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774 F.2d 1169
Sayre, Matter of,
85-1837
United States Court of Appeals,Eighth Circuit.
7/12/85
1
W.D.Mo.
DENIED
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 17-6968
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
HASSAN GENELL HINES,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern District of North Carolina, at
Raleigh. Terrence W. Boyle, District Judge. (5:07-cr-00323-BO-1)
Submitted: September 28, 2017 Decided: October 3, 2017
Before WILKINSON, MOTZ, and KING, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Hassan Genell Hines, Appellant Pro Se. Matthew Fesak, Stephen Aubry West, Assistant
United States Attorneys, Michael Gordon James, OFFICE OF THE UNITED STATES
ATTORNEY, Raleigh, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Hassan Genell Hines appeals the district court’s order denying his 18 U.S.C.
§ 3582(c)(2) (2012) motion as moot. On appeal, we confine our review to the issues
raised in the Appellant’s brief. See 4th Cir. R. 34(b). Because Hines’s informal brief
does not challenge the basis for the district court’s disposition, Hines has forfeited
appellate review of the court’s order. See Williams v. Giant Food Inc., 370 F.3d 423, 430
n.4 (4th Cir. 2004). Accordingly, we affirm the district court’s judgment. 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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250 B.R. 394 (2000)
In re Carlos Alfredo VIGIL, Debtor.
Cheryl Montoya, Plaintiff,
v.
Carlos Vigil, Defendant.
Bankruptcy No. 7-99-12204 MS. Adversary No. 99-1153.
United States Bankruptcy Court, D. New Mexico.
April 14, 2000.
*395 Douglas Booth, Attorney at Law, Santa Fe, NM, for debtor.
Shay E. Meagle, Attorney at Law, Albuquerque, NM, for Cheryl Montya.
MEMORANDUM
MARK B. McFEELEY, Chief Judge.
THIS MATTER came before the Court on the Plaintiff's Motion for Judgment on the Pleadings, or Alternatively, for Summary Judgment ("Motion for Summary Judgment") on her Complaint to Determine Dischargeability, and Debtor's Response to Plaintiff's Motion for Judgment on the Pleadings and Motion for Summary Judgment and Debtor/Defendant's Cross-Motion for Summary Judgment ("Cross-Motion for Summary Judgment"). Previously, the Court entered an Order in the main bankruptcy proceeding determining that wage garnishment of the Debtor's post-petition earnings fell within the exception to the automatic stay provided in 11 U.S.C. § 362(b)(2)(B). Plaintiff asserts that the Court's determination of the stay motion in the main bankruptcy proceeding is res judicata as to the issue of the dischargeability of debt in this adversary proceeding.
At a preliminary hearing on the Motion for Summary Judgment and the Cross-Motion for Summary Judgment, the Court directed the parties to submit letter memoranda on the standard the Court should apply when determining stay motions. After reviewing the memoranda submitted by counsel, and being otherwise fully informed, the Court finds that its preliminary determination in the main bankruptcy proceeding of the (in)applicability of the automatic stay to the wage garnishment is not entitled to preclusive effect on the issue of dischargeability in this adversary proceeding.
FACTS AND DISCUSSION
Normally, the issue of dischargeability of debt first arises in the context of an adversary proceeding to determine dischargeability of certain debt under 11 U.S.C. § 523. In this case, however, the dischargeability issue entered through the back door via stay motion proceedings brought in the main case by the Debtor's employer who had been served with a writ of garnishment. Section 362(b)(2)(B) provides that a proceeding against the debtor for "the collection of alimony, maintenance, or support from property that is not property of the estate" is excepted from application of the automatic stay. 11 U.S.C. § 362(b)(2)(B). Both parties treated the stay motion as an opportunity to argue whether the underlying debt which was the subject of the wage garnishment proceedings was dischargeable.
Plaintiff contends that res judicata principles bar relitigation of the issue of dischargeability, arguing that the Court, by determining that the collection of the debt at issue was excepted from the automatic stay under 11 U.S.C. § 362(b)(2)(B), *396 necessarily and finally adjudicated whether the debt was in the nature of support.[1]Res judicata, also known as claim preclusion, requires the presence of the following elements: 1) a final judgment on the merits in a prior action; 2) same parties in both suits (or party is in privity with a party to the prior suit); and 3) same cause of action in both suits. See United States v. Kunzman, 125 F.3d 1363, 1366 (10th Cir.1997). Similar to res judicata, but not synonymous, issue preclusion, or collateral estoppel, requires that the issue in the initial and subsequent action be identical, and that the issue be essential to the determination of the final judgment. See Sil-Flo, Inc. v. SFHC, Inc., 917 F.2d 1507, 1520 (10th Cir.1990).
It is true that the Court previously examined whether the debt at issue was "in the nature of support" as part of the stay motion. However, res judicata principles do not bar litigation of the dischargeability of debt in the adversary proceeding. Stay motions, by their very nature, are fundamentally different from adversary proceedings. See Grella v. Salem Five Cent. Sav. Bank, 42 F.3d 26, 33 (1st Cir.1994) (noting the separate procedures for stay motions which are "contested matters" and adversary proceedings governed by Fed.R.Bankr.P. 7001). Stay motions must be heard quickly. See 11 U.S.C. § 362(e); Grella, 42 F.3d at 31; In re Quality Electronics Centers, Inc., 57 B.R. 288, 290 (Bankr.D.N.M.1986) (court's inquiry with regard to stay motions should be limited). The Court must make an initial determination of whether the stay applies. See Estate Const. Co. v. Miller & Smith Holding Co., Inc., 14 F.3d 213, 219 (4th Cir.1994) (stay hearings are summary in nature and do not have preclusive effect on subsequent litigation of counterclaims a party fails to raise at a stay hearing); In re Vitreous Steel Products Co., 911 F.2d 1223, 1234 (7th Cir. 1990) (purpose of motion to lift stay is limited to whether creditor holds a colorable claim of lien; it does not preclude litigation of preferential or fraudulent transfer issues in subsequent adversary proceeding). The inquiry is summary and preliminary; it does not involve a full adjudication of all issues on the merits. Grella, 42 F.3d at 33; Cheshire County Sav. Bank v. Pappas (In re Pappas), 55 B.R. 658, 660-661 (Bankr.D.Mass.1985) (consideration of counter claims and defenses as part of a motion for relief from stay is different from adjudication of the merits) (citations omitted).
In this case, the applicable stay provision required a two-part inquiry. See 11 U.S.C. § 362(b)(2)(B). In order to be excepted from the stay, the debt must be in the nature of support, and the property from which the movant is attempting to collect must not be property of the estate. 11 U.S.C. § 362(b)(2)(B). The Court's determination of the second part of the inquiry is not at issue here. Because this is a Chapter 7 proceeding, Debtor's post-petition wages are not property of the Debtor's estate.[2] What is at issue is the first part of the inquiry.
The Court reached its decision regarding the first part of the inquiry based primarily on the language of the settlement agreement. For stay purposes, the Court had to make an initial and preliminary determination of whether the debt at issue fell within the exception to the automatic stay based solely on the limited evidence before it. Whether the debt at issue is "in the nature of support" for dischargeability *397 purposes requires an examination of several factors, including the relative financial position of the parties at the time of the marital settlement agreement. Sampson v. Sampson (In re Sampson), 997 F.2d 717, 725 (10th Cir.1993); Dewey v. Dewey (In re Dewey), 223 B.R. 559, 565 (10th Cir. BAP 1998). No evidence or testimony was presented on this issue in connection with the stay motion. The briefs contained only conflicting allegations concerning the relative financial position of the parties. Thus an important, if not crucial, factor relevant to a dischargeability determination under 11 U.S.C. § 523(a)(5) was not, indeed could not, have been considered by the Court in determining the applicability of the automatic stay.
CONCLUSION
Section 523 and § 362 serve fundamentally different purposes. The scope of a Court's review in the context of a stay motion is necessarily preliminary. Based on the limited information presented to the Court, the Court must determine whether the automatic stay applies. It is not a forum to litigate fully every issue relevant to an adversary proceeding contesting the dischargeability of certain debt. Such issues will be resolved in the adversary proceeding. Plaintiff's Motion for Judgment on the Pleadings, or Alternatively for Summary Judgment should be denied. For the same reasons, Debtor/Defendant's Cross-Motion for Summary Judgment should also be denied. An appropriate order will be entered.
This memorandum constitutes the Court's findings of fact and conclusions of law in accordance with Rule 7052 of the Federal Rules of Bankruptcy Procedure.
NOTES
[1] Debts which are in fact "in the nature of support" (as opposed to a property settlement), are non-dischargeable under 11 U.S.C. § 523(a)(5).
[2] As a general matter, the automatic stay does not apply to property which is not property of the estate, even with regard to collection of debt that does not arise out of marital dissolution proceedings. See 3 Collier on Bankruptcy ¶ 362.03[5] (Lawrence P. King, ed., 15th ed.1998) (§ 363(a)(3) inapplicable to property which is not property of the estate and not in possession of the debtor at the time the bankruptcy petition is filed).
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835 F.2d 880
Unpublished DispositionNOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.UNITED STATES of America, Plaintiff-Appellee,v.Sandor A. KERTESZ, Defendant-Appellant.
No. 87-3429.
United States Court of Appeals, Sixth Circuit.
Dec. 1, 1987.
Before KRUPANSKY and RYAN, Circuit Judges, and CONTIE, Senior Circuit Judge.
PER CURIAM.
1
Appellant, Sandor Kertesz, appeals his conviction of disorderly conduct in violation of 41 C.F.R. Sec. 101-20.305. Appellant argues that the provisions of section 305 should be read conjunctively, that if they are not read conjunctively the term nuisance as used in the regulation is unconstitutionally vague, and that there was insufficient evidence to convict. We do not agree, and for the following reasons we affirm the conviction.
I.
2
Kertesz was convicted of violating section 3051 in a bench trial before a United States Magistrate. At the trial, Linda Daniels, a woman who works for the IRS on the fourth floor of the federal building in Dayton, testified that after attending to personal business on the sixth floor she entered the elevator and was accosted by the appellant who said "you nice girl give me a kiss." She testified that he proceeded to grab her neck and pull her towards him. She kicked and hit at him, and when the elevator door opened on the fifth floor she ran off of the elevator and took the stairs back to her office on the fourth floor. A security officer escorted her to the nurse's station. On the way to the station she saw the appellant and identified him to the officer as her assailant. The appellant was detained, arrested, and charged. The officers that were involved in the investigation and arrest also testified at the trial.
3
At the close of the government's case, appellant moved for a verdict of acquittal under Rule 29 of the Federal Rules of Criminal Procedure, arguing that no evidence was presented to prove that his conduct disrupted, obstructed or interfered with any activities at the property. The magistrate, in denying the motion, ruled that the appellant's conduct "qualified as other conduct which creates a nuisance."
4
Kertesz took the stand and denied that he made the statement or grabbed Daniels. He admitted that he was on the elevator with a woman and testified that he may have backed into her. The magistrate found him guilty and after the presentencing investigation was waived, sentenced him to thirty days, and a fifty dollar fine. The fine and twenty-five days were suspended on the condition that the defendant commit no further offense for a period of two years, and that he apologize to Daniels. Appellant then filed this timely appeal.
5
Appellant makes three arguments in this appeal. First, he argues that section 305 should be read in the conjunctive and that the district court erred in not requiring the prosecution to prove two elements of section 305. Secondly, he argues in the alternative that if the regulation is read in the disjunctive it is unconstitutionally vague. Finally, he argues that there was insufficient evidence to convict.
II.
6
The appellant argues that section 305 should be read in the conjunctive to require that the government prove two elements:
7
First, there must be some wrongful conduct on the part of the Defendant. This conduct can consist of unwarranted loitering, disorderly conduct, conduct which creates loud or unusual noise, or conduct which creates a nuisance. Second, this wrongful conduct must obstruct the usual use of the property, impede or disrupt the performance of official duties by government employees, or prevent the public from obtaining the services provided on the property.
8
Appellant's conjunctive reading of the regulation cannot be reconciled with a plain reading of section 305. This is demonstrated by breaking the regulation up into its grammatical parts.
9
Any loitering, disorderly conduct, or other conduct on property which creates loud or unusual noise or a nuisance;
10
which unreasonably obstructs the usual use of entrances, foyers, lobbies, corridors, offices, elevators, stairways, or parking lots;
11
which otherwise impedes or disrupts the performance of official duties by government employees;
12
or which prevents the general public from obtaining the administrative services provided on the property in a timely manner,
13
is prohibited.
14
The regulation's use of the word "or" demonstrates that the government only has to prove that the defendant's conduct fits one of the categories listed in section 305. This regulation was given this reading by the First Circuit in United States v. Bader, 698 F.2d 553 (1st Cir.1983). "Section 305 is phrased in the alternative. Conduct violates the regulation if it 'creates ... a nuisance' or if it 'unreasonably obstructs the use of entrances,' or if it 'otherwise impedes or disrupts the performance of official duties' or if it 'prevents the general public from obtaining services.' " Bader, 698 F.2d at 555 (emphasis in original). Since the regulation is written in the disjunctive, the government need only prove that conduct fits one of its categories.
15
Appellant argues in the alternative, that if the regulation is read to allow a conviction for conduct which creates a nuisance, it is unconstitutionally vague. In denying his motion for acquittal after the government's case, the magistrate found that appellant's conduct was conduct on property which creates a nuisance, thereby finding him guilty under the first part of the regulation.
16
The Supreme Court has set forth the values which are offended by enactments which are not clearly defined.
17
First, because we assume that man is free to steer between lawful and unlawful conduct, we insist that laws give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly. Vague laws may trap the innocent by not providing fair warning. Second, if arbitrary and discriminatory enforcement is to be prevented, laws must provide explicit standards for those who apply them. A vague law impermissibly delegates basic policy matters to policemen, judges, and juries for resolution on an ad hoc and subjective basis, with the attendant dangers of arbitrary and discriminatory application. Third, but related, where a vague statute abut[s] upon sensitive areas of basic First Amendment freedoms, it operates to inhibit the exercise of [those] freedoms. Uncertain meanings inevitably lead citizens to steer far wider of the unlawful zone ... than if the boundaries of the forbidden areas were clearly marked.
18
Grayned v. City of Rockford, 408 U.S. 104, 108, 109 (1972) (footnotes omitted). The appellant argues that the word nuisance is vague and that because the proscribed conduct is defined by the word nuisance the statute is vague. We do not agree.
19
While courts have yet to address this specific issue, section 305 has withstood constitutional attack. See United States v. Sachs, 679 F.2d 1015, 1017 (1st Cir.1982) (law that prohibits unreasonable obstruction of elevators is not unconstitutionally vague in that it plainly gives notice not to sit on the floor, refuse to move and swing one's arms about); United States v. Occhino, 629 F.2d 561, 563 (8th Cir.1980) (section 305 as a reasonable time, place and manner regulation may be applied to speech irrespective of content), cert. denied, 450 U.S. 968 (1981); United States v. Parisi, 564 F.Supp. 855, 861 (E.D.Ill.1981) (section 305 is not facially vague or overbroad).
20
While courts have a duty to interpret legislation in a manner not inconsistent with the demands of the constitution, they are also to avoid a holding of unconstitutionality if a fair construction of the legislation will so allow. United States v. Cassiagnol, 420 F.2d 868 (4th Cir.), cert. denied, 397 U.S. 1044 (1970); Screws v. United States, 325 U.S. 91, 98 (1945).
21
[I]f the general class of offenses to which the statute is directed is plainly within its terms, the statute will not be struck down as vague, even though marginal cases could be put where doubts might arise ... and if this general class of offenses can be made constitutionally definite by a reasonable construction of the statute, this Court is under a duty to give the statute that construction.
22
United States v. Harriss, 347 U.S. 612, 618 (1954) (citation omitted).
23
The relevant portion of the regulation provides that, "conduct on property which creates ... a nuisance ... is prohibited." 41 C.F.R. Sec. 101-20.305 (emphasis added). The fact that this regulation, entitled disturbances, applies only on government property gives rise to the natural construction of the term nuisance as prohibiting conduct on federal property which disturbs the use for which the property was intended. See Parisi, 564 F.Supp. at 861 ("the government ... has a legitimate interest in preserving 'property' under its control for the use to which it is lawfully dedicated." Cf. Cassiagnol, 420 F.2d at 873. Appellant's conduct fits under this interpretation of the term nuisance, as his action clearly disturbed Daniel's use of the elevator. Daniels testified that on account of his conduct she fled the elevator on the fifth floor and took the stairs to her office on the fourth floor.2
24
Finally, appellant argues that he was entitled to a directed verdict of acquittal due to insufficient evidence to convict. We disagree. In reviewing such claims, the court must consider the evidence in the light most favorable to the government. Glasser v. United States, 315 U.S. 60, 80 (1942); United States v. Ebens, 800 F.2d 1422, 1427 (6th Cir.1986).
25
Daniels testified to the following facts at trial. She entered the elevator on the sixth floor of the Federal Building, and while on the elevator, the appellant grabbed her by the neck and said "you nice girl give me a kiss." She fled the elevator on the fifth floor and took the stairs to the fourth. She reported the incident to the security personnel and later identified the appellant as he was leaving the building. She was also able to identify him at trial.
26
The appellant testified and admitted being in the building and on the elevator with a woman. He denied grabbing her but admitted that he might have backed into her. The only evidence other than appellant's testimony which contradicts any part of Daniel's story was the testimony of the security guard concerning the time the incident took place. Although the testimony was not consistent as to the exact time of the incident, the differences in time were not significant. We find that there was sufficient evidence to support the appellant's conviction.
27
Accordingly, we AFFIRM appellant's conviction.
1
41 C.F.R. Sec. 101-20.305 reads as follows:
Sec. 101-20.305 Disturbances.
Any unwarranted loitering, disorderly conduct, or other conduct on property which creates loud or unusual noise or a nuisance; which unreasonably obstructs the usual use of entrances, foyers, lobbies, corridors, offices, elevators, stairways, or parking lots; which otherwise impedes or disrupts the performance of official duties by Government employees; or which prevents the general public from obtaining the administrative services provided on the property in a timely manner, is prohibited.
2
In closing argument, appellant's attorney conceded that Daniels was impeded from continuing from the sixth floor to the fourth floor
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IN THE SUPREME COURT OF TEXAS
════════════
No.
02-0244
════════════
In re L.M.I. and J.A.I., minor
children
════════════════════════════════════════════════════
On Petition
for Review from the
Court of
Appeals for the Fourteenth District of Texas
════════════════════════════════════════════════════
Justice Hecht, joined by Justice Jefferson, and joined by Justice Owen on Parts I, IIA, IIIA, and
IIIB,
dissenting. “[T]his
case,” laments the Court, “has taken its excruciatingly slow course through our
judicial system.”
Lamentably, a little more than a third of the excruciation has been in this
Court. And just whose fault is that? Whose fault is it that this
Court has taken 524 days to decide this case? Why, the parties’, of course,
says the Court. Who else could be to blame? Not us. We’ve tried our very best,
but “appellate review has been greatly hampered by the shifting, indistinct
focus of their complaints”.
Well, well. The facts here are a bit of a problem. We decided six parental
rights termination cases last Term,
and took, respectively, 199 days,
361 days,
387 days,
540 days,
584 days,
and 646 days
to issue an opinion in each. In none of the three cases that the Court took a
week, eight weeks, and seventeen weeks longer to decide than it took to decide
this case was “appellate review . . . greatly hampered” by poor
briefing.
“[W]e
still disagree about what the complaints are and whether they were preserved”,
the Court moans.
And here again, the fault for our disagreement must in all fairness be laid
squarely at the parties’ feet. If only the briefing had been better, the Court’s
decision would have been prompt and unanimous. But before taking the Court’s
word for this, the reader may wish to know that the parties have filed about 88
pages of briefs and motions in this Court, the reporter’s record of the one-day
hearing in the trial court is 328 pages, and the clerk’s record is 117 pages.
All told, the record and briefs would not take any one of our law clerks more
than half a day to master. Truth is, the Court knew what the issues were in this
case from the time it was filed. What the Court has disagreed about for more
than a year is not what the issues are, but whether these parents’ rights in
their children can be terminated some technical way without having to address
their arguments.
Then
in what I believe must rank as among the most bizarre statements to be found in
an opinion from this Court, the Court says that what it is really trying to do
in this case is: discourage foreign adoptions. This, the Court warns, is
a mounting plague on our society, and for proof one need look no further than a
story in last month’s Miami Herald. Thank goodness this case, poorly
briefed and all, came along when it did, and that we delayed our decision until
the Miami Herald’s exposé. If we hadn’t turned these parents away for
poor briefing, no telling where adoptive parents would have had to go for
“simpler and less expensive”
procedures in the future.
The
Court says that this case is about appellate procedure. You can’t argue on
appeal what you don’t raise in the trial court. Pure and simple. Happens all the
time. Too bad, really. Especially when children are at stake. The Court is
certainly not unsympathetic to parents who claim that they have been unjustly
deprived of their children. Absolutely not. Just can’t be helped, that’s
all.
With
respect, and all nonsense aside, this case is not about appellate procedure or
delay. It is certainly not about discouraging foreign adoptions. It is about the
process for taking children from their parents, and it is about the Texas legal
system’s treatment of people who do not speak English.
Ricardo
Duenas is Hispanic. His native tongue is Spanish. He was at work in a hotel
kitchen one day when he was called and told to go immediately to the office of a
lawyer he had never met, who as it turned out had been hired by a couple who
wanted to adopt Ricardo’s five-month-old twin sons. There he was handed a
seven-page, single-spaced affidavit, written in English, and told to sign it. He
complied, although it took him two tries to get it right. He was told to initial
every line of part of the affidavit, and he did. He initialed this sentence,
written in boldface, capital letters:
I REALIZE THAT I SHOULD SIGN THIS AFFIDAVIT OF
RELINQUISHMENT IF I AM NOT THINKING CLEARLY BECAUSE OF ILLNESS, MEDICATION, MY
EMOTIONAL STATE, OR ANY OTHER REASON.
Apparently a “not” was left
out. The affidavit was not read to him in English or Spanish. Parts of it were
paraphrased to him briefly in Spanish. He understood it had something to do with
losing his sons.
Ricardo
contends that he cannot be said to have voluntarily relinquished all rights to
his twin sons by signing an affidavit written in English that he could not
understand and that was not translated for him. This was his position in the
trial court and the focus of the evidence at the one-day hearing (with an
interpreter present, appointed by the court); it was his position in the court
of appeals, was thoroughly briefed by all parties there, and was decided by that
court on its merits;
it is still his position here. His lawyer on appeal has called the termination
of his parental rights a violation of constitutional due process; his lawyer in
the trial court did not use those exact words. Based on this relatively minor
discrepancy and nothing else, the Court refuses to consider Ricardo’s position.
His trial lawyer could have been more specific, even though she had only two
days to prepare, and the appellate lawyer could have elaborated in briefs and
argument. But still there cannot be the slightest doubt what Ricardo’s complaint
is: he lost his five-month-old sons because he does not speak English.
Nor
can there be any doubt what his wife Luz Maria Sylvestre Inocencio’s complaint
is. She contends that in signing her affidavit of relinquishment she was unduly
influenced by the kindness of some of the participants in the process and
defrauded by promises that her sons’ adoptive parents would send her pictures
and update her on their progress. This was her position in the trial court; it
was her argument in the court of appeals, was briefed by the parties, and was
decided by that court;
it is still her argument here. For the same technical reasons, the Court
refuses to consider whether Maria is right. Again, her appointed guardian ad
litem at trial and her appellate counsel (who also represents Ricardo) might
have been clearer, but there is still no mistaking Maria’s claim.
To
miss the simple arguments these parents make, one would seemingly have to
understand as little English as Ricardo does. Yet the Court takes an extremely
restrictive view of Ricardo and Maria’s brief, reading it to raise only narrow
issues that were not ruled on by the trial court. The termination of parental
rights, fundamental and constitutional in their magnitude, is thus held to turn
on trifling points regarding the construction of appellate briefs. It has long
been “our practice to liberally construe [briefs] in order to obtain a just,
fair and equitable adjudication of the rights of the litigants,”
and our rules mandate this practice.
The Court does not follow the practice in this case, where the importance of
the rights asserted make it all the more essential. It is fair to say that
Ricardo did not make a due process argument to the trial court, but it is not
fair to say that his brief, liberally read, makes no broader argument, or that a
“just, fair and equitable adjudication” of his parental rights can be made if
the core complaint he has made since he was sued is ignored. The same is true
for Maria.
To
order that children be taken from their parents and given to others is a grave
responsibility. To do it solely for technical reasons of appellate procedure,
without regard for the parents’ arguments, is hard to justify. But to terminate
parental rights as the Court does today, based solely on a rigid reading of a
brief, is in my view indefensible. I would decide the case on the merits, not on
procedure, and would reverse and remand to the trial court for further
proceedings.
Accordingly,
I dissent.
I
The
Court’s summary of the record is as crabbed as its reading of petitioners’
brief. From the Court’s opinion, it is impossible even to begin to appreciate
the context in which the important issues in this case arise. According to the
record, here is what happened. Some events are disputed, as I will indicate, but
many are not.
A
In
April 1999, Luz Maria Sylvestre Inocencio, age 15, gave birth to twin boys. She
contends that Ricardo Duenas, age 25, was their father, and he admits he was.
Ricardo and Maria were not married until later in the year. Detective Brian
Goetschius had investigated a report that a minor — Maria, as it turned out —
had been dancing at a strip joint,
and when he learned she was pregnant, he and his wife, Dawnell, took a personal
interest in her. Maria’s older sister, Esther Gonzalez, age 33, a college
graduate, deplored Maria’s lifestyle and decided that Maria could not care for
her sons properly. Maria and the boys were staying with Esther and Maria’s
mother, Guillerma Pruitt, and on September 2, 1999, Guillerma petitioned to be
named their sole managing conservator, apparently with Maria’s agreement.
Nevertheless, on September 21, Esther called Detective Goetschius to ask for
help in placing the twins for adoption. A day or so later, the Goetschiuses told
Esther that Dawnell’s sister and brother-in-law, Monica and Miles Montegut,
would be willing to adopt Maria’s boys.
On
September 24, Esther went to Guillerma’s home and announced that she had “great
news”: she had arranged for Maria to give her sons up for adoption that very
day. This was certainly news to Maria, since this was the first Esther had
mentioned it, but it was not “great” news, and Maria furiously refused to give
up her sons. Maria says that she and Esther fought. Esther says Maria was
emotional at first but soon calmed down and saw that adoption was best for her
boys. Maria and Guillerma say that Esther threatened Maria with juvenile
proceedings for having danced nude as a minor if she did not cooperate.
Guillerma says that Esther threatened her with truancy proceedings for not
having kept Maria in school. Guillerma says that she and Maria feared what would
happen to them if they resisted the adoption, and that she and Maria were like
“caged animals”, “like sheep to the slaughter”. Esther maintains that she
threatened no one and that calm reason simply prevailed over all. In any event,
Maria agreed to go to a lawyer’s office in Texas City within the hour and
surrender her children. Esther told her that it would be necessary for Ricardo
to agree as well, so on the way they stopped at a gasoline station, and Maria
telephoned Ricardo at work in Galveston and demanded that he join her. She
angrily told him that losing the twins was all his fault.
Ricardo,
a native of Honduras with temporary residence in the United States, was working
as a cook at a hotel restaurant. He speaks and understands a little English, but
there is no evidence that he can read or write English; Spanish is his language.
He first heard of the proposed adoption when Maria called him at work on
September 24 and demanded that he leave immediately and accompany her to a
lawyer’s office. He says, and Maria and Guillerma agree, that he was told that
if he failed to cooperate he would be prosecuted for statutory rape.
Esther and others present at the lawyer’s office deny that any threats were
ever made. Ricardo rode with Maria to the lawyer’s office, where they met
Guillerma and Maria’s brother, Solomon.
The
lawyer, Mark Ciavaglia, had been retained by Miles Montegut earlier in the week.
Ciavaglia had been in court the morning of September 24, and upon his return to
his office he was met with messages from Miles and Esther insisting that
adoption papers be signed that day. He drew up the papers while Ricardo, Maria,
Esther, Solomon, Guillerma, and the babies waited in his office.
Ciavaglia
prepared an affidavit entitled “Father’s Affidavit of Relinquishment of Parental
Rights” for Ricardo to sign. How much Ricardo understood of the seven-page,
single-spaced affidavit is vigorously disputed. The affidavit was not read to
Ricardo in English or Spanish, but Ciavaglia paraphrased parts of it briefly and
asked Guillerma to translate for Ricardo. Ciavaglia’s paralegal, who understood
some Spanish but could not speak it, testified that Guillerma told Ricardo that
by signing the affidavit he was giving up his rights to his children but did not
tell him he could not change his mind later. Guillerma testified that all she
told Ricardo was to sign the affidavit. There is no evidence that Ricardo was
able to read the affidavit or that he did read it. He signed it and initialed
several sentences, one of which stated, apparently incorrectly (or perhaps
not):
I
realize that I should sign this affidavit of relinquishment if I am not
thinking clearly because of illness, medication, my emotional state, or any
other reason.
(Emphasis added.)
Ciavaglia
then attempted to obtain Maria’s signature on an identical affidavit. At first
she refused, but Ciavaglia offered to have the prospective adoptive parents
agree that they would provide her periodic reports and pictures of the boys and
would allow her to give them gifts. At that point Maria relented, and when
Ciavaglia had discussed the matter with his clients, the Monteguts, and reduced
the promise to writing, Maria signed the affidavit.
B
On
October 1, a week after the affidavits were signed, the Monteguts sued Ricardo
and Maria to terminate their parental rights. The trial court issued an ex
parte order temporarily giving the Monteguts custody of the boys. On October
22, the court appointed a guardian ad litem for Maria because she was a minor.
The record does not reflect that the guardian filed an answer for Maria.
On
November 15, trial was set for a week later, on November 22. On November 17,
Ricardo filed an original answer in which he acknowledged paternity. Attached to
the answer was his verified “Revocation of Affidavit”, in which he stated: “The
Affidavit of Relinquishment was not translated for me.” Ricardo’s attorney
reiterated this statement in a motion for continuance filed the day the case was
called for trial. At a hearing on the motion the same day, counsel told the
trial court:
My basic
meritorious defense aside from [having only six days to prepare for trial] is
the fact that my client speaks no English, was not translated the affidavit of
relinquishment. He was basically picked up at his place of employment [in
Galveston], taken to a law office in Texas City, and told if you don’t sign this
document, the detective will take you to prison and that was all that was told
to him. They did not translate the affidavit word for word or line for line. The
attorney involved in that case was Mark Ciavaglia of Texas City. The translation
was — of that comment was done by Esther Gonzalez who’s the older sister of
Maria Inocencio, the minor mother in this case, and the minor mother also said
the detective is outside and they’re going to take you to jail if you don’t sign
this document. But it was never translated to him as to what the document meant
as far as relinquishing his parental rights. Due to other people at work telling
him that that was probably not constitutional and not right, they looked around
for an attorney and he finally did hire me.
Counsel for the Monteguts
urged the trial court to try the case immediately because the affidavits of
relinquishment would expire the next day, the sixtieth day after they were
signed.
The court denied the motion for continuance and immediately proceeded to
trial.
Ricardo’s
counsel requested the presence of a court interpreter to translate the
proceedings into Spanish, and the court attempted to locate one. When a suitable
interpreter could not be found on such short notice, the court recessed the
trial until the morning of November 23.
A
principal focus of the brief trial was on whether Ricardo could understand
English and what he knew of the affidavit he signed. There was also testimony
about the promise the Monteguts made to persuade Maria to sign her affidavit. At
the close of the evidence, the court ruled from the bench that Maria and Ricardo
had signed their affidavits voluntarily and without duress. The court
immediately heard evidence on whether termination of the parents’ relationship
was in the children’s best interest, and after a few minutes of testimony from
Miles Montegut, concluded that it was. The court then rendered judgment orally
terminating Maria’s and Ricardo’s relationship with their sons. The judgment
signed December 16 recited:
Luz
Maria Inocencio presented issues of fraud, duress, and overreaching to the Court
to deny that her Mother’s Affidavit of Relinquishment of Parental Rights was
signed voluntarily.
Ricardo
Duenas present [sic] issues of fraud, duress, and overreaching to the Court to
deny that his Father’s Affidavit of Relinquishment of Parental Rights was signed
voluntarily.
The
Court found after hearing the evidence that Luz Maria Inocencio executed her
Mother’s Affidavit of Relinquishment of Parental Rights voluntarily and was not
influenced by fraud, duress, or overreaching.
The
Court found after hearing the evidence that Ricardo Duenas executed his Father’s
Affidavit of Relinquishment of Parental Rights voluntarily and was not
influenced by fraud, duress, or overreaching.
Findings made January 21,
2000, echoed the judgment, adding that Ricardo and Maria had married:
Luz
Maria Duenas’ signing of the Mother’s Affidavit of Relinquishment of Parental
Rights was voluntary, and not secured by fraud, duress, or coercion.
* * *
Antonio
Duenas’ signing of the Father’s Affidavit of Relinquishment of Parental Rights
was voluntary, and not secured by fraud, duress, or coercion.
The
Court finds that Luz Maria Duenas and Antonio Duenas have married after the
signing of their Affidavits of Relinquishment of Parental Rights.
Ricardo
and Maria filed no post-trial motions.
II
A
I
agree with the Court that Ricardo did not raise in the trial court a claim that
his constitutional due process rights had been violated. His counsel’s single
mention of the word “constitutional” at the hearing on his motion for
continuance was insufficient to call the matter to the trial court’s attention,
especially in the haste in which the trial was conducted. But even a brief
review of the record leaves no question that Ricardo’s complaint was not merely
that his due process rights had been violated, but that he could not have
voluntarily relinquished his sons by signing an affidavit he did not understand
because it was in English. This was the principal focus of the trial.
The
Court concludes that Ricardo has not raised anything but a constitutional
issue on appeal. It is true that the issue stated in Ricardo’s briefs in the
court of appeals and this Court, and on which they focus, is whether his
signature “was procured in a manner that violated Ricardo’s due process rights”,
and this is the focus of his brief and petition. But we are obliged by rule to
treat the issue “as covering every subsidiary question that is fairly included.”
Moreover, we construe briefs “liberally . . . in order to obtain a
just, fair and equitable adjudication of the rights of the litigants.”
This practice becomes even more important when fundamental rights are at stake.
Ricardo’s briefs in this Court and the court of appeals can fairly be read to
raise a broader concern than constitutional due process. After pointing out the
requirements of chapter 161 of the Texas Family Code, the briefs state: “Ricardo
relinquished one of his most fundamental rights, i.e., the right of parenthood,
by signing a document that he could not read and was never put forth to him in
his native tongue.” One could well expect more elaboration of the argument, but
when the briefs are read in light of the record, Ricardo’s complaint is
clear.
It
was certainly clear to the Monteguts. In their fifty-page brief in the court of
appeals, they argued at great length that the evidence showed that Ricardo
understood enough English to know what he was doing and that the affidavit was
translated sufficiently for him. The Monteguts devoted only a few sentences of
their brief to arguing that Ricardo’s sole complaint was of a denial of due
process. The court of appeals restated Ricardo’s complaint on appeal as one of
due process, but it also added: “Ricardo claims that because he does not
understand English, he did not understand what he was signing.”
The court concluded that “Ricardo’s right to have the affidavit accurately
interpreted in a language he understands is a matter of due process,”
but concluded that the evidence failed to show that Ricardo did not understand
what he was signing.
As
the Court points out, at one point in oral argument Ricardo’s counsel appeared
to disavow any complaint except a denial of due process. What the Court does not
see fit to mention is that Ricardo’s counsel opened his argument stating: “We
further believe that in terms of the statutory requirements of placing a child
were totally violated.”
The
extent of Ricardo’s understanding of English may be disputed, but there is no
dispute that it is limited. It seems unjust to me to terminate his parental
rights despite that limited understanding on the ground that his brief is not
clearer. To read Ricardo’s brief as rigidly as the Court does simply compounds
his limitations. I would consider the substance of his argument: was his
affidavit of relinquishment effective given his limited understanding of
English?
B
Maria’s
guardian ad litem should have been clearer at trial, even though she had only a
month to prepare. She should have pointed out more directly Maria’s contention
that she had been misled into signing the affidavit of relinquishment by the
Monteguts’ promise to her that they would provide her reports and photographs of
the boys and would let her send them gifts. There is no question that this is
her principal complaint on appeal.
The
Court refuses to consider this complaint because Maria did not ask the trial
court to rule on whether the Monteguts’ promise was legally unenforceable. But
even though Maria did not request the trial court to rule, the trial court did
rule: in its judgment it expressly recognized she had “presented issues of
fraud, duress, and overreaching to the Court to deny that her [affidavit] was
signed voluntarily,” and it specifically found against her on those issues. The
Court offers no authority for imposing a requirement that the trial court have
ruled on the subsidiary question whether the promises made to Maria were
enforceable.
I
would therefore consider the substance of Maria’s argument: did the promises
made to her defeat the effectiveness of her affidavit of relinquishment?
III
A
Section
161.001 of the Family Code states that a parent-child relationship may be
terminated
“if the
court finds by clear and convincing evidence: (1) that the parent has
. . . (K) executed before . . . the suit is filed an
unrevoked or irrevocable affidavit of relinquishment of parental rights as
provided by this chapter . . . ; and (2) that termination is in
the best interest of the child.”
An affidavit of
relinquishment of parental rights is not a simple instrument. Section 161.103(b)
of the Family Code requires that a parent must swear to all of the
following:
(1) the
name, address, and age of the parent whose parental rights are being
relinquished;
(2) the
name, age, and birth date of the child;
(3) the
names and addresses of the guardians of the person and estate of the child, if
any;
(4) a
statement that the affiant is or is not presently obligated by court order to
make payments for the support of the child;
(5) a
full description and statement of value of all property owned or possessed by
the child;
(6) an
allegation that termination of the parent-child relationship is in the best
interest of the child;
(7) one
of the following, as applicable:
(A) the name and address of the other parent;
(B)a
statement that the parental rights of the other parent have been terminated by
death or court order; or
(C) a
statement that the child has no presumed father and that an affidavit of status
of the child has been executed as provided by this chapter;
(8) a
statement that the parent has been informed of parental rights and duties;
(9) a
statement that the relinquishment is revocable, that the relinquishment is
irrevocable, or that the relinquishment is irrevocable for a stated period of
time;
(10) if
the relinquishment is revocable, a statement in boldfaced type concerning the
right of the parent signing the affidavit to revoke the relinquishment only if
the revocation is made before the 11th day after the date the affidavit is
executed;
(11) if
the relinquishment is revocable, the name and address of a person to whom the
revocation is to be delivered; and
(12) the
designation of a prospective adoptive parent, the Department of Protective and
Regulatory Services, if the department has consented in writing to the
designation, or a licensed child-placing agency to serve as managing conservator
of the child and the address of the person or agency.
It should go without saying
that a person who executes such an affidavit must have some idea of all the
facts to which he is required to swear. It is not enough that an affiant
understand that he is severing his relationship with his children; he must
understand what that means. The purpose of the statute is to prescribe the
specific things a person must swear that he knows before he surrenders his
children. Furthermore, proof that he did must be clear and convincing.
So
the question in this case is this: how much of the affidavit Ricardo signed did
he understand? The answer, as a detailed review of the evidence below
demonstrates, is that the most he could possibly have understood was that
by signing the affidavit he was losing his sons. There is no evidence at all,
for example, that Ricardo thought relinquishing his sons was in their best
interest, or that he knew what rights and duties parents have, or that he
understood his decision was irrevocable for sixty days. The most important part
of the affidavit, and the only part that may have been paraphrased to him in
Spanish, omits the word “not” and consequently states the very opposite of what
was intended. If an English-speaking lawyer could not get the language right, it
is hard to imagine how Ricardo could have been expected to understand it.
The
Court’s view of this case is that the evidence was conflicting and the trial
court made the call, end of story. But only last Term we held that evidence for
terminating a parent-child relationship must be carefully reviewed to determine
whether it is clear and convincing.
Specifically, we said:
In a
legal sufficiency review [of a termination of parental rights], a court should
look at all the evidence in the light most favorable to the finding to determine
whether a reasonable trier of fact could have formed a firm belief or conviction
that its finding was true.
In my view, when one
considers all the evidence regarding what Ricardo understood or could have
understood and then reads the affidavit he signed, it is impossible to conclude
that there is any clear and convincing evidence that he understood a word of
what he signed.
Ricardo
testified through an interpreter. He stated that he had been in the United
States four years and was working as a cook. His supervisor, he said, spoke only
English, and a co-worker had to translate for him. He stated that he could
neither read nor write English. Asked whether he understood some English, he
answered, “Very little. A word here and there.” Regarding the signing of the
affidavit of relinquishment, he stated that he understood only that he was
required to sign and initial the affidavit, nothing else. Specifically, he
testified as follows, as translated by the interpreter:
Q Now,
Mr. Duenas, could you tell us what happened on the day that the Affidavits of
Relinquishment of Parental Rights were signed?
A Uh,
they picked me up at my work. They took me to an office. What they have that
papers that I signed that I didn’t know what I was signing and nobody explained
to me anything.
* * *
Q Do you
recall who gave you the papers?
A Well,
I don’t know if it was a lawyer or notary, but they gave me the paper. He said,
“Sign here, and then date it and initial it there,” and that was it.
* * *
Q Did —
did the man that gave you the papers to initial and to sign, did he translate
for you what those papers meant?
A
No.
* * *
Q So all
you know is that the last page has your signature; is that correct?
A
Yes.
Q And
the second to the last page has your initials; is that correct? Actually, it’s
the third.
A
Yes.
Q And
are those the areas where the man told you to put your initials?
A
Yes.
Q And in
putting those initials, did that man or the secretaries or anybody in that room,
did they translate to you what that document meant?
A
No.
* * *
Q And,
Mr. Duenas, how much English, if any, do you understand?
A I only
understand “put your name” and “initial that thing there.” That’s all.
Q Was
that what was translated to you?
A Yes.
It was translated to me, but I understood that. Only that.
Maria
verified that Ricardo does not speak English and cannot understand it. “One
time,” she testified, “I told him to say the word ‘seagull.’ That’s what I got
out of him.” Regarding his signing the affidavit of relinquishment, she
testified as follows:
Q
. . . [W]ho translated the document for Mr. Duenas?
A Nobody
translated.
Q What
was Mr. Duenas told he was signing?
A When I
got there, I didn’t really tell him what it was. I just told him, “Put your name
here, put the date there.”
Q Did
any of the secretaries for the attorney translate to Mr. Duenas what was in that
document?
A No. I
don’t think anybody there spoke Spanish.
Q So the
attorney didn’t translate it either for him?
A No. He
was just reading it in English, pointing and then out — because there would be
sometimes that Ricardo wouldn’t catch on and he would point and say, “Put your
name there,” but then he would just initial it. So I’d have to tell him —
(speaking Spanish) — “Put your whole name.”
Q And
did your mother or your sister translate the seven-page document to Mr.
Duenas?
A My
sister doesn’t speak good Spanish. My mom — she tried to start out telling him,
and I told her, “Shush.”
Q So no
one in that office, while Mr. Duenas was signing the Affidavit of
Relinquishment, explained to him that this document meant that he was giving up
his rights as a parent forever; is that correct?
A
No.
Q And no
one explained to him by signing this document he couldn’t change his mind until
after 60 days —
A
No.
Q — is
that correct? And by that, I mean translating it into Spanish what he understood
the document meant?
A
No.
Q To
your knowledge, had Mr. Duenas ever talked about giving up his babies for
adoption or anything like that?
A No, of
course not. He used to tell me if I wanted to be stupid and — and if I didn’t
act right, that he would take the babies and he would raise them. And I would
tell him, “You’re crazy.”
Maria’s
mother, Guillerma, understands both English and Spanish, and she spoke to Duenas
in Spanish in the lawyer’s office. This is what she testified:
Q Did
[the lawyer] read at this time to anybody in Spanish?
A No.
No, he can’t read it in Spanish.
Q Okay.
Did anybody ask you to — or let me rephrase it. Did you translate any of the
documents for anybody else?
A No,
ma’am. I wasn’t given the chance.
* * *
Q Did
you tell Ricardo Duenas what the papers were about in Spanish?
A No,
no. Uh, I wasn’t given that opportunity.
Q So you
didn’t ever speak Spanish at all during your — the time that you were at Mr
Ciavaglia’s [the lawyer]?
A The
little words I said, it was not that much. It was my own, uh — Mr. Ciavaglia
wanted someone to interpret so he could understand what was going on, and that’s
all.
Q And so
you did say a few words in Spanish, didn’t you?
A A few,
a few.
Q And
what was it that you said? Tell us in English what you told Mr. Duenas.
A I
looked at him and I told him that, uh, Mr. Ciavaglia wanted those papers, uh,
interpreted to him.
Q And
what else did you tell him?
A
Nothing, nothing.
Q And
didn’t you tell him, Mr. Duenas, that these were papers that they wanted him to
sign where he was giving up his rights to the babies? Didn’t you tell him that
in Spanish?
A No,
no. No.
Esther,
Maria’s sister who arranged for the adoption, testified that she understood some
Spanish but could not speak it fluently and could not and did not converse with
Ricardo. As for what Ricardo understood about what was happening, this is her
account of the events:
Q
. . . And then did you discuss the father [with the lawyer] and how to
get him involved in this process?
A The
babies looked like him, but we weren’t absolutely sure that he was the father.
DNA testing had not been done. It was assumed that he was. And I am not fluent
in Spanish, so I cannot communicate with him to — with him. So, if anything, it
would have to be told to him. My mother and my sister would have to be the
ones.
* * *
Q Did
Ricardo Duenas make any motions or do anything that would indicate that he knew
what was going on that day?
A
Yes.
Q What
was that?
A He
agreed to put his initials in the areas where he was — where he needed, and he
was asked over and over again if he understood.
Q And
who asked him over and over if he understood?
A Mark
[the lawyer] asked him, and my mother asked him also.
Q And
did your mother ask him in Spanish if he understood what he was doing that
day?
A
Yes.
Q But
Mr. Ciavaglia did not speak Spanish to Ricardo Duenas; is that right?
A Right.
That is correct.
* * *
Q [By
the Court:] Okay. And can you tell me if someone explained each of those lines
to him, or was it just a cursory summary, or was it a detailed explanation?
A Mark
[the lawyer] explained it in detail. And Ricardo kept on, like he acknowledged
what was being said. And then my mother made an attempt also in Spanish and
asked Ricardo did he understand, and he said yes, and he continued putting his
initials on there.
Q [By
the Court:] But how could he understand if no one went line by line in Spanish
and read that to him? That is — that’s my dilemma right here.
A I
can’t read his mind, ma’am. I don’t know. He said he understood. That’s all I
know.
Q [By
the Court:] And who asked him if he understood?
A Mark
did.
Q [By
the Court:] In English?
A
Yes.
Q [By
the Court:] And he answered in English? I mean, if you can remember.
A He did
not speak much. He just nodded his head. I don’t recall him speaking much at
all.
* * *
Q Based
on your observations of Ricardo Duenas and your sister in Mr. Ciavaglia’s
office, do you believe both of them understood what was going on?
A Yes, I
do.
Q And do
you believe that the relinquishment document was, in fact, explained to Ricardo
Duenas in Spanish?
A Yes.
As much as he needed, yes.
* * *
Q Okay.
At one point your mother attempted to translate the document for Mr. Duenas; is
that correct?
A Yes,
that is correct.
Q And
what happened during that translation?
A She
asked him if he understood all the details, and my little sister also
communicated with him in Spanish.
Q So it
was actually both your mother and sister that were talking to him in
Spanish?
A Yes. I
remember both of them doing that, doing some —
* * *
Q And
the — are you sitting here and telling the Court today that on September 24th,
when the attorney and the secretaries presented the seven-page document to Mr.
Duenas, that those seven pages were translated to Mr. Duenas in Spanish?
A Each
page was not translated word for word, no.
* * *
Q So the
total sum of the translations were actually three or four sentences, weren’t
they?
A I
don’t recall exactly.
Q It was
very quick, wasn’t it, the translation that your mother supposedly — or Maria
gave to him (indicating)?
A It
wasn’t within, like, 30-minute time intervals, no. They were not that long.
Q Would
three or four sentences be about right, the translation that your mother did or
that Maria did?
A I
don’t recall exactly how many lines were said.
* * *
Q You
testified earlier that you’re “not very fluent in Spanish.” Wasn’t those your
exact words?
A
Conversational Spanish, yes.
Q Okay.
So, then, how is it that you can sit here today and tell this Court that Mr.
Duenas had heard as much as he needed to hear?
A I
didn’t state that.
Q Yes,
you did. You didn’t just say on testimony from [counsel for the Monteguts] — on
your direct testimony that he heard, and I quote, “as much as he needed”?
A Okay.
As much as he needed apparently to understand because he nodded and he
acknowledged that he understood repeatedly.
Q Okay.
But it was being read to him in English, correct?
A That’s
corret.
Q Okay.
If I started speaking to you in French right now — you don’t speak French, do
you?
A
No.
Q And I
kind of nodded my head and was speaking to you in French, would you have any
idea what I was talking about if I just started speaking French right now?
A
No.
Q Okay.
But if I smiled at you and nodded my head and looked sort of favorably upon you,
is it possible that you might just nod your head back?
* * *
A No,
because I wouldn’t know what I would be agreeing to.
Q But
how would you even know you were agreeing to anything if you didn’t understand
the French language?
A I
would not be able to elicit a response if I did not understand what’s being
said.
Q Okay.
Thank you. Now, you said that on the 21st you called Mr. Ciavaglia’s office and
you had talked to Detective Goetschius and you got all of this arranged before
you went over there on the 24th. Didn’t you think it might be a good idea to
talk to either Ricardo or [Maria] before you got all this arranged to find out
whether they were even in agreement with it?
A I have
not had any communication with Ricardo one on one because I cannot converse
fluently in Spanish.
* * *
Q On
September 24th, after Mr. Duenas signed the papers, you spoke to him; is that
correct?
A
After?
Q After
the papers were signed.
A
Outside of the lawyer’s office.
Q And
would you tell the Court what you said?
A I told
him in English — I walked to him and shook his hand. I told him, “Thank you.
What you are doing is very courageous.”
Q And
did your mother translate what you said?
A I
asked her so he could make sure to understand what I was saying. And she started
to — and then she said — I can’t recall word for word, that, “Oh, he says he
understands. I don’t need to.”
Mark
Ciavaglia had been in practice six years when he agreed to represent the
Monteguts in adopting Ricardo’s and Maria’s sons. He does not understand
Spanish. Concerning the events in his office, he testified as follows:
Q How
did you receive the information [for the affidavit of relinquishment] for
Ricardo Duenas?
A I
asked him verbally.
Q And
was he able to understand what you asked him and relay that information?
A He
seemed to be. He seemed to understand English and responded to questions.
Q When
you asked for his name, did he respond with his name correct — give you a detail
of his name, or did he write it out? How did he do it?
A He
pronounced it, and I just wrote it. As I wrote his last name, I spelled it out
loud; and he acknowledged that was correct.
Q And
you don’t speak Spanish, correct?
A That’s
correct.
Q And he
— did he respond to what is your address and other information, what is your
Social Security number, what is you Texas driver’s license number?
A At
some point when I asked for his Social Security number, I don’t recall who
responded or — as to the address. I was asking, just writing the information
down. As to the question about his Social Security number, uh, he didn’t really
respond. And I don’t remember if it was Maria or [Guillerma] that said he
doesn’t have a Social Security number, didn’t have his wallet with him.
* * *
Q What
specifically did you tell the parties?
A I
again introduced myself and told them — or stated to them, “Does everyone
understand why we’re here today? You’re here to sign documents. I’m going to
offer to you some documents for your inspection and your signature that will
begin the process of adopting these children.”
Q And
did Ricardo Duenas do anything that would indicate whether he understood what
you were saying?
A He
said very little. During the course of that statement, I said — I kind of looked
at each and every one of them. I said, “Do you understand? Do you understand?”
Ricardo was to my left, and I said, “Do you understand?” And he nodded. I
specifically said, “Do you understand,” in English. And he nodded his head yes
and he mouthed yep. Like yep.
* * *
Q And
what discussion was had with Mr. Duenas about his document?
A I
explained that I would offer to each of them two documents. I turned to Mr.
Duenas and I said, “This document, the first document, is an affidavit that
acknowledges your paternity.” And I, knowing that sometimes legalese is
intimidating for laypersons, I asked, uh — I kind of made sure that they were
aware in common English what that meant. I said, “By signing this document,
you’re admitting that you’re the father of these children.” And there’s some
other reference, statutory information.
Q Okay.
Now, did he say yes, he understood, or no, he didn’t? Or did he acknowledge
anything?
A He
didn’t really acknowledge either way. He just looked at the document.
Q Okay.
Now, with regards to the Affidavit of Relinquishment of his parental rights, did
you explain what that document was?
A I
did.
Q And
did he make any response whatsoever to your explanation?
A Not at
all.
Q Okay.
Was there any discussion amongst the people in the room whether he understood or
whether he should have a translator or anything?
A The
documents that I offered first, the Affidavit of Relinquishment, as we were
going through the form and I was explaining it to him, and I use the same term
each time, “By signing this document, you fully, finally, and forever give up
all parental rights to these children.” As I was going through that, Maria noted
— she was sitting across from Mr. Duenas. She noted that her name was spelled
incorrectly on the document.
Q Okay.
So what happened then?
A Well,
at that point she corrected the spelling of her last name. I went back and
corrected all the documents. And this is after he had signed it, okay.
Q So,
then, he had to resign the documents, is that correct?
A That’s
correct.
Q Now,
before he resigned the documents, was there any point in time that anybody in
Spanish went over any parts or all of those documents?
A
Yes.
Q What
happened and who supposedly was it that went over those documents with him in
Spanish?
A Ms.
Pruitt.
Q And
would that be Maria’s mother?
A That’s
correct.
Q And
what — what do you recall her doing with regards to that document?
A
There’s a specific part of the form that requires a set of initials by each one.
It’s a double-spaced section. And it denotes if — I’m paraphrasing — it says
that they understand the importance of this document. . . . I directed
his attention specifically to this section and began to read it. And at that
point, Esther said, “Mom, why don’t you translate that to him to make sure he
understands?” At that point, Maria turned to her mother in a very agitated
fashion and said, “He don’t give a shit. He don’t even buy diapers.” So,
nonetheless, Ms. Pruitt did continue to, uh, what sounded to me was to translate
that in Spanish.
Q Did it
take her awhile to read that into Spanish?
A She
didn’t seem to read it. She was repeating what I was saying, which was
paraphrasing this language.
Q Okay.
And was that what you were saying basically that, “I understand that I’m
executing this relinquishment, and I’m giving up my rights to my children”?
. . . In your words, how did you explain that in English before it was
translated.
A What I
told him was that, “This document is very — excuse me — very important. And that
by signing it, you’re acknowledging that you understand this document and you
understand the consequences of this document, and that is that you fully,
finally, and forever give up any parental rights to your children. And you also
relinquish your right and give up your right to change your mind.”
Q [By
the Court:] And you said that pretty much the way you just told me?
A That’s
correct.
Q [By
the Court:] And you’re telling me that Ms. Pruitt, the grandmother, interpreted
that after you said it in English?
A She
was speaking in Spanish. I can’t say.
Q [By
the Court:] You can’t speak Spanish. But you think she was translating what you
said in English?
A That’s
correct.
Q [By
the Court:] Go ahead.
Q And
then what happened after the — Ms. Pruitt said things in Spanish to Mr.
Duenas?
A Uh,
Mr. Duenas then initialed beside each line. He executed the document in the
signature spaces as provided in front of the witnesses. Uh, and the witnesses
signed and, uh, the person that was the notary notarized the document.
* * *
Q Mr.
Ciavaglia, are you telling this Court that Ms. Pruitt translated these seven
pages to my client, Mr. Duenas?
A No,
ma’am.
Q In
fact, she probably said a sum total of three or four little sentences the whole
time she was there in Spanish to my client, didn’t she?
A She
said more than that.
Q And
when you would say, “You need to sign on this blank,” and the translation would
have been (speaking Spanish). If that was repeated several different times, you
don’t know that the translation was, “You’re giving up your rights to your
children forever,” and rather the translation is, “You need to sign on this
line, you need to sign on this line, and you need to sign on this line,” which
was being translated? Do any of your staff know what Ms. Pruitt was translating
to Mr. Duenas?
A I
could testify as to what I know; and I do not speak Spanish and I do not know
what she translated.
* * *
Q What
you’re saying is that you made an assumption that because — when you were
talking in English and he was nodding his head, that he understood what was
going on?
A I
believed he knew what was going on, yes.
Q And
would you know that in pointing to him where he needed to sign, that if someone
was telling him you need to sign there, if there was — you said he was very
quiet. In fact, he hardly talked at all is what you said a few minutes ago; is
that correct? Mr. Duenas was very quiet?
A
Yes.
Q In
fact, he hardly talked at all?
A
Correct.
* * *
Q And
you assumed that by Mr. Duenas’ silence, that he was agreeing to everything; is
that correct?
A I
assumed he understood.
* * *
Q Okay.
And isn’t it true that in the draft that had to be redone because of the
misspelling of the name, that at one point Mr. Duenas — forgive me — Mr. Duenas
had either initialed where he was supposed to sign or signed where he was
supposed to initial or vice versa?
A That’s
correct.
Q Okay.
So what — wouldn’t that kind of indicate to you that he didn’t understand what
he was supposed to do in that situation?
A
No.
Q Okay.
And while Ms. Pruitt was talking with Mr. Duenas, you don’t have any idea what
she was talking to him about, do you?
A In
Spanish?
Q
Yes.
A
No.
Q Okay.
And you said that you were basically paraphrasing the document; is that correct?
And that she was repeating what you were paraphrasing?
A
Yes.
Q Don’t
you think it’s kind of possible since we’re repeating paraphrasing that
something might have been lost in the translation?
A Since
I don’t know — you’re asking me?
Q Is it
possible?
A Is it
possible? Sure.
Finally,
Ciavaglia’s paralegal, Laura Hernandez, was present at the meeting and witnessed
the Duenas’s execution of the affidavit of relinquishment. Hernandez understands
Spanish but cannot speak it. She testified to what she observed as follows:
Q Did —
at the beginning of the conference, did you have occasion to hear Mr. Ciavaglia
say anything to the parties?
A He
just explained what was going on, and if they didn’t — you know, if they didn’t
want to go through with it, they didn’t have to. And they wanted to make sure
that everybody knew what was going on and they understood what was going on.
Q Did
you — did you notice whether Ricardo Duenas actually made any indication that he
understood? Just from the preliminary statements that Mr. Ciavaglia gave, that
he understood?
A We
weren’t sure if he understood. And Esther kept saying, “Make sure he understands
what he’s saying.” And then Maria said, “Well, he don’t care.”
Q Okay.
And are you talking about later on as he was presented with this Affidavit of
Relinquishment?
A
Right.
* * *
Q Okay.
Did Mr. Ciavaglia explain the papers to Maria Inocencio?
A Yes,
he did.
Q Was
his explanation to her more detailed than it was to Ricardo Duenas?
A No,
because I explained it to Maria, and then she said okay. Then he started to
explain it to the father, and he, you know — he kind of looked like he didn’t
know what he was saying. Then the grandma translated it to him, and he was
shaking his head yes. When she was translating — I understand Spanish. I can
understand it, but I can’t speak it back. And she was telling him the correct
things.
Q Okay.
So would you tell the Court what it was that the grandmother was actually
telling Mr. Duenas?
A That
he was giving up his rights of the children, and that he will no longer be
responsible for them. And that once this is all through, that’s it, you
know.
Q So did
she tell him whether or not he would have an opportunity to change his mind
later?
A No,
she didn’t.
Q Okay.
Based on what you heard that the grandmother translated in Spanish to Mr.
Duenas, do you believe he fully understood —
A
Yes.
Q — what
was happening?
A Yes,
because he kept shaking his head yes, he understood. And she just kept telling
him to sign it, just sign it. Maria kept telling him just to sign it.
Q So
Maria didn’t really want to have much discussion?
A No
. . . .
* * *
Q Now,
you were actually a witness on both the father’s Affidavit of Relinquishment of
Parental Rights and also the mother’s; is that right?
A That’s
correct.
Q And do
you feel, based on your observations in the room and what you saw and what you
heard of the parties, that they both understood fully what they were
signing?
A Yes,
ma’am.
* * *
Q And
you heard what Esther was telling Maria and what Maria was telling Mr.
Duenas?
A
Yes.
Q And in
the seven pages of the affidavit, you’re saying that Ms. Pruitt translated that
affidavit to Mr. Duenas?
A She
was just telling him that he was giving up his rights as a father because Maria
kept saying, “Don’t worry about this. Just tell him to sign it there and he’ll
sign it.”
Q And,
in effect, Ms. Pruitt didn’t tell him about terminating parental rights. She
just said, “Sign it,” didn’t she?
A
No.
Q “Just
sign here and sign here”?
A Maria
was saying, “Just sign it.” The grandmother was trying to translate it to him,
but Maria was the one that kept pushing. “Initial, sign it.”
Q In
fact, the grandmother never translated to him that his rights are going to be
terminated right then and there?
A She’s
just saying that his father — he wasn’t going to be the father anymore, that
he’s giving up his rights. That’s what she was telling him.
Q And
you’re saying she was telling him that in Spanish?
A Yes,
she was.
Q And
she wasn’t telling him to sign here and sign there, sign the different parts?
She never told him that?
A Maria
was pointing out to him where to sign, and he would sign it.
Q And
the attorney was there during the times that Ms. Pruitt was translating, is that
correct?
A Yes,
ma’am.
Q And
did Mr. Duenas ever say anything during that whole process of signing any of the
affidavits?
A He did
not.
Q Never
said a word?
A Never
said a word.
Q Did
anyone verify with him that he understood?
A They
asked him if he understood, and he said yes.
In
sum, there is no evidence that Ricardo read the affidavit of relinquishment or
that he was able to read it, and the uncontradicted evidence of several
witnesses is that the affidavit was not translated to Ricardo. Several witnesses
testified that they thought or believed or assumed that Ricardo understood, and
that he indicated by nodding his head or mouthing “yep” that he understood, but
none of these witnesses stated what it was exactly that Ricardo understood. It
seems fairly clear that he knew he was losing his children, but the paralegal,
who understood Spanish, testified without contradiction that he was never told
in Spanish that his affidavit would be irrevocable for sixty days. There is no
evidence that Ricardo thought adoption was in his sons’ best interest, as he was
required by statute to swear, or that he understood the parental rights he was
losing, again as the statute required him to swear.
What
various witnesses’ meant when they testified that Ricardo “understood” cannot be
appreciated without reading the affidavit Ricardo signed. This is what it
stated:
FATHER’S
AFFIDAVIT OF RELINQUISHMENT
OF PARENTAL
RIGHTS
STATE OF
TEXAS }
COUNTY OF
GALVESTON }
BEFORE
ME, the undersigned authority, on this day personally appeared RICARDO ANTONIO
DUENAS who, by me being duly sworn, in the presence of the undersigned credible
witnesses, made the following statements, and swore that they were
true:
“My
name is RICARDO ANTONIO DUENAS. Social Security Number ,
Driver’s License Number [
] in the State of Texas . My age
is 26 years. My residence address in 3714 Avenue S, Galveston, Galveston County,
Texas 77550.”
“I
am the father of twin children:
[L.M.I.],
a male child born on April 9, 1999, and [J.A.I.], a male child born on April 9,
1999, both twin children born to LUZ MARIA INOCENCIO at UTMB, Galveston,
Galveston County, Texas.”
“The
natural mother of the children, LUZ MARIA SYLVESTRE INOCENCIO and the children
reside at 806c – 3RD Avenue
South, Texas City, Galveston County, Texas 77590.”
“I
am not presently obligated by court order or decree to make payments for child
support in this or any court or jurisdiction.”
“No
property is owned or possessed by the children.”
“I
designate MILES QUENTIN
MONTEGUT and MONICA GAIL
MONTEGUT , qualified persons, as managing co-conservators of
the children. I have been informed that my parental rights, powers, duties, and
privileges are as follows:
1. the right to have physical
possession, to direct the moral and religious training and the [sic] establish
the legal domicile of the children;
2. the duty of care, control,
protection, and reasonable discipline of the children;
3. the duty to support the
children, including providing the child with clothing, food, shelter, medical
care, and education;
4. the duty to manage the estate
of the children, except when a guardian of the estate has been
appointed;
5. the right to the services and
earnings of the children;
6. the power to consent to
marriage, to enlistment in the Armed Forces of the United States, and to
medical, psychiatric and surgical treatment;
7. the power to receive and give
receipt for payments for the support of the children and to hold or disburse any
funds for the benefit of the children;
8. the power to represent the
children in legal action and to make other decisions of substantial legal
significance concerning the children;
9. the right to inherit from and
through the children; and,
10. any other rights, privileges,
duties and powers existing between a parent and children by virtue of law,
including decisions concerning medical care and treatment.”
I freely and voluntarily give and
relinquish to the above-named managing co-conservators all of my parental
rights, powers, duties, and privileges.”
“I
fully understand that a lawsuit will be promptly filed in a Court in Galveston
County, Texas to terminate forever the parent-child relationship between me and
the above-named children. I fully understand that the termination suit may or
may not be combined with a suit to adopt the children. I understand that either
way, once the Court terminates my parental rights, I have no further say
concerning my children, whether or not my children are adopted then or at some
later time.”
“I
know that I have the right to appear personally before the Court, with an
attorney of choice, to testify about my desires with respect to my children.
However, I do not want to go to court in person. I have been encouraged to seek
independent legal advice, but I do not feel that is necessary. I want this
Affidavit of Relinquishment of Parental Rights presented to the
Court.”
“Because
I do not want to testify in person before the court, I freely and voluntarily
waive and give up my right to the issuance, service, and return of citation,
notice and all other process in any suit to terminate my parental rights or in
any suit to terminate my parental rights joined with a suit to adopt. By
executing this affidavit and desiring to having [sic] it presented to the court
on my behalf, I freely and voluntarily consent to the jurisdiction of a court of
competent jurisdiction of the State of Texas. I do not want to be informed
further about the lawsuit, and I waive and give up my right to be given notice
about anything [sic] proceedings in the lawsuit. I specifically agree that a
final hearing in the lawsuit may be held at any time without further notice to
me. I waive and give up my right to have the official court reporter make a
record of the testimony in the lawsuit. Furthermore, I do not want to be mailed
or given a copy of the judgment terminating my parental rights and do not want
to be notified of the signing, rendition, or enty of that judgment. Therefore, I
waive and give up my right insist [sic] that those things be done. I also
consent to have any suit affecting the parent-child relationship filed or to be
filed with respect to the above-identified children be decided by a family law
master appointed pursuant to Texas Government Code § 54.001.”
“If
I am in the armed services of the United States at this time, that fact in no
way interfered with my freedom the [sic] make my decision to execute this
affidavit, and, insofar as this matter is concerned, I waive all rights,
privileges, and exemptions existing or that may hereafter exist in my favor
under the Soldiers’ and Sailors’ Civil Relief Act of 1940, including the
appointment of counsel to represent me in this cause.”
“I FULLY UNDERSTAND THAT I MAY NOT BE FURTHER INFORMED
ABOUT THE TERMINATION SUIT OR ABOUT ANY OTHER HEARING OR PROCEEDING AFFECTING
THE CHILD NAMED IN THIS AFFIDAVIT.”
“Termination
of the parent-child relationship is in the best interest of the children. I
understand that I made this termination possible by executing this affidavit.
With that in mind, I hereby declare that this Affidavit of Relinquishment of
Parental Rights is and shall be irrevocable for sixty (60) days. I FULLY UNDERSTAND THAT, IF I CHANGE MY MIND, I CANNOT
FORCE THE MANAGING CONSERVATOR TO DESTROY, REVOKE, OR RETURN THIS AFFIDAVIT AND
THAT I CANNOT TAKE BACK OR UNDO THIS AFFIDAVIT IN ANY WAY DURING THIS 60-DAY
PERIOD. I FURTHER UNDERSTAND THAT MY PARENTAL RIGHTS PROBABLY WILL HAVE ALREADY
BEEN ENDED FOR ALL TIME BEFORE THIS 60-DAY PERIOD EXPIRES. I also
understand that, if my parental rights have not been ended within this 60-day
period, this affidavit shall remain in full force and effect until I revoke it.
I FULLY UNDERSTAND THAT, AT ANY TIME UNTIL THIS
AFFIDAVIT IS REVOKED, MY PARENTAL RIGHTS MAY BE TERMINATED FOR ALL
TIME.”
“I
have carefully considered alternate plans for my children’s future and have
obtained the advice of whatever family members, friends, or other persons and
professionals I feel were necessary to help make this decision. This decision is
very difficult for me to make, and under other circumstances I might have made a
different decision. Nevertheless, under the circumstances I find myself in, I
have decided that I cannot provide properly for my children’s physical and
emotional needs, and I want MILES QUENTIN
MONTEGUT and MONICA GAIL
MONTEGUT to provide my children a permanent home. I declare
that I fully understand the meaning of this Affidavit of Relinquishment of
Parental Rights and the finality of my action in signing it, and understanding
all of this, I am signing it freely and voluntarily, and with the firm
conviction that this decision is the best available alternative for my
children.”
“I
am signing this affidavit today because I want to sign it and not because any
other person or persons want me to sign it. I am ready emotionally and in every
other way to make the decision I am making today. I am signing this affidavit in
the presence of the two undersigned witnesses, each of whom is present and
acting as a witness. I want them to be here and witness my signature. I am also
signing this affidavit before a notary public who has asked me under oath
whether or not each and every statement in this affidavit is true and correct
and has advised me not to sign it unless it is true.”
s/ RD
s/ RD
s/ RD
s/ RD
s/ RD
s/ RD
s/ RD
s/ RD
s/ RD
s/ RD
s/ RD
s/ RD
s/ RD
s/ RD
s/ RD
“I
REALIZE THAT I SHOULD NOT SIGN THIS AFFIDAVIT UNTIL I HAVE READ AND UNDERSTOOD
EACH WORD, SENTENCE, AND PARAGRAPH IN IT. I REALIZE THAT I SHOULD NOT SIGN THIS
AFFIDAVIT OF RELINQUISHMENT IF THERE IS ANY THOUGHT IN MY MIND THAT I MIGHT
SOMEDAY SEEK TO CHANGE MY MIND. I REALIZE THAT I SHOULD [SIC] SIGN THIS
AFFIDAVIT OF RELINQUISHMENT IF I AM NOT THINKING CLEARLY BECAUSE OF ILLNESS,
MEDICATION, MY EMOTIONAL STATE, OR ANY OTHER REASON. BECAUSE I REALIZE HOW
IMPORTANT THIS DECISION IS FOR THE FUTURE OF MY CHILDREN, I HAVE PUT MY INITIALS
BESIDE EVERY LINE OF THE PARAGRAPH SO THAT IT WILL ALWAYS BE UNDERSTOOD THAT I
HAVE READ THIS AFFIDAVIT OF RELINQUISHMENT, UNDERSTAND IT, AND DESIRE TO SIGN
IT.”
SIGNED
on this 24
day of Septieber [sic] ,
1999.
s/
Ricardo A.
Duenas
s/
Laura D.
Hernandez s/
Esther
Gonzalez
1232-2nd
Ave.
North 8161
½
Grofton
Texas
City, TX
77590 Houston
TX
77017
VERIFICATION
STATE OF
TEXAS }
COUNTY OF
GALVESTON }
BEFORE
ME, the undersigned authority and notary public, on this day personally appeared
RICARDO ANTONIO DUENAS, who, being by me duly sworn on his oath, deposed and
said that he is the affiant and that he has read the foregoing Affidavit of
Relinquishment of Parental Rights and that the statements contained therein are
within his personal knowledge and are true and correct.
This
Affidavit of Relinquishment of Parental Rights was subscribed and sworn before
me on the 24th day of
September ,
1999, by
[notary
seal] s/
Claudia
Tibaldo
Notary
Public, State [sic] of Galveston
STATE OF
TEXAS }
COUNTY OF
GALVESTON }
BEFORE
ME, the undersigned authority, on this day personally appeared Laura D. Hernandez
and Esther
Gonzalez , witnesses whose names are subscribed to the
foregoing instrument in their respective capacity, and both persons being by me
duly sworn, declared to me, in the presence and hearing of the affiant ,
[sic] that the affiant had declared to them that the foregoing instrument is an
Affidavit of Relinquishment of Parental Rights, that he executed it as such and
wanted each of them to sign it as a witness to his execution of the same; and
upon the oaths each witness stated further that he/she did sign the same as
witness, in the presence of the affiant and at his request, that affiant was at
that time eighteen years of age, or older, was of sound mind, and executed the
affidavit of his own free will; that each of said witnesses was then at least
eighteen years of age.
s/
Ricardo A.
Duenas
RICARDO
ANTONIO DUENAS
s/
Laura D.
Hernandez
Witness
s/
Esther
Gonzalez
Witness
SUBSCRIBED
AND ACKNOWLEDGED BEFORE ME by RICARDO ANTONIO DUENAS, the Affiant, and
SUBSCRIBED AND SWORN TO before me by said witnesses Laura D.
Hernandez and Esther
Gonzalez on this 24th
day of September ,
1999.
[notary
seal] s/
Claudia
Tibaldo
Notary
Public, State of Texas
Contrary
to what the affidavit states, there is no evidence that Ricardo had any idea
what his “parental rights, powers, duties, and privileges were, or that he had
“the right to appear personally before the Court, with an attorney of choice,”
or that the affidavit was irrevocable for sixty days. The careful reader will
note that in what appears to be the most crucial part of the affidavit, where
the words are all in upper case and bold font, and where the affiant must
initial every line, Ricardo was required to swear:
I
realize that I should sign this affidavit of relinquishment if I am not
thinking clearly because of illness, medication, my emotional state, or any
other reason.
(Emphasis added.) It seems
obvious to me that this was an error, but then I speak English. It would be much
less obvious to me if, like Ricardo, I did not.
B
To
recite the evidence exhaustively and verbatim, as I have just done, is what the
Court calls “effectively second-guess[ing] the trial court’s resolution of a
factual dispute”. I do not see how one could be truer to the record than by
quoting it, which of course, the Court does not do. The Court bases its
second-guessing accusations on a recharacterization of the record that simply
does not support the Court’s conclusions.
The
Court has three points. First, the Court says, “witnesses testified that Duenas
appeared to understand what was transpiring at the affidavit signing.”
That is true, of course, as the record just quoted shows. But none of these
witnesses testified that Duenas did understand what was transpiring, or
that he said he did, or that anyone present who spoke Spanish could tell
from talking with him that he did. From all the witnesses said about Duenas’s
appearance, one cannot tell whether he was a Shakespearean professor
bemused into silence or someone for whom all of the English conversation and the
seven-page affidavit were unintelligible gibberish.
Second,
the Court says, “Duenas’s testimony about his ability to understand English was
inconsistent”.
That, too, is true. But the only inconsistency to which the Court points is
that Ricardo’s statement that he understood no English followed by his admission
that he understood when he was told, “sign here”. I cannot fathom how that
inconsistency is any evidence that Ricardo could read and understand a
seven-page affidavit. If it were, then why did Ciavaglia ask that his summary of
the affidavit be translated into Spanish for Ricardo?
Finally,
the Court says that the trial court could have determined that Ricardo was not a
credible witness because he could not have worked in a hotel kitchen as long as
he had and not have understood better English, because he minimized how much of
the affidavit was translated for him, and because of his responses and demeanor.
This, too, is all true; the trial court could have made all of these
determinations. But a witness’s lack of credibility cannot establish the
opposite of his assertions. This is simple logic. The trial court may not have
believed Ricardo when he said he could not understand English, but that
disbelief is no evidence that Ricardo was a Shakespearean professor. Apart from
Ricardo’s credibility, there must be some positive evidence that he could
understand English — and not just some evidence — clear and
convincing evidence.
Nothing
in the record that the Court says has been overlooked has been omitted from the
recitation of the evidence contained in this opinion. The Court cannot point to
any evidence whatever that clearly and convincingly shows that Ricardo had the
knowledge that the Family Code requires before a parent can voluntarily
relinquish a child.
C
Conspicuously,
the Monteguts do not argue that their promise to Maria is enforceable. Even if
it were, I would hold that such promises precluded Maria’s affidavit of
relinquishment from being effective. There is no question in this case that the
promise was made; it was given to Maria in writing. Nor is there any question
that Maria signed her affidavit of relinquishment only because the promises were
made. Under these circumstances, I would hold that Maria’s relinquishment was
not voluntary.
IV
The
Court’s strained view of the record casts doubt on the sincerity of its
assurance that it is not unsympathetic to Ricardo’s and Maria’s claims. One
ordinarily hopes for a little more generosity from one’s sympathizers. But the
true measure of the Court’s non-unsympathy is reflected in its argument, never
raised in the case, that, oh and by the way, Ricardo would not be entitled to
his children even if his relinquishment had been involuntary because he may not
have been the father, was unfit, and probably has no constitutional rights
anyway. Before today, there has not been so much as a whisper of doubt that
Ricardo was the father of Maria’s twin sons. Both Ricardo and Maria swore to
that fact. Even Maria’s sister acknowledged that the boys “looked like” Ricardo.
Were the issue in question, it could easily be determined — but in a proceeding
not based on his affidavit of relinquishment. There are also procedures for
challenging Ricardo’s fitness as a father, but they do not include indictment by
the Supreme Court of Texas. To refuse to consider Ricardo’s argument because it
has not been raised properly, and then to make an argument against him that no
one has ever raised, is not what immediately comes to mind when one thinks of
not unsympathetic.
* * * * *
The
record contains no clear and convincing evidence — I agree with Justice Owen for the reasons she
explains that such evidence is required — that Ricardo understood and swore to
the statements required by section 161.103(b) of the Family Code for
relinquishment of parental rights. To the contrary, the evidence is overwhelming
that Ricardo has lost rights among the most precious guaranteed by law simply
because he does not understand English. If Ricardo could read the Court’s
opinion, he would no doubt be surprised (and dismayed) to learn that he is not
entitled to a decision on the only claim he has ever made because his lawyer in
the trial court phrased it differently than his lawyer on appeal. The one
benefit of Ricardo’s inability to understand English is that he will not be able
to read of the injustice that has been done to him. He should at least have a
paraphrase of the Court’s opinion, however, just as his affidavit was
paraphrased for him. I offer the following:
¡Peligro!
Si usted no puede hablar Inglés,
usted puede perder a sus niños.
Nathan
L. Hecht
Justice
Opinion delivered:
September 18, 2003 | {
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929 N.E.2d 178 (2006)
367 Ill. App.3d 1115
PEOPLE
v.
GREEN.
No. 4-05-0538.
Appellate Court of Illinois, Fourth District.
November 8, 2006.
Affirmed.
| {
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 93-8071
_____________________
ABELIA GARCIA, individually and as the
guardian for her brain damaged son Herman
Garcia and as the next friend for the minor
children of Herman Garcia, St., Marcos
Garcia and Herman Garcia, Jr.,
Plaintiffs-Appellants,
v.
MICHAEL A. WASH, Attorney, JACK PARKER,
of Nationswide Insurance Company,
JONATHON CLUCK, Attorney and Agent for
Jack Parker and Nationwide Insurance Company,
and NATION-WIDE MUTUAL INSURANCE COMPANY,
a/k/a Nationwide Insurance Company,
Defendants-Appellees,
Cross-Appellants,
and
PAUL DAVIS, Judge of the 200th Judicial
District,
Defendant-Appellee.
_________________________________________________________________
Appeals from the United States District Court
for the Western District of Texas
_________________________________________________________________
(April 27, 1994)
Before KING and SMITH, Circuit Judges, and KAZEN*, District
Judge:
PER CURIAM:**
*
District Judge of the Southern District of Texas, sitting
by designation.
**
Pursuant to Local Rule 47.5, the court has determined that
the non-precedential portions of this opinion should not be
Of the numerous issues raised by the appellants on appeal,
only one has precedential value.
Plaintiff-Appellant Abelia Garcia, individually and as the
guardian for her brain damaged son Herman Garcia and as the next
friend for the minor children of Herman Garcia, Sr., Marcos
Garcia and Herman Garcia, Jr., brings this appeal from a judgment
rendered dismissing the plaintiffs' federal claims with prejudice
and dismissing their pendent state law claims without prejudice.
The Garcias' attorney, Erik C. Moebius ("Moebius"), appeals from
the district court's award of sanctions against him for
violations of Federal Rule of Civil Procedure 11 in the amount of
$57,673.95.
* * *
I. Sanctions Against Moebius
Several of the defendants assert that we do not have
jurisdiction to entertain an appeal from the sanctions imposed
upon Moebius because he was not formally named as a party in any
of the notices of appeal. See Torres v. Oakland Scavenger Co.,
487 U.S. 312, 318 (1988) (holding that the failure to name a
party in a notice of appeal constitutes a fatal defect in that it
fails to confer jurisdiction over that party upon the court of
appeals); May v. Houston Post Pension Plan, 898 F.2d 1068, 1070-
71 (5th Cir. 1990) (Since notice of appeal did not name
published. See also United States v. Wesley, 748 F.2d 962, 963
(5th Cir. 1984).
The places at which the published opinion omits parts of the
lengthy unpublished opinion are indicated by asterisks.
2
appellant's attorney as an appealing party, court of appeals did
not have jurisdiction to review award of sanctions against that
attorney). We note, however, that the Federal Rules of Appellate
Procedure -- specifically Rule 3(c) upon which the court in
Torres relied -- have recently been amended. The language of,
and advisory comments to, the amendments to Rule 3(c) indicate
that their aim was to overrule Torres and its progeny. See FED.
R. APP. P. 3(c) ("An appeal will not be dismissed . . . for
failure to name a party whose intent to appeal is otherwise clear
from the notice."); see also Report of the Advisory Committee on
the Federal Rules of Appellate Procedure (September 1992),
reprinted in 147 F.R.D. 287, 335 (recognizing the throng of
litigation following Torres and reciting that the new rule was
designed "to prevent the loss of a right to appeal through
inadvertent omission of a party's name . . . .").
Although the notices of appeal in this case were all filed
prior to the December 1, 1993, effective date of the amendments,
we have recently held that the amendments to Federal Rule of
Appellate Procedure 4(a)(4) are to be given retroactive effect.
See Burt v. Ware, 14 F.3d 256, 260 (5th Cir. 1994). Highly
relevant to our decision in Burt v. Ware to apply the rule
retroactively was the fact that the amendments to Rule 4(a)(4)
were designed to remedy the exact procedural default problem
presented. Id.; see also Skoczylas v. Federal Bureau of Prisons,
961 F.2d 543, 545-46 (5th Cir. 1992). Similarly, Rule 3(c) was
amended to prevent the loss of appellate rights where, as here,
3
an intended party to an appeal fails to be named specifically.
Moreover, the order from the Supreme Court adopting the amended
rules provides "[t]hat the foregoing amendments . . . shall
govern all proceedings in appellate cases . . . commenced [after
the effective date of the amendments] and, insofar as just and
practicable, all proceedings in appellate cases then pending."
61 U.S.L.W. 4395 (U.S. Apr. 27, 1993) (emphasis added). We hold
that it is "just and practicable" to apply the amendments to Rule
3(c) retroactively. See, e.g., Hoeffler v. Tahoe, 1994 WL 28354
at **2 (9th Cir. Jan. 31, 1994) (unpublished opinion) (allowing
an attorney to appeal from a sanctions order entered against him
even though he was not named as a party by retroactive
application of amended Rule 3(c)). But cf. Brooks v. Celeste, 16
F.3d 104, 108 (6th Cir. 1994) (declining to address the
applicability of amended rule 3(c) because the amendments were
not in effect at the time the notice of appeal was filed nor when
the case was submitted for decision).
Applying the amended Rule 3(c) in this case, we find that
Moebius has sufficiently evidenced his intent to appeal the
sanctions order against him within the four corners of at least
one of the notices of appeal in this case. In two of the several
notices of appeal filed by Moebius, he specifically notices this
court -- as well as the other parties -- of his intent to appeal
both the final judgment (in which sanctions were assessed against
him individually) and the district court's "refusal to stay the
execution of the $60,000 sanction against [the Garcias']
4
attorney, Erik Moebius." We find that these references are
sufficiently clear to show Moebius' intent to appeal the sanction
order and thus to confer jurisdiction over that asserted error.
See FED. R. APP. P. 3(c) comments, reprinted in 147 F.R.D. at 335-
36 ("The test established by the rule for determining whether [a]
designation[] [is] sufficient is whether it is objectively clear
that a party intended to appeal."). Thus we conclude that we
have jurisdiction over Moebius' challenge to the sanctions order.
* * *
For the reasons discussed in the unpublished opinion, we
affirm the judgment of the district court.
AFFIRMED.
5
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48 F.3d 1225NOTICE: 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.
UNITED STATES of America, Appellee,v.Lorri Ann CLARK, Appellant.
No. 94-3682.
United States Court of Appeals,Eighth Circuit.
Submitted: Feb. 14, 1995.Filed: March 6, 1995.
Before BOWMAN, BEAM, and HANSEN, Circuit Judges.
PER CURIAM.
1
Lorri Ann Clark was tried by jury and found guilty (1) of being an accessory after the fact to the crime of bank robbery and (2) of misprision of a felony. The District Court1 sentenced her to be imprisoned for a term of twenty-seven months on each of these two counts, the sentences to run concurrently. Clark appeals.
2
Seeking reversal of her conviction (she raises no sentencing issues), Clark argues that the evidence is insufficient to support her conviction for misprision of a felony and that the District Court erred in refusing to submit her proposed instruction concerning the misprision offense to the jury.
3
Having heard oral argument and having considered the briefs and record, we are satisfied that the evidence is adequate to support Clark's conviction for misprision of a felony. We also are satisfied that the District Court did not abuse its discretion in refusing to submit Clark's proposed instruction to the jury. As no error of law appears, and as an opinion would lack precedential value, Clark's conviction is affirmed without further discussion.
4
AFFIRMED. See 8th Cir. R. 47B.
1
The Honorable Paul A. Magnuson, Chief Judge, United States District Court for the District of Minnesota
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595 F.Supp.2d 231 (2009)
David LORET, Plaintiff,
v.
Director Donald SELSKY, Inspector General G. Kendra, Superintendent James Conway, Lt. Dixon, Hearing Officer, Sgt. Caroll, Correctional Officer Valentino, Defendants.
No. 07-CV-6392L.
United States District Court, W.D. New York.
January 27, 2009.
*232 David Loret, Comstock, NY, pro se.
Thomas J. Kidera, New York State Attorney General's Office, Rochester, NY, for Defendants.
DECISION AND ORDER
DAVID G. LARIMER, District Judge.
Plaintiff, David Loret, appearing pro se, commenced this action under 42 U.S.C. § 1983. Plaintiff, an inmate in the custody of the New York State Department of Correctional Services ("DOCS"), alleges that his constitutional rights have been violated in a number of respects in connection with certain incidents that occurred in connection with a misbehavior report that was issued against him in February 2006, while plaintiff was confined at Wyoming Correctional Facility. Both plaintiff and defendants have moved for summary judgment.
BACKGROUND
On February 14, 2006, a misbehavior report was issued against plaintiff. The violations charged in that report arose from the delivery of a package addressed to plaintiff, which had been received at Wyoming twenty-two months earlier, on May 18, 2004. See Plaintiff's Statement of Undisputed Facts (Dkt. # 15) ¶ 1; Defendants' Rule 56 Statement (Dkt. # 17) ¶¶ 1, 3. The reasons for the long delay between the receipt of the package and the issuance of the misbehavior report are not apparent from the record before me.
Upon its delivery, the package was opened by DOCS employees, and was found to contain a quantity of marijuana and some small bottles of liquor. The package, which according to defendants was later identified as having been sent to plaintiff by his adult son, was immediately confiscated.
That same day, DOCS officers questioned plaintiff about the package. Plaintiff, who disclaimed all prior knowledge of the package, was also placed in the Special Housing Unit ("SHU") at Wyoming, where he remained for about four days, after which he was returned to general population. It appears to be undisputed that plaintiff never signed for, or had possession of, the package or its contents.
Apparently nothing further happened in connection with the matter until the issuance of the misbehavior report nearly two years later. Plaintiff was charged with four violations involving conspiracy to smuggle contraband into the facility, as well as "telephone abuse."
A Tier III hearing was conducted before defendant Lt. Dixon, beginning on February 18, 2006. Plaintiff testified at the hearing. At the conclusion of the hearing, Lt. Dixon found plaintiff guilty of all four charges against him. He was sentenced to twenty-four months' confinement in SHU and loss of privileges.
On administrative appeal, defendant Donald Selsky, the DOCS Director of the Special Housing/Inmate Disciplinary Program, affirmed the determination of guilt, but reduced the sentence from twenty-four to twelve months. Plaintiff then brought an Article 78 proceeding in state court, and on March 16, 2007, the Appellate Division, Fourth Department, annulled the determination of guilt, based on *233 the unexplained delay in the issuance of the misbehavior report, which the court found had violated plaintiff's due process rights. See Loret v. Goord, 38 A.D.3d 1267, 1268-69, 832 N.Y.S.2d 717 (4th Dep't 2007) (citing Di Rose v. New York State DOCS, 276 A.D.2d 842, 843, 714 N.Y.S.2d 161 (3d Dep't 2000)). By that point, however, plaintiff had served his entire twelve-month sentence.[1]
Plaintiff filed the complaint in this action on August 13, 2007. He asserts five claims alleging that his procedural due process rights were violated in connection with the Tier III hearing before defendant Dixon.
DISCUSSION
In support of their motion for summary judgment, defendants contend that the record establishes that plaintiff was not denied due process. Defendants point to evidence showing that plaintiff was given more than twenty-four hours' notice of the charges against him, and that he was allowed to testify and present evidence at the hearing.[2]
In support of his motion, and in response to defendants' motion, plaintiff asserts that he was wrongfully denied certain evidence at the Tier III hearing, particularly a tape or transcript of an alleged telephone conversation between him and his son. That conversation formed a part of the basis for the charges against plaintiff. Dixon denied plaintiff's request for that evidence on the ground that disclosure of the contents of that recording would "jeopardize[ ] ... institutional goals and safety," Dkt. #20 at 59, although he did not articulate how it would do so. Plaintiff also contends that his rights were violated by Dixon's failure to call as a witness the officer who actually opened the package in question, and by the delay in filing the misbehavior report.
After reviewing the record, I conclude that both plaintiff's and defendants' motions for summary judgment must be denied, with one exception, as explained below. The record before me is simply too sparse for the Court to resolve certain issues of material fact bearing upon plaintiff's claims.
Although an inmate facing disciplinary charges is not entitled to the full panoply of due process rights that one is entitled to in a criminal trial, there are nevertheless certain minimum procedural safeguards that must be provided under the Constitution. For example, an inmate subject to a disciplinary hearing is entitled to: "(1) advance written notice of the charges against him, (2) the opportunity to call witnesses and present documentary evidence in his defense and (3) a written statement of the evidence relied upon and the reasons for the disciplinary action." Shell v. Brzezniak, 365 F.Supp.2d 362, 376 (W.D.N.Y.2005) (citing Wolff v. McDonnell, 418 U.S. 539, 563-67, 94 S.Ct. 2963, 41 L.Ed.2d 935 (1974)).
The Second Circuit has also "held that, at a minimum, a prisoner is entitled to be *234 `confronted with the accusation, informed of the evidence against him ... and afforded a reasonable opportunity to explain his actions.'" Francis v. Coughlin, 891 F.2d 43, 47 (2d Cir.1989) (quoting Sostre v. McGinnis, 442 F.2d 178, 198 (2d Cir. 1971)). See also Gates v. Selsky, No. 02 CV 496, 2005 WL 2136914, at *10-*11 (W.D.N.Y. Sept. 2, 2005) ("Inmates have a well established due process right, at a minimum, to knowing the evidence that confronts them in a disciplinary hearing," since "such disclosure affords the inmate a reasonable opportunity to explain his actions and to alert officials to possible defects in the evidence") (quoting Sira v. Morton, 380 F.3d 57, 74 (2d Cir.2004)).
Although that right can give way to legitimate concerns over institutional safety, see Francis, 891 F.2d at 47-48, an inmate is still entitled to some explanation of the basis for a hearing officer's denial of the inmate's request for certain witnesses or items of evidence. Simply invoking security concerns, with no articulation at all of how institutional security could be jeopardized or compromised by turning over the evidence in question, does not meet that minimum constitutional standard. See, e.g., Benitez v. Straley, No. 01 Civ. 0181, 2006 WL 5400078, at *16 (S.D.N.Y. Feb. 16, 2006) (DOCS defendants were not entitled to qualified immunity where they "ha[d] not presented any explanation for the exclusion of witnesses, certain lines of questioning, or pieces of evidence"); Gates, 2005 WL 2136914, at *11 (denying qualified immunity to hearing officer where officer "did not present a contemporaneous, reason for not disclosing [the] documents" that inmate had requested).
In the case at bar, Dixon, in denying plaintiff's request for a copy of the telephone conversation between him and his son, simply stated that "it jeopardizes... institutional goals and safety." Dkt. #20 at 59. Dixon did not explain the basis for that statement, and it is not apparent to the Court, on this record (which does not include any affidavit by Dixon himself), how he reached that conclusion.
Presumably, of course, plaintiff would have had first-hand knowledge of what was said in the telephone conversation between him and his son, but given the length of time that had passed between the underlying events and the Tier III hearing, his memory of that conversation would almost certainly have faded, making it difficult for him to refute the investigating officer's testimony that plaintiff had telephoned his son to arrange for the contraband in question to be mailed to plaintiff. In any event, absent countervailing considerations of security or other legitimate institutional concerns, due process would seem to require that plaintiff be given more than simply an officer's statement that he had listened to a telephone conversation between plaintiff and his son, and that he, the officer, had concluded from that conversation that plaintiff had used the phone system to arrange for the delivery of the contraband.[3]
*235 At the same time, however, the record does not so clearly establish that plaintiff's constitutional rights were violated in this regard that the Court can enter summary judgment for plaintiff. Dixon's failure to explain the reasoning behind his statement about his concerns over "institutional goals and safety" does not mean that there were no such valid concerns. The constitutional violation here, if there was one, lay not simply in Dixon's failure to articulate more fully the basis for his denial of plaintiff's request for the audiotape or transcript, but in the denial itself. Whether that denial violated plaintiff's constitutional rights depends on whether there were legitimate security reasons for the denial, which cannot be determined on the record before me. I conclude, therefore, that neither side is entitled to summary judgment on this claim.
Although the denial of plaintiff's request concerning the telephone conversation appears to present the most serious constitutional concerns, I deny the motions as to plaintiff's other claims as well. For the reasons stated, the relevant facts are simply not clear at this juncture.[4]
I also note that in their motion, defendants have done little more than recite, in boilerplate fashion, the general principles applicable to prisoner procedural due process claims, followed by a conclusory assertion that plaintiff received adequate notice of, and an opportunity to defend against, the charges against him. Although it may eventually be demonstrated that the facts do not support some of plaintiff's § 1983 claims, the record as it now stands is simply inadequate for the Court to make such findings as a matter of law.
I do, however, grant summary judgment as to defendant James Conway, the Superintendent of Wyoming Correctional Facility at the time of the relevant events. The record here shows that Conway was not personally involved in the alleged constitutional deprivations.
A plaintiff asserting a § 1983 claim against a supervisory official in his individual capacity must allege that the supervisor was personally involved in the alleged constitutional deprivation. Johnson v. Newburgh Enlarged Sch. Dist., 239 F.3d 246, 254 (2d Cir.2001); Gaston v. Coughlin, 249 F.3d 156, 164 (2d Cir.2001). That requirement may be satisfied by alleging facts showing that: (1) the defendant participated directly in the alleged constitutional violation; (2) the defendant, after being informed of the violation through a report or appeal, failed to remedy the wrong; (3) the defendant created a policy or custom under which unconstitutional practices occurred, or allowed the continuance of such a policy or custom; (4) the defendant was grossly negligent in supervising subordinates who committed the wrongful acts; or (5) the defendant exhibited deliberated indifference to others' rights by failing to act on information indicated that constitutional acts were occurring. Colon v. Coughlin, 58 F.3d 865, 873 (2d Cir.1995); Williams v. Smith, 781 F.2d 319, 323-24 (2d Cir.1986).
Plaintiff has demonstrated no such facts here. He has alleged virtually nothing about Conway except that Conway appointed Dixon to conduct plaintiff's Tier III hearing. That is plainly insufficient to *236 hold Conway personally liable for any constitutional deprivations that may have occurred here.
CONCLUSION
Plaintiff's motion for summary judgment (Dkt. # 15) is denied.
Defendants' motion for summary judgment (Dkt. # 16) is granted in part and denied in part. Summary judgment is granted in favor of defendant James Conway, and plaintiff's claims against him are dismissed. In all other respects, defendants' motion is denied.
IT IS SO ORDERED.
NOTES
[1] In reaching its determination, the Appellate Division stated that "[w]hile significant events occurred during the 21-month period between the time of the acts underlying the charges and the date on which the misbehavior report was issued, i.e., petitioner was charged, tried and convicted of a previously unsolved murder and was sentenced to a term of imprisonment of 25 years to life, there was still an unexplained seven-month delay between the date of the murder conviction and the issuance of the misbehavior report." 38 A.D.3d at 1268, 832 N.Y.S.2d 717.
[2] At least for purposes of the pending motions, defendants do not dispute that plaintiff has established the existence of a protected liberty interest, based on his 12 months' SHU confinement. See Palmer v. Richards, 364 F.3d 60, 65 (2d Cir.2004).
[3] The investigating officer, Officer Kendra, also seemed at the hearing to be less than certain that he had listened to the alleged conversation. When asked by Dixon whether he had "listen[ed] to any phone conversations concerning this matter," Kendra responded, "Does it say I did [on Kendra's written report]?" After Dixon read to Kendra the portion of Kendra's report alleging that plaintiff had "abused the inmate phone system," Kendra stated, "Okay. Yes." Plaintiff then asked, "So [Kendra]'s saying that he did [listen to the phone conversation]?" Dixon answered, "He's responded to that. Next question." Dkt. # 20 at 51. Kendra never testified about what he actually heard in the phone conversation.
[4] With respect to plaintiff's claim concerning the delay between the incident and the Tier III hearing, I note that the state court's determination that this delay violated plaintiff's due process rights has no preclusive effect in this case, see Gutierrez v. Coughlin, 841 F.2d 484, 486 (2d Cir. 1988); Foxworth v. Selsky, No. 95-CV-1168, 1998 WL 59448, at *4 (N.D.N.Y. Feb. 9, 1998),
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NUMBER 13-00-456-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS
CHRISTI
BEATRIS MOYA, Appellant,
v.
GOLIAD COUNTY, TEXAS, Appellee.
On appeal from the 24th District Court
of Goliad
County, Texas.
O P I N I O N
Before Justices Dorsey, Hinojosa, and
Castillo
Opinion by Justice Castillo
Appellant Beatris Moya (AMoya@) appeals from
a summary judgment issued against her based on Goliad County=s affirmative
defense of sovereign immunity. In two
issues, she argues that summary judgment was improper due to the existence of a
Aspecial defect@ on the land
or, alternatively, a Apremises defect@ of which Goliad County was
aware. We affirm.
Factual Summary
On June 16, 1997, Richard Zapata was driving east on Kohl Road in rural Goliad County, on the way to
Victoria, Texas. His common-law wife, Beatris
Moya, was a passenger in the car. The road he was driving was straight and
unobstructed. Zapata was driving between
twenty-five and thirty miles per hour, in order to avoid hitting an animal
crossing the road. As Zapata was
driving, a deer jumped in his path, resulting in a collision between the car
and the deer. As a result of the
collision, Zapata=s car went off
the road, and Moya sustained injuries to her head,
neck, and jaw.[1]
Moya sued Goliad County for her
injuries under the Texas Tort Claims Act, claiming that the high grass located
along the roadside obscured the presence of the deer until it leapt into the
road, preventing Zapata from avoiding the collision. It is undisputed that the grass along the
roadside was in excess of three feet at the time of the accident. Goliad County periodically
cut the grass on its rural roads, but had not yet cut the grass on Kohl Road at the time of
the accident. Moya
asserted liability against the County under both Apremise defect@ and Aspecial defect@ grounds of the
Texas Tort Claims Act.[2]
Goliad County moved for a
traditional summary judgment, on the basis that it, as a government entity, was
immune from suit under the doctrine of sovereign immunity, because the claims
brought did not fall under the limited waiver provisions of the Tort Claims Act
as to either premise or special defects.
The trial court rendered summary judgment for Goliad County, and this
appeal followed.
Standard of
Review
Under a
traditional summary judgment under Texas Rule of Civil Procedure 166a(c), the movant has the burden of showing that there is no genuine
issue of material fact and is entitled to judgment as a matter of law. American Tobacco Co. v. Grinnell, 951
S.W.2d 420, 425 (Tex. 1985). In deciding whether there is a disputed
material fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true. Id. Every reasonable inference must be
indulged in favor of the nonmovant and any doubts
must be resolved in favor of the nonmovant. Id. Evidence favoring the movant=s position will
not be considered unless it is uncontradicted. Great Am. Reserve Ins. Co. v. San Antonio
Plumbing Supply Co., 391 S.W.2d 41, 47 (Tex. 1972). A defendant=s motion for summary judgment must
disprove at least one essential element of each of the plaintiff=s causes of
action, or establish all the elements of an affirmative defense as a matter of
law. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d
671, 678 (Tex. 1979).
Sovereign
Immunity and the Tort Claims Act
As a general rule, government entities are immune from tort
liability under the doctrine of sovereign immunity unless the legislature has
waived immunity. Harris County v. Dillard, 883 S.W.2d 166, 168 (Tex. 1994). Whether a particular claim falls into an
exception from the general doctrine of sovereign immunity is entirely dependant
on the statutory language. Dallas County Mental Health
& Mental Retardation v. Bosley, 968 S.W.2d
339, 341 (Tex. 1998).
The Texas Tort Claims Act provides that government units are
liable for Apersonal injury
and death so caused by a condition or use of tangible personal or real property
if the government unit would, were it a private person, be liable to the
claimant according to Texas law.@ Tex.
Civ. Prac. & Rem. Code Ann. ' 101.021(2) (Vernon 1997). It is undisputed that the County of Goliad is a Agovernment unit@ as defined by
the Texas Tort Claims Act. See Tex. Civ. Prac. & Rem. Code Ann. ' 101.001(3) (Vernon Supp.
2001).
Moya alleges in this case that the
tall grass located along the side of Kohl Road constituted a
dangerous condition of Goliad County=s real property,
thus creating liability for the County.
The Texas Tort Claims Act recognizes liability for two types of
dangerous conditions of real property B premise
defects and special defects. Tex. Civ.
Prac. & Rem. Code Ann. '101.022 (Vernon 1997).
Where it is asserted that the injury is caused by a premise
defect, the governmental unit owes to the claimant only the same duty as a
private person owes to a licensee on private property. Tex. Civ. Prac. & Rem. Code Ann. '101.022(a) (Vernon 1997). Thus the government=s only duty is
not to injure the claimant willfully,
wantonly, or through gross negligence. State
Dep=t of Highways
and Public Transp. v. Payne, 838 S.W.2d 235,
237 (Tex. 1992) (op. on reh=g); State v.
Tennison, 509 S.W.2d 560, 562 (Tex. 1974). The
exception to this rule is that, where a landowner has actual knowledge of a
dangerous condition, and the licensee does not, the landowner then has the duty
either to warn the licensee or to make the condition reasonably safe. Tennison, 590
S.W.2d at 562. For there to be
liability under such exception, constructive knowledge is insufficient; rather,
there must be proof of actual knowledge on the part of the landowner as to the
dangerous condition in question. Tennison, 509 S.W.2d at 562.
However, the limitation of the government=s duty to
claimants to that duty owed by a private landowner to a licensee does not apply
to the government=s duty to warn
of special defects such as excavations or obstructions on highways, roads, or
streets or to warn of the absence, condition, or malfunction of traffic
regulators. Tex. Civ. Prac. & Rem. Code Ann. '101.022(b) (Vernon 1997).
Where there exists a special defect, the government unit owes the same
duty to drivers as a private landowner owes to an invitee. Payne, 838 S.W.2d at 237. That is, the government unit must exercise
ordinary care to protect the driver / invitee from a dangerous condition which
the government unit is or reasonably should be aware. Id. A special defect is generally limited to
those conditions which occur on the surface of the road, or pose a threat to
ordinary users of the roadway. Id. at 238-39.
The question of whether an alleged defect is a special defect
or premise defect, and thus what duty is owed, is a question of law. State v. Rodriguez, 985 S.W.2d 83, 85 (Tex. 1999). We therefore consider this issue de
novo. Since, generally, defects in the
condition of land that are not special defects are, by default, premise
defects, we will first consider whether the alleged defect in question was a
special defect under law.
Special or Premise Defect?
A dangerous
condition need not have been created or caused by the government unit to
constitute a special defect. County of Harris v. Eaton, 573 S.W.2d
177, 179 (Tex. 1978). However, the condition needs to be analogous
to and of the same degree as Aexcavations or
obstructions on highways, roads, or streets.@ Tex. Civ. Prac. & Rem. Code Ann. ' 101.022(2) (Vernon 1997); Johnson
v. Texas Dep=t of Transp., 905 S.W.2d 394, 399 (Tex. App.BAustin 1995, no
writ). It must present Aan unusual and
unexpected danger to ordinary users of roadways.@ Payne, 838 S.W.2d at 238.
Most property defects
are premise defects, not special defects.
City of San Benito v. Cantu, 831 S.W.2d 416, 422 (Tex. App.BCorpus Christi 1992,
no writ). In general,
tall vegetation that obstructs the view of a driver is considered to be a
premise defect, and not a special defect.
Sipes v. Texas Dep=t of Transp., 949 S.W.2d 516, 521 (Tex. App.BTexarkana 1997,
writ denied). Texas courts
reviewing Agrass on the
side of the road@ claims have
consistently held that vegetation obscuring hidden dangers does not constitute
a special defect. See Anderson v.
Anderson County, 6 S.W.3d 612, 615-16 (Tex. App.BTyler 1999, pet
denied) (vegetation on a rural road covering a stop sign was not a special
defect);
Wildermuth v. Parker County, 1 S.W.3d 705, 708
(Tex. App.BFort Worth 1999, no
pet.) (trees and vegetation along the side of the road not considered a special
defect, even though they obscured oncoming traffic); Johnson, 905 S.W.2d
at 399 (vegetation obscuring a stop sign is not a special defect).
In this case, Moya claims that tall grass on the side of the road
obscured the driver=s view of a hidden
danger, the deer, precipitating the accident.
We find that Goliad County presented sufficient
summary judgment evidence to demonstrate that the tall grass did not constitute
a special defect in this case. Moya and her husband testified that they traveled Kohl Road with some
frequency. Both testified that they knew
the grass on the side of the road was high and believed that it was
dangerous. Zapata admittedly knew that
deer and other animals crossed this road, and he was driving slowly in order to
prevent collision with an animal. Under
such circumstances, we cannot say that the danger presented by the tall grass
was either unexpected or unusual, and therefore it was not a special defect. Since there was no special defect, the trial
court did not err in granting summary judgment as to appellant=s special defect
claim. Accordingly, we overrule Moya=s first issue.
Liability under the
Premise Defect Standard
Since we have
determined that the alleged hazard was a premise defect, we consider then
whether the trial court was correct in granting a summary judgment against appellee=s claim under this
theory of liability.
As previously stated,
in the case of a premise defect, the ordinary duty of a governmental unit is
only to not willfully, wantonly, or through gross negligence injure those using
its land. Payne, 838 S.W.2d at
237. An exception exists, however, in
such cases where the governmental unit had actual knowledge of a dangerous
condition, and the person on the land did not.
Tennison, 509 S.W.2d at 562. In those cases, there then exists the further
duty to exercise reasonable care to warn or make safe the dangerous condition. Id.
I. The Tennison Exception
We will first consider
whether the Tennison exception applies,
and therefore whether a duty was imposed on Goliad County to warn or make safe
the dangerous condition. Tennison, 509 S.W.2d at
562. Such additional duty would only arise if the
County had actual knowledge of the dangerous condition and Moya had no knowledge of that same condition. Id. (emphasis
added). We therefore review the evidence
as to the question of the actual knowledge of the parties.
Goliad County presented summary
judgment evidence conclusively demonstrating that Moya
had actual knowledge of the dangerous condition of the road. A government unit owes no duty to warn or
make safe a premise defect that the driver (or in this case, passenger) on the
road knows about herself. Payne,
838 S.W.2d at 237. The burden is
on the person suing under the Tort Claims Act to prove that she had no actual
knowledge of the dangerous condition. Id. Moya did not
present any summary judgment proof demonstrating that she did not know about
the dangerous condition. On the
contrary, in depositions, Moya testified that she had
to drive down Kohl Road at least once a week to get to and from her residence,
and Zapata testified that he drove on Kohl Road two or three times a week. Both Zapata and Moya
testified that they believed the grass along Kohl Road created a dangerous
condition for a month prior to the accident, although neither notified the
County of their concern. In light of
these facts, we find that Goliad County had met its burden on
summary judgment to prove that Moya had knowledge of
the dangerous condition.
Further, we note that
there was no evidence presented to the trial court demonstrating that the
County had actual knowledge of a dangerous condition at the spot of the
accident prior to its occurrence. At
most, Moya has demonstrated that County Commissioner
Precinct Four, Wayne Key, had traveled down Kohl Road many times in 1997, and,
due to his experience as a hunter, was generally aware that deer sleep in high
grass. Moya
also presented evidence demonstrating that between 1995 and 1997, twenty-one
auto accidents occurred in Goliad County involving
animals. However, there was no evidence
presented that any incidents involving cars colliding with deer or any other
animals had been reported on Kohl Road prior to the one in which Moya was injured.
Because Goliad County is a predominantly rural county possessing
hundreds of miles of roads both paved and unpaved,[3]
we cannot conclude that its agents
possessed actual knowledge of a hazardous condition caused by high grass at a
particular location on a rural road, absent evidence of some sort of
notification or complaint given to the county regarding the hazard.
As Moya
knew of the dangerous condition, we find that the Tennison
exception does not apply and the County had no duty to warn of or make safe
the condition. Tennison,
506 S.W.2d at 562. Thus the only duty
owned by the County to Moya was the ordinary one not
to injure her willfully, wantonly or through gross negligence. Payne, 838 S.W.2d at 237; Tennison, 506 S.W.2d at 562. We therefore next consider whether the
evidence was sufficient to demonstrate that the County did not fail in this
duty. See Cobb v. Texas Dep=t of Crim. Justice, 965 S.W.2d 59, 62 (Tex. App.BHouston [1st Dist.] 1998,
no pet.)(where plaintiff knew of defect, and thus Tennison
exception did not apply, he could only recover under the Texas Tort Claims
Act if he could prove gross negligence or willful, wanton conduct); Simpson v. Harris County, 951 S.W.2d
251, 254 (Tex. App.BHouston [14th Dist.]
1997, no pet.)(where county not liable under Tennison
exception, court considers liability under gross negligence standard).
II. Willful or Wanton
Conduct and Gross Negligence
Gross negligence
consists of Asuch an entire want of
care as to establish that the act or omission was the result of actual
conscious indifference to the rights, safety, or welfare of the person
affected.@ See Tex.
Civ. Prac. & Rem. Code Ann. ' 41.0001(5) (Vernon Supp. 2002). Ordinary negligence rises to the level of
gross negligence when it can be shown that the defendant was aware of the
danger but did not care to address it. Burk
Royalty Co. v. Wells, 616 S.W.2d 911, 922 (Tex. 1981).
We find that Goliad County has presented
sufficient evidence to refute Moya=s claim that it acted
willfully, wantonly, or with gross negligence with respect to the grass on the
side of Kohl Road. Kohl Road is located in a rural section of Goliad County, not in the middle of
a city, and thus a certain amount of grass and other vegetation along the side
of the road is to be expected. County Commissioner Key testified that he
personally drove the roads in his precinct in order to determine what grass
needed cutting. Goliad County cut all the grass
along the sides of its roads two or three times a year, and was in the process
of cutting the grass along a different section of Kohl Road when Moya=s accident
happened. No complaint was ever brought
to Goliad County regarding the height
of the grass on the particular section of Kohl Road that Moya was injured on, prior to her injury. There is no indication in the record that any
accidents involving deer or other animals had occurred on Kohl Road prior to this
one. Given these facts, we cannot say
that Goliad County=s failure to cut tall
vegetation where this accident occurred was willful, wanton, or grossly
negligent.
We therefore find that Goliad County adequately
demonstrated that Moya=s claims did not satisfy the requirements
necessary to recover for a premise defect under the Tort Claims Act, and we
overrule issue number two.
Conclusion
Having
overruled both of Moya=s issues, we affirm the judgment of the trial
court.
ERRLINDA
CASTILLO
Justice
Do not
publish.
Tex.
R. App. P.
47.3(b).
Opinion delivered and
filed
this 2nd day of May,
2002.
[1]The
Goliad
County
sheriff=s office was
not notified of the accident at the time it occurred, nor at any time prior to
the institution of this lawsuit.
[2]
Tex. Civ. Prac. & Rem. Code Ann. '101.022
(Vernon
1997).
[3]Goliad
County
has an area of 854 square miles and contains 316 miles of roads.
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886 F.2d 1324
Steinmetz Group, Ltd.v.Blackmon***
NO. 88-6091
United States Court of Appeals,Eleventh Circuit.
AUG 29, 1989
1
Appeal From: S.D.Fla.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 11th Cir.R. 34-3
**
Local Rule 36 case
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12 P.3d 707 (2000)
STATE of Wyoming ex rel. WYOMING WORKERS' SAFETY AND COMPENSATION DIVISION, Appellant (Petitioner),
v.
Lance A. CONNER, Appellee (Respondent).
No. 00-61.
Supreme Court of Wyoming.
October 27, 2000.
Representing Appellant: Gay Woodhouse, Wyoming Attorney General; John W. Renneisen, Deputy Attorney General; and Bernard P. Haggerty, Senior Assistant Attorney General.
Representing Appellee: George Santini, Cheyenne, WY.
Before LEHMAN, C.J., and THOMAS, GOLDEN, HILL, and KITE, JJ.
HILL, Justice.
The Wyoming Workers' Safety and Compensation Division (Division) challenges an award of benefits in favor of the Appellee-worker, Lance A. Conner. The Division asserts that because Conner suffered a compensable injury in 1994 and received benefits for loss of earning capacity as a result of that injury, he may not receive such benefits for a second compensable injury that occurred in 1998. We affirm the order awarding benefits.
ISSUES
The Division states these issues:
I. Was the Hearing Examiner's award of a second permanent partial disability for the same wage loss contrary to law and an abuse of discretion?
II. Was the Hearing Examiner's failure to offset the first permanent partial disability *708 award against the second contrary to law and an abuse of discretion?
Conner states these issues:
1. Was the award of permanent partial disability benefits supported by substantial evidence?
2. Does the Wyoming Workers' Compensation Act allow for successive awards for permanent partial disability awards for separate injuries?
FACTS
On October 16, 1998, Conner suffered an injury to his left shoulder while in the course and scope of his employment with Rocking K Construction. Conner worked as a carpenter, earning $9.00 an hour. He was on top of a wall, spider walking between the rafters and, upon turning to change directions, something popped inside his shoulder. Conner underwent surgery to have the injury repaired on November 18, 1998. As a result of that injury, Conner was restricted to lifting no more than 25 pounds with his left shoulder. As we shall encounter in more detail later, Conner previously had suffered an injury to his right shoulder in 1994 and, as a result, had been restricted to lifting no more than 25 pounds with his right shoulder. Conner was off work from the date of his 1998 injury until January 22 or 23, 1999. At that time, he was released to return to work and called his employer to see about returning to work. Conner claimed that he had called Rocking K Construction three times, but his calls were not returned. Conner accepted employment with another company at $7.00 an hour.
By letter dated April 13, 1999, the Division informed Conner that he might be eligible for additional worker's compensation benefits. The letter offered him the option of applying for vocational rehabilitation benefits or a permanent partial disability award. Conner submitted an application for a permanent partial disability award. By letter dated July 12, 1999, the Division informed Conner that his claim was not approved because:
Your employer Rocking K Construction has stated on the Vocational Evaluation report, they are willing to accommodate your restrictions at the same salary you were earning at the time of your work incident. Based on the employers [sic] statement you have not suffered an income loss and are not eligible for Permanent Partial Disability benefits.
On July 12, 1999, Conner filed an objection to that determination, and a hearing was set for October 28, 1999. The Division's disclosure statement was filed on October 14, 1999, and summarized the issues as follows: Conner had the burden of proving his claim, and the application for benefits did not include information regarding an employment search[1]. The Division contended that for that reason alone, the claim should be denied, and that failure to do so would increase the costs to the system and cause the hearing examiner to be acting as a claims analyst. No mention was made of the fact that work was available at Rocking K Construction at Conner's previous hourly rate of $9.00 an hour. On October 20, 1999, the Division filed an amended disclosure statement, coupled with a petition for modification. In that document, the Division contended that work might have been available at Rocking K at $9.00 an hour. In addition, the Division asserted that Conner was getting a duplicate award because he had suffered a previous, similar injury in 1994. We will set out that assertion in detail because it is difficult to summarize:
Additionally, it has come to the Division's attention that the Employee-Claimant has previously received a permanent partial disability award for an injury to his shoulder from a 1994 accident, which was, apparently, awarded in 1996, based upon the Employee-Claimant's representation at that time that he was incapable of returning to work at a comparable wage, which was, at that time, also $9.00 per hour. A breakdown of the Employee-Claimant's *709 previous awards ... is attached hereto as defendant's exhibit S-F. Several issues, therefore, are also raised. Should the Employee-Claimant be twice awarded a permanent partial disability award for the inability to return to work at $9.00 per hour? Since the Employee-Claimant has previously received and accepted the benefit of an award for permanently being unable to return to work at $9.00 per hour, should the Employee-Claimant be estopped from pursuing this matter? Did the legislature intend that the Employee-Claimant should receive two awards for permanent partial disability under these circumstances? Does res judicata or issue preclusion prevent the Employee-Claimant from receiving two awards for permanent partial disability in a three-year period for the permanent inability to return to work at $9.00 per hour or a comparable wage? Does the Employee-Claimant have a pre-existing condition that prevented him from returning to work at $9.00 per hour?
The Division hereby also (in the alternative) petitions the Office of Administrative Hearings for a modification of the 1996 award of permanent partial disability (based upon the apparent mistake regarding the Employee-Claimant's inability to return to work at a wage comparable to $9.00 per hour) and to order offset of that previous award if the Hearing Examiner orders payment of permanent partial disability in the present case.
STANDARD OF REVIEW
Our standard of review is somewhat different in the instance where the administrative agency challenges the decision of the hearing examiner. The burden of persuasion usually assigned to claimants is now on the agency, here, the Division. See W.R.A.P. 12.01. Of course, a claimant for worker's compensation benefits has the burden of proving all of the essential elements of a claim by a preponderance of the evidence in the contested case hearing. Lunde v. State of Wyoming ex rel. Wyoming Workers' Compensation Division, 6 P.3d 1256, 1258 (Wyo. 2000). We review assertions of error raised by the Division under the standard described in Wyo.Stat.Ann. § 16-3-114(c) (LEXIS 1999):
16-3-114. Judicial review of agency actions; district courts.
....
(c) To the extent necessary to make a decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. In making the following determinations, the court shall review the whole record or those parts of it cited by a party and due account shall be taken of the rule of prejudicial error. The reviewing court shall:
(i) Compel agency action unlawfully withheld or unreasonably delayed; and
(ii) Hold unlawful and set aside agency action, findings and conclusions found to be:
(A) Arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law;
(B) Contrary to constitutional right, power, privilege or immunity;
(C) In excess of statutory jurisdiction, authority or limitations or lacking statutory right;
(D) Without observance of procedure required by law; or
(E) Unsupported by substantial evidence in a case reviewed on the record of an agency hearing provided by statute.
In addition, the agency, as the trier of fact, is charged with weighing the evidence and determining the credibility of witnesses. The deference normally accorded to the findings of fact by a trial court is extended to the administrative agency, and the agency's decision as to the facts will not be overturned unless it is clearly contrary to the overwhelming weight of the evidence. Demonstrating evidentiary contradictions in the record does not establish the irrationality of the ruling, but we do examine conflicting evidence to determine if the agency reasonably could have made its finding and order based *710 upon all of the evidence before it. Lunde, 6 P.3d at 1259 (internal citations omitted).
DISCUSSION
So that the path ahead is clear, the Division's initial basis for denying Conner's claim (that he had not completed a work search) and all other later justifications invoked to deny Conner's claim have been abandoned by the Division in this appeal, with the exception of the charge that it was error for the hearing examiner to have awarded a second permanent partial disability benefit or to have failed to offset the award based on the 1994 injury against the award for the 1998 injury.
As the first step in the resolution of this case, we must determine if any matter relating to Conner's 1994 injury was even before the hearing examiner for consideration. The only claim that was before the hearing examiner for adjudication was Conner's 1998 left shoulder injury. Except to the extent permitted by statute, the resolution of Conner's 1994 claim was final and not open to modification. See Conn v. Ed Wederski Construction Company, 668 P.2d 649, 652-53 (Wyo.1983), and Wyo. Stat. Ann. § 27-14-605 (LEXIS 1999). Section 27-14-605 requires that an application for modification be submitted to the Division, identifying the grounds for a modification. Once such an application is submitted to the Division, the Division would then make a determination, and if a party were dissatisfied with that determination, the issues would be referred to a hearing examiner for a contested case hearing. That, of course, did not occur. Here, the only form of pleading was a notice in an amended disclosure statement that was filed with the hearing examiner in a different claim file. In addition, there are no materials from the case file associated with the 1994 injury in this record (with the exception of a summary of the costs of that claim, largely in handwritten form, and of no apparent relevance to a claim of mistake or other ground for modification of the 1994 claim. The only relevance that handwritten summary of the earlier benefits paid to Conner could have is to guide the hearing examiner in reducing the instant claim by the amount paid under the earlier claim.).
We are compelled to conclude that no issue with respect to the 1994 claim was before the hearing examiner for adjudication. The only issue to be decided at the hearing, therefore, was the benefit available to Conner if he proved his 1998 claim by a preponderance of the evidence. Moreover, to the extent the subject was broached with the hearing examiner, it was presented in the context of a mistake. However, no mistake in the 1994 proceedings is ever described by the Division. Since the matter of the 1994 award was not before the hearing examiner for consideration, the determination made in the instant case cannot be contrary to law and an abuse of discretion for a failure to take it into account in the adjudication of the 1998 claim.
The Division also contends that the hearing examiner's decision is contrary to law and an abuse of discretion because he did not offset the award resulting from the 1994 injury against the 1998 injury. The Division does not point to any statute or other law that allows or commands such a resolution. Our independent search has revealed no statute or law which would permit, much less require, such an offset, especially in the absence of a petition to modify the award based on the 1994 injury. The statute, as written, is clear and suffers from no ambiguity Conner is entitled to permanent partial disability benefits if he meets the statutory requirements. The Division does not challenge that Conner has met his burden. If there is a flaw in the statute, that is a question to be resolved by the legislature, not the courts.
We find it appropriate to tarry a few minutes with the Division's assertion that the governing statute permits only one award for each wage loss. The Division characterizes successive awards for successive injuries as absurd and contrary to the purposes of the Worker's Compensation Act. This characterization is premised on the following sequence of events. Prior to the 1994 injury, Conner could use both of his shoulders in the construction industry, which demands of its workers considerable physical strength. Prior to the injury, Conner could carry as much as he could lift with his right shoulder, and, *711 commensurately, he earned $9.00 an hour for his labor. After the 1994 injury, Conner could only carry 25 pounds on his right shoulder, and he was only able to earn about $7.00 an hour (though the precise amount is established through a study that may be commissioned by the Division). For that loss of earning capacity, he received a monetary benefit from worker's compensation. Between 1994 and 1998, Conner increased his earning capacity from $7.00 an hour to $9.00 an hour (No evidence was offered as to why this was so because the statute does not require such a showing. Some speculation might include an observation that there was a $.90 increase in the minimum wage during that period of time; that the record shows Conner to have been a pleasant and hardworking fellow, likely to receive increases in his rate of pay over a period of four years; and that there may have been an increase in demand for workers because of a robust economy that drove up wage rates in 1997-98.). In 1998 Conner suffered an injury to his left shoulder. Prior to the injury, he could carry as much as he could lift on that shoulder, and he earned $9.00 an hour at the time of that injury. After the injury, he was only able to earn $7.00 an hour doing lighter duty work (and eventually found that he could no longer do that). The conclusion the Division asks us to reach is that an employee cannot receive benefits for loss of earning capacity from $9.00 an hour to $7.00 an hour twice in a four-year period because that is a double recovery; indeed, the argument appears to go so far as to say that once an injured worker's earning capacity is pegged at, e.g., $7.00 an hour, the worker can not be permitted to earn more than that unless the permanent partial disability benefit is returned to the Division. We see no sense in such an argument. More importantly, we can find nothing in the governing statutes which supports such a position.
The Division does not otherwise challenge the findings and conclusions of the hearing examiner, and so we affirm the award of benefits ordered.
NOTES
[1] We will briefly mention here that the employment search information turned out to be irrelevant because Conner went out and found a job almost immediately upon being released to return to work.
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447 F.2d 950
UNITED STATES of America, Plaintiff-Appellee,v.Gustavo BATTLE, Defendant-Appellant.
No. 71-1344 Summary Calendar.*
United States Court of Appeals, Fifth Circuit.
August 13, 1971.
Prebish & Masin, Michael A. Masin, Miami, Fla., for defendant-appellant.
Robert W. Rust, U. S. Atty., George A. Kokus, Asst. U. S. Atty., Miami, Fla., for plaintiff-appellee.
Before JOHN R. BROWN, Chief Judge, and INGRAHAM and RONEY, Circuit Judges.
PER CURIAM:
1
On a plea of guilty, the petitioner was convicted on one count of purchasing, selling and distributing cocaine which was not in the original stamped package. He was sentenced to eight years imprisonment and a few days later filed what was denominated a Motion To Mitigate Sentence/Motion For Leave To Withdraw Plea of Guilty and Vacation of Sentence, contending that the misrepresentations of the Government were the forces moving him to plead guilty. In effect it is a direct appeal, not a post-conviction matter.
2
Prior to trial defendant's counsel had several conversations both with the United States Attorney and with the narcotics officer charged with consulting the probation officer. The defendant argues that the essence, though admittedly not unambiguous, of these conversations was that a light, if not minimal, sentence was in order and that the Government would not ask for, nor would the probation officer recommend, more. In fact, the defendant argues, the Government in effect admitted as much after the heavier sentence was imposed when the United States Attorney went to the Trial Judge and notified him that many of the statements in the presentence report very possibly pertained to the defendant's brother and not to the defendant.1 It was only because of these many claimed representations of Government officials that the defendant alleges he pleaded guilty. The Government of course counters that these were not the facts or that at any rate whatever the Government said it would do, it did.
3
The District Court in an unrevealing cryptic order denied the motion and the defendant appeals. In its denial, however, the District Court made no fact findings on which it based its determination. It is this deficiency that hinders our ability to resolve the merits of this appeal. We have nothing to go on but the charges and countercharges of the parties. The legal principles in this instance are fairly clear — a plea cannot be vacated because the defendant anticipated that by pleading guilty he would get a lighter sentence. On the other hand the Government ought not be allowed to lure the defendant into a plea on false information. So the facts here become critical for once they are known the application of the law to them will not be difficult. The need for full factual development is even more critical here than in post-conviction cases where we remanded for fact findings. See, e. g., Miller v. Henderson, 5 Cir., 1970, 435 F.2d 688. See also Waters v. Beto, 5 Cir., 1968, 392 F.2d 74, 75 n. 2; Welch v. Beto, 5 Cir., 1968, 400 F.2d 582. Thus we must vacate the judgment of the Court below and remand for specific fact findings which will put this case in a reviewable posture.
4
Vacated and remanded.
Notes:
*
Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et al., 5 Cir., 1970, 431 F.2d 409
1
Obviously an error of such seriousness ought to have been fully explored factually. The record is silent on what, if anything, the Judge did upon receiving this report
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752 F.Supp. 877 (1990)
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff,
v.
John Matthew BURGIN, et al., Defendants.
Civ. No. 90-5004.
United States District Court, W.D. Arkansas, Fayetteville Division.
November 19, 1990.
*878 Thomas B. Pryor, Pryor, Barry, Smith & Karber, Fort Smith, Ark., for plaintiff.
James A. Penix, Jr., Penix & Taylor, Springdale, Ark., John C. Everett, Everett & Gladwin, Prairie Grove, Ark., Bobby Lee Odom, Odom & Elliott, Fayetteville, Ark., Robert L. Jones, Jr., Jones, Gilbreath, Jackson & Moll, Fort Smith, Ark., Walter B. Cox, Davis, Cox & Wright, Fayetteville, Ark., for defendants.
MEMORANDUM OPINION
H. FRANKLIN WATERS, Chief Judge.
This is a declaratory judgment action initiated by the plaintiff, State Farm Mutual Automobile Insurance Company (State Farm), to determine which, if any, of three insurance policies issued by State Farm, Shelter Mutual Insurance Company (Shelter), and American General Fire and Casualty Company (American General), provide coverage for injuries received by defendant, John Burgin, in an automobile accident. This matter was submitted to the court on a partially stipulated record and by the presentation of other testimonial and documentary evidence on October 22, 1990. The following shall constitute the court's findings of fact and conclusions of law pursuant to Rule 52, Fed.R.Civ.P.
*879 The Facts and Principal Players
State Farm issued an automobile liability policy to Ron and Sheila Casteel expressly insuring a 1988 Ford Escort. It is not disputed that this policy was in full force and effect on the date of the accident.
American General issued a garage liability insurance policy to B & K Enterprises, Inc., (B & K), also known as Mazda of Springdale. B & K is the owner of the 1987 Chevrolet van which was being driven by Ron Casteel at the time of the occurrence.
Shelter issued an automobile insurance policy to Phillip and Charlotte Steele, insuring their 1984 Ford Bronco.
John Burgin was injured in an automobile accident in Iowa when the Chevrolet van driven by Ron Casteel, in which Burgin was a passenger, collided with another vehicle.
The evidence presented to the court indicates that Phillip Steele and Ron Casteel are stockholders in American Heritage Productions, Inc. (American Heritage) which produces and markets documentary films about the "Old West". For reasons of obscure historical importance, Steele and Casteel planned a trip to Minnesota, Kansas and Missouri to shoot documentary footage. The trip required at least four people: Ron and Sheila Casteel, Steele, and a photographer.
From experience these people knew that the Steele's 1984 Bronco would not accommodate four people and their equipment for such a trip. Steele went to Mazda of Springdale to request that James Baker (the owner-manager of B & K Enterprises) rent them a suitable vehicle. Baker informed Steele that B & K no longer rented vehicles but that he would loan them a suitable automobile. It is clear from the record that the Chevrolet van was loaned and not rented to the group. Further, Baker placed no restrictions upon who could operate the van or the purpose for which it could be used. As Steele and Casteel drove away from Mazda of Springdale, Casteel drove the Chevrolet van and Steele drove the Bronco to Steele's office and left it there during the trip. As noted, Casteel was operating the van at the time of the accident which injured Burgin, a passenger in the van.
The Policies:
The Shelter Policy Issued to the Steeles
As indicated above, Shelter issued a policy to the Steeles, expressly covering the 1984 Bronco. That policy also insures "temporary substitute autos" and "non-owned autos":
(4) Described auto means the vehicle described in the Declarations and includes a temporary substitute auto....
* * * * * *
(6) Non-owned auto means any auto other than:
(a) the described auto, or
(b) an auto owned in whole or in part by, or furnished or available for regular use of, either you or any resident of your household.
* * * * * *
(14) Temporary substitute auto means an auto not owned in whole or in part by you or any resident of your household, while temporarily used with the permission of the owner as a temporary substitute for the described auto when withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction.
It is at once apparent that, as to the Steeles, the Chevrolet van could, depending on the circumstances, be either a temporary substitute auto or a non-owned auto. In the case at bar there is no contention that the Steeles' 1984 Bronco was "withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction." Therefore, the Chevrolet van can, under the circumstances, be classified under the policy, only as a "non-owned auto".
What persons are insured under the Shelter policy issued to the Steeles as to a non-owned auto? The policy states:
(20) Insured means the person, persons, or organization defined as insureds in *880 or with reference to the specific coverage or endorsement.
PERSONS INSURED
As used in this Part, Insured means:
(1) with respect to the described auto,
(a) you,
(b) your relatives,
(c) any other person using the auto if its use is within the scope of your permission, and
(d) any other person or organization liable for the use of the auto by one of the above persons.
(2) With respect to a non-owned auto,
(a) you
(b) your relatives, provided the actual use or operation is with the permission, or reasonably believed to be with the permission of the owner or person in lawful possession, and within the scope of such permission, and
(c) any other person or organization which does not own or hire the auto but is liable for its use by one of the above persons.
Thus, as to a non-owned auto, the persons insured are the Steeles, relatives of the Steeles acting in accordance with permission given by the Steeles or the owner, and "any other person ... which does not own or hire the (van) but is liable for its use by one of the above persons." It is immediately obvious that Ron Casteel, as the driver of the van at the time of the accident, may be liable for his own use of the van, but cannot be "liable for its use by (the Steeles or their relatives)", under the factual allegations presented. It follows that Casteel, as an individual, is not an "insured" under the Shelter policy. Although the Steeles are insureds under the policy, according to the parties Burgin does not present a theory of liability encompassing them. Therefore, the Shelter policy provides no coverage as to any of Burgin's claims against Ron Casteel.
The American General Policy Issued to B & K Enterprises, Inc.
As indicated, American General issued a garage liability policy to B & K Enterprises, Inc. This policy obligates American General to:
[P]ay all sums the insured legally must pay as damages because of bodily injury or property damage to which this insurance applies caused by an accident and resulting from garage operations, (page 1 of 6)
"Garage operations" is defined as:
... the ownership, maintenance or use of locations for garage business and that portion of the roads or other accesses that adjoin these locations. Garage operations includes the ownership, maintenance or use of the autos indicated in Part II as covered autos. Garage operations also includes all operations necessary or incidental to a garage business. (definition "F", page 1 of 6)
Because "garage operations" is defined in the policy as including the "ownership ... or use of (the Chevrolet van)", the policy provides coverage for the type of occurrence at issue here. As to who is insured under the American General policy, the policy states:
D. WHO IS AN INSURED.
1. For Covered Autos.
a. You are an insured for any covered auto.
b. Anyone else is an insured while using with your permission a covered auto except:
(1) The owner of a covered auto you hire or borrow from one of your employees ...
(2) Someone using a covered auto while he or she is working in a business of selling, servicing, repairing or parking or storing autos unless the business is your garage operations.
(3) Your customers, if your business is shown in ITEM ONE of the declarations as an auto dealership. However, if a customer of yours:
(a) Has no other available insurance (whether primary, excess, or contingent), he or she is an insured but only up to the compulsory or financial responsibility law limits....
(b) Has other available insurance (whether primary, excess, or contingent) *881 less than the compulsory or financial responsibility law limits where the covered auto is principally garaged, he or she is an insured only for the amount by which the ... law limits exceed the limits of his or her other insurance.
Because it is not alleged that Casteel was the owner of a covered auto borrowed from an employee of B & K, nor that he was using the van while working in the business of selling, servicing, repairing, parking or storing autos, Casteel can be an insured only under D.1.b. Under that section, Casteel is an insured unless he is a customer (and is an insured if he is a customer subject to certain limitations). At this point, the question is whether Casteel qualifies as a "customer".
As to this, the only evidence before the court suggests that neither Steele nor Casteel were "customers" of B & K Enterprises on the day of the accident. The records reflect that Steele bought the 1984 Bronco from B & K several years ago. Additionally, sometime between six and twelve months prior to the accident, Steele told Baker and another employe, Cole, of B & K that he was "looking for" a vehicle similar to the Bronco to serve as a replacement vehicle and informally told them three or four times during this period to contact him if they located such a vehicle. No definite "order" for a particular vehicle had been placed, nor had any contract been entered. This is not sufficient to render Steele a customer on the day of the accident. The most that could be said is that Steele had been and probably will be again, a customer of B & K. Accordingly Casteel is insured under the American General policy for injuries to Burgin arising from Casteel's use of the van.
The State Farm Policy Issued to the Casteels
State Farm issued a policy to Ron and Sheila Casteel covering a 1988 Ford Escort. That policy also, under certain circumstances, insures Casteel while operating a "non-owned car". "Non-owned car" is defined as:
Non-owned carmeans a car not:
1. owned by,
2. registered in the name of, or
3. furnished or available for the regular or frequent use of:
you, your spouse, or any relative.
Again, the question is who is insured as to a non-owned car. The policy states:
When we refer to a non-owned car, insured means:
1. The first person named in the declarations;
2. his or her spouse;
3. their relatives;
4. any person or organization which does not own or hire the car but is liable for its use by one of the above persons.
Under the provisions set forth above, State Farm's policy provides coverage for the liability of Casteel while operating the van, unless other provisions of the policy exclude, modify, or limit such coverage. In this regard the policy states that there is no coverage:
2. For any Bodily Injury to:
a. A fellow employee while on the job and arising from the ... use of a vehicle by another employee in the employer's business. You and your spouse are covered for such injury to a fellow employee.
The first sentence quoted immediately above may be construed as excluding coverage for Burgin's bodily injuries under the theory that Burgin was a "fellow employee" of American Heritage whose injuries arose from the use of the van by Casteel ("another employee" of American Heritage) "in (American Heritage's) business." However, the last sentence expressly states that Casteel and his wife are covered for such injury to a fellow employee (Burgin). No other exclusion appears to be remotely applicable. As the last sentence can reasonably be construed as including (or not excluding) liability coverage for the Casteels for injuries to Burgin, he is also an "insured" under the State Farm policy.
*882 Construction of Other Insurance Clauses
However, there is more. The State Farm policy contains another insurance clause:
IF THERE IS OTHER LIABILITY COVERAGE
2. Other Liability Coverage Available From other Sources.
Subject to item 1, if other vehicle liability coverage applies, we are liable only for our share of the damages. Our share is the percent that the limit of liability of this policy bears to the total....
3. ... Non-Owned Car....
If a ... non-owned car ... has other vehicle liability coverage on it, then this coverage is excess. THIS COVERAGE SHALL NOT APPLY:
a. If the vehicle is owned by any person or organization in a car business; and
b. If the insured or the owner has other liability coverage which applies in whole or in part as primary, excess or contingent coverage.
The general language of Item 3 plainly attempts to modify the coverage provided so as to render any State Farm coverage "excess" coverage only, because the "non-owned" car has (or appears to have) "other vehicle liability coverage" on it (provided by American General). However, by its terms, even the "excess" State Farm coverage does not apply if the van is owned by an organization in a car business and the owner has other liability coverage which applies in whole or in part as primary, excess or contingent coverage.
In other words, if the Chevrolet van is covered by "other liability coverage" of any nature (provided in this case by American General), then there is no coverage at all under the State Farm policy if the vehicle is owned by an organization in the "car business". This is an "escape" clause.[1] The van is owned by B & K which is an organization engaged in a car business. Therefore, if B & K has other liability coverage for the occurrence, primary, excess, or contingent, then State Farm has no exposure under the policy provisions.
The next step is to ascertain whether American General's policy contains similar "excess", "escape", or "other insurance" provisions which arguably are mutually inconsistent with the clauses contained in the State Farm policy. One such clause found in the American General policy is as follows:
I. Other InsuranceSections II and III. With respect to bodily injury sustained by any person other than the named insured or a relative, the coverage ... shall apply only as excess insurance over any other similar insurance available to such person under the terms of any other motor vehicle insurance policy, and this coverage shall then apply only in the amount of which the limit of liability for this coverage exceeds the applicable limit of liability of such other insurance.
The American General policy's clause is clearly an "excess" clause, providing that coverage is "excess" over "any other similar insurance available" to an injured person, and then only for the amount by which the policy amount exceeds the limit of primary insurance. Thus, we are confronted with a possible conflict between an "escape" clause and an "excess" clause.[2]
The difficult interpretative process of deciphering the effects of "other insurance" *883 clauses has prompted Chief Judge Lay of the Eighth Circuit Court of Appeals to comment that such cases present "the repetitive task of untangling another web of confusion created by the inarticulate language of two automobile liability policies." Miller v. National Farmers Union Property & Casualty Co., 470 F.2d 700, 701 (8th Cir.1972). In that same vein, Justice Tobriner has said, "In entering this legalistic labyrinth of the provisions of these policies, we are not favored, like Theseus, with any thread of principle." American Auto. Ins. Co. v. Transport Indem. Co., 200 Cal. App.2d 543, 544, 19 Cal.Rptr. 558, 559 (1962).
It appears that a reasonably diligent legal researcher can find a line of cases that support about any proposition that the most fertile mind might care to advance. Numerous cases decided by probably a majority of the courts facing that issue have held that, where the policy of one of the insurers contains a provision attempting to preclude any coverage, and the other provides that its coverage should constitute "excess insurance" only in the event other insurance covered the risk, the "excess" insurance did not provide "other insurance" and therefore the "escape" insurer was liable for the loss.[3] It appears that many courts have shown a preference for excess clauses and a disfavor of escape clauses, with the result that escape insurers are often held to be primarily liable.[4]
On the other hand, there are other cases in which several courts favored, for one reason or another, the "escape insurer" over the "excess insurer".[5] Some of those cases involved policies of insurance which express a designated types of policies with which the provision in question might conflict.[6]
There are other views that have been followed by some courts. One is that the insurer of the policy first in effect is liable.[7] Another is that the insurer of the principal tortfeasor, under liability policies, is primarily liable.[8] Some courts have *884 adopted a middle ground. Under this view, it is held that, when "other insurance" clauses conflict, they are repugnant and each is rejected in toto, usually resulting in the carriers paying pro rata.[9] This is the modern trend where an "excess" clause conflicts with another similar "excess" clause in another policy. See Annotation: Resolution of Conflicts, in Non-Automobile Liability Insurance Policies, Between Excess or Pro-Rata "Other Insurance" Clauses, 12 A.L.R.4th 993; Annotation: Apportionment of Liability Between Liability Insurers Each of Whose Policies Provides That It Shall be "Excess" Insurance, 69 A.L.R.2d 1122.[10]
This court finds that the myriad of cases cited above going in every direction are not of substantial help in deciding this case. The outcome of many of them depended on the peculiar circumstances of the case and the exact wording of the various policies being construed. It is also obvious, at least to this court, that some of them make "bad law" because of the rightful concern of many courts that injured persons be adequately compensated.[11]
Choosing to cause one of two conflicting clauses to govern merely because excess clauses should control over escape clauses, or vice versa, is not based on much logic and has been said to be based upon circular reasoning, with the result depending upon which policy one happens to read first. See Oregon Auto. Ins. Co., supra.
Because this is a diversity case governed by Arkansas law, the question, of course, is which, if any, of the aforementioned positions has Arkansas adopted? While the court can find no Arkansas cases directly on point, and has been pointed to none by the parties, research discloses that Arkansas courts have expressed no particular disfavor for escape clauses and have traditionally upheld such clauses against attacks based upon public policy and later arguments based upon an asserted inconsistency with the uninsured motorist statute. As noted, Arkansas courts have rejected challenges to such clauses in the uninsured motorist context regardless of *885 the amount of indemnification, if any, that the claimant receives from primary coverage. See footnote 10, supra.
The Arkansas Supreme Court has sustained the validity of escape clauses where only one of two policies contains such a clause. In Planters' Mut. Ins. Co. v. Green, 72 Ark. 305, 80 S.W. 151 (1904), the court upheld the validity of an escape clause which stated:
This entire policy ... shall be void if the insured now has or shall hereafter ... procure any other contract of insurance, whether valid or not on property covered ... by this policy.
The court held that the policy was voided by the purchase of additional insurance by the insured. This principle was reiterated in Nabors v. Dixie Mut. Fire Ins. Co., 84 Ark. 184, 105 S.W. 92 (1907).
In Milwaukee Mechanics' Ins. Co. v. Gibson, 199 Ark. 542, 134 S.W.2d 521 (1939), one of the policies at issue contained both a pro rata clause and an escape clause. The insured argued that the clauses of that policy were inconsistent and therefore the pro rata clause controlled because it was more favorable to the insured. The court disagreed and held that the coverage of the policy was voided by other insurance covering the property. In accord Roach v. Arkansas Farmers Co., 216 Ark. 61, 224 S.W.2d 48 (1949); Agricultural Ins. Co. v. Arkansas Power & Light Co., 235 Ark. 445, 361 S.W.2d 6 (1962).[12]
In short, the Arkansas cases indicate that escape clauses such as the one present in the State Farm policy in this case are valid and are to be construed and applied as are other provisions of insurance policies. In this respect, it should be remembered that a policy of insurance is nothing more than a contract between the insurance carrier and its insured, and is to be governed by the ordinary rules of interpretation of contracts. Couch on Insurance § 45:294 at 620, and Perkins v. Clinton State Bank, 593 F.2d 327 (8th Cir.1979). A common sense approach should be used, and generally the words employed in the policy are to be understood in their ordinary sense. Wommack v. United States Fire Ins. Co., 323 F.Supp. 981 (W.D.Ark. 1971).
In construing and applying the "other insurance" clauses in the insurance policies in question in this case, the court must first determine whether it deems these provisions to be ambiguous, because, if they are, the law is well settled that the provision will be construed against the insurance company that drafted it. Aetna Cas. & Sur. Co. v. Stover, 327 F.2d 288 (8th Cir. 1964); Reiter v. State Farm Mut. Auto. Ins. Co., 357 F.Supp. 1006 (E.D.Ark.1973); Countryside Cas. Co. v. Grant, 269 Ark. 526, 601 S.W.2d 875 (1980). See also the discussion and cases cited at 43 Am.Jur.2d Insurance § 283.
On the other hand, if the court deems the provision to be plain and unambiguous, the law is that the court will not use a forced construction of the terms of an insurance contract where no ambiguity exists, and must apply the law to the unambiguous terms. Benton State Bank v. Hartford Acc. & Indem. Co., 452 F.2d 5 (8th Cir. 1971); Peacock & Peacock, Inc. v. Stuyvesant Ins. Co., 332 F.2d 499 (8th Cir.1964); Hardware Dealers Mutual Fire Ins. Co. v. Holcomb, 302 F.Supp. 286 (W.D.Ark.1969); Southern Farm Bureau Cas. Ins. Co. v. Williams, 260 Ark. 659, 543 S.W.2d 467 (1976); and Arkansas Blue Cross-Blue Shield, Inc. v. Tompkins, 256 Ark. 370, 507 S.W.2d 509 (1974).
In Rogers v. State Farm Ins. Co., 243 Ark. 887, 422 S.W.2d 677 (1968), the Arkansas Supreme Court, after recognizing that the modern trend is to broaden coverage under omnibus clauses of insurance contracts, then stated:
[B]ut liberal construction should not extend coverage under an omnibus clause, or restrict it under an exclusionary clause, beyond the plain words and obvious *886 intent and meaning of the words used in the contract.
The court does not believe that either of the "other insurance" clauses contained in the State Farm and American General policies are ambiguous. The State Farm policy provides in a straightforward manner that it does not provide coverage "if the insured or the owner has other liability coverage which applies in whole or in part as primary, excess, or contingent coverage", and the owner of the vehicle involved is in the "car business." On the other hand, the American General policy provides that, where there is other insurance, the insurance provided by that policy will be "excess coverage". Therefore, circular reasoning is not necessary to apply these provisions of these two policies and it makes no difference which policy is read first. The American General policy provides some type of coverage irrespective of whether there is other coverage provided by another insurance carrier. In other words, that policy always provides either primary coverage or excess coverage.
On the other hand, the State Farm policy rather clearly and unambiguously says that it will provide no coverage where another carrier has covered all or any part of the loss either through "primary, excess, or contingent coverage".[13] Thus, there is no conflict between the State Farm provision and the American General provision. Under all circumstances, American General provides some type of coverage, either primary, excess, or contingent, and, under those circumstances, the State Farm policy specifically provides no coverage.
In summary, of the insurance carriers who are defendants in this case, only American General provides coverage. Shelter, which issued the policy to the Steeles does not because Casteel, the driver of the vehicle involved in the accident, was not an insured as that term is defined in the Shelter policy. State Farm provides no coverage because, while Casteel is an insured, there is a specific and unambiguous escape clause providing that the policy affords no coverage to Casteel under the circumstances of this case.
A judgment in accordance with the foregoing will be concurrently entered.
NOTES
[1] An "escape clause" typically provides that the insurer shall have no liability if there is other insurance. See, e.g., clauses at issue in Insurance Co. of N. Am. v. Continental Casualty Co., 575 F.2d 1070 (3rd Cir.1978); Graves v. Traders & Gen. Ins. Co., 252 La. 709, 214 So.2d 116 (1968). An "excess clause" is similar to an "escape clause" but provides that the policy or coverage shall apply only as excess insurance over any other insurance. See e.g., clauses under discussion in Saint Ann v. American Ins. Co., 206 So.2d 817 (La.App.1968); Continental Cas. Co. v. Weekes, 74 So.2d 367 (Fla.1954).
[2] Such conflicting clauses are discussed in Annotation: Apportionment of Liability Between Automobile Liability Insurers One or More of Whose Policies Provide Against Any Liability if There is Other Insurance, 46 A.L.R.2d 1163.
[3] Citizens Mut. Auto. Ins. Co. v. Liberty Mut. Ins. Co., 273 F.2d 189 (8th Cir.1959), and cases cited therein. See also Continental Cas Co. v. Curtis Pub. Co., 94 F.2d 710 (3d Cir.1938); Michigan Alkali Co. v. Bankers Indem. Ins. Co., 103 F.2d 345 (2d Cir.1939); Zurich Gen. Accid. & Liability Ins. Co. v. Clamor, 124 F.2d 717 (7th Cir.1941); Travelers Indem. Co. v. State Auto. Ins. Co., 67 Ohio App. 457, 37 N.E.2d 198 (1941) (auto operator's "excess" policy is not "other valid insurance" within the meaning of the auto owner's "escape" policy-owner's insurer liable); Grasberger v. Liebert & Obert, Inc., 335 Pa. 491, 6 A.2d 925 (1939); Jamestown Mut. Ins. Co. v. Erie Ins. Exch., 357 F.Supp. 933 (W.D.Pa.1972); Protective Nat. Ins. Co. v. Bell, 361 So.2d 1058 (Ala. 1978); Rocky Mountain Fire & Cas. Co. v. Allstate Ins. Co., 107 Ariz. 227, 485 P.2d 552 (1971) (garage "escape" insurer primarily liable as to driver's "excess" insurer because "escape" clause void. However, the liability limitation provision of the "escape" clause is valid).
[4] See Fireman's Fund Indem. Co. v. Prudential Assur. Co., 192 Cal.App.2d 492, 13 Cal.Rptr. 629 (1961); Peerless Cas. Co. v. Continental Cas. Co., 144 Cal.App.2d 617, 301 P.2d 602 (1956); New Amsterdam Cas. Co. v. Certain Underwriters at Lloyd's, London, 34 Ill.2d 424, 216 N.E.2d 665 (1966); Vandermoere v. Michigan Millers Mut. Ins. Co., 34 Mich.App. 429, 191 N.W.2d 501 (1971); Federal Ins. Co. v. Prestemon, 278 Minn. 218, 153 N.W.2d 429 (1967); Western Nat. Mut. Ins. Co. v. United States Fire Ins. Co., 269 N.W.2d 34 (Minn.1978); Insurance Co. of N. America v. Continental Cas. Co., supra; Hardware Dealers Mut. Fire Ins. Co. v. Farmers Ins. Exch., 437 S.W.2d 390 (Tex.Civ.App.1969); Jensen v. Universal Underwriters Ins. Co., 208 Neb. 487, 304 N.W.2d 51 (1981).
[5] See Indiana Lumbermens Mut. Ins. Co. v. Mitchell, 409 F.2d 392 (7th Cir.1969); American Bankers Ins. Co. v. Leatherby Ins. Co., 350 So.2d 353 (Fla.App.1977); Indiana Lumbermens Mut. Ins. Co. v. Mitchell, 285 F.Supp. 969 (E.D.Ill. 1968); Zurich Ins. Co. v. Contin. Cas. Co., 239 Md. 421, 212 A.2d 96 (1965); Employers' Lia. Assur. Corp. v. Liberty Mut. Ins. Co., 167 N.E.2d 142 (Ohio 1959). See Keaton and Wades, Insurance Law § 3.11 (1988), p. 264 (West Pub. Co.); see also Insurance Co. of N. Am. v. Continental Cas. Co., supra; Maryland Cas. Co. v. Horace Mann Ins. Co., 551 F.Supp. 907 (W.D.Pa.1982); P.L. Kanter Agency, Inc. v. Continental Cas. Co., 541 F.2d 519 (6th Cir.1976).
[6] See Continental Cas. Co. v. Weekes, supra; Continental Cas. Co. v. Suttenfield, 236 F.2d 433 (5th Cir.1956); Faltersack v. Vanden Boogaard, 39 Wis.2d 64, 158 N.W.2d 322 (1968); State Farm Mut. Auto. Ins. Co. v. Western Cas. & Sur. Co., 477 S.W.2d 421 (Mo.1972).
[7] See New Amsterdam Cas. Co. v. Hartford Accid. & Indem. Co., 108 F.2d 653 (6th Cir.1940).
[8] See discussion in Oregon Auto. Ins. Co. v. U.S.F. & G., 195 F.2d 958 (9th Cir.1952), rejecting this view as well as the "specificity" test, and the "first-issued" rule).
[9] See Continental Cas. Co. v. General Accid. Fire & Life Assur. Corp., 175 F.Supp. 713 (D.Or.1959), and supp. opin., 179 F.Supp. 535, aff'd as mod., 287 F.2d 464 (9th Cir.1960); Oregon Auto. Ins. Co. v. U.S.F. & G., supra; Employers Mut. Cas. Co. v. MFA Mut. Ins. Co., 384 F.2d 111 (10th Cir.1967); General Ins. Co. v. Truck Ins. Exch., 242 Cal.App.2d 419, 51 Cal.Rptr. 462 (1966); New Amsterdam Cas. Co. v. Certain Underwriters at Lloyd's, London, 56 Ill.App.2d 224, 205 N.E.2d 735 (1965); Indiana Ins. Co. v. American Underwriters, Inc., 261 Ind. 401, 304 N.E.2d 783 (1973); Union Ins. Co. v. Iowa Hardware Mut. Ins. Co., 175 N.W.2d 413 (Iowa 1970); Veillon v. Southern Farm Bureau, 254 So.2d 130 (La.App. 1971); Gilkey v. Andrew Weir Ins. Co., 291 F.2d 132 (9th Cir.1961) (Oregon law); State Farm Mut. Auto. Ins. Co. v. U.S.F. & G., 490 F.2d 407 (4th Cir.1974) (West Virginia law); State Farm Mut. Auto. Ins. Co. v. Bogart, 149 Ariz. 145, 717 P.2d 449 (1986) (en banc); Western Cas. & Sur. Co. v. Universal Underwriters Ins. Co., 232 Kan. 606, 657 P.2d 576 (1983); Indiana Ins. Co. v. Federated Mut. Ins. Co., 415 N.E.2d 80 (Ind.App. 1981); Dette v. Covington Motors, Inc., 486 So.2d 805 (La.App.1986).
[10] For a discussion of conflicting excess clauses and pro rata clauses, see Annotation: Apportionment of Liability Between Automobile Liability Insurers Where One of the Policies Has an "Excess Insurance" Clause and the Other a "Proportionate" or "Pro Rata" Clause, 76 A.L.R.2d 502.
[11] In some jurisdictions, including Arkansas, courts accept the insurance companies' position that the excess/escape clause is clear and unambiguous and allows an insurer to reject claims even when a claimant has not been fully compensated by the primary coverage. These decisions hold that, when one uninsured motorist coverage is applicable to the accident, the insured is in the same position that would have existed if the tortfeasor had been covered by a liability insurance policy with the minimum limits of liability required by the state financial responsibility law, and that it is irrelevant whether the uninsured motorist insurance is disbursed to other claimants. See Harris v. Southern Farm Bur. Cas. Ins. Co., 247 Ark. 961, 448 S.W.2d 652 (1970). This is the view in several jurisdictions, including Caliafornia, Maryland, Massachusetts, New York, Utah, and perhaps Illinois, Michigan, and South Carolina. See Keaton and Wades, supra, § 3.11, pp. 269-70, n. 11.
Courts in several jurisdictions have concluded that a claimant should receive the minimum amount mandated by the state financial responsibility statutes. Adopting this view are Arizona, Connecticut, Iowa, Tennessee, and Wisconsin. See Keaton and Wades, supra, p. 271, n. 13.
[12] Other Arkansas cases either concerning or discussing the validity and effect of escape clauses include Arkansas Grain Corp. v. Lloyd's, 240 Ark. 750, 402 S.W.2d 118 (1966) and Ins. Co. of N. America v. Nicholas, 259 Ark. 390, 533 S.W.2d 204 (1976).
[13] It appears that this policy language may have been drafted with the shifting and conflicting law set forth above in mind, since it avoids usage of some of the terms which have caused courts problems in the past. For example, coverage does not depend upon whether there is "valid and collectible insurance" provided by another carrier. Instead, there is no coverage under the State Farm language where the owner or insured has "other liability coverage" covering any part of the loss whether that coverage is primary, excess, or contingent upon the happening of some other event or the existence of some other factor such as the lack of insurance provided by another carrier.
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700 F.2d 220
Curtis GRAVES, et al., Plaintiffs-Appellees,v.Ben BARNES, et al., Defendants-Appellants.
No. 81-1557.
United States Court of Appeals,Fifth Circuit.
March 17, 1983.
Martha H. Allan, Asst. Atty. Gen., Austin, Tex., for defendants-appellants.
David R. Richards, Austin, Tex., for Richards.
Joaquin Avila, Norma V. Solis, Jose Garza, Mexican American Legal Defense & Educ. Fund, San Antonio, Tex., Morrison & Foerster, Girvan Peck, San Francisco, Cal., for Bernal, et al.
Don Gladden, Fort Worth, Tex., for Escalante, Moore, John Dillard, T.R. Dillard and Mary Dillard.
Appeal from the United States District Court for the Western District of Texas.
Before CLARK, Chief Judge, THORNBERRY and POLITZ, Circuit Judges.
THORNBERRY, Circuit Judge:
I. Introduction:
1
This is an appeal by the State of Texas from an award of attorney's fees to plaintiffs in this action. Litigation in this voting rights case has spanned over a decade, requiring two trips to the United States Supreme Court. The merits of this case having been finally resolved in Graves v. Barnes, 446 F.Supp. 560 (W.D.Tex.1977), affirmed, 435 U.S. 901, 98 S.Ct. 1444, 55 L.Ed.2d 492 (1978) (Graves IV ), only the subsidiary issues of the award of attorney's fees and costs are now before us on appeal. The district court directed defendant State of Texas to pay attorney's fees and costs to the plaintiffs in the following amounts:
2
Attorney's Costs and
Name Fees Expenses
-------------------------- ----------- -----------
Mexican-American Legal
Defense Education Fund
(MALDEF) and George Korbel $365,645.20 $ 7,825.29
David Richards $166,125.00 $ 10,000.00
Don Gladden $416,933.00 $ 12,854.54
3
(including fees for
4
paralegal time)
5
Finally, by order dated May 18, 1982, the court ordered the State to pay Tony Korioth and John Collins jointly the sum of $3,600 in attorney's fees. For the reasons stated below, we modify the judgment, and affirm as modified.
II. Discussion:
6
Before proceeding to analyze the propriety of the fee award, however, we must first dispose of a threshold issue raised by the State. Relying on Supreme Court of Virginia v. Consumer's Union, 446 U.S. 719, 100 S.Ct. 1967, 64 L.Ed.2d 641 (1980), the State argues that since the defendants in this case, who were enforcement officials, merely followed the mandate laid down by the Texas legislature, they are entitled to absolute legislative immunity from suit. This argument misconstrues Consumer's Union, in which the Court stated that "[f]ee awards against enforcement officials are run-of-the-mill occurrences, even though, on occasion, had a state legislature acted or reacted in a different or more timely manner, there would have been no need for a lawsuit or for an injunction." 446 U.S. at 739, 100 S.Ct. at 1978. See also Fernandez v. Limmer, 663 F.2d 619, 637 (5th Cir.1981), cert. dismissed, --- U.S. ----, 103 S.Ct. 5, 73 L.Ed.2d 1395 (1982). Moreover, this Court has recently awarded attorney's fees to the prevailing plaintiffs in a voting rights case. See Flowers v. Wiley, 675 F.2d 704 (5th Cir.1982).
7
The State next contends that the district court abused its discretion by awarding excessive attorney's fees to plaintiffs. The standard in this circuit governing the computation of attorney's fees is set out in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974) and its progeny.1
8
In awarding attorney's fees, the district court is empowered to exercise its informed discretion, and a reviewing court will not disturb the judgment of the district court absent a showing of an abuse of discretion. Lindy Bros. Builders v. American Radiator & Standard Sanitary Corp., 487 F.2d 161, 166 (3d Cir.1973), affirmed, 540 F.2d 102 (3d Cir.1976) (en banc). In arriving at an appropriate amount, the district court is required to "explain the findings and reasons upon which the award is based, including an indication of how each of the twelve factors in Johnson affected [its] decision." Copper Liquor, Inc. v. Adolph Coors Co., 624 F.2d 575, 581 (5th Cir.1980) (Copper Liquor II ). Finally, the district court's factual findings will not be disturbed unless they are clearly erroneous. In re First Colonial Corp. of America, 544 F.2d 1291, 1298 (5th Cir.1977), cert. denied, 431 U.S. 904, 97 S.Ct. 1696, 52 L.Ed.2d 388 (1977).
9
The Fifth Circuit recently adopted the "lodestar" method of calculating attorney's fees relied upon by the Second,2 Third,3 and District of Columbia4 Circuits. See Copper Liquor II, 624 F.2d at 583 n. 15; Copper Liquor, Inc. v. Adolph Coors Co., 684 F.2d 1087, 1092-93 & n. 11 (5th Cir.1982) (Copper Liquor III ). Under this refinement of the Johnson test, "[t]he 'lodestar' is equal to the number of hours reasonably expended multiplied by the prevailing hourly rate in the community for similar work. The lodestar is then adjusted to reflect other factors such as the contingent nature of suit and the quality of the representation." Copper Liquor III, 684 F.2d at 1093 (citing Copeland, 641 F.2d at 891-94).
10
In fixing the amount of the fee award, the district court relied on prevailing hourly rates, rather than on historical rates. Stated differently, the district court applied the rates prevailing at the time the fee application was filed, rather than those rates prevailing at the time the services were actually rendered. The court then multiplied these rates by a factor of two so that they might reflect the contingent nature of the case. The court explained its use of the contingency multiplier in the following manner: "In recognition of the often uncertain prospects of success on the merits and the protracted nature of this litigation, which served to exacerbate the tenuous nature of ultimate recovery, the fee award for work on the merits of these actions will be multiplied by a factor of two."
11
In setting out principles that can be used by district courts in assessing the contingency multiplier, we adopt the analysis set out by the Third Circuit in Lindy II:
12
Under the rubric of "the contingent nature of success" the district court should appraise the professional burden undertaken--that is, the probability or likelihood of success, viewed at the time of filing suit. The court may increase the amount established in the computation of the "lodestar" as a reasonable fee on the basis of a careful evaluation of the following factors:
13
1. Analysis of plaintiff's burden. Subsumed in this category are the following considerations: (a) the complexity of the case,--legally and factually; (b) the probability of defendant's liability,--whether it is clear or dubious; whether it has been previously suggested by other civil or criminal proceedings; whether it is asserted under existing case law or statutory interpretation, or is advanced as a novel theory; (c) an evaluation of damages,--whether the claims would be difficult or easy to prove.
14
2. Risks assumed in developing the case. This category subsumes consideration of: (a) the number of hours of labor risked without guarantee of remuneration; (b) the amount of out-of-pocket expenses advanced for processing motions, taking depositions, etc.; (c) the development of prior expertise in the particular type of litigation; recognizing that counsel sometimes develop, without compensation, special legal skills which may assist the court in efficient conduct of the litigation, or which may aid the court in articulating legal precepts and implementing sound public policy.
15
3. The delay in receipt of payment for services rendered.
16
If, having considered the foregoing or other relevant criteria, the district court desires to increase the "lodestar" award, it should identify those factors supporting its conclusion, state the specific amount by which the basic fee should be increased due to the contingency of success, and give a brief statement of reasons therefor. We reiterate that any such increment in the "lodestar" award is to be considered and applied apart from the evaluation of the quality of services rendered in the particular proceedings.
17
Lindy II, 540 F.2d at 117. The concept of compensation for delay in receipt of payment is founded on the principle that "[p]ayment today for services rendered long in the past deprives the eventual recipient of the value of the use of the money in the meantime, which use, particularly in an inflationary era, is valuable." Copeland v. Marshall, 641 F.2d 880, 893 (D.C.Cir.1980) (en banc).
18
The lodestar may also be adjusted through the use of a multiplier to reflect the quality of representation.
19
Under the rubric of "the quality of an attorney's work," the court should appraise the manner in which counsel discharged his or her professional responsibilities. The district court may use this factor to increase or decrease the "lodestar" calculation.
20
As a first principle, the court must recognize that a consideration of "quality" inheres in the "lodestar" award: counsel who possess or who are reputed to possess more experience, knowledge and legal talent generally command hourly rates superior to those who are less endowed. Thus, the quality of an attorney's work in general is a component of the reasonably hourly rate; this aspect of "quality" is reflected in the "lodestar" and should not be utilized to augment or diminish the basic award under the rubric of "the quality of an attorney's work."
21
Lindy I, then, permits an adjustment to the "lodestar"--up or down--based on the all-round performance of counsel in the specific case: "Any increase or decrease in fees to adjust for the quality of work is designed to take account of an unusual degree of skill, be it unusually poor or unusually good." 487 F.2d at 168. By this is meant simply that the district court may determine that the lawyer discharged the professional burden undertaken with a degree of skill above or below that expected for lawyers of the caliber reflected in the hourly rates. As previously rehearsed, we do not intend that this evaluation entail a detailed analysis of the lawyer's performance in each category of services rendered. Rather, the increase or decrease reflects exceptional services only; it may be considered in the nature of a bonus or penalty. The heavy burden of proving entitlement to such an adjustment is on the moving party.
22
In determining whether to adjust the "lodestar" for quality work or not, the district court may consider, inter alia:
23
1. The result obtained by verdict or settlement, evaluated in terms of (a) the potential money damages available to the class member, i.e., a comparison of the extent of possible recovery with the amount of actual verdict or settlement; (b) the benefit--monetary or non-monetary--conferred on the class, i.e., permitting the court "to recognize and reward achievements of a particularly resourceful attorney who secures a substantial benefit for his clients with a minimum of time invested ...." [Merola v. Atlantic Richfield Co.,] Merola II, supra, 515 F.2d at 168 [ (3rd Cir.1975) ].
24
2. An evaluation of the professional methods utilized in processing the case,--rewarding the use of efficient methods to expedite the case and penalizing the use of methods the predominant purpose of which was to delay or obstruct the proceedings.
25
If, on the basis of the quality of services rendered, the court is persuaded that an increase or decrease in the "lodestar" is warranted, it should identify those factors supporting its conclusions, state the specific amount by which the basic fee should be altered due to the quality of work, and give a brief statement of reasons therefor.
26
Lindy II, 540 F.2d at 117-18 (emphasis in original).
27
We note that under the "quality of representation" rubric, consideration of the results of the litigation enters for the first time into the calculation of the fee award.
28
Where exceptional results are obtained--taking into account the hourly rate commanded and number of hours expended--an increase in fee is justifiable. However, it is important again to emphasize that a huge dollar recovery does not itself justify a huge fee award. The "lodestar" itself generally compensates lawyers adequately for their time. An upward adjustment for quality is appropriate only when the attorney performed exceptionally well, or obtained an exceptional result for the client. For example, if a substantial monetary judgment was to be expected, that expectation normally is reflected in the hourly rate used to compute the "lodestar," and no further adjustment would be necessary.
29
Copeland, 641 F.2d at 894 (emphasis in original).
30
We wish to emphasize that a district court should not award a contingency multiplier in every case. Under appropriate circumstances, attorneys may be adequately compensated through the reasonable calculation of the lodestar.5
31
Finally, we note that a court need not in determining the multiplier consider some factor already included in the calculation of the lodestar. Thus, where "the lodestar itself is based on present hourly rates, rather than on the lesser rates applicable to the time period in which the services were rendered, the harm resulting from delay in payment may be reduced or largely eliminated." Copeland, 641 F.2d at 893 n. 23 (emphasis in original). See also Copper Liquor III, 684 F.2d at 1096 n. 26; E. Larson, Federal Court Awards of Attorney's Fees 206-09 (1981), and cases cited therein.
32
Applying these principles to the present case, we conclude that the district court did not abuse its discretion by both awarding fees based on present hourly rates and using a contingency multiplier. Analysis of the district court's stated reasons for applying the multiplier reveals that "delay in payment" did not figure in its calculus. The court based its award on the uncertain prospects of success on the merits, and relied upon the "protracted nature of this litigation" only to the extent that this "exacerbate[d] the tenuous nature of ultimate recovery." The court also adequately compensated plaintiffs' counsel for the delay in payment by its use of present hourly rates in determining the amount of the lodestar.
33
We have reviewed the other arguments advanced by the State attacking the amount of the fee award. Having carefully examined the record, we conclude that the district court was not clearly erroneous in its findings of fact, and that its assessment of the total award due did not constitute an abuse of discretion. We note, however, that the court did make a minor error in its calculations. The district court specifically stated in its memorandum that the award for travel time was not subject to the contingency multiplier. However, in its calculation of fee awards in Table 2, the court mistakenly multiplied the amount for travel time by a factor of two. Accordingly, we modify the judgment of the district court to correct for this error as follows:
MALDEF and George Korbel $363,900.20
Don Gladden $416,368.00
34
As modified, the judgment of the district court is AFFIRMED. Finally, we note that MALDEF requested this court to award it attorney's fees for their work on this appeal. Since they have not submitted any affidavits in support of their claim, we REMAND this issue to the district court.
1
Attorney's fees are, of course, appropriate in this case under 42 U.S.C. Sec. 1973l (e). See also 1975 U.S.Code Cong. & Admin.News 774, 807-08. Our use of the Johnson standard is necessary only to determine the reasonableness of the amount awarded
2
City of Detroit v. Grinnell Corp., 560 F.2d 1093 (2d Cir.1977)
3
Lindy Bros. Builders, Inc. v. American Radiator and Standard Sanitary Corp., 540 F.2d 102 (3d Cir.1976) (en banc) (Lindy II )
4
Copeland v. Marshall, 641 F.2d 880 (D.C.Cir.1980) (en banc)
5
The contingency multiplier is not without its critics. See Leubsdorf, The Contingency Factor in Attorney Fee Awards, 90 Yale L.J. 473 (1981), noted in Copper Liquor III, 684 F.2d at 1097 n. 30. See also the dissenting opinions in Lindy II, 540 F.2d at 125, and Copeland, 641 F.2d at 917. We note, however, that one of the solutions proposed by Professor Leubsdorf in his article was a simple, across-the-board doubling of attorney's fee awards. 90 Yale L.J. at 511-12. That is precisely what the district court did in this case
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433 N.E.2d 788 (1982)
Alan D. BENDER, Ivan Bender, Defendants-Appellants,
v.
Jerry PEAY, Plaintiff-Appellee.
No. 1-481 A 154.
Court of Appeals of Indiana, First District.
April 5, 1982.
*789 George A. Porch, Bamberger, Foreman, Oswald & Hahn, Evansville, for defendants-appellants.
John A. Hamilton, David A. Bunner, Bunner, John & Heathcotte, Evansville, for plaintiff-appellee.
RATLIFF, Presiding Judge.
STATEMENT OF THE CASE
Alan and Ivan Bender appeal from the Warrick Superior Court's denial of their motion for summary judgment on Jerry Peay's claim for loss of consortium of his wife, her medical expenses, and his lost earnings occasioned by her injuries. We reverse.
STATEMENT OF THE FACTS
On January 12, 1978, Barbara Peay, Jerry Peay's wife, was driving a 1969 Cadillac automobile in a westerly direction on a snow-covered county road in Posey County, Indiana. Alan Bender was driving a pick up truck which belonged to his father, Ivan Bender, in an easterly direction on the same road. The vehicles collided head-on near the crest of a small hill. Mrs. Peay sustained injuries in the accident which required hospitalization and surgery.
Mrs. Peay sued Alan and Ivan Bender for her personal injuries, medical expenses, and property damage. This suit was tried in the Vanderburgh Circuit Court and judgment was entered against Mrs. Peay on August 31, 1979. There was no appeal from that judgment.
Jerry Peay filed suit against Alan and Ivan Bender on December 5, 1979. In Count I of his complaint, which is the only count involved in this appeal, Peay sought damages for the loss of consortium of his wife resulting from her injuries received in the January 27, 1978, automobile collision, his wife's medical expenses, and his own lost wages allegedly resulting from her injuries. Alan and Ivan Bender moved for summary judgment on Count I of the complaint contending the judgment of the Vanderburgh Circuit Court in Mrs. Peay's action was dispositive of Count I. The supporting affidavit filed with the motion for summary judgment submitted to the Warrick Superior Court the entire certified record of the Vanderburgh Circuit Court in Cause No. 5780 in Mrs. Peay's personal injury claim. The record of Mrs. Peay's suit was made a part of the record in the case at bar. A motion in opposition to the motion for summary judgment was filed by Jerry Peay. The trial court denied summary judgment and certified the issue for interlocutory appeal.
ISSUE
We have restated the sole issue raised by the Benders in this appeal as follows:
Whether a husband may maintain a separate action for loss of his wife's consortium after the wife's action for her injuries resulted in a judgment adverse to her claim.
DISCUSSION AND DECISION
The Benders contend first that Jerry Peay's claim is derived from his wife's personal injury claim and thus was extinguished by the termination of her claim in their favor and second that even if Mr. Peay's claim is not derivative, the doctrine of collateral estoppel bars his claim. Judge Neal in his dissenting opinion addresses only the second contention raised by the Benders. Although we do not quarrel with his accurate discussion of the general rules of res judicata, we do not believe it is necessary to apply those rules to the present case since we find the prior adjudication of Mrs. Peay's claim precludes Mr. Peay's claim for loss of consortium.
*790 In the present case, Mrs. Peay fully litigated her claim for damages for personal injuries against the Benders. That action resulted in a jury verdict adverse to her claim. A general verdict is a finding in favor of the prevailing party on all the material issues in the case. Harker v. Gruhl, (1916) 62 Ind. App. 177, 111 N.E. 457, trans. denied; 21 I.L.E., Negligence § 221 (1959). "A general verdict against a party is a finding against him upon all issues of which he assumed the affirmative." Scoopmire v. Taflinger, (1944) 114 Ind. App. 419, 430-31, 52 N.E.2d 728. Further, it has been held in negligence actions that a general verdict for the defendant amounts to a finding that the defendant was free from negligence or that the plaintiff was guilty of contributory negligence. Siivonen v. City of Oneida, (1970) 33 A.D.2d 934, 306 N.Y.S.2d 278; Snider v. Jennings, (1968) 11 Mich. App. 562, 161 N.W.2d 594; Jones v. Kline, (1955) Ohio App., 73 Ohio L.Abs. 354, 137 N.E.2d 611. Also, it has been held that a general verdict in favor of the defendant imports that all issues submitted to the jury were found in favor of the defendant. LeBlanc v. Bray, (1975) 168 Conn. 92, 357 A.2d 926. Thus, the verdict in favor of the Benders in Mrs. Peay's case established that the Benders were not liable for her injuries. If Benders were not liable for Mrs. Peay's injuries, how can they be liable to Peay for loss of his wife's consortium?
Our conclusion that Mr. Peay's loss of consortium claim is precluded by the adjudication of Mrs. Peay's claim is derived from the nature of a loss of consortium claim. In Arthur v. Arthur, (1973) 156 Ind. App. 405, 296 N.E.2d 912, trans. den., this court recognized the derivative nature of a loss of consortium claim. The plaintiff-wife in Arthur brought a loss of consortium claim against Ira E. Arthur. The plaintiff's husband, Lemuel, had been injured while he and Ira were unloading a load of logs from Ira's truck. Lemuel and Ira were hauling the logs for Kenneth Welty. Lemuel filed a workmen's compensation claim for his injuries against Welty. The Industrial Board approved an agreement between the parties that Lemuel was to receive compensation payments. Subsequently the plaintiff filed her action against Ira. Ira's motion for summary judgment was granted by the trial court, and the plaintiff appealed. On appeal, Chief Judge Hoffman recognized the derivative nature of the plaintiff's claim and framed the issue before the court as follows:
"However, a cause of action for loss of consortium derives its viability from the validity of the claim of the injured spouse against the wrongdoer. Where, for example, the claim of the injured spouse against the alleged tort-feasor has been abrogated by statute, the right of the other spouse to recover for loss of consortium cannot exist. Stainbrook v. Johnson Co. F. Bur. etc., et al. (1954), 125 Ind. App. 487, 122 N.E.2d 884 (transfer denied). Thus, the crucial issue in the instant case is whether Lemuel has a valid cause of action against Ira."
Id., 156 Ind. App. at 406, 296 N.E.2d at 913. Thus, this court determined whether Lemuel had a valid claim against Ira, for if he did not have such a claim his wife would not have a claim for loss of consortium. It was found in Arthur that a material issue of fact as to whether Lemuel had a valid claim against Ira existed and thus the entry of summary judgment was reversed.
The dissent in contending that Arthur v. Arthur, supra, is not controlling in the instant case states at 796:
"The issue was whether the plaintiff's husband had a valid cause of action against the fellow employee who allegedly caused his injury; if not the plaintiff's loss of consortium action was likewise invalid. This conclusion results from the fact that the remedy provided by the Workmen's Compensation statute is exclusive of all others, even those belonging to dependents and next of kin. Ind. Code 22-3-2-6. The issue was whether the plaintiff's claim was abrogated by statute, not whether it was foreclosed by res judicata."
A close examination of Arthur shows this court did not hold the plaintiff's loss of consortium claim to be abrogated by the *791 predecessor of Ind. Code 22-3-2-6.[1] Rather, the court determined whether the injured spouse's claim was abrogated by statute. If it was so abrogated, the loss of consortium claim would be invalid because of its derivative nature.
The fact that a loss of consortium claim derives its viability from the injured spouse's claim has been further exemplified in the recent case of Clouse v. Fielder, (1982) Ind. App., 431 N.E.2d 148. In Clouse, the husband's and wife's claims were jointly tried. The jury returned a verdict for the wife on her personal injury claim but failed to return a verdict for the husband on his claim for loss of consortium. The trial judge treated the non-verdict as an adverse verdict and entered judgment against the husband. After discussing the derivative nature of a loss of consortium claim, we reversed and remanded the case for a new trial only on the issue of the husband's damages saying at 160:
"In order for James to recover he must prove both liability and damages. In this case liability of Clouse for Georgia's injuries was established when the jury rendered a verdict for Georgia. The uncontradicted evidence in the record shows that those injuries caused James to lose to some extent his wife's services. Thus, when liability has already been determined and the evidence of loss of services or consortium is uncontradicted, a new trial for damages only will be required." (Citations omitted.)
See also, Lee v. Lafayette Home Hospital, Inc., (1980) Ind. App., 410 N.E.2d 1319, trans. denied (holding that the parents' action for loss of services of and medical expenses for their child, allegedly resulting from medical malpractice on the child, was derived from the child's malpractice claim and, therefore, subject to the provisions of the Indiana Medical Malpractice Act).
Since a loss of consortium claim derives its viability from the injured spouse's claim for injuries, we fail totally to understand how a defendant could be liable to one spouse on a loss of consortium claim when it has already been determined he or she did not cause the other spouse's injuries. To hold otherwise by applying the rules of res judicata and indulging in hair splitting technicalities, such as failure of the defendants to seek joinder of the claims or technical definitions of "privity," is to promote form over substance. Common sense and logic demand a holding which precludes one from pursuing a claim which is totally derivative when the claim from which it is derived has been fully litigated, adjudicated, and denied. Indeed, courts in other jurisdictions have clearly and unequivocally held that where one spouse's claim for personal injuries is tried and lost, the other spouse's claim for loss of consortium is likewise precluded. Stickney v. E.R. Squibb & Sons, Inc. (M.D.Fla. 1974) 377 F. Supp. 785 (Florida law); Douberly v. Okefenokee Rural Electric Membership Corp., (1978) 146 Ga. App. 568, 246 S.E.2d 708; Jones v. Slaughter, (1974) 54 Mich. App. 120, 220 N.W.2d 63; Sisemore v. Neal, (1963) 236 Ark. 574, 367 S.W.2d 417. As the Georgia Court of Appeals stated in Douberly:
"`One spouse's right of action for the loss of the other's society or consortium is a derivative one, stemming from the right of the other.' [citation omitted]. Since appellees are not liable for injuries to appellant, they are not liable to appellant's wife for loss of consortium attributable to those injuries. Summary judgment was therefore proper."
246 S.E.2d 709.
The dissent relies, in part, upon Rosander v. Copco Steel & Engineering Co., (1982) Ind. App., 429 N.E.2d 990, which held that one spouse's settlement and release of his personal injury action does not bar the other spouse from suing for loss of consortium where she was not a party to the settlement *792 and had no notice of it. That case is clearly distinguishable in that no adjudication of liability or non-liability had been made by a competent tribunal. Here, Mrs. Peay's injury claim was fully litigated resulting in an adverse verdict.
Having found a loss of consortium claim cannot be brought when the injured spouse's claim has been adjudicated and lost, we reverse the denial of Benders' motion for summary judgment.
Judgment reversed.
ROBERTSON, J., concurs.
NEAL, J., dissents with opinion.
NEAL, Judge, dissenting.
I respectfully dissent from the opinion of the majority. The principles of collateral estoppel control this case and require affirmance of the trial court's judgment. The majority makes a change in the law which, in the interests of fairness and clarity, should be effected by rule.
The majority attempts to distinguish the Benders' derivative-claim argument from their collateral estoppel argument. I see no distinction. The essence of the derivative argument is that the issue of the Benders' liability to Mrs. Peay has been decided and cannot be litigated by her husband in a subsequent suit. This is a collateral estoppel argument. It raises the same competing policies of fairness to individual litigants and deference to prior judgments. The majority ignores these issues by adopting a rephrased version of the question.
The doctrine of res judicata is composed of two parts. The first, known as "estoppel by judgment" or "claim preclusion" addresses the prior adjudication of a cause of action as a bar to further litigation of that claim. Town of Flora v. Indiana Service Corporation, (1944) 222 Ind. 253, 53 N.E.2d 161; State of Indiana, Indiana State Highway Commission v. Speidel, (1979) Ind. App., 392 N.E.2d 1172. In the instant case the Benders argue only that the second form of res judicata applies. This doctrine is known variously as "estoppel by verdict," "collateral estoppel" or "issue preclusion." Speidel, supra. It holds that once an issue has been adjudicated the parties to that adjudication and their privies are bound by this determination in any subsequent suits between them on different causes of action. Town of Flora, supra; Speidel, supra. As applied to the instant case this would mean that the issue of fault, which was adjudicated in Mrs. Peay's unsuccessful action could not be litigated in this suit by her husband.
There are three prerequisites to the application of collateral estoppel: (1) a final judgment in a former suit between the same parties or their privies; (2) actual adjudication of the issues in the former suit; and (3) mutuality of estoppel. Town of Flora, supra; Speidel, supra. In this case the dispute concerns only the first prerequisite identity of the parties or privity. The parties do not dispute that the issue of fault in this case was adjudicated in Mrs. Peay's suit. Under the facts of this case the mutuality of estoppel requirement will be satisfied if privity exists.[1]
The Benders' argument depends on their being able to demonstrate that some form of privity exists between Mr. and Mrs. Peay which would be sufficient to estop Mr. Peay from litigating the issue of fault. This precise question has not been resolved in Indiana, and other jurisdictions have reached conflicting results. See Annot. 12 A.L.R.3d 929; Tent. Draft No. 3 Restatement (Second) of Judgments § 93 (1976). The Benders have advanced two possible sources of privity: the marital relationship, and the derivative nature of the cause of action for loss of consortium.
The doctrine of res judicata serves two vital functions; it puts an end to litigation and protects the integrity of judgments by preventing inconsistent results. Illinois Central Gulf Railroad Company v. Parks, (1979) Ind. App., 390 N.E.2d 1078; In re Estate of Nye, (1973) 157 Ind. App. 236, 299 N.E.2d 854; Nichols v. Yater, (1970) 147 *793 Ind. App. 29, 258 N.E.2d 66; Citizens Loan and Trust Company of Washington, Indiana et al. v. Sanders, (1933) 99 Ind. App. 77, 187 N.E. 396. It is equally important to preserve the right of each litigant to his day in court; hence, Indiana law maintains the requirement of identity of the parties or privity.
Only parties to a former judgment and their privies may take advantage of or be bound by a former judgment. Tobin v. McClellan, (1947) 225 Ind. 335, 75 N.E.2d 149; Speidel, supra; Mayhew, Huston v. Deister, (1969) 144 Ind. App. 111, 244 N.E.2d 448. In determining the parties for res judicata purposes the court looks beyond the nominal parties to the parties whose interests are directly involved. Speidel, supra; Smith v. Midwest Mutual Insurance Company, (1972) 154 Ind. App. 259, 289 N.E.2d 788. A party is one who is "directly interested in the subject matter, and had a right to make defense, or to control the proceeding, and to appeal from the judgment." 1 Greenleaf, Evidence, (15th ed.), § 523, quoted in, Tobin, supra, 225 Ind. at 344, 75 N.E.2d 149; Mayhew, supra, 144 Ind. App. at 121, 244 N.E.2d 448. Clearly Mr. Peay was not a party to the earlier action. As traditionally defined, a privy is "one who, after the commencement of the action, has acquired an interest in the subject matter affected by the judgment through or under one of the parties, as by inheritance, succession, or purchase." Tobin, supra 225 Ind. at 344, 75 N.E.2d 149; Speidel, supra at 1176, 1177 n. 5; See Mayhew, supra, 144 Ind. App. at 122, 244 N.E.2d 448.
A more liberal approach was taken in In re Estate of Nye, supra, where the court adopted the Restatement of Judgments' general analysis of privity found in § 83 and the comments which follow:
"Privies General Rule.
A person who is not a party but who is in privity with the parties in an action terminating in a valid judgment is, to the extent stated in §§ 84-92, bound by and entitled to the benefits of the rules of res judicata.
Comment:
a. Privity is a word which expresses the idea that as to certain matters and in certain circumstances persons who are not parties to an action but who are connected with it in their interests are affected by the judgment with reference to interests involved in the action, as if they were parties. The word `privy' includes those who control an action although not parties to it (see § 84); those whose interests are represented by a party to the action (see §§ 85-88); successors in interest to those having derivative claims (§§ 89-92). There are other persons whose interests may or may not be less directly affected by a judgment because of their relation to one of the parties to the judgment; the effect of a judgment upon such persons is dealt with in Topic 3 (§§ 93-111).
The statement that a person is bound by or has the benefit of a judgment as a privy is a short method of stating that under the circumstances and for the purpose of the case at hand he is bound by and entitled to the benefits of all or some of the rules of res judicata by way of merger, bar or collateral estoppel. To determine when and to what extent he is bound or has rights, it is necessary to consider his relation to the parties to the action or to the subject matter of the action.
b. Two sets of privies. Where both parties to an action transfer their interests to others or where the action is controlled on both sides by persons other than the parties, both sides in the second action may be bound by and entitled to the benefits of the rules of res judicata although neither was a party to the first proceeding."
The following was also cited by the Nye court as a good description of the nature of privity:
"[T]here can be no such privity between persons as to produce collateral estoppel unless the result can be defended on principles of fundamental fairness in the due-process sense. A trial in which one party *794 contests his claim against another should be held to estop a third party only when it is realistic to say that the third party was fully protected in the first trial."
Wolff v. DuPuis, (1963) 233 Or. 317, 378 P.2d 707, 710, quoted in, Nye, supra, 299 N.E.2d at 870. The Wolff court, also citing the Restatement § 83, found no privity between a husband filing a loss of consortium action and his wife who had prevailed against the same defendant in her personal injury action.
Although the Restatement § 83 approach used in Nye could have been used to expand the meaning of privity, recent cases fail to use it and rely on the traditional definition given in Tobin and Mayhew. See, United Farm Bureau Mutual Insurance Company v. Wampler, (1980) Ind. App., 406 N.E.2d 1195; State of Indiana, Indiana State Highway Commission v. Speidel, (1979) Ind. App., 392 N.E.2d 1172, 1176-77 n. 5; Braun v. Loshe, (1979) Ind. App., 390 N.E.2d 189; Bailey v. Beekman, (1977) 173 Ind. App. 154, 362 N.E.2d 1171. The Nye court applied the Restatement § 83 to the relationship between a representative and a real party in interest, which could have been classified as identity of the parties. See, Speidel, supra at 1176; Smith v. Midwest Mutual Insurance Company, (1972) 154 Ind. App. 259, 269, 289 N.E.2d 788. In short, our definition of privity has not yet expanded sufficiently to bind a plaintiff by a former judgment to which he was neither a named party nor a real party in interest, and exceptions to the privity requirement are few. Although many courts have abolished or limited the mutuality and privity requirements of collateral estoppel,[2] Indiana continues to adhere to them. See, Speidel, supra at 1176; Mayhew, supra.
The Benders argue that privity arises from the marital relationship or the derivative nature of the claim for loss of consortium. I know of no cases in which marriage alone has been considered a source of privity. We have held that neither marriage nor consanguinity creates privity unless it results in the descent of an estate. Amann v. Tankersley, (1971) 149 Ind. App. 501, 511, 273 N.E.2d 772. Marriage and other family relationships in themselves do not provide sufficient assurance that the interests of all parties have been fully and fairly represented.
I also reject the assertion that privity may result from the derivative character of claims for loss of consortium. Unlike wrongful death actions, loss of consortium actions are not wholly derivative. For example, a decedent's prior settlement of his personal injury claim is binding on his personal representative. Haskell and Barker Car Company v. Logermann, (1919) 71 Ind. App. 69, 123 N.E. 818. Generally, the personal representative stands in the decedent's shoes and can only bring an action if the decedent could have done so. Hecht v. The Ohio and Mississippi Railway Company, (1892) 132 Ind. 507, 32 N.E. 302; Golding v. Town of Knox, (1914) 56 Ind. App. 149, 104 N.E. 978. However, this court has recently held that one spouse's settlement and release of his personal injury action does not bar the other spouse from suing for loss of consortium where she was not a party to the settlement and had no notice of it. Rosander v. Copco Steel and Engineering Company, (1982) Ind. App., 429 N.E.2d 990.
Under Rosander, supra, placing actions in a derivative posture does not give one party the right to waive the rights of another. I believe that the same principle applies to the trial of derivative claims. Both the personal injury and loss of consortium actions arise from separate individual injuries, and each spouse is entitled to a day in court in which he or she can control the conduct of the litigation. The derivative nature of loss of consortium satisfies a different prerequisite to the application of collateral estoppel, i.e. actual litigation of the issues in a former action. The fact that the Benders' negligence toward Mrs. Peay has already *795 been litigated addresses only this requirement. However, this alone cannot create privity where Mr. Peay was not represented in the former action.
Three cases which are relevant to the idea that privity stems from derivative actions are: United Farm Bureau Mutual Insurance Company v. Wampler, (1980) Ind. App., 406 N.E.2d 1195; State of Indiana, Indiana State Highway Commission v. Speidel, (1979) Ind. App., 392 N.E.2d 1172, and Lukacs v. Kluessner, (1972) 154 Ind. App. 452, 290 N.E.2d 125.
In United Farm Bureau, supra, the plaintiff, Wampler, sued for his personal injuries and property damages. The defendant, Stephens, filed a third-party complaint against his insurer, Farm Bureau, to resolve certain questions regarding his coverage. The action was severed at Farm Bureau's request, and when Stephens failed to answer interrogatories, it was dismissed with prejudice. Wampler later obtained a default judgment against Stephens. Wampler then brought proceedings supplemental against Stephens and against Farm Bureau as garnishee-defendant. Farm Bureau argued that the dismissal of Stephens' third-party action operated as a final adjudication on the merits which collaterally estopped Wampler from litigating the question of Stephens' insurance coverage. This court held that the dismissal of Stephens' action did not estop Wampler because the two were not in privity. It was also noted that Farm Bureau could have prevented the additional suit by joining Wampler in the third-party action under Ind. Rules of Procedure, Trial Rule 19. Farm Bureau is analogous to the case before us, in that Wampler's claim against Farm Bureau was derived from Farm Bureau's liability to Stephens. Like Mr. and Mrs. Peay, Stephens and Wampler were both interested in proving State Farm's liability, yet these common interests were not sufficient to create privity. The importance of privity to the protection of a prospective litigant's rights is clear; it would have been unfair to bind Wampler by a dismissal, which was the result of Stephens' apparent neglect rather than a full adversarial proceeding. Yet the dismissal constituted a judgment on the merits for collateral estoppel purposes. Had Mrs. Peay's claim been prosecuted with a similar absence of diligence or skill, Mr. Peay could now be bound if he were considered in privity with his wife. The traditional definition of privity retained by Indiana prevents such unjust results.
In Speidel, supra, a father filed suit for the wrongful death of his wife, the medical expenses of their three children and the loss of the children's services. After a jury verdict for the father, the three children sued for their personal injuries, and the trial court granted them summary judgment on the issue of liability. This court reversed. The court found identity of the parties to both suits due to the fact that the father as personal representative of the decedent represented his children as beneficiaries. The children, although not named parties in the first suit, were real parties in interest. The court appeared to favor the traditional definition of privity over the Restatement § 83 approach adopted in Nye, and it rejected the application of privity to the relationship between a representative and a real party in interest. Factors such as the derivative nature of wrongful death actions and the parent-child relationship were not mentioned as possible sources of privity.
In Lukacs, supra, there is dicta explicitly rejecting the extension of collateral estoppel to a situation similar to the one at bar. A minor injured by the defendant's automobile sued for his personal injuries. His father had previously recovered on a claim for loss of services and medical expenses. The trial court denied the minor's motion for summary judgment on liability. The Lukacs court reversed on a procedural ground after indicating that the law of res judicata would have required affirmance because privity and mutuality were lacking.
In support of their position, the Benders cite Arthur v. Arthur, (1973) 156 Ind. App. 405, 296 N.E.2d 912; and Illinois Central Gulf Railroad Company v. Parks, (1979) Ind. App., 390 N.E.2d 1078. Although both decisions *796 state that a loss of consortium action is derivative, neither is controlling in the instant case. Arthur, supra, addressed the nature of the loss of consortium claim in the Workmen's Compensation context. There were no res judicata issues. The issue was whether the plaintiff's husband had a valid cause of action against the fellow employee who allegedly caused his injury; if not, the plaintiff's loss of consortium action was likewise invalid. This conclusion results from the fact that the remedy provided by the Workmen's Compensation statute is exclusive of all others, even those belonging to dependents and next of kin. Ind. Code 22-3-2-6. The issue was whether the plaintiff's claim was abrogated by statute, not whether it was foreclosed by res judicata.
The majority argues that the derivative nature of loss of consortium controlled the plaintiff's right to sue. This was not the real issue. The Industrial Board had approved a settlement between the injured husband and his employer. The wife then sued a new defendant for loss of consortium, and the issue was whether the trial court had correctly granted summary judgment against the wife on the ground that the defendant was a fellow-employee of the husband. On appeal the wife contended that there were facts which supported the conclusion that the defendant was an independent contractor, who could be sued outside the Workmen's Compensation Act. However, under the predecessor of Ind. Code 22-3-2-6, neither spouse could have brought any common-law action against a fellow-employee of the husband. The resolution of this issue required no discussion of derivative actions or res judicata.
The case of Clouse v. Fielder, (1982) Ind. App., 431 N.E.2d 148, relied on by the majority, does not resolve the problem presented by the case at bar. In Clouse both spouses were parties to the suit. If the case had presented any collateral estoppel issues, the identity of the parties requirement would have been met.
Nor is Illinois Central, supra, dispositive. In that case the husband's loss of consortium claim was joined with his wife's personal injury action. The jury returned a general verdict in favor of the wife and against the husband, and he later brought his own personal injury suit. Since the husband was a party to both actions, the question of privity between the spouses was not discussed, and the defendant, also a former party, was estopped.
Public policies have given rise to exceptions to the privity requirement which arguably could be used to create additional exceptions or expand our definition of privity. However, an examination of these exceptions will show that the policies behind them are inapplicable here or are counter-balanced by other important considerations.
There are two well-recognized exceptions to the requirement of identity of the parties or privity. The first is the doctrine of virtual representation. It permits persons who have remote, contingent, or expectant interests in realty to be bound by a judgment affecting their interests although they were not parties to the suit. Krick v. Klockenbrink, (1968) 144 Ind. App. 55, 242 N.E.2d 848; Groves et al. v. Burton, (1954) 125 Ind. App. 302, 123 N.E.2d 204. Their interests must be properly represented by "persons who have the same interests and are equally certain to bring forward the entire merits of the question, so as to give the contingent interest effective protection." Groves, supra at 313, 123 N.E.2d 204. Arguably, since Mr. and Mrs. Peay appear to have the same interests, it could be said that Mrs. Peay represented her husband for the purpose of proving liability. But the same could be said of other plaintiffs who are injured by the same tortfeasor in the same tortious act. Both have a strong interest in proving the defendant's negligence, yet we do not deny one such plaintiff his day in court when another victim has failed to prove his case. In virtual representation cases the strong policy favoring stability in real estate titles prevails over the interest of the prospective litigant. In the case at bar there are no considerations important enough to outweigh Mr. Peay's interest in controlling his own cause of action.
*797 Another relevant exception to the privity requirement is applied to cases involving derivative liability. When the liability of a defendant is dependent on or derived from one who is exonerated in a prior adjudication brought by the same plaintiff, the defense of collateral estoppel is available to the second defendant. Mayhew, supra; Tobin, supra; see Speidel, supra. This exception is also supported by considerations not present in the case at bar. Where derivative liability exists (e.g. between master and servant, indemnitor and indemnitee), inconsistent judgments may prevent one defendant from obtaining indemnification from the other. See Greenebaum, "In Defense of the Doctrine of Mutuality of Estoppel" (1969) 45 Ind.L.J. 1, 4. In the case at bar inconsistent results would not impose such a hardship.
There are several important judicial policies which would support the application of collateral estoppel in this case, such as the protection of parties from multiple suits, avoidance of inconsistent judgments, and judicial economy. Of these policies the first is, perhaps, the most important, and the Benders argue that the additional trial will be an unfair burden. However, I note that the Benders could have joined Mr. Peay in Mrs. Peay's action under Ind. Rules of Procedure, Trial Rule 19(A)(2)(b); apparently they failed to do so. Under the circumstances their argument that the Peays are being given "two bites from the apple" is unconvincing. While the prospect of inconsistent verdicts is disturbing, consistent results are not inherently fair. I would favor the right of a litigant to his day in court over the appearance of fairness. Finally, judicial economy, while a worthwhile goal, is not important enough to justify the extension of collateral estoppel to the case at bar. See Rosander, supra.
I would conclude that Mr. Peay must be permitted to litigate all of the issues in his claim. No small weight should be given to the 1979 decision of Speidel, supra, in which the traditional requirements of collateral estoppel, including privity and mutuality of estoppel, were scrupulously followed. That case was reversed for lack of mutuality of estoppel. Because the children would not have been estopped by an unfavorable judgment in the prior wrongful death action (such a judgment might have been based on their mother's contributory negligence, which could not be imputed to them), the defendant was not estopped to defend the children's subsequent personal injury action. Though highly technical, this analysis of Indiana law is correct, and the cases I have discussed above also adhered to the rules which were reaffirmed in Speidel.
It is still the law in Indiana that a litigant may assert or be foreclosed by collateral estoppel only if he was present in the prior action as a nominal party, a real party, or a privy in the traditional sense. In Illinois Central, supra; and Nichols, supra, collateral estoppel was applied where both parties had been parties to the former suit. In Tobin, supra; United Farm Bureau, supra; and Lukacs, supra, collateral estoppel could not be applied because one of the parties had not been present as a party or privy to the former judgment. As Judge Buchanan concluded in Speidel,
"While the spirit of the Trial Rules is to encourage litigating all issues between the parties it is not mandatory that this be done as to a plaintiff with more than one cause of action. So the Supreme Court cases insisting on both privity and mutuality would seem to have vitality even though they were decided prior to the adoption of the present Trial Rules in 1971."
392 N.E.2d at 1179.
Although it may appear unfair to require a defendant to defend himself twice against virtually the same allegations, Trial Rules 19 and 20 would have prevented this result. Those rules permit parties to an action to bring in another party who may claim an interest in the subject matter of the action where his absence would leave any of the parties subject to multiple or inconsistent obligations. Neither the Peays nor the Benders chose to avail themselves of the benefits of those rules, though we assume they were aware of them. Each party took *798 the risk that the other would have a second chance to prove his case.
Excellent policy arguments can be made that the fair and efficient way to handle loss of consortium and similar actions is to require them to be joined with the underlying personal injury action of the spouse, parent, or child. Should this be found desirable, a rule change effecting this result would be more proper, as it would avoid any retroactive effect on existing cases. However, such action is not the prerogative of this court.
I would hold that Mr. and Mrs. Peay were not in privity, and therefore, collateral estoppel does not prevent Mr. Peay from litigating the issue of fault in his action for loss of consortium.
NOTES
[1] Ind. Ann. Stat. 40-1206 (Burns 1965) stated: "Rights and remedies of employee under this act exclusive. The rights and remedies herein granted to an employee subject to this act [§§ 40-1201 - 40-1414, 40-1505 - 40-1704] on account of personal injury or death by accident shall exclude all other rights and remedies of such employee, his personal representatives, dependents or next of kin, at common law or otherwise, on account of such injury or death."
[1] Estoppel is mutual if the one taking advantage of the prior judgment would have been bound if the judgment had gone the other way. Speidel, supra.
[2] Identity of the parties or privity and mutuality are no longer prerequisites to the application of collateral estoppel in the federal courts. Parklane Hosiery Co. Inc. v. Shore, (1979) 439 U.S. 322, 99 S.Ct. 645, 58 L.Ed.2d 552; Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, (1971) 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788.
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Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
8-6-2004
Buczek v. Cont Cslty Ins Co
Precedential or Non-Precedential: Precedential
Docket No. 02-2847
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PRECEDENTIAL GERARD J. JACKSON, ESQ. (Argued)
1260 Marlkress Road
UNITED STATES COURT OF P.O. Box 1820
APPEALS FOR THE THIRD CIRCUIT Cherry Hill, NJ 08034
Counsel for Appellees
Nos. 02-2847, 02-4063 SHEILA A. HAREN, ESQ. (Argued)
MONICA E. O'NEILL, ESQ.
Post & Schell, P.C.
JACK BUCZEK; MARIE BUCZEK; 1600 John F. Kennedy Blvd, 13th Floor
MICHAEL NEILL; SANDY NEILL, Four Penn Center
an Unincorporated Association Philadelphia, PA 19103
t/a MEADOWS CONDOMINIUM Counsel for Appellant
ASSOCIATION;
MEADOWS CONDOMINIUM
ASSOCIATION OPINION
v.
CHERTOFF, Circuit Judge.
CONTINENTAL CASUALTY Appellees Jack and Marie Buczek
INSURANCE COMPANY; and Michael and Sandy Neill are the sole
TRANSPORTATION INSURANCE and exclusive members of an
COMPANY, unincorporated condominium association
Appellant known as “Meadows Condominium
Association” (“Owners”). The Owners
On Appeal from the United States commenced the underlying contract action
District Court for the against Transportation Insurance
District of New Jersey Company (“Transportation”) and
(Dist. Ct. No. 00-cv-04274) Continental Casualty Insurance Company
District Judge: Honorable Joseph E. (“Continental”)1 in the United States
Irenas District Court for the District of New
Jersey on August 31, 2000. The Owners
Argued December 9, 2003 sued the two insurance companies
following the denial of their condominium
Before: AMBRO, FUENTES, and
CHERTOFF, Circuit Judges.
1
Continental Insurance Company is
(Filed: August 6, 2004) not an appellant in this matter. The
Owners have not appealed the District
Court’s decision to dismiss all claims
against Continental.
insurance claim, and they asserted claims wooden pilings, which extended from
for breach of contract and breach of the approximately three to four feet above
duty of good faith dealing. At the grade to approximately forty feet into the
conclusion of the proceedings, the District ground. As the District Court established
Court entered a judgment in favor of the and the record clearly reflects, the pilings
Owners and against Transportation in the served as the foundation for the house.
amount of $103,634.00. Over a series of About November 1, 1998, the Owners
amended orders, the District Court also noticed that their structure was swaying in
granted costs and prejudgment interest to high winds. They investigated the
the Owners. For the reasons set out problem in the Spring of 1999 and found
below, we will reverse the orders of the visible discoloration on the surface level
District Court and vacate the judgment of the pilings that supported the building.
entered in favor of the Owners. A general contractor, exterminator, and
engineer were retained to investigate the
I. situation further.
On April 5, 1999, the structure was
The Buczeks, citizens of the jacked up approximately one foot, and two
Commonwealth of Pennsylvania, and the longitudinal steel beams were inserted
Neills, citizens of the State of New Jersey; under the building for support. Local
purchased in 1986 a three-story, two-unit code enforcement officials deemed the
s t r u c t u r e k n o w n a s M e a d o ws temporary foundation to be unsatisfactory
Condominium located in Wildwood, New and dangerous and required that the
Jersey. At the time of their condominium building be secured and anchored to
purchase, the Owners obtained from another temporary or permanent
Transportation, an Illinois corporation, an foundation.
all-risk policy of insurance (“the Policy”) The Owners decided to replace the
to cover the Condominium Association. rotted portions of the existing pilings with
“All-risks insurance is a special type of concrete beams over the piles, building up
insurance extending to risks not usually a foundation wall from the concrete beams
contemplated, and generally allows to the house. The Owners claim that the
recovery for all fortuitous losses, unless replacement costs were approximately
the policy contains a specific exclusion $103,634.00. On April 22, 1999, the
expressly excluding the loss from Owners submitted a Notice of Loss to
coverage.” Jane Massey Draper, Transportation. The Owners described the
Annotation, Coverage Under All-Risk loss as follows: “supports [of] building
Insurance, 30 A.L.R. 5th 170 (2004). rotted and wood boring beetles took over”
Built on filled marshland, the and that the loss occurred on or about
condominium building is located on an November 1, 1998. App. 254a.
inlet and was supported by thirty-four On May 22, 1999, Irving
2
Fruchtman, an engineer retained by the appeals timely filed by Transportation
Owners, inspected the property and contesting the District Court’s March 1,
discovered that the pilings had rotted from 2002 judgment; the May 31, 2002
just below the water surface level to amended judgment; the June 17, 2002
approximately one foot below grade. order denying Appellant’s post-trial
Wood samples from the pilings were motions; and the October 16, 2002 order
analyzed, and it was determined that awarding costs. This Court has appellate
wood-destroying fungi and anaerobic jurisdiction pursuant to 28 U.S.C. § 1291.
bacteria were present in the pilings in II.
addition to brown rot or decay.
Transportation’s own investigation yielded Transportation appeals the District
similar findings. Transportation issued a Court’s conclusion that the Owners were
written denial of the Owners’ claim on entitled to coverage under the Policy and
October 6, 1999, noting, “[s]ince the argues that this Court should rule that it is
pilings are the cause of the loss, and not entitled to judgment as a matter of law. In
covered property under the policy, [the the alternative, Transportation argues that
company] must respectfully deny any it is entitled to a new trial because the
voluntary assistance or payment for this District Court “remov[ed] numerous
loss.” App. 257a. critical factual issues from the jury” and
On August 31, 2000, the Owners improperly took judicial notice of an issue
filed the underlying contract action in of importance in this case. Appellant’s Br.
District Court. Following a three-day jury at 9. Finally, Transportation claims that it
trial, the District Court decided the matter is entitled to a remittitur because the
on motions pursuant to Rules 50(a)(1) and District Court granted damages not
50(a)(2) of the Federal Rules of Civil recoverable under the Policy.
Procedure. On March 1, 2002, the Court We exercise plenary review over
entered judgment against Transportation the District Court’s decision to grant the
in the amount of $103,634.00. The Court Owners’ motions for judgment as a matter
subsequently granted the Owners’ request of law. Goodman v. Penn. Tpk. Comm’n,
for pre-judgment interest on the contract 293 F.3d 655, 664-65 (3d Cir. 2002). “In
obligation and amended the judgment to reviewing the grant of a judgment as a
$117,197.49, reflecting interest in the matter of law under Fed. R. Civ. P. 50
amount of $13,563.49. On June 17, 2002, following a jury verdict, we must view the
the District Court entered an order evidence in the light most favorable to the
denying Transportation’s post-trial non-moving party, and determine whether
motions. On October 15, 2002, the the record contains the ‘minimum
District Court awarded costs of $1,778.71 quantum of evidence from which a jury
to the Owners. might reasonably afford relief.’” Glenn
This appeal consolidates four Distribs. Corp. v. Carlisle Plastics, Inc.,
3
297 F.3d 294, 299 (3d Cir. 2002) (quoting enforce the policy as it is written.” Royal
Parkway Garage, Inc. v. City of Ins. Co. v. Rutgers Cas. Ins. Co., 638 A.2d
Philadelphia, 5 F.3d 685, 691 (3d Cir. 924, 927 (N.J. Super. Ct. App. Div. 1994)
1993)). (quoting Flynn v. Hartford Fire Ins. Co.,
The parties agree that New Jersey 370 A.2d 61, 63 (N.J. Super. Ct. App.
law applies to this case, as do we. Div. 1977)). However, in the absence of
Determination of the proper coverage of any ambiguity, courts should not write for
an insurance contract is a question of law. the insured a better policy of insurance
Atlantic Mut. Ins. Co. v. Palisades Safety than the one purchased. Vassiliu v.
and Ins. Ass’n., 837 A.2d 1096, 1098 Daimler Chrysler Corp., 839 A.2d 863,
(N.J. Super. Ct. App. Div. 2003).2 An 867 (N.J. 2004). A genuine ambiguity
insurance policy should be interpreted exists “where the phrasing of the policy is
according to its plain meaning. Benjamin so confusing that the average policyholder
Moore & Co. v. Aetna Cas. & Sur. Co., cannot make out the boundaries of
843 A.2d 1094, 1103 (N.J. 2004) (internal coverage.” Lee v. Gen. Accident Ins. Co.,
citations omitted). Where the express 767 A.2d 985, 987 (N.J. Super. Ct. App.
language of the policy is clear and Div. 2001). When the terms of coverage
unambiguous, “the court is bound to are ambiguous, “that doubt is ordinarily
resolved in favor of the insured.” Moore,
843 A.2d at 1103.
2
We review the District Court’s
interpretation of state law de novo. Wiley A.
v. State Farm Fire & Cas. Co., 995 F.2d
457, 459 (3d Cir. 1993). In adjudicating a The “Condominium Association
case under state law, we are not free to Coverage Form” sets out the terms of
impose our own view of what state law coverage for “Covered Property.” In
should be; rather, we are to apply existing pertinent part, the Policy provides:
state law as interpreted by the state’s
highest court in an effort to predict how A. COVERAGE
that court would decide the precise legal We will pay for direct
issues before us. Kowalsky v. Long physical loss of or damage
Beach Township, 72 F.3d 385, 388 (3d to Covered Property at the
Cir. 1995). In the absence of such premises described in the
guidance, we must look to decisions of Declarations caused by or
state intermediate appellate courts, of resulting from any Covered
federal courts interpreting that state's law, Cause of Loss.
and of other state supreme courts that have
addressed the issue. Wiley, 995 F.2d at 1. Covered Property
459-60. Covered Property, as used
4
in this Coverage Part, means wharves or docks;
the type of property ***
described in this section 3. Covered Causes of Loss
A.1., and limited in A.2., See applicable Causes of
Property Not Covered, if a Loss Form as shown in the
Limit of Insurance is shown Declarations.
in the Declarations for that
type of property. App. 201-03a.
The “Causes of Loss– Special
a. Building, meaning the Form” details the types of “Covered
building or structure C a u s e s o f L os s ” c o v er e d by
described in the Transportation. It provides:
Declarations, including:
(1) Completed additions; A. C O V E R E D
(2) Fixtures, outside of individual CAUSES OF LOSS
units, including outdoor fixtures; When Special is shown in
(3) Permanently installed: the Declarations, Covered
(a) Machinery and Causes of Loss means
(b) Equipment; R I S KS O F D I R E CT
*** PHYSICAL LOSS unless
2. Property Not the loss is:
Covered 1. Excluded in Section B.,
Covered Property does not Exclusions; or
include: 2. Limited in Section C.,
*** Limitations; that follow.
f. The cost of excavations,
grading, back filling or B. EXCLUSIONS
filling; ***
g. Foundations of buildings, 2. We will not pay for
structures, machinery or loss or damage
boilers if their foundations caused by or
are below: resulting from any of
(1) The lowest the following:
basement floor; or ***
(2) The surface of d.
the ground if there is (1) Wear and tear;
no basement. (2) Rust, corrosion, fungus,
*** decay, deterioration, hidden
j. Bulkheads, pilings, piers, or latent defect or any
5
quality in property that Covered Property caused by
causes it to damage or collapse of a building or any
destroy itself . . . part of a building insured
under this Coverage Form,
App. 216-17a. if the collapse is caused by
In a decision issued from the bench one or more of the
following the conclusion of the Owners’ following:
and Transportation’s cases, the District ***
Court established that the Owners’ claims b. H i d d e n
would not be covered under the terms of decay;
the General Insurance Policy. App. 780a. c. Hidden insect
To the extent that the Owners argue or vermi n
otherwise and claim that the pilings are damage;
insured as “Covered Property,” we ***
disagree. As the District Court’s opinion
and the record establish, the pilings served App. 221a.
as the foundation for the building, and the Since the pilings were damaged by
language of the Policy clearly excludes hidden decay, the applicability of this
both foundations and “pilings” as clause turns on whether there was damage
“Covered Property.” to the Covered Property— i.e., the
The District Court concluded building— caused by “collapse.” The
nevertheless that coverage was warranted word “collapse,” as used in insurance
under the Section D “Additional Coverage policies, has been litigated for many years.
– Collapse” provision of the Policy (the See Annotation, What Constitutes
“Collapse Clause”). Transportation “Collapse” of a Building Within Coverage
disputes this ruling. of Property Insurance Policy, 71 A.L.R.
The Additional Coverage clause 3d 1072 (1976). As this Court discussed
reads: in Ercolani v. Excelsior Insurance Co.,
830 F.2d 31 (3d Cir. 1987), courts have
3. A D D I T I O N A L not uniformly agreed on what constitutes
C O V E R A G E – the collapse of a building under the
COLLAPSE collapse coverage of a casualty insurance
The term Covered Cause of Loss policy. Id. at 34.
includes the Additional Coverage - Some courts have adopted a
Collapse as described and limited “narrow” interpretation, requiring
in D.1 through D.5 below. coverage only where a building has fallen
down or caved in. See id. However, as
1. We will pay for direct the District Court noted, New Jersey
physical loss or damage to follows an alternative approach, i.e., the
6
“majority rule.” Our opinion in Ercolani imminent risk. The fact the event may or
predicted, “New Jersey courts would . . . may not occur in any given point in time
read the collapse peril as covering serious doesn’t mean the risk is not imminent.”
impairment of structural integrity making Id. In short, the District Court concluded
the wall no longer capable of supporting that the house’s vulnerability to ninety
the house’s superstructure.” Id. at 34.3 In mile-per-hour winds, which may occur
Fantis Foods, Inc. v. North River once in twenty years, constituted
Insurance Co., 753 A.2d 176, 183 (N.J. “imminent collapse.”
Super. Ct. App. Div. 2000), the New We disagree with the District
Jersey Appellate Division echoed our Court’s definition of “imminent collapse.”
holding in Ercolani and decided that the Certainly our decision in Ercolani made it
definition of collapse “must be taken to clear that a house need not be in a pile of
cover any serious impairment of structural rubble before it is deemed “collapsed.”
integrity that connotes imminent collapse However, even if we assume that a ninety
threatening the preservation of the mile-per-hour wind might occur once
building as a structure or the health and every ten or twenty years, that is still not
safety of occupants and passers-by.” an “imminent” risk.4
Fantis, 753 A.2d at 183 (emphasis added).
After mulling the parameters of
4
what would be considered “imminent,” the We do note, however, that “[a]
District Judge made two pivotal findings. judicially noticed fact must be one not
First, he accepted testimony that ninety subject to reasonable dispute in that it is
mile-per-hour winds would cause the either (1) generally known within the
building to collapse, and second, he took territorial jurisdiction of the trial court or
judicial notice that ninety mile-per-hour (2) capable of accurate and ready
winds sometimes hit the New Jersey shore. determination by resort to sources whose
App. 767-68a. The District Judge accuracy cannot re as on ab ly b e
concluded, “I’m holding that even a risk questioned.” Fed. R. Evid. 201(b).
that might be a one in ten, or one in twenty Indeed, on this appeal, the Owners’ own
year risk, is still a very serious and evidence, an Army Corps of Engineers
survey, cited only two instances in the last
sixty-eight years where winds at Atlantic
3
At the time of our decision in City reached ninety miles-per-hour. Other
Ercolani, the New Jersey courts had yet to government data seems to suggest no
determine which interpretation of storms in the Jersey shore in the past
“collapse” would be the determinate rule, century achieved winds of ninety miles-
leaving this Court to predict how the New per-hour. National Climate Data Center,
Jersey Supreme Court would rule. 830 National Oceanic and Atmospheric
F.3d at 34. Administratio n, 1899-1 996 U.S .
7
“Imminent” is defined as “ready to “heard loud moaning and shrieking noises
take place: near at hand,” Webster’s Third emanating from the south basement wall,
New International Dictionary 1130 (1st noticed a crack in it, and observed it move
ed. 1966), and “likely to occur at any and bulge inward.” 830 F.2d at 33.
moment: impending,” The Random House Likewise, in Fantis Foods, the masonry
Dictionary of the English Language 957 consultant who inspected the damaged
(2d ed. 1987). As one court has observed, property noted, “‘[t]he main cause of the
“imminent” means collapse “likely to parapet walls [sic] displacement and
happen without delay.” See Ocean Winds imminent collapse is hidden decay of steel
Council of Co-Owners v. Auto-Owner Ins. beams and lintels which are located or
Co., 565 S.E.2d 306, 308 (S.C. 2002); see behind the brick masonry walls’” and that
also Doheny West Homeowners Ass’n v. the “‘[n]orth wall parapet has the
Am. Guarantee & Liab. Ins. Co., 70 emergency condition.’” Fantis, 753 A.2d
Cal.Rptr.2d 260, 264 (Cal. App. 2 at 180.
Dist.,1997) (“‘likely to happen without In short, the District Court’s
delay’” (quoting Webster's New World interpretation of “imminent” wrenched it
Dictionary (3d college ed. 1991))). from any reasonable definition of the
The District Court’s findings on the word.5
“imminent” threat to the structural
integrity of the condominium contrast with
5
the findings of imminence relied upon by We need not consider whether our
this Court in Ercolani and by the New decision would be different if there was
Jersey Appellate Division in Fantis. Here, evidence in the record that a common gust
the District Court noted, “[there was] no of wind would knock the structure down.
observable damage [to the house]. . . . The Owners chose to offer evidence only
[D]rywall wasn’t flying apart. Flashing as to the effect of ninety mile-per-hour
wasn’t coming apart. The walls weren’t winds on the house. The District Court
bulging or cracking which sometimes tried in vain to probe whether the house
happen when a house becomes out of was threatened with collapse by less
whack, did not exist.” App. 765a. powerful winds. App. 304-05a. But as
However, in Ercolani, the policyholder Judge Irenas explained, “[Fructman]
didn’t say . . . it would collapse on its
own. I tried to get him to say that. I
Landfalling Major Hurricanes– GIF Maps, asked, would a lesser [sic] wind, [e.g.,] a
available at forty [or] thirty [mile-per-hour wind], . . .
http://lwf.ncdc.noaa.gov/img/climate/sev [would] make the thing fall. His answer
ereweather/2hur9996.gif (last visited July was, I only did calculations for ninety
8, 2004). This kind of disputed fact is not miles-an-hour. Nothing [Transportation’s
one that is appropriate for judicial notice. expert] Honig[] said [was] anything
8
B. By way of analogy, they point to the so-
called “Sue and Labor” insurance clauses,
The Owners also argue that which oblige insurance companies to
Transportation was responsible for the reimburse expenses to insured parties who
renovation costs because the Owners were spend money to avert harm to covered
obliged to renovate under their duty to property and to mitigate damages.
minimize losses and mitigate damages. 6 Two provisions in the Policy
appear to resemble traditional “Sue and
Labor” provisions found in other “all-risk”
different.” App. 786a. Having chosen to insurance policies: the “Preservation of
try the case on the theory that the house Property” and “Duties in the Event of Loss
was vulnerable to the rare threat of a or Damage” provisions.
ninety mile-per-hour wind, the Owners are The Preservation clause provides:
bound to accept the consequence of our
determination that such a threat is not b. Preservation of Property
imminent and cannot serve to support a If it is necessary for you to
finding of “collapse.” move Covered Property
6
The Owners also cite Harr v.
Allstate Insurance Co., 255 A.2d 208 (N.J. exclusions therefrom, to an
1969), for the propo sition that insured before or at the
Transportation should be estopped from inception of the contract,
denying coverage because the Owners and the insured reasonably
relied on the language of the “Duties” relies thereupon to his
clause articulated in the Policy and copied ultimate detriment, the
in a letter sent by the Company that was insurer is estopped to deny
dated April 30, 1999. The Owners’ coverage after a loss on a
reliance on Harr is misplaced. In that risk or from a peril actually
case, the New Jersey Supreme Court not covered by the terms of
provided that equitable estoppel was the policy.
available in “appropriate circumstances.”
Id. at 219. Id. That case is clearly distinguishable
from the matter at hand. The District
These decisions all proceed Court found no evidence o f
on the thesis that where an misrepresentation regarding the coverage
insurer or its agent of insurance policy, as evidenced by its
misrepresents, even though rejection of the bad faith claim against
innocently, the coverage of Transportation. See App. 798-99a.
an insurance contract, or the
9
from the described premises The Owners also refer to the
to preserve it from loss or language of the “Duties in the Event of
damage by a Covered Cause Loss or Damage” Clause in the Policy.
of Loss, we will pay for any This Clause provides:
direct physical loss or
damage to that property: 3. Duties in the Event
(1) While it is being of Loss or Damage
moved or while a. You must see that
temporarily stored at the following are
another location; and done in the event of
(2) Only if the loss or loss or damage to
damage o ccurs Covered Property:
within 30 days after ***
the property is first (4) Take all reasonable
moved. steps to protect the
Covered Property
App. 204a (emphasis added). from further damage.
The District Court indicated that it . . . However, we will
relied on the Preservation of Property not pay for any
Clause in concluding that the Owners subsequent loss or
were entitled to coverage. The Court damage resulting
explained, “I think that there is [sic] from a cause of loss
mutual obligations, obligations on the part that is not a Covered
of the insured to do that, preserve the Cause of Loss.
property and obligations for them to pay
for it. The insured did it.” App. 793a. App. 208a (emphasis added).
The Preservation Clause provides Once again, the language clearly
coverage only in instances where a provides that loss or damage resulting
“Covered Cause of Loss” is implicated. from a cause of loss that is not a “Covered
But absent a finding of “collapse” under Cause of Loss” is excluded from
the Collapse Clause, the Owners do not coverage. Id. As we articulated in our
have a “Covered Cause of Loss.”7 discussion of the Preservation Clause, the
Owners have not established a “Covered
Cause of Loss” that would warrant
7
Absent a “Covered Cause of coverage under the Policy.
Loss,” we find no need to delve into the The Owners finally cite Broadwell
issues of what constitutes something
“being moved” to another location or what
items constitute “Covered Property” under the Policy.
10
Realty Services, Inc. v. Fidelity and a covered cause of loss. As we observed
Casualty Company of New York, 528 in GTE Corp. v. Allendale Mut. Ins. Co.,
A.2d 76 (N.J. Super. Ct. App. Div. 1987), addressing “Sue and Labor” clauses, “an
for the proposition that an insured has a alternative interpretation would permit [an
common law duty to prevent harm to the insured party] to recover for
property and that an insurer has a improvements and measures taken to
corresponding obligation to reimburse the address a host of uninsured risks.” 372
insured for out-of-pocket expenditures for F.3d 598, 618 (3d Cir. 2004).
these efforts. This case, however, is Accordingly, we will vacate the
clearly distinguishable. judgment (as amended) of the District
First, the policy at issue in Court, vacate the awards of prejudgment
Broadwell was a general liability policy, interest and costs, and remand for
not an “all-risk” policy purchased by the judgment to be entered in favor of
Owners. “General liability policies are not Transportation Insurance Company.
‘all-risk’ policies . . . . They provide an
insured with indemnification for damages
up to policy limits for which the insured
becomes liable as a result of tort liability
to a third party.” Standard Const. Co., Inc.
v. Maryland Cas. Co., 359 F.3d 846, 852-
53 (6th Cir. 2004) (internal citations
omitted); see also Lenning v. Commercial
Union Ins. Co., 260 F.3d 574, 584 (6th
Cir. 2001) (emphasis omitted). The issue
in Broadwell was whether the insurer had
to reimburse the insured for steps taken to
prevent damages to a third party which
were covered under the policy.
Significantly, the Broadwell court denied
coverage for the preventive measures
taken by the insured because the liability
policy excluded the insured’s property
from coverage. 528 A.2d at 528.
Simply put, the insurer’s obligation
to reimburse for acts taken to preserve or
protect Covered Property does not extend
to require reimbursement for prevention of
damage to property that is excluded from
coverage or for a circumstance that is not
11
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"pile_set_name": "FreeLaw"
} |
Case: 13-70030 Document: 00512727404 Page: 1 Date Filed: 08/08/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 13-70030 FILED
August 8, 2014
Lyle W. Cayce
ARTHUR BROWN, JR., Clerk
Petitioner – Appellant
v.
WILLIAM STEPHENS, DIRECTOR, TEXAS DEPARTMENT OF CRIMINAL
JUSTICE, CORRECTIONAL INSTITUTIONS DIVISION,
Respondent – Appellee
Appeal from the United States District Court
for the Southern District of Texas
Before STEWART, Chief Judge, and JOLLY and DENNIS, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
Texas death row inmate Arthur Brown, Jr., has exhausted all state and
federal habeas appeals. He has, however, filed a Texas state petition for
clemency and his execution has been stayed by the Texas courts. He moved
the federal district court to allow funds to hire a mitigation specialist to assist
him in his state clemency proceedings. Although Brown requested $7,500 in
his motion, his mitigation specialist estimated the investigation would cost
$20,000. The district court turned him down. He now appeals the district
court’s denial of his motion. We find no abuse of discretion in denying the
funding and AFFIRM the order of the district court denying Brown’s motion.
Case: 13-70030 Document: 00512727404 Page: 2 Date Filed: 08/08/2014
No. 13-70030
I.
Brown was convicted of capital murder for his role in the murders of four
people. We described the crime in our previous opinion as follows:
Rachel Tovar and her husband, Jose, were drug dealers in
Houston, Texas. They supplied marijuana and cocaine to other
drug dealers, including Brown and his associates, who were from
Tuscaloosa, Alabama. On June 19, 1992, Brown traveled from
Tuscaloosa to Houston, accompanied by Marion Dudley, Antonio
Dunson, and Maliek Travis. They arrived at the Houston
residence of Brown’s sister, Grace, early in the morning on June
20.
That evening, six people were bound and shot in the head at
Rachel Tovar’s residence in Houston. Four of them died: Jessica
Quinones, the pregnant common-law wife of Rachel Tovar’s son,
Anthony; Jose Guadalupe Tovar, Rachel Tovar’s husband; Audrey
Brown, one of Rachel Tovar’s neighbors; and Frank Farias, Rachel
Tovar’s son. Rachel Tovar and Alexander Camarillo, also known
as Nicolas Cortez Anzures, survived and testified at Brown’s trial.
Both of them identified Brown and Dudley, whom Tovar knew,
from previous drug deals, by the nicknames of “Squirt” and “Red,”
as the shooters. Three of Brown’s sisters––Serisa Ann Brown,
Grace Brown, and Carolyn Momoh––testified as witnesses for the
State at the guilt-innocence phase. All three of them claimed that
the police and prosecutors had threatened them in order to coerce
their cooperation. Carolyn Momoh was held in contempt and
incarcerated at one point during the trial for invoking the Fifth
Amendment, despite the fact that she had been given immunity.
After she eventually testified, she was convicted of perjury. The
jury convicted Brown of capital murder.
Brown v. Thaler, 684 F.3d 482, 486 (5th Cir. 2012) (footnote omitted).
At the punishment phase, the State presented evidence that Brown had
committed an armed robbery four years earlier, that he had extorted other
prisoners while in jail awaiting trial, and that he had assaulted a deputy at
the jail. Brown’s counsel presented evidence that he had a low IQ, suffered
from learning disabilities, and did not do well in special education classes.
They also presented the testimony of a law professor that prisoners become
2
Case: 13-70030 Document: 00512727404 Page: 3 Date Filed: 08/08/2014
No. 13-70030
less violent as they get older. Trial counsel’s cross-examination of Brown’s
sister, Serisa Ann Brown, during the guilt-innocence phase of the trial also
resulted in the presentation of some mitigating evidence. She testified that
Brown had 32 brothers and sisters, that Brown’s mother was present in the
courtroom during the trial, that Brown was only 23 years old, that Brown had
three children, and that Brown was close to the mother of his three children.
In the state habeas proceedings, Brown’s counsel obtained $2,500 from
the Texas Court of Criminal Appeals (TCCA) for a mitigation specialist. The
mitigation specialist, Lisa Milstein, traveled to Tuscaloosa, Alabama, where
she interviewed Brown’s parents, his brother, and his three sisters. She
obtained an affidavit from Brown’s mother in which she stated that she drank
alcohol excessively during her pregnancy with Brown. Brown’s state habeas
counsel sought an additional $2,700 for Milstein to complete her investigation.
That request was supported by Milstein’s statement in which she outlined the
evidence she had discovered and described the evidence she wanted to develop
through additional investigation. The state court denied the additional
funding request.
In his state habeas application, Brown claimed that trial counsel
rendered ineffective assistance in the investigation and presentation of
mitigating evidence. As support for his claim, Brown relied on the affidavit of
his mother, in which she described her drinking while she was pregnant with
him, and the affidavit of mitigation specialist Milstein, describing her
investigation into Brown’s background. We described the contents of Milstein’s
affidavit in our previous opinion, as follows:
Milstein stated that Brown’s mother, Joe Mae Brown, . . . told
Milstein that when Brown was three years old, he fell from a swing
and struck his head on a cement porch. Mrs. Brown took him to a
hospital, where the attending physician determined that he had a
concussion. Milstein stated that Mrs. Brown told her that Brown
3
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No. 13-70030
had headaches two to three times a week for several months after
the concussion, but they never took him for a follow-up visit with
the doctor. Mrs. Brown also told Milstein that she was married to
Brown’s father when Brown was born, but that they divorced when
he was twelve years old; that during the marriage, Brown’s father
beat her; that Brown was close to his father, and she started
having problems with Brown after the divorce; and that Brown
threatened to commit suicide by jumping out of a window at his
school.
According to Milstein, she did not learn of Brown’s mother’s
history of alcohol abuse while interviewing Mrs. Brown, but
learned of it later from interviews with other family members.
Milstein stated that Brown’s sister, Serisa, told her that Mrs.
Brown often went out drinking at night, leaving the children alone
at home, and returning heavily intoxicated in the early morning.
Sometimes when she returned home she woke the children and
made them pray throughout the rest of the night. As a result, the
children were frequently tired at school. According to Milstein,
Grace Brown, another of Brown’s sisters, stated that Brown was
exposed to his mother’s drinking as a child and was embarrassed
by her appearance in public while drunk. Milstein said that Grace
also told her that after the divorce, their mother’s drinking friends
came around more often.
Milstein stated that when she confronted Mrs. Brown, Mrs.
Brown admitted that she drank on a daily, or near daily, basis;
that she drank heavily throughout her pregnancy with Brown; and
that she obtained homemade bootleg whiskey from one of her
sisters. Milstein believed that Mrs. Brown was likely an alcoholic.
In her handwritten affidavit, Mrs. Brown stated that she drank
while pregnant with Brown, at least every weekend and often
during the week. She estimated that she consumed at least a pint
of bootleg whiskey or brandy. Milstein believed that Mrs. Brown’s
alcohol abuse during her pregnancy with Brown was an important
mitigating fact, because it might have caused organic brain
damage called Fetal Alcohol Syndrome or Fetal Alcohol Effect.
Milstein reported that she learned from her investigation
that Brown had an impoverished upbringing. After his parents’
divorce, he lived with his mother and three other siblings in a
small apartment in a poor area of Tuscaloosa, in a neighborhood
that contained drugs and violence. According to Milstein, Brown’s
4
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No. 13-70030
childhood was one marked by deprivation, including lack of food,
clothing, guidance, and a father figure. Brown was devastated by
his parents’ divorce and was left in the hands of a drunken and
abusive mother.
Milstein stated that Brown had a stable relationship in
Tuscaloosa with his common-law wife and that he worked at
legitimate jobs to provide for her and their three children. Milstein
stated that Brown’s sister Grace told her that Brown had an
intense work ethic and had on occasion worked two jobs at once to
support his family. Milstein reported that each of Brown’s sisters
told her that Brown’s trial counsel did not ask them any questions
regarding mitigating evidence.
684 F.3d at 493–94.
The TCCA denied Brown’s state habeas application. Ex parte Brown,
No. WR-26178-02, 2008 WL 2487788 (Tex. Crim. App. June 18, 2008)
(unpublished).
In his federal habeas petition, Brown claimed that the state courts
violated his constitutional rights by failing to provide additional funds and that
trial counsel rendered ineffective assistance by not putting the contents of the
two affidavits into evidence at trial. The district court held that the state
habeas court’s decision to deny the ineffective assistance claim was not
contrary to, or an unreasonable application of, federal law. Brown v. Thaler,
No. H-09-74, 2011 WL 798391 (S.D. Tex. Feb. 28, 2011) (unpublished). The
district court stated that there was not a reasonable probability that the jury
would have made a different assessment of Brown’s moral culpability had his
trial counsel presented the evidence that Brown claimed should have been
presented, as described in the affidavits of Milstein and his mother. It denied
habeas relief and denied a certificate of appealability (COA).
Brown requested a COA from this court for his claim that his trial
counsel rendered ineffective assistance by failing to investigate available
mitigating evidence concerning his difficult childhood and troubled
5
Case: 13-70030 Document: 00512727404 Page: 6 Date Filed: 08/08/2014
No. 13-70030
background, including his mother’s alcohol abuse, by failing to retain mental
health experts to evaluate his low intelligence, and by failing to explore
whether he suffers from Fetal Alcohol Spectrum Disorder. This court denied
Brown’s request for a COA. 684 F.3d 482. The Supreme Court denied
certiorari. Brown v. Thaler, 133 S. Ct. 1244 (2013).
After Brown’s execution was scheduled, he filed in the district court an
ex parte motion for authorization of funding and for appointment of a
mitigation investigator to assist in clemency proceedings. He asked the district
court to appoint Nicole VanToorn, a mitigation specialist, at an estimated cost
of $20,000, to complete the investigation that Milstein started in the state
habeas proceedings. He sought to develop a complete life and social history,
including evidence of poverty, family violence, exposure to drugs and alcohol
during childhood, and brain impairments caused by his mother’s excessive
drinking during her pregnancy with him. The district court denied Brown’s
request for funds, holding that he had not shown that the proposed
investigation is reasonably necessary for the purposes of clemency.
Brown filed a clemency petition on October 7, 2013. The State withdrew
the execution date in order to allow Brown to seek retesting of certain trial
evidence, and Brown withdrew the clemency petition. This appeal is not moot,
however, because of the likelihood that the State will reschedule Brown’s
execution.
II.
Brown argues that the district court abused its discretion in denying
funds for a mitigation specialist. He contends that the court mischaracterized
his proposed investigation as a request to obtain affidavits from the witnesses
Milstein had previously identified and interviewed. Instead, he maintains that
his proposed investigation was designed to follow up on the leads that Milstein
had uncovered and to obtain first-hand witness accounts concerning his
6
Case: 13-70030 Document: 00512727404 Page: 7 Date Filed: 08/08/2014
No. 13-70030
upbringing and family history. He asserts that Milstein’s affidavit indicates
that there are numerous red flags that more important mitigating evidence
exists and should be developed and presented in clemency proceedings, and
that it is unfair to limit him to the evidence that Milstein uncovered in 1998,
because her investigation was incomplete and does not accurately and fully
portray his upbringing and family history. Brown contends further that the
district court substituted its judgment concerning Brown’s entitlement to
clemency for that of the Parole Board and Governor. He points out that the
Board may consider defects in the justice system, as well as questions of mercy
and moral culpability, untethered by the legal standards applicable in prior
judicial proceedings.
We review the denial of funding for investigative or expert assistance for
an abuse of discretion. Woodward v. Epps, 580 F.3d 318, 334 (5th Cir. 2009);
Smith v. Dretke, 422 F.3d 269, 288 (5th Cir. 2005). In Harbison v. Bell, 556
U.S. 180, 183 (2009), the Supreme Court held that 18 U.S.C. § 3599 authorizes
federally funded counsel appointed to represent an indigent state prisoner in
federal habeas proceedings to represent him in subsequent state clemency
proceedings.
Section 3599 provides further that
Upon a finding that investigative, expert, or other services are
reasonably necessary for the representation of the defendant,
whether in connection with issues relating to guilt or the sentence,
the court may authorize the defendant’s attorneys to obtain such
services on behalf of the defendant and, if so authorized, shall
order the payment of fees and expenses therefor under subsection
(g).
18 U.S.C. § 3599(f) (emphasis added). Subsection (g) provides that
Fees and expenses paid for investigative, expert, and other
reasonably necessary services authorized under subsection (f)
shall not exceed $7,500 in any case, unless payment in excess of
that limit is certified by the court . . . as necessary to provide fair
7
Case: 13-70030 Document: 00512727404 Page: 8 Date Filed: 08/08/2014
No. 13-70030
compensation for services of an unusual character or duration, and
the amount of the excess payment is approved by the chief judge
of the circuit.
18 U.S.C. § 3599(g)(2).
In addressing requests for funding for expert or investigative assistance
in federal habeas proceedings, this court has interpreted “reasonably
necessary” to mean that the petitioner must show that he has “a substantial
need” for the requested assistance. Riley v. Dretke, 362 F.3d 302, 307 (5th Cir.
2004). In the federal habeas context, we have held that a district court may
deny an inmate’s request for funds “when a petitioner has (a) failed to
supplement his funding request with a viable constitutional claim that is not
procedurally barred, or (b) when the sought-after assistance would only
support a meritless claim, or (c) when the sought after assistance would only
supplement prior evidence.” Smith, 422 F.3d at 288 (citations omitted)
(addressing request for funds to obtain the assistance of an expert psychologist
in federal habeas proceedings).
The district court noted that questions about the procedural adequacy of
a claim have no bearing on the clemency process, but it nevertheless concluded
that an inquiry into the merits of the proposed investigation still applies to
requests for funds to support clemency. Therefore, it held that Brown was
required to show that the proposed investigation would not just supplement
prior evidence or support meritless claims. The district court held that Brown
had not shown that federal funds for a mitigation investigation, especially one
as expensive as the one he proposed, were reasonably necessary for the
purposes of clemency. Although Brown requested only $7,500 in his motion,
his mitigation specialist estimated that the investigation would cost $20,000.
The court pointed out that the estimated cost of the investigation was nearly
three times the statutory limit of $7,500 and that, for funds over that limit,
8
Case: 13-70030 Document: 00512727404 Page: 9 Date Filed: 08/08/2014
No. 13-70030
Brown must show that the requested assistance is of “unusual character or
duration.” 18 U.S.C. § 3599(g)(2). The court found that Brown had not shown
what mitigating evidence remains undiscovered and that he only sought to
amass more, not fundamentally different, mitigation evidence. The court
stated that, other than interviewing more witnesses, Brown had not shown
what information was missed by Milstein. Further, he did not propose any
mitigation theory that exceeded the contours of the affidavits he presented on
federal habeas review and his request for investigative assistance followed the
same mitigating avenues outlined in Milstein’s and his mother’s affidavits.
The court concluded that it was speculative whether additional investigation
would uncover information different from that contained in Milstein’s report.
The court concluded that federal courts have no obligation to authorize fishing
expeditions and that federal law does not authorize funding for speculative
investigation in the hopes that Brown may turn up something new.
Our court has not addressed a request for funding for investigative
services in the clemency context. In determining whether such services are
“reasonably necessary,” consideration must be given to the nature and purpose
of clemency proceedings. The clemency process takes place only after all
judicial proceedings have been completed. In capital cases, such judicial
proceedings include, at a minimum, trial, direct appeal, state post-conviction
review, and federal habeas review, in all of which proceedings indigent
prisoners are provided with legal representation and investigative and expert
assistance at taxpayer expense. Clemency “proceedings are a matter of grace
entirely distinct from judicial proceedings.” Harbison, 556 U.S. at 192.
“Clemency is deeply rooted in our Anglo-American tradition of law, and is the
historic remedy for preventing miscarriages of justice where judicial process
has been exhausted.” Herrera v. Collins, 506 U.S. 390, 411–12 (1993) (footnote
omitted). Thus, when a petitioner requests funds for investigative services for
9
Case: 13-70030 Document: 00512727404 Page: 10 Date Filed: 08/08/2014
No. 13-70030
the purpose of clemency proceedings, the petitioner must show that the
requested services are reasonably necessary to provide the Governor and
Board of Pardons and Paroles the information they need in order to determine
whether to exercise their discretion to extend grace to the petitioner in order
to prevent a miscarriage of justice. Accordingly, it was appropriate for the
district court to consider the merits of the proposed investigation and to
consider whether the proposed investigation would only supplement prior
evidence that had already been considered in the judicial proceedings and was
thus available to the Board and the Governor.
We hold that the district court did not abuse its discretion in denying
Brown’s request for funds. Brown sought funds for the purpose of completing
the investigation commenced by Milstein in the state habeas proceedings, to
develop evidence of poverty, family violence, exposure to drugs and alcohol
during childhood, and brain impairments caused by his mother’s excessive
consumption of alcohol during her pregnancy. Although Milstein estimated
that she could complete her investigation in 54 hours, Brown requested
authorization for nearly four times that number of hours for the proposed
investigation by VanToorn. As the district court observed, there can be little
doubt but that the facts of Brown’s crime will weigh heavily in his clemency
proceedings. Those facts are brutal: Brown and his accomplices bound and
shot six people in the head, execution-style. Although two of the victims
survived, one of the four who died was a nearly nine-months pregnant
teenager. In his request for funds, Brown offered little beyond speculation that
the proposed additional investigation would uncover some information
different from that Milstein described in her report and affidavit. Brown failed
to demonstrate that the proposed investigation by VanToorn was reasonably
necessary to provide the Board of Pardons and Paroles and the Governor with
material information beyond that already adduced by Milstein. Accordingly,
10
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No. 13-70030
the district court did not abuse its discretion by denying funding for such
investigation.
III.
Brown has not demonstrated that the funds he requested for
investigative services are reasonably necessary for clemency proceedings.
Accordingly, the district court did not abuse its discretion by denying the
requested funds. The order of the district court is therefore
AFFIRMED.
11
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38 Ill. App.3d 798 (1976)
349 N.E.2d 91
THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee,
v.
RALPH SMITH, Defendant-Appellant.
No. 13299.
Illinois Appellate Court Fourth District.
Opinion filed June 10, 1976.
Jack C. Vieley, of Peoria, for appellant.
Richard W. Leiken, State's Attorney, of Eureka, for the People.
Judgment reversed.
Mr. JUSTICE SIMKINS delivered the opinion of the court:
Defendant was convicted of a violation of the City of Eureka Zoning Ordinance. He was fined $200 plus costs. On appeal he contends that the use complained of, namely that he kept horses on property zoned R-1 *799 Residential, was a valid nonconforming use and therefore not a violation of the 1969 Eureka Zoning Ordinance.
The State has neither entered an appearance nor filed a brief. As set out by the Supreme Court in First Capitol Mortgage Corp. v. Talandis Construction Corp., 63 Ill.2d 128, 345 N.E.2d 493, this court may, if justice requires, search the record to sustain the judgment of the trial court or when the record is simple and the claimed errors easily decided, the court should determine the merits of the appeal. In the case at bar, the record is so simple that questions of considerable complexity arise. We consider that the third alternative set out in First Mortgage is applicable here. Appellant has demonstrated prima facie reversible error and his contentions find support in the record. Accordingly, we reverse.
Defendant contends that his present use of the property is a valid nonconforming use under the 1969 Eureka Zoning Ordinance on the ground that his predecessors in title used the property for this purpose prior to the enactment of the ordinance. A purchaser of property constituting a nonconforming use is entitled to the same rights as his grantors. Schneider v. Board of Appeals, 402 Ill. 536, 84 N.E.2d 428.
There is no dispute in the evidence. The testimony of all the witnesses was that this property had been used for the keeping of livestock from 1959 to the present. Since the State did not introduce into evidence the provisions of the 1969 ordinance governing nonconforming uses (nor the penalty provisions for that matter) this court cannot determine on the record that defendant's nonconforming use is a violation of the ordinance.
The State's witness testified that defendant's predecessors in title had discontinued the use of the property for keeping livestock from 1955-59. The State argued below that defendant's predecessors in title had unlawfully instituted a use nonconforming under the 1957 Eureka Zoning Ordinance. From that, the State argued that defendant's use could not be valid since his predecessor's use was unlawful under the preceding ordinance. However, the 1957 ordinance, by its own terms, did not prohibit the keeping of all livestock, but prohibited it only under stated circumstances. The evidence does not prove that the use by defendant's predecessors was, in fact, nonconforming.
Under these circumstances, since defendant has demonstrated prima facie reversible error which is supported by the record, we reverse the judgment of the trial court.
Reversed.
CRAVEN, P.J., and GREEN, J., concur.
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808 F.2d 1512
Riverav.Secretary of Health and Human Services
86-1161
United States Court of Appeals,First Circuit.
10/30/86
1
D.P.R.
AFFIRMED
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(Slip Opinion) OCTOBER TERM, 2013 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
MCCULLEN ET AL. v. COAKLEY, ATTORNEY GENERAL
OF MASSACHUSETTS, ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE FIRST CIRCUIT
No. 12–1168. Argued January 15, 2014—Decided June 26, 2014
In 2007, Massachusetts amended its Reproductive Health Care Facili
ties Act, which had been enacted in 2000 to address clashes between
abortion opponents and advocates of abortion rights outside clinics
where abortions were performed. The amended version of the Act
makes it a crime to knowingly stand on a “public way or sidewalk”
within 35 feet of an entrance or driveway to any “reproductive health
care facility,” defined as “a place, other than within or upon the
grounds of a hospital, where abortions are offered or performed.”
Mass. Gen. Laws, ch. 266, §§120E½(a), (b). The Act exempts from
this prohibition four classes of individuals, including “employees or
agents of such facility acting within the scope of their employment.”
§120E½(b)(2). Another provision of the Act proscribes the knowing
obstruction of access to an abortion clinic. §120E½(e).
McCullen and the other petitioners are individuals who attempt to
engage women approaching Massachusetts abortion clinics in “side
walk counseling,” which involves offering information about alterna
tives to abortion and help pursuing those options. They claim that
the 35-foot buffer zones have displaced them from their previous po
sitions outside the clinics, considerably hampering their counseling
efforts. Their attempts to communicate with patients are further
thwarted, they claim, by clinic “escorts,” who accompany arriving pa
tients through the buffer zones to the clinic entrances.
Petitioners sued Attorney General Coakley and other Common
wealth officials, seeking to enjoin the Act’s enforcement on the
ground that it violates the First and Fourteenth Amendments, both
on its face and as applied to them. The District Court denied both
challenges, and the First Circuit affirmed. With regard to petition
2 McCULLEN v. COAKLEY
Syllabus
ers’ facial challenge, the First Circuit held that the Act was a reason
able “time, place, and manner” regulation under the test set forth in
Ward v. Rock Against Racism, 491 U. S. 781.
Held: The Massachusetts Act violates the First Amendment. Pp. 8–30.
(a) By its very terms, the Act restricts access to “public way[s]” and
“sidewalk[s],” places that have traditionally been open for speech ac
tivities and that the Court has accordingly labeled “traditional public
fora,” Pleasant Grove City v. Summum, 555 U. S. 460, 469. The gov
ernment’s ability to regulate speech in such locations is “very lim
ited.” United States v. Grace, 461 U. S. 171, 177. “[E]ven in a public
forum,” however, “the government may impose reasonable re
strictions on the time, place, or manner of protected speech, provided
the restrictions ‘are justified without reference to the content of the
regulated speech, that they are narrowly tailored to serve a signifi
cant governmental interest, and that they leave open ample alterna
tive channels for communication of the information,’ ” Ward, supra,
at 791. Pp. 8–10.
(b) Because the Act is neither content nor viewpoint based, it need
not be analyzed under strict scrutiny. Pp. 10–18.
(1) The Act is not content based simply because it establishes
buffer zones only at abortion clinics, as opposed to other kinds of fa
cilities. First, the Act does not draw content-based distinctions on its
face. Whether petitioners violate the Act “depends” not “on what
they say,” Holder v. Humanitarian Law Project, 561 U. S. 1, 27, but
on where they say it. Second, even if a facially neutral law dispropor
tionately affects speech on certain topics, it remains content neutral
so long as it is “ ‘justified without reference to the content of the regu
lated speech.’ ” Renton v. Playtime Theatres, Inc., 475 U. S. 41, 48.
The Act’s purposes include protecting public safety, patient access to
healthcare, and unobstructed use of public sidewalks and streets.
The Court has previously deemed all these concerns to be content
neutral. See Boos v. Barry, 485 U. S. 312, 321. An intent to single
out for regulation speech about abortion cannot be inferred from the
Act’s limited scope. “States adopt laws to address the problems that
confront them.” Burson v. Freeman, 504 U. S. 191, 207. There was a
record of crowding, obstruction, and even violence outside Massachu
setts abortion clinics but not at other kinds of facilities in the Com
monwealth. Pp. 11–15.
(2) The Act’s exemption for clinic employees and agents acting
within the scope of their employment does not appear to be an at
tempt to favor one viewpoint about abortion over the other. City of
Ladue v. Gilleo, 512 U. S. 43, 51, distinguished. Given that some
kind of exemption was necessary to allow individuals who work at
the clinics to enter or remain within the buffer zones, the “scope of
Cite as: 573 U. S. ____ (2014) 3
Syllabus
employment” qualification simply ensures that the exemption is lim
ited to its purpose of allowing the employees to do their jobs. Even
assuming that some clinic escorts have expressed their views on
abortion inside the zones, the record does not suggest that such
speech was within the scope of the escorts’ employment. If it turned
out that a particular clinic authorized its employees to speak about
abortion in the buffer zones, that would support an as-applied chal
lenge to the zones at that clinic. Pp. 15–18.
(c) Although the Act is content neutral, it is not “narrowly tailored”
because it “burden[s] substantially more speech than is necessary to
further the government’s legitimate interests.” Ward, 491 U. S., at
799. Pp. 18–29.
(1) The buffer zones serve the Commonwealth’s legitimate inter
ests in maintaining public safety on streets and sidewalks and in
preserving access to adjacent reproductive healthcare facilities. See
Schenck v. Pro-Choice Network of Western N. Y., 519 U. S. 357, 376.
At the same time, however, they impose serious burdens on petition
ers’ speech, depriving them of their two primary methods of com
municating with arriving patients: close, personal conversations and
distribution of literature. Those forms of expression have historically
been closely associated with the transmission of ideas. While the Act
may allow petitioners to “protest” outside the buffer zones, petition
ers are not protestors; they seek not merely to express their opposi
tion to abortion, but to engage in personal, caring, consensual conver
sations with women about various alternatives. It is thus no answer
to say that petitioners can still be seen and heard by women within
the buffer zones. If all that the women can see and hear are vocifer
ous opponents of abortion, then the buffer zones have effectively sti
fled petitioners’ message. Pp. 19–23.
(2) The buffer zones burden substantially more speech than nec
essary to achieve the Commonwealth’s asserted interests. Subsection
(e) of the Act already prohibits deliberate obstruction of clinic en
trances. Massachusetts could also enact legislation similar to the
federal Freedom of Access to Clinic Entrances Act of 1994, 18 U. S. C.
§248(a)(1), which imposes criminal and civil sanctions for obstruct
ing, intimidating, or interfering with persons obtaining or providing
reproductive health services. Obstruction of clinic driveways can
readily be addressed through existing local traffic ordinances. While
the Commonwealth contends that individuals can inadvertently ob
struct access to clinics simply by gathering in large numbers, that
problem could be addressed through a law requiring crowds blocking
a clinic entrance to disperse for a limited period when ordered to do
so by the police. In any event, crowding appears to be a problem only
at the Boston clinic, and even there, only on Saturday mornings.
4 McCULLEN v. COAKLEY
Syllabus
The Commonwealth has not shown that it seriously undertook to
address these various problems with the less intrusive tools readily
available to it. It identifies not a single prosecution or injunction
against individuals outside abortion clinics since the 1990s. The
Commonwealth responds that the problems are too widespread for
individual prosecutions and injunctions to be effective. But again,
the record indicates that the problems are limited principally to the
Boston clinic on Saturday mornings, and the police there appear per
fectly capable of singling out lawbreakers. The Commonwealth also
claims that it would be difficult to prove intentional or deliberate ob
struction or intimidation and that the buffer zones accordingly make
the police’s job easier. To meet the narrow tailoring requirement,
however, the government must demonstrate that alternative
measures that burden substantially less speech would fail to achieve
the government’s interests, not simply that the chosen route is easier.
In any event, to determine whether someone intends to block access
to a clinic, a police officer need only order him to move; if he refuses,
then there is no question that his continued conduct is knowing or in
tentional. For similar reasons, the Commonwealth’s reliance on Bur-
son v. Freeman, 504 U. S. 191, is misplaced. There, the Court upheld
a law establishing buffer zones outside polling places on the ground
that less restrictive measures were inadequate. But whereas “[v]oter
intimidation and election fraud” are “difficult to detect,” id., at 208,
obstruction and harassment at abortion clinics are anything but sub
tle. And while the police “generally are barred from the vicinity of
the polls to avoid any appearance of coercion in the electoral process,”
id., at 207, they maintain a significant presence outside Massachu
setts abortion clinics. In short, given the vital First Amendment in
terests at stake, it is not enough for Massachusetts simply to say that
other approaches have not worked. Pp. 23–29.
708 F. 3d 1, reversed and remanded.
ROBERTS, C. J., delivered the opinion of the Court, in which GINS-
BURG, BREYER, SOTOMAYOR, and KAGAN, JJ., joined. SCALIA, J., filed an
opinion concurring in the judgment, in which KENNEDY and THOMAS,
JJ., joined. ALITO, J., filed an opinion concurring in the judgment.
Cite as: 573 U. S. ____ (2014) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 12–1168
_________________
ELEANOR McCULLEN, ET AL., PETITIONERS v.
MARTHA COAKLEY, ATTORNEY GEN-
ERAL OF MASSACHUSETTS, ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FIRST CIRCUIT
[June 26, 2014]
CHIEF JUSTICE ROBERTS delivered the opinion of the
Court.
A Massachusetts statute makes it a crime to knowingly
stand on a “public way or sidewalk” within 35 feet of an
entrance or driveway to any place, other than a hospital,
where abortions are performed. Mass. Gen. Laws, ch. 266,
§§120E½(a), (b) (West 2012). Petitioners are individuals
who approach and talk to women outside such facilities,
attempting to dissuade them from having abortions. The
statute prevents petitioners from doing so near the facili
ties’ entrances. The question presented is whether the
statute violates the First Amendment.
I
A
In 2000, the Massachusetts Legislature enacted the
Massachusetts Reproductive Health Care Facilities Act,
Mass. Gen. Laws, ch. 266, §120E½ (West 2000). The law
was designed to address clashes between abortion oppo
nents and advocates of abortion rights that were occurring
outside clinics where abortions were performed. The Act
2 McCULLEN v. COAKLEY
Opinion of the Court
established a defined area with an 18-foot radius around
the entrances and driveways of such facilities. §120E½(b).
Anyone could enter that area, but once within it, no one
(other than certain exempt individuals) could knowingly
approach within six feet of another person—unless that
person consented—“for the purpose of passing a leaflet or
handbill to, displaying a sign to, or engaging in oral pro
test, education, or counseling with such other person.”
Ibid. A separate provision subjected to criminal punish
ment anyone who “knowingly obstructs, detains, hinders,
impedes or blocks another person’s entry to or exit from a
reproductive health care facility.” §120E½(e).
The statute was modeled on a similar Colorado law that
this Court had upheld in Hill v. Colorado, 530 U. S. 703
(2000). Relying on Hill, the United States Court of Ap
peals for the First Circuit sustained the Massachusetts
statute against a First Amendment challenge. McGuire v.
Reilly, 386 F. 3d 45 (2004) (McGuire II), cert. denied, 544
U. S. 974 (2005); McGuire v. Reilly, 260 F. 3d 36 (2001)
(McGuire I).
By 2007, some Massachusetts legislators and law en
forcement officials had come to regard the 2000 statute as
inadequate. At legislative hearings, multiple witnesses
recounted apparent violations of the law. Massachusetts
Attorney General Martha Coakley, for example, testified
that protestors violated the statute “on a routine basis.”
App. 78. To illustrate this claim, she played a video de
picting protestors approaching patients and clinic staff
within the buffer zones, ostensibly without the latter
individuals’ consent. Clinic employees and volunteers also
testified that protestors congregated near the doors and in
the driveways of the clinics, with the result that prospec
tive patients occasionally retreated from the clinics rather
than try to make their way to the clinic entrances or park
ing lots.
Captain William B. Evans of the Boston Police Depart
Cite as: 573 U. S. ____ (2014) 3
Opinion of the Court
ment, however, testified that his officers had made “no
more than five or so arrests” at the Planned Parenthood
clinic in Boston and that what few prosecutions had been
brought were unsuccessful. Id., at 68–69. Witnesses
attributed the dearth of enforcement to the difficulty of
policing the six-foot no-approach zones. Captain Evans
testified that the 18-foot zones were so crowded with
protestors that they resembled “a goalie’s crease,” making
it hard to determine whether a protestor had deliberately
approached a patient or, if so, whether the patient had
consented. Id., at 69–71. For similar reasons, Attorney
General Coakley concluded that the six-foot no-approach
zones were “unenforceable.” Id., at 79. What the police
needed, she said, was a fixed buffer zone around clinics
that protestors could not enter. Id., at 74, 76. Captain
Evans agreed, explaining that such a zone would “make
our job so much easier.” Id., at 68.
To address these concerns, the Massachusetts Legisla
ture amended the statute in 2007, replacing the six-foot
no-approach zones (within the 18-foot area) with a 35-foot
fixed buffer zone from which individuals are categorically
excluded. The statute now provides:
“No person shall knowingly enter or remain on a pub
lic way or sidewalk adjacent to a reproductive health
care facility within a radius of 35 feet of any portion of
an entrance, exit or driveway of a reproductive health
care facility or within the area within a rectangle cre
ated by extending the outside boundaries of any en
trance, exit or driveway of a reproductive health care
facility in straight lines to the point where such lines
intersect the sideline of the street in front of such en
trance, exit or driveway.” Mass. Gen. Laws, ch. 266,
§120E½(b) (West 2012).
A “reproductive health care facility,” in turn, is defined as
“a place, other than within or upon the grounds of a hospi
4 McCULLEN v. COAKLEY
Opinion of the Court
tal, where abortions are offered or performed.” §120E½(a).
The 35-foot buffer zone applies only “during a facility’s
business hours,” and the area must be “clearly marked
and posted.” §120E½(c). In practice, facilities typically
mark the zones with painted arcs and posted signs on
adjacent sidewalks and streets. A first violation of the
statute is punishable by a fine of up to $500, up to three
months in prison, or both, while a subsequent offense is
punishable by a fine of between $500 and $5,000, up to
two and a half years in prison, or both. §120E½(d).
The Act exempts four classes of individuals: (1) “persons
entering or leaving such facility”; (2) “employees or agents
of such facility acting within the scope of their employ
ment”; (3) “law enforcement, ambulance, firefighting,
construction, utilities, public works and other municipal
agents acting within the scope of their employment”; and
(4) “persons using the public sidewalk or street right-
of-way adjacent to such facility solely for the purpose
of reaching a destination other than such facility.”
§120E½(b)(1)–(4). The legislature also retained the sepa
rate provision from the 2000 version that proscribes the
knowing obstruction of access to a facility. §120E½(e).
B
Some of the individuals who stand outside Massachu
setts abortion clinics are fairly described as protestors,
who express their moral or religious opposition to abortion
through signs and chants or, in some cases, more aggres
sive methods such as face-to-face confrontation. Petition
ers take a different tack. They attempt to engage women
approaching the clinics in what they call “sidewalk coun
seling,” which involves offering information about alterna
tives to abortion and help pursuing those options. Peti
tioner Eleanor McCullen, for instance, will typically
initiate a conversation this way: “Good morning, may I
give you my literature? Is there anything I can do for you?
Cite as: 573 U. S. ____ (2014) 5
Opinion of the Court
I’m available if you have any questions.” App. 138. If the
woman seems receptive, McCullen will provide additional
information. McCullen and the other petitioners consider
it essential to maintain a caring demeanor, a calm tone of
voice, and direct eye contact during these exchanges.
Such interactions, petitioners believe, are a much more
effective means of dissuading women from having abor
tions than confrontational methods such as shouting or
brandishing signs, which in petitioners’ view tend only to
antagonize their intended audience. In unrefuted testi
mony, petitioners say they have collectively persuaded
hundreds of women to forgo abortions.
The buffer zones have displaced petitioners from their
previous positions outside the clinics. McCullen offers
counseling outside a Planned Parenthood clinic in Boston,
as do petitioners Jean Zarrella and Eric Cadin. Petitioner
Gregory Smith prays the rosary there. The clinic occupies
its own building on a street corner. Its main door is re
cessed into an open foyer, approximately 12 feet back from
the public sidewalk. Before the Act was amended to cre
ate the buffer zones, petitioners stood near the entryway
to the foyer. Now a buffer zone—marked by a painted arc
and a sign—surrounds the entrance. This zone extends 23
feet down the sidewalk in one direction, 26 feet in the
other, and outward just one foot short of the curb. The
clinic’s entrance adds another seven feet to the width of
the zone. Id., at 293–295. The upshot is that petitioners
are effectively excluded from a 56-foot-wide expanse of the
public sidewalk in front of the clinic.1
Petitioners Mark Bashour and Nancy Clark offer coun
seling and information outside a Planned Parenthood
clinic in Worcester. Unlike the Boston clinic, the Worces
——————
1 The zone could have extended an additional 21 feet in width under
the Act. Only the smaller area was marked off, however, so only that
area has legal effect. See Mass. Gen. Laws, ch. 266, §120E½(c).
6 McCULLEN v. COAKLEY
Opinion of the Court
ter clinic sits well back from the public street and side
walks. Patients enter the clinic in one of two ways. Those
arriving on foot turn off the public sidewalk and walk
down a nearly 54-foot-long private walkway to the main
entrance. More than 85% of patients, however, arrive by
car, turning onto the clinic’s driveway from the street,
parking in a private lot, and walking to the main entrance
on a private walkway.
Bashour and Clark would like to stand where the pri
vate walkway or driveway intersects the sidewalk and
offer leaflets to patients as they walk or drive by. But a
painted arc extends from the private walkway 35 feet
down the sidewalk in either direction and outward nearly
to the curb on the opposite side of the street. Another arc
surrounds the driveway’s entrance, covering more than 93
feet of the sidewalk (including the width of the driveway)
and extending across the street and nearly six feet onto
the sidewalk on the opposite side. Id., at 295–297. Bash
our and Clark must now stand either some distance down
the sidewalk from the private walkway and driveway or
across the street.
Petitioner Cyril Shea stands outside a Planned
Parenthood clinic in Springfield, which, like the Worcester
clinic, is set back from the public streets. Approximately
90% of patients arrive by car and park in the private lots
surrounding the clinic. Shea used to position himself at
an entrance to one of the five driveways leading to the
parking lots. Painted arcs now surround the entrances,
each spanning approximately 100 feet of the sidewalk
parallel to the street (again, including the width of the
driveways) and extending outward well into the street.
Id., at 297–299. Like petitioners at the Worcester clinic,
Shea now stands far down the sidewalk from the driveway
entrances.
Petitioners at all three clinics claim that the buffer
zones have considerably hampered their counseling ef
Cite as: 573 U. S. ____ (2014) 7
Opinion of the Court
forts. Although they have managed to conduct some coun
seling and to distribute some literature outside the buffer
zones—particularly at the Boston clinic—they say they
have had many fewer conversations and distributed many
fewer leaflets since the zones went into effect. Id., at 136–
137, 180, 200.
The second statutory exemption allows clinic employees
and agents acting within the scope of their employment to
enter the buffer zones. Relying on this exemption, the
Boston clinic uses “escorts” to greet women as they ap
proach the clinic, accompanying them through the zones to
the clinic entrance. Petitioners claim that the escorts
sometimes thwart petitioners’ attempts to communicate
with patients by blocking petitioners from handing litera
ture to patients, telling patients not to “pay any attention”
or “listen to” petitioners, and disparaging petitioners as
“crazy.” Id., at 165, 178.
C
In January 2008, petitioners sued Attorney General
Coakley and other Commonwealth officials. They sought
to enjoin enforcement of the Act, alleging that it violates
the First and Fourteenth Amendments, both on its face
and as applied to them. The District Court denied peti
tioners’ facial challenge after a bench trial based on a
stipulated record. 573 F. Supp. 2d 382 (Mass. 2008).
The Court of Appeals for the First Circuit affirmed. 571
F. 3d 167 (2009). Relying extensively on its previous
decisions upholding the 2000 version of the Act, see
McGuire II, 386 F. 3d 45; McGuire I, 260 F. 3d 36, the
court upheld the 2007 version as a reasonable “time, place,
and manner” regulation under the test set forth in Ward v.
Rock Against Racism, 491 U. S. 781 (1989). 571 F. 3d, at
174–181. It also rejected petitioners’ arguments that the
Act was substantially overbroad, void for vagueness, and
an impermissible prior restraint. Id., at 181–184.
8 McCULLEN v. COAKLEY
Opinion of the Court
The case then returned to the District Court, which held
that the First Circuit’s decision foreclosed all but one of
petitioners’ as-applied challenges. 759 F. Supp. 2d 133
(2010). After another bench trial, it denied the remain-
ing as-applied challenge, finding that the Act left petition
ers ample alternative channels of communication. 844
F. Supp. 2d 206 (2012). The Court of Appeals once again
affirmed. 708 F. 3d 1 (2013).
We granted certiorari. 570 U. S. ___ (2013).
II
By its very terms, the Massachusetts Act regulates
access to “public way[s]” and “sidewalk[s].” Mass. Gen.
Laws, ch. 266, §120E½(b) (Supp. 2007). Such areas occupy
a “special position in terms of First Amendment protec
tion” because of their historic role as sites for discussion
and debate. United States v. Grace, 461 U. S. 171, 180
(1983). These places—which we have labeled “traditional
public fora”—“ ‘have immemorially been held in trust for
the use of the public and, time out of mind, have been used
for purposes of assembly, communicating thoughts be
tween citizens, and discussing public questions.’ ” Pleas-
ant Grove City v. Summum, 555 U. S. 460, 469 (2009)
(quoting Perry Ed. Assn. v. Perry Local Educators’ Assn.,
460 U. S. 37, 45 (1983)).
It is no accident that public streets and sidewalks have
developed as venues for the exchange of ideas. Even
today, they remain one of the few places where a speaker
can be confident that he is not simply preaching to the
choir. With respect to other means of communication, an
individual confronted with an uncomfortable message can
always turn the page, change the channel, or leave the
Web site. Not so on public streets and sidewalks. There, a
listener often encounters speech he might otherwise tune
out. In light of the First Amendment’s purpose “to pre
serve an uninhibited marketplace of ideas in which truth
Cite as: 573 U. S. ____ (2014) 9
Opinion of the Court
will ultimately prevail,” FCC v. League of Women Voters of
Cal., 468 U. S. 364, 377 (1984) (internal quotation marks
omitted), this aspect of traditional public fora is a virtue,
not a vice.
In short, traditional public fora are areas that have
historically been open to the public for speech activities.
Thus, even though the Act says nothing about speech on
its face, there is no doubt—and respondents do not dis
pute—that it restricts access to traditional public fora and
is therefore subject to First Amendment scrutiny. See
Brief for Respondents 26 (although “[b]y its terms, the Act
regulates only conduct,” it “incidentally regulates the
place and time of protected speech”).
Consistent with the traditionally open character of
public streets and sidewalks, we have held that the gov
ernment’s ability to restrict speech in such locations is
“very limited.” Grace, supra, at 177. In particular, the
guiding First Amendment principle that the “government
has no power to restrict expression because of its message,
its ideas, its subject matter, or its content” applies with
full force in a traditional public forum. Police Dept. of
Chicago v. Mosley, 408 U. S. 92, 95 (1972). As a general
rule, in such a forum the government may not “selectively
. . . shield the public from some kinds of speech on the
ground that they are more offensive than others.”
Erznoznik v. Jacksonville, 422 U. S. 205, 209 (1975).
We have, however, afforded the government somewhat
wider leeway to regulate features of speech unrelated to
its content. “[E]ven in a public forum the government may
impose reasonable restrictions on the time, place, or man
ner of protected speech, provided the restrictions ‘are
justified without reference to the content of the regulated
speech, that they are narrowly tailored to serve a signifi
cant governmental interest, and that they leave open
ample alternative channels for communication of the
information.’ ” Ward, 491 U. S., at 791 (quoting Clark v.
10 McCULLEN v. COAKLEY
Opinion of the Court
Community for Creative Non-Violence, 468 U. S. 288, 293
(1984)).2
While the parties agree that this test supplies the
proper framework for assessing the constitutionality of the
Massachusetts Act, they disagree about whether the Act
satisfies the test’s three requirements.
III
Petitioners contend that the Act is not content neutral
for two independent reasons: First, they argue that it
discriminates against abortion-related speech because it
establishes buffer zones only at clinics that perform abor
tions. Second, petitioners contend that the Act, by ex
empting clinic employees and agents, favors one viewpoint
about abortion over the other. If either of these argu
ments is correct, then the Act must satisfy strict scruti
ny—that is, it must be the least restrictive means of
achieving a compelling state interest. See United States v.
Playboy Entertainment Group, Inc., 529 U. S. 803, 813
(2000). Respondents do not argue that the Act can survive
this exacting standard.
JUSTICE SCALIA objects to our decision to consider
whether the statute is content based and thus subject to
strict scrutiny, given that we ultimately conclude that it is
not narrowly tailored. Post, at 2 (opinion concurring in
judgment). But we think it unexceptional to perform the
first part of a multipart constitutional analysis first. The
content-neutrality prong of the Ward test is logically
antecedent to the narrow-tailoring prong, because it de
termines the appropriate level of scrutiny. It is not unu
sual for the Court to proceed sequentially in applying a
——————
2 A different analysis would of course be required if the government
property at issue were not a traditional public forum but instead “a
forum that is limited to use by certain groups or dedicated solely to the
discussion of certain subjects.” Pleasant Grove City v. Summum, 555
U. S. 460, 470 (2009).
Cite as: 573 U. S. ____ (2014) 11
Opinion of the Court
constitutional test, even when the preliminary steps turn
out not to be dispositive. See, e.g., Bartnicki v. Vopper,
532 U. S. 514, 526–527 (2001); Holder v. Humanitarian
Law Project, 561 U. S. 1, 25–28 (2010) (concluding that a
law was content based even though it ultimately survived
strict scrutiny).
The Court does sometimes assume, without deciding,
that a law is subject to a less stringent level of scrutiny, as
we did earlier this Term in McCutcheon v. Federal Elec-
tion Commission, 572 U. S. ___, ___ (2014) (plurality opin
ion) (slip op., at 10). But the distinction between that case
and this one seems clear: Applying any standard of review
other than intermediate scrutiny in McCutcheon—the
standard that was assumed to apply—would have re
quired overruling a precedent. There is no similar reason
to forgo the ordinary order of operations in this case.
At the same time, there is good reason to address con
tent neutrality. In discussing whether the Act is narrowly
tailored, see Part IV, infra, we identify a number of less
restrictive alternative measures that the Massachusetts
Legislature might have adopted. Some apply only at
abortion clinics, which raises the question whether those
provisions are content neutral. See infra, at 12–15. While
we need not (and do not) endorse any of those measures, it
would be odd to consider them as possible alternatives if
they were presumptively unconstitutional because they
were content based and thus subject to strict scrutiny.
A
The Act applies only at a “reproductive health care
facility,” defined as “a place, other than within or upon the
grounds of a hospital, where abortions are offered or per
formed.” Mass. Gen. Laws, ch. 266, §120E½(a). Given
this definition, petitioners argue, “virtually all speech
affected by the Act is speech concerning abortion,” thus
rendering the Act content based. Brief for Petitioners 23.
12 McCULLEN v. COAKLEY
Opinion of the Court
We disagree. To begin, the Act does not draw content
based distinctions on its face. Contrast Boos v. Barry, 485
U. S. 312, 315 (1988) (ordinance prohibiting the display
within 500 feet of a foreign embassy of any sign that tends
to bring the foreign government into “ ‘public odium’ ” or
“ ‘public disrepute’ ”); Carey v. Brown, 447 U. S. 455, 465
(1980) (statute prohibiting all residential picketing except
“peaceful labor picketing”). The Act would be content
based if it required “enforcement authorities” to “examine
the content of the message that is conveyed to determine
whether” a violation has occurred. League of Women
Voters of Cal., supra, at 383. But it does not. Whether
petitioners violate the Act “depends” not “on what they
say,” Humanitarian Law Project, supra, at 27, but simply
on where they say it. Indeed, petitioners can violate the
Act merely by standing in a buffer zone, without display
ing a sign or uttering a word.
It is true, of course, that by limiting the buffer zones to
abortion clinics, the Act has the “inevitable effect” of re
stricting abortion-related speech more than speech on
other subjects. Brief for Petitioners 24 (quoting United
States v. O’Brien, 391 U. S. 367, 384 (1968)). But a facially
neutral law does not become content based simply be-
cause it may disproportionately affect speech on certain
topics. On the contrary, “[a] regulation that serves pur
poses unrelated to the content of expression is deemed
neutral, even if it has an incidental effect on some speak
ers or messages but not others.” Ward, supra, at 791. The
question in such a case is whether the law is “ ‘justified
without reference to the content of the regulated speech.’ ”
Renton v. Playtime Theatres, Inc., 475 U. S. 41, 48 (1986)
(quoting Virginia Pharmacy Board v. Virginia Citizens
Consumer Council, Inc., 425 U. S. 748, 771 (1976); empha
sis deleted).
The Massachusetts Act is. Its stated purpose is to “in
crease forthwith public safety at reproductive health care
Cite as: 573 U. S. ____ (2014) 13
Opinion of the Court
facilities.” 2007 Mass. Acts p. 660. Respondents have
articulated similar purposes before this Court—namely,
“public safety, patient access to healthcare, and the unob
structed use of public sidewalks and roadways.” Brief for
Respondents 27; see, e.g., App. 51 (testimony of Attorney
General Coakley); id., at 67–70 (testimony of Captain
William B. Evans of the Boston Police); id., at 79–80 (tes
timony of Mary Beth Heffernan, Undersecretary for Crim
inal Justice); id., at 122–124 (affidavit of Captain Evans).
It is not the case that “[e]very objective indication shows
that the provision’s primary purpose is to restrict speech
that opposes abortion.” Post, at 7.
We have previously deemed the foregoing concerns to be
content neutral. See Boos, 485 U. S., at 321 (identifying
“congestion,” “interference with ingress or egress,” and
“the need to protect . . . security” as content-neutral con
cerns). Obstructed access and congested sidewalks are
problems no matter what caused them. A group of indi
viduals can obstruct clinic access and clog sidewalks just
as much when they loiter as when they protest abortion or
counsel patients.
To be clear, the Act would not be content neutral if it
were concerned with undesirable effects that arise from
“the direct impact of speech on its audience” or “[l]isteners’
reactions to speech.” Ibid. If, for example, the speech
outside Massachusetts abortion clinics caused offense or
made listeners uncomfortable, such offense or discomfort
would not give the Commonwealth a content-neutral
justification to restrict the speech. All of the problems
identified by the Commonwealth here, however, arise
irrespective of any listener’s reactions. Whether or not a
single person reacts to abortion protestors’ chants or peti
tioners’ counseling, large crowds outside abortion clinics
can still compromise public safety, impede access, and
obstruct sidewalks.
Petitioners do not really dispute that the Common
14 McCULLEN v. COAKLEY
Opinion of the Court
wealth’s interests in ensuring safety and preventing ob
struction are, as a general matter, content neutral. But
petitioners note that these interests “apply outside every
building in the State that hosts any activity that might
occasion protest or comment,” not just abortion clinics.
Brief for Petitioners 24. By choosing to pursue these
interests only at abortion clinics, petitioners argue, the
Massachusetts Legislature evinced a purpose to “single[ ]
out for regulation speech about one particular topic: abor
tion.” Reply Brief 9.
We cannot infer such a purpose from the Act’s limited
scope. The broad reach of a statute can help confirm that
it was not enacted to burden a narrower category of disfa
vored speech. See Kagan, Private Speech, Public Purpose:
The Role of Governmental Motive in First Amendment
Doctrine, 63 U. Chi. L. Rev. 413, 451–452 (1996). At the
same time, however, “States adopt laws to address the
problems that confront them. The First Amendment does
not require States to regulate for problems that do not
exist.” Burson v. Freeman, 504 U. S. 191, 207 (1992)
(plurality opinion). The Massachusetts Legislature
amended the Act in 2007 in response to a problem that
was, in its experience, limited to abortion clinics. There
was a record of crowding, obstruction, and even violence
outside such clinics. There were apparently no similar
recurring problems associated with other kinds of
healthcare facilities, let alone with “every building in the
State that hosts any activity that might occasion protest
or comment.” Brief for Petitioners 24. In light of the
limited nature of the problem, it was reasonable for the
Massachusetts Legislature to enact a limited solution.
When selecting among various options for combating a
particular problem, legislatures should be encouraged to
choose the one that restricts less speech, not more.
JUSTICE SCALIA objects that the statute does restrict
more speech than necessary, because “only one [Massa
Cite as: 573 U. S. ____ (2014) 15
Opinion of the Court
chusetts abortion clinic] is known to have been beset by
the problems that the statute supposedly addresses.”
Post, at 7. But there are no grounds for inferring content
based discrimination here simply because the legislature
acted with respect to abortion facilities generally rather
than proceeding on a facility-by-facility basis. On these
facts, the poor fit noted by JUSTICE SCALIA goes to the
question of narrow tailoring, which we consider below.
See infra, at 26–28.
B
Petitioners also argue that the Act is content based
because it exempts four classes of individuals, Mass. Gen.
Laws, ch. 266, §§120E½(b)(1)–(4), one of which comprises
“employees or agents of [a reproductive healthcare] facil-
ity acting within the scope of their employment.”
§120E½(b)(2). This exemption, petitioners say, favors one
side in the abortion debate and thus constitutes viewpoint
discrimination—an “egregious form of content discrimina
tion,” Rosenberger v. Rector and Visitors of Univ. of Va.,
515 U. S. 819, 829 (1995). In particular, petitioners argue
that the exemption allows clinic employees and agents—
including the volunteers who “escort” patients arriving at
the Boston clinic—to speak inside the buffer zones.
It is of course true that “an exemption from an other
wise permissible regulation of speech may represent a
governmental ‘attempt to give one side of a debatable
public question an advantage in expressing its views to
the people.’ ” City of Ladue v. Gilleo, 512 U. S. 43, 51
(1994) (quoting First Nat. Bank of Boston v. Bellotti, 435
U. S. 765, 785–786 (1978)). At least on the record before
us, however, the statutory exemption for clinic employees
and agents acting within the scope of their employment
does not appear to be such an attempt.
There is nothing inherently suspect about providing
some kind of exemption to allow individuals who work at
16 McCULLEN v. COAKLEY
Opinion of the Court
the clinics to enter or remain within the buffer zones. In
particular, the exemption cannot be regarded as simply a
carve-out for the clinic escorts; it also covers employees
such as the maintenance worker shoveling a snowy side
walk or the security guard patrolling a clinic entrance, see
App. 95 (affidavit of Michael T. Baniukiewicz).
Given the need for an exemption for clinic employees,
the “scope of their employment” qualification simply en
sures that the exemption is limited to its purpose of allow
ing the employees to do their jobs. It performs the same
function as the identical “scope of their employment”
restriction on the exemption for “law enforcement, ambu
lance, fire-fighting, construction, utilities, public works
and other municipal agents.” §120E½(b)(3). Contrary to
the suggestion of JUSTICE SCALIA, post, at 11–12, there is
little reason to suppose that the Massachusetts Legisla
ture intended to incorporate a common law doctrine devel
oped for determining vicarious liability in tort when it
used the phrase “scope of their employment” for the wholly
different purpose of defining the scope of an exemption to
a criminal statute. The limitation instead makes clear—
with respect to both clinic employees and municipal
agents—that exempted individuals are allowed inside the
zones only to perform those acts authorized by their em
ployers. There is no suggestion in the record that any of
the clinics authorize their employees to speak about abor
tion in the buffer zones. The “scope of their employment”
limitation thus seems designed to protect against exactly
the sort of conduct that petitioners and JUSTICE SCALIA
fear.
Petitioners did testify in this litigation about instances
in which escorts at the Boston clinic had expressed views
about abortion to the women they were accompanying,
thwarted petitioners’ attempts to speak and hand litera
ture to the women, and disparaged petitioners in various
ways. See App. 165, 168–169, 177–178, 189–190. It is
Cite as: 573 U. S. ____ (2014) 17
Opinion of the Court
unclear from petitioners’ testimony whether these alleged
incidents occurred within the buffer zones. There is no
viewpoint discrimination problem if the incidents occurred
outside the zones because petitioners are equally free to
say whatever they would like in that area.
Even assuming the incidents occurred inside the zones,
the record does not suggest that they involved speech
within the scope of the escorts’ employment. If the speech
was beyond the scope of their employment, then each of
the alleged incidents would violate the Act’s express
terms. Petitioners’ complaint would then be that the
police were failing to enforce the Act equally against clinic
escorts. Cf. Hoye v. City of Oakland, 653 F. 3d 835, 849–
852 (CA9 2011) (finding selective enforcement of a similar
ordinance in Oakland, California). While such allegations
might state a claim of official viewpoint discrimination,
that would not go to the validity of the Act. In any event,
petitioners nowhere allege selective enforcement.
It would be a very different question if it turned out that
a clinic authorized escorts to speak about abortion inside
the buffer zones. See post, at 1–2 (ALITO, J., concurring in
judgment). In that case, the escorts would not seem to be
violating the Act because the speech would be within the
scope of their employment.3 The Act’s exemption for clinic
——————
3 Less than two weeks after the instant litigation was initiated, the
Massachusetts Attorney General’s Office issued a guidance letter
clarifying the application of the four exemptions. The letter interpreted
the exemptions as not permitting clinic employees or agents, municipal
employees or agents, or individuals passing by clinics “to express their
views about abortion or to engage in any other partisan speech within
the buffer zone.” App. 93, 93–94. While this interpretation supports
our conclusion that the employee exemption does not render the Act
viewpoint based, we do not consider it in our analysis because it ap
pears to broaden the scope of the Act—a criminal statute—rather than
to adopt a “ ‘limiting construction.’ ” Ward v. Rock Against Racism, 491
U. S. 781, 796 (1989) (quoting Hoffman Estates v. Flipside, Hoffman
Estates, Inc., 455 U. S. 489, 494, n. 5 (1982)).
18 McCULLEN v. COAKLEY
Opinion of the Court
employees would then facilitate speech on only one side of
the abortion debate—a clear form of viewpoint discrimina
tion that would support an as-applied challenge to the
buffer zone at that clinic. But the record before us con
tains insufficient evidence to show that the exemption
operates in this way at any of the clinics, perhaps because
the clinics do not want to doom the Act by allowing their
employees to speak about abortion within the buffer
zones.4
We thus conclude that the Act is neither content nor
viewpoint based and therefore need not be analyzed under
strict scrutiny.
IV
Even though the Act is content neutral, it still must be
“narrowly tailored to serve a significant governmental
interest.” Ward, 491 U. S., at 796 (internal quotation
marks omitted). The tailoring requirement does not sim
ply guard against an impermissible desire to censor. The
government may attempt to suppress speech not only
because it disagrees with the message being expressed,
but also for mere convenience. Where certain speech is
associated with particular problems, silencing the speech
is sometimes the path of least resistance. But by demand
——————
4 Of course we do not hold that “[s]peech restrictions favoring one
viewpoint over another are not content based unless it can be shown
that the favored viewpoint has actually been expressed.” Post, at 13.
We instead apply an uncontroversial principle of constitutional adjudi
cation: that a plaintiff generally cannot prevail on an as-applied chal
lenge without showing that the law has in fact been (or is sufficiently
likely to be) unconstitutionally applied to him. Specifically, when
someone challenges a law as viewpoint discriminatory but it is not clear
from the face of the law which speakers will be allowed to speak, he
must show that he was prevented from speaking while someone espous
ing another viewpoint was permitted to do so. JUSTICE SCALIA can
decry this analysis as “astonishing” only by quoting a sentence that is
explicitly limited to as-applied challenges and treating it as relevant to
facial challenges. Ibid.
Cite as: 573 U. S. ____ (2014) 19
Opinion of the Court
ing a close fit between ends and means, the tailoring
requirement prevents the government from too readily
“sacrific[ing] speech for efficiency.” Riley v. National
Federation of Blind of N. C., Inc., 487 U. S. 781, 795
(1988).
For a content-neutral time, place, or manner regulation
to be narrowly tailored, it must not “burden substantially
more speech than is necessary to further the government’s
legitimate interests.” Ward, 491 U. S., at 799. Such a
regulation, unlike a content-based restriction of speech,
“need not be the least restrictive or least intrusive means
of ” serving the government’s interests. Id., at 798. But
the government still “may not regulate expression in such
a manner that a substantial portion of the burden on
speech does not serve to advance its goals.” Id., at 799.
A
As noted, respondents claim that the Act promotes
“public safety, patient access to healthcare, and the unob
structed use of public sidewalks and roadways.” Brief for
Respondents 27. Petitioners do not dispute the signifi
cance of these interests. We have, moreover, previously
recognized the legitimacy of the government’s interests in
“ensuring public safety and order, promoting the free flow
of traffic on streets and sidewalks, protecting property
rights, and protecting a woman’s freedom to seek pregnancy
related services.” Schenck v. Pro-Choice Network of
Western N. Y., 519 U. S. 357, 376 (1997). See also Madsen
v. Women’s Health Center, Inc., 512 U. S. 753, 767–768
(1994). The buffer zones clearly serve these interests.
At the same time, the buffer zones impose serious bur
dens on petitioners’ speech. At each of the three Planned
Parenthood clinics where petitioners attempt to counsel
patients, the zones carve out a significant portion of the
adjacent public sidewalks, pushing petitioners well back
from the clinics’ entrances and driveways. The zones
20 McCULLEN v. COAKLEY
Opinion of the Court
thereby compromise petitioners’ ability to initiate the
close, personal conversations that they view as essential to
“sidewalk counseling.”
For example, in uncontradicted testimony, McCullen
explained that she often cannot distinguish patients from
passersby outside the Boston clinic in time to initiate a
conversation before they enter the buffer zone. App. 135.
And even when she does manage to begin a discussion
outside the zone, she must stop abruptly at its painted
border, which she believes causes her to appear “untrust
worthy” or “suspicious.” Id., at 135, 152. Given these
limitations, McCullen is often reduced to raising her voice
at patients from outside the zone—a mode of communica
tion sharply at odds with the compassionate message she
wishes to convey. Id., at 133, 152–153. Clark gave similar
testimony about her experience at the Worcester clinic.
Id., at 243–244.
These burdens on petitioners’ speech have clearly taken
their toll. Although McCullen claims that she has per
suaded about 80 women not to terminate their pregnan
cies since the 2007 amendment, App. to Pet. for Cert. 42a,
she also says that she reaches “far fewer people” than she
did before the amendment, App. 137. Zarrella reports an
even more precipitous decline in her success rate: She
estimated having about 100 successful interactions over
the years before the 2007 amendment, but not a single one
since. Id., at 180. And as for the Worcester clinic, Clark
testified that “only one woman out of 100 will make the
effort to walk across [the street] to speak with [her].” Id.,
at 217.
The buffer zones have also made it substantially more
difficult for petitioners to distribute literature to arriving
patients. As explained, because petitioners in Boston
cannot readily identify patients before they enter the zone,
they often cannot approach them in time to place litera
ture near their hands—the most effective means of getting
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Opinion of the Court
the patients to accept it. Id., at 179. In Worcester and
Springfield, the zones have pushed petitioners so far back
from the clinics’ driveways that they can no longer even
attempt to offer literature as drivers turn into the parking
lots. Id., at 213, 218, 252–253. In short, the Act operates
to deprive petitioners of their two primary methods of
communicating with patients.
The Court of Appeals and respondents are wrong to
downplay these burdens on petitioners’ speech. As the
Court of Appeals saw it, the Constitution does not accord
“special protection” to close conversations or “handbilling.”
571 F. 3d, at 180. But while the First Amendment does
not guarantee a speaker the right to any particular form of
expression, some forms—such as normal conversation and
leafletting on a public sidewalk—have historically been
more closely associated with the transmission of ideas
than others.
In the context of petition campaigns, we have observed
that “one-on-one communication” is “the most effective,
fundamental, and perhaps economical avenue of political
discourse.” Meyer v. Grant, 486 U. S. 414, 424 (1988). See
also Schenck, supra, at 377 (invalidating a “floating”
buffer zone around people entering an abortion clinic
partly on the ground that it prevented protestors “from
communicating a message from a normal conversational
distance or handing leaflets to people entering or leaving
the clinics who are walking on the public sidewalks”). And
“handing out leaflets in the advocacy of a politically con
troversial viewpoint . . . is the essence of First Amendment
expression”; “[n]o form of speech is entitled to greater
constitutional protection.” McIntyre v. Ohio Elections
Comm’n, 514 U. S. 334, 347 (1995). See also Schenck,
supra, at 377 (“Leafletting and commenting on matters of
public concern are classic forms of speech that lie at the
heart of the First Amendment”). When the government
makes it more difficult to engage in these modes of com
22 McCULLEN v. COAKLEY
Opinion of the Court
munication, it imposes an especially significant First
Amendment burden.5
Respondents also emphasize that the Act does not pre
vent petitioners from engaging in various forms of “pro
test”—such as chanting slogans and displaying signs—
outside the buffer zones. Brief for Respondents 50–54.
That misses the point. Petitioners are not protestors.
They seek not merely to express their opposition to abor
tion, but to inform women of various alternatives and to
provide help in pursuing them. Petitioners believe that
they can accomplish this objective only through personal,
caring, consensual conversations. And for good reason: It
is easier to ignore a strained voice or a waving hand than
a direct greeting or an outstretched arm. While the record
indicates that petitioners have been able to have a number
of quiet conversations outside the buffer zones, respond
ents have not refuted petitioners’ testimony that the con
versations have been far less frequent and far less success
ful since the buffer zones were instituted. It is thus no
answer to say that petitioners can still be “seen and
heard” by women within the buffer zones. Id., at 51–53. If
all that the women can see and hear are vociferous oppo
nents of abortion, then the buffer zones have effectively
stifled petitioners’ message.
Finally, respondents suggest that, at the Worcester and
Springfield clinics, petitioners are prevented from com
municating with patients not by the buffer zones but by
the fact that most patients arrive by car and park in the
——————
5 As a leading historian has noted:
“It was in this form—as pamphlets—that much of the most important
and characteristic writing of the American Revolution appeared. For
the Revolutionary generation, as for its predecessors back to the early
sixteenth century, the pamphlet had peculiar virtues as a medium of
communication. Then, as now, it was seen that the pamphlet allowed
one to do things that were not possible in any other form.” B. Bailyn,
The Ideological Origins of the American Revolution 2 (1967).
Cite as: 573 U. S. ____ (2014) 23
Opinion of the Court
clinics’ private lots. Id., at 52. It is true that the layout of
the two clinics would prevent petitioners from approach
ing the clinics’ doorways, even without the buffer zones.
But petitioners do not claim a right to trespass on the
clinics’ property. They instead claim a right to stand on
the public sidewalks by the driveway as cars turn into the
parking lot. Before the buffer zones, they could do so.
Now they must stand a substantial distance away. The
Act alone is responsible for that restriction on their ability
to convey their message.
B
1
The buffer zones burden substantially more speech than
necessary to achieve the Commonwealth’s asserted inter
ests. At the outset, we note that the Act is truly excep
tional: Respondents and their amici identify no other
State with a law that creates fixed buffer zones around
abortion clinics.6 That of course does not mean that the
law is invalid. It does, however, raise concern that the
Commonwealth has too readily forgone options that could
serve its interests just as well, without substantially
burdening the kind of speech in which petitioners wish to
engage.
That is the case here. The Commonwealth’s interests
include ensuring public safety outside abortion clinics,
preventing harassment and intimidation of patients and
clinic staff, and combating deliberate obstruction of clinic
entrances. The Act itself contains a separate provision,
subsection (e)—unchallenged by petitioners—that prohib
its much of this conduct. That provision subjects to crimi
nal punishment “[a]ny person who knowingly obstructs,
detains, hinders, impedes or blocks another person’s entry
——————
6 Amici do identify five localities with laws similar to the Act here.
Brief for State of New York et al. as Amici Curiae 14, n. 7.
24 McCULLEN v. COAKLEY
Opinion of the Court
to or exit from a reproductive health care facility.” Mass.
Gen. Laws, ch. 266, §120E½(e).7 If Massachusetts deter
mines that broader prohibitions along the same lines are
necessary, it could enact legislation similar to the federal
Freedom of Access to Clinic Entrances Act of 1994 (FACE
Act), 18 U. S. C. §248(a)(1), which subjects to both crimi
nal and civil penalties anyone who “by force or threat of
force or by physical obstruction, intentionally injures,
intimidates or interferes with or attempts to injure, intim
idate or interfere with any person because that person is
or has been, or in order to intimidate such person or any
other person or any class of persons from, obtaining or
providing reproductive health services.” Some dozen other
States have done so. See Brief for State of New York et al.
as Amici Curiae 13, and n. 6. If the Commonwealth is
particularly concerned about harassment, it could also
consider an ordinance such as the one adopted in New
York City that not only prohibits obstructing access to a
clinic, but also makes it a crime “to follow and harass
another person within 15 feet of the premises of a repro
ductive health care facility.” N. Y. C. Admin. Code §8–
803(a)(3) (2014).8
The Commonwealth points to a substantial public safety
risk created when protestors obstruct driveways leading to
the clinics. See App. 18, 41, 51, 88–89, 99, 118–119. That
is, however, an example of its failure to look to less intru
——————
7 Massachusetts also has a separate law prohibiting similar kinds of
conduct at any “medical facility,” though that law, unlike the Act,
requires explicit notice before any penalty may be imposed. Mass. Gen.
Laws, ch. 266, §120E.
8 We do not “give [our] approval” to this or any of the other alterna
tives we discuss. Post, at 4. We merely suggest that a law like the New
York City ordinance could in principle constitute a permissible alterna
tive. Whether such a law would pass constitutional muster would
depend on a number of other factors, such as whether the term “har
assment” had been authoritatively construed to avoid vagueness and
overbreadth problems of the sort noted by JUSTICE SCALIA.
Cite as: 573 U. S. ____ (2014) 25
Opinion of the Court
sive means of addressing its concerns. Any such obstruc
tion can readily be addressed through existing local ordi
nances. See, e.g., Worcester, Mass., Revised Ordinances of
2008, ch. 12, §25(b) (“No person shall stand, or place any
obstruction of any kind, upon any street, sidewalk or
crosswalk in such a manner as to obstruct a free passage
for travelers thereon”); Boston, Mass., Municipal Code, ch.
16–41.2(d) (2013) (“No person shall solicit while walking
on, standing on or going into any street or highway used
for motor vehicle travel, or any area appurtenant thereto
(including medians, shoulder areas, bicycle lanes, ramps
and exit ramps)”).
All of the foregoing measures are, of course, in addition
to available generic criminal statutes forbidding assault,
breach of the peace, trespass, vandalism, and the like.
In addition, subsection (e) of the Act, the FACE Act, and
the New York City anti-harassment ordinance are all
enforceable not only through criminal prosecutions but
also through public and private civil actions for injunc
tions and other equitable relief. See Mass. Gen. Laws
§120E½(f); 18 U. S. C. §248(c)(1); N. Y. C. Admin. Code
§§8–804, 8–805. We have previously noted the First
Amendment virtues of targeted injunctions as alternatives
to broad, prophylactic measures. Such an injunction
“regulates the activities, and perhaps the speech, of a
group,” but only “because of the group’s past actions in the
context of a specific dispute between real parties.” Mad-
sen, 512 U. S., at 762 (emphasis added). Moreover, given
the equitable nature of injunctive relief, courts can tailor a
remedy to ensure that it restricts no more speech than
necessary. See, e.g., id., at 770; Schenck, 519 U. S., at
380–381. In short, injunctive relief focuses on the precise
individuals and the precise conduct causing a particular
problem. The Act, by contrast, categorically excludes non
exempt individuals from the buffer zones, unnecessarily
sweeping in innocent individuals and their speech.
26 McCULLEN v. COAKLEY
Opinion of the Court
The Commonwealth also asserts an interest in prevent
ing congestion in front of abortion clinics. According to
respondents, even when individuals do not deliberately
obstruct access to clinics, they can inadvertently do so
simply by gathering in large numbers. But the Common
wealth could address that problem through more targeted
means. Some localities, for example, have ordinances that
require crowds blocking a clinic entrance to disperse when
ordered to do so by the police, and that forbid the individ
uals to reassemble within a certain distance of the clinic
for a certain period. See Brief for State of New York et al.
as Amici Curiae 14–15, and n. 10. We upheld a similar
law forbidding three or more people “ ‘to congregate within
500 feet of [a foreign embassy], and refuse to disperse
after having been ordered so to do by the police,’ ” Boos,
485 U. S., at 316 (quoting D. C. Code §22–1115 (1938))—
an order the police could give only when they “ ‘reasonably
believe[d] that a threat to the security or peace of the
embassy [was] present,’ ” 485 U. S., at 330 (quoting Finzer
v. Barry, 798 F. 2d 1450, 1471 (CADC 1986)).
And to the extent the Commonwealth argues that even
these types of laws are ineffective, it has another problem.
The portions of the record that respondents cite to support
the anticongestion interest pertain mainly to one place at
one time: the Boston Planned Parenthood clinic on Satur
day mornings. App. 69–71, 88–89, 96, 123. Respondents
point us to no evidence that individuals regularly gather
at other clinics, or at other times in Boston, in sufficiently
large groups to obstruct access. For a problem shown to
arise only once a week in one city at one clinic, creating
35-foot buffer zones at every clinic across the Common
wealth is hardly a narrowly tailored solution.
The point is not that Massachusetts must enact all or
even any of the proposed measures discussed above. The
point is instead that the Commonwealth has available to it
a variety of approaches that appear capable of serving its
Cite as: 573 U. S. ____ (2014) 27
Opinion of the Court
interests, without excluding individuals from areas histor
ically open for speech and debate.
2
Respondents have but one reply: “We have tried other
approaches, but they do not work.” Respondents empha
size the history in Massachusetts of obstruction at abor
tion clinics, and the Commonwealth’s allegedly failed
attempts to combat such obstruction with injunctions and
individual prosecutions. They also point to the Common
wealth’s experience under the 2000 version of the Act,
during which the police found it difficult to enforce the six
foot no-approach zones given the “frenetic” activity in front
of clinic entrances. Brief for Respondents 43. According to
respondents, this history shows that Massachusetts has
tried less restrictive alternatives to the buffer zones, to no
avail.
We cannot accept that contention. Although respond
ents claim that Massachusetts “tried other laws already
on the books,” id., at 41, they identify not a single prosecu
tion brought under those laws within at least the last 17
years. And while they also claim that the Commonwealth
“tried injunctions,” ibid., the last injunctions they cite date
to the 1990s, see id., at 42 (citing Planned Parenthood
League of Mass., Inc. v. Bell, 424 Mass. 573, 677 N. E. 2d
204 (1997); Planned Parenthood League of Mass., Inc. v.
Operation Rescue, 406 Mass. 701, 550 N. E. 2d 1361
(1990)). In short, the Commonwealth has not shown that
it seriously undertook to address the problem with less
intrusive tools readily available to it. Nor has it shown
that it considered different methods that other jurisdic
tions have found effective.
Respondents contend that the alternatives we have
discussed suffer from two defects: First, given the “wide
spread” nature of the problem, it is simply not “practica
ble” to rely on individual prosecutions and injunctions.
28 McCULLEN v. COAKLEY
Opinion of the Court
Brief for Respondents 45. But far from being “wide
spread,” the problem appears from the record to be limited
principally to the Boston clinic on Saturday mornings.
Moreover, by their own account, the police appear per-
fectly capable of singling out lawbreakers. The legislative
testimony preceding the 2007 Act revealed substantial
police and video monitoring at the clinics, especially when
large gatherings were anticipated. Captain Evans testi
fied that his officers are so familiar with the scene outside
the Boston clinic that they “know all the players down
there.” App. 69. And Attorney General Coakley relied on
video surveillance to show legislators conduct she thought
was “clearly against the law.” Id., at 78. If Common
wealth officials can compile an extensive record of obstruc
tion and harassment to support their preferred legislation,
we do not see why they cannot do the same to support
injunctions and prosecutions against those who might
deliberately flout the law.
The second supposed defect in the alternatives we have
identified is that laws like subsection (e) of the Act and the
federal FACE Act require a showing of intentional or
deliberate obstruction, intimidation, or harassment, which
is often difficult to prove. Brief for Respondents 45–47.
As Captain Evans predicted in his legislative testimony,
fixed buffer zones would “make our job so much easier.”
App. 68.
Of course they would. But that is not enough to satisfy
the First Amendment. To meet the requirement of narrow
tailoring, the government must demonstrate that alterna
tive measures that burden substantially less speech would
fail to achieve the government’s interests, not simply that
the chosen route is easier. A painted line on the sidewalk
is easy to enforce, but the prime objective of the First
Amendment is not efficiency. In any case, we do not think
that showing intentional obstruction is nearly so difficult
in this context as respondents suggest. To determine
Cite as: 573 U. S. ____ (2014) 29
Opinion of the Court
whether a protestor intends to block access to a clinic, a
police officer need only order him to move. If he refuses,
then there is no question that his continued conduct is
knowing or intentional.
For similar reasons, respondents’ reliance on our deci
sion in Burson v. Freeman is misplaced. There, we upheld
a state statute that established 100-foot buffer zones
outside polling places on election day within which no one
could display or distribute campaign materials or solicit
votes. 504 U. S., at 193–194. We approved the buffer
zones as a valid prophylactic measure, noting that existing
“[i]ntimidation and interference laws fall short of serving a
State’s compelling interests because they ‘deal with only
the most blatant and specific attempts’ to impede elec
tions.” Id., at 206–207 (quoting Buckley v. Valeo, 424 U. S.
1, 28 (1976) (per curiam)). Such laws were insufficient
because “[v]oter intimidation and election fraud are . . .
difficult to detect.” Burson, 504 U. S., at 208. Obstruction
of abortion clinics and harassment of patients, by contrast,
are anything but subtle.
We also noted in Burson that under state law, “law
enforcement officers generally are barred from the vicinity
of the polls to avoid any appearance of coercion in the
electoral process,” with the result that “many acts of inter
ference would go undetected.” Id., at 207. Not so here.
Again, the police maintain a significant presence outside
Massachusetts abortion clinics. The buffer zones in Bur-
son were justified because less restrictive measures were
inadequate. Respondents have not shown that to be the
case here.
Given the vital First Amendment interests at stake, it is
not enough for Massachusetts simply to say that other
approaches have not worked.9
——————
9 Because we find that the Act is not narrowly tailored, we need not
consider whether the Act leaves open ample alternative channels of
30 McCULLEN v. COAKLEY
Opinion of the Court
* * *
Petitioners wish to converse with their fellow citizens
about an important subject on the public streets and
sidewalks—sites that have hosted discussions about the
issues of the day throughout history. Respondents assert
undeniably significant interests in maintaining public
safety on those same streets and sidewalks, as well as in
preserving access to adjacent healthcare facilities. But
here the Commonwealth has pursued those interests by
the extreme step of closing a substantial portion of a tradi
tional public forum to all speakers. It has done so without
seriously addressing the problem through alternatives
that leave the forum open for its time-honored purposes.
The Commonwealth may not do that consistent with the
First Amendment.
The judgment of the Court of Appeals for the First
Circuit is reversed, and the case is remanded for further
proceedings consistent with this opinion.
It is so ordered.
——————
communication. Nor need we consider petitioners’ overbreadth chal
lenge.
Cite as: 573 U. S. ____ (2014) 1
SCALIA, J., concurring in judgment
SUPREME COURT OF THE UNITED STATES
_________________
No. 12–1168
_________________
ELEANOR McCULLEN, ET AL., PETITIONERS v.
MARTHA COAKLEY, ATTORNEY GEN-
ERAL OF MASSACHUSETTS, ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FIRST CIRCUIT
[June 26, 2014]
JUSTICE SCALIA, with whom JUSTICE KENNEDY and
JUSTICE THOMAS join, concurring in the judgment.
Today’s opinion carries forward this Court’s practice of
giving abortion-rights advocates a pass when it comes to
suppressing the free-speech rights of their opponents.
There is an entirely separate, abridged edition of the First
Amendment applicable to speech against abortion. See,
e.g., Hill v. Colorado, 530 U. S. 703 (2000); Madsen v.
Women’s Health Center, Inc., 512 U. S. 753 (1994).
The second half of the Court’s analysis today, invalidat
ing the law at issue because of inadequate “tailoring,” is
certainly attractive to those of us who oppose an abortion
speech edition of the First Amendment. But think again.
This is an opinion that has Something for Everyone, and
the more significant portion continues the onward march
of abortion-speech-only jurisprudence. That is the first
half of the Court’s analysis, which concludes that a statute
of this sort is not content based and hence not subject to
so-called strict scrutiny. The Court reaches out to decide
that question unnecessarily—or at least unnecessarily
insofar as legal analysis is concerned.
I disagree with the Court’s dicta (Part III) and hence see
no reason to opine on its holding (Part IV).
2 McCULLEN v. COAKLEY
SCALIA, J., concurring in judgment
I. The Court’s Content-Neutrality Discussion
Is Unnecessary
The gratuitous portion of today’s opinion is Part III,
which concludes—in seven pages of the purest dicta—that
subsection (b) of the Massachusetts Reproductive Health
Care Facilities Act is not specifically directed at speech
opposing (or even concerning) abortion and hence need not
meet the strict-scrutiny standard applicable to content
based speech regulations.1 Inasmuch as Part IV holds
that the Act is unconstitutional because it does not survive
the lesser level of scrutiny associated with content-neutral
“time, place, and manner” regulations, there is no princi
pled reason for the majority to decide whether the statute
is subject to strict scrutiny.
Just a few months past, the Court found it unnecessary
to “parse the differences between . . . two [available]
standards” where a statute challenged on First Amend
ment grounds “fail[s] even under the [less demanding]
test.” McCutcheon v. Federal Election Comm’n, 572 U. S.
___, ___ (2014) (plurality opinion) (slip op., at 10). What
has changed since then? Quite simple: This is an abortion
case, and McCutcheon was not.2 By engaging in constitu
tional dictum here (and reaching the wrong result), the
——————
1 To reiterate, the challenged provision states that “[n]o person shall
knowingly enter or remain on a public way or sidewalk adjacent to a
reproductive health care facility within a radius of 35 feet of any
portion of an entrance, exit or driveway” of such a facility or within an
alternative rectangular area. Mass. Gen. Laws, ch. 266, §120E½(b)
(West 2012). And the statute defines a “reproductive health care
facility” as “a place, other than within or upon the grounds of a hospi
tal, where abortions are offered or performed.” §120E½(a).
2 The Court claims that McCutcheon declined to consider the more
rigorous standard of review because applying it “would have required
overruling a precedent.” Ante, at 11. That hardly distinguishes the
present case, since, as discussed later in text, the conclusion that this
legislation escapes strict scrutiny does violence to a great swath of our
First Amendment jurisprudence.
Cite as: 573 U. S. ____ (2014) 3
SCALIA, J., concurring in judgment
majority can preserve the ability of jurisdictions across the
country to restrict antiabortion speech without fear of
rigorous constitutional review. With a dart here and a
pleat there, such regulations are sure to satisfy the tailor
ing standards applied in Part IV of the majority’s opinion.
The Court cites two cases for the proposition that “[i]t is
not unusual for the Court to proceed sequentially in apply
ing a constitutional test, even when the preliminary steps
turn out not to be dispositive.” Ante, at 10–11 (citing
Bartnicki v. Vopper, 532 U. S. 514, 526–527 (2001); Holder
v. Humanitarian Law Project, 561 U. S. 1, 25–28 (2010)).
Those cases provide little cover. In both, there was no
disagreement among the Members of the Court about
whether the statutes in question discriminated on the
basis of content.3 There was thus little harm in answering
the constitutional question that was “logically antecedent.”
Ante, at 10. In the present case, however, content neutral
ity is far from clear (the Court is divided 5-to-4), and the
parties vigorously dispute the point, see ibid. One would
have thought that the Court would avoid the issue by
simply assuming without deciding the logically antecedent
point. We have done that often before. See, e.g., Herrera
v. Collins, 506 U. S. 390, 417 (1993); Regents of Univ. of
Mich. v. Ewing, 474 U. S. 214, 222–223 (1985); Board of
Curators of Univ. of Mo. v. Horowitz, 435 U. S. 78, 91–92
(1978).
The Court points out that its opinion goes on to suggest
——————
3 See Bartnicki, 532 U. S., at 526 (“We agree with petitioners that
§2511(1)(c), as well as its Pennsylvania analog, is in fact a content
neutral law of general applicability”); id., at 544 (Rehnquist, C. J.,
dissenting) (“The Court correctly observes that these are ‘content
neutral law[s] of general applicability’ ” (brackets in original)); Humani-
tarian Law Project, 561 U. S., at 27 (“[Section] 2339B regulates speech
on the basis of its content”); id., at 45 (BREYER, J., dissenting)
(“[W]here, as here, a statute applies criminal penalties and at least
arguably does so on the basis of content-based distinctions, I should
think we would scrutinize the statute and justifications ‘strictly’ ”).
4 McCULLEN v. COAKLEY
SCALIA, J., concurring in judgment
(in Part IV) possible alternatives that apply only at abor
tion clinics, which therefore “raises the question whether
those provisions are content neutral.” Ante, at 11. Of
course, the Court has no obligation to provide advice on
alternative speech restrictions, and appending otherwise
unnecessary constitutional pronouncements to such advice
produces nothing but an impermissible advisory opinion.
By the way, there is dictum favorable to advocates of
abortion rights even in Part IV. The Court invites Massa
chusetts, as a means of satisfying the tailoring require
ment, to “consider an ordinance such as the one adopted in
New York City that . . . makes it a crime ‘to follow and
harass another person within 15 feet of the premises of a
reproductive health care facility.’ ” Ante, at 24 (quoting
N. Y. C. Admin. Code §8–803(a)(3) (2014)). Is it harass
ment, one wonders, for Eleanor McCullen to ask a woman,
quietly and politely, two times, whether she will take
literature or whether she has any questions? Three times?
Four times? It seems to me far from certain that First
Amendment rights can be imperiled by threatening jail
time (only at “reproductive health care facilit[ies],” of
course) for so vague an offense as “follow[ing] and har
ass[ing].” It is wrong for the Court to give its approval to
such legislation without benefit of briefing and argument.
II. The Statute Is Content Based and Fails Strict Scrutiny
Having eagerly volunteered to take on the level-of
scrutiny question, the Court provides the wrong answer.
Petitioners argue for two reasons that subsection (b) ar
ticulates a content-based speech restriction—and that
we must therefore evaluate it through the lens of strict
scrutiny.
A. Application to Abortion Clinics Only
First, petitioners maintain that the Act targets abortion
related—for practical purposes, abortion-opposing—speech
Cite as: 573 U. S. ____ (2014) 5
SCALIA, J., concurring in judgment
because it applies outside abortion clinics only (rather
than outside other buildings as well).
Public streets and sidewalks are traditional forums for
speech on matters of public concern. Therefore, as the
Court acknowledges, they hold a “ ‘special position in
terms of First Amendment protection.’ ” Ante, at 8 (quot
ing United States v. Grace, 461 U. S. 171, 180 (1983)).
Moreover, “the public spaces outside of [abortion
providing] facilities . . . ha[ve] become, by necessity and by
virtue of this Court’s decisions, a forum of last resort for
those who oppose abortion.” Hill, 530 U. S., at 763
(SCALIA, J., dissenting). It blinks reality to say, as the
majority does, that a blanket prohibition on the use of
streets and sidewalks where speech on only one politically
controversial topic is likely to occur—and where that
speech can most effectively be communicated—is not
content based. Would the Court exempt from strict scru
tiny a law banning access to the streets and sidewalks
surrounding the site of the Republican National Conven
tion? Or those used annually to commemorate the 1965
Selma-to-Montgomery civil rights marches? Or those
outside the Internal Revenue Service? Surely not.
The majority says, correctly enough, that a facially
neutral speech restriction escapes strict scrutiny, even
when it “may disproportionately affect speech on certain
topics,” so long as it is “justified without reference to the
content of the regulated speech.” Ante, at 12 (internal
quotation marks omitted). But the cases in which the
Court has previously found that standard satisfied—in
particular, Renton v. Playtime Theatres, Inc., 475 U. S. 41
(1986), and Ward v. Rock Against Racism, 491 U. S. 781
(1989), both of which the majority cites—are a far cry from
what confronts us here.
Renton upheld a zoning ordinance prohibiting adult
motion-picture theaters within 1,000 feet of residential
neighborhoods, churches, parks, and schools. The ordi
6 McCULLEN v. COAKLEY
SCALIA, J., concurring in judgment
nance was content neutral, the Court held, because its
purpose was not to suppress pornographic speech qua
speech but, rather, to mitigate the “secondary effects” of
adult theaters—including by “prevent[ing] crime, pro
tect[ing] the city’s retail trade, [and] maintain[ing] prop
erty values.” 475 U. S., at 47, 48. The Court reasoned that
if the city “ ‘had been concerned with restricting the mes
sage purveyed by adult theaters, it would have tried to
close them or restrict their number rather than circum
scribe their choice as to location.’ ” Id., at 48 (quoting
Young v. American Mini Theatres, Inc., 427 U. S. 50, 82,
n. 4 (1976) (Powell, J., concurring in part)). Ward, in turn,
involved a New York City regulation requiring the use of
the city’s own sound equipment and technician for events
at a bandshell in Central Park. The Court held the regu
lation content neutral because its “principal justification
[was] the city’s desire to control noise levels,” a justifica
tion that “ ‘ha[d] nothing to do with [the] content’ ” of re
spondent’s rock concerts or of music more generally. 491
U. S., at 792. The regulation “ha[d] no material impact on
any performer’s ability to exercise complete artistic control
over sound quality.” Id., at 802; see also id., at 792–793.
Compare these cases’ reasons for concluding that the
regulations in question were “justified without reference to
the content of the regulated speech” with the feeble rea
sons for the majority’s adoption of that conclusion in the
present case. The majority points only to the statute’s
stated purpose of increasing “ ‘public safety’ ” at abortion
clinics, ante, at 12–13 (quoting 2007 Mass. Acts p. 660),
and to the additional aims articulated by respondents
before this Court—namely, protecting “ ‘patient access to
healthcare . . . and the unobstructed use of public side
walks and roadways,’ ” ante, at 13 (quoting Brief for Re
spondents 27). Really? Does a statute become “justified
without reference to the content of the regulated speech”
simply because the statute itself and those defending it in
Cite as: 573 U. S. ____ (2014) 7
SCALIA, J., concurring in judgment
court say that it is? Every objective indication shows that
the provision’s primary purpose is to restrict speech that
opposes abortion.
I begin, as suggested above, with the fact that the Act
burdens only the public spaces outside abortion clinics.
One might have expected the majority to defend the stat
ute’s peculiar targeting by arguing that those locations
regularly face the safety and access problems that it says
the Act was designed to solve. But the majority does not
make that argument because it would be untrue. As the
Court belatedly discovers in Part IV of its opinion, al
though the statute applies to all abortion clinics in Massa
chusetts, only one is known to have been beset by the
problems that the statute supposedly addresses. See ante,
at 26, 28. The Court uses this striking fact (a smoking
gun, so to speak) as a basis for concluding that the law is
insufficiently “tailored” to safety and access concerns (Part
IV) rather than as a basis for concluding that it is not
directed to those concerns at all, but to the suppression of
antiabortion speech. That is rather like invoking the eight
missed human targets of a shooter who has killed one
victim to prove, not that he is guilty of attempted mass
murder, but that he has bad aim.
Whether the statute “restrict[s] more speech than
necessary” in light of the problems that it allegedly ad
dresses, ante, at 14–15, is, to be sure, relevant to the
tailoring component of the First Amendment analysis (the
shooter doubtless did have bad aim), but it is also rele
vant—powerfully relevant—to whether the law is really
directed to safety and access concerns or rather to the
suppression of a particular type of speech. Showing that a
law that suppresses speech on a specific subject is so far
reaching that it applies even when the asserted non
speech-related problems are not present is persuasive
evidence that the law is content based. In its zeal to treat
abortion-related speech as a special category, the majority
8 McCULLEN v. COAKLEY
SCALIA, J., concurring in judgment
distorts not only the First Amendment but also the ordi
nary logic of probative inferences.
The structure of the Act also indicates that it rests on
content-based concerns. The goals of “public safety, pa
tient access to healthcare, and the unobstructed use of
public sidewalks and roadways,” Brief for Respondents 27,
are already achieved by an earlier-enacted subsection of
the statute, which provides criminal penalties for “[a]ny
person who knowingly obstructs, detains, hinders, im
pedes or blocks another person’s entry to or exit from a
reproductive health care facility.” §120E½(e). As the
majority recognizes, that provision is easy to enforce. See
ante, at 28–29. Thus, the speech-free zones carved out by
subsection (b) add nothing to safety and access; what they
achieve, and what they were obviously designed to
achieve, is the suppression of speech opposing abortion.
Further contradicting the Court’s fanciful defense of the
Act is the fact that subsection (b) was enacted as a more
easily enforceable substitute for a prior provision. That pro
vision did not exclude people entirely from the restricted
areas around abortion clinics; rather, it forbade people
in those areas to approach within six feet of another per
son without that person’s consent “for the purpose of pass
ing a leaflet or handbill to, displaying a sign to, or engag
ing in oral protest, education or counseling with such
other person.” §120E½(b) (West 2000). As the majority
acknowledges, that provision was “modeled on a . . . Colo
rado law that this Court had upheld in Hill.” Ante, at 2.
And in that case, the Court recognized that the statute in
question was directed at the suppression of unwelcome
speech, vindicating what Hill called “[t]he unwilling lis
tener’s interest in avoiding unwanted communication.”
530 U. S., at 716. The Court held that interest to be con
tent neutral. Id., at 719–725.
The provision at issue here was indisputably meant to
serve the same interest in protecting citizens’ supposed
Cite as: 573 U. S. ____ (2014) 9
SCALIA, J., concurring in judgment
right to avoid speech that they would rather not hear. For
that reason, we granted a second question for review in
this case (though one would not know that from the
Court’s opinion, which fails to mention it): whether Hill
should be cut back or cast aside. See Pet. for Cert. i. (stat
ing second question presented as “If Hill . . . permits en
forcement of this law, whether Hill should be limited or
overruled”); 570 U. S. ___ (2013) (granting certiorari with
out reservation). The majority avoids that question by
declaring the Act content neutral on other (entirely unper
suasive) grounds. In concluding that the statute is con
tent based and therefore subject to strict scrutiny, I neces
sarily conclude that Hill should be overruled. Reasons for
doing so are set forth in the dissents in that case, see 530
U. S., at 741–765 (SCALIA, J.); id., at 765–790 (KENNEDY,
J.), and in the abundance of scathing academic commen
tary describing how Hill stands in contradiction to our
First Amendment jurisprudence.4 Protecting people from
speech they do not want to hear is not a function that the
First Amendment allows the government to undertake in
the public streets and sidewalks.
One final thought regarding Hill: It can be argued, and
it should be argued in the next case, that by stating that
“the Act would not be content neutral if it were concerned
with undesirable effects that arise from . . . ‘[l]isteners’
reactions to speech,’ ” ante, at 13 (quoting Boos v. Barry,
485 U. S. 312, 321 (1988) (brackets in original)), and then
holding the Act unconstitutional for being insufficiently
tailored to safety and access concerns, the Court itself has
——————
4 “Hill . . . is inexplicable on standard free-speech grounds[,] and . . . it
is shameful the Supreme Court would have upheld this piece of legisla
tion on the reasoning that it gave.” Constitutional Law Symposium,
Professor Michael W. McConnell’s Response, 28 Pepperdine L. Rev. 747
(2001). “I don’t think [Hill] was a difficult case. I think it was slam
dunk simple and slam-dunk wrong.” Id., at 750 (remarks of Laurence
Tribe). The list could go on.
10 McCULLEN v. COAKLEY
SCALIA, J., concurring in judgment
sub silentio (and perhaps inadvertently) overruled Hill.
The unavoidable implication of that holding is that protec
tion against unwelcome speech cannot justify restrictions
on the use of public streets and sidewalks.
B. Exemption for Abortion-Clinic Employees or Agents
Petitioners contend that the Act targets speech opposing
abortion (and thus constitutes a presumptively invalid
viewpoint-discriminatory restriction) for another reason
as well: It exempts “employees or agents” of an abortion
clinic “acting within the scope of their employment,”
§120E½(b)(2).
It goes without saying that “[g]ranting waivers to fa
vored speakers (or . . . denying them to disfavored speak
ers) would of course be unconstitutional.” Thomas v.
Chicago Park Dist., 534 U. S. 316, 325 (2002). The major
ity opinion sets forth a two-part inquiry for assessing
whether a regulation is content based, but when it comes
to assessing the exemption for abortion-clinic employees or
agents, the Court forgets its own teaching. Its opinion
jumps right over the prong that asks whether the provi
sion “draw[s] . . . distinctions on its face,” ante, at 12, and
instead proceeds directly to the purpose-related prong, see
ibid., asking whether the exemption “represent[s] a gov
ernmental attempt to give one side of a debatable public
question an advantage in expressing its views to the peo
ple,” ante, at 15 (internal quotation marks omitted). I
disagree with the majority’s negative answer to that ques
tion, but that is beside the point if the text of the statute—
whatever its purposes might have been—“license[s] one
side of a debate to fight freestyle, while requiring the other
to follow Marquis of Queensberry rules.” R. A. V. v. St.
Paul, 505 U. S. 377, 392 (1992).
Is there any serious doubt that abortion-clinic employees
or agents “acting within the scope of their employment”
near clinic entrances may—indeed, often will—speak in
Cite as: 573 U. S. ____ (2014) 11
SCALIA, J., concurring in judgment
favor of abortion (“You are doing the right thing”)? Or
speak in opposition to the message of abortion oppo
nents—saying, for example, that “this is a safe facility” to
rebut the statement that it is not? See Tr. of Oral Arg.
37–38. The Court’s contrary assumption is simply incred
ible. And the majority makes no attempt to establish the
further necessary proposition that abortion-clinic employ
ees and agents do not engage in nonspeech activities
directed to the suppression of antiabortion speech by
hampering the efforts of counselors to speak to prospective
clients. Are we to believe that a clinic employee sent out
to “escort” prospective clients into the building would not
seek to prevent a counselor like Eleanor McCullen from
communicating with them? He could pull a woman away
from an approaching counselor, cover her ears, or make
loud noises to drown out the counselor’s pleas.
The Court points out that the exemption may allow into
the speech-free zones clinic employees other than escorts,
such as “the maintenance worker shoveling a snowy side
walk or the security guard patrolling a clinic entrance.”
Ante, at 16. I doubt that Massachusetts legislators had
those people in mind, but whether they did is in any event
irrelevant. Whatever other activity is permitted, so long
as the statute permits speech favorable to abortion rights
while excluding antiabortion speech, it discriminates on
the basis of viewpoint.
The Court takes the peculiar view that, so long as the
clinics have not specifically authorized their employees to
speak in favor of abortion (or, presumably, to impede
antiabortion speech), there is no viewpoint discrimination.
See ibid. But it is axiomatic that “where words are em
ployed in a statute which had at the time a well-known
meaning at common law or in the law of this country[,]
they are presumed to have been used in that sense unless
the context compels to the contrary.” Standard Oil Co. of
N. J. v. United States, 221 U. S. 1, 59 (1911). The phrase
12 McCULLEN v. COAKLEY
SCALIA, J., concurring in judgment
“scope of employment” is a well-known common-law con
cept that includes “[t]he range of reasonable and foresee
able activities that an employee engages in while carrying
out the employer’s business.” Black’s Law Dictionary 1465
(9th ed. 2009). The employer need not specifically direct
or sanction each aspect of an employee’s conduct for it to
qualify. See Restatement (Second) of Agency §229 (1957);
see also Restatement (Third) of Agency §7.07(2), and
Comment b (2005). Indeed, employee conduct can qualify
even if the employer specifically forbids it. See Restate
ment (Second) §230. In any case, it is implausible that
clinics would bar escorts from engaging in the sort of
activity mentioned above. Moreover, a statute that forbids
one side but not the other to convey its message does not
become viewpoint neutral simply because the favored side
chooses voluntarily to abstain from activity that the stat
ute permits.
There is not a shadow of a doubt that the assigned or
foreseeable conduct of a clinic employee or agent can
include both speaking in favor of abortion rights and
countering the speech of people like petitioners. See post,
at 1–2 (ALITO, J., concurring in judgment). Indeed, as the
majority acknowledges, the trial record includes testimony
that escorts at the Boston clinic “expressed views about
abortion to the women they were accompanying, thwarted
petitioners’ attempts to speak and hand literature to the
women, and disparaged petitioners in various ways,”
including by calling them “ ‘crazy.’ ” Ante, at 7, 16
(citing App. 165, 168–169, 177–178, 189–190). What a
surprise! The Web site for the Planned Parenthood
League of Massachusetts (which operates the three
abortion facilities where petitioners attempt to counsel
women), urges readers to “Become a Clinic Escort Vol
unteer” in order to “provide a safe space for patients
by escorting them through protestors to the health center.”
Volunteer and Internship Opportunities, online at https://
Cite as: 573 U. S. ____ (2014) 13
SCALIA, J., concurring in judgment
plannedparenthoodvolunteer.hire.com /viewjob.html?optlink-
view=view-28592&ERFormID=newjoblist&ERFormCode=any
(as visited June 24, 2014, and available in Clerk of Court’s
case file). The dangers that the Web site attributes to
“protestors” are related entirely to speech, not to safety or
access. “Protestors,” it reports, “hold signs, try to speak to
patients entering the building, and distribute literature
that can be misleading.” Ibid. The “safe space” provided
by escorts is protection from that speech.
Going from bad to worse, the majority’s opinion con
tends that “the record before us contains insufficient
evidence to show” that abortion-facility escorts have actu
ally spoken in favor of abortion (or, presumably, hindered
antiabortion speech) while acting within the scope of their
employment. Ante, at 18. Here is a brave new First
Amendment test: Speech restrictions favoring one view
point over another are not content based unless it can be
shown that the favored viewpoint has actually been ex
pressed. A city ordinance closing a park adjoining the
Republican National Convention to all speakers except
those whose remarks have been approved by the Repub
lican National Committee is thus not subject to strict
scrutiny unless it can be shown that someone has given
committee-endorsed remarks. For this Court to suggest
such a test is astonishing.5
——————
5 The Court states that I can make this assertion “only by quoting a
sentence that is explicitly limited to as-applied challenges and treating
it as relevant to facial challenges.” Ante, at 18, n. 4. That is not so.
The sentence in question appears in a paragraph immediately following
rejection of the facial challenge, which begins: “It would be a very
different question if it turned out that a clinic authorized escorts to
speak about abortion inside the buffer zones.” Ante, at 17. And the
prior discussion regarding the facial challenge points to the fact that
“[t]here is no suggestion in the record that any of the clinics authorize
their employees to speak about abortion in the buffer zones.” Ante, at
16. To be sure, the paragraph in question then goes on to concede only
that the statute’s constitutionality as applied would depend upon
14 McCULLEN v. COAKLEY
SCALIA, J., concurring in judgment
C. Conclusion
In sum, the Act should be reviewed under the strict
scrutiny standard applicable to content-based legislation.
That standard requires that a regulation represent “the
least restrictive means” of furthering “a compelling Gov
ernment interest.” United States v. Playboy Entertain-
ment Group, Inc., 529 U. S. 803, 813 (2000) (internal
quotation marks omitted). Respondents do not even at
tempt to argue that subsection (b) survives this test. See
ante, at 10. “Suffice it to say that if protecting people from
unwelcome communications”—the actual purpose of the
provision—“is a compelling state interest, the First
Amendment is a dead letter.” Hill, 530 U. S., at 748–749
(SCALIA, J., dissenting).
III. Narrow Tailoring
Having determined that the Act is content based and
does not withstand strict scrutiny, I need not pursue the
inquiry conducted in Part IV of the Court’s opinion—
whether the statute is “ ‘narrowly tailored to serve a signif
icant governmental interest,’ ” ante, at 18 (quoting Ward,
491 U. S., at 796 (internal quotation marks omitted)). I
suppose I could do so, taking as a given the Court’s erro
neous content-neutrality conclusion in Part III; and if I
did, I suspect I would agree with the majority that the
legislation is not narrowly tailored to advance the inter
ests asserted by respondents. But I prefer not to take part
in the assembling of an apparent but specious unanimity.
I leave both the plainly unnecessary and erroneous half
——————
explicit clinic authorization. Even that seems to me wrong. Saying
that voluntary action by a third party can cause an otherwise valid
statute to violate the First Amendment as applied seems to me little
better than saying it can cause such a statute to violate the First
Amendment facially. A statute that punishes me for speaking unless x
chooses to speak is unconstitutional facially and as applied, without
reference to x’s action.
Cite as: 573 U. S. ____ (2014) 15
SCALIA, J., concurring in judgment
and the arguably correct half of the Court’s analysis to the
majority.
* * *
The obvious purpose of the challenged portion of the
Massachusetts Reproductive Health Care Facilities Act is
to “protect” prospective clients of abortion clinics from
having to hear abortion-opposing speech on public streets
and sidewalks. The provision is thus unconstitutional root
and branch and cannot be saved, as the majority suggests,
by limiting its application to the single facility that has
experienced the safety and access problems to which it is
quite obviously not addressed. I concur only in the judg
ment that the statute is unconstitutional under the First
Amendment.
Cite as: 573 U. S. ____ (2014) 1
ALITO, J., concurring in judgment
SUPREME COURT OF THE UNITED STATES
_________________
No. 12–1168
_________________
ELEANOR McCULLEN, ET AL., PETITIONERS v.
MARTHA COAKLEY, ATTORNEY GEN-
ERAL OF MASSACHUSETTS, ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FIRST CIRCUIT
[June 26, 2014]
JUSTICE ALITO, concurring in the judgment.
I agree that the Massachusetts statute at issue in this
case, Mass. Gen. Laws, ch. 266, §120E½(b) (West 2012),
violates the First Amendment. As the Court recognizes, if
the Massachusetts law discriminates on the basis of view
point, it is unconstitutional, see ante, at 10, and I believe
the law clearly discriminates on this ground.
The Massachusetts statute generally prohibits any
person from entering a buffer zone around an abortion
clinic during the clinic’s business hours, §120E½(c), but
the law contains an exemption for “employees or agents of
such facility acting within the scope of their employment.”
§120E½(b)(2). Thus, during business hours, individuals
who wish to counsel against abortion or to criticize the
particular clinic may not do so within the buffer zone. If
they engage in such conduct, they commit a crime. See
§120E½(d). By contrast, employees and agents of the
clinic may enter the zone and engage in any conduct that
falls within the scope of their employment. A clinic may
direct or authorize an employee or agent, while within the
zone, to express favorable views about abortion or the
clinic, and if the employee exercises that authority, the
employee’s conduct is perfectly lawful. In short, petition
ers and other critics of a clinic are silenced, while the
2 McCULLEN v. COAKLEY
ALITO, J., concurring in judgment
clinic may authorize its employees to express speech in
support of the clinic and its work.
Consider this entirely realistic situation. A woman
enters a buffer zone and heads haltingly toward the en
trance. A sidewalk counselor, such as petitioners, enters
the buffer zone, approaches the woman and says, “If you
have doubts about an abortion, let me try to answer any
questions you may have. The clinic will not give you good
information.” At the same time, a clinic employee, as
instructed by the management, approaches the same
woman and says, “Come inside and we will give you hon
est answers to all your questions.” The sidewalk counselor
and the clinic employee expressed opposing viewpoints,
but only the first violated the statute.
Or suppose that the issue is not abortion but the safety
of a particular facility. Suppose that there was a recent
report of a botched abortion at the clinic. A nonemployee
may not enter the buffer zone to warn about the clinic’s
health record, but an employee may enter and tell pro
spective clients that the clinic is safe.
It is clear on the face of the Massachusetts law that it
discriminates based on viewpoint. Speech in favor of the
clinic and its work by employees and agents is permitted;
speech criticizing the clinic and its work is a crime. This
is blatant viewpoint discrimination.
The Court holds not only that the Massachusetts law is
viewpoint neutral but also that it does not discriminate
based on content. See ante, at 11–15. The Court treats
the Massachusetts law like one that bans all speech
within the buffer zone. While such a law would be content
neutral on its face, there are circumstances in which a law
forbidding all speech at a particular location would not be
content neutral in fact. Suppose, for example, that a
facially content-neutral law is enacted for the purpose of
suppressing speech on a particular topic. Such a law
would not be content neutral. See, e.g., Turner Broadcast-
Cite as: 573 U. S. ____ (2014) 3
ALITO, J., concurring in judgment
ing System, Inc. v. FCC, 512 U. S. 622, 645–646 (1994).
In this case, I do not think that it is possible to reach a
judgment about the intent of the Massachusetts Legisla
ture without taking into account the fact that the law that
the legislature enacted blatantly discriminates based on
viewpoint. In light of this feature, as well as the over
breadth that the Court identifies, see ante, at 23–27, it
cannot be said, based on the present record, that the law
would be content neutral even if the exemption for clinic
employees and agents were excised. However, if the law
were truly content neutral, I would agree with the Court
that the law would still be unconstitutional on the ground
that it burdens more speech than is necessary to serve the
Commonwealth’s asserted interests.
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233 F.Supp. 102 (1964)
KINGSWAY, INC., Plaintiff,
v.
Ray WERNER and Missouri Plastics, Defendants.
No. 61 C 83(1).
United States District Court E. D. Missouri, E. D.
June 12, 1964.
E. E. Ezell, Kingsland, Rogers & Ezell, St. Louis, Mo., for plaintiff.
Ralph W. Kalish, St. Louis, Mo., for defendants.
HARPER, Chief Judge.
This is a suit brought by Kingsway, Inc. (hereinafter referred to as plaintiff) against Ray Werner and Missouri Plastics (hereinafter referred to as defendants), for infringement of plaintiff's alleged trademarks "Kingsway Florentine" and "Florentine" which have been applied to chess sets, and for unfair competition based upon defendants' manufacture and sale of chessmen allegedly copied and simulating the chessmen sold by plaintiff. Defendants have counterclaimed against plaintiff for unfair competition. Jurisdiction is based upon diversity of citizenship. *103 The matter in controversy exceeds the sum of $10,000.00.
The uncontroverted facts are as follows: Plaintiff is a rather small, one-man corporation, organized in 1947, which manufactures and sells plastic chess sets, plastic card holders and some other items. The first and main item manufactured and sold by plaintiff is its "Florentine" figurine chess sets.
Plaintiff first started selling plastic chessmen in 1947. On the front bottom of the pedestal of the King and Queen is molded "Kingsway, Inc." and on the back thereof "Kingsway Florentine trademark" (Plaintiff's Exhibit 5). In 1959, plaintiff started selling its chess sets under the name "Florentine" chess sets (Plaintiff's Exhibit 7). A figurine chess set is one in which each piece is a full figure (e. g., a King or Queen), while a Staunton chess set comprises pieces which are symbols (e. g., a crown with a cross on it is a King).
There are many different figurine chess sets (handcarved from the Orient, Europe, etc.) on the market. However, plaintiff was the first manufacturer of inexpensive plastic figurine chessmen. Between the years 1947 and 1962, plaintiff sold one and one-half million dollars worth of "Florentine" or Kingsway Florentine" chess sets.
There are several legal and factual issues in this case which must be considered by the court. First, the court must decide whether the defendant has infringed any trademark rights owned by plaintiff. Plaintiff alleges that it is the owner of the trademarks "Kingsway Florentine" and "Florentine" applied to chess sets. Second, the court must determine whether defendant is liable for unfair competition for making and selling figurine chessmen which are very similar to plaintiff's chessmen. Third, the court must determine whether defendants' counterclaim has merit.
The first two issues require the court to consider traditional fair and unfair methods of competing for business. Generally speaking, the use of trademarks and product designs as methods of competing for business have hinged on the ability of these devices to identify the source of the product to which they refer. Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 36 S.Ct. 357, 60 L.Ed. 713; Elgin Nat'l Watch Co. v. Illinois Watch Case Co., 179 U.S. 665, 21 S.Ct. 270, 45 L.Ed. 365; Crescent Tool Co. v. Kilborn & Bishop Co., 2 Cir., 247 F. 299; G. & C. Merriam Co. v. Saalfield, 6 Cir., 198 F. 369. A central issue in cases of this kind is whether the trade device (trademark or product design) indicates or is capable of indicating the source of the product.
Defendants have manufactured and sold figurine chessmen which are very similar to plaintiff's chessmen; however, defendants are not liable for alleged unfair competition.
Two very recent United States Supreme Court opinions make it very clear that a design, not protected by a design patent or other federal statutory protection, can be copied in every detail by whoever pleases. Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 84 S.Ct. 779, 11 L.Ed.2d 669; Sears, Roebuck & Co., v. Stiffel Co., 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661. This is true even if we assume, arguendo, that the plaintiff's chessmen, because of their design, had acquired a "secondary meaning" prior to defendants' copying.
In Compco Corp. v. Day-Brite Lighting, Inc., supra, the plaintiff and defendant were manufacturers of fluorescent lighting fixtures of a kind widely used in offices and stores. In 1955, Day-Brite started selling a fluorescent light reflector having cross-ribs which the District Court found had the capacity to identify Day-Brite in the trade and did in fact so identify it to the trade. The Compco Corporation copied Day-Brite's distinctive design so that to the ordinary observer the defendant's and plaintiff's reflectors were the same in appearance.
The Supreme Court accepted these findings (i. e., that there was confusion as to source of the articles), but held that *104 state law may not forbid Compco from copying the Day-Brite article. The court did hold, however, that state law could require copiers to take precautions to identify their products as their own.
At page 238 of 376, at page 782 of 84 S.Ct. in the Compco case, supra, the Supreme Court stated:
"A State of course has power to impose liability upon those who, knowing that the public is relying upon an original manufacturer's reputation for quality and integrity, deceive the public by palming off their copies as the original. That an article copied from an unpatented article could be made in some other way, that the design is `nonfunctional' and not essential to the use of either article, that the configuration of the article copied may have a `secondary meaning' which identifies the maker to the trade, or that there may be `confusion' among purchasers as to which article is which or as to who is the maker, may be relevant evidence in applying a State's law requiring such precautions as labeling; however, neither these facts nor any others can furnish a basis for imposing liability for or prohibiting the actual acts of copying and selling, regardless of the copier's motives. Cf. Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 120, 59 S.Ct. 109, 114, 83 L.Ed. 73 (1938)." (Emphasis added.)
It should be carefully noted that in the case at bar, the plaintiff put on no evidence of defendants' attempt to palm off their chessmen as those made by plaintiff, nor is the court convinced that palming off is inevitable. Defendants sold their own chess sets in packages that are clearly marked with defendants' name.
Prior to the two recent United States Supreme Court opinions, discussed supra, one might freely imitate an unpatented article in all its functional elements, so long as this right to copy was not exercised in such a way as to confuse the public as to the origin of the goods. A person could legally copy a nonfunctional part of an article unless the originator proved two things: First, that a certain feature of the originator's product had acquired "secondary meaning", thereupon identifying the source of the product to prospective buyers; second, that buyers are likely to confuse the imitation with the original. This doctrine was established in the now famous case of Crescent Tool Co. v. Kilborn & Bishop Co., supra, and has been followed in subsequent cases. See Kellogg Co. v. Nat'l Biscuit Co., supra; Upjohn Co. v. Wm. S. Merrell Chemical Co., 6 Cir., 269 F. 209. For an interesting study of these cases and other matters concerning "secondary meaning", see "Competition, The Right to Copy and Secondary Meaning," 1963 Washington University Law Quarterly, page 224, April issue.
Under the doctrine laid down in the Crescent Tool case, the court is of the opinion that the defendants are not liable for unfair competition. Although the court does not feel it necessary to decide whether defendants have copied functional or nonfunctional features of plaintiff's chessmen, the court is of the opinion that the plaintiff has not shown that its chessmen have acquired "secondary meaning". The evidence does not indicate that purchasers have been moved to buy plaintiff's chessmen because of the source. In summary, defendants are not liable for unfair competition under either the Crescent Tool doctrine or the doctrine laid down in the two recent United States Supreme Court opinions.
In regard to the alleged infringement of plaintiff's "Florentine" and "Kingsway Florentine" trademarks, both parties agree that the primary function of a trademark is to indicate that the goods upon which it is placed emanate from a common source. See Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240 U.S. 251, 36 S.Ct. 269, 60 L.Ed. 629; Restatement, Torts, 715 (1938).
It is also clear that a trademark is a definite property right, which the courts protect as they protect other property *105 rights. "Trade-Mark Cases", 100 U.S. 82, 25 L.Ed. 550; Hanover Star Milling Co. v. Metcalf, supra.
Plaintiff is correct in its contention that as a matter of law the likelihood of or probable confusion is sufficient to sustain trademark infringement. Cook Chemical Co. v. Cook Paint & Varnish Co., 8 Cir., 185 F.2d 365. It must be remembered, however, that plaintiff must first prove that its use of "Florentine" has indicated plaintiff (Kingsway), or a common source, as the origin of a chess set bearing the alleged trademark "Florentine". In other words, plaintiff must prove that "Florentine" has acquired a "secondary meaning", indicating plaintiff as the source or at least a common source. The primary significance of "Florentine" in the minds of the public must be the plaintiff (or common source) and not the product (i. e., chessmen). Kellogg Co. v. Nat'l Biscuit Co., supra, 315 U.S. l.c. 118, 59 S.Ct. 109.
The court is of the opinion that "Florentine" does not nor has it acquired "secondary meaning" as required by the law of trademarks and unfair competition. Evidence indicates that "Florentine" has been presented to the public in such a manner as to indicate that "Florentine" is a style or type of chess set. For example, see Defendants' Exhibit D, p. 193; Defendants' Exhibit R; Defendants' Exhibit E-2; Plaintiff's Exhibit 4; Plaintiff's Exhibit 17-9; Plaintiff's Exhibit 17-H. Certainly, there is not sufficient evidence to show that "Florentine" chessmen mean chessmen originating from a common source. The court, therefore, holds that plaintiff does not have any trademark right in the term "Florentine".
As to defendants' counterclaim, the court holds that defendants' claim is without merit.
The court adopts the above as its findings of fact and conclusions of law. Attorneys for the defendants will prepare the proper order and submit to the court for entry.
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793 F.2d 1291
Unpublished DispositionNOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.In re Robert H. Cohen and Michael Maggio, Attorneys,
85-3400
United States Court of Appeals, Sixth Circuit.
5/2/86
AFFIRMED
S.D.Ohio
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO
Before: Milburn and Ryan, Circuit Judges; and Brown, Senior Circuit Judge.
PER CURIAM.
1
Plaintiff-Appellant Elias Ayoub (plaintiff) appeals from an order of the district court denying plaintiff's application for attorney's fees and costs brought pursuant to the Equal Access to Justice Act, 28 U.S.C. Sec. 2412 (1982). Although finding plaintiff the 'prevailing party' in the litigation, the district court denied the request for fees based on its conclusion that the 'position' of theDefendant-Appellee Vernon Hazlett (government) in the litigation was 'substantially justified.' Because we find that plaintiff was not the prevailing party in the litigation, we affirm the judgment of the district court and, accordingly, do not reach the issue of whether the government's position was substantially justified.
I.
FACTS
2
Plaintiff, an Israeli citizen of Palestinian backround, was admitted to the United States in June of 1976 as a nonimmigrant student alien with a F-1 visa. Form I-20 indicated that plaintiff had been accepted for full course study of philosophy at Lansing Community College (LCC) and was expected to complete his studies not later than December of 1978. During his studies at LCC, plaintiff decided to switch his field of study and applied for admission to other universities as a transfer student. Plaintiff was accepted at Ohio State University in August of 1977. Before beginning his enrollment, plaintiff sent the requisite documents to the Immigration and Naturalization Service (INS) for a transfer authorization and a visa extension. During the fall of 1977, plaintiff made numerous inquiries to the INS regarding the status of his transfer application to which he received no reply.
3
In October of 1978, the INS requested the Federal Bureau of Investigation to investigate plaintiff for 'subversive activity.' Shortly thereafter, plaintiff attended a conference held by the INS to review his student status. Plaintiff was informed that the INS could not locate his application and was requested to submit evidence demonstrating that he had properly maintained his student status.
4
Plaintiff's visa expired on June 1, 1978, and plaintiff was notified that he was a deportable alien and that a voluntary departure date had been established. In administrative proceedings, the INS District Director denied plaintiff's request for reconsideration of his student status. After appeal to the Board of Immigration Appeals (Board), his case was remanded for reconsideration. On remand, the District Director reaffirmed his earlier decision which was subsequently upheld by the Board upon appeal.
5
On March 31, 1979, plaintiff commenced an action in district court seeking a preliminary injunction preventing further deportation proceedings until the entry of a declaratory judgment. After a trial on the merits, the district court held that the District Director did not abuse his discretion and refused to halt the deportation proceeding.
6
On appeal,1 this court vacated the Board's decision and remanded the case to the Board for 'reconsideration of the [plaintiff's] request for reinstatement of student visa in light of the 1982 revisions under 8 C.F.R. Sec. 214.2(f)(4) and (8) (1982).' See Ayoub v. INS, Nos. 81-3276 & 81-3295, slip op. at 4 (6th Cir. Dec. 14, 1982). However, prior to the issuance of this court's order, plaintiff's mother filed a petition to reclassify plaintiff as an immediate relative pursuant to 8 U.S.C. Sec. 1152(e)(2). This application was approved by the INS, and plaintiff was subsequently granted permanent immigrant status.
7
On September 26, 1984, plaintiff filed an application for attorney's fees and costs pursuant to the Equal Access to Justice Act, 28 U.S.C. Sec. 2412 (1982), seeking reimbursement for monies expended in the district court proceeding. The district court denied the request, and plaintiff has appealed the district court's ruling to this court.
II.
DISCUSSION
8
The sole issue presented on appeal is whether the district court abused its discretion in denying plaintiff's request for attorney's fees and costs under the Equal Access to Justice Act (EAJA), 28 U.S.C. Sec. 2412 (1982). In order to receive a fee award under the statute, plaintiff must demonstrate that he was the prevailing party in the civil action. 28 U.S.C. Sec. 2412(d)(1)(A). Once this burden is satisfied, plaintiff is entitled to an award of fees, unless the government can prove that its position was substantially justified. National Resources Council, Inc. v. United States Environmental Protection Agency, 703 F.2d 700, 712 (3d Cir. 1983).
9
On the issue of whether plaintiff was the prevailing party in the civil action, the district court remarked:
10
Plaintiff succeeded in having this case remanded to the administrative level for reconsideration of the ultimate issue of the case--whether plaintiff should have his status as a student reinstated. While that exact issue does not appear to have been decided upon remand, given the circumstances of this case, the decision by the court of appeals to remand this case is sufficient in itself to indicate that plaintiff was a prevailing party.
11
Joint Appendix at 52. However, because the district court found the position of the government at trial substantially justified,2 plaintiff's application for fees was denied.
12
In Citizens Coalition for Block Grant Compliance, Inc. v. City of Euclid, 717 F.2d 964, 966 (6th Cir. 1983), we indicated that in order for a litigant to qualify as a prevailing party under the EAJA, that party 'need not be a victor in a lawsuit that leads to a judgment on the merits.' It is sufficient if he 'succeed[s] on any significant issue in litigation which achieves some of the benefit the party sought in bringing suit.' Hensley v. Eckerhart, 461 U.S. 424, 433 (1983) (quoting Nadeau v. Helgemore, 581 F.2d 275, 278-79 (1st Cir. 1978)). However, at a minimum, the lawsuit must have 'acted as a 'catalyst' in prompting defendants to take the desired action.' Citizens Coalition, 717 F.2d at 966.
13
Plaintiff maintains that he was the prevailing party in the litigation, because he received the relief he sought in the district court in the remand of his case for administrative reconsideration and because the sole issue in the case--the proper legal standard used by the District Director to evaluate plaintiff's application for reinstatement--was decided in his favor by this court in Ayoub v. INS, Nos. 81-3276 & 81-3295, slip op. As to the government's claim that the relief plaintiff ultimately obtained was the result of intervening, unrelated events, plaintiff suggests that he would have received administratively the same relief he originally sought had the application for permanent residency not been filed.
14
We disagree. The relief sought in the district court by plaintiff was restoration of his status as a nonimmigrant student alien and injunctive relief restraining the government from conducting any further deportation proceedings against him. The district court refused to grant plaintiff this relief, specifically rejecting the claim that the actions of the District Director were arbitrary or capricious. On appeal, we did not decide whether the district court abused its discretion. Rather, we elected to remand the case for reconsideration by the INS in the light of recent changes in the regulations that govern reinstatement of student status. Ayoub v. INS, Nos. 81-3276 & 81-3295, slip op. at 4. Certainly, the remanding of plaintiff's case for administrative reconsideration cannot support the conclusion that plaintiff was the prevailing party. Kitchen Fresh, Inc. v. NLRB, 729 F.2d 1513 (6th Cir. 1984). See also Austin v. Department of Commerce, 742 F.2d 1417, 1420 (D.C. Cir. 1984); Brown v. Secretary of Health and Human Services, 747 F.2d 878, 883 (3d Cir. 1984); McGill v. Secretary of Health and Human Services, 712 F.2d 28, 32 (2d Cir. 1983), cert. denied, 465 U.S. 1068 (1984). It is undisputed that the relief plaintiff ultimately received--the grant of permanent residency--was the sole result of the petition plaintiff's mother filed with the INS. Plaintiff's argument that he would have received the relief originally requested but for the intervening application is speculative and, even if this were true, it would not make him the prevailing party in this litigation.
15
As we determine that plaintiff was not the prevailing party in the litigation, we affirm the judgment of the district court.
1
Plaintiff appealed both the judgment of the district court and the adverse decision of the Board. These appeals were consolidated for disposition by this court
2
At the time plaintiff filed his application for attorney's fees and costs in the district court, the EAJA read in pertinent part:
Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses, . . . incurred by that party in any civil action . . . brought by or against the United States . . . unless the court finds that the position of the United States was substantially justified or that special circumstances make the award unjust.
28 U.S.C. Sec. 2412(d)(1)(A). Without the benefit of our holding in Trident Marine Construction, Inc. v. District Engineers, 766 F.2d 974 (6th Cir. 1985), the district court correctly interpreted the words 'position of the United States' to mean litigation position or position at trial and, consequently, disreguarded evidence of the actions of the INS which prompted plaintiff to seek relief in the district court.
Shortly after the district court issued its order denying plaintiff's request for a fee award, Congress amended 28 U.S.C. Sec. 2412 (1982) to explicitly provide that the words 'position of the United States' meant 'position taken by the United States in the civil action,' as well as, 'the action or failure to act by the agency upon which the civil action is based.' 28 U.S.C. Sec. 2412 (1982), amended by 28 U.S.C. Sec. 2412(d)(2)(D) (effective August 5, 1985).
On appeal, the parties disagree over whether plaintiff's petition for attorney's fees should be judged under the more expansive reading provided in the statutory amendment. Alternatively, plaintiff suggests that should we find the more expansive definition inapplicable to the facts of this case, this court reconsider its holding in Trident Marine Construction in light of comments made in the legislative record of the amendment and reverse the judgment of the district court.
| {
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} |
T.C. Memo. 2003-53
UNITED STATES TAX COURT
WATER-PURE SYSTEMS, INC., Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11344-01. Filed February 26, 2003.
Joseph H. O’Donnell, Jr., for petitioner.
W. Randolph Shump and Pamela J. Arthur-Gerlach, for
respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
COHEN, Judge: The petition in this case was filed in
response to a Notice of Determination Concerning Worker
Classification Under Section 7436 (notice of determination)
regarding petitioner’s liabilities pursuant to the Federal
Insurance Contributions Act (FICA) and the Federal Unemployment
- 2 -
Tax Act (FUTA) for 1996, 1997, and 1998. The issues for decision
are: (1) Whether Martin L. Ridge (Ridge) was an employee of
petitioner for Federal employment tax purposes during 1996
through 1998 and, if so, (2) whether petitioner is entitled to
relief under section 530 of the Revenue Act of 1978, Pub. L. 95-
600, 92 Stat. 2885, as amended (Section 530).
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure. For convenience, FICA and FUTA taxes are collectively
referred to as employment taxes.
FINDINGS OF FACT
The facts in this matter were deemed stipulated pursuant to
Rule 91(f). The stipulated facts are incorporated in our
findings by this reference.
Petitioner’s Organization and Operations
Petitioner was incorporated in Pennsylvania on July 19,
1985, and has at all relevant times operated as an S corporation.
Petitioner’s principal place of business was located in
Langhorne, Pennsylvania, at the address of Ridge’s personal
residence, when the petition was filed in this case.
Since its organization and through the years in issue,
petitioner provided sales and service of water purification
systems. This activity was petitioner’s only business and only
- 3 -
source of income. Ridge and his wife, Jean S. Ridge
(Mrs. Ridge), each owned 50 percent of petitioner from the time
of its incorporation and throughout 1996, 1997, and 1998.
Ridge has at all times served as petitioner’s president.
During 1996, 1997, and 1998, Ridge performed all services
necessary to generate gross receipts on behalf of petitioner.
No other person provided services to petitioner.
During 1996, 1997, and 1998, petitioner did not make regular
payments at fixed times to Ridge for his services. Rather, Ridge
received funds from petitioner as his needs arose. Petitioner
neither classified any payment as a dividend nor distributed any
dividends to shareholders from 1996 through 1998.
Petitioner’s Tax Reporting
Petitioner timely filed Forms 1120S, U.S. Income Tax Return
for an S Corporation, and related schedules, for each of the
years 1996, 1997, and 1998. Petitioner reported ordinary income
from its trade or business of $26,173.32, $17,052.98, and
$4,822.46 for 1996, 1997, and 1998, respectively. Petitioner
claimed no deduction either for compensation of officers or for
salaries and wages in 1996; for 1997 and 1998, petitioner’s
returns reflect deductions of $16,500 and $14,000, respectively,
for compensation of officers. Schedules K-1, Shareholder’s Share
of Income, Credits, Deductions, etc., attached to the returns
- 4 -
show the following amounts as the pro rata share of, and as a
property distribution other than a dividend to, the stockholders:
Shareholder 1996 1997 1998
Ridge and Mrs. Ridge $26,173.32 -- --
Ridge -- $8,526.49 $2,411.23
Mrs. Ridge -- 8,526.49 2,411.23
Petitioner’s Forms 1120S were signed by Ridge as president and by
Joseph M. Grey (Grey) as preparer.
During the period from 1996 to 1998, petitioner did not
issue any Forms W-2, Wage and Tax Statement, to Ridge.
Petitioner also did not issue any Forms 1099-MISC, Miscellaneous
Income, to Ridge for 1996. For 1997 and 1998, petitioner issued
Forms 1099-MISC to Ridge reporting respective payments of $16,500
and $20,000.
Petitioner did not file a Form 941, Employer’s Quarterly
Federal Tax Return, for any quarter in 1996, 1997, or 1998 or a
Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax
Return, for 1996, 1997, or 1998.
The Ridges’ Tax Reporting
For each of the years 1996, 1997, and 1998, the Ridges
timely filed a joint Form 1040, U.S. Individual Income Tax
Return. On these returns, the Ridges reported as ordinary income
from “Rental real estate, royalties, partnerships,
S corporations, trusts, etc.” $26,173.32 for 1996 and $23,052.98
for 1997. (Equivalent information for 1998 is unavailable
- 5 -
because the copy of the 1998 return contained in the record does
not include the first two pages.) For 1996, an attached
Schedule E, Supplemental Income and Loss, characterizes the
foregoing amount as nonpassive income from Schedule K-1. For
1997, $17,052.98 is shown on Schedule E as nonpassive income from
Schedules K-1; $6,000 is shown on Schedule E and on Form 4831,
Rental Income, as rent; and $16,500 is shown on Schedule C,
Profit or Loss From Business, as gross receipts. For 1998,
$4,822.46 is shown on Schedule E as nonpassive income from
Schedules K-1, $6,000 is shown on Schedule E and on Form 4831 as
rent, and $14,000 is shown on Schedule C as gross receipts.
The Notice of Determination
On June 8, 2001, respondent sent to petitioner the notice of
determination at issue in this proceeding. The notice was based
on a determination that Ridge was to be legally classified as an
employee for purposes of Federal employment taxes and that
petitioner was not entitled to relief from such classification
pursuant to Section 530. Enclosed with the notice was a schedule
setting forth petitioner’s liabilities for FICA and FUTA taxes.
In calculating petitioner’s FICA and FUTA liabilities,
respondent concluded that only Ridge (and not Mrs. Ridge)
provided services to petitioner during the years in issue and,
accordingly, limited the computation to amounts distributed to
Ridge. As a result, for each of the years 1996, 1997, and 1998,
- 6 -
respondent reclassified as wages to Ridge 50 percent of the
nonpassive income distributed by petitioner. For 1997 and 1998,
respondent also reclassified as wages the Form 1099-MISC
“nonemployee compensation” paid to Ridge.
It is stipulated that, if the Court decides that Ridge is to
be classified as an employee for Federal employment tax purposes
for all periods in 1996, 1997, and 1998, the amounts of taxes due
and owing are as set forth in the notice of determination.
ULTIMATE FINDINGS OF FACT
Ridge, as president of petitioner, performed more than minor
services and received remuneration therefor.
Petitioner did not have a reasonable basis for failing to
treat Ridge as an employee during the years in issue.
OPINION
I. Statutory and Regulatory Provisions
A. Subtitle C of the Internal Revenue Code
Subtitle C of the Internal Revenue Code governs payment of
employment taxes. In particular, sections 3111 and 3301 impose
taxes on employers under FICA (pertaining to Social Security) and
FUTA (pertaining to unemployment), respectively, based on wages
paid to employees. The term “wages” as used in these statutes
generally encompasses “all remuneration for employment”. Secs.
3121(a), 3306(b). “Employee” is defined for purposes of FICA
taxes in section 3121(d), and, with modifications not germane
- 7 -
here, section 3306(i) makes this definition applicable for
purposes of FUTA taxes as well. Section 3121(d) provides:
SEC. 3121(d). Employee.--For purposes of this
chapter, the term “employee” means--
(1) any officer of a corporation; or
(2) any individual who, under the usual
common law rules applicable in determining the
employer-employee relationship, has the status of
an employee; or
(3) any individual (other than an individual
who is an employee under paragraph (1) or (2)) who
performs services for remuneration for any
person--
(A) as an agent-driver or commission-
driver * * *;
(B) as a full-time insurance salesman;
(C) as a home worker * * *; or
(D) as a traveling or city salesman
* * *;
* * * [under specified conditions]; or
(4) any individual who performs services that
are included under an agreement entered into
pursuant to section 218 of the Social Security
Act.
Regulations promulgated under section 3121(d) clarify the
scope of the inclusion in paragraph (1) for corporate officers,
as follows:
Generally, an officer of a corporation is an employee
of the corporation. However, an officer of a
corporation who as such does not perform any services
or performs only minor services and who neither
receives nor is entitled to receive, directly or
indirectly, any remuneration is considered not to be an
- 8 -
employee of the corporation. * * * [Sec. 31.3121(d)-
1(b), Employment Tax Regs.]
Identical language is also included in regulations promulgated
under section 3306. Sec. 31.3306(i)-1(e), Employment Tax Regs.
B. Section 530 of the Revenue Act of 1978
Section 530 operates in enumerated circumstances to afford
relief from employment tax liability, notwithstanding the actual
relationship between the taxpayer and the individual performing
services. The statute provides, in part:
SEC. 530. CONTROVERSIES INVOLVING WHETHER INDIVIDUALS
ARE EMPLOYEES FOR PURPOSES OF THE EMPLOYMENT TAXES.
(a) Termination of Certain Employment Tax
Liability.--
(1) In general.--If--
(A) for purposes of employment taxes, the taxpayer
did not treat an individual as an employee for any
period, and
(B) in the case of periods after December 31,
1978, all Federal tax returns (including information
returns) required to be filed by the taxpayer with
respect to such individual for such period are filed on
a basis consistent with the taxpayer’s treatment of
such individual as not being an employee,
then, for purposes of applying such taxes for such
period with respect to the taxpayer, the individual
shall be deemed not to be an employee unless the
taxpayer had no reasonable basis for not treating such
individual as an employee.
(2) Statutory standards providing one method of
satisfying the requirements of paragraph (1).-- For
purposes of paragraph (1), a taxpayer shall in any case
be treated as having a reasonable basis for not
treating an individual as an employee for a period if
the taxpayer’s treatment of such individual for such
- 9 -
period was in reasonable reliance on any of the
following:
(A) judicial precedent, published rulings,
technical advice with respect to the taxpayer, or a
letter ruling to the taxpayer;
(B) a past Internal Revenue Service audit of the
taxpayer in which there was no assessment attributable
to the treatment (for employment tax purposes) of the
individuals holding positions substantially similar to
the position held by this individual; or
(C) long-standing recognized practice of a
significant segment of the industry in which such
individual was engaged.
In specified circumstances, Section 530(e)(4) places the
burden of proof on the Commissioner with respect to certain
issues under Section 530, but this provision does not affect our
analysis here. Section 530(e)(4) applies only to periods after
December 31, 1996, so has no bearing on petitioner’s liabilities
for 1996. Small Business Job Protection Act of 1996, Pub. L.
104-188, sec. 1122(b)(3), 110 Stat. 1767. For subsequent
periods, a taxpayer desiring to take advantage of Section
530(e)(4) first must establish a prima facie case that it was
reasonable not to treat an individual as an employee and must
have fully cooperated with the Secretary. Because, as explained
in detail below, petitioner did not establish a prima facie case
that its treatment of Ridge was reasonable, the burden of proof
remains on petitioner with respect to 1997 and 1998 as well.
- 10 -
II. Classification of Ridge for Employment Tax Purposes
A. Status Under FICA and FUTA Provisions
In contending that Ridge should not be classified as an
employee under the FICA and FUTA provisions of the Internal
Revenue Code, petitioner focuses on Ridge’s status as an
S corporation shareholder and alleged lack of status as a common
law employee. We briefly address these contentions seriatim.
1. Contentions Regarding S Corporation Shareholders
Petitioner cites sections 1366, 1372, and 6037(c) and
Durando v. United States, 70 F.3d 548 (9th Cir. 1995), presumably
in support of an argument that S corporation shareholders should
not be deemed employees. Sections 1366 and 6037(c) generally
require that income items of S corporations be passed through to
shareholders on a pro rata basis and reported by such
shareholders in a manner consistent with treatment on the
corporate return. These rules, however, pertain to calculation
of income tax liability under subtitle A and have no bearing on
computation of Federal employment taxes. Veterinary Surgical
Consultants, P.C. v. Commissioner, 117 T.C. 141, 145 (2001),
affd. sub nom. Yeagle Drywall Co. v. Commissioner, 54 Fed. Appx.
100 (3d Cir. 2002). Furthermore, an employer cannot by the
expedient of characterizing moneys paid in remuneration for
services as distributions of net income, rather than as wages,
avoid FICA and FUTA liabilities. Id. at 145-146. Thus, as in
- 11 -
Veterinary Surgical Consultants, P.C. v. Commissioner, supra at
145-146, and Joseph M. Grey Pub. Accountant, P.C. v.
Commissioner, 119 T.C. 121, 128 (2002), we reject any suggestion
that petitioner’s passing through of its net income to
shareholders precludes the finding of an employer-employee
relationship between petitioner and Ridge. We likewise reject as
not germane to the question before us petitioner’s reliance on
section 1372, addressing fringe benefits under subtitle A, and
the reference to that statute in Durando v. United States, supra
at 551. See Veterinary Surgical Consultants, P.C. v.
Commissioner, supra at 147-148, 150.
2. Contentions Regarding Common Law Employment
Petitioner contends that “employee” as used throughout
section 3121(d) must be construed in a manner consistent with its
use in section 3121(d)(2), such that the usual common law rules
for determining existence of an employer-employee relationship
are to be taken into account. In support of this position,
petitioner quotes the following passage from Tex. Carbonate Co.
v. Phinney, 307 F.2d 289, 291-292 (5th Cir. 1962):
The statutory definition of “employees” as
including officers of a corporation will not be so
construed as to mean that an officer is an employee
per se. Only such officers as work for it in fact are
to be so included and, in determining whether an
officer is an employee within the meaning of the
statutes the usual employer-employee tests are to be
applied. * * *
- 12 -
Petitioner further emphasizes that common law focuses on whether
the alleged employer held the right to control the details of the
work performed by the individual and argues that petitioner had
neither the authority nor the ability to exert control over
Ridge. There exist, however, at least two fatal defects in
petitioner’s arguments in this regard.
First, from the standpoint of statutory construction, the
premise underlying petitioner’s position finds no support either
in the structure of the text or in the Tex. Carbonate Co. v.
Phinney, supra, decision. Section 3121(d) is written in the
disjunctive, with each of the four paragraphs expressly separated
from the next by “or”. Accordingly, each paragraph affords a
separate and independent basis for deeming one engaged to perform
services an employee. Individuals described in paragraphs (1),
(3), and (4) of section 3121(d) are therefore frequently referred
to as “statutory” employees, subject to FICA and FUTA regardless
of their status under common law. See Joseph M. Grey Pub.
Accountant, P.C. v. Commissioner, supra at 126.
Moreover, Tex. Carbonate Co. v. Phinney, supra, is not
authority to the contrary. Significant regulatory and statutory
developments have occurred since the years in issue in that case.
Given that sections 31.3121(d)-1(b) and 31.3306(i)-1(e),
Employment Tax Regs., were promulgated after those years and that
the FUTA definition of “employee” then in effect appears to have
- 13 -
contemplated a corporate officer who could be an independent
contractor under common law, see, e.g., sec. 1607(i), I.R.C.
1939, the Court of Appeals’ statements concerning common law
rules “may no longer be relevant.” Joseph M. Grey Pub.
Accountant, P.C. v. Commissioner, supra at 128 n.4. The opinion
in Tex. Carbonate Co. v. Phinney, supra at 291, recognized that,
regardless of the test purportedly being applied, “such officers
as work for * * * [a corporation] in fact” are included as
employees. The court also addressed the impact of an alleged
absence of control in that case, as follows:
Even though an absence of control is shown, and this as
we have noted has not been done, the force of the
factor is diminished to near de minimis by the fact
that * * * [the service provider] himself was a member
of the Board of Directors, a Vice President, and the
executive of the Company in charge of its sales and the
development of its markets. * * * [Id. at 292.]
Hence, critical components of the analysis in Tex. Carbonate Co.
v. Phinney, supra, are consistent with the current regulatory
approach to officers and contrary to petitioner’s position.
Second, from a factual standpoint, even if the common law
control factor were pertinent to our evaluation, petitioner has
failed to establish a lack of control over Ridge in the
performance of his services. As in Joseph M. Grey Pub.
Accountant, P.C. v. Commissioner, supra at 128-129, to accept
petitioner’s contentions in this regard would be the equivalent
of disregarding the corporate form in which Ridge chose to
- 14 -
conduct his business. Caselaw does not permit a taxpayer to use
his or her dual role as a shareholder of and service provider to
a corporation as grounds for ignoring the legal ramifications of
the business construct so selected. Moline Props., Inc. v.
Commissioner, 319 U.S. 436, 438-439 (1943); Joseph M. Grey Pub.
Accountant, P.C. v. Commissioner, supra at 129.
3. Application of Section 3121(d)(1)
On the basis of the foregoing analysis, application of
section 3121(d)(1) is not precluded or limited here by
considerations pertaining to Ridge’s status as an S corporation
shareholder or under the common law. Section 3121(d)(1) and
sections 31.3121(d)-1(b) and 31.3306(i)-1(e), Employment Tax
Regs., specify that corporate officers are to be classified as
employees if they perform more than minor services and receive or
are entitled to receive remuneration. The overwhelming weight of
the evidence here shows that Ridge’s activities vis-a-vis
petitioner met these criteria. (Accordingly, considerations with
respect to burden of proof do not affect our analysis on this
point.) Ridge at all relevant times served as petitioner’s
president and worked in all significant aspects of petitioner’s
business operations. Ridge also obtained remuneration from
petitioner as his needs arose.
Furthermore, although section 3121(d)(1) may be inapplicable
to the extent that an officer performs services in some other
- 15 -
capacity, i.e., as an independent contractor, petitioner has
offered no convincing evidence that Ridge worked for or was
engaged by petitioner in a capacity other than as president. See
Joseph M. Grey Pub. Accountant, P.C. v. Commissioner, 119 T.C. at
129-130; Rev. Rul. 82-83, 1982-1 C.B. 151, 152. The only items
referenced in the record that could suggest an independent
contractor relationship are the Forms 1099-MISC reporting
nonemployee compensation. These documents are uncorroborated by
other evidence, such as a service agreement, and are entitled to
little weight. See Joseph M. Grey Pub. Accountant, P.C. v.
Commissioner, supra at 130. Hence, we conclude that Ridge was an
employee of petitioner for employment tax purposes, in accordance
with section 3121(d)(1).
B. Availability of Section 530 Relief
Section 530 affords relief from employment tax liability,
notwithstanding an adverse classification, where the following
three requirements are satisfied: (1) The taxpayer has not
treated the individual, or any individual holding a substantially
similar position, as an employee for any period; (2) the taxpayer
has consistently treated the individual as not being an employee
on all tax returns for periods after December 31, 1978; and
(3) the taxpayer has a reasonable basis for not treating the
individual as an employee. Sec. 530(a)(1), (3).
- 16 -
With respect to the case at bar, petitioner did not claim
entitlement to the benefits of Section 530 until posttrial
briefing. Generally, issues raised for the first time on brief
will not be considered when to do so would prevent the opposing
party from presenting evidence that might have been offered if
the issue had been timely raised. DiLeo v. Commissioner, 96 T.C.
858, 891 (1991), affd. 959 F.2d 16 (2d Cir. 1992); Shelby U.S.
Distribs., Inc. v. Commissioner, 71 T.C. 874, 885 (1979). Here,
however, even if we were to treat the issue as properly before
us, petitioner’s position is without merit. It is clear that
petitioner failed to establish a reasonable basis for not
treating Ridge as an employee.
Concerning the existence of a reasonable basis for purposes
of Section 530(a)(1), Section 530(a)(2) sets forth three
statutory safe havens. Reliance upon any of the circumstances
enumerated in subparagraph (A), (B), or (C) of Section 530(a)(2)
is deemed sufficient to establish the requisite reasonable basis.
Subparagraph (A) lists judicial precedent, published
rulings, technical advice with respect to the taxpayer, or a
letter ruling to the taxpayer. On brief, petitioner cites Tex.
Carbonate Co. v. Phinney, 307 F.2d 289 (5th Cir. 1962), and
Automated Typesetting, Inc. v. United States, 527 F. Supp. 515
(E.D. Wis. 1981), in support of the premise that petitioner
- 17 -
reasonably looked to common law control concepts in classifying
Ridge.
For the reasons previously discussed, Tex. Carbonate Co. v.
Phinney, supra, does not afford a reasonable basis for disregard
of the explicit rules of section 3121(d)(1) and sections
31.3121(d)-1(b) and 31.3306(i)-1(e), Employment Tax Regs.
Equally unavailing in this regard is Automated Typesetting, Inc.
v. United States, supra. The District Court in that case simply
evaluated the employment relationship of the involved individuals
both through a common law analysis and through application of the
provisions relating to corporate officers. Id. at 519-522. In
deciding that the individuals qualified as employees under either
rubric, the court did not repudiate the statutory treatment of
corporate executives. Id. at 520, 522; see also Joseph M. Grey
Pub. Accountant, P.C. v. Commissioner, supra at 129 n.5.
Moreover, even if we were to assume arguendo that the cited
cases could offer a reasonable basis for treating an officer as a
nonemployee, petitioner has failed to establish reliance on the
claimed precedent as a factual matter. To fall within the safe
harbors of Section 530(a)(2), the taxpayer must have relied on
the alleged authority during the periods in issue, at the time
the employment decisions were being made. The statute does not
countenance ex post facto justification. See 303 W. 42nd St.
Enters., Inc. v. IRS, 181 F.3d 272, 277, 279 (2d Cir. 1999)
- 18 -
(reversing and remanding because it was “unclear from the record
whether * * * [the taxpayer] in fact relied on any specific
industry practice in reaching its decision to treat its * * *
[workers] as non-employee tenants, let alone whether such
reliance was reasonable”); Select Rehab, Inc. v. United States,
205 F. Supp. 2d 376, 380 (M.D. Pa. 2002) (“The taxpayer must show
that it relied upon those grounds [alleged as a reasonable
basis], and that the reliance was reasonable.”); W. Va. Pers.
Servs., Inc. v. United States, 78 AFTR 2d 96-6600, at 96-6608,
96-2 USTC par. 50,554, at 85,919 (S.D. W. Va. 1996) (“The plain
meaning of section 530(a)(2) is that only evidence known to and
relied upon by the taxpayer is relevant. Facts that are learned
after the incorrect treatment of the employees * * * are not
facts that a taxpayer relied upon in making its original decision
regarding how to treat its employees.”).
Until after trial, petitioner did not purport to rely on
Section 530 or the bases described therein and expressly
disclaimed any dependence on the statute. Petitioner’s present
claim of reliance is not credible. At trial, Ridge appeared but
presented no evidence regarding petitioner’s rationale for the
nonemployee treatment. Nor would testimony by Grey, the
accountant who advised petitioner and prepared petitioner’s tax
returns, have provided any further justification. See Veterinary
Surgical Consultants, P.C. v. Commissioner, T.C. Memo. 2003-48
- 19 -
(where Grey testified that he was unaware of the Tex. Carbonate
Co. v. Phinney, supra, case until posttrial briefing, during the
fall of 2001, in Joseph M. Grey Pub. Accountant, P.C. v.
Commissioner, 119 T.C. 121 (2002)). Petitioner failed to
establish that it relied on judicial precedent or, for that
matter, on any of the other sources specified in Section
530(a)(2)(A). Accordingly, we conclude that subparagraph (A)
does not aid petitioner here.
The same result obtains with respect to subparagraphs (B)
and (C). There is no evidence that respondent audited petitioner
for employment tax purposes prior to the examination underlying
the present case. Petitioner therefore cannot show reliance on a
past audit under Section 530(a)(2)(B). Likewise, petitioner has
adduced no evidence of conventions in the water filtration and
purification industry to establish longstanding industry practice
under Section 530(a)(2)(C). The safe havens of Section 530(a)(2)
are therefore inapplicable on the record before us.
In seeking to establish a reasonable basis for Ridge’s
treatment apart from the safe havens, petitioner quotes from the
following definition of “employment status” in Section 530(c)(2):
“The term ‘employment status’ means the status of an individual,
under the usual common law rules applicable in determining the
employer-employee relationship, as an employee or as an
independent contractor (or other individual who is not an
- 20 -
employee).” Petitioner apparently believes that the purported
lack of common law control makes its treatment of Ridge
reasonable within the meaning of Section 530 and that the above
definition supports this view.
Again, however, petitioner’s approach is contrary to
controlling statutes and to the facts of this case. As a matter
of construction, Section 530(c)(2) defines employment status for
purposes of certain provisions of Section 530 not germane here.
It does not purport to override or interpret the definition of
“employee” in section 3121(d) and related regulations. Hence,
Section 530(c)(2) does not render it rational for petitioner to
have ignored the statutory mandate regarding corporate officers
and to have taken a position that was not otherwise supported by
authority. Petitioner also does not claim in actuality to have
relied on Section 530(c)(2) in deciding not to treat Ridge as an
employee in 1996, 1997, or 1998. We conclude and have found as a
fact that petitioner did not have a reasonable basis for failing
to characterize Ridge as an employee. Consequently, relief from
employment tax liability is not available to petitioner under
Section 530.
Lastly, in connection with Section 530, petitioner raises a
due process argument. Section 530(e)(1) provides that the
Internal Revenue Service “shall, before or at the commencement of
any audit inquiry relating to the employment status of one or
- 21 -
more individuals who perform services for the taxpayer, provide
the taxpayer with a written notice of the provisions of this
section.” Small Business Job Protection Act of 1996 sec.
1122(a), 110 Stat. 1766. On brief, petitioner alleges that it
learned of the existence of Section 530 only through the June 8,
2001, notice of determination, which postdated by a substantial
margin the commencement on July 1, 1999, of the underlying
employment tax audit. Petitioner then states:
The inaction of Respondent in not providing Petitioner
with the required Sect. 530(e)(1) notice constitutes a
serious Constitutional violation of due process rights
guaranteed to Petitioner, and Petitioner moves this
Court to allow it to recover its legal fees, since the
conduct against Petitioner by Respondent is so
egregious.
To the extent that petitioner’s due process contentions take
the form of a claim for litigation or administrative costs and
fees under section 7430, such claim is premature. Rule
231(a)(2), as pertinent here, specifies that the appropriate time
to seek recovery of legal costs follows service of a written
opinion. See McWilliams v. Commissioner, 104 T.C. 320, 327
(1995); Groetzinger v. Commissioner, 87 T.C. 533, 548 (1986).
Furthermore, even if petitioner’s allegations might be read
as a plea encompassing other remedies, petitioner has failed to
show that its situation satisfies the prerequisites for relief
under the Due Process Clause. As this Court has noted, even in a
criminal context defendants are generally required to establish
- 22 -
actual prejudice in order to obtain due process relief. Riland
v. Commissioner, 79 T.C. 185, 197-198 (1982) (involving a claimed
denial of due process on account of delay in issuance of the
subject deficiency notice). The record in the instant case is
devoid of such prejudice. Although petitioner was made aware of
Section 530 at least prior to filing its petition with the Court,
petitioner failed therein to raise the statute. Petitioner then
did nothing to prepare this case for trial. Nonetheless, we have
addressed the merits of petitioner’s claim for relief under
Section 530(a), first put forth 3 months after trial, despite the
untimeliness of petitioner’s contentions. Accordingly,
petitioner was afforded an opportunity to be heard, and no actual
prejudice was sustained.
C. Conclusion
We hold that Ridge is an employee of petitioner pursuant to
section 3121(d)(1) and that petitioner is not entitled to relief
under Section 530. Accordingly, petitioner is liable for FICA
and FUTA taxes for the periods in issue as set forth in
respondent’s notice of determination and relevant stipulations.
To reflect the foregoing,
Decision will be entered for
respondent and in accordance with
stipulations as to amounts.
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544 Pa. 74 (1996)
674 A.2d 691
ROSS-ARACO CORPORATION, Appellee,
v.
COMMONWEALTH of Pennsylvania, BOARD OF FINANCE AND REVENUE, Appellant.
Supreme Court of Pennsylvania.
Argued December 6, 1995.
Decided April 18, 1996.
*75 Kevin A. Moury, Harrisburg, for Commonwealth.
*76 Daniel J. Dugan, Philadelphia, for Ross-Araco.
Before NIX, C.J., and FLAHERTY, ZAPPALA, CAPPY and CASTILLE, JJ.
OPINION
ZAPPALA, Justice.
The issue presented in this direct appeal is whether the corporate taxpayer's gain from the sale of a 21.5 acre tract of land was business income for the purpose of calculating its corporate net income tax for the fiscal year ending November 30, 1988. The Board of Finance and Revenue determined that the gain was business income under § 401(3)2.(a)(1) of the Tax Reform Code of 1971 (Code), 72 P.S. § 7401(3)2.(a)(1). The Commonwealth Court reversed based on its conclusion that the gain from the sale was nonbusiness income. We granted oral argument on this matter and now affirm.
Ross-Araco Corporation filed a petition for review of the decision of the Board of Finance and Revenue (Board) with the Commonwealth Court. The parties submitted a stipulation of facts pursuant to Pa.R.A.P. 1571(f) which constituted the entire record of the proceeding. As stipulated, Ross-Araco was formed in November 1981 following a merger of Ross Construction Corporation ("Ross") and Araco Company ("Araco"). Ross was originally known as Araco Construction and Realty Co., Inc. from the time of its incorporation in New Jersey on December 16, 1957, until March 5, 1963. Both Ross and Araco applied for and were granted certificates of authority to do business in Pennsylvania in 1958.[1]
Ross-Araco is a general and mechanical contractor in the construction business that operates in and outside of Pennsylvania. Its construction activities are exclusively on municipal projects on a low-bid basis. Ross-Araco does not invest its own funds in the projects on which it works.
*77 In 1960, prior to the merger, Ross-Araco's predecessor purchased a 24.5 acre parcel of land located in Voorhees, New Jersey. Ross-Araco used a building which was located on a fenced three-acre portion of the property for storage of the equipment and materials used in its construction business. The remaining 21.5 acres of land were heavily wooded and were unimproved during Ross-Araco's ownership. The 21.5 acre tract was never rented during the time that Ross-Araco owned the land; nor did the tract ever produce royalty income.
As a general contractor, Ross-Araco must obtain performance bid bonds from insurance companies in order to obtain bids on municipal projects. Ross-Araco customarily pledges the assets on its balance sheet to the insurance company that provides the performance bid bonds. The 21.5 acre tract was carried on the balance sheet at its original cost of $11,099 and was consistently pledged for the purpose of obtaining bid bonds. Ross-Araco also included the tract at its original cost value in calculating the property factor for the purposes of the Pennsylvania corporate net income tax and deducted the real estate taxes paid thereon in arriving at business income apportionable to Pennsylvania.
On April 25, 1988, Ross-Araco sold the 21.5 acre tract to an unrelated developer, Radnor-Canuso Partnership, for $1,439,598. The gross proceeds from the sale less the cost basis of $11,099 resulted in a net gain of $1,428,499. All of the proceeds from the sale were used to purchase United States Treasury Notes.
Ross-Araco currently owns the remaining three acre tract, but no other real property. The only other piece of real property ever owned by Ross-Araco was the site of offices formerly located in Philadelphia. The property was purchased prior to 1960 and sold in 1983.
On its Pennsylvania corporate tax report for the fiscal year ending November 30, 1988, Ross-Araco reported the gain from the sale of the 21.5 acre tract as nonbusiness income allocable to New Jersey. On October 23, 1990, the Department *78 of Revenue settled Ross-Araco's corporate net income tax, reclassifying the gain from nonbusiness income as business income. This resulted in an increase in the amount of tax owed from $268,321 to $376,770. Ross-Araco paid the principal amount of the tax as settled by the Department of Revenue, but not the interest assessed thereon. Ross-Araco filed a petition for resettlement that the Board of Appeals denied and then filed a petition for review with the Board of Finance and Revenue that was denied also.
A petition for review was then filed with the Commonwealth Court. The court determined that the gain was nonbusiness income under § 401(3)2.(a)(1)(D) of the Code, 72 P.S. § 7401(3)2.(a)(1)(D) because it was not derived from the transactions in which Ross-Araco regularly engaged. The court concluded that the sale of the property was a transaction of "an extraordinary nature outside the regular course of its trade or business." Ross-Araco Corporation v. Commonwealth of Pennsylvania, 165 Pa.Cmwlth. 49, 644 A.2d 235, 238 (1994) (citation omitted).
The court reversed the decision of the Board of Finance and Revenue and directed that, unless exceptions were filed, judgment be entered in favor of the Commonwealth in the lesser amount of tax of $281,342 plus statutory interest on the late payment of taxes. The Department of Revenue was directed to refund any overpaid taxes plus statutory interest thereon. The Board of Finance and Revenue filed exceptions which were overruled.
For purposes of determining corporate net income tax, "business income" is defined in the Code as
income arising from transactions and activity in the regular course of the taxpayer's trade or business and includes income from tangible and intangible property if the acquisition, management, and disposition of the property constitute integral parts of the taxpayer's regular trade or business operations.
*79 72 P.S. § 7401(3)2.(a)(1)(A). "Nonbusiness income" includes all income other than business income. 72 P.S. § 7401(3)2.(a)(1)(D).
In Welded Tube Co. of America v. Commonwealth, 101 Pa.Cmwlth. 32, 515 A.2d 988 (1986), the Commonwealth Court determined that the statutory definition of business income contained two alternative and independent tests for determining whether income is properly classified as business or nonbusiness income: the transactional test and the functional test.
The transactional test is derived from the first clause of the definition of business income. Under the transactional test, gain is classified as business income if it is derived from transactions in which the taxpayer regularly engages. The transactional test measures the particular transaction against the frequency and regularity of similar transactions in the past practices of the business. The taxpayer's subsequent use of the income is also relevant in determining whether gain is business income. Id., 101 Pa.Cmwlth. at 43, 515 A.2d at 993.
Under the functional test, which is based upon the second clause of the statutory definition, income is business income if the gain arises from the sale of an asset that produced business income while it was owned by the taxpayer. The extraordinary nature or infrequency of the transaction is irrelevant for purposes of the functional test. Id., 101 Pa. Cmwlth. at 43, 515 A.2d at 994.
In Welded Tube, the taxpayer was a corporation engaged in the manufacture and sale of welded steel tubing. The taxpayer owned two manufacturing facilities, one located in Philadelphia and one located in Chicago, Illinois. The Philadelphia manufacturing facility, machinery and equipment were eventually sold for a taxable gain of $2,111,543. On its corporate net income tax return, the taxpayer reported business income to be apportioned as $7,838,962, including the taxable gain of $2,111,543, and nonbusiness income of $274,418. The taxpayer computed the net income tax due at $73,807. The Department of Revenue and the Department of the Auditor General settled *80 the taxpayer's net income tax by finding business income to be apportioned of $6,001,837 and nonbusiness income of $2,111,543. This resulted in an increase in the corporate net income tax determined to be $264,501.85.
The taxpayer's petition for resettlement was refused by the Board of Appeals. On petition for review, the Board of Finance and Revenue rejected the taxpayer's claim that the gain on the sale of the Philadelphia manufacturing facility, machinery and equipment was business income. The corporate net income tax was reduced to $251,886.85 on resettlement, however.
The taxpayer filed a petition for review with the Commonwealth Court limited to the issue of the proper classification of the gain from the sale. The court concluded that the Board of Finance and Revenue had improperly found the capital gains to be nonbusiness income under either the transactional or functional test.
The record discloses that the taxpayer purchased the Philadelphia property, site of its manufacturing facility, in 1957 and then purchased thirteen additional contiguous parcels of land totaling some twelve acres between 1958 to 1963 for the expansion of this plant. In 1974, the taxpayer also acquired thirty-five acres of land in Alabama as a prospective site of a new manufacturing facility, ultimately never constructed. The taxpayer sold the Philadelphia facility in 1977 when it became unprofitable and sold the Alabama property in 1982, after the tax years in question here.
The Board argues that the taxpayer was not regularly engaged in the buying and selling of manufacturing plants and the disposition of real property only twice over the course of a thirty year corporate history cannot constitute a "systematic and recurrent" business practice so as to satisfy the test formulated in Atlantic Richfield indicative of business income.
In our view, the narrow interpretation proposed by the Board is not supported by the wording of the statute. The *81 statute makes no reference to transactions and activity in the regular course of the taxpayer's principal business. As we read the statute, and we do so mindful of 1 Pa.C.S.A. § 1928 providing that statutes imposing taxes are to be narrowly construed, it makes no difference whether income derives from the main business, the occasional business or the subordinate business so long as the income arises in the regular course of business.
While the principal business of the taxpayer comprised the manufacture of welded tube, it was a regular practice of this taxpayer to acquire property in the expansion of its business. We conclude that such property constituted an integral part of its business operations and that its disposition generated business income.
101 Pa.Cmwlth. at 44-45, 515 A.2d at 994 (emphasis supplied).
The court also emphasized the fact that the gain from the sale was invested in the ongoing operations of the business and that the record did not indicate that the closing of the Philadelphia facility contemplated a cessation of the taxpayer's operations. The proceeds from the sale were used by the taxpayer to extinguish existing debts and to expand the Chicago facility.
In Laurel Pipe Line v. Commonwealth, 537 Pa. 205, 642 A.2d 472 (1994), we adopted the transactional and functional tests used by the Commonwealth Court in Welded Tube. Laurel Pipe Line Company (Laurel) was an Ohio corporation engaged in the business of transporting refined petroleum products from refinery and pipeline connections within Pennsylvania. Laurel also operated a pipeline between points in Pennsylvania and Ohio. In 1986, Laurel discontinued the interstate pipeline operation and sold that particular pipeline for a gain of over three million dollars. Fifteen days after the sale, Laurel's Board of Directors declared dividends equal to the after-tax net proceeds from the sale and distributed the proceeds to Laurel's stockholders. None of the proceeds were used by Laurel to acquire any asset for use in future business operations or to generate income for use in future business operations.
*82 Laurel treated the gain from the sale of the pipeline as nonbusiness income when it filed its 1986 Pennsylvania corporate net income tax return. The Department of Revenue entered into a settlement with Laurel whereby the entire gain was reclassified as business income subject to apportionment between Pennsylvania and Ohio based upon the ratio of the length of pipeline located in Pennsylvania to the total length of pipeline. Laurel filed a Petition for Resettlement with the Board of Appeals that was denied. The Board of Finance and Revenue and the Commonwealth Court denied subsequent petitions for review.
On appeal before this Court, Laurel argued that the sale of the pipeline was nonbusiness income which should be allocated between Pennsylvania and Ohio based upon the situs of the property. We concluded that the gain on the pipeline sale was nonbusiness income.
In making the determination that the gain from the sale of the Aliquippa-Cleveland pipeline is nonbusiness income, we are persuaded by the disposition of a factually similar case in another jurisdiction involving a company in the business of laying pipelines. In McVean & Barlow, Inc. v. New Mexico Bureau of Revenue, 88 N.M. 521, 543 P.2d 489 (N.M.Ct.App.), cert. denied, 89 N.M. 6, 546 P.2d 71 (1975), the court held that the Commissioner of Revenue erred when he reclassified income derived from an equipment liquidation sale as business income. The company was engaged in pipeline work of two types: one type involved laying small diameter pipelines and the other involved laying large diameter pipelines. In 1973, the company experienced a reorganization which was accomplished in part by the liquidation of the large diameter pipeline business. The related equipment was sold at auction in Texas and Nevada. The gain on the sale was classified by the company as nonbusiness income to be allocated to Texas and Nevada.
The New Mexico Court of Appeals agreed that the gain on the sale of the large diameter pipeline equipment constituted nonbusiness income. By interpreting statutory definitions of business and nonbusiness income identical to those *83 of Pennsylvania, the court "fail[ed] to see how the acquisition, management and disposition of the property constituted integral parts of the taxpayer's regular trade or business." 88 N.M. at 524, 543 P.2d at 492. The court reasoned that the "taxpayer was not in the business of buying and selling pipeline equipment and, in fact, the transaction in question was a partial liquidation of taxpayer's business and a total liquidation of taxpayer's [large diameter pipeline] business. . . . This sale contemplated a cessation of taxpayer's [large diameter pipeline] business." Id.
Although Laurel, in the case at bar, continued to operate a separate, independent pipeline, the sale of the Aliquippa-Cleveland pipeline and distribution of the resultant gain constituted a liquidation of a separate aspect of Laurel's business. Laurel sold one of its two major assets and consequently divested itself from the pipeline business in the Aliquippa-Cleveland geographical region. While not a complete liquidation, the sale of the pipeline was a liquidation of a separate and distinct aspect of its business to the same extent that the taxpayer's sale of its large diameter pipeline business was a liquidation in McVean & Barlow, Inc. v. New Mexico Bureau of Revenue, supra.
537 Pa. at 212-13, 642 A.2d at 476. We noted that "the totality of the circumstances surrounding the sale of the . . . pipeline has persuaded us that the transaction is one that can be characterized as a partial liquidation which has changed the structure of the taxpayer's business." 537 Pa. at 214, 642 A.2d at 477.
In the instant case, the Board of Finance and Revenue argues that the gain from the sale of the 21.5 acre tract is business income under either the transactional test or functional test set forth in Welded Tube. It asserts that the transactional test is satisfied because the land was held for investment purposes, that it was Ross-Araco's regular business practice to acquire and hold investment assets, and the sale proceeds were used to acquire another investment asset, U.S. Treasury Notes. The Board of Finance and Revenue asserts that the gain is business income under the functional *84 test as well because the 21.5 acres were regularly pledged as collateral to obtain performance bid bonds from insurance companies, and that without performance bid bonds, Ross-Araco could not engage in business as a general construction contractor.
Ross-Araco responds that the gain from the sale was nonbusiness income under the transactional test because it was not derived from transactions in which it regularly engages. Ross-Araco asserts also that the sale cannot be construed as a transaction in the course of a secondary "investment business" because at no time did it or its predecessor ever engage in the business of buying, selling, and holding real estate. Nor is the functional test satisfied as the property was not used to produce income while owned by Ross-Araco.[2]
The Commonwealth Court's determination that the gain from the sale was nonbusiness income under the transactional test was based upon its finding that when the sale is measured against the frequency and regularity of Ross-Araco's past practice of similar real estate transactions, the gain realized from the sale was not derived from transactions in which Ross-Araco regularly engaged. Only one other sale of real property had occurred in the 31 years that Ross-Araco and its predecessors conducted business activity in the Commonwealth. The court dismissed as irrelevant the mere statement of proposed business activities contained in the 1958 application for a certificate of authority to do business in Pennsylvania filed by Araco Construction and Realty Company, Inc., stating that "the relevant consideration under the transactional test is the frequency and regularity of the similar transactions in which Taxpayer was actually engaged in the past *85 practice of the business." Ross-Araco v. Commonwealth, 165 Pa.Cmwlth. at 56, 644 A.2d at 238 (emphasis supplied).
The court also rejected the argument that the gain from the sale is business income from the regular course of Ross-Araco's investment activities. While the record indicates that Ross-Araco maintained substantial investments in U.S. Treasury Notes and mutual funds, there was no evidence that the 21.5 acre tract was directly or indirectly involved in Ross-Araco's investment activities and produced investment income before its sale. The transactional test requires comparison of the transaction at issue with similar transactions of the taxpayer's past business practice. The court stated,
If we adopt the interpretation of the transactional test urged by the Commonwealth, gain from the sale of any assets owned by the taxpayer would be deemed business income, as long as the taxpayer is engaged in the secondary investment activities, even though the property in question was not directly involved in such activities during the taxpayer's ownership.
Id., 165 Pa.Cmwlth. at 57, 644 A.2d at 239.
The court concluded also that the gain was not business income under the alternative functional test for gain derived from property whose acquisition, management and disposition constitute an integral part of the taxpayer's regular trade or business. The acquisition, management, and disposition of real property were not integral parts of Ross-Araco's regular trade or business. Nor did the real estate produce any income during Ross-Araco's ownership. This case was distinguished from Welded Tube in which it was the taxpayer's regular practice to acquire property to expand its business operations.
The fact that Ross-Araco carried the 21.5 acre tract on its balance sheet among the assets which were pledged to obtain performance bid bonds from insurance companies was found to be insignificant when compared with the total amount of Ross-Araco's assets. The parties stipulated that during the period from 1984 to 1989, Ross-Araco's total assets steadily *86 rose from $4,193,531 to $13,596,554. During that period of time and up until the time of sale, the 21.5 acre tract had been listed on the balance sheet at its original cost value of $11,099.
The Board of Finance and Revenue concedes that the sale of the real estate was not in the regular course of Ross-Araco's construction business, but argues that it was a transaction within the course of its regular and ongoing investment activities. It asserts that the purchase and sale of undeveloped real estate is a passive investment activity similar to the purchase and sale of U.S. Treasury Notes, money market funds, or mutual funds. The use of the sale proceeds to invest additional sums in U.S. Treasury Notes is said to support this position.
Acquisitions and sales of real property may generate business income when the taxpayer regularly engages in such transactions. For example, in Welded Tube the taxpayer originally purchased property in Philadelphia as the site of its manufacturing facility in 1957 and then purchased thirteen additional contiguous parcels of land between 1958 to 1963 for the expansion of the facility. In 1974, the taxpayer acquired thirty-five acres of land in Alabama for a new manufacturing facility that was never constructed. The properties in Philadelphia and Alabama were later sold.
Unlike Welded Tube, however, the property involved in this case was never improved or used in the construction business. The record indicates that its purchase was incidental to the acquisition of the 3 acre tract on which there was a building suitable for storage of equipment and materials used by Ross-Araco in its construction activities. There is no indication that the 21.5 acres were purchased to expand Ross-Araco's investment portfolio which was used as collateral to secure performance bid bonds. The Commonwealth Court's analysis of the issue was correct.
Based on the foregoing, we conclude that the gain on the sale of the 21.5 acre tract was nonbusiness income. The order of the Commonwealth Court is affirmed.
NOTES
[1] In its application for a certificate of authority, Araco Construction and Realty Co., Inc. identified the character and nature of its business as "construction and building, buying, selling & holding real estate." The application of Araco identified its business as "construction and building of any and all types, and in all its phases."
[2] Ross-Araco relies also upon a regulation adopted by the Department of Revenue that was in effect when the subject property was sold. The regulation, which was formerly found at 61 Pa.Code § 153.24 before its repeal, was issued after the Commonwealth Court's decision in Welded Tube and included illustrative examples of business income and nonbusiness income. We need not address Ross-Araco's argument that the regulation is controlling in this case in view of our disposition of its other arguments.
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200 S.W.3d 333 (2006)
Drew Wayne ODOM, Appellant,
v.
The STATE of Texas, Appellee.
No. 13-05-674-CR.
Court of Appeals of Texas, Corpus Christi-Edinburg.
August 24, 2006.
*334 Heather Harrison Hall, Humble, for appellant.
Marc Brumberger, Asst. Dist. Atty., Michael A. McDougal, Dist. Atty., Conroe, for state.
Before Justices HINOJOSA, RODRIGUEZ, and GARZA.
OPINION
Opinion by Justice RODRIGUEZ.
This is an appeal from a conviction for the offense of possession of a controlled substance and possession of a chemical with the intent to manufacture. See TEX. HEALTH & SAFETY CODE ANN. § 481.115(a), (b) (Vernon 2003), § 481.124 (Vernon Supp.2005). By four issues, appellant, Drew Wayne Odom, contends, among other things, that his Fourth Amendment rights were violated when law enforcement *335 officers searched his residence without a warrant. Appellant asserts that his refusal of consent at the time of the search was dispositive as to him, regardless of the consent of a third party who was not present at the time of the search. The State concedes error in light of the United States Supreme Court decision in Georgia v. Randolph, ___ U.S. ___, ___, 126 S.Ct. 1515, 1520, 164 L.Ed.2d 208 (2006), an opinion issued after the trial of this case. We reverse and remand.
I. Background
Pursuant to a report of suspicious activity, a warrantless search was conducted of a building where appellant had been living for approximately three months. M.O. Sims, appellant's brother-in-law, claimed that he was the property owner and gave "permission to search the whole entire property for anything illegal going on." When the officers arrived at the property, appellant, who was living there with Sims's permission, expressly objected to a search without a warrant.
After the officers informed appellant that Sims had given them permission to search the property and over appellant's objection and request for a warrant, the officers secured the building, detained appellant and others who were in the building, and conducted a search of the property. During the search, the officers gathered evidence, including an assortment of chemical substances and paraphernalia used in manufacturing methamphetamine. Sims was not at the property at the time of the search.
At trial, appellant moved to suppress the evidence obtained during the search on grounds that it was the fruit of an illegal search. The trial court denied his motion. After pleading not guilty, a jury found appellant guilty and assessed punishment at thirty years' imprisonment for the possession of a controlled substance and five years' imprisonment for possession of a chemical with the intent to manufacture. This appeal ensued.
II. Standard of Review
The appropriate standard for reviewing most trial court's rulings on a motion to suppress is a bifurcated standard of review, giving almost total deference to the trial court's determination of historical facts and reviewing de novo the court's application of the law. Maxwell v. State, 73 S.W.3d 278, 281 (Tex.Crim.App. 2002); Carmouche v. State, 10 S.W.3d 323, 327-28 (Tex.Crim.App.2000); State v. Ross, 32 S.W.3d 853, 856 (Tex.Crim.App. 2000); Guzman v. State, 955 S.W.2d 85, 89 (Tex.Crim.App.1997).
III. Analysis
By his first point of error, appellant complains that his Fourth Amendment rights were violated when police searched the building over his objection, irrespective of Sims's consent. We agree.
"[S]earches conducted outside the judicial process, without prior approval by judge or magistrate, are per se unreasonable under the Fourth Amendment-subject only to a few specifically established and well-delineated exceptions." Katz v. United States, 389 U.S. 347, 356, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967). The three exceptions under which a warrantless search can be justified are (1) the plain view doctrine, (2) consent, and (3) exigent circumstances. Stewart v. State, 681 S.W.2d 774, 777 (Tex.App.-Houston [14th Dist.] 1984, pet. ref'd); see TEX. CODE CRIM. PROC. ANN. art. 14.05 (Vernon 2005) (providing that an officer may not enter a residence to make an arrest without a warrant unless a person who resides there consents or exigent circumstances exist). In this case, we review only the consent *336 and exigent circumstance exceptions as the officers had no other basis for being in the building that could serve to support a "plain view" contention. See Stewart, 681 S.W.2d at 777.
A. Valid Consent
"To the Fourth Amendment rule ordinarily prohibiting the warrantless entry of a person's house as unreasonable per se, one `jealously and carefully drawn' exception recognizes the validity of searches with the voluntary consent of an individual possessing authority." See Randolph, 126 S.Ct. at 1520. The exception for consent extends even to entries made with the permission of one whom the police reasonably, but mistakenly, believe to possess such authority. Illinois v. Rodriguez, 497 U.S. 177, 186, 188-89, 110 S.Ct. 2793, 111 L.Ed.2d 148 (1990).
Based on the testimony elicited at trial, the trial court concluded that Sims had authority to consent to the search. However, after the trial in this case, the United States Supreme Court held, in Randolph, that while the consent of one with authority can support a warrantless entry, "a physically present inhabitant's express refusal of consent to a police search is dispositive as to him," even in the face of another with equal authority. Randolph, 126 S.Ct. at 1518, 1520, 1522-24, 1528.
Since the decision in Katz v. United States, 389 U.S. 347 [88 S.Ct. 507, 19 L.Ed.2d 576] (1967), it has been the law that "capacity to claim the protection of the Fourth Amendment depends . . . upon whether the person who claims the protection of the Amendment has a legitimate expectation of privacy in the invaded place." Rakas v. Illinois, 439 U.S. 128, 143 [99 S.Ct. 421, 58 L.Ed.2d 387] (1978). A subjective expectation of privacy is legitimate if it is "`one that society is prepared to recognize as "reasonable,"'" id. at 143-44, n. 12 [99 S.Ct. 421], quoting Katz, supra, at 361 [88 S.Ct. 507] (Harlan, J., concurring).
Minnesota v. Olson, 495 U.S. 91, 95-96, 110 S.Ct. 1684, 109 L.Ed.2d 85 (1990) (omission in original). In Randolph, the Supreme Court noted the following:
A tenant in the ordinary course does not take rented premises subject to any formal or informal agreement that the landlord may let visitors into the dwelling, and a hotel guest customarily has no reason to expect the manager to allow anyone but his own employees into his room.
Randolph, 126 S.Ct. at 1522 (citations omitted). In Olson, the Supreme Court similarly observed the following concerning overnight guests:
That the guest has a host who has ultimate control of the house is not inconsistent with the guest having a legitimate expectation of privacy. The houseguest is there with the permission of his host, who is willing to share his house and his privacy with his guest. It is unlikely that the guest will be confined to a restricted area of the house; and when the host is away or asleep, the guest will have a measure of control over the premises. The host may admit or exclude from the house as he prefers, but it is unlikely that he will admit someone who wants to see or meet with the guest over the objection of the guest. . . . The point is that hosts will more likely than not respect the privacy interests of their guests, who are entitled to a legitimate expectation of privacy despite the fact that they have no legal interest in the premises and do not have the legal authority to determine who may or may not enter the household. . . .
*337 Olson, 495 U.S. at 99, 110 S.Ct. 1684 (cited with approval in Randolph, 126 S.Ct. at 1522).
The evidence at trial showed that the officers knew appellant was at least a guest with permission to inhabit the building on an ongoing basis. Sims testified that he respected appellant's privacy and treated the living quarters as though it were appellant's apartment. Appellant almost always kept the doors locked, and Sims would infrequently enter or spend time in the living quarters in appellant's absence. When appellant was present, Sims would not enter without knocking on the door. Additionally, while the trial court found that appellant was a guest, not a tenant, the court also concluded that appellant and Sims had "equal access" and shared a degree of "mutual control" over the premises. Based on the above, appellant, even as an extended overnight guest, had an expectation of privacy. See id. at 94-100.
Pursuant to Randolph, we conclude that the consent exception to the Fourth amendment's warrant requirement is inapplicable to the evidence seized and introduced against him at trial. After securing the residence and detaining appellant, the officers should have abided by appellant's request that they obtain a search warrant because Sims's third-party consent was invalid in light of appellant's objection. See Randolph, 126 S.Ct. at 1522. Appellant's Fourth Amendment rights were, thus, violated when appellant unequivocally objected to the search of his property even though a third party, who was not present at the time, may have consented. See id.
B. Exigent Circumstances
We look next to the exigent circumstances exception under which a warrantless search can be justified. See Stewart, 681 S.W.2d at 777. "Situations creating exigent circumstances usually include factors pointing to some danger to the officer or victims, an increased likelihood of apprehending a suspect, or the possible destruction of evidence." McNairy v. State, 835 S.W.2d 101, 107 (Tex.Crim.App.1991) (en banc). The burden is on the State to prove exigency. McGee v. State, 105 S.W.3d 609, 615 (Tex. Crim.App.2003).
Lieutenant Phillip Cash with the Montgomery County Sheriff's Department testified that when he arrived he was concerned about the threat that the volatile substances posed to the safety of the community and to the safety of the officers on the scene. He was also concerned with the prospect that someone may have been inside destroying evidence. These concerns served as the basis for the initial protective sweep. See Reasor v. State, 12 S.W.3d 813, 815 (Tex.Crim.App.2000) (citing Maryland v. Buie, 494 U.S. 325, 328, 110 S.Ct. 1093, 108 L.Ed.2d 276 (1990)) (explaining that protective sweeps may be conducted to protect the safety of officers and justify a warrantless entry).
As for the second entry into the building, during which the search was conducted and evidence seized, the record does not contain evidence of exigent circumstances. Following the protective sweep, Lieutenant Cash called Sims to confirm his consent before re-entering the building. Lieutenant Cash testified that had he not received Sims's consent to the search, he would have withdrawn following the initial sweep to obtain a warrant. Nothing hazardous was observed during the protective sweep. The officers had secured the premises and the three individuals who were present in the building, including appellant, were waiting outside. The record does not reflect that any contraband was observed during that sweep. We conclude *338 that no exigent circumstances existed in this instance.
Accordingly, reviewing de novo the trial court's application of the law, we conclude that the warrantless entry was unreasonable under the Fourth Amendment, and the trial court erred when it denied appellant's motion to suppress.
IV. Harm Analysis
Having concluded error, we must conduct a harm analysis. See TEX. R. APP. P. 44.2(a); Hernandez v. State, 60 S.W.3d 106, 108 (Tex.Crim.App.2001). The harm analysis for erroneous admission of evidence obtained in violation of the Fourth Amendment is the constitutional standard set forth in rule 44.2(a) which mandates that the judgment be reversed unless this Court determines "beyond a reasonable doubt that the error did not contribute to the conviction or punishment." TEX.R.APP. P. 44.2(a); Hernandez, 60 S.W.3d at 108. In this case, because all of the incriminating evidence was obtained during the warrantless search, its erroneous admission formed the basis of appellant's conviction. We cannot conclude that the error did not contribute to the conviction or punishment; thus, appellant was harmed by its admission, and the judgment of the trial court should be reversed. See TEX.R.APP. P. 44.2(a). We sustain appellant's first point of error.
Because this point of error is dispositive of the appeal, we need not address appellant's remaining points. See id. at rule 47.1.
V. Conclusion
Accordingly, we reverse the trial court's judgment and remand for further proceedings consistent with this opinion.
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813 F.2d 406
*U.S.v.Hoskins
86-1425
United States Court of Appeals,Fifth Circuit.
2/26/87
1
N.D.Tex.
AFFIRMED
2
---------------
* Fed.R.App.P. 34(a); 5th Cir.R. 34.2.
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201 Mich. App. 717 (1993)
507 N.W.2d 5
PEOPLE
v.
LUCAS
Docket No. 142068.
Michigan Court of Appeals.
Submitted July 19, 1993, at Lansing.
Decided October 4, 1993, at 9:55 A.M.
Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, John D. O'Hair, Prosecuting Attorney, Timothy A. Baughman, Chief of Research, Training, and Appeals, and Don W. Atkins, Principal Attorney, Appeals, for the people.
Mark H. Magidson, for the defendant on appeal.
Before: DOCTOROFF, C.J., and GRIBBS and SHEPHERD, JJ.
AFTER REMAND
GRIBBS, J.
The underlying facts and procedural history of this case are set forth in our prior opinion. People v Lucas (On Remand), 193 Mich App 298; 484 NW2d 685 (1992). We have reviewed the findings and conclusions of the trial court and now affirm.
In our previous decision we concluded that the rape-shield statute, MCL 750.520j; MSA 28.788(10), authorizes preclusion of evidence of prior sexual activity between a defendant and a complainant. We also found that the decision whether the statutory notice requirement violates a defendant's right to confrontation must be made case by case. We retained jurisdiction and remanded this matter *719 for an evidentiary hearing regarding whether preclusion of evidence in this case was appropriate.
Following the issuance of our opinion, an evidentiary hearing was held below and the trial court ruled, in a written opinion, that the proffered evidence of a prior sexual relationship between defendant and complainant was irrelevant and immaterial in this case, and that counsel's failure to give the required notice was a tactical decision. The trial court concluded that admission of the evidence was properly denied in this case. The trial court noted that this matter was tried with a judge as factfinder and found that there was sufficient evidence presented of the parties' prior relationship to support the defendant's defense claim. The trial court also found that the parties' prior relationship had been explored in detail during the preliminary examination. In addition to finding that the evidence was immaterial and that failure to file the required notice was a tactical decision, the trial court concluded that exclusion of the evidence, even if error, was harmless.
We believe the trial court properly applied the balancing test in determining that the evidence of the parties' prior relationship should not have been admitted in this case. We note that the record of the evidentiary hearing shows that defense counsel was aware of the procedural requirements for admission of the evidence. As we suggested in our prior opinion, defense counsel's decision to raise this issue on the day of trial suggests a tactical decision and weighs in favor of exclusion. 193 Mich App 303. In addition, it is clear in this case that preclusion of the evidence did not prevent defense counsel from presenting defendant's claim of consent and that any error was harmless. We find no abuse of discretion.
Affirmed.
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UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 97-20718
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
ERIC SYKES HAMPTON, RANDY BAKER,
Defendants-Appellants.
Appeal from the United States District Court
for the Southern District of Texas
(H-96-CR-187-1)
May 17, 1999
Before KING, Chief Judge, POLITZ and BENAVIDES, Circuit Judges.
POLITZ, Circuit Judge:*
Randy Baker and Eric Sykes Hampton were convicted of conspiracy to
possess with intent to distribute crack cocaine in violation of 21 U.S.C. § 846.
Hampton was additionally convicted of possession with intent to distribute crack
cocaine in violation of 21 U.S.C. § 841(a). Baker was sentenced to prison for 360
months, and Hampton was sentenced to 324 months on each count, to be served
concurrently. Both timely appealed. We vacate Hampton’s conviction and
sentence, finding that the trial court committed reversible error in declining to give
*
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.
the requested entrapment instruction. We affirm in all other respects.
BACKGROUND
A. Suppression Hearing.
Before the trial, Hampton moved to suppress crack cocaine found in his
vehicle during a traffic stop and to suppress other evidence that came to light as a
result of the automobile search.
The following is a condensed summary of the relevant evidence presented
at the suppression hearing, viewed in the light most favorable to the government.1
On August 22, 1996, Deputy Sheriff Jeffrey Head spotted a vehicle -- driven by
Hampton, who was accompanied by his girlfriend, Alicia Kelley -- exceeding the
posted speed limit. A check on the license plate mistakenly showed that the
registration had expired, and a check of the license revealed that Hampton had an
outstanding felony warrant for the delivery of a controlled substance. Head
arrested Hampton. After reading Hampton his Miranda2 rights, Head asked
Hampton whether his vehicle contained any illegal substance; after a fifteen-second
pause, Hampton replied in the negative. When Head turned back to the vehicle he
saw that Kelley was now sitting in the driver’s seat, with the engine running,
talking on her cellular phone. Because her license had expired, she had arranged
for Hampton’s aunt to retrieve the vehicle.
Suspicious of Kelley’s obvious concern with removing the vehicle from the
1
United States v. Inocenio, 40 F.3d 716 (5th Cir. 1994).
2
See Miranda v. Arizona, 384 U.S. 436 (1966).
2
scene, and alerted by Hampton’s delay in responding to his question, considered in
light of the outstanding warrant, Head called for the canine narcotics unit. Within
a few minutes the unit arrived and the canine alerted to the glove compartment and
a wrapped package in the front of the vehicle. Both were found to contain crack
cocaine.
The trial court ruled that the search was lawful, and the case proceeded to
trial.
B. Trial.
The government’s key witness was Ronnie Hopes, Hampton’s second cousin.
Hopes had been arrested on drug charges on August 7, 1996, and subsequently
agreed to cooperate with law enforcement officials.
At trial, Hopes testified that Hampton introduced him to drugs in 1995 and
continued to provide him with ½ to one ounce of crack cocaine once or twice per
month through 1996. According to Hopes, he began helping Hampton deliver
drugs to Baker in early 1996. Hopes would obtain crack cocaine from Hampton
and contact Baker; then, Hopes would transport the drugs to Austin, Texas, where
Baker lived or, alternatively, Baker would pick up the drugs in Brenham, Texas,
where Hopes lived.
In support of this account, the government presented tape recordings of
conversations made by Hopes after his arrest. In one such conversation, Hopes told
Baker that police officers found the “fourteen, that your girl, from your girl”; Baker
responded, “Oh, man.” In that same conversation, Hopes asked if Baker and
3
Hampton planned to do any “business,” and Baker vigorously replied, “No, no, no.”
Hopes explained to the jury that the phrase “fourteen, that your girl, from your girl”
was a reference to drugs intended for Baker’s girlfriend and that “business” meant
drug dealing.
The government introduced additional corroborating evidence including:
Hopes’ address book, which contained several phone numbers for Hampton and
Baker; Hampton’s address book, which contained Hopes’ and Baker’s phone
numbers and what appeared to be a drug ledger; and phone records establishing
uninterrupted phone contact among Hopes, Hampton, and Baker during the relevant
time periods.
Further, the government offered testimony by Ryan Johnson, an agent from
the Drug Enforcement Administration. According to Agent Johnson, Hampton
confessed to supplying Hopes with crack cocaine since 1995 and confirmed
Baker’s participation in the drug trade. Also, Agent Johnson testified that Hampton
acknowledged familiarity with Baker’s and Hopes’ phone numbers and conceded
that the ledgers accounted for drug transactions. Finally, the government
introduced evidence that drug-related paraphernalia with cocaine residue was found
at Hampton’s residence and that roughly 260 grams of crack cocaine belonging to
Hampton were found in Hopes’ residence.
Hampton took the stand in his defense. He admitted to prior involvement in
the drug trade, including a drug-related arrest in 1991; he acknowledged that even
after this arrest, in violation of his terms of probation, he continued to deal drugs.
4
But Hampton claimed to have given up dealing sometime in 1994 at the urging of
his family and insisted that he had turned his life around. According to Hampton,
it was only because of persistent pleading by Hopes, who allegedly told Hampton
that he desperately needed to raise money for his legal defense, that Hampton
agreed to sell the drugs found in his automobile. Otherwise, Hampton denied
supplying Hopes with drugs; denied that the drugs found in Hopes’ residence
belonged to him; denied other involvement in the drug trade after 1994; denied that
he made a contrary confession to Agent Johnson; and specifically denied
implicating Baker in the drug trade. The ostensible drug ledgers, Hampton
explained, were actually accounts of donations and gambling debts; the numerous
phone calls between himself and Baker, Hampton asserted, were made because of
their mutual interest in music.
ANALYSIS
Hampton challenges his conviction on a number of grounds. First, he
contends that all evidence discovered by virtue of the automobile search should
have been suppressed. Second, he claims that his sixth amendment right to trial by
a fair cross-section of the community was violated because blacks were under-
represented in the jury venire. Third, he maintains that the trial court erred by
refusing to submit an entrapment instruction to the jury. Finally, Hampton insists
that his sentence was imposed in violation of the equal protection clause because
he, as a trafficker of crack cocaine, was punished far more severely than a
similarly-situated trafficker of powder cocaine.
5
Baker adopts Hampton’s challenge to the venire. Additionally, Baker urges
that his conviction must be reversed because of the erroneous admission of Agent
Johnson’s testimony regarding Hampton’s out-of-court confession implicating
Baker. In addition, Baker asserts that his trial counsel’s failure to object to the
admission of this testimony constitutes ineffective assistance of counsel.
I. Motion To Suppress.
The trial court upheld the search on three grounds: (1) the police officers had
the probable cause necessary to satisfy the automobile exception to the warrant
requirement; (2) the search was lawful as a search incident to arrest; and (3) the
search was lawful as an inventory search.
The first ground provides an independent basis for affirmance, we therefore
confine our discussion to the arguments relating to that issue.3 Hampton does not
dispute the trial court’s holding that the initial stop and his subsequent arrest were
legal. Rather, he challenges the trial court’s conclusion that the police had
probable cause to search his vehicle. Relying on United States v. Beale,4 a case
from the Ninth Circuit, Hampton insists that the existence of probable cause must
be measured before, not after, a canine alerts to drugs. Applying this standard,
Hampton contends that Officer Head lacked any reasonable, articulable suspicion
to call in the canine unit.
3
We need not resolve whether the search would have been lawful as a search incident to
arrest or as an inventory search.
4
731 F.2d 590 (9th Cir. 1983).
6
The Ninth Circuit has overruled the case upon which Hampton relies,5 and,
regardless, our controlling precedents foreclose this argument. We repeatedly have
held that a dog sniff does not constitute a search within the meaning of the fourth
amendment and that police officers need not have reasonable suspicion before
calling in a canine unit.6 Of particular relevance herein, a “dog alert provide[s]
probable cause to search.”7 Therefore, even assuming that Officer Head lacked any
basis to search Hampton’s vehicle prior to calling in the canine unit, he had
probable cause to search after the canine alerted. Consequently, the trial court
properly denied Hampton’s motion to suppress.
II. Fair Cross-Section Requirement.
Hampton and Baker objected to the jury venire because only two of thirty-
two individuals called were black. They contend that exclusive reliance on the
voter registration roles for jurors results in underrepresentation of blacks. The trial
court overruled their objection.
The sixth amendment requires that “petit juries . . . be drawn from a source
fairly representative of the community.”8 To establish a violation of this
requirement, a defendant must show the following:
(1) that the group alleged to be excluded is a “distinctive” group in the
community; (2) that the representation of this group in venires from which
5
United States v. Beale, 736 F.2d 1289 (9th Cir. 1984) (en banc).
6
See United States v. Seals, 987 F.2d 1102 (5th Cir. 1993).
7
United States v. Williams, 69 F.3d 27, 28 (5th Cir. 1995).
8
Taylor v. Louisiana, 419 U.S. 522, 538 (1975).
7
juries are selected is not fair and reasonable in relation to the number of such
persons in the community; and (3) that this underrepresentation is due to
systematic exclusion of the group in the jury-selection process.9
While defendants satisfied the first prong of the test, they offered no
evidence relative to the latter prongs. On appeal they cite 1990 census figures.
This information was not furnished to the trial court and we do not consider it on
appeal.10 Were it otherwise, the evidence would relate only to the second prong;
it would have no bearing on the third which would remain unproven.
III. Entrapment.
We review de novo a trial court’s refusal to offer a theory of defense
requested by a defendant.11 “A defendant is entitled to an entrapment instruction
when there is sufficient evidence from which a reasonable jury could find
entrapment.”12 When sufficient evidence supports an entrapment instruction but
the trial court refuses to so charge the jury, the court commits reversible error. 13
Entrapment is an affirmative defense which requires the defendant to make
a prima facie showing with respect to two elements: (1) a lack of predisposition on
the part of the defendant to engage in the criminal conduct and (2) “some
governmental involvement and inducement more substantial than simply providing
9
Duren v. Missouri, 439 U.S. 357, 364 (1979).
10
See, e.g., United States v. Bounds, 943 F.2d 541 (5th Cir. 1991).
11
United States v. Bradfield, 113 F.3d 515 (5th Cir. 1997).
12
Id. at 520-21.
13
Id.
8
an opportunity or facilities to commit the crime.”14 Predisposition, the principal
element in the defense of entrapment, . . . focuses upon whether the defendant was
an “unwary innocent” or, instead, an “unwary criminal” who readily availed
himself of the opportunity to perpetrate the crime.15 “The critical determination is
whether the criminal intent or design originated with the defendant or with the
government agents.”16 If the defendant presents evidence that provides a basis for
reasonable doubt as to lack of predisposition and inducement, the trial court must
give an entrapment instruction and the government must prove, beyond a
reasonable doubt, that the defendant was not entrapped.
According to Hampton, his post-1994 involvement in drug trafficking
consisted solely of delivering one drug shipment for Hopes on August 22, 1996.
Hampton contends that Hopes, acting as an agent for the government, induced him
to violate the law by repeatedly begging him to deal drugs to raise money for
Hopes’ legal defense. He was not predisposed to drug trafficking, Hampton urges,
because, with the support of his family, he had renounced the drug business
sometime in 1994 and had not dealt drugs until August 1996, and then only under
pressure from Hopes’s emotional entreaties.
The government counters that there is no evidence suggesting that when
Hopes purportedly pleaded with Hampton to engage in a drug transaction he acted
14
Id. at 521.
15
Mathews v. United States, 485 U.S. 58, 63 (1988) (internal quotations and citations
omitted); United States v. Brace, 145 F.3d 247 (5th Cir. 1998) (en banc).
16
United States v. Pruneda-Gonzalez, 953 F.2d 190, 197 (5th Cir. 1992).
9
on behalf of the government. Even assuming that Hopes could be deemed an agent
for the United States, the government argues, Hampton failed to establish lack of
predisposition.
We reject the government’s conclusory two-sentence argument that Hampton
failed to introduce sufficient evidence that, in imploring Hampton to deal drugs,
Hopes acted for the government. Hopes testified that he contacted Hampton in
order to fulfill his promise to cooperate with the government and to serve as its
confidant. Further, he stated that the government came up with the plan that he
telephone Hampton, that he record the call, and that he attempt to persuade
Hampton to deal crack cocaine. Despite hatching this plan, the government failed
to delineate the permissible bounds of persuasion or to provide any guidance to
Hopes regarding the lengths to which he could go to secure Hampton’s agreement
to deal drugs. Based on this, we hold that Hampton introduced sufficient evidence
of government involvement.17
We also cannot accept the government’s argument that Hampton failed to
introduce sufficient evidence as to lack of predisposition. To be sure, the evidence
is far from compelling on this score. But, viewing the evidence in the light most
favorable to Hampton, a rational jury could conclude that, as a result of Hampton’s
confrontation with his family two years before the instant offense, Hampton had
17
See Sherman v. United States, 356 U.S. 369, 373-74 (1958) (“The [g]overnment
cannot disown [its informer] and insist that it is not responsible for his actions. Although he
was not being paid, [he] was an active government informer. . . . Undoubtedly the impetus
for [the informer’s actions] was the fact that . . . [he] himself
was under criminal charges for illegally selling narcotics and had not yet been sentenced.”).
10
renounced drug dealing and was committed to leading a law-abiding life. A
reasonable juror could find that only after Hopes’s persistent calls, entreaties for
money, and pleas for sympathy, Hampton succumbed (despite initial refusals) and
agreed to deal drugs.
Though the case is very close and Hampton’s evidence undeniably weak, we
believe Hampton’s testimony was sufficient under the unique circumstances of this
case to warrant an instruction on entrapment.
IV. Hampton’s Confession Implicating Baker.
Though he did not object at the trial level, Baker now contends that the trial
court committed reversible error by allowing Agent Johnson’s testimony recounting
Hampton’s out-of-court inculpatory statements about Baker. The challenged
testimony consists of the following colloquy between counsel for the government
and Agent Johnson:
Q: What did Mr. Hampton tell you about providing crack cocaine to Mr. Ronnie
Hopes?
A: He told me that he had been supplying Ronnie Hopes with . . . crack cocaine
on a monthly basis since August of 1995 to the . . . present day of his arrest.
Q: And what . . . was Mr. Hopes to do with this crack cocaine that he was
receiving?
A: He was to give the crack cocaine to an individual by the name of Randy
Baker in Austin, Texas.
Because Baker did not challenge this testimony before the trial court, our
review is “sharply circumscribed by the plain error standard requiring that
11
unobjected-to errors be ‘plain’ and ‘affect substantial rights.’” 18 Even if these
requirements are met, we may, in our discretion, “decline to correct errors which
do not ‘seriously affect the fairness, integrity, or public reputation of judicial
proceedings.’”19
We begin this discussion by emphasizing what is not at issue here: there is
no claim under Bruton v. United States.20 Bruton holds that a defendant’s sixth
amendment right to confrontation is violated when two defendants are tried jointly
and out-of-court statements made by one defendant who does not take the stand are
used against the other defendant. Here, any potential Bruton problem was cured
when Hampton took the stand and subjected himself to cross examination by
Baker’s attorney.21
Nor does Baker purport to rely on Bruton. Instead, Baker urges that
Hampton’s confession implicating him was inadmissible hearsay -- it was an out-
of-court statement made by Hampton offered for the truth of the matter asserted.22
Introduction of this inadmissible hearsay, Baker contends, was extremely
prejudicial to his case. The general prejudice one would expect to flow from
18
United States v. Calverley, 37 F.3d 160, 162 (5th Cir. 1994) (en banc) (quoting United
States v. Olano, 507 U.S. 725, 732 (1993)).
19
Id.
20
391 U.S. 123 (1968).
21
See Nelson v. O’Neil, 402 U.S. 622 (1971).
22
See Fed. R. Evid. 801, 802. Hampton’s out-of-court statements regarding Baker would
have been admissible solely to impeach him after he offered testimony inconsistent with
these statements. See, e.g., United States v. Steen, 55 F.3d 1022 (5th Cir. 1995).
12
admission of such testimony, Baker argues, was exacerbated by the government’s
emphasis on it during closing argument. Baker suggests that the government’s
invocation of the out-of-court statement was especially damaging because, apart
therefrom, there was minimal evidence corroborating Hopes’ testimony.
The government candidly acknowledges that Hampton’s out-of-court
statement about Baker was admitted in error, but disputes that its admission
requires reversal. The government urges that its prejudicial impact was negated
when Hampton took the stand and denied that he had inculpated Baker. In
addition, the government maintains that the error was harmless in light of the other
probative evidence of Baker’s guilt, specifically, Hopes’ testimony and the phone
records and taped conversations.
This matter was not objected to in the trial court and we must review for
plain error. The following factors are salient to this decision.
First, and foremost, Hopes’ testimony, coupled with the phone records and
taped conversations, supports Baker’s conviction. Though we agree with Baker
that the taped conversations are somewhat ambiguous, viewed in light of all of the
evidence presented at trial they bolster Hopes’ account. Similarly, the phone
records Baker disparages as uninformative cannot be viewed in a vacuum; they are
part of a bigger picture, and they confirm Hopes’ account. Even without Agent
Johnson’s testimony, the evidence against Baker was sufficient to support his
conviction.
Second, Hampton took the stand, subjected himself to cross examination, and
13
flatly denied making the incriminating statement about Baker. Meanwhile, Agent
Johnson’s reference to Hampton’s confession as it implicated Baker was made
briefly and without undue emphasis; it boiled down to one sentence that
specifically mentioned Baker. Though the government focused on this testimony
by Agent Johnson in its closing argument, Baker’s counsel had in his arsenal
Hampton’s direct denial. It cannot be reasonably suggested that this wholly
negated the impact of Agent Johnson’s testimony. But, at the very least,
Hampton’s specific denial diminished the prejudice Baker otherwise would have
suffered.
Under these circumstances, it cannot be said that the trial court’s error
“seriously affect[ed] the fairness, integrity, or public reputation of judicial
proceedings.”23 Thus, even though Hampton’s out-of-court statement should not
have been admitted as substantive evidence against Baker, its admission does not
provide a basis for overturning Baker’s conviction.
V. Ineffective Assistance.
Baker claims that trial counsel’s failure to object to Agent Johnson’s
testimony rises to ineffective assistance. “As a general rule, Sixth Amendment
claims of ineffective assistance of counsel cannot be litigated on direct appeal,
unless they were adequately raised in the district court.”24 “Only in ‘rare cases
where the record allow[s] us to evaluate fairly the merits of the claim’ will we
23
United States v. Atkins, 297 U.S. 157, 160 (1936).
24
United States v. Gibson, 55 F.3d 173, 179 (5th Cir. 1995).
14
resolve ineffective assistance issues on direct appeal.” 25
This case does not fall into this narrow category and we cannot and do not
address this issue today.
VI. Sentencing Disparities Between Crack Cocaine And Powder Cocaine.
We have held that no deprivation of equal protection arises from the
sentencing disparity for offenses involving crack cocaine, on the one hand, and
offenses involving powder cocaine, on the other.26 We are bound by this holding
and thus reject Hampton’s constitutional challenge to the sentencing guidelines.
For these reasons, the conviction and sentence of Eric Hampton is
VACATED and the case is REMANDED to the trial court for further proceedings
consistent with this opinion; the conviction and sentence of Randy Baker are
AFFIRMED.
25
United States v. Palmer, 122 F.3d 215, 221 (5th Cir. 1997).
26
See United States v. Wilson, 77 F.3d 105 (5th Cir. 1996).
15
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838 So.2d 74 (2003)
STATE of Louisiana
v.
Robert Paul DAY.
No. 02-1039.
Court of Appeal of Louisiana, Third Circuit.
February 5, 2003.
*75 Robert Richard Bryant, Jr., District Attorney, Lake Charles, LA, for Plaintiff/Appellee, State of Louisiana.
Paula Corley Marx, Louisiana Appellate Project, Lafayette, LA, for Defendant/Appellant, Robert Paul Day.
Court composed of SYLVIA R. COOKS, JIMMIE C. PETERS, and GLENN B. GREMILLION, Judges.
GREMILLION, Judge.
In this case, the defendant, Robert Paul Day, pled guilty to cultivation of marijuana in violation of La.R.S. 40:966(A)(1). He was sentenced to serve five years at hard labor without benefit of probation, parole, or suspension of sentence, with credit for time served. He now appeals claiming that the sentence imposed was cruel, unusual, and constitutionally excessive; the trial court erred in finding the amendments to La.Code Crim.P. art. 893 did not apply to this case; and the trial court failed to adequately articulate the factual basis and reasons which supported the sentence imposed. For the following reasons, we affirm.
FACTS
On or about May 19, 2000, detectives arrived at Defendant's house to investigate a tip from his wife, regarding his use and cultivation of marijuana. Upon the detectives' entry into his house, they detected the smell of burnt marijuana. Defendant admitted smoking a joint shortly before the detectives arrived. He was searched and three partially burnt marijuana cigarettes and a metal clip were found. Also found were a metal pan with green plant material, rolling papers, scissors, and four hand-rolled cigarettes. Defendant maintained that he was growing the marijuana plants so he would not have to purchase the drug. He was arrested for possession of marijuana, possession of drug paraphernalia, and cultivation of marijuana.
RETROACTIVE APPLICATION ARTICLE 893
Defendant argues Acts 2001, No. 403, § 6, amending La.Code Crim.P. art. 893 and effective June 15, 2001, affords him the benefit of probation, parole, or suspension of sentence since he was sentenced after the acts' effective date, even though the offense was committed prior *76 to its effective date. Since this issue affects the outcome of Defendant's other assignments of error, we shall review it first.
Defendant contends that the amendments to Article 893 apply to persons convicted after June 15, 2001, and thus, the trial court erred when it applied the law in effect at the time of the offense when sentencing him. The State asserts that the sentencing provisions of La.R.S. 40:966(A) and La.Code Crim.P. art. 893 in effect prior to the most recent amendments apply to Defendant, which precludes him from receiving benefits.
The Louisiana Supreme Court recently rendered three opinions on the same day that made important distinctions between the Legislature's enactment of 2001 Acts, No. 403, which amended Article 893, and Acts 2001, No. 1163, which concerns the DWI statute. First is State v. Michael J. Mayeux, 01-3195 (La.6/21/02), 820 So.2d 526. Defendant relies on this case as authority for his contention that the new amendment should be retroactively applied to his sentence.
In Mayeux, the supreme court stated that the enactment of Act 1163, which amended the sentencing provisions of La. R.S. 14:98, applied to defendants convicted after the effective date of the statute based on "1) the words `upon conviction'; 2) the legislative purpose of favoring treatment over incarceration; and 3) allowing home incarceration for those previously convicted." Id. at 530. The supreme court acknowledged the longstanding rule that the law in effect at the time of the offense determines the applicable penalty. However, the supreme court noted that the enactment of Act 1163, in relation to the DWI law, made changes to how the sentence was to be served, in addition to the Legislature stating its underlying policy considerations for the changes. The changes were not merely adjustments to the term of imprisonment. Therefore, the new amendment applied to cases where the conviction occurred after the effective date.
In State v. Sugasti, 01-3407 (La.6/21/02), 820 So.2d 518, the defendant was sentenced to five years imprisonment for possession of heroin and alprazolam, and six months in parish jail for possession of marijuana, with a fine, court costs, and commission fees. The crimes were committed in 1998, and he was sentenced after the amendment to La.R.S. 40:966(C) became effective on June 15, 2001. The supreme court stated:
Policy reasons mitigate against holding that the amendment to LSA-R.S. 40:966(C) applies to anyone sentenced after June 15, 2001, regardless of when the offense was committed. To do so would encourage defendants to continually delay prosecution in hope that the legislature would enact more lenient sentences. Additionally, it would be grossly unfair to two defendants who commit the same crime on the same day to be sentenced under different penalties should one defendant successfully delay punishment until after the benefits of a reduced penalty go into effect.
Id. at 522 (footnote omitted). Furthermore, the supreme court reasoned that, had the Legislature intended for the amendment to be retroactive, it would have expressly stated so in the act. Id. See also State v. Weaver, 01-0467 (La.1/15/02), 805 So.2d 166. The act amending La.R.S. 40:966(A) does not expressly state that the amendment is to be applied retroactively.
In Sugasti, the supreme court distinguished Act 403 from Act 1163 by writing:
We distinguish Act 403 from the provisions of 2001 La. Acts No. 1163, which amended the sentencing provisions of *77 LSA-R.S. 14:98(E) related to driving while intoxicated. The new provisions in Act 1163 retained the sentencing ranges provided for third and fourth offense driving while intoxicated violations, but radically changed the way the offender may or must serve the sentence imposed by the court. The statute encompassing the penalty provisions specifically states "upon conviction" the defendant shall be punished to a specific term. Additionally, the act did not include language specifying "prospective only" application. Act 1163 simply went into effect on August 15, 2001.
Id. at 521 (footnote omitted).
In State v. Wayne Mayeux, 01-3408 (La.6/21/02), 820 So.2d 524, the supreme court held that a defendant, charged with possession of heroin in June 2000, and convicted of the charge in September 2001, after the effective date of amended Article 893, would be sentenced under the law in effect at the time of the offense. The court ruled, "The fact that a statute is subsequently amended to lessen the possible penalty does not extinguish liability for the offense committed under the former statute." Id. at 525. This case supports the general rule stated in Sugasti, that the statute in effect at the time the offense was committed governs the sentence of the defendant, but the case only briefly mentioned the newly amended Article 893. However, the supreme court did defer to the assigned reasons contained in Sugasti, which adequately discussed Act 403 and its effect on the sentencing provisions of Article 893.
Defendant overlooks the clear reading of the act itself. Act 403, § 6 provides that "[t]he provision of this Act shall only have prospective effect." It is clear the Legislature intended the newly amended provision of Article 893 to apply to only those defendants whose crimes were committed after June 15, 2001; the fact that the new provision became effective before Defendant's conviction does not extinguish his liability for the offense committed under the prior statute. Therefore, the penalty provision under the prior law is applicable to this case. This assignment of error is without merit.
EXCESSIVE SENTENCE
Defendant alleges, in this assignment of error, that the sentence imposed was cruel, unusual, and constitutionally excessive. Article 1, § 20 of the Louisiana Constitution of 1974, prohibits "cruel, excessive, or unusual punishment." A sentence within the statutory limits may still be deemed excessive under the particular circumstances of the case. State v. Sepulvado, 367 So.2d 762 (La.1979). He also contends his sentence is constitutionally excessive in light of the fact that the marijuana he was growing was for his own personal use.
Defendant was convicted of cultivation of marijuana in violation of La.R.S. 40:966(A), which carries a term of imprisonment at hard labor for not less than five years nor more than thirty years, and a fine of not more than fifty thousand dollars. As we have noted, he was sentenced to the minimum allowed under the statute in effect at the time of the offense, which was five years at hard labor without benefit of probation, parole, or suspension of sentence.
At the hearing on the motion for reconsideration of sentence, Defendant argued that the marijuana plants were for his personal use and the small amount found on his premises did not warrant such an excessive sentence. In response to this contention, the trial court stated:
I struggled with it, I wish you could have gotten a plea less than what it was, but that's exactly what it is,
*78 Whether it was a small amount or baby plants or however you want to consider it. I think the legislature, you know, they chose five years, that may be high. I don't think it's cruel and unusual, okay. They put in a provision that it would be five years served without benefit of parole, probation, or suspension of sentence. I'm not going to declare the statute unconstitutional, so your motion for reconsideration is denied.
A sentence which falls within the statutory limits may, nevertheless, be excessive under the circumstances. Sepulvado, 367 So.2d 762; State v. Naquin, 527 So.2d 601 (La.App. 3 Cir.1988). To constitute an excessive sentence this court must find that the penalty is so grossly disproportionate to the severity of the crime as to shock our sense of justice, or that the sentence makes no measurable contribution to acceptable penal goals and, therefore, is nothing more than needless imposition of pain and suffering. State v. Brown, 94-1290 (La.1/17/95), 648 So.2d 872, State v. Campbell, 404 So.2d 1205 (La.1981); State v. Dubroc, 99-730 (La.App. 3 Cir. 12/15/99), 755 So.2d 297. The trial court is given wide discretion in imposing a sentence, and a sentence imposed within the statutory limits will not be deemed excessive in the absence of manifest abuse of discretion. State v. Howard, 414 So.2d 1210 (La.1982). The five year sentence is not so grossly disproportionate as to shock our sense of justice, particularly in light of Defendant's prior criminal record and the fact that it is the minimum sentence allowed under the law for the crime to which he has pled guilty. Defendant has failed to show his sentence is constitutionally excessive. Accordingly, this assignment of error is without merit.
COMPLIANCE WITH ARTICLE 894.1
In this assignment of error, Defendant claims that the trial court failed to adequately articulate reasons and the factual basis for the sentence, relying on La. Code Crim.P. art. 894.1. In State v. Hopkins, 96-1063, p. 4 (La.App. 3 Cir. 3/5/97), 692 So.2d 538, 541, we stated with respect to the issue of compliance with that article:
The trial judge is given wide discretion in imposing a sentence, and a sentence imposed within statutory limits will not be deemed excessive lacking a manifest abuse of discretion. State v. Howard, 414 So.2d 1210 (La.1982).
The Legislature has provided criteria to aid a sentencing court in determining whether a sentence of imprisonment should be imposed and whether suspension of a sentence or probation is warranted. La.Code Crim.P. art. 894.1; State v. Klause, 525 So.2d 1076 (La.App. 3 Cir.1988). Paragraph (c) of Article 894.1 requires the court to state for the record the considerations taken into account and the factual basis used when imposing a sentence. The trial court need not refer to every aggravating and mitigating circumstance in order to comply with the article. However, the record must affirmatively reflect that adequate consideration was given to the codal guidelines in particularizing the defendant's sentence. State v. Smith, 433 So.2d 688 (La.1983).
If there is an adequate factual basis for the sentence contained in the record, the trial court's failure to articulate every circumstance listed in Article 894.1 will not require a remand for resentencing. State v. Cottingin, 476 So.2d 1184 (La.App. 3 Cir.1985), appeal after remand, 496 So.2d 1379 (La.App. 3 Cir. 1986); State v. Morgan, 428 So.2d 1215 (La.App. 3 Cir.1983), writ denied, 433 So.2d 166 (La.1983).
See also State v. Iron, 00-1238 (La.App. 3 Cir. 2/14/01), 780 So.2d 1123, writ denied, 01-1232 (La.3/15/02), 811 So.2d 898.
*79 As stated in State v. Cottingin, 476 So.2d 1184, 1186 (La.App. 3 Cir.1985) (citation omitted):
There are two underlying purposes of the codal requirement that the sentencing court articulate the specific reasons based on particular facts and considerations for imposing a sentence. First, it ensures that the sentence is particularized to the defendant. In addition, it aids the reviewing court in the determination of whether the sentence imposed is excessive by providing an actual indication of whether the sentencing court adequately considered the statutory guidelines.
Furthermore, in State v. Campbell, 404 So.2d 1205, 1207 (La.1981), quoting State v. Bonanno, 384 So.2d 355, 358 (La.1980), the court stated,
To determine whether the penalty is so grossly disproportionate to the crime we must consider the punishment and the crime in light of the harm to society caused by its commission and determine whether the penalty is so disproportionate to the crime committed as to shock our sense of justice. State v. Beavers, 382 So.2d 943 (La.1980).
Defendant contends the marijuana plants were for his own personal use and not for sale or distribution. He also alleges that his cooperation with the police, coupled with letters from his wife and supervisor attesting to his character, should have been considered as mitigating factors in his sentencing.
The trial court noted it had reviewed all of the information pertaining to Defendant, namely the pre-sentence report and Defendant's supplemental report, which contained letters from his friends and family. The trial court also considered Defendant's work history and a prior felony offense in 1991. It was also noted that Defendant cooperated with the police, was gainfully employed, paying his child support, and had a relatively small amount of marijuana for his personal use.
We find that the trial court complied with the sentencing guidelines under Article 894.1. The trial court imposed the minimum term of imprisonment under La. R.S. 40:966, and noted Defendant's prior felony conviction as the basis for the sentence. In this instance, we hold that the mandatory minimum sentence of five years is not excessive. This assignment of error is also found to be without merit.
ERRORS PATENT
In accordance with La.Code Crim.P. art. 920, all appeals are reviewed for errors patent on the face of the record. After reviewing the record, we note there is one error patent. The trial court informed Defendant of the two-year period for filing post-conviction relief at the time of the guilty plea, rather than at the time of sentencing as required by La.Code Crim.P. art. 930.8. In State v. Green, 94-617 (La.App. 3 Cir. 12/7/94), 647 So.2d 536, we found such notice to be sufficient. However, out of an abundance of caution, we asked the trial court to inform the defendant of the prescriptive period for filing post-conviction relief by sending appropriate written notice within ten days of the rendition of our opinion and to file written proof that the defendant received notice in the record of these proceedings. Accordingly, the trial court is asked to do the same in this case.
CONCLUSION
Defendant's sentence is affirmed. Additionally, the trial court is requested to inform him of the prescriptive period for filing post-conviction relief by sending appropriate written notice within ten days of the rendition of this opinion and to file *80 written proof that he received notice in the record of these proceedings.
AFFIRMED.
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276 F.3d 439 (8th Cir. 2002)
UNITED STATES OF AMERICA, APPELLEE,v.ARTHUR LEE BURNS, JR., APPELLANT.
No. 01-1986
UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT
Submitted: September 14, 2001January 10, 2002
Appeal from the United States District Court for the Western District of Missouri.[Copyrighted Material Omitted]
Stephen C. Moss, argued, Kansas City, MO, for appellant.
David Barnes, argued, Kansas City, MO (Phillip E. Porter, Aaron Hargis, on the broef), for appellee.
Before Bowman, Morris Sheppard Arnold, and Bye, Circuit Judges.
Morris Sheppard Arnold, Circuit Judge.
1
A jury convicted Arthur Lee Burns of conspiring to commit credit card fraud, see 18 U.S.C. § 1029(a)(2), (b)(2), and (c). He appeals, contending that the district court1 erred in admitting certain evidence at trial and in calculating the loss attributable to the offense for sentencing purposes. We affirm.
I.
2
Mr. Burns maintains that his due process rights were violated when the district court admitted testimony that he failed to respond to a question during his post-arrest interrogation and that he eventually declined to answer further questions. Mr. Burns relies on Doyle v. Ohio, 426 U.S. 610, 611, 619 (1976), in which the Supreme Court held that the government's reliance on a defendant's post-arrest silence to cross-examine him at trial violated his right to due process. In Doyle, 426 U.S. at 618, the Court reasoned that the Miranda warnings, see Miranda v. Arizona, 384 U.S. 436, 444-45 (1966), given to the defendant carried an implicit assurance that the government would not penalize him by using his post-arrest silence against him.
3
Here, however, Mr. Burns specifically waived his Miranda rights, including his right to remain silent, and he responded to post-arrest questioning regarding a scheme to obtain checks fraudulently through Western Union by the unauthorized use of credit card information. At trial, a United States Secret Service agent testified that during the questioning that occurred after he waived his rights Mr. Burns admitted that he had cashed checks, but that when asked whether he had recruited others to cash checks he did not respond and "just looked" at those questioning him. According to the agent, after failing to answer that question, Mr. Burns responded to additional inquiries, and when Mr. Burns eventually indicated that he did not want to answer any more questions, the interrogation stopped. On appeal, Mr. Burns notes that the written Miranda waiver that he signed stated that he had "been told that" he could "stop talking at any time."
4
We do not believe that the admission of Mr. Burns's silence in response to one question posed to him in the midst of his interrogation was a violation of the Supreme Court's holding in Doyle. Initially, we observe that a defendant's equivocal conduct generally is not sufficient to invoke his or her fifth amendment right to remain silent. See Simmons v. Bowersox, 235 F.3d 1124, 1131 (8th Cir. 2001), cert. denied, 122 S. Ct. 280 (2001), and we do not believe that Mr. Burns invoked this constitutional right when he was silent in response to a question. In addition, we have held that where the accused initially waives his or her right to remain silent and agrees to questioning, but "subsequently refuses to answer further questions, the prosecution may note the refusal because it now constitutes part of an otherwise admissible conversation between the police and the accused." United States v. Harris, 956 F.2d 177, 181 (8th Cir. 1992), cert. denied, 506 U.S. 827 (1992); see also United States v. Collins, 652 F.2d 735, 739 (8th Cir. 1981), cert. denied, 455 U.S. 906 (1982). Similarly, we believe that Mr. Burns's silent response to one inquiry during the interrogation and eventual refusal to respond to further questioning were "part of an otherwise admissible conversation" and that the admission of the conversation in its entirety did not violate his due process rights.
5
Even if it was error to admit the testimony regarding Mr. Burns's silence, moreover, we believe that the error was harmless beyond a reasonable doubt. See Fields v. Leapley, 30 F.3d 986, 991 (8th Cir. 1994) (standard of review). Although the district court did not attempt to cure the alleged error, the government neither used Mr. Burns's silence when it cross-examined him at trial nor referred to it during closing argument. Instead the government emphasized to the jury that the account of the events that Mr. Burns actually offered when he was first questioned differed markedly from his trial testimony. Furthermore, we believe that the defendant's exculpatory evidence was " 'transparently frivolous,' " and that the documentary and testimonial evidence supporting the jury's verdict was overwhelming. See Fields, 30 F.3d at 991 (quoting Chapman v. United States, 547 F.2d 1240 (5th Cir. 1977), cert. denied, 431 U.S. 908 (1977)).
II.
6
Mr. Burns also contends that his Sixth Amendment right to confront the witnesses against him was violated when the district court, over his objection, admitted testimony regarding the statements of Diane Evans, an alleged co-conspirator, who failed to appear at trial in response to a subpoena. At trial, a witness who was not involved in the crime testified that she gave Ms. Evans a ride and noticed at the time that she was carrying several bags, including a duffel bag filled with papers from a rental car company and from Western Union. The witness further testified over the defendant's objection that when she asked Ms. Evans what she was doing with these papers, Ms. Evans responded that Mr. Burns and another co-conspirator, Samuel Brooks, "would be in a lot of trouble" if the police found out about the contents of the bags. The witness also stated that Ms. Evans told her that "they were getting money out of an account and then Western Unioning it back to where the people wouldn't actually know it and asking somebody to go sign for the Western Union."
7
The government contends, among other things, that the statements were admissible under Fed. R. Evid. 801(d)(2)(E). Under this rule an out-of-court statement from a co-conspirator that incriminates the defendant is "not hearsay if... [it] is offered against a party and is... a statement by a coconspirator of a party during the course and in furtherance of the conspiracy." See Fed. R. Evid. 801(d)(2)(E); see also United States v. Whitehead, 238 F.3d 949, 951 (8th Cir. 2001). We find it unnecessary to resolve this matter because we conclude that any error in admitting the hearsay evidence was "harmless beyond a reasonable doubt," Chapman v. California, 386 U.S. 18, 24 (1967), because, as we have already said, the government submitted overwhelming evidence of Mr. Burns's guilt, including numerous documents and the testimony of his co-conspirator, Mr. Brooks. See United States v. Wright, 932 F.2d 868, 880 (10th Cir. 1991) (standard of review), cert. denied, 502 U.S. 962 and 502 U.S. 972 (1991); see also Delaware v. Van Arsdall, 475 U.S. 673, 681-84 (1986) (applying harmless error analysis to violation of confrontation clause).
III.
8
We address, finally, Mr. Burns's argument that the district court erred in sentencing him. According to Mr. Burns, the court should not have included in its loss calculation the losses resulting from fraudulent credit card transactions that involved Leon Timmons and John Tate and those individuals whom they recruited. Mr. Burns asserts that Mr. Timmons and Mr. Tate were involved in different conspiracies with Mr. Brooks from the one of which he was a member, or, in the alternative, that even if they were involved in the same conspiracy, he did not "jointly undertake[] criminal activities" with them as that phrase is used in U.S.S.G. § 1B1.3(a)(1)(B). Mr. Burns also contends that, contrary to the finding of the presentence investigation report, he did not introduce Mr. Timmons and Mr. Tate to Mr. Brooks.
9
Under the United States Sentencing Guidelines, the offense level in fraud cases may be increased depending upon the loss attributed to the offense committed. See U.S.S.G. § 2F1.1(b) (1995) (deleted by consolidation with U.S.S.G. §2B1.1, Nov. 1, 2001). The government has the burden of proof on the amount of the loss. See United States v. Berndt, 86 F.3d 803, 811 (8th Cir. 1996). To determine what conduct should be considered when calculating the relevant loss, a sentencing court looks to U.S.S.G. § 1B1.3, which deals with relevant conduct. See e.g., United States. v. Stover, 93 F.3d 1379, 1388 (8th Cir. 1996).
10
Where, as here, the sentencing judge also presided over the trial, the judge may rely on evidence submitted at trial to support the sentence imposed. See United States v. Jimenez-Villasenor, 270 F.3d 554, 562-63 (8th Cir. 2001). The district court at sentencing found that Mr. Burns's situation was "a classic example of 'In for a penny, in for a pound,'" and stated that Mr. Burns was "involved in this thing throughout," and the fact that he did not benefit from some of the transactions did not "diminish his participation." We conclude that there was sufficient evidence from which the district court could have found that Mr. Burns was a part of the same conspiracy that involved Mr. Tate and Mr. Timmons and their recruits, that he actually assisted in bringing about the contested criminal activities, and that he was therefore directly accountable at sentencing for the transactions because he "aided [or] abetted" them, see § 1B1.3(a)(1)(A).
11
The government offered evidence at trial that when Mr. Brooks arrived in Kansas City he was knowledgeable about credit card fraud, and that he shared this knowledge with Mr. Burns in return for living at Mr. Burns's residence. Mr. Brooks testified that Mr. Burns obtained completed forms from a car-rental company for use in a scheme; the forms included the renters' credit card numbers and other identifying information. Mr. Brooks and Mr. Burns worked closely together. For example, they used the car-rental information to purchase merchandise and to obtain checks through Western Union written to Mr. Burns. Mr. Burns and Mr. Brooks also recruited others to cash checks obtained in the same way through Western Union. According to uncontested findings in the PSR and the government's evidence at trial, Mr. Timmons and Mr. Tate and others whom they recruited became involved in the scheme after Mr. Burns, and they used information from the forms to obtain funds through Western Union transfers. There was also evidence that Mr. Brooks told Mr. Burns to give Mr. Timmons some of the information for his use.
12
We believe that there was sufficient evidence from which the district court could conclude that there was but one conspiracy. "A single conspiracy may exist even if the participants and their activities change over time, and even if many participants are unaware of, or uninvolved in, some of the transactions." United States v. Roach, 164 F.3d 403, 412 (8th Cir.1998), cert. denied, 528 U.S. 845 (1999). All conspirators need not even know each other. See United States v. Rosnow, 977 F.2d 399, 405 (8th Cir. 1992) (per curiam), cert. denied, 507 U.S. 990 (1993). For a single conspiracy to exist, " 'it is sufficient that... the co-conspirators were aware of the general nature and scope of the conspiracy and knowingly joined in the overall scheme.' " United States v. Pullman, 187 F.3d 816, 821 (8th Cir. 1999) (quoting United States v. Zimmerman, 832 F.2d 454, 457 (8th Cir.1987) (per curiam)). We believe that the district court could have found on the evidence before it that Mr. Burns, Mr. Timmons, and Mr. Tate were sufficiently aware through Mr. Brooks of the general nature and scope of the conspiracy, and that Mr. Burns was aware of the manner in which the information from the rental car applications was being used.
13
Under the sentencing guidelines, a defendant is accountable for the offense conduct that he "aided [or] abetted." U.S.S.G. § 1B1.3(a)(1)(A). We believe that the evidence was sufficient to allow the district court to find that Mr. Burns by providing the rental applications to Mr. Brooks to be used in the fraudulent scheme knowingly aided and abetted in the challenged transactions. Because we conclude based on § 1B1.3(a)(1)(A) of the sentencing guidelines that there was evidence from which the district court could have found that the direct conduct of Mr. Burns himself justified the sentence he received, we need not address his contention that the losses resulting from the conduct of others was wrongly attributed to him because that conduct was not "in furtherance of... jointly undertaken criminal activity" under § 1B1.3(a)(1)(B).
IV.
14
Accordingly, we affirm the judgment of the district court.
NOTE:
1
The Honorable Fernando J. Gaitan, Jr., United States District Judge for the Western District of Missouri.
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367 F.2d 768
UNITED STATES of America, Plaintiff-Appellee,v.S. E. BOWMAN et al., Defendants-Appellants.UNITED STATES of America, Plaintiff-Appellee,v.Edward SEEBER and Louise Seeber, Defendants-Appellants.
Nos. 15370-15373, 15658.
United States Court of Appeals Seventh Circuit.
Oct. 19, 1966.
John S. Grimes, Indianapolis, Ind., Leroy Baker, William H. Andrews, Bloomington, Ind., for defendants-appellant.
A. Donald Mileur, Dept. of Justice, Washington, D.C., Joseph W. Annakin, Indianapolis, Ind., Edwin L. Weisl, Jr., Asst. Atty. Gen., Richard P. Stein, U.S. Atty., Indianapolis, Ind., Roger P. Marquis, Atty., Dept. of Justice, Washington, D.C., for appellee.
Before KNOCH, KILEY and CUMMINGS, Circuit Judges.
KNOCH, Circuit Judge.
1
These cases arose out of condemnation proceedings instituted by the United States for the construction of the Monroe Reservoir on Salt Creek, Monroe County, Indiana. The reservoir was authorized by Congress, Act of July 3, 1958, P.L. 85-500, 72 Stat. 297, 313, to be constructed in accordance with the recommendations of the Chief of Engineers in House Document numbered 192, 85th Congress, First Session, 1957, Cong. Doc. Ser. No. 12039.
2
All of the defendant landowners filed answers in which they alleged that those parts of their respective tracts located above the 560 foot contour line, accepted by all parties as convering the 5-year flood-frequency line, were being taken without authority, not for the use of the United States for a flood control project and uses incidental thereto as alleged, but solely to be leased, assigned, deeded or transferred to the State of Indiana to be used not for any purpose for which that state could institute eminent domain proceedings under the laws of that state, but to grant franchises for profit to individuals to maintain docks, boats and similar equipment for sailing, boating, swimming and fishing purposes in connection with the body of water to be formed.
3
The defendants denied their land above the 560 foot contour line was being taken for a public use or that it was necessary for or even included in the original schedule for the Monroe Reservoir Project as shown by the United States Army Engineers-Corps of Engineers map attached to their answer, being subsequently requested by the State of Indiana for recreational purposes, and that the taking was arbitrary, capricious, and beyond the discretion of the Secretary of the Army.
4
The District Court sustained the motion of the United States to strike that portion of the answers summarized above. The motion asserted that the necessity, nature and extent of a taking of land for a public purpose was a legislative matter not reviewable by the courts.
5
Judgment was entered after stipulation of all matters in issue, including the amount of compensation, subject to the right to prosecute these appeals on the right to the government to take the land.
6
The defendants contend that an issue of fact was raised: Whether the proposed taking was for a public purpose; and tha they were entitled to a trial of this issue at which evidence would be adduced to show that taking of land beyond the 560 foot contour line without specific Congressional authority was arbitrary and capricious and thus made in bad faith for other than a public purpose, and, in addition, was arbitrary, capricious and not for a public purpose because the land was to be turned over to the State of Indiana for purposes not authorized by Congress; all as alleged in those portions of their respective answers which had been stricken by the District Court.
7
The government argues that its motion to strike admitted all well pleaded facts, eliminating any need to adduce evidence and leaving a purely legal decision for the District Court.
8
Although the District Judge wrote no opinion at the time of his disposition of these motions to strike, he later wrote a comprehensive opinion covering the same questions in connection with another one of the several similar suits. U.S.C. v. 798.61 Acres of Land etc., No. IP 64-C-166 dated December 10, 1964.
9
By Act of April 24, 1888, 25 Stat. 94, 33 U.S.C. 591, Congress authorized the Secretary of the Army to condemn land to maintain, operate, or prosecute works for improvement of rivers and harbors for which provision has been made by law.
10
By act of December 22, 1944, 58 Stat. 889, as amended, 16 U.S.C. 460d, Congress authorized the Chief of Engineers to construct, maintain, and operate public park and recreation facilities at water resource development projects under control of the Department of the Army, to permit construction of such facilities by local interests and to maintain ready access to and from areas along the shores for general public use.
11
This Court has declined to read into the powers granted by the 1888 Act any limitations not indicated by Congress. United States v. Meyer, 7 Cir., 1940, 113 F.2d 387, 391-392, cert. den. 311 U.S. 706, 61 S.Ct. 174, 85 L.Ed. 459.
12
The River and Harbor Act of 1958, 72 Stat. 297, 313, authorized construction of the Monroe Dam and Reservoir in accordance with the recommendations of the Chief of Engineers in House Document No. 192, supra. The Chief of Engineers recommended construction generally in accordance with the plan of the district engineer with such modifications as the Chief of Engineers in his discretion deemed advisable.
13
Other sections of House Document No. 192 show that the Corps of Engineers contemplated use of the Monroe Reservoir for recreational, fish and wildlife purposes provided other federal or state agencies would pay the additional expense involved.
14
Department of the Interior-- Department of the Army Joint Policy, 27 Fed. Reg. 1734, announced a policy of the U.S. Government to acquire land for realizations of outdoor recreation potentials as a part of reservoir projects.
15
Congress usually confers authority to condemn land by general statutes and authorizes projects and appropriation of money therefor in genral terms. United States v. Advertising Checking Bureau, 7 Cir., 1953, 204 F.2e 770, 771-772; United States ex rel. T.V.A. v. Welch, 1946, 327 U.S. 546, 554, 66 S.Ct. 715, 90 L.Ed. 843. When changes of plans and conditions made after commencement of the project require taking of addtional property new Congressional authorization need not be secured for each subsequent taking. United States v. Certain Land in Borough of Manhattan, 2 Cir., 1964, 332 F.2d 679, 336 F.2d 1021 (3rd case) afg. S.D.N.Y., 233 F.Supp. 899; United States v. 172.80 acres of land, etc., 3 Cir., 1965, 350 F.2d 957.
16
In addition to the land which will be flooded, such land as in the discretion of the condemning authorities may be necessary or desirable to protect the reservoir or permit incidental public use may be taken. United States v. 91.69 acres of land etc., 4 Cir., 1964, 334 F.2d 229, 231, and cases there cited. Taking of more land than necessary for the basic purpose had been held not to be a defense to taking. Wilson v. United States, 10 Cir., 1965, 350 F.2d 901, 907. It is not necessary that land taken to promote a public purpose remain in United States ownership. Berman v. Parker, 1954,348 U.S. 26, 33-34, 75 S.Ct. 98, 99 L.Ed. 27. The taking of more land than needed or the possibility that the property may be used for another purpose in the future has been held not to be a taking in 'bad faith.' Wilson v. United States, 10 Cir., 1965, 350 F.2d 901, 907, and cases there cited.
17
The District Court may properly strike a defense where it is insufficient on the facts alleged in the answer. Kosuga v. Kelly, 7 Cir., 1958, 257 F.2d 48 (2d case) afd. 358 U.S. 516, 79 S.Ct. 429, 3 L.Ed.2d 475; Arrow Petroleum Co. v. Johnston, 7 Cir., 1947, 162 F.2d 269, cert. den. 332 U.S. 817, 68 S.Ct. 158, 92 L.Ed. 394.
18
We have considered all other points and authorities advanced by the various defendants but we remain convinced that the judgment of the District Court should be affirmed.
19
Affirmed.
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67 Wn.2d 973 (1966)
410 P.2d 904
GENERAL INSURANCE COMPANY OF AMERICA, Appellant,
v.
STODDARD WENDLE FORD MOTORS, Respondent.[*]
No. 37909.
The Supreme Court of Washington, Department One.
February 10, 1966.
Morrison & Huppin, by D.N. Morrison and Robert Ewing, for appellant.
Quackenbush, Dean, Beschel & Smith, by Jack R. Dean, for respondent.
HILL, J.
Superficially,[1] this would seem to be a subrogation case with the issue whether the insurance company, as subrogee, had waived its right to recover. The trial court held that there had been such a waiver and dismissed the action.
Stoddard Wendle Ford Motors, a corporation (hereinafter called Stoddard-Wendle), sold a truck to W.H. Findley (hereinafter called Findley) for use in his logging operations in Idaho. To meet the purchaser's requirements of a 212-inch wheel base, the truck, which had a wheel base of 191 inches, was lengthened by cutting the body and welding in an additional section.
The vendor's interest in the conditional sales contract covering the truck (dated May 3, 1960) was assigned to Pacific Finance Corporation (hereinafter called Pacific) and, later, reassigned to Stoddard-Wendle. The insurance required by the contract was procured by Findley from the General Insurance Company of America (hereinafter called General) and named Pacific as the loss-payee. Findley never made any payment on the truck, other than the down payment, and his equity was never sufficient to entitle him to any part of the loss subsequently paid by General.
On August 1, 1960, while the truck carrying a tractor belonging to Findley was going up a grade, the weld separated *975 and the truck, together with the tractor it was carrying, went over an embankment with resultant heavy damage. We assume, for the purposes of this opinion, that, as alleged by General, the welding by Stoddard-Wendle was "negligently and ineffectually" done, otherwise General has no cause of action.
The truck was repossessed by Stoddard-Wendle by virtue of a repossession action which it started against Findley in Idaho in early June, 1961. By stipulation of the parties on June 15, 1961, the possession of the truck, then in the possession of the Sheriff of Nez Perce County, Idaho, was surrendered to Stoddard-Wendle. The stipulation provided that "Such truck shall be and remain the property of the plaintiff to do with as it sees fit." It was brought to Spokane and repaired at a cost of $7,124.
This amount, less the $250 deductible, i.e., $6,874, was paid by General October 20, 1961. The check was made payable to Pacific (the designated loss payee in the policy) and to Inland Truck & Diesel, which had made the repairs. The latter received the entire amount. Stoddard-Wendle, which then owned and had possession of the truck, paid the $250 deductible.
Stoddard-Wendle, in its repossession action against Findley, had also claimed damages; and Findley had, in his amended answer, made a claim for some $18,000 against Stoddard-Wendle for damages caused by the defective weld which had caused the truck to go off the road and down the embankment. The damages he claimed were to his tractor, which was being carried by the truck at the time of the accident, and for loss of use of the truck and tractor. (No damages were claimed for damage to the truck General having paid for the necessary repairs, except the $250 deductible which Stoddard-Wendle had paid.) The stipulation, which restored ownership and possession of the truck to Stoddard-Wendle, provided that the taking of possession by Stoddard-Wendle "shall not be construed as a waiver by either the plaintiff or the defendants of any right to damages accrued or accruing in this cause."
*976 The Idaho action was finally compromised June 29, 1962, by Stoddard-Wendle paying Findley $3,500. The action by Stoddard-Wendle, and Findley's action by cross-complaint for damages were both dismissed. Each party released all claims against the other for any damages arising out of the transaction between them.
The present action by General, as subrogee of Findley or Pacific, was commenced August 9, 1962, against Stoddard-Wendle as a third-party tort-feasor, to recover the $6,874 paid for repairs to the truck which had been damaged by reason of its defective weld.
The defense was that General had waived its right to claim subrogation by failing to intervene in the Idaho action, which had been commenced by Stoddard-Wendle but in which Findley, by cross-complaint, asked for damages caused by the defective weld. This action was terminated by a settlement in which Findley gave Stoddard-Wendle a release of all claims arising from any negligence.
It was established that General had notice of the Idaho action; and the trial court, in the present action, held that General had waived its right to sue Stoddard-Wendle when it failed to intervene in the Idaho action, even though Findley was not in that action asking for damages to the truck. The trial court found that General, by its failure to intervene in the Idaho action, had waived its right to subrogation and dismissed the action. General appeals.
[1] The right of an insurer, which has paid a loss under its policy, to be subrogated to the rights of the insured (or the loss payee) against a wrongdoer responsible for the loss, is clear. However, subrogation is an equitable right and will be enforced or not according to the dictates of equity and good conscience. It arises independently of contract provision. Powers v. Calvert Fire Ins. Co., 216 S.C. 309, 57 S.E.2d 638, 16 A.L.R.2d 1261 (1950).
There is a substantial body of law developing which indicates that a settlement by a tort-feasor and the insured, with an accompanying release made with the knowledge of the tort-feasor that the insurer has paid that portion of the loss for which it was liable, does not defeat the insurer's *977 claim to subrogation against the tort-feasor. See cases collected under § 5 (a), beginning at page 124 of 92 A.L.R.2d (part of an Annotation on "Rights and remedies of property insurer as against third-person tortfeasor who has settled with insured" p. 97).
We are agreed that the trial court properly dismissed the action by General. However, we have serious doubts whether such a compromise settlement between Findley and Stoddard-Wendle, if the latter were a third-party tort-feasor, could enable it to avoid liability to General for the damage. Certainly Stoddard-Wendle knew that General had paid $6,874 for repairs on the truck.
Nor are we convinced that General lost or waived any rights by failing to intervene in the Idaho action between Findley and Stoddard-Wendle. That action was terminated by a settlement and a stipulated judgment. The Supreme Court of Michigan in Wolverine Ins. Co. v. Klomparens, 273 Mich. 493, 497, 263 N.W. 724 (1935), points out, under similar circumstances, that
The doctrine [splitting of causes of action] can have no application to settlements. There is no good reason why parties may not settle any part of a controversy upon which they may reach agreement and leave the controverted part for litigation.... By the settlement, made with full knowledge, defendants acquiesced in the splitting of the causes of action.
See, to the same effect, Omaha & Republican Valley Ry. v. Granite State Fire Ins. Co., 53 Neb. 514, 73 N.W. 950 (1898).
These, however, are issues on which we prefer to pass when they are raised between the insurer and a third-party tort-feasor. We do not believe Stoddard-Wendle is a third-party tort-feasor.
[2] It seems clear to us, under the record here made, that the insurance in this case was at all times maintained for the benefit of Stoddard-Wendle. It was Stoddard-Wendle's contract with Findley which required Findley to procure the insurance. It was Stoddard-Wendle that received *978 the benefit of the insurance (payment for the repairs to the truck then in its possession).
While Pacific was named as loss-payee, it is clear that Pacific was no more than the agent for Stoddard-Wendle. Stoddard-Wendle unconditionally guaranteed that Pacific would sustain no loss by reason of any conditional sales contract assigned it by Stoddard-Wendle. It was Stoddard-Wendle that repossessed the 1960 Ford truck, after the accident, and had it brought to Spokane for repairs. It was Stoddard-Wendle that paid the $250 deductible to complete the payment on the repair bill on the truck. It was in Stoddard-Wendle's action to repossess the truck[2] that Findley, in his amended answer, asked for damages because of the defective welding of the truck by Stoddard-Wendle.
Within a few days after that action was started, the parties stipulated that the 1960 Ford truck, which was then in the possession of the Sheriff of Nez Perce County, Idaho, might be delivered to Stoddard-Wendle to be its property "to do with as it sees fit," and reserved for determination at the trial all claims for damages made therein by either party. The repairs were made thereafter and the insurer paid therefor (for the benefit of Stoddard-Wendle).
We are satisfied that Pacific was, under the circumstances, no more than the agent of Stoddard-Wendle and that the loss-payable clause in the insurance policy was for the actual benefit of Stoddard-Wendle.
General, itself, recognized this, as shown by exhibit No. 24, a notice cancelling the insurance policy (dated April 10, 1961) which was sent by General to Stoddard-Wendle, in *979 which Findley and Stoddard-Wendle were both listed as named insureds and Pacific as mortgagee or loss payee.
[3] Conceding that the negligence of Stoddard-Wendle caused the accident which occasioned the loss, the insurance was for its benefit, and it cannot be liable to the insurance company as a third-party tort-feasor. Stoddard-Wendle was never a "third party," but always a party beneficially interested in the insurance.
Cases in which an insurance company attempts to recover, as a subrogee, against a party for whose benefit the insurance was written and whose negligence has occasioned the loss, are concededly rare, but there are some (mostly in the field of builder's risk insurance). The courts have consistently held, in the builder's risk cases, that the insurance company having paid a loss to one insured cannot, as subrogee, recover from another of the parties for whose benefit the insurance was written even though his negligence may have occasioned the loss, there being no design or fraud on his part. Allegheny College v. Crump, Inc., 21 Pa. D. & C.2d 207 (1959); Glens Falls Ins. Co. v. Globe Indem. Co., 214 La. 467, 38 So.2d 139 (1948); Louisiana Fire Ins. Co. v. Royal Indem. Co. 38 So.2d 807 (La. App. 1949). See Annotation: "Builder's risk insurance policies," § 21, Subrogation, 94 A.L.R.2d 221, 264-65.
In the last cited case, the court says, speaking of the Glens Falls Ins. Co. case, supra:
The Supreme Court considered the rule too well established to require citation of authorities that an insurance company, which has paid a claim and taken a subrogation, has no right of action against a co-insured of the subrogor, even though the fire loss may have been caused by the negligence of the co-insured, and provided, of course, as is true in the case before us, that there is no design or fraud on the part of defendant. (Louisiana Fire Ins. Co. v. Royal Indem. Co., supra., p. 810)
"Co-insured," as therein used does not apply only to named insureds, but to all for whose benefit the insurance was written.
*980 The judgment of dismissal appealed from is approved.
FINLEY, OTT, and HAMILTON, JJ., and LANGENBACH, J. Pro Tem., concur.
April 14, 1966. Petition for rehearing denied.
NOTES
[*] Reported in 410 P.2d 904.
[1] We say "superficially" because we ultimately conclude that the situation is not what it seems to be. We arrive at the same end result (i.e., the dismissal of the action), but for a different reason.
[2] If there was an earlier repossession proceeding in February, 1961, the parties ignore it. The only reference to it comes from exhibit No. 10, an affidavit of February 13, 1961, by Marie Jacobson, in which she says that she is the "Repossession Clerk of the Pacific Finance Corporation," and that "we are the lawful owner" of the 1960 Ford truck here in question, and certifies "that we have lawfully repossessed" that truck "on the 7th day of February, 1961 from W.H. Findley."
Asked concerning this exhibit, Keith Cochran of Pacific Finance Corporation testified that the statement therein that Pacific was the lawful owner was not true, and said: "We are the agent for Stoddard-Wendle in this particular case."
| {
"pile_set_name": "FreeLaw"
} |
515 F.3d 1168 (2008)
Willie McNAIR, Plaintiff-Counter-Defendant,
James Callahan, Plaintiff-Counter-Defendant-Appellee,
v.
Richard ALLEN, Commissioner, Alabama Department of Corrections, individually and in his official capacity, Grantt Culliver, Warden, Holman Correctional Facility, in his individual and official capacity, Defendants-Counter-Claimants-Appellants.
No. 08-10100.
United States Court of Appeals, Eleventh Circuit.
January 29, 2008.
*1169 *1170 J. Clayton Crenshaw, Montgomery, AL, for Culliver.
Stephanie Lynn Cohen, Heather K. McDevitt, Vincent R. Fitzpatrick, Jr., White & Case, LLP, New York CIty, for Callahan.
Before TJOFLAT, BLACK and WILSON, Circuit Judges.
BLACK, Circuit Judge:
James Callahan is an Alabama death row inmate scheduled for execution on January 31, 2008. On October 11, 2006, Callahan filed an action under 42 U.S.C. § 1983, contending the method of execution chosen by the State of Alabama constitutes cruel and unusual punishment in violation of the Eighth Amendment. Finding Callahan's case had a significant possibility of succeeding on its merits, the district court entered a stay of execution on December 14, 2007, in order to permit Callahan to fully litigate his constitutional challenge. On appeal, Appellants contend the court abused its discretion by entering the stay.
We do not reach the relative merits of Callahan's constitutional claim because we conclude the claim, is barred by the statute of limitations. Callahan's limitations period began to run on July 31, 2002, when he selected lethal injection as the method by which he would be put to death, and expired two years later, on July 31, 2004. In light of the fact Callahan's complaint was filed more than two years beyond the limitations period, the district court abused its discretion by entering a stay of execution. We now vacate that decision.
I. BACKGROUND
The full details of Callahan's crime are set forth in Callahan v. Campbell, 427 F.3d 897, 903-10 (11th Cir.2005). In short, on February 3, 1982, Callahan abducted 26-year-old Rebecca Suzanne Howell from *1171 a laundromat in Jacksonville, Alabama. He murdered her, then dumped her body in a creek, where it was discovered two weeks later.[1]
On June 26, 1982, Callahan was convicted of a capital offense, and shortly thereafter was sentenced to death. The Alabama Supreme Court reversed Callahan's conviction and sentence after finding incriminating statements had been admitted improperly, and the case was remanded for a new trial. Ex parte Callahan, 471 So.2d 463 (Ala.1985). At the second trial, the jury again found Callahan guilty, and a sentence of death was re-imposed. Both the Alabama Court of Criminal Appeals and the Alabama Supreme Court affirmed Callahan's conviction and sentence. Callahan v. State, 557 So.2d 1292 (Ala.Crim. App.1989); aff'd, Ex parte Callahan, 557 So.2d 1311 (Ala.1989).
Callahan's conviction and sentence became final on October 1, 1990, when the United States Supreme Court denied his petition for certiorari. See Callahan v. Alabama, 498 U.S. 881, 111 S.Ct. 216, 112 L.Ed.2d 176 (1990). Callahan then filed a state postconviction motion. The trial denied the motion, and the court of appeals affirmed the denial. Callahan v. State, 767 So.2d 380 (Ala.Crim.App.1999). On March 31, 2000, the Alabama Supreme Court denied certiorari. Ex parte Callahan, 767 So.2d 405 (Ala.2000).
On March 29, 2001, Callahan petitioned for a writ of habeas corpus in the United States District Court for the Northern District of Alabama. Twice the district court granted relief, and twice this court reversed. See Callahan v. Haley, 313 F.Supp.2d 1252 (N.D.Ala.2004), vacated and remanded sub. nom. Callahan v. Campbell 396 F.3d 1287 (11th Cir.2005); Callahan v. Campbell 427 F.3d 897 (11th Cir.2005). On October 10, 2006, the Supreme Court denied Callahan's petition for a writ of certiorari on his habeas claims. Callahan v. Allen, ___ U.S. ___, 127 S.Ct. 427, 166 L.Ed.2d 269 (2006).
At the time Callahan was sentenced, Alabama executed inmates by electrocution. On July 1, 2002, Alabama adopted lethal injection as its preferred form of execution and gave inmates already on death row 30 days in which to select electrocution as the method by which they would die. Callahan did not opt out of the new protocol, and therefore became subject to death by lethal injection on July 31, 2002.
On October 11, 2006, one day after the Supreme Court denied Callahan's request for certiorari on the denial of his federal habeas petition, Callahan filed a complaint under 42 U.S.C. § 1983, alleging Alabama's lethal injection protocol violates his Eighth Amendment right to be free from cruel and unusual punishment. Appellants moved for summary judgment, contending the claim was barred by the statute of limitations and Callahan had failed to adduce evidence from which a rational trier of fact could conclude Alabama's method of execution violates his constitutional rights. In addition, Appellants urged the court to find the lawsuit equitably barred because of Callahan's delay in filing it. After denying Appellants' motion for summary judgment in its entirety, the district court set trial for October 3, 2007.
On September 25, 2007, eight days before the trial was slated to begin, Alabama announced it would be reviewing its execution protocol. That same date, the United States Supreme Court granted certiorari *1172 in Baze v. Rees, ___ U.S. ___, 128 S.Ct. 34, 168 L.Ed.2d 809 (Sept. 25, 2007), a case brought by a death row inmate raising a challenge to Kentucky's nearly identical lethal injection protocol.[2]
In the midst of these events, the district court determined it was prudent to continue the case, despite the parties' readiness for trial. On October 26, 2007, the State filed its revised lethal injection protocol, which differed only minimally from prior procedures. Five days later, on October 31, 2007, the Alabama Supreme Court set Callahan's execution date for January 31, 2008.[3]
Callahan moved for a stay of execution, arguing his claim was timely brought and had a significant possibility of success. The district court agreed, and granted the stay. Appellants now ask this court to find the entry of a stay was an abuse of discretion.
II. ANALYSIS
When a capital defendant seeks to challenge on constitutional grounds the method by which he will be executed, courts must balance the competing interests of the defendant and the State. A defendant's interest in being free from cruel and unusual punishment is primary; however, the State's interest in effectuating its judgment remains significant. Nelson v. Campbell, 541 U.S. 637, 644, 124 S.Ct. 2117, 2123, 158 L.Ed.2d 924 (2004) ("State retains a significant interest in meting out a sentence of death in a timely fashion"). The Supreme Court has repeatedly admonished courts regarding their obligation to guard against litigation brought solely for the purpose of delay. Hill v. McDonough, 547 U.S. 573, 126 S.Ct. 2096, 2103, 165 L.Ed.2d 44 (2006) (noting "courts should not tolerate abusive litigation tactics" in constitutional tort cases challenging methods of execution). Courts have given special attention to the timeliness of method of execution challenges brought under 42 U.S.C. § 1983.
Courts assessing the timeliness of a § 1983 method of execution challenge may do so in either of two ways. The first is to ask whether the action has been timely brought under the applicable statute of limitations. The second involves an equitable inquiry that arises when a prisoner requests a stay of execution in order to fully litigate his constitutional claim. In the latter circumstance, courts ask whether the litigant "unreasonably delayed" before filing his claim and should therefore be barred from raising his challenge on the eve of execution.
While acknowledging the existence of a statute of limitations for § 1983 claims, our prior cases addressing method of execution challenges have focused exclusively on the second inquiry, employing an equitable analysis to determine whether a capital litigant's challenge has been brought too late to warrant a stay of execution. See, e.g., Schwab v. Sec., Dep't of Corr., 507 F.3d 1297, 1301 (11th Cir.2007). We have yet to determine how the relevant statute of limitations applies to inmates who wish to bring a § 1983 challenge to the method of their execution, because the question has not been placed squarely before us.
In Jones v. Allen, 485 F.3d 635 (11th Cir.2007), we affirmed on equitable grounds the district court's denial of a stay *1173 of execution in a case closely analogous to this one.[4] Although we took note of the district court's finding that the claim was not barred by the statute of limitations, we did not review that decision because the Government had not cross-appealed. Id. at 638 n. 1. We have dealt similarly with other cases, all of which involved appeals by a defendant, rather than by the Government. See, e.g., Williams v. Allen, 496 F.3d 1210, 1215 n. 2 (11th Cir.2007) ("Because we affirm on equitable grounds the district, court's judgment dismissing Williams's challenge to the State's method of execution, we need not address the State's alternative argument that Williams's suit is barred by the statute of limitations."); Grayson v. Allen, 491 F.3d 1318, 1326 n. 5 (11th "Cir.2007).
There is a close connection in this case between the district court's decision to impose a stay and its finding that Callahan's claim was timely filed. In granting. Callahan's request for a stay, the district court properly engaged in a traditional equitable analysis, considering, among other things, whether Callahan had shown "a significant possibility of success on the merits" of his § 1983 claim. See Hill, 126 S.Ct. at 2104. The district court concluded Callahan made the required showing.
We review the district court's grant of preliminary injunctive relief for abuse of discretion. See Grayson, 491 F.3d at 1319 (applying abuse of discretion standard to review denial of stay in § 1983 action). It would be "a paradigmatic abuse of discretion for a court to base its judgment on an erroneous view of the. law," Schlup v. Delo, 513 U.S. 298, 333, 115 S.Ct. 851, 870, 130 L.Ed.2d 808 (1995) (O'Connor, J., concurring), and the district court's decision would be erroneous if we were to find the claim barred by the statute of limitations, as Appellants contend it was.
All constitutional claims brought under § 1983 are tort actions, subject to the statute of limitations governing personal injury actions in the state where the § 1983 action has been brought. Wilson v. Garcia, 471 U.S. 261, 275-76, 105 S.Ct. 1938, 1946-47, 85 L.Ed.2d 254 (1985). Callahan's claim was brought in Alabama, where the governing limitations period is two years. Ala.Code § 6-2-38; Jones v. Preuit & Mauldin, 876 F.2d 1480, 1483 (11th. Cir.1989) (en banc). Therefore, in order to have his claim heard, Callahan was required to bring it within two years from the date the limitations period began to run.
It has long been the law of this Circuit that in § 1983 actions "the statute of limitations does not begin to run until the facts which would support a cause of action are apparent or should be apparent to a person with a reasonably prudent regard for his rights." Mullinax v. McElhenney, 817 F.2d 711, 716 (11th Cir.1987) (internal quotations omitted). What does that mean as applied to a capital litigant seeking injunctive relief for an injury that has not yet occurred, but can be reasonably anticipated? The question is one of first impression in this Circuit.
There are at least four potentially viable dates on which Callahan's claim could accrue: (1) October 1, 1990, the date *1174 his death sentence became final; (2) July 31, 2002, the date on which it became clear Callahan would die by Alabama's lethal injection protocol (rather than by any other method); (3) October 10, 2006, the date the denial of his federal habeas petition became final; and (4) the day of his execution, when the ultimate injury will occur. It is well established that a federal claim accrues when the prospective plaintiff "knows or has reason to know of the injury which is the basis of the action." Corn v. City of Lauderdale Lakes, 904 F.2d 585, 588 (11th Cir.1990). Applying that principle to the facts of this case, we reject execution and the completion of federal habeas review as the points from which to measure the limitations period in a method of execution challenge. We hold a method of execution claim accrues on the later of the date on which state review is complete, or the date on which the capital litigant becomes subject to a new or substantially changed execution protocol. For the reasons set forth below, we conclude Callahan's claim accrued on July 31, 2002, when he selected lethal injection as the method by which he would be executed.
A Date of Execution
The district court held Callahan's claim could not accrue until the moment of execution because the statute of limitations could not "attach to an act that has yet to occur and a tort that is not yet complete." Dist. Ct. Order dated, Nov. 16, 2007, dkt. # 146, at 9-10. See also Grayson v. Allen, 499 F.Supp.2d 1228, 1235 (M.D.Ala.2007); Jones v. Allen, 483 F.Supp.2d 1142, 1153 (M.D.Ala.2007). Although we agree with the general principle recited by the district court, we disagree with its application to cases such as this one, where the ultimate injury is reasonably likely and wholly foreseeable.
In a recent challenge to the lawfulness of detention brought under § 1983, the Supreme Court explained accrual under the statute of limitations "occurs when the plaintiff has a complete and present cause of action, that is, when the plaintiff can file suit and obtain relief." Wallace v. Kato, ___ U.S. ___, 127 S.Ct. 1091, 1095, 166 L.Ed.2d 973 (2007) (internal quotations omitted). It is clear a capital litigant may file suit and obtain injunctive relief long before he is executed. Therefore, it is difficult to reconcile Wallace with the district court's holding that the limitations period would not begin to run until after the litigant has died (at which time the claim would be simultaneously mooted). Cf. Cooey v. Strickland, 479 F.3d 412, 418 (6th Cir.2007) (noting problems with selecting date of execution as date of accrual in method of execution claims).
Moreover, to hold the limitations period does not begin to run until the moment of death would be inconsistent with the manner in which we have treated other § 1983 claims seeking prospective relief, such as those involving challenges to parole eligibility. For example, in Lovett v. Ray, 327 F.3d 1181 (11th Cir.2003), we dismissed as time barred a prisoner's complaint that a 1998 change in parole procedure would render him ineligible for parole consideration in 2006. We held the litigant "knew, or should have known, all of the facts necessary to pursue a cause of action" in 1998, but nonetheless waited beyond the two year limitation period before filing his claim. Id. at 1182. Despite the fact the plaintiff was seeking prospective relief against a future injury, we held the claim was untimely. Id. at 1183. See also Brown v. Georgia Bd. of Pardons & Paroles, 335 F.3d 1259, 1261 (11th Cir.2003) (reiterating statute of limitations begins to run from date facts which would support cause of action should be apparent to person *1175 with reasonably prudent regard for his rights).
For these reasons, we conclude death is not the moment from which to measure the accrual of the limitations period for method-of-execution claims brought under § 1983, and we turn to the second option, the date on which federal habeas review ends.
B. Completion of Federal Habeas Review
Callahan filed this lawsuit one day after the Supreme Court denied his petition for review of the denial of his federal habeas petition. Were we to conclude the denial of certiorari is the moment from which to measure the limitations period, Callahan's complaint would be timely. We do not, however, adopt the completion of habeas review as the moment of accrual because doing so would prolong unnecessarily the time during which a litigant should reasonably anticipate the need to file suit and would fail to show proper respect for principles of federalism.
Respect for the equality and independence of state courts is a cornerstone of our judicial system. Under wellestablished principles of federalism, federal courts operate within
a system in which there is sensitivity to the legitimate interests of both State and National Governments, and in which the National Government, anxious though it may be to vindicate and protect federal rights and federal interests, always endeavors to do so in ways that will not unduly interfere with the legitimate activities of the States.
Younger v. Harris, 401 U.S. 37, 44, 91 S.Ct. 746, 750-51, 27 L.Ed.2d 669 (1971). These principles apply with special force in matters of criminal law. McCleskey v. Zant, 499 U.S. 467, 491, 111 S.Ct. 1454, 1469, 113 L.Ed.2d 517 (1991) ("Our federal system recognizes the independent power of a State to articulate societal norms through criminal law; but the power of a State to pass laws means little if the State cannot enforce them."). Federal review of state court judgments, while an important check on possible constitutional abuses, should be carried out in a timely fashion to prevent unnecessary interference with a state's authority.
In considering when a method-of-execution claim accrues under § 1983, we are especially mindful of the Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA), which Congress passed "to reduce delays in the execution of state and federal criminal sentences, particularly in capital cases, . . . and to further the principles of comity, finality, and federalism" by curtailing the ability of federal habeas courts to review state court judgments. Woodford v. Garceau, 538 U.S. 202, 206, 123 S.Ct. 1398, 1401, 155 L.Ed.2d 363 (2003) (internal quotations omitted). Although method-of-execution challenges brought under § 1983 are not governed by AEDPA, they do "fall at the margins of habeas," Nelson, 541 U.S. at 646, 124 S.Ct. at 2124; Gooey, 479 F.3d at 421, and therefore implicate many of the same comity concerns AEDPA was designed to address. These concerns counsel away from setting the moment of accrual at the end of federal habeas review, since doing so would provide capital defendants with a means of delaying execution even after their sentences have been found lawful by both state and federal courts.
As an example, consider the State of Alabama. It is well known in this Circuit that "it is common practice for the State to ask the Alabama Supreme Court to set an execution date for a death-row inmate shortly after the United States Supreme Court has denied certiorari review of the petitioner's federal habeas petition," *1176 Williams, 496 F.3d at 1213, which as "a matter of common sense . . . eliminates the last possible obstacle to execution," Jones, 485 F.3d at 639-40 n. 2.[5] Were we to hold a § 1983 method-of-execution challenge accrues on the date federal habeas review ends, we would effectively provide capital defendants with a veto power over the state's ability to effectuate its judgment at the close of federal habeas review. Cf. Thompson v. Wainwright, 714 F.2d 1495, 1506 (11th Cir.1983) ("Each delay, for its span, is a commutation of a death sentence to one of imprisonment.").
Furthermore, in pinpointing the moment a § 1983 claim accrues, we remain mindful of our own equity jurisprudence. Although the Supreme Court has sanctioned the filing of § 1983 claims challenging the constitutionality of execution methods, the Court has emphasized that the availability of § 1983 litigation does not diminish the interest of states and crime victims "in the timely enforcement of a sentence," and does not "deprive federal courts of the means to protect" that interest. Hill, 126 S.Ct. at 2104 ( "CF]ederal courts can and should protect States from dilatory or speculative suits."). To protect this interest, courts apply a strong equitable presumption against a stay of execution "where a claim could have been brought at such a time as to allow consideration of the merits without requiring entry of a stay." Nelson, 541 U.S. at 650, 124 S.Ct. at 2126; Schwab, 507 F.3d at 1301.
Following that reasoning, we have suggested a capital litigant bringing a § 1983 claim in Alabama can foresee his complaint will be untimely if 110 waits to file it until the completion of federal collateral review. Jones, 485 F.3d at 639-40 n. 2 ("Waiting to file suit until the Supreme Court has denied certiorari review of an inmate's federal habeas petition . . . is simply too late to avoid the inevitable need for a stay of execution."). If we were to hold the limitations period begins to run when federal habeas review ends, claims which have just accrued under the Alabama statute of limitations would always be untimely as a matter of equity. Such a rule would be indefensible, and we decline to adopt it.
C. Date. Death Sentence Became Final
The next possible accrual date is the day on which a litigant's death sentence becomes final following direct appeal. Ordinarily, this is the date on which a capital defendant's § 1983 challenge to the method of his execution will accrue because it is the date by which the relevant facts (i.e., the manner and certainty of execution under state law) should be apparent to a person with a reasonably prudent regard for his rights. See Mullinax, 817 F.2d at 716. Accord Cooey, 479 F.3d at 421-22 (finding completion of direct review appropriate moment from which to measure accrual); Neville v. Johnson, 440 F.3d 221, 222 (5th Cir.2006) ("A challenge to a method of execution may be filed any time after the plaintiffs conviction has become final on direct review.").
There are several reasons why the completion of state review will ordinarily trigger the statute of limitations for a challenge to the method of execution. First, by requiring a defendant to wait to bring a claim after direct review is complete (as opposed, say, to when the sentence is first imposed), we ensure claims are not brought prematurely, before state courts have had an adequate opportunity to correct any infirmities in the defendant's conviction or sentence. Second, by requiring *1177 a claim to be brought within two years of the completion of state review, we guarantee defendants' constitutional challenges to the method of their execution can be fully adjudicated and at the same time protect states from unnecessary interference in carrying out their judgments. Finally, selecting the completion of direct appeal as the moment a § 1983 claim accrues has the added benefit of mirroring the time at which a defendant's habeas limitations period begins to run, see 28 U.S.C. § 2244(d)(1)(A), thereby simplifying the postconviction labyrinth of filing deadlines through which capital litigants must navigate.
Callahan's conviction became final in 1990, sixteen years before this case was filed. Nevertheless, the statute of limitations was not triggered by the completion of state review in this case because, at that time, Alabama had not yet adopted lethal injection as a form of execution. Until it became clear that lethal injection was the method by which he would die, Callahan lacked a "complete and present cause of action," Wallace, 127 S.Ct. at 1095, and his claim did not accrue. We turn, therefore, to the final proposed triggering date: July 31, 2002, the day Callahan selected lethal injection as the means by which he will die.
D. Date the Execution Protocol Became Applicable to Callahan
As we recognized in Jones, the Alabama Legislature changed the State's preferred method of execution from electrocution to lethal injection in July 2002. 485 F.3d at 637. Current death row inmates, including Jones and Callahan, were given 30 days in which to choose electrocution as the means by which they would prefer to die. Id. Any inmates who had not selected electrocution by that time would be subject to death by lethal injection. Id. (citing Ala.Code § 15-18-82.1 (2006 Cumulative Supp.)). By failing to choose electrocution by July 31, 2002, Callahan chose to die by lethal injection.
Although Jones was decided on equitable grounds, we noted Jones' lethal injection challenge ripened in July 2002, when it became clear he would be executed by lethal injection:
We see no convincing reason why, after Alabama made lethal injection its primary method of execution, Jones could not have brought his method-of-execution challenge sooner than he did. Jones knew of the State's intention to execute him at least by July 2002. "It was during that periodin which the execution was not so much an imminent or impending danger as it was an event reasonably likely to occur in the futurethat Jones needed to file this challenge."
Id. at 640 (quoting Harris v. Johnson, 376 F.3d 414, 418 (5th Cir.2004)). There is no doubt Callahan, too, was free to challenge the method of his execution beginning July 31, 2002, by which time the facts which would support a cause of action should have been apparent to any person with a reasonably prudent regard for his rights.[6]Mullinax, 817 F.2d at 716. The statute of limitations began to run at that time; therefore, absent a significant change in the state's execution protocol (which did not occur in this case), Callahan was required to file his Eighth Amendment challenge by July 31, 2004more than two years before his complaint was filed.
Unguided by a statement of this Circuit's position on the relevant statute of *1178 limitations, it is understandable why the court (and the parties) placed more emphasis on the merits of Callahan's Eighth Amendment challenge and the equities of the stay than on the threshold question of whether the complaint was barred by the statute of limitations. Nevertheless, in light of our holding today, we conclude the district court abused its discretion by determining Callahan had a significant possibility of success on the merits of his claim when, in fact, the complaint was filed beyond the applicable two-year statute of limitations. Consequently, the district court's order staying the execution is VACATED.
WILSON, Circuit Judge, dissenting:
I would affirm the entry of the stay based on the rationale articulated by Judge Gilman in his dissent in Cooey v. Strickland, 479 F.3d 412 (6th Cir.2007). In my view, a method-of-execution challenge brought under § 1983 does not accrue until the prisoner knows or has reason to know the facts giving rise to his claim and the prisoner's execution becomes imminent. See id. at 426 (Gilman, J., dissenting). For accrual purposes, the execution becomes imminent when the prisoner has exhausted all of his state and federal challenges to the validity of the sentence. See id. I find this approach preferable to that adopted by the majority, which effectively requires a death-sentenced prisoner to file a method-of-execution claim years before his execution is to take place, during which time the challenged protocol could be materially changed. Accordingly, I respectfully dissent.
As the majority correctly notes, it is well established that a federal claim accrues when the prospective plaintiff "knows or has reason to know of the injury which is the basis of the action." Corn v. City of Lauderdale Lakes, 904 F.2d 585, 588 (11th Cir.1990). The majority holds that the facts supporting Callahan's § 1983 action were or should have been apparent to him on July 31, 2002, when the 30-day period within which he could choose electrocution as his means of execution expired. I believe that this conclusion misconstrues the nature of the injury that Callahan seeks to enjoin. Callahan's § 1983 action is not based on the fact of his death sentence, or even on the fact that he is to be executed by lethal injection. Rather, Callahan is asserting that the specific lethal injection protocol presently employed by Alabama is likely to cause him undue pain and suffering when his execution is carried out. This claim could have begun to accrue only (1) when Callahan knew or had reason to know the details of Alabama's lethal injection protocol and (2) when his execution became imminent.
Contrary to the majority's conclusion, neither of these circumstances existed in July of 2002. Although Alabama adopted lethal injection as its sole method of execution at that time, its specific protocol is neither fixed by law nor readily accessible. The protocol is a creature of regulation, not statute, and thus it is subject to change at any time by the Alabama Department of Corrections. As is the case in other states, Inlo statutory framework determines when or how such changes may occur. Nor is there a framework governing when, or even if, such changes will be publicized." Cooey v. Strickland, 479 F.3d 412, 427 (6th Cir.2007) (Gilman, J., dissenting). Indeed, it appears that Alabama has revised the protocol on a number of previous occasions, and there is reason to believe that its efforts to promulgate these changes have been inadequate. See Jones v. Allen, 483 F.Supp.2d 1142, 1146 n. 2 (M.D.Ala.2007) (noting that Alabama defendants "admitted that earlier revisions to the protocol were made . . . but that after diligent search they [were] unable to locate *1179 the version of the protocol that existed before such changes were made"). Adding to this uncertainty, the State of Alabama keeps the specifics of its lethal injection protocol a secret. Siebert v. Allen, 2007 WL 3047086, at *1 (M.D.Ala. Oct.17, 2007). I thus cannot accept the majority's conclusion that Callahan's cause of action began to accrue five years before his execution date was set, during which time Alabama could, and in fact did, amend its lethal injection protocol.[1]
A better approach would be to fix the date of accrual when Callahan knew or had reason to know the details of the protocol to be used in his execution and when his habeas challenge to his sentence was exhausted. Placing the accrual date after the completion of habeas proceedings would have "provide[d] clarity and certainty to both the death-sentenced inmate and the State that the sentence [was] final and not susceptible to attack, that the execution date [was] set, and that the protocol for [the] execution [was] likely fixed." Gooey, 479 F.3d at 429 (Gilman, J., dissenting). Moreover, in future cases, this approach would avoid the problematic outcomes that the majority's decision will produce: that death-sentenced prisoners will be required to pursue method-of-execution challenges several years prior to their executions and during the same time they are challenging their convictions and sentences on habeas.[2]
Finally, the majority expresses the concern that placing the accrual date after the completion of habeas proceedings would enable prisoners to "veto" the state's ability to effectuate its judgments by unreasonably delaying their § 1983 actions. However, the Supreme Court has recognized that prisoners seeking stays of execution must establish a significant likelihood of success on the merits, including overcoming a presumption against entry of a stay where the claim could have been brought earlier. Nelson v. Campbell 541 U.S. 637, 650, 124. S.Ct. 2117, 158 L.Ed.2d 924 (2004). In my view, therefore, the majority's concern in this regard is unpersuasive.
For these reasons., I respectfully dissent.
NOTES
[1] Although Callahan was not charged with rape, forensic evidence suggested Howell was sexually assaulted prior to her death.
[2] Two days later, Alabama Governor Bob Riley granted a 45-day reprieve to another condemned prisoner, Thomas Arthur, to allow the Alabama Department of Corrections to review its lethal injection protocol.
[3] On the same day, the Alabama Supreme Court also set a new execution date for Thomas Arthur. See supra, n. 1.
[4] Under nearly identical circumstances, Jones raised a claim identical to the one Callahan brings here. We found Jones had unreasonably delayed in bringing his § 1983 challenge even though he filed it while his petition for a writ of certiorari on the denial of his habeas petition was still pending in the United States Supreme Court. Jones, 485 F.3d at 638. By contrast, Callahan filed his § 1983 challenge a day after his petition for certiorari was denied.
[5] It is not clear why Alabama abandoned its standard procedure in this case, waiting until well after Callahan's federal habeas review was finished before asking the Alabama Supreme Court to set the date of his execution. It may have been mere fortuity.
[6] The dissent notes Alabama's execution protocol is subject to change. Although that is true, neither party suggests the lethal injection protocol has undergone any material change between 2002 and the present.
[1] Alabama most recently revised its lethal injection protocol on October 26, 2007.
[2] It is noteworthy that in Jones v. Allen, 483 F.Supp.2d 1142 (M.D.Ala.2007), the court recognized that according to general tort principles, `the statute [of limitations] does not usually begin to run until the tort is complete,'" and a "`tort is ordinarily not complete until there has been an invasion of a legally protected interest of the plaintiff.'" Id. at 1148 (alterations in original) (quoting Rest.2d Torts § 899 cmt. c). As such, where a defendant challenges the constitutionality of an event that has not yet occurred, i.e., the method of execution, the statute of limitations inquiry is not applicable; rather, only equitable considerations (such as those associated with comity, finality, federalism, and laches) are relevant. Id. at 1149-51.
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112 F.3d 1173
Hallv.Atlanta Public School Syst.*
NO. 96-8837
United States Court of Appeals,Eleventh Circuit.
Apr 11, 1997
Appeal From: N.D.Ga. ,No.95033071CVODE
1
Affirmed.
*
Fed.R.App.P. 34(a); 11th Cir.R. 34-3
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 09-5139
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
DIANGELLO DARNELLE STRONG,
Defendant - Appellant.
Appeal from the United States District Court for the Middle
District of North Carolina, at Greensboro. William L. Osteen,
Jr., District Judge. (1:09-cr-00095-WO-1)
Submitted: July 14, 2011 Decided: August 11, 2011
Before NIEMEYER, DAVIS, and KEENAN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
James E. Quander, Jr., QUANDER & RUBAIN, P.A., Winston-Salem,
North Carolina, for Appellant. Terry Michael Meinecke,
Assistant United States Attorney, Greensboro, North Carolina,
for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Diangello Darnelle Strong pleaded guilty, pursuant to
a plea agreement, to one count of possession of ammunition by a
convicted felon in violation of 18 U.S.C. §§ 922(g)(1), 924(e)
(2006). The district court sentenced Strong to 188 months in
prison followed by five years of supervised release, and imposed
a $100 special assessment. We affirm.
On appeal, Strong’s counsel filed a brief pursuant to
Anders v. California, 386 U.S. 738 (1967), in which he states
that he could find no meritorious issues for appeal. Counsel
seeks our review of the reasonableness of Strong’s sentence.
Strong filed a pro se supplemental brief raising several
additional grounds for appeal. Strong also moved for
appointment of additional appellate counsel.
We review Strong’s sentence for reasonableness under a
deferential abuse of discretion standard. Gall v. United
States, 552 U.S. 38, 51 (2007). The first step in this review
requires us to inspect for procedural reasonableness by ensuring
that the district court committed no significant procedural
errors, such as failing to calculate or improperly calculating
the Guidelines range, failing to consider the 18 U.S.C.
§ 3553(a) (2006) factors, or failing to adequately explain the
sentence. United States v. Boulware, 604 F.3d 832, 837-38 (4th
Cir. 2010). We then consider the substantive reasonableness of
2
the sentence imposed, taking into account the totality of the
circumstances. Gall, 552 U.S. at 51.
Strong’s sentence fell within the Sentencing
Guidelines advisory range. We presume a sentence within a
properly-calculated Guidelines range is reasonable. United
States v. Allen, 491 F.3d 178, 193 (4th Cir. 2007). Our review
of the record reveals nothing indicative of an abuse of
discretion by the district court in imposing Strong’s sentence.
We have assessed the further grounds for appeal set
forth by Strong in his pro se brief and find them wholly lacking
in merit. We lend only abbreviated comment to each. Strong has
no cognizable speedy trial claim because he pleaded guilty
within seventy days of his initial court appearance. Strong has
no cognizable double jeopardy claim because the use of criminal
activity that is not part of the current conviction to determine
the appropriate punishment for the current conviction is not
punishment that implicates double jeopardy. United States v.
McHan, 101 F.3d 1027, 1039 (4th Cir. 1996). Strong has no
meritorious disparate sentencing claim because his sentence was
only eight months longer than the fifteen-year statutory
mandatory minimum sentence. Strong has no cognizable cruel and
unusual punishment claim because proportionality review under
the cruel and unusual punishment clause is not available for any
sentence less than life imprisonment without the possibility of
3
parole. United States v. Malloy, 568 F.3d 166, 180 (4th Cir.
2009), cert. denied, 130 S. Ct. 1736 (2010).
In accordance with Anders, we have reviewed the record
in this case and have found no meritorious issues for appeal.
We therefore affirm Strong’s conviction and sentence. We deny
Strong’s motion for appointment of additional appellate counsel.
This court requires that counsel inform Strong, in
writing, of the right to petition the Supreme Court of the
United States for further review. If Strong 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 Strong.
We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials
before the court and argument would not aid the decisional
process.
AFFIRMED
4
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264 Cal.App.2d 711 (1968)
THE PEOPLE, Plaintiff and Respondent,
v.
BOBBY RAY BRITTON, Defendant and Appellant.
Crim. No. 479.
California Court of Appeals. Fifth Dist.
Aug. 5, 1968.
Albert C. Buehler, under appointment by the Court of Appeal, for Defendant and Appellant.
Thomas C. Lynch, Attorney General, Daniel J. Kremer and Arnold O. Overoye, Deputy Attorneys General, for Plaintiff and Respondent.
STONE, J.
Defendant appeals from a conviction of possession of marijuana upon the sole ground the package of marijuana introduced in evidence over his objection was taken from his person by an illegal search and seizure. *712
At 2 a.m. on December 31, 1966, Deputy Sheriffs Mitchell and Koozin were patrolling in the area of the Jumbo Mart, Florin Street and Power Inn Road, Sacramento County, paying particular attention to the market because of a report that the burglar alarm system was not functioning properly. They saw defendant's Ford and another automobile in the market parking lot; as they approached, the other vehicle left. Defendant circled the lot and drove east on Florin Street. There is no evidence that he was aware of the presence of the patrol car, and the officers had no interest in him or his automobile at that time. Nothing was amiss at the market, but a few minutes later the officers saw defendant's Ford preparing to make a U-turn at Power Inn Road and Florin Street. They decided to see why he remained in the area at that late hour, but they had no intention of arresting him.
The officers drove up behind defendant's automobile and turned on their overhead lights, whereupon defendant pulled to the side of the road and stopped. Deputy Koozin, the passenger in the police vehicle, got out and stood on the driver's side of defendant's car. Deputy Mitchell followed him, remaining out of range of the headlights to cover his partner until there was no indication of danger. Mitchell walked up to the driver's side of the Ford, flashed his light inside and saw the barrel of a gun protruding six or eight inches from under the front seat. Subsequent investigation disclosed a broken .22 caliber rifle, completely inoperative, a fact unknown to the officers at the time. Defendant had the odor of liquor on his breath but was not belligerent, and complied when he was ordered out of the car. Deputy Mitchell testified that then a "regular frisk search" for weapons took place. However, the officers ordered defendant to remove all articles from his clothing and place them on the trunk of the car; after that, Deputy Koozin patted his clothing to be certain he was not armed. Koozin felt a soft bulge on the left side of defendant's jacket and observed an object protruding from the pocket. He asked defendant what it contained, and defendant replied, "I don't know." Koozin removed the package and handed it to Officer Mitchell, who unwrapped three plastic or cellophane bags, one inside the other, and found that the innermost bag contained a vegetable substance which the officer thought to be marijuana. It was, and at the trial the package was introduced in evidence over the objection of defendant. [1a] The whole point of this appeal is whether the package was obtained by an illegal search. *713
It is clear that at the time the officers stopped defendant they did not intend to arrest him; they merely decided to question him because of his activities noted above, which aroused their suspicions. Thus the admissibility of the package rests upon the legality of the search conducted by the officers when they stopped defendant for questioning.
The United States Supreme Court recently came to grips with the question of an officer's right to "frisk" or "pat down" in circumstances short of an arrest and concurrent search. (Terry v. Ohio, 392 U.S. 1 [20 L.Ed.2d 889, 88 S.Ct. 1868]; Sibron v. New York, 392 U.S. 40 [20 L.Ed.2d 917, 88 S.Ct. 1889]; Peters v. New York, 392 U.S. 40 [20 L.Ed.2d 917, 88 S.Ct. 1889].) The first case of the trilogy, Terry v. Ohio, postured the problem within the context of the Fourth Amendment proscription against unreasonable searches and seizures, made applicable to the states by the Fourteenth Amendment. (Mapp v. Ohio, 367 U.S. 643 [6 L.Ed.2d 1081, 81 S.Ct. 1684, 84 A.L.R.2d 933].) The court commented, at page 1877 [392 U.S. at p. 16, 20 L.Ed.2d at p. 903] of Terry: "Our first task is to establish at what point in this encounter the Fourth Amendment becomes relevant. ... There is some suggestion in the use of such terms as 'stop' and 'frisk' that such police conduct is outside the purview of the Fourth Amendment because neither action rises to the level of a 'search' or 'seizure' within the meaning of the Constitution. We emphatically reject this notion. It is quite plain that the Fourth Amendment governs 'seizures' of the person which do not eventuate in a trip to the station house and prosecution for a crime--'arrests' in traditional terminology. ... it is nothing less than sheer torture of the English language to suggest that a careful exploration of the outer surfaces of a person's clothing all over his or her body in an attempt to find weapons is not a 'search.' "
After noting the sanctity of the right of the people to be secure in their persons, houses, papers and effects against unreasonable searches and seizures, the court pointed out that the Fourth Amendment protects people, not places, and this protection applies to an on-the-street encounter between the citizen and the police. The court then turned to the other aspect of the problem, the right of a police officer to protect himself by a frisk or pat down of a suspect before questioning, and concluded: "... we cannot blind ourselves to the need for law enforcement officers to protect themselves and other prospective victims of violence in situations where they *714 may lack probable cause for an arrest. When an officer is justified in believing that the individual whose suspicious behavior he is investigating at close range is armed and presently dangerous to the officer or to others, it would appear to be clearly unreasonable to deny the officer the power to take necessary measures to determine whether the person is in fact carrying a weapon and to neutralize the threat of physical harm." (P. 1881 [392 U.S. at p. 24, 20 L.Ed.2d at p. 907].)
Confrontations between the police and the citizen, the court observed, range from friendly intercourse to a strong suspicion that the person has committed a crime. Because of this broad spectrum of encounter, no general formula can tell us in advance where the line is to be drawn between an individual's right to protection under the Fourth Amendment and the policeman's right to protect himself and others by a frisk. However, guidelines for determining whether the officer used reasonable judgment in making a "frisk" in a particular case, are laid down in Terry. These criteria point to a pragmatic resolution of the conflict between the overlapping concepts of the Fourth Amendment protection against unreasonable search and seizure, and the police officer's need to protect himself and others. The court explained, in Terry, that the test is "a dual one--whether the officer's action was justified at its inception, and whether it was reasonably related in scope to the circumstance which justified the interference in the first place." (P. 1879 [392 U.S. at p. 20, 20 L.Ed.2d at p. 905].)
The first half of the test, "whether the officer's action was justified at its inception," was given the following explication: "Our evaluation of the proper balance that has to be struck in this type of case leads us to conclude that there must be a narrowly drawn authority to permit a reasonable search for weapons for the protection of the police officer, where he has reason to believe that he is dealing with an armed and dangerous individual, regardless of whether he has probable cause to arrest the individual for a crime. The officer need not be absolutely certain that the individual is armed; the issue is whether a reasonably prudent man in the circumstances would be warranted in the belief that his safety or that of others was in danger. [Citations.] And in determining whether the officer acted reasonably in such circumstances, due weight must be given, not to his inchoate and unparticularized suspicion or 'hunch,' but to the specific reasonable inferences which he is entitled to draw from the facts in the *715 light of his experience." (P. 1883 [392 U.S. at p. 27, 20 L.Ed.2d at p. 909].)
When measured by the standard of the "reasonably prudent man" the officers' decision to stop defendant for questioning was justified. They had been advised that the burglar alarm at the store was not working properly, which alerted them when they observed defendant on the market parking lot at 2 a.m.; they noticed that he circled the lot before leaving, which was unusual, that he drove a short distance along a street, made a U-turn and returned to the market area. In such circumstances the officers were warranted in stopping defendant to question him about his unusual conduct at that hour of the morning, even though they had no cause to arrest him. (Ballard v. Superior Court, 64 Cal.2d 159, 169, fn. 3 [49 Cal.Rptr. 302, 410 P.2d 838, 18 A.L.R.3d 1416]; People v. Martin, 46 Cal.2d 106 [293 P.2d 52].) When the officers saw the barrel of the .22 rifle protruding from under the front seat, they were indeed justified in making a frisk or "pat down" of the driver before questioning him.
Having established that the frisk was justified, the second part of the bifurcated test comes into play, "whether it was reasonably related in scope to the circumstance which justified the interference in the first place." This language was given articulation in Terry, at page 1882 [392 U.S. at p. 25, 20 L.Ed.2d at p. 908], as follows: "A search for weapons in the absence of probable cause to arrest, however, must, like any other search, be strictly circumscribed by the exigencies which justify its initiation. [Citation.] Thus it must be limited to that which is necessary for the discovery of weapons which might be used to harm the officer or others near by, and may realistically be characterized as something less than a "full" search even though it remains a serious intrusion."
Before discussing the scope of the frisk conducted by the officers, we note, parenthetically, that the fact marijuana was found and defendant's arrest followed does not justify the search; it has been held repeatedly that a search cannot be justified by what it turns up. (People v. Brown, 45 Cal.2d 640, 643 [290 P.2d 528].)
The scope of the search made by the officers can best be related through their own testimony. Officer Mitchell testified:
"Q. And at that point you searched him? A. Yes, sir."
"Q. And on the search, was this just a general patting-down to see whether or not he had any weapons? A. It was your regular frisk search. *716"
"Q. All right. And what is the purpose of this search, only to find out if he had weapons on him? A. Yes, sir."
"Q. Did the officer--did you observe the officer taking the wallet out of Mr. Britton's pocket? A. We did have Mr. Britton empty his pockets, sir."
"Q. Uh huh. A. No, I don't know if my partner took the wallet out or if Mr. Britton took the wallet out. I do know we did have his pockets emptied up on the trunk of the car, and that's when we patted him down."
And again:
"Q. Did you empty all of his pockets completely? A. Yes, sir."
"Q. Uh huh. A. All of his pants and shirt pockets. I'm not certain, I don't think we emptied the jacket pockets."
"Q. And did you open a small plastic bag that you found on or near him? A. Yes, sir."
"Q. Did you open the bag to find out whether there was a weapon in it? A. I opened it to find out what was in it, sir."
"Q. Did you suspect there was a weapon of some type in it? A. I didn't know what was in it, sir."
"Q. Could the little bag have contained a revolver of any type? A. Not a revolver, no."
"Q. Did you pat it before taking it out of his pocket? A. Yes, sir."
"Q. And was it soft? A. Now, what do you mean by soft, sir?"
"Q. By soft I mean, oh, malleable as contrasted from hard-metal type? A. Yes, sir."
"Q. As it was pulled out of the pocket, could you tell whether or not this was pipe tobacco or anything of that, like that, at that particular time? A. I couldn't tell what it was, sir. That's the reason I opened the bag."
The officer who actually removed the plastic bag from defendant testified as follows:
"Q. During this search, is that when you came up with the plastic bag which you said you found, which was similar there? A. Yes, I was patting him down and felt the bulge and saw the plastic bag hanging over the pocket, and I asked him what it was, what this was, and he said, 'I don't know.'"
"Q. All right. Now at any rate, it was during this search for a weapon when you ran across the bag? A. Yes, sir."
"Q. And you ran across this, removed it, and gave it to Mitchell? A. Yes, sir."
"Q. Then, after removing that and giving it to Mitchell, did you continue to search for weapons? A. Yes, sir." *717
By requiring defendant to empty his pockets and by removing from his pocket a soft pouch which had no possible use as a weapon, the search exceeded the bounds of a permissible "frisk." In Sibron v. New York, supra, page 1904 [392 U.S. at p. 65, 20 L.Ed.2d at p. 936], the Supreme Court reiterated the narrow compass within which the right to frisk is confined: "The search for weapons approved in Terry consisted solely of a limited patting of the outer clothing of the suspect for concealed objects which might be used as instruments of assault."
[2] There remains the critical question whether exceeding the scope of a permissible frisk requires exclusion of the contraband seized. It would appear that the exclusionary rule which was adopted to insure observance of Fourth Amendment protections would likewise be employed to confine stop and frisk intrusions upon those protections to the narrow limits fashioned by the court. Terry pointedly says: "Ever since its inception, the rule excluding evidence seized in violation of the Fourth Amendment has been recognized as a principal mode of discouraging lawless police conduct. [Citation.] Thus its major thrust is a deterrent one [citation], and experience has taught that it is the only effective deterrent to police misconduct in the criminal context, and that without it the constitutional guarantee against unreasonable searches and seizures would be a mere 'form of words.' " (P. 1875 [392 U.S. at p. 12, 20 L.Ed.2d at p. 900].)
Certainly if the exclusionary rule is not applicable the temptation is open to circumvent the Fourth Amendment by turning a stop and frisk into a full-blown search.
[1b] Since the search of defendant exceeded the permissible bounds of a "frisk" under the principles formulated by the United States Supreme Court in Terry and articulated in Sibron, it must follow that the fruits of such search are inadmissible under the exclusionary rule adhered to by the United States Supreme Court and the California Supreme Court.
The judgment is reversed.
Conley, P. J., and Gargano, J., concurred.
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81 B.R. 97 (1987)
In re William ALTON, Debtor.
Bankruptcy No. 85-3208.
United States Bankruptcy Court, M.D. Florida, Tampa Division.
November 20, 1987.
*98 Harley Riedel, Tampa, Fla., for debtor.
Louise Toole Ramsay, State of Florida, Dept. of Labor, Tallahassee, Fla., for movant.
ORDER ON MOTION FOR ALLOWANCE OF ADMINISTRATIVE EXPENSE
ALEXANDER L. PASKAY, Chief Judge.
This Chapter 11 case, instituted by William Alton (Debtor), presents a novel question for this Court's consideration. It involves the right of the State of Florida (State) to have an unpaid unemployment claim allowed and charged against the estate of the Debtor as a first priority claim pursuant to Sec. 507(a)(1) of the Bankruptcy Code. The underlying facts relevant and germane to the claim of the State are without dispute and are as follows:
The Debtor is an individual and was at the time pertinent a general partner of an entity, Madison Hotel Management, Ltd. (Madison Hotel), a limited partnership. In mid-1985, Madison Hotel filed its own voluntary petition for relief under Chapter 11. In due course it was authorized to continue to operate its one and only asset, a facility known as the Princess Martha Hotel located in St. Petersburg, Florida. The liability asserted by the State is for the unpaid unemployment tax incurred by Madison Hotel, and based on its failure to pay the appropriate unemployment tax for the fourth quarter of 1985 and the first and second quarters of 1986. The claim of the State is in the amount of $4,090.44. The Debtor, the general partner of Madison Hotel, subsequently filed his own voluntary petition for relief. The Chapter 11 case of the Madison Hotel was ultimately dismissed for its inability to effectuate a plan of organization, but the individual case of the Debtor is still pending.
It is the contention of the State that the Debtor as general partner of the Madison Hotel is legally liable for the debts of Madison Hotel, and since this liability is based on the unpaid unemployment taxes incurred post-petition by Madison Hotel and that of the Debtor, the debt is properly chargeable against the Debtor's estate pursuant to § 503(b)(1)(A) of the Bankruptcy Code and must be accorded administrative claim status pursuant to § 507(a)(1) of the Bankruptcy Code. Moreover, it is contended by the State that under applicable local law, Sec. 620.71, Fla.Stat., the partnership was automatically dissolved upon the commencement of a bankruptcy case, therefore, the partnership case of Madison Hotel was actually the Debtor's case, and thus he is not only vicariously, but primarily liable for unpaid unemployment taxes incurred originally by Madison Hotel. For this reason the unpaid unemployment taxes should be properly chargeable against his estate as costs of administration and paid as the first priority claim pursuant to Sec. 507(a)(1) of the Bankruptcy Code.
In opposing the claim of the State, the Debtor urges that while it is true that the Debtor is legally liable for the debts of the limited partnership by virtue of the fact that he was the general partner of Madison Hotel, these debts were not "necessary and reasonable expenses and costs of preserving the Debtor's estate" and for this reason, this debt would not qualify under § 503(b)(1)(A) as an administration expense of his estate and can not be paid as a first priority claim.
Unfortunately neither counsel for the State nor counsel for the Debtor have been able to present any controlling authorities on the subject and none of the authorities cited by both sides are very helpful and shed any light which would assist this Court to resolve the ultimate issue which is: Can a tax liability incurred by the partnership under Chapter 11 be charged as an administration expense pursuant to § 503(b)(1)(A) of the Bankruptcy Code against the estate of the general partner who is also a Chapter 11 Debtor.
*99 The resolution of the question is not without difficulty especially in light of a dearth of any persuasive precedent, thus, one must analyze the legal character of the players and the nature of the liability represented by the unpaid employment taxes.
At the outset it must be pointed out, and it is without dispute for the purpose of bankruptcy administration, that a partnership is a separate entity, i.e., an entity separate and apart from its component parts, i.e., the general partner or partners and the limited partners. In re Aboussie Bros. Const. Co., 8 B.R. 302 (Bankr.D.C. Mo.1981) While it is true that a general partner as noted earlier is legally liable for the debts of the partnership, this liability is only secondary, and the partnership which in fact incurred the indebtedness, in this case Madison Hotel, is the primary obligor. The question is, however, not whether or not the Debtor is liable for the taxes in question, but whether or not such liability could be charged against his estate as an actual and necessary cost and expense of preserving his estate. It might be argued that the estate of the Debtor includes his partnership interest. Thus, based on this argument, this tax obligation was incurred indirectly and in conjunction and preservation of his estate, i.e., his partnership interest in Madison Hotel and, therefore, as such, is properly chargeable as a cost of administration in his estate. The difficulty with this proposition should be evident if one considers the logic of the argument which, if accepted, would inevitably lead to the conclusion that all debts incurred by a partnership under Chapter 11 are properly chargeable as administrative expenses against the estate of the individual general partner. This result would inevitably lead to total frustration of the individual partner's ability to achieve reorganization. Moreover, as administrative expenses and priorities in general are narrowly construed, see Trustees of the Amalgamated Insurance Fund v. McFarlin's, Inc., 789 F.2d 98 (Ct.App.2d Cir.1986), this Court is satisfied that Congress did not intend that an indirect expense such as the one incurred by the Debtor in this case should be given first priority status under § 507(a)(1) of the Bankruptcy Code.
Based on the foregoing, the Motion for Allowance of Administrative Expense should be denied. The claim of the State of Florida should be allowed, however, as a seventh priority pursuant to § 507(a)(7)(C) of the Bankruptcy Code.
Accordingly, it is
ORDERED, ADJUDGED AND DECREED that the Motion for Allowance of Administrative Expense be, and the same is hereby, denied. It is further
ORDERED, ADJUDGED AND DECREED that the claim in the amount of $4,090.44 of the State of Florida be, and the same is hereby, allowed as an unsecured claim.
| {
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United States Court of Appeals
for the Federal Circuit
______________________
CENCAST SERVICES, L.P., CENEX SERVICES,
L.P., DISC ACQUISITION CORP., DISC
MANAGEMENT SERVICES GROUP, INC., DISC
TALENT GROUP, INC., EP MANAGEMENT
SERVICES, L.P., EP PRODUCTION SERVICES,
L.P., EP TALENT SERVICES, L.P., PIXPAY
SERVICES, L.P., AND SCREENPAY, INC.,
Plaintiffs-Appellants,
v.
UNITED STATES,
Defendant-Appellee.
______________________
2012-5142, -5143, -5144, -5145, -5146, -5147, -5148, -5149,
-5150, -5151
______________________
Appeals from the United State Court of Federal
Claims in consolidated Nos. 02-CV-1916, 02-CV-1917, 02-
CV-1918, 02-CV-1919, 02-CV-1920, 02-CV-1921, 02-CV-
1922, 02-CV-1923, 02-CV-1924, and 02-CV-1925, Judge
George W. Miller.
______________________
Decided: September 10, 2013
______________________
2 CENCAST SERVICES, L.P. v. US
KENT A. YALOWITZ, Arnold & Porter, LLP, of New
York, New York, argued for plaintiffs-appellants. With
him on the brief was MAXWELL C. PRESTON.
PATRICK J. URDA, Attorney, Tax Division, United
States Department of Justice, of Washington, DC, argued
for defendant-appellee. With him on the brief were
KATHRYN KENEALLY, Assistant Attorney General, TAMARA
W. ASHFORD, Deputy Assistant Attorney General, and
GILBERT S. ROTHENBERG, Attorney.
ELIZABETH ROSENFELD, Wohlner Kaplon Phillips
Young & Cutler of Encino, California, for amicus curiae
Studio Transportation Drivers, Union No. 399 of the
International Brotherhood of Teamsters.
DALE W. SHORT, Short & Shepherd of Westlake, Ohio,
for amicus curiae International Alliance of Theatrical
Stage Employees, et al.
REX S. HEINKE, Akin Gump Strauss Hauer & Feld
LLP, of Los Angeles, California, for amicus curiae Alli-
ance of Motion Picture and Television Producers. With
him on the brief was JESSICA M. WEISEL.
______________________
Before NEWMAN, DYK, and PROST, Circuit Judges.
DYK, Circuit Judge.
In these consolidated tax refund cases, Cencast Ser-
vices, L.P. et al. are entities that, inter alia, remit payroll
and employment taxes on behalf of motion picture and
television production companies. For convenience we refer
to these entities in the singular as “Cencast.” Cencast
appeals from a final judgment of the United States Court
of Federal Claims (“Claims Court”) rejecting its claims for
tax refunds. We hold that the scope of Cencast’s liability
for employment taxes under the Federal Unemployment
Tax Act (“FUTA”) and the Federal Insurance Contribution
CENCAST SERVICES, L.P. v. US 3
Act (“FICA”) is determined by reference to the employees’
“employment” relationships with the common law em-
ployers for which Cencast remits taxes (i.e., the produc-
tion companies), and that the common law employers
cannot decrease their liability by retaining entities such
as Cencast to actually make the wage payments to the
employees. We also hold that Cencast is barred from
raising its theory that it overpaid the FUTA and FICA
taxes because some of the individuals classified as em-
ployees were independent contractors. We affirm.
BACKGROUND
The evolution of the motion picture and television in-
dustries over the past century has resulted in this tax
case concerning FUTA and FICA tax liability. In the early
part of the twentieth century, motion picture productions
were primarily controlled by large, major motion picture
and television studios, and production workers enjoyed
long-term, continuous employment relationships with
those studios. These studios paid wages to these employ-
ees, and, as the common law employers of these workers,
were liable for employment taxes on those wages, and
remitted those taxes directly to the Internal Revenue
Service (“IRS”).
Since the late 1970s, however, many smaller produc-
tion companies have emerged and have created movies
and television programs independently from the large
studios. As a result of this trend, many production work-
ers are now employed by several different production
companies during the course of a year, rather than by a
single large production studio. Thus, in any given year, a
given production worker might earn wages from several
production companies, all of whom (being common law
employers) would be individually liable for employment
taxes on those wages. The complex web of production
companies and production workers that evolved made
administration of payroll, benefits, collective bargaining
agreements, and taxes increasingly difficult.
4 CENCAST SERVICES, L.P. v. US
Entities like Cencast, which are also known as payroll
service companies (“Service Companies”), emerged to
address these problems. Over the last twenty-five years,
virtually all independent production companies have
contracted with Service Companies for payroll and related
services. Cencast and other Service Companies compute
and pay compensation to production workers, report and
pay compensation to multi-employer pension and benefit
funds, provide post-production financial reporting, and
pay employment taxes to the IRS.
Although they contract with the Service Companies,
production companies both hire and supervise the indi-
vidual production workers—as they had done in the pre-
Service Company era. In general, Cencast and other
Service Companies have no role in selecting or supervis-
ing production workers. The only change is that entities
like Cencast—and not the production companies—now
pay the production workers and administer the produc-
tion companies’ payroll and employment tax obligations.
It is undisputed in this case that Cencast is not the com-
mon law employer of production workers.
Around the time that Service Companies such as Cen-
cast began to emerge, the Supreme Court decided Otte v.
United States, 419 U.S. 43 (1974), which involved the
question of whether entities who are not the common law
employers (but nonetheless pay wages to the employees)
are required, inter alia, to withhold the employees’ por-
tion of the FICA tax. See id. at 49-51. That question arose
in the context of the payment of wages by a bankruptcy
trustee on behalf of a bankrupt common law employer.
See id. at 45-46. The Court held that persons who formal-
ly pay the wages of employees (called “statutory employ-
ers”) are liable for the withholding of FICA taxes under
I.R.C. § 3102(a), even where those persons were never in a
common law employment relationship with those employ-
ees. See id. at 50-51. While Otte dealt only with the em-
ployee’s portion of FICA, it is accepted that Otte applies
equally to the employer’s FUTA and FICA tax obligations.
CENCAST SERVICES, L.P. v. US 5
See Winstead v. United States, 109 F.3d 989, 991 (4th Cir.
1997) (applying Otte to FUTA); In re Armadillo Corp., 561
F.2d 1382, 1386 (10th Cir. 1977) (applying Otte to FUTA
and to the employer’s portion of FICA).
Under Otte, because Cencast and the other Service
Companies pay the production workers, they are required
to remit taxes imposed on employers and employees
under FUTA and FICA. Only the employer’s FUTA and
FICA tax obligations are at issue here.
Between 1991 and 1996, Cencast paid over $7 billion
in wages, on behalf of production companies, to hundreds
of thousands of workers who worked on numerous differ-
ent productions. Cencast also filed tax returns and remit-
ted FUTA and FICA taxes to the federal government with
respect to these employees. For the six tax years in ques-
tion, Cencast remitted approximately $465 million in
FUTA and FICA taxes as the employer contribution for
the production worker employees.
When Cencast filed its FUTA and FICA employment
tax returns, it treated each employee as being in an
“employment” relationship with Cencast rather than with
the production companies. This reduced the overall tax
payments because of statutory caps on both FUTA and
FICA taxes. Though both FUTA and FICA tax “all remu-
neration for employment,” see I.R.C. § 3306(b) (FUTA);
I.R.C. § 3121(a) (FICA), they both place caps on the wages
subject to the tax. Under FUTA, each employer is only
liable to pay taxes on the first $7,000 of wages paid “with
respect to employment,” see I.R.C. § 3306(b)(1), and under
FICA, each employer is only liable to pay taxes on wages
paid “with respect to employment” up to a specified FICA
wage base, see I.R.C. § 3121(a)(1) (excluding from FICA’s
definition of wages remuneration above “the [FICA]
contribution and benefit base (as determined under
section 230 of the Social Security Act)”). The FICA wage
base varies by year. The relevant FICA wage base for
1996, for example, was $62,700. Thus, if employee A
earned $50,000 from production company 1 and $50,000
6 CENCAST SERVICES, L.P. v. US
from production company 2, Cencast paid FUTA tax on
only $7,000 of wages instead of $14,000, and paid FICA
tax on only $62,700 in wages instead of $100,000 (for the
1996 tax year). Thus, applying a single wage cap in calcu-
lating its taxable wages for both FUTA and FICA purpos-
es, Cencast excluded a portion of the production workers’
wages from employment taxes. The amount of tax that
was avoided is exactly equal to the additional amounts of
FUTA and FICA tax that individual production compa-
nies would have been liable for had those companies
conducted their own payroll services and filed their own
tax returns.
In 1994, the IRS began investigating Cencast’s FUTA
and FICA tax calculation practices. Eventually, the IRS
issued Technical Advice Memorandum (“TAM”) 119980-
97. See IRS Tech. Adv. Mem. 119980-97, available at
http://www.irs.gov/pub/irs-wd/9918056.pdf. In the TAM,
the IRS explained that FUTA and FICA taxes should be
calculated as though each employee were in an employ-
ment relationship with each individual production com-
pany, rather than with Cencast. Thus, the TAM concluded
that Cencast could not treat itself as being in an “em-
ployment” relationship with production workers (i.e.,
apply a single wage cap) in calculating its tax liability for
FUTA and FICA purposes. Instead, Cencast was required
to apply a separate wage cap with respect to each produc-
tion company that had an employment relationship with
the production worker during that year. In 2001, the IRS
assessed Cencast FUTA and FICA tax deficiencies for the
1991-1996 tax years totaling approximately $43.7 million
for FUTA taxes and $15.6 million for FICA taxes.
In November 2001, Cencast paid divisible portions of
the IRS assessments totaling $637,000, representing
additional tax owed with respect to some (but not all)
Cencast employees for each of the 1991-1996 tax years.
These payments entitled Cencast to file a claim for re-
fund. See Flora v. United States, 362 U.S. 145, 175 n.38
(1960). Cencast then filed refund claims with the IRS in
CENCAST SERVICES, L.P. v. US 7
April 2002 alleging, inter alia, that Cencast should be
treated as the “employer” for FUTA and FICA tax purpos-
es, and that taxes should be calculated accordingly. After
Cencast requested and received a notice of claim disal-
lowance from the IRS in May 2002, Cencast filed suit in
the Claims Court, where it raised claims that largely
paralleled those raised in the administrative refund
claim. Because Cencast had only made a partial payment
of tax, the government raised counterclaims for the re-
maining, unpaid balances of the IRS’s assessments with
respect to the employees not covered by Cencast’s original
refund claim. Cencast, in its answers to these counter-
claims, defended on the same grounds asserted in the
initial refund claim.
In December 2003, the parties first filed motions for
partial summary judgment on the issue of how to compute
the statutory caps for FUTA and FICA. In September
2004, the Claims Court granted the government’s sum-
mary judgment motion on this issue. See Cencast Servs.,
L.P. v. United States (“Cencast I”), 62 Fed. Cl. 159 (2004).
It agreed with the government that “the Production
Companies are to be considered the [production workers’]
employers for purposes of calculating FICA and FUTA
taxable wage bases.” Id. at 165, 184.
After this ruling, the parties discussed settlement and
discovery. Then, in an August 2008 status conference,
Cencast argued for the first time that it was entitled to
reduce its tax obligations because, in its view, it had
erroneously overpaid FUTA and FICA taxes. This was so
because some individuals for whom it paid tax were not
employees but independent contractors. Cencast Servs.,
L.P. v. United States (“Cencast II”), 94 Fed. Cl. 425, 437
(2010). (Neither FUTA nor FICA taxes are imposed with
respect to independent contractors. See, e.g., Hathcock v.
Acme Truck Lines, Inc., 262 F.3d 522, 525 (5th Cir. 2001).)
According to the Claims Court, “[t]his was the first men-
tion of [Cencast’s] independent contractor theory in this
litigation, which, at that time, had been pending for
8 CENCAST SERVICES, L.P. v. US
approximately six years.” Cencast II, 94 Fed. Cl. at 437.
Indeed, neither Cencast’s original complaint nor its
administrative claim for refund attached to that com-
plaint reference the independent contractor theory.
Meanwhile, in December 2008, the IRS issued a notice
of levy and seized an additional $4.3 million from a Cen-
cast affiliate (beyond the $637,000 Cencast had already
paid to the IRS). Cencast filed administrative claims for
refund of this $4.3 million. Cencast then moved to amend
its complaint in the Claims Court in April 2010 to include
allegations regarding both Cencast’s purported independ-
ent contractor overpayments, as well as allegations perti-
nent to its claim for refund with respect to the
additionally seized funds. See Cencast II, 94 Fed. Cl. at
437-38. In January 2010, the government filed a motion
in limine to exclude the independent contractor theory
from the case.
In September 2010, the Claims Court ruled on both
the government’s motion in limine and Cencast’s motion
for leave to amend. See Cencast II, 94 Fed. Cl. 425. As to
the government’s motion in limine on Cencast’s independ-
ent contractor theory, the Claims Court considered the
variance doctrine, which bars taxpayers from raising new
issues relating to its tax claims unless “the [new] issue
raised in court ‘is derived from or is integral to the ground
timely raised in the [initial] refund claim.’” Id. at 440
(quoting Ottawa Silica Co. v. United States, 699 F.2d
1124, 1139 n.6 (Fed. Cir. 1983)). The Claims Court held
that “[t]he independent contractor theory [could not] be
said to be ‘fairly contained within the refund claim’ [origi-
nally filed in 2001] and [wa]s [therefore] barred by the
variance doctrine.” Cencast II, 94 Fed. Cl. at 441 (citing
Blakley v. United States, 593 F.3d 1337, 1342 (Fed. Cir.
2010)). The Claims Court considered and rejected Cen-
cast’s arguments that various exceptions to the variance
doctrine applied, see id. at 441-47, and also held that,
even if the variance doctrine had not barred the inde-
pendent contractor theory, “the [c]ourt would nonetheless
CENCAST SERVICES, L.P. v. US 9
[have] preclude[d] [Cencast] from injecting [the theory]
into the litigation at th[at] point because it simply c[ame]
too late,” id. at 448-49. The Claims Court denied Cen-
cast’s motion to amend its complaint “to the extent that it
s[ought] to add a claim for refund . . . based on the inde-
pendent contractor theory,” but allowed the motion in
other respects. Id. at 450-53. The Claims Court entered
an agreed-upon final judgment on September 4, 2012.
Cencast timely appealed. We have jurisdiction under
28 U.S.C. § 1295(a)(3). The relevant facts are undisputed.
“We review the Claims Court’s legal determinations de
novo.” Haddon Housing Assocs., Ltd. P’ship v. United
States, 711 F.3d 1330, 1337 (Fed. Cir. 2013).
DISCUSSION
I
We first consider whether the Claims Court errone-
ously held that, for purposes of calculating the FUTA and
FICA wage base caps, the caps should be calculated as
though employees were in an “employment” relationship
with each of the individual production companies (the
common law employers), rather than with Cencast (the
statutory employer). We agree with the government that
the wage caps should be calculated by treating the em-
ployees as being in employment relationships with the
common law employers. It would be contrary to the statu-
tory scheme to allow common law employers to reduce
their liability by transferring the functions of wage ad-
ministration to entities like Cencast.
We begin with FUTA. Section 3301 of the Internal
Revenue Code imposes a tax “on every employer (as
defined in section 3306(a)) . . . equal to [a percentage] of
the total wages (as defined in section 3306(b)) paid by him
during the calendar year (or portion of the calendar year)
with respect to employment (as defined in section
3306(c)).” I.R.C. § 3301. It is established that both the
common law employer and the statutory employer (Ser-
vice Company) are employers within the meaning of
10 CENCAST SERVICES, L.P. v. US
Section 3301. See I.R.C. § 3306(a). 1 Though the parties
appear to agree that the term “employer” as used under
§ 3301 refers to both common law employers and statuto-
ry employers, Cencast argues that liability is imposed
only on the entities that control the payment of wages—
i.e., those who have “paid” wages. Thus, if the common
law employee retains an entity such as Cencast to formal-
ly make the payments, only Cencast is liable for the tax
and therefore must be the relevant “employer” for purpos-
es of both § 3301—imposing liability—and § 3306(b)(1)—
defining the wage cap calculation. We assume—without
deciding—that when a single entity controls the payment
of wages (i.e., it formally makes the tax payments), that
entity is the “employer” who has “paid” the “wages” or
“remuneration” under FUTA. 2 But it does not follow that
the caps are to be computed as though the “employment”
of the employees was by Cencast and not by the multiple
common law employers here (the production companies).
The definition of taxable “wages” for FUTA purposes
in § 3306(b)(1), referring to the wage cap, excludes:
that part of the remuneration [for employment]
which, after remuneration . . . equal to $7,000
with respect to employment has been paid to an
1 Section 3306(a) contains a statutory definition of
employer, as well as a common law definition of employer.
See I.R.C. § 3306(a)(1)(A) (employer can include any
person who “during any calendar quarter in the calendar
year or the preceding calendar year paid wages of $1,500
or more”); id. § 3306(a)(1)(B) (employer can include any
person who “on each of some 20 days during the calendar
year or during the preceding calendar year, each day
being in a different calendar week, employed at least one
individual in employment”).
2 We make the identical assumption when discuss-
ing FICA below.
CENCAST SERVICES, L.P. v. US 11
individual by an employer during any calendar
year, is paid to such individual by such employer
during such calendar year.
Id. § 3306(b)(1) (emphasis added). In other words, the
wage cap is “equal to $7,000 [paid] with respect to em-
ployment.” Id. It is therefore “employment,” not “employ-
er,” that is the relevant term for the wage cap amount.
There can also be no doubt that “employment” under
§ 3306(b)(1) must refer to the common law employment
relationship. The statute defines “employment” to include
“any service, of whatever nature, performed after 1954 by
an employee for the person employing him . . . within the
United States.” Id. § 3306(c)(A) (emphasis added). FUTA
incorporates the FICA definition of “employee,” see id.
§ 3306(i), which defines an “employee” in employment as
“any individual who, under the usual common law rules
applicable in determining the employer-employee rela-
tionship, has the status of an employee.” I.R.C.
§ 3121(d)(2) (emphasis added). These references in the
FUTA statute, therefore, consistently refer to employment
in the common law sense, and the wage cap provision
must therefore be calculated with respect to the employ-
ee’s various common law employments during the calen-
dar year. The “person employing” the “employee” under
§ 3306(c) is not the statutory employer, and the “employ-
ment” referenced in § 3306(b)(1) is not the relationship
between the “employee” and the statutory employer but
the relationship between the “employee” and his or her
common law employers. The language of the statute is
quite consistent with the view that the common law
employers provide the “employment” (the remuneration
for which is the measure of the statutory cap) even though
the statutory employer is “an employer” that “paid” the
remuneration.
Moreover, as the Ninth Circuit noted in Blue Lake
Rancheria v. United States, 653 F.3d 1112, 1118 (9th Cir.
2011), “it is the common-law employment relationship
that triggers the FUTA tax.” Blue Lake reiterated that
12 CENCAST SERVICES, L.P. v. US
Otte and its progeny “merely hold that a statutory em-
ployer has responsibility for reporting and remitting
[FUTA and FICA] taxes; these cases do not change the
fact that FUTA liability arises out of the common-law
employment relationship.” Id. 3 This case, like Blue Lake,
involves provisions—the wage cap provisions—that are
designed to exempt certain wages from tax, and we agree
with Blue Lake that only common law employment is
relevant to such exemptions. Here, given the undisputed
common law employment relationship between the pro-
duction companies and the production workers, it is the
common law “employment” that governs in the wage cap
computation, not the relationship of the employees to
Cencast. 4 And there is no question here that remunera-
3 In Blue Lake, the Ninth Circuit declined to extend
a statutory provision exempting from FUTA taxes wages
that were earned for “services performed . . . in the employ
of an Indian tribe,” see I.R.C. § 3306(c)(7) (emphasis
added), to wages earned through employment by other
common law employers but remitted by a tribe acting as a
statutory employer, holding that this specific exemption
from taxable wages under FUTA only applied to common
law Indian tribe employers. See 653 F.3d at 1114.
4 The term “employment” is perhaps ambiguous as
to whether it refers to each employee’s overall employer
during the year or to employment with each individual
“employing the employee.” The Treasury Regulations—
which are entitled to Chevron deference, see Mayo Found.
for Med. Educ. & Research v. United States, __ U.S. __, __,
131 S. Ct. 704, 711-14 (2011)—make clear that the latter
is the correct interpretation. See, e.g., Treas. Reg. §
31.3306(b)(1)-1(a)(3) (noting that under FUTA, the wage
cap applies “not to the aggregate remuneration paid by all
employers with respect to employment performed [during
a calendar year] after 1938, but instead to the remunera-
tion paid during such calendar year by each employer
with respect to employment”); see also Treas. Reg.
CENCAST SERVICES, L.P. v. US 13
tion was “paid” by Cencast, making it liable for the FUTA
taxes since Cencast paid all wages to the employees.
Under Cencast’s theory, moreover, the statutory em-
ployer’s tax liability is less than the aggregate liability of
the production companies if they had paid the employees
directly. Nothing in § 3306(b)(1) suggests that Congress
intended that common law employers be given the option
to choose a different wage cap (and effectively reduce the
amount of their tax liability) depending on whether they
chose to administer payroll themselves or to delegate that
responsibility to another entity. Rather, Congress intend-
ed the wage cap calculation amount to be the same
whether the Service Company or the production company
paid the wages to the employees. Neither Otte nor the
Court of Appeals cases following Otte in any way suggest
that common law employers could reduce their tax liabil-
ity by contracting with Service Companies to pay wages
and remit taxes. Accordingly, the FUTA wage cap provi-
sion, when referring to the relevant “employments” for
purposes of calculating the wage cap, must refer to com-
mon law employment relationships.
A similar issue arises with respect to FICA. FICA im-
poses taxes “on every employer . . . with respect to having
individuals in his employ[] equal to [a] percentage[] of the
wages (as defined in section 3121(a)) paid by him with
respect to employment (as defined in section 3121(b)).”
I.R.C. § 3111(a). Moreover, the wage cap provision of
FICA, defining the “wages” to be taxed under FICA, has
§ 31.3121(a)(1)-1(a)(3) (noting that under FICA, “[i]f
during a calendar year the employee receives remunera-
tion from more than one employer, the annual wage
limitation does not apply to the aggregate remuneration
received from all such employers, but instead applies to
the remuneration received during such calendar year
from each employer with respect to employment”).
14 CENCAST SERVICES, L.P. v. US
an identical structure to the corresponding FUTA provi-
sion. It excludes from the wages taxed under FICA
that part of the remuneration [for employment]
which, after remuneration . . . equal to the contri-
bution and benefit base (as determined under sec-
tion 230 of the Social Security Act) with respect to
employment has been paid to an individual by an
employer during the calendar year with respect to
which such contribution and benefit base is effec-
tive, is paid to such individual by such employer
during such calendar year.
I.R.C. § 3121(a)(1) (emphasis added). As with FUTA,
Cencast argues that the “employer” used in calculating
the FICA wage base should be the employer that pays the
wages (here, the statutory employer), and the government
argues that the common law employer should be treated
as the employer. But again, even assuming that Cencast
is the “employer” that has paid the “wages” or “remunera-
tion,” the computation of the wage cap is made with
respect to common law “employment.”
Again, the relevant term is “employment.” The em-
phasis in FICA, as in FUTA, is on capping taxable wages
paid “with respect to employment.” Id. (emphasis added).
Employment, as in FUTA, is defined in FICA as “any
service, of whatever nature, performed . . . by an employee
for the person employing him,” id. § 3121(b) (emphasis
added), again suggesting a common law relationship. As
in FUTA, FICA defines “employee” as “any individual
who, under the usual common law rules applicable in
determining the employer-employee relationship, has the
status of an employee.” Id. § 3121(d)(2) (emphasis added).
Therefore, it is clear that the FICA statute refers to
common law employment when it refers to the “employ-
ment” with respect to which FICA wages are capped. As
with FUTA, it would not make sense to have a wage cap
definition that varies depending on the entity that paid
the wages to the employees, and the Treasury Regulations
again make clear that employment is not defined by
CENCAST SERVICES, L.P. v. US 15
reference to a single employer but rather by each individ-
ual employer employing the worker during the year. See
Treas. Reg. § 31.3121(a)(1)-1(a)(3). Therefore, we hold
that the wage base under FICA must be calculated by
reference to common law employments.
Cencast argues that we cannot interpret the FUTA
and FICA provisions such that “employer” has different
meanings under the liability (§§ 3301 and 3111) and wage
cap (§§ 3306(b)(1) and 3121(a)(1)) provisions. However,
because calculation of the wage cap amount rests on the
definition of “employment,” rather than on the definition
of “employer,” we do not adopt inconsistent interpreta-
tions of the term “employer.” For purposes of this case, we
assume that both the liability and wage cap provisions
refer to the “employer” who is responsible for withholding,
calculating, and reporting taxes. But the cap is not calcu-
lated by treating the “employee” as having “employment”
with the statutory employer but instead as having em-
ployment with the various entities that have entered into
common law employment relationships with them.
Finally, Cencast appears to argue that the FUTA and
FICA provisions should be given the same construction as
the income tax withholding provisions of § 3401 of the
Internal Revenue Code at issue in Otte, and that those
provisions apply only to the statutory employer. Section
3401(d)(1) defines “employer” as the entity “having control
of the payment of . . . wages” (here Cencast). I.R.C.
§ 3401(d)(1). But this definition does not apply “for pur-
poses of subsection [3401](a),” which defines the “wages”
subject to withholding. See id. Section 3401(d) makes
clear that the wage computation of § 3401(a)—the equiva-
lent of the wage caps here—does not refer to the wages
paid by the entity that “control[s] . . . the payment of . . .
wages,” see § 3401(d), but rather to wages earned “for
services performed by an employee for his employer,” (i.e.,
common law employment). Id. § 3401(a). If § 3401(a) is
viewed as similar to the wage cap provisions in FUTA and
FICA, it supports our interpretation of those provisions.
16 CENCAST SERVICES, L.P. v. US
Ultimately, as discussed above, the wage cap provi-
sions under FUTA and FICA would make no sense if the
wage caps were applied to the statutorily defined em-
ployment relationships, and not the common law em-
ployment relationships, because that would allow common
law employers to reduce their tax liabilities by retaining
entities like Cencast. This is a result Congress could not
have intended. 5 Contrary to the views expressed by
various amici, this result will not impair production
companies’ use of Service Companies like Cencast. If the
Service Companies provide indispensable administrative
services, as both amici and Cencast argue, we are con-
vinced that production companies will continue to con-
tract with Cencast, even if Cencast is liable for the same
amount of tax as the common law employers would be in
the event that they chose to make the wage payments
directly. But whether or not this is the case, the argument
that this liability should be reduced to encourage the use
5 Cencast’s proposed disposition would also be con-
trary to the IRS’s current guidance in the Internal Reve-
nue Manual, which states:
Although a section 3401(d)(1) employer is liable
for the payment of employment taxes, the deter-
mination of whether an employee has wages as
defined by the FICA, FUTA, or [income tax with-
holding] provisions of the Internal Revenue Code
is made by reference to the common law employer.
Thus, if an employee has multiple common law
employers during a calendar year, the section
3401(d)(1) employer must apply a separate FICA
and FUTA wage base for each common law em-
ployer.
See Field Collecting Procedures, Third-Party Payer Ar-
rangements for Employment Taxes, IRM 5.1.24.3.2.2 (Aug.
15, 2012), available at
http://www.irs.gov/irm/part5/irm_05-001-024r.html.
CENCAST SERVICES, L.P. v. US 17
of Service Companies is a matter for Congress, not this
court.
II
The second issue on appeal is the independent con-
tractor issue, namely, whether Cencast can include in its
refund suit a claim for taxes erroneously paid with respect
to independent contractors. This claim was neither sub-
mitted to the IRS with Cencast’s original refund claim nor
originally asserted in the refund suit in 2003 nor asserted
in Cencast’s response to the government’s counterclaims.
Cencast argues that it erroneously designated some
production workers as “employees,” (rather than as inde-
pendent contractors) and that this resulted in an over-
payment of tax. Cencast seeks to amend its pleadings to
claim a tax refund on this theory. The government argues
that Cencast’s attempt to amend its pleadings to include
the independent contractor theory in 2010 is barred. We
agree with the Claims Court that Cencast’s independent
contractor theory is barred. See Cencast II, 94 Fed. Cl. at
438-49. We address Cencast’s several arguments in turn.
A
Cencast argues that, under Court of Federal Claims
Rule 15(a), 6 it should have been permitted to amend its
answer to the government’s counterclaim to assert the
independent contractor theory as an affirmative defense.
There is no dispute that, when Cencast filed answers to
the counterclaim in both 2003 and 2007, it failed to in-
clude the independent contractor theory.
6 Though Cencast references Rule 15(b) as authori-
ty to amend its pleadings, we agree with the government
that Rule 15(a) is the pertinent rule, since Rule 15(a) is
the rule that applies to amendments sought pre-trial.
Rule 15(b) applies to amendments made during and after
trial. See Ct. Fed. Cl. R. 15(a),(b),
18 CENCAST SERVICES, L.P. v. US
Though Rule 15(a), like the corresponding Federal
Rule of Civil Procedure, is construed liberally to allow
amended pleadings, and leave is to be “freely give[n] . . .
when justice so requires,” such amendments are not
allowed where they result in undue delay or prejudice. See
Ct. Fed. Cl. R. 15(a); Zenith Radio Corp. v. Hazeltine
Research, Inc., 401 U.S. 321, 330-31 (1971) (“[I]n deciding
whether to permit . . . an amendment, the trial court [i]s
required to take into account any prejudice that [the non-
movant] would have suffered as a result . . . .”); Foman v.
Davis, 371 U.S. 178, 182 (1962) (citing “undue delay” and
“undue prejudice to the opposing party” as reasons to
deny leave to amend). Here, the Claims Court found that
both undue delay and prejudice would result from Cen-
cast’s proposed amendments relating to the independent
contractor theory.
Not only did Cencast’s original complaint not refer-
ence the independent contractor issue, the government
and Cencast had entered into a stipulation meant to
define and narrow the relevant issues in the case as late
as 2008. This stipulation did not mention the independent
contractor theory. We agree that the amended pleading,
coming two years later, would have been prejudicial to the
government. As the Claims Court concluded, “[a]llowing
[the] plaintiffs to introduce the independent contractor
theory [in 2010] would [have] prejudice[d] [the govern-
ment], which ha[d] already devoted significant resources
to litigating the issues long recognized as raised by th[e]
case.” Cencast II, 94 Fed. Cl. at 448. Here, the Claims
Court emphasized that injecting the theory into the
litigation at a late stage would require new discovery,
noting “the addition of the independent contractor theory
would cause ‘further factual disputes [and] substantial
factual inquiry by [the parties].’” Id. at 449 (quoting In re
Bank of Am., 217 Ct. Cl. 731, 732 (1978)) (second altera-
tion in the original). As the record shows, discovery on the
independent contractor issue would have indeed been
complex and time consuming, including requiring statisti-
cal sampling. Additional discovery would thus have been
CENCAST SERVICES, L.P. v. US 19
burdensome and, contrary to Cencast’s arguments, the
government never acquiesced to such discovery. 7 It is
clear that, “if the amendment [to a pleading] substantially
changes the theory on which the case has been proceeding
and is proposed late enough so that the opponent would
be required to engage in significant new preparation, the
court may deem it prejudicial.” 6 Wright & Miller, Federal
Practice and Procedure § 1487 (Apr. 2013); see also Troxel
Mfg. Co. v. Schwinn Bicycle Co., 489 F.2d 968, 971 (6th
Cir. 1973) (“[T]o put [the non-moving party] through the
time and expense of continued litigation on a new theory,
with the possibility of new discovery, would be manifestly
unfair and unduly prejudicial.”).
Cencast’s unreasonable delay after it became aware of
the independent contractor issue—also emphasized by the
Claims Court—only underscores the evident prejudice
here. See Cencast II, 94 Fed. Cl. at 449 (noting that Cen-
cast’s attempt to amend to include the independent con-
tractor theory “simply c[ame] too late”). Cencast was
7 After Cencast first raised the independent con-
tractor theory before the Claims Court, discovery regard-
ing the independent contractor issue was discussed at
status conferences and other hearings, and some discov-
ery began on the issue. The government objected to the
discovery, noting that there would be “legal barriers” to
Cencast’s independent contractor theory, and sought to
stay discovery pending resolution of its defenses to Cen-
cast’s independent contractor theory. See J.A. 2591. Any
discovery undertaken by the government during the
period between the government’s objection to discovery
and the Claims Court’s ultimate decision to exclude the
independent contractor theory was not voluntary. Rather,
this discovery occurred because the Claims Court denied
the government’s motion to stay discovery pending its
forthcoming decision on the motion to exclude the inde-
pendent contractor theory from the case.
20 CENCAST SERVICES, L.P. v. US
aware of its independent contractor theory as early as
1994. Nonetheless Cencast, without explanation, failed to
raise the issue in a refund claim or pleading for over
fifteen years. Here, Cencast could have sought leave to
file its amended pleading at any point before February 23,
2007, the deadline the parties agreed to—and the court
imposed—for adding new legal theories and affirmative
defenses to the pleadings. This opportunity existed for
nearly five years after the government brought its initial
counterclaim on the entire tax assessment in 2003.
Cencast’s “failure to seek such leave, much less do so in a
timely fashion, renders its purported [supplemental
pleading] improper.” Rates Tech. Inc. v. Nortel Networks
Corp, 399 F.3d 1302, 1309-10 (Fed. Cir. 2005). And
“[d]elay alone, even without a demonstration of prejudice,
has thus been sufficient grounds to deny amendment of
pleadings.” Te-Moak Bands of W. Shoshone Indians of
Nev. v. United States, 948 F.2d 1258, 1262 (Fed. Cir.
1991); see also 6A Charles Alan Wright et al., Federal
Practice and Procedure § 1510, at 208-09 (2d ed. 1990)
(noting that “supplemental pleading will not be permit-
ted” where “the moving party is guilty of inexcusable
delay”).
We conclude that the Claims Court did not abuse its
discretion in denying Cencast’s motion to amend its
complaint as to the independent contractor theory. See
Tamerlane, Ltd. v. United States, 550 F.3d 1135, 1147
(Fed. Cir. 2008) (“‘The decision to grant or deny a motion
for leave to amend . . . lies within the sound discretion of
the trial court.’” (quoting Insituform Techs., Inc. v. CAT
Contracting, Inc., 385 F.3d 1360, 1372 (Fed. Cir. 2004))).
Cencast next argues that its 2009 administrative re-
fund claim (relating to the $4.3 million levy in 2008 which
resulted in the seized funds) permitted supplementation
of Cencast’s pleading to include the independent contrac-
tor issue. There is no dispute that Cencast raised the
independent contractor theory in the 2009 administrative
claim that preceded its proposed amended complaint.
CENCAST SERVICES, L.P. v. US 21
Cencast’s argument seems to be that, because the IRS
seized the additional $4.3 million in funds in 2008, lead-
ing to a new refund claim, Cencast was entitled to file a
supplemental pleading raising the independent contractor
theory. Cencast relies in part on Court of Federal Claims
Rule 15(d), which gives the Claims Court discretion to,
“on just terms, permit a party to serve a supplemental
pleading setting out any transaction, occurrence, or event
that happened after the date of the pleading to be sup-
plemented.” See Ct. Fed. Cl. R. 15(d). Rule 15(d) further
allows the court to “permit supplementation even though
the original pleading is defective in stating a claim or
defense.” Id. As with Rule 15(a), the Court of Appeals
“review[s] the denial of leave to supplement a complaint
under [Rule 15(d)] for abuse of discretion.” See Schwarz v.
City of Treasure Island, 544 F.3d 1201, 1211 (11th Cir.
2008) (addressing Rule 15(d) of the Federal Rules of Civil
Procedure).
Here, following Rule 15(d), the Claims Court allowed
Cencast to supplement its complaint to (1) plead factual
allegations surrounding the 2008 levy of funds; (2) plead
an illegal exaction claim “assert[ing] a right to . . . return”
of the seized funds; and (3) include the $4.3 million seized
by the IRS in the relief it sought in its original refund
claim (based on the legal theories originally raised). See
Cencast II, 94 Fed Cl. at 451-52. These legal claims and
facts resulted from the 2008 levy, and the Claims Court
allowed these amendments because “[s]upplementation of
pleadings should be allowed where post-commencement
events are material to the action.” Id. at 449 (emphasis
added) (internal quotation marks omitted). However, the
Claims Court did not allow Cencast to supplement its
complaint to include new allegations relating to the
independent contractor theory. Id. at 449-50. This ruling
was entirely appropriate. In 2008, no new facts material
to Cencast’s independent contractor theory arose. The
pertinent facts relate to the production workers’ employ-
ment relationships with the production companies be-
22 CENCAST SERVICES, L.P. v. US
tween 1991-1996, which remained unchanged as a result
of the 2008 levy.
Moreover, Cencast’s liability for the $4.3 million
seized as a result of the levy had already been placed at
issue in this case as a result of the government’s counter-
claims and as a result of Cencast’s election to pay a di-
visible portion of the tax to determine its overall tax
liability and commence a refund suit under I.R.C.
§ 7422(a). Even though the divisibility rule “‘legally
entitle[s a taxpayer] to make [a partial] payment . . ., to
make [a] claim for refund, and to institute [a] suit for
recovery,’” the rule is designed as a means of “‘settling the
question of the right of the government to have made [the
entire tax] assessment against [the taxpayer].’” See
Boynton v. United States, 566 F.2d 50, 52 (9th Cir. 1977)
(emphasis added) (quoting Steele v. United States, 280
F.2d 89, 91 (8th Cir. 1960)). When a taxpayer sues for a
refund based on a divisible refund claim, it is meant to
“test the validity of the entire assessment.” See Lucia v.
United States, 474 F.2d 565, 576 (5th Cir. 1973) (empha-
sis added)); see also Univ. of Chi. v. United States, 547
F.3d 773, 785 (7th Cir. 2008) (noting that, where a tax is
divisible, “the taxpayer may pay the full amount on one
transaction, sue for a refund for that transaction, and
have the outcome of this suit determine his liability for all
the other, similar transactions” (emphasis added) (quota-
tion marks omitted)).
Moreover, Congress has recognized the representative
nature of a divisible refund suit, foreclosing IRS levies
“with respect to any unpaid divisible tax during the
pendency of any [previously-filed refund] proceeding
brought . . . in a proper Federal trial court” where “the
decision in [a] [previously-filed] proceeding would be res
judicata with respect to such unpaid tax” for the amounts
not formally part of the refund suit. See id.
CENCAST SERVICES, L.P. v. US 23
§ 6331(i)(1)(A). 8 We view this to be such a case. Thus, we
are persuaded that the Claims Court did not abuse its
discretion in declining to allow Cencast’s independent
contractor theory on the basis of the IRS’s levy of $4.3
million. The “new facts” arising from the IRS levy did not
compel the Claims Court to allow Cencast to plead “new
issues” relating to the independent contractor theory. 9
B
Cencast finally argues that its original 2002 refund
claim was sufficient to preserve the independent contrac-
tor theory. The Claims Court rejected this argument,
concluding that it lacked jurisdiction over the independ-
ent contractor theory based on the so-called “substantial
variance” rule. See Cencast II, 94 Fed. Cl. at 441-42. We
described this rule in Computervision Corp. v. United
States, 445 F.3d 1355 (Fed. Cir. 2006). As we explained in
8 The propriety of the levy in this case is not impli-
cated by this provision because it only applies to “unpaid
tax attributable to taxable periods beginning after De-
cember 31, 1998.” Pub. L. 105-206, § 3433(b), 112 Stat.
685, 760 (1999).
9 Allstate Ins. Co. v. United States, 550 F.2d 629
(Ct. Cl. 1977), is not to the contrary. Although the Court
of Claims allowed a taxpayer to assert an additional legal
theory in a second refund claim in that case, both the first
and second refund claims at issue were made within the
initial statute of limitations period defined in § 6511(a).
See id. at 635-36. Unlike Allstate, this case does not
involve an amendment to the taxpayer’s legal theories
within the limitations period applicable to a taxpayer’s
initial refund claim. Rather, it involves allegedly “new
facts” arising several years after the initial deficiency
assessment and tax payment that, in Cencast’s view,
justify a separate refund claim, made outside the initial
limitations period, raising new legal theories.
24 CENCAST SERVICES, L.P. v. US
Computervision, “[t]he Secretary by regulation requires
that claims for refund ‘set forth in detail each ground
upon which a credit or refund is claimed and facts suffi-
cient to apprise the Commissioner of the exact basis [of
the refund claim].’” Id. at 1363 (quoting Treas. Reg. §
301.6402-2(b)(1)). This requirement “‘is designed both to
prevent surprise and to give adequate notice to the [IRS]
of the nature of the claim and the specific facts upon
which it is predicated, thereby permitting an administra-
tive investigation and determination.’” Computervision,
445 F.3d at 1363 (quoting Alexander Proudfoot Co. v.
United States, 454 F.2d 1379, 1383 (Ct. Cl. 1972)). Accord-
ingly, new claims or theories raised subsequent to the
initial refund claim are not permitted where they sub-
stantially vary from the theories initially raised in the
original claim for refund. See Computervision, 445 F.3d at
1364 & n.8; Lockheed Martin Corp. v. United States, 210
F.3d 1366, 1371 (Fed. Cir 2000) (“[The] ‘substantial
variance’ rule . . . bars a taxpayer from presenting claims
in a tax refund suit that ‘substantially vary’ the legal
theories and factual bases set forth in the tax refund
claim presented to the IRS.”).
The question here, as in other cases, is “whether there
[wa]s a substantial variance from a timely filed claim.”
See Computervision, 445 F.3d at 1364 n.8 (citing Lock-
heed, 210 F.3d at 1371). There is no dispute that the
independent contractor theory was not raised in Cencast’s
2002 administrative refund claim. There is also no doubt
that the independent contractor theory substantially
varies from Cencast’s original theory of the case (which
was based on the wage cap issue discussed in Part I).
However, Cencast argues that exceptions to the variance
rule apply here.
1
Cencast first argues that the equitable recoupment
doctrine is an exception to the variance rule that permits
it to use its independent contractor theory to offset any
recovery the government may receive on its counter-
CENCAST SERVICES, L.P. v. US 25
claims. However, where the government files a counter-
claim that places the entire balance of assessed tax in
issue, we agree with the Claims Court that Cencast’s
right to assert a setoff with respect to the government’s
counterclaim recovery “exists only when the Government
raises a new issue that the plaintiff could not have antici-
pated and, therefore, could not have . . . asserted as
grounds for its [original] refund [claim].” Cencast II, 94
Fed. Cl. at 441. The principle underlying equitable re-
coupment, as articulated by the Ninth Circuit in a related
context, is that “[i]t would be unfair to allow the Govern-
ment to assert a new defense to a taxpayer’s claim at
pretrial and simultaneously to prevent the taxpayer from
making appropriate responses to it, because the taxpayer
had not previously anticipated the defense.” Brown v.
United States, 427 F.2d 57, 62 (9th Cir. 1970). However,
where “the government does not raise a[] [new] offset
issue . . . , a taxpayer could not raise any setoff.” Union
Pac. R.R. Co. v. United States, 389 F.2d 437, 447 (Ct. Cl.
1968).
This principle—that equitable recoupment only ap-
plies when the government raises a new taxation theory
in its counterclaims—is compelled by Supreme Court
cases emphasizing that the doctrine applies where the
government raises new and inconsistent theories of taxa-
tion. See United States v. Dalm, 494 U.S. 596, 605 n.5
(1990) (“[W]e have emphasized that a claim of equitable
recoupment will lie only where the Government has taxed
a single transaction, item, or taxable event under two
inconsistent theories.” (emphases added)); Rothensies v.
Electric Storage Battery Co., 329 U.S. 296, 300 (1946)
(“Whatever may have been said [in past cases] indicating
a broader scope to the doctrine of recoupment, these facts
are the only ones in which it has been applied by this
Court in tax cases.”); Bull v. United States, 295 U.S. 247
(1935) (permitting use of equitable recoupment defense
where an executor initially paid an estate tax on certain
funds, but the IRS subsequently treated the funds as
taxable income of the estate). No new and inconsistent
26 CENCAST SERVICES, L.P. v. US
theories were raised by the government in its counter-
claims. Accordingly, the equitable recoupment exception
is inapplicable.
2
Cencast next argues that the waiver doctrine saves its
independent contractor theory. Under this doctrine,
where “the taxpayer files a timely formal claim but fails
to include the specific claim for relief [i.e., the independ-
ent contractor theory], th[at] claim may nonetheless be
considered timely if the IRS considers that specific claim
within the limitations period.” Computervision, 445 F.3d
at 1365. Under some circumstances, the IRS’s considera-
tion is viewed as resulting in a waiver. See id.; see also
Goulding v. United States, 929 F.2d 329, 332 (7th Cir.
1991) (noting that waiver may occur “if the IRS has
sufficient knowledge of the claim and makes a determina-
tion on the merits”). “The central purpose of the waiver
doctrine is to prevent IRS agents from lulling taxpayers
into missing the [limitations] deadline . . . .” Computervi-
sion, 445 F.3d at 1366 (alterations in the original) (quota-
tion marks omitted). However, “the IRS cannot waive the
requirements of its regulations by conduct outside of the
limitations period.” Id. at 1367.
Here, with respect to Cencast’s 2002 administrative
claim, the relevant limitations period expired in 2004. See
I.R.C. § 6511(a) (noting that the statute of limitations for
a refund claim expires at the later of two years from the
date the tax is paid or three years from the date the
return is filed). Thus, the IRS’s consideration must have
occurred no later than 2004 for this exception to apply.
Cencast argues that the IRS considered the independent
contractor issue during the investigative proceedings that
preceded its 2001 assessment, but this argument is with-
out merit. While Cencast, during the administrative
investigation, alerted the IRS that there were questions
as to the independent contractor status and possibility of
refund claims with respect to those employees, Cencast
did not suggest that the independent contractor theory
CENCAST SERVICES, L.P. v. US 27
was a current issue, but merely that it was an issue that
could be raised in the future. Cencast’s submissions to the
IRS during its investigation specifically stated that “the
issue in the case at hand is not whether the workers are
employees or independent contractors. [The taxpayer] has
always treated the [production workers] as employees.”
J.A. 5488 (emphasis added). At the conclusion of the
investigation, the IRS merely “accepted the determination
that was made by the production companies and [Cen-
cast]” that the production workers were common law
employees. J.A. 10,775.
Here, it is clear that, before the expiration of the limi-
tations period, the IRS neither “consider[ed]” nor made a
“determination of the merits” as to the scope or nature of
any independent contractor overpayment. See Com-
putervision, 445 F.3d at 1365; Goulding, 929 F.2d at 332.
It is also clear that the IRS’s actions here did not pre-
vent Cencast from raising a timely administrative claim
or lull it into missing a limitations deadline. See Com-
putervision, 445 F.3d at 1365-67; see also United States v.
Memphis Cotton Oil Co., 288 U.S. 62, 64-66, 71 (1933)
(finding waiver where the IRS, after initially concluding
that a refund was due on a claim, reversed its position
and determined that the initial claim was improperly
filed, after the limitations period expired for filing a
corrected claim); Goulding, 929 F.2d at 333 (finding
waiver where the IRS had considered the merits of the
taxpayer’s claim based on an “in-depth investigation” it
had performed on a related claim, and declined to chal-
lenge the sufficiency of the taxpayer’s claim until two
years after the original claim was filed). No aspect of the
IRS’s alleged “consideration” prevented Cencast from
raising the independent contractor theory before 2004.
We agree with the Claims Court that, “[b]ecause
[Cencast] did not assert the independent contractor status
of [the] workers as a basis of [its] claim for refund and the
28 CENCAST SERVICES, L.P. v. US
answer to that question was not implicitly included in the
agency’s audit investigation,” 10 the independent contrac-
tor status of employees was “beyond the scope” of what
the IRS considered. Cencast II, 94 Fed. Cl. at 441. Thus,
the waiver doctrine does not warrant further considera-
tion of Cencast’s independent contractor theory.
There is no exception to the substantial variance doc-
trine here that would permit Cencast to raise its inde-
pendent contractor theory at this late date.
CONCLUSION
Because we conclude that Cencast has not shown its
entitlement to a tax refund, we affirm the judgment of the
Claims Court.
AFFIRMED
COSTS
Costs to the United States.
10 Cencast argued in its 2002 administrative claim
that the IRS had misidentified the workers’ common law
employers. Now, on appeal, Cencast argues that assess-
ment of this issue necessarily required the IRS to ascer-
tain whether production workers were independent
contractors or employees. However, as discussed above,
the refund claims treated as settled fact that the produc-
tion workers were employees. The issue was therefore not
“implicitly included” in Cencast’s claim, see Cencast II, 94
Fed. Cl. at 441.
| {
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FILED
NOT FOR PUBLICATION MAY 30 2014
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
FERIAL KAREN ARDALAN, No. 12-16581
Plaintiff - Appellant, D.C. No. 5:09-cv-04894-JW
v.
MEMORANDUM*
MACY’S WEST; MARISELA
ZAMBRANO,
Defendants - Appellees.
Appeal from the United States District Court
for the Northern District of California
Edward J. Davila, District Judge, Presiding
Submitted May 13, 2014**
Before: CLIFTON, BEA, and WATFORD, Circuit Judges.
Ferial Karen Ardalan appeals pro se from the district court’s order denying
her petition to vacate an arbitration award in her employment action alleging
wrongful termination, sexual harassment, and discrimination claims. We have
*
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), and, therefore, denies
Ardalan’s request for oral argument, set forth in her opening brief.
jurisdiction under 28 U.S.C. § 1291. We review de novo, Collins v. D.R. Horton,
Inc., 505 F.3d 874, 879 (9th Cir. 2007), and we affirm.
The district court properly denied Ardalan’s petition because Ardalan failed
to establish any of the limited grounds on which an arbitration award can be
vacated under section 10 of the Federal Arbitration Act. See id. (setting forth
narrow grounds on which courts may vacate an arbitration award, limited to fraud
in the procurement of the award, bias or corruption on the part of the arbitrator,
misconduct in refusing to hear evidence, abuse of power, and manifest disregard of
the law, and explaining that “mere allegations of error are insufficient” (citation
and internal quotation marks omitted)); see also Stolt-Nielsen S.A. v. AnimalFeeds
Int’l Corp., 559 U.S. 662, 671 (2010) (party seeking to vacate an arbitral award
“must clear a high hurdle,” which is not satisfied even by a showing that the
arbitrator committed “a serious error”).
Ardalan’s contentions that the district court ignored material evidence and
relied on distorted facts, and that defendants omitted or misreported material
information and engaged in other improprieties, are rejected as unpersuasive.
Ardalan’s request for an order of investigation and inquiry, set forth in her
opening brief, is denied.
AFFIRMED.
2 12-16581
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United States Court of Appeals
For the Eighth Circuit
___________________________
No. 17-1959
___________________________
United States of America
lllllllllllllllllllll Plaintiff - Appellee
v.
Nathaniel Taylor Matlock
lllllllllllllllllllll Defendant - Appellant
____________
Appeal from United States District Court
for the Northern District of Iowa - Waterloo
____________
Submitted: December 14, 2017
Filed: February 9, 2018
[Unpublished]
____________
Before WOLLMAN, LOKEN, and MURPHY, Circuit Judges.
____________
PER CURIAM.
Nathaniel Matlock pleaded guilty to being a felon in possession of a firearm
in violation of 18 U.S.C. § 922(g)(1), reserving his right to appeal the district court’s1
denial of his motion to suppress evidence. We affirm.
On July 24, 2016, Officer Troy Wilson of the Waterloo Police Department’s
Violent Crime Apprehension Team was patrolling the streets of Waterloo, Iowa, in
his squad car. At approximately 8:00 p.m., Officer Wilson initiated a traffic stop after
observing a vehicle’s malfunctioning rear brake light. Three other officers arrived
to assist with the stop.
Four people occupied the stopped vehicle. The driver’s license was revoked
and suspended, the front-seat passenger’s license was suspended, and the back-seat
passengers, one of whom was Matlock, had only Iowa identification cards, not
licenses. Officer Wilson initially could not specifically identify the back seat
passengers because of the vehicle’s tinted windows, but upon viewing Matlock’s
identification card he recognized him as a person who had previously been reported
to carry a firearm. Because no one in the vehicle was a legally licensed driver and the
vehicle was not insured, Officer Wilson ultimately decided to have the vehicle towed
and asked the occupants to exit the vehicle.
When Matlock stepped out of the vehicle, Officer Wilson asked him to put his
hands on the vehicle so that Wilson could conduct a pat-down search. Matlock
responded by saying, “For what? I’m just a passenger.” Officer Wilson again told
Matlock to put his hands up, at which point Matlock complied. Although Matlock’s
hands were not trembling, Wilson believed that Matlock’s hesitation to comply
1
The Honorable Linda R. Reade, United States District Judge for the Northern
District of Iowa, adopting the report and recommendation of the Honorable Jon S.
Scoles, United States Chief Magistrate Judge for the Northern District of Iowa.
-2-
suggested nervousness. During the search, Wilson discovered a .40 caliber handgun
in Matlock’s waistband and a pocketknife in his pocket.
Upon being indicted, Matlock moved to suppress the firearm. Officer Wilson
testified at the suppression hearing that he knew of Matlock’s “violent tendencies and
. . . firearm violence” because of three previous incidents, one of which was a report
that in May 2016, Matlock had allegedly exited a vehicle, brandished and cocked a
gun, and continued to display it until police were called. In March 2016, Officer
Wilson had responded to a shots-fired call, during which it was reported that Matlock
was the passenger in a vehicle from which shots were being fired. Officer Wilson
also knew of a police report that Matlock had been involved in a March 2014 shots-
fired call.
Officer Wilson further testified that although Matlock associates with the Black
Flag Mafia gang, the traffic stop occurred in a rival gang’s neighborhood. According
to Officer Wilson, the neighborhood is “plagued with gun violence,” and police had
responded to a nearby homicide a week prior to the traffic stop. Tr. 16. Additionally,
the block where the vehicle was stopped had been the location of numerous fights and
shots-fired calls.
In light of these circumstances, the magistrate judge concluded that Officer
Wilson had reasonable suspicion to search Matlock and that his actions thus did not
violate the Fourth Amendment. The district court adopted the magistrate judge’s
report and recommendation and denied the motion to suppress. Following the entry
of his guilty plea, the district court sentenced Matlock to 78 months’ imprisonment.
Matlock argues that the district court erred in denying his motion to suppress,
contending that Officer Wilson lacked reasonable suspicion to conduct the search.
We review “de novo the district court’s determination of reasonable suspicion and its
-3-
findings of fact for clear error.” United States v. Roelandt, 827 F.3d 746, 748 (8th
Cir. 2016).
The Supreme Court has upheld a pat-down search as permissible if two
conditions are met: (1) “the investigatory stop must be lawful,” and (2) the “officer
must reasonably suspect that the person stopped is armed and dangerous.” Arizona
v. Johnson, 555 U.S. 323, 326 (2009). “‘The officer need not be absolutely certain
that the individual is armed; the issue is whether a reasonably prudent man in the
circumstances would be warranted in the belief that his safety or that of others was
in danger.’” United States v. Oliver, 550 F.3d 734, 739 (8th Cir. 2008) (quoting
Terry v. Ohio, 392 U.S. 1, 27 (1968)). To determine reasonableness, we analyze the
totality of the circumstances, “allowing ‘officers to draw on their own experience and
specialized training.’” United States v. Davison, 808 F.3d 325, 329 (8th Cir. 2015)
(quoting United States v. Arvizu, 534 U.S. 266, 273 (2002)).
Matlock does not challenge the lawfulness of the initial traffic stop. He also
acknowledges that an officer may lawfully order a passenger to exit a vehicle to
perform a pat-down search if the officer reasonably believes that the passenger is
armed and dangerous. See Oliver, 550 F.3d at 737 (quoting Knowles v. Iowa, 525
U.S. 113, 118 (1998) (stating that the law permits an officer to “perform a ‘pat-down’
of a driver and any passengers upon reasonable suspicion that they may be armed and
dangerous”)); see also Johnson, 555 U.S. at 783 (noting that “[a] passenger’s
motivation to use violence during [a traffic] stop to prevent apprehension for a crime
more grave than a traffic violation is just as great as that of the driver”).
We conclude that Officer Wilson had reasonable suspicion to believe that
Matlock may have been armed and dangerous. As recounted above, the traffic stop
was initiated in an area “plagued with gun violence.” See Roelandt, 827 F.3d at 748
(citing United States v. Stewart, 631 F.3d 453, 457 (8th Cir. 2011) (defendant’s
presence in a high-crime area supported reasonable suspicion). Officer Wilson
-4-
recognized Matlock from previous incidents allegedly involving firearms, including
an incident that had occurred just two months before the pat-down search. See id.
(officer’s familiarity with past reports that the defendant possessed a gun supported
reasonable suspicion). He was also aware that while Matlock associated with the
Black Flag Mafia gang, he was stopped in a rival gang’s neighborhood. See id. at
749 (citing United States v. Cornelius, 391 F.3d 965, 967 (8th Cir. 2004)) (officer’s
knowledge of defendant’s gang affiliation supported reasonable suspicion); see also
id. (citing United States v. Feliciano, 45 F.3d 1070, 1074 (7th Cir. 1995)
(“Knowledge of gang association and recent relevant criminal conduct . . . is a
permissible component of the articulable suspicion required for a [pat-down
search].”). Officer Wilson also believed that Matlock’s failure to immediately
comply with Wilson’s order to place his hands on the vehicle reflected nervousness
on his part. See United States v. Morgan, 729 F.3d 1086, 1090 (8th Cir. 2013)
(defendant’s failure to comply with officer’s order to remove his hands from under
the seat when first ordered to do so supported reasonable suspicion).
We need also recognize that a situation of this nature is “fraught with risks to
officer safety.” Oliver, 550 F.3d at 738. Because the car was being towed, Matlock
and the other passengers were required to exit the vehicle. An officer is “not
constitutionally required to give [a passenger] an opportunity to depart the scene after
he exited the vehicle without first ensuring that, in so doing, [the officer] was not
permitting a dangerous person to get behind [him].” Johnson, 555 U.S. at 334. The
traffic stop was therefore “still at a point where the ‘risk of harm to both the police
and the occupants is minimized if the officers exercise unquestioned command of the
situation.’” Oliver, 550 F.3d at 738 (quoting United States v. Sanders, 510 F.3d 788,
790 (8th Cir. 2007)).
The judgment is affirmed.
______________________________
-5-
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J-S65043-15
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
KELVIN MANN
Appellant No. 1184 EDA 2015
Appeal from the PCRA Order March 27, 2015
In the Court of Common Pleas of Philadelphia County
Criminal Division at No(s): CP-51-CR-0003908-2008
CP-51-CR-0003913-2008
CP-51-CR-0009993-2008
BEFORE: BENDER, P.J.E., SHOGAN, J., and JENKINS, J.
MEMORANDUM BY JENKINS, J.: FILED JANUARY 07, 2016
Appellant Kelvin Mann appeals from the order of the Philadelphia
County Court of Common Pleas dismissing his petition filed pursuant to the
Post Conviction Relief Act (“PCRA”), 42 Pa.C.S. § 9541, et seq. We affirm.
On July 30, 2010, a jury found Appellant guilty of attempted murder,
carrying a firearm in public in Philadelphia, and firearms not to be carried
without a license,1 and the trial court found Appellant guilty of persons not
to possess or use firearms2 at CP-51-CR-0003908-2008.3 On November 22,
____________________________________________
1
18 Pa.C.S. §§ 901(a), 6108, and 6106(a)(1), respectfully.
2
18 Pa.C.S. § 6105(a)(1).
3
A previous May 2009 trial resulted in a judgment of acquittal for
Appellant’s co-defendant and a mistrial for Appellant. Commonwealth v.
(Footnote Continued Next Page)
J-S65043-15
2010, the trial court sentenced Appellant to 18 to 40 years’ incarceration for
the attempted murder conviction. The trial court imposed no further penalty
for the remaining charges.
On January 13, 2011, the trial court reinstated Appellant’s direct
appeal rights nunc pro tunc. Appellant filed a notice of appeal and, on March
12, 2012, this Court affirmed his judgment of sentence. Appellant filed a
petition for allowance of appeal to the Supreme Court of Pennsylvania, which
was denied on February 27, 2013.
On March 18, 2013, Appellant filed a timely PCRA petition. The trial
court appointed counsel, who filed a Turner/Finley4 no-merit letter. On
February 20, 2015, the trial court issued a notice of intent to dismiss the
PCRA petition without a hearing pursuant to Pennsylvania Rule of Criminal
Procedure 907. On March 2, 2015, Appellant filed a response to the notice
of intent to dismiss. On March 27, 2015, the trial court dismissed the PCRA
petition. Appellant filed a timely notice of appeal. Both Appellant and the
trial court complied with Pennsylvania Rule of Appellate Procedure 1925.
Appellant raises the following issues on appeal:
A. Whether trial counsel was ineffective for acquiescing to
the prior evidentiary rulings and failing to procure witness?
_______________________
(Footnote Continued)
Mann, 254 EDA 2011, at 10 (Pa.Super. filed Mar. 12, 2012) (unpublished
memorandum) (hereinafter “Direct Appeal Memorandum”).
4
Commonwealth v. Turner, 544 A.2d 927 (Pa.1988) and
Commonwealth v. Finley, 550 A.2d 213 (Pa.Super.1998) (en banc).
-2-
J-S65043-15
B. Whether [appellate] counsel was ineffective for failing to
frame the issues in a legally meaningful fashion?
C. Whether the sentence imposed a deadly weapon
enhancement in violation of Appellant’s right to due
process?
D. Whether PCRA counsel was ineffective for filing a no–
merit letter when the pro se claims in fact possessed
merit?
Appellant’s Brief at 3.5
Our standard of review from the denial of post-conviction relief “is
limited to examining whether the PCRA court’s determination is supported by
the evidence of record and whether it is free of legal error.”
Commonwealth v. Ousley, 21 A.3d 1238, 1242 (Pa.Super.2011) (citing
Commonwealth v. Morales, 701 A.2d 516, 520 (Pa.1997)).
Appellant first maintains his trial counsel was ineffective for agreeing
that the evidentiary rulings of the first trial would apply to the July 2010 trial
____________________________________________
5
Appellant also pled guilty at docket numbers CP-51-CR-0009993-2008 and
CP-51-CR-0003913-2008 to possession with intent to deliver a controlled
substance, 35 P.S. § 780-113(a)(30). He filed PCRA petitions at these
docket numbers, which the trial court denied in the same memorandum as
the PCRA petition filed at CP-51-CR-0003908-2008. Opinion, 3/27/2015.
Appellant raises in his appellate brief only the issues raised at CP-51-CR-
0003908-2008. Because Appellant provides no discussion of any issue
related to docket numbers CP-51-CR-0009993-2008 and CP-51-CR-
0003913-2008, he has waived the issues. Commonwealth v. Woodard, --
- A.3d ----, 2015 WL 7767271, at *22-23 (Pa.2015) (finding claim waived
where appellant “set forth no argument at all” on the issues in his appellate
brief.)
-3-
J-S65043-15
and for failing to present “Oschino”6 as a trial witness. Appellant’s Brief at
8-13.
For ineffective assistance of counsel claims, the petitioner must
establish: “(1) his underlying claim is of arguable merit; (2) counsel had no
reasonable basis for his action or inaction; and (3) the petitioner suffered
actual prejudice as a result.” Commonwealth v. Spotz, 84 A.3d 294, 311
(Pa.2014) (quoting Commonwealth v. Ali, 10 A.3d 282, 291 (Pa.2010)).
“[C]ounsel is presumed to be effective and the burden of demonstrating
ineffectiveness rests on appellant.” Ousley, 21 A.3d at 1244 (quoting
Commonwealth v. Rivera, 10 A.3d 1276, 1279 (Pa.Super.2010)). “The
failure to prove any one of the three [ineffectiveness] prongs results in the
failure of petitioner’s claim.” Id. (quoting Rivera, 10 A.3d at 1279).
Appellant first maintains that trial counsel should not have agreed that
the trial court was bound by the evidentiary rulings from the first trial.
Appellant’s Brief at 10-12. Specifically, Appellant claims trial counsel should
have objected to Lieutenant McGlinn’s testimony during which he used a
memorandum containing hearsay and trial counsel should have requested
____________________________________________
6
Appellant refers to the proposed defense witness as Oschino. He does not
provide additional information as to Oschino’s identity. Keith McLeod, the
victim, testified that Oschino was with Appellant on the day of the shooting
and testified that McLeod did not know Oschino’s real name. N.T.,
7/28/2010, at 176-77.
-4-
J-S65043-15
the use of tape-recorded messages of Yolanda Jones, a trial witness. Id. at
11.7
The trial court found Appellant failed to establish he was prejudiced by
counsel’s failure to contest the prior evidentiary rulings. Opinion,
4/30/2015, at 11 (“PCRA 1925(a) Opinion”). The trial court noted it would
have made the same evidentiary rulings during the trial. Id.
In its 1925(a) opinion on direct appeal, the trial court found it was not
error to allow Lieutenant McGlinn to use a memorandum that he prepared,
which contained hearsay statements.8 Opinion, 7/11/2011, at 12-13
(“Direct Appeal 1925(a) Opinion”). It further found the Lieutenant was
properly permitted to testify regarding the hearsay statements of the victim.
Id. at 13.
Following the shooting, while in transit from the trauma bay to the
operating room, Lieutenant McGlinn asked the victim who had shot him, and
____________________________________________
7
During the first trial, the trial court made evidentiary rulings. At the start
of the second trial, counsel stated that he believed the trial court was bound
by the prior evidentiary rulings and did not re-argue the issues. N.T.,
7/28/2010, at 15-16. On direct appeal, this Court found Appellant waived
the challenge to evidentiary rulings because he failed to challenge the
rulings at the second trial. Direct Appeal Memorandum at 11-12.
8
Although Lieutenant McGlinn identified the report he made following his
conversation with the victim, and testified it reflected his previous
testimony, he did not rely on this document while testifying. N.T.,
7/28/2010, at 147-49. He identified it after he completed recounting his
conversation with the victim. Id.
-5-
J-S65043-15
the victim responded: “Cash shot me.” N.T., 7/28/2010, at 146. He asked
the victim again who shot him, and the victim responded: “Cash. C-A-S-H.”
Id.9 The trial court noted the statement was within one hour of “being shot
numerous times at close range.” Direct Appeal 1925(a) Opinion, at 14. The
trial court reasoned the statements were admissible as present sense
impressions pursuant to Pennsylvania Rule of Evidence 803(1), which
provides:
(1) Present Sense Impression. A statement
describing or explaining an event or condition, made while
or immediately after the declarant perceived it.
Pa.R.Evid. 803(1). The trial court reasoned that statement was a present
sense impression because it was “uttered before the dust and smoke of the
mishap which gave it birth subside[d], and while the agony and the hurt of
the misfortune [was] yet unspent.” Direct Appeal 1925(a) Opinion, at 14
(quoting Thompson v. Philadelphia, 294 A.2d 826, 828 (Pa.Super.1972)
(admitting under res gestae exception to rule excluding hearsay a statement
made to police officer while in hospital x-ray room one hour after being
struck by car)). This was not error. Further, even if not admissible as a
present sense impression, the statement would have been admissible as a
____________________________________________
9
Officer Kenneth Downing also testified that the victim stated Cash shot him
and a medical student who was in the elevator at the time of the declaration
testified that the victim told the officers who shot him, although she could
not remember the name the victim provided and spelled. N.T., 7/28/2010,
288-90; N.T., 7/29/2010, 6-11.
-6-
J-S65043-15
dying declaration.10 Therefore, the underlying evidentiary claim that
Lieutenant McGlinn testified to impermissible hearsay evidence lacked
merit.11
Similarly, in its direct appeal 1925(a) opinion, the trial court found the
tape-recorded messages from Yolanda Jones were inadmissible because
Appellant’s arguments lacked the requisite specificity as to what the tapes
would show. Direct Appeal 1925(a) Opinion, at 14. It noted that Appellant
merely claimed the tapes would have shown Jones was a liar. Id. He does
not explain what is on the tapes, whether the tapes would have contradicted
Jones’ testimony, and which portion of the testimony would have been
contradicted. Id. at 15. The trial court did not err in finding the tapes
____________________________________________
10
When a declarant is unavailable, admission of “[a] statement that the
declarant, while believing the declarant’s death to be imminent, made about
its cause or circumstances,” is not prohibited by the hearsay rule. Pa.R.Evid.
804(b)(2). The declarant must believe death is imminent, he need not have
died. Id.; see Commonwealth v. Chamberlain, 731 A.2d 593, 597
(Pa.1999) (inferring that the victim believed she was dying due to the
gunshot wounds to her chest and head). Identifying the assailant would
relate to the cause or circumstances of the imminent death.
Commonwealth v. Edwards, 244 A.2d 683 684, 686 (Pa.1968) (victim’s
statement to police officer that “Howard Shot me” and another reference to
the shooter within scope of dying declaration). Further, the victim was
unavailable to testify as to the identification in the elevator because, as he
testified at trial, he did not recall the incident because he went in and out of
consciousness following the shooting. Pa.R.Evid. 804(a)(3); N.T.,
7/28/2010, 187-89, 226.
11
The victim also testified that Appellant shot him. N.T., 7/28/2010, at
176-87.
-7-
J-S65043-15
inadmissible. Because the claim lacked merit, the PCRA court properly found
counsel was not ineffective.
The PCRA court did not err in finding trial counsel not ineffective for
failing to present Oschino as a witness. To establish that counsel was
ineffective for failing to call a witness, a PCRA petitioner must demonstrate
that: “(1) the witness existed; (2) the witness was available to testify for the
defense; (3) counsel knew of, or should have known of, the existence of the
witness; (4) the witness was willing to testify for the defense; and (5) the
absence of the testimony of the witness was so prejudicial as to have denied
the defendant a fair trial.” Commonwealth v. Washington, 927 A.2d 586,
599 (Pa.2007). The PCRA court found Appellant failed to establish several
prongs, including that Oschino was available and willing to testify. The PCRA
court noted the “witness was arguably a co-conspirator of Mann’s who
himself was at risk of being arrested and charged in his own right, thereby
making it highly unlikely that he would have been willing to testify for the
defense at trial.” PCRA 1925(a) Opinion at 11-12. The PCRA court
concluded that Appellant failed to establish counsel’s ineffectiveness. Id. at
12. In addition, Appellant also failed to present any description of Oschino’s
proposed testimony, in either his PCRA petition or his response to the PCRA
court’s notice of intent to dismiss the PCRA petition. 12 As Appellant failed to
____________________________________________
12
Appellant’s brief states that Oschino contacted Appellant’s family and
wrote a letter indicating he would have testified. Appellant’s Brief at 12-13.
(Footnote Continued Next Page)
-8-
J-S65043-15
allege the required elements to establish counsel ineffectiveness for failure
to call a witness, this claim fails.
Appellant next maintains his appellate counsel was ineffective for
failing to frame the issues on appeal in a legally meaningful fashion,
including that appellate counsel failed to raise sufficiency of the evidence
claims for his gun convictions and did not properly raise his evidentiary
claims. Appellant’s Brief at 13-16. On direct appeal, this Court found the
Commonwealth presented sufficient evidence that Appellant was guilty of
attempted murder. Direct Appeal Memorandum at 5-7. In a footnote, we
noted that the argument section of the brief did not argue that there was
insufficient evidence of the gun possession convictions, and, therefore, it
need not address those convictions. Id. at 6 n.1. However, any challenge
to the sufficiency of the evidence of the gun convictions would have been
meritless, because the evidence established that Appellant carried, and
used, a firearm, which Appellant was not permitted to own, and that he used
the gun in Philadelphia.13
_______________________
(Footnote Continued)
The record does not include this letter. Further, the brief does not explain
Oschino’s proposed testimony, other than to state that Oschino was an
eyewitness. Id. at 13.
13
A person is guilty of carrying a firearm without a license where he:
“carries a firearm concealed on or about his person, . . . without a valid and
lawfully issued license.” 18 Pa.C.S. § 6106(a). A person is guilty of carrying
a firearm in public in Philadelphia if, without a license or an exemption, he
“carr[ies] a firearm, rifle or shotgun at any time upon the public streets or
upon any public property” in Philadelphia, 18 Pa.C.S. § 6108(a). A person
(Footnote Continued Next Page)
-9-
J-S65043-15
The PCRA court also did not err in finding appellate counsel not
ineffective for failing to raise the evidentiary claims. Trial counsel
ineffectiveness claims, however, cannot be raised on direct appeal.
Commonwealth v. Liston, 977 A.2d 1089, 1094 (Pa.2009) (quoting
Commonwealth v. O’Berg, 880 A.2d 597 (Pa.2005)). Further, as
discussed above, the evidentiary claims regarding Detective McGlinn’s
testimony and tape recordings of Yolanda Jackson lacked merit.14 Appellate
counsel cannot be found ineffective for failing to raise meritless claims. See
Spotz, 84 A.3d at 311.
Appellant next contends his due process rights were violated because
the trial court imposed a deadly weapon enhancement. Appellant’s Brief at
16-18. He maintains that, based on Alleyne v. United States, 133 S.Ct.
_______________________
(Footnote Continued)
is guilty of possession of a firearm by person prohibited if he previously was
convicted of an enumerated offense and he “possess[es], use[s], control[s],
sell[s], transfer[s] or manufacture[s] . . . a firearm in this Commonwealth.”
18 Pa.C.S. § 6105(a)(1). Appellant previously was convicted of robbery, an
enumerated offense. Further, a jury found him guilty of using a firearm to
attempt to murder the victim. The use of the firearm was in Philadelphia,
Pennsylvania.
14
To the extent Appellant purports to challenge appellate counsel’s failure to
properly raise a challenge to the preclusion of evidence that the
Commonwealth withdrew its prosecution against Terrell Ross, it appears this
was not raised in the second trial. Further, the evidence is inadmissible, see
Commonwealth v. Holloway, 739 A.2d 1039, 1044 (Pa.1999), and the
testimony clarified that the charges against Ross resulted from a
miscommunication between the police officers and the victim, as Ross
previously shot the victim but did not participate in the shooting at issue.
N.T., 7/28/2010, at 189-95.
- 10 -
J-S65043-15
2151 (U.S. 2013), a jury was required to make a determination regarding
the applicability of the deadly weapon enhancement beyond a reasonable
doubt. Appellant’s Brief at 16-18.
In Alleyne, the Supreme Court of the United States found that “[a]ny
fact that, by law, increases the penalty for a crime is an ‘element’ that must
be submitted to the jury and found beyond a reasonable doubt.” 133 S.Ct.
at 2155. Alleyne, however, does not apply to the application of a deadly
weapon enhancement. This Court has recently found:
Alleyne and [Apprendi v. New Jersey, 530 U.S. 466,
120 S.Ct. 2348 (U.S.2000)], dealt with factors that either
increased the mandatory minimum sentence or increased
the prescribed sentencing range beyond the statutory
maximum, respectively. Our case does not involve either
situation; instead, we are dealing with a sentencing
enhancement. If the enhancement applies, the sentencing
court is required to raise the standard guideline range;
however, the court retains the discretion to sentence
outside the guideline range. Therefore, neither of the
situations addressed in Alleyne and Apprendi are
implicated.
Commonwealth v. Buterbaugh, 91 A.3d 1247, 1270 n.10
(Pa.Super.2014) (en banc), appeal denied, 104 A.3d 1 (Pa.2014).
Accordingly, the PCRA court did not err in finding the application of the
deadly weapon enhancement did not violate Appellant’s due process rights.
Appellant’s final contention is that PCRA counsel was ineffective for
filing a no-merit letter. Appellant’s Brief at 18-21. Appellant preserved his
PCRA counsel ineffectiveness claims, which he raised in his response to the
trial court’s notice of intent to dismiss the PCRA petition. Commonwealth
- 11 -
J-S65043-15
v. Pitts, 981 A.2d 875, 879 n.3 (Pa.Super.2009) (appellant waives
challenge to PCRA counsel’s Turner/Finley letter where he “fail[ed] to
challenge PCRA counsel’s withdrawal upon his receipt of counsel’s no-merit
letter or within the 20-day period” to respond to the court’s notice of intent
to dismiss). However, the PCRA counsel ineffectiveness claim lacks merit.
As discussed above, the allegations Appellant attempted to raise in his PCRA
petition and in this appeal are meritless and PCRA counsel cannot be
ineffective for failing to raise meritless claims. Commonwealth v. Ligons,
971 A.2d 1125, 1146 (Pa.2009) (finding PCRA counsel not effective because
underlying claim lacked merit).
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 1/7/2016
- 12 -
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 16-6107
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
DAQUAN TYREK BROWN, a/k/a Scutter, a/k/a Scutter P, a/k/a
Keith Martin,
Defendant - Appellant.
Appeal from the United States District Court for the District of
South Carolina, at Charleston. Patrick Michael Duffy, Senior
District Judge. (2:11-cr-00472-PMD-16; 2:14-cv-02515-PMD)
Submitted: August 31, 2016 Decided: September 7, 2016
Before SHEDD, WYNN, and DIAZ, Circuit Judges.
Dismissed by unpublished per curiam opinion.
Daquan Tyrek Brown, Appellant Pro Se. Sean Kittrell, Assistant
United States Attorney, Charleston, South Carolina, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Daquan Tyrek Brown seeks to appeal the district court’s
order denying relief on his 28 U.S.C. § 2255 (2012) motion. The
order is not appealable unless a circuit justice or judge issues
a certificate of appealability. 28 U.S.C. § 2253(c)(1)(B)
(2012). A certificate of appealability will not issue absent “a
substantial showing of the denial of a constitutional right.”
28 U.S.C. § 2253(c)(2) (2012). When the district court denies
relief on the merits, a prisoner satisfies this standard by
demonstrating that reasonable jurists would find that the
district court’s assessment of the constitutional claims is
debatable or wrong. Slack v. McDaniel, 529 U.S. 473, 484
(2000); see Miller-El v. Cockrell, 537 U.S. 322, 336-38 (2003).
When the district court denies relief on procedural grounds, the
prisoner must demonstrate both that the dispositive procedural
ruling is debatable, and that the motion states a debatable
claim of the denial of a constitutional right. Slack, 529 U.S.
at 484-85.
We have independently reviewed the record and conclude that
Brown has not made the requisite showing. Accordingly, we deny
a certificate of appealability, deny leave to proceed in forma
pauperis, and dismiss the appeal. We dispense with oral
argument because the facts and legal contentions are adequately
2
presented in the materials before this court and argument would
not aid the decisional process.
DISMISSED
3
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Opinion issued February 21, 2019
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-18-00067-CR
———————————
JEFFREY MENDEZ, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 403rd District Court
Travis County, Texas1
Trial Court Case No. D-1-DC-15-301608
MEMORANDUM OPINION
1
The Texas Supreme Court transferred this appeal from the Court of Appeals
for the Third District of Texas. See TEX. GOV’T CODE § 73.001 (authorizing
transfer of cases between courts of appeals).
Appellant, Jeffrey Mendez, was found guilty by a jury of the capital felony
offense of capital murder. See TEX. PENAL CODE § 19.03. The trial court sentenced
appellant to life imprisonment without parole. See TEX. PENAL CODE § 12.31(a)(2).
Appellant timely filed a notice of appeal.
Appellant’s appointed counsel on appeal has filed a motion to withdraw, along
with an Anders brief stating that the record presents no reversible error and that,
therefore, the appeal is without merit and is frivolous. See Anders v. California, 386
U.S. 738 (1967). Counsel’s brief meets the Anders requirements by presenting a
professional evaluation of the record and supplying this Court with references to the
record and legal authority. See id. at 744; see also High v. State, 573 S.W.2d 807,
812 (Tex. Crim. App. 1978). Counsel indicates that he has thoroughly reviewed the
record and that he is unable to advance any grounds of error that warrant reversal.
See Anders, 386 U.S. at 744; Mitchell v. State, 193 S.W.3d 153, 155 (Tex. App.—
Houston [1st Dist.] 2006, no pet.).
Appellant’s counsel certified that he delivered a copy of the motion to
withdraw and Anders brief to appellant and informed appellant of his right to file a
pro se response. See In re Schulman, 252 S.W.3d 403, 408 (Tex. Crim. App. 2008).
Furthermore, counsel certified that he sent appellant the form motion for pro se
access to the records for his response. See Kelly v. State, 436 S.W.3d 313, 322 (Tex.
2
Crim. App. 2014). Appellant requested and was provided access to the record, but
he did not file a pro se response.
We have independently reviewed the entire record in this appeal, and we
conclude that no reversible error exists in the record, that there are no arguable
grounds for review, and that therefore the appeal is frivolous. See Anders, 386 U.S.
at 744 (emphasizing that reviewing court—and not counsel—determines, after full
examination of proceedings, whether appeal is wholly frivolous); Garner v. State,
300 S.W.3d 763, 767 (Tex. Crim. App. 2009) (reviewing court must determine
whether arguable grounds for review exist); Bledsoe v. State, 178 S.W.3d 824, 826–
28 (Tex. Crim. App. 2005) (reviewing court is not to address merits of each claim
raised in Anders brief or pro se response after determining there are no arguable
grounds for review); Mitchell, 193 S.W.3d at 155. An appellant may challenge a
holding that there are no arguable grounds for appeal by filing a petition for
discretionary review in the Texas Court of Criminal Appeals. See Bledsoe, 178
S.W.3d at 827 n.6.
Accordingly, we affirm the judgment of the trial court and grant counsel’s
motion to withdraw.2 See TEX. R. APP. P. 43.2(a). Attorney Michael Chandler must
immediately send the required notice and file a copy of that notice with the Clerk of
2
Appointed counsel still has a duty to inform appellant of the result of this
appeal and that he may, on his own, pursue discretionary review in the Texas
Court of Criminal Appeals. See Bledsoe, 178 S.W.3d at 826–27.
3
this Court. See TEX. R. APP. P. 6.5(c). We dismiss any other pending motions as
moot.
PER CURIAM
Panel consists of Chief Justice Radack and Justices Goodman and Countiss.
Do not publish. TEX. R. APP. P. 47.2(b).
4
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IN THE COURT OF CRIMINAL APPEALS
OF TEXAS
NOS. AP-76,528, AP-76,529 & AP-76,530
EX PARTE JOHN DEWAYNE WILLIAMS, Applicant
ON APPLICATIONS FOR A WRIT OF HABEAS CORPUS
CAUSE NOS. 114-0329-09, 114-0330-09 & 114-0331-09
IN THE 114TH DISTRICT COURT
FROM SMITH COUNTY
Per curiam.
O P I N I O N
Pursuant to the provisions of Article 11.07 of the Texas Code of Criminal Procedure, the
clerk of the trial court transmitted to this Court these applications for a writ of habeas corpus. Ex
parte Young, 418 S.W.2d 824, 826 (Tex. Crim. App. 1967). Applicant was convicted of two counts
of robbery and one count of aggravated robbery. He was sentenced to imprisonment for thirty years
on each robbery count and life on the aggravated robbery count.
Applicant contends that he was denied his right to appeal. The trial court determined that
appellate counsel did not receive timely notice of his appointment and recommended that we grant
relief. We find, therefore, that Applicant is entitled to the opportunity to file out-of-time appeals of
the judgments of conviction in Cause Nos. 114-0329-09, 114-0330-09, and 114-0331-09 from the
114th Judicial District Court of Smith County. Applicant is ordered returned to that time at which
he may give written notices of appeal so that he may then, with the aid of counsel, obtain meaningful
appeals. All time limits shall be calculated as if the sentences had been imposed on the date on which
the mandate of this Court issues. We hold that, should Applicant desire to prosecute appeals, he must
take affirmative steps to file written notices of appeal in the trial court within 30 days after the
mandate of this Court issues.
Delivered: April 6, 2011
Do Not Publish
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PD-0445-15
COURT OF CRIMINAL APPEALS
AUSTIN, TEXAS
Transmitted 7/27/2015 12:23:12 PM
July 27, 2015
Accepted 7/27/2015 12:40:36 PM
No. PD-0445-15
ABEL ACOSTA
CLERK
______________________________
IN THE COURT OF CRIMINAL APPEALS
OF TEXAS
______________________________
THE STATE OF TEXAS,
Appellant,
v.
DAVID FREDERICK CARY,
Appellee.
______________________________
On Appeal from the Court of Appeals, Fifth District of Texas at Dallas
Court of Appeals No. 05-13-01010-CR
______________________________
STATE’S UNOPPOSED MOTION FOR AN EXTENSION OF TIME
TO FILE THE STATE’S BRIEF
______________________________
KEN PAXTON *JOSEPH P. CORCORAN
Attorney General of Texas Assistant Attorney General
Supervising Attorney
CHARLES E. ROY for Non-Capital Appeals
First Assistant Attorney General Criminal Appeals Division
State Bar No. 00793549
EDWARD L. MARSHALL [email protected]
Chief, Criminal Appeals Division
P. O. Box 12548, Capitol Station
ADRIENNE McFARLAND Austin, Texas 78711
Deputy Attorney General Telephone: (512) 936-1400
for Criminal Justice Facsimile: (512) 936-1280
*Lead Appellate Counsel
_____________________________
ATTORNEYS FOR THE STATE
TO THE HONORABLE JUSTICES OF THE COURT OF CRIMINAL
APPEALS:
COMES NOW, the State of Texas and files this, the State’s Motion
for an Extension of Time to File the State’s Brief, and respectfully shows
the following:
I.
The State’s opening brief in this appeal is presently due Friday,
July 31, 2015.
II.
The State hereby requests an extension of 14 days to file its brief,
extending the new deadline to Friday, August 14, 2015. This is the
State’s first extension request.
III.
As justification for this request, in the last three weeks the
undersigned attorney (as the non-capital appellate supervisor for the
Criminal Appeals Division of the Texas Attorney General), was required
to perform an in-depth review of several non-extendible appellate briefs,
including: a brief in opposition to certiorari in Hunt v. Texas, No.
14-8575, filed in the Supreme Court of the United States on July 23,
2015; a brief in Vollmer v. Stephens, No. 14-10301, filed in the United
2
States Court of Appeals for the Fifth Circuit on July 14, 2015; and a brief
in Romero v. Stephens, No. 14-40570, filed in the United States Court of
Appeals for the Fifth Circuit on July 11, 2015. Moreover, the
undersigned attorney will be traveling out-of-state on a pre-paid
vacation from August 5, until August 9, 2015. This request is not
designed to harass Appellee, nor to unnecessarily delay these
proceedings, but to ensure that the State’s legal arguments are properly
presented.
The undersigned conferred with Appellant’s counsel of record on
July 24, 2015, who is unopposed to this motion.
WHEREFORE, PREMISES CONSIDERED, the State of Texas
respectfully requests an extension of time to file its brief up to and
including Friday, August 14, 2015.
3
Respectfully submitted,
KEN PAXTON
Attorney General of Texas
CHARLES E. ROY
First Assistant Attorney General
ADRIENNE McFARLAND
Deputy Attorney General
for Criminal Justice
EDWARD L. MARSHALL
Chief, Criminal Appeals Division
/s/ Joseph P. Corcoran
*Lead Counsel JOSEPH P. CORCORAN*
Assistant Attorney General
Supervising Attorney
for Non-Capital Appeals
Criminal Appeals Division
State Bar No. 00793549
[email protected]
P.O. Box 12548, Capitol Station
Austin, Texas 78711-2548
Telephone: (512) 936-1400
Facsimile: (512) 936-1280
ATTORNEYS FOR THE STATE
4
CERTIFICATE OF CONFERENCE
I hereby certify that I conferred with Mr. John Helms prior to the
filing of this motion, and he indicated that he did not oppose the
extension.
/s/ Joseph P. Corcoran
JOSEPH P. CORCORAN
Assistant Attorney General
5
CERTIFICATE OF SERVICE
Pursuant to Rule 9.5(b)(1) of the Texas Rules of Appellate
Procedure, I do hereby certify that if the email address of attorneys
designated below is on file with the electronic filing manager, a true and
correct copy of the foregoing notice was served electronically by that
electronic filing manager, on the following attorneys via electronic mail:
John Michael Helms Jr.
Attorney for Appellant
Moreover, I do hereby certify that if the email addresses for the
designated attorneys are not on file with the electronic filing manager, a
true and correct copy of the foregoing pleading was served by email,
addressed to:
John Michael Helms Jr.
[email protected]
/s/ Joseph P. Corcoran
JOSEPH P. CORCORAN
Assistant Attorney General
6
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538 U.S. 961
CITY OF LODI, CALIFORNIAv.FIREMAN'S FUND INSURANCE CO. ET AL.
No. 02-1169.
Supreme Court of United States.
April 7, 2003.
1
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.
2
C. A. 9th Cir. Certiorari denied. Reported below: 302 F. 3d 928.
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2 So.3d 1117 (2009)
RICHARD ROAD ESTATES, LLC, Petitioner,
v.
MIAMI-DADE COUNTY BOARD OF COUNTY COMMISSIONERS, Respondent.
No. 3D08-1400.
District Court of Appeal of Florida, Third District.
February 25, 2009.
*1118 Greenberg Traurig and Elliot H. Scherker, Miami, for petitioner.
R.A. Cuevas, Jr., Miami-Dade County Attorney, and Eduardo I. Sanchez, Assistant Miami-Dade County Attorney, for respondent.
Before WELLS and SHEPHERD, JJ., and SCHWARTZ, Senior Judge.
SCHWARTZ, Senior Judge.
Richard Road Estates, the owner of real property in southwest Miami-Dade County, seeks second tier certiorari review of a circuit court appellate division decision affirming the refusal of the Miami-Dade County Commission to grant a change in zoning of the petitioner's property from AU (agricultural zoning permitting one residence per five acres) to EU ("estate" zoning permitting one residence per one acre). We find the ruling a departure from the essential requirements of the law resulting in a miscarriage of justice to the petitioner, see Haines City Cmty. Dev. v. Heggs, 658 So.2d 523 (Fla.1995), and therefore grant relief.
The indisputable evidence is that (a) the previous agricultural nature of the area no longer prevails, so that (b) the surrounding property is now used as permitted either by EU or, if anything, even more liberal zoning.[1] In these circumstances, it is obvious that continuing the AU designation results in an instance of impermissible "reverse spot zoning," which cannot be sustained. *1119 Miami-Dade County v. Valdes, 34 Fla. L. Weekly D194, ___ So.3d ___, 2009 WL 129111 (Fla. 3d DCA Jan. 21, 2009), and cases cited; Debes v. City of Key West, 690 So.2d 700 (Fla. 3d DCA 1997), and cases cited. See also Tollius v. City of Miami, 96 So.2d 122 (Fla.1957).
The County's justification for the contrary result, which was accepted by the appellate division notwithstanding its acknowledgement that the outcome "seems unfair,"[2] was the desire to preserve the property's present status as an area into which excess rain water which would otherwise accumulate on the surrounding land is drained onto the petitioner's. Richard Road's property is thus forced to act, as it were, as an uncompensated storm sewer for the neighborhood. As a matter of constitutional law, however, a policy such as this one, which is unrelated to appropriate zoning principles, cannot support the action below. As we said in Debes, concerning a restriction of land use for a much worthier purpose keeping property available for affordable public housing:[3]
... [W]hile this aim may represent a desirable public policy-which might support, for example, the condemnation of property for that use, see State v. Miami Beach Redevelopment Agency, 392 So.2d 875 (Fla.1980)-it emphatically may not be promoted on the back of a private landowner by depriving him of the constitutionally protected use of his property. As the estimable Judge Cowart correctly and succinctly stated:
A property owner is entitled to have his property properly zoned based on proper zoning concepts without regard to the one particular use which the owner might then intend to make of the various uses permitted under a proper zoning classification. A zoning authority's insistence on considering the owner's specific use of a parcel of land constitutes not zoning but direct governmental control of the actual use of each parcel of land which is inconsistent with constitutionally guaranteed private property rights.
Porpoise Point Partnership v. St. Johns County, 470 So.2d 850, 851 (Fla. 5th DCA 1985); accord ABG Real Estate Dev. Co. v. St. Johns County, 608 So.2d 59, 63 (Fla. 5th DCA 1992), cause dismissed, 613 So.2d 8 (Fla.1993).
*1120 Debes, 690 So.2d at 700. See also CNL Resort Hotel, L.P. v. City of Doral, 991 So.2d 417 (Fla. 3d DCA 2008).
For these reasons, the decision of the appellate division is quashed. The cause is remanded with directions to quash the zoning resolutions in question.
Certiorari granted.
NOTES
[1] The record contains the following exchange between a commissioner and a County official:
COMMISSIONER SORENSON: ... Let me just look at the surrounding properties. Mr. Basu, the surrounding the property in the north is agriculture. Is that one house per five acres?
ACTING DIRECTOR BASU: No, that's an acre, acre.
COMMISSIONER SORENSON: It's an acre.
And the property to the east?
ACTING DIRECTOR BASU: East is one acre.
COMMISSIONER SORENSON: And the property to the south?
ACTING DIRECTOR BASU: South is AU right now.
COMMISSIONER SORENSON: It's AU. So it's one house per five acres on the south?
ACTING DIRECTOR BASU: Yes.
And caddy corner southeast is EU-1.
COMMISSIONER SORENSON: EU-1. So most of the area surrounding it is an acre?
ACTING DIRECTOR BASU: Yes ...
[2] The lower court said:
While it seems unfair to deny the Petitioner's application based on the illegal conduct of neighboring landowners who, under earlier regulations, were not required to fill or grade their land, flooding in the absence of infrastructure to contain the flooding presents a valid public policy concern. Petitioner argues that denying their petition because of inadequate existing infrastructure or because of flooding in the area amounts to a taking under the law. Accordingly, the Commission's resolution is unreasonable, arbitrary and confiscatory. As applied to its property, Petitioner argues that the resolution deprives them of equal protection of the laws and constitutes a taking of their property without due process of law contrary to the guarantees of our State Constitution ... While the Commission's decision appears unfair, a delay in the development of an applicant's property does not constitute a compensable temporary taking under the law.
But see CNL Resort Hotel, L.P. v. City of Doral, 991 So.2d 417, 421 (Fla. 3d DCA 2008) ("CNL did not assert that the City took its property without just compensation. CNL merely wanted the City to properly consider its private property rights before enacting its plan.").
It may be observed that in this case, as probably in every case, what seems (because it is) unfair also turns out to be wrong.
[3] Because, as a County official testified, "the surrounding properties ... don't have drainage rights to drain into this property.", Debes, in which the use sought to be promoted was perfectly lawful, is applicable in spades.
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177 So.2d 795 (1965)
Rita MIRE et al., Plaintiffs-Appellants,
v.
Cecil HAWKINS et al., Defendants-Appellees.
No. 1397.
Court of Appeal of Louisiana, Third Circuit.
May 19, 1965.
Rehearing Denied June 9, 1965.
Writ Granted September 30, 1965.
*797 Simon & Trice, by Phil Trice, Lafayette, for plaintiffs-appellants.
Hargrove, Guyton & Van Hook, by Elmon W. Holmes, Shreveport, Davidson, Meaux, Onebane & Donohoe, by Lawrence E. Donohoe, Jr., Lafayette, J. Lyle DeBellevue, Crowley, Edwards & Edwards, by Edwin W. Edwards, Crowley, P. J. Chappuis, II, Crowley, for defendants-appellees.
Before TATE, SAVOY, and HOOD, JJ.
TATE, Judge.
The plaintiffs appeal from a judgment granting them only part of their demands.
This is a suit by three former minors asserting three different demands, each of them principally against a different set of defendants: (I) against the co-owners of the mineral interests in certain lands ("the Mire tract") formerly owned by their grandparents, the plaintiffs assert a claim for recognition of their own ownership of a portion of the mineral interest affecting the Mire tract; (II) against the mineral lessees under assignments of 1953 mineral leases covering the entire Mire tract, the plaintiffs assert a demand for cancellation of the said leases essentially on the ground of nonpayment of mineral royalties when due (as well as a demand for an accounting for unpaid royalties); and (III) against the State Commissioner of Conservation (as well as the mineral lessees), the plaintiffs assert the unconstitutionality of a commissioner's order reducing the participation of Mire tract acreage in a producing conservation drilling unit.
The trial court granted the plaintiffs judgment recognizing that they still owned a mineral servitude affecting a very small portion of the Mire tract and ordering the defendant mineral lessees to account to plaintiffs for production royalties due to them by reason of such ownership. The plaintiffs' other demands were denied. The plaintiffs alone appeal from the trial court judgment.
Facts.
The late Veon Mire and his wife owned an 152-acre tract in Acadia Parish ("the Mire tract"). There were six children of Veon Mire's marriage, one of whom was the father of the three plaintiffs in this action. As a result, following the death of both of the Mire grandparents and of the plaintiffs' father, the three plaintiffs owned in indivision a one-sixth interest of the Mire tract prior to its partition in 1946.
In 1946, the Mire tract was partitioned into six approximately equal 25-acre lots numbered 1 through 6. The plaintiffs receiving Lot 1 as their share, with a reservation of their one-sixth mineral interest in Lots 2 through 6. In 1947, the plaintiffs sold Lot 1, reserving their remaining one-sixth mineral interest in said lot (the other five-sixths having been reserved by the other Mire co-heirs in the 1946 partition). The plaintiffs were minors at the time of both of these transactions, which were of course court-approved.
In 1953, the mineral leases now held by the defendant lessees were granted on all lots of the Mire tract by all the co-owners of the Mire tract (including the present plaintiffs).
In both the 1946 partition and the 1947 sale, the reservation of the mineral interests, as stated by Horn v. Skelly Oil Co., 224 La. 709, 70 So.2d 657, 660, "constitute[d] a servitude imposed upon the land, giving the owner thereof the right of ingress and egress for the purpose of exploring for and reducing to possession the minerals under the property so burdened." This servitude *798 is extinguished by prescription through nonusage for ten years, in the absence of intervening user or other interruption, or of suspension or other extension of the prescriptive period. Daggett, Louisiana Mineral Rights (Rev. ed., 1949), Sections 12 (p. 53), 14 (p. 63).
These 1946 and 1947 transactions therefore resulted in the then-minor plaintiffs owning two separate mineral servitudes: (a) one created by their reservation in the partition of November 27, 1946 of a one-sixth (1/6) mineral interest in Lots 2 through 6 of the Mire tract; (b) another created by their reservation in the April 11, 1947 sale of a one-sixth (1/6) mineral interest in Lot 1 of the Mire tract.
The most serious questions of this appeal concern whether either or both of these mineral servitudes created in favor of the then-minors were preserved by the interruption or suspension of prescription, or whether instead they had prescribed by the time mineral production was obtained in September, 1957, from a well drilled on non-servitude lands within a compulsory conservation unit which included part of the Mire tract.
I. Questions relating to the plaintiffs' present ownership of a mineral servitude affecting all or part of the Mire tract: Was prescription suspended by their minority or by commissioner's non-drilling orders?
The trial court rejected the plaintiffs' contentions (to be discussed below) that prescription was suspended for the requisite period by either their minority or by non-drilling orders issued by the commissioner of conservation when portions of the Mire tract were unitized. No attempt at user whatsoever being proved within ten years of the creation of the November 1946 servitude, the trial court held that this servitude (affecting Lots 2 through 6) was extinguished by prescription.
As to the April 11, 1957 servitude affecting Lot 1 (only), however, the trial court held that this was preserved as to a small portion of Lot 1 included within a commissioner's drilling unit ("Unit 11"). This holding was based upon the following:
Approximately two acres from the western end of Lot 1 was included in Unit 11, when said compulsory drilling unit was created in 1956. On April 10, 1957, (one day before expiration of the plaintiffs' 1947 servitude), the mineral lessee commenced surface preparations for a unit well within Unit 11, which was successfully completed as a producing well in September, 1957. This drilling site was not on the portion of the Mire tract included within the conservation unit.
Based on the holding in McMurrey v. Gray, 216 La. 904, 45 So.2d 73, to the effect that such surface preparatory operations constitute a user of a mineral servitude (at least if done on the servitude tract), the trial court held that this user on April 10, 1957, interrupted prescription against mineral servitudes affecting all surface acreage unitized within Unit 11, which included two acres of Lot 1 of the Mire tract[1].
The trial court therefore recognized the plaintiffs' mineral ownership to the extent of their one-sixth (1/6) mineral interest in the unitized two acres of Lot 1, pursuant to the mineral servitude created in their favor by the mineral reservation of April 11, 1947, when this lot was sold by them, which servitude was preserved by the user of April 10, 1957.
*799 For the purpose of the succeeding discussion, we will consider that the April 10, 1957 drilling preparations were a user of any mineral servitude affecting surface areas included within the commissioner's Unit 11[2]. This user in April 1957 by unit drilling operations interrupted prescription and preserved the plaintiffs' April 1947 mineral servitude, affecting Lot 1 (only) of the Mire tract, insofar as the two acres of the lot included with Unit 11.
The plaintiffs contend that such April 1957 user also prevented from prescribing their November 29, 1946 servitude, affecting the remainder (Lots 2 through 6) of the Mire tract, insofar as portions of it were included within Unit 11. This result obtains, the plaintiffs say, because the running of prescription had been suspended during part of the ten years so as to prevent this servitude's extinguishment by ten years' non-usage on November 29, 1956, only 4½ months preceding the April 1957 user. The plaintiffs contend that prescription was suspended for a great deal more than 4½ months (a) by their minority during a portion of the ten years and (b) by certain conservation orders prohibiting drilling on portions of the Mire tract within Unit 11, which while effective as obstacles to the user of the servitude had the effect of suspending prescription.
A. Was prescription against the plaintiffs' 1946 mineral servitude suspended by their minority prior to the 1950 amendment of LSA-R.S. 9:5805 abolishing suspension because of minority?
The plaintiffs were minors at the time the mineral servitudes were created in their favor in 1946 and 1947. Under Louisiana Statute, prescription does not run against minors, except as specified by law. LSA-C.C. Arts. 3522, 3554. At the time the plaintiffs' mineral servitudes were created, there was no provision of law by reason of which prescription ran against the mineral servitudes in favor of the then-minor plaintiffs.
In 1950, however, LSA-R.S. 9:5805 was amended to specify that prescription with regard to mineral interests was not suspended or interrupted by reason of minority, with the further specific provision that the abolition of minority as a suspension of prescription was intended to affect presently existing mineral or royalty rights. See Act 510 of 1950, amending and re-enacting LSA-R.S. 9:5805 (which is quoted in full in the discussion below).
The plaintiffs contend that this 1950 statute did not have the retroactive effect of depriving them of the suspension of prescription which had already taken place by reason of their minority prior to the act's effective date in 1950. In this regard, two (Rita and Raymond) of the three plaintiffs became majors either by age or judicial emancipation in the latter part of 1948, while the third (Joseph) did not attain majority until 1953.
Thus, if the plaintiffs' pre-1950 minority suspended the running of prescription against their November 29, 1946 mineral servitude, then prescription did not commence running until 1948 as to two of them (Rita and Raymond) and not until 1950 (the effective date of the act) as to the third (Joseph). If prescription was thus suspended and did not commence running until 1948 and 1950, then the 1957 user (by unit drilling operations) would have interrupted the running of prescription before the 1946 mineral servitude was extinguished by ten years' non-usage.
*800 With regard to the retroactive application of the 1950 enactment, statutes repealing a former cause for the suspension of prescription may be given retroactive application, if so intended; at least so long as a reasonable time is provided for the assertion of any rights adversely affected thereby. Cooper v. Lykes, 218 La. 251, 49 So.2d 3; Thomann v. Dutel, 158 La. 1026, 105 So. 52. In both of the cited decisions, minority had caused a suspension of prescription for several years under a formerly applicable statute; but the new statute abolishing minority as a suspension of prescription was applied retroactively in the light of its intent so as to commence and continue prescription as if such had never been suspended by the formerly applicable statute. Cf.: Sample v. Whitaker, 174 La. 245, 140 So. 36.
The plaintiffs-appellants contend, however, that the 1950 statute must be interpreted as intended to apply prospectively only.
By this 1950 enactment, LSA-R.S. 9:-5805 was amended so as to provide as follows:
"The accrual of the liberative prescription against the ownership, use, or development of minerals, or mineral or royalty rights shall not be suspended or interrupted because of the minority or other legal disability of any owner.
"This Section is intended to and does affect presently existing mineral or royalty rights; however, any minor or other person under legal disability, whose rights are affected hereby, shall have a period of one year from the effective date hereof within which to exercise such rights." (Italics ours.)
Although the matter is not free from doubt, we conclude that this 1950 enactment is under its terms intended to have retroactive effect. It specifically declares that it is intended to affect presently existing mineral rights. Of more weight, if the statute were prospective in operation only (so that prescription would commence running against minors only with its effective date in 1950), then it seems to us that there would have been no need of the statutory provision above italicized additionally providing that persons "whose rights are affected thereby, shall have a period of one year from the effective date hereof within which to exercise such rights."
As to this quoted savings clause: If the effect of the statute was intended to be prospective onlyand thus the abolition of suspension of prescription during minority effective only commencing in 1950 upon enactment of the statute, we can visualize little if any reason for the statute to provide for a period of time within which to assert rights adversely by the ending of the former suspension of prescription. Upon the statutory ending of the previous suspension or prescription, the minor against whom prescription was previously suspended by the former law, would still have the remaining period of the full prescriptive term within which to assert his rights.
On the other hand, if the intent of the statute was indeed retroactively to remove any previous suspension of prescription during minority or legal disability, then there is a definite reason for the statute to contain the one year's savings clause in question. Except for this savings provision, the retroactive application of the statute might in some instances have caused prescription to accrue prior to the effective date of the statute.[3] Therefore, for those who might be adversely affected by the act, without opportunity except for the clause to protect their rights, at least a full year *801 to do so from the effective date was given by the savings clause, so as to avoid questions of the unconstitutional divesting by the statute of property rights or contract obligations if no reasonable time had been allowed for the assertion of rights adversely affected by the act. See Cooper v. Lykes, cited above, at 49 So.2d 5, syllabi 3, 4; Sample v. Whitaker, cited above, at 140 So. 38-39, syllabi VII, VIII.
However, the appellants' able counsel points out that, literally read, the statute only affords a one-year savings period to "any minor or other person under legal disability" adversely affected. Counsel points out that two of the plaintiffs (Rita and Raymond) were no longer minors or under legal disability at the time the statute became effective in 1950, they having attained majority status in 1948. Thus, it is contended, since no savings clause protected the rights of those who had become majors prior to the statute's effective date (and who therefore might be immediately deprived of their rights by previously accrued prescription if the statute were retroactive in effect, see illustration in Footnote 3), it must be assumed that as to such majors, there is no retroactive effect of the statute removing the period of minority suspension applied prior to the statute's effective date. See Nabors, The Mineral Servitude and Royalty Doctrines, Part 2, 26 Tul.L.Rev. 23 (1951), 44-45.
We recognize the force of this argument, and also that the specification in the savings clause of only minors or persons under legal disability might tend to support a prospective rather than retroactive intent of the statute, since majors would have no need of a savings clause if the statute were prospective only. Nevertheless, we are not persuaded by these arguments, however forceful, that the statutewhich for the reasons previously stated we have held was intended by its terms to apply retroactively, should be construed to be prospective in whole or in part.
In the first place, "a statute cannot be retroactive as to some persons and only prospective as to others, unless the Legislature had indicated a manifest intention that it should be so; for the presumption is that a statute is intended to apply alike and equally to all persons unless the contrary clearly appears." Sample v. Whitaker, cited above, at 140 So. 39. Further, "it is a familiar rule of law that, if a statute is capable of two constructions, one of which will save the statute and the other damn it, that construction will be adopted which will save the statute." Id.
As in Sample v. Whittaker, therefore, we think that the statute must be interpreted either as entirely retroactive or else as entirely prospective. Further, we think that it would be an unreasonable construction to hold that the Legislature intended to give minors at the time of the enactment only one year within which to assert their rights or to provide that the statute was retroactive only as to them, but to give greater rights to older persons who had already attained majority status as of the statute's effective date.[4] The plaintiffs' arguments are rejected, therefore, that the 1950 statute should be interpreted so as to apply retroactively to the plaintiffs who were majors as to its effective date.
Further, an applicable principle of construction is to afford a constitutional construction to a statute where possible rather than an unconstitutional one. If the statute is retroactive in effect but majors are not included within the one year's savings *802 clause, then majors at the time of statute's adoption were given no time within which to exercise rights. The statute in some instances (see Footnote 3 illustration above) might immediately upon the statute's effective date deprive them of their right to exercise their servitude, which might thus unconstitutionally not afford them a reasonable period within which to exercise such rights following the statute's enactment. See Cooper v. Lykes, and Sample v. Whitaker, cited above.
We think, therefore, that the savings clause must be reasonably interpreted as providing a year from the act's effective date to exercise rights adversely affected, not only to those who were minors or under legal disability at the statute's effective date, but also to those whose minority or legal disability had formerly suspended prescription, in instances when the former suspension of prescription as to them had retroactively been removed by the 1950 statute.
In our opinion, thus, the sense of the statutory savings clause is that "any [now or former] minor or other person under legal disability * * * shall have a period of one year from the effective date hereof" within which to exercise rights adversely affected by the statute. The bracketed words ("now or former") which we have inserted into the text of the statute are, we believe, implied by the statute's intent both to remove minority as a present or previous cause for the suspension of prescription against mineral rights, but also to permit at least one year from the act's effective date for the exercise of rights adversely affected by it, as to those persons adversely affected by the act's retroactive removal of a former suspension of prescription (under the prior law) because of minority or legal disability.
We are reenforced in this construction of the retroactive effect of the 1950 amendment of LSA-R.S. 9:5805 by the similar interpretation given Act 232 of 1944, LSA-R.S. 9:5805 (prior to the 1950 amendment). This statute abolished the benefit of suspension of prescription in favor of minors or other persons under legal disability insofar as such suspension was formerly allowed co-proprietors with the minors by pre-1944 law. Despite possible arguments that the statute was not retroactive similar to those suggested above, see Nabors above-cited at 26 Tul.L.Rev. 43-44, the Supreme Court indicated that the statute was retroactive in intent and effect insofar as erasing a previous minority-caused suspension of prescription. Cooper v. Lykes, cited above; Davidson v. Bolton, 216 La. 677, 44 So.2d 700.
We therefore agree with the trial court's determination that the plaintiffs' pre-1950 minority did not suspend prescription.
B. Was prescription suspended by obstacles created by the conservation's commissioner's order forbidding drilling? The application or not of Boddie v. Drewett.
As earlier stated, the trial court held that the user of April 1947 did not preserve the plaintiffs' November 1946 servitude because the servitude had been extinguished by prescription some 4½ months earlier. The plaintiffs further contend that there had been a suspension of prescription by periods of some six to seventeen months as to all portions of Mire tract included within Unit 11, because of commissioner's conservation orders preventing drilling during such periods on the Mire tract lands within Unit 11. This contention is based on Boddie v. Drewett, 229 La. 1017, 87 So.2d 516.
Accepting for present purposes the plaintiffs' construction of the commissioner's orders in question, they show the following:
(1) Order 307 issued on May 1, 1955, unitized 45 acres of the Mire tract, with the commissioner's order forbidding drilling on 42 acres of said unitized area (under a prohibition of any drilling less than 1320 feet from the unit boundary). While drilling was therefore permissible on 3 acres of the unitized area, it was thus prohibited *803 on the other 42 acres for some 17 months, until Order 307 was replaced by Order 307-b.
(2) Order 307-b, replacing the prior unitization order, was issued on October 2, 1956. Unit 11 created by it included 61½ acres of the Mire tract (all of the portion previously unitized by Order 307 plus an additional some 16 acres), upon 54 acres of which drilling was prohibited by a similar commissioner's order. The 7½ acres upon which drilling was permissible by the order did not include any part of the three acres upon which drilling had been permitted under Order 307. This prohibition against drilling was in effect from October 2, 1956, some 6½ months prior to the user of April 1957.
Therefore, if the commissioner's orders preventing drilling had the effect as obstacles to user of suspending prescription, all of the unitized 61½ acres of the Mire tract within Unit 11 had been subject at one time or another to such a non-drilling order suspending prescription for from 6 to 17 months. Thus, the user of April 1957 was a user of the November 1946 servitude within the prescriptive period of ten years, taking into account the suspension of prescription through the non-drilling orders.
The plaintiffs' arguement is based solely upon the decision of Boddie v. Drewett, 229 La. 1017, 87 So.2d 516. In this case, the entire (12-acre) servitude tract had been unitized in the commissioner's drilling unit, and the entire servitude tract was subject to a non-drilling order preventing user upon any portion thereof. The Supreme Court held that therefore the commissioner's non-drilling order constituted an obstacle to user of the servitude which therefore suspended prescription for the period of time the obstacle was effective. See LSA-Civil Code Art. 792.
In the present instance, however, there was no obstacle to user by reason of a nondrilling order as to any portion of the 125-acre Mire tract outside of the unitized 61½ acres of Unit 11, Jumonville Pipe & Machinery Co. v. Federal Land Bank, 230 La. 41, 87 So.2d 721 at 724; nor, even if (assuming arguendo) the unitization orders are considered as having divided the servitude,[5] was user by drilling forbidden on at *804 least some of the areas unitized for different periods respectively either by Order 307 (3 of the 45 unitized acres were not subject to a non-drilling order) or subsequently by the superseding Order 307-b (7½ of the 61½ unitized acres were not within the non-drilling area).
Since drilling was thus permissible on at least a part of the servitude area at all times, there was no obstacle to user of the servitude; since "if a definite mineral interest is granted (or reserved) by a single instrument covering the whole of a continuous tract of land only one servitude is created thereby, and the proper exercise of it on any part of the tract interrupts the accruing of prescription as to any and all of the remaining portion." Gulf Oil Corporation v. Clement, 239 La. 144, 118 So.2d 361, 362-363. (Italics ours.) Boddie v. Drewett, upon which appellants rely, is thus distinguishable, since in that case no part of the servitude tract was within an area in which drilling was permissible.
The trial court, therefore, correctly held that the commissioner's limited non-drilling order did not suspend prescription.
II. Demand for cancellation of the leases.
In 1953 plaintiffs executed mineral leases of their interest in the Mire tract. The assignees of these leases eventually achieved production in 1957 by a producing unit well. As against these mineral-lessee defendants, the plaintiffs contend that they are entitled to a cancellation of the lease because of the active breach thereof by the mineral lessees through their failure to pay production royalties to the plaintiffs from the 1957 well prior to this suit in 1960.
The plaintiffs rely upon jurisprudence to the effect that failure to pay production royalties under a mineral lease for any appreciable time, without justification, amounts to an active breach of such lease which entitles the lessor to a cancellation thereof without the necessity of placing the lessee in formal default. Harris v. J. C. Trahan Drilling Contractor, Inc., La.App. 2 Cir., 168 So.2d 881; Sellers v. Continental Oil Co., La.App. 3 Cir., 168 So.2d 435; Pierce v. Atlantic Refining Co., La. App. 3 Cir., 140 So.2d 19, certiorari denied. Under this jurisprudence, however, even where (as here is not the case as to the plaintiffs), there are no adverse claims to the title of the lessor, the mineral-owner lessor is not entitled to cancellation when adequate reason is shown for the delay by the mineral lessee in the payment of production royalties due to the lessor interest. Broadhead v. Pan American Production Co., La.App. 3 Cir., 166 So.2d 329; Fawvor v. United States Oil Co. of Louisiana, Inc., La.App. 3 Cir., 162 So.2d 602.
In the present instance, there was a genuine and bona-fide dispute as to the plaintiffs' ownership of any mineral ownership whatsoever in the Mire tract, which the other co-owners have denied in these proceedings. It was necessary to resolve various serious and unsettled questions of law before it could be determined that the plaintiffs had not lost by prescription any mineral rights they still owned affecting the Mire tract. Under the provisions of the lease, the mineral lessees were authorized to withhold payment of royalties in the event of a dispute as to their ownership. We are cited to no applicable statute or jurisprudence justifying the drastic remedy of cancellation of a mineral lease under such circumstances.
The plaintiffs do contend that by virtue of LSA-R.S. 30:105, 106, the mineral lessees breached an obligation of law to pay their lessors, the plaintiffs, production royalties due under the lease. The *805 statutory provisions in question provide, inter alia, that it is unlawful for mineral lessees to withhold payment of royalties due to the lessor under a mineral lease from "the last record owner." Here, however, it was necessary to resolve several then-unsettled close questions of law before it could be determined whether indeed the plaintiffs were still "record owners" by virtue of their apparently prescribed mineral servitudes, and for this reason among others we do not feel the statute was intended to apply to the type of situation instanced by the present facts.
The trial court properly denied the plaintiffs' demands for cancellation of the leases.
III. Demand to declare commissioner's order unconstitutional.
Commissioner's Order 307-b-1, adopted March 1, 1960, removed some 45 acres of the Mire tract from the conservation Unit 11 created in 1956 by Order 307-b. The new 1960 order thus greatly reduced future participation of the Mire-tract mineral owners in the production royalties from the 1957 unit well. By one of their demands, the plaintiffs attack this 1960 order as unconstitutional on the ground that no adequate prior notice was given to royalty owners adversely affected by it.
The trial court dismissed this demand concerning the constitutionality of the order, for the reason, inter alia, that the commissioner was an indispensable party and that the commissioner had previously been dismissed from the instant action due to lack of proper venue. Mire v. Hawkins, La.App. 3 Cir., 147 So.2d 892, writs denied, 244 La. 116, 150 So.2d 584. We think the trial court's ruling is correct.
When the grounds of a peremptory exception cannot be removed by amendment of the petition, the cause of action must be dismissed. LSA-C.C.P. Art. 934. No adjudication of a cause of action can be made unless all indispensable parties are joined. LSA-C.C.P. Art. 641.
LSA-R.S. 30:12 provides that a person aggrieved by an order of the commissioner of conservation is required to bring an action against him as defendant. Construing the jurisprudence holding that an order of the Louisiana Conservation Commissioner fixing a production unit is not subject to collateral attack, Everett v. Phillips Petroleum Co., 218 La. 835, 51 So.2d 87, Mayer v. Tidewater Oil Co., 218 F.Supp. 611 (D.C.La. 1963), with the foregoing statute, we think that the commissioner is an indispensable party to an action to declare unconstitutional an order issued by him. See LSA-C.C.P. Art. 641: "Indispensable parties to an action are those whose interests in the subject matter are so interrelated, and would be so directly affected by the judgment, that a complete and equitable adjudication of the controversy cannot be made unless they are joined in the action. * * *"
Since there can be no adjudication of a cause of action as to unconstitutionality without joinder of the commissioner as an indispensable party, and since the commissioner cannot be impleaded in the present Acadia Parish suit (and in fact has been dismissed from it by judgment now final), the trial court correctly dismissed the demand as to unconstitutionality of the commissioner's order.
Conclusion.
The judgment of the district court is therefore to be affirmed insofar as it dismissed all demands of the plaintiffs other than those allowed by it, namely, the recognition of part of the mineral servitude claimed by them (that affecting the portion of Lot 1 included within Unit 11), as well as the plaintiffs' right to an accounting for the production of mineral royalties due to them by reason thereof.
*806 Costs.
The district court assessed one-half of the costs in the trial court to the plaintiffs and one-half to the defendants.
The plaintiffs point out that judgment was in their favor for a portion of the mineral interests claimed by them, and for an accounting of the proceeds due them by reason of this, with plaintiffs' legal rights in these regards against all defendants-appellees secured only by reason of such favorable judgment; and that the general rule, subject to the trial court's discretion, however, is that the plaintiff prevailing under these circumstances is entitled to costs. See Official Revision Comment (b), LSA-C.C.P. Art. 1920.
The plaintiffs also point out that the trial court judgment did not fix the fee and tax as costs one expert witness fee due to the plaintiffs' expert engineer for testifying, despite the plaintiffs' request for such fixing (TR 538). The plaintiffs further contend that the cost of preparing the appellate record was materially increased by the necessity of furnishing duplicate copies of voluminous exhibits introduced by the lessee defendants (Continental Oil and Texas Eastern), many pages of which are duplications of exhibits previously entered by the plaintiffs or of other exhibits of the defendants.
Taking all of these circumstances into consideration, and exercising our discretion to assess costs as may be considered equitable by us, LSA-C.C.P. Art. 2164: the defendants-appellees are hereby assessed with all the costs of the trial proceedings (including the expert fee due to the plaintiffs' expert engineer witness, the right being reserved to tax same as costs by a rule to show cause in the trial court, LSA-C.C.P. Art. 1920); further, the mineral-lessee defendants-appellees (Continental Oil and Texas Eastern) are cast with one-half the costs of this appeal, the plaintiffs-appellants with the other one-half.
Decree.
As thus amended as to costs, the trial court judgment is affirmed in all other respects.
Affirmed.
On Application for Rehearing.
En Banc. Rehearing denied.
NOTES
[1] We may say that the lessor defendants-appellees contest the correctness of the trial court's resolution of this previously undecided question of law (when the preparatory operations are conducted not on the servitude tract but on other land unitized with us). However, it is unnecessary for us to discuss the correctness of the trial court's holding with regard to Lot 1. The defendants-appellees neither appealed nor answered the appeal, so the ruling as to Lot 1 is not before us for review.
[2] Of course, under the jurisprudence, this user, on a site within the unit but off the unitized area of the servitude tract, did not constitute a user as to non-unitized servitude lands outside of Unit 11; as to these latter, the plaintiffs' mineral servitudes were therefore extinguished by ten years' non-user. Jumonville Pipe and Machinery Co. v. Federal Land Bank, 230 La. 41, 87 So.2d 721; Childs v. State of Washington, 229 La. 869, 87 So.2d 111; cf., Frey v. Miller, La.App. 3 Cir., 165 So.2d 43.
[3] For example: Persons who as minors acquired a mineral interest in 1938 and became majors in 1948; by the retroactive effect of the 1950 act, the ten years' prescription would have accrued in 1948, instead of then just commencing as under the prior law (because of the prior law's suspension of prescription during minority.)
[4] For instance, in the present instance, the 1946 servitude would prescribe against the only one of the plaintiffs still a minor in 1950, Joseph, in 1956, if the statute were prospective as to him only; whereas it would not prescribe as to the other two plaintiffs, who attained majority status in 1948, until 1958, or two years later than for Joseph, if the statute were retroactive as to minors but not as to majors as of the effective date of the enactment.
[5] It is unnecessary for us to decide whether the commissioner's unitization orders had the effect for present purposes of dividing the servitude between the unitized and the non-unitized areas, although we doubt it. Our Supreme Court in Jumonville Pipe & Machinery Co. v. Federal Land Bank, 230 La. 41, 87 So.2d 721, and Childs v. State of Washington, 229 La. 869, 87 So.2d 111, held that a commissioner's conservation unit did have the effect in law of so dividing a mineral servitude when production from a non-tract well resulted, but this was based solely upon the statutory provision that production from a unit well not located on the servitude tract is "considered" as if it were produced from the servitude tract, LSA-R.S. 30:10(A) (1) (b). See Professor Daggett's discussion at 17 La.L.Rev. 340-342 (1957). The commissioner's unitization order does not divide the servitude for all purposes; for instance, not for mineral lease purposes, see Le Blanc v. Danciger Oil & Ref. Co., 218 La. 463, 49 So.2d 855. Again, for example: in the absence of production bringing into play the statutory provision considering unit production as a servitude user (which perhaps would include surface preparatory and initial drilling operations leading to successful production as the trial court here held, see I above), the general rule is that unsuccessful dry hole drilling in the unit but not on the unitized portion of the servitude tract does not constitute a user of the servitude; see Boddie v. Drewett at 87 So.2d 518: "On the other hand, we do not regard the dry hole drilled on the unit in December of 1949 as a user of the servitude as there was neither production from nor drilling on the land burdened therewith." (To the contrary, of course, unsuccessful bonafide drilling operations located on the servitude tract itself are considered as a user sufficient to interrupt prescription. Daggett, Louisiana Mineral Rights, Rev. ed. 1949. Section 21, p. 96). Unitization per se thus, in the absence of production (statutorily "considered" a user), did not change the usual requirements of user, which permit a user anywhere on the servitude area to constitute a user of the servitude affecting the whole.
| {
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PURSUANT TO INTERNAL REVENUE CODE
SECTION 7463(b),THIS OPINION MAY NOT
BE TREATED AS PRECEDENT FOR ANY
OTHER CASE.
T.C. Summary Opinion 2015-54
UNITED STATES TAX COURT
DAVID WILLIAM LAUDON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 27380-11S. Filed September 8, 2015.
David William Laudon, pro se.
Christina L. Cook and John Schmittdiel, for respondent.
SUMMARY OPINION
HOLMES, Judge: David Laudon is a chiropractor licensed in Minnesota.
He made nearly $290,000 in bank deposits from 2007 to 2009 yet reported only a
bit less than $210,000 in gross receipts on his returns. He deducted as business
expenses for his chiropractic home office a Microsoft Xbox 360, Nintendo Wii,
and numerous pieces of hair-salon equipment. He also claimed deductions for
-2-
driving tens of thousands of miles throughout Minnesota and the Dakotas--both to
treat patients and to perform an assortment of other services. The Commissioner
thought this was a stretch and urges us to support his adjustments.1
Background
Laudon owns and operates a rather unconventional chiropractic business in
Detroit Lakes, Minnesota. He treats some of his patients in his home and claims to
use roughly half of his house--the basement and half of the garage--for business.
Like many chiropractic offices, Laudon’s has beds, tables, and a waiting area. But
unlike most, his also comes equipped with a Wii, Xbox 360, big-screen TVs and,
for a time, a working hair salon.
Laudon testified that he also makes “house calls” and reported that he
racked up between 40,000 and 60,000 miles per year in his business vehicles. He
said that his patients often called him a psychiatrist, chauffeur, physician, peace
officer, or even a pheasant hunter.2 Some of Laudon’s stated reasons for making
1
We tried this small case in St. Paul under Internal Revenue Code section
7463(f). (All section citations are to the Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and Procedure.) Trial as
a small case means that this decision isn’t reviewable by any other court, and this
opinion shouldn’t be cited as precedent.
2
But not a ghostbuster. The Commissioner rhetorically asserted that some
of Laudon’s trips might have made more sense if he was claiming to be a
(continued...)
-3-
these trips strain credibility: for example, driving to a “schizophrenic” patient who
was--on more than one occasion--“running scared of demons” down a rural
Minnesota highway, or driving to a patient’s home in a Minneapolis suburb--
expensing 261 miles--because he had received a call from police that she had
overdosed on OxyContin prescribed by her physician. Laudon claimed to have
driven hundreds of miles per day--sometimes without a valid license--to see
patients, but several of these trips were for medical procedures he was not licensed
to perform. Even his testimony about multiple entries in the logs where he wrote
“DUI” was not credible: He claimed that these were not references to being
stopped by police while under the influence, or driving while his license was
suspended, but instead were his misspellings of a patient named “Dewey”--a
supposed patient of his. He testified that he took one business trip to pick up a
patient left stranded due to a domestic dispute with his girlfriend. And he even
testified about trips he made to test his patients’ urine:
2
(...continued)
ghostbuster. Laudon then disclaimed any employment as a ghostbuster. In his
reply brief the Commissioner conceded that Laudon was not “employed or under
contract to perform work as a ghostbuster during the tax years at issue in this
case.” We therefore need make no finding on the existence of a market for
“supernatural elimination” in west-central Minnesota. See “Ghostbusters”
(Columbia Pictures 1984).
-4-
Absolutely we do * * * [test urine]. It’s part of the--I believe it’s
Federal, you know, that they have--we have to abide by that. It’s
specific gravity. You’re basically, looking for sugar, let alone height,
weight, blood pressure. Make sure they’re not drunk, doing illegal
drugs.
We find Laudon not credible in his testimony regarding his business
mileage, and this finding affects our views of his testimony’s credibility on every
other issue in the case.
These other issues arise from his unusual returns that reported no net
income:3
Year Gross Receipts Expenses Taxable Income
2007 $59,056 $111,250 $(60,944)
2008 67,068 71,005 (65,081)
2009 33,952 56,313 (84,393)
Laudon did, however, make unexplained deposits into his bank accounts. The
Commissioner analyzed these accounts and discovered that Laudon had put nearly
$80,000 more into them than he’d reported on his tax returns. The Commissioner
3
The gross receipts and expenses come from Laudon’s Schedules C, which
constitute the biggest part of his returns. He combined his Schedule C losses with
other items--Schedule A itemized deductions or the standard deduction depending
on the year, his personal exemption, and large “other income” items that were
carried-forward losses--to arrive at his taxable income.
-5-
added this amount to Laudon’s income and disallowed many deductions. The
notice of deficiency determined:
Year Gross Receipts Expenses Taxable Income
2007 $71,056 $11,319 $46,766
2008 105,997 28,780 62,812
2009 62,014 23,290 26,138
Laudon filed a timely petition, and we tried his case in St. Paul. Laudon
remains a Minnesota resident, as he was when he began his case.
Discussion
A. Income
We first ask whether Laudon underreported his income. Laudon did not
keep records of his income in any decipherable form; and when this happens the
Commissioner may reconstruct a taxpayer’s income by using any rational method
that separates taxable income from nontaxable income and expenses. A bank-
deposits analysis is an acceptable method. See, e.g., Caulfield v. Commissioner,
33 F.3d 991, 993 (8th Cir. 1994), aff’g T.C. Memo. 1993-423.
For us to accept his bank-deposits analysis, the Commissioner must show
that Laudon operated an income-producing business for the tax years at issue, and
made regular deposits into this business’s bank accounts. He may then compute
-6-
net taxable income by distinguishing taxable deposits from deposits of nontaxable
income and income from years not at issue. See United States v. Abodeely, 801
F.2d 1020, 1023 (8th Cir. 1986). Using this long-accepted method, the
Commissioner determined that Laudon had made net taxable deposits for the tax
years before us:4
Year Total Deposits Reported and Total unreported
non-taxable taxable income
income
2007 $99,578 $87,578 $12,000
2008 113,448 74,519 38,929
2009 74,862 46,800 28,062
Total 287,888 208,897 78,991
Because the Commissioner used an acceptable method of income
reconstruction, Laudon has the burden of proving that the Commissioner made
some mistake. See Caulfield, 33 F.3d at 993; Dodge v. Commissioner, 981 F.2d
350, 354 (8th Cir. 1992), aff’g 96 T.C. 172 (1991). Laudon contends that the
Commissioner failed to classify certain deposits as nontaxable, including
insurance payments for damage to several vehicles, one of which was involved in
a “high speed police chase” with a man “high on meth and cocaine.” He also
4
The Commissioner did concede that one $900 deposit shouldn’t be
included in the bank-deposits analysis due to a bank error.
-7-
claims he had proceeds from car sales gone awry, the sale of scuba equipment,
compensation for lost luggage, and payments from Best Buy and FedEx for
damage to his laptop computer on two different occasions. And he claims that
“Wells Fargo lost [a] cash deposit” of $6,000 or maybe $7,850.
But because he didn’t produce any evidence verifying that these amounts
were deposited into the relevant accounts, Laudon hasn’t met his burden of proof.
Cf. Caulfield, 33 F.3d at 993-94. The Commissioner calculated Laudon’s income
by adding the deposits in his personal accounts and business account for each of
the years at issue. He then reduced the total by Laudon’s reported income and by
any deposits identified as nontaxable. We therefore accept the Commissioner’s
reconstruction of Laudon’s income.
B. Deductions
We next look at Laudon’s deductions. The Commissioner allowed very few
of them:
Schedule C expenses
Year Amount reported Amount allowed Adjustment
on return by exam
2007 $111,250 $11,319 $99,931
2008 71,005 28,780 42,225
2009 56,313 23,290 33,023
-8-
Total 238,568 63,389 175,179
The Commissioner’s reason was simple: Like any taxpayer, Laudon can claim
business-expense deductions only for the ordinary and necessary expenses of his
business, see sec. 162(a), and he bears the burden of proof, see Rule 142(a);
INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992). Taxpayers usually
meet this burden with records of some kind. See sec. 6001; Hradesky v.
Commissioner, 65 T.C. 87, 89-90 (1975); sec. 1.6001-1(a)-(e), Income Tax Regs.
And for some kinds of expenses, those records must be particularly detailed. See
sec. 274(d).
Car and Truck Expenses
We look first at the very large deductions that Laudon claimed for his travel
throughout and between the Dakotas and Minnesota. The Commissioner objected
to all of these on the ground that Laudon’s records didn’t substantiate them:
Car and truck expenses
Year Amount reported Amount allowed Adjustment
on return by exam
2007 $30,645 $0 $30,645
2008 24,899 0 24,899
2009 23,741 0 23,741
-9-
Laudon’s problem is that car-and-truck expenses are governed by section
274(d), which requires his records to show (1) the amount of each expense, (2) the
dates that he drove for business purposes, (3) where he was going, and (4) his
business reason for going there. See sec. 274(d).
Laudon had a mileage log, but it fails to meet section 274(d)’s standards.
The July 31, 2007 entry, for example, describes his purpose as “[t]ravel to and
from places.” Even Laudon conceded that his log was “not a complete itemized
thing.” We find this log to be both incomplete and incomprehensible and disallow
Laudon’s mileage deductions in full.
Home Office Expenses
Laudon also took deductions for using his basement and garage as a home
office in 2007 and 2009:
Business use of home expense
Year Amount reported Amount allowed Adjustment
on return by exam
2007 $5,235 $0 $5,235
2009 $1,787 $0 $1,787
Section 280A(c)(1) allows a taxpayer to claim a deduction for the portion of his
home allocated for business use. A taxpayer claiming a deduction under this
section must, however, show that he used the portion of his home exclusively for
- 10 -
business. Id.; Langer v. Commissioner, 980 F.2d 1198, 1199 (8th Cir. 1992), aff’g
T.C. Memo. 1990-268.
While we accept that Laudon treated patients in his home at least some of
the time, we don’t find credible his testimony that his basement was used
exclusively for his business. We particularly disbelieve his claim that the Xbox,
Wii, big-screen TVs, and other electronics in his basement were used exclusively
for chiropractic purposes since this claim conflicts with his much more plausible
admission to the IRS examiner during audit that his daughter and his girlfriend’s
son would play these video games while he was on the phone.5 Laudon also
admitted that he used his garage to store the cars that he used personally. This is
an entirely plausible use of a garage, but it means we won’t find that he used the
garage exclusively for business purposes. We also deny these deductions because
5
Laudon further undermined his credibility by claiming that he used the Wii
and Xbox 360 to keep his patients “active and moving.” These are well-known
games whose features are not subject to reasonable dispute and are “generally
known within the trial court’s territorial jurisdiction.” Fed. R. Evid. 201(b)(1).
One can imagine the Wii--with games such as Wii Bowling and Wii Fit that
feature motion-based controllers requiring physical activity from its users--might
be used for its physical benefits. But no reasonable person could think that the
Xbox 360 could be--Microsoft didn’t introduce the Kinect until late 2010, just in
time for Christmas and before the years at issue in this case. Before Kinect, Xbox
playing was more of the vegging-out-on-the-couch variety.
- 11 -
Laudon failed to substantiate his claimed home-office expenses with any records
or other documentation.
Insurance, Repairs, Utilities, Office Expenses, and Wages Expenses
We’ll dispose of some other contested deductions on Laudon’s returns:
Insurance, repairs, utilities, office expenses, and wages
Year Expense Amount Amount Adjustment
category reported on allowed by
return exam
2007 Insurance $2,030 $850 $1,180
Repairs 5,405 0 5,405
Utilities 6,160 3,490 2,670
Office 13,169 1,553 11,616
expenses
2008 Insurance 3,717 850 2,867
Utilities 7,749 4,339 3,410
Wage 9,600 0 9,600
2009 Insurance 3,012 0 5,083*
Total 50,842 11,082 41,831*
* The notice of deficiency disallowed insurance expenses of this amount even
though Laudon had claimed a smaller amount. We suspect that the Commissioner
meant to disallow the $5,083 that Laudon claimed on his 2009 return as “Repairs
and Maintenance.” But this is just speculation, and neither party offered any
evidence on the subject. We therefore treat the disallowance of $5,083 as a
disallowance of the actual amount that Laudon claimed--$3,012. This reduces the
total adjustments for these expenses, and the parties should redo the
Commissioner’s math and use this lower amount in their Rule 155 computations.
- 12 -
Laudon produced no substantiation whatsoever that would let us allow anything
beyond what the Commissioner already has.
Other Expenses
Other expenses
Year Amount reported Amount allowed Adjustment
on return by exam
2007 $33,728 $2,741 $30,987
2008 3,299 1,850 1,449
2009 1,534 1,284 250
The Commissioner disallowed $30,987 of Laudon’s claimed “other
expenses” in 2007. Laudon didn’t substantiate any of his claimed deductions for
these “other expenses” for 2007, 2008, and 2009, so we agree with the
Commissioner’s determination. Most of this amount--$22,665--was a deduction
for the value of Laudon’s labor, supplies, and stolen tools related to the renovation
of a home that Laudon neither lived nor worked in, or even owned. We agree with
the Commissioner that these improvements aren’t related to Laudon’s chiropractic
business. They do seem to have produced some money for Laudon, though: He
filed a mechanic’s lien for expenses including a “Jacuzzi tub,” “Race Tracks,”
several hotel-room bills, a satellite dish, and several necessities for a “[b]asement
movie room,” and received $20,000 as a result. The Commissioner classified this
- 13 -
$20,000 as nontaxable income, and we have no reason to disturb this
determination either.
Depreciation
Depreciation
Year Amount reported Amount allowed Adjustment
on return by exam
2007 $5,172 $0 $5,172
2009 3,234 0 3,234
We turn next to depreciation. On this item, the Commissioner seems to
have made a mistake that benefits Laudon. For his 2007 tax year, Laudon claimed
a $5,172 depreciation expense; and for 2008, a $12,193 depreciation expense. But
the Commissioner in the notice of deficiency disallowed $12,193 in depreciation
for 2007 and didn’t disallow anything for 2008. For 2009 he disallowed $28,062,
but Laudon had claimed only $3,234. This suggests a clerical error, but the
Commissioner never asked to fix it. As a result, the Commissioner does not
dispute Laudon’s claimed $12,193 depreciation for 2008. And for 2007 and 2009,
the Commissioner’s adjustments were larger than the amounts that Laudon
claimed. Laudon didn’t present any evidence--either records or testimony--
substantiating his claimed depreciation in any amount, so we sustain their
disallowance. But only up to the amounts that he claimed. (As with the 2009
- 14 -
“insurance” expense, the parties should take this into account when they do the
Rule 155 computations.)
Net Operating Losses
Net Operating Losses
Year Amount reported Amount allowed Adjustment
on return by exam
2008 $52,194 $0 $52,194
2009 52,182 0 52,182
Laudon claimed net operating losses of $52,194 for 2008 and $52,182 for
2009, but the Commissioner disallowed them entirely. Laudon has the burden of
proof. See Keith v. Commissioner, 115 T.C. 605, 621 (2000). He did not,
however, ever address this issue at trial. We therefore find for the Commissioner
and sustain his disallowance.
C. Penalty
The last issue is whether to sustain the Commissioner’s application of an
accuracy-related penalty under section 6662 for Laudon’s underreported income
and overstated deductions. A taxpayer is subject to a substantial-understatement
penalty if he understates his income tax by the greater of $5,000 or ten percent of
the tax required to be shown for the taxable year. See sec. 6662(a), (d)(1)(A).
- 15 -
Laudon’s understated income tax meets this requirement for all three tax years at
issue.
Laudon asserts the defense that he reasonably relied on the advice of a tax
professional. See sec. 1.6664-4(b), Income Tax Regs. To make this
determination, we look to three factors. Neonatology Assocs., P.A. v.
Commissioner, 115 T.C. 43, 99 (2000), aff’d, 299 F.3d 221 (3d Cir. 2002).
C First, was the adviser a competent professional who had sufficient
expertise to justify reliance?
C Second, did the taxpayer provide necessary and accurate information
to the adviser?
C Third, did the taxpayer actually rely in good faith on the adviser’s
judgment?
We don’t need to address the first and third factors because we don’t believe
that Laudon provided “necessary and accurate information” to his adviser. See id.
At trial Laudon presented the summaries of his tax information and expenses that
he provided to H&R Block’s preparers. He said he also provided his preparers
with “all my receipts and stuff,” but he didn’t present evidence suggesting he
provided all of his receipts or that what he provided was sufficiently detailed to
aid his preparers. For example, included in the exhibit alongside these summaries
was Laudon’s mileage log, but he later admitted his mileage log wasn’t a complete
- 16 -
itemized list; and so if this is something he presented his preparers, it wouldn’t be
sufficient. Moreover, while he claimed to have brought all of his receipts to H&R
Block along with his summaries, he later stated that his preparers didn’t want him
to just walk in with his receipts and have them add it up, so it’s unclear to what
extent he actually went over his receipts with his preparers rather than just
presenting the summaries. And Laudon never mentioned explaining the diverse
and unconventional nature of his business so as to help his preparers understand
his (incomplete) logs and claimed expenses. All of this leads us to find that
Laudon did not provide all of the necessary and accurate information to his
advisers. Having blinded H&R Block to the details and peculiarities of his
chiropractic enterprise, Laudon cannot now claim that he relied on H&R Block’s
advice. We sustain the penalty.
Decision will be entered
under Rule 155.
| {
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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
No. 73209-9-I
In the Matter of the
RICHARD C. SWEEZEY TRUST OF 1990 DIVISION ONE
UNPUBLISHED OPINION
FILED: May 16, 2016
Appelwick, J. — The Estate appeals the dismissal on summary judgment
of its petition for a declaration of rights under a TEDRA Agreement. Under the
terms of a trust, Rick was to receive a portion of the trust's remainder if he survived
his mother. Rick predeceased his mother. Under the terms of the TEDRA
agreement, upon his mother's death, before distribution of the trust assets, certain
payments were to be made to equalize for amounts previously taken by other
residual beneficiaries. The Estate asserts that it is entitled to a payment from Trust
assets, because the TEDRA Agreement amended the survivorship requirement as
to a portion of the trust assets. We affirm.
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No. 73209-9-1/2
FACTS
Richard C. Sweezey (Dick) was married to June1 Sweezey. Together, Dick
and June had four sons: Richard H. Sweezey (Rick), Paul Sweezey, David
Sweezey, and Gary Sweezey. Rick married Rae Ann Engdahl in 1985. Engdahl
had two children from a previous marriage. Rick never adopted Engdahl's
children.
In 1990, Dick established the Richard C. Sweezey Trust of 1990 (Trust).
The Trust corpus consisted primarily of interests in closely held corporations. Dick
established the Trust for his benefit during his lifetime and for June's benefit after
his death.2 Specifically, the Trust allocated the property as follows:
3.4 Balance of Property. Trustees shall allocate the rest of
Trustor's estate as follows:
(a) If Trustor's wife is then living, Trustees shall distribute the
balance of the trust property to the Trustees of the Trust for Wife
under Article 4.
(b) If Trustor's wife is not then living, Trustees shall distribute
all of the trust property in equal shares as follows:
(i) one share to each son of Trustor who is then living;. . . and
(ii) one share by right of representation to the descendants
then living of any of Trustor's sons who are deceased. . . .
Therefore, under the terms of the trust, if a son predeceased June, that son's share
would go to his descendants. Dick died on July 23, 1992. The Trust became
1 We refer to the parties by their first names for the sake of clarity. No
disrespect is intended.
2 The 1990 Trust provided that after Dick died and after other specific
requests the remainder of the assets were to be held in a qualified terminable
interest property Trust (QTIP). The QTIP and the Richard C. Sweezy Trust of 1990
are collectively referred to as the Trust.
No. 73209-9-1/3
irrevocable upon Dick's death. At that point, pursuant to the Trust, specific
distributions were made to Rick, David, Paul, and a trust was created for Gary and
his family (Gary Family Trust). The remainder of the Trust assets funded a trust
for June's benefit.
Rick, David, and Paul served as successor co-trustees of the Trust.3 In
November 2004, Rick and David, as co-trustees of the Trust, June, as co-trustee
of the Gary Family Trust, and Paul, as co-trustee of both the Trust and the Gary
Family Trust, executed a "Joint Action and Consent of the Co-Trustees" (Joint
Action). The Joint Action delegated day-to-day affairs of the Trust to a trust
administrator. The co-trustees first designated David as the administrator.
Sometime shortly after the Joint Action, the co-trustees verbally agreed to
substitute Paul as the Trust administrator. The Joint Action also appointed David,
Paul, and Rick to corporate executive positions at companies owned by the Trust.
On January 7, 2009, June filed a petition under the Trust and Estate Dispute
Resolution Act (TEDRA)4 seeking removal and replacement of Rick, David, and
Paul as the co-trustees. She alleged that the co-trustees breached their fiduciary
duties, unjustly enriched themselves, and converted trust assets. The petition
alleged that since the Joint Action, from 2004 to 2007, a majority of the co-trustees
caused one of the Trust's companies, City Electric, to pay each of them excessive
salaries and year-end bonuses. The petition noted that David and Paul do not
work for or run the operations of City Electric and that Rick, who does work for and
3 June and Paul served as co-trustees of the Gary Family Trust.
4RCW11.96A.080
No. 73209-9-1/4
run City Electric,5 consented to the removal of all three co-trustees in favor of a
professional fiduciary. In addition to removal of the trustees, June's petition sought
the return of the illegally obtained Trust property as soon as possible. The petition
also requested that the co-trustees be restrained from taking any more Trust
assets with the exception of reasonable wages received for work actually
performed.
Prior to trial, on June 26, 2009, after two mediations, June, Paul, Rick, and
David all signed a settlement agreement (TEDRA Agreement). Under the TEDRA
Agreement, Rick, David, and Paul agreed to resign as co-trustees and appoint an
independent corporate trustee. By signing the TEDRA Agreement, June released,
waived, and discharged all claims against Rick, Paul, and David for breach of
fiduciary duty.
Among many provisions, the TEDRA Agreement had an "Equalizing
Distributions to Four Brothers" provision to ensure that at June's death the
brothers' distributions would be equalized:
Within three months of the three brothers signing this Agreement,
Rick, David, and Paul will participate in an arbitration before Steve
Scott to determine the amount of distributions that the brothers have
received to date. Earned income shall not be considered a
distribution. To the extent the distributions are unequal, they shall
be equalized by the New Corporate Trustee upon June's
death. .. . Once those equalizing distributions are made, the
remaining assets would be divided between the four brothers
equally.
5 Rick was the Chief Executive Officer of City Electric.
No. 73209-9-1/5
The TEDRA Agreement also included a merger and inurement clause under the
"Miscellaneous" section:
5. This Agreement contains the entire agreement between and
among the parties with regard to the matters set forth herein and is
conclusive and binding on and inures to the benefit of the executors,
administrators, personal representatives, heirs, successors and
assigns of each.
On March 5, 2010, the parties amended the TEDRA Agreement. Among
other things, the amendment noted that the parties all selected Union Bank, N.A.
to serve as the new corporate trustee for the Trust. The superior court entered an
order approving the TEDRA Agreement on March 24, 2010.
As mandated by the TEDRA Agreement, Rick, David, and Paul went to
arbitration. After considering evidence and argument of counsel, the arbitrator
determined the amount of advance distributions each brother received from the
Trust. He found that Rick and Gary had received no advance distributions. But,
he found that David received $829,490.94 and that Paul received $679,062.31.
He made an award accordingly. The arbitrator also awarded Rick $35,929.39 in
attorney fees and costs. The superior court entered an order confirming the
arbitration awards on June 28, 2010.
In 2012, Rick disappeared and was declared deceased. Engdahl is the
personal representative of Rick's Estate (the Estate). Then, June died on April 21,
2014. June's death triggered the final distribution of Trust assets. But, before the
assets were distributed, Union Bank, the corporate trustee, petitioned to resign as
trustee. On June 18, the Estate filed an opposition to Union Bank's petition,
because the Estate did not want David and Paul to serve as Union Bank's
No. 73209-9-1/6
replacement. The Estate noted that it was a creditor of the Trust, because the
Trust was obligated to pay it the equalizing payments under the TEDRA
Agreement. David and Paul responded, indicating that they agreed to Union
Bank's resignation, but they denied the Trust's obligation to make an equalizing
payment to the Estate. They argued, among other things, that the Estate is not a
creditor and has no claim. They asserted that neither the TEDRA Agreement nor
the arbitration award changed the terms of the Trust that require a beneficiary of
the Trust to survive June in order to claim anything under the Trust.
On July 1, 2014, the court entered an order appointing David and Paul as
co-trustees. But, the trial court required that they post a bond or secure a deed of
trust for $1,000,000 on the Trust property until the Estate resolved its potential
claim against it. The trial court's order also authorized Union Bank to resign as
trustee of the Gary Family Trust.6 On July 29, 2014, as required by the court's
order, David and Paul executed a deed of trust in favor of Rick's Estate secured
by some of the Trust's real property. .
On August 1, 2014, the Estate, filed a petition for declaration of rights under
TEDRA Agreement and judgment. The Estate argued that Rick's interest in the
TEDRA Agreement passed to his Estate. And, it noted that the TEDRA Agreement
created an absolute obligation for the Trust to pay the equalizing payments upon
June's death to Rick, Gary, and their heirs, and then distribute the remainder.
David and Paul, on behalf of the Trust, and Vranizan, on behalf of the Gary Family
Trust (collectively "respondents"), separately opposed the Estate's petition.
6 It named Michael Vranizan as the successor trustee.
No. 73209-9-1/7
On September 18, 2014, the matter was certified for trial. On January 23,
2015, the Estate moved for summary judgment. That same day, David and Paul
also filed a motion for summary judgment on behalf of the Trust, arguing that the
TEDRA Agreement did not destroy the survivorship condition—that a son survive
June in order to collect—under the Trust. They argued that because Rick
predeceased June, according to the language of the Trust, only his "descendants"
were entitled to collect. And, because Rick never adopted Engdahl's two children,
Rick had no descendants. On February 9, 2015, the Gary Family Trust filed a
response, requesting that the court grant the Trust's motion for summary judgment
and dismiss the Estate's petition.
On February 20, 2015, the parties went before the trial court on the cross-
motions for summary judgment. The Estate conceded that Rick had no
"descendants" under the terms of the Trust. But, it argued that this was a question
of the interpretation of only the TEDRA Agreement, not the Trust. It argued that
the language of the TEDRA Agreement mandated that the equalizing payments
be made upon June's death. And, the Estate referenced the inurement clause in
the TEDRA Agreement and claimed the right to receive the equalizing payments
inures to the benefit of the party's estates, assigns, and heirs—words it claimed
are materially different than "descendant" as stated in the Trust. The Estate also
requested interest from the date of June's death and attorney fees.
No. 73209-9-1/8
After hearing argument from the Estate, the trial court granted the Trust's
motion for summary judgment. The trial court stated:
I think it is quite clear that you have to construe all of these
agreements together - the trust as well as the - the TEDRA
agreement, and it is clear that this related to a right that Rick had as
an expectancy, which is as ... if he survived his mother, June, and
he didn't, and so there's nothing to be paid out here.
The trial court also noted that an award of attorney fees was appropriate for both
the co-trustees and the Gary Family Trust to the extent that the fees were
reasonable.
That same day, the trial court entered a written order granting the co
trustees' motion for summary judgment, dismissing the Estate's petition with
prejudice, and denying its request for interest and attorney fees.7 Because of its
ruling, the trial court also ordered that the deed of trust securing the Estate's
potential claim against the Trust be reconveyed.
In the order granting summary judgment, the trial court noted that attorney
fees were appropriate. It reasoned this was so, because the Estate's petition
caused the co-trustees to incur fees and costs in their defense of the Trust and its
remainder beneficiaries from an unsuccessful and meritless attack. The court
7 The written order stated that the court finds and concludes that section
3.4(b) of the Trust clearly and unambiguously requires a Trust beneficiary to have
survived June or predeceased June, leaving lineal descendants in order to receive
a distribution from the Trust upon June's death. It continued that the TEDRA
Agreement and the arbitration award did not create a stand-alone payment
obligation that was separate and distinct from the final Trust distribution. It
concluded that the Estate had no interest in the Trust, because Rick did not survive
June and died without leaving descendants.
8
No. 73209-9-1/9
awarded the Trust and the Gary Family Trust attorney fees and costs. The Estate
appeals.
DISCUSSION
The Estate argues that the trial court erred when it granted summary
judgment in favor of the Trust. The Estate urges this court to reverse the trial court,
order summary judgment in its favor, replace the deed of trust with security for the
Estate's claim, reverse the trial court's attorney fee award against it and award
fees to the Estate, and award it fees on appeal.
This court reviews summary judgment orders de novo. Hadlev v. Maxwell,
144 Wn.2d 306, 310-11, 27 P.3d 600 (2001). Summary judgment is appropriate
only where there are no genuine issues of material fact and the moving party is
entitled to judgment as a matter of law. CR 56(c); Peterson v. Groves, 111 Wn.
App. 306, 310, 44 P.3d 894 (2002). When considering the evidence, the court
draws reasonable inferences in the light most favorable to the nonmoving party.
Schaafv.Hiqhfield. 127Wn.2d 17, 21, 896 P.2d 665 (1995).
I. The TEDRA Agreement
The Estate first argues that summary judgment was improper, because the
TEDRA Agreement is an independent and enforceable contract that is not subject
to the survivorship requirement of the Trust. It asserts that it is entitled to an
equalizing distribution payment—$829,490.94—under the terms of the TEDRA
Agreement.
TEDRA, provides for judicial and nonjudicial resolution to trust and estate
disputes and related matters. RCW 11.96A.010. Under TEDRA, if all parties
No. 73209-9-1/10
agree to a resolution of a matter related to a trust or an estate, the matter can be
settled by a written agreement signed by all parties. RCW 11.96A.220. If the
parties file the written agreement with a court, it becomes the equivalent of a final
court order binding all interested parties. RCW 11.96A.230(2).
The parties urge this court to adopt different interpretations of the TEDRA
Agreement. When interpreting TEDRA agreements, this court applies general
principles of contract law. See In re Estate of Bernard, 182 Wn. App. 692, 697,
718, 332 P.3d 484 , review denied, Wn.2d , 339 P.3d 634 (2014) (applying
principles of contract interpretation to interpreting TEDRA Agreements); see
Condon v. Condon, 177 Wn.2d 150, 162, 298 P.3d 86 (2013) (applying principles
of contract interpretation to interpreting settlement agreements.). In Washington,
courts interpret contracts by attempting to determine the intent of the parties by
focusing on their objective manifestations as expressed in the agreement.
McGuire v. Bates, 169 Wn.2d 185, 189, 234 P.3d 205 (2010). Washington courts
apply the "context rule" of contract interpretation in ascertaining the parties' intent.
Roats v. Blakelv Island Maint. Comm'n, Inc., 169 Wn. App. 263, 274, 279 P.3d 943
(2012). The context rule allows a court, while viewing the contract as a whole, to
consider extrinsic evidence, such as the circumstances leading to the execution of
the contract, the subsequent conduct of the parties and the reasonableness of the
parties' respective interpretations.8 Id.
8The Estate argues that the context rule does not apply at all in this case,
because there is no specific contractual provision or term in the TEDRA Agreement
requiring definition. Specifically, the Estate claims that respondents are improperly
using the Trust—as extrinsic evidence under the context rule—to vary the plain
and unqualified meaning of the equalizing distribution provision of the TEDRA
10
No. 73209-9-1/11
Both parties properly agree that the intent of the contracting parties is
paramount in interpreting the TEDRA Agreement. But, they offer differing
interpretations as to the parties' intent. The Estate asserts that the plain language
of the equalizing distribution provision, the inurement clause, and the merger
clause illustrates the intent of the parties.9 It argues that the three provisions read
together show that the parties intended to contract away the Trust's survivorship
requirement as to the equalizing distribution payment provision of the TEDRA
Agreement. And, that the merger clause specifically manifests an intent of the
parties to have the TEDRA Agreement stand alone and not be overruled by the
"inconsistent survivorship requirement" in the Trust. By contrast, respondents
argue that the TEDRA Agreement clearly cannot be interpreted as a stand-alone
contract, because its purpose was to resolve disputes arising under the Trust.
And, they assert that neither the TEDRA Agreement's plain language nor its
context show that the parties intended to modify the survivorship term of the Trust.
They contend that the equalizing distribution provision reflects an intent to ensure
Agreement. But, in Washington, all contracts are interpreted under the context
rule. Tiartv. Smith Barney. Inc., 107 Wn. App. 885, 895, 28 P.3d 823 (2001). This
is true regardless of whether the court determines that the terms of the contract
are ambiguous. Roats, 169 Wn. App. at 274. And, the parties need not identify a
specific undefined term or word before this court may apply the context rule. See
Top Line Builders, Inc. v. Bovenkamp, 179 Wn. App. 794, 806, 808-09, 320 P.3d
130 (2014) (considering extrinsic evidence to determine why an entire provision
was included in a contract). That there is a merger clause in the TEDRA
Agreement does not preclude this court from applying the context rule. See King
v. Rice, 146 Wn. App. 662, 670-71, 191 P.3d 946 (2008).
9While the Estate objects to how the respondents are using the Trust as
extrinsic evidence, at oral argument, the Estate conceded that we may consider
the terms of the Trust in determining the parties' intent under the TEDRA
Agreement.
11
No. 73209-9-1/12
equal distributions to only beneficiaries who satisfy the Trust's survivorship
requirement.
The parties entered into the TEDRA Agreement in order to resolve issues
concerning the management of the Trust as stated in June's petition. Under the
terms of the Trust, June was the sole beneficiary of the Trust during her lifetime.
The trustees were to invest and reinvest the principal of the Trust and pay June
the income during her lifetime. Therefore, because advance distributions were
withdrawn from the Trust, June forfeited any income that would have accrued on
those Trust assets. June filed her petition, and requested that the court appoint a
professional fiduciary, restrain the co-trustees from depleting any more Trust
funds, and set a trial on the merits of her claims against the co-trustees.
The parties then entered into the TEDRA Agreement. The TEDRA
Agreement notes that since November 2004, issues had arisen concerning the
management of the Trust. The TEDRA Agreement then states why the parties
entered into the agreement. They did so to resolve the disputes among them,
facilitate the proper administration of the Trust, minimize the risks to each party
inherent in the trial or arbitration of the issues raised in June's petition, and avoid
further expenses of litigation. And, by agreeing to the equalizing distribution
provision in the TEDRA Agreement, the parties agreed that any recipient of
advance distributions would not be required to pay that money back to the Trust
as June originally sought in her petition. Instead, upon June's death, initial
distribution payments would be paid out of the Trust's assets to leave each brother
12
No. 73209-9-1/13
with an amount equal to the greatest advance distribution. Then, the equal
residual division among the brothers would be made.
Based on the language of the TEDRA Agreement and the circumstances
leading up to it, it is clear that the primary intent of the parties was to resolve June's
claims and restore operation of the Trust on June's death to what it would have
been had no advance distributions been taken.10
Still, the Estate argues that the language of the equalizing distribution
provision creates an absolute obligation to payment. That provision states, "To the
extent the distributions are unequal, they shall be equalized .. . upon June's
death. . . . Once those equalizing distributions are made, the remaining trust
assets would be divided between the four brothers equally." The Estate seizes on
the word "shall" and argues that the obligation to equalize the payments to the
beneficiaries is mandatory. In other words, the Estate is arguing that because of
this mandatory language, Rick received a present, unconditional, and vested right
to a payment upon entering into the TEDRA Agreement.11 The Estate points to
10 The Estate cites to Bernard, 182 Wn. App. 692, to support a claim that
there is no requirement that a TEDRA agreement comply with a trustor's original
intent. Here, because the parties to the TEDRA Agreement did not seek to modify
the terms of the Trust, the parties did not contract around the trustor's original
intent. Therefore, whether Bernard stands for the general proposition that the
parties to a TEDRA Agreement may contract around the trustor's original intent is
not at issue. But, we note that, in Bernard, which dealt with a revocable trust,
unlike here, the original trustor was alive and was a participating party to both
TEDRA agreements at issue. 182 Wn. App. at 699, 701, 724-25.
11 While the Estate argues that the TEDRA Agreement modified the
survivorship requirement of the Trust as to the equalizing distribution payments, it
does not argue that it modified the survivorship requirement as to the remainder of
the Trust assets. It argues that its argument is consistent with the language in the
provision, because the equalizing distribution "shall be" made upon June's death,
but the remainder Trust assets only "would be" divided. It argues that the
13
No. 73209-9-1/14
the language in the merger clause and argues that by including the merger clause
in the TEDRA Agreement, the parties intended the TEDRA Agreement to stand
alone and not be overruled by the Trust. The Estate also points to the inurement
clause language as evidence that the parties' rights inure to the benefit of the
parties' estates, heirs, and assigns. It argues that as a party to the TEDRA
Agreement, Rick clearly had the right to receive the equalizing distribution payment
while he lived and that the right inured to his estate.
But, June's lawsuit did not include any claims that involved modifying the
terms of the Trust. The language of the TEDRA Agreement resolving her claims
does not state an intent to modify the survivorship requirement of the Trust or to
modify the scope of the Trust beneficiaries. It makes no mention of those issues
in the substantive provisions. The Estate's argument is dependent upon
inferences drawn from general provisions of the TEDRA Agreement to reach a
conclusion that is inconsistent with the survivorship provision of the Trust. We
reject the Estate's assertion that the three provisions of the TEDRA Agreement
illustrate that the parties intended to provide Rick a present, unconditional, and
vested right to an equalizing distribution while he lived.12 His rights under the
difference in language, "would" versus "shall," makes the parties' intent to place
the remainder distribution subject to a condition—the survivorship requirement—
whereas it does not do so for the equalizing distribution payments. But, the
provision states that the "remaining trust assets would be divided between the four
brothers egually." (Emphasis added). That provision suggests that the parties to
the TEDRA Agreement did not specifically contemplate what would happen if one
of the brothers predeceased June. This language undercuts the argument that the
intent of the parties was to waive the survivorship requirement of the Trust as to
the equalizing distribution payments but not as to the remainder Trust assets.
12 If the TEDRA Agreement did provide Rick a present, vested right to an
equalizing distribution payment during his lifetime as the Estate contends, itwould
14
No. 73209-9-1/15
TEDRA Agreement were tied to the terms of the Trust. Surviving June was a
condition precedent to any distribution, including an advance to equalize what
others may have received earlier. Therefore, that right could not have passed to
his estate through the inurement clause.
We conclude that the TEDRA Agreement did not confer upon Rick or his
Estate an absolute right or promise to an equalizing distribution payment
notwithstanding the Trust's survivorship requirement.
Alternative Theories
The Estate then makes three alternative arguments, claiming that it is
entitled to the equalizing distribution payment. Specifically, the Estate argues that
it is entitled to the payment, because the TEDRA Agreement is an assignment of
rights and because of the doctrines of promissory and equitable estoppel.
A. Assignment
First, the Estate argues that the TEDRA Agreement is an assignment by
David and Paul to Rick and the Gary Family Trust. No particular words of art are
required to create a valid and binding assignment. Carlile v. Harbour Homes, Inc.,
147 Wn. App. 193, 208, 194 P.3d 280 (2008). Any language showing the owner's
intent to transfer and invest property in the assignee is sufficient. Jd.
The Estate argues that the TEDRA Agreement served as an assignment by
June to Rick of her right to recover the Trust assets from David and Paul. It notes
that the distributions David and Paul paid themselves were amounts that rightfully
not need to rely on the inurement clause to claim Rick's right. RCW 4.20.046, the
survival statute, allows causes of action arising out of a contract to survive to the
Estate.
15
No. 73209-9-1/16
should have been distributed to June. But, this is inconsistent with the claims June
brought in her petition, which included claims against Rick. And, through her
petition, June did not seek any personal distributions of Trust property or lost
income, only that the money "illegally siphoned from the Trust[] be returned as
soon as possible." Any equalizing distribution payment under the TEDRA
Agreement was not to be made from June's interest or even from the money
wrongfully taken by the others, but only from the Trust remainder. June had no
interest in the remainder to assign. Moreover, June released any claims she had
to the advance distributions. She could not assign what she had released.
Therefore, we conclude that June did not intend to make an assignment of a
personal right to recover the assets.
Second, the TEDRA Agreement did not require disgorgement of the
advance distributions. Nor did it require anyone who was determined to have
received an advance distribution to make an equalizing distribution payment to a
brother who had not received a like amount. The TEDRA Agreement provided that
the corporate trustee would make payments from the Trust to equalize the advance
distributions. Once the equalizing distributions were made, the remaining Trust
assets would be divided between the four brothers equally. The advance
distributions were treated as charges against that brother's share of the Trust, not
as an increase in that brother's interest in the Trust. The brothers who received
the advance distributions did not assign any portion of their interest in the Trust to
another brother. They merely agreed the others were entitled to receive advances
in comparable amounts prior to distribution of the Trust remainder.
16
No. 73209-9-1/17
The Estate's assignment arguments are without merit.
B. Promissory and Equitable Estoppel
Next, the Estate asserts that both the doctrines of promissory and equitable
estoppel entitle it to an equalizing distribution payment. But, the Estate's
arguments under both theories rely on the fact that the respondents made a
"promise" to Rick that he would receive an equalizing distribution payment that was
not kept. But, the right to Trust assets was contingent upon surviving June. The
equalizing distribution payments were to occur only after June died. Because Rick
predeceased June, he lost any right to equalizing distributions from the Trust.
There was no longer any distribution rights to equalize. No promise was broken.
We conclude that neither June nor any of the other parties to the TEDRA
Agreement ever made a promise ofequalizing distribution payments, independent
of the Trust survivorship provisions. The estoppel arguments are without merit.
We hold that the trial court did not err when it granted summary judgment
in favor of respondents and when it released the deed oftrustsecuring the Estate's
claim.
II. Attorney Fees - Trial Court
The Estate argues that the trial court erred when it awarded attorney fees
to respondents and denied its request for fees. It argues that the trial courtapplied
the incorrect standard—the prevailing party standard—in awarding fees to
respondents. It asserts that the trial court did not enter appropriate findings and
conclusions to support the fee award. And, it claims that fees are unwarranted
when a TEDRA case presents unique issues.
17
No. 73209-9-1/18
TEDRA, RCW 11.96A. 150(1), grants courts great discretion in awarding
attorney fees. In re the Estate of Fitzgerald. 172 Wn. App. 437, 453, 294 P.3d 720
(2012). It states:
(1) Either the superior court or any court on appeal may, in its
discretion, order costs, including reasonable attorneys' fees, to be
awarded to any party: (a) From any party to the proceedings; (b) from
the assets of the estate or trust involved in the proceedings; or (c)
from any nonprobate asset that is the subject of the proceedings.
The court may order the costs, including reasonable attorneys' fees,
to be paid in such amount and in such manner as the court
determines to be equitable. In exercising its discretion under this
section, the court may consider any and all factors that it deems to
be relevant and appropriate, which factors may but need not include
whether the litigation benefits the estate or trust involved.
RCW 11.96A. 150(1). This statute allows a court to consider any relevant factor
when determining whether to make a fee award, including whether a case presents
novel or unique issues. In re Estate of Evans, 181 Wn. App. 436, 451, 326 P.3d
755 (2014). The statute does not limit fee awards to only the prevailing party. Id,
This court reviews a trial court's award of fees under RCW 11.96A.150 for abuse
of discretion. ]d_,
In its order granting summary judgment the trial court stated:
Under [TEDRA] (RCW 11.96A.150), this Court has discretionary
authority to award costs, including reasonable attorneys' fees, to any
party from any party to the proceedings, to be paid in such amount
and in such manner as the Court determines equitable. The Court
finds that the Estate's Petition caused the co-trustees to incur
attorneys' fees and costs in their defense of the Trust and its
remainder beneficiaries from an unsuccessful and meritless attack
by the Estate of Richard H. Sweezey. The Court finds that it is
equitable to AWARD the Trust its reasonable attorneys' fees and
costs incurred, in an amount to be set by the Court in further
proceedings, and that such attorneys' fees and costs should be paid
by the Estate of Richard H. Sweezey or its distributees.
18
No. 73209-9-1/19
In the order awarding attorney fees to the Gary Family Trust, the trial court stated
that this case did not involve claims that are particularly novel or legally challenging
which would justify not making a fee award. Then, in the order awarding attorney
fees and costs to the co-trustees of the Trust, the court stated that it rejected the
Estate's petition in its entirety, finding it meritless.
The Estate argues that the trial court's oral ruling and written orders are
insufficient to provide an equitable basis for a fee award under TEDRA. It first
argues that when a court makes a fee award, the basis for and the calculation of
the fee award should be supported by appropriate findings and conclusions. The
trial court must enter findings of fact and conclusions of law supporting its decision
to award fees. Deep Water Brewing, LLC v. Fairway Res., Ltd., 170 Wn. App. 1,
6, 282 P.3d 146 (2012). Where a trial court fails to create the appropriate record,
remand for entry of proper findings and conclusions is the appropriate remedy. Jd.
But, if the trial court enters specific findings as to the basis for the award and the
rationale underlying the court's conclusion that it was reasonable, this court is able
to determine whether the trial court abused its discretion. See Bentzen v.
Demmons, 68 Wn. App. 339, 350, 842 P.2d 1015 (1993).
Here, the Estate does not question the amount or calculation of the fee
award, only the trial court's basis for the award. Although the trial court did not
enter formal findings of fact and conclusions of law, the trial court provided the
basis for its award. It stated that the Estate's petition was a meritless attack
involving claims that were not novel or legally challenging. Therefore, we are able
19
No. 73209-9-1/20
to determine whether the trial court's fee award on this basis constituted an abuse
of discretion.
The Estate's next argument is that the trial court improperly applied the
prevailing party standard in awarding fees. But, the trial court noted that it was
making its fee award under RCW 11.96A.150(1), and it acknowledged that it was
applying an equitable standard. Although the trial court said that the Estate's claim
was "unsuccessful," it also found that it was equitable for the Estate to reimburse
the Trust and the Gary Family Trust for the fees they were forced to incur defending
against the Estate's meritless attack. Therefore, the trial court did not apply the
inappropriate prevailing party standard.
Next, the Estate argues that defending against a meritless attack is an
insufficient basis for a fee award under TEDRA. At least one Washington appellate
court has affirmed a fee award under TEDRA when the Estate was forced to incur
attorney fees defending against a claim that itfound was meritless. See Fitzgerald,
172 Wn. App. at 453-54 (finding a plainly time-barred claim meritless and affirming
a fee award). Here, the trial court granted summary judgment against the Estate
noting, "I think it's quite clear that you have to construe all of these agreements
together." And, it later stated that the case did not involve claims that are
particularly legally challenging. In other words, although the claim here was not
clearly time-barred, like in Fitzgerald, the trial court found that the case was quite
plainly meritless. Therefore, awarding attorney fees under TEDRA because a
lawsuit is meritless does not necessarily constitute an abuse of discretion.
20
No. 73209-9-1/21
The Estate also argues that fees are unwarranted when a TEDRA case
presents unique issues. It claims that if a party to a TEDRA petition raises a novel
issue in good faith, it is an abuse of discretion to award fees against the party for
not prevailing. Washington courts have concluded that where a case involves a
unique issue under TEDRA, an award of fees is unwarranted. See, e.g., Bale v.
Allison. 173 Wn. App. 435, 461, 294 P.3d 789 (2013) (finding fees unwarranted
because case involved unique issue); In re Estate of Stover, 178 Wn. App. 550,
564, 315 P.3d 579 (2013) (denying appellate fees because the case involved a
novel issue of statutory construction), review denied, 180 Wn.2d 1005, 321 P.3d
1206 (2014). But, here, the Estate fails to explain why the trial court abused its
discretion in finding that this case did not involve a novel issue. Nor does it provide
any authority indicating that whether the issue is novel is dispositive as opposed
to only one of the factors that the trial court may consider under RCW
11.96A.150(1).13
We agree with the trial court that this case involved straightforward contract
interpretation. And, the Estate has provided no argument or authority upon which
to conclude that the trial court abused its discretion under TEDRA when it awarded
the respondents attorney fees based on a lawsuit it deemed meritless.
The Estate also asserts that the trial court abused its discretion when it did
not award it attorney fees below. The Estate argues that where all beneficiaries
13 The Estate also argues that Washington courts typically award fees in
TEDRA litigation against parties personally only upon a showing of misbehavior or
violation of a statute. But, it cites to no authority to support the assertion that a
party must have committed misconduct or violated a statute for a court to award
fees against it.
21
No. 73209-9-1/22
are involved in the litigation and it ascertains and resolves doubtful rights of the
parties, it is appropriate to award fees to all the parties. The Estate claims that
because it brought a good faith claim with a reasonable basis, the trial court should
have awarded it attorney fees regardless of how it decided the case. But, under
the line of cases cited by the Estate—all will contests—generally the estate must
be benefited if attorney fees are to be assessed against it. In re Estate of Black,
153 Wn.2d 152,174,102 P.3d 796 (2004). This same rule applies in litigation over
trusts. SeeBarlettv.Betlach, 136 Wn. App. 8, 22,146 P.3d 1235 (2006) ("Attorney
fees may generally be awarded against a trust only where the litigation results in
a substantial benefit to the trust."). Even if all parties were involved in the litigation,
where the litigation was unsuccessful and primarily prosecuted for personal
benefit, a benefit of the trust will rarely be found and the trial court does not abuse
its discretion in denying attorney fees. In re Boris v. Korrv Testamentary Marital
Deduction Trust for Wife, 56 Wn. App. 749, 756, 785 P.2d 484 (1990); In re Estate
of Ehlers, 80 Wn. App. 751, 764, 911 P.2d 1017 (1996). Therefore, because the
Estate clearly brought its action for its benefit rather than the Trust's, we hold that
the trial court did not abuse its discretion in denying the Estate's request for
attorney fees.
III. Attorney Fees - Appeal
Both the Estate and the respondents request attorney fees on appeal. A
party may recover attorney fees and costs on appeal when granted by applicable
law. RAP 18.1(a). TEDRA permits an award of attorney fees on appeal. See
RCW 11.96A.150 ("Either the superior court or any court on appeal may, in its
22
No. 73209-9-1/23
discretion, order costs including reasonable attorneys' fees, to be awarded to any
party ... in such manner as the court determines to be equitable.").
Although the Estate's appeal involved straightforward contract
interpretation and did not advance an argument about a novel issue of law, it was
not frivolous. See In re Estate of Wright, 147 Wn. App. 674, 688, 196 P.3d 1075
(2008) (declining to award fees on appeal in TEDRA action because the issues
appellant raised were not frivolous). And, both parties here willingly entered into
the TEDRA Agreement with vague language that resulted in extended litigation.
Therefore, both parties are responsible to some degree for this dispute. As such,
we decline to exercise our equitable authority under the statute and deny both
parties' requests for attorney fees on appeal.
We affirm.
WE CONCUR:
T/SO^y f\cS~ C?J?(iJ>
23
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121 F.2d 927 (1941)
UNITED STATES
v.
NETTL.
No. 7591.
Circuit Court of Appeals, Third Circuit.
June 23, 1941.
*928 Robert J. Fitzsimmons, of New York City (Michael Breitkopf, of Newark, N. J., on the brief), for appellant.
Irwin L. Langbein, Sp. Asst. to Atty. Gen., of Washington, D. C. (William F. Smith, U. S. Atty., of Newark, N. J., on the brief), for appellee.
Before BIGGS, CLARK, and JONES, Circuit Judges.
CLARK, Circuit Judge.
We are quite aware of the meaning of the "substantial prejudice"[1] of the statute which defines reversible error for the guidance of the appellate courts.[2] Because the Congress has seen fit to adjust the balance between the community and its accused members, those courts should be all the more zealous in their protection of those unfortunate individuals from actual injustice. We think the case at bar is a typical example of exactly that. The appellant was convicted of conspiracy to transport in interstate commerce, to receive and to sell stolen goods so transported with knowledge that the goods were stolen.[3] He took the stand in his own defense. On cross-examination, the United States Attorney asked him the questions of which he now complains. They read:
"Q. Mr. Nettl, you say you were never convicted of a crime? A. No, sir.
"Q. Weren't you convicted of receiving goods in New York?
"Mr. Fitzsimmons (defendant's counsel): That is objected to as incompetent, irrelevant and immaterial, I think Mr. Smith has the proper information by which he knows that there was never a conviction on Mr. Nettl's record.
"The Court: He has a right to ask whether he was.
"Q. I am just asking if he was convicted of receiving stolen goods in 1939. A. No, sir.
"Q. You were not? A. Never." Stenographer's Minutes, p. 135 (italics ours).
The record therefore shows that the defendant was not convicted of receiving stolen goods in New York.
The damaging effect of so-called "other crime evidence" is recognized.[4] The jury may receive an impression that defendant is an habitual criminal or probably committed the crime charged.[5] So behaviorism is sacrificed to possible prejudice and such testimony restricted to proof of indentity, intent, motive, system, etc.[6] Even here the earlier cases permitted it only in the exigency of no other available evidence.[7] Nevertheless, this *929 very testimony is received for another purpose. It can be used for testimonial impeachment even though the witness happens to be a defendant in a criminal case.[8] The trial judge is believed capable of insulating the jurors' minds and causing them to consider the crime only in so far as it affects credibility.
The relevancy of bad moral character to the issue of veracity is acknowledged.[9] There have been differences of opinion over the kind of conduct that suggests the probability of a man's being a liar.[10] The crime inquired about in the principal case is one of cunning and is included by the strictest standards. Professor Wigmore points out that there is what he calls an "auxiliary policy" that may preclude proof of bad character by extrinsic testimony.[11] He says that "confusion of issues" and "unfair surprise" attend all such proof other than the record of conviction itself.[12]
The learned Professor argues that the "auxiliary policy" vanishes when the proof is offered other than through question and answer on cross-examination.[13] He concedes, as he must, that both the courts and the legislatures are sharply divided.[14] As an example of that division, we have only to compare the statutes of Pennsylvania[15] and New Jersey.[16] Logically Professor Wigmore is right. There is however, we think, this argument ad hominem. To permit this type of question assumes the prosecuting official is what the jury believe him to be, a person interested only in securing justice.[17] Such a thought, perhaps, has caused some courts to guard carefully against any abuse in this field of cross-examination.[18]
*930 Even the authority already cited[19] agrees that the cross-examiner is bound by the witness' answer.[20] The United States Attorney in the case at bar refused to be so bound. After receiving the negative answer he pursued the subject in three further questions. Two of them included the mention of substantially the crime currently charged; one added a specific date, and the other a specific place of and for its commission. The third is in the form which lends itself most readily to voice inflection. The effect of innuendo, insinuation, and the specious framing of questions has been considered in the cases.[21] Its prejudicial character scarcely requires elaboration. Two early cases say, we think, all that need to be said:
"A review of the evidence in this case suggests very forcibly, that however full may be the explanations, a list of questions which assume the existence of damaging facts, may be put in such a manner, and with such persistency and show of proof, as to impress a jury that there must be something wrong even though the prisoner fully denies it, and there is no other evidence." Gale v. People, 1872, 26 Mich. 157.
"The purpose of the questions clearly was to keep persistently before the jury the assumption of damaging facts which could not be proven, and thus impress upon their minds the probability of the existence of the assumed facts upon which the questions were based. To say that such a course would not be prejudicial to defendant is to ignore human experience and the dictates of common sense." People v. Mullings, 1890, 83 Cal. 138, 23 P. 229, 231, 17 Am.St.Rep. 223.
It is true that some of the authorities make the curious suggestion that the matter is affected by a subjective standard applied to the District Attorney.[22] We cannot understand how the accused is interested in the personal character of his accuser. The prosecutor may be disciplined.[23] But it hurts the defendant just as much to have prejudicial blasts come from the trumpet of the angel Gabriel.[24]
The judgment is reversed and a new trial is ordered.
NOTES
[1] 28 U.S.C.A. § 391.
[2] Townsend v. United States, 3 Cir., 106 F.2d 273; United States v. Silverman, 3 Cir., 106 F.2d 750.
[3] 18 U.S.C.A. §§ 415, 416.
[4] 22 C.J.S., Criminal Law, § 682.
[5] Criminal Law Evidence Other Crimes Proof of Intent And Knowledge, 10 Iowa Bulletin 245 (note).
[6] Evidence Similar Facts And Occurrences Crimes Similar To One In Issue, 26 Harvard Law Review 656 (note); Evidence Inadmissibility of Past Crimes Exceptions, 69 University of Pennsylvania Law Review 180 (note); Criminal Law Evidence of Other Offenses Showing System, 20 Michigan Law Review 235 (note); Evidence Criminal Law Intoxicating Liquor Illegal Sales Proof of Offenses Other Than the One in Issue Admissibility Where Other Acts Are Part of a System, 7 Minnesota Law Review 591 (note); Evidence Intent Proof by Similar Acts, 23 Columbia Law Review 306 (note).
[7] Evidence Criminal Law Admissibility of Proof of Substantial Offenses Other Than the One in Issue, 11 Minnesota Law Review 666 (note).
[8] 3 Wigmore on Evidence, 3d Ed., § 890, Defendant Impeachable as an Ordinary Witness.
[9] 3 Wigmore on Evidence, 3d Ed., Chapter 32, A, Moral Character.
[10] 1 Wigmore on Evidence, 3d Ed., § 193, Particular Bad Acts to show the Defendant's Character: 3 Wigmore on Evidence, 3d Ed., § 922 Kind of Character; Veracity as the Fundamental Quality; § 923 Same: the Rule in the various Jurisdictions; § 982 Relevancy of Acts, on Cross-examination; Kinds of Misconduct.
[11] 3 Wigmore on Evidence, 3d Ed., § 979 Particular Acts of Misconduct, not provable by Extrinsic Testimony.
[12] 3 Wigmore on Evidence, 3d Ed., § 979, above cited; § 980 Record of Judgment of Conviction of Crime.
[13] 3 Wigmore on Evidence, 3d Ed., § 981 Cross-examination not Forbidden.
[14] 4 Wigmore on Evidence, 3d Ed., § 1270 Copy of a Record of Conviction, as preferred to the Convict's Testimony on Cross-examination; cf. Wharton's Criminal Evidence § 474; Underhill on Criminal Evidence §§ 60, 61; Thompson on Trials § 467.
[15] "Hereafter any person charged with any crime, and called as a witness in his own behalf, shall not be asked, and, if asked, shall not be required to answer, any question tending to show that he has committed, or been charged with, or been convicted of any offense other than the one wherewith he shall then be charged, or tending to show that he has been of bad character or reputation; unless * * * [not pertinent here]." 19 P.S. Pa. § 711.*
* Discussed in Criminal Procedure The Accused As Witness Evidence of Former Conviction, 71 University of Pennsylvania Law Review 173 (note).
[16] "For the purpose of affecting the credibility of any witness, his interest in the result of the action, proceeding or matter or his conviction of any crime may be shown by examination or otherwise * * *." N.J.S.A. 2:97-13.
[17] "The United States Attorney is the representative not of an ordinary party to a controversy, but of a sovereignty whose obligation to govern impartially is as compelling as its obligation to govern at all; and whose interest, therefore, in a criminal prosecution is not that it shall win a case, but that justice shall be done. As such, he is in a peculiar and very definite sense the servant of the law, the twofold aim of which is that guilt shall not escape or innocence suffer. He may prosecute with earnestness and vigor indeed, he should do so. But, while he may strike hard blows, he is not at liberty to strike foul ones. It is as much his duty to refrain from improper methods calculated to produce a wrongful conviction as it is to use every legitimate means to bring about a just one." Berger v. United States, 295 U.S. 78, 88, 55 S.Ct. 629, 633, 79 L.Ed. 1314.*
* Noted in Criminal Law Misconduct of Attorneys During Trial Possible Remedies, 34 Michigan Law Review 1044; Improper Conduct of Prosecuting Attorney as Ground for Reversal, 26 Journal of Criminal Law 276.
[18] Williams v. United States, 8 Cir., 3 F.2d 129, 135, 41 A.L.R. 328.
[19] Professor Wigmore.
[20] 3 Wigmore on Evidence, 3d Ed., § 1005 Facts discrediting the Witness in respect to Moral character, Bias, Corruption, Skill, Knowledge, etc.
[21] An Iowa court said: "We are unable to understand why prosecuting attorneys persist in thus infracting the well-established rules of practice. This court has repeatedly warned prosecutors about these dangers, and it seems rather strange that in spite of these warnings prosecutors persist in this practice. * * * [They should realize] that the matter about which they were inquiring would fall as a subtle poison against the defendant in the minds of the jury * * *." State v. Poston, 199 Iowa 1073, 203 N.W. 257, 258 (italics ours).
Cf. Trial Practice Improper Examination Designed to Discredit Witness Before Jury, 26 Michigan Law Review 123 (note); Evidence Witnesses Improper Cross-Examination of Defendant in Criminal Prosecution, 29 Columbia Law Review 526 (note); Evidence Impeachment of Witnesses Specific Acts of Misconduct, Indictments and Convictions, 8 Texas Law Review 588 (note).
[22] Clark v. United States, 57 App.D.C. 335, 23 F.2d 756; Chicago, B. & O. R. Co. v. Kelley, 8 Cir., 74 F.2d 80.
[23] Pope v. Boston & M. R. R., 79 N.H. 52, 104 A. 403.
[24] Apt v. United States, 8 Cir., 13 F. 2d 126; Mercer v. United States, 3 Cir., 14 F.2d 281; Speiller v. United States, 3 Cir., 31 F.2d 682; Beck v. United States, 8 Cir., 33 F.2d 107.
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657 F.Supp. 213 (1987)
AETNA CASUALTY & SURETY COMPANY
v.
KEMPER INSURANCE COMPANY, Carriers Insurance Company, Cleve Smith and Larry Kendricks.
Civil No. 85-5650.
United States District Court, E.D. Pennsylvania.
March 19, 1987.
*214 Michael Saltzburg, Philadelphia, Pa., for plaintiff.
Albert Hart, Jr., Philadelphia, Pa., for defendants.
MEMORANDUM AND ORDER
DITTER, District Judge.
This insurance case comes before the court on stipulated facts and cross motions for summary judgment that raise alternative questions: (1) whether two injured men were "occupants" of a motor vehicle, and if not, (2) whether an insured vehicle was "parked so as to cause unreasonable risk of injury."
On June 15, 1984, Cleve Smith was lawfully driving and Larry Kendricks was a passenger in a Cadillac automobile owned by Smith's girlfriend. This car was insured by plaintiff Aetna Casualty and Surety Company. Smith stopped the Cadillac on Route 22 to help a friend, Alvin Perry, whose pick-up truck was broken down. Defendant Kemper Insurance Company insured Perry's pick-up truck. Smith parked on the shoulder of the road four to five feet from where Perry's truck was stopped. While Smith was looking under the hood of the pick-up and Kendricks was standing nearby, both were injured when a tractor-trailer hit the rear of the pick-up. The accident occurred five to twenty minutes after Smith and Kendricks had stopped to help Perry. As a result of the accident, Aetna paid no-fault benefits to Smith and Kendricks. Because the tractor-trailer's insurance carrier has been liquidated and severed from this action, either Aetna, Kemper, or both are liable for the no-fault claims of Smith and Kendricks.
Pennsylvania's No-Fault Act established a seriatim order for the payment of basic loss benefits. 40 Pa.Stat.Ann. § 1009.204(a) (repealed). Pursuant to this section, the "security", i.e., the insurer responsible for payment of benefits, is determined by the status of the injured. The "security" for injury to:
(a) ...
(1) ...
(2) ...
(3) the driver or other occupant of a motor vehicle involved in an accident resulting in injury who is not an insured is the security covering such vehicle;
(4) an individual who is not an insured or the driver or other occupant of a motor vehicle involved in an accident resulting in injury is the security covering any motor vehicle involved in such accident. For purposes of this paragraph, a parked and unoccupied motor vehicle is not a motor vehicle involved in an accident, unless it was parked so as to cause unreasonable risk of injury; and
(5) ...
Id. The parties agree that subparagraphs (1), (2), and (5) are inapplicable. Kemper contends that Smith and Kendricks were "occupants" of the Cadillac at the time of the accident; therefore, Aetna is responsible for their claims. In addition, Kemper asserts that if Smith and Kendricks were not "occupants" then the Cadillac was parked so as to cause unreasonable risk of injury; therefore, both vehicles are liable under subparagraph (4).[1]
In Utica Mutual Insurance Co. v. Contrisciane, 504 Pa. 328, 473 A.2d 1005 *215 (1984), the Pennsylvania Supreme Court held that a person "occupies" a vehicle if he satisfies four criteria:
(1) there is a causal relation or connection between the injury and the use of the insured vehicle;
(2) the person asserting coverage must be in a reasonably close geographic proximity to the insured vehicle, although the person need not be actually touching it;
(3) the person must be vehicle oriented rather than highway or sidewalk oriented at the time; and
(4) the person must also be engaged in a transaction essential to the use of the vehicle at the time.
473 A.2d at 1009.[2] There, the court found a person to be an "occupant" of his car while he was standing next to a police car. The court noted that the man, who had been involved in a minor accident, was required by law to stop his car. Moreover, the police officer directed him to go to the police car. Thus, the court found the person's actions "essential to the continued use of his car." Id.
Here, the third and fourth criteria are not satisfied. In Government Employees Insurance Co. v. Keystone Insurance Co., 442 F.Supp. 1130 (E.D.Pa.1977), the court found a person who left his car for the purpose of confronting the driver of another car, "ceased to be vehicle-oriented, and became, instead, highway oriented." Id. at 1134. Similarly, Smith and Kendricks became "highway-oriented" when they left the Cadillac for the purpose of helping Perry with his pick-up truck. Moreover, their actions were not essential to the use of the Cadillac. Unlike the situation in Contrisciane, where the person had to go to the police car before he could continue using his car, the actions of Smith and Kendricks were completely unrelated to the continued use of the Cadillac.
Since Kendricks and Smith were not "occupants" of the Cadillac at the time of the accident,[3] Kemper is responsible since the pick-up was a motor vehicle involved in an accident. Aetna is liable if the Cadillac was parked so as to cause "unreasonable risk of injury." The accident occurred during rush hour on Route 22, a four lane highway. At the time of the accident, the Cadillac and pick-up were four to five feet apart and both stopped on the shoulder of the road. Because of its proximity to the pick-up and a major highway during rush hour, the Cadillac was parked in a position causing unreasonable risk of injury. The Cadillac would not have been involved in the accident nor would Smith have been pinned between the truck and the Cadillac if the Cadillac had been parked further down the road. Therefore, Aetna and Kemper are equally responsible for the past and future basic loss benefits that Smith and Kendricks are entitled to recover.
ORDER
AND NOW, this 19th day of March, 1987, upon consideration of the parties' cross motions for summary judgment, it is hereby ordered that defendant Kemper Insurance Company is obligated to reimburse plaintiff Aetna Casualty & Surety Company for one-half of the basic loss benefits paid by Aetna Casualty & Surety Company to Cleve Smith and Larry Kendricks and each party is responsible to pay one-half of all further basic loss benefits that Cleve Smith and Larry Kendricks may be entitled to recover in the future as a result of injuries they sustained in the June 14, 1984 accident.
NOTES
[1] The parties do not dispute that Perry was an "occupant" of the pick-up at the time of the accident. Moreover, a truck that is broken down is not a parked vehicle. Consequently, the pick-up was a "motor vehicle involved in an accident."
[2] While Contrisciane was decided in connection with Uninsured Motorist Act, 40 Pa.Stat.Ann. § 2000, clearly the "occupant" test is equally applicable to questions arising under the Pennsylvania No-Fault law. See Tucci v. State Farm Ins. Co., 503 Pa. 447, 469 A.2d 1025 (1983) (No-Fault law and Uninsured Motorist Act should be construed as one act because they relate to the same person or things); Government Employees Ins. Co. v. Noon, No. 77-1978 (E.D.Pa.1978) (adopting a vehicle oriented versus highway oriented approach in construing "occupying" for purposes of the No-Fault Act).
[3] Aetna claims that Kendricks and Smith were occupants of Perry's pick-up truck. Clearly, this argument has no merit.
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575 So.2d 1068 (1991)
Grayham LYNCH
v.
GREEN TREE ACCEPTANCE, INC., and Robert E. Moorer.
89-1297.
Supreme Court of Alabama.
February 1, 1991.
*1069 James T. Baxter III of Berry, Ables, Tatum, Little & Baxter, Huntsville, for appellant.
Joan-Marie Pace of Lanier, Ford, Shaver & Payne, Huntsville, for appellee Green Tree Acceptance, Inc.
John O. Cates of Sadler, Sullivan, Herring and Sharp, Huntsville, for appellee Robert E. Moorer.
ADAMS, Justice.
In this malicious prosecution case, Grayham Lynch sued Green Tree Acceptance, Inc., and its attorney, Robert Moorer, alleging that a previous cause of action filed by Green Tree Acceptance against Lynch for conversion was filed maliciously and without probable cause. The court entered a summary judgment for the defendants; the plaintiff appeals.
The controversy in this case arises out of the following facts:
James and Jackie Hesterley purchased a mobile home in 1984, and signed a security agreement with Adventure Homes, Inc., of Cullman; their account was subsequently assigned to Green Tree Acceptance, which perfected its interest. In 1984, the Hesterleys rented a space from Grayham Lynch for their mobile home in Lynch's mobile home park. After having made eight payments on the trailer, however, the Hesterleys defaulted on their payments to Green Tree and on their rental payments to Lynch. Lynch, who needed the space where their mobile home was parked to rent to a paying tenant, had the Hesterleys' mobile home, with their permission, moved to his storage lot, which had no security, but was located within sight of a busy highway. Green Tree Acceptance thereafter learned that the mobile home had been moved. It inspected the mobile home and found that the air conditioner that had been on it when it was sold was no longer there. Green Tree then made arrangements for the mobile home to be picked up by the dealership that had sold it to the Hesterleys. Before it was picked up, however, it disappeared.
At the outset, we note the following:
"`Malicious prosecution is an action disfavored in the law.' Cutts v. American United Life Insurance Co., 505 So.2d 1211, 1212 (Ala.1987). The reason for such disfavor is clear: `[P]ublic policy requires that all persons shall [be allowed to] resort freely to the courts for redress of wrongs and to enforce their rights, and that this may be done without the peril of a suit for damages in the event of an unfavorable judgment by jury or judge.' Boothby Realty Co. v. Haygood, 269 Ala. 549, 114 So.2d 555, 559 (1959).
"For the trial court to have erred in granting summary judgment for [the defendant] on the malicious prosecution count, there must have been some direct or circumstantial evidence from which the trier of fact could reasonably infer each of the following elements, which comprise a cause of action for malicious prosecution; (1) that a judicial proceeding was initiated by [the defendant] against [the plaintiff], (2) that the judicial proceeding was instituted without probable cause, (3) that the [proceeding was] instituted by [the defendant] maliciously, (4) that the judicial proceeding had been terminated in favor of [the plaintiff], and (5) that [the plaintiff] suffered damage as a proximate cause of the judicial proceeding. Smith v. Wendy's of the South, Inc., 503 So.2d 843, 844 (Ala. 1987)."
Eidson v. Olin Corp., 527 So.2d 1283, 1284 (Ala.1988). The only element at issue in this case is whether Green Tree Acceptance and its attorney had probable cause to initiate the original suit against Lynch.
"Probable cause is defined as ` "[a] reasonable ground for suspicion, supported by circumstances sufficiently strong in themselves to warrant a cautious man in the belief that the person accused is guilty of the offense charged."` Parisian Co. v. Williams, 203 Ala. 378, 83 So. 122, 127 (1919). `The *1070 question is not whether the [malicious prosecution] plaintiff was guilty of the thing charged, but whether the [malicious prosecution] defendant acted in good faith on the appearance of things.' Birwood Paper Co. v. Damsky, 285 Ala. 127, 134-35, 229 So.2d 514, 521 (1969).
". . . .
"The test that this Court must apply when reviewing the lack-of-probablecause element in a malicious prosecution case in which summary judgment has been granted to a defendant is as follows: Can one or more undisputed facts be found in the record below establishing that the defendant acted in good faith on the appearance of things as they existed when suit was filed, based upon direct evidence, or upon circumstantial evidence and inferences that can reasonably be drawn therefrom."
Eidson at 1285 (emphasis added in Eidson).
Green Tree claims that its suit was filed on the advice of its attorney, Robert Moorer, and that it and Moorer had reason to assume that Lynch had something to do with the disappearance of the mobile home and/or the air conditioner.
"It is well settled in this state that advice of counsel, honestly sought and acted on in good faith, supplies an indispensable element of probable cause for legal action and is a complete defense to an action for malicious prosecution. Birwood Paper Co. v. Damsky, 285 Ala. 127, 229 So.2d 514 (1969); Broussard v. Brown, 353 So.2d 804 (Ala.Civ.App. 1978)."
Hanson v. Couch, 360 So.2d 942, 945 (Ala. 1978). Although this issue is generally one for the jury, where there is no dispute as to the facts given to the attorney the issue is to be decided by the trial court. See King v. Farrell, 55 Ala.App. 147, 314 So.2d 68, 71 (Civ.App.1975).
Considering the facts that he had before him at the time the initial suit was filed, it is clear to us that Green Tree's attorney had probable cause to initiate the suit against Lynch.[1] First, the attorney knew that when Lynch learned of the difficulties that the Hesterleys were having in making their payments, Lynch questioned Green Tree about the possibility of purchasing some of the appliances in the mobile home. Subsequently, the air conditioning unit on the mobile home turned up missing after the mobile home was moved to the storage lot; Green Tree was told by Lynch's son that the air conditioning unit was located behind the office of the mobile home park, which was owned and operated by Lynch. In addition, Lynch had moved the mobile home to a storage lot where there was no security for the mobile home and had done so without the permission of Green Tree. These facts, considered together, constitute probable cause for the filing of the initial suit by Green Tree against Lynch. The mere fact that summary judgment was entered for Lynch in that suit does not mean there was no probable cause to file the suit in the first place; otherwise, every defendant who gets a summary judgment in a case would be entitled thereafter to sue for malicious prosecution.
For the foregoing reasons, the judgment is hereby affirmed.
AFFIRMED.
HORNSBY, C.J., and MADDOX, ALMON and STEAGALL, JJ., concur.
NOTES
[1] Lynch argues in his brief that the affidavits relied on by Green Tree in its motion for summary judgment were improperly before the trial court. This argument was raised for the first time on appeal and, therefore, will not be considered by this Court.
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United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 04-1027
___________
United States of America, *
*
Appellee, * Appeal from the United States
* District Court for the District
v. * of Minnesota.
*
Roger Leigh Oehler, * [UNPUBLISHED]
*
Appellant. *
___________
Submitted: November 16, 2004
Filed: November 23, 2004
___________
Before WOLLMAN, HEANEY, and FAGG, Circuit Judges.
___________
PER CURIAM.
Roger Leigh Oehler created and presented more than $2.4 million in false sight
drafts drawn on the United States Treasury. Oehler also filed false Internal Revenue
Service forms on government employees and other individuals. The Government
charged Oehler with presenting fictitious obligations with intent to defraud the United
States and with making false statements. At Oehler’s arraignment, he sought to
represent himself. The magistrate judge warned Oehler about the dangers of his
decision and asked Oehler several questions. Oehler responded coherently. The
magistrate judge appointed standby counsel to help Oehler in his defense.
Two days later, another magistrate judge held a hearing to confirm Oehler’s
waiver of his right to counsel was knowing and voluntary. See Faretta v. California,
422 U.S. 806 (1975). The magistrate judge conducted an extended inquiry of Oehler
and found he had knowingly, intelligently, unequivocally, and voluntarily waived his
right to counsel. Later, at a hearing on the government’s bond revocation motion, the
same magistrate judge found that although Oehler was claiming to be the “secured
party” of the defendant and making legally frivolous arguments, Oehler was not
mentally incompetent but instead performing incantations of the tax protest
movement. Oehler stated he had never sought psychiatric treatment or suffered from
mental illness, and showed an adequate understanding of the criminal process. The
magistrate judge then made a sua sponte finding that Oehler was competent to stand
trial, stating that given the totality of the circumstances, there was no reasonable
cause to believe Oehler was presently suffering from a mental disease or defect
rendering him mentally incompetent to the extent that he could not understand the
nature and consequences of the proceedings against him or to assist properly in his
defense.
At trial, Oehler represented himself with assistance from standby counsel.
Oehler acted appropriately throughout the trial. After Oehler’s conviction, a
psychologist met twice with Oehler and concluded that at the time of the evaluation,
Oehler was suffering from a delusional disorder limited to the actions underlying his
crimes. The psychologist gave no opinion about whether Oehler suffered from
delusions at the time of his crimes or at the time of his trial, or about Oehler’s
competence to represent himself, to stand trial, or face sentencing. The district court*
requested a further psychiatric evaluation of Oehler for sentencing purposes. Oehler
was not found to be delusional and the evaluator stated Oehler’s functioning did not
appear to be impaired to any great extent. Oehler moved for a new trial arguing his
*
The Honorable Joan N. Ericksen, United States District Judge for the District
of Minnesota.
-2-
mental condition prevented him from making a knowing waiver of his right to
counsel. The district court denied the motion and sentenced Oehler to thirty-three
months in prison.
On appeal, Oehler contends the district court should not have allowed him to
waive his right to counsel because he was mentally incompetent to waive the right.
Oehler claims he was incompetent because he made certain statements that were
nonsense. The district court’s finding that Oehler was competent to waive his right
to counsel was not clearly erroneous. Oehler’s nonsensical statements were simply
tax protester rhetoric. The district court examined Oeheler at length before finding
he knowingly and voluntarily waived his right to counsel. The magistrate judge
confirmed Oehler was educated and intelligent, understood the charges against him,
had a basic understanding of the criminal process, and had the ability to communicate
effectively with stand-by counsel and others. We cannot say a reasonable judge, in
the same situation as the trial court, should have doubted Oehler’s competence.
Branscomb v. Norris, 47 F.3d 258, 261 (8th Cir. 1995).
Oehler also argues his standby counsel failed to effectively assist him when he
failed to seek a mental competency examination before trial. Ineffective assistance
claims should ordinarily be raised under 28 U.S.C. § 2255 in collateral proceedings
where an appropriate record may be developed. United States v. Leisure, 377 F.3d
910, 917 n.2 (8th Cir. 2004). We thus decline to consider Oehler’s ineffective
assistance claim on direct appeal. See id.
Accordingly, we affirm the district court.
______________________________
-3-
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IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FIFTH DISTRICT
NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
DISPOSITION THEREOF IF FILED
LIA WARD,
Appellant,
v. Case No. 5D16-1641
KEITH M. MORLOCK,
Appellee.
________________________________/
Opinion filed May 5, 2017
Appeal from the Circuit Court
for Orange County,
John Marshall Kest, Judge.
Lindsey M. Tenberg, Lighthouse Point, for
Appellant.
Michael M. Brownlee, of Fisher Rushmer,
P.A., Orlando, for Appellee.
LAMBERT, J.
The issue that we address in this conflict of laws case is whether Florida’s
dangerous instrumentality law should apply to a case arising out of a motor vehicle
accident that occurred in South Carolina where the only two parties to the litigation are
Florida residents. The material facts of the case are not in dispute. Appellee, Keith
Morlock, and his family were vacationing in South Carolina with his brother-in-law, Paul
Behrens, and his family. Behrens’ son needed a ride to a local airport, and Behrens asked
Appellee if he could borrow his vehicle. Appellee consented, and while on the way to the
airport, Behrens rear-ended the car that Appellant, Lia Ward, was driving at an
intersection located in Mt. Pleasant, South Carolina.
Appellant filed a negligence suit solely against Appellee, seeking damages under
Florida’s dangerous instrumentality doctrine, which provides that an owner of a motor
vehicle is generally liable for injuries that are caused by the vehicle’s negligent operation.
Michalek v. Shumate, 524 So. 2d 426, 427 (Fla. 1988). Appellee answered the complaint,
and after the parties conducted some preliminary discovery, Appellee moved for final
summary judgment. Appellee argued that South Carolina law, rather than Florida law,
governed and that under South Carolina law, the mere ownership of a vehicle is, without
more, insufficient to establish the owner’s liability for the negligence of the driver. See
Thompson v. Michael, 433 S.E.2d 853, 855-56 (S.C. 1993). Appellee argued that
because there was no evidence that he negligently entrusted his vehicle to his brother-
in-law or that he would otherwise be liable to Appellant under South Carolina’s “Family
Purpose Doctrine,”1 final summary judgment was proper. The trial court determined that
1 The South Carolina Supreme Court has explained that the Family Purpose
Doctrine arises from the law of agency and is derived from the notion that one “who has
made it his business to furnish a car for the use of his family is liable as principal or master
when such business is being carried out by a family member using the vehicle for its
intended purpose, the family member thereby filling the role of agent or servant.” Gause
v. Smithers, 742 S.E.2d 644, 648 (S.C. 2013) (quoting Campbell v. Paschal, 347 S.E. 2d
892, 897 (S.C. Ct. App. 1986). To impose liability under this doctrine, the plaintiff must
prove that the defendant is the head of the family and that the defendant owned,
maintained, or furnished the automobile. Id. In the present case, Appellee’s brother-in-
law, Behrens, is an adult who resides with his own family in Pennsylvania. Thus, under
South Carolina’s Family Purpose Doctrine, the trial court concluded that Appellee would
not be liable to Appellant for Behrens’ allegedly negligent operation of Appellee’s car.
The undisputed evidence before the trial court demonstrates that Behrens is not a
member of Appellee’s family or, stated differently, Appellee is not the head of Behrens’
family.
2
TORPY, J., concurring and concurring specially. Case No. 16-1641
I fully concur with the majority opinion. I write separately to address arguments
not raised by the parties, including the effect of section 324.021(9)(b)3., Florida Statutes
(2017). Although the Dangerous Instrumentality Doctrine was originally created by
decisional law, since 1999, it has been codified in a statute that supersedes other statutes
or “existing case law.” It provides that the owner of a vehicle who loans it to “any
permissive user shall be liable for the operation of the vehicle or the acts of the operator
in connection therewith” up to certain limits, depending on what insurance limits are
obtained. § 324.021(9)(b)3., Fla. Stat. (2017) (emphasis added). This statute imposes
and limits the liability of an “owner,” a defined term that includes the holder of “legal title.”
§ 324.021(9)(a), Fla. Stat. (2017).
When an owner invokes the laws of Florida to obtain title and registration of a
vehicle, the owner accepts the concomitant financial responsibility imposed by Florida
law. This responsibility includes that which is imposed by section 324.021(9)(b)3. Nothing
in this statute purports to limit the scope of this liability to permissive use that originates
in this state or to injuries caused within the geographic confines of this state. The statute
recognizes that the vehicle owner is in the best position to secure resources to pay for
injuries and ensure that the vehicle, a dangerous instrument, is entrusted to careful
drivers. See Burch v. Sun State Ford, Inc., 864 So. 2d 466, 470 (Fla. 5th DCA 2004)
(identifying policy for Dangerous Instrumentality Doctrine). New York is one of the few
states with a similar statute. I agree with much of the analysis of our sister court in New
Jersey, which concluded that the New York statute imposing vicarious liability controlled
where the vehicle was registered in New York even though the collision there occurred in
8
(c) the domicil, residence, nationality, place of
incorporation and place of business of the parties,
and
(d) the place where the relationship, if any, between the
parties is centered.
These contacts are to be evaluated according to their relative
importance to the particular issue.
§ 146 Personal Injuries
In an action for a personal injury, the local law of the state
where the injury occurred determines the rights and liabilities
of the parties, unless, with respect to the particular issue,
some other state has a more significant relationship under the
principles stated in § 6 to the occurrence and the parties, in
which event the local law of the other state will be applied.
Section 6(2) of the Restatement (Second) of Conflict of Laws sets forth the
following choice of law principles in assessing which state law is to be applied:
(a) the needs of the interstate and international systems,
(b) the relevant policies of the forum,
(c) the relevant policies of the other interested states and the
relative interests of those states in the determination of
the particular issue,
(d) the protection of justified expectations,
(e) the basic policies underlying the particular field of the law,
(f) certainty, predictability and uniformity of result, and
(g) ease in the determination and application of the law to be
applied.
Pertinent to our resolution of this appeal is the recognition that the “significant
relationships test does not require the court to evaluate the recited contacts with a view
to determine which state’s local law should be applied to all issues in the case as a whole;
4
rather, the contacts must be evaluated with respect to the particular issue under
consideration.” Stallworth v. Hosp. Rentals, Inc., 515 So. 2d 413, 415 (Fla. 1st DCA 1987)
(citing Hertz v. Piccolo, 453 So. 2d 12 (Fla. 1984); Harris v. Berkowitz, 433 So. 2d 613
(Fla. 3d DCA 1983)). Thus, although two of the four contacts under section 145(2), the
place where both the injury and the conduct causing the injury occurred, favor South
Carolina,2 these contacts are evaluated qualitatively, not quantitatively, according to their
relative impact to the particular issue. See Spence v. Glock, Ges.m.b.H., 227 F.3d 308,
312 (5th Cir. 2000).
As previously stated, the critical legal issue in dispute is whether Appellee, as
owner of the automobile, may be held vicariously liable for Appellant’s injuries and
damages under Florida’s dangerous instrumentality doctrine. Comment a. to section 145
of the Restatement (Second) of Conflict of Laws recognizes that sections 156-174 of the
Restatement focus on specific issues in tort, providing that the best way to bring more
precision into the conflict of laws arena is by attempting to provide special rules for
particular issues in tort. On the precise issue of vicarious liability, comment a. to section
174 of the Restatement (Second) of Conflict of Laws directs the forum court to apply “the
local law of the state which has the most significant relationship to the occurrence and
the parties with respect to the issue of vicarious liability” in deciding “whether one person
is liable for the tort of another.” See also Cates v. Creamer, 431 F.3d 456, 463 (5th Cir.
2005). Comment a. to section 174 further provides that the state whose vicarious liability
law is to be applied should be selected in accordance with the choice-of-law principles
2
As to the fourth contact under section 145(2), there is no pre-accident relationship
between Appellant and Appellee.
5
stated in section 6 and that these principles require the forum court to consider: “(1)
whether the relationship between the defendant and the other person makes the
imposition of vicarious liability reasonable and (2) whether there is a reasonable
relationship between the defendant and the state whose local law is to be applied.”
Pursuant to sections 6 and 174, we conclude that Florida has the most significant
relationship to the occurrence and the parties on the issue of vicarious liability. First,
Appellee is a Florida resident and the vehicle that his brother-in-law allegedly operated in
a negligent manner was both registered and insured in Florida. As such, there is a
“reasonable relationship” between Appellee and Florida. Second, Appellant is also a
Florida resident. Applying Florida law on the issue of vicarious liability is consistent with
the policy behind its dangerous instrumentality doctrine; that is, to “protect[] plaintiffs from
impecunious drivers by imposing liability on the owners of the vehicles.” Cates, 431 F.3d
at 465. Third, Behrens, who has not been sued or otherwise named as a party in the
underlying litigation, is a resident of Pennsylvania. Florida’s manifest interest in both
protecting its residents and holding its residents responsible under its dangerous
instrumentality doctrine far outweighs any interest that South Carolina may have in the
application of its laws here, where neither driver nor owner resides in South Carolina.
Moreover, while both states have a public policy of protecting an injured plaintiff against
monetary costs at the hands of a negligent defendant, South Carolina does not impose
vicarious liability upon owners of automobiles. Thus, the application of Florida’s law in this
case more readily serves this purpose without offending South Carolina. Additionally,
South Carolina would appear to have little, if any, interest in protecting Appellee, a Florida
resident, from liability under Florida’s vicarious liability law. Fourth, pursuant to section
6
6(2)(a), given that the only two parties to his action are Florida residents, the needs of the
interstate system appear to be minimally impacted. Fifth, under section 6(2)(d), neither
Appellee nor his brother-in-law had any “justified expectations” that the law of South
Carolina as opposed to the law of Florida would apply when Behrens borrowed Appellee’s
car, and we find it entirely reasonable for Appellee to be vicariously liable for the actions
of his brother-in-law’s allegedly negligent driving. Finally, pursuant to section 6(2)(f) and
(g), we find no difficulty or any lack of predictability or certainty in applying Florida’s
dangerous instrumentality law to a motor vehicle accident where both vehicles are
licensed, registered, and insured in Florida and both parties to the litigation are Florida
residents, irrespective of where the motor vehicle accident occurred.
In sum, under the facts of this case, Florida is the state with the most significant
relationship for the issue of vicarious liability, and the trial court should have applied
Florida’s dangerous instrumentality law. Accordingly, we reverse the final summary
judgment and remand this case for further proceedings consistent with this opinion.
REVERSED and REMANDED.
WALLIS, J., concurs.
TORPY, J., concurs and concurs specially, with opinion.
7
TORPY, J., concurring and concurring specially. Case No. 16-1641
I fully concur with the majority opinion. I write separately to address arguments
not raised by the parties, including the effect of section 324.021(9)(b)3., Florida Statutes
(2017). Although the Dangerous Instrumentality Doctrine was originally created by
decisional law, since 1999, it has been codified in a statute that supersedes other statutes
or “existing case law.” It provides that the owner of a vehicle who loans it to “any
permissive user shall be liable for the operation of the vehicle or the acts of the operator
in connection therewith” up to certain limits, depending on what insurance limits are
obtained. § 324.021(9)(b)3., Fla. Stat. (2017) (emphasis added). This statute imposes
and limits the liability of an “owner,” a defined term that includes the holder of “legal title.”
§ 324.021(9)(a), Fla. Stat. (2017).
When an owner invokes the laws of Florida to obtain title and registration of a
vehicle, the owner accepts the concomitant financial responsibility imposed by Florida
law. This responsibility includes that which is imposed by section 324.021(9)(b)3. Nothing
in this statute purports to limit the scope of this liability to permissive use that originates
in this state or to injuries caused within the geographic confines of this state. The statute
recognizes that the vehicle owner is in the best position to secure resources to pay for
injuries and ensure that the vehicle, a dangerous instrument, is entrusted to careful
drivers. See Burch v. Sun State Ford, Inc., 864 So. 2d 466, 470 (Fla. 5th DCA 2004)
(identifying policy for Dangerous Instrumentality Doctrine). New York is one of the few
states with a similar statute. I agree with much of the analysis of our sister court in New
Jersey, which concluded that the New York statute imposing vicarious liability controlled
where the vehicle was registered in New York even though the collision there occurred in
8
New Jersey. Dolan v. Sea Transfer Corp., 942 A.2d 29, 36-37 (N.J. Super. Ct. App. Div.
2008). Here, Florida has similarly manifested a paramount interest in ensuring that
owners of vehicles titled and registered in Florida assume responsibility for injuries arising
from the use of those vehicles.
I also agree with the approach taken by New York’s highest court in Neumeier v.
Kuehner, 286 N.E.2d 454 (N.Y. 1972). The first so-called “Neumeier rule” addresses
issues of “loss allocation,” such as vicarious liability, where the plaintiff and defendant
have a common domicile. See id. at 457; see also Padula v. Lilarn Props. Corp., 644
N.E.2d 1001, 1003 (N.Y. 1994). In this circumstance, the law of the common domicile
controls the loss allocation issue, irrespective of where the tort occurred. See, e.g.,
Dorsey v. Yantambwe, 276 A.D.2d 108, 111 (N.Y. App. Div. 2000) (Virginia law controlled
issue of vicarious liability in suit arising from collision occurring in New York, where plaintiff
and defendant shared common Virginia domicile).
9
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683 P.2d 504 (1984)
WARDEN, NEVADA STATE PRISON, Appellant,
v.
Harold Travis LYONS, Respondent.
No. 15084.
Supreme Court of Nevada.
July 3, 1984.
Rehearing Denied August 27, 1984.
D. Brian McKay, Atty. Gen., Carson City, Steven B. Wolfson, Deputy Atty. Gen., Las Vegas, for appellant.
John J. Momot, Las Vegas, for respondent.
OPINION
PER CURIAM:
The warden appeals from an order granting a post-conviction petition for writ of habeas corpus. The order declared void ab initio pleas of nolo contendere entered by respondent in two Washoe County criminal prosecutions. For the reasons set forth below, we reverse the order granting the petition and reinstate the pleas.
On December 1, 1980, respondent pleaded nolo contendere to one count each of slot cheating and attempted possession of a cheating device, in a case involving events which transpired at the MGM Grand casino. Before sentencing, he was arrested for cheating offenses at the Sahara-Reno. Respondent left the state and was not located and returned until January of 1982. In subsequent proceedings he was sentenced in the MGM matter consistent with the original plea bargain, and was allowed to plead nolo contendere to another cheating offense in the Sahara case. He was sentenced to ten years and five years, concurrent, in the former matter, and to a concurrent, five years in the latter.
In June of 1982, respondent filed the instant petition for habeas relief, challenging the validity of his pleas in the MGM case.[1] The petition contended that respondent had pleaded without the effective assistance *505 of counsel, and that his pleas had been "coerced" by the "use" of illegally seized evidence and by the filing of an habitual criminal allegation the Friday before trial. In supplemental points and authorities, respondent raised the additional claim that both his MGM and his Sahara-Reno pleas were invalid under Hanley v. State, 97 Nev. 130, 624 P.2d 1387 (1981). The district court concluded that respondent's pleas were "not properly taken" and granted the habeas petition, declaring the pleas void ab initio "for the reasons and on the grounds set forth" in the petition and supplemental points and authorities.
The warden now argues that there was no factual or legal basis for the grant of habeas relief. We agree.
Respondent argued below that his MGM pleas were "coerced" and obtained in violation of due process by the state's filing of an habitual criminal allegation three days before trial. He argues that such a practice is unequivocal evidence of prosecutorial vindictiveness triggered by a defendant's refusal to plead and the concomitant assertion of the constitutional right to a trial. The United States Supreme Court, however, has approved this practice and held that a prosecutor may file an habitual criminal allegation in response to an accused's election not to plead guilty. The Court specifically indicated that absent a decision to file the allegation based on an arbitrary factor such as race, an inference of vindictiveness is not compelling in light of the give-and-take of the plea bargaining process and the prosecutor's power to have filed the allegation at the outset of the plea negotiations. See Bordenkircher v. Hayes, 434 U.S. 357, 98 S.Ct. 663, 54 L.Ed.2d 604 (1978). We have embraced the Bordenkircher analysis under facts fairly similar to those of this case. See Schmidt v. State, 94 Nev. 665, 584 P.2d 695 (1978). Moreover, respondent gave no indication of any feeling of coercion at the MGM plea canvass, and told the court he was entering his pleas freely and voluntarily and without compulsion. Accordingly, we conclude that the prosecutor's conduct in this case did not violate respondent's due process rights or result in involuntary pleas.[2]
Respondent also argued below that his MGM pleas were "coerced" by the "use" of illegally seized evidence. By entering his nolo pleas, however, respondent waived all constitutional claims based on events occurring prior to the entry of the pleas, except those involving the voluntariness of the pleas themselves. See Cline v. State, 90 Nev. 17, 518 P.2d 159 (1974). Accordingly, his fourth amendment claim was not cognizable on his petition for habeas relief.
Respondent also argued below that his attorney in the MGM proceeding did not provide effective assistance in advising him to forego trial and plead nolo contendere. The United States Supreme Court has recently adopted the "reasonably effective assistance" standard for ineffective counsel in criminal cases. This constitutional standard supplants Nevada's traditional "farce and sham" test. See Strickland v. Washington, ___ U.S. ___, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984). It is not entirely clear whether the Strickland case applies prospectively only, or to cases still pending on direct appeal. In any event, we have examined the various claims of ineffectiveness and have concluded that counsel was not ineffective under either the traditional "farce and sham" or the modern "reasonably effective assistance" standard.[3]
*506 We have considered the argument that the nolo pleas violated the rule of Hanley v. State, supra, and have found the argument meritless.
Having concluded that the record before us shows no factual or legal basis for the grant of habeas relief, we hereby reverse the order granting the post-conviction petition for writ of habeas corpus, and we hereby reinstate respondent's pleas of nolo contendere.
NOTES
[1] The district court determined that respondent had shown "good cause" why his petition should be entertained notwithstanding his failure to appeal from the judgments of conviction. See Junior v. Warden, 91 Nev. 111, 532 P.2d 1037 (1975). The "good cause" finding is not at issue on appeal, and we express no opinion thereon.
[2] In his answering brief, respondent relies on State v. Sather, 564 P.2d 1306 (Mont. 1977), which disapproves of the filing of an habitual criminal allegation under circumstances similar to those of this case. Sather relied heavily on Hayes v. Cowan, 547 F.2d 42 (6th Cir.1976), which was overruled in Bordenkircher. Sather is of doubtful validity in the wake of the Bordenkircher ruling.
[3] In particular, we note that counsel was not ineffective for failing to file a motion to suppress. Although respondent's substantive fourth amendment claim was not cognizable on his petition for post-conviction habeas, he was entitled to argue, as he did, that counsel was ineffective for failing to seek suppression. We have concluded, however, that notwithstanding decisions from other jurisdictions, the motion would have been without merit under federal and Nevada law. See Burdeau v. McDowell, 256 U.S. 465, 41 S.Ct. 574, 65 L.Ed. 1048 (1921); Radkus v. State, 90 Nev. 406, 528 P.2d 697 (1974).
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626 So.2d 74 (1993)
Leon MILES, Plaintiff-Appellant,
v.
F.D. SHAY CONTRACTOR, INC. & CNA, Defendants-Appellees.
No. 93-64.
Court of Appeal of Louisiana, Third Circuit.
November 3, 1993.
*76 Louis D. Bufkin, Lake Charles, for Leon Miles.
Michael Jesse McNulty, III, Lake Charles, for F.D. Shay Contractor Inc. & CNA.
Before YELVERTON, KNOLL and THIBODEAUX, JJ.
THIBODEAUX, Judge.
This is an action for workers' compensation benefits. The claimant, Leon Miles, appeals an adverse judgment rendered against him by the administrative hearing officer regarding the propriety of terminating weekly benefits and the failure to award penalties and attorney's fees for the alleged arbitrary and capricious behavior of the employer's insurer, CNA.
The administrative hearing officer concluded that Miles was continuously temporarily totally disabled from the date of the accident, August 8, 1989, to the date of trial, November 18, 1991. The benefits were terminated from December 22, 1990 to October 27, 1991 for Miles's alleged failure to cooperate with his physician's recommended treatment.
For the following reasons, we reverse the decision of the administrative hearing officer and award temporary total disability benefits to claimant for the period from December 22, 1990 to October 27, 1991. Furthermore, we also award statutory penalties on these wrongfully withheld benefits and award attorney's fees in the sum of $5,000.00.
FACTS
During the summer of 1989, Mr. Miles was employed by F.D. Shay Contractor as a laborer. His crew was responsible for laying sewer pipe in a ditch. On two occasions while Mr. Miles worked in the ditch, objects fell on top of his head. On the first occasion, a co-worker dropped a segment of pipe on top of his head and knocked his head back. As a result of this accident, on August 8, 1989, Miles saw Dr. C.M. Smith. Dr. Smith gave him medication for the pain and possible infection. The second accident occurred about two weeks later when, while working in a ditch, a "clog" of dirt the size of a basketball, dislodged from the bank of the ditch, hitting him on the top of his head and causing him to feel dizzy. Miles claimed in his deposition that the pain he experienced later on that night was so intense that he could not sleep lying down.
Mr. Miles began receiving weekly workers' compensation benefits on August 12, 1989. The weekly benefits continued through the termination date of December 22, 1990. In addition to the indemnity benefits paid, CNA also paid a total of $14,041.47 in medical expenses on behalf of Mr. Miles.
Eventually, Mr. Miles saw Dr. Gerald Litel, a neurosurgeon, who performed a complete decompressive laminectomy at levels C4-5, C5-6 and C6-7 with bilateral foraminotomies at C4-5. Dr. Litel also performed decompressing spinal cord and multiple nerve roots surgical procedures on February 13, 1990.
After his accident, Mr. Miles was charged with the rape of his step-daughter. In April of 1990, he was incarcerated in the Calcasieu Parish jail. While incarcerated, Mr. Miles continued to see Dr. Litel for his complaints. On August 7, 1990, Dr. Litel issued a report to CNA recommending that Mr. Miles undergo a myelogram followed by an enhanced CT scan. His report advised CNA that he would be able to make a decision regarding Mr. Miles's present health status only after those tests were performed. Following receipt of Dr. Litel's report, CNA authorized Dr. Litel to perform the myelogram and the enhanced CT scan. Thereafter, in 1990, after Mr. Miles's initial incarceration in the Calcasieu Parish jail, he was transferred to the Avoyelles Parish jail.
Not only did Mr. Miles fail to undergo the medical tests recommended by Dr. Litel and authorized by CNA, but he also failed to return to see Dr. Litel. A CNA representative *77 contacted Mr. Miles's attorney on November 13, 1990, to inquire about Mr. Miles's condition as well as his reason for not undergoing the recommended tests. Susan Baggett who handled Mr. Miles's file for CNA, testified that she was advised by counsel for Mr. Miles, that they would get Mr. Miles in to see Dr. Litel as soon as possible. Ms. Baggett further testified that on December 20, 1990, CNA received a report from Dr. Litel stating that he had not seen Mr. Miles since August 6, 1990, and that he did not know whether or not he had gone through with the testing. Dr. Litel assumed, in his latest report as testified by Ms. Baggett, that Mr. Miles was still in the local city jail. Furthermore, Ms. Baggett testified that Dr. Litel's report indicated that the doctor felt that Mr. Miles's previous operation was definitive, but he could not determine whether Mr. Miles's significant complaints were new or old complaints and he was not aware of Mr. Miles's present status.
Mr. Miles continued to be treated by various doctors for numerous complaints during his incarceration. Until Mr. Miles's deposition of November 11, 1991, Ms. Baggett and CNA did not know that Mr. Miles had been transferred to Avoyelles. Based on its lack of knowledge as to Mr. Miles's condition and Mr. Miles's failure to undergo the recommended tests, Mr. Miles's workers' compensation benefits were terminated by CNA on December 22, 1990.
ISSUES
The issues before us are whether the claimant's benefits were properly terminated on December 22, 1990. If not, was CNA, the insurer, arbitrary and capricious or without probable cause for terminating claimant's benefits, thereby subjecting itself to penalties and attorney's fees?
DISCUSSION
A. Back Due Benefits
Mr. Miles argues that the hearing officer, while acknowledging that LSA-R.S. 23:1201.4 (pertaining to suspension of benefits while a claimant is incarcerated) did not apply in this case, nevertheless, "hung his hat" on Mr. Miles's release date as the time for CNA to resume payment of his workers' compensation benefits.
CNA, on the other hand, argues first that since Mr. Miles failed to submit to the diagnostic tests recommended by his treating physician and which it authorized, the hearing officer was correct in finding that benefits were properly terminated by CNA. In connection with its first argument, CNA claims an inability on its part to determine Mr. Miles's medical condition and disability due to his failure to cooperate with Dr. Litel's request. Secondly, CNA contends that although LSA-R.S. 23:1201.4 was not in effect until January 1, 1990, it nonetheless applies to the claimant since he became incarcerated after the effective date of the statute's amendment. We disagree.
The Louisiana Supreme Court stated clearly in Bruno v. Harbert International, Inc., 593 So.2d 357 (La.1992) that the governing law in a workers' compensation action is that which was in effect at the time of the alleged injury. See also, Behmke v. K-Mart Corp., 581 So.2d 291 (La.App. 5th Cir.1991). Thus, Mr. Miles's incarceration could not be a valid reason for discontinuing his benefits in the present case.
The hearing officer found that Mr. Miles was temporarily totally disabled as a result of his injury occurring within the course and scope of his employment with Shay on August 12, 1989, and that his disability commenced on that date and continued through the date of trial. Further, the hearing officer agreed with Mr. Miles that LSA-R.S. 23:1201.4 was inapplicable to the present case since Mr. Miles's injury occurred before its effective date. It is clear from the hearing officer's written reasons for judgment that his denial of back due benefits was tied to Mr. Miles's incarceration rather than his lack of disability, since the judgment requiring CNA to resume payment of Mr. Miles's compensation benefits coincided with his release date, contrary to the law in effect at the time of Mr. Miles's injury. Thus, the hearing officer, having no basis in fact or law, erred in refusing to award payment of Mr. Miles's back due weekly compensation benefits *78 beginning from the date his benefits were terminated, December 22, 1990, and ending upon Mr. Miles's release from jail, October 27, 1991.
B. Penalties and Attorney's Fees
It is well settled that a workers' compensation claimant is not entitled to penalties and attorney's fees unless the withholding or termination of benefits is found to be arbitrary, capricious or without probable cause. LSA-R.S. 23:1201; 23:1201.2; Scott v. Central Industries, Inc., 602 So.2d 201 (La.App. 3d Cir.1992). Further, we stated in Scott that if the employer (in this case, the insurer) has a bona fide dispute as to whether the claimant is no longer disabled, penalties and attorney's fees will not be awarded.
Whether or not a termination of benefits is arbitrary, capricious, or without probable cause depends primarily on the facts known to the employer or insurer at the time of its action. Brown v. Manville Forest Products Corp., 565 So.2d 496 (La.App. 2d Cir.), writ denied, 567 So.2d 1127 (La.1990). Absent manifest error, the hearing officer's determination that an award of penalties and attorney's fees is not warranted will not be disturbed on appeal. Savant v. Employers Nat. Ins. Co., 502 So.2d 176 (La.App. 3d Cir.1987). An injured employee may not be cut off from compensation benefits on the basis of inconclusive medical reports; it is incumbent upon the insurer to make reasonable efforts to ascertain the employee's exact medical condition at the time benefits are terminated. However, when an insurer's termination of compensation is based upon competent medical evidence, the action is not arbitrary and capricious. Savant, supra, 502 So.2d at 179. Furthermore, an insurer is not automatically penalized under these statutes for terminating compensation benefits even if ultimately the insurer's decision is found to be in error. Dearmon v. Louisiana Pacific Corp., 465 So.2d 144 (La.App. 3d Cir.), writ denied, 467 So.2d 1136 (La.1985). The statutes authorizing penalties and attorney's fees where the insurer is arbitrary, capricious, or without probable cause in terminating compensation benefits are penal in nature and must be strictly construed so that insurers are not penalized for contesting a close factual question in a workers' compensation proceeding and relying on valid defenses. Dearmon, supra; Landry v. Central Indus., Inc., 592 So.2d 478 (La.App. 3d Cir.1991), writ denied, 593 So.2d 381 (La.1992); Marcel v. Craig Guidry Construction Co., 511 So.2d 48 (La.App. 3d Cir.1987).
In the case sub judice, we find that the hearing officer was clearly wrong in concluding that CNA was not arbitrary, capricious or without probable cause in terminating Mr. Miles's compensation benefits and in failing to award penalties and attorney's fees. CNA terminated Mr. Miles's benefits on December 22, 1990, after his treating physician, Dr. Litel, opined that Mr. Miles failed to have the requested diagnostic tests performed and that he was not sure whether Mr. Miles's complaints were related to his August 1989, accident or some other accident. Dr. Litel also reported that he felt the surgical procedures he performed on Mr. Miles's back were definitive.
The record reveals that CNA knew of Mr. Miles's incarceration. CNA did not inquire of Calcasieu Parish jail personnel as to Mr. Miles's medical treatment, physical complaints or whereabouts in order to ascertain Mr. Miles's medical condition. CNA chose, instead, to rely solely on the report submitted by Dr. Litel as to Mr. Miles's failure to have the requested diagnostic tests performed. The record is also clear that Mr. Miles underwent the very tests Dr. Litel recommended while he was incarcerated. This court stated in Savant, supra, 502 So.2d at 179, that an injured employee may not be cut off from compensation benefits on the basis of inconclusive medical reports. At best, Dr. Litel's report to CNA was inconclusive. Further, Savant makes it incumbent upon the insurer to make reasonable efforts to ascertain the employee's exact medical condition. CNA, having knowledge of Mr. Miles's incarceration, made no such effort.
The hearing officer's refusal to award penalties and attorney's fees is a factual determination and subject to the manifest error rule. However, because CNA failed to make even reasonable efforts to determine Mr. Miles's medical condition when they knew that he *79 was incarcerated, and had they made the slightest effort they would have discovered his exact medical condition, it was manifestly erroneous for the hearing officer to find that CNA was not arbitrary, capricious or without probable cause when it terminated Mr. Miles's compensation benefits on December 22, 1990.
We hold CNA's termination of benefits to be arbitrary and capricious due to its failure to make reasonable efforts to ascertain Mr. Miles's medical condition relying only on Dr. Litel's inconclusive report. Under LSA-R.S. 23:1201(B) and (E), Mr. Miles is entitled to penalties amounting to twelve percent of any unpaid compensation installment from December 22, 1990 through October 27, 1991.
Mr. Miles is also entitled to a judgment of attorney's fees under the authority of LSA-R.S. 23:1201.2. We find $5,000.00 to be a reasonable amount in light of the effort, evidenced by the record, put forth by Mr. Miles's counsel in preparing this case. See, Thibodeaux v. Woman's Hosp. of Acadiana Foundation, Inc., 578 So.2d 213 (La.App. 3d Cir.1991), and Sharbono v. H & S Construction Co., 478 So.2d 779 (La.App. 3d Cir.1985). LSA-R.S. 23:1201.2 makes the insurer liable. Consequently, CNA is ordered to pay $5,000.00 for being arbitrary, capricious or without probable cause in terminating Mr. Miles's benefits.
CONCLUSION
For the foregoing reasons, the judgment of the Office of Workers' Compensation is reversed in favor of plaintiff-appellant, Leon Miles, to award Mr. Miles back due weekly compensation benefits in the amount of $267.00, commencing December 22, 1990, and ending October 27, 1991. Defendant-appellee, CNA Insurance Company, is likewise cast in judgment for twelve percent penalties on any unpaid compensation installment from December 22, 1990 through October 27, 1991. Defendant-appellee, CNA Insurance Company, is cast in judgment for attorney's fees in the amount of $5,000.00.
In all other respects, the judgment of the Office of Workers' Compensation is affirmed.
All costs of this appeal are assessed against defendant-appellee, CNA Insurance Company.
REVERSED IN PART, AMENDED IN PART, AND AFFIRMED AS AMENDED.
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209 F.Supp.2d 330 (2002)
Jacob SHAPIRO, on behalf of himself and all others similarly situated, Plaintiff(s),
v.
DUN & BRADSTREET RECEIVABLE MANAGEMENT SERVICES, INC., Defendant(s).
No. 02 CIV. 1231(JES).
United States District Court, S.D. New York.
July 15, 2002.
*331 Katz & Kleinman, Uniondale, NY (Lawrence Katz, Of Counsel), for Plaintiff.
Pitney Hardin Kipp & Szuch LLP, New York City (Lisa Martinez Wolmart, Of Counsel), for Defendant.
MEMORANDUM OPINION AND ORDER
SPRIZZO, District Judge.
Plaintiff Jacob Shapiro brings the above-captioned action on behalf of himself and others similarly situated, alleging a violation of the Fair Debt Collections Practices Act ("FDCPA"). Plaintiff claims that a debt collection letter sent by defendant Dun & Bradstreet Receivable Management Services, Inc. ("RMS") violated the FDCPA because it was so confusing as to "overshadow or contradict" RMS's statutorily-mandated debt validation notice advising plaintiff of his legal rights. Defendant moves to dismiss plaintiff's claim pursuant to Fed.R.Civ.P. 12(b)(6) and plaintiff cross-moves for partial summary judgment pursuant to Fed.R.Civ.P. 56(a). For the reasons set forth below, the Court grants defendant's motion and denies plaintiff's cross motion.
BACKGROUND
The following facts are uncontested. On or about February 8, 2002, RMS sent a notice to plaintiff in connection with a debt owed to ECONnergy Energy Company, Inc. ("the creditor"). See Plaintiff's Memorandum of Law in Support of Cross Motion on Pleadings dated May 6, 2002, Exhibit A, Debt Collection Letter to Plaintiff dated February 2, 2002 ("the Letter"). The front side of the Letter advised plaintiff that the debt was past due, and further advised plaintiff:
At this time[the creditor] ha[s] have requested assistance from [RMS] in collecting this debt. We ask that you send your check directly to [the creditor] for the amount owed. If you have already remitted payment, thank you, and you can disregard this letter.
* * * * * *
If there are any questions regarding this account, or if you wish to make payment arrangements, please contact [the creditor] directly at [telephone #]. Should you wish to dispute this account, please refer to the notice on the reverse side of this letter.
Letter at ¶¶ 2,4.
At the bottom of the page and in large bold letters, RMS advised plaintiff: "NOTICE: SEE REVERSE SIDE FOR IMPORTANT INFORMATION." On the reverse side, and in similar oversized lettering, appeared the following language: "IMPORTANT NOTICE OF YOUR RIGHTS UNDER FEDERAL LAW." The notice stated:
Unless you notify this office within 30 days after receiving this notice that you dispute the validity of this debt or any portion thereof, this office will assume that this debt is valid. If you notify this office in writing within 30 days from receiving this notice that you dispute the validity of this debt or any portion thereof, this office will obtain verification of the debt or obtain a copy of a judgment, if any, and mail you a copy of such judgment or verification. If you request this office in writing within 30 days after receiving this notice this office will provide you with the name and address of the original creditor, if different from the current creditor.
Letter at side 2.
Plaintiff contends that the above-quoted language on the front side of the Letter *332 misled him regarding how to preserve his rights under the FDCPA. Defendant denies this contention and argues that the language in the Letter does not violate the FDCPA as a matter of law.
DISCUSSION
In deciding a Rule 12(b)(6) motion to dismiss, a court must construe in plaintiff's favor any well-pleaded factual allegations of the complaint. See Finnegan v. Campeau Corp., 915 F.2d 824, 826 (2d Cir. 1990). A court may dismiss the complaint only where it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief. See Allen v. WestPoint-Pepperell, Inc. 945 F.2d 40, 44 (2nd Cir.1991) (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).
Congress enacted the FDCPA in 1977 to "eliminate abusive debt collection practices by debt collectors [and] to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged." 15 U.S.C. § 1692. In the instant case, plaintiff seeks damages and declaratory and injunctive relief arising out of defendant's alleged violation of 15 U.S.C. §§ 1692g, 1692e.
Section 1692g requires that a debt collection letter contain a "validation notice" which must inform the consumer how to obtain verification of the debt within thirty (30) days from receiving the letter. 15 U.S.C. §§ 1692g(a)(3), (a)(4). Section 1692e of the FDCPA prohibits "[t]he use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer." 15 U.S.C. § 1692e(10).
In determining whether the FDCPA has been violated, the United States Court of Appeals for the Second Circuit ("the Second Circuit") uses an objective standard based on how the "least sophisticated consumer" would interpret the debt collection letter. Russell v. Equifax, A.R.S., 74 F.3d 30, 34 (2d Cir.1996); Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir.1993). Under this standard, the mere inclusion of the required statutory debt validation language does not ensure compliance with the FDCPA. Russell, 74 F.3d at 35. This is especially so where the letter includes "language that overshadows or contradicts other language informing the consumer of her rights." Id. at 34 (internal quotations omitted). Thus, to determine whether a defendant violated the FDCPA, the Court must establish whether the challenged language fails to convey the required information "clearly and effectively and thereby makes the least sophisticated consumer uncertain" as to its meaning. Savino v. Computer Credit Inc., 164 F.3d 81, 85 (2d Cir.1998).
Plaintiff alleges violations of the FDCPA arising out of two (2) sentences in RMS's debt-collection letter. According to plaintiff, the language in these sentences "overshadows and contradicts" the validation notice on the reverse side of the Letter, thereby confusing the "least sophisticated consumer" into waiving his statutory rights under the FDCPA. Both of these assertions must be rejected as a matter of law.
Plaintiff first contends that RMS's instruction to contact the creditor directly with "any questions regarding this account, or ... to make payment arrangements" suggests that the consumer can preserve his protections under the FDCPA simply by contacting the creditor. See Plaintiff's Complaint dated February 12, 2002 at ¶ 19. Plaintiff thus contends that RMS's debt collection letter "overshadows and contradicts" the validation notice which makes clear that plaintiff can only preserve these rights by contacting RMS. However, unlike debt collection letters that *333 "can be reasonably read to have two (2) or more different meanings," or that leave consumers uncertain as to their rights, see Russell, 74 F.3d at 35; Savino, 164 F.3d at 86, RMS's instruction to contact the creditor with questions regarding the account does not leave the consumer uncertain. In Russell, the letter stated that "[i]f you do not dispute this claim (see reverse side) and wish to pay it within the next 10 days we will not post this collection to your file," while at the same time stressing that "it is our practice to post unpaid collections in the amount of $25 or more to individual credit records." Russell, 74 F.3d at 32. There was thus a veiled implication that plaintiff's credit record might be adversely affected should he not pay the debt.
Moreover, unlike the letter in Savino, the notice at issue here never demands payment within a certain time. In Savino, the Second Circuit held that any demand for payment, "without also explaining that its demand did not override the consumer's rights under Section 1962g," Savino, 164 F.3d at 86, effectively contradicts the validation notice and therefore violates the FDCPA. In the instant case, RMS simply advises plaintiff that he can either contact the creditor for payment arrangements or refer to the validation notice should he wish to dispute the debt. Thus there is no suggestion as to which course the plaintiff should follow nor even a demand for immediate payment.
For the same reason, Spira v. Consiglio, Parisi and Allen, Inc, 99 Civ. 870 (E.D.N.Y. Jan. 3, 2001) (ARR), a case plaintiff relies on heavily in support of his motion, is factually inapposite. In that case, plaintiff received a letter informing him that "[y]ou may telephone us to discuss this, however we suggest you contact Brooklyn Union directly." Spira, 99 Civ. 870, at 2 (emphasis added); see also Macarz v. Transworld Systems, Inc., 26 F.Supp.2d 368, 371 (D.Conn.1998) (debtor plaintiff received a letter stating that "if there is a legitimate misunderstanding concerning this debt, contact your creditor and discuss it" and letter had a validation notice written in the passive voice and typed in smaller print at the bottom of the letter). In both Spira and Macarz the courts held that the language of the letters encouraged the debtor to contact the creditor and thus could have misled the consumer into believing that he could trigger his FDCPA rights by contacting the creditor only.
No such suggestion exists here. The language here makes clear that "[i]f there are any questions regarding this account," plaintiff may contact the creditor, but that if he wanted to dispute the account, he should "refer to the notice on the reverse side of [the] letter." Letter at ¶ 4. The letter even uses bold-face, capital lettering to inform the reader of his "RIGHTS UNDER FEDERAL LAW." This case is therefore almost identical to Renick v. Dun & Bradstreet Receivable Management Services, 290 F.3d 1055 (9th Cir. 2002), where RMS was a party defendant. In that case the court held that a letter advising plaintiff to contact the creditor only with questions pertaining to the phone account would not confuse the least sophisticated consumer into believing that he should contact the creditor to validate the debt. See Renick, 290 F.3d at 1057.
This Court similarly concludes that RMS's letter unambiguously instructs plaintiff: (1) to contact the creditor only with questions about his account or to make payment arrangements; and (2) to contact RMS if he disputed the debt and wanted the debt to be verified. See Letter at ¶ 4, Reverse Side. Accordingly, defendant's letter does not create the actionable confusion which plaintiff alleges since not even the "least sophisticated consumer" could misconstrue its language in a way *334 that would indicate that he should contact the creditor rather than RMS to validate the debt.
Plaintiff also contends that RMS's instruction to disregard the collection letter if payment has already been remitted suggests to the consumer that he need not contact the debt collector to validate the debt. This interpretation of the Letter does not satisfy even the "least sophisticated consumer" standard, especially since there is language in the Letter which informs plaintiff of the appropriate course of action should he wish to dispute the account, advises him to "SEE [the Letter's] REVERSE SIDE FOR IMPORTANT INFORMATION," and fully recites the debt validation requirements in § 1692g. The "least sophisticated consumer" standard still "admits an objective element of reasonableness," which "protects debt collectors from liability for unrealistic or peculiar interpretations of collection letters." Vasquez v. Gertler & Gertler, Ltd., 987 F.Supp. 652, 655 (N.D.Ill.1997) (citing Jang v. A.M. Miller & Associates, 122 F.3d 480, 483-84 (7th Cir.1997)). Here, the Court finds that a reasonable albeit unsophisticated consumer would understand that there is no need to dispute a debt that has already been paid. Therefore, defendant's instruction to disregard the Letter if payment has been made does not violate the FDCPA. Hence, plaintiff's claims under § 1692g are dismissed.
Finally, plaintiff alleges FDCPA violations under § 1692e. Plaintiff's assertions for this count rest wholly on the same allegedly overshadowing and contradictory language that he claims violates § 1692g. Absent any other basis for "deception" or "false representation," the Court dismisses the 1692e claims for the same reasons set forth above in connection with plaintiff's other claims.
CONCLUSION
For the foregoing reasons, defendant's motion to dismiss is granted and plaintiff's cross motion for summary judgment is denied. The Clerk of the Court is hereby directed to enter a judgment in favor of the defendant and against plaintiff pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure and to close the above-captioned action.
It is SO ORDERED.
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Reversed and Rendered and Memorandum Opinion filed July 18, 2013.
In The
Fourteenth Court of Appeals
NO. 14-12-00192-CV
DRESSER-RAND COMPANY, Appellant
V.
SCOTT M. BOLICK, Appellee
On Appeal from the 189th District Court
Harris County, Texas
Trial Court Cause No. 2010-65793
MEMORANDUM OPINION
Appellant Dresser-Rand Company challenges the trial court’s orders
denying its motion for summary judgment and granting summary judgment in
favor of appellee Scott M. Bolick. We reverse the summary judgment granted in
favor of Bolick and render judgment in favor of Dresser-Rand.
BACKGROUND
Bolick was originally hired by Dresser-Rand in 2006. He worked out of
Albany, New York, and his title was “Global Commodity Manager.” Bolick left
the company to pursue other interests in 2007; he was rehired in 2008, once again
with the title “Global Commodity Manager.” Dresser-Rand transferred Bolick to
its Houston office in 2009.
This appeal hinges on the Relocation Expense Reimbursement Agreement
Bolick signed before his 2009 transfer to Houston. In relevant part, that agreement
provides:
Employee Name: Scott M. Bolick
New Work Location: Houston
Job Assignment Title: Global Commodity Mgr.
Start Date of New Assignment: 5/1/2009
1. This Agreement effective this 28th day of April, 2009
(hereinafter “Effective Date”) is by and between Scott M. Bolick
(hereinafter “Employee”) and DRESSER-RAND COMPANY
(hereinafter “DRESSER-RAND”). As of the Effective Date of this
Agreement, DRESSER-RAND has agreed to incur expenses or
reimburse Employee for certain expenses for the purpose of relocating
Employee and Employee’s eligible household members to a new
DRESSER-RAND work location identified above. The relocation
benefits being offered are described in the Relocation Letter of
Understanding, a copy of which is attached hereto for reference.
* * *
3. If Employee voluntarily terminates employment with
DRESSER-RAND for any reason or requests a transfer from the New
Work Location, then Employee agrees to repay DRESSER-RAND
any and all relocation expenses, or payments made in lieu of
relocation, incurred or reimbursed by DRESSER-RAND on the
prorated basis described in 7 below.
2
* * *
6. Nothing in this Agreement shall change Employee’s status as
an “At-Will” employee whose employment may be terminated for any
reason at any time by either DRESSER-RAND or Employee.
Nothing in this Agreement constitutes a contract or guarantee of
employment for any specific term or limits either party’s right to
terminate the employment relationship.
7. EMPLOYEE’S PRORATED RELOCATION REPAYMENT
SCHEDULE:
Employee agrees that from the start date of the new assignment
at the new location listed above and if a voluntary termination of
employment, a request for a transfer out of the assigned location, or
Employee’s employment is terminated for Cause occurs then with
respect to the periods of times [sic] listed below:
If employment is terminated within one year, per this Agreement, then
Employee will repay 100%
* * *
9. Any repayment required under this Agreement will be due and
payable to DRESSER-RAND within thirty (30) days of voluntary
termination of employment, request for transfer out of the assignment
location, or termination for Cause . . . .
* * *
10. The terms of this Agreement shall be governed by and
interpreted in accordance with the laws of the State of Texas. This
Agreement contains the entire agreement and understanding between
Employee and DRESSER-RAND with respect to the subject matter
hereof and supersedes all prior understandings, arrangements,
representations, warranties and agreements between the parties,
whether oral or written, with respect to the same. This Agreement
may only be modified by a writing that is signed by each DRESSER-
RAND’s duly authorized representative.
* * *
3
EMPLOYEE HEREBY EXPRESSLY WARRANTS AND
REPRESENTS THAT, BEFORE ENTERING INTO THIS
AGREEMENT, THAT [sic] THEY HAVE READ, INFORMED
THEMSELVES [sic] OF AND UNDERSTAND ALL THE
TERMS, CONTENTS, CONDITIONS AND EFFECTS OF ALL
PROVISIONS OF THIS AGREEMENT, THAT NO PROMISE
OR REPRESENTATION OF ANY KIND HAS BEEN MADE,
EXCEPT FOR THOSE EXPRESSLY STATED IN THIS
AGREEMENT AND THAT THEY ARE ENTERING INTO
THIS AGREEMENT ON A KNOWING AND VOLUNTARY
BASIS.
Bolick resigned from his employment less than one year after relocating to
Houston, but he did not repay more than $30,000 in moving expenses Dresser-
Rand incurred on his behalf.
Dresser-Rand sued Bolick for breach of the Relocation Expense
Reimbursement Agreement and asserted other claims not relevant to this appeal.
On September 13, 2011, Dresser-Rand filed a motion for traditional summary
judgment; on October 7, 2011, the trial court signed an order denying Dresser-
Rand’s motion “at this time.” On December 5, 2011, Bolick filed a motion for
traditional and no-evidence summary judgment. On January 4, 2012, the trial court
signed two orders — one granting Bollick’s motion, and another denying Dresser-
Rand’s motion a second time.
Dresser-Rand now appeals from all three orders in the trial court.
ANALYSIS
We review summary judgments de novo. Joe v. Two Thirty Nine Joint
Venture, 145 S.W.3d 150, 156 (Tex. 2004); Raynor v. Moores Mach. Shop, LLC,
359 S.W.3d 905, 907 (Tex. App.—Houston [14th Dist.] 2012, no pet.). When both
parties move for summary judgment and the trial court grants one motion and
4
denies the other, we determine all questions presented and render the judgment the
trial court should have rendered. Valence Operating Co. v. Dorsett, 164 S.W.3d
656, 661 (Tex. 2005); Seber v. Union Pac. R.R., 350 S.W.3d 640, 655-56 (Tex.
App.—Houston [14th Dist.] 2011, no pet.).
I. Bolick’s Motions for Summary Judgment
Bolick moved for summary judgment on traditional and no-evidence
grounds. For both types of motions, we take as true all evidence favorable to the
nonmovant and indulge every reasonable inference and resolve any doubts in the
nonmovant’s favor. Williams v. Bell, No. 14-12-00691-CV, __ S.W.3d __, 2013
WL 1197760, at *3 (Tex. App.—Houston [14th Dist.] March 26, 2013, no pet.);
see Joe, 145 S.W.3d at 157 (traditional summary judgment); King Ranch, Inc. v.
Chapman, 118 S.W.3d 742, 751 (Tex. 2003) (no-evidence summary judgment).
In a traditional summary judgment, the movant has a burden of showing
there is no genuine issue of material fact and it is entitled to judgment as a matter
of law. Tex. R. Civ. P. 166a(c); Joe, 145 S.W.3d at 157. We affirm the summary
judgment if any of the theories presented to the trial court and preserved for
appellate review are meritorious. Joe, 145 S.W.3d at 157.
A no-evidence summary judgment is proper when (a) there is a complete
absence of a vital fact, (b) the court is barred by rules of law or of evidence from
giving weight to the only evidence offered to prove a vital fact, (c) the evidence
offered to prove a vital fact is no more than a mere scintilla, or (d) the evidence
conclusively establishes the opposite of a vital fact. King Ranch, 118 S.W.3d at
751. We affirm the summary judgment unless the respondent brings forth more
than a scintilla of probative evidence to raise a genuine issue of material fact. Id.;
see Tex. R. Civ. P. 166a(i). Less than a scintilla of evidence exists when the
evidence is so weak as to do no more than create a mere surmise or suspicion of a
fact. King Ranch, 118 S.W.3d at 751. More than a scintilla of evidence exists
5
when the evidence rises to a level that would enable reasonable and fair-minded
people to differ in their conclusions. Id.
Summary judgment may only be granted upon the grounds expressly stated
in the summary judgment motion. Tex. R. Civ. P. 166a(c); G & H Towing Co. v.
Magee, 347 S.W.3d 293, 297 (Tex. 2011) (per curiam). In determining whether
grounds are expressly presented, reliance may not be placed on briefs or summary
judgment evidence. McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337,
341 (Tex. 1993).
Bolick asserted three grounds1 in his summary judgment motion: (1) “The
Relocation Agreement is an Unenforceable Penalty Clause;” (2) “The Clause Was
Drafted, and Operates, as a Penalty Clause;” and (3) “Dresser Has No Evidence of
Damages, Even if It Had a Valid Contract, Which It Does Not.” Those are the
only grounds upon which the trial court could have granted summary judgment in
favor of Bolick, and those are the only grounds upon which we review the trial
court’s order granting summary judgment.2 See Tex. R. Civ. P. 166a(c); G & H
Towing, Co., 347 S.W.3d at 297.
We examine each of these contentions in turn.
A. Unenforceable Penalty Clause
Bolick argued that the Relocation Expense Reimbursement Agreement is
unenforceable because it amounts to a provision fixing unreasonably large
liquidated damages.
1
A fourth ground for summary judgment addressed Dresser-Rand’s claim for unjust
enrichment concerning Bolick’s personal expenditures on a company American Express card.
That claim is not at issue in this appeal.
2
In light of the grounds raised in Bolick’s motion for summary judgment, we do not
address the following additional arguments raised in Bolick’s appellate briefing in support of the
trial court’s grant of summary judgment in his favor: “There is no Contract for Payment of the
Expenses Demanded by [Dresser-Rand];” and “Even if the relocation agreement is held not to
constitute an unenforceable penalty, it was procured by fraud.”
6
Liquidated damages clauses fix in advance the compensation to a party
accruing from the failure to perform specified contractual obligations. Dorsett,
164 S.W.3d at 664. Liquidated damages are recoverable only when there has been
a failure to perform contractual obligations. Id. Whether a contractual provision is
an enforceable liquidated damages provision or an unenforceable penalty is a
question of law for the court to decide. Phillips v. Phillips, 820 S.W.2d 785, 788
(Tex. 1991). Under the Texas Business and Commerce Code,
[d]amages for breach by either party may be liquidated in the
agreement but only at an amount which is reasonable in light of the
anticipated or actual harm caused by the breach, the difficulties of
proof or loss, and the inconvenience or non-feasibility of otherwise
obtaining an adequate remedy. A term fixing unreasonably large
liquidated damages is void as a penalty.
Tex. Bus. & Com. Code §2.718 (a) (Vernon 2009).
We reject the premise of Bolick’s argument because the Relocation Expense
Reimbursement Agreement is not a liquidated damages provision.
The Dallas court of appeals has considered an agreement similar to the one
at issue here. See Sunbelt Servs., Inc. v. Grove Temp. Serv., Inc., No. 05-05-
01090-CV, 2006 WL 2130144 (Tex. App.—Dallas Aug. 1, 2006, no pet.) (mem.
op.). In that case, a contract between an employment agency (Grove) and its client
provided for a placement fee if the client chose to offer a permanent position to an
employee referred to them by Grove:
Should you decide to hire a Grove temporary employee on a
permanent basis within one year from the date of referral, the
temporary would remain on Grove’s payroll for a total of 520 hours.
After completing the 520 hours, the Grove temporary will be released
to you with no additional fee. If you would like the Grove temporary
employee to become your permanent employee prior to completing
the 520 hours, you will be billed 1% per $1,000 of the annual gross
7
salary up to 30%. The same fee applies should your company move
our temporary to any other company or temporary agency’s payroll.
Id. at *2. Grove referred Nanine Young to work for Sunbelt, and while Young
worked for Sunbelt, she filled out timecards that were signed by her supervisor and
sent to Grove. Id. at *1-*2. Those timecards included preprinted language
describing the placement fee and referring to it as “liquidated damages.” Id. at *3.
After working 126 hours for Sunbelt, Young was offered a permanent position at
the company. Id. at *1.
The court rejected Sunbelt’s argument that the terminology on the preprinted
timecards was dispositive and concluded that, as a matter of law, the placement fee
was agreed compensation, not liquidated damages:
[T]he contract’s fee for Sunbelt’s hiring Young within one year or 520
employment hours of Grove’s referral of her to Sunbelt is not
liquidated damages unless it was agreed it would be assessed for a
breach of contract. In the contract, Sunbelt never agreed not to
permanently hire Young within one year or 520 employment hours.
Instead, it agreed to pay a particular fee if it did so.
Id. at *3.
We adopt the reasoning of the Dallas court of appeals and apply it here. The
repayment obligation for resigning within one year does not constitute liquidated
damages unless the parties agreed that the amount at issue would be assessed as
damages if Bolick breached the contract by resigning within one year of relocation.
In the agreement, Bolick’s status as an at-will employee was expressly stated.
Bolick never agreed not to resign within one year; instead, he agreed to repay
Dresser-Rand’s relocation expenses if he did resign within one year. Construing
the agreement as a matter of law, we conclude that the repayment obligation was
agreed compensation, not a liquidated damages provision. See id. at *4.
8
Because the obligation was not a liquidated damages provision, it cannot be
an unenforceable penalty. See Tex. Bus. & Com. Code §2.718 (a). Thus, the trial
court should not have granted summary judgment on the basis of Bolick’s first
argument.
B. Operating as a Penalty Clause
In his second summary judgment argument, Bolick argued that the
repayment obligation “[w]as [d]rafted, and [o]perates, as a [p]enalty [c]lause”
because (1) it does not exclude further liability by making it clear that liquidated
damages will be in lieu of other damages; (2) it is not a reasonable approximation
of Dresser-Rand’s damages; (3) it was designed to penalize people who left the
company soon after joining it and encourage employees to stay near the company’s
headquarters in Olean, New York; and (4) there is evidence that Dresser-Rand
actually saved money by transferring Bolick to Houston.
To the extent that this argument assumes the repayment obligation is a
liquidated damages provision, we reject it for reasons explained above. See Tex.
Bus. & Com. Code §2.718 (a); Dorsett, 164 S.W.3d at 664; Sunbelt Servs., 2006
WL 2130144 at *3. Beyond that, Bolick does not offer any authority for summary
judgment on the basis of the repayment obligation’s original intent or its financial
utility to Dresser-Rand.
The trial court should not have granted summary judgment on the basis of
Bolick’s second argument.
C. No Evidence of Damages
Finally, Bolick argued that Dresser-Rand failed to produce any evidence of
damages.
To prevail on a breach of contract claim, a party must establish the following
elements: (1) a valid contract existed between the plaintiff and the defendant, (2)
9
the plaintiff tendered performance or was excused from doing so, (3) the defendant
breached the terms of the contract, and (4) the plaintiff sustained damages as a
result of the defendant’s breach. West v. Triple B Servs., LLP, 264 S.W.3d 440,
446 (Tex. App.—Houston [14th Dist.] 2008, no pet.). In this context, a no-
evidence summary judgment is proper only if Dresser-Rand has produced no more
than a scintilla of probative evidence of damages. See Tex. R. Civ. P. 166a(i);
King Ranch, 118 S.W.3d at 751.
Dresser-Rand provided the trial court with an itemized list of Dresser-
Rand’s expenditures related to Bolick’s relocation, which was supported by an
affidavit of Lori Lee, Dresser-Rand’s human resources and global development
manager. That evidence showed that Bolick’s relocation expenses totaled
$31,087.54, and $27,463.66 remained unpaid. Bolick has not argued that any of
these expenses were not incurred by Dresser-Rand, only that he is not obligated to
repay them.
We conclude that Dresser-Rand has presented more than a scintilla of
evidence regarding damages; the trial court should not have granted summary
judgment on the basis of Bolick’s third argument. See Tex. R. Civ. P. 166a(i);
King Ranch, 118 S.W.3d at 751.
Bolick did not argue any meritorious grounds for summary judgment;
therefore, the trial court erred by granting summary judgment in his favor. See
Tex. R. Civ. P. 166a(c); G & H Towing, Co., 347 S.W.3d at 297. We must now
determine whether the trial court also erred in denying Dresser-Rand’s competing
motion for summary judgment. See Dorsett, 164 S.W.3d at 661; Seber, 350
S.W.3d at 655-56.
10
II. Dresser-Rand’s Motion for Summary Judgment
Dresser-Rand asserted a single relevant3 ground in its traditional motion for
summary judgment against Bolick: “[Dresser-Rand] has established the essential
elements of its claim against [Bolick] for Breach of the Agreement” based upon
Bolick’s failure to repay the relocation expenses as promised. Bolick argues that
Dresser-Rand is not entitled to summary judgment because three fact issues are
still in dispute.
A. Breach of Contract
In the context of summary judgment, Dresser-Rand had the burden of
showing there was no genuine issue of material fact and it was entitled to judgment
as a matter of law. See Tex. R. Civ. P. 166a(c); Joe, 145 S.W.3d at 157. To
prevail on its breach of contract claim, Dresser-Rand needed to demonstrate (1) a
valid contract existed between Dresser-Rand and Bolick, (2) Dresser-Rand
tendered performance or was excused from doing so, (3) Bolick breached the terms
of the contract, and (4) Dresser-Rand sustained damages as a result of the
defendant’s breach. See Triple B Servs., 264 S.W.3d at 446.
Bolick conceded each of the first three elements in deposition testimony that
Dresser-Rand attached to its motion for summary judgment. The transcript of that
testimony provides, in relevant part:
Q. (BY [Dresser-Rand’s counsel Paul A.] PILIBOSIAN) The only
thing that Dresser-Rand is agreeing to do in this relocation agreement
is provide you with relocation money, right?
* * *
A. And services.
3
Like Bolick, Dresser-Rand also asserted grounds for summary judgment on the unjust
enrichment claim that is not at issue in this appeal. Additionally, Dresser-Rand moved for
summary judgment on several counterclaims that have been nonsuited by Bolick.
11
Q. (BY MR. PILIBOSIAN) Are you saying that those were not
provided?
A. They were.
Q. So, Dresser-Rand held up its end of the bargain. They paid the
relocation expenses. You terminated your employment within the —
within one year voluntarily, right?
A. I did.
* * *
Q. (BY MR. PILIBOSIAN) According to the agreement, you were
supposed to pay your relocation expenses back to Dresser-Rand
within 30 days after you left, right?
* * *
A. That’s what it read in the agreement.
Q. (BY MR. PILIBOSIAN) And that’s what you signed off on?
* * *
A. It is.
Q. (BY MR. PILIBOSIAN) And when you signed it, you intended to
be bound by this contract, right?
A. I did.
Q. Okay, but you would agree with me you haven’t abided by the
contract. You haven’t paid those expense [sic] back, right?
* * *
A. Not to date.
Q. (BY MR. PILIBOSIAN) Okay. Do you have any intention of
paying them back?
A. (No response from the witness.)
Q. I take that as a no. You don’t have any intention of paying it back,
do you?
* * *
A. You are putting words in my mouth.
12
Q. (BY MR. PILIBOSIAN) You won’t answer my question. So I’m
asking — I’m trying to make it easier for you. Do you have any
intention of paying that money back to Dresser-Rand?
A. Not at this time.
As we discussed above, the fourth element — damages — is established by the
itemized list of expenses and Lee’s affidavit.
Bolick’s testimony establishes (1) the existence of a contract, (2) Dresser-
Rand’s performance, and (3) his own breach. He has not disputed (4) the amount
of damages claimed by Dresser-Rand. Bolick nevertheless argues that Dresser-
Rand is not entitled to summary judgment due to fraudulent inducement, prior
breach, and estoppel.
B. Bolick’s Defenses
1. Fraudulent Inducement
Bolick alleges that he agreed to relocate to Houston only after Dresser-Rand
promised him a promotion; he argues that, because his title and responsibilities
remained the same after the move, the Relocation Expense Reimbursement
Agreement was “procured by fraud.” Dresser-Rand argues that Bolick’s fraudulent
inducement claim is precluded by provisions of the Relocation Expense
Reimbursement Agreement.
A contract is subject to avoidance on the ground of fraud. Williams v.
Glash, 789 S.W.2d 261, 264 (Tex. 1990); McLernon v. Dynegy, Inc., 347 S.W.3d
315, 328 (Tex. App.—Houston [14th Dist.] 2011, no pet.). However, a provision
that clearly expresses the parties’ intent to waive fraudulent inducement claims, or
one that disclaims reliance on representations about specific matters in dispute, can
preclude a claim of fraudulent inducement. Schlumberger Tech. Corp. v. Swanson,
959 S.W.2d 171, 181 (Tex. 1997); McLernon, 347 S.W.3d at 329. To determine
13
whether such a provision is present here, we must construe the language of the
Relocation Expense Reimbursement Agreement.
In construing a contract, a court must ascertain the true intentions of the
parties as expressed in the writing itself. Seagull Energy E & P, Inc. v. Eland
Energy, Inc., 207 S.W.3d 342, 345 (Tex. 2006). Courts must always examine the
contract itself and the totality of the surrounding circumstances when determining
if a waiver of reliance provision is binding. Forest Oil Corp. v. McAllen, 268
S.W.3d 51, 60 (Tex. 2008). Whether the parties express a clear and unequivocal
intent to disclaim reliance on representations or to waive fraudulent-inducement
claims is a threshold requirement. Tex. Standard Oil & Gas, L.P. v. Frankel
Offshore Energy, Inc., 394 S.W.3d 753, 763 (Tex. App.—Houston [14th Dist.]
2012, no pet.); see Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341
S.W.3d 323, 337 n.8 (Tex. 2011). Once that intent is satisfied, a court should be
guided by four factors in determining the enforceability of a disclaimer of reliance:
(1) the terms of the contract were negotiated, rather than boilerplate, and during
negotiations the parties specifically discussed the issue which has become the topic
of the subsequent dispute; (2) the complaining party was represented by counsel;
(3) the parties dealt with each other in an arm’s length transaction; and (4) the
parties were knowledgeable in business matters. Italian Cowboy, 341 S.W.3d at
337 n.8; Forest Oil, 268 S.W.3d at 60. Ultimately, the determination of whether a
provision forecloses a fraudulent inducement claim is a question of law. See
Italian Cowboy, 341 S.W.3d at 333.
Several provisions of the Relocation Expense Reimbursement Agreement
potentially are relevant to our disclaimer-of-reliance analysis.
On the first page of the agreement, immediately under the main title, there
are four blanks that have been filled in with what Bolick concedes is his own
14
handwriting. The blanks are labeled “Employee Name,” “New Work Location,”
“Job Assignment Title,” and “Start Date of New Assignment.” In the blank for Job
Assignment Title, Bolick wrote “Global Commodity Mgr.”
Paragraph 10 the agreement states:
This Agreement contains the entire agreement and understanding
between Employee and DRESSER-RAND with respect to the subject
matter hereof and supersedes all prior understandings, arrangements,
representations, warranties and agreements between the parties,
whether oral or written, with respect to the same. This Agreement
may only be modified by a writing that is signed by each DRESSER-
RAND’s duly authorized representative.
This language functions as a merger clause, which is defined as “‘[a] provision in a
contract to the effect that the written terms may not be varied by prior or oral
agreements because all such agreements have been merged into the written
document.’” IKON Office Solutions, Inc. v. Eifert, 125 S.W.3d 113, 125 n.6 (Tex.
App.—Houston [14th Dist.] 2003, pet. denied) (quoting Black’s Law Dictionary
989 (6th ed. 1990)). An additional potentially relevant clause appears at the end of
the agreement:
EMPLOYEE HEREBY EXPRESSLY WARRANTS AND
REPRESENTS THAT, BEFORE ENTERING INTO THIS
AGREEMENT, THAT [sic] THEY HAVE READ, INFORMED
THEMSELF [sic] OF AND UNDERSTAND ALL THE TERMS,
CONTENTS, CONDITIONS AND EFFECTS OF ALL
PROVISIONS OF THIS AGREEMENT, THAT NO PROMISE
OR REPRESENTATION OF ANY KIND HAS BEEN MADE,
EXCEPT FOR THOSE EXPRESSLY STATED IN THIS
AGREEMENT AND THAT THEY ARE ENTERING INTO
THIS AGREEMENT ON A KNOWING AND VOLUNTARY
BASIS
The bold, underlined, all-capitals format appears in the original document.
15
In IKON, this court concluded that the requisite clear and unequivocal intent
to disclaim reliance was demonstrated by two broadly worded clauses that parallel
the clauses used here. See id. at 125-26.
In that case, we noted:
The Acquisition Agreement includes a statement that it “constitutes
the entire agreement concerning the subject matter hereof. No
modification or waiver hereof shall be binding upon any party unless
in writing and signed on behalf of the party against which the
modification or waiver is asserted.” The Employment Agreement is
referenced in, and attached to, the Acquisition Agreement. The
Employment Agreement, to which Eifert’s job description was
attached, contains clauses stating it contains the entire agreement
between the parties; supercedes prior employee and compensation
agreements, and can be changed, modified or extended only in
writing. It also contains a provision stating, “[N]o commitments have
been made relative to bonuses, guarantees or any other special
provisions, except as specifically identified herein.”
Id. Other courts have discerned the intent to disclaim reliance in similar clauses.
See Springs Window Fashions Div., Inc. v. Blind Maker, Inc., 184 S.W.3d 840,
857-58 (Tex. App.—Austin 2006, pet. granted, judgm’t vacated w.r.m.)
(examining a clause providing that, “This agreement contains the entire agreement
between the parties hereto in respect of the subject matter hereof and supercedes
and cancels all previous agreements, negotiations, commitments and
understandings, with respect to the subject matter hereof, whether made orally or
in writing.”); see also Armstrong v. Am. Home Shield Corp., 333 F.3d 566, 571
(5th Cir. 2003) (examining a clause providing that, “This Agreement shall
constitute the entire contract between the parties and supercedes all existing
agreements between them, whether oral or written, with respect to the subject
matter hereof.”).
More recently, the Texas Supreme Court has stated that “generic merger
16
language” is insufficient to demonstrate an intent to disclaim reliance. See Italian
Cowboy, 341 S.W.3d at 336. Following that precept, the supreme court said the
following provision was insufficient to disclaim reliance: “Tenant acknowledges
that neither Landlord nor Landlord’s agents, employees or contractors have made
any representations or promises . . . except as expressly set forth herein.” Id.
The language at issue in the Relocation Expense Reimbursement Agreement
is broader and more explicit than the “generic merger language” quoted in Italian
Cowboy. Paragraph 10 excludes prior oral and written understandings. The bold,
underlined, all-capitals provision at the end of the agreement reiterates the absence
of any extra-contractual promise or representation; this provision also warrants that
Bolick read the agreement and informed himself of its contents before entering it,
that Bolick understood the agreement, and that he entered into the agreement on a
“knowing and voluntary basis.”
Additionally, the agreement clearly states that one term of Bolick’s
relocation is that he will retain the title of “Global Commodity Manager.” One of
the elements of a claim based in fraud is the justifiable reliance on an alleged
misrepresentation. Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d
573, 577 (Tex. 2001). Reliance upon an oral representation that is directly
contradicted by the express, unambiguous terms of a written agreement between
the parties is not justified as a matter of law. DRC Parts & Accessories, L.L.C. v.
VM Motori, S.P.A., 112 S.W.3d 854, 858 (Tex. App.—Houston [14th Dist.] 2003,
pet. denied); see Atlas Props, Inc. v. Republic Waste Servs. of Tex., Ltd., No. 02-
11-00332-CV, 2012 WL 579442, at *2 (Tex. App.—Fort Worth Feb. 23, 2012, no
pet.) (mem. op.) (concluding that a contract expressly providing for a 36-month
term precluded the plaintiff from relying on an oral representation of another term
length); see also E.R. Dupuis Concrete Co. v. Penn Mut. Life Ins. Co., 137 S.W.3d
17
311, 321 (Tex. App.—Beaumont 2004, no pet.) (concluding that a contract
expressly forbidding insurance agents from making certain representations
precluded the plaintiff from relying on the forbidden representations).
Under these circumstances, the agreement contains clear and unequivocal
language necessary to defeat reliance. We therefore turn to the other Italian
Cowboy factors: (1) the terms of the contract were negotiated, rather than
boilerplate, and during negotiations the parties specifically discussed the issue
which has become the topic of the subsequent dispute; (2) the complaining party
was represented by counsel; (3) the parties dealt with each other in an arm’s length
transaction; and (4) the parties were knowledgeable in business matters. Italian
Cowboy, 341 S.W.3d at 337 n.8.
Only one Italian Cowboy factor potentially cuts in favor of Bolick; it is
unclear on this record whether he was represented by counsel during contract
negotiations. This factor is not determinative because the other three factors
overwhelmingly demonstrate an intent to defeat reliance.
The terms of the contract are directly relevant to the present dispute and are
not boilerplate. In particular, the term at the core of this dispute — Bolick’s post-
relocation position — was inserted into the agreement by Bolick himself.
Likewise, the terms of the agreement reflect that Bolick executed it “on a knowing
and voluntary basis,” and Bolick does not deny that it was the result of an arm’s
length negotiation. The record makes it clear that Bolick was a knowledgeable
party during negotiations; his estoppel argument relies completely on his conceded
“intimate knowledge of Dresser-Rand’s relocation program.”
I worked with others at the company to build the program and was
involved in all aspects of the program throughout my tenure with the
company. For example, I was part of the team that reviewed the
program on a quarterly basis to monitor the performance of Dresser-
18
Rand’s relocation services provider . . . the program’s expenses,
relocation policy exceptions[,] and industry relocation program trends.
We conclude that, as a matter of law, the Relocation Expense Reimbursement
Agreement includes a disclaimer of reliance that precludes Bolick’s fraudulent
inducement defense.
Therefore, Bolick’s fraudulent inducement claim does not raise a genuine
issue of material fact, and it has no effect on Dresser-Rand’s motion for summary
judgment. See Tex. R. Civ. P. 166a(c); Joe, 145 S.W.3d at 157.
2. Prior Breach
Bolick argues that Dresser-Rand committed a material breach of contract
that discharged his duty to repay the moving expenses Dresser-Rand accrued on
his behalf; he alleges that, “[Dresser-Rand] breached the contract by failing to
promote Bolick to Corporate Purchasing Manager.”
We reject this argument for the same reasons we reject Bolick’s fraudulent
inducement claim. See Atlas Props, 2012 WL 579442, at *2; DRC, 112 S.W.3d at
858. In clear, unambiguous terms, the Relocation Expense Reimbursement
Agreement provides that, upon relocation, Bolick was to retain his title of Global
Commodity Manager. That Bolick actually did retain his title of Global
Commodity Manager is not only uncontroverted, but it is the very basis of the
present litigation.
Even if we assume that Dresser-Rand promised to promote Bolick to
Corporate Purchasing Manager, such a promise is outside the terms of the
Relocation Expense Reimbursement Agreement. “It is a fundamental principle of
contract law that when one party to a contract commits a material breach of that
contract, the other party is discharged or excused from further performance.”
19
Mustang Pipeline Co., Inc. v. Driver Pipeline Co., Inc., 134 S.W.3d 195, 196 (Tex.
2004) (per curiam) (emphasis added). Dresser-Rand abided by the terms of the
Relocation Expense Reimbursement Agreement, and Bolick’s obligations under
that agreement have not been discharged or excused. See id.
Bolick’s prior breach argument is likewise ineffective in raising a genuine
issue of material fact that would preclude summary judgment in favor of Dresser-
Rand. See Tex. R. Civ. P. 166a(c); Joe, 145 S.W.3d at 157.
3. Estoppel
Bolick’s final argument against summary judgment hinges on his contention
that Dresser-Rand “waived (or is estopped from enforcing) its alleged right to
reimbursement for relocation expenses.” In support of this contention, Bolick
notes that “several other employees to whom [Dresser-Rand] paid benefits under
the company’s ‘relocation policy’ left the company within one year, and [Dresser-
Rand] made no effort to recoup these benefits from them.”
This argument has no merit; Dresser-Rand’s previous enforcement conduct
has no bearing on its right to enforce the contract at issue. See Yzaguirre v. KCS
Res., Inc., 47 S.W.3d 532, 541 (Tex. App.—Dallas 2000), aff’d, 53 S.W.3d 368
(Tex. 2001). In the face of an unambiguous contract, past conduct or promises do
not give rise to estoppel. Id.
Assuming arguendo that Dresser-Rand has historically been lax in enforcing
repayment obligations under the Relocation Expense Reimbursement Agreement,
by allowing former employees to keep more money than that to which they were
entitled under the agreement, Dresser-Rand did not create a right in all future
employees who sign the Relocation Expense Reimbursement Agreement. See Sun
Oil Co. (Del.) v. Madeley, 626 S.W.2d 726, 734 (Tex. 1981). In Sun Oil, an oil
20
company paid its lessors a royalty greater than that provided for in the express
terms of the leases. Id. at 727. For more than forty years, the oil company paid
more than was contractually required, and internal documentation even showed
that the oil company was aware of the overpayment. Id. at 727, 733. The supreme
court reasoned that four decades of excess payments was not a promise to continue
to overpay. See id. at 733.
Applying the Sun Oil reasoning here, we conclude that, even if Bolick’s
allegations of Dresser-Rand’s past conduct were true, Bolick has failed to raise a
genuine issue of material fact because Dresser-Rand’s past conduct is irrelevant to
its current rights.
Accordingly, Dresser-Rand has carried its burden and demonstrated that
there is no genuine issue of material fact regarding its claim for breach of contract.
See Triple B Servs., 264 S.W.3d at 446. Dresser-Rand was entitled to judgment as
a matter of law, and the trial court erred by denying its motion for summary
judgment. See Tex. R. Civ. P. 166a(c); Joe, 145 S.W.3d at 157.
III. Attorney’s Fees
In its motion for summary judgment, Dresser-Rand asserted that it was
entitled to recover attorney’s fees from Bolick; Dresser-Rand renews that assertion
on appeal.
The prevailing party may recover reasonable attorney’s fees in claims for
breach of contract. Tex. Civ. Prac. & Rem. Code § 38.001(8) (Vernon 2008).
Clear, direct, and uncontroverted evidence of attorney’s fees is taken as true as a
matter of law, especially when the opposing party has the means and opportunity
to disprove the testimony. B & W Supply, Inc. v. Beckman, 305 S.W.3d 10, 20
(Tex. App.—Houston [1st Dist.] 2009, pet. denied) (citing Ragsdale v. Progressive
21
Voters League, 801 S.W.2d 880, 882 (Tex. 1990)).
Dresser-Rand produced an affidavit from its trial counsel, Pilibosian,
attesting to attorney’s fees totaling $16,412.48 through the date of the trial court’s
hearing on Dresser-Rand’s motion for rehearing of its motion for summary
judgment. Pilibosian anticipated that in the event the case was appealed to the
court of appeals, a reasonable fee for additional services would be $12,500.00.
Bolick did not object to or controvert this evidence.
Because we have determined that Dresser-Rand was entitled to judgment as
a matter of law in the trial court, we conclude that Dresser-Rand is entitled to
attorney’s fees as a matter of law. See Tex. Civ. Prac. & Rem. Code § 38.001(8).
CONCLUSION
We reverse the trial court’s order granting summary judgment in favor of
Bolick and render summary judgment in favor of Dresser-Rand. We further render
judgment awarding Dresser-Rand attorney’s fees in the amount of $28,912.48.
/s/ William J. Boyce
Justice
Panel consists of Chief Justice Hedges and Justices Boyce and Donovan.
22
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441 F.2d 403
UNITED STATES of Americav.Kasper ALEXANDER, Robert Jones, Milford Davis, MilfordDavis, Appellant.
No. 18422.
United States Court of Appeals, Third Circuit.
Argued March 18, 1971.Decided April 7, 1971.
Avrom J. Gold, Newark, N.J. (Mandelbaum, Mandelbaum & Gold, Newark, N.J., on the brief), for appellant.
James D. Fornari, Asst. U.S. Atty., Newark, N.J. (Frederick B. Lacey, U.S. Atty., Newark, N.J., on the brief), for appellee.
Before BIGGS, KALODNER and ADAMS, Circuit Judges.
OPINION OF THE COURT
PER CURIAM:
1
The appellant was indicted, tried, and convicted by a jury of armed bank robbery in violation of 18 U.S.C. 2113(a) and of putting in jeopardy the lives of several persons while committing a bank robbery in violation of 18 U.S.C. 2113(d). During the trial, the Assistant United States Attorney sought to introduce through two FBI agents, Genakos and Diggs, the oral statement of the appellant to the agents 'that this was the only bank robbery he had been involved in.' A Jackson v. Denno1 hearing was held in the absence of the jury to determine whether appellant voluntarily and knowingly waived his privilege against self-incrimination. Genakos and Diggs both testified that they presented Davis with a warning and waiver document which set forth the warnings required by the United States Supreme Court in Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966), a statement that the signer has read and understands his rights, and a waiver of these rights. The agents further testified that they went over the warnings and waiver with Davis and asked him whether he understood them. After indicating that he understood his rights and signing the waiver form, he made the statement referred to above. After making that statement Davis refused to say anything further concerning the robbery and requested an attorney. Over objection by Davis' counsel, the trial judge allowed the prosecution to introduce the statement in evidence before the jury.
2
Davis concedes that the FBI agents were not obliged to advise him orally of his Miranda rights in contradistinction to so advising him in writing. United States v. Osterburg, 423 F.2d 704 (9 Cir. 1970), cert. denied, 399 U.S. 914, 90 S.Ct. 2166, 26 L.Ed.2d 571 (1970); United States v. Van Dusen, 431 F.2d 1278, 1286 (1 Cir. 1970); United States v. Johnson, 426 F.2d 1112, 1115 (7 Cir. 1970); Bell v. United States, 382 F.2d 985, 987, (9 Cir. 1967), cert. denied, 390 U.S. 965, 88 S.Ct. 1070, 19 L.Ed.2d 1165 (1968); United States v. Bird, 293 F.Supp. 1265 (D.Mont.1968). As was so well stated in Bell, supra, 382 F.2d at 987: 'There is no requirement as to the precise manner in which police communicate the required (Miranda) warnings to one suspected of crime. The requirement is that the police fully advise such a person of his rights, and appellant made no showing that he did not read or understand the written warnings which were presented to him.'
3
Davis contends, however, that his immediate request for an attorney shortly after signing the waiver and making the inculpatory statement demonstrates 'that he always wanted an attorney, (that he) misunderstood the nature of the waiver,' and that he 'made (the statement) in ignorance of his rights and in violation of his right to counsel.' He further maintains that we should adopt the following prophylactic rule: After a Miranda warning is given and the accused signs a waiver of his rights, if the accused during the course of an in-custody interrogation answers some questions but then refuses to continue and demands an attorney, the entire interrogation cannot be considered to have been the result of a voluntary and intelligent waiver and the accused must be considered as having refused to waive his rights nunc pro tunc. We shall not adopt such a rule and we do not pass upon the issue of whether such a rule conceivably might be desirable for here the trial court has determined on the basis of substantial evidence that the appellant knowingly and voluntarily waived his rights prior to making a confession. The fact that Davis refused to make any further statements after making the confession is consistent with such a knowing and voluntary waiver.
4
The instant case is clearly distinguishable from Frazier v. United States, 136 U.S.App.D.C. 180, 419 F.2d 1161 (1969), where, after making a purported waiver, the accused objected to the officer taking notes on his confession. In that case the court felt that the accused's objection was strong evidence that he never knowingly and intelligently waived his rights. The court remanded the case for an evidentiary hearing and findings on the validity of the purported waiver. In the instant case, there is no evidence in the record demonstrating that Davis' waiver was unknowing or involuntary. His subsequent refusal to answer further questions in fact manifests Davis' understanding of his rights, for one of the enumerated rights appearing on the warning and waiver document informs an accused that he has the right to stop answering questions at any time.
5
We thank our court-appointed counsel for his able prosecution of his client's claim.
6
The judgment will be affirmed.
1
378 U.S. 368, 84 S.Ct. 1774, 12 L.Ed.2d 908 (1963)
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COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-03-102-CV
LARRY D. WILLIAMS APPELLANT
V.
VERA HAMILTON APPELLEE
----------
FROM THE 48
TH
DISTRICT COURT OF TARRANT COUNTY
----------
MEMORANDUM
OPINION
(footnote: 1)
AND JUDGMENT
----------
On August 7, 2003, we notified appellant that his amended brief had not been filed as required by appellate rule of procedure 38.6(a).
Tex. R. App. P. 38.6
(a);
See
T
ex. R. App. P.
38.9(a).
We stated we would dismiss the appeal for want of prosecution unless appellant or any party desiring to continue this appeal filed with the court within ten days a response showing grounds for continuing the appeal. We have not received any response.
Because appellant’s amended brief has not been filed, we dismiss the appeal for want of prosecution.
See
T
EX
. R. A
PP
. P. 38.8(a)(1), 42.3(b).
Appellant shall pay all costs of this
appeal, for which let execution issue.
PER CURIAM
PANEL D: LIVINGSTON, DAUPHINOT, and HOLMAN, JJ.
DELIVERED: September 11, 2003
FOOTNOTES
1:See
Tex. R. App. P. 47.4.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 96-6632
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
KARL DALVIN CUFF,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern Dis-
trict of Virginia, at Newport News. Richard B. Kellam, Senior
District Judge. (CR-93-4-NN, CA-96-4-NN)
Submitted: January 31, 1997 Decided: February 25, 1997
Before WIDENER, MURNAGHAN, and ERVIN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Karl Dalvin Cuff, Appellant Pro Se. Arenda L. Wright Allen, Assis-
tant United States Attorney, Norfolk, Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Appellant appeals the district court's order denying his mo-
tion filed under 28 U.S.C. § 2255 (1994), amended by Antiterrorism
and Effective Death Penalty Act of 1996, Pub. L. No. 104-132, 110
Stat. 1214. We have reviewed the record and the district court's
opinion and find no reversible error. Accordingly, we affirm on the
reasoning of the district court. United States v. Cuff, No. CR-93-
4-NN; CA-96-4-NN (E.D. Va. Mar. 22, 1996). We deny Appellant's
pending motion to appoint counsel and 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 deci-
sional process.
AFFIRMED
2
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244 P.3d 26 (2010)
In re the Meretricious Relationship of Jeremy R. LONG, Respondent, and
David R. FREGEAU, Appellant, and
Kirsten Fregeau, Intervener Appellant.
No. 28377-1-III.
Court of Appeals of Washington, Division 3.
December 14, 2010.
*27 Samuel Benton Gordon, Gordon Jones PLLC, Seattle, WA, Travis S. Jones, Law Office of Travis S. Jones PLLC, Spokane, WA, for Appellant.
Gary R. Stenzel, Gary R. Stenzel PS, Spokane, WA, for Respondent.
Kenneth H. Kato, Attorney at Law, Spokane, WA, for Appellant Intervenor.
BROWN, J.
¶ 1 Dr. David R. Fregeau appeals the trial court's equitable property division to Jeremy R. Long and the meretricious relationship determination from which it flowed. The parties use different, sometimes confusing terms to describe their relationship. Our Supreme Court has noted "meretricious" carries negative and derogatory connotations and has chosen to substitute "committed intimate relationship" for meretricious relationship. Olver v. Fowler, 161 Wash.2d 655, 657 n. 1, 168 P.3d 348 (2007). Intimacy and commitment are just two non-exclusive relevant factors a trial court can consider in deciding if equity applies to support an equitable property division.
¶ 2 Here, the parties agree they had an intimate relationship neither disparages; *28 and, they view the meaning of commitment differently. The parties largely agree on the facts, but they disagree if those facts sufficiently raise equity to support an equitable property division. Characterizing their liaison as merely a dating relationship, Dr. Fregeau mainly contends his intimacy with Mr. Long lacked mutual commitment and sufficient duration to justify equitable relief. He asserts equity does not apply, and if it does, the property division is incorrect. Given this background, we use the phraseology "equity relationship" as a neutral, more accurately descriptive, substitute term in analyzing the common fact-equity issues found in this subject area.
¶ 3 We hold the trial court did not err in analyzing the relevant factors and concluding an equity relationship existed. We affirm the equitable property division, except for consideration of one separate retirement account, the Rockwood plan, belonging to Dr. Fregeau that does not show any contributions during the relevant time. We reject arguments from Dr. Fregeau and his intervening daughter, Kirsten Fregeau (holding part title in one property), that the court lacked jurisdiction over that property because she was not joined as a necessary party. Accordingly, we affirm and remand for an amended property division order.
FACTS
¶ 4 Jeremy Long and David Fregeau, a married man, met in March 1999 and soon began dating. In fall 1999, Dr. Fregeau left his family home and moved into Mr. Long's home on Valleyway where they lived until 2003. Dr. Fregeau formally separated from his wife in September 2000. For some time, Dr. Fregeau stayed at Mr. Long's house without paying rent. While there, the pair shared living expenses.
¶ 5 In fall 2002, the pair found an investment property, the Wellesley house. Title and financing was put in the names of Mr. Long and Dr. Fregeau's daughter, Kirsten, as a divorce accommodation to Dr. Fregeau. Ms. Fregeau paid rent to Mr. Long while she lived at the Wellesley house. Mr. Long paid the mortgage. At times, Dr. Fregeau paid Kirsten's rent. After Kirsten moved out, the pair jointly rented the Wellesley house to others.
¶ 6 In 2003, Mr. Long and Dr. Fregeau decided they wanted a larger house on Havana and worked together to acquire it. Because of Department of Housing and Urban Development (HUD) restrictions, Mr. Long could not take title, so while he paid the earnest money and each paid one-half of the down payment, title was put in Dr. Fregeau's name. Before moving into the Havana house, the pair equally shared renovation expenses and later shared other improvement expenses, except for disputed 2004 landscaping expenses paid by Dr. Fregeau. The pair continued living together at the Havana house and sharing expenses, except for a three-month separation beginning March 2006. Dr. Fregeau's children occasionally visited.
¶ 7 In September 2006, Mr. Long added Dr. Fregeau to one of his bank accounts so Dr. Fregeau could deposit $48,000 to conceal the funds from his wife. Mr. Long transferred the money to Dr. Fregeau as needed for his bills. Dr. Fregeau removed his remaining funds from the account after the parties finally separated.
¶ 8 The parties agree their relationship was loving and intimate. They cared for each other during illnesses and after surgeries, spent holidays with their families, purchased furniture and housewares, worked on their joint and separate rental properties, and vacationed together. Dr. Fregeau paid for vacationing if Mr. Long could not afford it. The parties often discussed their future together. Mr. Long named Dr. Fregeau as a contingent beneficiary on a workplace retirement plan. On the other hand, the pair did not engage in mutual estate planning or buy and insure vehicles together.
¶ 9 In September 2001, after Dr. Fregeau discovered Mr. Long's infidelity, some months elapsed without full intimacy, although the pair continued to sleep in the same bed and remained otherwise intimate. Dr. Fregeau later admitted a similar indiscretion. Dr. Fregeau testified Mr. Long's sexual behavior was an ongoing concern and argued it showed lack of commitment. In *29 March 2007, Dr. Fregeau suspected Mr. Long was again cheating and later confronted him. Mr. Long minimized his behavior as merely recreational and without diminished commitment to Dr. Fregeau.
¶ 10 Dr. Fregeau divorced in February 2007. That month, Washington allowed same-sex registered domestic partnerships. The pair attended a seminar on the subject. In summer 2007, they attended joint counseling to maintain their relationship. During this time, Dr. Fregeau filled out papers to register as a domestic partnership, but Mr. Long declined. At trial, Dr. Fregeau asserted the relationship had ended in July 2007, even though Mr. Long permanently left the Havana house in February 2008.
¶ 11 In March 2008, Mr. Long sued for an equitable property division. Before trial, the parties mediated most property issues. After a bench trial, the judge concluded an equity relationship existed and considered the parties' remaining property and debt the Havana house, the Wellesley house, and the parties' retirement accounts. The court awarded one-half of Wellesley to Mr. Long, noting the remaining one-half was "titled to Kristen [sic] Fregeau." Clerk's Papers at 49. The court ordered a $60,815 equalization judgment for Mr. Long without disturbing the titling of property. Dr. Fregeau appealed. Ms. Fregeau successfully intervened on appeal.
ANALYSIS
A. Marriage did not Bar an Equity Relationship
¶ 12 The issue is whether the trial court erred in deciding Dr. Fregeau's marriage did not prevent the creation of an equity relationship.
¶ 13 We review a court's conclusions of law de novo. Gormley v. Robertson, 120 Wash.App. 31, 36, 83 P.3d 1042 (2004).
¶ 14 An equity relationship is a "stable, marital-like relationship where both parties cohabit with knowledge that a lawful marriage between them does not exist." Connell v. Francisco, 127 Wash.2d 339, 346, 898 P.2d 831 (1995) (citing In re Marriage of Lindsey, 101 Wash.2d 299, 304, 678 P.2d 328 (1984); Harry M. Cross, Community Property Law in Washington (Revised 1985), 61 WASH. L.REV. 13, 23 (1986)).
¶ 15 In Vasquez v. Hawthorne, 99 Wash. App. 363, 367, 994 P.2d 240 (2000) (Vasquez I), Division Two of this court partly reasoned an equity relationship is one where the parties can legally marry. On review, our Supreme Court, Vasquez v. Hawthorne, 145 Wash.2d 103, 107, 33 P.3d 735 (2001) (Vasquez II) held that the Vasquez I court erred on this point. The Vasquez II majority partly wrote, "Equitable claims are not dependent on the `legality' of the relationship between the parties, nor are they limited by the gender or sexual orientation of the parties." Vasquez II, 145 Wash.2d at 107, 33 P.3d 735. The Supreme Court reached the same conclusion in Olver, 161 Wash.2d at 668, 168 P.3d 348.
¶ 16 As noted in the next discussion, several factors are considered to determine the existence of an equity relationship. Connell, 127 Wash.2d at 346, 898 P.2d 831 (citing Lindsey, 101 Wash.2d at 304-05, 678 P.2d 328). No one factor is determinative. Thus, remaining married is a fact to consider, but it is not determinative. See In re Marriage of Pennington, 142 Wash.2d 592, 604, 14 P.3d 764 (2000) (parties married during part of relevant time). Considering these authorities, the trial court did not err in applying equity relationship law to this couple, even though Dr. Fregeau was married during part of his relationship with Mr. Long.
B. Equity Relationship Established
¶ 17 The issue is whether the trial court erred in considering relevant factors in deciding if an equity relationship existed here.
¶ 18 Relevant factors establishing an equity relationship include continuous cohabitation, relationship duration, relationship purpose, pooling of resources and services for joint projects, and the parties' intent. Connell, 127 Wash.2d at 346, 898 P.2d 831 (citing Lindsey, 101 Wash.2d at 304-05, 678 P.2d 328). These factors are neither exclusive nor hypertechnical but rather a means *30 to examine all relevant evidence. Pennington, 142 Wash.2d at 602, 14 P.3d 764. No factor is more important than another. Id.
¶ 19 Continuous Cohabitation: The trial court found, and the facts show, Dr. Fregeau moved into Mr. Long's residence in August of 1999 and, except for a three-month separation, they remained together until early February 2008. It weighed the instances of infidelity as insufficient to undermine its finding of continuous cohabitation. The court noted Dr. Fregeau's marriage, but considered it defunct. Ultimately, it found the approximate eight to nine-year cohabitation satisfied the continuous cohabitation requirements. We agree. The court's analysis is supported by the record.
¶ 20 Relationship Duration: The trial court found its analysis for the continuous cohabitation factor applicable to this factor as well. Dr. Fregeau contends this factor is not satisfied because the relationship was not exclusive since Mr. Long admitted to several instances of infidelity. Considering this record showing a seven to eight year relationship, the duration factor is satisfied because their relationship can be considered long enough to merit a property division much like a marriage of a similar length, despite a few months apart.
¶ 21 Relationship Purpose: The trial court found the parties provided mutual love, care, support, sex, friendship, and companionship. It found they intended to plan for retirement together and bought real estate with this purpose in mind. And, it found they essentially treated one another as though they were married and attempted counseling to maintain their relationship. Given the no-fault principles applied to marriage dissolutions and noting infidelities can occur during a marriage, Dr. Fregeau's reliance on Mr. Long's infidelities to argue against a shared purpose is unpersuasive. The court acknowledged that Mr. Long did not enter into a registered domestic partnership, that Dr. Fregeau was reticent toward the idea of children, and that the relationship was marked by infidelity. Given all in this record showing permanency planning, shared love and intimacy, extended family relationships, caring for one another when sick, and holding themselves out as a couple, the court did not err in determining the parties held a shared purpose in their relationship.
¶ 22 Pooling of Resources and Services for Joint Projects: The trial court correctly found this factor was satisfied. Significantly, it discussed the two houses that the pair purchased together. The pair attempted to jointly finance these properties but could not do so because of mortgage restrictions. The Wellesley house was titled to Mr. Long and he held the mortgage, but the pair managed it jointly. Similarly, the Havana house was titled to Dr. Fregeau and he held the mortgage, but both men financed the down-payment and initial renovations. And, while living in the Havana house together, they shared mortgage, utility, and other household expenses. The court found it significant that each party engaged in forbearance of rent and/or mortgage payments when necessary. The court noted their joint work on each other's rental properties and their work on the home of Mr. Long's mother. And, a joint account is not an essential factor in finding an equity relationship. Soltero v. Wimer, 128 Wash.App. 364, 115 P.3d 393 (2005).
¶ 23 Parties' Intent: The court decided the parties intended to be in a marriage-like relationship. Substantial evidence supports the court's reasoning. The trial court found Mr. Long and Dr. Fregeau discussed several times legally formalizing their relationship by moving to a jurisdiction recognizing their relationship and when Washington created the domestic partnership law. They attended a seminar on the subject. The court could discount Mr. Long's refusal to enter into a domestic partnership because that was suggested near the end of the relationship when the pair was attending counseling and in stress. Even so, they went to counseling to maintain their relationship. Dr. Fregeau did not intend to continue his marriage. Mr. Long remained in this relationship despite losing relationships with some of his family members.
¶ 24 In sum, the trial court did not err in abusing its discretion when finding the parties intended a marriage-like relationship and concluding an equity relationship existed.
*31 C. Retirement Accounts
¶ 25 The issue is whether the trial court erred in considering Dr. Fregeau's retirement accounts in its equitable property division.
¶ 26 We review the distribution of property at the end of an equity relationship for abuse of discretion. Koher v. Morgan, 93 Wash.App. 398, 401, 968 P.2d 920 (1998). Once the court finds an equity relationship, all property the parties acquired through their efforts during the relationship is before the court for distribution. In re Marriage of Lindemann, 92 Wash.App. 64, 69, 960 P.2d 966 (1998). The court must examine the relationship and property accumulation and make a just and equitable division of the property. Lindsey, 101 Wash.2d at 304, 678 P.2d 328. The court may characterize property as "separate" and "community" by analogy to marital property. Connell, 127 Wash.2d at 351, 898 P.2d 831; see RCW 26.16.010-.030 (definitions of separate and community property).
¶ 27 Unlike a marriage, at the end of an equity relationship, solely what would be community property is before the court. Connell, 127 Wash.2d at 351, 898 P.2d 831. The court may not dispose of the parties' separate property. Lindemann, 92 Wash.App. at 69, 960 P.2d 966. We presume any increase in value of separate property is likewise separate in nature. Lindemann, 92 Wash.App. at 69, 960 P.2d 966 (citing In re Marriage of Elam, 97 Wash.2d 811, 816, 650 P.2d 213 (1982)). However, "if the court is persuaded by direct and positive evidence that the increase in value of separate property is attributable to community labor or funds, the community may be equitably entitled to reimbursement for the contributions that caused the increase in value." Id. The labor of each party during a committed intimate relationship is community labor. Id. at 72, 960 P.2d 966.
¶ 28 Here, one of Dr. Fregeau's 401(k)s, the Rockwood plan, was established prior to the relationship as was Mr. Long's 401(k). Therefore, those two retirement accounts are separate property. Mr. Long testified he contributed to his 401(k) during the relationship, so the increase in value of that separate property was properly before the court as community-like property. However, Mr. Long did not present evidence that Dr. Fregeau contributed to the Rockwood plan during the relationship. Therefore, the increase in value of that plan was not properly before the court. Although the court did not actually award the funds from the Rockwood plan to Mr. Long, it did the functional equivalent by considering its increase in value during the relationship when determining an equalization payment. Therefore, the trial court abused its discretion in considering the increase in value of the Rockwood plan without direct and positive evidence of an increase in value attributable to community-like labor. On remand, the trial court should not consider the Rockwood plan in its property division order.
D. Ms. Fregeau is not a Necessary Party
¶ 29 The issue is whether the trial court erred in deciding the parties' interests in the Wellesley property without having joined Ms. Fregeau as a necessary party. Dr. Fregeau and Ms. Fregeau contend the court did not have jurisdiction over the Wellesley property because Ms. Fregeau, as a title owner, was not before the court.
¶ 30 The trial court lacks jurisdiction if all necessary parties are not joined. Treyz v. Pierce County, 118 Wash.App. 458, 462, 76 P.3d 292 (2003). A party is necessary if that party's absence "would prevent the trial court from affording complete relief to existing parties to the action or if the party's absence would either impair that party's interest or subject any existing party to inconsistent or multiple liability." Coastal Bldg. Corp. v. City of Seattle, 65 Wash.App. 1, 5, 828 P.2d 7 (1992); see CR 19(a). A title owner of a property is not a necessary party based solely on its status as a record owner. Gildon v. Simon Prop. Group, Inc., 158 Wash.2d 483, 145 P.3d 1196 (2006) (title owner of mall was not necessary party in injured plaintiff's premises liability action). Though Ms. Fregeau is a title owner of the Wellesley property, she was not a necessary party because nothing about the property division order impairs her interest in the property or *32 subjects her to conflicting liability. Title was not altered and she is not precluded from a future partition action. Therefore, the trial court did not err.
¶ 31 Affirmed. Remanded for further proceedings consistent with this opinion.
WE CONCUR: KORSMO, A.C.J., and SIDDOWAY, J.
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294 F.Supp.2d 246 (2003)
UNITED STATES of America
v.
Anthony WASHINGTON
No. 3:02CR146 (JBA).
United States District Court, D. Connecticut.
December 15, 2003.
*247 Roger H. Sigal, Federal Public Defender's Office, New Haven, CT, Sarah A. Chambers, Natick, MA, for Defendant.
*248 James I. Glasser, John H. Durham, Keith A. King, U.S. Attorney's Office, New Haven, CT, John A. Danaher, III, U.S. Attorney's Office, Hartford, CT, for Plaintiff.
Ruling on Government's Motion for Reconsideration of Ruling on Defendant's Amended Motion for New Trial [Doc. # 104]
ARTERTON, District Judge.
On May 15, 2003, this Court vacated defendant Anthony Washington's conviction and ordered a new trial, pursuant to Fed.R.Crim.P. 33. See United States v. Washington, 263 F.Supp.2d 413 (D.Conn. 2003). The ruling was based alternatively on the late disclosure of the previous conviction of Joseph McNeil ("McNeil"), the Government's key witness, for making a false police report, and on prosecutorial misconduct in the cross-examination of the defense's key witness, in the summation, and in rebuttal summation. For the reasons discussed below, the motion for reconsideration is granted, and upon reconsideration, the Court reaffirms its previous holding finding the prejudicial suppression of evidence favorable to defendant. Because this Brady violation, see Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), provided a sufficient basis to grant defendant's new trial motion, the Court finds that reconsideration of the claim of prosecutorial misconduct in light of the Government's now fully developed arguments[1] is unnecessary as this claim no longer forms the basis for the Court's ruling.
The Court assumes the reader's familiarity with its earlier ruling, see Washington, 263 F.Supp.2d 413, and with the underlying factual and legal background of this case, and turns directly to the Government's arguments on reconsideration.
I. Standard
A Court may reconsider a prior decision in the same case if "there has been an intervening change in controlling law, there is new evidence, or a need is shown to correct a clear error of law or to prevent manifest injustice." U.S. v. Sanchez, 35 F.3d 673, 677 (2d Cir.1994) (citing United States v. Adegbite, 877 F.2d 174, 178 (2d Cir.), cert. denied, 493 U.S. 956, 110 S.Ct. 370, 107 L.Ed.2d 356 (1989); United States v. Yonkers Board of Education, 856 F.2d 7, 11 (2d Cir.1988)). Here, the Government has argued that this Court's May 15 ruling was incorrect as a matter of law, and that reconsideration is necessary to prevent injustice.[2]
II. Discussion
In support of its motion for reconsideration, the Government contends that its failure to disclose McNeil's prior conviction was "neither willful nor intentional suppression of evidence, nor gamesmanship at play." See Gov't. Mem. Supp. Mot. Recons. [Doc. # 106] at 12-13. The Court's earlier opinion expressed no such belief, only concern that without *249 prosecutorial oversight, case agents become improper and inadequate substitutes. Although the Court recognizes that the Government has now described at length the circumstances under which the impeachment evidence had been overlooked until the completion of the first day of trial, and that no bad faith is evident, the Court's earlier decision made clear that the "prosecutor's good faith or lack of bad faith is irrelevant" to the determination of whether a Brady violation occurred, where prejudice to the defendant has ensued from the suppression of favorable evidence. Washington, 263 F.Supp.2d at 421 (citing Leka v. Portuondo, 257 F.3d 89, 99-100 (2d Cir.2001)).
The Government also argues that the disclosure of the impeachment evidence after trial began did not prejudice the defendant, because when the evidence was discovered after the first day of trial, "the underlying details of McNeil's conviction were in fact agreed to, introduced, and used by the defense at trial to attack McNeil's credibility and character for truthfulness." Gov't Mem. L. Supp. Mot. Recons. [Doc. # 106] at 14. In particular, the Government contends (a) that defense counsel failed to perceive at trial any prejudice to the defendant; (b) that all relevant facts underlying McNeil's prior conviction were revealed to the defendant and used at trial by defense counsel; and (c) that, as a matter of law, prejudice cannot be found if the defense used the Brady material at trial. The Court finds each of these arguments unpersuasive.
First, the Government's argument that defense counsel did not perceive any prejudice at trial not only fails to alter the Court's prejudice calculation, but underscores it precisely because what can be perceived in the heat of a short, aggressively prosecuted trial may be far different from pre-trial development of evidence and appreciation of how it may be effectively integrated into an overall trial strategy. In its original ruling, this Court considered the fact that by receiving the impeachment material after the first day of trial, defense counsel was also unable to immediately mitigate the impact on the jury of the crucial 911 tapes by impugning the truthtelling character of the caller (McNeil), or more effectively impeach prosecution witness Danielle Soradi when she first testified, and found resulting prejudice to the defendant. The Government challenges this conclusion by pointing to the fact that defense counsel "did not object, or request a continuance or a mistrial, or even claim a Brady violation" once the information about McNeil's prior conviction was disclosed, and that the defense agreed to the stipulation as to McNeil's conviction. The Government also asks the Court to view defense counsel's failure to introduce the stipulation as to McNeil's prior conviction until late in the second trial day, and defense counsel's initial neglect to use the conviction to cast doubt on prosecution witness Danielle Soradi's ("Soradi") claimed familiarity with McNeil, as evidence that defense counsel did not find the late disclosure to be prejudicial, as opposed to an indication that defense counsel failed to immediately appreciate the degree of prejudice at the time.
The Court disagrees that defense counsel's perceptions or performance at trial should control a determination of whether prejudice occurred. It cannot be doubted that the late disclosure of material evidence disrupts a prepared trial strategy. As Leka counsels, when the information is disclosed after trial is already under way, the "the defense may be unable to assimilate the information into its case." Leka, 257 F.3d at 101. Indeed, "[t]he opportunity for use under Brady is the opportunity for a responsible lawyer to use the information with some degree of calculation and forethought." Id. at 103. Thus, rather than signaling a lack of prejudice, the fact *250 that defense counsel did not immediately pick up on the full value of the impeachment evidence to his case seems itself to be indicative of the prejudice of the late disclosure.
Second, the Government's argument that the defense was able to make fully effective use of the impeachment material, such that additional or earlier uses of the information would be merely cumulative and insufficient for a finding of prejudice, fails both factually and as a matter of law. The Court earlier noted that defense counsel might have further impeached McNeil's credibility as to both motive and veracity through presentation of extrinsic evidence of the underlying details of McNeil's conviction, i.e. circumstances under which he falsely blamed others to avoid responsibility for his own misconduct. See Washington, 263 F.Supp.2d at 423 (quoting U.S. v. Friedman, 854 F.2d 535, 570 n. 8 (2d Cir.1988)). In disputing this conclusion, the Government argues that the police report disclosed to the defense after the first day of trial included all relevant facts about the circumstances under which McNeil made a false report. The Government also focuses on the fact that defense counsel made use of the fact of McNeil's prior conviction, as the stipulation about the conviction was introduced into evidence, the defense recalled Soradi to the stand and asked her about this conviction, and defense counsel referred repeatedly to this prior conviction in his summation. Thus, according to the Government, any further use of this information would be cumulative, and insufficient grounds for granting a Rule 33 motion. See Gov't Mem. L. Supp. Mot. Recons. [Doc. # 106] at 20 (citing United States v. Gambino, 59 F.3d 353, 366 (2d Cir.1995); United States v. Avellino, 136 F.3d 249, 257 (2d Cir.1998)).
The Government's reliance on Gambino and Avellino is misguided, for these cases are concerned not with the prejudice caused by late disclosure, but with the predicate question of whether impeachment evidence that itself is merely cumulative is material to the defense. See Gambino, 59 F.3d at 366; Avellino, 136 F.3d at 257. Here, there is no dispute about whether the late-disclosed impeachment evidence was material to Washington's defense, as in fact this evidence provided the central means by which the defendant could impeach the Government's deceased key witness, whose only testimony was the 911 call. The issue before the Court, therefore, is whether the defendant was able to fully and effectively use this acknowledged Brady material. Defense counsel's inability to investigate the circumstances of this conviction for false reporting before the start of trial, plan his overall trial strategy based on the investigative results, and his resulting inability to fully or effectively exploit the underlying facts of the conviction beyond the generalized credibility arguments, was, in the Court's view, prejudicial to this defendant, in the context of this short and weak case. Contrary to the Government's assertion that all relevant underlying facts were contained in the police report and available to defense counsel at trial, McNeil's motive for making the false statement to police is not evident, and only became clear after the defense's follow-up investigation. This motive arguably parallels and could have buttressed the defendant's theory of why McNeil might have been motivated to lie in his 911 call. See Washington, 263 F.Supp.2d at 423-24. Because a determination of whether McNeil's prior conviction casts doubt on the reliability of his 911 call must take into account how "`the circumstances of the past conduct'" compare "`with those surrounding the hearsay statements admitted into evidence,'" id. at 423 (quoting U.S. v. Friedman, 854 F.2d at 570), the Court disagrees with the Government's *251 characterization of the possible additional uses of the evidence as "cumulative." Gov't Mem. L. Supp. Mot. Recons. [Doc. # 106] at 20.
Finally, there is no per se rule in the Second Circuit that prejudice cannot occur if the defense was able to use the late-disclosed evidence at trial. To the contrary, the Second Circuit's caselaw clearly establishes that a Court must look to "the sufficiency, under the circumstances, of the defense's opportunity to use the evidence." Leka, 257 F.3d at 100. Thus, the Second Circuit considers whether the disclosure was made in time "to allow for full exploration and exploitation by the defense." Id. at 101 (emphasis added). In fact, the Leka Court clearly envisioned that prejudice might be found even if the late-disclosed material was used at trial, as Leka favorably cites to a case finding prejudice where the defense in fact used the late-disclosed material at trial. See Leka, 257 F.3d at 102 (citing Blake v. Kemp, 758 F.2d 523, 532 n. 10 (11th Cir. 1985)). This Court's earlier decision, therefore, was fully in accord with Second Circuit precedent, and was in no way an unprecedented expansion of the meaning of prejudice.
As the Court's earlier ruling discussed, in this case the combination of a short trial, weak Government evidence, and an overbearing prosecutor provided the context in which the claimed existence of prejudice caused by the late-disclosed material has been evaluated. This "was hardly a case where the evidence against Washington was overwhelming," Washington, 263 F.Supp.2d at 439, as the Government's key witness, Joseph McNeil, had died before trial, and a tape recording of McNeil's 911 telephone call provided the only substantive evidence of Washington's possession of the firearm. The impeachment evidence was critical in this context. The earlier presentation of this evidence to the jury might have mitigated somewhat the impact of the 911 tape, and a fuller exploitation of the underlying facts of McNeil's prior conviction could have made the defense's theory of its case more plausible.
The buttressing of the Government's evidentiary deficiencies by its improper comments on cross-examination and summation augmented the potential for prejudice in the Court's view. While the Court's May 15 decision included two "alternative" holdings, id. at 416, upon reconsideration, the Court finds that the prejudice from the Brady violation constitutes a fully sufficient basis for granting defendant's Rule 33 motion, and therefore, the Court need not reach the issue of whether the prosecutor's excesses constituted "prosecutorial misconduct" in the context of this case.
III. Conclusion
For the foregoing reasons, after reconsideration, the Court grants the defendant's motion for a new trial, based on the Government's Brady violation.
IT IS SO ORDERED.
NOTES
[1] In originally opposing the defendant's Amended Motion for a New Trial, the Government offered a mere two sentences of argument about defendant's claim of prosecutorial misconduct during closing and rebuttal argument, and never addressed the issue of personal vouching. See Gov't. Resp. Def.'s Mot. New Trial. [Doc. # 92] at 14.
[2] The Government offers no explanation for why its affidavits describing the circumstances of its admitted late disclosure of Brady material could not have been submitted with its original memorandum of opposition. Perplexingly, given the Government's perfunctory treatment of the prosecutorial misconduct claims, see supra note 1, and its now vastly expanded response to the Brady claims, it appears that defendant's motion for a new trial was not given serious consideration by the Government until after the motion was granted.
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475 A.2d 976 (1984)
John A. HOLMES, Jr., et al.
v.
Susan L. FARMER et al.
No. 83-149-Appeal.
Supreme Court of Rhode Island.
April 10, 1984.
*978 Max Wistow, John P. Barylick, Wistow, Barylick & Bruzzi Incorporated, Providence, for plaintiffs.
Peter J. McGinn, Normand G. Benoit, John M. Boehnert, Tillinghast, Collins & Graham, Providence, for defendants.
OPINION
SHEA, Justice.
This is an appeal by the plaintiffs[1] from a judgment of the Superior Court dismissing their complaint challenging the constitutionality of the legislation reapportioning and redistricting the Rhode Island Legislature, specifically the House of Representatives.
The plaintiffs claimed that the reapportionment plans violated the Rhode Island Constitution's requirement of compactness; that the plans violated the equal-protection clauses of the United States' and Rhode Island's Constitutions because of population inequality among the districts; that certain defendant legislators engaged in an unlawful civil conspiracy to deprive voters of their right to equal protection; that the plans were gerrymandered to serve political purposes and to dilute the voting strength of women and various racial, ethnic, religious, and political groups; and that the plans violated the Rhode Island constitutional requirement of partial compliance with the municipal-representation apportionment formulae. The plaintiffs sought a declaratory judgment, injunctive relief, and a court-ordered redistricting plan.
The case was originally consolidated with Licht v. Quattrocchi (No. 82-1494 R.I. Superior Court a suit challenging the redistricting of the Senate), concerned with the validity of the Senate redistricting. The issues concerning the redistricting of the House of Representatives (House plan) were specifically severed. The trial court ruled that the Senate plan was unconstitutional, and this court upheld that judgment. Licht v. Quattrocchi, R.I., 449 A.2d 887 (1982).[2] This appeal involves only the validity of the House plan.
*979 The claims against the individual House defendant legislators were dismissed prior to trial because of their immunity from civil suit. The plaintiffs made various other motions for summary judgment and dismissal, but the court declined to rule on these during trial.
Evidence described as highly technical by the trial justice was presented by experts throughout the three-week trial along with approximately forty exhibits. During trial plaintiffs called the consultant to the General Assembly's Reapportionment Commission and various state legislators to testify concerning the formation of the House plan. The trial justice ruled this testimony inadmissible on the grounds of privilege and relevance.
On the basis of evidence presented, which the trial justice found credible, the following facts were found.
According to the 1980 census, the population of the State of Rhode Island was 947,154; therefore, the ideal district population for each of the 100 House districts was 9,472.
The cities of Providence and Newport contained, under the 1974 House districting, districts or portions of districts that comprised population in numbers that exceeded the number of seats to which these cities would now be entitled if their populations were divided by the ideal district population. Between the 1970 and the 1980 censuses, Newport lost 15.3 percent of its population, the adjoining town of Middletown lost 41.2 percent of its population, and the town of Jamestown grew 38.8 percent in population, all of which changes necessitated substantial alterations in district lines.
Prior to the 1982 Reapportionment Act, one House district, No. 45, was overrepresented by 64 percent and another district, No. 58, was underrepresented by 69 percent. In the House plan enacted, the total maximum deviation, which is the sum of the percentage deviations of the most underrepresented and the most overrepresented districts, is 11.5 percent, or 1,090 people. The major reason for this particular deviation is a population disparity in the plan between district 24, which is overrepresented by 5.827 percent, and district 25, which is underrepresented by 5.679 percent. This particular disparity, evidence established, resulted from a mathematical error in drawing the boundary lines between districts 24 and 25. Without this error, the total maximum deviation of the House plan, excluding the two districts, would be 5.4 percent, or 518 people. The average deviation overall in the House plan is 1.9 percent, or 180 people, and the median deviation in the plan is 2.1 percent, or 199 people. If one excludes districts 24 and 25, the formation of which, as we have said, resulted from a mathematical error, no district in the plan deviates more than 2.7 percent from the ideal. Forty-five of the districts have deviations of less than 2 percent, and nineteen of the districts in the plan have deviations of less than 1 percent.
Between the 1970 census and the 1980 census, the population of Rhode Island decreased by .3 percent, or 2,569 people. Also, 129,980 people shifted from district to district within the state between the time that the then-existing House district lines were created in 1974 and the time the 1980 census was conducted. When the General *980 Assembly was reapportioned in 1982, 76.8 percent of the population within the State carried over within the same districts.
The number of crossings of municipal boundaries involved in the House plan is seventy-four. The plaintiffs' proposed reapportionment plan would have contained sixty-eight municipal boundary crossings.
The evidence established that there are twenty-five recognized neighborhoods within the city of Providence. Consequently, the division of Providence into eighteen representative districts or parts of districts necessitated a substantial number of crossings of neighborhood lines. The court also found that there are approximately twenty recognized neighborhoods within the city of Newport.
The court found that district 98 in the House plan enacted comprises the island of Jamestown and part of the city of Newport, which are contiguous on a shore-to-shore basis by virtue of the Newport Bridge.
The percentage of black population in the Providence districts remained substantially unchanged in the 1982 reapportionment. The districts in the 1982 House plan contain districts that range in black population from 9.62 percent to 44.47 percent. The court ruled that the evidence did not demonstrate minority-voter dilution but rather that the plan preserves the political strength of minorities in Providence and Newport. This ruling has not been appealed by plaintiffs.
The trial justice dismissed plaintiffs' complaint and upheld the validity of the House reapportionment plan.
The plaintiffs raise five issues, three of which we deal with here:
1. Whether the trial justice correctly upheld the legislators' and their aide's invocation of the privilege contained in the speech in debate clause.
2. Whether the House plan violates the Rhode Island constitutional requirement that districts be as compact as possible.
3. Whether there is a violation of the federal and state equal-protection clause.
We need not deal with the issues of the relevancy of the excluded testimony, nor need we deal with the trial justice's refusal to declare the reapportionment commission's consultant an adverse witness because our ruling on the first issue is dispositive of those matters.
I
LEGISLATIVE PRIVILEGE
On numerous occasions during trial, plaintiffs attempted to introduce evidence from Dr. Anthony Coelho, the legislative aide to the General Assembly's Reapportionment Commission; Speaker of the House Matthew J. Smith; Representatives Joseph DeAngelis and Zygmunt J. Friedemann; and Senator Lila M. Sapinsley, concerning the formation of the state reapportionment plan. The evidence was principally offered to show that the Reapportionment Commission used a ± 2.5 percent target deviation in drawing district lines, that the commission members were politically motivated when they decided on district boundaries, and that the members were ignorant of applicable laws by which they were required to abide.
The trial justice excluded this testimony on two grounds: (1) that under R.I. Const., art. IV, sec. 5,[3] the legislators and their aides enjoyed a constitutional privilege from testifying concerning their words and conduct in the execution of their legislative duties and (2) that the evidence was irrelevant. At first he allowed Senator Sapinsley to testify because she allegedly waived her privilege, but he later sustained defendants' objections to her testimony on relevancy grounds.
There has never been an interpretation or application of Rhode Island's "speech in *981 debate clause" by this court.[4] In order to interpret this provision adequately, we must look at the history of this section as well as the interpretation of a similar provision in the United States Constitution (Art. I, Sec. 6).[5] We do not accept plaintiff's contention that there is a relevant difference between the federal provision ("speech or debate") and the state provision ("speech in debate").
English history provides the origin of freedom of speech for legislators. The language in both the federal and state speech in debate clause appears to be taken directly from the English Bill of Rights of 1689.[6] As the United States Supreme Court pointed out in Kilbourn v. Thompson, 103 U.S. 168, 202-03, 26 L.Ed. 377, 391 (1881):
"Many of the colonies, which afterwards became States in our Union, had similar provisions in their charters or in bills of rights, which were part of their fundamental laws; and the general idea in all of them, however expressed, must have been the same, and must have been in the minds of the members of the constitutional convention."
The speech in debate clause was first recorded in 1542 in the Speaker's Petition that defined the relationship between Parliament and the Crown.[7] It had been asserted by members of Parliament, however, long before its inclusion in that document.[8] A struggle between the English Crown and Parliament for legislative independence ensued and culminated in the Glorious Revolution of 1689.[9] The English Bill of Rights was established to ensure "that the freedom of speech and debates or proceedings in Parliament ought not to be impeached or questioned in any court or place out of Parliament."[10]
The extent of the privilege was broad.
"Thus the privilege of having their debates unquestioned, though denied when the members began to speak their minds freely in the time of Queen Elizabeth, and punished in its exercise both by that princess and her two successors, was soon clearly perceived to be indispensable and universally acknowledged. By consequence, whatever is done within the walls of either assembly must pass without question in any other place. For speeches made in Parliament by a member to the prejudice of any other person, or hazardous to the public peace, that member enjoys complete impunity." Stockdale v. Hansard, 112 Eng.Rep. 1112, 1156 (1839).
*982 The speech in debate privilege first appeared in this country in state constitutions.[11] This privilege was "deemed so essential for representatives of the people that it was written into the Articles of Confederation and later into the Constitution." Tenney v. Brandhove, 341 U.S. 367, 372, 71 S.Ct. 783, 786, 95 L.Ed. 1019, 1025 (1951). Only four days after the Constitutional Convention opened, article V of the first draft of the United States Constitution submitted by Charles Pinckney stated that "Freedom of Speech or Debate in the legislature shall not be impeached or questioned in any place out of it."[12] The provision was adopted by the convention with virtually no debate and subsequently became Art. I, Sec. 6, of the United States Constitution.
The purpose of the speech in debate clause is to ensure the Legislature freedom in carrying out its duties. James Wilson, a member of the Committee of Detail of the Constitutional Convention, stated:
"In order to enable and encourage a representative of the public to discharge his public trust with firmness and success, it is indispensably necessary, that he should enjoy the fullest liberty of speech, and that he should be protected from the resentment of every one, however powerful, to whom the exercise of that liberty may occasion offence." Tenney v. Brandhove, 341 U.S. at 373, 71 S.Ct. at 786, 95 L.Ed. at 1025. (quoting II Works of James Wilson 38 (Andrews ed. 1896)).
The Constitutions of Massachusetts and New Hampshire explicitly declare that free speech and debate in the Legislature are "essential to the rights of the people." Mass. Const., pt. I, art. XXI, and N.H. Const., pt. I, art. XXX. The Massachusetts Supreme Judicial Court, in the first interpretation by a court in this country of the privilege, further highlighted its importance:
"These privileges are thus secured, not with the intention of protecting the members against prosecutions for their own benefit, but to support the rights of the people, by enabling their representatives to execute the functions of their office, without fear of prosecutions, civil or criminal. I therefore think that the article ought not to be construed strictly, but liberally, that the full design of it may be answered." Coffin v. Coffin, 4 Mass. 1, 27 (1808).
This freedom ensures the separation of powers among the coordinate branches of government. Further, the fact that the legislators can carry out their duties without being questioned "in any other place" allows the free flow of debate among legislators and the maximization of an effective and open exchange of ideas.
These principles are protected by a liberal construction and strict enforcement of the speech in debate clause. As James Madison noted in Federalist No. 47:
"It is agreed on all sides, that the powers properly belonging to one of the departments ought not to be directly and completely administered by either of the other departments. It is equally evident, that neither of them ought to possess, directly or indirectly, an overruling influence over the others in the administration of their respective powers. * * * [T]he next and most difficult task is to provide some practical security for each, against the invasion of the others." The Federalist 343 (Dawson ed. 1864).
"The legislative privilege * * * is one manifestation of the `practical security' for ensuring the independence of the legislature." United States v. Johnson, 383 U.S. 169, 179, 86 S.Ct. 749, 754, 15 L.Ed.2d 681, 687 (1966).
We now turn to the specifics of the case before us to determine the scope of the privilege and whether it was properly applied *983 by the trial justice. The first issue is whether the trial justice correctly upheld the claim of privilege by Speaker Smith, Representatives DeAngelis and Friedemann, and consultant Dr. Coelho. The second issue is whether an individual legislator can waive this privilege as Senator Sapinsley purported to do and as plaintiffs claim Speaker Smith, Representatives DeAngelis and Friedemann, and Dr. Coelho did during a deposition in another case.
A
The plaintiffs attempted to question Speaker of the House of Representatives Matthew J. Smith, Representatives Joseph DeAngelis and Zygmunt J. Friedemann, and Reapportionment Commission consultant Dr. Anthony Coelho concerning the process of reapportionment. The extent of plaintiffs' attempted questioning can be found in their depositions taken in a related case (Licht v. Quattrocchi, No. 82-1494 R.I. Superior Court, aff'd, R.I., 449 A.2d 887 (1982)), which plaintiffs presented in total as their offer of proof. The testimony that plaintiffs wished to present concerned the following matters: who hired Dr. Coelho as consultant to the Reapportionment Commission, whether a targeting specialist addressed the political reasons for particular district lines, whether any consideration was given to aligning Jamestown with a city or town on the west shore of Narragansett Bay instead of with the city of Newport, whether there was an agreement that the House and the Senate would each apportion themselves, whether the Newport Democrats "bickered" at redistricting meetings, whether the legislators had agreed to Newport's maintaining control of four seats, whether a ± 2.5 percent deviation target was used, and whether the Reapportionment Commission participated in the formation of the House plan. The plaintiffs concede that an inquiry into the "thoughts or motivations" of legislators with respect to their vote or into "legitimate legislative activity" would be protected by the speech in debate clause. They argue, however, that the evidence offered as proof was "not within the sphere of legitimate legislative activity." We must disagree.
The speech in debate clause contained in Rhode Island's Constitution confers a privilege on legislators from inquiry into their legislative acts or into the motivation for actual performance of legislative acts that are clearly part of the legislative process. See United States v. Brewster, 408 U.S. 501, 515-16, 92 S.Ct. 2531, 2539, 33 L.Ed.2d 507, 520 (1972). Legislators should not be questioned by any other branch of government for their acts in carrying out their legislative duties relating to the legislative process. We go no further at this time than to hold that the speech in debate clause limits judicial inquiry into words or actions that are clearly a part of the legislative process.
The scope of the privilege does not extend to actions by legislators outside the legislative process. It does not protect the political activities of the legislators, United States v. Brewster, 408 U.S. at 512, 92 S.Ct. at 2537, 33 L.Ed.2d at 518, nor does it protect legislators engaged in criminal activity, Gravel v. United States, 408 U.S. 606, 621 n. 12, 92 S.Ct. 2614, 2625 n. 12, 33 L.Ed.2d 583, 600 n. 12, reh. denied, 409 U.S. 902, 93 S.Ct. 98, 34 L.Ed.2d 165 (1972), even if committed in furtherance of legislative activity. Id. 408 U.S. at 622, 92 S.Ct. at 2625, 33 L.Ed.2d at 600. Although a legislator cannot be officially questioned outside the legislative chambers about his legislative activities, he may be asked about these acts if they are relevant to the investigation of the criminal activity of another party as long as the propriety of the legislative act itself is not questioned. Id. at 628, 92 S.Ct. at 2628, 33 L.Ed.2d at 604. As the United States Supreme Court noted in Hutchinson v. Proxmire, 443 U.S. 111, 127, 99 S.Ct. 2675, 2684, 61 L.Ed.2d 411, 426 (1979): "Claims under the Clause going beyond what is needed to protect legislative independence are to be closely scrutinized."
*984 We need not reach very far into an interpretation of the speech in debate clause in order to find the excluded testimony in this case privileged. The excluded testimony of the legislators concerned the actions and motivations of the legislators and the General Assembly in proposing and passing the reapportionment plan. Inquiry by the court into the actions or motivations of the legislators in proposing, passing, or voting upon a particular piece of legislation (as plaintiffs attempted to require) falls clearly within the most basic elements of legislative privilege.
The privilege applies equally to legislative aides and commission staff members who are engaged in legislative activity. For the purpose of construing the privilege, legislators and legislative aides are to be "`treated as one.'" Gravel v. United States, 408 U.S. at 616, 92 S.Ct. at 2622, 33 L.Ed.2d at 597.
In order fully to effectuate the purpose and design of the speech in debate clause, it must be construed as an immunity from suit as well as a testimonial privilege. See United States v. Peoples Temple of the Disciples of Christ, 515 F. Supp. 246 (D.D.C. 1981). This conclusion is further supported by the plain meaning of the constitutional provision that reads: "no member shall be questioned in any other place." R.I. Const., art. IV, sec. 5.
In Sweeney v. Notte, 95 R.I. 68, 82-83, 183 A.2d 296, 304 (1962), this court stated that the General Assembly is required to reapportion after a census is taken, and the prevailing apportionment constitutes a denial of equal protection. Article XIII of the Rhode Island Constitution vests the General Assembly with exclusive jurisdiction to apportion the House. Id. at 82, 183 A.2d at 303-04. The General Assembly undertook that obligation when it passed Public Law 1980, ch. 146, art. VIII, establishing the Reapportionment Commission and subsequently amended chapters 1 and 2 of title 22.
Although it is impossible to analyze here each of the legislators' statements from their depositions, which plaintiffs offered as proof, it is apparent that the thrust of plaintiffs' questioning would have involved matters that directly relate to the legislators' motivations and actions in proposing and carrying out the House plan. The business conducted at meetings of the Reapportionment Commission, the discussions that took place among groups of individual legislators, and the actions of individuals in carrying out the reapportionment process are areas of legitimate legislative undertakings.
The fact that some of the meetings took place outside the State House and were not formal committee meetings does not preclude application of the privilege. At times the Legislature's business is conducted outside the four walls at the State House. The physical setting and the informality of the meeting do not impair the privilege or dilute its objective. Restrictive application of the privilege to words spoken within the walls of the State House in a formal setting would inhibit legitimate legislative activities.
The plaintiffs claim that evidence of the use of a ± 2.5 percent deviation target would show a "highly impermissible purpose" on the part of the legislators and therefore falls outside the privilege. "The claim of an unworthy purpose does not destroy the privilege." Tenney v. Brandhove, 341 U.S. at 377, 71 S.Ct. at 788, 95 L.Ed. at 1027. Legislators' testimony is privileged in order to ensure the free flow of debate within the Legislature and the separation of powers among co-equal branches of government. An inquiry into the purpose behind legislative discussions or actions would dilute the rationale for the very existence of the privilege.
B
The plaintiffs contend that the depositions of Smith, DeAngelis, Friedemann, and Coelho which were taken in the case involving the Senate redistricting and the assertion *985 by Senator Sapinsley constitute a waiver of the privilege. The United States Supreme Court has on three occasions declined to decide whether, on the federal level, a member of Congress or Congress as a whole can waive the privilege of the speech in debate clause. See United States v. Helstoski, 442 U.S. 477, 490, 99 S.Ct. 2432, 2440, 61 L.Ed.2d 12, 24 (1979); United States v. Brewster, 408 U.S. at 529 n. 18, 92 S.Ct. at 2546 n. 18, 33 L.Ed.2d at 527 n. 18; United States v. Johnson, 383 U.S. at 185, 86 S.Ct. at 758, 15 L.Ed.2d at 690-91. We must therefore turn to the purpose of the privilege in order to analyze the waiver issue properly.
The speech in debate clause has two definite purposes: first, "to preserve the constitutional structure of separate, co-equal, and independent branches of government," United States v. Helstoski, 442 U.S. at 491, 99 S.Ct. at 2441, 61 L.Ed.2d at 24; and second, to protect individual legislators "from executive and judicial oversight that realistically threatens to control his conduct as a legislator." Gravel v. United States, 408 U.S. at 618, 92 S.Ct. at 2623, 33 L.Ed.2d at 598. The privilege protects the institution of the Legislature itself from attack by either of the other co-equal branches of government. At the same time it protects the individual legislator personally from attack either by another branch of government or from a majority within the Legislature itself.
To allow the privilege to be waived would be inconsistent with these purposes. The privilege is institutional in its protection of the Legislature, ensuring the separation of powers among the co-equal branches of government. To allow an individual legislator to waive the institution's privilege would be to allow one to act on behalf of the whole in waiving the protection of a significant bulwark of our constitutionally mandated system of government. We need not address the issue of whether an individual legislator can waive the privilege when he or she is being sued or prosecuted individually. That question is not before us.
Senator Sapinsley was allowed to testify concerning the process of formation of the reapportionment plan. No actions or statements on her part were being called into question. The privilege she purported to waive protects the Legislature as an institution from judicial interference. This "waiver" by Senator Sapinsley was incorrectly allowed, and the objection of defendants should have been sustained. The same ruling holds true for the testimony of Representatives Smith, DeAngelis, and Friedemann, and Dr. Coelho. These individuals were not allowed to testify after objection by defendants. Their testimony was contained in depositions given in a related case which were received by the trial justice in an offer of proof by plaintiffs. Because of the privilege, none of the testimony as it related to legitimate legislative activities should have been introduced, and the depositions could not therefore have constituted a waiver.
II
COMPACTNESS
The plaintiffs claim that the House plan violates Rhode Island's constitutional requirement that legislative districts be "as compact in territory as possible." (R.I. Const. amend. XIII). They appear to rely on two major propositions to show a violation of the compactness requirement: an excessive number of crossings of municipal boundaries in the statewide plan and the alignment of district 98 in the town of Jamestown with a portion of the city of Newport rather than with the town of North Kingstown.
This court has stated that the intention of the compactness requirement of amendment XIII is "to provide an electorate with effective representation rather than with a design to establish an orderly and symmetrical geometric pattern of electoral districts." Opinion to the Governor, 101 R.I. 203, 208, 221 A.2d 799, 802 (1966). Factors other than the mere geometric shape of the particular districts are crucial because "our *986 state with its irregular boundaries, its bays and its inlets, its islands, its rivers and lakes and its many other geographical features is obviously not susceptible to being divided into circular planes or squares." Id. at 207, 221 A.2d at 802.
Our review of the compactness requirement, however, is limited. The framers of the constitution "clearly intended to leave the legislature with a wide discretion as to the territorial structuring of the electoral districts." Id. at 210, 221 A.2d at 803. The phrasing of the constitutional limitation suggests this result in that it requires the districts to be as territorially compact "as possible." The court reviews to ensure that the Legislature did not act "without a rational or legitimate basis." Id. at 211, 221 A.2d at 803. The clause is violated, as the trial justice correctly stated, "only when a reapportionment plan creates districts solely for political considerations, without reference to other policies, in such a manner that the plan demonstrates a complete abandonment of any attempt to draw equal, compact and contiguous districts."
The plaintiffs claim that according to their expert's testimony the House plan contains seventy-four municipal crossings. However, there are a total of sixty-eight crossings in plaintiffs' expert's own proposed plan. This difference between the two plans is hardly sufficient to say that the Legislature acted arbitrarily when it drew the district lines. Rather, we are able to conclude from this minor variance that the Legislature was in fact careful in preserving municipal boundaries as closely as possible, considering the various other valid factors that go into the drawing of district lines.
The other facts plaintiffs point to in order to demonstrate that the Legislature did not observe the principles of compactness and contiguity are the positioning of district 98 between the city of Newport and the town of Jamestown and the "odd shape" of district 98 in Newport.
When an island is involved that does not contain enough residents to constitute a separate district, a decision must be made in respect to combining such island with a portion of the mainland. The Legislature must then look to other factors to determine where the island's interest and relationship are strongest. The trial justice considered evidence of Jamestown's ties to North Kingstown ("There is a toll free bridge to North Kingstown, its high school students are educated in the North Kingstown school system, and several other relationships create a strong link") as well as its ties to Newport ("additional fire, police and medical service is available in greater quantity from Newport; Newport has closer and larger shopping areas; and Jamestown is in Newport County, and thus served by the Family, District and Superior Courts at the County seat in Newport"). The trial justice then concluded that
"the court could not judge that one was substantially stronger than the other. In any event, the link to North Kingstown is not sufficiently stronger than the link to Newport to warrant a judicial finding to that effect."
The trial justice was not clearly wrong in his statement and construction of the facts. His conclusion that neither tie was substantially stronger clearly leaves the decision in the hands of the Legislature, which exercised its discretion in connecting Jamestown to a portion of Newport. The legislative decision to link Jamestown with Newport was based on legitimate factors and was clearly not irrational. That decision will not be disturbed by this court.
Although the shape of the Newport section of district 98 may be odd, it appears that the "hook section" of district 98 which plaintiffs point to as evidence of noncompactness was drawn to create additional contiguity with Jamestown. We make no judgment about whether the addition was required in order to establish contiguity between the two portions of the district. District 98 is contiguous because the Newport Bridge connects both the *987 Newport and the Jamestown portions of the district without crossing land of any other district. Rhode Island's unique geographic features make compliance with the compactness requirement difficult at times. We do not wish to lessen the importance of this constitutional mandate, but we find that the addition by the Legislature of a small amount of shoreline to district 98 to ensure that the contiguous requirement was met does not present a violation of the constitutional requirement that districts be as compact as possible.
III
EQUAL PROTECTION
The trial justice made the following findings of fact: the ideal House District should contain 9,472 residents; the total maximum deviation of the House plan is 11.5 percent, the average deviation is 1.9 percent, and the median deviation is 2.1 percent; a mathematical error occurred in computing districts 24 and 25, causing district 24 to be 5.83 percent above the ideal district size and district 25 to be 5.68 percent below the ideal; the total deviation of the entire plan absent districts 24 and 25 would be 5.4 percent. Each of these facts is important in a determination of whether the House reapportionment plan as a whole violates plaintiffs' constitutional right to equal protection.
The Constitution of the United States protects the right of all qualified citizens to vote, Ex parte Yarbrough, 110 U.S. 651, 4 S.Ct. 152, 28 L.Ed. 274 (1884), and to have their votes counted. United States v. Mosley, 238 U.S. 383, 35 S.Ct. 904, 59 L.Ed. 1355 (1915). As the Court stated in Gray v. Sanders, 372 U.S. 368, 379-81, 83 S.Ct. 801, 808-09, 9 L.Ed.2d 821, 830-31 (1963):
"The concept of `we the people' under the Constitution visualizes no preferred class of voters but equality among those who meet the basic qualifications. The idea that every voter is equal to every other voter in his State, when he casts his ballot in favor of one of several competing candidates, underlies many of our decisions. * * * The conception of political equality from the Declaration of Independence, to Lincoln's Gettysburg Address, to the Fifteenth, Seventeenth, and Nineteenth Amendments can mean only one thing one person, one vote."
Our focus "must be concentrated upon ascertaining whether there has been any discrimination against certain of the State's citizens which constitutes an impermissible impairment of their constitutionally protected right to vote." Reynolds v. Sims, 377 U.S. 533, 561, 84 S.Ct. 1362, 1381, 12 L.Ed.2d 506, 527 reh. denied, 379 U.S. 870, 85 S.Ct. 12, 13 L.Ed.2d 76 (1964).
The plaintiffs assert that the total maximum deviation of 11.5 percent represents a prima facie case of the unconstitutionality of the plan, requiring the state to justify the deviation in order for the entire plan to withstand the constitutional challenge. Our reading of the applicable U.S. Supreme Court cases (See, e.g., Brown v. Thomson, ___ U.S. ___, 103 S.Ct. 2690, 77 L.Ed.2d 214 (1983)) would lead us to agree with this conclusion were it not for the other unique factors present in this case.
We do not believe that the problem before us lends itself to any "uniform formula, and it is neither practicable nor desirable to establish rigid mathematical standards for evaluating the constitutional validity of a state legislative apportionment scheme under the Equal Protection Clause." Roman v. Sincock, 377 U.S. 695, 710, 84 S.Ct. 1449, 1458, 12 L.Ed.2d 620, 630 (1964). "In any event, the fact that a 10% or 15% variation from the norm is approved [or disapproved] in one State has little bearing on the validity of a similar variation in another State." Swann v. Adams, 385 U.S. 440, 445, 87 S.Ct. 569, 572, 17 L.Ed.2d 501, 505 (1967).
As the U.S. Supreme Court stated in Reynolds v. Sims, 377 U.S. at 578, 84 S.Ct. at 1390, 12 L.Ed.2d at 537:
"Developing a body of doctrine on a case-by-case basis appears to us to provide the most satisfactory means of arriving at *988 detailed constitutional requirements in the area of state legislative apportionment. Cf. Slaughter-House Cases, 16 Wall. 36, 78-79 [21 L.Ed. 394]."
The trial justice found that a "mathematical error" resulted in such large deviations from the ideal district size in districts 24 and 25. Other than this deviation in these two districts, the House plan has a total deviation of 5.4 percent. It is clear that a 5.4 percent total deviation, absent a showing of bad-faith actions, would be a "relatively minor population deviation[]," White v. Regester, 412 U.S. 755, 764, 93 S.Ct. 2332, 2338, 37 L.Ed.2d 314, 323 (1973), and therefore not be deemed to deny any citizens their constitutional rights.
The plan contains an average deviation of only 1.9 percent and a median deviation of 2.1 percent. Without the overly populated district 24 (5.827 percent above the ideal) and the underpopulated district 25 (5.679 percent below the ideal), the total deviation of the entire plan would be 5.4 percent clearly prima facie constitutional. These facts persuade us that the House plan as a whole adequately protects the people of this state in their constitutional right to one person, one vote.
We cannot, however, allow the large disparity between districts 24 and 25 to exist. The United States Supreme Court has clearly held that a deviation of greater than 10 percent is prima facie unconstitutional and requires a showing of legitimate state purpose. Brown v. Thomson, ___ U.S. at ___, 103 S.Ct. at 2696, 77 L.Ed.2d at 221-22. The difference between districts 24 and 25 is 11.5 percent. The trial court found that this discrepancy was due to a mathematical error. This does not represent a legitimate state purpose it is merely an explanation. We need not and do not find the entire plan invalid in order to correct this disparity. To discard a reapportionment plan that in all other respects is constitutionally adequate would be a tremendous waste. We therefore direct the Superior Court to enjoin implementation of the plan in respect to districts 24 and 25 unless and until the General Assembly corrects the disparity before the next general election in order to ensure that the voting rights of the citizens of these districts are not diluted.[13]
For the reasons given, the plaintiffs' appeal is sustained in regard to districts 24 and 25. The appeal is otherwise denied. The judgment appealed from is affirmed, and the papers of the case are remanded to the Superior Court with directions to enter judgment in accordance with this opinion.
KELLEHER, Justice, concurring.
I concur with all of the conclusions reached by my colleagues, but I see no necessity for reaching the question of institutional privilege. A decision based upon a constitutional determination should be avoided whenever it is possible to determine the issue on other grounds. Chartier Real Estate Co. v. Chafee, 101 R.I. 544, 556, 225 A.2d 766, 773 (1967). The trial justice, in refusing to allow Senator Sapinsley to testify about her experience as a member of the Reapportionment Commission and in rejecting the plaintiffs' effort to have the Speaker of the House and two members of the commission give similar testimony, rested his decision on two grounds: relevancy and the institutional privilege. I am of the firm belief that, for the reasons that follow, the testimony sought from the senator, the speaker, and the two commission members was totally irrelevant. Consequently, I affirm the trial justice's evidentiary rulings on that ground and leave the institutional-privilege question to another day.
There can be little doubt that a valid exercise of legislative power, whether on the federal or the state level, will not be *989 invalidated because certain legislators may have had invalid motives when the legislation in question was enacted. Legislators with evil motives can be part of a group that passes sound legislation, whereas legislators who have been motivated by the purest of intentions have been known to adopt legislation that has failed to pass constitutional muster.
As long ago as 1810, the United States Supreme Court in Fletcher v. Peck, 10 U.S. (6 Cranch) 87, 3 L.Ed. 162 (1810), had this to say about inquiry into legislative motivation:
"If the title be plainly deduced from a legislative act, which the legislature might constitutionally pass, if the act be clothed with all the requisite forms of a law, a court, sitting as a court of law, cannot sustain a suit brought by one individual against another founded on the allegation that the act is a nullity, in consequence of the impure motives which influenced certain members of the legislature which passed the law." Id. at 131.
During the ensuing years the Supreme Court has had several opportunities to reconsider this doctrine, but it has been forceful in upholding it. As the Supreme Court stated in United States v. O'Brien, 391 U.S. 367, 88 S.Ct. 1673, 20 L.Ed.2d 672 (1968), reh. denied, 393 U.S. 900, 89 S.Ct. 63, 21 L.Ed.2d 188 (1968), "What motivates one legislator to make a speech about a statute is not necessarily what motivates scores of others to enact it, and the stakes are sufficiently high for us to eschew guesswork." Id. 391 U.S. at 384, 88 S.Ct. at 1683, 20 L.Ed.2d at 684. Later, in Eastland v. United States Servicemen's Fund, 421 U.S. 491, 508, 95 S.Ct. 1813, 1824, 44 L.Ed.2d 324, 339 (1975), the Court once again emphasized that in determining the legitimacy of a congressional act, it would not look at the motives alleged to have prompted it. Similar sentiments were expressed by our predecessors in Gorham v. Robinson, 57 R.I. 1, 186 A. 832, 838 (1936).
Indeed, the guesswork alluded to in O'Brien would, in all probability, be futile. If the law is struck down because of what less than a handful of legislators said about it, "it would presumably be valid as soon as the legislature or relevant governing body repassed it for different reasons." Palmer v. Thompson, 403 U.S. 217, 225, 91 S.Ct. 1940, 1945, 29 L.Ed.2d 438, 445 (1970).
Consequently, since it is beyond the power of the judiciary to hypothesize about legislators' motivations, the judiciary is obligated to evaluate the legislative work product in the light of settled legal principles. The question is, What has the Legislature actually done? and not, Why has it done so? Daniel v. Family Security Life Insurance Co., 336 U.S. 220, 224, 69 S.Ct. 550, 552, 93 L.Ed. 632, 636 (1949); United States v. Des Moines Navigation and Railway Co., 142 U.S. 510, 544, 12 S.Ct. 308, 318, 35 L.Ed. 1099, 1109 (1892); Ex parte McCardle, 74 U.S. (7 Wall.) 506, 19 L.Ed. 264 (1869). Thus, if what the Legislature has done is constitutional, the reasons why it has done so are irrelevant, Bullock v. Washington, 468 F.2d 1096, 1102 (D.C. Cir.1972), and as noted earlier by my Brother Shea, the House reapportionment plan satisfies all relevant constitutional mandates, whether federal or state.
NOTES
[1] The plaintiffs in this case are John A. Holmes, Jr. (substituted individually as party plaintiff for the Rhode Island Republican Party); Senator Lila M. Sapinsley; and Representative Norma B. Willis. The defendants originally were Speaker of the House Matthew J. Smith; Representatives Zygmunt J. Friedemann and Joseph DeAngelis; Senators Rocco Quattrocchi and William A. Castro; Secretary of State Robert F. Burns; and the Rhode Island State Board of Elections. Because the complaint against the individual legislators was dismissed below and Susan L. Farmer succeeded Robert F. Burns as Secretary of State, the case is now captioned Holmes v. Farmer.
[2] The case was subsequently dismissed (Licht v. Quattrocchi, R.I., 454 A.2d 1210 (1982)) as moot because a three-judge federal court had assumed jurisdiction over the issues involved in the Senate redistricting controversy. Farnum v. Burns, 561 F. Supp. 83 (D.R.I. 1983). The decision of the three-judge federal court in Farnum invalidated the Senate plan as violative of the nineteenth amendment of the Rhode Island Constitution and ordered state officials to comply with the court's order. We note, however, the recent decision of the United States Supreme Court in Pennhurst State School & Hospital v. Halderman, ___ U.S. ___, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984), in which it was held that a federal court is prohibited from ordering state officials to conform with state law ("* * * it is difficult to think of a greater intrusion on state sovereignty than when a federal court instructs state officials on how to conform their conduct to state law. Such a result conflicts directly with the principles of federalism that underlie the Eleventh Amendment." Id. at ___, 104 S.Ct. at ___). Consequently, the order of the three-judge federal court may have been void for lack of subject-matter jurisdiction.
[3] Article IV, sec. 5, of Rhode Island's Constitution states in part: "For any speech in debate in either house, no member shall be questioned in any other place."
[4] It has only been mentioned twice by this court, both times in passing. Bailey v. Laurie, 118 R.I. 184, 188-89, 373 A.2d 482, 484 (1977), and Lemoine v. Martineau, 115 R.I. 233, 241, 342 A.2d 616, 622 (1975).
[5] Article I, Sec. 6, of the United States Constitution states in part: "for any speech or debate in either house, they shall not be questioned in any other place."
[6] English Bill of Rights, 1 W & M Sess. 2, c. 2 (1689).
[7] See Neale, The Commons' Privilege of Free Speech in Parliament, 2 Historical Studies of the English Parliament at 147-76 (Fryde and Miller 1970).
[8] Note the case of Thomas Young in 1455, who asserted the privilege in a petition to the House of Commons, stating, "all members `ought to have theire fredom to speke and sey in the Hous of their assemble, as to theym is thought convenyent or resonable, withoute eny maner chalange, charge or punycion therefore.'" Neale, Id. at 154-55.
[9] The conflict between Charles I, son of James I, and a succession of Puritan-dominated Parliaments in England led to civil war in 1642, during which Charles I was executed by the Parliamentarians. A republican regime, Oliver Cromwell's Commonwealth, lasted from 1649 until the Stuart monarchy was restored in 1660. James II's overt Catholicism and the birth of a Catholic heir united Tories and Whigs in opposition. Seven nobles invited William of Orange and his consort Mary, Protestant daughter of James, to come to England's aid. After the revolution they ruled jointly as William II and Mary II. Their acceptance of the Bill of Rights assured ascendancy of parliamentary authority over royal absolutism.
[10] Reinstein & Silverglate, Legislative Privilege and the Separation of Powers, 86 Harv.L.Rev. 1113, 1129-30 (1973); Comment, The Supreme Court Interprets the Speech and Debate Clause, 48 U.Cinn.L.Rev. 01015, 1017 (1979).
[11] Md. [Declaration of Rights] Code Ann. art. X (1981); Mass. [Declaration of Rights] Gen.Laws Ann. pt. 1, art. XXI (West 1978); N.H. Rev. Stat. Ann. pt. 1, art. XXX (1970).
[12] Madison, Journal of the Constitutional Convention at 66 (Scott ed. 1893).
[13] The court has become aware that an act that appears to address the disparity between the two districts has passed the General Assembly and has become law without the signature of the Governor. This may constitute compliance with our mandate herein. However, this issue would be resolved properly in the Superior Court to which this case is remanded.
| {
"pile_set_name": "FreeLaw"
} |
United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 04-3263
___________
Bill M., by and through his father and *
natural guardian, William M., and on *
behalf of themselves and all other *
persons similarly situated; John Doe, *
by and through his mother and natural *
guardian, Jane Doe, and on behalf of *
themselves and all other persons *
similarly situated; Heather V., by and *
through her mother and guardian, *
Marcia V., and on behalf of themselves *
and all other persons similarly situated; * Appeal from the United States
Jane S., by and through her mother and * District Court for the
natural guardian, Patricia S., and on * District of Nebraska.
behalf of themselves and all other *
persons similarly situated; Kevin V., *
by and through his mother and legal *
guardian, Kathy V., and on behalf of *
all other persons similarly situated; *
Jennifer T., by and through her parents *
and legal guardians, Sharon and Greg *
T., and on behalf of themselves and all *
other persons similarly situated; *
William M., on behalf of his son, *
Bill M.; Jane Doe, on behalf of her son, *
John Doe; Marcia V., on behalf of her *
daughter, Heather V.; Patricia S., on *
behalf of her daughter, Jane S.; Kathy *
V., on behalf of her son, Kevin V.; *
Sharon T., on behalf of her daughter, *
Jennifer T.; Greg T., on behalf of his *
daughter, Jennifer T., *
*
Plaintiffs/Appellees, *
*
United States of America, *
*
Intervenor on Appeal, *
*
v. *
*
Nebraska Department of Health and *
Human Services Finance and Support; *
Nebraska Department of Health and *
Human Services; Stephen B. Curtiss, *
in his official capacity as the Director *
of Nebraska Department of Health and *
Human Services Finance and Support; *
Ron Ross, in his official capacity as the *
Director of Nebraska Department of *
Health and Human Services, *
*
Defendants/Appellants. *
___________
Submitted: March 16, 2005
Filed: May 27, 2005
___________
Before WOLLMAN, HANSEN, and COLLOTON, Circuit Judges.
___________
WOLLMAN, Circuit Judge.
The Nebraska Department of Health and Human Services and the Nebraska
Department of Health and Human Services Finance and Support (collectively,
Nebraska) appeal from the district court’s denial of their motion to dismiss based on
Eleventh Amendment sovereign immunity. We reverse.
-2-
I.
Bill M. and six other developmentally disabled adults (Plaintiffs) sued
Nebraska and various Nebraska officials in their official capacities, alleging
violations of Title II of the Americans with Disabilities Act of 1990 (ADA), 42
U.S.C. § 12131 et seq.; Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. §
794; and other federal and state law provisions. Plaintiffs asserted that they are each
“eligible for, desire, have applied for or have attempted to apply for and have been
denied home and community-based Medicaid-funded services.” Compl. at 2. They
alleged that Nebraska’s withholding of funding to these services has left them without
adequate services to meet their needs and placed them “at imminent risk of
unnecessary institutionalization.” Id. Nebraska and the officials moved to dismiss
on various grounds. The district court denied the motion.
This interlocutory appeal is limited to one aspect of the dismissal motion:
Nebraska’s contention that Eleventh Amendment immunity precludes the district
court from having subject matter jurisdiction over the Title II claim. Plaintiffs
contend that Title II and related statutory provisions ostensibly abrogate Eleventh
Amendment immunity with respect to a Title II claim. Nebraska argues, in response,
that the extension of Title II to the states is unconstitutional under our circuit’s
precedent. The United States has intervened to defend the statutory abrogation.
II.
Although we have jurisdiction over an interlocutory appeal of an order denying
Eleventh Amendment immunity under the collateral order doctrine, Maitland v.
University of Minnesota, 260 F.3d 959, 962 (8th Cir. 2001), we must also consider
the issue of standing.1 Article III standing requires a party to show actual injury, a
causal relation between that injury and the challenged conduct, and the likelihood that
1
Although we raised the question of standing sua sponte during oral argument,
it is elementary that standing relates to the justiciability of a case and cannot be
waived by the parties. See Sierra Club v. Robertson, 28 F.3d 753, 757 n.4 (8th Cir.
1994).
-3-
a favorable decision by the court will redress the alleged injury. Minnesota Citizens
Concerned for Life v. Federal Election Comm’n, 113 F.3d 129, 131 (8th Cir. 1997)
(citing Lujan v. Defenders of the Wildlife, 504 U.S. 555, 560-61 (1992)). Plaintiffs
allege in their Title II claim (their first claim for relief) that Nebraska’s failure to
provide adequate funding “places [Plaintiffs] at risk of institutionalization.” Compl.
at 28 ¶ 117 (emphasis added). The mere risk that Plaintiffs may be institutionalized
due to the lack of adequate funding does not constitute an actual or imminent harm
sufficient to satisfy the first element of standing.2
Plaintiffs also allege, however, in portions of their complaint incorporated by
reference into the first claim for relief, see id. at 27 ¶ 111, that they have suffered
actual harm from Nebraska’s refusal to fund home and community-based Medicaid-
funded services. See id. at 15-16 ¶ 51 (lack of funding precludes necessary
residential services in a community setting for Bill M.); id. at 17 ¶¶ 55-56 (same for
John Doe); id. at 19-20 ¶ 69 (Heather V.’s required services are underfunded, which
jeopardizes her health and safety); id. at 22 ¶ 83 (Jane S. is unable to move to a work
setting more suited to her needs due to the denial of additional funding); id. at 23 ¶¶
90-91 (Kevin V.’s services are not adequately funded to protect his health and safety);
id. at 24 ¶¶ 97-98 (same for Jennifer T.); id. at 26 ¶¶ 107-08, 110 (same for Marcus
J.). We accept as true all of the complaint’s material allegations and construe the
complaint in favor of the complaining party for purposes of deciding the question of
standing. See Shain v. Veneman, 376 F.3d 815, 817 (8th Cir. 2004). We conclude
that Plaintiffs have alleged concrete and particularized harm sufficient to satisfy the
first element of standing. Plaintiffs also meet the other standing requirements that the
2
The complaint alleges that the denial of funding to one of the Plaintiffs,
Marcus J., has forced him “to remain in a more restrictive institutional setting, i.e.,
a nursing home, in order to receive the services he needs.” Compl. at 26 ¶ 109.
Because Plaintiffs’ counsel informed us at oral argument that Marcus J. is no longer
in a nursing home, we need not address the issue of whether the limitation of services
to the “more restrictive institutional setting” of a nursing home would constitute
actionable harm sufficient to provide Marcus J. with standing.
-4-
alleged harm be traceable to the defendant’s challenged action and redressable by the
court’s favorable decision. See Minnesota Citizens, 113 F.3d at 131 (“When
government action or inaction is challenged by a party who is a target or object of that
action . . . ‘there is ordinarily little question that the action or inaction has caused him
injury, and that a judgment preventing or requiring the action will redress it.’”)
(quoting Lujan, 504 U.S. at 561-62)).
III.
We review de novo a decision to deny or grant a motion to dismiss for lack of
subject matter jurisdiction. Metzger v. Village of Cedar Creek, Neb., 370 F.3d 822,
823 (8th Cir. 2004). We held in Alsbrook v. City of Maumelle, 184 F.3d 999, 1010
(8th Cir. 1999) (en banc), that “the extension of Title II of the ADA to the states was
not a proper exercise of Congress’s power under Section 5 of the Fourteenth
Amendment.” Accordingly, Alsbrook is dispositive here unless it has been
superseded.
Plaintiffs and the United States argue that Alsbrook has been superseded by
Tennessee v. Lane, 124 S. Ct. 1978 (2004). The plaintiffs in Lane were paraplegics
who used wheelchairs for mobility. They alleged that the lack of reasonable access
to state and county courthouses constituted a Title II violation. Tennessee moved to
dismiss based on Eleventh Amendment immunity, and the plaintiffs argued that
Congress had abrogated Eleventh Amendment immunity under Title II. The Supreme
Court held that “Title II, as it applies to the class of cases implicating the
fundamental right of access to the courts, constitutes a valid exercise of Congress’
§ 5 authority to enforce the guarantees of the Fourteenth Amendment.” Id. at 1994
(emphasis added). The Court thus carefully limited its holding to a particularized
class of cases. See id. at 1993 (“Because we find that Title II unquestionably is valid
§ 5 legislation as it applies to the class of cases implicating the accessibility of
judicial services, we need go no further.”) (emphasis added). Several of our sister
circuits have interpreted Lane accordingly. See Cochran v. Pinchak, 401 F.3d 184
-5-
(3d Cir. 2005) (refusing to extend Lane to Title II claims by disabled prison inmates);
Miller v. King, 384 F.3d 1248 (11th Cir. 2004) (same). See also Pace v. Bogalusa
City School Bd., 403 F.3d 272, 303 (5th Cir. 2005) (en banc) (Jones, J., concurring
in part and dissenting in part) (concluding, as to issue not reached by majority, that
Fifth Circuit’s prior precedent “remains valid in holding that ADA Title II, apart from
the Lane scenario, does not validly abrogate States’ Eleventh Amendment
immunity”). We conclude that Alsbrook has been modified by Lane to the extent that
a discrete application of Title II abrogation—related to claims of denial of access to
the courts—has been deemed by the Court to constitute a proper exercise of
Congress’ power. Other applications of Title II abrogation, like the one at issue here,
continue to be governed by Alsbrook.3
IV.
Plaintiffs and the United States argue that even if Nebraska were to prevail on
its interlocutory appeal, Nebraska would still have to defend the “essentially
identical” claim that Plaintiffs bring under Section 504 of the Rehabilitation Act,4 as
well as the ADA claims brought against the Nebraska officials. Because the Eleventh
Amendment provides Nebraska constitutional immunity from suit, the existence of
parallel claims is immaterial.5
3
Although Lane may well presage the eventual rejection of Alsbrook’s
rationale, the Supreme Court’s carefully cabined holding counsels against a
conclusion that Lane supersedes Alsbrook. Such a determination would have to come
from the Supreme Court or from an en banc decision of our court.
4
We held in Doe v. Nebraska, 345 F.3d 593, 599 (8th Cir. 2003), that
Nebraska’s receipt of federal funds effected a knowing waiver of its sovereign
immunity to actions brought under Section 504.
5
The United States’ argument that we should direct the district court to hold in
abeyance the Eleventh Amendment issue until after the Section 504 claim has been
resolved fails for the same reason.
-6-
The denial of Nebraska’s motion to dismiss based on sovereign immunity with
respect to Plaintiffs’ Title II claim is reversed, and the case is remanded to the district
court with direction to dismiss the Title II claim against Nebraska.
COLLOTON, Circuit Judge, concurring in the judgment.
I agree that Bill M., John Doe, Jane S., and Marcus J. have Article III standing
based on their allegations of injury resulting from the State’s refusal to provide
community-based funding under Medicaid to which they claim entitlement. I also
agree that although Tennessee v. Lane, 124 S. Ct. 1978 (2004), undermined some of
the reasoning of Alsbrook v. City of Maumelle, 184 F.3d 999, 1010 (8th Cir. 1999)
(en banc), our court’s en banc precedent still governs this case, which involves only
a claim for additional funding of community-based services and implicates no
fundamental constitutional right. Accordingly, I concur in the judgment.
______________________________
-7-
| {
"pile_set_name": "FreeLaw"
} |
Revised September 23, 1998
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 98-10140
_____________________
SBC COMMUNICATIONS, INC.; SOUTHWESTERN
BELL TELEPHONE COMPANY; SOUTHWESTERN
BELL COMMUNICATIONS SERVICES, INC.;
SOUTHWESTERN BELL COMMUNICATIONS
SERVICES-TEXAS, INC.; SOUTHWESTERN
BELL INTERNET SERVICES, INC.; PACIFIC
BELL; PACIFIC BELL COMMUNICATIONS;
NEVADA BELL,
Plaintiffs-Appellees,
US WEST COMMUNICATIONS, INC.; BELL
ATLANTIC CORPORATION,
Intervenor Plaintiffs-Appellees,
versus
FEDERAL COMMUNICATIONS COMMISSION;
UNITED STATES OF AMERICA,
Defendants - Appellees - Appellants,
MCI TELECOMMUNICATIONS CORPORATION;
AMERICAN TELEPHONE & TELEGRAPH
CORPORATION; ASSOCIATION FOR LOCAL
TELECOMMUNICATIONS SERVICES;
COMPETITIVE TELECOMMUNICATIONS
ASSOCIATION; NATIONAL CABLE TELEVISION
ASSOCIATION; SPRINT COMMUNICATIONS
COMPANY L P; TELECOMMUNICATIONS
RESELLERS ASSOCIATION,
Intervenor Defendants - Appellees - Appellants,
versus
KEITH MAYDAK,
Movant-Appellant.
2
_________________________________________________________________
Appeals from the United States District Court for the
Northern District of Texas
_________________________________________________________________
September 4, 1998
Before JOLLY, SMITH, and BARKSDALE, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
This appeal challenges the constitutionality of a significant
part of the Telecommunications Act of 1996. The FCC, the United
States, and numerous interested intervenors appeal the district
court’s determination that §§ 271-75 of the Act, 47 U.S.C.
§§ 271-75, are an unconstitutional bill of attainder. Finding the
provisions at issue to be nonpunitive in character, we hold that
they are not, in fact, a bill of attainder as that term has been
defined by the Supreme Court. Because we further hold that the
provisions are also consistent with the constitutional requirements
of separation of powers, equal protection, and free speech, we
reverse the judgment of the district court.
I
As every antitrust law student learns these days, in 1974 the
Department of Justice brought a massive, precedent-setting Sherman
Act1 suit against AT&T. See United States v. AT&T, 461 F.Supp.
1314 (D.D.C. 1978). For many years before the suit, most
1
15 U.S.C. § 1 et seq.
3
telecommunications equipment and telephone service in the United
States--both local and “long distance”--had been provided by AT&T
and its corporate affiliates, collectively known as the Bell
System. See United States v. AT&T, 552 F.Supp. 131, 222 (D.D.C.
1982). Although certain isolated aspects of the Bell System had
become the subject of intermittent antitrust actions, consent
decrees, and federal legislative intervention dating back to 1949,
see generally United States v. AT&T, 552 F.Supp. at 135-38, no
broad-based attack on the system itself had ever been launched. In
1974, however, the government changed all that. It alleged, among
other things, that the way AT&T used its various state-granted
local service monopolies to also monopolize the markets in long
distance service and telecommunications equipment was in
contravention of § 2 of the Sherman Act. See United States v.
AT&T, 461 F.Supp. at 1317-18. AT&T ultimately conceded this
assessment, for, after some initial procedural wrangling, it
eventually settled with the government in what became known as the
AT&T Consent Decree or Modified Final Judgment (“MFJ”). See United
States v. AT&T, 552 F.Supp. at 222-234, aff’d sub nom. Maryland v.
United States, 460 U.S. 1001 (1983). Under the MFJ, AT&T was
required to divest itself of its twenty-two local exchange
subsidiaries, which became known as the Bell Operating Companies or
4
“BOCs.” 552 F.Supp. at 223.2 The BOCs were then grouped into
2
As District Judge Greene explained the divestiture:
The key to the Bell System’s power to impede
competition has been its control of local telephone
service. The local telephone network functions as the
gateway to individual telephone subscribers. It must be
used by long-distance carriers seeking to connect one
caller to another. Customers will only purchase
equipment which can readily be connected to the local
network through the telephone outlets in their homes and
offices. The enormous cost of the wires, cables,
switches, and other transmission facilities which
comprise that network has completely insulated it from
competition. Thus, access to AT&T’s local network is
crucial if long distance carriers and equipment
manufacturers are to be viable competitors.
AT&T has allegedly used its control of this local
monopoly to disadvantage these competitors in two
principal ways. First, it has attempted to prevent
competing long distance carriers and competing equipment
manufacturers from gaining access to the local network,
or to delay that access, thus placing them in an inferior
position vis-a-vis AT&T’s own services. Second, it has
supposedly used profits earned from the monopoly local
telephone operations to subsidize its long distance and
equipment businesses in which it was competing with
others.
For a great many years, the Federal Communications
Commission has struggled, largely without success, to
stop practices of this type through the regulatory tools
at its command. A lawsuit the Department of Justice
brought in 1949 to curb similar practices ended in an
ineffectual consent decree. Some other remedy is plainly
required; hence the divestiture of the local Operating
Companies from the Bell System. This divestiture will
sever the relationship between this local monopoly and
the other, competitive segments of AT&T, and it will thus
ensure--certainly better than could any other type of
relief--that the practices which allegedly have lain
heavy on the telecommunications industry will not recur.
552 F.Supp. at 223.
5
seven “regional Operating Companies” or “RBOCs.” 552 F.Supp. at
142 n.41. In addition, because the BOCs were allowed to retain
their state-regulated local service monopolies under the terms of
the MFJ, they became subject to various restrictions on their own
lines of business. In particular, the BOCs were barred from
competing in the markets for long distance,3 telecommunications
equipment, and information services (including electronic
publishing and alarm monitoring). 552 F.Supp. at 224.4 The
3
By “long distance,” we refer to what is technically known as
“interLATA” service. In implementing the MFJ, the district court
established numerous local access and transport areas or “LATAs”
within which the BOCs were permitted to operate and provide
telephone service. See United States v. West. Elec. Co., 569
F.Supp. 990, 993-94 (D.D.C. 1983). The way the long distance line-
of-business restriction played out, each BOC was allowed to
transmit telecommunications information only between points within
a single LATA, providing what is, basically, the traditional local
telephone service, even though every BOC encompassed several LATA’s
as a geographical matter. When a person in one LATA called a
person in another, the BOC serving the caller’s LATA was required
to transmit the call to an interexchange carrier, such as AT&T or
MCI, which then carried the call on its own network across the LATA
boundaries, whereupon it was picked up by the BOC (possibly the
same one) that served the called party’s LATA. See United States
v. West. Elec. Co., 969 F.2d 1231, 1233 (D.C. Cir. 1992). This is
“long distance” service. Local, or “intraLATA” service, on the
other hand, is the making of calls entirely within a single LATA,
even though such calls are sometimes subject to per-minute tolls.
4
Again, as Judge Greene explained:
After the divestiture, the Operating Companies will
possess a monopoly over local telephone service.
According to the Department of Justice, the Operating
Companies must be barred from entering all competitive
markets to ensure that they will not misuse their
monopoly power. The Court will not impose restrictions
6
restriction on information services was subsequently lifted, see
United States v. West. Elec. Co., 767 F.Supp. 308 (D.D.C. 1991),
aff’d, 993 F.2d 1572 (D.C. Cir. 1993), but the BOCs then became
subject to detailed FCC regulations governing the provision of
information and other “enhanced” services. See generally In re
Computer III Further Remand Provisions: Bell Operating Company
Provision of Enhanced Services, 10 F.C.C.R. 8360 (1995).
As the very existence of the numerous and ponderous post-1982
decisions of the D.C. courts should make clear, however, the MFJ was
far from a final resolution of the nation’s telecommunications
dilemma. Its enforcement and alteration in the light of
technological progress and changing market circumstances ultimately
required substantial monitoring on the part of the district court,
and the extensive judicial tinkering that resulted prompted many
simply for the sake of theoretical consistency.
Restrictions must be based on an assessment of the
realistic circumstances of the relevant markets,
including the Operating Companies’ ability to engage in
anticompetitive behavior, their potential contribution to
the market as an added competitor for AT&T, as well as
upon the effects of the restrictions on the rates for
local telephone service. This standard requires that the
Operating Companies be prohibited from providing long
distance services and information services, and from
manufacturing equipment used in the telecommunications
industry. Participation in these fields carries with it
a substantial risk that the Operating Companies will use
the same anticompetitive techniques used by AT&T in order
to thwart the growth of their own competitors.
552 F.Supp. at 224.
7
pundits to dub District Judge Greene the country’s
“telecommunication’s czar.”5 Unsurprisingly, Congress soon became
skeptical of this unusual title of judicial nobility,6 and
ultimately spent many long and contentious years in drafting a
system of comprehensive telecommunications regulation to replace and
supplement the MFJ. See SBC Communications, Inc. v. FCC, 138 F.3d
5
See Fred H. Cate, The National Information Infrastructure:
Policymaking and Policymakers, 6 Stan. L. & Pol’y Rev. 43, 50
(1994) (noting that, although “Judge Greene rendered his decision
approving the Modified Final Judgment in 1982,” he “retained
jurisdiction under the consent decree to control the operations of
both AT&T and the [RBOCs]” and “the breadth of that decree and the
substantial discretion given judges to interpret antitrust laws,
‘probably makes him the single most powerful decisionmaker in U.S.
communications policy today,’” a veritable “‘telecom czar’”)
(quoting Mark S. Nadel, U.S. Communications Policymaking: Who &
Where, 13 Hastings Comm. & Ent. L. J. 273, 289 (1991) and Telcom
Showdown: Battle Lines Harden as Baby Bells Fight to Kill
Restrictions, Wall St. J., July 22, 1994, at A1, respectively); see
also Michael Schrage, Is There a Shade of Greene In the Microsoft
Decision?, Wash. Post, Feb. 17, 1995, at B3 (“Judge Greene has been
alternately praised and excoriated as a ‘telecommunications czar’
whose impact on telecommunications is still more forceful than that
of AT&T Chairman Robert Allen or Tele-Communications Inc. boss John
Malone.”); Editorial, Review & Outlook: State of the Presidency,
Wall St. J., Feb. 2, 1990, at A14 (“Judge Greene made himself
Telecommunications Czar as part of the AT&T breakup; maybe he’d now
like to take over running Lebanon.”); Paula Dwyer, The Baby Bells:
Ready, Get Set, Diversify, 2962 Bus. Wk. 29 (1986) (noting that a
1986 D.C. Circuit ruling was “the latest blow to Judge Greene, who,
as czar of the breakup of AT&T, is the ‘dominant influence on the
industry,’ according to William L. Weiss, chairman and chief
executive of Ameritech,” and remarking, presciently, that “Greene’s
clout and influence are already under attack on Capitol Hill, where
lawmakers are pushing legislation to return supervision of the Baby
Bells to the FCC”).
6
Cf. U.S. Const., Art. I, sec 9, cl.8.
8
410, 412-13 (D.C. Cir. 1998). On February 8, 1996, President
Clinton executed these legislative labors into law as the
Telecommunications Act of 1996 (the “Act”).
As has been widely recognized, the core function of the Act is
to “‘provide for a pro-competitive, deregulatory national policy
framework . . . by opening all telecommunications markets to
competition.’” SBC Communications, 138 F.3d at 413 (quoting H.R.
Conf. Rep. No. 104-458, at 1 (1996), reprinted in 1996 U.S.C.C.A.N.
at 124). To effectuate this goal, the Act prohibits states and
localities from sanctioning local service monopolies or
“‘prohibiting the ability of any entity to provide . . . intrastate
telecommunications service.’” Id. (quoting 47 U.S.C. § 253(a)).
It also places numerous and onerous duties and restrictions on all
local telephone service providers (“Local Exchange Carriers,” or
“LECs”)7 that are designed to prevent a recurrence of the
uncompetitive use of local service market power that occurred under
the Bell System. See id.; 47 U.S.C. §§ 251-52.
In addition to these generally applicable local competition
provisions, however, the Act also contains a number of provisions
directed specifically at the BOCs. First, the uncodified
§ 601(a)(1) provides that the restrictions imposed by the MFJ are
7
Of which there are now many hundreds of independent examples
(e.g., GTE Corp., Sprint Communications Company, Southern New
England Telephone Company, etc.) in addition to the BOCs.
9
lifted and replaced by the restrictions of the Act. See Pub. L. No.
104-104, § 601(a)(1), 110 Stat. 143 (1996); cf. United States v.
West. Elec. Co., 1996 WL 255904 (D.D.C. Apr. 11, 1996) (terminating
the MFJ in accordance with § 601(a)(1)). Second, §§ 271-76,
entitled “Special Provisions Concerning Bell Operating Companies,”
impose renewed line-of-business restrictions on the activities of
the twenty remaining BOCs; § 153(4) of the Act makes quite clear
that the additional restrictions are only applicable to these twenty
specific, named corporations. See 47 U.S.C. §§ 153(4) & 271-76.
It is these latter “Special Provisions” that are at the heart of
this case, and they must accordingly be examined in some detail.8
Inconvenient to that purpose, the Special Provisions are
drafted in that rather soulless bureaucratese that is an all too
familiar sight on the American legal landscape. We have attempted
to pierce the statutory fog, however, and would summarize the
Special Provisions’ effect essentially as follows.
First, under § 271, each BOC must obtain prior authorization
from the FCC before providing non-incidental long distance service
to customers within the states in which the BOC was allowed to
provide local service prior to the enactment of the Act (“in-region
long distance service”). 47 U.S.C. § 271(a) & (b). The FCC is to
8
With the exception of § 276, relating to payphone service,
which has not been challenged.
10
grant authorization only after a number of complex criteria
evidencing free competition in the particular local service market
have been established. 47 U.S.C. § 271(d)(3); see generally SBC
Communications, 138 F.3d at 413-14. Even then, however, the BOC in
question may initially only provide long distance service through
a separate affiliate. 47 U.S.C. §§ 271(d)(3)(B) & 272(f)(1). The
BOCs are permitted to provide incidental long distance service and
long distance service to customers located outside of their regions
of former monopoly (“out-of-region long distance service”) without
significant limitation or prior authorization. 47 U.S.C.
§ 271(b)(2) & (3).
Second, under § 273, the BOCs may not manufacture or provide
telecommunications equipment until they have met the requirements
for non-incidental, in-region long distance service in § 271(d),
and, once again, even then only through a separate affiliate for an
interim period. 47 U.S.C. §§ 272(f)(1) & 273(a).
Finally, under §§ 274 & 275, the BOCs may not provide
electronic publishing or alarm monitoring services until February 8,
2001, unless they do so by way of a separate affiliate or joint
venture and, in the case of alarm monitoring, only if they were
engaged in the business prior to November 30, 1995. 47 U.S.C. §§
274(a), 274(g)(2), & 275(a).
11
Essentially, the Special Provisions recreate most of the
original line-of-business prohibitions of the MFJ, with some
tweaking. In the case of information services, the recreation
represents a reimposition of restrictions that had already been
lifted under the regime of the MFJ. In the case of in-region long
distance service and telecommunications equipment, however, the Act
simply changes the administrator and specifies the rules by which
Judge Greene’s long-running restrictions can be lifted.
II
On April 11, 1997, plaintiff SBC Communications, which is of
course one of the RBOCs,9 applied to the FCC pursuant to § 271 to
have the long distance line-of-business restriction lifted for its
local service area of Oklahoma. The FCC determined that the
statutory criteria had not been met, and therefore denied the
application on June 26, 1997. SBC appealed that ruling to the D.C.
Circuit, where it was affirmed on March 20, 1998. See SBC
Communications, 138 F.3d at 410.
Without waiting for the outcome of that appeal, however, on
July 2, 1997, SBC and its subsidiaries filed suit against the United
9
SBC is currently parent to BOCs Southwestern Bell, Pacific
Bell, and Nevada Bell, and will become parent to Illinois Bell,
Indiana Bell, Wisconsin Bell, Michigan Bell, and Ohio Bell upon
completion of its planned merger with Ameritech, another RBOC.
Southwestern Bell provides local service to customers in Texas,
Missouri, Oklahoma, Arkansas, and Kansas. Pacific Bell serves
California.
12
States and the FCC in the Federal District Court for the Northern
District of Texas, alleging that all of the Special Provisions were
facially unconstitutional under the Bill of Attainder and Equal
Protection Clauses, and that § 274 violated the Free Speech Clause
as well. Several long distance companies, including MCI
Telecommunications Corp., Sprint Communications Company, and AT&T,
the BOCs’ erstwhile parent, intervened on the government’s side in
the dispute, and two other RBOCs, US West Communications and Bell
Atlantic Corp., intervened on SBC’s. Bell Atlantic added a slightly
more nuanced separation of powers challenge to SBC’s other
constitutional complaints.
On December 31, 1997, ruling on cross-motions for summary
judgment, District Judge Kendall held that the Special Provisions
constituted an unconstitutional bill of attainder and that they were
severable from the rest of the Act. He therefore granted SBC’s
motion and declared the challenged sections void. From this final
judgment the United States, the FCC, and the defendant-intervenors
timely appeal.
III
This court reviews the constitutionality of a federal statute
de novo. United States v. Bailey, 115 F.3d 1222, 1225 (5th Cir.
1997).
13
IV
On appeal, SBC and the other appellees urge all of the
arguments offered below as potential bases for affirming some or all
of the decision of the district court. We consider each contention
in turn, beginning with SBC’s primary and most substantial complaint
that the Special Provisions constitute a bill of attainder.
A
Article I, sec. 9, cl. 3 of the United States Constitution
provides that “[n]o Bill of Attainder or ex post facto law shall be
passed [by Congress].”10 As the Supreme Court has often clarified,
“[i]n forbidding bills of attainder, the draftsmen of the
Constitution sought to prohibit the ancient practice of the
Parliament in England of punishing without trial ‘specifically
designated persons or groups.’” Selective Service System v.
Minnesota Public Interest Research Group, 468 U.S. 841, 847 (1984)
(quoting United States v. Brown, 381 U.S. 437, 447 (1965)).
Consistent with this characterization, the Court has generally
defined a bill of attainder as “‘a law that legislatively determines
guilt and inflicts punishment upon an identified individual without
provision of the protections of a judicial trial.’” Id. (quoting
Nixon v. Administrator of General Services, 433 U.S. 425, 468
10
Art. I, sec. 10, cl. 1 contains a parallel provision
applicable to the states.
14
(1977)). Where, as here, the liability in question clearly attaches
by operation of the legislative act alone, the constitutional test
may be summarized in the following two-pronged test: First, has the
legislature acted with specificity? Second, has it imposed
punishment?
In this case, SBC argues that the Special Provisions constitute
a bill of attainder because they impose line-of-business
restrictions on named corporations. As SBC portrays the Special
Provisions, they represent Congress’s unconstitutional legislative
determination that the BOCs are the guilty spawn of AT&T, who
deserve to be deprived of their current ability to enter the long
distance, information services, and telecommunications equipment
markets as punishment for the immutable past antitrust violations
of their former parent. The district court essentially agreed with
this analysis.
Notwithstanding beguiling arguments that support the district
court’s holding, at bottom, we simply cannot find a constitutional
violation in this case. Even assuming that the Bill of Attainder
Clause applies to corporations,11 and even assuming that the Special
11
Which does seem likely. Although the Court has yet to reach
the question directly, it has suggested as much in dictum. See
Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 239 n.9 (1995)
(indicating that the Clause applies to laws that punish “a single
individual or firm”) (emphasis added). Furthermore, it has been
established that a number of very similar constitutional rights do
apply in the corporate setting. See, e.g., Virginia Pharmacy Bd.
15
Provisions are sufficient to meet the specificity prong of the
test,12 there simply cannot be a bill of attainder unless it is also
v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748 (1976)
(freedom of speech); United States v. Martin Linen Supply Co., 430
U.S. 564 (1977) (double jeopardy); Penn Central Transportation Co.
v. New York City, 438 U.S. 104 (1978) (takings); Marshall v.
Barlow’s, Inc., 436 U.S. 307 (1978) (searches and seizures);
Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408 (1984)
(due process); Metropolitan Life Ins. Co. v. Ward, 470 U.S. 869
(1985) (equal protection).
12
Again, probably a safe assumption in this case, as the
Special Provisions identify the burdened parties by name. In the
entirety of the Supreme Court’s attainder jurisprudence, the only
case to suggest that a statute naming individuals might not satisfy
the specificity prong of the test was the very unusual Nixon.
There, the Court indicated that a law requiring Richard M. Nixon by
name to turn over his presidential papers to the Administrator of
General Services might not be specific enough to constitute a bill
of attainder, because, as the only former president whose papers
were not protected in a presidential library, Nixon represented a
“legitimate class of one” for purposes of such legislation. Id.,
433 U.S. at 472. That unusual case seems inapposite to the one at
hand, particularly in the light of the fact that the rest of the
Court’s attainder jurisprudence, both subsequent and prior, has
consistently applied a broad interpretation of specificity. See,
e.g., Selected Service, 468 U.S. at 847 (noting that “‘[t]he
singling out of an individual for legislatively imposed punishment
constitutes an attainder whether the individual is called by name
or described in terms of conduct which, because it is past conduct,
operates only as a designation of particular persons’”) (quoting
Communist Party v. Subversive Activities Control Board, 367 U.S. 1,
86 (1961)); United States v. Brown, 381 U.S. 437 (1965) (finding
law applicable to past members of the Communist Party specific
enough to constitute an attainder); Cummings v. Missouri, 71 U.S.
(4 Wall.) 277 (1866) (noting that, although “bills [of attainder]
are generally directed against individuals by name,” they “may also
be directed against a whole class,” as “[t]he bill against the Earl
of Kildare and others, passed in the reign of Henry VIII,” which
“enacted that ‘all such persons which be or heretofore have been
comforters, abettors, partakers, confederates, or adherents unto
the said’ late earl, and certain other parties, who were named, ‘in
his or their false and traitorous acts and purposes, shall in
16
the case that the Special Provisions impose punishment on the BOCs.
As Justice Scalia recently reiterated in Plaut v. Spendthrift Farm,
Inc., 514 U.S. 211 (1995):
The premise that there is something wrong with
particularized legislation is of course questionable.
While legislatures usually act through laws of general
applicability, that is by no means their only legitimate
mode of action. Private bills in Congress are still
common, and were even more so in the days before
establishment of the Claims Court. Even laws that impose
a duty or liability upon a single individual or firm are
not on that account invalid--or else we would not have
the extensive jurisprudence that we do concerning the
Bill of Attainder Clause, including cases which say that
it requires not merely “singling out” but also
punishment, and a case which says that Congress may
legislate “a legitimate class of one.”
Id. at 239 n.9 (citing United States v. Lovett, 328 U.S. 303, 315-18
(1946), and Nixon, 433 U.S. at 472, for the two final propositions);
see also Selective Service, 468 U.S. at 851 (stating expressly that
“[e]ven if the specificity element were deemed satisfied,” the
provision at issue “would not necessarily implicate the Bill of
Attainder Clause,” because “[t]he proscription against bills of
attainder reaches only statutes that inflict punishment on the
specified individual or group”).13 Because punishment is a
likewise stand, and be attainted, adjudged, and convicted of high
treason’”) (quoting 28 Hen. VIII, c. 3 (1536)).
13
See also BellSouth Corp. v. FCC, 144 F.3d 58, 63-64 (D.C.
Cir. 1998) (finding punishment a necessary condition of a bill of
attainder, regardless of specificity, in rejecting an attack on
§ 274 of the Special Provisions at issue in this case); Dehainaut
v. Peña, 32 F.3d 1066, 1071 (7th Cir. 1994) (same with regard to a
17
necessary element of an unconstitutional bill of attainder, and
because we can find in the Special Provisions no punishment--as that
term must be defined in the context of this case--our resolution of
that question is dispositive of the attainder claim.
1
As an initial matter, however, we must acknowledge that just
what constitutes “punishment” for purposes of the Bill of Attainder
Clause is a question of some historical and doctrinal complexity.
In particular, the distinction between the punitive and the
prophylactically regulatory, which is of course at the root of this
case, is admittedly a fine one.
Under the common law, there were no such nuances: the very
concept of “attainder” was clearly limited to criminal cases of a
capital nature. As Blackstone described it:
When sentence of death, the most terrible and highest
judgment in the laws of England, is pronounced, the
immediate inseparable consequence by the common law is
attainder. For when it is now clear beyond all dispute,
that the criminal is no longer fit to live upon the
earth, but is to be exterminated as a monster and a bane
to human society, the law sets a note of infamy upon him,
puts him out of it’s [sic] protection, and takes no
provision imposing a perpetual employment bar on the air traffic
controllers fired by President Reagan); Fresno Rifle and Pistol
Club, Inc. v. Van de Kamp, 965 F.2d 723, 727 (9th Cir. 1992) (same
with regard to a law affecting certain named firearms (and thus
their manufacturers)); but see BellSouth, 144 F.3d at 72 (Sentelle,
J., dissenting) (noting that, although “mere specificity may not
make an act a bill of attainder,” in “most cases the Court has
required little more”).
18
farther care of him than barely to see him executed. He
is then called attaint, attinctus, stained, or blackened.
He is no longer of any credit or reputation; he cannot be
a witness in any court; neither is he capable of
performing the functions of another man: for, by an
anticipation of his punishment, he is already dead in
law. . . . The consequences of attainder are
forfeiture, and corruption of blood.
4 William Blackstone, Commentaries *373-74 (citing 3 Inst. 213).14
Tough stuff. Nevertheless, and consistent with this definition,
common law bills of attainder were “such special acts of the
legislature, as inflict[ed] capital punishments upon persons
supposed to be guilty of high offences, such as treason and felony,
without any conviction in the ordinary course of judicial
proceedings.”15 3 Joseph Story, Commentaries on the Constitution of
14
As Blackstone further clarified:
[W]hen judgment is once pronounced, both law and fact
conspire to prove [the attainted person] completely
guilty; and there is not the remotest possibility left of
any thing to be said in his favour. Upon judgment
therefore of death, and not before, the attainder of a
criminal commences: or upon such circumstances as are
equivalent to judgment of death; as judgment of outlawry
on a capital crime, pronounced for absconding or fleeing
from justice, which tacitly confesses the guilt. And
therefore either upon judgment of outlawry, or of death,
for treason or felony, a man shall be said to be
attainted.
Id.
15
For example, the 1685 attainder of James, Duke of Monmouth:
WHEREAS James duke of Monmouth has in an hostile manner
invaded this kingdom and is now in open rebellion,
levying war against the king, contrary to the duty of
19
the United States § 1338 at 209 (Boston 1833). A similar act that
inflicted “a milder degree of punishment than death” was termed a
“bill of pains and penalties.” Id. at 209-10.
Although some of the Supreme Court’s earliest opinions appeared
to recognize that attainder was technically confined to capital
cases,16 its subsequent jurisprudence has uniformly supported a
broader sweep for the constitutional prohibition. See, e.g.,
Fletcher v. Peck, 10 U.S. (6 Cranch) 87, 138 (1810) (Marshall, J.)
(“A bill of attainder may affect the life of an individual, or may
confiscate his property, or may do both.”); Cummings, 71 U.S. at 323
(“Within the meaning of the Constitution, bills of attainder include
allegiance; Be by and with the advice and consent of the
lords spiritual and temporal, and commons in this
parliament assembled, and by the authority of same, That
the said James duke of Monmouth stand and be convicted
and attainted of high treason, and that he suffer pains
of death, and incur all forfeitures as a traitor
convicted and attainted of high treason.
1 Jac. II, c. 2 (1685), quoted in Nixon, 433 U.S. at 473 n.35.
16
See, e.g., Calder v. Bull, 3 U.S. (3 Dall.) 386, 389 (1798)
(noting that “the Parliament of Great Britain claimed and exercised
a power to pass [ex post facto] laws, under the denomination of
bills of attainder, or bills of pains and penalties; the first
inflicting capital, and the other less, punishment”); Marbury v.
Madison, 5 U.S. (1 Cranch) 137, 179 (1803) (Marshall, J.) (“The
constitution declares that ‘no bill of attainder or ex post facto
law shall be passed.’ If, however, such a bill should be passed
and a person should be prosecuted under it, must the court condemn
to death those victims whom the constitution endeavours to
preserve?”).
20
bills of pains and penalties.”); Lovett, 328 U.S. at 314 (“‘A bill
of attainder is a legislative act which inflicts punishment without
a judicial trial.’”) (quoting Cummings, 71 U.S. at 323); Brown, 381
U.S. at 447 (noting that “the Bill of Attainder Clause [i]s not to
be given a narrow historical reading (which would exclude bills of
pains and penalties), but [i]s instead to be read in light of the
evil the Framers . . . sought to bar: legislative punishment, of any
form or severity, of specifically designated persons or groups”);
cf. 3 Story, Commentaries § 1338 at 210 (“But in the sense of the
constitution, it seems, that bills of attainder include bills of
pains and penalties.”) (citing Fletcher).17 Apart from making clear
17
Although our information is somewhat limited, see Note,
Beyond Process: A Substantive Rationale for the Bill of Attainder
Clause, 70 Va. L. Rev. 475, 477 (1984) (stating that “[t]here is no
record of any debate about including a ban on the bills in the
Constitution,” and that the provision “is scarcely mentioned by
contemporary commentators”), this broad construction of the
Clause’s reach would appear to be consistent with the contemporary
views of the Framers. In addressing Congress shortly after the
Whiskey Rebellion of 1794, President Washington opined that
“certain self-created societies” had been responsible for
encouraging the insurrection. 4 Annals of Cong. 788 (1794). As it
turned out, certain members of Congress were none too fond of these
“Democratic Societies” or “Jacobin Clubs” either, and when the
House considered its ceremonial reply to the President’s speech,
Rep. Fitzsimons of Pennsylvania moved to insert a paragraph
expressing “reprobation” of the societies. 4 Annals of Cong. 899.
As Professor Currie has described it, “the friends of France
exploded in wrath” at the suggestion. See generally David P.
Currie, The Constitution in Congress: The Federalist Period 1789-
1801 190-91 (Chicago 1997). More to the present point, however,
James Madison was of the specific opinion that including the
paragraph would constitute a bill of attainder, because
“denunciation” was punishment for purposes of that provision of the
21
that the Clause reaches punishment of a lesser severity than the
death penalty, however, these general statements provide little
assistance to our present inquiry.
More guidance is found by considering the details of the
Court’s development of the punishment prong. In Cummings v.
Missouri, 71 U.S. (4 Wall.) 277 (1866), and its companion case, Ex
Parte Garland, 71 U.S. (4 Wall.) 333 (1866), Justice Field
considered whether laws requiring that persons swear an oath under
penalty of perjury disclaiming any past sympathy for the Confederacy
before engaging in certain professions18 constituted punishment for
attainder purposes. Noting that “[t]he deprivation of any rights,
civil or political, previously enjoyed, may be punishment, the
circumstances attending and the causes of the deprivation
determining this fact,” 71 U.S. at 320, and that “[d]isqualification
from the pursuits of a lawful avocation . . . may also[ be], and
often has been, imposed as punishment” under the English law, id.
(citing 4 Blackstone, Commentaries at *44), he held that the oath
requirements acted to exclude the burdened individuals from lawful
employment on the basis of past conduct, and were therefore
Constitution. 4 Annals of Cong. 934.
18
Ministry under a provision of Missouri’s post-war
constitution in Cummings, and the practice of law in federal court
under a congressional enactment in Garland.
22
punishment for attainder purposes. See Cummings, 71 U.S. at 325;
Garland, 71 U.S. at 380.
Although Cummings and Garland might be viewed as establishing
that any exclusion from a profession on the basis of past conduct
is punishment for attainder purposes,19 a closer examination reveals
a more subtle analysis. In both cases, a four-vote dissent written
by Justice Miller was premised on the belief that the laws in
question were enacted not to punish the burdened individuals but
instead as a prophylactic measure to protect the public from their
probable future bad acts. See Garland, 71 U.S. at 393-96 (Miller,
J., joined by Chase, CJ., and Swayne & Davis, JJ., dissenting)
(arguing that, in the light of recent historic events, the oath
requirement was merely a legitimate “qualification, exacted in self-
defence, of all who took part in administering the government . . .
and . . . was not passed for the purpose of inflicting punishment,
however merited, for past offences”). Although obviously taking a
different view of the ultimate outcome, Justice Field appeared to
19
See, e.g., Cummings, 71 U.S. at 321-22:
The theory upon which our political institutions rest is,
that all men have certain inalienable rights--that among
these are life, liberty and the pursuit of happiness; and
that in the pursuit of happiness all avocations, all
honors, all positions, are alike open to every one, and
that in the protection of these rights all are equal
before the law. Any deprivation or suspension of any of
these rights for past conduct is punishment, and can be
in no otherwise defined.
23
agree with Justice Miller’s core proposition that a properly crafted
prophylactic measure could survive attainder analysis, even where
the finding of a propensity for future conduct was based solely on
past acts, and the result was a bar from future employment. See
Cummings, 71 U.S. at 319-20 (noting that “[i]t is evident from the
nature of the pursuits and professions of the parties . . . that
many of the acts, from the taint of which they must purge
themselves, have no possible relation to their fitness for those
pursuits and professions” and that the oath requirement, therefore,
“was exacted, not from any notion that the several acts designated
indicated unfitness for the callings, but because it was thought
that the several acts deserved punishment”); Garland, 71 U.S. at 379
(“The legislature may undoubtedly prescribe qualifications for the
office, to which [the burdened individual] must conform, as it may,
where it has exclusive jurisdiction, prescribe qualifications for
the pursuit of any of the ordinary avocations of life. The
question, in the case, is not as to the power of Congress to
prescribe qualifications, but whether that power has been exercised
as a means for the infliction of punishment, against the prohibition
of the Constitution.”).
This relevance of applicational context and the proper
existence of a “prophylactic” exception to the Bill of Attainder
24
Clause20 was developed further in Dent v. West Virginia, 129 U.S.
114 (1889), and Hawker v. New York, 170 U.S. 189 (1898). First, in
Dent, Justice Field made a major interpretation of his own majority
opinions in Cummings and Garland in the context of a bill of
attainder challenge to a state law requiring certain educational
qualifications in order to practice medicine. He held:
The cases of Cummings v. State of Missouri, 4 Wall. 277,
and of Ex parte Garland, id. 333, upon which much
reliance is placed, do not, in our judgment, support the
contention of the plaintiff in error. . . . They only
determine that one who is in the enjoyment of a right to
preach and teach the Christian religion as a priest of a
regular church, and one who has been admitted to practice
the profession of the law, cannot be deprived of the
right to continue in the exercise of their respective
professions by the exaction from them of an oath as to
their past conduct, respecting matters which have no
connection with such professions. Between this doctrine
and that for which the plaintiff in error contends there
is no analogy or resemblance. The constitution of
Missouri and the act of Congress in question in those
cases were designed to deprive parties of their right to
continue in their professions for past acts, or past
expressions of desires and sympathies, many of which had
no bearing upon their fitness to continue in their
professions. The law of West Virginia was intended to
secure such skill and learning in the profession of
medicine that the community might trust with confidence
those receiving a license under authority of the state.
129 U.S. at 125-28 (emphasis added). In Hawker, the Court took the
Dent analysis one step farther and upheld a state ban on medical
20
The dissent erroneously credits us instead of Justices Miller
and Field with the “discovery” of this exception. We have only
supplied its moniker.
25
practice by convicted felons as also not constituting punishment for
purposes of the Bill of Attainder or Ex Post Facto Clauses. Relying
expressly on the above quoted language in Dent, the Court held that
the law was not unconstitutional because it did not “seek[] to
further punish a criminal, but only to protect . . . citizens from
physicians of bad character.” Id. at 196.
Further development of the prophylactic exception emerged under
Justice Frankfurter’s tutelage. In United States v. Lovett, 328
U.S. 303 (1946), the Court examined a federal law that cut off
salary payments to certain named federal employees, allegedly due
to their “subversive” activities. Finding that the law “‘operate[d]
as a legislative decree of perpetual exclusion’ from a chosen
vocation,” and thus “accomplishe[d] punishment of named individuals
without judicial trial,” Justice Black struck it down as an
unconstitutional bill of attainder. 328 U.S. at 316 (quoting
Cummings and Garland). Justice Frankfurter took a slightly
different view, however. Taking his cue from Hawker and the
historical foundations of the Clause in the English law, he
reiterated that “punishment is a prerequisite” for a bill of
attainder, and that:
Punishment presupposes an offense, not necessarily an act
previously declared criminal, but an act for which
retribution is exacted. The fact that harm is inflicted
by governmental authority does not make it punishment.
Figuratively speaking all discomfiting action may be
deemed punishment because it deprives of what otherwise
26
would be enjoyed. But there may be reasons other than
punitive for such deprivation. A man may be forbidden to
practice medicine because he has been convicted of a
felony, or because he is no longer qualified. “The
deprivation of any rights, civil or political, previously
enjoyed, may be punishment, the circumstances attending
and the causes of deprivation determining this fact.”
328 U.S. at 324 (Frankfurter, J., joined by Reed, J., concurring [in
the judgment]) (citing Hawker and Dent, and quoting Cummings, 71
U.S. at 320, respectively) (emphasis added). Because he found no
indication in the text of the statute or the circumstances of its
passage that Congress intended it as a punitive measure, Justice
Frankfurter concluded that it was not a bill of attainder. Id. at
324-27.21
Following Lovett, Justice Frankfurter’s views on the Bill of
Attainder Clause commanded a majority for a number of cases in which
the Court rejected every attainder challenge that it considered.
See American Communications Ass’n v. Douds, 339 U.S. 382, 413-14
(1950) (Vinson, CJ.) (rejecting attainder challenge to federal law
conditioning recognition of a labor organization on the filing of
affidavits by its officers that they did not belong to the Communist
Party and did not believe in overthrow of the government by force);
21
The dissent dismisses our reference to Justice Frankfurter’s
concurrence in Lovett because it did not reflect the majority view
in that case. Such a back-of-the-hand to the alleged “cornerstone
of the majority’s theory” (see Dissent, p. __) ignores the
influence of the Frankfurtian view in many subsequent cases cited
herein.
27
Garner v. Board of Pub. Works, 341 U.S. 716, 722-23 (1951) (Clark,
J.) (same as to municipal ordinance requiring employees to take oath
that they had not advocated, or belonged to organization advocating,
overthrow of government by force and violence in the preceding five
years); DeVeau v. Braisted, 363 U.S. 144, 160 (1960) (Frankfurter,
J.) (same as to state law prohibiting felons from soliciting or
receiving dues on behalf of any waterfront union); Flemming v.
Nestor, 363 U.S. 603, 617 (1960) (Harlan, J.) (same as to federal
law providing for the termination of Social Security benefits of
aliens who were deported on certain grounds); Communist Party v.
Subversive Activities Control Board, 367 U.S. 1, 86-88 (1961)
(Frankfurter, J.) (same as to federal law imposing registration and
other burdens on “Communist-action” organizations). Although some
of these decisions were premised in part on a strict historical
reading22 of the Clause23 as requiring that a bill specify the
22
Since expressly abandoned. See Brown, 381 U.S. at 447.
23
Based on Justice Frankfurter’s general model of bifurcated
constitutional adjudication:
Broadly speaking two types of constitutional claims come
before this Court. Most constitutional issues derive
from the broad standards of fairness written into the
Constitution (e.g. “due process,” “equal protection of
the laws,” “just compensation”), and the division of
power as between States and Nation. Such questions, by
their very nature, allow a relatively wide play for
individual legal judgment. The other class gives no such
scope. For this second class of constitutional issues
derives from very specific provisions of the
28
offense and clearly declare the guilt of the burdened individual or
class to be unconstitutional,24 they also maintained the
prophylactic exception developed in Hawker and Dent. See, e.g.,
Douds, 339 U.S. at 413-14 (finding Lovett, Garland, and Cummings
distinguishable because “in the previous decisions the individuals
involved were in fact being punished for past actions; whereas in
this case they are subject to possible loss of position only because
there is substantial ground for the congressional judgment that
their beliefs and loyalties will be transformed into future
conduct,” and noting that, even though “the history of the [burdened
Constitution. These had their source in definite
grievances and led the Fathers to proscribe against
recurrence of their experience. These specific
grievances and the safeguards against their recurrence
were not defined by the Constitution. They were defined
by history. Their meaning was so settled by history that
definition was superfluous. Judicial enforcement of the
Constitution must respect these historic limits. The
prohibition of bills of attainder falls of course among
these very specific constitutional provisions.
Lovett, 328 U.S. at 321 (Frankfurter, J., joined by Reed, J.,
concurring [in the judgment]).
24
See Lovett, 328 U.S. at 321-23 (Frankfurter, J., joined by
Reed, J., concurring [in the judgment]) (“The distinguishing
characteristic of a bill of attainder is the substitution of
legislative determination of guilt and legislative imposition of
punishment for judicial finding and sentence. . . . All bills of
attainder specify the offense for which the attainted person was
deemed guilty and for which the punishment was imposed. There was
always a declaration of guilt either of the individual or the class
to which he belonged. The offense might be a pre-existing crime or
an act made punishable ex post facto.”).
29
individuals’] past conduct was the foundation for the judgment as
to what the future conduct is likely to be,” that fact “does not
alter the conclusion that [the statute] is intended to prevent
future action rather than to punish past action”); DeVeau, 363 U.S.
at 160 (finding that the state “sought not to punish ex-felons, but
to devise what was felt to be a much-needed scheme of regulation of
the waterfront, and for the effectuation of that scheme it became
important whether individuals had previously been convicted of a
felony”); Flemming, 363 U.S. at 617 (noting, with respect to the
statute before the Court, that “it cannot be said, as was said of
the statute in Cummings, that [the disability imposed] bears no
rational connection to the purposes of the legislation of which it
is a part, and must without more therefore be taken as evidencing
a Congressional desire to punish”) (citing Cummings, 71 U.S. at 319,
and Dent, 129 U.S. at 126).
After this Frankfurtian phase, however, the Court appeared to
pointedly reassess the essential nature of the Clause, and the scope
of the punishment requirement. In United States v. Brown, 381 U.S.
437 (1965), after surveying the above described cases, Chief Justice
Warren viewed the Bill of Attainder Clause as expressive of some of
the most fundamental ideals of separation of powers, in addition to
its more specific prohibition:
[T]he Bill of Attainder Clause not only was intended as
one implementation of the general principle of
30
fractionalized power, but also reflected the Framers’
belief that the Legislative Branch is not so well suited
as politically independent judges and juries to the task
of ruling upon the blameworthiness of, and levying
appropriate punishment upon, specific persons. “Every
one must concede that a legislative body, from its
numbers and organization, and from the very intimate
dependence of its members upon the people, which renders
them liable to be peculiarly susceptible to popular
clamor, is not properly constituted to try with coolness,
caution, and impartiality a criminal charge, especially
in those cases in which the popular feeling is strongly
excited,--the very class of cases most likely to be
prosecuted by this mode.” By banning bills of attainder,
the Framers of the Constitution sought to guard against
such dangers by limiting legislatures to the task of
rulemaking. “It is the peculiar province of the
legislature to describe general rules for the government
of society; the application of those rules to individuals
in society would seem to be the duty of other
departments.”
381 U.S. at 445-46 (quoting 1 Cooley, Constitutional Limitations
536-37 (8th ed. 1927), and Fletcher, 10 U.S. at 136,
respectively).25 Acting on this broad view of the Clause’s role in
25
See also Landgraf v. USI Film Prod., 511 U.S. 244, 267 n.20
(1994) (quoting Richmond v. J.A. Croson Co., 488 U.S. 469, 513-14
(1989) (Stevens, J., concurring in part and concurring in the
judgment)):
Legislatures are primarily policymaking bodies that
promulgate rules to govern future conduct. The
constitutional prohibitions against the enactment of ex
post facto laws and bills of attainder reflect a valid
concern about the use of the political process to punish
or characterize past conduct of private citizens. It is
the judicial system, rather than the legislative process,
that is best equipped to identify past wrongdoers and to
fashion remedies that will create the conditions that
presumably would have existed had no wrong been
committed.
31
the constitutional structure, Chief Justice Warren held that the law
in question--making it a crime for a past or current member of the
Communist Party to hold certain union positions with a potential to
disrupt interstate commerce--was an unconstitutional bill of
attainder:
The statute does not set forth a generally applicable
rule decreeing that any person who . . . possesses
certain characteristics . . . shall not hold union
office, and leave to courts and juries the job of
determining what persons . . . possess the specified
characteristics. Instead, it designates in no uncertain
terms the persons who possess the feared characteristics
and therefore cannot hold union office without incurring
criminal liability--members of the Communist Party.
Id. at 450.
The broad holding in Brown was not without its caveats,
however, and to these we must turn in order to assess the precise
role of punishment in the case. In distinguishing § 32 of the
Banking Act of 1933--providing that the officers, directors, and
and The Federalist No. 44, at 301 (James Madison) (J. Cooke ed.
1961):
Bills of attainder, ex post facto laws, and laws
impairing the obligation of contracts are contrary to the
first principles of the social compact, and to every
principle of sound legislation. . . . The sober people
of America are weary of the fluctuating policy which has
directed the public councils. They have seen with regret
and with indignation, that sudden changes and legislative
interferences in cases affecting personal rights, become
jobs in the hands of enterprizing and influential
spectators; and snares to the more industrious and less
informed part of the community.
32
employees of certain securities firms could not serve as officers,
directors, or employees of member banks in the Federal Reserve
System--from the statute at issue, the Court noted that:
[The union law], unlike § 32 of the Banking Act, inflicts
its deprivation upon the members of a political group
thought to present a threat to national security. As we
noted above, such groups were the targets of the
overwhelming majority of English and early American bills
of attainder. Second, § 32 incorporates no judgment
censuring or condemning any man or group of men. In
enacting it, Congress relied upon its general knowledge
of human psychology, and concluded that the concurrent
holding of the two designated positions would present a
temptation to any man--not just certain men or members of
a certain political party. Thus insofar as § 32
incorporates a condemnation, it condemns all men. . . .
In designating bank officers . . . Congress merely
expressed the [general] characteristics it was trying to
reach in an alternative, shorthand way.
Id. at 453-54.
Thus, although Brown began with a fairly broad construction of
the Clause, and thereby supplied SBC with a large portion of its
argument in the instant case, it did not purport fully to abandon
the prior development of the punitive element. As the above
discussion makes clear, one of the key reasons that the Court found
§ 32 distinguishable was that it did not incorporate a “judgment
censuring or condemning any man or group of men.” Further, the
Court explicitly left open the possibility of accomplishing non-
punitive, prophylactic economic legislation by way of “shorthand”
designations.
33
This latter theme was picked up one last time in Nixon v.
Administrator of General Services, 433 U.S. 425 (1977), where the
Court summarized and rationalized its extensive attainder
jurisprudence and developed the most comprehensive analysis of the
punishment prong that has been offered to date. In that case, the
Court upheld a law that, as noted, directed Richard M. Nixon by name
to turn over his presidential papers to the Administrator of General
Services. After discussing why Nixon “constituted a legitimate
class of one,” see supra, note 12, the Court went on to explain
that, even if the specificity element were deemed to be satisfied,
it would still have to inquire whether Congress “‘inflict[ed]
punishment’ within the constitutional proscription.” 433 U.S. at
472-73 (quoting Lovett, 328 U.S. at 315). After examining the
historical underpinnings of the Clause and noting that the statute
at issue did not involve any of the traditional examples of
“punishment” which had been held to implicate attainder analysis in
the past--including death, imprisonment, banishment, punitive
confiscation of property, and employment bars (as evidenced by
Cummings)--the Court launched into a three-stage examination of
general punitive character. See id. at 473-75. First, the Court
noted that it “often has looked beyond mere historical experience
and has applied a functional test of the existence of punishment,
analyzing whether the law under challenge, viewed in terms of the
34
type and severity of burdens imposed, reasonably can be said to
further nonpunitive legislative purposes.” See id. at 475 (citing
Cummings, 71 U.S. at 319-320, Hawker, 170 U.S. at 193-194, and Dent,
129 U.S. at 128, among other cases). Because the protection of
Nixon’s presidential papers was unquestionably a legitimate,
nonpunitive legislative purpose that the burdens imposed by the
statute were well designed to further, the Court concluded that the
law was nonpunitive under the functional approach. See id. at 476-
78. Next, the Court looked to legislative purpose. Because there
was no indication in the legislative history of a specific intent
to punish--unlike in past cases like Lovett, where the House Report
characterized the named individuals as “‘subversive . . . and . . .
unfit . . . to continue in Government employment’”--the Court
concluded that this test also came out in favor of a nonpunitive
finding. See id. at 478-80 (quoting Lovett, 328 U.S. at 312).
Finally, the Court turned to the structure of the statutory
provisions. Because it also evinced a nonpunitive quality to the
legislation, by protecting, for example, Nixon’s ability to access
the papers himself and to raise claims of privilege with regard to
them in court proceedings, the Court concluded that this test also
indicated a nonpunitive character. See id. at 481-82. Because the
statute did not “impose criminal penalties or other punishment,” the
35
Court concluded that it was not a bill of attainder, regardless of
its specificity. Id. at 482 (quotations omitted).
2
In the light of the 400 years of case law and history that we
have considered, we believe that Nixon stands, ultimately and
concisely, for the following proposition: if legislation has a
legitimately nonpunitive function, purpose, and structure, it does
not constitute punishment for purposes of the Bill of Attainder
Clause, even where it imposes the historically punitive sanction of
barring designated individuals from engaging in certain professions.
This statement is consistent with the older, traditional lines of
analysis in the Court’s attainder jurisprudence, including
particularly the prophylactic exception developed in Cummings,
Garland, Dent, Hawker, and Justice Frankfurter’s concurrence in
Lovett. It is also not inconsistent with the more sweeping
separation of powers theory espoused by Chief Justice Warren in his
somewhat aberrant Brown opinion, at least to the extent that that
case left open the possibility of using “shorthand” designations in
otherwise proper categorical legislation. Although some portions
of Nixon might be read to suggest that historical punishments are
“inherently suspect,”26 we find this suggestion inapposite to the
26
See id., 433 U.S. at 473 (noting that “the substantial
experience of both England and the United States with such abuses
of parliamentary and legislative power offers a ready checklist of
36
particular area of employment bars. As Nixon makes clear, this type
of liability is only an “historical” punishment to the extent that
certain examples have been declared punitive in past cases like
Cummings and Lovett. See Nixon, 433 U.S. at 474. Because these
building blocks for the historical characterization themselves
contain the very seeds of the prophylactic exception, and because
Nixon’s “functional test” is rooted in that very exception as
developed in the employment bar cases of Hawker, Dent, and Cummings,
see Nixon, 433 U.S. at 475, it simply cannot be convincingly
maintained that employment bars are inherently historically punitive
without reference to Nixon’s other considerations.
More importantly, however, such a reading would contradict the
Supreme Court’s own most recent recapitulation of the punishment
prong. In Selective Service, the Court stated that:
In deciding whether a statute inflicts forbidden
punishment, we have recognized three necessary inquiries:
(1) whether the challenged statute falls within the
historical meaning of legislative punishment; (2) whether
the statute, “viewed in terms of the type and severity of
burdens imposed, reasonably can be said to further
nonpunitive legislative purposes”; and (3) whether the
legislative record “evinces a congressional intent to
punish.”
deprivations and disabilities so disproportionately severe and so
inappropriate to nonpunitive ends that they unquestionably have
been held to fall within the proscription of Art. I, § 9” and that
“[a] statutory enactment that imposes any of those sanctions on
named or identifiable individuals would be immediately
constitutionally suspect”).
37
468 U.S. at 852 (quoting Nixon, 433 U.S. at 473, 475-76, & 478,
respectively). Nothing in Selective Service suggests that the
historical punishment test is ever dispositive on its own, or that
it should be conducted without reference to the actual history
underlying the sanction at issue, and we decline to read such a
ritualistic and unsensible formulation into the Clause. See also
BellSouth, 144 F.3d at 65 (stating that “[e]ven measures
historically associated with punishment--such as permanent exclusion
from an occupation--have been otherwise regarded when the
nonpunitive aims of an apparently prophylactic measure have seemed
sufficiently clear and convincing”) (internal quotations omitted);
Dehainaut, 32 F.3d at 1071 (stating that, “[e]ven where a fixed
identifiable group . . . is singled out and a burden traditionally
associated with punishment--such as permanent exclusion from an
occupation--is imposed, the enactment may pass scrutiny under bill
of attainder analysis if it seeks to achieve legitimate and
nonpunitive ends and was not clearly the product of punitive
intent”).
3
Adapting the Selective Service formulation to this case in the
light of our inquiries, the question becomes whether the Special
Provisions, viewed in terms of the type and severity of burdens
imposed and the expressed intent of Congress, reasonably can be said
38
to further nonpunitive legislative purposes such that the sanction
at issue, a bar from participation in certain businesses, is neither
historically nor functionally nor motivationally punitive. We can
only conclude that they can, and therefore find that the Special
Provisions are constitutionally sound.
First and perhaps foremost, we think that the Special
Provisions are not punitive because they do not impose a perpetual
bar on the BOCs’ entry into any of life’s avocations. In Cummings,
Garland, and Lovett, the burdened individuals were barred from all
future employment in certain professions based on immutable past
acts. Under the Special Provisions, on the other hand, the BOCs
will be allowed to enter each of the affected areas as soon as the
statutory criteria regarding competition in their local service
markets are met, and, in the case of information services, in 2001
regardless. As the Supreme Court expressly stated in Selective
Service, “[a] statute that leaves open perpetually the possibility
of [qualifying for some specifically denied benefit] does not fall
within the historical meaning of forbidden legislative punishment.”
468 U.S. at 853.27
27
We recognize that meeting the competition criteria may not
be an easy matter for the BOCs. Still, nothing in the statute or
SBC’s recent experiences with the FCC and the D.C. Circuit leads us
to suspect that it will be impossible, and we are satisfied that
the BOCs will be able to emerge from the restrictions when it is in
their economic and business interest to meet the stiff criteria.
39
Second, we conclude that the Special Provisions are not
punishment because they serve a nonpunitive purpose: attempting to
ensure fair competition in the markets for local service, long
distance, telecommunications equipment, and information services.
Indeed, even under the MFJ, we do not understand that the line-of-
business restrictions imposed on the BOCs were intended to have a
punitive function. As Judge Greene stated, the restrictions were
imposed because “[p]articipation in these fields carries with it a
substantial risk that the Operating Companies will use the same
anticompetitive techniques used by AT&T in order to thwart the
growth of their own competitors.” United States v. AT&T, 552
F.Supp. at 224. This rationale seems much more like a judgment
“condemning all men” in certain inherently conflicted positions than
an impermissible “judgment censuring or condemning any man or group
of men” for their personal conduct, see Brown, 381 U.S. at 453-54,
so to the extent that Congress was merely reimposing the MFJ, it did
not engage in action derivatively punitive. Furthermore, the actual
terms of the Special Provisions stay close to their legitimate ends.
By clearly linking a lifting of the long distance and
telecommunications equipment restrictions to competition in the
BOCs’ local markets, and by making the structural separation
condition for entry into the nascent and vulnerable information
services market temporary, Congress has tailored the burdens imposed
40
to an appropriate end of promoting competition. Finally, and
although SBC has argued fervently to the contrary, the mere fact
that the Special Provisions are limited in application to the BOCs
(and thus do not cover other LECs with substantial local market
power, like GTE) does not cast substantial doubt on the fit of this
tailoring. As the D.C. Circuit has expressly recognized, “[b]ecause
the BOCs’ facilities are generally less dispersed than GTE’s, they
can exercise bottleneck control over both ends of a [long distance]
telephone call in a higher fraction of cases than GTE” (or any of
the other LECs, for that matter), and it is thus rational to subject
them to additional burdens in order to achieve the overall goal of
competitive local and long distance service. BellSouth, 144 F.3d
at 67.
Third, we reason that the Special Provisions are not punitive
because neither their terms nor their legislative history
demonstrates the “smoking gun” evidence of punitive intent necessary
to establish a bill of attainder. As the Supreme Court clarified
in Selective Service, “‘unmistakable evidence of punitive
intent . . . is required before a Congressional enactment of this
kind may be struck down’” on attainder grounds. Id., 468 U.S. at
856 n.15 (quoting Flemming, 363 U.S. at 619); cf. Lovett, 328 U.S.
at 315 (for an example of such evidence). To be sure, there were
some isolated references in congressional debate to the Bell
41
System’s questionable business practices prior to the MFJ, which
were offered as evidence of the general potential for abuse of local
market power. But, still, SBC has pointed us towards no indication
that the Special Provisions were themselves enacted to punish the
BOCs for past antitrust violations. Instead, the legislative record
is really quite clear that Congress--certainly as a whole--
considered the Special Provisions to be just what they appeared to
be: a prophylactic, compromise regulation of the BOCs’ local market
power to ensure greater competition in all of the nation’s
telecommunications markets.
Finally, and perhaps most fundamentally, we conclude that the
Special Provisions are not punitive because they were part of a
larger quid pro quo. Combined with § 601(a)(1), the Special
Provisions represent a hard-fought compromise on a massive issue of
public policy which, in the end, contained both good and bad
elements for the BOCs.28 For example, although the information
28
See SBC Communications, 138 F.3d at 412:
The question of how best to achieve [the goals of the
Act] . . . was the subject of great debate. Some thought
that the local and long-distance markets should be open
to all competitors immediately. Others believed that the
BOCs should have to wait until actual competition was
introduced in their local markets before providing
interLATA service, since it was claimed that the
long-distance market is already competitive. As might be
expected for an issue of this economic significance, an
extended lobbying struggle ensued. The end product was
a compromise between the competing factions.
42
services restriction lifted under the MFJ was partially reimposed
under § 274, the BOCs were immediately freed, by operation of
§ 601(a)(1) and the other Special Provisions, from existing MFJ
restrictions on their ability to offer incidental and out-of-region
long distance service. More importantly, the Special Provisions
gave the BOCs a clear delineation of what they needed to do to
achieve a lifting of all the old MFJ restrictions in the future--
certainly a step up, from the BOCs’ perspective, from being under
Judge Greene’s perpetual supervision. It is perhaps for this reason
that the BOCs have apparently consistently represented, outside of
litigation, that they were pleased with the Act. Indeed, in a
public news release, SBC’s Chairman lauded the Act as “landmark
legislation” that would allow SBC “immediately [to] provide long-
distance service outside [its] . . . region and to [its] cellular
customers everywhere,” and that created “clear and reasonable
pathways” for SBC to obtain permission to provide in-region long
distance service in the future--“pathways that [SBC was] happy
with.” The other BOCs made similar comments, and they clearly were
effective in persuading Congress of their support for the Act. See
142 Cong. Rec. S393 (daily ed. Jan. 26, 1996) (remarks of Sen.
Pressler) (“We now have the regional Bell companies supporting the
bill and we have the long-distance companies supporting the bill.
That is an unusual, rare moment in American history when the
43
regional Bells and long-distance companies are temporarily at peace,
so to speak.”); id. at S696 (daily ed. Feb. 1, 1996) (statement of
Sen. Kerrey) (noting that the Act was “a very unusual piece of
legislation in that the demand for it [wa]s coming from . . . the
whole range of corporations; . . . RBOC’s, long-distance, cable,
broadcast; all of them”); id. at S699 (daily ed. Feb. 1, 1996)
(statement of Sen. Lott) (“The telephone companies are supporting
this legislation. The long-distance companies are supporting this
legislation--both of them would like to have a little more in their
sections, but basically they know this is good
legislation . . . .”). Be that as it may, it is at any rate clear
that a legislative quid pro quo on this level simply cannot be
punitive for attainder purposes.
For all of the foregoing reasons, we find that the Special
Provisions ultimately are nonpunitive as an historical, functional,
and motivational matter. They are therefore not an unconstitutional
and odious bill of attainder as that term has been defined by the
Supreme Court. To the extent that the district court concluded
otherwise, it was in error, and its decision on that point is
accordingly reversed.
B
As noted above, however, SBC and the other appellees also urge
three additional constitutional arguments as alternate bases for
44
affirming the judgment of the district court. Having found the
Special Provisions not to constitute a bill of attainder, we must
obviously consider these alternate theories. We do so only briefly,
however, as they are far less substantial.
1
The appellees first make two interrelated arguments that the
Special Provisions violate the constitutional requirement of
separation of powers--i.e., that the Special Provisions represent
an arrogation to the legislative branch of powers functionally
vested in the judicial branch by the very firmament of the
Constitution. See generally Plaut, 514 U.S. at 218-25 (noting,
among other things, that “[t]he Framers of our Constitution lived
among the ruins of a system of intermingled legislative and judicial
powers” and felt a “sense of a sharp necessity to separate the
legislative from the judicial” in designing their new system).
Despite their strong institutional pedigree, neither argument has
significant merit.
First, the appellees contend that the Special Provisions
violate separation of powers because they address themselves to a
particular judicial consent decree--the MFJ--in such a way as to
alter the result. They rely on the well accepted rule that it
violates separation-of-powers principles for Congress to reopen any
adjudication that represents the “final word of the judicial
45
department” on a case. See Plaut, 514 U.S. at 225-27. Yet under
Pennsylvania v. Wheeling and Belmont Bridge Co., 59 U.S. (18 How.)
421 (1855), it has long been clear that Congress may change the law
underlying ongoing equitable relief, even if, as in Wheeling itself,
the change is specifically targeted at and limited in applicability
to a particular injunction, and even if the change results in the
necessary lifting of that injunction. See id. at 429. The only
real question on this point would seem to be whether Wheeling
survives the Court’s more recent separation of powers jurisprudence,
as recently recited in Plaut. In that case, however, Justice Scalia
could hardly have been more clear that “nothing in our holding today
calls [Wheeling] into question.” Id., 514 U.S. at 232.
Obviously, Wheeling survives, as all of the circuit courts to
consider separation-of-powers challenges to the Prison Litigation
Reform Act of 1995 recently concluded. In those cases the courts
dealt with a statute, 18 U.S.C. § 3626(b)(2), that mandated the
termination of certain existing consent decrees if they were not
based upon a newly announced standard of factual findings. In
upholding this provision in the face of a separation-of-powers
attack, five courts expressly held that Congress could interfere
with ongoing consent decrees, because such decrees were not “final
46
judgments” for separation-of-powers purposes.29 Indeed, even the
one court to strike down § 3626(b)(2) was forced to concede that
“Wheeling established the principle that the state of the law at the
time a final judgment embodying a permanent injunction is entered
is not part of what is ‘final’ about the judgment.” Taylor v.
United States, 143 F.3d 1178, 1182 (9th Cir. 1998) (Ristani, J.).
29
See Dougan v. Singletary, 129 F.3d 1424, 1426 (11th Cir.
1997) (per curiam) (“As the Court explained in Plaut v. Spendthrift
Farm, Inc., a true ‘final judgment’ here means not an appealable
judgment, but one that represents the ‘last word of the judicial
department with regard to a particular case or controversy.’
Consent decrees are final judgments, but not the ‘last word of the
judicial department.’”); Inmates of Suffolk County Jail v. Rouse,
129 F.3d 649, 657 (1st Cir. 1997) (Selya, J.) (“Plaut and Wheeling
Bridge, read together, teach that equity requires, and the
separation of powers principle permits, legislatures to direct that
courts respond to changes in substantive law by revisiting forward-
looking injunctions.”); Benjamin v. Jacobsen, 124 F.3d 162, 171 (2d
Cir. 1997) (Calabresi, J.) (“In distinguishing Wheeling Bridge, the
Plaut Court implicitly drew a similar distinction between two kinds
of final judgments for separation of powers purposes--final
judgments without prospective effects, which could not be
constitutionally revised through legislation, and final judgments
with prospective effects, whose effects could be constitutionally
so revised.”); Gavin v. Branstad, 122 F.3d 1081, 1087 (8th Cir.
1997) (Bowman, J.) (“Plaut does not hold that final judgments are
invariably immune to congressional tinkering; what Plaut protects
is ‘the last word of the judicial department with regard to a
particular case or controversy.’ In a continuing case, a consent
decree is not the last word of the courts in the case, even after
the decree itself has become final for purposes of appeal.”);
Plyler v. Moore, 100 F.3d 365, 371 (4th Cir. 1996) (Wilkins, J.)
(“[A]s made clear by the Court in Plaut, an attempt to alter
legislatively a legal judgment violates the separation-of-powers
doctrine. A judgment providing for injunctive relief, however,
remains subject to changes in the law. These principles apply
equally to consent decrees and litigated judgments.”) (citations to
Wheeling and other cases omitted).
47
Despite this great weight of authority, the appellees counter
that the congressional interference in this case is more suspect,
because it is so specific. Yet, as noted, the legislation in
Wheeling was rife with specificity: the change effected by Congress
was specifically directed at altering the legal status of a single,
named bridge in order to change the result of a particular
injunction. See id., 59 U.S. at 429. Specificity was also
manifestly evident in the more recent related case of Robertson v.
Seattle Audubon Society, 503 U.S. 429, 434-35, 437-40 (1992), where
Justice Thomas, writing for a unanimous Court, found no separation-
of-powers problem in a statute that changed the law with respect to
two pending lawsuits identified by name and caption number. In the
light of all these precedents, we simply cannot see a separation-of-
powers problem based on the Special Provisions’ interference with
the MFJ in this case.
That leaves the second line of attack, which, as we understand
it, is a not-too-well-defined argument that all of the problematic
aspects of the Special Provisions--including particularly their
specificity, their interference with the MFJ, and the near-punitive
nature of the liability they impose--when added together somehow
amount to a separation-of-powers violation that is greater than the
sum of its parts. Although this argument finds appealing rhetorical
support in the more sweeping statements of some of the Court’s older
48
cases, including particularly the admonition offered by Justice
Marshall in Fletcher and seconded by Chief Justice Warren in Brown
that “[i]t is the peculiar province of the legislature to describe
general rules for the government of society; the application of
those rules to individuals in society would seem to be the duty of
other departments,” see Brown, 381 U.S. at 446, it is squarely and
specifically contradicted by Plaut. In that case, Justice Breyer
raised a very similar argument in his one-vote concurrence. See
id., 514 U.S. at 241-46. Justice Scalia’s six-vote majority opinion
soundly rejected it, however, noting (in addition to the above-
quoted statement from footnote nine) that:
The nub of th[e] infringement consists not of the
Legislature’s acting in a particularized and hence
according to the concurrence) nonlegislative fashion; but
rather of the Legislature’s nullifying prior,
authoritative judicial action. It makes no difference
whatever to that separation-of-powers violation that it
is in gross rather than particularized . . . or that it
is not accompanied by an “almost” violation of the Bill
of Attainder Clause, or an “almost” violation of any
other constitutional provision.
See id. at 239 & n.9. In the light of Plaut, there is thus no
viability to the “amorphous” theory either, and the appellees’
separation-of-powers challenge in this case must fail.
2
The appellees next argue that the Special Provisions violate
the Equal Protection Clause by discriminating against the BOCs by
name. Under City of New Orleans v. Dukes, 427 U.S. 297 (1976),
49
however, specification of named parties in economic regulation is
clearly permissible for equal protection purposes so long as the
regulation is rationally related to a legitimate governmental
interest and does not trammel fundamental personal rights or draw
upon inherently suspect distinctions such as race, religion, or
alienage. Id. at 304-06. As should be manifest from the entire
history of this area of the law, regulation of an LEC’s conduct in
the local telephone service market neither restricts fundamental
individual rights nor lacks rational relation to the government’s
legitimate interest in ensuring greater competition in all
telecommunications markets. Furthermore, the specification of the
BOCs in the Special Provisions at issue here was not based on
invidious criteria like race, religion, or alienage. As such, the
Special Provisions are not inconsistent with the Equal Protection
Clause.
3
Finally, the appellees urge that, even if the other Special
Provisions are allowed to stand, § 274 must go as it impermissibly
infringes the BOCs’ right to free speech. The D.C. Circuit recently
rejected an identical challenge to § 274 by another RBOC, however,
see BellSouth, 143 F.3d at 67-71, and we can find no reason to
disagree with its result and analysis. Because § 274 does not in
any way differentiate speech on the basis of content, its speech
50
restricting provisions are subject only to (at most) intermediate
scrutiny review under Turner Broadcasting System, Inc. v. FCC, 512
U.S. 622, 642 (1994) (Turner I). Under that standard, a restriction
will be upheld “if it advances important governmental interests
unrelated to the suppression of free speech and does not burden
substantially more speech than necessary to further those
interests.” Turner Broadcasting System, Inc. v. FCC, 117 S.Ct.
1174, 1186 (1997) (Turner II). Obviously, the competition-enhancing
interests discussed above are manifestly sufficient to meet the
first hurdle. Furthermore, because § 274 merely imposes a
structural separation requirement on speech activities, not an
absolute bar, its restrictions are practically de minimis in this
necessarily corporate context, and certainly do not burden
substantially more speech than necessary to accomplish its
legitimate goals. For these reasons, the contention that § 274
violates the BOCs’ right to free speech is entirely lacking in
merit.
V
In the end, the constitutional prohibition against bills of
attainder is a specific rather than a general guaranty of rights.
Cf. Lovett, 328 U.S. at 321 (Frankfurter, J., joined by Reed, J.,
concurring [in the judgment]). Nothing in the Court’s jurisprudence
should be read to allow that specific guaranty wholly to escape the
51
implications of its historical origins, and since the age of
Blackstone and before, it has been clear that for a bill to attaint,
it simply must invoke the punitive. In this case, that has not
occurred. Although the Special Provisions may well constitute a
legislative judgment that the BOCs currently have an inherent and
natural potential to restrain competition by virtue of their local
market power, the Act does not declare them monsters or otherwise
seek to punish them on the basis of past conduct, and thus does not
run afoul of the Bill of Attainder Clause. Because the
Constitution’s additional requirements of separation of powers,
equal protection of the laws, and free speech are also not even
arguably infringed by the Act, the judgment of the district court
is accordingly
R E V E R S E D.30
30
We are unable to see this case in the single-minded terms
expressed in the dissenting opinion. We have faithfully, to the
best of our ability, recounted the sinuous journey of bills of
attainder from the earliest days to the present day. Like a
Christmas pie, these cases--as a whole and indeed individually--
provide a little something for every taste, and are rich with
selective quotes to support a chosen conclusion. In arriving at
our conclusions, we have tried to synthesize these diverse
expressions and applications of the bill of attainder clause in
order to apply it in this context of business regulation--its first
such application. What we think the dissenting opinion has not
observed in its straightforward stride is that attainder requires
an element of punishment. There are employment bars and there are
employment bars--some of the same character, others of a different
character. A non-perpetual legislative bar, which forbids only a
corporation’s participating in a particular segment of the general
business in which the corporation is engaged is not punishment when
52
that bar is enacted for nonpunitive appropriate legislative
purposes under conditions to which that business effectively has
agreed. Indeed, we are not sure the dissent is otherwise convinced
given its acknowledgment that there is no real “victim” of Congress
in this case.
53
JERRY E. SMITH, Circuit Judge, dissenting:
En route to minting a “regulatory exception” to the Bill of
Attainder Clause, the majority holds that punishment is not
punishment when it is inflicted with a “prophylactic” intent. The
majority reaches this cherished goal by stitching together a
patchwork of concurrences and dissents and by brushing aside binding
Supreme Court majority opinions as “aberrant” and “unsensible.”
I respectfully dissent.
I.
The Telecommunications Act of 1996 singles out twenty named
corporations for severe line-of-business restrictions characterized,
in the Act's telling language, as the “Special Provisions.” This
case hinges on whether these economic restrictions, which bar the
named firms from lucrative telecommunications markets, amount to
legislative “punishment” as historically understood.
A.
The Supreme Court has consistently held that bars to employment
constitute punishment for purposes of the Bill of Attainder Clause.
In one of the earliest bill of attainder cases, Cummings v.
Missouri, 71 U.S. (4 Wall.) 277, 320 (1866), the Court observed that
54
“[d]isqualification from the pursuits of a lawful avocation . . .
may also, and often has been, imposed as punishment.” The Court
struck down, as a bill of attainder, a provision in the Missouri
Constitution prohibiting Confederates or their sympathizers from
holding certain jobs. The Court recognized that “in the pursuit of
happiness all avocations, all honors, all positions, are alike open
to every one, and that in the protection of these rights all are
equal before the law. Any deprivation or suspension of any of these
rights for past conduct is punishment, and can be in no otherwise
defined.” Id. at 321-22 (emphasis added).
The law has not changed. In Ex parte Garland, 71 U.S.
(4 Wall.) 333 (1866), the Court applied Cummings's reasoning to
strike down, as a bill of attainder, a federal statute barring
Confederates from practicing in the federal courts. More recently,
in United States v. Lovett, 328 U.S. 303 (1946), the Court
reaffirmed the principle that line-of-work restrictions are
inherently punitive, invalidating a federal statute terminating the
salaries of three named federal employees. And in United States v.
Brown, 381 U.S. 437 (1965), the Court once again held that a statute
proscribing entry into a certain line of work constituted
punishment, striking down a federal statute that forbade members of
the Communist Party from serving as labor union officials.
55
55
Any doubt that employment bars fall squarely within the
historical conception of punishment was erased by the Court's two
most recent bill of attainder cases. In Nixon v. Administrator of
Gen. Servs., 433 U.S. 425, 474 (1977), the Court canvassed the
various burdens historically deemed punitive, concluding that “[o]ur
country's own experience with bills of attainder resulted in the
addition of another sanction to the list of impermissible
legislative punishments: a legislative enactment barring designated
individuals or groups from participation in specified employments
or vocations . . . .”
The Court's latest pronouncement, in Selective Serv. Sys. v.
Minnesota PIRG, 468 U.S. 841 (1984), echoes Nixon: “In our own
country, the list of punishments forbidden by the Bill of Attainder
Clause has expanded to include legislative bars to participation by
individuals or groups in specific employments or professions.”
468 U.S. at 852. Indeed, employment bars “have constituted the most
common sort of statutes struck down by the Court as unconstitutional
bills of attainder.” BellSouth Corp. v. FCC, 144 F.3d 58, 72-73
(D.C. Cir. 1998) (Sentelle, J., dissenting) (citing Selective
Service, 468 U.S. at 852).
The majority's ancillary argument that “the Special Provisions
are not punitive because they do not impose a perpetual bar” is
meritless. The majority quotes Selective Service, 468 U.S. at 853,
56
56
which states that “[a] statute that leaves open perpetually the
possibility of [qualifying for some specifically denied benefit]
does not fall within the historical meaning of forbidden legislative
punishment” (brackets added by majority). But in Brown, the Court
had already considered and rejected the majority's escapability
argument, explaining:
We do not read [two prior cases] to have set up ines-
capability as an absolute prerequisite to a finding of
attainder. Such an absolute rule would have flown in the
face of explicit precedent, Cummings v. Missouri, 4 Wall.
277, 324, as well as the historical background of the
constitutional prohibition. A number of ante-
Constitution bills of attainder inflicted their
deprivations upon named or described persons or groups,
but offered them the option of avoiding the deprivations,
e.g., by swearing allegiance to the existing government.
381 U.S. at 457 n.32. This illustrates that the Bill of Attainder
Clause cannot be avoided simply by inserting into the statute a
means of escape. The fact that the federal government holds the key
to the Baby Bells' prison is irrelevant.
B.
Faced with the unhappy reality of well over a century of
Supreme Court cases holding that employment bars constitute
punishment, the majority announces the discovery of a heretofore
unrecognized exception to the Bill of Attainder Clause: the
“prophylactic exception.” Apparently this creature awakens only in
57
57
cases such as thisSSwhen Congress punishes, but acts with a
beneficent, regulatory intent.
The method through which the majority traces the evolution of
the “prophylactic exception” reveals its suspect pedigree. The
exception's origin is said to lie in Justice Miller's dissent in
Garland, where he suggested that the employment bar at issue was not
punitive because Congress did not intend it as such. Rather,
Justice Miller argued, the statute should properly be viewed as a
prophylactic measure, because Congress merely sought to protect the
public from the future misdeeds of the attainted individuals. See
71 U.S. (4 Wall.) at 393-96 (Miller, J., dissenting).
This theory, rejected by the Garland majority, was purportedly
adopted some decades later in Dent v. West Virginia, 129 U.S. 114
(1889), and Hawker v. New York, 170 U.S. 189 (1898). Unlike most
of the authorities the majority relies on to support the
prophylactic exception, Dent and Hawker are majority opinions. But
they have little to say about this case: The statute at issue in
Dent did not single out individuals for punishment, but concerned
a state's generally applicable licensing requirements; similarly,
the burden in Hawker was imposed on a class rather than named
individuals. In any event, no subsequent case has interpreted Dent
and Hawker the way the majority does hereSSas authorizing
58
58
congressional punishment of individuals as long as the statute can
be said to prevent future harms.
The cornerstone of the majority's theory is Justice
Frankfurter's concurrence in Lovett, 328 U.S. at 318. Although
Justice Frankfurter distinguished between “harm [that is] inflicted
by government authority” and “punishment,” id. at 324 (Frankfurter,
J., concurring), the majority of the Court refused to embrace this
view. Cf. Seminole Tribe of Florida v. Florida, 517 U.S. 44, 66
(1996) (holding that a minority opinion is “of questionable
precedential value, largely because a majority of the Court
expressly disagreed with the rationale of the plurality”). Rather
than adopt Justice Frankfurter's narrow reading of the Bill of
Attainder Clause, the Court majority held that the challenged law,
which terminated the salaries of three named federal employees,
“'operates as a legislative decree of perpetual exclusion' from a
chosen vocation” and therefore “clearly accomplishes the punishment
of named individuals without a judicial trial.” Lovett, 328 U.S.
at 316 (quoting Garland, 71 U.S. (4 Wall.) at 377). The majority
quite plainly equated employment bars with punishment.
Finally, Brown and Nixon foreclose any suggestion that the full
Court subsequently adopted Justice Frankfurter's minority view.
Brown, which the panel majority cryptically claims “did not purport
fully to abandon the prior development of the punitive element,”
59
59
concluded that the employment restriction at issueSSbarring members
of the Communist Party from holding certain jobsSSamounted to
punishment. The Court surveyed its bill of attainder jurisprudence
and, relying on Garland and Lovett, held that the statute “plainly
constitutes a bill of attainder” because “it designates in no
uncertain terms the persons who possess the feared characteristics
and therefore cannot hold union office . . . .” 381 U.S. at 449,
450.
Nixon is even more direct. There, the Court explained that
“legislative enactment[s] barring designated individuals or groups
from participation in specified employments or vocations” are
“impermissible” and “unquestionably have been held to fall within
the proscription of Art. I, § 9.” 433 U.S. at 473, 474. This stark
language leaves little room for the majority's “prophylactic
exception”: Impermissible is impermissible. Once a court
determines that Congress has imposed a burden historically deemed
punitive, such as the employment bar at issue here, that is the end
of the analysis. The majority protests that such a reading of Nixon
is “ritualistic and unsensible,” but it is difficult to squeeze a
prophylactic exception out of the Court's statement that “[a]
statutory enactment that imposes [an employment bar] on named or
identifiable individuals would be immediately constitutionally
suspect.” Id. at 473 (emphasis added).
60
60
Moreover, to the extent the Court considered congressional
purpose in passing the law, it did so only after it had determined
that the challenged burden did not fit the historical definition of
punishment; its consideration of legislative intent was a means of
ensuring that “new burdens and deprivations [are not] legislatively
fashioned that are inconsistent with the bill of attainder
guarantee.” Id. at 475.
The Court began its analysis by asking whether the burdenSSthe
confiscation of presidential recordsSSfell into the category of
“immediately suspect” punishments, such as a bar to employment.
After concluding that President Nixon “cannot claim to have suffered
any of these forbidden deprivations at the hands of Congress,” the
Court remarked that “our inquiry is not ended by the determination
that the [statute] imposes no punishment traditionally judged to be
prohibited by the Bill of Attainder Clause.” Id. at 475. Only then
did the Court turn to legislative purposeSSan inquiry that would not
have been necessary if President Nixon had suffered one of the
“forbidden” deprivations.
The Selective Service Court clarified this point. It
explained:
Our inquiry does not end with a determination that
[the statute] does not inflict punishment in its
historical sense. To ensure that the Legislature has not
created an impermissible penalty not previously held to
be within the proscription against bills of attainder, we
61
61
must determine whether the challenged statute can be
reasonably said to further nonpunitive goals.
468 U.S. at 853-54 (citing Nixon, 433 U.S. at 475-76).
The majority's reading of these cases is sadly ironic. In both
Nixon and Selective Service, the Court sought to expand the
protections of the Bill of Attainder Clause by looking to
legislative purpose. The Court's concern was congressional
creativity in dreaming up new burdens that fell outside the category
of burdens historically deemed punitive; by considering legislative
intent, the Court erected an additional safeguard to protect
individuals from new types of congressionally-devised punishment.
The majority's interpretation, by contrast, contracts the scope
of the clause. The majority looks to legislative intent not to
protect citizens from congressional overreaching, but as a means of
empowering Congress to pass punitive laws it could not otherwise
enactSSsimply by claiming an intent to “regulate” rather than
punish. Thanks to the prophylactic exception, Congress may now
single out individuals for punishments that were, until today,
routinely held unconstitutional.
C.
In deeming nonpunitive a burden that the Nixon Court
characterized as “unquestionably” punitive, 433 U.S. at 473, the
62
62
majority reasons that punishment is not really punishment if it is
inflicted for preventive purposes. The majority concludes that
“[a]lthough the Special Provisions may well constitute a legislative
judgment that the BOCs currently have an inherent and natural
potential to restrain competition by virtue of their local market
power, the Act does not declare them monsters or otherwise seek to
punish them on the basis of past conduct, and thus does not run
afoul of the Bill of Attainder Clause.” The majority distinguishes
between retribution (the imposition of a burden for wrongful past
conduct) and prevention (the imposition of a burden to reduce the
likelihood of future harmsSShere, antitrust violations).
This distinction is flatly contradicted by Brown, which rejects
such a cramped view of punishment and undermines the majority's
novel interpretation of the clause. In holding that an employment
bar constituted punishment, even when imposed for prophylactic
purposes, the Court explained:
It would be archaic to limit the definition of
“punishment” to “retribution.” Punishment serves several
purposes: retributive, rehabilitative, deterrentSSand
preventive. One of the reasons society imprisons those
convicted of crimes is to keep them from inflicting
future harm, but that does not make imprisonment any the
less punishment.
Historical considerations by no means compel restriction
of the bill of attainder ban to instances of retribution.
A number of English bills of attainder were enacted for
preventive purposesSSthat is, the legislature made a
judgment, undoubtedly based largely on past acts and
63
63
associations . . . that a given person or group was
likely to cause trouble (usually, overthrow the
government) and therefore inflicted deprivations upon
that person or group in order to keep it from bringing
about the feared event.
381 U.S. at 458-59.
Consider a statute that sentences to death a named individual
who announces that he has criminal tendenciesSSbut has yet to commit
a crime. Under the majority's theory, this law is not a bill of
attainder: It does not “seek to punish on the basis of past
conduct,” and it serves a legitimate prophylactic function. This
hypothetical illustrates the impossibility of confining the clause's
protections to retributive measures. As the Court explained, a
burden is rendered no less punitive by being based on future, rather
than past, wrongdoing.
In fact, the majority's concession that “the Act may well
constitute a legislative judgment that the BOCs currently have an
inherent and natural potential to restrain competition” falls
squarely within the Court's description of a bill of attainder:
when “the legislature [makes] a judgment . . . that a given person
or group [is] likely to cause trouble . . . and therefore [inflicts]
deprivations upon that person or group in order to keep it from
bringing about the feared event.” Id. at 458-59. Here, Congress
made a legislative judgment that the BOC's were likely to cause
troubleSSthey were likely to commit antitrust violationsSSand
64
64
inflicted deprivations (severe line-of-business restrictions) in
order to keep the Baby Bells from bringing about the feared event.
Accordingly, under a straightforward application of Brown, the
“prophylactic exception” is a chimera, and the Special Provisions
are a bill of attainder.
D.
In sum, the unbroken line of Supreme Court precedent compels
the conclusion that the Special Provisions, because they impose an
employment bar, constitute historical punishment forbidden by the
Bill of Attainder Clause. The Court has never held that Congress
can single out named individuals for burdens historically deemed
punitive simply because legislators are animated by a well-meaning,
regulatory spirit. Yet that is precisely what the majority holds
today, sidestepping the Nixon Court's statement, 433 U.S. at 473,
that this type of law is “immediately constitutionally suspect.”
II.
The Bill of Attainder Clause has long been regarded as
protecting unpopular individuals or groups from trial-by-
legislature. As the Court explained in South Carolina v.
Katzenbach, 383 U.S. 301, 324 (1966), the clause protects those “who
are peculiarly vulnerable to nonjudicial determinations of guilt.”
65
65
A quick survey of the caselaw confirms this view: The clause has
been invoked to rescue Confederates and Communists from
congressional wrath.
And that is what makes the Bill of Attainder analysis so
unusual in this context: The Baby Bells, represented by armies of
lawyers and lobbyists, hardly fit anyone's notion of a helpless
victim. Moreover, there is evidence in the record that the Baby
Bells, by their own account, prevailed in the legislative process.
While their apparent consent to the Special Provisions does not
estop them from challenging the restrictions in this court, it
certainly undercuts their claim to victimhood. As the majority
notes, the Special Provisions were part of a larger quid pro quo.
But the Bill of Attainder Clause serves a dual purpose: Not
only does it rescue individuals from trial-by-legislature, it also
preserves the separation of powers. The clause is a check on
Congress's power to legislate; it forbids Congress from passing
punitive laws that target individuals. Congress may, of course,
pass laws conferring benefits on individuals, see Plaut v.
Spendthrift Farm, Inc., 514 U.S. 211, 239 n.9 (1995), but when it
wishes to impose punishment, it must legislate in general terms and
allow the judicial branch to decide which individuals have violated
the laws and must be punished.
66
66
The Court explained the clause's role in preserving the
separation of powers most thoroughly in BrownSSan opinion the panel
majority tars as “somewhat aberrant.” The Court began its
discussion by reviewing the history of the clause, describing it as
a barrier “to ensure that the legislature would not overstep the
bounds of its authority and perform the functions of the other
departments.” 381 U.S. at 444 (emphasis omitted). It then stated
precisely why the statute, which imposed an employment bar on
members of the Communist Party, violated the clause:
In [enacting the statute] Congress has exceeded the
authority granted it by the Constitution. The statute
does not set forth a generally applicable rule decreeing
that any person who commits certain acts or possesses
certain characteristics (acts and characteristics which,
in Congress' view, make them likely to initiate political
strikes) shall not hold union office, and leave to courts
and juries the job of deciding what persons have
committed the specified acts or possess the specified
characteristics. Instead, it designates in no uncertain
terms the persons who possess the feared characteristics
. . . .
Id. at 450.
The Court noted that Congress was free to pass laws weeding
subversives out of the labor movementSSonly it had to do so through
generally applicable legislation, otherwise it overstepped its
constitutional bounds. In language directly applicable to the
instant case, the Court explained that Congress “cannot specify the
people upon whom the sanction it prescribes is to be levied. Under
67
67
our Constitution, Congress possesses full legislative authority, but
the task of adjudication must be left to other tribunals.” Id. at
461.
Brown stands for the idea that the Bill of Attainder Clause
protects not only individual liberty, but also the other branches
of government. The clause, in other words, helps ensure that
Congress does not encroach on the executive's or judiciary's turf.
As the Court concluded, id. at 442, “the Bill of Attainder Clause
was intended not as a narrow, technical (and therefore soon to be
outmoded) prohibition, but rather as an implementation of the
separation of powers, a general safeguard against legislative
exercise of the judicial function.”
This is hardly a novel, twentieth-century interpretation. In
one of the earliest bill-of-attainder cases, Fletcher v. Peck,
10 U.S. (6 Cranch) 87, 136 (1810), Chief Justice Marshall explained
that “[i]t is the peculiar province of the legislature, to prescribe
general rules for the government of society; the application of
those rules to individuals in society would seem to be the duty of
other departments.” In fact, this understanding predates even the
Marshall Court:
Writings contemporary with the drafting of the
Constitution express great concern lest the legislature
assume the power to implement the total policy of
government without the participation of the other
branches, and support the thesis that the bill of
68
68
attainder clause should be viewed as a limitation on
legislatures fully as broad, and as necessary to the
effective separation of powers, as that which has been
imposed upon courts by article III.
Note, The Bounds of Legislative Specification: A Suggested Approach
to the Bill of Attainder Clause, 72 YALE L.J. 330, 343 (1962) (cited
with approval in Brown, 381 U.S. at 457 n.32). In this sense, even
if the BOC's somehow “consented” to Congress's imposing the Special
Provisions, that consent is as irrelevant as is a litigant's
“consenting” to subject-matter jurisdiction. Congress simply lacks
the power to legislate in this way.
In enacting the Special Provisions, Congress adjudicated. It
not only specified the sanction but also identified the specific
corporations upon whom the sanction was to be leviedSSnot
coincidentally, the same corporations involved in the prior AT&T
litigation. The Bill of Attainder Clause says that when Congress
wishes to impose certain burdens historically deemed punitive, it
can do so only through laws of general applicability. The actual
application of these laws to specific parties must be left to the
other branches of government. Congress runs afoul of the Bill of
Attainder Clause when it enacts punitive legislation that targets
certain entitiesSSeven where, as here, the punishment comes cloaked
in the mantle of prophylactic economic regulation.
69
69
III.
The majority today opens a loophole in the Bill of Attainder
Clause, allowing Congress to pass legislation that historically has
been held unconstitutional. In doing so, the majority redefines our
traditional understanding of the clause's mandate: Congress cannot
single out an individual and deprive him of his life, liberty, or
freedom to work. Because the Telecommunications Act's “Special
Provisions” amount to a bill of attainder, I respectfully dissent.
70
70
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512 So.2d 88 (1987)
FOWLER PEST CONTROL AND INSULATION, INC.
v.
HARTFORD INSURANCE COMPANY OF ALABAMA, etc.
85-1122.
Supreme Court of Alabama.
July 24, 1987.
*89 Dieter Schrader, Huntsville, for appellant.
L. Tennent Lee III of Cleary, Lee, Morris, Smith, Evans & Rowe, Huntsville, for appellee.
PER CURIAM.
Fowler Pest Control and Insulation, Inc. ("Fowler"), appeals from a summary judgment in favor of defendant Hartford Insurance Company of Alabama ("Hartford"). At all times pertinent to this appeal, Fowler was insured under a comprehensive general liability policy issued by Hartford. Fowler's complaint, as amended, sets out claims against Hartford for "bad faith," breach of contract, fraud, and deceit arising from Hartford's withdrawal from the defense of Fowler in a suit filed against Fowler by Maurice G. Reynolds, Jr., and his wife, Rebecca Ann Reynolds.
The underlying action against Fowler by the Reynoldses was before this Court in Reynolds v. Fowler Pest Control & Insulation, Inc., 479 So.2d 1185 (Ala.1985). There the cause of action was stated as follows:
"AMENDED COMPLAINT FOR FRAUD"
"1. On, to wit, the 30th day of December, 1981, the Defendant, or its agent, servant or employee acting within the line and scope of his authority, represented in writing at a loan closing that the property in question was free of termite damage, when in fact there was significant termite damage to the dwelling house. The representations were made on Veterans Administration Loan Closing Forms that required disclosure of all observed damage. A copy of the report is attached hereto and incorporated herein by reference.
"2. At the time Defendants represented to Plaintiffs that no termite damage was observed, or failed to report any observed damage, there was in fact serious damage present which a reasonable termite inspection would have revealed.
"3. The representations made by the Defendant were false and Defendant knew or should have known that they were false, and they were made with the intent that Plaintiffs rely upon the representations.
"4. Plaintiffs believed the representations and in reliance upon the representations purchased the property to their detriment."
Based on this claim as alleged by the Reynoldses, Hartford determined that no coverage was provided under the terms of the policy issued to Fowler and withdrew from defending Fowler in the action.
The insurance policy issued to Fowler provided, among other things, the following:
"The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of
"Coverage ABodily Injury or
"Coverage BProperty Damage
"to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations *90 of the suit are groundless, false or fraudulent...."
The policy defines "occurrence" as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured."
Fowler contends that the trial court erred in concluding that there was no obligation by Hartford to defend Fowler because there was no coverage under the policy. Fowler argues that facts known to Hartford, which were outside the complaint, should be considered in determining whether the policy provided coverage for Fowler.
The rules regarding an insurer's duty to defend are set out in United States Fidelity & Guaranty Co. v. Armstrong, 479 So.2d 1164, 1167 (Ala.1985), as follows:
"Whether an insurance company owes a duty to provide an insured with a defense to proceedings instituted against him must be determined primarily from the allegations of the complaint. Ladner & Co. v. Southern Guaranty Ins. Co., 347 So.2d 100, 102 (Ala.1977). If the injured party's complaint alleges an accident or occurrence which comes within the coverage of the policy, the insurer is obligated to defend, regardless of the ultimate liability of the insured. Ladner & Co., 347 So.2d at 102.
"If the complaint suggests that the injury alleged may not be within the coverage of the policy, then other facts outside the complaint may be taken into consideration. Ladner & Co., 347 So.2d at 103."
Hartford relies on Ladner & Co. v. Southern Guaranty Insurance Co., 347 So.2d 100 (Ala.1977), where the Court considered the issue of "whether the qualifying clause in the definition of occurrence, `neither expected nor intended from the standpoint of the insured' operates to excuse the insurer's duty to defend where the only theories of recovery alleged in the complaint charge the insured with intentional acts." 347 So.2d at 102. In that case, two insurers denied coverage and brought an action for declaratory judgment to determine their obligation to defend a suit against their insured. The complaint alleged that the insured had sold houses to the plaintiffs with knowledge that the houses would flood. The trial court granted summary judgment in favor of the insurers.
The Ladner & Co. Court held:
"[A]s presently postured, the defendant insurance companies are not presently required to defend the lawsuit pending against Ladner. The allegations of their complaint allege only intentional acts by Ladner; and nothing in the record before us indicates that any other theory of liability is asserted."
347 So.2d at 103. The Court emphasized, however, that if the plaintiffs changed their theory of liability and asserted a claim against the insured that was covered by the policies, it was possible that the insurers could be obligated to defend their insured.
For all that appears in the complaint filed by the Reynoldses against Fowler in the original case, certain types of fraud that are not intentional could have been included in that claim and therefore would not be excluded by the policy. We cannot say from the record and from the opinion rendered in Reynolds v. Fowler Pest Control & Insulation, Inc., supra, that every actionable claim or theory of fraud fell within the exclusion from Hartford's obligation to defend. We therefore hold that the trial court erred in granting summary judgment for Hartford on the contract claim, i.e., the claim based on a duty to defend. Since there was not a scintilla of evidence before the trial court on the issues of bad faith, fraud, and deceit, the summary judgment is otherwise affirmed.
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
JONES, ALMON, SHORES, ADAMS and STEAGALL, JJ., concur.
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765 F.2d 141
*Neov.I.N.S.
84-4847
United States Court of Appeals,Fifth Circuit.
6/4/85
1
I.N.S.
AFFIRMED
2
---------------
* Fed.R.App.P. 34(a); 5th Cir.R. 34.2.
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http://www.va.gov/vetapp16/Files5/1639905.txt
Citation Nr: 1639905
Decision Date: 09/30/16 Archive Date: 10/13/16
DOCKET NO. 11-20 148A ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in Milwaukee, Wisconsin
THE ISSUES
1. Whether vacatur of the decision of the Board of Veterans Appeals denying service connection for a cervical spine disability issued on March 30, 3016, is warranted.
2. Entitlement to service connection for a cervical spine disability.
3. Entitlement to service connection for a bilateral eye disability.
4. Entitlement to a total disability evaluation based on individual unemployability due to service-connected disabilities (TDIU).
REPRESENTATION
Appellant represented by: Daniel G. Krasnegor, Attorney at Law
WITNESS AT HEARING ON APPEAL
Appellant
ATTORNEY FOR THE BOARD
P. Olson, Counsel
INTRODUCTION
The Veteran had active military service from January 1978 to May 1988; he also had a period of active duty as a Reserve Member from September 1976 to January 1977.
This issue of entitlement to service connection for a cervical spine disability came back before the Board of Veterans' Appeals (Board) on Remand from the United States Court of Appeals for Veterans Claims (Court) regarding a Board decision rendered in December 2014. The issues of entitlement to service connection for bilateral eye disability and a TDIU are before the Board of Veterans' Appeals (Board) following Board Remands in December 2014 and March 2016. This matter was originally on appeal from an April 2010 rating decision of the Department of Veterans Affairs (VA) Regional Office (RO) in Milwaukee, Wisconsin.
In July 2014, the Veteran testified at a videoconference hearing. A transcript of that hearing is of record.
In a March 30, 2016, decision, the Board denied the Veteran's claim of entitlement to service connection for a cervical spine disability. In July 2016, the Veteran's attorney filed a motion to vacate the Board's March 30, 2016, decision.
The claims file is now entirely in VA's secure electronic processing systems, Virtual VA and Veterans Benefits Management System (VBMS).
The issues of entitlement to service connection for a cervical spine disability and a bilateral eye disability as well as entitlement to a TDIU are addressed in the REMAND portion of the decision below and are REMANDED to the Agency of Original Jurisdiction (AOJ).
FINDINGS OF FACT
1. On March 30, 2016, the Board issued a decision denying service connection for a cervical spine disability.
2. In July 2016, the Veteran's attorney filed a motion to vacate the Board's March 30, 2016, decision. It was contended that the attorney was not aware of evidence that had been added to the record and was considered in the March 2016 decision.
CONCLUSION OF LAW
The criteria for vacatur of the March 30, 2016, Board decision denying service connection for a cervical spine disability, have been met. 38 U.S.C.A. § 7104(a) (West 2014); 38 C.F.R. § 20.904(a) (2015).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
The Board may vacate an appellate decision at any time upon request of the appellant or his or her representative, or on the Board's own motion, where an appellant has been denied due process of law. 38 U.S.C.A. § 7104(a); 38 C.F.R. § 20.904(a).
In its March 30, 2016, decision, the Board denied the Veteran's claim for service connection for a cervical spine disability.
In denying the claims, the Board relied in part on evidence received after the December 2014 Board decision which was remanded by the Court August 2015. In his July 2016 motion to vacate the Board's March 30, 2016, decision, the Veteran's attorney argued that although records identified in a December 2014 remand order were requested and/or obtained, and they were associated with the Veteran's claims file, the Veteran's attorney was not notified of this development or afforded an opportunity to respond to the developed evidence prior to the rendering of the March 2016 decision.
In view of the above, the March 30, 2016, Board decision denying entitlement to service connection for a cervical spine disability is vacated. Accordingly, the motion to vacate the Board's March 30, 2016, decision denying service connection for a cervical spine disability is granted.
ORDER
The decision of the Board denying service connection for a cervical spine disability issued on March 30, 2016, is vacated.
REMAND
As noted above, additional evidence was added to the file after the December 2014 Board decision was remanded by the Court August 2015. A subsequent Supplemental Statement of the Case was not sent to the Veteran's or his attorney with respect to the issue of entitlement to service connection for a cervical spine disability. As such, the Board must remand the case so that a Supplemental Statement of the Case can be issued.
Similarly, in April 2016, after the Board remanded the issues of entitlement to service connection for bilateral eye disability and a TDIU, the Veteran appointed private attorney Daniel Krasnegor as his representative for the claims of entitlement to service connection for disabilities of the cervical spine, bilateral wrists, right thumb, bilateral eyes, right knee, and a TDIU via a properly executed VA Form 21-22a, Appointment of Individual as Claimant's Representative. The Board recognizes the change in representation. These matters had been part of a separate decision as the veteran was represented by a different organization at the time of the earlier remand.
A Supplemental Statement of the Case was, however, sent to the Veteran's previous representative, Wisconsin Department of Veterans Affairs, in June 2016. Thus, the Veteran's attorney should be provided a copy of all correspondence from VA with respect to the issues on appeal, including the June 2016 Supplemental Statement of the Case with revised representation.
Accordingly, the case is REMANDED for the following action:
1. The Veteran's attorney should be provided all correspondence from VA since April 12, 2016 concerning the issues on appeal.
2. The Veteran and his attorney should be furnished a revised Supplemental Statement of the Case showing the Veteran's attorney as his representative for the issues of entitlement to service connection for bilateral eye disability and entitlement to a TDIU and be afforded a reasonable opportunity to respond before the record is returned to the Board for further review
3. The issue of entitlement to a cervical spine disability should be reviewed on the basis of the additional evidence added to the file since December 17, 2014. If the benefit sought is not granted in full, the Veteran and his attorney should be furnished a Supplemental Statement of the Case and be afforded a reasonable opportunity to respond before the record is returned to the Board for further review.
The appellant has the right to submit additional evidence and argument on the matter or matters the Board has remanded. Kutscherousky v. West, 12 Vet. App. 369 (1999).
This claim must be afforded expeditious treatment. The law requires that all claims that are remanded by the Board of Veterans' Appeals or by the United States Court of Appeals for Veterans Claims for additional development or other appropriate action must be handled in an expeditious manner. See 38 U.S.C.A. §§ 5109B, 7112 (West 2014).
______________________________________________
MICHAEL D. LYON
Veterans Law Judge, Board of Veterans' Appeals
Department of Veterans Affairs
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FILED
NOT FOR PUBLICATION JUN 27 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
LYAZID ABAKKA; AMINA MELLITY, No. 07-73660
Petitioners, Agency Nos. A079-629-700
A096-165-806
v.
ERIC H. HOLDER, Jr., Attorney General, MEMORANDUM *
Respondent.
On Petition for Review of an Order of the
Board of Immigration Appeals
Submitted June 15, 2011 **
Before: CANBY, O’SCANNLAIN, and FISHER, Circuit Judges.
Lyazid Abakka and Amina Mellity, natives and citizens of Morocco, petition
for review of the Board of Immigration Appeals’ (“BIA”) order dismissing their
appeal from an immigration judge’s decision denying their applications for asylum
and withholding of removal. We have jurisdiction under 8 U.S.C. § 1252. We
*
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).
review for substantial evidence factual findings, Ornelas-Chavez v. Gonzales, 458
F.3d 1052, 1055-56 (9th Cir. 2006), and we deny the petition for review.
The record does not compel the conclusion that Mellity established
extraordinary circumstances excusing the untimely filing of her asylum
application. See 8 C.F.R. § 1208.4(a); Toj-Culpatan v. Holder, 612 F.3d 1088,
1090-92 (9th Cir. 2010). Accordingly, Mellity’s asylum claim fails.
Substantial evidence supports the agency’s finding that petitioners failed to
demonstrate past persecution or a clear probability of future persecution, because
they did not establish that the government was unable or unwilling to protect them
from the members of the Polisario Front. See Castro-Perez v. Gonzales, 409 F.3d
1069, 1072 (9th Cir. 2005) (the burden is on the applicant to show that the
government is unable or unwilling to control a non-governmental persecutor). We
reject petitioners’ claim that the BIA applied an incorrect legal standard.
Accordingly, petitioners’ withholding of removal claims fail.
PETITION FOR REVIEW DENIED.
2 07-73660
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242 S.W.3d 215 (2007)
Darrell Eugene GREEN, Appellant,
v.
The STATE of Texas, Appellee.
Nos. 09-07-260 CR, 09-07-261 CR.
Court of Appeals of Texas, Beaumont.
Submitted September 12, 2007.
Decided December 5, 2007.
*217 Brack Jones, Jr., Beaumont, for appellant.
Tom Maness, Dist. Atty., Wayln G. Thompson, Asst. Dist. Atty., Beaumont, for state.
Before McKEITHEN, C.J., KREGER and HORTON, JJ.
OPINION
HOLLIS HORTON, Justice.
This appeal[1] presents two questions: (1) whether Darrell Eugene Green's pleas were voluntary, and (2) whether the trial court erred in stacking Green's sentences. We overrule Green's first issue, but agree that the Penal Code prohibits the stacking of sentences where similar offenses are prosecuted in the same criminal action. See TEX. PEN.CODE ANN. § 3.03 (Vernon Supp.2007). Because Green's offenses were similar, and prosecuted in the same criminal action, we conclude that the trial court erred in stacking his sentences. As a result, we reform the judgment to require that his sentences be served concurrently.
Pursuant to plea bargain agreements, Green pled guilty to possession of cocaine and possession of codeine. In each case, the trial court deferred adjudication and placed Green on community supervision. The State subsequently filed motions to revoke Green's unadjudicated community supervisions. At the revocation hearing in each case, Green pled true to violating two terms of his community supervision and the trial court found another violation true after hearing evidence. Subsequently, but on the same date, the trial court conducted Green's sentencing hearings and adjudicated his guilt. The trial court sentenced Green to twenty years' confinement on his possession of cocaine charge (trial cause number 90240) and ten years' confinement on his possession of codeine charge (trial cause number 90969). The trial court ordered that Green's sentence in trial cause number 90969 run consecutive to the sentence in trial cause number 90240.
On appeal, Green argues the trial court breached his plea agreements by ordering consecutive sentences in trial cause number 90969 and trial cause number 90240. Green contends that he understood that he would receive no more than a combined twenty-year sentence in the event his sentences for community supervision were revoked. Because Green received a longer combined sentence than he understood he would receive, Green argues that his guilty pleas were involuntary. Green also asserts that the trial court did not have the discretion to cumulate his sentences because his offenses arise from the same criminal episode and were prosecuted in the same criminal action.
Arguing the trial court breached the plea agreements, Green asserts that he is entitled to withdraw his guilty pleas. Therefore, we first examine Green's plea agreements. The written plea agreements providing for deferred adjudication and community supervision are silent regarding the issue of concurrent or consecutive sentences. At the conclusion of the deferred adjudication hearing, the following *218 exchange occurred between Green and the trial court:
The Court: While you're under our supervision, you must comply with all of the conditions that are set.
[Green]: Yes, sir.
The Court: If you do that, your cases will be dismissedcompletely wiped off. But, if you don't, if you break a condition, you could get up to 20 years in the penitentiary. That's what is at stake. Do you understand that completely?
[Green]: Yes, sir.
We disagree that this exchange constitutes a promise that the trial court would not cumulate Green's sentences, and does not support Green's claim that he had an agreement that limited his exposure to a concurrent sentence. The exchange, in our opinion, reflects the trial court's attempt to advise Green about the serious consequences he would face if he violated the terms under which the trial court had placed him on community supervision; but the exchange is silent with respect to how the trial court might cumulate Green's sentences in that event.
Green relies on Santobello v. New York, 404 U.S. 257, 262, 92 S.Ct. 495, 30 L.Ed.2d 427 (1971), which states, "[W]hen a plea rests in any significant degree on a promise or agreement of the prosecutor, so that it can be said to be part of the inducement or consideration, such promise must be fulfilled." A defendant has a right to have the State honor a plea agreement after the trial court has accepted the plea agreement in open court. Bitterman v. State, 180 S.W.3d 139, 141 (Tex.Crim.App. 2005).
We disagree that Santobello is analogous to the circumstances presented by the record concerning Green's plea agreements. The trial court's statement is not a "promise" to sentence Green concurrently upon revocation as part of the plea agreements or otherwise. Nothing in the record indicates that Green pled guilty under a false premise, that the State failed to live up to the terms of the plea agreements, or that the trial court did not follow the plea agreements by giving Green deferred adjudication. Because the record does not reflect any promise that Green would receive concurrent sentences, the plea agreements do not restrict the trial court's discretion to impose a sentence allowed by the Penal Code. See Ex parte Haskins, 176 S.W.3d 818, 819 (Tex.Crim.App.2005); see also Ditto v. State, 988 S.W.2d 236, 238 (Tex.Crim.App.I999). Green's first issue is overruled.
In Green's second issue, he asserts that the trial court abused its discretion in cumulating his sentences. The trial court's discretion to order sentences to run consecutively or concurrently is generally defined by the Code of Criminal Procedure. TEX.CODE CRIM. PROC. ANN. art. 42.08 (Vernon 2006). However, section 3.03 of the Penal Code limits the trial court's discretion to order consecutive sentences, and provides:
When the accused is found guilty of more than one offense arising out of the same criminal episode prosecuted in a single criminal action, a sentence for each offense for which he has been found guilty shall be pronounced. Except as provided by Subsection (b) [not applicable here], the sentences shall run concurrently.
TEX. PEN.CODE ANN. § 3.03(a).
The Penal Code defines a "criminal episode" as the commission of two or more offenses if "the offenses are committed pursuant to the same transaction or pursuant to two or more transactions that are connected or constitute a common scheme or plan" or if "the offenses are the repeated *219 commission of the same or similar offenses." TEX. PEN.CODE ANN. § 3.01 (Vernon 2003). Green does not contend, that the offenses were from the same transaction or, from connected transactions constituting a common scheme or plan, but asserts that the possession charges were the repeat offenses of similar crimes. Green contends that because both of his, offenses were for possession of controlled substances, they are repeated commissions of a similar offense. Therefore, Green concludes that the two drug possession offenses qualify as arising from the same "criminal episode."
On the other hand, the State argues that the offenses are not the same because they concern different controlled substances, in this case cocaine and codeine. However, the statute defines "criminal episode" broadly, since it encompasses not only the same offenses, but similar offenses as well. TEX. PEN.CODE ANN. § 3.01 (defining "criminal episode" as the "repeated commissions of the same or similar offenses"). Nevertheless, the legislature placed cocaine and codeine in separate penalty groups. See TEX. HEALTH & SAFETY CODE ANN. § 481.102(3)(D) (Vernon Supp.2007); §§ 481.105(1), 481.115, 481.118 (Vernon 2003). Therefore, we must determine whether the legislature intended to consider possession offenses that are under different penalty provisions as "similar" for purposes of section 3.03 of the Penal Code.
Whether these two controlled substance possession offenses, located in different penalty groups, arise from the same criminal episode depends on the meaning the legislature intended to assign to the term "similar." The Penal Code does not define "similar." Thus, we must construe the term as required by the rules of statutory construction. TEX. PEN.CODE ANN. § 1.05(b) (Vernon 2003). Unless the context of a term's use requires a different construction, we interpret the legislature's intent pursuant to certain provisions of the Code Construction Act, including section 311.011 of the Texas Government Code. Id. This provision states: "Words and phrases shall be read in context and construed according to the rules of grammar and common usage." TEX. GOV.CODE ANN. § 311.011(a) (Vernon 2005). Dictionaries determine a word's commmon use. "Similar" means: "1: having characteristics in common: very much alike: COMPARABLE . . . 2: alike in substance or essentials: CORRESPONDING. . . ." WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 2120 (2002).
Both of Green's possession offenses are addressed by the Texas Controlled Substances Act. See TEX. HEALTH & SAFETY CODE ANN. § 481.001 (Vernon 2003). The offense of possession of cocaine concerns the unlawful possession of a substance listed in "Penalty Group 1." Id. §§ 481.102(3)(D), 481.115. Green's offense of possession of codeine concerns the unlawful possession of a substance listed in "Penalty Group 4." Id. §§ 481.118, 481.105(1). Although the substances for which Green was charged are found in different penalty groups, we note that some types of codeine offenses are also included among the substances listed in Penalty Groups 1 and 3. See id. § 481.102(2),(3), § 481.104(a)(4) (Vernon 2003). Therefore, in assigning these two types of drug offenses to penalty categories, the legislature did not completely distinguish between substance types by penalty groups.
Additionally, the punishment assessed with respect to each penalty group is determined predominately by the weight of the substance within the defendant's possession. Thus, depending on the weight of the respective drug in the defendant's possession, it appears that cocaine and codeine possession offenses could result in *220 similar criminal penalties. See id. §§ 481.115(f), 481.118(e). For example, a life sentence or up to 99 years may be assessed for the possession of either codeine or cocaine if the amount possessed exceeds 400 grams. See id. §§ 481.115(f), 481.118(e).
Therefore, we conclude that by placing codeine and cocaine in different penalty groups, the differences are not sufficient to make the two offenses dissimilar. Green's two offenses are both possession of controlled substance offenses, and for purposes of section 3.03 of the Penal Code, we conclude that the legislature intended them to be considered as similar offenses. As a result, we conclude that Green's two offenses arise out of the same "criminal episode." See TEX. PEN.CODE ANN. §§ 3.01(2), 3.03; see also Vallez v. State, 21 S.W.3d 778, 783 (Tex.App.-San Antonio 2000, pet. ref'd) (delivery and possession of controlled substances were same or similar); Hernandez v. State, 938 S.W.2d 503, 508-09 (Tex.App.-Waco 1997, pet. ref'd) (April 16 cocaine sale and September 22 marijuana sale merely repetitious commissions of the same offense).
Section 3.03 of the Penal Code also requires that the criminal episode be "prosecuted in a single criminal action" before it operates to restrict the trial court's discretion in sentencing to a concurrent sentence. Although the Penal Code does not define the term "prosecuted in a single criminal action," the Court of Criminal Appeals has stated that "a defendant is prosecuted in `a single criminal action' whenever allegations and evidence of more than one offense arising out of the same criminal episode . . . are presented in a single trial or plea proceeding, whether pursuant to one charging instrument or several, and the provisions of Section 3.03 then apply." LaPorte v. State, 840 S.W.2d 412, 415 (Tex.Crim.App.1992). The Court further clarified the meaning of "single criminal action" in Ex parte Pharr, which held that offenses are not prosecuted in a single criminal action when the trial court calls each case separately and deals with each individually even if one case is called immediately after the other. Ex parte Pharr, 897 S.W.2d 795, 796 (Tex.Crim.App. 1995). However, when the record does not show that each case was dealt with separately, but instead reflects that multiple cases were considered together, the offenses are considered as having been prosecuted in a single criminal action. See Polanco v. State, 914 S.W.2d 269, 271-72 (Tex.App.-Beaumont 1996, pet. ref'd).
Like Polanco, Green was indicted under separate indictments and entered separate pleas during his plea proceeding. See id. at 271. Green also signed two separate plea agreements. Although Green pled guilty to each indictment, the trial court conducted the balance of his guilty plea hearing jointly, and addressed issues pertaining to both offenses jointly. For example, the portions of the hearing where the trial court determined that Green understood the contents of signed documents, the voluntariness of his pleas, the acceptance of Green's confessions, and the acceptance of Green's pleas were all conducted jointly. Where the original plea proceedings do not present separate proceedings, but instead are conducted in a manner that they are "so intertwined that we are left only to conclude they are a single criminal action[,]" a court may not order consecutive sentences. Id. at 272.
Thus, because the State chose to prosecute the two similar possession charges in a single criminal action, the trial court did not have the authority to order Green's sentences to run consecutively. See TEX. *221 PEN.CODE ANN. § 3.03; see also LaPorte, 840 S.W.2d at 415. Green's second issue is sustained. Accordingly, the judgment in trial cause number 90969 from the 252nd District Court of Jefferson County is reformed to delete the cumulation order.
AFFIRMED IN PART; REVERSED AND REFORMED IN PART; AFFIRMED AS REFORMED.
NOTES
[1] Green filed two separate appeals regarding his convictions, However, because he presents identical issues in both appeals with respect to the voluntariness of his plea, and the issue surrounding the stacking of his sentences concerns both convictions, we address his two appeals in a single opinion.
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71 S.E.2d 481 (1952)
STATE
v.
HESTON.
No. 10471.
Supreme Court of Appeals of West Virginia.
Submitted April 16, 1952.
Decided July 8, 1952.
Rehearing Denied September 15, 1952.
*482 *483 Chauncey Browning, Atty. Gen., George W. Stokes, Asst. Atty. Gen., Donald L. Schaffer, Atty., State Road Commission, Charleston, for plaintiff in error.
Tusca Morris, George W. May, Fairmont, for defendant in error.
HAYMOND, Judge.
The defendant, William J. Heston, was indicted in the Criminal Court of Marion County, West Virginia, at its regular January Term, 1952, for a misdemeanor. The offense charged in the indictment is that in November, 1951, the defendant, being the owner of a certain motor vehicle which was not specially designed to transport and haul only liquid or semi-liquid products, without a special permit in writing authorizing the operation of such motor vehicle, knowingly and unlawfully drove such motor vehicle upon a highway known as the Pleasant Valley Road, in Marion County, with a weight imposed upon such highway by the rear axle of such motor vehicle of 19,210 pounds, which is in excess of the maximum weight of 18,000 pounds permitted by Subsection (a), Section 8, *484 Article 17, Chapter 17-C of Chapter 129, Acts of the Legislature, 1951, Regular Session, and a tolerance of five per cent of such weight of 900 pounds, in violation of Section 14 of the same article and chapter.
To the foregoing indictment the defendant filed his plea in abatement and to the plea in abatement the State of West Virginia filed its written demurrer. The criminal court, by order entered January 28, 1952, overruled the demurrer to the plea in abatement, and held the statute, Chapter 129, Acts of the Legislature, 1951, Regular Session, to be unconstitutional, null and void. The State of West Virginia declined to file any replication to the plea in abatement; and the criminal court, on motion of the defendant, by order entered January 31, 1952, quashed the indictment, dismissed the proceeding, and discharged the defendant.
Upon writ of error to the final judgment of the criminal court, the judge of the circuit court of Marion County, by order entered in vacation on February 14, 1952, affirmed the judgment of the criminal court. To that order this Court, under Section 30, Article 5, Chapter 58, Code 1931, awarded this writ of error upon the petition of the State of West Virginia.
By his plea in abatement the defendant, asserting that the indictment is fatally defective because it is not based upon a valid statute, attacks the constitutionality of the act, Chapter 129, Acts of the Legislature, 1951, Regular Session, on substantially these grounds: (1) The regular 1951 session of the Legislature, not having been legally extended beyond its expiration date, except by the Governor for a period of five days to enable it to pass a budget bill, the act, designated as Engrossed House Bill No. 189, having been previously passed by the House of Delegates, was not passed by the Senate until after the expiration on March 10, 1951, of the sixty day period imposed by Article VI, Section 22, of the Constitution of this State for all sessions of the Legislature other than extraordinary sessions; (2) the act, being designated Engrossed House Bill No. 189, not having been presented to the Governor until March 16, 1951, which was six days after the expiration of the sixty day period on March 10, 1951, was not presented to the Governor in the manner required by Article VII, Section 14, of the Constitution of this State; and (3) the act contains discriminatory and arbitrary provisions, in regard to the weights and the types of different motor vehicles, which exempt certain motor vehicles specially designed to transport and haul liquid or semi-liquid products, during the life of such vehicles from the penalties imposed by the act, contrary to the provisions of Article III, Sections 1 and 10, of the Constitution of this State and of the Fifth and Fourteenth Amendments to the Constitution of the United States.
The plea in abatement sets out in detail the facts and the Constitutional provisions, including Article VI, Section 22, and Article VII, Section 14, upon which the defendant relies to support his contention that the statute is invalid.
As to the first ground that the act was not passed by the Senate until after midnight of March 10, 1951, the expiration date of the session, the plea states certain proceedings shown by the journal of the Senate under date of March 10, 1951, relating to House Bill No. 30, as to which, following a statement of the President that "we are still operating under the tenth of March.", Senator Eddy stated that "it is now twenty minutes after eight, on March eleventh, one thousand nine hundred fifty-one, and that when Eng. House Bill No. 30 was considered in this body approximately an hour ago, it was then twenty minutes after seven, on March eleventh, one thousand nine hundred fifty-one"; and alleges that, on motion of another Senator, the foregoing remarks were incorporated in the journal by a vote, upon a division, of 14 yeas and 11 nays. The plea, with further reference to the time of the passage of the act by the Senate, also alleges that the journal of the Senate "shows that immediately after Enrolled House Bill No. 30 was considered and passed, Enrolled House Bill No. 189 was actually considered and passed by the Senate"; that House Bill No. 189 was *485 actually passed by the Senate after House Bill No. 30 had actually been passed; and that "therefore, said Enrolled House Bill No. 189, was considered and acted upon and passed by the Senate on Sunday, the 11th day of March, 1951, between 7:20 o'clock P.M. and twenty minutes after eight o'clock P.M., Sunday, the 11th day of March, 1951, after the term of the Legislature had actually, legally and constitutionally expired under the provisions of law and the Constitution of West Virginia." The plea further alleges that "said Legislature, Regular Session, 1951, after midnight, on the 10th day of March, 1951, continued to be in session under a double-barrelled situation, to-wit: one, said Legislature had been extended beyond twelve o'clock midnight, on the 10th of March, 1951, under said proclamation of the Governor for five days for the purpose of considering and the passage of said Budget Bill, and the other, an illegal and unconstitutional continuation of said Legislature, Regular Session, 1951, done by surreptitiously, fraudulently, illegally and unconstitutionally turning back the time clock in and before said House of Delegates, and the time clock in and before said Senate, and thereby continuing and prolonging the day of said 10th day of March, 1951, past twelve o'clock midnight, surreptitiously, fraudulently, illegally and unconstitutionally, and thereby holding said Legislature in Session for the passage of said Enrolled House Bill No. 189, which both said House of Delegates and said Senate had passed and enacted, after twelve o'clock midnight on the 10th day of March, 1951, and, therefore, said Engrossed House Bill No. 189 as enacted into Chapter 129 of the Acts of said Legislature, Regular Session, 1951, constitutes a nullity and is void."
With reference to the second ground, that the act after its passage was not presented to the Governor in the manner required by Article VII, Section 14, of the Constitution of this State, the plea alleges that the journals of the House of Delegates and the Senate, under the purported date of March 10, 1951, show that the Joint Committee on Enrolled Bills reported that: "Your Joint Committee on Enrolled bills has examined, found truly enrolled, and on the 16th day of March, 1951, presented to His Excellency, the Governor, for his action" certain bills signed by the Speaker of the House of Delegates and the President of the Senate, in which report was included House Bill No. 189; and that there is appended to that act, as now on file in the office of the Secretary of State, this certificate: "The Joint Committee on Enrolled Bills hereby certifies that the foregoing bill is correctly enrolled. Robert C. Byrd, Chairman, Senate Committee, James W. Loop, Chairman, House Committee. Originated in House of Delegates, takes effect July 1, 1951. James H. Myers, Clerk of the Senate, J. R. Aliff, Clerk of the House of Delegates, W. Broughton Johnston, President of the Senate, W. E. Flannery, Speaker of the House of Delegates. The within approved this the 16th day of March, 1951. Okey L. Patteson, Governor. Filed in the Office of the Secretary of State of West Virginia, March 16, 1951, D. Pitt O'Brien, Secretary of State". The plea, dealing with the same subject matter, further alleges "that said Enrolled House Bill No. 189 was actually presented to the Governor of West Virginia, on the 16th day of March, 1951, which is six days later and six days after said Legislature actually ceased to exist, as purportedly shown from said Journals as of the 10th day of March, 1951, at midnight of that day; that by the action of said Legislature, in and by said Joint Committee, in presenting said Enrolled House Bill No. 189 six days after the expiration of said term of said Legislature to the Governor precluded him thereby from having five days for considering said bill after said expiration of said session of said Legislature, and would, therefore, be unconstitutional, even though the Governor purportedly and illegally signed said bill and filed it with the Secretary of State; that said Chapter 129 of the Acts of the Legislature, Regular Session, 1951, was not presented to the Governor in the manner and to the extent as required under the terms of Article VII, Section 14, of the West Virginia Constitution; that such Chapter 129 thereby has not been *486 validly enacted and constitutes a nullity, and that, therefore, said Enrolled House Bill No. 189, purported to have been passed by said Legislature and approved by the Governor is simply no more than a stray paper."
With regard to the third ground of attack upon the constitutionality of the act, the plea alleges that it sets up certain discriminatory and arbitrary standards with respect to "the weights and types of different trucks and in that it exempts truck carriers and their vehicles in the transporting and hauling of liquid or semiliquid products relating to weight limitations `for the life of such vehicle' * *, and that such exemptions are not afforded or given to the carriers of solid fuel such as truckers of coal or coal products, as the defendant herein, William J. Heston, and hence said Statute deprives him of his property without due process of law, and is therefore unconstitutional"; and that the act is violative of Article III, Sections 1 and 10, of the Constitution of this State, and of the Fifth and Fourteenth Amendments to the Constitution of the United States.
Though with reference to the first and the second grounds of attack upon the constitutionality of the act set forth in the plea in abatement there are additional allegations, those allegations merely repeat the substance of the allegations of the plea in abatement which have been already stated; and, as the additional allegations of the plea in abatement add nothing of substance, the allegations mentioned in the preceding paragraphs of this opinion constitute the material subject matter of the plea in abatement.
The defendant contends that, as the only pleading filed by the State is its written demurrer to the plea in abatement, which the criminal court overruled, and as the State refused to file a general replication to the plea in abatement, the facts set forth in the plea in abatement, upon the demurrer, must be taken as true, under the well recognized principle that upon demurrer the demurrant admits the truth of all well pleaded material facts in the pleading to which the demurrer is filed.
In considering the regularity and the validity of the action of the Legislature in enacting a statute, this Court will take judicial notice of the records of the offices of the Governor, of the Secretary of State, and of the clerks of both the Senate and the House of Delegates which records, of course, include the journal of each house of the Legislature. State ex rel. Armbrecht v. Thornburg, W.Va., 70 S.E.2d 73; Charleston National Bank v. Fox, 119 W.Va. 438, 194 S.E. 4; Osburn v. Staley, 5 W.Va. 85, 13 Am.Rep. 640; Gardner v. Collector of Customs, 6 Wall. 499, 73 U.S. 499, 18 L.Ed. 890; 15 R.C.L. 1066; 20 Am.Jur., Evidence, Section 42; 31 C.J.S., Evidence, § 43.
In 15 R.C.L. 1066 the text, quoted with approval in Charleston National Bank v. Fox, 119 W.Va. 438, 194 S.E. 4, 8, is in these words: "Naturally the laws of a state are judicially noticed by the courts of that state, for such is the purpose of their existence, and it is immaterial whether the law in question be written or unwritten. Every fact upon which, in any view, depends the question whether a document purporting to be a statute has, by legislative action, been invested with the force of law, is, in its nature, a public fact and will be noticed by the court in determining what is and what is not the law of the state. So the time when a public statute of the state takes effect and becomes a law, and whether it exists as law at any particular time, is a matter of judicial notice with the courts of the state."
In Charleston National Bank v. Fox, 119 W.Va. 438, 194 S.E. 4, 8, involving the question whether an act presented to the Governor was in fact the act passed by the Legislature, this Court said: "Under the authorities and in sound logic, when a bill, passed by the Legislature, is printed in the acts as having become a law without the signature of the Governor, this court will take judicial notice of such facts as will enable it to determine the question of its presentation to the Governor. In pursuing this inquiry, judicial notice will be taken of the records of the offices of the Governor, Secretary of State, and clerks of both the Senate and House of Delegates." *487 In Osburn v. Staley, 5 W.Va. 85, 13 Am.Rep. 640, point 3 of the syllabus is in these words: "The constitution of West Virginia requires each branch of the legislature to keep a journal, and provides that on the passage of every bill the vote shall be taken by yeas and nays, and be entered on the journal, and no bill shall be passed by either branch without an affirmative vote of a majority of the members elected thereto; and on a question touching the validity of an act, this court can look beyond the authentication of the act, to the journal of either branch, to see if the bill passed by the required number of votes." In the opinion in that case, this Court quoted with approval this passage from Cooley, Constitutional Limitations, First Edition (1868), p. 135: "Each house keeps a journal of its proceedings, which is a public record, and of which the courts are at liberty to take judicial notice. If it should appear from these journals that any act did not receive the requisite majority, or that in respect to it the legislature did not follow any requirement of the constitution, or that in any other respect the act was not constitutionally adopted, the courts may act upon this evidence, and adjudge the statute void. * * *." From the cited authorities, it is clear that the courts have the right, and that it is their duty, to take judicial notice of the journals of both houses of the Legislature and other legislative records in determining whether constitutional provisions relating to the enactment of legislation have been complied with and observed.
With regard to the relation of the doctrine of judicial notice to the pleadings in judicial proceedings the text in 20 Am.Jur., Evidence, Section 25, contains these statements: "The general rule prevails that judicial notice is not dependent upon the pleadings in the case. In other words, matters of which judicial notice may be taken need not be stated in the pleadings; the court will consider such matters although not pleaded." In 71 C.J.S., Pleading, § 7, the statement is that "Facts of which the court will take judicial notice need not be alleged, and the courts will read a pleading as if it contained a statement of such facts, even when there is an express allegation to the contrary. An allegation which is inconsistent with, or contradictory of, facts judicially noticed is nugatory and will be disregarded." When facts alleged are out of harmony or inconsistent with, or contrary to, facts of which courts take judicial notice, the facts alleged will be disregarded. Verde River Irrigation and Power District v. Salt River Valley Waters Users Association, 9 Cir., 94 F.2d 936. Allegations of facts which are inconsistent with facts which courts notice judicially are negatived and are not sufficient to sustain a cause of action or a defense. Hinds v. Federal Land Bank of New Orleans, 235 Ala. 360, 179 So. 194. See also Creek Nation v. United States, 92 Ct.Cl. 346, certiorari denied, 313 U.S. 581, 61 S.Ct. 1099, 85 L.Ed. 1538. As to legislative journal entries 20 Am.Jur., Evidence, Section 42 uses this language: "There is no necessity that the pleadings make an issue in order for the court to take judicial notice of legislative journal entries; the court takes notice of the legislative proceedings as recorded therein to the same extent that it takes notice of statutes of the legislature." In testing the legal sufficiency of a plea in abatement which omits material facts of which courts take judicial notice, such omitted facts should be considered; and if such omitted facts and the facts alleged in the plea in abatement, considered together, do not constitute a valid defense, a demurrer to such plea in abatement should be sustained.
The plea in abatement omits to state a number of pertinent and material facts, shown by the journal of the Senate under the date of March 10, 1951, relating to its action in considering and passing House Bill No. 30 and House Bill No. 189, which, according to the journal, are closely associated. As already indicated, these omitted facts, disclosed by the journal, and of which this Court will take judicial notice, even though not pleaded, should be considered in determining the legal sufficiency of the plea in abatement and whether it sets forth a valid defense to the indictment.
*488 Though not indicating the hour, the journal of the Senate of March 10, 1951, shows that House Bill No. 30, on third reading, coming up in regular order, was read a third time and passed with its title, and that on the passage of that bill the yeas were 16, the nays 15, and one Senator was absent or did not vote. The next action taken by the Senate related to House Bill No. 436, which, according to the journal, was read a second time and a motion that the constitutional rule requiring a bill to be fully and distinctly read on three different days be dispensed with was defeated. The journal shows that the next action of the Senate, after that taken in connection with House Bill No. 436, related to House Bill No. 189, and that as to it the first action taken was the consideration and the adoption of the report of the Committee on Conference which had previously been adopted by the House of Delegates. Immediately following the adoption by the Senate of the report of the committee, according to the journal, these proceedings occurred in regular order:
"The bill, as amended by the conference report, was then passed with its title.
"On the passage of the bill,
"The yeas were: * * * 27
"The nays were: * * * 4
"Absent or not voting: * * * 1.
"Mr. Bean moved that the bill take effect July 1, 1951.
"On this question,
"The yeas were: * * * 27
"The nays were: * * * 4.
"Absent or not voting: * * * 1.
"So, two-thirds of all the members elected to the Senate having voted in the affirmative the President declared the bill (Eng. H. B. No. 189) takes effect July 1, 1951.
"Ordered, That Mr. Bean communicate to the House of Delegates the action of the Senate.
"Mr. Bean moved that the Senate recess for five minutes.
"Whereupon,
"The following proceedings were had on,
"Eng. House Bill No. 30 * * *.
"MR. BEAN: Mr. President, in view of the fact that I understand there is a desire among some members to make another motion, I withhold the motion to recess for two minutes.
"MR. HOLDEN: Mr. President, I would like to recommend that Eng. House Bill No. 30 be taken up again and be voted onreconsideration of Eng. House Bill No. 30.
"MR. PRESIDENT: Do you move that we reconsider the vote by which we passed Eng. House Bill No. 30?
"MR. HOLDEN: To reconsider Eng. House Bill No. 30.
"MR. AMOS: Mr. President, it isn't in regular order.
"THE PRESIDENT: The regular order has been demanded."
Then follows a page of the journal embodying the discussion of the "regular order" and the action taken on that subject. Immediately after that action, the statement of the President that "we are still operating under the tenth of March.", the remarks of Senator Eddy "that it is now twenty minutes after eight, on March eleventh, one thousand nine hundred fifty-one, and that when Eng. House Bill No. 30 was considered in this body approximately an hour ago, it was then twenty minutes after seven, on March eleventh, one thousand nine hundred fifty-one", and the vote of 14 yeas and 11 nays, upon a division, on the motion to incorporate in the journal the foregoing remarks of Senator Eddy, as alleged in the plea in abatement, occurred in the order just stated.
The journal of the Senate and the journal of the House of Delegates state affirmatively that each house of the Legislature finally adjourned on March 10, 1951, and the certificate of the clerk of each house is to the same effect. Whether the Legislature finally adjourned its regular session on or after March 10, 1951, however, has no important bearing upon the question of the time of the passage of House Bill No. *489 189 if that bill was actually passed before the end of that day. The journals and the certificates are referred to merely to indicate the state of the legislative records on that point.
The facts alleged in the plea in abatement relating to the contention that the act was passed after midnight of March 10, 1951, and for that reason is invalid, do not support that contention and the allegations to that effect, being merely statements of a conclusion, are not sufficient, are not established by the plea in abatement, and are not admitted by the failure of the State to file a replication to that plea. See 71 C.J.S., Pleading, § 14; Hinds v. Federal Land Bank of New Orleans, 235 Ala. 360, 179 So. 194.
Additional facts disclosed by the journal, but not set forth in the plea in abatement, show clearly that the only action taken by the Senate between its passage of House Bill No. 30 and of House Bill No. 189, consisted of its consideration of House Bill No. 436 on second reading and its rejection of the motion to dispense with the constitutional rule requiring a bill to be fully and distinctly read on three different days; that the motion to reconsider House Bill No. 30, which was defeated, occurred subsequent to the passage of both of those bills; and that the remarks of Senator Eddy, with reference to the time his statements were made and the time House Bill No. 30 was "considered", relate to the motion to reconsider that bill and not to its earlier passage by the Senate.
The facts alleged in the plea in abatement and the additional facts shown by the quoted portion of the journal of the Senate, but omitted from the plea in abatement, do not disclose any ambiguity, conflict or contradiction in the journal in relation to the time of the passage by the Senate of House Bill No. 30 or House Bill No. 189, and do not show, clearly and convincingly, that either of those bills was passed by the Senate after midnight of March 10, 1951, the last day of the regular session, 1951, of the Legislature. The statement of the President of the Senate that "we are still operating under the tenth of March.", contrary to the contention of the defendant that it indicated a different date, is equivalent to and means that "we are still operating on the tenth of March.", and is an official pronouncement that the Senate was then in session on that day. The entry in the journal, by a vote of 14 to 11 upon a division, of the statement of Senator Eddy of the time at which it was made and of the time at which House Bill No. 30 was considered incorporates that statement in the record of the Senate but does not establish it as correct or impeach the entries in the journal. Anderson v. Bowen, 78 W.Va. 559, 89 S.E. 677; City of Ensley v. Simpson, 166 Ala. 366, 52 So. 61; Auditor General v. Board of Supervisors, 89 Mich. 552, 51 N.W. 483. The vote of the Senate did not declare the statement to be correct but merely authorized its entry in the journal.
In the recent case of State ex rel. Armbrecht v. Thornburg, W.Va., 70 S.E.2d 73, 77, the contentions, among others, were that House Bill No. 30 was not passed by the Senate until after midnight of March 10, 1951, the final day of the regular session of the Legislature, and that certain statements in the journal of the Senate, referred to earlier in this opinion, including the remarks of Senator Eddy, relating to the time when that bill "was considered", created an ambiguity in the journal of the Senate which rendered admissible extrinsic oral evidence tending to show that the bill was actually passed by the Senate after that date. This Court, in rejecting those contentions and in sustaining the constitutionality of the act, said: "The Senate Journal clearly shows that the bill passed that body on the tenth of March, 1951, within the sixty day period." After quoting in the opinion a number of excerpts from the journal of the Senate, this Court also said:
"The statements quoted do not disclose any ambiguity in the records as to the time of the passage of the act. The statement of Senator Eddy `that it is now twenty minutes after eight, on March eleventh, one thousand nine hundred fifty-one, and that when Eng. House Bill No. 30 was considered in *490 this body approximately an hour ago, it was then twenty minutes after seven, on March eleventh, one thousand nine hundred fifty-one.', does not necessarily refer to the time of the passage of the act. It refers, in fact, to the motion of Senator Holden to `reconsider' the act sometime after the passage thereof. This is made clear by the later remark of Senator Eddy that `I am perfectly willing to do that if the motion to reconsider can be considered.' Moreover, we can not assume that the Senator intended to use the word `considered' as being synonymous with the word `passed'.
"We are not here called upon to decide whether the quoted statements of Senator Eddy, assuming such statements to have clearly referred to the `passage' rather than to the `reconsideration' of the bill, would be of sufficient purport to overcome the strong presumption existing in favor of the validity of an enrolled bill. We merely hold that the statements do not constitute such an ambiguity or conflict in the public records as to permit the Court to consider extrinsic evidence relating thereto."
The foregoing quotations from the opinion in the Armbrecht case are directly applicable to the case at bar and justify the conclusion of this Court that the journal of the Senate shows that House Bill No. 189 was passed by the Senate on the tenth of March, 1951, within the sixty day period and that the journal is unambiguous and free from conflict or contradiction as to the time of the passage of that bill.
On the question whether an act may be impeached for failure by the Legislature to comply with constitutional requirements in enacting it the decisions of the courts in different jurisdictions are in conflict. Some courts hold that the courts will not look beyond an enrolled bill to determine its constitutionality and that it will be conclusively presumed to have been regularly passed by the Legislature when, from the face of the bill, it appears to be properly authenticated. Western Union Telegraph Company v. Taggart, 141 Ind. 281, 40 N.E. 1051, 60 L.R.A. 671; Territory ex rel. Haller v. Clayton, 5 Utah 598, 18 P. 628; Morrow v. Henneford, 182 Wash. 625, 47 P.2d 1016; Atchison, Topeka & Sante Fe Railway Co. v. State of Oklahoma, 28 Okl. 94, 113 P. 921, 40 L.R.A., N.S., 1; Field v. Clark, 143 U.S. 649, 12 S.Ct. 495, 36 L.Ed. 294. According to the weight of authority, however, the courts may look to the journals of the Legislature and other public records, but not to extrinsic evidence, to determine whether an act has been passed in accordance with the constitutional requirements. Wise v. Bigger, 79 Va. 269; Jackson v. State, 131 Ala. 21, 31 So. 380; Andrews v. People, 33 Colo. 193, 79 P. 1031; Koehler v. Hill, 60 Iowa 543, 14 N.W. 738, 15 N.W. 609; Attorney General v. Rice, 64 Mich. 385, 31 N.W. 203; State ex rel. McKinley v. Martin, 160 Ala. 181, 48 So. 846; White v. Hinton, 3 Wyo. 753, 30 P. 953, 17 L.R.A. 66; Weeks v. Smith, 81 Me. 538, 18 A. 325; State ex rel. Herron v. Smith, 44 Ohio St. 348, 7 N.E. 447, 12 N.E. 829; Homrighausen v. Knoche, 58 Kan. 646, 50 P. 879; Integration of Bar Case, 244 Wis. 8, 11 N.W.2d 604, 12 N.W. 2d 699, 151 A.L.R. 586; State ex rel. Cline v. Schricker, 228 Ind. 41, 88 N.E.2d 746, 89 N.E.2d 547.
The rule to be derived from the decisions of this Court by which the validity of an enrolled bill which appears from the face of the bill to be properly authenticated is determined when its validity is assailed on the ground that the Legislature failed to comply with constitutional requirements in its enactment is that a bill duly enrolled, authenticated and approved, is presumed to have been passed by the Legislature in conformity with the requirements of the Constitution unless the contrary affirmatively appears from the journal of either house or other legislative records, and that the failure of the Legislature to comply with constitutional requirements in its enactment, which can be considered only when disclosed by ambiguity, omission or conflict in such journal or other legislative records, must be clearly and convincingly established to overcome such presumption. See State ex rel. Armbrecht v. Thornburg, W.Va., 70 S.E.2d 73; *491 Charleston National Bank v. Fox, 119 W. Va. 438, 194 S.E. 4; Combs v. City of Bluefield, 97 W.Va. 395, 125 S.E. 239; Anderson v. Bowen, 78 W.Va. 559, 89 S.E. 677. With regard to the weight and the effect of the journals of the two houses of the Legislature and other legislative records in determining whether the requirements of the Constitution have been satisfied in the enactment of a statute, such records when clear and unambiguous, are presumed to be correct, and the contrary must be clearly and convincingly established to overcome such presumption; and when such records are clear and free from ambiguity or conflict, extrinsic evidence can not be admitted to impeach them or to overcome the presumption that they are correct. See State ex rel. Armbrecht v. Thornburg, W.Va., 70 S.E.2d 73; Capito v. Topping, 65 W.Va. 587, 64 S.E. 845, 22 L.R.A.,N.S., 1089; Anderson v. Bowen, 78 W.Va. 559, 89 S.E. 677; Price v. City of Moundsville, 43 W.Va. 523, 27 S.E. 218, 64 Am.St.Rep. 878. As House Bill No. 189 is an enrolled bill which on its face appears to have been duly authenticated and approved, as there is no ambiguity or conflict in the journal of the Senate with respect to the time of the passage of House Bill No. 189, which would have occurred if the remarks of Senator Eddy had referred to the time of the passage of House Bill No. 30 instead of the time of the consideration of the motion to reconsider it, and as that journal shows that it was passed by the Senate on March 10, 1951, the undenied allegations of the plea in abatement do not clearly and convincingly establish the contrary, or overcome the presumption that such journal on that point is correct, and that presumption must prevail and be given controlling force and effect.
The allegations of the plea in abatement to the effect that by turning back the time clock in the House of Delegates and the time clock in the Senate, for the purpose of prolonging the day of March 10, 1951, beyond its expiration at midnight of that day and keeping the Legislature in session after that time for the passage of House Bill No. 189, though not denied by replication, when considered together with the journals of both Houses of the Legislature, of which journals the courts take judicial notice, do not establish those facts. As already pointed out, the journal of the Senate shows that House Bill No. 189 was passed on March 10, 1951, although the hour of its passage does not appear. This legislative record is clear and unambiguous and free from conflict or contradiction on that point. There is nothing in any of the records of the regular session, 1951, of the Legislature which indicates that the time clock in either House was stopped or turned back before midnight of March 10, 1951, or that creates any ambiguity concerning that fact which would permit its establishment by extrinsic evidence. For these reasons that question can not be determined by this Court in this proceeding. It should be said, however, that the device or the practice of stopping or turning back the legislative clock is emphatically disapproved. Such device or practice can not in law stop the actual passage of time or lawfully continue or prolong a regular session of the Legislature beyond the end of the sixty day limit imposed by Article VI, Section 22, of the Constitution of this State. Any legislative action taken, after the expiration by the actual passage of time at midnight of the sixtieth day of an unextended regular session, under the device or the practice of stopping or turning back the legislative clock, or other like device or practice, is forbidden by the Constitution of this State, is unconstitutional, null and void and, in a proper proceeding in which it is shown by competent evidence that any such action has been taken, will be necessarily and unhesitatingly so held and declared by this Court. See State ex rel. Armbrecht v. Thornburg, W.Va., 70 S.E. 2d 73.
The allegations of the plea in abatement do not sustain the second ground relied on that the act is unconstitutional because House Bill No. 189 was not presented to the Governor in the manner required by Article VII, Section 14, of the Constitution. That section provides: "Every bill passed by the Legislature shall, before it becomes a law, be presented to the Governor. If he approve, he shall sign *492 it, and thereupon it shall become a law; but if not, he shall return it, with his objections, to the House in which it originated, which House shall enter the objections at large upon its journal, and proceed to reconsider it. If, after such reconsideration, a majority of the members elected to that House, agree to pass the bill, it shall be sent, together with the objections to the other House, by which it shall likewise be reconsidered, and if approved by a majority of the members elected to that House, it shall become a law, notwithstanding the objections of the Governor. But in all such cases, the vote of each House shall be determined by yeas and nays to be entered on the journal. Any bill which shall not be returned by the Governor within five days (Sundays excepted) after it shall have been presented to him, shall be a law, in like manner as if he had signed it, unless the Legislature shall, by their adjournment prevent its return, in which case it shall be filed with his objections in the office of the Secretary of State, within five days after such adjournment, or become a law." These provisions are, of course, mandatory. Charleston National Bank v. Fox, 119 W. Va. 438, 194 S.E. 4; Capito v. Topping, 65 W.Va. 587, 64 S.E. 845, 22 L.R.A.,N.S., 1089.
It is pertinent to observe that the first sentence of the foregoing section which requires every bill passed by the Legislature to be presented to the Governor before it becomes a law, prescribes no time within which it must be so presented. The first part of the second sentence of the section declares that, if the Governor approves the bill, he shall sign it and that when he does so it shall become a law. The section does not say that a bill after its passage must be presented to the Governor before the Legislature adjourns, and it does not require the Governor, at any time or within any specified period of time, to return to either House of the Legislature, or to file in the office of the Secretary of State, any bill presented to him which he approves and signs. The first two sentences of the section in effect declare that when the Governor approves and signs a bill presented to him after its passage such bill shall become a law; and no additional requirement to make such law effective is expressly specified or imposed by those sentences or by any other provision of the section.
The remaining portions of the section relate to the procedure to be followed by the Governor and the two Houses of the Legislature when the Governor does not approve the bill and exercises his power to veto legislation which he disapproves and do not apply to his power to approve legislation with which he agrees or to which he does not object. Under the provisions of those portions of the section, if he would defeat an act of the Legislature by the exercise of his veto power, he must return it, with his objections, to the House in which it originated within five days (Sundays excepted) after it has been presented to him unless the Legislature by its adjournment prevents its return. If the Legislature has adjourned, he must file it with his objections in the office of the Secretary of State within five days, Sundays excepted, after such adjournment. Capito v. Topping, 65 W.Va. 587, 64 S.E. 845, 22 L.R.A.,N.S., 1089. If the Governor does not take the designated action in the particular circumstance in which such action is required his power to veto such bill becomes ineffective and it becomes a law in like manner as if he had signed it.
The provisions of Article VII, Section 14, of the Constitution were not designed or intended to prevent the Governor from agreeing with the Legislature or to defeat an act passed by the Legislature and approved by the Governor. Though there appears to be no decision of this Court on the question of the time within which a bill, after its passage must be presented to the Governor and, if approved, signed by him, in some jurisdictions in which constitutional provisions substantially similar to those of Article VII, Section 14, of the Constitution of this State exist, it has been held that a bill passed by the Legislature may be presented to the Governor and signed by him after the Legislature has adjourned, Lankford v. County Commissioners of Somerset County, 73 Md. 105, 20 A. 1017, 22 A. 412, 11 L.R.A. 491; People ex rel. Akin v. Rose, *493 167 Ill. 147, 47 N.E. 547; Dow v. Beidleman, 49 Ark. 325, 5 S.W. 297; that a bill presented to the Governor while the Legislature is in session may be signed by him after the Legislature has adjourned if he signs it within a designated period of time after it is presented to him, Town of Seven Hickory v. Ellery, 13 Otto 423, 103 U.S. 423, 26 L.Ed. 435; People v. Bowen, 30 Barb. 24; Id., 21 N.Y. 517; State of Mississippi v. Board of Supervisors of Coahoma County, 64 Miss. 358, 1 So. 501; State ex rel. Belden v. Fagan, 22 La.Ann. 545; and that the designated period of time within which the Governor may return a bill with his disapproval after it is presented to him, being a privilege accorded to enable him to consider it, may be shortened by him and the bill returned before the expiration of such period. Hunt v. State, 72 Ark. 241, 79 S.W. 769, 65 L.R.A., 71, 105 Am.St.Rep. 34, 2 Ann.Cas. 33.
In Lankford v. County Commissioners of Somerset County, 73 Md. 105, 20 A. 1017, 1018, 22 A. 412, 11 L.R.A. 491, the Court of Appeals of Maryland held, two judges dissenting, that, under the Constitution of that State which provides that "every bill which shall have passed the House of Delegates and the Senate shall, before it becomes a law, be presented to the Governor of the State; if he approve, he shall sign it; but if not, he shall return it, with his objections, to the House in which it originated, which House shall enter the objections at large on its journal, and proceed to reconsider the bill; * * *. If any bill shall not be returned by the Governor within six days, (Sundays excepted,) after it shall have been presented to him, the same shall be a law in like manner as if he signed it; unless the General Assembly shall, by adjournment, prevent its return, in which case it shall not be a law.," a bill regularly passed and sealed could be presented to the Governor and signed by him after the session of the Legislature had closed, if the bill was signed by the Governor within six days after it had been presented to him for approval. In that case the concurring opinion of Justice Bryan contains this pertinent language:
"The requisites to the validity of statutes are prescribed by section thirty of the third Article of the Constitution. When passed by the General Assembly, they are to be sealed with the Great Seal, and presented to the Governor; if he approves them, he is required to sign them in the presence of the presiding officers and chief clerks of the Senate and House of Delegates. The Constitution requires nothing more to be done in order to give operation and effect to laws. No time is limited by the section in question for the presentation to the Governor, or for his signature in case of approval. It is not said that the presentation and signature shall take place during the session; nor is it said that they shall be consummated within a specified time after its determination. * * *. When he approves it, he has nothing to do but to sign it in the presence of the designated officers. * * *. It will be observed that nothing whatever is said about his approval of an Act of Assembly, except as introductory to the grant of the veto power. And nowhere in the Constitution, when the Governor approves a bill, is he required to do anything more than to sign it.
"It has been suggested that unless some period is fixed within which the Governor is obliged to sign bills, he might retain them for an indefinite time, and cause great public inconvenience by the delay. It may be answered that all public officers are bound to perform their duties with promptness and diligence. * * *. We must never forget that, in sustaining a law which has been signed by the Governor, we are giving effect to legislation which has received the sanction of all the branches of the law-making power. The Constitution has provided for defeating an Act of Assembly when the Governor disagrees with the two Houses of the Legislature; but where they all agree, it contains no provisions for defeating their united will. The veto power has usually been regarded with *494 jealousy, and is restricted within well-defined limits; but there is no restraint on the Governor's right to agree with the Legislature. That has never been considered as a danger to be guarded against. * * *"
In the case of Amos v. Gunn, 84 Fla. 285, 94 So. 615, the Supreme Court of Florida, by a divided court, held, contrary to the holding of the Maryland court in the Lankford case, that presentation to the governor of a bill passed by the Legislature may be made only while the Legislature is in session, and its decision on that question was approved and reaffirmed in the later case of State ex. rel. Cunningham v. Davis, 123 Fla. 41, 166 So. 289, also by a divided court. In Solomon v. Commissioners of Cartersville, 41 Ga. 157, the Supreme Court of Georgia held that a bill passed March 16, 1869, two days before the legislature adjourned on March 18, 1869, which was not approved by the governor until May 29, 1869, was not lawfully approved and for that reason did not become a law of that State. Though the Gunn and the Cunningham cases and the Lankford case are not binding but merely persuasive authority, this Court is of the opinion that the Lankford case announces the sound rule on the question whether, under similar pertinent constitutional provisions, a bill must be presented to the governor while the legislature is in session or may be presented after the session has adjourned, and follows the holding of the Lankford case on that point for the reasons stated in the foregoing quotations from the concurring opinion of Justice Bryan in that case.
In Town of Seven Hickory v. Ellery, 13 Otto 423, 103 U.S. 423, 26 L.Ed. 435, the Supreme Court of the United States, considering Article IV, Section 21, of the Constitution of Illinois which in its pertinent provisions is identical with the provisions of Article VII, Section 14, of the Constitution of this State, except that the time within which the Governor must return a bill disapproved by him is ten days, instead of five days (Sundays excepted), after it has been presented to him, held that a bill passed by the Legislature of that State, which was presented to the Governor before the Legislature adjourned, became a law when signed by the Governor after the session of the Legislature had terminated but within ten days from the time it was presented to him. In the opinion the Court said: "The single question we now have to consider is whether a bill passed by both Houses, and presented to the Governor before the legislature adjourns, becomes a law when signed by the governor after the session of the legislature has been terminated by an adjournment, but within ten days from its presentation to him. We have no hesitation in saying that it does. There is certainly no express provision of the Constitution to the contrary. All that instrument requires is that, before any bill, which has passed the two Houses, can become a law, it shall be presented to the governor. If he approves it, he may sign it. If he does sign it within the time, the bill becomes a law. That is not said in so many words, but is manifestly implied. After a bill has been signed, the legislature has nothing more to do with it. Undoubtedly, if the legislature should be in session when the signing is done, it would not be inappropriate for the governor to communicate his approval to one or both the Houses; but there is nothing in the Constitution which requires him to do so. The filing of the bill by the governor in the office of the secretary of state with his signature of approval on it is just as effectual in giving it validity as a law, as its formal return to the legislature would be. The bill becomes a law when signed. Everything done after that is with a view to preserving the evidence of its passage and approval."
Under a constitutional provision somewhat similar to that contained in Article VII, Section 14, of the Constitution of this State, the Supreme Court of Mississippi, in State of Mississippi v. Board of Supervisors of Coahoma County, 64 Miss. 358, 1 So. 501, 504, held that a bill which had passed both Houses of the Legislature and had been presented to the Governor two days after its passage and before the session of the Legislature had adjourned could be validly signed after the termination *495 of the session, when the Legislature had adjourned before the expiration of the five day period allowed him after presentation of the bill in which to approve or veto the bill. In the opinion the Court said: "No time is prescribed by the constitution in which the governor shall sign if he approve. * * *. If he signs he converts the bill into a law by his signing. He may inform the legislature or either house of the fact that he has signed, but he need not do this. It is a mere courtesy. His signing makes the bill a law, and its validity does not depend on his making any communication to the legislature or either house on the subject. If he disapproves a bill he must return it with his objections, but if he approves he is to sign it, and need never communicate with either house on the subject. The finishing act by which a bill is transformed into a law is the governor's approval as shown by his signing, and that may be as long as he has the bill in his hands for his official action. So long as he may return it with his objections he may convert the bill into a law by his approval and signing. So long as he may disapprove and return the bill with his objections he may assent to the expressed will of the two houses, and as governor unite with the legislature in passing a bill into a law."
Whether, under Article VII, Section 14, of the Constitution of this State, the period of five days after a bill has been presented to the Governor within which he may return a bill which he disapproves to the House in which it originated, or, if the Legislature has adjourned, file it in the office of the Secretary of State, within five days after such adjournment, by necessary implication, constitutes the period within which he may sign a bill which he approves, a question which need not be, and is not now, decided, the allegations of the plea in abatement, the journal of the House of Delegates, and the other legislative records of which this court takes judicial notice show beyond question that House Bill No. 189, after its passage, was presented to the Governor and signed by him and filed in the office of the Secretary of State on March 16, 1951, which was within five days, excluding Sunday, March 11, 1951, after the Legislature adjourned, according to the journal of each house. If the Governor had decided to veto the act, instead of approving and signing it, he could have done so by disapproving it and filing it, with his objections, in the office of the Secretary of State on March 16, 1952, which was within five days, excluding Sunday, March 11, 1952, after the Legislature had adjourned. As he filed it within the period of five days, however, with no objections, it would have become a law even if he had not signed it and, if he had not filed it within that period, even though he had disapproved it with his objections, it would have become a law. As he approved and signed it, however, and caused it to be filed in the office of the Secretary of State on the day it was presented to him, and as the Constitution does not prescribe any time within which it must, after its passage, be presented to him, the manner in which it was presented to him, approved and signed by him, and filed of record, did not violate any provision of the Constitution; and the constitutionality of the act which he so approved and signed can not be successfully assailed on the ground that the applicable provisions of Article VII, Section 14, of that instrument have not been complied with or satisfied.
The case of Charleston National Bank v. Fox, 119 W.Va. 438, 194 S.E. 4, cited and relied on by the defendant to sustain his contention that House Bill No. 189 was not presented to the Governor and signed by him in the manner required by Article VII, Section 14, of the Constitution of this State, is distinguishable from the case at bar. In that case a bill other than the one passed by the Legislature was presented to the Governor but the bill actually passed was not so presented. The bill passed by the Legislature but which was never presented to the Governor was, for that reason, held to be unconstitutional. In the case at bar, it is not disputed that the bill here under attack was actually presented to the Governor and approved and signed by him on March 16, 1951. Though the journal of the House of Delegates, under the date of March 10, 1951, *496 shows that House Bill No. 189 was approved and signed by the Governor on March 16, 1951, and in that particular presents an ambiguity or a conflict in the journal entry as to the date it was approved and signed, that ambiguity or conflict is of no importance in relation to the time of presentment, approval and signing for the reason, heretofore pointed out, that the presentment of the bill and the action of the Governor in approving and signing it on March 16, 1951, did not disregard any requirement or contravene any provision of Article VII, Section 14, of the Constitution of this State.
The principal contention of the defendant to sustain the third ground of attack upon the constitutionality of the act, set forth and relied upon in the plea in abatement, is that Subsection (b) of Section 1, and Subsections (a), (b) and (c) of Section 11, Article 17, Chapter 17-C, of Chapter 129, Acts of the Legislature, 1951, Regular Session, which while pending in the Legislature was designated as Engrossed House Bill No. 189, contain certain discriminatory, unreasonable and arbitrary provisions which invalidate the entire act.
Subsection (a), Section 1, Article 17, dealing with the scope of that article, provides that it shall be unlawful for any person to drive or move, or for the owner, the lessee or the borrower, to cause or knowingly to permit to be driven or moved, on any highway, any vehicle or vehicles which in size and weight exceed the limitations stated in the article; that the maximum size and weight of vehicles, as specified in the article, shall be lawful throughout the State; that local authorities shall have no power or authority to alter the limitations imposed except as expressly granted in the article; and that violation of the section shall constitute a misdemeanor. Subsection (b), Section 1, then states this exemption from certain provisions of the article: "The provisions of this article governing size, weight, and load shall not apply to fire apparatus, road machinery, or to implements of husbandry, including farm tractors, temporarily moved upon a highway, or to a vehicle operated under the terms of a special permit issued as herein provided."
Subsections (a), (b) and (c), Section 11, relate to permits for excess size and weight of certain vehicles which may be issued by the state road commissioner for different periods of time upon specified terms and conditions and subsection (a) also contains this language: "Provided, however, That specially designed vehicles which can only be used to transport and haul specific liquid or semi-liquid products shall be exempt from the provisions of this chapter, relating to weight limitations, during the life of such vehicles: Provided further, That this exemption shall only apply to vehicles registered in this state prior to the effective date of this chapter. In order for this exemption to apply the owner or operator shall apply for and the state road commissioner shall issue a permit for such vehicle allowing such owner or operator to use the same upon the roads and highways of this state for the life of such vehicle."
Section 1, Article 21, Chapter 17-C provides: "If any part or parts of this chapter shall be held to be unconstitutional such unconstitutionality shall not affect the validity of the remaining parts of this chapter. The legislature hereby declares that it would have passed the remaining parts of this chapter if it had known that such part or parts thereof would be declared unconstitutional." An identical provision appears in each of the other two chapters, Chapter 17-A and Chapter 17-B, of the act.
A statute may contain constitutional and unconstitutional provisions which may be perfectly distinct and separable so that some may stand and the others will fall; and if, when the unconstitutional portion is rejected, the remaining portion reflects the legislative will, is complete in itself, is capable of being executed independently of the rejected portion, and in all other respects is valid, such remaining portion will be upheld and sustained. Meisel v. Tri-State Airport Authority, W.Va., 64 S.E.2d 32; Lingamfelter v. Brown, 132 W.Va. 566, 52 S.E.2d 687; The County Court of Raleigh County v. Painter, 123 W.Va. 415, 15 S.E.2d 396; Prichard v. De Van, 114 W.Va. 509, 172 S.E. 711; Fair *497 mont Wall Plaster Company v. Nuzum, 85 W.Va. 667, 102 S.E. 494; State ex rel. Dillon v. County Court of Braxton County, 60 W.Va. 339, 55 S.E. 382; People ex rel. Stuckart v. Knopf, 183 Ill. 410, 56 N.E. 155; Loeb v. Trustees of Columbia Township, 179 U.S. 472, 21 S.Ct. 174, 45 L.Ed. 280; Berea College v. Commonwealth of Kentucky, 211 U.S. 45, 29 S. Ct. 33, 53 L.Ed. 81; 11 Am.Jur., Constitutional Law, Section 152; Cooley, Constitutional Limitations, Eighth Edition, Vol. I, p. 361.
In Lingamfelter v. Brown, 132 W.Va. 566, 52 S.E.2d 687, 694, though the statute there under consideration was held to be unconstitutional in its entirety because a provision levying a tax, being invalid, the remaining provisions were of no force or vitality, this Court referring to the rule applicable to a statute containing distinct and separable provisions some of which are constitutional and others of which are unconstitutional, said: "In the case of Loeb v. Trustees of Columbia Township, 179 U.S. 472, 45 L.Ed. 280, 21 S.Ct. 174, the applicable rule is stated as follows: `One part [of a statute] may stand, while another will fall, unless the two are so connected, or dependent on each other in subject-matter, meaning, or purpose, that the good cannot remain without the bad. The point is not whether the parts are contained in the same section, for the distribution into sections is purely artificial, but whether they are essentially and inseparably connected in substance,whether the provisions are so interdependent that one cannot operate without the other.' See Shulman Co. v. Sawyer [167 Va. 386], 189 S.E. 344; 11 Am.Jur., Constitutional Law, Section 156; 6 R.C.L., Constitutional Law, Section 121. If the other parts of a statute are not dependent upon the void part, the valid portions of the statute may remain in force. County Court v. Painter, 123 W.Va. 415, 15 S.E.2d 396; Berea College v. Kentucky, 211 U.S. 45, 53 L.Ed. 81, 29 S.Ct. 33."
In State ex rel. Dillon v. County Court of Braxton County, 60 W.Va. 339, 55 S. E. 382, 387, a statute which limited the amount of taxes to be levied and collected by county courts contained a proviso which expressly exempted the counties of McDowell and Gilmer from the limitation. The exemption was advanced as one ground of attack upon the constitutionality of the statute. In rejecting the contention that the exemption rendered the statute invalid this Court said: "We have no doubt that the exception at the end of the proviso, designed to preclude its operation in McDowell and Gilmer counties can be stricken out without affecting the validity of the proviso itself. Upon striking it out, the language of all that remains will apply to all the counties in the state. When a statute, containing an invalid clause, is so framed that elimination of said clause leaves the residue of it in such form that, if it had been so passed originally, it would have been a complete and valid statute, courts do not declare the entire statute void because of the insertion of the illegal exception. They cut out the exception and uphold the act from which it is eliminated. But for the exception, the terms of the act would expressly embrace every county in the state. The exception is an attempt to withdraw from its influence two counties."
In Prichard v. De Van, 114 W.Va. 509, 172 S.E. 711, this Court held in point 5 of the syllabus that "When a part of an act is invalid, but the remainder reflects the legislative intent and is complete in itself, then the remainder will be upheld."
The principle, as stated in 11 Am.Jur., Constitutional Law, Section 152, is "that a statute may be constitutional in one part and unconstitutional in another part and that if the invalid part is severable from the rest, the portion which is constitutional may stand while that which is unconstitutional is stricken out and rejected."
It is evident that the Legislature intended the various provisions of the act to be considered as distinct and separable and that, if any part of the act should be declared unconstitutional, the Legislature would have passed the remaining parts of the act. The act so declares in each of its three separate chapters; and the saving clause contained in the provisions of each chapter, being an "aid in determining *498 legislative intent", Hodges v. Public Service Commission, 110 W.Va. 649, 159 S.E. 834, 837, and an expression of the will of the Legislature, though not "an inexorable command", is generally carried into effect by the courts. 11 Am.Jur., Constitutional Law, Section 156.
It is equally clear that the challenged provisions of Subsection (b) of Section 1, and of Subsections (a), (b) and (c) of Section 11, of Article 17, are distinct and separable from other parts of the act. If any or all the challenged provisions had been omitted when the act was passed it would be a complete statute. None of the other provisions is so connected with, or dependent on, the challenged provisions of the act in subject matter, meaning or purpose, that the other provisions could not remain or be operative without the challenged provisions. If the exemption provisions, which do not apply to or invade any right of the defendant who is not within any of those provisions, and the provisions authorizing the state road commissioner to issue permits in the designated instances and upon the specified terms and conditions, were eliminated from the act the remaining parts of the act would constitute a complete statute which would express the legislative will independently of any or all of those particular provisions.
Whether the provisions of Subsection (b) of Section 1, and of Subsections (a), (b) and (c) of Section 11, of Article 17, the validity of which is challenged by the defendant, are invalid need not be, and is not, decided. A court will not pass upon the constitutionality of challenged provisions of a statute unless a decision upon that specific point is necessary to a determination of the case. See Simms v. County Court of Kanawha County, W.Va., 61 S.E.2d 849; Lingamfelter v. Brown, 132 W.Va. 566, 52 S.E.2d 687; State v. Harrison, 130 W.Va. 246, 43 S.E.2d 214; State v. Garner, 128 W.Va. 726, 38 S.E.2d 337; Norris v. County Court of Cabell County, 111 W.Va. 692, 163 S.E. 418; State ex rel. Motor Finance Corp. v. Jackson, 95 W.Va. 365, 121 S.E. 162; Ice v. County Court of Putnam County, 91 W.Va. 272, 112 S.E. 495; State v. McCoy, 91 W.Va. 262, 111 S.E. 125; Edgell v. Conaway, 24 W.Va. 747. Even if the challenged provisions could be said to be invalid, they do not affect or vitiate the remainder of the act or render the act invalid.
As the plea in abatement does not state a valid defense to the indictment, and as the constitutionality of the statute on which it is based can not be successfully assailed on any of the three grounds asserted and relied upon in that pleading, the demurrer of the State to the plea in abatement should have been sustained.
The judgment of the criminal court quashing the indictment and discharging the defendant and the judgment of the circuit court affirming the judgment of the criminal court, being erroneous, are reversed; and this case is remanded to the Criminal Court of Marion County for further proceedings in conformity to the principles enunciated in this opinion.
Reversed and remanded.
FOX, J., not participating.
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NO. 07-03-0337-CR
IN THE COURT OF APPEALS
FOR THE SEVENTH DISTRICT OF TEXAS
AT AMARILLO
PANEL D
OCTOBER 14, 2004
______________________________
ROBERT RODRIGUEZ, APPELLANT
V.
THE STATE OF TEXAS, APPELLEE
_________________________________
FROM THE 222ND DISTRICT COURT OF DEAF SMITH COUNTY;
NO. CR-021-167; HONORABLE H. BRYAN POFF, JR., JUDGE
_______________________________
Before QUINN and REAVIS and CAMPBELL, JJ.
MEMORANDUM OPINION
Following a plea of not guilty, appellant Robert Rodriquez was convicted by a jury of burglary of a habitation, enhanced, and sentenced by the trial court to 15 years confinement. Presenting a sole issue, appellant asserts error by the trial court in refusing to instruct the jury on the lesser-included offense of criminal trespass. We affirm.
On October 5, 2002, complainant Jimmy Rojas was taking care of his and Amy Vela’s child at his home in Hereford while Amy was at work in Amarillo. Jimmy and Amy shared a past relationship but were no longer romantically involved. In fact, she had just ended a controlling relationship with appellant a month or two earlier. After work, Amy drove to Hereford to pick up her child and when she arrived, went inside the house to pack the child’s belongings. About 15 minutes later, Jimmy and Amy noticed an unfamiliar car pull into the driveway. The front seat was occupied by two females and when the car door opened, appellant emerged from the back seat in an angry mood and was pulling his shirt off as he proceeded toward the house. Amy became scared and went inside the house and locked the door.
Once inside, Amy went to the kitchen to call the police and while on the phone, she heard the door slam open and saw appellant enter. Jimmy testified that appellant came at him and threatened to “kick [his] ass” and “f___ [him] up.” Appellant punched Jimmy and threw household items at him. During the altercation, Jimmy found an opportunity to run outside to get help when he noticed a patrol car driving by and flagged it down. Officer Luis Zamora was responding to a 911 call from Jimmy’s residence.
Officer Zamora testified that Jimmy was upset, hysterical, and looked like he had been in a fight. Jimmy reported to the officer that appellant had assaulted him and was in the house assaulting Amy. Zamora testified that when he arrived on the scene he heard a lot of yelling and proceeded inside the house. He noticed that the door frame was broken and the living room was in shambles. He described appellant as being in a rage and observed him attempting to assault Amy as appellant’s two female friends were trying to get between them. Zamora directed appellant to stop and place his hands behind his back. He complied and was handcuffed and escorted to the patrol car.
Appellant was indicted for burglary of a habitation for entering the residence of Jimmy Rojas without his consent and with intent to commit an assault against him. Appellant does not dispute that the evidence established he entered Jimmy’s home without consent or that he assaulted him. Rather, he argues he was entitled to an instruction on the lesser-included offense because the evidence did not show he intended to assault Jimmy, but instead established that he traveled to Hereford to see Amy and confront her about being at Jimmy’s residence. Thus, he contends the trial court erred in refusing to instruct the jury on the lesser-included offense of criminal trespass. We disagree.
The decision whether to include an instruction on a lesser-included offense requires a two-step analysis. Rousseau v. State, 855 S.W.2d 666, 673 (Tex.Cr.App. 1993),
cert. denied
, 510 U.S. 919, 114 S.Ct. 313, 126 L.Ed.2d 260 (1993). First, the lesser-included offense must be included within the proof necessary to establish the offense charged, and second, there must be some evidence that would permit a rational jury to find that if the defendant is guilty, he is guilty only of the lesser offense.
Id.
;
see also
Tex. Code Crim. Proc. Ann. art. 37.09 (Vernon 1981).
Burglary of a habitation occurs when a person, without the effective consent of the owner, enters a habitation with intent to commit felony, theft, or assault. Tex. Pen. Code Ann. § 30.02(a)(1) (Vernon 2003). A person commits criminal trespass if he enters or remains on or in property of another without effective consent and had notice that the entry was forbidden or received notice to depart but failed to do so. § 30.05(a). Criminal trespass is a lesser-included offense of burglary.
See
Day v. State, 532 S.W.2d 302, 306 (Tex.Cr.App. 1975);
see also
Wyble v. State, 764 S.W.2d 927, 929 (Tex.App.–Amarillo 1989, pet. ref’d). Thus, the first prong of
Rousseau
is satisfied.
In order to meet the second prong of the
Rosseau
analysis, there must be some evidence in the record that appellant is only guilty of criminal trespass. Burglary requires intent and intent to commit an act may be inferred from the defendant’s conduct and surrounding circumstances. McGee v. State, 923 S.W.2d 605, 608 (Tex.App.–Houston [1st Dist.] 1995, no pet.);
see also
Dues v. State, 634 S.W.2d 304, 305 (Tex.Cr.App. 1982).
The evidence shows that appellant arrived at Jimmy’s residence in an angry state of mind and forced the front door open. Jimmy testified that when appellant entered the house, “he started coming at [him],” made threats, and began punching him. Only after Jimmy ran out of the house did appellant turn his attention toward Amy.
Antonia Hernandez, one of the female friends that accompanied appellant to Hereford on October 5 and who was dating him at the time of trial, testified for appellant. She claimed appellant was not upset during the drive to Hereford and thought they were going there to meet Amy. She also testified that she did not notice Jimmy’s door was broken when she entered the residence during the altercation. Officer Zamora testified that when he questioned Antonia about the incident she was cooperative until he asked questions about the damage to Jimmy’s front door.
Considering appellant’s conduct in forcing open the door to Jimmy’s residence and immediately approaching him while making threats, and the circumstances surrounding the relationships between Jimmy and Amy and Amy and appellant, the jury could infer that appellant intended to assault Jimmy. Furthermore, there is no evidence to indicate that appellant was only guilty of the lesser-included offense of criminal trespass. Thus, appellant did not satisfy the second prong of
Rosseau
and the trial court did not err in refusing to instruct the jury on the lesser-included offense. Appellant’s sole issue is overruled.
Accordingly, the judgment of the trial court is affirmed.
Don H. Reavis
Justice
Do not publish.
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233 P.3d 205 (2010)
Karen MARTINEZ, Appellant,
v.
MILBURN ENTERPRISES, INC., Appellee.
No. 100,865.
Supreme Court of Kansas.
June 4, 2010.
*207 Mitchell Rice, of Bretz Law Offices, L.L.C., of Hutchinson, argued the cause, and Matthew L. Bretz, of the same firm, was with him on the brief for appellant.
Dustin L. DeVaughn, of McDonald, Tinker, Skaer, Quinn & Herrington, P.A., of Wichita, argued the cause and was on the brief for appellee.
James R. Howell, of Prochaska, Giroux & Howell, of Wichita, was on the brief for amicus curiae Kansas Association for Justice.
Lyndon W. Vix, of Fleeson, Gooing, Coulson & Kitch, L.L.C. of Wichita, was on the brief for amicus curiae Kansas Association of Defense Counsel.
The opinion of the court was delivered by NUSS, J.:
This civil interlocutory appeal concerns the possible application of the collateral source rule to medical bill write-offs.
*208 FACTS AND HOLDING
The essential facts are straightforward. On July 23, 2005, plaintiff Karen Martinez slipped and fell while shopping at defendant's business in Lyons, Kansas. She underwent back surgery at Wesley Medical Center and was ultimately billed $70,496.15. The hospital accepted $5,310 in satisfaction of the bill: $4,689 from plaintiff's private health insurance company, Coventry Health Systems (Coventry), and $621 from plaintiff as her deductible and co-pay. Pursuant to its contract with Coventry, the hospital wrote off the balance of $65,186.15.
In plaintiff's suit for recovery of damages, defendant filed a motion in limine asking the district court to prohibit plaintiff from claiming the full $70,496.15 as damages. The defendant apparently erred in its recitation of the specific amounts paid by each source to satisfy the bill, as well as the total amount paid to the hospital. Those errors apparently were repeated by plaintiff and the district court and by the parties in their briefs to this court. The facts and resultant parties' arguments in this opinion have been modified to conform with the amounts stated in Coventry's Explanation of Benefits, which was attached to defendant's motion.
The court granted defendant's motion, limiting plaintiff's recovery to those amounts actually paid by Coventry and plaintiff ($5,310) and preventing her from submitting evidence of medical expenses in excess of that amount. The court made the findings required by K.S.A. 60-2102(c) for an interlocutory appeal, and the Court of Appeals granted plaintiff's application. We transferred the case on our own motion pursuant to K.S.A. 20-3018(c).
The issue on appeal is whether in a case involving private health insurance write-offs, the collateral source rule applies to bar evidence of (1) the amount originally billed for medical treatment or (2) the reduced amount accepted by the medical provider in full satisfaction of the amount billed, regardless of the source of payment. We hold that the rule does not bar either type of evidence; both are relevant to prove the reasonable value of the medical treatment, which is a question for the finder of fact. Accordingly, we reverse and remand to the district court for further proceedings.
ANALYSIS
Collateral source rule and the parties' arguments
Our analysis starts with this court's past description of the collateral source rule as follows:
"`At common law, the collateral source rule prevented the jury from hearing evidence of payments made to an injured person by a source independent of the tortfeasor as a result of the occurrence upon which the personal injury action is based. The court has stated the rule as follows: "Under the `collateral source rule,' benefits received by the plaintiff from a source wholly independent of and collateral to the wrongdoer will not diminish the damages otherwise recoverable from the wrongdoer." (Emphasis added.)'" Rose v. Via Christi Health System, Inc., 279 Kan. 523, 529, 113 P.3d 241 (2005) (Rose II) (quoting Farley v. Engelken, 241 Kan. 663, Syl. ¶ 1, 740 P.2d 1058 [1987]; Thompson v. KFB Ins. Co., 252 Kan. 1010, 1014, 850 P.2d 773 (1993)).
After a lengthy recitation of the Kansas appellate court decisions on the collateral source rule, plaintiff contends they create the following standard: "[W]hen an injured person has negotiated for, paid for or contributed in kind for a benefit that reduces his obligation to pay for injuries caused by a tortfeasor, that benefit should not be used to reward the tortfeasor or anyone responsible for his debt." Consequently, she argues that the district court failed to apply the collateral source rule and, as a result, $65,186.15 of the original hospital bill, $70,496.15, would be incorrectly withheld from the jury's consideration of her damages.
In holding that the collateral source rule is inapplicable to the $65,186.15 write-off, the district court explained:
"The court finds the Collateral Source Rule is inapplicable in this case as that is set forth in Bates v. Hogg, 22 Kan.App.2d [702] 705 [921 P.2d 249] (1996). The court *209 finds this is a pretrial declaration of law that the plaintiff's recovery should be limited to the amount actually paid by the private insurance company. The court finds the proper measure of damages for medical expenses under these facts and circumstances is the actual amount paid by the plaintiff's own private insurance company . . . . To allow for the write-off amount is a misleading piece of evidence that did not actually occur as damage to the plaintiff. The evidence is the plaintiff cannot and will not be held responsible for the write-off, pursuant to the contract between the hospital and her own private insurance company. Therefore, only her actual medical damage is [$5,310]. . . . To require the defendant to pay for some amount that was not paid would be giving the plaintiff the benefit of receiving more than their actual damages that is actually needed to reimburse the plaintiff to be made whole." (Emphasis added.)
As the holding indicates, the court initially ruled that only the amount paid by plaintiff's insurance carrier ($4,689) could be recovered. But it later clarified that her actual medical damages, i.e., the amount recoverable, was $5,310, which included plaintiff's own payments of $621.
Defendant responds to plaintiff's position with three main points. First, defendant argues that the doctrine of restoration is fair and "[r]equiring defendants to pay more than the amount necessary to satisfy the financial obligation . . . violates . . . fundamental fairness." Second, it points out that under its theory, plaintiff would not be made "less than whole." Finally, elaborating upon the district court's decision, defendant argues that plaintiff is only entitled to recover the "reasonable value" of her medical care and expenses. Defendant contends that the reasonable value is necessarily the "agreed upon" value, i.e., the $5,310 offered by plaintiff and her carrier and accepted by the hospital in satisfaction of the bill. See, e.g., Bates v. Hogg, 22 Kan.App.2d 702, Syl. ¶ 3, 921 P.2d 249 (1996) (person who suffers personal injuries because of negligence of another is entitled to recover the reasonable value of medical care and expenses for the treatment of his or her injuries); PIK Civ. 4th 171.02.
Amicus CuriaeKansas Association for Justice
Kansas Association for Justice (KsAJ) argues that write-offs and write-downs are collateral source benefits. Like plaintiff, it contends that if a plaintiff has contributed to or bargained for something, then benefits should not be considered in the damage award. KsAJ posits that courts have "concluded nearly uniformly" that write-offs are collateral benefits negotiated for or purchased from an independent third party. It argues against a strict application of the restoration doctrine as encouraged by defendant.
KsAJ relies heavily upon the principles of the collateral source rule as provided in the Restatement (Second) of Torts (1977): (1) deterrence, (2) compensation, and (3) determining wrongful conduct. See, e.g., Section 920A(2) ("Payments made to or benefits conferred on the injured party from other sources are not credited against the tortfeasor's liability, although they cover all or a part of the harm for which the tortfeasor is liable.") It contends that these principles were not intended to be oppositional but collaborative. Finally, KsAJ takes exception to the suggestion that Plaintiffs receive a windfall under the collateral source rule; it suggests they instead obtain a "consequential benefit."
Amicus CuriaeKansas Association of Defense Counsel
Kansas Association of Defense Counsel (KADC) fleshes out the defendant's argument that simply restoring a plaintiff to his or her preinjury status is fair. KADC acknowledges Section 920A of the Restatement and how it effectively bars any argument that plaintiff's damages should be reduced by the $4,689 paid by Coventry to the hospital on her behalf. It argues, however, that the real issue before us is the value of plaintiff's medical expenses. It cites comment h of Restatement (Second) of Torts § 911 in support of its position that the appropriate compensation for injured plaintiffs is the amount *210 actually paid on the bill: here, $5,310. That comment states:
"When the plaintiff seeks to recover for expenditures made or liability incurred to third persons for services rendered, normally the amount recovered is the reasonable value of the services rather than the amount paid or charged. If, however, the injured person paid less than the exchange rate, he can recover no more than the amount paid, except when the low rate was intended as a gift to him."
KADC next argues that plaintiff's benefit of the bargain concept does not apply to write-offs because the plaintiff plays no role in the bargaining process. It contends that a consumer who contracts for health insurance seeks only to have the insurance carrier bear the brunt of the consumer's medical expenses, whatever they turn out to be. According to KADC, an insurance carrier's ability to negotiate with medical providers to reduce the amount the carrier is required to pay in order to satisfy its obligation to the consumer, is a benefit to the carriernot the consumer.
KADC also points out that the basic principle of damages is to make the plaintiff whole, not to grant a windfall. It observes that the collateral source rule itself operates as an exception to that basic principle, since it allows an injured party to recover damages, which the party itself did not pay. According to KADC, however, allowing the plaintiff to recover not only the expenses paid by other sources but also expenses not paid by any source, amounts to a "super-windfall" for which there is no public policy justification.
KADC further takes exception to the suggestion that limiting the plaintiff's recovery to the actual expenses paid effectively grants the tortfeasor a windfall. It contends that the tortfeasor is still responsible for the entire amount of the plaintiff's medical expenses paidwhether or not these expenses were actually paid by the plaintiff, e.g., through private insurance. KADC argues that this result is fair because the amount originally billed by the medical provider is an inflated rate, not the reasonable value of services.
Finally, KADC argues that if the "sticker price"the original amount billedis admitted into evidence, then the amount actually paid to satisfy that bill should also be admitted. It contends that only then would the jury be able to determine the reasonable value of the services provided.
Standard of Review
This court generally reviews the granting of a motion in limine for abuse of discretion. See State v. Morton, 283 Kan. 464, 473, 153 P.3d 532 (2007). However, "`[t]he abuse of discretion standard includes review to determine that the discretion was not guided by erroneous legal conclusions.'" Griffin v. Suzuki Motor Corp., 280 Kan. 447, 452, 124 P.3d 57 (2005) (citing Koon v. United States, 518 U.S. 81, 116 S.Ct. 2035, 135 L.Ed.2d 392 (1996)). Here, the district court made "a pretrial declaration of law that the plaintiff's recovery should be limited to the amount actually paid by the private insurance company." Moreover, this issue arrives via interlocutory appeal because the district court found there was a controlling legal issue requiring decision by the appellate courts. Consequently, this court is asked to determine whether the district court's ruling was guided by erroneous legal conclusions and a de novo standard applies. See State v. White, 279 Kan. 326, 332, 109 P.3d 1199 (2005).
To better understand how the collateral source rule should be applied, if at all, under the circumstances of this case, we need to review the case law on the interplay of the rule with write-offs in Kansas.
Bates v. Hogg
Kansas appellate courts first considered the applicability of the collateral source rule to write-offs in Bates v. Hogg, 22 Kan.App.2d 702, 921 P.2d 249, rev. denied 260 Kan. 991 (1996). Hogg's pickup struck Bates' vehicle and injured Bates. Hogg filed a motion in limine to limit Bates' evidence of economic damages to the amount actually paid by Medicaid to medical care providers on her behalf. The district court granted the motion and prohibited Bates from presenting evidence of the market value or list price of *211 her medical treatment. 22 Kan.App.2d at 703, 921 P.2d 249.
The question presented in Bates was the same one presented in the instant case except that the write-off was pursuant to a Medicaid contract rather than a private insurance agreement. The Court of Appeals panel first pointed out that the "`purpose of awarding damages is to make a party whole by restoring that party to the position he [or she] was in prior to the injury.'" 22 Kan. App.2d at 704, 921 P.2d 249 (quoting Samsel v. Wheeler Transport Services Inc., 246 Kan. 336, 352, 789 P.2d 541 (1990), overruled in part on other grounds 248 Kan. 824, 844, 811 P.2d 1176 (1991)). It then explained the reasonable value of the medical cost of restoration:
"The fundamental principle of the law of damages is that a person who suffers personal injuries because of the negligence of another is entitled to recover the reasonable value of medical care and expenses for the treatment of his or her injuries, as well as the cost of those reasonably certain to be incurred in the future." (Emphasis added.) 22 Kan.App.2d at 704, 921 P.2d 249 (citing 22 Am. Jur. 2d, Damages § 197, p. 169).
The Bates panel concluded that the collateral source rule simply was not applicable to its facts. It reasoned that because medical providers, by agreement and contract, may not charge Medicaid patients for the difference between their "normal" charges and the amount actually paid by Medicaid, then "the amount allowed by Medicaid becomes the amount due and is the `customary charge' under the circumstances." Bates, 22 Kan. App.2d at 705, 921 P.2d 249. The panel further agreed with the taxpayer-based public policy rationale of a North Carolina federal court:
"`It would be unconscionable to permit the taxpayers to bear the expense of providing free medical care to a person and then allow that person to recover damages for medical services from a tort-feasor and pocket the windfall.'" 22 Kan.App.2d at 706, 921 P.2d 249 (quoting Gordon v. Forsyth County Hospital Authority, Inc., 409 F.Supp. 708, 719 (M.D.N.C.1976)).
In effect, the Bates panel endorsed limited application of the collateral source rule. Plaintiff was allowed to seek recovery of damages for the amount of medical expenses that was actually paid by a nonwrongdoer, i.e., from a source "collateral" to the wrongdoer. Plaintiff was not allowed, however, to seek recovery of damages for the amount written off because it was paid by no one.
Judge, now Chief Judge, Rulon dissented, opining that a plaintiff should be allowed to recover the reasonable value of medical services rendered to treat an injury regardless of what amount was actually paid. 22 Kan. App.2d at 709-10, 921 P.2d 249.
Rose I
This court first examined the interplay between write-offs and the collateral source rule in Rose v. Via Christi Health System, Inc., 276 Kan. 539, 78 P.3d 798 (2003) (Rose I). In Rose I, the executor of Rose's estate brought a negligence action against Via Christi after Rose died as a result of injuries sustained from falling out of his hospital bed. After a judgment for the executor, the hospital moved to offset the judgment by the amount of medical expenses it wrote off for Rose pursuant to its contract with Medicare.
The Rose I court concluded that the federal Medicare statute, 42 U.S.C. § 1395cc(a)(1)(A)(i) (2000), was in direct conflict with the district court's decision in granting Via Christi's motion to offset the written-off medical expenses. It further concluded that the Medicare statute preempted the district court's ruling. 276 Kan. at 543-44, 78 P.3d 798.
The court then considered the hospital's cross-appeal, in which it argued that the district court should have limited the evidence of plaintiff's medical expenses to those amounts actually paid and not include the amounts it wrote off. 276 Kan. at 544, 78 P.3d 798. The court focused on the rationale in Judge Rulon's dissent in Bates which stated:
"The purpose for the collateral source rule is to prevent the tortfeasor from escaping the full liability resulting from his or her actions by requiring the tortfeasor *212 to compensate the injured party for all of the harm he or she causes, not just the injured party's net loss." Rose I, 276 Kan. at 544 [78 P.3d 798] (citing Bates v. Hogg, 22 Kan.App.2d 702, 709, 921 P.2d 249, rev. denied 260 Kan. 991 [1996] [dissenting opinion citing 2 Minzer, Nates, Kimball, Axelrod, and Goldstein, Damages in Tort Actions § 9.60, p. 9-88 (1991); Restatement (Second) Torts § 920A, comment b (1977)]).
The Rose I court then ruled that Bates' holding was limited to cases involving Medicaid. 276 Kan. at 546, 78 P.3d 798. The court distinguished Medicare and Medicaid cases on the basis of the recipient's contribution for Medicare coverage, finding Medicare to be akin to private insurance. 276 Kan. at 551, 78 P.3d 798. It found persuasive those courts applying the collateral source rule to amounts written off due to private insurance. 276 Kan. at 551, 78 P.3d 798; see, e.g., Koffman v. Leichtfuss, 246 Wis.2d 31, 630 N.W.2d 201 (2001). It additionally relied upon the court decisions from the three jurisdictions that had addressed the issue and had unanimously concluded that the collateral source rule also applies to Medicare write-offs. Rose I, 276 Kan. at 546-47, 78 P.3d 798 (citing Candler Hosp. v. Dent, 228 Ga.App. 421, 491 S.E.2d 868 (1997); Wal-Mart Stores, Inc. v. Frierson, 818 So.2d 1135, 1140 (Miss.2002); Brown v. Van Noy, 879 S.W.2d 667 (Mo.App.1994)). Simply put, an injured plaintiff could seek recovery as damages for amounts written off by health care providers, i.e., amounts not paid by Medicare on plaintiff's behalf.
The Rose I court looked to other jurisdictions because it found a Kansas case cited by the hospital to be inapposite. In Jackson v. City of Kansas City, 263 Kan. 143, 947 P.2d 31 (1997), a jury awarded plaintiff damages for his personal injuries after his girlfriend cut his throat while he was handcuffed and sitting on a curb in police custody. The Rose I court rejected the hospital's argument that Jackson stood for the proposition that a plaintiff's recovery should not include write-offs but should be limited to the amount actually paid:
"Jackson, however, does not support this contention. In Jackson, the defendant sought to have the damage award for medical expenses reduced to the amount that had actually been paid by the plaintiff and a charity on his behalf. Finding no evidence to support the defendant's request for remittitur, the Jackson court refused to reduce the plaintiff's damage award. 263 Kan. at 151-52, 947 P.2d 31. However, the Jackson court did not address the application of the collateral source rule, so it is inapposite to the issue in this case." 276 Kan. at 546, 78 P.3d 798.
The Rose I court appeared to acknowledge that its ruling would result in a windfall for plaintiffs. It held:
"Public policy in Kansas supports the theory that any windfall from the injured party's collateral sources should benefit the injured party rather than the tortfeasor, who should bear the full liability of his or her tortious actions without regard to the injured parties' method of financing his or her medical treatment." 276 Kan. at 551, 78 P.3d 798.
In short, given the court's reliance upon case law holding that write-offs pursuant to private insurance and write-offs pursuant to Medicare were all covered by the collateral source rule, to date arguably only the Medicaid write-offs from Bates v. Hogg were excluded from possible recovery by injured plaintiffs.
Justice Luckert wrote for the dissent, arguing that applying the collateral source rule to "this portion of the judgment is contrary to the basic precept of the collateral source rule which is that benefits received by the plaintiff from a source wholly independent of and collateral to the wrongdoer will not diminish the damages otherwise recoverable from the wrongdoer." 276 Kan. at 552, 78 P.3d 798. She pointed out that the hospital was both the "wrongdoer" and the entity writing off charges, i.e., not a source wholly independent of the wrongdoer. 276 Kan. at 552, 78 P.3d 798.
Fischer & Liberty
This court granted a motion for rehearing in Rose I. Before release of our modified *213 opinion in June 2005, earlier that year one panel of the Court of Appeals released two unpublished opinions dealing with the possible applicability of the collateral source rule to write-offs. The decisions essentially excluded recovery for write-offs in the contexts of both Medicare (contrary to Rose I) and private insurance.
First, in Fischer v. Farmers Insurance Company Inc., No. 90,246, 2005 WL 400404, unpublished opinion filed February 18, 2005, the plaintiff was injured when her automobile was struck by a pickup. She settled with the defendant's insurance company and sought recovery under her own policy's underinsured motorist coverage. Her insurer filed a motion in limine to exclude evidence of that portion of Fischer's medical expenses that had been written off by the medical provider pursuant to an agreement with Fischer's own group health insurance carrier.
The trial court relied upon Bates to exclude the amount of the write-off from plaintiff's damages. The Court of Appeals panel agreed that the Bates majority holding "was not principally driven by the fact that the write-off was mandated by a Medicaid contract." Fischer, slip op. at 4. It emphasized the doctrine of restoration, explaining that when the plaintiff is awarded damages equal to the amount actually paid to his or her health care provider pursuant to an agreement, the plaintiff is then restored to his or her exact economic preinjury status. While the plaintiff would not be able to pocket the write-off amount, neither would he or she owe anything for medical services. Fischer, slip op. at 2. The panel explained that this solution results in restoration and equal treatment for all plaintiffs:
"The principle of restoration should be applicable to all plaintiffs, regardless of whether they be uninsured, covered by Medicaid, covered by Medicare, covered by an employer's group health policy, or covered by an individually purchased private insurance contract. . . . In short, applying Bates to all plaintiffs effects their restoration to pre-accident status without arbitrarily overcompensating some injured persons." Fischer, slip op. at 5.
The Fischer panel interpreted the Bates holding to mean that while the amount a plaintiff's health insurer actually pays to the health care provider is a benefit from a collateral source, the amount the provider writes off is not. Accordingly, like the Bates court, it held that the collateral source rule was "`not applicable under these circumstances.'" Fischer, slip op. at 5.
The Fischer panel also explained that the idea that a plaintiff should receive a windfall so that the tortfeasor can be held fully liable is fiction:
"The sentiment that public policy dictates giving a plaintiff a windfall in order to hold the tortfeasor fully liable for his or her tortious conduct is, in practice, an illusion. In most cases, a tortfeasor pays nothing personally; the plaintiff's judgment is paid by a liability insurance carrier. If the wrongdoer's bodily injury liability insurance limits are inadequate to cover the plaintiff's injuries, it is common for the tortfeasor to confess judgment in return for a covenant not to execute. On other occasions, a tortfeasor discharges an excess judgment in bankruptcy." Fischer, slip op. at 12.
The panel not only concluded that the collateral source rule was inapplicable to write-offs but also that the amount the provider agreed to satisfy its bill conclusively established the reasonable value of the services:
"In summary, we hold that the amount which a health care provider has, in advance, agreed to accept in full satisfaction for services rendered to a plaintiff is the measure of the reasonable value of medical care and expenses for the treatment of the plaintiff's injuries. Previously established nonrecourse discounts by health care providers are not a collateral source benefit within the ambit of the collateral source rule." (Emphasis added.) Fischer, slip op. at 13.
It then logically followed that "[t]he plaintiff cannot introduce evidence of the amount of the nonrecourse discounts as part of the plaintiff's economic damages." Fischer, slip op. at 13.
*214 In effect, Fischer extended the Bates holding and rationalerefusing to apply the collateral source rule to Medicaid write-offs by medical care providersto private insurance write-offs by providers. And as in Bates, the rule still had some limited application: plaintiff could seek recovery of damages for the amount of medical expenses that was actually paid by a nonwrongdoer, i.e., plaintiff's carrier. Moreover, Fischer more clearly articulated the rule inherent in Bates' result: the paid amount is "the measure of the reasonable value of medical care and expenses for the treatment of the plaintiff's injuries."
Two months later, the same panel released Liberty v. Westwood United Super, Inc., No. 89,143, 2005 WL 1006363, unpublished opinion filed April 29, 2005, rev. denied 280 Kan. 983 (2005). There, the plaintiff fell and sustained injuries in defendant's business. Plaintiff challenged the district court's order in limine, based upon its interpretation of Bates, which excluded evidence of the portion of her medical expenses, which the health care providers wrote off pursuant to their contracts with Medicare. The Liberty panel then extended the Bates holding and rationalerefusing to apply the collateral source rule to Medicaid write-offs by medical care providersto Medicare write-offs by providers. This extension was contrary to our holding in Rose I, which was awaiting rehearing.
The Liberty panel explained that, for several reasons, applying the collateral source rule to write-offs in Medicare scenarios made little sense:
"The application of that rule to mandatory Medicare discounts requires a great deal of creativity. First, one must perceive that the nonconsensual, involuntary deductions from a person's wages to fund the federally mandated Medicare program are akin to the premiums paid by the fiscally prudent and relatively affluent purchaser of private insurance. More importantly, however, one must fictionally characterize the mandatory contractual discount for Medicare patients as a `payment' of medical expenses. The write-off is a volume discount allowed by medical care providers who want to tap into the pool of Medicare patients. No one is paid the discount, but rather the discounted cost of services assists in keeping the amount that must be deducted from one's paycheck at a manageable level." (Emphasis added.) Slip op. at *13.
As the panel had done in Fischer, it also addressed the windfall argument in Liberty:
"Finally, the rationale of giving the injured person a windfall in order to avoid allowing the tortfeasor to reap a windfall simply ignores reality. One can perceive that in the vast majority of cases, the `windfall' [to the plaintiff] is funded by a [defendant's] liability insurance carrier, not the tortfeasor personally. The tortfeasor is not taught a lesson via his or her pocketbook, but rather the rest of us must share the cost of the windfall through higher liability premiums." (Emphasis added.) Slip op. at *13.
Where the panel in Fischer only suggested, in Liberty it now stated directly: "[T]he issue presented is not the applicability of the collateral source rule, but rather the `reasonable value of medical care and expenses for the treatment of [the victim's] injuries.'" (Emphasis added.) Liberty, slip op. at 13. Relying upon Bates, the Liberty panel held that the amount permitted to be charged to Medicare patients, i.e., the amount remaining after the write-off, is the "customary charge" for their medical treatment. Accordingly, the Liberty panel, as it did in Fischer, held that this reduced amount conclusively established the "reasonable value" of plaintiff's medical care and expenses. Liberty, slip op. at 13. As a result, the panel affirmed the trial court's exclusion from evidence that portion of the plaintiff's medical expenses which the health care providers wrote off pursuant to their contracts with Medicare.
Rose II
At the same time the Court of Appeals panel was considering Fischer and Liberty, this court reheard arguments in Rose I Rose v. Via Christi Health System, Inc., 279 Kan. 523, 113 P.3d 241 (2005) (Rose II). In our decision released 5 weeks after Liberty, this court limited its ruling to the specific facts of that case, i.e., where the tortfeasor *215 was also the entity writing off its own charges for medical services. 279 Kan. at 529, 113 P.3d 241. As the court explained its holding:
"Thus, we conclude that under the facts of this case, specifically where the Medicare provider, Via Christi, is the defendant and also the health care provider of the services which form the basis of the economic damages claim, the trial court did not err in allowing a setoff or credit against the portion of the economic loss attributable to medical expenses in the amount of the Medicare write-off, an amount not paid by the plaintiff, Medicare, or any third party, and which reflected a cost incurred by the defendant. The trial court's ruling is a correct application of Kansas law. . . ." (Emphasis added.) 279 Kan. at 533, 113 P.3d 241.
Because this court upheld the trial court's decision to allow a setoff or credit, it did not reach the cross-appeal question. That question was "whether evidence of medical charges that are written off by a health care provider pursuant to a contract with Medicare is admissible at trial as evidence of economic damages." 279 Kan. at 533-34, 113 P.3d 241. The court explained that it therefore did not reach the broader issue (answered by the Court of Appeals in Liberty 5 weeks earlier) of "whether Medicare, or a Medicare write-off, when the services are provided by a health care provider that is not a defendant, is a collateral source." (Emphasis added.) Rose II, 279 Kan. at 534, 113 P.3d 241.
Adamson v. Bicknell
Most recently, the Court of Appeals considered the collateral source rule and write-offs in Adamson v. Bicknell, 41 Kan.App.2d 958, 207 P.3d 265 (2009), rev. granted March 31, 2010. There, the panel noted that pursuant to Bates, "evidence of medical expenses written off pursuant to Medicaid requirements must be excluded from evidence." Adamson, 41 Kan.App.2d at 970, 207 P.3d 265. Accordingly, the panel reversed the trial court and allowed the introduction of these write-offs at retrial because they were "within the scope of the collateral source rule." Adamson, 41 Kan.App.2d at 973, 207 P.3d 265.
Recent Kansas case law, i.e., from Bates to date, is therefore synthesized chronologically as follows:
1. Medicaid write-offs are not covered by the collateral source rule per Bates;
2. Medicare write-offs are covered by the collateral source rule per Rose I;
3. Private insurance write-offs are not covered by the collateral source rule per Fischer;
4. Medicare write-offs are not covered by the collateral source rule per Liberty (contrary to Rose I); and
5. Whether Medicare write-offs are covered by the collateral source rule is intentionally left unaddressed by the Supreme Court per Rose II.
Related case law from the Court of Appeals is further synthesized as follows: Because write-offs by health care providers are not a collateral source benefit within the ambit of the collateral source rule, the issue regarding these write-offs instead becomes their possible relevance to the "reasonable value of medical care and expenses for the treatment of the victim's injuries." Liberty, slip op. at 13. And the amount which a health care provider has agreed to accept in full satisfaction for services rendered in treatment of the plaintiff's injuries conclusively establishes the reasonable measure of those medical care and expenses. Fischer, slip op. at 13; Liberty, slip op. at 14. As a result, the plaintiff cannot introduce evidence of the amount of the nonrecourse discounts, i.e., write-offs, as part of the plaintiff's economic damages. Fischer, slip op. at 13.
Federal cases
The federal district courts in Kansas have uniformly held that the collateral source rule does not apply to write-offs by health care providerswhether via Medicaid as in Bates, via Medicare as in Liberty (contrary to Rose I), or via private insurance as in Fischer. Like Liberty and Fischer, the opinions are all unpublished.
In Strahley v. Mercy Health Center of Manhattan, 2000 WL 1745291 (D.Kan.2000) *216 (unpublished opinion), Judge Vratil adopted the Medicaid-based rationale in Bates and, like Fischer, extended it to private insurance write-offs by health care providers. She held: "Although Bates addressed only a Medicaid write-off, the same reasoning applies to amounts written off in conjunction with private health care insurance. No one, including plaintiffs, is liable for the amount of the write-offs. Therefore, they do not represent actual losses." Strahley, 2000 WL 1745291, at *2 (citing McAmis v. Wallace, 980 F.Supp. 181, 184 (W.D.Va.1997)).
Judge Vratil quoted with approval Mitchell v. Hayes, 72 F.Supp.2d 635, 637 (W.D.Va. 1999):
"`Discounting is a reality of modern medical economics and it does no violence to the collateral source doctrine to bring the tort compensation system the same extended savings. By allowing the plaintiff to show the discounted medical expenses as evidence of his damages, even though he paid no part of them, but refusing any evidence of the write-offs that no one incurred, there is a proper balance of the competing interests at issue.'" Strahley, 2000 WL 1745291, at *2.
One year later, in Davis v. Management & Training Corp. Centers, 2001 WL 709380 (D.Kan.2001) (unpublished opinion), Judge Rogers faced a factual situation similar to Bates. Medicaid paid part of plaintiff's medical expenses, and the remainder was written off per an agreement between Medicaid and the health care providers. Relying upon Bates and Judge Vratil's Strahley decision, the defendant argued that the plaintiff's claim was limited to the portion actually paid by Medicaid. After acknowledging the collateral source rule, Judge Rogers decided to follow these authorities, holding that "[s]ince plaintiff is not liable for the amount of write-offs, we do not find that the plaintiff has suffered actual losses. Accordingly, the court shall preclude any evidence of any amount of the plaintiff's medical bills that represent write-offs." Davis, 2001 WL 709380, at *3.
Finally, 1 year after Davis, in Wildermuth v. Staton, 2002 WL 922137 (D.Kan.2002) (unpublished opinion), Magistrate Judge Waxse reviewed defendant's argument that the collateral source rule did not apply to the amounts written off by health insurance carriers after payment by Medicare. He rejected the plaintiff's counterarguments for admission of the write-offs as evidence of damagesbecause they were required by federal law:
"First, the write-offs were not a benefit that Plaintiff's were personally responsible for obtaining or that they individually bargained for. Rather, the write-offs are required by operation of federal law." 2002 WL 922137, at *5.
He further rejected the plaintiff's arguments for admission of the write-offs as evidence of damages because the collateral source rule does not apply to write-offs of expenses that are never paid:
"Second, the Court sees no reason to distinguish between the type of benefits received. What is at issue is the write-off and not the Medicare payments itself. It does not matter whether the benefits received are from the Medicaid or Medicare programthe collateral source rule, by its express terms, simply does not apply to write-offs of expenses that are never paid. The collateral source rule only excludes `evidence of benefits paid by a collateral source.' Wendtling [Wentling] v. Medical Anesthesia Servs., 237 Kan. [503] 505, 515, 701 P.2d 939 (1985) (emphasis added.) Because a write-off is never paid, it cannot possibly constitute payment of any benefit from a collateral source. [Citation omitted.]" Wildermuth, 2002 WL 922137, at *5.
Judge Waxse also addressed the windfall arguments:
"Moreover, as the Kansas Court of Appeals noted in Bates, allowing a plaintiff to recover the amount of charges written off would result in a windfall to the plaintiff. Permitting Plaintiffs in this case to enter into evidence medical bills for which neither Plaintiffs nor collateral source had any responsibility to pay and allowing Plaintiffs to recover that amount does not further the purpose of the collateral source rule. The rule is intended to prevent a defendant tortfeasor from escaping from *217 full liability for the consequences of his or her wrongdoing and to prevent a windfall to the tortfeasor, who would otherwise profit from the benefits provided by a third party to the injured party. It is not intended to provide a windfall to plaintiffs. As the Kansas Supreme Court has noted, `the basic principle of damages is to make a party whole by putting it back in the same position, not to grant a windfall.' [Citation omitted.]" (Emphasis added.) Wildermuth, 2002 WL 922137, at *5.
Judge Waxse expressly rejected plaintiff's additional argument that Bates v. Hogg, 22 Kan.App.2d 702, 921 P.2d 249, rev. denied 260 Kan. 991 (1996), was inconsistent with the policies supporting the collateral source rule. He found that the Bates rule was entirely consistent with the theories of fair compensation reflected in Kansas Supreme Court cases. First, "`the purpose of awarding damages is to make a party whole by restoring that party to the position he or she was in prior to the injury'" and second, "the `basic principle of damages' [is] . . . that the injured party should not be granted a windfall." He concluded that "[a]pplying Bates to this case will further these goals." Wildermuth, 2002 WL 922137, at *7.
The parties' arguments required Judge Waxse to go further than his federal colleagues, judges Vratil and Rogers, and to review the reasonable value of the medical care and expenses for plaintiff's treatment. More particularly, defendant alleged that plaintiff had not met the threshold requirement of a reasonable value of $2,000 in economic damages, e.g., medical expenses, which would allow him or her to seek recovery of noneconomic damages in a motor vehicle tort action under K.S.A. 40-3117. Based upon Bates' holding on Medicaid, he ruled that the reduced amount payable under the care provider's agreement with Medicare conclusively established the "reasonable value" of the medical services under the statute:
"Finally, the [Bates] appeals court recognized that, pursuant to the provider's agreement with Medicaid, the provider was required to accept a reduced amount for his or her services and could not charge the Medicaid patient for the full amount. That amount became the `customary' and, therefore, `reasonable,' charge. Id. at 705 [921 P.2d 249]. Implicit in the appeals court's decision is the holding that the reduced amount payable under the provider's agreement with Medicaid should be deemed the `reasonable value' of the services under K.S.A. 40-3117.
"The Court finds that Bates is consistent with the `reasonable value' standard set forth in K.S.A. 40-3117. The Court also finds that the Kansas Court of Appeals' reasoning regarding the `reasonable value' standard applies equally to Medicare write-offs. As is the case with Medicaid, the reduced amount a provider is obligated to accept pursuant to his/her agreement with Medicare should be deemed the `reasonable value' of the services." (Emphasis added.) Wildermuth, 2002 WL 922137, at *7.
At least in the context of K.S.A. 40-3117, Judge Waxse arguably foreshadowed the Liberty panel's clarification 3 years later that "the issue presented is not the applicability of the collateral source rule, but the `reasonable value of medical care and expenses for the treatment of [the victim's] injuries.'" Liberty, slip op. at 13.
In short, a synthesis of this case law from the federal district courts of Kansas is similar to the synthesis of recent Kansas Court of Appeals decisions as described above. Specifically, previously established write-offs by health care providers through Medicaid, Medicare, or private insurance are not covered by the collateral source rule. Strahley, 2000 WL 1745291; Davis, 2001 WL 709380; Wildermuth, 2002 WL 922137. Moreover, the amount which a health care provider has agreed to accept in full satisfaction for services rendered in treatment of the plaintiff's injuries conclusively establishes the reasonable measure of value of medical care and expenses under K.S.A. 40-3117. Wildermuth, 2002 WL 922137. Finally, the plaintiff cannot introduce evidence of the amount of the write-offs as part of his or her economic damages. See, e.g., Strahley, 2000 WL 1745291; Davis, 2001 WL 709380.
Now that we have examined the direction in which Kansas case law appears to lean, we *218 look at other jurisdictions that have considered the question of the interplay, if any, between the collateral source rule and write-offs.
Other jurisdictions
The Louisiana Supreme Court has explained that other courts have applied three different approaches in determining whether to apply the collateral source rule to Medicaid write-offs. Bozeman v. State, 879 So.2d 692, 701 (La.2004). While Bozeman dealt only with Medicaid, the categories apply to all types of write-offs. These approaches are: (1) reasonable value of services; (2) actual amounts paid; and (3) benefit of the bargain.
1. Reasonable value of services
According to the Bozeman court, some jurisdictions apply a reasonable value of services approach and some of those allow plaintiffs to recover the entire amount of medical expenses originally billed, including any amounts later written off by the healthcare provider. See Brandon HMA, Inc. v. Bradshaw, 809 So.2d 611, 618 (2001) (Mississippi); Haselden v. Davis, 353 S.C. 481, 579 S.E.2d 293 (2003) (South Carolina); Koffman v. Leichtfuss, 246 Wis.2d 31, 630 N.W.2d 201 (2001) (Wisconsin). The reasonable value of services approach is largely based on the idea that the collateral source rule applies even when the source of the payment is a public relief provided by law. 879 So.2d at 702. The Bozeman court pointed out that comment b to the Restatement (Second) of Torts § 920A (the general collateral source rule) supports this position:
"`If the plaintiff was himself responsible for the benefit, as by maintaining his own insurance or by making advantageous employment arrangements, the law allows him to keep it for himself. If the benefit was a gift to the plaintiff from a third party or established for him by law, he should not be deprived of the advantage that it confers. The law does not differentiate between the nature of the benefits, so long as they did not come from the defendant or a person acting for him.'" (Emphasis added.) 879 So.2d at 701-02.
The Illinois Supreme Court recently addressed these three categories and adopted the reasonable value approach in Wills v. Foster, 229 Ill.2d 393, 323 Ill.Dec. 26, 892 N.E.2d 1018 (2008). The Wills court explained that the difficulty with this approach is how to determine the reasonable value of services. 229 Ill.2d at 407-11, 323 Ill.Dec. 26, 892 N.E.2d 1018. It opined that a "minority of courts employing this approach hold that the reasonable value of medical services is the actual amount paid," (229 Ill.2d at 407-08, 323 Ill.Dec. 26, 892 N.E.2d 1018), and that the "vast majority of courts using a reasonable-value approach allow the plaintiff to seek recovery of the amount originally billed by the healthcare provider." 229 Ill.2d at 410, 323 Ill.Dec. 26, 892 N.E.2d 1018. The court held that this latter position is supported by the Restatement (Second) of Torts, specifically sections 924 and 920A. 229 Ill.2d at 410, 323 Ill.Dec. 26, 892 N.E.2d 1018.
The Wills court observed that Section 920A(2) states in relevant part that "[p]ayments made to or benefits conferred on the injured party from other sources are not credited against the tortfeasor's liability, although they cover all or a part of the harm for which the tortfeasor is liable." Like the Bozeman court in Louisiana, the Wills court noted that under comment b "[t]he law does not differentiate between the nature of the benefits, so long as they did not come from the defendant or a person acting for him." 229 Ill.2d at 411, 323 Ill.Dec. 26, 892 N.E.2d 1018. Section 924 in turn allows an injured plaintiff to recover reasonable medical expenses. Its comment f explains that this is a recovery for value even if there is no liability or expense to the injured person. 229 Ill.2d at 409-10, 323 Ill.Dec. 26, 892 N.E.2d 1018.
The Wills court gave four basic reasons for adopting the reasonable value approach. First, the court noted the policy justification for the collateral source rule that the tortfeasor should not benefit from "the expenditures made by the injured party or take advantage of contracts or other relations that may exist between the injured party and third persons. [Citation omitted.]'" 229 Ill.2d at 413, 323 Ill.Dec. 26, 892 N.E.2d 1018. Second, Section 920A supports a reasonable value approach *219 and does not distinguish between private insurance and government benefits or those who receive their treatment on a gratuitous basis. 229 Ill.2d at 413, 323 Ill.Dec. 26, 892 N.E.2d 1018. Third, the benefit of the bargain approach (as discussed below) discriminates against certain plaintiffs and prevents sick or disabled plaintiffs covered by Medicaid from recovering the full billed amount. 229 Ill.2d at 413, 323 Ill.Dec. 26, 892 N.E.2d 1018; see, e.g., Bates v. Hogg, 22 Kan.App.2d 702, 921 P.2d 249. Consequently, this approach undermines the spirit of the collateral source rule because the measure of the defendant's liability is then determined by the nature of the injured party's relationship with a source collateral to the tortfeasor. 229 Ill.2d at 413-14, 323 Ill.Dec. 26, 892 N.E.2d 1018. Fourth, "[t]he vast majority of courts to consider the issue employ some sort of reasonable value approach." 229 Ill.2d at 414, 323 Ill.Dec. 26, 892 N.E.2d 1018.
The Wills court acknowledged the obvious criticism of the reasonable value approach. Because it allows recovery of the entire amount of medical expenses billed, including health care provider write-offs, it can lead to a windfall for plaintiffs. But the court ruled that it is better for the benefit to go to the plaintiff rather than the tortfeasor. 229 Ill.2d at 411, 413, 323 Ill.Dec. 26, 892 N.E.2d 1018.
Some courts have taken a slightly different approach to determining the "reasonable value" of damages. In Robinson v. Bates, 112 Ohio St.3d 17, 857 N.E.2d 1195 (2006), the Ohio Supreme Court reasoned that the collateral source rule does not apply to write-offs of medical expenses that are never paid. Accordingly, "the written-off amount of a medical bill differs from the receipt of compensation or services." 112 Ohio St.3d at 22, 857 N.E.2d 1195. It noted our holding that "[t]he collateral-source rule excludes only `"evidence of benefits paid by a collateral source."' (Emphasis added.) Wentling v. Med. Anesthesia Servs., P.A., 237 Kan. 503, 515, 701 P.2d 939 (1985), quoting 3 Minzer, Nates, Kimball, Axelrod and Goldstein, Damages in Tort Actions (1984) 17-5, Section 17.00." 112 Ohio St.3d at 22-23, 857 N.E.2d 1195. Because no one pays the write-off, the Robinson court reasoned that the write-off cannot possibly constitute payment of any benefit from a collateral source. As a result, "Because no one pays the negotiated reduction, admitting evidence of write-offs does not violate the purpose behind the collateral source rule. The tortfeasor does not obtain a credit because of payments made by a third party on behalf of the plaintiff." 112 Ohio St.3d at 23, 857 N.E.2d 1195.
The Robinson court sought to eliminate potential disparate treatment of plaintiffs by simply emphasizing the reasonable value of the medical services received. It ruled that both the amount originally billed and the amount ultimately paid may be considered by the jury in making that determination:
"To avoid the creation of separate categories of plaintiffs based on individual insurance coverage, we decline to adopt a categorical rule. Because different insurance arrangements exist, the fairest approach is to make the defendant liable [only] for the reasonable value of plaintiff's medical treatment. Due to the realities of today's insurance and reimbursement system, in any given case, that determination is not necessarily the amount of the original bill or the amount paid. Instead, the reasonable value of medical services is a matter for the jury to determine from all relevant evidence. Both the original medical bill rendered and the amount accepted as full payment are admissible to prove the reasonableness and necessity of charges rendered for medical and hospital care." (Emphasis added.) 112 Ohio St.3d at 23, 857 N.E.2d 1195.
The Robinson court acknowledged that the jury's determination of the reasonable value could lie someplace in between the amount of the original bill and the amount accepted in satisfaction:
"The jury may decide that the reasonable value of medical care is the amount originally billed, the amount the medical provider accepted as payment, or some amount in between. Any difference between the original amount of a medical bill and the amount accepted as the bill's full payment is not a `benefit' under the collateral-source *220 rule because it is not a payment, but both the original bill and the amount accepted are evidence relevant to the reasonable value of medical expenses." 112 Ohio St.3d at 23, 857 N.E.2d 1195.
2. Actual amount paid
At least one jurisdiction only allows plaintiffs to recover the actual amount paid to the health care provider in full settlement of the bill. See Dyet v. McKinley, 139 Idaho 526, 81 P.3d 1236 (2003) (Idaho). This approach is based on the premise that the plaintiff did not incur the write-off amount and therefore should not receive the resulting windfall. See Bozeman, 879 So.2d at 702. In Dyet, the Idaho Supreme Court held that "`[a]lthough the write-off technically is not a payment from a collateral source within the meaning of [the collateral source statute], it is not an item of damages for which plaintiff may recover because plaintiff has incurred no liability therefore.' [Citation omitted]." 139 Idaho at 529, 81 P.3d 1236. The Illinois Supreme Court has explained that this approach focuses on "the objective of compensatory damages as making an injured party whole." Wills, 229 Ill.2d at 408, 323 Ill.Dec. 26, 892 N.E.2d 1018.
3. Benefit of the bargain
The third approach, the benefit of the bargain, allows plaintiffs to recover the full value of their medical expenses, including the write-off amount, when the plaintiff has paid some consideration for the benefit of the write-off. Bozeman, 879 So.2d at 703 (Louisiana); see Helfend v. Southern California Rapid Transit Dist., 2 Cal.3d 1, 84 Cal.Rptr. 173, 465 P.2d 61 (1970) (California); Acuar v. Letourneau, 260 Va. 180, 531 S.E.2d 316 (2000) (Virginia). As the Virginia Supreme Court explained in Acuar: "The portions of medical expenses that health care providers write off [do] constitute `compensation or indemnity received by a tort victim from a source collateral to the tortfeasor. . . .' [Citation omitted.]" 531 S.E.2d at 322-23.
Similarly, the California Supreme Court's explanation of the policy judgment behind the rule was that the court was in favor of
"encouraging citizens to purchase and maintain insurance for personal injuries and for other eventualities. Courts consider insurance a form of investment, the benefits of which become payable without respect to any other possible source of funds. . . . Defendant should not be able to avoid payment of full compensation for the injury inflicted merely because the victim has had the foresight to provide himself with insurance." Helfend, 2 Cal.3d at 10, 84 Cal.Rptr. 173, 465 P.2d 61.
The Illinois Supreme Court explained in Wills that "[u]nder this approach, courts allow plaintiffs who have private insurance to recover the full amount of their medical expenses because they have bargained for the benefits they received." 229 Ill.2d at 406, 323 Ill.Dec. 26, 892 N.E.2d 1018. However, while these courts treat Medicare recipients the same as those with private insurance, they do not allow the same for Medicaid: they only allow the amount actually paid. 229 Ill.2d at 406, 323 Ill.Dec. 26, 892 N.E.2d 1018. As mentioned earlier, the Wills court pointed out that one "obvious criticism" of the benefit of the bargain approach as used by some courts is that it "undermines the collateral source rule by using the plaintiff's relationship with a third party to measure the tortfeasor's liability." 229 Ill.2d at 407, 323 Ill.Dec. 26, 892 N.E.2d 1018 (citing, inter alia, Bozeman, 879 So.2d at 703-05).
Discussion
Plaintiff contends this court should apply a benefit of the bargain approach. In other words, we should allow plaintiffs to recover their full medical expenses, including the write-offs, when plaintiff has paid some consideration for the benefit of the write-off. Applying such an approach under Kansas law is problematic, however, for several basic reasons.
First, such an approach is contradicted by the very case law relied upon by plaintiff. In both Zak v. Riffel, 34 Kan. App.2d 93, 115 P.3d 165 (2005), and Johnson v. Baker, 11 Kan.App.2d 274, 719 P.2d 752 (1986), the Court of Appeals acknowledged that the collateral source rule also applies to gratuitous payments. For example, the Zak *221 panel held that "the collateral source rule applies to payments received gratuitously as well as those received as a result of an obligation." 34 Kan.App.2d at 106, 115 P.3d 165 (citing Johnson v. Baker, 11 Kan.App.2d 274, 719 P.2d 752 (1986)). More particularly, "`[a] benefit secured by the injured party either through insurance contracts, advantageous employment arrangements, or gratuity from family or friends should not benefit the tortfeasor by reducing his or her liability for damages.'" (Emphasis added.) 34 Kan. App.2d at 106, 115 P.3d 165 (quoting Rose v. Via Christi Health System, Inc., 276 Kan. 539, 544, 78 P.3d 798 (2003) [Rose I]); see Johnson, 11 Kan.App.2d 274, Syl. ¶ 2, 719 P.2d 752.
The Rose I language cited by the Zak panel is from an opinion of this court which cited no authority for the proposition that the collateral source rule applies to gratuitous payments. We observe, however, that in Lewark v. Parkinson, 73 Kan. 553, 555-56, 85 P. 601 (1906), we indicated that an injured plaintiff may seek recovery for nursing services provided gratuitously by family members. To the extent that our past opinions, including Wentling v. Medical Anesthesia Services, 237 Kan. 503, 701 P.2d 939 (1985), suggested that the collateral source rule only precludes admission of payments made to the plaintiff, we clarify today that the rule also precludes admission of evidence of gratuitous services provided by a collateral source. Accordingly, the benefit of the bargain approach carries little weight under Kansas law.
The second problem with plaintiff's proposed benefit of the bargain approach is its possible violation of the equal protection provisions of the state and federal Constitutions by effectively creating categories of plaintiffs. See Wentling, 237 Kan. 503, 701 P.2d 939 (holding that legislature's limitation on the collateral source rule was unconstitutional because it violated the equal protection provisions of the United States and Kansas Constitutions by discriminating between indigent and insured plaintiffs). By distinguishing among patients with Medicare, Medicaid, and private insurance, this court could potentially discriminate among plaintiff's based on their ability to obtain certain types of health care coverage. See Wills, 229 Ill.2d at 407, 323 Ill.Dec. 26, 892 N.E.2d 1018 (benefit of the bargain approach "undermines the collateral source rule by using the plaintiff's relationship with a third party to measure the tortfeasor's liability"). If we were to follow Bates v. Hogg, 22 Kan.App.2d 702, 921 P.2d 249, and to adopt plaintiff's proposal, a Medicaid patient in her position would only be allowed to recover $4,689 plus the $621 she paid herself while a Medicare or privately insured patient could potentially recover $70,496.15.
A third problem with plaintiff's proposed approach is that Medicare beneficiaries do not truly "bargain with" Medicare. And even though insureds concededly may bargain with their private insurance companies, they typically do not negotiate with their health care providers for the write-offs. As Judge Waxse pointed out in Wildermuth v. Staton, 2002 WL 922137 (D.Kan.2002), Medicare write-offs are not a benefit for which plaintiffs are personally responsible for bargaining or otherwise obtaining. 2002 WL 922137, at *5. Additionally, as the Court of Appeals panel noted in Liberty, federally mandated wage deductions for Medicare can hardly be considered the equivalent of premiums voluntarily paid for private insurance. Liberty v. Westwood United Super, Inc., No. 89,143, 2005 WL 1006363, unpublished opinion filed April 29, 2005.
Lastly, but most important, Kansas courts do not reflexively order liable defendants to pay the full amount billed by the health care providers to injured plaintiffs. Kansas courts instead have typically based the value of damages on the reasonable expense of treatment. See, e.g., Shirley v. Smith, 261 Kan. 685, 693, 933 P.2d 651 (1997) ("The reasonable expense of treatment is a proper element of economic damages."); Cansler v. Harrington, 231 Kan. 66, 69, 643 P.2d 110 (1982) (question of reasonableness is jury question); Bates v. Hogg, 22 Kan.App.2d 702, Syl. ¶ 3, 921 P.2d 249, rev. denied 260 Kan. 991 (1996) (person who suffers personal injuries because of the negligence of another is entitled to recover the reasonable value of medical care and expenses for the treatment *222 of his or her injuries); PIK Civ. 4th 171.02 (recoverable damages for personal injury include "reasonable expenses of necessary medical care"). Accordingly, the defendant has a right to challenge the reasonableness of the plaintiff's medical expenses. Cansler v. Harrington, 231 Kan. at 69, 643 P.2d 110.
The "reasonable value" approach to recovery of medical expenses is expressly identified as the one required in the Kansas Automobile Injury Reparations Act in K.S.A. 40-3117. For plaintiffs in a tort action involving motor vehicles to be eligible to seek noneconomic damages, e.g., pain and suffering, they can be required to have an injury with medical treatment of "reasonable value" of $2,000 or more. But the statute goes further and expresses how reasonable value is to be determined. It provides that "the charges actually made for medical treatment expenses shall not be conclusive as to their reasonable value." (Emphasis added.) K.S.A. 40-3117. Instead, "[e]vidence that the reasonable value thereof was an amount different from the amount actually charged shall be admissible." 40-3117; see Wildermuth, 2002 WL 922137. Evidence demonstrating that the charged amount is not reasonable typically has been admitted through cross-examination of plaintiff's witnesses, by direct examination of defendant's witnesses, or both.
Based upon our review of this and other Kansas state case law on the reasonable value of medical expenses and our review of Kansas law on write-offs and the collateral source ruleboth from state court and federal courtswe reach several conclusions in the instant case.
First, we reject plaintiff's benefit of the bargain approach because of the shortcomings previously listed. Second, the reasonable value approach to medical expenses remains valid, including when the medical services are self-administered or gratuitously provided by family members. See, e.g., Shirley v. Smith, 261 Kan. at 693, 933 P.2d 651 ("The reasonable expense of treatment is a proper element of economic damages."); Lewark v. Parkinson, 73 Kan. 553, 555-56, 85 P. 601 (1906); PIK Civ. 4th 171.02. Third, the charges "actually made" or billed by the health care provider for plaintiff's medical treatment expenses are not conclusive as to their reasonable value: other evidence shall be admissible. See, e.g., Cansler v. Harrington, 231 Kan. at 69, 643 P.2d 110 (defendant has right to challenge reasonableness of plaintiff's medical expenses); K.S.A. 40-3117. Toward that end, we note that according to KADC's brief, studies performed earlier in this decade reveal that the average charge-to-cost ratio (i.e., "mark-up") for approximately 4,000 hospitals across the country was 244.37%. Wesley Medical Center, the hospital where our plaintiff underwent her surgery and treatment, had a charge-to-cost ratio of almost 400% according to this study.
Fourth, and most important to resolving the issue in the instant case's collateral source context, this other evidence relevant to determining the reasonable value of medical expenses may include write-offs or other acknowledgments that something less than the charged amount has satisfied, or will satisfy, the amount billed. Accordingly, neither the amount billed nor the amount actually accepted after a write-off conclusively establishes the "reasonable value" of medical services. We therefore expressly reject the Wildermuth court conclusion that the amount accepted in satisfaction "should be deemed the `reasonable value'" of the medical services. Wildermuth, 2002 WL 922137, at *7. We also reject similar expressions contained in Fischer v. Farmers Insurance Company, Inc., No. 90,246, 2005 WL 400404, unpublished opinion filed February 18, 2005, and Liberty, e.g., that the paid amount is the measure of the reasonable value of medical care and treatment. In short, we embrace the rationale and holding of Robinson v. Bates, 112 Ohio St.3d 17, 857 N.E.2d 1195, from the Ohio Supreme Court: When medical treatment expenses are paid from a collateral source at a discounted rate, determining the reasonable value of the medical services becomes an issue for the finder of fact. Stated more completely, when a finder of fact is determining the reasonable value of medical services, the collateral source rule bars admission of evidence stating that the expenses were paid by a collateral source. However, the rule does not address, much *223 less bar, the admission of evidence indicating that something less than the charged amount has satisfied, or will satisfy, the amount billed.
The Robinson approachalthough rejected since its December 2006 release by Wisconsin (Leitinger v. DBart, Inc., 302 Wis.2d 110, 736 N.W.2d 1 (2007)) and Illinois (Wills v. Foster, 229 Ill.2d 393, 323 Ill.Dec. 26, 892 N.E.2d 1018 (2008))was embraced by the Indiana Supreme Court in Stanley v. Walker, 906 N.E.2d 852 (May 2009). There, plaintiff introduced into evidence his medical bills showing the amounts originally billed to him ($11,570). Defendant attempted to introduce the discounted amount actually paid and accepted as satisfaction of the bill ($6,820). The trial court excluded defendant's evidence, holding that insurance and "`anything flowing from the insurance benefit purchased by the plaintiff'" would be prohibited by the collateral source statute. 906 N.E.2d at 854. The Indiana Supreme Court ultimately remanded with an order to reduce the damage award, holding that the statute did not bar admission of evidence of discounted amounts or write-offs for the purpose of determining the reasonable value of medical services. 906 N.E.2d at 858-59. Its journey to this conclusion is instructive.
The Stanley court elaborated upon the rationale established by the Ohio Supreme Court in Robinson. Although Indiana, unlike Kansas, has a collateral source statute, like Kansas law the Indiana statute retained
"the common law principle that collateral source payments should not reduce a damage award if they resulted from the victim's own foresightboth insurance purchased by the victim and also government benefitspresumably because the victim has paid for those benefits through taxes." Stanley, 906 N.E.2d at 855.
Also like in Kansas, an Indiana "injured plaintiff is entitled to recover damages for medical expenses that were both necessary and reasonable." (Emphasis added.) Stanley, 906 N.E.2d at 855. As a result, the Stanley court, like this court in the instant case (and as suggested in Fischer and Liberty), was directly "confronted with the question of how to determine the reasonable value of medical services, when an injured plaintiff's medical treatment is paid from a collateral source at a discounted rate." Stanley, 906 N.E.2d at 855.
The Stanley court noted that while the proper measure of medical expenses is their reasonable value, that particular determination was difficult due to complexities of health care pricing structures:
"The complexities of health care pricing structures make it difficult to determine whether the amount paid, the amount billed, or an amount in between represents the reasonable value of medical services. One authority reports that hospitals historically billed insured and uninsured patients similarly. Mark A. Hall & Carl E. Schneider, Patients as Consumers: Courts, Contracts and the New Medical Marketplace, 106 MICH. L.REV. 643, 663 (2008). With the advent of managed care, some insurers began demanding deep discounts, and hospitals shifted costs to less influential patients. Id. This authority reports that insurers generally pay about forty cents per dollar of billed charges and that hospitals accept such amounts in full satisfaction of the billed charges. Id." Stanley, 906 N.E.2d at 857.
The Stanley court observed the present tenuous relationship between medical charges and medical costs. Accordingly, it concluded that the reasonable value of medical services was not necessarily represented by either the amount originally billed or the amount actually paid:
"As more medical providers are paid under fixed payment arrangements, another authority reports, hospital charge structures have become less correlated to hospital operations and actual payments. The Lewin Group, A Study of Hospital Charge Setting Practices (2005). Currently the relationship between charges and costs is `tenuous at best.' Id. at 7. In fact, hospital executives reportedly admit that most charges have `no relation to anything, and certainly not to cost.' Hall, Patients as Consumers at 665. Thus, based on the realities of health care finance, we are unconvinced that the reasonable value of medical services is necessarily represented *224 by either the amount actually paid or the amount stated in the original medical bill." (Emphasis added.) Stanley, 906 N.E.2d at 857.
After acknowledging that the focus was on the reasonable value of medical services, not the actual charge, the Stanley court held that the Robinson approach was also the fairest. More specifically, the Robinson court avoided the problem of creating separate categories of plaintiffs based upon how their medical expenses were financed:
"The reasonable value of medical services is the measure used to determine damages to an injured party in a personal injury matter. This value is not exclusively based on the actual amount paid or the amount originally billed, though these figures certainly may constitute evidence as to the reasonable value of medical services. A defendant is liable for the reasonable value of the services. We find this to be the fairest approach; to do otherwise would create separate categories of plaintiffs based on the method used to finance medical expenses. See Robinson, 857 N.E.2d at 1200 (discussing how its rule avoided the creation of separate categories of plaintiffs based on individual insurance coverage)." (Emphasis added.) Stanley, 906 N.E.2d at 858.
The Stanley court recognized several methods, including those used in Kansas, for determining the reasonable value of medical expenses:
"Given the current state of the health care pricing system where, to repeat, authorities suggest that a medical provider's billed charges do not equate to cost, the jury may well need the amount of the payments, amounts billed by medical service providers, and other relevant and admissible evidence to be able to determine the amount of reasonable medical expenses. To assist the jury in this regard, a defendant may cross-examine any witness called by the plaintiff to establish reasonableness. The defendant may also introduce its own witnesses to testify that the billed amounts do not represent the reasonable value of services." (Emphasis added.) Stanley, 906 N.E.2d at 858.
See, e.g., K.S.A. 40-3117.
The Stanley court then approved the additional method permitted in Robinson for determining reasonable value, i.e., allowing evidence of discounted amounts, write-offs, or reimbursement rates:
"Additionally, the defendant may introduce the discounted amounts into evidence to rebut the reasonableness of charges introduced by the plaintiff. We recognize that the discount of a particular provider generally arises out of a contractual relationship with health insurers or government agencies and reflects a number of factorsnot just the reasonable value of the medical services. However, we believe that this evidence is of value in the fact-finding process leading to the determination of the reasonable value of medical services." (Emphasis added.) 906 N.E.2d at 858.
The Stanley court concluded that "to the extent the discounted amounts may be introduced without referencing insurance, they may be used to determine the reasonable value of medical services." (Emphasis added.) Stanley, 906 N.E.2d at 853; see also Scott v. Garfield, 454 Mass. 790, 807, 912 N.E.2d 1000 (2009) (Cordy and Botsford, JJ., concurring) ("While I do not challenge the principal tenet of the collateral source rule, that benefits or payment received on behalf of a plaintiff from an independent source should not diminish recovery from the tortfeasor, the plaintiff is only entitled to the reasonable value of his medical expenses, and the price that a medical provider is prepared to accept for the medical services rendered is highly relevant to that determination."); cf. Liberty v. Westwood United Super, Inc., No. 89,143, 2005 WL 1006363, unpublished opinion filed April 29, 2005, rev. denied 280 Kan. 983 (2005) ("[T]he issue presented is not the applicability of the collateral source rule, but rather the `reasonable value of medical care and expenses for the treatment of [the victim's] injuries.'").
*225 Criticism of Robinson
Robinson has been criticized. As mentioned, since Robinson's December 2006 release its approach has been rejected by Wisconsin (Leitinger v. DBart, Inc., 302 Wis.2d 110, 736 N.W.2d 1 (2007)) and Illinois (Wills v. Foster, 229 Ill.2d 393, 323 Ill.Dec. 26, 892 N.E.2d 1018 (2008)). Robinson's specific rationale that the evidence of write-offs and discounts is relevant and admissible for determining the reasonableness of the plaintiff's medical expenses has been expressly rejected. Among other things, the concerns seem to be that admitting evidence of the write-offs and discounts will (1) impair or undermine the collateral source rule; (2) confuse the jury; and (3) be of marginal, or no, relevance. Each concern will be addressed in turn.
1. Undermining of Collateral Source Rule
The Wisconsin Supreme Court in Leitinger expressed the concern that admitting evidence of the discounts or reimbursement rates undermines the collateral source rule:
"[T]he tortfeasor is not to benefit from the fact that the medical services provider was paid less by a collateral source than the amount billed. If evidence of the collateral source payments were admissible, even for consideration of the reasonable value of the medical treatment rendered, a plaintiff's recovery of medical expenses would be affected by the amount actually paid by a collateral source for medical services. Such a `limitation' on the plaintiff's damages contravenes the view of the collateral source rule." (Emphasis added.) 302 Wis.2d at 135-36, 736 N.W.2d 1.
The Leitinger court further considered the argument that the defendant insurance company was not undercutting the collateral source rule because it was seeking to introduce as evidence only the amount actually paid for medical treatment, not the source of the compromised payments, and was not seeking "to reduce the damages by the amount of these collateral source payments." 302 Wis.2d at 136, 736 N.W.2d 1. The Wisconsin Supreme Court observed that this argument had been rejected by the South Carolina Supreme Court in Covington v. George, 359 S.C. 100, 104, 597 S.E.2d 142 (2004):
"The South Carolina Supreme Court evaluated an argument similar to [defendant's]. The court declared that `[w]hile facially appealing, this argument ignores the reality that unexplained, the compromised payments would in fact confuse the jury. Conversely, any attempts on the part of the plaintiff to explain the compromised payment would necessarily lead to the existence of a collateral source.' The South Carolina Supreme Court held that the collateral source rule is directly implicated and that a party cannot introduce evidence of the actual payment by a collateral source to challenge the reasonableness of the plaintiff's medical expenses." (Emphasis added.) 302 Wis.2d at 137, 736 N.W.2d 1.
Like the South Carolina Supreme Court, the Leitinger court then rejected the defendant insurance company's argument, essentially holding that the defendant was trying to outflank the collateral source rule:
"Although claiming that the evidence assists the fact-finder in determining the reasonable value of the medical treatment and does not limit or reduce the damages, [the defendant], in essence, is seeking to do indirectly what it cannot do directly, that is, it is seeking to limit [the plaintiff's] award for expenses for medical treatment by introducing evidence that payment was made by a collateral source. [Defendant] ignores the fact that the collateral source rule protects against the `ever-present danger that the jury will misuse the evidence [of collateral payments] to diminish the damage award.' [Defendant] is trying to circumvent the collateral source rule.
"The collateral source rule prevents the fact-finder from learning about collateral source payments, even when offered supposedly to assist the jury in determining the reasonable value of the medical treatment rendered, so that the existence of collateral source payments will not influence the fact-finder." (Emphasis added.) 302 Wis.2d at 137, 736 N.W.2d 1.
Apparently, Wisconsin's Supreme Court and Illinois' in Willswould be concerned in *226 the instant case that once the jury hears that $5,310 was accepted to satisfy the hospital's original bill to plaintiff of $70,496.15, it would perhaps not only fail to award the $65,186.15 but that it would also deduct the paid $5,310 (or at least Coventry's $4,689) from its final damage award. In other words, the jury would not even award for the $4,689 because that amount had already been paid by a collateral source, i.e., "`the jury will misuse the evidence of collateral payments to diminish the damage award.'" 302 Wis.2d at 137, 736 N.W.2d 1.
The evidence admitted, however, need not necessarily be "evidence that payment was made by a collateral source," e.g., private insurance or Medicare. 302 Wis.2d at 137, 736 N.W.2d 1. Accordingly, if the jury only hears that "the hospital will accept $5,000 to satisfy its bill of $70,000," i.e., it does not hear that payment was actually made, then the jury can still reasonably perceive that the plaintiff will make payment herself. Similarly, even if the jury hears that "$5,000 has paid this $70,000 bill in full," then the jury can still reasonably perceive that the plaintiff has paid it herself, e.g., by receiving a cash discount. In fact, in the instant case, plaintiff did pay part of the bill herself.
Stanley v. Walker, 906 N.E.2d 852, is again particularly instructive. There, defendant Stanley conceded that he could not ask plaintiff the amount of expenses that were paid by his health insurance carrier because "`that's the collateral source.'" 906 N.E.2d at 858. Instead, he sought to enter into evidence the amount that two parties had agreed to as "reasonable," as evidenced by the discounts. Specifically, Stanley wanted to submit evidence showing that the amount accepted in satisfaction of the medical charges totaled $6,820, that is, $4,750 less than the $11,570 originally billed. The court held that "[b]ecause Stanley sought to do so without referencing insurance, his evidence should have been admitted." 906 N.E.2d at 859.
Accordingly, we are unpersuaded that the "unexplained compromise payment" will cause ill effects. See Covington, 359 S.C. at 104, 597 S.E.2d 142 (rejecting defendant's argument because "unexplained, the compromise payments would in fact confuse the jury"). We therefore respectfully disagree with the courts in Leitinger and Covington.
2. Jury Confusion
As mentioned, in Leitinger the Wisconsin Supreme Court also articulated concerns about confusion caused by admitting evidence of discounts and reimbursement rates. This particular concern apparently arises because discounts can be due to factors besides the value of medical services:
"The admission in evidence of the amount actually paid in the present case, even if marginally relevant [to reasonable value of medical expenses], might bring complex, confusing side issues before the fact-finder that are not necessarily related to the value of the medical services rendered. Accordingly, [defendant insurance company] errs in insisting that the amount actually paid by a collateral source in the present case is a factor for the fact-finder in determining reasonable value of those services." (Emphasis added.) 302 Wis.2d at 145-46, 736 N.W.2d 1.
See, e.g., Wills, 229 Ill.2d 393, 323 Ill.Dec. 26, 892 N.E.2d 1018. This concern somewhat overlaps with the earlier articulated concerns by courts about unexplained compromise payments confusing the jury. See, e.g., Covington, 359 S.C. at 104, 597 S.E.2d 142.
We are confident that any concerns about jury confusion with possible side issues can be alleviated by a vigilant trial court. At the time the write-off and discount evidence is admitted, the court can, if necessary, inform the jury of the evidence's limited purpose. See K.S.A. 60-406 ("When relevant evidence is admissible . . . for one purpose and is inadmissible for another purpose, the judge upon request shall restrict the evidence to its proper scope and instruct the jury accordingly."). Kansas trial courts have been instructing juries in this fashion for many years. See State v. Kidwell, 199 Kan. 752, 755, 434 P.2d 316 (1967) ("When evidence is introduced for a limited purpose the trial court should explain the limitation to the jury and limit its application to that purpose.") (citing Griffith v. Railroad Co., 100 Kan. 500, 166 P. 467 (1917)). The trial court can also, if necessary, inform the jury of the *227 particular purpose of the evidence through limiting instructions at the time the case is submitted. See PIK Civ. 4th 102.40 ("Whenever any evidence has been admitted limited to one purpose, the jury should not consider it for any other purpose.").
We observe, for example, that Kansas courts frequently admit evidence in criminal trials of a defendant's prior crimes and civil wrongs under K.S.A. 60-455. This evidence is potentially quite prejudicial as improper proof of defendant's propensity to commit the present, often egregious, crimes. But the evidence is nevertheless allowed provided that the jury receives limiting instructions about the narrow purposes for its admissibility, e.g., motive and knowledge. See State v. Gunby, 282 Kan. 39, 144 P.3d 647 (2006). And the failure to give such limiting instruction does not demand automatic reversal but is subject to a harmlessness analysis. 282 Kan. at 58, 144 P.3d 647; see State v. Cruse, 112 Kan. 486, 496, 212 P. 81 (1923).
We turn now to the specific concern about introducing confusing side issues that are not necessarily related to the reasonable value of the medical services rendered. We observe that in Wisconsin medical malpractice actions, evidence of collateral source payments nevertheless can be admissible for this particular valuation purpose. See Leitinger, 302 Wis.2d at 140-41, 145 n. 66, 736 N.W.2d 1 ("In Lagerstrom, this court recognized that the legislature decided in enacting Wis. Stat. § 893.55[7] that evidence of collateral source payments may be relevant to determining the reasonable value of medical services" but "must not reduce the reasonable value of medical services by the amount of the collateral source payments.").
Presumably, the Wisconsin trial courts take appropriate precautions when handling these malpractice cases and strike an acceptable balance between these competing considerations. Indeed, in Lagerstrom v. Myrtle Werth Hosp.Mayo Health Sys., 285 Wis.2d 1, 39, 700 N.W.2d 201 (2005), the Wisconsin Supreme Court ruled that while evidence of collateral source payments may be used by the jury to determine the reasonable value of medical services, "the circuit court must instruct the fact-finder that it must not reduce the reasonable value of medical services on the basis of the collateral source payments." 285 Wis.2d at 38, 700 N.W.2d 201. In this fashion, Wisconsin appears to ably address the aftermath of the concern of the South Carolina Supreme Court in Covington that "attempts on the part of plaintiff to explain the compromised payment would necessarily lead to the existence of a collateral source." (Emphasis added.) 359 S.C. at 104, 597 S.E.2d 142. In short, the plaintiff's rights can be protected.
Several of our concurring colleagues criticize our rationale and holding. The following abbreviated responses are sufficient.
First, they contend that under our holding, the uninsured plaintiff is eligible to recover for the full amount of services billed while the insured plaintiff is not. They label this as discriminatory. We disagree. An uninsured plaintiff may herself pay her medical expenses at a negotiated price, e.g., steep cash discount upon her threat of bankruptcy. See Robinson, 112 Ohio St.3d at 23, 857 N.E.2d 1195 ("Both the original medical bill rendered and the amount accepted as full payment are admissible to prove the reasonableness and necessity of charges rendered for medical and hospital care.") In that event, just as with an insured plaintiff who has insurance carrier write-offs, evidence of the lower amount accepted in full satisfaction of the debt could be admissible for determining the reasonable value of the medical services.
Second, in today's world we do not share the concerns of our concurring colleagues about the purported catastrophic results emanating from a jury's "likely inference" about the existence of a plaintiff's collateral source, e.g., medical insurance. For example, for years Kansas has required motor vehicle liability insurance coverageor self-insuranceand prohibited the owner of an uninsured vehicle from allowing it to be operated on highways or upon property open to use by the public. K.S.A. 40-3104. And for years Kansas has also required owner certification of the maintenance of insurance before applying for registration or renewal of registration of motor vehicles. K.S.A. 8-173(c). Because Kansas juries are often selected *228 from drivers' license rolls, our juries obviously contain Kansas drivers and motor vehicle owners. Accordingly, they will "likely infer" insurance coverage for defendants and plaintiffs in cases involving motor vehicle accidents. Yet we routinely entrust our juries with considering liability and determining resultant damage amounts.
The two-car accident case of Bott v. Wendler, 203 Kan. 212, 453 P.2d 100 (1969), is of guidance on this issue. There, the jury sent back the following question to the court during their deliberation: "Amount of liability Ins. of Mrs. Bott and Mr. WendlerThere is a lot of money involved here and we do not want to leave either party penniless. This we need to knowPlease." 203 Kan. at 224, 453 P.2d 100. The jury rejected defendants' damage claims and awarded damages to plaintiffs. Defendants appealed, arguing that because of plaintiffs' counsel's efforts, "the probability and fact that the defendants were covered by liability insurance was injected into the case which materially prejudiced the defendants." 203 Kan. at 223, 453 P.2d 100. In one specific contention, defendants claimed that counsel had several times referred to men who the jury might have identified as representatives of defendants' insurance carrier who had helped defense counsel investigate the case.
In rejecting defendants' argument, we held that, among other things:
"Furthermore, there is nothing in the record to suggest that the jury's question to the court concerning liability insurance was motivated by any reference to insurance at the trial, nor does such fact suggest insurance was improperly injected into the case. It is general knowledge that most drivers today have liability insurance, and neither party to a lawsuit should be prejudiced by a question which may be prompted by the jury's own experience and common knowledge of the affairs of mankind." (Emphasis added.) 203 Kan. at 228, 453 P.2d 100.
See also Kelty v. Best Cabs, Inc., 206 Kan. 654, 481 P.2d 980 (1971) (Despite plaintiff's doctor's "monstrous testimony" about insurance, e.g., his employment of "the opprobrious term," the "malignant term," and "odious expression", court held reference was inadvertent and did not prejudicially affect the substantial rights of the complaining party).
We now turn to the Wisconsin Supreme Court's last set of concerns.
3. Relevance
The Leitinger court also expressed relevance concerns with evidence of discounts and reimbursement rates:
"The evidence [defendant insurance company] proffers will not assist the fact-finder as [defendant] claims, because a particular health insurance company's negotiated rates with a health care provider are not necessarily relevant evidence of the reasonable value of the medical services in a tort action. . . . The reimbursement rate of a particular health insurance company generally arises out of a contractual relationship and reflects a multitude of factors related to the relationship of the insurance company, and the provider, not just to the reasonable value of the medical services." (Emphasis added.) 302 Wis.2d at 144, 736 N.W.2d 1.
See, e.g., Radvany v. Davis, 262 Va. 308, 310, 551 S.E.2d 347 (2001) ("negotiated amounts. . . do not reflect the `prevailing cost' of those services to other patients").
The Indiana Supreme Court in Stanley v. Walker essentially acknowledged this concern but nevertheless found the evidence of discounts relevant to the reasonable value of medical services:
"We recognize that the discount of a particular provider generally arises out of a contractual relationship with health insurers or government agencies and reflects a number of factorsnot just the reasonable value of the medical services. However, we believe that this evidence is of value in the fact-finding process leading to the determination of the reasonable value of medical services." (Emphasis added.) Stanley, 906 N.E.2d at 858.
In Kansas, relevant evidence is any "evidence having any tendency in reason to prove any material fact." K.S.A. 60-401(b). Relevance only requires a logical connection between the asserted facts and *229 the inferences they are intended to establish. State v. Richmond, 289 Kan. 419, Syl. ¶ 9, 212 P.3d 165 (2009). Given this standard, we agree with the Stanley court. Evidence of the amount accepted in satisfaction of the bill for medical services provided to an injured plaintiff is of relevance, i.e., some value, in determining the reasonable value of those services. As mentioned, the Leitinger court itself acknowledged that the Wisconsin Legislature apparently felt that evidence of collateral source payments was relevant in medical malpractice actions for the purpose of determining the reasonable value of medical services. 302 Wis.2d at 140-41, 145 n. 66, 736 N.W.2d 1; see also Scott v. Garfield, 454 Mass. 790, 912 N.E.2d 1000 (Mass.2009) (Cordy and Botsford, JJ., concurring) ("The plaintiff is only entitled to the reasonable value of his medical expenses, and the price that a medical provider is prepared to accept for the medical services rendered is highly relevant to that determination.").
Moreover, when such relevant evidence is withheld from the jury, the jury is inappropriately left to speculate on the reasonable value of the medical services. We agree with the Leitinger dissent:
"`If the higher stated medical bill, an amount that never was and never will be paid, is admitted without evidence of the lower reimbursement rate, the jury is basing their verdict on `mere speculation or conjecture.' The difference between the stated bill and the paid charges . . . is purely fictional as a true charge.' [Citation omitted.]" 302 Wis.2d at 156, 736 N.W.2d 1 (Roggensack, J. dissenting).
The Leitinger dissent is consistent with this court's long-stated concerns about awarding damages based upon speculative evidence:
"In a negligence action, recovery may be had only where there is evidence showing with reasonable certainty the damage was sustained as a result of the negligence. Recovery may not be had where the alleged damages are too conjectural or speculative to form a basis for measurement. To warrant recovery of damages, therefore, there must be some reasonable basis for computation which will enable the trier of fact to arrive at an estimate of the amount of the loss." (Emphasis added.) McKissick v. Frye, 255 Kan. 566, 591, 876 P.2d 1371 (1994).
Here, if there is only evidence admitted of a $70,496.15 hospital bill, and no evidence of any lesser amount being accepted in satisfaction of that bill, a jury would easily be justified in awarding the full $70,496.15 as reasonable value of damages. Cf. Jackson v. City of Kansas City, 263 Kan. 143, 151-52, 947 P.2d 31 (1997) (jury awarded more than amount of medical bills: court refused to reduce jury verdict to amount actually paid by plaintiff on those bills because no evidence in record that hospital had settled for less than the amount due or had written off the remaining portion of the bills). This verdict would be sustainable despite the awarded amount being approximately 12 times the amount the defendant contendsand the hospital's acceptance suggeststhat the services are reasonably worth. With this result, we begin to leave the realm of compensatory damages and move toward the punitive.
Moreover, of this $70,496.15 awarded to plaintiff, not even the $4,689 actually paid by Coventry would be subject to subrogation. K.A.R. 40-1-20 provides:
"An insurance company shall not issue contracts of insurance in Kansas containing a `subrogation' clause applicable to coverages providing for reimbursement of medical, surgical, hospital or funeral expenses."
In conclusion, we reverse and remand to the district court for further proceedings. On remand the district court may allow into evidence (1) the original amount billed ($70,496.15), and (2) the amount accepted by the hospital in full satisfaction of the amount billed ($5,310). However, evidence of the source of any actual payments is inadmissible under the collateral source rule. The finder of fact shall determine from these and other facts the reasonable value of the medical services provided to plaintiff.
JOHNSON, J., concurring:
On the issue of medical care provider discounts, I remain convinced that Bates v. *230 Hogg, 22 Kan.App.2d 702, 921 P.2d 249, rev. denied 260 Kan. 991 (1996); Fischer v. Farmers Insurance Company, Inc., No. 90,246, 2005 WL 400404, unpublished opinion filed February 18, 2005; and Liberty v. Westwood United Super, Inc., No. 89,143, 2005 WL 1006363, unpublished opinion filed April 29, 2005, rev. denied 280 Kan. 983 (2005), reached the correct result on the questions that are presented in this case, i.e., whether contractual discounts or write-offs are a collateral source benefit subject to the collateral source rule and how to appropriately measure the reasonable value of medical services. However, if I remain true to my convictions, the trial bench and litigation bar in this state will be placed in the untenable position of not knowing what evidence is legally admissible on the question of economic damages.
The existing precedent, i.e., Bates, Fischer, and Liberty, to which I adhere, would instruct the trial court to admit only the evidence of the amount which the medical care provider had contractually agreed to accept in full satisfaction of the bill for medical services (amount paid). Three of my colleagues would tell the district court that evidence of the amount the provider initially billed (prediscount amount) is admissible and the trial court risks reversal based upon a violation of the collateral source rule if any evidence is admitted on the amount actually paid or the amount of the discounts. The remaining three justices would affirm a trial court's admission of any relevant evidence of the reasonable value of the medical services, which they believe could include both the prediscount amount and the amount paid. In effect, the trial court would be told that one justice says only the amount paid, three justices say only the prediscount amount, and three justices say both the prediscount amount and the amount paid. What evidence could a trial judge admit without risking reversal?
I do not discern in my colleagues' opinions any practical solution to the dilemma this appellate court deadlock would present to the district court upon remand. Therefore, to avoid a calamity of epic proportions, I will fall on the sword of pragmatism. I cast my vote with my colleagues who believe that both the prediscount amount and the amount actually paid are relevant, admissible evidence of damages. However, in a fit of self-pitying martyrdom, I feel entitled to indulge myself by setting forth some selected thoughts on the matter.
I begin by taking issue with Justice Nuss' characterization of the first opinion in Rose v. Via Christi Health System, Inc., 276 Kan. 539, 78 P.3d 798 (2003). Although I believe the labeling of that opinion as "Rose I" unduly elevates its status, I will follow that nomenclature for the sake of simplicity, as well as referring to Justice Nuss' opinion as the majority and the joint opinion of Chief Justice Davis, Justice Rosen, and Justice Biles as the concurrence.
I am concerned about two possible misconceptions about Rose I. First, the majority's repeated reference to the Court of Appeals' decision in Liberty as being "contrary to [the Supreme Court's] holding in Rose I" seems to intimate a failure by the Courts of Appeals to follow Kansas Supreme Court precedent. See Buchanan v. Overley, 39 Kan.App.2d 171, 175-76, 178 P.3d 53 (2008) ("[The Court of Appeals] is duty bound to follow Kansas Supreme Court precedent, absent some indication the court is departing from its previous position."). Second, in its synthesized chronology of recent Kansas law, the majority declares that after Bates, but before Fischer, "Medicare write-offs are covered by the collateral source rule per Rose I."
With regard to the first concern, the majority fails to mention that both Fischer and Liberty acknowledged the existence of Rose I, but opined that, pursuant to the Supreme Court's own rules, that decision was not binding precedent on the Court of Appeals at the time Fischer and Liberty were decided and filed. I believe a review of the chronology of Rose I and Liberty in conjunction with the Supreme Court Rules will confirm that legal conclusion.
Rose I was filed October 31, 2003. Before the mandate was issued on that opinion, the defendant hospital, Via Christi, filed a timely motion for rehearing or modification on November 20, 2003. See Kansas Supreme Court Rule 7.06(a) (2009 Kan. Ct. R. Annot. 60) (motion for rehearing or modification to *231 be filed within 20 days of decision date). The filing of the motion for rehearing or modification stayed the issuance of a mandate in the case, pending the determination of the issues raised in the motion. Rule 7.06(a). The decision was not an effective final order, because the mandate had not issued. Cf. K.S.A. 60-2106(c) (Supreme Court may by rule provide for postdecision motions for rehearing; when under such rule a decision of an appellate court becomes final, such court shall promptly cause transmission of its mandate). The Supreme Court granted the motion for rehearing on January 7, 2004. "If a rehearing is granted, such order suspends the effect of the original decision until the matter is decided on rehearing." Rule 7.06(a) (2009 Kan. Ct. R. Annot. 60). The case was not decided on rehearing until the decision in Rose II was filed on June 3, 2005. Rose v. Via Christi Health System, Inc., 279 Kan. 523, 113 P.3d 241 (2005). To summarize, a mandate was not issued on Rose I; the issuance of such a mandate was stayed, by rule, on November 20, 2003; the legal effect of Rose I was suspended, by rule, on January 7, 2004; and the suspension of Rose I's legal effect continued for approximately 1 1/2 years, until June 3, 2005.
The Liberty case was set for hearing in the Court of Appeals on February 13, 2004, after the effect of Rose I had been legally suspended. Some 14 months later, when Liberty was filed, the Court of Appeals panel noted that it was "not currently bound by [Rose I], albeit we have afforded our high court the deference of delaying our decision in the hope that a rehearing decision would be forthcoming. However, we now choose to proceed, based upon Bates." Liberty, slip op. at 12.
To reiterate, because the legal effect of Rose I remained suspended, that original decision was not binding precedent upon the Court of Appeals (or anyone else for that matter) when Liberty was filed. Indeed, if the Court of Appeals panel had been inclined to follow the rationale of Rose I, it could not have cited to that unmandated opinion for supporting legal authority. Perhaps the publication of the Rose I opinion in our official reports convinces the majority that it had precedential value. Nevertheless, at the time, there was no mandatory holding from the Supreme Court in the Rose case to which Liberty could be "contrary"; rather, the only legally effective precedent was Bates. Moreover, even if Rose I could have been considered some sort of persuasive authority, the Supreme Court's uncommon act of granting a rehearing in the case certainly provided "some indication the court is departing from its previous position." Overley, 39 Kan. App.2d at 175-76, 178 P.3d 53. As time would tell, the Supreme Court did depart from its original decision.
My second concern is with treating Rose I as part of the case law in this state on the issue of medical bill discounts. In my view, Rose I never became the law in Kansas. As the majority notes, when the matter was decided on rehearing, the Supreme Court issued the opinion referred to as Rose II. When the sole and only mandate in this case was issued on September 22, 2005, it was accompanied by Rose II, not Rose I. As the majority notes, Rose II specifically declined to decide whether medical bill discounts or write-offs are a benefit from a collateral source. 279 Kan. at 534, 113 P.3d 241. In other words, to this day, the Supreme Court has not issued a mandate accompanied by an opinion that includes a holding on the medical bill discount issue presented in this case. In my view, Rose I possesses no more legal effect or precedential value than a draft opinion; it is not now nor has it ever been a final order of the Kansas Supreme Court.
To the contrary, Bates, Fischer, and Liberty, represent the case law from Kansas state courts on this issue. Ironically, the Supreme Court declined an opportunity to answer the question it left unanswered in Rose II or to reject the holding in Liberty on this issue when it denied the petition for review in Liberty on the same date that it issued the mandate in Rose II. Although one cannot read anything into a denial of a petition for review, one might ponder why the Supreme Court would let Liberty stand unabated if Rose I was Kansas law and Liberty was "contrary to [the] holding in Rose I."
Turning now to the concurrence, I note that my concurring colleagues are enamored with the fact that the collateral source rule *232 has a "100-year-old history" in this state. With tongue in cheek, I would point out that the rule against perpetuities also has a long history in this state, but such longevity alone does not make the rule against perpetuities applicable to the question presented in this case. Likewise, the contractual write-offs must fit within the definition of a collateral source benefit, regardless of how long the collateral source rule has been applied in this state to insurance benefits that are actually paid to the medical care provider. I wholeheartedly agree with preserving the century-old collateral source rule in this case by excluding evidence that the health insurer paid $4,689 of the $5,310 bill which was actually paid. I would not, today and for the first time in this state, extend the rule to the phantom portion of the bill designated as discounts or write-offs.
Looking at the concurrence's recitation of the collateral source rule from Wentling v. Medical Anesthesia Services, 237 Kan. 503, 515, 701 P.2d 939 (1985), I note that it states that "`[t]he collateral source rule permits an injured party to recover full compensatory damages.'" (Emphasis added.) (Quoting 3 Minzer, Nates, Kimball, Axelrod and Goldstein, Damages in Tort Actions § 17.00, p. 17-5 [1984]). A victim is fully compensated when returned to his or her preinjury status. With respect to medical services, that preinjury status is that the victim owes no medical bill. If judgment is awarded to the plaintiff in an amount that will fully pay the medical bill, i.e., in an amount that the medical care provider has contractually agreed to accept in full settlement of the services provided, the plaintiff is returned to the preinjury status of owing for no medical services and he or she has been fully compensated. Allowing the victim to recover the amount of the contractual write-offs, which were never intended to be paid by anyone, places the plaintiff in a better position after the injury with a pocketful of fictional discount damages. The rationale often given is that it is better to give the plaintiff a windfall than to let a tortfeasor escape full responsibility for his or her wrongful act. That rationale suggests that the unpaid discount damages are actually punitive damages to teach the tortfeasor a lesson, rather than compensatory damages to make the plaintiff whole.
Looking further at the Wentling definition of the collateral source rule, recited by the concurrence, it states that "`[t]he rule also precludes admission of evidence of benefits paid by a collateral source.'" (Emphasis added.) Wentling, 237 Kan. at 515, 701 P.2d 939 (quoting Damages in Tort Actions § 17.00, p. 17-5). Of course, as noted, the write-offs were not "paid" by Coventry Health Systems (health insurer), the "collateral source" in this instance, or by anyone else. In advance of Martinez' entering Wesley Medical Center (hospital), Coventry had negotiated the discounts for its own benefit and Wesley had agreed to accept the discounted payments, presumably to qualify as an authorized provider for those persons insured with Coventry. The discounts resulted from a business deal between Coventry and Wesley. There certainly was no gratuity involved.
Moreover, the bargained-for benefit concept is illusory. One would presume that Martinez purchased health insurance to assure that she could receive reimbursement of or payment for needed medical services which might be required for any reason, including illnesses, as well as accidents. Health insurance is first-party coverage. It stretches one's credulity to believe a person purchases health insurance with a view to the size of the discounts that might be collected from a tortfeasor in the event medical services are occasioned by someone else's negligence. To the contrary, a health insurance purchaser is fiscally motivated by the amounts that will need to be personally paid to the company in premiums; by the amounts that will need to be personally paid to the health care providers in deductibles and copayments; and by the scope of the services covered by the policy, e.g., maternity benefits.
Of course, some of what I set forth here is drawn from Bates, Fischer, and Liberty. The concurrence perceives that the common threads in those three Court of Appeals opinions are: "(1) plaintiffs are limited to claiming only the cash amounts actually paid personally, [by] their insurance carriers, or [by] federal assistance programs; and (2) a belief *233 that the question in these cases is not the collateral source rule, but the reasonable value of medical care and expenses for the treatment of plaintiffs' injuries." Interestingly, the concurrence challenges the efficacy of the first common thread, which is at the heart of the three opinions, with the one sentence declaration: "As to the first point, this court has rejected it." Apparently, the concurrence ascribes to the theory that a majority of votes trumps cogent thinking.
With respect to the second "common thread," the concurrence believes the Court of Appeals decisions begged the question and answered the question by restating it. Apparently, the concurrence does not discern that there are two sides to this coin. On one side, the plaintiff is objecting to admitting evidence of the discounts because the plaintiff characterizes them as collateral source benefits. On the other side, the defendant is objecting to admitting evidence of the prediscount billing amount because it bears no rational relationship to the reasonable value of the provided medical services. The relevance or materiality of the allegedly inflated initial billing is a question that exists regardless of the applicability of the collateral source rule.
Perhaps an analogy might be helpful. The assumptions are as follows: (1) a defendant has a liability insurance policy which includes coverage for the cost of defense; (2) the liability insurer has an agreement with a law firm to represent its insureds at the rate of $200 per billable hour, which will be paid by the insurer without any additional billing to the insured; (3) the trial court has determined that the plaintiff is liable to the defendant for certain attorney fees, e.g., as a discovery sanction, and the court directs the defendant to submit evidence of the amount of those fees; and (4) the law firm has prepared a billing statement for the insurer that is calculated on the basis of $1,000 per billable hour, but which then reflects a contractual discount or write-off of $800 per hour, to get to the agreed upon hourly rate of $200. The questions presented are: (1) Whether the defendant will be allowed to submit only the $1,000 per hour billing, excluding any evidence of either the $200-per-hour actual payment or the $800-per-hour discount on the theory that the discount or write-off is a collateral source benefit from the purchase of liability insurance; and (2) whether the plaintiff can successfully object to the introduction of the $1,000-per-hour billing because it is not the appropriate measure of the reasonable value of legal services.
The hypothetical reinforces my contention that the bargained-for benefit approach is unrealistic. The defendant contracted with the liability insurer to have competent legal representation to defend the insured against any lawsuit. In selecting an insurer, the insured might well have considered the amount of premium it would have to pay for the liability coverage and the reputation of the insurer. However, the insured is unconcerned about how much it will cost the insurer to fulfill its policy obligation to provide legal counsel; the insured just wants competent counsel defending the insured. Moreover, it defies imagination to believe that a liability insurance purchaser would contemplate the situation in which a wrongdoer would be reimbursing the cost of defense, and, accordingly, the purchaser would consider the insurer's contract with the law firm and the law firm's billing policy.
Further, the hypothetical highlights the fallacy of ascribing any significance to a fictional prediscount charge. The law firm knew that it was only going to collect $200 per hour and, therefore, it could have arbitrarily selected any inflated amount it wanted as a prediscount charge, even if it had never collected that rate from any client. If another law firm had chosen to reflect an initial billing closer to reality, say $300 per hour, the insured's windfall would be significantly reduced based solely on the candor of the "collateral source." Moreover, the plaintiff could attack the admission of the $1,000-per-hour billing as being unreasonable, even if evidence of the $200-per-hour contract is excluded.
My last comment on the hypothetical is that it supports the notion that people and entities should be free to make their own deals through valid and enforceable contracts, and that when they do so, the contract establishes the value of the goods and services *234 involved. If the law firm feels that the reasonable value of its services is worth more than $200 per hour, it is free to decline to represent the insurance company. If the law firm believes that it must accept the $200 hourly rate in order to attract insurance company clients because other firms are willing to accept that amount, then that simply means that the reasonable value of legal services in that context is $200 per hour. To use another example, if I list my house for $250,000, but actually get a purchase contract for $200,000, the value of my house is the sale price, not my estimate of what I think the house should be worth.
My final comments address the concurrence's argument that even introducing evidence of the amount actually paid discriminates against those plaintiffs who are insured and the majority's response that an uninsured plaintiff might also have a negotiated reduction of the amount billed. I find the concurrence's argument to be inscrutable and the majority's response to be incomplete.
The concurrence's example assumes two plaintiffs have similarly broken legs and are billed $10,000 for the same medical services; one plaintiff is uninsured; and one plaintiff is insured by an insurer which has negotiated a $9,000 write-off, leaving $1,000 to actually be paid. The issue before us is the evidence which can be admitted to establish a specific category of damages, i.e., compensation for the plaintiff's economic damages. Yet, the concurrence, utilizing its collective "common sense," finds disparate treatment for the insured plaintiff based in part on its belief of how a jury would analyze the separate category of noneconomic damages. The concurrence speculates that a jury which does not hear that economic damages were satisfied by $1,000 will award more money to the uninsured plaintiff for pain and suffering. That is akin to saying that a criminal defendant charged with one count of theft is less likely to be convicted of that charge than a defendant who is charged with nine other crimes in addition to the theft charge. While common sense would suggest that it might be true that more charges increase the likelihood of conviction of one of those crimes, legally each count must stand on its own proof. The same should be true of damages in a civil action. Pain and suffering damages should be driven by proof of the extent to which the injuries have caused the plaintiff pain and suffering, separate and apart from the amount of money it took to fix the injuries. Indeed, the broken leg used in the concurrence's example might well cause considerably more pain and suffering for an extended period of time than some other surgical procedure generating a much higher medical bill. In essence, the concurrence believes that a jury is likely to abdicate its responsibility to determine the amount of each category of damages based solely on the proof applicable to that category. It would have us guard against jury nullification on noneconomic damages by manipulating the admissible evidence of economic damages. As in the criminal analog, that position is legally unsupportable.
Ironically, the concurrence's example will serve nicely to point out that, within the category of economic damages, it is the uninsured plaintiff who gets the short straw regardless of what evidence we deem to be admissible. As the majority notes, under Kansas Administrative Regulations, an insurer is precluded from issuing a policy in this State that allows it to be reimbursed for the portion of the medical bill that the insurer pays. Therefore, if the insured plaintiff obtains judgment for $10,000 in medical services, he or she pockets all but the amount of deductible and copayment the insured personally paid. That would result in a windfall of over $9,000. Even if the insured plaintiff obtains judgment for only the $1,000 that was actually paid for medical services, he or she still pockets the portion of the $1,000 paid by the health insurer.
In contrast, I know of nothing that prohibits the hospital from collecting its bill out of an uninsured plaintiff's judgment. Therefore, even though the uninsured plaintiff might recover the entire initial hospital billing of $10,000 from the tortfeasor, that plaintiff still owes the $10,000 hospital bill and will pocket nothing.
Additionally, a rather significant factor absent from the concurrence's hypothetical is any provision for the payment of the plaintiff's *235 attorney fees. Presuming a 40% contingent fee arrangement, the uninsured plaintiff would actually net $6,000, less expenses. However, the uninsured plaintiff still owes a $10,000 hospital bill, of which $4,000 must be paid with personal funds unless he or she can personally negotiate a discount with the hospital. In contrast, so long as the insurer's portion of the $1,000 actually paid for the insured plaintiff exceeds 40%, that insured still pockets money after paying his or her contingent attorney fees.
In other words, an insured plaintiff will always be in a better cash position than an uninsured plaintiff with respect to the economic damages. I can accept that circumstance with respect to the amounts that the insurer actually paid for medical services under the oft-stated theory that a person should reap the rewards of his or her prudence and foresight in purchasing insurance. However, in reality, the ability to be insured is seldom a function of prudence and foresight, but rather it depends too often on fortuitous circumstances, such as favorable employment or affluence acquired via family-provided opportunities. In that regard, I would note that the concurrence's hypothetical omits a significant segment of our citizenry. Some persons, e.g., farmers or small businesspersons, are unable to afford to purchase health insurance from a blue-ribbon company that has the clout to extract huge discounts. The trade-off for affordable premiums is that the health insurance policy has higher deductibles and copayments and the amount of services for which the insurance will pay is reduced. Therefore, the windfall for those who are underinsured will be less than the windfall for those fortunate enough to be fully insured. I can find no justification for exacerbating the difference in pocket money between the most fortunate and the least fortunate among us by allowing the recovery of unpaid discounts.
Nevertheless, as a practical matter, I feel compelled to hold my nose and join with the result reached in Justice Nuss' opinion.
DAVIS, C.J., ROSEN and BILES, JJ., concurring in part and dissenting in part:
We agree the district court erred in limiting plaintiff's recovery for medical expenses to only those cash amounts actually paid by plaintiff and her health insurance company. The jury must determine the reasonable value of medical services. But this determination should not depend upon how successful plaintiff's insurance company was at negotiating lower prices to benefit its insureds. For that reason, the district court's ruling on the motion in limine must be reversed. We concur in this result.
We write separately to express our disagreements with our colleagues' approach as to how the district court should proceed on remand. Our colleagues see this case as an opportunity to depart from this court's long-standing limitations regarding collateral source evidence, which would bar the admission of those cash amounts actually paid by plaintiff or on her behalf by her health insurance company. These limitations derive from our case law dating back more than 100 years, and the majority's method of departure is unnecessarily complicating. We discern no compelling reason now to alter the evidentiary landscape imposed by this court over these many years regarding a plaintiff's collateral source benefits.
We would not change this court's historical collateral source principles. We would not permit a jury to be told the plaintiff's medical bills "might be satisfied" by a particular amount. We would continue to bar admission into evidence of the amounts actually paid to satisfy those charges. We would further bar admission of any billing write-offs secured under plaintiff's private medical insurance contract. These evidentiary facts exist only because of the relationship between plaintiff, her health care providers, and her private medical insurance carrier. This relationship was created when plaintiff procured her own health care insurance. Under this court's existing case law, defendant is not permitted to enjoy any benefit from plaintiff's private insurance contract. That principle should be preserved.
BACKGROUND APPLICABLE TO THIS ISSUE
In Kansas, personal injury plaintiffs are entitled to claim as damages the reasonable value of medical services necessary to recover *236 from injuries caused by a wrongdoer. Shirley v. Smith, 261 Kan. 685, 693, 933 P.2d 651 (1997) ("The reasonable expense of treatment is a proper element of economic damages."); Lewark v. Parkinson, 73 Kan. 553, Syl. ¶, 85 P. 601 (1906) ("Expenses incurred by an injured [plaintiff], which resulted from the injuries, including compensation for services of nurses, are proper elements of damages in action against the [defendant] in such a case, notwithstanding the services were performed by a member of the family of the injured person, if the services were necessary and the charges reasonable."); see also K.S.A. 40-3117 (In a tort action against the owner, operator, or occupant of a motor vehicle, "the charges actually made for medical treatment expenses shall not be conclusive as to their reasonable value. Evidence that the reasonable value thereof was an amount different from the amount actually charged shall be admissible in all actions to which this subsection applies.") and PIK Civ. 4th 171.02 (recoverable damages for personal injury include "reasonable expenses of necessary medical care").
Similarly, the alleged wrongdoer has a right at trial to challenge the reasonableness of the expenses plaintiff claims. Cansler v. Harrington, 231 Kan. 66, 69, 643 P.2d 110 (1982). "The reasonable value of services is generally [defined as] the reasonable charges of the profession for those services, not the usual charges of the particular physician or surgeon." Bates v. Hogg, 22 Kan.App.2d 702, 709, 921 P.2d 249 (1996) (Rulon, J., dissenting) (quoting 2 Minzer, Nates, Kimball, Axelrod, and Goldstein, Damages in Tort Actions, § 9.20, P. 9-14 [1991]); Lewark, 73 Kan. at 556, 85 P. 601 ("`If she had paid ten times the true value of [medical] services she could only have recovered what such services were reasonably worth.'" [quoting Brosnan et al v. Sweetser, 127 Ind. 1, 8, 26 N.E. 555 (1891)]).
In this case, Milburn Enterprises Inc. (Milburn) sought to shortcut its evidentiary challenge to the reasonableness of Karen Martinez' damage claim for her medical care. It did this by asking the district court to depart from instructing the jury to determine the reasonable value based on the evidence to simply asking the court to decide as a matter of law that her claim was limited to the cash amounts actually paid for medical care and treatment resulting from Martinez' personal medical insurance. The district court agreed with Milburn and permitted this limitation, relying on the majority opinion issued by a divided Court of Appeals panel in Bates v. Hogg, 22 Kan.App.2d 702, 921 P.2d 249, rev. denied 260 Kan. 991 (1996), superseded on other grounds by K.S.A.1999 Supp. 60-226(b), (e) and 60-237(c), as stated in Frans v. Gausman, 27 Kan.App.2d 518, 527, 6 P.3d 432, rev. denied 270 Kan. 897 (2000), concerning health care provider write-offs under the federal Medicaid program. The obvious outcome from the district court's order was to transfer the benefit plaintiff derived from the contractual arrangements between her insurance company and her health care providers to the defendant Milburn. These contractual arrangements resulted in certain negotiated write-offs, i.e. discounts, to the amount billed under Martinez' contract for insurance. Clearly, Milburn's motion in limine would not have been available if Martinez were uninsured.
This court agrees the district court was wrong to limit plaintiff's damages to the actual amount paid under her personal health insurance agreement. But the court's members disagree on how the collateral source evidence should be handled on remand.
Three justices contend Milburn should be permitted to offer into evidence: (1) the actual payments made to plaintiff's health care providers under her personal insurance contract; and (2) the medical expense write-offs provided as a result of that insurance. They sanction a contrivance that would advise the jury that the plaintiff's medical bills could be "satisfied" by a payment that happens to coincide with the cash payments made by the plaintiff's health care insurance and plaintiff. There would be no mention that plaintiff actually had health insurance to pay for her care and treatment, although the implication is obvious. Any confusion this may cause, they believe, can be corrected with limiting jury instructions. Justice Johnson begrudgingly joins these three in order to form the majority needed to impose this methodology *237 on our trial courts, even though he vehemently disputes his colleagues' legal analysis that leads to this result.
We disagree with the majority approach and discern no reason why there should be any change to both litigants' respective evidentiary obligations regarding the reasonable value and necessity of the medical services provided to plaintiff as defined by our existing law. Similarly, we believe imposing the majority's new evidentiary methodology will most surely allow a jury to infer the existence of a plaintiff's insurance, which is forbidden by the collateral source rule; inject jury confusion into what are already complex deliberations at trial; and ultimately lead to the demise of the collateral source rule itself. We dissent from that portion of the opinion by the majority as discussed below.
ANALYSIS
The Collateral Source Rule in Kansas
Put simply, the collateral source rule is a common law tenet preventing the introduction of certain evidence. Farley v. Engelken, 241 Kan. 663, 665, 740 P.2d 1058 (1987). In this state, our long-standing collateral source rule provides that "damages recoverable for a wrong are not diminished by the fact that the party injured has been wholly or partly indemnified for his loss by insurance effected by him, and to the procurement of which the wrongdoer did not contribute." Rexroad v. Kansas Power & Light Co., 192 Kan. 343, 354-55, 388 P.2d 832 (1964) (declaring this rule is "well settled" and citing 15 Am. Jur., Damages § 201, pp. 617, 618); see also Davis v. Kansas Electric Power Co., 159 Kan. 97, 109, 152 P.2d 806 (1944) ("[T]he general rule applicable is that a tort-feasor is not entitled to have damages caused by him reduced because the person whom he injured by his tort had insurance."); Berry v. Dewey, 102 Kan. 593, Syl. ¶ 10, 172 P. 27 (1918) ("Financial benefits derived by the heir of a person who has lost his life by the wrongful act of another cannot be deducted from the damages sustained, and the verdict and judgment be reduced by the benefits received."); Lewark, 73 Kan. at 556, 85 P. 601 (stating services donated by a good friend or family member are the good fortune of the injured party and not a concern of the person liable for damages).
The collateral source rule prevents the jury from hearing evidence regarding certain payments or gratuitous services provided for the plaintiff's benefit. The rule is frequently stated simply as an understanding that benefits received by a plaintiff from a source wholly independent of and collateral to the wrongdoer will not diminish the plaintiff's damages otherwise recoverable from the wrongdoer. Farley, 241 Kan. 663, Syl. ¶ 1, 740 P.2d 1058; Thompson v. KFB Ins. Co., 252 Kan. 1010, 1014, 850 P.2d 773 (1993); see Gregory v. Carey, 246 Kan. 504, 508, 791 P.2d 1329 (1990); Harrier v. Gendel, 242 Kan. 798, 800, 751 P.2d 1038 (1988); Wentling v. Medical Anesthesia Services, 237 Kan. 503, 515, 701 P.2d 939 (1985); Allman v. Holleman, 233 Kan. 781, 788, 667 P.2d 296 (1983); Pape v. Kansas Power & Light Co., 231 Kan. 441, 446, 647 P.2d 320 (1982); Negley v. Massey Ferguson, Inc., 229 Kan. 465, 469, 625 P.2d 472 (1981); Southard v. Lira, 212 Kan. 763, 769, 512 P.2d 409 (1973).
This court has also said the collateral source rule "`precludes admission of evidence of benefits paid by a collateral source, except where such evidence clearly carries probative value on an issue not inherently related to measurement of damages.'" Wentling, 237 Kan. at 515, 701 P.2d 939 (quoting 3 Minzer, Nates, Kimball, Axelrod and Goldstein, Damages in Tort Actions § 17.00, p. 17-5 [1984]). Specifically in the private insurance context, such as the case now before us, we have held:
"The reasons generally given for the [collateral source] rule are that the contract of insurance and the subsequent conduct of the insurer and insured in relation thereto are matters with which the wrongdoer has no concern and which do not affect the measure of his liability." (Emphasis added.) Rexroad, 192 Kan. at 354-55, 388 P.2d 832.
In other words, the overwhelming case law from this court has been that a defendant is entitled to challenge the reasonableness of a plaintiff's damage claim but may not introduce evidence derived from a collateral *238 source to make that challenge. Instead, defendants must approach the issue through other evidentiary means. For example, if Wesley Medical Center, the health care provider in this case, is appropriately documented for evidentiary purposes to have a typical charge-to-cost ratio as claimed by the amicus curiae Kansas Association of Defense Counsel, this general evidence might be available to the defendant to challenge the reasonable value of plaintiff's medical services and treatments. But specific evidence regarding collateral source benefits obviously resulting from the existence of plaintiff's private medical insurance is not admissible.
Why Kansas has a collateral source rule
From its earliest beginnings, the purposes behind the collateral source rule were articulated by this court as being grounded in notions of equity, fairness, and inherent prejudice to the plaintiff if such evidence was presented to a jury. More recently, our cases evolved to emphasize the additional public policy interests of deterrence and accountability for tortfeasors. In Berry, one of our early cases on the subject, the defendant tortfeasor in a wrongful death action argued the heir's damages should be reduced by the amount of her inheritance from the decedent. Characterizing this argument as "untenable," this court stated: "Although it appears to have standing in the courts of some of the states, it does not address itself to the judgment of this court as being sound, legal, equitable, or fair, and [evidence of the inheritance] cannot be permitted to reduce the amount of recovery in any way." 102 Kan. at 598, 172 P. 27.
In Rexroad, this court said the plaintiff's insurance contracts were of "no concern" to the wrongdoer. 192 Kan. at 355, 388 P.2d 832. Again recognizing equity and fairness principles, this court noted that just as a plaintiff cannot tell the jury a defendant has liability insurance to pay a judgment, the same rule has "application in reverse" regarding plaintiff's insurance benefits. 192 Kan. at 355, 388 P.2d 832. In Southard, this court similarly noted it would be "highly prejudicial to the plaintiff and should not [be] permitted" to allow defendant to put into evidence a cash settlement reached with plaintiff's uninsured motorist insurance carrier. 212 Kan. at 769, 512 P.2d 409.
In Pape, this court used the collateral source rule to hold that it was improper for a defendant to offer evidence that a surviving spouse in a wrongful death action had remarried, characterizing such evidence as "highly speculative" on the claimed justification that it showed mitigation of damages, and adding there was no justification "to depart from our long recognition of the collateral source rule. . . ." 231 Kan. at 447, 647 P.2d 320. In Negley, we said it was improper in a wrongful death action to disclose to the jury that the surviving spouse was receiving workers compensation benefits, explaining that this "would present the same danger of prejudice as does the disclosure of insurance in other actions." 229 Kan. at 473, 625 P.2d 472. In Allman, this court denied the admission of evidence of financial resources available to minor plaintiffs resulting from their father's death, stating "[a]s the definition illustrates[,] the collateral source rule is merely a species of the relevancy doctrine." 233 Kan. at 789, 667 P.2d 296. In other words, plaintiff's receipt of collateral benefits was irrelevant on the damages issue.
In Wentling, this court quoted with approval 3 Minzer, Nates, Kimball, Axelrod and Goldstein, Damages in Tort Actions § 17.00, p. 17-5 (1984) to describe the collateral source rule as follows:
"`The collateral source rule permits an injured party to recover full compensatory damages from a tortfeasor irrespective of the payment of any element of those damages by a source independent of the tortfeasor. The rule also precludes admission of evidence of benefits paid by a collateral source, except where such evidence clearly carries probative value on an issue not inherently related to measurement of damages.'" 237 Kan. at 515, 701 P.2d 939.
In Harrier, we compared the prejudice caused by a plaintiff revealing to a jury that the defendant had insurance to satisfy the requested damages as the same prejudice a plaintiff would suffer from the introduction of collateral source benefits. We said, "The distinction is one without a difference." 242 *239 Kan. at 801, 751 P.2d 1038. We continued by declaring: "To allow the introduction of evidence that the plaintiff received collateral source benefits is inherently prejudicial and requires reversal." 242 Kan. at 802, 751 P.2d 1038. In Rose v. Via Christi Health System, Inc., 276 Kan. 539, 78 P.3d 798 (2003) (Rose I), modified on rehearing 279 Kan. 523, 113 P.3d 241 (2005) (Rose II) a majority of this court picked up on the theme stated in Wentling and approvingly drew from Judge, now Chief Judge, Rulon's dissenting opinion in Bates to state:
"The purpose of the collateral source rule is to prevent the tortfeasor from escaping from the full liability resulting from his or her actions by requiring the tortfeasor to compensate the injured party for all of the harm he or she causes, not just the injured party's net loss. [Citations omitted.] A benefit secured by the injured party either through insurance contracts, advantageous employment arrangements, or gratuity from family or friends should not benefit the tortfeasor by reducing his or her liability for damages. If there is to be a windfall, it should benefit the injured party rather than the tortfeasor." 276 Kan. at 544, 78 P.3d 798.
As the 100-year-old history of this court's treatment of the collateral source rule illustrates, we have traditionally viewed the introduction of collateral source evidence with disdain. This court has characterized the potential admission of collateral source-related evidence as being inherently unfair and prejudicial because of the influence it can have upon the jury in determining the recoverable damages. We also have found it contrary to the important policy aspects of deterrence and accountability for tortfeasors, who are not entitled to have damages caused by them reduced because the persons whom they injure had insurance. See Davis, 159 Kan. at 109, 152 P.2d 806.
In this case, it is agreed plaintiff's private medical insurance contract is wholly independent of and collateral to Milburn. Plaintiff's medical insurance did not come from Milburn or any person or entity acting for Milburn. Our issue only arises because Martinez had the foresight to secure for herself private medical insurance. Therefore, the evidentiary question advanced by our colleagues' view is whether permitting Milburn to present to the jury the cash payments and expense write-offs resulting solely from plaintiff's private medical insurance contract violates the collateral source rule as this court has traditionally articulated it. We believe it does.
Put another way, should the jury's damage calculations for Martinez be different just because she has private health insurance from calculations for someone else who is uninsured? Under the collateral source rule and common sense, the question answers itself. The rule's purpose is to ensure a party's treatment is the same for all plaintiffs by not reducing the tortfeasor's liability for damages through the introduction of collateral source payments made on a particular plaintiff's behalf. Rexroad, 192 Kan. at 355, 388 P.2d 832.
With our colleagues' approach, an uninsured plaintiff would still be able to collect from a jury the original amount billed. But an insured plaintiff, under the same facts, would likely see a reduction in damages simply because he or she had the good sense to be insured. Likewise, the tortfeasor lucky enough to injure an insured plaintiff would be able to reduce its liability by seizing on the benefits available to the insured plaintiff, even though the tortfeasor did not contribute to the those insurance benefits. The justification for this disparate treatment is completely contrary to this court's prior case law as discussed above.
This court looked at the interplay between the collateral source rule and actual cash payments and medical write-offs in only one case, which had to be reheard to produce a binding result by a divided court. See Rose I, 276 Kan. at 539, 78 P.3d 798; and Rose II, 279 Kan. 523, 113 P.3d 241. But both Rose decisions dealt with the question at hand only in the context of the federal Medicare program, which has its own statutory and regulatory scheme. Furthermore, those decisions involved an even more limiting factual scenario in which the tortfeasor (Via Christi) was the health care provider that gave the write-off benefit for the plaintiff's medical treatment. In the end, the unique nature of *240 the Medicare program and the facts resulted in a divided court holding that the Medicare write-off by Via Christi could be allowed as a setoff or credit against the portion of the economic loss attributable to medical expenses because it "reflected a cost incurred by the defendant." (Emphasis added.) Rose II, 279 Kan. at 533, 113 P.3d 241.
Accordingly, the only controlling principle on the subject emerging from this court to date is to exclude evidence of medical write-offs and actual payments, except when the medical provider is also the claimed tortfeasor. Those facts are not presented here, so the Rose II decision has no controlling precedential value in this case.
The Court of Appeals has addressed the write-off issue in four cases. We consider those next.
Kansas Court of Appeals' Decisions
The first Kansas appellate court to consider the question of actual cash payments and medical write-offs was Bates in which a divided Court of Appeals panel considered whether an injured plaintiff could include in his economic damage claim amounts written off by a health care provider under the federal Medicaid program. The two-judge majority concluded that the collateral source rule was inapplicable under the circumstances and agreed further to limit plaintiff's claim to the actual amounts paid. 22 Kan.App.2d at 705, 921 P.2d 249 ("[T]he amount allowed by Medicaid becomes the amount due and is the `customary charge' under the circumstances.").
The Bates majority also expressed its agreement with the public policy reflected in a federal court decision in a similar North Carolina case, stating that it would be "`unconscionable to permit the taxpayers to bear the expense of providing free medical care to a person and then allow that person to recover damages for medical services from a tort-feasor and pocket the windfall.'" 22 Kan. App.2d at 706, 921 P.2d 249 (quoting Gordon v. Forsyth County Hospital Authority, Inc., 409 F.Supp. 708, 719 (M.D.N.C.1976)). But the Bates majority did nothing to reconcile its result with this court's historical basis for strictly enforcing the collateral source rule. This court criticized that failing in Rose I. 276 Kan. at 545, 78 P.3d 798.
Judge Rulon vigorously dissented from the Bates majority view, taking the general position that our state's case law required that a plaintiff recover the reasonable value of medical services regardless of the amount actually paid or written off because of the collateral source rule. Harkening back to our early collateral source jurisprudence, Judge Rulon noted:
"While the plaintiff can only recover the reasonable value of the medical services provided, there is no requirement in Kansas that it be shown that any amount was actually paid. Were it otherwise, there is no way an injured party could recover damages for services provided gratuitously by family members or charity." Bates, 22 Kan.App.2d at 710, 921 P.2d 249 (citing Lewark v. Parkinson, 73 Kan. 553, 85 P. 601 (1906)).
Judge Rulon then observed the concepts of deterrence and accountability inherent in our rule, by stating: "The purpose of the collateral source rule is to prevent a wrongdoer from escaping from full liability for the consequences of his or her negligence." 22 Kan. App.2d at 709, 921 P.2d 249 (citing 2 Minzer, Nates, Kimball, Axelrod, and Goldstein, Damages in Tort Actions § 9.60, p. 9-88 [1991]). He then quoted from 22 Am. Jur. 2d, Damages § 566, p. 638 the following passage:
"Thus, if the basic goal of tort law is only that of compensating plaintiff for his [or her] losses, evidence of these benefits should be admitted to reduce the total damages assessed against the defendant. At the same time, reducing recovery by the amount of the benefits received by the plaintiff would be, according to most courts, granting a `windfall' to the defendant by allowing him [or her] a credit for the reasonable value of those benefits. Such a credit would result in the benefits being effectively directed to the tortfeasor and from the intended partythe injured plaintiff. If there must be a windfall, it is usually considered more just that the injured person should profit, rather than let *241 the wrongdoer be relieved of full responsibility for his [or her] wrongdoing." (Emphasis added.)
Later, the Rose I majority limited the Bates majority holding to cases in which a Medicaid contract mandated the nonrecourse discount. Rose I, 276 Kan. at 545, 78 P.3d 798. But the fact that all members of this court today refuse to adopt either the result or underlying public policy reflected by the Bates majority speaks more pointedly to its failings and the lack of precedential value both it and its progeny should be given in the present discourse.
The next Court of Appeals panel to address the issue did so during the period of time between Rose I and the rehearing in Rose II. That panel declared it was not constrained to follow Rose I because the pending rehearing suspended the binding effect of the original decision, and it extended Bates to apply to a private insurance carrier being sued by its own insured under an uninsured motorist clause. Fischer v. Farmers Insurance Company, Inc., No. 90,246, 2005 WL 400404, unpublished opinion filed February 18, 2005. The panel determined it was proceeding with the case "based upon the currently effective precedent of Bates and upon our firm belief that the collateral source rule has no place in the determination of the proper measure of damages to be applied to all plaintiffs' economic damages." Op. at *5.
In Fischer, the tortfeasor was not a party to the dispute. The trial court limited Fischer to presenting to the jury only the cash amounts actually paid personally and by her medical insurer. The write-off amounts were excluded from plaintiff's claim. Relying on Bates, the Court of Appeals panel, which included then-Judge, now Justice, Johnson, affirmed. The panel based its decision on its belief that Bates was not "principally driven" by the fact that a Medicaid contract mandated the write-off at issue. Op. at *2.
The same Court of Appeals judges who comprised the Fischer panel again sat as a panel to decide the next case in our series, Liberty v. Westwood United Super, Inc., No. 89,143, 2005 WL 1006363, unpublished opinion filed April 29, 2005, rev. denied 280 Kan. 983 (2005). Not surprisingly, that panel extended Bates to Medicare write-offs and repeated its declaration of freedom from the Rose I opinion because it was still pending on rehearing. The panel again held that the amount permitted to be charged to Medicare patients was the "customary charge" for their medical treatment, so a Medicare patient's damages were limited to that amount.
More recently, a Court of Appeals panel in Adamson decided that write-offs under a private insurance contract providing personal injury protection to the plaintiff and a "self-pay" write-off for expenses charged directly to the plaintiff by a health care provider were admissible and should not have been excluded by the trial court under the Bates rationale. Adamson v. Bicknell, 41 Kan. App.2d 958, 207 P.3d 265 (2009), rev. granted March 31, 2010. In Adamson, plaintiff did not challenge the trial court's exclusion of Medicaid write-offs because of Bates but did dispute the issue as to the other write-offs, claiming they had nothing to do with Medicaid. The Adamson panel limited the holding in Bates to Medicaid, agreed with plaintiff, and unanimously reversed the trial court's exclusion of this evidence on the basis of the collateral source rule. Adamson, 41 Kan. App.2d at 971-72, 207 P.3d 265. The Adamson court did not address its sister panel's extension of Bates in Fischer.
In summary, the common threads running through three Court of Appeals' decisions (Bates, Fischer, and Liberty) are these: (1) plaintiffs are limited to claiming only the cash amounts actually paid personally, their insurance carriers, or federal assistance programs; and (2) a belief that the question in these cases is not the collateral source rule, but the reasonable value of medical care and expenses for the treatment of plaintiff's injuries. As to the first point, this court has rejected it. As to the second, it begs the issue because we are concerned here with what evidence may be elicited at trial on this issue. The collateral source rule has always been a limitation on evidence about the reasonable value of medical service, which limitation is founded on principles of fairness, equity, relevance, deterrence, and accountability for defendants. In effect, these Court *242 of Appeals panels simply answer the question by restating it. This ignores the underlying principles this court has stated for having a collateral source rule.
Finally, the more recent Adamson decision conflicts with the other panels' rationale as it concerns write-offs provided directly to a plaintiff or to plaintiff's private medical insurance carrier. In summary, we find little adherence to this court's historical reading of the collateral source rule in the various approaches and rationales taken by the Court of Appeals.
Kansas Federal Court Decisions
Our colleagues reference three unpublished federal district court decisions they find reinforcing to their viewpoint. Wildermuth v. Staton, 2002 WL 922137 (D.Kan. 2002) (unpublished opinion); Davis v. Management & Training Corp. Centers, 2001 WL 709380 (D.Kan.2001) (unpublished opinion); and Strahley v. Mercy Health Center of Manhattan, 2000 WL 1745291 (D.Kan.2000) (unpublished opinion). We find these decisions unpersuasive for two reasons.
First, all three decisions use the majority opinion in Bates v. Hogg, 22 Kan.App.2d 702, 921 P.2d 249 (1996) as their center of gravity. They do this because Kansas state law governs evidentiary questions in federal diversity cases when those questions are closely intertwined with a state's substantive policy. Wildermuth, 2002 WL 922137, at *2 (agreeing that the collateral source doctrine is governed by Kansas law); Davis, 2001 WL 709380, at *2 (quoting Strahley and concurring that the collateral source doctrine is governed by Kansas law); and Strahley, 2000 WL 1745291, at *1 (stating: "Application of the collateral source doctrine, while an evidentiary rule, is closely tied to state substantive policy, and thus is governed by Kansas law."). As noted above, given the lack of controlling authority from this court, Bates was seen by these federal courts as the next best case, even though our decision in Rose I expressly limited that two-judge majority opinion. Second, and as our colleagues noted, those federal decisions inaccurately predicted how this court would analyze the collateral source rule questions presented because this court has now rejected the federal result.
As to Wildermuth specifically, we also note this court expressly rejects its conclusion that the cash amount paid to satisfy the medical bills should be deemed the reasonable value of those services. But in addition, we find Wildermuth's reference to the Kansas collateral source rule as being limited to amounts actually paid on plaintiff's behalf ignores case law from this court dating back to 1906 applying the rule to gratuitous services benefiting plaintiff. See Lewark, 73 Kan. at 555-56, 85 P. 601. Accordingly, we find little in the federal case law referenced by our colleagues that informs our decision any better than a review of our court's own case law as previously discussed.
Points of agreement with our colleagues
At this juncture, we think it is important to reflect on our points of agreement with our three colleagues before discussing in greater detail our disagreements. We believe our common ground can best be described as follows: (1) Plaintiff is entitled to the reasonable value of the medical services necessary for plaintiff's recovery; (2) Plaintiff is entitled to seek recovery for the reasonable value of medical services even when they are self-administered or gratuitously provided; (3) Defendant is entitled to challenge both the necessity and reasonable value of the expenses plaintiff claims; (4) Amounts billed by health care providers for plaintiff's medical treatment expenses are not conclusive as to their reasonable value, but are probative evidence as to value; and (5) The results reached in Bates, Fischer, and Liberty are wrong when those Court of Appeals panels held as a matter of law that the amount paid by Medicare, Medicaid, or private health insurers are the only measure of reasonable value for the medical care and treatment plaintiff received.
Our point of departure is the evidence our colleagues would authorize a defendant to use at trial in an effort to attack the reasonableness of plaintiff's claims for medical services. We discuss that departure next.
*243 The Robinson approach from Ohio
Our colleagues distill from the case law and arguments a new course of action they impose for use by our trial courts grappling with this issue. They adopt the approach taken by an Ohio Supreme Court decision in Robinson v. Bates, 112 Ohio St.3d 17, 857 N.E.2d 1195 (2006). From Robinson, our colleagues find the trial court should continue to allow plaintiffs to introduce into evidence the actual billings for plaintiff's medical care, while defendants will be entitled to introduce the actual cash payments that satisfied the medical obligation as well as the write-offs or negotiated discounts. They believe it is best to simply allow the jury to make the reasonable value determination using this information. Any potential prejudice to plaintiff arising from implying the existence of insurance or another collateral source can be ameliorated, they argue, by having a vigilant trial court provide limiting instructions to the jury. This approach, they claim, is the "fairest." We disagree.
By our count, 22 courts in other jurisdictions that have considered one or more aspects of our colleague's approach have rejected it. See Aumand v. Dartmouth Hitchcock Medical Center, 611 F.Supp.2d 78, 92 (D.N.H.2009); Pipkins v. TA Operating Corp., 466 F.Supp.2d 1255, 1261 (D.N.M. 2006); Lopez v. Safeway Stores, Inc., 212 Ariz. 198, 207, 129 P.3d 487 (2006); Montgomery Ward & Co. v. Anderson, 334 Ark. 561, 567-68, 976 S.W.2d 382 (1998); Helfend v. Southern Cal. Rapid Transit Dist., 2 Cal.3d 1, 9-10, 84 Cal.Rptr. 173, 465 P.2d 61 (1970); Tucker v. Volunteers of America Co. Branch, 211 P.3d 708, 713 (Colo.App.2008); Mitchell v. Haldar, 883 A.2d 32, 40 (Del. 2005); Hardi v. Mezzanotte, 818 A.2d 974, 985 (D.C.App.2003); Goble v. Frohman, 848 So.2d 406, 410 (Fla. 2nd Dist.Ct.App.2003), aff'd 901 So.2d 830, 832-33 (Fla.2005); Olariu v. Marrero, 248 Ga.App. 824, 825-26, 549 S.E.2d 121 (2001); Bynum v. Magno, 106 Hawai`i 81, 89, 101 P.3d 1149 (2004); Wills v. Foster, 229 Ill.2d 393, 418, 323 Ill.Dec. 26, 892 N.E.2d 1018 (2008); Baptist Healthcare Systems, Inc. v. Miller, 177 S.W.3d 676, 683-84 (Ky.2005); Bozeman v. State, 879 So.2d 692, 705-06 (La.2004); Lockshin v. Semsker, 412 Md. 257, 284-85, 987 A.2d 18 (2010); Wal-Mart Stores, Inc. v. Frierson, 818 So.2d 1135, 1139-40 (Miss.2002); Brown v. Van Noy, 879 S.W.2d 667, 676 (Mo.App.1994); Covington v. George, 359 S.C. 100, 105, 597 S.E.2d 142 (2004); Papke v. Harbert, 738 N.W.2d 510, 536 (S.D.2007); Texarkana Memorial Hosp., Inc. v. Murdock, 903 S.W.2d 868, 874 (Tex.App.1995), rev'd on other grounds 946 S.W.2d 836 (Tex.1997); Radvany v. Davis, 262 Va. 308, 310, 551 S.E.2d 347 (2001); and Leitinger v. DBart, Inc., 302 Wis.2d 110, 135, 736 N.W.2d 1 (2007).
We also note with particular interest a recent opinion from the Ohio Court of Appeals that described its Supreme Court's majority opinion in Robinson as a "perplexing decision" that "appears to both reaffirm the collateral-source rule in principle but eradicate it in practice." Ross v. Nappier, 185 Ohio App.3d 548, 559, 924 N.E.2d 916 (2009) ("Now, litigants are forced to navigate an uncertain and complex procedure when presented with a case where the injured party received collateral benefits from a third party.").
We find the collective analysis recited in these cases persuasive and far more consistent with the long-standing principles this court has espoused to support the traditional collateral source rule. This is particularly true in the context of the case before us now in which the private insurance benefits at issue were purchased personally by the plaintiff, i.e. they were not a derivative of a regulated public assistance program like Medicare or Medicaid.
We would summarize our disagreements with the Robinson approach as follows: (1) its implementation is highly likely to generate jury confusion and mistrials; (2) the result discriminates against plaintiffs on the basis of whether they are insured; and (3) it contradicts the underlying principles of the collateral source rule by allowing defendants to benefit from the plaintiff's foresight or the kindness of others. We next address each of those disagreements.
1. Implementation problems
Our colleagues acknowledge the probability that presenting juries with collateral *244 source evidence reflecting payments under an insurance policy will require trial court diligence and limiting instructions to prevent the jury from considering that plaintiff's insurance paid the medical bill when calculating damages. They suggest limiting instructions, such as those used in criminal cases under K.S.A. 60-455, may avoid prejudice, confusion, mistrials, and reversals. Our case law already foreshadows the difficulties such a system creates.
In Zak v. Riffel, 34 Kan.App.2d 93, 115 P.3d 165 (2005), the Court of Appeals addressed a trial court's failed attempt at a limiting instruction after the trial judge permitted collateral source evidence to be admitted to impeach an expert witness regarding his damages calculations. After admitting the evidence, the trial court admonished the jury as follows:
"`Members of the jury, these two exhibits that we have just been talking about... were received in evidence by me earlier this afternoon for the limited purposes that I have talked about before. They are merely being introduced for the purpose of laying a foundation to determine some calculations that have been made by an expert witness who will testify tomorrow. They are not received for the purpose of presenting evidence to diminish the amount of economic loss, if any, that the plaintiff has suffered as a result of the defendant's negligence.'" 34 Kan.App.2d at 107-08, 115 P.3d 165.
The Court of Appeals reversed, saying, "The jury could only have been confused by the limiting instruction." 34 Kan.App.2d at 108, 115 P.3d 165. It found the evidentiary presentation insufficient to permit the jury to understand any purpose to the admission of the collateral source evidence, except for diminishing the plaintiff's recovery by making the jury aware of the insurance payment at issue.
Furthermore, admission of other crimes evidence has not proven to be a simple issue in criminal cases. The comments to PIK Crim.3d 52.06, the K.S.A. 60-455 limiting instruction, recognize other crimes evidence "has proven to be one of the most troublesome areas in the trial of a criminal case." This is reflected by the volume of appeals filed each year on this issue. We find the suggestion that limiting instructions will cure whatever ills result from our colleagues' approach is unfounded based upon the known complications demonstrated in our case law and the likelihood a jury will infer the existence of insurance.
As noted above, this court traditionally has viewed the injection of insurance coverage into a trial as highly prejudicial to the insured party. See Rose II, 279 Kan. at 529, 113 P.3d 241; Rose I, 276 Kan. at 544, 78 P.3d 798; Allman v. Holleman, 233 Kan. 781, 789, 667 P.2d 296 (1983); Rexroad v. Kansas Power & Light Co., 192 Kan. 343, 355, 388 P.2d 832 (1964); Davis v. Kansas Electric Power Co., 159 Kan. 97, 109, 152 P.2d 806 (1944); Berry v. Dewey, 102 Kan. 593, 598, 172 P. 27 (1918); and Lewark v. Parkinson, 73 Kan. 553, 555-56, 85 P. 601 (1906). This view has been advantageous for both defendants, whose insurance coverage will pay any adverse verdict, as well as plaintiffs, whose collateral source benefits from insurance are similarly shielded from the jury. Harrier v. Gendel, 242 Kan. 798, 801, 751 P.2d 1038 (1988). We agree with our sister jurisdictions that have considered the problem in the context presented here and believe the risk is simply too great that the jury will improperly subtract collateral payments from the plaintiff's recovery in violation of the collateral source rule. Aumand, 611 F.Supp.2d at 91; Goble, 848 So.2d at 410; Wills, 229 Ill.2d at 418, 323 Ill.Dec. 26, 892 N.E.2d 1018; Covington, 359 S.C. at 104-05, 597 S.E.2d 142; Leitinger, 302 Wis.2d at 134-36, 736 N.W.2d 1.
We also are concerned that, in cases where the only evidence presented will be the original amount billed and the amount paid, juries will be lured into simply splitting the difference between those two points on the evidentiary continuum. In that likely occurrence, the verdict will have to be thrown out and a mistrial declared since there would be no evidence upon which the jury could have based its compromise verdict. See State ex rel. Stephan v. Wolfenbarger & McCulley P.A., 236 Kan. 183, 188, 690 P.2d 380 (1984) (holding that "`[i]n order for the evidence to *245 be sufficient to warrant recovery of damages there must be some reasonable basis for computation which will enable the jury to arrive at an approximate estimate thereof.'") (quoting Venable v. Import Volkswagen, Inc., 214 Kan. 43, 50, 519 P.2d 667 (1974)).
We appreciate that defendants have long sought to be able to introduce collateral source evidence on any alternative basis in order to do indirectly what they have not before been able to do directly. See, e.g., Zak, 34 Kan.App.2d 93, 115 P.3d 165. We cannot help but think our colleagues' approach is better seen as a solution looking for a problem to justify its existence. But it is a solution with a high risk factor for prejudice, mistrials, appeals, and delays in justice. Given that defendants have other evidentiary alternatives to present to the jury regarding health care provider discounts and the reasonable value of a plaintiff's medical care, we believe our adherence to existing collateral source case law is required.
2. Discrimination against insured plaintiffs
Our colleagues note their sensitivity to the prospects of discriminating between low income, public assistance plaintiffs, and private insureds under the so-called benefit-of-the-bargain approach, which has been used to justify the collateral source rule in other jurisdictions. But they do not address the obvious evidentiary schism generated by their approach between plaintiffs with private insurance benefits and uninsured plaintiffs.
As an example, assume we have two civil trials against the same defendant occurring across the hall from each other in any Kansas courthouse. Liability is admitted. Plaintiffs each suffered a broken leg. The issues in both cases are the reasonable value of the medical services provided to each plaintiff to heal the broken leg and plaintiff's noneconomic damages for pain and suffering. Each hospital billed $10,000 for those medical services. In the first courtroom, the plaintiff personally purchased for herself medical insurance. The insurance company settled the $10,000 billing for an actual cash payment of $1,000 and a negotiated write-off of $9,000. In the second courtroom, the plaintiff had no medical insurance, so there was no write-off.
Under our colleague's approach, in the first courtroom, the jury would hear evidence of the $10,000 billing to the insured plaintiff, be told "the hospital will accept $1,000 to satisfy its bill of $10,000," and some limiting instruction will be given that introduction of the $1,000 figure is not given to necessarily diminish plaintiff's noneconomic loss. Any attempt by the insured plaintiff to explain the compromised payment evidence will necessarily lead to disclosure of a collateral source. The jury will be asked to determine the "reasonable value" of the medical services necessary for plaintiff's recovery. The jury also will be asked to consider plaintiff's noneconomic damages for pain and suffering but will not be able to consider the $1,000 figure in its determination of noneconomic damages. The jury also will not be allowed to consider the existence of the plaintiff's insurance, even though that fact is obvious. A limiting jury instruction also will be added in an effort to address the potential for prejudice.
In the second courtroom, the uninsured plaintiff will have the jury consider the same legal questions, but without the additional evidence about the $1,000 that would satisfy the hospital bill. The uninsured plaintiff's lawsuit also will have none of the complications or limitations outlined above for the insured plaintiff.
Common sense tells us the defendant is better off in the first courtroom against the insured plaintiff because there is a greater likelihood the uninsured plaintiff will obtain a higher jury verdict based on the original amount billed and a higher pain and suffering award. This result makes no sense. See Wentling v. Medical Anesthesia Services, 237 Kan. 503, 517, 701 P.2d 939 (1985). In the first courtroom, the tortfeasor benefits from the collateral source evidence, while in the second courtroom the same tortfeasor does not. As the Helfend court observed:
"If we were to permit a tortfeasor to mitigate damages with payments from plaintiff's insurance, plaintiff would be in a position inferior to that of having bought no insurance, because his payment of premiums *246 would have earned no benefit. Defendant should not be able to avoid payment of full compensation for the injury inflicted merely because the victim has had the foresight to provide himself with insurance." 2 Cal.3d at 10, 84 Cal.Rptr. 173, 465 P.2d 61.
In Farley v. Engelken, 241 Kan. 663, 678, 740 P.2d 1058 (1987), this court decried a statute that altered the collateral source rule's impact for some, but not all, tortfeasors and some, but not all, of their victims, as being devoid of a "legitimate legislative purpose." Our colleagues fail to tell us what legitimate judicial purpose their preferred result serves, or why it should be imposed at this time when it has such an obviously disparate impact between those tort victims with insurance and those without.
3. Dismantles the principles underlying the rule
Finally, we need to mention how our colleagues' approach fails to recognize and apply the long-standing rationales underlying the collateral source rule. As discussed above, the collateral source rule, as articulated by this court over many years, is solidly grounded in notions of equity, fairness, relevance, inherent prejudice to the plaintiff, as well as deterrence and accountability for tortfeasors. We fail to detect those principles in the alternative approach our colleagues now require.
We believe the law is unmistakable. The injured party's damages are not to be diminished simply by the fact that he or she is indemnified for his or her loss by insurance. The more recent clouds of compromise and needless complexity reflected in some courts' decisions weaken the bright clarity of this principle. This erosive process has now continued to the point where the underlying principle is becoming so fundamentally altered that the collateral source rule is compromised beyond useful applicability. As noted by the Ohio Court of Appeals, we fear our colleague's Robinson-based approach will eradicate the collateral source rule in practice. Ross, 185 Ohio App.3d at 562, 924 N.E.2d 916.
CONCLUSION
We agree with our colleagues that the district court erred in limiting plaintiff's recovery for medical expenses to only those amounts actually paid by plaintiff and her health insurance company. The district court's ruling on the motion in limine must be reversed. We agree further that the result reached in Bates, Fischer, and Liberty is wrong. But on remand, we believe the district court in this case should be directed to return to the long-standing principles previously articulated by this court underlying the collateral source rule. This would preclude the specific admission of the amount paid to satisfy the medical bills as a collateral source benefit, which would eliminate the need for any limiting instructions and the likelihood for jury confusion or misconduct on this highly prejudicial subject matter.
We concur in the result, which reverses the district court's ruling on the motion in limine. We dissent from the majority's adoption of the Robinson-based approach for the admission of evidence regarding the amounts actually paid and the provider write-offs, as explained above.
| {
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413 F.Supp. 962 (1976)
XYOQUIP, INC., Plaintiff,
v.
James K. MIMS and Betty Mims, Defendants.
No. GC 74-117-S.
United States District Court, N. D. Mississippi, Greenville Division.
January 6, 1976.
*963 Luther P. Crull, Jr., Liston, Crull & Gibson, Winona, Miss., for plaintiff.
G. Hite McLean, Kimbrough, Kimbrough & McLean, Greenwood, Miss., for defendants.
MEMORANDUM OF DECISION
ORMA R. SMITH, District Judge.
This action was tried to the court, sitting without a jury, at the United States Courthouse in Greenville, Mississippi, on September 16, 1975. The parties have submitted post-trial memoranda and the action is ready for entry of the court's findings of fact and conclusions of law pursuant to Rule 52(a) Fed.R.Civ.P. They are incorporated in this memorandum.
The evidence in the case is without substantial conflict. Plaintiff, XYOQUIP, Inc., (hereinafter referred to as "plaintiff") is a foreign corporation organized and existing under the laws of the State of Ohio. Plaintiff has its principal place of business in the City of Cincinnati, State of Ohio, and has not, as a foreign corporation, qualified to do business in Mississippi. Defendants are husband and wife. They are adult resident citizens of and reside in the Northern District of Mississippi.
The court has subject matter jurisdiction of the action pursuant to 28 U.S.C.A. § 1332(a)(1), as the matter in controversy exceeds the sum or value of $10,000, exclusive of interest and costs, and is between citizens of different states.
Plaintiff, at all times pertinent to this action, operated a general equipment leasing business and, among other pursuits, engaged in financing, through a leasing arrangement, the sale and distribution of slush drink freezers (hereinafter referred to as "machines") sold and distributed by the Freezie Corporation. The Freezie Corporation, during the time pertinent hereto, was a corporation operating under a charter of incorporation issued by the State of Georgia. Its home office and principal place of business were in Atlanta, Georgia.
The leasing arrangement contemplated that the Freezie Corporation, after locating a prospective user of its machines, would procure from the prospect a signed lease *964 and letter of acceptance acknowledging delivery and receipt of the machines. At the same time the Freezie Corporation would secure information from the prospect as to his or her financial status.
After securing the executed lease, acceptance letter, and financial statement, the Freezie Corporation would prepare an invoice evidencing a sale of the machines to plaintiff. A schedule of the serial numbers would then be prepared and attached to the lease and acceptance letter. The documents would be submitted to plaintiff, and if approved, plaintiff would execute the lease which would close the transaction.
The evidence reflects that on several occasions prior to November 8, 1971, Herbert Frady (hereinafter referred to as "Frady") representing the Freezie Corporation contacted defendants and undertook to interest them in acquiring the machines which were then being sold and distributed by his employer.
Relying upon representations made by Frady, defendants, on or about the date last mentioned, executed a lease agreement to be submitted to plaintiff for its acceptance by virtue of which defendants agreed to lease from plaintiff twenty of the machines marketed by the Freezie Corporation. Defendants executed an acceptance letter addressed to plaintiff in which defendants acknowledged receipt of the machines in acceptable condition and requested plaintiff to procure the machines from the Freezie Corporation for leasing to them. Defendants also furnished Frady with financial statements, reflecting their financial ability to perform the provisions of the lease agreement.
Neither the lease nor the acceptance letter, when executed by defendants, contained the serial numbers of the machines; each provided that the numbers would appear on an attached schedule. At the time of the execution of the lease, acceptance letter and financial statements, Frady delivered to defendants four of the machines, but did not deliver the other sixteen. Defendants were not acquainted with plaintiff at the time of the transaction and came to know plaintiff only because plaintiff's name appeared on the forms used in the transaction by Frady. Defendants relied entirely on Frady and trusted him to arrange the closing of the transaction. Defendants requested, and Frady left with them, a document upon which Frady guaranteed that the Freezie Corporation would deliver the other sixteen machines as requested by defendants.
Frady secured an invoice from the Freezie Corporation representing the sale of the twenty machines to plaintiff and prepared a schedule reflecting the serial numbers of the machines, a copy of which was attached to the lease agreement and acceptance letter.
Frady personally carried the invoice, lease, acceptance letter and financial statements to plaintiff's Cincinnati office two days later, November 10, 1971, and closed the transaction. The purchase price of the machines, as reflected by the invoice, was $21,000.
The evidence reflects that upon a review of the documents, plaintiff agreed to accept the lease and enter into the transaction. Thereupon plaintiff paid the Freezie Corporation the purchase price of the machines, as reflected by the invoice. The transaction was closed on November 10, 1971, but the lease is dated November 15, 1971. Whether it was actually signed on the 10th and dated the 15th is not reflected by the record. At any rate, the evidence sustains the finding that plaintiff approved and closed the transaction on November 10, 1971.
Plaintiff paid the Freezie Corporation the sum of $11,127.28, by check and entered a credit for the balance of the purchase price on Freezie's open account.
Plaintiff did not notify defendants of the acceptance of the lease until January 18, 1972 when plaintiff sent defendants a coupon book covering letter, the coupon book and an insurance letter.
The Freezie Corporation on November 22, 1971, filed a voluntary petition in bankruptcy in the United States District Court for the Northern District of Georgia. Defendants *965 were not listed as creditors in the bankruptcy schedules. The record does not reflect whether the sixteen undelivered machines were a part of the bankrupt estate.
Plaintiff was notified by Frady on January 16, 1972 that he delivered to defendants only four of the machines.
Plaintiff was named as a creditor in the schedules filed by the Freezie Corporation and on January 22, 1972, plaintiff filed its proof of claim in the bankruptcy proceedings alleging therein that the twenty machines involved in the action sub judice might be in the possession of the bankrupt.
Upon the receipt of the coupon book and related documents, defendants notified plaintiff that they had received only four machines, and that these were in a defective and inoperateable condition. Plaintiff acknowledged receipt of this letter on February 29, 1972.
Plaintiff initiated an action in a Florida state court against the former president of the Freezie Corporation seeking to recover of him the $11,127.28 which plaintiff had paid the Freezie Corporation on the purchase price of the machines. At the time of the trial of the action sub judice, the Florida proceedings had not been concluded.
The lease entered into between the parties described the leased property as being "20 used model `300' Freezie Slush Drink Freezers, S/N's on attached schedule". The costs of the machines to lessor-plaintiff is shown to have been the sum of $21,000. The lease is for the aggregate sum of $26,472.60 payable in 36 monthly installments of $735.35 each. At the time of the purchase of the machines, plaintiff deducted from the purchase price, the sum of $2,206.05, representing the first and last two monthly payments on the lease, as advanced rental security deposit.
The defendants have not made any payment on the lease and more than three years has expired since its execution. All payment has matured in due course. Plaintiff filed this action on November 22, 1974.
Defendants deny any liability to plaintiff arising from the transaction. They assert that Frady was acting as the agent of plaintiff in negotiating the lease and preparing the documents and that plaintiff is responsible for his actions and conduct. The record is devoid of evidence that Frady acted as the agent of plaintiff. Frady was employed by the Freezie Corporation and not by plaintiff. Plaintiff did not invest Frady with any express or actual authority and the circumstances surrounding the parties does not warrant a holding of implied or apparent authority.
Frady carried forms used by plaintiff in its finance/leasing business and used these forms in the transaction with defendants. This fact alone, however, is not sufficient to establish an agency relationship between Frady and plaintiff. Such a practice is common in the commercial community. Defendants did not know of plaintiff's existence prior to the transaction. Frady did not hold himself out as plaintiff's agent. Defendants dealt with Frady as the salesman and agent of the Freezie Corporation. The evidence introduced by defendants makes it clear that they placed their trust in Frady and relied upon him to carry out the transaction and deliver the balance of the machines.
In 2A C.J.S. Agency § 36, it is stated:
The question of agency depends in a marked degree on the facts and circumstances of the particular case. The factual elements are a manifestation of the principal, by either his words or conduct or both, that the agent shall act for him, the agent's acceptance of the undertaking, and, most critically, the understanding of the parties that the principal is to be in control of the undertaking. Agency implies employment or service coupled with delegated authority to manage some affair for or on behalf of the principal and on his account, and to render an accounting of it.
The most that can be said in support of defendants' position is that plaintiff was engaged in financing the sale of the machines marketed by the Freezie Corporation. In carrying out this objective, plaintiff furnished the Freezie Corporation with *966 the forms customarily used by plaintiff in its business. Such circumstances do not, in the judgment of the court, operate to make Frady, plaintiff's agent.
Neither did plaintiff's conduct create an implied agency. There is no substantial evidence in the case to sustain a holding that plaintiff's conduct evidenced an intention on its part to create such a relationship.
There can be no apparent authority to act where an agency relationship, either actual, expressed, or implied, does not exist.
The Mississippi Supreme Court in Steen v. Andrews (1955), 78 So.2d 881, at 883 said:
A principal, having clothed his agent with the semblance of authority, will not be permitted, after others have been led to act in reliance of the appearances thus produced, to deny, to the prejudice of such others, what he has theretofore tacitly affirmed as to the agent's powers [citation omitted]. There are three essential elements to apparent authority: (1) Acts or conduct of the principal; (2) reliance thereon by a third person; and (3) a change of position by the third person to his detriment. All must concur to create such authority. [Emphasis supplied]
Defendants contend that plaintiff is prohibited from maintaining the action sub judice because, at the time of the transaction, plaintiff had not procured a certificate of authority to transact business in Mississippi. A foreign corporation transacting business in Mississippi without a certificate of authority is prohibited from maintaining any action, suit, or proceedings in any court in the state. Mississippi Code 1972 § 79-3-247. This prohibition is applicable in federal as well as in state court.
A foreign corporation is not deemed to be doing business in Mississippi in matters pertaining to the transaction of business in interstate commerce. Mississippi Code 1972 § 79-3-211(e). See Humboldt Foods, Inc. v. Massey, 297 F.Supp. 236 (N.D. Miss., 1968).
The facts and circumstances surrounding plaintiff's participation in the transaction sub judice does not, in the opinion of the court, sustain a finding that plaintiff was transacting business within the state in its relationship with the transaction here involved so as to subject plaintiff to the penalty of Section 79-3-247.
Defendants take the position that a viable lease does not exist. The acceptance letter above-mentioned, signed by defendants, provides in pertinent part:
"This is to acknowledge that we have received the equipment described above, that it is acceptable to us, and that you are hereby authorized to make payment to the abovenamed supplier."
The acceptance letter and the executed lease were presented to plaintiff at its Cincinnati office. Plaintiff evidenced its acceptance of the lease when, pursuant to defendants' request, plaintiff paid the Freezie Corporation for the machines. Formal notice of acceptance was not required to effectually bind the parties to the contract.
The court finds that the parties are bound by the lease agreement, and plaintiff has the right to sue thereon.
Defendants plead estoppel. They assert that plaintiff acquired early knowledge that defendants had not received twenty machines from the Freezie Corporation and that the Freezie Corporation was bankrupt. Defendants argue that plaintiff possessed knowledge of the bankruptcy of the Freezie Corporation, failed to alert them of this fact and thereby lulled them into inactivity, to their prejudice.
The court is not persuaded by argument that plaintiff is estopped to assert its rights against defendants. Plaintiff was diligent in its efforts to follow the twenty machines into the bankrupt estate and assert its lien thereon. Plaintiff was also diligent in proceeding against a former official of the Freezie Corporation to recover the amount of cash advanced in the purchase of the machines.
The evidence does not sustain defendants' contention that plaintiff is prohibited *967 from pursuing its claim against them because plaintiff elected to proceed against the property pledged with the lease and the former official of the Freezie Corporation. The relief sought by plaintiff in such actions was not inconsistent with the relief which plaintiff here seeks.
The circumstances revealed by this record present a regrettable situation. Defendants have received only four machines and they are inoperateable. Relying upon the honesty and integrity of Frady, and placing their trust in him, defendants armed Frady with documents which enabled him to defraud plaintiff; and plaintiff relying upon the truthfulness of the facts revealed by the lease and acceptance letter paid the Freezie Corporation the sum of $11,127.28, and extended credits as above mentioned. As it later developed, the open account of the Freezie Corporation was worthless because of its bankruptcy.
The rule of law is "that where one of two innocent parties must suffer from the fraud of a third, he who reposes trust and confidence in the fraudulent agent ought to bear the loss." Weil Bros., Inc. v. Keenan, 180 Miss. 697, 178 So. 90, 94 (1938). Here defendants reposed trust and confidence in Frady, the fraudulent agent. The defendants must, therefore, bear the loss resulting from his fraudulent conduct.
The court has encountered some difficulty in reaching a determination of the amount plaintiff is entitled to recover. It is clear that the award on the basis of the lease contract would be in the sum of $24,266.55. Plaintiff's out-of-pocket loss amounted to $11,127.28.
The court has concluded, in light of all circumstances, that a judgment for $11,127.28, with interest at eight percent per annum from the date of the advance, November 10, 1971, to the date of payment, will compensate plaintiff for its loss.
Accordingly, the clerk will enter a judgment for plaintiff for said sum with interest as directed, and all costs.
| {
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754 F.2d 1381
117 L.R.R.M. (BNA) 2974, 118 L.R.R.M. (BNA) 3022,102 Lab.Cas. P 11,233
WHISPER SOFT MILLS, INC., Petitioner,v.NATIONAL LABOR RELATIONS BOARD, Respondent,Pacific Northwest District Council, International LadiesGarment Workers Union, AFL-CIO, Intervenors.NATIONAL LABOR RELATIONS BOARD, Cross-Petitioner,v.WHISPER SOFT MILLS, INC., Cross-Respondent.PACIFIC NORTHWEST DISTRICT COUNCIL, INTERNATIONAL LADIESGARMENT WORKERS UNION, AFL-CIO, Petitioner,v.NATIONAL LABOR RELATIONS BOARD, Respondent.
Nos. 83-7717, 83-7813 and 83-7840.
United States Court of Appeals,Ninth Circuit.
Argued and Submitted Sept. 13, 1984.Decided Oct. 31, 1984.As Modified on Denial of Rehearing and Rehearing En bancMarch 11, 1985.
Stefan M. Mason, Mason & Mason, Los Angeles, Cal., Sanford N. Nathan, Neyhart, Anderson, Nussbaum, Reilly & Freitas, San Francisco, Cal., for petitioner.
Susan Williams, Elliott Moore, NLRB, Washington, D.C., for respondent.
Petition to Review a Decision of the United States National Labor Relations Board.
Before MERRILL, ALARCON, and NELSON, Circuit Judges.
MERRILL, Circuit Judge:
1
Petitioner, Whisper Soft Mills, Inc., seeks review of a decision and order of the National Labor Relations Board. Whisper Soft contends that the NLRB erred in finding that (1) the Pacific Northwest Council of the International Ladies Garment Workers Union, AFL-CIO [the Council] possessed the authority of an authorized bargaining representative; (2) that Whisper Soft's delay in advancing a wage proposal constituted a refusal to bargain in violation of the National Labor Relations Act, 29 U.S.C. Secs. 158(a)(5) and (1); and (3) that Whisper Soft's withdrawal of recognition of the International Ladies Garment Workers Union [ILGWU] violated Secs. 158(a)(5) and (1) of the Act, converting an existing economic strike into an unfair labor practice strike. The Council has been granted leave to intervene. Jurisdiction over the final order of the Board is based on 29 U.S.C. Sec. 160(f).
2
* On November 29, 1979, the ILGWU was certified as the representative of the production employees at Whisper Soft's Santa Rosa, California facility. Contract negotiations between Whisper Soft and the Council began on January 15, 1980. After twelve bargaining sessions, a strike against the company commenced on August 25, and six more sessions were held between September 2 and November 14. On December 16, Whisper Soft withdrew recognition from the ILGWU, claiming to have a good faith doubt that the union continued to represent a majority of the employees in the bargaining unit. Since that time, no bargaining has occurred.
3
Throughout the period during which bargaining took place, Whisper Soft manifested concern that the Council was not the certified bargaining representative. At the second bargaining session on February 20, the Council proposed an agreement solely between the Council and the Company. Whisper Soft asked that the ILGWU sign and be bound by the agreement. The Council did not agree, stating that this suggestion presented problems.
4
When the parties next met on March 11, the company asked that one of the Council's representatives sign any agreement in her capacity as a vice-president of ILGWU and obtain a letter from the ILGWU authorizing her to negotiate and binding the international union to the agreement. The Council made no response.
5
At the fourth negotiating session on March 17 and 18, the issue arose again. The Council indicated that the ILGWU did not want to be a party to any agreement due to a desire to avoid liability in the event of a later breach. Whisper Soft responded that the Council's position raised legal problems because only the ILGWU was the certified bargaining representative. The company continued negotiating under the stated assumption that it was dealing with a representative of the ILGWU. Whisper Soft warned, however, that legal problems might arise if the parties were unable to reach an agreement on the representation issue.
6
At the September 4 bargaining session, the issue arose once again. Whisper Soft stated that any agreement was to be between the ILGWU and the company, signed by an officer of the ILGWU per certification. Later in the meeting, the Council's chief negotiator stated that to have the ILGWU as the signatory to the contract would be an embarrassment to the Council. On September 5, Whisper Soft reiterated its position.
7
Against this background of uncertainty as to the presence of the certified representative, negotiations transpired concerning the terms of a collective bargaining agreement. The company asserted that its policy was to grant wage increases in September, when customer prices were raised. Whisper Soft further maintained that a wage offer could not be immediately forthcoming because of a decrease in business necessitating the layoff of employees.
8
On August 20, Whisper Soft made a wage proposal, and five days later the employees struck. The company reacted by hiring permanent replacements, and on December 16, approximately thirteen months after the ILGWU had been certified, Whisper Soft informed the Council that the company had a good faith doubt as to whether a majority of the bargaining unit employees supported the union. On that basis, recognition was withdrawn by Whisper Soft.
9
A complaint alleging violation of Secs. 158(a)(5) and (1) of the Act was brought against Whisper Soft by the General Counsel of the NLRB. An Administrative Law Judge found that the company's delay in making a wage proposal was based upon legitimate business considerations. The withdrawal of recognition from the union was found to be lawful. The employees' strike was, therefore, stated neither to have been caused nor prolonged by unfair labor practices. Because the company was found not to have violated the Act, the Administrative Law Judge did not decide whether the Council was the agent of the ILGWU for the purpose of bargaining.
10
The National Labor Relations Board reversed the decision of the Administrative Law Judge. The Board refused to dismiss the case because of the attempt by the Council to obtain its name, and not that of the ILGWU, as signatory to the contract. Whisper Soft was then found to have refused to bargain in violation of 29 U.S.C. 158(a)(5) and (1) by unjustifiably delaying bargaining. Due to this finding of unlawful delay, the Board extended, by the duration of the delay, the one-year period during which a certified representative is irrebuttably presumed to retain the support of the bargaining unit. The company's withdrawal of recognition fell, due to the extension of the bargaining year, within the period during which majority support is presumed. A prima facie violation of Secs. 158(a)(5) and (1) of the Act resulted, and the economic strike which began on August 25 was thereby converted into an unfair labor practice strike on December 161. All striking workers who were not permanently replaced before December 16 were found entitled to reinstatement. In addition, the Board ordered the company to recognize and bargain collectively with the union as the exclusive representative of its employees.2
II
11
The Board's order is to be enforced if the Board correctly applied the law and if the Board's findings of fact are supported by substantial evidence on the record viewed as a whole. See Universal Camera Corp. v. NLRB, 340 U.S. 474, 487-88, 71 S.Ct. 456, 463-65, 95 L.Ed. 456 (1951); NLRB v. Big Bear Supermarkets, 640 F.2d 924 (9th Cir.), cert. denied, 449 U.S. 919, 101 S.Ct. 318, 66 L.Ed. 147 (1980). This standard does not change when the Board and the Administrative Law Judge make contrary findings; the Administrative Law Judge's findings are part of the record to be weighed along with all other evidence. See Idaho Falls Consolidated Hospitals, Inc. v. NLRB, 731 F.2d 1384 (9th Cir.1984).
III
12
The duty of an employer to bargain with the chosen representatives of his employees in respect to rates of pay, wages and hours and other conditions of employment is an obligation only to the certified bargaining representative. See 29 U.S.C. Sec. 159(a) (1978). The obligation, being exclusive, exacts a "negative duty to treat with no other." Medo Photo Supply Corp. v. National Labor Relations Board, 321 U.S. 678, 683-84, 64 S.Ct. 830, 832-33, 88 L.Ed. 1007 (1944).
13
In order to assert that Whisper Soft had a duty to bargain with the Council, the Council must therefore cloak itself in the authority of an authorized bargaining representative.3 The certified representative was, however, not the Council, but the ILGWU.
14
For purposes of determining the identity of the authorized representative, the local union is distinguishable as a legal entity from its international parent.4 As the Court of Appeals for the District of Columbia Circuit recognized, "where the International has been certified, an employer could hardly be held guilty of an unfair labor practice for failing to recognize a local union which was not certified." International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America v. NLRB, 394 F.2d 757, 761 (D.C.Cir.), cert. denied, 393 U.S. 831, 89 S.Ct. 100, 21 L.Ed.2d 102 (1968). "An uncertified organization," the court continued, "cannot ... inject itself, or be injected by a friendly parent, into a labor relationship where there is a certification, in the face of the statutory provisions as to exclusiveness, certification, etc. [footnote omitted.]" 394 F.2d at 761.
15
The National Labor Relations Act and, in particular, the exclusive representation requirement strive to bring stability to the process by which labor and management resolve their differences. See, e.g., Abood v. Detroit Board of Education, 431 U.S. 209, 220-21, 97 S.Ct. 1782, 1791-92, 52 L.Ed.2d 261 (1977); S.Rep. No. 573, 74th Cong., 1st Sess. (1935). A strict distinction between the local and the international union for the purpose of determining the authorized representative is necessary in order to bring this policy to fruition. Serious consequences to the labor relations framework adopted by Congress would result if local unions were allowed to inject themselves into negotiations in place of a certified international. The employer could be confronted by a well financed international union in the campaign preceding the representation election. If the ensuing collective bargaining agreement was signed only by the local and only on the authority of the local, the international could shield itself from any liability for a subsequent breach of the agreement. The position of the international union would thus be greatly strengthened in dealing with employers; the international would be able to exert considerable influence in the election campaign without risking liability in the administration of any later collective agreement.
16
Allowing the breakdown in the distinction between the local and the international would also undermine the position of labor unions and reduce the benefits to employees from collectivization. Employers would be able to offer separate peace settlements to locals and thereby avoid more stringent international demands. See NLRB v. General Electric Company, 418 F.2d 736, 755 (2d Cir.1969), cert. denied, 397 U.S. 965, 90 S.Ct. 995, 25 L.Ed.2d 257 (1970). An international union, having organized an entire industry or a multi-plant employer, might face a strategy of divide and conquer.
IV
17
Despite the necessity for retaining a clear distinction between the Council and the ILGWU in identifying the authorized bargaining representative, the international union is by no means barred from delegating bargaining authority to members of a local. In general, a union may select whomever it wants, including officers and members of other unions, as representatives in dealings with an employer. General Electric Co. v. NLRB, 412 F.2d 512, 517 (2d Cir.1969). Members of a local are not barred from serving a certified international as designated representatives. Cf. Prudential Insurance Co. of America v. NLRB, 278 F.2d 181, 182-83 (3d Cir.1960).
18
Whether the Council members were in fact delegated authority to negotiate on behalf of the ILGWU is a question of agency law.5 For an agency relationship to exist, the agent must consent to act on behalf of the principal. Nelson v. Serwold, 687 F.2d 278, 282 (9th Cir.1982); Grace Line, Inc. v. Todd Shipyard Corp., 500 F.2d 361, 373 (9th Cir.1974); Restatement (Second) of Agency Sec. 1(1) (1958). The agent's consent must be manifest and is evidenced by, inter alia, the actual dealings between the parties. Johnson v. Bechtel Associates Professional Corp., 717 F.2d 574, 579 (D.C.Cir.1983), cert. granted, --- U.S. ----, 104 S.Ct. 972, 79 L.Ed.2d 210 (1984).
19
The behavior of the Council is inconsistent with the existence of any consent. An essential characteristic of an agency is the power of the agent to commit his principal to business relationships with third parties. Griffin v. United States, 588 F.2d 521, 528 (5th Cir.1979). See, e.g., Esmond Mills v. Commissioner, 132 F.2d 753, 755 (1st Cir.), cert. denied, 319 U.S. 770, 63 S.Ct. 1432, 87 L.Ed. 1718 (1943); Restatement (Second) of Agency Sec. 12 (1958). An agent can by nature bind his principal to a transaction with a third person. See Restatement (Second) of Agency Sec. 140 (1958). A party without this capacity to bind the principal is not an agent. The statement that the ILGWU did not want to be a party to any agreement due to a desire to avoid liability was in effect a claim by the Council not to be an agent of the ILGWU. The Council cannot, therefore, be regarded as having consented to any agency status.6V
20
The Council being neither an authorized representative nor an agent of an authorized representative, the company had no duty to bargain with the Council.7 In the absence of a duty to bargain, any failure by Whisper Soft to put forward a wage proposal cannot result in an illegality. Because the company was not guilty of any unfair labor practice prior to August 25, the strike which began on that date was not an unfair labor practice strike at its inception.
VI
21
The sole remaining issue is whether the company's withdrawal of recognition of the union on December 16 violated Secs. 158(a)(5) and (1) of the Act and converted the strike into an unfair labor practice strike. The rationale advanced by the Board was that the year during which a union is presumed to retain majority support in a bargaining unit, see Brooks v. NLRB, 348 U.S. 96, 104, 75 S.Ct. 176, 181, 99 L.Ed. 125 (1954), had been extended due to Whisper Soft's delay in making a wage proposal. The company's withdrawal of recognition had therefore fallen within the time period during which a union is presumed to retain majority support. Since we have held, however, that Whisper Soft's method of making a wage proposal did not result in any illegality, the certification year should not have been extended. The withdrawal of recognition therefore did not fall within the period of time during which a union is irrebuttably presumed to enjoy majority support.
22
At the expiration of the certification year, the presumption of majority status becomes rebuttable. An employer may rebut that presumption, so as to withdraw recognition, by presenting evidence of a sufficient objective basis for a reasonable doubt of the union's majority status at the time the employer refused to bargain. See Retired Persons Pharmacy v. NLRB, 519 F.2d 486 (2d Cir.1975). Such objective evidence must be clear, cogent, and convincing. See Pioneer Inn Associates v. NLRB, 578 F.2d 835 (9th Cir.1978).
23
The company argued that its good faith belief in a lack of majority status was premised on the fact that, at the time recognition was withdrawn, a majority of the unit was comprised of employees who had applied for work in response to an advertisement which informed them of the company's labor dispute and who had crossed the picket line daily to work for the company.8 The Administrative Law Judge acknowledged that the mere fact that other employees crossed the line to work does not evidence and is insufficient to establish a good faith belief in a loss of majority status because new employees are presumed to support the union in the same ratio as the old. See Pennco, Inc., 250 N.L.R.B. 716 (1980). Yet the Administrative Law Judge found unique circumstances which would rebut the ancillary-ratio presumption and lead to the conclusion that none of the new employees was loyal to the Union: throughout the strike, the Union demand that Whisper Soft reinstate all of the strikers as a condition of any collective bargaining agreement, thereby resulting in a loss of employment for a majority of the new employees. Accordingly, the Administrative Law Judge concluded that the company did have an objective basis for doubting the Union's majority status.9
24
This Court has found employee turnover to be a factor which may be considered in determining whether there is an objective basis for a doubt of majority support for the union. See Dalewood Rehabilitation Hospital, Inc. v. NLRB, 566 F.2d 77 (9th Cir.1977). Moreover, the presumption that strike replacements support the union in the same ratio as strikers has never been embraced by any circuit court and has been rejected by the four circuits that have considered it. See NLRB v. Pennco, Inc., 684 F.2d 340 (6th Cir.1982), cert. denied 459 U.S. 994, 103 S.Ct. 355, 74 L.Ed.2d 392 (1982); Soule Glass & Glazing Co. v. NLRB, 652 F.2d 1055 (1st Cir.1981); National Car Rental System, Inc. v. NLRB, 594 F.2d 1203 (8th Cir.1979); and NLRB v. Randle-Eastern Ambulance Service, Inc., 584 F.2d 720 (5th Cir.1978). Against this background, the Administrative Law Judge did not err in finding that Whisper Soft reasonably concluded that the Union no longer enjoyed majority status.10 No unfair labor practice therefore occurred.
25
The decision of The National Labor Relations Board is reversed and its order is vacated.
1
The Board affirmed the Administrative Law Judge's finding that the strike was not caused by the delay in making a wage offer and that the strike was therefore economic at its inception
2
The Administrative Law Judge also found that the company did not refuse to furnish wage and benefit information concerning its supervisory employees. This finding was affirmed by the Board and is not contested in the Council's petition for review
3
Respondents view the question of whether the Council or the ILGWU would be signatory to the agreement as a permissive bargaining issue. This analysis is, however, beside the point. If the Council had no authority to act as or on behalf of the authorized representative, then petitioner had no duty to bargain with the Council
4
That members of the Council's bargaining committee had formal ties to the ILGWU is irrelevant. If the members were willing to sign only in the name of the Council, they were not part of the ILGWU for purposes of the negotiations
5
Questions of agency under the Act are generally resolved according to common law principles. NLRB v. Local 64, Falls Cities District Council of Carpenters, 497 F.2d 1335, 1336 (6th Cir.1974). Cf., Carbon Fuel Co. v. United Mine Workers of America, 444 U.S. 212, 217, 100 S.Ct. 410, 414, 62 L.Ed.2d 394 (1979) (In suits for violations of contracts between an employer and a labor organization, the common law of agency governs in determining whether any person is acting as the agent of another person); NLRB v. Int. Long and Ware. Union, et. al., 283 F.2d 558, 563 (9th Cir.1960)
6
At the hearing before the Administrative Law Judge, Jackson, one of the negotiators for the Council, testified that she had the authority to sign contracts on behalf of the ILGWU. As the foregoing discussion has indicated, however, the creation of an agency relationship is a two-way street. The grant of authority by the principal is necessary but not sufficient; the agent must still consent. Whatever authority Jackson generally possessed did not suffice to make her an agent during the Whisper Soft negotiations. Furthermore, the statement by a Council negotiator that to seek explicit authority from the ILGWU would be embarrassing raises doubts as to whether the principal had actually granted authority. The Administrative Law Judge made no finding as to whether such a grant was made
7
The decision of the NLRB, that the attempt by the Council to obtain its own name as signatory did not warrant dismissal of the case, places great weight on the fact that Whisper Soft "continued to negotiate with the representatives who arrived to bargain with it." The Board seems to be implying a sort of estoppel or waiver theory to bar Whisper Soft's claim that the Council was not the authorized representative. On the present facts, any theory of estoppel or waiver is inappropriate. Throughout the negotiations, Whisper Soft made clear that unless the Council could bind the ILGWU, legal problems would arise. The company asserted that negotiations were continuing on the assumption that the Council would ultimately obtain agency status. Furthermore, given the important considerations which underlie the exclusive representation rule, the degree to which waiver or estoppel might be recognized in this context is uncertain
8
All twenty-seven production employees at Whisper Soft's Santa Rosa facility went on strike on August 25, 1980. The Administrative Law Judge evaluated continued majority status by including in the bargaining unit all strikers, even if permanently replaced, as well as permanent replacements. See NLRB v. Windham Community Hospital, 577 F.2d 805, 813 (2d Cir.1978); C.H. Guenther & Son, Inc. v. NLRB, 427 F.2d 983, 986-87 (5th Cir.), cert. denied, 400 U.S. 942, 91 S.Ct. 240, 27 L.Ed.2d 246 (1970). The Administrative Law Judge then found that on December 16, 1980, the date the company withdrew recognition, the unit consisted of fifty-eight employees: twenty-four strikers, twenty-seven strike replacements and seven other employees who were hired during the strike. The figure of twenty-four strikers was reached by subtracting from the group of twenty-seven original strikers one striker who had explicitly abandoned the strike and moved out of the area and two strikers who had been discharged for picket line misconduct
9
Because the Board found an unlawful delay sufficient to toll the certification period, it had no opportunity to review the Administrative Law Judge's analysis concerning objective basis for doubt of the Union's majority status
10
The Union suggests that there may have been room for both the strikers and the replacements so as to undermine a good faith belief in a loss of majority status. Yet the findings of the Administrative Law Judge belie that contention inasmuch as the company maintained in several instances throughout negotiations that there was insufficient demand to immediately rehire all strikers in light of the replacements. See, e.g., NLRB v. Randle-Eastern Ambulance Service, Inc., 584 F.2d 720 (5th Cir.1978) (generally fair to assume that strike replacements do not support the union and should not be counted toward union majority)
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Case: 13-20262 Document: 00512475938 Page: 1 Date Filed: 12/18/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 13-20262 December 18, 2013
Lyle W. Cayce
MAURICE MITCHELL, Clerk
Plaintiff-Appellant
v.
CORRECTIONAL OFFICER ANGELA R. HENDERSON; GRIEVANCE
COORDINATOR A. GUIDRY; LAW LIBRARY SUPERVISOR REGIS C.
RAYME; SENIOR WARDEN BRENDA CHANEY,
Defendants-Appellees
Appeals from the United States District Court
for the Southern District of Texas
USDC No. 4:13-CV-192
Before KING, DAVIS, and ELROD, Circuit Judges.
PER CURIAM: *
Maurice Mitchell, Texas prisoner # 648121, moves for leave to proceed in
forma pauperis (IFP) on appeal from the district court’s dismissal of his 42
U.S.C. § 1983 complaint as frivolous. Mitchell’s IFP motion is a challenge to
the district court’s certification that his appeal is not taken in good faith. See
* 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: 13-20262 Document: 00512475938 Page: 2 Date Filed: 12/18/2013
No. 13-20262
Baugh v. Taylor, 117 F.3d 197, 202 (5th Cir. 1997). This court’s inquiry into
whether the appeal is taken in good faith “is limited to whether the appeal
involves legal points arguable on their merits (and therefore not frivolous).”
Howard v. King, 707 F.2d 215, 220 (5th Cir. 1983) (internal quotation marks
and citation omitted).
A liberal construction of Mitchell’s brief reveals that he asserts that the
dismissal of his complaint as frivolous was error, urging that the district court
made inappropriate factual determinations and legal conclusions. He also
conclusionally asserts that the district court was biased against him, but his
conclusional assertion, based on the court’s adverse ruling, is insufficient to
demonstrate bias on the district court’s part. See Liteky v. United States, 510
U.S. 540, 555 (1994).
Although Mitchell broadly references his denial-of-access and retaliation
claims, he fails to brief any argument challenging the district court’s reasons
for dismissing those claims as frivolous. He has thus abandoned any such
challenge. See Yohey v. Collins, 985 F.2d 222, 224-25 (5th Cir. 1993);
Brinkmann v. Dallas County Deputy Sheriff Abner, 813 F.2d 744, 748 (5th Cir.
1987). Accordingly, the instant appeal is without arguable merit and is
frivolous. See Howard, 707 F.2d at 219-20. The IFP motion is denied, and the
appeal is dismissed. See Baugh, 117 F.3d at 202; 5TH CIR. R. 42.2.
Both the district court’s dismissal of the complaint as frivolous and our
dismissal of the appeal as frivolous count as “strikes” for purposes of the “three
strikes” bar under 28 U.S.C. § 1915(g). See Adepegba v. Hammons, 103 F.3d
383, 387-88 (5th Cir. 1996). Mitchell is warned that if he accumulates three
strikes under § 1915(g), he will not be able to proceed IFP in any civil action or
appeal filed in a court of the United States while he is incarcerated or detained
2
Case: 13-20262 Document: 00512475938 Page: 3 Date Filed: 12/18/2013
No. 13-20262
in any facility unless he is under imminent danger of serious physical injury.
See § 1915(g).
IFP MOTION DENIED; APPEAL DISMISSED; SANCTION WARNING
ISSUED.
3
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Filed 12/15/15 Marriage of Minkey CA1/5
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FIVE
In re the Marriage of JESICA and HARRY
MINKEY.
JESICA MCINTYRE,
Appellant, A143625
v.
(San Francisco City and County
HARRY MINKEY, Super. Ct. No. FDI-09-769752)
Respondent.
During the course of a dissolution action, the trial court granted Jesica McIntyre’s
request for a domestic violence restraining order (DVRO)1 against her then-husband,
Harry Minkey. The following year, McIntyre requested a five-year renewal of the
DVRO and produced proof of Minkey’s continuing communications in violation of the
order. The court declined to issue the renewal, instead “warning” Minkey of the
consequences of further violations. McIntyre appeals. We conclude the court abused its
discretion and reverse with directions to grant renewal of the DVRO.
1
The DVRO was issued pursuant to the Domestic Violence Prevention Act
(DVPA) (Fam. Code, § 6200 et seq.). All further undesignated statutory references are to
the Family Code.
1
I. BACKGROUND
A. 2011 DVRO Proceedings
In March 2011, McIntyre requested a DVRO against Minkey on behalf of herself
and the parties’ children—a daughter and two sons, then ages 14, 6, and 3. McIntyre
alleged a lengthy history of abuse by Minkey.
McIntyre averred that in 1999, the year they started dating, Minkey mounted her
on the bed, held down her shoulders, spat on her, and screamed profanities at her. In
another incident that year, he kicked a bathroom door open, grabbed McIntyre by the
neck, and slammed her against a medicine cabinet. Minkey also punched holes in doors
when he became upset. After the couple broke up in 2001, Minkey stole McIntyre’s car,
broke into her residence, and verbally abused her. In 2003, after they reunited, Minkey
came home drunk, pushed McIntyre to the ground, verbally abused her, and had to be
restrained by a friend from following her into another room.
Two years after their 2005 marriage, McIntyre told police Minkey swung his arm
at her during an argument, grabbed and pulled her hair, raised a clenched fist, verbally
abused her, and hit her in the face with a pillow while she was holding their infant son.
In 2008, Minkey came home drunk and verbally abused McIntyre; she and the children
barricaded themselves in a room to prevent him from kicking in the door. Also that year,
while McIntyre was driving Minkey home from a party, he became verbally abusive,
grabbed the steering wheel and jerked the car toward parked cars and houses, grabbed
McIntyre’s head, and pulled her by the hair. In early 2009, Minkey put McIntyre in a
chokehold during an argument in the presence of their son. In August 2009 (subsequent
to McIntyre’s filing a petition for dissolution), she reported an incident to the police
where Minkey grabbed their then-four-year-old son, slammed him on the ground, and
verbally abused him for urinating on himself. The following month, McIntyre told police
that she had locked herself and her children in a bedroom after Minkey kept opening the
door during an argument and hit her in the leg.
Just prior to McIntyre’s March 2011 DVRO request, Minkey was verbally abusive
toward her in front of the children while on a trip together. In a separate incident,
2
Minkey yelled at their daughter, “got[] in her face,” implied he might hit her, and when
the girl protested said, “[W]hat are you going to do?” McIntyre left the home with the
girl that night. On an unspecified date, Minkey grabbed their daughter by the jaw,
slammed her against a kitchen cabinet, and yelled at her. The daughter submitted a letter
corroborating incidents of abuse described by McIntyre and reporting additional
incidents.
The court granted a temporary restraining order and set a hearing for April 2011.
In opposition, Minkey disputed the accounts of abuse and argued that McIntyre had not
alleged he committed or threatened to commit serious bodily harm. In April, the court
(Judge Monica F. Wiley) entered a stipulated child custody and visitation order. The
minute order of the April hearing also states that the court issued a one-year “non-CLETS
restraining order”2 protecting McIntyre from Minkey, although no such order is contained
in the record. In June, the court entered a new stipulated support, custody and visitation
order, which gave McIntyre exclusive use of the family home and required Minkey to
stay away from the home. The court terminated the “non-CLETS restraining order” by
“agreement.”
McIntyre and Minkey later reported that they resumed an on-and-off relationship
sometime after June 2011. McIntyre claimed their intimate relationship ended in
September 2012, and Minkey claimed it ended in January 2013.
2
CLETS is an acronym for the California Law Enforcement Telecommunications
System, a computer system operated by the Department of Justice. (People v. Martinez
(2000) 22 Cal.4th 106, 113; see Gov. Code, § 15151.) Restraining orders issued pursuant
to the DVPA are required to be entered into CLETS to facilitate enforcement. (§ 6380.)
We observe that some family law courts apparently issue “non-CLETS” restraining
orders in lieu of DVRO’s, perhaps with a view to mitigate in “close cases” the significant
consequences that may accrue to the restrained spouse or partner. (See Ritchie v. Konrad
(2004) 115 Cal.App.4th 1275, 1291 (Ritchie) [citing concerns about “social stigma” that
might interfere with the restrained party’s employment, social life, and “access to his (or
her) children even when they are not potential targets of abuse”]; §§ 3044, 6389
[presumption against joint child custody; ban on firearm ownership or possession].) We
have no occasion to consider here the validity of this nonstatutory response to a DVRO
request.
3
B. 2013 DVRO Proceedings
On March 14, 2013, McIntyre again requested a DVRO, reporting that Minkey
“comes to the house and lets himself in, in violation of our current order. . . . [¶] . . .
[¶] . . . I have made it very clear to [Minkey] that I do not want to talk to him unless we
need to speak about our children. Still, he calls me three or four times per day. . . . [¶] . . .
[He] also sends me approximately 20–30 text messages each day.”
McIntyre averred Minkey entered the home in July 2012, and he became verbally
abusive toward her in front of the children. After he left, McIntyre chained the front door
from the inside, but Minkey broke the chain open and texted her, “I’m warning you never
to lock me out of my house or you will pay.” In February 2013, Minkey confronted
McIntyre about phone records as she was trying to pick up the children and return home.
He would not let go of the car door until the parties’ daughter pushed his hand off the
door. In a later phone call, Minkey verbally abused the girl. After McIntyre changed her
cell phone number, Minkey entered the home, found the phone, and forwarded texts from
the phone to himself and back to McIntyre. He also left a note for McIntyre on a
personal item in her bedroom, and asked her about another personal item he had
apparently found while searching the home.
On March 7, 2013, Minkey sent McIntyre 30 text messages between 12:07 a.m.
and 9:04 p.m. Some of those texts read: “I don’t want to explode and lose my children or
you, or damage Ruben [(apparently, McIntyre’s boyfriend)] or anyone”; “Keep doing
this to me and I’m going to snap and everyone loses!”; “This is too much. I need help.
I’m going to lose it.” McIntyre replied five times, including, “Leave me alone . . . I don’t
ever want to hear from u again!”; and “Don’t text [our daughter], my family or friends!”
Minkey entered the house that day and McIntyre told him to leave her alone. Minkey
followed McIntyre into another room, embraced and kissed her, and would not let go. He
said he would return in the morning. McIntyre texted him, “Don’t ever touch me! Don’t
come to the house/morning.” Minkey entered the house the next morning, climbed on
top of McIntyre in her bed, kissed her, refused her requests to get off, and pinned her
down, bruising her arm.
4
The court (Judge Michael Isaku Begert) granted McIntyre a temporary restraining
order and scheduled a hearing for April 2013, which was ultimately continued to July. In
a response, Minkey wrote3 that neither he nor McIntyre had fully respected the June 2011
visitation order. “[McIntyre] and I have both come and gone from the family home as we
please, mutually caring for our children and maintaining the property. [¶] . . . During the
fall and winter of 2012, I stayed in the family home with [McIntyre] and our children
after I underwent double hip replacement surgery on November 30, 2012. [¶] . . .
Although I maintained a separate residence, I continued to stay overnight and share a bed
with [McIntyre] at our family home periodically through January 2013.”4 He disputed
that McIntyre was fearful of him, noting that on March 11, 2013—shortly after the
March 7 events recounted by McIntyre—he and McIntyre met for lunch, agreed on a
modification of the visitation order, and agreed that Minkey would pay McIntyre’s credit
card debt. He told her that day he was going to the family home and she did not object.
About a week later, Minkey gave McIntyre additional money she had requested and he
hand-delivered the money at the family home with no objection from McIntyre.5
Minkey also argued the proposed DVRO would damage his professional
reputation and impose an unfair burden on him because he needed to be able to
communicate with McIntyre regarding the children and enter the house to retrieve items
for himself or the children, to carry out maintenance and repair, and to protect the
children if they were left alone at night, as they had been on repeated occasions. He
argued later in court that a DVRO also would be a burden because he was applying to
3
Minkey’s “declaration” is not made under penalty of perjury, although it is
incorporated by reference into his form response to the petition, which is verified under
oath.
4
McIntyre acknowledged that she “allowed [Minkey] to recuperate from his hip
surgery in December 2012. However, we did not share a bed. . . . I made it known to
[him] that his sexual advances were unwanted after September 2012 . . . .”
5
Minkey also claimed that McIntyre frequently called and e-mailed him, but
McIntyre averred that the phone calls were placed by her children and that she had not
sent Minkey hundreds of texts, as Minkey had claimed.
5
volunteer for the Make-A-Wish Foundation and was traveling with Surfaid International
to vaccinate children in poor countries. “[T]he restraining order has affected my ability
to travel freely. It has affected my reputation.”
The March 2013 temporary restraining order required Minkey to stay away from
McIntyre, barred him from returning to the family home, and required him to pick up the
children from school rather than the home. On April 10, the parties agreed to continue
the DVRO hearing to April 24 “to work on stipulation.” The temporary restraining order
was reissued. Minkey and McIntyre stipulated that on nonschool days Minkey could pick
up the children from the family home if he remained in the car and did not communicate
with McIntyre. On April 24, the parties agreed to again continue the hearing to June 12,
and the temporary restraining order was reissued with modifications. They agreed that
Minkey could communicate with McIntyre by text or e-mail regarding the children, the
home or their pets, and he could enter the home on specified days of the month for
maintenance and repair.
In June 2013, McIntyre averred that Minkey repeatedly violated the April 24
temporary restraining order. On April 11, he attempted to enter the family home’s
garage. On April 13, 14, 16, 19, 23, and May 11, he entered the home without
permission. He also texted and e-mailed McIntyre “incessantly” with messages that
included repeated pleas for reconciliation; long, ranting criticisms of her conduct as a
mother and wife; and verbal abuse, racial slurs and profanity. Some of the texts were:
“you make me fucking sick, fuck you and fuck your ghetto boyfriend”; “go hang out with
ur little punk spic mfr u ghetto ass losers!!!”; and “your piece of shit cheating mfn
mexican who’s day will come. and so will yours. karmas a bitch.”
The June 12, 2013 hearing was rescheduled to give Minkey an opportunity to
respond to McIntyre’s supplemental declaration. The temporary restraining order was
reissued. McIntyre filed a second supplemental declaration on July 11 alleging that
Minkey committed “over 70” additional violations of the temporary restraining order in
the month following her first supplemental declaration. Hearing on McIntyre’s March
2013 DVRO request was finally held on July 17 and 24. The parties’ daughter testified
6
that she had witnessed Minkey enter the family home without permission; try to hug
McIntyre and be pushed away; verbally abuse McIntyre, calling her “a slut and a whore
and a bitch”; and stand very close to McIntyre when he argued with her (although
McIntyre did the same). Minkey admitted entering the house the day before the hearing
because he noticed a gate was open.
During the hearing, Judge Begert made several comments noting Minkey’s need
for—and lack of—self-control. McIntyre’s counsel argued, “[W]hile this temporary
restraining order is in effect, one would assume [this] is [Minkey’s] best behavior. He
has a permanent restraining order request pending. [He] is represented by counsel during
this time. [¶] . . . [But he] did not stop. He cannot control himself . . . .” Minkey’s
counsel argued, “This is a couple that has had an ongoing relationship that has been off
and on for over a period of three years. [¶] . . . They reunited, and they separated again.
[McIntyre] has requested that [Minkey] not contact her, . . . and then she . . . agrees to
meet with him two to three days later after the initial ‘Don’t contact me.’ There has been
a lot of confusion. [¶] . . . [¶] . . . Since the restraining order has been issued, [Minkey]
has greatly limited his contact to [McIntyre]. . . . [¶] . . . [¶] . . . Any confusion about the
relationship has cleared up.” Judge Begert ruled: “I am optimistic that if we can get
some of these issues resolved [in the divorce case], it will deescalate matters, but I am
sufficiently concerned right now particularly by the extensive electronic communications
that have taken place since the temporary restraining order was issued and the substance
of those communications that I am going to issue a restraining order.” Judge Begert
issued a DVRO that was scheduled to expire on April 24, 2014, and that essentially
continued the terms of the April 24, 2013 stipulated order. He specifically advised that
all contacts or communications between the parties had to be “brief and peaceful.”
C. 2014 DVRO Renewal Proceedings
On April 23, 2014, one day before the 2013 DVRO was due to expire, McIntyre
applied for a five-year renewal. She submitted evidence that Minkey repeatedly sent her
texts and e-mails in violation of the 2013 DVRO, and that those communications
continued despite her calls to police. The texts and e-mails included repeated criticisms
7
of McIntyre’s conduct as a mother and wife, which were not brief or peaceful;
expressions of sadness over their breakup; and some vulgarity. Minkey had called the
2013 DVRO a “fake ‘order.’ ”
At a May 14, 2014 hearing on the renewal request before Judge Begert, Minkey
acknowledged that he had sent the texts and e-mails quoted by McIntyre. When Minkey
interjected a comment during argument, the court said, “[W]hen you start talking like this
and you just accelerate and accelerate, all that establishes is that you have too much
emotion to not stop . . . doing the stuff that you’re doing. [¶] . . . [¶] . . . You need to
channel your frustration someplace else.”
McIntyre’s counsel argued that McIntyre was genuinely and reasonably concerned
about what would happen if the DVRO were not renewed. The court, however,
responded by asking McIntyre directly, “Are you really?” She replied, “I am. Because I
know, in my relationship with [Minkey], that he gets emotional. And when he’s
drinking, he will come to the house when I’m sleeping . . . I need a restraining order to
protect the home and my family.” The court questioned McIntyre’s counsel about what
abuse McIntyre feared. “You’ve got these text messages. Which one is it that she’s
afraid of . . . ?” Counsel cited a March 13 text that went “through a long story of guilting
her, of saying how much he wants them to be able to . . . be there together. [¶] . . . [¶] . . .
I think [that’s] harassing conduct that’s been enjoined by this Court . . . . [¶] There is also
the fact that [she] fears he will come into their home without this restraining order, and
she won’t have anything to protect her. [¶] This has happened in the past.” The court
responded, “I can tell you the initial restraining order was not based on some concern that
there be physical violence.” The court commented on the “off-and-on relationship after
two different restraining orders were in effect. [¶] So . . . I’m not really happy with the
respect to which Mr. Minkey has afforded the restraining order that I issued in here. But
it seems like these two individuals, neither one of them is really paying attention to these
restraining orders. And so I am a little bit sympathetic that Mr. Minkey continues to have
some ambiguity in his mind about how he’s supposed to interact with Ms. McIntyre.”
8
The court declined to renew the DVRO, saying “Mr. Minkey, I’m going to give
you something to lose, and I’m going to guarantee you that you will lose it so fast that it
will make your head spin. [¶] . . . [¶] . . . I’m not going to renew this thing. If you do
anything, including the stupid stuff that you have been doing in this case while this
restraining order was in effect, you can bet . . . that Ms. McIntyre will be back in here
requesting a new restraining order, and she will get it. . . . [¶] . . . [¶] . . . [Y]ou’re giving
her an excuse to do this to you. So you don’t have anybody to blame but yourself.”
Addressing McIntyre, the court stated, “Now, I do think that you deserve some
protection. I am not going to renew this restraining order, but I would encourage you, if
anything happens that would have been a violation of this restraining order, . . . come
back in here, and I will give you a restraining order.”6 McIntyre appeals.
II. DISCUSSION
The purpose of the DVPA is “to prevent acts of domestic violence, abuse, and
sexual abuse and to provide for a separation of the persons involved in the domestic
violence for a period sufficient to enable these persons to seek a resolution of the causes
of the violence.” (§ 6220.)7 The DVPA authorizes the trial court to issue a restraining
order “if an affidavit . . . shows, to the satisfaction of the court, reasonable proof of a past
act or acts of abuse.” (§ 6300.) For purposes of the DVPA, “abuse” means intentionally
or recklessly causing or attempting to cause bodily injury; sexual assault; placing a
person in reasonable apprehension of imminent serious bodily injury to that person or
another; or engaging in behavior that could be enjoined pursuant to section 6320.
(§ 6203.) Section 6320 covers not only “molesting, attacking, striking, stalking,
6
McIntyre asks us to take judicial notice of a subsequent DVRO that Judge Begert
issued in December 2014. We deny the request. As a general rule, when we review a
trial court ruling we do not consider matters that occurred after the ruling and thus were
not before the court at the time it made its decision. (In re Zeth S. (2003) 31 Cal.4th 396,
405.)
7
Several statutes discussed in this opinion were amended effective January 1,
2015, after the trial court made the decision under review here. (See Stats. 2014, ch. 635,
§§ 1–7.) Except where noted, the amendments are immaterial to this case.
9
threatening, sexually assaulting, [and] battering,” but also “harassing, telephoning, . . .
contacting, either directly or indirectly, by mail or otherwise, coming within a specified
distance of, [and] disturbing the peace of the other party . . . .” (§ 6320, italics added.)
The court may issue a restraining order after notice and a hearing for a period of up to
five years. (§ 6345, subd. (a); In re Marriage of Nadkarni (2009) 173 Cal.App.4th 1483,
1494–1495.)
A DVRO “may be renewed, upon the request of a party, either for five years or
permanently, without a showing of any further abuse . . . .” (§ 6345, subd. (a).) This
does not mean that an order must be renewed “merely because the protected party files a
‘request’ and expresses [a] subjective desire the court issue such an extension.” (Ritchie,
supra, 115 Cal.App.4th at p. 1284.) In a contested case, the protected party must show
an objectively “ ‘reasonable apprehension’ ” of future abuse if the order is allowed to
expire. (Id. at p. 1288.) “That is, the court must find the probability of future abuse is
sufficient that a reasonable woman (or man, if the protected party is a male) in the same
circumstances would have a ‘reasonable apprehension’ such abuse will occur unless the
court issues a protective order.” (Ibid.) “[T]his does not mean the court must find it is
more likely than not future abuse will occur if the protective order is not renewed. It only
means the evidence demonstrates it is more probable than not there is a sufficient risk of
future abuse to find the protected party’s apprehension is genuine and reasonable.” (Id. at
p. 1290.) In assessing the risk of future abuse, the trial court “ordinarily should consider
the evidence and findings on which [the] initial order was based,” which “often will be
enough in themselves to provide the necessary proof to satisfy that test.” (Id. at
pp. 1290–1291.) The court “should not permit the restrained party to challenge the truth
of the evidence and findings underlying the initial order, . . . [which] would contradict
principles of collateral estoppel . . . .” (Id. at p. 1290.) The court should also consider
any significant change in circumstances that affects the risk that the abuse will recur, and
the burdens that the DVRO imposes on the restrained party. Burdens are irrelevant if the
feared abuse is physical violence, but may be relevant “where the existing order focuses
not on the threat of physical violence, but lesser forms of abuse—unwanted telephone
10
calls or mail, for example. Where the worst ‘danger’ the protected party must fear is a
few unwanted calls or letters or e-mail messages, the court may have to weigh the
seriousness as well as the degree of the risk against the significance of the burdens. . . .”
(Id. at p. 1292; see Lister v. Bowen (2013) 215 Cal.App.4th 319, 332–333.)
“The trial court’s ruling on a request to renew a [DVRO] is reviewed for an abuse
of discretion. [Citation.] An abuse of discretion occurs when the ruling exceeds the
bounds of reason. [Citation.] But, the exercise of discretion is not unfettered in such
cases. [Citation.] ‘All exercises of discretion must be guided by applicable legal
principles, however, which are derived from the statute under which discretion is
conferred. [Citations.] If the court’s decision is influenced by an erroneous
understanding of applicable law or reflects an unawareness of the full scope of its
discretion, the court has not properly exercised its discretion under the law. [Citation.]
Therefore, a discretionary order based on an application of improper criteria or incorrect
legal assumptions is not an exercise of informed discretion and is subject to reversal.
[Citation.]’ [Citation.] The question of whether a trial court applied the correct legal
standard to an issue in exercising its discretion is a question of law [citation] requiring de
novo review.” (Eneaji v. Ubboe (2014) 229 Cal.App.4th 1457, 1463.)
When the court issued the 2013 DVRO, it necessarily found “reasonable proof of a
past act or acts of abuse.” (§ 6300.) In explaining its ruling, the court referred to “the
extensive electronic communications that have taken place since the temporary
restraining order was issued and the substance of those communications.” The court also
noted the level of emotion in Minkey’s texts to McIntyre, and specifically advised him
that his communications with McIntyre had to be “brief and peaceful.” It appears
reasonable to infer, therefore, that the “past act or acts of abuse” the court found to exist
before it issued the 2013 DVRO were the emotional, lengthy and antagonizing texts and
e-mails that Minkey had sent to McIntyre. Such conduct falls within the meaning of
“abuse” in former section 6203, subdivision (d) (current § 6203, subd. (a)(4)) and section
6320, subdivision (a) because it constitutes “harassing, . . . contacting, either directly or
indirectly, by mail or otherwise, . . . or disturbing the peace of the other party.” (See
11
Burquet v. Brumbaugh (2014) 223 Cal.App.4th 1140, 1144 [unannounced and uninvited
visit and repeated contacts by phone, e-mail, and text, despite requests of no contact,
“ ‘disturb[ed] the peace’ ” and constituted “ ‘abuse’ ” within the meaning of § 6320];
Nevarez v. Tonna (2014) 227 Cal.App.4th 774, 776–780, 784.)
In 2014, McIntyre presented evidence that Minkey continued the same pattern of
abuse after issuance of the 2013 DVRO. She quoted from texts and produced copies of
e-mails containing emotional, lengthy and antagonizing criticisms of McIntyre’s conduct
as a mother and wife, expressions of sadness over their breakup, and some vulgarity. The
court appeared to acknowledge the credibility of McIntyre’s allegations, saying to
Minkey, “[W]hy would you do this stuff?” and “[Y]ou still have trouble keeping a lid on
it.” The court, however, later seemed to focus on whether McIntyre had demonstrated a
reasonable fear of physical abuse from Minkey. The court twice asked McIntyre’s
counsel, “[W]hat’s the abuse that she has a reasonable apprehension of?” and when
counsel referred to the texts and e-mails, stated, “No, no, no, no. Tell me something
practical. What is it? . . . [¶] . . . [¶] . . . You’ve got these text messages. Which one is it
that she’s afraid of, and are you going to tell me that that constitutes abuse?” Counsel
noted that the court had already found the texts and e-mails to constitute abuse, but the
court replied, “I can tell you the initial restraining order was not based on some concern
that there be physical violence.” To the extent that the court required a showing of
threatened physical abuse in order to renew the restraining order, the court erred.
“Abuse [within the meaning of the DVPA] is not limited to the actual infliction of
physical injury or assault.” (§ 6203, subd. (b), as amended by Stats. 2014, ch. 635, § 2;
Conness v. Satram (2004) 122 Cal.App.4th 197, 202 [“the requisite abuse need not be
actual infliction of physical injury or assault”; construing former § 6203, as amended by
Stats. 1998, ch. 581, § 16].) As noted ante, several courts have upheld the issuance of
DVRO’s based largely on harassing communications. (See, e.g., Burquet v. Brumbaugh,
supra, 223 Cal.App.4th at p. 1144.) The court’s statement that it had not issued the
2013 DVRO “based on some concern that there be physical violence” seemed to at least
implicitly recognize this authority. Inexplicably, however, the court suggested that
12
evidence of a credible threat of physical violence would be necessary to renew the order,
even though renewal does not require “a showing of any further abuse since the issuance
of the original order” (§ 6345, subd. (a)), much less a showing of further physical abuse.
The court agreed that Minkey had violated the terms of the restraining order, but
commented that “neither one of them is really paying attention to these restraining
orders” in an “off-and-on relationship.” However, while the court referenced its
familiarity with the family dynamics in the underlying dissolution proceeding, Minkey
had earlier conceded that the couple’s intimate relationship ended no later than
January 2013, and at the 2014 hearing he introduced no evidence that McIntyre had
initiated any contact with him outside the bounds of the 2013 DVRO during the pendency
of that order. In any event, McIntyre’s resumption of her relationship with Minkey in
2011–2012 was irrelevant. All restraining orders issued in this matter restrained Minkey,
not McIntyre. As Judge Begert himself said during the 2013 proceedings, McIntyre’s
conduct toward Minkey was irrelevant because the “temporary restraining order . . . goes
in one way,” and Minkey was liable for violating the order “whether [the violation] is
invited or not.” The court possibly believed the absence of evidence of unwelcome
physical contact between McIntyre and Minkey since June 2013 changed the reasonable
apprehension calculus. However, “the fact that a protective order has proved effective is
a good reason for seeking its renewal,” not its termination. (Ritchie, supra,
115 Cal.App.4th at p. 1284.)
Part of the court’s justification for refusing a renewal order was its view that
Minkey “continues to have some ambiguity in his mind about how he’s supposed to
interact with Ms. McIntyre.” But Minkey’s counsel conceded during the
2013 proceedings that “[a]ny confusion about the relationship has cleared up.” The court
directly informed Minkey in 2013, “[W]hether it is invited or not, you can get in trouble
if you are in violation of the order.” (Italics added.) Moreover, the 2013 DVRO clearly
recites that “[e]ven if the protected person invites or consents to contact with the
restrained person, the orders remain in effect and must be enforced. . . . The orders can be
changed only by another court order.” There was no substantial evidence that would
13
support a finding that Minkey was reasonably confused about the requirements of the
2013 DVRO so as to excuse repeated violations.
The court previously found that Minkey committed abuse by sending emotional,
lengthy and antagonizing texts and e-mails to McIntyre in the months leading up to
issuance of the 2013 DVRO, that Minkey continued to send such e-mails thereafter, and
that Minkey continued to show an inability to control himself and abide by the court’s
orders. It commented on “the stupid stuff that [Minkey has] been doing in this case while
this restraining order was in effect.”
The evidence, as accepted by the court, of Minkey’s persistent conduct established
a more than reasonable objective apprehension by McIntyre of future abuse if the DVRO
were allowed to expire. There was no evidence that circumstances had changed such that
“the restrained and protected parties [have] moved on with their lives so far that the
opportunity and likelihood of future abuse has diminished to the degree they no longer
support a renewal of the order.” (Ritchie, supra, 115 Cal.App.4th at p. 1291.) In fact,
quite the contrary.
Despite findings acknowledging Minkey’s continuing abusive behavior, the court
elected only to warn Minkey of the consequences of future violations. The trial court’s
“warning” comments to Minkey “suggest that the trial court believed there was a need to
admonish [Minkey] from the bench that he must continue to stay away and have no
contact with [McIntyre], but without giving [McIntyre] the legal protection of a
restraining order.” (Cueto v. Dozier (2015) 241 Cal.App.4th 550, 562–563 [abuse of
discretion to deny restraining order where reasonable apprehension of future abuse
shown].) The trial court’s comments serve to further “bolster our conclusion that
[McIntyre] had demonstrated a reasonable apprehension of future abuse.” (Id. at p. 562.)
It was an abuse of discretion to deny renewal of the DVRO under these
circumstances.
III. DISPOSITION
The May 14, 2014 order denying McIntyre’s request for a renewal of the
2013 DVRO is reversed. On remand, the court shall enter a renewal of the 2013 DVRO
14
for the requested five-year term. McIntyre is awarded her requested costs and fees on
appeal pursuant to section 6344, subdivision (a).
_________________________
BRUINIERS, J.
WE CONCUR:
_________________________
JONES, P. J.
_________________________
NEEDHAM, J.
15
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SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
479
CA 15-01793
PRESENT: PERADOTTO, J.P., CARNI, LINDLEY, CURRAN, AND TROUTMAN, JJ.
GDH CONSTRUCTION INC., PLAINTIFF-APPELLANT,
V MEMORANDUM AND ORDER
MARK A. GUGINO, LINDA M. GUGINO,
DEFENDANTS-RESPONDENTS,
ET AL., DEFENDANTS.
FREID AND KLAWON, WILLIAMSVILLE (WAYNE I. FREID OF COUNSEL), FOR
PLAINTIFF-APPELLANT.
BRAUTIGAM & BRAUTIGAM, LLP, FREDONIA (DARYL P. BRAUTIGAM OF COUNSEL),
FOR DEFENDANTS-RESPONDENTS.
Appeal from an order of the Supreme Court, Chautauqua County
(Deborah A. Chimes, J.), entered January 9, 2015. The order granted
the motion of defendants Mark A. Gugino and Linda M. Gugino for
summary judgment dismissing the complaint.
It is hereby ORDERED that the order so appealed from is
unanimously affirmed without costs.
Memorandum: In this mortgage foreclosure action, plaintiff
appeals from an order that granted the motion of Mark A. Gugino and
Linda M. Gugino (defendants) for summary judgment dismissing the
complaint. Plaintiff contends that defendants’ motion should have
been denied as premature pursuant to CPLR 3212 (f) because further
discovery was necessary. We reject that contention. Because the note
and mortgage were a nullity “the discovery sought would [not] produce
evidence sufficient to defeat the motion” (Resetarits Constr. Corp. v
Elizabeth Pierce Olmstead, M.D. Center for the Visually Impaired
[appeal No. 2], 118 AD3d 1454, 1456). Plaintiff’s contention that
defendants’ motion should be denied on equitable grounds is raised for
the first time on appeal and thus is not properly before us (see
Ciesinski v Town of Aurora, 202 AD2d 984, 985).
Entered: June 10, 2016 Frances E. Cafarell
Clerk of the Court
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Warner v State of New York (2019 NY Slip Op 00821)
Warner v State of New York
2019 NY Slip Op 00821
Decided on February 1, 2019
Appellate Division, Fourth Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on February 1, 2019
PRESENT: CENTRA, J.P., LINDLEY, DEJOSEPH, NEMOYER, AND WINSLOW, JJ. (Filed Feb. 1, 2019.)
MOTION NO. (1106/18) CA 17-02004.
[*1]RICHARD H. WARNER, INDIVIDUALLY, AND AS GUARDIAN OF MARY DOROTHY WARNER, AN INCAPACITATED PERSON, CLAIMANT-APPELLANT,
vSTATE OF NEW YORK, DEFENDANT-RESPONDENT. (CLAIM NO. 098768.) RICHARD H. WARNER, AS EXECUTOR OF THE ESTATE OF MARY DOROTHY WARNER, DECEASED, CLAIMANT-APPELLANT, STATE OF NEW YORK, DEFENDANT-RESPONDENT. (CLAIM NO. 105712.) (APPEAL NO. 3.)
MEMORANDUM AND ORDER
Motion for reargument or leave to appeal to the Court of Appeals denied.
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[Cite as Zaffer v. Zaffer, 2011-Ohio-3625.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF LORAIN )
CHRISTINA ZAFFER C.A. No. 10CA009884
Appellee
v. APPEAL FROM JUDGMENT
ENTERED IN THE
JOHN G. ZAFFER COURT OF COMMON PLEAS
COUNTY OF LORAIN, OHIO
Appellant CASE No. 2006 PC 00022
DECISION AND JOURNAL ENTRY
Dated: July 25, 2011
DICKINSON, Judge.
INTRODUCTION
{¶1} John Zaffer allegedly took more than $200,000 from his niece Christina Zaffer’s
trust for his own use while he was serving as trustee of the trust. Ms. Zaffer sued Mr. Zaffer and
The Cincinnati Insurance Company, which had bonded Mr. Zaffer. Cincinnati filed a cross-
claim against Mr. Zaffer for indemnification and a complaint against his construction company,
alleging that it had converted trust assets. Ms. Zaffer and Cincinnati moved to surcharge Mr.
Zaffer and for a release of the fiduciary bond. After an evidentiary hearing, the trial court
determined that Mr. Zaffer had engaged in self-dealing, held him and Cincinnati liable for the
amount improperly taken from the trust, and granted Cincinnati’s claim for indemnification. It
also ordered Mr. Zaffer and Cincinnati to pay interest and Ms. Zaffer’s attorney fees. Mr. Zaffer
has appealed, assigning four errors. We dismiss the appeal because the trial court did not resolve
2
Cincinnati’s claim against Mr. Zaffer’s construction company or determine that “there is no just
reason for delay” under Rule 54(B) of the Ohio Rules of Civil Procedure.
JURISDICTION
{¶2} Under the Ohio Constitution, Ohio’s courts of appeals “have such jurisdiction as
may be provided by law to review and affirm, modify, or reverse judgments or final orders of the
courts of record inferior to the court of appeals within the district . . . .” Ohio Const. Art. IV §
3(B)(2). The Ohio Supreme Court has held that that language empowers the General Assembly
to define the jurisdiction of Ohio’s courts of appeals. State v. Collins, 24 Ohio St. 2d 107, 108
(1970). The General Assembly, in Section 2501.02 of the Ohio Revised Code, has provided that
the courts of appeals “shall have jurisdiction . . . to review, affirm, modify, set aside, or reverse
judgments or final orders of courts of record inferior to the court of appeals within the district . . .
.” See also R.C. 2505.03(A) (providing that “[e]very final order, judgment, or decree of a
[lower] court . . . may be reviewed on appeal”); Humphrys v. Putnam, 172 Ohio St. 456, 457
(1961).
{¶3} Even if a trial court’s journal entry is a judgment or final order, it is not
appealable if it does not comply with the rules prescribed by the Ohio Supreme Court regarding
the timing of appeals. Under Article IV Section 5(B) of the Ohio Constitution, the Ohio
Supreme Court has authority to “prescribe rules governing practice and procedure in all courts of
the state . . . .” Exercising that authority, the Supreme Court has adopted the Ohio Rules of Civil
and Appellate Procedure, which contain requirements regarding the timing of appeals. See
Alexander v. Buckeye Pipe Line Co., 49 Ohio St. 2d 158, 159-60 (1977) (“Questions involving
the joinder and separation of claims and the timing of appeals are matters of practice and
procedure within the rule-making authority of this court . . . .”). For instance, under Rule 54(B)
3
of the Ohio Rules of Civil Procedure, “[if] more than one claim for relief is presented in an
action . . . or when multiple parties are involved, the court may enter final judgment as to one or
more but fewer than all of the claims or parties only upon an express determination that there is
no just reason for delay.” The term “judgment,” for purposes of Civil Rule 54(B), includes final
orders under Section 2505.02. Civ. R. 54(A).
{¶4} Acknowledging the dual requirements of finality and appealability, the Ohio
Supreme Court has explained that “[a]n order which adjudicates one or more but fewer than all
the claims or the rights and liabilities of fewer than all the parties must meet the requirements of
R.C. 2505.02 and Civ.R. 54(B) in order to be final and appealable.” Noble v. Colwell, 44 Ohio
St. 3d 92, syllabus (1989). Accordingly, to determine whether a trial court’s journal entry is
appealable in a case involving multiple claims or parties, we engage in a two-step analysis
examining (1) whether it is a judgment or final order under Sections 2501.02 and 2505.03 of the
Ohio Revised Code and (2) whether it complies with Rule 54(B) of the Ohio Rules of Civil
Procedure. See Sullivan v. Anderson Twp., 122 Ohio St. 3d 83, 2009-Ohio-1971, at ¶10 (“The
general rules regarding final appealable orders in multiparty and/or multiclaim cases involve the
tandem of R.C. 2505.02(B) for substance and Civ.R. 54(B) for procedure.”); Noble, 44 Ohio St.
3d at 96. But see State ex rel. Butler County Children Servs. Bd. v. Sage, 95 Ohio St. 3d 23, 25
(2002) (explaining that Civil Rule 54(B) does not apply to provisional remedies under Section
2505.02(B)(4) because they do not present a “claim for relief.”).
{¶5} Mr. Zaffer has argued that the trial court’s August 2, 2010, journal entry is
appealable because a motion to surcharge a bond is an independent and separate action under
Section 2109.61 of the Ohio Revised Code. His argument appears to be that an action under
Section 2109.61 is a special proceeding under Section 2505.02. Under Section 2505.02(B)(2),
4
the definition of a final order includes “[a]n order that affects a substantial right made in a
special proceeding . . . .” “‘Special proceeding’ means an action or proceeding that is specially
created by statute and that prior to 1853 was not denoted as an action at law or a suit in equity.”
R.C. 2505.02(A)(2).
{¶6} Under Section 2109.61, “[a]n action may be prosecuted on the bond of a fiduciary
against any one or more of the obligors thereof by any person who has been injured by reason of
the breach of any condition of the bond.” That language was originally adopted by the General
Assembly in 1941 and codified at Section 10506-91 of the Ohio General Code. 1941 Ohio Laws
422. At common law, however, wards were allowed to file actions at law or bills in equity
against their guardians and the guardians’ sureties if they suspected that their guardian had
mismanaged their assets. See Oldham v. Trimble, 15 Mo. 225, 1851 WL 4221 at *2 (Mo. 1851);
Pierce v. Irish, 31 Me. 254, 260 (Me. 1850); Kittredge v. Betton, 14 N.H. 401, 1843 WL 4163 at
*4 (N.H. 1843); Bryan v. Blakeney, 23 S.C.L. (Dud.) 27, 1837 WL 1501 at *1 (S.C. App. 1837);
see also Ludlow’s Heirs v. Johnston, 3 Ohio 553, 563 (1828) (noting 1803 act allowing common
pleas courts “to appoint guardians for minors . . . and to call such guardians to an account.”).
Accordingly, it is doubtful that an action under Section 2109.61, which addresses similar issues,
qualifies as a special proceeding.
{¶7} Because this case involves multiple claims and multiple parties, even if the trial
court’s journal entry is a final order, it must still satisfy Rule 54(B) of the Ohio Rules of Civil
Procedure to be appealable. Under Civil Rule 54(B), a journal entry that “enters final judgment
as to one or more but fewer than all of the claims [for relief]” can only be appealed “upon an
express determination that there is no just reason for delay.”
5
{¶8} The trial court’s journal entry resolved Ms. Zaffer’s claims against Mr. Zaffer and
Cincinnati and Cincinnati’s cross-claim against Mr. Zaffer. It did not, however, resolve
Cincinnati’s claim against Mr. Zaffer’s construction company. The trial court also did not make
an express determination that there is no just reason for delay. The entry, therefore, is not
appealable under Civil Rule 54(B). The appeal is dismissed.
CONCLUSION
{¶9} The trial court has not resolved all of the parties’ claims or determined that there
is no just reason for delay. Accordingly, we do not have jurisdiction to consider this appeal. Mr.
Zaffer’s appeal is dismissed.
Appeal dismissed.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(E). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed to Appellant.
CLAIR E. DICKINSON
FOR THE COURT
WHITMORE, J.
BELFANCE, P. J.
CONCUR
6
APPEARANCES:
TERRY S. SHILLING, Attorney at Law, for Appellant.
BARRY ECKSTEIN, Attorney at Law, for Appellee.
PATRICK S. CORRIGAN, Attorney at Law, for Appellee.
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7 Cal.3d 844 (1972)
500 P.2d 610
103 Cal. Rptr. 698
THE PEOPLE, Plaintiff and Respondent,
v.
WARREN O. SALING, Defendant and Appellant.
Docket No. Crim. 15222.
Supreme Court of California. In Bank.
September 5, 1972.
*846 COUNSEL
Michael Korn, under appointment by the Supreme Court, for Defendant and Appellant.
Evelle J. Younger, Attorney General, William E. James, Assistant Attorney General, and William V. Ballough, Deputy Attorney General, for Plaintiff and Respondent.
*847 OPINION
WRIGHT, C.J.
Defendant Warren O. Saling was charged jointly with Sean J. Murphy by indictment for conspiracy to commit first degree murder (Pen. Code, § 182) and the first degree murder of Murphy's wife, Catherine (Pen. Code, §§ 187, 189). Defendant pleaded not guilty to the charged offenses. The trial court granted his motion for severance but denied his motions to dismiss the indictment (Pen. Code, § 995) and to suppress incriminating tape recordings of conversations between his alleged coconspirators (Pen. Code, § 1538.5). The jury found defendant guilty as charged, and after the penalty phase of the trial, returned a verdict of death for each of the charged offenses.[1] His motions for mistrial and a new trial were denied; his appeal is automatic (Pen. Code, § 1239, subd. (b)).[2]
Defendant contends, inter alia, that (1) statements made by one of his coconspirators three days after the charged murder and (2) recordings of conversations between other coconspirators made almost three and one-half weeks subsequent to the charged murder were erroneously and prejudicially received at trial. The errors are predicated on defendant's contention that the extrajudicial statements constituted inadmissible hearsay which did not come within the coconspirators exception. (Evid. Code, § 1223.) We hold that, although the statements made three days after the murder were properly received, the admission of the recordings constituted error, the prejudicial effect of which becomes manifest upon a detailed examination of the evidence. We are thus compelled to reverse.
On August 22, 1969 at approximately 10 p.m., William Mulhearn was traveling through Lopez Canyon in Los Angeles County and was "waved down" by Sean J. Murphy.[3] Murphy told him that his wife, who was lying near the Murphy automobile, had been hurt. He asked Mulhearn to call the police. When Deputy Sheriff Barrett Fitzgerald arrived at Lopez Canyon a few hours later to investigate the incident he found the dead body of Catherine Murphy, a pool of blood behind a nearby bush and drag marks *848 extending from the bush to where her body lay. A short distance to the north Fitzgerald noticed tire tracks similar to the tires on Murphy's car.
Later on the morning of August 23 Murphy related to Fitzgerald that he and his wife had been driving through Lopez Canyon after failing to locate a house trailer which, according to Murphy, was for sale. They were stopped by a man who claimed that his vehicle was out of gas. Murphy agreed to drive him and his friend to a service station. After traveling only a short distance Murphy was told, "This is a stickup," and was ordered to drive off the road and stop the car. The Murphys were instructed to get out of their automobile. Shortly thereafter, Murphy continued, he was hit on the head and rendered unconscious and his wife apparently received five fatal stab wounds. When he regained consciousness he heard his wife moaning, and he dragged her from behind a bush to the point where she was later seen by Mulhearn and Fitzgerald.
Sometime after August 29, 1969, Jerry Carnes was arrested for conspiracy in the homicide of Catherine Murphy. Following his release from custody, apparently for the purpose of assisting investigating officers, Carnes allowed Fitzgerald to affix an induction coil to his telephone and to record a conversation between him and Murphy on September 18. The following day Carnes' brother, Richard, authorized Deputy Sheriff William Allen to conceal a transmitting device in Richard's clothing and to record a conversation between him, his brother and Murphy. Both recordings contain incriminating statements which seriously implicate defendant in a conspiracy entered into upon Murphy's solicitation to kill the victim.
Jerry Carnes was granted immunity from prosecution and testified that sometime in the latter part of July 1969 Murphy telephoned him and asked whether he wanted to make some money by "roughing up" a person who owed Murphy money. Carnes replied that he did not do that type of thing but would ask among the people he knew. He eventually went to the home of defendant whom he also knew as "Dusty" and defendant agreed to do the job. About two hours later Carnes brought Murphy to defendant's house to discuss the amount of payment and how the plan was to be carried out. Carnes testified that he did not pay close attention to the conversation but remembered that $300 or $500 was to be paid in advance. Murphy later disclosed the plan to Carnes. Murphy was to drive the victim into Big Tujunga Canyon and, on the way out, pretend to have a flat tire. He would stop the car on the side of the pavement and arrange to have the victim remove the lug nuts from the wheel nearest the center of the road while Murphy removed a spare tire from the trunk. Defendant would then drive by and "clip" the victim while "he" was loosening the lug nuts. Carnes *849 was to call the police after the accident, claiming to be a witness. Carnes said that during the course of their conversation Murphy referred to the victim as "her" one or two times.
On the evening of the homicide Carnes went to Big Tujunga Canyon about 7:30 p.m. and parked at a predesignated spot. Approximately 45 minutes later he saw Murphy drive into the canyon with a woman in the car. Carnes stayed there for a short time while Murphy, waiting for defendant, drove back and forth. Defendant did not appear. Carnes left the canyon about 8:30 p.m. and shortly thereafter recognized defendant and Robert "Pokey" Jurgenson driving toward the canyon in an automobile.[4] They stopped their cars and talked briefly. Defendant said that he was late because the police had detained him and indicated that he would contact Murphy later. Nothing more was said concerning the plan. Carnes left and thereafter did not see defendant. Mrs. Murphy was killed that evening.
Carnes learned of the victim's death three days after the homicide and visited defendant at his home. Jurgenson, who was also present when Carnes arrived, stepped outside to talk with Carnes. In response to Carnes' statement that he thought there was only supposed to have been a "rough up," Jurgenson replied that the plan was again discussed after their initial meeting and he and defendant discovered for the first time that the victim was to be Murphy's wife. Jurgenson also said that after he and defendant saw Carnes near Big Tujunga Canyon they drove to Lopez Canyon.[5] They flagged down Murphy's car in the canyon and informed him that their car was out of gas. Murphy agreed to drive them to a service station. After a short distance had been traveled they told Murphy that he was being robbed and instructed him to drive down the road, pull over and get out of the car. Jurgenson continued, stating that Murphy and his wife left the car and were forced off to the side of the road. Murphy was then hit on the back of the head and his wife was stabbed "two or three times." Defendant was present during a portion of this conversation and, while he was there, told Carnes to "keep his mouth shut."[6]
*850 Jerry Carnes' account of the foregoing events is corroborated in a number of significant respects. A witness testified that Carnes came to her home about seven days prior to the murder and told her that Murphy was looking for him to arrange for "roughing up" someone, but that Carnes "did not want any part of it." It also appears that defendant's common law wife complained to Deputy Sheriff Fitzgerald that it was "too bad [Carnes] had to get away with his part in this deal." Richard Carnes testified that he was acquainted with Jurgenson and defendant and knew the latter as "Dusty" and that at least on one occasion had seen his brother, defendant and Murphy together. On a different occasion he overheard "something about getting somebody roughed up." Richard further testified that after the homicide Murphy called the cycle shop where Richard was an employee and told him that he had some money for Jerry and defendant. Richard arranged to accept, and in fact did accept, $700 for them. He later gave $200 of the money to Jerry and the remaining $500 to defendant. There was also testimony by a babysitter in defendant's household that she had overheard defendant discuss with his common law wife a payoff of $300 which defendant was to have received from someone. The babysitter further testified that defendant and Jurgenson asked her to provide an alibi for them for the night of the homicide.
Additionally, defendant was connected with a particular maroon Pontiac automobile which, according to a criminalist, was at the scene of the homicide. The vehicle was loaned to defendant by a former used car dealer about the middle of August 1969. A neighbor of Jurgenson testified that he had seen the vehicle at the Jurgenson home on a few occasions and had seen defendant come out of Jurgenson's house at least once. The car was returned to the driveway at the owner's residence on the night of the killing. The criminalist testified that a tire track near the scene of the murder had many characteristics similar to a tire on the particular maroon Pontiac.
There was, finally, testimony which tended to establish that Murphy was motivated to bring about his wife's death because he would receive proceeds from various insurance policies which he had arranged to be placed on her life. On November 1, 1968, applications were purportedly made by the Murphys for insurance policies on their respective lives. In January 1969 a $13,815 policy was issued on the life of Mrs. Murphy with Mr. Murphy as the primary beneficiary. A policy insuring the life of Mr. Murphy was also issued but was returned to the company in February 1969 after *851 he refused to accept delivery. There was expert testimony that Murphy wrote his wife's name on the application for the policy on her life and additionally signed her name on a card authorizing the bank in which the Murphys maintained an account to make withdrawals to pay the premiums when drafts therefor were submitted by the company.
On November 8, 1968, a $10,000 policy with a double indemnity clause was issued by a second company on the life of Mrs. Murphy. Mr. Murphy was named as the primary beneficiary. The same company, on July 17, 1963, had also issued a $5,000 family policy with double indemnity provisions to the Murphys (Catherine Murphy's single indemnity being $1,250). A third company carried the Murphy's automobile insurance obtained in October 1967 which provided for a $15,000 indemnity in the event either insured was killed by a hit-and-run driver.
Admissibility of the Conversation Between Jerry Carnes and Robert "Pokey" Jurgenson
(1a) Defendant first contends that the trial court prejudicially erred in allowing Jerry Carnes to relate the conversation he had with Jurgenson outside defendant's house three days after the homicide. He argues that the statements were hearsay (Evid. Code, § 1200), were not made during or in furtherance of any conspiracy and, therefore, were erroneously admitted under the coconspirators exception to the hearsay rule (Evid. Code, § 1223).[7] The People concede that the statements were hearsay but maintain that they were properly admitted under the coconspirators exception because they were made "during the conspiracy, several weeks before defendant was paid." They argue that since payment to defendant of an agreed sum was one of the objectives of the conspiracy and since it had not yet been attained at the time of the conversation between Carnes and *852 Jurgenson the latter's statements were made during the criminal enterprise. Defendant's position is untenable.
(2) It has long been the law in this state that a conspirator's statements are admissible against his coconspirator only when made during the conspiracy and in furtherance thereof. (Evid. Code, § 1223 [former Code Civ. Proc., §§ 1848, 1870, subd. 6]; People v. Irwin (1888) 77 Cal. 494, 504 [20 P. 56]; People v. Aleck (1882) 61 Cal. 137, 138-139; People v. Moore (1872) 45 Cal. 19, 21; People v. Pool (1865) 27 Cal. 572, 576.) (3) The conspiracy usually comes to an end when the substantive crime for which the coconspirators are being tried is either attained or defeated. (See, e.g., People v. Aleck, supra, 61 Cal. 137, 138-139; see also People v. Oldham (1896) 111 Cal. 648, 652-653 [44 P. 312]; People v. Dilwood (1892) 94 Cal. 89, 91 [29 P. 420]; People v. Gonzales (1887) 71 Cal. 569, 575 [12 P. 783].) It is for the trier of fact considering the unique circumstances and the nature and purpose of the conspiracy of each case to determine precisely when the conspiracy has ended. (People v. Smith (1966) 63 Cal.2d 779, 794 [48 Cal. Rptr. 382, 409 P.2d 222]; People v. Holmes (1897) 118 Cal. 444, 459 [50 P. 675].) Particular circumstances may well disclose a situation where the conspiracy will be deemed to have extended beyond the substantive crime to activities contemplated and undertaken by the conspirators in pursuance of the objectives of the conspiracy. (See, e.g., People v. Collier (1931) 111 Cal. App. 215, 237 [295 P. 898]; People v. Lorraine (1928) 90 Cal. App. 317, 327 [265 P. 893]; but see Krulewitch v. United States (1949) 336 U.S. 440 [93 L.Ed. 790, 69 S.Ct. 716] (action taken for the mere purpose of concealing the conspiracy or the substantive crime deemed not to extend the conspiracy to that point in time).)
(1b) Clearly the money offered by Murphy for killing his wife motivated defendant and Jerry Carnes to participate in the plan, and the transfer of the money was one of its main objectives as far as defendant and Carnes were concerned. Since payment to either defendant or Carnes had not yet occurred by the time of the conversation between Carnes and Jurgenson only three days after the murder, Jurgenson's statements to Carnes were admissible as being made during the conspiracy.[8]
*853 Citing People v. Luker (1965) 63 Cal.2d 464 [47 Cal. Rptr. 209, 407 P.2d 9] defendant argues that since the conspiracy was discovered when Jerry Carnes was arrested, any hearsay admissions made by him must be excluded against his fellow conspirators. He reasons that such statements would not have been made in furtherance of the conspiracy but, rather, in frustration of it. We have been presented with no admissions by Carnes which defendant seeks to exclude and any statements made by Carnes at trial concerning his participation in the scheme are clearly not hearsay (Evid. Code, § 1200).
Admissibility of the Recordings Made on September 18 and 19
(4a) Defendant's next assignment of claimed prejudicial error concerns the trial court's admission of the hearsay recordings made on September 18 and 19, almost three and one-half weeks after the murder. He contends that the recordings did not fall within the ambit of the coconspirators exception to the hearsay rule since they neither were made during nor in furtherance of the conspiracy. We agree.
The statements contained in the recordings were clearly made not only after Catherine Murphy had been killed but also after payment had been made to defendant and Jerry Carnes. It does not appear that the statements were otherwise made during any activity in pursuance of any significant objective of the conspiracy. That the statements in the recordings concerned the method by which detection and punishment were to be avoided is of no moment. In Krulewitch v. United States, supra, 336 U.S. 440, the Supreme Court rejected, as a further breach of the general rule against the admission of hearsay evidence, the government's argument that "even after the central criminal objectives of a conspiracy have succeeded or failed, an implicit subsidiary phase of the conspiracy always survives, the phase which has concealment as its sole objective." (Id. at p. 443 [93 L.Ed. at p. 794].) Mr. Justice Jackson, concurring in the judgment, explained the illogic of the government's position: "I suppose no person planning a crime would accept as a collaborator one on whom he thought he could not rely for help if he were caught, but I doubt that this fact warrants an inference of conspiracy for that purpose.... [¶] It is difficult to see any logical limit to the `implied conspiracy,' either as to duration or means, nor does it appear that one could overcome the implication by express and credible evidence that no such understanding existed, nor any way in which an accused against whom the presumption is once raised can terminate the imputed agency of his associates to incriminate him. Conspirators, long after the contemplated offense is complete, after perhaps they have fallen *854 out and become enemies, may still incriminate each other by deliberately harmful, but unsworn declarations, or unintentionally by casual conversations out of court." (Id. at pp. 455-456 [93 L.Ed. at p. 800] (Jackson, J. concurring); see also Goldstein, The Krulewitch Warning: Guilt by Association (1965) 54 Geo. L.J. 133.)[9]
The People make an alternative argument one with which the trial court agreed that the recorded conversations were admissible as being made during a conspiracy to collect the proceeds of the insurance policies on the life of Catherine Murphy. The People contend that since such a conspiracy did not end until the insurance proceeds were paid, the statements made by a coconspirator prior to that time were admissible.
(5) Before evidence of the acts and declarations of an alleged coconspirator is admissible against the other conspirators prima facie evidence of the conspiracy must be proved. (Evid. Code, § 403; People v. Steccone (1950) 36 Cal.2d 234, 238 [223 P.2d 17].) (4b) We have carefully examined the lengthy record and are compelled to the conclusion that there was no evidence, other than the recordings themselves, to constitute a prima facie showing of the existence of the claimed insurance conspiracy. The only admissible evidence adduced at trial concerning insurance was that (1) there were life insurance policies insuring Catherine Murphy in the total amount of $25,665; (2) the Murphys had an automobile insurance policy containing an uninsured motorist provision which allowed either insured to recover $15,000 if injured or killed as the result of being struck by a hit-and-run driver; and (3) Murphy apparently had forged his wife's signature on an application for one of the insurance policies and the authorization card for that policy. Aside from the recordings, the receipt of which is sought to be justified on the independent showing of an insurance conspiracy, there is nothing in the record to indicate that defendant or the Carnes brothers were involved in a conspiracy to collect the proceeds of *855 the insurance policies, nor is there any evidence from which we may infer the existence of such a conspiracy.[10]
(6) Holding that the hearsay recordings were erroneously admitted as not falling within any exception to the hearsay rule does not necessarily warrant reversal. It must also be evident that "`after an examination of the entire cause, including the evidence,' ... it is reasonably probable that a result more favorable to the appealing party would have been reached in the absence of error." (People v. Watson (1956) 46 Cal.2d 818, 836 [299 P.2d 243].) As stated above, we have read the entire record, including the transcripts of the recordings. Although the competent evidence of defendant's guilt is substantial, it is not compelling. Jerry Carnes testified that defendant conspired to "rough up" a victim who might have been Catherine Murphy. Defendant was seen in the general vicinity of the crime with Jurgenson who later stated that he and defendant had killed the victim in a manner consistent with the physical evidence of her death. Defendant was also connected with the killing by evidence that placed his automobile at the scene of the crime; that Murphy transferred money to him; and that he attempted to arrange for an alibi at the time of the killing.
The recordings, on the other hand, are extremely damaging to defendant. They compel the inference, particularly when considered with the competent evidence, that Murphy initiated a conspiracy involving Robert "Pokey" Jurgenson, Jerry Carnes and defendant (the latter two being paid for their participation) to murder Murphy's wife and that she was killed as a result of that conspiracy. The recorded discussions generally relate to the progress the investigating officers were making and the manner in which Murphy and the Carnes brothers should conduct themselves in order to frustrate the investigation. Great concern is expressed that defendant and Jurgenson might "sing" and what strategy Murphy and the Carnes brothers should adopt in such event. Comment is made that defendant had agreed to "take the rap without involving anybody else" in the event "anything went wrong" and that defendant was "pretty scared." Again great concern is expressed when it appeared that defendant had returned from some undesignated *856 place and might still have in his possession "the knife" and the victim's credit cards. Murphy indicates that defendant "had everything in his pocket.... [and Murphy had not] laid eyes on the guy since that night." Murphy also states, inconsistently with his statements to the investigating officers, that "I laid her down there [she was] unconscious at this stage but the blood was still coming from the jugular vein it looked like you just turned on a faucet in a house." When Jerry Carnes indicates that he would have been nauseated, Murphy mentions that it was for such reason that defendant did not want Jerry to be present. At other points in the conversations the possibility of defendant signing a confession, particularly if he was "high" when picked up, is considered, and it is speculated that, if they are not careful, all of them will end up "in the chair ... [a]s a matter of fact, they would probably put three more chairs up there."
The foregoing and other incriminating remarks were related under circumstances which would necessarily persuade a trier of fact of their truth. In addition, the recordings contained other remarks of an inflammatory nature from which it could be concluded that defendant was a dope addict and under the influence of heroin at the time of the killing and that he had on some earlier occasion driven his vehicle over the body of a police officer.
It appears, then, that the effect of receiving the transcripts of the recordings and thus allowing the trier of fact to consider them together with the competent evidence of defendant's guilt adduced at trial destroyed the force of defendant's testimony that he was innocent and compelled the conclusion of guilt.[11]
We conclude that on our examination of the whole cause it is reasonably probable that a result more favorable to the defendant would have been reached in the absence of the error of receiving the recordings.
The judgment is reversed.
McComb, J., Peters, J., Tobriner, J., Mosk, J., and Burke, J., concurred.
SULLIVAN, J.
I concur in the judgment and I join in the majority opinion, except that portion dealing with the admissibility of the conversation between the coconspirator Jerry Carnes and Robert "Pokey" Jurgenson. *857 I dissent from the holding that such conversation, which took place three days after the homicide, was admissible as falling within the coconspirator exception to the hearsay rule (Evid. Code, § 1223; see ante, p. 851, fn. 7).
Elsewhere in the opinion,[1] the majority properly recognize that a coconspirator's hearsay statement, to be admissible against his fellow conspirator, must be made "during any activity in pursuance of any significant objective of the conspiracy." (Ante, p. 853.) Their holding as to the admissibility of the Carnes-Jurgenson conversation cannot be reconciled with their own correct statement of the law. To reach this result the majority look beyond the charged conspiracy to commit murder and imply an uncharged conspiracy to receive payment for the criminal act. Thus they extend the hearsay exception in a manner which, in following Krulewitch v. United States (1949) 336 U.S. 440 [93 L.Ed. 790, 69 S.Ct. 716], they themselves condemn.
With all respect to my colleagues, I am afraid that they confuse motive with objective. The objective of the conspiracy entered into by Murphy, Carnes and defendant was to murder Murphy's wife. Whatever may have been Murphy's motive for sowing the seeds of the conspiracy, Carnes and defendant joined the scheme for its financial fruits. The different motives of all participants were satisfied by accomplishment of the murder: Murphy was rid of his wife, and defendant and Carnes were entitled to the payoff. No further acts were contemplated by the conspirators, and none were necessary to the completion of the conspiracy's objective. Nor did any common purpose (except perhaps avoidance of detection and punishment) continue to unite the interests of the participants. In fact, Murphy's interests after the murder were somewhat in conflict with those of the hired killers, because he was now financially indebted to them, albeit for an obligation which no court would enforce. To infer from this state of affairs that one of the objectives of the conspiracy was Murphy's payment to the others strains credulity. Although it is indisputable that money motivated some of its participants, the financial benefit to the hired killers was not part of the "common design of the conspiracy." (People v. Suter (1941) 43 Cal. App.2d 444, 458 [111 P.2d 23].)
Besides confusing the motives of the conspirators with the objective of the conspiracy, the majority's holding would perpetuate the life of a conspiracy beyond rational limits. If, for example, Murphy had given his confederates a promissory note rather than cash, would the conspiracy *858 continue until the note was paid? If Murphy defaulted on his promise to pay, would the conspiracy continue endlessly? According to the logic of the majority, and contrary to both established law and the hard realities of life, a conspiracy might last forever. An uncharged implied conspiracy to conceal a crime has properly been held to extend the duration of a conspiracy impermissibly beyond legitimate limits (Grunewald v. United States (1957) 353 U.S. 391, 404-405 [1 L.Ed.2d 931, 943-944, 77 S.Ct. 963]; Krulewitch v. United States, supra, 336 U.S. 440, 456 [93 L.Ed. 790, 800-801] (Jackson, J., concurring)). So too, in the case at bench, does the majority's implied uncharged conspiracy to receive payment extend the duration of the conspiracy beyond legally recognized bounds.
Even if we assume for the sake of argument that the Carnes-Jurgenson conversation did occur during the pendency of the conspiracy to murder Mrs. Murphy, it did not further the objective of that conspiracy, as required by Evidence Code section 1223, subdivision (a). The "furtherance" requirement did not expressly appear in Code of Civil Procedure section 1870, subdivision 6, the predecessor to Evidence Code section 1223, but was an additional limitation upon the hearsay exception included in the new statute (People v. Brawley (1969) 1 Cal.3d 277, 287 [82 Cal. Rptr. 161, 461 P.2d 361], cert. den. sub nom. Baker v. California (1971) 400 U.S. 993 [27 L.Ed.2d 441, 91 S.Ct. 462]). Although it may be argued that the "furtherance" requirement is superfluous in light of the pendency requirement (Levie, Hearsay and Conspiracy (1954) 52 Mich.L.Rev. 1159, 1173), nevertheless we may infer from the above change a legislative intent to narrow rather than to broaden the scope of this exception to the hearsay rule.
In the instant case the objective of the conspiracy was the murder of Mrs. Murphy. Assuming arguendo that payment for the murder was also an objective, the Carnes-Jurgenson conversation, to be admissible, had to be in furtherance of the receipt of payment, as the murder was at that time fait accompli. But the conversation consists solely of Jurgenson's statements informing Carnes how the murder had been carried out and, after joining the others, defendant's admonition to Carnes to "keep [his] mouth shut." Nothing that transpired, it is evident, would have aided these conspirators in furthering the objective of receiving payment for their crime.
The decisional law in California dealing with the evidentiary problem before us provides on the whole for a rational termination of conspiracies. Where evidence has been held admissible, the duration of the conspiracy has extended beyond the substantive crime only to encompass activity directly related thereto (e.g., People v. Rodley (1900) 131 Cal. 240, 254 *859 [63 P. 351], cert. den. (1901) 183 U.S. 694 [46 L.Ed. 393, 22 S.Ct. 934], conspiracy to fabricate a will and loot estate; People v. Ross (1941) 46 Cal. App.2d 385, 396 [116 P.2d 81], conspiracy to commit grand theft and divide the proceeds).
In People v. Brown (1955) 131 Cal. App.2d 643 [281 P.2d 319], cited by the People, I have found the only reference to payment for participation in a crime. In that case a conspiracy to murder Mrs. Brown was held to continue after an unsuccessful attempt on her life, because the evidence showed that the objective of the conspirators to murder her had not been abandoned. The court first correctly stated that a conspiracy "`may, for various purposes, extend in point of time beyond the actual commission of the substantive crime, providing there is some evidence showing that subsequent activities of the conspirators were a part of their scheme or plan.'" (Fns. omitted.) (Id. at p. 656, citing 11 Cal.Jur.2d 223.) Then, as examples of this proposition, the court gave "division of the loot and payment for participation in the crime (People v. Ross [supra] 46 Cal. App.2d 385, 395-396 ...) and acts contemplating escaping punishment (People v. Tinnin [1934] 136 Cal. App. 301, 306 ...)." (People v. Brown, supra, 131 Cal. App.2d 643, 656-657.) No case was offered to illustrate the example of payment for participation in crime. Notwithstanding the placement of the citation, the Ross case illustrates only the "division of the loot" example. Nor does the reference to 11 Cal.Jur.2d 223 yield any such cases. Therefore I consider the Brown dictum to be meaningless as support for the conclusion asserted by the People and adopted by the majority.
In opposition to the foregoing cases are those in which the courts have refused to extend the duration of the conspiracy, finding that its objective had either been accomplished or frustrated (People v. Dilwood (1892) 94 Cal. 89, 91 [29 P. 420]; People v. Irwin (1888) 77 Cal. 494, 505 [20 P. 56]; Callan v. Superior Court (1962) 204 Cal. App.2d 652, 664-665 [22 Cal. Rptr. 508]). As the majority note, this determination is generally a question for the trier of fact (People v. Smith (1966) 63 Cal.2d 779, 794 [48 Cal. Rptr. 382, 409 P.2d 222], cert. den. (1967) 388 U.S. 913 [18 L.Ed.2d 1353, 87 S.Ct. 2119], rehg. den., 389 U.S. 893 [19 L.Ed.2d 211, 88 S.Ct. 13]). But the formula applied by all the cases requires that there be an objective of the conspiracy yet to be accomplished for the conspiracy to continue beyond the commission of the substantive crime. Where the purpose of a conspiracy is theft, the division of the proceeds among the conspirators is logically an integral part of the conspiracy's goal; where the object is murder, on the other hand, accomplishment of that goal generally satisfies the conspiracy's objective, even though the motives of some of the murderers remain unfulfilled.
*860 Two reasons, among others, have been advanced to support the coconspirator exception to the hearsay rule. One assumes that during the attempt to reach a common goal and in furtherance of it the conspirators' acts and declarations are reliable enough to be competent evidence against each other in a criminal prosecution (Note, Developments in the Law Criminal Conspiracy (1959) 72 Harv.L.Rev. 920, 985, fn. 488). The other rationale asserts that conspirators are each other's agents; when acting for divergent goals, however, the agency relationship cannot be assumed (id. at pp. 988-989; Levie, supra, 52 Mich.L.Rev. 1159, 1164-1165). Extending the conspiracy in the instant case until one conspirator pays the others for their participation defeats both justifications for the hearsay exception and opens the door to a flood of evidence the reliability of which is at most dubious. Neither the majority nor the People cite, nor has my independent research disclosed, any reported California decision so extending a conspiracy.
In sum, I believe that the majority draw an irrational line by considering that the conspiracy continues for the purpose of Evidence Code section 1223 until fulfillment of the promise which concededly induced some of the participants to enter into the conspiracy, but which was not its common goal. The rationale behind the United States Supreme Court's decision in Krulewitch v. United States, supra, 336 U.S. 440, which the majority embrace in dealing with the recordings sought to be admitted, applies equally to the conversation. It is the objective of the conspiracy as an entity, not the individual motives of its members, which defines its temporal limits.
I am of the opinion that the statements of Carnes and Jurgenson are not admissible on retrial.[2]
NOTES
[1] The separate trials of defendants each resulted in sentences of death. Murphy's automatic appeal (Crim. 15221) is now pending but not before us in these proceedings.
[2] The proceedings herein all occurred prior to our decision in People v. Anderson (1972) 6 Cal.3d 628 [100 Cal. Rptr. 152, 493 P.2d 880].
[3] Reference at trial to August 25th, 1969 as the date of the homicide is apparently in error since the 25th was a Monday and all parties agree that the homicide occurred on a Friday evening. However, with the aid of other record matters we have concluded that the correct date was August 22. In so doing we also observe that undisputed evidence at Murphy's trial establishes that the date on which the murder occurred was August 22.
[4] It has not been called to our attention what charges if any were made against Jurgenson. In the second recorded conversation (between Jerry and Richard Carnes and Murphy) Murphy purportedly states, at a time before defendant and Murphy were indicted, that Jurgenson was "sent ... up on parole violation and narcotics possession."
[5] The record is silent as to what happened between the time Carnes met defendant and Jurgenson and the events immediately prior to the homicide. Moreover, the record does not indicate how defendant and Jurgenson knew that Murphy would shortly thereafter be driving through Lopez Canyon.
[6] The People contend that Jurgenson's incriminating statements were admissible as "implied [adoptive] admissions" of defendant. It should be noted that defendant was not present during the entire conversation between Jerry Carnes and Jurgenson. In the absence of a showing by the People of precisely when defendant was present during Jurgenson's admissions we cannot assume that he adopted all or any of them.
[7] Evidence Code section 1223 provides: "Evidence of a statement offered against a party is not made inadmissible by the hearsay rule if: (a) The statement was made by the declarant while participating in a conspiracy to commit a crime or civil wrong and in furtherance of the objective of that conspiracy; (b) The statement was made prior to or during the time that the party was participating in that conspiracy; and (c) The evidence is offered either after admission of evidence sufficient to sustain a finding of the facts specified in subdivisions (a) and (b) or, in the court's discretion as to the order of proof, subject to the admission of such evidence."
On the subject of this exception to the hearsay rule, see generally McCormick on Evidence (1954) page 521; 4 Wigmore, Evidence (3d ed. 1940) section 1079; Levie Hearsay and Conspiracy (1954) 52 Mich.L.Rev. 1159; Note, Developments in the Law Criminal Conspiracy (1959) 72 Harv.L.Rev. 920, 984-989; Comment. The Hearsay Exception for Co-Conspirators' Declarations (1958) 25 U.Chi.L.Rev. 530. See also Model Code of Evidence (1942) rule 508; Uniform Rules of Evidence (1953) rule 63(9).
[8] Although it has been held that statements which merely narrate past events are not to be deemed as made in furtherance of a conspiracy (People v. Smith (1907) 151 Cal. 619, 625-626 [91 P. 511]; People v. Oldham, supra, 111 Cal. 648, 652-653; People v. Aleck, supra, 61 Cal. 137, 138-139), such a rule cannot be applied mechanically. Jurgenson's statements to Carnes were clearly made in furtherance of the conspiracy to kill Catherine Murphy, as it was necessary that Carnes be made aware of the departure from the original scheme in order that he, in the best interests of himself and his coconspirators, be able to maintain the integrity of their security until they received payment for their participation in the crime.
[9] In Grunewald v. United States (1957) 353 U.S. 391 [1 L.Ed.2d 931, 77 S.Ct. 963], the Supreme Court again refused to "accede to the proposition that the duration of a conspiracy can be indefinitely lengthened merely because the conspiracy is kept a secret, and merely because the conspirators take steps to bury their traces, in order to avoid detection and punishment after the central criminal purpose has been accomplished." (Id. at p. 405 [1 L.Ed.2d at p. 943].) It noted, however, that "[b]y no means does this mean that acts of concealment can never have significance in furthering a criminal conspiracy.... [A] vital distinction must be made between acts of concealment done in furtherance of the main criminal objectives of the conspiracy, and acts of concealment done after these central objectives have been attained, for the purpose only of covering up after the crime." (Id.; see also Dutton v. Evans (1970) 400 U.S. 74, 81-82 [27 L.Ed.2d 213, 222-223, 91 S.Ct. 210].)
[10] The only reference to insurance in the recordings was by Richard Carnes, as follows: "RICHARD CARNES: Has the insurance contacted you or anything? MR. MURPHY: No. No. I haven't even had death certificates or anything like that yet. RICHARD CARNES: They haven't said anything to you? MR. MURPHY: No. Oh, I got a call from my insurance (Unintelligible) and he said, `As soon as you get a death certificate I'll come over and talk to you.' ... RICHARD CARNES: How much are you getting? MR. MURPHY: Five Grand. RICHARD CARNES: Is that all? MR. MURPHY: Well, I told him that if I wanted to use my car I'd get fifty grand.... But if I did ... I'd be hung.... MR. MURPHY: I wasn't doing this for insurance."
[11] That the jury gave weight to the recordings is illustrated by the fact that it requested that the recording of the telephone conversation between Jerry Carnes and Murphy be replayed after one day of deliberation during the guilt phase of the trial.
[1] See majority opinion pages 853-856, concerning the admissibility of the recordings made on September 18 and 19, about which the majority reach a different conclusion.
[2] While I agree with the majority that the recordings made on September 18 and 19, over three weeks after the murder, were inadmissible, I do not adopt that portion of their reasoning which derives and draws support from their conclusion as to the Carnes-Jurgenson statements.
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
May 6, 2008
No. 07-11235 Charles R. Fulbruge III
Summary Calendar Clerk
ANTHONY TODD JOSEPH
Plaintiff - Appellant
v.
THE CITY OF DALLAS; THE CITY OF DALLAS POLICE DEPARTMENT;
DAVID KUNKEL, Dallas Chief of Police; LIEUTENANT CRAIG MILLER,
Dallas Police Officer, Badge Number 4653; DETECTIVE NICHOLAS
WINGO, Dallas Police Officer, Badge Number 6645; DETECTIVE STACY
WARD, Dallas Police Officer, Badge Number 5302
Defendants - Appellees
Appeal from the United States District Court
for the Northern District of Texas, Dallas
No. 3:06-CV-1563
Before KING, DAVIS, and CLEMENT, Circuit Judges.
PER CURIAM:*
Plaintiff-appellant Anthony Todd Joseph appeals the district court’s
summary judgment dismissing his discrimination claim under the Age
Discrimination in Employment Act. Because we agree with the district court
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
No. 07-11235
that defendants-appellees offered a legitimate, nondiscriminatory reason for not
hiring Joseph, and Joseph did not provide sufficient evidence of pretext, we
affirm.
I. BACKGROUND
In the spring of 2006, when Anthony Todd Joseph was forty-nine years old,
he attended a job fair at which he met a recruiting team from the Dallas Police
Department (the “DPD”). Joseph told the recruiters his age and asked if it
would be an impediment if he applied to become an officer. The recruiters
assured him that there was no age requirement and encouraged him to apply.
Excited by the prospect, Joseph applied.
Joseph passed the first five of twelve steps in the DPD application process,
including a preliminary interview, a civil service test, a physical fitness test, a
pre-polygraph examination, and a polygraph examination. On May 26, 2006,
Joseph participated in the sixth step, an interview by three officers comprising
the so-called Applicant Interview Board (the “AIB”). The AIB interview was
conducted by DPD Officers Craig Miller, Nicholas Wingo, and Stacy Ward.
Joseph was asked to complete a number of tasks, including writing two essays,
and memorizing and repeating police procedures. In addition, Joseph was asked
to orally explain how he would respond to hypothetical police scenarios, namely:
(1) a hit-and-run auto accident; (2) an ambush while patrolling; and (3) a hostage
situation involving a rape victim. To assist him with the hypothetical scenarios,
he was provided with instructions and police protocols. This portion of the AIB
interview was intended to be stressful and intense. Indeed, Joseph described his
interview as “fairly intense,” with panel members “trying to rattle and hurry
[him].”
Each AIB member individually evaluated Joseph on the following criteria:
(1) ability to follow directions; (2) adaptability/flexibility; (3) decision
making/situational reasoning ability; (4) reaction to pressure; (5) interpersonal
2
No. 07-11235
skills; (6) appearance/bearing; (7) oral communication skills; and (8) writing
skills. Officers Miller, Wingo and Ward scored Joseph on each criteria on a scale
of 1.00 to 5.00. Scores of 3.00 and above were passing. A candidate’s final,
overall AIB score was calculated by averaging all twenty-four scores.
Collectively, Officers Miller, Wingo, and Ward gave Joseph a failing score
of 2.74. Joseph received an overall passing score of 3.00 from Officer Miller.
However, Officers Wingo and Ward both gave Joseph an overall failing score of
2.62. All three officers gave Joseph passing scores for “appearance/bearing.”
However, all three failed Joseph in the “adaptability/flexibility” category and
Officers Wingo and Ward failed Joseph in the “decision making/substantial
reasoning ability” category. On Joseph’s AIB interview form signed by all of the
officers, the officers noted that Joseph was “unable to logically process
information.”
After each panel member’s scores were calculated, Joseph was informed
that he had failed the AIB examination and that he would not be allowed to
continue in the hiring process. The AIB members discussed with Joseph the
reasons for his failure and gave him an opportunity to ask questions. The
following day, on May 25, 2006, Joseph sent an email to the recruiting section
of the DPD. In his email, Joseph acknowledged that he had made mistakes in
his responses to the hypothetical police scenarios. He also asked for guidance
as to the proper answers so that he could improve in future interviews. The
DPD never responded.
On August 29, 2006, Joseph filed a three-count complaint against the City
of Dallas (the “City”), the DPD, David Kunkel, the Dallas Chief of Police, and
Officers Miller, Wingo, and Ward. Joseph claimed that the DPD failed to hire
him as a result of his age and brought claims under: (1) the Age Discrimination
in Employment Act (“ADEA”); (2) Title VII of the Civil Rights Act of 1964 (“Title
VII”); and (3) 42 U.S.C. § 1983. On February 27, 2007, the defendants moved for
3
No. 07-11235
summary judgment. Because one of the grounds for the motion was the
individual defendants’ qualified immunity defense, the defendants triggered a
provision in the district court’s scheduling order automatically staying discovery,
except with respect to qualified immunity issues.
On November 6, 2007, the district court granted the defendants summary
judgment on all of Joseph’s claims. The district court held that Joseph could not
recover for age discrimination: (1) under Title VII because Title VII does not
provide a cause of action for age discrimination; (2) under 42 U.S.C. § 1983
because the ADEA preempts § 1983 age discrimination claims; (3) against the
individual defendants because the ADEA does not allow claims against
supervisory employees in their individual capacities; or (4) against the DPD
because the DPD is not a legal entity amenable to suit. In addition, the district
court held that Joseph could not recover for age discrimination against the City
because, even assuming Joseph could make out a prima facie case of
discrimination, the City stated a legitimate, nondiscriminatory reason for its
decision—Joseph’s alleged poor responses to the hypothetical police scenarios
and his inability to logically process information—and Joseph failed to offer
sufficient evidence that the reason was pretextual.
On November 29, 2007, Joseph filed a timely appeal. Joseph argues that
the district court’s order in favor of the City was in error because: (1) the City
did not provide a legitimate, nondiscriminatory basis for failing him; and (2) he
presented sufficient evidence to establish that the City’s putative reason for
failing him was a mere pretext for discriminatory animus. Joseph does not take
issue with the remainder of the district court’s specific holdings. However,
Joseph contends that the district court’s order should be set aside because he
was unable to conduct discovery as a result of the automatic stay imposed by the
district court’s scheduling order.
4
No. 07-11235
II. DISCUSSION
A.
We review a grant of summary judgment de novo, viewing all the evidence
in the light most favorable to the nonmoving party and drawing all reasonable
inferences in that party’s favor. See Crawford v. Formosa Plastics Corp., 234
F.3d 899, 902 (5th Cir. 2000) (citations omitted). “Summary judgment is proper
when the evidence reflects no genuine issues of material fact and the non-
movant is entitled to judgment as a matter of law.” Id. (citing Fed. R. Civ. P.
56(c)). “A genuine issue of material fact exists ‘if the evidence is such that a
reasonable jury could return a verdict for the non-moving party.’” Id. (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
The ADEA makes it unlawful for an employer “to fail or refuse to hire . . .
any individual . . . because of such individual’s age . . . .” 29 U.S.C. § 623(a)(1).
A plaintiff may prove age discrimination through either direct or circumstantial
evidence. Sandstad v. CB Richard Ellis, Inc., 309 F.3d 893, 896 (5th Cir. 2002)
(citation omitted). “Direct evidence is evidence that, if believed, proves the fact
of discriminatory animus without inference or presumption.” Id. at 897 (citation
omitted); see also Palasota v. Haggar Clothing Co., 342 F.3d 569, 576 (5th Cir.
2003) (citation omitted) (“To qualify as direct evidence, a document must be (1)
age related, (2) proximate in time to the termination, (3) made by an individual
with authority over the termination, and (4) related to the employment
decision.”). Here, however, Joseph does not appear to argue that he has direct
evidence of discrimination. Nor do we believe that any of the evidence he offered
indicates discriminatory intent without inference or presumption.
When a plaintiff relies only on circumstantial evidence of age
discrimination to prove his case, courts apply the three-part McDonnell Douglas
burden-shifting framework. Patrick v. Ridge, 394 F.3d 311, 315 n.10 (5th Cir.
2004) (citation omitted). First, the plaintiff must establish a prime facie case of
5
No. 07-11235
discrimination. Id. (citations omitted). To establish a prima facie case for
discriminatory failure to hire under the ADEA, the plaintiff must show that (1)
he was over the age of forty at the time he was not selected; (2) he was qualified
for the position he sought; (3) he was not selected; and (4) either (a) a candidate
outside his protected class was hired, (b) someone younger was hired, or (c) he
was otherwise not selected because of his age. See McClaren v. Morrison Mgmt.
Specialists, Inc., 420 F.3d 457, 462 (5th Cir. 2005) (citations omitted) (setting
forth the elements for discriminatory failure to hire under the substantively
identical Texas Commission on Human Rights Act); see also Berquist v. Wash.
Mut. Bank, 500 F.3d 344, 349 (5th Cir. 2007) (citations omitted) (setting forth a
prima facie case under the ADEA for discriminatory discharge). If the
requirements for a prima facie case of discrimination are established, a
rebuttable presumption arises that the employer unlawfully discriminated
against the plaintiff. Patrick, 394 F.3d at 315 (citation omitted).
To rebut the presumption of discrimination created by the plaintiff’s prima
facie case, the employer must articulate a legitimate, nondiscriminatory reason
for its decision not to hire. See id. (citation omitted). The employer bears only
the burden of production at this stage and, therefore, it “need not prove that it
was actually motivated by its proffered reason.” Id. (citation omitted);
Bodenheimer v. PPG Indus., Inc., 5 F.3d 955, 958 (5th Cir. 1993) (“The employer
need only articulate a lawful reason, regardless of what its persuasiveness may
or may not be.”). Thus, courts must avoid making any “credibility
determinations at this stage because ‘the burden-of-production determination
necessarily precedes the credibility-assessment stage.’” Bodenheimer, 5 F.3d at
958 (emphasis in the original) (quoting St. Mary’s Honor Ctr. v. Hicks, 509 U.S.
502, 509 (1993)).
Finally, if the employer meets its burden of production, “the presumption
of discrimination created by the prima facie case disappears, and the plaintiff is
6
No. 07-11235
left with the ultimate burden of proving discrimination.” Sandstad, 309 F.3d at
897 (citing St. Mary’s Honor Ctr., 509 U.S. at 511-12). To survive summary
judgment, “the plaintiff must then offer sufficient evidence to create a genuine
issue of material fact either (1) that the defendant’s reason is not true, but is
instead a pretext for discrimination (pretext alternative); or (2) that the
defendant’s reason, while true, is only one of the reasons for its conduct, and
another ‘motivating factor’ is the plaintiff’s protected characteristic (mixed-
motive[s] alternative.).” Berquist, 500 F.3d at 356 (citing Rachid v. Jack In The
Box, Inc., 376 F.3d 305, 312 (5th Cir. 2004)).
In the instant case, the parties dispute whether Joseph presented
adequate summary judgment evidence to establish a prima facie case of
discrimination. But as the district court also stated in its well-reasoned opinion,
we need not consider this issue because the City articulated a legitimate,
nondiscriminatory basis for the decision and Joseph has not shown that it was
a pretext for discrimination.1 See Evans v. City of Houston, 246 F.3d 344, 355
(5th Cir. 2001) (“[W]e need not address the issue whether the district court erred
in finding that [the plaintiff] had not satisfied the prima facie showings for
discrimination . . . because even if she had . . . we find that [the plaintiff] has
produced no substantial evidence to support her contention that the
[defendant’s] legitimate nondiscriminatory justification for her demotion was,
in fact, a pretext for racial or age discrimination.”).
The City offers as a legitimate, nondiscriminatory reason for its decision
not to hire Joseph his failing scores from his AIB interview. More specifically,
the City contends that Joseph gave poor answers to the hypothetical police
scenarios and seemed unable to logically process information. Joseph argues in
response that the City’s proffered explanation was not a sufficiently “clear and
1
Nor does Joseph attempt to prove that the City’s legitimate, nondiscriminatory reason
for not hiring him was only one of the reasons for its decision.
7
No. 07-11235
reasonably specific” explanation of its decision under Alvarado v. Tex. Rangers,
492 F.3d 605 (5th Cir. 2007).2
In Alvarado, the defendant attempted to justify its decision not to hire the
plaintiff by noting that the scores the plaintiff received from a panel assessing
her interview performance were lower than the scores received by the applicants
actually hired. Id. at 616-17. The court rejected this basis as inadequate
because the defendants offered neither an explanation of the scores nor evidence
of how or why the interviewers arrived at the scores. Id. at 617. The court
recognized that “[a]n employer’s subjective reason for not selecting a candidate,
such as a subjective assessment of the candidate’s performance in an interview,
may serve as a legitimate, nondiscriminatory reason for the candidate’s non-
selection.” Id. at 616 (citation omitted). But it held that “[s]uch a reason will
satisfy the employer’s burden of production . . . only if the employer articulates
a clear and reasonably specific basis for its subjective assessment.” Id. (citation
omitted). Without some indication of the factual basis or specific reasons for the
plaintiff’s interview score, “the score [said] nothing about whether her non-
selection for the Rangers was the product of sex discrimination.” Id. Indeed, the
plaintiff’s score was “at least as consistent with discriminatory intent as it [was]
with nondiscriminatory intent because [the plaintiff] may well have received the
relatively low interview score on account of her sex.” Id. (citation and internal
quotations omitted).
We agree with the district court that the City satisfied the criteria set
forth in Alvarado because it provided a “clear and reasonably specific basis for
2
Joseph also argues that the City did not articulate a legitimate, nondiscriminatory
reason because: (1) the AIB members’ opinion lacked credibility; and (2) Officer Miller
contradicted his individual passing score by signing the final AIB Evaluation Summary,
wherein it was recorded that Joseph lacked the ability to logically process information. These
arguments fail, however, because the City only bears the burden of production at this stage
and we do not make any credibility determinations. See Bodenheimer, 5 F.3d at 958 (citation
omitted).
8
No. 07-11235
its subjective assessment,” namely that Joseph provided poor answers to the
hypothetical police scenarios and seemed unable to logically process information.
This is simply not a case where the defendant relies on nothing more than a
unexplained interview score that might be consistent with discriminatory intent.
Indeed, whereas in Alvarado the defendant did not provide the court with
interview comments or notes, the City submitted the evaluation form from
Joseph’s AIB interview, which stated that Joseph’s interview performance was
unacceptable because he was “unable to logically process information.” In
addition, Officers Wingo and Ward provided affidavits explaining why they gave
Joseph failing scores. Officer Wingo stated that he “felt Mr. Joseph gave poor
answers to the police scenarios and demonstrated an inability to logically process
information.” Similarly, Officer Ward stated that she “gave Mr. Joseph the tools
necessary to analyze the police scenarios and provide logical answers to them.
He did not do so.”
Moreover, we agree with the district court that Joseph failed to offer
sufficient evidence to create a genuine issue of material fact that the City’s
stated reason for not hiring him was a mere pretext for discrimination. See
Berquist, 500 F.3d at 356 (citation omitted). In order to demonstrate pretext,
Joseph introduced evidence that: (1) Officer Miller made comments about his
age during the AIB interview; and (2) between August 2005 and August 2006
applicants to the DPD over the age of forty were hired at a lower rate than
applicants under forty. In addition, Joseph provided the opinion of an “expert”
that he should have received a higher score for his “appearance/bearing” during
the interview, and his own opinion that he was qualified for the position and
performed well during the interview process. We shall discuss each point
separately.
First, we recognize that there is a dispute over whether Officer Miller
made age-based comments during the AIB interview. Joseph stated that when
9
No. 07-11235
he was responding to the AIB’s third hypothetical scenario—a scenario during
which a kidnapper is holding a gun to a rape victim’s head—Officer Miller
screamed at him: “Come on, what’s your forty-nine year old ass gonna do now?”
and “Come on Mr. forty-niner, whats you gonna do?” Also, at another point,
Joseph claims that Officer Miller asked whether at any time in his forty-nine
years Joseph had the opportunity to participate in a “ride along” with a police
officer. By contrast, Officers Miller, Wingo, and Ward all deny that Officer
Miller made any age-based comments.
Nevertheless, the dispute does not concern a material issue of fact. See
Shackelford v. Deloitte & Touche, LLP, 190 F.3d 398, 405 (5th Cir. 1999) (holding
that although there was a dispute of fact as to whether the plaintiff performed
badly or was to blame for disputes with fellow employees, summary judgment
was appropriate because the remaining evidence of discrimination was too
speculative). As the district court noted, Joseph’s own affidavit places some of
the alleged comments in a context such that they could be interpreted as
nondiscriminatory statements intended to “rattle and hurry” Joseph during the
interview. See Berquist, 500 F.3d at 352 (“Based on [the plaintiff’s] personal
impression of the statement, we decline to characterize this comment as
anything more than a comment unrelated to an unlawful discriminatory
animus.”). To illustrate, Joseph also alleged that during the second scenario
Officer Miller yelled at him to “[c]ome on, what are you going to do, come on,
come on[,]” and them mocked him by stating that “[o]h, we have a lawyer here,
oh Mr. Lawyer, Mr. Paralegal . . . .” More importantly, however, it is undisputed
that Officer Miller gave Joseph a passing score. As such, even if true, there is
no evidence that Officer Miller’s comments were “related to” the City’s decision
not to hire Joseph. See Manning v. Chevron Chem. Co., 332 F.3d 874, 882 (5th
Cir. 2003) (citation omitted).
10
No. 07-11235
Second, Joseph’s statistical evidence—between August 2005 and August
2006 applicants to the DPD over the age of forty were hired at a lower rate than
younger applicants—does not create a genuine issue of material fact because it
lacks any factual link to Joseph. In Walther v. Lone Star Gas Co., 977 F.2d 161,
162 (5th Cir. 1992) (citation omitted) (emphasis added), this court explained
that:
gross statistical disparities . . . may be probative of
discriminatory intent, motive or purpose. Such
statistics might in an unusual case provide adequate
circumstantial evidence that an individual employee
was discharged as part of a larger pattern of layoffs
targeting older employees. This is not to say that such
statistics are enough to rebut a valid, nondiscriminatory
reason for discharging a particular employee.
Generally, they are not. . . . [P]roof of pretext, hence of
discriminatory intent, by statistics alone would be a
challenging endeavor.
Elsewhere, we found that a statistical analysis that did not purport to analyze
the facts surrounding the circumstances of the individual at issue was
“impotent” to establish whether an employer’s stated reasons were pretextual.
EEOC v. Tex. Instruments Inc., 100 F.3d 1173, 1185 (5th Cir. 1996).
Here, Joseph has merely provided raw numbers. He has not shown that
these numbers can only be explained by discriminatory animus because he has
not purported to control for factors such as the applicants’ ability to pass the
physical fitness examination, the applicants’ qualifications, or any other
potential variable. Nor has Joseph sought to demonstrate how these statistics
apply to his individual case. See Sandstad, 309 F.3d at 900 (holding that, even
if the court could infer age-based animus, the plaintiff could not link that general
animus to his own termination). Indeed, Joseph’s statistics demonstrate that
applicants over the age of forty were hired by the City. Compare Keelan v.
Majesco Software, Inc., 407 F.3d 332, 345-46 (5th Cir. 2005) (citation omitted)
11
No. 07-11235
(“Being a majority Indian company did not prevent [the defendant] from also
firing Indians for nonperformance in sales.”). As such, the statistics do not
establish pretext in Joseph’s specific case.
Finally, the opinions of Joseph and his expert do not create a genuine issue
of fact. Joseph’s expert opined, based on photographs of Joseph and other
applicants on the day of their interviews, that Joseph deserved the highest score
possible for his “appearance/bearing” because he was dressed more
professionally than applicants receiving high scores. Joseph himself, meanwhile,
stated that he performed very well during the AIB interview and that the AIB
members were mistaken about his alleged inability to logically process
information. Whether true or not, neither subjective opinion can defeat the
imposition of summary judgment precisely because it is a subjective opinion. See
Evans, 246 F.3d at 355 (citation omitted) (“Thus, [the plaintiff] cannot survive
summary judgment merely because she disagrees with the [defendant’s]
characterization of her disciplinary history . . . .”); Shackelford, 190 F.3d at 408
(citation omitted) (holding that a plaintiff may not survive summary judgment
merely by disputing the defendant’s assessment of his performance); Wright v.
W. Elec. Co., 664 F.2d 959, 965 (5th Cir. 1981) (holding that an unsuccessful
applicant could not create a fact issue by personally disagreeing with an
interviewer’s assessment of his performance). “The ADEA cannot protect older
employees from erroneous or even arbitrary personnel decisions, but only from
those decisions which are unlawfully motivated.” Bienkowski v. Am. Airlines,
Inc., 851 F.2d 1503, 1507-08 (5th Cir. 1988) (citation omitted).
B.
If a party cannot adequately defend a motion for summary judgment
because he has not had sufficient time to conduct discovery, he must move for
a continuance under Rule 56(f) of the Federal Rules of Civil Procedure. Potter
v. Delta Air Lines, Inc., 98 F.3d 881, 887 (5th Cir. 1996). If a district court
12
No. 07-11235
precludes further discovery before granting summary judgment, we review its
decision for an abuse of discretion. Resolution Trust Corp. v. Sharif-Munir-
Davidson Dev. Corp., 992 F.2d 1398, 1401 (5th Cir. 1993) (citations omitted). “If
it reasonably appears that further discovery would not produce evidence creating
a genuine issue of material fact, the district court’s preclusion of further
discovery prior to entering summary judgment is not an abuse of discretion.” Id.
(citations omitted).
Here, Joseph argues that the district court should not have granted
summary judgment because he stated in his response to the defendants’ motion
for summary judgment that he “has had no time to conduct discovery other than
for qualified immunity per the scheduling order.” The City responds that the
entire issue is waived because Joseph filed neither a motion under Rule 56(f) nor
an affidavit stating why discovery had not been completed, what further
discovery was proposed, and how that discovery would enable the nonmovant to
oppose summary judgment. See id. at 1403 n.5 (citation omitted). Moreover, the
City stresses that the case was pending for six months before the automatic stay
of discovery was imposed, and that during this time Joseph propounded
interrogatories and requests for production on the defendants.
We are not generally inclined to impose a literal interpretation of Rule
56(f) upon pro se litigants. See Haines v. Kerner, 404 U.S. 519, 520 (1972)
(holding that pleadings filed by pro se litigants are to be held to less stringent
standards than pleadings filed by lawyers); Int’l Shortstop, Inc. v. Rally’s, Inc.,
939 F.2d 1257, 1266-67 (5th Cir. 1991) (noting that courts are willing to accept
something less than a formal Rule 56(f) request from litigants). However, at a
minimum, a party must show: (1) why he needs additional discovery; and (2)
how that discovery would create a fact issue that would defeat summary
judgment. See Stearns Airport Equip. Co. v. FMC Corp., 170 F.3d 518, 535 (5th
Cir. 1999) (citation omitted). Joseph did not do so below. See Potter, 98 F.3d at
13
No. 07-11235
887 (“Some discovery was permitted. If [the plaintiff] needed more discovery in
order to defeat summary judgment, it was up to her to move for a continuance
pursuant to rule 56(f).”). Moreover, it does not reasonably appear that further
discovery would produce evidence creating a genuine issue of material fact. See
Resolution Trust Corp., 992 F.2d at 1401. Thus, the district court did not abuse
its discretion.
III. CONCLUSION
For the reasons stated above, we AFFIRM the district court’s judgment.
14
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243 U.S. 36 (1917)
McCLUSKEY, ADMINISTRATOR OF NORDGARD,
v.
MARYSVILLE & NORTHERN RAILWAY COMPANY ET AL.
No. 166.
Supreme Court of United States.
Argued January 30, 31, 1917.
Decided March 6, 1917.
ERROR TO THE CIRCUIT COURT OF APPEALS FOR THE NINTH CIRCUIT.
*37 Mr. John T. Casey, with whom Mr. George F. Hannan and Mr. Chas. R. Pierce were on the briefs, for plaintiff in error.
Mr. E.C. Hughes, with whom Mr. Maurice McMicken, Mr. Otto B. Rupp and Mr. H.J. Ramsey were on the brief, for defendants in error.
MR. CHIEF JUSTICE WHITE delivered the opinion of the court.
This suit was brought under the Employers' Liability Act to recover damages resulting from injuries suffered by Nordgard while in the employ of the defendant railway company. The trial court directed a verdict for the defendants on the ground that there was no evidence tending to show that the defendants and Nordgard were engaged at the time of the accident in interstate or foreign commerce, and the case is here on writ of error to secure a reversal of the action of the court below affirming the judgment entered by the trial court dismissing the suit. 218 Fed. Rep. 737.
These are the facts: The defendant Stimson Mill Company *38 was engaged in the logging and lumber business and carried its logs on its own logging railroad, the Marysville & Northern Railway, from timber land owned by it in Washington to a point near Marysville in that State where they were dumped into the waters of Puget Sound. Part of the logs were thereafter sold to mills located on the sound and the balance were rafted and taken by tugs to the Stimson Company's mills at Ballard, Washington, where they were manufactured into timber, which was thereafter sold, about twenty per cent. in local markets and the remainder in other States and countries. The logs which were sold after they had been carried to tidewater by the railroad were towed away by the purchasers to their mills or places for storage and part of them were subsequently re-sold for piling or poles to purchasers both within and without the State. Nordgard was a brakeman on the logging railroad and suffered the injuries for which he sued while engaged in unloading logs from the cars at tidewater.
The conclusion of the court below that under these facts the defendants were not engaged in interstate or foreign commerce when the injuries were suffered was based upon the decisions in Coe v. Errol, 116 U.S. 517, and The Daniel Ball, 10 Wall. 557, from the former of which the following quotations were made:
"When the products of the farm or the forest are collected and brought in from the surrounding country to a town or station serving as an entrepot for that particular region, whether on a river or a line of railroad, such products are not yet exports, nor are they in process of exportation, nor is exportation begun until they are committed to the common carrier for transportation out of the State to the State of their destination, or have started on their ultimate passage to that State." 116 U.S. 517, 525.
"But this movement [that is, interstate commerce movement] does not begin until the articles have been *39 shipped or started for transportation from one State to the other. The carrying of them in carts or other vehicles, or even floating them, to the depot where the journey is to commence is no part of that journey. . . . Until actually launched on its way to another State, or committed to a common carrier for transportation to such State, its destination is not fixed and certain. It may be sold or otherwise disposed of within the State, and never put in course of transportation out of the State." 116 U.S. 517, 528.
After pointing out that these rulings had not been modified, but on the contrary had been re-affirmed by the subsequent cases relied upon by the plaintiff in error (Texas & New Orleans R.R. Co. v. Sabine Tram Co., 227 U.S. 111; Louisiana Railroad Commission v. Texas & Pacific Ry. Co., 229 U.S. 336; Southern Pacific Terminal Co. v. Interstate Commerce Commission, 219 U.S. 498; Ohio Railroad Commission v. Worthington, 225 U.S. 101) the court said:
"In the case at bar there was no initial shipment of the goods. The transportation of the poles from the forest in which they were cut to tidewater, where they were sold, was not a shipment. There was no contract of carriage; there was no bill of lading; there was no consignor or consignee. The goods were not committed to a carrier. The defendant Mill Company simply carried over its own road, on its own cars, its own goods to a market where it sold and delivered them. It had no concern with the subsequent disposition of them. It was under no obligation to deliver them to another carrier, and no other carrier was under obligation to receive them or carry them further. The selling of the poles after the first sale by the Mill Company, or whether they were going outside of the State, depended upon chance or the exigencies of trade. The movement of the poles did not become interstate commerce until by the act of the purchasers thereof the *40 poles were started on their way to their destination in another State or country. The beginning of the transit which constitutes interstate commerce `is defined in Coe v. Errol, to be the point of time that an article is committed to a carrier for transportation to the State of its destination, or started on its ultimate passage.' General Oil Co. v. Crain, 209 U.S. 211, 229."
The conclusion of the court below that the defendants were not engaged in interstate or foreign commerce when the accident occurred is, we think, clearly demonstrated by the reasoning by which it sustained its conclusion and the authorities upon which it relied as above stated, and its judgment should be affirmed.
Before concluding we observe that in view of the stipulation of the parties in the court below agreeing to the substitution as plaintiff in error of the administrator of Nordgard who died while the cause was there pending, the motion to dismiss on the ground that the writ of error was wrongfully allowed and that the administrator is not a proper party is based upon a mere irregularity which was waived.
Affirmed.
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} |
ACCEPTED
03-15-00401-CV
6493720
THIRD COURT OF APPEALS
AUSTIN, TEXAS
8/13/2015 6:32:28 PM
JEFFREY D. KYLE
CLERK
No. 03-15-00401-CV
IN THE COURT OF APPEALS FILED IN
3rd COURT OF APPEALS
FOR THE THIRD DISTRICT AUSTIN, TEXAS
AUSTIN, TEXAS 8/13/2015 6:32:28 PM
JEFFREY D. KYLE
Clerk
IN RE XEROX CORPORATION AND XEROX STATE HEALTHCARE,
LLC F/K/A ACS STATE HEALTHCARE, LLC,
Relators
On Petition for Writ of Mandamus
Original Proceeding from the 53rd Judicial District Court
Travis County, Texas, Cause No. D-1-GV-14-000581
The Honorable Stephen Yelenosky, Presiding
BRIEF IN RESPONSE TO PETITION FOR WRIT OF MANDAMUS
KEN PAXTON RAYMOND C. WINTER
Attorney General of Texas Assistant Attorney General
Chief, Civil Medicaid Fraud Division
CHARLES E. ROY [email protected]
First Assistant Attorney General State Bar No. 21791950
REYNOLDS B. BRISSENDEN
JAMES E. DAVIS Assistant Attorney General
Deputy Attorney General for Civil Managing Attorney, Civil Medicaid Fraud
Litigation Division
[email protected]
State Bar No. 24056969
P. O. Box 12548
Austin, TX 78711-2548
Attorneys for Real Party in Interest
The State of Texas
Oral Argument Requested
IDENTITY OF PARTIES AND COUNSEL
The following is a complete list of all parties, as well as the names and addresses
of all counsel.
Relators Counsel
(Defendants in trial court)
Xerox Corporation; Eric J.R. Nichols
Xerox State Healthcare, LLC Gretchen Sween
f/k/a ACS State Healthcare, LLC Christopher R. Cowan
BECK REDDEN
515 Congress Avenue, Suite 1900
Austin, TX 78701
Constance H. Pfeiffer
BECK REDDEN
1221 McKinney Street, Suite 4500
Houston, TX 77010
Robert C. Walters
GIBSON, DUNN & CRUTCHER
2100 McKinney Avenue, Suite 1100
Dallas, TX 75201
C. Andrew Weber
KELLY HART & HALLMAN
301 Congress, Ste. 2000
Austin, TX 78701
Real Party in Interest/Respondent Counsel
(Plaintiff in trial court)
The State of Texas Office of the Attorney General
Raymond C. Winter
Reynolds B. Brissenden
Civil Medicaid Fraud Division
PO Box 12548
Austin, TX 78711-2548
ii
TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL ........................................................... ii
TABLE OF CONTENTS ......................................................................................... iii
INDEX OF AUTHORITIES......................................................................................v
STATEMENT OF THE CASE CORRECTED ....................................................... ix
ISSUES CORRECTED .............................................................................................x
BRIEF IN RESPONSE TO PETITION FOR WRIT OF MANDAMUS .................1
STATEMENT OF FACTS CORRECTED ...............................................................4
1. Texas Medicaid provides a limited benefit for orthodontia. ............................4
2. Xerox, HHSC’s Prior Authorization vendor, had responsibility to review, and
approve or deny, each request for orthodontia services. ........................................6
3. The State brings the underlying law enforcement action against Xerox,
seeking civil remedies for the unlawful acts Xerox, and only Xerox, committed. 8
4. The trial court denied Xerox’s attempt to join third parties to the State’s law
enforcement action. ..............................................................................................10
SUMMARY OF THE ARGUMENT ......................................................................12
STANDARD OF REVIEW .....................................................................................12
ARGUMENT ...........................................................................................................14
I. Because CPRC Chapter 33 does not apply in a law enforcement action
brought by the State under the Texas Medicaid Fraud Prevention Act, the trial
court did not abuse its discretion in granting the State’s motion to strike Xerox’s
third party claims, or in denying Xerox’s motion for leave to designate
responsible third parties. .......................................................................................14
A. The TMFPA is not a “cause of action based on tort” and is therefore
outside the scope of Chapter 33. .......................................................................14
1. Essential tort law concepts are missing from the TMFPA. .....................15
2. The cases cited by Xerox are distinguishable, because the statutory
causes of action were either “based on tort,” or the issue was never reached by
the court, and are inapplicable here because none involved statutory law
enforcement actions. .........................................................................................20
3. The TMFPA was modeled after federal criminal law, not on ....................21
traditional tort law. ............................................................................................21
iii
4. The TMFPA lacks a single, indivisible injury. ............................................22
5. When a statutory conflict would result, courts have held that Chapter 33
cannot be applied to a statute. ...........................................................................24
B. The False Claims Act cases cited by Xerox do not assist the Court when
interpreting the TMFPA. ......................................................................................27
C. The civil remedies the State seeks to impose against Xerox for Xerox’s
violations of the TMFPA are based solely on Xerox’s conduct and are not the
“same alleged injury” for which the State seeks redress from dental providers. .29
D. Even if the TMFPA were a “statutory tort” to which Chapter 33 would
otherwise apply, the Legislature did not intend for Chapter 33 to apply to the
State suing in its sovereign capacity.....................................................................33
E. Applying CPRC Chapter 33 to the TMFPA would violate tenets of
statutory construction and lead to absurd and conflicting results. .......................37
II. Xerox has an adequate remedy at law because all of its complaints can be
addressed on appeal. ................................................................................................42
A. Only Xerox’s conduct as the State’s vendor is at issue in the instant matter,
and Xerox has an adequate remedy on appeal. ....................................................43
1. The reasoning in Andersen is inapplicable in a statutory law enforcement
case.. ..................................................................................................................43
2. Xerox fails to cite any case law to show it lacks an adequate remedy on
appeal. ...............................................................................................................46
B. Factors weigh in favor of affirming trial court’s rulings. ...........................49
PRAYER ..................................................................................................................50
CERTIFICATE OF COMPLIANCE .......................................................................51
CERTIFICATE OF SERVICE ................................................................................51
iv
INDEX OF AUTHORITIES
Cases
Acker v. Tex. Water Comm’n, 790 S.W.2d 299 (Tex. 1990) ...................................38
Argonaut Ins. Co. v. Baker, 87 S.W.3d 526 (Tex. 2002) .......................................38
Atacosa Cnty. v. Atacosa Cnty. Appraisal Dist., 990 S.W.2d 255 (Tex. 1999) ......37
Brookhouser v. State of California, 10 Cal. App. 4th 1665, 13 Cal. Rptr. 2d 658,
665 (1992).............................................................................................................19
Challenger Gaming Solutions, Inc. v. Earp, 402 S.W.3d 290 (Tex. App.—Dallas
2013, no pet.) ..................................................................................... 24, 25, 29, 31
City of Hutchins v. Prasifka, 450 S.W.2d 829 (Tex. 1970) .....................................41
Compton v. Sesso, 2006 Tex. App. LEXIS 6322, at 18-19 (Tex. App.—Austin July
21, 2006, no pet.) ..................................................................................................45
Cont’l Cas. Ins. Co. v. Functional Restoration Assocs., 19 S.W.3d 393 (Tex. 2000)
..............................................................................................................................38
Cunningham v. Blue Cross Blue Shield of Tex., No. 2-06-363-CV, 2008 WL
467399, at 5 (Tex. App.—Fort Worth Feb. 21, 2008, pet. denied) ......................19
Dollar Sav. Bank, 86 U.S. (19 Wall.) at 239 ...........................................................34
Dugger v. Arredondo, 408 S.W.3d 825 (Tex. 2013) ...............................................21
Equitable Recovery v. Heath Ins. Brokers of Tex., 235 S.W.3d 376 (Tex. App.–
Dallas 2007, pet. dism’d)......................................................................................29
F.F.P. Operating Partners v. Duenez, 237 S.W.3d 680 (Tex. 2007) ......................21
Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864 (Tex. 1999) ....36
Goose Creek Consol. Indep. School Dist. v. Jarrar's Plumbing, Inc., 74 S.W.3d
486 (Tex. App.—Texarkana 2002, pet. denied) ...................................................30
Grogan v. Garner, 498 U.S. 279 (1991) ..................................................................22
Henning v. One West Bank, 405 S.W.3d 950 (Tex. App.–Dallas 2013, no pet.) ....19
In re Altec Indus., No. 10-12-00207-CV, 2012 WL 2469542, at 2 (Tex. App.—
Waco June 22, 2012, orig. proceeding) (mem. op.) .............................................46
In re Arthur Andersen. 121 S.W.3d 471 (Tex. App.—Houston [14th Dist.] 2003,
orig. proceeding) ...................................................................................... 43, 45, 48
In re Brokers Logistics, 320 S.W.3d 402, 404 (Tex. App.—El Paso 2010, orig.
proceeding) ...........................................................................................................46
In re Columbia Med. Ctr., 290 S.W. 3d 204 ( Tex. 2009).......................................13
In re Greyhound Lines, Inc., No. 05-13-01646-CV, 2014 WL 1022329, at 1-3
(Tex. App.—Dallas Feb. 21, 2014, orig. proceeding) (mem. op.) .......................46
In re Inv. Capital Corp. & Serv. Corp. Int’l, No. 14-09-00105-CV 2009 WL
310899, at 2 (Tex. App.—Houston [14th Dist.] Feb. 4, 2009, orig. proceeding) .48
v
In re License Plates of Tex., No. 03-13-00671-CV, 2013 WL 6466919, at 1 (Tex.
App.—Austin Nov. 27, 2013, no pet.) .......................................................... 42, 47
In re Masonite Corp., 997 S.W.2d 194 (Tex. 1999) ................................................49
In re Oncor Elec. Delivery Co., 355 S.W.3d 304 (Tex. App.–Dallas 2011, orig.
proceeding) ...........................................................................................................46
In re Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex. 2004).................. 13, 47, 49
In re State Line Fireworks, 387 S.W. 3d 27, 31-33 (Tex. App.—Texarkana 2012,
orig. proceeding) ...................................................................................................47
In re State, 355 S.W.3d 611, 612 (Tex. 2011) .........................................................49
In re Taymax Fitness, No. 04-14-00119-CV, 2014 WL 1831100, (Tex. App.—San
Antonio May 7, 2014, orig. proceeding) ..............................................................47
In re Team Rocket, 256 S.W.3d 257 (Tex. 2008) ....................................................49
In re Unitec Elevator Servs. Co., 178 S.W.3d 53, 66 (Tex. App.—Houston [1st
Dist.] 2005, orig. proceeding)...............................................................................47
In re United Servs. Auto. Ass’n, 307 S.W.3d 299 (Tex. 2010) ................................50
In re Wilkerson, No. 14-08-00376-CV, 2008 WL 2777418, at 2 (Tex. App.—
Houston [14th Dist.] June 6, 2008, orig. proceeding) ..........................................48
Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323 (Tex.
2011) .....................................................................................................................20
JCW Elecs., Inc. v. Garza, 257 S.W.3d 701 (Tex. 2008) ........................... 21, 24, 25
JLG Trucking v. Garza, 2015 Tex. LEXIS 346, at 16 .............................................46
Jones v. Ray, 886 S.W.2d 817 (Tex. App.—Houston [1st Dist.] 1994, orig.
proceeding) ...........................................................................................................46
Lexington Ins. Co. v. Strayhorn, 209 S.W.3d 83 (Tex. 2006) .................................25
Liberty Mut. Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482 (Tex.1998) .38
Malouf v. State ex. rel. Ellis, 461 S.W. 3d 641 (Tex. App.—Austin 2015, pet.
requested)....................................................................................................... 34, 38
Moore v. Collins, 897 S.W.2d 496 (Tex. App.—Houston [1st Dist.] 1995, no writ)
..............................................................................................................................15
Parex v. ERG Resources, 427 S.W.3d 407 (Tex. App.—Houston [14th] 2014, pet.
filed)......................................................................................................................45
Pemex Exploracion y Produccion v. BASF Corp., 2011 WL 9523407, at 13 (S.D.
Tex. Oct. 20, 2011) ...............................................................................................21
Pub. Util. Comm’n of Tex. v. Cofer, 754 S.W.2d 121 (Tex. 1988) .................. 20, 32
R.R. Comm'n v. United States, 290 S.W.2d 699 (Tex. Civ. App.—Austin 1956),
aff'd, 159 Tex. 197, 317 S.W.2d 927 (Tex. 1958) ......................................... 33, 34
Republicbank Dallas, N.A. v. Interkal, Inc., 691 S.W.2d 605 (Tex. 1985) .............35
Schlumberger Tech. v. Swanson, 959 S.W.2d 171 (Tex. 1997) ..............................20
Simmons v. Arnim, 220 S.W. 66 (Tex. 1920) ..........................................................35
State v. Crawford, 771 S.W.2d 624 (Tex. App.—Dallas 1989, writ. denied) .........42
vi
State v. Durham, 860 S.W.2d 63 (Tex. 1993) .................................................. 32, 41
Stewart Title Guar. Co., v. Sterling, 822 S.W.2d 1 (Tex. 1991) .............................37
Sw. Bank v. Info. Support Concepts, Inc., 149 S.W.3d 104 (Tex. 2004).................24
Tex. Hum. Res. Code § 36.052(a)(1) .......................................................................23
Thomas v. State, 226 S.W.3d 697 (Tex. App.–Corpus Christi 2007, pet. dism’d) .32
U.S. v. Bollinger Shipyards, Inc., 775 F.3d 255 (5th Cir. 2014) .............................42
United States ex. rel. Hagwood v. Sonoma Cnty. Water Agency, 929 F.2d 1416 (9th
Cir. 1991) ..............................................................................................................16
United States ex. rel. Schwedt v. Planning Research Corp., 59 F.3d 196 (D.C. Cir.
1995) .....................................................................................................................16
United States v. Sci. Applications Int’l Corp., 626 F.3d 1257 (D.C. Cir. 2010) .....28
United States v. Southland Mgmt. Corp., 326 F.3d 669 (5th Cir. 2003) .................42
United States v. United Mine Workers of Am., 330 U.S. 258 (1947) ......................33
Univ. of Tex. Sw. Med. Ctr. at Dallas v. Loutzenhiser, 140 S.W.3d 351 (Tex. 2004)
..............................................................................................................................39
Varljen v. Cleveland Gear, 250 F.3d 426 (6th Cir. 2001) .......................................16
Villareal v. Wells Fargo Brokerage Servs., 315 S.W.3d 109 (Tex. App.—Houston
[1st Dist. 2010], no pet.) .......................................................................................21
Vt. Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765 (2000) .33
Walker v. Packer, 827 S.W.2d 833 (Tex. 1992) ................................... 12, 13, 42, 49
Waller v. Sanchez, 618 S.W.2d 407 (Tex. App.—Corpus Christi 1981, no writ) ...41
Wheaton Van Lines, Inc. v. Mason, 925 S.W.2d 722 (Tex. App.—Fort Worth 1996,
writ denied) ...........................................................................................................19
Statutes
25 Tex. Admin. Code § 33.71 ....................................................................................5
31 U.S.C. § 3729(a) .................................................................................................28
31 U.S.C. § 3729(a)(1) .............................................................................................16
31 U.S.C. § 3729(a)(1)(A) .......................................................................................27
31 U.S.C. § 3729(a)(1)(B) .......................................................................................27
31 U.S.C. § 3729(a)(1)(E)........................................................................................27
42 U.S.C. § 1320a-7b, ..............................................................................................22
42 U.S.C. § 1396 ........................................................................................................4
CPRC § 33.001 ................................................................................................. 29, 40
CPRC § 33.002(a)(1) ...............................................................................................14
CPRC § 33.002(a)(2) ...............................................................................................14
CPRC § 33.003(a) ....................................................................................................39
CPRC § 33.004 ........................................................................................................39
Tex. Bus. & Com. Code § 27.01 ..............................................................................19
Tex. Gov’t Code § 311.021(2) .................................................................................38
vii
Tex. Gov’t Code § 311.021(5) .................................................................................40
Tex. Gov’t Code § 531.0055(b)(1) ............................................................................4
Tex. Gov’t Code ch. 311 ..........................................................................................39
Tex. Hum Res. Code § 36.002 ...................................................................................8
Tex. Hum Res. Code § 36.002(2) ............................................................................18
Tex. Hum Res. Code § 36.002(9) ............................................................................27
Tex. Hum Res. Code § 36.002(10)(c) ......................................................................27
Tex. Hum Res. Code § 36.012(a)(1) ........................................................................28
Tex. Hum. Res. Code § 36.052(a) ...........................................................................17
Tex. Hum. Res. Code § 36.052(a)(3) .......................................................................19
Tex. Hum. Res. Code § 36.115 ................................................................................29
Tex. Hum. Res. Code § 36.115(a)(2) .......................................................................29
Tex. Hum. Res. Code §§ 36.002(1) .........................................................................18
Tex. Hum. Res. Code §§ 36.052(a)(1)-(3) ...............................................................10
Tex. Hum. Res. Code Ann. § 11.002(b) ..................................................................36
Tex. Hum. Res. Code Ann. § 36.052 .......................................................................16
Tex. Hum. Res. Code Ann. § 36.131 (1995) ...........................................................22
Other Sources
2 William Blackstone, Commentaries .....................................................................34
3 N. Singer, Sutherland on Statutory Construction § 62:1, 377-78 (7th ed. 2008).34
82 C.S.J. Statutes § 389, 483-84 (2009) ..................................................................34
86 C.J.S. Torts § 2 ....................................................................................................15
Gregory J. Lensing, Proportionate Responsibility and Contribution Before and
After the Tort Reform of 2003, 35 Tex. Tech L. Rev. 1125, 1131 .......................15
Gus Hodges, Contribution and Indemnity among Tortfeasors, 26 Tex. L. Rev. 150
..............................................................................................................................30
Gus Hodges, Contribution and Indemnity among Tortfeasors, 26 Tex. L. Rev. 150,
..............................................................................................................................30
Justin Roberts & Randell Roberts, Can Immune Parties Really be Responsible?:
An Analysis of the Current Interpretation of the Responsible Third Party Statute
and Its Vulnerability to Constitutional Challenge, 43 St. Mary’s L.J. 559 (2012)
..............................................................................................................................34
viii
STATEMENT OF THE CASE CORRECTED
Nature of the Case: This is a mandamus action in which the Xerox
parties (“Xerox”) seek review of two orders issued
by the trial court. The underlying suit is a law
enforcement action brought on behalf of the State
of Texas (“the State”) by the Attorney General of
Texas pursuant to the Texas Medicaid Fraud
Prevention Act (“TMFPA”), a remedial public
welfare statute. The State seeks to recover civil
remedies against Xerox for the unlawful acts
Xerox, and only Xerox, committed against the
Texas Medicaid program. Xerox has attempted to
join dental providers as responsible third parties to
the State’s suit.
Trial Court: 345th Judicial District Court of Travis County, The
Hon. Stephen Yelenosky, Presiding.
Trial Court Disposition: The trial court has ruled repeatedly in this, and in
similar litigation, that Chapter 33 of the Civil
Practice & Remedies Code does not apply to the
State’s actions under the TMFPA.
The trial court granted the State’s motion to strike
Xerox’s third party claims under Rule 38 and
denied Xerox’s motion for leave to designate
responsible third parties.1 The trial court then
denied Xerox’s request to appeal the two rulings.
Xerox then filed this original proceeding.
1
In addition to striking Xerox’s third party claims against multiple dental providers and
denying Xerox’s motion for leave to designate responsible third parties, the trial court also
denied two attempts by Xerox to consolidate the underlying lawsuit in the instant proceeding
with other suits. Xerox, however, has failed to seek appellate relief from the trial court’s two
orders denying Xerox’s two motions to consolidate.
ix
ISSUES CORRECTED2
1. Because Chapter 33 of the Civil Practice & Remedies Code does not apply
in an action brought by the State under the Texas Medicaid Fraud
Prevention Act, the trial court did not abuse its discretion in granting the
State’s motion to strike Xerox’s third party claims, or in denying Xerox’s
motion for leave to designate responsible third parties.
2. Xerox has an adequate remedy at law because all of its complaints can be
addressed on appeal. Therefore, mandamus will not lie.
STATEMENT REGARDING ORAL ARGUMENT
The State of Texas requests oral argument.
2
See Tex. R. App. P. 38.2(a)(1)(B).
x
No. 03-15-00401-CV
IN THE COURT OF APPEALS
FOR THE THIRD DISTRICT
AUSTIN, TEXAS
IN RE XEROX CORPORATION AND XEROX STATE HEALTHCARE,
LLC F/K/A ACS STATE HEALTHCARE, LLC,
Relators
On Petition for Writ of Mandamus
Original Proceeding from the 53rd Judicial District Court
Travis County, Texas, Cause No. D-1-GV-14-000581
The Honorable Stephen Yelenosky, Presiding
BRIEF IN RESPONSE TO PETITION FOR WRIT OF MANDAMUS
TO THE HONORABLE THIRD COURT OF APPEALS:
The State of Texas (“State”), plaintiff in the trial court proceeding below and
the real party in interest in this action, respectfully submits this Response to the
Petition for Writ of Mandamus (“Petition”) filed by Xerox Corporation and Xerox
State Healthcare, LLC f/k/a ACS State Healthcare, LLC (collectively “Xerox”).
Xerox cannot meet either requirement for mandamus relief to be granted. In the
first place, Chapter 33 of the Civil Practice & Remedies Code (“CPRC”) does not
apply in a law enforcement action brought by the State under the Texas Medicaid
Fraud Prevention Act (“TMFPA”). Therefore, the trial court did not abuse its
discretion in granting the State’s motion to strike Xerox’s third party claims or in
denying Xerox’s motion for leave to designate responsible third parties into the
State’s law enforcement action against Xerox.
The underlying suit is a statutory law enforcement action brought by the
Attorney General of Texas against Xerox under the TMFPA. See generally
Plaintiff’s Original Petition (“State’s Petition”), at MR.1-23. The State’s claims
against Xerox are not “based on tort.” Instead, the TMFPA is a remedial public
welfare statute, designed by the Legislature to address the specific scourge of
unlawful acts against the Texas Medicaid program. See generally TMFPA, Tex.
Hum. Res. Code ch. 36. Although the name of the statute includes the word
“Fraud,” the causes of action created in the TMFPA are not a codification of the
doctrine of common law fraud or any other tort-based cause of action.
The State seeks to hold Xerox – and only Xerox – liable for Xerox’s false
statements and material misrepresentations – both affirmatively and by omission –
to the Texas Medicaid program. State’s Pet., at MR.1-23. The State does not seek
to hold Xerox responsible for the conduct of any other parties. Id. Although the
State has brought law enforcement actions against a few dental providers for their
conduct, the State is not seeking, as erroneously claimed by Xerox, “the same
damages” against dental providers that the State seeks against Xerox. See Xerox’s
Pet. 1, 8.
2
The State alleges that during the time at issue, Xerox made
misrepresentations to State officials, affirmatively and by omission, regarding its
actions administering the Texas Medicaid orthodontia Prior Authorization (“PA”)
function. Specifically, the State contends that Xerox (1) misrepresented that Xerox
staff reviewed diagnostic materials (e.g., x-rays, color photographs, cephalometric
tracings) submitted by providers along with PA requests to make clinical
determinations about whether the PA requests met Texas Medicaid standards for
medical necessity; (2) failed to disclose that the majority of its personnel working
on orthodontic PA requests had no dental education and only minimal training in
their job functions; and (3) misrepresented to the State that orthodontia PA
requests were being approved or denied by Xerox in accordance with Texas
Medicaid policy.
Contrary to Xerox’s erroneous assertion, the State does not seek “damages”
from Xerox under the TMFPA. See Xerox Pet. at, e.g., 1, 2, 5, 7, 8. Rather, the
State seeks to recover civil remedies from Xerox, including the amounts paid by
Texas Medicaid “directly or indirectly” as a result of Xerox’s unlawful acts, civil
penalties, costs, and attorney’s fees. Tex. Hum. Res. Code § 36.052.
Finally, Xerox has an adequate remedy at law because all of its complaints
can be addressed by appeal. Therefore, Xerox’s Petition should be denied.
3
STATEMENT OF FACTS CORRECTED
Xerox’s statement of facts contains argument, omits material facts, and
misstates facts. The State thus submits this corrected statement of facts. Tex. R.
App. P. 52.4(b).
1. Texas Medicaid provides a limited benefit for orthodontia.
The United States Congress enacted the Medicaid program in 1965 as a
cooperative undertaking between the federal and state governments to help provide
medical care to lower income individuals. Medicaid is funded jointly by the United
States and each of the fifty states, as mandated by federal law. 42 U.S.C. § 1396. In
Texas, the single state agency responsible for the administration of Medicaid is the
Health and Human Services Commission (“HHSC”). Tex. Gov’t Code §
531.0055(b)(1) (“[HHSC] shall “supervise the administration and operation of the
Medicaid program.”). 3
Texas Medicaid provides coverage for dental services, including, on a very
limited basis, orthodontic services. Only Medicaid-eligible children between the
ages of 12 and 21 who are diagnosed with severe handicapping malocclusion or
other related conditions described in the Texas Medicaid Provider Procedures
3
Currently more than 4.5 million Texans are enrolled in Medicaid. Texas, Monthly
Medicaid and CHIP Enrollment Data, Medicaid.gov, http://www.medicaid.gov/Medicaid-CHIP-
Program-Information/By-State/texas.html. In 2013, Medicaid comprised about 26.2 percent of
the Texas state budget, amounting to approximately $25.6 billion dollars total for state and
federal expenditures. “Pink Book,” Tex. Medicaid & CHIP in Perspective (10th ed.) 1-1,
http://www.hhsc.state.tx.us/medicaid/about/PB/PinkBook.pdf.
4
Manual (“TMPPM”) qualify to receive this limited orthodontic benefit. See 25
Tex. Admin. Code § 33.71.
Since 2003, the Texas Medicaid orthodontia benefit policy has covered
orthodontic services under three limited scenarios: (i) for children between the ages
of 12 and 21 who have a severe handicapping malocclusion, which is defined by a
Handicapping Labio-lingual Deviation (“HLD”) score of 26 points or greater; (ii)
children up to the age of 20 with cleft palate; or (iii) other medically necessary
circumstances such as a head injury involving severe traumatic deviation. TMPPM
(2009), Vol. 2, § 19.19, copy attached at Appendix A. The Texas Medicaid
program does not pay for cosmetic orthodontics. Id.
A treating provider (dentist or orthodontist) had to submit to Texas Medicaid
a prior authorization (“PA”) request and receive approval before providing
orthodontia services to a Medicaid patient. See 25 Tex. Admin. Code § 33.71.
Specifically, HHSC required providers to include with each PA request the
following documentation and diagnostic records: an orthodontic treatment plan;
cephalometric tracings; a completed HLD score sheet; facial photographs; and a
full series of radiographs or a panoramic radiograph. TMPPM at § 19.19.2, copy at
App. A.
5
2. Xerox, HHSC’s Prior Authorization vendor, had responsibility to
review, and approve or deny, each request for orthodontia services.
The Prior Authorization (“PA”) review process required HHSC’s vendor to
determine whether each request for orthodontia service met the criteria established
by Texas Medicaid. Specifically, the PA review was “a mechanism to determine
the medical necessity of selected non-emergency, Medicaid-covered, and medical
services prior to service delivery” and was meant to “serve as a utilization
management measure allowing payment for only those services that are medically
necessary, appropriate, and cost-effective, and reducing the misuse of specified
services.” State’s Pet. 5, at MR.5. A vendor was required to:
• Receive, correctly disposition (i.e., approve, deny, modify, or
determine incomplete) prior authorization requests for services.
• Ensure that non-covered services are not prior authorized.
• Conduct quality assurance reviews to ensure appropriateness of
Medicaid .PA analyst decisions.
• Ensure PA staff use well-defined processes and procedures for
analysis and research for PA approvals.
• Provide sufficient and adequate professional medical staff for staffing
and managing the PA function, including medically knowledgeable
PA analysts for processing requests and availability of licensed
medical professionals to provide consultative services regarding all
Medicaid ... covered service types.
• Implement a quality assurance process and establish procedures to
periodically sample and review dispositioned [sic] PA requests to
determine if PA policy and procedures are being followed.
State’s Pet. 5-6, at MR.5-6.
6
Xerox submitted a proposal to HHSC to become the Texas Medicaid vendor.
Xerox represented to Texas Medicaid that its PA review process would do the
following: (1) ensure the implementation of HHSC-approved dental criteria and
policy, prevent medically unnecessary services, and identify over-utilization of
services; (2) employ qualified PA staff who would review each request and
determine both whether the orthodontic PA request complied with Medicaid policy
and if the services were medically necessary; and (3) qualified clinical personnel
would use their medical expertise and HHSC-approved policy to evaluate medical
necessity and cost-effectiveness of requested services. Xerox also promised that it
would provide ongoing quality reviews of PA activities, including reviews of
accuracy of the PA determinations and adherence to documented procedures.
State’s Pet. 6, at MR.6.
Based on Xerox’s representations, Texas Medicaid employed Xerox as the
Texas Medicaid PA request review vendor, starting in January 2004. Medical
necessity for the requested treatment could be verified only by examination and
verification of the clinical documentation by a licensed dental professional. HHSC
expected and required the PA review process implemented by Xerox to include a
substantive review of the diagnostic materials providers submitted to verify the
patient actually had a severe handicapping maloclussion and the conditions stated
7
by the providers on the HLD score sheet and to verify that the providers’ proposed
treatment plan met all program requirements.
Instead, when Xerox received PA requests from providers for orthodontia
services, Xerox neither unboxed the diagnostic materials nor had qualified
personnel verifying whether the condition of the children’s mouths actually
qualified as a severe handicapping malocclusion. Xerox merely had clerical staff
review the HLD score sheet to check and see if the total score on the score sheet
was 26 or greater. From 2004 to 2012, Xerox approved over 500,000 PA requests
for orthodontia services. During this same time period, Xerox repeatedly
represented to Texas Medicaid and gave reassurances that qualified personnel were
indeed conducting substantive reviews of the PA requests.
3. The State brings the underlying law enforcement action against
Xerox, seeking civil remedies for the unlawful acts Xerox, and only
Xerox, committed.
The State brought the underlying statutory law enforcement action against
Xerox under the TMFPA for certain unlawful acts, including misrepresentations
Xerox made to HHSC. State’s Pet., at MR.1- 23. The State seeks civil remedies
under the TMFPA for these unlawful acts. State’s Pet. 3; Tex. Hum Res. Code §
36.002.
8
The State alleges that Xerox misrepresented facts and concealed material
facts, affirmatively and by omission, regarding Xerox’s discharge of its obligations
to HHSC. Specifically, the State alleges:
• Xerox represented to Texas Medicaid officials that its PA
review system ensured proper pre-determinations of medical
necessity and enforcement of Medicaid policy. Contrary to
those representations, Xerox knowingly failed to adequately
review the orthodontic PA requests and documentation
submitted by providers to obtain prior authorization for
orthodontic treatment.
• Unqualified Xerox employees routinely approved orthodontic
PA requests, without proper review. Vast numbers of these
orthodontic PA requests were for children who did not meet the
strict Medicaid criteria to qualify for orthodontic benefits from
Texas Medicaid.
• Xerox’s dental director failed to properly review PA requests,
and Xerox misrepresented to HHSC the director’s failure to
follow mandated procedures and policy.
State’s Pet. 3-4. The State further alleges that Xerox’s conduct violated the
TMFPA.4 Xerox's unlawful acts resulted in a breach of safeguards intended to
4
A person, or entity, commits an unlawful act under the TMFPA if a person:
• Knowingly makes or causes to be made a false statement or misrepresentation of
a material fact to permit a person to receive a benefit or payment under the
Medicaid program that is not authorized or that is greater than the benefit or
payment that is authorized.
• Knowingly conceals or fails to disclose information that permits a person to
receive a benefit or payment under the Medicaid program that is not authorized or
that is greater than the benefit or payment that is authorized.
• Knowingly makes, causes to be made, induces, or seeks to induce the making of a
false statement or misrepresentation of material fact concerning information
required to be provided by a federal or state law, rule, regulation, or provider
agreement pertaining to the Medicaid program.
9
protect taxpayer dollars, maintain the integrity of Medicaid policies, and ensure the
appropriate delivery of services to Medicaid clients. Moreover, because of its
misrepresentations, Xerox received tens of millions of dollars for services Xerox
did not actually perform. State’s Pet. 3.
The TMFPA provides statutory remedies to redress the conduct of a
defendant. Tex. Hum. Res. Code § 36.052. In the underlying suit, the State seeks to
recover from Xerox, and only Xerox: (l) the amount of any payments or the value
of any monetary or in-kind benefits provided under the Medicaid program, directly
or indirectly, as a result of Xerox’s unlawful acts; (2) pre-judgment interest on the
amount of the payments or the value of such payments; (3) two times the amount
of the payments or the value of such payments; (4) civil penalties in an amount not
less than $5,500 or more than $11,000 for each unlawful act committed by Xerox;
and (5) costs, attorney’s fees, and expenses. See State’s Pet. 4; Tex. Hum. Res.
Code §§ 36.052(a)(1)-(3).
4. The trial court denied Xerox’s attempt to join third parties to the
State’s law enforcement action.
Xerox responded to the State’s allegations, by, among other things, casting
blame on dental providers who had submitted the PA requests that Xerox
approved. Xerox’s First Am. Original Answer and Original Third-Party Pet. 2-9, at
MR.67-74. In response, the State filed its Motion to Strike. MR.77-97. The trial
Tex. Hum. Res. Code Ann. §§ 36.002(l), (2), (4)(B) (eff. Sept. 1, 2005).
10
court granted the State’s motion to strike Xerox’s third-party petition. See Order,
dated Mar. 31, 2015, at MR.629-30; see also trial court letter, dated Feb. 10, 2015,
at MR.232-34 (explaining reasoning for subsequent decision).5
Xerox then sought leave to designate responsible third parties, under Chapter
33. See Xerox’s Mot. for Leave to Designate Responsible Third Parties, at
MR.235-606. The State filed an Objection to Xerox’s motion. MR.607-28. The
trial court denied Xerox’s motion. See Order Denying the Xerox Parties’ Mot. for
Leave to Designate Responsible Third Parties, dated Apr. 15, 2015, at MR.631.
See also court’s letter, dated Sept. 26, 2014 (“The State is . . . entitled to pursue a
Medicaid Fraud claim against a defendant to the exclusion of all other parties . .
.”). MR.210-11. After the trial court denied Xerox’s request to take an
interlocutory appeal, Xerox initiated this mandamus proceeding. 6
5
The court, in explaining its decision to strike Xerox’s third-party petition, wrote:
There is no authority for treating an enforcement action by the State as a statutory
tort, and the civil remedy in the TMFPA is not a damage provision. Each
wrongful actor is liable for a civil remedy and penalty in multiples of the State's
actual loss that is undiminished by the civil remedy and penalty assessed on or
paid by another actor. What Xerox characterizes as a “novel theory” is the plain
meaning of the statute. There is no comparative fault, joint-and-several liability,
contribution, single-satisfaction, or settlement credit in a TMFPA action. If there
is any right to contribution, it must be pursued in a separate action between
alleged wrongdoers.
Decision Letter, p. 1, at MR.232.
6
Xerox erroneously asserts that a separate law enforcement action brought by the State
against several dental providers is “inextricably intertwined” with the instant suit; however, the
State’s allegations against the dental providers are factually and legally distinct from the State’s
allegations against Xerox in the instant underlying suit. See Xerox’s Pet. 8; State v. Nazari,
Cause No. D-1-GN-14-005380 (53rd Dist. Ct., Travis County, Tex.). In the State’s law
11
SUMMARY OF THE ARGUMENT
The Court should deny Xerox’s petition for writ of mandamus because the
trial court correctly ruled that the State’s law enforcement action, brought under
the TMFPA, is not based on tort, the State does not seek “damages” capable of
apportionment, and, thus, CPRC Chapter 33 does not apply in the underlying case.
The trial court, therefore, did not abuse its discretion in striking Xerox’s third party
claims or in denying Xerox’s motion for leave to designate responsible third
parties. Also, Xerox has an adequate remedy at law on appeal.
STANDARD OF REVIEW
“Mandamus is an extraordinary remedy, available only when a trial court
clearly abuses its discretion and when there is no adequate remedy on appeal.”
Walker v. Packer, 827 S.W.2d 833, 839-40, n.7 (Tex. 1992). A clear abuse of
discretion is only found when the dispute had but one reasonable answer and the
enforcement actions against several dental providers, the liability rests only upon each dental
provider’s acts and omissions, and whether the dental providers submitted false statements to
Texas Medicaid. In contrast, the only conduct at issue in this matter, and that will be considered
by the trier of fact, is Xerox’s, and only Xerox’s acts and omissions.
In the Nazari matter, the dental provider defendants sought to name Xerox as a
responsible third party. The trial court denied the dental providers’ attempt to join Xerox as a
third party. The dental providers now seek interlocutory appellate relief from this Court. See No.
03-15-00252-CV, Nazari v. State of Texas. In its Appellee’s Brief in 03-15-00252-CV, Xerox
argues that this Court should decide the merits of the Nazari appeal alongside the merits of this
original proceeding. On that point, the State and Xerox agree. The Court should deny Nazari’s
interlocutory appeal at the same time it declines to issue this mandamus. See State’s appellee’s
brief in No. 03-15-00252-CV (discussing reasons Nazari’s interlocutory appeal should be
denied).
12
court chose another. See id at 839-40 (“A trial court clearly abuses its discretion if
it reaches a decision so arbitrary and unreasonable as to amount to a clear and
prejudicial error of law.”) (internal quotation omitted).
Mandamus should only be granted if the relator has no other adequate
remedy at law. In re Columbia Med. Ctr., 290 S.W. 3d 204, 207 (Tex. 2009)
(“Generally, mandamus will issue only to correct a clear abuse of discretion or the
violation of a duty imposed by law, . . . when an adequate remedy by appeal does
not exist. . . . . Mandamus should not issue to correct grievances that may be
addressed by other remedies.”) (citations omitted); see also Walker v. Packer, 827
S.W.2d at 841 (“The requirement that mandamus issue only where there is no
adequate remedy by appeal is sound, and we reaffirm it today.”).
Courts look to the particular circumstances to determine that an adequate
appellate remedy is available. In re Prudential Ins. Co. of Am., 148 S.W.3d 124,
137 (Tex. 2004) ("Whether an appellate remedy is ‘adequate’ so as to preclude
mandamus relief depends heavily on the circumstances presented and is better
guided by general principles than by simple rules.”). And such “considerations
implicate both public and private interests.” Id. at 136.
13
ARGUMENT
I. Because CPRC Chapter 33 does not apply in a law enforcement action
brought by the State under the Texas Medicaid Fraud Prevention Act, the
trial court did not abuse its discretion in granting the State’s motion to
strike Xerox’s third party claims, or in denying Xerox’s motion for leave to
designate responsible third parties.
A. The TMFPA is not a “cause of action based on tort” and is
therefore outside the scope of Chapter 33.
CPRC Chapter 33 applies only (1) to an action “based on tort,” in which a
trier of fact can apportion, among a defendant and others, responsibility for a harm,
or (2) to an action brought under the DTPA in which “a defendant, settling person,
or responsible third party is found responsible for a percentage of the harm.”
CPRC §§ 33.002(a)(1), (2).7
Xerox argues that because the TMFPA has the word “fraud” in its title, and
because fraud is a tort, the TMFPA is a statutory tort. See Xerox’s Pet. 13. In
support of this argument, Xerox points to cases that have applied Chapter 33 to
statutory causes of action, and to some federal False Claims Act (“FCA”) cases in
which the FCA is described as a tort or sounding in tort. Id. at 14. For the
following reasons, and as the trial court correctly determined, the TMFPA is not a
statutory tort. First, the TMFPA lacks the requisite elements of tort law, such as
7
The fact that the Legislature specifically included the DTPA within the scope of Chapter
33’s reach illustrates that it did not intend to include the TMFPA or other public welfare statutes.
If the Legislature had wanted Chapter 33 to apply to the TMFPA, it would have said so – clearly
and unambiguously.
14
reliance, causation, and damages. Second, the TMFPA is not a codification of the
common law tort of fraud, and there is no “single indivisible injury” to apportion
among joint tortfeasors, as contemplated by Chapter 33.8 And third, the TMFPA is
fundamentally different from the False Claims Act, and comparisons to the False
Claims Act are not instructive in this instance.
1. Essential tort law concepts are missing from the TMFPA.
“The basic elements necessary to state any tort claim are duty; breach of
duty; causation between the breach of the duty and the injury; and actual damage.”
86 C.J.S. Torts § 2. A civil wrong or breach of duty imposed by law “is called a
tort only if the harm that has resulted is capable of being compensated in an action
at law for damages.” Moore v. Collins, 897 S.W.2d 496, 501 (Tex. App.—Houston
[1st Dist.] 1995, no writ) (noting that a tort is a breach of some duty, other than a
contractual or quasi-contractual duty, which gives rise to an action for damages).
To establish liability under the TMFPA, the State has no obligation to show an
independent duty on the part of Xerox. However, even assuming that the TMFPA
imposes a legal duty and Xerox has breached that duty, other essential elements of
8
See Gregory J. Lensing, Proportionate Responsibility and Contribution Before and After
the Tort Reform of 2003, 35 Tex. Tech L. Rev. 1125, 1131 (“In sum, the proportionate-
responsibility principles set forth in Chapter 33 will govern virtually any Texas tort case
(possibly excluding statutory causes of action) in which more than one party (including the
plaintiff) is alleged to have caused or contributed to cause a single, indivisible injury through the
violation of any legal duty ‘based on tort.’”) (emphasis added).
15
a tort-based cause of action – e.g., causation, injury, and damages – are not present
in the TMFPA and are not required for the State to prevail on its TMFPA claims.
For a defendant to be liable under the TMFPA, the State must prove that the
defendant committed an unlawful act as described in section 36.002. Tex. Hum.
Res. Code § 36.002. Section 36.002 defines proscribed conduct for which the State
may recover civil remedies, without regard to whether or not the proscribed
conduct caused the State any harm. Put another way, the defendant’s liability to the
State is established once a violation of the TMFPA is established and the State
need not show actual monetary loss in order to recover civil remedies. 9 Tex. Hum.
Res. Code § 36.052.
Additionally, for a defendant to be held liable for civil remedies, the
TMFPA does not require the defendant to have actually received a benefit or a
payment from the State. A benefit or payment may have gone to a third party, and
the defendant may still be liable to the State for that benefit or payment. Tex. Hum.
Res. Code Ann. § 36.052(a)(1) (authorizing the State to recover “the amount of
9
See § 36.052: “CIVIL REMEDIES. (a) …[A] person who commits an unlawful act is
liable to the state . . .” Tex. Hum. Res. Code Ann. § 36.052 (2011) (emphasis added). See also
31 U.S.C. § 3729(a)(1) (a person who presents a false claim “is liable to the United States
Government . . .”); Varljen v. Cleveland Gear, 250 F.3d 426, 429-30 (6th Cir. 2001) (“Recovery
under the FCA is not dependent upon the government’s sustaining monetary damages.”); United
States ex. rel. Schwedt v. Planning Research Corp., 59 F.3d 196, 199 (D.C. Cir. 1995)
(“regardless whether the submission of the claim actually causes the government any damages . .
. its very submission is a basis for liability”); United States ex. rel. Hagwood v. Sonoma Cnty.
Water Agency, 929 F.2d 1416, 1421 (9th Cir. 1991) (holding that government need not show
damages in order to recover civil penalties under FCA).
16
any payment or the value of any monetary or in-kind benefit provided under the
Medicaid program, directly or indirectly, as a result of the unlawful act, including
any payment made to a third party”) (emphasis added). The State is also entitled to
recover a civil penalty for each unlawful act. Tex. Hum. Res. Code §
36.0052(a)(3). See generally Tex. Hum. Res. Code § 36.052(a) (containing scope
of civil remedies to which the State is entitled under TMFPA).
Importantly, the TMFPA provides for recovery of the amount paid by Texas
Medicaid, not the amount paid in error or in overpayment, and not the amount paid
less any benefit that may have been received by the Medicaid program. Tex. Hum.
Res. Code § 36.052(a)(1). The amount the State may recover as civil remedies is
therefore measured by the amount the state paid, without reference to whether the
State sustained any actual loss or “damage” from the unlawful conduct. The
TMFPA unambiguously includes all of the payment made by the State, even if, but
for the unlawful conduct, the State would have made the same payment at a
different time, or made some payment in a lesser amount. Under the TMFPA,
therefore, any remedies owed to the State are a measure of the magnitude of the
defendant’s unlawful conduct, and not a measure of any tort-based concept of
damages. See Tex. Hum. Res. Code § 36.052(a)(1).
Likewise, in a TMFPA action the State does not have to show causation – a
necessary element in tort-based causes of action. As previously described, a
17
defendant “is liable” to the State for civil remedies once the State has proved the
unlawful act. See Tex. Hum. Res. Code § 36.052(a). Yet Xerox argues that the “as
a result of” language in the civil remedies portion of the statute, section
36.052(a)(1), is the equivalent of a tort-based causation standard and is a
prerequisite to the State establishing liability. It is not.
First, in the liability section of the TMFPA, there is no causation
requirement. A person is liable if he knowingly makes a false statement, regardless
of whether that misrepresentation actually caused injury or harm to the State. See,
e.g., Tex. Hum. Res. Code §§ 36.002(1) (affirmative false statements), 36.002(4)
(false statements regarding information required by law). 10
Second, by using, in the remedies section, the phrases “directly or
indirectly” and “as a result of” the unlawful act, the Legislature defined the scope
of the benefits or payments the State may recover from an already-liable
defendant. Should the State fail to show the payment or benefit was made “as a
result of” the unlawful act, the State may not recover those amounts, but the
defendant is nonetheless liable for the unlawful act, and for a civil penalty for the
10
The words “to permit” found in 36.002(2) do not require the State to show that a
defendant’s unlawful conduct caused harm; rather, “to permit” refers to the fact that the
defendant’s unlawful conduct may “open the door” to allow a person to obtain a benefit. See
Tex. Hum. Res. Code § 36.002(2). The State has no obligation to demonstrate, for liability
purposes, that anyone actually received an unauthorized benefit. See id.
18
unlawful act. See Tex. Hum. Res. Code § 36.052(a)(3) (prescribing minimum
penalty of $5,500 per unlawful act).11
In contrast, with a tort cause of action there can be no liability without
causation of damages. See Cunningham v. Blue Cross Blue Shield of Tex., No. 2-
06-363-CV, 2008 WL 467399, at *5 (Tex. App.—Fort Worth Feb. 21, 2008, pet.
denied) (citing Wheaton Van Lines, Inc. v. Mason, 925 S.W.2d 722, 728 (Tex.
App.—Fort Worth 1996, writ denied) (“In any cause of action, whether grounded
in tort, contract, or a hybrid of the two, causation is the essential element necessary
to attribute fault for one's injuries to another.”)); Brookhouser v. State of
California, 10 Cal. App. 4th 1665, 1677, 13 Cal. Rptr. 2d 658, 665 (1992) (“It is
axiomatic that a defendant cannot be held liable in tort for an injury he or she did
not cause.”).
The TMFPA also lacks any element of reliance. Fraud causes of action, even
some statutory frauds, include an element of reliance. Indeed, the elements of
statutory fraud are essentially the same as those of common-law fraud, except that
the plaintiff need not prove the defendant’s knowledge or recklessness. See
Henning v. One West Bank, 405 S.W.3d 950, 963 (Tex. App.–Dallas 2013, no pet.)
(comparing elements of statutory fraud under Tex. Bus. & Com. Code § 27.01 to
11
The civil penalty provision contains no “as a result” language. A person who commits an
unlawful act is subject to a mandatory civil penalty regardless whether there was any payment by
the Medicaid program as a result of the unlawful act. Tex. Hum. Res. Code § 36.052(a)(3).
19
elements of common law fraud). In a fraud case, including a statutory fraud case,
the defendant can show the plaintiff’s knowledge of the fraudulent conduct to
negate the element of reliance.12 But the State’s knowledge is not relevant in this
case because reliance is not an element of a TMFPA claim. 13 The absence of a
reliance element in the TMFPA is further indication that it is not a “statutory
fraud” to which Chapter 33 applies.
2. The cases cited by Xerox are distinguishable, because the
statutory causes of action were either “based on tort,” or the issue
was never reached by the court, and are inapplicable here because
none involved statutory law enforcement actions.
As a preliminary matter, none of the cases that Xerox cites in support of
applying Chapter 33 to the TMFPA involve statutory law enforcement actions
brought by the State in its sovereign capacity to enforce a public welfare statute.
Nor could the State identify such a case. 14 This is not surprising because, as will be
discussed below, the State in a TMFPA enforcement action is not a “person” to
whom Chapter 33 applies. In the cases Xerox cites, the courts either took pains to
analyze the particular statute at issue and determine, on a statute-by-statute basis,
12
Schlumberger Tech. v. Swanson, 959 S.W.2d 171, 181 (Tex. 1997); see also Italian
Cowboy Partners v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 336-37 (Tex. 2011).
13
See Pub. Util. Comm’n of Tex. v. Cofer, 754 S.W.2d 121, 124 (Tex. 1988) (orig.
proceeding) (holding that a court may not write special exceptions into a statute to make the
statute inapplicable under certain circumstance not mentioned in the statute).
14
The undersigned counsel conducted a diligent search and could find no Texas case where
a court applied Chapter 33 to a statutory law enforcement action brought by the State in its
sovereign capacity.
20
whether the statutory cause of action was “based on tort” within the meaning of
Chapter 33, or failed to reach the issue at all.15
Regarding the statutes to which the Texas Supreme Court has applied
Chapter 33, each requires a plaintiff to prove the necessary elements of a tort cause
of action: duty, breach, causation, and damages. Consequently, none of the cases
cited by Xerox are binding on this Court, and none of the findings translate to the
TMFPA or are persuasive given the particular statutory scheme adopted by the
Legislature in the TMFPA.
3. The TMFPA was modeled after federal criminal law, not on
traditional tort law.
The enumerated unlawful acts in the TMFPA have their roots in criminal
law, and are not a codification of any common law or traditional tort-based causes
15
See Dugger v. Arredondo, 408 S.W.3d 825 (Tex. 2013) (holding that Wrongful Death
Act is based on tort); F.F.P. Operating Partners v. Duenez, 237 S.W.3d 680 (Tex. 2007)
(recognizing previous holding that Dram Shop Act incorporates essential elements of negligence
action and holding that it thus sounds in tort); JCW Elecs., Inc. v. Garza, 257 S.W.3d 701 (Tex.
2008) (holding that UCC Article 2 breach of implied warranty claim is tort based, as claim for
implied warranty a traditional basis for product liability claim); Villareal v. Wells Fargo
Brokerage Servs., 315 S.W.3d 109 (Tex. App.—Houston [1st Dist. 2010], no pet.) (applying
CPRC § 33.004(e) to Texas Securities Act and Texas Trust Act claims because real parties in
interest failed to argue that acts were not based on tort); Pemex Exploracion y Produccion v.
BASF Corp., H-10-1997, H-11-2019, 2011 WL 9523407, at *13 (S.D. Tex. Oct. 20, 2011)
(applying CPRC Chapter 33 to Theft Liability Act (“TLA”) to permit designation of responsible
third parties under section 33.004(j)).
Regarding the TLA, the Texas Supreme Court has not yet been asked to determine
whether Chapter 33 might apply to the TLA, or portions thereof. The TLA allows a civil remedy
for certain theft offenses, several of which have a corresponding common law tort-based cause of
action, such as conversion, quantum merit, and trespass to personal property. CPRC §§ 134.001-
.005. The Pemex court did not identify the penal code violation(s) made the basis of the TLA
claims in the suit Pemex, 2011 WL 9523407, at *11.
21
of action. The majority of the unlawful acts in section 36.002 of the TMFPA,
including all of the provisions at issue in this case, do not derive from or codify
existing tort law, but rather were created from 42 U.S.C. § 1320a-7b, entitled
“Criminal penalties for acts involving Federal health care programs.” Moreover,
prior to the repeal of section 36.131 of the Human Resources Code in 2005, prior
versions of the TMFPA specified that committing an unlawful act under section
36.002 constituted a criminal offense.16 The fact that the TMFPA now provides
only civil remedies and penalties for violations of the Act does not change the
underlying statutory, non-tort based nature of the causes of action. 17
4. The TMFPA lacks a single, indivisible injury.
Unlike the tort-based statutes to which Chapter 33 has been previously
applied, under the TMFPA there is no single, indivisible injury to apportion among
joint tortfeasors. First, as noted earlier, the State need not show actual injury in
order to hold Xerox liable for its unlawful acts. Second, Xerox can only be held
liable for payments made directly or indirectly as a result of its unlawful acts. See
16
See § 36.131 Tex. Hum. Res. Code Ann. (1995) (providing that a violation of section
36.002 constituted at least a Class C misdemeanor and up to a first degree felony depending on
the total amount of payments made as a result of the unlawful act).
17
Xerox argues that “claims to recover damages for overpayments based on false
statements for Medicaid reimbursement [under the FCA] are ‘“substantive causes of action for
fraud’” and cites to Grogan v. Garner, 498 U.S. 279, 288 (1991) for this proposition. The
Grogan court, however, even though citing the FCA as one of several federal “fraud” statutes,
did not undertake to analyze whether the FCA is “based in tort.” See Xerox Pet. at p. 16. The
State discusses the differences between the TMFPA and the FCA, in section I.B., below.
22
Tex. Hum. Res. Code § 36.052(a)(1). Therefore, Xerox can never be held liable
under the TMFPA for the actions of third parties and cannot be held liable for
payments made, directly or indirectly, as the result of someone else’s conduct. See
id.
Additionally, the Legislature intended to allow the State to recover from a
defendant payments the State made to third parties. See Tex. Hum. Res. Code §
36.052(a)(1) (“a person who commits an unlawful act is liable to the state for the
amount of any payment or the value of any monetary or in-kind benefit provided
under the Medicaid program, directly or indirectly, as a result of the unlawful act,
including any payment made to a third party”). The State may recover the full
amount of the “payment” under section 36.052, without regard to whom the
payment was made and without reference to any alleged “harm” or “injury” to the
State. That the State may recover these dollars as a statutory remedy does not mean
Xerox is paying some other violator’s “proportionate share,” or discharging the
liability of third parties such that a contribution claim would be available.18
18
Xerox also contends that TRCP Rule 38 permits Xerox to join potentially responsible
contribution defendants. See Xerox’s Pet. 26. While Rule 38 provides the procedural mechanism
for joining contribution defendants, it does not create a cause of action for contribution. Rule 38
neither creates a cause of action nor confers an independent right of contribution. See Tex. Gov’t
Code § 22.004(a) (“The supreme court has the full rulemaking power in the practice and
procedure in civil actions, except that its rules may not abridge, enlarge, or modify the
substantive rights of a litigant.”). Contribution is a statutory creation. Consequently, absent an
independent, substantive right to contribution, Rule 38 alone has no legal effect.
23
Permitting “contribution defendants,” such as dental providers, to be joined
or named as responsible third parties under Chapter 33 would undermine this
language in the TMFPA, which expressly permits the State to recover, from Xerox,
any “payments made to third parties” as a result of Xerox’s unlawful acts. Tex.
Hum. Res. Code § 36.052(a)(1). Such a result is contrary to the unambiguous
language of the statute, would dramatically alter the legislative liability scheme
inherent in the TMFPA, and would have sweeping implications for every TMFPA
case.
5. When a statutory conflict would result, courts have held that
Chapter 33 cannot be applied to a statute.
The Dallas Court of Appeals’ analysis in declining to apply Chapter 33 to
the Uniform Fraudulent Transfers Act (“UFTA”) is instructive. See Challenger
Gaming Solutions, Inc. v. Earp, 402 S.W.3d 290, 296 (Tex. App.—Dallas 2013, no
pet.) (holding that Chapter 33 “has no applicability in an UFTA claim”). 19 The
same result should occur here.
In Challenger, a lender sued a borrower’s ex-wife under the UFTA. Id. at
291. The ex-wife moved to designate the borrower as a responsible third party
under Chapter 33, and the trial court allowed the designation. Id. The jury found
the borrower 50% responsible for Challenger’s damages, and reduced the award to
19
The court also provided a cogent analysis of two cases cited by Xerox. See JCW Elecs.,
Inc. v. Garza, 257 S.W.3d 701 (Tex. 2008); Sw. Bank v. Info. Support Concepts, Inc., 149
S.W.3d 104 (Tex. 2004).
24
Challenger against the ex-wife. Id. On appeal, Challenger argued that Chapter 33
did not apply to the UFTA. Id. at 296-99.
In determining that Chapter 33 does not apply to the UFTA, the court noted
that the UFTA “delineates what types of transfers and obligations are fraudulent,
enumerates the remedies available to a creditor, prescribes the measure of liability
to a transferee, and lists the defenses and protections afforded to a transferee.” Id.
at 294.20 The court noted that “the proportionate responsibility statute [Chapter 33]
conflicts with the liability scheme in the UFTA and cannot be reconciled.” Id. at
299. When two statutes conflict and cannot be reconciled, the specific statute
controls over the more general. Challenger, 402 S.W.3d at 295 (citing to Tex.
Gov’t. Code Ann. § 311.026(b), Lexington Ins. Co. v. Strayhorn, 209 S.W.3d 83,
86 (Tex. 2006)).
As in Challenger, allowing the application of Chapter 33 to TMFPA cases
would turn the Legislature’s intended effectiveness of the TMFPA on its head. For
20
Interestingly, in reaching its decision the court did not find JCW Electronics dispositive:
In contrast…an UFTA claim does not lend itself to a fault-allocation scheme.
Rather the focus of an UFTA claim is to ensure the satisfaction of a creditor’s
claim when the elements of a fraudulent transfer are proven. Specifically, the
UFTA provides several different forms of equitable relief designed to follow and
reach assets…. Also, the UFTA provides for a money judgment that does not
exceed the value of the asset transferred or the amount necessary to satisfy the
creditor’s claim….Further the UFTA allows recovery against the debtor, the
transferee, or the person for whose benefit the transfer was made, but does not
distinguish the forms of relief based on culpability….That is, “[i]t operates
against the title of an ‘innocent’ transferee who has not paid value just as fully as
against the title of a transferee who has participated in a fraud.
Id. at 298-99 (citing JCW Elecs., Inc. v. Garza, 257 S.W.3d 701).
25
instance, in a TMFPA case involving off-label promotion of pharmaceutical rugs
by a pharmaceutical company, the potential “contribution defendants” could
number in the thousands, with pharmaceutical companies seeking to join every
Texas Medicaid provider who prescribed the drug and each pharmacy as “causing
or contributing to cause the harm for which damages is sought.” When the
Legislature limited participation in TMFPA actions to the Attorney General
(subchapter B) and qui tam relators (subchapter C), the Legislature foreclosed the
participation in an action of any other “private persons,” including third-party
contribution defendants.
In sum, the concept of “joint tortfeasors” combining to violate the TMFPA
and causing the State one indivisible injury is not supported by the TMFPA’s plain
language. Xerox seeks to have the fact-finder consider the “proportionate
responsibility” of dental providers for false statements contained in their PA
requests for orthodontia services. Those false statements, so goes Xerox’s theory,
caused or contributed to cause injury to the State. But Xerox’s defense necessarily
fails because Xerox is liable under the TMFPA for its own independent unlawful
conduct – whether that conduct caused injury to the State or not and whether an
assertion made by a dental provider in its PA request was accurate or not. In this
way, the goal of the TMFPA is not merely to make the State whole but also to
deter future unlawful acts.
26
B. The False Claims Act cases cited by Xerox do not assist the Court
when interpreting the TMFPA.
The False Claims Act (“FCA”) cases as cited by Xerox are neither
instructive nor persuasive when analyzing the TMFPA. 21 The TMFPA is far more
specific than the FCA in its enumeration of unlawful acts, and broader in terms of
the proscribed conduct that it reaches. Moreover, apart from the use of the word
“Fraud” in the title, the word appears only twice in the body of the TMFPA. 22 In
contrast, the FCA requires presentment of a false or fraudulent claim. 31 U.S.C. §§
3729(a)(1)(A), (B). The TMFPA does not have this requirement, nor makes any
reference to a “fraudulent” claim. The FCA also references an actor’s intent “to
defraud” the government, and provides that “no proof of specific intent to defraud
is required.” Id. at §§ 3729(a)(1)(E), (b)(1)(B). With respect to the latter provision,
the Legislature considered this exact language, but ultimately did not include it in
the 2005 amendments to the TMFPA. 23 Of particular significance to Chapter 33’s
21
The FCA and the TMFPA differ in many important ways, but briefing constraints
preclude an exhaustive analysis of the differences.
22
See Tex. Hum Res. Code § 36.002(9) (making it an unlawful act to enter into a
“conspiracy to defraud the state by obtaining or aiding another person in obtaining an
unauthorized payment or benefit from the Medicaid program or fiscal agent”); Tex. Hum Res.
Code § 36.002(10)(c) (making it an unlawful act to “engage in a fraudulent activity in connection
with the enrollment of an individual eligible under the Medicaid program in the organization’s
managed care plan or in connection with marketing the organization’s services to an individual
eligible under the Medicaid program”).
23
The introduced version of SB 563, which would become the 2005 amendments to the
TMFPA, originally defined the culpable mental state now contained in section 36.0011 as “the
person’s specific intent to defraud. . . .” This language was amended to read “the person’s
27
inapplicability to the TMFPA, the government’s recovery under the FCA is
couched in terms of “damage” to the government. 24 Hence, it is the harm to the
government in a FCA case, not the amount the government paid, that is considered.
The TMFPA makes no such reference to “damage” in connection with the State’s
recovery. 25
But Xerox argues that because section 36.1021 references damages, and
because the State has made reference to “damages” at various times in the record,
that the State seeks damages in a TMFPA action. See Xerox’s Pet. 22. That the
State is not seeking “damages” in a TMFPA action is covered below, but for
purposes of distinguishing the TMFPA from the FCA, it is important to note that
section 36.1021 is referencing both the State’s recovery of civil remedies and
penalties, and a qui tam relator’s recovery of damages.
Section 36.1021 reads: “STANDARD OF PROOF. In an action under this
subchapter, the state or person bringing the action must establish each element of
the action, including damages, by a preponderance of the evidence.” As discussed
below, there is no requirement that the State prove damage or harm to prevail in a
specific intent to commit an unlawful act” prior to the passage of the bill. Compare Tex. S.B.
563, 79th Leg., R.S. (2005) (introduced version), with Tex. Hum Res. Code § 36.0011.
24
31 U.S.C. § 3729(a) (permitting the government to recover a civil penalty “plus 3 times
the amount of damages which the Government sustains because of the act of that person.”)
(emphasis added). This provision has been interpreted to allow for evidence of the government’s
net economic harm to be presented. See United States v. Sci. Applications Int’l Corp., 626 F.3d
1257, 1279 (D.C. Cir. 2010).
25
Compare Tex. Hum Res. Code § 36.012(a)(1), with 31 U.S.C. § 3729(a).
28
TMFPA case, and “damages” is not an element of the State’s claim. The TMFPA
contains a retaliation provision: A private person relator may choose to assert a
claim for damages as a result of any retaliation or discrimination for bringing the
unlawful conduct to the State’s attention. See Tex. Hum. Res. Code § 36.115. It is
in this context that the word “damages” appears again. In addition to reinstatement,
a person who is retaliated against for bringing a TMFPA action is entitled to “two
times the amount of back pay, interest on the back pay, and compensation for any
special damages sustained as a result of the discrimination . . .” See Tex. Hum.
Res. Code § 36.115(a)(2). The damages reference, made in this context, is limited
to the potential damages awarded to a qui tam relator for wrongful termination, and
does not operate to transform the plain language of section 36.052 into a
“damages” provision.
C. The civil remedies the State seeks to impose against Xerox for
Xerox’s violations of the TMFPA are based solely on Xerox’s
conduct and are not the “same alleged injury” for which the State
seeks redress from dental providers.
Because Chapter 33’s sole purpose is to apportion “proportionate
responsibility,” the statute “requires the trier of fact to determine the percentage of
responsibility of each claimant.” CPRC § 33.001; Challenger Gaming, 402 S.W.3d
at 292. See also Equitable Recovery v. Heath Ins. Brokers of Tex., 235 S.W.3d
376, 387 (Tex. App.–Dallas 2007, pet. dism’d) (“Contribution and indemnity are
methods by which the burden of paying damages to a plaintiff is shifted from one
29
defendant to another, both of whom are jointly liable to the plaintiff on the same
claim.”) (emphasis added); Goose Creek Consol. Indep. School Dist. v. Jarrar's
Plumbing, Inc., 74 S.W.3d 486, 492 (Tex. App.—Texarkana 2002, pet. denied)
(third-party actions under Tex. R. Civ. P. 38(a) “join a party who may be liable to
the defendant or to the plaintiff for all or part of the plaintiff's claims against the
defendant”).26
Here, there is no “joint liability” between Xerox and any dental providers,
somehow resulting in one indivisible injury to Texas, such that Xerox can “shift”
its TMFPA liability onto these putative third parties. Xerox’s violations of the
TMFPA stand alone and do not depend on whether dental providers also violated
the TMFPA. 27 For example, Xerox’s misrepresentations to HHSC regarding
Xerox’s prior authorization (PA) review process violated the TMFPA without
regard or reference to the veracity of dental providers’ submissions to Xerox.
Additionally, Xerox’s failure to provide trained personnel to review PA requests
has no factual nexus with any conduct attributable to dental providers. Xerox’s
26
See also Gus Hodges, Contribution and Indemnity among Tortfeasors, 26 Tex. L. Rev.
150, 150 (“Historically neither the common law courts nor the legislative bodies have been
sympathetic with the plight of wrongdoers in the adjustment of their affairs.”). Not until 1917 did
Texas adopt a statute which expressly provided for contribution. Id. at 151.
27
Here Xerox attempts to join as third parties twenty-seven dental providers. See Xerox’s
First Am. Original Answer and Original Third-Party Pet., at MR.68-71. But these are not the
only dentists who treated Medicaid patients, and they are not the only dentists who the State
alleges have committed unlawful acts. It appears that Xerox’s attempt to implead these dentists is
retaliatory, after these dentists first cast blame on Xerox.
30
focus on the potential measure of the remedy mandated by section 36.052(a)(1),
rather than on the nature of its own, independent liability under the TMFPA, is
misdirected. The fact that one potential measure of the civil remedies prescribed by
the TMFPA for Xerox’s unlawful conduct is the dollars paid to providers is not
germane to the question of whether joint liability exists. Because there is no joint
liability between Xerox and the third party providers, Xerox can never be
responsible for more than its own injury-causing conduct. See Challenger Gaming,
402 S.W.3d at 292.
While Xerox may deem it a harsh reality, the TMFPA does not provide for
common law or equitable defenses. As the State has explained:
Allowing the Xerox Parties and Providers to Consolidate Texas’s
TMFPA case with other cases involving common law claims, where
all claims would be tried to the same jury and damages awarded
accordingly, would indeed allow the Xerox Parties and providers to
assert equitable and common law defenses and introduce such
concepts as comparative fault and responsible third-party liability and
contribution into the same jury trial, addressing Texas’s TMFPA
claims. Consolidating these cases into a single case would circumvent
this Court’s and other Travis County Court’s consistent holdings that
equitable and common law defenses and concepts do not apply to the
TMFPA and allowing such would cause jury confusion and be
substantially prejudicial to Texas.
See State of Texas’s Opp’n to Xerox Parties’ Mot. to Consolidate, at p. 8, copy
attached at Appendix B.
Furthermore, the right to contribution has its origins in equity. Texas courts
have consistently held that the State of Texas in its sovereign capacity is not
31
subject to equitable defenses, including laches, estoppel, quasi-estoppel, and
ratification. See State v. Durham, 860 S.W.2d 63, 67-68 (Tex. 1993). The rationale
behind this policy is to allow governmental entities to pursue claims and enforce
statutes intended to protect the public interest. Thomas v. State, 226 S.W.3d 697,
710 (Tex. App.–Corpus Christi 2007, pet. dism’d). Like other Texas law
enforcement statutes, the TMFPA is a statute that sets forth all violations and
available defenses. A violation of a statute is limited to the terms of the statute
itself. Likewise, the only defenses available are those specifically set forth in the
statute; common law defenses are simply not applicable. See, e.g., Pub. Util.
Comm’n of Tex. v. Cofer, 754 S.W.2d 121, 124 (Tex. 1988) (“when the Legislature
has spoken on a subject, its determination is binding upon the courts unless the
Legislature has exceeded its constitutional authority”). And, Travis County courts,
when interpreting the TMFPA, have held that equitable and common law defenses
and concepts are not available.28
28
See Exs. A - E to the State’s Opp’n to Xerox Parties’ Mot. to Consolidate, at App. B.
(Ex. A, Order from The Honorable Judge Yelenosky granting Pls.’ Traditional and No-Evidence
Mot. for Partial Summ. J. on Defs.’ Waiver Defense; Ex. B, Order from The Honorable Judge
Yelenosky granting Pls.’ Traditional Mot. for Partial Summ. J. on Defs.’ Equitable Defenses; Ex.
C, Order from Judge John K. Dietz on Cross-Motions for Summ. J. (granting, inter alia,
Plaintiffs’ Motion for Partial Summary Judgment on Defendants’ Defenses to the [TMFPA] at 3-
4 (“The Court finds that equitable defenses and defenses or limitations found in the [CPRC] do
not apply to the Plaintiffs’ claims under TMFPA”); Ex. D, Order from Judge Lora Livingston on
Motions for Summ. J. (granting, inter alia, Plaintiffs’ Traditional Motion for Partial Summary
Judgment on Certain Defenses (ratification, failure to mitigate, good faith, industry practice,
proximate cause and intervening/superseding acts) and Plaintiffs’ No-Evidence Motion for
Partial Summary Judgment as to All Defendants (waiver and selective enforcement)) at 2-3; and
Ex. E, Order from Judge Suzanne Covington granting Pl.’s First Am. Mot. for Partial Summ. J.).
32
D. Even if the TMFPA were a “statutory tort” to which Chapter 33
would otherwise apply, the Legislature did not intend for Chapter
33 to apply to the State suing in its sovereign capacity.
Under the common law, there is a “longstanding interpretive presumption
that ‘person’ does not include the sovereign,” which “may be disregarded only
upon some affirmative showing of statutory intent to the contrary.” See Vt. Agency
of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 780–81 (2000)
(applying Supreme Court’s “longstanding interpretive presumption that ‘person’
does not include the sovereign” to term “person” in federal False Claims Act and
noting that presumption “may be disregarded only upon some affirmative showing
of statutory intent to the contrary”); United States v. United Mine Workers of Am.,
330 U.S. 258, 275 (1947) (“In common usage [‘person’] does not include the
sovereign, and statutes employing it will ordinarily not be construed to do so.”);
see also R.R. Comm'n v. United States, 290 S.W.2d 699, 702 (Tex. Civ. App.—
Austin 1956), aff'd, 159 Tex. 197, 317 S.W.2d 927 (Tex. 1958) (stating common-
law rule that the sovereign “shall not be bound unless the statute is made by
express words to extend to [the sovereign]” and noting that “ordinary legislation is
intended merely to regulate the acts and rights of individuals” (citation and internal
quotation marks omitted)). 29
29
“Statutory provisions which are written in such general language that they are reasonably
susceptible to being construed as applicable both to the government and to private parties are
subject to a rule of construction which exempts the government from their operation in the
33
Indeed, this Court recently ruled that CPRC Chapter 74, the Texas Medical
Liability Act, (“TMLA”) does not apply to the TMFPA because the State is not a
“person” as included in the definition of “claimant” in the TMLA. See Malouf v.
State ex. rel. Ellis, 461 S.W. 3d 641 (Tex. App.—Austin 2015, pet. requested). The
Court also considered the conflicts that would result from a forced application of
the TMLA onto the TMFPA. Id. n.3 This Court should similarly hold that the State
is not a claimant for the purposes of analyzing CPRC 33. 30
To allow a TMFPA defendant to apply Chapter 33 would be to interfere with
the State’s right to manage its fiscal affairs. The sovereign is generally not a
“person” under statutes that would restrict the sovereign’s rights and interests:
It is a familiar principle that the King is not bound by any act of the
Parliament unless he be named therein by special and particular
words. The most general words that can be devised (for example, any
person or persons, bodies politic or corporate) affect not him in the
least, if they may tend to restrain or diminish any of his rights and
interests.
Dollar Sav. Bank, 86 U.S. (19 Wall.) at 239 (emphasis added); accord 2 William
Blackstone, Commentaries *253; see also, e.g., R.R. Comm’n, 290 S.W.2d at 702.
absence of other particular indicia supporting a contrary result in particular instances.” 3 N.
Singer, Sutherland on Statutory Construction § 62:1, 377-78 (7th ed. 2008). This “general rule
applies with special force to statutes by which prerogatives, rights, titles, or interests of the
government would be divested or diminished,” and “[i]f there is doubt as to the construction of
the statute, the doubt should be resolved in favor of the government.” 82 C.S.J. Statutes § 389,
483-84 (2009).
30
Interestingly, appellant Dr. Malouf in No. 03-14-00036-CV is one of the dentists Xerox
seeks to have designated as a responsible third party in the State’s underlying case against Xerox.
See Xerox’s Mot. for Leave to Designate Responsible Third Parties, MR.250-52.
34
As already discussed, applying Chapter 33 to the State’s claims would severely
restrict its rights and interests, and no “particular words” in Chapter 33 include the
State. 31
The assertion that failing to apply Chapter 33 would permit a “double
recovery” by the State, see Xerox Pet. 19, also misstates both the legislative intent
of the TMFPA and the nature of the State’s claims. The TMFPA represents a
specific statutory framework for deterring unlawful conduct and obtaining civil
remedies for the Texas Medicaid program. In enacting the TMFPA, the Legislature
deliberately limited the State’s burden to establish a violation of the statute and
recover civil remedies and penalties. And courts must defer to the plain language
of a statute:
‘Courts must take statutes as they find them. More than that, they
should be willing to take them as they find them. They should search
out carefully the intendment of a statute, giving full effect to all of its
terms. But they must find its intent in its language and not elsewhere. .
. .They are not responsible for omissions in legislation.’
Republicbank Dallas, N.A. v. Interkal, Inc., 691 S.W.2d 605, 607 (Tex. 1985)
(quoting Simmons v. Arnim, 220 S.W. 66 (Tex. 1920)). See also Fitzgerald v.
31
Xerox may argue that a governmental unit may be named as a responsible third party
under Chapter 33, and is therefore a “person” within the meaning of Chapter 33. Whether the
sovereign may be named as a responsible third party in situations in which it is immune from suit
is open to debate, but is ultimately not relevant to whether a TMFPA defendant may assert
Chapter 33 to thwart the State’s rights and interests in protecting its fiscal well-being through
enforcement of a public welfare statute. See generally Justin Roberts & Randell Roberts, Can
Immune Parties Really be Responsible?: An Analysis of the Current Interpretation of the
Responsible Third Party Statute and Its Vulnerability to Constitutional Challenge, 43 St. Mary’s
L.J. 559 (2012).
35
Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 867 (Tex. 1999) (holding that
courts “may add words into a statutory provision only when necessary to give
effect to clear legislative intent. Only truly extraordinary circumstances showing
unmistakable legislative intent should divert us from enforcing the statute as
written”).
Xerox argues that the TMFPA’s silence as to whether it permits “double
recoveries” is somehow indicative of the legislature’s intent that Chapter 33 should
apply to the TMFPA, and to the State suing in its sovereign capacity. 32 Precisely
the opposite is true. As the trial court noted:
Each wrongful actor is liable for a civil remedy and penalty in
multiples of the State’s actual loss that is undiminished by the civil
remedy and penalty assessed on or paid by another actor. What Xerox
characterizes as a ‘novel theory’ is the plain meaning of the statute.
There is no comparative fault, joint-and-several liability, contribution,
single-satisfaction, or settlement credit in a TMFPA action.
Decision Letter, dated Feb. 10, 2015, at MR.232.
A person who commits an unlawful act does not escape liability because
there may be multiple violators. Indeed, the unlawful acts listed in section 36.002
specifically contemplate multiple violators. See §§ 36.002(1), (2), (4), (9), (12).
And because the TMFPA is a remedial statute subject to the liberal construction
required by the Human Resources Code, it must be read broadly to ensure that its
32
See Xerox’s Pet. 26 (claiming that “[t]he TMFPA’s silence regarding contribution, single
satisfaction, et cetera cannot be interpreted as expressly permitting a double recovery.”).
36
purposes are accomplished. See Tex. Hum. Res. Code Ann. § 11.002(b) (“This title
shall be liberally construed in order that its purpose may be accomplished as
equitably, economically, and expeditiously as possible.”). In addition to relying
primarily on the plain meaning, a court may not accept interpretations of a statute
that defeat the purpose of the legislation, “so long as another reasonable
interpretation exists.” Atacosa Cnty. v. Atacosa Cnty. Appraisal Dist., 990 S.W.2d
255, 258 (Tex. 1999).
Also, as explained above, in a TMFPA action there is no “single, indivisible
injury” committed by “joint tortfeasors.” Consequently, there can be no “double
recovery” to the State. As the Texas Supreme Court has noted:
The one satisfaction rule applies to prevent a plaintiff from obtaining
more than one recovery for the same injury. Appellate courts have
applied the one satisfaction rule when the defendants commit the same
act as well as when defendants commit technically differing acts
which result in a single injury.
Stewart Title Guar. Co., v. Sterling, 822 S.W.2d 1 (Tex. 1991) (emphasis added).
Therefore, Chapter 33 does not, and cannot, apply to a law enforcement action
brought by the State in its sovereign capacity, specifically in a TMFPA suit, and
the trial court, therefore, did not abuse its discretion.
E. Applying CPRC Chapter 33 to the TMFPA would violate tenets of
statutory construction and lead to absurd and conflicting results.
A court’s objective in construing a statute is to determine and give effect to
the Legislature's intent. Cont’l Cas. Ins. Co. v. Functional Restoration Assocs., 19
37
S.W.3d 393, 402 (Tex. 2000) (citing Liberty Mut. Ins. Co. v. Garrison Contractors,
Inc., 966 S.W.2d 482, 484 (Tex.1998)). In doing so, it is helpful to consider the
purpose behind a statute, as stated by the Legislature.
In 1995, the Legislature enacted the TMFPA, chapter 36 of the Human
Resources Code. By enacting the TMFPA, the Legislature provided the State with
a robust statute to investigate, prosecute, and deter fraud, waste, and abuse in the
Texas Medicaid system, including providing specific investigative authority to the
Office of Attorney General and stiff remedies and penalties for violations of the
statute. The Legislature adopted chapter 36 to safeguard the public treasury and to
protect the health and welfare of Medicaid recipients by preventing the diversion
of Medicaid funding to private purposes.
In 1995, the Legislature also enacted certain provisions of CPRC Chapter
33, namely section 33.004 (Designation of Responsible Third Parties) and
subsequently in 2003 significantly amended other provisions of Chapter 33 in its
efforts to address tort reform. 33 Presumably, the Legislature was aware of both
measures 34 and intended both of its enactments to be effective.35 The application
33
In 2003 the Amendments to Chapter 33 by the Texas Legislature were part of the same
legislation enacting Chapter 74 of the CPRC (the Texas Medical Liability Act), which this Court
recently found did not apply to the TMFPA. Malouf v. State ex. rel. Ellis, 461 S.W. 3d 641 (Tex.
App.—Austin 2015, pet. requested).
34
See Argonaut Ins. Co. v. Baker, 87 S.W.3d 526, 530-31 (Tex. 2002) (quoting Acker v.
Tex. Water Comm’n, 790 S.W.2d 299, 301 (Tex. 1990) (“A statute is presumed to have been
enacted by the legislature with complete knowledge of the existing law and with reference to it”).
38
of CPRC Chapter 33 to the TMFPA would violate these tenets of statutory
construction. Moreover, common sense dictates that the Legislature would not
have enacted the TMFPA on the one hand to combat and deter fraud, waste and
abuse in the Medicaid system, but on the other hand restrict the State’s ability to
enforce the TMFPA and limit its effect by subjecting the State and the TMFPA to
the limitations and restrictions set forth in CPRC Chapter 33.
The forced application of Chapter 33 to the TMFPA fails because it would
lead to absurd results and conflicts, not only within the two statutes but also with
other Texas law. Any attempt at reconciliation leads inexorably to an absurd result
that cannot have been the intent of the Legislature. See, e.g., Univ. of Tex. Sw.
Med. Ctr. at Dallas v. Loutzenhiser, 140 S.W.3d 351, 356 (Tex. 2004) (“Courts
should not read a statute to create such an absurd result.”) (internal quotation
omitted). Therefore, the Court must resort to Code Construction Act provisions for
resolution of conflicting provisions. See generally Tex. Gov’t Code ch. 311.
Consideration of these principles leads only to the conclusion that Chapter 33 was
not intended to apply to the TMFPA.
One absurd result from the forced application of Chapter 33 to the TMFPA,
is that a defendant like Xerox could designate not just several Texas Medicaid
providers as responsible third parties under Chapter 33, section 33.004, but
35
Tex. Gov’t Code § 311.021(2).
39
designate hundreds, if not thousands, of Texas Medicaid providers from around the
State of Texas who received even one payment over the eight year period Xerox
was HHSC’s vendor. Allowing a defendant in a TMFPA action to designate
hundreds of Medicaid providers from across the State would require the trier of
fact – a single jury – “to determine the percentage of responsibility, stated in whole
numbers . . . for each defendant and for each responsible third party who has been
designated.” See CPRC § 33.003(a). Allowing such a designation would favor a
defendant’s private pecuniary interests over the public interest in punishing and
deterring unlawful acts by a defendant against the Texas Medicaid program. This
result violates Tex. Gov’t Code § 311.021(5) and the presumption that the public
interest is favored over the private.
Another absurd result from the forced application of Chapter 33 to the
TMFPA would arise from the application of section 33.003(a) requiring the trier of
fact to determine the percentage of responsibility of the “claimant.” In other words,
the forced application of Chapter 33 to the TMFPA would require a jury to
determine the percentage of responsibility of the State of Texas itself, and could, in
essence, make the State responsible for defendants’ unlawful acts. Such a result
would require a jury to focus not just on the unlawful acts of the defendant but to
also focus and assess the general responsibility of any State employee or State
40
official. This forced application would impermissibly abrogate the sovereign
immunity of the State.
Moreover, if section 33.001 were applied to the jury’s determination, the
State of Texas would be barred from recovering any civil remedies whatsoever
from a defendant (and even potentially civil penalties as well) in a TMFPA
enforcement case if the jury found the State of Texas’s percentage of responsibility
to be greater than 50 percent. See CPRC § 33.001. In other words, even if a jury
found a defendant to have committed an “unlawful act” under the TMFPA, the
State could not recover any civil remedies or penalties if the jury found the State
more than 50 percent responsible. This forced application of CPRC sections
33.003(a) and 33.001 directly conflict with the TMFPA provisions addressing civil
remedies and civil penalties.
These absurd results would not only undermine the Legislature’s intended
purpose of enacting a robust and effective TMFPA statute but would also conflict
with case law recognizing that certain similar equitable and common law concepts
and defenses do not apply to the State. For example, equitable defenses of
limitations, estoppel and laches do not apply to the State in its sovereign capacity,36
36
State v. Durham, 860 S.W.2d 63, 67 (Tex. 1993); see also City of Hutchins v. Prasifka,
450 S.W.2d 829, 835-36 (Tex. 1970); Waller v. Sanchez, 618 S.W.2d 407, 409 (Tex. App.—
Corpus Christi 1981, no writ).
41
the affirmative defense of implied waiver does not run against the State,37 and the
so-called “government knowledge” defense is not an affirmative defense a
defendant can assert. 38 And yet, the forced application of Chapter 33 to the
TMFPA would allow a defendant to inject these defenses into a TMFPA
enforcement action under the auspices of allocating proportionate responsibility.
Such a result was not and could not have been the intent of the Legislature.
II. Xerox has an adequate remedy at law because all of its complaints can
be addressed on appeal.
Regardless of whether the trial court somehow clearly abused its discretion,
the Court should still deny the request for mandamus relief because Xerox has
failed to show that it lacks an adequate remedy by appeal. See Walker v. Packer,
827 S.W. 2d. at 840. See also In re License Plates of Tex., No. 03-13-00671-CV,
2013 WL 6466919, at *1 (Tex. App.—Austin Nov. 27, 2013, no pet.) (holding that
relator had adequate remedy by ordinary appeal of trial court’s denial of leave to
designate two state agencies as responsible third parties).
37
Texas courts have recognized that the affirmative defense of implied waiver is not
applicable to the State. State v. Crawford, 771 S.W.2d 624, 629-630 (Tex. App.—Dallas 1989,
writ. denied). The defense of waiver can only be established against the State by evidence of the
intentional relinquishment of the State’s known rights by an authorized representative. Id.
38
Federal Courts have made clear that a defendant cannot assert the so-called “government
knowledge defense” as a defense in an FCA case. See U.S. v. Bollinger Shipyards, Inc., 775 F.3d
255, 263 (5th Cir. 2014) (citing United States v. Southland Mgmt. Corp., 326 F.3d 669, 682 n.8
(5th Cir. 2003) (“This defense is inaptly named because it is not a statutory defense to FCA
liability but a means by which the defendant can rebut the government’s assertion of the
‘knowing’ presentation of a false claim.”)).
42
A. Only Xerox’s conduct as the State’s vendor is at issue in the instant
matter, and Xerox has an adequate remedy on appeal.
As a threshold matter, Xerox has an adequate remedy at law. The State seeks
to only hold Xerox liable, for Xerox’s conduct. Nevertheless, if Xerox believes
some unknown number of potential parties is somehow responsible for Xerox’s
unlawful acts, Xerox is free to sue those parties (bringing common law, non-
statutory causes of action). In fact, there are four lawsuits pending, brought by four
dental providers against Xerox, in which Xerox is free to bring counterclaims. 39
Xerox is also free to initiate any number of lawsuits against providers for recovery
of some alleged harm.
1. The reasoning in Andersen is inapplicable in a statutory law
enforcement case.
None of the cases, or the reasoning, on which Xerox relies support Xerox’s
argument. The principal case upon which Xerox relies is In re Arthur Andersen.
121 S.W.3d 471 (Tex. App.—Houston [14th Dist.] 2003, orig. proceeding). Xerox
cites Andersen for the proposition that there is no adequate remedy at law when a
trial court erroneously denies a defendant the opportunity to join responsible third
parties in a complex case where damage is caused by multiple tortfeasors. But
Andersen is readily distinguishable.
39 The four cases, all in Travis County District Court are: (1) Harlingen Family Dentistry v.
ACS State Healthcare, Cause No. D-1-GN-14-000319; Antoine Dental Center v. ACS State
Healthcare, Cause No. D-1- GN-14-000320; (3) M&M Orthodontics v. ACS State Healthcare,
Cause No. D-1-GN-14-000321; (4) Dr. Paul Dunn, DDS v. ACS State Healthcare, Cause No. D-
1-GN-14-000322.
43
Most importantly, the causes of action in Andersen are different from the
State’s TMFPA claims. Here, the only causes of action are codified in the TMFPA,
none of which are based on tort, and only concern the acts and omissions of Xerox
acting as HHSC’s PA authorization vendor and whether Xerox misrepresented to
HHSC Xerox’s PA review process. In stark contrast, in Arthur Andersen a group of
investors who had lost money in the Enron collapse sued the accounting firm
Arthur Andersen for three common law causes of action: negligent
misrepresentation, fraud, and conspiracy. Id. at 475. Each of the claims asserted by
the plaintiffs are based on tort; and no party contested the applicability of chapter
33 in the Andersen proceedings.
The plaintiffs accused Andersen of providing “false and misleading
information and misleading public information regarding Enron’s financial
condition.” Andersen claimed it had been misled by Enron executives and
attempted to name responsible third parties and to join third parties, particularly
other financial institutions.40 Id. The trial court denied Andersen’s motion, and the
company sought mandamus relief. Id. In granting mandamus relief, the Andersen
court noted that the investor-plaintiffs made “broad sweeping allegations”
regarding financial entities other than Andersen and other named defendants, and
these unnamed entities would “play a pivotal role in the stories the Plaintiffs will
40
Andersen sought leave to name responsible third parties under an earlier version of
chapter 33. Id. at n.18.
44
tell the jury.” Id. at 480-81. Regarding the latter two causes of action of fraud and
conspiracy, the court reasoned that the other financial institutions were necessarily
implicated in the allegations against Andersen.41 Id. at 481-82 (holding that
Andersen had shown that third parties were “implicated” in the plaintiffs’ claims
“to such an extent that the Plaintiffs could have sued each third party, and that each
third party ‘may’ be liable to the Plaintiffs for all or a part of the ‘damages
claimed’ against Andersen and the other defendants”).
Here, the State seeks to hold Xerox liable for only Xerox’s conduct, not the
conduct of third parties. The State does not seek remedies from Xerox for any
unlawful acts committed by third parties. Therefore, the reasoning and holding in
Andersen, which focused on common-law fraud and conspiracy, are inapplicable
here.42 Additionally, any law enforcement action the State might bring against a
41
For fraud, “third parties . . . need not have made representations directly to the Plaintiffs.”
Id. at 481 (noting that “each party to a fraudulent scheme is responsible for the acts of the other
participants done in furtherance of the scheme and liable for fraud”). As for conspiracy, the court
dismissed plaintiffs’ claims that a third party “cannot be liable for conspiracy to commit fraud
without being liable for the underlying fraud.” Id. at 482-82 (noting that “[a] party may be liable
for conspiracy to commit fraud without being liable for the underlying fraud).
42
In most of the other 33 Texas cases citing Andersen, courts reference the opinion when
analyzing the causes of action of either common law fraud or conspiracy. See, e.g., Parex v. ERG
Resources, 427 S.W.3d 407, 440 (Tex. App.—Houston [14th] 2014, pet. filed) (noting that “[f]or
a party to be liable for fraud, it need not have made representations directly to the plaintiff”).
This Court has cited to Andersen only once, in a case in which the Court had to determine
whether a trial court correctly ruled whether a third party may be held jointly and severally liable
for common-law fraud. See Compton v. Sesso, 2006 Tex. App. LEXIS 6322, at *18-19 (Tex.
App.—Austin July 21, 2006, no pet.) (noting that a “party who benefits from a fraudulent
transaction may be a principal in the fraud and may be held liable as such”).
The Texas Supreme Court also only cites to Andersen once, and only in reference to the
proposition that parties may plead conflicting claims and defenses if they “have a reasonable
45
dental provider would only, and separately, implicate that provider’s
misrepresentations or omissions and have no bearing on Xerox’s own unlawful
conduct.
2. Xerox fails to cite any case law to show it lacks an adequate
remedy on appeal.
Xerox also makes several other arguments that fail to show it lacks an
adequate remedy on appeal. First, the cases cited by Xerox for the proposition that
not being allowed to name a responsible third party would somehow “skew” the
proceedings are inapposite because the cases are all common-law negligence cases,
none are statutory law enforcement cases brought by the State in its sovereign
capacity. 43
basis in fact [and] law.” JLG Trucking v. Garza, 13-0978, 2015 Tex. LEXIS 346, at *16 (Tex.
Apr. 24, 2015). This issue is not before the Court.
43
See In re Altec Indus., No. 10-12-00207-CV, 2012 WL 2469542, at *2 (Tex. App.—
Waco June 22, 2012, orig. proceeding) (mem. op.) (design defect, negligence, premises liability,
and failure to warn) (noting that not naming responsible third party would “potentially affect the
outcome of the litigation, and compromise the presentation of the defense in ways unlikely to be
apparent in the appellant record”); see also In re Oncor Elec. Delivery Co., 355 S.W.3d 304
(Tex. App.–Dallas 2011, orig. proceeding) (negligence) (after parents named owner of lifting
apparatus as causing their child’s injuries, defendant sought to name the individual who operated
the apparatus as a Responsible third party); In re Brokers Logistics, 320 S.W.3d 402, 404 (Tex.
App.—El Paso 2010, orig. proceeding) (negligence) (relator-defendant, as premises owner,
sought leave to name doctor whose negligent treatment proximately caused plaintiff’s injuries);
Jones v. Ray, 886 S.W.2d 817 (Tex. App.—Houston [1st Dist.] 1994, orig. proceeding)
(negligence) (holding that part of a group of healthcare providers who may have all contributed
to plaintiff’s paralysis could not sever case); In re Greyhound Lines, Inc., No. 05-13-01646-CV,
2014 WL 1022329, at *1-3 (Tex. App.—Dallas Feb. 21, 2014, orig. proceeding) (mem. op.)
(personal injury suit) (holding that where passenger sued bus company but not the owners of the
other vehicle involved in crash, bus company could name owner of other vehicle as responsible
third party).
46
Second, contrary to Xerox’s assertion, no bright line rule exists in
determining that an adequate appellate remedy is available. See In re Prudential,
148 S.W.3d at 136 (whether an adequate remedy by appeal exists “is not an
abstract or formulaic” inquiry and “resists categorization”).44 In Prudential, the
trial court’s ruling would have forced the parties to have sixteen unnecessary trials
and subject the parties to jury trials that had been waived in the underlying
contract. Id. at 137-38. Here, even if the Court were to determine that Chapter 33
could apply, there could only be one trial—to determine only Xerox’s liability.
Xerox would still, therefore, have an adequate remedy by appeal.
In fact, this Court has held that an adequate remedy on appeal exists when a
trial court denies leave to name a responsible third party. See In re License Plates
of Tex., No. 03-13-00671-CV, 2013 WL 6466919, at *1 (Tex. App.—Austin Nov.
27, 2013, orig. proceeding) (holding that adequate remedy on appeal existed after
trial court denied leave to name responsible third parties).45 And, Xerox cannot
44
See Xerox Pet. 30-31 (erroneously asserting that “[o]ther courts have adopted bright-line
holdings that a trial court’s improper denial of leave to designate a responsible third party can
never be adequately remedied on appeal").
45
Other Texas intermediate courts have also held the same. See, e.g., In re State Line
Fireworks, 387 S.W. 3d 27, 31-33 (Tex. App.—Texarkana 2012, orig. proceeding) (products
liability) (holding that relator had adequate remedy on appeal where relator-defendant, if found
liable, could then file suit against other parties); In re Unitec Elevator Servs. Co., 178 S.W.3d 53,
66 (Tex. App.—Houston [1st Dist.] 2005, orig. proceeding) (negligence, gross negligence)
(noting that, in holding to deny mandamus, “whether mandamus relief is appropriate ‘depends
heavily on the circumstances presented’” (quoting In re Prudential, 148 S.W.3d at 137)); In re
Taymax Fitness, No. 04-14-00119-CV, 2014 WL 1831100, (Tex. App.—San Antonio May 7,
2014, orig. proceeding) (personal injury claim) (holding that relator failed to show lack of
47
establish it lacks a remedy on appeal. See, e.g., id.; see also supra note 42 (list of
cases in which other intermediate courts have similarly denied mandamus after a
trial court denied leave to name third parties).
Xerox then argues that the underlying instant matter is some unsettled area
of the law, as mentioned in Andersen. In Andersen the question was whether
Chapter 33 permits a “tortfeasor subject to a judgment to bring a post-judgment
contribution claim against a tortfeasor who was not a party to the original suit.”
121 S.W.3d at 485. Here, there are no tortfeasors. Rather, Xerox’s–and only
Xerox’s–misrepresentations and omissions are at issue. Under the TMFPA, the
trier of fact will only be able to determine Xerox’s liability, and there will not be,
and cannot be, an apportionment of liability to anyone else besides Xerox.
Moreover, as discussed above, Chapter 33 does not apply to law enforcement
actions brought by the State in its sovereign capacity.
Lastly, Xerox makes a curious argument that because the State’s recovery
might be large, an adequate remedy on appeal is somehow not available. See Xerox
Pet. 28. No case law supports this reasoning.
adequate remedy on appeal); In re Inv. Capital Corp. & Serv. Corp. Int’l, No. 14-09-00105-CV
2009 WL 310899, at *2 (Tex. App.—Houston [14th Dist.] Feb. 4, 2009, orig. proceeding)
(negligence, gross negligence, premises liability) (distinguishing Andersen, not because of the
type of case, but because the facts were, unlike in Andersen, “relatively straightforward and the
trial court’s error, if any, can be corrected through the regular appellate process”); In re
Wilkerson, No. 14-08-00376-CV, 2008 WL 2777418, at *2 (Tex. App.—Houston [14th Dist.]
June 6, 2008, orig. proceeding) (negligence) (in denying mandamus, holding that relator had
adequate remedy by appeal).
48
B. Factors weigh in favor of denying Xerox’s Petition.
Denying Xerox’s Petition will actually save money—for both the State and
Xerox. Cf. Walker v. Packer, 827 S.W.2d at 842 (“An appellate remedy is not
inadequate merely because it might involve more delay or cost than mandamus.”).
Here, by trying the instant underlying law enforcement action with Xerox as the
only defendant will result in less delay and less expense. 46
And, in considering the public interest, the State has an interest in having its
claims timely heard and not being unnecessarily subjected to potentially hundreds
of putative third parties being improperly designated and/or added to its lawsuit
against Xerox. See In re Prudential, 148 S.W.3d at 136 (weighing whether denying
mandamus would “spare . . . the public the time and money utterly wasted
enduring eventual reversal of improperly conducted proceedings”). Unnecessarily
46
Of the three cases Xerox cites to support its position, one of the cases actually supports
the State’s position: denying mandamus will save both parties and the judicial system
unnecessary time, expense, and extra trials; and the latter two are inapposite—focusing on
improper venue transfer. See In re State, 355 S.W.3d 611, 612 (Tex. 2011) (holding that trial
court abused discretion in ordering severance of state’s condemnation suit into eight separate
proceedings after landowner subdivided the one parcel into eight tracts); see also In re Team
Rocket, 256 S.W.3d 257 (Tex. 2008) (holding that wrongful death action was improperly
transferred to different venue); In re Masonite Corp., 997 S.W.2d 194 (Tex. 1999) (granting
mandamus relief after trial court granted motion to transfer venue of non-residents homeowners
in defective building materials suit).
Here, denying mandamus will not result in multiple identical trials regarding the same
facts; rather, the only liability to be determined in this suit is Xerox’s liability as the State’s
vendor. And any potential suit the State might bring against a dental provider will only concern
that particular provider’s actions, and only that provider’s liability to the State. See trial court
letter, dated Apr. 28, 2015 (“State v. Xerox will proceed to trial more quickly without third
parties, and the trial will be shorter and less complicated . . .”), at MR.633.
49
expanding this case beyond the existing two parties would exponentially increase
the costs to the State and would significantly delay the resolution of the case. See
In re United Servs. Auto. Ass’n, 307 S.W.3d 299, 314 (Tex. 2010) (“wasted trials
are not the most efficient use of the state’s judicial resources”). The USAA court
also considered, as one of the factors in whether to deny mandamus, if granting of
mandamus would “thwart the legislative intent” of the statute in question. Id. at
314. Here, granting mandamus and applying Chapter 33 to the TMFPA would
thwart the Legislature’s intent of having an effective statute, the TMFPA, to
combat and deter unlawful acts against the Texas Medicaid program.
PRAYER
Because the third party claims asserted in Xerox's First Amended Answer
and Original Third Party Petition have no basis in law, the trial court did not abuse
its discretion in striking those claims, pursuant to Texas Rule of Civil Procedure
38. Xerox’s allegations, even if true, do not entitle Xerox to the relief it sought
from the trial court. Moreover, Xerox has an adequate remedy on appeal. The State
prays the Court will deny Xerox’s Petition.
Respectfully submitted,
KEN PAXTON
Attorney General of Texas
CHARLES E. ROY
First Assistant Attorney General
50
JAMES E. DAVIS
Deputy Attorney General for Civil Litigation
/s/ Raymond C. Winter____________
RAYMOND C. WINTER
State Bar No. 21791950
Chief, Civil Medicaid Fraud Division
(512) 936-1709 direct
[email protected]
REYNOLDS B. BRISSENDEN
State Bar No. 24056969
(512) 936-2158 direct
[email protected]
Assistant Attorneys General
P. O. Box 12548
Austin, Texas 78711-2548
(512) 499-0712 facsimile
CERTIFICATE OF COMPLIANCE
I certify that this Brief in Response to Petition for Writ of Mandamus has
13,984 words.
/s/ Raymond C. Winter
Raymond C. Winter
CERTIFICATE OF SERVICE
I certify that I have on this 13th day of August 2015, served copies of this
Response to Petition for Writ of Mandamus to the following:
Via efile:
Eric J.R. Nichols Constance H. Pfeiffer
Gretchen Sween Beck Redden LLP
Christopher R. Cowan 1221 McKinney St., Suite 4500
Beck Redden LLP Houston, Texas 77010
515 Congress Ave. Suite 1900 [email protected]
Austin, Texas 78701 COUNSEL FOR RELATORS
51
[email protected]
[email protected]
[email protected]
COUNSEL FOR RELATORS
Robert C. Walters C. Andrew Weber
Gibson, Dunn & Crutcher LLP Kelly Hart & Hallman LLP
2100 McKinney Ave., Ste 1100 301 Congress Ave., Suite 2000
Dallas, Texas 75201 Austin, Texas 78701
[email protected] [email protected]
COUNSEL FOR RELATORS COUNSEL FOR RELATORS
/s/ Raymond C. Winter
Raymond C. Winter
52
Append¡x A
Dear Manual User:
Welcome to the 2009 Texas Medicaid Provider Procedures Manual. To enhance usability, this manual
is available on a searchable CD-ROM and on the TMHP website at www.tmhp.com.
Note: Alt users who access www,tmhp.com are requìred to accept the American Medical Association
(AMA) End-user Agreement on the use of Current Procedural Terminology (CPT). For each computer that
accesses the TMHP website, the agreement must be accepted every 30 days from the last date on
which the agreement was accepted by the user. lf the end-user agreement is not accepted on a
particular computer every 30 days, no user will be able to enter the webs¡te from that computer, For
additional information about the AMA and CPT, refer to www.ama-assn.org/ama/pub/category
/3113.htm\.
A Ctaims Fiting Resources table is located at the end of each service section with page references to all
claim instructions, appendices, Medicaid forms, and claim form examples associated with the service.
This manual contains both the Primary Care Case Management (PCCM) and Texas Health Steps
(THSteps) manuals. PCCM information can befound primarily in Section 7, though relevant information
can be found in othersections. THSteps information is contained in Section 43 and throughoutthe
manual.
Texas Medicaid policy published ¡n this manual represents policy implemented on or before October 31,
2008. Policy updates effective after October 31, 2008, are published bimonthly in the lexas Medicaid
Bulletin.
The November/December 2OO8 Texas Medicaid Bulletin and all Texas Medicaid Bulletins through and
including the September/October 2OO9 Texas Medicaid Bulletin supplement the 2009 Texas Medicaid
Provider Procedures Manual and update the policy contained herein.
The Texas Medicaid Provider Procedures Manualserves as a comprehensive guide for Texas Medicaid
providers, and contains information aboutTexas Medicald benefits, policies, and procedures. The
manual also includes an overview of the State of Texas Medicaid Managed Care programs to include
the State of Texas Access Reform (STAR), STAR+PLUS, PCCM, and NorthSTAR. The information
regarding the State of Texas Medicaid Managed Care programs, including Section 7, is not an
exhaustive policies and procedures guide. Forspecific managed care information, contactthe individual
health plans participating in STAR, STAR+PLUS, and NorthSTAR. For PCCM, refer to the TMHP
Telephone and Address Guide included in this manual.
Provider Manual Overview
The 2008 Texas Medicaid Provider Procedures Manual is divided into three pafts, including:
Part l: Provider lnformation
The information in Part I is for all health-care providers who are enrolled in Texas Medicaid and provide
services to Texas Medicaid clients. ln Part l, providers find instructions for providing allowable services
and receiving appropriate reimbursementforservices. The followingsections are included in Part l:
. lntroduction
. TMHP Telephone and Address Guide
. Section 7. Provider Enrollment and Responsibilitles
. Section 2. Texas Medicaid Reimbursement
. Section 3. TMHP Electronic Data lnterchange (EDl)
. Section 4. Client Eligibility
. Section 5. Claims Flling
. Section 6. Appeals
. Section Z. Managed Care
Part ll: Texas Medicaid Services
Parl ll contains a section for each Texas lvledicaid service with information on health-care policy, proce-
dures, and claims filing peftaìning to each provìder type.
CP-f on y coDynght 2008 American il,4edical Assoclation All rrghts reserued
Denta I
L9.4.2 THSteps Dental Eligibility . Dental prophylaxis, if appropriate
The client must be Medicaid- and THSteps-eligible (birth . Topical fluoride application using fluoride varnish, if
through 20 years ofage) atthe time ofthe service request appropriate
and service delivery. However, Medicaid-approved . Caries risk assessment
orthodontic services already in progress may be continued . Dental anticipatory guidance
even after the client loses Medicaid eligibility if the
orthodontic treatment is begun before the loss of Procedure code D0145 bundles the above services for
Medicaid eligibility and before the day of the client's 21st THSteps clients age 6 months of age through 35 months
birthday and is completed within 36 months. Medicaid- of age. THSteps dentists and Federally Qualified
approved orthodontic services already in progress may be Healthcare Centers (FQHCs) that have completed training
continued even afterthe client loses Medicaid eligibility if and been certified to participate in the First Dental Home
the orthodontic treatment is: initiative may be reimbursed for procedure code D0145.
. FQHC providers attending the training will be certified at
Begun before the loss of Medicaid eligibility
the facility level.
. Begun before the day of the client's 21st birthday
Procedure code D0120, D0150, Dtt2O, D1203, or
. Completed within 36 months. DL206 are denied if procedure code D0145 is billed on
The client is not eligible for THSteps dental preventive or the samê date of service by any provider. A First Dental
therapeutic benefits if the client's Medicaid ldentification Home examination is limited to ten services per client
Form (Form H3087) or Medicaid Eligibility Verification lifetime with at least 60 days between visits. This service
Form (Forms H7O27 and HLO27-A-C) states any of the is limited to once per day.
following:
. Emergency care only
. Presumptive eligibility (PE)
19.5 ICF-MR Dental Services
ICF-MR dental services are mandated by Medicaid, and
. Qualified Medicare beneficiary (QMB) reimbursement is provided for treatment of dental
. Women's Health Program problems for Medicaid-eligible residents of ICF-MR facil-
A check mark will be present ¡n the "Dental" column of the ities who are 2tyears of age or older. Residents of ICF-MR
client's Medicaid ldentification Form (Form H3087) to facilities who are 20 years of age or younger receive
indicate that the client is eligible for dental services. A services through the regular THSteps Program. Eligibility
message (THSteps Dental checkup due) may appear for ICF-MR services is determined þy DADS.
below the client's name on the monthly client Medicaid Procedure codes without a CCP designation in the limita-
ldentification Form (Form H3087) statingthe client is due tions column of the dental fee schedule may be billed in a
for a dental checkup, which serves as a reminder to routine manner for ICF-MR clients.
parents to contact their child's dentist and schedule an
These procedures must be documented as medically
appointment for their periodic dental checkup. This necessary and appropriate. ICF-MR clients are not subject
message is printed on the H3087 when the client has not to periodicity for preventive care.
received any dental services (diagnostic, preventive,
therapeutic, or orthodontic) for a period of six months. For procedure codes with a CCP designation, a provider
may request authorization with documentation or provide
Clients are not eligible for CCP services on or after their documentation on the submitted claim.
21st birthday, but are eligible for non{CP THSteps dental
services (see fee schedule for CCP and nonCCP Refer to: "Medicaid Dental Fee Schedule" on page 19-11.
reimbursed services)through the end of the month of their
21st birthday.
Note: lf a client has a birthday on any day except the first 19.6 THSteps and ¡CF-MR Provision
day during the month, the new eligibility period is of Services
considered to begin on the first day of the following All THSteps and ICF-MR dental services shall be
month. peformed by the Med icaid-en rol led denta I provide r except
for permissible work delegated to a licensed dental
hygienist, dental assistant, or dental technician in a
L9.4.3 First Dental Home dental laboratory on the premises where the dentist
First Dental Home is an initiative designed to establish a practices, or in a commercial laboratory registered with
dental home, provide preventive care, identify oral health the Texas State Board of Dental Examiners (TSBDE). The
problems, and provide treatment and parenlal/ guardian Texas Dental Practice Actand the rules and regulations of
oral health instruct¡ons as early as possible. the TSBDE (22f AC, Part 5) define the scope of work that
dental auxiliary personnel may perform. Any deviations
A First Dental Home visit includes, but is not limited to:
from these practice limitations shall be reported to the
. Comprehensive oral examination TSBDE and HHSC, and could result in sanctions or other
. Oral hygiene instruction with primary caregiver actions imposed agalnst the provider.
CDf only copyíght 2008 American Dental Association- All rights reseryed 19-5
Section 19
19.18 Hospitalization and ASG/HASC Exception: Retained deciduous teeth and cleft palates
with gross malocclusion that will benefit from early
Dental services performed in an ASC, hospital ambulatory treatment. Cleft palate cases do not have to meet the HLD
surgical center (HASC), or a hospital (either as an 26-point scoring requirement. However, it is necessary to
inpatient or an outpatient) may be benefits of THSteps submit a sufficient narrative and,/or outline of the
based on the medical or behavioraljustification provided, proposed treatment plan when request¡ng authorization
or if one of the following conditions exist: for orthodontic services on cleft palate cases,
. The procedures cannot be performed in the dental . Crossbite therapy.
office.
. . Head injury involving severe traumatic deviation.
The client is severely disabled.
The following l¡mitat¡ons apply for orthodontic services:
Contact the individual HMO for precertification require-
ments related to the hospital procedure. lf services are
. Orthodontic services for cosmetic purposes only are
precertified, the provider receives a precertification not a benefit of Texas Medicaid or THSteps.
number effective for 90 days. . Orthognathic surgery, to include extractions, required or
ln those areas of the state with Medicaid managed care, provided in conjunction with the application of braces
the provider should contact the managed care plan for must be completed while the client is Medicaid-eligible
specific requirements or limitations. lt is the dental in order for reimbursement to be considered.
provider's responsibility to obtain precertification from the . Except for D8660, all orthodontic procedures require
client's HMO or managed care plan for facility and general prior authorization for consideration of reimbursement.
anesthesia services if it is required. . The THSteps client must be Medicaid/THSteps€ligible
To be reimbursed by the HMO, the provider must use the when authorization is requested and the orthodontic
HMO's contracted facility and anesthesia provider. These treatment plan is initiated. lt is the provider's responsi-
services are included in the capitation rates paid to bility to see that the client has a current Medicaid
HMOs, and the facility/anesthesiologist risk nonpayment ldentification Form (Form H3087) or Medicaid Eligibility
from the HMO without such approval. Coordination of all Verification Form (Forms HLO27 and H1O27-A-C) and
specialty care is the responsibility of the client's primary that the date of birth on the form indicates the client ¡s
care provider. The primary care provider must be notified 20 years of age or younger and no limitations are
bythe dentist and/or the HMO of the planned services. indicated.
Dentists providing sedation/anesthesia services must . Prior authorization is issued to the requesting provider
have the appropriate current permit from the TSBDE for only and is not transferable to another provider. lf the
the level of sedation/anesthesia provided. client changes providers or if the provider stops
The dental provider must be in compliance with the guide- practicing dentistry in Texas Medicaid for whatever
lines detailed in "Dental Therapy Under General reason, a new prior authorization must be requested.
Anesthesia" on page 19-35. Refer to: "Transfer of Orthodontic Services" on page 19-
Note: Post-treatment authorization will not be approved 40.
for codes that require mandatory prior authorization. The following procedure codes, policies, and limitations
are applied to the processing and payment of o¡thodontic
services under THSteps dental services:
19.19 Orthodontic Services . Procedure code D8660 is allowed when:
(THSteps) . The client is referred to an ofthodontistfora determi-
Orthodontic services for cosmetic purposes only are not a nation of whether orthodontic services are indicated
benefit of Texas Medicaid. Orthodontic services are and to determine the appropriate time to initiate
limited to the treatment of children t2years of age or such services.
older with severe handicapping malocclusion, children . The client is referred to an ofthodontist and elects to
birth through 20 years of age with cleft palate, or other receive services from another orthodontic provider
special medically necessary circumstances as outlined in because of justifiable reasons.
Benefits and Lim¡tations below.
. Repeat visits at different age levels are required to
determine the appropriate time to initiate
19.19.1 Benefits and Limitations orthodontic treatme nt.
Orthodontic services include the following:
. Procedure code D8680 is payable for one retainer per
arch, per lifetime, and each retainer may be replaced
. Correction of severe handicapping malocclusion as once because of loss or breakage (prior authorization is
measured on the Handicapping Labiolingual Deviation required).
(HLD) lndex. Refer to page 79-45 for information on
how to score the HLD. A minimum score of 26 points is
. Procedure code D8670 should be billed only when an
required for full banding approval (only permanent adjustment to the appliances is provided and may not
dentition cases are considered). be billed before the date the orthodontic adjustment
was performed. The number of visits for monthly adjust-
19-38 CDf only copyright 2O08 American Denta¡ Assoc¡at¡on All righls reseryed
Dental
ments to the appliances is restricted to the number L9.L9.2 Mandatory Prior Authorization
that was authorized in the treatment plan. However, the Prior authorization is required for all THSteps orthodontic
number of monthly visits may be amended with appro- services except for procedure code D8660. The prior
priate documentation of medical necessity while the authorization request must contain the DOS that the
client is Medicaid eligible. orthodontic diagnostic tools were produced. lf the request
. Procedure code D8670 is paid only in conjunction with is approved, the date that the records were produced is
a history of braces (code 08080), unless special considered to be the date on which orthodontic treatment
circumstances exist. begins.
. All orthodontic codes and appliances are global fees. Refer to: "THSteps Dental Mandatory Prior Authorization
. Request Form" on page 8-111.
Separate fees for adjustments to retainers are not
payable. lf orthodontic treatment is medically indicated, providers
. The appropriate code should be billed for those appli- are responsible for obtaining prior authorization for a
ances required as part of the treatment of cleft palate complete orthodont¡c treatment plan while the client is
cases. eligible for Medicaid and THSteps and 20 years of age or
younger.
Special orthodontic appliances may also be used with full
banding and crossbite therapy with approval by the TMHP Submission of diagnostic casts are not required when
Dental Director. requesting prior authorization for procedure codes
08050, D8060, or D8080.
. Procedure codes D5951, 05952, D5953, D5954,
Prior authorization is a condition for reimbursement; it is
D5955, D5958, D5959, and D5960 are to be used as
applicable with documentation of medical necessity. not a guarantee of payment.
Otherwise, use the appropriate special orthodontic Upon receipt of prior authorization of complete treatment
appliance code. plans, providers are to advise clients that they will be able
. Full banding is allowed on permanent dentition only, to receive the approved treatment services (e.9.
and treatment should be accomplished in one stage orthodontic adjustments, bracket replacements and
and is allowed once per lifetime. retainers), even if they lose Medicaid elieiibility or reach
27 years of age. Approved ofthodontic treatment must be
Exception: Cases of mixed dentition when the treatment initiated before the loss of Medicaid eligibility and
plan includes extractions of remaining primary teeth or completed within 36 months of the authorization date.
cleft palate.
Note: Providers must submit all orthodontic services for
. Crossbite therapy is allowed for primary, mixed, or Medicaid managed care clients following these guide'
permanent dentition. lines. STAR and STAR+PLUS are not responsible for
. Providers must not request crossbite correction (limited orthodontic services.
orthodontics) for a mixed dentition client when there is Requests for orthodontic services must be accompanied
a need for full banding in the adult teeth. Crossbite by all of the following documentation:
therapy is an inclusive charge for treating the crossbite . An orthodontic treatment plan. The treatment plan
to complet¡on, and additional reimbursement is not
provided for adjustments or maintenance.
must include all procedures required to complete full
treatment (such as, extractions, ofthognathic surgery,
. lf a case is not approved, the dentist may file a claim upper and lower appliance, monthly adjustments, ant¡c-
for payment of the diagnostic workup necessary to ipated bracket replacements, appliance removal if
obta¡n the authorization using procedure codes D0330, indicated, special orthodontic appliances, etc.). The
D0340, D0350, and D0470. The dentist may receive treatment plan should incorporate only the minimal
payment underthese procedure codes for no more than number of appliances required to properly treat the
two cases out of every ten cases denied. The dentist case. Requests for multiple appliances to treat an
should determine if the client's condition meets individual arch are reviewed for duplication of purpose.
orthodontic benefit criteria before performing a . Cephalometric radiograph with tracing models.
diagnost¡c workup.
. . Completed and scored HLD sheet with diagnosis of
Procedure codes D8080, D8O5O, and 08060, are
Angle class (26 points required for approval of noncleft
limited to one per lifetime.
palate cases).
. Comprehensive orthodontic services (procedure code . Facial photographs.
D8080) are restricted to clients who are !2 years of
age or older or clients who have exfol¡ated all primary . Full series of radiographs or a panoramic radiograph;
dentition. Crossbite therapy includes diagnosic cast diagnosticauality films are required (copies are
services. accepted and radiographs will not be returned to the
provider).
CDT only copyright 2008 American Dental Association All rjghls reseryed 19-39
Section 19
. Any additional pertinent information as determined by The following supporting documentation must accompany
the dent¡st or requested by TMHP's Dental Director the new request for orthodontia services and must include
Requests for crossbite therapy require properly the DOS the ofthodontic diagnostic tools were produced:
trimmed models to be retained in the office and must . All of the documentation as required for the original
demonstrate the following criteria: provider.
. Posterior teeth. Not end to end, but buccal cusp of . The reason the client left the previous provider, if
upper teeth should be lingual to buccal cusp of lower known.
teeth.
. An explanation of the treatment status.
. Anterior teeth. The incisal edge of upper should be
.
lingual to the incisal of the opposing arch. A compete treatment plan addressing all procedures for
which authorization is being requested (such as the
The dentist should be certain that radiographs, photo- number of monthly adjustments or reta¡ners required to
graphs, and other information are properly packaged to complete the case).
avoid damage. TMHP is not responsible for lost or
damaged materials.
. A full diagnostic workup (D8080) with an HLD lndex.
The score of 26 points will be modified according to any
Refer to: "THSteps Dental Mandatory Prior Authorization progress achieved.
Request Form" on page 8-111.
Exception:The prior authorization requests for clients
who initiate orthodontic services before becoming eligible
19.19.3 Gompletion of Treatment Plan for Medicaid do not requ¡re models or the HLD score
sheet, nor does the client have to meet the HLD lndex of
lf a client reaches 2tyears of age or loses Medicaid eligi- 26 points, However, a complete plan of treatment is
bility before the authorized orthodontic treatment is required.
completed, reimbursement is provided to complete the
orthodontic treatment that was authorized and initiated Note: Medicaid clients who initiate orthodontic services
while the client was 20 years of age or younger, eligible for privately (e.9. pay out of pocket for the ofthodontic workup
Medicaid and THSteps, and completed within 36 months. and/or ¡n¡t¡al banding, etc.) wh¡le Medicaid eligible due to
Any orthodontic-related service requested (e.9., extrac- not meeting the HLD index 26-points, are not eligible to
tions or surgeries) must be completed before the loss of have their orthodontic services transferred to and
client eligibility. Serv¡ces cannot be added or approved reimbursed by Medicaid.
after Medicaid/THSteps eliÉibility has expired. To request prior authorization for completion of the
orthodontic treatment initiated by another provider,
complete a THSteps Dental Mandatory Prior Authorization
L9.L9.4 Premature Removal of Appliances Request Form and send it with the complete plan of
The overall fee for orthodontic treatment (D8080) treatment and appropriate documentation for orthodontic
includes the removal of orthodontic brackets and/or services and/or crossbite therapy to the TMHP Dental
treatment appliances. Procedure code D7997 may be Director at the following address:
used only when the appliances were placed by a different Texas Medicaid & Healthcare Partnership
provider with an unaffiliated practice (not a partner or THSteps and ICF-MR Dental Authorization and lnformation
office-sharing arrangement) and one of the following PO Box 2O29L7
conditions exist: Austin, TX 78720-2977
. There is documentation of a lack of cooperation from
the client.
. The client requests premature removal and a release
19.19.6 Gomprehens¡ve Orthodontic
form has been signed by the parent, guardian, or client Treatment
if he is at least 18 years of age. Comprehensive orthodontic services (procedure code
D8080) are restricted to cl¡ents who are t2years o1 age
Providers must keep a copy of the release form on file and
or older or clients who have exfoliated all primary
are responsible for this documentation during a review
dent¡tion.
process.
National procedure codes do not allow for any work-in-
progress or partial billing by separating the three
19.19.5 Transfer of Orthodontic Services orthodontic components: diagnostic workup, orthodontic
Prior authorization issued to a dental provider for
appliance (upper), or orthodontic appliance (lower).
orthodontic services is not transferable to another dental When billing for comprehensive orthodontic treatment,
provider. The new provider must subm¡t to TMHP a new D8080, three local codes must be submitted as remarks
prior authorization request in order to be approved to codes along with code D8080. Local codes (72OO9,
complete the orthodontic treatment initiated by the Dia gnostic worku p a pproved, Z2OI1-, O rthodontic
original provider.
19-40 CDf only copyright 2008 Ame.ican Dental Association. All rights reseryed
Section 19
L9.2L.L HLD Score Sheet
This sheet and a Boley Gauge are required to score.
Procedure:
. Occlude client or models in centric position.
. Record all measurements rounded-off to the nearest millimeter.
. Enter a score of 0 if the condition is absent.
. Overjet is measured from the most protrusive inc¡sor.
. Overbite is measured from the labio-incisal edge of overlapped anterior tooth or teeth to point of
maximum coverage.
. Ectopic eruption and anterior crowding: Do not double-score. Record the more serious condition.
PLEASE PRINT CLEARLY:
Client Name: Date of birth Medicaid lD:
Address: (Street/City/County/State/Zip Code)
CONDITIONS OBSERVED HLD SCORE
Cleft Palate Score 15
Severe Traumatic Deviations Score 15
Trauma/Accident related only
Overjet in mm. Minus 2 mm.
Example: I mm. - 2 mm. = 6 points
Overbite in mm. Minus 3 mm.
Example: 5 mm. - 3 mm. = 2 points
Mandibular Protrusion in mm. x5
See definitions/instructions to score (previous page)
Open Bite in mm. x4
See definitions/instructions to score (previous page)
Ectopic Eruption (Anteriors Only) Each tooth x3
Reminder: Points cannot be awarded on the same arch
for Ectopic Eruptíon and Crowding
Anterior Crowding Max. Mand = 5 pts. each
1O point maximum total for both arches arch
combined
Labio-lingual Spread in mm
TOTAL
Diagnosis For TMHP use only
Authorizat¡on Number
Examiner: ,Recorder:
Provider's Signature
Please submit this score sheet with records
19-46 CDI only copyr¡ght 2008 American Dental Associatron All ri8hts reserued
Append¡x B
9/8/2014 6:43:30 PM
Amalia Rodriguez-Mendoza
District Clerk
Travis County
D-1-GV-14-000581
II. ARGUMENT
A. The TMFP A Does Not Allow for Intervention or Consolidation of Other
Parties' Claims into a TMFPA Case
Twenty providers, all represented by the same counsel who also represent the
seven providers in the four Separately Filed Provider Cases, 2 have wrongly intervened in
Texas's TMFPA Case. Texas has properly filed a Motion to Strike their interventions.
See Motion to Strike Petitions in Intervention, Answer and Pleas to the Jurisdiction filed
June 9, 2014, in Texas's TMFPA Case (the arguments set forth therein are re-alleged and
incorporated by reference herein). As explained in the Motion to Strike Intervention,
there is no basis for the providers to intervene in Texas's TMFPA case. See Id. at pp. 9-
13. Likewise, consolidation of Texas's TMFPA Case is not a permissible alternative to
wrongly intervening in a case. Furthermore, consolidation of the providers' common law
claims and Xerox's contribution claims do not make them any more relevant or common
to Texas's TMFPA Case against Xerox. See Section C, infra.
Furthermore, twenty providers wrongly intervened in Texas HHSC's Injunction
Case and HHSC has properly filed a Motion to Strike their intervention. See Motion to
Strike Intervention filed September 3, 2014, in Texas HHSC' s Injunction Case (the
arguments set forth therein are re-alleged and incorporated by reference herein).
Consolidating these cases would allow the providers to wrongly intervene in a case and
2
The following cases are collectively referred to as the 4 Separately Filed Provider Cases: (1) Harlingen
Family Dentistry, P.C., et al. v. ACS State Healthcare, LLC, Cause No. D-GN-14-000319 ("Harlingen");
(2) Antoine Dental Center v. ACS State Healthcare, LLC, Cause No. D-GN-14-000320 ("ADC"); (3)
M&M Orthodontics, PA, et al. v. ACS State Healthcare, LLC, Cause No. D-GN-14-000320 ("M&M");
(4) Dr. Paul Dunn, DDS v. ACS State Healthcare, LLC, Cause No. D-GN-14-000322 ("Dunn").
Texas' Response in Opposition to Motion to Consolidate Page3
successfully circumvent the Court's ruling on Texas's Motion to Strike Intervention in
Texas HHSC' s Injunction Case by also seeking consolidation.
B. Consolidation of Six Separate Cases Into a Single Case For Trial Will Not
Promote Judicial Economy or Convenience, and Will Create An Unwieldy
Single Case Resulting in Jury Confusion and Prejudice.
1. Consolidation will promote jury confusion.
In deciding whether to consolidate cases, a trial court must weigh the judicial
economy and convenience that may be gained by the consolidation, against the risk of an
unfair outcome because of prejudice or jury confusion. TEX. R. CIV. P. 174; In re Van
Waters & Rogers, Inc., 145 S.W.3d 203, 208 (Tex. 2004) ("In determining whether
various claims are appropriate for consolidation, 'the dominant consideration in every
case is whether the trial will be fair and impartial to all parties"); Owens-Corning
Fiberglass Corp. v. Martin, 942 S.W.2d 712, 716 (Tex. App. -Dallas 1997).
"Consolidation should be avoided if it would cause 'confusion or prejudice as to render
the jury incapable of finding the facts on the basis of the evidence."' In re Van Waters &
Rogers, Inc., 145 S.W.3d at 208.
The providers in the 4 Separately Filed Provider Cases intervened in both Texas'
TMFPA Case and Texas HHSC' s Injunction Case. See Pleas in Intervention filed by
Harlingen, ADC, M&M, and Dunn on May 15, 2014 in Texas's TMFPA Case, and
Petition in Intervention filed by Intervenors in Texas HHSC' s Injunction Case on
September 3, 2014 at 2 (identifying the Harlingen, ADC, M&M and Dunn providers as
Intervenors). Consolidating these 4 Separately Filed Provider Cases with the two Texas
cases against Xerox, would result in a single case consisting of Texas, the Xerox Parties
Texas' Response in Opposition to Motion to Consolidate Page4
EXHIBIT A
EXHIBIT B
EXHIBIT C
EXHIBIT D
EXHIBIT E
| {
"pile_set_name": "FreeLaw"
} |
United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT August 10, 2005
_____________________
Charles R. Fulbruge III
No. 04-70040 Clerk
_____________________
DERRICK FRAZIER,
Petitioner - Appellant,
versus
DOUG DRETKE, Director,
Texas Department of Justice,
Correctional Institutions Division,
Respondent - Appellee.
_________________________________________________________________
Appeal from the United States District Court
for the Southern District of Texas
District Cause No. V-02-110
_________________________________________________________________
Before JONES, BARKSDALE, and PRADO, Circuit Judges.
PRADO, Circuit Judge.*
Derrick Frazier, a Texas inmate, was convicted of capital
murder and sentenced to death. Frazier seeks a certificate of
appealability (COA) to appeal the district court’s denial of his
application for federal habeas relief. After considering that
request, this court denies a COA.
Background of Frazier’s Complaints
The indictment against Frazier charged him with committing
*
Pursuant to 5TH CIRCUIT RULE 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 CIRCUIT
RULE 47.5.4.
1
capital murder under five different theories: The first
paragraph alleged that Frazier murdered Betsy Nutt and Cody Nutt
during the same criminal transaction; the second paragraph
alleged that Frazier murdered Betsy Nutt in the course of robbing
her; the third paragraph alleged that Frazier murdered Cody Nutt
in the course of robbing Betsy Nutt; the fourth paragraph alleged
that Frazier murdered Betsy Nutt in the course of burglarizing
the home of Ron Lucich; and the fifth paragraph alleged that
Frazier murdered Cody Nutt in the course of burglarizing Lucich’s
home.
On direct appeal, the Texas Court of Criminal Appeals
summarized the evidence of Frazier’s guilt as follows:
Michael Brown testified that, on the evening of
June 25, 1997, he drove [Frazier] and Jermaine Herron
to the Lucich home, which was located approximately ten
miles from Refugio in the country. [Frazier] and
Herron had been inside the place before and knew where
guns were kept. In the car, [Frazier] and Herron
discussed the plan for stealing the guns. The plan was
that they would quickly retrieve the guns and kill
anyone in the home. However, before they could enter
the Lucich home, the lights came on. As a result, the
three men drove away from the scene before commencing a
burglary. The next morning, Brown drove [Frazier] and
Herron back to the Lucich home, dropped them off, and
drove away.
In his videotaped confession, [Frazier] narrated
the following set of events occurring that morning.
After burglarizing the Lucich home, [Frazier] and
Herron took a pistol and went to the Nutt residence.
Hiding the pistol, the two men approached Betsy Nutt,
and Herron conversed with her. After this
conversation, Betsy offered to take [Frazier] and
Herron to Refugio. The three of them entered Betsy’s
pickup truck, but, as she started the engine, Betsy
realized she had forgotten her mobile phone. She
2
turned off the engine and went back inside her home to
retrieve the phone. While Betsy was in her home,
Herron told [Frazier] that “I’m going to do ‘em now,”
which [Frazier] took to mean that Herron was going to
kill the home’s occupants. [Frazier] responded, “It’s
your business.” When Betsy came back to her truck and
started the engine, Herron told her that he needed to
use the bathroom. Betsy told him that he could go
inside and do so, and Herron entered the Nutt
residence. Soon afterwards, Herron returned from the
residence and told Betsy that she had a telephone call.
Betsy exited the truck and entered her home, with
[Frazier] following her. Once inside the Nutt home,
Herron pointed the pistol at Betsy and told her not to
move. Hearing the commotion, Cody Nutt [(Betsy’s son)]
came into the room occupied by [Frazier], Herron, and
Betsy. Then Herron shot Cody with the pistol. After
shooting Cody, Herron handed the gun to [Frazier] and
told [Frazier] to shoot Betsy. Although he did not
want to do it, [Frazier] shot Betsy twice. Both shots
hit Betsy in the head. The first shot was from six to
seven feet away while the second shot occurred when
[Frazier] was standing over Betsy with the gun two or
three feet away from her. Then Herron set the house on
fire, and Herron and [Frazier] drove away in Betsy’s
truck.1
According to Brown’s testimony, Herron later
called Brown on the telephone. During their
conversation, Herron told Brown that he (Herron) had
killed a lady and a little boy. However, at a later
date, when Brown and Herron were in jail, Herron told
Brown that [Frazier] was the one who shot both persons.
Upon hearing this evidence, the jury returned a guilty verdict.
After the State presented its punishment evidence, the jury
answered the three special punishment issues in the affirmative.
Accordingly, the trial court imposed the death penalty.
1
In his confession, Frazier explained that after he and
Herron shot Betsy and Cody, they drove back to the Lucich
residence in Betsy’s truck, gathered up the property they had
collected earlier, set fire to the Lucich residence, and then
drove back to Refugio in Betsy’s truck.
3
The Texas Court of Criminal Appeals affirmed Frazier’s
conviction. That court later denied Frazier’s state habeas
application. Subsequently, the district court denied Frazier’s
federal habeas application and his request for a COA. Frazier
has asked this court for a COA on two issues.
Standard for Obtaining a COA
To obtain a COA, Frazier must make “a substantial showing of
the denial of a constitutional right.”2 To make this showing,
Frazier must demonstrate that “reasonable jurists could debate
whether (or, for that matter, agree that) the petition should
have been resolved in a different manner or that the issues
presented were adequate to deserve encouragement to proceed
further.”3 Where the district court denied relief on the merits,
rather than on procedural grounds, Frazier “must demonstrate that
reasonable jurists would find the district court’s assessment of
the constitutional claims debatable or wrong.”4 Where the
district court denied relief on a procedural ground, Frazier must
show reasonable jurists would find it debatable whether the
petition states a valid claim of the denial of a constitutional
right and that reasonable jurists would find it debatable whether
2
28 U.S.C. § 2253(c)(2); see Miller-El v. Cockrell, 537 U.S.
322, 336 (2003); Slack v. McDaniel, 529 U.S. 473, 483 (2000).
3
Miller-El, 537 U.S. at 336 (quoting Slack, 529 U.S. at
484).
4
Slack, 529 U.S. at 484.
4
the court was correct in its procedural ruling.5
In determining whether to grant a COA, this court’s
examination is limited to a threshold inquiry into the underlying
merit of Frazier’s claim.6 “This threshold inquiry does not
require full consideration of the factual or legal bases adduced
in support of the claims.”7 Instead, this court’s determination
is based on “an overview of the claims in the habeas petition and
a general assessment of their merits.”8 “Any doubt regarding
whether to grant a COA is resolved in favor of the petitioner,
and the severity of the penalty may be considered in making this
determination.”9
Frazier’s Complaint About the Jury Charge
Frazier contends that he was denied due process because the
state trial judge combined the five theories alleged in the
indictment into a single submission for the jury. The trial
judge submitted the theories to the jury in a disjunctive manner.
The jury returned a general verdict of “Guilty of capital murder
as charged in the indictment.” Frazier maintains that the jury
charge permitted the jury to find him guilty without unanimously
5
Id.
6
Miller-El, 537 U.S. at 336.
7
Id. at 337.
8
Id.
9
Miniel v. Cockrell, 339 F.3d 331, 336 (5th Cir. 2003).
5
believing him guilty on a single theory.
Frazier first complained about the jury charge in his state
habeas petition. The state habeas judge determined that
Frazier’s trial attorney failed to object to the jury charge and
concluded that Frazier had waived any error. The Texas Court of
Criminal Appeals then denied Frazier’s application based on the
state habeas judge’s findings of fact and conclusions of law.
Four of the justices of the court, however, dissented from the
denial of Frazier’s application. The dissenting justices
observed that the court had in the past recognized that charge
error of constitutional dimension was cognizable in a habeas
proceeding.10
Frazier raised the claim again in his application for
federal habeas relief. The district court determined that the
operation of state law barred federal consideration of the claim.
The court further determined that Frazier had failed to
demonstrate cause for his procedural default or that failing to
consider the claim would result in a fundamental miscarriage of
justice. Frazier seeks a COA to challenge the district court’s
resolution of his claim. Frazier argues that reasonable jurists
would disagree with the district court’s conclusion that the
state court adjudication of his claim was not contrary to or an
unreasonable application of federal law. He maintains that the
10
Ex Parte Derrick Frazier, 67 S.W.3d 189, 190 (Tex. Crim.
App. 2001) (Holland, J., dissenting).
6
dissenting opinion in his state habeas case demonstrates that
reasonable jurists would disagree about the resolution of his
claim.
The scope of federal habeas review is limited in part by the
doctrine of procedural default.11 “Procedural default exists
where . . . a state court clearly and expressly bases its
dismissal of a claim on a state procedural rule, and that
procedural rule provides an independent and adequate ground for
the dismissal. . . .”12 To be adequate, a state procedural rule
must be strictly or regularly followed by the state court; that
is, it must be “strictly or regularly applied evenhandedly to the
vast majority of similar claims.”13 Where a petitioner contends
a state procedural rule is not strictly or regularly followed, he
must show “that the state has failed to apply the procedural bar
rule to claims identical or similar to those raised by the
petitioner himself.”14 If he does not make this showing, a
procedural default exists and “the petitioner is deemed to have
forfeited his federal habeas claim.”15
The “Texas contemporaneous objection rule, upon which the
11
Bledsue v. Johnson, 188 F.3d 250, 254 (5th Cir. 1999).
12
Bledsue, 188 F.3d at 254.
13
Amos v. Scott, 61 F.3d 333, 339 (5th Cir. 1995).
14
Stokes v. Anderson, 123 F.3d 858, 860 (5th Cir. 1997).
15
Bledsue, 188 F.3d at 254.
7
state court relied in this case, is an adequate and independent
state ground that procedurally bars federal habeas review.”16
Under that rule, “a petitioner is deemed to have waived any error
by failing to raise an objection.”17 Here, there is no question
that Frazier’s trial attorney failed to object to the jury
charge. Although Frazier does not specifically address the issue
of procedural default, he at least suggests that the dissent from
the denial of his state habeas application indicates that the
Texas contemporaneous objection rule is not strictly or regularly
applied. This court has determined otherwise, observing that the
Texas Court of Criminal Appeals “strictly or regularly enforces
the contemporaneous objection rule.”18 Although the dissenting
justices insisted that the rule is not absolute, Texas
jurisprudence makes it clear that the failure to object to a
purported charge error precludes review in a habeas proceeding
unless the petitioner demonstrates that the charge error “in
light of the trial as a whole, so infected the procedure that the
applicant was denied a fair and impartial trial.”19 Yet the
16
Cotton v. Cockrell, 343 F.3d 746, 754 (5th Cir. 2003).
17
Haley v. Cockrell, 306 F.3d 257, 262 n.8 (5th Cir. 2002).
18
Amos, 61 F.3d at 342; see Rogers v. Scott, 70 F.3d 340
(5th Cir. 1995) (determining that Texas courts have not applied
the contemporaneous objection rule erratically or
inconsistently).
19
Ex Parte Maldonado, 688 S.W.2d (Tex. Crim. App. 1985); see
Ex parte Coleman, 599 S.W.2d 305, 306 (Tex. Crim. App. 1978)
(requiring habeas applicant to demonstrate that “‘the ailing
8
dissenting justices identified no cases where a petitioner met
that burden and only one case where the court reviewed
unobjected-to charge error on habeas review.20 This court
identified only two habeas proceedings where an intermediate
court of appeals reviewed unobjected-to charge error.21
Although it appears that two Texas courts have reviewed
unobjected-to charge error in a habeas proceeding, “an occasional
act of grace by a state court in excusing or disregarding a state
instruction by itself so infected the entire trial that the
resulting conviction violates due process’”) (quoting Cupp v.
Naughten, 414 U.S. 141, 147 (1973)).
20
The dissenting justices cited three habeas cases for their
proposition that the court of criminal appeals reviews
unobjected-to charge error in habeas cases, yet the court
reviewed unobjected-to charge error only one of those cases. See
Ex parte McKay, 819 S.W.2d 478, 480 (Tex. Crim. App. 1990)
(considering whether the trial court erred in restricting the
scope of voir dire examination); Ex parte Maldonado, 688 S.W.2d
at 116 (explaining that a habeas applicant must demonstrate that
an unobjected-to charge error infected his trial so as to deny
him a fair and impartial trial, but determining that the
applicant failed to allege sufficient facts that would entitle
him to review and dismissing the application); Ex parte Coleman,
599 S.W.2d at 307 (stating that jury charge error rarely rise to
constitutional error and concluding, without explaining why, that
the habeas applicant failed to show that his due process right
was violated by unobjected-to jury charge error).
21
See Jones v. State, No. 14-03-00499-CR, 2004 WL 438676, at
*2 (Tex. App.——Houston [14 Dist.] 2004, pet. ref’d) (not
designated for publication) (reviewing alleged jury charge error
on writ of habeas corpus for egregious harm even though the
appellant did not object at trial); Thacker v. State, 999 S.W.2d
56, 65 (Tex. App.——Houston [14 Dist.] 1999, pet. ref’d)
(requiring habeas applicant to prove that alleged unobjected-to
jury charge error denied her a fair and impartial trial).
9
procedural rule does not render the rule inadequate.”22 Frazier
has not shown that the Texas contemporaneous objection rule does
not apply to his claim. As a result, a procedural default
exists, and federal review is
precluded unless Frazier can overcome his procedural bar.23
A state prisoner can overcome a procedural default by
demonstrating cause for the default and actual prejudice
resulting from the purported violation of federal law, or by
demonstrating that failing to consider the claim will result in a
fundamental miscarriage of justice.24 To show cause for the
default, Frazier must show that “he was impeded by some objective
factor external to the defense, such as governmental interference
or the reasonable unavailability of the factual basis for the
claim.”25 Frazier, however, has not advanced any external factor
that impeded his attorney from objecting to the jury charge, and
the factual basis for Frazier’s claim existed at trial. Thus,
Frazier has not shown cause for his default. Because he has not
shown cause, there is no need to determine whether Frazier
demonstrated actual prejudice.
22
Amos, 61 F.3d at 342; see also Bass v. Estelle, 705 F.2d
121, 122-23 (5th Cir. 1983) (declining to consider an occasional
act of grace by Texas courts as the failure to strictly or
regularly follow the state's contemporaneous objection rule).
23
Coleman v. Thompson, 501 U.S. 722, 750 (1991).
24
Coleman, 501 U.S. at 750.
25
McCleskey v. Zant, 499 U.S. 467, 468 (1991).
10
To demonstrate that the failure to consider his claim will
result in a fundamental miscarriage of justice,26 Frazier must
make a persuasive showing that he is actually innocent.27
Frazier, however, does not claim that he is innocent or advance
any argument about innocence. Thus, he has not shown that a
fundamental miscarriage of justice will result.
Frazier has not shown cause for his default and has failed
to demonstrate that a fundamental miscarriage of justice will
result; thus, Frazier has failed to overcome his procedural bar.
Consequently, reasonable jurists would not debate the district
court’s conclusion that the procedural default bars federal
review. As a result, Frazier is not entitled to a COA on his
jury charge claim.
Frazier’s Ineffective Assistance of Counsel Claim
Frazier also maintains that his trial attorney was
ineffective for failing to investigate his background and for
failing to present mitigation evidence during the punishment
phase of his trial. At trial, the prosecutor called several
punishment witnesses who testified about Frazier’s violent
nature. Frazier’s attorney, however, did not call any witnesses.
Frazier first complained about his attorney’s failure to
present mitigating evidence in his state habeas application. To
26
Coleman, 501 U.S. at 750.
27
Sawyer v. Whitley, 505 U.S. 333, 339-40 (1992).
11
support his complaint, Frazier presented affidavits from his
grandmother and his aunt. In those affidavits, the affiants
described how Frazier was abandoned by his mother when he was a
teenager and how his mother died shortly thereafter. The
affiants presented Frazier as a good child who was left alone by
the death of his mother and who was dependent thereafter on his
aunt for support. After considering the affidavits and the trial
record, the state habeas court determined that Frazier’s trial
attorney actually presented the information contained in the
affidavits by cross-examining the state’s punishment witnesses,
and thus concluded that the attorney was not ineffective in
failing to present the mitigating evidence.
Frazier expanded his claim in his federal habeas proceeding.
In the district court, Frazier argued that his trial attorney was
unreasonable for failing to investigate the possibility that
Frazier’s family and friends could have provided evidence that
could have resulted in a life sentence in lieu of the death
penalty. Frazier maintained that his trial attorney failed to
investigate numerous mitigating factors: beatings with a belt by
his step-father; his adaptability to prison life as evidenced by
good behavior and obtaining a GED; his involvement as a child in
his church and community; his reputation among his school
teachers, school administrators, and coaches; the neighborhood in
which he was reared; whether he was a leader or a follower; his
substance abuse; and potential emotional problems caused by the
12
death of his mother. Frazier supported his claim with eighteen
affidavits which presented Frazier as a loving and well-behaved
child who went bad only after he lost his mother. Frazier also
presented a mitigation prospectus in which a mitigation expert
opined that “there were factors present in the life of Mr.
Frazier which were not investigated and which might be shown to
be mitigating factors to the crime.”
Considering Frazier’s expanded claim, the district court
observed that Frazier’s federal claim asserts a “legal argument
and evidentiary support that fundamentally differs from that
evidence anticipated by his state claim” and determined that
Frazier had not exhausted his claim to the extent that it
exceeded the evidence presented in state court. As for the
exhausted portion of the claim, the district court determined
that the state habeas court’s resolution of the claim was
reasonable based on the evidence presented to the state habeas
court. The court explained that although a reasonable attorney
making a prudent investigation into Frazier’s background would
have uncovered a great deal of potentially mitigating evidence,
nothing indicated that the result of the proceeding would have
been different had the attorney presented a mitigation case.
Frazier seeks a COA to challenge the district court’s
resolution of his ineffective assistance of counsel claim. In
seeking a COA, Frazier criticizes the state habeas court for not
focusing on the reasonableness of the investigation supporting
13
his trial attorney’s decision to not introduce mitigating
evidence. Frazier relies on Wiggins v. Smith28 where the Supreme
Court explained that the focus in an ineffective assistance claim
is not on whether counsel should have presented a mitigation
case, but rather on whether the investigation supporting
counsel’s decision not to introduce mitigating evidence was
itself reasonable.29 Frazier, however, does not address the
issue of exhaustion, except to emphasize that the district court
struggled in reaching its determination. Because Wiggins did not
change the requirement that a petitioner must exhaust his state
court remedies30 or the requirements for demonstrating
ineffective assistance of counsel,31 Frazier cannot show that
reasonable jurists would debate the district court’s treatment of
his claim.
First, reasonable jurists would not debate the district
court’s determination that Frazier did not exhaust his federal
habeas claim.32 “A federal habeas petitioner must exhaust state
28
539 U.S. 510 (2003).
29
Wiggins, 539 U.S. at 522.
30
28 U.S.C. § 2254(b)(1).
31
Strickland v. Washington, 466 U.S. 668, 687 (1984).
32
See Slack, 529 U.S. at 484 (requiring a petitioner who
challenges the district court’s determination that a claim is
procedurally barred to show that reasonable jurists would find it
debatable whether the court was correct in its procedural
ruling).
14
remedies before he can obtain federal habeas relief.”33 To
exhaust a claim in state court, a petitioner must fairly present
the substance of the claim to the state court.34 A petitioner
fails to satisfy the exhaustion requirement where he “‘advances
in federal court an argument based on a legal theory distinct
from that relied upon in the state court.’”35 He also fails to
satisfy the exhaustion requirement if he “presents newly
discovered evidence or other evidence not before the state courts
such as to place the case in a significantly different and
stronger evidentiary posture than it was when the state courts
considered it.”36
Here, Frazier presented an evidentiary basis for his federal
claim that was significantly different from the evidence he
presented in state court. In state court, Frazier complained
about his attorney’s failure to present a mitigation case and
contended that his attorney failed to investigate any possible
aggravating factors presented by the state. In federal court, he
complained about the unreasonableness of the investigation that
served as the basis for his attorney’s decision not to present a
mitigation case. Although the legal theories he relied on in
33
Carey v. Saffold, 536 U.S. 214, 220 (2002).
34
28 U.S.C. § 2254(b)(1).
35
Wilder v. Cockrell, 274 F.3d 255, 259 (5th Cir. 2001)
(citations omitted).
36
Brown v. Estelle, 701 F.2d 494, 495 (5th Cir. 1983).
15
state court are essentially the same theories he advanced in
federal court, Frazier presented a significantly different
evidentiary basis for his federal claim. The brief affidavits he
presented in state court present Frazier as a good boy who was
abandoned by his mother and left dependent on his aunt for
assistance. The eighteen affidavits supporting his federal claim
present much more. The affidavits describe a well-behaved and
sweet child who was very involved in his church and performed
well in school, but got involved with drugs and a bad crowd after
his mother died. The affidavits describe Frazier’s poor family
social history, unstable home life, good school performance, and
non-violent nature. Together, the federal affidavits suggest
that Frazier’s criminal conduct was due to bad friends, drugs, a
troubled and abusive childhood, living in the projects, a
follower’s mentality, and psychological issues. This information
was not presented to the state court and places Frazier’s case in
a significantly different and stronger evidentiary posture than
it was when the state court considered it. Although a habeas
petitioner may under some circumstances present evidence that was
not presented to the state court, evidence that places his claim
“in a significantly different legal posture must first be
presented to the state courts.”37 The affidavits Frazier
presented in the district court do not merely supplement the
37
Anderson v. Johnson, 338 F.3d 382, 386-87 (5th Cir. 2003)
(internal quotations omitted).
16
information presented to the state court; instead, they present
numerous mitigating factors that were not presented to the state
court. As a result, the district court’s procedural ruling that
Frazier failed to exhaust his claim is correct. Thus, Frazier’s
claim is barred to the extent that it exceeds the evidentiary
basis presented in state court.
Second, reasonable jurists would not debate the district
court’s resolution of Frazier’s unexhausted claim——that his
attorney was ineffective for failing to present mitigation
witnesses. To establish ineffective assistance of counsel, a
criminal defendant must show that his attorney’s assistance was
deficient and that the deficiency prejudiced him.38 “To
establish deficient performance, a petitioner must demonstrate
that counsel's representation ‘fell below an objective standard
of reasonableness.’”39 “In any case presenting an
ineffectiveness claim, the performance inquiry must be whether
counsel's assistance was reasonable considering all the
circumstances.”40 To show prejudice, the defendant must show a
reasonable probability that, absent his attorney’s error, the
jury would have concluded that the balance of aggravating and
38
Strickland, 466 U.S. at 687; Hopkins v. Cockrell, 325 F.3d
579, 586 (5th Cir. 2003).
39
See Wiggins, 539 U.S. at 522 (quoting Strickland, 466 U.S.
at 688).
40
Strickland, 466 U.S. at 688.
17
mitigating circumstances did not warrant the death sentence.41
The state habeas judge determined that Frazier’s attorney
was not deficient——the first part of the test for ineffective
assistance of counsel——but the district court was troubled by the
lack of an explanation for why the attorney failed to investigate
the possibility that family members could provide mitigation
evidence. Faced with the numerous affidavits Frazier presented
with his federal habeas petition, the district court questioned
the reasonableness of the attorney’s performance, but determined
that Frazier could not show that the result of his trial would
have been different even if the attorney had called mitigation
witnesses.
Although the district court resolved this claim without
making a determination about deficient performance, the state
judge’s determination that the attorney was not deficient was not
an unreasonable application of clearly established federal law
for determining whether an attorney’s performance was
deficient.42 The trial attorney’s cross-examination of state
punishment witness Courtney La Font revealed that Frazier’s
mother had abandoned him when he was 15 and that his mother died
41
Id. at 695.
42
See Pondexter v. Dretke, 346 F.3d 142, 145 (5th Cir. 2003)
(explaining that a petitioner seeking habeas relief based on
ineffective assistance of counsel must show that the state
court’s adjudication of his claim constitutes an unreasonable
application of clearly established federal law).
18
shortly afterwards. La Font explained that his mother’s death
left Frazier feeling hurt, confused, and alone. She stated that
Frazier lived periodically with his father and his aunt when his
mother was still living and that he started using drugs. This
information is essentially the same information that was
presented in the affidavits of Frazier’s grandmother and aunt.
In addition, the attorney’s cross-examination of two other
state punishment witnesses showed that Frazier had previously
completed a boot-camp program without disciplinary action and
that Frazier earned his GED while incarcerated. This testimony
evidenced the possibility that Frazier could be incarcerated
without posing a danger to others. Thus, Frazier’s trial
attorney presented mitigation evidence.
As for the second part of the test for ineffective
assistance of counsel, reasonable jurists would not debate the
correctness of the district court’s determination that nothing
indicated that the result of Frazier’s trial would have been
different. The state presented several punishment witnesses who
testified about various violent acts committed by Frazier. This
testimony revealed that Frazier was a gang member, robbed a man
at age 15, raped his girlfriend at age 16, committed an
aggravated assault at age 17, was convicted for unlawfully
carrying a weapon while he was on probation at age 18, and
assaulted a 17-year-old at age 20. The state’s punishment
evidence indicated that Frazier engaged in repeated and
19
escalating acts of violent behavior and that efforts to
rehabilitate him failed.
The evidence portrayed Frazier as a violent person who poses
a danger to others. Yet nothing in either the affidavits
presented to the state court——or even in the plethora of
affidavits presented to the federal court, were they, contrary to
this opinion, to be considered——suggests that the jury would have
considered a life sentence in lieu of the death penalty. As the
district court observed, “[t]he instability of Frazier’s
childhood and his good nature as a youth, when compared to the
violent life he chose to live and failed to reform, would not
call for a reasonable probability of a different result.” Thus,
no reasonable probability exists that, had Frazier’s attorney
called Frazier’s grandmother and aunt as mitigation witnesses,
the jury would have returned a life sentence.
Frazier has not demonstrated that reasonable jurists would
debate the correctness of the district court’s resolution of his
claim. As a result, he is not entitled to a COA on his
ineffective assistance of counsel claim.
Conclusion
Because Frazier has not shown that reasonable jurists would
debate the district court’s resolution of his claims, the court
DENIES Frazier’s request for a COA.
APPLICATION DENIED.
20
21
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101 N.H. 289 (1958)
STATE
v.
CHALMERS H. DAY.
No. 4640.
Supreme Court of New Hampshire.
Argued April 1, 1958.
Decided April 24, 1958.
Louis C. Wyman, Attorney General, John J. Zimmerman, Assistant Attorney General, and T. Casey Moher, city solicitor (Mr. Zimmerman orally), for the State.
*290 Philip C. Keefe (by brief and orally), for the respondent.
DUNCAN, J.
The resolution of the city council which purported to amend the ordinances of the city and to restrict portions of Main Street to one-way travel was not in the form prescribed by the city charter (Laws 1949, c. 430, s. 2, Pt. I, subs. 13, as amended by Laws 1953, c. 358, s. 5); nor was it shown to have been published as required by the compiled ordinances of the city. Compiled Ordinances of Dover (1939) c. I, s. 3. As the respondent's argument is understood, it is his contention that a public highway is one which is open to the public at large for travel, without restriction except by validly adopted police regulation (25 Am. Jur., Highways, p. 339, s. 2); that the purported regulation relating to Main Street was not legally adopted; and that Main Street, by virtue of the invalid regulation and consequent abandonment of full use of the highway, ceased to be a public highway, and will not again become one until it has been used as such for a period of twenty years. RSA 230:1. From this conclusion it is argued that the State failed to establish that the alleged offense occurred upon a public highway.
The action taken by the city council is in issue only as it bears upon the status of Main Street as a public highway. If it be assumed, arguendo, that the resolution adopted by the council was invalid for want of compliance with requirements of the charter (but see, Town of Walkerton v. N.Y.C. & St. L. R.R. Co., 215 Ind. 206, 211, 212), we are of the opinion that the result for which the respondent contends does not follow. An invalid restriction would have no legal effect. It is not contended that Main Street was not a public highway prior to adoption of the resolution by the council. It follows that its status as a public highway was unchanged by reason of any invalid restriction.
If travel upon the highway was in fact restricted in mistaken reliance upon invalid action by the council, this would not constitute such an abandonment of rights by the public as to change the status of the highway as a public way. State v. Morse, 50 N. H. 9, 20; Thompson v. Major, 58 N. H. 242, 244. We therefore find it unnecessary to determine the validity of the action taken by the city council.
There was no error in the use of judicial notice in determining that the State had sustained its burden of proving the offense charged, and the respondent's motion to dismiss was properly *291 denied. State v. Duranleau, 99 N. H. 30; State v. Deane, 101 N. H. 127, 131.
Exception overruled.
All concurred.
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Opinion issued August 5, 2010
In The
Court of
Appeals
For The
First District
of Texas
————————————
NO. 01-10-00234-CR
———————————
Dondrick Deshon Christmas, Appellant
V.
The State of
Texas, Appellee
On Appeal from the 268th District Court
Fort Bend County, Texas
Trial Court Case No. 50069
MEMORANDUM OPINION
We lack jurisdiction to hear this
appeal. The trial court sentenced
appellant, Dondrick DeShon Christmas, and signed a final judgment in this case
on December 15, 2009.[1] Appellant did not file a motion for new
trial, and therefore the deadline for filing a notice of appeal was January 14,
2010, 30 days after sentencing. See
Tex. R. App. P. 26.2(a)(1).
On February 17, 2010, twenty-eight days after the deadline
for filing his notice of appeal, appellant filed a document that included a
hand-written notation which states “Yes, I would like to appeal my case at this
time period.” We construe the February
17th, 2010 document as a notice of appeal.
An untimely notice of appeal fails to vest the appellate court with
jurisdiction to hear the case. Slaton
v. State, 981 S.W.2d 208, 209–10 (Tex. Crim. App. 1998); Olivo
v. State, 918 S.W.2d 519, 522 (Tex. Crim. App. 1996); Douglas v. State,
987 S.W.2d 605, 605-06 (Tex. App.CHouston [1st Dist.] 1999, no pet.).
We therefore dismiss the appeal for lack of jurisdiction.
All pending motions are denied as moot.
It is so ORDERED.
PER CURIAM
Panel consists of Justices Keyes, Hanks, and Higley.
Do not publish.
Tex. R. App. P. 47.2(b).
[1]
We
note that appellant, Dondrick Deshon Christmas, pleaded guilty to the offense
of aggravated assault, and in accordance with his plea bargain agreement with
the State, the trial court sentenced appellant to confinement for eight
years. As part of appellant’s
plea-bargain agreement with the State, he signed a written waiver of appeal. On
December 15, 2009, the trial court certified that this case is “a plea-bargain
case and the defendant has no right to appeal” and that “the defendant has
waived the right of appeal.” The
certification that appellant has no right of appeal, as shown on the “Trial
Court’s Certification of Right of Appeal” form signed by the trial court on
December 15, 2009, is supported by the record that shows that appellant has no
right of appeal due to the agreed plea bargain.
See Tex. R. App. P.
25.2(a). Also see, Tex. R. App. P. 25.2 (b).
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132 F.3d 37
NOTICE: Seventh Circuit Rule 53(b)(2) states unpublished orders shall not be cited or used as precedent except to support a claim of res judicata, collateral estoppel or law of the case in any federal court within the circuit.UNITED STATES of America, Plaintiff-Appellee,v.Tonja Tonetta MONTGOMERY, Defendant-Appellant.
No. 96-1283.
United States Court of Appeals, Seventh Circuit.
Argued November 12, 1997.Decided Dec. 4, 1997.
Appeal from the United States District Court for the Central District of Illinois.
Before Hon. Jesse E. ESCHBACH, Circuit Judge Hon. John L. COFFEY, Circuit Judge Hon. Michael S. KANNE, Circuit Judge
ORDER
MILLS, J.
1
Tonja Montgomery pleaded guilty to one count of possessing crack cocaine with intent to distribute, reserving the right to appeal the denial of her motion to suppress. Police stopped the car in which Montgomery was a passenger for a traffic violation, and found drugs both in the car and on her person in subsequent searches. The district court denied her motion to suppress the drug, and incriminating statements she made to the police, and she now appeals. We affirm.
I. Facts
2
On April 18, 1995, the Springfield police received two anonymous phone calls indicating that one or two black females carrying a substantial amount of cocaine would arrive in Springfield on a bus after 11:00 p.m. that evening. The caller reported that one of the women would have a nice hairdo, and would be picked up by a black male in a two-door blue Chevrolet, while the other woman would have a light complexion and have the name "Dennis" tattooed on her neck. In respose to the calls, the Springfield police set up surveillance at the Springfield bus station.
3
Shortly before 12:20 a.m., the officers observed a silver 2-door car enter and leave the bus station parking lot four times. One of the officers saw the car's license plate, and determined that it was registered to the Hertz Rental Corporation at O'Hare airport in Chicago. At 12:20, a bus arrived at the station, followed by the silver car, which parked approximately 50 feet from the bus. Officer Loftus observed a black person exit the bus and enter the car. When the car left, Officer Loftus advised other units in the area that the car had left the lot, so that the police could stop the vehicle.
4
Officers Kohler and Banks followed the silver car for several blocks, and stopped the car after the driver made a right turn after signaling left. Officer Kohler then approached the driver's side of the car, and Officer Banks approached the passenger side. The officers found Kaven Warren in the driver's seat, Tonja Montgomery in the passenger seat, and a 16-year-old juvenile along with Warren and Montgomery's 1-year-old son in the back. The officers noticed that there were white flakes on the bottom of Warren's shirt, a white substance on Montgomery's jacket, and a white substance on the juvenile's hands. Officer Kohler also saw a fist-sized white rock that he suspected was cocaine in Warren's right shoe. A subsequent search of the car turned up several smaller pieces of suspected cocaine under the passenger seat and in the area around the passenger doorhandle. The officers searched Warren and the juvenile, and discovered a plastic bag containing white rocks on the juvenile.
5
The officers removed Montgomery's jacket, and saw a torn trash bag sticking out from the waistine of her sweatpants. Officer Kohler pulled out the bag, which was empty. When Montgomery was searched, three rocks fell from her sweatpants. All of the rocks proved positive for cocaine when tested at the scene. The officers recovered nine ounces of crack cocaine in total. At the county jail, after being read their Miranda rights, Warren and Montgomery both gave incriminating statements.
6
Montgomery was indicted on one count of possession of crack with intent to distribute, in violation of 21 U.S.C. § 841(a)(1). Montgomery moved to suppress the drugs and her statements, alleging 1) the stop of the car was an invalid pretextual stop, because the order to stop the car was given prior to observing any traffic violation; 2) the plain view search of the car was invalid, 3) there was no probable cause to search Montgomery, because she was the passenger of the car, and 4) Montgomery's statements should be suppressed as the fruit of an unlawful arrest. The district court denied the motion on the grounds that there was probable cause to make the traffic stop, and that the search of Montgomery was a search incident to a lawful arrest. Montomery cooperated with the government and pled guilty, reserving her right to appeal the denial of the motion to suppress. She received a 41 month sentence. On appeal, Montgomery urges reversal on the same four grounds.
II. Analysis
7
When reviewing a motion to suppress, this court reviews questions of law de novo, and questions of fact for clear error. United States v. Liss, 103 F.3d 617, 620 (7th Cir.1997). A district court's determination of probable cause or reasonable suspicion to search is reviewed de novo. See Ornelas v. United States, 116 S.Ct. 1657, 1659 (1996).
8
Montgomery argues at length that the traffic stop was pretextual, but this argument is foreclosed by Whren v. United States, 116 S.Ct. 1769 (1996). A traffic stop is valid when made with probable cause to believe that a traffic violation has occurred See Whren, 116 S.Ct. at 1772; United States v. Trigg, 878 F.2d 1037 (7th Cir.1989). The subjective motivations of the police officers effecting a stop cannot delegitimize a stop made with probable cause. Whren, 116 S.Ct. at 1774. Because the officer who stopped the car did so only after seeing a moving violation, the fact that the police had followed Warren and Montgomery prior to seeing the moving violation is irrelevant. See United States v. Williams, 106 F.3d 1362 (7th Cir.1997); United States v. Fiala, 929 F.2d 285 (7th Cir.1991).
9
Montgomery attempts to argue that there was no moving violation, even though both her statement of facts in the memorandum in support of the motion to suppress in the district court and the statement of facts in her primary brief to this court indicate that "[t]he driver signaled left, then turned right onto 31st Street." Even if it were true, as she states in her reply brief, that she only stipulated "that the officers said the driver signaled a left turn but turned right" (emphasis in original), Montgomery provides no evidence to show that the district Court's factual finding that a violation occurred was clearly erroneous. See Williams, 106 F.3d at 1366 ("Without any evidence to the contrary, we cannot find these factual determinations by the district court clearly erroneous.").
10
Montgomery's other claims are meritless, Both her Miranda claim and her challenge to thw search of the car are premised on the illegality of the initial stop of the car. Her challenge to the search of her person is similarly meritless, because the drug residue on her jacket and the drugs found in the passenger seat area of the car clearly gave the police probable cause to search Montgomery.
AFFIRMED
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-6016
ANTOINE HILL,
Plaintiff - Appellant,
v.
UNITED STATES OF AMERICA,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern
District of Virginia, at Richmond. Robert E. Payne, Senior
District Judge. (3:11-cv-00480-REP)
Submitted: April 17, 2014 Decided: April 22, 2014
Before WILKINSON, KING, and DUNCAN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Antoine Hill, Appellant Pro Se. Gurney Wingate Grant, II,
Assistant United States Attorney, Richmond, Virginia, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Antoine Hill appeals the district court’s order
dismissing his Fed. R. Crim. P. 41(g) motion for return of
seized property. We have reviewed the record and find no
reversible error. Accordingly, we affirm the district court’s
order. Hill v. United States, No. 3:11-cv-00480-REP (E.D. Va.
Dec. 19, 2013). 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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Case: 12-12295 Date Filed: 03/05/2013 Page: 1 of 2
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 12-12295
Non-Argument Calendar
________________________
D.C. Docket No. 2:06-cr-00049-SLB-RRA-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
LARRY JERRELL SMITH,
a.k.a. Andre Williams,
a.k.a. Andre Woods,
a.k.a. Andre Smith,
Defendant-Appellant.
__________________________
Appeal from the United States District Court
for the Northern District of Alabama
_________________________
(March 5, 2013)
Before HULL, JORDAN and ANDERSON, Circuit Judges
Case: 12-12295 Date Filed: 03/05/2013 Page: 2 of 2
PER CURIAM:
Gregory J. Reid, counsel for Larry Jerrell Smith in this appeal of the
revocation of Smith’s supervised release, has moved to withdraw from further
representation of the appellant and filed a brief pursuant to Anders v. California,
386 U.S. 738, 87 S.Ct. 1396, 18 L.Ed.2d 493 (1967). Our independent review of
the entire record reveals that counsel’s assessment of the relative merit of the
appeal is correct. Because independent examination of the entire record reveals no
arguable issues of merit, counsel’s motion to withdraw is GRANTED, and Smith’s
revocation of supervised release and sentence are AFFIRMED.
2
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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
EDDIE B., Appellant,
v.
DEPARTMENT OF CHILD SAFETY, E.B., Appellees.
No. 1 CA-JV 17-0329
FILED 1-9-2018
Appeal from the Superior Court in Navajo County
No. S0900JD201400012
The Honorable Michala M. Ruechel, Judge
REVERSED AND REMANDED
COUNSEL
Law Office of Elizabeth M. Hale, Show Low
By Elizabeth M. Hale
Counsel for Appellant
Arizona Attorney General’s Office, Mesa
By Nicholas Chapman-Hushek
Counsel for Appellee Department of Child Safety
EDDIE B. v. DCS, E.B.
Decision of the Court
MEMORANDUM DECISION
Judge Jon W. Thompson delivered the decision of the Court, in which
Presiding Judge Kenton D. Jones and Judge Jennifer M. Perkins joined.
T H O M P S O N, Judge:
¶1 Eddie B. (father) appeals the juvenile court’s order appointing
Hallie H. as permanent guardian of father’s son, E.B. For the reasons stated
below, we reverse the court’s order.
FACTUAL AND PROCEDURAL HISTORY
¶2 Father is the biological parent of E.B., born February 2007.1
Father is hearing impaired, and uses sign language and vocal intonations
to communicate. E.B. is not hearing impaired.
¶3 The Department of Child Safety (DCS) removed E.B. from his
home, with father and his mother, in March 2014. E.B. had reportedly been
exposed to domestic violence between his parents, including an incident
where father threatened suicide, pointed a gun to his own head, and shot a
couch that was opposite from where E.B. and his mother were sitting.
¶4 After he was placed in DCS’s care, E.B. was removed to live
with his maternal aunt, Hallie H. At the time of his removal, E.B. was
diagnosed with chronic anorexia; family stress; chronic anxiety; failure to
thrive; and being underweight. E.B.’s low weight and issues thriving were
“attributed in part to anxiety which appeared to be exacerbated by [his]
parents’ behavior towards each other.” However, the juvenile court found
there was no evidence of physical abuse towards E.B. E.B. was adjudicated
dependent as to father in August 2014.
¶5 E.B. has thrived since residing with his maternal aunt. E.B.’s
parents separated after his removal. DCS assigned father a case plan to
eliminate the need for E.B.’s out of home placement.
¶6 Pursuant to father’s case plan, father was required to accept
responsibility for his part in domestic violence; learn how his behavior was
affecting E.B.; work with a therapist on both domestic violence and anger
1 Mother is not a party to this appeal.
2
EDDIE B. v. DCS, E.B.
Decision of the Court
issues; and show emotional stability and the ability to accept constructive
criticism. After a psychological evaluation, the psychologist recommended
that father receive individual counseling, work on his parenting skills with
a parent aide, and have supervised visits with E.B.
¶7 DCS provided father with sign language interpreter services.
DCS did not provide E.B. with services to enable him to continue to learn
to sign after removal.
¶8 The case plan remained reunification throughout most of the
dependency. However, in the first week of December 2016, the juvenile
court ruled that it was not an appropriate time to return the child to either
parent, that it was “appropriate to change the case plan to guardianship by
a relative[,]” with a target date for April 2017. The court also noted that it
“[would] set a secondary plan of severance and adoption.”
¶9 In late January 2017, E.B.’s guardian ad litem moved to have
the juvenile court appoint Hallie H. as E.B.’s permanent guardian. Father
objected to the permanent guardianship and a trial regarding the matter
was set for April 7, 2017. After the guardianship hearing, the juvenile court
took the matter under advisement. The court ultimately found that
“guardianship is in the best interests of [E.B.].” Relying on Arizona Revised
Statutes (A.R.S.) section 8-871 (2017) 2 (permanent guardianship of a child),
the court ruled that: (1) [E.B.] had been in the custody of the prospective
guardian for at least 9 months; (2) DCS had made reasonable efforts to
reunify the family, but further efforts would be unproductive; and (3) the
termination of parental rights was not in E.B.’s interest given his desire to
have an ongoing relationship with his parents in a safe environment. See
id. at § 8-871(A)(1)-(4).
¶10 Father timely appealed the juvenile court’s order of
permanent guardianship to Hallie H. We have jurisdiction pursuant to
Article 6, Section 9 of the Arizona Constitution and A.R.S. §§ 8-235(A)
(2017), and 12-2101(A)(1) (2017).
DISCUSSION
¶11 Father challenges the juvenile court’s ruling that DCS made
reasonable efforts to reunify the family, but further efforts would be
unproductive. See A.R.S. § 8-871(A)(3).
2 We cite to the current version of the relevant statutes, unless
revisions material to this decision have occurred.
3
EDDIE B. v. DCS, E.B.
Decision of the Court
¶12 In reviewing a juvenile court’s order for permanent
guardianship, we accept its findings of fact, unless those findings are
unsupported by reasonable evidence. Jesus M. v. Ariz. Dep’t of Econ. Sec.,
203 Ariz. 278, 280, ¶ 4 (App. 2002). The finding of the requisite statutory
grounds within the order must be supported by clear and convincing
evidence. See, e.g., A.R.S. § 8-872(G) (2017); Jennifer B. v. Ariz. Dep’t of Econ.
Sec., 189 Ariz. 553, 555 (App. 1997) (applying the clear and convincing
evidence standard of review in case regarding permanent guardianship);
see also Valerie M. v. Ariz. Dep’t of Econ. Sec., 219 Ariz. 155, 160, ¶ 15 (App.
2008) (the clear and convincing evidence standard of proof for statutory
grounds is also applied in the analogous context involving severance of
parental rights). The applicable standard of proof requires a showing
establishing the statutory grounds to a degree of high or reasonably certain
probability. Kent K. v. Bobby M., 210 Ariz. 279, 284-85, ¶ 25 (2005).
¶13 We will not reverse the guardianship order, unless it is clearly
erroneous. Jennifer B., 189 Ariz. at 555. A finding of “clearly erroneous” is
warranted where, upon review of the entire evidence, we are left with a
“definite and firm conviction that a mistake has been committed.” Park
Cent. Dev. Co. v. Roberts Dry Goods, Inc., 11 Ariz. App. 58, 60 (1969) (internal
quotation and citation omitted). Undoubtedly, a mistake has occurred
where a belief or finding does not correspond with essential facts.
¶14 Father asserts his challenge to the subject statutory ground in
two parts. First, he contends DCS failed to make reasonable efforts to
reunite him and E.B. by not providing E.B. with “appropriate instruction in
ASL” to facilitate communication between them which, father alleges, was
“critical to the success” of DCS-ordered therapy. Second, father argues that
the evidence did not meet the requisite standard of proof to support the
statutory finding that further efforts to reunify father and E.B. would be
unproductive.
¶15 We cannot find in father’s favor on his first basis of
contention. A showing of reasonable efforts need not be supported by a
finding that DCS had provided a parent and child with “every conceivable
service.” 3 Christina G. v. Ariz. Dep’t of Econ. Sec., 227 Ariz. 231, 235, ¶ 15
(App. 2011) (quotation and citation omitted). Moreover, the juvenile court’s
guardianship order did not consider communication issues as between E.B.
and father, but rather focused on whether father was addressing his own
3 The juvenile court found that DCS made reasonable efforts to
provide services to father, including counseling; case management;
visitation; interpreters; and parenting classes.
4
EDDIE B. v. DCS, E.B.
Decision of the Court
issues dealing with anger and domestic violence. As such, we affirm the
juvenile court’s ruling on this point.
¶16 We nonetheless find that the juvenile court erred as the
evidence of record is insufficient to support its finding that further efforts
to reunify father and E.B. would be unproductive.
¶17 The record indicates that as to father’s fitness to be reunified
with E.B., both DCS and the juvenile court were primarily concerned with
the potential for domestic violence by father. They were specifically
concerned about the likelihood that such violence would create an unsafe
environment for E.B., father’s ability to take responsibility for the violence,
and his ability to control his anger.
¶18 In support of the court’s “unproductive” finding, the record
does establish that at certain visits with E.B. father was reportedly hostile,
and on at least one occasion, in May 2016, allegedly “threatened the
interpreter, the parent aide and frightened [E.B.].” Father also
inconsistently engaged in counseling.
¶19 The juvenile court also found,
Father has yet to accept responsibility for his violent behavior
and its impact on his son. Instead claiming either that the
child made up the incidents or misinterpreted the interactions
between his parents due to their method of communicating
due to their deafness.
However, the record does not fully support this finding. At trial, E.B.’s
guardian ad litem questioned the assigned case aide regarding father’s
acceptance of responsibility. The case aide, who, as of December 14, 2016,
oversaw supervised visitations at father’s home testified that she believed
father was “[v]ery much so” taking responsibility for his role in the
situation that caused E.B. to be removed from the home.
¶20 Additionally, during the guardianship hearing, the assigned
DCS case manager testified that father had not reached his case plan goals
to be reunified with E.B. The same case manager also opined that it would
not be beneficial to allow father more time, to evaluate his progress, before
changing the case plan to permanent guardianship. Nonetheless, this case
manager also conceded that the notes she received from the case aide, as of
December 2016, indicated that there were no problems or concerns during
visitations to suggest father was having anger issues or unable to manage
his anger. The case manager however indicated that father was likely on
5
EDDIE B. v. DCS, E.B.
Decision of the Court
his best behavior because father had been videotaping the more recent
visits. 4
¶21 The subject case aide testified that recent visits had been going
well, and DCS agrees that father’s behavior had “finally improved” within
the six months prior to the guardianship hearing. Additionally, the juvenile
court found that “[t]he parent aide testified that she believes visits should
be unsupervised even though [E.B.] has shown concerns about [f]ather’s
behavior during the visits and is told by the supervisor that [f]ather’s
actions are not anger but passionate.” (Emphasis added.) In a December
2016 ruling, the juvenile court also noted that E.B.’s guardian ad litem “fe[lt]
that [E.B. was] deliberately trying to sabotage visits (especially with dad) in
order to remain in the current placement.”
¶22 Furthermore, while the juvenile court found that mother and
father continued to have “some” contact with each other, the two had
separated since E.B.’s removal and were no longer living together.
Accordingly, the primary source of domestic conflict, at least as of the time
of the guardianship hearing, had been significantly eliminated.
¶23 Given the record of father’s progress—despite the DCS case
manager’s skepticism—over the several months most immediately
preceding the guardianship hearing, we do not agree that clear and
convincing evidence supports the juvenile court’s finding that further
efforts would be unproductive. At best, based upon the evidence, we could
make a preponderance of the evidence supposition in this regard, which, of
course, is insufficient. We therefore reverse the juvenile court’s apparently
premature finding 5 on the issue. See also Cochise Cty. Juv. Action No. 5666–
J, 133 Ariz. 157, 159 (1982) (indicating, albeit in the context of severance, that
adjudications of permanency should be resorted to only in the most extreme
cases).
4 Father had requested the visits be videotaped.
5 We do recognize that “[l]eaving the window of opportunity for
remediation open indefinitely is not necessary,” and the passage of time
may justify the court’s ruling. Maricopa Cty. Juv. Action No. JS-501568, 177
Ariz. 571, 577 (App. 1994).
6
EDDIE B. v. DCS, E.B.
Decision of the Court
CONCLUSION
¶24 For the foregoing reasons, we reverse the juvenile court’s
order granting permanent guardianship to Hallie H., given father’s contest.
We remand the case for further proceedings consistent with this decision.
AMY M. WOOD • Clerk of the Court
FILED: AA
7
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110 Cal.Rptr.2d 668 (2001)
91 Cal.App.4th 602
The PEOPLE, Petitioner,
v.
The SUPERIOR COURT of Los
Angeles County, Respondent;
Rafael Gevorgyan et al., Real Parties in Interest.
Karen Terteryan, Petitioner,
v.
The Superior Court of Los Angeles County, Respondent;
The People, Real Party in Interest.
Nos. B147452, B147799.
Court of Appeal, Second District, Division One.
August 10, 2001.
Review Denied November 20, 2001.[*]
*670 Steve Cooley, District Attorney, George M. Palmer, Head Deputy District Attorney, and Matthew G. Monforton, Deputy District Attorney, for Petitioner and Real Party in Interest the People.
Geragos & Geragos and Mark J. Geragos, Los Angeles, for Petitioner Karen Terteryan.
No appearance for Respondent.
Andrew Reed Flier, for Real Party in Interest Rafael Gevorgyan.
Theodore S. Flier, Encino, for Real Party in Interest Anait Msryan.
*669 MALLANO, J.
Traditionally, minors could be tried as adults only when a juvenile court found them unfit for that court's jurisdiction. But Proposition 21, the Gang Violence and Juvenile Crime Prevention Act, passed by the electorate on March 7, 2000, changed that. Now 14-through 17-year-olds accused of certain crimes are subject to mandatory direct filing in adult court (Welf. & Inst.Code, § 602, subd. (b)), and the prosecution has discretion to bring charges directly in adult court on other enumerated offenses without the necessity of a finding of unfitness (id., § 707, subd. (d)). The three minor defendants in this case were charged under Welfare and Institutions Code sections 602, subdivision (b), and 707, subdivision (d), by grand jury indictment. We conclude that Proposition 21 requires that juveniles be prosecuted by way of information following a preliminary hearing and not by indictment by grand jury. Accordingly, we grant relief requiring that the indictment in this case be dismissed.
FACTUAL AND PROCEDURAL BACKGROUND
Petitioner Karen Terteryan and real parties in interest Rafael Gevorgyan and Anait Msryan were named in a three-count indictment returned by the Grand Jury of Los Angeles County and filed in respondent superior court on August 14, 2000. (The indictment was returned after a criminal complaint containing similar charges against defendants was dismissed.) The *671 indictment, which arose from an incident that occurred on May 5, 2000, was later amended. As amended, the indictment alleges that defendants, all of whom are 14 years of age or older, committed (1) murder with the special circumstance that the murder was committed to further the activities of a street gang, (2) attempted murder, and (3) street terrorism. The indictment further alleges that Terteryan personally killed the murder victim. (Well & Inst. Code, § 602, subd. (b)(1); unless otherwise specified, further section references are to the Welf. & Inst.Code.)[1] Gevorgyan and Msryan are alleged to have committed an offense that, if committed by an adult, would be punishable by death or life imprisonment (§ 707, subd. (d)(2), criterion (A)), and that was committed for the benefit of a criminal street gang (§ 707, subd. (d)(2), criterion (C)(ii)).[2]
Terteryan demurred to the indictment. He argued that indictment was precluded because section 602, subdivision (b)(1), requires that the prosecutor (rather than a grand jury) allege the existence of a special circumstance and that the minor personally killed the victim. The demurrer was overruled, and Terteryan petitioned for extraordinary relief. We issued an order to show cause and requested further briefing. (B147799.)
Gevorgyan and Msryan also demurred to the indictment. They argued that the indictment was precluded because section 707, subdivision (d)(1), requires that the district attorney or other prosecuting officer file the accusatory pleading. They also relied on a reference to a preliminary hearing in section 707, subdivision (d)(4).[3] The trial court overruled their *672 demurrer, but held that, under People v. Aguirre (1991) 227 Cal.App.3d 373, 277 Cal.Rptr. 771, the prosecution could not proceed unless defendants were afforded a preliminary hearing. The People petitioned for a writ of mandate, challenging the trial court's decision. We issued an order to show cause and requested further briefing. (B147452.)
We have ordered that the two petitions be considered concurrently to determine whether the instant prosecutions may proceed by indictment. We conclude that they may not. In so doing, we recognize that the People petitioned this court seeking to overturn the portion of the trial court's order granting a preliminary hearing to Gevorgyan and Msryan, and that Gevorgyan and Msryan did not file petitions on their own behalf asserting that they were not subject to indictment. Nevertheless, the issue of whether Gevorgyan and Msryan are subject to indictment was argued extensively in the trial court and is included in the parties' briefing to this court. In addition, whether Gevorgyan and Msryan are not subject to indictment is closely related to the issues raised by Terteryan. Therefore, we find it proper in this opinion to grant relief to Gevorgyan and Msryan as well as to Terteryan.
The petitions also raise other issues that were asserted in the trial court, including those pending before our Supreme Court in Manduley v. Superior Court (2001) 86 Cal.App.4th 1198, 104 Cal.Rptr.2d 140, review granted April 25, 2001, S095992, and the applicability of an amendment to section 602 that took effect on January 1, 2000 (Stats.1999, ch. 996, § 12.2). We do not reach those issues in this opinion.
DISCUSSION
I
California's Juvenile Court Law is set forth in division 2, chapter 2 of the Welfare and Institutions Code. (§ 202 et seq.) Nowhere in the text of this law, both before and after the adoption of Proposition 21, do the words "grand jury" or "indictment" appear. Nor are they included in the summary, argument, or analysis of Proposition 21 that was submitted to the voters. Yet, the People assert that under People v. Aguirre, supra, 227 Cal.App.3d at page 380, 277 Cal.Rptr. 771, People v. Aikens (1969) 70 Cal.2d 369, 372-373, 74 Cal.Rptr. 882, 450 P.2d 258, and In re Hartman (1949) 93 Cal.App.2d 801, 802-803, 210 P.2d 53, "[a] grand jury's authority to indict juveniles is unquestioned. [Citations.]" The assertion is an overstatement that begs the question raised in this case.
The Aikens and Hartman opinions recite by way of background that the defendants in those cases were originally indicted by grand jury, then certified to juvenile court because they were minors, and finally prosecuted as adults when the juvenile courts declined jurisdiction. Because the appropriateness of the grand jury indictment is not mentioned in either case, they are not authority on this point. (See People v. Hill (1974) 12 Cal.3d 731, 766, fn. 34, 117 Cal.Rptr. 393, 528 P.2d 1, overruled on other grounds in People v. DeVaughn (1977) 18 Cal.3d 889, 896, fn. 5, 135 Cal. Rptr. 786, 558 P.2d 872.) Consequently, Aguirre is the only California appellate decision to date that discusses the propriety *673 and consequences of initiating the prosecution of a minor by indictment and is the foundation of the People's argument that they may proceed by indictment against defendants in this case.
In Aguirre, the defendant committed multiple felonies, including sex crimes, during a nighttime assault on a young couple on the beach in 1981. The offenses were subject to a six-year statute of limitations, and an indictment charging the defendant with those crimes was returned in 1985. When the defendant was later arrested and appeared in superior court, it was discovered that he was 16 years old at the time of the crimes. Criminal proceedings were suspended and the matter was certified to juvenile court, where the defendant appeared in 1988. The juvenile court found the defendant unfit and returned him to superior court. There, he was arraigned and given a preliminary hearing. After the defendant was held to answer, the People filed an information that was identical to the 1985 indictment. The defendant pleaded guilty to the charges in the information. (227 Cal. App.3d at pp. 376-378, 277 Cal.Rptr. 771.)
By the time the defendant in Aguirre had been brought before the juvenile court, more than six years had elapsed since the commission of his offenses. On appeal, the defendant raised the statute of limitations, contending that "(1) the juvenile court has exclusive initial jurisdiction over persons under 18 years of age who commit acts in violation of criminal laws; (2) an order of the juvenile court adjudging such a minor to be a ward of juvenile court is not deemed a conviction of a crime for any purpose; (3) a grand jury may only inquire into and indict for the commission of `public offenses' and, therefore, (4) a grand jury has no jurisdiction to indict a person under the age of 18 until after that person has been the subject of a juvenile court petition and been found unfit to be handled under the juvenile court law." (227 Cal.App.3d at p. 378, 277 Cal. Rptr. 771.) Based on these arguments, the defendant urged that the prosecution against him did not commence with the 1985 grand jury indictment because it was a nullity, and any proceedings against him after the statute of limitations expired in 1987 (namely, both the juvenile petition and the superior court information) were therefore barred. (Ibid.)
The Court of Appeal rejected the defendant's position on the primary ground the defendant "cite[d] no case authority for his contention that the grand jury has no jurisdiction to indict a minor, and our own research has not found any cases in California or any other state which support that conclusion." (227 Cal.App.3d at p. 378, 277 Cal.Rptr. 771.) The court then reviewed the history of grand jury indictments and of juvenile court law. In so doing, it observed that notwithstanding section 203's rule that "`[a]n order adjudging a minor to be a ward of the juvenile court shall not be deemed a conviction of a crime for any purpose, nor shall a proceeding in the juvenile court be deemed a criminal proceeding,'" minors have been considered "capable of committing crimes." (Id. at p. 379, 277 Cal.Rptr. 771.)
And, continued the Aguirre court, although (at that time) the juvenile and adult courts had concurrent jurisdiction over 16- and 17-year-olds and the juvenile court had exclusive jurisdiction of minors under the age of 16, "nothing in the juvenile court law suggests that minors alleged to have violated a criminal statute may not be initially charged by complaint or by indictment, even though it is clear that a petition filed in juvenile court by the district attorney is the method by which juvenile court proceedings seeking a determination of wardship are commenced. [Citation.]" (227 Cal.App.3d at *674 p. 380, 277 Cal.Rptr. 771, fn. omitted.) But once it is determined that the accused appearing in adult court on a complaint or indictment may be a minor, "the court must immediately suspend the criminal proceeding and conduct a hearing to determine the minor's age at the time of the offense." (Id. at p. 381, 277 Cal.Rptr. 771.)
Finally, the Aguirre court noted that it is often difficult to obtain accurate information regarding the date of birth of an accused, and that the argument advanced by the defendant in that case could put the prosecution in a position where it "might, for lack of sufficient reliable information concerning the suspect's birthdate, be forced to watch helplessly as the statute of limitations expires on a serious felony offense. We decline to conclude the law requires such an absurd result." (227 Cal. App.3d at p. 382, 277 Cal.Rptr. 771.) Rather, "[o]nce . . . it is suggested or appears to the [superior] court that [the accused] was under 18 years of age when the offenses were committed, the law provides a procedure to determine which court will adjudicate the charge. [Citations.]" (Ibid.)
II
The issues presented in this case require us to interpret sections 602 and 707 as amended by Proposition 21 and to consider Aguirre in light of those amendments. "`We begin with the fundamental rule that our primary task in construing a statute is to determine the Legislature's intent. [Citation.]' [Citation.] `"`The court turns first to the words themselves for the answer.' [Citations.]" [Citation.]' When the statutory language is clear and unambiguous, there is no need for construction and courts should not indulge in it. [Citation.]" (People v. Fuhrman (1997) 16 Cal.4th 930, 937, 67 Cal.Rptr.2d 1, 941 P.2d 1189.) "When the statutory language is ambiguous, the court may examine the context in which the language appears, adopting the construction that best harmonizes the statute internally and with related statutes. [Citations.] `"When the language is susceptible of more than one reasonable interpretation . . ., we look to a variety of extrinsic aids, including the ostensible objects to be achieved, the evils to be remedied, the legislative history, public policy, contemporaneous administrative construction, and the statutory scheme of which the statute is a part."' [Citation.]" (People v. Jefferson (1999) 21 Cal.4th 86, 94, 86 Cal.Rptr.2d 893, 980 P.2d 441.)
"The same rules apply in interpreting a voter initiative [citation], with the focus of our inquiry being `the electorate's purpose, as indicated in the ballot arguments and elsewhere.' [Citation.]" (Robert L. v. Superior Court (2001) 87 Cal. App.4th 912, 916, 104 Cal.Rptr.2d 868; accord, Horwich v. Superior Court (1999) 21 Cal.4th 272, 276, 87 Cal.Rptr.2d 222, 980 P.2d 927; People v. Superior Court (Sturm) (1992) 9 Cal.App.4th 172, 178, fn. 4, 11 Cal.Rptr.2d 652.) The drafters of an initiative and the voters who enacted it are presumed to have been aware of the existing statutory law and its judicial construction. (In re Harris (1989) 49 Cal.3d 131, 136, 260 Cal.Rptr. 288, 775 P.2d 1057; Robert L. v. Superior Court, supra, 87 Cal.App.4th at p. 918, 104 Cal.Rptr.2d 868.)
Thus, the drafters of Proposition 21 presumably knew that the grand jury and indictments were not part of juvenile court statutory law. They were also presumably aware that the only judicial treatment of indictments under juvenile court law was set forth in Aguirre, a case in which the indictment of a juvenile was relevant only to satisfy statute of limitations concerns, and the defendant was ultimately *675 charged by information and given a postindictment preliminary hearing. Finally, the drafters presumably knew that the California Constitution was amended by Proposition 115 in 1990 to add article I, section 14.1, which provides that "[i]f a felony is prosecuted by indictment, there shall be no postindictment preliminary hearing." This constitutional amendment abrogated previous judicial decisions and established that a defendant is no longer entitled to a postindictment preliminary hearing or any other similar procedure. (See Bowens v. Superior Court (1991) 1 Cal.4th 36, 39, 2 Cal.Rptr.2d 376, 820 P.2d 600.)
In this context, we turn to the two specific statutes under which defendants were indicted.
A
Section 602, subdivision (b), requires that minors (in this case, Terteryan) be "prosecuted under the general law in a court of criminal jurisdiction." "General law" is the law that applies to adults, as contrasted with juvenile court law. (People v. Chi Ko Wong (1976) 18 Cal.3d 698, 706-707, 135 Cal.Rptr. 392, 557 P.2d 976; People v. Superior Court (Jennings) (1986) 183 Cal.App.3d 636, 644, 228 Cal.Rptr. 357.)
To implement the mandatory direct filing procedure of section 602, subdivision (b), there are two significant qualifications. First, it must be alleged that the minor committed murder (§ 602, subd. (b)(1)) or one of several enumerated sex offenses (id., subd. (b)(2)).[4] Second, with respect to murder, special circumstances must be "alleged by the prosecutor, and the prosecutor [must] allege[ ] that the minor personally killed the victim." (§ 602, subd. (b)(1), italics added.) Similarly, with respect to the enumerated sex offenses, mandatory direct filing applies only when "the prosecutor alleges that the minor personally committed the offense, and . . . the prosecutor alleges one of the circumstances" supporting application of the one strike law. (§ 602, subd. (b)(2), italics added.)
Under the "general law," grand juries have independent authority to investigate public offenses and return indictments. (Pen.Code, §§ 917, 940.) "In practice, grand juries almost exclusively confine their consideration of public offenses to those matters presented to them by the district attorney." (Bradley v. Lacy (1997) 53 Cal.App.4th 883, 893, 61 Cal.Rptr.2d 919.) "The indictment does not require the district attorney's signature [citation]. While it is the district attorney's duty to `draw all indictments' ([Gov.Code,] § 26502), `[t]he obvious intendment is that the district attorney must draw all indictments only when requested *676 by the grand jury for . . . advice and assistance.' [Citation.]" (Bradley v. Lacy, supra, 53 Cal.App.4th at p. 893, fn. 4, 61 Cal.Rptr.2d 919.) An indictment found by a properly constituted grand jury, "shall be endorsed, `A true bill,' and the endorsement shall be signed by the foreman of the grand jury." (Pen.Code, § 940.) "An indictment, when found by the grand jury, must be presented by their foreman, in their presence, to the court, and must be filed with the clerk." (Pen.Code, § 944.)
Thus, an indictment does not contain allegations made by the prosecutor. Rather, the allegations are made by the grand jury, albeit with the prosecutor's assistance. In contrast, an information "shall be in the name of the people of the State of California and subscribed by the district attorney." (Pen.Code, § 739.) The information is filed following a preliminary hearing initiated upon a felony criminal complaint made "under oath subscribed by the complainant." (Pen.Code, § 806.)
The foregoing statutes make clear that it is only the prosecutor who can make the allegations necessary for a mandatory direct filing in adult court. Thus, section 602, subdivisions (b)(1) and (2) precludes use of indictment by grand jury.
B
Section 707, subdivisions (d)(1) and (2), provide that for minors not charged under section 602, subdivision (b) (here, Gevorgyan and Msryan), "the district attorney or other appropriate prosecuting officer may file an accusatory pleading...." Although an indictment is an "accusatory pleading" (Pen.Code, § 691, subd. (c)), it is the foreperson of the grand jury, not the district attorney, who presents an indictment to be filed (id., § 944). And there is no precedent for designating the foreperson of the grand jury a "prosecuting officer." The only other reference in the Welfare and Institutions Code to a "prosecuting officer" other than in section 707, subdivision (d)(1) and (2) appears in section 707.1, subdivision (a), which was not amended by Proposition 21. That statute provides in part: "If the minor is declared not a fit and proper subject to be dealt with under the juvenile court law, or as to a minor for whom charges in a petition or petitions in the juvenile court have been transferred to a court of criminal jurisdiction . . ., the district attorney, or other appropriate prosecuting officer may file an accusatory pleading against the minor in a court of criminal jurisdiction. The case shall proceed from that point according to the laws applicable to a criminal case." (Italics added.)
Under section 707.1, subdivision (a), the role of "prosecuting officer" plays no role until after the minor has already been charged in juvenile court and transferred to adult court. If a "prosecuting officer" were the foreperson of a grand jury, the statute would authorize the grand jury to indict a minor after that minor had already been subjected to juvenile court procedures. Not only would this be unprecedented, the procedure would undermine the direct filing alternatives created by Proposition 21. Accordingly, it would appear that the "prosecuting officer" contemplated by Proposition 21's section 707.1 does not include the foreperson of a grand jury.
Although the term "prosecuting officer" has not been defined by statute, under Penal Code section 691, subdivision (d), "[t]he words `prosecuting attorney' include any attorney, whether designated as district attorney, city attorney, city prosecutor, prosecuting attorney, or by any other title, having by law the right or duty to prosecute, on behalf of the people, any *677 charge of a public offense." While it may be said that the foreperson of the grand jury participates in the filing of an accusatory pleading (id., § 944), the foreperson's function ends at that point. He or she does not have the "right or duty to prosecute," and is therefore not a "prosecuting officer" within the meaning of Penal Code section 691, subdivision (d).
Section 707, subdivision (d)(4), set forth in footnote 3, ante, is also significant in our analysis. It states that when "the district attorney or other appropriate prosecuting officer has filed an accusatory pleading" in adult court, "the case shall then proceed according to the laws applicable to a criminal case. In conjunction with the preliminary hearing as provided for in Section 738 of the Penal Code, the magistrate shall make a finding that reasonable cause exists to believe that the minor comes within the provisions of this subdivision."
The use of the words "district attorney or other appropriate prosecuting officer has filed" indicates an intent to proceed by way of a preliminary hearing, because such language is not consistent with a grand jury proceeding. So, too, the reference to the preliminary hearing itself, which sets forth the requirement that the magistrate shall make a finding of reasonable cause that the minor falls within the scope of section 707, subdivision (d)(4). Given that our state Constitution now forbids a defendant who is being prosecuted by indictment from being afforded a preliminary hearing (see Bowens v. Superior Court, supra, 1 Cal.4th at p. 39, 2 Cal.Rptr.2d 376, 820 P.2d 600), the reference to the duty of the magistrate strongly suggests that the drafters of Proposition 21 did not envision grand jury indictment as being a part of the new statutory scheme.
The People tender an interpretation of section 707 that would render it compatible with rules applicable to grand jury indictment. The People urge, without citation of authority, that because the prosecutor plays such a key role in the procedure by which an indictment is returned, a "better interpretation of the first sentence of section 707, subdivision (d)(4) [ (fn.3, ante)] . . . would include the presenting of an unendorsed indictment to a grand jury." (Fn.omitted.) The People also consider the reference to preliminary hearings to be of no consequence because the statute further specifies that the preliminary hearing is to be provided pursuant to Penal Code section 738, which states that "[t]he proceedings for a preliminary examination must be commenced by written complaint...." The People continue that, "[b]ecause no complaint is filed in cases where a grand jury returns an indictment, it follows, a fortiori, that the reference in section 707, subdivision (d)(4), to `the preliminary hearing as provided for in Section 738' does not apply in cases commenced by indictment. Section 707, subdivision (d)(4), should instead be read as a requirement imposed upon the magistrate when a preliminary hearing is held as to section 707, subdivision (d), cases; those references, however, do not mandate a preliminary hearing." (Underscoring in original.)
As the People's position does not find support in the specific language of Proposition 21, we look to the initiative's purposes. Included is the purpose of requiring "more juvenile offenders to be tried in adult court." (Ballot Pamp., Primary Elec. (Mar. 7, 2000) analysis of Prop. 21 by Legis. Analyst, p. 45.) Under Proposition 21, "prosecutors would be allowed to directly file charges against juvenile offenders in adult court under a variety of circumstances without first obtaining permission of the juvenile court." (Ibid.) And the proponents urged that "Proposition 21 ends the `slap on the wrist' of current law *678 by imposing real consequences for GANG MEMBERS, RAPISTS AND MURDERERS who cannot be reached through prevention or education." (Ballot Pamp., Primary Elec. (Mar. 7, 2000) argument in favor of Prop. 21, p. 48.)
We conclude that nothing in the language of the ballot pamphlet materials states or implies that procedures pertinent to grand juries should be grafted wholesale onto the juvenile law in order to impose more severe consequences on minors. Rather, the Legislative Analyst's explanation that prosecutors would be allowed to file directly in adult court is inconsistent with the notion of prosecution accomplished by grand jury indictment. In sum, the People's contention that section 707, subdivision (d)(4), does not require a preliminary hearing is the product of a strained attempt to create ambiguity where none exists.
Finally, even if we deem the language of section 707, subdivision (d) susceptible of an interpretation that would support indictment, the language of section 602, subdivision (b) clearly is not. One of our tasks is to bring harmony to the statutory scheme implemented by Proposition 21. It would do violence to that scheme to conclude that defendants subject to the mandatory direct filing provisions of section 602, subdivision (b), may not be indicted while at the same time concluding that indictment is proper with respect to defendants subject to discretionary direct filing under section 707, subdivision (d).
III
In referring throughout their briefing to "laws applicable to criminal cases" (§ 707, subd. (d)(4)) or to "general law" (§ 602, subd. (b)), the People ignore the rationale of the case on which they depend, People v. Aguirre, supra, 227 Cal.App.3d 373, 277 Cal.Rptr. 771. The cornerstone of the Aguirre analysis was that the defendant "cite[d] no case authority for his contention that the grand jury has no jurisdiction to indict a minor, and our own research has not found any cases in California or any other state which support that conclusion." (Id. at p. 378, 277 Cal.Rptr. 771.) Thus, according to Aguirre, indictment in that case was a permissible vehicle by which to "initially charge[ ]" the defendant. (Id. at p. 380, 277 Cal.Rptr. 771.)
Postindictment preliminary hearings have long since been abolished. And Proposition 21 has undercut the rationale of Aguirre by its lack of reference to indictment and its inclusion of language incompatible with indictment set forth in sections 602, subdivision (b), and 707, subdivision (d). These statutes now constitute the authority, which the Aguirre court found lacking, that a juvenile cannot be prosecuted in adult court without being granted a preliminary hearing.
We express no opinion on the validity of Aguirre's core holding that the indictment of a minor will be deemed to commence a prosecution for the purposes of the statute of limitations. Here, the trial court, misconceiving the limited nature of Aguirre, refused to dismiss the indictment against defendants Gevorgyan and Msryan but ordered that they be granted a postindictment preliminary hearing in violation of California Constitution, article I, section 14.1. Indeed, the difficulties inherent in interpreting a new statutory scheme were recognized by the trial court itself, which expressed the opinion that even if it were to sustain defendants' demurrers, the case could be filed a third time pursuant to Penal Code section 1387.1.[5] Nonetheless, the demurrers *679 to the indictment of all three defendants should have been sustained.
DISPOSITION
Let a peremptory writ of mandate issue ordering respondent superior court to (1) vacate its orders (a) overruling the demurrers of defendants Terteryan, Gevorgyan and Msryan and (b) granting a preliminary hearing to defendants Gevorgyan and Msryan, and to (2) enter new and different orders sustaining those demurrers on the ground that the instant prosecution may not proceed by grand jury indictment. The temporary stay orders issued in this matter on January 31, 2001, and February 2, 2001, as modified on February 22, 2001, are dissolved.
SPENCER, P.J. and ORTEGA, J., concur.
NOTES
[*] Chin, J. dissented.
[1] Section 602 provides in pertinent part:
"(b) Any person who is alleged, when he or she was 14 years of age or older, to have committed one of the following offenses shall be prosecuted under the general law in a court of criminal jurisdiction:
"(1) Murder, as described in Section 187 of the Penal Code, if one of the circumstances enumerated in subdivision (a) of Section 190.2 of the Penal Code is alleged by the prosecutor, and the prosecutor alleges that the minor personally killed the victim."
[2] Section 707 provides in pertinent part:
"(d)(1) Except as provided in subdivision (b) of Section 602, the district attorney or other appropriate prosecuting officer may file an accusatory pleading in a court of criminal jurisdiction against any minor 16 years of age or older who is accused of committing an offense enumerated in subdivision (b) [which contains a list of 30 felonies].
"(2) Except as provided in subdivision (b) of Section 602, the district attorney or other appropriate prosecuting officer may file an accusatory pleading against a minor 14 years of age or older in a court of criminal jurisdiction in any case in which any one or more of the following circumstances apply:
"(A) The minor is alleged to have committed an offense which if committed by an adult would be punishable by death or imprisonment in the state prison for life.
"(B) The minor is alleged to have personally used a firearm during the commission or attempted commission of a felony, as described in Section 12022.5 of the Penal Code.
"(C) The minor is alleged to have committed an offense listed in subdivision (b) in which any one or more of the following circumstances apply:
"(i) The minor has previously been found to be a person described in Section 602 by reason of the commission of an offense listed in subdivision (b).
"(ii) The offense was committed for the benefit of, at the direction of, or in association with any criminal street gang, as defined in subdivision (f) of Section 186.22 of the Penal Code, with the specific intent to promote, further, or assist in any criminal conduct by gang members."
[3] Section 707, subdivision (d)(4) provides: "In any case in which the district attorney or other appropriate prosecuting officer has filed an accusatory pleading against a minor in a court of criminal jurisdiction pursuant to the provisions of this subdivision, the case shall then proceed according to the laws applicable to a criminal case. In conjunction with the preliminary hearing as provided for in Section 738 of the Penal Code, the magistrate shall make a finding that reasonable cause exists to believe that the minor comes within the provisions of this subdivision. If reasonable cause is not established, the criminal court shall transfer the case to the juvenile court having jurisdiction over the matter."
[4] Section 602, subdivision (b)(2), provides: "The following sex offenses, if the prosecutor alleges that the minor personally committed the offense, and if the prosecutor alleges one of the circumstances enumerated in the One Strike law, subdivisions (d) or (e) of Section 667.61 of the Penal Code, applies: [¶] (A) Rape, as described in paragraph (2) of subdivision (a) of Section 261 of the Penal Code. [¶] (B) Spousal rape, as described in paragraph (1) of subdivision (a) of Section 262 of the Penal Code. [¶] (C) Forcible sex offenses in concert with another, as described in Section 264.1 of the Penal Code. [¶] (D) Forcible lewd and lascivious acts on a child under the age of 14 years, as described in subdivision (b) of Section 288 of the Penal Code. [¶] (E) Forcible penetration by foreign object, as described in subdivision (a) of Section 289 of the Penal Code. [¶] (F) Sodomy or oral copulation in violation of Section 286 or 288a of the Penal Code, by force, violence, duress, menace, or fear of immediate and unlawful bodily injury on the victim or another person. [¶] (G) Lewd and lascivious acts on a child under the age of 14 years, as defined in subdivision (a) of Section 288, unless the defendant qualifies for probation under subdivision (c) of Section 1203.066 of the Penal Code."
[5] Penal Code section 1387.1 provides in pertinent part: "(a) Where an offense is a violent felony . . ., the people shall be permitted one additional opportunity to refile charges where either of the prior dismissals under Section 1387 were due solely to excusable neglect." (See also Pen.Code, § 1387, subd. (c) [order terminating action not a bar to prosecution if complaint based on same subject matter dismissed before preliminary hearing in favor of indictment].)
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7 Kan. App. 2d 676 (1982)
647 P.2d 820
SCHATZ DISTRIBUTING CO., INC., Appellee,
v.
OLIVETTI CORPORATION OF AMERICA, Appellant,
v.
EXECUTIVE FINANCIAL SERVICES, INC., Appellee.
No. 52,959
Court of Appeals of Kansas.
Opinion filed July 2, 1982.
Eileen Hiney of McDowell, Rice & Smith, Chartered, of Kansas City, for the appellant.
W. Fredrick Zimmerman of Thompson & Verbanic, of Kansas City, for the appellee Schatz Distributing Co., Inc.
Before SPENCER, P.J., PARKS, J., and RONALD D. INNES, District Judge Assigned.
SPENCER, J.:
Defendant Olivetti Corporation of America, a manufacturer and distributor of business machines, has appealed from judgment in favor of plaintiff for damages resulting from *677 breach of warranty in the sale to plaintiff of an Olivetti DE-525 computer with related equipment.
Anticipating a substantial increase in its accounts, plaintiff, through its then president Michael Scherzer, commenced negotiations with defendant for the purchase of a computer. A meeting was arranged with Jim Neese, an Olivetti sales representative, at which Robert Wedow, plaintiff's accountant, explained to Neese the contents of a three-page list of functions which plaintiff expected to accomplish by means of a computer, with particular emphasis on general ledger accounting, inventory analysis, route profitability, and container analysis. Neese advised that defendant's DE-525 computer would satisfactorily perform all the functions outlined, and further that plaintiff would "never outgrow" the system. These assurances were also recorded in two items of correspondence directed to Scherzer by Neese during the latter part of 1975.
The sale was accomplished in January and February, 1976, but since plaintiff did not desire to pay the full price at the time of purchase, defendant arranged for a lease purchase agreement with Executive Financial Services, Inc. Defendant then sold the computer directly to that company, which contracted with plaintiff for the purchase of the computer by means of monthly payments. Plaintiff had previously paid defendant $1,000.
The computer remained unused and in August, 1976, Thomas Creach, plaintiff's office manager, scheduled a meeting with Neese, Neese's superior Charles Wildman, and an Olivetti programmer. The purpose of that meeting was to discuss what steps needed to be taken to get the computer into operation. Creach was advised that Olivetti did not have the personnel available to install the software desired, but that Neese would nevertheless seek a competent programming firm on plaintiff's behalf.
In March of 1977, Neese arranged a meeting between Creach and representatives of Information Services International, Jim Burke and Raymond Lear. As a result of this meeting, plaintiff entered into an agreement with Information whereby the latter contracted to program the computer with a "general ledger processing" system for $3,000. Plaintiff made a down payment of $1,500.
To assist Burke in programming the computer, Neese provided several operations manuals for setting up a general ledger system *678 for the DE-525 computer. In order to familiarize himself with the computer and the programs provided, Burke spent several hours working on the DE-525 computer at Olivetti's Kansas City, Missouri, facility. Despite this, Burke was unable to get the computer to function. In an effort to gain additional information, Burke telephoned Olivetti facilities in Denver, Seattle, San Francisco, Atlanta, New Orleans, and New York City, but could not locate anyone with direct experience with the DE-525 and its software manuals. Eventually Burke was successful in contacting a Mr. Valhon, an Olivetti employee in New Orleans. Valhon informed Burke he was preparing to install the same program for a customer in New Orleans and invited Burke to assist. At his own expense, Burke traveled to New Orleans and spent two days assisting Valhon. During the course of their work, Valhon made several handwritten corrections to the operations manuals, and Valhon provided Burke with several discs containing other revisions. Burke returned to Kansas City with this information but still could not get a general ledger program to function on either plaintiff's computer or the DE-525 at the Olivetti facility.
Burke resumed telephoning Olivetti facilities around the country for additional information. As a result, an individual with Atlanta Olivetti referred Burke to Walt Grambling, a former Olivetti employee who had purportedly programmed the system Burke was attempting to install on plaintiff's computer. Burke contacted Grambling at his place of business in North Carolina and arranged for Grambling to travel to Kansas City, where together they worked on plaintiff's computer for two and one-half days without success. At this point Burke offered to refund the $1,500 already paid by plaintiff, but was refused.
Due to the inability to get the computer to work satisfactorily, plaintiff's new president Patrick Scherzer called a meeting with Creach, Neese and Wildman. According to Creach and Scherzer, it was at this meeting that Neese informed them the DE-525 was incapable of performing the functions originally warranted. Neese then suggested that plaintiff sell its computer to a purchaser located by Olivetti for the sum of approximately $10,000 and purchase a new computer from Olivetti. Having paid out approximately $20,000 at the time, with another $11,000 owed on the contract with Executive, Scherzer refused Olivetti's offer. Plaintiff initiated this action on September 28, 1978.
*679 Count II of plaintiff's petition asserted violation of express warranties and the implied warranty of merchantability, as set out in K.S.A. 84-2-313 and -314. It was on this theory the trial court granted relief to plaintiff.
The matter was tried to the court over a two-day period in July, 1980. Judgment was entered on February 3, 1981. At the close of plaintiff's evidence, the trial court ruled in favor of Executive's motion for involuntary dismissal, ordering all sums paid into court to be turned over to Executive. Generally, the findings of fact rendered by the court reflect a wholesale adoption of testimony offered by plaintiff's witnesses on direct examination. The court determined the computer sold to plaintiff was incapable of performing the functions warranted by Olivetti. As to damages, the court held:
"5. Plaintiff has been damaged in the full amount of the money it has had to pay to EFS, and in this case is entitled to pre-judgment interest on each payment from the date of said payment to February 1, 1981, at the rate of twelve percent (12%) per annum. That contract required the payment of $529.92 per month, commencing February 13, 1976, for sixty-one (61) months, plus a $1,990.00 payment for the sixty-second (62nd) month, and a payment of $1,024.00 at the outset. No pre-judgment interest attaches to any payments made in the future by Olivetti on the EFS contract. Counsel for plaintiff is requested to furnish the amount for inclusion on the journal entry of judgment assessed against Olivetti including the amount of pre-judgment interest which will have accrued as of February 1, 1981, which is declared to be the effective date of this entire judgment. This amount should include all payments made by Schatz to EFS, the North Hills Bank, and the Clerk of the District Court whether paid by Schatz or the First State Bank.
"6. Plaintiff is also given judgment versus Olivetti for $1,000.00, the original payment made directly to Olivetti by Schatz, plus prejudgment interest at the rate of twelve percent (12%) per annum from December 23, 1975 to February 1, 1981, and counsel for plaintiff is directed to compute this figure also for inclusion in the journal entry of judgment effective February 1, 1981.
"7. Similarly, judgment is entered for plaintiff versus defendant Olivetti for $355.00 paid by plaintiff to Morasch Electric on 2-10-77, for $1,500.00 paid by plaintiff to Information Services International, Inc. (Mr. Burke) on 4-12-77 and for $1,786.02 paid by plaintiff to defendant Olivetti for a maintenance agreement on 5-11-77, all to bear pre-judgment interest at the rate of twelve percent (12%) per annum, and all of which are directed to be computed by plaintiff's attorney as of February 1, 1981, for inclusion in the journal entry of judgment effective as of that date.
"8. Plaintiff's request for allowance of damages for loss of use of the computer's services is denied as speculative.
"9. I find specifically that defendant breached its express warranty and the implied warranty of fitness for a particular purpose, and that defendant was unjustly enriched. Defendant's claim of lack of mitigation effort on the part of *680 plaintiff is likewise denied. The proposed sale, if it had ever been able to be consummated, was packaged to the purchase of still another Olivetti computer, and it is difficult to understand why the unused DE525 would have lost so much value in such a short period as to bring only $10,000.00. The requirement to mitigate does not require a subsequent sale at any price. Olivetti is directed to pick up its DE525."
The court rendered judgment in the total amount of $47,279.59, including prejudgment interest of $11,339.29.
Initially, defendant challenges the sufficiency of evidence to support a finding of breach of warranty.
"When a verdict or judgment is attacked for insufficiency of the evidence, the duty of the appellate court extends only to a search of the record for the purpose of determining whether there is any competent substantial evidence to support the findings. The appellate court will not weigh the evidence or pass upon the credibility of the witnesses. Under these circumstances, the reviewing court must review the evidence in the light most favorable to the party prevailing below." Marcotte Realty & Auction, Inc. v. Schumacher, 229 Kan. 252, Syl. ¶ 1, 624 P.2d 420 (1981).
Accord, International Petroleum Services, Inc. v. S & N Well Service, Inc., 230 Kan. 452, Syl. ¶ 8, 639 P.2d 29 (1982).
Essentially, defendant complains the evidence does not support the conclusion the computer had "hardware" defects which prevented it from functioning properly. The court determined that not only was the computer incapable of performing the functions warranted, but "would not function in a much more limited capacity, and was, in fact, worthless." Although no one testified the hardware was malfunctioning, a strong inference tending to prove that fact was created by the testimony of Burke concerning his extensive efforts to program the computer for a single function.
In any case, the gist of the court's decision was that the computer could not perform as warranted. This conclusion is amply supported by the testimony of Rex Babcock, a former Olivetti employee, that even assuming the hardware of the computer was in good order, it simply did not possess the capacity for data storage required to perform the many functions plaintiff desired and which defendant had guaranteed. Additionally, plaintiff's office manager and president testified that Neese admitted the computer lacked the capacity to carry out those functions. Accordingly, we find this issue to be without merit.
It is argued plaintiff is not entitled to recover as damages *681 interest paid on the lease purchase contract. K.S.A. 84-2-714 provides in part:
"(2) The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount.
"(3) In a proper case any incidental and consequential damages under the next section may also be recovered."
Subsection (2) is generally in accord with the common law concept that damages in case of a breach of warranty are ordinarily the difference between the value of the article delivered and what it would have been worth had it been as warranted. 67 Am.Jur.2d, Sales §§ 740,741. The court found the computer sold to plaintiff was not functional to any degree and was "worthless." Accordingly, the measure of damages in this case constitutes the difference between zero and the value the computer would have had if it had been as warranted presumably the agreed-upon purchase price. Additionally, the court awarded plaintiff interest which it had paid under the contract with Executive.
K.S.A. 84-2-715 provides in relevant part:
"(2) Consequential damages resulting from the seller's breach include
"(a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise...."
As to those losses which are consequential, Official UCC Comment 2 states in part:
"Subsection (2) operates to allow the buyer, in an appropriate case, any consequential damages which are the result of the seller's breach. The `tacit agreement' test for the recovery of consequential damages is rejected. Although the older rule at common law which made the seller liable for all consequential damages of which he had `reason to know' in advance is followed, the liberality of that rule is modified by refusing to permit recovery unless the buyer could not reasonably have prevented the loss by cover or otherwise."
The common law rule has always been that damages recoverable for breach of contract are limited to those which may fairly be considered as arising, in the usual course of things, from the breach itself, or as may reasonably be assumed to have been within the contemplation of both parties as the probable result of the breach. Kansas State Bank v. Overseas Motosport, Inc., 222 Kan. 26, Syl. ¶ 1, 563 P.2d 414 (1977).
Neither party cites authority dealing directly with the issue of *682 whether interest expense may constitute consequential damages. This appears to be a question of first impression in this state. However, in Coyle Chevrolet Co. v. Carrier, ___ Ind. App. ___, 397 N.E.2d 1283 (1979), the defendant-automobile company appealed from judgment in favor of plaintiff-buyer on the theory of breach of warranty. Part of the appeal concerned judgment in favor of the buyer for sales tax and finance charges. The court stated:
"Coyle fails to comprehend the significance of the evidence relating to the sales tax and finance charge. The sales tax is clearly an incidental damage resulting from expenses `reasonably incurred in ... receipt' of the car. Ind. Code. XX-X-X-XXX. Lloyd v. Classic Motor Coaches, Inc., 388 F. Supp. 785 (N.D. Ohio 1974). We recently held in Hudson v. Dave McIntire, Inc. (1979), Ind. App., 390 N.E.2d 179, 184, that finance charges could be included as a consequential damage.
"`Consequential damages are recoverable when they represent a loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know. Such damages should be direct, immediate and probable and not speculative. The determination of these damages is a question for resolution by the trier of fact. Jerry Alderman Ford Sales, Inc. v. Bailey (1972), 154 Ind. App. 632, 647, 648, 291 N.E.2d 92 mod. reh. den. 294 N.E.2d 617. This is a question of first impression in this state. However, we see no reason why this type of damage could not be assessed as a consequential damage where a buyer presents evidence that the seller had "reason to know" the buyer needed to borrow money in order to complete the purchase. See Carl Beasley Ford, Inc. v. Burroughs Corporation, 361 F. Supp. 325 (E.D. Pa. 1973), where such damages were awarded. Id. at 184, footnote 4.'
"Further, we note some jurisdictions consider the sales tax and finance charge as part of the price of the goods as warranted. Burrus v. Itek Corp. (1977). 46 Ill. App.3d 350, 4 Ill. Dec. 793, 360 N.E.2d 1168; Thomas Chrysler Plymouth. Inc. v. Meyers (1970), 48 Ala. App. 350, 264 So.2d 893." ___ Ind. App. at ___, 397 N.E.2d at 1286-87.
Although there is authority to the contrary [Long v. Quality Mobile Home Brokers, Inc., 271 S.C. 482, 248 S.E.2d 311 (1978)], we find the reasoning in Coyle accords with the governing principles of the UCC on the subject of consequential damages. It was established by defendant's own witnesses that its agents were aware of plaintiff's need to finance the purchase of the computer. Indeed, defendant's salesman Neese arranged for the sale of the computer through Executive. No reason exists why interest paid Executive should not be considered and assessed as a component of consequential damages.
Defendant next asserts error in awarding prejudgment interest. As a general rule, prejudgment interest is not allowable on a claim *683 for unliquidated damages. This rule is subject to the qualification however, that where necessary to arrive at full compensation, a court may in the exercise of its discretion award interest or its equivalent as an element of damages even where the primary damages are unliquidated. Lightcap v. Mobil Oil Corporation, 221 Kan. 448, Syl. ¶¶ 10, 11, 562 P.2d 1, cert. denied 434 U.S. 876 (1977); Schaefer & Associates v. Schirmer, 3 Kan. App.2d 114, Syl. ¶ 6, 590 P.2d 1087 (1979).
Here there exist two classifications of damages based on defendant's breach of warranty: (1) The difference at the time and place of acceptance between the actual value of the computer and the value the computer would have had if it had been as warranted (K.S.A. 84-2-714[2]); and (2) consequential damages resulting from seller's breach (84-2-714[3], -715[2][a]).
Although plaintiff claimed as damages under the first classification all moneys paid on the principal of the purchase price, the exact measure of damages could not be ascertained until the court had determined, at the least, the actual market value of the computer. In Lightcap the court responded to a substantially similar situation where presented with the question of whether the court had correctly withheld an award of prejudgment interest on royalties due.
"As to the amounts which were determined to be due only when judgment was entered below, we believe the general rule as to unliquidated claims should apply. Apart from the question of liability (one of `initial impression' as noted by the trial court), the amount due if there was liability was not determined until judgment. The `market value' of the gas sold was subject to proof at trial by any competent evidence. [Citations omitted.] Here plaintiff chose to rely on the arbitrated value as establishing market value, and that figure was accepted by the trial court in the absence of any other evidence on the issue. Such a result, however, could not have been foretold before this litigation was well under way, and until that time the total claim was unliquidated." 221 Kan. at 467; emphasis added.
Here damages awarded under K.S.A. 84-2-714(2) were unliquidated where the actual value of the computer was uncertain. The trial court should not have awarded prejudgment interest on the principal obligation incurred for the computer.
Items of consequential damages awarded plaintiff, e.g., electrical wiring, maintenance agreement, finance charges, and programming fees, were sums certain in amount with the issue of defendant's liability being the sole determinant of whether they would be allowed or denied in full. Here prejudgment interest was warranted.
*684 Defendant argues plaintiff failed to mitigate damages: (1) by refusing Olivetti's offer to effect a resale of the computer; and (2) in not taking back the $1,500 paid to Burke, as offered. While the first of these arguments was presented to the trial court, the second was not. Thus, whether plaintiff failed in its duty to mitigate damages by refusing Burke's offer to refund programming fees is a matter beyond this court's ability to consider. Anderson v. Overland Park Credit Union, 231 Kan. 97, Syl. ¶ 6, 643 P.2d 120 (1982).
In denying defendant's claim that plaintiff failed to mitigate by refusing to offer to effect a resale, the court stated:
"Defendant's claim of lack of mitigation effort on the part of plaintiff is likewise denied. The proposed sale, if it had ever been able to be consummated, was packaged to the purchase of still another Olivetti computer, and it is difficult to understand why the unused DE525 would have lost so much value in such a short period as to bring only $10,000.00. The requirement to mitigate does not require a subsequent sale at any price."
This finding is amply supported by the evidence.
Prejudgment interest was awarded at the rate of 12 percent per annum and it appears the court was in error in doing so. The record reveals that consequential damages allowable in this case were incurred in 1976 and 1977, and accordingly interest on those amounts should have been at the rate of 6 percent per annum to July 1, 1980. K.S.A. 16-201 (Weeks); Equity Investors, Inc. v. Academy Ins. Group, Inc., 229 Kan. 456, 625 P.2d 466 (1981); Jerry L. Phillips, Inc. v. Ratley, 6 Kan. App.2d 157, 627 P.2d 339 (1981). From and after July 1, 1980, prejudgment interest should have been assessed at the rate of 10 percent per annum. The judgment as entered should be modified accordingly.
This cause is remanded to the trial court with directions to modify its judgment by (1) deletion of prejudgment interest on the principal of purchase money paid by plaintiff to Executive Financial Services, Inc., and (2) by recomputation and an award of prejudgment interest on consequential damages at rates and in the manner herein set forth. In all other respects, the judgment is affirmed.
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898 So.2d 1191 (2005)
Bertha HENDERSON, as Personal Representative of the Estate of Charles L. Henderson, Deceased, Appellant,
v.
TANDEM HEALTH CARE OF JACKSONVILLE, INC., A Florida Corporation, and Tandem Health Care, Inc., A Foreign Corporation, Appellees.
Nos. 1D04-5516, 1D05-0398.
District Court of Appeal of Florida, First District.
April 7, 2005.
*1192 Paul S. Boone, Jacksonville, for Appellant.
Thomas A. Valdez and Matthew T. Roach, of McCumber, Inclan, Daniels, Valdez, Buntz & Ferrera, P.A., Jacksonville, for Appellees.
PER CURIAM.
Having considered the appellant's response and supplemental response to this Court's orders issued on January 4, 2005, and January 25, 2005, as well as the appellees' reply to the appellant's response, these appeals are hereby dismissed as premature. All pending motions in these appeals are hereby denied as moot.
The appellant filed a timely notice of appeal seeking review of a nonfinal "Order on Defendants' Motion for Sanctions and Motion to Dismiss Plaintiff's Complaint with Prejudice, and Plaintiff's Motion for Sanctions," entered on November 16, 2004. The appellant indicated in her notice of appeal that this nonfinal order was appealable pursuant to Florida Rule of Appellate Procedure 9.130(a)(3)(C)(iv), which allows an appeal of orders that determine the entitlement of a party to arbitration. The order on appeal required the plaintiff to reschedule non-binding arbitration and to proceed at the rescheduled non-binding arbitration in a reasonable manner and in good faith. Furthermore, the order specifically required the parties to "actively participate at the hearing." However, this order did not determine "the entitlement of a party to arbitration" as required under rule 9.130. Rather, the determination of entitlement was made in the trial court's original order referring the parties to arbitration, and the trial court was not required to make this finding anew upon the appellant's failure to participate in the previously ordered arbitration proceeding. See Department of Health and Rehabilitative Services v. Electronic Data Systems Corp., 664 So.2d 332, 333 (Fla. 1st DCA 1995); Crawford v. Dwoskin, 729 So.2d 520 (Fla. 3d DCA 1999).
The appellant filed a subsequent appeal seeking review of a nonfinal "Order Denying Plaintiff's Motion to Dispense with Arbitration," entered on December 31, 2004. This order addressed the same issues as those decided in the November 16, 2004, order. These two appeals have been consolidated for all purposes. The December 31, 2004, order is not a final order nor is it appealable pursuant to rule 9.130 under the same reasoning as applied to the November 16, 2004, order.
DISMISSED.
WOLF, C.J., DAVIS and PADOVANO, JJ., concur.
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15 F.Supp. 35 (1935)
SCHMITT
v.
TOBIN et al.
No. 2598.
District Court, D. Nevada.
July 8, 1935.
Platt & Sinai, of Reno, Nev., for plaintiff.
Ayres, Gardiner & Pike and N. J. Barry, all of Reno, Nev., and Brobeck, Phleger & Harrison, of San Francisco, Cal., for defendants.
NORCROSS, District Judge.
This suit was originally brought in the Second Judicial District Court of the state of Nevada, in and for the county of Washoe, by the superintendent of banks of the state of Nevada. On petition of defendants, the action was removed to this court. The Crocker First National *36 Bank of San Francisco, appearing specially therefor, has moved this court to dismiss the complaint as to it and to quash the service of summons on three grounds:
(1) That it is a national bank located outside the state of Nevada, namely, in the state of California, and that under the provisions of the National Banking Act no action can be brought against it outside of the state of California; (2) that it was not doing business in the state of Nevada at the time of the issuance and service of process in this action; (3) that service upon John V. Mueller was not service upon a business or managing agent of this defendant.
With respect to the subject-matter of venue, title 12 U.S.C.A., chapter 2, National Banks, § 94, provides:
"Venue of suits. Actions and proceedings against any association under this chapter may be had in any district or Territorial court of the United States held within the district in which such association may be established, or in any State, county, or municipal court in the county or city in which said association is located having jurisdiction in similar cases."
The movant, Crocker First National Bank, is established and located in the city and county of San Francisco, state of California. The question here presented is whether in view of the provisions of the section of the statute quoted, a national bank, without its consent, can be sued in a state or federal court without the state of its location and establishment. No authorities are cited expressly holding that a national bank may be so sued. Counsel for plaintiff cite the case of Farmers' & Merchants' Bank of Catlettsburg, Ky., v. Federal Reserve Bank of Cleveland, Ohio, et al. (D.C.) 286 F. 566. Federal Reserve Banks are not national bank associations such as are authorized and controlled under the provisions of title 12, chapter 2, of the United States Code (12 U.S.C.A. c. 2, § 21 et seq.), but are created under a separate and distinct chapter, being chapter 3 of that Code (12 U.S. C.A. c. 3, § 221 et seq.). Said chapter 3 contains no similar provision such as that relating to national bank associations quoted, supra. Federal Reserve Banks are established in districts which may and usually do include several states. The authority cited is not in point upon the question here presented. American Bank & Trust Co. v. Federal Reserve Bank, 256 U.S. 350, 41 S.Ct. 499, 65 L.Ed. 983.
There are other provisions of the National Bank Act which may have some bearing upon the question here presentedthe proper construction of section 94, supra.
Section 24 reads:
"§ 24. Corporate powers of associations. * * *
"Fourth. To sue and be sued, complain and defend, in any court of law and equity, as fully as natural persons."
Section 81 reads:
"§ 81. Place of business. The usual business of each national banking association shall be transacted at an office or banking house located in the place specified in its organization certificate."
Section 41 of the Judicial Code and Judiciary (28 U.S.C.A.) also provides:
"Section 41. Original jurisdiction. The district courts shall have original jurisdiction as follows:
"(1) * * *
"(16) Suits against national-banking associations. Sixteenth. Of all cases commenced by the United States, * * * and all national banking associations established under the laws of the United States shall, for the purposes of all other actions by or against them, real, personal, or mixed, and all suits in equity, be deemed citizens of the States in which they are respectively located."
A provision similar to that of section 94 has been included in the several statutes dealing with national banks since the adoption of the original act of 1863. 12 U.S.Stat. 665, 681, § 59. For a period of seventy years, the statute has been in force without material change with no decision of any court holding that a national bank may be sued in another state than that of its domicile. This fact alone is strongly indicative that it has been generally accepted that a national bank by reason of the statutory provisions controlling was not liable to suit excepting in the state of its location. While recognized as a corporation and a citizen of the state of its domicile, it is a national agency subject only to control of the Congress. Davis v. Elmira Sav. Bank, 161 U.S. 275, 16 S.Ct. 502, 40 L.Ed. 700; Clement National Bank v. Vermont, 231 U.S. 120, 34 S.Ct. 31, 58 L.Ed. 147. While *37 the Supreme Court has never been required to expressly rule upon the question here presented, in First National Bank of Charlotte v. Morgan, 132 U.S. 141, 10 S.Ct. 37, 38, 33 L.Ed. 282, that court said:
"This exemption of national banking associations from suits in state courts, established elsewhere than in the county or city in which such associations were located, was, we do not doubt, prescribed for the convenience of those institutions, and to prevent interruption in their business that might result from their books being sent to distant counties in obedience to process from state courts."
In the case of American Bank & Trust Co. v. Federal Reserve Bank, supra, the court said:
"But we agree with the Court below that the reasons for localizing ordinary commercial banks do not apply to the Federal Reserve Banks * * * and that the phrase `national banking associations' does not reach forward and include them. That phrase is used to describe the ordinary commercial banks." 256 U.S. 350, at page 357, 41 S.Ct. 499, 500, 65 L.Ed. 983.
In the comparatively recent (1923) case of Bank of America v. Whitney Central National Bank, 261 U.S. 171, 43 S.Ct. 311, 312, 67 L.Ed. 594, which was a suit brought in a federal court in the state of New York against a national bank established in the city of New Orleans, state of Louisiana, and service obtained upon the president of the bank, the court held that notwithstanding the fact the defendant bank was doing "a large New York business" transacted for it by its correspondent banks, it was not doing business in that state within the purview of the National Bank Act, and affirmed the decree of dismissal upon that ground. Upon the question of whether a national bank could be sued outside the state of its domicile it did not express an opinion, saying:
"Whether a national bank could under any circumstances be subjected, without its consent, to suit in a state or district, other than that in which it is authorized to locate its banking house, we have no occasion to consider in this case."
In the latest reported case dealing with the question under consideration, Raiola v. Los Angeles First National Trust & Savings Bank, 133 Misc. 630, 233 N.Y.S. 301, 305, Judge Noonan, after reviewing the cases both federal and state at some length, in his opinion said:
"The federal cases which have been discussed hold that the language of the section is mandatory and that in a proper case an action against a national bank must be instituted in a court where it is located."
In the Raiola Case, supra, the defendant national bank maintained an office at No. 52 Wall street, New York City, presided over by one of its vice presidents upon whom summons was served. The court also held it was not doing a business in the state of New York that would entitle it otherwise to be sued therein.
Contention also has been made that said section 94 should be construed as limited to suits for usury, as provided for in section 86 of said chapter 2 (12 U.S. C.A. § 86). This contention has its basis in the fact that the Revised Statutes of 1873 omitted therefrom section 57 of the National Bank Act of 1864, 13 Stat. 116, said section 57 corresponding to said section 94 of title 12, chapter 2 of the United States Code adopted in 1925 (12 U.S. C.A. § 94). By an act entitled, "An act to correct errors and to supply omissions in the Revised Statutes of the United States," 18 Stat. 320, section 5198 of the Revised Statutes dealing with the subject of usury, and being the same as section 30 of the said act of 1864 (13 Stat. 108), was amended by adding thereto the omitted provisions of said section 57 relating to the venue of suits, but changing the expression in the section "under this act" to read "under this title." The title referred to is title 62, c. 3, "National Banks." The construction contended for would have the word "Title" mean section. Even if we were now considering the provision as it appears in the Revised Statutes, we think the contention could not be sustained. While not expressly passing on the contention here made, this view finds support in the case of First Nat. Bank v. Morgan, supra, and in Casey v. Adams, 102 U.S. 66, 26 L.Ed. 52. We are here, however, dealing with the United States Code of 1925, and in that Code the several matters in question are dealt with in separate sections as in the act of 1864, being sections 86 and 94 of title 12, chapter 2, 44 Stat. part 1, pp. 264, 265 (12 U.S.C.A. §§ 86, 94). It is clear that said section 94 of the Code is not *38 restricted to suits of the character referred to in said section 86.
The law appears to be well settled that a national bank may not be sued without its consent in a court outside the state of its domicile. See, also, Cadle v. Tracy, 11 Blatchf. 101, 4 Fed.Cas. 967, No. 2,279; Main v. Second Nat. Bank, 6 Biss. 26, 16 Fed.Cas. 509, No. 8,976; Crocker v. Marine Nat. Bank, 101 Mass. 240, 3 Am.Rep. 336; Morse on Banks and Banking (6th Ed.) vol. 2, p. 1922; Mitche on Banks and Banking, vol. 7, p. 316.
The question of venue appears to be so clear that it is deemed unnecessary to pass upon the other questions raised upon the motion.
The motion to dismiss is granted.
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175 Cal.App.4th 1346 (2009)
ABBOTT LABORATORIES et al., Plaintiffs and Appellants,
v.
FRANCHISE TAX BOARD, Defendant and Respondent.
No. B204210.
Court of Appeals of California, Second District, Division Three.
July 21, 2009.
As modified August 6, 2009.
*1349 Baker & McKenzie, J. Pat Powers, Tod L. Gamlen, Jerry Salcido and Scott L. Brandman for Plaintiffs and Appellants.
Edmund G. Brown, Jr., Attorney General, Felix E. Leatherwood and Brian D. Wesley, Deputy Attorneys General, for Defendant and Respondent.
Silverstein & Pomerantz, Amy L. Silverstein and Edwin P. Antolin for California Taxpayers' Association and River Garden Retirement Home as Amici Curiae.
OPINION
KITCHING, J.
INTRODUCTION
This appeal concerns the effect of Farmer Bros. Co. v. Franchise Tax Bd. (2003) 108 Cal.App.4th 976 [134 Cal.Rptr.2d 390] (Farmer Bros.) on Revenue and Taxation Code section 24402.[1]Farmer Bros. held that section 24402 violated the commerce clause of the United States Constitution by allowing a tax deduction to a corporation which received a dividend declared from income of a corporation subject to California tax, while not allowing a *1350 tax deduction to a corporation receiving a dividend declared from income of a corporation not subject to California tax.
Plaintiff Abbott Laboratories (Abbott) owned a 50 percent interest in TAP Pharmaceutical Products, Inc. (TAP), part of whose income was subject to California tax and which declared a dividend. Based on Farmer Bros., defendant Franchise Tax Board (FTB) denied the dividends received deduction to Abbott, which paid the tax on the TAP dividend it received and sued FTB for a refund of that tax paid. Abbott appeals from an order dismissing its action after the trial court sustained the FTB's demurrer without leave to amend.
In this appeal Abbott proposes that this court rewrite section 24402, subdivision (a) to sever its invalid portion. We conclude that writing or reforming section 24402 in this manner would not be consistent with the enacting Legislature's intent and would contradict the purpose of its enactment, and therefore it would be inappropriate for this court to rewrite or reform the statute. We affirm the sustaining of the demurrer without leave to amend and the order of dismissal.
FACTUAL AND PROCEDURAL HISTORY
On April 20, 2007, plaintiffs Abbott Laboratories, Abbott Laboratories, Inc., CMM Transportation, Inc., North Shore Properties, Inc., and Perclose, Inc., filed a complaint for refund of corporate franchise tax or income tax against defendant FTB, an agency of the State of California. Pursuant to the standard of review[2] of an order of dismissal entered following the sustaining of a demurrer, the facts alleged in the complaint are as follows.
Abbott Laboratories was and is a corporation organized and existing under the laws of the state of Illinois with its principal offices in the state of Illinois. Abbott Laboratories, Inc., CMM Transportation, Inc., North Shore Properties, Inc., and Perclose, Inc., were unitary subsidiaries of Abbott Laboratories included in its California tax returns and were corporations organized and existing under the laws of the state of Delaware.
*1351 During the 1999 and 2000 income years, Abbott manufactured and marketed pharmaceutical, nutritional, and medical products. Abbott timely filed California bank and corporation tax returns for the 1999 and 2000 income years.
At all times during the 1999 and 2000 income years, Abbott owned 50 percent of the outstanding common stock of TAP. Part of the income of TAP was subject to taxes imposed under section 23101 et seq., and part was not. Section 24402 limits the deduction for dividends received from other corporations based on the portion of the income of the dividend-paying corporation which was subject to tax imposed by the Revenue and Taxation Code. The complaint alleged that section 24402 facially discriminated against taxpayers such as Abbott, which owned stock in corporations doing business outside California, and that the previous taxation by California of income from which dividends are declared is what makes them eligible for total or partial deduction from income. The complaint alleged that the limitation on dividend deduction in section 24402 violates California and federal due process clauses (U.S. Const., 14th Amend., § 1; Cal. Const., art. I, § 7), the commerce clause (U.S. Const., art. I, § 8, cl. 3), and the equal protection clause of the Fourteenth Amendment to the United States Constitution.
The complaint alleged that Farmer Bros., supra, 108 Cal.App.4th 976 held that the limitation of the section 24402 deduction to dividends from income on which California tax had been imposed violated the commerce clause and affirmed a decision ordering a refund based on full deduction of dividends, subject to ownership requirements in section 24402, subdivision (b).
Pursuant to section 24402, for the 1999 and 2000 income years Abbott deducted amounts representing 80 percent of dividends received from TAP. The FTB denied said deductions and assessed additional tax, interest, and penalties. After exhausting its administrative remedies, Abbott paid the additional tax, interest, and penalties. The FTB denied Abbott's claim for refund and Abbott filed an action for tax refund.
The complaint alleged that by not allowing proper deduction for dividends, FTB illegally assessed and collected tax from Abbott for $715,735 in excess of Abbott's correct liability for 1999 and for $1,624,359 in excess of Abbott's correct liability for 2000. Abbott prayed for judgment in the amount of $2,340,094, plus interest paid, applicable penalties or such larger amount as provided by law, interest as provided by law, and such other relief (including, but not limited to, attorneys' fees) as the court found appropriate.
*1352 FTB demurred to the complaint, arguing, inter alia, that the Farmer Bros. holding that section 24402 was unconstitutional rendered that statute void, that section 24402 could not be reformed, and that statutory law required the FTB to disallow deductions under section 24402 after the Farmer Bros. decision.
Abbott's reply argued that California Supreme Court cases supported reformation of section 24402 by rewriting that statute to preserve its constitutionality and to preserve the deduction for dividends after eliminating the unconstitutional portions of section 24402.
On August 9, 2007, by minute order the trial court sustained the demurrer without leave to amend. The trial court's order stated that in light of the Farmer Bros. holding, Abbott could not state causes of action for tax refunds based on section 24402. Farmer Bros. held that the "dividends received deduction" of section 24402 violated the commerce clause of the United States Constitution by discriminating against corporations engaged in interstate commerce. The trial court stated that it would not depart from that precedent, which referred to the entire dividends received deduction scheme. The trial court refused to reform section 24402 because it could not "`conclude with confidence that (i) it is possible to reform the statute in a manner that closely effectuates policy judgments clearly articulated by the enacting body, and (ii) the enacting body would have preferred such a reformed version of the statute to invalidation of the statute.'" (Quoting Kopp v. Fair Pol. Practices Com. (1995) 11 Cal.4th 607, 670 [47 Cal.Rptr.2d 108, 905 P.2d 1248] (Kopp).)
By its formal order filed on October 5, 2007, the trial court dismissed the action with prejudice.
Abbott filed a timely notice of appeal.
ISSUES
Abbott claims on appeal that:
1. The trial court erroneously ruled that Farmers Bros. found section 24402 to be unconstitutional in its entirety;
2. The trial court erroneously failed to sever the unconstitutional limitation of the dividends received deduction from the valid provisions of section 24402;
3. Section 24402, and the Legislature's intent, can be preserved by applying it in a nondiscriminatory fashion.
*1353 DISCUSSION
1. Section 24402
Section 24401 states: "In addition to the deduction provided in Article 1 (commencing with Section 24341), there shall be allowed as deductions in computing taxable income the items specified in this article."
This appeal concerns the first such deduction in section 24402, which states, in relevant part: "(a) A portion of the dividends received during the taxable year declared from income which has been included in the measure of the taxes imposed under Chapter 2 (commencing with Section 23101), Chapter 2.5 (commencing with Section 23400), or Chapter 3 (commencing with Section 23501) upon the taxpayer declaring the dividends.
"(b) The portion of dividends which may be deducted under this section shall be as follows:
"(1) In the case of any dividend described in subdivision (a), received from a `more than 50 percent owned corporation,' 100 percent.
"(2) In the case of any dividend described in subdivision (a), received from a `20 percent owned corporation,' 80 percent.
"(3) In the case of any dividend described in subdivision (a), received from a corporation that is less than 20 percent owned, 70 percent.
"(c) For purposes of this section:
"(1) The term `more than 50 percent owned corporation' means any corporation if more than 50 percent of the stock of that corporation (by vote and value) is owned by the taxpayer. For purposes of the preceding sentence, stock described in Section 1504(a)(4) of the Internal Revenue Code shall not be taken into account.
"(2) The term `20 percent owned corporation' means any corporation if 20 percent or more of the stock of that corporation (by vote and value) is owned by the taxpayer. For purposes of the preceding sentence, stock described in Section 1504(a)(4) of the Internal Revenue Code shall not be taken into account."
*1354 The remainder of the statute concerns exceptions to the section 24402 deduction which do not apply in this appeal.
2. The Farmer Bros. Decision
Farmer Bros. held that section 24402 unconstitutionally violated the commerce clause of the United States Constitution.
In Farmer Bros., the taxpayer Farmer Bros., a California corporation that manufactured and sold coffee and coffee-related products, filed corporate income or franchise tax returns with the FTB. The returns reported a "dividends received deduction" under section 24402, reflecting a portion of the dividends Farmer Bros. received during the income/tax year. Farmer Bros. owned less than 20 percent of stock in corporations that paid it dividends. In this circumstance section 24402 allowed a maximum deduction of 70 percent of the dividend amount. (Farmer Bros., supra, 108 Cal.App.4th at p. 981.) The FTB promulgated a schedule listing the corporations and the percentage of dividends deductible under section 24402, based on a formula that entitled the taxpayer to a greater deduction the more the payer corporation's income was subject to California corporate taxes. Taxpayer Farmer Bros. filed amended tax returns claiming a dividends received deduction for all dividends received for the years at issue and requested more than $800,000 in refunds on the ground that section 24402 violated the commerce clause. After the FTB denied the refund claims and the State Board of Equalization sustained that denial, taxpayer Farmer Bros. filed an action for refund of corporate franchise or income tax based on its assertion that section 24402 was unconstitutional under the commerce clause. Farmer Bros. argued that on its face, section 24402 discriminated against interstate commerce by improperly taxing income not attributable to business transacted in California, and that the deduction could not be justified as a lawful compensatory tax. (Farmer Bros., at pp. 981-983.) The trial court found that section 24402 facially placed an unconstitutional burden on interstate commerce, found that Farmer Bros. was entitled to recover $811,000 in refunds of corporate income and franchise taxes for seven tax years, and entered judgment for Farmer Bros. FTB appealed. (Farmer Bros., at pp. 984-985.)
(1) The Farmer Bros. opinion quoted the commerce clause of the United States Constitution, which states: "Congress shall have Power ... [¶] ... [¶] To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." (U.S. Const. art. I, § 8, cl. 3.) Although it grants regulatory power to Congress, the clause has a negative aspect that denies *1355 states the power to discriminate unjustifiably against or burden the interstate flow of articles of commerce. The negative or "dormant commerce clause" prohibits economic protectionism in the form of regulation which benefits in-state economic interests by burdening economic competitors from outside the state. (Farmer Bros., supra, 108 Cal.App.4th at pp. 985-986.) (2) To determine whether a state regulation violates the dormant commerce clause, "the first step is to determine whether it regulates evenhandedly[,] with only incidental effects on interstate commerce[,] or discriminates against interstate commerce. [Citation.] With respect to state taxation, a state law is treated as discriminatory if it taxes a transaction or incident more heavily when it crosses state lines than when it occurs entirely within the state.... A law that is discriminatory on its face must be invalidated unless the state can show that it advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives." (Id. at p. 986.) Even if it has no discriminatory goal or intent, a tax may violate the commerce clause if it is (1) facially discriminatory or (2) has the effect of unduly burdening interstate commerce. A State's justifications for discriminatory restrictions on commerce must pass the "strictest scrutiny." Under this heavy burden of justification, facial discrimination by itself may be a fatal defect. (108 Cal.App.4th at p. 986.)
(3) Farmer Bros. held section 24402 to be "discriminatory on its face because it affords to taxpayers a deduction for dividends received from corporations subject to tax in California, while no deduction is afforded for dividends received from corporations not subject to tax in California." (Farmer Bros., supra, 108 Cal.App.4th at p. 986.) The section 24402 dividends received deduction favored dividend-paying corporations doing business and paying taxes in California over dividend-paying corporations which did not do business or pay taxes in California. (Farmer Bros., at pp. 986-987.) The dividends received deduction of section 24402 favored intrastate commerce by giving a greater tax benefit to taxpayers investing in California corporations. By denying the dividends received deduction to taxpayers investing in non-California corporations, section 24402 discriminated against corporations engaged in business outside California. Thus it discriminated against interstate commerce in violation of the commerce clause. (Farmer Bros., at pp. 988-989.)
3. Farmer Bros. Found Section 24402 to Be Unconstitutional in Its Entirety
Abbott claims that the trial court erroneously ruled that Farmer Bros. found section 24402 to be unconstitutional in its entirety.
*1356 Abbott focuses on subdivision (a) of section 24402, which defines dividends subject to the deduction in computing taxable income. The deduction is allowed for "[a] portion of the dividends ... declared from income which has been included in the measure of the taxes imposed under Chapter 2 (commencing with Section 23101), Chapter 2.5 (commencing with Section 23400), or Chapter 3 (commencing with Section 23501) upon the taxpayer declaring the dividends." Chapters 2, 2.5, and 3 concern taxation of corporations doing business in California or deriving income from sources within California. Thus if a taxpayer owns part or all of a corporation which declares a dividend from income taxed under chapters 2, 2.5, or 3, section 24402, subdivision (a) would entitle the taxpayer to deduct a portion of those dividends from taxable income.
Abbott argues that the Farmer Bros. holding applies only to section 24402, subdivision (a), which discriminated against interstate commerce by allowing a deduction for dividends received from corporations subject to tax in California but not allowing this deduction for dividends received from corporations not subject to tax in California. Specifically, Abbott claims that only subdivision (a) of section 24402 was at issue in the Farmer Bros. case, and that the Farmer Bros. decision did not address the constitutional validity of subdivision (b).
We disagree. Having declared section 24402, subdivision (a) unconstitutional, Farmer Bros. eliminated the statutory deduction for dividends paid by corporations subject to tax in California. Subdivision (b) of section 24402 establishes the portions of dividends which may be deducted. The invalidation of the deduction as unconstitutional meant that the percentages used to calculate "[t]he portion of dividends which may be deducted under this section" could not be applied. (Ibid.) Thus it was unnecessary for Farmer Bros. to address whether section 24402, subdivision (b) was constitutional.
4. It Would Be Inappropriate for This Court to Rewrite or Reform Section 24402, Subdivision (a)
Abbott claims that the trial court erroneously failed to sever the unconstitutional provision in subdivision (a) from the remaining, valid provisions of section 24402.
Farmer Bros. held that allowing a deduction for dividends paid by corporations subject to tax in California favored those corporations, and allowing no deduction for dividends paid by corporations not subject to tax in *1357 California unconstitutionally discriminated against such corporations. There are two ways to eliminate this differing, discriminatory treatment. The deduction for dividends of corporations subject to tax in California can be eliminated, so that no dividends paid by any corporation would receive a deduction. Alternatively, the section 24402 dividends received deduction could be extended to dividends paid by all corporations, whether or not they were subject to tax in California.
Abbott argues in favor of this latter alternative, and claims this court should sever unconstitutional portions of section 24402 from the valid portion and declare the remaining statute constitutional. Abbott relies on the severability clause in section 23057, which states that: "If any chapter, article, section, subsection, clause, sentence or phrase of this part which is reasonably separable from the remaining portions of this part, or the application thereof to any person, taxpayer or circumstance, is for any reason determined unconstitutional, such determination shall not affect the remainder of this part, nor, will the application of any such provision to other persons, taxpayers or circumstances, be affected thereby."
Abbott proposes that section 24402, subdivision (a) should be rewritten to delete all words after the word "year," so that subdivision (a) would state: "(a) A portion of the dividends received during the taxable year." This revision would have the effect of allowing a deduction in computing taxable income for dividends declared from the income of any corporation, whether or not its income was subject to California tax.
a. The Invalid Portion of Section 24402, Subdivision (a) Is Not Volitionally Separable
(4) A severability clause "`"normally calls for sustaining the valid part of the enactment, especially when the invalid part is mechanically severable....."' ... `"[S]uch a clause plus the ability to mechanically sever the invalid part while normally allowing severability, does not conclusively dictate it. The final determination depends on whether the remainder ... is complete in itself and would have been adopted by the legislative body had the latter foreseen the partial invalidity of the statute ... or constitutes a completely operative expression of legislative intent ... [and is not] so connected with the rest of the statute as to be inseparable."'" (Gerken v. Fair Political Practices Com. (1993) 6 Cal.4th 707, 714 [25 Cal.Rptr.2d 449, 863 P.2d 694], italics omitted.) To be severable, "`the invalid provision must be grammatically, functionally, and volitionally separable.'" (Ibid.)
*1358 To be grammatically separable, the valid and invalid parts of the statute can be separated by paragraph, sentence, clause, phrase, or even single words. (People's Advocate, Inc. v. Superior Court (1986) 181 Cal.App.3d 316, 330 [226 Cal.Rptr. 640].) Here the words after "year" in section 24402, subdivision (a) are "reasonably separable" from the remaining portions of section 24402, subdivision (a).
To be functionally separable, the remainder after separation of the invalid part must be "`"complete in itself"'" and "capable of independent application." (People's Advocate, Inc. v. Superior Court, supra, 181 Cal.App.3d at pp. 331-332.) After severance of the unconstitutional language, subdivision (a) of section 24402 appears to pass this functional separability test.
To be volitionally separable, "[t]he final determination depends on whether `the remainder ... is complete in itself and would have been adopted by the legislative body had the latter foreseen the partial invalidation of the statute'... or `constitutes a completely operative expression of the legislative intent.'" (Santa Barbara Sch. Dist. v. Superior Court, (1975) 13 Cal.3d 315, 331 [118 Cal.Rptr. 637, 530 P.2d 605], citation omitted.) Here, we find that the Legislature intended to provide the dividends received deduction only to dividends declared from income subject to tax in California.
Both parties have cited legislative history of section 24402. Abbott claims that the intent of the 1929 enactment was "to not tax the same dollar of corporate income more than once." (Nelson, Senator, First District, California Legislature, "California's New Tax Laws; Corporation and Bank Tax Explained," The Tax Digest, Vol. 7, April 1929, p. 129.) As pointed out by the FTB, the full quotation from Senator Nelson's article states: "Dividends received by a corporation from other corporations, to the extent that they are based on business done in California, are deductible, the theory being to not tax the same dollar of corporate income more than once." (Ibid., italics added.) The purpose of the section 24402 dividend deduction was "to avoid double taxation at the corporate level of income which has already been subjected to California taxation in the hands of the dividend-declaring corporation." (Safeway Stores, Inc. v. Franchise Tax Board (1970) 3 Cal.3d 745, 749-750 [91 Cal.Rptr. 616, 478 P.2d 48], italics omitted.)[3]
*1359 (5) As enacted by the Legislature, section 24402, subdivision (a) limited the dividends received deduction to dividends declared from income subject to California tax. Deleting the language imposing this limitation on the deduction from section 24402, subdivision (a) rewrites the statute to give the statute a purpose quite different from the one enacted by the Legislature. It therefore ceases to serve the function intended by the Legislature. "`[W]hen the main purpose of a statute is defeated by the unconstitutionality of part of the act, the whole act is invalid.'" (Barlow v. Davis (1999) 72 Cal.App.4th 1258, 1266 [85 Cal.Rptr.2d 752].)
Finally, severing all but the first 10 words of section 24402, subdivision (a), would constitute tax legislation by this court. We repeat that there are two ways to address the unconstitutional violation of the commerce clause by section 24402, subdivision (a): to treat all taxpayers and all income from which dividends are declared alike, by either (1) extending the dividends received deduction to all taxpayers, without regard to whether the corporate income from which the dividend was declared was subject to California tax, or (2) denying a dividends received deduction to all taxpayers. These tax policy choices diverge so greatly, and have such widely differing fiscal and budgetary effects, that the Legislature, not this court, must resolve the matter. The Legislature has the ability to hold hearings and to hear testimony from experts on the merits and effects of proposed changes to the statute. The Legislature might decide to adopt the statute Abbott proposes, but might also decide to deny a dividends received deduction altogether. That decision is properly a matter for the Legislature, not this court.
In light of the purpose of the enacting Legislature, to adopt Abbott's proposed revision of the statute "would essentially eviscerate the statute and `would create a program quite different from the one the [Legislature] actually adopted.'... We are certain that the legislature ... can do this better than we." (Spokane Arcades, Inc. v. Brockett (9th Cir. 1980) 631 F.2d 135, 139, citation omitted.) In California the Legislature has the entire lawmaking authority, limited only by Constitution. "The principle that the Legislature *1360 may exercise all powers not denied to it by the Constitution `"is of particular importance in the field of taxation, in which the Legislature is generally supreme."'" (County of Sonoma v. Commission on State Mandates (2000) 84 Cal.App.4th 1264, 1280 [101 Cal.Rptr.2d 784].) The Legislature's authority to impose taxes exists unless expressly eliminated by the Constitution. (Armstrong v. County of San Mateo (1983) 146 Cal.App.3d 597, 624 [194 Cal.Rptr. 294].) The power to make laws, which includes the power to tax, is vested in the Legislature and cannot be delegated to the courts. This court has no power to rewrite the statute to make it conform to a presumed intention which its terms do not express. (California Teachers Assn. v. Governing Bd. of Rialto Unified School Dist. (1997) 14 Cal.4th 627, 633 [59 Cal.Rptr.2d 671, 927 P.2d 1175].
(6) We therefore conclude that the revision of section 24402, subdivision (a) does not pass the volitional separability test. As the invalid provision, section 24402, subdivision (a), is not volitionally separable, we reject the claim that this court should sever all but the first 10 words of section 24402, subdivision (a) and declare the remaining statute constitutional.
b. Reformation of Section 24402, Subdivision (a) Is Inconsistent with the Enacting Legislature's Intent and Would Contradict the Purpose of That Enactment, and Therefore This Court Will Not Reform the Statute
(7) The court also has authority to rewrite a statute to preserve its constitutionality. (Kopp, supra, 11 Cal.4th at p. 615.) "[A] reviewing court may ... reform a statute to conform it to constitutional requirements in lieu of simply declaring it unconstitutional and unenforceable. The guiding principle is consistency with the Legislature's ... intent: a court may reform a statute to satisfy constitutional requirements if it can conclude with confidence that (i) it is possible to reform the statute in a manner that closely effectuates policy judgments clearly articulated by the enacting body, and (ii) the enacting body would have preferred such a reformed version of the statute to invalidation of the statute." (Ibid.) This judicial reformation of a statute, however, "is improper when the suggested reformation is inconsistent with the Legislature's intent, or when that intent cannot be ascertained." (Id. at p. 643, italics omitted.)
As we have stated, ante, the purpose of section 24402, subdivision (a) dividend deduction was "to avoid double taxation at the corporate level of income which has already been subjected to California taxation in the hands *1361 of the dividend-declaring corporation." (Safeway Stores, Inc. v. Franchise Tax Board, supra, 3 Cal.3d at pp. 749-750, italics omitted.) This purpose was clearly expressed by the predecessor statute to section 24402, enacted in 1929 (quoted in fn. 3), and by an article describing the 1929 enactment written by State Senator H.C. Nelson, quoted ante. The reformation of section 24402, subdivision (a) urged by Abbott does not closely effectuate the policy judgment clearly articulated by the enacting body. It does not limit the dividends received deduction to dividends declared from income already subjected to California taxation; instead it contradicts that policy judgment by allowing the dividends received deduction for dividends declared from income of any corporation, whether or not that income was already subjected to California taxation. For this reason the reformation of section 24402, subdivision (a) urged by Abbott is inconsistent with the enacting body's intent. (Kopp, supra, 11 Cal.4th at p. 655.)
(8) There is moreover no basis for this court to conclude with confidence that the enacting bodythe 1929 Legislaturewould have preferred the reformed construction to invalidation of section 24402, subdivision (a). (Kopp, supra, 11 Cal.4th at p. 661.) This court cannot reform section 24402 to extend the dividends received deduction to all dividends, from whatever corporate source, without engaging in judicial policymaking in the guise of statutory reformation. Such policymaking encroaches on the Legislature's function and violates the separation of powers doctrine. (Kopp, at p. 661.) "In the context of cases involving tax statutes that violate the Commerce Clause, the courts have consistently declined to exercise the power of judicial reformation to cure the constitutional violation." (Ventas Finance I, LLC v. Franchise Tax Bd. (2008) 165 Cal.App.4th 1207, 1224 [81 Cal.Rptr.3d 823].)
We conclude that the proposed reformation would be improper and this court refuses to reform section 24402, subdivision (a).
5. Abbott Untimely Raised Its Claim of Error Regarding Its Second Cause of Action, and Therefore This Court Need Not Consider It
Abbott claims that its second cause of action relies on the same operative facts as its first cause of action, but raises additional constitutional grounds for relief, such as that the FTB's failure to allow deduction of dividends received violates the due process and equal protection clauses (U.S. Const., 14th Amend., § 1; Cal. Const., art. 1, § 7). Abbott raises this claim for the first time in its reply brief, and therefore this court need not consider it. (Medill v. Westport Ins. Corp. (2006) 143 Cal.App.4th 819, 836, fn. 3 [49 Cal.Rptr.3d 570].)
*1362 DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to defendant Franchise Tax Board.
Klein, P. J., and Aldrich, J., concurred.
NOTES
[1] Unless otherwise specified, statutes in this opinion will refer to the Revenue and Taxation Code.
[2] A demurrer tests the legal sufficiency of factual allegations in a complaint. (Title Ins. Co. v. Comerica BankCalifornia (1994) 27 Cal.App.4th 800, 807 [32 Cal.Rptr.2d 735].) "Our task in reviewing a judgment of dismissal following the sustaining of ... a demurrer is to determine whether the complaint states, or can be amended to state, a cause of action. For that purpose we accept as true the properly pleaded material factual allegations of the complaint, together with facts that may properly be judicially noticed." (Crowley v. Katleman (1994) 8 Cal.4th 666, 672 [34 Cal.Rptr.2d 386, 881 P.2d 1083].)
[3] "The very purpose of section 8 subdivision (h) [predecessor statute to § 24402] is to avoid double taxation and thereby prevent the destruction of capital assets. While it aims to tax all income received as dividends (except those exempted by law) which have not been taxed while in the treasury of the dividend payor, at the same time it purposes to avoid the inclusion of the same income in the measure of the tax to be paid by two or more different taxpayers. If the same dividend is included in the measure of the tax paid by two taxpayers successively under the Franchise Tax Act, the result is multiple taxation. It was to avoid such injustice that the Tax Commission reported to the governor on March 5, 1929, the proposed constitutional amendment `to enable the legislature to extend special treatment to dividends received from a corporation which has already paid the tax with the object of avoiding double taxation.' (California State Printing Office Publication No. 63725, p. 278.)" (Burton E. Green Inv. Co. v. McColgan (1943) 60 Cal.App.2d 224, 231-232 [140 P.2d 451].)
Section 8 stated: "In computing `net income' the following deductions shall be allowed: [¶] . . . [¶] (h) Dividends received during the taxable year from income arising out of business done in this state; but if the income out of which the dividends are declared is derived from business done within and without this state, then so much of the dividends shall be allowed as a deduction as the amount of the income from business done within this state bears to the total business done. [¶] The burden shall be on the taxpayer to show that the amount of dividends claimed as a deduction has been received from income arising out of business done in this state." (Stats. 1929, ch. 13, § 8, pp. 21, 23.)
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