job postings;
to the contrary, it is undisputed that internal job announcements
were not used for career managerial employees before 2003 or after
2008.
Individuals given a smorgasbord of status changes through
a different process are hardly similarly situated to plaintiffs.
Citing González-Segarra, plaintiffs argue that the Puerto Rico
Supreme Court has explained that the merit principle applied in
full to employees before 2001 and that nominating authorities are
obligated to seek out and annul any violations of the merit
principle. González-Segarra, however, holds only that appointments
which were annulled as a result of the 2009 audit violated the
merit principle and were not justified by any exception. Id. The
opinion says nothing about the appointments from before 2001.
Finally, the first two groups also had their status
changed about a decade before the plaintiffs were appointed.
There was no reason for defendants to think these groups were
similar. Nor was it unreasonable for defendants to audit only the
prior eight years, which constituted the entire period of hiring
through closed job announcements. The Constitution does not
require the SIFC to audit indefinitely into the past, or even back
to the date of the last audit. Cf. Williamson v. Lee Optical of
-11-
Okla., Inc., 348 U.S. 483, 489 (1955) ("[T]he legislature may
select one phase of one field and apply a remedy there, neglecting
others. The prohibition of the Equal Protection Clause goes no
further than the invidious discrimination." (citation omitted));
Beeler v. Rounsavall, 328 F.3d 813, 817 (5th Cir. 2003) (finding
that two applicants for a permit were not similarly situated
because one was applying for a new permit and one was applying for
an existing permit, and the relevant regulation entailed
"differential treatment of businesses applying for their first
permit and businesses applying to renew their permits").
As to the union employees, plaintiffs do not dispute that
the SIFC is legally obligated to appoint some union employees via
internal job announcements because of applicable collective
bargaining agreements. Díaz-Vázquez, 2013 WL 6282309, at *3.
Union employees, by definition, are also not career managerial
employees. They are not similarly situated to plaintiffs in the
relevant respects.
III.
Plaintiffs' Equal Protection claims fail as a matter of
law. The district courts' grants of summary judgment are affirmed.
So ordered.
-12-
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FILED
NOT FOR PUBLICATION NOV 21 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
HAYDEE STUART, individually and on No. 10-55638
behalf of all others similarly situated,
D.C. No. 2:09-cv-06295-AHM-
Plaintiff - Appellant, CW
v.
MEMORANDUM*
CADBURY ADAMS USA, LLC, a
Delaware Corporation,
Defendant - Appellee.
Appeal from the United States District Court
for the Central District of California
A. Howard Matz, District Judge, Presiding
Submitted November 14, 2011**
Pasadena, California
Before: W. FLETCHER and RAWLINSON, Circuit Judges, and
SINGLETON, Senior District Judge.***
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable James K. Singleton, Senior District Judge for the U.S.
District Court for Alaska, Anchorage, sitting by designation.
Haydee Stuart appeals the district court’s dismissal under Rule 12(b)(6) for
failure to state a claim. Stuart also appeals the district court’s denial of leave to
amend her complaint. We have jurisdiction under 28 U.S.C. § 1291.
Stuart sued Cadbury Adams USA LLC (“Cadbury”), alleging that Cadbury’s
Trident White chewing gum packaging constitutes false and misleading advertising
under California Business and Professions Code sections 17200, et. seq. (Unfair
Competition Law) and 17500, et. seq. (false advertising law). Stuart also sought
relief under the Consumer Legal Remedies Act, Cal. Civ. Code section 1750, et
seq., and for common law fraud.
The district court dismissed Stuart’s claims, finding that they “defy common
sense.” We review dismissals for failure to state a claim under Rule 12(b)(6) de
novo. Edwards v. Marin Park, Inc., 356 F.3d 1058, 1061 (9th Cir. 2004). In
evaluating a Rule 12(b)(6) motion, the complaint’s allegations are assumed to be
true and construed in the light most favorable to the nonmoving party. Wyler
Summit P’ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir. 1998).
Nevertheless, “only a complaint that states a plausible claim for relief survives a
motion to dismiss.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1950 (2009).
Stuart’s claims under California’s consumer protections laws are evaluated
under a “reasonable consumer” standard. Williams v. Gerber Prods. Co., 552 F.3d
2
934, 938 (9th Cir. 2008) (citing Freeman v. Time, Inc., 68 F.3d 285, 289 (9th Cir.
1995)). Her fraud claim also requires her to show that Cadbury’s advertisements
would “mislead a reasonable person.” Hill v. Roll Int’l Corp., 128 Cal Rptr.3d 109,
118 (Ct. App. 2011).
Stuart’s complaint advances three theories to support her claim. First, Stuart
alleges that Cadbury’s claim that Trident White both whitens teeth and removes
stains is false and deceptive because Cadbury uses “whitens teeth” as a synonym for
“removes stains.” We agree with the district court that because removing stains
does cause teeth to appear whiter, this statement does not mislead the reasonable
consumer.
Second, Stuart alleges that Cadbury’s failure to tell consumers that Trident
White only removes stains in conjunction with an oral hygiene program is
deceptive. Only an unreasonable consumer would be confused or deceived by
Cadbury’s failure to clarify that Trident White gum works only if consumers
continue to brush and floss regularly.
Finally, Stuart alleges that the study Cadbury relied upon to show that
Trident White removes stains was flawed and unreliable. While Stuart’s complaint
does contain specific allegations concerning problems with one Cadbury study,
materials attached as exhibits to the complaint make clear that the study with which
3
Stuart takes issue is not the one relied on by Cadbury for its advertising claims. Cf.
Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995) (“When a
plaintiff has attached various exhibits to the complaint, those exhibits may be
considered in determining whether dismissal was proper.”).
We review decisions to deny leave to amend for abuse of discretion. See
Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).
However, “[d]ismissal without leave to amend is improper unless it is clear, upon
de novo review, that the complaint could not be saved by any amendment.” Id.
(internal quotation and citations omitted).
We cannot conceive of any amendment that would cure Stuart’s allegations
concerning the deceptive nature of Cadbury’s claim that Trident White “whitens
teeth” or of Cadbury’s failure to make clear that its product only works with proper
oral hygiene. Stuart has not provided any indication of additional claims that might
question the reliability of the study relied on by Cadbury in its advertising claims.
AFFIRMED.
4
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70 F.3d 988
UNITED STATES of America, Appellee,v.Juan Francisco Gomez TOLEDO, also known as Rudy Martinez, Appellant.
No. 95-2178.
United States Court of Appeals,Eighth Circuit.
Submitted Oct. 17, 1995.Decided Nov. 29, 1995.
Lelia L. Hood, Rapid City, SD, argued, for appellant.
Steven D. Rich, Asst. U.S. Atty., Rapid City, SD, argued, for appellee.
Before FAGG, LAY, and HANSEN, Circuit Judges.
PER CURIAM.
1
Juan Francisco Gomez Toledo, a Mexican citizen, is a habitual violator of the United States immigration laws. After his most recent deportation, Toledo illegally reentered the United States, traveled to South Dakota, and took up residence on the Pine Ridge Indian Reservation. Toledo brandished a gun during a dispute with another man on the reservation, and tribal police responding to the disturbance arrested Toledo. A federal grand jury then indicted Toledo for immigration and firearms offenses. The district court denied Toledo's motion to dismiss the indictment for lack of jurisdiction. Reserving the right to appeal the jurisdictional issue, Toledo entered a conditional guilty plea to being a felon in possession of a firearm in violation of 18 U.S.C. Sec. 922(g)(1) and illegally reentering the United States in violation of 8 U.S.C. Sec. 1326. The district court sentenced Toledo to eighty-four months imprisonment. Toledo appeals his convictions and sentences, and we affirm.
2
Toledo contends the district court lacked jurisdiction over this case because Toledo committed his crimes on the reservation and the resident Oglala Sioux Tribe has exclusive, sovereign authority to regulate aliens and immigration on tribal lands. Essentially, Toledo contends he has the right to live on the reservation and the federal government cannot touch him. We disagree. Although Toledo is married to a member of the Oglala Sioux Tribe, Toledo is not a tribe member. Thus, the tribe's sovereignty does not include criminal jurisdiction to prosecute Toledo for his offenses. Oliphant v. Suquamish Indian Tribe, 435 U.S. 191, 195-96, 98 S.Ct. 1011, 1014-15, 55 L.Ed.2d 209 (1978). Contrary to Toledo's viewpoint, the tribe only retains the powers of self-governance necessary "to control [the tribe's] own internal relations, and to preserve [its] own unique customs and social order." Duro v. Reina, 495 U.S. 676, 685-86, 110 S.Ct. 2053, 2060, 109 L.Ed.2d 693 (1990). Because the tribe is a limited sovereign subject to the overriding authority of the United States, an alien like Toledo cannot exempt himself from prosecution for federal crimes by moving to the reservation. Id. at 685, 694, 110 S.Ct. at 2059-60, 2064. We decline Toledo's suggestion to transform Indian reservations into havens where illegal aliens can flaunt the federal criminal statutes and immigration laws.
3
Toledo also challenges his sentence imposed under the federal sentencing guidelines, but his contentions fail. The district court correctly refused to hear Toledo's collateral attack on an earlier state conviction used to enhance Toledo's federal sentence, because Toledo was represented by counsel when he pleaded guilty to the earlier offense in state court. See Custis v. United States, --- U.S. ----, ----, 114 S.Ct. 1732, 1738, 128 L.Ed.2d 517 (1994). Toledo may not collaterally attack the state conviction by arguing that his state court counsel was ineffective or that Toledo could not understand his state court guilty plea because his English skills were poor. Id.
4
We also conclude the district court properly reduced Toledo's base offense level by only two levels for acceptance of responsibility. See U.S.S.G. Sec. 3E1.1 (1993). The district court found Toledo did not assist the Government in its investigation or timely enter his guilty plea, and these findings are not clearly erroneous. See United States v. Patterson, 11 F.3d 824, 825 (8th Cir.1993) (per curiam). Toledo argues his plea was timely, but Toledo did not plead guilty until after the Government participated in a preliminary hearing and a hearing on Toledo's motion to dismiss and spent three months preparing for Toledo's trial. See id. at 825-26. Toledo thus does not qualify for an additional one-level reduction under Sec. 3E1.1(b).
5
Finally, we cannot review the district court's refusal to depart downward from the guidelines sentencing range. The sentencing transcript shows the district court realized it had the authority to depart downward based on Toledo's claim of mitigating circumstances, but decided a departure was unwarranted. See United States v. Henderson-Durand, 985 F.2d 970, 976 (8th Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 164, 126 L.Ed.2d 125 (1993).
6
We thus affirm Toledo's convictions and sentences.
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793 F.Supp. 209 (1992)
BUREAU OF ENGRAVING, Plaintiff,
v.
FEDERAL INSURANCE COMPANY, Defendant.
Civ. Nos. 3-89-517 and 3-90-673.
United States District Court, D. Minnesota, Third Division.
June 3, 1992.
*210 David M. Coyne, Gray, Plant, Mooty, Mooty & Bennett, Minneapolis, Minn., for plaintiff.
Bonita Jean Girard, and John Marvin Anderson, Bassford, Heckt, Lockhart, Truesdell & Briggs, Minneapolis, Minn., for defendant.
MEMORANDUM AND ORDER
MAGNUSON, District Judge.
I. INTRODUCTION
This matter is before the court upon Federal Insurance Company's motion for summary judgment (Docket No. 27 in Civil File No. 3-89-517; Docket No. 18 in Civil File No. 3-90-673), the Bureau of Engraving, Inc.'s motion for summary judgment (Docket No. 15 in Civil File No. 3-89-517; Docket No. 22 in Civil File No. 3-90-673), and upon the Bureau's motion for certification of an issue to the Minnesota Supreme Court (Docket No. 32 in Civil File 3-89-517; Docket No. 29 in Civil File No. 3-90-673). For the following reasons, the court grants Federal's motion for summary judgment and denies the Bureau's motions for certification and summary judgment.
II. FACTS
In these consolidated actions, the Bureau seeks a determination of insurance coverage for expenses incurred as a result of pollution at seven different sites in Minnesota. Federal insured the Bureau under a series of comprehensive commercial general liability policies beginning in 1973. The policies provide that:
The company will pay on behalf of the insured all sums which the insured shall become obligated to pay as damages by reason of liability to which this insurance applies ... for bodily injury, property damage, or personal injury caused by an occurrence.
The policies define "occurrence" as "an event, including continuous or repeated exposure to conditions, which results in bodily injury, property damage, personal injury. ..." The policies also contain a pollution exclusion. The policies in effect prior to April 1, 1986, have a "sudden and accidental" exception to the exclusion. The policies in effect after April 1, 1986, contain an absolute pollution exclusion.
Civil File No. 3-89-517 involves five sites in Isanti County. In the 1980's, the Environmental *211 Protection Agency conducted an investigation of these five sites. The EPA discovered many barrels of hazardous wastes, some of which were buried, some of which were leaking or had leaked, and contaminated soil and ground water. The contamination was caused by leaks from barrels, some of which had been buried in 1970, which were discovered in 1980.
The EPA sued entities whose waste materials had been disposed of at the Isanti County sites. Although the EPA did not sue the Bureau of Engraving, one of the defendants commenced a third-party action against it, alleging that some of the Bureau's waste materials, specifically barrels of used trichloroethylene, had been disposed of at the Isanti County sites. The Bureau denied these allegations, but paid $45,000 in settlement of the claims against it in connection with the Isanti sites. The Bureau now seeks to recover that amount from Federal Insurance Company.
Civil File No. 3-90-673 involves two sites which were formerly operated by Ecolotech, one in St. Paul and one in Minneapolis. From 1974 to 1978, the Bureau contracted with Ecolotech to take toxic waste etchants generated by the Bureau of Engraving in the process of manufacturing printed circuit boards.
In 1979, the Minnesota Pollution Control Agency began an investigation of the Ecolotech facilities. The MPCA observed leakages of liquid waste and many waste containers in a deteriorated condition. The MPCA found both soil and ground water contamination. The MPCA determined that the barrels of liquid waste had been accumulated at the St. Paul site from 1973 to 1984, and at the Minneapolis site from 1979 to 1984.
The MPCA demanded that Ecolotech, its owner, and companies that provided hazardous substances to it, including the Bureau, conduct an investigation and remediation of hazardous waste contamination at the sites. The Bureau has expended $442,105.63 conducting an investigation of the contamination at the facilities, removing and properly disposing of stored waste, and performing hazardous waste remediations at the facilities. The Bureau seeks to recover this amount from Federal.
III. DISCUSSION
A court shall render summary judgment when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c) (1987).
A. POST-1986 POLLUTION EXCLUSION
The policies in effect after 1986 contain an absolute pollution exclusion. They exclude:
Property damage arising out of the actual, alleged, or threatened discharge, disbursal, release, or escape of pollutants:
* * * * * *
b. At or from any site or location used at any time by or for you or by others for the handling, storage, disposal, processing or treatment of waste;
c. Which are or were at any time transported, handled, stored, treated, disposed of, or processed as waste by or for you or any person or organization for which you may be legally responsible; or
d. At or from any site or location on which you or any contractors or subcontractors working directly or indirectly on your behalf or performing operations:
(i) If the pollutants are brought on or to the site or location in connection with such operation; or
(ii) If the operations are to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize pollutants.
* * * * * *
2. Any loss, cost, or expense arising out of any request, demand or order issued or made pursuant to any environmental liability laws that you or others test for, monitor, clean up, remove, contain, treat, detoxify, or neutralize pollutants.
Pollutants means one or more solid, liquid, gaseous or thermal irritant or contaminant including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials *212 to be recycled, reconditioned or reclaimed.
The Minnesota Court of Appeals has held that this exclusion is clear and unambiguous and that it precludes coverage for damage caused by the emission of a pollutant. League of Minnesota Cities Ins. Co. v. Coon Rapids, 446 N.W.2d 419, 422 (Minn.Ct.App.1989). The post-1986 damages the Bureau seeks to recover from Federal are excluded under this absolute pollution exclusion.
B. PRE-1986 POLLUTION EXCLUSION
The policies in effect before 1986 contain a pollution exclusion with an exception if the discharge is "sudden and accidental." They exclude:
bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acid, alkalies, toxic chemicals, liquids or gasses, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere, or any water course or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.
The Bureau contends that issues of fact exist as to whether the substances it disposed of were hazardous. It argues that it did not think that its waste materials were dangerous. It further argues that government regulations had not identified the substances that it disposed of as hazardous at the time when the Bureau disposed of them.
The exclusion does not require, however, that the Bureau know that the substances are hazardous. Furthermore, it does not require that the government identify the substances as hazardous. The EPA found that the property damage at the Isanti and Ecolotech sites were caused by leakage of contaminants from barrels. The damages for which the Bureau became liable for property damage at the Isanti and Ecolotech sites arose, therefore, out of the release or discharge of contaminants. The pollution exclusion applies to these cases.
The Bureau further contends that the "sudden and accidental" exception to the pollution exclusion does not apply because the policy language is ambiguous. The Bureau argues that "sudden" could reasonably mean "unexpected." If there are ambiguities in the language of the policy, they must be construed in favor of the insured. Grinnell Mut. Reinsurance Co. v. Wasmuth, 432 N.W.2d 495, 497 (Minn. App.1988). Whether policy language is ambiguous is a question of law. Id.
The Bureau argues that the policy language is ambiguous because the policy does not define "sudden" or "accidental," and the dictionary provides two reasonable definitions for the word "sudden." The Bureau adds that other insurance policies define "sudden" as "unexpected." Additionally, it claims that members of the insurance industry have made pronouncements that "sudden" means "unexpected." Lastly, the Bureau notes that courts are split as to the meaning of the exclusion.
In Sylvester Bros. Dev. v. Great Cent. Ins., 480 N.W.2d 368, 373 (Minn.App.1992), the Minnesota Court of Appeals addressed many of these arguments and found that the "sudden and accidental" language in the pollution exclusion was not ambiguous and carried a temporal connotation of "abruptness." Id. at 375. The Sylvester Bros. court held that the existence of multiple dictionary definitions does not prove a word in an insurance policy is ambiguous. Id. If this were the case, it would be impossible to draft an unambiguous policy without defining almost every word. The Sylvester Bros. court noted that the word "sudden" must be construed in the context of the policy language. Id. The Sylvester Bros. court concluded that the use of "and" between "sudden" and "accidental" indicates that the drafters intended two separate requirements. Since "accidental" would require that the discharge was "unexpected," "sudden" must require that the discharge occurred relatively quickly rather than over a long period of time. Id.
This court adopts the reasoning of the Sylvester Bros. court and finds that the "sudden and accidental" language is not *213 ambiguous and that "sudden" requires that the discharge occurred quickly or abruptly. Definitions in other insurance policies and pronouncements in other states by other members of the insurance industry are not relevant to otherwise unambiguous policy language.
The Bureau cites the Grinnell case, in which another panel of the Minnesota Court of Appeals held that the pollution exclusion was ambiguous and did not apply. 432 N.W.2d at 499. The Sylvester court stated, however, that it based its holding in the Grinnell case on the reasonable expectations doctrine. 480 N.W.2d at 376. It further stated that in Grinnell it had based its holding upon the unique facts in that case. Id. The Grinnell court distinguished its claim of illness resulting from emission of formaldehyde from insulation in a home from "typical" pollution cases. 432 N.W.2d at 500.
The Grinnell court identified five factors of a "typical" pollution case:
(1) deliberate disposition of potentially hazardous waste or produced substances;
(2) widespread pollution;
(3) multiple claimants;
(4) damaging action over an extended period of time, usually in the regular course of business; and
(5) discovery of the damage years after polluting conduct.
Id. at 498. The absence of one or more of these factors of a "typical" pollution case does not mean that the pollution exclusion does not apply to that particular case. The case presently before the court has most of these factors. The damage was discovered years after the polluting conduct. The damaging action occurred over a long period of time and in the regular course of business. There were many parties found liable for the damage at both the Isanti and Ecolotech sites. The pollution was widespread. The damages arose from the disposition of potentially hazardous or produced substances.
The Bureau argues that the pollution exclusion should not apply because the Bureau did not deliberately dispose of its waste at the Isanti or Ecolotech sites. However, the Grinnell court cites with approval Centennial Insurance Co. v. Lumbermens Mutual Casualty Co., 677 F.Supp. 342 (E.D.Pa.1987). Id. In Centennial, the insured arranged for a third party to dispose of its waste. Unknown to the insured, the third party illegally disposed of the waste causing contamination. The court held that the pollution exclusion applied. Centennial, 677 F.Supp. at 349. The Centennial court stated that although the damages may have been accidental from the insured's perspective, it could not have been sudden due to its continuous nature. Id. The court further stated:
This interpretation prevents companies, whose wastes are regularly disposed of improperly, from hiding behind their ignorance and seeking insurance for damages caused by pollution that occurs in the regular course of business. Companies should avoid improper toxic waste disposal rather than blindly accept it as a cost of business.
Id. Although the Bureau may not be guilty of hiding behind its ignorance in this case, deliberate disposition of hazardous substances by the insured does not have to occur before the pollution exclusion applies.
The Bureau alternatively argues that the discharge did occur suddenly. The Bureau does not produce any evidence, however, that would suggest that the discharge occurred suddenly. The evidence shows, instead, that the barrels at both the Isanti site and the Ecolotech site had been leaking for almost ten years. A reasonable jury could not find that the discharge was sudden. No genuine issue of fact remains for trial as to whether the discharge at the Isanti site or the Ecolotech site was sudden.
Lastly, the Bureau argues that the reasonable expectations doctrine precludes application of the pollution exclusion. Where policy language is unambiguous and there is no showing of a hidden exclusion or other special circumstances, the reasonable expectations doctrine does not apply. Levin v. Aetna Casualty and Surety Company, 465 N.W.2d 99, 102 (Minn.App. *214 1991). As previously discussed, the policy language is not ambiguous and, therefore, no hidden exclusions exist. Furthermore, there are no special circumstances in this case, as there were in the Grinnell case.
In Grinnell, the court noted that,
the reasonable expectations doctrine gives the court a standard by which to construe insurance contracts ... without having to bend and stretch rules to do justice in individual cases.
432 N.W.2d at 499. This case falls within the pollution exclusion. It has many of the factors of a "typical" pollution case. Insurance companies should be able to exclude certain damages from coverage and not be required to cover damages explicitly excluded by clear and unambiguous policy language. The court finds no reason to resort to the reasonable expectations doctrine to do justice in this case.
Accordingly, IT IS ORDERED that:
Federal Insurance Company's motion for summary judgment (Docket No. 27 in Civil File No. 3-89-517; Docket No. 18 in Civil File No. 3-90-673) is GRANTED. The Bureau of Engraving's motion for summary judgment (Docket No. 15 in Civil File No. 3-89-517; Docket No. 22 in Civil File No. 3-90-673) is DENIED. The Bureau of Engraving's motion to certify an issue to the Supreme Court of Minnesota (Docket No. 32 in Civil File 3-89-517; Docket No. 29 in Civil File No. 3-90-673) is DENIED. The action is DISMISSED.
LET JUDGMENT BE ENTERED ACCORDINGLY.
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767 F.2d 910
Blankenshipv.Rockefeller
84-6211
United States Court of Appeals,Fourth Circuit.
7/10/85
1
N.D.W.Va.
AFFIRMED
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60 F.3d 1037
FEDERAL HOME LOAN MORTGAGE CORPORATIONv.ARROTT ASSOCIATES, LTD., a Pennsylvania Limited Partnership;Bernard Miller; Marc Knopfler, Appellants.
No. 94-2119.
United States Court of Appeals,Third Circuit.
Argued June 27, 1995.Decided Aug. 1, 1995.
Marvin Neiman (argued), Neiman, Ginsburg & Mairanz, New York City, for appellants.
Raymond A. Quaglia (argued), Ballard, Spahr, Andrews & Ingersoll, Philadelphia, PA, for appellee.
Before: MANSMANN, GREENBERG, and SAROKIN, Circuit Judges.
OPINION OF THE COURT
GREENBERG, Circuit Judge.
1
Arrott Associates, Ltd., Bernard Miller, and Marc Knopfler appeal from an order entered on October 14, 1994, fixing the value of a foreclosed and judicially sold property previously owned by Arrott at $1,000,000, and dismissing Miller's and Knopfler's counterclaim seeking an order marking as satisfied a personal judgment entered against them in the foreclosure proceedings. The appeal is only from the dismissal of the counterclaim. The case raises issues which seem to be of first impression under the Pennsylvania Deficiency Judgment Act, 42 Pa.Cons.Stat.Ann. Sec. 8103 (1982) (the "Act").
I. FACTUAL AND PROCEDURAL HISTORY
2
The action arises in the aftermath of a mortgage foreclosure on a property in Philadelphia, Pennsylvania. The plaintiff is the Federal Home Loan Mortgage Corporation ("FHLMC"), successor to the original mortgagee, and the defendants are the appellants, successors to the original mortgagor. Appellant Arrott Associates, Ltd., is a limited partnership in which Miller and Knopfler are the general partners. Arrott defaulted on the payments on the mortgage note, and consequently FHLMC instituted the foreclosure action in 1990.
3
FHLMC obtained a foreclosure judgment on April 3, 1992, in the district court authorizing a judicial sale of the mortgaged property and providing as follows:
4
From the monies arising from the sale of the mortgaged premises, FHLMC is to be paid the sum of $2,494,991.51, together with per diem interest and default interest accrued from February 3, 1992, to the date of this Judgment, and any further costs and expenses incurred between January 27, 1992 and the date this Judgment is satisfied.
5
In an accompanying second judgment, which we shall call the personal judgment, the district court ordered the following:
6
It is hereby ORDERED and DECREED that of the $2,494,991.51 referred to in the Judgment in Foreclosure, defendants, Arrott Associates, Ltd., Bernard Miller and Marc Knopfler are jointly and severally liable to the Federal Home Loan Mortgage Corporation for the sum of $223,288.33, together with per diem default interest accruing from February 3, 1992, to the date of this Judgment, and any further costs and expenses incurred between January 27, 1992 and the date this Judgment is satisfied.
7
The court entered the personal judgment because the mortgage secured a debt which was largely but not entirely nonrecourse. Thus, the personal judgment reflected the court's determination of the extent of appellants' personal liability.
8
At the foreclosure sale on March 1, 1994, FHLMC purchased the property for $800,000. Then on March 25, 1994, it moved in the district court for confirmation of the sale. While the appellants did not object to the motion for confirmation, they moved under the Act for an order compelling FHLMC to deliver a satisfaction of the foreclosure and personal judgments.
9
On June 24, 1994, the district court entered a memorandum and order confirming the sale and denying the appellants' motion. The court stated that under the mortgage and the note it secured, FHLMC could not have recourse against the appellants for the principal and interest, but that the appellants were personally liable for "default interest, late charges, attorney fees, real estate taxes, water/sewer rents paid by FHLMC, and operating expenses, totalling $223,288.33."1 In ruling that the sale had not satisfied the personal judgment, the court relied on the following paragraph of the mortgage:
10
Notwithstanding the existence of any other security interests in the Property held by Lender or by any other party, Lender shall have the right to determine the order in which any or all of the Property shall be subjected to the remedies provided herein. Lender shall have the right to determine the order in which any or all portions of the indebtedness secured hereby are satisfied from the proceeds realized upon the exercise of the remedies provided herein. (Emphasis added by district court.)
11
The court held that this paragraph allowed FHLMC to apply the proceeds from the sale of the property to the nonrecourse portion of the foreclosure judgment rather than to the personal judgment.
12
In addition, the court explained that under the Act a judgment creditor who purchases real property at a price less than the amount of the judgment must petition the court within six months of the sale to fix the fair market value of the property sold before it can collect the balance of the judgment over such value. If the judgment creditor does not file the petition, the debtor is discharged from personal liability. By June 24, 1994, when the court rendered its opinion, FHLMC had not petitioned the court to fix the fair market value of the property sold but the appellants had not been discharged from personal liability as the six months had not expired. Furthermore, the court reasoned that to offset the purchase price of the property against the personal judgment would defeat the purpose of the Act and "would encourage a judgment creditor to bid only a nominal price for the property so as to avoid offsetting any of the judgment."
13
On August 24, 1994, FHLMC petitioned the district court under the Act to fix the fair market value of the property sold at $1,000,000. The appellants answered that a valuation hearing was unnecessary because FHLMC would not be entitled to a deficiency judgment inasmuch as its valuation of the property far exceeded their liability on the personal judgment and the balance of the debt reflected in the foreclosure judgment was nonrecourse. At the same time, the appellants counterclaimed for delivery of a satisfaction of the personal judgment.2 On October 14, 1994, the district court entered an order fixing the fair market value of the property at $1,000,000 for deficiency judgment purposes and dismissing the counterclaim. The district court did not render an opinion explaining the reason for the October 14, 1994 order, as it evidently relied on its June 24, 1994 opinion which allowed FHLMC to determine the order in which the portions of the secured debt would be satisfied by the proceeds obtained through the exercise of its foreclosure remedies. The appellants then appealed from the October 14, 1994 order.
14
The district court had jurisdiction pursuant to 12 U.S.C. Sec. 1452(f), and we have jurisdiction pursuant to 28 U.S.C. Sec. 1291. Inasmuch as no facts are in dispute and the appeal involves only questions of law, our review is plenary. Leo v. Kerr-McGee Chem. Corp., 37 F.3d 96, 99 (3d Cir.1994). We apply Pennsylvania law, which the parties agree governs.
II. DISCUSSION
15
We regard this appeal as involving nothing more than a straightforward application of the Act. With respect to the merits, we first point out that the personal judgment was not final upon its entry in the sense that FHLMC could execute on it. Rather, the personal judgment merely determined the extent to which FHLMC eventually could have recourse individually against the appellants for payment of the debt secured by the mortgage. Thus, the personal judgment indicated that the $223,288.33 for which the appellants were liable was a portion of the foreclosure judgment of $2,494,991.51. Accordingly, FHLMC has recognized that to obtain an enforceable judgment against the appellants it was obliged, as the district court indicated in its June 24, 1994 opinion, to follow the procedure in the Act.
16
Subsection (a) of the Act establishes what is called the "general rule" in deficiency judgment cases and reads as follows:
17
Whenever any real property is sold, directly or indirectly, to the judgment creditor in execution proceedings and the price for which such property has been sold is not sufficient to satisfy the amount of the judgment, interest and costs and the judgment creditor seeks to collect the balance due on said judgment, interest and costs, the judgment creditor shall petition the court having jurisdiction to fix the fair market value of the real property sold. The petition shall be filed as a supplementary proceeding in the matter in which the judgment was entered.
18
Subsection (b) deals with failure to notify the debtor of the valuation proceedings and is not material here. Subsection (c) initially sets forth the procedure for establishing the fair market value of the property sold which we need not describe as the parties have agreed on a value of $1,000,000. Subsection (c) then concludes as follows:
19
After the hearing and the determination by the court of the fair market value of the property sold, the debtor, obligor, guarantor and any other person liable directly or indirectly to the judgment creditor for the payment of the debt shall be released and discharged of such liability to the judgment creditor to the extent of the fair market value of said property as previously agreed to by the judgment creditor or determined by the court, less the amount of all prior liens, costs, taxes and municipal claims not discharged by the sale, and also less the amount of any such items paid at the distribution on the sale, and shall also be released and discharged of such liability to the extent of any amount by which the sale price, less such prior liens, costs, taxes and municipal claims, exceeds the fair market value as agreed to by the judgment creditor or fixed and determined by the court as provided in this subsection, and thereupon the judgment creditor may proceed by appropriate proceedings to collect the balance of the debt. (Emphasis added.)
20
It seems to us that the plain language of subsection (c) requires the appellants' release and discharge from liability under the personal judgment. They are, after all, liable to the judgment creditor, FHLMC, for the payment of a debt set forth in the foreclosure judgment, as the $223,288.33 personal judgment partially duplicates the liability in the foreclosure judgment.3 Furthermore, the $1,000,000 fair market value for the property sold far exceeds $223,288.33. Finally, FHLMC does not contend that the $1,000,000 must be reduced by "the amount of all prior liens, costs, taxes and municipal claims not discharged by the sale" or by the other deductions provided in subsection (c).
21
What considerations, then, could cause us to reject the above result? There is, of course, the provision of the mortgage we already have quoted allowing FHLMC to determine the "order in which any or all portions of the indebtedness secured [by the mortgage] are satisfied from the proceeds realized upon the exercise of the remedies provided [in the mortgage]." This provision, however, is plainly inapplicable because a credit against personal liability for the fair market value of the property sold is simply not an allocation of the "proceeds realized upon" the exercise of any remedy under the mortgage. This conclusion is obvious because if a property is sold for a nominal amount so that there are no proceeds to allocate, an obligor nevertheless must be released and discharged from liability to the extent of the fair market value of the property sold. Furthermore, even if we regarded the allocation of proceeds provision of the mortgage as applying to the credit for the fair market value of the property sold, it could not override subsection (c) so as to deny the appellants the release and discharge provided in that subsection because subsection (e) of the Act provides:
22
Any agreement made by any debtor, obligor, surety or guarantor at any time, either before or after or at the time of incurring any obligation, to waive the benefits of this section or to release any obligee from compliance with the provisions hereof shall be void.
23
See also Marine Midland Bank v. Surfbelt, Inc., 718 F.2d 611, 614 (3d Cir.1983). The credit for the fair market value of the property sold is thus an unwaivable benefit.
24
A second possible reason for deviating from a straightforward application of subsection (c) is that arguably our result does not further the legislature's intention in adopting the Act. We have recognized that the policy of the Act "is to protect debtors against the risk of a mortgagee obtaining a 'double recovery' " by purchasing the property for less then fair market value and pursuing the debtor for the deficiency, thereby recovering more than the debt amount. Marine Midland Bank v. Surfbelt, Inc., 718 F.2d at 615-16.4 See also Cheltenham Fed. Sav. and Loan Ass'n v. Pocono Sky Enter., Inc., 305 Pa.Super. 471, 451 A.2d 744, 748 (1982). In this case even if the appellants are not released and discharged from liability to the extent of the fair market value of the property sold and so remain liable for the full amount of the personal judgment, FHLMC cannot make a double recovery of the debt. The $1,000,000 fair market value, when added to the personal judgment of $223,288.33, is far less then the foreclosure judgment of $2,494,991.51. In fact, FHLMC seems destined to suffer a large loss in this case which our result will deepen.5
25
The arguably anomalous outcome flowing from application of the Act in this case is attributable to the note and mortgage providing for personal liability for less than the full amount of the debt secured by the mortgage. Thus, if the appellants had been liable for the entire debt secured by the mortgage, a deficiency judgment (with adjustments which we need not detail) of $2,494,991.51 less $1,000,000, or $1,494,991.51 net, could have been entered against them. If they then paid the deficiency judgment, FHLMC would be made whole, as the appellants' payment when added to the value of the property would equal the amount of the foreclosure judgment.
26
In this case we could avoid our result, which arguably does not further the Act's purposes, by reading "debt" in the phrase "person liable ... for payment of the debt" in subsection (c) to mean the entire debt. Under this construction, appellants would not be released and discharged to the extent of the fair market value of the property sold.
27
There are, however, several reasons why we will not read "debt" in subsection (c) to mean "entire debt." To start with, in ordinary parlance it would be thought that a person liable for payment of a portion of a debt is liable, in the words of the Act, for "payment of the debt." Second, FHLMC has not suggested in its brief or by its actions that a judgment debtor can obtain a release or discharge of the judgment to the extent of the fair market value of the property sold only if the debtor is liable for the entire debt secured by the mortgage. In fact, FHLMC's actions demonstrate that it believes exactly the opposite. If FHLMC thought that appellants could not obtain the benefit of the Act, then it would have been filing what it should have regarded as a useless petition when it asked the court to determine the fair market value of the property sold, as the court determines that value to ascertain the credit to be given a debtor against the judgment. Yet, as the district court indicated in its June 24, 1994 opinion, FHLMC "acknowledges that it cannot obtain a deficiency judgment against the defendants without first petitioning the court to set the fair market value of the property." Indeed, FHLMC concedes that it would not contend that if the value of the property sold exceeded the amount of the foreclosure judgment that the appellants would be liable on the personal judgment. To the contrary, in its brief it indicates that if the "fair market value of the [p]roperty exceeded the amount of the judgment in [f]oreclosure" there would not be a deficiency "as a practical matter." Brief at 7.
28
There is a third reason why we will not read "debt" in subsection (c) to mean "entire debt." It is true that in this case, if appellants do not obtain a release and discharge to the extent of the fair market value of the property sold, FHLMC nevertheless will not make a double recovery of the entire amount due on the foreclosure judgment. But in another case, denial to a judgment debtor of a release and discharge to the extent of the fair market value of the property sold when the debtor is liable for only a portion of the debt, could enable a creditor to secure a double recovery. For example, a debtor might be personally liable for 90% of a debt secured by a foreclosed mortgage. Then at a judicial sale the creditor might obtain title for a nominal bid to a property equal or almost equal in value to the amount of the debt for which there was personal liability. In that situation the creditor nevertheless could execute on a personal judgment against the judgment debtor for 90% of the debt unless it was required to release and discharge the debtor for an amount equal to the fair market value of the property sold.6 The Act was intended to preclude that result. Consequently, a reading that "debt" means "entire debt" would in some cases frustrate the purpose of the Act.
29
There is a final rationale which could be advanced to avoid the literal application of the Act and to deny the appellants a release and discharge from the personal judgment. When appellants were seeking a discharge by reason of the $800,000 sale price prior to the district court fixing the valuation, the court in rejecting their application indicated that if the purchase price of the property was offset automatically against a personal liability, a judgment creditor would be encouraged "to bid only a nominal price for the property so as to avoid offsetting any of the judgment." FHLMC relies on this point on this appeal. The problem with this rationale to avoid the literal application of the Act is that under the Act the release and discharge of personal liability to the extent of the fair market value of the property sold is not dependent on the purchase price at a judicial sale. Thus, under the Act, the purchase price becomes germane only "to the extent" that, with certain adjustments, it exceeds the judicially-determined fair market value.
30
Consequently, the fact that a judgment creditor acquired the property for a nominal bid would not preclude a judgment debtor from being released and discharged from liability to the extent of the fair market value of the property sold. Accordingly, although a judgment creditor might make a nominal bid for the property, it would have little incentive to do so to preserve its claim for personal liability against an obligor on the debt. Indeed, at most our opinion will discourage a judgment creditor from bidding more than the fair market value for a property, a possibility we do not regard as likely, as we think that, with or without our opinion, a judgment creditor would not be so foolish as to bid more for a property than its value. See Pleasant Summit Land Corp. v. Comm'r, 863 F.2d 263, 273-77 (3d Cir.1988), cert. denied, 493 U.S. 901, 110 S.Ct. 260, 107 L.Ed.2d 210 (1989). Thus, we adhere to the plain language of the Act and conclude that the appellants are released and discharged from the personal judgment.
31
In view of the aforesaid conclusions, we will reverse the order of October 14, 1994, to the extent that it dismissed the counterclaim, and will remand the case to the district court for entry of an order marking the personal judgment against Miller and Knopfler satisfied.7
1
The court focused on the liability of Miller and Knopfler, apparently because as a practical matter Arrott's liability was not important. However, inasmuch as the personal judgment was against all three appellants we will deal with them as a group
2
Only Miller and Knopfler filed the counterclaim but as a matter of convenience we treat the appellants collectively as the counterclaimants. See note 1, supra
3
Of course, under Pennsylvania law, no deficiency judgment can issue from a judgment for mortgage foreclosure
The sole purpose of the judgment obtained through an action of mortgage foreclosure is to effect a judicial sale of the mortgaged property. Once the foreclosure sale has taken place, the purpose of the judgment has been fulfilled and it is rendered functus officio. Useless resort to the Deficiency Judgment Act of 1941 to establish fair market value and thus the net amount of the deficiency can in no way change the nature of the judgment from a judgment de terris to one in personam.
Meco Realty Co. v. Burns, 414 Pa. 495, 200 A.2d 869, 871 (1964); see also First Seneca Bank v. Greenville Distrib. Co., 367 Pa.Super. 558, 533 A.2d 157, 161 (1987); Kretschman v. Stoll, 238 Pa.Super. 51, 352 A.2d 439, 441 (1975). If, however, the mortgage was security for a loan that was evidenced by a note or bond and was created with recourse to other assets of the debtor, the creditor may recover the deficiency by obtaining a personal judgment on the note or bond and petitioning in that in personam proceeding for a fair value determination under the Act. First Seneca Bank v. Greenville Distrib. Co., 533 A.2d at 161; National Council of Junior Order of United Am. Mechanics v. Zytnick, 221 Pa.Super. 391, 293 A.2d 112, 114 (1972).
4
We note that the Act by its terms is not limited to foreclosure cases, though the litigation under it routinely involves foreclosure actions
5
Of course, if we focus solely on the appellants' personal liability and if the policy of the Act is to preclude a creditor from making a double recovery with respect to a debt for which there is personal liability, then our result is in harmony with the policy of the Act
6
A foreclosing creditor may be the only bidder at a sale, as it can bid up to the value of its judgment by using its judgment in place of cash. See Pa.R.Civ.P. 1149, 3133, and 3181. Thus, a foreclosing judgment creditor may be able to obtain title at a judicial sale for a nominal bid, as other potential bidders will recognize the futility of bidding against the creditor
7
While as a matter of convenience we have written this opinion referring to all three defendants as the appellants, which they are, see note 1, supra, we direct the personal judgment to be marked satisfied only as to Miller and Knopfler. Arrott, though originally seeking to have both the judgments against it marked satisfied, did not join in the later counterclaim seeking that relief and the appeal is from the dismissal of the counterclaim
In their reply brief, appellants additionally request that the foreclosure judgment be marked satisfied because they believe that FHLMC is asserting on this appeal that they are personally liable under that judgment. We will not consider this request as it was not raised in the district court and, in any event, we are unaware of how a judgment creditor could assert that a defendant is personally liable on a foreclosure judgment. See note 3, supra. Of course, we do not intend by our opinion to preclude the appellants from making any contentions they deem appropriate if FHLMC attempts to enforce personal liability against them under the foreclosure judgment.
FHLMC contends that the counterclaim was procedurally improper because the only issue before the district court when it filed its petition was the fair market value of the property and because the district court in its June 24, 1994 order already had rejected appellants' claim for satisfaction of the personal judgment. We reject these contentions, as we see no valid reason why the appellants should have been required to institute a separate proceeding to obtain relief. See Fed.R.Civ.P. 60(b)(5). Furthermore, the fair market value had not been set in June so that the appellants could not have relied on that valuation to obtain the release and discharge from liability when they made their initial application.
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Case: 18-41118 Document: 00515239454 Page: 1 Date Filed: 12/17/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
No. 18-41118
Fifth Circuit
FILED
Summary Calendar December 17, 2019
Lyle W. Cayce
UNITED STATES OF AMERICA, Clerk
Plaintiff-Appellee
v.
OMAR MONTOYA,
Defendant-Appellant
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 7:12-CR-614-9
Before DENNIS, ELROD, and DUNCAN, Circuit Judges.
PER CURIAM: *
Omar Montoya, federal prisoner # 12928-379, has filed a motion for leave
to proceed in forma pauperis (IFP) on appeal from the denial of his motion for
a sentence reduction under 18 U.S.C. § 3582(c)(2) based on Amendment 782 to
the Sentencing Guidelines. The district court determined that Montoya was
eligible for a sentence reduction under Amendment 782 but that the 28 U.S.C.
§ 3553(a) factors did not warrant the reduction. It denied Montoya’s
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 18-41118 Document: 00515239454 Page: 2 Date Filed: 12/17/2019
No. 18-41118
IFP motion and certified that his appeal was not taken in good faith. By
moving for IFP status, Montoya is challenging the district court’s certification.
See Baugh v. Taylor, 117 F.3d 197, 202 (5th Cir. 1997).
Although Montoya’s notice of appeal was untimely, the time limit for
filing a notice of appeal in a criminal case is not jurisdictional and may be
waived. United States v. Martinez, 496 F.3d 387, 388-89 (5th Cir. 2007). We
therefore pretermit the issue of the timeliness of the notice of appeal. See id.
at 389.
Montoya contends that the district court abused its discretion in denying
his § 3582(c)(2) motion. The district court correctly recognized that despite
Montoya’s eligibility for a sentence reduction, it was under no obligation to
grant him one. See United States v. Evans, 587 F.3d 667, 673 (5th Cir. 2009).
The district court considered Montoya’s arguments in favor of a sentence
reduction but concluded, as matter of discretion, that a lower sentence was not
warranted. In doing so, the district court properly considered the applicable
18 U.S.C. § 3553(a) factors, including Montoya’s history and characteristics
and the need to afford adequate deterrence to criminal conduct. See
§ 3553(a)(1), § 3553(a)(2)(A)-(B); § 3582(c)(2); U.S.S.G. § 1B1.10, p.s., comment.
(n.1(B)(i)). The district court also properly considered Montoya’s post-
sentencing conduct. See § 1B1.10, p.s., comment. (n.1(B)(iii)). Montoya has
not shown that the district court based its decision on an error of law or on a
clearly erroneous assessment of the evidence. See United States v. Henderson,
636 F.3d 713, 717 (5th Cir. 2011); United States v. Larry, 632 F.3d 933, 936
(5th Cir. 2011).
Montoya has failed to show that the district court arguably abused its
discretion in denying his § 3582(c)(2) motion, and the instant appeal does not
involve legal points arguable on their merits. See Howard, 707 F.2d at 220.
2
Case: 18-41118 Document: 00515239454 Page: 3 Date Filed: 12/17/2019
No. 18-41118
Accordingly, we deny Montoya’s motion for leave to proceed IFP on appeal, and
we dismiss his appeal as frivolous. See Baugh, 117 F.3d at 202 & n.24; see also
5TH CIR. R. 42.2.
MOTION DENIED; APPEAL DISMISSED.
3
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377 A.2d 70 (1977)
Morton FUNGER et al., Appellants,
v.
Albert D. MAIZELS et al., Appellees.
No. 10571.
District of Columbia Court of Appeals.
Argued November 11, 1976.
Decided September 1, 1977.
*71 Robert M. Scott, Washington, D. C., with whom Leonard C. Greenebaum, Washington, D. C., was on the brief, for appellants.
Albert E. Arent, Washington, D. C., with whom John M. Bray and Thomas P. Gilliss, Washington, D. C., were on the brief, for appellees.
Before KERN, GALLAGHER and MACK, Associate Judges.
GALLAGHER, Associate Judge:
This is an appeal from a judgment of the Superior Court, Civil Division, granting summary judgment in favor of appellees (hereinafter referred to as Landlords) in a suit by appellants (hereinafter referred to as Tenants) seeking a declaratory judgment to obtain a construction of a provision in two long-term ground leases. Tenants also sought to vacate the appraisal submitted on behalf of the Landlords. Instead of permitting the two appraisers to select a third appraiser whose determination would govern under the lease, the Tenants instituted suit. The parties filed cross-motions for summary judgment. In addition to granting the Landlords' motion for summary judgment, the court also directed the parties to appoint a third appraiser.
On April 1, 1964, Tenants entered into two separate but substantially identical 99-year ground leases, one with the Landlords Maizels and one with the Landlords Lewises and Gratzes. A fixed annual rental fee for the initial ten-year period was specified in the lease. It provides for new rental fees for every ten-year period. Paragraph 29 sets out the method for appraising the land should the parties fail to agree as to the fair value of the property for the purpose of computing a new rental fee:
29. Appraisal.
The appraised fair value of the Leased Land, required to be periodically ascertained *72 pursuant to the provisions of paragraph (b) of § 2 hereof, and any other appraisal of the Leased Land and/or improvements thereon and/or any interest therein that may at any time be required in the proper enforcement of the provisions of this Lease, shall be made and determined as follows: Starting thirty (30) days prior to the date of which any such interest is to be valued (or as soon as practicable after that date as it becomes known that an appraisal is required) Landlord and Tenant shall attempt to reach mutual agreement, in writing, as to the fair value of the property to be valued. If they reach such agreement within a thirty-day period, said agreement shall govern. If they fail to reach such an agreement within said thirty-day period, they shall each appoint, in writing, one appraiser. If said two appraisers agree, their joint determination shall govern. If said two appraisers cannot reach agreement within thirty (30) days after their appointment, they shall promptly appoint, in writing, a third appraiser, and the determination of said third appraiser shall govern; provided, however, that if the determination of said third appraiser is below the lower determination of the first two appraisers, the lower determination of the first two appraisers shall govern; provided, further, that if the determination of said third appraiser is above the higher determination of the first two appraisers, the higher determination of the first two appraisers shall govern. Any appraisers appointed hereunder shall be qualified (by training and experience), disinterested, and members in good standing of the American Institute of Real Estate Appraisers (or any organization successor thereto). All appraisal reports shall be rendered in writing to both Landlord and Tenant and shall be signed. If appraisers are appointed hereunder, absent fraud or bad faith, the appraised value as determined by them hereunder shall be final and conclusive for the purpose said appraisal was made. Landlord and Tenant shall each pay the fee of their own appraiser and each shall pay one-half (½) of the fee of any third appraiser.
Paragraph 2(b) dictates the manner in which the annual net rental is to be determined once the appraised value of the leased land has been determined:
2. Annual Net Rental.
* * * * * *
(b) For each of the following nine periods, to wit, the eight consecutive ten-year periods commencing on the first day of the eleventh Lease Year, and the nine-year period commencing on the first day of the ninety-first Lease Year, the Annual Net Rental shall be a sum (to be computed separately for, and as of the first day of, each of said nine periods) equal to the greater of the following: (A) The sum of [the rent stated for the initial ten-year period] or (B) Twelve percent (12%) of the appraised value of the Leased Land as of the first day of said period. Said appraisals shall be made, as provided in § 29 hereof, as if the Leased Land were vacant, unencumbered, unimproved, and not under Lease. [Emphasis added.]
The dispute between Tenants and Landlords is over the interpretation of the last sentence of Paragraph 2(b) and, specifically, the issue is whether the language used there precludes the appraisers from giving a value to the property which includes an increment of value arising from the land's potential for assembly. In granting summary judgment in favor of the Landlords, the trial court adopted their interpretation of the disputed language and ruled that the language "does not express any intention of the parties . . . to exclude from value considerations any potential for assembly which each parcel may have."
Since the issue presented for our consideration is the correct interpretation of the lease unaided by evidence extrinsic to the document, this court will review de novo the provisions in dispute. Marceron v. Chevy Chase Services, Inc., 103 U.S.App. D.C. 303, 258 F.2d 155 (1958). Because the parties were unable to reach agreement *73 upon the fair value of the property involved, the appraisal mechanism in Paragraph 29 became operative. The appraisers who are appointed pursuant to that paragraph are directed to ascertain the "appraised fair value." The phrase "fair value" is synonymous with fair market value. Bullock's, Inc. v. Security-First National Bank of Los Angeles, 160 Cal.App.2d 277, 325 P.2d 185 (1958). In determining the fair value of property, appraisers have been guided by the following judicially approved standard: the property shall be valued in terms of its highest and best use. See, e. g., Eltinge & Graziadio Development Co. v. Childs, 49 Cal.App.3d 294, 298, 122 Cal.Rptr. 369, 371 (1975); Tureman v. Altman, 361 Mo. 1220, 1224, 239 S.W.2d 304, 311 (1951). That the highest and best use of a parcel of land can be realized only through its combination with other property does not mean that this use must be excluded from consideration in the valuation of the land if there is a reasonable possibility of combination or assemblage. Olson v. United States, 292 U.S. 246, 256-57, 54 S.Ct. 704, 78 L.Ed. 1236 (1934).
It is undisputed that potential assemblage value is a legitimate valuation factor generally. Tenants' principal contention is that the highest and best use standard has been restricted by the last sentence in Paragraph 2(b):
Said appraisal shall be made . . . as if the Leased Land were vacant, unencumbered, unimproved, and not under Lease.
It is the Tenants' position that these conditions preclude the appraisers from giving any consideration to potential for assembly in valuing the property. Tenants contend that the conditions of the lease require that the particular parcel be given an appraisal value based upon its worth "on its own individual merits at the time of appraisal [as] if it were then standing as a vacant lot without any liens or leases on it."[1] The economic consideration underlying the dispute is that appellants' appraiser reached a figure which did not take into account assemblage potential. Appellees' appraiser took that factor into account. The variance was a valuation of $90 per square foot when appraised on appellants' theory of the lease and $150 per square foot when appraised on appellees' theory.
The words "vacant," "unencumbered" and "unimproved" and the phrase "not under Lease" do not manifest an intention of the parties to preclude the appraisers from considering the potential assemblage value of the property. The words "vacant" and "unimproved" have reference to the physical state of the property. The appraisers are required not to consider an office building or other improvements on the leased land. The property is also to be appraised as if it were "unencumbered." This means that the appraisers must disregard any charge or burden of financial obligations, mortgages or liens in valuing the property. See City of Crown Point v. Henderlong Lumber Co., 137 Ind.App. 662, 667, 206 N.E.2d 890, 896 (1965). Finally, an appraisal is to be made as if the leased land were "not under Lease." The significance of this instruction is that an existing lease must be eliminated from consideration in the land valuation process, either positively or negatively. Ruth v. S.Z.B. Corp., 2 Misc.2d 631, 153 N.Y.S.2d 163, aff'd mem., 2 A.D.2d 970, 158 N.Y.S.2d 754 (1956).
Appellants assert that the appraisal here which takes into consideration assemblage potential of these parcels is necessarily based upon "rank speculation or conjecture." We do not discern that this factor is any more speculative than some other appraisal factors. The fact is that the parcels in question have been assembled with other parcels to permit the building existing on them. Tenants' argument that the lots should be valued on their "own individual merits" ignores the fact that a willing buyer would consider assembly potential a part of each lot's "individual merits." If assembly potential were not considered a part of the "fair value," the appraisal figure results in something other than the "fair value" of the land.
*74 It is admitted that the rental amount for the initial ten-year period of the lease took into account the potential for assembly factor. Appellants would now have this factor removed from the periodic appraisals for the remainder of the lease. The effect of this would be to read out of the lease, in substantial part, the escalation factor over the remaining term of the lease (89 years).[2] We see no basis in the lease for such a departure.
We conclude the lease requirement that appraisals shall be made "as if the Leased Land were vacant, unencumbered, unimproved, and not under Lease" does not on this record preclude from the appraisal the usual consideration of potential for assembly.
Affirmed.
NOTES
[1] Brief for Appellant at 5.
[2] This is demonstrated by the current disparity between the $90 per square foot and $150 per square foot variance referred to earlier.
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COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-13-00050-CV
IN RE EMIL LIPPE, JR., LAW RELATORS
OFFICES OF LIPPE &
ASSOCIATES, DAVID LINE, THE
LINE LAW FIRM, SUN TEC
COMPUTER, INC., ADISU S.
TADESSE, WON PAK, AND
RONNY LUONG
------------
ORIGINAL PROCEEDING
------------
MEMORANDUM OPINION1
------------
The court has considered relators’ petition for writ of mandamus and is of
the opinion that relief should be denied. Accordingly, relators’ petition for writ of
mandamus is denied.
PER CURIAM
PANEL: GABRIEL, DAUPHINOT, and GARDNER, JJ.
DELIVERED: March 11, 2013
1
See Tex. R. App. P. 47.4, 52.8(d).
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27 F.3d 571
NOTICE: Eighth Circuit Rule 28A(k) governs citation of unpublished opinions and provides that no party may cite an opinion not intended for publication unless the cases are related by identity between the parties or the causes of action.Edward G. ENNIS, individually and on behalf of all otherssimilarly situated; Victoria Waliser, individually and onbehalf of all others similarly situated; Elwin J. Fontaine,individually and on behalf of all others similarly situated;Luis R. Rivera, individually and on behalf of all otherssimilarly situated; Wynn E. Gebur, individually and onbehalf of all others similarly situated; Edward R. Reitan,individually and on behalf of all others similarly situated,Appellants,v.Dan WROLSTAD, Law Library Supervisor, North Dakota StatePenitentiary, in his official capacities; TimothySchuetzle, Warden, North Dakota State Penitentiary, in hisofficial capacity; Elaine Little, Director of the Departmentof Corrections & Rehabilitation, in her official capacity, Appellees.
No. 93-3433ND.
United States Court of Appeals,Eighth Circuit.
Submitted: June 14, 1994.Filed: June 30, 1994.
Before FAGG and BEAM, Circuit Judges, and BOGUE,* Senior District Judge.
PER CURIAM.
1
Edward G. Ennis and other inmates of the North Dakota State Penitentiary appeal the district court's grant of summary judgment to three correctional officials sued by the inmates in this 42 U.S.C. Sec. 1983 action. The court has considered the briefs of the parties and heard oral argument. Based on the record before us, we find no error that would require reversal. We thus affirm the district court. See 8th Cir. R. 47B.
*
The HONORABLE ANDREW W. BOGUE, Senior United States District Judge for the District of South Dakota, sitting by designation
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622 F.2d 589
Willeyv.Cox
80-6233
UNITED STATES COURT OF APPEALS Fourth Circuit
5/29/80
1
E.D.Va.
AFFIRMED
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 18-4551
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
AJARHI SAVIMI ROBERTS, a/k/a Ajarhi Savimbi Roberts, a/k/a Wayne Roberts,
Defendant - Appellant.
Appeal from the United States District Court for the Northern District of West Virginia,
at Martinsburg. Gina M. Groh, Chief District Judge. (3:17-cr-00050-GMG-RWT-1)
Submitted: March 28, 2019 Decided: April 11, 2019
Before WILKINSON, NIEMEYER, and RICHARDSON, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Charles T. Berry, Fairmont, West Virginia, for Appellant. Lara Kay Omps-Botteicher,
OFFICE OF THE UNITED STATES ATTORNEY, Martinsburg, West Virginia, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Ajarhi Savimi Roberts appeals his conviction and the 24-month sentence imposed
after his guilty plea, pursuant to a plea agreement, to bank fraud, in violation of 18 U.S.C.
§ 1344(1) (2012). Roberts’ attorney has filed a brief pursuant to Anders v. California,
386 U.S. 738 (1967), stating that there are no meritorious issues for appeal but
questioning whether the district court properly calculated Roberts’ advisory Guidelines
range, whether the prosecutor committed misconduct, and whether Roberts received
effective assistance of counsel. Although advised of his right to do so, Roberts did not
file a pro se supplemental brief. We affirm.
We review Roberts’ sentence for both procedural and substantive reasonableness
“under a deferential abuse of discretion standard.” Gall v. United States, 552 U.S. 38, 51
(2007). We “first ensure that the district court committed no significant procedural error,
such as failing to calculate (or improperly calculating) the [Sentencing] Guidelines range,
. . . failing to consider the [18 U.S.C.] § 3553(a) factors, . . . or failing to adequately
explain the chosen sentence.” Id.; see 18 U.S.C. § 3553(a)(2012). If there is no
significant procedural error, we then consider the sentence’s substantive reasonableness
under “the totality of the circumstances, including the extent of any variance from the
Guidelines range.” Gall, 552 U.S. at 51. We presume that a sentence within a properly
calculated Guidelines range is substantively reasonable, and a defendant can rebut this
presumption only “by showing that the sentence is unreasonable when measured against
the 18 U.S.C. § 3553(a) factors.” United States v. Louthian, 756 F.3d 295, 306 (4th Cir.
2014).
2
Having carefully reviewed the record, we find no error in the district court’s
imposition of Roberts’ sentence. The district court properly calculated the advisory
Sentencing Guidelines range and sufficiently explained its reasons for imposing the
sentence Roberts received. * Furthermore, Roberts has not made the showing necessary to
rebut the presumption of reasonableness that we afford his within-Guidelines range
sentence.
Roberts next argues that his counsel was ineffective for failing to file a timely
notice of appeal and advising him to enter into a plea agreement that did not include
stipulations as to sentencing factors applicable to his offense. The first argument is
moot—the remedy for such a claim is an appeal, which Roberts is receiving. See In re
Goddard, 170 F.3d 435, 438 (4th Cir. 1999). As to the second issue, we are not
persuaded that any deficient performance by counsel appears conclusively on the face of
the record. See United States v. Galloway, 749 F.3d 238, 241 (4th Cir. 2014) (noting that
claims of ineffective assistance of counsel may be raised on direct appeal “if and only if it
conclusively appears from the record that . . . counsel did not provide effective
assistance.” (emphasis and internal quotation marks omitted)).
In accordance with Anders, we have reviewed the entire record in this case; we
have found no meritorious issues for appeal. We therefore affirm Roberts’ conviction
and sentence. This court requires that counsel inform Roberts, in writing, of the right to
*
Counsel’s suggestion that the prosecutor engaged in misconduct by failing to
object to a particular offense level enhancement is without merit, as we conclude that the
enhancement was properly imposed and there was thus no basis for an objection.
3
petition the Supreme Court of the United States for further review. If Roberts requests
that a petition be filed, but counsel believes that such a petition would be frivolous, then
counsel may move in this court for leave to withdraw from representation. Counsel’s
motion must state that a copy thereof was served on Roberts.
We dispense with oral argument because the facts and legal contentions are
adequately presented in the materials before this court and argument would not aid the
decisional process.
AFFIRMED
4
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"pile_set_name": "FreeLaw"
} |
933 F.2d 1227
Darel TAYLOR and Margaret Taylor Darel Taylor, Appellee,v.The CONTINENTAL GROUP CHANGE IN CONTROL SEVERANCE PAY PLAN,The General Pension Board of the Continental Group, Inc.,Robert Adams, "John Doe" Numbers 1-15 and "Mary Moe" Numbers1-15 (Names Being Fictitious), Continental Group, Inc.,Kiewit Continental, Inc., Jet Aviation of America, Inc.,Robert Schaeberle, and "Peter Poe" Numbers 1-15 and "LindaLoe" Numbers 1-15 (Names Being Fictitious)The Continental Group Change in Control Severance Pay Plan, Appellant.
No. 90-5556.
United States Court of Appeals,Third Circuit.
May 29, 1991.
Brian N. Lokker (argued), Hope M. Pomerantz, Williams, Caliri, Miller & Otley, Wayne, N.J., for appellant.
David Tykulsker (argued), Ball, Livingston & Tykulsker, Newark, N.J., for appellee Darel Taylor.
Before MANSMANN and SCIRICA, Circuit Judges, and POLLAK, District Judge*.OPINION OF THE COURT
SCIRICA, Circuit Judge.
1
In this action under the Employee Retirement Income Security Act of 1974 (ERISA), The Continental Group Change in Control Severance Pay Plan challenges a grant of partial summary judgment awarding severance benefits to Darel Taylor. Because we find disputed issues of material fact, we will reverse and remand for further proceedings.
I.
2
Taylor was employed by the Air Transport Division ("Air Transport") of The Continental Group, Inc. for more than 24 years, beginning in 1960. Air Transport was primarily responsible for scheduling and maintaining a fleet of private airplanes. On November 1, 1984, The Continental Group was taken over by Kiewit Continental, Inc.1 In March, 1985, Continental sold the airplanes belonging to Air Transport. On May 29, 1985, Continental sold Air Transport's remaining assets to Jet Aviation of America, Inc. ("Jet"). At this time, Continental formally terminated all ten of Air Transport's employees, including Taylor. However, as part of its purchase agreement with Continental, Jet obligated itself to offer employment to these people. Taylor accepted employment with Jet. On October 27, 1986, Jet discharged Taylor for unsatisfactory work performance.
3
This action involves Taylor's claim for benefits under The Continental Group Change in Control Severance Pay Plan ("the Plan"). Continental created the Plan in 1982. In the summer of 1984, fearing a hostile takeover, Continental's Board of Directors adopted amendments to the Plan to provide further protection for all salaried non-unionized employees. The amendments were designed to protect certain employees who were terminated following a change in control of Continental. The stated purpose of the Plan as amended was "to encourage Employees to make and continue careers with The Continental Group, Inc." Defendant's App. at 53. Taylor was covered by the Plan.
4
The Plan provides that covered employees shall receive severance payments upon "Involuntary Termination." Id. at 57. In Sec. 2.10 of the Plan, Involuntary Termination is defined in relevant part as:
5
any termination of an Employee's employment by the Company, or by one of its Subsidiaries, within two years after a Change in Control; provided, however, such term shall not include: .... (b) except in the event of an Unapproved Change in Control, a termination by the Company resulting solely from the disposition of any subsidiary or division, other than by dissolution or liquidation.
6
Id. at 55. The parties agree that the sale of Continental on November 1, 1984 constituted a Change in Control as the Plan defines the term, and that this was not an Unapproved Change. There is also no dispute that the sale of Air Transport to Jet did not constitute a Change in Control.
7
Taylor claims he is owed severance benefits because he was terminated by Jet within two years after a Change in Control. However, Sec. 2.10 applies only to terminations by the "Company, or by one of its Subsidiaries." The term "Company" is defined as "The Continental Group, Inc. and all Subsidiaries." Id. at 54. "Continental Group" is further defined as "The Continental Group, Inc. and its successors or assigns." Id. The parties dispute whether Jet is considered a "successor" to Continental within the meaning of this term. If Jet is a successor, Taylor is entitled to benefits under this provision. If Jet is not a successor, Taylor is not entitled to benefits.
8
Before the 1984 change in control, Continental foresaw that employees might find themselves in Taylor's situation. On June 28, 1984, Continental issued a Special Policy that applied "only to an employee employed by a subsidiary or division of the Company which is sold or otherwise disposed of following a Change in Control, and who remains in the employ of the successor employer." Id. at 72. The Special Policy provides that:
9
In the event that such employee is Involuntarily Terminated by the successor employer within two years from the Change in Control or within one year from the sale or other disposition of the subsidiary or division, whichever period ends first, the Company will cover such employee under [various benefits programs, including the Plan] which would have been provided had the employee remained in the employ of the Company or one of its subsidiaries. The terms "Change in Control" and "Involuntary Termination" have the same meanings as under such Policies.
10
Id. As can be seen, the Special Policy is similar to the Plan, but limits its coverage to terminations occurring within one year after the sale of a subsidiary or division. Taylor is ineligible for benefits under the terms of the Special Policy, because his termination occurred more than one year after the sale of Air Transport. However, the parties dispute whether the Special Policy was intended to supersede or merely supplement the Plan, and whether it would constitute a valid amendment to the Plan if it were intended as such.
11
As noted above, Jet purchased Air Transport's assets in May, 1985. The asset purchase agreement between Continental and Jet contained the following provision:
12
In the event of the Involuntary Termination of employment of any salaried Employee, as defined in [the Plan], by [Jet] or any successor thereto within one year from the Closing ("Involuntary Termination"), [Jet] agrees to pay such Employee severance pay and benefits pursuant to the Severance Plan in effect as of the Closing which would have been applicable to such Employee on the date of such termination of employment.
13
Id. at 117-118. Jet thus obligated itself to pay benefits upon the termination of certain employees if Continental would have been required to do so. Mirroring the terms of the Special Policy, the asset purchase agreement required Jet to compensate only those employees discharged within one year after the purchase of Air Transport. This appeal does not concern Jet's obligations.
14
Following the sale of Air Transport, Jet employees who had previously worked for Air Transport raised questions about their eligibility under various benefits programs. See Certification of Robert E. Adams, Defendant's App. at 77-78. Continental circulated a response which included a discussion of whether former Continental employees who now worked for Jet were entitled to severance benefits. This response stated that:
15
The Severance Plan does not apply to employees whose employment is "terminated" solely by reason of the sale of a business of the Company. That type of termination is not considered an "Involuntary Termination" for the purposes of receiving benefits under the Plan.
16
However, the Company has extended severance benefits under the Severance Plan to employees who are involved in the sale of a business, where such employees are subsequently Involuntarily Terminated, other than for cause, by the new owners of that business within the earlier of October 31, 1986, or a date within one year after the sale of the business unit involved. Therefore, in the case of the Air Transport employees, any employee who is Involuntarily Terminated, other than for cause, by Jet Aviation prior to May 29, 1986, will be eligible for the benefits available under the Continental Change in Control policies as if Continental had laid that person off at that time.
17
Id. at 90.
18
Taylor pursued his claim for severance benefits with an internal pension board. In initial correspondence with the board, Taylor argued in part that he was owed benefits because he was terminated within two years after a Change in Control. Plaintiff's App. at 2. However, the only argument pressed in subsequent correspondence was that his job duties had been "materially reduced," and as a consequence he was owed benefits under a different provision of the Plan. See id. at 15-18; Defendant's App. at 56 (material reduction in job duties considered an Involuntary Termination under the Plan). The board rejected Taylor's "material reduction" claim, and did not address any claim regarding the two year termination provision. The "material reduction" claim is not before us on appeal. We note, however, that it appears that any "material reduction" claims are also subject to the two year limitation.
19
Taylor and his wife then sued the Plan in district court. The district court granted partial summary judgment to Taylor, holding that he was entitled to benefits under the Plan because he was terminated by a "successor" to Continental within two years after a Change in Control. In addition, the court held that the Special Policy could not alter any of Taylor's rights under the Plan because it did not constitute a legally valid amendment to the Plan. The Plan now appeals from this judgment.2
II.
20
The Plan is governed by ERISA and this action was brought pursuant to 29 U.S.C. Sec. 1132(a)(1)(B) (1988), which permits suits by beneficiaries to recover benefits. This dispute centers around the proper interpretation of various provisions of the Plan. In particular, the parties differ over whether Jet's purchase of Air Transport makes it a "successor" to Continental under the Plan. The parties have assumed that this dispute can be resolved through summary judgment. However, we find that critical provisions of the Plan are ambiguous, and that their meaning is a disputed issue of material fact. Consequently, we will reverse the district court's grant of summary judgment and remand for further proceedings consistent with this opinion.
A.
21
The district court granted summary judgment to Taylor. Consequently, we must consider the evidence in the light most favorable to the nonmoving party, and can affirm only if no genuine issue of material fact remains in dispute and "the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). We apply the same standard of review as that employed by the district court. Erie Telecommunications, Inc. v. Erie, 853 F.2d 1084, 1093 (3d Cir.1988).
22
In this case, the district court was required to exercise de novo review. As the Supreme Court held in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), "a denial of benefits challenged under Sec. 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Id. at 115, 109 S.Ct. at 956. As the district court noted, the Plan does not give its administrators such discretionary authority, and the de novo standard is appropriate here. Prior to Bruch, many courts had reviewed denials of benefits under an "arbitrary and capricious" standard that afforded deference to an administrator's interpretation of plan provisions. In Bruch, the Court held that when an administrator has denied benefits, a deferential standard of review would be contrary to the principles of trust law underlying ERISA. As in this case, Bruch involved severance claims by employees who had been terminated when their division was sold, and who were immediately rehired by the purchasing company.
23
Subsequent to Bruch, we held that the interpretation of ambiguous plan provisions is a question of fact. In Anderson v. Pittsburgh-Des Moines Corp., 893 F.2d 638 (3d Cir.1990), an employee had worked for one company which was then acquired by another company. The employee claimed that he was owed pension benefits based on the time spent with both companies, but the plan administrator did not credit the time spent with the former employer. As in this case, the dispute in Anderson centered around the proper interpretation of the term "Company." In Anderson, the parties disputed whether the term "Company" included a predecessor of the current employer. As in Bruch, we applied general common law principles and noted that "[w]hile 'a clear and unambiguous contractual provision raises no factual issue,' ... 'as a general rule the meaning of a contract is a matter of fact.' " Id. at 640 (quoting First Jersey Nat'l Bank v. Dome Petroleum Ltd., 723 F.2d 335, 339 (3d Cir.1983)). We found that the district court erred in determining that the term "Company" was unambiguous, and we remanded for a new trial.
24
The determination of whether a term is ambiguous is a question of law. Mellon Bank, N.A. v. Aetna Business Credit, Inc., 619 F.2d 1001, 1011 (3d Cir.1980). A term is ambiguous if it is subject to reasonable alternative interpretations. Id. We recognize that in Ulmer v. Harsco Corp., 884 F.2d 98, 101-02 (3d Cir.1989), we noted that the proper interpretation of the severance plan at issue was a question of law. As in this case and Bruch, Ulmer involved severance claims by employees who had been terminated when their division was sold, and who were immediately rehired by the purchasing entity. However, in that case we determined that the language of the plan was not ambiguous. Id. at 103. Consequently, we were able to interpret the plan as a matter of law.
25
When an ERISA plan is ambiguous, ascertaining its meaning requires examining many factors, which may include considering how the plan was understood by its beneficiaries. In Bruch, the Supreme Court quoted language from the Restatement (Second) of Trusts indicating that only the "intention of the settlor" is relevant. See Bruch, 489 U.S. at 112, 109 S.Ct. at 955 (quoting Restatement (Second) of Trusts Sec. 4, comment d (1959)). But trust law cannot be imported wholesale into the ERISA context. Severance plans are often similar to employment contracts, whose interpretation requires determining the intent of both contracting parties. Bruch, 828 F.2d 134, 145 (3d Cir.1987), rev'd on other grounds, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989).
26
In this case, the Plan was adopted to encourage employees to stay with Continental despite an impending takeover. It does not appear that the Plan was the product of explicit bargaining between Continental and its employees. As we have noted, such severance plans are in essence unilateral contracts, which often makes it difficult to discern the true "intention" of the parties. Id. at 147. In this situation, the reasonable understanding of the beneficiaries, as well as the intent of the employer, may be admissible to clarify ambiguities. On remand, the district court may consider interpretive statements made by Continental, past practices, customary usage in the trade, and other competent evidence bearing on the understanding of the parties. Id. at 147-48.
27
Taylor urges that we adopt a rule that construes ambiguous terms of a benefit plan against the drafter of the plan. He notes that the dissent in Flick v. Borg-Warner Corp., 892 F.2d 285 (3d Cir.1989), indicated that in ERISA cases "clearly expressed intentions govern (even if pro-employer), but silence or ambiguity is construed in favor of the employee participants." Id. at 291. The majority did not reach the issue. However, in that case the dissent was addressing the employer's ability to amend a plan, and did not discuss precisely when its proposed rule should be applied. When discussing denials of benefits, the Supreme Court clearly stated in Bruch that:
28
[a]s they do with contractual provisions, courts construe terms in trust agreements without deferring to either party's interpretation.... The terms of trusts created by written instruments are "determined by the provisions of the instrument as interpreted in light of all the circumstances and such other evidence of the intention of the settlor with respect to the trust as is not inadmissible."
29
489 U.S. at 112, 109 S.Ct. at 955 (quoting Restatement (Second) of Trusts Sec. 4, comment d (1959)) (emphasis added). See also Bruch, 828 F.2d at 145 (severance plan is similar to contract for wages, and thus should be construed as would other arms'-length transactions), rev'd on other grounds, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). Consequently, when interpreting an ERISA severance plan, a district court should attempt to determine its intended meaning without construing it in favor of any party. Only if this factual inquiry proves fruitless should a court resort to constructions in favor of one party or another.
30
The Court of Appeals for the Ninth Circuit has held that ambiguities in insurance contracts governed by ERISA are to be construed against the insurer. Kunin v. Benefit Trust Life Ins. Co., 910 F.2d 534 (9th Cir.1990) (alternative holding), cert. denied, --- U.S. ----, 111 S.Ct. 581, 112 L.Ed.2d 587 (1990). Under this rule, when an ambiguity is discovered, "the interpretation that is most favorable to the insured will be adopted." Id. at 539 (quoting A. Windt, Insurance Claims and Disputes Sec. 6.02, at 281 (2d ed.1988)). The Kunin court held that Bruch did not preclude it from applying a "presumption" in favor of one party without necessarily "deferring" to that party's interpretation. Id. at 541. The Court of Appeals for the Eighth Circuit has explicitly rejected the approach in Kunin, holding that Bruch has pre-empted the traditional rule that ambiguous insurance contracts are construed against the insurer. Brewer v. Lincoln Nat'l Life Ins. Co., 921 F.2d 150 (8th Cir.1990).
31
These cases, however, involved insurance contracts, where the principle of "contra proferentem" is often strictly applied. We express no opinion on whether Bruch has diluted the traditional rule in that area. In the context of general contract law, the principle is employed as a constructional tool, but does not affect the factual inquiry into the intent of the parties. John F. Harkins Co. v. Waldinger Corp., 796 F.2d 657, 662 n. 2 (3d Cir.1986), cert. denied, 479 U.S. 1059, 107 S.Ct. 939, 93 L.Ed.2d 989 (1987). As one court has noted, "[r]ules of construction such as the principle that in certain circumstances a contract may be construed adversely to the party that drafted it are principles of last resort, to be invoked when efforts to fathom the parties' intent have proved fruitless." Record Club of America, Inc. v. United Artists Records, Inc., 890 F.2d 1264, 1271 (2d Cir.1989) (citations omitted). See also Lippo v. Mobil Oil Corp., 776 F.2d 706, 714 n. 15 (7th Cir.1985); Board of Trade v. Swiss Credit Bank, 597 F.2d 146, 149 (9th Cir.1979); Quad Constr., Inc. v. Wm. A. Smith Contracting Co., 534 F.2d 1391, 1394 (10th Cir.1976). As we have noted, non-bargained severance plans raise special interpretational concerns. But we do not adopt a rule that would construe ambiguities against the drafter without first attempting to ascertain the intent of the parties.
B.
32
As in Anderson, we believe that the Plan and the Special Policy are sufficiently ambiguous to create triable issues of fact. Here, the term "successor" is ambiguous. The district court found that Jet was a "successor" to Continental in part because the Plan provided that it should be construed in accordance with New York law, and "New York law routinely refers to asset purchasers as 'successors.' " Memorandum Opinion at 7. However, while reported cases may be instructive as to how the term "successor" is interpreted in other contexts, the task here remains to discern the understanding of the parties. As the Supreme Court has stated in the context of successor liability under the Labor Management Relations Act, "[t]here is, and can be, no single definition of 'successor' which is applicable in every legal context. A new employer, in other words, may be a successor for some purposes and not for others." Howard Johnson Co. v. Detroit Local Joint Executive Bd., 417 U.S. 249, 263 n. 9, 94 S.Ct. 2236, 2243 n. 9, 41 L.Ed.2d 46 (1974). For example, the New York cases cited by Taylor concern whether a company can be considered a successor for purposes of imposing tort liability. See Hartford Accident & Indem. Co. v. Canron, Inc., 43 N.Y.2d 823, 402 N.Y.S.2d 565, 373 N.E.2d 364 (1977); Greenlee v. Sherman, 142 A.D.2d 472, 536 N.Y.S.2d 877 (App.Div.1989). This case does not involve defining the term "successor" for purposes of imposing statutory or tort liability. Rather, the term "successor" must be given the meaning intended by the drafters of the Plan and reasonably understood by its beneficiaries.
33
The district court apparently believed that the meaning of the term "successor" was plain enough to support a judgment for Taylor as a matter of law. In determining that Jet was a successor to Continental, the district court stated that "[d]efendants' argument is undermined ... by the provision in the sale agreement which requires Jet to pay benefits under the Special Policy when the Special Policy, like the Plan, extends only to a 'successor employer.' " Memorandum Opinion at 7. In addition, the court held that denying Taylor's claim would "conflict[ ] with defendants' declared goal of providing employees with job security in the event of a takeover." Id.
34
But the district court's reliance on the terms of the sale agreement and the Special Policy follows only if the term "successor" is ambiguous, which would permit the introduction of such extrinsic evidence. Under the principles of trust law endorsed in Bruch, "[t]he intention of the settlor at the time of creation of the trust may ... be shown by facts occurring after that time to the extent that evidence of such facts is admissible to show such intention under the rules of evidence." Restatement (Second) of Trusts Sec. 4, comment a (1959). However, the parol evidence rule generally bars the use of extrinsic evidence to interpret a document unless that evidence is offered to clarify an ambiguity. See Anderson, 893 F.2d at 640-41; Thermice Corp. v. Vistron Corp., 832 F.2d 248, 252-53 (3d Cir.1987). Thus, the district court's discussion would be relevant only if an ambiguity exists. We note, though, that the district court was mistaken when it indicated that both the Plan and the Special Policy refer to a "successor employer." Although the Special Policy applies to a "successor employer," the Plan refers only to a "successor." This distinction may be important, given defendant's argument that the Plan was not intended to apply to all successor employers.
35
We believe defendant has sufficiently demonstrated that the term "successor" is ambiguous. Defendant notes that under Sec. 2.10(b) of the Plan, employees whose discharges result "solely from the disposition of any subsidiary or division other than by dissolution or liquidation" are excluded from benefits. Taylor was discharged from Continental when Air Transport was sold to Jet. Cf. Ulmer v. Harsco Corp., 884 F.2d 98 (3d Cir.1989) (employees fired when division was sold were terminated within meaning of severance plan, even though they had been rehired by purchasing entity). Defendant claims that Taylor was therefore excluded from benefits under Sec. 2.10(b), and that interpreting the term "successor" to include a purchaser of a division would render that provision ineffectual. An employee whose termination is excluded under Sec. 2.10(b) would find himself covered again once he accepted re-employment with the purchasing entity. We believe this interpretation is sufficient to demonstrate that the term "successor" is ambiguous. See Sejman v. Warner-Lambert Co., 889 F.2d 1346, 1348-50 (4th Cir.1989) (termination by purchaser of division not termination "by the Company" within the meaning of severance plan), cert. denied, --- U.S. ----, 111 S.Ct. 43, 112 L.Ed.2d 19 (1990).
36
The intended effect of the Special Policy poses a related ambiguity. According to defendant, the Special Policy was intended to extend benefits to employees whose terminations were not otherwise covered by the Plan. In defendant's view, the Special Policy was adopted precisely to afford some protection to those employees who were discharged as the result of the sale of a division and subsequently re-employed by the purchaser. The Special Policy, however, limits its coverage to terminations occurring within one year of the sale, which excludes Taylor's termination by Jet. Under defendant's interpretation, therefore, the term "successor employer" in the Special Policy was specifically intended to carry a different meaning from the term "successor" used in the Plan.
37
Defendant supports this interpretation with the statement circulated by Continental in response to employee questions following the sale of Air Transport. In this statement, Continental indicated that the termination of Air Transport employees fell within the coverage exclusion of Sec. 2.10(b), but that those employees who accepted employment with Jet would be covered under the Special Policy for one year after the sale. Defendant also points to a certification submitted by a Continental lawyer who was involved in drafting the Plan. As with all competent evidence occurring after the adoption of the Plan and the Special Policy, these statements may be admissible to resolve ambiguities. We leave it to the district court to determine how much weight they should be given.
38
Taylor asserts that his termination by Jet is covered under the Plan itself, and that the Special Policy was intended to restrict, rather than expand, the rights of employees in his situation. Taylor admits that he is ineligible for benefits under the terms of the Special Policy, but claims that the Special Policy is ineffective because it was not validly adopted. As we have noted, the circumstances surrounding the promulgation of the Special Policy can be used to clarify ambiguities on remand. The validity of the Special Policy is relevant only if it is determined that Taylor is entitled to benefits under the terms of the Plan. Consequently, we decline at this time to reach the question of whether the Special Policy would constitute a valid amendment to the Plan if it were intended as such.
III.
39
Taylor also contends that the Plan may not even raise the argument that Jet is not a successor to Continental, because that argument was not raised by the internal pension board. Taylor cites 29 U.S.C. Sec. 1133(1) (1988), which provides that when a claim has been denied internally, the trustee must provide written notice "setting forth the specific reasons for such denial." Taylor relies on cases indicating that ERISA's goal of efficient claims resolution would be compromised if a rationale for the denial of benefits were raised for the first time in the district court. See Short v. Central States, S.E. and S.W. Areas Pension Fund, 729 F.2d 567, 575 (8th Cir.1984); Richardson v. Central States, S.E. and S.W. Areas Pension Fund, 645 F.2d 660, 664-65 (8th Cir.1981).
40
We believe defendant adequately complied with Sec. 1133. We have held that an ERISA claimant may rely on a different theory in the district court from that pursued administratively. Wolf v. National Shopmen Pension Fund, 728 F.2d 182, 186 (3d Cir.1984). Taylor's attorney pressed the claim based on Taylor's termination--as distinguished from the "material reduction" claim--only in initial correspondence with the pension board. Plaintiff's App. at 2. Thereafter, the record indicates that the claim based on termination was not raised again until the district court level. Taylor himself indicated that only the "material reduction" claim was before the board. In a certification submitted to the pension board, Taylor stated that the company had
41
attempted to confuse the issue before the General Pension Board by injecting my termination into this proceeding. The issue is not relevant to whether Jet caused me to suffer a material reduction in my responsibilities and authorities, the standard under which my claim for severance benefits is to be judged.
42
Plaintiff's App. at 32 (emphasis added). In this situation, the board sufficiently complied with the requirement that it provide written notice of the reasons for its denial. Its response was directed toward what appeared to be the sole thrust of Taylor's arguments before it. Cf. Voliva v. Seafarers Pension Plan, 858 F.2d 195, 196-97 (4th Cir.1988) (defendant may rely on new argument to counter evidence first introduced by plaintiff in district court).
IV.
43
Because we find that the Plan and the Special Policy are susceptible to reasonable alternative interpretations, we will reverse the district court's grant of summary judgment and remand for further proceedings. On remand, the parties may introduce any admissible evidence bearing upon the intended meaning of the disputed terms.
*
The Honorable Louis H. Pollak, United States District Judge for the Eastern District of Pennsylvania, sitting by designation
1
Both The Continental Group, Inc. and Kiewit Continental, Inc. will be referred to as "Continental."
2
Taylor contends that we lack jurisdiction because defendant's Notice of Appeal was not timely filed. See Fed.R.App.P. 4(a)(1) (notice of appeal must be filed within 30 days after the date of the judgment or order appealed from). We disagree. On May 9, 1990, the district court entered an order that had been proposed by the parties. This order contained one paragraph certifying the order as a final judgment under Fed.R.Civ.P. 54(b), and one paragraph certifying the order for interlocutory appeal under 28 U.S.C. Sec. 1292(b). The inconsistent certifications made it difficult for defendant's counsel to determine how the order should be appealed. When an order has been certified as a final judgment under Rule 54(b), a notice of appeal must be filed within 30 days. See Fed.R.App.P. 4(a). But when an order has been certified under Sec. 1292(b), a party must file a petition for permission to appeal within 10 days. See Fed.R.App.P. 5(a). In addition, a court of appeals has discretion over whether to accept a Sec. 1292(b) appeal. On May 29, in response to a request by defendant's counsel, the district court vacated its earlier order and signed a new order containing only the Rule 54(b) certification. This order was filed on May 30 and entered on June 6. On June 21, defendant filed its notice of appeal, which designated this new order. Taylor claims the notice was untimely, because it was filed more than 30 days after entry of the initial May 9 order. However, we believe defendant has properly appealed from the June 6 order. This is not a case where the district court has attempted to "relax the time periods specified in Fed.R.App.P. 4 merely by vacating and refiling judgments." McGarr v. United States, 736 F.2d 912, 918 (3d Cir.1984). The May 9 order was inadequate to inform defendant of the proper avenue of appeal, and this confusion was rectified by the later order. When a judge vacates an earlier order and replaces it with a materially different version, a party may appeal the later order regardless of whether it has filed a motion to amend the judgment or a motion to extend the time for appeal. Cf. Burkett v. Cunningham, 826 F.2d 1208, 1216-17 (3d Cir.1987) (permitting appeal of order vacating and reissuing earlier order where post-judgment motion not made solely for the purpose of extending time for appeal)
| {
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289 B.R. 173 (2002)
In re John P. LANDI and Phyllis Landi, Debtors.
John P. Landi and Phyllis Landi, Plaintiffs,
v.
United States of America and State of New York, Defendants.
Bankruptcy No. 01-00526-9P7, Adversary No. 01-62.
United States Bankruptcy Court, M.D. Florida, Ft. Myers Division.
September 24, 2002.
*174 *175 Ronald Stetler, Esquire, Naples, FL, for plaintiffs.
Phillip Doyle, Esquire, Washington, DC, for defendant.
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND MEMORANDUM OPINION
ALEXANDER L. PASKAY, Chief Judge.
The matter under consideration, in this Chapter 7 case, is a suit filed by John P. and Phyllis Landi (Debtors) seeking a determination that certain tax liabilities of the Debtors are protected by the general bankruptcy discharge and are not within the exception set forth in 11 U.S.C. § 523(a)(1)(C). On February 5, 2001, the Debtors filed a two Count Complaint against the United States of America, Department of Treasury, Internal Revenue Service (Government) and the State of New York (New York).
In Count I of the Complaint, the Debtors seek to discharge income tax obligations owed to the Government for 1040 taxes for the following years: 1990, 1991, 1992, 1993, 1994, 1995, and 1996. In Count II of the Complaint, the Debtors seek to discharge income tax obligations owed to New York for the following years: 1989, 1990, 1991, 1992, 1993, 1994, and 1995.
Both the Government and New York filed their respective Answers. On July 2, 2001, a Stipulation was filed between the Debtors and New York. This Court on July 9, 2001, subsequently entered a Final Judgment in favor of the Debtors on Count II of the Complaint. The remaining count against the Government, Count I, proceeded to trial.
At the final evidentiary hearing, this Court considered the testimony of the witnesses and the Exhibits introduced into evidence, and based upon the same, makes these findings of facts and conclusions of law as follows:
It should be noted, at the outset, that the Government stipulated to the fact that the Debtors meet the criteria for dischargeability of the tax obligations for the tax years at issue, in that all taxes involved were due and owing for more than three years when the Debtors filed their Chapter 7 case. However, the Government contends that by virtue of Section 523(a)(1)(C) of the Code, the debts involved are non-dischargeable, and that the sole issue is the exception, specifically, whether the Debtors evaded payment of their taxes. Counsel for the Debtors orally objected to the "evasion of payment" assertion by the Government, arguing that said assertion is an affirmative defense that has to be specifically plead; however, this Court overruled the objection. Moreover, the Government conceded that the Debtors had paid the tax liability for the year 1992 in full. Be as it may, this Court shall make reference to the tax year 1992, as it is satisfied that the tax year is relevant to the Government's overall case.
Background of the Debtors During the Relevant Years
The Debtor, John P. Landi, is a vascular surgeon since 1980. When he completed his fellowship following medical school in 1980, Dr. Landi opened his office in New York, which he operated until 1996 when he relocated to Naples, Florida. Dr. Landi has operated his medical practice through a professional corporation, John P. Landi, M.D., P.C. (the P.C.). Originally, the P.C. was named John P. Landi, P.C.; however, there was a name change sometime thereafter to John P. Landi, M.D., P.C.
Mrs. Landi has served as the office manager for Dr. Landi's practice since its inception. *176 Dr. Landi testified that this arrangement was a "team approach," with Mrs. Landi handling the financial end of Dr. Landi's practice, while he performed his surgeries. Although Dr. Landi signed all of the P.C.'s tax returns, Mrs. Landi met with the accountants and gathered the relevant information for the filing of the tax returns. Until 1990, Mrs. Landi initially received compensation by way of a salary from the P.C., however, since 1990, she has not and does not at present receive any "income" from the P.C., although she works there five days a week.
The record also reflects that Mrs. Landi was the owner of their first home, located at 44 West Patent Road, Bedford Hills, New York. This home was originally purchased in 1980 for $450,000. The Debtors spent approximately $1,000,000 in improving this property. In 1989, the Debtors sold their residence in Bedford Hills and purchased the 58-acre hilltop site overlooking a reservoir on Titicus Road. The Debtors netted over $1,500,000 from the sale of their Bedford Hills home. (Db.'s Exh. 18).
At the time of the purchase of the Titicus Road property, it was still unimproved. The Debtors hired an architect to draft their "dream home," and Mrs. Landi acted as general contractor for the construction of their home. During the construction of their dream home, the Debtors purchased and stayed at the Fox Den Lane home. The Debtors borrowed in excess of $2,600,000 for the purchase of the land and construction of the Titicus Road dream home. Mrs. Landi testified that as completed, the home was approximately 10,000 square feet, has six bedrooms, 10 bathrooms, and a basement of 6,000 square feet on its own, with a fully equipped exercise room and jacuzzi. It is without dispute that they signed a financial statement on August 15, 1989, showing that the medical practice was worth $1,000,000; that the Debtors owned several automobiles; and that the Debtors had in excess of $250,000 worth of personal property. (Govt.'s Exh. 51, HVB134-135).
The record reflects that by the year 1990, Mrs. Landi was the owner of the following five pieces of real estate: (1) the building and property where the practice was housed, located at 2503 St. Raymends Avenue, New York City, New York; (2) 444A Heritage Hills, Somers, New York, where Dr. Landi's parents resided; (3) 441C Heritage Hills, Somers, New York, where Mrs. Landi's parents resided; (4) 218 Titicus Road, North Salem, New York, the "dream home" of the Debtors; and (5) Fox Den Lane, New Salem, New York. Mrs. Landi was the sole owner of all real properties as protection against possible medical malpractice judgments against her husband.
Overview of Tax Years At Issue
As stated above, the tax year liabilities of the Debtors involve the tax years 1990 through 1996, excluding 1992, as it has subsequently been satisfied in full by the Debtors, although not when the tax became due for that tax year. This Court is satisfied that a review of all seven years is relevant to the dischargeability vel non of the total liability of the Debtors for unpaid taxes notwithstanding that the 1992 taxes were paid. A summary of the income earned by Dr. Landi, his subsequent tax liability, the Debtors' non-payment, and the Debtors' payment history is as follows. *177
----------------------------------------------------------------------------------------------------------------
Adjusted Wages
Gross subject to Non-Wage Income Withholding Balance
Year Income[1] withholding[2] Income[3] Tax[4] credit[5] due[6]
----------------------------------------------------------------------------------------------------------------
1990 579,495 450,934 51,462 107,916 26,843[7] 57,331
84,174[8] 24,047
1991 756,173 376,380 251,564 110,289 25,307 88,744
25,202[9]
1992 613,205 285,337 327,119 137,287 52,660 87,420
1993 553,878 529,470 0 116,456 25,693 94,446
25,581[10]
1994 470,313 125,000 350,000 142,709 38,750 103,959
1995 379,926 22,230 365,000 113,635 3,000 116,657
1996 500,326 0.00 488,919 182,695 3,230 157,944
478,484[11]
TOTAL[12] 3,831,474 1,789,351 1,834,064 887,245 172,470 706,501
----------------------------------------------------------------------------------------------------------------
(Govt.'s Exhs. 1 and 9). In addition, each of the amounts are supported by the corresponding Form 1040 tax returns as filed by the Debtors. (Govt.'s Exhs. 2, 3, 4, 5, 6, 7, and 8).
With respect to the Debtors' income during the relevant years, as set forth in columns 1-3 of the chart, it is without dispute that the Debtors' adjusted gross income (AGI) for the seven-year period in question totaled $3,831,474. Of the AGI figure, $1,789,351 was from "wages subject to withholding," i.e., Dr. Landi's claimed income on his Form W-2 Wage and Tax Statement and $1,834,064 was from "non-wage income," either from his services at Mount Vernon hospital (MVH) or from the P.C. income not treated as wages, at least *178 not reported on his W-2. A further break down of the "non-wage income" reveals that in 1990, the MVH wages were $51,462; in 1991, MVH wages were $51,564 and P.C. wages were $200,000; in 1992 MVH wages were $51,564 and P.C. wages were $275,555; and in 1993 through 1996, the Debtors' non-wage income was reflected on line 12 (business income), as opposed to line 22 (other income) of their Form 1040. The Debtors' did not specify if the wages were from MVH or P.C. Be as it may, it is apparent that Dr. Landi's AGI was almost equally divided from his "wage income" and "non-wage income," initially the later, his non-wage income, comprising of most of his AGI for the years 1994 through 1996.
With respect to the Debtors' tax liability, as set forth in columns 3-6 of the chart, the total liability of the Debtors was $887,245, of which there was a "credit" for taxes withheld by the P.C. in the amount of $172,470, leaving a balance of $706,501 "not paid" by the Debtors. However, as more fully described below, the "credit" claimed is not supported by this record because no monies, or very little, were withheld and paid over to the Government.
The record confirms that the P.C. failed to pay its "withheld tax" due per Form 941 for the relevant time periods (1990 though 1996). The record reflects that for each quarter of each year that the net tax was due, the P.C. paid very little or nothing at all with its Form 941.
(1) year 1990, the P.C. net tax due $36,137.77, as opposed to the $1,846.31 paid;
(2) year 1991, P.C. net tax due $42,587.01, as opposed to the $560 paid;
(3) year 1992, P.C. net tax due $72,837.26, as opposed to zero paid;
(4) year 1993, P.C. net tax due $46,670.63, as opposed to $17,000 paid;
(5) year 1994, P.C. net tax due $69,590.10, as opposed to $4,591.85 paid;
(6) year 1995, P.C. net tax due $30,781.50, as opposed to zero paid; and
(7) year 1996, P.C. net tax due $8,769.56, as opposed to $5,509.45 paid.
(Govt.'s Exh. 17). The Government's Exhibit 17 is a chart that summarizes the numbers set forth in the "Certificate of Assessments, Payments, and other Specified Matters" of the P.C. for the tax years 1990 through 1996. (Govt.'s Exhs. 18, 19, 20, 21, 22, 23, and 24, which are the Certificates for each year at issue).
The summary of the income tax collections as of the date of the filing of the Petition was also admitted into evidence. (Govt.'s Exh. 25). This chart shows that the Government collected $12,775.41 from the Debtors by levy and $199,616.33 from the Debtors through voluntary payments. However, the chart also indicates that the total amount owed by the Debtors was $934,933.11, as of the Petition date. This amount is also confirmed by the Government's proof of claim, claim no. 9, filed on March 26, 2002, in the amount of $1,126,693.47, which includes penalties and interest.
--------------------------------------------------
Amounts Voluntary Tax and Interest
Collected Amounts Due as of the
Year by Levy Paid Petition Date
--------------------------------------------------
1990 2,774.80 87,909.68 34,855.51
--------------------------------------------------
1991 10,000.61 11,231.84 143,959.84
--------------------------------------------------
1992 0 100,474.81 0
--------------------------------------------------
1993 0 0 168,101.45
--------------------------------------------------
1994 0 0 187,764.04
--------------------------------------------------
1995 0 0 169,754.13
--------------------------------------------------
1996 0 0 230,498.14
__________________________________________________
Total 12,775.41 199,616.33 934,933.11
--------------------------------------------------
*179 Lifestyle of the Debtors During the Relevant Year
The Debtors lifestyle appears to have been extravagant, through the use of several credit cards at Bloomingdale's, Neiman Marcus, Lord & Taylor, and American Express. (Govt.Exh. 30). It is evident from the record that the Debtors used the P.C. basically as their private bank, disregarding the separate legal existence of the P.C. from themselves, and indiscriminately using funds from the P.C. whenever needed. For instance, a cursory review of Government's Exhibit 60, a copy of checks issued from the P.C., show checks issued to "Cash," in excess of $76,000; "Paul Landi," in excess of $17,500; "John Landi," in excess of $22,250; "Phyllis Landi," in excess of $44,625; "Bloomingdales," in excess of $23,000; "American Express," in excess of $24,000; and other entities such as Sears and Home Depot, in excess of $6,000. (Govt.'s Exh. 60).
Treatment of Trust Fund Taxes by the Debtors
The undisputed facts established by the testimony of the two accountants of the Debtors, Richard Hayden and Terry Lazar, reveal a startlingly graphic paradigm of the most cavalier attitude of a fiduciary dealing with the obligation of a corporate employer to withhold and pay over to the Government the trust fund taxes. The Debtor, Dr. Landi, was the sole "responsible person" within the meaning of 26 U.S.C. § 6672. As such, he was subject to the 100% penalty assessment if he did not fulfill his obligation as the responsible person.
As noted earlier, in the present instance, beginning the year 1994, the Debtor received less by way of salary and more by way of "non-wage" income from the P.C. Therefore, there were no funds withheld from the monies he received from the P.C. The record reflects that although there were few quarterly returns filed by the P.C., the P.C. paid very little in payroll taxes. In preparing the Debtors' income tax return at the end of the year, the accountant testified that there was always a problem in calculating the amount, which had to be treated as salary of what the Debtor received during any given year, and then determining the proper withholding on that amount.
For instance, in one particular year, the Form 941 reported a salary of $85,000. There should have been withholding on his income, which in turn, would have shown up as a credit on the Debtors' Form 1040 tax return. However, in the present instance, the P.C. did not withhold anything and of course did not pay over any of the amounts required to be withheld. This practice continued consistently by the Debtor, who was the principal of the P.C. and the "responsible person," not withstanding that the Debtors were warned repeatedly by both accountants of the inadvisability of this practice. Both accountants told the Debtors that this practice was improper and warned them about the consequences of their failure to comply with the requirement of the Internal Revenue Code concerning treatment of trust fund taxes by an employer, the P.C. (Db.'s Exhs. 26 and 29, Depositions of Richard Hayden and Terry Lazar).
Mrs. Landi, who was basically in charge of the finances of the P.C., decided that it was easier to maintain one bank account for the P.C. and for the Debtors. The Debtors used that account, not only to pay the business expenses of the P.C., but also to pay the family's personal expenses, which ultimately had to be classified as salary earned by Dr. Landi, subject to withholding. Of course, as noted above, this was not done. Hence, the tax liability *180 of the Debtors for the 100% penalty assessment was constantly growing bigger and bigger.
The Debtors attempt to make the point that there is nothing illegal or improper in treating a professional in a P.C. as an independent contractor and not as an employee, which is technically correct. However, this is true provided that the individual professional files a quarterly estimated tax return and pays the amount. Moreover, the estimated amount has to be proper and not underestimated when he files his annual tax return and reports the amount received on Schedule C as income earned not from employment.
On the other hand, if he is treated as an employee and receives a salary, it is the obligation of the employer, here the P.C., to make an appropriate withholding and pay the amount of payroll taxes to the Government on the quarterly returns. If the P.C. fails to do so, then the funds not collected cannot be reported as a credit by the individual. The P.C. is liable for the trust funds, but so is the individual who is pursuant to 26 U.S.C. § 6672, the "responsible person." This person will likewise be subject to a 100% penalty for failure to pay over to the Government the trust fund taxes.
Since in the present instance, neither the Debtors filed quarterly estimated tax returns and paid the same, nor were the trust fund taxes paid over to the Government, the Debtors are not entitled to receive a credit for the same on their individual tax returns.
It is evident from the foregoing that it is shear sophistry to argue that the procedure followed by the Debtors was proper over the years in question because neither requirements of the two alternatives were followed nor complied with in spite of the repeated admonition and advice by both accountants of the consequences of the failure to comply with the requirements of the Tax Code.
Government's Argument and Debtors' Defenses
The Government contends that the evidence fully supports its claim that the Debtors have purposefully evaded their tax liabilities for the years in question based upon the following facts: (1) that the Debtors used the P.C. to shield cash from the IRS levy, so that the P.C. would pay all of their personal expenses; (2) that the Debtors fraudulently claimed withholding credits against their income knowing that the P.C. was not paying the corresponding Form 941 taxes; (3) that the Debtors failed to pay estimated taxes or to pay any income taxes with their tax returns while maintaining a lavish lifestyle; and (4) that the Debtors failed to account for jewelry and other personal property that could have been levied on.
In defense, the Debtors argue that the Debtors' inability to pay their taxes is caused by the following: (1) the misappropriations of funds by their accountant, Dennis King from 1981 through 1987; (2) the purchase of their "dream home" on Titicus Road; and (3) the failure of the Debtors to curb their personal spending. Although at trial, this Court ruled that the claimed embezzlement of Mr. King was inadmissible as irrelevant, the Debtors admitted into evidence the deposition transcripts of John W. Moscow, Deputy Chief, Investigations Division, New York County District Attorney's Office and Peter T. Goodrich, Esq., both of whom testified about Mr. King's alleged embezzlement. (Db.'s Exhs. 28 and 27, respectively).
This Court has considered the testimony adduced at trial, the evidenced admitted at trial, the post-trial briefs of the parties, and the governing principles of law, and is satisfied that the Government *181 has sustained its burden of proving that the Debtors purposefully evaded the payment of taxes.
Section 523(a)(1)(C) of the Bankruptcy Code provides as follows:
(a) A discharge under § 727 . . . of this title does not discharge an individual debtor from any debt
(1) for a tax or a customs duty
. . .
(C) with respect to which the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax . . .
11 U.S.C. § 523(a)(1)(C). The burden is on the Government to prove its case by a preponderance of the evidence. In re Griffith, 206 F.3d 1389, 1396 (11th Cir.) (en banc) (citing Grogan v. Garner, 498 U.S. 279, 287-288, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991)) (2000).
Under applicable law interpreting Section 523(a)(1)(C) of the Code, the Government must satisfy a two-prong test. First, the Government must show that the Debtors engaged in conduct, either acts of commission or acts of omission, to avoid the payment or collection of taxes. In re Fretz, 244 F.3d 1323, 1329 (11th Cir.2001). Second, the Government must show that the conduct engaged by the Debtors was willful. Fretz, 244 F.3d at 1330. In this context, willfulness means (1) the debtor had a duty under the law, (2) the debtor knew he/she had the duty, and (3) the debtor voluntarily and intentionally violated that duty. In re Griffith, 206 F.3d at 1396.
With respect to the first prong, the conduct requirement, under Fretz, the Eleventh Circuit re-examined its prior decisions dealing with this exception. In In re Haas, 48 F.3d 1153 (11th Cir.1995), abrogated in part, In re Griffith, 206 F.3d at 1395-96, the Eleventh Circuit held that a debtor's failure to pay taxes alone did not fall within the scope of Section 523(a)(1)(C)'s exception to discharge and it also held that Section 523(a)(1)(C) did not cover attempts to evade or defeat the payment or collection of taxes. Fretz, 244 F.3d at 1327-1328, citing Haas, 48 F.3d at 1159. However, the Eleventh Circuit overruled that part of Haas in In re Griffith, 206 F.3d 1389 (11th Cir.) (en banc), cert. denied, 531 U.S. 826, 121 S.Ct. 73, 148 L.Ed.2d 37 (2000). In Griffith, the Eleventh Circuit determined that Section 523(a)(1)(C) precludes discharge when a debtor "willfully attempts to evade or defeat a tax at the payment stage." Fretz, 244 F.3d at 1328, citing Griffith, 206, F.3d at 1393, 1395-96. Under Fretz, the Eleventh Circuit determined that the law of this Circuit is that the conduct requirement is satisfied when a debtor engages in affirmative acts to avoid payment or collection of taxes as well as acts of omission. Fretz, 244 F.3d at 1329 (emphasis added).
In Fretz, Dr. Fretz argued that he simply failed to pay his taxes; however, the Eleventh Circuit disagreed. Dr. Fretz was an alcoholic who failed to pay taxes and file his tax returns. The Eleventh Circuit held that the plain statutory language reads that the modifying phrase "in any manner" means what it says, and covers attempts to evade or defeat a tax whether accomplished by acts of culpable omission or acts of commission. See also, In re Fegeley, 118 F.3d 979 (3d Cir.1997) and In re Toti, 24 F.3d 806 (6th Cir.1994). The Eleventh Circuit indicated that this holding did not overrule Haas, inasmuch as the fact pattern in Fretz was different than in Haas. In Fretz, Dr. Fretz neither filed his tax return nor paid his taxes, whereas in Haas, the debtor filed the return but did not pay. Fretz, 244 F.3d at 1329.
*182 While it is true that if one oversimplifies the fact pattern here, one can readily conclude that this is nothing more than a case of a debtor who knew the taxes were due, who had the money to pay the taxes, but failed to pay the taxes, and therefore, under Haas, the liability would not be excepted from the discharge. However, this would be an oversimplification of the fact pattern in this instance for the following reasons.
First, in the beginning of the relevant time period, the Debtors very well knew that they were already heavily indebted to the Government, due to the claimed embezzlement of their accountant of substantial sums. Notwithstanding, they embarked on extremely ambitious undertakings involving very substantial financial involvements, well knowing that the obligation undertaken in conjunction with several pieces of real estate would create a new additional financial burden upon them.
Second, while it is true that during the first four years, they filed all of the proper tax returns and treated income from the P.C. as wages of an employee, the fact remains that they made no meaningful attempt to meet their obligations in the years in question. The Debtors did not file estimated quarterly returns for their non-wage income. Dr. Landi's very substantial income was used for the purchase of their dream house on Titicus Road, an opulent dream house. The most telling part of this picture was when the Debtors sold their property on Bedford and realized approximately 1.5 million and instead of paying, at least some of it to the Government, used the funds as part of the purchase of their dream house, which required monthly mortgage payments of $23,000 and $80,000 in real estate taxes a year. This was the first gigantic step towards the entire pervasive pattern for a blatant disregard of their obligation to pay the taxes and use the very substantial earnings of the Debtor to feed their uncontrollable appetite for a lavish life-style.
Third, and to further facilitate their lavish lifestyle and feeding upon their seemingly uncontrollable spending from 1994 onward, the Debtors no longer properly allocated their monies earned by Dr. Landi as wages but treated all as non-wage income. They disregarded the separation of the two entities and ran all funds through the P.C. account. This Court is constrained to reject the proposition urged by counsel of the Debtors that this is common practice, and so long as at the end of the tax year, there is a proper allocation between earned income as employment and earned income not as employment, the result is that this practice is permissible. This is true provided that if all income is from non-wages, the taxpayer files the quarterly tax return and pays the estimated taxes (emphasis added). The Debtor did not file nor pay any estimated amounts. Moreover, by not properly reporting the monies earned by the Debtors as wages, the P.C. was relieved of the obligation to withhold and pay employer's payroll tax. To further highlight this scheme, the Debtors claimed a credit for withholding they finally reported as part of Dr. Landi's income as wages, yet little to no withholdings were made from the P.C. or paid over to the Government.
So viewing the totality of the picture, this Court is satisfied that it is proper to infer that the Debtors embarked on an elaborate willful scheme to not live up to the obligations of paying their taxes. Therefore, under Fretz, the facts established by this record clearly support this conclusion. This Court is satisfied that the Government has met its burden.
*183 A separate Final Judgment will be entered in accordance to the foregoing.
NOTES
[1] This number coincides with line 31 of the Debtors' 1040 tax returns as filed.
[2] This number coincides with line 7 of the Debtors' 1040 tax returns as filed (wages represented by a W-2 form).
[3] This number coincides with line 22 (other income) or line 12 (business income) of the Debtors' 1040 tax returns as filed.
[4] This number coincides with either line 54, 53, or 51 (total tax) depending upon the year of the Debtors' 1040 tax returns as filed.
[5] This number coincides with either line 55 or 54 (fed. income tax withheld) depending upon the year of the Debtors' 1040 tax returns as filed, as opposed to line 60 or 62 (total payments applied) to the total tax owed.
[6] This number coincides with either line 66, 64, 65, or 62 (amount you owe) depending upon the year of the Debtors' 1040 tax returns as filed.
[7] This is the amount stated on line 54 of the Debtors' 1990 1040 tax return, although Govt.'s Exh. 1 indicated the higher amount.
[8] This is the amount stated on line 62 of the Debtors' 1990 1040 tax return, which reflects the total amount of payments applied against the total tax due.
[9] This amount is the amount stated on line 54 as opposed to line 60 of the Debtors' 1991 tax return.
[10] This amount is the amount stated on line 54 as opposed to line 60 of the Debtors' 1993 tax return.
[11] This amount is the amount stated on line 31 of the Debtors' 1996 tax return as opposed to the amount on the Govt.'s Exh. 1.
[12] The total is based on the amounts stated in the tax returns and not necessarily as summarized by the Govt.'s Exh. 1.
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29 N.J. 152 (1959)
148 A.2d 313
STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
HAROLD J. WELSCH, DEFENDANT-APPELLANT.
The Supreme Court of New Jersey.
Argued January 19, 1959.
Decided February 16, 1959.
*154 Mr. Harold H. Fisher argued the cause for appellant (Messrs. Shanley & Fisher, attorneys).
Mr. William C. Brudnick, Special Assistant Prosecutor, argued the cause for the State (Mr. Guy W. Calissi, Bergen County Prosecutor, attorney).
The opinion of the court was delivered by WACHENFELD, J.
The defendant was convicted by a jury of committing an act of open lewdness in violation of N.J.S. 2A:115-1. He was fined $200 and sentenced to an indeterminate term at the Bordentown Reformatory. Sentence was suspended, however, upon condition that he submit to psychiatric care.
On appeal, the Appellate Division affirmed. We granted the defendant's petition for certification. The grounds of appeal urged here are substantially the same as those presented below.
The sordid facts as developed at the trial need not be detailed other than as commented on hereafter since the disposition of the cause does not turn on this phase of the appeal.
The incident in question allegedly took place on Sunday, April 28, 1957. The State's case rested entirely upon the testimony of the complaining witness, a married woman, who at the time of the occurrence was accompanied by her six-year-old niece. This testimony was not corroborated in any respect.
The defendant, a married man and the father of three children, took the stand and emphatically denied the charges made against him. He testified as to a certain skin irritation with which he was afflicted and the resulting physical discomfiture plus his attempts to relieve himself therefrom, which he claims brought about the visual misinterpretation testified to by the complaining witness. The existence of dermatitis was corroborated by his wife and a doctor.
The Appellate Division concluded that although there were some inconsistencies in the complaining witness' testimony, *155 her story basically "remained unchanged throughout the cross-examination."
The defendant continues to insist, however, despite the adjudication below, that the verdict of conviction was against the weight of the evidence. He also contends that it was the product of passion and prejudice created in part, if not wholly, by the statements of the prosecutor in summation which stressed the fact that the defendant had not produced character witnesses on his behalf and asserted that his failure to do so created an issue which might be decisive of the case submitted to the jury for determination. It is urged these comments constitute prejudicial and reversible error under our plain error rule, R.R. 1:5-1(a), even though no objection was offered.
As to the defendant's contention that the verdict was contrary to the weight of the evidence because the testimony of the State's only witness was inconsistent and incapable of belief, it is quite apparent from the record that the whole case turned upon the credibility to be given to the testimony of the complaining witness as contrasted with the complete denial of the defendant under oath. Even though there were minor inconsistencies and conflicts in the State's evidence, the issue nevertheless resolved itself into a contest between two versions of the truth, a situation always presenting a jury question.
It may well be that it would seem improbable that a man would act the way the defendant is described by the State as having acted, but this conclusion is buttressed by faith in human nature and experience with the normal standards of human behavior, which unfortunately do not always prevail.
The power of an appellate tribunal to reject findings of a jury has its limitations. It was not intended that appellate courts should interfere with the constitutional right of trial by jury by weighing the evidence and substituting their judgment for that of the jury. Hager v. Weber, 7 N.J. 201, 210 (1951). We will not set aside a verdict merely because in our opinion, upon the same evidence, *156 we might have found otherwise. Boesch v. Kick, 97 N.J.L. 92, 97 (Sup. Ct. 1922); Knickerbocker Ice Co. v. Anderson, 31 N.J.L. 333, 335 (Sup. Ct. 1865). As long as "a verdict * * * rests upon testimony competent to sustain the inference implied in such a finding [it] is ordinarily conclusive" upon us. Hager v. Weber, supra. "* * * [O]ur review upon appeal is aimed only at correcting injustice resulting from obvious failure by the jury to perform its function." State v. Haines, 18 N.J. 550, 565 (1955).
These doctrines are epitomized in our present rule, R.R. 1:5-1(a), that "* * * A verdict of a jury shall not be set aside as against the weight of the evidence unless it clearly and convincingly appears that the verdict was the result of mistake, partiality, prejudice or passion."
We conclude that appellant's first point has no merit.
The entire proof of the State's case came from the lips of one witness, and although the number of witnesses is never controlling, it nevertheless may be a factor for consideration in determining whether the conduct and the remarks of the prosecutor in summation remained within the limits of what constitutes fundamental fairness as defined by our adjudications.
The defendant did not produce any character witnesses, but nevertheless in his summation the prosecutor said:
"And, does anyone come to the stand saying what is this man's reputation for Christian virtue or moral probity? Where did you hear it from anybody? And you have a right to decide this case on those issues, Ladies and Gentlemen."
There are many decisions on the question and they establish beyond doubt that:
"* * * in a criminal case, the prosecution cannot offer evidence of the character or reputation of the defendant unless the defendant himself raises the issue, State v. Raymond, 53 N.J.L. 260, 21 A. 328 (Sup. Ct. 1891); State v. Hauptmann, 115 N.J.L. 412, 436, 180 A. 809, 824 (E. & A. 1935), certiorari denied 296 U.S. 649, 56 S.Ct. 310, 80 L.Ed. 641 (1935); State v. Steensen, 35 N.J. Super. 103 (App. Div. 1955); Michelson v. United States, 335 *157 U.S. 469, 69 S.Ct. 213, 93 L.Ed. 168 (1948); 1 Wigmore, Evidence (3 ed. 1940), § 56, pp. 450, 454." State v. D'Ippolito, 19 N.J. 540, 546 (1955).
In the case last cited this court emphatically and bluntly pointed out, 19 N.J. at page 548:
"The prosecution should never be permitted to turn the defendant's failure to avail himself of the privilege of introducing character evidence in his own behalf into an affirmative weapon against him."
Comparing the admonition in the D'Ippolito case, supra, and the utterances of the prosecutor here, one can hardly escape the conclusion that what we have directly proclaimed should "never be permitted" in a criminal case occurred in the matter before us in a rather unequivocal manner.
But the State urges the subject remarks did not constitute reversible error because (1) there was no objection on the record; (2) the trial judge preserved the "purity" of the proceedings by his general admonition to the jury to disregard all extraneous matters; and (3) defendant's counsel in substance invited the prosecutor's comments by dwelling upon the defendant's good character in his own summation.
Defense counsel in his summation said:
"* * * there isn't one iota of evidence that indicates that he has lived nothing but a clean life. There has been no attack on his past record. * * *"
Again:
"* * * if a man like Mr. Welsch, a perfect record, there is nothing against him in this case if there were, the Prosecutor's Office would have presented it * * *"
And again:
"I ask you, Members of the Jury, to consider this case between the State of New Jersey and Harold Welsch, this young man who has led a fine life up until this point, this unfortunate incident *158 which he is charged with, but I say in view of the fine background, the family he raised, the fact that he had one job and he took another job so he might advance himself and members of the family, I say that alone should create in your minds a reasonable doubt * * *"
These remarks are not contrary to the record before us. It is not disputed that defendant was raising a family and had taken two jobs in order to advance himself and benefit his family. There was no impropriety in stressing these attributes which are reflected in the record.
Certain it was that this emphasis did not open the door for the prosecutor's devastating invasion of the defendant's basic right by incorrectly charging he was under an obligation to prove his reputation "for Christian virtue or moral probity." If the defendant went beyond the record and impliedly made "reputation" an issue, the prosecutor's relief was to object and ask to have the jury instructed according to the law and not to indulge in "retaliation," as urged in the State's brief. See People v. Kirkes, 39 Cal.2d 719, 249 P.2d 1 (Cal. Sup. Ct. 1952); People v. Cook, 148 Cal. 334, 83 P. 43 (Cal. Sup. Ct. 1905); People v. Kramer, 117 Cal. 647, 49 P. 842 (Cal. Sup. Ct. 1897).
The prejudicial effect of the prosecutor's utterance becomes more important in view of the close balance throughout the trial, the case ultimately turning entirely upon the question of credibility. He not only improperly said that no one had come forward to testify to the defendant's good reputation, but he created an issue not sanctioned by the law when he emphasized: "And you have a right to decide this case on those issues, Ladies and Gentlemen." The jury had no such right, but it may well have been induced to convict the defendant by the prosecutor's improper creation of an issue of bad repute. Under the special circumstances of this case, there was plain error of which we must take notice. R.R. 1:5-1(a); State v. D'Ippolito, supra.
There is little assurance that the trial judge's charge, in substance that the case should be decided strictly on its merits, in its present setting cured the prejudicial remarks *159 so firmly implanted by the prosecutor's summation and not specifically referred to by the court.
Reversed and remanded.
For reversal Chief Justice WEINTRAUB, and Justices HEHER, WACHENFELD, BURLING, JACOBS, FRANCIS and PROCTOR 7.
For affirmance None.
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32 F.2d 182 (1929)
STANDARD OIL CO.
v.
ROBINS DRY DOCK & REPAIR CO.
No. 264.
Circuit Court of Appeals, Second Circuit.
April 15, 1929.
*183 Cullen & Dykman, of Brooklyn, N. Y. (Timothy J. Shea and Maximilian Moss, both of Brooklyn, N. Y., of counsel), for appellant.
Kirlin, Woolsey, Campbell, Hickox & Keating, of New York City (Cletus Keating and James H. Herbert, both of New York City, of counsel), for appellee.
Before MANTON, SWAN, and AUGUSTUS N. HAND, Circuit Judges.
AUGUSTUS N. HAND, Circuit Judge (after stating the facts as above).
It is contended by the plaintiff that the appeal should be dismissed, because no order allowing it was obtained; but the bond on appeal was approved. This was enough to cure any irregularity in perfecting the appeal. Brandies v. Cochrane, 105 U. S. 262, 26 L. Ed. 989.
The record contains no bill of exceptions, so that we are confined to a review of errors appearing in the judgment roll. In this case we can only consider whether the complaint is sufficient to support the judgment. Fleischmann Co. v. United States, 270 U. S. 349, 46 S. Ct. 284, 70 L. Ed. 624. The complaint was founded on the primary obligation of the Robins Dry Dock & Repair Company, that had furnished the gangway and had invited the plaintiff's employees to use it, to keep such gangway in a safe condition.
We can see no real distinction between the legal principles involved in this case and in Washington Gaslight Co. v. Dist. of Columbia, 161 U. S. 316, 16 S. Ct. 564, 40 L. Ed. 712, Geo. A. Fuller Co. v. Otis Elevator Co., 245 U. S. 489, 38 S. Ct. 180, 62 L. Ed. 422, and Petition of L. Boyer's Sons Co. (C. C. A.) 25 F.(2d) 602. In all three of those cases a third party had recovered against a person who was under a nondelegable duty to furnish a safe place to such third person, but in each case the primary and affirmative wrong was occasioned by the defendant against which indemnity was sought. In the Washington Gaslight Co. Case, supra, the District of Columbia had been held liable for injuries to a pedestrian caused by a deep and dangerous hole in a street in Washington. This hole was made by a gas box placed in the street by the Washington Gas Company, which had remained open and unrepaired. The District of Columbia notified the gas company to come in and defend the action brought against the District by the injured person. The Supreme Court held that a judgment against the District, rendered after notice to the gas company, and after opportunity afforded it to defend, was conclusive of the liability of the company to the District, and allowed the latter to recover indemnity for the amount that it had been obliged to pay.
In the case at bar the primary obligation of the Robins Dry Dock & Repair Company is set up in the complaint. The judgment for the plaintiff, therefore, is in accordance with that pleading.
It is contended that the complaint should have alleged that Anstee, the person injured, was free from contributory negligence. But the liability of the defendant to Anstee, based upon the installation of a defective gangway and an invitation to use it, was conclusively determined by the state court judgment. The judgment, to the extent of establishing that liability, is binding upon this plaintiff, who had notice and the right to defend. Such was the ruling in the case of Washington Gaslight Co. v. Dist. of Columbia, supra.
The contention that the plaintiff here was bound to allege and prove freedom from contributory negligence as against the defendant is wholly contrary to the theory of Washington Gaslight Co. v. District of Columbia, supra. The whole basis of that decision was not freedom from negligence of the indemnitee but the primary fault of the indemnitor. Union Stockyards Co. v. Chicago, etc., R. Co., 196 U. S. 217, 25 S. Ct. 226, 49 L. Ed. 453, 2 Ann. Cas. 525, differs from *184 the foregoing decision, because the person there seeking indemnity was concurrently negligent.
If Oceanic Steam Navigation Co. v. Campania Transatlantica Espanola, 144 N. Y. at page 668, 39 N. E. 360, can be thought to require different allegations in the complaint, it is not in accordance with decisions binding upon us. Those decisions distinguish between primary and secondary negligence between faults of commission and omission.
The matter which remained open to litigation in the case at bar was the question whether the defective gangway installed by the dry dock company was the primary cause of the injuries to Anstee. The installation of a defective gangway for the use of employees involved active negligence on the part of the dry dock company, whereas the neglect of the Standard Oil Company to inspect the gangway and to warn its employees against danger was a secondary fault of omission. In such circumstances, the plaintiff was entitled to indemnity. Washington Gaslight Co. v. Dist. of Columbia, 161 U. S. 316, 16 S. Ct. 564, 40 L. Ed. 712; Gray v. Boston Gaslight Co., 114 Mass. 149, 19 Am. Rep. 324; Scott v. Curtis, 195 N. Y. 424, 88 N. E. 794, 40 L. R. A. (N. S.) 1147, 133 Am. St. Rep. 811; Petition of L. Boyer's Sons Co. (C. C. A.) 25 F.(2d) 602.
The complaint clearly states facts showing the primary liability on the part of the dry dock company, and the judgment is in conformity with its allegations, which is accordingly affirmed.
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FILED
NOT FOR PUBLICATION JUN 09 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
JAIME LOPEZ-HERNANDEZ, No. 05-76882
Petitioner, Agency No. A072-880-847
v.
MEMORANDUM *
ERIC H. HOLDER, Jr., Attorney General,
Respondent.
On Petition for Review of an Order of the
Board of Immigration Appeals
Submitted May 25, 2010 **
Before: CANBY, THOMAS, and W. FLETCHER, Circuit Judges.
Jaime Lopez-Hernandez, a native and citizen of Mexico, petitions for review
of the Board of Immigration Appeals’ order summarily affirming an immigration
judge’s decision finding him removable for participating in alien smuggling. We
dismiss the petition for review.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
We lack jurisdiction to review Lopez-Hernandez’s unexhausted contentions
regarding his prior counsel’s alleged ineffective assistance, his entitlement to
warning pursuant to Miranda v. Arizona, 384 U.S. 436 (1966), and his right to
counsel. See Barron v. Ashcroft, 358 F.3d 674, 678 (9th Cir. 2004) (no jurisdiction
over legal claims not presented in administrative proceedings below).
PETITION FOR REVIEW DISMISSED.
2 05-76882
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Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
7-23-2007
McCabe v. Ernst Young
Precedential or Non-Precedential: Precedential
Docket No. 06-1318
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2007
Recommended Citation
"McCabe v. Ernst Young" (2007). 2007 Decisions. Paper 648.
http://digitalcommons.law.villanova.edu/thirdcircuit_2007/648
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 06-1318
DANIEL McCABE;
RUSSELL E. McCABE; DAVID MOTOVIDLAK,
Appellants
v.
ERNST & YOUNG, LLP;
NICHOLAS R. TOMS, a/k/a Nic Toms;
HUGO BIERMANN; GREGORY THOMAS;
EDWARDSTONE & COMPANY, INC;
WAYNE CLEVINGER; JOSEPH ROBINSON;
MIDMARK CAPITAL, LP; OTTO LEISTNER;
BUNTER B.V.I. LTD.; GEORGE POWCH;
STEPHEN M. DUFF; CLARK ESTATES, INC.;
RAYMOND BROEK; DONALD ROWLEY;
DOUGLAS L. DAVIS; BARBARA H. MARTORANO;
JACQUI GERRARD
On Appeal from the United States District Court
for the District of New Jersey
D.C. Civil Action No. 01-cv-5747
(Honorable William H. Walls)
Argued January 31, 2007
Before: SCIRICA, Chief Judge, FUENTES
and CHAGARES, Circuit Judges
(Filed July 23, 2007)
STEVEN M. KAPLAN, ESQUIRE (ARGUED)
Kaplan & Levenson
630 Third Avenue
New York, New York 10017
Attorney for Appellants
BRUCE M. CORMIER, ESQUIRE (ARGUED)
Ernst & Young
1l01 New York Avenue, N.W.
Washington, D.C. 20005
Attorney for Appellee Ernst & Young
2
OPINION OF THE COURT
SCIRICA, Chief Judge.
The principal issue in this securities fraud action against
auditors Ernst & Young, LLP is whether plaintiffs presented
sufficient evidence of loss causation to survive a summary
judgment motion. We will affirm the grant of summary
judgment.
I.
A.
Plaintiffs Daniel McCabe, Russell McCabe, and David
Motovidlak (“the ATS Plaintiffs”) had been shareholders and
officers of Applied Tactical Systems, Inc., a closely-held supply
chain management company that was acquired by Vertex
Interactive, Inc., a publicly-traded supply chain management
company. The Merger Agreement was negotiated between
October and December 2000, during which period Vertex’s
stock price fluctuated between $7.66 and $18.50 per share. The
Merger Agreement provided the ATS Plaintiffs would exchange
all their shares of ATS stock for three million unregistered
shares of Vertex common stock, as well as stock options.
Vertex promised to obtain an effective registration of the three
million shares and the shares underlying the options “within
fifteen (15) days of such time as financial results covering at
3
least thirty (30) days of combined operations of Vertex and ATS
have been published by Vertex . . . but in any event no later than
May 14, 2001.” The unregistered shares were restricted from
resale until either (1) their registration or (2) expiration of a one-
year “lockup” period established by SEC regulations, 17 C.F.R.
§ 230.144(d)(1) (2000), whichever occurred first.
The Merger Agreement was signed on December 11,
2000. On that date Vertex’s closing stock price was $8.69 per
share. The merger was scheduled to close on December 29,
2000. In the Merger Agreement, Vertex made several
representations, including that: (1) there were no pending or
threatened legal claims against it that could reasonably be
expected to have a material adverse effect on Vertex’s financial
performance or the merger; (2) all of its SEC filings contained
no untrue statements and omitted no material fact necessary to
make the filings not misleading; (3) the financial statements
included in its SEC filings were prepared in accordance with
Generally Accepted Accounting Principles (“GAAP”) and fairly
presented Vertex’s financial position; and (4) since the date of
its SEC filings, Vertex’s financial position had undergone no
material change.
Between the merger’s signing and closing dates, Vertex
informed the ATS Plaintiffs that Ernst & Young was auditing
Vertex’s financial statements for the year ending September 30,
2000. The audited financial statements and Ernst & Young’s
unqualified opinion were scheduled to be published in Vertex’s
annual report (to be filed with its SEC Form 10-K), before the
4
December 29 closing date. Ernst & Young knew the ATS
Plaintiffs would be reading and relying on the audit results
before deciding whether to close the merger. On December 19,
Ernst & Young issued an unqualified audit opinion on Vertex’s
financial statements for the year ending September 30, 2000.
The audit opinion certified that Vertex’s financial statements
were prepared in accordance with GAAP, audited in accordance
with Generally Accepted Auditing Standards (“GAAS”), and
fairly presented Vertex’s financial position in all material
respects.
The merger closed as scheduled on December 29, 2000.
On that date Vertex’s stock price had dropped to $6.25 per
share. Subsequently, Vertex failed to meet its earnings and
revenue targets by a wide margin, and had difficulty integrating
ATS and other acquired companies. Vertex failed to register the
ATS Plaintiffs’ shares by the promised deadline of May 14,
2001 (by which time Vertex’s stock price had declined to $2.48
per share). The parties disputed the cause of Vertex’s financial
problems. Vertex contended that “as a result of the dramatic
downturn in high tech stocks and the generally weak economy,
[it] found itself in a ‘no growth’ market.” McCabe v. Ernst &
Young, No. 01-5747, 2006 WL 42371, at *2 (D.N.J. Jan. 6,
2006). The ATS Plaintiffs blamed a variety of factors,
specifically “Vertex’s (a) failure to pay its vendors resulting in
the inability to fulfill customer orders; (b) failure to properly
manage its expenses; (c) breach of its various agreements to
make payments and to register the shares of stock used as
5
consideration in various acquisitions; and (d) failure to properly
manage its business.” Id.
Because of Vertex’s registration default, the ATS
Plaintiffs were unable to begin selling their Vertex shares until
early 2002, after the one-year SEC lockup period had expired.
By June 28, 2002, they had sold all their Vertex shares (which
were never registered) in private transactions, realizing gross
proceeds of approximately $940,000. Vertex’s final stock price,
immediately before its de-listing, was $0.07 per share.
The ATS Plaintiffs alleged it was only after the merger
closed that they discovered Vertex had defaulted on similar
registration obligations in the past; specifically, Vertex had
failed timely to register with the SEC: (1) 1.3 million Vertex
shares used as consideration for its acquisition of
Communication Services International, Inc.; (2) 400,000 Vertex
shares used as consideration for its acquisition of Positive
Development, Inc.; and (3) 3 million shares in a private
placement. The ATS Plaintiffs also alleged it was only after
closing that they learned that former shareholders of
Communication Services International and Positive
Development had threatened to sue both Vertex and Ernst &
Young over the registration defaults.1 Additionally, the ATS
1
Former shareholders of Communication Services
International and Positive Development had threatened Vertex
with litigation over its registration defaults at least as early as
November 2000. Former shareholders of Communication
6
Plaintiffs allegedly only then discovered that the nearly five
million shares involved in Vertex’s prior registration defaults
were first exposed to market sales only when they were
eventually registered in February 2001 (five months after
negotiation of the price Vertex would pay for ATS) rather than
in September 2000 (before the negotiations). The ATS
Plaintiffs alleged this meant Vertex was “exposed to over $25
million in related contingent liabilities” that they were unaware
of when they agreed to the merger. ATS Br. 10.
Services International filed suit against Vertex in United States
District Court for the District of New Jersey on September 7,
2001, alleging breach of contract, fraud, and negligent
misrepresentation. Compl., Henley et al. v. Vertex Interactive
et al., No. 01-4275 (D.N.J. Sept. 7, 2001). Communication
Services International’s former president stated in a deposition
that the plaintiffs reached a settlement with Vertex “[t]owards
the end of January . . . 2002 . . . .” (J.A. 558.) Former
shareholders of Positive Development filed suit against Vertex
in California Superior Court for the County of Los Angeles on
November 20, 2001, alleging fraud, promissory fraud, breach of
fiduciary duty, and negligent misrepresentation. Am. Compl. ¶
123, McCabe, No. 01-5747 (D.N.J. Mar. 21, 2002). Vertex
disclosed the Positive Development lawsuit in a January 25,
2002, Form 10-K filing with the SEC. Positive Development’s
former president stated in a deposition that the plaintiffs reached
a settlement agreement with Vertex at some point, but its terms
were confidential.
7
Neither Vertex’s financial statements nor Ernst &
Young’s audit opinion (nor any of Vertex’s prior SEC filings)
disclosed that Vertex had defaulted on prior registration
obligations or had been threatened with litigation as a result.
The ATS Plaintiffs alleged Ernst & Young had known of these
prior registration defaults and threatened lawsuits, but
consciously decided not to disclose them “in plain violation of
GAAP and GAAS.” Id. at 11. The ATS Plaintiffs also alleged
that, had they known of the prior registration defaults and
associated threats of litigation, they would not have closed the
merger. In a deposition, the Ernst & Young partner in charge of
the Vertex audit conceded that if he had been in the ATS
Plaintiffs’ position, he, too, would have wanted to have that
information before deciding whether to close the merger.
B.
After unsuccessful arbitration with Vertex, the ATS
Plaintiffs sued both Vertex and Ernst & Young in December
2001. After negotiating a $4 million settlement with Vertex in
November 2002, the ATS Plaintiffs proceeded with the three
causes of action against Ernst & Young in their Amended
Complaint: violation of § 10(b) of the Securities Exchange Act
of 1934; common law fraud; and negligent misrepresentation.
All three claims were based on the same alleged omissions by
Ernst & Young—that Vertex had previously failed to register
stock and had been threatened with lawsuits as a result. The
ATS Plaintiffs contended this information should have been
disclosed in Vertex’s 2000 financial statements, and that they
8
would not have closed the merger had they known it. Both
parties presented expert testimony on whether the alleged
omissions had actually caused the ATS Plaintiffs’ economic
loss.
Ernst & Young submitted deposition testimony and an
expert report from University of Pittsburgh economics professor
Kenneth Lehn that disclosure of Vertex’s prior registration
defaults had no material effect on the price of Vertex stock, and
so the ATS Plaintiffs had incurred no damages as a result of the
omissions. Lehn stated that the market did not become aware of
any prior registration defaults by Vertex (or associated threats of
litigation) until January 2002, when Vertex publicly disclosed
that an action had been commenced against it by former
shareholders of Positive Development. He opined that, even
then, the price of Vertex stock did not change by a statistically
significant amount, demonstrating investors did not consider the
information material. “In other words,” the District Court
summarized Lehn’s view, the ATS Plaintiffs “suffered zero
damages as a result of the alleged fraud.” McCabe, 2006 WL
42371, at *3. Lehn also stated the ATS Plaintiffs could have
realized between $4.9 and $5.7 million had they been able to sell
their Vertex shares by the May 14, 2001, registration deadline.
The ATS Plaintiffs contended this was tantamount to an
admission that they suffered an economic loss of at least $4.76
million (the estimated May 14, 2001, sale price minus the
$940,000 the ATS Plaintiffs were eventually able to obtain from
the sale of their Vertex shares) because of Ernst & Young’s
9
omission. But the District Court concluded Lehn had done
nothing more than calculate what may have occurred by a date
certain, rather than attribute any responsibility to Ernst &
Young.
The ATS Plaintiffs’ expert, Fordham University finance
professor John Finnerty, approached the question of loss
causation in a different manner: using two common valuation
methodologies, he estimated that ATS had an intrinsic value of
between $34.49 million and $47.78 million at the time of the
merger’s closing. In his expert report, Finnerty noted the
transaction with Vertex could be assigned an implied value of
$26 million (because the ATS Plaintiffs were to receive three
million shares of Vertex common stock, which was trading at
$8.69 per share on the date the Merger Agreement was signed).
But in his subsequent deposition he stated: “I was asked to value
ATS, and that’s what I valued. Nothing in my report implies
anything about the value of the Vertex shares. There’s an
implied value which I cite. I valued ATS.” Finnerty stated he
had no opinion on the value of either the shares or stock options
the ATS Plaintiffs received, but that “the McCabes sold the
company too cheaply. I think it was worth more than the price
they received.” But he added: “I think that if I were to value all
of those components [of the consideration the ATS Plaintiffs
received] and add them up, I believe I would get a value within
the [$34.49–$47.78 million] range I’ve estimated. I didn’t try to
do that, but I believe that to be the case.”
Following discovery, Ernst & Young moved for summary
10
judgment on all three causes of action. The District Court
granted the motion, finding the ATS Plaintiffs had failed to
create a genuine issue of material fact as to loss causation. It
stated the facts alleged by the ATS Plaintiffs “suggest
transaction causation, not loss causation.” McCabe, 2006 WL
42371, at *8. The ATS Plaintiffs timely appealed.
II.
A.
The District Court had federal question jurisdiction under
28 U.S.C. § 1331 over the ATS Plaintiffs’ Securities Exchange
Act § 10(b) claim and supplemental jurisdiction under 28 U.S.C.
§ 1367 over their related fraud and negligent misrepresentation
claims. We have jurisdiction under 28 U.S.C. § 1291.
B.
We exercise de novo review of the District Court’s grant
of summary judgment. See, e.g., Slagle v. County of Clarion,
435 F.3d 262, 263 (3d Cir. 2006). Summary judgment is proper
where the moving party has established “there is no genuine
issue as to any material fact” and “the moving party is entitled
to judgment as a matter of law.” Fed. R. Civ. P. 56(c). To
demonstrate that no issue is in dispute as to any material fact,
the moving party must show that the non-moving party has
failed to establish one or more essential elements of its case on
which the non-moving party has the burden of proof at trial.
Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). To
11
survive the motion, the non-moving party must show specific
facts such that a reasonable jury could find in its favor. See Fed.
R. Civ. P. 56(e). “While the evidence that the non-moving party
presents may be either direct or circumstantial, and need not be
as great as a preponderance, the evidence must be more than a
scintilla.” Hugh v. Butler County Family YMCA, 418 F.3d 265,
267 (3d Cir. 2005) (citing Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 251 (1986)). A court should view the facts in the light
most favorable to the non-moving party and draw all reasonable
inferences in that party’s favor. Id.
In interpreting state law in the absence of a controlling
decision from a state’s highest court, “it is the duty of the
[federal court] to ascertain from all the available data what state
law is and apply it.” West v. AT&T Co., 311 U.S. 223, 237
(1940).
III.
Section 10(b) of the Securities Exchange Act forbids (1)
the “use or employ[ment of] . . . any manipulative or deceptive
device or contrivance,” (2) “in connection with the purchase or
sale of any security,” and (3) “in contravention of [SEC] rules
and regulations.” 15 U.S.C. § 78j(b) (2006). SEC regulations,
in turn, make it unlawful “[t]o make any untrue statement of a
material fact or to omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances
under which they were made, not misleading” in connection
with the purchase or sale of any security. 17 C.F.R. § 240.10b-
12
5(b) (2006) (“Rule 10b-5”).
The Supreme Court has identified the six required
elements of a Securities Exchange Act § 10(b) private damages
action:
(1) a material misrepresentation (or omission);
(2) scienter, i.e., a wrongful state of mind;
(3) a connection with the purchase or sale of a
security;
(4) reliance, often referred to in cases involving
public securities markets (fraud-on-the-market
cases) as “transaction causation”;
(5) economic loss; and
(6) “loss causation,” i.e., a causal connection
between the material misrepresentation and the
loss.
Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 341–42 (2005)
(citations omitted). See also In re Suprema Specialties, Inc. Sec.
Litig., 438 F.3d 256, 275 (3d Cir. 2006). The common law loss
causation element is codified as a requirement in the Private
Securities Litigation Reform Act (“PSLRA”): “the plaintiff shall
have the burden of proving that the act or omission of the
defendant . . . caused the loss for which the plaintiff seeks to
recover damages.” 15 U.S.C. § 78u-4(b)(4) (2006). See also
Berckeley Inv. Group, Ltd. v. Colkitt, 455 F.3d 195, 208 n.15 (3d
Cir. 2006).
A.
13
We have stated that “[u]nder Rule 10b-5 causation is
two-pronged.” Newton v. Merrill Lynch, Pierce, Fenner &
Smith, Inc., 259 F.3d 154, 172 (3d Cir. 2001). A plaintiff must
show both: (1) “transaction causation” (or “reliance”), i.e., that
but for the fraudulent misrepresentation or omission, the
investor would not have purchased or sold the security; and (2)
“loss causation,” i.e., that the fraudulent misrepresentation or
omission actually caused the economic loss suffered. Id. at
172–73. In addressing § 10(b) claims, and especially their loss
causation element, we have distinguished between “typical” and
“non-typical” claims. See, e.g., EP MedSystems, Inc. v.
EchoCath, Inc., 235 F.3d 865, 884 (3d Cir. 2000) (“In
considering loss causation, it is important to recognize . . . how
this case differs from the usual securities action.”).2 But we
have consistently required that both transaction causation and
loss causation must be established in § 10(b) cases, and have
2
We noted in EP MedSystems, 235 F.3d at 871, that § 10(b)
claims are typically brought in securities actions in which a
plaintiff claims a defendant made material public
misrepresentations or omissions in order to affect the price of its
publicly-traded stock, i.e., to perpetrate “fraud on the market.”
But EP MedSystems and Berckeley involved § 10(b) claims
alleging misrepresentations or omissions that induced another
party into entering a private transaction. Nevertheless,
Berckeley reaffirms that, fundamentally, the same loss causation
analysis occurs in both typical and non-typical § 10(b) cases.
See infra, Part III.A.
14
never allowed the elements to merge.
“Similar to the concept of proximate cause in the tort
context, loss causation focuses on whether the defendant should
be held responsible as a matter of public policy for the losses
suffered by the plaintiff.” Berckeley, 455 F.3d at 222.3 A §
10(b) plaintiff must show both that (1) the plaintiff entered the
transaction at issue in reliance on the claimed misrepresentation
or omission (transaction causation) and (2) the defendant
misrepresented or omitted the very facts that were a substantial
factor in causing the plaintiff’s economic loss (loss causation).
1.
It is more difficult to categorize the required loss
causation showing in non-typical § 10(b) actions such as this
one than it is in typical § 10(b) actions. In a typical “fraud-on-
3
The loss causation requirement limits the circumstances in
which an investor can sue over a failed investment, so that the
individual allegedly responsible for the misrepresentation or
omission does not become an insurer against all the risks
associated with that investment. “Otherwise, for example, a
seller who fraudulently induced a purchase of securities in early
October 1987 would have become an insurer against the
precipitous price decline caused in large part by the market crash
on October 19.” 3 Thomas Lee Hazen, Treatise on the Law of
Securities Regulation § 12.11[3] (5th ed. 2005) [hereinafter
Hazen, Securities Regulation].
15
the-market” § 10(b) action, the plaintiff shareholder alleges that
a fraudulent misrepresentation or omission has artificially
inflated the price of a publicly-traded security, with the plaintiff
investing in reliance on the misrepresentation or omission; to
satisfy the loss causation requirement, the plaintiff must show
that the revelation of that misrepresentation or omission was a
substantial factor in causing a decline in the security’s price,
thus creating an actual economic loss for the plaintiff.
Semerenko v. Cendant Corp., 223 F.3d 165, 184–85 (3d Cir.
2000). See also EP MedSystems, 235 F.3d at 884 (collecting
typical § 10(b) cases).
But in a non-typical § 10(b) action, where the plaintiff
does not simply allege that the price of a publicly-traded security
has been affected, the factual predicates of loss causation fall
into less of a rigid pattern. For example, the plaintiff
corporation in EP Medsystems alleged the defendant corporation
had violated § 10(b) by inducing plaintiff to buy shares in
defendant through misrepresentations about “imminent”
business opportunities that were actually non-existent. 235 F.3d
at 869. We held the plaintiff’s argument it had been “induced
to make an investment of $1.4 million which turned out to be
worthless” was a sufficient allegation of loss causation to
survive a motion to dismiss. Id. at 884. And in Newton, a
putative class of investors sued defendant broker for violating §
10(b) by executing trades at stock prices established by an
industry-wide system rather than on the reasonably available
terms most favorable to plaintiffs. 259 F.3d at 162. We stated
16
that the difference between (1) the price at which a trade had
been executed and (2) the price at which it could reasonably
have been executed could be a sufficient showing of loss
causation. Id. at 181 n.24. The ATS Plaintiffs’ § 10(b) claim is
clearly a non-typical one. In return for selling their ATS shares
in a private transaction, they received consideration that
included unregistered shares of and options for Vertex stock.
That the ATS Plaintiffs could not re-sell those shares for a year
unless Vertex registered them further distinguished the ATS
Plaintiffs from the typical purchaser of publicly-traded securities
who claims to have been misled into making the purchase by
fraud on the market.
In order to satisfy the loss causation requirement in both
typical and non-typical § 10(b) actions, the plaintiff must show
that the defendant misrepresented or omitted the very facts that
were a substantial factor in causing the plaintiff’s economic loss.
2.
The loss causation inquiry asks whether the
misrepresentation or omission proximately caused the economic
loss. See Semerenko, 223 F.3d at 185, 187 (stating “an investor
must . . . establish that the alleged misrepresentations
proximately caused the decline in the security’s value to satisfy
the element of loss causation” and clarifying the loss causation
requirement would not be met where “the misrepresentations
were not a substantial factor”). In EP MedSystems, we
characterized Semerenko’s as “a practical approach, in effect
17
applying general causation principles.” 235 F.3d at 884.
Adopting this “practical approach,” we considered the following
loss causation allegations in EP MedSystems: the defendant
medical research and development company had told the
corporate investor plaintiff that contracts between the company
and four prominent corporations to market the company’s new
women’s health products were “imminent,” when in fact the
company had never been on the verge of entering any such
marketing contract; the company had provided the investor with
sales projections (necessarily based on consummation of the
aforementioned contracts) that showed the company would
enjoy liquidity for two years; the statements and sales
projections had induced the investor to purchase 280,000 shares
of the company’s preferred stock for $1.4 million, in the
expectation of profiting from the “imminent” contracts; and the
investor subsequently discovered that, because the “imminent”
contracts were actually non-existent, the company would run out
of operating funds within six months of the investment, which
thus turned out to be worthless. We held the plaintiff’s
allegation of loss causation was sufficient to survive a motion to
dismiss.4
4
We emphasized that loss causation “becomes most critical
at the proof stage,” EP MedSystems, 235 F.3d at 884, and also
stated: “Although . . . the allegation that [plaintiff] ‘sustained
substantial financial losses as a direct result of the
aforementioned misrepresentations and omissions on the part of
[defendant]’ could have more specifically connected the
18
In Berckeley, 455 F.3d at 223, another non-typical §
10(b) case, we held the loss causation requirement had not been
satisfied because plaintiff had failed to establish a “direct causal
nexus between the misrepresentation and the plaintiff’s
economic loss.” Plaintiff Colkitt, the chairman and principal
shareholder of a corporation, entered a private agreement to sell
convertible debentures to defendant, an offshore financing
entity: Colkitt would receive $2 million in exchange for forty
misrepresentation to the alleged loss, i.e., investment in a
company with little prospects, when we draw all inferences in
plaintiff’s favor, we conclude that MedSystems has adequately
alleged loss causation,” id. at 885. The procedural posture of
EP MedSystems necessitated a different approach to the loss
causation requirement than here on summary judgment, where
discovery has taken place. See 3 Hazen, Securities Regulation
§ 12.11[3] (“Loss causation issues can be highly factual, thus
frequently precluding judgment on the pleadings.”); see also
Dura, 544 U.S. at 346–47 (holding the plaintiff had not
adequately alleged loss causation and noting that, in the context
of a motion to dismiss, a plaintiff is only required to give a
“‘short and plain statement’ . . . describing the loss caused by
the defendants’ . . . misrepresentations”); Louis Loss & Joel
Seligman, Fundamentals of Securities Regulation 276 (Supp.
2007) (“At its core, Dura is largely a case about pleading. The
Court concluded its analysis by highlighting how little would
have been necessary by the plaintiffs to have effectively pled
this cause of action.”).
19
convertible debentures; and in lieu of repayment, the offshore
entity was entitled to convert up to 50% of its debentures into
unregistered shares in the corporation, to be issued by Colkitt.
The number of shares the offshore entity was entitled to obtain
depended on the market price of the corporation’s stock. In the
agreement, the offshore entity warranted that all subsequent
sales of its debentures or shares would be undertaken in
accordance with federal securities law registration requirements.
Soon after the agreement closed, Colkitt accused the
offshore entity of short-selling in order to deflate the market
price of the corporation’s stock, so that it could obtain more
shares from him upon conversion of its debentures. In
retaliation, when the time came for Colkitt to convert the
unregistered shares and thereby repay his debt, he converted
only a small percentage of the shares the offshore entity
requested, breaching the agreement. Both parties filed suit. One
of Colkitt’s arguments on summary judgment was that he was
justified in not complying with the agreement because the
offshore entity made material misrepresentations in the
agreement to induce Colkitt into entering it, in violation of §
10(b). Specifically, Colkitt contended: securities laws required
the offshore entity to file a registration statement before it could
sell the shares it had purchased from him; the offshore entity
warranted it would comply with securities laws in subsequent
sales of the shares; the offshore entity later sold the still-
unregistered shares; and therefore, because the offshore entity
had intended to do this all along, its representations in the
20
agreement that it would comply with applicable securities laws
were misrepresentations.
In order to establish the loss causation element of his §
10(b) claim, Colkitt contended his shares in the corporation lost
value as a direct and proximate result of the offshore entity’s
misrepresentations. We rejected this argument, noting Colkitt
had (1) himself alleged that the corporation’s stock price had
decreased because of short-selling by the offshore entity, and (2)
presented no evidence connecting the stock price to the
misrepresentations.
Colkitt’s complaint asserts that his NMFS share
holdings lost value because of Berckeley’s alleged
misrepresentation. We disagree. Based on the
record before us, there is absolutely no connection
between the price decrease in NMFS shares and
Berckeley’s unrelated alleged misrepresentation
as to its intent to comply with offshore
registration requirements. . . . We hold that
Colkitt failed to set forth sufficient facts that the
precipitous loss in value in his NMFS share
holdings was proximately caused by Berckeley’s
alleged misrepresentation. There is no evidence
in the record that the decline in the price per share
of NMFS stock was connected in any manner to
alleged misrepresentations regarding Berckeley’s
intent to evade Section 5 registration requirements
....
21
Berckeley, 455 F.3d at 223–24.5
3.
The Court of Appeals for the Fifth Circuit has offered a
concise statement of what is required to show that a
misrepresentation or omission proximately caused an economic
loss:
The plaintiff must prove . . . that the untruth was
in some reasonably direct, or proximate, way
responsible for his loss. The [loss] causation
requirement is satisfied in a Rule 10b-5 case only
if the misrepresentation touches upon the reasons
for the investment’s decline in value. If the
investment decision is induced by misstatements
5
Colkitt made two additional § 10(b) claims, contending that,
as a direct and proximate result of the offshore entity’s
misrepresentations, he suffered damages in the form of (1) the
sale of shares in the corporation to the offshore entity at a 17%
discount from their market value and (2) the possible
requirement to pay interest and penalties on the outstanding
debentures under the agreement. We remanded these claims
because record evidence on loss causation was “unclear” as to
them. Berckeley, 455 F.3d at 223 n.25. But we noted the
remand was “only a Pyrrhic victory for Colkitt, who will not be
able to recover his largest category of damages from Berckeley,
which is the drop in stock prices . . . .” Id. at 224 n.27.
22
or omissions that are material and that were relied
on by the claimant, but are not the proximate
reason for his pecuniary loss, recovery under the
Rule is not permitted.
Huddleston v. Herman & MacLean, 640 F.2d 534, 549 (5th Cir.
1981), aff’d in part and rev’d in part on other grounds, 459 U.S.
375 (1983). See also Berckeley, 455 F.3d at 222 (“[T]he loss
causation element requires the plaintiff to prove ‘that it was the
very facts about which the defendant lied which caused its
injuries.’”) (quoting Caremark, Inc. v. Coram Healthcare Corp.,
113 F.3d 645, 648 (7th Cir. 1997)). This approach has been
advocated by some scholars, as well:
[I]f false statements are made in connection with
the sale of corporate stock, losses due to a
subsequent decline in the market, or insolvency of
the corporation brought about by business
conditions or other factors in no way relate[d] to
the representations will not afford any basis for
recovery. It was only where the fact misstated
was of a nature calculated to bring about such a
result that damages for it can be recovered.
W. Page Keeton et al., Prosser & Keeton on the Law of Torts §
110 (5th ed. 1984). See also Dane A. Holbrook, Measuring and
Limiting Recovery Under Rule 10b-5: Optimizing Loss
Causation and Damages in Securities Fraud Litigation, 39 Tex.
J. Bus. L. 215, 260–62 (2003) (“The materialization of risk
23
approach requires plaintiffs to prove that the materialization of
an undisclosed risk caused the alleged loss. . . . [C]ourts
utilizing this approach will not compensate a plaintiff who
assumes the risk of an intervening factor. . . . [This] approach
most appropriately balances the interests of plaintiffs and
defendants.”).
We believe this approach is consistent with our loss
causation jurisprudence in Berckeley, Newton, and EP
Medsystems. Therefore, to make the requisite loss causation
showing, the ATS Plaintiffs must show that Vertex’s prior
registration defaults and consequent litigation risks (the very
facts Ernst & Young allegedly omitted) were a substantial factor
in causing the ATS Plaintiffs’ economic loss.6
6
This standard is consistent with the district court cases cited
in the ATS Plaintiffs’ brief. In Rosen v. Communication
Services Group, Inc., 155 F. Supp. 2d 310 (E.D. Pa. 2001),
plaintiffs claimed they were induced to purchase convertible
debentures from defendant in reliance on defendant’s repeated
promises that its company would go public (a “liquidity event”
that would have converted the debentures into common stock);
plaintiffs attributed their damages to defendant’s failure to go
public (the very fact misrepresented), and the court, relying on
EP MedSystems, found this a sufficient allegation of loss
causation to overcome a motion to dismiss, id. at 321. See also
In re DaimlerChrysler AG Sec. Litig., 294 F. Supp. 2d 616,
629–30 (D. Del. 2003) (denying summary judgment because
24
B.
Before addressing the adequacy of the ATS Plaintiffs’
loss causation showing here, we address two points of their
argument that warrant further discussion.
1.
First, the ATS Plaintiffs rely on EP MedSystems to
contend that “plaintiffs must prove . . . that [Ernst & Young’s]
misstatements and omissions . . . were causally linked to . . . the
loss of ownership of ATS.” ATS Br. 22. Their argument is that
they can satisfy the loss causation requirement by showing a
causal nexus between (1) Ernst & Young’s alleged omissions
and (2) the ATS Plaintiffs’ decision to close the merger (which
is when they gave up their ATS shares). But by focusing only
on whether the ATS Plaintiffs were induced into the transaction
by Ernst & Young’s alleged omissions, this argument
impermissibly conflates loss causation with transaction
causation, rendering the loss causation requirement meaningless.
The ATS Plaintiffs essentially admit this is the approach they
advocate: “Courts have acknowledged that where the omission
of collateral facts fraudulently induces a transaction that would
evidence created a genuine issue as to whether defendant’s
mischaracterization of a transaction as being a merger of equals
rather than an acquisition prevented plaintiff from obtaining
control premium it would have received had the transaction been
properly characterized).
25
not have otherwise taken place, as in this case, loss causation
and transaction causation ‘effectively merge.’” Id. at 20 n.7.
The Supreme Court recently reiterated that a § 10(b)
plaintiff must show both loss causation and transaction
causation. Dura, 544 U.S. at 341–42. And even in non-typical
§ 10(b) cases, where we have called for a practical approach to
loss causation, this Court has consistently distinguished loss
causation from transaction causation: we have required both loss
causation and transaction causation to be established, and have
analyzed them separately. See, e.g., Newton, 259 F.3d at 174–77
(analyzing transaction causation separately from loss causation);
EP MedSystems, 235 F.3d at 882–83 (same).7 This is because
7
The Courts of Appeals for the Second and Ninth Circuits
have held that, in the limited circumstance of a defendant broker
fraudulently inducing a plaintiff investor to purchase securities
in order to “churn” plaintiff’s portfolio and generate
commissions, plaintiff need not show loss causation to make a
§ 10(b) claim, as long as the transaction causation requirement
is met: “The plaintiff . . . should not have to prove loss causation
where the evil is not the price the investor paid for a security,
but the broker’s fraudulent inducement of the investor to
purchase the security.” Hatrock v. Edward D. Jones & Co., 750
F.2d 767, 773 (9th Cir. 1984). In Hatrock, a stock broker
repeatedly made misrepresentations about upcoming corporate
takeovers, encouraging clients to engage in repeated sale and re-
acquisition of certain stocks (whose value steadily declined)
26
the two prongs of causation in § 10(b) cases are rooted in
traditional common law principles, and serve different purposes:
purely so that the broker could generate commissions. The court
stated: “the customer may hold the broker liable for churning
without proving loss causation.” Id. See also Chasins v. Smith,
Barney & Co., 438 F.2d 1167, 1173 (2d Cir. 1970) (“The issue
is not whether Smith, Barney was actually manipulating the
price on Chasins or whether he paid a fair price, but rather the
possible effect of disclosure of Smith, Barney’s market-making
role on Chasins’ decision to purchase at all on Smith, Barney’s
recommendation. It is the latter inducement to purchase by
Smith, Barney without disclosure of its interest that is the basis
of this violation . . . .”). The Ninth Circuit has emphasized the
narrowness of this exception. See Levine v. Diamanthuset, Inc.,
950 F.2d 1478, 1486 n.7 (9th Cir. 1991) (“We decline to [apply
the Hatrock exception here] because the exception appears
capable of swallowing the rule. We therefore view the Hatrock
exception as limited to the facts of that case, which involved
churning of trading accounts by brokers.”); see also Bastian v.
Petren Res. Corp., 681 F. Supp. 530, 535 (N.D. Ill. 1988) (citing
Hatrock and Chasins and stating that “the courts which have
rejected a ‘loss causation’ requirement have done so in cases
involving a particular and special form of § 10(b)
violation—stock broker ‘churning’ of client accounts”). We
cited Hatrock in dicta in Berckeley, but this Court has never
found such an exception applicable.
27
It must be remembered that, as in other areas of
the law, causation embodies two distinct
concepts: (1) cause in fact and (2) legal cause.
Legal cause is frequently dealt with in terms of
proximate cause. Cause-in-fact questions are
frequently stated in terms of the sine qua non rule:
but for the act or acts complained of, the injury
would not have occurred. Legal cause represents
the law’s doctrinal basis for limiting liability even
though cause in fact may be proven. . . .
Causation in securities law involves the same
analysis of cause in fact and legal cause that was
developed under the common law.
3 Thomas Lee Hazen, Treatise on the Law of Securities
Regulation § 12.11[1] (5th ed. 2005). See also Louis Loss &
Joel Seligman, Fundamentals of Securities Regulation 276
(Supp. 2007) (“The Supreme Court decision in Dura was
notable for its close reliance on common law concepts . . . .”).
We have never suggested that the loss causation inquiry
may “effectively merge” with the transaction causation inquiry.
In Berckeley (a non-typical § 10(b) decision) we stated that
“[l]oss causation is a more exacting standard” than transaction
causation. 455 F.3d at 222. That is because “‘[t]he loss
causation inquiry typically examines how directly the subject of
the fraudulent statement caused the loss, and whether the
resulting loss was a foreseeable outcome of the fraudulent
statement.’” Id. (quoting Suez Equity Investors, L.P. v. Toronto-
28
Dominion Bank, 250 F.3d 87, 96 (2d Cir. 2001)) (alteration in
Berckeley). “[T]he loss causation element requires the plaintiff
to prove ‘that it was the very facts about which the defendant
lied which caused its injuries.’” Id. (quoting Caremark, 113
F.3d at 648).
The ATS Plaintiffs rely on Marbury Management, Inc. v.
Kohn, 629 F.2d 705 (2d Cir. 1980), in which investors sued a
brokerage house for violating § 10(b) after they had purchased
and retained securities (whose value subsequently declined) on
the advice of a trainee who misrepresented himself as a licensed
broker and portfolio management specialist. The value of the
securities did not decline because of the trainee’s
misrepresentation, but the Court of Appeals for the Second
Circuit nevertheless held that the plaintiffs had satisfied the loss
causation requirement. The majority wrote that, though the case
was “not one in which a material misrepresentation of an
element of value intrinsic to the worth of the security is shown
to be false,” the misrepresentation nevertheless proximately
caused plaintiffs’ economic loss, because it was foreseeable that
the trainee’s false credentials would have induced them to
purchase and retain the stocks he recommended despite
“misgivings prompted by the market . . . .” Id. at 708. The
dissent, however, wrote that the loss causation requirement had
not been met:
In straining to reach a sympathetic result,
the majority overlooks a fundamental principle of
causation which has long prevailed under the
29
common law of fraud and which has been applied
to comparable claims brought under the federal
securities acts. This is, quite simply, that the
injury averred must proceed directly from the
wrong alleged and must not be attributable to
some supervening cause. This elementary rule
precludes recovery in the case at bar since Kohn’s
misrepresentations as to his qualifications as a
broker in no way caused the decline in the market
value of the stocks he promoted.
Id. at 716–17 (Meskill, J., dissenting). District courts within this
Circuit have identified the majority opinion in Marbury
Management as an outlier inconsistent with our precedents, and
have instead followed Judge Meskill’s dissent.8
8
See Edward J. DeBartolo Corp. v. Coopers & Lybrand, 928
F. Supp. 557, 562 (W.D. Pa. 1996) (citing Marbury
Management for the minority view that no showing of loss
causation is required where a showing of transaction causation
has been made and citing Judge Meskill’s dissent as providing
the “rationale for requiring loss causation”); Hartman v. Blinder,
687 F. Supp. 938, 943 n.5 (D.N.J. 1987) (stating Marbury
Management “found loss causation in a case where the facts
would seem to support only a finding of transaction causation”
and that “[t]he ‘vehement dissent’ of Judge Meskill has been
lionized”); In re Catanella and E.F. Hutton & Co. Sec. Litig.,
583 F. Supp. 1388, 1417 (E.D. Pa. 1984) (“I find the view
30
To the extent Marbury Management conflates the loss
causation and transaction causation requirements in § 10(b)
cases, it is contrary to our jurisprudence and, more importantly,
to the Supreme Court’s recent decision in Dura. See Dura, 544
U.S. at 341–42 (stating a § 10(b) claim’s “basic elements”
include both transaction causation and loss causation). We also
note the Court of Appeals for the Second Circuit has apparently
disavowed this aspect of Marbury Management. In Lentell v.
Merrill Lynch & Co., 396 F.3d 161, 172 (2d Cir. 2005), the
court began its discussion of loss causation by stating: “[i]t is
long settled that a securities-fraud plaintiff must prove both
transaction and loss causation.” In order to establish loss
causation, it said, “‘a plaintiff must allege . . . that the subject of
the fraudulent statement or omission was the cause of the actual
loss suffered,’ i.e., that the misstatement or omission concealed
something from the market that, when disclosed, negatively
affected the value of the security.” Id. at 173 (quoting Suez
Equity, 205 F.3d at 95) (alteration in Lentell). The court stated
that its cases “require both that the loss be foreseeable and that
the loss be caused by the materialization of the concealed risk,”
id., and cited Marbury Management for the contrary proposition
that an “allegation that fraud induced [an] investor to make an
articulated by Judge Meskill . . . to be logical and consistent
with the definition of loss causation. A contrary view would
render meaningless the distinction between transaction and loss
causation, thereby writing the proximate cause requirement out
of a section 10(b) cause of action.”).
31
investment and to persevere with that investment [was]
sufficient to establish loss causation,” id. at 174. As two
commentators noted, the Second Circuit thus “appeared
implicitly to overrule the long-controversial opinion in Marbury
Management[,] dismissing it with a ‘but see’ citation at the end
of its analysis, and pointedly noting that ‘[w]e follow the
holdings of Emergent Capital, Castellano, and Suez
Equity’—conspicuously omitting Marbury.” M artin
Flumenbaum & Brad S. Karp, Loss Causation in the Research
Analyst Cases (and Beyond), N.Y.L.J., Jan. 26, 2005, at 3, 7
(quoting Lentell, 396 F.3d at 174) (second alteration in
Flumenbaum & Karp). Even before Lentell, the Second Circuit
had maintained that transaction causation and loss causation
were to be considered separately. See AUSA Life Ins. Co. v.
Ernst & Young, 206 F.3d 202, 216 (2d Cir. 2000) (concluding,
after discussing Marbury Management and case law in the
Circuit subsequent to it, that “[l]oss causation is a separate
element from transaction causation, and, in situations such as the
instant one, loss causation cannot be collapsed with transaction
causation”); see also ATSI Commc’ns, Inc. v. Shaar Fund, Ltd.,
Nos. 05-5132 & 05-2593, 2007 WL 1989336, at *13 (2d Cir.
July 11, 2007) (stating “[a] plaintiff is required to prove both
transaction causation . . . and loss causation” and concluding the
allegation that a seller misrepresented that a fund was an
accredited investor, in order to induce a buyer to enter a
transaction, “might support transaction causation; it fails,
however, to show how the fact that the Shaar Fund was not an
accredited investor caused any loss”). Under Dura, as well as
32
under our own jurisprudence, a § 10(b) plaintiff is required to
establish both loss causation and transaction causation.
2.
Second, the ATS Plaintiffs contend “they were damaged
at the moment the ATS Merger closed,” ATS Br. 20, when they
sold a company worth up to almost $48 million in exchange for
consideration whose “quality and value [were] far inferior to
that which was represented to them,” id. at 19. They cite cases
from the Court of Appeals for the Second Circuit in support of
the proposition that “in cases like this, plaintiffs do not have to
demonstrate a post-acquisition decline in market price in order
to establish loss causation.” Id. at 15 n.5.9 Their argument is
that, when the plaintiff has been fraudulently induced to make
an investment that is actually worth less than the plaintiff has
been misled into believing, the loss causation requirement is
satisfied at the moment the transaction occurs.
As an initial matter, it is not clear that this would be a
viable argument for the ATS Plaintiffs, even if it were a valid
one. As discussed, they presented no evidence of the value of
the consideration they received at the time the merger closed:
Dr. Finnerty estimated the value of what the ATS Plaintiffs gave
9
The ATS Plaintiffs’ brief cites Lentell; Castellano v. Young
& Rubicam, Inc., 257 F.3d 171 (2d Cir. 2001); Suez Equity; and
Schlick v. Penn-Dixie Cement Corp., 507 F.2d 374 (2d Cir.
1974).
33
up, but expressed no opinion on the value of the Vertex shares
and stock options they got back in return. Thus, there was
insufficient evidence to show an economic loss for the ATS
Plaintiffs at the moment the transaction occurred.10
More importantly, this argument is inconsistent with
controlling precedent. In Dura, the Supreme Court explicitly
rejected the argument that a § 10(b) plaintiff could satisfy the
loss causation requirement simply by showing that “‘the price on
the date of purchase was inflated because of the
misrepresentation.’” 544 U.S. at 342. Reversing the Court of
Appeals for the Ninth Circuit, the Court explained:
[T]he logical link between the inflated share
purchase price and any later economic loss is not
invariably strong. Shares are normally purchased
with an eye toward a later sale. But if, say, the
purchaser sells the shares quickly before the
relevant truth begins to leak out, the
misrepresentation will not have led to any loss. If
the purchaser sells later after the truth makes its
10
In fact, Dr. Finnerty arguably suggested the ATS Plaintiffs
had suffered no economic loss at all at the moment the
transaction occurred. He stated in his deposition that, although
he had not tried to calculate the value of all the components of
consideration the ATS Plaintiffs received, he believed that, had
he done so, the figure would have been within the
$34.49–$47.78 million range he estimated ATS to be worth.
34
way into the marketplace, an initially inflated
purchase price might mean a later loss. But that
is far from inevitably so. When the purchaser
subsequently resells such shares, even at a lower
price, that lower price may reflect, not the earlier
misrepresentation, but changed economic
circumstances, changed investor expectations,
new industry-specific or firm-specific facts,
conditions, or other events, which taken
separately or together account for some or all of
that lower price. . . .
Given the tangle of factors affecting price,
the most logic alone permits us to say is that the
higher purchase price will sometimes play a role
in bringing about a future loss.
Id. at 342–43. As the Supreme Court noted, this Court, too, has
“rejected the Ninth Circuit’s ‘inflated purchase price’ approach
to proving causation and loss.” Id. at 344 (citing Semerenko,
223 F.3d at 185). The District Court rightly noted that Dura
dealt with a typical fraud-on-the-market § 10(b) claim and is
thus not directly controlling here, because the ATS Plaintiffs
could not simply turn around and re-sell the unregistered Vertex
shares they had received. McCabe, 2006 WL 42371, at *7.11
11
See also Livid Holdings Ltd. v. Salomon Smith Barney, Inc.,
416 F.3d 940, 944 n.1 (9th Cir. 2005) (“Although the Supreme
Court’s decision in [Dura] makes clear that in
35
Nevertheless, we believe the logic of Dura is persuasive.
The ATS Plaintiffs also cite a 2001 non-typical § 10(b)
case from the Court of Appeals for the Second Circuit. In Suez
Equity, 250 F.3d at 87, plaintiffs purchased $3 million in
securities in a financing entity on the recommendation of
defendant bank, which was already invested in the financing
entity. Plaintiffs had asked the bank for a background report on
the financing entity’s controlling shareholder, Mallick, but the
bank’s report consciously omitted several negative events in
Mallick’s business career and financial history; instead, the bank
claimed its investigation of Mallick had yielded a positive
picture of his management skills. Within seven weeks of
plaintiffs’ investment, the financing entity suffered a cash flow
crisis from which it never recovered, rendering their investment
worthless. In their complaint, plaintiffs alleged the financing
entity’s collapse (and their consequent loss of the value of their
fraud-on-the-market cases involving publicly traded stocks,
plaintiffs cannot plead loss causation simply by asserting that
they purchased the security at issue at an artificially inflated
price, the Court refused to consider ‘other proximate cause or
loss-related questions.’ Here, at issue is a private sale of
privately traded stock and Livid not only asserted that it
purchased the security at issue at an artificially inflated price,
but pled that the Defendants’ misrepresentation was causally
related to the loss it sustained. Under these circumstances, Dura
is not controlling.”) (quoting Dura, 544 U.S. at 346).
36
investment) were attributable to Mallick’s lack of management
skills, the very facts omitted from the background report that
induced plaintiffs to make their investment. The Second Circuit
held that this allegation of loss causation was sufficient to
survive a motion to dismiss:
The complaint thus alleges that plaintiffs suffered
a loss at the time of purchase since the value of
the securities was less than that represented by
defendants. Plaintiffs have also adequately
a lle g e d a s e c o n d , re la te d lo s s — th a t
Mallick’sconcealed lack of managerial ability
induced SAM Group’s failure.
Id. at 98.
The ATS Plaintiffs cite Suez Equity to support the
proposition that “in cases like this, plaintiffs do not have to
demonstrate a post-acquisition decline in market price in order
to establish loss causation.” ATS Br. 15 n.5. But the Court of
Appeals for the Second Circuit has clarified Suez Equity,
undercutting the ATS Plaintiffs’ argument:
Plaintiff’s allegation of a purchase-time value
disparity, standing alone, cannot satisfy the loss
causation pleading requirement. . . .
In its misplaced reliance on Suez Equity,
appellant overlooks a crucial aspect of that
decision. . . .
. . . Plaintiffs [in Suez Equity] claimed that
37
the concealed events reflected the executive’s
inability to manage debt and maintain adequate
liquidity. Plaintiffs also alleged that their
investment ultimately became worthless because
of the company’s liquidity crisis and expressly
attributed that crisis to the executive’s inability to
manage the company’s finances.
Thus, the Suez Equity plaintiffs did not
merely allege a disparity between the price they
had paid for the company’s securities and the
securities’ “true” value at the time of the
purchase. Rather, they specifically asserted a
causal connection between the concealed
information—i.e., the executive’s history—and
the ultimate failure of the venture.
. . . We did not mean to suggest in Suez
Equity that a purchase-time loss allegation alone
could satisfy the loss causation pleading
requirement. To the contrary, we emphasized that
the plaintiffs had “also adequately alleged a
second, related, loss—that [Mallick’s] concealed
lack of managerial ability induced [the
company’s] failure.”
Emergent Capital Inv. Mgmt., LLC v. Stonepath Group, Inc.,
343 F.3d 189, 198 (2d Cir. 2003) (quoting Suez Equity, 250 F.3d
38
at 98) (last alteration in Emergent Capital).12
In EP MedSystems, we used language similar to that of
Suez Equity in describing plaintiffs’ investment as “worthless,”
but we characterized the loss as occurring subsequent to the
transaction rather than contemporaneously with it. Compare
12
In clarifying Suez Equity, Emergent Capital apparently also
clarified two earlier Second Circuit case cited by the ATS
Plaintiffs for the proposition that “plaintiffs do not have to
demonstrate a post-acquisition decline in market price in order
to establish loss causation.” ATS Br. 15 n.5. See Castellano,
257 F.3d at 187 (“The rule affirmed in Suez Equity . . . is that
‘plaintiffs may allege transaction and loss causation by averring
both that they would not have entered the transaction but for the
misrepresentations and that the defendants’ misrepresentations
induced a disparity between the transaction price and the true
investment quality of the securities at the time of the
transaction.’”); Schlick, 507 F.2d at 380 (“[Loss causation] is
demonstrated rather easily by proof of some form of economic
damage, here the unfair exchange ratio, which arguably would
have been fairer had the basis for valuation been disclosed.”).
The fourth case cited by the ATS Plaintiffs, Lentell, simply does
not support their argument. See 396 F.3d at 174 (citing
Emergent Capital and stating that “[i]t is not enough to allege
that a defendant’s misrepresentations and omissions induced a
‘purchase-time value disparity’ between the price paid for a
security and its ‘true investment quality.’”).
39
Suez Equity, 250 F.3d at 94 (“As a result, plaintiffs’ SAM Group
securities were at the time of acquisition—and are
today—worthless.”) with EP MedSystems, 235 F.3d at 884 (“In
this case, MedSystems claims that as a result of fraudulent
misrepresentations made in personal communications by
EchoCath executives, it was induced to make an investment of
$1.4 million which turned out to be worthless.”) (emphasis
added). Moreover, our discussion in EP MedSystems shows that
the very facts which defendant misrepresented were allegedly a
substantial factor in causing the subsequent loss of plaintiff’s
investment. First, we described the misrepresented future
business opportunities: “DeBernardis represented that EchoCath
had engaged in lengthy negotiations to license its products and
was on the verge of signing contracts with a number of
prominent medical companies . . . to develop and market
EchoCath’s women’s health products.” EP MedSystems, 235
F.3d at 868. Then we connected the subsequent economic loss
to the failure of those future business opportunities to
materialize:
In the fifteen months after MedSystems made its
investment, EchoCath failed to enter into a single
contract or to receive any income in connection
with the marketing and development of the
women’s health products. It also did not receive
the expected payments from license fees. In
September 1997, EchoCath advised MedSystems
that EchoCath would run out of operating funds in
40
90 days if new investment in the company was not
forthcoming.
Id. at 869. This is consistent with the Court of Appeals for the
Second Circuit’s clarification of Suez Equity. See Emergent
Capital, 343 F.3d at 198 (“[T]he Suez Equity plaintiffs did not
merely allege a disparity between the price they had paid for the
company’s securities and the securities’ ‘true’ value at the time
of the purchase. Rather, they specifically asserted a causal
connection between the concealed information . . . and the
ultimate failure of the venture.”).
The ATS Plaintiffs presented no evidence that the value
of the consideration they received, at the time the merger closed,
was actually lower than they had been misled into believing.
Even if they had presented such evidence, it alone would have
been insufficient to satisfy the loss causation requirement. It is
not enough for § 10(b) plaintiffs to show that a misstatement or
omission induced them to buy or sell securities at a price less
favorable to them than they had been misled into believing.
Rather, they must show that the misstated or omitted facts were
a substantial factor in causing an economic loss actually
incurred by the plaintiffs.
C.
In order to survive summary judgment, then, the ATS
Plaintiffs had to create a genuine issue as to whether Vertex’s
registration defaults and the threats of litigation associated with
them (the very facts omitted by Ernst & Young) were a
41
substantial factor in causing the ATS Plaintiffs’ economic loss.
That economic loss was embodied in Vertex’s failure to meet its
earnings and revenues targets following the merger, which
resulted in a swift decline in the price of Vertex stock from
$6.25 when the merger closed (on December 29, 2000) to $0.95
when the ATS Plaintiffs were finally able to begin selling off
their shares (on December 31, 2001). The ATS Plaintiffs were
able to realize only $940,000 on the eventual sale of three
million unregistered shares of Vertex stock.
To restate the previous discussion, as well as rely on
“general causation principles,” EP MedSystems, 235 F.3d at
884, whether Ernst & Young’s omission was a substantial factor
in causing the ATS Plaintiffs’ economic loss includes
considerations of materiality, directness, foreseeability, and
intervening causes. See Berckeley, 455 F.3d at 222 (“[T]he loss
causation inquiry typically examines how directly the subject of
the fraudulent statement caused the loss, and whether the
resulting loss was a foreseeable outcome . . . . [It] requires the
plaintiff to prove that it was the very facts about which the
defendant lied which caused its injuries.”); Egervary v. Young,
366 F.3d 238, 246 (3d Cir. 2004) (“[A]n intervening act of a
third party, which actively operates to produce harm after the
first person’s wrongful act has been committed, is a superseding
cause which prevents the first person from being liable for the
harm which his antecedent wrongful act was a substantial factor
in bringing about.”) (citing Restatement (Second) of Torts §§
42
440–41 (1965)).13
We agree with the District Court that the factual record
is devoid of sufficient evidence to create a genuine issue as to
loss causation. The ATS Plaintiffs asserted in their counter-
statement of material facts that “[a]mong the reasons for
Vertex’s failure to meet earnings and revenue targets was
Vertex’s . . . breach of its various agreements to make payments
and to register the shares of stock used as consideration for
various acquisitions.” McCabe, 2006 WL 42371, at *9. This
might have been a sufficient allegation of loss causation to
survive a motion to dismiss, as in EP MedSystems. See supra
13
It is particularly important for the ATS Plaintiffs to show
that the very facts omitted by Ernst & Young were a substantial
factor in causing the decline in Vertex’s financial fortunes,
because both parties placed Vertex’s performance in the context
of a “general downturn in the economy,” particularly for high-
tech stocks. (J.A. 318.) See Louis Loss & Joel Seligman,
Fundamentals of Securities Regulation 1283–84 (5th ed. 2004)
(“[W]hen the market declines after the published rectification of
a false earning statement that was used in the sale of an
electronics stock, the misrepresentation is not the ‘legal cause’
of the buyer’s loss, or at any rate not the sole legal cause, to the
extent that a subsequent event that had no connection with or the
relation to the misrepresentation caused a market drop—for
example . . . a softening of the market for all electronic stocks .
. . .”) (second emphasis added).
43
note 4. But “[t]o survive summary judgment, a party must
present more than just ‘bare assertions, conclusory allegations
or suspicions’ to show the existence of a genuine issue.”
Podobnik v. U.S. Postal Serv., 409 F.3d 584, 594 (3d Cir. 2005)
(quoting Celotex 477 U.S. at 325).
Whereas Vertex’s expert witness, Dr. Lehn, attempted to
show that the price of Vertex’s stock had not been affected by
the disclosure of Vertex’s registration defaults, the report of Dr.
Finnerty, the ATS Plaintiffs’ expert witness, focused solely on
the value of ATS at the time of the merger. His rebuttal report
challenged Dr. Lehn’s damages-calculation methodology, but
still focused on ATS’s value, contending it was the best measure
of the ATS Plaintiffs’ damages. In Dr. Finnerty’s deposition, he
stated that he was never asked to value Vertex stock, and that he
had no opinion on “whether the alleged misrepresentations of
Ernst & Young proximately caused the decline of values in the
Vertex shares after the merger.”
The ATS Plaintiffs also specify in their brief that, “[a]s
a result of the Registration Defaults, Vertex was experiencing
substantial problems integrating its former merger partners . . .
into the company’s operations.” ATS Br. 23. In support, they
point to the depositions of the former presidents of
Communication Services International and Positive
Development, respectively Roger Henley and Walter Reichman.
Henley and Reichman each received unregistered shares of
Vertex stock that Vertex failed to register in a timely manner.
Both stated that, because the price of Vertex stock was dropping
44
steadily, they wanted to sell off their shares, and were unable to
do so as soon as they would have liked because of Vertex’s
registration defaults. The registration defaults thus prevented
Henley and Reichman from selling at as high a price as they
would have been able to obtain had Vertex complied with its
obligations, creating an economic loss. But neither attributed
Vertex’s falling stock price or declining financial performance
to the registration defaults. Evidence of that connection is what
was required from the ATS Plaintiffs to create a genuine issue
as to loss causation.
Henley did say that, at the time Communication Services
International agreed to a settlement with Vertex over Vertex’s
registration default, “Vertex was having a lot of difficulties[,]
they had cash problems and . . . there wasn’t going to be a lot of
dollars for taking care of settlements or judgments. So from our
perspective we were competing with [the ATS Plaintiffs] for a
limited dollar pool . . . .” He also said that Vertex was having
“a lot of operational issues” at the time, issues “about things
getting paid, vendor problems, customer problems.” These two
statements suggest that settlement payouts were putting a strain
on Vertex’s already-struggling finances, thus potentially
contributing to the ATS Plaintiffs’ economic loss. But, even
taken together, they are insufficient to create a genuine issue as
to loss causation.
Finally, the ATS Plaintiffs contend Ernst & Young’s own
expert, Dr. Lehn, gave evidence of loss causation. In his report,
Dr. Lehn theorized that, had the ATS Plaintiffs been able to
45
begin selling off their Vertex stock on May 14, 2001 (by which
date Vertex had promised to register the shares), they could have
realized between $4.9 and $5.7 million. The ATS Plaintiffs
characterize this as “an admission that Vertex’s failure to
register plaintiffs’ shares caused plaintiffs to lose at least $4.76
million (i.e., the $5.7 million that would have been realized had
the shares been timely registered, less the $940,000 actually
received).” ATS Br. 25. But we agree with the District Court
that this alone is insufficient evidence of loss causation: the
$4.76 million figure may be a measure of the ATS Plaintiffs’
economic loss, and but for Ernst & Young’s omissions the ATS
Plaintiffs might not have been “locked into” that economic loss;
but Dr. Lehn’s report does not show that the omission
proximately caused the economic loss. That is, it was not
evidence that the falling price of Vertex stock was attributable
to registration defaults and associated threats of litigation (the
very facts omitted by Ernst & Young).
Because the ATS Plaintiffs cannot point to sufficient
record evidence to show that the very facts misrepresented or
omitted by Ernst & Young were a substantial factor in causing
the ATS Plaintiffs’ economic loss, we agree with the District
Court that the ATS Plaintiffs failed to create a genuine issue as
to loss causation.
IV.
The District Court held that “[b]ecause [the ATS]
Plaintiffs have failed to create a genuine issue as to loss
46
causation, it follows that [the ATS] Plaintiffs’ common law
fraud and negligent misrepresentation claims must fail as a
matter of law.” McCabe, 2006 WL 42371, at *14. We will
affirm this holding, because the ATS Plaintiffs’ failure to create
a genuine issue as to loss causation also constitutes a fatal
failure to create a genuine issue as to the proximate causation
required for their claims under New Jersey law. See, e.g.,
Berckeley, 455 F.3d at 224 n.28 (“[T]o the extent we have
determined that Colkitt has stated a claim under Section 10(b),
we will also reinstate Colkitt’s claim that Berckeley’s conduct
[constituted] common law fraud under New York law.”).
As the District Court noted, there is no New Jersey
decision that addresses the precise issue raised here. McCabe,
2006 WL 42731, at *12. But proximate causation is a required
element of both common law fraud and negligent
misrepresentation under New Jersey law. See Kaufman v. i-Stat
Corp., 754 A.2d 1188, 1196 (N.J. 2000) (negligent
misrepresentation); Gennari v. Weichert Co. Realtors, 691 A.2d
350, 366–67 (N.J. 1997) (fraud). Under New Jersey tort law,
“[t]he test of proximate cause is satisfied where . . . conduct is
a substantial contributing factor in causing [a] loss.” 2175
Lemoine Ave. Corp. v. Finco, Inc., 640 A.2d 346, 351–52 (N.J.
Super. Ct. 1994) (citing State v. Jersey Cent. Power & Light
Co., 351 A.2d 337, 341–42 (N.J. 1976); Ettin v. Ava Truck
Leasing, Inc., 251 A.2d 278, 289 (N.J. 1969)).
Like other courts of appeals, we “apply[] general
causation principles” to § 10(b) claims. EP MedSystems, 235
47
F.3d at 884. See also Berckeley, 455 F.3d at 222 (stating loss
causation is “[s]imilar to the concept of proximate cause in the
tort context,” and citing Suez Equity, 250 F.3d at 96, and
Caremark, 113 F.3d at 648 ). This approach was recently
endorsed by the Supreme Court:
Judicially implied private securities fraud actions
resemble in many (but not all) respects
common-law deceit and misrepresentation
actions. The common law of deceit subjects a
p e r s o n w h o “ f r a u d u l e n t ly” m a k e s a
“misrepresentation” to liability “for pecuniary loss
caused” to one who justifiably relies upon that
misrepresentation. And the common law has long
insisted that a plaintiff in such a case show not
only that had he known the truth he would not
have acted but also that he suffered actual
economic loss.
....
. . . [Section 10(b)] expressly imposes on
plaintiffs ‘the burden of proving’ that the
defendant’s misrepresentations ‘caused the loss
for which the plaintiff seeks to recover.’ The
statute makes clear Congress’ intent to permit
private securities fraud actions for recovery
where, but only where, plaintiffs adequately
allege and prove the traditional elements of
causation and loss.
48
Dura, 544 U.S. at 343–44, 345–46 (citations omitted). The §
10(b) loss causation standard we have reiterated here is similar
to the “substantial contributing factor” test of proximate
causation under New Jersey law. 2175 Lemoine Ave., 640 A.2d
at 351–52. Accordingly, for the same reasons that the ATS
Plaintiffs failed to create a genuine issue as to loss causation (as
required for their § 10(b) claim), they also failed to create a
genuine issue as to proximate causation (as required for their
common law fraud and negligent misrepresentation claims).
V.
We will affirm the grant of summary judgment.
49
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UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS
NO . 99-1001
JAMES T. BENJAMIN , APPELLANT ,
V.
ANTHONY J. PRINCIPI,
SECRETARY OF VETERANS AFFAIRS, APPELLEE.
Before KRAMER, Chief Judge, and FARLEY,
HOLDAWAY, IVERS, STEINBERG, and GREENE, Judges.
ORDER
Note: Pursuant to U.S. Vet. App. R. 30(a),
this action may not be cited as precedent.
In an April 19, 2001, order, the Court vacated an April 1, 1999, decision of the Board of
Veterans' Appeals and remanded the matter for readjudication in light of the enactment of the
Veterans Claims Assistance Act of 2000, Pub. L. No. 106-475, 114 Stat. 2096 (Nov. 9, 2000). On
May 10, 2001, the appellant, through counsel, filed a motion for reconsideration or, in the
alternative, for a panel decision. By order dated September 6, 2001, the single judge denied
reconsideration and a divided panel denied his request for a panel decision. On September 20, 2001,
the appellant filed a motion for a full Court decision.
Motions for a full Court decision are not favored. Ordinarily they will not be granted unless
such action is necessary to secure or maintain uniformity of the Court's decisions or to resolve a
question of exceptional importance. In this appeal, the appellant has not shown that either basis
exists to warrant a full Court decision.
Upon consideration of the foregoing, the record on appeal, and the appellant's motion for a
full Court decision, it is
ORDERED that the motion for a full Court decision is denied.
DATED: November 2, 2001 PER CURIAM.
KRAMER, Chief Judge, concurring: I concur in the denial of the appellant's motion for a
full Court decision because the appellant has not demonstrated that he would be prejudiced by a
remand pursuant to the Veterans Claims Assistance Act of 2000, Pub. L. No. 106-475, 114 Stat.
2096 (Nov. 9, 2000) (VCAA), without additional relief. Such prejudice may result, for example,
where the appellant would have (1) argued and provided support for a reversal with a direction by
the Court for the award of benefits or (2) demonstrated that errors alleged to have been made by the
Board of Veterans' Appeals (Board) neither could be mooted by the VCAA nor could likely be
properly raised or eventually remedied on remand to the Board. In this regard, I note that the
appellant has not yet raised to the Board his arguments regarding VA's failure (1) to provide a copy
of the appellant's claims file to the VA examining physician, see Hampton v. Gober, 10 Vet.App.
481, 483 (1997), and (2) to comply with the requirements of 38 C.F.R. § 4.40 (2000) and DeLuca
v. Brown, 8 Vet.App. 202, 206 (1995). Accordingly, I agree that a VCAA remand was appropriate
in this case. See Maggitt v. West, 202 F.3d 1370, 1377-78 (Fed. Cir. 2000) (this Court is not
compelled to hear arguments raised for first time on appeal; in its discretion, Court may remand for
Board to determine such matters in first instance); Best v. Principi, 15 Vet.App. 18, 20 (2001) (per
curiam order) (because of as yet unknown factual and legal context in which claim readjudication
will occur, absent "appropriate circumstances," Court refrains from exercising, either sua sponte or
at appellant's request, its discretion to address each assertion of Board error once it is determined that
VCAA necessitates remand); see also Kutscherousky v. West, 12 Vet.App. 369, 372 (1999) (per
curiam order); Fletcher v. Derwinski, 1 Vet.App. 394, 397 (1991).
STEINBERG, Judge, dissenting: I previously dissented from this Court's denial of the
appellant's motion for a panel decision in this case. Benjamin v. Principi, __Vet.App.__,__, No. 99-
1001, 2001 WL 1021027, at *1-3 (Sept. 6, 2001) (per curiam order) (Steinberg, J., dissenting). I did
so because I believe that the Court should address two of the appellant's assertions of error that are
not predicated on the potential applicability of the Veterans Claims Assistance Act of 2000, Pub. L.
No. 106-475, 114 Stat. 2096 (Nov. 9, 2000) (VCAA), and are capable of repetition on remand.1 For
the same reasons that I dissented from the Court's denial of the appellant's motion for a panel
decision, I now dissent from the denial of the appellant's motion for full-court review.
The appellant's motion for full-court review cites as grounds this Court's misinterpretation
of the scope of its jurisdiction and the necessity to maintain uniformity in the Court's decisions.
Appellant's Motion at 1, 4. I voted to grant this motion for the following reasons. As I explained
in my dissent from the denial of the appellant's motion for a panel decision, I do not believe that a
remand for readjudication in light of the enactment of the VCAA, as a general matter, obviates this
Court's responsibility2 to consider assertions of Board of Veterans' Appeals (BVA or Board)
adjudication errors, including errors asserted as alternative grounds for remand. Benjamin,
__Vet.App. at __, 2001 WL 1021027, at *1-2. The Court should generally review such assertions
in order to avoid the possibility that adjudication errors will be repeated by the Board on remand.
See Mahl v. Principi, 15 Vet.App. 37, 40-41 (2001) (Steinberg, J., dissenting); see also Webb v.
1
In my previous dissent to the denial of a panel decision in this case, I fully addressed the specific adjudication
errors that may be repeated on remand to the Board and that I believe the Court should address. Benjamin v. Principi,
__ Vet.App.__,__, No. 99-1001, 2001 W L 1021027, at *2-3 (Sept. 6, 2001) (per curiam order) (Steinberg, J.,
dissenting).
2
M y views regarding the responsibility of the Court in this regard are most fully set forth in my dissenting
opinion in Mahl v. Principi, 15 Vet.App. 37, 40-47 (2001) (Steinberg, J., dissenting).
2
Principi, 15 Vet.App. 139, 140–41 (2001) (per curiam order) (Steinberg, J., dissenting).
Additionally, as I noted in my previous dissent from the denial of the appellant's motion for a panel
decision, the Court's refusal, as a general matter, to consider the appellant's assertions of BVA
adjudication error that are not predicated on the potential applicability of the VCAA is inconsistent
with this Court's precedent. See Kingston v. West, 11 Vet.App. 272, 273-74 (1998) (per curiam
order) (although remand required pursuant to Karnas v. Derwinski, 1 Vet.App. 308 (1991), BVA
adjudication error alleged by appellant provided additional basis for remand); Baker v. West,
11 Vet.App. 163, 168-69 (1998) (same). Accordingly, I agree that full-court review is appropriate
on the grounds cited by the appellant. See U.S. VET . APP . R. 35(c).
For the foregoing reasons, I dissent from the Court's denial of the appellant's motion for a
decision by the full court.
3
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210 Md. 46 (1956)
122 A.2d 462
HILL ET AL.
v.
MAYOR AND TOWN COUNCIL OF COLMAR MANOR ET AL.
[No. 123, October Term, 1955.]
Court of Appeals of Maryland.
Decided May 4, 1956.
The cause was argued before BRUNE, C.J., and DELAPLAINE, COLLINS, HENDERSON and HAMMOND, JJ.
Bill L. Yoho and Frank P. Flury, with whom were Hoyert & Yoho on the brief, for appellants.
Charles T. Finley, with whom was Blair H. Smith on the brief, for appellees.
BRUNE, C.J., delivered the opinion of the Court.
The appellants, Harry W. Hill and Olin L. Merchant, filed a petition in the Circuit Court for Prince George's County for a writ of mandamus to require the Mayor and Town Council of Colmar Manor (1) to count write-in votes cast for them, respectively, for the offices of Mayor and Councilman for the Third Ward, (2) to declare the installation of others in those offices to be void, (3) to install the appellant Hill as Mayor and the appellant Merchant as Councilman *48 for the Third Ward, and (4) to produce records and perform other acts more or less incidental to the foregoing action. The Mayor and Town Council of Colmar Manor, a municipal corporation (usually referred to below as "Colmar Manor" or the "Town"), the appellants' rivals as candidates for Mayor and Councilman and the Board of Election Supervisors of Colmar Manor were named as respondents. They filed a demurrer and an answer to the petition. Their demurrer was sustained and the petition was dismissed. The appeal is from the order of dismissal.
The question at issue is whether or not the write-in votes for the appellants should have been counted. The answer depends upon the construction of the charter of Colmar Manor.
The Town was incorporated by Chapter 178 of the Acts of 1927, and its charter, as amended, constitutes Sections 373 to 415, inclusive, of the Code of Public Local Laws of Prince George's County (Everstine, 1953 Edition). For brevity, those sections of the Prince George's County Code which are included in the Charter of Colmar Manor will be referred to by their respective numbers in that Code, but as parts of the Charter of Colmar Manor.
Section 380 of the Charter of Colmar Manor (as amended by Chapter 37 of the Acts of 1933, and not since amended) provides that "A person shall be deemed a candidate for the office of Mayor or Councilman and his name as such candidate be placed on the ballots prepared by the Board of Election Supervisors provided such person" possesses certain qualifications referred to below "when such person shall have at least fifteen days * * * prior to the date of * * * election, filed with the Board of Election Supervisors a petition, signed by at least ten qualified voters of said town, setting forth (a) the name and address of the candidate, (b) the ward from which he seeks election, (c) the facts showing that he is eligible to the office of Mayor or Councilman, and (d) that he desires his name placed on the ballot as a candidate." This Section further provides that within five days after the time for filing has expired, the Board shall "cause to be posted *49 in such manner as shall give general publicity the names of the candidates and the positions to which they aspire."
The qualifications which Section 380 requires relate to age, residence and the ownership of property in the Town. The petition alleges in rather general terms that the appellants meet these requirements. Since the demurrer admits such allegations and since the case was decided on the demurrer, no more need now be said on this subject.
For reasons which are not disclosed on the record the appellants did not follow the procedure prescribed by Section 380 to have their names printed on the ballots. All of the votes which they received were write-ins; and according to the petition, each of the appellants received more votes by this method than did their respective opponents whose names were printed on the ballots. Blank lines were provided for writing in the names of candidates whose names were not printed on the ballots and boxes were placed at the end of such lines for "X" marks. The petition alleges and the demurrer admits (though the answer denies) that for more than twenty years prior to the 1955 election "the right of the voters of Colmar Manor to vote by writing in the name of the candidate of their choice has been recognized and upheld."
The report of the Board of Election Supervisors of the Town showing the result of the vote as above stated was presented at a special meeting of the Mayor and Town Council held on July 21, 1955. By a vote of 3 to 2 (Messrs. Torvestad and Rian being 2 of the 3 who constituted the majority), a resolution was adopted declaring Messrs. Torvestad and Rian to have been duly elected as Mayor and as Councilman from the Third Ward, respectively. The write-in votes were rejected. The appellees contend that they were properly rejected, and the Circuit Court sustained their contention on the basis of its interpretation of the cases of Jackson v. Norris, 173 Md. 579, 195 A. 576, and Board of Supervisors of Elections of Baltimore City v. Blunt, 200 Md. 120, 88 A.2d 474, though the Court conceded that the petitioners' argument based upon an analogy to the case of Landover Hills v. Brandt, 199 Md. 105, 85 A.2d 449, was not without force.
*50 The question in this case is solely one of statutory construction.
In Jackson v. Norris, supra, which contains an interesting history of the development of the ballot in this State, it was held that under Sections 1 and 5 of Article I of the Constitution of Maryland (relating to the elective franchise) voting machines for use in elections in Baltimore City had to provide means for a voter to write in the name of a candidate of his choice whose name was not printed on the ballot. In delivering the opinion of the Court, Judge Parke said (at 173 Md. 603-604, 195 A. 588):
"The conclusion of the court that it is the constitutional right of an elector to cast his ballot for whom he pleases, and that it is necessary for him to be given the means and the reasonable opportunity to write or insert in the ballot the names of his choice, is subject to this limitation, that the right is not applicable to primary elections, nor to municipal elections other than those of the City of Baltimore. This exception must be made, since the provisions of article 1, section 5 of the Constitution have been held to apply solely to the right to vote at federal and state elections, and municipal elections in the City of Baltimore."
The historical review contained in Jackson v. Norris, supra, shows that a provision for write-in votes which had appeared in the first general ballot law (Chapter 538 of the Acts of 1890) merely preserved a pre-existing right and that such a provision continued in the Code until it was eliminated by Chapter 581 of the Acts of 1924. An opinion of the Attorney General rendered in 1926 stated that the purpose of the 1924 Act was to shorten the ballot by eliminating the blank spaces. A second Act was passed in 1931 to eliminate a provision for counting written-in votes, which had apparently been overlooked at the time of the 1924 repeal of the provision authorizing writing in the names of candidates. This bit of history is important for its bearing on the holding in the Blunt Case.
Before turning to that case it may be well to emphasize that the quoted passage from Jackson v. Norris with which *51 we are concerned in the instant case dealt with the constitutional rights of voters to write in the names of candidates of their choice.
In Supervisors v. Blunt, supra, the question was whether or not an opportunity to write in the name of a candidate had to be afforded in a presidential primary election. After quoting with approval the passage from Jackson v. Norris, above quoted, this Court stated that the question was solely one of statutory construction, and held that the write-in privilege did not exist.
In reaching this conclusion, the Court rejected the contentions of the appellees which rested largely upon the following statutory provisions, all of which are contained in Article 33 of the Code and which are referred to by their numbers in the 1951 Edition, with their numbers in the 1947 Supplement to the 1939 Edition being given in parentheses:
(a) Section 68 (62), under the sub-title "Elections", the sentence reading:
"Nothing in this Article contained shall prevent any voter from writing on his ballot and marking in the proper place the name of any person other than those already printed for whom he may desire to vote for any office, and such votes shall be counted the same as if the name of such person had been printed upon the ballot and marked by the voter."
(b) Section 212 (205), under the sub-title "Miscellaneous Provisions", which defines the word "election" as including "elections had within any county or city for the purpose of enabling voters to choose some public officer or officers under the laws of this State or of the United States."
(c) Section 64 (b) (formerly 58 (b)), under the sub-title "Nominations and Primaries" (which under 64 (a) (formerly 58 (a)) applies to "Every candidate for the nomination for a State office, that is to say, an office filled by the vote of all the registered voters of the State"), providing in part that:
"* * * said primary election shall be held and *52 conducted and determined in the manner and form provided by this Article for general elections and subject to all regulations, requirements and provisions as prescribed by this Article for general elections, in so far as the same is or may be applicable to said primary elections, except as may be herein otherwise provided."
It may be noted in passing that under Section 56 (5) (formerly 50 (5)), ballots for presidential primaries are to be prepared and are to be marked and cast in the same manner as prescribed for gubernatorial primary elections.
Several other provisions of Article 33 were also involved in the Blunt Case. Among them were provisions contained in the "Instructions" to absentee voters in statewide and in Baltimore City municipal elections. Under the statewide election instructions write-in voters were not and are not permitted in primary elections; under the instructions applicable to Baltimore municipal elections they were and are permitted. See Code (1951), Article 33, Sec. 144, par. (g) of "Instructions" (formerly 136, par. (g)) and Sec. 224 (c) (7) (formerly 217, par. (g)).
The opinion of this Court in the Blunt Case, which was written by Judge Henderson, points out that the sentence from Section 68 of Article 33 quoted above had been restored by the Codifier in the 1939 Edition of the Code, despite its deletion by Chapter 581 of the Acts of 1924, in order to conform with the decision in Jackson v. Norris, supra, and that this sentence had been re-enacted without change in a compilation or rearrangement of the election laws, with such amendments as the Legislature thought desirable, by Chapter 934 of the Acts of 1945. The opinion, after quoting the passage from Jackson v. Norris already set forth herein, states that this sentence from Section 68 (formerly 62) "could not be construed to accomplish a purpose directly opposed to the limitation * * * expressed" in Jackson v. Norris.
The mere restoration of this sentence to the laws relating to general elections did not give it an effect contrary to the limitation stated in the opinion which brought about its reinstatement. *53 If that had been all that was involved in the case the opinion could have stopped at that point. It did not, however, stop there, but went on to consider the applicability to primary elections of the language of the restored provisions itself and whether the incorporation by reference clause of Section 64 (b) was sufficient to adopt the write-in provisions of the general elections, law as a part of the law relating to primary elections. Approaching the matter from this point of view, we find that the result of the Blunt Case is due to the language of Section 68 itself indicating its inapplicability to primary elections, to the exceptions in the incorporation by reference clause of Section 64 (b) of Article 33 which are based upon the past or present inapplicability of provisions relating to general elections, and to the expressed view that write-in votes are "inconsistent with the whole theory of primary elections."
In this case we may start with the premise that the reinstatement of the write-in sentence of Section 68 of Article 33 was no more effective to achieve a result opposite to a limitation stated in Jackson v. Norris, supra, that it was in the Blunt Case. But that leads us to the other inquiries such as those with which the Blunt Case was concerned the applicability of the language of the pertinent sentence of Section 68 of Article 33 to a municipal general election and the sufficiency of the incorporation by reference provision contained in Section 377 of the Charter of Colmar Manor.
Undoubtedly, the Legislature has plenary powers which are not restricted by the provisions of Article I of the Constitution of Maryland with regard to both primary elections and municipal elections (outside of the City of Baltimore). Jackson v. Norris, supra; Smith v. Stephan, 66 Md. 381, 7 A. 561, 10 A. 671 (municipal election); Hanna v. Young, 84 Md. 179, 35 A. 674 (municipal election); Johnson v. Luers, 129 Md. 521, 99 A. 710 (municipal election); Hennegan v. Geartner, 186 Md. 551, 47 A.2d 393 (primary election); Landover Hills v. Brandt, supra (municipal election). This does not mean, however, that both of these types of elections must be treated in the same way as to write-in votes or otherwise.
*54 It may be conceded that the Legislature could, if it chose, bar write-in votes in municipal general elections (subject to the Baltimore City exception), but by the same token it may also authorize them. The questions is, has it done so?
Though Section 68 of Article 33 is not by its own terms applicable to a municipal general election, we find nothing in it which is incompatible with its being made applicable to such an election by an appropriate incorporation by reference clause. Indeed, the sharp distinction between a nomination for and an election to public office which the Court stressed in the Blunt Case supports its applicability to an actual final election. Moreover, we find no incompatibility between its provisions for write-in votes and the theory upon which general municipal elections are based. They are like general elections for county offices and have none of the features which distinguish primary elections from general elections and which led the Court to say in the Blunt Case that "the write-in privilege was never applicable to primary elections, and, indeed, is inconsistent with the whole theory of primary elections."
The case then turns on the sufficiency of the language used in the incorporation by reference provision of Section 377 of the Colmar Manor Charter, and upon the effect of the exception therein stated when read in conjunction with Section 380. The pertinent sentence of Section 377 reads as follows:
"All elections for town purposes shall as nearly as practicable be conducted as are elections for county officers in Prince George's County, except as herein provided."
We shall return to these questions after a rather full discussion of Landover Hills v. Brandt, already cited, which we think is controlling.
In that case a question was raised as to whether there was or was not a right to court review of an election controversy. In that case Section 12 of Chapter 465 of the Acts of 1945 which incorporated the town of Landover Hills authorized the appointment of judges of elections and provided that "The rules and procedure of conducting the election *55 shall be governed by the general election laws of the State of Maryland on any question not provided for in this charter." There was a further provision that the ballot boxes containing the ballots should be kept for thirty days "unless there is a recount, in which case they shall be kept until said recounting is finally concluded." This Court referred to what are now Sections 115 and 116 of Article 33 of the Code (then Sections 108 and 109) which cover all cases of contested elections not provided for by the Constitution or by the preceding Section of Article 33, and provide for court review and for an appeal to this Court. The Court also referred to what is now Section 212 (then 205) of Article 33 which defines an election as including "elections had within any county or city for the purpose of enabling voters to choose some public officer or officers under the laws of this State. * * *" It then held that the provisions for court review contained in the general law were adopted by reference in the Charter of Landover Hills.
The Landover Hills Case, in which the opinion was also written by Judge Henderson, is not cited in the Blunt Case, and the Court evidently thought it unnecessary to distinguish it. The appellees now undertake to do so on the ground that in the Landover Hills Case only a procedural electoral right was incorporated by reference in the Charter of that town, whereas in the Blunt Case a substantive right was held not to be so incorporated.
The exact language of the Court in the Blunt Case relating to the creation of a new substantive right has already been quoted. The result that no such right was created by the "guarded incorporation by reference of the general election procedure" is supported by one of the limitations expressed in the incorporation by a reference provision itself "insofar as the same is or may be applicable to said primary elections" when considered against the Court's holding that the write-in privilege had never been applicable to primary elections "and, indeed, is inconsistent with the whole theory of primary elections."
In the Landover Hills Case incorporation by reference of the laws relating to general elections was restricted to "the *56 rules and procedure of conducting the election." No such narrow limitation of incorporation by reference is present in this case.
Apart from the possible effect of Section 380 of the Charter of Colmar Manor, which is considered below, there is no prohibition against incorporating by reference any of the substantive rights which are conferred upon voters by the general election law and are not prohibited by the Charter of Colmar Manor. (We need not pass upon the appellants' contention that in the absence of a prohibition against write-in votes the write-in privilege exists; but this comment is not to be taken as indicating agreement with that contention.) We find nothing in the history or theory of this Charter comparable to the considerations which led this Court in the Blunt Case to refuse to extend the scope of a relatively weak incorporation by reference provision to a field in which the write-in privilege had never existed and to a type of election with which it was held to be inconsistent.
The appellees contend that the granting of the write-in privilege would be inconsistent with the provisions of Section 380 and hence that it is excluded by the concluding "except as herein provided" clause of Section 377.
We have already set forth the salient provisions of Section 380. We think that it states what a prospective candidate must do in order to have his name printed on the ballot, but we do not think that it should be construed as barring a vote for anyone whose name is not printed on the ballot.
In this connection it is interesting to compare the provisions of Section 68 of Article 33 of the Code with those of Section 380 of the Charter of Colmar Manor. Under each of these Sections the appropriate election officials are required to have ballots printed containing the names of all candidates who have been duly nominated. The Colmar Manor election officials are required to print the names of those who filed their nominating petitions fifteen days before the primary; the general election law relieves the County election officials of any obligation to print the name of a candidates not certified to them at least ten days before the meeting. That alone would suggest that getting one's name *57 printed on the ballot is not a prerequisite to being voted for (no matter how much it may help in winning the election). We see no reason for drawing one conclusion from the language of the Town Charter and another from the comparable language of the general statute. A write-in authorization is as compatible with one as with the other.
We may add that if it was intended to limit the voting under the Colmar Manor Charter to those whose names were printed on the ballot, no useful purpose would be served, in the case of a candidate who happened to be the only one to file a nominating petition for some office, by those provisions of this Section which require the posting before the election of the names of candidates and the offices which they seek in such manner as will give general publicity thereto. If, in an election for a State office, only one candidate has been nominated therefor, it is still necessary that his name be printed on the ballot and that an opportunity for write-ins be given. True, this is a constitutional and not merely a statutory matter, but it is a familiar and persuasive analogy.
In addition, in the light of the distinction between a nomination for public office and an election to public office sharply drawn in the Blunt Case, what was said in Jackson v. Norris, at 173 Md. 601, 195 A. 587, seems as applicable here on the question of statutory construction as it did there in interpreting constitutional provisions. The Court there observed that "* * * the political importance of the preservation of the right considered is enhanced by its potential value in a civic crisis where, because of want of time or of adverse political conditions, an aroused electorate would have as its sole recourse for the expression of the popular will the right to vote in an election for its own freely chosen candidates." The comments of the Court in that same case on restricting the voter to a choice among official nominees and on the insufficiency of the right of a voter to join in signing a nominating petition as compared with his complete freedom in voting for anyone of his own choosing, are also pertinent.
The question is one of legislative intent, not of constitutional right nor yet of legislative power. A rule under which *58 the effectiveness or extent of incorporation by reference of one statutory provision into another would depend upon whether the matter to be incorporated is minor or procedural on the one hand, or major or substantive on the other, would lead to endless confusion. The Landover Hills and the Blunt Cases do not rest upon such a rule or distinction; each rests upon the interpretation of the language used in the light of the circumstances surrounding its use.
The incorporation-by-reference clause of the Charter of Colmar Manor is broader than that of the Charter of Landover Hills; it is both broader and stronger than that involved in the Blunt Case. We think that it is not limited by Section 380 of the Charter of Colmar Manor and that it is sufficient to incorporate by reference the write-in vote provisions contained in Section 68 of Article 33 of the Code (1951).
The appellees have urged in opposition to this view that the charters of some other municipalities in Prince George's County expressly confer the right to write in the names of candidates and hence that the Legislature did not intend to permit such voting by the general language used in Section 377 of the Charter of Colmar Manor. We are of the opinion that the inference which the appellees seek to draw from this is too remote to offset what we think is clearly within the scope of the incorporation by reference provisions of Section 377 which were added by the 1931 amendment to the Charter.
We are accordingly of the opinion that the write-in votes for the appellants were proper and should have been counted.
We have not gone into any discussion of the effect of the practice of permitting write-in votes which the appellants allege to have long been established, because in our view of the case it is unnecessary to do so. We shall merely observe that, in our opinion, the benefits which the appellants seek to draw from this asserted long continued practical construction of the Charter do not, as the appellees contend, involve any extension of the powers granted to the Town. The right involved is that of the voters. See Jackson v. Norris, supra.
*59 In accordance with the views above expressed the order appealed from will be reversed.
Order reversed, with costs to the appellants.
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17 B.R. 733 (1982)
In re Bertha M. COOPER a/k/a Bert Cooper, Debtor.
Edward DeV. BUNN, Jr., et al, Plaintiffs,
v.
Bertha M. COOPER, Defendant.
Bankruptcy No. 81-10926, Adv. No. 81-0415.
United States Bankruptcy Court, D. Maryland.
February 18, 1982.
Richard M. McGill, Upper Marlboro, Md., for Bertha M. Cooper, debtor and defendant.
Edward DeV. Bunn, Jr., et al., Baileys Crossroads, Va., pro se, plaintiffs.
OPINION AND ORDER DECLARING DEBT NON-DISCHARGEABLE
PAUL MANNES, Bankruptcy Judge.
This matter came on for hearing on the Complaint for Recovery of Debt Due filed *734 by Edward DeV. Bunn, Jr., et al. Plaintiffs are minors, represented by Edward DeV. Bunn, next friend, pursuant to Rule 17(c) of the Federal Rules of Civil Procedure. The questions presented by the Complaint are whether the judgment for conversion in favor of the Plaintiffs and against the Debtor, Bertha M. Cooper, (Case entitled General Services, Inc. v. Bert Cooper, C.A. No. 80-1258-A [May 12, 1981], for Sheri K. Bunn, $3,700.00; for Edward DeV. Bunn, Jr., $5,000.00; and for all three, $2,500.00) is non-dischargeable under 11 U.S.C. § 523 and whether the Debtor's discharge should be denied under 11 U.S.C. § 727.
The undisputed facts of this case are that on May 12, 1981, Judge Albert Bryan, Jr., ruled in favor of the Plaintiffs in an action based on a theory of conversion, brought in the United States District Court for the Eastern District of Virginia. He awarded judgments of a total of Eleven Thousand Two Hundred Dollars ($11,200.00) to the three children for damages sustained because of the wrongful conversion of their horses by Bertha Cooper, the Debtor in this case. On July 21, 1981, Bertha Cooper filed her petition under Chapter 7 of the Bankruptcy Code, listing only the following debts upon her schedules:
Bobby Bunn $2,500.00
Edward DeV. Bunn,
Jr. 5,000.00
Sheri Bunn 3,700.00
Robert C. Dunn 2,000.00
The court is advised that Robert C. Dunn, Esquire, was Ms. Cooper's counsel in the Virginia action.
The decision by Judge Bryan is decisive as to the issue of whether a conversion occurred, leaving only the question of whether the judgment based on conversion constitutes an exception to discharge because it is a "willful and malicious injury by the debtor to another entity or to the property of another entity," as defined by 11 U.S.C. § 523(a)6.
Judge Bryan awarded compensatory damages but not punitive damages, stating, in his findings of fact, that he finds no malice, although "it is close." General Services, Inc. v. Bert Cooper, C.A. No. 80-1258-A (May 12, 1981). This court is free to make its own determination as to whether the Debtor's actions constitute the "willful and malicious" behavior required for a court to declare a debt non-dischargeable. See Carey Lumber Co. v. Bell, 615 F.2d 370, 377 (5th Cir., 1980); Matter of Kasler, 611 F.2d 308, 309-10 (9th Cir., 1979), citing, Brown v. Felsen, 439 U.S. 925, 99 S.Ct. 307, 58 L.Ed.2d 317 (1979) (construing Bankruptcy Act). Even bankruptcy courts that have recognized some collateral estoppel effect of prior judgments in other courts require that the issue in both court proceedings be identical.
In this case, no party made a showing that the standard for awarding punitive damages in tort in Virginia bears any relation to the standard for dischargeability determination, which is exclusively a matter of federal law. See Spilman v. Harley, 656 F.2d 224, 229 (6th Cir., 1981) (lack of showing that Ohio traffic code and 11 U.S.C. § 523 impose similar standards).
The standard for awarding punitive damages in Virginia is unclear. Actual malice will support such an award. See, e.g., F.B.C. Stores v. Duncan, 214 Va. 246, 198 S.E.2d 595 (1973); Giant of Virginia v. Pigg, 207 Va. 679, 152 S.E.2d 271 (1967). If there is no actual malice, courts have awarded punitive damages for other kinds of behavior that is equivalent to actual malice. The Fourth Circuit referred to conduct that is "in conscious disregard of the rights of others and is wanton and oppressive." National Carloading Corp. v. Astro Van Lines, Inc., 593 F.2d 559, 565 (4th Cir.) reh. den. (1979). In Peacock Buick, Inc. v. Durkin, 277 S.E.2d 225 (1981), the court said that the behavior must demonstrate "ill-will," "malevolence," "spite," or "wicked intent." Id. at 227. The court in Matney v. First Protection Life Ins. Co., 73 F.R.D. 696 (W.D.Va.1977) referred to "wanton" and "oppressive" behavior amounting to "criminal indifference." Id. at 697. The varying language applied in these cases makes it impossible for this court to determine whether the standards applied by Judge *735 Bryan in his decision not to award punitive damages are identical to that applied by a bankruptcy court in determining whether a debt constitutes an exception to discharge under 11 U.S.C. § 523(a)6. Because these issues may not be identical, application of collateral estoppel by this court would be improper. See similarly In re E. Supple, Jr., 8 B.C.D. 544 (Bkrtcy. CT. 1981) (holding that because identity of issues in willful conversion suit and non-dischargeability action was not shown, collateral estoppel does not apply).
The court finds that this debt constitutes an exception to discharge pursuant to 11 U.S.C. § 523(a)6 because the act that formed the basis of the judgment rendered by Judge Bryan was "willful and malicious". The conversion itself was an injury to property for which Judge Bryan awarded damages in the total amount of Eleven Thousand Two Hundred Dollars ($11,200.00). The question that then arises is whether it was "willful and malicious" under the meaning of § 523.
The facts of this case fall within the ambit of the phrase "willful and malicious." In Tinker v. Colwell, 193 U.S. 473, 24 S.Ct. 505, 48 L.Ed. 754 (1903), the Supreme Court considered language in the Bankruptcy Act of 1898 that is identical to the "willful and malicious" standard present in 11 U.S.C. § 523(a)6. In Tinker, the Court held that in order to declare a debt non-dischargeable, the trial court need not find personal malice towards an individual. If the court finds that the action is intentional and deliberate, that finding is sufficient to support a conclusion that malice exists. Tinker v. Colwell, 193 U.S. at 485, 24 S.Ct. at 508. Collier on Bankruptcy states:
Meaning of Willful and Malicious Injury.
In order to fall within the exception of section 523(a)(6), the injury to an entity or property must have been willful and malicious. An injury to an entity or property may be a malicious injury within this provision if it was wrongful and without just cause or excessive, even in the absence of personal hatred, spite or ill-will. The word "willful" means "deliberate or intentional", a deliberate and intentional act which necessarily leads to injury. Therefore, a wrongful act done intentionally, which necessarily produces harm and is without just cause or excuse, may constitute a willful and malicious injury. It has been said that this category of liabilities excepted from discharge "contemplates something more restricted than malice in the broader sense," and covers all cases in which the facts of intent and malice are judicially ascertained, irrespective of the character of the allegations made by the parties. Injuries within the meaning of the exception are not confined to physical damage or destruction; but an injury to intangible personal or property rights is sufficient. Thus the conversion of another's property without his knowledge or consent, done intentionally and without justification and excuse, to the other's injury, is a willful and malicious injury within the meaning of the exception. On the other hand; a technical conversion may very well lack any element of willfulness or maliciousness necessary to except the liability from discharge.
523.16[1] at XXX-XXX-XXX (citations omitted).
In the instant case, the facts demonstrate that the Debtor knew the victims of her tort, personally for many years, knew they were children, and knew the devastating effect her actions would have on the particular individuals involved. Her stealthy taking of the horses during the night also demonstrates her awareness of the wrongfulness of her actions as does her conduct following the conversion. The facts of this case satisfy even the strict standard of personal malice rejected by the Supreme Court in Tinker and, therefore, certainly meet the standard of intentional and voluntary action set forth in Tinker.
Courts construing bankruptcy legislation subsequent to the decision in Tinker v. Colwell have applied a similarly broad interpretation of the words "willful and malicious." In In re Goeddaeus, 1 C.B.C. 105 (Bkrtcy.W.D.Mi.1974) (construing the Bankruptcy *736 Act) and In re Auvenshine, 9 B.R. 772, 7 B.C.D. 511 (Bkrtcy.W.D.Mi.1981) (construing the Bankruptcy Code), bankruptcy courts held that damages resulting from the sale of goods subject to a security interest without satisfying that interest, constituted an exception to discharge under 11 U.S.C. § 523(a)6. In this case, Judge Bryan found that the Debtor sold the horses when
"the circumstances of which she was well aware put her on notice that she had no right to dispose of those horses."
General Services, Inc. v. Bert Cooper, C.A. No. 80-1258-A (May 12, 1981).
The phone calls from the children and their father alerted the Debtor to the fact that they claimed these horses. If a sale without regard to a security interest constitutes an exception to discharge, then certainly the sale of the horses in this case with actual notice of the children's assertion of ownership must also be non-dischargeable.
In In re Freidenberg, 12 B.R. 901, 8 B.C.D. 69 (Bkrtcy.S.D.N.Y.1981) the court declared a debt non-dischargeable even though the action upon which it was based sounded in contract, not in tort. The standard articulated in that case was if
anyone of reasonable intelligence knows that the act is contrary to commonly accepted and ordinary relationships among people, and injurious to another.
Id. at 905, 8 B.C.D. at 71-72.
In this case, the Debtor knew that the children owned these horses and that their mother did not, and, finally, knew the devastating impact that the loss of these horses would have on the Bunns. She knew the inadequacy of the price paid by her for the horses. Her actions in unilaterally removing and selling stealthily the horses certainly violates the ordinary, accepted relationships between people.
The method of conversion and the testimony of the Bunns distinguish this case from Grand Piano and Furniture Co. v. Hodges, 4 B.R. 513 (Bkrtcy.W.D.Va.1980) in which the court found a debt dischargeable because the debtor's testimony that he intended no harm to the secured creditor was uncontradicted. Id. at 517. In this case all facts and circumstance demonstrate that the taking was malicious as well as willful. This court, then, finds that the debt of Eleven Thousand Two Hundred Dollars ($11,200.00) based on a judgment for damages stemming from conversion constitutes an exception to discharge under 11 U.S.C. § 523(a)6.
The Plaintiffs failed to carry their burden of proving that the Debtor's discharge should be denied under 11 U.S.C. § 727. Although the evidence showed certain variances between the Debtor's testimony during the tort proceedings in the United States District Court for the Eastern District of Virginia and in the proceedings before this court, Plaintiffs presented no evidence to show that the Debtor made a false oath in connection with this proceeding, as 11 U.S.C. § 727(a)(4)(A) requires. Because the Plaintiffs failed to subpoena any of the books and records of the Debtor, her failure to produce such documentary evidence was justified, does not demonstrate that she did not keep books and records, and does not constitute grounds for denying discharge under 11 U.S.C. § 727(a)(3). None of the testimony offered demonstrated concealment or waste of assets, or any other behavior that constitutes grounds for denying the Debtor's discharge under 11 U.S.C. § 727.
It is, therefore, this 18th day of February, 1982, by the United States Bankruptcy Court for the District of Maryland,
ORDERED, That the debts of $2,500.00 owed to Bobby Bunn; $5,000.00 owed to Edward DeV. Bunn, Jr.; and $3,700.00 owed to Sheri Bunn[1] be, and hereby are, declared non-dischargeable, and it is further
ORDERED, That the discharge of the Debtor with regard to all other debts shall proceed.
NOTES
[1] General Services, Inc. v. Bert Cooper, C.A. No. 80-1258-A, May 12, 1981; judgment in favor of Sheri, $3700; in favor of Eddie, $5000; and in favor of all three, the amount of $2500, against the Defendant Bert Cooper.
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856 F.2d 1484
UNITED STATES of America, Plaintiff-Appellee,v.Mark Marvin MUSSER, Gary Wayne Harvey, and Joseph PaulAbraham, Defendants- Appellants.
No. 87-3616.
United States Court of Appeals,Eleventh Circuit.
Oct. 4, 1988.
Joseph Paul Abraham, pro se.
Peter D. Ringsmuth, Smith & Ringsmuth, Fort Myers, Fla., for Harvey.
Samuel R. Mandelbaum, Smith & Williams, Tampa, Fla., for Musser.
David T. Weisbrod, Tampa, Fla., for Abraham.
Jeffrey S. Downing, Asst. U.S. Atty., Tampa, Fla., for plaintiff-appellee.
Appeals from the United States District Court for the Middle District of Florida.
Before TJOFLAT, VANCE and COX, Circuit Judges.
PER CURIAM:
1
Appellants Mark Musser, Gary Harvey and Joseph Abraham were indicted on two counts of conspiracy to possess with intent to distribute and possession with intent to distribute cocaine in violation of 21 U.S.C. Secs. 846 and 841(a)(1), respectively. Harvey pleaded guilty to both counts, and was sentenced to seven years' imprisonment and a supervised release term of four years. Musser and Abraham were convicted on both counts after jury trial. Musser received the same sentence as Harvey; Abraham was sentenced to ten years' imprisonment and a four-year supervised release term. We affirm.
A. Sufficiency of the Evidence
2
Musser argues that there was insufficient evidence to sustain his conviction for possession with intent to distribute cocaine because there was no evidence presented that he was ever in actual or constructive possession of the cocaine. Reviewing the evidence in the light most favorable to the Government, United States v. Thomas, 676 F.2d 531, 535 (11th Cir.1982), we agree that there was no evidence that Musser ever actually or constructively possessed the cocaine. We hold, however, that there was sufficient evidence to allow the jury to find beyond a reasonable doubt that Musser was guilty of aiding and abetting Harvey and Abraham in their possession with intent to distribute cocaine. Musser's argument is without merit.
B. Improper Closing Argument
3
Abraham argues that the prosecutor's rebuttal argument was improper and deprived him of a fair trial in two respects: first, the prosecutor's reference to drug dealing as a "dirty, nasty, deadly business" was intended to inflame the jury; and, second, the prosecutor's comment that "each of these Defendants had the opportunity to subpoena people to come in and to testify on their behalf, just as the Government has that right, and each of these Defendants had the opportunity to make the same requests that the Government had ... to test the bag for fingerprints" was an unfair comment on the defendants' ability to present evidence on their behalf.
4
In determining whether a prosecutor's comments during closing argument warrant reversal, we must find that the comments were not within the proper scope of argument, and that the comments prejudiced substantial rights of the accused. United States v. Trujillo, 714 F.2d 102, 104 (11th Cir.1983). The prosecutor's duty in closing argument is to assist the jury in analyzing the evidence, and he must scrupulously avoid going beyond the evidence to obtain a conviction. United States v. Dorr, 636 F.2d 117, 120 (5th Cir. Unit A 1981). Having reviewed the first comment in the context in which it was made, we conclude that, while emotive, it was well within the bounds of proper closing argument. As for the second comment, we conclude that it was a fair response to comments of Abraham's counsel during his closing that the Government should have called a fingerprint expert to establish that Abraham's fingerprints were on the bag of cocaine seized upon his arrest. United States v. Russell, 703 F.2d 1243, 1248 (11th Cir.1983). Assuming the comment was otherwise improper or inadmissible, it was invited error, and hence not grounds for reversal. United States v. Ard, 731 F.2d 718, 728 (11th Cir.1984).
5
C. Constitutionality of Sentencing Provisions of the Anti-Drug Abuse Act of 1986
6
Musser and Harvey assert on various grounds the unconstitutionality of the provisions of the Anti-Drug Abuse Act of 1986 under which they were sentenced. For the following reasons, we reject all of their arguments.
7
Both argue that the minimum mandatory sentencing provisions constitute cruel and unusual punishment in violation of the eighth amendment of the constitution. This argument is without merit for the reasons stated in United States v. Holmes, 838 F.2d 1175, 1178-79 (11th Cir.1988).
8
Harvey argues that the mandatory minimum sentence which he received is unlawful because 21 U.S.C. Sec. 841(b)(1)(B) is unconstitutionally vague in that it allows the district court to impose a mandatory term of imprisonment or a fine in lieu of imprisonment.1 Construing the subsection as a whole, it is clear that a mandatory term of imprisonment is required. The language might have been more precisely drafted, but lack of precision does not render it unconstitutionally vague. See e.g., High Ol' Times, Inc. v. Busbee, 673 F.2d 1225, 1229 (11th Cir.1982). Harvey's argument is without merit.
9
Musser and Harvey both argue that the Act's "substantial assistance" provision embodied in Fed.R.Crim.P. 35(b) and 18 U.S.C. Sec. 3553(e)2 violates the equal protection component of the fifth amendment because minor participants and those of relatively low culpability are without sufficient knowledge to avail themselves of the provision. Because the statute does not discriminate on the basis of race or a suspect class, we must uphold it "in the absence of persuasive evidence that Congress had no reasonable basis for drawing the lines that it did." Holmes, 838 F.2d 1175.
10
Congress' desire to ferret out drug kingpins is obviously served by encouraging those with information as to the identity of kingpins to disclose such information. Hence, there is a rational relationship between the statute and Congress' purpose. Moreover, all "minor" figures, are treated similarly by the statute, which belies any claim of unequal treatment. Cf. United States v. Brandon, 847 F.2d 625, 631 (10th Cir.1988) (finding no equal protection violation as to those defendants sentenced under the Act between October 27, 1986, and November 1, 1987, to whom Sec. 3553(e) was not even available). Appellants' equal protection challenge to the "substantial assistance" provision is without merit.
11
Appellants also argue that the "substantial assistance" provision is unconstitutional because it delegates to prosecutors unbridled discretion to decide who is entitled to a sentence reduction.3 Initially, we observe that the only authority "delegated" by the rule is the authority to move the district court for a reduction of sentence in cases in which the defendant has rendered substantial assistance. The authority to actually reduce a sentence remains vested in the district court, a delegation which Musser does not challenge. Moreover, although the term "substantial assistance" is not defined in the statute, the discretion of prosecutors is limited by considering the "substantial assistance" provision within the overall context of the Anti-Drug Abuse Act itself. Cf. United States v. Gordon, 580 F.2d 827 (5th Cir.1978), cert. denied, 439 U.S. 1051, 99 S.Ct. 731, 58 L.Ed.2d 711 (1978). Finally, appellants' argument ignores Congress' plenary authority in all areas in which it has substantive legislative jurisdiction as long as exercise of that authority does not offend some other constitutional provision. Buckley v. Valeo, 424 U.S. 1, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976). Appellants certainly have no constitutional right to the availability of the "substantial assistance" provision, and hence no grounds upon which to challenge Congress' manner of enacting it. Appellants' argument is without merit.
12
Appellants finally argue that the Anti-Drug Abuse Act's amendment to Rule 35(b) violates the separation of powers doctrine. We have previously found this argument to be without merit in the context of the mandatory minimum sentences, Holmes, 838 F.2d at 1178, and reiterate that conclusion here.
D. Conclusion
13
In view of the foregoing opinion, appellants' convictions are AFFIRMED.
1
The challenged section of the statute reads, in pertinent part, as follows:
"In case of a violation of subsection (a) of this section ... such person shall be sentenced to a term of imprisonment which may not be less than 5 years and not more than forty years ... a fine ... or both."
2
18 U.S.C. Sec. 3553(e) reads:
Upon motion of the Government, the court shall have the authority to impose a sentence below a level established by statute as minimum sentence so as to reflect a defendant's substantial assistance in the investigation or prosecution of another person who has committed an offense. Such sentence shall be imposed in accordance with the guidelines and policy statements issued by the Sentencing Commission pursuant to section 994 of title 28, United States Code.
Fed.R.Crim.P. 35(b) reads:
The court, on motion of the Government, may within one year after the imposition of a sentence, lower a sentence to reflect a defendant's subsequent, substantial assistance in the investigation or prosecution of another person who has committed an offense, in accordance with the guidelines and policy statements issued by the Sentencing Commission pursuant to section 994 of title 28, United States Code. The court's authority to lower a sentence under this subdivision includes the authority to lower such sentence to a level below that established by statute as a minimum sentence.
3
Musser fashions his argument as a straight due process attack. Harvey subsumes the due process argument under a general attack asserting that the "substantial assistance" provision constitutes an unlawful delegation of legislative authority to the executive
| {
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Filed 3/13/17
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
MARINA IVANOFF, B271035
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC591972)
v.
BANK OF AMERICA, N.A.,
Defendant and Respondent.
APPEAL from an order of the Superior Court of
Los Angeles County, Holly E. Kendig, Judge. Affirmed.
Marina Ivanoff, in pro. per., for Plaintiff and Appellant.
Bryan Cave, Douglas E. Winter, Andrea M. Hicks, and
Richard Steelman, Jr., for Defendant and Respondent.
_____________________
Marina Ivanoff appeals the order dismissing with prejudice
her complaint against the Bank of America after the trial court
sustained without leave to amend the Bank‟s demurrer to
Ivanoff‟s complaint for violations of the federal Truth In Lending
Act (TILA) (15 U.S.C. § 1601 et seq.) and California‟s unfair
competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.),
fraudulent omission/concealment and injunctive relief. Ivanoff
argues the trial court improperly applied the doctrines of
res judicata (claim preclusion) and collateral estoppel (issue
preclusion) based on her prior unsuccessful lawsuit against the
Bank for breach of contract and contends she stated valid causes
of action on the theories alleged in her complaint. Ivanoff also
asserts the court erred in denying her an opportunity to amend
her complaint. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
1. Ivanoff’s Initial Lawsuit for Breach of Contract
Ivanoff originally sued Bank of America, N.A., successor to
BAC Home Loans Servicing LP and Countrywide Bank, FSB, as
well as ReconTrust Company, N.A., and Mortgage Electronic
Registration Systems, Inc. (MERS), in July 2013, asserting
causes of action for breach of contract, temporary restraining
order and preliminary injunction, violation of the UCL, specific
performance and equitable rescission.
In her complaint Ivanoff alleged she was the owner of a
condominium in West Los Angeles, which she had purchased in
2004 with a loan secured by a deed of trust in favor of
Washington Mutual Bank. Ivanoff refinanced her loan in 2006-
2007 with Countrywide; the refinancing closed in December 2007.
Contrary to representations made to her by Countrywide
representatives, a penalty and fees were added to the loan
2
balance, increasing the amount she borrowed from $636,000 to
$711,000. Those additional undisclosed amounts, included in
breach of the parties‟ agreement, made the loan unaffordable;
and Ivanoff defaulted.
In October 2010 Ivanoff sought a modification of the loan
with the Bank, which had acquired Countrywide. Ivanoff alleged
the Bank agreed to modify the loan, following successful
completion of a trial loan modification agreement, with a new
principal balance of $847.989.90, a new interest rate of 2 percent,
an effective date of February 1, 2011 and a maturity date of
January 1, 2051. Monthly loan payments were to be $2,567.93.
However, according to Ivanoff, the Bank breached their loan
modification agreement by adding an additional sum for required
“escrow option insurance,” which increased the monthly payment
to $3,328.65.
The defendants demurred on numerous grounds. The trial
court sustained the demurrer, in part, because Ivanoff had not
alleged whether the agreements at issue were oral, written or
implied, had not attached copies of any of the agreements and
had not alleged the material terms of the agreements with the
requisite detail. The court also found that certain of her claims,
as pleaded, were barred by the statute of limitations or the
statute of frauds.
Given leave to amend, Ivanoff filed a first amended
complaint that was virtually identical to the original complaint
and that, once again, did not attach any of the alleged
agreements or describe their terms in any greater detail. The
trial court sustained the defendants‟ demurrer to the first
amended complaint without leave to amend, observing, “the
opposition fails to address about eighty percent of the issues
3
raised (e.g., Statute of Limitations and Statute of Frauds), and
fails to cite any governing law on point (e.g., tender, contract and
injunction).” The court then explained that “„[c]ontentions are
waived when a party fails to support them with reasoned
argument and citations to authority.‟”
The Court of Appeal affirmed. (Ivanoff v. Bank of America
(May 13, 2015, B256462 [nonpub. opn.].) The court stated
Ivanoff‟s brief was “blatantly deficient,” containing no citation to
the record and essentially no factual or legal analysis. The court
then ruled, “Since Ivanoff has not demonstrated that the trial
court erred, we are in no position to reverse its order.” (Ibid.) In
addition, because Ivanoff had made no attempt to demonstrate
how she could amend her complaint to plead a viable claim, the
Court of Appeal concluded leave to amend was not warranted.
2. The Current TILA/Fraud Lawsuit
On August 20, 2015, four weeks after the Supreme Court
denied Ivanoff‟s petition for review in the initial lawsuit, Ivanoff
again sued the Bank, ReconTrust and MERS, as well as two of
the Bank‟s employees, in a complaint for violation of TILA, the
UCL, fraudulent omission/concealment and injunctive relief. The
general allegations of the complaint were identical to those in the
prior lawsuit relating to the December 2007 refinancing and
February 1, 2011 loan modification agreements. (As in her prior
lawsuit, Ivanoff did not attach copies of the refinancing or loan
modification agreements.)
Rather than alleging breach of contract, however, Ivanoff‟s
new lawsuit alleged the Bank violated TILA by failing to make
required disclosures with respect to the “escrow option
insurance,” which was surreptitiously added to Ivanoff‟s monthly
loan payment obligation. Ivanoff additionally alleged the Bank‟s
4
violation of TILA was an unlawful business practice within the
meaning of the UCL and the failure of its employees to disclose
the loan modification agreement would include an additional
monthly sum of $760.72 for “escrow option insurance” constituted
fraudulent concealment. Had she known the true facts, Ivanoff
alleged, she would have considered other financing options.
Ivanoff also sought injunctive relief preventing a sale at
foreclosure of her condominium.
The Bank demurred, contending Ivanoff‟s complaint was
barred as a matter of law by the doctrines of claim preclusion and
issue preclusion. The Bank argued Ivanoff was asserting the
same primary right in both actions (claim preclusion) and the
issues alleged had been actually litigated and decided against
Ivanoff on the merits (issue preclusion). The Bank also argued in
support of its demurrer that the claims for violation of TILA and
fraud were time-barred; Ivanoff lacked standing to assert a UCL
claim because she failed to allege she had lost money or property
as a result of the Bank‟s actions; and the claim for an injunction
against foreclosure was improper because injunctive relief is a
remedy, not a cause of action. In her opposition to the demurrer
Ivanoff emphasized she had not pleaded either violation of TILA
or fraud in her prior lawsuit.
The trial court sustained the demurrer without leave to
amend. The court ruled Ivanoff‟s claims were barred by
res judicata, explaining “[t]he „primary right‟ of Plaintiff in both
actions—the right to be free from increased loan payments that
were not agreed to—is the same, which means the present
proceeding is on the same „cause of action‟ as the prior
proceeding.” The court also ruled the claims were barred by
collateral estoppel because her four causes of action “all involve
5
the same underlying issue—the validity of the increased loan
payments that Plaintiff allegedly did not agree to.” That issue,
the trial court found, had already been litigated, decided and
finalized in the prior litigation. Finally, the trial court agreed
with the Bank that Ivanoff‟s claims independently fail: The TILA
and fraud claims were barred by the governing statutes of
limitation (one year and three years, respectively); Ivanoff lacked
standing to bring a UCL claim; and the cause of action for
injunctive relief was not a valid cause of action.
The order sustaining the demurrer and judgment of
dismissal was filed March 3, 2016. Notice of entry was served on
March 10, 2016. Ivanoff filed a timely notice of appeal.
DISCUSSION
1. Standard of Review
A demurrer tests the legal sufficiency of the factual
allegations in a complaint. We independently review the superior
court‟s ruling on a demurrer and determine de novo whether the
complaint alleges facts sufficient to state a cause of action or
discloses a complete defense. (Loeffler v. Target Corp. (2014)
58 Cal.4th 1081, 1100; Committee for Green Foothills v. Santa
Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42.) We
assume the truth of the properly pleaded factual allegations,
facts that reasonably can be inferred from those expressly
pleaded and matters of which judicial notice has been taken.
(Evans v. City of Berkeley (2006) 38 Cal.4th 1, 20; Schifando v.
City of Los Angeles (2003) 31 Cal.4th 1074, 1081.) We liberally
construe the pleading with a view to substantial justice between
the parties (Code Civ. Proc., § 452; Gilkyson v. Disney
Enterprises, Inc. (2016) 244 Cal.App.4th 1336, 1340; see
Schifando, at p. 1081 [complaint must be read in context and
6
given a reasonable interpretation]); but, “[u]nder the doctrine of
truthful pleading, the courts „will not close their eyes to
situations where a complaint contains allegations of fact
inconsistent with attached documents, or allegations contrary to
facts which are judicially noticed.‟” (Hoffman v. Smithwoods RV
Park, LLC (2009) 179 Cal.App.4th 390, 400; see Brakke v.
Economic Concepts, Inc. (2013) 213 Cal.App.4th 761, 767 [“[w]hile
the „allegations [of a complaint] must be accepted as true for
purposes of demurer,‟ the „facts appearing in exhibits attached to
the complaint will also be accepted as true and, if contrary to the
allegations in the pleading, will be given precedence‟”];
SC Manufactured Homes, Inc. v. Liebert (2008) 162 Cal.App.4th
68, 83 [“[i]f the allegations in the complaint conflict with the
exhibits, we rely on and accept as true the contents of the
exhibits”].)
Although a general demurrer does not ordinarily reach
affirmative defenses, it “will lie where the complaint „has
included allegations that clearly disclose some defense or bar to
recovery.‟” (Casterson v. Superior Court (2002) 101 Cal.App.4th
177, 183; accord, Nolte v. Cedars-Sinai Medical Center (2015)
236 Cal.App.4th 1401, 1406; Favila v. Katten Muchin Rosenman
LLP (2010) 188 Cal.App.4th 189, 224.) “Thus, a demurrer based
on an affirmative defense will be sustained only where the face of
the complaint discloses that the action is necessarily barred by
the defense.” (Casterson, at p. 183; accord, Favila, at p. 224; see
Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185,
1191 [application of a statute of limitations based on facts alleged
in a complaint is a legal question subject to de novo review].)
“„Where the complaint is defective, “[i]n the furtherance of
justice great liberality should be exercised in permitting a
7
plaintiff to amend his [or her] complaint.”‟” (Aubry v. Tri-City
Hospital Dist. (1992) 2 Cal.4th 962, 970-971.) We determine
whether the plaintiff has shown “in what manner he [or she] can
amend [the] complaint and how that amendment will change the
legal effect of [the] pleading.” (Goodman v. Kennedy (1976)
18 Cal.3d 335, 349.) “[L]eave to amend should not be granted
where . . . amendment would be futile.” (Vaillette v. Fireman’s
Fund Ins. Co. (1993) 18 Cal.App.4th 680, 685; see generally
Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal.App.4th
365, 373-374.)
2. The Bank’s Demurrer Was Properly Sustained Without
Leave To Amend
a. Violation of TILA
i. The TILA claim is not subject to claim preclusion
or issue preclusion
The doctrine of res judicata has two aspects—claim
preclusion and issue preclusion. (DKN Holdings LLC. v. Faerber
(2015) 61 Cal.4th 813, 824 (DKN Holdings); Boeken v. Philip
Morris USA, Inc. (2010) 48 Cal.4th 788, 797.) “Claim preclusion
„prevents relitigation of the same cause of action in a second suit
between the same parties or parties in privity with them.‟
[Citation.] Claim preclusion arises if a second suit involves
(1) the same cause of action (2) between the same parties [or
those in privity with them] (3) after a final judgment on the
merits in the first suit. [Citations.] If claim preclusion is
established, it operates to bar relitigation of the claim
altogether.” (DKN Holdings, at p. 824; accord, Mycogen Corp. v.
Monsanto Co. (2002) 28 Cal.4th 888, 896 (Mycogen); Johnson v.
GlaxoSmithKline, Inc. (2008) 166 Cal.App.4th 1497, 1507.) The
bar applies if the cause of action could have been brought,
8
whether or not it was actually asserted or decided in the first
lawsuit. (Busick v. Workermen’s Comp. Appeals Bd. (1972)
7 Cal.3d 967, 974; Zevnik v. Superior Court (2008)
159 Cal.App.4th 76, 82.) The doctrine promotes judicial economy
and avoids piecemeal litigation by preventing a plaintiff from
“„“splitting a single cause of action or relitigat[ing] the same
cause of action on a different legal theory or for different relief.”‟”
(Mycogen, at p. 897.)
The second aspect of res judicata, issue preclusion,
historically referred to as collateral estoppel, “prohibits the
relitigation of issues argued and decided in a previous case even
if the second suit raises a different cause of action. [Citation.]
Under issue preclusion, the prior judgment conclusively resolves
an issue actually litigated and determined in the first action.”
(DKN Holdings, supra, 61 Cal.4th at p. 824; accord, Boeken v.
Philip Morris USA, Inc., supra, 48 Cal.4th at p. 797.) The
doctrine applies “(1) after final adjudication (2) of an identical
issue (3) actually litigated and necessarily decided in the first
suit and (4) asserted against one who was a party in the first suit
or one in privity with that party.” (DKN Holdings, at p. 825.)
The doctrine differs from claim preclusion in that it operates as a
conclusive determination of issues; it does not bar a cause of
action. (Ibid.) In addition, unlike claim preclusion, issue
preclusion can be raised by one who is not a party to the prior
proceeding against one who was a party or his or her privy.
(Ibid.; Lucido v. Superior Court (1990) 51 Cal.3d 335, 341.)
Moreover, even if the minimal requirements for issue preclusion
are satisfied, courts will not apply the doctrine if policy
considerations outweigh the doctrine‟s purpose in a particular
case. (Lucido, at pp. 342-343.)
9
The trial court ruled Ivanoff‟s TILA claim was barred by
both claim preclusion and issue preclusion, reasoning, as to claim
preclusion, the primary right at issue in that cause of action and
Ivanoff‟s initial breach of contract lawsuit was the same—“the
right to be free from increased loan payments that were not
agreed to”—and, as to issue preclusion, the validity of the
increased loan payments had been actually litigated and
necessarily decided in the first lawsuit. Neither ruling is correct.
It is true that when two actions involving the same parties
seek compensation for the same harm, “„they generally involve
the same primary right.‟” (Bullock v. Philip Morris USA, Inc.
(2011) 198 Cal.App.4th 543, 558.) But, not always: “[D]ifferent
primary rights may be violated by the same wrongful conduct.”
(Branson v. Sun-Diamond Growers (1994) 24 Cal.App.4th 327,
342 [corporation‟s failure to indemnify may violate an employee‟s
statutory right to indemnity under Corp. Code, § 317 and a
separate contractual right to indemnity]; accord, Le Parc
Community Assn. v. Workers’ Comp. Appeals Bd. (2003)
110 Cal.App.4th 1161, 1172-1173 [uninsured employer‟s
negligence may violate employee‟s distinct primary rights under
workers‟ compensation and tort law].) For example, in Agarwal
v. Johnson (1979) 25 Cal.3d 932, 954-955, disapproved on another
ground in White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 574,
footnote 4, the Supreme Court held an employer‟s racially
discriminatory conduct may violate distinct primary rights under
federal civil rights law and state tort law regarding defamation
and intentional infliction of emotional distress.
Here, although Ivanoff‟s contract and TILA claims are
largely based on the same set of underlying facts, the two actions
do not involve the same primary rights. “The purpose of the
10
TILA is to promote the „informed use of credit‟ by consumers.”
(Anderson Bros. Ford v. Valencia (1981) 452 U.S. 205, 219
[101 S.Ct. 2266, 68 L.Ed.2d 783].) Thus, “the TILA‟s
requirements principally focus on disclosures that creditors must
make when offering credit.” (Lyon v. Chase Bank United States,
N.A. (9th Cir. 2011) 656 F.3d 877, 887; see 15 U.S.C. § 1601(a)
[“[i]t is the purpose of this subchapter to assure a meaningful
disclosure of credit terms so that the consumer will be able to
compare more readily the various credit terms available to him
and avoid the uninformed use of credit, and to protect the
consumer against inaccurate and unfair credit billing and credit
card practices”].) The primary right at issue in Ivanoff‟s TILA
cause of action, therefore, was the right to full disclosure of the
material terms of her home loan refinancing by Countrywide and
the subsequent loan modification by the Bank—in particular, the
addition of a $30,000 penalty and fees of $37,000 to the
outstanding loan balance as part of the December 2007
refinancing and the addition of an escrow option insurance
charge of $760.72 to the monthly loan payment as part of the
February 1, 2011 loan modification. That is a federal statutory
right distinct from the common law right to have enforced only
those contractual terms to which she had agreed, the claim
presented by her initial lawsuit. Accordingly, the doctrine of
claim preclusion does not bar Ivanoff‟s TILA claim. (See
generally Baral v. Schnitt (2016) 1 Cal.5th 376, 395 [“the primary
right theory is notoriously uncertain in application”].)
Similarly, even if the conclusory statement of grounds
recited by the court when it sustained the Bank‟s demurrer to the
first amended complaint in the initial lawsuit is properly
considered a decision on the merits of Ivanoff‟s contract claim, the
11
adequacy of the disclosure of credit terms in the refinancing and
loan modification agreements was neither actually litigated nor
finally determined in that action. The doctrine of issue
preclusion does not bar Ivanoff‟s TILA claim either.
ii. The TILA claim is time-barred
Although the trial court erred in concluding Ivanoff‟s TILA
cause of action was barred by the doctrines of claim and issue
preclusion, we agree Ivanoff‟s claim was untimely under TILA‟s
governing limitations provisions, the court‟s alternative ground
1
for sustaining the demurrer to the TILA cause of action.
Ivanoff‟s right to recover damages for the Bank‟s alleged
violation of TILA is set forth in title 15 of the United States Code
section 1640(a)(1). Pursuant to title 15 of the United States Code
section 1640(e), most TILA actions must be filed “within one year
1
Ivanoff‟s appellate brief does not address this alternate
basis for the trial court‟s ruling sustaining the demurrer to the
TILA cause of action. Ordinarily, courts treat an appellant‟s
failure to raise an issue in her briefs as forfeiting that challenge.
(See, e.g., Tiernan v. Trustees of Cal. State University & Colleges
(1982) 33 Cal.3d 211, 216, fn. 4 [issue not raised on appeal
deemed forfeited or waived]; Wall Street Network, Ltd. v. New
York Times Co. (2008) 164 Cal.App.4th 1171, 1177-1178
[“[g]enerally, appellants forfeit or abandon contentions of error
regarding the dismissal of a cause of action by failing to raise or
address the contentions in their briefs on appeal”]; Paulus v. Bob
Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 685 [“[c]ourts will
ordinarily treat the appellant‟s failure to raise an issue in his or
her opening brief as a waiver of that challenge”].) However, in
light of Ivanoff‟s self-represented status and our responsibility to
independently review the trial court‟s order sustaining the
demurrer to her complaint, we address the merits of the
limitations rulings.
12
from the date of the occurrence of the violation.” However, claims
alleging violations of title 15 of the United States Code
section 1639, which requires specific disclosures and sets certain
restrictions on loans secured by a mortgage, may be brought
within three years of the date of violation. The violations here
allegedly occurred in 2007 and 2010 (see, e.g., Philibotte v.
Nisource Corporate Services Co. (1st Cir. 2015) 793 F.3d 159, 163
[date of occurrence for disclosure violations is the date the
transaction was consummated]; King v. California (9th Cir. 1986)
784 F.2d 910, 915 [same]) and were allegedly first discovered by
Ivanoff, according to her verified complaint, when she had her
loan “forensically examined” in May 2011. (See King, at p. 915
[“the doctrine of equitable tolling may, in the appropriate
circumstances, suspend the limitations period until the borrower
discovers or had reasonable opportunity to discover the fraud or
nondisclosures that form the basis of the TILA action”].)
The refinancing transaction concluded in December 2007.
The loan modification closed with an effective date of February 1,
2011. Ivanoff‟s current lawsuit was not filed until August 20,
2015. Accordingly, whether measured by title 15 of the United
States Code section 1640(e)‟s one-year or three-year limitations
period, and even if equitable tolling was appropriate until May
2011 under the circumstances alleged, Ivanoff‟s TILA claim is
time-barred.
b. Violation of the UCL
i. Ivanoff adequately alleged injury in fact and has
standing to pursue a UCL claim
Unfair competition under the UCL means “any unlawful,
unfair or fraudulent business act or practice and unfair,
deceptive, untrue or misleading advertising . . . .” Written in the
13
disjunctive, Business and Professions Code section 17200
establishes “three varieties of unfair competition—acts or
practices which are unlawful, unfair, or fraudulent.” (Cel-Tech
Communications, Inc. v. Los Angeles Cellular Telephone Co.
(1999) 20 Cal.4th 163, 180; accord, Kasky v. Nike, Inc. (2002)
27 Cal.4th 939, 949.) “Violation of federal statutes, including
those governing the financial industry, may serve as the
predicate for a UCL cause of action.” (Rose v. Bank of America,
N.A. (2013) 57 Cal.4th 390, 394.) Ivanoff‟s complaint alleged the
Bank‟s violation of TILA constituted an unlawful business
practice, an appropriate basis for her UCL claim. The trial
court‟s ruling the UCL cause of action was barred by claim and
issue preclusion suffers from the same defects as its ruling with
respect to the TILA claim itself.
The trial court alternatively ruled that Ivanoff lacked
standing to pursue the UCL claim, an argument also advanced on
appeal by the Bank, which contends Ivanoff cannot show any loss
of money or property as a result of its allegedly unlawful business
practices. This ruling, too, was error.
“Historically, the UCL authorized any person acting for the
interests of the general public to sue for relief notwithstanding
any lack of injury or damages. [Citation.] At the November 2,
2004, General Election, the voters approved Proposition 64,
which amended the UCL to provide that a private person has
standing to bring a UCL action only if he or she „has suffered
injury in fact and has lost money or property as a result of the
unfair competition.‟” (Hale v. Sharp Healthcare (2010)
183 Cal.App.4th 1373, 1382.) “„In approving Proposition 64, the
voters found and declared that the amendments were necessary
to prevent abusive UCL actions by attorneys whose clients had
14
not been “injured in fact” or used the defendant‟s product or
service, and to ensure “that only the California Attorney General
and local public officials [are] authorized to file and prosecute
actions on behalf of the general public.”‟” (Troyk v. Farmers
Group, Inc. (2009) 171 Cal.App.4th 1305, 1345; see Kwikset Corp.
v. Superior Court (2011) 51 Cal.4th 310, 320 (Kwikset) [“[w]hile
the substantive reach of [the UCL] remains expansive, the
electorate has materially curtailed the universe of those who may
enforce their provisions”].)
To satisfy Proposition 64 a plaintiff “must now establish a
loss or deprivation of money or property sufficient to qualify as
injury in fact, i.e., economic injury, and (2) show that that
economic injury was the result of, i.e. caused by, the unfair
practice or false advertising that is the gravamen of the claim.”
(Kwikset, supra, 51 Cal.4th at p. 322.) “Injury in fact” as used in
Proposition 64 has the same meaning as under federal law:
“„[A]n invasion of a legally protected interest which is (a) concrete
and particularized, [citations]; and (b) “actual or imminent, not
„conjectural‟ or „hypothetical,‟” [citations].‟” (Kwikset, at p. 322.)
Proposition 64, however, imposes the additional requirement that
the plaintiff have lost money or property. (Ibid.) Indeed, loss of
money or property—that is, “economic injury”—“is itself a classic
form of injury in fact.” (Id. at p. 323; see id. at p. 325, fn. 8
[“proof of lost money or property will generally satisfy the
element of injury in fact”].) Economic injury may be shown in
many ways including a plaintiff “surrender[ing] in a transaction
more, or acquir[ing] in a transaction less, than he or she
otherwise would have”; “hav[ing] a present or future property
interest diminished”; and “be[ing] required to enter into a
15
transaction, costing money or property, that would otherwise
have been unnecessary.” (Id. at p. 323.)
Although Proposition 64‟s standing requirement is more
restrictive than the federal law requirement because the injury
must be economic, “the quantum of lost money or property
necessary to show standing is only so much as would suffice to
establish injury in fact . . . . [F]ederal courts have reiterated that
injury in fact is not a substantial or insurmountable hurdle; as
then Judge Alito put it: „Injury-in-fact is not Mount Everest.‟
[Citation.] Rather, it suffices for federal standing purposes to
„“allege[] some specific, „identifiable trifle‟ of injury.”‟” (Kwikset,
supra, 51 Cal.4th at p. 324.) “„“The basic idea that comes out in
numerous cases is that an identifiable trifle is enough for
standing to fight out a question of principle; the trifle is the basis
for standing and the principle supplies the motivation.”‟” (Id. at
p. 325, fn. 7.)
Applying these principles in Sarun v. Dignity Health (2014)
232 Cal.App.4th 1159, this court held “the existence of an
enforceable obligation, without more, ordinarily constitutes
actual injury or injury in fact,” even if the creditor has not begun
any collection activity. (Id. at p. 1167; cf. Adams v. Paul (1995)
11 Cal.4th 583, 591, fn. 5 [“actual injury . . . may well precede
quantifiable financial costs”].) Whether or not Ivanoff‟s
allegation that she “stands to lose her home” adequately pleaded
injury in fact under the UCL, Ivanoff also alleged, as a result of
the Bank‟s unlawful business practices, she paid money to the
Bank and received billings for increased monthly loan payments
in excess of what she should have owed (or was told she would
owe). No more is required to allege injury in fact.
16
ii. The UCL claim is time-barred
“Any action to enforce any cause of action pursuant to [the
UCL] shall be commenced within four years after the cause of
action accrued.” (Bus. & Prof. Code, § 17208; see Aryeh v. Canon
2
Business Solutions, Inc., supra, 55 Cal.4th at p. 1192.)
Application of the UCL limitations provision “is governed by
common law accrual rules to the same extent as any other
statute.” (Aryeh, at p. 1196.) Thus, absent special circumstances,
the last element accrual rule is fully applicable in UCL cases.
(See, e.g., Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1110
[“[u]nder the discovery rule, the statute of limitations begins to
run when the plaintiff suspects or should suspect that her injury
was caused by wrongdoing, that someone has done something
wrong to her”].)
In her verified first amended complaint in the initial
contract lawsuit against the Bank, Ivanoff alleged her loan was
2
The Bank did not demur to the UCL cause of action on
statute of limitations grounds. Although an issue not raised in
the trial court is typically forfeited, we can reach a ground for
demurrer not raised below if it presents a pure question of law
and the parties have been given an opportunity to address it.
(See Woods v. Fox Broadcasting Sub., Inc. (2005) 129 Cal.App.4th
344, 357; Home Ins. Co. v. Zurich Ins. Co. (2002) 96 Cal.App.4th
17, 22.) Indeed, we must affirm an order of dismissal when there
are no grounds for relief and the demurrer is meritorious as a
matter of law. (Trinkle v. California State Lottery (1999)
71 Cal.App.4th 1198, 1201 [appellate court must affirm if the
trial court‟s decision to sustain the demurrer was correct on any
theory].) We invited supplemental letter briefs from the parties
addressing whether Ivanoff‟s UCL cause of action was timely
filed. The Bank responded; Ivanoff did not.
17
forensically examined in May 2011 (that is, after both the
refinancing and the loan modification). That allegation was
repeated in Ivanoff‟s verified complaint in the instant action.
However, in the pending action Ivanoff also alleged she “did not
discover the falsity/material omissions until several years later
including May 2012.” That inconsistent and unexplained
allegation is properly ignored. (Larson v. UHS of Rancho
Springs, Inc. (2014) 230 Cal.App.4th 336, 344 [the principle of
“„“truthful pleading”‟” requires us to disregard “facts that
contradict the facts or positions that the plaintiff pleaded in
earlier actions” or in a pleading in the same action, italics
omitted]; accord, Cantu v. Resolution Trust Corp. (1992)
4 Cal.App.4th 857, 877-878; see Hendy v. Losse (1991) 54 Cal.3d
723, 742 [“„“Where a verified complaint contains allegations
destructive of a cause of action, the defect cannot be cured in
subsequently filed pleadings by simply omitting such allegations
without explanation. In such a case the original defect infects the
subsequent pleading so as to render it vulnerable to demurrer”‟”;
3
citations omitted].)
3
“„When the plaintiff pleads inconsistently in separate
actions, the plaintiff‟s complaint is nothing more than a sham
that seeks to avoid the effect of a demurrer.‟” (Larson v. UHS of
Rancho Springs, Inc., supra, 230 Cal.App.4th at p. 344.) “„The
sham pleading doctrine is not “„intended to prevent honest
complainants from correcting erroneous allegations . . . or to
prevent correction of ambiguous facts.‟” [Citation.] Instead, it is
intended to enable courts “„to prevent an abuse of process.‟”
[Citation.]‟ [Citations.] Plaintiffs therefore may avoid the effect
of the sham pleading doctrine by alleging an explanation for the
conflicts between the pleadings.‟” (Ibid.)
18
Moreover, Ivanoff has nowhere attempted to explain why
the discrepancies between the sums she believed would be due
following the 2007 refinancing and the February 1, 2011 loan
modification and the amounts demanded by the Bank did not
provide inquiry notice, if not actual notice, of the Bank‟s alleged
unlawful business practices. (See Fox v. Ethicon Endo-Surgery,
Inc. (2005) 35 Cal.4th 797, 815 [“[a] plaintiff seeking to utilize the
discovery rule must plead facts to show his or her inability to
have discovered the necessary information earlier despite
reasonable diligence”]; see also Union Carbide Corp. v. Superior
Court (1984) 36 Cal.3d 15, 25 [“„[I]f on the face of the complaint
the action appears barred by the statute of limitations, plaintiff
has an obligation to anticipate the [statute of limitations] defense
and plead facts to negative the bar.‟”].) Whether measured by the
dates of payment notices following the December 2007
refinancing or the February 2011 loan modification, or even the
May 2011 date Ivanoff has twice identified, her UCL cause of
action filed in August 2015 was time-barred.
c. Fraudulent omission/concealment
Ivanoff‟s fraudulent concealment claim, like her TILA and
UCL claims, is based on the alleged nondisclosure of material
terms of the loan refinancing (the addition of a $30,000 penalty
and fees of $37,000 to the outstanding loan balance) and loan
modification (the addition of an escrow option insurance charge
to the monthly loan payment ). A fraud cause of action, whether
based on intentional misrepresentation or concealment, is
governed by the three-year limitations period set forth in Code of
Civil Procedure section 338, subdivision (d). However, that
provision also specifies, “The cause of action in that case is not
deemed to have accrued until the discovery, by the aggrieved
19
party, of the facts constituting the fraud . . . .” (See Alfaro v.
Community Housing Improvement System & Planning Assn., Inc.
(2009) 171 Cal.App.4th 1356, 1391; see also Cleveland v. Internet
Specialties West, Inc. (2009) 171 Cal.App.4th 24, 31 [“the statute
of limitations in a cause of action for fraud „commences to run
after one has knowledge of the facts sufficient to make a
reasonably prudent person suspicious of fraud, thus putting him
on inquiry . . .‟”].) Whether measured by the receipt of payment
notices that demanded a larger sum than she had anticipated,
the May 2011 forensic examination of her loan, or even the
purported May 2012 discovery of the Bank‟s “falsity/material
omissions,” Ivanoff‟s cause of action for fraud, not filed until
August 20, 2015, is barred by section 338, subdivision (d)‟s three-
year limitations period.
d. Injunctive relief
“Injunctive relief is a remedy, not a cause of action.
[Citations.] A cause of action must exist before a court may grant
a request for injunctive relief.” (Allen v. City of Sacramento
(2015) 234 Cal.App.4th 41, 65; accord, City of South Pasadena v.
Department of Transportation (1994) 29 Cal.App.4th 1280, 1293
[“„A permanent injunction is merely a remedy for a proven cause
of action. It may not be issued if the underlying cause of action is
not established.‟”]; see Roberts v. Los Angeles County Bar Assn.
(2003) 105 Cal.App.4th 604, 618; McDowell v. Watson (1997)
59 Cal.App.4th 1155, 1159.) Because none of Ivanoff‟s other
causes of action may be maintained, her request for injunctive
relief necessarily fails as well.
e. Leave to amend
Although Ivanoff correctly states the trial court abuses its
discretion if it sustains a demurrer without leave to amend if the
20
pleading defect can be cured, she does not identify any additional
facts she can allege to refute the conclusion her claims are time-
barred as a matter of law. (See Schifando v. City of Los Angeles,
supra, 31 Cal.4th at p. 1081 [“plaintiff has the burden of proving
that an amendment would cure the defect”].) Accordingly, the
Bank‟s demurrer was properly sustained without leave to amend.
DISPOSITION
The order dismissing the action is affirmed. The parties
are to bear their own costs on appeal.
PERLUSS, P. J.
We concur:
SEGAL, J.
SMALL, J. *
* Judge of the Los Angeles County Superior Court, assigned
by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
21
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376 Mich. 271 (1965)
136 N.W.2d 889
AMERICAN TELEPHONE & TELEGRAPH COMPANY
v.
EMPLOYMENT SECURITY COMMISSION.
Calendar Nos. 25-28, Docket Nos. 50,450-50,453.
Supreme Court of Michigan.
Decided October 4, 1965.
*277 Cross, Wrock, Miller, Vieson & Kelley (William A. Coughlin, Jr., of counsel), for plaintiff.
Zwerdling, Miller, Klimist & Maurer (Bruce A. Miller and Joseph R. Wietek, of counsel), for defendant claimants.
O'HARA, J.
Appellants here are telephone operators employed or formerly employed by appellee-utility. Each asked for and received a maternity leave of absence. In each case it was give for a specified period. Each, at differing times both prior to and upon termination of the leave granted, sought reemployment from appellee. Each was refused reemployment on the ground of lack of work. Each filed for employment security benefits. By administrative determination and redetermination benefits to each were denied. Each appealed to a referee. Different referees reached different conclusions, resulting in affirmance or reversal of the commission. Each claim was appealed to the appeal board. All claimants were granted benefits by the board. The employer appealed all cases to the circuit court of Ingham county. The circuit judge reversed the appeal board in all cases. All claimants are before us as appellants.
The provision of the Michigan employment security act[1] which controls reads:
"Sec. 29. (1) An individual shall be disqualified for benefits: * * *
"(d) For the duration of her unemployment when it is found by the commission that total or partial unemployment is due to pregnancy: Provided, That *278 this provision shall not apply to an individual who has received a leave of absence, due to pregnancy, from her employing unit and applies for reinstatement at the termination of such leave but is not reemployed by such employing unit. Leave of absence as used in this section shall mean an authorized absence from employment with an assurance of reemployment by the employing unit."
Claimant-appellants contend that:
(1) The circuit court exceeded the settled permissible bounds of judicial review of the appeal board's findings.
(2) Each of them received a leave of absence as defined in the statute with an assurance of reemployment.
(3) The appellee-employer acquiesced in the construction of the act which awarded them benefits.
The appellee contends that:
(1) The circuit court's finding was well within the scope of judicial review.
(2) Claimant-appellants did not receive a leave of absence with assurance of reemployment within the meaning of the quoted statute.
(3) It did not acquiesce in a construction of the statute entitling claimant-appellants to benefits.
As previously noted, referees for the commission lawyers all, who daily hear contested cases under the act divided as to its construction. Circuit judges, all of whom have had measurable experience in these appeals, were likewise divided. There is no controlling precedent of this Court except as to the varied contentions as to the scope of review. As to this issue we hold that the opinion of Mr. Justice SOURIS in Wickey v. Employment Security Commission, 369 Mich 487, controls and we do not find that the trial judge offended against it. In fact, the *279 circuit court demonstrated that he fully apprehended the scope of review in his observation:
"The court does not find any disputed issue here with respect to assurance, but if there are then it must be said that the findings of the appeal board are against the great weight of the evidence."
Judge Salmon considered the real issue to be construction of the statutory phrase with an assurance of reemployment by the employing unit. He construed it as a matter of law, as was his duty. It is axiomatic that the overriding consideration in this respect is the determination of legislative intent.
"The fundamental rule of construction of statutes is to ascertain and give effect to the intention of the legislature." (June v. School District No. 11, Southfield Township. Oakland County, 283 Mich 533, 543 [116 ALR 581].)
It is equally as fundamental that in such determination words are given their ordinary meaning. See People v. Powell, 280 Mich 699, 703 (111 ALR 721). When the legislature used the phrase "leave of absence," we must presume it was used in its normally accepted meaning. It seems to us that "leave of absence" generally speaking, means a temporary authorized release from one's duty for a stated period with the right or duty to return at the end thereof. If then, as we conclude that is what the phrase connotes in its ordinary meaning, what was the legislative reason for adding "with an assurance of reemployment by the employing unit?" We look first to the statute itself for any significant language of clarification. We think when the legislature included the admonition "as used in this section," it was stating clearly and unequivocally that whatever variations the term might import *280 when used by the military establishment, educational institutions, or any other entity which may grant leaves of absence, the phrase "as used in this section" obligates us to respect the definition specified in the statute. Our coordinate governmental branch tells us that whatever we may think "leave of absence" means, whatever the marines or the University of Michigan might consider it to be, however one of a hundred and one different employers use the term, or how six different dictionaries may define it, "leave of absence" as used in this section of the statute "shall mean an authorized absence from employment with an assurance of reemployment by the employing unit." We would be hard put to give to the statute any meaning other than that accorded it by the trial judge.
We think it further significant, as did the trial judge, that the collective bargaining agreement between appellants' duly constituted bargaining agent and appellee recites:
"Except as otherwise stated with respect to leaves of absence for union duties and military leaves, the granting of a leave without pay does not include the assurance that an employee's position will be available to him at the termination of his leave. The company may, however, reinstate the employee in the same or similar capacity if such a position is available when the employee's leave is terminated." (Art 8, paragraph 8.12) (Emphasis this Court's.)
To this extent then we affirm Judge Salmon's construction of the statute. The variant holdings of the referees, of the appeal board and the different circuit courts of the State are bound hereby. Leave of absence for the purpose of this section of this statute must include in it an affirmative commitment by the employer to reemploy. The commitment in *281 the words of the trial judge must be "sure, certain and definite."
We turn now to whether in these cases such "sure, certain and definite" assurance of reemployment was given. We decline to accept the "waiver" theory urged by appellants. They contend that because in prior instances they were rehired upon application, and that because certain referee decisions which granted benefits to these claimants and to others similarly situated went unappealed, appellants thereby acquired some manner of vested right to benefits in the instant cases. As noted by appellees in their brief, the facts in the unappealed referee cases might very well have varied from those in the cases at bar, and we may not accept the employer's choice not to appeal them as controlling here. Neither is the "past practice" of rehiring controlling. In discharge for misconduct cases a course of employer conduct might lull employees into the well-founded belief in and reliance upon an employer's interpretation of what constitutes "misconduct." Misconduct is not, as is the involved term here, expressly defined in the statute. Here public policy the wisdom or efficacy of which cannot be our concern as a Court imposes a disqualification for benefits when unemployment is "due to pregnancy." There follows the statutorily defined exception in cases of authorized leave with assurance of reemployment. Under the test we have heretofore adopted that such assurance be "sure, certain and definite" an employer option to reemploy, when labor market conditions permit, cannot be held to alter the plain meaning of the statute when it is invoked. The legislature did not inhibit the employer from reemploying an employee granted a maternity leave. It did affirmatively provide for disqualification when her unemployment is due to pregnancy unless the statutory exception obtains.
*282 We must now determine under the interpretation of the statute which we have held reflects the legislative intention, whether there was testimony from which the appeal board could have found as a matter of fact that claimant-appellants received sure, definite and certain assurance of reemployment.
We have combed the record with care. We find abundant testimony that the employer did not advise any claimant-appellant that she would not be reemployed. We find abundant testimony that each claimant-appellant fully expected to be reemployed. We find ample testimony to establish that when work was available no other employee similarly situated as claimant-appellants was ever refused reemployment upon application therefor.
Nowhere, however, can we find any testimony that upon application for maternity leave, the employer affirmatively gave to any appellant affirmative assurance of reemployment. None the less, the appeal board so found in the following variations in language:
(Coleman): "It is the practice of employer to reinstate employees absent on a pregnancy leave."
(Fuller): "Claimant had reasonable assurance when she commenced her leave that she would resume her work upon the termination of that leave."
(Messer): "The facts strongly indicate that the claimant had reasonable assurance when she commenced her leave that she would resume her work upon the termination of that leave."
(Charboneau): "On the basis of her past experience with maternity leaves of absence, had reasonable assurance when she commenced her leave that she would resume her work upon the termination of that leave."
*283 In the case of appellant Coleman where the appeal board affirmed the referee without opinion, the finding was a finding of ultimate fact. That fact was that it was the practice of the employer under these circumstances to reemploy. In her case Judge Salmon was eminently correct in holding that this finding of fact was not dispositive of the appeal; that no controlling issue of fact existed, and that only a legal question of statutory interpretation was involved.
In the other 3 cases we have what more properly should be designated legal conclusions from facts. As pointed out by Mr. Justice DETHMERS in George F. Alger Co. v. Public Service Commission, 339 Mich 104, at pp 111, 112:
"Because there is no dispute concerning what external acts defendants carried out, * * * the commission was not, at that juncture, deciding a question of fact, but, rather, the legal one of what acts are necessary, under the statute, to avoid forfeiture. Hence, there was, in this respect, no substituting of the circuit court's opinion for that of the commission on a question of fact."
That is the precise situation here. The appeal board was deciding the question of what external acts constituted an assurance of reemployment. In this very difficult of delineation area we must carefully distinguish between an administrative body's arriving at a legal conclusion from adduced facts and drawing conclusions or inferences of fact from testimonial facts themselves. However metaphysical this may sound, the concept must be articulated in decision language because upon that language depends the whole process of adjudication by an administrative body.
We cannot here undertake to make the distinction for every commission, board, or bureau functioning *284 in every separate area entrusted to its expertise because few, if any, statutes delegating authority to the particular body are identical. Each is a complex of legislative delegation with restrictions, limitations and varying scopes of statutory judicial review. We do undertake here to distinguish between the instances where an administrative body, under the legislative delegation of power is authorized by the terms of the statute to make ultimate conclusions of fact, which conclusions of fact, if testimonially supported, become binding upon courts on review, as opposed to cases such as this where the involved section of the statute includes its own legislatively created legal definition of a term used within the statute. Had the statute in this case entrusted to the commission the right to determine what constituted a leave of absence and what the incidents of a leave of absence were, any court would be chary of substituting its determination for that of the commission. As Mr. Justice Holmes so incisively hold in Chicago, B. & Q.R. Co. v. Babcock, 204 US 585, 598 (27 S Ct 326, 329, 51 L ed 636):
"Within its jurisdiction, except, as we have said, in the case of fraud or a clearly shown adoption of wrong principles, it [the agency] is the ultimate guardian of certain rights. The State has confided those rights to its protection and has trusted to its honor and capacity as it confides the protection of other social relations to the courts of law."
The situation is not in principle different here. In the field of employment security there has been entrusted to the commission the major task of administering a most salutary social enactment. Absent "adoption of wrong principles" in the words of Mr. Justice Holmes, the commission's statutory interpretation should be accorded great weight by the courts. We believe here, however, there was an *285 "adoption of wrong principle" by this appeal board. The present appeal board faced conflicting circuit court opinions construing the statutory phrase "with an assurance of reemployment." In 1956, the Monroe county circuit court held[2] that the above phrase in no way limited the meaning of the term "leave of absence." Of this decision the appeal board 3 years later (1959) said:
"This appeal board considers that the court's comment on the `assurance of reemployment' phase in the cited case [Monroe county] implies an interpretation which would render the legislature's definition of leave of absence as stated in section 29(1)(d) vain and fruitless contrary to fundamental principles of statutory interpretation."
This decision was affirmed by the circuit court of Macomb county.
Two years later (1961) in the instant cases, the appeal board reversed itself and readopted the earlier "no restriction" construction. In 1963, Judge Salmon reversed the appeal board's reversal of its prior holding.
Under the foregoing circumstances we admit to some difficulty in applying Justice Holmes' view that the statutory interpretation of the involved administrative agency be given great weight by the courts. We reaffirm here, however, the rule of statutory construction that the proper office of a proviso in a statute is to qualify or restrain some preceding general provision. See Moeller v. Wayne County Board of Supervisors, 279 Mich 505.
We think the circuit judge here correctly applied the well-settled rules of statutory construction as they had previously been applied by the appeal board and affirmed by the circuit court of Macomb county.
*286 As to all claimant-appellants, the order of the circuit court reversing the appeal board and affirming the administrative redetermination of the commission disqualifying them for benefits is affirmed for the reasons hereinbefore set out. As to claimant-appellant Coleman, whose application for reinstatement was made 5-1/2 months prior to the termination of the leave of absence granted, we further hold that to come within the proviso in the statute excepting claimants from the disqualification for pregnancy, application for reinstatement must be made as the statute requires "at the termination of such leave."
No costs, a public question being involved.
DETHMERS, J., concurred with O'HARA, J.
KELLY and BLACK, JJ., concurred in result.
SMITH, J. (concurring).
I concur in the opinion of Mr. Justice O'HARA, excepting therefrom, however, that part in which he erects a "sure, certain and definite" test for the fact-finder in determining whether an employing unit has given an employee an "assurance of reemployment" in connection with a pregnancy leave of absence. The statute requires no such evidentiary hurdle and I know of no good reason why one should be supplied. In this connection, I do agree, however, that it is a proper office of construction to say, in this instance, that an "assurance of reemployment" connotes "an affirmative commitment by the employer to reemploy." Beyond that, I would not go. Subject to that reservation, then, I concur.
ADAMS, J., concurred with SMITH, J.
SOURIS, J. (concurring).
If, as Mr. Justice O'HARA writes, the term "`leave of absence', generally speaking, *287 means a temporary authorized release from one's duty for a stated period with the right or duty to return at the end thereof", I cannot discern the logic by which he concludes that the legislature modified that meaning in any way by expressly defining "leave of absence", as used in section 29(1)(d) of the Michigan employment security act,[*] to mean "an authorized absence from employment with an assurance of reemployment by the employing unit." It is my opinion that the legislative language we are obliged to construe effectively distinguished leaves of absence "with an assurance of reemployment" and those without such assurance or without, in Justice O'HARA'S language, "the right or duty to return".
A leave of absence from employment without assurance of reemployment is not an anomaly, as it is suggested to be. In the practical world of commercial and industrial life in which we live, not infrequently such leaves are granted by employers and accepted by employees with potential mutual benefit. The employer may benefit in the event an already trained and valued employee on such leave is reemployed. The employee, on the other hand, may benefit during such leave of absence from continuation of group life and sickness and accident insurance policies and, in the event reemployment occurs, preservation of accrued pension and seniority rights. Indeed, the collective bargaining representative of the claimants herein expressly recognized the practical fact that such leaves of absence without assurance of reemployment occur in commerce and industry with some regularity. The union contract applicable at the time these claims arose, which is pertinently quoted in Justice O'HARA'S opinion, p 280, supra, provides that, with only two exceptions, *288 unpaid leaves of absence granted by the company do not include an assurance of reemployment. It cannot be doubted that the parties to that contract, had they desired to do so, could have provided, instead, that leaves of absence, at least for pregnancy, do include, automatically, assurances of reemployment. This is not to suggest that their failure to do so, or their choice of the language actually used in the contract, can affect our interpretation of the statutory provision, but I do suggest that the contract as written supports my contention that leaves of absence from employment without assurance of reemployment are not uncommon. The legislature has made it clear that the proviso clause of section 29(1)(d) does not apply to such leaves but only applies to leaves of absence from employment with an assurance of reemployment.
I agree with Mr. Justice OTIS M. SMITH that the statute does not require proof that the assurance of reemployment was by "sure, certain and definite" commitment. The fact of such assurance may be proved as any other fact essential to a claim may be proved, if need be by circumstantial evidence. As I read this record, however, I do not find even circumstantial evidence to support the appeal board's findings of fact that such assurances of reemployment were given claimants. Hence, I must cast my vote to affirm the circuit judge's reversal of the awards made by the appeal board.
T.M. KAVANAGH, C.J., concurred with SOURIS, J.
NOTES
[1] CLS 1961, § 421.29 (Stat Ann 1960 Rev § 17.531).
[2] Angeline Duvall v. Appeal Board, No. 9035.
[*] CLS 1961, § 421.29 (Stat Ann 1960 Rev § 17.531). REPORTER.
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315 F.Supp.2d 1197 (2004)
Dominic FERACI, individually and on behalf of his minor children, Nicolas Anthony Feraci and Kristen Nicole Feraci, Plaintiffs,
v.
GRUNDY MARINE CONSTRUCTION COMPANY; P & S Construction Services, Inc.; Total Leasing Company, Inc.; Ronnie Resmondo; Paul Waynick; and Ledr Group, Inc., d/b/a TMG Staffing Services, Inc., Defendants.
No. 3:02-CV-525/MCR.
United States District Court, N.D. Florida, Pensacola Division.
March 11, 2004.
*1198 *1199 Ronnie G. Penton, Ronnie G. Penton PA, Bogalusa, LA, for Plaintiff.
Charles Thomas Wiggins, Beggs & Lane, Yancey Frank Langston, Moore Hill & Westmoreland PA, Charles Phillip Young, Emmanuel Sheppard & Condon, Pensacola, FL, for Defendants.
ORDER GRANTING DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT
RODGERS, District Judge.
Pending before the court are five motions for summary judgment (see docs. 199, 205, 207, 213, and 215) and documents in support thereof (see docs. 200-01, 206, 208-09, 213-16, 243, 257-58, and 261), which were filed by the following five Defendants: (1) GRUNDY MARINE CONSTRUCTION COMPANY; (2) P & S CONSTRUCTION SERVICES, INC.; (3) TOTAL LEASING COMPANY, INC.; (4) RONNIE RESMONDO; and (5) LEDR GROUP, INC., d/b/a TMG STAFFING SERVICES, INC. Plaintiff DOMINIC FERACI timely filed memoranda and evidentiary materials in opposition to each motion. (Docs.223-27, 232-35). The court has taken the motions under advisement (Doc. 256) and is now prepared to rule on Defendants' motions. Because of an entitlement to workers' compensation immunity, the following Defendants' motions for summary judgment are GRANTED: (1) GRUNDY MARINE CONSTRUCTION COMPANY; (2) P & S CONSTRUCTION SERVICES, INC.; (3) RONNIE RESMONDO; and (4) LEDR GROUP, INC., d/b/a TMG STAFFING SERVICES, INC. Even though TOTAL LEASING COMPANY, INC., is not entitled to workers' compensation immunity, the company's motion for summary judgment is GRANTED, because Plaintiffs failed to demonstrate a cause of action against the company.
I. STATEMENT OF THE CASE
A. Procedural History
On December 23, 2002, Plaintiffs filed the current action in this Court based on diversity jurisdiction.[1] (Doc. 1). Plaintiffs later filed an amended complaint (see doc. 55), to which all Defendants filed timely answers (see docs. 76-77, 82, 84, 96, 99). On April 30, 2003, Plaintiffs filed a motion to dismiss Defendant PAUL WAYNICK without prejudice from the case (see doc. 118), and on May 14, 2003, the Court granted Plaintiffs' motion (see doc. 123). The following three causes of action are *1200 common to all remaining Defendants: (1) unspecified intentional torts; (2) negligence; and (3) gross negligence. (Doc. 55).[2] Beginning in mid-August 2002, the five remaining Defendants each filed a motion for summary judgment along with supporting documentation. (Docs.199-201, 205-209, 213, 215-216, 243, 257-258). Plaintiffs timely filed materials in opposition to each motion. (Docs.223-27, 232-35). On January 26, 2004, the Court entered an Order and Notice notifying the parties that summary judgment would be taken under advisement beginning on February 2, 2004 (Doc. 256).
B. Relevant Facts
For purposes of ruling on Defendants' motions for summary judgment, the following facts are either undisputed or viewed in the light most favorable to Plaintiffs.[3] This is a personal injury case for damages arising out of an injury to Plaintiff DOMINIC FERACI ("Feraci"), which occurred on October 19, 2001, while he was working at a construction site. At the time of the accident, Defendant GRUNDY MARINE CONSTRUCTION COMPANY ("Grundy") was a prime contractor with the United States Army Corps of Engineers who had entered into a contract to perform construction operations at Hurlburt Field Air Force Base in Okaloosa County, Florida ("the project"). (Docs. 209, ¶ 1; 214, ¶ 1). Grundy subcontracted with Defendant P & S CONSTRUCTION SERVICES, INC. ("P & S"), to perform underground utility work on the project, including the installation of concrete and PVC pipe. (Docs. 209, ¶ 2; 214, ¶ 2). Pursuant to the terms of the subcontract between Grundy and P & S, P & S was obligated to secure and maintain worker's compensation coverage for the project personnel who were under P & S's direction and control. (Doc. 209, ¶ 3).
On September 30, 2001, Plaintiff DOMINIC FERACI ("Feraci") was hired as a laborer to work for P & S at the Hurlburt Field project. (Doc. 55, ¶ 6B). Feraci was employed by Defendants P & S and LEDR GROUP, INC. d/b/a TMG STAFFING SERVICES, INC. ("TMG"). (Doc. 214, ¶ 4).[4] TMG is an employee *1201 leasing company who leased Feraci to P & S to work on the project. (Doc. 214, ¶ 3). Pursuant to the February 1, 2001, contract between P & S and TMG, TMG was responsible for the "back office" and administrative tasks relevant to its leased personnel, including payment of worker's compensation premiums and payroll. (Doc. 209, ¶ 6). Thus, TMG acquired and maintained worker's compensation coverage for Feraci. (Docs. 201, ¶ 8; 209, ¶ 7). Throughout the course of the project, TMG did not interfere with P & S's day-to-day operations. (Doc. 209, ¶ 9). Pursuant to the terms of the P & S/TMG contract, TMG retained various rights related to safety and risk management; however, P & S was responsible for the direct supervision of the leased employees and for compliance with any relevant safety regulations. (Doc. 209, ¶ 10).
On the morning of the accident, Hugh Noa ("Noa"), one of Grundy's superintendents, ordered P & S to move four 48-inch elliptical concrete pipes from one location at the project site to another. (Docs. 209, ¶ 17; 214, ¶ 13). Noa did not give P & S any specific instructions as to the methods or procedures to be employed in moving the pipes. (Doc. 209, ¶ 18). P & S's foreman, Defendant RONNIE RESMONDO ("Resmondo") ordered Feraci and two co-workers, Paul Waynick ("Waynick") and Kenneth Melvin ("Melvin"), to move the four pipes using a Caterpillar excavator, commonly referred to as a "trac-hoe."[5] (Docs. 209, ¶¶ 12, 19; 216, ¶¶ 2-4).[6] The *1202 pipes were to be hoisted using a steel cable attached to the trachoe's bucket. (Doc. 209, ¶ 13).[7] Throughout his time on the project, Feraci had assisted crews using the same hoisting method with smaller pipes. (Docs. 209, ¶ 15; 216, ¶¶ 6-7).[8] Waynick operated the trac-hoe while Feraci and Melvin worked as the ground personnel. (Doc. 209, ¶ 20). The men moved one of the concrete pipes without incident; however, while moving the second pipe, Feraci suffered injury. (Docs.209, ¶¶ 21-22, 214, ¶ 13). Feraci and Melvin had been standing away from the trac-hoe but somehow Feraci became crushed between the second concrete pipe and either the trac-hoe or the hoist cable. (Docs. 209, ¶ 22; 214, ¶¶ 13-14).[9] As a result of the accident, CNA Insurance, TMG's worker's compensation carrier, voluntarily paid workers' compensation benefits to Feraci. (Docs. 209, ¶ 25; 214, ¶¶ 6-7; 216, ¶ 20).
In Plaintiffs' amended complaint, Plaintiffs aver that the causes of Feraci's injuries were due to the Defendants'"willful and wanton disregard" for Feraci's safety, as well as the following "grossly negligent acts and omissions:"
(1) Inadequate supervision over the operations, work environment, and personnel[;]
(2) Too many employees unaware of each other's movement and activity[;]
(3) Very congested area requiring additional oversight, traffic management, and safety monitoring[;]
(4) Inadequately trained operator concerning the safety aspect of ground personnel[;]
(5) Inexperienced and/or inadequately trained laborers[;]
(6) No established procedures or policies for visual contact at all times with ground personnel assigned to the operator[;]
*1203 (7) Improperly adjusted mirrors on the trackhoe equipment to allow visual contact with ground personnel[;]
(8) Limited visibility of equipment operator with ground personnel and structures[;]
(9) No safety meeting was held before this operation addressing the relevant safety precautions of the job[;]
(10) Toolbox safety meetings were not conducted regularly or documented at the worksite[;]
(11) Inadequate hazard identification of operations, work tasks, personnel assignments, and the worksite[;]
(12) Failure to perform equipment safety inspections of equipment and worksites[;]
(13) Failure to provide ground spotters to eliminate blind equipment operations[;]
(14) Failure to maintain the working environment, equipment, machinery, supplies, and training for their employees to meet all state and federal OSHA standards[;]
(15) Failure to inspect, review, test, and approve safety procedures prior to commencing the subject operation[;]
(16) Failure to provide proper supervision and safety monitoring of the task[;]
(17) Failure to provide safe work practices and use of protective equipment imposed by controlling federal, state and local government, and for all applicable laws, ordinances, and regulations related to environmental, equipment, machinery, and all other matters which affected the assigned employee's safety[;]
(18) Failure to provide a safe work environment involving heavy equipment, human beings, and construction materials and facilities[;]
(19) Failure to implement safety policies and procedures[;]
(20) Inadequate risk protection and prevention[;]
(21) Inadequate training, generally[;]
(22) Failure to provide a competent worksite superintendent.
(Doc. 55, ¶ 7A). In addition, Plaintiffs also generally refer to Defendants' knowing and reckless conduct, but they are not specific as to what and whose conduct demonstrates knowledge and recklessness.[10]
II. MOTIONS FOR SUMMARY JUDGMENT
A. Standard
Summary judgment is appropriate where the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, if any, show that no genuine issue of material fact exists and that the party moving is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, *1204 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). The substantive law will identify which facts are material and which are irrelevant. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). An issue of fact is material if it is a legal element of the claim under the applicable substantive law which might affect the outcome of the case. See id.
At the summary judgment stage, a court's function is not to weigh the evidence to determine the truth of the matter, but to determine whether a genuine issue of fact exists for trial. See Anderson, 477 U.S. at 249, 106 S.Ct. at 2510. A genuine issue exists only if sufficient evidence is presented favoring the nonmoving party for a jury to return a verdict for that party. See id."If reasonable minds could differ on the inferences arising from undisputed facts, then a court should deny summary judgment." Miranda v. B & B Cash Grocery Store, Inc., 975 F.2d 1518, 1534 (11th Cir.1992) (citing Mercantile Bank & Trust Co. v. Fidelity & Deposit Co., 750 F.2d 838, 841 (11th Cir.1985)).
When assessing the sufficiency of the evidence in favor of the nonmoving party, the court must view all the evidence, and all factual inferences reasonably drawn from the evidence, in the light most favorable to the nonmoving party. See Hairston v. Gainesville Sun Publ'g Co., 9 F.3d 913, 918 (11th Cir.1993). The court is not obliged, however, to deny summary judgment for the moving party when the evidence favoring the nonmoving party is merely colorable or is not significantly probative. See Anderson, 477 U.S. at 249, 106 S.Ct. at 2510. A mere scintilla of evidence in support of the nonmoving party's position will not suffice to demonstrate a material issue of genuine fact that precludes summary judgment. See Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir.1990).
B. Workers' Compensation Immunity under Florida Law
In the current motions for summary judgment, all Defendants request the Court to grant summary judgment in their favor under the immunity provision of Florida's workers' compensation statute. See Fla. Stat. § 440.11(1) (2002). In response, Plaintiffs claim that the intentional tort exception to workers' compensation immunity applies to preclude summary judgment.
"Florida's Workers' Compensation Law, codified in chapter 440, Florida Statutes..., protects workers and compensates them for injuries in the workplace, without examination of fault in the causation of the injury." Gerth v. Wilson, 774 So.2d 5, 6 (Fla. 2nd DCA 2000). The Florida legislature intended the statute to provide "quick and efficient delivery of disability and medical benefits to an injured worker and to facilitate the worker's return to gainful reemployment at a reasonable cost to the employer." Fla. Stat. § 440.015 (2002). "Essentially, under this no-fault system, the employee gives up a right to a common-law action for negligence in exchange for strict liability and the rapid recovery of benefits." Turner v. PCR, Inc., 754 So.2d 683, 686 (Fla.2000) (citing United Parcel Service v. Welsh, 659 So.2d 1234, 1235 (Fla. 5th DCA 1995); 2 Arthur Larson & Lex K. Larson, Larson's Workers' Compensation § 65.10 (Desk ed.1999)). "The goal of this policy is to avoid lawsuits at the outset, not simply to prevent adverse verdicts against employers and coworkers at the end of lengthy litigation." Fleetwood Homes of Florida, Inc. v. Reeves, 833 So.2d 857, 864 (Fla. 2nd DCA 2002).
For those who fall within the statute's purview, "workers' compensation is the exclusive remedy for `accident[al] injury or *1205 death arising out of work performed in the course and the scope of the employment.'" Turner, 754 So.2d at 686 (quoting Fla. Stat. § 440.09(1) (1997)). Thus, absent an excepted circumstance, Florida's Workers' Compensation Law generally protects employers from liability for an employee's injuries beyond the workers' compensation benefits. "At the same time..., the statutory scheme itself explicitly recognizes the liability of co-employees [and supervisors] to injured employees under certain limited conditions, including intentional or reckless actions." Id. (citing Fla. Stat. § 440.11(1) (1997)).
1. Intentional Tort Exception to Workers' Compensation Immunity
"Notwithstanding the general recognition of tort immunity for employers, the [Supreme Court of Florida] has recognized an intentional tort exception to the worker's compensation statutory scheme." Turner, 754 So.2d at 686 (citations omitted). Florida Workers' Compensation Law does not shield an employer from liability for intentional torts against an employee. See id. (citations omitted). Under the intentional torts exception, the employee must show that the employer "either [1.] `exhibite[d] a deliberate intent to injure or [2.] engage[d] in conduct which [was] substantially certain to result in injury or death.'" Id. at 687 (citation omitted) (emphasis in original); see also McClanahan, 854 So.2d at 795; Gerth, 774 So.2d at 6.
When determining whether the substantial certainty standard has been met, the employer's conduct is evaluated under an objective standard. See Turner, 754 So.2d at 688-89; see also McClanahan, 854 So.2d at 795. "[A]n analysis of the circumstances in a case [is] required to determine whether a reasonable person would understand that the employer's conduct was `substantially certain' to result in injury or death to the employee." Turner, 754 So.2d at 688. When determining substantial certainty, the employer's actual intent is not controlling. See id. In order to prove substantial certainty, a plaintiff employee must demonstrate "that the employer engaged in conduct that is at least worse than `gross negligence.'" McClanahan, 854 So.2d at 795-96; see also Turner, 754 So.2d at 687 n. 4; Tinoco v. Resol, Inc., 783 So.2d 309, 310-11 (Fla. 3rd DCA 2001).[11]
There have been several cases in Florida post-Turner applying the "substantial certainty" *1206 standard. In the Tinoco case, a Florida court determined that, under factual circumstances similar to the instant case, the plaintiff failed to prove the establishment of the intentional tort exception. In Tinoco, the plaintiff-employee brought an intentional tort action against his employer for injuries he sustained in a work-related accident. See Tinoco, 783 So.2d at 310. In defense, the defendant-employer asserted that it was immune from suit on the basis of workers' compensation immunity. See id. On the day of the accident, the plaintiff was working as a pipe fitter, and his work crew was digging a trench and installing pipe in the trench. See id. The crew was using a new excavator which had a defect that caused it to lurch forward two or three feet every time the operator tried to move it, and after that initial lurch, the excavator would operate properly. See id. The foreman knew of the defect, but concluded that it would be safe to use the machine so long as employees stayed at least three feet away from its forward path. See id. The entire crew knew of the defect, and prior to the plaintiff's injury, the excavator had been operated twenty-six or twenty-seven times without incident. See id. The plaintiff was in the operator's blind spot, so when the plaintiff stepped in front of the excavator to assist the lowering of a pipe, the operator did not see him. See id. As a result, the excavator lurched forward crushing the plaintiff's foot. See id.
The trial court in Tinoco granted summary judgement in favor of the employer on the basis of workers' compensation immunity. On appeal, the Third District Court of Appeal of Florida affirmed the trial court's ruling on the basis of Turner. See id. at 310-11. The court determined that "the facts of this case do not show that the employer exhibite[d] a deliberate intent to injure or engaged in conduct which [was] substantially certain to result in injury or death." Id. at 310 (quoting Turner, 754 So.2d at 687 n. 4). In addition, the district court noted that "the circumstances here demonstrate negligence, [b]ut under the case law, a showing of negligence, or even gross negligence, is not enough." Id. at 310-11 (citing Turner, 754 So.2d at 687 & n. 4).[12]
*1207 The case of Sierra v. Associated Marine Institutes, Inc., 850 So.2d 582 (Fla. 2nd DCA 2003), found to the contrary, albeit on a very different set of facts. In Sierra, a Florida court determined that the plaintiff pled sufficient facts to preclude the employers' motion to dismiss on workers' compensation immunity grounds. See id. Defendant Big Cypress Wilderness Institute, Inc. ("Big Cypress"), contracted with the State of Florida to operate a juvenile detention facility, known as a "boot camp." See id. at 585. The juveniles, aged fourteen to eighteen, who were housed there had a history of serious felony offenses. See id. They had been placed in the facility due to the risk that they posed to public safety. See id.[13] The youths had also been assessed as flight risks; however, before assigning the deceased to guard the youths, the boot camp failed to inform him of the flight risk. See id. The boot camp assigned the deceased alone to oversee the youth's performance of heavy manual labor in a secluded area off of the camp's grounds. See id. During a break at 8:25 p.m., the youths struck the deceased in the head with their manual labor tools, machetes and a pickaxe. See id.
The plaintiff, the wife of the deceased, brought a wrongful death action against her husband's employers, Big Cypress and its parent company, Associated Marine Institutes, Inc. See id. at 585. The defendants filed a motion to dismiss arguing that they were shielded from liability under the workers' compensation immunity doctrine. See id. The trial court agreed with the defendants and dismissed the complaint with prejudice. See id. On appeal, the Second District Court of Appeal for Florida reversed the dismissal of the plaintiff's complaint. See id. According to the court, the plaintiff's complaint alleged facts sufficient to except the suit from immunity under the intentional tort exception. See id. Based on the facts as plead, the court determined that the defendants should have known that there was a substantial certainty that sending a new counselor alone to guard two serious, escape-risk felons who would be using potentially dangerous tools would result in the counselor's injury or death. See id. at 589.
2. Culpable Negligence of a Supervisor/Manager
As the Court indicated above, employers are not the only defendants who are clothed with workers' compensation immunity. Supervisors are also entitled to the same immunity from suit to which the employer is entitled. See Fla. Stat. § 440.11(1) (2002). Section 440.11(1), Florida Statutes, provides, in pertinent part:
The same immunity provisions enjoyed by an employer shall also apply to any...supervisor...who in the course and scope of his or her duties acts in a managerial or policymaking capacity and *1208 the conduct which caused the alleged injury arose within the course and scope of said managerial or policymaking duties and was not a violation of law, whether or not a violation was charged, for which the maximum penalty which may be imposed does not exceed 60 days' imprisonment as set forth in s. 775.082.
Id. Under § 775.082, Florida Statutes, the only crimes with penalties exceeding 60 days are first-degree misdemeanors. See Kennedy, 650 So.2d at 1106. Thus, "when evaluating whether the negligent conduct of [a] managerial [employee] rises to a level sufficient to abrogate their statutory immunity, such negligence must be equivalent to a violation of law constituting a first-degree misdemeanor or higher crime." Id. "Thus, pursuant to subsection 440.11(1), there would be no workers' compensation immunity for a managerial employee who, through culpable negligence, actively inflicted injury, but there would be immunity for a managerial employee who passively exposed an employee to injury even if the employee [were culpably negligent]." Id.; see also Emergency One, 652 So.2d at 1235. "Culpable negligence is negligence of a gross and flagrant character which evinces a reckless disregard for the safety of others. It is that entire want of care which raises a presumption of indifference to consequences." Killingsworth v. State, 584 So.2d 647, 648 (Fla. 1st DCA 1991) (citing State v. Greene, 348 So.2d 3 (Fla.1977)).[14]
C. Defendants' Individual Motions for Summary Judgment
1. TMG Staffing Services, Inc.'s Motion for Summary Judgment
In its motion for summary judgment, TMG argues that it is entitled to summary judgment for three reasons: (1) as Feraci's co-employer, it is clothed with workers' compensation immunity for Plaintiffs' various negligence claims; (2) Plaintiffs' evidence is not sufficient to prove an intentional tort; and (3) as an employee leasing company, TMG is not vicariously liable for its leased employees. In response, Plaintiffs claim to have provided evidence sufficient to meet the requirements of the intentional tort exception. Plaintiffs maintain that TMG exhibited "an intentional or wanton disregard" for Feraci's safety by failing to properly manage safety, risk, and hazard control at the project site prior to Feraci's accident.
*1209 a. Workers' Compensation Immunity
In response to TMG's motion, Plaintiffs do not dispute TMG's assertion that it is entitled to workers' compensation immunity for Plaintiffs' negligence claims. As previously noted by the Court, workers' compensation is the exclusive remedy for an injured employee whose injury arose out of work performed in the course and scope of his employment. TMG admits to being a co-employer of Feraci, and TMG leased him to P & S to work at Hurlburt Field. P & S had subcontracted to perform the underground installation of concrete pipe at the project site, and when Feraci was injured, he was assisting other P & S employees in the movement of concrete pipes from one area of the project site to another. Thus, Feraci's injury arose out of work performed in the scope of his employment. In addition, TMG provided workers' compensation insurance for Feraci. As a result, TMG is entitled to workers' compensation immunity and is entitled to summary judgment as a matter of law as to Plaintiffs' negligence claims.
b. Intentional Tort Exception
In response to TMG's motion, Plaintiffs argue that they have brought forth sufficient evidence to meet the intentional tort exception to TMG's workers' compensation immunity defense. Further, Plaintiffs claim that TMG reserved the right of direction and control over the management of safety, risk, and hazard control over its leased employees working at the project site. Because of the retention of that right, Plaintiffs assert that TMG may be held vicariously liable for punitive damages for the intentional torts of its employees Waynick and Resmondo.
As previously noted by the Court, an employer is not entitled to workers' compensation immunity for intentional torts against an employee. To meet this intentional tort exception, Plaintiffs must show that TMG either exhibited a deliberate intent to injure Feraci or engaged in conduct that was substantially certain to result in injury to Feraci. First, there is no evidence in the record to demonstrate that TMG exhibited a deliberate intent to injure Feraci. Second, there is also no evidence in the record to demonstrate that TMG engaged in conduct which was "substantially certain" to result in injury to Feraci despite Plaintiffs' assertion that TMG did not manage safety, risk, and hazard controls regarding its employees at the project site.
TMG is an employee leasing company that is statutorily required to retain "a right of direction and control over management of safety, risk, and hazard control at the worksite or sites affecting its leased employees." Fla. Stat. § 468.525(4)(e) (2002). In keeping with the statutory requirement, TMG included in its employee leasing contract with P & S a clause which explicitly reserves such a right. (Doc. 140, Ex. F, Service Agreement between P & S and TMG, p. 2, § 4, ¶ 1). However, TMG's reservation of that right did not automatically create an obligation on behalf of TMG to exercise that right. At most, it may have created a duty to inspect the project site to ensure that P & S was complying with federal, state, and local safety regulations. Assuming arguendo that TMG had such a duty to inspect the safety of the project site, any failure to inspect would amount to either negligence or gross negligence, not reckless or wanton conduct.
Furthermore, Plaintiffs concede that there is no evidence in the record to demonstrate that TMG actually exercised the retained right to direct and control the safety, risk, and hazard control at the project site. Assuming arguendo that there were facts to demonstrate TMG's exercise of that right, failure to comply with any *1210 duties imposed smacks of negligence, or maybe even gross negligence, tort claims which the Court has already determined cannot be brought against TMG. After analyzing the factual circumstances in this case, Plaintiffs have failed to demonstrate that a reasonable person would understand that TMG's conduct was "substantially certain" to result in injury to Feraci, and based on the evidence in the record, no reasonable jury could conclude otherwise.
In addition, Plaintiffs' argument that TMG is vicariously liable for potential punitive damages based on the conduct of its employees Waynick and Resmondo is equally unavailing. In their response to summary judgment, Plaintiffs cite Carroll Air Systems, Inc. v. Greenbaum, 629 So.2d 914 (Fla. 4th DCA 1993), to support the proposition that TMG is vicariously liable. The court in Carroll stated that "an employer may be held liable for vicarious punitive damages under respondeat superior when, in addition to the willful and wanton misconduct by the employee, there is independent fault or negligence on the part of the employer." Id. at 917 (citing Mercury Motors Express, Inc. v. Smith, 393 So.2d 545 (Fla.1981)). Carroll, however, is not analogous to the case at hand. The employer in Carroll was held liable for punitive damages to a third-party (i.e., non-employees) for injuries which had been caused by an employee. See Carroll, 629 So.2d at 917. In that case, workers' compensation did not factor into the liability equation.
In the case at hand, Feraci, the injured party, was not a third-party outside of the employment relationship. Rather, he was an employee of TMG, and the accident that injured him was covered by Florida's Workers' Compensation Law. Furthermore, it appears that Carroll's vicarious liability rule could not be properly applied to a workers' compensation case. Workers' compensation immunity, when applicable, precludes an employer's liability for negligence in relation to an employee's injury or death. If Carroll's vicarious liability rule could be successfully applied to an employer who is otherwise entitled to worker's compensation immunity, then the employer's own negligence would cause it to be vicariously liable for punitive damages. That would be an illogical result and a backdoor approach for holding an employer liable for negligence in direct contravention of the spirit of Florida's Workers' Compensation Laws.[15]
2. P & S Construction Services, Inc.'s Motion for Summary Judgment
In its motion for summary judgment, P & S argues that it is entitled to summary judgment as to all of Plaintiffs' claims based upon the doctrines of workers' compensation immunity and election of remedies. In response, Plaintiffs argue that their evidence establishes the requirements of the intentional tort exception and that the election of remedies doctrine is inapplicable to the instant case.
a. Workers' Compensation Immunity
In response to P & S's motion, Plaintiffs do not dispute P & S's assertion that it is entitled to workers' compensation immunity for Plaintiffs' negligence claims. As previously noted by the Court, workers' compensation is the exclusive remedy for an injured employee whose injury arose out of work performed in the course and scope of the employment. P & S admits to being a co-employer of Feraci, and Feraci *1211 was leased to P & S to work at Hurlburt Field. As the Court previously explained, Feraci's injury arose out of work performed in the scope of his employment. Therefore, P & S is entitled to workers' compensation immunity and is entitled to summary judgment as a matter of law regarding Plaintiffs' negligence claims.
b. Intentional Tort Exception
In response to P & S's motion, Plaintiffs argue that they have brought forth sufficient evidence to meet the intentional tort exception to workers' compensation immunity. According to Plaintiffs, the facts of this case "indicate a deliberate, intentional, and gross disregard for safety," and the "composite of circumstances was substantially certain to result in death or injury to Feraci." In addition, Plaintiff's argue that P & S is vicariously liable for punitive damages based upon certain actions of its employees.
As previously noted by the Court, an employer is not entitled to workers' compensation immunity for intentional torts against an employee. To meet this intentional tort exception, Plaintiffs must show that P & S either exhibited a deliberate intent to injure Feraci or engaged in conduct that was substantially certain to result in injury to Feraci. First, there is no evidence in the record to demonstrate that P & S exhibited a deliberate intent to injure Feraci. Second, there is also no evidence in the record to demonstrate that P & S engaged in conduct which was "substantially certain" to result in injury to Feraci.
Plaintiffs attempt to join together twenty-two alleged "grossly negligent actions or omissions," which are listed on pages 6 and 7 of this Order, to maintain that the "composite of the circumstances" was substantially certain to cause injury or death to Feraci. In other words, Plaintiffs are trying to stack numerous instances of alleged negligent (or even grossly negligent) conduct by P & S to arrive at the conclusion that Feraci's injury was substantially certain to result. The Second District Court of Appeal of Florida has expressly rejected such a position. See Fleetwood Homes, 833 So.2d at 868-69. In Fleetwood Homes, the court stated that "we do not believe that the supreme court in Turner intended to allow a plaintiff to add together small risks of injury in order to reach a combined total where the likelihood of injury to some employee sometime was substantially certain." Id. Therefore, assuming arguendo that the alleged twenty-two "grossly negligent acts or omissions" occurred, Plaintiffs cannot lump them together to demonstrate substantial certainty. At most, those acts or omissions would demonstrate gross negligence. As a result, after analyzing the factual circumstances in this case, the Court finds that Plaintiffs have failed to demonstrate that a reasonable person would understand that P & S's conduct was "substantially certain" to injure Feraci. Based on the evidence in the record, no reasonable jury could conclude otherwise.[16]
In addition, Plaintiffs' argument that P & S is vicariously liable for potential punitive damages for Resmondo's deliberately allowing an intoxicated Waynick to operate the trac-hoe is equally unavailing. In their response to summary judgment, Plaintiffs cite Carroll Air Systems, Inc. v. Greenbaum, 629 So.2d 914 (Fla. 4th DCA 1993), to support the proposition that TMG is vicariously liable. For reasons already stated by the Court, Carroll is not applicable to this case. Furthermore, the evidence *1212 in the record does not create any question about whether Waynick was under the influence of drugs on the morning of the accident. Thus, there is no evidence demonstrating that Resmondo deliberately allowed Waynick to operate the trac-hoe while Waynick was under the influence of drugs.
3. Grundy Marine Construction Company's Motion for Summary Judgement
In its motion for summary judgment, Grundy argues that it is entitled to summary judgment for two reasons: workers' compensation immunity, and Plaintiffs' failure to establish the intentional tort exception to Grundy's immunity. In response, Plaintiffs argue that the evidence in this case indicates Grundy's "intentional and gross disregard for safety." According to Plaintiffs, that evidence is sufficient to establish the intentional tort exception to Grundys' workers' compensation immunity. Additionally, Plaintiffs assert that Grundy is vicariously liable for the tortious intentional acts of its subcontractor, P & S.
a. Workers' Compensation Immunity
In its motion, Grundy argues that Plaintiffs' negligence claims against it are barred by Florida's workers' compensation immunity doctrine. Even though Grundy is not a direct employer of Feraci, Grundy asserts that, as a general contractor, it is a "statutory employer" under Section 440.10(1)(b), Florida Statutes. Section 440.10(1)(b) provides that:
In case a contractor sublets any part or parts of his contract work to a sucontractor or subcontractors, all of the employees of such contractor and subcontractor or subcontractors engaged on such contract work shall be deemed to be employed in one and the same business or establishment; and the contractor shall be liable for, and shall secure, the payment of compensation to all such employees except to employees of a subcontractor who has secured such payment.
Fla. Stat. § 440.10(1)(b) (2002). Thus, "[a] contractor may be immune from suit where workers' compensation has been paid on behalf of the subcontractor." Carnegie Gardens Nursing Center v. Banyai, 852 So.2d 374, 375-76 (Fla. 5th DCA 2003) (citing Yero v. Miami-Dade County, 838 So.2d 686, 687 (Fla. 3rd DCA 2003); Fla. Stat. § 440.1(1)(b)). In the case at hand, Grundy was the general contractor of the project, and Grundy hired P & S as a subcontractor to work at Hurlburt Field. P & S secured the workers' compensation benefits for Feraci in the employee leasing agreement between P & S and TMG, and TMG provided those benefits for Feraci. Therefore, the subcontract between Grundy and P & S made Grundy a statutory employer under § 440.10(1)(b), Florida Statutes, thereby entitling Grundy to workers' compensation immunity.[17] As a result, Grundy is entitled to summary judgment as to Plaintiffs' negligence claims.
b. Intentional Tort Exception
In response to Grundy's motion, Plaintiffs argue that they have brought forth sufficient evidence to meet the intentional tort exception to workers' compensation immunity. According to Plaintiffs, the evidence in this case indicates "an intentional or gross disregard" by Grundy for Feraci's safety. In addition, Plaintiffs maintain that Grundy is vicariously liable for the intentional torts of its subcontractors.
*1213 As previously noted by the Court, an employer is not entitled to workers' compensation immunity for intentional torts against an employee. To meet this intentional tort exception, Plaintiffs must show that Grundy either exhibited a deliberate intent to injure Feraci or engaged in conduct that was substantially certain to result in injury to Feraci. First, there is no evidence in the record to demonstrate that Grundy exhibited a deliberate intent to injure Feraci. Second, there is also no evidence in the record to demonstrate that Grundy engaged in conduct which was "substantially certain" to result in injury to Feraci.
Plaintiffs attempt to join twenty-two alleged "grossly negligent actions or omissions," which are listed on pages 6 and 7 of this Order, by Grundy to maintain that the "composite of the circumstances" was substantially certain to cause injury or death to Feraci. As previously explained in this Order, Florida law does not allow Plaintiffs to accumulate several negligent (or grossly negligent) acts or omissions to demonstrate substantial certainty.[18] As a result, after analyzing the factual circumstances in this case, Plaintiffs have failed to demonstrate that a reasonable person would understand that Grundy's conduct was "substantially certain" to result in injury to Feraci. Based on the evidence in the record, no reasonable jury could conclude otherwise.
In addition, Plaintiffs argue (without legal citations in support) that Grundy is vicariously liable for the intentional torts of its subcontractor, P & S. Assuming Grundy could be vicariously liable in such a situation, no vicarious liability would exist in the instant case. The Court has already determined that the evidence in the record does not support a claim for an intentional tort against P & S; therefore, there is no intentional tort claim for which Grundy could be held vicariously liable.
4. Total Leasing Company, Inc.
In its motion for summary judgment, Total asserts that, despite Plaintiffs' contentions to the contrary, Total is not a co-employer of Feraci. Total argues that, in the event if it is considered an employer, it is nonetheless entitled to workers' compensation immunity. In response, Plaintiffs maintain that Total is a co-employer and that Total's immunity is abrogated by the intentional tort exception.
a. Workers' Compensation Immunity
As the Court determined in footnote 4 of this Order, Total is not an employer of Feraci and is not entitled to workers' compensation immunity. Because Total is not immune from suit, there must be sufficient evidence in the record to support Plaintiffs' intentional tort and negligence claims against Total.
At the outset, the Court notes that Plaintiffs do not specify which of their intentional tort allegations apply to Total. However, it is of no consequence because the very nature of an intentional tort requires Plaintiffs to prove Total had:(1) an intent to offer injury to Feraci by force; (2) an intent to injure Feraci; or (3) acted in a manner that amounted to "exaggerated recklessness" as to Feraci's safety. See e.g., Sullivan v. Atlantic Federal Savings & Loan Association, 454 So.2d 52 (defining the elements of assault and battery); Caprio v. American Airlines, Inc., 848 F.Supp. 1528, 1534 (M.D.Fla.1994) ("In order to submit a claim for punitive damages based upon intentional torts to the jury, Plaintiff must make a threshold showing that Defendant's conduct approaches a level *1214 that `transcends the level of simple negligence, and even gross negligence,...and enters the realm of wanton intentionality, exaggerated recklessness, or such an extreme degree of negligence as to parallel an intentional and reprehensible act.") (quoting American Cyanamid Co. v. Roy, 498 So.2d 859, 861 (Fla.1986)); see also 55 Fla. Jur.2d Torts § 5 (West 2004). There is no evidence in the record to demonstrate that Total had an intent to either offer to cause harm or to cause harm to Feraci, or had acted with exaggerated recklessness.[19] As a result, Plaintiffs cannot maintain a cause of action against Total for an intentional tort, and based on the evidence in the record, no reasonable jury could conclude otherwise.
In addition to the undefined intentional tort claims, Plaintiffs' amended complaint asserts claims for both negligence and gross negligence. "To sustain a cause of action for negligence, the burden of proof is on the plaintiff to establish that: (1) the defendant had a duty to protect the plaintiff; (2) the defendant breached that duty; and (3) the defendant's breach was the proximate cause of the plaintiff's injuries and resulting damages." Cooper Hotel Services, Inc. v. MacFarland, 662 So.2d 710, 712 (Fla. 2nd DCA 1995) (citing Lake Parker Mall, Inc. v. Carson, 327 So.2d 121, 123 (Fla. 2nd DCA 1976)). In its motion for summary judgment, Total argues that Plaintiffs cannot maintain a cause of action against Total for negligence, because there is no evidentiary support in the record that Total owed a duty of care to Feraci.
"The duty element of negligence focuses on whether the defendant's conduct forseeably created a broader `zone of risk' that poses a general threat of harm to others." Whitt v. Silverman, 788 So.2d 210, 216 (Fla.2001) (quoting McCain v. Florida Power Corp., 593 So.2d 500, 502-503 (Fla.1992)). "Foreseeability clearly is crucial in defining the scope of the general duty placed on every person to avoid negligent acts or omissions." McCain, 593 So.2d at 503. "Florida, like other jurisdictions, recognizes that a legal duty will arise whenever a human endeavor creates a generalized and foreseeable risk of harming others." Id."Where a defendant's conduct creates a forseeable zone of risk, the law generally will recognize a duty placed upon defendant either to lessen the risk or see that sufficient precautions are taken to protect others from the harm that the risk poses. Id. (quoting Kaisner v. Kolb, 543 So.2d 732, 735 (Fla.1989) (emphasis in original)). The Supreme Court of Florida has also noted that every risk need not be set out in a statute or by case law in order to give rise to a duty of care:
[E]ach defendant who creates a risk is required to exercise prudent foresight whenever others may be injured as a result. This requirement of reasonable, general foresight is the core of the duty element. For these same reasons, duty exists as a matter of law and is not a factual question for the jury to decide: Duty is the standard of conduct given to the jury for gauging the defendant's factual conduct. As a corollary, the trial and appellate courts cannot find a lack of duty if a foreseeable zone of risk more likely than not was created by the defendant.
*1215 Whitt, 788 So.2d at 217 (quoting McCain, 593 So.2d at 503).
As previously noted, Total is not a co-employer of Feraci. Total is an independent contractor that is engaged in the business of marketing employee management services. In its contract with TMG, Total merely agreed to solicit client companies desiring risk management, human resources, employee benefits, and payroll management on behalf of TMG. Total in fact solicited P & S, a client company, on behalf of TMG, and TMG leased its employees to P & S to work on the project at Hurlburt Field. There is no evidence in the record to indicate that Total owed any duty to Feraci. Plaintiffs have not demonstrated that Total actually controlled anyone or anything at the project site at any point in time (especially on the day of the accident). Further, Plaintiffs have not demonstrated that Total was legally obligated in any manner to control safety at the job site. Total located P & S, a client company who was in need of employees to work on the project, and put P & S into contact with TMG. Putting the two companies in contact with each other did not create a duty for Total to protect Feraci's (or any other TMG employees') safety, and Total's actions did not create a foreseeable zone of risk. As a result, based on the evidence in the record, Total owed no duty to Feraci, and Total is entitled to summary judgment as a matter of law on all of Plaintiffs' negligence claims.[20]
Assuming arguendo that Total is a co-employer of Feraci, Total would be entitled to workers' compensation immunity for Plaintiffs' negligence claims for the same reasons as P & S and TMG. As to the intentional tort exception, Plaintiffs have failed to establish the requirements necessary to avoid workers' compensation immunity. As the Court has already explained in this Order, even assuming that all twenty-two alleged actions or omissions were committed by Total, they would amount to nothing more than gross negligence. Since the intentional tort exception requires Plaintiffs to demonstrate more than gross negligence, Plaintiffs would be unable to maintain an intentional tort action against Total.
5. Ronnie Resmondo's Motion for Summary Judgment
In his motion for summary judgment, Resmondo argues that, as an employee of P & S, he is immune from suit for Feraci's injuries. Resmondo was an employee of P & S who worked in a supervisory capacity at the project site. At the time of Feraci's accident, Resmondo was Feraci's supervisor. On the day of the accident, Resmondo had received orders from Grundy to move four 48-eight inch elliptical concrete pipes from one location to another. Acting in the course and scope of his employment, Resmondo delegated the job to Feraci, Melvin, and Waynick. Because Resmondo's boss, Steve Smith, had ordered the removal of the Fiat Ellis loader, which had been previously used to move the concrete pipe, Feraci, Melvin, and Waynick had to use the trac-hoe. Waynick had experience operating the trac-hoe, albeit not for the movement of the 48-inch elliptical concrete pipes, and Feraci had experience in moving similar concrete pipes as a ground *1216 person with the Fiat Ellis loader. In addition, Feraci had experience moving pipe of smaller size with a trachoe using the exact same procedure as was employed on the day of the accident.
Plaintiffs argue that Resmondo's culpable negligence under the facts of this case abrogates his immunity. First, Plaintiffs claim that engaging in and allowing others to engage in drug use at the project site amounts to culpable negligence. Plaintiffs assert that Resmondo failed to have Waynick, the operator, screened for drugs immediately following the accident. They also maintain that Resmondo "committed the criminal act of falsely completing a document required by OSHA regarding site drug use." As already noted by the Court in footnote 6 of this Order, there is no evidence that either Resmondo or Waynick were under the influence of illegal drugs on the day of Feraci's accident. Thus, Resmondo is not culpably negligent for the use of drugs himself or for allowing others to use drugs on the job site.[21]
Second, Plaintiffs claim that Resmondo's failure to ensure ground communication between Waynick and the ground personnel, Feraci and Melvin, through the use of a spotter, amounts to culpable negligence. There is conflicting evidence in the record regarding whether or not a spotter was used at the time of Feraci's accident; however, construing the evidence in a light most favorable to Plaintiffs, the Court will assume Resmondo failed to check whether or not a spotter was being used before the pipe moving operation began. At most, that failure amounts to nothing more than simple negligence. It is not negligence of a gross and flagrant character which evinces a reckless disregard for the safety of others.
Third, Plaintiffs argue that Resmondo had a duty to implement a hazard analysis to determine the location of possible pinch points, i.e., areas where workers could be pinched between construction equipment. Plaintiffs also maintain that Feraci was never trained how to recognize such pinch points. Plaintiffs assert that such hazard analysis was required by OSHA and that TMG was responsible for ensuring that P & S adhered to OSHA regulations. There is no evidence in the record demonstrating that Resmondo was in fact responsible for implementing a pinch point analysis and for training Feraci on how to recognize such pinch points. TMG's safety professional, Frank Ruckles, testified that, to his knowledge, the hazard analysis was performed by Grundy Marine. Plaintiffs cannot demonstrate that Resmondo had a responsibility regarding the implementation of hazard analysis and the training of Feraci on how to recognize pinch points. Thus, Plaintiffs cannot show that any negligence by Resmondo was of a gross and flagrant character so as to evince a reckless disregard for the safety of others.[22]*1217 As a result, Resmondo was not culpably negligent, and based on the evidence in the record, no reasonable jury could conclude otherwise.[23] Accordingly, Resmondo's workers' compensation immunity is not abrogated, and he is entitled to judgment as a matter of law.[24]
Accordingly, it is hereby ordered:
1. Defendant TOTAL LEASING COMPANY, INC.'s motion for summary judgment (see doc. 199) is GRANTED.
2. Defendant LEDR GROUP, INC., d/b/a TMG STAFFING SERVICES, INC.'s motion for summary judgment (see doc. 205) is GRANTED.
3. Defendant GRUNDY MARINE CONSTRUCTION COMPANY's motion for summary judgment (see doc. 207) is GRANTED.
4. Defendant P & S CONSTRUCTION SERVICES, INC.'s motion for summary judgment (see doc. 213) is GRANTED.
5. Defendant RONNIE RESMONDO's motion for summary judgment (see doc. 215) is GRANTED.
6. Consistent with this order, the Clerk of Court is directed to enter final judgment as to all claims in favor of Defendants GRUNDY MARINE CONSTRUCTION COMPANY; P & S CONSTRUCTION SERVICES, INC.; TOTAL LEASING COMPANY, INC.; LEDR GROUP, INC., d/b/a TMG STAFFING SERVICES, INC.; and RONNIE RESMONDO. Plaintiffs shall take nothing by this action and go hence without day.
7. The Clerk of Court is directed to close the file in this case.
NOTES
[1] See 28 U.S.C. § 1332 (West 2003).
[2] Feraci also mentions the term "strict liability" once in the amended complaint; however, he never fleshes out a discernable cause of action for strict liability. In addition, the term negligence, as used in this Order, also includes any potential claim for negligence per se.
[3] Some of the facts are construed according to Local Rule 56.1(A). Where the Court cites to the Defendants' statement of facts (see docs. 201, ¶ X; 209, ¶ X; 214, ¶ X; 216, ¶ X), Plaintiffs have failed to controvert that specific fact, and it is therefore deemed admitted for the limited purpose of ruling on Defendants' motions for summary judgment. In addition, the Court notes that Plaintiffs' materials in opposition to summary judgment are identical to each other for the following document numbers: 224, 226, 233, and 235.
[4] Plaintiffs maintain that Defendant TOTAL LEASING COMPANY, INC. ("Total") was a co-employer of Feraci, an allegation which Total denies. Total "is engaged in the business of marketing employee management services." (Doc. 140, Ex. B, "Contract for Services" between Total and TMG, p. 1). On October 24, 2000, Total entered into a contract with TMG whereby Total agreed to "solicit client companies desiring risk management, human resources, employee benefits and payroll management on behalf of TMG." (Id., p. 1, ¶ 1). In return, TMG agreed to "provide Total with risk management, including worker's compensation coverage, payroll management, human resource administration and employee benefits to Total client companies on behalf of TMG." (Id.). The contract expressly provided that "Total is an independent contractor in its relationship to TMG and agents of TMG." (Id., p. 2, ¶ 3). In addition, TMG was obligated to provide "workers' compensation coverage for TMG's leased employees." (Id., ¶ 4(a)).
Plaintiffs argues that, notwithstanding the contract between TMG and Total, Total is a co-employer of Feraci. First, Plaintiffs note that Feraci's W-2 tax form, which was issued by TMG, states that "Total Leasing" is Feraci's employer. (Doc. 227, ¶ 6). Second, Plaintiffs refer to Total's Employee Handbook which states that Total is the employer of record for payroll tax reporting, benefits, worker's compensation, etc. (Id., ¶ 7). Although a Total employee testified that the Handbook is inaccurate, Total has not issued a new handbook correcting the error. (Id., ¶ 9). Notwithstanding, Total was nothing more than an independent contractor who marketed employee management services on behalf of TMG. Total and TMG expressly contracted to an "independent contractor" relationship. Their contract in no way demonstrates an intent by either party for Total to be a co-employer of TMG's employees, and their actions also demonstrate otherwise. As a result, the Court finds that Total was not a co-employer of Feraci.
[5] On October 18, 2001, P & S owner, Steve Smith, removed from the project site a Fiat Ellis loader (a type of heavy construction machinery with large forks) that was normally used for moving large elliptical pipes. (Doc. 224, ¶ 19). The day of the accident was the first time P & S had used a trac-hoe to hoist the large elliptical concrete pipes instead of using the Fiat Ellis loader. (Doc. 224, ¶ 20). Waynick had previous experience operating a trac-hoe, but only for moving earth and laying small pipe. (Docs. 216, ¶ 17; 224, ¶¶ 29-30). Waynick had neither read nor had been given a manual detailing how to operate a trac-hoe. (Doc. 224, ¶¶ 34, 37). In addition, he had not been qualified to operate it through any formal testing procedures (see id.); however, a trac-hoe operator is not required to hold any certain license or certification (see doc. 216, ¶ 19).
[6] Plaintiffs claim that Waynick and Resmondo had smoked marijuana on the morning of the accident; however, there is no proof in the record to support that allegation. When asked during his deposition, Feraci testified that he did not recall whether or not they in fact smoked marijuana that morning. (Doc. 214, ¶ 8). Feraci was only able to speculate that they did, because he said that they often had red eyes and smelled like marijuana. (Doc. 184, deposition I of Dominic Feraci, p. 93, lines 23-25; deposition II of Dominic Feraci, pp. 34, lines 1-8, and 61, line 19 through 62, line 11). In addition, Feraci testified that Waynick, on the morning of the accident, had bragged about using crystal meth the previous evening. (Id., pp. 89, line 1 through 90, line 10; and Doc. 227, ¶ 28). However, Feraci conceded that he had no knowledge that Waynick was using crystal meth on the morning of the accident. (Id., p. 90, lines 14-17). Also during deposition testimony, Kenneth Melvin (a co-worker) testified that Waynick and Resmondo often had red eyes and smelled like marijuana when they arrived at work, but he had no knowledge of Waynick and Resmondo having smoked marijuana on the day of the accident. (Doc. 224, Ex. 8, deposition of Kenneth Melvin, p. 68, lines 2-24).
[7] More specifically, "P & S implemented a procedure whereby the operator would place the bucket of the hydraulic excavator into the female end of the pipe and then lift one end of the pipe with the excavator boom. Once the pipe was elevated on one end, the laborers Kenneth Melvin and DOMINIC FERACI would rig a wire cable choker under the pipe for lifting. The choker was then hooked to the bucket, lifted by the excavator, and moved." (Doc. 214, ¶ 13).
[8] P & S had experienced no injuries using its heavy equipment on the project prior to the accident that injured Feraci. (Docs. 214, ¶ 12; 216, ¶ 15).
[9] There were no eyewitnesses to the accident itself, and in fact, no witness in this case knows exactly how Feraci was injured. Feraci has no memory of the accident itself other than being in great pain and feeling weight against his chest. (Docs. 201, ¶ 4; 214, ¶ 19; 216, ¶ 12). Waynick was unable to see the accident, and in fact, he had no knowledge of how Feraci got to the location where he was injured (Doc. 233, Ex. 3, deposition of Paul Waynick, p. 121, lines 19-22). Melvin described his memory of the accident as follows: "I did not see [Waynick] rotate the cab [of the trac-hoe]. All I know is right before I left [Feraci's] side, I looked up at [Waynick] and kept on going to this side....[Feraci] was being twisted. He was being rolled. And then when I looked at the side, I saw him being squished by the upper section....The cable was laying on [Feraci] when I got Waynick to finally swing away from him...." (Doc. 233, Ex. 8, deposition of Kenneth Melvin, p. 41, lines 6-8, 12-16, and p. 44, lines 7-9). Melvin also testified that, when he realized Feraci was being crushed, the big arm extending from the trac-hoe was rotated forty-five degree counterclockwise as opposed to being aligned with the trac-hoe's chassis. (Id., p. 97, lines 6-25). Melvin, however, did not see the trac-hoe turn to the forty-five degree angle, so he does not know when or why Waynick made the turn. (Id.).
[10] The allegations in the second amended complaint are as follows:
The agreements and contracts specify a course of conduct to comply with federal safety regulations which, when violated, constituted an imminent, clear, and present danger, all of which were willfully and wantonly disregarded by these Defendants. The [twenty-two failures listed above] were reckless and wanting in care and constituted a conscious disregard and/or indifference to the life and safety of employees such as Dominic Feraci and were substantially certain to result in injury or death. Additionally, these failures constituted intentional conduct in that the Defendants had actual knowledge of the wrongfulness of their conduct and the high probability that the injury to Mr. Feraci, or some similar worker, would result but, despite that knowledge, intentionally pursued their course of conduct and/or actively and knowingly participated in such conduct.
(Doc. 55, ¶ 7B).
[11] The Court notes that in 2003, the Florida legislature effectively overruled Turner when it amended § 440.11(1), Florida Statutes. The amendment codifies the intentional tort exception recognized by Turner; however, the legislature mandated that a plaintiff-employee prove the existence of the intentional tort exception by "clear and convincing evidence." Fla. Stat. § 440.11(1)(b) (2003). In addition, the legislature changed the substance of the exception by: (1) replacing the "substantial certainty" standard with a "virtually certain" standard, which is a higher standard; and (2) requiring that "the employer knew, based on prior similar accidents or on explicit warnings specifically identifying a known danger, was virtually certain to result in injury or death to the employee." Id. However, this legislative amendment is not retroactively applicable to the case at hand. "In the absence of a clear legislative intent that a statute is retroactive, a statute is presumed prospective." Foreman v. Russo, 624 So.2d 333, 336 (Fla. 4th DCA 1993) (citing State Department of Revenue v. Zuckerman-Vernon Corp., 354 So.2d 353 (Fla.1977)). Furthermore, if the legislature includes an effective date on which the amendment takes effect, then such inclusion rebuts any argument that a retroactive application was intended. See Zuckerman-Vernon, 354 So.2d at 358. Feraci's accident occurred in October 2001, and the amendment was not passed until 2003. There is no clear legislative intent that the amendment is retroactive, and since the legislature gave the amendment an effective date of October 1, 2003, any argument that the amendment should be retroactively applied to this case has been dispelled. Assuming arguendo that it were retroactive, Defendant employers would still be entitled to immunity, because if Plaintiffs cannot demonstrate the existence of an intentional tort exception under the lower standard in Turner, then Plaintiffs would be unable to meet the more stringent standard announced in the 2003 amendment.
[12] There two other noteworthy cases where Florida courts have determined that an employer's conduct did not rise to the requisite level of conduct for the plaintiff to maintain a lawsuit under Turner's intentional tort exception. In Fleetwood Homes, the plaintiff, who was the personal representative of the decedent's estate, brought a wrongful death action against the deceased's former employer. See Fleetwood Homes, 833 So.2d at 859. The deceased, who normally had another job assignment, had been assigned to work at a table inside of the defendant's factory. See id. at 860. The table was situated adjacent to an aisle used by forklifts to move supplies into the factory. See id. A forklift, driven by an experienced operator, drove passed the plaintiff carrying three rolls of sheet metal weighing about six hundred pounds. See id. The operator honked the horn for all nearby employees to move out of the way, but the deceased did not heed the warning. See id. The operator, who had been instructed by the defendant to continue when employees did not respond, continued moving down the aisle. See id. When the forklift went by the table where the deceased was working, the rolls of sheet metal hit a pipe, and one roll fell off of the forklift and struck the deceased in the head, killing him. See id. Evaluating the facts in light of the standard in Turner, the Second District Court of Appeal of Florida determined that the defendant employer was entitled to workers' compensation immunity, because the facts of the case did not rise to the level of an intentional tort. See id. at 868-69.
In Garrick v. Publix Super Markets, Inc., 798 So.2d 875 (Fla. 4th DCA 2001), a security guard who was injured in an armed robbery brought an intentional tort claim against his employer, Brinks Incorporated. See id. at 876. The plaintiff alleged that Brinks deliberately withheld knowledge from the plaintiff of a potential armed robbery of an armored car that was supposed to occur at one of two Publix supermarkets at an unspecified time on an unspecified date, and the plaintiff further alleged that such non-disclosure led to his injuries. See id. at 876-79. Applying Turner's objective standard, the Fourth District Court of Appeal of Florida affirmed the trial court's dismissal of the complaint. See id. at 879-80. According to the court, the complaint did not allege facts sufficient to establish that Brinks engaged in conduct substantially certain to result in injury to the plaintiff. See id.
[13] The juveniles had records which included the following felonies: (1) aggravated assault; (2) battery; (3) prior escape; and (4) burglary. See Sierra, 850 So.2d at 586.
[14] Two examples of cases where culpable negligence was not found are as follows: (1) Ross v. Baker, 632 So.2d 224 (Fla. 2nd DCA 1994), implied overruling on other grounds, Stucki v. Hopkins, 691 So.2d 560 (Fla. 5th DCA 1997) (At a construction site, the injured employee-plaintiff and a co-worker attempted to move a piece of plywood to cover a hole in the floor at a construction site. Unfortunately, the piece of plywood was covering another hole, and when they went to move it, the plaintiff fell through the hole which it had been covering. A few days before the accident, one of plaintiff's supervisor's knew of the need for handrails on the holes at the construction site; however, the supervisor did not install them prior to the plaintiff's fall. The court determined that there was no culpable negligence because the hole had been covered by plywood, which was recognized as an inferior method of protection); and (2) Killingsworth v. State, 584 So.2d 647 (Fla. 1st DCA 1991) (The defendant was loading a gun, which was being held between his legs and was pointed towards the floor, when it discharged, and the bullet ricocheted off of the interior of an automobile striking a nearby child.).
However, the court in Byers v. Ritz, 859 So.2d 1282 (Fla. 3rd DCA 2003) found culpable negligence where a police officer died as a result of injuries received from a backhoe that was being used in a post-hurricane cleanup effort. See id. The officer's supervisors took the backhoe without permission, and the court determined that theft of the backhoe was the cause of the officer's death. See id.
[15] Because the Court has determined that TMG is not vicariously liable for punitive damages arising from its employees' actions in this case, it is unnecessary for the Court to consider TMG's third argument regarding TMG's statutory avoidance of liability as a leasing company over the tortious acts of its employees.
[16] Furthermore, none of the acts or omissions, standing alone, are sufficient to demonstrate "substantial certainty."
[17] In addition, the Court notes that Plaintiffs did not refute Grundy's assertion that it was a statutory employer of Feraci.
[18] Assuming arguendo that Grundy committed all twenty-two acts or omissions, Plaintiffs have demonstrated nothing more than gross negligence.
[19] In addition, there is no evidence to prove that Total acted with a reckless disregard for Feraci's safety. See e.g., Kline v. Rubio, 652 So.2d 964, 965 (Fla. 3rd DCA 1995) (per curiam) ("The defendant who acts in the belief or consciousness that the act is causing an appreciable risk of harm to another may be negligent, and if the risk is great the conduct may be characterized as reckless or wanton, but is not an intentional tort.") (quotations and citations omitted).
[20] This includes any claim for negligence per se and gross negligence. Plaintiffs have not demonstrated to the Court that Total was in violation of any federal, state, or local law in order to establish negligence per se. See deJesus v. Seaboard Coast Line Railroad Co., 281 So.2d 198, 201 (Fla.1973). In addition, Plaintiffs have not shown that Total owed a duty to Feraci, and without a duty, Plaintiffs cannot legally recover from Total for gross negligence. See Faircloth v. Hill, 85 So.2d 870, 872 (Fla.1956) (explaining that gross negligence is the absence of exercise of slight care, which is the degree of care that a reasonably prudent person owes under the circumstances).
[21] In addition, Plaintiffs maintain that Resmondo committed a crime by falsifying an OSHA document regarding on site drug use. Plaintiffs failed to cite any portion of the record to substantiate that contention; however, assuming arguendo that there were evidence in the record, the falsification of such a document did not actively injure Feraci. Assuming further that such falsification amounts to culpable negligence, the falsification could only have passively exposed Feraci to injury, which is not sufficient to abrogate immunity. See Kennedy, 650 So.2d at 1106 ("[T]here would be immunity for the managerial employee who passively exposed an employee to injury even if the employee's conduct otherwise could be deemed culpably negligent.")
[22] There is a lack of evidence in the record to demonstrate that Resmondo (P & S, TMG, Total, or Grundy) had notice of any prior accidents as a result of the same alleged negligence. Plaintiffs do cite to deposition testimony that, in approximately the summer of 2000, Resmondo operated a trac-hoe at a different construction site and bumped either the guy or the pipe he was carrying. However, the witness did not see the alleged accident and only heard about it from others. (Doc. 184, Attach. Ex. E, deposition of Jimmy Nelson, p. 38, line 11 through p. 40, line 2). Even if that accident occurred, it was not one where a worker was crushed in a manner similar to Feraci.
[23] Furthermore, Plaintiffs seem to contend that Resmondo was culpably negligent for failing to hold a meeting to explain to Waynick, Melvin, and Feraci how to move the concrete pipes. Feraci had experience moving smaller pipes using the same method that injured him, and Waynick had experience in the operation of a trac-hoe. Thus, assuming Resmondo had a responsibility to explain how to move the pipes despite everyone's experience, his failure amounts to nothing more than simple negligence.
[24] In addition, there is no evidence that Resmondo intended to injure Feraci. Thus, Plaintiffs' intentional tort claims against Resmondo also fail as a matter of law.
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755 S.W.2d 131 (1988)
Ex parte Charlie Joe HALIBURTON, Jr.
No. 69850.
Court of Criminal Appeals of Texas, En Banc.
June 29, 1988.
*132 Gary Udashen, Dallas, for appellant.
John Vance, Dist. Atty. and Leslie McFarlane, Asst. Dist. Atty., Dallas, Robert Huttash, State's Atty., Austin, for the State.
Before the court en banc.
OPINION
MILLER, Judge.
Applicant filed this application for writ of habeas corpus pursuant to Article 11.07, Sec. 2, V.A.C.C.P., alleging his conviction was invalid because the Dallas County District Attorney's Office has a history of systematically excluding blacks from juries solely on the basis of race in violation of Swain v. Alabama, 380 U.S. 202, 85 S.Ct. 824, 13 L.Ed.2d 759 (1965).[1] On November 30, 1987, we remanded this cause to the trial court for appointment of an attorney for applicant and for an evidentiary hearing to determine whether applicant could produce evidence to support his claim under Swain, supra. The record of the evidentiary hearing is now before us; we will deny relief.
The trial judge filed supplemental findings of fact and conclusions of law in this cause. The trial court found that the State used only seven of its ten peremptory challenges in the jury selection process in applicant's trial in Cause # F80-1312-KQ[2] and that the prosecutor did not use any of these peremptory challenges to strike black persons from the jury panel. Thus, the trial judge concluded that the Swain holding was inapplicable to applicant's case and that applicant had not been denied any rights under the constitution of the United States or of Texas.[3] The trial judge also *133 concluded that applicant's application for writ of habeas corpus was totally without merit and recommended that it be denied.[4]
*134 For applicant to sustain a claim of a Swain violation, he must prove the Dallas County District Attorney's Office purposefully discriminates against blacks in the jury selection process. The quantum of proof necessary to sustain this burden is a matter of federal law. Swain, 380 U.S. at 205, 855 S.Ct. at 827. In discussing this burden of proof, the Fifth Circuit adopted the standard enunciated in Willis v. Zant, 720 F.2d 1212 (11th Cir.1983), cert. denied, 467 U.S. 1256, 104 S.Ct. 3548, 82 L.Ed.2d 851 (1984), aff'd sub nom., Willis v. Kemp, 838 F.2d 1510 (11th Cir.1988), wherein the court stated:
"In order to prevail in the instant case, [petitioner] must prove that his prosecutor had a systematic and intentional practice of excluding blacks from traverse juries in criminal trials through the exercise of peremptory challenges, and that this practice continued unabated in petitioner's trial."
See Evans v. Cabana, 821 F.2d 1065 (5th Cir.1987), cert. denied, ___ U.S. ___, 108 S.Ct. 5, 97 L.Ed.2d 795 (emphasis added). Applicant, therefore, must satisfy what appears to be a two-part test: he must show not only that Dallas County prosecutors have a history of systematically excluding blacks from juries because of race, but also that this practice was employed in the selection of his jury.
The trial court's supplemental findings and conclusions contain a copy of the State's jury strike sheet from applicant's trial in this cause. The strike sheet shows that seven venirepersons were peremptorily challenged by the State, but there is nothing on the strike sheet which indicates the race of the persons struck or the reason for the strike. James Jacks, one of the prosecutors in applicant's trial, testified at the hearing on the writ that he did not specifically remember whether there were any blacks on the jury panel, but if there were, he did not strike any of them on the basis of race because such practice was not a policy of his or of the district attorney's office. Jacks stated that there were no notes in the district attorney's file on this case regarding racial considerations of the venirepersons in applicant's trial. Michael Byck, applicant's trial attorney in this cause, also testified at the hearing on the writ that he did not recall whether there were any blacks on the jury panel. The only evidence of the racial composition of *135 the jury panel was applicant's testimony at the hearing that he thought there were two or three blacks on the jury panel in his third trial. Applicant initially stated that the prosecutor, Jacks, struck "some" of the black veniremembers, but he then concluded that the State struck all the blacks from the venire because there were no blacks on applicant's petit jury and his attorney did not strike any of them from the panel. Applicant testified further, however, that the investigator hired by his attorney for this hearing was checking the names of the members of the jury panel and was unable to find any blacks on the jury panel. Apparently, from applicant's testimony, the investigator had not been able to contact all of the venirepersons from applicant's third trial.
Although there is conflicting testimony as to the racial composition of the venire in applicant's third trial, the trial judge found that the State did not use its peremptory challenges to strike blacks from the jury panel. Absent an abuse of discretion, the findings of the trial judge will be upheld. We find that there is evidence in the record to support the trial judge's finding.
Since applicant has failed to establish that blacks were excluded from his jury panel solely because of their race, he has failed to meet his burden of proof. Willis v. Zant, supra; and Ex parte Alexander, 598 S.W.2d 308 (Tex.Cr.App.1980). Accordingly, we deny the relief sought.[5]
TEAGUE, J., concurs in the result.
DUNCAN, J., not participating.
ONION, Presiding Judge, concurring.
In Swain v. Alabama, 380 U.S. 202, 85 S.Ct. 824, 13 L.Ed.2d 759 (1965), the United States Supreme Court recognized that a State's purposeful or deliberate denial to Blacks on account of race of participation as a juror in the administration of justice violates the Equal Protection Clause. In order to prove such a violation, however, the Court required that the defendant prove the establishment of a pattern by which the prosecutor in numerous cases had peremptorily stricken veniremen of a particular race. Id. at 222-226, 85 S.Ct. at 837-839, 13 L.Ed.2d at 773-776. It was not enough to show just what was done in the defendant's own case.
In Willis v. Zant, 720 F.2d 1212 (11th Cir.1983), cert. den. 467 U.S. 1256, 104 S.Ct. 3548, 82 L.Ed.2d 851 (1984), the Court, in ordering an evidentiary hearing on a Swain claim, noted that the petitioner at such hearing had to prove the prosecutor had a systematic and intentional practice of excluding blacks from petit juries in criminal cases through the exercise of peremptory challenges, "and that practice continued unabated in petitioner's trial. The exclusion must have occurred `in case after case, whatever the circumstances, whatever the crime and whoever the defendant may be.' Swain, 380 U.S. at 223, 85 S.Ct. at 837." Willis was affirmed sub nom. Willis v. *136 Kemp, 838 F.2d 1510 (11th Cir.1988), where the Court adopted the above stated standard. See also Evans v. Cabana, 821 F.2d 1065 (5th Cir.1987), cert. den. ___ U.S. ___, 108 S.Ct. 5, 97 L.Ed.2d 795.
And it has been held by this Court in the past that the mere alleged use of peremptory challenges to strike qualified blacks is not a prohibited systematic exclusion of blacks in the selection of petit jurors. See Ridley v. State, 475 S.W.2d 769, 772 (Tex. Cr.App.1972); Evans v. State, 622 S.W.2d 866, 868, 869 (Tex.Cr.App.1981); McKay v. State, 707 S.W.2d 23 (Tex.Cr.App.1985), cert. den. 479 U.S. 871, 107 S.Ct. 239, 93 L.Ed.2d 164.
Then along came Batson v. Kentucky, 476 U.S. 79, 106 S.Ct. 1712, 90 L.Ed.2d 69 (1986), wherein the Supreme Court reaffirmed the principle announced in Swain but reexamined the evidentiary burden placed on a defendant who wishes to challenge the prosecution's use of peremptory challenges as racially discriminatory. In Batson the Supreme Court relaxed the evidentiary burden on a defendant by holding that a prima facie case of purposeful discrimination can be established solely by facts pertaining to the defendant's trial. Id. 106 S.Ct. at 1722-1724, 90 L.Ed.2d at 87-88.
It is to be observed that in Allen v. Hardy, 478 U.S. 255, 106 S.Ct. 2878, 92 L.Ed.2d 199 (1986), the Court held that Batson was not available to defendants whose convictions were final at the time Batson was announced. Subsequently, however, in Griffith v. Kentucky, 479 U.S. 314, 107 S.Ct. 708, 93 L.Ed.2d 649 (1987), the Court held that Batson was applicable to those defendants whose appeals were pending or not yet final by the time of the Batson decision.
These cases form the background for applicant's post-conviction application for writ of habeas corpus brought pursuant to Article 11.07, V.A.C.C.P.
The record before us reflects that applicant was convicted by a jury of aggravated robbery in 1980 in Cause No. F-80-1312-KQ in the 204th District Court of Dallas County. The court assessed punishment at 35 years' imprisonment after the State dismissed the paragraphs of the indictment alleging two prior convictions for enhancement of punishment.
Applicant appealed his conviction to this Court and the case was docketed as Cause No. 66,994. On September 1, 1981, the cause was transferred to the Fifth Court of Appeals in Dallas when that court and other Courts of Appeals acquired criminal jurisdiction. See Article V, § 6 (as amended 1980) and S.B. 265, Acts 1981, 65th Leg.
In his appeal one of applicant's points of error was that "constitutional rights to due process of law and the equal protection of the law were violated by the racially discriminatory actions of the State in peremptorily challenging all venirepersons of the Black Race and thereby subjecting appellant, a black person, to trial before an all white jury in a case involving an assault against a white woman."
In his appellate brief applicant stated that "By Bill of Exception and/or Motion to Supplement the Record of Trial, appellant shall establish the facts necessary to support this Ground of Error."[1]
Applicant's appellate brief also asserted that the jury panel in his case contained less than ten blacks and each were peremptorily challenged by the prosecutors in accordance with their official policy and custom when the accused is black and the victim is white. "In support of appellant's contention that such `official policy' or `custom' exists, appellant points out the fact that every such case involving the same prosecutors, such a policy and custom has been followed without exception." Applicant cited "Swain v. Alabama, 380 U.S. 202 [85 S.Ct. 824]," but did not cite any portion of the record supporting the assertions in his brief.
Applicant's counsel on appeal did submit an exhaustive brief on the Swain question *137 including most of the federal and state authorities outstanding at that time. His brief, however, never pointed out any trial objection on the basis of Swain nor did it call attention to just how the record was developed to support any Swain claim. The Court of Appeals rejected applicant's point of error on the basis that appellant had waived the transcription of the court reporter's notes of the voir dire examination of the jury, and the appellate record was not such as to permit the court to pass on the contention.[2] Applicant's other points (nee grounds) of error were disposed when his conviction was affirmed. Haliburton v. State (Tex.App.-Dallas 1982, No. 05-81-00318-CR) (unpublished opinion) (no PDR filed).
Applicant has now filed the instant and his third post-conviction application for writ of habeas corpus.[3] The main thrust of the instant habeas application is that there was Batson error at the time of his 1980 trial and he is entitled to relief. The judge of the convicting court clearly viewed the application as advancing only a Batson claim of error, and in his finding of fact and conclusions of law found that a Batson error claim was not entertainable on collateral attack after the conviction had become final citing Griffin v. Kentucky, supra. See also Allen v. Hardy, supra. In this the trial judge was correct even if a timely trial objection is made. See Allen v. Hardy, supra.
The habeas record was forwarded to this Court pursuant to the provisions of Article 11.07, supra.
Upon review of the record this Court entered a 5-4 order instructing the convicting court to conduct an evidentiary hearing. The Court agreed that a Batson error was not cognizable by collateral attack, but, directed the convicting court's attention to the possibility of a Swain error in the 1980 trial, although that case was not cited by the applicant. The order specifically directed the convicting trial court to determine in the evidentiary hearing whether an objection was made in applicant's 1980 trial for aggravated robbery. "In order for applicant to raise the Swain issue, he must have objected at trial pursuant to the grounds of Swain, and produce evidence that Dallas County has a history of systematically excluding blacks from juries through the use of peremptory challenges solely because of their race. Since such evidence may have developed subsequent to applicant's trial, we will remand this cause to the trial court for appointment of an attorney and an evidentiary hearing to determine whether applicant can produce evidence of the systematic exclusion of blacks from juries in Dallas County in violation of the holding in Swain, supra."[4]
After entry of the order the State filed a motion for rehearing pointing out that this Court had ordered an evidentiary hearing to resolve an issue raised and rejected on direct appeal. The State pointed out that if an issue has been addressed on direct appeal it need not be addressed again by way of a post-conviction habeas corpus proceeding, citing Ex parte Acosta, 672 S.W.2d 470 (Tex.Cr.App.1984). The motion was denied.
Following the evidentiary hearing the trial judge made supplemental findings of fact and conclusions of law. The judge found that applicant testified that his trial attorney made an objection towards the jurors by stating "... something to the nature as that I was the only black facing the court." While applicant's trial counsel was called as a witness he was not asked by anyone if he objected at the 1980 trial on the basis of the 1965 decision in Swain. Neither one of applicant's two appellate counsel who raised the Swain question on appeal were called to testify at the evidentiary hearing. With only applicant's testimony the trial judge found in his conclusions of law that "no legal objection raising *138 the `Swain issue' was made at trial that encompassed the grounds of the Swain case."
The trial judge also found that at the 1980 trial the State used only seven of its ten peremptory challenges and these were used to strike white prospective jurors and none were exercised against blacks, and that on appeal applicant's counsel waived the transcription of the "voir dire process." The trial judge concluded that without a trial objection and without the use of any peremptory challenges against blacks in applicant's trial Swain was inapplicable and applicant was entitled to no relief. No finding was made as to the existence of any systematic and intentional practice of excluding blacks from jury service in Dallas County prior to applicant's 1980 trial or that such practice continued unabated during said trial. It is not clear whether the trial judge thought that Swain was inapplicable without the necessity of such a finding or that he concluded the evidence was insufficient to establish that the claimed exclusion in 1980 occurred "in case after case, whatever the circumstances, whatever the crime, and whoever the defendant may be." Swain, 380 U.S. at 223, 85 S.Ct. at 837.
Despite the fact that the order for an evidentiary hearing noted that it was necessary in order to raise the Swain issue that appellant objected at his 1980 trial on this basis, today's majority opinion ignores the finding that no such trial objection was made.
The majority simply concludes: "Since applicant has failed to establish that blacks were excluded from his jury panel solely because of his race, he has failed to meet his burden of proof. Willis v. Zant, supra...." This is not the standard set forth in Willis v. Zant, supra, and is more like some Batson -type standard which is not applicable to a Swain claim. Swain made clear that it was not enough to show what was done in the defendant's own case.
In my opinion Swain is not applicable because applicant did not sustain his burden in showing that he made a timely objection on the basis of Swain. But even if he did make such an objection there was not sufficient evidence to sustain his burden of showing that prior to his 1980 trial that Dallas County prosecutors had a systematic and intentional practice "in case after case" of excluding blacks from juries in criminal cases by peremptory challenges and that such established practice continued unabated during applicant's trial.
While agreeing with the result reached by the majority opinion, I do not agree with all of its reasoning or the implications left by that opinion.
McCORMICK, J., joins this opinion.
NOTES
[1] On original submission of his application for writ of habeas corpus, applicant also challenged the validity of his conviction on the basis of Batson v. Kentucky, 476 U.S. 79, 106 S.Ct. 1712, 90 L.Ed.2d 69 (1986). We denied relief since applicant's conviction became final prior to the time the Batson decision was issued. See Griffith v. Kentucky, 479 U.S. 314, 107 S.Ct. 708, 93 L.Ed.2d 649 (1987).
[2] Applicant apparently had two other jury trials prior to the one in question, but he was not convicted in either trial. Consequently, the jury selection procedure in those two trials is not in issue.
[3] The germane findings of fact were that the State only used seven of its ten possible peremptory challenges; that the seven peremptory challenges used by the State were to strike white venirepersons; that the State did not use any peremptory challenge to strike a black venireperson; and that transcription of the voir dire process was waived by applicant's appellate counsel.
The germane conclusions of law were that the Swain holding is inapplicable to the present cause as no peremptory challenges were used by the State to exclude blacks from the jury; that applicant was not denied any rights guaranteed to him the constitution of the United States or of Texas; and that applicant's application for writ of habeas corpus is totally without merit.
[4] Although we do not find it necessary, for reasons indicated infra, to address the issue of whether applicant proved a history of systematic exclusion to dispose of his contention, a synopsis of the evidence introduced at the hearing aids in understanding applicant's claim. Applicant attempted to show a history of systematic exclusion of blacks from juries in Dallas County, the second requirement discussed in Willis v. Zant, 720 F.2d 1212 (11th Cir.1983), cert. denied, 467 U.S. 1256, 104 S.Ct. 3548, 82 L.Ed.2d 851 (1984), aff'd sub nom., Willis v. Kemp, 838 F.2d 1510 (11th Cir.1988), by presenting testimony from several criminal defense lawyers and prosecutors who practice law in Dallas County to support his claim that the Dallas County district attorney's office has systematically excluded blacks from juries. The trial judge then concluded that Swain, supra, was inapplicable to applicant's case without expressly concluding that applicant failed to adequately show a history of systematic exclusion of blacks from juries in Dallas County.
Larry Mitchell, a board certified criminal law specialist and former judge, was the first witness called by applicant at the evidentiary hearing. Mitchell stated that, in his opinion which was based upon his experience in 150-200 felony jury trials, the Dallas County district attorney's office systematically excluded blacks through the use of peremptory challenges and that when blacks did serve on juries, it was extremely unusual and token representation. Mitchell stated that it was the practice of defense attorneys to strike blacks from the venire when the defendant was white. Mitchell had also seen the article written in 1973 by Jon Sparling, a former prosecutor in Dallas County, which dealt with jury selection in criminal cases. This article, which applicant relied upon heavily to prove a Swain violation, instructed prosecutors that "You are not looking for any member of a minority group.... Minority races almost always empathize with the Defendant." Mitchell stated that he saw this article in the prosecutor's manual around 1979-1981, that the article was republished several times and was eventually excised from the manual.
Fred Tinsley, a black lawyer who is also a board certified criminal law specialist and former judge, testified that the Sparling article reflects the policy of the Dallas County district attorney's office and that the prosecutors systematically excluded blacks from juries. According to Tinsley, approximately ninety percent of his law practice consists of representing black defendants in criminal cases. Tinsley stated that it was his experience that blacks are struck from juries when there is a black defendant and a white victim but not when both the defendant and victim are black. Tinsley testified that he had in the past struck blacks from jury panels, but he has never struck all blacks. Tinsley said that prosecutors, whose names he could not recall, told him that they struck blacks solely because of their race but that this practice was not the policy of the Dallas County district attorney's office.
Applicant next called Ron Goranson, a defense lawyer who specializes in criminal law, to testify. It was Goranson's opinion that prosecutors in Dallas systematically struck all blacks from jury panels but that this practice was an informal policy of the district attorney's office. Goranson believed that prosecutors could have struck blacks from jury panels for neutral reasons but that blacks were struck by the State because prosecutors believed blacks were unlikely to convict, and prosecutors want to win their cases. Goranson did not recall seeing a black juror in Dallas County until 1980, and he stated that he never struck blacks from jury panels because the State always struck the blacks for you.
James Jacks, a former assistant district attorney in Dallas County and, as noted earlier, one of the prosecutors in applicant's trial, testified that the Sparling article on jury selection was not given to him when he joined the district attorney's office. Jacks stated that it was not a policy of the district attorney's office to systematically exclude blacks from jury panels. Although applicant claims his trial attorney objected to the jury, Jacks did not recall any objections by applicant to the State's use of peremptory challenges at his trial.
Another former prosecutor from Dallas County, Ron Wells, reiterated that it was not a policy of the district attorney's office to strike blacks on the basis of race. Wells, however, was given the prosecutor's manual, of which the Sparling article was a part, when he joined the district attorney's office in 1980.
Richard Anderson, a criminal defense attorney since 1973 who is also board certified in criminal law, could not specifically recall having a black juror in any case where he represented a black defendant. Anderson believed that the district attorney's office had an unwritten policy of excluding blacks solely for racial reasons.
Peter Lesser, another criminal defense lawyer, stated that prosecutors, whose names he could not recall, readily acknowledged that it was a policy of the district attorney's office to use peremptory challenges to exclude blacks from juries. Lesser had a copy of the prosecutor's manual which included the Sparling article, but he had gotten this manual about ten years ago. Lesser stated that the manual is given to prosecutors when they begin working for the district attorney's office and that the manual was being used by prosecutors at the time of applicant's trial.
Michael Byck, a criminal defense attorney also board certified in criminal law, represented applicant in his three jury trials. He believed that the Dallas County district attorney's office systematically excluded blacks from jury panels during 1979-1981, the time during which applicant was tried, and that that practice was employed by the prosecutors in applicant's trial. Byck's jury selection notes from applicant's first two trials, which are not in issue here, indicate that applicant was tried by an all-white jury in both trials, but Byck could not recall if any blacks were on the jury panel in applicant's third trial.
As stated earlier, applicant relied heavily upon the Sparling article to show that Dallas County prosecutors have a history of excluding blacks from jury panels solely on the basis of race. Sparling states in the introduction that the article contains "one prosecutor's ideas on some things that need to be said to the panel, and some things to look for in a juror." Sparling's "ideas" included not selecting minorities as jurors because they have a tendency to sympathize with defendants, not selecting old women who wear too much make-up because they are usually unstable, and not selecting extremely overweight people, especially young men and women, because they lack self-discipline and are sometimes unstable. This article indicates that Sparling probably struck venirepersons on grounds irrelevant to legal proceedings, see Swain, 380 U.S. at 220, 85 S.Ct. at 835, but the article does not on its face indicate that Sparling's "ideas" were the policy of the Dallas County district attorney's office.
Applicant also relied heavily on an article printed in the Dallas Morning News in March of 1986. The article contained statistics on the jury selection process in 100 felony jury trials in Dallas County in 1983-1984. The authors of the article, Ed Timms and Steve McGonigle, found that of the black venirepersons that were struck peremptorily, ninety-two percent were struck by prosecutors. Other statistics showed that blacks were excluded from jury service almost five times the rate that whites were excluded, that four out of five black defendants have all-white juries, and that the chance that a black will serve on a jury is one in ten as opposed to a one in two chance for a white person.
[5] The concurring opinion would hold that Swain, supra, is inapplicable to this cause because applicant failed to show that he made a timely objection at trial on the basis of Swain, supra. Specifically, the concurring opinion states that "today's majority opinion ignores the finding that no such trial objection was made." There are two reasons for which we did not address this issue of an objection at trial. First, the State filed a motion for rehearing in this cause after we remanded this cause to the trial court for a determination of whether applicant objected at trial on a Swain basis and for an evidentiary hearing to determine whether applicant could sustain his claim of a Swain violation. The State argued in its motion that: "Since Applicant cannot show an objection at trial, he cannot meet the first element of proof required by this court." Further, the court of appeals had resolved this issue against applicant in his appeal to that court after his conviction. We impliedly rejected the State's argument when we denied the motion. Second, we believe that the first person "systematically excluded" against, as per Swain, supra, is just as entitled to complain of systematic exclusion as is the last person systematically excluded against. In other words, if the systematic exclusion is not apparent at a particular defendant's trial, he should not be excluded from complaining of systematic exclusion by collateral attack when the systematic exclusion becomes apparent. Thus, we could not say prior to applicant's evidentiary hearing that he needed to object at trial in order to preserve Swain error. Having found a dispositive ground other than a procedural default, in the opinion above, we decline for the aforementioned reasons to address the procedural default issue.
[1] This applicant apparently did not do so on his appeal where he was represented by different counsel than at trial.
[2] Even at this late date there seems to be no doubt about the waiver of the said transcription.
[3] Applicant's other post-conviction applications for writ of habeas corpus did not involve a Batson or Swain claim.
[4] See pp. 133-34 and 134 by the majority.
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137 Ga. App. 30 (1975)
223 S.E.2d 8
QUEEN
v.
BAIR.
51442.
Court of Appeals of Georgia.
Submitted November 3, 1975.
Decided November 19, 1975.
Rehearing Denied December 10, 1975.
*32 Kyle Yancey, for appellant.
Downey, Cleveland & Moore, Lynn Downey, for appellee.
WEBB, Judge.
Mrs. Queen sued Bair for injuries she received as a result of an automobile collision. She sought damages in the amount of $75,000, was awarded $7,500 by the jury and appeals, enumerating as error the following: that the trial court erred (1) in charging the jury on comparative and contributory negligence; (2) in allowing the defendant to examine her witness, Dr. Wallace, in regard to the beliefs of other chiropractors; and (3) in overruling her motion for new trial.
1. Both drivers were stopped at an intersection and proceeded forward at approximately the same time. Bair admitted to crossing the center line while making a right turn and striking Mrs. Queen's automobile on her side of the road, and that she moved partially off the road to avoid him, but contended that she was using excessive speed.
"The driver of an automobile having the right of way at an intersection ordinarily has the right to assume and to act upon the assumption that drivers of cars approaching on his left will yield the right of way and exercise the ordinary care required of them. But even if the driver approaching on the left is guilty of negligence per se or has otherwise failed to exercise ordinary care in approaching the intersection, this will not relieve the driver having the right of way of his own legal duty to exercise ordinary care under the facts and circumstances of the situation. It is his duty to exercise ordinary care, to remain alert in observing the vehicles approaching the crossing, and to exercise ordinary care in the control, speed and movements of his car to avoid a collision, after he sees or by ordinary diligence could have seen that one is threatened or imminent. [Cits.]" Currey v. Claxton, 123 Ga. App. 681, 682 (182 SE2d 136).
Questions as to whether or not alleged acts constitute negligence are peculiarly the province of the jury. Atlantic C. L. R. Co. v. Coxwell, 93 Ga. App. 159 (2) (91 SE2d 135). The charge as given embodied the principles of Code § 105-603; and since the evidence authorized a finding that Mrs. Queen failed to avoid the consequences *31 of the defendant's act, failure to give the charges objected to would have been error. Davis v. Hammock, 123 Ga. App. 33 (179 SE2d 283).
2. Mrs. Queen complains that the trial court erred in allowing her witness, Dr. Wallace, to be cross examined concerning the beliefs of other chiropractors because his testimony was irrelevant, illustrated nothing in regard to his qualifications and was elicited for the purpose of discrediting him.
Where the admissibility of evidence is doubtful the burden is on the objecting party to show wherein it is inadmissible. Carter v. Marble Products, 179 Ga. 122, 128 (175 SE 480); Smith v. The Morning News, 99 Ga. App. 547, 548 (109 SE2d 639). "Whether a physician's testimony has probative value is for the trior of the facts rather than for the witness himself. Accord Glover v. State, 129 Ga. 717 (9) (59 SE 816). `Every expert derives much of his knowledge from books as well as from experience, and can give his opinion based upon the knowledge acquired from both sources.' Central R. Co. v. Mitchell, 63 Ga. 173, 181. Expert opinion is admissible even where in reaching his opinion the expert `derived all his knowledge on the subject from reading medical authorities.' Mayor &c. of Jackson v. Boone, 93 Ga. 662 (1) (20 SE 46); Boswell v. State, 114 Ga. 40 (3) (39 SE 897)." Miller v. Travelers Ins. Co., 111 Ga. App. 245, 247 (141 SE2d 223).
Dr. Wallace was qualified as an expert chiropractor and the trial court did not err in allowing him to testify as to what his beliefs were in this field of medicine.
3. The verdict was not contrary to the law or the evidence, or against the weight of the evidence, and the trial court did not err in overruling Mrs. Queen's motion for new trial.
Judgment affirmed. Bell, C. J., and Marshall, J., concur.
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ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of -- )
)
Abdul Ahad Khadim Construction Company ) ASBCA No. 59206
)
Under Contract No. W91B4L-12-C-0214 )
APPEARANCE FOR THE APPELLANT: Mr. Abdul Ahad Khadim
Director
APPEARANCES FOR THE GOVERNMENT: Raymond M. Saunders, Esq.
Army Chief Trial Attorney
L TC Brian J. Chapuran, JA
Trial Attorney
DECISION BY ADMINISTRATIVE JUDGE LOPES ON THE
GOVERNMENT'S MOTION TO DISMISS FOR LACK OF JURISDICTION
Pursuant to Board Rule 7, the Department of the Army (Army or government)
moves to dismiss Abdul Ahad Khadim Construction Company's (appellant) appeal for
the Board's lack of jurisdiction due to appellant's failure to certify its claim. The
motion to dismiss is granted. This appeal is dismissed without prejudice.
STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION
1. On 19 July 2012, the government awarded firm fixed-price Contract
No. W91B4L-12-C-0214 (contract) to appellant for the construction of a road and
entry control point at Kandahar Airfield, Afghanistan (R4, tabs 1-3). The estimated
value of the contract was $201,232 (R4, tab 1 at 3-5).
2. The contract incorporated by reference the FAR 52.233-1, DISPUTES (JUL
2002) clause (R4, tab 1 at 28). The contract included the full text of the FAR 52.211-12,
LIQUIDATED DAMAGES -- CONSTRUCTION (SEP 2000) clause and notified appellant that if
it failed to complete the work within the time specified in the contract it would be
required to "pay liquidated damages to the Government in the amount of $667.36 for the
first day and $573.44 for each calendar day of delay thereafter until the [contract]
work [was] completed or accepted" (R4, tab 1 at 7-8).
3. The government issued a notice to proceed on 1 September 2012, with a
contract start date of 1 September 2012. The contract completion date was 30 October
2012. (R4, tab 5)
4. On 17 October 2012, the contracting officer sent a letter to appellant
expressing concern over appellant's lack of progress on the contract work (R4, tab 5).
5. On 22 October 2012, the government issued contract Modification
No. P00002 that extended the contract completion date to 10 November 2012 due to
delays caused by appellant (R4, tab 9 at 1, 3). The modification stated that liquidated
damages would be assessed effective 31 October 2012, until the project had been
accepted by the government (id. at 1).
6. On 13 January 2013, the government issued contract Modification
No. P00003 that extended the contract completion date to 1 February 2013 due to
delays (R4, tab 18 at 2, 3). The modification stated that liquidated damages would
continue to be assessed (id. at 3).
7. On 7 March 2013, the government issued contract Modification No. P00004
that extended the contract completion date to 2 April 2013 due to delays caused by
appellant (R4, tab 32).
8. On 3 April 2013, the government issued contract Modification No. P00005
that extended the contract completion date to 22 April 2013 (R4, tab 37). The
modification stated that the government had decided not to assess liquidated damages
for delays caused by appellant (id. at 2).
9. On 1 October 2013, the government issued contract Modification
No. P00006 that assessed $27,045.60 in liquidated damages due to delays of 47 days
between 19 May 2013 and 4 July 2013 caused by appellant (R4, tab 43).
10. On 2 February 2014, appellant filed a claim for AFN 16,508,044.80 (R4,
tab 44). Using the currency conversion rate in the contract, the claim was for
$339,513.82 (R4, tab 1 at 10). The claim for currency exchange losses, lost labor,
administration costs, and liquidated damage costs was not certified pursuant to the
Contract Disputes Act by appellant.
11. On 1 March 2014, the contracting officer issued a contracting officer's
final decision granting appellant's claim for liquidated damages cost ($27,045.60) (see
SOF if 9) but denying the remainder of the claim (R4, tab 45).
12. On 10 March 2014, appellant timely filed this appeal.
2
DECISION
The Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-7109, requires each
claim by a contractor against the Federal Government relating to a contract shall be in
writing. 41 U.S.C. § 7103(a)(2).
For claims of more than $100,000 made by a contractor,
the contractor shall certify that -
(A) the claim is made in good faith;
(B) the supporting data are accurate and complete to
the best of the contractor's knowledge and belief;
(C) the amount requested accurately reflects the
contract adjustment for which the contractor believes the
Federal Government is liable; and
(D) the certifier is authorized to certify the claim on
behalf of the contractor.
41 U.S.C. § 7103(b)(I). Certification may be executed by an individual authorized to
bind the contractor with respect to the claim. 41 U.S.C. § 7103(b)(2).
"[T]he certification requirement is a jurisdictional prerequisite that must be
satisfied by the contractor before it may appeal the contracting officer's claim denial."
Tefirom lnsaat Enerji Sanayi ve Ticaret A.S., ASBCA No. 56667, 11-1 BCA ii 34,628
at 170,630 (citing United States v. Grumman Aerospace Corp., 927 F.2d 575, 579
(Fed. Cir. 1991); WM Schlosser Co. v. United States, 705 F.2d 1336, 1338 ("Unless
the claim was certified when it was submitted to the contracting officer, the Board
should have neither heard nor ruled on the appeal.")). The complete absence of any
certification is not a defect which may be corrected under the CDA for the Board to
retain jurisdiction. Eurostyle, Inc., ASBCA No. 45934, 94-1BCAii26,458
at 131,654. Moreover, the fact that a contracting officer purported to issue a final
decision does not serve to remedy the absence of certification. CDM International,
Inc., ASBCA No. 52123, 99-2 BCA if 30,467 at 150,514 (citing WM Schlosser,
705 F.2d 1336).
The record establishes that appellant's monetary claim is for more than
$100,000 (SOF if 10). There is no evidence on record that appellant has certified its
claim as required by the CDA. The Board determines that appellant has failed to
certify its monetary claim in accordance with the CDA, and therefore the Board has no
jurisdiction over the claim.
3
CONCLUSION
Because appellant's monetary claim is for more than $100,000 and was not
certified in accordance with the CDA, the Board has no jurisdiction over the appeal.
The government's motion to dismiss is granted without prejudice. Appellant retains
its right to submit a properly certified claim to the contracting officer for decision.
Dated: 7 August 2014
CRANE L. LOPES
Administrative Judge
Armed Services Board
of Contract Appeals
I concur I concur
~~L-IAM~'-S~~~~~~ ~$
Administrative Judge Administrative Judge
Chairman Vice Chairman
Armed Services Board Armed Services Board
of Contract Appeals of Contract Appeals
I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 59206, Appeal of Abdul
Abad Khadim Construction Company, rendered in conformance with the Board's
Charter.
Dated:
JEFFREY D. GARDIN
Recorder, Armed Services
Board of Contract Appeals
4
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 17-6843
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
RONALD WENDELL DOBY,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern District of Virginia, at
Richmond. Henry E. Hudson, District Judge. (3:08-cr-00029-HEH-DJN-1)
Submitted: November 21, 2017 Decided: November 27, 2017
Before WYNN and THACKER, Circuit Judges, and HAMILTON, Senior Circuit Judge.
Affirmed by unpublished per curiam opinion.
Ronald Wendell Doby, Appellant Pro Se. Stephen Eugene Anthony, Thomas Arthur
Garnett, Assistant United States Attorneys, Richmond, Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Ronald Wendell Doby appeals the district court’s order denying relief on his 18
U.S.C. § 3582(c)(2) (2012) motion. We have reviewed the record and find no reversible
error. Accordingly, we affirm for the reasons stated by the district court. United States v.
Doby, No. 3:08-cr-00029-HEH-DJN-1 (E.D. Va. June 30, 2017). We dispense with oral
argument because the facts and legal contentions are adequately presented in the materials
before this court and argument would not aid the decisional process.
AFFIRMED
2
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17 So.3d 1289 (2009)
Alexander PERKINS, Appellant,
v.
STATE of Florida, Appellee.
No. 4D05-712.
District Court of Appeal of Florida, Fourth District.
October 9, 2009.
Carey Haughwout, Public Defender, and Margaret Good-Earnest, Assistant Public Defender, West Palm Beach, for appellant.
*1290 Bill McCollum, Attorney General, Tallahassee, and Mitchell A. Egber, Assistant Attorney General, West Palm Beach, for appellee.
PER CURIAM.
We vacate our orders of May 27, 2009 and August 28, 2009, and reconsider on remand our opinion in Perkins v. State, 939 So.2d 1113 (Fla. 4th DCA 2006), which the Florida Supreme Court reviewed in Perkins v. State, 7 So.3d 529 (Fla.2009).
Perkins argued to this court that the trial court erred in sentencing by considering an affidavit from the Department of Corrections ("DOC") reflecting his prior release date from prison. 939 So.2d at 1113. The State offered the letter at sentencing in order to establish Perkins' status as a prison releasee reoffender ("PRR"). This court affirmed based on our en banc opinion in Yisrael v. State, 938 So.2d 546 (Fla. 4th DCA 2006). In Yisrael, this court held that, during sentencing, a DOC release-date letter was admissible, under the public records exception to the hearsay rule, to establish a defendant's status as a habitual violent felony offender. Id. at 549-50.
The Florida Supreme Court, however, in Yisrael v. State, 993 So.2d 952 (Fla.2008), concluded that DOC release-date letters alone are not admissible under either the business or public records exceptions to the hearsay rule. Id. at 960. Instead, the Florida Supreme Court held that a signed release-date letter, written under seal, or a section 90.902(11) business record certification, may be used to authenticate an attached DOC "Crime and Time Report" to render the entire report admissible under the public records exception to the hearsay rule. Id. (citing Parker v. State, 973 So.2d 1167, 1168-69 (Fla. 1st DCA 2007); § 90.902(11), Fla. Stat. (2004)).
Following the disposition of Yisrael, the Florida Supreme Court issued an order quashing and remanding to this court for reconsideration.
We have reviewed the full appellate record and find that the State submitted a DOC business records certification to authenticate the "Crime and Time Report" upon which the trial court based Perkins' PRR sentence. Accordingly, we affirm Perkins' PRR designation and sentence.
Affirmed.
POLEN, FARMER and CIKLIN, JJ., concur.
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442 Pa. 516 (1971)
Commonwealth
v.
Alvarado, Appellant.
Supreme Court of Pennsylvania.
Argued November 30, 1970.
April 22, 1971.
*517 Before BELL, C.J., JONES, COHEN, EAGEN, O'BRIEN, ROBERTS and POMEROY, JJ.
David N. Savitt, with him John Patrick Walsh, for appellant.
Mark Sendrow, Assistant District Attorney, with him Milton M. Stein, Assistant District Attorney, James D. Crawford, Deputy District Attorney, Richard A. Sprague, First Assistant District Attorney, and Arlen Specter, District Attorney, for Commonwealth, appellee.
*518 OPINION BY MR. JUSTICE ROBERTS, April 22, 1971:
On June 2, 1966, appellant Julio Alvarado pleaded guilty to an indictment charging him with rape and murder. Following a degree of guilt hearing, a three-judge panel found the homicide to be murder in the first degree and sentenced him to death. On January 14, 1970, Alvarado's petition for leave to withdraw his guilty plea was denied, and the present appeal followed.
The Commonwealth concedes that the prosecutor assigned to try Alvarado's case promised not to seek the death penalty in return for a guilty plea. In urging that he is now entitled to withdraw that plea, Alvarado contends that the prosecutor's promise was not kept and that he was denied the effective assistance of counsel.
I
In support of the ineffective counsel claim, we are referred to counsel's failure to object at the degree of guilt hearing to the introduction into evidence of certain gruesome and inflammatory photographs of the victim's body and to our holding in Commonwealth v. Powell, 428 Pa. 275, 241 A. 2d 119 (1968), that such inflammatory photographs are not admissible unless of "essential evidentiary value". Id. at 278, 241 A. 2d at 121. However, the degree of guilt hearing in the instant case took place two years prior to Powell, at a time when counsel might have reasonably believed that any objection would have been futile. See, e.g., Commonwealth v. Dickerson, 406 Pa. 102, 176 A. 2d 421 (1962). We therefore cannot conclude that counsel's decision not to object to the introduction of the photographs was without "some reasonable basis" designed to effectuate his client's interests. Commonwealth ex rel. Washington v. Maroney, 427 Pa. 599, 604, 235 A. 2d 349, 352 (1967). See also Commonwealth v. Woody, 440 Pa. 569, 271 A. 2d 477 (1970); Commonwealth v. Skipper, 440 Pa. 576, 271 A. 2d 476 (1970).
*519 The only other alleged ineffectiveness is counsel's failure to inform the court, prior to its acceptance of Alvarado's plea, of the prosecutor's promise not to seek the death penalty. It is undoubtedly the much better practice for the court to be made aware of the existence and nature of any plea bargain prior to the plea itself. See ABA Project on Minimum Standards for Criminal Justice, Pleas of Guilty § 1.5, Commentary (Approved Draft 1968); Note, 112 U. Pa. L. Rev. 865, 894-95 (1964). The potential benefits of disclosure are substantial. The court would be on notice to instruct the possibly confused defendant that the prosecutor's recommendation or lack of recommendation is in no way binding on the court. Moreover, an on-the-record disclosure of the plea bargain would serve both to protect the defendant in the event that the prosecutor does not subsequently abide by the plea bargain and to protect the Commonwealth against later false claims of unkept bargains. People v. West, 3 C. 3d 595, 91 Cal. Rptr. 385 (1970). We are not at this time, however, disposed to fashion a rule that counsel's failure to disclose a plea bargain per se constitutes ineffective assistance of counsel. In the instant case, there is ample indication that Alvarado understood that the court might not be swayed by the prosecutor's failure to seek the death penalty, and the Commonwealth admits the existence of the promise not to seek the death penalty. Absent any demonstrable prejudice, counsel's silence respecting the plea bargain did not in itself render his assistance of Alvarado constitutionally defective.
We wish to emphasize, however, that we will in the future expect defense counsel to see to it that the court is made aware of the existence and terms of any plea agreement. This responsibility is, of course, shared concurrently by the prosecutor and by the court itself. In this regard, we are in substantial accord with the American Bar Association's recommended standard. "The *520 court should not accept a plea of guilty or nolo contendere without first determining that the plea is voluntary. By inquiry of the prosecuting attorney and defense counsel, the court should determine whether the tendered plea is the result of prior plea discussions and a plea agreement, and, if it is, what agreement has been reached. If the prosecuting attorney has agreed to seek charge or sentence concessions which must be approved by the court, the court must advise the defendant personally that the recommendations of the prosecuting attorney are not binding on the court. The court should then address the defendant personally and determine whether any other promises or any force or threats were used to obtain the plea." ABA Project on Minimum Standards for Criminal Justice, Pleas of Guilty § 1.5 (Approved Draft 1968).
II
In Commonwealth ex rel. Kerekes v. Maroney, 423 Pa. 337, 223 A. 2d 699 (1966), this Court expressly indicated that plea bargaining is in general a permissible device, frequently serving the best interest of both the Commonwealth and the accused. Thus we turn to Alvarado's remaining contention that the Commonwealth did not abide by the plea bargain, and in this claim we find much merit.[*] The record discloses that the prosecutor *521 never specifically urged or expressly recommended the death penalty. But neither did he stand mute. When asked by the court whether he had any comments to offer on the question of sentence, he replied that he had and proceeded to make a series of statements, including the following: "During the course of the testimony that the Commonwealth presented, there was testimony that this defendant helped carry the stretcher containing the victim down the stairs, and at that time before the testimony came in I think your Honors felt that this was an act of mercy showing that this was remorse or sorrow. Later through all the testimony we found that this was not an act of remorse, but was part of the actions which this man undertook calculated to deceive the family and his friends. He had given the story and the information of the 3 men that he saw. He didn't beg the family for forgiveness or for mercy, but he came back specifically to try to fall (sic) and deceive and send the police out on a false track. The purpose (sic) we are here today is to judge a man. What kind of man is he? Is he showing this Court any remorse? Has he begged this Court for mercy himself? He has had nothing to say. Would he show any mercy to this girl? . . ." (Emphasis added.) ". . . In conclusion, your Honors, I would just say that in your discretion in deciding what the penalty should be in this case the question should be asked have you ever observed in your experience, have you ever seen a crime as vicious as this one has been? Can you ever forget the pictures you saw? From the pictures I think the Commonwealth could show a specific intent to kill in this case." (Emphasis added.)
The Commonwealth would dismiss the above references as a mere vigorous "review of the evidence". That may be so but a review for what purpose? These statements were made after Alvarado had already been found guilty of first degree murder and there remained to be *522 decided only whether his punishment should be life imprisonment or death. See Act of June 24, 1939, P.L. 872, § 701, as amended, 18 P.S. § 4701. Consequently, the only conceivable purpose of the references to the brutal nature of the crime and to Alvarado's apparent remorselessness was to persuade the court to assign the harsher of the two possible penalties.
It is of course possible that the prosecutor may have intended to promise only that he would not explicitly urge the death penalty. However, the prosecutor's subjective understanding of his promise is immaterial. To determine the content of a plea bargain we must consider what the defendant might have reasonably interpreted it to be. Cf. In re Valle, 364 Mich. 471, 477-78, 110 N.W. 2d 673, 677 (1961). Here, Alvarado might have reasonably believed that the prosecutor's promise not to seek the death penalty included a commitment not to make any damning or even potentially damaging statements at the time of sentencing. As so interpreted, that promise was clearly violated.
We are brought then to the question of remedy. The majority of jurisdictions that have faced this issue permit the withdrawal of a guilty plea when the prosecutor violates a plea bargain. See, e.g., White v. Gaffney, 435 F. 2d 1241 (10th Cir. 1970); People v. Fratianno, 6 Cal. App. 3d 211, 85 Cal. Rptr. 755 (1970); State v. Wolske, 280 Minn. 465, 160 N.W. 2d 146 (1968); People v. Sigafus, 39 Ill. 2d 68, 233 N.E. 2d 386 (1968); State v. Reppin, 35 Wis. 2d 377, 151 N.W. 2d 9 (1967); Darnell v. Timpani, 68 Wash. 2d 666, 414 P. 2d 782 (1966); Zaffarano v. United States, 306 F. 2d 707 (9th Cir. 1962); People ex rel. Valle v. Bannan, supra; State v. Hovis, 353 Mo. 602, 183 S.W. 2d 147 (1944). See also ABA Project on Minimum Standards for Criminal Justice, Pleas of Guilty § 2.1(a) (ii) (4) (Approved Draft 1968); cf. ABA Project on Standards for Criminal Justice, The Prosecution Function *523 and the Defense Function, The Prosecution Function § 4.3 (Tent. Draft 1970). There exists, however, a minority rule which does not permit the withdrawal of the plea but instead gives the defendant the benefit of the bargain by modifying his sentence in accordance with the prosecutor's promise. People v. Chadwick, 33 A.D. 2d 687, 306 N.Y.S. 2d 182 (1969); People v. Keehner, 28 A.D. 2d 695, 281 N.Y.S. 2d 128 (1967). Courtney v. State, 341 P. 2d 610 (Okla. Crim. App. 1959); Harjo v. State, 70 Okla. Crim. App. 369, 106 P. 2d 527 (1940). Finally, in at least two instances courts have given a defendant the option of either withdrawing his plea or accepting a modification of his sentence in accordance with the plea bargain. People v. Farina, 2 A.D. 2d 776, 154 N.Y.S. 2d 501 (1956); United States v. Graham, 325 F. 2d 922 (6th Cir. 1963).
While not expressing any opinion as to the possible general preferability of the majority rule, we believe that in the particular circumstances of this case the appropriate disposition is to modify Alvarado's sentence to life imprisonment rather than to allow withdrawal of his guilty plea. Cf. Commonwealth v. Green, 396 Pa. 137, 151 A. 2d 241 (1959); Commonwealth v. Irelan, 341 Pa. 43, 17 A. 2d 897 (1941); Commonwealth v. Garramone, 307 Pa. 507, 161 Atl. 733 (1932). As the Commonwealth did not breach any promise until after Alvarado had been found guilty of murder in the first degree, a life sentence rather than death was the most benefit he could have derived from fulfillment of the prosecutor's promise. No consideration of fairness or sound judicial administration dictates that he now be given an opportunity to withdraw his plea, stand trial, and possibly escape criminal liability altogether.
Accordingly, as this Court unanimously instructed in Commonwealth v. Aljoe, 420 Pa. 198, 216 A. 2d 50 (1966), the record is remanded to the trial court with *524 directions to vacate the death penalty and to sentence Alvarado to life imprisonment.
Mr. Justice COHEN took no part in the decision of this case.
NOTES
[*] Before discussing the plea bargain issue, we wish to make clear that we in no way condone appellant's negative responses to the court's careful and explicit questions concerning whether any representations or promises had been made to him in return for his plea of guilty. If appellant misled the court of his own volition, we would be most hesitant to grant any relief. If, however, appellant's negative answers were "coached" by his counsel, he should not be made to suffer because of counsel's questionable advice. Furthermore, as set out in part I of this opinion, the conspiracy of silence respecting the plea bargain extended even to the prosecutor who sat idly by while the court was misinformed concerning the circumstances attending appellant's decision to plead guilty.
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Fourth Court of Appeals
San Antonio, Texas
June 14, 2018
No. 04-18-00356-CV
MICHELIN NORTH AMERICA,
Appellant
v.
Roberto GARZA and Lizeth Garza,
Appellees
From the 229th Judicial District Court, Starr County, Texas
Trial Court No. DC-17-448
Honorable John Longoria, Judge Presiding
ORDER
The trial court clerk has filed a notification of late record, stating that the appellant has
failed to pay or make arrangements to pay the fee for preparing the clerk’s record and that the
appellant is not entitled to appeal without paying the fee.
We, therefore, ORDER appellant to provide written proof to this court within ten days of
the date of this order that either (1) the clerk’s fee has been paid or arrangements have been made
to pay the clerk’s fee; or (2) appellant is entitled to appeal without paying the clerk’s fee. If
appellant fails to respond within the time provided, this appeal will be dismissed for want of
prosecution. See TEX. R. APP. P. 37.3(b); see also TEX. R. APP. P. 42.3(c) (allowing dismissal of
appeal if appellant fails to comply with an order of this court).
_________________________________
Karen Angelini, Justice
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the said
court on this 14th day of June, 2018.
___________________________________
KEITH E. HOTTLE,
Clerk of Court
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IN THE COURT OF CRIMINAL APPEALS OF TENNESSEE
AT KNOXVILLE FILED
JULY 1998 SESSION
STATE OF TENNESSEE, * C.C.A. # 03C01-9708-CR-00366
September 22, 1998
Appellee, * KNOX COUNTY
VS. * Hon. Mary Beth Leibowitz, Judge
Cecil Crowson, Jr.
JAMES SMITH, a.k.a. * (Revocation of Community Corrections)
Appe llate Court C lerk
JAMES E. MAXWELL,
*
Appellant.
*
For Appellant: For Appellee:
Mark E. Stephens John Knox Walkup
District Public Defender Attorney General & Reporter
6th Judicial District
Georgia Blythe Felner
Paula R. Voss Assistant Attorney General
Julia Auer Criminal Justice Division
Assistant Public Defenders 450 James Robertson Parkway
1209 Euclid Avenue Nashville, TN 37243-0493
Knoxville, TN 37921
Randall Nichols
District Attorney General
and
Leon Franks
Assistant District Attorney General
400 Main Avenue
Knoxville, TN 37902
OPINION FILED:_____________________
AFFIRMED AS MODIFIED
GARY R. WADE, PRESIDING JUDGE
OPINION
The defendant, James Smith, a.k.a. James E. Maxwell, appeals the
trial court's revocation of his community corrections sentence. The following issues
have been presented for review:
(I) whether the trial court should have held a hearing
before the revocation of his suspended sentence and
imposition of greater sentences; and
(II) whether the judgment forms and orders reflect
illegal sentences.
The judgment of revocation is affirmed; the sentences are modified as provided
herein.
This appeal involves sentencing for three separate convictions. On
June 28, 1991, in case number 35815, the defendant was given a Range I, two-year
sentence to be served on probation for the attempted sale of a schedule II controlled
substance, a Class D felony. On September 2, 1992, probation on the two-year
term was revoked and the defendant was ordered to serve the full sentence in
custody, less credit for service of 105 days in jail. On December 22, 1992, the
Department of Correction placed the defendant on determinate probation pursuant
to Tenn. Code Ann. § 40-35-501.
While out on determinate probation for the two-year sentence, the
defendant incurred additional charges. On December 8, 1993, in case number
47804, he received a Range I, eight-year sentence in TDOC for possession of
cocaine with intent to sell, a Class B felony; the sentence was suspended and he
was placed on community corrections for eleven years. On the same date, in case
number 49817, he received a Range I, three-year sentence for sale of less than
one-half gram cocaine, a Class C felony; the sentence was suspended and he was
2
placed on community corrections for eleven years. The three year sentence was to
be served consecutively to the eight-year sentence.1
Revocation warrants were eventually filed for all offenses. On July 21,
1995, the trial court held a brief hearing; no proof was presented. Apparently, the
defendant conceded that the terms of the alternative sentences had been violated.
The state and the defense appear to have agreed that the trial judge should revoke
the alternative sentences and then increase the term, as long as the defendant was
not ordered to serve any time in custody. The trial court asked the defendant, "You
... understand I intend to increase your sentence significantly now; so that, if you do
fail, you are going to spend some time in the penitentiary." The defendant
responded, "A whole lot, yes." The trial court then ruled from the bench as follows:
Here is what I have got. I have an eight-year
sentence and a B felony. So that can be increased to up
to twelve years as a range I offender and a three-year
sentence in 49817, which is a C felony and increase that
to six years, for a total sentence of eighteen years.
Now, I do not know how to deal with this pending
determinate probation, because that was not figured in
when we originally put Mr. Maxwell on C.A.P.P. in these
cases. ... I am going to put him on C.A.P.P. for two
1
The judgments of conviction entered in the defendant's latter two cases
reflect conflicting sentences. Read literally, the judgments reflect that the trial court
imposed sentences to the Department of Correction, suspended those sentences,
and placed the defendant in the community corrections program for a term of years.
This looks as if the trial court gave the defendant probation and made supervision
under the community corrections program a condition of that probation. See Tenn.
Code Ann. § 40-36-106(f). If that were so, the trial court would not have retained
the power to change the length of the sentences as originally imposed.
However, the record on appeal, including the judgments of conviction, reflect that
the trial court intended to impose community corrections sentences pursuant to
Tenn. Code Ann. § 40-36-106(e)(1), instead of making the program a condition of
probation pursuant to Tenn. Code Ann. § 40-36-106(f). With a community
corrections sentence, though, the trial court does not also impose a term of years for
service in the penitentiary or local jail that is then suspended. Any sentence so
imposed, including its length, is essentially a nullity and recording it in the judgment
of conviction is superfluous. The length of time the defendant serves in the
community corrections program is the only sentence to be imposed.
3
years in this case, also, and run that C.A.P.P. time
concurrent.... [H]is effective C.A.P.P. sentences is
eighteen years.
The court also entered a written order on that date:
[I]n case no. 35815, the defendant's State Probation ... is
... revoked; and the defendant placed on CAPP for
eighteen (18) years to expire July 21, 2013. In case no.
47804, the defendant's CAPP revoked, sentence
increased from eight (8) years to twelve (12) years,
however, the defendant is placed back on CAPP for
eighteen (18) years to expire July 21, 2013. In case no.
49817, the defendant's CAPP revoked, sentence
increased from three (3) years to six (6) years, however,
the defendant is placed back on CAPP for eighteen (18)
years to expire July 21, 2013.
Sometime later, on January 6, 1997, another revocation warrant was
filed. At the revocation hearing, Tamela Wheeler, who supervised the defendant on
C.A.P.P., testified that the defendant had absconded and that she had no contact
from May 1996 until January 1997.
The trial court concluded that the defendant had violated the terms of
his community corrections sentence. Rather than ruling at the conclusion of the
hearing, however, the trial judge opted to review the transcript of the 1995 hearing
to make certain that the defendant had understood his sentence was to be
increased to an effective term of eighteen years. At a second hearing one month
later, defense counsel argued that at the 1995 hearing, where the sentences were
increased, the defendant was not advised of his right to insist on a sentencing
hearing and the right to appeal. The trial judge ruled as follows:
It is clear ... to this Court that Mr. Maxwell violated the
terms of his C.A.P.P. ... There is no question in my mind
that based upon this transcript and my memory ... that
Mr. Maxwell understood that I intended to revoke him.
But he took the eighteen year sentence because he
wanted to get out. ... It may not be equitable, but this
isn't a court of equity. And it may not be fair, and
perhaps we have not held the hearings that the law
4
requires of us. ... However, I think that it's pretty clear
that there was a hearing, that there was an agreement,
that Mr. Maxwell understood the agreement, that Mr.
Maxwell understood because he had already been
revoked and sent to the penitentiary and put out on
determinate probation in one of the cases, what he had
to do and he didn't do it. ... So I don't think I really have
a choice but to revoke Mr. Maxwell. And I don't think I
have a choice right now but to revoke him at the eighteen
year sentence that he agreed to.
On that same day, the trial court entered three separate orders
revoking community corrections for each offense and ordering judgment to be
executed. The order on the two-year sentence provides as follows:
[T]he defendant's CAPP is ... revoked and the original
judgment of this Court on June 28, 1991 is put into full
force and effect. Defendant ... is to receive ... a
combined total credit of eight hundred and eight (808)
days, sentence to begin January 1, 1995.
The order on the twelve-year sentence, which originally was an eight-year sentence,
provides as follows:
CAPP is hereby revoked and the original judgment of this
Court on December 8, 1993 is put into full force and
effect, along with the revocation of July 21, 1995
increasing the defendant's sentence from eight (8) to
twelve (12) years.
The order on the six-year sentence, which was originally a three-year term, provides
as follows:
CAPP is hereby revoked and the original judgment of this
court on December 8, 1993 is put into full force and
effect, along with the revocation of July 21, 1995,
increasing the defendant's sentence from three (3) to six
(6) years.
Trial courts have authority to revoke a community corrections sentence
based upon the conduct of the defendant. Tenn. Code Ann. § 40-36-106(e)(3). A
trial judge's decision to revoke a defendant's release on community corrections
5
should not be disturbed unless there is an abuse of discretion. State v. Harkins, 811
S.W.2d 79, 82 (Tenn. 1991). In order to find an abuse of discretion, it must appear
that the record contains "no substantial evidence to support the conclusion of the
trial judge that a violation of the conditions ... occurred." Id.
The same principles applicable to a probation revocation are relevant
to the revocation of community corrections. Id. at 83. The trial judge is not required
to find that a violation of the terms of probation has occurred beyond a reasonable
doubt. Stamps v. State, 614 S.W.2d 71, 73 (Tenn. Crim. App. 1980). Rather, the
existence of a violation of probation need only be supported by a preponderance of
the evidence. Tenn. Code Ann. § 40-35-311(d).
The defendant concedes he violated the terms of his community corrections sentence
and does not contest the revocation. Instead, he complains that the trial court erred by increasing his
sentence without a hearing and that the orders reflect illegal sentences.
I
On July 21, 1995, the trial court increased the eight-year sentence to twelve years and
the three-year sentence to six years. The trial court did so without having received any proof and
without making reference to any of the sentencing principles of the 1989 Act. The defendant argues
that because the trial judge failed to conduct an appropriate hearing before increasing the sentences,
the case should be remanded "for further proceedings which conformwith the [defendant's] rights to
due process of law."
The tim for appealing the order entered on July 21, 1995, has long since passed.
e
The defendant had thirty days to file a notice of appeal. Tenn. R. App. P. 4(a). The tim filing may
ely
be waived "in the interest of justice." Id. Under the circumstances, however, w are not inclined to do
e
6
so. The defendant agreed to the increase in sentence. At the hearing, defense counsel stated to the
trial court:
I think that you were going to add additional time to his sentence.
That was one of the conditions of releasing him, and that is w M
hat r.
Maxwell wants to do. So I amgoing to ask that you do that.
Clearly, the defendant agreed to the additional time, in exchange for not being placed in custody after
the revocation. It is only because he now has to actually serve the agreed upon sentence that he
complains.
When a community corrections sentence is revoked, the trial court m increase the
ay
sentence. Tenn. Code Ann. § 40-36-106(e)(4); State v. Griffith, 787 S.W.2d 340 (Tenn. 1990). The
increases fromeight to twelve years and from three to six years are both within the statutorily
permissible range. Generally, before the trial court increases the sentence, a sentencing hearing
should be held. State v. Ervin, 939 S.W.2d 581, 583 (Tenn. Crim. App. 1996). Nonetheless, it is
apparent the sentences were the product of negotiations. There are no circumstances here which
would warrant the review of a judgment which becam final three years ago.
e
II
The defendant next complains that he is either being forced to serve an illegal
sentence or that the written orders contain clerical errors. In our view, the written orders contained in
the record do contain errors which should be corrected.
The defendant's first complaint concerns the two-year sentence he received in 1991.
He complains that "nowhis sentence appears to be eighteen years in the state penitentiary." The
written order entered on July 21, 1995, does provide that "the defendant is placed ... on CAPP for
eighteen (18) years ...." The written order entered on March 20, 1997, however, provides "the original
judgm of this Court on June 28, 1991 is put into full force and effect." Also, the transcript of the
ent
hearing held in 1995 provides that he was to serve two years on C.A.P.P. concurrent with his other
7
sentences. The state agrees "that the defendant's two (2) year sentence in case number 35815 was
not increased."
The trial court is without authority to order an eighteen-year community corrections
sentence for a Range I offender convicted of a Class D felony. Tenn. Code Ann. § 40-36-106(e)(2);
Tenn. Code Ann. § 40-35-112. When imposing a community corrections sentence, "the court shall
possess the power to set the duration of the sentence ... at any period of time up to the maximum
sentence within the appropriate sentence range." Tenn. Code Ann. § 40-36-106(e)(2) (emphasis
added). Thus, the order entered on July 21, 1995, is modified to reflect a concurrent two-year termon
C.A.P.P. for case num 35815. The order entered on March 20, 1997, is also m
ber odified to reflect a
concurrent two-year term on C.A.P.P. for case number 35815.
The defendant also complains that the judgment forms in cases 47804 and 49817 are
erroneous. He points out that the original judgment forms provided for sentences of eight years and
three years, to be served consecutively. Yet the original judgment forms also provide for an eleven-
year term on C.A.P.P. for each sentence. He claims the judgment form "appear[] to require himto
s
serve 22 years in the CAPP program and that this error w carried over to the orders entered on July
" as
21, 1995 and March 20, 1997. The state agrees that the written orders should be modified. Because
the trial court is without authority to order an eighteen-year community corrections sentence for either
of the Range I Class B or C felonies, we agree the orders should be modified to reflect a sentence of
twelve years in case number 47804 and six years in case num 49817. See Tenn. Code Ann. § 40-
ber
36-106(e)(2). Thus, the orders are modified to reflect that the six-year term is to be served
consecutively to the twelve-year term.
Accordingly, the judgm of the trial court is affirmed. The sentences are modified as
ent
provided in this opinion. See Tenn. R. Crim. P. 36.
8
__________________________________
Gary R. Wade, Presiding Judge
CONCUR:
______________________________
Joseph M. Tipton, Judge
_______________________________
David H. Welles, Judge
9
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819 F.2d 1133
Gereau-Beyv.Potter
86-3616
United States Court of Appeals,Third Circuit.
5/19/87
D.V.I.,
Christian, J.
AFFIRMED
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692 F.2d 770
224 U.S.App.D.C. 1
GROUND SAUCER WATCH, INC., Appellant,Harvey Brodyv.CENTRAL INTELLIGENCE AGENCY et al.
No. 80-1705.
United States Court of Appeals,District of Columbia Circuit.
Aug. 17, 1981.
Before WRIGHT, Circuit Judge, VAN DUSEN,* Senior Circuit Judge, and GINSBURG, Circuit Judge.
PER CURIAM.
MEMORANDUM
JUDGMENT
1
This cause came on to be heard on the record on appeal from the United States District Court for the District of Columbia and was argued by counsel. For the reasons stated in the accompanying memorandum,
2
It is ORDERED and ADJUDGED by this court that the judgment of the District Court appealed from in this cause is hereby affirmed.
3
This case comes before us on appeal from a District Court decision to grant appellees' motion for summary judgment. It presents a single troublesome issue. Following a search of its files that resulted in release of over 900 pages of documents, the Central Intelligence Agency (CIA) filed affidavits indicating that it had conducted a thorough search for materials defined by appellant's Freedom of Information Act (FOIA) request.1 Under the applicable legal standard, agency affidavits will ordinarily suffice to establish the adequacy of an FOIA search effort if they are " 'relatively detailed' and nonconclusory and * * * submitted in good faith." Goland v. CIA, 607 F.2d 339, 352 (D.C.Cir.1978) (footnote omitted), quoted in Founding Church of Scientology v. National Security Agency, 610 F.2d 824, 836 (D.C.Cir.1979). The District Court found, and appellant cannot seriously dispute, that the Agency affidavits here in issue were relatively detailed and nonconclusory. Ground Saucer Watch does, however, contest the conclusion that it failed to raise a substantial and material question about the CIA's good faith. Its argument on this point defines the issue before us: Viewing the evidence in the light most favorable to appellant, can it be said that the CIA affidavits left no substantial and material fact to be determined and that appellees were entitled to summary judgment as a matter of law?2
4
As this court held in Founding Church of Scientology v. National Security Agency, supra, 610 F.2d at 834, "[T]he competence of any records-search is a matter dependent upon the circumstances of the case * * *." Agency affidavits enjoy a presumption of good faith, which will withstand purely speculative claims about the existence and discoverability of other documents. See, e.g., Goland v. CIA, supra, 607 F.2d at 355. In order to prevail on this appeal, therefore, appellant must point to evidence sufficient to put the Agency's good faith into doubt. Although Ground Saucer Watch advances numerous arguments, in none do we find a sufficient link between asserted fact and argued inference to raise a serious and material question requiring trial on the merits.
5
Appellant relies, first, on the search instructions that the CIA issued to the employees actually canvassing its files. Those instructions called for a search of only those files identified in a stipulation entered by the parties on August 23, 1978 and approved by the District Court on September 15, 19783: they stated that the stipulation "so changes the [appellant's] original requests, original complaint and revised complaint that the latter have, in effect, become immaterial to the search you will conduct * * *."4 According to appellant, the CIA showed its bad faith by not directing a search responsive to all of Ground Saucer Watch's earlier requests. The answer to this argument appears in the plain language of the stipulation, the stated purpose of which was to "clarify and simplify the issues"5 arising from appellant's earlier demands for production. In addition to the amended complaint incorporating by reference the FOIA requests of various nonparties, these included 635 interrogatories and 274 requests for other documents. Under the circumstances, we agree with the District Court that the stipulation contemplated "simplification" by limiting the Agency's search obligations to the files and documents defined therein.6 Noting that appellant drafted the terms of the stipulation that defined the files to be searched, we must reject its claim in this court that a search limited to those files "ignore[d]" the stipulation's "content and intent."7
6
Appellant also purports to find evidence of bad faith in the CIA's failure to produce all of the documents "referenced" in the more than 900 pages of materials that were disclosed following the de novo search conducted pursuant to the stipulation. Yet the CIA's affidavits assert entirely plausible reasons for the absence of the missing documents. Most are old, and some naturally have become lost or illegible.8 Moreover, as this court held in Goland v. CIA, supra, 607 F.2d at 369, "The issue [is] not whether any further documents might conceivably exist but whether CIA's search for responsive documents was adequate." (Emphasis deleted.) Although the failure to produce identified documents might sometimes raise a substantial and material question of good faith, see Founding Church of Scientology v. National Security Agency, supra, 610 F.2d at 835, the reasonableness of an inference necessarily depends on its factual context. Id. at 834-835. Here, the missing documents can be identified almost solely through references contained in the more than 900 pages of documents that the CIA did produce. Compare Founding Church of Scientology v. National Security Agency, supra, in which NSA had produced no documents in response to the plaintiff's request. Moreover, the CIA's large disclosure occurred following a de novo search of its records, conducted pursuant to stipulated search instructions drafted in pertinent parts by appellant's own attorneys. In the absence of other evidence, the institution of a de novo search significantly undercuts appellant's argument that earlier noncooperation by the CIA raises a substantial question of current bad faith on the part of the Agency. Indeed, if the release of previously withheld materials were held to constitute evidence of present "bad faith," similar evidence would exist in every FOIA case involving additional releases of documents after the filing of suit. See Fonda v. CIA, 434 F.Supp. 498, 502 (D.D.C.1977).
7
There is, finally, no evidence whatever to support appellant's bald allegation that the CIA did not in fact conduct a de novo search of its files. Such unadorned speculation will not compel further discovery or resist a motion for summary judgment. Goland v. CIA, supra, 607 F.2d at 352 & n. 78 (citing cases).
8
The judgment of the District Court is, accordingly,
9
Affirmed.
*
Of the Third Circuit, sitting by designation pursuant to 28 U.S.C. Sec. 294(b) (1976)
1
The CIA released the materials to appellant on December 14, 1978. Affidavits explaining its search procedures, together with indices to the uncovered documents, were filed with the District Court on February 26, 1979. The affidavits were by George Owens, CIA Information and Privacy Act Coordinator; Robert Owen, Directorate of Operations documents; Karl Weber, Office of Scientific Intelligence documents; Sidney Stembridge, Office of Security documents; and Rutledge Hazzard, Directorate of Science & Technology documents
2
The Freedom of Information Act retains this traditional legal test of the propriety of summary judgment. Founding Church of Scientology v. National Security Agency, 610 F.2d 824, 836 (D.C.Cir.1979)
3
The stipulation, which was designed to "clarify and simplify the issues" developed in literally hundreds of document requests, pleadings, and interrogatories over a three-year period, defined the documents at issue in this case and identified precisely where the CIA would search for those documents
4
Quoted in Memorandum Opinion in Ground Saucer Watch, Inc. v. CIA, D. D.C. Civil Action No. 78-859, at 8 (May 30, 1980), Appellant's Appendix (App.) at 147
5
Stipulation and Order, Ground Saucer Watch, Inc. v. CIA, D. D.C. Civil Action No. 78-859, at 1 (Sept. 15, 1978), App. at 94
6
See Ground Saucer Watch, Inc. v. CIA, supra note 4, at 7-8, App. at 146-147
7
Brief for appellant at 17. Appellant argues in this court that the District Court misconstrued the stipulation in holding that it "did not refer to the original requests, original complaint, or amended complaint." Ground Saucer Watch, Inc. v. CIA, supra note 4, at 8, App. at 147. As appellant notes, the stipulation did, in fact, expressly adopt certain definitions--including those of "documents" and "UFOs"--contained in the interrogatories. See Stipulation and Order, supra note 5, at 1 & nn. 1-4, App. at 94 & nn. 1-4. But we do not understand either the District Court's opinion or the CIA's search instructions to have ignored those definitions. As we read them, they merely meant to recognize that the stipulation's request for "[a]ll documents in the possession or under the control of the CIA from wherever obtained, relating to Unidentified Flying Objects (UFOs) and the UFO Phenomena," id. (footnotes omitted), superseded the earlier requests and rendered unnecessary a separate search for materials identified therein. So understood, neither the CIA's search instructions nor the District Court's opinion can be viewed as mischaracterizing the aim of the stipulation
8
See Supplementary Affidavit of George Owens at 5-7 (Sept. 10, 1979), Supplementary Appendix at 48-51
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F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
MAY 31 2001
TENTH CIRCUIT
PATRICK FISHER
Clerk
UNITED STATES OF AMERICA,
Plaintiff - Appellee, No. 00-2096
v. (District of New Mexico)
GREGORY LACY, (D.C. No. CR-99-439-BB)
Defendant - Appellant.
ORDER AND JUDGMENT*
Before ANDERSON and LUCERO, Circuit Judges, and MILLS, District Judge.**
I. BACKGROUND
Officers John Salazar, Robert D. Sanchez and Michael Teague were all part of a
Drug Enforcement Agency (DEA) interdiction team in Albuquerque, NM. As part of
their duties, the team routinely went to the Albuquerque train station to meet the
*
This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. The court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 36.3.
**
The Honorable Richard Mills, Senior United States District Judge for the Central
District of Illinois, sitting by designation.
eastbound Amtrak train when it stopped on its Los Angeles to Chicago route. Prior to the
train's arrival, officers would review passengers’ reservations by checking Amtrak's
computer records. They were on the look out for reservations that fit drug trafficking
profiles (i.e. reservations made soon before the time and date of departure, for one way
tickets that were paid for in cash).
On March 23, 1999, Officer Teague reviewed the reservation record of Amtrak
passengers Millard and Gregory Lacy. Greg and Millard were traveling together, sharing
a room in the train's sleeping car, and bought their tickets with cash. The Lacys originally
reserved tickets for March 22, but they missed that train and had to take the March 23
train instead. On their way to meet the Lacys' train, Officers Teague, Sanchez, and
Salazar made several calls to the number the Lacys provided to Amtrak. Each time, the
officers received a message stating that the phone had been disconnected.
When the officers reached the station, Officer Salazar spoke with the Amtrak
attendant assigned to the sleeper car occupied by the Lacys. The attendant described the
Lacys, said they were staying in two rooms in the same car, and then pointed them out to
Officer Salazar. Officer Salazar was several feet away from the Lacys at the time. He
observed them for some time and watched as they used the public telephones. When he
walked toward them, Millard walked away so as to board the train. Officer Salazar
approached him and turned on a tape recorder he carried on his belt. Officer Salazar was
in street clothes and did not have a weapon visible. He identified himself as a police
2
officer and asked Millard if he could speak to him. Millard said that he could. Officer
Salazar asked Millard if he had any luggage and Millard said that he had a bag and a radio
in his room. Officer Salazar asked Millard if he was traveling with anybody else and
Millard said that he was traveling with his brother Greg. Officer Salazar told Millard
about his duties as an interdiction officer. He said that it was his job to talk with
passengers because "we have problems with people carrying contraband, . . . narcotics,
weapons, guns, all kinds of stuff." Salazar then asked if he could search the room and
Millard said "Yes."
Meanwhile, Gregory Lacy began to approach the room. As he did so, Officer
Sanchez arrived. Officer Sanchez stopped Gregory and asked him for identification.
Gregory claims that he identified himself as Gregory Lacy. However, he produced a
college identification card bearing the name of his younger brother, Michael Lacy.
Officer Sanchez knew that the train reservation had been made in the names of Gregory
and Millard Lacy. He asked Gregory if his name was Gregory or Michael—the name that
appeared on the card. Gregory said his name was Michael, and that Gregory was the
name of his younger brother, in whose place he had come. From that point on, Officer
Sanchez addressed Gregory as Michael and Gregory assumed that identity. Officer
Sanchez asked for and received Gregory’s permission to search the room and luggage.
Officer Sanchez's entire encounter with Gregory lasted about seven minutes. It revealed
nothing. When the encounter ended, Officer Sanchez released Gregory and went to
3
Millard's room to assist Officer Salazar.
Gregory followed Officer Sanchez to Millard's room. As the two men stood in the
hallway outside the room, Officer Salazar asked Millard if the person standing with
Officer Sanchez was his brother Greg. Millard said that it was not, that Greg was one of
his brothers, but the person in the hallway was Michael Lacy, another one of his brothers.
Officer Salazar then proceeded to search Millard's black duffle bag. Although Officer
Salazar found no contraband, he found Millard to be "very nervous" during the
search—shuffling back and forth, continually touching his head and avoiding eye contact
with Officer Salazar. Officer Salazar noticed an old, "beat up" radio on the lower bunk
bed and Millard became more nervous when Officer Salazar handled it. Millard’s
shuffling intensified, he fidgeted, looked side to side quickly, and touched his face.
Officer Salazar decided to examine the radio more closely. When he did so, he
saw tool marks around the screws on the back of the stereo and scratches around the
screws. Based on his training, Officer Salazar determined that the back "had been taken
on and off quite a bit." He said to Millard "Have you ever opened this before? . . . This
thing has been opened; take a look at it." He then asked, "Who's [sic] is this, is this
yours?" Lacy responded, "I bought it from a friend," but he soon changed his answer and
said he merely borrowed it.
Officer Salazar tapped one of the stereo's speakers and heard a "clanking noise like
something hitting the side on the inside of the speaker box" when he shook the speaker.
4
He picked up the other speaker and could feel a difference between the two speakers.
Officer Salazar peered into a gap in the back of the speaker and saw some grey material.
He inserted a leatherman tool through the gap and tried to pull the material from the
speaker. Something was wrapped inside the material which prevented him from
removing it from the speaker. He poked his finger through the gap in the speaker and felt
a "lumpy substance" wrapped in a grey cloth. He placed his nose near the gap and
detected the odor of ether. Officer Salazar knew from his training and experience as an
interdiction officer that the smell of ether indicated the presence of cocaine base.
By the time Officer Salazar discovered the substance in the speaker, Officer
Teague had arrived on the scene. He and Officer Sanchez were standing in the hallway
with Gregory Lacy while Officer Salazar spoke to Millard about the stereo. Officer
Salazar then said, "There's something wrong with this. I don't feel comfortable, I don't
feel comfortable with this." Officer Salazar told Millard, "[T]here's something in there
like a ball or something inside where it won't come out. And I should have to break it, I
should have to break it. You want to figure out what it is [?] Go ahead and break it open
[?]" Millard replied, "Well, I don't want no one to mess up the radio, you know I want to
listen to it." Officer Salazar acknowledged Millard's concern.
Gregory had by this time shown a keen interest in the stereo's examination and
when Millard expressed concern, Gregory chimed in "Right” as if to echo Millard's
concern that the radio remain operational. Officer Sanchez responded, "[Y]ou have one
5
speaker there I'd say just go ahead . . . break it open." Officers Salazar and Sanchez then
looked at Millard and Millard nodded to them. The officers immediately began to pry the
speaker apart. Officer Salazar used a pair of pliers to break off part of the back of the
speaker and extract a grey cloth which turned out to be a pair of boxer shorts. Two
packages of crack cocaine were wrapped inside the boxer shorts. Extracting the boxer
shorts and cocaine did not affect the stereo’s ability to function. Moreover, the entire
series of events—from initial contact to discovery of the drugs—lasted fifteen minutes.
The agents arrested Millard and Gregory Lacy and took them into custody. Officer
Sanchez conducted a strip search of Gregory Lacy at the DEA offices. As a routine part
of the search, Officer Sanchez ordered Gregory to turn away from him and bend over.
When Gregory did this, Officer Sanchez discovered that Gregory had a package wedged
between his buttocks. The package consisted of 34 packets which contained 24 grams of
crack. Gregory was processed and signed a fingerprint card and several other documents
as "Michael B. Lacy."
Prior to trial, Gregory and Millard Lacy each moved to have the crack suppressed.
They claimed that the officers lacked probable cause to arrest them and that the officers'
search exceeded the scope of their consent. United States District Judge Bruce Black
presided at a joint hearing on the Lacys' motions. Upon hearing the evidence, Judge
Black found that while the dialogue of Millard's encounter was equivocal, Millard
consented to Officer Salazar breaking open the speaker. Millard’s sole condition with
6
respect to Officer’s Salazar’s search was that Officer Salazar leave the stereo operational.
Judge Black also found that there was probable cause to arrest Gregory since he traveled
from a city that was a source for drugs, shared a room with someone engaged in drug
trafficking, purchased a one-way ticket in cash, and attempted to conceal his identity.
Following Judge Black's ruling, Gregory and Millard Lacy proceeded to trial. The
trial was by jury and Judge Warren Egington1 presided. The government played its tape
of Officer Salazar and Millard Lacy's conversation on the train. While the tape played,
the prosecution used a monitor to display a typed transcript of the tape which Officer
Salazar prepared. There were two ways in which the transcript differed from the one the
trial court used at the suppression hearing. First, although the court had already
determined during the motion to suppress that Millard had said, "Well, I don't want no
one to mess up the radio, you know I want to listen to it.", the transcript displayed on the
monitor read, "Well, I wanna one to mess up the radio, you know I want to listen to it."
Second, the transcript that appeared on the monitor stated that Millard went to get a drink
of water during the search of his compartment and luggage. The transcript presented at
the motion to suppress indicated no such thing. Gregory Lacy moved for a mistrial,
arguing that Officer Salazar changed the transcript in order to bolster his credibility.
Judge Egington took the matter under advisement and ruled that Judge Black should
1
The Honorable Warren W. Egington, Senior United States District Judge for the
District of Connecticut, sat by designation at Gregory Lacy’s trial.
7
decide the merits of the motion. Judge Black never ruled on the motion. Thus, the
district court deemed it to be denied.
After closing arguments, the court gave the jury instructions. The court did not,
however, inform the jury that the weight of the cocaine base was an element of a 21
U.S.C. § 841 offense. Nevertheless, the jury convicted Millard and Gregory. At
sentencing, the court found that the preponderance of the evidence showed that Gregory
and Millard Lacy were responsible not only for the cocaine found on each of them
individually, but for the cocaine possessed by the other as well. Thus, the court found
each brother responsible for possessing 68.6 grams of cocaine. Pursuant to the United
States Sentencing Guidelines, the court sentenced Gregory Lacy to 240 months in prison.
Gregory filed a timely appeal on March 15, 2000. He argues that the district court
erred when it denied his motion to suppress and erred again when it found there was
probable cause to support arrest. He also argues that the district court erred when it found
that the prosecutor’s display of altered transcripts to the jury did not constitute grounds
for a mistrial. Finally, he contends that the trial court erred at sentencing when it found
him responsible for possessing 68.8 grams of cocaine base.
The Court exercises jurisdiction based on 28 U.S.C. § 1291. We affirm all the
district court’s judgments.
8
II. ANALYSIS
The Motion to Suppress
The Court reviews the denial of a motion to suppress in the light most favorable to
the party who prevailed below. See United States v. Pena, 143 F.3d 1363, 1368 (10th Cir.
1998). The Court must accept the trial court's factual findings unless they are clearly
erroneous. See United States v. Vazquez-Pulido, 155 F.3d 1213, 1216 (10th Cir.), cert.
denied, 525 U.S. 978 (1998). Whether or not law enforcement had probable cause to
arrest a defendant is a legal issue subject to de novo review. See United States v.
Springfield, 196 F.3d 1180, 1182 (10th Cir. 1999), cert. denied, 529 U.S. 1029, 120 S.Ct.
1444, 146 L.Ed.2d 331 (2000).
Gregory alleges that the police arrested him merely because his brother Millard
was found with drugs and the two of them were traveling together. He argues that
proximity to drugs and association with criminals do not establish probable cause and that
the trial court should have suppressed the drugs that Officers Salazar and Sanchez found.
In ruling on Gregory's motion to suppress, the trial court applied the "totality of the
circumstances" test enunciated in Illinois v. Gates, 462 U.S. 213, 238, 103 S.Ct. 2317,
2332, 76 L.Ed.2d 527 (1983). In doing so, the trial court correctly stated that Gregory
and Millard's association, by itself, was not sufficient to establish probable cause. See,
i.e., Vazquez-Pulido, 155 F.3d at 1216-17 (citing United States v. Hillison, 733 F.2d 692
(9th Cir. 1984)("In order to find probable cause based on association with persons
9
engaging in criminal activity, some additional circumstances from which it is reasonable
to infer participation in a criminal enterprise must be shown.")). Thus, the trial court
looked to other factors in order to make a probable cause determination. It considered the
fact that Gregory paid cash for a one-way ticket from a city that was a drug source and
shared a room with Millard. It also relied on Gregory’s conduct on the train. In
particular, it noted his deliberate presence in the doorway during Officer Salazar's search
of Millard's train compartment and the "keen interest" he showed in the stereo as Officer
Salazar searched it for drugs. These facts are enough to establish probable cause under
Gates.
In making its determination that probable cause existed to arrest Gregory, the trial
court emphasized Gregory's attempt to conceal his identity from police. Probable cause,
however, must exist “at the moment the arrest was made”; it cannot be established by
evidence made known to the police after the arrest is made. See Beck v. State of Ohio,
379 U.S. 89, 91, 85 S.Ct. 223, 225, 13 L.Ed.2d 142 (1964)(citations omitted). Here,
Gregory was booked as Michael Lacy and made his initial appearance under that name.
Since the police were not aware that he concealed his identity at the time they arrested
him, this factor cannot be used to establish probable cause. See Id. However, the totality
of circumstances clearly show that the officers had probable cause to arrest Gregory.
Denial of the Motion for New Trial
The Court reviews a trial court's denial of a motion for a new trial for abuse of
10
discretion. See United States v. Garcia, 182 F.3d 1165, 1169 (10th Cir. 1999). A trial
court must grant a new trial only if the weight of the evidence produced at trial
"preponderates heavily against the verdict, such that it would be a miscarriage of justice
to let the verdict stand." See United States v. Washington, 184 F.3d 653, 657 (10th Cir.
1999) (citation omitted).
Gregory does not make any argument to support a motion for a new trial other than
the arguments he raised on his motion to suppress. He merely reasserts that his arrest was
unlawful because it was based exclusively on his association with his brother Millard. As
the Court has explained, Gregory and Millard’s association was merely one factor in the
"totality of circumstances" that supported Gregory's arrest. See Gates, 462 U.S. at 238. It
was Gregory's association with Millard, his cash purchase of a one-way ticket from a city
that was a drug source, his sharing of a room with Millard, his deliberate presence at
Millard's room during the search, and his "keen interest" in Officer Salazar's examination
of Millard's stereo that established probable cause to arrest Gregory. Given the presence
of these factors, the police had probable cause to arrest Gregory. See Id. at 238. As such,
the trial court properly denied
Sentencing for Possession of Cocaine Base
The United States Sentencing Guidelines allow district courts to consider as
relevant conduct any drug amounts which were part of the same course of conduct or
common scheme or plan as the offense of conviction, whether or not the defendant was
11
convicted of offenses connected to the additional drug amounts. See U.S.S.G. § 1B1.3;
United States v. Roederer, 11 F.3d 973, 978-79 (10th Cir. 1993). The government must,
by a preponderance of the evidence, establish the additional amounts of drugs to be
considered at sentencing. See United States v. Rios, 22 F.3d 1024, 1027 (10th Cir. 1994).
The evidence relied on by the sentencing court must be supported by "some indicia of
reliability." See United States v. Short, 947 F.2d 1445, 1456 (10th Cir. 1991).
Gregory does not dispute that the police discovered 24 grams of crack on him and
44.6 grams on his brother Millard totaling 68.6 grams. Rather, he argues that he should
not be accountable for the 44.6 grams of crack found in Millard's radio because the
government failed to show that he exercised any actual or constructive control over those
drugs. He also contends that the differences in the purity, color, and packaging of his
crack from Millard's shows that the drugs were not part of the same conduct or scheme.
The district court rejected these arguments at sentencing. The court found that the
facts of the case demonstrated that Gregory and Millard were involved in a common
scheme to possess and distribute cocaine base. The evidence which supported this
finding included the brothers buying tickets together, traveling together and sharing a
room. Moreover, Gregory made it a point to be present when Officer Salazar searched
Millard's radio, all the while demonstrating what the district court called a "keen interest"
in the radio. Gregory attempted to conceal his identity and Millard averred to Gregory's
attempted misidentification immediately before Officer Salazar discovered the 44.6 grams
12
of crack hidden in Millard's radio. The timing of these events and the actions themselves
demonstrate that Gregory was conscious of guilt and knew that drugs were hidden in
Millard's radio. Given these facts, the trial court had ample evidence to find that the 68.6
grams of crack involved here were part of a common scheme. See U.S.S.G. § 1B1.3;
United States v. Roederer, 11 F.3d 973, 978-79 (10th Cir. 1993). Accordingly, the
preponderance of the evidence supports the district court's decision to sentence Gregory
Lacy for the drugs found on him and the drugs hidden in Millard’s radio.
Mistrial Based on Presentation of Altered Transcripts
The Court employs an abuse of discretion standard when reviewing a trial court's
refusal to grant a mistrial or new trial based on prosecutorial misconduct. See United
States v. Galbaldon, 91 F.3d 91, 93-94 (10th Cir. 1996). To prevail on a motion for new
trial based on prosecutorial misconduct, the appellant must show that the prosecution's
acts were "flagrant enough to influence the jury on grounds other than the evidence
presented." See United States v. Lowder, 5 F.3d 467, 473 (10th Cir. 1993).
Gregory alleges two instances of prosecutorial misconduct arising from items
presented to the jury on the courtroom's video monitors. First, although the district court
had already determined during the motion to suppress that Millard had said, "Well, I don't
want no one to mess up the radio, you know I want to listen to it.", the transcript
displayed on the monitor read, "Well, I wanna one to mess up the radio, you know I want
to listen to it." Second, the transcript the government displayed to the jury stated that
13
Millard went to get a drink of water during the search of his compartment and luggage
when Officer Salazar’s report did not indicate that Millard did this.
The only prejudice Gregory claims is that Officer Salazar may have bolstered his
testimony by changing the transcripts. Gregory does not explain how these items
bolstered Officer Salazar's credibility and it is not plain on the face of his argument how
they could do so. The transcripts appeared on the monitor very briefly and it is uncertain
whether the jury ever got to see them since a technical difficulty disrupted the monitor’s
display. In any case, the prosecution submitted a correct copy of the transcript for the
jury to examine and the court told the jury that the transcripts were merely for their use to
help determine what the audio tapes actually said. Thus, determinations about the tapes’
content were left to a jury which as likely as not discredited Officer Salazar's testimony
due to the aforementioned inconsistencies. In any case, the evidence overwhelmingly
supports Gregory’s conviction. His trial may not have been error-free, but it was
undoubtedly fair. A fair trial is all that Gregory Lacy was entitled to and he received one.
See U.S. v. Hasting, 461 U.S. 499, 508-09, 103 S.Ct. 1974, 1980, 76 L.Ed.2d.
(1983)(stating that “there can be no such thing as an error-free, perfect trial, and that the
Constitution does not guarantee such a trial”). Thus, the district court properly denied
Gregory Lacy’s motion for a mistrial since the errors he complains of were harmless.
14
III. CONCLUSION
For the reasons stated above, we AFFIRM Gregory Lacy’s conviction and the
sentence that the district court imposed.
Entered for the Court
Richard Mills
United States District Judge
15
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312 S.W.3d 486 (2010)
Lamonica R. LEWIS, Appellant,
v.
STATE of Missouri, Respondent.
No. ED 93434.
Missouri Court of Appeals, Eastern District, Division Three.
June 8, 2010.
Maleaner Harvey, Saint Louis, MO, for Appellant.
Chris Koster, Attorney General, Jamie Pamela Rasmussen, Assistant Attorney General, Jefferson City, MO, for Respondent.
Before GLENN A. NORTON, P.J., MARY K. HOFF, J. and LAWRENCE E. MOONEY, J.
ORDER
PER CURIAM.
LaMonica R. Lewis appeals the judgment denying her Rule 24.035 motion for post-conviction relief without an evidentiary hearing. We find that the motion court's findings of fact and conclusions of law are not clearly erroneous. An extended opinion would have no precedential value. We have, however, provided the parties a memorandum setting forth the reasons for our decision. We affirm the judgment under Rule 84.16(b).
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703 So.2d 20 (1997)
STATE of Louisiana,
v.
Kerry PARFAIT.
No. 97-K-1347.
Supreme Court of Louisiana.
October 31, 1997.
Denied.
LEMMON, J., not on panel.
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394 Mich. 59 (1975)
228 N.W.2d 380
GEORGIA-PACIFIC CORPORATION
v.
CENTRAL PARK NORTH CO
Docket Nos. 54615-54616, (Calendar No. 4).
Supreme Court of Michigan.
Argued April 2, 1974.
Decided April 29, 1975.
Wells, Wilmoth, Keating & Nitz, P.C. (by Daniel J. Henry, Jr., and Donald P. Schuur), for plaintiff.
Dakmak, Gropman & Sinai, P.C., and Liberson, Fink, Feiler, Crystal & Burdick P.C. (by Jeffery L. Schmier), for defendant Central Park North Co. and American Casualty Company.
T.G. KAVANAGH, C.J.
This is an action to foreclose a materialman's liens.
Central Park North Co. owns an apartment complex consisting of six interconnected apartment buildings which during construction were numbered from 1 through 6. Hollenbeck Drywall, Inc., now bankrupt, was the drywall subcontractor for the complex. Georgia-Pacific Corporation, plaintiff-appellant, sold drywall materials to Bob Ryan, Inc., a wholesaler. Bob Ryan sold and delivered drywall materials to Hollenbeck Drywall which were used in constructing the complex.
Bob Ryan began delivering materials to buildings #4 and #5 on May 26, 1965, and continued through June, 1965. Payments for those materials were made to Bob Ryan by means of promissory *62 notes which were then assigned by Bob Ryan to Georgia-Pacific.
On June 16, 1965, Bob Ryan was notified by Georgia-Pacific that it would no longer accept Hollenbeck's promissory notes in lieu of cash. On July 12 Bob Ryan began delivering materials to building #1.
On September 9, 1965, Bob Ryan began delivering materials to building #2.
On October 3, 1965, Bob Ryan served a notice of intent to file a mechanics' lien against building #1 for the value of materials furnished to it and followed the same procedure for building #2.
On October 14, 1965, shortly after the notices of intent to claim liens were served on Central Park North, the general contractor, Hamilton Construction Company, issued a check for the sum of $4,104 made payable jointly to Hollenbeck Drywall and Bob Ryan. The purpose of the check was not designated.
Hollenbeck Drywall negotiated the check solely upon its endorsement without notice to Bob Ryan.
On February 10, 1966, mechanics' liens against buildings #1 and #2 were filed by Bob Ryan in accordance with MCLA 570.5; MSA 26.285. These liens were subsequently assigned to Georgia-Pacific.
On March 24, 1966 Central Park North posted two bonds to vacate the liens resulting in the surety, American Casualty Company, becoming a codefendant.
Georgia-Pacific on January 13, 1967, instituted suit to foreclose its liens.
In February, 1967, the bank that had erroneously cashed the check made payable jointly to Hollenbeck Drywall and Bob Ryan paid Bob Ryan the $4,104. Bob Ryan sent this money to Georgia-Pacific *63 to apply to the oldest indebtedness of Hollenbeck Drywall, that is the money owed on the promissory notes held by Georgia-Pacific. Bob Ryan did not apply that money as a credit on the liens.
Judgment was entered in favor of Georgia-Pacific in the amount of $10,423.91. That amount included the lien of $3,575.22 against building #1 and the lien of $11,391.15 against building #2 minus $438.46[1] for an invoice that was disallowed, and also minus the payment of $4,104.
Central Park North argues that the liens are void for two reasons: a) Bob Ryan was acting in bad faith by not reducing the amount claimed in the liens by the $4,104 paid by Hamilton Construction and by the $438.96 which the trial court disallowed; and b) the notices of intent to claim the liens were not timely served.
The Bad Faith Issue
The trial court held that the $4,104 was paid in response to a request for payment by Hollenbeck and was for materials used in buildings #1 and #2 and, therefore, should have been subtracted from the amount claimed by the liens. Accordingly, the trial court credited Central Park North with that amount and reduced the claim of $14,527.91 to a judgment of $10,423.91 plus interest.
Central Park North argues that Bob Ryan knowingly inflated the statements of accounts and liens filed on February 10, 1966, pursuant to MCLA 570.5; MSA 26.285, and was therefore, acting in *64 bad faith. For support Central Park North cites Gibbs v Hanchette, 90 Mich 657; 51 NW 691 (1892); J E Greilick Co v Taylor, 143 Mich 704; 107 NW 712 (1906); Silverstein v Berman, 254 Mich 478; 236 NW 840 (1931); Equitable Trust Co v Detroit Golf & Recreation Co, 260 Mich 606; 245 NW 531 (1932); Currier Lumber Co v Ruoff, 298 Mich 505; 299 NW 163 (1941); Sacchetti v Recreation Co, 304 Mich 185; 7 NW2d 265 (1943).
Each of the cases cited involved the voiding of a lien because the statement of account was held to have been made in bad faith. In the instant case when Bob Ryan filed its statements, it had not yet received the $4,104. Thus, including it in the amount due was not inaccurate as to the $4,104 at that time.
Although Bob Ryan was in error in not subsequently reducing the amount of its claim prior to trial, the trial court considered that error and the erroneous inclusion of one invoice in reaching judgment, and thus apparently did not find Bob Ryan's errors to have been made in bad faith.
In mechanics' liens cases the question of bad faith depends to a great degree on the facts and circumstances shown. Sacchetti v Recreation Co, 304 Mich 185, 192; 7 NW2d 265 (1943). From our reading of the record, we do not find sufficient evidence to support a conclusion that Bob Ryan's errors were made in bad faith so as to void the liens.
The Timely Notice Issue
Section 1 of the mechanics' liens act, MCLA 570.1 et seq.; MSA 26.281 et seq., requires, inter alia, that a materialman must serve on the owner a written notice of intent to claim a lien against a *65 building for any amounts unpaid for the materials furnished to that building. Such notice must be served "within 90 days after furnishing the first of such material". MCLA 570.1; MSA 26.281.
The trial court found from the evidence before it that Bob Ryan contracted with Hollenbeck Drywall to furnish materials on an individual per building basis, that the buildings on the project were separate and divisible, and that the notices of intent to file liens against buildings #1 and #2 were timely served within 90 days of the first deliveries to those buildings. We agree with those findings of facts and affirm the judgment of the trial court.
The Court of Appeals after a de novo review of the record found that there was only a single contract between Bob Ryan and Hollenbeck Drywall for the furnishing of materials to a single project consisting of six separate buildings. It held that the liens were void because they were not served within 90 days of the first delivery to the project, i.e., within 90 days of the delivery of materials to buildings #4 and #5 on May 26, 1965.
As authority for the proposition that when several buildings are constructed under a single contract the project must be treated as a single improvement under the mechanics' liens act, the Court cited Union Trust v Casserly, 127 Mich 183; 86 NW 545 (1901); Sandusky Grain Co v Borden's Condensed Milk Co, 214 Mich 306; 183 NW 218 (1921); David Lupton's Sons Co v Berghoff Printing Co, 249 Mich 455; 229 NW 810 (1930); and International Mill & Timber Co v Kensington Heights Home Co, 215 Mich 178; 183 NW 793 (1921).
We are persuaded the Court of Appeals erred, both in its conclusion that there was a single *66 contract and in its application of the cases cited above. In every case cited the lien was held to be valid. The Court permitted lien claimants to file single liens against a project over objections that separate liens were required if there were separate contracts or separate buildings.
Although not applicable to those cases, but consonant with the rationale is a clause added to the basic act of 1891 by 1897 PA 143 which remains in its essential form within MCLA 570.1; MSA 26.281. In pertinent part that clause now reads:
"and in case of construction of a number of buildings * * * under 1 contract upon, around or in front of the same lot or contiguous lots for the same owner, part owner or lessee, of any interest in the real estate upon which said buildings are situated * * * such lien for such material or labor or leased equipment so furnished, shall attach to all of said buildings * * * together with the land upon, around or in front of which the same are being constructed, the same as hereinbefore provided in case of a single building * * *."
But permitting the filing of a single lien does not forbid the filing of separate liens. The question of whether a claimant who furnishes labor or materials for separate buildings under a single contract may have separate liens upon each of the buildings has not been decided in Michigan.
Section 27 of the mechanics' liens act declares that the act is a remedial statute intended to benefit and protect subcontractors, materialmen, and laborers and should be construed liberally in order to carry out the intent of the Legislature. MCLA 570.27; MSA 26.307. See also Smalley v Gearing, 121 Mich 190; 79 NW 1114 (1899).
The intent of the Legislature when it amended *67 the statute in 1897 and the effect of the cases cited by the Court of Appeals was to extend rather than restrict the rights of mechanics and materialmen in filing liens with the object being to permit the filing of one lien rather than several.
Decisions in other jurisdictions under various circumstances and statutes have held it to be proper for a lien claimant to proceed by way of separate lien claims with respect to separate buildings that are part of a single project. See 15 ALR3d 73, § 11[d], pp 143-145, and the cases cited therein. The question of separate notices when there is a single contract is not discussed in those cases.
We are not convinced that the Michigan statute precludes the filing of separate liens upon single buildings when a claimant has furnished labor or materials pursuant to a single contract. However, since this lawsuit has been tried on the question of separate contracts and the record supports the finding of separate contracts, we do not decide the case on the basis of a single contract.
In the instant case Bob Ryan contracted to supply materials on a per building basis. It claimed separate liens against buildings #1 and #2 and served notices of intent to claim the liens within 90 days of first delivering materials to those buildings. We conclude that the notices were timely served and fulfilled their purpose of alerting the owners of Central Park North of the possibility of liens, so that they could protect themselves by following the procedures set forth in MCLA 570.4; MSA 26.284. Hartwick Lumber Co v Chonoski, 216 Mich 424; 185 NW 774 (1921).
The decision of the Court of Appeals is reversed. The judgment of the trial court is affirmed.
Costs to plaintiff.
*68 SWAINSON, WILLIAMS, LEVIN, M.S. COLEMAN, and J.W. FITZGERALD, JJ., concurred with T.G. KAVANAGH, C.J.
The late Justice T.M. KAVANAGH took no part in the decision of this case.
NOTES
[1] The record indicates that the invoice was actually in the amount of $438.96; however, for the purpose of this lawsuit that 50 cents shall be disregarded under the familiar rule of de minimis non curat lex.
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641 F.2d 710
81-1 USTC P 9397
UNITED STATES of America and Dennis P. McCarthy, SpecialAgent, Petitioners/Appellees,v.SILVA AND SILVA ACCOUNTANCY CORPORATION, and Ruldolph F.Silva, Respondents,David H. Zimmer and Zimmer Service Center, Inc.,Intervenors-Appellants.
No. 80-5497.
United States Court of Appeals,Ninth Circuit.
Argued and Submitted Jan. 8, 1981.Decided March 20, 1981.
Morgan C. Taylor, Newport Beach, Cal., for intervenors-appellants.
William Whitledge, Dept. of Justice, Washington, D. C., argued for petitioners-appellees; Michael L. Paup, Chief, App. Sec., Washington, D. C., on brief.
Appeal from the United States District Court for the Central District of California.
Before TRASK, SNEED and SCHROEDER, Circuit Judges.
SNEED, Circuit Judge:
1
The Internal Revenue Service issued a summons to Silva requesting him to appear and produce records in his possession with respect to taxpayers Zimmer's joint income tax returns for 1974 and 1975. Pursuant to 26 U.S.C. § 7609, taxpayers directed Silva not to comply. The government then applied to the district court for an order enforcing the summons as permitted by 26 U.S.C. § 7604(b). The Zimmers intervened in the summons enforcement proceeding to contest the summons. After conducting a hearing, the district court ordered the summons enforced. This court denied the Zimmers' motion for a stay pending appeal. Following the denial of the stay, Silva complied fully with the summons.
2
Because the summons appealed from has been fully satisfied, the instant appeal is moot. United States v. Arthur Andersen & Company, 623 F.2d 720 (1st Cir. 1980); United States v. Deak-Perera International Banking Corp., 610 F.2d 89 (2d Cir. 1979). We therefore remand this case to the district court with directions to vacate its order enforcing the summons. See United States v. Munsingwear, Inc., 340 U.S. 36, 71 S.Ct. 104, 95 L.Ed.2d 36 (1950).
3
Remanded.
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802 F.2d 467
Alvarezv.D.O.T., F.A.A.
85-1599
United States Court of Appeals,Federal Circuit.
7/1/86
MSPB
Affirmed
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141 B.R. 270 (1992)
In re I.C. COCHRAN, Jr., Debtor.
Civ. No. 92-31-ALB/AMER(DF).
United States District Court, M.D. Georgia, Albany/Americus Division.
June 4, 1992.
*271 Harry Wingate, Albany, Ga., for I.C. Cochran, Jr., Debtor.
Janice Rovner, Dept. of Justice, Washington, D.C., for U.S.
ORDER
FITZPATRICK, District Judge.
In this case the United States has appealed from the denial of its motion for relief from an ex parte order from the bankruptcy court, Honorable John T. Laney, III, presiding, directing that any tax refunds due to the debtor be paid directly to the U.S. Trustee as provided in the debtor's Chapter 13 plan. After the original income deduction order was issued pursuant to 11 U.S.C. § 1325(c), the United States moved the bankruptcy court to alter or amend that order. A hearing was held two months later. Several months after the hearing, the government's motion was denied, after which this appeal was filed. The United States raises four questions in its brief, which will be considered in order given in that document.
1. Does the debtor's tax refund constitute "income" under § 1325(c) of the Bankruptcy Code?
Section 1325(c) provides that after a plan has been confirmed, the court may *272 order an entity from which the debtor receives income to pay all or part of that income to the Trustee. The parties agree that the United States qualifies as an entity under this section. The debtor's plan, as confirmed, provided that any tax refund he might receive would be paid to the Trustee. The United States argues that a tax refund is not income and therefore it should not be required to make such a payment.
The court believes that a tax refund does qualify as income, even though the Bankruptcy Code does not define that term. A tax refund is, by definition, a repayment of overpaid taxes on income, i.e. money that should have been classified originally as net income rather than paid as taxes. Additionally, other courts have treated tax refunds as constituting "disposable income" under § 1325(b), meaning that these funds must be applied to payments under a Chapter 13 plan before it can be confirmed. In re Rhein, 73 B.R. 285 (Bkrtcy.E.D.Mich. 1987); In re Red, 60 B.R. 113 (Bkrtcy. E.D.Tenn.1986). Surely, if a tax refund is included in the narrow category of disposable income under § 1325(b), then it is to be counted in the broader category of income in general under § 1325(c). Finally, the court agrees with the Trustee that the definition of income used by the Internal Revenue Service for tax purposes does not necessarily apply in the bankruptcy context.
2. Should the Trustee have been required to start a turnover proceeding in order to receive the tax refund, thus allowing the United States to assert a right to setoff under § 553 of the Bankruptcy Code?
The court agrees with the bankruptcy court that this question is not pressing, since there is no reason why the United States cannot exercise its right to setoff any debts owed to it against the debtor's tax refund regardless of whether an adversary proceeding, e.g. a motion for turnover, is commenced. An adversary proceeding is not needed to justify a setoff, therefore the Trustee was not required to bring one.
The government raises the possibility of disagreements between the Trustee and other debtors over who should get tax refunds, citing the case of In re Gonzalez, 42 B.R. 401 (Bkrtcy.N.D.Ga.1984). Gonzalez, however, is inapplicable, since the debtor's confirmed plan in that case did not call for his tax refund to be used to fund his Chapter 13 plan, meaning that the debtor was entitled to the refund. In the case at bar, the plan provides that the tax refund is to go to the Trustee, so there is no disagreement between the Trustee and the debtor on this point. The court is confident that the bankruptcy court can resolve any future conflicts of the type discussed by the government.
3. Does the Anti-Assignment Act, 31 U.S.C. § 3727, prohibit the bankruptcy court from ordering that the United States forward the debtor's tax refunds to the Trustee?
"The Anti-Assignment Act (31 U.S.C. § 3727) unambiguously excuses the United States from purported private assignments of income tax refunds prior to submission of the tax return and allowance of the refund by the Internal Revenue Service . . ." Knight v. United States, 596 F.Supp. 540, 542 (M.D.Ga.1984), aff'd, 762 F.2d 1022 (11th Cir.1985). The United States makes a strong argument that this statute bars the bankruptcy court from ordering the Internal Revenue Service from sending the debtor's tax refund to the Trustee. The Act provides that for an assignment to be valid it must, among other things, be made after a claim is allowed. Since the debtor's tax return serves as a claim for a refund, the government argues, no assignment could be valid until after the return is filed. (Under this argument, the debtor's refund for 1991 could be validly assigned because the return has already been filed, but since the possibility of refunds during the remainder of the life of the Chapter 13 plan exists the question is not moot.) The court considers the bankruptcy court's order under § 1325(c) to be a confirmation of the assignment made when the debtor included his tax refund in his Chapter 13 plan; the parties appear to agree on this point.
*273 Case law analogous to this question concerns the Social Security Act. In United States v. Devall, 704 F.2d 1513, 1514-15 (11th Cir.1983), the Eleventh Circuit held that social security payments were subject to income deduction orders issued by bankruptcy courts pursuant to § 1325(c), since this provision prevailed over the more general anti-assignment provision of the Social Security Act, 42 U.S.C. § 407. The opposite conclusion was reached in In re Buren, 725 F.2d 1080 (6th Cir.), cert. denied, Hildebrand v. Social Sec. Admin., 469 U.S. 818, 105 S.Ct. 87, 83 L.Ed.2d 34 (1984), where the court noted that § 407 was not included in the Bankruptcy Code's list of statutes repealed or modified by the Code's definition of the debtor's estate and that there was no reason to believe that § 407 had been repealed by implication. Id. at 1085-87. The court also noted that Congress had subsequently modified § 407 to forbid assignments of social security payments by bankruptcy courts, but then held that this new version of the statute did not apply retroactively and so did not rely on this fact as a basis for its decision. Id. at 1087.
Likewise, that part of Title 11 of the United States Code cited by the court in Buren, 725 F.2d at 1083, as not listing § 407 as among those statutes repealed or modified by the Bankruptcy Code also does not mention the Anti-Injunction Act, meaning that § 1325(c) has not explicitly repealed or modified the Act. Given the court's belief that a tax refund constitutes income, however, it is apparent that the powers given to a bankruptcy court by the language of § 1325(c) are in conflict with the Anti-Assignment Act. Despite the rule of statutory construction stating that changes by implication are disfavored, Id. at 1085, the court concludes, similarly to the court in Devall, 704 F.2d 1513, that § 1325(c) has impliedly modified the Anti-Assignment Act to allow the assignment of tax refunds to the Trustee via income deduction orders. This is in keeping with the rule that all laws are presumed to be consistent with each other. In re Sampson, 95 B.R. 66, 66 (Bkrtcy.W.D.Mich.1988).
This holding is supported by the fact that there appears to have been no action taken by Congress in the area of tax law forbidding the application of income deduction orders to tax refunds similar to that body's modification of § 407 to prevent bankruptcy income deduction orders from applying to social security benefits. Additionally, the language of the Anti-Assignment Act contains no provision, even one added by amendment, stating that the statute is not subject to bankruptcy law. Also, an examination of the Act shows that it and its amendments were passed well before the Bankruptcy Code was approved in 1978, meaning that Congress must have been aware of the existence of the Act when it approved of the broad powers given to the bankruptcy court by § 1325(c).
Moreover, this case can be distinguished from an assignment of the type disallowed in Knight, 596 F.Supp. 540, where the plaintiffs, engaged in the business of discounting federal income tax checks of private individuals, unsuccessfully attempted to force the Internal Revenue Service to honor a taxpayer's assignment of his refund to them. Clearly, assignments of this type should be scrutinized carefully, since "[p]romiscuous assignments of income tax refunds . . . could lead to frauds, undue influence and duress inflicted by relative, `friends' or con men." Sampson, 95 B.R. at 66-67. Here, the debtor voluntarily included his tax refund in his confirmed Chapter 13 plan which was then supported by an order from the bankruptcy court, presumably enough to guard against the dangers listed above.
4. Should the bankruptcy court's orders have been issued without requiring the Trustee to initiate an action to recover property under Bankruptcy Rule 7001?
In its final argument the United States contends that in order to collect the debtor's tax refund, the Trustee should have been required to initiate an adversary proceeding via an action to recovery property under Bankruptcy Rule 7001. The government therefore reasons that it was entitled to proper notice of this action and should have been allowed to conduct discovery *274 as allowed by Rules 7030-36. In re Brumlik, 132 B.R. 495, 499-500 (M.D.Ga. 1991).
The initial order by the bankruptcy court was issued ex parte. After the United States moved the bankruptcy court to alter or amend that order, a hearing was held just over two months later. Two factors are thus present: (1) a hearing was held and (2) two months passed between the filing of the motion and the date of the hearing. When these are considered, it is apparent that the United States was not prejudiced by the ex parte nature of the original order but was given ample time to develop its case. There is no indication that discovery was sought before the hearing or that the government raised this point during or after the hearing. The court therefore need not decide whether an income deduction order of this nature is an adversary proceeding requiring notice and discovery for, unlike Brumlik, there has been neither a showing nor a claim, in either the bankruptcy court or this court, that the government was unable to sufficiently present its case due to the nature of the bankruptcy court's proceedings.
For the foregoing reasons, the order of the bankruptcy court is AFFIRMED.
SO ORDERED.
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326 F.Supp. 198 (1971)
George RIOS, Eugene C. Jenkins, Eric O. Lewis and Wylie B. Rutledge, Plaintiffs,
v.
ENTERPRISE ASSOCIATION STEAMFITTERS LOCAL UNION NO. 638 OF U. A., Mechanical Contractors Association of New York, Inc. and the Joint Steamfitting Apprenticeship Committee of the Steamfitters' Industry Educational Fund, Defendants.
No. 71 Civ. 847.
United States District Court, S. D. New York.
March 24, 1971.
*199 Dennis R. Yeager, E. Richard Larson, New York City, for plaintiffs; Douglas D. Broadwater, George Cooper, New York City, of counsel.
Peter Kaiser, New York City, for defendants, Local Union No. 638 and Union Members of Apprenticeship Committee; John A. Mcavinue, Jr., New York City, of counsel.
Breed, Abbott & Morgan, New York City, for Mechanical Contractors Assn. and Employer Members of Apprenticeship Committee; Lloyd V. Almirall, Thomas A. Shaw, Jr., Michael C. Devine, New York City, of counsel.
OPINION
FRANKEL, District Judge.
The four plaintiffs, three black and one Puerto Rican, charge that they have suffered denials of employment and lost other advantages of union membership because of unlawful discriminations on account of race and national origin. They bring this suit for themselves and for the class of persons they describe as being similarly situated. Their complaints appear to be primarily against defendant Union, Enterprise Association Steamfitters Local Union #638 of U. A., but they charge wrongs also by defendant Mechanical Contractors Association of New York, Inc., an employer group, and by defendant Joint Steamfitting Apprenticeship Committee of the Steamfitters' Industry Educational Fund, an employer-union entity. As substantive bases for their claims, plaintiffs invoke the relatively ancient and general civil rights *200 provisions of 42 U.S.C. §§ 1981 and 1983, along with Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. The Court's jurisdiction is rested upon 28 U.S.C. §§ 1343, 2201 and 2202.
Simultaneously with the filing of their complaint, plaintiffs brought by order to show cause a motion for a preliminary injunction. In addition to affidavits and exhibits from both sides, the court has heard the live testimony of five witnesses called by plaintiffs, one of whom was also deposed between the noticing and the return date of the motion. Defendants offered no such additional evidence. Upon the record thus made, and solely for the question of temporary relief now decided, the court states the following findings and conclusions:
Defendant Local Union serves as a collective bargaining representative for steamfitters employed in the construction industry in the New York City metropolitan area. By its agreement with defendant Contractors Association, the Union engages to "furnish to the members of the * * * Association all the competent steamfitters and apprentices which they demand * * *." To implement this arrangement, the Union keeps its "books of membership" open for transfers of workers from other locals, and supplies the employer group with current membership lists. In addition to these explicit arrangements, business agents of the Union serve the members who need jobs, at least by supplying information as to openings. Moreover, the Union purports to screen people for competence in accepting them for membership, so that the status of member serves in some measure as a certification of suitability to prospective employers. Finally, while it is not critical for present purposes and therefore not necessary to pursue in detail, there is evidence of union pressure upon both contractors and workers to discourage the employment of non-union men for jobs as steamfitters.
It seems plain, in sum, that membership in defendant Union is a substantial help, and non-membership a substantial detriment, in obtaining and keeping employment in the steamfitting industry. And this is the central concern of three of the four plaintiffs now before the court who contend that they are qualified and experienced as steamfitters, but denied the benefits of union membership because of their race or national origin. George Rios is of Puerto Rican ancestry; Eugene C. Jenkins and Eric O. Lewis are Negroes. They range in age from 30 to 37. All three have had substantial training as steamfitters and plumbers, mainly on the job, and, in Jenkins's case, in school and in military service as well. All three have worked for substantial periods as steamfitters, proving themselves competent at their work.
While these three plaintiffs have worked in the steamfitting industry, and were reported to be so employed at the time of our evidentiary hearing, they have suffered, and they face, periods of unemployment which would in all probability have been (or will be) shortened by the advantages of information and other assistance flowing from membership in defendant Union. They have sought such membership in vain. The Union, as is reflected dramatically in its overwhelmingly white and non-Spanish membership[1] contrasted with the composition of the working population in its area, has followed a course of racial discrimination over the years. Cf. Parham v. Southwestern Bell Telephone Co., 433 F.2d 421, 426 (8th Cir. 1970), and cases cited therein; Jones v. Lee Way Motor Freight, Inc., 431 F.2d 245 (10th Cir. 1970); United States v. Hayes International Corporation, 415 F.2d 1038, 1043 (5th Cir. 1969). The same animus, now plainly unlawful if it was ever otherwise, has prompted the denial of membership to plaintiffs Lewis, Rios and Jenkins. The Union has repeatedly failed to respond to the requests for application *201 forms or for admission made by these three plaintiffs. Plaintiff Lewis, when he went to the office of defendant Mechanical Contractors Association of New York, Inc., was told that he did not meet union qualifications.[2] But before this court, the defendants have made no attempt to rebut the strong evidence from plaintiffs and their past and present employers that they are fully qualified to perform a steamfitter's job.[3] Further evidence of the Union's discriminatory behavior appeared in the uncontradicted testimony of Frederick Clarke, a contractor for whom plaintiffs Rios, Jenkins and Lewis were employed as steamfitters in 1970. Clarke testified that a business agent from defendant Union visited his Harlem work site in April 1970, questioned Rios about not having a Union book, and told Clarke that he had to hire Union men. Clarke asked the Union agent to issue permits for the non-union men then working at the site, but there was never any action on this request, although Clarke himself eventually signed a collective bargaining agreement with the Union.
The record as it is now made is convincing that the Puerto Rican ancestry of Rios and the skin color of Lewis and Jenkins in fact explain their exclusion from the Union.
It is not disputed that these plaintiffs have duly and meticulously pursued the administrative remedy of attempted conciliation provided by Title VII of the 1964 Civil Rights Act, 42 U.S.C. § 2000e-5. They have received requisite letters from the Equal Employment Opportunity Commission authorizing the institution of the present suit. 42 U.S.C. § 2000e-5(e). And they have, as the foregoing findings show, demonstrated a large probability of ultimate success in proving the violations Congress has denounced.
The Union, on the other hand, reveals, and indeed insists upon, factors that tilt the balance of the equities still farther toward the plaintiffs. The Union denies that it operates a hiring hall. It goes on to urge, unsuccessfully but revealingly, that union membership is not at all relevant to the obtaining of employment, *202 this being handled on his own by each man (there are said to be no woman steamfitters, and this is not here in question). Union counsel suggested in argument, however, that the worth of the Union's imprimatur will suffer if unqualified workers are "held out" as competent steamfitters by virtue of their membership. Thus, the Union essentially concedes that membership may be of substantial utility in gaining employment, if only because employers interpret membership as a sign of competence. There is, in all these circumstances, no reason for serious concern about the Union's reputation, since the indications are that Rios, Jenkins and Lewis are amply qualified. In sum, the dubious and speculative injuries to the Union from a temporary injunction are solidly outweighed by the harm the three qualified plaintiffs would suffer from its denial. The preliminary relief they seek will be granted. Cf. Local 53 of Int. Ass'n of Heat & Frost I. & A. Wkrs. v. Vogler, 407 F.2d 1047 (5th Cir. 1969); United States v. Hayes International Corporation, 415 F.2d 1038 (5th Cir. 1969).
Different questions are presented, and a different result is reached, in the case of the remaining plaintiff, Wylie B. Rutledge. Rutledge is 21 years old, black, and, according to his affidavit, possessor of a high school equivalency diploma. He has for some time been enrolled in a program for recruitment and training of young minority group workers for jobs in construction industry apprenticeship programs. In November, 1969, he took and passed an examination given by the elevator constructors' union. He went to work as an apprentice for two months thereafter. Then, his affidavit says: "I was not allowed to complete the apprenticeship program of the elevator constructors because I was dismissed by two employers, allegedly because I missed and was late for work too frequently." His affidavit also describes some miscellaneous work experience unrelated to the construction industry and to the issues in this case.
In January, 1970, Rutledge received notice of a forthcoming examination for admission to defendant Apprenticeship Committee's apprenticeship program. The examination, originally devised and run for the Committee by New York University, and administered since 1967 by Stevens Institute of Technology, embraces four tests in "verbal meaning," "number facility," "mechanical comprehension," and "spatial relations." Rutledge enrolled in a class run by the Workers Defense League to help prepare for the examination, which he then took on January 31, 1970. In his affidavit he says:
"I took the test at the scheduled time and I believe I received passing grades on all aspects of that test. I believe that I was not admitted because the program accepts only a small number of the applicants."
Contrary to Rutledge's assertion, the record before the court shows that he failed a critical portion of the examination, and was so informed over a year ago on February 20, 1970. As the notice to him stated, the requirement was to score above the lowest 25% of those taking the examination. Rutledge met the requirement with respect to verbal meaning, number facility, and spatial relationsthe three components which, in the order listed, are surfacially most suspect as subjects for testing prospective steamfitters. He fell at the 18th percentile, however, on mechanical comprehension.
The record is less than complete or completely satisfying with respect to the test and its effect. The picture may change markedly after the case is fully tried. Upon the present record, however, there is no evidence that the test operates or has operated "to disqualify Negroes at a substantially higher rate than white applicants * * *." Griggs v. Duke Power Company, 401 U.S. 424, p. 426, 91 S.Ct. 849, p. 851, 28 L.Ed.2d 158. Since plaintiff Rutledge does not provide the basis for any finding that the test is "discriminatory in operation" *203 (id. at 431, 91 S.Ct. at 853), there may be no need to assess in detail whether defendants have met the burden of showing that test performance is related to job performance. Id. at 432, 91 S.Ct. at 854; 42 U.S.C. § 2000e-2(h); 35 Fed. Reg. 12333 (Aug. 1, 1970). Even as to that, however, the present record weighs against Rutledge. The evident relevance of mechanical comprehension to the work in question, the buttressing of this point by a witness for plaintiffs, and the sponsorship of the examination all indicate that it is fairly and aptly designed for a legitimate purpose. Whether defendants must show more to meet the burden when the case has been fully tried is a matter to consider later.[4]
In short, the most basic and decisive factor against Rutledge on the present motion is the weakness of his case on the merits. He has other difficulties as well. Rutledge knew or should have known over a year ago that he had been rejected on the ground of his insufficient test score. He evidently did nothing until December 14, 1970, when he complained to the New York State Division of Human Rights. Then, on February 16, 1971, he complained to the United States Equal Employment Opportunity Commission, long after expiration of the 210-day period prescribed by 42 U.S.C. § 2000e-5 (d). Having tardily invoked that remedy, he suddenly moved with an ill-timed burst of speed, joining in this suit before expiration of the 60-day period and the Commission notification required by 42 U.S.C. § 2000e-5(e) and applicable regulations.[5]
Thus, having come finally to seek relief under Title VII of the Civil Rights Act of 1964, plaintiff has managed, at least until now, to generate large, possibly decisive, procedural obstacles to his success in this enterprise. Rutledge argues, however, that he is not confined to Title VII, and that his claim may be sustained under older sections of Title 42, namely §§ 1981 and 1983. Whether or not it will ultimately prevail in this case, there is substance in the contention that either or both of these statutes may now be seen to outlaw racial discrimination in employment. But while the existence of Title VII, with its specific and detailed administrative remedies, does not appear to preclude the use of the alternative statutes, Sanders v. Dobbs Houses, Inc., 431 F.2d 1097 (5th Cir. 1970), cert. denied 401 U.S. 948, 91 S.Ct. 935, 28 L.Ed.2d 231 (March 1, 1971); cf. Sullivan v. Little Hunting Park, Inc., 396 U.S. 229, 237, 90 S.Ct. 400, 24 L.Ed.2d 386 (1970), it has been held that a plaintiff may have to present some reasonable justification for bypassing the administrative forum, Waters v. Wisconsin *204 Steel Works of International Harvester Company, 427 F.2d 476, 481, 487 (7th Cir.), cert. denied sub nom. United Order of Bricklayers and Stone Masons, Local 21 v. Waters, 400 U.S. 911, 91 S.Ct. 137, 27 L.Ed.2d 151 (1970); State of Washington v. Baugh Construction Co., 313 F.Supp. 598 (W.D.Wash.1969); cf. Young v. International Telephone & Telegraph Co., 438 F.2d 757 (3rd Cir., 1971); but see Sanders v. Dobbs Houses, Inc., supra. And even if the complete bypassing of the EEOC may be allowable, it does not follow that a plaintiff may invoke the help of that agency and then short-circuit its efforts by premature resort to the federal court.[6]
The shape of Rutledge's case on the preliminary motion now before the court makes this a particularly unsuitable occasion for allowing suit while the procedures of the EEOC remain to be completed. As things appear thus far, Rutledge will not succeed in showing racial discrimination as a matter of fact. It will be time enough if he ultimately proves such conduct, and if the obvious and specific remedies of Title VII should then be held to be foreclosed, to consider whether the suggested alternatives are available to him as a matter of substantive law.
For the reasons stated, the motion of plaintiff Rutledge will be denied. A preliminary injunction will issue in favor of plaintiffs Rios, Jenkins and Lewis,[7] restraining defendant Union from denying them union membership on terms and conditions, and with rights, privileges and responsibilities, equal to those of all other members enjoying the status of full journeymen, without regard to race or national origin.[8]
Settle order on notice.
NOTES
[1] Of approximately 4,000 persons in the building trades branch of the Union, 28 are black and 13 have Spanish surnames.
[2] According to his affidavit, in uncontradicted portions which the court credits, Lewis was told that "to join the Union I would have to complete the apprenticeship program. I was also told that I probably wouldn't want to take the apprenticeship program since the pay was low." In contrast with that pattern of deterrence Union President Tom Murray stated in his deposition that only one-third of the Union's members have gone through the apprenticeship program.
[3] Defendants argue that, at best, plaintiffs are experienced as plumbers not steamfitters. The evidence shows, however, that plaintiffs have substantial experience doing both plumbing and steamfitting work. Moreover, on the present record it appears that the two jobs are similar and that a plumber is qualified to do most if not all the work of a steamfitter. Defendants have offered no evidence which refutes the conclusion on this point of plaintiffs' experienced witness.
Section 158 of the Union Constitution requires an applicant for membership to show that he has had "at least five (5) years actual practical working experience in the plumbing [emphasis added] and pipefitting industry." It is questionable whether plaintiffs Lewis and Rios could meet this qualification, although plaintiff Jenkins would appear to. However, while the argument is made (and rejected by this court) that plaintiffs are not experienced enough as steamfitters, there has been no suggestion on the Union side that this five-year provision of the Union Constitution played any part in the exclusion of any of these plaintiffs. In addition, in an industry where racial discrimination has been practiced for years, a rigid five-year work experience requirement which perpetuates the effects of prior discrimination may well violate Title VII. Cf. Local 53 of Int. Ass'n of Heat & Frost I. & A. Wkrs. v. Vogler, 407 F.2d 1047, 1054-1055 (5th Cir. 1969); Dobbins v. Local 212, International Bro. of Elec. Wkrs., 292 F.Supp. 413, 445 (S.D.Ohio 1968); United States v. Sheet Metal Wkrs. Int. Ass'n, Local U. 36, 416 F.2d 123, 133 (8th Cir. 1969); Local 189, United Papermak. & Paperwork. v. United States, 416 F.2d 980 (5th Cir. 1969), cert. denied 397 U.S. 919, 90 S.Ct. 926, 25 L.Ed.2d 108 (1970); Parham v. Southwestern Bell Telephone Co., 433 F.2d 421, 426-427 (8th Cir. 1970).
[4] While defendants may have to demonstrate more upon a full record for example, a more particularized relationship between the written test and "successful performance of the jobs for which it [is] used," and perhaps even a "study" demonstrating the connection, Griggs v. Duke Power Company, supra at 853 there are also other things potentially adverse to Rutledge. He claims, and ought to be held to the claim, that he has the equivalent of a high school education. For what it may be worth, the fairness of putting Rutledge to a written test may differ from a case like Griggs, arising in an environment of segregated schooling. Id. at 5-6. But cf. Taylor v. Board of Education of City School District of New Rochelle, 191 F.Supp. 181 (S.D.N.Y.), aff'd. 294 F.2d 36 (2d Cir.), cert. denied 368 U.S. 940, 82 S.Ct. 382, 7 L.Ed. 339 (1961). In any event, it should be noted that since Rutledge claims he has a high school equivalency diploma, he is not in a position to suffer whatever discriminatory effects might follow from the requirement that an apprenticeship applicant submit a high school diploma or equivalency certificate. Parham v. Southwestern Bell Telephone Co., 433 F.2d 421, 427-428 (8th Cir. 1970).
[5] 42 U.S.C. § 2000e-5(e) provides that a civil action may be brought thirty days after a charge is filed with the Commission, "except that * * * such period may be extended to not more than sixty days upon a determination by the Commission that further efforts to secure voluntary compliance are warranted * * *." The Commission has issued regulations permitting it to consider and attempt conciliation in all cases for the full 60 days after the filing of a charge. 29 C.F.R. § 1601.25a.
[6] The cases cited above discuss the application of 42 U.S.C. § 1981 to claims of racial discrimination by unions or private employers. Plaintiffs cite no authority supporting their reliance upon 42 U.S.C. § 1983, and there is no need at this stage to explore the possible application of that statute.
[7] The four plaintiffs, despite the different situation of Rutledge, undertook to sue on behalf of a single "class." In the brief time from the filing of suit to the hearing of the instant motion, there has been no proceeding under Fed.R.Civ.P. 23(c) and our local Civil Rule 11A to determine whether the suit may be so maintained and, if so, how the alleged class is to be defined. It seems orderly and, indeed, necessary, therefore, to rule only with respect to the named plaintiffs, postponing for another time any possible impact upon others who may turn out to be similarly situated.
[8] Plaintiffs' prayer sought to compel the Union "to place them in the highest hiring hall referral category and * * * to refer them for steamfitting work as if they were full journeymen in the highest hiring hall referral category." There is, at least thus far, no showing that the Union operates what may literally be called a "hiring hall." However, there is evidence, sketched above, of specific and measurable union influence upon the getting and keeping of jobs. It may well be and the Union should know best that this impact is broader and more concretely detailed than has thus far appeared. Considering the nature of the subject matter, the distribution of the pertinent knowledge, and the relatively precise focus upon employment and employment opportunities, it seems fitting that the injunction should be formulated in terms that require the Union simply to give plaintiffs no less of the things in question than it gives to other members. Within these directions there should be enough from which the parties can propose a decree fully comprehensible to those who must obey it. Cf. International Longshoremen Ass'n, Local 1291 v. Philadelphia Marine Trade Assn., 389 U.S. 64, 76, 88 S.Ct. 201, 19 L.Ed.2d 236 (1967); Developments in the Law Injunctions, 78 Harv.L.Rev. 994, 1066 (1965). Of course, the court does not sit in equity to trap the innocent unwary. If there are genuine problems of construction, they may be tendered in all good conscience for such declaratory guidance as may be necessary in the absence of an agreed course charted in good-faith consultations between the parties. See Regal Knitwear Co. v. National Labor Relations Board, 324 U.S. 9, 15, 65 S.Ct. 478, 89 L.Ed. 661 (1945).
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671 F.2d 1276
Samuel F. JOHNSON, Plaintiff-Appellant,v.Norwood BRYANT, an individual, et al., Defendants,Master Norwood Inc., et al., Defendant-Appellee.
No. 80-7434.
United States Court of Appeals,Eleventh Circuit.
March 1, 1982.
Diamond, Lattof, Gardner, Pate & Peters, Ross Diamond, III, Mobile, Ala., for plaintiff-appellant.
G. Hamp Uzzelle, III, J. Hodge Alves, III, Mobile, Ala., for defendant-appellee.
Appeal from the United States District Court for the Southern District of Alabama.
Before TUTTLE, HENDERSON and HATCHETT, Circuit Judges.
HENDERSON, Circuit Judge:
1
In this appeal, Samuel F. Johnson challenges a jury verdict for the defendant in his personal injury action for negligence under the Jones Act, 46 U.S.C. § 688, and unseaworthiness under general maritime law. He assigns as error the district court's denial of his motions for summary judgment, directed verdict and judgment notwithstanding the verdict for the reason that the vessel was unseaworthy and its captain negligent as a matter of law. He also contends that the trial judge incorrectly charged the jury. Finding that the court erred in instructing the jury on unseaworthiness, we reverse and remand for a new trial on that count.
2
The appellant was injured by a falling net while working as a deckhand aboard the M/V MASTER NORWOOD, captained by his son. At the time of the injury, the MASTER NORWOOD was in the Gulf of Mexico in the middle of a month-long fishing voyage. The crew was bringing in the nets aboard the vessel so that she could be taken to sheltered waters in nearby Louisiana to ride out an approaching "norther," which had produced 10 to 12 foot seas, 40 to 50 knot winds, and rain.
3
The nets were hoisted aboard the vessel by means of a whipline, a rope approximately one and one-quarter inches in diameter. The whipline ran through an overhead block and forward through another block to a "gypsy head" winch, which provided power for lifting the nets. The captain "tailed" the winch, tightening the whipline to raise the nets and slacking it to lower them to the deck. The whipline was first tied to the loaded "sack" of the net, which was lifted out of the water, brought over the stern, and lowered to the deck. The main body or middle of the net was then brought aboard in the same manner.
4
Earlier in the same voyage the captain had noticed a worn section in the whipline, caused by rubbing on the winch drum. There was no spare whipline, so he cut out the worn section and spliced the line back together. It is undisputed that the splice was good and tight. Because the spliced portion was thicker than the whipline itself, it could not be wrapped around the winch drum, so the ends of the line were switched. The splice thereafter ran through the overhead stern block. During operations prior to the plaintiff's injury, it stuck in the block because of its size, but the weight of the loaded nets usually permitted the splice to pass through without incident. The winch itself operated properly at all times.
5
The plaintiff's injury occurred as he was assisting in bringing the main body of one of the nets to a landing on the stern deck. The loaded sack had already been decked, and the main body lifted out of the water and brought overhead. The plaintiff's task was to take hold of the net and guide it gently to the deck in order to prevent damage to the rollers and floats. The captain was handling the other end of the whipline and had control of the height of the net. As he lowered the net, the splice caught in the block, as it had on prior occasions. The captain raised the net slightly and then slacked the whipline in an attempt to force the splice through the block. He lost control of the net, which fell upon the plaintiff.
6
The precise cause of the net's fall is not clear from the evidence. The captain testified that the vessel was rocking in heavy seas and that rain tended to cause the line to slip. Both he and the appellant observed that a turn of the whipline probably jumped off the winch drum, and that he was unable to catch it. The plaintiff says simply that "(w)henever he pulled the line down ... it slipped on him," causing the net to fall. He conceded, however, that the captain was not negligent, and that he was manning the winch in "the onliest way you could operate a winch."
7
The webbing of the net caused a laceration of the appellant's left ear. The injury was treated with bandages and medication available aboard the vessel. The appellant asserts that a staph infection further caused spinal abscess resulting in permanent disability.
8
The denial of a motion for summary judgment will be reversed only for an abuse of discretion. National Screen Service Corp. v. Poster Exchange, 305 F.2d 647, 651 (5th Cir. 1962); see Marcus v. St. Paul Fire & Marine Ins. Co., 651 F.2d 379, 382 (5th Cir. Unit B 1981). The district court did not abuse its discretion here.
9
The standards for denial of motions for a directed verdict and for judgment notwithstanding the verdict are the same. Ellis v. Chevron U.S.A., Inc., 650 F.2d 94, 96-97 (5th Cir. Unit A 1981). Considering all the evidence in the light and with reasonable inferences most favorable to the opposing party,
10
(i)f the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict, granting of the motions is proper. On the other hand, if there is substantial evidence opposed to the motions, that is, evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions, the motions should be denied, and the case submitted to the jury.
11
Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir. 1969) (en banc).
12
In a Jones Act case, such a motion should be granted only where there is a complete absence of probative fact to support a verdict of negligence for the plaintiff. See Lavender v. Kurn, 327 U.S. 645, 66 S.Ct. 740, 90 L.Ed. 916 (1946). Whether the same rule prevails for a motion by a plaintiff is not clear, see Allen v. Seacoast Products, Inc., 623 F.2d 355, 360 (5th Cir. 1980), but we have applied the Boeing rule without addressing that issue where there is substantial evidence opposing the motion. E.g., Bobb v. Modern Products, Inc., 648 F.2d 1051 (5th Cir. Unit B 1981).
13
On the facts presented here, there was substantial evidence in opposition to the appellant's motions for a directed verdict and judgment n.o.v. on liability under the Jones Act. The appellant unequivocally admitted that the captain did not negligently handle the whipline. There was independent evidence that the loss of a turn on the winch drum was caused not by negligence, but by the rain and rocking of the vessel.
14
We similarly conclude that there was sufficient evidence to support a finding that the spliced whipline was seaworthy. The question of unseaworthiness is ordinarily one for the jury, Morales v. City of Galveston, 291 F.2d 97 (5th Cir. 1961), aff'd, 370 U.S. 165, 82 S.Ct. 1226, 8 L.Ed.2d 412 (1962), and only in a rare case can a vessel be unseaworthy as a matter of law, Jefferson v. Taiyo Katun, K. K., 310 F.2d 582 (5th Cir. 1962). The appellant contends that the facts of this case establish unseaworthiness as a matter of law, citing Marshall v. Ove Skou Rederi, A/S, 378 F.2d 193 (5th Cir. 1967), and Gibbs v. Kiesel, 382 F.2d 917 (5th Cir. 1967).
15
The warranty of seaworthiness is, as the appellant contends, an absolute duty, but it does not obligate the owner to furnish an accident-free vessel. Mitchell v. Trawler Racer, Inc., 362 U.S. 539, 550, 80 S.Ct. 926, 933, 4 L.Ed.2d 941, 948-49 (1960). The question is one of reasonable fitness for the intended use of the vessel and her appliances. Id., 362 U.S. at 550, 80 S.Ct. at 933, 4 L.Ed.2d at 948-49; Little v. Green, 428 F.2d 1061, 1065 (5th Cir. 1970), cert. denied, 400 U.S. 964, 91 S.Ct. 366, 27 L.Ed.2d 384 (1970). We noted in Haughton v. Blackships, Inc., 462 F.2d 788 (5th Cir. 1972), "that 'a seaman is not absolutely entitled to a deck that is not slippery. He is absolutely entitled to a deck that is not unreasonably slippery.' " 462 F.2d at 789 (quoting Colon v. Trinidad Corp., 188 F.Supp. 97, 100 (S.D.N.Y.1960)). Similarly, a seaman is not absolutely entitled to a spliced whipline that does not stick when passing through a block. He is absolutely entitled only to a spliced whipline which does not cause an unreasonable departure from normal operating conditions by sticking in the block. As we noted in Marshall, "(t) he hazard may not be sufficiently great that the departure from conditions of absolute safety is enough to impose liability." 378 F.2d at 201-02; see Rivers v. Angf. A/B Tirfing, 450 F.2d 12 (5th Cir. 1971). The extraordinary conditions present in Marshall are absent in this case, and the evidence concerning the use and operation of the spliced whipline raised a jury question on the issue of unseaworthiness. See Atlantic & Gulf Stevedores v. Ellerman Lines, Ltd., 369 U.S. 355, 82 S.Ct. 780, 7 L.Ed.2d 798 (1962).1
16
Of the several exceptions to the district court's charge to the jury, Johnson first complains that the warranty of seaworthiness was diluted by overemphasizing the "reasonable fitness" aspect of the vessel. In assessing the jury instructions, consideration must be given to the charge as a whole so as to determine whether it is misleading or incorrectly states the law to the prejudice of the objecting party. E.g., Hlodan v. Ohio Barge Line, Inc., 611 F.2d 71 (5th Cir. 1980). When the instructions, taken together, properly express the law applicable to the case, there is no error even though an isolated clause may be inaccurate, ambiguous, incomplete or otherwise subject to criticism. Vicksburg Furn. Mfg., Ltd. v. Aetna Cas. & Sur. Co., 625 F.2d 1167, 1169 (5th Cir. Unit A 1980). An erroneous instruction is not otherwise reversible unless the court is "left with a substantial and ineradicable doubt as to whether the jury was properly guided in its deliberations." Miller v. Universal City Studios, Inc., 650 F.2d 1365, 1372 (5th Cir. 1981). The district judge's instructions on unseaworthiness properly balanced the absolute nature of the warranty with the requirement that vessel and gear need only be "reasonably fit." See Lacaze v. Olendorff, 526 F.2d 1213 (5th Cir. 1976); Marshall v. Ove Skou Rederi A/S, 378 F.2d at 197 n. 6. No undue emphasis was placed on the reasonableness feature which would dilute the warranty, as occurred in Ballwanz v. Isthmian Lines, Inc., 319 F.2d 457 (4th Cir. 1963), cert. denied, 376 U.S. 970, 84 S.Ct. 1136, 12 L.Ed.2d 84 (1964).
17
The appellant further objects to two instructions on unseaworthiness given at the request of the appellee. Defendant's Instruction No. 4 stated, in part:
18
The standard is not perfection, but reasonable fitness, not a shrimp boat that will weather every storm or withstand every imaginable peril of the sea, but a shrimp boat reasonably suited for her intended service of catching shrimp.
19
Defendant's Instruction No. 5 stated, in part:
20
The test to be applied by the jury in determining whether the vessel was seaworthy at the time of the plaintiff's alleged accident is whether or not the vessel was reasonably fit for her intended purpose as a shrimp boat.
21
Following each of these instructions, this court added:
22
The Court further charges the jury that, if you find from the evidence in this case that, at the time and place complained of in the plaintiff's complaint the M/V MASTER NORWOOD and her gear, including whip lines, were reasonably fit for their intended purpose, then you may not return verdict in favor of the plaintiff on the basis of unseaworthiness.
23
The appellee urges that the concluding paragraph of each instruction, taken with the district judge's entire charge, mitigated any suggestion that a defect in the whipline must render the entire vessel unseaworthy. We cannot agree. An instruction that the jury must find that a defect in a piece of gear renders the entire vessel unseaworthy is improper. McAllister v. Magnolia Petroleum Co., 357 U.S. 221, 78 S.Ct. 1201, 2 L.Ed.2d 1272 (1958).2 The requested instructions created a substantial possibility that the jury would find the M/V MASTER NORWOOD reasonably suited for catching shrimp and end their inquiry, without considering whether the whipline itself was unseaworthy. These instructions were wholly inconsistent with another portion of the charge that unseaworthiness "doesn't mean that the entire vessel has to be unseaworthy." Two contradictory standards of liability are suggested, and we cannot say that the jury followed the proper rule. Gardner v. Wilkinson, 643 F.2d 1135, 1136-37 (5th Cir. Unit A 1981). Because of this uncertainty, the error was not harmless and a new trial is required on the unseaworthiness count.
24
Also at the appellee's request, the district judge charged the jury that
25
the law recognizes what is called a mere accident or unavoidable accident, which simply means an accident which occurs and is not caused or contributed to, by negligence or unseaworthiness.
26
Defendant's Instruction No. 6. The plaintiff objected only that there was no evidence of unavoidable accident without specifically excepting to the instruction on the ground that it was "at war with the absolute warranty of seaworthiness." Lowry v. A/S D/S Svendborg, 396 F.2d 850 (3d Cir. 1968).
27
The objection of insufficient evidence does not raise the issue of whether an instruction is improper as a matter of law. Worthington Corp. v. Consol. Alum. Corp., 544 F.2d 227 (5th Cir. 1976); Page v. St. Louis Southwestern Ry., 312 F.2d 84 (5th Cir. 1963), appeal after remand, 349 F.2d 820 (5th Cir. 1965). We cannot consider an objection to a jury instruction not made at trial, absent plain error. Rivers v. Angf. A/B Tirfing, 450 F.2d at 14-15. An unavoidable accident charge in an unseaworthiness case is not plainly erroneous. Quintero v. Sinclair Refining Co., 311 F.2d 217, 218 (5th Cir. 1962), cert. denied, 374 U.S. 830, 83 S.Ct. 1871, 10 L.Ed.2d 1053 (1963); see Page v. St. Louis Southwestern Ry., 312 F.2d at 93-94.3 There was evidence in this case to support the instruction. Id. at 94. The jury could reasonably have concluded that the storm, not unseaworthiness, caused the captain to lose control of the net.
28
Finally, after reviewing the evidence and the court's charge to the jury, we find no error in the instruction concerning recovery for injury to the ear.4
29
AFFIRMED IN PART, REVERSED IN PART AND REMANDED FOR A NEW TRIAL.
1
Our holding in Marshall was predicated in part upon the extreme danger caused by the particular method of loading steel which caused the injury there. 378 F.2d at 198-99, 202. In Gibbs v. Kiesel, we held that a vessel owner may not rely upon a plaintiff's failure to identify the precise manner in which gear is unseaworthy to defeat liability. 382 F.2d at 919. Neither holding stands for the proposition that unseaworthiness exists solely because a piece of gear fails in normal use, without regard to the reasonable fitness of the gear
2
The appellee's instruction No. 5 was apparently taken almost verbatim from Mitchell v. Trawler Racer, Inc., 362 U.S. 539, 80 S.Ct. 926, 4 L.Ed.2d 941 (1960). Appellate opinions often adopt the usage of a vessel's unseaworthiness to refer to the unseaworthiness of a piece of gear; indeed we have done so here. It does not follow, however, that a jury may be instructed in the language of an appellate opinion where such would be misleading. Ballwanz v. Isthmian Lines, Inc., 319 F.2d 457, 462-63 (4th Cir. 1963), cert. denied, 376 U.S. 970, 84 S.Ct. 1136, 12 L.Ed.2d 84 (1964)
3
Notwithstanding our holding here, we note that in this and other circuits the unavoidable accident charge has been severely criticized because of its potential to mislead the jury in an unseaworthiness case. E.g., Mills v. Mitsubishi Shipping Co., 358 F.2d 609 (5th Cir. 1966), cert. denied, 386 U.S. 1036, 87 S.Ct. 1474, 18 L.Ed.2d 600 (1967); accord, Lowry v. A/S D/S Svendborg, 396 F.2d 850 (3d Cir. 1968); Yanow v. Weyerhauser S.S. Co., 250 F.2d 74 (9th Cir. 1958), cert. denied, 356 U.S. 937, 78 S.Ct. 779, 2 L.Ed.2d 812 (1958). But cf. Neal v. Lykes Bros. S.S. Co., 306 F.2d 313, 316 (5th Cir. 1962) (charge harmless error where jury indicated seaworthiness by special interrogatory). In both Lowry and Yanow, an objection to the unavoidable accident charge was made on proper grounds. We express no opinion as to the result had such an objection been interposed here
4
The charge complained of recites:
If you find that the cut on the ear is worth something, but didn't produce the abscess, he would be entitled to recover whatever the cut on the ear was worth; even if you decide the abscess was not brought about by it.
It was given at the request of the appellee. The plaintiff did not object to an earlier instruction that he could not recover for the cut on the ear. The charge correctly stated that the plaintiff could recover something if the jury found only the ear injury to have been caused by the fall of the net.
| {
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178 B.R. 87 (1995)
In re CREATIVE GOLDSMITHS OF WASHINGTON, D.C., Debtor.
NATIONSBANK OF D.C., N.A., Plaintiff,
v.
Jerry BLIER, et al., Defendants.
Bankruptcy No. 94-1-1468-ESD. Adv. No. 94-1-A-053-DK.
United States Bankruptcy Court, D. Maryland.
February 16, 1995.
*88 *89 Michael D. Nord, Gebhardt & Smith, Baltimore, MD, for plaintiff.
Jerry Blier, pro se.
MEMORANDUM OPINION
DUNCAN W. KEIR, Bankruptcy Judge.
On March 12, 1992, an involuntary petition under Chapter 7 of the Bankruptcy Code was filed against Debtor. On April 16, 1992, this court entered an Order for Relief. On January 21, 1994, Plaintiff filed an adversary complaint alleging that the Plaintiff's collateral was wrongfully converted by Defendant. A *90 trial on the merits was held on September 12, 1994 (the "Trial").
At the conclusion of the Trial, this court found that Defendant converted the collateral and orally ruled that judgment should be entered for Plaintiff for the return of the converted collateral or its fair market value. Subsequent to that ruling, and prior to the entry of any order or judgment, on September 19, 1994, this court ordered that its prior ruling be withheld pending reconsideration. Pursuant to this court's Order dated September 21, 1994, a hearing was held on reconsideration (the "Reconsideration Hearing"). At the Reconsideration Hearing this court requested that the parties submit post hearing memoranda in support of their positions.
I. FACTS
Creative Goldsmiths of Washington D.C., Inc. ("Debtor"), was a company in the retail jewelry business. Jerry Blier ("Defendant"), is engaged in the business of shipping various types of jewelry, including loose and mounted diamonds, to wholesale and retail jewelry businesses. On numerous occasions Defendant supplied diamonds to Debtor.
On or about October 26, 1987, Debtor renewed or entered into a loan agreement with Plaintiff, NationsBank of D.C., N.A. ("Plaintiff") in the principal amount of Three Hundred Forty-One Thousand Six Hundred Twenty-Five Dollars and Twenty-Nine Cents ($341,625.29). This loan was secured by a blanket lien on all Debtor's business assets, including its inventory. Subsequent to that loan, on March 27, 1991, Debtor executed a Commercial Note in the amount of Two Hundred Eighty-Nine Thousand Nine Hundred Forty-Six Dollars and Thirty-Four Cents ($289,946.34). This debt also was secured by a blanket lien on all of Debtor's business assets, including its inventory. Plaintiff properly perfected its security interest in Debtor's assets by filing financing statements in the appropriate locations.
On a number of occasions Debtor received from Defendant shipments of diamonds on memorandum. It is clear to this court that the diamonds received in this manner were intended to be resold to the general public. These diamonds were kept for approximately one to two weeks and, if not sold in that time period, were returned to Defendant.
Transfers made pursuant to memorandum agreements are the customary practice within the diamond industry. Witnesses testified repeatedly that the transfer of diamonds on memorandum represents an important as well as significant part of the industry.
The dispute in this case revolves around a number of diamonds returned to Defendant by Debtor pursuant to three memorandum agreements dated February 26, 1991, March 6, 1991, and October 10, 1991. These diamonds were returned to Defendant, in accordance with each memorandum, on March 11, 1991, March 15, 1991, and October 22, 1991 respectively (the "Returned Diamonds"). At no time during any of these transactions did Defendant notify Debtor's secured creditors of his interest in the Returned Diamonds, nor did he file financing statements to perfect his interest in the Returned Diamonds.
II. LEGAL ANALYSIS
Preliminarily, Plaintiff argues that this court does not have the authority to, sua sponte, reconsider its September 12, 1994 oral ruling unless it finds that extraordinary circumstances exist which create a substantial danger that the underlying judgment is unjust.[1]
It is well established that courts have the authority to reconsider a previous ruling even before the judgment becomes final.[2] In Otis v. City of Chicago, 29 F.3d *91 1159 (7th Cir.1994), the Court noted that "until the court has entered a Rule 58 judgment or expressly indicated that none is contemplated . . . it is always possible for the court to change its mind." Id. at 1164.
A court's authority to reconsider a decision before it becomes final is inherent in Rule 59(e) of the Federal Rules of Civil Procedure. Although Federal Rule 59(e) refers to the amendment of a final judgment, cases have repeatedly deemed motions for reconsideration as timely filed even though they were filed before the judgment became final. See In re B.J. McAdams, Inc., 999 F.2d 1221, 1223 (8th Cir.1993); Hilst v. Bowen, 874 F.2d 725, 726 (10th Cir.1989). Under this interpretation, it is only logical to infer that a court may reconsider its ruling prior to the judgment becoming final.
The purpose of Federal Rule 59(e) is to permit the correction of any manifest errors of law or fact that are discovered, upon reconsideration, by the trial court. National Metal Finishing v. Barclaysamerican, 899 F.2d 119, 123 (1st Cir.1990). Thus, a court, under this rule, may amend, amplify or expand upon its initial findings even to the extent that the modified or additional findings in effect reverse the initial ruling.[3]Id.; see also Fontenot v. Mesa Petroleum Co., 791 F.2d 1207, 1219 (5th Cir.1986).
For the reasons set forth below, this court finds that its previous decision did not properly take into account all of the evidence presented. Accordingly, this court amends its previous oral decision in toto. The oral findings and decision are replaced by this opinion and the Order entered herewith.
A. Priority of the Bank's Lien
At the Trial, Plaintiff averred that Defendant wrongfully converted Plaintiff's collateral by withholding the Returned Diamonds. As Plaintiff had a properly perfected security interest on all of Debtor's assets, Plaintiff contends that it is entitled to the Returned Diamonds. More specifically, Plaintiff contends that the Returned Diamonds were, under § 2-326 of the Maryland Uniform Commercial Code, goods held on "sale or return," and, as such, are subject to the claims of the Plaintiff pursuant to the security agreement executed between Debtor and Plaintiff. Consequently, Defendant's wrongful withholding of the Returned Diamonds constituted a conversion of Plaintiff's collateral. Alternatively, Defendant contends that diamonds sold pursuant to memorandum agreements are sold on "sale on approval," and therefore the Returned Diamonds are not subject to the claims by Plaintiff.
The relative rights and priorities of the parties are governed by §§ 2-326 and 9-114 of Maryland's Uniform Commercial Code. The court must determine whether the Returned Diamonds were held by Debtor on "sale or return" or "sale on approval." If the transaction was "sale or return", it then must be determined whether any of the § 2-326 exceptions are applicable. Upon review of § 2-326 and the relevant case law, this court is unpersuaded by Defendant's contentions that the sale was a "sale on approval." Rather, this court finds that the Returned Diamonds were goods held on "sale or return," and therefore are subject to the security interest of Plaintiff.
Two reported decisions have decided the application of § 2-326 to jewelry transactions made pursuant to memorandum agreements. In In re Monahan & Company Ltd., 29 B.R. 579 (Bankr.D.Mass.1983), a jewelry supplier left jewelry with the debtor pursuant to a memorandum agreement. The agreement stated that:
The goods described and valued as below are delivered to you for EXAMINATION AND INSPECTION ONLY and remain our property subject to our order and shall be returned to us on demand. Such merchandise, until returned to us and actually received, are at your own risk from all *92 hazards. NO RIGHT OR POWER IS GIVEN TO YOU TO SELL, PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE of this merchandise regardless of prior transactions. A sale of this merchandise can only be effected and title will pass only if, as and when we the said owner shall agree to such sale and a bill of sale rendered therefor.
Id. at 581.
Notwithstanding the language in that agreement, that Court ruled that the jewelry was delivered by the supplier for resale, and therefore the transaction was deemed to be a "sale or return" under § 2-326.[4]Id.
Similarly, in Limor Diamonds, Inc. v. D'Oro By Christopher Michael, Inc., 558 F.Supp. 709, 711 (S.D.N.Y.1983), diamonds were shipped to the debtor by a jewelry wholesaler. These diamonds subsequently were returned to the wholesaler because they were not resold. That Court considered the transaction to be a "sale or return," and consequently ruled that the diamonds were subject to the claims of the debtor's secured creditors as they had a blanket lien on the inventory. Id. at 711.
In the present case, the memorandum agreements are substantially identical to that which was in dispute in the Monahan case. Furthermore, the weight of the evidence supports that the Returned Diamonds were delivered for resale and not for use by the Debtor. This court therefore finds that the Diamonds were goods held on "sale or return."
However, the inquiry is not complete, as § 2-326 provides three circumstances under which a consignor would maintain priority over a properly perfected secured creditor. Md.Code Ann.Com.Law I § 2-326 (1992).[5] "Consigned" goods will not be deemed to be sale or return and subject to creditors' claims, if: the consignor complies with a sign law, establishes that the consignee is generally known by its creditors to be substantially engaged in selling the goods of others, or files an appropriate financing statement. The first and third exceptions, revealed in subsection (a) and (c) of § 2-326(3), are not applicable in the instant adversary proceeding. The first exception clearly is not applicable as Maryland has not adopted the referenced sign law. The third exception equally is not applicable as Defendant concedes that the appropriate financing statements were not filed.
The second exception, however, is relevant in this adversary proceeding, as Defendant asserts that Debtor generally was known by its creditors to be substantially engaged in selling the goods of others. Defendant bears the burden of proof to prove the existence of this exception. Matter of High-Line Aviation, Inc., 149 B.R. 730, 738 (Bankr.N.D.Ga.1992).
Defendant fails to offer sufficient evidence demonstrating that a substantial amount of the jewelry in Debtor's possession was in fact property of others. Although it is not necessary to demonstrate that a consignee *93 is "primarily engaged in selling the goods of others" in order to establish that the consignee substantially dealt in the goods of others, there must be some evidence from which the fact finder could reasonably conclude that Debtor was generally known by its creditors to be substantially engaged in the sale of goods of others. High-Line Aviation, 149 B.R. at 738. Defendant presented testimony from various witnesses that jewelry stores, or persons working in them, are involved in selling the goods of others. Only one of Defendant's witnesses testified that jewelers are "substantially" engaged in selling the goods of others.
Defendant further fails to make an adequate showing that most of the Debtor's creditors had knowledge that Debtor was substantially engaged in selling the goods of others. See In re Webb, 13 U.C.C.Rep.Serv. 394, 1973 WL 21364 (S.D.Texas 1973) (It is the debtor's burden to show that most of the bankrupt's creditors knew that a considerable amount of the bankrupt's business was selling the goods of others). The evidence presented by Defendant merely demonstrates that the jewelers themselves knew that diamonds were usually transferred pursuant to a memorandum or consignment agreement, as opposed to whether most of Debtor's creditors had the requisite knowledge. See In re Fabers, Inc., 12 U.C.C.Rep. Serv. 126, 1972 WL 20789 (Bankr.D.Conn. 1972). In fact, the record is devoid of any evidence demonstrating that the most of Debtor's creditors knew anything about the customs and practices of the diamond trade. Defendant failed to establish the applicability of this exception, therefore, this defense must fail.
In that Defendant has not satisfied any of the exceptions listed in § 2-326, the rights of the parties are determined by § 9-114.[6] This section requires the consignor, in addition to filing the appropriate financing statements, to contact all secured creditors of the consignee and provide them with notice of the consignment. Defendant failed to comply with any of the § 9-114 requirements, and consequently Plaintiff's perfected security interest has priority over any interest of Defendant with respect to the Returned Diamonds. See Md.Code Ann.Com. Law I § 9-114 (1992); In re Alper-Richman Furs, Ltd., 147 B.R. 140, 149 (Bankr.N.D.Ill. 1992).
B. Conversion
In Maryland, "conversion has been generally defined as the wrongful exercise of dominion by one person over the personal property of another." Kalb v. Vega, 56 Md.App. 653, 665, 468 A.2d 676, 683 (1983). In order to successfully plead conversion, it must be shown that the appropriation of property was unauthorized or without the consent of the owner. Matter of Burdick, 65 B.R. 105, 108 (Bankr.N.D.Ind.1986). An act which would otherwise constitute a conversion may be precluded from having that effect by a plaintiff's consent to the act. Restatement (Second) of Torts § 252 (1965). Nonconsent to the possession and disposition of the property by Defendant are therefore indispensable. If an owner expressly or impliedly assents to, or ratifies the taking, use, or disposition of the property, the owner cannot recover for conversion. Rose Brothers, Inc. v. City of Alva, 356 P.2d 1083, 1085 (Okla.1960).
In the instant case, Debtor received, and subsequently returned, diamonds to Defendant pursuant to certain memorandum agreements. Plaintiff alleges that these transfers wrongfully deprived it of its right to those diamonds as collateral under the terms of the security agreement. This court, however, finds Plaintiff's contention unpersuasive. More specifically, this court finds that Plaintiff had actual knowledge over the *94 six year lending relationship that Debtor was receiving and returning diamonds pursuant to memorandum agreements, and therefore, by its inaction, implicitly authorized the transfer of diamonds.
All of the witnesses brought forth by Defendant testified that diamonds commonly are transferred on memorandum. Further support is found in the testimony of Mr. Mervis, who stated not only that the majority of the diamond business was carried on through memorandum agreements, but also that any financial institution servicing the jewelry industry would have knowledge of transactions made on memorandum and the procedures associated with that type of transaction.
Testimony also revealed that it is customary in the diamond industry that diamonds received on memorandum are kept by the recipient for approximately one to two weeks and then, if not sold during that period of time, returned to the supplier. This fact was supplemented and confirmed by the three memorandum agreements submitted as Plaintiff's Exhibits 7 through 10. All of the diamonds received by Debtor pursuant to those memorandum agreements, and subsequently not sold, were returned within the customary two week period.
The testimony of Mr. Kalin, vice president of Plaintiff, demonstrated that Plaintiff was familiar with the business operations of the jewelry industry and that Plaintiff had several discussions with Debtor concerning the operation of its business. Mr. Gross, president of Debtor, testified that during at least one of those conversations he informed Mr. Kalin that Debtor transacted business pursuant to memorandum agreements. Furthermore, the evidence revealed that Debtor and Plaintiff have been in a financial relationship since at least October of 1987.
In light of the evidence presented, this court finds that Plaintiff had actual knowledge of the methods by which Debtor conducted business.[7] Given the communication between the Debtor and Plaintiff, the length of time in which Debtor and Plaintiff have been engaged in a significant financial relationship, the predominant nature of memorandum agreements in the diamond industry, and Plaintiff's inaction with respect to memorandum transactions, this court finds that Plaintiff implicitly authorized Debtor to receive and return diamonds pursuant to memorandum agreements. See Matter of Burdick, 65 B.R. 105 (Bankr.N.D.Ind.1986).
Even if this court were to have found that the acceptance back by the Defendant of the Returned Diamonds constituted an unauthorized deprivation of Plaintiff's security interest, this court in its discretion finds that the damages were fully mitigated. It was the uncontradicted testimony of three expert witnesses that the diamonds supplied under memorandum were, if unsold, required to be returned to the supplier within two weeks. The court notes that the timing of the three memoranda in question is consistent with this testimony, that is, although additional diamonds were supplied under the second memorandum, while the diamonds under the first memorandum were outstanding, the diamonds under the first memorandum were not overdue. All of the Returned Diamonds were returned within the customary two weeks. The Defendant testified that at the time of bankruptcy, the Defendant was owed $50,000.00 by the Debtor for diamonds which had been supplied to the Debtor and neither been returned, nor paid for. Further evidence of the fact that the Defendant supplied additional diamonds, other than the Returned Diamonds, is found in the proof of claim in the amount of $38,273.40 filed by the Defendant in this bankruptcy case. The Court takes judicial notice of this proof of *95 claim, which stands as prima facie proof of Defendant's claim. 11 U.S.C. § 502(a). This claim exceeds the value ($33,579.50) of the Returned Diamonds.
Defendant argued from this evidence that the Defendant would not have supplied the additional diamonds subsequent to the Returned Diamonds, if he never received either payment for, or return of, the Returned Diamonds. This court finds as a reasonable inference from this evidence, that additional diamonds were supplied subsequent to the memoranda in question (hereinafter the "Additional Diamonds"), that the value of those diamonds equalled or exceeded the value of the Returned Diamonds and that the Additional Diamonds were neither returned to, nor were proceeds of, the sale of those diamonds remitted to the Defendant.
The interest of the Plaintiff in the Returned Diamonds was a security interest. That security interest automatically attached to the Returned Diamonds when supplied by the Defendant, as discussed earlier in this opinion. Likewise, a security interest automatically was obtained by the Plaintiff in the Additional Diamonds, when they were supplied by the Defendant to the Debtor. Thus, subsequent to the return of the Returned Diamonds, and the alleged wrongful conversion of Plaintiff's security interest in the Returned Diamonds, the Defendant, in effect, supplied to the Plaintiff a security interest of equal quality and of greater amount. Under the circumstances of this adversary proceeding, such subsequent provision of an equal or greater security interest to the Plaintiff mitigated the damages suffered by the Plaintiff from the alleged conversion.
"The privilege of mitigation of the damages by return of the chattel is equitable in nature. When the privilege is granted, there is specific relief, such as is commonly afforded by equity. The privilege is not a matter of absolute right but lies within the discretion of the trial court in light of all of the circumstances in the case."
Restatement (Second) of Torts § 922 cmt. h (1965).
Although generally mitigation of damages in conversion has been limited to return of the exact chattels converted, where the property interest converted is a security interest in inventory, and the subsequent provision by the Defendant is of the same type of inventory to which the same "floating lien" attaches, the court may exercise its discretion and allow mitigation of damages up to the value of the security interest in the subsequently provided inventory (the Additional Diamonds).[8]
Plaintiff argues against mitigation by asserting that it was entitled to the security interest in the Returned Diamonds and the Additional Diamonds. Certainly under some circumstances, Plaintiff's argument would be meritorious. For example, if a supplier were supplying goods on a periodic basis to a customer which had granted a blanket security interest on inventory to a lender, the lender would be entitled to the value of its security interest in all goods supplied and would have a cause of action for conversion if any of those goods were returned to the supplier without the consent of the lender. However, under the facts of the instant adversary proceeding, the court finds there would have been no provision of the subsequent security interest had the Returned Diamonds not been received back by the Defendant under the terms of the memoranda. In exercising its equitable discretion to allow mitigation, the court must take great care in distinguishing between the case of a lender whose security interest has been violated under circumstances in which the lender had a reasonable expectation that such goods would be available as collateral to the lender, upon default of the borrower; as opposed to circumstances in which the lender had no such reasonable expectations. On the one hand, the court should vigilantly protect the rights of the lender where a Debtor out of the ordinary course of business returns goods without the consent of the lender for *96 whatever reason, including, but not limited to, the Debtor's seeking favor with suppliers for possible future endeavors. On the other hand, courts should not be used by lenders to take advantage of alleged technical conversions, which transfers were in fact part of the known and reasonably expected ordinary course of the borrower's business.
Plaintiff makes one final argument in an attempt to defend against the exercise by the court of its discretion to allow mitigation. Plaintiff points out that it did not receive any of the proceeds from the Additional Diamonds and therefore argues Plaintiff did not receive the value to which it was entitled under the Restatement and cases cited above. Plaintiff errs in this argument because the interest of Plaintiff in the Returned Diamonds was a security interest. The interest arising from the shipment of the Additional Diamonds was a new security interest. The fact that the Debtor failed to pay Plaintiff from the proceeds of the Additional Diamonds at most created a default under the loan contract between Debtor and Plaintiff but does not obviate or eliminate the fact that the subsequent provision of value by the Defendant occurred. Plaintiff's loss from the default under its loan contract occurred because the Debtor failed to pay sufficient sums of money to the Plaintiff from all of the Debtor's revenue sources. This risk was assumed by Plaintiff in the making of the loan contract and not occasioned by the facts of this adversary proceeding.
For these reasons, the court finds that no conversion of goods occurred and that if conversion had occurred, full mitigation of all damages was subsequently supplied by the Defendant and therefore, in the court's discretion, no right to damages remains to the Plaintiff. Accordingly, judgment shall be entered in favor of the Defendant.
NOTES
[1] Plaintiff relies on In re Etchin, 128 B.R. 662 (Bankr.W.D.Wis.1991) to support its contention. This case, however, interprets the authority of the bankruptcy court to reconsider an order only under Rule 60(b) of the Federal Rules of Civil Procedure. This Court finds, however, that Plaintiff's reliance on Federal Rule 60(b) is misplaced, as Federal Rules 59(e) and 52(b) are more appropriate under the circumstances of this case.
[2] The law is certainly clear that a bankruptcy court may reconsider orders after they have become final. Transportation, Inc. v. Mayflower Services, Inc., 769 F.2d 952, 954 (4th Cir.1985); McLaughlin v. McPhail, 707 F.2d 800, 805 (4th Cir.1983). It is equally well established that the decision to grant such relief is within the sound discretion of the court. McLaughlin, 707 F.2d at 805.
[3] The Barclaysamerican court noted that this statement applies also to Federal Rule 52(b). Federal Rule 52(b) provides that a court may amend its findings of fact and amend its judgment accordingly even when such action results in the reversal of the initial judgment. National Metal Finishing, 899 F.2d at 124.
[4] In drawing this conclusion the Monahan court held that this type of transaction is not controlled by the common law of bailment and consignment. Monahan, 29 B.R. at 582; see also White & Summers, Uniform Commercial Code, § 24-4 (3d ed. 1988).
[5] This section provides, in pertinent part:
(2) Except as provided in subsection (3), goods held on approval are not subject to the claims of the buyer's creditors until acceptance; goods held on sale or return are subject to such claims while in buyer's possession.
(3) Where goods are delivered to a person for sale and such person maintains a place of business at which he deals in goods of the kind involved, under a name other than the name of the person making the delivery, then with respect to claims of creditors of the person conducting the business the goods are deemed to be on sale or return. The provisions of this subsection are applicable even though an agreement purports to reserve title to the person making delivery until payment or resale or uses such words as "on consignment" or "on memorandum." However, this subsection is not applicable if the person making delivery:
(a) Complies with applicable law providing for a consignor's interest or the like to be evidenced by a sign, or
(b) Establishes that the person conducting the business is generally known by his creditors to be substantially engaged in selling the goods of others, or
(c) Complies with the filing provisions of the title on secured transactions (Title 9).
Md.Code Ann.Com.Law I § 2-326 (1992).
[6] Section 9-114 is interpreted as applying only in instances where the two exceptions listed in § 2-326(3)(a) and (b) are not applicable. When these exceptions to § 2-326 are not satisfied, the language of § 9-114 requires the consignor to file under Article 9 to prevent the consigned goods from becoming subject to security interests of the consignee's creditors. See In re Alper-Richman Furs, Ltd., 147 B.R. 140, 149-50 (Bankr.N.D.Ill. 1992) (§ 9-114 should be limited to situations where the other exceptions to § 2-326(3) do not apply); In re State Street Auto Sales, 81 B.R. 215, 217-18 (Bankr.D.Mass.1988) (same); Matter of Great American Veal, Inc., 59 B.R. 27, 32 (Bankr. D.N.J.1985) (same); In re Lebus-Albrecht Lumber Co., 38 B.R. 58, 61 (Bankr.D.N.D.1984) (same).
[7] This court's finding that Plaintiff had knowledge that Debtor was engaged in memorandum transactions is not inconsistent with its ruling on the § 2-326 issue. Section 2-326 requires that most of the creditors have knowledge that a substantial amount of the Debtor's business is selling goods of others. Plaintiff represents only one of Debtor's creditors and therefore does not constitute "most" of the creditors. This is true even though Plaintiff represents the majority of Debtor's total indebtedness. See In re Webb, 13 U.C.C.Rep.Serv. 394, 1973 WL 21364 (S.D.Texas 1973). In addition, there was no testimony concerning whether or not the amount of memorandum transactions was a substantial amount of the Debtor's business, which business included retail non-custom jewelry sales.
[8] The mitigation of damages for return of converted property has been recognized in Maryland. See Keyes v. Chrysler Credit Corp., 303 Md. 397, 414, 494 A.2d 200, 208 (1984). As the action is brought by the Plaintiff for enforcement of a state law cause of action of tort, Maryland law is determinative.
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In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-18-00230-CR
No. 02-18-00231-CR
No. 02-18-00232-CR
___________________________
EARL THOMPSON, Appellant
V.
THE STATE OF TEXAS
On Appeal from the 211th District Court
Denton County, Texas
Trial Court Nos. F17-1865-211, F17-1867-211, F17-1868-211
Before Gabriel, Pittman, and Bassel, JJ.
Memorandum Opinion by Justice Bassel
MEMORANDUM OPINION
I. INTRODUCTION
Appellant Earl Thompson was indicted and pleaded guilty in three separate
cases of burglary of habitation with intent to commit sexual assault. See Tex. Penal
Code Ann. § 30.02. During the punishment phase, the trial judge sua sponte asked
Appellant if he wanted to testify. Appellant stated that he did, but after a ten-minute
recess to confer with his counsel, Appellant’s trial counsel did not call him as a
witness. The jury assessed Appellant’s punishment at confinement for life in the
Institutional Division of the Texas Department of Criminal Justice (TDCJ), and the
trial court sentenced him accordingly. Appellant raises two issues asserting that his
Sixth Amendment constitutional right to testify was violated and that the jurors
improperly considered parole when deliberating. Because the record on this direct
appeal is inadequate for us to resolve whether there was deficient performance by
Appellant’s counsel let alone prejudice with regard to his Sixth Amendment
complaint, and because a complaint to the trial court’s response to the jury’s note
concerning parole was not preserved—and even if preserved, was not an error— we
affirm.
2
II. BACKGROUND 1
Following his commission of a series of home-invasion assaults in Denton,
Texas, Appellant was arrested and charged in three cases of burglary of habitation
with intent to commit sexual assault. He pleaded guilty in all three cases and elected
to have a jury assess punishment for all three cases in one punishment trial. During
the punishment trial, the State called 31 witnesses.
Before the defense called its first witness and outside of the presence of the
jury, the trial court asked both Appellant and his trial counsel if they had discussed the
possibility of Appellant testifying and his Fifth Amendment right not to testify. After
Appellant and his trial counsel affirmed that they had discussed the matter, the trial
court asked Appellant if he wanted to testify. Appellant stated that he wanted to
testify, which prompted the trial court to reiterate again that it is his absolute right not
to testify and that the exercise of the right cannot be used against him. Appellant
reiterated that he wanted to testify. The entire exchange appears in the reporter’s
record as follows:
THE COURT: All right. We’re back on the record from the lunch
break. The jury has not been seated at this time.
[Appellant’s trial counsel], have you had plenty of time to
admonish your client and go over with him his right to exercise his Fifth
Amendment and not testify in this matter?
Because the resolution of Appellant’s two issues does not require more, we
1
provide a limited recitation of the factual and procedural background of these cases.
3
[APPELLANT’S TRIAL COUNSEL]: I have, Your Honor.
THE COURT: All right. Mr. Thompson, I just want to reiterate
and make sure that you have had ample opportunity to speak to your
attorney about your ability to be able to -- one of two things, either
testify in this matter or exercise your Fifth Amendment right to not
testify.
Have you had time to go over with your attorney all of the
options that you have regarding your testimony?
THE DEFENDANT: Yes, sir.
THE COURT: All right. And have you made a decision?
THE DEFENDANT: Yes, sir.
THE COURT: And what is your decision?
THE DEFENDANT: Testify.
THE COURT: You would like to testify?
THE DEFENDANT: Uh-huh.
THE COURT: All right. And that is your absolute right to do
so. I just want to make sure that I reiterate that if you choose to exercise
your constitutional right to remain silent, you understand that that is an
absolute right and that cannot be used against you and, in fact, the jury
will be instructed both orally by me reading the charge and in writing
that they cannot use that circumstance against you? Do you understand
that?
THE DEFENDANT: Yes, sir.
THE COURT: And understanding that, do you still choose to
testify in this matter?
THE DEFENDANT: Yes, sir.
4
After the defense called its second witness, the trial court again discussed
Appellant’s Fifth Amendment rights with him before granting a ten-minute recess for
Appellant to discuss with his trial counsel whether he still wanted to testify:
THE COURT: Mr. Thompson, we spoke and I gave you
admonishments before the jury was seated, and I know you’ve had lots
of opportunities to speak with [your trial counsel] about you testifying in
this case. One of the things I wanted to bring up to you is you
understand if you take the stand your attorney is going to ask you
questions first? You understand you cannot assert a Fifth Amendment
privilege and remain silent when the State begins to ask you questions?
You understand that?
THE DEFENDANT: Yes, sir.
THE COURT: It’s a two-way street. And I know [your trial
counsel] has talked to you about that, but I want to reiterate that as well,
so we’ve taken a break so that you can talk to your attorney a few more
minutes before you’re called to testify. So I’ve granted that recess in
order for you to speak to your attorney in private to see if you want to
stick with your decision of testifying or if you’d like to assert your Fifth
Amendment privilege.
With that, we’ll be in recess for ten minutes.
[APPELLANT’S TRIAL COUNSEL]: Thank you, Your Honor.
After the recess, the defense called a total of three witnesses, but not Appellant.
The record does not reflect that the issue of whether Appellant wanted to testify came
up again.
After both sides rested, the trial court tendered its charge to the jury for all
three cases. The charge included the following instructions regarding parole:
Under the law applicable in this case, if the defendant is sentenced to a
term of imprisonment, he will not become eligible for parole until the
5
actual time served equals one-half of the sentence imposed or 30 years,
whichever is less, without consideration of any good conduct time
defendant may earn. Eligibility for parole does not guarantee that parole
will be granted.
It cannot accurately be predicted how the parole law and good
conduct time might be applied to this defendant if he is sentenced to a
term of imprisonment, because the application of these laws will depend
on decisions made by prison and parole authorities.
You may consider the existence of the parole law and good
conduct time. However, you are not to consider the extent to which
good conduct time may be awarded to or forfeited by this particular
defendant. You are not to consider the manner in which the parole law may be
applied to this particular defendant.
In determining the punishment in this case, you are instructed
that you are not to discuss among yourselves how long the defendant
will be required to serve any sentence you decide to impose. Such
matters come within the exclusive jurisdiction of the Board of Pardons
and Paroles and the Governor of the State of Texas.
[Emphasis added.]
After the jurors had begun deliberating, the presiding juror gave a note to the
bailiff with three questions for the trial court that all concerned parole:
1) Does a life sentence mean no chance of parole?
2) Does 99 yrs mean a minimum of 30 yrs before parole opportunity is
available?
3) Does 60 yrs mean a minimum of 30 yrs before parole opportunity is
available?
The trial court read the questions to counsel and proposed the following response:
“Ladies and gentlemen of the jury, in response to your question, you are instructed
that you have before you all the law and the evidence allowed in the case. Please refer
6
to the Court’s Charge and continue your deliberations.” After neither the prosecutor
nor Appellant’s trial counsel had any objection to the proposed response, the bailiff
gave the written response to the jurors.
The jury assessed Appellant’s punishment at life in the Institutional Division of
the TDCJ for each case and the trial court sentenced Appellant accordingly. This
appeal followed.
III. FAILURE TO TESTIFY
In his first issue, Appellant contends that his Sixth Amendment right to testify
was violated because the record supports that he expressed a desire to testify, but his
trial counsel did not call him as a witness. Appellant attempts to frame his challenge
as implicating his Sixth Amendment defendant-autonomy rights recently explained by
the United States Supreme Court in McCoy v. Louisiana, 138 S. Ct. 1500 (2018). The
State responds that although Appellant did state at one point that he wanted to testify,
the last on-the-record mention of the issue demonstrates that Appellant and his trial
counsel were still discussing if Appellant was going to testify, so Appellant’s allegation
is not confirmed by the record. Moreover, the State contends that a defendant’s
complaint that his constitutional right to testify was violated is not analyzed under the
McCoy framework, but is instead analyzed under the ineffective-assistance-of-counsel
standard in Strickland v. Washington, 466 U.S. 668, 104 S. Ct. 2052 (1984), and that the
record on direct appeal does not support an ineffective-assistance-of-counsel claim.
7
Because we conclude that the record on this direct appeal is inadequate to
establish that Appellant’s right to testify was violated, we overrule Appellant’s first
issue regardless of whether Strickland or McCoy controls.
A. The decision to testify is a constitutional right that is the defendant’s alone
to make, and an allegation that the right has been violated has traditionally
been brought as an ineffective-assistance-of-counsel claim.
A criminal defendant has a constitutional right to testify in his defense,
including during the punishment phase of the trial. Rock v. Arkansas, 483 U.S. 44, 52,
107 S. Ct. 2704, 2709 (1987); Smith v. State, 286 S.W.3d 333, 338 n.9 (Tex. Crim. App.
2009); Pady v. State, 908 S.W.2d 65, 68 (Tex. App.—Houston [1st Dist.] 1995, no pet.).
This right can be knowingly and voluntarily waived only by the defendant, not his
counsel. Smith, 286 S.W.3d at 338 n.9. 2
In Johnson v. State, the court of criminal appeals decided that it is not the trial
court but “defense counsel [who] shoulders the primary responsibility to inform the
defendant of his right to testify, including the fact that the ultimate decision belongs
to the defendant.” 169 S.W.3d 223, 235 (Tex. Crim. App. 2005). Thus, Johnson held
that “Strickland provides the appropriate framework for addressing an allegation that
the defendant’s right to testify was denied by defense counsel.” Id. Johnson further
2
One commentator has explained that the lawyer disciplinary rules track with
these constitutional entitlements and “provide that in the criminal defense context, a
lawyer must abide by the client’s decisions about the plea to enter, whether to waive
jury trial, and whether to testify.” W. Bradley Wendel, Autonomy Isn’t Everything: Some
Cautionary Notes on McCoy v. Louisiana, 9 ST. MARY’S J. LEGAL MALPRACTICE & ETHICS
92, 98 (2018) (citing Model Rules of Prof’l Conduct r. 1.2(a) (Am. Bar Ass’n 2018)).
8
held that because a complete denial of the right to testify at trial is not a structural
defect but is the type of violation that can be subjected to a harm/prejudice inquiry,
“the usual Strickland prejudice analysis applies: the defendant must show a reasonable
probability that the outcome of the proceeding would have been different had his
attorney not precluded him from testifying.” Id. at 239.
Therefore, since Johnson, Texas law has required that a defendant’s complaint
that his right to testify was denied by his counsel be reviewed under an ineffective-
assistance-of-counsel framework, which requires a sufficient record to show both
deficient performance and prejudice. See Carballo v. State, 303 S.W.3d 742, 751 (Tex.
App.—Houston [1st Dist.] 2009, pet. ref’d) (citing Johnson in recognizing that “the
Court of Criminal Appeals has held that the Strickland ineffective assistance of counsel
test provides the appropriate framework for addressing an allegation that the
defendant’s right to testify was denied by his defense counsel”); Roberts v. State, No.
08-12-00112-CR, 2014 WL 1513122, at *3 (Tex. App.—El Paso Apr. 16, 2014, no
pet.) (not designated for publication) (“When a defense attorney prevents a defendant
from testifying on his own behalf, we use the Strickland framework to address the
allegation counsel was ineffective in allowing the defendant to exercise his right to
testify.”).
An appellate court may not infer ineffective assistance simply from an unclear
record or a record that does not show why counsel failed to do something. Menefield v.
State, 363 S.W.3d 591, 593 (Tex. Crim. App. 2012); Mata v. State, 226 S.W.3d 425, 432
9
(Tex. Crim. App. 2007). Trial counsel “should ordinarily be afforded an opportunity
to explain his actions before being denounced as ineffective.” Menefield, 363 S.W.3d at
593. If trial counsel did not have that opportunity, we should not conclude that
counsel performed deficiently unless the challenged conduct was “so outrageous that
no competent attorney would have engaged in it.” Nava v. State, 415 S.W.3d 289, 308
(Tex. Crim. App. 2013). Direct appeal is usually inadequate for raising an ineffective-
assistance-of-counsel claim because the record generally does not show counsel’s
reasons for any alleged deficient performance. See Menefield, 363 S.W.3d at 592–93;
Thompson v. State, 9 S.W.3d 808, 813–14 (Tex. Crim. App. 1999).
B. We need not decide whether McCoy or Turner establishes a new rule to
review an alleged denial of the right to testify.
Appellant contends a new standard applies to a claimed denial of the right to
testify because the court of criminal appeals disregarded the Strickland standard in
Turner v. State, No. AP-76,580, 2018 WL 5932241 (Tex. Crim. App. Nov. 14, 2018),
and thus overruled Johnson. Turner, he argues, adopted a standard derived from the
United States Supreme Court’s holding in McCoy. According to Appellant, the court
of criminal appeals now views a defendant’s failure to testify through the defendant-
autonomy prism of McCoy rather than the competence-of-counsel prism of Strickland
(and Johnson).3 We cannot agree.
3
The pivotal difference if Appellant is correct is that, unlike an ineffective-
assistance-of-counsel error under Johnson and Strickland, which is not considered a
structural error and thus also requires a showing of harm to be reversible, a client-
10
Last year in McCoy, the United State Supreme Court reversed the defendant’s
conviction for capital murder and remanded the case when the defendant’s counsel
conceded the defendant’s guilt against the defendant’s clear objections to the contrary.
138 S. Ct. at 1512. McCoy held that the Sixth Amendment guarantees to a defendant
“the right to insist that counsel refrain from admitting guilt, even when counsel’s
experience-based view is that confessing guilt offers the defendant the best chance to
avoid the death penalty.” Id. at 1505. McCoy further stated, “When a client expressly
asserts that the objective of ‘his defen[s]e’ is to maintain innocence of the charged
criminal acts, his lawyer must abide by that objective and may not override it by
conceding guilt.” Id. at 1509. McCoy explained that maintaining one’s innocence is an
objective of representation and not merely an issue of trial tactics, so it is a decision
reserved for the client, not the attorney. Id.
In Turner, the court of criminal appeals addressed a capital murder case with
“striking” similarities to McCoy. 2018 WL 5932241, at *20. The similarities were that
in both capital murder cases, the defendant’s trial counsel’s strategy was to concede
that the defendant had killed the victims and argue that because the defendant was
guilty of a lesser offense, he should not get the death penalty. Id.; see McCoy, 138 S. Ct.
at 1506. The record supported that the defendant objected to this strategy because he
autonomy error under McCoy and Turner would be considered structural, requiring no
showing of harm and resulting in automatic reversal and remand for a new trial. See
Turner, 2018 WL 5932241, at *21 (reversing and remanding for new trial when the
appellant both preserved and established his McCoy claim).
11
maintained that he was innocent and that he did not want to concede killing the
victims. Turner, 2018 WL 5932241, at *20; see McCoy, 138 S. Ct. at 1506. Therefore,
Turner concluded that structural error had occurred because McCoy controlled, the
appellant had preserved his McCoy claim, and McCoy was violated because the
appellant had made it known repeatedly on the record of his desire not to concede
that he had killed the victims but his counsel ignored his desire. 2018 WL 5932241, at
*20. The error required reversal and remand for new trial. Id. at *21.
We conclude that neither McCoy nor Turner has implicitly overruled Johnson, and
we see no implicit conflict between McCoy or Turner and Johnson.4
C. Analysis
But, in any event, we need not resolve a question of a conflict between McCoy
or Turner and Johnson in order to resolve this appeal. The record in McCoy and Turner
clearly established that counsel acted contrary to the client’s wishes. The same is not
true in this case. The record in our appeal does not tell us whether Appellant was
actually deprived of his right to testify and if he was persuaded not to testify, what
4
But even assuming arguendo that McCoy and Turner conflict with Johnson, they
still would not necessarily control. The instant case does not involve a defendant
who, during the guilt/innocence phase of a capital murder trial, wanted to maintain
his innocence and clearly objected to his counsel’s refusal to advance such a defense
by conceding that the defendant had actually committed the charged offense. Cf.
Turner, 2018 WL 5932241, at *21; McCoy, 138 S. Ct. at 1509. Here, the supposed
violation occurred during the punishment phase after Appellant had already entered a
guilty plea and conceded guilt and without any on-the-record objection from
Appellant. At this point, the court of criminal appeals has not applied the principles
of McCoy to the right to testify in a noncapital case or in the procedural context of the
instant case.
12
prompted his change of heart. If he were steadfast in his desire to testify, McCoy
might arguably apply. If he wavered in his desire to testify because of the advice of
his counsel, Strickland might continue to apply.
Here, unlike several other cases where an appellant waited until appeal to
express his or her desire to testify, there is some indication in our record that
Appellant initially wanted to testify.5 When asked sua sponte by the trial court,
Appellant stated that he wanted to testify. But there is also a follow-up discussion
that reflects that Appellant and his counsel were still discussing the issue. And after
that, the record is silent. The record we have to review does not establish the fact that
is essential to Appellant’s claim—that he wished to testify on his own behalf and was
prevented from doing so, or if talked out of doing so, the nature of the advice that
prompted his decision.
Numerous cases support our conclusion that a record silent on the question of
whether counsel’s actions frustrated a defendant’s desire to testify makes it impossible
to resolve Appellant’s claim on direct appeal, no matter the standard we apply. See
Salinas v. State, 163 S.W.3d 734, 741 (Tex. Crim. App. 2005) (“[A]ppellant’s assertions
5
See, e.g., Grumbles v. State, No. 05-13-00369-CR, 2014 WL 3907994, at *2 (Tex.
App.—Dallas Aug. 12, 2014, no pet.) (mem. op., not designated for publication)
(“Nor does the record contain . . . appellant’s complaint about not being called as a
witness, or a ruling from the trial court denying him his right to testify.”); Rice v. State,
No. 05-07-00704-CR, 2008 WL 3522243, at *3 (Tex. App.—Dallas Aug. 14, 2008, pet.
ref’d) (not designated for publication) (“[Appellant’s] outbursts in the courtroom do
not constitute testimony, and he never affirmatively stated he wished to take the stand
to testify.”).
13
in his brief on appeal, in the absence of anything in the trial record, are insufficient to
show that he asserted his right to testify and his attorney failed to protect it.”); Brown
v. State, No. 08-12-00026-CR, 2014 WL 172521, at *5 (Tex. App.—El Paso Jan. 15,
2014, pet. ref’d) (not designated for publication) (finding no deficient performance
when “Appellant did not provide any affirmative evidence that his lawyer refused to
let him testify”); Stovall v. State, No. 05-96-01371-CR, 1998 WL 484624, at *6 (Tex.
App.—Dallas Aug. 19, 1998, pet. ref’d) (refusing to find deficient performance when
the defendant did not testify after counsel initially told the jury that he would because
the “ambiguity of the conclusions to be drawn from the record” about the
defendant’s desire to testify required the reviewing court to engage in rank
speculation). Again, even if McCoy applied to the deprivation of the right to testify,
our record does not establish a deprivation of that right.
Moreover, the record is silent as to how the advice and actions of his counsel
impacted Appellant’s desire or ability to testify, i.e., whether it was part of an agreed
trial strategy, or a strategy pursued in disregard of Appellant’s wishes. With a silent
record and applying a Strickland standard, we can find ineffective assistance of counsel
only if the challenged conduct was “so outrageous that no competent attorney would
have engaged in it.” Goodspeed v. State, 187 S.W.3d 390, 392 (Tex. Crim. App. 2005).
The failure to call a defendant or any witness to testify during a punishment trial is not
on its face so outrageous that it represents deficient performance. See Brown, 2014 WL
172521, at *5. Accordingly, the deficient-performance prong of Appellant’s
14
ineffective-assistance-of-counsel claim cannot be sustained in this appeal’s posture.
See Esparza v. State, No. 08-12-00007-CR, 2014 WL 97301, at *7 (Tex. App.—El Paso
Jan. 10, 2014, no pet.) (not designated for publication) (“The record shows that
Appellant and his attorney spoke after the State rested its case, but based on the
record, we do not know what advice Appellant received from his attorney about his
right to testify. Moreover, there is nothing in the record demonstrating that Appellant
was not allowed to testify or that he wanted to testify.”); Stuckwisch v. State, No. 08-16-
00098-CR, 2017 WL 3725811, at *6 (Tex. App.—El Paso Aug. 30, 2017, no pet.) (not
designated for publication) (“[W]here the record is silent as to whether defense
counsel advised a defendant to testify or not, . . . a claim of ineffectiveness under this
theory has not been affirmatively demonstrated in the record and cannot be
sustained.”).
Assuming that the prejudice prong of Strickland applies, Appellant has also
failed to demonstrate the prejudice prong of his ineffective-assistance-of-counsel
claim because he presents no argument or citations to the record to support what he
would have testified about, or that had he testified, the outcome would have been
different. See Dukes v. State, 486 S.W.3d 170, 182 (Tex. App.—Houston [1st Dist.]
2016, no pet.) (op. on reh’g) (“[A] claim that trial counsel deprived the defendant of
his right to testify must be supported by evidence in the record that the defendant
would have testified, and of what the defendant would have said.”); Calderon v. State,
No. 03-15-00442-CR, 2016 WL 3144175, at *2 (Tex. App.—Austin June 2, 2016, no
15
pet.) (mem. op., not designated for publication) (overruling the appellant’s sole issue
that her right to testify was violated because “there is no indication in the record that
if counsel had questioned [the appellant] on the record regarding whether she was
waiving her right to testify, she would have decided to exercise that right”); see also
Carballo, 303 S.W.3d at 751 (rejecting similar ineffective-assistance claim because “it is
not possible to determine whether the result of the punishment proceeding would
have been different if defense counsel had questioned appellant regarding his version
of the events”).
Accordingly, we overrule Appellant’s first issue.
IV. CONSIDERING PAROLE IN JURY DELIBERATIONS
In his second issue, Appellant argues that the jury’s questions submitted to the
trial court demonstrate that the jurors improperly considered parole during their
deliberations. Although Appellant concedes that the trial court’s instruction was
“accurate with regard to how parole eligibility is charged,” he contends that the jury’s
questions demonstrated that they disregarded this instruction, so it was necessary for
the trial court not only to refer back to the charge but also to provide additional
“curative” instruction as well.
A. Applicable Law
A jury’s communications with the trial court are governed by article 36.27 of
the code of criminal procedure, and we review a trial court’s responses for an abuse of
discretion. See Tex. Code Crim. Proc. Ann. art. 36.27. Article 36.27 requires the trial
16
court to answer communications from the jury and to give additional instructions on
questions of law requested by the jury when the request is proper. Id. If the request is
not proper, the trial court should so inform the jurors by referring them to the court’s
charge. Id.; Gamblin v. State, 476 S.W.2d 18, 20 (Tex. Crim. App. 1972).
“Under Texas law, parole is not a proper topic for jury deliberation.” Colburn v.
State, 966 S.W.2d 511, 519 (Tex. Crim. App. 1998); see also Tex. Code Crim. Proc. Ann.
art. 37.07, § 4. And, while the court of criminal appeals has recognized that a jury
note regarding parole “suggests that jurors are ‘discussing’ and ‘considering’ parole,
. . . [n]ot every mention of parole . . . warrants a drastic remedy.” Colburn, 966 S.W.2d
at 519. Therefore, to show that a jury’s discussion of the parole law constitutes
reversible error, it must be shown that there was (1) a misstatement of the law,
(2) asserted as a fact, (3) by one professing to know the law, (4) which is relied upon
by other jurors, and (5) who for that reason changed their vote to a harsher
punishment. Id. at 519–20; Sneed v. State, 670 S.W.2d 262, 266 (Tex. Crim. App. 1984).
B. Analysis
As an initial matter, Appellant has failed to preserve this alleged error because
his trial counsel did not object when the trial court read the proposed response to the
jury’s note in open court and submitted the written response to the jury. See Diehl v.
State, No. 04-07-00608-CR, 2008 WL 2260833, at *2 (Tex. App.—San Antonio June
4, 2008, no pet.) (mem. op., not designated for publication) (“The record here does
not demonstrate that Diehl objected to the trial court’s answers to the jury questions;
17
therefore, he failed to preserve error.”); Saddler v. State, No. 01-95-00390-CR, 1996
WL 111845, at *4 (Tex. App.—Houston [1st Dist.] Mar. 14, 1996, pet. ref’d) (not
designated for publication) (“[A]n objection in the record or a bill of exception is
necessary to preserve error concerning the trial court’s communications with the jury
during its deliberation.” (citing Harris v. State, 736 S.W.2d 166, 166–67 (Tex. App.—
Houston [14th Dist.] 1987, no pet.))). Accordingly, nothing is presented for our
review. See Diehl, 2008 WL 2260833, at *2.
Assuming arguendo that the complaint was preserved, we must consider whether
the trial court erred. The jury note is some evidence that at some preliminary point in
their deliberations the jury may have improperly considered or discussed parole. See
Colburn, 966 S.W.2d at 519. We agree with the parties—including Appellant—that the
jury charge accurately instructed the jurors not to consider how parole law may apply
to Appellant. See Tex. Code Crim. Proc. Ann. art. 37.07, § 4. Therefore, the trial
court’s response that the jurors had all of the available law and evidence and to refer
back to the charge in continuing their deliberations was neither additional instruction
nor error. See Fuentes v. State, No. 02-15-00356-CR, 2016 WL 6277369, at *6–7 (Tex.
App.—Fort Worth Oct. 27, 2016, pet. ref’d) (mem. op., not designated for
publication) (holding no error when trial court informed the jury that it could not
respond to a question when the original charge had already correctly instructed the
jurors on their question); Reidweg v. State, 981 S.W.2d 399, 402 (Tex. App.—San
Antonio 1998, no pet.) (op. on reh’g) (explaining that a communication between the
18
trial court and jury that violates Article 36.27 but “does not constitute an additional
instruction by the court upon the law or some phase of the case . . . is not reversible
error”).
Moreover, it is a rebuttable presumption that the jurors follow the trial court’s
instructions in the manner presented. See Williams v. State, 937 S.W.2d 479, 490 (Tex.
Crim. App. 1996) (holding the jury is presumed to follow the court’s instructions as
given); Waldo v. State, 746 S.W.2d 750, 754 (Tex. Crim. App. 1988). At best for
Appellant, this record demonstrates that the jury had improperly considered parole at
some preliminary point in deliberations. But the trial court’s response referred the
jury to the trial court’s charge which had correctly instructed the jury not to consider
parole regarding Appellant, so Appellant was required to set forth evidence to rebut
the presumption that the jury followed the trial court’s instructions in response to the
note.
Appellant has pointed to no evidence to rebut the presumption that the jury
followed the trial court’s instruction by reviewing the charge and continuing their
deliberations without considering how parole law may apply to Appellant. Indeed,
Appellant did not file a motion for new trial alleging juror misconduct or obtain a
hearing to adduce facts not in the record. See Colburn, 966 S.W.2d at 520.
Accordingly, we overrule Appellant’s second issue.
19
V. CONCLUSION
Having overruled Appellant’s two issues, we affirm the trial court’s judgment.
/s/ Dabney Bassel
Dabney Bassel
Justice
Do Not Publish
Tex. R. App. P. 47.2(b)
Delivered: March 7, 2019
20
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741 N.W.2d 240 (2007)
RILEY
v.
GIOMBI.
No. 2006AP0801.
Supreme Court of Wisconsin.
August 14, 2007.
Petition for review denied.
(BUTLER, J., did not participate)
| {
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FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT December 10, 2012
Elisabeth A. Shumaker
Clerk of Court
CHARLES NII AMARTEY,
Petitioner,
v. No. 12-9539
(Petition for Review)
ERIC H. HOLDER, JR., United States
Attorney General,
Respondent.
ORDER AND JUDGMENT*
Before GORSUCH, ANDERSON, and EBEL, Circuit Judges.
Charles Nii Amartey petitions for review of an order of the Board of
Immigration Appeals (BIA or Board), which denied his application for special-rule
cancellation of removal under 8 U.S.C. § 1229b(b)(2) because he failed to
*
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
demonstrate that removal would result in extreme hardship to him. Exercising
jurisdiction under 8 U.S.C. § 1252(a), we deny the petition for review.
Background
Amartey is a native and citizen of Ghana who entered the United States on
May 26, 2003, on a nonimmigrant visitor visa. Rather than exiting the country before
the expiration of his authorized six-month stay, he married a United States Citizen
and remained in the United States. In April 2004, Amartey’s wife filed a visa
petition on his behalf, and he applied to adjust his status to lawful permanent
resident. After interviewing Amartey and his wife, Citizenship and Immigration
Services (“CIS”) suspected that their marriage was fraudulent and referred the matter
for further investigation. Amartey’s wife subsequently withdrew the visa petition,
acknowledging that the purpose of the marriage was so that Amartey could obtain
United States citizenship. CIS ultimately denied the visa petition and adjustment
application in May 2008, on the basis that the marriage was fraudulent.
The Department of Homeland Security (“DHS”) served Amartey with a notice
to appear on June 27, 2008, charging him with removability on two grounds: (1) as
an alien who entered the United States on a nonimmigrant visa and remained longer
than permitted, see 8 U.S.C. § 1227(a)(1)(B); and (2) as an alien who sought to
procure a benefit under the Immigration and Nationality Act (“INA”) by fraud or
willful misrepresentation of a material fact, see id. § 1227(a)(1)(A); 8 U.S.C.
§ 1182(a)(6)(C)(i). At a hearing before an immigration judge (“IJ”), Amartey
-2-
conceded removability on the overstay charge but denied the fraud charge. He also
applied for special-rule cancellation of removal under 8 U.S.C. § 1229b(b)(2),
claiming that he was the battered spouse of a United States citizen.
IJ’s Decision
The IJ found Amartey removable as charged and denied his application for
relief, observing that “this is one of the more significant cases of marriage fraud that
the Court has seen.” Admin. R. at 27. He also found that Amartey was not a credible
witness. But because the BIA or this court might disagree with his credibility
assessment, the IJ proceeded to make findings on the statutory requirements for
special-rule cancellation of removal.
As relevant to this case, § 1229b(b)(2) authorizes the Attorney General, in his
discretion, to cancel the removal of an alien who demonstrates that (1) he has been
battered or subjected to extreme cruelty by a United States citizen spouse; (2) he has
been physically present in the United States for a continuous period of at least three
years before filing his application; (3) he has been a person of good moral character
during that period; (4) he is not inadmissible or deportable under specified sections of
the INA; and (5) “the removal would result in extreme hardship to the alien.”
8 U.S.C. § 1229b(b)(2)(A)(i)-(v). The IJ determined that Amartey failed to establish
that he had been the victim of battery or extreme cruelty. But even assuming that he
had satisfied that requirement, the IJ found that he failed to demonstrate that his
removal would result in extreme hardship to him. Finally, the IJ indicated that he
-3-
would ultimately deny Amartey’s application in the exercise of discretion. The IJ
therefore denied Amartey’s application for special-rule cancellation of removal and
ordered him removed.
BIA’s Decision
Amartey appealed the IJ’s removal order to the BIA. He argued that the IJ
erred in allowing DHS to present evidence regarding its charge of marriage fraud
because DHS failed to disclose the evidence to Amartey before the hearing. The BIA
first affirmed the IJ’s conclusion that Amartey was removable under § 1227(a)(1)(B),
because he failed to contest the charge that he overstayed his nonimmigrant visa.
The Board explicitly did not address or affirm the IJ’s alternative conclusion that
Amartey was removable under § 1227(a)(1)(A), based on a fraudulent marriage. As
to that charge, the BIA stated: “While we have concerns about the DHS’s litigation
strategy with regard to its endeavor to prove marriage fraud, we are unable to
conclude that the respondent has suffered any prejudice as a result of the DHS’s
actions, since we are not reaching any marriage fraud issues.” Admin. R. at 3 n.1.
The BIA next affirmed the IJ’s determination that Amartey failed to
demonstrate that his removal to Ghana would result in extreme hardship to himself,
as required by § 1229b(b)(2)(A)(v). The Board cited the following factors, which the
IJ had also relied on, as supporting its decision: Amartey’s short stay in the United
States; the lack of evidence that he had a health condition that would be adversely
affected by his removal to Ghana; the absence of any risk that his former spouse
-4-
would travel to Ghana to harm him; and Amartey’s educational background and
employment history in Ghana. The BIA noted that Amartey had not asserted that any
of the IJ’s findings were clearly erroneous. It also concluded that any ridicule
Amartey may suffer in Ghana based on his being a victim of domestic violence did
not amount to an extreme form of hardship. After reiterating that it was not
“considering or affirming any of the [IJ’s] determinations relating to marriage fraud,”
the Board found “that the record supports the [IJ’s] conclusion relating to the
respondent’s failure to establish extreme hardship.” Admin. R. at 4. Finally, the BIA
also explicitly stated that it would “not address the issues of credibility, battery,
extreme cruelty, or discretion.” Id.
The BIA therefore dismissed Amartey’s appeal and ordered him removed to
Ghana. Amartey filed a timely petition for review of the Board’s decision.
Discussion
Amartey contends that the IJ violated his due process rights by allowing DHS
to present certain witnesses and evidence during the hearing, and that the BIA erred
in concluding that he did not suffer any prejudice as a result of DHS’s litigation
strategy. More specifically, Amartey contends that, without the improperly admitted
evidence, the IJ may have found him credible and may have relied on his testimony
to determine that he was statutorily eligible for special-rule cancellation of removal
under § 1229b(b)(2). And because the BIA affirmed the IJ’s determination under that
section, Amartey argues that the IJ’s due process violation therefore prejudiced him.
-5-
Because a single member of the BIA affirmed the IJ’s decision in a brief order,
see 8 C.F.R. § 1003.1(e)(5), we review the BIA’s opinion rather than the decision of
the IJ, see Uanreroro v. Gonzales, 443 F.3d 1197, 1204 (10th Cir. 2006). We review
the agency’s factual findings for substantial evidence and its legal determinations de
novo. Lockett v. INS, 245 F.3d 1126, 1128 (10th Cir. 2001). We have jurisdiction to
review the BIA’s discretionary determination regarding extreme hardship under
§ 1229b(b)(2)(A)(v) only to the extent that Amartey raises a constitutional claim or a
question of law. See Morales Ventura v. Ashcroft, 348 F.3d 1259, 1262 (10th Cir.
2003) (holding hardship determination is discretionary decision unreviewable under
8 U.S.C. § 1252(a)(2)(B)(i)); Arambula-Medina v. Holder, 572 F.3d 824, 828
(10th Cir. 2009) (holding court has jurisdiction to review constitutional claims and
questions of law with respect to extreme hardship issue under 8 U.S.C.
§ 1252(a)(2)(D)).
Amartey’s contentions of error are unavailing. He asserts that the IJ violated
his due process rights by considering DHS’s evidence of marriage fraud, and he
claims that the BIA “erred in affirming the IJ’s improper application of legal
standards.” Pet. Br. at 7. But the BIA did not consider or affirm the IJ’s decision to
admit DHS’s evidence. Rather, the Board found that Amartey was removable on the
alternative charge that he overstayed his nonimmigrant visa, a point that he conceded.
The BIA thereafter expressly declined to address any issue related to the IJ’s
-6-
marriage fraud determination, including Amartey’s contention that the IJ violated his
due process rights with respect to that issue.
Amartey argues that the BIA nonetheless erred in concluding that he was not
prejudiced by DHS’s litigation strategy on the marriage fraud issue. He claims that
the IJ relied on the improperly admitted evidence in making his adverse credibility
finding, which in turn affected the IJ’s determination regarding his eligibility for
discretionary relief under § 1229b(b)(2). But the BIA affirmed the IJ’s denial of
relief solely on the basis of Amartey’s failure to demonstrate the requisite hardship
under § 1229b(b)(2)(A)(v). He fails to show that the IJ’s credibility finding or the
evidence he claims was improperly admitted by the IJ played any role in the Board’s
decision. The BIA expressly declined to address the issue of Amartey’s credibility.
Thus, it did not reject Amartey’s evidence of hardship as not credible. To the
contrary, the Board carefully considered the evidence he presented, but concluded
that it was insufficient “to establish that he would suffer hardship that is substantially
different from, or beyond, that which would normally be expected from the removal
of an alien from the United States.” Admin. R. at 4.
-7-
Conclusion
Amartey conceded removability based on overstaying his nonimmigrant visa.
And he has not raised a meritorious constitutional claim or a question of law with
respect to the BIA’s determination that he failed to establish that his removal would
result in extreme hardship. The petition for review is therefore DENIED.
Entered for the Court
David M. Ebel
Circuit Judge
-8-
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Filed 8/2/16 P. v. Delgado CA3
NOT TO BE PUBLISHED
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Shasta)
----
THE PEOPLE,
Plaintiff and Respondent, C079467
v. (Super. Ct. No. 11F5625)
MINDY MARIE DELGADO,
Defendant and Appellant.
Defendant Mindy Marie Delgado appeals from the trial court’s denial of her
petition for resentencing pursuant to Penal Code section 1170.18.1 She contends her
conviction for second degree burglary (§ 459) was eligible for resentencing because her
criminal activity constituted the newly enacted crime of shoplifting (§ 459.5). We
conclude defendant established eligibility to resentencing for her second degree burglary
1 Undesignated statutory references are to the Penal Code.
1
conviction. Accordingly, we reverse the trial court’s order declining to find eligibility
and remand for additional proceedings.2
BACKGROUND
Since the police report was the factual basis for defendant’s no contest plea, we
take the facts of her crime from a summary of the police report found in the probation
report.
On March 24, 2011, Sierra Central Credit Union in Redding notified Ronald
Eakins it had refused to honor a check for $350 issued from his account and tendered by
a Joseph Callejas because the signature did not match the one on file for Eakins. Eakins
reviewed his checks and found two were missing. He visited the bank where he learned
the second missing check, in the amount of $250, had been cashed by defendant. A
surveillance photograph showed defendant cashing the check.
Defendant was charged with second degree burglary, forgery (§ 475, subd. (c)),
and identity theft (§ 530.5), along with two strike allegations. She pleaded no contest to
second degree burglary. The trial court suspended imposition of sentence and granted her
three years’ formal probation. After defendant subsequently admitted violating
probation, the trial court sentenced defendant to serve an eight-month state prison term,
to be served consecutive to a four-year term in an unrelated case.
Defendant subsequently filed a section 1170.18 petition seeking resentencing on
her burglary conviction. The trial court denied the petition, finding the crime was
ineligible for resentencing.
2 In light of our conclusion and remand to the trial court, we do not need to decide
defendant’s claim that the trial court did not make an adequate record for meaningful
appellate review.
2
DISCUSSION
Defendant contends her second degree burglary conviction is eligible for
resentencing because her criminal conduct constitutes the crime of shoplifting. The
Attorney General asserts defendant had an intent to commit identity theft, which
disqualifies her from resentencing. In the alternative, the Attorney General asks this
court to find the definition of larceny in section 459.5 should be constrained by the use of
the term “shoplifting” in defining that offense. We are not persuaded and decline to limit
the definition of larceny in section 459.5 to the common understanding of shoplifting.
We conclude defendant established eligibility to resentencing for her second degree
burglary conviction.
The passage of Proposition 47 (as approved by voters, Gen. Elec. (Nov. 4, 2014,
eff. Nov. 5, 2014) created section 1170.18, which provides for any defendant “currently
serving a sentence for a conviction . . . of a felony or felonies who would have been
guilty of a misdemeanor under [Proposition 47] had [it] been in effect at the time
of the offense [to] petition for a recall of sentence before the trial court that entered
the judgment of conviction in his or her case to request resentencing . . .” under the
statutory framework as amended by the passage of Proposition 47. (§ 1170.18,
subd. (a); see Voter Information Guide, Gen. Elec. (Nov. 4, 2014) text of Prop. 47, § 14,
pp. 73-74.)
Proposition 47 added section 459.5, which establishes the offense of shoplifting, a
misdemeanor, defined as “entering a commercial establishment with intent to commit
larceny while that establishment is open during regular business hours, where the value of
the property that is taken or intended to be taken does not exceed nine hundred fifty
dollars ($950).” (§ 459.5, subd. (a); People v. Rivera (2015) 233 Cal.App.4th 1085,
1091.) Larceny or theft (§ 490) is defined very broadly. Section 490a replaced statutory
references to “larceny” with “theft.” Section 484, subdivision (a), defines theft to include
3
“knowingly and designedly, by any false or fraudulent representation or pretense, defraud
any other person of money.” This definition is broad and encompasses fraudulent
presentation of a check belonging to someone else to obtain money.
We ascertain the defendant’s criminal conduct from the record of conviction.
(See People v. Bradford (2014) 227 Cal.App.4th 1322, 1338 [as to Prop. 36 and
§ 1170.126, court must determine “petitioner’s eligibility for resentencing based on the
record of conviction”].) Since defendant stipulated to the police report as the factual
basis for her plea, the record includes the summary of the police report found in the
probation report. The complaint in her case is also part of the record of conviction.
(People v. Saez (2015) 237 Cal.App.4th 1177, 1196; People v. Henley (1999)
72 Cal.App.4th 555, 560.)
The burglary count alleged defendant entered the bank “with the intent to commit
larceny and any felony,” but added no other factual allegations. The remaining counts
alleged other facts; the forgery count alleged defendant forged “check # 1674 in the
amount of $250.00,” and the identity theft count alleged defendant used the personal
identifying information of Ronald Eakins to obtain credit, goods, or services in his name
without his consent.
The facts summarized in the police report show defendant forged Eakins’s name
on the check stolen from him in order to defraud the bank in the amount of $250.00.
Here, there is no dispute the amount of the check did not exceed $950.00. Thus,
defendant’s act of passing a bad check qualifies as theft under section 484, subdivision
(a), and thus as shoplifting under section 459.5.
DISPOSITION
The trial court’s order concluding defendant’s conviction for second degree
burglary is ineligible for resentencing under Proposition 47 is reversed and the matter is
4
remanded to the trial court for consideration of whether to resentence defendant under the
remaining provisions of Penal Code section 1170.18.
/s/
HOCH, J.
We concur:
/s/
HULL, Acting P. J.
/s/
RENNER, J.
5
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451 Pa. Superior Ct. 459 (1996)
679 A.2d 1313
Christopher RYAN and Sean Drea
v.
Robert GORDON, Appellant.
Superior Court of Pennsylvania.
Argued May 2, 1996.
Filed July 26, 1996.
*460 Robert K. Gordon, Pro Se, appellant.
Eric J. Pritchard, Philadelphia, for Christopher Ryan, appellee.
Paul J. Downey, Philadelphia, for Sean Drea, appellee.
Before CIRILLO, Presiding Judge Emeritus, DEL SOLE, J. and CERCONE, P.J.E.
*461 CERCONE, President Judge Emeritus:
This is an appeal from the order entered by the Court of Common Pleas of Philadelphia County. We quash the appeal.
This case originated as a dispute over funds allegedly held in an escrow account. Appellees Christopher Ryan and Sean Drea (lessors) purchased property located at 602 North 21st Street, Philadelphia, Pennsylvania. On August 2, 1990, Robert Gordon leased the premises from lessors for nine hundred dollars ($900.00) per month. On January 30, 1991, Prudential Home Mortgage Company, Inc. (Prudential) commenced a mortgage foreclosure action against lessors. On March 27, 1991, counsel for Prudential notified Gordon by letter that lessors had defaulted on the note and mortgage to the property. The notice requested Gordon to forward all future rent payments to Prudential. At that time, Gordon notified lessor Ryan that he would place future rent payments in a separate bank account pending a determination of the rightful payees of the rent. Gordon placed money in a separate account from May 1991 through October or November 1992.
On September 23, 1992, Prudential purchased the property at a foreclosure sale. In September or October 1992, lessors demanded payment of the escrowed funds representing rent owed from May 1991 through September 23, 1992. Gordon moved out of the premises in October or November of 1992 and withdrew the funds contained in the escrow account. Gordon did not forward these funds to lessors. In November 1993, the United States District Court for the Eastern District of Pennsylvania entered an order in Prudential's foreclosure action which directed that lessor Ryan's obligation to Prudential be marked as satisfied, released and discharged. A similar order as to lessor Drea was entered in February 1994.
In March 1994, lessors filed a complaint seeking fifteen thousand, one hundred dollars ($15,100.00), such sum reflecting the rental payments allegedly due them from April 1, 1991 through September 23, 1992, minus Gordon's security deposit of nine hundred dollars ($900). The matter proceeded to arbitration. On November 30, 1994, the arbitrators found in *462 favor of lessors and against Gordon in the amount of $15,100. Gordon appealed the award of the arbitrators to the court of common pleas. At the request of Settlement Master Howard Chambers, the parties briefed the legal issues to be presented to the trial court. On September 28, 1995, the trial court ordered that judgment be entered in favor of the lessors and against Gordon in the amount of $15,100. Thereafter, Gordon filed the instant appeal.
Gordon raises three issues for our review:
I. THE LOWER COURT'S RELIANCE ON THE APPELLEES' STATEMENTS CONCERNING FACTUAL STIPULATIONS RESULTED IN THE DENIAL OF THE APPELLANT'S DUE PROCESS RIGHTS AND THE ENTRY OF A FUNDAMENTALLY DEFECTIVE JUDGMENT.
II. PRUDENTIAL'S SERVICE OF THE DEMAND-FOR-RENTS LETTER UPON THE APPELLANT WAS SUFFICIENT AS A MATTER OF LAW TO CONFER UPON PRUDENTIAL THE RIGHT TO RECEIVE THE RENTS AND TO DIVEST THE APPELLEES OF THAT RIGHT.
III. THE EXTINGUISHMENT OF THE LENDER'S RIGHT TO PURSUE THE DEBTORS FURTHER NEITHER REVERSED THE ASSIGNMENT-OF-RENTS NOR RESTORED THE DEBTORS' RIGHT TO THE RENTS.
Before addressing these issues, however, we must first ascertain whether appellant Gordon properly preserved them in the court below.
In connection with the instant appeal, lessors have filed a motion to quash arguing that: (1) Gordon failed to object to any of the facts contained in their memorandum of law presented to the trial court; and (2) Gordon failed to file post-trial motions. Thereafter, this court issued a rule to show cause as to whether this matter satisfies the requirements of submission to the trial court on a case stated basis or whether the matter constitutes a non-jury trial based upon a stipulation *463 of the facts. In his response to the rule to show cause, Gordon contends that the disposition of this matter was neither a "trial without a jury upon a stipulation of facts" nor a submission of the case on a "case stated" basis. Gordon contends that the disposition should be considered more in the nature of a summary judgment, which does not require the filing of post-trial motions pursuant to Pennsylvania Rule of Civil Procedure 227.1(c).[1]
Gordon's attempt to characterize the underlying proceedings as entry of summary judgment is a somewhat creative effort to avoid quashal of the action for failing to preserve his allegations of error for appellate review. If the trial court's adjudication constituted either a trial without a jury upon stipulated facts, or submission of agreed upon facts for entry of judgment by the lower court (i.e., a "case stated"), Gordon's appeal must be quashed.
"It is well settled that where there is a trial without a jury upon stipulated facts submitted for the decision of the court, a party must file post-trial motions to preserve any right of appeal." Baughman v. State Farm Mutual Automobile Ins. Co., 441 Pa.Super. 83, 86, 656 A.2d 931, 932 (1995) (citing Miller v. Kramer, 424 Pa.Super. 48, 49-51, 621 A.2d 1033, 1034 (1993); and McCormick v. Northeastern Bank, 522 Pa. 251, 254, 561 A.2d 328, 330 (1989)). To preserve the right to appeal from a judgment entered upon a case stated, the statement of facts must contain a clause reserving the right to appeal. Penn v. Nationwide Ins. Co., 363 Pa.Super. 13, 15, 525 A.2d 400, 401 (1987); Wertz v. Anderson, 352 Pa.Super. 572, 577, 508 A.2d 1218, 1220 (1986). Here, Gordon neither filed post-trial motions, nor does his statement of facts contain a clause reserving the right to appeal. Under either scenario, *464 Gordon has not preserved his allegations of error for appellate review.
The trial court's adjudication contains elements resembling both a trial without a jury upon stipulated facts, and judgment upon a case stated. Because the procedure does not exactly match either scenario, Gordon argues that this court must consider the adjudication the entry of summary judgment. Unfortunately, the record does not reflect the filing of a motion for summary judgment by either party. Gordon cites no cases which recognize the trial court's grant of summary judgment on its own motion. Because the trial court had no motion for summary judgment before it, we cannot consider its adjudication the grant of summary judgment. See Pa.R.C.P., No. 1035(a), 42 Pa.C.S.A. ("After the pleadings are closed, but within such time as not to delay trial, any party may move for summary judgment....").[2]
Proceedings representing a hybrid between adjudication upon a case stated and a non-jury trial upon stipulated facts are not unheard of in this Commonwealth. See Baughman v. State Farm Mut. Auto. Ins. Co., supra (although trial court's order is captioned "Judgment" and parties agreed to facts, the proceeding more closely resembled non-jury trial *465 based upon stipulated facts); Penn v. Nationwide Ins. Co., supra ("[w]hether the instant action qualifies as a case submitted upon a stipulation of facts or as a case-stated is not clear"); Wertz v. Anderson, supra (Superior Court recognizes that underlying action contained some of the characteristics of a case stated). In the instant case, it makes no difference whether the underlying proceedings constituted a case stated or a non-jury trial based upon stipulated facts. If the proceedings constituted a final judgment entered on a case stated, Gordon failed to properly preserve his right to appeal in the statement of facts. Penn v. Nationwide Ins. Co., 363 Pa.Super. at 15, 525 A.2d at 400; Wertz v. Anderson, 352 Pa.Super. at 577, 508 A.2d at 1220. In the alternative, if the proceedings constituted a non-jury trial upon stipulated facts, Gordon failed to file post-trial motions as required by Pa.R.C.P. 227.1. Baughman v. State Farm Mutual Automobile Ins. Co., 441 Pa.Super. at 86, 656 A.2d at 931. Because Gordon failed to properly preserve any issues for appellate review, we must grant lessors' motion to quash the appeal.
The appeal is quashed.
NOTES
[1] Rule 227.1 of the Pennsylvania Rules of Civil Procedure provides, in pertinent part:
(c) Post-Trial motions shall be filed within ten days after
* * * * * *
(2) notice of nonsuit or the filing of the decision or adjudication in the case of a trial without a jury or an equity trial.
Pa.R.C.P., No. 227.1(c)(2).
[2] Contrary to Gordon's assertions, we note that all parties agreed that there was no dispute as to the pertinent facts underlying the cause of action. Memorandum of Law of Plaintiffs Christopher Ryan and Sean Drea, page 1; Memorandum of Law In Connection With Settlement Conference of Robert Gordon, at 1, 2. The affidavit of Howard Chambers, Esquire, the settlement master, likewise reflects no dispute regarding the facts underlying the cause of action:
4. During the [settlement] conference, counsel agreed that there were no pertinent factual issues in dispute. Accordingly, I informed counsel that the matter would be adjudicated by non-jury trial based upon stipulated facts. I then directed the parties to submit briefs in connection with the non-jury trial for consideration by the court no later than May 2, 1995. The parties agreed to do so.
5. On or about May 2, 1995, I received briefs from the the parties which I reviewed. After reviewing the briefs, I forwarded the briefs to the Honorable Albert F. Sabo, Court of Common Pleas, Philadelphia County, for entry of a decision based upon the parties stipulated facts.
Affidavit of Howard Chambers, Esquire, filed in Superior Court on April 3, 1996 (emphasis added).
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657 F.2d 263
Green Mountain Grange No. Onev.Goldschmidt
80-6353
UNITED STATES COURT OF APPEALS Second Circuit
3/10/81
1
D.Vt.
AFFIRMED
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J-A30018-14
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
CHARLES ENGELHARDT
Appellant No. 2040 EDA 2013
Appeal from the Judgment of Sentence June 12, 2013
In the Court of Common Pleas of Philadelphia County
Criminal Division at No(s): CP-51-CR-0003525-2011
BEFORE: LAZARUS, J., MUNDY, J., and PLATT, J.*
MEMORANDUM BY MUNDY, J.: FILED MARCH 25, 2015
Appellant, Charles Engelhardt, appeals from the June 12, 2013
aggregate judgment of sentence of six to 12 years’ imprisonment, plus five
years’ probation, imposed after he was found guilty of one count each of
endangering the welfare of a child (EWOC), corruption of minors, and
indecent assault.1 After careful review, we affirm.
The trial court summarized the relevant factual and procedural history
of this case as follows.
The victim’s parents, J.G. (hereinafter “Father”) and
S.G. (hereinafter “Mother”) married in 1981 and had
two sons, J.G., Jr. (hereinafter “Brother”) and the
____________________________________________
*
Retired Senior Judge assigned to the Superior Court.
1
18 Pa.C.S.A. §§ 4304(a)(1), 6301(a)(1)(i) and 3126(a)(7), respectively.
J-A30018-14
victim “D.G.” The victim and his family resided in
the northeast section of Philadelphia. Father was a
Philadelphia [p]olice [s]ergeant, and Mother was a
nurse. As both of D.G.’s parents had attended
Catholic school and wanted to provide their sons with
a similar education, they enrolled D.G. and Brother
at St. Jerome’s School, the Archdiocese parochial
school located within walking distance of their home.
D.G. began attending St. Jerome’s School in
kindergarten. Physically, D.G. was small for his age.
Despite this, D.G. was very active in school sports
and he participated in many extra-curricular
activities at St. Jerome’s, including serving as altar
boy. [Mother] recalled that [D.G.] was an active and
rambunctious young boy. D.G.’s classmate and
fellow altar boy, [J.S.P]., remembered D.G. as a
“happy kid [who] was always joking.”
When D.G. was in seventh and eighth grades
at St. Jerome’s, however, some of his friends noticed
a marked change in D.G.’s demeanor. According to
[J.S.P.], D.G. became “real dark,” and secluded
himself from everybody. Another friend, [R.B.],
confirmed this change in D.G.’s personality,
testifying that D.G. became a “loner” and “did not
talk to too many people.” During this same time
period, D.G. complained of testicular pain. D.G. was
examined by a pediatrician and a urologist but the
cause of the pain was never determined. According
to Mother, around this time D.G.’s appetite
diminished and he lost weight.
After graduating from St. Jerome’s, D.G.
attended Archbishop Ryan High School where his
behavior quickly spiraled out of control, and he
became a heavy drug abuser. D.G. was expelled
from Archbishop Ryan for possession of drugs and
weapons. After his expulsion, D.G. attended the
International Christian High School where he became
good friends with fellow student [L.H.]. Early in their
friendship, D.G. and [L.H.] were socializing in D.G.’s
basement when D.G. confided that two priests and a
teacher had sex with him when he was in the 5th
-2-
J-A30018-14
and 6th grades. [L.H.] was stunned by this
revelation, but D.G. did not want to discuss further
details of the incident at that time.
[L.H.] testified that D.G. again confided in him
about being the victim of sexual abuse during a
conversation they were having about a teacher at
the International Christian High School whom neither
he nor D.G. liked because the teacher was “really
touchy, feely” and because of “weird vibes that came
from him all the time, weird sexual-type vibes.”
D.G. and [L.H.] were in a classroom at school when
the teacher exhibited what they deemed “creepy”
behavior. On this occasion, D.G. again mentioned
the abuse to [L.H.].
D.G.’s high school years were a nightmare for
D.G. and his parents. According to Mother, D.G. cut
his wrists, drew images of a gun to his head, and
wrote suicide notes. He obtained psychiatric help at
the Horsham Clinic, but the treatment did not help
and “things continued to get worse and worse.”
D.G.’s substance abuse worsened as he continued to
use drugs including marijuana, Percocet, Oxycontin,
LSD, and ultimately became a “full blown heroin
addict.” Over the years, D.G. was treated at over
twenty drug rehabilitation clinics. During this same
time period D.G. was arrested several times for
offenses including retail theft and possession of drug
paraphernalia. D.G.’s most recent arrest for
possession of heroin occurred in November 2011.
D.G.’s parents could not understand the
complete change in their son’s behavior and
personality and they were concerned that serious
issues were at the root of the problem. Mother and
Father pleaded with D.G. to open up to them but
D.G. refused. When D.G. was eighteen or nineteen
years old, however, he suddenly confessed to his
parents that a priest had sexually abused him. After
that revelation, D.G. immediately “shut down” again
and refused to discuss it further with his parents. It
was apparent to Mother and Father that D.G. was
not ready or willing to reveal his entire story. Out of
-3-
J-A30018-14
concern for D.G.’s fragile and agitated state, and
fearing that he would disappear and overdose on
drugs, Mother and Father decided not to report this
revelation to the police.
The underlying issues driving D.G.’s self-
destructive behavior finally began to emerge in detail
in January 2009, when D.G. was approximately 20
years old. While undergoing treatment for his heroin
addiction at a drug rehabilitation facility, D.G. broke
down during a group therapy session and revealed to
his drug counselor that he had been sexually abused
while a young student at St. Jerome’s. On January
30, 2009, with the support of his counselor, D.G.
called the Philadelphia Archdiocese hotline to
officially report the abuse. Later that day, D.G.
spoke with Louise Hagner, the victim assistance
coordinator for the Archdiocese. Hagner’s duties
included receiving reports from victims alleging
sexual abuse and providing services to the victims.
The initial phone call D.G. made to Hagner ultimately
led to investigations by the Philadelphia District
Attorney’s Office and a Grand Jury investigation.
These investigations brought to light the details of
the sexual abuse of D.G. at the hands of Appellant
and Edward Avery, both priests at St. Jerome’s and
Bernard Shero, a lay teacher at St. Jerome’s. All
three men were indicted and warrants were issued
for their arrests.
D.G.’s accounts of the sexual abuse committed
by Appellant varied at different stages of the
investigations. A large portion of the jury trial
consisted of the defense presenting witnesses and
evidence highlighting the inconsistencies and
generally attacking D.G.’s credibility. The
prosecution provided evidence and witnesses to
account for the inconsistencies and corroborate
D.G.’s allegations. The jury, as fact-finders [sic],
ultimately made a credibility determination in favor
of D.G. and found Appellant guilty. The following
description of Appellant’s sexual abuse of D.G.
reflects the consistent [evidence presented and]
-4-
J-A30018-14
sworn testimony of D.G. before the Grand Jury and
during the jury trial.
Appellant, a member of the Order of the
Oblates of St. Francis de Sales, was assigned to
serve as a priest at St. Jerome’s Parish and was
serving there when D.G. was in fifth grade. One of
Appellant’s responsibilities included presiding over
weekday morning masses. During the winter of
1998-1999, while D.G. was in fifth grade, D.G.
assisted Appellant and other priests as an altar boy.
D.G.’s responsibilities as an altar boy included
setting up for the mass, assisting the priests during
the mass, and cleaning up afterwards. One morning
that winter while D.G. was cleaning up after a mass
conducted by Appellant, Appellant caught D.G.
drinking the wine left over from the mass. Appellant
scolded D.G and commanded him to return to the
sacristy, a small room adjoining the church altar.
Once they were seated in the sacristy, Appellant
poured himself the remaining wine, offered some to
D.G., and asked if he had “ever looked at porno,” or
if he was sexually interested in boys or girls.
Appellant removed pornographic magazines from a
briefcase and began to show the pictures to D.G. as
he touched and rubbed D.G.’s back. Appellant told
D.G. that he wanted D.G. to “become a man.”
Appellant ended the encounter by telling D.G. that
they would see each other again and his “sessions
are going to begin soon.”
Approximately 1½ to 2 weeks later, D.G. again
served the early morning [m]ass with Appellant.
After the [m]ass, Appellant asked D.G. to stay
behind in the sacristy and told him that his
“sessions” were going to begin. According to D.G.
everyone else who had served that [m]ass had left
by that point. Appellant and D.G. sat down in the
same chairs in the sacristy as in their first encounter.
D.G. was wearing his school uniform and Appellant
was wearing black clothing and his priest collar.
Appellant told D.G., “[i]t’s time for [you] to
become a man,” and began rubbing and caressing
-5-
J-A30018-14
D.G.’s back and leg while assuring D.G. that “God
loves [him] and everything is going to be okay. This
is what God wants.” He told D.G. to get undressed
and D.G. complied. Appellant then took off his
clothes. According to D.G., Appellant began to
masturbate D.G.’s penis and then performed oral
sex. D.G. acknowledged having a “slight erection”
but “did not ejaculate.” Appellant then told D.G. to
perform oral sex on him. D.G. complied and
Appellant ejaculated on the floor. At this point
Appellant told D.G. that he “did a good job” and he
was “dismissed.” Following this encounter, D.G.
walked home but did not tell anyone what had
happened. D.G. felt scared, embarrassed, and did
not want to get in trouble; he thought he had done
something wrong.
D.G. saw Appellant about a week later at which
time Appellant told him that they were “getting
ready for another session.” D.G. testified that he
told Appellant that “[i]f he came near me again, I
would kill him.” Following this conversation,
Appellant never talked to D.G. again about
“sessions.” From that point forward D.G. tried to
avoid serving mass with [] Appellant by switching his
[m]ass assignments with other altar servers.
Trial Court Opinion, 12/17/13, at 2-6 (footnotes and citations omitted).
On April 12, 2011, the Commonwealth filed an information, charging
Appellant with the above mentioned offenses, as well as one count each of
rape of a child, involuntary deviate sexual intercourse (IDSI), aggravated
indecent assault, as well as four counts of criminal conspiracy.2 On January
14, 2013, Appellant proceeded to a lengthy, joint jury trial with Bernard
____________________________________________
2
18 Pa.C.S.A. §§ 3121(c), 3123(b), 3125(a)(7), and 903(c), respectively.
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Shero.3 At the conclusion of the trial on January 30, 2013, the jury found
Appellant guilty of one count each of EWOC, corruption of minors, indecent
assault, and four counts of criminal conspiracy. The jury was deadlocked as
to IDSI. The rape of a child and aggravated indecent assault charges were
nolle prossed. On June 12, 2013, the trial court granted Appellant’s oral
motion for extraordinary relief to the extent it sought a judgment of
acquittal as to the four counts of criminal conspiracy, but denied the motion
in all other respects.4 That same day, the trial court imposed an aggregate
sentence of six to 12 years’ imprisonment, followed by five years’
probation.5 On June 20, 2013, Appellant filed a timely motion for
modification of sentence, which the trial court denied on July 10, 2013
____________________________________________
3
Shero’s appeal is currently pending before this Court at 2164 EDA 2013.
As discussed infra, Edward Avery pled guilty to certain charges in exchange
for a lighter sentence. Appellant agreed to be tried jointly with Engelhardt.
Commonwealth’s Brief at 8 n.1.
4
The Commonwealth has not filed a cross-appeal challenging the judgments
of acquittal notwithstanding the jury’s verdict on the criminal conspiracy
charges.
5
Specifically, the trial court imposed a sentence of three-and-one-half to
seven years’ imprisonment for EWOC, two-and-one-half to five years’
imprisonment for indecent assault, and five years’ probation for corruption of
minors. All sentences were to run consecutively.
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without a hearing. On July 11, 2013, Appellant filed a timely notice of
appeal.6
On appeal, Appellant raises the following seven issues for our review.
1. Whether it was [an] abuse of discretion for the
[trial] court to admit evidence of Dr. Gerald
Margiotti, a pediatrician, who testified that a young
patient’s complaint of testicular pain was consistent
with a child having been sexually abused in a case
where there was no objective factual support for his
opinion testimony?
2. (a) Whether the trial court erred in allowing
the jury to deliberate on whether Appellant was
guilty of conspiracy when the Commonwealth failed
to provide sufficient evidence to meet its burden of
proving that Appellant violated each element of the
crime[?]
(b) Whether the trial court erred in denying
Appellant’s motion for judgment of acquittal on the
charge of conspiracy at the close of the
Commonwealth’s case[-]in[-]chief and in giving
lengthy jury instructions on conspiracy and
accomplice liability applicable to the four original
separate charges against Appellant where the
Commonwealth failed to present sufficient evidence
to meet its burden of proof that Appellant violated
each element of conspiracy?
(c) Whether the trial court erred in providing
the jury with a separate full[-]page verdict sheet
listing four charges coupled with each of the four
original separate charges against Appellant where
the Commonwealth failed to meet its burden of
proving conspiracy and where the trial court
subsequently acknowledged this failure of proof by
____________________________________________
6
Appellant and the trial court have complied with Pennsylvania Rule of
Appellate Procedure 1925.
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granting Appellant’s post-trial motion for judgment
of acquittal on the charge of conspiracy?
(d) Whether the [trial] court’s lengthy and
undue emphasis on conspiracy and accomplice
liability during its jury charge was reversible error
mandating a new trial?
(e) Whether the [trial] court’s unduly
repetitive and grueling conspiracy and accomplice
liability charge where the Commonwealth failed to
meet its burden of proof which permitted the jury in
this case to wrongly infer that Appellant violated the
other crimes charges based on erroneous conspiracy
and accomplice liability theories was reversible error
mandating a new trial?
(f) Whether the [trial] court’s instructions
wrongly permitted the jury to deliberate on the
conspiracy charge listing four separate counts along
with the four other charges of [IDSI], indecent
assault, [EWOC] and corrupting morals of a minor,
thereby making it impossible to determine whether
the jury’s verdicts were based on unproven
conspiracy liability, and this was reversible error
mandating a new trial?
3. Whether it was [an] abuse of discretion for the
[trial] court not to grant a mistrial on the basis of the
Commonwealth’s highly prejudicial summation which
included statements not supported by the trial
record?
4. Whether it was an abuse of discretion for the
[trial] court to allow the Commonwealth to cross[-
]examine its own witness, Edward Avery, the alleged
co-conspirator of Appellant, regarding five unrelated
allegations of sexual abuse, where there was no
evidence presented concerning these accusations,
where they were highly inflammatory and failed to
pass a probative/prejudicial test and were
inextricably intertwined with the conspiracy charge
against Appellant that had not been proven by the
Commonwealth and which engaged in further
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prosecutorial misconduct in its questioning and
summation?
5. Whether the [trial] court abused its discretion
and committed legal error in sentencing [] Appellant
to a six to twelve year term of imprisonment, as
discussed in Appellant’s post-sentence motion to
modify sentence filed on June 20, 2013, because it
substantially exceeded the aggravated range of the
applicable sentencing guideline range and was
outside the entire sentencing guideline range even
though the [trial c]ourt had announced that the
sentence would be in the aggravated sentencing
guideline range and where the sentence imposed
was excessive, unsupported and unreasonable?
6. Whether this Court should grant a remand to
the lower court based on newly discovered evidence
that could have changed the outcome of the trial?
7. Whether it was an abuse of discretion for the
[trial] court to refuse to issue a bench warrant or
grant a continuance where critical defense witness,
J.G., Jr., Esquire, brother of complainant D.G. failed
to appear after [being] subpoenaed and [the]
problem [was] compounded by [the trial] court’s
erroneous answer to [a] jury question on [the]
issue?
Appellant’s Brief at 5-8.
At the outset, we summarily address some of Appellant’s issues,
beginning with his entire second issue, surrounding the Commonwealth’s
failure to provide sufficient evidence to satisfy each element of criminal
conspiracy. As noted above, the trial court granted Appellant’s motion for a
judgment of acquittal on all criminal conspiracy counts. Although the
Commonwealth argues in its brief in response to Appellant’s arguments that
it did present sufficient evidence to prove conspiracy, the Commonwealth
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has not filed a cross-appeal from the trial court’s June 12, 2013 order
granting Appellant’s motion in part. As a result, any issue pertaining to the
criminal conspiracy charges is moot, and we decline to express any opinion
on them at this juncture. See generally Commonwealth v. Weis, 611
A.2d 1218, 1228 n.9 (Pa. Super. 1992).
We next address Appellant’s fifth issue pertaining to the discretionary
aspects of his sentence and his sixth issue pertaining to his request for a
remand to the trial court for an evidentiary hearing on his claim of after-
discovered evidence. We note that Appellant has passed away during the
pendency of this appeal.7 However, consistent with our cases, we decline to
dismiss this appeal as moot in its entirety. See generally Commonwealth
v. Bizzaro, 535 A.2d 1130, 1132 (Pa. Super. 1987).
In Bizzaro, the defendant was convicted of IDSI, indecent assault and
corruption of minors. Id. at 1131. During the pendency of his appeal,
Bizzaro passed away. Id. This Court noted that our Supreme Court had
____________________________________________
7
This Court was advised of Appellant’s death by the filing of a petition to
intervene, although no formal suggestion of death was filed in this matter at
that time. See Application for Leave for Third Party Intervention, 12/22/14,
at 2; Joe Dolinsky, Phila. Priest Dies While Appealing Sexual Abuse
Conviction, PHILA. INQUIRER, Nov. 18, 2014, http://articles.philly.com/2014-
11-18/news/56313260_1_engelhardt-altar-boy-former-catholic-priest.
On February 23, 2015, this Court entered an order directing the
parties to file a suggestion of death, along with documentation of the same
pursuant to Pa.R.A.P. 502(a). Superior Court Order, 2/23/15, at 1.
Appellant’s counsel filed a response to our order on March 6, 2015, enclosing
therewith a copy of Appellant’s death certificate.
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held that “it is in the interest of both a defendant’s estate and society that
any challenge initiated by a defendant to the regularity or constitutionality of
a criminal proceeding be fully reviewed and decided by the appellate
process.” Bizzaro, supra, quoting Commonwealth v. Walker, 288 A.2d
741, 742 n. * (Pa. 1972). The Bizarro Court ultimately held that the
defendant was entitled to relief on one issue, and in lieu of the normal
remedy of a new trial, vacated the judgment of sentence and remanded with
instructions for the trial court to “ent[er] … an order of abatement upon
record certification of [Bizzaro]’s death.” Id. at 1133.
Consistent with Bizzaro, and based on the issues raised by Appellant,
the most this Court could grant Appellant in the form of relief would be a
reversal of his judgment of sentence and either discharge or an instruction
for the trial court to enter “an order of abatement upon record certification
of [A]ppellant’s death.” Id. Conversely, the normal remedy Appellant would
receive from this Court addressing the discretionary aspects of his sentence
would be resentencing. Likewise, the normal remedy Appellant would get
from the Court on his claim of after-discovered evidence or a Brady8
violation would be a remand to the trial court for an evidentiary hearing.9 As
____________________________________________
8
Brady v. Maryland, 373 U.S. 83 (1963).
9
On July 29, 2014, this Court accepted Appellant’s “Application … to Amend
Brief and Reproduced Record for Appellant” as a supplemental brief.
Superior Court Order, 7/29/14, at 1.
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neither of these forms of relief is possible, we decline to address the merits
of these issues, as they do not directly “challenge … the regularity or
constitutionality of a criminal proceeding.” Walker, supra. We therefore
turn to the balance of Appellant’s issues that would warrant a reversal and
order of abatement if deemed meritorious.
We elect to next address Appellant’s first and fourth issues, as they
each challenge evidentiary rulings made by the trial court. In his first issue
on appeal, Appellant avers that the trial court abused its discretion when it
permitted Dr. Gerald Margiotti, D.G.’s pediatrician, to testify that D.G.’s
complaint of testicular pain was consistent with sexual abuse. Appellant’s
Brief at 23. We begin by noting our well-settled standard of review
regarding evidentiary issues.
The admissibility of evidence is at the discretion of
the trial court and only a showing of an abuse of that
discretion, and resulting prejudice, constitutes
reversible error. An abuse of discretion is not merely
an error of judgment, but is rather the overriding or
misapplication of the law, or the exercise of
judgment that is manifestly unreasonable, or the
result of bias, prejudice, ill-will or partiality, as
shown by the evidence of record. Furthermore, if in
reaching a conclusion the trial court over-rides or
misapplies the law, discretion is then abused and it is
the duty of the appellate court to correct the error.
Commonwealth v. Fischere, 70 A.3d 1270, 1275 (Pa. Super. 2013) (en
banc) (internal quotation marks and citations omitted), appeal denied, 83
A.3d 167 (Pa. 2013).
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The admission of expert testimony is governed by Pennsylvania Rule of
Evidence 702, which provides as follows.
Rule 702. Testimony by Expert Witnesses
A witness who is qualified as an expert by
knowledge, skill, experience, training, or education
may testify in the form of an opinion or otherwise if:
(a) the expert’s scientific, technical, or other
specialized knowledge is beyond that possessed by
the average layperson;
(b) the expert’s scientific, technical, or other
specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact in
issue; and
(c) the expert’s methodology is generally accepted in
the relevant field.
Pa.R.E. 702. Our Supreme Court has held that “the opinion of an expert
witness may be excluded where no attempt has been made to qualify such
witness as an expert in the disputed field.” Commonwealth v. Duffey,
548 A.2d 1178, 1186 (Pa. 1988) (citation omitted; emphasis added).
“Neither the Pennsylvania Rules of Evidence, nor the Federal Rules of
Evidence set out any special procedure for determining whether the witness
is qualified to testify as an expert.” 1 Leonard Packel & Anne Bowen Boulin,
West Pennsylvania Practice § 702-5 (4th ed. 2013).
Additionally, our Supreme Court has held that it is admissible for the
Commonwealth to present expert testimony that “the absence of physical
trauma is nevertheless consistent with the alleged sexual abuse.”
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Commonwealth v. Minerd, 753 A.2d 225, 227 (Pa. 2000). It therefore
follows, a fortiori, that it is equally permissible for an expert to testify that
the existence of trauma or pain could be consistent with alleged sexual
abuse. See Commonwealth v. Fink, 791 A.2d 1235, 1247 (Pa. Super.
2002) (stating, “[a] physician is permitted to testify that his or her findings
following examination are consistent with a victim’s allegations of abuse[]”).
In this case, Dr. Margiotti was asked if “based on [his] experience, []
testicular pain [has] been associated with child sexual abuse? Is it
consistent with child sexual abuse?” N.T., 1/22/14, at 44. Dr. Margiotti
responded that it was. Id. Under Minerd and Fink, this was a permissible
line of questioning. The Commonwealth never asked Dr. Margiotti if D.G.
was abused or if he believed D.G. was telling the truth, so as not to
improperly bolster D.G.’s credibility with the jury.
Although Appellant objects that the Commonwealth did not engage in
a voir dire of Dr. Margiotti, Appellant has not cited to any authority for the
proposition that a formal voir dire is required. To the contrary, as noted
above, our Supreme Court has held that a trial court may exclude expert
testimony if there is no formal qualification. Duffey, supra. Furthermore,
we note the Commonwealth elicited testimony from Dr. Margiotti on direct
examination that he had been a practicing pediatrician since 1986, became
board-certified in 1988, attended LaSalle University, and attended
Hahnemann University for medical school. N.T., 1/22/13, at 35. Dr.
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Margiotti also testified that he completed his internship and residency at
Hahnemann, is a member of the American Academy of Pediatrics and the
Pennsylvania Medical Society. Id. at 35-36. Appellant does not dispute any
of Dr. Margiotti’s medical credentials.
Appellant also argues that Dr. Margiotti never used the words “to a
reasonable degree of medical certainty.” However, there are no “magic
words” required for an expert’s opinion to be admissible. See
Commonwealth v. Dennis Miller, 987 A.2d 638, 656 (Pa. 2009) (stating,
“[a] review of the applicable law indicates that ‘magic words’ need not be
uttered by an expert in order for his or her testimony to be admissible[]”)
(citations omitted). “Rather, the substance of the testimony presented by
the expert must be reviewed to determine whether the opinion rendered was
based on the requisite degree of certainty and not on mere speculation.”
Id. Finally, to the extent Appellant argues that Dr. Margiotti should not
have been permitted to testify as an expert because he did not personally
perform the specific examination on D.G., we find this distinction to be
immaterial for the purposes of the Rule 702 issue.10 See generally
Sheeley v. Beard, 696 A.2d 214, 218 (Pa. Super. 1997) (stating, “[i]t is
well-settled in Pennsylvania that a medical expert is permitted to express an
opinion which is based, in part, on medical records which are not in
____________________________________________
10
Appellant has not made a hearsay argument.
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evidence, but which are customarily relied on by experts in her
profession[]”). Based on these considerations, we conclude the trial court
did not abuse its discretion in admitting Dr. Margiotti’s testimony. 11 See
Fischere, supra.
In his fourth issue, Appellant avers that the trial court erred when it
permitted the Commonwealth to “cross-examine [Edward] Avery concerning
a number of other supposed accusations for which there was no evidence at
trial.” Appellant’s Brief at 42. The Commonwealth counters that the
evidence was admissible to impeach Avery’s credibility and even if it was
improper, Appellant did not suffer any prejudice as a result.
Commonwealth’s Brief at 36.
At trial, the Commonwealth called Avery during its case-in-chief.
Avery previously pled guilty to IDSI and criminal conspiracy and was
sentenced to two-and-one-half to five years’ imprisonment. N.T., 1/17/13,
at 140-141. Relevant to this appeal, during its direct examination, the
Commonwealth read into the record the recitation of the facts from Avery’s
guilty plea hearing.12 Specifically, the factual basis for Avery’s guilty plea to
____________________________________________
11
Although our reasoning differs from the trial court, we note “[t]his [C]ourt
may affirm [the trial court] for any reason, including such reasons not
considered by the [trial] court.” Commonwealth v. Clemens, 66 A.3d
373, 381 n.6 (Pa. Super. 2013) (citation omitted).
12
Appellant did not object to the relevance of this testimony when Avery
took the stand at trial, nor does Appellant raise such a challenge on appeal.
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IDSI was that “sometime during the spring of 1999, [Avery] was 57 years
old at the time. While he was serving as a priest at Saint Jerome’s Parish,
he engaged in oral sexual intercourse with 10-year-old [D.G.]” Id. at 156-
157. Avery acknowledged he knew those were the facts to which he pled
guilty. Id. at 157. However, during questioning by the Commonwealth at
trial, Avery asserted his innocence, despite his guilty plea, and stated that
“[he] had no contact whatever with [D.G.]” Id. at 161. Avery also testified
that he only pled guilty to get a better sentence. Id. at 160. Avery
repeated these assertions on cross-examination. Id. at 177, 180-181. On
redirect examination, the Commonwealth questioned Avery about six other
complainants, R.F., R.C., H.A., M.M., G.F., and S.L., all of whom had made
claims of sexual abuse against Father Avery. Id. at 208-209. Avery denied
these allegations. Id. at 210. It is this testimony that Appellant objects to,
arguing that it was impermissible under Rule 404 and unfairly bolstered
D.G.’s credibility. Appellant’s Brief at 40.
However, before we may address the merits of this claim, we must
first ascertain whether Appellant has preserved it for our review. It is
axiomatic that “[i]ssues not raised in the lower court are waived and cannot
be raised for the first time on appeal.” Pa.R.A.P. 302(a). Our Supreme
Court has repeatedly emphasized the importance of issue preservation.
Issue preservation is foundational to proper
appellate review. Our rules of appellate procedure
mandate that “[i]ssues not raised in the lower court
are waived and cannot be raised for the first time on
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appeal.” Pa.R.A.P. 302(a). By requiring that an
issue be considered waived if raised for the first time
on appeal, our courts ensure that the trial court that
initially hears a dispute has had an opportunity to
consider the issue. This jurisprudential mandate is
also grounded upon the principle that a trial court,
like an administrative agency, must be given the
opportunity to correct its errors as early as possible.
Related thereto, we have explained in detail the
importance of this preservation requirement as it
advances the orderly and efficient use of our judicial
resources. Finally, concepts of fairness and expense
to the parties are implicated as well.
In re F.C. III, 2 A.3d 1201, 1211-1212 (Pa. 2010) (some internal citations
omitted); accord Commonwealth v. Cody Miller, 80 A.3d 806, 811 (Pa.
Super. 2013) (citation omitted).
In the case sub judice, when the Commonwealth first began its
questioning of Avery regarding the other complainants, counsel for Shero
objected stating “this is outside the scope of everything.” N.T., 1/17/13, at
208. The trial court immediately stated “[i]t is absolutely proper
impeachment at this time.” Id. The Commonwealth then continued with
this line of questioning. At no point, did Appellant note any objection on the
record, or join Shero in his objection. As a result, we deem this issue
waived on appeal. See F.C., supra; Cody Miller, supra; Commonwealth
v. Woods, 418 A.2d 1346, 1352 (Pa. Super. 1980) (stating that where
“[c]ounsel for appellant never joined in the[] objections [of his co-defendant,
the appellant] waived the argument[]”), appeal dismissed, 445 A.2d 106
(Pa. 1982).
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In his third issue, Appellant avers that the trial court erred when it
refused to grant a mistrial after the Commonwealth allegedly made an
improper remark when it implied that there were more charges to come
against Appellant. Id. at 32.
Our standard of review for a claim of
prosecutorial misconduct is limited to whether the
trial court abused its discretion. In considering this
claim, our attention is focused on whether the
defendant was deprived of a fair trial, not a perfect
one. Not every inappropriate remark by a
prosecutor constitutes reversible error. A
prosecutor’s statements to a jury do not occur in a
vacuum, and we must view them in context. Even if
the prosecutor’s arguments are improper, they
generally will not form the basis for a new trial
unless the comments unavoidably prejudiced the
jury and prevented a true verdict.
Commonwealth v. Bedford, 50 A.3d 707, 715-716 (Pa. Super. 2012) (en
banc) (internal quotation marks and citations omitted), appeal denied, 57
A.3d 65 (Pa. 2012).
We note that “a prosecutor has considerable latitude during closing
arguments.” Commonwealth v. Holley, 945 A.2d 241, 250 (Pa. Super.
2008) (citation omitted), appeal denied, 959 A.2d 928 (Pa. 2008). “In
reviewing prosecutorial remarks to determine their prejudicial quality,
comments cannot be viewed in isolation but, rather, must be considered in
the context in which they were made.” Commonwealth v. Sampson, 900
A.2d 887, 890 (Pa. Super. 2006) (citation omitted), appeal denied, 907 A.2d
1102 (Pa. 2006).
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The prosecutor is allowed to vigorously argue
his case so long as his comments are supported by
the evidence or constitute legitimate inferences
arising from that evidence. … Thus, a prosecutor’s
remarks do not constitute reversible error unless
their unavoidable effect … [was] to prejudice the
jury, forming in their minds fixed bias and hostility
toward the defendant so that they could not weigh
the evidence objectively and render a true verdict.
Commonwealth v. Ragland, 991 A.2d 336, 340-341 (Pa. Super. 2010),
appeal denied, 4 A.3d 1053 (Pa. 2010), quoting Commonwealth v. Smith,
985 A.2d 886, 907 (Pa. 2009) (citation omitted; brackets in original). In
addition, “comments made by a prosecutor must be examined within the
context of defense counsel’s conduct.” Commonwealth v. Chmiel, 889
A.2d 501, 543 (Pa. 2005) (citation omitted), cert. denied, Chmiel v.
Pennsylvania, 549 U.S. 848 (2006).
It is well settled that the prosecutor may fairly
respond to points made in the defense closing.
Moreover, prosecutorial misconduct will not be found
where comments were based on the evidence or
proper inferences therefrom or were only oratorical
flair.
Id. at 544 (internal citations and quotations omitted).
In this case, the Commonwealth made the following statement during
its summation to the jury.
[Appellant] told you [his] picture was everywhere.
You heard him choose his words carefully, not one
child, not one student has come forward. He picked
his words carefully. Sometimes the subtle is more
powerful than the obvious. What he also didn’t tell
you was no child, no student has come forward yet.
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No child, no student has had the courage that [D.G.]
has because what he did takes some guts[.]
N.T., 1/25/13, at 142 (emphasis added). It is the Commonwealth’s use of
the word “yet” that Appellant objected to, as it implied there were other
victims out in the world that just had not come forward to accuse Appellant.
Appellant’s Brief at 39.
However, before the Commonwealth made its closing argument to the
jury, Appellant made the following remarks in its summation.
[Appellant] surrendered and that was February 10,
2011 and that was the first public announcement
that [Appellant] was accused of a sexual abuse of an
altar boy at Saint Jerome’s back in ’98, ’99 and that
it was a brutal sexual attack and [Appellant]’s name
and picture was [sic] spread all over the region
nationally, the internet, TV, radio, newspapers,
national magazines, saying this is a child molester.
This man is accused of being a brutal sex abuser of a
child. Every pulpit in the Archdiocese of Philadelphia
and surrounding region read from the pulpit at every
mass that [Appellant] has been accused of these
crimes, had been removed from ministry and if you
had any information to contact the Archdiocese or
the District Attorney’s Office.
Ladies and gentlemen, there has not been one
child or one student from any of the institutions that
[Appellant] was associated with his entire life that
came forward to say when I was a student or I was a
child and his picture was saturating the media and
he sits here today two years later and that’s the
effect that went out about his reputation ….
N.T., 1/25/13, at 36-37.
The trial court concluded that the Commonwealth’s remark was a fair
response to the Appellant’s closing argument. See Trial Court Opinion,
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12/17/13, at 11-12 (stating, “[i]n this instance, the Commonwealth was
responding directly to a statement made [by] Appellant’s counsel with
respect to the fact that no other victims had [come] forward – which, per
Appellant’s counsel, was a reflection of [Appellant]’s innocence[]”). As noted
above, it is axiomatic that the Commonwealth “may fairly respond to points
made in the defense closing.” Chmiel, supra. Appellant, through his
summation attempted to argue that the Commonwealth had not met its
burden in part because D.G. was the only person to come forward and
accuse Appellant. In our view, the Commonwealth was permitted to respond
to that argument by logically pointing out that all that meant was that no
one else had come forward at that point in time. As a result, we conclude
the trial court did not abuse its discretion when it denied Appellant’s request
for a mistrial. See Bedford, supra.
In his seventh issue, Appellant argues that the trial court erred when it
denied his request for a bench warrant for D.G.’s brother, J.G., or in the
alternative a continuance to investigate why J.G. did not appear. Appellant’s
Brief at 55. Appellant also objects to the trial court’s response to a jury
question regarding why J.G. did not appear to testify. Id. Before we may
address this issue, we must first address the Commonwealth’s argument
that Appellant has waived this issue for failure to develop this issue in his
brief. Commonwealth’s Brief at 54.
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Generally, appellate briefs are required to conform to the Rules of
Appellate Procedure. See Pa.R.A.P. 2101. Pennsylvania Rule of Appellate
Procedure 2119(a) requires that the argument section of an appellate brief
include “citation of authorities as are deemed pertinent.” Pa.R.A.P. 2119(a).
This Court will not consider an argument where an appellant fails to cite to
any legal authority or otherwise develop the issue. Commonwealth v.
Johnson, 985 A.2d 915, 924 (Pa. 2009), cert. denied, Johnson v.
Pennsylvania, 131 S. Ct. 250 (2010); see also, e.g., In re Estate of
Whitley, 50 A.3d 203, 209 (Pa. Super. 2012) (stating, “[f]ailure to cite
relevant legal authority constitutes waiver of the claim on appeal[]”)
(citation omitted), appeal denied, 69 A.3d 603 (Pa. 2013). Nor will this
Court “act as counsel and … develop arguments on behalf of an appellant.”
Commonwealth v. Kane, 10 A.3d 327, 331 (Pa. Super. 2010) (citation
omitted), appeal denied, 29 A.3d 796 (Pa. 2011).
In this case, Appellant’s argument is devoid of any discussion of our
cases, standards, or any other legal authority on the subject of bench
warrants, continuances, or jury questions. Appellant’s brief has one citation
to a civil case involving service and due process and one citation to the
Pennsylvania Rules of Civil Procedure. Appellant’s Brief at 56. Appellant
does not cite to any legal authority to explain or develop his argument as to
why he was entitled to a bench warrant or a continuance regarding J.G.’s
failure to appear to testify. Nor does Appellant cite to any type of legal
- 24 -
J-A30018-14
authority to show how the trial court abused its discretion in its answer to
the jury’s question or how he was prejudiced by the same. Based on these
considerations, we conclude Appellant’s seventh issue on appeal is waived
for want of development. See Johnson, supra; Whitley, supra; Kane,
supra.
Based on the foregoing, we conclude all of Appellant’s reviewable
issues are either waived or devoid of merit. Accordingly, the trial court’s
June 12, 2013 judgment of sentence is affirmed.
Judgment of sentence affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/25/2015
- 25 -
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59 F.3d 1246
Ironsv.State of Florida**
NO. 94-2846
United States Court of Appeals,Eleventh Circuit.
June 21, 1995
1
Appeal From: M.D.Fla., No. 93-00303-CIV-ORL-19
2
AFFIRMED.
**
Local Rule 36 case
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919 F.Supp. 165 (1996)
Lynn T. DRYDEN, Plaintiff,
v.
TIFFANY & COMPANY, Defendant.
No. 95 Civ. 0345 (LAK).
United States District Court, S.D. New York.
March 25, 1996.
Patrick J. Leddy, Cleveland, OH, for Plaintiff.
Kenneth W. DiGia, Epstein Becker & Green, P.C., New York City, for Defendant.
MEMORANDUM OPINION
KAPLAN, District Judge.
This is an action under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq., the Age Discrimination in Employment Act of 1967, 29 U.S.C. §§ 621 et seq. (the "ADEA"), and corresponding provisions of New York State and City law. The plaintiff *166 claims that she was terminated as a sales person at Tiffany & Company, the well known jeweler, on the basis of her age (late 40s) and race (Asian). Tiffany moves for summary judgment dismissing the complaint.
Facts
The facts pertinent to the resolution of this motion may be stated briefly.
Ms. Dryden began her employment with Tiffany in 1971 as a retail sales professional and held a variety of positions over the ensuing 18 years. Beginning on January 1, 1989, she worked in the silver jewelry department on the second floor of Tiffany's East 57th Street store in Manhattan where she remained until she was terminated effective July 1, 1993. For most of her career, her job performance concededly was acceptable.
Tiffany claims that Ms. Dryden's performance began to decline in 1991 and that she repeatedly was cited for security violations ranging from showing more than the maximum permitted number of pieces of merchandise to a customer at one time to leaving merchandise unattended in a customer area. These episodes culminated in an incident on June 12, 1993, in which Ms. Dryden allegedly committed four separate security violations, which Tiffany asserts led to her termination. The events relied upon by Tiffany are corroborated by documents said by Tiffany to be contemporaneous reports of the incidents. In one or two instances, Tiffany's accounts are supported by photographs made from security surveillance tapes.
Ms. Dryden tells a different story. She sustained a job related injury in 1991 that led to a workers' compensation claim and complaints to management by her about an allegedly defective drawer. The alleged security violation reports, she says, commenced thereafter "without my knowledge for the most part." (Dryden Aff. ¶ 8) She denies knowledge prior to October 1992 of the policy prohibiting a salesperson from having more than five pieces out of the showcase at a single time and thus seeks to explain away the earlier incidents relied upon by Tiffany. (Id. ¶¶ 10-13) She admits a violation of the policy on October 20, 1992 four days after signing a written evaluation which called the policy to her attention but seeks to justify it on the theory that she was cleaning her showcase. (Id. ¶ 14) With respect to other alleged violations, she either denies advance knowledge of the policy in question, denies the occurrence or, at least, aspects of Tiffany's version of the incident, offers justifications for her actions, or all three. (Id. ¶¶ 10-19)
The evidence of age discrimination is extraordinarily thin. Ms. Dryden admittedly was replaced by Ms. Nan Craver who, at 60 years of age, was substantially older than Ms. Dryden. (Id. ¶ 20) Ms. Dryden relies on her "recollection" that Ms. Craver was replaced by a younger employee.
The evidence of racial discrimination consists principally of Ms. Dryden's claim that the supervisors charged with enforcing the security policies which she was accused of violating both were Caucasian and her assertion that five other Caucasians, including Ms. Craver, repeatedly violated the same rules but never were written up. (Id.) Tiffany's Ms. Ray acknowledged that she had spoken to Craver about the five piece rule about five times, to another Caucasian employee approximately twice, and to a majority of the other employees at least once. (PX XXII) Tiffany produced documentary evidence that one of the five Caucasians referred to by Ms. Dryden in fact was written up in February 1993 for a violation of the security policy. (Ray Reply Aff.Ex. A)
Discussion
Summary Judgment as to Merits of Discrimination Claims
The standards governing plaintiff's discrimination claims are clear. In order to establish a prima facie case in this context, the plaintiff must demonstrate that she was (1) a member of a protected class, (2) qualified for the position, and (3) discharged in circumstances giving rise to an inference of discrimination. If the plaintiff satisfies that burden, the defense must articulate an independent, non-discriminatory reason for its action. The plaintiff then bears the burden of showing by a preponderance of the evidence that (1) the defendant's actions were *167 pretextual, and (2) discrimination played a role in the decision. See St. Mary's Honor Center v. Hicks, 509 U.S. 502, 113 S.Ct. 2742, 2749, 125 L.Ed.2d 407 (1993); Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 252-53, 101 S.Ct. 1089, 1093-94, 67 L.Ed.2d 207 (1981); McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-04, 93 S.Ct. 1817, 1824-25, 36 L.Ed.2d 668 (1973); Quaratino v. Tiffany & Co., 71 F.3d 58, 64 (2d Cir.1995); Chambers v. TRM Copy Centers Corp., 43 F.3d 29, 36 (2d Cir.1994); Fitzgerald v. Alleghany Corp., 904 F.Supp. 223, 228 (S.D.N.Y. 1995). The burden of establishing the prima facie case is "not onerous." Burdine, 450 U.S. at 253, 101 S.Ct. at 1093.
Here, plaintiff has offered evidence which, if believed and viewed in the light most favorable to her, establishes the first two elements of the prima facie case on both the age and racial discrimination claims. As an Asian over the age of forty, she is a member of the classes protected by Title VII and the ADEA. Her long record of satisfactory employment by Tiffany, given the Court's obligation to accept for summary judgment purposes her version of the disputed events concerning the alleged security violations, is sufficient to create a genuine issue of fact as to her qualification for the position from which she was terminated. She concededly was discharged. Accordingly, the question whether she has made out a prima facie case turns on whether the evidence, viewed in the light most favorable to her, would justify a trier of fact in finding that she was terminated in circumstances giving rise to an inference of discrimination.
The evidence does not permit such an inference with respect to the age discrimination claim. It is undisputed that Ms. Dryden was replaced by Ms. Craver, who was substantially older. Ms. Dryden's "recollection" that Ms. Craver in turn was replaced by a younger employee is insufficient to raise a triable issue of fact because (1) the relevant focus is on Ms. Dryden's replacement, not Ms. Craver's, and (2) Ms. Dryden has offered no competent evidence of the age of anyone who may have replaced Ms. Craver.[1]
The claim of racial discrimination stands on a somewhat different footing. There is much to support Tiffany's contention that racial discrimination played no role here. For one thing, Tiffany employed Ms. Dryden for over twenty years. Nevertheless, Ms. Dryden was replaced by a Caucasian employee. There is some evidence that might permit a trier of fact to conclude that Ms. Dryden received more intense scrutiny with regard to security policy compliance than Caucasian employees. See Chambers, 43 F.3d at 36. If a trier of fact accepted Ms. Dryden's account of the alleged security violations, it might find Tiffany's alleged reason for the termination to be a pretext. Such a finding, coupled with the prima facie case, would permit the trier to rule for the plaintiff. St. Mary's Honor Center, 113 S.Ct. at 2749. The evidence of record is sufficient to raise a triable issue as to whether Ms. Dryden has proved a prima facie case and, if so, carried her burden under Hicks of proving pretext and discriminatory motive.
New York City Administrative Code Claim
Among the statutes upon which Ms. Dryden bases this action is Title 8 of the New York City Administrative Code. Tiffany seeks dismissal of these claims on the ground that plaintiff failed to serve a copy of the complaint on the City Commissioner of Human Rights and the Corporation Counsel as required by N.Y.C.AD.C. § 8-502(c).
The question whether compliance with Section 8-502(c) is a prerequisite to the maintenance of an action under Title 8 has divided the courts. Compare Walsh v. Lincoln Savings Bank, FSB, No. 93 Civ. 1101(LLS), 1995 WL 66639, at *1 (S.D.N.Y.1995) (prerequisite); Paladines v. Poulos, No. 93 Civ. 9031(LLM), 1994 WL 389022, at *3 (S.D.N.Y. 1994) (same); with Persaud v. S. Axelrod *168 Co., No. 95 Civ. 7849(RPP), 1996 WL 11197, at *6 n. 1 (S.D.N.Y.1996) (not prerequisite): Bernstein v. 1995 Associates, ___ A.D.2d ___, 630 N.Y.S.2d 68, 72 (1st Dept.1995) (same). Assuming that there is some difference between the protection afforded by Title 8 and other statutes upon which plaintiff relies, the possibility that the availability of a cause of action under Title 8 would have any practical impact on the outcome of this case is purely theoretical. In consequence, no useful purpose would be served by the Court deciding this question at this stage, and it declines to do so.
Conclusion
Accordingly, defendant's motion for summary judgment dismissing the claims of age discrimination under all of the statutes relied upon is granted. The motion for summary judgment dismissing the claims of racial discrimination is denied.
SO ORDERED.
NOTES
[1] Ms. Dryden last worked at Tiffany on June 15, 1993 and has returned since only for a brief period on July 1, 1993, when she was informed of her termination. (Dryden Dep. 167-68, 170, 174, 177-80; Ames Dep. 41) In consequence, her professed belief or recollection as to Ms. Craver's replacement, whom she could not identify, at best is hearsay and at worst is simply speculation. In either case, it does not meet the requirement of Rule 56(c) that evidence in opposition to a motion for summary judgment be admissible in evidence.
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791 F.2d 916
Feltonv.Hicks
85-5575
United States Court of Appeals,Third Circuit.
5/15/86
M.D.Pa.,
Conaboy, J.
AFFIRMED
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194 So.2d 861 (1966)
Willie Joe CHILDS
v.
STATE.
6 Div. 166.
Court of Appeals of Alabama.
October 25, 1966.
Rehearing Denied November 22, 1966.
Morel Montgomery, Birmingham, for appellant.
Richmond M. Flowers, Atty. Gen., and John C. Tyson, III, Asst. Atty. Gen., for the State.
*862 PRICE, Presiding Judge.
The indictment as returned by the grand jury contained three counts. Count I charged burglary. Count II charged larceny. Count III charged the offense of buying, receiving, concealing, etc., stolen property. At the conclusion of the testimony, on motion of the state, Counts II and III were stricken. Defendant was convicted of burglary under Count I and was sentenced to imprisonment in the penitentiary for a term of five years.
Count I charges burglary of the "shop, store or warehouse of The Goodyear Tire and Rubber Company, a corporation, in which goods, merchandise or television sets, things of value, were kept for use, sale or deposit."
Mr. P. R. Smith testified he was office manager of the Goodyear Tire and Rubber Company's retail store at 700 South 21st Street, Birmingham; that the Goodyear Tire & Rubber Company is a corporation; that it sells tires, appliances, televisions, car and home merchandise. On Monday morning, March 1, 1965, when he came to work the "door between the service department and the sales display room was torn downsplinteredand one window comes from the back of the building through the recap shop had been broken and the double doors had been opened from the inside." The window and the double doors opened onto an alley. The shattered door was on the inside of the building; that he was in the store when it closed Saturday night and everything was in order at that time, with the door and window intact and locked. There were around twenty-five General Electric television sets in the store when it closed Saturday night. Sixteen television sets, including one color set, and radios and stereos were missing from the store on Monday morning; that he had serial numbers on two of the television sets, one of which was a color and the other was a portable model.
Phillip Witherspoon testified he had entered a plea of guilty to the charge of burglarizing the Goodyear Store; that he went to the store with Willie Joe Childs, this defendant, in a Buick automobile belonging to Gaines Hicks; that defendant broke into the place and witness followed him inside; that they carried out televisions, radios and hi-fies and put them in the car and drove to Graymont Avenue and Second Street, where they picked up Gaines Hicks; that witness stayed there while Hicks and defendant drove off with the television sets; that they were gone about fifteen minutes and when they returned Hicks, witness, defendant and another fellow, whose name he thought was Henry Miller, went back to the Goodyear store in a Chevrolet panel truck, like a station wagon, and got another load of television sets; two trips were made to Benny Jones' apartment and television sets were left there. This was about 10:30 or 11:00 Sunday morning. That same afternoon a television set and a hi-fi were delivered to Prynter Howard.
Prynter Howard was next called as a witness for the state, but he refused to testify, on the advice of his counsel.
Benny Jones, who was under a charge of buying and receiving stolen property arising out of the incident at the Goodyear store, testified: Sometime in March I saw Willie Joe Childs at my apartment. I saw Childs first and then I saw Witherspoon. When I first saw the defendant he was outside my apartment with two or three fellows. They were in a '56 or '57 Buick automobile. They had seven televisions in the car and one of them asked if I wanted to buy one. I told him I didn't have any money and they asked if I knew anybody that might want one. I called a friend of mine. After the conversation they carried them out to another place. I bought one of the television sets. Willie Childs was in the car and he got out and came upstairs behind the fellow that brought the television up to my apartment. He didn't say anything to me. I saw him again the same day with Phillip Witherspoon *863 and three others. This time they came over in a station wagon. I talked to Gaines Hicks in the presence of Willie Childs but I did not have a conversation with Childs. Hicks said he had more televisions, I think he said eight. He didn't say anything about where they came from. The televisions were in the station wagon and me and Henry Miller carried them to Henry Albert Stueckler's house. I drove the station wagon. Phillip Witherspoon, Hicks and Childs went out to the car wash and waited for me. Henry Stueckler operates the car wash at Twenty-second Avenue and Twenty-sixth Street, North, and I delivered seven of the televisions to the car wash and the other eight sets to his house. Stueckler paid me $650.00 for them and I gave the money to Gaines Hicks.
Henry Albert Stueckler testified he stands charged with buying, receiving and concealing stolen property, concerning television sets taken from the Goodyear store. He stated that Sunday, February 28, 1965, Benny Jones and a boy named Hicks delivered television sets to his place of business at 2201 Twenty-sixth Street, North and on the same date Benny Jones and Henry Miller delivered television sets to his home at 1120 Oak Grove Road. All of these fellows were colored. Henry Miller works for him. The television sets were delivered in a Cadillac convertible and a '57 Chevrolet panel truck, which would look more like a station wagon if it had windows in the side. A total of eleven television sets were delivered to him. The one that went to his home was a color set. He paid Benny Jones $650.00 for televisions. Detective Jake Turner picked up the television sets the following Tuesday.
J. B. DePriest testified that on February 28, 1965, he was living at Henry Albert Stueckler's home. He was present when two colored boys delivered two or three television sets, one of which was a color set, to the Stueckler home. One of the boys works for Henry Stueckler and he has heard him called Hawthorne. The sets were transported in a station wagon, or one of those cars that looks like a station wagon. He testified he had not been charged with any offense in connection with the television sets.
J. K. Turner, a police detective of the City of Birmingham testified that in the early morning hours of March 1, 1965, he investigated the burglary at the Goodyear Tire and Rubber Company store and that he recovered two television sets from the residence of Henry Stueckler. One was a color set and the other was a portable; that other televisions sets were turned over to him and other officers. Fourteen General Electric television sets were returned to the Goodyear Tire and Rubber Company and that they were identified by Mr. P. R. Smith as part of the property taken from the Goodyear Tire and Rubber Company store.
No testimony was presented by defendant.
Defense counsel argues for a reversal of this cause that the State failed to prove the allegations of the indictment that the Goodyear Tire and Rubber Company was a corporation other than by the conclusion of the witness P. R. Smith, and that the evidence was insufficient to prove that the building burglarized was the property of the named corporation, citing as authority for such contention the case of Anthony v. State, 30 Ala.App. 425, 7 So.2d 513.
The sworn plea denying the incorporation of the corporation named in the indictment, provided for by Title 15, Sec. 315, Code 1940, was not filed in this case, and it was not necessary for the state to prove such incorporation. Burrow v. State, 147 Ala. 114, 41 So. 987. See also White v. State, 42 Ala.App. 249, 160 So.2d 496.
The indictment charged the breaking and entering of the store of Goodyear Tire and Rubber Company. The proof showed the building was occupied by the said company as a store. It was immaterial who owned the building. Hale v. State, 122 Ala. 85, 26 So. 236; Vines v. State, 37 Ala.App. 22, 69 So.2d 475.
*864 At the close of the state's testimony defense counsel moved to exclude the state's evidence on the ground that there was no evidence tending to connect him with the burglary other than the uncorroborated testimony of the accomplice Phillip Witherspoon. It is insisted in brief that Benny Jones and Henry Albert Stueckler were accomplices.
Section 307, Title 15, Code 1940, prohibits a conviction unless the testimony of the accomplice is corroborated by other evidence tending to connect the defendant with the crime charged.
The witness Witherspoon is an admitted participant in the burglary, and under the undisputed evidence was an accomplice. The fact that the witnesses Benny Jones and Henry Albert Stueckler were purchasers of the stolen property and indicted for buying, receiving or concealing it, does not make them accomplices as a matter of law. Dye v. State, 25 Ala.App. 138, 142 So. 111; Sweeney v. State, 25 Ala. App. 220, 143 So. 586. "The burden of proving the witness to be an accomplice is, of course, upon the party alleging it for the purpose of invoking the rule, namely upon the defendant3 Wigmore on Evidence, Sec. 2060(c). Darden v. State, 12 Ala.App. 165, 68 So. 550." Horn v. State, 15 Ala.App. 213, 72 So. 768. (Except, of course, where the state's evidence undisputedly makes the witness an accomplice) There was no evidence tending to show that Jones and Stueckler were accomplices.
The credibility and weight of the evidence corroborating an accomplice and tending to connect the defendant with the commission of the offense are questions for the jury. Horn v. State, supra; Slayton v. State, 234 Ala. 1, 173 So. 642; Burns v. State, 246 Ala. 135, 19 So.2d 450.
We are of opinion the testimony of the accomplice as to the burglarizing of the Goodyear Store was sufficiently corroborated by other testimony tending to connect the defendant with the commission of the offense to warrant the submission of the issue to the jury and to sustain the judgment of conviction.
We find no reversible error in the denial of the motion to exclude the evidence, the refusal of the affirmative charge nor in overruling the motion for a new trial.
The judgment is affirmed.
Affirmed.
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561 F.3d 233 (2009)
Russell BRUESEWITZ; Robalee Bruesewitz, parents and natural guardians of Hannah Bruesewitz, a minor child and in their own right, Appellants
v.
WYETH INC. f/k/a Wyeth Laboratories, Wyeth-Ayerst Laboratories, Wyeth Lederle, Wyeth Lederle Vaccines, and Lederle Laboratories.
No. 07-3794.
United States Court of Appeals, Third Circuit.
Argued September 11, 2008.
Filed March 27, 2009.
*234 Collyn A. Peddie (Argued), Williams, Kherkher, Hart & Boundas, Houston, TX, for Appellant.
Reetu Dandora, Philadelphia, PA, Lauren Elliott, Richard W. Mark (Argued), Daniel J. Thomasch, Orrick, Herrington & Sutcliffe, New York, NY, Henry F. Reichner, Michael T. Scott, Reed Smith, Philadelphia, PA, for Appellee.
Before: McKEE, SMITH, and WEIS, Circuit Judges.
*235 OPINION
SMITH, Circuit Judge.
This appeal presents three questions related to the National Childhood Vaccine Injury Act: (1) whether the Act preempts all design defect claims against the manufacturer of a vaccine; (2) whether the plaintiffs demonstrated that the manufacturer failed to adequately warn the plaintiffs of the risks associated with the vaccine; and (3) whether the plaintiffs provided sufficient evidence of a manufacturing defect to survive the defendant's motion for summary judgment. The District Court held that the Act preempted all design defect claims and concluded that the plaintiffs failed to provide sufficient evidence to support the other two claims. For the reasons that follow, we will affirm.
I.
A.
Historically, the states have possessed "great latitude under their police powers to legislate as to the protection of the lives, limbs, health, comfort, and quiet" of their citizens. Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 756, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985). This has been true with regard to drugs, as the Supreme Court has declared it "well settled that the State has broad police powers in regulating the administration of drugs by the health professions." Whalen v. Roe, 429 U.S. 589, 603, 97 S.Ct. 869, 51 L.Ed.2d 64 (1977). And the police powers extend to immunization, as state and local authorities have responded to illnesses like smallpox and sought to inoculate members of the populous. Center for Biologics Evaluation and Research, Food and Drug Administration, Science and the Regulation of Biological Products: From a Rich History to a Challenging Future 8 (2002). Despite calls in the late nineteenth-century for the federal regulation of vaccines to promote uniform safety regulations, Congress did not act until 1902, when thirteen children died after being vaccinated with contaminated diphtheria antitoxin. Id. at 12. Over the past century, however, the federal government has taken a predominate role in approving, regulating, and promoting vaccinesfrom the passage of the Biologics Control Act in 1902, Pub.L. No. 57-244, which authorized a federal agency to issue regulations related to vaccines, to the Public Health Service Act, Pub.L. No. 78-410, which required federal authorities to license vaccines and vaccine manufacturers, to the Emergency Supplemental Appropriations Act for Recovery from and Response to Terrorist Attacks on the United States, Pub.L. No. 107-9, which appropriated money for the acquisition of a sufficient quantity of the smallpox vaccine to inoculate the country.
The National Childhood Vaccine Injury Act ("Vaccine Act") is one such effort. P.L. 99-660, Title III, 100 Stat. 3743, 3756-3784 (codified at 42 U.S.C. § 300aa-1 et seq.). Enacted in 1986, the Vaccine Act established a national vaccine program to "achieve optimal prevention of human infectious diseases through immunization and to achieve optimal prevention against adverse reactions to vaccines." 42 U.S.C. § 300aa-1. It sought to accomplish this primarily through the creation of the National Vaccine Injury Compensation Program ("NVICP") for claims against drug manufacturers for vaccine-related injuries and deaths. 42 U.S.C. § 300aa-10 et seq.
The NVICP has two parts. Part A creates a mandatory forum for the administration of claimsit requires a petitioner seeking compensation, including the injured party's legal representative, to file a petition in the "Vaccine Court," which is part of the United States Court of Federal *236 Claims. Id. at § 300aa-11. The petitioner is entitled to receive compensation if: (1) the affected person received a vaccine covered by the Vaccine Act; (2) the affected person suffered a "Table injury";[1] and (3) it cannot be shown by a preponderance of the evidence that the injuries or death were not caused by the vaccine. Id. at §§ 300aa-11, 300aa-13. Alternatively, a petitioner who suffers a non-Table injury may still obtain compensation by proving affirmatively that the vaccine caused the injury. See Grant v. Sec'y of HHS, 956 F.2d 1144, 1148 (Fed.Cir.1992). Part B of the NVICP permits a petitioner, after the Vaccine Court has issued a final judgment, to either accept or reject that judgment. 42 U.S.C. § 300aa-21 et seq. If the petitioner rejects the judgment, she may pursue certain limited claims in state or federal court.[2] 42 U.S.C. § 300aa-21.
B.
Hannah Bruesewitz was born on October 20, 1991. At the time, the federal Advisory Committee on Immunization Practices recommended that children receive five doses of the diphtheria-pertussis-tetanus ("DPT") vaccine during the course of their childhood, one dose at each of the following ages: (1) 2 months; (2) 4 months; (3) 6 months; (4) 15-18 months; and (5) 4-6 years. Hannah received her first three shots of the DPT vaccine according to this schedule. After the third DPT shot, marketed under the trade name TRI-IMMUNOL and administered on April 1, 1992, she suffered a series of seizures. Doctors subsequently diagnosed Hannah as having residual seizure disorder and developmental delay. Hannah, who is now seventeen, will likely require some medical care related to that condition for the remainder of her life.
Defendant Wyeth, Inc. and its predecessors[3] ("Wyeth") manufactured TRI-IMMUNOL until 1998. Approved in 1948, this vaccine contains the "whole-cell" pertussis vaccineit is prepared using whole, inactivated pertussis bacterial cells. Although the whole-cell vaccine effectively reduced pertussis infections and deaths associated with these infections, it was also linked to a variety of adverse events. This led to interest in and efforts to develop a safer, acellular pertussis vaccine.
In December 1991, the Food and Drug Administration ("FDA") approved the defendant's application for an alternate DPT vaccine, which was known as ACEL-IMUNE. ACEL-IMUNE contains an acellular pertussis component. While the acellular vaccine contains parts of pertussis bacterial cells, because it does not contain a complete cell, it has less endotoxin and is less likely to cause adverse events.[4] The *237 FDA initially approved ACEL-IMUNE, however, for administration as the fourth and/or fifth DPT dose in the series of five. The FDA did not approve an acellular pertussis vaccine for the first three shots in the series until July 1996 when it approved the license of Connaught Laboratories, Inc. Defendant's ACEL-IMUNE did not receive approval for these same doses until December 1996.
Nonetheless, at the time of vaccination in April 1992, Hannah's doctor administered the TRI-IMMUNOL vaccine because there were no acellular pertussis vaccines commercially available for the third dose. Hannah's particular vaccine came from a lot that generated sixty-five reports of adverse reactions with the FDA and Centers for Disease Control and Prevention, including thirty-nine emergency room visits, six hospitalizations, and two deaths. Hannah's physician later indicated, as part of this litigation, that she would not have immunized Hannah had she known of the adverse event reports associated with this lot of the vaccine.
In 1998, Wyeth voluntarily discontinued manufacturing TRI-IMMUNOL.
C.
Hannah's parents ("plaintiffs") filed a petition in the Vaccine Court in April 1995, alleging that Hannah suffered an on-Table residual seizure disorder and encephalopathy.[5]Bruesewitz v. Sec'y of Dep't of HHS, No. 95-0266V, 2002 WL 31965744, at *1 n. 1 (Fed.Cl. Dec. 20, 2002). The Court held a hearing in July 2002 and concluded in December of that year that Hannah's injuries were non-Table injuries and that the petitioners had not proven causation in fact. Id. at *13-17. Accordingly, it dismissed the claim with prejudice. Id. at *17. Hannah's parents rejected the Court's judgment on February 14, 2003.
Having exhausted their administrative remedies, the plaintiffs filed a Complaint in the Philadelphia Court of Common Pleas in October 2005. The complaint sought recovery on four claims: (I) negligent failure to produce a safer vaccine; (II) negligent failure to warn; (III) strict liability for design defect; and (IV) strict liability for manufacturing defect. Wyeth removed the action on the basis of diversity to the Eastern District of Pennsylvania and filed a motion for summary judgment. The District Court denied the motion without prejudice because the parties had not engaged in discovery. Following completion of discovery, Wyeth again moved for summary judgment on all four counts.
Although the District Court did not accept all of Wyeth's theories, it granted summary judgment in Wyeth's favor on all counts on August 24, 2007. The District Court concluded that Section 22(b)(1) of the Vaccine Act, 42 U.S.C. § 300aa-22(b)(1), preempts all design defect claims arising from a vaccine-related injury or death and dismissed Counts I and III on that basis. Regarding Count II, which alleged negligent failure to warn, the District Court concluded that the plaintiffs had not rebutted the statutory presumption *238 created by Section 22(b)(2) of the Vaccine Act, 42 U.S.C. § 300aa-22(b)(2), that Wyeth's FDA-compliant warnings were proper. As to Count IV, which alleged that the particular lot from which Hannah's dose originated was especially prone to adverse reactions due to a manufacturing defect, the District Court concluded that the plaintiffs had failed to present sufficient evidence that the lot was defective or that it caused Hannah's injuries.
The District Court's ruling on the first and third claims warrants further examination. Both counts alleged a design defectCount I alleged that Hannah's vaccine was negligently designed because the defendant knew of a safer alternative and failed to produce it, while Count III alleged strict liability design defect. The District Court ruled that both claims were preempted by the Vaccine Act. It rested this decision on four points. First, it stated that a case-by-case consideration of whether a vaccine was unavoidably safe would not protect vaccine manufacturers from suit. Second, it reasoned that Congress passed the Vaccine Act to "provide an umbrella under which manufacturers would improve the safety of their products while remaining immune from design defect claims." Third, the Court found that Congress achieved an appropriate balance by offsetting the effect of the preemption of design defect claims with creation of a compensation program for individuals injured by vaccines. Finally, it concluded that the Vaccine Act preempts both strict liability and negligent design defect claims against FDA-approved vaccines. Accordingly, it dismissed plaintiffs' first and third claims.
The plaintiffs appealed. Their appeal presents this Court with three questions: (1) does § 300aa-22(b)(1) act as a complete bar to design defect claims; (2) have the plaintiffs in this case met their burden under § 22(b)(2) of the Vaccine Act to show that defendants failed to provide an adequate warning of the alleged dangers of the vaccine; and (3) have the plaintiffs provided sufficient evidence of a manufacturing defect to survive the defendant's motion for summary judgment.
II.
The District Court had jurisdiction under 28 U.S.C. §§ 1332 and 1441, and we have appellate jurisdiction under 28 U.S.C. § 1291. Our review of a District Court's grant of summary judgment is plenary, and we apply the same standard as the District Court to determine whether summary judgment was appropriate. Norfolk S. Ry. Co. v. Basell USA Inc., 512 F.3d 86, 91 (3d Cir.2008). A grant of summary judgment is appropriate "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In making this determination, we must view the facts in the light most favorable to the nonmoving party and draw all inferences in that party's favor. Norfolk, 512 F.3d at 91.
III.
Preemption doctrine is rooted in the Supremacy Clause of the United States Constitution. Article VI declares that the laws of the United States "shall be the supreme Law of the Land; ... any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Const. art. VI, cl. 2. "Under the Supremacy Clause, federal law may supersede state law in several different ways." Hillsborough County, Fla. v. Automated Med. Labs., Inc., 471 U.S. 707, 713, 105 S.Ct. 2371, 85 L.Ed.2d 714 (1985). Over the years, the Supreme Court has recognized *239 three types of preemption: express preemption, implied conflict preemption, and field preemption. Id.
A federal enactment expressly preempts state law if it contains language so requiring. Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 541, 121 S.Ct. 2404, 150 L.Ed.2d 532 (2001). Thus, when construing an express preemption clause, a reviewing court must necessarily begin by examining the "plain wording of the clause," as this "necessarily contains the best evidence of Congress' pre-emptive intent." Sprietsma v. Mercury Marine, 537 U.S. 51, 62-63, 123 S.Ct. 518, 154 L.Ed.2d 466 (2002) (quoting CSX Transp. v. Easterwood, 507 U.S. 658, 664, 113 S.Ct. 1732, 123 L.Ed.2d 387 (1993)). Though the language of the provision offers a starting point, courts are often called upon to "identify the domain expressly pre-empted by that language." Medtronic, Inc. v. Lohr, 518 U.S. 470, 484, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996) (internal quotation marks and citations omitted). This, in turn, is guided by two principles. Id. at 485, 116 S.Ct. 2240. First, "Congressional purpose is the `ultimate touchstone' of our inquiry." Lorillard Tobacco Co., 533 U.S. at 541, 121 S.Ct. 2404 (quoting Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992)); see also Altria Group, Inc. v. Good, ___ U.S. ___, 129 S.Ct. 538, 543, ___ L.Ed.2d ___ (2008) ("If a federal law contains an express pre-emption clause, it does not immediately end the inquiry because the question of the substance and scope of Congress' displacement of state law still remains."). Second, courts must operate under the "assumption that the historic police powers of the States [a]re not to be superseded by the Federal Act unless that [is] the clear and manifest purpose of Congress." Cal. Div. of Labor Standards Enforcement v. Dillingham Constr., N.A., Inc., 519 U.S. 316, 325, 117 S.Ct. 832, 136 L.Ed.2d 791 (1997).
Implied conflict preemption arises when state law conflicts with a federal statute in one of two situations. First, it arises when it is "impossible for a private party to comply with both state and federal requirements." English v. General Elec. Co., 496 U.S. 72, 78-79, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990). It is also present when state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581 (1941). Furthermore, implied preemption may exist even in the face of an express preemption clause. As the Supreme Court observed in Freightliner Corp. v. Myrick, 514 U.S. 280, 288, 115 S.Ct. 1483, 131 L.Ed.2d 385 (1995), "Congress' enactment of a provision defining the preemptive reach of a statute implies that matters beyond that reach are not pre-empted," but that "does not mean that the express clause entirely forecloses any possibility of implied pre-emption."
When confronting arguments that a law stands as an obstacle to Congressional objectives, a court must use its judgment: "What is a sufficient obstacle is a matter of judgment, to be informed by examining the federal statute as a whole and identifying its purpose and intended effects." Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363, 373, 120 S.Ct. 2288, 147 L.Ed.2d 352 (2000). In fact, we must look to "`the entire scheme of the statute'" and determine "`[i]f the purpose of the [federal] act cannot otherwise be accomplished if its operation with its chosen field [would] be frustrated and its provisions be refused their natural effect.'" Id. (quoting Savage v. Jones, 225 U.S. 501, 533, 32 S.Ct. 715, 56 L.Ed. 1182 (1912)). Once again, this requires an examination of the "`whole law, *240 and to its object and policy.'" Gade v. Nat'l Solid Wastes Mgmt. Assn., 505 U.S. 88, 98, 112 S.Ct. 2374, 120 L.Ed.2d 73 (1992) (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 51, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987)).
Field preemption arises by implication when state law occupies a "field reserved for federal regulation." United States v. Locke, 529 U.S. 89, 111, 120 S.Ct. 1135, 146 L.Ed.2d 69 (2000). This occurs when "Congress [] left no room for state regulation of these matters." Id.; see also Lorillard Tobacco Co., 533 U.S. at 541, 121 S.Ct. 2404. It may also be inferred when "an Act of Congress `touch[es] a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject.'" English v. Gen. Elec. Co., 496 U.S. 72, 79, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990) (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 91 L.Ed. 1447 (1947)). Nonetheless, because field preemption typically arises in areas traditionally regulated by states under their police powers, "congressional intent to supersede state laws must be `clear and manifest.'" Id. (citation omitted).
Yet despite the development of the foregoing preemption jurisprudence, courts must begin their analysis of these questions by applying a presumption against preemption. Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992). "In areas of traditional state regulation, we assume that a federal statute has not supplanted state law unless Congress has made such an intention `clear and manifest.'" Bates v. Dow Agrosciences, 544 U.S. 431, 449, 125 S.Ct. 1788, 161 L.Ed.2d 687 (2005). When faced with two equally plausible readings of statutory text, we "have a duty to accept the reading that disfavors pre-emption." Id; see also Altria Group, Inc., 129 S.Ct. at 543; Cipollone, 505 U.S. at 518, 112 S.Ct. 2608. This is true even in the event of an express preemption clause. Riegel v. Medtronic, Inc., ___ U.S. ___, 128 S.Ct. 999, 1014, 169 L.Ed.2d 892 (2008) (quoting Bates, 544 U.S. at 449, 125 S.Ct. 1788). That issues of health and safety have traditionally fallen within the province of state regulation is beyond refute. That safety of vaccines is an issue of health and safety is equally clear. See, e.g., Medtronic, Inc., 518 U.S. at 485, 116 S.Ct. 2240. Nonetheless, in the face of clear evidence, the presumption against preemption can be overcome. See Crosby, 530 U.S. at 374 n. 8, 120 S.Ct. 2288. ("Assuming, arguendo, that some presumption against preemption is appropriate, we conclude, based on our analysis below, that the state Act presents a sufficient obstacle to the full accomplishment of Congress's objectives under the federal Act to find it preempted.").
We must decide here whether the plaintiffs' design defect claims are preempted. As we have noted, the District Court reasoned that four points counseled in favor of finding that both claims were preempted by the Vaccine Act: (1) if the Vaccine Act permitted case-by-case consideration of design defect claims, the Act would do little to protect manufacturers from suit; (2) Congress intended the Vaccine Act to encourage vaccine improvements while providing immunity for design defect claims; (3) Congress achieved a balance between manufacturers and patients by creating the compensation system to offset design defect immunity; and (4) the Vaccine Act is broader than comment k of the Restatement (Second) of Torts § 402A such that the Act encompasses both strict liability and negligence claims. At the same time, the District Court did not explicitly lay out a framework for coming to *241 these conclusions, nor did it state whether they were predicated on express, implied, or field preemption grounds.
Plaintiffs now seek to turn such ambiguity to their advantage by arguing that the District Court's decision was "based on some kind of implied or field preemption" when the defendant's motion for summary judgment raised only express preemption. This, they maintain, violated "well-settled summary judgment principles."[6] Accordingly, we must consider four questions related to the preemption of the design defect claim: (1) whether § 300aa-22(b) constitutes an express preemption provision; (2) whether we may use traditional tools of statutory interpretation, including legislative history, when construing such a provision; (3) whether this provision preempts plaintiffs' design defect claims; and (4) whether the District Court's decision is consistent with this analysis.
A.
Part B of the Vaccine Act establishes the circumstances under which individuals who have rejected the judgment of the Vaccine Court may subsequently file suit in state or federal court. Section 300aa-22, entitled "Standards of Responsibility," sets forth both a general rule and several exceptions to that rule. It states:
(a) General rule
Except as provided in subsections (b), (c), and (e) of this section State law shall apply to a civil action brought for damages for a vaccine-related injury or death.
(a) Unavoidable adverse side effects; warnings
(1) No vaccine manufacturer shall be liable in a civil action for damages arising from a vaccine-related injury or death associated with the administration of a vaccine after October 1, 1988, if the injury or death resulted from side effects that were unavoidable even though the vaccine was properly prepared and was accompanied by proper directions and warnings.
(2) For purposes of paragraph (1), a vaccine shall be presumed to be accompanied by proper directions and warnings if the vaccine manufacturer shows that it complied in all material respects with all requirements under the Federal Food, Drug, and Cosmetic Act [21 U.S.C.A. § 301 et seq.] and section 262 of this title (including regulations issued under such provisions) applicable to the vaccine and related to vaccine-related injury or death for which the civil action was brought unless the plaintiff shows
(A) that the manufacturer engaged in the conduct set forth in subparagraph (A) or (B) of section 300aa-23(d)(2) of this title, or
(B) by clear and convincing evidence that the manufacturer failed to exercise *242 due care notwithstanding its compliance with such Act and section (and regulations issued under such provisions).
(c) Direct warnings
No vaccine manufacturer shall be liable in a civil action for damages arising from a vaccine-related injury or death associated with the administration of a vaccine after October 1, 1988, solely due to the manufacturer's failure to provide direct warnings to the injured party (or the injured party's legal representative) of the potential dangers resulting from the administration of the vaccine manufactured by the manufacturer.
(d) Construction
The standards of responsibility prescribed by this section are not to be construed as authorizing a person who brought a civil action for damages against a vaccine manufacturer for a vaccine-related injury or death in which damages were denied or which was dismissed with prejudice to bring a new civil action against such manufacturer for such injury or death.
(c) Preemption
No State may establish or enforce a law which prohibits an individual from bringing a civil action against a vaccine manufacturer for damages for a vaccine-related injury or death if such civil action is not barred by this part.
42 U.S.C. § 300aa-22.
We are guided by two cases interpreting language similar to that which appears in § 300aa-22. In Lorillard Tobacco Co., the Supreme Court interpreted the Federal Cigarette Labeling and Advertising Act, which stated that "`[n]o statement relating to smoking and health other than the statement required by section 1333 of this title, shall be required on any cigarette package.'" 533 U.S. at 541, 121 S.Ct. 2404 (quoting 15 U.S.C. § 1334). This language is analogous to subsection 22(b)(1) of the Vaccine Act, which states that "[n]o vaccine manufacturer shall be liable in a civil action for damages arising from a vaccine-related injury or death ... if the injury or death resulted from side effects that were unavoidable." In both provisions, without using language such as "no state shall" or "state law is preempted," Congress has set forth an area in which state law may not operate. In CSX Transportation, Inc., the Supreme Court construed the following provision: "A state may adopt or continue in force any law ... until such time as the Secretary has adopted a rule ... covering the subject matter of such State requirement. A state may adopt or continue in force an additional or more stringent law... when not incompatible with any Federal law...." 507 U.S. at 662 & n. 2, 113 S.Ct. 1732 (quoting 45 U.S.C. § 434 (repealed 1994)). Similarly, Section 22(a) of the Vaccine Act establishes a general rule permitting states to regulate vaccines subject to several exceptions set forth in subsections (b), (c), and (e).
In both Lorillard Tobacco Co. and CSX Transportation, Inc., the Supreme Court characterized the language at issue as an express preemption provision. In the former case, the Court declared that "Congress unequivocally preclude[d] the requirement of any additional statements on cigarette packages beyond those provided in § 1333." Lorillard Tobacco Co., 533 U.S. at 542, 121 S.Ct. 2404. In the latter case, the Court characterized the quoted language as containing "express saving and preemption clauses." CSX Transp., Inc., 507 U.S. at 662, 113 S.Ct. 1732. Accordingly, we conclude that § 22(a) and § 22(b)(1) of the Vaccine Act also contain express preemption clauses.
Our conclusion is consistent with prior jurisprudence from this Court, stating that express preemption "arises when there is *243 an explicit statutory command that state law be displaced." St. Thomas-St. John Hotel & Tourism Ass'n, Inc. v. Gov't of the U.S., V.I., 218 F.3d 232, 238 (3d Cir.2000). Section 22(a) clearly states Congress's intent to displace state law in several enumerated instances, including as provided for in subsection (b). Subsection (b) then declares that manufacturers are immune from liability for claims arising from "unavoidable" injuries and deaths related to vaccine administration, thereby prohibiting states from regulating in this area. The scope of a preemption provision stating that "no state shall pass laws with the following exceptions" may well be broader than a provision stating "state law applies with the following exceptions." Yet the breadth of a provision does not alter the import of the underlying language, and here that language conveys a clear intent to override state law civil action claims in particular, defined circumstances.
Yet we must still determine the scope and reach of the express preemption provision. The plaintiffs here concede that the statute "expressly precludes only those state tort claims involving vaccines with side effects first shown to be `unavoidable,'" but they argue that avoidability must first be determined "on a case-by-basis" as part of a court's examination of a design defect claim. In response, Wyeth argues that this language "preempts all claims arising from allegations of design defect." Accordingly, "we must [ ] `identify the domain expressly pre-empted' by [the] language" of the Vaccine Act. Medtronic Inc., 518 U.S. at 484 116 S.Ct. 2240.
B.
Again, we are mindful that courts seeking to identify the scope of an express preemption provision are compelled to consider "Congressional purpose [ ] the `ultimate touchstone' of our inquiry." Lorillard Tobacco Co., 533 U.S. at 541, 121 S.Ct. 2404 (quoting Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992)). The Supreme Court has declared on numerous occasions that reviewing courts have several tools to aid them in their interpretation of congressional purpose. Courts may be guided by the "structure and purpose of the statute as a whole, as revealed not only in the text, but through the reviewing court's reasoned understanding of the way in which Congress intended the statute and its surrounding regulatory scheme to affect business, consumers, and the law." Medtronic, Inc., 518 U.S. at 486, 116 S.Ct. 2240 (internal quotation marks and citations omitted); see also Gade, 505 U.S. at 98, 112 S.Ct. 2374 ("Our ultimate task in any pre-emption case is to determine whether state regulation is consistent with the structure and purpose of the statute as a whole."); Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990) ("To discern Congress' intent we examine the explicit statutory language and the structure and purpose of the statute."). Beyond structure and purpose, the Court has also stated "that `[i]n expounding a statute, we must not be guided by a single sentence or member of a sentence, but look to the provisions of the whole law, and to its object and policy.'" Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 51, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987) (quoting Kelly v. Robinson, 479 U.S. 36, 43, 107 S.Ct. 353, 93 L.Ed.2d 216 (1986)).
The above analysis, allowing courts to consider a statute's purpose, structure, and regulatory scheme, applies even in light of the presumption against preemption. The Court's preemption discussion in Cipollone is particularly instructive on this point. In that case, the Court considered a statute stating that "[n]o statement relating to smoking and health shall be required in *244 the advertising of [properly labeled] cigarettes." Cipollone, 505 U.S. at 518, 112 S.Ct. 2608 (internal quotations and emphasis omitted). The Court reaffirmed the presumption against preemption. Id. at 516, 112 S.Ct. 2608. It also noted the existence of an express preemption clause, id. at 517, 112 S.Ct. 2608, which it construed using several tools of statutory construction, id. at 519, 112 S.Ct. 2608. The Court noted the Act's explicit "statement of purpose," and it read this against a "backdrop of regulatory activity." Id. It also considered the "regulatory context," namely the factors that served as "the catalyst for the passage" of the statute. Id. The Court stated that this backdrop and context supported a narrow reading of the preemption clause. Id. at 518-19, 112 S.Ct. 2608. In dissent, Justice Scalia criticized the majority and argued for a broader interpretation of the provision, predicated on the statute's use of the phrase "no statement." Id. at 549-50, 112 S.Ct. 2608 (Scalia, J., dissenting). The majority rejected Justice Scalia's interpretation because it "relie[d] solely on an interpretation of those two words, artificially severed from both textual and legislative context." Id. at 519 n. 16, 112 S.Ct. 2608.
We have recognized that legislative history is not without its shortcomings as a tool of interpretation. "As a point of fact, there can be multiple legislative intents because hundreds of men and women must vote in favor of a bill in order for it to become a law." Morgan v. Gay, 466 F.3d 276, 278 (3d Cir.2006); see also Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 568, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005) (noting that "legislative history is itself often murky, ambiguous, and contradictory," and that it "may give unrepresentative committee membersor, worse yet, unelected staffers and lobbyistsboth the power and the incentive to ... secure results they were unable to achieve through the statutory text"). Yet, resort to legislative history is appropriate "when necessary to interpret ambiguous statutory text." BedRoc Ltd., LLC v. United States, 541 U.S. 176, 187 n. 8, 124 S.Ct. 1587, 158 L.Ed.2d 338 (2004) (plurality opinion). Although this Court has declined to employ legislative history if a statute is clear on its face, we have allowed recourse to legislative history in the face of ambiguity. See, e.g., In re Mehta, 310 F.3d 308, 311 (3d Cir.2002) ("We look to the text of a statute to determine congressional intent, and look to legislative history only if the text is ambiguous."); United States v. Gregg, 226 F.3d 253, 257 (3d Cir.2000) ("To determine a law's plain meaning, we begin with the language of the statute. If the language of the statute expresses Congress's intent with sufficient precision, the inquiry ends there ... Where the statutory language does not express Congress's intent unequivocally, a court traditionally refers to the legislative history....").
It is, therefore, appropriate to consider legislative history to resolve ambiguity in the scope of an express preemption provision. In Cipollone, as part of the discussion of the regulatory context of the statute at issue, the Court cited language from a House of Representatives' report that was issued during Congress's consideration of the legislation. Cipollone, 505 U.S. at 519, 112 S.Ct. 2608. Similarly, in Lorillard Tobacco Co., the Court stated that its task was to "identify the domain expressly pre-empted," 533 U.S. at 541, 121 S.Ct. 2404, and that this was aided "by considering the predecessor pre-emption provision and the circumstances in which the current language was adopted." Id. at 542, 121 S.Ct. 2404. It went on to cite reports from the United States Surgeon General, the House of Representatives, *245 and the Senate in the course of its discussion. Id. at 542-44, 121 S.Ct. 2404.
We cannot resolve from statutory text alone the scope of the express preemption provision before us. Accordingly, we will look at the language, structure, and purpose of the Vaccine Act to ascertain whether it preempts all design defect claims, and we will resortas we mustto legislative history to aid our interpretation.
C.
We are left to construe the scope of preemption created by the phrase "if the injury or death resulted from side effects that were unavoidable ...." § 300aa-22(b). The phrase hinges on the word "unavoidable," yet the term is not defined in the Vaccine Act. Nor does the surrounding language answer questions such as whether all design defect claims are preempted or whether state courts may determine avoidability on a case-by-case basis. According to the Oxford English Dictionary, "unavoidable" means "[n]ot avoidable; that [which] cannot be avoided or escaped; inevitable." (2d ed.1989). By itself, this succinct definition is unhelpful. Yet, the structure of the provision as a whole provides necessary context, and we can conceive of two possible interpretations of this language.
1.
The first construction would result in the preemption of some design defect claims. Subsection (a) expressly preempts state law to the degree indicated in subsection (b). Subsection (b), in turn, primarily relates to design defect claims, as evidenced by the use of a subordinate clause introduced by "even though" to reference claims that might arise from a manufacturing defect or warning defect. That structure makes it clear that we must consider design defects in the first instance. Clearly, then, subsection (a) and (b) work in concert to preempt state law and exempt manufacturers from liability for some design defect claims.
Section 300aa-22, taken as a whole, further clarifies Congress's intent with regard to design defect claims. Subsection (a) displaces state law only as defined in subsections (b), (c), and (e). Subsections (b) and (c) employ identical introductory language, stating that "[n]o vaccine manufacturer shall be liable in a civil action for damages arising from a vaccine-related injury or death associated with the administration of a vaccine...." Subsection (e) prohibits states from foreclosing civil actions that are otherwise "not barred by this part," thereby stating that other parts of § 300aa-22 are designed to not only limit liability but bar some claims entirely. Thus, by reading these three provisions together, it becomes clear that Congress intended that subsections (b) and (c) should be an outright bar to some claims.
In a case presenting design defect claims similar to those in the present case, the Georgia Supreme Court reached a different conclusion regarding the meaning of § 22(b). Am. Home Prods. Corp. v. Ferrari, 668 S.E.2d 236 (Ga.2008). It focused on the clause "if the injury or death resulted from side effects that were unavoidable." That Court first noted that this language is conditional and implies that some vaccine-related injuries and deaths may be avoided. Id. at 240. The Ferrari Court also reasoned that reading the preemption provision to exclude all design defect claims would render the clause superfluous. Id. at 240. That Court concluded that if Congress intended to preempt all design defect claims, it could have achieved that result by omitting the "unavoidable" clause such that the provision would prevent liability "if the vaccine was properly prepared and was accompanied *246 by proper directions and warnings." Id.
We do not consider the Ferrari Court's reading to be compelling. First, while we recognize that the language is conditional, such a reading does not foreclose the preemption of some claims. Furthermore, it is always possible to construct through hindsight an alternate structure for a statute with alternative wording that would render it more clear. For instance, subpart (b)(1) notes that manufacturers may not be liable for unavoidable side effects caused by a vaccine that was "properly prepared and was accompanied by proper directions and warnings," and subpart (b)(2) sets limits on this. In subpart 22(b)(2), the statute declares that vaccines issued in accordance with federal labeling requirements are presumed to have proper directions and warnings unless one of the following applies: (1) the manufacturer engaged in conduct that would subject it to punitive damages under § 300aa-23 of the Vaccine Act, or (2) there is clear and convincing evidence that the manufacturer failed to exercise due care. § 300aa-22(b)(2). If, as plaintiffs claim, Congress intended to carve out from subsection 22(b) a mechanism to enable states to determine what side effects could have been avoided through an alternate design, Congress could have done so in the manner used in subpart (b)(2) to preserve some warning defect claims against vaccines that meet federal labeling requirements.
More importantly, we think the Ferrari Court's construction is contrary to the structure of the Act because it does not bar any design defect claims. If we interpret the Vaccine Act to allow case-by-case analysis of whether particular vaccine side effects are avoidable, every design defect claim is subject to evaluation by a court. Furthermore, in 1986 when Congress enacted the Vaccine Act, several courts had already barred strict liability design defect claims against prescription drug manufacturers under state law.[7] The Ferrari Court's construction of § 300aa-22 could create an awkward dichotomy in the case law of these statestheir courts would be required to engage in case-by-case analysis of all strict liability and negligent design defect claims brought under the Vaccine Act, while barring strict liability design defect claims against prescription drug manufacturers. As discussed above, Congress could not have intended such a result, as § 300aa-22 makes clear that Congress intended to preempt and bar certain claims.
Though there are two possible interpretations of subsection (b), we conclude that a "clear and manifest" expression of congressional intent supports the first interpretation.[8] Our construction, however, *247 does not indicate whether subsection (b) preempts all design defect claims or only strict liability design defect claims.
2.
There is no language in the statute indicating whether the Vaccine Act preempts only strict liability design defect claims or also those based in negligence, and the structure and purpose of the Act are of little assistance in resolving that question. As a result, there remains some inherent ambiguity in the statute, and we must resort to legislative history to resolve that ambiguity. The parties in this case cite to different congressional reports to support their claims. Each argument will be addressed in turn.
a.
Wyeth cites to a report ("Commerce Report") from the House Committee on Energy and Commerce ("Energy and Commerce Committee"), which had jurisdiction over the Vaccine Act and guided the legislation through passage. H.R.Rep. No. 99-108 (1986). The Commerce Report declared that childhood vaccinations have been "one of the most spectacularly effective public health initiatives this country has ever undertaken," preventing countless deaths and saving billions of dollars. Id. at 4. The Report stated, however, that "the Nation's ability to maintain this level of success has come into question" as a result of tort claims by individuals gravely injured by vaccines. Id. This, in turn, caused an increase in the cost of vaccines, the withdrawal of some manufacturers from the market, and a decreased rate of immunization. Id. The Report noted that these conditions prompted the Energy and Commerce Committee to reevaluate the federal regulation of vaccines. Id. at 5.
Though the Committee was concerned with compensating individuals injured by vaccines, it also sought to reduce the cost of such claims in order to safeguard the development and availability of such vaccines. It noted that there was "no `perfect' or reaction-free childhood vaccine on the market" and that a small number of children suffered serious reactions. Id. at 6. It then stated that "despite these possibilities... it is safer to take the required shots than to risk the health consequences of contracting the diseases...." Id. The Committee expressed concern that the "withdrawal of even a single manufacturer would present the very real possibility of vaccine shortages, and, in turn, increasing numbers of unimmunized children, and, perhaps, a resurgence of preventable diseases." Id. at 7. The Report demonstrates that the Vaccine Act was motivated in great measure by Congress's belief that an alternate compensation system would reduce awards and create a stable, predictable basis for estimating liability: "[T]he Committee believes that once this system is in place and manufacturers have a better sense of their potential litigation obligations, a more stable childhood vaccine market will evolve." Id.
Importantly, the Commerce Report specifically addressed § 300aa-22, the section at issue here. First, it noted that some provisions of the Vaccine Act would "change most State laws" related to vaccine injuries and deaths. Yet, it deemed this an appropriate change "in light of the availability of a comprehensive and fair compensation system." Id. at 25. Then, the Commerce Report stated that the Vaccine Act reflected the principle of Restatement (Second) of Torts § 402A comment k,[9] which states that sellers of certain *248 products, including vaccines, should not be strictly liable for harm caused by their products when it is not possible to make these products entirely safe.[10]Id. at 25-26. The Report described the type of vaccine cases in which comment k would have importcases in which innocent children would be "badly injured or killed" by a vaccine, but in which a jury would likely impose liability on the manufacturer "even if the defendant manufacturer may have made as safe a vaccine as anyone reasonably could expect." H.R. Rep. 99-908 at 26 (emphasis added). Finally, it stated in precise and certain terms that its reference to comment k and the language of 22(b) results in immunity for liability for all design defects, whether liability rests on theories of strict liability or negligence: "[i]f [injured individuals] cannot demonstrate under applicable law either that a vaccine was improperly prepared or that it was accompanied by improper directions or inadequate warnings [they] should pursue recompense in the compensation system, not the tort system." Id.
In our view, the Commerce Report supports the conclusion that the Vaccine Act preempts all design defect claims, including those based in negligence. First, the Committee Report repeatedly stressed the importance of vaccine development and availability. Second, it expressed serious concern over the withdrawal of even a single vaccine manufacturer from the marketplace. Third, though it described a regime *249 that sought to compensate individuals, the Commerce Report emphasized that the new system would reduce and stabilize litigation costs while also enabling manufacturers to estimate the costs associated with compensation. Finally, it explicitly stated that injured individuals could only seek redress in the state tort system for certain manufacturing defect and warning claims.
Each of the objectives extolled by the Commerce Report would be undermined if design defect claims were permitted under the statute. The plaintiffs' construction of the statute would permit state courts to determine on a case-by-case basis whether a vaccine manufacturer could have conceivably created a safer vaccine. This would undoubtedly increase the costs and risks associated with litigation and would undermine a manufacturer's efforts to estimate and control costs. It would also effectively impose an affirmative obligation on vaccine manufacturers to pursue, regardless of cost, the countless avenues through which they could develop a safer vaccine. These were the very problems which led to instability in the vaccine market and which caused Congress to intervene through the passage of the Vaccine Act.
b.
Unfortunately, our review of legislative history does not end here. Rather than rely on the Commerce Report, the plaintiffs respond that other language in the legislative history strongly favors their position that design defect claims are not preempted. The Vaccine Act, which Congress passed in 1986, did not initially "include a source of payment for such compensation and made the compensation program and accompanying tort reforms contingent on the enactment of a tax to provide funding for the compensation." H.R.Rep. No. 100-391(I), at 690 (1987), U.S. Cong.Code & Admin.News 1987, pp. 2313-1, 2313-364. In 1987, Congress passed legislation to fund the compensation program. On October 26, 1987, as part of this funding legislation, the House Committee on the Budget ("Budget Committee") issued its own report ("Budget Report") which stated the following:
It is not the Committee's intention to preclude court actions under applicable law. The Committee's intent at the time of considering the Act and in these amendments was and is to leave otherwise applicable law unaffected, except as expressly altered by the Act and the amendments. An amendment to establish as part of this compensation system that a manufacturer's failure to develop safer vaccine was not grounds for liability was rejected by the Committee during its original consideration of the Act. Further, the codification of Comment (k) of The Restatement (Second) of Torts was not intended to decide as a matter of law the circumstances in which a vaccine should be deemed unavoidably unsafe. The Committee stresses that there should be no misunderstanding that the Act undertook to decide as a matter of law whether vaccines were unavoidably unsafe or not. This question is left to the courts to determine in accordance with applicable law.
Id. at 691, 1987 U.S.C.C.A.N. at 2313-365.
According to the plaintiffs, this language demonstrates that Congress considered and rejected an amendment that would have explicitly preempted all design defect claims. This argument is premised on the well-settled notion that "[f]ew principles of statutory construction are more compelling than the proposition that Congress does not intend sub silentio to enact statutory language that it has earlier discarded in favor of other language." INS *250 v. Cardoza-Fonseca, 480 U.S. 421, 442-443, 107 S.Ct. 1207, 94 L.Ed.2d 434 (1987) (internal quotation marks and citation omitted). Additionally, plaintiffs claim that the Budget Report evidences Congress's intent to permit courts to determine on a case-by-case basis whether a vaccine's side effects were "unavoidable."
The problems with the Budget Report, however, are three-fold. First, the Budget Report repeatedly uses the term "the Committee," but it is unclear whether this refers to the Budget Committee or the Energy and Commerce Committee. While the Budget Committee did not play a role in the drafting or passage of the Vaccine Act, the Energy and Commerce Committee had jurisdiction over the bill and held several hearings on childhood vaccines and the proposed legislation. A subcommittee of the Energy and Commerce Committee also held a hearing, known as a "mark-up" hearing, on the Vaccine Act in September 1986 during which time it considered amendments to the legislation.[11] Because the Budget Committee did not consider amendments to the Vaccine Act, we will presume that references in the Budget Report to "the Committee" refer to the Energy and Commerce Committee. Second, though the Energy and Commerce Committee conducted a mark-up hearing to consider proposed amendments, no record is available to confirm that the Energy and Commerce Committee considered and rejected an amendment related to design defects at that time.[12] Third, "the views of a subsequent Congress form a hazardous basis for inferring the intent of an earlier one." United States v. Price, 361 U.S. 304, 313, 80 S.Ct. 326, 4 L.Ed.2d 334 (1960). That danger is amply present here, where the subsequent report was not issued by the committee with jurisdiction over the legislation, but by a committee which played no role in passage of the Vaccine Act. See United States v. United Mine Workers of Am., 330 U.S. 258, 281-82, 67 S.Ct. 677, 91 L.Ed. 884 (1947). Without more, we have no basis to conclude that the Budget Report is an accurate reflection of what transpired before the Energy and Commerce Committee, or for that matter, the motivations underlying Congress's enactment of the Vaccine Act in 1986.
For these reasons, and despite plaintiffs urging, we refuse to view the relevant legislative history as containing "dueling" committee reports.
3.
Even if Congress did not intend to prohibit all design defect claims against vaccine manufacturers, the legislative history indicates that it intended to preempt the specific claim at issue here. In the days prior to passage of the Vaccine Act, the Energy and Commerce Committee issued a report containing "background information on the various issues concerning childhood vaccines...." ("Background Report"). Staff of H. Comm. on Energy & Commerce, 99th Cong., Childhood Immunizations, at III (1986). This report stated that the pertussis vaccine "is considered the most reactive of all the commonly used vaccines and has been the one of most concern in debates over adverse effects of *251 vaccines." Id. at 24. It recounted the risks and side effects associated with the pertussis vaccine, including neurological problems and even death, and the efforts of parent groups to raise awareness of these serious consequences. Id. at 24-29. The Background Report also stated that "research is proceeding on the effort to develop an acellular vaccine that would cause fewer side effects." Id. at 38. Namely, it explained that researchers were attempting to isolate the reactive components of the pertussis bacterial cell so that these components could be excluded from the vaccine. Id. at 24. The Background Report also explained that Japan had used such a vaccine, but it indicated that the safety and efficacy of this vaccine had not been reported. Id. It then warned that "conducting clinical trials to test any new pertussis vaccine will pose major logistic, legal, and ethical problems." Id.
The Commerce Report on the Vaccine Act also contained numerous references to the DPT vaccine. H.R. Rep. 99-908. It noted the "seriousand sometimes deadlyconsequences" of vaccines and that this was "particularly true with regard to the pertussis" component of the DPT vaccine. Id. at 6. Before warning of the ramifications of the withdrawal of "even a single manufacturer," the Report also highlighted the increasing number of lawsuits related to the DPT vaccine and recognized that there were only two manufacturers of the DPT vaccine at that time. Id. at 6-7.
Whereas the plaintiffs contend that Wyeth and its predecessors knew "for more than 25 years that the acellular vaccine was less reactogenic and, therefore, safer for the children who receive it" and seek to establish liability by virtue of that knowledge, the two reports discussed immediately above, taken together, establish that Congress intended to preempt such claims. The Background Report indicates that Congress was well aware of the state of the art concerning development of an acellular DPT vaccine. It also evidences that Congress believed there were hurdles before such a vaccine could undergo clinical testing in the United States. The Commerce Report stresses the particular problems faced by DPT vaccine manufacturers, including the high number of lawsuits and existence of only two producers. The Commerce Report then concludes that the "withdrawal of even a single manufacturer would present the very real possibility of vaccine shortages ... [and] a resurgence of preventable diseases" and that the vaccine market will stabilize once "manufacturers have a better sense of their potential litigation obligations." Id. at 7. This evidence indicates that Congress weighed the various concerns related to the pertussis vaccine and concluded that DPT manufacturers should be shielded from liability for injuries arising from the whole-cell pertussis vaccine.
4.
As we stated at the beginning of this part, "Congressional purpose is the `ultimate touchstone' of our inquiry." Lorillard Tobacco Co., 533 U.S. at 541, 121 S.Ct. 2404 (quoting Cipollone, 505 U.S. at 516, 112 S.Ct. 2608). Section 22(a) and 22(b)(1) of the Vaccine Act contain express preemption clauses. Further, the structure and purpose of § 300aa-22 of the Act make clear that Congress intended to preempt some design defect claims. The legislative history identifies the scope of this preemption, which encompasses both strict liability and negligent design defect claims.
D.
The District Court did not clearly explain the basis of its summary judgment *252 decision. It neither discussed the three types of preemption nor mentioned that the motion for summary judgment raised only express preemption. Nevertheless, the District Court decision is consistent with an express preemption analysis, and we take it to have intended application of that doctrine. The four points discussed in the District Court's opinion were grounded in the purpose of the Vaccine Act. As discussed in Part III.B above, such an analysis is permitted when construing an express preemption clause. Furthermore, in response to the motion for summary judgment, the plaintiffs cited to the Vaccine Act's legislative history and purpose to support their argument that design defect claims were not preempted. As a result, we reject plaintiffs' argument that the District Court's decision was based on implied or field preemption grounds or that it violated well-settled principles of summary judgment.
IV.
Plaintiffs also allege that Wyeth is liable for failing to warn Hannah's doctor, Jane M. Breck, M.D., that the vaccine administered to Hannah came from a lot of TRIIMMUNOL associated with at least two deaths and more than thirty injuries prior to April 1992. Dr. Breck testified that had she known that the vaccine came from this lot, she would not have administered the dose. Although § 22(c) of the Vaccine Act expressly preempts failure-to-warn claims based on "the manufacturer's failure to provide direct warnings to the injured party (or the injured party's legal representative)," 42 U.S.C. § 300aa-22(c), nothing in the Vaccine Act expressly bars claims based on failure to warn "doctors and other medical intermediaries."[13]
As discussed above, § 22(b)(1) states that manufacturers shall not be liable for injuries caused by "side effects that were unavoidable even though the vaccine ... was accompanied by proper directions and warnings." Section 22(b)(2) states that proper directions and warnings will be presumed when the manufacturer "complied in all material respects with all requirements under the Federal Food, Drug, and Cosmetic Act ... and section 262 of this title...." Nevertheless, the Vaccine Act provides two circumstances in which this presumption can be overridden: (1) when the manufacturer engages in conduct that would subject it to punitive damages under the Vaccine Act; and (2) when the manufacturer "failed to exercise due care." 42 U.S.C. § 300aa-22(b)(2)(A)-(B). As the District Court correctly noted, this creates a shifting burdenonce the manufacturer establishes that it complied with federal law, the burden shifts to the plaintiff to establish that either § 22(b)(2)(A) or § 22(b)(2)(B) has been met.
The District Court dismissed this claim on the ground that Wyeth was entitled to the statutory presumption of proper warning and that the plaintiffs had failed to rebut the presumption. Noting that Wyeth had presented uncontested evidence that TRI-IMMUNOL and its warnings had been approved by the FDA, the District Court found that Wyeth was entitled to § 22(b)(2)'s presumption of proper warning. Next, the District Court noted that the Amended Complaint did not allege fraud or wrongful withholding of information within the meaning of § 22(b)(2)(A).[14]*253 Thus, the only relevant question was whether plaintiffs had presented clear and convincing evidence that Wyeth had not exercised due care.
Plaintiffs presented a report of the Vaccine Adverse Event Reporting System ("VAERS")[15] confirming that the lot of TRI-IMMUNOL that included the dose administered to Hannah Bruesewitz was associated with two deaths and more than thirty injuries. They also presented the affidavit of Dr. Donald H. Marks, who claimed that such a lot is sometimes called a "hot lot." Dr. Marks relied on a 1984 memorandum by an epidemiologist at the Department of Health and Human Services ("HHS") regarding the "Investigation of Potential Hot Lots," which said that "potential hot fill lots of DTP vaccine" are "fill lots that exceeded a threshold of ≥2 deaths or ≥2 convulsions or ≥10 total reports." The District Court, however, found it significant that this memorandum identified such lots merely as "potential" hot lots.
The memorandum also stated that "[i]n order to proceed with an investigation by which we could differentiate reporting bias from a higher rate of reactivity in specific fill lots we needed information on the number of doses distributed and which percent went to the public sector." Thus, in order to differentiate between a "hot lot" and a "potential hot lot," investigators must know not only the total number of incidents but also the rate at which the incidents occurred. Because the "[p]laintiffs have produced no evidence from which a trier of fact could infer that the dose in question originated" in such a lot, the District Court concluded that the plaintiffs had not proven that Wyeth failed to exercise due care by distributing doses from this lot.
Before this Court, the plaintiffs argue that the District Court's reasoning is flawed on two grounds: (1) Wyeth is not entitled to a presumption of proper warning unless the side effects of the vaccine are first shown to be unavoidable; because they allege a safer vaccine design was available, they argue that § 22(b)(2) should not apply; and (2) Dr. Mark's opinion raises an issue of fact as to whether Hannah's dose came from a "hot lot." We dismiss both arguments. The first argument must be dismissed for the reasons discussed in Part IIIthe Vaccine Act preempts design defect claims premised on the notion that the manufacturer could have created a safer vaccine. The second requires more discussion.
As stated above, a court may not grant summary judgment so long as there exists a genuine issue of material fact. Fed. R.Civ.P. 56(c); Kaucher v. County of Bucks, 455 F.3d 418, 423 (3d Cir.2006). To determine whether a factual dispute is genuine, "the court's function is not to weigh the evidence or to determine the truth of the matter, but only to determine whether the evidence of record is such that a reasonable jury could return a verdict for the nonmoving party." Orsatti v. N.J. State Police, 71 F.3d 480, 482 (3d Cir. 1995); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The "mere existence of a scintilla of evidence" in support of the nonmoving party's claim is insufficent. *254 Anderson, 477 U.S. at 252, 106 S.Ct. 2505. We will resolve all doubts and draw all reasonable inferences in favor of the nonmoving party. Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 140 (3d Cir.2004).
Dr. Marks identified the HHS memorandum as the basis on which he drew his conclusions: "This memorandum provides what I understood to be the official definition of a `Hot Lot'."[16] As the District Court correctly noted, the memorandum clearly states that the incident statistics, cited above, only establish "potential hot lots." It further states that investigators must identify the number of doses administered to determine whether a particular vaccine lot qualifies as a "hot lot."[17] Because plaintiffs have not offered any evidence on this point, Dr. Marks' assertions and conclusions are unsupported by the very memorandum upon which he relies.
The plaintiffs also contend that the sheer number of adverse events associated with this vaccine lot is sufficient to establish "some evidence of a serious health problem no [matter] how many doses, circumscribed by the concept of a batch, it contains." While this may be true, the plaintiffs' burden is not to produce "some evidence"a mere scintilla but evidence sufficient for a reasonable jury to find in their favor. The HHS memorandum states that investigators cannot conclude whether a vaccine lot is a "hot lot" without evidence on the number of doses administered. Thus, even drawing all inferences and doubts in favor of the plaintiffs, there is insufficient evidence on which a jury could conclude that Hannah's vaccine came from a "hot lot." Accordingly, the District Court did not err in granting summary judgment on the failure to warn claim.
V.
In their Amended Complaint, the plaintiffs alleged that Wyeth's "manufacturing *255 process and inadequate quality control resulted in recurrent problems with maintaining the appropriate balance between neuron-toxins and endo-toxins in the pertussis vaccine." Plaintiffs also assert, as they do before this Court, that they have a "classic manufacturing defect claim here: that the vaccine lot used on Hannah Bruesewitz was tainted such that it was associated with two deaths and more than 66 injuries, a number and percentage far in excess of that for other lots." Under Pennsylvania law, a plaintiff alleging a manufacturing defect based on a strict liability theory must show that: (1) "the product was defective;" (2) "the defect was a proximate cause of the plaintiff's injuries;" and (3) "the defect causing the injury existed at the time the product left the seller's hands." Berkebile v. Brantly Helicopter Corp., 462 Pa. 83, 337 A.2d 893, 898 (1975).
The District Court held that plaintiffs had failed to provide enough evidence of a manufacturing defect to meet their burden for purposes of summary judgment. With regard to the first claim, related to the balance of neuro and endo-toxins, the District Court concluded that "Plaintiffs have offered absolutely no evidence to support this allegation...." Moreover, the District Court noted this claim was directly refuted by Wyeth, which offered undisputed evidence that its pertussis vaccine did not contain a neuro-toxin component and was not known to have a neuro-toxic effect.
The District Court also considered the plaintiffs' second argument, which was essentially the same as the "hot lot" theory discussed above. The plaintiffs argued to the District Court that a "hot lot" can serve as circumstantial evidence of a manufacturing defect. The District Court noted that this theory is known as the "malfunction theory:"
The malfunction theory permits a plaintiff to prove a defect in a product with evidence of the occurrence of a malfunction and with evidence eliminating abnormal use or reasonable, secondary causes for the malfunction. The plaintiff is relieved from demonstrating precisely the defect yet it permits the trier-of-fact to infer one existed from evidence of the malfunction, of the absence of abnormal use and of the absence of reasonable secondary causes.
Bruesewitz v. Wyeth, 508 F.Supp.2d 430, 450 (E.D.Pa.2007) (quoting Barnish v. KWI Bldg. Co., 2007 PA Super 1, 916 A.2d 642, 646 (2007)).
As the District Court recognized, this theory has not been applied to allegedly defective vaccines. Nevertheless, we need not determine if and how this theory of liability would apply in this case. Both before the District Court and this Court, the plaintiffs predicated their argument for a manufacturing defect on the fact that Hannah's vaccine came from a "hot lot." For the reasons stated in Part IV, after drawing all reasonable inferences in favor of the plaintiffs, we agree with the District Court's conclusion that the plaintiffs have not provided evidence from which a jury could conclude that Hannah was administered a vaccine from a "hot lot." Because plaintiffs sole arguments to this Court on the manufacturing defect issue require a finding of a "hot lot," we will also affirm the District Court's judgment on this claim.
VI.
We hold that the plaintiffs design defect claims are expressly preempted by the Vaccine Act. We also conclude that the plaintiffs have failed to establish either a manufacturing defect or a warning defect claim under the Vaccine Act. For the reasons discussed above, we will affirm the *256 District Court's grant of summary judgment in favor of Wyeth.
NOTES
[1] The Vaccine Act created the "Vaccine Injury Table." 42 U.S.C. § 300aa-14. It sets forth the "vaccines, the injuries, disabilities, illnesses, conditions, and deaths resulting from the administration" of vaccines for which individuals may seek compensation. Id.
[2] The party also has the option of appealing the Court of Federal Claims' judgment to the United States Court of Appeals for the Federal Circuit. 42 U.S.C. § 300aa-12(f).
[3] The National Health Institute first issued a product license for TRI-IMMUNOL in 1948 to American Cyanamid Company ("Cyanamid"). Lederle Laboratories, an unincorporated division of Cyanamid, produced TRIIMMUNOL. In 1994, American Home Products Corporation ("AHPC") acquired Cyanamid. In March 2002, AHPC changed its name to Wyeth.
[4] The acellular pertussis vaccine contains pertussis toxin and other bacterial components. These components, however, are less reactive and cause fewer adverse events because they have been detoxified using chemical or genetic techniques. Centers for Disease Control and Prevention, Pertussis Vaccination: Acellular Pertussis Vaccine for the Fourth and Fifth Doses of the DPT Series; Update to Supplementary ACIP Stat Recommendations of the Advisory Committee on Immunization Practices, October 9, 1992, http://www.cdc.gov/mmwr/preview/mmwrhtml/00048610.htm.
[5] Effective March 10, 1995, approximately one month before the plaintiffs filed their petition with the Vaccine Court, new regulations deleted residual seizure disorder as a Table injury for DPT vaccine. Bruesewitz v. Sec'y of Dep't of HHS, No. 95-0266V, 2002 WL 31965744, at *1 n. 1 (Fed.Cl. Dec. 20, 2002); see also National Vaccine Injury Compensation Program Revision of the Vaccine Injury Table, 60 Fed.Reg. 7678, 7689-91 (Feb. 8, 1995).
[6] The plaintiffs argue that the District Court's decision violates the principle that a "district court may not grant summary judgment sua sponte on grounds not requested by the moving party." John Deere Co. v. Am. Nat'l Bank, 809 F.2d 1190, 1192 (5th Cir.1987). This Court has previously remanded a claim because the District Court granted summary judgment on a ground not offered in the moving party's motion. Brobst v. Columbus Servs. Intern., 761 F.2d 148, 159 (3d Cir.1985). For the reasons that follow, we need not decide this issue. We note, however, that our ruling in Brobst was predicated on a district court's obligation to provide notice to the parties before ruling on a particular issue. In this case, the plaintiffs argued in their response to the motion for summary judgment about the propriety of ruling on implied preemption grounds, thereby indicating that they were on notice that the District Court may have been considering implied preemption at that time and furthermore that they had an opportunity to respond on this issue.
[7] See, e.g., Davis v. Wyeth Labs., Inc., 399 F.2d 121, 128 (9th Cir.1968); Lewis v. Baker, 243 Or. 317, 413 P.2d 400, 404 (1966) (overruled in part on other grounds).
[8] In Wyeth v. Levine, ___ U.S. ___, 129 S.Ct. 1187, 1189, ___ L.Ed.2d ___ (2009), the Supreme Court examined whether federal law preempted state tort claims alleging that a drug manufacturer failed to adequately warn of the dangers associated with a drug. Id. at 1189. Though we recognize that the Supreme Court concluded that state tort law claims were not preempted in that case, id. at 1203-04, Levine is readily distinguishable on several grounds. First, the Court explicitly noted the absence of an express preemption provision and found Congress's silence, "coupled with its certain awareness of the prevalence of state tort litigation, [] powerful evidence." Id. at 1199-1200. In this case, however, Congress included an express preemption provision that was prompted, as evidenced by the Committee Report, by the prevalence of state tort litigation. Second, it recognized that, under federal law, a drug manufacturer could strengthen a drug's label without preapproval from the FDA. Id. at 1196-97. This stands in contrast to the FDA's far-more extensive control and oversight of the approval of a drug's design and alteration.
[9] The Georgia Supreme Court took this reference to mean that Congress intended to preserve some design defect claims and permit case-by-case consideration of whether a vaccine is unavoidably harmful. See Ferrari, 668 S.E.2d at 239-40. Specifically, the Ferrari Court pointed to the fact that a majority of courts have interpreted comment k as permitting a case-by-case analysis of whether a vaccine's side effects are avoidable. Id. at 239. It then drew on the Vaccine Act's legislative history to support its conclusion that Congress interpreted comment k in the same manner as those other courts. Id. at 240.
Though we acknowledge that a majority of states permit some design defect claims under comment k, we disagree with the Georgia Supreme Court on the relevance of this fact. First, it discounts that courts in a significant minority of states have held that comment k preempts all strict liability design defect claims against FDA-approved drugs. Second, the current state of affairs with regard to the interpretation of comment k tells us little about what Congress knew in 1986 when it passed the Vaccine Act. As one court has noted, "in 1986 courts had not yet reached a consensus on the meaning of Comment k, or the proper treatment of prescription drugs in design defect legislation. Thus, while some courts concluded that a case-by-case analysis was necessary ... others concluded that prescription drug manufacturers were generally not liable for design defect claims." Militrano v. Lederle Labs. 3 Misc.3d 523, 769 N.Y.S.2d 839, 844-45 (N.Y.Sup.Ct.2003). Finally, we note that regardless of state court consideration of comment k, we believe Congress made it clear what it intended when it invoked comment k.
[10] Comment k states the following:
There are some products which, in the present state of human knowledge, are quite incapable of being made safe for their intended and ordinary use.... An outstanding example is the vaccine for the Pasteur treatment of rabies, which not uncommonly leads to both serious and damaging consequences when it is injected. Since the disease itself invariably leads to a dreadful death, both the marketing and the use of the vaccine are fully justified, notwithstanding the unavoidable high degree of risk which they involve. Such a product, properly prepared, and accompanied by proper directions and warning, is not defective, nor is it unreasonably dangerous.... The seller of such products, again with the qualification that they are properly prepared and marketed, and proper warning is given, where the situation calls for it, is not to be held to strict liability for unfortunate consequences attending their use, merely because he has undertaken to supply the public with an apparently useful and desirable product, attended with a known but apparently reasonable risk.
Restatement (Second) of Torts § 402A cmt. k (1966).
[11] Information pertaining to Congressional passage of the Vaccine Act, including the dates of the markup hearing and Committee consideration, can be found on the Library of Congress's website for legislative information. Library of Congress, THOMAS, S.1744 (P.L. 99-660): All Congressional Actions with Amendments, http://thomas.loc.gov/cgi-bin/bdquery/z?d099:SN01744:@@@TOM:/bss/d 099query.html.
[12] The Energy and Commerce Committee retains a transcript of this hearing, but this transcript was not available to us.
[13] The parties disagree as to whether Section 22(b)(2) is a preemption clause. Though Wyeth classified it as such, the District Court expressly held that the failure-to-warn claim was not preempted. We need not reach this issue, however, for the reasons set forth in this section.
[14] The District Court acknowledged that the original Complaint alleged that Wyeth had committed fraud or wrongful withholding of information, but the Amended Complaint failed to do so. Nevertheless, even if the Amended Complaint had repeated this allegation, the District Court suggested that it would not have survived application of Fed. R.Civ.P. 9(b), which requires that allegations of fraud be pled with particularity.
[15] As the District Court explained, "VAERS is a database created, pursuant to the Vaccine Act, by the FDA and the Centers for Disease Control and Prevention to receive reports about adverse events which may be associated with vaccines."
[16] Dr. Marks also approvingly cited to an older document from the Food and Drug Administration. This document states:
In analyzing patterns of adverse event reporting, the FDA considers more than just the number of reports for a lot. More reports will be received for a large lot than a small one, simply because vaccine from the large lot will be given to more children. Some lots contain as many as 700,000 doses, while others as few as 20,000 doses. Similarly, more reports will be received for a lot that has been in use for a long time than a lot in use for a short time. Even among lots of similar size and time in use, some lots will receive more reports than others simply due to change. The FDA continually looks for lots that have received more serious reports tha[n] should be expected on the basis of such factors as size, time in use, and chance variation.
Pub. Health Serv., Dep't of Health & Human Servs., Vaccine Adverse Event Reporting System (VAERS) 2.
[17] Other authorities support this. For instance, according to the Centers for Disease Control and Prevention:
Vaccine lots are not the same. The sizes of vaccine lots might vary from several hundred thousand doses to several million, and some are in distribution much longer than others. Naturally a larger lot or one that is in distribution longer will be associated with more adverse events, simply by chance. Also, more coincidental deaths are associated with vaccines given in infancy than later in childhood, since the background death rates for children are highest during the first year of life. So knowing that lot A has been associated with x number of adverse events while lot B has been associated with y number would not necessarily say anything about the relative safety of the two lots, even if the vaccine did cause the events.
Centers for Disease Control and Prevention, Some Common Misconceptions About Vaccination and How to Respond to Them, http:// www.cdc.gov/vaccines/vac-gen/6mishome. htm# Therear ehot.
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695 S.E.2d 757 (2010)
The COVENTRY WOODS NEIGHBORHOOD ASSOCIATION, INC., a North Carolina non-profit corporation, John F. Bordsen and wife, Patricia Bresina, Martha L. McAulay, and Joan E. Provost, Eva Cole Matthews, Chris Johnson and wife, Shannon Jones, Rebecca S. Gardner, John White, Ronald Matthews and wife, Evelyn Matthews and Shirley Jones, and Thomas R. Myers
v.
CITY OF CHARLOTTE, North Carolina, a municipal corporation, Charlotte-Mecklenburg Planning Commission, an agency of the City of Charlotte, and Independence Capital Realty, LLC, a North Carolina limited liability corporation.
No. 99A10.
Supreme Court of North Carolina.
April 14, 2010.
Kenneth T. Davies, for Coventry Woods, et al.
Richard A. Vinroot, Charlotte, for the Coventry Woods Neighborhood Association, Inc, et al.
*758 Robert E. Hagemann, Senior Deputy City Attorney, for City of Charlotte.
Prior report: ___ N.C.App. ___, 688 S.E.2d 538.
ORDER
Upon consideration of the notice of appeal from the North Carolina Court of Appeals, filed by the Plaintiffs on the 8th of March 2010 in this matter pursuant to G.S. 7A-30, and the joint motion to dismiss the appeal filed by the Defendants, the following order was entered and is hereby certified to the North Carolina Court of Appeals: the joint motion to dismiss the appeal is
"Allowed by order of the Court in conference, this the 14th of April 2010."
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115 So.2d 418 (1959)
Leon Allen FEKANY et al., Appellants,
v.
STATE ROAD DEPARTMENT of Florida, an Agency of the State of Florida, Appellee.
No. 1227.
District Court of Appeal of Florida. Second District.
November 4, 1959.
Kirkland & Hurt Associates and Sam E. Murrell & Sons, Orlando, for appellants.
Clyde G. Trammell, Jr., Tallahassee, for appellee.
ALLEN, Chief Judge.
The appellee, as plaintiff in the lower court, filed a petition for condemnation of defendants' property under Florida Statutes, Chapters 73 and 74, F.S.A. The defendants filed their answers admitting ownership and requested damages, attorneys' fees, and costs as provided by law. Trial was had before a jury which resulted in a verdict for Cortina for $8,000, plus attorney's fees of $250; a verdict for Rojek for $12,050, plus attorney's fees of $250; a verdict for Fekany for $11,150 plus attorney's fees of $250; and a verdict for *419 Wilder for $18,150 plus attorney's fees of $250.
Motions for new trial or judgment notwithstanding the verdict were made by the defendants on the basis that the attorneys' fees were grossly inadequate. These motions were denied by the lower court and this appeal is before this court solely on the question of the adequacy of the awards with respect to attorneys' fees.
The appellants introduced one witness during the trial on the issue of attorneys' fees. After being qualified as an expert witness, he testified on direct examination:
"Q. Mr. Whittaker, as not only a practicing attorney, but a member of the various bar associations and president of the local bar association, having done this type of work, are you familiar with the reasonable charges of attorneys for persons involved as defendants in eminent domain and condemnation proceedings? A. I am.
"Q. Based on your knowledge of these various matters, what would you say, and what is your opinion of a reasonable fee to be paid the defendants for services of their attorneys in representing them in this particular suit? A. In my opinion, a reasonable fee for such services would be a minimum fee in any case, regardless of the amount involved, of $100.00 and in addition thereto ten percent of the amount that was subsequently directed to be paid to the defendant property owner.
"Q. It is your opinion then that $100.00 plus ten percent of the verdict that the defendant gets would adequately compensate the defendants for the services of their attorneys? A. I believe that it would.
"Q. And that coupled with the hundred would be just compensation to be paid by the defendant to his attorney, in your opinion? A. It would."
On cross-examination the expert witness, Mr. Whittaker, stated:
"Q. Let me ask you this question, Mr. Whittaker. What in your opinion would be a reasonable fee to pay the property owner for his attorney in an eminent domain proceeding? A. I have already given that opinion and I understand what you are getting at and you can stop me if my answer is not responsive, but in my opinion the ten percent of the verdict awarded for the taking of a property owner's property would apply up to a figure of $15,000.00 and beyond that, in my opinion a reasonable fee would reduce that percentage fee to five percent of the balance over $15,000.00.
"Q. You are still of that opinion? A. I am."
This is the only evidence in the record before this court on the reasonableness of the attorneys' fees. There is neither testimony as to the number of hours spent by any of the attorneys in preparation for trial, nor is there any testimony or evidence as to the amount of work that any of the attorneys specifically performed. The expert testimony of Mr. Whittaker was couched in generalities in answering hypothetical questions concerning eminent domain and condemnation proceedings.
The Supreme Court held in Baruch v. Giblin, 122 Fla. 59, 164 So. 831, 833:
"The testimony of duly qualified witnesses given as expert opinion evidence is admissible, and may be offered in support of the issue as to the value of the services of an attorney, though such issues may be proven by other evidence and other circumstances affecting it. The rule is generally approved that while expert testimony is strongly persuasive as to the value of an attorney's services it is not conclusive, neither is it binding on the court or the jury. Such evidence should be *420 weighed with reference to the nature of the services, the time consumed in their performance, and other incidents peculiar to the case in which it was performed."
Numerous elements enter into the determination of the reasonableness of attorneys' fees. The jury can consider the service performed, the responsibility undertaken, the nature of the service, the degree of skill, the amount of time involved, and the importance and results of the litigation. Subjectively speaking, in estimating the value of an attorney's services, his skill, experience, professional reputation, and even his amount of business may be taken into consideration. Folmar v. Davis, Fla. App. 1959, 108 So.2d 772.
The testimony of an expert witness is to aid and assist in the determination of the issue, however, such testimony is neither conclusive nor binding on the court or the jury. Folmar v. Davis, supra, and see cases cited therein.
An issue similar to the issue in the instant case was before the Third District Court of Appeal in Dratch v. Dade County, Fla. App. 1958, 105 So.2d 171. In discussing reasonableness of attorneys' fees in a proceeding pursuant to Section 73.16, Fla. Stat., F.S.A., the court cited Baruch v. Giblin, supra, and then held that it is within the province of the jury to determine what is a reasonable fee. The court further stated that the trial court should not instruct the jury as to a definite amount to be awarded for attorneys' fees unless it is so stipulated between the parties.
Although the court in the Dratch case held a jury award of $225 as an attorney fee on a $23,000 verdict and a $175 attorney fee on a $13,500 verdict inadequate, we think the case is clearly distinguishable from the instant case. The trial of the Dratch case lasted for two weeks and involved one group of 90 parcels of land and another group of 38 parcels of land. The defendants and petitioner had stipulated as to many of the parcels that the attorneys' fees in each parcel wherein the verdict had awarded less than 5% to the attorneys over and above the award to the defendants should be increased to 5%, but the appellants in the Dratch case did not sign this stipulation. Whereas in the instant case the trial lasted only two days, no stipulations regarding attorneys' fees were made, the defendants received the same award as the amount of petitioner's appraisal, and, we again emphasize, there was no evidence at all of the amount of labor performed by the attorneys for the property owners. We cannot tell from the court's opinion in the case of Dratch v. Dade County, supra, whether or not there was in the record any evidence of the time consumed, questions involved, etc., or other evidence except expert opinion on reasonable value of attorneys' fees based on the amount recovered alone.
The Third District Court of Appeal more recently again ruled on this issue in Romy v. Dade County, Fla.App. 1959, 114 So.2d 8, 9. An eminent domain proceeding had been brought and at the close of the case the trial judge had directed a verdict for attorneys' fees equal to 10 percent of amounts awarded to the landowners. In reversing on the ground that to give such an instruction in the absence of a stipulation thereto is error, the court stated:
"This court previously has followed and applied the rule that in the determination of the value of an attorney's services, testimony of qualified experts, though strongly persuasive, is not binding on a court or jury but is to be weighed with other evidence and factors appearing in the case and bearing upon the value of such services. Folmar v. Davis, Fla.App. 1959, 108 So.2d 772. See, also, Baruch v. Giblin, 122 Fla. 59, 164 So. 831.
"The rule thus enunciated was applied by this court in the case of Dratch v. Dade County, Fla.App. 1958, 105 So.2d 171, 174, and we hold here, *421 as was held in the Dratch case, that in the trial of an eminent domain case `the court should not instruct the jury as to a definite amount to be awarded for attorneys' fees unless it is stipulated between petitioner and defendants.'"
We note in passing that the hypothetical questions propounded to Mr. Whittaker were not supported by any testimony or fact predicate in the record and, was therefore improper. It is uniformly held that an expert may not be interrogated on a hypothesis having no foundation in the evidence. Alls v. State, 104 Fla. 373, 139 So. 789; 13 Fla.Jur. Evidence, section 314; Jones on Evidence, section 416; McCormick on Evidence, Ch. 3, sec. 14; and 32 C.J.S. Evidence § 553.
In view of the foregoing principles and finding no error, the judgment appealed from is affirmed.
Affirmed.
SHANNON, J., and SMITH, CULVER, Associate Judge, concur.
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106 U.S. 350 (____)
ST. CLAIR
v.
COX.
Supreme Court of United States.
Mr. Charles I. Walker for the plaintiff in error.
Mr. Henry M. Duffield and Mr. Levi T. Griffin for the defendant in error.
MR. JUSTICE FIELD delivered the opinion of the court.
This action was brought by the plaintiff in the court below, to recover the amount due on two promissory notes of the defendants, each for the sum of $2,500, bearing date on the 2d of August, 1877, and payable five months after date, to the order *351 of the Winthrop Mining Company, at the German National Bank, in Chicago, with interest at the rate of seven per cent per annum.
To the action the defendants set up various defences, and, among others, substantially these: That the consideration of the notes had failed; that they were given, with two others of like tenor and amount, to the Winthrop Mining Company, a corporation created under the laws of Illinois, in part payment for ore and other property sold to the defendants upon a representation as to its quantity, which proved to be incorrect; that only a portion of the quantity sold was ever delivered, and that the value of the deficiency exceeded the amount of the notes in suit; that at the commencement of the action, and before the transfer of the notes to the plaintiff, the Winthrop Mining Company was indebted to the defendants in a large sum, viz. $10,000, upon a judgment recovered by them in the Circuit Court of Marquette County, in the State of Michigan, and that the notes were transferred to him after their maturity and dishonor, and after he had notice of the defences to them.
On the trial, evidence was given by the defendants tending to show that the plaintiff was not a bona fide holder of the notes for value. A certified copy of that judgment was also produced by them and offered in evidence; but on his objection that it had not been shown that the court had obtained jurisdiction of the parties, it was excluded, and to the exclusion an exception was taken. The jury found for him for the full amount claimed; and judgment having been entered thereon, the defendants brought the case here for review. The ruling of the court below in excluding the record constitutes the only error assigned.
The judgment of the Circuit Court in Michigan was rendered in an action commenced by attachment. If the plaintiffs in that action were, at its commencement, residents of the State, of which some doubt is expressed by counsel, the jurisdiction of the court, under the writ, to dispose of the property attached, cannot be doubted, so far as was necessary to satisfy their demand. No question was raised as to the validity of the judgment to that extent. The objection to it was as evidence *352 that the amount rendered was an existing obligation or debt against the company. If the court had not acquired jurisdiction over the company, the judgment established nothing as to its liability, beyond the amount which the proceeds of the property discharged. There was no appearance of the company in the action, and judgment against it was rendered for $6,450 by default. The officer, to whom the writ of attachment was issued, returned that, by virtue of it, he had seized and attached certain specified personal property of the defendant, and had also served a copy of the writ, with a copy of the inventory of the property attached, on the defendant, "by delivering the same to Henry J. Colwell, Esq., agent of the said Winthrop Mining Company, personally, in said county."
The laws of Michigan provide for attaching property of absconding, fraudulent, and non-resident debtors and of foreign corporations. They require that the writ issued to the sheriff, or other officer by whom it is to be served, shall direct him to attach the property of the defendant, and to summon him if he be found within the county, and also to serve on him a copy of the attachment and of the inventory of the property attached. They also declare that where a copy of the writ of attachment has been personally served on the defendant, the same proceedings may be had thereon in the suit in all respects as upon the return of an original writ of summons personally served where suit is commenced by such summons. 2 Comp. Laws, 1871, sects. 6397 and 6413.
They also provide, in the chapter regulating proceedings by and against corporations, that "suits against corporations may be commenced by original writ of summons, or by declaration, in the same manner that personal actions may be commenced against individuals, and such writ, or a copy of such declaration, in any suit against a corporation, may be served on the presiding officer, the cashier, the secretary, or the treasurer thereof; or, if there be no such officer, or none can be found, such service may be made on such other officer or member of such corporation, or in such other manner as the court in which such suit is brought may direct;" and that "in suits commenced by attachment in favor of a resident of this State against any corporation created by or under the laws of any other State, *353 government, or country, if a copy of such attachment and of the inventory of property attached shall have been personally served on any officer, member, clerk, or agent of such corporation within this State, the same proceedings shall be thereupon had, and with like effect, as in case of an attachment against a natural person, which shall have been returned served in like manner upon the defendant." 2 Comp. Laws, 1871, sects. 6544 and 6550.
The courts of the United States only regard judgments of the State courts establishing personal demands as having validity or as importing verity where they have been rendered upon personal citation of the party, or, what is the same thing, of those empowered to receive process for him, or upon his voluntary appearance.
In Pennoyer v. Neff we had occasion to consider at length the manner in which State courts can acquire jurisdiction to render a personal judgment against non-residents which would be received as evidence in the Federal courts; and we held that personal service of citation on the party or his voluntary appearance was, with some exceptions, essential to the jurisdiction of the court. The exceptions related to those cases where proceedings are taken in a State to determine the status of one of its citizens towards a non-resident, or where a party has agreed to accept a notification to others or service on them as citation to himself. 95 U.S. 714.
The doctrine of that case applies, in all its force, to personal judgments of State courts against foreign corporations. The courts rendering them must have acquired jurisdiction over the party by personal service or voluntary appearance, whether the party be a corporation or a natural person. There is only this difference: a corporation being an artificial being, can act only through agents, and only through them can be reached, and process must, therefore, be served upon them. In the State where a corporation is formed it is not difficult to ascertain who are authorized to represent and act for it. Its charter or the statutes of the State will indicate in whose hands the control and management of its affairs are placed. Directors are readily found, as also the officers appointed by them to manage its business. But the moment the boundary *354 of the State is passed difficulties arise; it is not so easy to determine who represent the corporation there, and under what circumstances service on them will bind it.
Formerly it was held that a foreign corporation could not be sued in an action for the recovery of a personal demand outside of the State by which it was chartered. The principle that a corporation must dwell in the place of its creation, and cannot, as said by Mr. Chief Justice Taney, migrate to another sovereignty, coupled with the doctrine that an officer of the corporation does not carry his functions with him when he leaves his State, prevented the maintenance of personal actions against it. There was no mode of compelling its appearance in the foreign jurisdiction. Legal proceedings there against it were, therefore, necessarily confined to the disposition of such property belonging to it as could be there found; and to authorize them legislation was necessary.
In McQueen v. Middleton Manufacturing Co., decided in 1819, the Supreme Court of New York, in considering the question whether the law of that State authorized an attachment against the property of a foreign corporation, expressed the opinion that a foreign corporation could not be sued in the State, and gave as a reason that the process must be served on the head or principal officer within the jurisdiction of the sovereignty where the artificial body existed; observing that if the president of a bank went to New York from another State he would not represent the corporation there; and that "his functions and his character would not accompany him when he moved beyond the jurisdiction of the government under whose laws he derived this character." 16 Johns. (N.Y.) 5. The opinion thus expressed was not, perhaps, necessary to the decision of the case, but nevertheless it has been accepted as correctly stating the law. It was cited with approval by the Supreme Court of Massachusetts, in 1834, in Peckham v. North Parish in Haverhill, the court adding that all foreign corporations were without the jurisdiction of the process of the courts of the Commonwealth. 16 Pick. (Mass.) 274. Similar expressions of opinion are found in numerous decisions, accompanied sometimes with suggestions that the doctrine might be otherwise if the foreign corporation sent its *355 officer to reside in the State and transact business there on its account. Libbey v. Hodgdon, 9 N.H. 394; Moulin v. Trenton Insurance Co., 24 N.J.L. 222.
This doctrine of the exemption of a corporation from suit in a State other than that of its creation was the cause of much inconvenience, and often of manifest injustice. The great increase in the number of corporations of late years, and the immense extent of their business, only made this inconvenience and injustice more frequent and marked. Corporations now enter into all the industries of the country. The business of banking, mining, manufacturing, transportation, and insurance is almost entirely carried on by them, and a large portion of the wealth of the country is in their hands. Incorporated under the laws of one State, they carry on the most extensive operations in other States. To meet and obviate this inconvenience and injustice, the legislatures of several States interposed, and provided for service of process on officers and agents of foreign corporations doing business therein. Whilst the theoretical and legal view, that the domicile of a corporation is only in the State where it is created, was admitted, it was perceived that when a foreign corporation sent its officers and agents into other States and opened offices, and carried on its business there, it was, in effect, as much represented by them there as in the State of its creation. As it was protected by the laws of those States, allowed to carry on its business within their borders, and to sue in their courts, it seemed only right that it should be held responsible in those courts to obligations and liabilities there incurred.
All that there is in the legal residence of a corporation in the State of its creation consists in the fact that by its laws the corporators are associated together and allowed to exercise as a body certain functions, with a right of succession in its members. Its officers and agents constitute all that is visible of its existence; and they may be authorized to act for it without as well as within the State. There would seem, therefore, to be no sound reason why, to the extent of their agency, they should not be equally deemed to represent it in the States for which they are respectively appointed when it is called to legal responsibility for their transactions.
*356 The case is unlike that of suits against individuals. They can act by themselves, and upon them process can be directly served, but a corporation can only act and be reached through agents. Serving process on its agents in other States, for matters within the sphere of their agency, is, in effect, serving process on it as much so as if such agents resided in the State where it was created.
A corporation of one State cannot do business in another State without the latter's consent, express or implied, and that consent may be accompanied with such conditions as it may think proper to impose. As said by this court in Lafayette Insurance Co. v. French, "These conditions must be deemed valid and effectual by other States and by this court, provided they are not repugnant to the Constitution or laws of the United States, or inconsistent with those rules of public law which secure the jurisdiction and authority of each State from encroachment by all others, or that principle of natural justice which forbids condemnation without opportunity for defence." 18 How. 404, 407; Paul v. Virginia, 8 Wall. 168.
The State may, therefore, impose as a condition upon which a foreign corporation shall be permitted to do business within her limits, that it shall stipulate that in any litigation arising out of its transactions in the State, it will accept as sufficient the service of process on its agents or persons specially designated; and the condition would be eminently fit and just. And such condition and stipulation may be implied as well as expressed. If a State permits a foreign corporation to do business within her limits, and at the same time provides that in suits against it for business there done, process shall be served upon its agents, the provision is to be deemed a condition of the permission; and corporations that subsequently do business in the State are to be deemed to assent to such condition as fully as though they had specially authorized their agents to receive service of the process. Such condition must not, however, encroach upon that principle of natural justice which requires notice of a suit to a party before he can be bound by it. It must be reasonable, and the service provided for should be only upon such agents as may be properly deemed representatives of the foreign corporation. The decision of this *357 court in Lafayette Insurance Co. v. French, to which we have already referred, sustains these views.
The State of Michigan permits foreign corporations to transact business within her limits. Either by express enactment, as in the case of insurance companies, or by her acquiescence, they are as free to engage in all legitimate business as corporations of her own creation. Her statutes expressly provide for suits being brought by them in her courts; and for suits by attachment being brought against them in favor of residents of the State. And in these attachment suits they authorize the service of a copy of the writ of attachment, with a copy of the inventory of the property attached, on "any officer, member, clerk, or agent of such corporation" within the State, and give to a personal service of a copy of the writ and of the inventory on one of these persons the force and effect of personal service of a summons on a defendant in suits commenced by summons.
It thus seems that a writ of foreign attachment in that State is made to serve a double purpose, as a command to the officer to attach property of the corporation, and as a summons to the latter to appear in the suit. We do not, however, understand the laws as authorizing the service of a copy of the writ, as a summons, upon an agent of a foreign corporation, unless the corporation be engaged in business in the State, and the agent be appointed to act there. We so construe the words "agent of such corporation within this State." They do not sanction service upon an officer or agent of the corporation who resides in another State, and is only casually in the State, and not charged with any business of the corporation there. The decision in Newell v. Great Western Railway Co., reported in the 19th of Michigan Reports, supports this view, although that was the case of an attempted service of a declaration as the commencement of the suit. The defendant was a Canadian corporation owning and operating a railroad from Suspension Bridge in Canada to the Detroit line at Windsor opposite Detroit, and carrying passengers in connection with the Michigan Central Railroad Company, upon tickets sold by such companies respectively. The suit was commenced in Michigan, the declaration alleging a contract by the defendant to carry the plaintiff over its road, and its violation of the contract by *358 removing him from its cars at an intermediate station. The declaration was served upon Joseph Price, the treasurer of the corporation, who was only casually in the State. The corporation appeared specially to object to the jurisdiction of the court, and pleaded that it was a foreign corporation, and had no place of business or agent or officer in the State, or attorney to receive service of legal process, or to appear for it; and that Joseph Price was not in the State at the time of service on him on any official business of the corporation. The plaintiff having demurred to this plea, the court held the service insufficient. "The corporate entity," said the court, "could by no possibility enter the State, and it could do nothing more in that direction than to cause itself to be represented here by its officers or agents. Such representation would, however, necessarily imply something more than the mere presence here of a person possessing, when in Canada, the relation to the company of an officer or agent. To involve the representation of the company here, the supposed representative would have to hold or enjoy in this State an actual present official or representative status. He would be required to be here as an agent or officer of the corporation, and not as an isolated individual. If he should drop the official or representative character at the frontier, if he should bring that character no further than the territorial boundary of the government to whose laws the corporate body itself, and consequently the official positions of its officers also, would be constantly indebted for existence, it could not, with propriety, be maintained that he continued to possess such character by force of our statute. Admitting, therefore, for the purpose of this suit, that in given cases the foreign corporation would be bound by service on its treasurer in Michigan, this could only be so when the treasurer, the then official, the officer then in a manner impersonating the company, should be served. Joseph Price was not here as the treasurer of the defendants. He did not then represent them. His act in coming was not the act of the company, nor was his remaining the business or act of any besides himself. He had no principal, and he was not an agent. He had no official status or representative character in this State." p. 344.
According to the view thus expressed by the Supreme Court *359 of Michigan, service upon an agent of a foreign corporation will not be deemed sufficient, unless he represents the corporation in the State. This representation implies that the corporation does business, or has business, in the State for the transaction of which it sends or appoints an agent there. If the agent occupies no representative character with respect to the business of the corporation in the State, a judgment rendered upon service on him would hardly be considered in other tribunals as possessing any probative force. In a case where similar service was made in New York upon an officer of a corporation of New Jersey accidentally in the former State, the Supreme Court of New Jersey said, that a law of another State which sanctioned such service upon an officer accidentally within its jurisdiction was "so contrary to natural justice and to the principles of international law, that the courts of other States ought not to sanction it." Moulin v. Trenton Insurance Co., 24 N.J.L. 222, 234.
Without considering whether authorizing service of a copy of a writ of attachment as a summons on some of the persons named in the statute a member, for instance, of the foreign corporation, that is, a mere stockholder is not a departure from the principle of natural justice mentioned in Lafayette Insurance Co. v. French, which forbids condemnation without citation, it is sufficient to observe that we are of opinion that when service is made within the State upon an agent of a foreign corporation, it is essential, in order to support the jurisdiction of the court to render a personal judgment, that it should appear somewhere in the record either in the application for the writ, or accompanying its service, or in the pleadings or the finding of the court that the corporation was engaged in business in the State. The transaction of business by the corporation in the State, general or special, appearing, a certificate of service by the proper officer on a person who is its agent there would, in our opinion, be sufficient prima facie evidence that the agent represented the company in the business. It would then be open, when the record is offered as evidence in another State, to show that the agent stood in no representative character to the company, that his duties were limited to those of a subordinate employé, or to a particular *360 transaction, or that his agency had ceased when the matter in suit arose.
In the record, a copy of which was offered in evidence in this case, there was nothing to show, so far as we can see, that the Winthrop Mining Company was engaged in business in the State when service was made on Colwell. The return of the officer, on which alone reliance was placed to sustain the jurisdiction of the State court, gave no information on the subject. It did not, therefore, appear even prima facie that Colwell stood in any such representative character to the company as would justify the service of a copy of the writ on him. The certificate of the sheriff, in the absence of this fact in the record, was insufficient to give the court jurisdiction to render a personal judgment against the foreign corporation. The record was, therefore, properly excluded.
Judgment affirmed.
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312 B.R. 52 (2004)
In re ENCORE HEALTHCARE ASSOCIATES, Debtor.
No. 04-11025DWS.
United States Bankruptcy Court, E.D. Pennsylvania.
June 18, 2004.
*53 Peter E. Meltzer, Meltzer and Associates, P.C., Philadelphia, PA, for Encore Healthcare Associates.
Dave P. Adams, United States Department of Justice, Philadelphia, PA, for United States Trustee.
MEMORANDUM OPINION
DIANE WEISS SIGMUND, Chief Judge.
Before the Court is the Motion for an Order under 11 U.S.C. §§ 105(a), 363 and Fed.Bankr.R. 2002, 6004, 6008 and 9014(A) Approving Auction and Notice Procedures, (B) Authorizing the Sale of Substantially All of Debtor's Assets Free and Clear of Liens, Claims and Encumbrances and (C) Granting Related Relief (the "Motion"). A hearing was held on May 18, 2004 at which the Debtor requested an Order approving the auction and notice procedures, i.e., the relief set forth in part (A) of the Motion. Greenleaf VI, Inc. ("Greenleaf") filed an Objection to the Motion but advised me at the hearing that it had negotiated a resolution and was supporting the sale on the terms of a proposed Order yet to be finalized.[1] No other objections to the Motion were filed. However, for the reasons set forth below, the Court raised sua sponte a question regarding the permissibility of the contemplated sale and directed the Debtor to file a memorandum in support of the Motion by May 28, 2004. On May 28, 2004, the memorandum was filed, and the matter is ripe for resolution.
BACKGROUND
The following facts were elicited from the case file.[2] On January 23, 2004 Encore Health Associates ("Debtor") filed a petition under Chapter 11. Until the Motion was filed there was no activity in this case other than the conduct of the § 341 hearing on March 3, 2004. The first and only operating report for the period January 23, 2004 to February 28, 2004 was filed on May 18, 2004.
The Debtor's sole asset is a facility located at 2630 Woodland Road, Roslyn, Pennsylvania in which a 120 licensed bed skilled nursing facility is operated by Brookside Health Care Rehabilitation Center, *54 Inc. Motion ¶¶ 3, 6. The operating report for this self-described single asset real estate case indicates that the Debtor received $25,000 per month in post-petition rent for the reporting period but all operating expenses were paid by the tenant.[3] It is not clear what use is being made of the rental income.
According to the Debtor's Schedules, the current market value of the real property is $2,300,000 against which there is a secured claim of $8,401,259 presently held by Greenleaf. The Debtor also owns office and medical equipment and fixtures valued at $200,000 which also secures its obligation to Greenleaf. At the time of the filing of the petition, the holder of the secured claim was the U.S. Department of Housing and Urban Affairs ("HUD") which assigned the note and mortgage to Greenleaf on April 16, 2004. Motion ¶ 7. There are no priority claims scheduled. The Debtor's Schedule F refers to a Schedule A attachment as providing the list of unsecured nonpriority claims. However, all that is supplied is a list of pending lawsuits but no Schedule A or statement of the total amount of unsecured debt.
Also relevant to this matter is the Unanimous Consent in Lieu of Meeting of Partners of Encore Healthcare Associates ("Unanimous Consent") which authorizes the filing of the Chapter 11 petition. As background it recites that the Debtor is insolvent, that it had been informed by HUD that it intends to commence foreclosure action on the Debtor's assets, that it was in its best interests to sell the assets of the Debtor, that it had entered an agreement to do so, and that it needed the protection of the Bankruptcy Court to stay all creditor actions and assist in the consummation of the asset sale.
The Motion proposes to sell the Debtor's assets to Brookside Real Estate, L.L.C. ("Brookside") for $2,500,000 pursuant to an Asset Purchase Agreement dated as of July 8, 2003 (the "Agreement"). Given the date of the Agreement, presumably this is the sale agreement referenced in the Unanimous Consent. The proceeds of sale will be used to pay costs of sale and to partially pay the amounts owed to Greenleaf.[4] The Agreement requires the Debtor as seller to file a petition for relief under Chapter 11 and concomitantly to file a motion, in form and substance satisfactory to Brookside, seeking a procedures order and sale order, both in the form specified in the Agreement.
DISCUSSION
As noted above, at the hearing on the Motion, the Court raised with the Debtor's counsel the propriety of a § 363 sale, the sole purpose of which was to liquidate assets for the benefit of the secured creditor. In response to my questioning, the Debtor acknowledges its intention to convert this Chapter 11 case to one under Chapter 7 following the approval of the sale. Thus, this sale is not in furtherance of a plan of reorganization or liquidation.
In Committee of Equity Security Holders v. The Lionel Corporation (In re The Lionel Corp.), 722 F.2d 1063 (2d Cir.1983), the Second Circuit Court of Appeals considered the propriety of sales pursuant to § 363 by Chapter 11 debtors outside of a *55 plan. In that case, the debtor sought to sell its most valuable asset, 82% of the common stock of a non-debtor affiliate, pursuant to § 363(b). The debtor contended that the sale of this non-productive asset would generate cash to fund the plan of reorganization. Indeed a plan of reorganization was filed four days after the sale motion was lodged. The sale was favored by the Official Committee of Unsecured Creditors but the order approving the sale was subsequently appealed by the Committee of Equity Security Holders.
While the facts of Lionel are different than the facts before me in this case, the Court's discussion on the use of § 363 to sell assets in Chapter 11 is instructive as it refutes the Debtor's assertion that § 363 confers a right and power to a debtor-in possession to sell assets outside the ordinary course free and clear of any interest in such property so long as the interest holder consents. In Lionel, the Court rejected the notion that § 363(b) grants the bankruptcy judge carte blanche to approve a sale outside a plan of reorganization. Id. at 1069. Rather it concluded that there must be some business justification, other than appeasement of major creditors before the bankruptcy judge may order such disposition under § 363(b). Id. at 1070. The debtor applying under § 363(b) must demonstrate that a sale will aid the debtor's reorganization. Id. at 1071. Since the sole justification was that the sale was urged by the Creditors' Committee, the Court concluded there was no business reason and reversed the order approving the sale.[5]
While disclaiming any need to justify its use of the bankruptcy forum to sell its assets under § 363(b), Debtor does proffer an explanation for its filing. Debtor's counsel contends that it was unable to sell its assets outside of bankruptcy because HUD would not consent nor would it take any action to foreclose. Thus, there was an impasse that the Debtor believed could only be remedied by resorting to bankruptcy. Assuming that explanation to be true,[6] it hardly provides an explanation as to why the bankruptcy sale is needed now. HUD sold its mortgage to Greenleaf last April. Once that occurred, there was no impediment to a dismissal of this case which admittedly has no other purpose than to sell the assets to Brookside, pay the proceeds less expenses to Greenleaf and convert this Chapter 11 case to a case under Chapter 7. Rather it appears that the bankruptcy sale is a requirement of Brookside who reached agreement with the Debtor pre-petition and imposed as a condition of sale the requirement that the Debtor secure bankruptcy orders in the form it approved. While this Court understands Brookside's interest in acquiring the assets along with a bankruptcy order insulating it from future claims and providing a federal forum to litigate any contract issues,[7] I am hard pressed to see why the *56 bankruptcy court should assume jurisdiction over this sale.
While I afforded Debtor the opportunity to convince me otherwise, its legal memorandum filed fails to cite any cases that advance its cause. Two of the cases deal with the right of a debtor-in-possession to commence a preference action when the proceeds of the action will only benefit the secured creditor. Mellon Bank, N.A. v. Dick Corp., 351 F.3d 290 (7th Cir.2003); Enserv Company Inc. v. Manpower, Inc. (In re Enserv Company, Inc.), 64 B.R. 519 (9th Cir. BAP 1986). I find no relationship between preference litigation and asset sales for a number of reasons. First, the inability to commence a preference suit in the bankruptcy court would result in forfeiture of the asset and subvert the policy underpinnings of the preference statute, i.e., to discourage the race to dismantle a debtor in financial trouble and to treat similarly situated creditors equally. These policies were very much in the mind of the appellate courts that concluded that the debtor should be permitted to bring these actions notwithstanding that they conferred no benefit on the estate generally. Mellon Bank, 351 F.3d at 293;[8]Enserv, 64 B.R. at 520. The asset sale can easily be accomplished outside of bankruptcy either with the consent of the secured creditor or by abandoning the asset to the secured creditor to sell on its own. The final case cited by Debtor is Behm v. Bell, 80 B.R. 104 (M.D.Tenn.1987). This case holds that a Chapter 7 trustee may sell both the estate's interest and the non-debtor's interest in certain real estate under § 363(h). The Court rejected the appellant's contention that the sale was improper because it inured only to the benefit of the secured creditor, finding that the secured creditor would not be the sole beneficiary of the proposed sale which would realize proceeds to pay administrative expenses and make a distribution to holders of priority claims. In any event, a sale by a Chapter 7 trustee that is charged with the liquidation of estate assets presents a different scenario than a sale by a debtor-in-possession under Chapter 11.[9]
While Debtor's research did not unearth any cases on point, my own is to the contrary. In In re Fremont Battery Co., 73 B.R. 277 (Bankr.N.D.Ohio 1987), the *57 court applied the Lionel business judgment test and concluded that there was no justification for the proposed § 363 sale of all the debtor's assets. The court reasoned as follows:
The proposed sale would not, as a whole benefit the Debtor or creditors. In fact, if allowed, the sale would terminate Debtor's existence. If Debtor's proposed sale were authorized, the likelihood of reorganization would dissipate as there would remain no assets from which a plan could be proposed. Additionally, the proceeds from the proposed sale would, at most, benefit one creditor only. The sale would not create proceeds that would inure to the benefit of the unsecured creditors.
Id. at 279.[10]
The pre-confirmation sale of assets in Chapter 11 cases is often an important step in furtherance of a reorganization proceeding. Such is not the case here. Notably where such sales have been approved, the facts are very different. For example, in In re Medical Software Solutions, 286 B.R. 431 (Bankr.D.Utah 2002), the court found a sound business reason for sale outside the ordinary course of business and outside a plan based on the lack of funds to continue operating and the narrow window for sale before the assets significantly declined in value. Notably the sale to the lenders for the cancellation of pre and post-petition debt also ensured the payment of administrative claims and established a $100,000 fund for unsecured creditors. In re Channel One Communications, Inc., 117 B.R. 493 (Bankr.E.D.Mo. 1990) represents another factual circumstance where a Chapter 11 § 363 sale is appropriate. In that case, the debtor was securing post-petition loans to fund operating losses and needed to sell the assets quickly as a going concern to maximize value for the estate. The cash consideration for the assets was in excess of all liens and encumbrances. Here the proposed sale not only generates funds solely for the secured creditor which could realize the value of its collateral by foreclosing and selling the assets itself but more significantly advances no purpose of a Chapter 11 proceeding. There is no operating business with employees that is preserved by reason of this sale as the Debtor does not operate a business but merely leases real property. Compare In re Rausch Manufacturing Co., Inc., 59 B.R. 501, 503 (Bankr.D.Minn.1985) (approving a sale because rather than result in the demise of a debtor/corporation, it allowed the continuation of a viable company employing people and producing product for a worldwide market). Indeed the Debtor intends to convert to a case under Chapter 7 after the sale is consummated.
Finding no business justification for the proposed § 363 sale in a Chapter 11 proceeding, the Motion is denied. While I recognize that at this junction the *58 Debtor has only requested that I approve the sale procedures and not the sale which would be conducted pursuant to those procedures, since I will not approve a sale under any procedures, it would be improper to authorize this first step. An Order consistent with this Memorandum Opinion shall issue.
ORDER
AND NOW, this 18th day of June 2004 upon consideration of the Motion for an Order under 11 U.S.C. §§ 105(a), 363 and Fed.Bankr.R. 2002, 6004, 6008 and 9014(A) Approving Auction and Notice Procedures, (B) Authorizing the Sale of Substantially All of Debtor's Assets Free and Clear of Liens, Claims and Encumbrances and (C) Granting Related Relief (the "Motion"), after notice and hearing and for the reasons stated in the accompanying Opinion;
It is hereby ORDERED that the Motion is DENIED.
NOTES
[1] A revised form of Order was to have been submitted. However, as it had not as of the date of this writing, my Chambers confirmed with the Debtor's counsel that the Motion was not being withdrawn, but rather that certain business issues were being addressed and that had been the reason for not requesting the order. As it is the legal issues, not the business issues that will determine the outcome of this Motion, counsel was advised of my intention to render a decision rather than await a proposed order.
[2] No evidence was presented. However, I shall take judicial notice of the docket entries in this case. Fed.R.Evid. 201, incorporated in these proceedings by Fed.R.Bankr.P. 9017. See Maritime Elec. Co., Inc. v. United Jersey Bank, 959 F.2d 1194, 1200 n. 3 (3d Cir.1991); Levine v. Egidi, 1993 WL 69146, at *2 (N.D.Ill.1993); In re Paolino, 1991 WL 284107, at *12 n. 19 (Bankr.E.D.Pa.1991); see generally In re Indian Palms Associates, Ltd., 61 F.3d 197 (3d Cir.1995). Moreover, factual assertions in pleadings, which have not been superceded by amended pleadings, are judicial admissions against the party that made them. Larson v. Groos Bank, 204 B.R. 500, 502 (W.D.Tex.1996) (statements in schedules). See also In re Musgrove, 187 B.R. 808 (Bankr.N.D.Ga.1995) (same); In re Leonard, 151 B.R. 639 (Bankr.N.D.N.Y.1992) (same).
[3] Curiously, the Schedules indicate no rent was received in 2003 but $1,018,865 was received in 2002. How this relates to the present $25,000 is unclear. Counsel's Rule 2016(a) Statement indicates that his fees and expenses will be paid by Wellness Concepts, Inc., a corporation that has common ownership with the Debtor. He recived a $ 250,000 retainer from that entity.
[4] The Agreement provides for a $250,000 hold back to be escrowed to provide the buyer with a source of payment for Damages as defined in the Agreement.
[5] In a case decided under the 1898 Bankruptcy Act, the Third Circuit Court of Appeals had held that a preconfirmation sale could be authorized only upon a showing of an emergency. In re Solar Mfg. Corp., 176 F.2d 493 (3d Cir. 1949). That Court's subsequent ruling in In re Abbotts Dairies of Pennsylvania, Inc., 788 F.2d 143 (3d Cir. 1986), approving of a pre-confirmation sale without reference to Solar has led courts in this circuit to conclude that the "sound business purpose" test has supplanted the "emergency" rule. In re Delaware & Hudson Railway Co., 124 B.R. 169, 176 (D.Del.1991) (citing In re Indus. Valley Refrigeration and Air Conditioning Supplies, Inc., 11 B.R. 15, 20 (Bankr.E.D.Pa.1987)).
[6] No testimony was taken, and it conflicts with the Unanimous Consent which states that HUD was foreclosing on the assets.
[7] The proposed order annexed to the Agreement as the required document to be secured is nine pages long and contains such findings as (1) the sale must be completed immediately in order to preserve the Debtor's going concern value and as a result, good and sufficient business justification exists for the immediate sale; (2) the transfer of the assets will not subject the buyer to "any liability for claims against the Debtor or any of the Debtor's predecessors or affiliates of any kind or character...." One would conclude from (1) above that the parties are aware of the limitation on § 363 as articulated in Lionel. Paragraph 5 of the Order provides (for over more than half a page) the interest is sold. Paragraph 6 enjoins all persons from pursuing claims against the buyer to recover on claims against the Debtor, its estate, its principals, etc. Paragraph 8 directs all governmental agencies to accept any documents necessary to consummate the sale, and paragraph 10 requires all entities who are in possession of the assets to surrender possession of them to the buyer. Finally, the Court is to retain jurisdiction to enforce and implement the Agreement, compel delivery of the assets to the buyer, resolve any disputes arising under or related to the Agreement and enforce, implement and interpret the Sale Order.
[8] Mellon is also distinguishable because the secured creditor had advanced post-petition funds at a time when the Debtor still operated and had unsecured creditors and in consideration was provided with a lien on the preference recoveries as protection. The sale had generated funds that allowed a bonus of $7.5 million to unsecured creditors.
[9] Indeed the Debtor recognized that in this district the United States trustee's procedures for panel Chapter 7 trustees precludes the administration of assets for the benefit of a secured creditor. In such case, the assets are abandoned, and the lienholder is free to exercise its state law remedies.
[10] The Court reiterated that GGEC was the only creditor which would benefit from the proposed sale. "No funds would remain, after the proposed sale, that would benefit other creditors or that would provide funds from which a reorganization." Id. Notably this case was decided some time ago and the view that a liquidation of assets is not a proper use of Chapter 11 proceedings is no longer held. E.g., In re After Six, Inc., 154 B.R. 876, 881 (Bankr.E.D.Pa.1993). Indeed Chapter 11 bankruptcy proceedings are frequently utilized to liquidate assets. However, there are limits to the use of § 363, and it is clear that Chapter 11 liquidations are still subject to the proscriptions of Chapter 11 concerning, inter alia, the filing of a plan. Recognizing as much, most secured creditors understand the necessity of making some distribution available to other creditors as the price of a courtapproved sale. An asset sale under the facts presented to me goes beyond the most liberal interpretation of Lionel.
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606 F.2d 1156
196 U.S.App.D.C. 249, 1979-2 Trade Cases 62,779
CENTRAL IOWA POWER COOPERATIVE, et al., Petitioners,v.FEDERAL ENERGY REGULATORY COMMISSION, Respondent.ALEXANDRIA BOARD OF PUBLIC WORKS, MINNESOTA, et al., Petitioners,v.FEDERAL ENERGY REGULATORY COMMISSION, Respondent,Central Iowa Power Cooperative, et al., Intervenors.PUBLIC UTILITIES COMMISSION OF the STATE OF SOUTH DAKOTA, Petitioner,v.FEDERAL ENERGY REGULATORY COMMISSION, Respondent,Central Iowa Power Cooperative, et al., Intervenors.
Nos. 77-1914, 77-1916 and 77-1924.
United States Court of Appeals,District of Columbia Circuit.
Argued Nov. 30, 1978.Decided July 9, 1979.
James F. Fairman, Jr., Washington, D. C., with whom John C. Scott and Susan M. Jenkins, Washington, D. C., were on the brief, for petitioners in No. 77-1916.
Alan J. Roth, Washington, D. C., with whom Robert C. McDiarmid, George Spiegel, Sandra J. Strebel, and Frances E. Francis, Washington, D. C., were on the brief, for petitioners in No. 77-1924.
William J. Madden, Jr., Washington, D. C., with whom Donald K. Dankner, Washington, D. C., was on the brief, for petitioners in No. 77-1914 and intervenors in Nos. 77-1916 and 77-1924.
James E. Rogers, Jr., Atty., Federal Energy Regulatory Commission, Washington, D. C., with whom Howard E. Shapiro, Solicitor, Federal Energy Regulatory Commission, Washington, D. C., was on the brief, for respondent.
Philip R. Telleen, Atty., Federal Energy Regulatory Commission, Washington, D. C., also entered an appearance for respondent.
Before TAMM and ROBINSON, Circuit Judges, and JOHN H. PRATT,* United States District Judge for the District of Columbia.
Opinion for the court filed by TAMM, Circuit Judge.
TAMM, Circuit Judge:
1
This case involves challenges to provisions of the Mid-Continent Area Power Pool (MAPP) Agreement. The Federal Power Commission (Commission) found that the membership criteria of the Agreement were discriminatory and ordered modifications.1 The Commission approved the Agreement in all other respects. For the reasons that follow, we affirm the Commission's decision.
BACKGROUND
2
In 1972, thirty-one electric power systems signed the MAPP Agreement.2 The original parties to the Agreement were twelve investor-owned utilities,3 eight cooperative corporations,4 eight municipal systems, two state public power districts, and the Federal Bureau of Reclamation.5 The Agreement covers the mid-continent area of Minnesota, Iowa, North and South Dakota, Nebraska, eastern Montana, western Illinois, and Wisconsin.6
3
The Agreement is designed to promote reliable and economical operation of the interconnected electric network in the mid-continent area, primarily through reserve sharing to back up large generating units.7 Although the Agreement does not establish a fully integrated electric system with central dispatch of generating units, it provides a mechanism for coordinated daily operation of generation facilities and seeks to promote the staggered construction of new generation units.8 Each participant retains responsibility for serving its customers' demands.9 Exchanges of power under the Agreement are on a short-term basis and may not be used to fulfill long-term needs. The Agreement does not preclude participants from entering into other joint arrangements for power pooling, nor does it compel or restrict installation of new facilities.10
4
The MAPP participants filed the Agreement with the Commission as required under section 205 of the Federal Power Act (Act), 16 U.S.C. § 824d (1976). After hearings,11 an administrative law judge (ALJ) approved the Agreement in its entirety. Joint Appendix (J.A.) II at 345. On review of the ALJ's decision, the Commission held that, with the exception of the membership provisions, the Agreement was just, reasonable, and nondiscriminatory and did not violate antitrust law or policy. Id. at 403.
5
Three sets of petitioners seek review of the Commission's decision in this court. Petitioners Alexandria Board of Public Works, et al. (Alexandria) consist primarily of municipal electric utility systems, rural electric cooperatives, farm organizations, and state power-planning agencies in the mid-continent area.12 Petitioner Public Utilities Commission of the State of South Dakota (South Dakota) is authorized under the laws of South Dakota to determine rates for private electric companies, define service territories for cooperative, municipal and private electric systems, rule on some securities matters and license certain plant facilities.13 Petitioners Central Iowa Power Cooperative, et al. (Central Iowa) are the original full membership nonfederal participants in the Agreement.14
ANTITRUST CONTENTIONS
6
Alexandria attacks the Commission's approval of the MAPP Agreement primarily on antitrust grounds. Although the Commission lacks authority to adjudicate violations of the antitrust laws, it must consider competitive factors when acting under the public interest mandate of the Act. Central Power & Light Co. v. FERC, 188 U.S.App.D.C. 56, 57, 575 F.2d 937, 938 (per curiam), Cert. denied, 439 U.S. 981, 99 S.Ct. 568, 58 L.Ed.2d 652 (1978). In Gulf States Utilities Co. v. FPC, 411 U.S. 747, 93 S.Ct. 1870, 36 L.Ed.2d 635 (1973), the Supreme Court stated that the Commission has "responsibility to consider, in appropriate circumstances, the anticompetitive effects of regulated aspects of interstate utility operations pursuant to §§ 202 and 203, and under like directives contained in §§ 205, 206, and 207" of the Act.15Id. at 758-59, 93 S.Ct. at 1878; See FPC v. Conway Corp., 426 U.S. 271, 278-79, 96 S.Ct. 1999, 48 L.Ed.2d 626 (1976).
7
Congress has decided, as a matter of general policy, that power pooling arrangements, rather than unrestrained competition between electric facilities, are in the public interest. Section 202(a) of the Act, 16 U.S.C. § 824a(a) (1976), provides:
8
For the purpose of assuring an abundant supply of electric energy throughout the United States with the greatest possible economy and with regard to the proper utilization and conservation of natural resources, the Commission is empowered and directed to divide the country into regional districts for the voluntary interconnection and coordination of facilities for the generation, transmission, and sale of electric energy . . . . It shall be the duty of the Commission to promote and encourage such interconnection and coordination within each such district and between such districts.
9
In enacting this section, Congress was "confident that enlightened self-interest will lead the utilities to cooperate . . . in bringing about the economies which can alone be secured through . . . planned coordination." S.Rep.No.621, 74th Cong., 1st Sess. 49 (1935).16
10
Thus, when the Commission determines the lawfulness of a power pooling arrangement challenged on antitrust grounds, it is to be guided by the clear congressional policy of section 202(a). Specifically, the Commission must consider whether the arrangement imposes negative restrictions on competition, whether such restrictions are reasonably related to valid purposes of the power pool, and whether the arrangement is, on the whole, in the public interest. See generally City of Huntingburg v. FPC, 162 U.S.App.D.C. 236, 238, 498 F.2d 778, 788 (1974). See also Northern Natural Gas Co. v. FPC, 130 U.S.App.D.C. 220, 226-28, 399 F.2d 953, 959-61 (1968).
11
Alexandria presents several antitrust arguments. First, it alleges that the MAPP Agreement represents unlawful price-fixing under section 1 of the Sherman Act, 15 U.S.C. § 1 (1976), and section 10(h) of the Federal Power Act, 16 U.S.C. § 803(h) (1976). The Agreement contains a series of service schedules17 that set forth rates for the furnishing of power thereunder. Alexandria presented no evidence directly related to these schedules, but contended that the schedules represented per se violations of the antitrust laws. The ALJ ruled, and the Commission agreed, that the rate schedules did not constitute unlawful price-fixing. The ALJ explained:
12
This is not a combination of sellers conspiring to fix a uniform price in which they will sell goods to outside parties. It is a group of participants who expect over the course of time to be buyers as often as they are sellers. This concept is basic to the equitable utilization of the MAPP service schedules.18
13
We hold that establishing a price for the short-term power services available under the Agreement is reasonably necessary to the functioning of the cooperative arrangement undertaken pursuant to section 202. Although the pricing provisions restrict competition in transactions between pool members, they insure that costs and benefits of the power pool will be shared fairly and predictably. Moreover, some exchanges of power between the participants may take place so rapidly that price negotiations at the time of exchange would be difficult.19 Since the schedules are reasonably necessary to the pooling arrangement, we affirm the Commission's judgment that the rate provisions of the various schedules do not render the Agreement inconsistent with the public interest. See Broadcast Music, Inc. v. CBS, 441 U.S. 1, 99 S.Ct. 1551, 60 L.Ed.2d 1 (1979).
14
Alexandria criticizes the Commission's failure to discuss possible anticompetitive consequences of provisions for "allocation of sales and for boycott of outside systems until MAPP's surpluses are exhausted." Brief for Alexandria at 41. Apparently, Alexandria is referring to provisions of the Agreement that permit participants to purchase power from each other on a short-term basis to cover deficiencies in accredited generation capability.20 Accredited generation capability is essentially the amount of generation capacity a participant must maintain to satisfy its own system demand and meet its reserve obligation to the pool.21
15
Under the Agreement, deficiencies in accredited generation capability may be covered by installation of new generation facilities or by the purchase of power from other suppliers.22 Participants may purchase power from MAPP members as well as from nonmembers. If a participant elects to purchase outside the pool, the Pool Administrative Committee must determine that the source of supply is reliable. Transactions between pool members are governed by the terms of the Agreement's service schedules. See note 17 Supra.
16
If a participant fails to make voluntary arrangements for maintaining accredited generation capability, the Pool Administrative Committee will require the deficient member to purchase the necessary power within the pool. The Pool Administrative Committee selects the participant or participants who will supply that power. If surplus power is not available within the pool, the Committee may recommend purchase from nonparticipants.
17
Central Iowa asserts that Alexandria's claims of sales allocation and boycott are based on a "complete misunderstanding of the way the pool operates." Brief for Central Iowa at 25. It argues that pool members are free under the Agreement to decide whether they will fulfill their accredited generation capability requirement by purchase within or without the pool. Id. at 25-26. The ALJ agreed, concluding that the Agreement does not restrict purchases or sales of bulk power. J.A. II at 372.
18
We hold that the challenged provisions represent the essence of a voluntary agreement for the coordination of facilities to achieve increased reliability and economies in operation. See generally Federal Power Commission, The 1970 National Power Survey at I-17-1 (1971).23 As we have explained, MAPP seeks to promote reliable operation of the interconnected regional network, primarily through reserve sharing to back up large generating units. To achieve this goal, MAPP members must be able to insure that each party maintains accredited generation capability that can be called upon for reserve energy. If a member decides to maintain accredited generation capability by purchasing outside the pool, MAPP members must be assured that the outside source is reliable. Otherwise, there is no guarantee that reserve energy will actually be available when needed. If a member fails to make voluntary arrangements to cover deficiencies in accredited generation capability, the pool, if it is to maintain overall reserve assurance, must be able to require the deficient member to purchase power. The pool, which lacks authority to compel sales from outside sources, must depend on members with surplus energy to sell power to deficient members. Selection of the selling member or members in accordance with the valid interests of the pool reasonably furthers the pool's objectives. The challenged provisions of the Agreement clearly do not represent an illegal group boycott or sales allocation scheme, and the Commission did not err in failing to discuss them as such.
19
Alexandria further contends that the Agreement effectively destroys potential competition from nongenerating distribution systems by denying them services essential to their entry into the generating business. According to Alexandria, newcomers may be unable to obtain financing or may be unwilling to make the necessary investment to enter the generation business without commitments for the back-up of any proposed generation unit. Alexandria concludes that the Agreement is unlawful because it limits reserve sharing to participants who own and use generation.
20
Alexandria relies on Associated Press v. United States, 326 U.S. 1, 13-14, 65 S.Ct. 1416, 89 L.Ed. 2013 (1945), to support its argument that the Agreement's failure to include nongenerating distribution systems is anticompetitive. In that case, the bylaws of a cooperative association engaged in gathering and distributing news prohibited members from selling to nonmembers. The bylaws were designed to destroy competition and effectively did so. In those circumstances, the Supreme Court held that the bylaws violated the antitrust laws.
21
Alexandria's argument misconceives the thrust of the MAPP Agreement. First, the Agreement does not prohibit or restrict participants from entering into reserve arrangements with nonmember distribution companies. Indeed, the Agreement explicitly recognizes the possibility of such arrangements.24 Second, nongenerating distribution systems that desire to enter the generating business may submit construction plans to MAPP for consideration and may attend MAPP meetings at which long-range plans are discussed.25 Under the modified membership provisions, See text at 1170-1172 Infra, any distribution company interconnected with a MAPP participant that wishes to construct generation facilities is assured of eligibility for pool membership, and the consequent benefits of reserve sharing, when the facilities are operational.
22
The pooling arrangement before us is thus fundamentally different from that presented in Associated Press v. United States, 326 U.S. at 13-15, 65 S.Ct. 1416. Cf. City of Huntingburg v. FPC, 162 U.S.App.D.C. at 239-40, 498 F.2d at 781-82 (case remanded for consideration of anticompetitive effects of pool agreement limiting participant's wholesale power sales to nonmembers). Moreover, the Commission has stated that it will monitor access to the planning functions of MAPP and, if necessary, institute improvements.26 We affirm the Commission's decision that the failure to include nongenerating distribution systems in MAPP is not anticompetitive and does not render the Agreement inconsistent with the public interest.27 See Municipalities of Groton v. FERC, 190 U.S.App.D.C. 399, 401-403, 587 F.2d 1296, 1298-1300 (1978). See also Municipal Electric Association v. FPC, 134 U.S.App.D.C. 310, 313-14, 414 F.2d 1206, 1209-10 (1969).
23
Alexandria also asserts that past conduct by MAPP participants demonstrates the anticompetitive ends of the Agreement. It argues that the Agreement is designed to formalize and perpetuate a set of anticompetitive practices developed by the participants over several years. The ALJ ruled, and the Commission agreed, that Alexandria failed to produce evidence to support its allegations.28 We have reviewed the record in this case and find that there is substantial evidence underlying the Commission's decision. See Gainesville Utilities Department v. Florida Power Corp., 402 U.S. 515, 526-27, 91 S.Ct. 1592, 29 L.Ed.2d 74 (1971) (citing 16 U.S.C. § 825L (b)).29
24
Alexandria finally interprets the Commission's decision as holding that the Agreement is acceptable as long as it is not more anticompetitive than prior pooling agreements. This is an inaccurate reading of the Commission's decision. In affirming the ALJ's conclusion that MAPP would improve power pooling in the mid-continent area, the Commission stated:
25
We do, however, wish to clarify one point. While the Administrative Law Judge is correct that the pooling agreement under consideration need not necessarily advance pooling beyond prior agreements it supersedes, in the event that the new pooling agreement under review reduces competition in contrast to the prior agreements the Commission would have to find in the new pool public interest advancements outweighing the reduction in competition. Since, we find Infra, no reduction in competition resulting from MAPP when properly modified, such a balance is not required.
26
J.A. II at 406 (footnote omitted).30 The Commission then agreed with the ALJ that Alexandria "(had) not shown that the MAPP Agreement, with the exception of its membership provisions . . . is anticompetitive." Id. at 408. In so ruling, the Commission correctly described the role of anticompetitive considerations:
27
"(B)ecause competitive considerations are important elements of the public interest, we believe that in a case such as this the Commission was obliged to make findings related to the pertinent antitrust policies, draw conclusions from the findings, and weigh these conclusions along with other important public interest considerations."
28
Id. at 409 (footnote omitted) (quoting Northern Natural Gas v. FPC, 130 U.S.App.D.C. at 228, 399 F.2d at 961). The Commission's analysis of Alexandria's allegations was not based on a comparison of the possible anticompetitive effects of the Agreement with the effects of prior power pools. The Commission considered Alexandria's various antitrust contentions without regard to prior pooling arrangements and held that the Agreement was in the public interest. We are satisfied that the Commission engaged in the appropriate legal analysis.
SCOPE OF MAPP SERVICES
29
South Dakota argues that the scope of MAPP services is too limited and that the Commission failed fully to consider expanding MAPP services. Specifically, South Dakota asks this court to remand the case to the Commission with directions to consider whether MAPP participants should be required to construct larger generation units31 and engage in single system planning with central dispatch. South Dakota bases its arguments on several theories.32 Petitioner Alexandria makes substantially the same arguments in its brief.
30
In responding to the argument that the scope of the MAPP Agreement was too limited, the Commission stated:
31
We reject the position of (Alexandria) and South Dakota that MAPP must be transformed from its present limited scope to one offering all conceivable pooling services. While Section 202(a) of the Federal Power Act speaks in terms of "voluntary interconnection and coordination" and to "promote and encourage" the same, the pooling agreement is an FPC tariff which must pass muster under Sections 205 and 206 of the Federal Power Act. For example, we have already found the membership provisions unacceptable. Nevertheless, the scope of a power pool is in the first instance a matter for the utilities involved. The mere fact that a particular pool does not offer the same range of services as another pool does not permit the Commission to direct expansion of the narrower pools' scope. Unless the limited scope of the MAPP Agreement is for some other reason unjust, unreasonable or unduly discriminatory, we are not authorized under Part II of the Federal Power Act to direct the pool to offer more services. While we can and do "encourage and promote" greater use of pooling, the peculiarities of each region necessitate that the member utilities determine the services to be offered. One cannot automatically apply the broader scope of NEPOOL, based upon very different geography, industry history and make-up in New England, to the mid-continent region with its tremendous area, sparse load and different industry make-up.
32
J.A. II at 420.
33
We are satisfied that the Commission reached an informed and reasoned decision consistent with congressional purposes. See Municipalities of Groton v. FERC, 190 U.S.App.D.C. at 402, 587 F.2d at 1299.33 Congress has concluded that regional coordination of electric power systems by means of regional power pools is in the public interest. See text at 1162-1163 Supra. Section 202(a) recognizes that power pooling can yield benefits of efficiency and economy.34 Notwithstanding the desirability of coordination of electric systems, however, Congress decided to make such coordination voluntary, with limited exceptions.35 See S.Rep.No.621, 74th Cong., 1st Sess. 19, 49 (1935); H.Rep.No.1318, 74th Cong., 1st Sess. 8, 27-28 (1935). Congress was convinced that "enlightened self-interest" would lead utilities to engage voluntarily in power planning arrangements, and it was not willing to mandate that they do so. S.Rep.No.621, 74th Cong., 1st Sess. 49; See Otter Tail Power Co. v. United States, 410 U.S. 366, 374, 93 S.Ct. 1022, 35 L.Ed.2d 359 (1973). Given the expressly voluntary nature of coordination under section 202(a), the Commission could not have mandated adoption of the Agreement, and failure of the MAPP participants to establish a fully integrated electric system36 could not justify rejection of the Agreement filed.
34
The Commission had authority, however, under section 206 of the Act, 16 U.S.C. § 824e (1976), to order changes in the limited scope of the Agreement, including the addition of pool services, if, in the absence of such modifications, the Agreement presented "any rule, regulation, practice or contract (that was) unjust, unreasonable, unduly discriminatory or preferential." See Municipalities of Groton v. FERC, 190 U.S.App.D.C. at 404-06, 587 F.2d at 1301-03. We agree with South Dakota that the Commission should consider the policies of the Federal Power Act in making a determination under this section. This does not mean, however, that a pooling plan is unlawful under section 206 merely because a more comprehensive arrangement might better achieve the purposes of section 202(a). To so conclude would undermine Congress's determination that coordination under section 202(a) be voluntary. Moreover, we cannot agree with South Dakota that in approving the Agreement the Commission abdicated its duty under section 202(a) to promote and encourage regional interconnection and coordination of electric facilities.
35
South Dakota also argues that the Commission "erred as a matter of law" in concluding that it could not direct the pool to offer more services even if the pool arrangement were unreasonable. We find the assertion spurious.37 The Commission ruled only that Unless the MAPP Agreement was unjust, unreasonable or unduly discriminatory, it lacked statutory authority to compel additional services.
36
Finally, South Dakota contends that the Commission should have considered ordering MAPP participants to wheel38 electric power to nongenerating electric systems. This court has previously rejected a similar argument. In Richmond Power & Light v. FERC, 187 U.S.App.D.C. 399, 574 F.2d 610, (1978), the court recounted the Supreme Court's decision in Otter Tail Power Co. v. United States:
37
"As originally conceived, Part II (of the Federal Power Act) would have included a 'common carrier' provision making it 'the duty of every public utility to . . . transmit energy for any person upon reasonable request . . . .' In addition, it would have empowered the Federal Power Commission to order wheeling if it found such action to be 'necessary or desirable in the public interest.' H.R.5423, 74th Cong., 1st Sess.; S.1725, 74th Cong., 1st Sess. These provisions were eliminated to preserve 'the voluntary action of the utilities.' S.Rep.No.621, 74th Cong., 1st Sess. 19.
38
It is clear, then that Congress rejected a pervasive regulatory scheme for controlling the interstate distribution of power in favor of voluntary commercial relationships."
39
187 U.S.App.D.C. at 408, 574 F.2d at 619 (quoting Otter Tail Power Co. v. United States, 410 U.S. at 374, 93 S.Ct. at 1028). This court concluded that arguments advocating mandatory wheeling in lieu of relying on voluntary wheeling should be addressed to Congress. Id. Although Congress has recently taken action permitting the Commission to order wheeling in certain circumstances,39 this legislation is inapplicable to the case before us.40 Given the voluntary nature of power pooling under section 202(a), and Congress's particular determinations with respect to wheeling, we uphold the Commission.
40
Alexandria argues that the Agreement should have been rejected because it did not offer services beyond those of pools which previously operated in the mid-continent area. The ALJ found, and the Commission agreed, that MAPP is an improvement over earlier pools.41 In addition, the ALJ and the Commission held that a pool agreement that supersedes a prior arrangement is not unlawful merely because it does not offer new services.42 We agree with the Commission on both counts.
41
The most obvious improvement of the Agreement is enhanced reserve assurance. By combining the pool operations of the Bureau of Reclamation with the various other power pools existing in the mid-continent region, MAPP has increased the number of generating units committed to back up other units in the pool. See generally Gainesville Utilities Department v. Florida Power Corp., 402 U.S. at 518-20 & n. 3, 91 S.Ct. 1592. However, even if a newly filed pool agreement merely streamlined or updated prior agreements without initiating substantive changes in pool services, nothing in sections 202(a), 205, or 206 of the Act suggests that this alone would be sufficient to hold it unlawful. Such a conclusion would be inconsistent with Congress's intent to promote planned coordination of electric systems.
MEMBERSHIP PROVISIONS
42
Article IV of the Agreement establishes pool membership requirements. Under the Agreement, any "entity engaged in the electric utility business which owns or leases, and controls the operation of, one or more generating units, and which entity is electrically interconnected with one or more Parties to this Agreement"43 may become a MAPP party. Parties are divided into two classes: participants, who are entitled to representation on all pool committees and participation in the full range of pool services; and associate participants, who are entitled to representation on certain pool committees and participation in pool planning functions. To become a participant, a party is required to meet certain requirements. It must be a party:
43
a. Whose system is normally operated directly interconnected with two or more electric systems; and
44
b. Which owns or controls transmission facilities operated at 115 kilovolts or higher forming an integral part of the regional transmission network; and
45
c. Whose system contributes significantly as determined by the Management Committee to the reliability of the interconnected systems operation; and
46
d. Which operates or participates in the operation of a 24-hour dispatch center with a terminal on the communication network connecting the Participants.
47
J.A. II at 221-22. Parties not meeting these criteria are associate participants.
48
The Commission staff contended before the ALJ that the Agreement created an unreasonable distinction between participants and associate participants. The ALJ nonetheless held the provisions were just, reasonable, and not unduly discriminatory or preferential.44 On review of the ALJ's decision, the Commission agreed with the staff. It found the distinction between participants and associate participants discriminatory on its face under sections 205 and 206 of the Act.45 It reversed the ALJ's decision with respect to membership criteria, and held that "as far as access to the operational functions of MAPP, Staff is correct that ownership and use of generation and at least one interconnection is the minimum criterion." Id. at 417.46
49
Both Alexandria and Central Iowa attack the Commission's decision. Alexandria argues that the Commission did not go far enough in ordering modification of the membership provisions and that it should have opened MAPP services to nongenerating distribution systems. Central Iowa argues that there was no evidence to support the Commission's conclusion that the membership provisions were discriminatory and that the Commission unlawfully changed the purposes of the MAPP Agreement.
50
We are satisfied that the Commission, in modifying the membership provisions, reached a reasoned decision based on substantial evidence. See 16 U.S.C. § 825L (b) (1976). See generally Gainesville Utilities Department v. Florida Power Corp., 402 U.S. at 527, 91 S.Ct. 1592; Municipalities of Groton v. FERC, 190 U.S.App.D.C. at 402, 406, 587 F.2d at 1299, 1303. Insofar as Alexandria attacks the revised membership provisions on specific antitrust grounds, we have previously discussed why that argument is without merit. See text at ----, 606 F.2d 1165 Supra. Nongenerating distribution systems are not excluded from participation in MAPP planning functions; nor are MAPP participants prohibited from making reserve generation commitments to distribution systems that desire to enter the generation business. Id. Alexandria implies in its brief that the Agreement will result in the denial of wholesale power to small nongenerating distribution systems. We have no reason to believe, on the record before us, that such conduct will occur. The MAPP Agreement does not apply to long-term wholesale power arrangements and specifically recognizes that participants may freely enter into outside contracts for the sale of electric power.47 Further, the current successor to the Bureau of Reclamation is statutorily required to prefer municipal systems and public cooperative corporations in the sale of electric power.48 The Commission has warned that if MAPP participants engage in anticompetitive conduct, the conduct will be subject to commission scrutiny.49
51
We also disagree with Central Iowa's contention that the Commission's finding that the membership provisions are unduly discriminatory is unsupported. The MAPP Agreement excludes generating electric systems with only one interconnection and with less than the specified level of transmission capability from participation in MAPP's service schedules, including the reserve energy schedule. These systems could clearly benefit through use of MAPP's services, particularly reserve sharing.50 See generally Gainesville Utilities Department v. Florida Power Corp., 402 U.S. at 518-20 & n.3, 91 S.Ct. 1592. The Commission held that exclusion of the smaller generating systems was not reasonably related to MAPP's objectives and that the pool would not be injured by inclusion of such systems as long as they provide compensation for the true value of transmission services, whether in kind or in money. The Commission directed the MAPP participants and the Commission staff to develop a formula for fair compensation to be paid by those participants unable to reciprocate for transmission in kind.51 This is a matter well within the Commission's expertise, and we are convinced that its decision is reasonable and supported by substantial evidence.52 See Municipalities of Groton v. FERC, 190 U.S.App.D.C. at 406, 587 F.2d at 1303.
CONCLUSION
52
The petitioners in this case attack the Commission's decision both for going too far in modifying the MAPP Agreement, and for not going far enough. We have considered all of the arguments raised, and we conclude that the Commission has struck a proper balance in accepting, with modified membership provisions, the Agreement. Therefore, the Commission's decision is
53
Affirmed.
*
Sitting by designation pursuant to 28 U.S.C. § 292(a)
1
The Commission functions involved in this case were transferred to the Federal Energy Regulatory Commission (FERC) on October 1, 1977, pursuant to section 402 of the Department of Energy Organization Act, 42 U.S.C.A. § 7172(a) (1978). See Exec. Order No. 12,009, 42 Fed.Reg. 46267 (1977). FERC was substituted as respondent in this case in accordance with 42 U.S.C.A. § 7295(e) (1978)
2
Joint Appendix (J.A.) II at 345 (Initial Decision on a Power Pool Agreement). The Commission adopted the findings of the administrative law judge (ALJ) with respect to the procedural background of the case, the nature of the electric utility industry in the mid-continent area, the history of coordination leading to the Agreement, and the Agreement itself. Id. at 403
3
The investor-owned utilities are "public utilities" within the meaning of section 201 of the Act, 16 U.S.C.A. § 824 (Supp.1979). Neither the Department of Energy Organization Act, Pub.L.No. 95-91, 91 Stat. 565 (1977), nor Title I of the Public Utility Regulatory Policies Act of 1978, Pub.L.No. 95-617, 92 Stat. 3117, applies to this proceeding. See 42 U.S.C.A. § 7295(c) (1978); 16 U.S.C.A. § 824 note (Supp. 1979). In citing to pertinent statutes, we therefore refer to those in force at the time of the Commission's decision
4
The operations of the cooperative corporations are financed, in whole or in part, by the Rural Electrification Administration. See 7 U.S.C. § 904 (1976)
5
The MAPP Agreement is applicable to a specific electric system operated by the Bureau of Reclamation in the Eastern Division of the Pick-Sloan Missouri Basin Program. J.A. II at 255
The power marketing functions of the Bureau of Reclamation have been transferred to the Secretary of the Department of Energy and are exercised by a separate administration within that department. 42 U.S.C.A. § 7152(a) (1978); See 43 U.S.C. § 485h(c) (1976) (authority to sell electric power in connection with federal reclamation projects). In marketing electric power, the Bureau of Reclamation is required to give preferences to municipalities and other public corporations or agencies. Id.
6
J.A. II at 349
7
Id. at 356. The ALJ described the Agreement as follows:
The MAPP Agreement itself is 72 pages long. It covers objectives, conditions of membership, relationships to other agreements, committees, committee organization, obligations of the parties (such as maintenance of adequate capabilities and operating reserves, service obligations, and services to be rendered), and participation by the United States Bureau of Reclamation and by the Manitoba Hydro-Electric Board. In addition, the Agreement contains a number of service schedules dealing with wheeling services and interchange services for participation power, emergency and scheduled outages, operating reserves, economy energy, operational control energy, and peaking, short-term and firm power. Exhibit A to the Agreement contains a list of the points of interconnection through which power and energy may be interchanged between the Participants (Exh. No. 935).
Id. at 355.
8
Id. at 243, 358. In The 1970 National Power Survey, the Commission discussed the advantages of staggered construction:
Staggered construction is a technique which involves construction of excess capacity by one utility for the use of one or more other utilities with the supplier-buyer arrangement being reversed or modified with each succeeding unit. Several variations of this practice are widely used. Sometimes adjacent systems informally coordinate their capacity additions over a period of several years so that the total installed capacity reserve approximates the amount required by the entire geographic area. Each individual system's reserve in percent of peak-hour load may vary widely from year to year, but the total peak-hour reserves for the group are maintained at approximately a constant level.
A refinement of this coordinating technique includes short-term capacity transactions which permit a system to install a larger unit than its own immediate needs require and to sell firm capacity to neighboring systems for one or more years. Later this utility purchases firm capacity from neighboring systems for a period of time and then repeats the cycle by installing an even larger generating unit. This arrangement has found general acceptance by some power pools and other coordinating groups since each member can achieve benefits from economy of scale and maintain most economically the installed capacity reserves required by the coordinating group.
Another form of staggered construction which has gained widespread acceptance in recent years is the unit-sale concept. This entails arrangements whereby a system installs a larger unit than it otherwise normally would, and sells a specified amount of excess capacity from that unit to one or more neighboring systems. The purchaser's entitlement is limited to the availability of capacity from the specific unit. In the event of an outage of such unit, the buyer is not entitled to any portion of the supplier's other capacity resources. Rates for unit sale transactions usually reflect actual capacity and energy costs from the specific unit involved.
Federal Power Commission, The 1970 National Power Survey at I-17-23 (1971).
9
J.A. II at 238, 356
10
Id. at 356
11
The Commission conducted a hearing on the Agreement under, Inter alia, section 206 of the Act, 16 U.S.C. § 824e (1976). The burden of showing that an initial rate filing is unlawful under section 206 rests on those attacking the filing. See Municipalities of Groton v. FERC, 190 U.S.App.D.C. 399, 403 n.3, 587 F.2d 1296, 1300 n.3 (1978)
12
Brief for Petitioners Alexandria Board of Public Works, et al. (Alexandria) at 11-12. Alexandria describes itself as
forty municipalities operating electric utility systems, forty rural electric cooperatives, four major farm organizations, two Kansas power-planning agencies, Kansas Municipal Utilities (a state-wide association of municipal electric systems), Montana Associated Utilities, Inc. (a state-wide association of rural cooperatives), the Burt County Public Power District (Nebraska), Mid-West Electric Consumers Association, Missouri Basin Municipal Power Agency, and the Mayor of Sioux Center, Iowa.
Mid-West Electric Consumers Association is a trade association of consumer-owned utilities scattered throughout Colorado, Kansas, Wyoming, Montana, Nebraska, North Dakota, South Dakota, Minnesota and Iowa. The Missouri Basin Municipal Power Agency ("MBMPA") is a nonprofit organization of 64 municipal electric utilities serving a population base of approximately 220,000 in the states of Iowa, Minnesota, and South Dakota.
Id.
13
Brief of the Public Utilities Commission of the State of South Dakota (South Dakota) at 4-5. Four of the six private, investor-owned utilities that provide service in South Dakota are participants in the MAPP Agreement. Most of the rural electric cooperatives and municipal electric systems in the state depend on other suppliers for generation. Id. at 5
14
Brief for Petitioners Central Iowa Power Cooperative, et al. (Central Iowa) at 6. MAPP membership was of two types: full membership participants who enjoyed all the benefits of the Agreement and associate participants who had limited privileges. See text at 1170-1172 Infra
15
These sections of the Federal Power Act appear at 16 U.S.C. §§ 824a, 824b, 824d, 824e, and 824f (1976) respectively. The Commission acted in this case under sections 202, 205, and 206 of the Act
16
A noted commentator has explained the advantages of coordination:
There are two major benefits that can be achieved through pooling: (1) pools, properly planned and operated, can substantially improve the systems' reliability at considerably reduced cost; (2) pooling can result in large cost savings in the production and the transmission of power.
Pooling arrangements are basically of two types. The first is designed primarily to accomplish a high degree of operational reliability on a day-to-day basis, but it will usually also reduce the relative cost of providing reliability. . . . The second type is designed to achieve these goals, plus the economies of joint planning and construction of generation and transmission facilities.
Meeks, Concentration in the Electric Power Industry: The Impact of Antitrust Policy, 72 Colum.L.Rev. 64, 101 (1972); See note 8 Supra.
17
The service schedules are:
Schedule A Participation Power Interchange Service
Schedule B Seasonal Participation Power Interchange Service
Schedule C Emergency and Scheduled Outage Energy Interchange Service
Schedule D Operating Reserve Interchange Service
Schedule E Economy Energy Interchange Service
Schedule F Wheeling Services and Losses
Schedule G Operational Control Energy Interchange Service
Schedule H Peaking Power Interchange Service
Schedule I Short Term Power Interchange Service
Schedule J Firm Power Interchange Service
J.A. II at 269-84.
18
Id. at 380
19
See Meeks, Supra note 16, at 111-12
20
Alexandria does not elaborate its argument in this court and was equally vague before the Commission. See, e. g., J.A. II at 448
21
See id. at 238 (P 15.01)
22
See id. at 238-40 (Article XV)
23
In The 1970 National Power Survey, Supra note 8, the Commission stated:
Financial benefits are often realized from staggered construction of large generating units, short-term capacity transactions, and interchanges of economy energy. Reduction of installed reserve capacity is made possible by mutual emergency assistance arrangements and associated coordinated transmission planning. Bulk power supply reliability is enhanced by interconnection agreements covering spinning reserves, reactive kilovol-tampere requirements, emergency service, coordination of day-to-day operations, and coordination of maintenance schedules. Also, operating costs may be reduced through coordinated operation of interconnected systems.
Id. at I-17-1.
24
J.A. II at 243 (P 19.01); See id. at 374-75
25
Id. at 231; See id. at 377
26
Id at 418
27
See id. at 410, 417. See also id. at 373-74, 385-88
28
Id. at 382-83, 412-13. Alexandria also suggests that particular pricing and power exchange procedures within the Agreement are "designed to protect inefficiency." Brief for Alexandria at 49. It refers to rate schedules not based exclusively on cost factors. Alexandria is not contesting the general reasonableness of price levels, See id. at 449, but contends that the rate-setting procedures are indicative of MAPP's anticompetitive nature. In upholding the schedules, the ALJ and the Commission relied on the need to stimulate short-term purchases of excess capacity in lieu of adding new capacity and to discourage reliance on emergency energy when units are less efficient. See id. at 381-82, 411-12 & n.14. We conclude that the Commission's decision that such procedures were not anticompetitive is reasonable
29
Thus, we need not consider the Commission's alternate conclusion that even if such conduct has occurred, it is irrelevant to determining the lawfulness of the Agreement
30
The Commission apparently was clarifying statements by the ALJ that participation in MAPP did not hamper the competition that does exist, Id. at 378, and that the systems not eligible to participate in MAPP were not eligible to participate in prior power pools, Id. at 387
31
Under 202(b) of the Act, 16 U.S.C. § 824a(b) (1976), the Commission is expressly prohibited from compelling the enlargement of generation facilities in connection with an order issued under that section
32
South Dakota argues that the Commission should have held the Agreement unreasonable under section 206(a) of the Act, 16 U.S.C. § 824e(a) (1976), because pool services were limited; that the Commission did not engage in reasoned decisionmaking; that the Commission failed to fulfill its duty under section 202(a) of the Act, 16 U.S.C. § 824a(a) (1976), to promote and encourage interconnection and coordination of facilities; and that the Commission erred in holding it has no authority to order increased pool services
South Dakota also suggests that the Commission failed to carry out its responsibilities under section 207 of the Act, 16 U.S.C. § 824f (1976). We do not consider this argument because South Dakota failed to comply with that section's procedural provisions, which require, Inter alia, filing a complaint with the Commission and sending notice to all affected state commissions.
33
South Dakota suggests that the Commission gave inadequate attention to "national energy policy." Brief for South Dakota at 31-34. Specifically, South Dakota asserts that the Commission failed to act with the requisite urgency to conserve energy and failed to give due regard to coordination with the states. We disagree. The Commission had specific responsibility in this proceeding to decide whether a particular voluntary pool agreement was unjust, unreasonable, or unduly discriminatory. We have no reason to believe that its decision was inconsistent with "national energy policy." However, even if it could be so construed, we recall this court's recent decision in Richmond Power & Light v. FERC, 187 U.S.App.D.C. 399, 405-06, 574 F.2d 610, 616-17 (1978) (footnotes omitted):
While an administrative agency must remain faithful to public policies directly related to its regulatory authority, surely at any given moment of history it may rationally decline to affirmatively foster other policies in weighing the specific interests that it is required by statute to consider.
34
See notes 8, 16, 23 Supra. See also Municipalities of Groton v. FERC, 190 U.S.App.D.C. at 401, 587 F.2d at 1298
35
Under section 202(b), 16 U.S.C. § 824a(b) (1976), the Commission, upon application of a state commission or a person engaged in the sale or transmission of electrical energy, may order a public utility to establish physical connection of its transmission facilities with another electric system and sell or exchange energy. The Commission may not compel the enlargement of generating facilities for such purpose or impose undue burden upon such public utility. See also § 202(c), 16 U.S.C. § 824a(c) (1976) (emergency powers)
36
The Commission explained the different degrees of power pooling in The 1970 National Power Survey, Supra note 8, at I-17-1 to I-17-2:
There are thousands of arrangements among systems from all segments of the industry providing for various degrees and methods of electrical coordination. These variations reflect differences in load density, characteristics of generating resources, geography, and climate. They are also a product of managerial views with respect to planning, marketing, competition, and retention of prerogatives. Because of these differences, no single definition of coordination has been established by the electric utility industry. As used in this chapter, Coordination is joint planning and operation of bulk power facilities by two or more electric systems for improved reliability and increased efficiency which would not be attainable if each system acted independently. Full coordination involves coordination of all systems within an area, to the extent technologically and economically feasible to permit the serving of their combined loads with a minimum of resources and to exploit opportunities for coordination with adjacent areas.
The highest degree of coordinated planning results when a group of utilities jointly plan, design, and construct their generation and transmission facilities as a single system. However, such coordinating groups must be large enough to take full advantage of the efficient generating units and EHV transmission made available by modern technology, yet be of manageable size with all members capable of sharing the responsibilities of the coordinated effort. Similarly, the highest degree of coordinated operation is achieved when a group of utilities operate all of their bulk power facilities as a single system.
37
See Brief for South Dakota at 21. We also reject South Dakota's assertion that the Commission's decision should be reversed because the Commission did not reopen the evidentiary proceedings to receive a report prepared by South Dakota in 1977 entitled An Evaluation of Power Supply Planning by the Six-Investor Owned Electric Utilities in South Dakota. Basically, the report concludes that MAPP participants continue to plan and construct "sub-optional" facilities. Brief for South Dakota at 24. The report apparently underlies South Dakota's arguments that the Commission should have ordered pool operations to result in enlargement of generation facilities. See text at --- U.S.App.D.C. ----, 606 F.2d 1166 Supra. South Dakota first referred to its ongoing "study of the power supply alternatives available to South Dakota" in its brief of exceptions to the ALJ's initial decision. J.A. II at 398. At that time, however, South Dakota specifically indicated that the present proceeding could be concluded without consideration of the report. South Dakota recommended reopening the record only "if the Commission believe(d) additional information would be useful." Id. at 399. In its petition for rehearing of the Commission's decision, South Dakota indicated it was prepared to present evidence that the Agreement "fails to establish reasonable mechanisms for more efficient regional planning and construction." Id. at 439. South Dakota then suggested that it join with the Commission in further investigation "if the . . . Commission finds the present record inadequate to evaluate the pool agreement and order necessary improvements." Id
In view of the lack of a firm request for reopening of the record, and our decision with respect to the Commission's authority to mandate enlarged pool services, we cannot say that the Commission abused its discretion in failing to reopen the evidentiary record. See generally Willis Shaw Frozen Express, Inc. v. ICC, 191 U.S.App.D.C. 1, 7, 587 F.2d 1333, 1339 (1978).
38
"Wheeling is broadly defined as 'the transfer by direct transmission or displacement (of) electric power from one utility to another over the facilities of an intermediate utility.' " Richmond Power & Light v. FERC, 187 U.S.App.D.C. at 403 n. 9, 574 F.2d at 614 n. 9 (quoting Otter Tail Power Co. v. United States, 410 U.S. 366, 368, 93 S.Ct. 1022, 35 L.Ed.2d 359 (1973))
39
Under section 203 of the Public Utility Regulatory Policies Act of 1978, Pub.L.No.95-617, 92 Stat. 3136, 16 U.S.C.A. § 824j (Supp.1979), the Commission can order wheeling to an applicant electric utility or federal power marketing agency if certain criteria are met relating to conservation, efficiency, reliability, competitive impact, and burdens
40
See note 3 Supra
41
J.A. II at 365, 406
42
Id
43
Id. at 221
44
Id. at 384-85
45
The MAPP Management Committee submitted a filing with the Commission on March 6, 1979, which contains new membership provisions. This filing is the subject of ongoing Commission proceedings and we express no view on its merits
46
In ordering the modification of the membership provisions, the Commission stated:
We agree with Staff that the membership criteria of Article IV of MAPP are not reasonably related to the MAPP objectives. Those objectives are the effectuation of reserve sharing so as to best develop through coordination reliable and economic generating capacity. As far as access to the operational functions of MAPP, Staff is correct that ownership and use of generation and at least one interconnection is the minimum criterion. The criteria now employed to differentiate Participants from Associate Participants all distill down to size of the system. While the smaller systems could conceivably benefit from MAPP membership, they do not have the transmission facilities to reciprocate in kind for the short-term transmission services included in the MAPP services schedules. Because of the significant advantages flowing from MAPP membership and the corresponding impact of denied access, we do not feel that this size criterion is reasonable. So long as the small utility can provide compensation for the true value of this transmission service, whether in kind or money, the pool should not be injured.
Although the complexities involved in establishing some standard for monetary compensation do not deter the ultimate result that Article IV must be modified, they do cause us to proceed cautiously. Accordingly, we shall hereby direct Commission Staff to initiate dialogue with the MAPP Management Committee to develop a fair and equitable measure of compensation to be paid by those Participants which do not have the transmission wherewithal to reciprocate in kind. This process of modifying the membership provisions should be open so that any electric system in the mid-continent area can observe. Access to the MAPP planning function should also be improved as a part of this modification process. . . .
In making this decision that the membership criteria must be modified, we do not deny the benefits which any utility, including those too small to presently become MAPP Participants, can glean from purely bilateral, non-pool reserve sharing arrangements; however, that fact does not mollify the discrimination inherent in Article IV which we must, under Sections 205 and 206 of the Federal Power Act, remedy. While there is no obligation for utilities in the first instance to have a pooling agreement, if one does exist it must be nondiscriminatory. Within the dynamics of the electric utility industry, the oftentimes subtle and yet significant long-term impact of power pooling demands our close scrutiny of provisions which deny access to the benefits of the pool. Thus the presence of such bilateral arrangements and the absence of denials of membership do not vindicate discrimination inherent in the membership provisions. In this regard, apart from the inherent discrimination Article 4.02(b) and (c) contain standards (forming an integral part of the regional transmission network and contributing significantly to the reliability of the interconnected systems operations) which are not sufficiently quantitative to assure objective and nondiscriminatory interpretation. This problem must be cured when the membership provisions are reformed.
Id. at 417-18.
47
See, e. g., id. at 243 (P 19.01), 245 (P 19.09)
48
See note 5 Supra
49
J.A. II at 378
50
See id. at 417-18. See also id. at 365, 406
51
The filing submitted to the Commission by the MAPP Management Committee on March 6, 1979, See note 45 Supra, contains provisions covering payment for transmission services
52
J.A. II at 417-18. We cannot agree with Central Iowa that the Commission changed the purpose and intent of MAPP by allowing some generating electric systems to compensate MAPP members monetarily for transmission service. This feature will not relieve such systems from reserve obligations and should not have a detrimental impact on planning functions
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566 F.Supp. 193 (1983)
In re INVESTORS FUNDING CORPORATION OF NEW YORK SECURITIES LITIGATION.
James BLOOR, as Trustee Pursuant to Chapter X of Title 11 of the United States Code of the Estates of Investors Funding Corporation of New York, etc., Plaintiff,
v.
Jerome DANSKER, et al., Defendants.
No. 76 Civ. 4679 (WCC).
United States District Court, S.D. New York.
June 15, 1983.
*194 *195 Anderson, Russell, Kill & Olick, P.C., New York City, for plaintiff; Richard W. Collins, Nicholas J. Zoogman, New York City, of counsel.
Curtis, Mallet-Prevost, Colt & Mosle, New York City, for defendant Morris Karp; Peter Flemming, Jr., Mark H. O'Donoghue, New York City, of counsel.
Shea & Gould, New York City, for defendant Hyman Shapiro; Martin I. Shelton, New York City, of counsel.
Freedman, Levy, Kroll & Simonds, Washington, D.C., for defendants Peter K. Grunebaum, Irving Kessler and Marco Buitoni; Michael I. Smith, Washington, D.C., of counsel.
Segal & Hundley, New York City, for defendant David W. Katz & Co.; Marvin B. Segal, Edward M. Chikofsky, New York City, of counsel.
Rogers, Hoge & Hills, New York City, for defendant Ely-Cruikshank Co.; W. Hubert Plummer and Thomas C. Junker, New York City, of counsel.
Spengler, Carlson, Gubar & Brodsky, New York City, for defendants Carro, Spanbock, Londin, Rodman & Fass, Melvin J. Carro, Maurice Spanbock and Jerome J. Londin; Edward Brodsky and Alison Rivard, New York City, of counsel.
Rubin, Baum, Levin, Constant & Friedman, New York City, for defendants Estate of Charles A. Berns, H. Jerome Berns, Eli Bloom, Harry Epstein, Ulu Grosbard, Herbert Jaffe, Stephen Katz, Jack Klatell, H. Peter Kreindler, Estate of I. Robert Kreindler, Estate of Maxwell A. Kreindler, Barbara Londin, Connie E. Naitove, Reginald Rose, Walter Seid, David Shaw, Stephen Solomon, Sheldon J. Tannen, Philip Tonken, Estate of Jess Ward and Dale Wasserman; Max Wild, New York City, of counsel.
OPINION AND ORDER
CONNER, District Judge:
Plaintiff James Bloor ("Trustee"), Chapter X Trustee for the Investors Funding Corporation of New York ("IFC"), instituted this action against a multitude of defendants alleging fraud in connection with the insolvency of IFC. The principal actors in the tragic drama described in the Trustee's voluminous complaint are Jerome, Norman and Raphael Dansker ("Danskers"), "the principal officers, controlling directors, controlling stockholders and the dominant force of IFC until some time prior *196 to October 21, 1974." Complaint ¶ 105.[1] IFC allegedly suffered massive damages at the hands of the Danskers, both as a result of certain management decisions and as a consequence of transactions by which the Danskers misappropriated IFC funds for the personal benefit of themselves and others. See Complaint ¶ 103 et passim. The Trustee asserts that as these actions, characterized as "the Fraud," Complaint ¶ 100, progressed, "larger and larger amounts of money were required and were obtained in order (i) to cover up the past fraudulent activities, management malfeasance and business reverses, (ii) to give IFC the false and misleading appearance of legitimacy and success and (iii) to continue the Fraud." See Complaint ¶ 104. On the basis of this false image of financial health, the Danskers were allegedly able to obtain for IFC huge quantities of funds from creditors, debenture holders, stockholders and other sources, Complaint ¶ 102, which monies were purportedly utilized to perpetuate and conceal the Fraud.
The case is currently before the Court on the motions of defendants Morris Karp ("Karp"), Hyman Shapiro ("Shapiro"), Peter Grunebaum ("Grunebaum"), Irving Kessler ("Kessler"), Marco Buitoni ("Buitoni"), David W. Katz & Co. ("Katz & Co."), Ely-Cruikshank Co. ("Ely-Cruikshank"), Carro, Spanbock, Londin, Rodman & Fass ("Carro-Spanbock"), Melvin J. Carro ("Carro"), Maurice Spanbock ("Spanbock"), Jerome Londin ("Londin") and a group of individual defendants including the estate of Charles A. Berns, H. Jerome Berns, Eli Bloom, Harry Epstein, Ulu Grosbard, Herbert Jaffe, Stephen Katz, Jack Klatell, H. Peter Kreindler, the estate of Maxwell A. Kreindler, Barbara Londin, Connie E. Naitove, Reginald Rose, Walter Seid, David Shaw, Stephen Solomon, Sheldon J. Tannen, Philip Tonken, the estate of Jess Ward and Dale Wasserman (collectively the "Joint Venture defendants") for judgment on the pleadings pursuant to Rule 12(c), F.R.Civ.P., or, alternatively, for summary judgment pursuant to Rule 56, F.R.Civ.P., dismissing several of the claims against them. The relevant claims of the Trustee, not all of which are advanced against each moving defendant, are as follows:
Third Claim Aiding and abetting common law fraud
Fourth Claim Sections 10(b) and 20 of the Securities Exchange Act of 1934 (the "Act")
Fifth Claim Section 18 of the Act
Sixth Claim Section 14 of the Act
Seventh Claim Section 352-c of the New York General Business Law
Eighth Claim Section 339-a of the New York General Business Law.
Seventeenth Claim Common law breach of contract
Twenty-first Claim Common law breach of contract
Twenty-seventh Claim Fraudulent transfers under Section 67(d) of the Bankruptcy Act, 11 U.S.C. § 107, or §§ 273, 273-a, 274 or 275 of the New York Debtor and Creditor Law.
In an Opinion and Order dated November 19, 1980,[2] familiarity with which is presumed, this Court granted in part the motions of defendants Peat, Marwick, Mitchell & Co., Jerome Lowengrub, S.D. Leidesdorf & Co. and Robert Saltman (collectively the "Auditors") to dismiss the claims against them. Briefly, the Court held, with respect to the fourth, fifth, seventh and eighth claims, that to the extent the Auditors were alleged to have certified inaccurate IFC financial statements which led to the issuance or sale of IFC securities, the proceeds of which were mismanaged or misapplied by IFC management, such claims did not arise in connection with the purchase or sale of a security, and thus failed to state a claim under § 10(b) or § 18 of the Act or under § 352-c or § 339-a of the New York General Business Law. See IFC I, 523 F.Supp. at 539 (citing Rochelle v. Marine Midland Grace Trust Co., 535 F.2d 523 (9th Cir.1976)). Moreover, to the extent that the *197 Trustee's allegations of looting of the proceeds by the Danskers and others satisfied the "in connection with" requirement,[3] the claims against the Auditors failed because of the absence of any proximate causal relationship between the Auditor's alleged acts and the injuries to IFC. See id. at 540.
The Court also rejected the two theories of secondary liability proffered by the Trustee, concluding that the Auditors could not be found liable as aiders and abettors of another's primary violation of § 10(b) or § 18, nor could they be subject to liability as controlling persons under § 20 of the Act. See id. at 542-43. With respect to the Trustee's nineteenth and twenty-seventh claims, the Court ruled that payments for professional services which allegedly failed to meet professional standards, while possibly giving rise to a malpractice action, neither constitute fraudulent transfers nor give rise to a breach of contract claim. Accordingly, the Auditors' motions to dismiss the twenty-seventh claim and the breach of contract portion of the nineteenth claim were also granted.[4] See id. at 549-50.
In the instant motions, each defendant seeks to obtain dismissal of the claims asserted against him by riding on the coattails of the Auditors. Each moving defendant argues that his situation is sufficiently analogous to that of the Auditors to require similar treatment. Because the outcome of each motion depends upon the particular circumstances of each defendant or group of defendants, each will be considered separately.
Morris Karp
Karp has moved to have the Court dismiss the Trustee's fourth, fifth, seventh and eighth claims for relief against him. In its November 1980 Opinion, this Court ruled that the "in connection with" requirement is a necessary element of both the federal securities law violations alleged in the Trustee's fourth and fifth claims, see IFC I, 523 F.Supp. at 537, and the state securities law violations asserted in his seventh and eighth claims. See id. at 544. The Court later found that the Trustee's allegations of a scheme to loot IFC of the proceeds from the sale of securities could, under Superintendent of Insurance v. Bankers Life & Casualty Co., 404 U.S. 6, 92 S.Ct. 165, 30 L.Ed.2d 128 (1971), satisfy this requirement, and accordingly held that the Complaint sufficiently pleads securities law claims against the Danskers. See IFC II, slip op. at 7-9. In view of that ruling, Karp's motion must be denied.
Paragraphs 110 through 133 of the Trustee's Complaint set forth Karp's alleged contribution to the Fraud. The Trustee asserts that pursuant to certain secret agreements between Karp and Norman Dansker, IFC entered into a continuing series of sham real estate transactions with Realty Equities, a company controlled by Karp, which enabled IFC to report a false and rosy picture of its financial health. Unlike the involvement of the Auditors, whose contribution was limited to the negligent or reckless preparation of financial statements, the Trustee has plausibly alleged that Karp knowingly engaged in fraudulent schemes with the Danskers, *198 which schemes enabled the Danskers to perpetuate the Fraud by hiding the fact of IFC's financial illness. In such a situation, the continuous looting of IFC by the Danskers, which forms the basis of the securities law violations alleged by the Trustee, was a direct and arguably foreseeable consequence of Karp's involvement, and thus does not suffer from the lack of causal linkage that was fatal to the Trustee's claims against the Auditors. The reasoning of this Court's ruling in IFC I is accordingly inapplicable to Karp. His motion to dismiss is therefore denied.
Hyman Shapiro
Shapiro has moved for judgment on the pleadings or, alternatively, for summary judgment dismissing the Trustee's twenty-seventh claim for relief against him. That claim alleges that Shapiro received six fraudulent transfers between April 1972 and February 1973. Although Shapiro's motion does not follow directly from this Court's conclusion in IFC I that payments for improperly rendered professional services cannot serve as the basis for a fraudulent transfer claim, the Court concludes, nevertheless, that it should be granted.
In Paragraph 123 of the Complaint, the Trustee alleges that Shapiro participated in the Fraud by agreeing to purchase properties from Realty Equities at inflated prices and by diverting construction loan advances from IFC to make mortgage payments to IFC on those properties. In the Report of the Trustee of Investors Funding Corporation of New York and its Debtor Subsidiaries, dated December 8, 1976 (the "Trustee's Report"), the Trustee sets forth in detail the loans from IFC to Shapiro which were allegedly diverted wrongfully to make mortgage payments to IFC. See Trustee's Report at 10.3-.4. The six transfers to Shapiro enumerated by the Trustee in his twenty-seventh claim for relief are not on that list, nor does the Trustee's basis for his claim that those six payments were fraudulent appear elsewhere in either the Complaint or the Trustee's Report.
In support of his motion, Shapiro has submitted the affidavit of Karp, which sets forth the consideration Shapiro provided to IFC for each of the six allegedly fraudulent transfers. The Trustee has not submitted any further evidence to support his claim that the transfers were fraudulent, but has relied solely upon the bare allegation contained in Paragraph 242 of his Complaint. This clearly does not fulfill his burden under Rule 56, F.R.Civ.P. See State of New York v. Gorsuch, 554 F.Supp. 1060, 1062 (S.D.N.Y.1983) (Conner, J.). Accordingly, Shapiro's motion for summary judgment dismissing the Trustee's twenty-seventh claim for relief against him is granted.
Peter K. Grunebaum, Irving Kessler and Marco Buitoni
Grunebaum, Kessler and Buitoni have moved for judgment on the pleadings dismissing the Trustee's fourth, fifth, seventh and eighth claims for relief against them. They claim that their positions as outside directors of IFC place them in a role analogous to that of the Auditors, and consequently that any damage suffered by IFC as a result of the Fraud was not the proximate result of their alleged wrongdoing. This argument, however, misconstrues the role of an outside corporate director.
The alleged contribution of the Auditors to the Fraud was their certification of financial statements that the Trustee claims overstated IFC's financial condition. See IFC I, 523 F.Supp. at 536-37. In IFC I, the Court ruled that although it is foreseeable that such statements will enable securities issued and sold by a corporation to command an artificially high price in the market, and thus injure purchasers, it is not foreseeable that inside management will embezzle the funds received. Id. at 540. The rationale for this ruling was, in part, based on the fact that the Auditors had no control over IFC's management, nor indeed did they have any connection with IFC's management except in their capacity as IFC's independent accountants. To the contrary, Grunebaum, Kessler and Buitoni were all directors of IFC. Although the responsibilities imposed upon outside directors of a corporation are not stringent, it is clear that "the proper role of these nonofficer *199 directors is that they should supervise the performance of the management." Lanza v. Drexel & Co., 479 F.2d 1277, 1306 (2d Cir.1973) (en banc). Thus, any management malfeasance was a direct, and not an unforeseeable, consequence of the directors' neglect of their directorial responsibilities. Accordingly, the Trustee's claims against Grunebaum, Kessler and Buitoni do not suffer from the absence of causal linkage that was fatal to his claims against the Auditors.
Of greater concern to the Court is the question whether the Trustee's claims against the outside directors can satisfy the scienter element that is necessary to establish both the federal and the state securities law claims asserted here. Despite the Trustee's overly colorful characterization of the involvement of these directors in the Fraud, he has in his Complaint actually alleged little more than that they completely failed to carry out their duties as directors of the corporation. In Greene v. Emersons, Ltd., 86 F.R.D. 66 (S.D.N.Y.1980), Judge Haight of this Court ruled that an outside director's failure to discover the improprieties of a corporation's officers, even if such behavior could be characterized as "reckless," does not constitute scienter which, under those circumstances, requires something closer to an actual intent to defraud. See id. at 72-73. Thus, he dismissed the plaintiffs' § 10(b) and Rule 10b-5 claims against the outside directors for failure to state a claim upon which relief can be granted. Id. at 73. For that same reason, the Trustee's fourth, fifth, seventh and eighth claims for relief against Grunebaum, Kessler and Buitoni are dismissed with leave to replead within thirty days if the Trustee can in good faith allege a more substantial involvement by these outside directors in the asserted Fraud.
David W. Katz & Co.
Katz & Co., an accounting firm, has moved for judgment on the pleadings or, alternatively, for summary judgment dismissing the Trustee's twenty-seventh claim for relief against it on the ground that the allegedly fraudulent transfers set forth in Paragraph 242 of the Trustee's Complaint were payments for professional services and, like the payments to the Auditors, cannot be considered fraudulent transfers even if those services failed to meet professional standards. The motion, however, misconstrues the nature of the Trustee's allegations against Katz & Co. While the Trustee's Complaint is far from a model of clarity and good draftsmanship, it does allege, albeit somewhat disjointedly, that the payments to Katz & Co. were for services that were never performed for IFC and not, as Katz & Co. believes, for services that were performed but failed to meet professional levels of competence.
In Paragraph 3(e)(4) of the Complaint, the Trustee describes Katz & Co. as "a partnership engaged in the practice of public accounting [which] purportedly performed accounting services for IFC and performed accounting services for the Danskers which were charged to IFC." Complaint ¶ 3(e)(4) (emphasis added). The fraudulent transfer claim, which appears at Paragraph 242 of the Complaint, states only that Katz & Co. received three payments from IFC, totalling $32,500, which payments are alleged to have been fraudulently made. In view of the absence of any further allegations against Katz & Co., or indeed any further mention of Katz & Co., the only plausible reading of the Complaint is that these three payments are alleged to have been made by IFC as compensation for services performed by Katz & Co. for the Danskers rather than for IFC itself. If proved, these allegations constitute a valid right of recovery on the part of the Trustee under the bankruptcy laws. On the other hand, if Katz & Co. is able specifically to document that the payments set forth in Paragraph 242 of the Complaint were for services rendered to IFC, then it might be able to succeed in a motion for summary judgment. On the current state of the record however, both the motions for judgment on the pleadings and for summary judgment must be denied.
Ely-Cruikshank Co.
Ely-Cruikshank is a real estate appraiser which appraised property owned by *200 IFC and located at 320 Harrison Street in East Orange, New Jersey. The Trustee alleges in Paragraphs 208-10 of the Complaint that Ely-Cruikshank appraised that property at an unreasonably high value, with the knowledge that the appraised value would be used by IFC's auditors to prepare IFC's financial statements and by IFC to obtain credit and sell securities. Ely-Cruikshank has moved for judgment on the pleadings dismissing the Trustee's fourth, fifth, seventh and eighth claims for relief against it on the ground that its position as an appraiser is analogous to the Auditor's role with respect to the looting by the Danskers. It has also moved to dismiss the portion of the Trustee's twenty-first claim for relief that alleges a breach of contract and to limit the third claim against Ely-Cruikshank in the same manner that it was limited against the Auditors in IFC I. All of these motions are granted, substantially for the reasons set forth in IFC I.
The Trustee's securities law claims against Ely-Cruikshank suffer from the same causal failing that was fatal to his claims against the Auditors. As noted in IFC I, in order for any of the federal and state securities law claims asserted by the Trustee to be actionable, the injury to the bankrupt estate must have been the proximate result of the misleading statements or omissions complained of. See IFC I, supra, 523 F.Supp. at 539, 544. While it was arguably foreseeable that, as a result of appraisals overstating the value of assets of the corporation, securities issued and sold by IFC would command a higher price than their true value, thus injuring purchasers and providing excessive funds to the corporation, it was not reasonably foreseeable that inside management of IFC would embezzle the funds so received for their personal use. See id. at 540 (same reasoning set forth in greater detail with respect to the Auditor's inaccurate financial statements). Accordingly, the Trustee's fourth, fifth, seventh and eighth claims for relief are dismissed as against Ely-Cruikshank.
In IFC I, the Court dismissed the contract portion of the Trustee's nineteenth claim for relief against the Auditors on the ground that a claim against an accountant for failure to perform his duties in accordance with generally accepted accounting principles states only a claim in tort or malpractice, not in contract. See id. at 546 (relying on Carr v. Lipshie, 8 A.D.2d 330, 187 N.Y.S.2d 564 (1st Dep't 1959), aff'd, 9 N.Y.2d 983, 218 N.Y.S.2d 62, 176 N.E.2d 512 (1961)). The appraisers' counterpart of that claim is contained in the twenty-first claim for relief, wherein the Trustee alleges that the appraisers "breached their contractual obligations to perform appraisal services in accordance with the professional standards applicable to them." Complaint ¶ 528. The claim against the appraisers, like the claim against the Auditors, asserts as a theory of recovery that the failure of a professional to perform his work at a professional level of competence constitutes a breach of contract. Absent any showing by the Trustee to demonstrate that appraisers should be treated differently from auditors on this point, the Court concludes that the claims are analogous. Accordingly, the Trustee's twenty-first claim for relief is dismissed insofar as it asserts a breach of contract claim against Ely-Cruikshank.
The Trustee's third claim for relief alleges that Ely-Cruikshank, among others, aided and abetted the commission of common law fraud. In IFC I, the Court ruled that although the injuries upon which the Trustee based this claim need not have been incurred in connection with the purchase or sale of securities, they still must have been proximately connected to the participation of the alleged aider and abettor. Id. at 545. Thus, the Court held that to the extent the Trustee sought to hold the Auditors liable on the basis of amounts looted from IFC by the Danskers, his claim failed to satisfy the requirement of causal nexus. But to the extent he sought recovery from them for amounts other than the alleged misappropriations by the Danskers, he would have to prove facts sufficient to establish a proximate causal connection between the Auditors' acts and the damages to IFC. Id. at 545-46. In view of the Court's current *201 ruling that the actions of Ely-Cruikshank were not the proximate cause of the looting by the Danskers, this same limitation will be applied to the Trustee's third claim for relief against it.
Carro Spanbock Londin Rodman & Fass, Melvin J. Carro, Maurice Spanbock and Jerome J. Londin
Carro Spanbock, IFC's outside legal counsel, has moved for judgment on the pleadings or, alternatively, for summary judgment dismissing the Trustee's fourth, fifth, seventh, eighth, seventeenth and twenty-seventh claims for relief against it. Carro, Spanbock and Londin, members of that firm, have made the same motion with respect to the Trustee's fourth, fifth, seventh and eighth claims asserted against them individually or in their capacity as investors in several IFC-sponsored real estate ventures. The Trustee alleges in Paragraphs 231-38 of the Complaint that Carro Spanbock provided improper legal advice to IFC concerning IFC's securities disclosures and its transactions with interested directors. The individuals Carro, Spanbock and Londin are alleged to have participated in the Fraud by virtue of their investments in certain real estate deals characterized by the Trustee as fraudulent, and Carro is further claimed to have been an active participant in the secret arrangements underlying some of those deals. See Complaint ¶ 126.
The Trustee's claims against Carro Spanbock suffer from the same failings as his claims against the Auditors and Ely-Cruikshank, and thus the firm's motion for judgment on the pleadings dismissing those claims must be granted. Assuming, as this Court must for purposes of this motion, that Carro Spanbock rendered legal services to IFC in the manner alleged by the Trustee, the firm's advice led directly to the preparation and dissemination of misleading prospectuses and registration statements, by means of which IFC securities were sold to the public at fraudulently inflated prices. As this Court previously noted with respect to the certification of misleading financial statements by the Auditors, such action might well have been a substantial factor in the injury suffered by investors, but it was not a proximate cause of the injury to IFC for which the Trustee seeks redress here. See IFC I, supra, 523 F.Supp. at 542-43. Accordingly, for that same reason, the fourth, fifth, seventh and eighth claims for relief against Carro Spanbock are dismissed.
The Trustee's seventeenth claim for relief alleges that Carro Spanbock breached its agreement to provide legal services to IFC because of the deficient manner in which those services were performed. The claim is conceptually identical to the breach of contract claims asserted against the Auditors and the appraiser, Ely-Cruikshank, both of which have already been dismissed by the Court. In dismissing those claims, this Court ruled that under New York law a professional's failure to perform his job in accordance with the standards required of one in his field states a claim in tort or malpractice, but not in contract. Since the Trustee's claims against Carro Spanbock allege nothing more than this, and because there appears to be no legal basis for distinguishing attorneys from accountants or appraisers in this respect, the seventeenth claim for relief is also dismissed.
The twenty-seventh claim for relief alleges that between 1972 and 1974 Carro Spanbock was the recipient of fraudulent transfers totalling nearly $650,000. See Complaint ¶¶ 242, 536. The Trustee has neither alleged in the Complaint nor argued in his motion papers that these transfers were other than payments to Carro Spanbock for legal services. Unlike the allegations against Katz & Co., there is no claim that Carro Spanbock was paid by IFC for services that it never performed or that it performed for someone other than IFC. Accordingly, in view of this Court's prior ruling that fraudulent transfers under both the Bankruptcy Act and New York law do not encompass payments to a professional for services which failed to meet professional standards of performance, the Trustee's *202 twenty-seventh claim for relief is dismissed against Carro Spanbock.
The Trustee's securities law allegations against Carro in his individual capacity stand, however, on a completely different footing than his claims against the firm. Unlike the allegations against the firm, see Complaint ¶¶ 231-34, which arise in the context of the legal advice it provided to IFC, the individual claims against Carro concern his asserted involvement in business dealings with IFC unrelated to the legal services being offered by his firm. In Paragraphs 126 and 134 of the Complaint, the Trustee alleges that Carro, along with Jerome Dansker, was the motivating force behind the formation and operation of three real estate ventures, denominated the Plummer Venture, the Hampshire Towers Venture and the Spanbock Venture (the "Ventures"). Under the scenario sketched by the Trustee, Carro formed the three Ventures by organizing groups of investors. Carro and Jerome Dansker then entered into secret agreements governing the sale of property to each of the three Ventures, which enabled IFC to report sham profits and provided the Ventures with sweetheart deals at IFC's expense. See Complaint ¶¶ 126-34. Thus, Carro was in a position not unlike that of Karp, whose situation was discussed above.
Because the alleged involvement of both Carro and Karp occurred at different stages of the Fraud from that of the Auditors, their participation is not analogous to that of the Auditors. While a foreseeable effect of the Auditors' involvement was that IFC was able to obtain through the sale of securities more money than would otherwise have been available, the Court in IFC I held that it was not reasonably foreseeable that the Auditors' participation would lead to the looting of those excess funds. Accordingly, the Court rejected the Trustee's attempt to connect the Auditors' limited involvement to the ultimate injury suffered by IFC by a series of "but for" links. See 523 F.Supp. at 540.
Here, by contrast, Carro, like Karp, is alleged by the Trustee to have been involved directly in the process by which these funds were diverted from IFC. The purportedly fraudulent manner in which these real estate transactions were set up not only enabled IFC to portray a false picture of financial health, and thus to obtain more money through securities sales on the basis of materially overstated financial statements, but it also provided the mechanism through which the Danskers and others were allegedly able to loot the funds previously obtained. See id. at 541. The ultimate injury to IFC is not, therefore, free of clear causal linkage to Carro's conduct, but follows instead as a direct and proximate result of the acts he is alleged to have committed. Accordingly, the motion of Carro to dismiss the Trustee's fourth, fifth, seventh and eighth claims for relief against him is denied.
The Trustee in his fourth, fifth, seventh and eighth claims for relief has also asserted securities law claims directly against the Plummer Venture, the Hampshire Towers Venture and the Spanbock Venture. Spanbock and Londin have moved in their capacities as investors in the Ventures[5] to dismiss these claims under the authority of Rochelle v. Marine Midland Grace Co., 535 F.2d 523 (9th Cir.1976), and this Court's ruling in IFC I. Inherent in the above discussion concerning Carro, however, is the Court's conclusion that, as alleged by the Trustee, the transactions between IFC and the Ventures satisfy the causation requirement that was absent from the securities law claims asserted against the Auditors. Thus, Spanbock's and Londin's motion to dismiss these securities law claims on the *203 ground that the injuries suffered by IFC were not causally related to the conduct of the Ventures must be denied.
Joint Venture Defendants
The Joint Venture Defendants, like Spanbock and Londin, were investors in some or all of the Ventures. They have not moved to dismiss the securities law claims asserted against the Ventures, but have moved against the Trustee's sixteenth and twenty-seventh claims for relief, which allege that the participants in the Ventures were unjustly enriched and received fraudulent transfers from IFC. As the above discussion and the. Court's analysis in IFC I point out, the Complaint alleges that the transactions between IFC and the Ventures involved sham arrangements and imprudent deals and were generally adverse to IFC's interests. In the face of these allegations, the Court cannot rule, as urged by these defendants, that there is no theory under which the transfers from IFC to the Ventures could have been for less than fair value or could in any way have harmed IFC.
At the same time, the Court agrees with the Joint Venture Defendants that the complaint does not adequately set forth the basis for the Trustee's claims that these investors were unjustly enriched by payments from IFC or that those payments constituted fraudulent transfers. In interpreting the Trustee's poorly drafted Complaint, the Court has displayed an extremely liberal attitude toward drawing all reasonable inferences from the disjointed allegations contained in the pleading. The unjust enrichment and fraudulent transfer claims, however, are set forth in the barest and most generalized of terms and simply list these defendants as among a multitude of defendants who are alleged to have received improper payments. In his fraudulent transfer claim, the Trustee, after listing more than ten pages of purported fraudulent transfers to a host of unrelated defendants, generally alleges that "some or all" of those transfers were made in violation of New York and federal law. The Complaint never sets forth which of the various alternative legal prohibitions are applicable to any particular transferee nor does it describe any background facts relevant to each defendant to support the Trustee's claim that the payments to that defendant were fraudulent conveyances. See Complaint ¶¶ 242-49. The unjust enrichment claim suffers similarly from the disease of overgeneralization. See Complaint ¶ 516. Accordingly, these claims will be dismissed with leave granted to the Trustee to replead within thirty days.
Summary
For the reasons stated above, all motions to dismiss the Trustee's sixth claim for relief are granted, as are all motions to dismiss that portion of his fourth claim which asserts a violation of § 20 of the Act. The motions of Karp, Carro, Spanbock and Londin to dismiss the claims against them are denied. Shapiro's motion for summary judgment dismissing as against him the Trustee's twenty-seventh claim for relief is granted, as are the motions of David W. Katz & Co., Ely-Cruikshank and Carro Spanbock. The fourth, fifth, seventh and eighth claims for relief are dismissed as against Grunebaum, Kessler and Buitoni, except that the Trustee is given leave to replead these claims within thirty days of the date of this Opinion and Order. Similarly, the Trustee's sixteenth and twenty-seventh claims for relief are dismissed as against the Joint Venture Defendants with leave to replead within thirty days.
SO ORDERED.
NOTES
[1] All references are to the Trustee's amended complaint, dated November 8, 1976.
[2] 523 F.Supp. 533 (S.D.N.Y.1980) (Conner, J.) (hereinafter cited as "IFC I").
[3] In dismissing the fourth, fifth, seventh, and eighth claims against the Auditors because of the absence of a causal link, the Court expressed no opinion whether the underlying allegations of looting satisfy the "in connection with" requirement needed to establish both the federal and state securities laws violations asserted by the Trustee. In a later decision, rendered on January 12, 1982, the Court reached this issue in denying the Danskers' motion to dismiss these claims, and concluded that the allegations in the Complaint of a scheme on the part of the Danskers to loot the proceeds from the sale of IFC securities satisfies this requirement. Thus, the Complaint sufficiently pleads a violation of the securities laws by the Danskers. See slip op. at 7-9 (S.D.N.Y. Jan. 12, 1982) (Conner, J.) (citing Superintendent of Insurance v. Bankers Life & Casualty Co., 404 U.S. 6, 92 S.Ct. 165, 30 L.Ed.2d 128 (1971)) (hereinafter cited as "IFC II").
[4] The Trustee's sixth claim was also dismissed as against the Auditors without objection. In his memorandum in opposition to the instant motions, the Trustee does not object to dismissal of his sixth claim for relief and that portion of his fourth claim alleging violations of § 20 of the Act. Accordingly, all motions to dismiss those claims are granted.
[5] Spanbock is named by the Trustee as an investor in all three Ventures, while Londin is named only in the Spanbock Venture. Complaint ¶ 3(j)(2). The Complaint, which as noted several times previously is far from artfully drafted, appears to assert securities law claims only against the Ventures as entities and not against the individual investors in those Ventures. Since Spanbock and Londin do not purport to be acting on behalf of any of the three Ventures, their standing to make the instant motion is subject to question. In view of the Court's decision to deny the motion, however, it need not reach that point.
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5 F.Supp.2d 1213 (1998)
MIAMI TRIBE OF OKLAHOMA, Plaintiff,
v.
UNITED STATES of America, et al., Defendants.
No. 97-2396-JWL.
United States District Court, D. Kansas.
May 8, 1998.
*1214 Kip A. Kubin, Payne & Jones, Chtd., Overland Park, KS, for Plaintiffs.
Christina L. Medeiros, Office of United States Attorney, Kansas City, KS, for Defendants.
MEMORANDUM AND ORDER
LUNGSTRUM, District Judge.
This action arises under the federal Indian Gaming Regulatory Act (IGRA), 25 U.S.C. §§ 2701-2721. Pursuant to its authority under IGRA, the National Indian Gaming Commission (NIGC) denied approval of a class II gaming management contract submitted by plaintiff Miami Tribe of Oklahoma (the Tribe) on the ground that the proposed site for the gaming operation did not constitute "Indian lands," as required under IGRA. The Tribe now seeks judicial review of that decision.[1] For the reasons set forth below, the court concludes on the record that is before it that the agency abused its discretion in denying approval for the management contract. The matter is therefore remanded to the NIGC for further proceedings.
I. Background
In 1995, the NIGC disapproved a class II gaming management contract between the Tribe and Butler National Service Corporation. *1215 The NIGC relied in part on an opinion from the Department of the Interior (DOI) that the proposed site for the gaming operation, the Maria Christiana Miami Reserve No. 35 (the Reserve), did not constitute "Indian lands", which IGRA defines as trust or restricted land "over which an Indian tribe exercises governmental power." 25 U.S.C. § 2703(4). The Tribe appealed that decision to this court.
On April 10, 1996, the court issued a memorandum and order affirming the NIGC's decision. See Miami Tribe of Okla. v. United States, 927 F.Supp. 1419 (D.Kan.1996). The court first determined that the NIGC's interpretation of the "Indian lands" definition to require jurisdiction was permissible. Id. at 1423. The court then reviewed the history of the Reserve and concluded that the Tribe had relinquished its jurisdiction over the Reserve by 1884 and, furthermore, that Congress had expressly abrogated the Tribe's jurisdiction by 1924. Id. at 1424-27. The court also concluded that jurisdiction could not arise from membership of the current owners of the Reserve because the owners were not in fact members of the Tribe at the time of the agency decision under review. Id. at 1427. The court did not consider the effect of steps taken toward membership after the agency's decision. Id. at 1427-28.
On March 14, 1996, pursuant to an amendment in the Tribe's constitution, the owners of the Reserve were admitted as members of the Tribe. On April 16, 1996, the owners leased the Reserve to the Tribe for purposes of a gaming operation; in the lease agreement, the owners consented to jurisdiction of the Tribe over the Reserve.
On June 18, 1996, the Tribe requested that the NIGC reconsider its earlier disapproval in light of the new membership of the owners of the Reserve. On July 1, 1996, the NIGC again requested an opinion from the DOI on the issue of "Indian lands" under IGRA. The Tribe, through its attorney, submitted two briefs to the DOI in support of its position.
On May 12, 1997, the Solicitor of the DOI issued his opinion that the Reserve did not qualify as "Indian lands" under IGRA. The Solicitor concluded that "the admission of the owners of the land into the Tribe is alone not sufficient evidence of tribal authority to bring the land within the definition of `Indian lands' under IGRA." The Solicitor then reviewed the history of the Tribe's relationship to the Reserve. Next, the Solicitor cited Cheyenne River Sioux Tribe v. State of South Dakota, 830 F.Supp. 523, 528 (D.S.D.1993), aff'd, 3 F.3d 273 (8th Cir.1993), in which the district court, in denying summary judgment on the issue, suggested the following factors that may be relevant in determining whether a tribe "exercises governmental power" over a location:
(1) whether the areas are developed; (2) whether tribal members reside in those areas; (3) whether any governmental services are provided and by whom; (4) whether law enforcement on the lands in question is provided by the Tribe or the State; and (5) other indicia as to who exercises governmental power over those areas.
The Solicitor concluded as follows:
In the case of the Maria Christiana allotment [the Reserve], the land was originally allotted in 1859 to a nonmember of the Tribe. It is some distance from the Tribe's headquarters. Until the adjoining landowner recently provided the Tribe with access, it was inaccessible. It remains undeveloped. No member of the Tribe resides on the land. Until very recently, there had been no tribal oversight. The heirs of the original allottee were not members of the Tribe until 1996 when they were adopted because of their ownership interest in the land. The Miami Tribe of Oklahoma agreed by treaty to move to Oklahoma and cede its interest in this land. The Miami Tribe of Oklahoma did not allege governmental power over the land in the early 1990's and there is no agreement by local jurisdictions that the Tribe has civil and regulatory jurisdiction over the land. Finally, the Miami Tribe of Oklahoma twice received compensation from the United States based on the loss of this land. The initial payment compensated the Tribe for the land; the second payment compensated the Tribe for unpaid interest on the initial payment. Considering all these circumstances leads us to the *1216 conclusion that the Miami Tribe does not exercise governmental powers over the Maria Christiana Reserve No. 35 within the meaning of IGRA.
To join the issue, the Tribe actually submitted the management contract to the NIGC for approval on June 11, 1997. On July 23, 1997, the NIGC disapproved the contract on the basis that the Reserve was not "Indian lands" as required under IGRA; the NIGC deferred to the DOI opinion on that issue. On August 14, 1997, the Tribe brought the instant suit by which it seeks review of the NIGC's decision.[2] On January 23, 1998, the Tribe filed its appeal brief to place the question of the agency's "Indian lands" ruling at issue.
II. Standard of Review
The Chairman of the NIGC disapproved the management contract pursuant to 25 U.S.C. § 2711. That decision is appealable to this court under 25 U.S.C. § 2714 and the Administrative Procedure Act (APA), 5 U.S.C. § 702.
The parties have spent substantial portions of their briefs arguing about whether the court should pay deference to the agency's decision pursuant to Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). In arguing that no deference is due here, the Tribe points to Southern Ute Indian Tribe v. Amoco Production Co., 119 F.3d 816 (10th Cir.1997), in which the Tenth Circuit held that deference under Chevron to an agency interpretation of a statute that it administers is appropriate only if that interpretation is rendered by way of legislative rule or adjudication. Id. at 832-33. What both parties overlook, however, is that the interpretation here was made in the context of an adjudication, specifically, the adjudication of the Tribe's application for approval of its management contract. As the court stated in Miami Tribe I, this deferential standard "is the same whether the agency interpretation is performed through rule-making or, as here, informal adjudication." Miami Tribe I, 927 F.Supp. at 1423 (quoting Arco Oil & Gas Co. v. EPA, 14 F.3d 1431, 1433 (10th Cir.1993)).
Although the applicability of Chevron here entitles the NIGC to deference regarding its interpretation of the statute, that, of course, does not end the inquiry. The court's review of the final agency decision in this case is also governed by the APA, specifically 5 U.S.C. § 706(2)(A), which requires the court to set aside an agency action found to be "arbitrary, capricious, an abuse of discretion, or not otherwise in accordance with law." There is no contention here that the NIGC exceeded the scope of its authority or failed to comply with prescribed procedures; the court must therefore determine whether the action was otherwise arbitrary, capricious, or an abuse of discretion. See Olenhouse v. Commodity Credit Corp., 42 F.3d 1560, 1574 (10th Cir.1994). Thus, even if the court defers to the agency's interpretation of the statutory definition, it must still examine the agency's decision to determine whether the agency's conclusions based on that interpretation pass muster under the APA.
Under the arbitrary and capricious standard, the court "must determine whether the agency considered all relevant factors and whether there has been a clear error of judgment." Id. (citing Motor Vehicle Mfrs. Ass'n v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983)).
Agency action will be set aside "if the agency relied on factors which Congress has not intended for it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise."
Id. (quoting Motor Vehicle Mfrs., 463 U.S. at 43, 103 S.Ct. 2856). The Tenth Circuit further explained the standard as follows:
*1217 Because the arbitrary and capricious standard focuses on the rationality of an agency's decisionmaking process rather than on the actual decision, it is well-established that an agency's action must be upheld, if at all, on the basis articulated by the agency itself. Thus, the grounds upon which the agency acted must be clearly disclosed in, and sustained by, the record. The agency must make plain its course of inquiry, its analysis and its reasoning. After-the-fact rationalization by counsel in briefs or argument will not cure noncompliance by the agency with these principles. If the agency has failed to provide a reasoned explanation for its action, or if limitations in the administrative record make it impossible to conclude the action was the product of reasoned decisionmaking, the reviewing court may supplement the record or remand the case to the agency for further proceedings.
Id. at 1575 (citations omitted). Finally, "[i]n addition to requiring a reasoned basis for agency action, the `arbitrary and capricious' standard requires an agency's action to be supported by the facts in the record." Id.
III. Application of Arbitrary and Capricious Standard
The pivotal issue in this case is whether the Reserve constitutes "Indian lands" as required in IGRA. That term is defined in the statute to mean
(A) all lands within the limits of any Indian reservation; and
(B) any lands title to which is either held in trust by the United States for the benefit of any Indian tribe or individual or held by any Indian tribe or individual subject to restriction by the United States against alienation and over which an Indian tribe exercises governmental power.
25 U.S.C. § 2703(4). The Reserve is not within the limits of an Indian reservation. The parties agree, however, that the first requirement of part (B) of the definition that the Reserve be trust or restricted land is met here by virtue of the Reserve's status as an allotment. Thus, the only remaining question is whether the Tribe "exercises governmental power" over the Reserve.[3]
Under Chevron, the court analyzes the interpretation of the phrase "exercises governmental power" here under a two-part inquiry. With respect to the first part of the test, see Chevron, 467 U.S. at 842-43, 104 S.Ct. 2778, the court has already concluded that Congress has not directly spoken to the meaning of this phrase. Miami Tribe I, 927 F.Supp. at 1423. The court then must determine whether the agency's interpretation is based on a permissible construction of the statute. Chevron, 467 U.S. at 843, 104 S.Ct. 2778.
The case law considering this phrase is sparse. In Cheyenne River, the district court denied summary judgment to both parties on the question of whether the Indian tribe in that case exercised governmental power over the location at issue. 830 F.Supp. at 528. The court stated:
There is nothing in the record to determine: (1) whether the areas are developed; (2) whether tribal members reside in those areas; (3) whether any governmental services are provided and by whom; (4) whether law enforcement on the lands in question is provided by the Tribe or the State; and (5) other indicia as to who exercises governmental power over those areas.
Id. The DOI opinion noted these factors. On appeal, the Eighth Circuit upheld the district court's denial of summary judgment without commenting further on the meaning of the phrase "exercises governmental power." Cheyenne River, 3 F.3d at 280.
The First Circuit has also commented on the "exercises governmental power" requirement. That court stated:
In addition to having jurisdiction, a tribe must exercise governmental power in order to trigger the Gaming Act.[4] Meeting *1218 this requirement does not depend upon the Tribe's theoretical authority, but upon the presence of concrete manifestations of that authority.
State of R.I. v. Narragansett Tribe of Indians, 19 F.3d 685, 702-03 (1st Cir.1994).
Certainly, then, the NIGC's construction of the statute to involve consideration of a number of factors under the totality of the circumstances is a permissible one, and the court therefore defers to that construction under Chevron. The Tribe argues that jurisdiction alone should satisfy the "exercise of governmental power" requirement. Given the First Circuit's language in Narragansett Tribe, a construction requiring more than mere jurisdiction or theoretical authority by a tribe over a parcel of land would be permissible. The Tribe's position is further undermined by the fact that Congress used (and separately defined) the term "Indian lands" instead of "Indian country", the term generally used to define the limits of a tribe's jurisdiction. See Mustang Production Co. v. Harrison, 94 F.3d 1382, 1385 (10th Cir.1996) (tribal jurisdiction determined by status as Indian country).
Having concluded that the NIGC employed a permissible interpretation of the statute, the court turns to the NIGC's application of the statute to the case at hand. This is where the court believes the problems arise. First, the continued reference to the parcel's history in the DOI opinion leaves unclear the extent to which and for what purpose the NIGC considered that history. In Miami Tribe I, the court concluded that the history of the Reserve did not supply the jurisdiction over that land required by the NIGC and DOI. The Tribe now contends, however, that jurisdiction has arisen from the Reserve owners' membership in the Tribe. That argument, which the NIGC did not directly address, appears facially sound. Mustang Production, 94 F.3d at 1385 ("Indian tribes have jurisdiction over lands that are Indian country, and allotted lands constitute Indian country."). Thus, the Tribe argues that it has established jurisdiction without reference to and despite the history of the Reserve by virtue of events that occurred subsequent to the events on which Miami Tribe I turned.
If jurisdiction were established, based on these subsequent events, the court would find that the history of the parcel, at least that part dealing with the cession of the land and the Tribe's receipt of compensation, is irrelevant; the only inquiry under the statutory definition of "Indian lands" would be whether the tribe exercises in the present governmental power over the land. Thus, to the extent the NIGC and DOI conceded that jurisdiction has been satisfied here, the court believes that they considered improper factors when they cited the history of the Reserve as a basis for their decision.
But there's the rub the court cannot determine whether the NIGC and DOI, in once again concluding that the Reserve is not "Indian lands", found that the Tribe still had not established jurisdiction over the Reserve.[5] The DOI opinion did not state specifically that jurisdiction was still lacking, but instead focused on whether the Tribe exercises governmental power. The references to history in the opinion may evidence an implicit argument by the NIGC and DOI that the Tribe did not assume jurisdiction over the Reserve by virtue of the owners' new membership in the Tribe. But if that is indeed the basis on which the management contract was disapproved, the decision must be overturned as arbitrary and capricious because the decision-maker has not provided a "reasoned explanation" why the Tribe cannot obtain jurisdiction in the way it has proposed. See Olenhouse, 42 F.3d at 1575. The DOI opinion's continued reliance on history seems in fact to ignore the Tribe's argument that jurisdiction exists here despite history. If the NIGC and DOI believe that jurisdiction cannot be obtained in that way, it should *1219 at least explain its reasoning in that regard. If on the other hand, they concede that jurisdiction has been satisfied, then history concerning the Tribe's cession of the land and receipt of compensation should no longer play a role in the agency's determination.
Second, the DOI opinion also contains no reference to the tribal ordinances and other activities that the Tribe asserts are examples of their actually and concretely exercising governmental power. It thus appears to the court that the NIGC and DOI "entirely failed to consider an important aspect of the problem." Id. at 1574 (quoting Motor Vehicle Mfrs., 463 U.S. at 43, 103 S.Ct. 2856). It may be that these activities are not enough in the eyes of the agency to constitute the exercise of governmental power, but they are contentions that require consideration. If they were considered but rejected by the agency, it needs to make an appropriate record to that effect.
Finally, the additional facts on which the NIGC and DOI relied the undeveloped nature of the Reserve, the fact that no member resides there, the absence of an agreement with local jurisdictions do not seem to have evidentiary support in the record compiled and filed in this case by defendants. It may well be that those stated facts are true and that they are entitled to great weight, but the court has not been shown that those actually are facts established in the record of the case.
Therefore, under the standard set out by the Tenth Circuit in Olenhouse and repeated above, the court must conclude that the decision to disapprove the Tribe's management contract based on the conclusion that the Reserve does not constitute "Indian lands" must be set aside as an abuse of discretion. Because "the agency has failed to provide a reasoned explanation for its action" and "limitations in the administrative record make it impossible to conclude the action was the product of reasoned decisionmaking," the court remands this issue to the NIGC for further proceedings. See id. at 1575.[6]
IT IS THEREFORE ORDERED BY THE COURT THAT the decision by the NIGC to deny approval of the management contract submitted by the Tribe on the basis that the proposed gaming site does not constitute "Indian lands" is reversed, and proceedings related to that submission are remanded to the agency.
IT IS FURTHER ORDERED THAT a telephone status conference to discuss procedural matters arising out of this order shall be set for May 15, 1998, at 10:30 a.m. The court shall initiate the telephone call.
IT IS SO ORDERED.
NOTES
[1] This order concerns only count I of the Tribe's complaint. On November 26, 1998, the court ordered that defendants could file a motion to dismiss count II (breach of fiduciary duty) within 30 days after the court's ruling on count I.
[2] The parties stipulated that the July 23 decision was final and that all necessary administrative remedies have been exhausted.
[3] The Tribe has not challenged the DOI's interpretation of part (B) to mean that the requirement that the Indian tribe exercise governmental power over the land applies to both trust and restricted land. See 25 C.F.R. § 502.12.
[4] The First Circuit based its requirement of both jurisdiction and the exercise of governmental power on IGRA's provision for gaming "on Indian lands within such tribe's jurisdiction." See 25 U.S.C. § 2710(b)(1).
[5] Defendants appear to argue in their brief that jurisdiction is still wanting, but, as stated above, "an agency's action must be upheld, if at all, on the basis articulated by the agency itself," and not on a basis argued in a brief. Olenhouse, 42 F.3d at 1575 (quoting Motor Vehicle Mfrs., 463 U.S. at 50, 103 S.Ct. 2856).
[6] The court will not grant the Tribe's request that the court order the NIGC to approve the management contract; instead, the court believes that, given the deficiencies in the agency's decision, remand is appropriate under Olenhouse. The Tribe has withdrawn the request in its complaint for an accounting of funds paid by Butler National Corporation.
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Case: 15-14635 Date Filed: 04/21/2016 Page: 1 of 10
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 15-14635
Non-Argument Calendar
________________________
D.C. Docket No. 9:14-cv-80467-JG
ENRIQUE COLLADO,
Plaintiff-Appellee,
JUAN GIRON,
and others similarly situated,
JOEL RUBIO,
ANTONIO WOODSON,
DANNY RHINEHART, et al.,
Plaintiffs,
versus
J. & G. TRANSPORT, INC.,
Defendant-Appellant,
IVIS GUZMAN,
individually, et al.,
Defendants.
Case: 15-14635 Date Filed: 04/21/2016 Page: 2 of 10
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(April 21, 2016)
Before ED CARNES, Chief Judge, WILLIAM PRYOR, and FAY, Circuit Judges.
PER CURIAM:
Enrique Collado filed a collective action lawsuit under the Fair Labor
Standards Act alleging that J. & G. Transport, Inc. (J&G) failed to pay its truck
drivers for overtime work.1 J&G waived its contractual right to compel arbitration
by participating in the litigation, but when Collado amended his complaint to add
state law claims for breach of contract and quantum meruit, J&G moved to compel
arbitration as to those new claims. The district court denied the motion to compel
arbitration, finding that the addition of those state law claims did not unexpectedly
change the scope or theory of the litigation to an extent that would give J&G the
authority to insist on arbitration of those new claims. This is J&G’s interlocutory
appeal of that ruling. See 9 U.S.C. § 16(a)(1).
I.
In June 2014 Collado filed an amended complaint alleging that he had
worked for J&G as a truck driver hauling garbage, debris, and mulch from
1
Collado also named two of J&G’s corporate officers, but they are not parties to this
appeal.
2
Case: 15-14635 Date Filed: 04/21/2016 Page: 3 of 10
July 2013 into January 2014, during which time he worked about 85 hours per
week. According to Collado, J&G made its truck drivers sign an independent
contractor agreement in a scheme to evade the FLSA’s overtime wage
requirements. He sought compensatory and liquidated damages for the purported
failure to pay him and similarly situated employees the overtime wages required by
the FLSA.2
Immediately after the close of discovery and shortly before trial was
scheduled to begin, Collado moved to file a second amended complaint seeking to
add state law claims for breach of contract and quantum meruit. He asserted that
an addendum to the agreement provided that his compensation was to be 35% of
the adjusted gross revenue received by J&G for loads that he accepted and
completed, but that on the last day of discovery J&G had disclosed documents
showing that he was actually paid less than that. And, he continued, it was not
until after discovery ended that J&G explained, in response to an interrogatory, its
position that the addendum did not apply to Collado because of the type of loads he
was hauling.
J&G opposed the motion to amend the complaint, arguing that Collado
should not be permitted to file a second amended complaint so close to trial
2
Collado’s initial complaint and first amended complaint also raised an FLSA claim
relating to J&G’s purported failure to pay him and other drivers the minimum wage. Because he
dropped that claim in his second amended complaint, we do not address it.
3
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because he had been aware of the potential breach of contract claim for some time.
It pointed to allegations in Collado’s first amended complaint, filed a year earlier,
and asserted that they showed that he had been aware of a potential breach of
contract claim at that time. J&G also argued that shortly after Collado filed his
first amended complaint, one of its corporate officers testified in deposition that the
compensation rate provided in the addendum did not apply to drivers like Collado,
which put Collado on notice of the potential claim well before he moved to amend
his complaint. J&G contended that it would be a waste of judicial resources to
permit amendment only to later compel arbitration of the state law claims.
The district court granted Collado’s motion to file a second amended
complaint, finding that he could not have discovered the potential breach of
contract claim until he learned how much money J&G earned per haul. After
Collado filed his second amended complaint, J&G immediately moved to dismiss
the new state law claims or, in the alternative, to compel arbitration of those
claims. J&G conceded that it had waived arbitration of Collado’s FLSA claim but
argued that the second amendment to his complaint revived its right to elect
arbitration of the state law claims because those new claims unexpectedly
broadened the scope of the case.
4
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The district court denied J&G’s motion. It concluded that while Collado’s
second amended complaint altered the theory of the case, the alteration was not
unexpected and fairness did not compel reviving J&G’s right to elect arbitration.
II.
We review de novo a district court’s denial of a motion to compel
arbitration. Klay v. All Defendants, 389 F.3d 1191, 1200 (11th Cir. 2004). The
law is that arbitration agreements “shall be valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for the revocation of any
contract.” 9 U.S.C. § 2. Federal policy strongly favors enforcing arbitration
agreements. See, e.g., Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 24–25, 103 S. Ct. 927, 941 (1983); Krinsk v. SunTrust Banks, Inc., 654
F.3d 1194, 1200 n.17, 1203 (11th Cir. 2011); Ivax Corp. v. B. Braun of Am., Inc.,
286 F.3d 1309, 1315 (11th Cir. 2002). But “courts will not compel arbitration
when the party who seeks to arbitrate has waived its right to do so.” Krinsk, 654
F.3d at 1200. In limited circumstances, however, where a party has waived the
right to compel arbitration, an amended complaint can revive that right “if it is
shown that the amended complaint unexpectedly changes the scope or theory of
the plaintiff’s claims.” Id. at 1202.
J&G concedes that it waived its right to compel arbitration with respect to
Collado’s FLSA claim but contends that it has the right to compel arbitration of the
5
Case: 15-14635 Date Filed: 04/21/2016 Page: 6 of 10
state law claims that were not pleaded until after it had litigated to the point of
waiver the FLSA claim. The pleading of those state law claims thereafter in the
second amended complaint, it argues, unexpectedly changed the scope or theory of
the litigation.3 Collado does not dispute that his second amended complaint
changed the scope or theory of the litigation, but he argues that it still did not
revive J&G’s right to compel arbitration because that change was not unexpected.
The parties rely on our Krinsk decision as the closest precedent on point, but
that case is not quite the same as this one. In the Krinsk case, the plaintiff brought
a class action lawsuit against the defendant, estimating that the class would consist
of hundreds of class members. Id. at 1197–98. The defendant waived the right to
compel arbitration by engaging in the judicial process. Id. at 1198–99, 1202. The
plaintiff later amended the complaint, asserting “revised, but mostly similar,
claims,” and expanding the class definition so that it included “thousands—if not
tens of thousands” of potential class members. Id. at 1199. The defendant filed a
motion to compel arbitration, which the district court denied. Id. at 1199–1200.
We vacated that order, holding that the amended complaint revived the defendant’s
right to compel arbitration, which it had previously waived, because the defendant
3
J&G relies heavily on an unpublished decision from this Court, Plaintiffs’ Shareholders
Corp. v. Southern Farm Bureau Life Insurance Co., 486 F. App’x 786, 787–88 (11th Cir. 2012).
Unpublished decisions are not binding authority and they are “persuasive only to the extent that a
subsequent panel finds the rationale expressed in that opinion to be persuasive after an
independent consideration of the legal issue.” Twin City Fire Ins. Co. v. Ohio Cas. Ins. Co., 480
F.3d 1254, 1260 n.3 (11th Cir. 2007).
6
Case: 15-14635 Date Filed: 04/21/2016 Page: 7 of 10
could not have foreseen such a major change to the definition of the class. Id. at
1204.
This case is different from Krinsk because the amended complaint in that
case “asserted revised, but mostly similar, claims.” Id. at 1199. It did not plead
any new claims. The substantial change that motivated the Krinsk decision was,
instead, the substantial increase in the size of the plaintiff class and the resulting
increase in the size of the defendant’s potential liability. The defendant had
waived the right to arbitrate the claims of hundreds of plaintiffs, but it had not
waived the right to arbitrate the claims of thousands, if not tens of thousands, of
plaintiffs. Id. at 1198–99, 1204.
The change wrought by the amendment in this case was not in the number of
plaintiffs but in the type of claim asserted. The case began as one asserting a
federal claim. Only after J&G had waived by litigation its right to arbitrate that
claim did Collado file the amendment changing the case to one asserting both
federal and state claims. Waiver of the right to arbitrate a federal claim does not
extend to later asserted state claims. Some cases speak of revival of a waived right
to arbitrate. See, e.g., Krinsk, 654 F.3d at 1202–03 (collecting cases). In these
circumstances, however, it is more accurate to say that there was never a waiver of
the right to arbitrate the state claims in the first place.
7
Case: 15-14635 Date Filed: 04/21/2016 Page: 8 of 10
A Seventh Circuit case is instructive. In Dickinson v. Heinold Securities,
Inc., 661 F.2d 638, 640 (7th Cir. 1981), the plaintiff filed an initial complaint
raising two claims. The first count presented a non-arbitrable federal securities
claim. Id. The second count incorporated by reference the federal securities claim
and also alleged that the defendant’s conduct violated the parties’ agreement, but it
did not expressly raise a breach of contract claim, which would have been
arbitrable. Id. Almost a year after filing the initial complaint, as the parties
engaged in discovery, the plaintiff filed an amended complaint clarifying that only
the first count raised a federal securities claim and asserting that the second count
was a state law breach of contract claim. Id. at 640–41. The amended complaint
also raised two other state law claims. Id. The defendant moved to stay the
proceedings pending arbitration of the state law claims. Id. at 641.
The Seventh Circuit determined that even though “the complaint might
eventually have been construed, within the loose strictures of notice pleading, as
stating a claim for breach of contract,” it was reasonable for the defendant to
assume that the complaint raised only non-arbitrable federal securities claims. Id.
at 641–42. As a result, the defendant had not waived its right to compel arbitration
of the state law claims — not even for the breach of contract claim alluded to, but
not clearly stated, in the original complaint. Id.
8
Case: 15-14635 Date Filed: 04/21/2016 Page: 9 of 10
As in Dickinson, J&G did not waive the right to arbitrate the state law
claims raised in the second amended complaint because those claims were not in
the case when it waived by litigation the right to arbitrate the FLSA claim. If
anything, this case is even more clear-cut than Dickinson because the initial
complaint in that case arguably raised a state law claim, see id. at 640, while
Collado’s first amended complaint clearly did not.
J&G did argue, in response to Collado’s motion to file a second amended
complaint, that his first amended complaint “reveal[ed] that a potential breach of
contract action was an issue then known to Collado[ ].” From that Collado argues
that J&G must also have known there was a state law claim lurking in the case.
But knowing that a potential claim may lurk in the shadows of a case is not the
same as litigating against a claim that has been brought out into the open in a
pleading. A defendant is not required to litigate against potential but unasserted
claims. By the same token, a defendant will not be held to have waived the right to
insist that previously unasserted claims be arbitrated once they are asserted. Any
other rule would put a defendant in an awkward if not absurd position. A
defendant who was willing to litigate the claim pleaded against it would need to
identify all of the possible claims that could have been but weren’t pleaded against
it and file a motion insisting that those unpleaded claims be arbitrated. Otherwise,
9
Case: 15-14635 Date Filed: 04/21/2016 Page: 10 of 10
under Collado’s position, the defendant would waive the right to arbitrate those
claims if they ever were pleaded.
We hold that J&G’s waiver through litigation of the right to arbitrate
Collado’s FLSA claim does not extend to the state law claims that were pleaded
for the first time after J&G had litigated to the point of waiver the FLSA claim.
See Morewitz v. W. of Eng. Ship Owners Mut. Prot. & Indem. Ass’n, 62 F.3d
1356, 1366 (11th Cir. 1995) (“Waiver occurs when a party seeking arbitration
substantially participates in litigation to a point inconsistent with an intent to
arbitrate and this participation results in prejudice to the opposing party.”); see also
Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217, 1223 (11th Cir. 2000)
(concluding that the defendant did not waive its right to arbitrate because its
“demand for arbitration was made promptly after the lawsuit was filed”).
We VACATE the district court’s order denying J&G’s motion to compel
arbitration of the state law claims and REMAND the case for further proceedings
consistent with this opinion.
10
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157 S.W.3d 529 (2004)
MANILA SCHOOL DISTRICT NO. 15
v.
Charlotte WAGNER, Jimmy White, Harold Lee Evans, and E.A. Shaneyfelt.
No. 03-755.
Supreme Court of Arkansas.
March 29, 2004.
Mike Gibson, Osceola; and W. Paul Blume, for petitioners.
W. Hunter Williams, Jr., Osceola, for respondents.
Bearden Law Firm, by Mike Bearden, Blytheville, for intervenors.
PER CURIAM.
This case arose from the Mississippi County Circuit Court's grant of an ex parte injunction prohibiting Petitioner Manila School District No. 15 from hiring a superintendent to replace Respondent Charlotte Wagner. The injunction was granted on behalf of three Respondents, Jimmy White, Harold Lee Evans, and E.A. Shaneyfelt, who were permitted by the trial court to intervene in the suit between the District and Wagner. We recently issued a per curiam opinion granting Petitioner's motion to expedite and instructing all parties to this case to file simultaneous briefs on three particular issues: (1) whether Respondents-Intervenors had standing to seek an injunction; (2) whether the irreparable harm relied on to grant the injunction is the same as that relied upon to grant a previous injunction to Respondent Wagner; and (3) whether this court may, at this stage of the proceedings, act on the District's motion to remove the trial judge, the Honorable Victor Hill, from the case. See Manila Sch. Dist. No. 15 v. Wagner, 356 Ark. 421, 155 S.W.3d 1 (2004) (per curiam).
The District and Wagner both filed their briefs on March 18, 2004. The Intervenors, however, elected not to file a brief. Instead, their attorney, Mike Bearden, sent a letter to our court clerk, stating that his clients have chosen not to pursue the injunction any further and that the issue should now be moot. This letter is unacceptable, as it does not comply with our previous order in this matter.
We hereby order and direct Intervenors to file a brief in this matter, addressing the three issues set out in our March 11, 2004, *530 per curiam. Intervenors have until Monday April 5, 2004, to file their brief. We further order the attorneys for all parties to appear before this court at 9:00 a.m. on April 8, 2004, for oral argument in this matter.
It is so ordered.
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FILED
2015 IL App (4th) 130575 July 7, 2015
Carla Bender
NO. 4-13-0575 4th District Appellate
Court, IL
IN THE APPELLATE COURT
OF ILLINOIS
FOURTH DISTRICT
THE PEOPLE OF THE STATE OF ILLINOIS, ) Appeal from
Plaintiff-Appellee, ) Circuit Court of
v. ) McLean County
THOMAS M. BARTHOLOMEW, ) No. 12CF1022
Defendant-Appellant. )
) Honorable
) John C. Costigan,
) Judge Presiding.
JUSTICE HARRIS delivered the judgment of the court, with opinion.
Presiding Justice Pope and Justice Holder White concurred in the judgment and
opinion.
OPINION
¶1 In April 2013, a jury convicted defendant, Thomas M. Bartholomew, of two
counts of aggravated battery, both Class 2 felonies (720 ILCS 5/12-3.05(d)(4), (h) (West Supp.
2011)) and one count of battery, a Class A misdemeanor (720 ILCS 5/12-3(a)(1), (b) (West
2010)). In June 2013, the trial court sentenced defendant to 13 years in prison.
¶2 On appeal, defendant asserts the trial court failed to substantially comply with
Illinois Supreme Court Rule 401(a) (eff. July 1, 1984) prior to allowing him to proceed pro se.
We reverse and remand for a new trial.
¶3 I. BACKGROUND
¶4 On September 28, 2012, the State charged defendant by information with two
counts of aggravated battery, both Class 2 felonies (720 ILCS 5/12-3.05(d)(4), (h) (West Supp.
2011)). The State alleged that on September 27, 2012, defendant knowingly (1) caused great
bodily harm to a peace officer engaged in the execution of his official duties when he punched
him in the mouth (count I); and (2) made contact of an insulting or provoking nature to the same
peace officer when he punched him in the chest (count II). On April 8, 2013, the State charged
defendant by information with battery, a Class A misdemeanor (720 ILCS 5/12-3(a)(1), (b)
(West 2010)), based on the September 27, 2012, incident. The State alleged defendant
knowingly and without legal justification caused bodily harm to the victim when he punched him
in the face with his fist.
¶5 On April 8, 2013, defendant's jury trial commenced with defendant represented by
an assistant public defender. The State presented its evidence—the details of which are not
important to this appeal—and rested its case. Defendant, outside the presence of the jury, then
requested to proceed pro se for the remainder of the trial. In considering defendant's oral motion
to proceed pro se, the trial court informed defendant that it first had to determine whether he had
"the requisite capacity to make a knowing and intelligent waiver of [his] right of counsel, not
whether [he] can conduct [his] defense or not." The court then asked defendant a series of
questions regarding his age, education level, mental health, and his prior involvement with legal
proceedings. Next, the court informed defendant that he would be held to the same standard as
an attorney—who has substantial experience and training in trial procedure—in presenting
evidence, and that by representing himself, he may fail to make appropriate objections, and
therefore, allow into evidence that which may not otherwise be admissible. The court further
admonished defendant he could not later claim ineffective assistance of counsel from that point
forward in the trial. Defendant stated he understood the court's admonishments and that his
decision to proceed pro se would result in the discharge of his assistant public defender.
-2-
Thereafter, the court found that defendant understood the admonishments, discharged the
assistant public defender, and allowed him to proceed pro se.
¶6 After defendant presented evidence—the details of which are not important to this
appeal—the jury returned guilty verdicts on all counts. Following a sentencing hearing, the trial
court sentenced defendant—who, due to his prior record was subject to mandatory Class X
sentencing—to 13 years in prison on count I. Counts II and III were merged into count I.
¶7 This appeal followed.
¶8 II. ANALYSIS
¶9 On appeal, defendant asserts the trial court failed to substantially comply with
Illinois Supreme Court Rule 401(a) (eff. July 1, 1984) prior to allowing him to proceed pro se.
The State concedes the court did not substantially comply with Rule 401(a) and that defendant's
conviction and sentence should be reversed. We agree.
¶ 10 Rule 401(a) provides as follows:
"Any waiver of counsel shall be in open court. The court shall not
permit a waiver of counsel by a person accused of an offense
punishable by imprisonment without first, by addressing the
defendant personally in open court, informing him of and
determining that he understands the following:
(1) the nature of the charge;
(2) the minimum and maximum sentence prescribed
by law, including, when applicable, the penalty to
which the defendant may be subjected because of
prior convictions or consecutive sentences; and
-3-
(3) that he has a right to counsel and, if he is
indigent, to have counsel appointed for him by the
court." Id.
In People v. Campbell, 224 Ill. 2d 80, 84, 862 N.E.2d 933, 936 (2006), our supreme court stated,
"[t]he purpose of this rule is 'to ensure that a waiver of counsel is knowingly and intelligently
made.' " (quoting People v. Haynes, 174 Ill. 2d 204, 241, 673 N.E.2d 318, 335 (1996)). Thus,
Rule 401(a) admonishments "must be provided when the court learns the defendant has chosen
to waive counsel so the defendant can consider the ramifications of his decision." People v.
Stoops, 313 Ill. App. 3d 269, 275, 728 N.E.2d 1241, 1245 (2000). Prior admonishments, if any,
are not sufficient. Id. "Accordingly, substantial compliance with Rule 401(a) is required for an
effective waiver of counsel." Campbell, 224 Ill. 2d at 84, 862 N.E.2d at 936.
¶ 11 In this case, the trial court did not address any of the three elements required by
Rule 401(a) prior to allowing defendant to proceed pro se during the defense portion of his trial.
Accordingly, defendant's waiver of counsel was ineffective and his conviction and sentence must
be reversed. See id. at 85, 862 N.E.2d at 936 (a conviction following an ineffective waiver of
counsel cannot stand).
¶ 12 II. CONCLUSION
¶ 13 For the reasons stated, we reverse the defendant's conviction and sentence and
remand for a new trial.
¶ 14 Reversed; cause remanded.
-4-
| {
"pile_set_name": "FreeLaw"
} |
USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 96-1306
CELSO RODRIGUEZ-CIRILO, ET AL.,
Plaintiffs - Appellants,
v.
JUAN B. GARCIA, ET AL.,
Defendants - Appellees.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. H ctor M. Laffitte, U.S. District Judge]
___________________
____________________
Before
Torruella, Chief Judge,
___________
Campbell, Senior Circuit Judge,
____________________
and DiClerico, Jr.,* District Judge.
______________
_____________________
Kevin G. Little with whom Law Offices David Efr n was on
_______________ ________________________
brief for appellants.
Eduardo Rodr guez-Quilichini, Assistant Solicitor General,
_____________________________
Department of Justice, with whom Carlos Lugo-Fiol, Solicitor
_________________
General, and Edda Serrano-Blasini, Deputy Solicitor General, were
____________________
on brief for appellees.
____________________
June 2, 1997
____________________
____________________
* Of the District of New Hampshire, sitting by designation.
TORRUELLA, Chief Judge. Plaintiffs-appellants are six
TORRUELLA, Chief Judge.
___________
family members, one of whom, Celso Rodr guez-Cirilo ("Celso"),
was the victim of a stabbing. Celso was stabbed by his brother,
Francisco Rodr guez-Cirilo ("Francisco"), who is not a party to
the suit. The family members filed a civil rights damages action
under 42 U.S.C. 1983 (1994) against two officers of the Puerto
Rico Police Department alleging that the officers' failure to
enforce a temporary detention order against Francisco caused the
injury to Celso and thus violated his constitutional rights.1
The district court held that plaintiffs failed to
establish that a due process right protected under section 1983
was violated by the officers' failure to prevent private
violence, and also held that plaintiffs could not establish
causation. Having reviewed the record and the parties' briefs on
appeal, we find that the district court's treatment of the
causation issue correctly identifies a sufficient ground for
granting summary judgment to the defendants. We therefore do not
reach the nettlesome legal question of whether, in light of
DeShaney v. Winnebago County Dept. of Social Servs., 489 U.S. 189
________ _______________________________________
(1989), a police officer's knowing refusal to carry out the
express terms of a non-discretionary detention order can be
deemed an "affirmative act" that, by increasing the risk of
private harm to those sought to be protected by the order, may
____________________
1 In view of the ambiguous wording of the plaintiffs' complaint,
the district court chose to treat this section 1983 suit as one
claiming a violation of due process under the Fourteenth
Amendment. On appeal, neither party suggests otherwise.
-2-
trigger due process concerns. Cf. DeShaney, 489 U.S. at 201;
___ ________
Frances-Col n v. Ram rez, 107 F.3d 62, 64 (1st Cir. 1997)
_____________ _______
(discussing the limited scope for relief under section 1983 where
"the government employee, in the rare and exceptional case,
affirmatively acts to increase the threat of harm to the
claimant"); Soto v. Flores, 103 F.3d 1056, 1064 (1st Cir. 1997)
____ ______
("In a creation of risk situation, where the ultimate harm is
caused by a third party, courts must be careful to distinguish
between conventional torts and constitutional violations.").
BACKGROUND
BACKGROUND
In the summary judgment context, we relate all
material facts in genuine dispute in the light most favorable to
the party resisting summary judgment, here the plaintiffs.
S nchez v. Alvarado, 101 F.3d 223, 225 n.1 (1st Cir. 1996). On
_______ _________
March 16, 1994, Jorge Rodr guez-Nieves ("Jorge"), a nephew of
both Celso and Francisco who is not a party in the instant suit,
filed a petition pursuant to the Mental Health Code of Puerto
Rico ("Law 116"),2 to have his uncle Francisco involuntarily
detained for psychiatric examination. The petition stated that
Francisco presented a danger to himself and others and had
threatened to kill with a sharp object, such as a machete or a
knife. On March 17, 1994, a San Juan municipal court judge
responded to the petition by issuing an order that Francisco be
detained for examination. The temporary detention order
authorizes a law enforcement officer to detain the subject --
____________________
2 See P.R. Laws Ann. tit. 24 6006 (Supp. 1991).
___
-3-
with the assistance of health care personnel if necessary -- and
to take him to a psychiatric institution where he can be
examined, and where he cannot be held for more than 24 hours. If
the examining doctor concludes that detention for any longer
period or treatment of the subject is required, then that doctor
must notify the petitioner, who must then notify the court. The
temporary detention order under Law 116 does not explicitly give
police officers any discretion with regard to enforcement.3
On the same day that the order was issued, Jorge,
along with two of Francisco's siblings (but not Celso), went to a
police station to have the order enforced. The defendants were
at the police station and assumed the task of enforcing the
order, calling on paramedics for assistance. Later that day, the
defendant police officers, the paramedics, and the three family
members found Francisco at a local establishment. Francisco
refused to go with the officers, stating that he was already
being treated at a veteran's hospital. The officers then failed
to carry out the order, despite the efforts of the family members
to convince the officers that Francisco was dangerous. Before
departing, the officers told the family members that they
themselves should take Francisco to a veteran's hospital for
treatment, which is contrary to the stated procedure under Law
116.
____________________
3 Defendants appear to concede the fact that carrying out the
terms of such a Law 116 order is a non-discretionary obligation
on the part of the police officer.
-4-
No further legal steps were taken to obtain another
detention order, although the plaintiffs and other family members
assert that they made further informal requests to the police to
take Francisco into custody. Francisco was ultimately never
taken to a hospital for examination or treatment. On April 6,
1994, nearly three weeks after the defendants' failure to carry
out the temporary detention order, the injury giving rise to this
damages suit occurred. Francisco stabbed his brother Celso while
Celso was at their mother's house for a visit. Celso had argued
with Francisco about getting their mother some water and then
stood out on a balcony; a few minutes later Francisco returned
and stabbed Celso in the chest with a knife. Celso suffered
injuries to his chest and to his respiratory and digestive
systems.
Plaintiffs brought actions for damages under both
section 1983 and Puerto Rico tort provisions. The district court
granted summary judgment to defendants on the section 1983 suit
and dismissed the state tort claims without prejudice.
DISCUSSION
DISCUSSION
We review the district court's grant of summary
judgment de novo. Serrano-Cruz v. DFI Puerto Rico, Inc., No. 96-
__ ____ ____________ _____________________
1418, 1997 WL 114118, at *2, --- F.3d --- (1st Cir. 1997).
The essential elements of a claim under section 1983
are: First, that the defendants acted under color of state law;
and second, that the defendants' conduct worked a denial of
rights secured by the Constitution or by federal law. Mart nez
________
-5-
v. Col n, 54 F.3d 980, 984 (1st Cir. 1995). To satisfy the
_____
second element, plaintiffs must show that the defendants' conduct
was the cause in fact of the alleged deprivation. See Guti rrez-
___ __________
Rodr guez v. Cartagena, 882 F.2d 553, 559 (1st Cir. 1989). The
_________ _________
issue of causation of damages in a section 1983 suit is based on
basic notions of tort causation. See Maldonado Santiago v.
___ __________________
Vel squez Garc a, 821 F.2d 822, 831 (1st Cir. 1987) ("Section
________________
1983 imposes a causation requirement similar to that of ordinary
tort law."). In applying basic tort principles to the facts
raised by a particular section 1983 claim, the causation
requirement may be fleshed out with reference to state law tort
principles. Guti rrez-Rodr guez, 882 F.2d at 561.
___________________
As discussed in the decision below, plaintiffs cannot
establish that the conduct of the defendants, in not enforcing
the temporary detention order, was the legal cause of an attack
occurring much later. See Rodr guez-Cirilo v. Garc a, 908 F.
___ ________________ ______
Supp. 85, 91 (D.P.R. 1995). The concept of proximate causation
restricts tort liability to those whose conduct, beyond falling
within the infinite causal web leading to an injury, was a
legally significant cause. The passage of time can certainly
reduce the legal significance of a particular contributing act.
See Restatement (Second) of Torts 433 (1965) (lapse of time a
___ _____________________________
factor to be considered in determining whether a contributing
factor is substantial).
The remoteness in time of the harm in this case
precludes a finding of proximate causation. Although Francisco
-6-
committed the kind of violence mentioned in the petition for a
detention order, the space of over two weeks that passed after
the officers' failure to detain Francisco, during which time
family members did not attempt to obtain another detention order,
renders his later act of violence too remote to impose liability
on the officers. Cf. Mart nez v. California, 444 U.S. 277, 285
___ ________ __________
(1980) (murder committed by parolee five months after release
"too remote" a consequence to hold parole board liable under
section 1983); Restatement (Second) of Torts 433 (1965).
_______________________________
Although the stabbing occurred at the address named in the
original petition, and although the police officers may have had
some indication that Celso would be at danger from an attack by
Francisco,4 given the intervening time we cannot say that the
officers' failure to enforce the order was the legal cause of the
injury. See Mart nez, 444 U.S. at 285; Restatement (Second) of
___ ________ ________________________
Torts 433 cmt. f ("Experience has shown that when a great
_____
length of time has elapsed between the actor's negligence and
harm to another, a great number of contributing factors may have
operated, many of which may be difficult or impossible of actual
____________________
4 It is a widely recognized tort law principle that one may be
responsible for the foreseeable intervening acts of third
parties. For example, the requirement of "causalidad adecuada"
under Puerto Rico tort law would permit the assignment of
liability if the intervening third party action -- that is,
Francisco's stabbing -- was a reasonably foreseeable consequence
of the defendants' actions. Widow of Andino v. Puerto Rico Water
_______________ _________________
Resources Auth., 93 P.R.R. 168, 177-79 (P.R. 1966) (harm caused
________________
by reasonably foreseeable intervening causes, including the
actions of third parties, may lead to liability).
-7-
proof. . . . [T]he effect of the actor's conduct may thus be so
attenuated as to be insignificant . . . .").
What further persuades us that the causation issue in
this case is dispositive is that even if Francisco had been taken
to a hospital on March 17, 1994, for examination, appellants have
not shown that an examination performed on that day would have
prevented the violent attack, spurred by an argument, on April 6,
1996. The temporary detention period was itself limited to a
maximum of twenty-four hours. Appellants offered no competent
evidence that could have supported a finding that an examination
in Francisco's particular case would have prevented the later
attack. Appellants rely on a clinical psychologist's signed
statement asserting that Francisco's "personality disorder"
caused the stabbing, and that, had Francisco been detained on
March 17, 1994, he would have received effective treatment that
would have prevented the stabbing. This statement, based solely
on information collected through conversations with Francisco's
relations and formed without any direct examination of either
Francisco or of his medical records, is not enough to defeat
defendants' motion for summary judgment and does not create a
triable issue of material fact as to causation.5 "The nonmoving
party must establish a trial-worthy issue by presenting 'enough
____________________
5 This statement, as the district court notes, would probably be
found unreliable and inadmissible as expert testimony under Fed.
R. Evid. 702. Garc a, 908 F. Supp. at 91-92. In any event, the
______
psychologist's broad assertion regarding causation does not
create a triable issue in this case, where the defendant's case
as to a lack of proximate causation is strong.
-8-
competent evidence to enable a finding favorable to the nonmoving
party.'" LeBlanc v. Great Am. Ins. Co., 6 F.3d 836, 842 (1st
_______ ___________________
Cir. 1993) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S.
________ ____________________
242, 249 (1986)). Thus, not only do appellants run into
proximate causation problems, but their case also falls short
with regard to demonstrating the "but for" aspect of causation.
See Restatement (Second) of Torts, 432 (1965). We conclude,
___ _____________________________
therefore, that defendants were properly granted summary judgment
based on plaintiffs' failure to demonstrate causation under well-
established tort principles.
Appellants' remaining arguments on appeal do not
require lengthy treatment. First, we note that the record
indicates that the appellants have failed to support, with any
competent evidence, their additional assertion that there existed
a conspiracy between the defendants and Francisco to violate
plaintiffs' civil rights. Second, in response to appellants'
claim that the district court abused its discretion in denying
them an opportunity to amend their complaint after the deadline
for such amendments established in the court's scheduling order,
we note that even had the plaintiffs been able to amend their
complaint by adding as a third defendant the supervisor of the
two defendant police officers, the fundamental, insurmountable
obstacle of causation would still have remained, and would still
have offered a sufficient ground for summary judgment in favor of
defendants.
CONCLUSION
CONCLUSION
-9-
For the foregoing reasons the district court's grant
of summary judgment to defendants is affirmed.
________
Concurrence Follows
-10-
CAMPBELL, Senior Circuit Judge (Concurring). I write
CAMPBELL, Senior Circuit Judge (Concurring)
__________________________________
separately because I believe that there was sufficient evidence
of causation to allow the issue to go to the jury. However, I
concur with the majority's result because I do not think the
police officers' conduct constituted a violation of the
plaintiffs' constitutional due process rights.
I. Causation
I. Causation
I think the record indicates the existence of a factual
issue as to causation, precluding the granting of summary
judgment in favor of Defendants on the ground of an absence of
causation. See Ahern v. O'Donnell, 109 F.3d 809, 811 (1st Cir.
___ _____ _________
1997) (all inferences to be made in favor of party against whom
summary judgment sought).
Causation depends upon whether, assuming the police
officers violated 1983 on March 17 by not carrying out the
court order directing them to take Francisco into custody for
psychiatric examination, there was a sufficient causal connection
between the officers' default and Francisco's stabbing of a
relative two weeks later.
Causation in tort law is generally divided into two
concepts: causation in fact, or actual causation, and proximate
or legal causation. See W. Page Keeton et al., Prosser & Keeton
___ ________________
on Torts 41-42 (5th ed. 1984). The terms for these two
_________
concepts are sometimes confused, as are the concepts themselves.
Regardless of the terminology, however, there are two questions
-11-
that must be answered to determine if a defendant's conduct
"caused" a plaintiff's injury. The first question is whether
there was in fact some causal relationship between the conduct
and the outcome. The Restatement expresses this test as whether
___________
the defendant's conduct was a "substantial factor" in producing
the harm. Id. The second question is whether the circumstances
___
and causal relationship are such that the law will impose
liability on the defendant. Sometimes this is expressed as a
foreseeability test, see Keeton, supra, 42, at 273. Cf.
___ _____ ___
Restatement (Second) of Torts, 431(b) (1965) (different
________________________________
terminology).
Regarding the second issue, foreseeability, that prong
is plainly satisfied here. A foreseeable result of the police
officers' failure to take Francisco to the psychiatrist for
examination, as ordered by the court, was that he would harm
someone, since the express basis of the court order was
Francisco's potential dangerousness and likely eligibility for
involuntary commitment in a mental health facility. The reason
for the ordered psychiatric examination, as Puerto Rico's
statute specifically provides, infra, is to determine whether a
_____
person believed to be dangerous is dangerous, and needs to be
__
committed immediately in order to avoid the kind of harm
Francisco later caused. While under the preliminary court order
in issue Francisco could only be detained for twenty-four hours,
the order directed that he be psychiatrically examined during
that period and that, within the twenty-four hours, a report of
____________________________
-12-
his condition be sent to the judge and proper steps be initiated
for his involuntary admittance should that be indicated. Thus
___________
the harm that occurred here was clearly a foreseeable result of
interrupting the protective process begun by the petition and
order.
Since the harm that occurred was foreseeable, the only
remaining question is that of actual cause, i.e., whether
______
Francisco's later assault with a knife was actually linked
causally in sufficient degree to the police's failure to detain
Francisco for the ordered psychiatric examination. I believe
that on this record a factual issue is raised as to whether the
police officers' failure to comply with the court order to detain
Francisco was a "substantial factor" in bringing about the harm
from Francisco's later stabbing of Celso.6
The order the police failed to carry out was issued
under a comprehensive statutory scheme for the examination and
involuntary commitment to a mental health facility of mentally
ill people who are dangerous to themselves or others. In the
first step of this process, any person who fears an individual
may be psychologically unstable may bring that individual to the
attention of a Puerto Rico court. P.R. Laws Ann. tit. 24,
____________________
6 Although the majority discusses the Restatement's "substantial
___________
factor" test under the rubric of proximate causation, Rodr guez-
__________
Cirilo v. Garc a, ___ F.3d ___, No. 96-1306, slip op. at 6 (1st
______ ______
Cir. May ___, 1997), it is perhaps more accurately described as
referring to actual causation. See Keeton, supra, 42, at 278
___ _____
("[T]he 1948 revision of the Restatement limited [the]
application [of the "substantial factor" test] very definitely to
cause in fact alone.") (citing, inter alia, Restatement (Second)
__________ ____________________
of Torts 433 (1965)).
________
-13-
6006. This occurred here when a relative, Mr. Jorge Rodr guez-
Nieves, filed a petition to the Puerto Rico court declaring that
Francisco was believed dangerous, having threatened to kill
someone with a sharp object such as a machete or a knife. The
petition also stated that Francisco had previously been in a
recognized mental institution.
The second step spelled out in the Puerto Rico statute
is for a judge to decide, preliminarily, whether or not there are
"reasonable grounds to believe that the patient is subject to
involuntary admission and needs immediate hospitalization to keep
___________
him from harming himself, other persons or property." Id.
___
(emphasis supplied). The judge expressly found such reasonable
grounds here and issued a written order that Francisco was to be
detained for twenty-four hours and examined by a psychiatrist to
determine "if he should be admitted immediately and involuntarily
to the psychiatric institution," as the statute provided. The
order directed that an explanatory report be returned to the
judge within the twenty-four hours and a resolution of
provisional admittance prepared in the event continued
hospitalization was required. It was the court order containing
the above provisions that the police allegedly failed to carry
out, with the result that Francisco was never examined by a
psychiatrist and the necessary steps never taken for his
involuntary hospitalization should that have been recommended by
the psychiatrist.
-14-
If Francisco had been examined, the psychiatrist was
under a duty, as the order and Puerto Rico law provide, to report
his findings concerning Francisco's mental condition and
potential dangerousness back to the court within twenty-four
hours. If the court had then found by clear and convincing
evidence, see P.R. Laws Ann. tit. 24, 6089, that Francisco was
___
"subject to involuntary admission," the court would have ordered
him confined to a mental health facility. P.R. Laws Ann. tit.
24, 6090. The statute provides that a person is "subject to
involuntary admission" if he is mentally ill and if, because of
his illness, he "may reasonably be expected to physically injure
himself or any other person, or damage property." P.R. Laws Ann.
tit. 24, 4002(14)(a).
It is important to emphasize that the order here in
question did not merely provide for a twenty-four hour period of
detention. Rather it was based on a judge's finding of
reasonable cause to believe that Francisco was a candidate for
involuntary admission, i.e. confinement, in a mental health
facility. The twenty-four hours' detention was merely the period
within which he was to be evaluated, after which, if the initial
finding was confirmed, he would be involuntarily committed for a
more extended period. Under Puerto Rico law, a court's order for
involuntary admission is limited, in the first instance, to a
term of thirty days, but it can be followed by an additional
thirty-day order. P.R. Laws Ann. tit. 24, 6094(a). This
second thirty-day period may then be supplemented by additional
-15-
periods of 180 days as long as the patient "continues to be
subject to involuntary admission." P.R. Laws Ann. tit. 24,
6094(b). So in effect, once involuntarily admitted, a person may
be forced to remain confined in a mental health facility
indefinitely if he remains a danger to himself, others, or to
property because of a mental illness.
I believe the evidence here plainly creates a jury
issue as to whether Francisco would likely have been confined to
a mental health facility for a sufficient period of time to
render him unable to stab Celso when he did, had the police
complied with the court order to detain him for a psychiatric
examination. A jury could find that the police officers' failure
to enforce the order was a "substantial factor" in the ensuing
harm.
As noted, there is evidence that Francisco had
threatened to kill with a sharp object, such as a machete or a
knife, a threat followed by stabbing his brother two weeks later.
The record also indicates his prior hospitalization in a mental
facility, giving rise to an inference that his behavior stemmed
from an underlying mental condition. Even more significantly,
the record shows a judicial determination, reciting the
consideration of evidence, that "the Court finds a reasonable
basis to believe that [Francisco] may be subject to an
involuntary admission treatment and hospitalization under the
provisions of the Puerto Rico Mental Health Code." Underlying
that determination necessarily lay a finding of reasonable
-16-
grounds to believe that Francisco might harm himself, other
persons or property. See P.R. Laws Ann. tit. 24, 6006.
___
The above facts more than suffice, in my view, to
demonstrate a triable issue over whether, if the defendants had
done their duty and brought Francisco to the psychiatrist for
examination, the latter would more likely than not have found
that Francisco was mentally ill and a danger to himself or to
others and recommended committing him involuntarily. Had that
recommendation been made, it could also be reasonably inferred
that the Puerto Rico court would have implemented it pursuant to
the statutory authority described above, and that Francisco,
being confined, would not have been able to stab Celso two weeks
later. Hence, I believe there is adequate evidence to create a
factual issue for later trial over whether the police officers'
default was a "substantial factor" in causing Celso's stabbing.7
The majority argues that no reasonable jury could find
that the police officers' failure to bring Francisco to the
psychiatrist actually caused Celso's injuries. They point out
that two weeks elapsed between the police officers' failure to
____________________
7 My colleagues' error, as I see it, is in treating causation as
a matter for their own determination now rather than recognizing
that, on summary judgment, the question is simply whether,
viewing everything most favorably to (here) the plaintiffs, the
record indicates a disputed issue of fact. I do not see how, for
that purpose, one can ignore the finding, similar to a probable
cause finding, of a Puerto Rico judge, coupled with undisputed
facts strongly indicating that Francisco was both mentally
unbalanced and dangerous to others the criteria for
involuntary admission. From these facts a reasonable jury could
infer that he would likely have been committed for several weeks
or more, thus preventing any attack on Celso.
-17-
detain Francisco and the stabbing. They also insist that it is
too speculative, on this record, to know whether Francisco would
have been confined or treated so as not to have injured Celso
when he did.
The time factor is hardly significant here. Two weeks
is not a lengthy interval for present purposes; it is less than
the thirty days which the court could have initially ordered him
confined had the court determined, after psychiatric examination,
that he was dangerous. "[W]here it is evident that the influence
of the actor's negligence is still a substantial factor, mere
lapse of time, no matter how long, is not sufficient to prevent
it from being the legal cause of the other's harm." Restatement
___________
(Second) of Torts, 433(c) cmt. f (1965). The damage from the
__________________
collapse of a defective bridge is no less caused by the builder's
negligence even though occurring months or years after
construction.
As for the argument that it is too speculative whether
Francisco would have been confined, I think, for reasons already
discussed, that the present record is sufficient to raise a
factual issue concerning his likely commitment that makes summary
judgment inappropriate. The evidence of Francisco's mental
instability and dangerousness is uncontested making it probable
that he would have been committed. The Puerto Rico judge had
already found that Francisco was a likely candidate for
involuntary commitment a preliminary finding, to be sure, but
-18-
indicative of a factual issue in that judge's mind as to the need
to commit him.
There is, in addition, the affidavit of a psychologist
which, if accepted, would lend even further support to the
probability of his commitment. Unfortunately, as the district
court and my colleagues note, the affidavit is poorly drafted.
The affidavit says only that it is the psychologist's
"understanding" that Francisco has a serious personality
disorder. It does say, however, that the psychologist is "of the
opinion that Mr. Francisco Rodr guez-Cirilo's being temporarily
detained on March 17, 1994 for the purpose [of] an examination
and evaluation of his mental condition . . . would have resulted
in Francisco Rodr guez-Cirilo's receipt of timely and effective
psychological and/or psychiatric treatment, most likely on an in
____________________
patient basis over an extended period of time," (emphasis
____________________________________________________
supplied) and expresses the opinion that such treatment would
have prevented Francisco's later stabbing of Cirilo.
Given, in any case, the other uncontested factual
evidence mentioned above plainly indicating Francisco's
abnormality and dangerousness, I cannot doubt that a factual
__________
issue exists over whether Francisco would have been confined and,
____________
if so, rendered unable to have committed the assault in dispute.
The very finding by the Puerto Rico court of reasonable grounds
to believe that Francisco was subject to involuntary commitment
suggests the existence of such a triable issue. The existence of
such an issue is the only question at the present stage. We are
____
-19-
not now acting as factfinders. Summary judgment is not a
substitute for trial. The credible evidence here all shows that
Francisco was suffering from mental instability, having been
previously hospitalized and having uttered credible threats,
later carried out, to stab someone to death. Hence even
excluding the affidavit, the record provides a factual basis for
a finding that, if detained as ordered for psychiatric
examination, Francisco would, more likely than not, have been
involuntarily admitted to a mental health facility, thereby
preventing the later stabbing. The police officers' failure to
detain Francisco could thus reasonably be found to have been a
"substantial factor" in producing Celso's injuries.
II. The Due Process Claim
II. The Due Process Claim
Despite my disagreement with the majority on causation,
I concur in the result because, like the district court, I do not
believe that the plaintiffs have stated a violation of the Due
Process Clause of the federal constitution.8
Plaintiffs' due process claim does not rest, of course,
on any contention that the police or other agents of the state
attacked or physically harmed Celso. This case is not about
violence committed by agents of the state. Rather, Plaintiffs'
claim concerns the all too common situation where violence
inflicted by a third party might have been prevented had the
____________________
8 The Fourteenth Amendment states, in relevant part, "[N]or
shall any State deprive any person of life, liberty, or property,
without due process of law . . . ."
-20-
police or other public officials acted more diligently. But
while police default may be found to have caused Celso to lose
the protection of a state statutory scheme designed to guard the
public against people having Francisco's potential for violence,
this unfortunate failure does not violate the federal
constitution. As the Supreme Court wrote:
But nothing in the language of the Due
Process Clause itself requires the State
to protect the life, liberty, and
property of its citizens against invasion
by private actors. The Clause is phrased
as a limitation on the State's power to
act, not as a guarantee of certain
minimal levels of safety and security.
It forbids the State itself to deprive
individuals of life, liberty, or property
without "due process of law," but its
language cannot fairly be extended to
impose an affirmative obligation on the
State to ensure that those interests do
not come to harm through other means.
DeShaney v. Winnebago County Dep't. of Soc. Servs., 489 U.S. 189,
________ ______________________________________
195 (1989). See also Estate of Gilmore v. Buckley, 787 F.2d 714
________ _________________ _______
(1st Cir.) (holding that a county was not liable under the Due
Process Clause for the death of a woman murdered by a prison
inmate while he was on a furlough release, even though the county
had reason to know that the victim was in special danger from the
murderer), cert. denied, 479 U.S. 882 (1986).
____________
Nor does the fact that the police violated the plain
order of a Puerto Rico court to detain Francisco and bring him to
a psychiatrist for examination change the analysis. Police
officers certainly have a duty to obey court orders. But the
court did not, in ordering Francisco's detention, thereby create
-21-
the sort of "special relationship" between the state and all of
Francisco's potential victims that might make the state liable
for any harm that came to them at Francisco's hands. See
___
generally DeShaney, 489 U.S. at 198-203 (discussing the "special
_________ ________
relationship" test). Neither did the state render Celso more
vulnerable to the danger posed by Francisco. See id. at 201. By
___ ___
failing to detain him for examination, the defendants merely
failed to reduce a danger not of the state's own making
that Francisco's violent proclivities already created.
The police officers in this case may have acted
improperly. Faced with a court order to detain Francisco, they
should not have substituted their judgment for the court's and
refused to detain him in violation of the court's order. As
discussed above, a jury could reasonably find that their wrongful
failure to enforce the court's order was a substantial factor in
causing Celso's injury by Francisco. Their default might
constitute a tort under state law. See Restatement (Second) of
___ ________________________
Torts 323 (1965) (stating that one who undertakes to render
_____
services to another may be liable for performing negligently).
But "the Due Process Clause of the Fourteenth Amendment
. . . does not transform every tort committed by a state actor
into a constitutional violation." DeShaney, 489 U.S. at 202. If
________
the defendants' conduct here violated the Due Process Clause,
then many everyday defaults of police, firefighters, and other
public officials around the nation would likewise violate the
Constitution on a similar theory. It will be unfortunate, I
-22-
believe, if, instead of relying on state legislatures and state
courts to provide legal means to redress matters of this nature,
federal courts transform conduct that is at most tortious into
constitutional causes of action.
I would affirm the decision of the district court
because the plaintiffs have no cause of action under 42 U.S.C.
1983 and the Due Process Clause.
-23-
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640 F.2d 1139
Gilberto RODRIGUEZ-GONZALEZ, Jose Luz Aquiando-Cortez etal., Petitioners,v.IMMIGRATION AND NATURALIZATION SERVICE, Respondent.
No. 79-7245.
United States Court of Appeals,Ninth Circuit.
Argued and Submitted Oct. 7, 1980.Decided April 3, 1981.
Jose Angel Rodriguez, Los Angeles, Cal., for petitioners.
Carolyn M. Reynolds, Los Angeles, Cal., for respondent.
Petition to Review a Decision of The U.S. Immigration & Naturalization Service.
Before HUG and FARRIS, Circuit Judges, and LUCAS,* District Judge.
FARRIS, Circuit Judge:
1
Petitioners, five citizens of Mexico, seek review of an order of the Board of Immigration Appeals finding them deportable. We affirm.
I. FACTS
2
Petitioners were interrogated in February and March of 1978 at their workplace, Vogue Coach Corp., by the Immigration and Naturalization Service. Immediately after interrogation, the INS arrested them for entry into the United States without inspection. See 8 U.S.C. § 1251(a)(2) (1976). On May 2, 1978, the petitioners, with their attorney, appeared at a joint deportation hearing. At the hearing, their attorney admitted that petitioners had entered without inspection but denied their deportability. In support of the denial, the attorney made an offer of proof that Vogue and the INS had agreed to interrogate, arrest, and commence deportation proceedings against petitioners in retaliation for the petitioners' union activities. The attorney accordingly argued that petitioners should not be deported because deportation would violate public policy. In addition, he contended that petitioners should not be deported because 1) they were unreasonably arrested in violation of their Fourth Amendment rights and 2) their arrest constituted a violation of the equality component of the Fifth Amendment due process clause.
3
On the basis of their attorney's admission, the immigration judge found that petitioners had illegally entered the country, see 8 U.S.C. § 1251(a)(2) (1976), ruled that he had no authority to refuse deportation because of Vogue's antiunion activities, and rejected Vogue's offer of proof. The Board of Immigration Appeals affirmed. Petitioners seek review.
II. FINDING OF ENTRY WITHOUT INSPECTION
4
The immigration judge and the Board found that petitioners entered the United States without inspection. This finding is conclusive "if supported by reasonable, substantial, and probative evidence on the record." 8 U.S.C. § 1105a(a)(4) (1976). At the deportation hearing, the petitioners' attorney admitted that petitioners had entered without inspection. If effective, the admission constitutes substantial evidence.
5
Petitioners argue that the interrogation and arrest at Vogue violated their Fourth and Fifth Amendment rights. Even if such violations occurred, however, they would not prevent reliance by the Board on petitioners' voluntary admission of illegal entry at the subsequent deportation hearing. Medina-Sandoval v. INS, 524 F.2d 658, 659 (9th Cir. 1975) (voluntary admission at deportation hearing admissible even if initial stop unlawful); see Cuevas-Ortega v. INS, 588 F.2d 1274, 1278 n.9 (9th Cir. 1979) (voluntary admission at immigration office admissible even after illegal arrest). Nor would a constitutionally invalid arrest taint the deportation proceeding itself. Medina-Sandoval, 524 F.2d at 659.
6
Petitioners attack the effectiveness of the admission on three grounds. They assert (1) that under immigration regulations admissions at deportation hearings must be personally made, (2) that the admission constituted a waiver of the petitioners' right to avoid self-incrimination and therefore may not be made by counsel, and (3) that the court should have allowed withdrawal of the admission because petitioners were ineffectively assisted by counsel.
7
Petitioners base their first contention on their reading of 8 C.F.R. § 242.16(b) (1980). They assert that the references in this regulation to personal pleadings prohibit admissions by counsel. In the deportation hearing, the immigration judge accepted an admission of factual allegations from counsel. The Board was aware of this procedure. This is not an isolated instance of admission by counsel at deportation hearings. E. g., Medina-Sandoval v. INS, 524 F.2d 658, 659 (9th Cir. 1975) ("Following this ruling, Medina-Sandoval, through counsel, admitted the allegations in the order to show cause ...."). We understand petitioners' contention, but we reject it. Under the circumstances here, the Board's acceptance of admission through counsel does not violate C.F.R. § 242.16(b) (1980). See 8 C.F.R. § 292.5(a) (1980).1
8
Petitioners also contend that the Fifth Amendment requires that admissions be made personally. They first characterize the admission as a waiver of their privilege against self-incrimination. Next, they argue that because that right can only be asserted personally, Schoeps v. Carmichael, 177 F.2d 391, 398-99 (9th Cir. 1949), cert. denied, 339 U.S. 914, 70 S.Ct. 566, 94 L.Ed. 1340 (1950), it can only be waived personally. This position, if accepted, would preclude counsel from making any effective admissions or stipulations that eventually prove contrary to the client's interest.
9
Such a result has been repeatedly rejected. See, e. g., United States v. Cravero, 530 F.2d 666, 671-72 (5th Cir. 1976) (and cases cited therein). Even criminal defendants are bound by the admissions of fact made by their counsel during trial in their presence and with their authority. E. g., United States v. Ferreboeuf, 632 F.2d 832 at 836 (9th Cir. 1980); Taylor v. United States, 182 F.2d 473, 475 (9th Cir. 1950) (dictum); United States v. Adams, 422 F.2d 515, 518 (10th Cir.) (dictum), cert. denied, 399 U.S. 913, 90 S.Ct. 2213, 26 L.Ed.2d 569 (1970); United States v. Denniston, 89 F.2d 696, 698 (2d Cir.) (guilty plea), cert. denied, 301 U.S. 709, 57 S.Ct. 943, 81 L.Ed. 1362 (1937); Jones v. United States, 72 F.2d 873, 874 (7th Cir. 1934) (stipulation of fact). Ordinarily, admissions of fact by counsel in deportation proceedings are similarly binding. Cf. United States v. Guerra de Aguilera, 600 F.2d 752, 753 (9th Cir. 1979) (in-court admission by counsel combined with previous written admission bound alien in deportation proceeding). Petitioners personally acknowledged to the court the authority of their attorney, they were present when the admission was made, and they had the benefit of an interpreter. Nothing more was required.2
10
Petitioners claim that the admission renders their attorney's representation of them ineffective and contend that the admission should be withdrawn. They rely upon two decisions in which criminal defendants were allowed to withdraw guilty pleas. Davis v. United States, 376 F.2d 535 (5th Cir. 1967) (client unrepresented by counsel; withdrawal of guilty plea should have been allowed); United States v. Shapiro, 222 F.2d 836, 840 (7th Cir. 1955) (client pleaded nolo contendere when unaware of consequences; withdrawal should have been allowed). Even if petitioners can properly extend this rule from the context of withdrawal of a plea at a criminal trial to withdrawal of a factual admission at an administrative hearing, the attorney's representation does not constitute ineffective assistance. He made a decision to forego challenging the accusation of entry without inspection in hopes of focusing attention on the labor law defense. This sort of tactical decision, even if in hindsight unwise, does not constitute ineffective assistance.
III. FINDING OF DEPORTABILITY
11
Petitioners also contend that their deportation would constitute an unfair labor practice by Vogue. In an argument based loosely on NLRB v. Apollo Tire Co., Inc., 604 F.2d 1180 (9th Cir. 1980),3 they assert that, even if they had entered without inspection, public policy precluded a finding of their deportability and required that the deportation proceedings be terminated. The Board rejected this assertion, ruling that the immigration judge had no power to terminate the proceedings. When an immigration statute makes an alien deportable, as 8 U.S.C. § 1251(a)(2) (1976) does here, and INS enforcement officials seek deportation, the immigration judge is without power to terminate the proceedings on equitable, humanitarian, or other grounds not specified by the statute. See Lopez-Telles v. INS, 564 F.2d 1302, 1304 (9th Cir. 1977) (immigration judge has no "discretionary authority to terminate deportation proceedings"); Guan Chow Tok v. INS, 538 F.2d 36, 38 (2d Cir. 1976) (immigration judge "cannot exercise discretion and withhold deportation in contravention of the statute").
12
Affirmed.
*
Honorable Malcolm M. Lucas, U.S. District Judge for the Central District of California, sitting by designation
1
Cf. Fed.R.Civ.P. 11 (attorney alone signs pleadings)
Fed.R.Crim.P. 11 requires that guilty pleas in federal criminal cases ordinarily must be personally made. This is not a criminal case and thus Rule 11 does not apply. Moreover, Rule 11 applies to pleas, rather than admissions of fact. See United States v. Stapleton, 600 F.2d 780, 782 (9th Cir. 1979); United States v. Miller, 588 F.2d 1256, 1263 (9th Cir. 1978), cert. denied, 440 U.S. 947, 99 S.Ct. 1426, 59 L.Ed.2d 636 (1979); United States v. Terrack, 515 F.2d 558, 560-61 (9th Cir. 1975). Cf. ABA Project on Standards for Criminal Justice, Standards Relating to The Prosecution Function and The Defense Function 239-40 (Approved Draft 1971) (commentary to Defense Function Standard 5.2(b)) ("(T)he lawyer must be allowed to decide ... whether to stipulate certain facts ....").
2
The rule that guilty pleas by criminal defendants must be personally made or affirmed has taken on constitutional stature. See Boykin v. Alabama, 395 U.S. 238, 242-44, 89 S.Ct. 1709, 1711-1713, 23 L.Ed.2d 274 (1969); id. at 247, 89 S.Ct. at 1714 (Harlan, J., dissenting) (protesting the Court's elevation of Fed.R.Crim.P. 11 to constitutional dimensions). Boykin reasoned that because a guilty plea in a criminal case involves waiver of the defendant's constitutionally protected rights to avoid self-incrimination, to jury trial, and to confront one's accusers, the record must show that the guilty plea was voluntarily and knowingly entered. At most, the factual admission at the administrative hearing in this case involved waiver of the right to avoid self-incrimination; we hold that waiver sufficient. The Supreme Court has recognized that a factual admission is distinguishable from a guilty plea. Id. at 242, 89 S.Ct. at 1711-1712 ("(A) plea of guilty is more than an admission of conduct ....")
3
The Apollo Tire court determined only that because illegal aliens are "employees" under the National Labor Relations Act (NLRA), 29 U.S.C. § 152(3), the employer was guilty of an unfair labor practice in discharging alien employees who had complained to the Labor Department about the company's failure to pay overtime. Our decision that an illegal alien can exercise rights protected by the NLRA, however, does not bear on his deportability under the immigration laws when an employer's unfair labor practice precipitated the discovery of his illegal status
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868 F.2d 908
CORRUGATED PAPER PRODUCTS, INC., Plaintiff-Appellant,v.LONGVIEW FIBRE CO., Defendant-Appellee.
No. 88-1668.
United States Court of Appeals,Seventh Circuit.
Argued Oct. 31, 1988.Decided Jan. 31, 1989.
R. Wyatt Mick, Jr., Bingham, Loughlin, Mick & Bent, Mishawaka, Ind., Edward J. Murphy, Notre Dame Law School, Notre Dame, Ind., for plaintiff-appellant.
Richard M. Esenberg, Foley & Lardner, Milwaukee, Wis., for defendant-appellee.
Before CUMMINGS and CUDAHY, Circuit Judges, and PELL, Senior Circuit Judge.
CUDAHY, Circuit Judge.
1
Plaintiff-appellant, Corrugated Paper Products, Inc. ("Corrugated"), appeals the grant of summary judgment in favor of the defendant-appellee, Longview Fibre Company ("Longview"). Corrugated's complaint in this diversity case alleges that it is a third-party beneficiary of a contract for the sale of certain used industrial equipment entered into by Longview and Atlas Corrugated Machinery, Inc. ("Atlas"). Since we agree with the district court that Corrugated has not put forward any facts which would entitle it to third-party beneficiary status, we affirm.
I.
2
Corrugated and Longview are manufacturers of cardboard and other paper products. Atlas buys and sells used machinery employed in the paper products industry. During the latter part of 1983, Corrugated informed Atlas that it was interested in purchasing a used "cut-off" knife for its Mishawaka, Indiana facility. On February 17, 1984, Atlas received a letter from Longview indicating that Longview had a used cut-off knife for sale. Shortly thereafter, Atlas employee Berneice Gurley contacted Longview's Russell Reeve and indicated that Atlas was interested in purchasing the knife. During this phone conversation, Gurley told Reeve that Atlas had a prospective buyer for the equipment. According to their depositions, Reeve asked Gurley for assurances that Atlas would purchase the equipment "for its own account," whatever the outcome of Atlas' further business dealings with the (unidentified) subsequent purchaser. Gurley assured Reeve that Atlas would acquire the knife irrespective of the status of the further sale.
3
Between February 22 and March 30, 1984, Corrugated employees spoke directly with employees at Longview regarding the knife's technical specifications, performance and condition. On April 3, 1984, a Corrugated representative visited Longview's plant in Cedar Rapids, Iowa, to inspect the knife in operation. As a result of this visit, on April 10, 1984, Corrugated and Atlas entered into a written agreement for the purchase of the knife. Corrugated sent Atlas a deposit of $5,000 on May 1, 1984. After cashing the deposit check, Atlas sent a written purchase order for the knife to Longview on May 17, 1984, together with its own check in the amount of $5,000. The purchase order stated that the knife would be shipped F.O.B. to Corrugated's Mishawaka plant. The purchase order also provided that the knife would be shipped "approximately June 15, 1984 upon installation of new replacement machinery." Between the Corrugated visit to Cedar Rapids and the execution of the purchase order, Gurley again assured Reeve that Atlas was purchasing the knife for itself and that the deal was not contingent on Atlas' success in reselling the equipment.
4
During the summer of 1984, Corrugated contacted Longview on several occasions to determine the shipping date of the equipment. Longview informed Corrugated that shipping had been delayed due to Longview's difficulties in securing satisfactory replacement machinery. On September 10, 1984, Atlas sent an amended purchase order to Longview, directing that the equipment be sent to a different buyer. Longview complied with Atlas' request.1 On September 28, Corrugated learned from Longview employees that the knife would not be shipped to Corrugated.
5
On March 26, 1985, Corrugated filed suit against both Atlas and Longview, alleging breach of contract. Summary judgment was granted to Corrugated against Atlas, but this judgment is apparently uncollectible. The district court also entered summary judgment in favor of Longview, finding that Corrugated was not a third-party beneficiary of the Atlas-Longview agreement. Corrugated appeals from the summary judgment in favor of Longview.
II.
6
In reviewing the district court's grant of summary judgment, we must examine the entire record to determine whether a genuine issue of material fact exists requiring a trial on the merits, construing all facts in the light most favorable to the nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-52, 106 S.Ct. 2505, 2509-11, 91 L.Ed.2d 202 (1986); Scherr v. Woodland Community Consol. Dist. No. 50, 867 F.2d 974, 981, 983, (7th Cir. 1988). However, if the nonmovant bears the burden of proof on an issue, it "may not simply rest on its pleadings, but must affirmatively demonstrate, by specific factual showings, that there is a genuine issue of material fact requiring trial." First Nat'l Bank of Cicero v. Lewco Securities Corp., 860 F.2d 1407, 1411 (7th Cir.1988); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-26, 106 S.Ct. 2548, 2552-55, 91 L.Ed.2d 265 (1986). Since Corrugated bears the burden of demonstrating it is a third-party beneficiary, we must determine whether Corrugated has identified specific facts to support the contention that it is entitled to enforce the Atlas-Longview contract.
7
Under New Jersey law,2 the intent of the contracting parties when executing the contract is the controlling factor in determining whether enforceable rights have been created in a third party. The New Jersey Supreme Court has only recently stated that
8
[t]he principle that determines the existence of a third party beneficiary status focuses on whether the parties to the contract intended others to benefit from the existence of the contract, or whether the benefit so derived arises merely as an unintended incident of the agreement.
9
In Brooklawn v. Brooklawn Housing Corp., 124 N.J.L. 73, 11 A.2d 83 (E. & A.1940), the Court of Errors and Appeals stated the proposition:
10
The determining factor as to the rights of a third party beneficiary is the intention of the parties who actually made the contract. Thus, the real test is whether the contracting parties intended that a third party should receive a benefit which might be enforced in the courts; and the fact that such a benefit exists, or that the third party is named, is merely evidence of this intention. [Id. at 76-77, 11 A.2d 83.]
11
The contractual intent to recognize a right to performance in the third person is the key.
12
Broadway Maintenance Corp. v. Rutgers, 90 N.J. 253, 259, 447 A.2d 906, 909 (1982); see also Dravo Corp. v. Robert B. Kerris, Inc., 655 F.2d 503, 510 (3d Cir.1981) (New Jersey law); Insulation Contracting & Supply v. Kravco, Inc., 209 N.J.Super. 367, 507 A.2d 754, 758 (App.Div.1986). Cf. Holbrook v. Pitt, 643 F.2d 1261, 1270 n. 17 (7th Cir.1981) (federal common law; "the central interpretative question involved in third-party beneficiary problems: did the contracting parties intend that the third party benefit from the contract?"); Restatement (Second) of Contracts Sec. 302 (1981).
13
In determining the intent of the contracting parties, the fact that a third party is named in the contract, or that performance is to run directly to the third party, is not conclusive. For example, in the Brooklawn case, the court found that a municipality was not a third-party beneficiary of a real estate sales contract, even though the agreement provided that the purchaser would pay past-due real estate taxes directly to the municipality. In Dravo Corp., the Third Circuit held that an equipment manufacturer could not enforce an agreement between a construction contractor and a subcontractor, despite the fact that the contract specifically provided for installation of the manufacturer's products, and the contracting parties had discussed selection of the manufacturer's equipment at length. See also F.W. Hempel & Co., Inc. v. Metal World, Inc., 721 F.2d 610 (7th Cir.1983) (Illinois law; "bare mention" of third party in contract insufficient to establish third-party beneficiary status).
14
In other jurisdictions, courts have also been reluctant to recognize third-party rights based solely on the fact that the contracting parties were aware of the third person's relationship to the transaction. For example, courts have generally held that a third party is not a beneficiary of a sales agreement merely because both contracting parties knew that the product would be resold to the third party, or to a class of which the third party was a member. Even where the subsequent purchaser is mentioned by name in the contract, such a third party is "no more than a known remote buyer" in the absence of further evidence of an intent to benefit the third party. Kaiser Aluminum & Chemical Corp. v. Ingersoll-Rand Co., 519 F.Supp. 60, 73 (S.D.Ga.1981).3 Similarly, where a loan commitment is relied upon by persons dealing with the borrower, no third-party rights are recognized, even if the lender knew the identity of the third party (such as a home seller), or the lender directly communicated with the third party regarding the loan commitment.4 And a property owner is generally not a third-party beneficiary of an agreement between a general construction contractor and a subcontractor, even though both contractor and sub knew that benefits were to be directly conferred on the property owner.5
15
As these decisions indicate, there is an important difference between knowledge that a certain outcome will occur, and an intent to bring about that result. In order to establish third-party beneficiary status, a plaintiff must show more than that the contracting parties acted against a backdrop of knowledge that the plaintiff would derive benefit from the agreement. The plaintiff must show that the benefit to plaintiff was a consequence which the parties affirmatively sought; in other words, the benefit to plaintiff must have been, to some extent, a motivating factor in the parties' decision to enter into the contract.
16
This court discussed the distinction between knowledge of consequences and an intent to produce those consequences in a recent decision in which plaintiff alleged that the City of Chicago had operated O'Hare Airport in a manner intended to inflict noise pollution on surrounding landowners. As Judge Easterbrook explained, we must
17
distinguish[ ] knowledge from intent, byproduct from objective. A state may know what its laws do, yet may not "intend" all of the consequences. Some of them may be unwelcome fallout from activities undertaken for another reason. The essential question ... [is] whether the state acted "at least in part 'because of,' not merely 'in spite of,' [the] adverse effects upon an identifiable group."
18
Chicago intends to operate O'Hare Airport, knowing that noise and pollution occur. But it does not operate O'Hare because this is the best way to create noise and fumes. These are unwelcome byproducts. A good way to put the intent question is: "If the consequence at issue were smaller, or its effect were reversed, would the actor find the activity less attractive?" If planes made less noise, would Chicago curtail the size and hours of operation at O'Hare? To put the question this way is to show that [plaintiff] cannot establish intent.
19
Bieneman v. City of Chicago, 864 F.2d 463, 467 (7th Cir.1988) (citation omitted).
20
The same reasoning applies here. Even disregarding, for the moment, the deposition testimony of Gurley and Reeve regarding the substance of their telephone conversations, Corrugated has come forward with no evidence which might suggest that both Longview and Atlas intended, at the time of entering their contract, to confer a benefit on Corrugated. All we know is that Corrugated's Mishawaka facility was listed as the delivery location, and that Longview was aware that Atlas was purchasing the equipment for resale. However, there is no evidence to suggest that Longview intended to assume Atlas' contractual obligations to Corrugated. Instead, the evidence indicates that direct delivery to a subsequent purchaser is an industry-wide practice used primarily as a cost-saving device. Therefore, it appears that Longview agreed to ship directly to Corrugated as an accommodation to Atlas rather than to become entwined in contractual relations with a company with which it had no prior dealings.
21
The direct communications between Corrugated and Longview do not mandate a different result. The communications prior to the Atlas-Longview contract, and the visit of a Corrugated employee to view the knife at Longview's plant, were once again merely an accommodation by Longview. These communications did not in any way alter the substance of the Atlas-Longview agreement--Longview was clearly not specially designing or manufacturing a product or service to meet Corrugated's specifications. Such communications are very similar to communications between a mortgage lender and a home seller prior to the execution of a loan commitment between lender and prospective purchaser--while the lender may inform the seller of the progress of the transaction, or of the conditions under which financing is to be granted, the seller is not a third "party" to the financing agreement.
22
Corrugated also makes much of the fact that, after the Atlas-Longview contract had been executed, it engaged in "negotiations" with Longview which resulted in "contract modifications" regarding the knife's delivery date. However, the Atlas-Longview purchase order specifically provided for "shipping approximately June 15, 1984 upon installation of new replacement machinery." When the installation of Longview's replacement equipment was delayed, there was simply no need for Longview to "modify" the agreement in any way. All that can be said of these later communications is that, when Corrugated employees called to inquire, Longview officials informed them of the progress of the Atlas-Longview sale agreement. Such provision of information is insufficient to create third-party beneficiary rights, especially where the communications occurred after execution of the contract, and are therefore virtually irrelevant to the parties' intent at the time the contract was executed. F.W. Hempel & Co., Inc. v. Metal World, Inc., 721 F.2d 610, 614 & n. 7 (7th Cir.1983) (Illinois law; intent must be determined at time of contract formation; subsequent communications between promisor and third party irrelevant to third-party beneficiary analysis).
23
Corrugated has simply failed to come forward with the sort of evidence relied upon in decisions which have found that a third party was an intended beneficiary of a contract. In some of these cases, the promisor specially designed its product for the third party's use, or discussed the selection of an appropriate product with the third party. See, e.g., Keel v. Titan Constr. Corp., 639 P.2d 1228, 1231 (Okla.1982); Acme Brick Co. v. Hamilton, 218 Ark. 742, 238 S.W.2d 658, 660-61 (1951). In other cases, the contract negotiations revealed that the promisee explicitly informed the promisor that it was entering the transaction "on behalf of," or "for the purpose of" benefiting, the third party. See, e.g., Holbrook v. Pitt, 643 F.2d 1261, 1271-73 (7th Cir.1981); Mercado v. Mitchell, 83 Wis.2d 17, 28-29, 264 N.W.2d 532, 538 (1978). In a third group of cases the contract itself established a comprehensive set of rights and obligations between the promisor and third party. See, e.g., Sears, Roebuck & Co. v. Jardel Co., 421 F.2d 1048, 1054 (3d Cir.1970) (Pennsylvania law); Oliver B. Cannon & Son, Inc. v. Dorr-Oliver, Inc., 336 A.2d 211, 215-16 (Del.1975). The present situation is a far cry from cases in which a legally enforceable third-party beneficiary relationship has been found to exist.
III.
24
Besides the evidence discussed above, Longview also offered deposition testimony of its own employee, Russell Reeve, and two Atlas employees, Berneice Gurley and Steven Frangedis, in support of its motion for summary judgment. Gurley and Reeve testified that on two occasions Reeve asked for, and received, assurances that Atlas was dealing for itself in the purchase transaction, and that Atlas' purchase of the cut-off knife was not contingent on the success of the resale transaction. The deposition testimony of Gurley and Frangedis contains categorical assertions that it had not been Atlas' intent to benefit Corrugated when entering into the purchase transaction. If credited, this testimony alone would seem to dispose of Corrugated's contention that it is a third-party beneficiary of the Atlas-Longview contract. However, this evidence relates to the contracting parties' state of mind, was solely in the control of Longview and a party presumably allied in interest with it and might have been disbelieved by a jury in its evaluation of credibility. It is therefore not immediately clear whether this evidence in itself may serve as a basis for summary judgment.
25
Certainly, in cases where the defendant's motive or state of mind is an essential element of a plaintiff's case, a court must be circumspect in granting summary judgment based solely on the defendant's categorical denial that the requisite mental state existed. See Beard v. Whitley County REMC, 840 F.2d 405, 410 (7th Cir.1988) ("When the issue is one of intent, we approach the application of [summary judgment] principles with special caution."). However, where the plaintiff has had the opportunity to depose the defendant to test the defendant's veracity and the plaintiff has failed to "shake" the defendant's version of the facts or to raise significant issues of credibility, summary judgment for the defendant may ordinarily be granted. This is the case unless the plaintiff has adduced other "significant probative evidence" from which a jury would be entitled to infer contrary conclusions about the mental state at issue.
26
It is well-settled that summary judgment may be granted where the controlling issue is whether or not the movant acted with a particular mental state. Although the movant's testimony about the existence of a particular mental state may not be dispositive, the movant is entitled to summary judgment if the burden is on the nonmovant to establish the state of mind and the nonmovant has failed to come forward with even circumstantial evidence from which a jury could reasonably infer the relevant state of mind.6
27
As noted, Corrugated has failed to present any evidence which would contradict the deposition testimony of Gurley, Frangedis and Reeve that Atlas and Longview did not intend to benefit Corrugated when they formed their agreement. Therefore the deponents' statements would be entitled to conclusive weight unless Corrugated can show that their credibility is subject to attack. Where, as here, the movant's witnesses have been examined by the nonmovant in depositions, the nonmovant ordinarily must identify specific factual inconsistencies in the witness' testimony in order to withstand a motion for summary judgment. "[T]he opposing party may not merely recite the incantation, 'Credibility,' and have a trial on the hope that a jury may disbelieve factually uncontested proof." Curl v. International Business Mach. Corp., 517 F.2d 212, 214 (5th Cir.1975) (quoting Rinieri v. Scanlon, 254 F.Supp. 469, 474 (S.D.N.Y.1966)).7
28
Judge Learned Hand discussed the appropriateness of summary judgment where all evidence is in the possession of the movant's witnesses in Radio City Music Hall Corp. v. United States, 135 F.2d 715 (2d Cir.1943), which involved the question whether certain performers who appeared at Radio City were its employees for tax purposes. All the evidence regarding the relationship of these performers to the management of the theater was in the hands of Radio City personnel; the government resisted summary judgment on the ground that it should have the chance to test the credibility of these witnesses before a jury. Judge Hand emphatically disagreed:
29
Since [the government] is forced to draw all its evidence from the plaintiff's own officers, or from other actors, is it not unfair to make this one-sided presentation final? There would be much force in this, if the motion had been heard merely upon affidavits; the right to cross-examine [Radio City's manager] and the actors was almost the [government's] only protection. But it did fully cross-examine them [at depositions], and did not shake their testimony; and, although if it wished, it might challenge [Radio City's manager's] good faith, before a jury, it does not suggest that he was fabricating.... [The government] says that, given time, it may find that some of these were "employees," and that we should not take away its chance of doing so. That does not make a "genuine issue," Rule 56(c), or a "substantial controversy," Rule 56(d). When a party presents evidence on which, taken by itself, it would be entitled to a directed verdict if believed, and which the opposite party does not discredit as dishonest, it rests upon that party at least to specify some opposing evidence which it can adduce and which will change the result.
30
Id. at 718 (citation omitted); see also Dyer v. MacDougall, 201 F.2d 265, 268-69 (2d Cir.1952) (L. Hand, J.); Arnstein v. Porter, 154 F.2d 464, 478-79 (2d Cir.1946) (Clark, J., dissenting).
31
In the present case, Corrugated has not come forward with any evidence which would suggest that Gurley, Frangedis and Reeve are not credible witnesses; nor has it identified any inconsistencies in the deponents' accounts of the transaction. The opportunity to cross-examine these witnesses at trial would presumably add nothing to the deposition testimony already elicited. Therefore, it was appropriate for the district court to consider their testimony in ruling on the motion for summary judgment. As previously indicated, this testimony clearly demonstrates that Longview did not desire to become involved in contractual relations with a third party. Therefore, Corrugated's claim of entitlement to third-party beneficiary status must fail.
IV.
32
Considering the entire record in the light most favorable to Corrugated, it is clear that Longview and Atlas did not intend to confer enforceable third-party beneficiary rights on Corrugated when entering into their purchase contract. Therefore, Longview was entitled to summary judgment. The judgment of the district court is
33
AFFIRMED.
1
The record indicates that Longview did not receive any additional compensation due to the change in ultimate purchasers. It is unclear whether Atlas retained Corrugated's $5,000 deposit, and therefore profited indirectly from the altered resale arrangements
2
Neither Corrugated nor Longview challenge the district court's determination that New Jersey law governs the interpretation of the Atlas-Longview contract. Brief of Plaintiff-Appellant at 5; Brief of Defendant-Appellee at 12 n. 3. Accordingly, we will apply New Jersey law without independently examining the choice of law issue. Runnemede Owners, Inc. v. Crest Mortgage Corp., 861 F.2d 1053, 1056 (7th Cir.1988); Mutual Service Casualty Ins. Co. v. Country Life Ins. Co., 859 F.2d 548, 551 (7th Cir.1988); Schlumberger Technology Corp. v. Blaker, 859 F.2d 512, 514 (7th Cir.1988); Bandag, Inc. v. National Acceptance Co. of America, 855 F.2d 491, 493 n. 1 (7th Cir.1988)
3
See also, e.g., Commonwealth Propane Co. v. Petrosol Int'l, Inc., 818 F.2d 522, 531-32 (6th Cir.1987) (Ohio law); Slate Printing Co. v. Metro Envelope Co., 532 F.Supp. 431, 433-34 (N.D.Ill.1982); Cullen v. BMW of North America, Inc., 531 F.Supp. 555, 560 (E.D.N.Y.), rev'd on other grounds, 691 F.2d 1097 (2d Cir.1982), cert. denied, 460 U.S. 1070, 103 S.Ct. 1525, 75 L.Ed.2d 948 (1983); Wheeling Trust & Savings Bank v. Tremco Inc., 153 Ill.App.3d 136, 140-41, 106 Ill.Dec. 254, 257-58, 505 N.E.2d 1045, 1048-49 (1st Dist.1987); Spiegel v. Sharp Electronics Corp., 125 Ill.App.3d 897, 903, 81 Ill.Dec. 238, 243, 446 N.E.2d 1040, 1045 (1st Dist.1984) ("mere knowledge of resale to third parties is [not] sufficient to create third-party beneficiary status"); Altevogt v. Brinkoetter, 85 Ill.2d 44, 56, 51 Ill.Dec. 674, 421 N.E.2d 182, 188 (1981)
4
See, e.g., Braten v. Bankers Trust Co., 60 N.Y.2d 155, 468 N.Y.S.2d 861, 865, 456 N.E.2d 802, 806 (1983) (lender's agreement to extend credit to failing business did not create third-party rights in business' suppliers, even if lender directly communicated arrangement to suppliers, and suppliers relied on agreement to "gear up" their facilities to continue to supply business); Khabbaz v. Swartz, 319 N.W.2d 279, 284-86 (Iowa 1982) (loan commitment between home buyer and bank creates no rights in home seller); Dale v. Groebe & Co., 103 Ill.App.3d 649, 653, 59 Ill.Dec. 350, 354, 431 N.E.2d 1107, 1111 (1st Dist.1981) (seller not third-party beneficiary of loan commitment between lender and home buyer, even though seller relied on lender's confirmation of loan commitment to enter into a further home purchase contract); see also Annot., Vendor's Action Against Vendee's Prospective Lender for Misrepresentation Respecting or Failure to Complete Loan Commitment, 30 A.L.R. 4th 474 (1984)
5
See, e.g., Hixon v. Sherwin-Williams Co., 671 F.2d 1005, 1010 (7th Cir.1982) (Indiana law)
6
First Nat'l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 289-90, 88 S.Ct. 1575, 1592-93, 20 L.Ed.2d 569 (1968); Beard v. Whitley County, 840 F.2d at 410 ("even when such issues of motive or intent are at stake, summary judgment is proper where the plaintiff presents no indication of motive or intent supportive of his position.") (citations omitted); National Union Fire Ins. Co. v. Argonaut Ins. Co., 701 F.2d 95, 97 (9th Cir.1983) (in general, issues of contractual intent not subject to summary disposition; however summary judgment appropriate where nonmovant has failed to produce "at least some evidentiary support for [a] competing interpretation[ ] of the contract's language."); Weit v. Continental Illinois Nat'l Bank & Trust Co., 641 F.2d 457, 464 (7th Cir.1981) (summary judgment appropriate where extensive discovery has failed to uncover even circumstantial evidence of illicit motive); Vaughn v. Teledyne, Inc., 628 F.2d 1214, 1220 (9th Cir.1980); Morrison v. Nissan Co., Ltd., 601 F.2d 139 (4th Cir.1979) (summary judgment inappropriate where, despite defendant's denial of intent to fix prices, plaintiff produced significant circumstantial evidence from which inference of illicit motive could be drawn); Conrad v. Delta Air Lines, Inc., 494 F.2d 914, 918 (7th Cir.1974) ("If improper motive could reasonably be inferred from facts before the court, sworn denials of such intentions do not remove the issue from the case so as to entitle the party to summary judgment."); Washington Post Co. v. Keogh, 365 F.2d 965, 969 (D.C.Cir.1966); Sonenshein, State of Mind and Credibility in the Summary Judgment Context: A Better Approach, 78 NW.U.L.Rev. 774, 786-87 & n. 49 (1983) (state of mind issues should be treated like any other factual issue for summary judgment purposes; Federal Rules, unlike state counterparts, fail to exempt state of mind issues from normal summary judgment practice)
Where the burden of proof is on the movant with respect to state of mind or another issue as to which evidence is in the movant's exclusive control, the standards for a grant of summary judgment may differ. See Wilmington Trust Co. v. Manufacturers Life Ins. Co., 624 F.2d 707, 709 (5th Cir.1980).
7
See also Strickland v. Watt, 453 F.2d 393, 394 (9th Cir.1972) (per curiam) (fact that affiant a convicted felon insufficient to preclude summary judgment, where appellants had not contradicted any facts asserted in affidavit); Eisbach v. Jo-Carroll Elec. Co-op., Inc., 440 F.2d 1171, 1174 (7th Cir.1971); Lavine v. Shapiro, 257 F.2d 14, 19 (7th Cir.1958) (mere "anemic hope" that information contradicting deposition testimony would be elicited under cross-examination at trial insufficient to withstand motion for summary judgment); Sterling Nat'l Bank & Trust Co. v. Federated Dep't Stores, Inc., 612 F.Supp. 144, 146 (S.D.N.Y.1985); Vantage Point, Inc. v. Parker Bros., Inc., 529 F.Supp. 1204, 1213-14 (E.D.N.Y.1981), aff'd mem., 697 F.2d 301 (2d Cir.1982); Carroll v. United Steelworkers of Am., 498 F.Supp. 976, 978 (D.Md.1980); United States v. Canellis, 490 F.Supp. 1125, 1128 (N.D.Ill.1980); Sonenshein, State of Mind and Credibility in the Summary Judgment Context: A Better Approach, 78 NW.U.L.Rev. 774, 798 (1983) (denying summary judgment whenever witness' demeanor could be tested at trial "is plainly wrong, and would emasculate Rule 56 by precluding summary judgment in all cases except perhaps those in which the proof is documentary."); 10A Wright, Miller & Kane, Federal Practice & Procedure Sec. 2726, at 119 (2d ed. 1983) ("specific facts must be produced in order to put credibility in issue so as to preclude summary judgment. Unsupported allegations that credibility is in issue will not suffice.") (footnotes omitted); see also 6 Moore & Wicker, Moore's Federal Practice p 56.15, at 56-298 to -299 (2d ed. 1988)
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 05-4955
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
RAYMONT DAVID BROWN,
Defendant - Appellant.
Appeal from the United States District Court for the Southern
District of West Virginia, at Bluefield. David A. Faber, Chief
District Judge. (CR-03-155-1)
Submitted: July 28, 2006 Decided: August 11, 2006
Before WILKINSON, GREGORY, and DUNCAN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Derrick W. Lefler, GIBSON, LEFLER & ASSOCIATES, Princeton, West
Virginia, for Appellant. Charles T. Miller, United States
Attorney, John L. File, Assistant United States Attorney, Beckley,
West Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Pursuant to a plea agreement, Raymont David Brown pled
guilty to distribution of a quantity of cocaine base (“crack”), in
violation of 21 U.S.C. § 841(a)(1) (2000). Brown appealed the
district court’s original sentence of 137 months in prison. We
vacated Brown’s sentence and remanded for resentencing, concluding
that, under United States v. Booker, 543 U.S. 220 (2005), Brown’s
sentence violated the Sixth Amendment.
Upon remand, the district court sentenced Brown to 115
months in prison, based on the original guideline calculation as
modified to reflect a two-level reduction in offense level granted
pursuant to the government’s post-remand Fed. R. Crim. P. 35(b)
motion for a reduction in sentence. Brown timely appealed.
Brown argues that his sentence following Booker violates
his due process rights, as informed by ex post facto principles.
This claim is foreclosed by our recent decision in United States v.
Davenport, 445 F.3d 366 (4th Cir. 2006).
Accordingly, we affirm Brown’s sentence. We dispense
with oral argument because the facts and legal contentions are
adequately presented in the materials before the court and argument
would not aid the decisional process.
AFFIRMED
- 2 -
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267 S.E.2d 397 (1980)
In the Matter of Shirley W. BOLDEN, Appellee, and
J. C. Penney Company, Inc., Employer, and
Employment Security Commission of North Carolina, Appellant.
No. 8026SC146.
Court of Appeals of North Carolina.
July 1, 1980.
*398 Paul E. Hemphill, Staff Atty., Legal Services of Southern Piedmont, Inc., Charlotte, for claimant-appellee.
Gail C. Arneke, Staff Atty., Raleigh, for Employment Security Commission of North Carolina, appellant.
PARKER, Judge.
In the judgment appealed from the court expressly found that the facts found by the Commission were based upon competent evidence contained in the record. The court nevertheless reversed the Commission's decision, basing its ruling upon its finding that the Commission "did not properly apply the law to those and other facts in evidence." (Emphasis added.) In reversing the Commission on the basis of "other facts in evidence," the Court committed error.
In reviewing decisions of the Employment Security Commission as authorized by G.S. 96-15(i), the superior court functions as an appellate court. In re Enoch, 36 N.C.App. 255, 243 S.E.2d 388 (1978). In *399 performing that function, "the reviewing court may determine upon proper exceptions whether the facts found by the Commission were supported by competent evidence and whether the findings so supported sustain the legal conclusions and the award made, but in no event may the reviewing court consider the evidence for the purpose of finding the facts for itself." Employment Security Comm. v. Young Men's Shop, 32 N.C.App. 23, 29, 231 S.E.2d 157, 160 (1977). If the findings of fact made by the Commission, even though supported by competent evidence in the record, are insufficient to enable the court to determine the rights of the parties upon the matters in controversy, the proceeding should be remanded to the end that the Commission made proper findings.
In the judgment appealed from the court did not specify what were the "other facts in evidence" to which the Commission had failed properly to apply the law. Presumably the court was referring to the evidence presented by the claimant in support of her contention that her employer had unfairly discriminated against her because of her race. The ultimate question for decision in this case was whether the claimant had "left work voluntarily without good cause attributable to [her] employer" within the meaning of G.S. 96-14(1) so as to be disqualified for unemployment compensation benefits by virtue of that section. Had she left her job because of racial discrimination practiced against her by her employer, she would have had good cause attributable to her employer and so would not have been disqualified for benefits. The Commission made no factual findings on this matter. The question presented for our determination on this appeal thus becomes whether such findings were necessary to determine the rights of the parties upon the matters in controversy in this case. This depends upon whether the evidence presented by the claimant was sufficient to raise a genuine issue of fact which the Commission was required to resolve as to whether claimant's employer unfairly discriminated against her on account of her race. We find that it was. Although claimant's objective evidence tending to support her subjective feeling that she had been the victim of racial discrimination was minimal indeed and certainly would not compel that conclusion, in our opinion it was sufficient to raise a factual issue which the Commission should have resolved.
Accordingly, the judgment appealed from is vacated and this matter is remanded to the superior court with directions that the superior court further remand this matter to the Employment Security Commission, to the end that the Commission make findings of fact upon all controverted issues required to determine the rights of the parties.
Vacated and remanded.
CLARK and WEBB, JJ., concur.
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193 N.W.2d 515 (1972)
STATE of Iowa, Appellee,
v.
Francis M. EVANS and Gene Allen Knudtson, Appellants.
No. 54435.
Supreme Court of Iowa.
January 14, 1972.
*516 Paul H. Kinion, and John C. Platt, Cedar Rapids, for appellant.
Richard C. Turner, Atty. Gen., Richard N. Winders, Asst. Atty. Gen., and John W. Shafer, County Atty., for appellee.
MOORE, Chief Justice.
Defendants, Gene A. Knudtson and Francis M. Evans, were jointly charged, tried and convicted of the crime of breaking and entering in violation of Code section 708.8. Each was sentenced to serve a term not to exceed ten years in the Anamosa reformatory. They have jointly appealed and assign the same two errors. We affirm as to each defendant.
Defendants first assert the trial court erred in overruling their motion to suppress evidence regarding items of clothing taken from them after their warrantless arrest.
The thrust of their contention is that their rights under the Fourth and Fourteenth Amendments to the United States Constitution were violated. They argue their warrantless arrest was without probable cause and therefore evidence obtained incident thereto was obtained by an unreasonable search and seizure.
I. A search without a warrant is, within limits, permissible if incident to a lawful arrest. However such an arrest to support an incidental search must be made with probable cause. Henry v. United States, *517 361 U.S. 98, 102, 80 S.Ct. 168, 4 L.Ed.2d 134, 138, 139.
II. The rules involving probable cause for arrest without warrant and searches incident thereto have, after review of numerous state and federal authorities, been announced in many of our recent cases. State v. Post, 255 Iowa 573, 123 N.W.2d 11; State v. Raymond, 258 Iowa 1339, 142 N.W.2d 444; State v. Brown, 261 Iowa 656, 155 N.W.2d 416; State v. Vallier, Iowa, 159 N.W.2d 406; State v. Ricehill, Iowa, 1970, 178 N.W.2d 288.
In State v. King, Iowa, 191 N.W.2d 650, 653, filed November 11, 1971, we recognize the well established rule by this quote from Draper v. United States, 358 U.S. 307, 313, 79 S.Ct. 329, 3 L.Ed.2d 327, 332:
"`In dealing with probable cause, * * * as the very name implies, we deal with probabilities. These are not technical; they are the factual and practical considerations of everyday life on which reasonable and prudent men, not legal technicians, act.' Brinegar v. United States, supra, 338 U.S. [160] at page 175, 69 S.Ct. [1302] at page 1310. Probable cause exists where `the facts and circumstances within their [the arresting officers'] knowledge and of which they had reasonably trustworthy information [are] sufficient in themselves to warrant a man of reasonable caution in the belief that' an offense has been or is being committed. Carroll v. United States, 267 U.S. 132, 162, 45 S.Ct. 280, 288, 69 L.Ed. 543, 555, 39 A. L.R. 790."
For a recent thorough analysis of authorities from other jurisdictions see 24 Vand.L.Rev. 317, "Probable Cause to Arrest". The author's observations include "flight is frequently acknowledged as a factor properly considered in determining whether the known data reached the level of probable cause". Page 326.
III. Code section 755.4 provides a peace officer may make an arrest without a warrant where a public offense has been committed and the officer has reasonable grounds for believing the person to be arrested committed it. The record clearly shows a breaking and entering had been committed. The narrow question raised by defendants here is whether the arresting officers had probable cause to believe defendants committed the offense.
IV. The probable cause issue must necessarily be resolved upon the particular facts in each case. Wong Sun v. United States, 371 U.S. 471, 479, 83 S.Ct. 407, 9 L.Ed.2d 441, 450; Jackson v. United States, 8 Cir., 408 F.2d 1165, 1171.
About midnight November 1, 1970 Waukon police officer Darrell Stone noticed an out of county car which he had not seen around town before. It was parked near the bowling alley. He again saw the car at 1:15 a. m. and wrote down the license number 57-42941. It was a gray 1960 Pontiac. Between 2:00 and 2:15 a. m. while making his rounds Stone saw the same car parked alongside the loading door of the Super Valu store. He then saw it driven away and observed the two male occupants, one of whom had a dark beard. After following the Pontiac for several blocks Stone returned to the store and found the door had been broken open and the safe "peeled". He immediately reported his information by radio to all law enforcement agencies in the area.
Ronald Makin, an agent with the Iowa Bureau of Criminal Investigation, on receiving the Waukon break-in report immediately started to drive from his Oelwein home to Waukon. En route he received an Allamakee County Sheriff's radio message that the vehicle believed used in the Waukon breaking and entering was parked behind the Winneshiek Hotel in Decorah. Decorah is approximately 20 miles west of Waukon. He also heard a police radio report that possibly one of the persons involved in the breaking and entering was Gene Knudtson. Makin knew Knudtson and was aware of his criminal record. Makin drove to Decorah and learned from officers at a roadblock the car behind the *518 hotel had license plates matching the number reported by officer Stone. He also learned two male subjects had checked into the Winneshiek Hotel but had later run away. Makin then went to the hotel and to room 105 which had been rented by the two men. They had not registered by their true names. Outside the room window he observed a scattering of change on an adjacent roof. It appeared the money had been thrown from the window.
Shortly thereafter a police radio report, based on an anonymous phone call to the Waukon Sheriff's office, was broadcast that the two men sought for the breaking and entering were at the Freeport trailer court, a short distance outside Decorah. Makin, Garland Morse, an Iowa Highway Patrolman, Al Etteldorf, Jr., Decorah Assistant Police Chief, and Deputy Sheriff Mel Lee, converged upon the trailer court. The officers had a general physical description of the two subjects wanted in connection with the Waukon break-in.
The officers observed a light in a trailer owned by a Scotty Stevens, an acquaintance of Patrolman Morse. While observing the trailer a tall man with dark hair and beard came close to the window and looked out. Morse knew that man did not live there. The four officers then entered the trailer where they found Knudtson and Evans. Knudtson was unable to produce any identification.
The four law officers arrested defendants and took them to the Decorah police station. There defendants' clothing was taken from them and other garments furnished. FBI tests of defendants' clothing disclosed particles of material from the "peeled" safe.
On trial after Officer Stone had testified the court excused the jury and heard testimony from the four arresting officers on the question of probable cause for arrest which defendants had raised in a motion to suppress any evidence concerning their clothing and materials found therein. We have already set out the substance of the four officers' testimony.
After carefully reviewing the record the trial court overruled and denied defendants' motion to suppress and trial before the jury was resumed.
Defendants rely heavily on the holding in Whiteley v. Warden of Wyoming Penitentiary, 401 U.S. 560, 91 S.Ct. 1031, 28 L. Ed.2d 306 (1971) which we find is clearly factually distinguishable from the case at bar. There the arrest was made on the word of an unnamed informer that defendant and another person had broken into a building.
Our review of the facts and circumstances gives us no difficulty in upholding the trial court's determination that probable cause for arrest existed here. The trial court was correct in overruling defendants' motion to suppress.
V. The State has argued defendants failed to preserve the question of illegal search and seizure by their failure to object when the clothing and the results of the tests thereof were introduced into evidence. Under the record that contention is untenable. The trial court had been timely and well advised of defendants' objection and had ruled adversely to defendants.
Objections to the introduction of evidence are addressed to the court and not to the jury. It is sufficient if the objection calls the trial court's attention to the claimed inadmissibility or incompetency involved. An objection may and often should be made in chambers to avoid prejudice. Reversible error may result if an attorney is compelled to make his objection in the jury's presence. Repeated objections need not be made to the same type of proof. Lessenhop v. Norton, 261 Iowa 44, 53, 55, 153 N.W.2d 107, 112, 113 and citations.
VI. Defendants' second assigned error is that the taking of their clothing at *519 the Decorah police station was too remote to be a lawful search and seizure incident to arrest. This issue was not raised in the motion to suppress or at any other time before the trial court. It is raised for the first time on this appeal.
We have consistently held that ordinarily matters not raised in the trial court, including constitutional questions, cannot be effectively asserted the first time on appeal. State v. Conrad, Iowa, 191 N.W.2d 648, 649, filed November 11, 1971; State v. Franklin, Iowa, 163 N.W.2d 437, 441; State v. Allnutt, Iowa, 158 N.W.2d 715, 717; State v. Everett, Iowa, 157 N.W.2d 144, 148.
We decline to consider defendants' second assigned error but must observe the officers could hardly be expected to remove defendants' clothing before reaching the nearby Decorah police station.
We find no reversible error.
Affirmed.
All Justices concur except HARRIS, J., who takes no part.
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716 F.2d 907
Turnbullv.Block
82-2352
UNITED STATES COURT OF APPEALS Eighth Circuit
5/3/83
1
W.D.Mo.
2
AFFIRMED*
*
See Local Rule 14
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Case: 16-40137 Document: 00513762780 Page: 1 Date Filed: 11/16/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 16-40137 FILED
Summary Calendar November 16, 2016
Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA,
Plaintiff-Appellee
v.
MARTIN GUILLEN-CRUZ,
Defendant-Appellant
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 7:10-CR-1446-1
Before REAVLEY, OWEN, and ELROD, Circuit Judges.
PER CURIAM: *
Martin Guillen-Cruz appeals the revocation of the supervised release
term imposed upon his 2012 conviction for exporting defense articles on the
United States Munitions List without a license. In 2016, Guillen-Cruz pleaded
true to violating a special condition of supervised release requiring that he “not
re-enter the United States illegally.” The district court found that he violated
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 16-40137 Document: 00513762780 Page: 2 Date Filed: 11/16/2016
No. 16-40137
this condition and several others, revoked his supervision, and sentenced him
to 12 months and one day of imprisonment.
Guillen-Cruz argues that there was no special condition of supervised
release prohibiting him from reentering the United States illegally and that
the district court committed plain error by finding that he violated this
nonexistent condition and by including the violation in the judgment of
conviction. He contends that the judgment of conviction should be vacated and
the case should be remanded to the district court for a correction of the
judgment.
Ordinarily, we review a district court’s decision to revoke supervised
release for abuse of discretion. United States v. Spraglin, 418 F.3d 479, 480
(5th Cir. 2005). However, because Guillen-Cruz did not object in the district
court, we review the issue for plain error. See United States v. Magwood, 445
F.3d 826, 828 (5th Cir. 2006). Under the plain error standard, Guillen-Cruz
must show a clear or obvious forfeited error that affected his substantial rights.
See Puckett v. United States, 556 U.S. 129, 135 (2009). If Guillen-Cruz makes
such a showing, this court has discretion to correct the error but should do so
only if it seriously affects the fairness, integrity, or public reputation of the
proceedings. See id.
Neither the 2012 judgment of conviction nor the district court’s oral
pronouncement of sentence included a special condition of supervised release
prohibiting Guillen-Cruz from illegally reentering the United States.
Accordingly, the district court committed clear or obvious error when it found
that Guillen-Cruz violated a nonexistent condition of supervised release. See
Puckett, 556 U.S. at 135. Nevertheless, Guillen-Cruz has not demonstrated
that the error affected his substantial rights. The disputed violation was one
of five violations found by the district court and listed in the judgment of
2
Case: 16-40137 Document: 00513762780 Page: 3 Date Filed: 11/16/2016
No. 16-40137
conviction. The remaining violations, none of which are being challenged on
appeal, sufficed to allow a revocation of Guillen-Cruz’s supervised release.
Moreover, the disputed special condition is somewhat duplicative of the
mandatory condition prohibiting Guillen-Cruz from violating a state, local or
federal law, and he does not challenge the district court’s finding that he
violated that mandatory condition by being found in the United States
following deportation.
Guillen-Cruz has not shown that the inclusion of his violation of the
nonexistent condition in the judgment of conviction affects his substantial
rights. Accordingly, he has not demonstrated plain error.
The district court’s judgment is AFFIRMED.
3
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906 N.E.2d 895 (2009)
Clint R. BELDON, Appellant-Defendant,
v.
STATE of Indiana, Appellee-Plaintiff.
No. 43A05-0805-CR-302.
Court of Appeals of Indiana.
May 21, 2009.
*897 David C. Kolbe, Warsaw, IN, Attorney for Appellant.
Gregory F. Zoeller, Attorney General of Indiana, Arturo Rodriguez II, Deputy Attorney General, Indianapolis, IN, Attorneys for Appellee.
OPINION
RILEY, Judge.
STATEMENT OF THE CASE
Appellant-Defendant, Clint Beldon (Beldon), appeals his conviction for operating a motor vehicle while intoxicated, as a Class D felony, Ind.Code § 9-30-5-3, and the trial court's finding that he is a habitual substance offender for sentencing purposes under I.C. § 35-50-2-10.
We affirm in part, reverse in part, and remand with instructions.
ISSUES
Beldon raises three issues for our review, which we restate as follows:
(1) Whether the trial court abused its discretion by admitting a physician's videotaped deposition at trial in lieu of live testimony;
(2) Whether the State properly requested blood and urine test results pursuant to I.C. § 9-30-6-6; and
(3) Whether the trial court erred in sentencing Beldon when it used the same prior conviction: (1) to elevate a Class A misdemeanor charge to a Class D felony; (2) to support a habitual substance offender finding; and (3) as an aggravating factor to support the imposition of a maximum sentence.
FACTS AND PROCEDURAL HISTORY
On the afternoon of April 24, 2007, Victor Staton (Staton) and his wife were driving their vehicle on County Road 1350 in Kosciusko County, Indiana. As they approached the intersection of County Road 1350 North and County Road 700 West, Staton noticed Beldon's vehicle approaching *898 a stop sign. Staton slowed his vehicle down to make sure that Beldon would stop. Staton saw Beldon slow down and look to his right. Believing that Beldon would look left and come to a complete stop after seeing Staton's vehicle approaching, Staton put his foot back on the accelerator and sped up. However, Beldon never looked to his left. Instead, Beldon rolled through the stop sign and pulled his vehicle out into the intersection. Both Staton and Beldon tried to avoid impact, but a collision nevertheless occurred.
Minutes later, Sergeant Terry Chanley (Sergeant Chanley) and Officer Matthew Tice (Officer Tice) of the Nappanee Police Department arrived at the scene of the collision. Sergeant Chanley and Officer Tice approached Beldon's vehicle and saw Beldon slumped over across the passenger seat with his head against the passenger side door. When Sergeant Chanley and Officer Tice asked Beldon if he was okay, Beldon was unresponsive. Sergeant Chanley and Officer Tice detected the smell of alcohol coming from Beldon's vehicle.
Shortly thereafter, an ambulance arrived at the scene of the accident. Paramedics removed Beldon from his vehicle and transported him to the Elkhart General Hospital. While the ambulance was en route to the hospital, Beldon became semi-conscious and combative with paramedics. Paramedic Monte Flowers (Paramedic Flowers) wrote in his report that Beldon appeared to be intoxicated.
After arriving at the hospital, Beldon was placed in a trauma room. Dr. Michelle Bache (Dr. Bache), an emergency room physician, treated Beldon upon his arrival. During the course of her treatment, and absent any request by law enforcement to do so, Dr. Bache ordered that samples of Beldon's blood and urine be collected and tested. Linda Rothenbuhler (Rothenbuhler), a phlebotomist, took a blood sample from Beldon. William Scott Sullivan (Sullivan), an emergency room technician, took a urine sample from Beldon. Following the chain of custody, Rothenbuhler and Sullivan delivered the samples to Yashanait Chore die (Choredie), a medical laboratory technician. Choredie, in turn, passed the samples to Elizabeth Rowell (Rowell), a support technician, for testing. The test results revealed that Beldon's blood alcohol content was 0.27.
On August 3, 2007, the State filed an Information charging Beldon with: Count I, operating a motor vehicle with at least 0.08 hundredths gram of alcohol but less than 0.15 hundredths grams of alcohol per 100 milliliters of blood or 210 milliliters of breath, a Class C misdemeanor, I.C. § 9-30-5-1; Count II, operating a motor vehicle while intoxicated in a manner that endangers a person, a Class A misdemeanor, I.C. § 9-30-5-2; Count III, operating a motor vehicle while intoxicated, a Class C misdemeanor, I.C. § 9-30-5-2; and Count IV, operating a motor vehicle with an alcohol concentration equivalent to at least fifteen-hundredths grams of alcohol per one hundred millimeters of his blood, a Class A misdemeanor, I.C. § 9-30-5-1. The State also filed four elevated charges based on Beldon's prior conviction for operating a vehicle while intoxicated, Counts IA, IIA, IIIA, and IVA. On March 11 through 12, 2008, the trial court conducted a trifurcated jury trial. During the first phase of the trial, the State presented several witnesses, including Sergeant Chanley, Officer Tice, Paramedic Flowers, Rothenbuhler, Choredie, and Rowell. Dr. Bache was unavailable to testify at trial because of her "extensive patient responsibilities and work schedule." (Appellant's Appendix p. 21). Over Beldon's objection, *899 the trial court allowed the State to present Dr. Bache's video deposition into evidence for the jury to watch. At the conclusion of the evidence, the trial court found Beldon guilty of Counts I, II, III and IV.
During the second phase of the trial, the State presented evidence that Beldon had a previous conviction for operating a motor vehicle while intoxicated, a Class D felony, in November 10, 2003. The jury found that Beldon had a previous conviction for purposes of the elevated charges, and found Beldon guilty of Counts IA, IIA, IIIA and IVA.
During the third phase of the trifurcated trial, the State argued that Beldon had two prior substance offense convictions, and was therefore eligible to be sentenced under the habitual substance offender statute. The State relied upon Beldon's conviction for operating a vehicle while intoxicated, a Class D felony, from February 1992, and his conviction for operating a motor vehicle while intoxicated, a Class D felony, from November 10, 2003. The jury found that Beldon was a habitual substance offender.
On April 10, 2008, the trial court merged Counts I, II, III, IV and Counts IA, IIA, IIIA, IVA for purposes of sentencing, and entered a single conviction for Count IIA, operating a motor vehicle while intoxicated in a manner that endangers a person with a prior conviction, a Class D felony, I.C. § 9-30-5-3. The trial court applied Beldon's criminal history, including four previous convictions for operating a vehicle while intoxicated, a conviction for child molesting, and a conviction for possession of a handgun by a convicted felon, as an aggravating factor to support a three-year sentence, the maximum sentence available for operating a vehicle while intoxicated, as a Class D felony. Additionally, the trial court enhanced Beldon's sentence by six years for being a habitual substance offender.
Beldon now appeals. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
I. Admission of Video-Taped Deposition
Beldon argues that the trial court abused its discretion when it permitted the State to present Dr. Bache's videotaped deposition in lieu of live testimony. Specifically, Beldon argues that Dr. Bache's deposition was hearsay, and thus, its admission violated his fundamental rights to confront witnesses under both the Sixth Amendment to the United States Constitution and Article 1, Section 13 of the Indiana Constitution.
We review a trial court's decision to admit or exclude evidence for an abuse of discretion. Payne v. State, 854 N.E.2d 7, 13 (Ind.Ct.App.2006), trans. denied. An abuse of discretion occurs if a trial court's decision is clearly against the logic and effect of the facts and circumstances before the court. Id. If a trial court abuses its discretion by admitting the challenged evidence, we will only reverse for that error if "the error is inconsistent with substantial justice" or if "a substantial right of the party is affected." Id. (quoting Iqbal v. State, 805 N.E.2d 401, 406 (Ind.Ct.App.2004)). Any error caused by the admission of evidence is harmless error for which we will not reverse a conviction if the erroneously admitted evidence was cumulative of other evidence appropriately admitted. Id.
Hearsay is an out-of-court statement offered to prove the truth of the matter asserted. Ind. Evid. R. 801(c). Generally, an absent witness' deposition testimony offered in court to prove the truth of the matter asserted constitutes *900 classic hearsay. Garner v. State, 777 N.E.2d 721, 724 (Ind.2002). However, possible exceptions to the hearsay rule exist under both Indiana Trial Rule 32 and Indiana Evidence Rule 804. Id. These rules allow the use of prior recorded testimony in lieu of live testimony when special circumstances exist. Id. The decision to invoke the rule allowing admission of a deposition is within the sound discretion of the trial court. Id. Nevertheless, the constitutional right of confrontation restricts the range of admissible hearsay by requiring (1) that the State either produce the declarant or demonstrate the unavailability of the declarant whose statement it wishes to use against the defendant and (2) that the statements bear sufficient indicia of reliability. Id. (quoting Jackson v. State, 735 N.E.2d 1146, 1150 (Ind.2000)). Depositions that comport with the principal purposes of cross-examination provide sufficient indicia of reliability. Id.
Beldon and his attorney both attended the deposition of Dr. Bache. During the depositions, Beldon's attorney extensively questioned Dr. Bache regarding her treatment of Beldon. Consequently, there was ample opportunity for Beldon to challenge Dr. Bache's truthfulness and memory during the deposition. We conclude that Dr. Bache's videotaped deposition demonstrated sufficient indicia of reliability.
Nevertheless, the Confrontation Clause of the Sixth Amendment to the United States Constitution provides that, "[i]n all criminal prosecutions, the accused shall enjoy a right ... to be confronted with the witnesses against him." This right applies to both federal and state prosecutions. Crawford v. Washington, 541 U.S. 36, 42, 124 S.Ct. 1354, 1359, 158 L.Ed.2d 177 (2004). The Confrontation Clause requires that testimonial statements of witnesses absent from a criminal trial shall only be admitted where the declarant is unavailable and the defendant has had a prior opportunity to cross-examine the witness. Id. at 54-55, 124 S.Ct. at 1365. A witness is unavailable for purposes of the Confrontation Clause requirement if the State has made a good faith effort to obtain the witness's presence at trial. Tiller v. State, 896 N.E.2d 537, 543 (Ind.Ct.App.2008), (citing Garner, 777 N.E.2d at 724) reh'g denied. The State is correct when it notes that Trial Rule 32 permits use of an absent witness' deposition testimony if the court finds that "upon application and notice, such that exceptional circumstances exist to make it desirable, in the interest of justice and with due regard to the importance of presenting the testimony of witnesses orally in open court, to allow the deposition to be used." T.R. 32(A)(3)(e). However, our supreme court has noted that Trial Rule 32 is not applicable to claims involving a violation of the defendant's Sixth Amendment right of confrontation. Garner, 777 N.E.2d at 724. As such, Trial Rule 32 plays no part in our analysis of the instant case. The issue here is not whether "exceptional circumstances" existed so as to justify admitting Dr. Bache's deposition into evidence at trial, but rather, the issue is whether the State made a good faith effort to obtain Dr. Bache's attendance at trial. "Even if there is only a remote possibility that an affirmative measure might produce the witness at trial, the good faith obligation may demand effectuation. Reasonableness is the test that limits the extent of alternatives the State must exhaust." Id. at 725 (citing Gillie v. State, 512 N.E.2d 145, 150 (Ind.1987)).
The record does not reflect that the State made a good faith effort to obtain Dr. Bache's attendance at trial. Granted, after Dr. Bache filed an affidavit stating that she would not be available to testify on the day of trial because of her work *901 schedule, the State took steps to preserve her testimony through a videotaped deposition. However, a busy work schedule is not sufficient to circumvent the constitutional right to confrontation. The State could have asked Dr. Bache to rearrange her work schedule, or ask another doctor to manage her patient responsibilities for the short duration of the trial. Likewise, the record indicates that the State failed to make any effort to attempt to secure Dr. Bache's attendance at trial by subpoena. Here, such alternatives presented more than a "remote possibility" that Dr. Bache could have testified in person. As such, we conclude that the State did not make a good faith effort to obtain Dr. Bache's attendance at trial. Furthermore, the trial court's determination that Dr. Bache was unavailable to testify was clearly against the logic and effect of the facts and circumstances before the court. For these reasons, we conclude that the trial court erred when it determined that Dr. Bache was unavailable to testify and that it abused its discretion when it admitted Dr. Bache's videotaped deposition in lieu of live testimony.
Nonetheless, if a trial court abused its discretion by admitting the challenged evidence, we will only reverse for that error, if "the error is inconsistent with substantial justice" or if "a substantial right of the party is affected." Payne, 854 N.E.2d at 13. Any error caused by the admission of evidence is harmless error for which we will not reverse a conviction if the erroneously admitted evidence was cumulative of other evidence appropriately admitted. Id.
Here, copies of Beldon's medical records and ambulance run report were admitted into evidence. Likewise, appropriate chain of custody forms and descriptions of the medical procedures used in testing Beldon's blood and urine were also admitted. The State also presented the testimony of Paramedic Flowers, who testified as to Beldon's physical condition following the car accident. Additionally, the State presented the testimony of those individuals directly involved in the testing of Beldon's blood and urine, including the phlebotomist who drew his blood, the emergency room technician who drew his urine, and the laboratory technicians who handled the samples in the laboratory. The State also presented the testimony of Dr. Prentiss Jones, a certified toxicologist, who used Beldon's test results to calculate his blood alcohol content. We conclude that Dr. Bache's videotaped deposition was merely cumulative of this other evidence. As such, we hold that although the trial court erred by admitting the videotaped deposition of Dr. Bache, the error was harmless beyond a reasonable doubt.
II. State's Request for Blood and Urine Test Results
Beldon also argues that the State did not present sufficient evidence that his blood and urine test results were requested from the hospital pursuant to Indiana Code § 9-30-6-6. He seems to contend that this alleged defect should have rendered his blood and urine samples inadmissible at his trial. However, Beldon did not make any objection to the admission of the medical records based on Indiana Code section 9-30-6-6 during the trial. As such, Beldon has waived this argument for purposes of appeal. See Walker v. State, 582 N.E.2d 877, 879 (Ind.Ct.App.1991) (citing Jethroe v. State, 262 Ind. 505, 319 N.E.2d 133, 137-38 (1974)).
Waiver notwithstanding, Beldon's argument fails. Indiana Code § 9-30-6-6 provides: "A physician or a person trained in obtaining bodily substance samples and acting under the direction of or under a protocol prepared by a physician who ... performs a chemical test on blood, urine, *902 or other bodily substance obtained from a person; shall deliver the sample or disclose the results of the test to a law enforcement officer who requests the sample or results as a part of a criminal investigation." This statute "applies when a sample has already been obtained. It allows a police officer to obtain the sample or the results from the analysis of a sample that has already been collected when the results are needed as part of a criminal investigation." State v. Eichhorst, 879 N.E.2d 1144, 1148 (Ind.Ct.App.2008), trans. denied.
In Eichhorst, we examined an argument by the Appellant that Indiana Code section 9-30-6-6 cannot circumvent the protections of records under HIPPA. Id. at 1150-1154. We explained how the procedures undertaken by the law enforcement officers and their authority under Indiana Code section 9-30-6-6 rendered the medical records admissible in that case, in spite of the protections under HIPPA.
Beldon has not made the effort to develop such an argument, but rather oversimplifies his contention by arguing that Indiana Code section 9-30-6-6 mandates certain procedural steps. He then states "the only evidence before the jury was that Officer Curtis had some recollection that the prosecutor's office subpoenaed the results. He did not request them himself and there was no evidence presented at trial that subpoenas were procured." (Appellant's Br. p. 10). However, in Indiana Code section 9-30-6-6, we find no requirement of subpoena or any requirement that if a subpoena is used to request the medical records the subpoena be admitted along with the medical records. Further, Indiana Code section 9-30-6-6 merely requires a "law enforcement officer" to request the medical records, and Beldon has made no contention that an employee of a prosecutor's office is not a "law enforcement officer" for purposes of that statute. Indeed, in Eichhorst, the records "were provided to the prosecutor pursuant to a subpoena." 879 N.E.2d at 1151.
Altogether, had Beldon raised a timely objection based upon noncompliance with the statute, the State may have been able to provide evidence that Beldon complains is lacking. But he did not; so, he has waived his contention of error. Be that as it may, Beldon has failed to direct us to any specific requirement mandated by Indiana Code section 9-30-6-6 that, if not met, would render the medical records inadmissible, and, therefore, his contention must fail.
III. Enhancement of Beldon's Sentence
Beldon argues that the trial court improperly used the same prior conviction against him in three different ways: (1) to elevate his operating while intoxicated charge from a misdemeanor to a Class D felony; (2) as a predicate conviction supporting the habitual substance offender finding; and (3) as an aggravating factor to support the imposition of the maximum sentence.
Beldon's conviction for operating a vehicle while intoxicated in a manner that endangers a person was a Class D felony, instead of a Class A misdemeanor, based upon his prior conviction for operating a vehicle while intoxicated that he received on November 10, 2003. (Appellant's App. p. 447). Additionally, Beldon was found to be a habitual substance offender pursuant to Indiana Code section 35-50-2-10 based in part on that same prior conviction. (Appellant's App. p. 448). In addition, the trial court considered Beldon's criminal history as an aggravating factor which supported the imposition of the maximum sentence for his conviction. Included in his criminal history, of course, was his conviction from November 10, 2003.
*903 In Pedraza v. State, 887 N.E.2d 77, 80-81 (Ind.2008) our supreme court held that, under our current advisory sentencing scheme, the use of a prior conviction to support a habitual substance offender finding or to elevate a criminal charge does not preclude the trial court from considering that same conviction as an aggravating factor. As such the trial court did not abuse its discretion by considering Beldon's criminal history, which included his conviction on November 10, 2003, as an aggravating factor.
However, in Mills v. State, 868 N.E.2d 446, 452 (Ind.2007), our supreme court expressly stated that it was improper for a trial court to elevate a criminal charge based upon a prior conviction, and then enhance the sentence for that same charge by way of a habitual offender finding based upon the same prior conviction. By using Beldon's prior conviction to support his conviction as a Class D felony and to enhance the sentence based on a habitual substance offender finding, we conclude that the trial court made such an improper double enhancement.
In Sweatt v. State, 887 N.E.2d 81 (Ind. 2008), a double enhancement case decided the same day as Pedraza, our supreme court provided guidance as to what remedy should be imposed on appeal when we conclude there has been an improper double enhancement. Specifically, our supreme court remanded to the trial court to use its discretion to remedy the sentencing defect. Id. at 85. Here, Beldon's sentence could be fixed by entering a conviction for operating a vehicle while intoxicated as a Class A misdemeanor (which would not rely upon a prior conviction), and then adjusting the habitual substance offender enhancement of his sentence downward in accordance with Indiana Code section 35-50-2-10, or by entering his conviction as a Class D felony but removing the habitual substance offender enhancement altogether. Therefore, we will remand so that the trial court can use its discretion to remedy the sentencing defect.
CONCLUSION
Based on the foregoing, we conclude that although the trial court erred by admitting the videotaped deposition of Dr. Bache, the deposition testimony was merely cumulative of other properly admitted evidence, and the error was harmless beyond a reasonable doubt. We also conclude that Beldon's failure to raise any argument at trial concerning the State's failure to provide evidence of requests for blood and urine tests constituted waiver of that issue for purposes of his appeal. Finally, we conclude that the trial court erred by elevating his charge for operating a vehicle while intoxicated to a Class D felony based upon a prior conviction and enhancing his sentence based, in part, upon a habitual substance offender finding relying upon the same prior conviction. Therefore, we remand so that the trial court may remedy the sentencing defect in accordance with this opinion.
Affirmed in part, reversed in part, and remanded with instructions.
DARDEN, J., and VAIDIK, J., concur.
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 97-50338
Summary Calendar
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
CRAIG CURRY,
Defendant-Appellant.
- - - - - - - - - -
Appeal from the United States District Court
for the Western District of Texas
USDC No. A-96-CR-169-ALL
- - - - - - - - - -
January 5, 1998
Before JONES, SMITH and STEWART, Circuit Judges.
PER CURIAM:*
Craig Curry appeals from his conviction and sentence for
making a false statement to a financial institution and for
interstate transportation of stolen money. He argues solely that
the district court erred by failing to reduce his offense level
for acceptance of responsibility based on the fact that he
voluntarily paid full restitution prior to his adjudication of
guilt. We have reviewed the record and the briefs of the
parties, and we hold that the district court did not clearly err
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
No. 97-50338
-2-
by refusing to award Curry a reduction in his offense level based
on acceptance of responsibility. See United States v. Watson,
988 F.2d 544, 551 (5th Cir. 1993).
AFFIRMED.
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