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952 F.Supp. 352 (1997)
LOUISIANA ACORN FAIR HOUSING
v.
QUARTER HOUSE, Oak Ridge Park, Inc., et al.
Civil Action No. 96-2128.
United States District Court, E.D. Louisiana.
January 9, 1997.
*353 *354 Spencer Livingston, New Orleans, LA, Thomas Wilson Glass, Citizens Consulting, Inc., New Orleans, LA, for Louisiana Acorn Fair Housing.
Ronald L. Naquin, Wilbur Anthony Toups, III, Scott Cameron Barney, Robert Lloyd Clayton, Chaffe, McCall, Phillips, Toler & Sarpy, LLP, New Orleans, LA, for Quarter House, Oak Ridge Park, Inc., Quarter House Owners' Association.
Brian F. Heffernan, Paul F. Hancock, Jerri U. Dunston, U.S. Department of Justice, Civil Rights Division, Housing & Civil Enforcement Section, Washington, DC, for U.S.
Marc Norman DuBois, New Orleans Legal Assistance Corp., New Orleans, LA, Stacy Elizabeth Seicshnaydre, Greater New Orleans Fair Housing Action Center, Inc., New Orleans, LA, for Greater New Orleans Fair Housing Action Center.
ORDER AND REASONS
CLEMENT, District Judge.
Before the Court are defendants Quarter House, Oak Ridge Park, Inc. and Quarter House Owner's Association Inc.'s Motions to Dismiss pursuant to Fed.R.Civ.Proc. 12(b)(1), Rule 12(b)(4), Rule 12(b)(6) and Motion for Summary Judgment pursuant to Fed.R.Civ. Proc. 56(b). For the following reasons, defendants' Motion to Dismiss as to Quarter House is GRANTED; defendants' Motion to Dismiss for insufficiency of process pursuant to Rule 12(b)(4) is DENIED; defendants' Motion to Dismiss Quarter House Owners' Association and Oak Ridge Park is DENIED; Defendants' Motion for Summary Judgment as to Quarter House Owners' Association is GRANTED; defendants' Motion to Dismiss plaintiff's claims under Title 42 U.S.C. §§ 1981 and 1982 is DENIED; defendants' Motion to Dismiss plaintiff's claim under the Thirteenth Amendment is GRANTED; and defendants' Motion for Summary Judgment as to Oak Ridge Park is DENIED.
BACKGROUND
Quarter House is the trade name of a timeshare resort which has provided recreational units adjacent to the French Quarter since 1983. According to the defendants, the Quarter House Owners' Association, Inc. ("Owners' Association") is composed of purchasers of Quarter House timeshare units which administers and operates the timeshare units. The Owners' Association appoints a board of directors and officers to promulgate rules and regulations regarding the use of the units and the common elements which all units share, as well as assessing fees necessary to keep the units and common areas in good working order. The defendants claim that the Owners' Association is not involved at any level in the sales or marketing of the Quarter House timeshare units.
In order to market Quarter House timeshare units, field marketing representatives ("FMRs") have been employed to approach pedestrians in and around the French Quarter and convince them to tour the Quarter House timeshare units. The tours take place on the premises of the Quarter House under the direction of a touring agent. The complaint alleges that these FMRs, whose pay checks are drawn from Oak Ridge Park Inc.'s bank account, are paid on commission and are only compensated when they send prospective residents to Quarter House who comply with Quarter House's qualification list. According to the complaint, this list is communicated verbally by Quarter House employees to the FMRs. The qualification list requires that prospective buyers cannot be 1) African-American; 2) aliens; 3) of mid-Eastern or Indian cultures or religions; 3) physically unable to climb stairs; and 4) pregnant women, families with more than two children or families with children under the age of 10. The complaint alleges that when FMRs would send touring agents prospective buyers who were members of one of the above mentioned groups, the agents refused to show these individuals timeshare units while offering tours to other buyers *355 who did not belong to one of the groups. On June 24, 1996, plaintiff filed the present suit, alleging violations of Title VIII of the Civil Rights Act of 1968, as amended, 42 U.S.C. § 3601, et seq. ("the Fair Housing Act" or "the FHA"), La.R.S. 51:2601 et seq. ("the Louisiana Open Housing Act"), 42 U.S.C. §§ 1981 and 1982, and the Thirteenth Amendment.
ANALYSIS
1. "Quarter House" Status as a Defendant
Defendants first argue that defendant Quarter House should be dismissed as a party pursuant to Rule 12(b)(6) because Quarter House is only a trade name and not a proper party defendant.
Article 736 of the Louisiana Code of Civil Procedure provides that "a person who does business under a trade name is the proper defendant in an action to enforce an obligation created by or arising out of the doing of such business." Louisiana courts have held that a trade name has no separate existence apart from the individual doing business under that trade name. Trombley v. Allstate Insurance Co., 640 So.2d 815, 817 (La.App. 3 Cir.1994). Moreover, a trade name is not a separate entity capable of being sued. Guidry v. City of Houma, 471 So.2d 1056, 1058 (La.App. 1 Cir.1985).
Given that a trade name is not a separate entity capable of being sued under Louisiana law, the Court GRANTS defendants' motion to dismiss Quarter House as a defendant.
2. Service of Process on Quarter House Owners' Association, Inc. and Quarter House
Defendants next move for dismissal of claims against Quarter House Owners' Association and Quarter House pursuant to Rule 12(b)(4) on the ground that the summons served upon Quarter House Owners' Association incorrectly identified defendant as "Quarter House Homeowners Association, Inc." As the Court has already dismissed Quarter House as a defendant, the Court will only address whether there was insufficient process on defendant Quarter House Owners' Association.
"When an alleged defect in service is due to a minor, technical error, only actual prejudice to the defendant or evidence of a flagrant disregard of the requirements of the rules justifies dismissal." Libertad v. Welch, 53 F.3d 428, 440 (1st Cir.1995); see also 4A C. Wright and A. Miller, Federal Practice & Procedure, Civ.2d § 1088; Sanderford v. Prudential Ins. Co. of America, 902 F.2d 897, 900 (11th Cir.1990); Crane v. Battelle, 127 F.R.D. 174, 177 (S.D.Cal.1989) (erroneously naming defendant "Leonard Colin" rather than "Colin Lennard" in the summons and complaint is a mere technical error that does not prejudice defendant's rights when there is actual notice).
Defendants have offered no evidence in their memoranda that Quarter House Owners' Association did not receive notice or has suffered any prejudice from plaintiff's technical error. The Court finds that plaintiff's technical error in identifying defendant as "Homeowners" as opposed to "Owners" does not warrant dismissal under Rule 12(b)(4).
3. Defendants' Rule 12(b)(6) Motion as Quarter House Owners Association and Oak Ridge Park, Inc.
Defendants next claim that plaintiff has failed to allege a claim against Quarter House Owners' Association and Oak Ridge Park, Inc. under Rule 12(b)(6) and that plaintiff has failed to comply with Fed.R.Civ.Proc. 8(a).
Under Fed.R.Civ.Proc. 8(f), a complaint must be construed liberally so as to do substantial justice. Palmer v. City of San Antonio, Texas, 810 F.2d 514, 517 (5th Cir.1987); U.S. v. Uvalde Consol. Independent Sch. Dist., 625 F.2d 547, 549 (5th Cir.1980). A dismissal for failure to state a claim upon which relief may be granted cannot be upheld "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). In reviewing such a dismissal, a court must examine only the pleadings, accept the factual averments as true, and view them in the light most favorable to the plaintiff. Rankin *356 v. City of Wichita Falls, Texas, 762 F.2d 444, 446 (5th Cir.1985).
Given plaintiff's complaint and the standard for dismissal under Rule 12(b)(6), the Court finds that plaintiff has stated a claim. Although the complaint is at times vaguely worded and frequently refers obliquely to "Quarter House" or "Defendants," the Court finds that plaintiff has presented sufficient facts under Rule 12(b)(6) to withstand defendants' motion. Plaintiff first alleges that defendant Oak Ridge Park, Inc. owns and manages the Quarter House and that "upon information and belief, defendant Quarter House Homeowners Association, Inc. owns the Quarter House." Plaintiff also states that Quarter House trains and employs FMRs who are paid with checks drawn from Oak Ridge Park's bank account. Taking these factual averments as true and construing them in the light most favorable to the plaintiff, the Court finds that they are sufficient to withstand defendant's Rule 12(b)(6) and comply with the standards of Rule 8.
4. Defendants' Motion for Summary Judgment as to Quarter House Owners' Association, Inc.
Summary judgment is appropriate where the pleadings, depositions, answers to interrogatories and admissions on file, together with any affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The moving party bears the initial burden of informing the court of the basis for its motion by identifying portions of the record which highlight the absence of genuine factual issues. Topalian v. Ehrman, 954 F.2d 1125, 1132 (5th Cir.1992), cert. denied, 506 U.S. 825, 113 S.Ct. 82, 121 L.Ed.2d 46 (1992). Once the movant produces such evidence, the nonmovant must then direct the court's attention to evidence in the record sufficient to establish that there is a genuine issue of material fact for trial. Id. The nonmovant can satisfy its burden by tendering depositions, affidavits, and other competent evidence to buttress its claim. Id. It may not rest upon mere allegations made in its pleadings or conclusory allegations without setting forth specific facts establishing a genuine issue worthy of trial. Id. In evaluating the evidence tendered by the parties, the Court must accept the evidence of the non-movant as credible and draw all justifiable inferences in his favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986).
Defendants claim that there is no genuine issue of material fact and that the Owners' Association, Inc. is entitled to judgment as a matter of law because plaintiff has provided no evidence to support a finding that the Owners' Association was at all involved with the marketing or sales of Quarter House units. Defendants submitted to the Court an affidavit from Mary Estrada, a director of the Owners' Association, Inc. from 1993 to the present which states that 1) the Owners' Association administers and operates the Quarter House through a board of directors; 2) the board of directors promulgates rules and regulations regarding use and occupancy of the individual timeshare units and the common areas of Quarter House; 3) the Owners' Association, Inc. does not own title to any realty associated with the Quarter House resort; 4) the powers and authorities of the Owners' Association do not include any right to participate in the sale or marketing of Quarter House timeshare unit weeks, and that the Owners' Association is not a party to any sales transactions and receives no proceeds or funds from any sales; and 5) the Owners' Association has not been involved at any level in any effort to market unit weeks in the Quarter House resort. Plaintiff has provided the Court with no affidavits or evidence in its original or supplemental memorandum to demonstrate that the Owners' Association has had any involvement in the marketing or sales of Quarter House units. Without providing any evidence to link the Owners' Association with the alleged conduct, the plaintiff cannot hold the Owners' Association liable for alleged offenses emanating from these activities. Accordingly, the Court finds that there exists no genuine issue of material fact and finds that Quarter House Owners' Association is entitled to judgment as a matter of law.
*357 5. Defendants' Motion to Dismiss Plaintiff's Title 42 U.S.C. §§ 1981 and 1982 Claims
Defendants contend that plaintiff has failed to assert a cause of action under 42 U.S.C. §§ 1981 and 1982 because plaintiff's claim is based upon defendants' alleged discriminatory advertising practices. The Court finds that defendant's argument misconstrues the complaint.
The Supreme Court has held that 42 U.S.C. § 1981 and § 1982 should be construed together. Runyon v. McCrary, 427 U.S. 160, 96 S.Ct. 2586, 49 L.Ed.2d 415 (1976). 42 U.S.C. § 1981 states that:
All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.
42 U.S.C. § 1982 provides that:
All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherent, purchase, lease, sell, hold, and convey real and personal property.
For plaintiff to withstand defendants' motion to dismiss claims under §§ 1981 and 1982, the complaint must allege that defendants denied plaintiff the same right to lease and own property as is enjoyed by white citizens. The Court finds that the complaint has satisfied this threshold.
Although defendants contend that plaintiff's §§ 1981 and 1982 claims are based only on "advertising practices," paragraph 13 of the complaint alleges that Quarter House agents would refuse to exhibit model units to prospective buyers who were "not qualified" by virtue of membership in a racial, ethnic or handicap group while at the same time offering tours to potential buyers who were not members of the above mentioned groups. While defendants are correct that using discriminatory advertising practices are not covered by §§ 1981 and 1982, see Jones v. Alfred H. Mayer Co., 392 U.S. 409, 88 S.Ct. 2186, 20 L.Ed.2d 1189 (1968), the Court finds that plaintiff has alleged that defendants have denied nonwhite citizens the same right to lease and own property as possessed by white citizens. In accepting the factual averments in the complaint as true and in a light most favorable to the plaintiff, the Court DENIES defendants' Motion to Dismiss.
In a footnote, defendants also argue that an alternate ground for dismissing plaintiff's claims is the "well-settled principle of law" that fair housing organizational plaintiffs lack standing to prosecute §§ 1981 and 1982 claims. The Court finds this argument equally unavailing.
"The only injury which need be shown to confer standing on a fair-housing agency is deflection of the agency's time and money from counseling to legal efforts directed against discrimination." City of Chicago v. Matchmaker Real Estate Sales Center, Incorporated, 982 F.2d 1086, 1095 (7th Cir.1992) (quoting Village of Bellwood v. Dwivedi, 895 F.2d 1521, 1526 (7th Cir.1990)). The complaint alleges that ACORN is a nonprofit corporation whose activities include education and information services, housing referral services, and mediation and conciliation of disputes arising from fair housing violations. The complaint asks for damages based on its staff time, volunteer time, and other costs it has expended in efforts that have been thwarted by Defendants. From this evidence, the Court concludes that ACORN has standing to sue.
6. Defendants' Motion to Dismiss Plaintiff's Claim under the Thirteenth Amendment
In the complaint, plaintiff states that "All of the above acts and conduct of Defendants constituted violations of the AFH LA's right to be free from racial discrimination in contracting for and renting property under 42 U.S.C. §§ 1981 and 1982 and the Thirteenth Amendment to the United States Constitution." (Plaintiff's Complaint, ¶ 19). If plaintiff is attempting to allege a cause of action under the Thirteenth Amendment, defendants are correct in asserting that the *358 Amendment does not give rise to a private cause of action. Sanders v. A.J. Canfield Co., 635 F.Supp. 85, 87 (N.D.Ill.1986); Westray v. Porthole, Inc., 586 F.Supp. 834, 838-39 (D.Maryland 1984); Lopez v. Sears, Roebuck and Co., 493 F.Supp. 801, 806 (D.Maryland 1980). Accordingly, the Court GRANTS defendants' motion to dismiss plaintiff's claim under the Thirteenth Amendment pursuant to Rule 12(b)(6).
7. Defendants' Motion for Summary Judgment as to Plaintiff's Claims under 42 U.S.C. § 3601 et seq. and La.R.S. 51:2601 et seq.
Defendants contend in their Motion to Dismiss and/or for Summary Judgment that plaintiff has failed to state a viable claim for relief under the Fair Housing Act, as amended, 42 U.S.C. 3601 et seq., ("FHA") and the Louisiana Open Housing Act, La.R.S. 51:2601 et seq. ("LOHA"). As the definition of "dwelling" under LOHA is identical to the definition of dwelling under FHA and because there is no Louisiana case law on this point, the Court will consider whether Quarter House timeshare units are residential dwellings under the FHA.
The FHA prohibits discrimination in the rental or sale of a "dwelling" on the basis of race, color, religion, national origin, handicap and familial status. 42 U.S.C. § 3601 et seq. The Supreme Court considers the language of the FHA "broad and inclusive." Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 209, 93 S.Ct. 364, 367, 34 L.Ed.2d 415 (1972).
In order for plaintiff to state a claim for relief under the FHA, plaintiff must first establish that discrimination occurred in a property that is a "dwelling" within the meaning of the FHA. 42 U.S.C. § 3602 defines a dwelling as:
any building, structure, or portion thereof which is occupied as, or designed or intended for occupancy as, a residence by one or more families, and any vacant land which is offered for sale or lease for the construction or location thereon of any such building, structure or portion thereof.
As there is no further indication in the statute as to how Congress would require a court to interpret the meaning of "dwelling," this Court will accord considerable weight to an executive department's construction of a statutory scheme which the department is entrusted to administer. Chevron U.S.A., Inc. v. Natural Resources Defense, 467 U.S. 837, 846, 104 S.Ct. 2778, 2783-84, 81 L.Ed.2d 694 (1984); see also Phillips v. Marine Concrete Structures, Inc., 877 F.2d 1231, 1234 (5th Cir.1989) (as to two reasonable interpretations of a statute, a court owes deference to the one proffered by the agency charged with administering it). In particular, the Supreme Court has held that HUD's administrative construction of the FHA is entitled to "great weight." Trafficante v. Metropolitan Life Insurance Co., 409 U.S. 205, 210, 93 S.Ct. 364, 367, 34 L.Ed.2d 415 (1972) (letter opinion of HUD was entitled to great deference).
In the Preamble to Regulations issued in 1988, HUD stated that § 3602 was "broad enough to cover each of the types of dwellings enumerated in the proposed rule: mobile home parks, trailer courts, condominiums, cooperatives, and timesharing properties." Preamble I, 24 C.F.R. Ch. 1, Subch. A, App. I, 54 Fed.Reg. 3232, 3238 (Jan. 23, 1989). As mentioned above, HUD had considered including specific examples of dwellings in its final rule but "determined that, on balance, the need to leave open the extent and scope of the terms defined in the Fair Housing Act outweighs the need to provide comprehensive examples in connection with this rulemaking." Id.
The Court finds HUD's interpretation to be persuasive. The clear language of the preamble states that HUD intended the term dwelling to be "clearly broad enough" to include timeshare properties. Moreover, the fact that these examples were not part of the final rule but were included in HUD's proposed rule and mentioned in the preamble demonstrates that HUD intended the FHA to encompass at a minimum, those examples set out in the proposed rule but also viewed the FHA as covering a wider variety of structures than those mentioned in the proposed rule. As HUD is partially responsible *359 for enforcement for the FHA, the Court accords significant weight to HUD's interpretation of a timeshare unit.
The Court next looks to the caselaw interpreting whether certain residential arrangements are considered dwellings within the FHA. The FHA defines a dwelling as a "residence by one or more families." 42 U.S.C. § 3602. In determining whether a dwelling is a residence under the Act, courts have looked to the ordinary meaning of "residence" adopted in United States v. Hughes Memorial Home, 396 F.Supp. 544, 548-49 (W.D.Va.1975). See United States v. Columbus Country Club, 915 F.2d 877 (3rd Cir. 1990); Villegas v. Sandy Farms, Inc., 929 F.Supp. 1324 (D.Or.1996); Hernandez v. Ever Fresh Co., 923 F.Supp. 1305 (D.Or. 1996); Woods v. Foster, 884 F.Supp. 1169 (N.D.Ill.1995); Baxter v. City of Belleville, Ill., 720 F.Supp. 720 (S.D.Ill.1989). The Hughes court, taking its definition of residence from Webster's Third New International Dictionary, defined a residence as "a temporary or permanent dwelling place, abode or habitation to which one intends to return as distinguished from the place of temporary sojourn or transient visit." Hughes, 396 F.Supp. at 549. Courts have given the FHA a generous construction and have found that summer bungalows[1], farm labor camps[2], an AIDS hospice[3], a childrens' home[4], a homeless shelter[5], a nursing home[6], a cooperative apartment building[7] are all dwellings while finding that a motel[8] is not a dwelling. In making these determinations, courts have generally considered the length of time a person stayed at the "residence" and whether the person intended to return.
The Court finds that the facts of the present case are more analogous to the Columbus case than to the facts of the Patel case. In Columbus, the court found that bungalows were dwellings under the FHA since annual members could spend up to five months in their bungalows, most returned to these bungalows each summer, and each resident owned a right to return to his bungalow. Moreover, the court in Columbus found that Congress did not intend the FHA to only apply to year-round places of abode and exempt seasonal dwellings. Columbus, 915 F.2d at 881. In Patel, the district court rejected plaintiff's claim that a motel was a dwelling under the FHA because the motel was a commercial venture and a public accommodation, and no plaintiff intended to reside in the motel. Patel, 483 F.Supp. at 381. Here, purchasers of a Quarter House unit do not purchase a one night stay at a motel but instead possess the right to return every year to the same residential unit until 2032. There is no limit on the number of weeks in a unit that a Quarter House resident can purchase, and like any other property owner, Quarter House residents pay a mortgage and taxes on their property. Although defendants claim that historically 40% of Quarter House purchasers acquire a unit because of their ability to exchange their unit for another timeshare in a different area of the country, this right is limited by a provision in the Agreement For Sale and Purchase that Quarter House does not guarantee the availability of the exchange program. However, many Quarter House purchasers do exercise their right to return and the most important fact in this analysis is that Quarter House owners possess the right to return to their unit. What these owners decide to do with this right, as is true with any property owner, is their own decision. Moreover, the FHA is intended to prevent discrimination in the rental or sales of housing. Timeshares, because they involve the ownership a housing right, fall within the *360 purview of the FHA. Courts which have considered cases dealing with this issue have involved unique factual situations, such as facilities which provide shelter to children, AIDS patients, and the homeless, residences which do not concern the FHA's core protected activities, the rental or sale of housing. Given HUD's interpretation of timeshares, the property rights that Quarter House residents possess, and the fact that the FHA is intended to prevent discrimination in the rental and sales housing market, the subject of the present case, the Court finds that Quarter House timeshare units are dwellings within the meaning of the FHA. Accordingly, the Court DENIES defendants' Motion for Summary Judgment as to Oak Ridge Park, Inc. Accordingly,
IT IS ORDERED that defendants' Motion to Dismiss as to Quarter House is GRANTED; defendants' Motion to Dismiss for insufficiency of process pursuant to Rule 12(b)(4) is DENIED; defendants' Motion to Dismiss Quarter House Owners' Association and Oak Ridge Park is DENIED; Defendants' Motion for Summary Judgment as to Quarter House Owners' Association is GRANTED; defendants' Motion to Dismiss plaintiff's claim under Title 42 U.S.C. §§ 1981 and 1982 is DENIED; defendants' Motion to Dismiss plaintiff's claim under the Thirteenth Amendment is GRANTED; and defendants' Motion for Summary Judgment as to Oak Ridge Part is DENIED.
NOTES
[1] United States v. Columbus Country Club, 915 F.2d 877 (3rd Cir.1990).
[2] Hernandez v. Ever Fresh Co., 923 F.Supp. 1305 (D.Or.1996).
[3] Baxter v. City of Belleville, Ill., 720 F.Supp. 720 (S.D.Ill.1989).
[4] United States v. Hughes Memorial Home, 396 F.Supp. 544, 549 (W.D.Va.1975).
[5] Woods v. Foster, 884 F.Supp. 1169 (N.D.Ill. 1995).
[6] Hovsons Inc. v. Township of Brick, 89 F.3d 1096 (3rd Cir.1996).
[7] Robinson v. 12 Lofts Realty, Inc., 610 F.2d 1032 (2d Cir.1979).
[8] Patel v. Holley House Motels, 483 F.Supp. 374 (S.D.Ala.1979).
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127 B.R. 363 (1991)
In re HUNTMAR BEAUMEADE I LIMITED PARTNERSHIP, Debtor.
In re UMBRELLA ONE LIMITED PARTNERSHIP, Debtor.
Bankruptcy Nos. 90-13203-AB, 90-11945-AB.
United States Bankruptcy Court, E.D. Virginia, Alexandria Division.
May 31, 1991.
Nelson C. Cohen, Mark W. Foster, Barbara L. Ward, Zuckerman, Spaeder, Goldstein, Taylor & Kolker, Washington, D.C., for the debtor.
Jack I. Frankel, Office of the United States Trustee, Alexandria, Va.
Howard H. Stahl, Filiberto Agusti, Steven K. Davidson, Steptoe & Johnson, Washington, D.C., for Chase Manhattan Bank.
MEMORANDUM OPINION
MARTIN V.B. BOSTETTER, Jr., Chief Judge.
On April 16, 1991, this Court took under advisement an Application for Authority to Employ Counsel Under a General Retainer filed on December 24, 1990 by Huntmar Beaumeade I Limited Partnership ("Huntmar"), as well as a similar application filed on January 17, 1991 by Umbrella One Limited Partnership ("Umbrella One"). For the reasons stated herein, this Court denies both applications.[1]
*364 In the Huntmar matter, a voluntary petition for relief under Chapter 11 of the Bankruptcy Code was filed by Huntmar on December 7, 1990. Prior to Huntmar's filing of the petition, Stuart Gary ("Gary"), president of Huntmar's general partner, Huntmar Beaumeade I, Inc. ("Huntmar Inc."), retained the law firm of Zuckerman, Spaeder, Goldstein, Taylor & Kolker ("Zuckerman, Spaeder") to represent Huntmar in the bankruptcy proceeding.
Zuckerman, Spaeder, on instructions from Gary, contacted representatives of Dominic F. Antonelli, Jr. ("Antonelli") to arrange for payment of its retainer.[2] On December 7, 1990, a corporation controlled by Antonelli, Liquid Assets Corp., paid Zuckerman, Spaeder a retainer of $50,000.00.
On December 24, 1990, Huntmar filed an Application for Authority to Employ the law firm of Zuckerman, Spaeder as its bankruptcy counsel (the "Huntmar Application"). The Huntmar Application and related filings stated that:
(a) Liquid Assets Corp. paid Zuckerman, Spaeder a retainer of $50,000 for legal fees in this case;
(b) Liquid Assets Corp. is controlled by Antonelli who "has interests in" Huntmar; and
(c) there was no connection between Zuckerman, Spaeder and any creditors or other parties in interest.
On January 7, 1991, Chase Manhattan Bank ("Chase") filed an objection to the Huntmar Application and supplemented its objection on February 26, 1991. The United States Trustee filed an objection to the Application on February 14, 1991.
On April 10, 1991, Zuckerman, Spaeder disclosed that:
(1) Antonelli is an unsecured creditor of Huntmar with a claim of approximately $38,400.00;
(2) a partnership controlled by Antonelli has a 45% limited partnership interest in Huntmar; and
(3) Antonelli is a guarantor of a secured loan made to Huntmar by Chase.
Management Group Associates ("MGA"), a corporation controlled by Antonelli, has purportedly assumed de facto control of Huntmar and desires to replace Huntmar Inc. as the general partner of Huntmar. Liquid Assets Corp. has purportedly provided working capital necessary to operate Huntmar. However, neither MGA nor Liquid Assets Corp. is a general partner in Huntmar.
In the Umbrella One matter, Umbrella One's general partner, Umbrella Development Corporation ("Umbrella Corp."), retained Zuckerman, Spaeder in July 1990, to represent Umbrella One in litigation pending in the Fairfax County Circuit Court between Arthur Hamel Construction Company ("Arthur Hamel") and Umbrella One. On August 3, 1990, an involuntary petition for relief was filed by Arthur Hamel against Umbrella One in this Court and on December 10, 1990, an order for relief was entered.
In mid-December, Gary, executive vice-president of Umbrella Corp., instructed Zuckerman, Spaeder to contact representatives of Antonelli to arrange for payment of its retainer. On December 21, 1990, Zuckerman, Spaeder received a retainer payment of $25,000 from Liquid Assets Corp.
On January 9, 1991, Umbrella One, through its counsel, Zuckerman, Spaeder, filed its Schedule of Assets and Liabilities which lists Antonelli as an unsecured creditor with a claim of $6,000,000 (which amount was subsequently amended to $3,420,220).
On January 17, 1991, Umbrella One filed an Application for Authority to Employ the law firm of Zuckerman, Spaeder as its *365 bankruptcy counsel (the "Umbrella Application"). The Umbrella Application as well as information subsequently disclosed reveals that:
(1) Antonelli is an unsecured creditor of Umbrella One with a claim of approximately $3,420,220;
(2) an Antonelli created trust has a 45% limited partnership interest in Umbrella One; and
(3) Antonelli is a guarantor of a secured loan made to Umbrella One by Chase.
Both Chase and the United States Trustee filed objections to the Umbrella Application.
In analyzing this matter, we must first turn to Section 327(a) of the Bankruptcy Code which states that "the trustee, with the court's approval, may employ one or more attorneys . . . that do not hold or represent an interest adverse to the estate, and that are disinterested persons. . . . 11 U.S.C. § 327(a) (emphasis added).
The term "disinterested person" is defined by the Bankruptcy Code as "a person that (E) does not have an interest materially adverse to the interest of the estate or of any class of creditors or equity security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the debtor . . . or for any reason." 11 U.S.C. § 101(13).
A treatise discussing the "disinterestedness" requirement observes that "[i]t appears broad enough to include anyone who in the slightest degree might have some interest or relationship that would color the independent and impartial attitude required by the Code." 2 Collier on Bankruptcy ¶ 327.03[f] p. 327-38 (1989).
Zuckerman, Spaeder, by receiving payment of its fees from a creditor of the debtors, is not "disinterested" as that term is used in Sections 327(a) and 101(13) of the Bankruptcy Code. See In re Crimson Investments, N.V., 109 B.R. 397, 402 (Bankr. D.Ariz.1989) (proposed counsel to the debtor held not disinterested where it received prepetition and postpetition retainer payments from unsecured creditors of the debtor); In re Glenn Electric Sales Corp., 99 B.R. 596, 602 (D.N.J.1988) (debtor's counsel's employment terminated because legal fees were indirectly provided by a party affiliated with debtor's largest creditor); In re WPMK, 42 B.R. 157, 163 (Bankr.D.Haw.1984) (a conflict of interest is presented where an attorney representing a debtor received compensation from a corporation that was controlled by an individual who was an owner of a creditor of the debtor). As the court in the WPMK case stated, "[a]n attorney representing a debtor should not receive payment, either directly or indirectly, from any of the creditors." WPMK, 42 B.R. at 163.
In both the Huntmar and the Umbrella One matters, the proposed counsel for the debtor is being paid by a creditor whose interests are directly adverse to those of the debtor. Where a creditor pays the legal fees of the debtor's attorney, the possibility that the attorney's loyalty may be divided is so significant that he cannot continue such representation. "It is no answer to say that fraud or unfairness were not shown to have resulted." Woods v. City Nat'l Bank, 312 U.S. 262, 268, 61 S.Ct. 493, 497, 85 L.Ed. 820 (1940).
At the outset of the Umbrella One matter, Zuckerman, Spaeder knew that it was receiving retainer payments from its client's largest unsecured creditor, Antonelli, for services rendered as counsel to Umbrella One. Nevertheless, Zuckerman, Spaeder did not recognize, or decided to ignore, the conflict of interest, and elected to continue its representation of Umbrella One. Although Zuckerman, Spaeder asserts that in the Huntmar matter it did not realize that Antonelli was a creditor of Huntmar until early April 1991, because it knew of Antonelli's status as a significant creditor of Umbrella One, and that Antonelli had "interests in" Huntmar, the inescapable conclusion is that the law firm should have vigorously investigated the possibility that Antonelli was a creditor of Huntmar when it undertook the representation of such debtor.
Zuckerman, Spaeder contends that because of the purported inability of Umbrella One and Huntmar to pay their own *366 legal fees, this Court should grant the applications to retain Zuckerman, Spaeder, notwithstanding its receipt of retainer payments from a creditor of both debtors. In support of this position, Zuckerman, Spaeder urges this Court to follow In re Martin, 817 F.2d 175, 182 (1st Cir.1987), where the court stated that, to determine whether a debtor's counsel is disinterested, the bankruptcy court should not apply a "per se" rule but rather should apply its "experience, common sense, and knowledge of the particular proceeding. . . ." However, contrary to Zuckerman, Spaeder's assertion, "experience" and "common sense" dictate that we do not ignore conflict-of-interest standards set forth in the Bankruptcy Code and in relevant case law in favor of achieving an expedient solution to the debtors' purported shortage of financial resources.
For the foregoing reasons, the applications for authority to employ Zuckerman, Spaeder are denied because Zuckerman, Spaeder is not disinterested as required by 11 U.S.C. § 327(a). An appropriate Order will be entered.[3]
NOTES
[1] Because In re Huntmar Beaumeade I Limited Partnership (Case No. 90-13203-AB) and In re Umbrella One Limited Partnership (Case No. 90-11945-AB) are related in several respects, including by the fact that both involve applications to retain the law firm of Zuckerman, Spaeder, Goldstein, Taylor & Kolker, and by the fact that such law firm received a retainer payment from the same source in both matters, we are deciding them together.
[2] On January 17, 1991, an involuntary petition for relief was filed against Antonelli and his wife in the United States Bankruptcy Court for the District of Maryland, Rockville Division, and on February 14, 1991, an order for relief was entered in the proceeding.
[3] Because the applications are denied, it is unnecessary for this Court to address the United States Trustee's argument that Zuckerman, Spaeder failed to make a full and complete disclosure in the Huntmar matter of the relationship between Antonelli and Zuckerman, Spaeder as required by Bankruptcy Rule 2014.
|
Kimberly J. Coleman v. Mark Woolf, M.D.
COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-03-075-CV
KIMBERLY J. COLEMAN APPELLANT
V.
MARK WOOLF, M.D. APPELLEE
------------
FROM THE 352ND DISTRICT COURT OF TARRANT COUNTY
------------
OPINION
------------
I. Introduction
The primary issues we decide in this no-evidence summary judgment appeal are: (1) whether a plaintiff may use an article 4590i, section 13.01 expert report as summary judgment evidence; and (2) whether, if the statute prohibits the use of such a report as summary judgment evidence, the result of attaching such a report to a summary judgment response is a defect of form or a defect of substance. Because the plain language of the statute prohibits use of an article 4590i, section 13.01 expert report “in a deposition, trial, or other proceeding,” we hold that it may not be used as summary judgment evidence.
See
Act of May 18, 1995, 75
th
Leg., R.S., ch. 140, § 1, sec. 13.01(k)(2), 1995 Tex. Gen. Laws 985, 986,
repealed by
Act of June 1, 2003, 78
th
Leg., R.S., ch. 204, § 10.09, 2003 Tex. Gen. Laws 847, 884 (formerly set forth in
Tex. Rev. Civ. Stat. Ann.
art. 4590i, § 13.01(k)(2), current version at
Tex. Civ. Prac. & Rem. Code Ann.
§ 74.351(j)(2) (Vernon Supp. 2004)).
(footnote: 1)
We also hold that use of an article 4590i, section 13.01 expert report as summary judgment evidence constitutes a defect of form. Accordingly, we will affirm the trial court’s no-evidence summary judgment.
II. Factual Background
Dr. Woolf filed a rule 166a(i) no-evidence motion for summary judgment asserting that Coleman had no evidence of the standard of care or that any deviation from the standard of care proximately caused her injuries because she had failed to timely designate any expert on these matters. Coleman filed a response to Dr. Woolf’s motion for summary judgment. Coleman’s response relies upon: the affidavit of Dr. Kimberly K. Mezera, Coleman’s subsequent medical care provider, and Dr. Mezera’s attached medical records; Coleman’s affidavit; and Coleman’s pleadings. Dr. Woolf objected to Coleman’s summary judgment evidence, pointing out that Dr. Mezera’s affidavit was the very same affidavit filed by Coleman to satisfy article 4590i’s expert report requirement. Dr. Woolf claimed that article 4590i, section 13.01(k)(2) precludes use of a 4590i expert report in a summary judgment proceeding.
The trial court conducted a summary judgment hearing and later signed a no-evidence summary judgment for Dr. Woolf. The trial court subsequently signed an order sustaining Dr. Woolf’s objection to Dr. Mezera’s affidavit on the ground that it could not be used as summary judgment evidence.
III. Grounds For No-Evidence Summary Judgment
In her first issue, Coleman contends that the trial court erroneously granted summary judgment for Dr. Woolf because, contrary to the ground asserted in Dr. Woolf’s motion, Dr. Mezera was timely designated as an expert witness. Relying on
McConnell v. Southside Indep. Sch. Dist.,
858 S.W.2d 337, 341 (Tex. 1993)
, Coleman points out that summary judgment may be granted only on a ground specifically raised in the motion. She characterizes Dr. Woolf’s no-evidence summary judgment motion as raising only the issue of the alleged untimely designation of Dr. Mezera and contends that, because the trial court granted summary judgment on another ground—no evidence of the elements of Coleman’s medical negligence claim—the trial court’s summary judgment violates
McConnell
’s holding. We cannot agree.
Dr. Woolf’s no-evidence motion states that no evidence exists of the standard of care or that any deviation from the standard of care proximately caused Coleman’s injuries
because
Coleman failed to timely designate any expert on these matters. When Dr. Woolf filed his no-evidence motion for summary judgment contending that no evidence existed of the standard of care, breach, and proximate cause, Coleman was required to come forward with summary judgment evidence raising a genuine issue of material fact on each of these elements of her medical negligence claim.
See, e.g., Patriacca v. Frost
, 98 S.W.3d 303, 306 (Tex. App.—Houston [1
st
Dist.] 2003, no pet.);
Gen. Mills Rests., Inc. v. Tex. Wings, Inc
., 12 S.W.3d 827, 832 (Tex. App.—Dallas 2000, no pet.). Proof that Coleman did, in fact, timely designate experts does not constitute evidence of any of the challenged elements of Coleman’s medical negligence claim.
Accord Patriacca
, 98 S.W.3d at 306-07
. Because Dr. Woolf moved for a no-evidence summary judgment on the grounds that no evidence of the elements of a medical negligence claim existed, we overrule Coleman’s first issue complaining that the no-evidence summary judgment was granted on a ground not raised in the motion.
IV. Objections and Opportunity to Cure
In her second issue, Coleman contends that the trial court abused its discretion by sustaining Dr. Woolf’s objections to Dr. Mezera’s affidavit. It is undisputed that Dr. Mezera’s affidavit, attached to Coleman’s summary judgment response, is the same affidavit prepared by Dr. Mezera and previously filed by Coleman as an article 4590i, section 13.01 expert report. Article 4590i, section 13.01 provides that “[n]otwithstanding any other law, an expert report filed under this section . . . shall not be used in a deposition, trial, or other proceeding.” Act of May 18, 1995, 75
th
Leg., R.S., ch. 140, § 1, sec. 13.01(k)(2), 1995 Tex. Gen. Laws 985, 986 (repealed 2003).
We must determine whether this statutory provision prohibits use of an article 4590i, section 13.01 expert report as summary judgment evidence. Statutory interpretation is a question of law.
In re Canales
, 52 S.W.3d 698, 701 (Tex. 2001) (orig. proceeding). Our primary goal is to ascertain and effectuate the legislature's intent.
Bragg v. Edwards Aquifer Auth.
, 71 S.W.3d 729, 734 (Tex. 2002). In doing so, we begin with the statute's plain language because we assume that the legislature tried to say what it meant and, thus, that its words are the surest guide to its intent.
Fitzgerald v. Advanced Spine Fixation Sys., Inc.
, 996 S.W.2d 864, 865-66 (Tex. 1999).
The statutory language used here—that an expert report “shall not be used in a deposition, trial, or other proceeding”—clearly and plainly prohibits use of an article 4590i expert report as summary judgment evidence.
See
Act of May 18, 1995, 75
th
Leg., R.S., ch. 140, § 1, sec. 13.01(k)(2), 1995 Tex. Gen. Laws 985, 986 (repealed 2003);
see also Patriacca,
98 S.W.3d at 307 (holding that an article 4590i, section 13.01 expert report could not be used as summary judgment evidence);
Trusty v. Strayhorn,
87 S.W.3d 756, 762 (Tex. App.—Texarkana 2002, no pet.) (same);
Keeton v. Carrasco
, 53 S.W.3d 13, 24-25 (Tex. App.—San Antonio 2001, pet. denied) (recognizing that use of an expert report filed under article 4590i, section 13.01 is prohibited);
Garcia v. Willman
, 4 S.W.3d 307, 311 (Tex. App.—Corpus Christi 1999, no pet.) (holding that an article 4590i, section 13.01 expert report could not be used as summary judgment evidence);
see also Green v. Cypress Fairbanks Med. Ctr. Hosp.
, No. 04-01-00434-CV, 2003 WL 475846, at *1 (Tex. App.—San Antonio Feb. 26, 2003, no pet.) (not designated for publication). Thus, we hold that an expert report filed under article 4590i, section 13.01 may not be used in a summary judgment proceeding. Consequently, we hold that the trial court properly sustained Dr. Woolf’s objection to Dr. Mezera’s report.
Coleman also complains that, pursuant to Texas Rule of Civil Procedure 166a(f), the trial court should have given her an opportunity to cure the alleged defect in Dr. Mezera’s affidavit, that is, the defect that the affidavit was originally filed as a 4590i, section 13.01 expert report.
See
Tex. R. Civ. P.
166a(f) (providing that "[d]efects in the form of affidavits or attachments will not be grounds for reversal unless specifically pointed out by objection by an opposing party with opportunity, but refusal, to amend"). A defect is substantive if the summary judgment proof is incompetent; it is formal if the summary judgment proof is competent, but inadmissible.
Trusty
, 87 S.W.3d at 764 (citing
Keeton
, 53 S.W.3d at 24)
; Mathis v. Bocell
, 982 S.W.2d 52, 60 (Tex. App.—Houston [1
st
Dist.] 1998, no pet.);
see also
Timothy Patton
,
Summary Judgments in Texas
, § 6.10[1][b] (2nd
ed. 2002).
The appellate courts that have addressed whether a plaintiff’s improper use of an article 4590i, section 13.01 expert report as summary judgment evidence constitutes a defect of form or a defect of substance, have all concluded that this defect is a formal one.
Trusty
, 87 S.W.3d at 764 (characterizing expert report used in summary judgment proceeding as constituting a defect of form that must be objected to);
Keeton
, 53 S.W.3d at 24 (holding expert report used in summary judgment proceeding contained a defect of form);
Garcia
, 4 S.W.3d at 311 (same). The
Keeton
court explained:
[An article 4590i, section 13.01 expert report] is competent evidence that section 13.01(k) renders inadmissible; therefore, it contains a defect in form. If Greenfield's alternative assertion were correct, an expert who provides the report used by the plaintiff to comply with section 13.01 could never provide the content of that report in another form for use in opposition to a summary judgment. Section 13.01(k) only prohibits the use of the "expert report" filed under section 13.01. Section 13.01(k) does not prohibit the expert who provides that report from providing another report for other purposes.
53 S.W.3d at 24-25. We likewise hold that an objection to an affidavit asserting only that the affidavit may not be used as summary judgment evidence because it was previously used as an article 4590i, section 13.01 expert report raises a defect of form.
See
Trusty
, 87 S.W.3d at 764;
Keeton
, 53 S.W.3d at 24-25;
Garcia,
4 S.W.3d at 309-11.
We next address whether Coleman was entitled to an opportunity to amend Dr. Mezera’s affidavit. Dr. Woolf filed his objections to Dr. Mezera’s affidavit four days before the scheduled summary judgment hearing. Coleman did not file a response to the objections or move for a continuance of the hearing. The summary judgment hearing proceeded on the scheduled date, and at the conclusion of the hearing the trial court took the motion under advisement. Approximately two weeks after the hearing, the trial court signed an order granting summary judgment to Dr. Woolf. Approximately two weeks after that, the trial court signed an order sustaining Dr. Wolf’s objection to Dr. Mezera’s affidavit on the ground that it could not be used as summary judgment evidence because it had already been filed as an article 4590i, section 13.01 expert report.
In
Trusty
, the defendant failed to obtain a ruling on his objection to the plaintiff’s expert’s affidavit, which the defendant alleged was the same report previously filed as an article 4590i, section 13.01 expert report. 87 S.W.3d at 764. Because the defendant’s objection raised a defect of form that the defendant did not get a ruling on, the appellate court held that the objection was waived.
Id.
In
Keeton
, the defendant failed to object to the summary judgment use of an article 4590i, section 13.01 expert report until the day of the summary judgment hearing. 53 S.W.3d at 22. At the summary judgment hearing, the plaintiffs tendered an amended expert affidavit to the trial court, but the trial court denied them leave to file the amended report.
Id.
Plaintiffs then moved for a seven-day continuance of the summary judgment hearing, but the trial court denied that too and granted summary judgment for the defendant.
Id.
The appellate court reversed, holding that the trial court should have given the plaintiffs the opportunity they requested to amend their expert’s affidavit.
Id.
at 23.
In
Garcia
, the defendant filed his objections to the plaintiff’s summary judgment use of her expert’s report the day before the summary judgment hearing. 4 S.W.3d at 311. The plaintiff sought either a continuance of the hearing or leave to file another expert affidavit.
Id.
The trial court denied the plaintiff’s request and granted summary judgment for the defendant.
Id.
at 309-10. The appellate court cited its decision in
Wyatt v. McGregor
,
(footnote: 2) and reversed, holding that the trial court should have given the plaintiff the opportunity to amend the affidavit after she requested it.
Id.
In
Green
, the defendant hospital filed a no-evidence summary judgment motion, and the plaintiff filed a response and attached her article 4590i, section 13.01 expert report as her only summary judgment evidence. 2003 WL 475846, at *1. The Hosptital objected to the plaintiff’s use of the expert report as summary judgment evidence and contended that article 4590i, section 13.01(k) precluded such use.
Id.
The trial court sustained the Hospital’s objections to the expert report, struck the report, and granted summary judgment for the Hospital.
Id.
On appeal, the plaintiff contended the trial court erred by failing to afford her the opportunity to amend her defective summary judgment evidence.
Id.
at *2. The court of appeals noted that the plaintiff “had more than three weeks in which to file additional evidence – from January 16, 2001, the date on which the Hospital’s objections were filed, until February 19, 2001, the date on which the summary judgment was signed.”
Id.
The court pointed out that “[a]t no point during this period did [the plaintiff] seek leave to file additional summary judgment evidence.”
Id.
Accordingly, the court of appeals rejected the plaintiff’s contention that the trial court erred by refusing to grant her leave to amend the defective summary judgment evidence and affirmed the no-evidence summary judgment in favor of the Hospital.
Generally, we may not rule on a complaint not presented to the trial court.
Tex. R. App. P.
33.1(a). As a prerequisite to presenting a complaint for appellate review, the record must show that the complaint was made to the trial court by a timely request, objection, or motion.
Id.
When a summary judgment movant objects to summary judgment evidence proffered by the nonmovant, the burden lies upon the nonmovant to request relief under rule 166a(f), including a continuance or the opportunity to cure any formal defects in the nonmovant’s summary judgment evidence.
See Trusty
, 87 S.W.3d at 763-64 (holding that if objections are made to the nonmovant’s summary judgment evidence, the nonmovant must seek an opportunity to amend its summary judgment proof);
see also Eckmann v. Des Rosiers,
940 S.W.2d 394, 400 (Tex. App.—Austin 1997, no pet.) (same);
Webster v. Allstate Ins. Co.,
833 S.W.2d 747, 750 (Tex. App.—Houston [14
th
Dist.] 1992, no writ) (same).
In each of the cases relied upon by Coleman in support of her argument that the trial court erred by not allowing her the opportunity to amend Dr. Mezera’s report, the plaintiff took some action in the trial court requesting the opportunity to cure summary judgment evidence defects.
See
Trusty
, 87 S.W.3d at 764;
Keeton
, 53 S.W.3d at 24;
Garcia,
4 S.W.3d at 309-11. Here, Coleman took no action in the trial court to indicate that she desired the opportunity to correct any defects in Dr. Mezera’s affidavit. She did not request or file a motion for continuance; she did not tender an amended affidavit or seek leave to file an amended affidavit during the two weeks that the trial court had Dr. Woolf’s motion for summary judgment under advisement. Coleman never made a timely request, objection, or motion seeking the opportunity to cure the defect in Dr. Mezera’s affidavit.
See
Tex. R. App. P.
33.1(a). Consequently, in the absence of such a request, we will not hold that the trial court erred by failing to grant the unrequested relief of providing Coleman with the opportunity to cure the defect in Dr. Mezera’s affidavit.
See Trusty
, 87 S.W.3d at 763-64;
Eckmann,
940 S.W.2d at 400;
Webster,
833 S.W.2d at 750;
accord Green
, 2003 WL 475846, at *2. We overrule Coleman’s second issue.
V. Conclusion
Having overruled Coleman’s issues, we affirm the trial court’s judgment.
SUE WALKER
JUSTICE
PANEL B: DAUPHINOT, WALKER, and McCOY, JJ.
DELIVERED: February 5, 2004
FOOTNOTES
1:Although the 78
th
Legislature repealed article 4590i, it also enacted Texas Civil Practice and Remedies Code section 74.351, setting forth expert report requirements in health care liability claims.
Tex. Civ. Prac. & Rem. Code Ann.
§ 74.351. Subsection (k)(2) of section 74.351 contains the same restriction on the use of expert reports that was previously set forth in article 4590i, section 13.01(k)(2).
Id. §
74.351(k)(2).
The Legislature has, however, cured the problem presented in this case by also enacting civil practice and remedies code section 74.351(t) which provides that “[i]f an expert report is used by the claimant in the course of the action for any purpose other than to meet the service requirement of Subsection (a), the restrictions imposed by Subsection (k) on use of the expert report by any party are waived.”
Id. §
74.351(t).
Although repealed, article 4590i remains in effect for application to suits filed before September 1, 2003, such as this one.
See
Act of June 11, 2003, 78
th
Leg., R.S., ch. 204, § 23.02(a), (b), 2003 Tex. Gen. Laws 847, 898-99.
2:855 S.W.2d 5, 17-18 (Tex. App.—Corpus Christi 1993, writ denied) (op. on reh’g). In
Wyatt
, at the summary judgment hearing the defendants objected that the plaintiff’s affidavits were defective because they stated the affiants’ competency as a conclusion rather than by stating that both were over eighteen, had never been convicted of a crime, and possessed personal knowledge of the facts stated.
Id.
at 17. The plaintiff did not have the opportunity to amend the affidavits before the trial court granted summary judgment.
Id.
The plaintiff subsequently filed a motion for reconsideration, tendered amended affidavits, and requested leave to file the amended affidavits.
Id.
The trial court denied all relief, but the appellate court reversed, holding that the plaintiff should have been provided with the requested opportunity to cure the defective affidavits.
Id.
at 17-18.
|
697 P.2d 766 (1984)
The PEOPLE of the State of Colorado, Plaintiff-Appellee,
v.
Robin Roy PELTZ, Defendant-Appellant.
No. 82CA1241.
Colorado Court of Appeals, Div. II.
August 23, 1984.
Rehearing Denied September 20, 1984.
Certiorari Granted March 25, 1985.
*768 Duane Woodard, Atty. Gen., Charles B. Howe, Chief Deputy Atty. Gen., Richard H. Forman, Sol. Gen., Laura E. Udis, Asst. Atty. Gen., Denver, for plaintiff-appellee.
Mary G. Allen, Denver, for defendant-appellant.
BERMAN, Judge.
Defendant, Robin Roy Peltz, appeals his conviction by a jury of burglary, conspiracy to commit burglary, theft over $10,000, and conspiracy to commit theft over $10,000. We affirm.
On October 7, 1980, a scuba supply shop was burglarized and over 200 items with a retail value of $50,000 and a wholesale value of about $30,000 were taken. The owners of the burglarized shop offered a $2,000 reward for information regarding the burglary and, based upon information provided to the Colorado Bureau of Investigation by defendant's high school friend, James Vest, defendant was arrested in June 1981.
The defendant, as well as co-defendnts Robin Pappadakis and David Lindholm, were charged with burglary, conspiracy to commit burglary, theft over $10,000, and conspiracy to commit theft over $10,000. Pappadakis was defendant's girlfriend and Lindholm was a plumber for whom defendant worked as an apprentice.
Defendant and Pappadakis were tried jointly, while Lindholm was tried separately. Both defendant and Pappadakis elected to testify at their joint trial, and Vest was the key prosecution witness. Pappadakis was convicted of theft and conspiracy to commit theft and acquitted of second degree burglary. Defendant, however, was convicted on all counts with which he was charged and was sentenced on August 3, 1981, to concurrent terms of four years each for burglary and conspiracy and five years for theft. This appeal followed.
I.
Defendant's first contention is that the trial court erred in denying his repeated motions for severance from co-defendant Pappadakis. We disagree.
For a defendant to be entitled to severance of his trial from that of a co-defendant the following two-pronged test must be satisfied: (1) there must be material evidence admissible against one but not all of the parties; and (2) admission of that evidence must be prejudicial to the defendant against whom the evidence is not admissible. People v. Gonzales, 198 Colo. 450, 601 P.2d 1366 (1979); see § 16-7-101, C.R.S. (1978 Repl.Vol. 8); Crim.P. 14.
At trial, co-defendant Pappadakis attempted to impeach Vest's credibility by inquiring into Vest's deferred judgment which he received for his participation in the unrelated crime of arson in Douglas County. Defendant argues that Vest's testimony upon cross-examination by Pappadakis that Vest's deferred judgment arose from his "covering up the crime for defendant [Peltz]" would not have been admissible against him if he had been tried separately because, although defendant had *769 been found guilty by a jury of that crime, he had not yet been sentenced on that charge. Defendant argues, further, that, despite the trial court's cautionary instruction to the jury that such evidence was not to be considered in determining defendant's guilt in this case, he was nevertheless prejudiced by the admission of such evidence at his joint trial with Pappadakis. Hence, he concludes his motion to sever his trial from the trial of Pappadakis should have been granted. We disagree.
Contrary to defendant's contention, admission of defendant's previous felony conviction for arson in Douglas County would not have been precluded merely because defendant had not yet been sentenced for that offense. People v. Johnson, 192 Colo. 483, 560 P.2d 465 (1977). Although defendant asserts that there had been no disposition of defendant's motion for new trial in the arson case, he points to nothing in the record which supports that assertion as it is his burden to do on appeal. Hence, the first prong of the Gonzales test has not been met.
In addition, the second prong of the Gonzales test was not met because there is no showing of prejudice to the defendant. Here, the jury was immediately instructed that testimony regarding the defendant's involvement in the Douglas County arson could not be considered against him but could only be considered with respect to co-defendant Pappadakis, and there is a strong presumption that the jury heeded those instructions. People v. Gonzales, supra.
Defendant further contends that severance was mandated by virtue of Vest's testimonial reference to the fact that Vest was in protective custody and by the fact that co-defendant Pappadakis was allowed by the trial court to dispel any inference that she had threatened Vest with harm. However, nothing in Vest's protective custody reference implicated the defendant as having been involved with threatening Vest. The jury could easily have inferred that protective custody resulted from Vest's discussions with the Colorado Bureau of Investigation or that it resulted from threats from the severed co-defendant, Lindholm.
In sum, severance of all defendants was not mandatory upon the trial court. Furthermore, inasmuch as the defendant and co-defendant Pappadakis were identically charged, the charges arose from a single criminal episode (the burglary and theft of a scuba supply shop), and both co-defendants asserted the non-antagonistic defenses of general denial of participation in the crime, we hold that the trial court did not abuse its discretion in denying discretionary severance to defendant. See People v. Gonzales, supra; People v. Warren, 196 Colo. 75, 582 P.2d 663 (1978).
II.
Defendant's second contention is that the affidavits in support of the warrants to search defendant's car and a mini-warehouse storage unit which he rented were insufficient to establish probable cause and that, therefore, the trial court erred in denying his motion to suppress the numerous articles of diving equipment and a small television set, belonging to the victim, which were seized during the searches. Specifically, defendant argues that the affidavits used to support both search warrants were inadequate in two respects: (1) they failed to establish the reliability of informant Vest, and (2) Vest's information in the affidavits was stale because it failed to establish the items sought were currently located in the storage shed and automobile. We disagree.
Defendant's first argument appears to have emerged from a misplaced reliance on the rather rigid Aguilar-Spinelli test which previously applied to tips from anonymous or confidential informants. However, that test is no longer applicable, the test now being one in which the "totality of the circumstances" is considered. People v. Smith, 685 P.2d 786 (Colo.App.1984); People v. Sullivan, 680 P.2d 851 (Colo.App. 1984); People v. Gallegos, 680 P.2d 1294 (Colo.App.1983).
*770 Here, the information provided by the named informant was both detailed and corroborated by the other information in the affidavits. Hence, under the "totality of circumstances" approach, the affidavits here were sufficient to support the trial court's finding of probable cause to believe that contraband or evidence of criminal activity was located on the premises to be searched.
Both affidavits recited the following facts. Vest initiated his contact with the police and provided the names and addresses of the three perpetrators of the scuba shop burglary and theft; the date and locations of the crimes; the point of entry into the building; and descriptions of some of the stolen items. Vest's information was corroborated by observations of named police officers and by the victim's statements to the officers and detailed lists of stolen equipment attached to the affidavits.
Additionally, Vest related to the officers the unusual fact that the defendant had told him that he had removed the glass on the countertops and fish tanks and had placed them on the floor so as not to break them during the burglary. This fact too was corroborated by the officers' on-the-scene observations of the location of the pieces of glass belonging to the fish tanks and countertops.
Finally, Vest produced a regulator, one of the items stolen from the scuba shop, and gave it to an agent of the Colorado Bureau of Investigation. Taken together, these facts are more than sufficient to supply the requisite probable cause.
Defendant's second argument is that, by the time the search warrant issued some seven months after the crime, Vest's information was stale and any previously existing probable cause had dissipated. This argument is also without merit.
In People v. Ball, 639 P.2d 1078 (Colo. 1982), our Supreme Court stated:
"[W]hile an affidavit must contain a sufficient statement of the time of the events relied upon to establish probable cause, it is not necessary that the timing of these events be delineated with exactitude or that the events themselves occur immediately prior to the issuance of the warrant. The test is whether the timing of the events is sufficiently set forth to justify a reasonable belief that seizable objects are present on the premises to be searched."
Here, the affidavits provided that Vest stated that the majority of the stolen property had been moved from an apartment which he shared with the defendant to a storage shed located at a specific address in Aurora, Colorado, which he had seen recently, and further provided that Vest stated that he knew the items were still there because he was advised by defendants Peltz and Lindholm that the property was being used by them. The affidavits further provided that Vest stated that he had seen the television stolen from the victim's store "recently" in the trunk of defendant's automobile, a specific description of which was given. Since the search warrants issued four days after Vest's discussion with the affiant officer and fellow officers, we hold that the timing of the events is sufficiently set forth to justify a reasonable belief that items stolen during the burglary would be found in the storage shed and automobile to be searched. See People v. Hamer, 689 P.2d 1147 (Colo.App. 1984).
III.
Defendant's third contention is that the trial court erred in denying his motion to quash the jury panel and to declare a mistrial based upon the prejudicial remark of one prospective juror, Mr. Gomez, which may have been overheard by other prospective jurors. Again, we disagree.
During a recess, the trial court clerk overheard prospective juror Gomez state in the presence of other prospective jurors and in a joking manner, "Let me practice this, defendant is guilty." The clerk reported that conduct to the court and, following an admission by Gomez that he did make the statement, the trial court granted defendant's challenge for cause as to Gomez. *771 In addition, the court agreed to permit the other potential jurors in the jury box to be questioned individually in chambers; however, the court denied defendant's motion to quash the entire jury panel. Upon questioning, each of the potential jurors in the box responded that he had not heard Gomez make any remark.
New jurors were then called to the box and, as each successive juror was examined, he was asked in open court if he had overheard any comments by other prospective jurors. Two jurors, Mr. Fox and Mr. Donovan, stated that they had overheard remarks by Gomez. Each was then questioned in chambers.
Fox related that Gomez had said he thought it was a game and was practicing delivering a guilty verdict. Fox stated that he thought Gomez' "flippant attitude" was "a little strange" in light of the seriousness of the case, but that his capacity to be fair and impartial to both sides in the trial was not in any way compromised or influenced by Gomez' remarks. The defendant challenged Fox for cause and the challenge was denied. The defendant then opted not to exercise a peremptory challenge on Fox, and Fox was seated as a juror.
Prospective juror Donovan stated in chambers that Gomez had commented to him during a recess that the reason the judge and counsel went back into chambers was probably "to smoke a joint." Donovan also related that Gomez stated that he thought that co-defendant Pappadakis was attractive and that "she could offer me something for a not guilty" verdict. Donovan was later excused for cause for an apparently unrelated reason.
Defendant does not object to the trial court's denial of his challenge for cause of juror Fox. Rather, the defendant argues that other prospective jurors "may well have" overheard Gomez' remarks and been prejudiced thereby. However, defendant points to nothing in the record which establishes that other prospective jurors in fact overheard any of Gomez' remarks, much less that they were prejudiced thereby.
Mere speculation as to the possibility of prejudice among the pool of prospective jurors is insufficient to warrant quashing the entire venire and is certainly far short of a scenario which would constitute grounds for a mistrial. Accordingly, the trial court did not err in denying defendant's motion to quash and motion for mistrial.
IV.
Defendant's next contention is that his statutory right to a speedy trial under § 18-1-405(1), C.R.S. (1978 Repl.Vol. 8), and Crim.P. 48(b)(1) was violated because, although jury selection commenced one day prior to the expiration of the six-month time limitation for speedy trial, jury selection was not completed and the jury was not sworn until five days after the sixmonth time period had elapsed. On this basis, defendant argues that the trial court erred in denying his motion to dismiss. We do not agree.
Section 18-1-405(1), C.R.S. (1978 Repl. Vol. 8) and Crim.P. 48(b)(1) provide that a defendant must be "brought to trial on the issues raised by the complaint, information, or indictment within six months from the date of the entry of a plea of not guilty." Here, defendant entered his not guilty plea on September 3, 1981, and jury selection in this case commenced on March 2, 1981. The jury was empaneled and sworn and the first prosecution witness was sworn on March 8, 1982.
Defendant submits that an accused is "brought to trial" for purposes of the speedy trial statute at the same time that jeopardy attachesnamely, at the moment the jury is empaneled and the first witness is sworn. However, in People v. Erickson, 194 Colo. 557, 574 P.2d 504 (1978), our Supreme Court specifically rejected the argument that a trial does not begin and, therefore, that a "mistrial" cannot be declared prior to the swearing of the jury and the attachment of jeopardy. Therefore, we hold that the phrase "brought to trial" under the speedy trial provision refers to the date upon which the *772 court calls the case for trial, the attorneys indicate their readiness to proceed, and the proceedings commence. Hence, although the empaneling of the jury is determinative as to when a defendant has been placed in jeopardy, it is not determinative of when a defendant is "brought to trial" for purposes of the speedy trial provisions.
Inasmuch as the Supreme Court strongly implied that "trial" had commenced in Erickson for purposes of the speedy trial statute, notwithstanding the fact that the jury had not yet been sworn, and inasmuch as the trial court here found that jury selection "proceeded with diligence," we hold that the defendant was not denied his statutory right to a speedy trial. Therefore, the trial court did not err in denying his motion to dismiss.
V.
Defendant's final contention is that the trial court erred in failing, sua sponte, to rule inadmissible at trial Vest's testimony regarding his out-of-court statements to a Mr. LaVoie, a friend of Vest who was a lieutenant in the fire department. Once again, we disagree.
Defendant did not object to Vest's testimony at trial, nor did he include any objection to Vest's testimony in his motion for new trial. Hence, our review of the issue is precluded unless the defendant establishes plain error seriously affecting his substantial rights. Crim.P. 52(b); People v. Peterson, 656 P.2d 1301 (Colo.1983). Here, there is no such plain error.
Defendant complains specifically of Vest's testimony that he related "some of the basics" about the burglary incident to LaVoie and that he "was becoming afraid for his life" and wanted to talk to an officer he could trust. Defendant argues that such hearsay was prejudicial to him because it tended to establish his involvement in the burglary and to suggest that he may have threatened Vest's life.
However, both Vest and LaVoie testified at trial and Vest testified at length during his direct examination about defendant's involvement in the scuba shop burglary. Hence, the statements to LaVoie which implicated the defendant were merely cumulative of Vest's previous testimony and, thus, could not have been prejudicial. Therefore, regardless of whether the evidence fell within any hearsay exception, its admission does not constitute reversible error. People v. O'Donnell, 184 Colo. 104, 518 P.2d 945 (1974).
As to Vest's recitation of his statement to LaVoie that he was becoming afraid for his life, there is no evidence that these statements were hearsay because they need not have been offered for "the truth of the matter asserted," see CRE 801(c), but were, instead, quite probably offered to explain to the jury the reason that Vest subsequently revealed his knowledge of the burglary to local authorities. The testimony was clearly admissible for this purpose. See People v. Tenorio, 197 Colo. 137, 590 P.2d 952 (1979).
In addition, had defendant objected, Vest's testimony as to his expression to LaVoie of his fear for his own safety would still have been admissible under CRE 803(3) as a statement of the declarant's "then existing mental, emotional, or physical condition."
Finally, the fact that both declarants, Vest and LaVoie, were subject to cross-examination by defendant at trial negates any possibility of plain error. See CRE 801(d)(1).
Judgment affirmed.
SMITH and VAN CISE, JJ., concur.
|
608 F.Supp. 1407 (1985)
Inez CURRY, et al., Plaintiffs,
v.
John BLOCK, et al., Defendants.
Civ. A. No. 281-037.
United States District Court, S.D. Georgia, Brunswick Division.
May 6, 1985.
*1408 Martha Miller, Atlanta, Ga., Holle Weiss-Friedman, Brunswick, Ga., for plaintiffs.
Melissa Mundell, Asst. U.S. Atty., Savannah, Ga., for defendants.
ORDER
ALAIMO, Chief Judge.
By Order dated June 11, 1982, this Court granted plaintiffs' motion for summary judgment. That judgment was affirmed by the United States Court of Appeals for the Eleventh Circuit. Currently before the Court is plaintiffs' motion for assessment of approximately $55,460 in attorney fees against the United States. After a thorough and painstaking consideration of the record and of the briefs and oral argument presented on this motion, the Court concludes *1409 that plaintiffs should be awarded attorney fees pursuant to the fee provisions of 28 U.S.C. § 2412(b) and (d).
FACTUAL BACKGROUND
Plaintiffs initiated this class action on behalf of all Georgians in default on Farmer's Home Administration ("FmHA") loans financed under the Consolidated Farm and Rural Development Act ("the Act"). A 1978 amendment to the Act had set out certain procedures to be used for granting deferrals for FmHA loans. 7 U.S.C. § 1981a (1982). The complaint requested this Court to order the United States Department of Agriculture to implement the deferral procedure described in the amendment. The Court concluded that § 1981a mandated establishment of the requested deferral mechanism. Consequently, summary judgment was entered for plaintiffs. See Curry v. Block, 541 F.Supp. 506 (S.D. Ga.1982), aff'd, 738 F.2d 1556 (11th Cir. 1984).
Plaintiffs now request that attorney fees incurred by them, from the initiation of the action to date, be assessed against the United States. Plaintiffs assert a two-fold basis for their fee application. First, they request fees under 28 U.S.C. § 2412(b). This subsection invests district courts with discretion to award fees against the Federal Government to the extent that common law or statute would permit a fee award against any other party. Alternatively, plaintiffs assert that a mandatory fee is authorized under 28 U.S.C. § 2412(d) because the Government's position in this litigation was not substantially justified.[1]
DISCUSSION
A. Fee Award Under 28 U.S.C. § 2412(b)
It has become axiomatic that, under the "American Rule," parties in this Nation's courts pay their own attorney fees. See Alyeska Pipeline v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975). Embracing this rule, 28 U.S.C. § 2412 formerly immunized the Federal Government from judgments for attorney fees. See 28 U.S.C. § 2412 (1976) (amended 1980).
Enforcement of former § 2412 created an onerous economic burden for citizens seeking to challenge governmental actions. In an effort to reduce the economic deterrents to litigation, Congress in 1980 passed the Equal Access to Justice Act ("EAJA"). See H.R.Rep. No. 1418, 96th Cong., 2d Sess. 6 (hereinafter cited as "House Report"), reprinted in 1980 U.S.Code Cong. & Ad.News 4984 (stating purpose of EAJA). This legislation amended § 2412 by adding subsection (b), which reads:
(b) Unless expressly prohibited by statute, a court may award reasonable fees and expenses of attorneys, in addition to the costs which may be awarded pursuant to subsection (a), to the prevailing party in any civil action brought by or against the United States or any agency and any official of the United States acting in his or her official capacity in any court having jurisdiction of such action. The United States shall be liable for such fees and expenses to the same extent that any other party would be liable under the common law or under the terms of any statute which specifically provides for such an award.
28 U.S.C. § 2412(b) (1982). Under § 2412(b), a litigant may invoke the common law exceptions to the American Rule and seek fees where the United States litigates in bad faith or where litigation produces a common benefit. See House Report, supra, 1980 U.S.Code Cong. & Ad. News 4987. As well, the Government may be charged with fees pursuant to statutory fee-shifting provisions applicable to other parties.
Plaintiffs, taking the latter approach, assert that the attorney fee provision of the Civil Rights Act of 1976, 42 U.S.C. § 1988, *1410 provides a statutory basis for a fee award in this case.[2] Section 1988 provides that:
In any action or proceeding to enforce a provision of sections 1981, 1982, 1983, 1985, and 1986 of this title, ... the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs.
42 U.S.C. § 1988 (1982). Section 1983 provides a remedy for any action taken under color of state law which subjects a person within the jurisdiction of the United States to the deprivation of a federal constitutional or statutory right. 42 U.S.C. § 1983 (1982). The case at bar is analogous to one brought under § 1983, differing only in that the deprivation of rights resulted not from state action but from the action of federal officials. See Bivens v. Six Unknown Federal Narcotics Agents, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971) (creating common law remedy for violations of federal constitutional rights by officers acting under color of federal law) (hereinafter termed "Bivens -type action"). Liability under § 1983 could have resulted had a state officer worked a violation of federal right analogous to that perpetrated by the Federal Government in the case at bar. See Maine v. Thiboutot, 448 U.S. 1, 100 S.Ct. 2502, 65 L.Ed.2d 555 (1980).
As plaintiffs explain it, if a § 1983 plaintiff were successfully to challenge a violation of federal rights by state officials, attorney fees would be available against the state under § 1988. Section 2412(b) permits fees to be assessed against the United States to the same extent that any statute would permit assessment of fees against a non-federal party. Since § 1988 would authorize a fee award against a state official sued for violating federal statutory rights, plaintiffs submit that § 2412(b) permits assessment of fees where the Federal Government violates federal statutory rights. See Trujillo v. Heckler, 587 F.Supp. 928 (D.Colo.1984); Lauritzen v. Lehman, 736 F.2d 550, 560-66 (9th Cir.1984) (Boochever, J., dissenting); Premachandra v. Mitts, 753 F.2d 635, 642-44 (8th Cir.1985) (en banc) (Floyd Gibson and Heaney, JJ., dissenting).
The Government urges the Court to reject plaintiffs' analysis of §§ 1988 and 2412(b) in favor of a more limiting statutory construction.[3] The Government focuses on the scope of § 1988 and urges that this statute simply does not provide fees for litigants challenging violations of federal rights by federal officials. Had the Congress which passed § 1988 intended this result, the Government supposes that the statute would have included the language underlined below:
[The Court may allow to the prevailing party a reasonable attorney's fee] in any action ... to enforce a provision of section 1981, 1982, 1983, 1985, and 1986 of this title, or in any action to enforce any right against the United States analogous to the rights protected by the foregoing sections.
The Government contends that the actual language of § 1988 does not permit such a gloss upon the statute. The majority of courts which have addressed the application of § 2412(b) to Bivens -type cases have adopted the construction of §§ 1988 and 2412(b) which the Government here espouses. See Lauritzen v. Lehman, supra; Premachandra v. Mitts, supra; Saxner v. Benson, 727 F.2d 669 (7th Cir.1984); Unification Church v. INS, 574 F.Supp. 93 (D.D.C.1983).
The Government, by relying too heavily on the language of the referenced statute, § 1988, misses the import of § 2412(b). Having considered the language and the legislative history of the EAJA, the Court is persuaded that *1411 § 2412(b) provides for attorney fees in the case at bar.
Turning first to the language of the EAJA, § 2412(b) provides for fee awards against the United States "to the same extent that any other party would be liable under the common law or under the terms of any statute which specifically provides for such an award." State officials are among the possible "other parties" to actions for violations of federal statutory rights. As plaintiffs would be able to recover fees pursuant to § 1988 against a state defendant, the United States should be liable "to the same extent" under the language of § 2412(b).
The legislative history of the EAJA supports a construction of the Act which provides for fees in Bivens -type cases. The House Report to the Act reflects Congress' general concern with the economic burden which citizens must bear in challenging the wrongs of the Federal Government. See House Report, supra, 1980 U.S.Code Cong. & Ad.News at 4984. The testimony of Armend Derfner, of the Lawyer's Committee for Civil Rights Under the Law, reveals the legislators' particular awareness of the need for fee awards in Bivens -type cases against the Federal Government.
Early in the evolution of the EAJA, it proposed to hold the Federal Government amenable to fee awards "to the same extent as would be any private litigant." Derfner took issue with this language:
Mr. Kastenmeier, if I could just direct myself to one portion of this bill?
There is an area in which a slight drafting modification could carry out what I believe might be the intention of the committee; and that is to put the United States completely on a par as far as the enforcement of important constitutional and statutory rights.
In the Civil Rights Act of 1976 you provided that when someone ... sues a State or local government under 42 United States Code, section 1983, to vindicate a constitutional or Federal statutory right, that fees would be available under the Newman v. Peggy [Piggie] [sic] Park standard. [The proposed amendment to § 2412 says] ... that the United States should pay fees ... in those circumstances where the court may award fees in suits involving private parties.
That doesn't say State or local government, but if the language were amended to read, "in those circumstances where the court may award such fees in suits involving other litigants"; it would achieve that purpose. And I think it would go even further toward putting the United States on a par with other governmental bodies.
Award of Attorneys' Fees Against the Federal Government: Hearings on S.B. 265 Before the Subcommittee on Courts, Civil Liberties, and the Administration of Justice of the House Judiciary Committee, 96th Cong., 2d Sess., at 100, quoted in Premachandra v. Mitts, 727 F.2d 717, 728 (8th Cir.1984) (panel opinion, vacated upon decision to rehear case en banc). Derfner advocated extension of § 2412(b) to provide for fees in Bivens -type cases. The statute's language was changed as Derfner suggested prior to the statute's enactment. The Court can only assume that, by changing the language exactly as Derfner recommended, the Congress intended the effect which Derfner described.
The Ninth Circuit in Lauritzen v. Lehman, supra, followed what it had concluded was the statutes' clear meanings and held that fees are not available under §§ 2412(b) and 1988 in Bivens -type cases. The Lauritzen court refused to give Derfner's testimony dispositive weight, stating: "The farther we wander from the statutory language to pick up bits and scraps of legislative history to aid interpretation, the more likely will our interpretations be capricious and unpredictable." 736 F.2d at 555.
The "plain language" of § 2412(b) does not point inexorably to the result reached by the Lauritzen court. As to the importance of the committee testimony in determining the statute's meaning, this Court is more persuaded by Judge Boochever's comments in dissent in Lauritzen:
*1412 Testimony before a congressional committee sometimes is of dispositive weight in interpreting congressional intent where the testifying witness is closely identified with the legislation ... In the instant case, ... the sequence of events ... provides a nexus between the intent of Congress and that of the witness. Congress, without stating any other reason for the change, amended S. 265 in precisely the fashion Derfner suggested. Far from being a bit or scrap of legislative history as the majority implies, Derfner's testimony is the only reason in the legislative record for the amendment. The majority fails to explain the remarkable coincidence in the timing of Derfner's suggestion and the amendment. The only plausible explanation is that Congress adopted the amendment for the reason Derfner suggested.
736 F.2d 561-62 (Boochever, J., dissenting) (citations omitted).
The language of § 2412(b) permits a statutory construction under which fees would be available in the current case. Allowing fees in this case advances the broad purposes of the Equal Access to Justice Act. Individual litigants such as the Currys are ill-able to shoulder the cost of litigation and appeal against the Federal Government, nor should such sacrifice be expected of them. "[T]he expense of correcting error on the part of the Government should not rest wholly on the party whose willingness to litigate ... has helped to define the limits of Federal authority." House Report, supra, 1980 U.S.Code Cong. & Ad. News at 4989. The Court does not believe that Congress intended to minimize the importance of the Bivens -type suit in defining public policy by exempting litigants such as the Currys from the fee provision of § 2412(b).
Having concluded that plaintiffs are eligible for a fee award under § 2412(b), the Court must decide whether a fee is justified under the facts of this case. See 28 U.S.C. § 2412(b) (making award of fees under § 2412(b) discretionary). A court's discretion in making a § 2412(b) award pursuant to a statutory fee provision is to be guided by the same standard which governs awards against other parties. House Report, supra, 1980 U.S.Code Cong. & Ad. News at 4996. The standard for fee awards under 42 U.S.C. § 1988, therefore, applies to this case. Under this standard, a prevailing plaintiff ordinarily recovers fees unless special circumstances would render such an award unjust. Hensley v. Eckerhart, 461 U.S. 424, 429, 103 S.Ct. 1933, 1937, 76 L.Ed.2d 40, 48 (1983). The Government has asserted no factual circumstances which militate against awarding fees to plaintiffs. Neither does the Court perceive any reason to deny plaintiffs' § 2412(b) fee application. The Court shall, thus, grant plaintiffs' request for fees under 28 U.S.C. § 2412(b).
B. Fee Award Under 28 U.S.C. § 2412(d)
Plaintiffs submit that fees are also available under 28 U.S.C. § 2412(d) because the Government's position in this litigation was not substantially justified. The Court agrees with this characterization of the Government's case and shall, alternatively, base its fee award on § 2412(d).
Before addressing the substantial-justification issue, the Court must consider the timeliness of plaintiffs' application under § 2412(d).
1. Timeliness Under § 2412(d)(1)(B)
The factual setting relevant to this issue is straightforward. This Court entered its Order granting plaintiffs' motion for summary judgment on June 11, 1982. The Eleventh Circuit's affirmance was docketed on August 15, 1984. Plaintiffs submitted their application for fees under § 2412(b) and (d) on September 10, 1984. The Government challenges the timeliness of the motion.
Subsection 2412(d)(1)(B) provides that "[a] party seeking an award of fees and other expenses shall, within thirty days of final judgment in the action, submit to the court an application for fees." 28 U.S.C. § 2412(d)(1)(B) (1982). The Government asserts *1413 that "final judgment" in this provision refers to the final, appealable disposition of the case by the trial court, rather than to disposition of the case on appeal. See Fed.R.Civ.P. 54(a) (defining "judgment"). Under this reading of the statute, the Court would be compelled to deny plaintiffs' fee application under § 2412(d) for untimeliness.
Neither the statutory language nor the legislative history of § 2412(d) indicate the meaning which Congress intended for "final judgment." Left without congressional guidance, courts have interpreted the timeliness provision variously. The majority of courts have held that fee applications under § 2412(d) are timely if filed within 30 days of the conclusion of final appeal. See McDonald v. Schweiker, 726 F.2d 311 (7th Cir.1983); Massachusetts Union of Public Housing Tenants, Inc. v. Pierce, 755 F.2d 177 (D.C.Cir.1985); Taylor v. United States, 749 F.2d 171 (3d Cir.1984); Knights of the Ku Klux Klan v. East Baton Rouge Parish School Board, 679 F.2d 64 (5th Cir.1982); Cox v. United States, 593 F.Supp. 1238 (S.D.Fla.1984); Rawlins v. United States, 686 F.2d 903, 914, 210 Ct.Cl. 672, 231 Ct.Cl. 313 (1982). The Ninth and Fourth Circuits, applying Fed.R.Civ.P. 54(a)'s definition of "judgment," have stated that "final judgment" in § 2412(d) refers to the final, appealable decision of the trial court. See McQuiston v. Marsh, 707 F.2d 1082, 1085 (9th Cir.1983); Guthrie v. Schweiker, 718 F.2d 104, 106 (4th Cir.1983) (dicta). The Eleventh Circuit has not directly addressed this issue. But see Gold Kist, Inc. v. United States Dept. of Agriculture, 741 F.2d 344, 349 (11th Cir.1984) (dicta)(expressing agreement with statutory interpretation adopted in McQuiston and Guthrie).
The Court is persuaded that the "final judgment" which begins the time for filing a § 2412(d) fee application is the final, nonappealable judgment. Judge Posner's opinion for the Seventh Circuit panel in McDonald v. Schweiker well explains the superior practicality of this statutory construction. 726 F.2d at 313-16. It is revealing that, in a revised version of § 2412(d) which recently passed Congress, an added definitional section reads: "`final judgment' means a judgment that is final and not appealable." Taylor v. United States, supra at 174. President Reagan declined to sign the reenacted version of § 2412(d) into law. However, the definition included in the vetoed legislation provides a clear indication of Congress' intent. Id.
For purposes of § 2412(d)(1)(B), the "final judgment" in this case was entered on August 15, 1984, when the Eleventh Circuit affirmed this Court's dispositive Order.[4] Plaintiffs filed their application for fees under § 2412(d) within thirty days of the circuit court's judgment; thus, the application was timely under § 2412(d)(1)(B).
2. Government's Position Substantially Justified?
Like § 2412(b), the fee provision of § 2412(d) was added to § 2412 as part of the EAJA. The standard applicable to fee awards under § 2412(d) is set out in the subsection's initial paragraph:
(d)(1)(A) Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses, in addition to any costs awarded pursuant to subsection (a), incurred by that party in any civil action (other than cases sounding in tort) brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.
28 U.S.C. § 2412(d)(1)(A) (1982). To resist a prevailing party's application for attorney fees under § 2412(d), the Government must show that the position which it took in the *1414 litigation had substantial justification. Ashburn v. United States, 740 F.2d 843, 849 (11th Cir.1984) (holding that the "position" referred to in § 2412(d) is the Government's litigation position, rather than the position taken by the agency in the underlying action which prompted litigation).
As the language of § 2412(d) indicates, the Government bears the burden of showing that its litigation position was substantially justified. Id. at 850, citing House Report, supra, 1980 U.S.Code Cong. & Ad.News at 4989. The standard which the Government must meet is essentially one of reasonableness. Id.[5] The fact that the Government's arguments were unsuccessful does not raise a presumption that its position was not substantially justified. Id. Nor is the Government required to establish that its decision to litigate was based on a substantial probability of prevailing. Id. Rather, to satisfy its burden under § 2412(d), the Government must show that it had a solid, if not correct, basis in fact and law for the litigation position which it adopted. McDonald v. Schweiker, supra at 316.
The Currys' eligibility for fees under § 2412(d), thus, turns on the reasonableness of the litigation position taken by the Government. First, it is necessary to review the arguments which the Government pressed in this case. The complaint alleged that the United States Department of Agriculture had violated the mandate of 7 U.S.C. § 1981a by having failed to implement the statute's deferral procedure for FmHA loans. The plaintiffs requested injunctive relief in the form of: (1) an order that the FmHA give borrowers personal notice of the rights under § 1981a to apply for deferral relief; and, (2) an order requiring the FmHA to promulgate regulations setting out the criteria for eligibility for deferral relief.
The Government's primary argument before this Court was that § 1981a required nothing and conferred no rights upon borrowers, but merely gave the Department the option of instituting the section's loan deferral mechanism.[6] The Government asserted that the statute's directive that "the Secretary may permit ... the deferral of principal and interest" and "may forego foreclosure" unambiguously revealed that Congress intended to impose no duty on the Department. Section 1981a's "permissive" language, it was argued, left implementation of the section to the Department's discretion.
This Court's Order granting summary judgment for the plaintiffs explained the deficiencies in the Government's position. First, the Government relied on the too "sweeping" assertion that Congress expressed with the single word "may" an intention that the Department's authority under § 1981a be purely discretionary. See Curry v. Block, 738 F.2d at 1559 (appellate court's characterization of this argument as "sweeping" and "extreme"). The statutory context and legislative history of § 1981a strongly belies the Government's "literal" interpretation of the statute. Curry v. Block, 541 F.Supp. at 521. The statute's legislative history revealed that Congress in 1977 was dissatisfied with the FmHA's position on loan deferral. Id. at 521, 518-19. Section 1981a, enacted in 1978, was intended to assure that a deferral mechanism would be available for FmHA borrowers similar to the moratorium *1415 provision of the Farm Housing Act, 42 U.S.C. § 1475. Id. at 516-18.
To accept the statutory interpretation advocated by the Government, one had to conclude that Congress passed a measure intended to change FmHA policy, yet left implementation of the ameliorative measure to the unchecked discretion of the FmHA itself. Refusing to ascribe such perverse conduct to the Congress, this Court rejected the Government's contention that the Department's implementation of § 1981a was purely optional.
Despite its failure to have carried the day, the Government insists that its litigation position was substantially justified. The Government stresses that the nature of the Department's responsibility was a question of first impression when this Court decided Curry v. Block. This is true. Without judicial interpretation of the statute, the legislative history and statutory language were the only law upon which the Government could draw in formulating its argument before this Court. See Donovan v. Dillingham, 668 F.2d 1196, 1198-99 (11th Cir.1982), rev'd on other grounds, 688 F.2d 1367 (11th Cir.1982) (in determining whether a litigation position was justified, the court must consider the state of the law at the time the position was taken). These sources, the statute's language and history, pointed to only one reasonable statutory interpretation one which made mandatory the Department's obligation to institute § 1981a deferral procedures for FmHA loans. The novelty of the § 1981a issue did not entitle the Government to advocate an alternative, and unreasonable, interpretation of the statute.
The statutory interpretation urged by the Government in this case lacked substantial justification from its inception. The Government's decision to appeal this Court's decision, further, was characteristic of the Government's obstinance throughout this litigation. During the pendency of the Curry appeal, district courts throughout the country were criticizing the Government's contention that implementation of § 1981a was discretionary. See, e.g., Matzke v. Block, 564 F.Supp. 1157 (D.Kan. 1983); Jacoby v. Schuman, 568 F.Supp. 843 (E.D.Mo.1983); Allison v. Block, 556 F.Supp. 400 (W.D.Mo.1982); but see Neighbors v. Block, 564 F.Supp. 1075 (E.D.Ark. 1983). During oral argument of the current case before a three-judge panel of the Eleventh Circuit, the Government conceded that implementation of § 1981a was not wholly optional, thus abandoning what had been its primary argument before this Court. The concession was well-advised; circuit courts which have construed § 1981a have uniformly rejected the statutory interpretation which the Government argued before this Court. See Shick v. FmHA, 748 F.2d 35, 41 (1st Cir.1984) (by implication); United States v. Hamrick, 713 F.2d 69, 70 (4th Cir.1983) (by implication); United States v. Markgraf, 736 F.2d 1179, 1182-84 (7th Cir.1984); Allison v. Block, 723 F.2d 631, 633-34 (8th Cir.1983); Matzke v. Block, 732 F.2d 799, 801-02 (10th Cir.1984); Ramey v. Block, 738 F.2d 756, 758-62 (6th Cir.1984).
This abundance of judicial criticism was not available when the Government was formulating its litigation position in this case. However, an objective consideration of § 1981a's language and legislative history should have revealed to the Government the weakness of the argument which it pressed in this Court. For this reason, this Court holds that the Government's primary litigation position in this case that implementation of § 1981a was discretionary was never substantially justified. There exist no special circumstances which make an award of fees against the Government unjust. Accordingly, the Court shall grant plaintiffs' motion for attorney fees under 28 U.S.C. § 2412(d).
C. Amount of Plaintiffs' Fee Award
Plaintiffs request recoupment of all attorney fees and costs attendant to their prosecution of this suit. They further assert that fee enhancement is appropriate in this case and request the Court to award double the actual litigation expenses. The Court shall deny the invitation to award an *1416 enhanced fee. See Blum v. Stenson, ___ U.S. ___, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984). The Court's award shall fully compensate plaintiffs' attorney fees and costs.
In determining the size of plaintiffs' fee award, the Court is guided by cases construing the fee provision of 42 U.S.C. § 1988. These cases establish that a presumptively reasonable attorney fee results from multiplication of the number of hours reasonably spent on the litigation by a reasonable hourly rate. Hensley v. Eckerhart, 461 U.S. at 433, 103 S.Ct. at 1939, supra, 76 L.Ed.2d at 50. The reasonableness of the hours and rate submitted by a prevailing party are tested by application of certain of the factors set out in Johnson v. Georgia Highway Express, 488 F.2d 714 (5th Cir.1974). Having considered the relevant Johnson factors, the Court shall base its fee calculation on the full number of hours and hourly rate submitted by plaintiffs.
Plaintiffs' attorneys have submitted affidavits showing their investment of 616.25 billable hours in the prosecution of this case. During a hearing on the motion for a fee award, the Government stipulated to the reasonableness of plaintiffs' attorneys' hours. Accordingly, the Court shall forego a detailed application of the Johnson factors to the hours charged. The affidavits reveal no nonbillable duplication of effort by plaintiffs' attorneys and no nonchargeable hours. In adopting the plaintiffs' hours as a basis for its fee calculation, the Court considers that this was a case of first impression and, as such, presented a singular research burden for plaintiffs' counsel. See Johnson, supra at 718 (novelty of legal issue is relevant to fee award). The Court as well recognizes the additional time required of plaintiffs' attorneys to litigate this case on appeal.
Plaintiffs request that these hours be charged at a rate of $90. The Government, again, stipulated to the reasonableness of this hourly rate. The Court finds that this rate approximates the prevailing market rate in this geographic area for legal service of the quality rendered in this case. The rate of $90 per hour shall, thus, be used to calculate the fee award to plaintiffs.[7]
Charging 616.25 hours at a rate of $90 per hour produces a total fee award of $55,462.50. Plaintiffs urge the Court to enhance this "lodestar" amount by applying to it a multiplier of two. District courts have limited discretion to adjust the presumptively reasonable "lodestar" amount upward or downward to arrive at a just fee award. Blum v. Stenson, supra, ___ U.S. at ___, 104 S.Ct. at 1548, 79 L.Ed.2d at 901. However, the Supreme Court's decisions in Blum and Hensley v. Eckerhart indicate that a proper application of the twelve Johnson factors should rarely result in enhancement of the ratetimes-hours amount.
The Court concludes that the following factors offered in support of the request for an enhanced fee in this case will be fully reflected in an award of the "lodestar" amount:
(1) Experience: Plaintiffs' attorneys' ample hourly fee reflects their expertise in cases involving federal lending programs. See n. 7, supra at p. 1416.
(2) Success of litigation: Because of plaintiffs' complete success in this case, the Court shall award the full amount of plaintiffs' actual attorney expenses. Hensley, supra, 461 U.S. at 435, 103 S.Ct. at 1940, 76 L.Ed.2d at 52 ("Where a plaintiff has obtained excellent results, his attorney should recover a fully compensatory fee."). Plaintiffs' victory justifies no fee enhancement, as there has *1417 been no showing that their success was greater than one could have reasonably expected in light of the fee charged. See Blum, supra, ___ U.S. at ___, 104 S.Ct. at 1549, 79 L.Ed.2d at 902.
(3) Risk of nonpayment: Plaintiffs' recovery of attorney fees was contingent upon their prevailing and upon this Court's application of the EAJA. Precedent in this circuit has established that a contingency fee arrangement may justify an increase in an award of attorney fees. Jones v. Central Soya Co., 748 F.2d 586, 591 (11th Cir.1984). Plaintiffs' counsel failed to show that they entered into a classic contingency arrangement, whereby they agreed to forego any compensation if they did not prevail. See Id. at 592-93; Blum v. Stenson, supra (reserving judgment on whether risk of being denied a fee award can ever justify fee enhancement). The record before the Court does not indicate that plaintiffs' attorneys were prevented from covering possible losses by accepting other cases while pursuing plaintiffs' cause. The hourly rate to be paid plaintiffs' attorneys will sufficiently reward their willingness to accept the case.
In summary, the Court has considered the Johnson factors, with particular concentration upon those discussed above, and has concluded that fee enhancement is inappropriate in this case.
CONCLUSION
Plaintiffs' motion for attorney fees is GRANTED pursuant to the fee provisions of 28 U.S.C. §§ 2412(b) and 2412(d). Defendant is ORDERED to pay fees in the amount of $55,462.50, plus any attorney fees which plaintiffs may prove for the period since October 24, 1984. The Government is, in addition, ORDERED to reimburse plaintiffs' costs consistent with 28 U.S.C. § 2412(a), exclusive of any costs previously awarded plaintiffs by the Eleventh Circuit Court of Appeals. The Clerk of Court is directed to enter an appropriate judgment.
NOTES
[1] The fee provision of 28 U.S.C. § 2412(d) expired automatically on October 1, 1984, but continues to apply "through final disposition of any action commenced before the date of repeal." Pub.L. 96-481, Section 240(c).
[2] Plaintiffs' first supplemental brief in support of this motion asserts as well that fees are appropriate because plaintiffs' success created a "common benefit." This argument is rejected for the reasons set out in Trujillo v. Heckler, 587 F.Supp. 928, 930-31 (D.Colo.1984).
[3] The Government concedes, as it must, that plaintiffs substantially prevailed in this action. Thus, the sole point of contention between the parties is the availability of § 2412(b) attorney fees to plaintiffs in a Bivens -type action against the Federal Government.
[4] The Court assumes, without deciding, that "final judgment" came with entry of the appellate decision, rather than with entry of the mandate or with passage of the time to appeal to the United States Supreme Court.
[5] But see Spencer v. N.L.R.B., 712 F.2d 539, 558 (D.C.Cir.1983) (noting that Senate Judiciary Committee rejected amendment to the EAJA which would have changed the pertinent language from "substantially justified" to "reasonably justified." This suggested to the Spencer court that the test should be "slightly more stringent than `one of reasonableness.'").
[6] The Government alternatively argued that, even if § 1981a were mandatory, the deferral procedures already in place satisfied the statute's mandate. Defendant's Brief in Opposition to Plaintiffs' Motion for a Summary Judgment and in Support of Defendant's Motion for Summary Judgment, at pp. 57-65. This argument occupied 8 pages of defendant's 65-page brief to this Court. The remainder of the brief was dedicated to what the Court now characterizes as the defendant's primary argument. See Defendant's Brief, at p. 3 ("It is the defendant's position that § 1981a is not mandatory.").
[7] In that this fee award is based in the alternative on 28 U.S.C. § 2412(d), the Court has considered § 2412(d)(2)(A)'s directive that "attorney fees shall not be awarded in excess of $75 per hour unless the court determines that an increase in the cost of living or a special factor ... justifies a higher fee." The Court concludes that the expertise of plaintiffs' counsel, the excellent results achieved by them and the delay in receipt of their fee justifies an upward adjustment of the statutory fee amount from $75 per hour to $90 per hour.
|
IN THE
TENTH COURT OF APPEALS
No. 10-12-00426-CV
MARICELA G. MORALES, LEONEL MORALES,
AND FIDEL MORALES, INDIVIDUALLY,
AS PERSONAL REPRESENTATIVE OF THE
ESTATE OF INNOCENCIO MORALES, DECEASED,
Appellants
v.
PURSLEY TEMPORARIES, INC., NAVARRO PECAN
COMPANY, INC., COLLIN STREET BAKERY, INC.,
GEORGE M. MARTIN, JOANN MEANS,
L. WILLIAM MCNUTT, JR., AND ROBERT MCNUTT,
Appellees
From the 13th District Court
Navarro County, Texas
Trial Court No. 05-00-14661-CV
MEMORANDUM OPINION
After entering summary judgments on all of Appellants’ claims against Appellee
Navarro Pecan Company, Inc. in the original cause (trial court cause no. 05-00-14661-
CV), the trial court signed an order severing Appellants’ claims against Appellee
Navarro Pecan Company, Inc. into a new cause (trial court cause no. D12-21707-CV).
The trial court then entered a final judgment on Appellants’ claims against Appellee
Navarro Pecan Company, Inc. in the severed cause. Appellants filed a notice of
appeal in both the original cause (which we docketed as case no. 10-12-00426-CV) and
in the severed cause (which we docketed as case no. 10-12-00425-CV).
The Clerk of the Court notified Appellants that it appears that the Court does not
have jurisdiction of the appeal in the original cause, case no. 10-12-00426-CV (trial court
cause no. 05-00-14661-CV), because there is not a final judgment. In a response,
Appellants do not contest that we lack jurisdiction. Accordingly, this appeal is
dismissed for lack of jurisdiction.
Appellants filed a motion to consolidate both appeals, asserting that the district
clerk failed to transfer all of the relevant items into the severed cause. We thereafter
received the clerk’s records in both appeals, and the clerk’s record in the severed cause
(case no. 10-12-00425-CV) appears to contain all relevant items. Additionally, the clerk’s
record and the reporter’s record in case no. 10-12-00426-CV have been cross-filed in case
no. 10-12-00425-CV. Accordingly, the motion to consolidate is denied.
REX D. DAVIS
Justice
Before Chief Justice Gray,
Justice Davis, and
Justice Scoggins
Appeal dismissed
Opinion delivered and filed April 25, 2013
[CV06]
Morales v. Pursley Temporaries Page 2
|
333 F.Supp. 1221 (1971)
Charles A. HICKMANN and Phyllis C. Hickmann, Plaintiffs,
v.
Gregory WUJICK, as Assessor of the Town of Huntington, New York, Defendant.
No. 71 C 1025.
United States District Court, E. D. New York.
November 15, 1971.
*1222 Charles A. Hickmann, Huntington, N. Y., for plaintiffs.
Nicholas LaCarrubba, Town Atty., Town of Huntington, Northport, N. Y., by Frank J. Mack, Huntington, N. Y., of counsel, for defendant.
MEMORANDUM OF DECISION
NEAHER, District Judge.
Plaintiffs commenced this civil action pursuant to 28 U.S.C. § 1343, seeking a declaratory judgment, damages and injunctive relief to redress claimed deprivation, under color of New York State law, of rights secured by the United States Constitution, more particularly their prior right as parents to control the education of their children. The sole defendant named in plaintiffs' complaint is the Assessor of the Town of Huntington, Suffolk County, New York, where plaintiffs reside and pay real property taxes on the basis of an assessment roll prepared by defendant as required by State law.
Plaintiffs have moved for a preliminary injunction enjoining defendant from "denying [them] a $200.00 tax credit against the school property taxes they will be required to pay for the 1971-72 tax year * * *." They claim, in substance, that this tax relief is needed to enable them to pay the tuition charged by the non-public school their children attend. After hearing oral argument and careful consideration of the pleadings, affidavits and briefs submitted, plaintiffs' motion is denied and their complaint is dismissed sua sponte, since the court lacks jurisdiction to enjoin the assessment, levy or collection of taxes imposed under State law.[1]
The connection between plaintiffs' asserted deprivation of their constitutional rights as parents and the action (or inaction) of the defendant tax assessor emerges from their complaint, affidavit and brief as follows:
(1) Plaintiffs, as owners of residential real property in the Town of Huntington, are admittedly subject to annual assessment for purposes of taxation pursuant to the Real Property Tax Law of the State of New York[2] and the Suffolk County Tax Act enacted thereunder.[3] A substantial portion of the real property taxes they pay is used for the support of public schools in the Town and their school tax levy has increased each year. In 1957-58 it amounted to $500.74; by 1970-71 it had increased to $1557.35; and in 1971-72 it will increase again to $1698.85.
(2) Plaintiffs are the parents of four children of school age who do not attend the public schools. Instead, plaintiffs, exercising their constitutional right, have chosen to educate their children in a non-public church-affiliated school. For the 1970-71 school year plaintiffs were required to pay an increased tuition of $150 to the non-public school, and for the 1971-72 school year the tuition has been increased to $200.
*1223 (3) In the apparent belief that these tuition payments should entitle them to a corresponding reduction of their real property tax for school purposes, plaintiffs filed claims with the defendant assessor demanding credits of $150 and $200, respectively, against their 1970-71 and 1971-72 school tax levies. The credits have not been granted, plaintiffs protested defendant's inaction and subsequently brought this suit.
(4) Plaintiffs' complaint sums up their grievance against defendant in these terms:
"8. The defendant official's act denying the plaintiffs a credit against the school property taxes they were required to pay in the 1970-71 school year, and will be required to pay in the 1971-72 school year, for the tuition they were required to pay, and will be required to pay, for exercising their prior constitutional right to control the education of their children by sending them to a non-public school in compliance with the compulsory education law of New York State prohibits the free exercise of religion by the plaintiffs, deprives the plaintiffs of liberty without due process of law, denies to the plaintiffs the prior right to control the education of their children, abridges the privileges of the plaintiffs, and denies to the plaintiffs equal protection of the law."
Defendant's answer to the complaint admits certain allegations and denies others, and pleads a number of defenses, including (1) the court's lack of jurisdiction of the subject matter, (2) the prohibition in 28 U.S.C. § 1341 against a district court of the United States enjoining, suspending or restraining the assessment, levy or collection of any tax under State law, and (3) defendant's lack of power or authority to afford plaintiffs the relief they seek.[4]
Plaintiffs' constitutional claim, involving real property taxes assessed under State law, and their motion for a preliminary injunction necessarily raise a threshold question of the jurisdiction of this court. American Commuters Association v. Levitt, 279 F.Supp. 40, 45 (S.D. N.Y.1967), aff'd 405 F.2d 1148 (2 Cir. 1969). "There are two possible grounds for federal jurisdiction. One is the `federal question' jurisdiction contained in 28 U.S.C.A., § 1331. The other possible ground for jurisdiction is the `civil rights' provision contained in 28 U.S.C.A. § 1343(3)." Abernathy v. Carpenter, 373 U.S. 241, 83 S.Ct. 1295, 10 L.Ed.2d 409 (1963), aff'g per curiam, 208 F.Supp. 793, 794 (W.D.Mo.1962).
Plaintiffs' claim does not meet the requirements of either jurisdictional ground. They do not and could not bring this action under 28 U.S.C. § 1331 because the tax credit in controversy, totaling $350, falls far short of the minimum jurisdictional sum or value of $10,000 specified in that statute. Nor can this action be maintained in this court under 28 U.S.C. § 1343, upon which plaintiffs expressly rely, because 28 U.S.C. § 1341 plainly precludes the ultimate relief plaintiffs seek.
Plaintiffs undoubtedly have the right to direct the upbringing and education of their children by having them attend a non-public religious school. And that right is certainly protected by the Constitution from State abridgement, as recognized in Pierce v. Society of Sisters, 268 U.S. 510, 45 S.Ct. 571, 69 L.Ed. 1070 (1925).[5] Indeed, plaintiffs allege they are now exercising that right. But *1224 when they attempt to enlarge constitutional protection to include a right to a tax credit or exemption not provided by State law, their claim is beyond the jurisdiction of this court. Assuming it to be true, as plaintiffs assert, that without a tax credit they will not have "sufficient funds to pay the $200.00 tuition required to send their children to the same non-public school this school year as they attended the last school year," presumably leaving no alternative but the public schools, plaintiffs cannot look to this court for a remedy under 28 U.S.C. § 1343.[6]
Passing the question whether plaintiffs' constitutional claim is one dependent for its existence upon infringement of property rights, to which section 1343 may not apply (cf. Hague v. C. I. O., 307 U.S. 496 at 531, 59 S.Ct. 954, 83 L. Ed. 1423, and American Commuters Association v. Levitt, supra, 405 F.2d at 1154, fn. 4), the State tax aspect clearly removes the case from this court's jurisdiction. In language that could hardly be more explicit Congress has declared in 28 U.S.C. § 1341 that:
"The district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State."
In American Commuters Association, supra, the Court of Appeals for this Circuit found no merit in the argumentalso advanced by plaintiffs here that § 1341 cannot bar a cause of action asserted under § 1343 for alleged deprivation of constitutionally-protected civil rights. There, as here, the plaintiffs' claim related to taxes imposed under State and local laws. In rejecting the argument, the court said:
"* * * considering the special attention courts have always shown to tax matters even when constitutional rights are involved, e. g., Nelson v. City of New York, 352 U.S. 103, 77 S. Ct. 195, 1 L.Ed.2d 171 (1956), plus the unequivocal congressional statement set forth in § 1341, we conclude that *1225 when there are adequate state remedies available, § 1341 means what it so plainly says and that federal jurisdiction is still precluded by it." (405 F. 2d at 1151)
Plaintiffs cannot distinguish this case by denying any constitutional challenge to the State tax law as such and contending their suit is "against the defendant individually to enjoin unconstitutional action" by him under color of law. In asking the court to order defendant not to deny them a tax credit as they demand, plaintiffs obviously are seeking to have this court interfere by injunction with the full assessment of their property tax liability by defendant and ultimate collection thereof as commanded by State law. Their complaint, moreover, discloses that defendant is sued in his official capacity for enforcing the State law according to its terms and not as plaintiffs would have him vary it.[7]
Unquestionably 28 U.S.C. § 1341 applies to this action and precludes jurisdiction over it. The Real Property Tax Law of the State of New York, Chapter 959 of the Laws of 1958, subjects all real property in the State to taxation by counties, cities, towns, villages or school districts for municipal or school district purposes. The Suffolk County Tax Act was enacted by the State legislature to enable the taxing of real property in Suffolk County in accordance with the needs of its several Town governments, villages and separate school districts. See Collier Advertising Service, Inc. v. City of New York, et al., 32 F.Supp. 870 (S.D. N.Y.1940).
Contrary to plaintiffs' contention, New York State law provides them with adequate remedies which meet the requirements of 28 U.S.C. § 1341. Plaintiffs may seek judicial review of their assessment under section 700 of the Real Property Tax Law. They may appeal an adverse determination as from an order of the Supreme Court, which shall be heard and determined in like manner as appeals from such orders. Real Property Tax Law, § 724. That the remedy is expeditious is shown by § 700(3), which grants such proceedings and appeals a preference over all other civil actions and proceedings in all courts.
In addition, it has been held that "an action for a declaratory judgment may be maintained, despite * * * provisions of a taxing statute * * * that the method of judicial review prescribed therein shall be exclusive, where the jurisdiction of the taxing authorities is challenged on the ground that the statute is unconstitutional or that the statute by its own terms does not apply in a given case." Hudson Transit Lines, Inc. v. Bragalini, 11 Misc.2d 1094, 172 N.Y. S.2d 423 (1958); see also Dun & Bradstreet, Inc. v. City of New York, 276 N.Y. 198, 11 N.E.2d 728; Richfield Oil Corp. v. City of Syracuse, 287 N.Y. 234, 39 N.E. 219 (1942); All American Bus Lines, Inc. v. City of New York, 268 App.Div. 508, 52 N.Y.S.2d 689, aff'd 296 N.Y. 571, 68 N.E.2d 869 (1944).
28 U.S.C. sec. 1341 also prevents plaintiffs from obtaining a declaratory judgment in this court with respect to *1226 the constitutionality of the tax assessment of their real property under State law. Gray v. Morgan, 251 F.Supp. 316 (W.D.Wis.), aff'd 371 F.2d 172 (7 Cir. 1966), cert. denied 386 U.S. 1033, 87 S.Ct. 1484, 18 L.Ed.2d 596 (1967); Collier Advertising Service, Inc. v. The City of New York, supra. The Court of Appeals for this Circuit, in American Commuters Association v. Levitt, supra, pointed out that the Supreme Court itself
"* * * has on numerous occasions emphasized that a state court should first adjudicate the meaning and scope of a tax statute passed by its legislature, and that Supreme Court review of such a statute's constitutionality should be had only after an adjudication by the State's court of last resort." 405 F.2d at 1151.
Since the court is without jurisdiction to enjoin defendant's assessment of taxes against plaintiffs' real property as provided by State law or to adjudicate the subject matter by declaratory judgment, plaintiffs' motion for a preliminary injunction is denied and the complaint is dismissed for lack of jurisdiction over the subject matter.
Settle order on notice.
NOTES
[1] Plaintiffs did not seek an evidentiary hearing and none seems necessary. Oral argument confirmed that the material facts are simple and not genuinely in dispute, the critical question being one of this court's jurisdiction. Cf. Weiss v. Walsh, 2 Cir., No. 43,237, Sept. Term 1971 Sl. op. 239, decided Oct. 29, 1971.
[2] N.Y.Laws 1958, ch. 959, which subjects "All real property within the state * * * to real property taxation * * * unless exempt therefrom by law." McKinney's Real Property Tax Law, § 300.
[3] N.Y.Laws 1920, ch. 311, entitled "An act in relation to the assessment and collection of taxes in Suffolk county * * *."
[4] Additionally, defendant contends on brief that injunctive relief is precluded because of plaintiffs' failure to request a three-judge court under 28 U.S.C. § 2281, but did not move to dismiss the complaint. It is clear, however, that if the district judge is of the belief that jurisdiction to grant relief is lacking a three-judge court is unnecessary and he may dismiss the action. American Commuters Association v. Levitt, 405 F.2d 1148 (2 Cir. 1969), aff'g 279 F.Supp. 40 (S.D.N.Y.1967); Liquori v. United States, 246 F.Supp. 530, 533 (E.D.N.Y.1965).
[5] "The fundamental theory of liberty upon which all governments in this Union repose excludes any general power of the state to standardize its children by forcing them to accept instruction from public teachers only. The child is not the mere creature of the state; those who nurture him and direct his destiny have the right, coupled with the high duty, to recognize and prepare him for additional obligations." 268 U.S. at 535, 45 S.Ct. at 573.
[6] Indeed, they may have no remedy. In Brusca v. State of Missouri, U.S.D.C., E.D.Mo., Eastern Div., 332 F.Supp. 275, decided September 28, 1971 by a three-judge court, reported in 40 U.S.Law Week 2191, parent-plaintiffs of parochial school children claimed that Missouri's Constitution and implementing laws "prevent or at least seriously impair the free exercise by plaintiffs of their religion and * * * deny them the equal protection of the laws unless and until defendants [state officials] take steps to subsidize with tax funds the religious schools to which the parent-plaintiffs wish to send their children." The action was dismissed, the court stating that "a parent's right to choose a religious private school for his children may not be equated with a right to insist that the state is compelled to finance his child's non-public school education in whole or in part in order that he may obtain a religious education."
Although State tax exemptions have been upheld for religious purposes, Walz v. Tax Commission of the City of New York, 397 U.S. 664, 90 S.Ct. 1409, 25 L.Ed.2d 697 (1970), recent State legislative efforts to extend financial aid to church-affiliated schools have encountered constitutional obstacles. Cf. Lemon v. Kurtzman, 403 U.S. 602, 91 S.Ct. 2105, 29 L.Ed.2d 745 (1971).
While Serrano v. Priest, Supreme Court of California, 96 Cal.Rptr. 601, 487 P.2d 1241, decided Aug. 30, 1971, 40 U.S.Law Week 2128, cited by plaintiffs here, holds that substantial dependence on local property taxes may deny school children equal protection of the laws, "because it produces substantial disparities among school districts in the amount of revenue available for education", the education referred to is public school education. Although Serrano endorses Horace Mann's "absolute right" concept of education and "the correlative duty of every government to see that the means of that education are provided for all", no court has yet held that these means must be provided equally to all children regardless of the school attended, public or private.
[7] Plaintiffs apparently believe defendant has inherent authority to grant them a tax credit, since they urge, "By the statutory scheme of the New York Real Property Tax Law, the defendant, who statutorily must grant veterans exemptions, old-age exemptions, and other partial or complete exemptions from real property taxes, is the only necessary party defendant in this action" (emphasis supplied). If so, they are mistaken. As defendant points out, his authority and duties as a town assessor are distinctly spelled out by statute (Suffolk County Tax Act, Chapter 311, Laws of 1920, Art. I, §§ 1-7 incl.). Assessors merely prepare a list of taxable property each year, making all necessary valuations and apportionments, and file and certify the completed assessment roll as required by law. Assessors neither bill, collect nor receive taxes, those functions being performed by other officials, e. g., supervisor of the town, receiver of taxes of the town and county treasurer. Under Art. 16, § 1 of the New York Constitution, "Exemptions from taxation may be granted only by general laws." Plaintiffs point to no statute providing for the tax credit or exemption they seek and in fact there is none.
|
635 F.Supp.2d 1166 (2009)
Robert E. STYRE, Petitioner,
v.
Derral G. ADAMS, Warden, Respondent.
No. 1:07-CV-01436-WWS (HC).
United States District Court, E.D. California.
April 9, 2009.
Marc E. Grossman, Law Offices of Marc E. Grossman, Upland, CA, for Petitioner.
Krista Leigh Pollard, Attorney General's Office, Sacramento, CA, for Respondent.
ORDER GRANTING § 2254 PETITION
WILLIAM W. SCHWARZER, District Judge.
State prisoner Robert E. Styre ("Styre" or "Petitioner") filed a Petition for a Writ of Habeas Corpus pursuant to 28 U.S.C. § 2254 on September 7, 2007. Styre is serving a sentence of twenty-seven years to life for his January 1982 conviction for first degree murder in the Madera County Superior Court. The Petition challenges Governor Schwarzenegger's July 26, 2005 reversal of the Board of Prison Terms' ("BPT" or "Board") determination that Styre was suitable for parole. After a thorough review of the Petition, Respondent's Answer, Petitioner's Traverse, and all supporting documents, the court finds Petitioner is entitled to the relief requested and therefore GRANTS the Petition.
I. Background
In December 1980, Styre visited his son and his son's mother, Kathy Millus, in San Jose. He was approached by Richard Mosely, a member of the Hell's Angels gang. Mosley told him that John Bronstad (the victim) was a police informant, and threatened to harm Styre's son if he did not "take care of" Bronstad. Pet., Ex. C (Psychosocial Assessment, October 26, 2004) at 3.
*1167 Several days later, on December 14, 1980, the Petitioner told Ms. Millus that Mr. Bronstad needed to be taken care of that day. Pet., Ex. D (Life Prisoner Evaluation, March 1996) at 10. After Mr. Bronstad declined Styre's request to go for a drive, the Petitioner directed Ms. Millus to call Mr. Bronstad and ask for his help to move a car. Id. He agreed, and Ms. Millus, the Petitioner, and another acquaintance picked up Mr. Bronstad at his home. Pet., Ex. C at 4.
Instead of going to move the other car, the group drove up to the mountains on a logging road. They stopped the car in a secluded area. Pet., Ex. D at 11. Everyone got out of the car to walk around and smoke some hashish. Id. Styre admits that he had also been using methamphetamine on the day of the murder and for several days beforehand. Pet., Ex. B (Parole Hearing Transcript, March 14, 2005) at 14. At some point while the group was walking, Petitioner called out to the victim, said "goodbye," and shot him once in the chest. Pet., Ex. D at 11. The Petitioner and the other individuals fled the scene. Id. Mr. Bronstad's remains were discovered several months later. Styre was arrested and later convicted of murder.
Prior to the instant conviction, Petitioner had an extensive juvenile record, including convictions for auto theft and various drug related offenses. Pet., Ex. D at 12-13. He also has one additional adult conviction for burglary in 1979. Id. At his March 2005 parole hearing, Petitioner stated that he came from an abusive home, both of his parents were alcoholics, and that he turned to drugs at a very young age. Pet., Ex. B at 18-19, 42-43.
To his credit, Petitioner made tremendous strides while in prison. He received three citations for non-violent disciplinary infractions early in his prison term, but has remained discipline free since 1986. Pet., Ex. B at 33. He completed his GED, and gained state certification in two vocational programs, watch repair and auto body and fender repair. Id. at 34-35. Petitioner also participated in a number of therapy and self-help programs, including Creative Conflict Resolution and a parenting course, and became involved in religious activities. Pet., Ex. B at 36; Ex. C at 4.
The psychologists who evaluated Styre have also noted substantial progress. Based on a 2004 evaluation, Dr. Russell Jordan, the senior psychologist at Petitioner's treatment center, stated that "the inmate has cemented into his consciousness a completely different lifestyle and is very committed to acting in a very Christian and moral manner in every aspect of his life." Pet., Ex. C at 4. He noted that the Petitioner has not used drugs since 1984 and showed genuine remorse and sorrow over his crime. Id. at 2. Dr. Jordan concluded that Petitioner's risk of dangerousness was no greater than the average citizen, and that there are no significant risk factors in this case. Id. at 4-5. He stated that "[i]t is unlikely that this inmate will commit any further acts of violence; even relapse into substance abuse is a low probability." Id. at 5.
The Board took note of Petitioner's positive evaluations, stating that the record is "replete with statements by psychologists that indicate you made a tremendous change." Pet., Ex. B at 56. The board also found that Petitioner had maintained strong family ties with his wife of ten years, as well as his children, step-children and grandchildren. Id. at 57-58. He had realistic parole plans, including a place to live and several job offers. Id. The BPT found that he did not currently pose a substantial danger to society and found him suitable for parole. Id. at 56.
Pursuant to the authority granted to him under Article 5, Section 8(b) of the California Constitution, the Governor reversed *1168 the BPT's grant of parole. Pet., Ex. E at 1. In his decision explaining the reversal, the Governor stated that the Petitioner planned and carried out a heinous murder, and noted the Petitioner's extensive pre-commitment criminal record and history of substance abuse. Id. at 2-3. He noted that although Petitioner had participated extensively in prison self-help programs, he had only attended a limited number focused on substance abuse. Id. at 2.
II. Standard of Review
Petitioner's claim is governed by the Antiterrorism and Effective Death Penalty Act of 1996 ("AEDPA"). Under AEDPA, a federal court may only grant the Petition if Styre demonstrates that the state court decision denying relief was "contrary to or involved an unreasonable application of clearly established federal law, as determined by the Supreme Court of the United States; or resulted in a decision that was based on an unreasonable determination of the facts in light of the evidence presented in the State court proceeding." 28 U.S.C. § 2254(d)(1).
III. Discussion
A. Timeliness of Petition
Respondent contends that the Petition is not timely because once applicable tolling periods are applied, it was filed one day after the one-year statute of limitations elapsed following the Governor's reversal of the BPT's parole suitability determination.[1] Respondent fails to note, however, that although the Governor's reversal is dated July 26, 2005, it was not actually mailed to the Petitioner until August, 11, 2005. Section 2244(d)(1) provides that the one-year limitation period shall run from the date on which the factual predicate of the claim could have been discovered through the exercise of due diligence. 28 U.S.C. § 2244(d)(1). At the earliest, the statute of limitations began to run on August 11, 2005, when the Governor's office took steps to inform Styre of the reversal. Therefore, the Petition was filed within the one-year limitations period and is timely.
B. Reversal of parole suitability finding
The Supreme Court has held that there is no constitutional right to parole, but a prisoner can nonetheless have a protected liberty interest if a state statute uses mandatory language such as shall "to `create a presumption that parole release will be granted' when designated findings are made." Bd. of Pardons v. Allen, 482 U.S. 369, 377-78, 107 S.Ct. 2415, 96 L.Ed.2d 303 (1987) (quoting Greenholtz v. Nebraska Penal Inmates, 442 U.S. 1, 12, 99 S.Ct. 2100, 60 L.Ed.2d 668 (1979)). The Ninth Circuit has held that the California parole statute creates a protected liberty interest. McQuillion v. Duncan, 306 F.3d 895, 901 (9th Cir.2002). Like the Nebraska and Montana statutes evaluated by the Supreme Court, the California statute uses mandatory language that creates a presumption of release.[2]Id.
*1169 Because the Petitioner has a protected liberty interest in parole, the court examines whether the deprivation of this interest violated due process. See Ky. Dep't. of Corr. v. Thompson, 490 U.S. 454, 460, 109 S.Ct. 1904, 104 L.Ed.2d 506 (1989). In the parole context, due process requires that parole board decisions are supported by "some evidence." McQuillion, 306 F.3d at 904; Jancsek v. Oregon Bd. of Parole, 833 F.2d 1389, 1390 (9th Cir.1987) (adopting the some evidence standard set forth by the Supreme Court in Superintendent v. Hill, 472 U.S. 445, 456, 105 S.Ct. 2768, 86 L.Ed.2d 356 (1985)).[3]
Under California law, the Governor must consider the same factors as the Board when deciding to reverse a parole suitability determination. See Cal. Const. art. 5, § 8(b); In re Rosenkrantz, 29 Cal.4th 616, 664-65, 128 Cal.Rptr.2d 104, 146-47, 59 P.3d 174, 210 (Cal.2002). Accordingly, the court reviews the Governor's decision to reverse a parole grant under the same procedural due process principles used to review challenges to the BPT's denial of parole. Miller v. Davis, 521 F.3d 1142, 1146 (9th Cir.2008).
The court's analysis of whether the Board's or the Governor's decision is supported by some evidence is framed by the state statutes and regulations governing parole suitability determinations. Irons, 505 F.3d at 851. California law mandates that a parole release date be set unless the panel determines that "public safety requires a more lengthy period of incarceration. . . ." Cal.Penal Code § 3041(b). The BPT is charged with determining "whether the life prisoner is suitable for release on parole," and whether "the prisoner will pose an unreasonable risk of danger to society if released from prison." Cal.Code Regs. tit. 15, § 2402(a). In determining suitability for parole, the Board is directed to consider "all relevant, reliable information," and is guided by regulations outlining factors tending to show suitability and unsuitability for parole. Cal.Code Regs. tit. 15, § 2402(b)-(d).
The California Supreme Court recently clarified the statutory standard applicable to parole suitability determinations. The court stated that "the paramount consideration for both the Board and the Governor under the governing statutes is whether the inmate currently poses a threat to public safety." In re: Lawrence, 44 Cal.4th 1181, 1210, 82 Cal.Rptr.3d 169, 189, 190 P.3d 535, 552 (2008). The court rejected the notion that the existence of one or more unsuitability factors described in the regulations is necessarily sufficient to support the ultimate conclusion that the inmate currently poses an unreasonable risk of danger if released. See Lawrence, 44 Cal.4th at 1210, 1212, 82 Cal.Rptr.3d at 189, 190, 190 P.3d at 552, 553. The Board and the Governor must offer "more than rote recitation of the relevant factors with no reasoning establishing a rational nexus between those factors and the necessary basis for the ultimate decisionthe determination of current dangerousness." Id. Accordingly, the court held that the standard of review is "whether `some evidence' *1170 supports the conclusion that the inmate is unsuitable for parole because he or she currently is dangerous." Lawrence, 44 Cal.4th at 1191, 82 Cal.Rptr.3d at 173, 190 P.3d at 539.
Reviewing the Governor's reversal in light of In re: Lawrence, the court finds that the decision violates Styre's due process rights because it is not supported by some evidence of current dangerousness. See Irons, 505 F.3d at 852; Lawrence, 44 Cal.4th at 1191, 82 Cal.Rptr.3d at 173, 190 P.3d at 539. The Governor's denial was based on the gravity of Styre's offense and his prior criminal history. These factors, however, are insufficient unless they demonstrate that the inmate currently poses a threat to public safety. Lawrence, 44 Cal.4th at 1212, 82 Cal.Rptr.3d at 190, 190 P.3d at 553 ("the circumstances of the commitment offense . . . establish unsuitability if, and only if, those circumstances are probative to the determination that a prisoner remains a danger to the public."). There is no evidence in Styre's record that suggests he would currently pose a threat to public safety if released. As the BPT noted, Petitioner's psychological evaluators observed that Styre has made tremendous life changes and poses no greater risk of danger to public safety than an average citizen. The psychologist who conducted the most recent evaluation, Dr. Jordan, stated that "[i]t is unlikely that this inmate will commit any further acts of violence. . . ."
The memo explaining the Governor's reversal also noted Petitioner's history of substance abuse, and raised concerns that he had participated in a limited number of substance abuse programs while in prison. By Petitioner's own admission, he frequently used drugs prior to his incarceration, and used hashish and methamphetamine during the commission of the commitment offense. The record indicates, however, that he has remained drug free for over twenty years, and does not currently have a substance abuse problem. Dr. Jordan noted that "currently there are no ongoing problems with drug or alcohol abuse and there are no recommendations for further treatment . . . . Styre is in remission for all drug and alcohol problems . . . . [and] relapse into substance abuse is a low probability." Because Styre's past substance abuse does not indicate that he currently poses a threat to public safety, it is insufficient to support the Governor's reversal of the Board's determination that Styre is suitable for parole. See Lawrence, 44 Cal.4th at 1191, 1210, 82 Cal.Rptr.3d at 173, 188-89, 190 P.3d at 539, 552.
IV. Conclusion
For the reasons stated above, the court GRANTS the Petition for a Writ of Habeas Corpus.
IT IS SO ORDERED.
NOTES
[1] Under 28 U.S.C. § 2244(d)(2), the one-year statute of limitations is tolled for the time "during which a properly filed application for State post-conviction or other collateral review with respect to the pertinent judgment or claim is pending."
[2] California Penal Code § 3041(b) provides in relevant part:
"The panel or the board, sitting en banc, shall set a release date unless it determines that the gravity of the current convicted offense or offenses, or the timing and gravity of current or past convicted offense or offenses, is such that consideration of public safety requires a more lengthy period of incarceration for this individual and that a parole date, therefore, cannot be fixed at this meeting . . ."
[3] Both the Petitioner and Respondent contend that the some evidence standard is not clearly established federal law as determined by the Supreme Court, and thus is not applicable under AEDPA. Petitioner claims that a clear and convincing evidentiary standard applies, and Respondent contends that due process is satisfied if an inmate is given an opportunity to be heard and advised of the reasons for the parole denial. However, the Ninth Circuit has repeatedly held that the some evidence standard is clearly established federal law and applies to habeas petitions for parole denials. See, e.g., Irons v. Carey, 505 F.3d 846, 851 (9th Cir.2007); Sass v. Cal. Bd. of Prison Terms, 461 F.3d 1123, 1129 (9th Cir.2006); Biggs v. Terhune, 334 F.3d 910, 915 (9th Cir.2003); McQuillion, 306 F.3d at 904.
|
44 A.3d 922 (2012)
POLICE AND FIRE RETIREMENT SYSTEM OF CITY OF DETROIT
v.
CALLEN.
No. 16, 2012.
Supreme Court of Delaware.
May 7, 2012.
DECISION WITHOUT PUBLISHED OPINION
AFFIRMED.
|
71 F.3d 877
U.S.v.Brown*
NO. 95-50305
United States Court of Appeals,Fifth Circuit.
Nov 09, 1995
Appeal From: W.D.Tex., No. CR-A-94-187
1
AFFIRMED.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
|
161 F.3d 19
98 CJ C.A.R. 4841
NOTICE: Although citation of unpublished opinions remains unfavored, unpublished opinions may now be cited if the opinion has persuasive value on a material issue, and a copy is attached to the citing document or, if cited in oral argument, copies are furnished to the Court and all parties. See General Order of November 29, 1993, suspending 10th Cir. Rule 36.3 until December 31, 1995, or further order.
UNITED STATES of America, Plaintiff-Appellee,v.Jesse SANDOVAL, Defendant-Appellant.
No. 97-4101.
United States Court of Appeals, Tenth Circuit.
Sept. 11, 1998.
Before ANDERSON, BARRETT, and TACHA, Circuit Judges.
1
ORDER AND JUDGMENT*
2
After examining the briefs and appellate record, this panel has determined unanimously to grant the parties' request for a decision on the briefs without oral argument. See Fed. R.App. P. 34(f); 10th Cir. R. 34.1.9. The case is therefore ordered submitted without oral argument.
3
Defendant Jesse Sandoval entered a plea of guilty to possession of a controlled substance with intent to distribute, reserving the right to appeal the district court's denial of his motion to suppress evidence found in a suitcase located in a vehicle used to facilitate an illegal drug transaction. On appeal, defendant argues that the arresting officers lacked probable cause to arrest him and his suitcase was searched illegally. We affirm.
4
Based on information provided by a confidential informant, law enforcement officers arranged to purchase a quantity of methamphetamine. The transaction was arranged to take place in a motel in Ogden, Utah, on March 5, 1996. Two vehicles and four or five persons were expected to deliver the drugs. At the appointed time, defendant arrived in one of two vehicles traveling together. While one of his companions went into the motel room, defendant and two others stayed outside to keep watch. After the undercover officers in the motel room showed the supplier the money for the methamphetamine and tested a sample of the drug, he went back to the vehicles to get the rest of the methamphetamine. Two suppliers returned to the motel room where they were arrested. Word was sent to officers outside the motel to arrest the other participants. Defendant tried to run away, but was arrested. Thereafter, the officers impounded both vehicles and conducted an inventory search of the vehicles and their contents, in accordance with the Ogden City Police Department impound and inventory policy. During the inventory, methamphetamine was discovered in a suitcase apparently belonging to defendant.
5
Following an evidentiary hearing, the magistrate judge found that the officers had probable cause to arrest defendant as an aider and abetter, defendant lacked standing to challenge the impound of the vehicle, the government conceded defendant's standing to challenge the search of the suitcase, and the official impound policy permitted opening the suitcase located in the vehicle. The magistrate judge recommended denying defendant's motion to suppress the methamphetamine in the suitcase. The district court adopted the magistrate judge's recommendation.
6
"In reviewing the district court's denial of a motion to suppress, we examine the court's findings of fact for clear error, viewing all facts in the light most favorable to the government, but review de novo the reasonableness of the seizure and search." United States v. Haro-Salcedo, 107 F.3d 769, 771 (10th Cir.1997). It is within the district court's province to evaluate witness credibility, to decide what weight to give to the evidence, and to draw reasonable inferences from the evidence. See United States v. Hunnicutt, 135 F.3d 1345, 1348 (10th Cir.1998).
7
Defendant claims the arresting officers lacked probable cause to arrest him because he was merely present at the scene of a crime. He also challenges the inventory search of his suitcase located in the vehicle, claiming that because the officers did not have probable cause to arrest him, the vehicle should not have been impounded and subsequently subjected to an inventory search.
8
A warrantless arrest for a felony normally is permissible as long as the arresting officer has probable cause. The proper probable cause inquiry asks whether at the time of the arrest the facts and circumstances within the officers' knowledge and of which they had reasonably trustworthy information were sufficient to warrant a prudent man in believing that the arrestee had committed or was committing an offense. Probable cause can rest upon the collective knowledge of the police, rather than solely on that of the officer who actually makes the arrest.
9
United States v. Klein, 93 F.3d 698, 701 (10th Cir.1996) (quotations and citations omitted).
10
After carefully reviewing the record, we hold that the authorities had probable cause to arrest defendant. He had arrived at the motel with the person who carried the drugs into the motel room, he had conferred and congregated with the other participants in the drug transaction, he had conducted counter-surveillance to facilitate the illegal transaction, and he had attempted to run away from the scene when police officers made themselves known. Defendant's actions demonstrated that he had willfully "associate[d] himself with the criminal venture and [sought] to make it succeed through some action on his part." United States v. McKneely, 69 F.3d 1067, 1072 (10th Cir.1995) (quoting United States v. Esparsen, 930 F.2d 1461, 1470 (10th Cir.1991)). Defendant's conduct was sufficient for a prudent officer to believe that he was aiding and abetting the illegal drug transaction. See id.
11
Defendant next argues that the search of the suitcase without a warrant violated his Fourth Amendment rights. The government conceded that defendant had standing to challenge the search of the suitcase, but argued that the search was a proper inventory search.
12
"An inventory search is a well-defined exception to the warrant requirement of the Fourth Amendment, designed to effect three purposes: protection of the owner's property, protection of the police against claims of lost or stolen property, and protection of the police from potential danger." Haro-Salcedo, 107 F.3d at 772 (citations omitted). To be reasonable under the Fourth Amendment, an inventory search must be conducted according to standardized procedures. See id. Police officers may search closed containers in an impounded vehicle pursuant to sufficiently regulated inventory procedures. See Colorado v. Bertine, 479 U.S. 367, 374-75, 107 S.Ct. 738, 93 L.Ed.2d 739 (1987).
13
The official inventory search procedure in his case required that all closed containers located in an impounded vehicle be opened. We conclude that the procedure was sufficiently standardized and regulated to meet constitutional requirements. Accordingly, the inventory search of defendant's suitcase did not violate the Fourth Amendment.
14
The judgment of the United States District Court for the District of Utah is AFFIRMED.
Entered for the Court
STEPHEN H. ANDERSON, Circuit Judge
*
This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3
|
862 F.2d 878
Johnsonv.Jones*
NO. 88-7072
United States Court of Appeals,Eleventh Circuit.
NOV 08, 1988
1
Appeal From: N.D.Ala.
2
AFFIRMED IN PART AND REVERSED IN PART.
*
Fed.R.App.P. 34(a); 11th Cir.R. 23
|
766 F.2d 1387
Howard K. LEE, Li Yu, Eileen Ku, and Enoch C.J. Ho, onbehalf of themselves and on behalf of CaliforniaPacific National Bank, Plaintiffs-Appellees,v.Dietmar SCHMIDT-WENZEL and Gene C. Harter, Defendants-Appellants.
Nos. 84-5945, 84-5974.
United States Court of Appeals,Ninth Circuit.
Argued and Submitted April 5, 1985.Decided July 26, 1985.
Richard Burdge, Lillick, McHose & Charles, and Amy Branaman, Gibson, Dunn & Crutcher, Los Angeles, Cal., for plaintiffs-appellees.
Robert L. Ivey, Ellen Hodgson Brown, Evans & Harter, Los Angeles, Cal., for Gene Harter.
Lawrence M. Jacobson, Nancy A. Lee, Schneider & Shaffer, Santa Monica, Cal., for Dietmar Schmidt-Wenzel.
Appeal from the United States District Court for the Central District of California.
Before HUG and BOOCHEVER, Circuit Judges, and THOMPSON,* District Judge.
HUG, Circuit Judge:
1
* This case involves a dispute over whether three vacancies on the board of directors of a bank were properly filled by the remaining directors. We hold that no live controversy exists between the remaining parties to the action and that the case is moot.
2
At the time this action was instituted, plaintiffs Lee, Yu, and Ku were three of the duly elected directors of the California Pacific National Bank (the "Bank"). Plaintiff Ho was a stockholder of the Bank. They brought this action on behalf of themselves as individuals and as a derivative action on behalf of the Bank against three other duly elected directors and three other persons who plaintiffs claimed had been illegally appointed to fill vacancies as directors. Defendants Evans, Schmidt-Wenzel, and Harter were the elected directors. Defendants Abel Holtz, Daniel Holtz, and Richard Stone (the "Holtz Defendants") were the persons plaintiffs claimed had been illegally appointed as directors. The plaintiffs contended that the defendants had illegally sought to seize control of the Bank and prayed for declaratory and injunctive relief, as well as general and punitive damages.
3
By the time of the entry of the summary judgment that is before us on appeal, the actions against Evans, Abel Holtz, Daniel Holtz, and Richard Stone had been dismissed by stipulation. The claims for damages and injunctive relief also had been dismissed. All that remained was the declaratory judgment claim against Schmidt-Wenzel and Harter to declare that the appointment of the three directors was invalid because it allegedly violated section 74 of the National Banking Act, 12 U.S.C. Sec. 74 (1982).
4
The issue in this declaratory judgment action is whether section 74 requires vacancies to be filled by a majority of the full board of directors then in office, or whether that statute authorizes a majority of a quorum present at a meeting, though less than a majority of the directors then in office, to fill the vacancies.
5
On October 27, 1982, the Bank held its regularly scheduled monthly board of directors' meeting (the "October 27 Meeting"). At that time, there was one vacancy on the board. The October 27 Meeting was attended by the eight directors then in office: David Bushnell, Robb Evans, Harter, Eileen Ku, Howard K. Lee, Frederick Rohe, Schmidt-Wenzel, and Li Yu. The Holtz Defendants were also in attendance.
6
Harter nominated Abel Holtz to fill the existing vacancy on the board, which nomination was seconded by Schmidt-Wenzel. The vote on the motion was four-to-four, and thus, Mr. Holtz was not appointed. During the course of the October 27 Meeting, Mr. Bushnell and Mr. Rohe resigned their directorships and left the meeting. Director Eileen Ku also left the meeting. At this juncture, six directors remained in office, but only five were present at the October 27 Meeting. The five directors did constitute a quorum under the bank bylaws.
7
Harter nominated Daniel Holtz and Richard Stone as directors. The vote was three-to-two in favor of the appointments, with Harter, Schmidt-Wenzel, and Mr. Evans voting in favor of the motion, and Mr. Yu and Mr. Lee voting against it. The chairman of the board of directors, after being advised by bank counsel that the majority of the quorum was sufficient to fill the vacancies, ruled that Daniel Holtz and Richard Stone were elected. Following that ruling, Mr. Yu and Mr. Lee left the meeting. At this point, eight directors, Harter, Schmidt-Wenzel, Evans, Daniel Holtz, Stone, Ku, Yu, and Lee, purportedly served on the Bank's board of directors, but only five, Harter, Schmidt-Wenzel, Evans, Daniel Holtz, and Stone, were in attendance at the meeting.
8
Immediately thereafter, Harter nominated Abel Holtz to fill the remaining vacancy. Harter, Schmidt-Wenzel, Daniel Holtz, and Richard Stone voted in favor of the motion; Chairman Evans abstained.
9
Appellees filed their action on November 3, 1982, contending that the election of the Holtz Defendants violated section 74 of the Act, and seeking a declaratory order that the election was invalid and an injunction enjoining the Holtz Defendants from serving as directors of the bank and damages. On November 4, 1982, appellees obtained a temporary restraining order enjoining the Holtz Defendants from acting as directors. Before the hearing on the temporary restraining order, the Holtz Defendants and appellees entered into a stipulation whereby the three challenged directors agreed not to act as directors of the Bank and agreed to schedule and hold a shareholders' meeting on February 11, 1983 at which a new nine-member board of directors would be elected.
10
On February 11, 1983, the special meeting of the Bank's shareholders was held and a new board of directors comprised of Lee, Yu, Ku, Harter, Schmidt-Wenzel, Stone, Daniel Holtz, and two other individuals not parties to this action were elected. There is no claim that any action was taken by the board, with the three contested members acting as directors, between the October 27, 1982 Meeting and the February 11, 1983 election.
11
By the time summary judgment was entered on May 1, 1984, both Stone and Daniel Holtz had resigned from the board. At that time, the only defendants remaining on the board were Harter and Schmidt-Wenzel. We hold that the issue raised by the summary judgment pleadings--whether the October 27 election was valid--was moot, and we thus vacate the judgment.
II
12
Generally, an action is mooted " 'when the issues presented are no longer "live" or the parties lack a legally cognizable interest in the outcome.' " Murphy v. Hunt, 455 U.S. 478, 481, 102 S.Ct. 1181, 1183, 71 L.Ed.2d 353 (1982) (quoting United States Parole Comm'n v. Geraghty, 445 U.S. 388, 396, 100 S.Ct. 1202, 1208, 63 L.Ed.2d 479 (1980) (quoting Powell v. McCormack, 395 U.S. 486, 496, 89 S.Ct. 1944, 1950, 23 L.Ed.2d 491 (1969) ). Under this general rule, the appellees' claim for declaratory relief was rendered moot by the special shareholders' meeting held on February 11, 1983, at which a new nine-member board of directors was elected. With that vote, a live question was no longer present because even a favorable decision by the district court would not have entitled the appellees to relief. See Wahyou v. Central Valley National Bank, 361 F.2d 755, 757 (9th Cir.1966) (challenge to special election of board of directors mooted by expiration of term of office). The declaratory and injunctive relief requested could no longer affect the composition of the board because the new board had been duly elected by the stockholders. There was no basis for a damage claim because the appointed directors took no action as directors.
13
An exception to the mootness doctrine is recognized, however, in those actions that are "capable of repetition, yet evading review." This exception is limited to cases where:
14
(1) [T]he challenged action [is] in its duration too short to be fully litigated prior to its cessation or expiration, and (2) there [is] a reasonable expectation that the same complaining party would be subjected to the same action again.
15
Trustees for Alaska v. Environmental Protection Agency, 749 F.2d 549, 555 (9th Cir.1984) (emphasis added) (quoting Weinstein v. Bradford, 423 U.S. 147, 149, 96 S.Ct. 347, 349, 46 L.Ed.2d 350 (1975) ). The "repetition/evasion" exception is a narrow one, and applies only in "exceptional situations." Los Angeles v. Lyons, 461 U.S. 95, 109, 103 S.Ct. 1660, 1669, 75 L.Ed.2d 675 (1983).
16
The exception to mootness for those actions that are capable of repetition, yet evading review, usually is applied to situations involving governmental action where it is feared that the challenged action will be repeated. The defending party being constant, the emphasis is on continuity of identity of the complaining party. When the litigation is between private parties, we must consider whether the anticipated future litigation will involve the same defending party as well as the same complaining party. In order to apply the "capable of repetition" doctrine to private parties, there must be a reason to expect that there will be future litigation of the same issue between a present complaining party and a present defending party. As noted in 13 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure Sec. 3533 at 291-92 (1975), "[s]o long as the parties are bound in a continuing relationship, or there is other ground for supposing that the same question quite probably will recur between them, such applications seem appropriate." On the other hand, the possibility of a future controversy between a complaining party and some other person, not a party to the current lawsuit, does not fulfill the case or controversy requirement of article III.
17
Under the "capable of repetition" prong of the exception to the mootness doctrine, the plaintiffs have the burden of showing that there is a reasonable expectation that they will once again be subjected to the challenged activity. Id. at 109, 103 S.Ct. at 1669. Specifically, the plaintiff must establish a demonstrated probability that the same controversy will recur involving the same litigants. Murphy, 455 U.S. at 482, 102 S.Ct. at 1183; Williams v. Alioto, 549 F.2d 136, 146 (9th Cir.1977). The inability of the federal courts to decide moot cases derives from Article III of the U.S. Constitution, under which the exercise of judicial power depends upon the existence of a case or controversy. DeFunis v. Odegaard, 416 U.S. 312, 316, 94 S.Ct. 1704, 1705, 40 L.Ed.2d 164 (1974). Speculative contingencies afford no basis for finding the existence of a continuing controversy between the litigants as required by article III. Id. at 320 n. 5, 94 S.Ct. at 1707 n. 5. "[W]hen the chance of repetition is remote and speculative, there is no jurisdiction." Williams v. Alioto, 549 F.2d at 142. In the instant action, the plaintiffs have the burden of proving that there is a reasonable expectation that the challenged activity will recur over their objection. Such a recurrence is extremely unlikely. On February 11, 1983, a new board of directors was elected by the shareholders of the Bank.
18
For this same controversy to recur between any of these litigants, there would have to occur again:(1) One or more vacancies on the board;
19
(2) A meeting of the board to fill the vacancy or vacancies at which not all members are present;
20
(3) An attempt by a majority of a quorum, but less than a majority of the remaining members of the board seeking to fill the vacancy or vacancies by appointment over the objection of the plaintiffs;
21
(4) An attempt by defendants Schmidt-Wenzel and Harter in some way to bring this about.
22
We find it difficult to see how Schmidt-Wenzel and Harter, as two members of a nine-member board, could realistically ever bring this about, even assuming that they chose to do so.1 We also find it highly unlikely that all of the other conditions would again arise, with the board members in disagreement on the method for filling the vacancy.
23
Because there is no reasonable expectation that any of the plaintiffs will again be subjected to the same challenged activity by any of the defendants, we hold that this action was moot at the time the summary judgment was entered. Therefore, the judgment of the district court is vacated, and the case is remanded to the district court with instructions that the complaint be dismissed. Each party shall bear its own costs on appeal.
24
REMANDED.
*
Honorable Bruce R. Thompson, Senior United States District Judge for the District of Nevada, sitting by designation
1
That possibility is even more remote at this time because Harter has since resigned as a director, leaving Schmidt-Wenzel the only defendant remaining on the board
|
657 F.2d 266
Abbottv.United Transportation Union
79-3406
UNITED STATES COURT OF APPEALS Sixth Circuit
4/13/81
N.D.Ohio
AFFIRMED
|
310 F.2d 426
William B. SCHULTZ, Plaintiff-Appellee and Cross-Appellant,v.TECUMSEH PRODUCTS, a Corporation, Defendant-Appellant andCross-Appellee.
Nos. 14649, 14650.
United States Court of Appeals Sixth Circuit.
Nov. 27, 1962.
G. Cameron Buchanan, Detroit, Mich., Robert P. Hobson, Louisville, Ky., on brief, for Tecumseh Products Co.
William J. Weinstein, Detroit, Mich., Carl Gussin, Detroit, Mich., on brief, for William B. Schultz.
Before CECIL, WEICK and O'SULLIVAN, Circuit Judges.
O'SULLIVAN, Circuit Judge.
1
Plaintiff-appellee, a citizen of Kentucky, brought suit to recover damages for personal injuries sustained by him when a refrigerator compressor unit which he had installed in a food market exploded. The accident happened in Kentucky. Defendant-appellant, a Michigan corporation, manufactured the unit which caused the injuries. The suit was tried to a jury in the United States District Court for the Eastern District of Michigan, Southern Division, and resulted in a verdict of $74,349.64 for the plaintiff. Of that amount, $21,994.00 was ordered remitted by the District Judge. This is a diversity case.
2
Defendant reises only one question in its appeal: Did the District Judge err in submitting to the jury the right of the plaintiff to recover on a finding of breach of implied warranty, in the absence of privity of contract between plaintiff and defendant? Plaintiff crossappeals from the order of remittitur, contending that such order violates the Seventh Amendment to the United States Constitution. Because of our disposition of defendant's appeal, we need not discuss the cross-appeal.
3
The case was submitted to the jury on two theories: negligence in manufacture and breach of implied warranty. No error is claimed in the submission of the negligence count. It is clear, however, that if the warranty county was erroneously submitted to the jury, the verdict returned in plaintiff's favor must be set aside and a new trial ordered.1
4
Defendant contends, and plaintiff agrees, that the law of Kentucky controls the disposition of the question it raises. Under the law of that state, it is argued, a plaintiff may not recover damages for a breach of implied warranty in the absence of privity of contract between him and defendant. No privity of contract existed between the parties.
5
Plaintiff's proofs showed that the explosion was caused by the presence of a defective casting in the compressor unit. Defendant purchased the casting from the Lakey Foundry, Muskegon, Michigan, and sent the casting to its plant in Marion, Ohio, where it was used as a component in the refrigerator compressor unit here involved. The compressor unit was sold by defendant to a distributor, Williams & Company, Louisville, Kentucky. On July 24, 1957, plaintiff purchased the unit from Williams & Company and installed it that same day at the K & I Super-Market in Louisville. The next day, when plaintiff began to remove his test gauges from the unit, the explosion occurred with the consequent injuries. No direct contractual relation thus exists between plaintiff and defendant.
6
In diversity cases, a federal court applies the substantive law of the state where that tribunal sits. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188. This requirement directs that the federal court likewise follow the conflict of laws rules of the forum state. Klaxon Co. v. Stentor Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477; Griffin v. McCoach, 313 U.S. 498, 61 S.Ct. 1023, 85 L.Ed. 1481; Maki v. George R. Cooke Co., 124 F.2d 663 (C.A. 6, 1942); Victorson v. Albert M. Green Hosiery Mills, 202 F.2d 717 (C.A.3, 1953). Under the conflict of laws rule obtaining in Michigan, the forum state, in an action involving a sale, the law of the place of the sale determines the extent and effect of the warranties which attend the sale. Schantz v. Mott, 242 Mich. 642, 645, 646, 219 N.W. 634; Amos v. Walter N. Rilley Co., 240 Mich. 257, 260, 215 N.W. 397. See also: Sullivan v. Sullivan, 70 Mich. 583, 585, 38 N.W. 472; Alropa Corp. v. King's Estate, 279 Mich. 418, 420, 272 N.W. 728. Where an action is predicated upon a statute of a state other than the forum state, such statute will be construed in accordance with the decisions of that state unless those courts have not placed a definite construction on the statute. In the latter event, the courts of the forum state, Michigan in this case, will construe the statute as they would a like statute of their own state. Edison v. Keene, 262 Mich. 611, 613, 247 N.W. 757; Perkins v. Great Central Transport Corp., 262 Mich 616, 623, 247 N.W. 759. If the courts of the state of the situs of a sale have not adopted any rule on the point of law involved in the case-- in this case the question of whether privity of contract is essential to an action on an implied warranty-- the forum state may follow its own views and decisions in resolving the question. Bostrom v. Jennings,326 Mich. 146, 154, 40 N.W.2d 97.
7
Our first inquiry, then, is whether there is now clear Kentucky law on the question before us. If not, the rule presently in force in Michigan would sustain the district court's submission of breach of implied warranty. In Michigan, privity of contract is no longer essential to the maintenance of an action for breach of implied warranty. Spence v. Three Rivers Builders & Masonry Supply, Inc., 353 Mich. 120 90 N.W.2d 873; Monzoni v. Detroit Coca-Cola Bottling Co., 363 Mich. 235, 109 N.W.2d 918. We are of the opinion, however, that the law of Kentucky is to the contrary.
8
Prior to 1928, when Kentucky adopted the Uniform Sales Act (K.R.S. 361.010 et seq., repealed, 1958, c. 77, art. 10, 10-1022 ), it was the law of Kentucky that no action could be predicated on a warranty, express or implied, without privity of contract between the parties to the suit. Prater v. Compbell, 110 Ky. 23, 60 S.W. 918 (1901); Hall Manufacturing Co. v. Purcell, 199 Ky. 375, 378, 251 S.W. 177 (1923); J.I. Case Threshing Machine Co. v. Dulworth, 216 Ky. 637, 641, 287 S.W. 994 (1926); Berger v. Standard Oil Co., 126 Ky. 155, 158, 103 S.W. 245, 11 L.R.A.N.S., 238 (1907). In the last cited case, the Berger case, an employees of the purchaser of lubricating oil claimed to have been injured from its use, charging that such oil was not fit and suitable for its intended use as impliedly warranted by its manufacturer. He brought suit against the manufacturer in two courts, one in negligence and one in warranty. The trial court submitted plaintiff's claim of negligence to the jury, but, because there was no privity of contract between plaintiff and the manufacturer, refused to submit the warranty issue. In sustaining the action of the trial court, the Kentucky Court of Appeals said:
9
'There is lacking privity, mutuality, consideration, and every other element essential to constitute the contractual relation between the claimant and the person sued.'
10
Appellee argues that because the above cases antedated Kentucky's adoption of the Uniform Sales Act, they have lost their validity as controlling precedents. In this connection, it should be noted that Section 73 of the Sales Act (K.R.S. 361.730) provides: 'In any case not provided for in this chapter, the rules of law and equity * * * shall continue to apply to contracts to sell and to sales of goods.' Nowhere in the Sales Act does it purport to deal with the question of privity of contract. Consequently, since that Act does not legislate on the question of privity of contract, it cannot be said to overrule prior court decisions on that point. Cf., Graves Ice Cream Co. v. Rudolph W. Wurlitzer Co., 267 Ky. 1, 6, 100 S.W.2d 819 (1937). Apart form this consideration, however, the Kentucky decisions rendered after the adoption of the Sales Act in 1928 treat of the point involved with sufficient clarity and finality as to provide controlling precedent for out decision of the case at bar. Since the Sales Act became a part of Kentucky law, the Court of Appeals has dealt with the privity question in four cases. Nehi Bottling Co. v. Thomas, 236 Ky. 684, 33 S.W.2d 701 (1930); Hiernymous Motor Co. v. Smith, 241 Ky. 209, 43 S.W.2d 668 (1931); North American Fertilizer Co. v. Combs, 307 Ky. 869, 212 S.W.2d 526 (1948); Caplinger v. Werner, 311 S.W.2d 201 (Ky.1958). While the facts of these cases are not on all fours with those in the case before us, the decisions are sufficiently analogous for our purposes here. From those cases, we conclude that Kentucky adheres to the rule that privity of contract between plaintiff and defendant is essential to a cause of action for breach of implied warranty.
11
In Nehi Bottling, which involved an implied warranty, the plaintiff was poisoned by drinking pop which he had purchased from a seller who had, in turn, purchased it from the defendant manufacturer, or bottler. On appeal, it was held that plaintiff was entitled to go to the jury on negligence, but not on breach of implied warranty. After reviewing cases involving the liability of manufacturers of food and drink, the Court said:
12
'* * * There are two lines of cases upon which the right of action by the consumer is upheld against the manufacturer, and which are bottomed upon two distinct theories, the one ex contractu and the other upon tort. The opinions adopting the first theory permit the action to be maintained upon the theory, which those courts are pleased to designate, of a constructive warranty which is always a contractual obligation. The courts that permit the action to be maintained upon the ground that the manufacturer failed to exercise the requisite degree of care, and was therefore negligent, adopt the tort theory, since there can be no warranty in the absence of a contractual relationship, and there is no such relationship between the consumer and the manufacturer * * *. To keep our opinion in harmony with the fundamental and basic principles of the law, we have concluded to adopt the tort theory as being the sounder of the two principles upon which the cause of action is permitted, where the purchase is not direct from the manufacturer.' (236 Ky. 688, 689, 33 S.W.2d 703.)
13
In Hieronymous Motors, the Kentucky court was dealing wigh express warranty. A litigant had purchased an automobile from a dealer who had purchased it from Kinkead Wilson Motor Company. Being sued for the balance of the purchase price, he filed a counterclaim in which he impleaded the Kinkead Wilson Motor Company and charged it and others with breach of warranty. In holding that no such claim could be asserted against Kinkead, the Court said:
14
'No contractual relation or privity between the parties is disclosed by the record which would authorize a recovery on the alleged warranty as against Kinkead Wilson Motor Company and manifestly the court should have sustained the motion for a permptory instruciton in their favor.' (241 Ky. 212, 43 S.W.2d 669.)
15
North American Fertilizer Co., dealt with the implied warranty based upon subsection (5) of K.R.S. 361.150 (Section 15(5) of the Uniform Sales Act). Under such subsection, an implied warranty as to the quality of fintness of a product for a particular use 'may be annexed by the usage of trade.' The product involved was a grade of fertilizer ordinarily used for the field cultivation of tobacco. The plaintiff used it for plant bed cultivation and claimed that such use of the product had become so customary that an implied warranty of its fitness for such use came into being by reason of 'usage of trade.' Plaintiff purchased the fertilizer from an independent seller who had acquired it by purchase from the manufacturer. The manufacturer was joined as a defendant in plaintiff's suit for breach of the claimed implied warranty. The manufacturer's motion ofr a directed verdicr was denied and it appealed from a judgment entered against it on a jury verdict. The Court of Appeals decision, in holding that the maunfacturer's motion should have been granted, was that such a warranty as plaintiff relied upon did not extend beyond the immediate seller and could not be charged against the remote manufacturer. Thus limited to its precise holding, the case supports defendant's position. The plaintiff here, however, relies upon its dictum to support a claim that Kentucky law on this point is now unsettled and its courts are now ready to move into line with the Michigan rule. The paragraph containing the dictum relied upon reads:
16
'The Uniform Sales Act seems to incorporate a declaration of the rights and remedies existing between sellers and buyers rather than between manufacturers and consumers. While this company (the manufactuer) was a seller as to Taylor (the independent dealer), yet Taylor alone was a seller as to Combs (plaintiff). There was no privity existing between this company, the manufacturer up in Louisville, and Combs, the buyer down in Jessamine County, except that privity springing from a warranty that this product had the specified component parts and a further warranty that this product was fit for the common usage of the ordinary fertilizer.' (307 Ky. 873, 212 S.W.2d 528).
17
If the decisive holding of that case has any relevancy to the question of law before us, it supports defendant's position that privity of contract is required. Its dictum commencing with the word 'except' in the last sentence of the quotation may provide plaintiff with some support. We have said that, 'where a question has been decided expressly in an earlier case which has not been modified, the fact that in later cases involving similar, but different, questions, the reasoning seems to indicate a changed view is not justification for a departure from the rule earlier laid down.' Grand Trunk Western R. Co. v. H. W. Nelson Co., 118 F.2d 252, 254 (C.A.6, 1941). So too, here, the dictum expressed in the North American Fertilizer case, does not warrant us to say that such language overruled all prior Kentucky precedents on the point involved. A chance dictum uttered in a single opinion is not sufficient ground upon which to bottom a repeal of the clearly announced law of a state. See: New England Mutual Life Ins. Co. v. Mitchell, 118 F.2d 414, 419, 420 (C.A.4, 1941).
18
After the use of the dictum in the North American case, (1948), the Kentucky Court of Appeals reiterated its adherence to the general rule of the necessity of privity. In Caplinger v. Werner, supra, (1958), the Kentucky court was considering an action of a young lady who was injured by the explosion of a motor boat in which she was a guest. The plaintiff joined as defendants the owner of the boat, the dealer who sold the boat to such owner-- her host's father-- and the manufacturer of the boat. The latter was not served and the case went to trial against the dealer and the owner. A verdict was directed for both defendants on plaintiff's opening statement, primarily because the trial court was of the opinion that such statement did not make a case of negligence. The Court of Appeals in affirming the judgment said:
19
'In considering the correctness of the trial court ruling, it may be noted that appellant has attempted to assert a cause of action against Werner (the dealer) for breach of an implied warranty and one against Thompson based on negligence. * * * There was no contractual relation alleged or shown between Werner the seller, and appellant, a third party, who had no contractual relation with Thompson, the buyer of the boat. There was a failure to allege or show any cause of action by appellant on any implied warranty or representation under K.R.S. 361.150. The complaint did not attempt to state a cause of action against Werner based on negligence.' (331 S.W.2d 203.)
20
The holding on this point clearly is at variance with the dictum expressed in the North American case. Even should we characterize the above language as dictum, it affords the plaintiff no assistance, because where there are opposed statements of equal gravity made by a state court, the more recent one will control as the expression of what the state law is. See: Standard Acc. Ins. Co. v. Roberts, 132 F.2d 794, 799 (C.A.8, 1942).
21
Appellant urges, however, that the fact that the plaintiff in the above case was not herself a buyer of the boat detracts from its appositeness here. Such factual difference does not, in our opinion, provide substantial distinction. Where the privity rule has been abolished, the benefit of such abolition has been held to be available to a remote nonbuyer as well as to a remote buyer.3 Manzoni v. Detroit Coca-Cola Bottling Co., 363 Mich. 235, 109 N.W.2d 918; Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 161 A.2d 69, 75 A.L.R.2d 1; Peterson v. Lamb Rubber Co., 343 P.2d 261 (Cal.App., 1959). Neither does the fact that plaintiff in the Caplinger case failed to make out a case of negligence detract from the court's ruling that privity of contract is essential to recover for breach of implied warranty.
22
The legal point involved here is a subject of much discussion in the current legal literature relating to products liability. Some commentators state that a trend away from the privity rule is now clearly discernible. Up to now, however, a large majority of the states adhere to the rule that privity is essential to recovery for a breach of implied warranty. This is evidenced by the note on the subject in 75 A.L.R.2d 39. The writer of such note, as well as other legal scholars, refer to the Michigan and New Jersey rules, the minority position, as the more enlightened view. Notwithstanding such observations, a check of the supplement to the above annotation indicates a persistence by various state courts to adhere to the allegedly less enlightened view. We will not, by dictum, take an excursion into academic discussion of the relative merits of the currently opposing views on the subject. Neither is it necessary that we speculate as to whether Kentucky should now adopt the allegedly more enlightened view. We must accept its clear pronouncements on the question before us withour trying to prophesy whether it will change direction in its next decision.
23
Appellee further argues, however, that, whatever may be the law of Kentucky, it was proper for the District Judge to follow Michigan law in submitting the case on implied warranty. This is so, he says, because the only Kentucky authority cited to the District Judge was the dictum of the North American Fertilizer case. It was cited by plaintiff's counsel to support his request that the District Judge submit implied warranty notwithstanding absence of privity. Not being advised of the other applicable Kentucky decisions, discussed hereinabove, the District Judge determined to follow the Michigan rule on the privity question. Plaintiffappellee argues that such was correct procedure because of the failure of defendant to cite the more pertinent Kentucky decisions. If the case had been tried in a state court of Michigan, it might have been appropriate for such court to have applied the Michigan rule, absent a showing that the law of Kentucky was to the contrary. People v. Sokol, 226 Mich. 267, 269, 197 N.W. 569; Crane v. Hardy, 1 Mich. 56, 63. Under the Michigan statute, its courts may, but are not required to, take judicial notice of the decisions of other states. M.S.A. 27.876, Comp.Laws 1948, 617.27. Such, however, is not the rule in Federal Courts.
24
The states of the Union are not foreign to the United States or to its courts. Such courts are required to take judicial notice of the statute and case law of each of the states. Owings v. Hull, 34 U.S. 607, 625, 9 Pet. 607, 9 L.Ed. 246; Covington Drawbridge Co. v. Shepherd, 61 U.S. 227, 232, 20 How. 227, 15 L.Ed. 896; Lamar v. Micou, 114 U.S. 218, 223, 5 S.Ct. 857, 29 L.Ed. 94; Hanley v. Donoghue, 116 U.S. 1, 6, 6 S.Ct. 242, 29 L.Ed. 535. 'The law of any State of the Union, whether depending upon statutes or upon judicial opinions, is a matter of which the courts of the United States are bound to take judicial notice, without plea or proof.' Lamar v. Micou, supra, p. 223, 5 S.Ct. p. 859, 29 L.Ed. 94.
25
The rule thus enunciated by the Supreme Court has been followed in this and other circuits under a variety of circumstances, prior to and subsequent to Erie v. Tompkins. Baltimore & Ohio R. Co. v. Reed, 223 F. 689, 697 (C.A.6, 1915); Loree v. Abner, 57 F. 159, 164 (C.A.6, 1893); Parkway Baking Co. v. Freihofer Baking Co., 255 F.2d 641, 646 (C.A.3, 1958); Gallup v. Caldwell, 120 F.2d 90, 93 (C.A.3, 1941); Alcaro v. Jean Jordeau, 138 F.2d 767, 772 (C.A.3, 1943); Wm. J. Lemp Brewing Co. v. Ems Brewing Co., 164 F.2d 290, 293 (C.A.7, 1947). That Erie v. Tompkins has not affected or changed the rule is emphasized and discussed by Professor Moore at 5 Moore's Federal Practice, 1343, 1344.
26
It is not necessary for our decision to now consider whether plaintiff, who was requesting the instruction on implied warranty, or defendant, who was resisting such instruction, should have better researched and advised the District Judge of the Kentucky decisions. The distinguished District Judge who tried this case gave careful consideration to the requests submitted. He invited, but failed to get, adequate briefing on the point involved. Notwithstanding these obsevations, however, counsel's failure to cite law of which a United States Court must take judicial notice, and which controls the disposition of the case, does not render such law inapplicable or prevent reliance upon it on appeal. Parkway Baking Company v. Freihofer Baking Company, 255 F.2d 641, 646 (C.A.3, 1958); In re Paramount Publix Corporation, 85 F.2d 83, 86 (C.A.2, 1936); United States v. Certain Parcels of Land, etc., 144 F.2d 626, 630 (C.A.3, 1944). See, also, Jenkins v. Collard, 145 U.S. 546, 560, 561, 12 S.Ct. 868, 36 L.Ed. 812; Lilly v. Grand Trunk Western R. Co., 317 U.S. 481, 488, 489, 63 S.Ct. 347, 87 L.Ed. 411.
27
We hold that it was error to submit plaintiff's claim of breach of implied waraanty to the jury. Inasmuch as our decision will require a new trial, we need not consider the question involved in plaintiff's cross-appeal, viz.: whether the District Judge erred, or abused his discretion, in ordering a remittitur of a portion of the damages awarded by the jury's verdict.
28
The judgment is reversed and a new trial ordered.
29
WEICK, Cricuit Judge (dissenting).
30
The District Judge, sitting in Michigan, in a diversity case, was confronted with difficult problems of conflict of laws when the time arrived for him to charge the jury. No issue as to the law of Kentucky had been previously raised in the pleadings or in the issues of law and fact set forth in the pre-trial order.
31
At the request of plaintiff, the court charged the jury on implied waraanty under the provisions of the Kentucky statute which was also in force in Michigan in substantially the same language. Counsel for plaintiff cited to the court only one Kentucky decision, namely, North American Fertilizer Co. v. Combs, 307 Ky. 869, 212 N.W.2d 526 which indicated, by way of dicta, that privity was not required in Kentucky. Counsel for defendant cited no Kentucky decisions to the court, but objected to the court's charge on implied warranty on the ground 'that the law applicable to this case does not and did not warrant the submission of the theory of implied warranty.'
32
The only applicable law submitted to the court was the decision of the Court of Appeals of Kentucky in North American Fertilizer Co., supra, and the decision of the Supreme Court of Michigan in Spence v. Three Rivers Builders & Masonry Supply, Inc., 353 Mich. 120, 90 N.W.2d 873. In Spence, the Supreme Court of Michigan held that privity was not required.
33
The court applied the Michigan rule on privity since it had not been shown to him that Kentucky law was any different. In so doing, he followed Michigan decisions which held that there is a presumption that the law of a sister state is the same as Michigan until the contrary is shown. Slayton v. Boesch, 314 Mich. 1, 23 N.W.2d 134; Walton School of Commerce v. Stroud, 248 Mich. 85, 89, 226 N.W. 883; Crane v. Hardy, 1 Mich. 56, 63. This rule also prevails in Kentucky. Lovejoy v. Reed, 302 Ky. 153, 156, 193 S.W.2d 1013.
34
Fairness would seem to require the parties to bring to the attention of the court applicable decisions of the courts of sister states if they rely on foreign law. While the judge may well know and have at his finger tips the decisions of the Supreme Court of his own state, it is certainly too much to expect that he would know the common law of other states which may be entirely different. When foreign law is not injected into a case until the judge is ready to charge the jury, he does not have much time to make an independent investigation of his own. Foreign law is generally regarded as a fact. 20 Am.Jur. 48, p. 73. The Kentucky decisions now relied on by appellant were not cited to the District Court until after the verdict had been returned and when the case was being heard on motion for a mew trial. Since the Kentucky decisions now relief on were not timely brought to the court's attention appellant should be precluded from claiming as error that the court failed to apply them. The principle is analogous to objections to a court's charge which must be specific. Rule 51, Federal Rules of Civil Procedure; Palmer v. Hoffman, 318 U.S. 109, 119, 63 S.Ct. 477, 87 L.Ed. 645; McPherson v. Hoffman, 275 F.2d 466, 471 (C.A.6); Ostapenko v. American Bridge Division of U.S. Steel Corp., 267 F.2d 204 (C.A.2).
35
If this case had been tried in the state court in Michigan, the judgment of the trial court would be affirmed instead of reversed. The trial judge would not have been required to apply Kentucky law not proven or called to his attention. He could presume, as did the District Court, that the law of Kentucky was the same as Michigan since the contrary was not shown.
36
It may be argued that this presumption is merely procedural and not binding on the federal court which can apply its own rules of procedure. In my judgment, the rule is more than procedural in the present case because by our not applying it plaintiff has not only lost his verdict, but also his cause of action for implied warranty.
37
But even if the presumption was only procedural, I still think the District Court was correct in applying it. The rule in Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 is not to be narrowly construed. The Supreme Court, I believe, sought to avoid a situation where, in diversity cases, the federal court sitting in the same community applies law differently than the state court.
38
In Guaranty Trust Co. V. York, 326 U.S. 99, 109, 65 S.Ct. 1464, 89 L.Ed. 2079, the Court held that Erie R. Co. v. Tompkins ought not to be thwarted by technical niceties between substance and procedure. Mr. Justice Frankfurter said:
39
'The nub of the policy that underlies Erie R. Co. v. Tompkins is that for the same transaction the accident of a suit by a non-resident litigant in a federal court instead of in a State court a block away should not lead to a substantially different result. And so, putting to one side abstractions regarding 'substance' and 'procedure,' we have held that in diversity cases the federal courts must follow the law of the State as to burden of proof, Cities Service Co. v. Dunlap, 308 U.S. 208, (60 S.Ct. 201, 84 L.Ed. 196), as to conflict of laws, Klaxon Co. v. Stentor Co., 313 U.S. 487, (61 S.Ct. 1020, 85 L.Ed. 1477), as to contributory negligence, Palmer v. Hoffman, 318 U.S. 109, 117, (63 S.Ct. 477, 87 L.Ed. 645). And see Sampson v. Channell, 110 F.2d 754, Erie R. Co. v. Tompkins has been applied with an eye alert to essentials in avoiding disregard of State law in diversity cases in the federal courts. A policy os important to our federalism must be kept free from entangliments with analitical or terminological niceties.'
40
See also: Byrd v. Blue Ridge Rural Electric Cooperative, Inc., 356 U.S. 525, 78 S.Ct. 893, 2 L.Ed.2d 953.
41
In Tracy v. Finn Equipment Co., 290 F.2d 498 at 500 (C.A.6), we applied the Tennessee statutory two-issue rule which relates to procedure. Judge Simons, who wrote the opinion for the Court, said:
42
'While the Act is in this respect procedural, the United States Supreme Court has postulated a policy that in diversity cases the federal courts must follow even the procedural rules of the state in which it sits where an application of a different rule would cause a substantial likelihood of a different result had the matter been tried in the state court.'
43
The majority recognizes that the District Court was required to follow the conflict of laws rule in Michigan. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477. Under that tule, Michigan applies its own common law unless the highest court of the sister state has declared the law on the particular subject involved with 'absolute certainty.' Bostrom v. Jennings, 326 Mich. 146, 154, 40 N.W.2d 97, 101.
44
It is my position that the common law of Kentucky on the subject of privity has not been declared with absolute certainly.
45
The dictum in North American Fertilizer Co. would seem to indicate, as the District Judge Thought, a trend away from privity.
46
In Gaidry Motors, Inc. v. Brannon, 268 S.W.2d 627 (Ky.), plaintiff was struck by a used automobile which had been purchased by one Hensley from Gaidry Motors. The court affirmed a judgment in favor of plaintiff based on negligence. Three judges dissented citing Olds Motor Works v. Shaffer, 145 Ky. 616, 140 S.W. 1047, 37 L.R.A.,N.S., 560; Davis v. Glass Coffee Brewer Corp., 296 Ky. 706, 178 S.W.2d 407, and Nehi Bottling Co. v. Thomas, 236 Ky. 684, 33 S.W.2d 701.
In Nehi, the court had held:
47
'The general rule is that a contractor, manufacturee or furnisher of an article is not liable to third parties who have no contractual relation with him for negligence in the construction, manufacture, or sale of such article * * *.'
48
Davis was to the same effect.
49
In C. D. Herme, Inc. v. R. C. Tway Co., 294 S.W.2d 534 (Ky.), Herme purchased a trailer from an independent dealer which was manufactured by Tway. An accident was caused by a king-pin connecting the tractor and trailer which was defectively constructed. In allowing a recovery against the manufacturer in negligence in favor of one who had no contractual relations with it the court said:
50
'The ancient so-called 'general rule' of the manufacturer's non-liability for negligence to persons with whom he has no contractual relation, followed by this Court in the Olds Motor case, has been abandoned by substantially all modern authorities. * * * Upon reconsideration, we now determine also to abandon it, and we hereby expressly overrule the Olds Motor case.'
51
The impact of Herme was considered in 74 A.L.R.2d at p. 1195 where the annotator states:
52
'The C. D. Herme decision, supra, must be taken to have overruled not only the Olds Motor Works case, but also the following cases supporting the general rule requireing privity: Heindirk v. Lousiville Elevator Co., (1906) 122 Ky. 675, 92 S.W. 608, 5 L.R.A.,N.S., 1103; Berger v. Standard Oil Co. (1907), 126 Ky. 155, 103 S.W. 245, 11 L.R.A.,N.S., 238; * * * Payton's Admr. v. Childers' Electric Co. (1929), 228 Ky. 44, 14 S.W.2d 208; Davis v. Glass Coffee Brewer Corp. (1944), 296 Ky. 706, 178 S.W.2d 407.'
53
Finally, in Snead v. Waite, et al., 306 Ky. 587, 208 S.W.2d 749, Mr. Waite purchased from Snead barbecued mutton for immediate consumption. He and his wife and two childrem became ill from food poisoning, but only the husband and wife filed suit to recover damages for their injuries. Recovery was allowed to each on implied warranty. The question of privity in the wife's suit was not raised or even mentioned by Kentucky's highest court.
54
In the present case, the relationship between plaintiff and the manufacturer was not far removed since plaintiff purchased the defective compressor from the manufacturer's distributor. The article was assembled by defendant in Marion, Ohio, where it was sold, crated and shipped to the distributor in Lousiville, Kentucky who in turn sold and delivered it in its original package to plaintiff.
55
I would affirm the judgment of the district Court.
1
If a case is submitted to a jury on more than one theory of recovery and reversible error is committed in the submission of one of these theories, a general verdict returned in favor of the plaintiff must be set aside and a new trial ordered. Cygan v. Chesapeake & Ohio Rly. Co., 291 F.2d 782, 783 (C.A.6, 1961); Wilmington Star Mining Co. v. Fulton, 205 U.S. 60, 77-79, 27 S.Ct. 412, 51 L.Ed. 708; Dumbar v. Adams, 283 Mich. 48, 276 N.W. 895; Charters v. Industrial Works, 179 Mich. 1, 146 N.W. 128
2
Upon the repeal of the Uniform Sales Act in 1958, the Kentucky Legislature adopted in its stead the Uniform Commercial Code. (Chap. 355, K.R.S.)
3
Under the Uniform Commercial Code, now a part of the law of Kentucky, a seller's implied warranty to his buyer 'extends to any natural person who is in the family or household of his buyer or who is a guest in his home if it is reasonable to expect that such person may use, consume or be affected by the goods and who is injured (thereby).' K.R.S. 355.2-318
|
FIRST DISTRICT COURT OF APPEAL
STATE OF FLORIDA
_____________________________
No. 1D18-3558
_____________________________
LARRY LEONARD RICHARDSON,
Appellant,
v.
STATE OF FLORIDA,
Appellee.
_____________________________
On appeal from the Circuit Court for Duval County.
Russell Healey, Judge.
May 8, 2019
PER CURIAM.
AFFIRMED.
WOLF, WETHERELL, and MAKAR, JJ., concur.
_____________________________
Not final until disposition of any timely and
authorized motion under Fla. R. App. P. 9.330 or
9.331.
_____________________________
Andy Thomas, Public Defender, and Kevin P. Steiger, Assistant
Public Defender, Tallahassee, for Appellant.
Ashley Moody, Attorney General, Tallahassee; and Allan Richard
Geesey, Assistant Attorney General, West Palm Beach, for
Appellee.
2
|
709 P.2d 964 (1985)
Jean CATOE, Trustee of W.H. Catoe Corn Growers, Inc., Pension Retirement Trust; Tina McDonald, Trustee for James W. McDonald, Jr., Attorney At Law, P.A., Pension Retirement Trust; James W. McDonald; Tina McDonald; William C. Catoe; and Jean Catoe, Plaintiffs-Appellees,
v.
Dean L. KNOX and Donald R. Carpenter, Defendants-Appellants.
No. 84CA1218.
Colorado Court of Appeals, Div. II.
October 17, 1985.
*965 Gorsuch, Kirgis, Campbell, Walker & Grover, Michael J. Wadle, Catherine M. Meyer, Denver, for plaintiffs-appellees.
Towey & Zak, James J. Zak, James M. Edwards, Denver, for defendants-appellants.
STERNBERG, Judge.
The defendants, Dean L. Knox and Donald R. Carpenter (sellers), appeal from a judgment entered by the trial court in favor of plaintiffs (purchasers). We affirm.
In 1979 sellers sold purchasers three undeveloped lots located in Vail, Colorado. Purchasers paid cash for one lot and gave sellers promissory notes secured by deeds of trust on the remaining two lots. At the time these lots were sold, sellers represented to purchasers that the applicable zoning regulations would permit purchasers to construct six dwelling units of a specified size on the lots. In fact, the applicable regulations did not permit the planned construction.
After purchasers discovered that the town of Vail would not issue building permits for their planned construction, the parties had a series of discussions concerning their financial obligations to each other during the time necessary to obtain a variance from the zoning requirements. On conflicting evidence, the trial court found that these discussions culminated in an oral agreement whereby, until a variance was granted, purchasers would not make any principal payments on the promissory notes and interest would not accrue. Also on conflicting evidence, the trial court found that the parties had agreed that sellers would reimburse purchasers for attorney fees and costs incurred by them in obtaining the variance.
Although purchasers eventually obtained the necessary variance, the parties could not agree what balances were due sellers on the promissory notes. Under protest, the purchasers paid one promissory note and sellers instituted a public trustee foreclosure on the remaining note and deed of trust. Purchasers then brought this action against sellers to enjoin the foreclosure sale, to recover damages caused by the sellers' misrepresentations, to recover alleged overpayments on the note paid under protest, and to recover attorney fees and costs expended by them in obtaining the necessary variances. Sellers counterclaimed for judicial foreclosure of the remaining note and sought damages for defamation and outrageous conduct.
*966 The trial court entered judgment in favor of sellers for the balance due on the note involved in the foreclosure action and also entered judgment in the same amount in favor of purchasers for overpayments made by them on the note paid under protest, for damages resulting from sellers' misrepresentations, and for purchasers' attorney fees and costs incurred in obtaining a variance from the town of Vail.
I.
On appeal, sellers first contend that the evidence was insufficient to support the trial court's findings that sellers' misrepresentations contributed to construction delays and that the delays caused purchasers to incur damages of at least $4,214.45. We disagree.
Contrary to sellers' assertion, there is ample evidence in the record supporting the trial court's conclusion that the misrepresentation was a cause of construction delays. Because the purchasers could not obtain building permits from the town of Vail, they could not start building until after the necessary variances were obtained. There is also substantial evidence in the record that the delay resulted in increased costs and that, when finished, the units were worth less than they would have been worth had they been completed when originally planned. Because these factual determinations are supported by the record, they cannot be disturbed on review. Page v. Clark, 197 Colo. 306, 592 P.2d 792 (1979).
II.
Sellers next contend that the trial court erred in finding that the parties had agreed that interest would not accrue on the promissory notes until a variance was obtained from the town of Vail. Again, we disagree.
Both the sellers and the purchasers testified that they had agreed that there would be a "moratorium" on payments of principal until a variance was obtained from the town of Vail. Purchasers testified that this agreement was to include both principal and interest, and sellers testified that it was only intended to apply to principal. However, there was also evidence that sellers had represented to a bank that interest had been "waived." This evidence, although conflicting, is sufficient to support the trial court's finding that the parties' original agreement was that interest would not accrue until the variance was obtained. See Sunshine v. M.R. Mansfield Realty, Inc., 195 Colo. 95, 575 P.2d 847 (1978).
III.
Sellers also assert that even if the parties had agreed that interest would not accrue until a variance was obtained, the trial court erred in enforcing this agreement because enforcement of an oral modification to a contract for the sale of land is precluded by the statute of frauds. We agree with the trial court that the statute of frauds was not applicable in this case.
The statute of frauds does not prevent enforcement of oral modifications to a contract for the sale of land where reinstatement of the original contract terms would be unjust in view of a material change of position in reliance on the subsequent agreement. See Burnford v. Blanning, 189 Colo. 292, 540 P.2d 337 (1975); Urton & Co. v. Poznik, 181 Colo. 15, 506 P.2d 741 (1973); Restatement (Second) of Contracts § 150 (1979). Under such circumstances to hold an oral modification unenforceable would, as stated in Burnford v. Blanning, supra, allow the statute to operate as a cloak for, rather than a shield against, fraud.
Here, the record demonstrates that purchasers, in reliance on the oral agreement that there would be a "moratorium" until the necessary variances were obtained, refrained from instituting legal action against sellers, and assumed the task of obtaining the necessary variances from the town of Vail. These actions are directly attributable to the oral agreement and constitute sufficient material change in position to render application of the statute of frauds unjust. Because of these circumstances, *967 the trial court did not err in refusing to apply the statute of frauds.
IV.
Sellers' final contention is that the trial court erred in its award of attorney fees because a portion of the fees awarded were for the services of an attorney not licensed to practice in the state of Colorado. Sellers also argue that there was insufficient evidence of the necessity and reasonableness of the fees charged by this attorney. We disagree.
Sellers conceded at trial that they had agreed to reimburse reasonable and necessary attorney fees incurred by purchasers in obtaining a variance. Pursuant to this agreement, one of the purchasers who is an attorney licensed to practice in the state of Florida, together with a local Colorado attorney, undertook the project of convincing the town of Vail to grant a variance. No court appearances were made by either attorney, but there was extensive testimony regarding the work performed by these attorneys and sufficient evidence of the reasonableness of their charges. We hold that the trial court did not err in awarding attorney fees for the Florida attorney's services. See Dietrich Corp. v. King Resources Co., 596 F.2d 422 (10th Cir.1979) (Illinois attorney performing consulting services in Colorado is not engaged in unauthorized practice of law under the Colorado Code of Professional Responsibility Canon 3 and therefore is entitled to be compensated as a lawyer).
Judgment affirmed.
SMITH and VAN CISE, JJ., concur.
|
155 B.R. 235 (1992)
In re Johnie Bryan TOWNSEND, Debtor.
Johnie Bryan TOWNSEND, Plaintiff,
v.
Sherrie Buford TOWNSEND and J. Jerry Pilgrim, Defendants.
Bankruptcy No. 90-02580, Adv. P. No. 91-0184.
United States Bankruptcy Court, S.D. Alabama.
March 6, 1992.
*236 Edward R. Tibbetts, Mobile, AL, for debtor.
Gary P. Alidor, Mobile, AL, for Sherry Buford Townsend and J. Jerry Pilgrim.
MEMORANDUM OPINION
ARTHUR B. BRISKMAN, Bankruptcy Judge.
This matter came before the Court on the complaint of the Debtor, Johnie Bryan Townsend, to determine the dischargeability of indebtedness to Sherrie Buford Townsend and her attorney, J. Jerry Pilgrim, pursuant to 11 U.S.C. § 523(a)(5). Appearing before the Court were Edward R. Tibbets, attorney for the debtor; Gary P. Alidor, attorney for Sherry Buford Townsend; and J. Jerry Pilgrim. After due deliberation on the pleadings and arguments of counsel, the Court makes the following findings of fact and conclusions of law.
FINDINGS OF FACT
Johnie Bryan Townsend ("the debtor") and Sherrie Buford Townsend ("Townsend") were married on March 14, 1986. On November 8, 1990, Townsend filed a complaint for divorce. While the divorce proceeding was pending, the debtor filed a chapter 7 bankruptcy petition on December 18, 1990. A divorce decree was issued on March 1, 1991, ordering the debtor to pay periodic alimony in the amount of $350.00 per month for five (5) years and attorney's fees in the amount of $500.00 to Townsend's attorney, J. Jerry Pilgrim ("Pilgrim").
At the time of the divorce, the debtor was employed as a front end mechanic and earned approximately $18,000.00 annually in wages and income as a member of the *237 National Guard. Townsend was employed at Fernwood Nurseries and earned $3.80 per hour. Townsend suffers from a chemical imbalance and nervous condition and is undergoing medical treatments. The debtor paid Townsend $25.00 per week in maintenance and support after the debtor moved out of the trailer he shared with Townsend. These payments, however, did not cover her medical bills or living expenses and, as a result, Townsend was forced to borrow money from family and friends and seek assistance from the food stamp program for her sustenance.
CONCLUSIONS OF LAW
The issue before the Court is whether the pending complaint for divorce and subsequent divorce decree constitute a claim within the jurisdiction of the bankruptcy court. If jurisdiction exists, the next question is whether the provisions of the decree, namely the periodic alimony payments, are dischargeable. Traditionally, domestic relations is within the domain of state courts. See Barber v. Barber, 62 U.S. (21 How.) 582, 16 L.Ed. 226 (1859). Bankruptcy Courts, however, have endeavored to determine the proper balance between domestic relations, which is clearly a state governed issue, and the status of alimony, maintenance and support claims against the bankruptcy estate which are subject to federal bankruptcy laws.
The timing of the divorce decree and the filing of the bankruptcy petition in this case create a unique circumstance. Under 11 U.S.C. § 523(a)(5), periodic alimony to a spouse or former spouse is nondischargeable if the payment is made for the recipient's maintenance or support. Alimony in gross, which is in the form of a property settlement, is fully dischargeable. In re Harrell, 754 F.2d 902 (11th Cir.1985). The issue of whether provisions of a post-petition divorce decree constitute a claim against the bankruptcy estate has not been directly addressed.
The bankruptcy court's jurisdiction includes all cases under title 11, United States Code ("the Bankruptcy Code"), and all core proceedings arising under title 11. 28 U.S.C. § 157(b)(1). Core proceedings include the allowance or disallowance of claims against the estate, determinations as to the dischargeability of particular debts and objections to discharges. Section 157(b)(2) is not limiting in the scope of a bankruptcy court's jurisdiction of core proceedings.
The Bankruptcy Code defines a "claim" as:
(4)(A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, secured, or unsecured; or
(B) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured;
11 U.S.C. § 101(4). The legislative history behind this section describes a claim as having the broadest possible definition and notes the Bankruptcy Code "contemplates that all legal obligations of the debtor . . . will be dealt with in a bankruptcy case." Pennsylvania Department of Public Welfare v. Davenport, 495 U.S. 552, 110 S.Ct. 2126, 2130, 109 L.Ed.2d 588 (1990) (quoting H.R.Rep. No. 95-595, 95th Cong., 1st Sess., 309 reprinted in 1978 U.S.Code Cong. & Admin.News 5787, 5963, 6266. Whether an alimony claim continues as an obligation of the debtor or is dischargeable impacts the entire estate and the debtor's ability to receive a fresh start.[1] Because the allowance *238 or disallowance of a claim impacts the debtor and his entire estate, such determination is a core proceeding within the jurisdiction of the bankruptcy court.
The controlling provision for the discharge of domestic obligations in the event of bankruptcy is 11 U.S.C. § 523(a)(5). Section 523(a)(5) provides that a discharge will not be granted from any debt:
(5) to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with state or territorial law by a governmental unit, or property settlement agreement, but not to the extent that
. . . . .
(B) such debt includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance, or support;
11 U.S.C. § 523(a)(5) (emphasis added). Alabama recognizes to forms of alimony payable to a spouse: periodic and in gross. Periodic alimony provides a method for a spouse's maintenance and support while alimony in gross is a form of property settlement paid either in a lump sum or fixed installments of a specific sum. See Mullins v. Mullins, 475 So.2d 578 (Ala.Civ.App. 1985); Carnaggio v. Carnaggio, 475 So.2d 861 (Ala.Civ.App.1985). Periodic alimony for the spouse's maintenance and support is nondischargeable in bankruptcy. Alimony in gross, which serves as a property settlement, is fully dischargeable. When determining whether § 523(a)(5) applies to render a debt nondischargeable, a bankruptcy court must do nothing more than determine "whether the support label accurately reflects that the obligation at issue is `actually in the nature of alimony, maintenance or support.'" In re Harrell, 754 F.2d 902, 906 (11th Cir.1985) (emphasis added).
In the instant case, the Circuit Court of Mobile County, Alabama awarded Townsend $350.00 a month in periodic alimony. It is not this Court's duty or function to second guess the circuit court's labeling of payments as periodic alimony, which are not dischargeable. Instead, the bankruptcy court must look to the substance of the payment and be satisfied that the periodic alimony payments are for Townsend's maintenance and support. The Court is satisfied that while the terms and duration of the alimony payments are fixed, which is indicative of alimony in gross, the nature of the payments is rehabilitative and in the nature of maintenance and support. The payments will provide Townsend the ability to meet immediate living expenses necessary to reestablish herself in the community and are nondischargeable pursuant to 11 U.S.C. § 523(a)(5).
An award of attorney's fees is essential to a spouse's ability to sue or defend a matrimonial action and, thus, necessary. See In re Nunnally, 506 F.2d 1024 (5th Cir.1975); In re Spong, 661 F.2d 6, 9 (2nd Cir.1981); In re Borzillo, 130 B.R. 438 (Bankr.E.D.Pa.1991). The $500.00 attorney fee owed to Pilgrim is in the nature of alimony and is a nondischargeable debt.
NOTES
[1] One of the primary purposes of the Bankruptcy Code is to "relieve the honest debtor from the weight of oppressive indebtedness, and permit him to start afresh free from the obligations and responsibilities consequent upon business misfortunes." Williams v. U.S. Fidelity & Guaranty Co., 236 U.S. 549, 554-55, 35 S.Ct. 289, 290, 59 L.Ed. 713 (1915). The fresh start policy is not without exception. Certain debts, such as the rights of spouses to alimony, maintenance and support under 11 U.S.C. § 523(a)(5) are excluded from discharge. This provision indicates the preference to protect the rights of spouses over the debtor's right to a fresh start. In re Gianakas, 917 F.2d 759, 761 (3rd Cir.1990).
|
THE STATE OF SOUTH CAROLINA
In The Supreme Court
The State, Petitioner,
v.
Eric Terrell Spears, Respondent.
Appellate Case No. 2017-001933
ON WRIT OF CERTIORARI TO THE COURT OF APPEALS
Appeal from Richland County
Robert E. Hood, Circuit Court Judge
Opinion No. 27945
Heard January 30, 2019 – Filed February 12, 2020
REVERSED
Attorney General Alan McCrory Wilson, Senior Assistant
Attorney General David A. Spencer, and Interim Solicitor
Heather Savitz Weiss, all of Columbia, for Petitioner.
Appellate Defender LaNelle Cantey DuRant, of
Columbia, for Respondent.
JUSTICE JAMES: Eric Terrell Spears was indicted for trafficking crack cocaine
between ten and twenty-eight grams. Spears moved to suppress the evidence of the
drugs seized from his person on the ground he was seized in violation of the Fourth
Amendment. The trial court denied the motion to suppress, and Spears was
convicted as charged. The trial court sentenced Spears to thirty years in prison. A
divided court of appeals reversed Spears' conviction. State v. Spears, 420 S.C. 363,
802 S.E.2d 803 (Ct. App. 2017). We granted the State's petition for a writ of
certiorari to review the court of appeals' decision. We now reverse the court of
appeals and uphold Spears' conviction. We hold there is evidence in the record to
support the trial court's finding that Spears engaged in a consensual encounter with
law enforcement and that Spears' subsequent actions created a reasonable suspicion
that he may have been armed and dangerous—justifying law enforcement's Terry1
frisk that led to the discovery of the offending crack cocaine in Spears' pants.
I. FACTUAL AND PROCEDURAL HISTORY
Law enforcement officers from Immigration Customs Enforcement (ICE), the
Drug Enforcement Agency (DEA), and the Lexington and Richland County
Sheriffs’ Offices were investigating a tip that two black males (Tyrone Richardson
and Eric Bradley) were transporting drugs into South Carolina via one of the
"Chinese bus lines." These bus lines depart from the Chinatown district in New
York City, dropping off passengers in major cities along the East Coast. Because of
the lack of security measures and required identification, these buses are frequently
exploited by wanted criminals and people trafficking in narcotics and counterfeit
merchandise. There are no traditional bus stations for the "Chinese bus line"; the
buses usually stop at a couple of different locations in Columbia to allow passengers
to disembark.
On March 29, 2012, Agents Dennis Tracy, Briton Lorenzen, and Frank Finch
were dispatched, pursuant to the tip, to conduct surveillance at one of the bus stops.
As the passengers were exiting the bus, most of the passengers were being greeted
by relatives or friends, being picked up by cabs, or talking on the phone (presumably
making arrangements to be picked up). However, the agents observed a man and a
woman with four large suitcases who "stuck out" because "they were paying an
excess amount of attention" to the plain-clothed agents. A few minutes later, the
man and woman began walking down the road away from the agents. The agents
followed, and while walking briskly behind the man and woman to catch up with
them, the agents observed the woman remove an unknown object from her purse and
pass it to the man. When the agents were approximately ten feet from the couple,
they asked the couple to stop and speak with them. The couple complied and
engaged the agents in a conversation. The man was identified as Spears. As they
spoke, Spears kept placing his hands inside his untucked shirt near his waistband.
1
See Terry v. Ohio, 392 U.S. 1 (1968).
Fearing Spears might have a weapon, Agent Tracy repeatedly asked Spears to stop.
Spears persisted in this movement, so Agent Tracy frisked Spears for safety reasons.
During the frisk, Agent Tracy felt a small, hard object about the size of a golf
ball with jagged edges tucked into Spears' waistband. Based on his training and
experience, Agent Tracy believed the object was crack cocaine, and he removed it
from Spears' pants. The object field-tested positive for crack cocaine, and Spears
was arrested. Spears told law enforcement he was paid to bring the crack cocaine
from New York to South Carolina because of the drug's higher street value in South
Carolina. Spears admitted he did so out of "stupidity" and because he needed the
money.
Spears was indicted for trafficking crack cocaine more than ten grams and less
than twenty-eight grams. Prior to trial, Spears moved to suppress the drug evidence.
Spears argued he was seized by the agents in violation of the Fourth Amendment.
Specifically, he contended a seizure occurred because a reasonable person would not
have felt free to walk away from the initial encounter. Spears also contended the
agents did not have a reasonable suspicion to stop him. The State argued the
encounter between the couple and the agents was consensual and the agents therefore
did not need a reasonable suspicion to initiate the stop. The State contended Agent
Tracy properly frisked Spears for safety reasons.
Agent Tracy, a nineteen-year law enforcement veteran with ten years'
experience in narcotics and certified in the field of narcotics interdiction, testified
during the suppression hearing. Agent Tracy testified that on the day of the incident,
he and Agents Lorenzen and Finch were dressed in plain clothes and were observing
passengers disembarking a bus in a parking lot near I-20. Agent Tracy testified he
was carrying a concealed handgun.2 He testified most of the passengers did not
appear suspicious; however, he noted Spears and a woman appeared nervous and
"kept looking at us and talking amongst themselves." Agent Tracy testified as to
why the agents wanted to make contact with the couple:
The reason . . . was to first of all identify them, and second
of all to ascertain if they were involved in any criminal
activity, specifically under our ICE authority it would be
trafficking counterfeit goods. They have four large bags
coming out of a known source area for counterfeit goods,
2
Agents Lorenzen's and Finch's guns were holstered but visible. This fact was
disclosed during trial testimony in front of the jury, not during the suppression
hearing.
we thought that might be something we wanted to take a
look at.
Agent Tracy conceded the agents wanted to make contact with the couple solely
based on their activity and not based on the original narcotics tip. Agent Tracy
testified Spears and the woman began walking down the street towards the post
office and that the woman appeared to reach into her bag and pass an unknown item
to Spears. Agent Tracy testified that because Spears never lifted his hands above his
waist, the agents believed the object would be in Spears' hands, waistband, or
pockets.
Agent Tracy testified Spears and the woman continued to look back at the
agents as they were walking away and that when the agents got close enough to
Spears and the woman, he requested to speak with the couple. Agent Tracy testified
he said something "nonthreatening" such as, "Excuse us, do you mind if we have a
word with you?" Agent Tracy testified the couple complied. Agent Tracy described
how the agents caught up with the couple: "They're walking, we're walking behind
them, we didn't run. However, [] we [did] walk a little faster than they did to make
contact with them." Agent Tracy testified Spears and the woman were not
handcuffed and would have been free to walk away if they had initially refused to
speak to the agents. Agent Tracy testified:
We identified ourselves, made small talk with them about
their travel itinerary, asked them how the bus ride was, if
they got any bad weather[.] . . . We then asked them if
they had -- or we told them the bus lines, that we had
problems in the past with drugs and wanted subjects and
counterfeit merchandise, and we asked them for ID.
Spears handed the agents his ID. However, the record does not reflect whether the
agents retained his ID or gave it back to him. Agent Tracy testified Spears' answers
about the trip were "very forthcoming"; however, when he asked Spears whether he
had any illegal weapons, Spears hesitated before answering "no." Agent Tracy
testified that based on his training in narcotics interdiction, people traditionally
hesitate when they are confronted with a question they do not want to answer
truthfully.
Agent Tracy testified about Spears' subsequent behavior, which is of
particular importance to the issues on appeal:
I noted that while I was speaking with [Spears,] he
continued to put his hands underneath his shirt and I guess
the motion would be like puff his shirt away from his
waistband. . . . I asked him to keep his hands where I
could see them . . . because I didn't know what if he was
reaching in his pockets. He did it a couple more times, and
I kept reminding him to cease putting his hands in his
pockets . . . for officer safety regards[.] . . . So he
continued to get frustrated, or he continued to put his
hands in his pockets or pulled his shirt out, and I told him
I was going to conduct a pat down of him so I could be
sure he didn't have any weapons on him or anything that
was going to hurt me.
Agent Tracy testified he frisked Spears for his and the other agents' safety. He
testified it was during the frisk in which he discovered the crack cocaine and a small
amount of marijuana.
Traci Jenkins (referred to as Traci Williams by the court of appeals), the
woman with Spears at the time of the incident, also testified at the suppression
hearing. She testified Spears was her boyfriend at the time of the incident. Jenkins
testified she and Spears were waiting on a ride when they first disembarked the bus
but decided to walk when the ride was taking too long to arrive. Jenkins testified
she and Spears were told by the agents to "stop." She testified the encounter lasted
probably less than twenty minutes and that she did not believe she was free to walk
away. Jenkins testified she was told by the agents to sit down; however, she recalled
that particular instruction was likely given to her after Spears was searched and
handcuffed. She was unsure as to whether the agents' guns were visible. Spears did
not testify at the suppression hearing.
The trial court denied Spears' motion to suppress the crack cocaine. The trial
court found the agents engaged Spears in a consensual encounter and that Agent
Tracy "pointed to specific and articulable facts [that] warranted a search of Spears'
person."
During trial, Agents Tracy, Lorenzen, and Finch testified about their
encounter with Spears. Tara Kinney, a forensic chemist, identified the seized drug
as crack cocaine and determined it had a net weight of 11.43 grams. When the State
moved the drug into evidence, Spears renewed his pretrial objection to its
admissibility. The jury convicted Spears of trafficking crack cocaine, and because
this was Spears' third offense, the trial court imposed a thirty-year sentence pursuant
to section 44-53-375(C)(1)(c) of the South Carolina Code (2018).
Spears appealed, and a divided court of appeals reversed his conviction. State
v. Spears, 420 S.C. 363, 802 S.E.2d 803 (Ct. App. 2017). The majority held Spears
was seized under the Fourth Amendment at the time of the initial encounter because
a reasonable person would not have felt free to walk away from the agents at that
point. Id. at 369-72, 802 S.E.2d at 806-08. The majority found Spears was arguably
seized the moment the agents made initial contact with him, but, at the latest, he was
seized when Agent Tracy asked whether Spears had any weapons or illegal items.
Id. at 371, 802 S.E.2d at 807. The majority recognized the trial court did not rule as
to whether the agents had a reasonable suspicion to stop Spears since the trial court's
ruling was based on the premise that Spears and the agents engaged in a consensual
encounter. Id. at 372 n.3, 802 S.E.2d at 808 n.3. However, in the interest of judicial
economy, finding a remand unnecessary, the majority held the agents did not have a
reasonable suspicion to seize Spears—thereby violating Spears' Fourth Amendment
rights. Id. at 372-76, 802 S.E.2d at 808-10. The majority held the trial court erred
in denying Spears' suppression motion. Id. at 376, 802 S.E.2d at 810.
The dissent at the court of appeals believed the appellate court's deferential
standard of review in Fourth Amendment cases required the court of appeals to
affirm. The dissent noted "a faithful adherence to the 'any evidence' standard of
review will prevent any misconception that we have substituted our own findings in
place of those of the [trial] court." Id. at 377, 802 S.E.2d at 810 (Williams, J.,
dissenting). This Court granted the State's petition for a writ of certiorari to review
the court of appeals' decision.
II. ISSUE
Did the court of appeals err in reversing the trial court's denial of Spears'
motion to suppress?
III. STANDARD OF REVIEW
"On appeals from a motion to suppress based on Fourth Amendment grounds,
this Court applies a deferential standard of review and will reverse if there is clear
error." State v. Tindall, 388 S.C. 518, 521, 698 S.E.2d 203, 205 (2010). "[T]his
deference does not bar this Court from conducting its own review of the record to
determine whether the trial judge's decision is supported by the evidence." Id. If
there is any evidence to support the trial judge's decision, this Court will affirm.
State v. Brockman, 339 S.C. 57, 66, 528 S.E.2d 661, 666 (2000). "The 'clear error'
standard means that an appellate court will not reverse a trial court's finding of fact
simply because it would have decided the case differently." State v. Pichardo, 367
S.C. 84, 96, 623 S.E.2d 840, 846 (Ct. App. 2005) (citing Easley v. Cromartie, 532
U.S. 234, 242 (2001)).
IV. DISCUSSION
The State argues the court of appeals erred in reversing the trial court's
decision to deny Spears' suppression motion. The State contends the court of appeals
failed to properly apply the standard of review and substituted its own findings in
place of the trial court's findings. The State argues there is evidence in the record to
support the trial court's finding that law enforcement engaged Spears in a consensual
street encounter that only became a seizure when law enforcement necessarily
performed a Terry frisk. We agree.
A. Seizure
Spears unquestionably possessed Fourth Amendment rights as he walked
down the street, for "the Fourth Amendment protects people, not places." See Katz
v. United States, 389 U.S. 347, 351 (1967). "The Fourth Amendment to the United
States Constitution prohibits unreasonable searches and seizures. Evidence seized
in violation of the Fourth Amendment must be excluded from trial." State v.
Khingratsaiphon, 352 S.C. 62, 69, 572 S.E.2d 456, 459 (2002). The Fourth
Amendment guarantee "protects against unreasonable searches and seizures,
including seizures that involve only a brief detention." Pichardo, 367 S.C. at 97,
623 S.E.2d at 847 (citing United States v. Mendenhall, 446 U.S. 544, 551 (1980)).
"This inestimable right of personal security belongs as much to the citizen on the
streets of our cities as to the homeowner closeted in his study to dispose of his secret
affairs." Terry v. Ohio, 392 U.S. 1, 8-9 (1968).
"A person has been seized within the meaning of the Fourth Amendment at
the point in time when, in light of all the circumstances surrounding an incident, a
reasonable person would have believed that he was not free to leave." Robinson v.
State, 407 S.C. 169, 181, 754 S.E.2d 862, 868 (2014). In other words, when law
enforcement "accosts an individual and restrains his freedom to walk away, [law
enforcement] has 'seized' that person." Terry, 392 U.S. at 16. "Only when the
officer, by means of physical force or show of authority, has in some way restrained
the liberty of a citizen may we conclude that a 'seizure' has occurred." Id. at 19 n.16.
However, not all personal intercourse between law enforcement and citizens
triggers Fourth Amendment concerns. Id. The United States Supreme Court has
made it clear that "a seizure does not occur simply because a police officer
approaches an individual and asks a few questions." Florida v. Bostick, 501 U.S.
429, 434 (1991). "[L]aw enforcement officers do not violate the Fourth Amendment
by merely approaching an individual on the street or in another public place, by
asking him if he is willing to answer some questions, by putting questions to him if
the person is willing to listen, or by offering in evidence in a criminal prosecution
his voluntary answers to such questions." Id. at 434 (quoting Florida v. Royer, 460
U.S. 491, 497 (1983)). "While most citizens will respond to a police request, the
fact that people do so, and do so without being told they are free not to respond,
hardly eliminates the consensual nature of the response." I.N.S. v. Delgado, 466
U.S. 210, 216 (1984). "What has evolved from our cases is a determination that an
initially consensual encounter between a police officer and a citizen can be
transformed into a seizure or detention within the meaning of the Fourth
Amendment, 'if, in view of all the circumstances surrounding the incident, a
reasonable person would have believed that he was not free to leave.'" Id. at 215
(quoting Mendenhall, 446 U.S. at 554).
There is not "a litmus-paper test for distinguishing a consensual encounter
from a seizure." Royer, 460 U.S. at 506. Rather, "there will be endless variations in
the facts and circumstances, so much variation that it is unlikely that the courts can
reduce to a sentence or a paragraph a rule that will provide unarguable answers to
the question whether there has been an unreasonable . . . seizure in violation of the
Fourth Amendment." Id. at 506-07.
Here, in denying Spears' motion to suppress, the trial court pointed to certain
facts in the record to support a finding that the encounter was consensual. The trial
court found: (1) law enforcement initiated a conversation with Spears; (2) Spears
willingly stopped and spoke with law enforcement; (3) law enforcement notified
Spears they were law enforcement; (4) law enforcement never told Spears he was
not free to leave; and (5) Spears was originally forthcoming with his answers to law
enforcement's questions until he was asked about having anything illegal on his
person.
The court of appeals held the trial court's characterization of the evidence
ignored the totality of the circumstances. See Spears, 420 S.C. at 371, 802 S.E.2d
at 807. The court of appeals concluded a reasonable person in Spears' position would
not have felt free to terminate the encounter and go about his business. Id. at 372,
802 S.E.2d at 807. In so concluding, the court of appeals cited the framework it
employed in State v. Williams, 351 S.C. 591, 600, 571 S.E.2d 703, 708 (Ct. App.
2002), to determine whether a seizure had occurred:
Although no single factor dictates whether a seizure has
occurred, courts have identified certain probative factors,
including the time and place of the encounter, the number
of officers present and whether they were uniformed, the
length of the detention, whether the officer moved the
person to a different location or isolated him from others,
whether the officer informed the person he was free to
leave, whether the officer indicated to the person that he
was suspected of a crime, and whether the officer retained
the person's documents or exhibited threatening behavior
or physical contact.
The court of appeals concluded most of the factors it enumerated in Williams
to be probative of whether Spears had been seized:
Spears and [Jenkins] were approached by three agents, two
of whom had their guns visible; the agents waited to
engage Spears and [Jenkins] until they were alone; the
agents did not inform Spears and [Jenkins] they were free
to leave; Agent Tracy indicated Spears was suspected of a
crime by following Spears, telling him the bus lines were
known for illegal activity, and asking him if he had any
illegal weapons or items on his person or in his property;
and the agents exhibited threatening behavior by following
Spears and [Jenkins] for several hundred feet before the
agents increased their pace to catch up with Spears and
[Jenkins].
Spears, 420 S.C. at 371, 802 S.E.2d at 807. The court of appeals found "particularly
significant" the fact that "the agents increased their speed to catch up with Spears,"
indicating Spears was no longer free to continue to walk away. Id. at 371-72, 802
S.E.2d at 807. The court of appeals held that although Spears was arguably seized
when the agents made contact with him, Spears was seized, at the latest, when Agent
Tracy inquired as to whether Spears had any weapons or illegal items on his person
or in his property. Id. at 371, 802 S.E.2d at 807. Even though Traci Jenkins was
unsure whether the officers' guns were visible, the court of appeals found the
visibility of the guns to be a factor in the analysis. Id.
We disagree with the court of appeals and find the facts and circumstances as
a whole support the trial court's finding that Spears engaged in a consensual
encounter with law enforcement and was not seized until he was frisked by Agent
Tracy. The court of appeals erred in finding that the trial court ignored the totality
of the circumstances; the trial court simply considered the facts of this case and, in
its broad discretion, determined Spears' encounter with law enforcement was
consensual up until the moment Agent Tracy frisked Spears. The deferential
standard for reviewing the trial court's ruling compels our reversal of the court of
appeals. When facts in the record support the trial court's decision, an appellate court
cannot reweigh the facts to support its own conclusions.
Specifically, there is evidence in the record to support a finding that a
reasonable person would have felt free to walk away from the encounter up until the
point of being told an agent was going to frisk him. The evidence supports the
conclusion that after Spears and Jenkins disembarked a bus known for harboring
illegal activity, they paid undue attention to the three plain-clothed agents. The three
agents followed Spears and Jenkins down a public street and sped up to a brisk walk
to catch up with the couple to see if the couple would answer some questions. The
agents did not move Spears and Jenkins to an isolated place to speak to them. The
record supports the conclusion that when the agents reached Spears and Jenkins,
Agent Tracy, in a "nonthreatening" manner, asked if the couple would stop and speak
with the agents. Spears complied, engaged in small-talk with the agents, and gave
them his ID; Agent Tracy informed Spears in general terms about prior issues
involving illegal activity on the buses and did not accuse Spears of committing a
crime. Agent Tracy then inquired as to whether Spears had any weapons or illegal
items. Again, the trial court's ultimate finding that a reasonable person would have
felt free to walk away from the encounter is supported by the evidence.
We reject Spears' contention that the only conclusion the trial court could have
reached was that a reasonable person would not have felt free to walk away from the
encounter. The evidence supports a finding that the agents' goal was not to impede
Spears' movement and that he was free to walk away from the encounter up until the
time he was frisked. As noted previously, Jenkins testified she felt she was not free
to walk away from the encounter; however, she testified her impression she was not
free to leave arose only after Spears was searched, the drugs were found, and Spears
was handcuffed. Even if Jenkins believed she was not free to leave before then, the
law requires us to discount her subjective belief, as our analysis must be based upon
whether a "reasonable person" would have felt free to decline the agents' requests or
otherwise terminate the encounter. See Bostick, 501 U.S. at 436.
While we acknowledge many of the Williams factors might apply in any given
case, we decline to expressly adopt the specific factor test enumerated in Williams;
we believe a proper determination of whether a seizure occurred involves a broader
analysis of the totality of circumstances and does not lend itself to what might be
construed as a rigid test. Nevertheless, even when we apply the Williams factors to
this case, our deferential review of the evidence supports the trial court's conclusion:
- Time and place of the encounter: Here, it was daylight, and Spears and
Jenkins were walking down a public street. See United States v. Weaver, 282
F.3d 302, 312 (4th Cir. 2002) ("Unlike those situations that may occur in the
traffic stop context, pedestrian encounters are much less restrictive of an
individual's movements.").
- The number of officers present and whether they were uniformed: Three
plain-clothed agents spoke with Spears and Jenkins.
- The length of the detention: The record is not clear as to the exact length;
Jenkins was unsure but believed the detention likely lasted less than twenty
minutes; in this case, that is not an excessive length of time.
- Whether the officer moved the person to a different location or isolated him
from others: Spears was not moved into an isolated location; he walked away
from the bus on his own accord. Once they caught up with Spears, the agents
did not move him to a more isolated location and did not separate him from
Jenkins.
- Whether the officer informed the person he was free to leave: The agents did
not inform Spears he was free to leave; however, the agents did not inform
Spears he was not free to leave. See Delgado, 466 U.S. at 216 ("While most
citizens will respond to a police request, the fact that people do so, and do so
without being told they are free not to respond, hardly eliminates the
consensual nature of the response." (emphasis added)); United States v.
Ringold, 335 F.3d 1168, 1172 (10th Cir. 2003) (refusing to view any one
factor as dispositive).
- Whether the officer indicated to the person that he was suspected of a crime:
Agent Tracy informed Spears in general terms of the illegal activity that often
occurs on the bus line. Agent Tracy asked Spears whether he had any
weapons or illegal items.
- Whether the officer retained the person's documents: Agent Tracy asked for
Spears' identification. The record does not indicate whether it was or was not
returned to Spears. See Weaver, 282 F.3d at 312 (differentiating a pedestrian
encounter from an encounter involving a traffic stop because a pedestrian can
refuse to cooperate when asked for identification).
- Whether the officer exhibited threatening behavior or physical contact: The
agents did not physically touch Spears until he was frisked, and Spears was
frisked only after he refused to comply with Agent Tracy's instruction to stop
reaching under his shirt. The agents did not run after Spears but walked
briskly at an accelerated rate so they could reach him. Agent Tracy politely
asked if Spears would speak with him, and Spears complied. Agent Tracy
testified his firearm was concealed. Jenkins testified she was unsure as to
whether the agents' guns were visible.
The court of appeals found important to its reasonable person analysis the fact
that the agents increased their walking speed before speaking with Spears. Spears,
420 S.C. at 371-72, 802 S.E.2d at 807. In Michigan v. Chesternut, 486 U.S. 567,
574 (1988), the United States Supreme Court held law enforcement officers' pursuit
of the defendant did not constitute a seizure implicating the protections of the Fourth
Amendment. The officers observed a man get out of a car and approach the
defendant at a street corner. Id. at 569. The defendant saw the officers in their patrol
car and ran, and "[t]he cruiser quickly caught up with [the defendant] and drove
alongside him for a short distance." Id. The officers observed the defendant
discarding pills from his pockets as he ran. Id. At a pretrial hearing, the defendant
moved to suppress the drugs, arguing he was seized during an "investigatory
pursuit." Id. at 570-71. The Supreme Court disagreed with the lower court's
suppression of the drugs, holding the officers' conduct would not have
communicated to a reasonable person "an attempt to capture or otherwise intrude
upon [the defendant's] freedom of movement." Id. at 575. The Supreme Court noted
the record did not show "the police activated a siren or flashers; or that they
commanded [the defendant] to halt, or displayed any weapons; or that they operated
the car in an aggressive manner to block [the defendant's] course or otherwise control
the direction or speed of his movement." Id. The Supreme Court provided, "While
the very presence of a police car driving parallel to a running pedestrian could be
somewhat intimidating, this kind of police presence does not, standing alone,
constitute a seizure." Id.
Here, the agents briskly walking behind Spears is similar—but much less
"threatening"—to the police cruiser's "investigatory pursuit" discussed in
Chesternut. The brisk approach of the agents in the instant case did not
automatically morph a street encounter into a seizure. A finding of a seizure in this
context could create the absurd result of law enforcement officers only being able to
ask questions of individuals who were standing still, walking slowly, or walking
toward the officers. Law enforcement does not have unlimited license to deploy
interdiction efforts or engage in general policing; however, legitimate efforts in these
areas would be unrealistically restricted if law enforcement was not permitted to
walk fast in an effort to speak to a pedestrian on a public street. Walking briskly
towards a suspect may, in any given case be interpreted differently based on the
totality of the circumstances; however, in this case, the record supports the finding
that the agents walked briskly to catch up with Spears and Jenkins as a matter of
practicality—not as a show of authority to restrain Spears' liberty. Spears was free
to continue walking and to refuse the agents' request that he speak with them. See
Mendenhall, 446 U.S. at 554 ("[C]haracterizing every street encounter between a
citizen and the police as a 'seizure,' while not enhancing any interest secured by the
Fourth Amendment, would impose wholly unrealistic restrictions upon a wide
variety of legitimate law enforcement practices.").
The asking of incriminating questions by law enforcement does not
automatically trigger Fourth Amendment protections. See Bostick, 501 U.S. at 434-
35 ("[E]ven when [police] officers have no basis for suspecting a particular
individual, they may generally ask questions of that individual, ask to examine the
individual's identification, and request consent to search his or her luggage—as long
as the police do not convey a message that compliance with their requests is
required." (internal citations omitted)). There is no evidence in the record that the
agents asked incriminating questions in a forceful or persistent manner to compel
Spears' compliance. See Ringold, 335 F.3d at 1173 ("[T]he mere fact that officers
ask incriminating questions is not relevant to the totality-of-the-circumstances
inquiry—what matters instead is 'the manner' in which such questions were posed.");
United States v. Little, 60 F.3d 708, 712 (10th Cir. 1995) ("Accusatory, persistent,
and intrusive questioning can turn an otherwise voluntary encounter into a coercive
one." (internal quotation marks omitted)). The record supports the finding that the
tone of the agents' interaction with Spears was not aggressive but conversational.
The evidence supports the finding that the agents simply noted to Spears, in general
terms, issues in the past with people transporting illegal items on the bus line and
inquired as to whether Spears had any illegal weapons or other items in his luggage
or on his person. See United States v. Wilson, 895 F.2d 168, 170 (4th Cir. 1990)
(finding no seizure occurred when a narcotics agent stopped the defendant in an
airport, informed the defendant he was investigating drug trafficking, and asked the
defendant if he had anything illegal in his possession).
Spears dwells on the fact that Agents Lorenzen's and Finch's firearms were
visible. The court of appeals also found this fact important to its analysis. Spears
argues, "It was not consensual because Spears did not feel free to leave with police
guns facing him." First, the fact that Agents Lorenzen's and Finch's firearms were
visible was never argued to the trial court during the suppression hearing. This fact
did not surface until trial. Second, even if it had been argued during the suppression
hearing, Spears' statement improperly characterizes and inflates the impact of the
agents' firearms and ignores the fact that both agents' firearms remained holstered
during the entire encounter. It is common knowledge a law enforcement officer
carries a holstered weapon, concealed or visible. The record does not indicate the
agents displayed their firearms in a manner that would cause a reasonable person to
feel he could not walk away. This conclusion is supported by the fact that Traci
Jenkins was unsure if the officers' guns were even visible. It would be unrealistically
restrictive and unsafe for a law enforcement officer to have to remove his firearm
and leave it elsewhere before approaching and questioning a person on the street.
We hold, under the facts of this case, the court of appeals erred in concluding the
"display" of handguns in Lorenzen's and Finch's holsters would have caused a
reasonable person to feel he was not free to leave the encounter.
Spears is a black male. During oral argument, this Court inquired as to
whether Spears' race was a factor to be considered in determining whether a
reasonable person would have felt free to terminate the encounter with law
enforcement and continue walking. Spears did not argue this point during the
suppression hearing or to the court of appeals or in his brief to this Court; in fact, he
contended no one would have felt free to leave this encounter. Even though the issue
is not before us, we will briefly address it.
In Mendenhall, the defendant, a black female, was approached by DEA agents
in the concourse of the Detroit Metropolitan Airport after she exhibited behavior the
agents believed to be characteristic of a person carrying illegal drugs. 446 U.S. at
547. The agents approached the defendant and began asking her questions about her
flight documentation. Id. at 548. The defendant appeared "extremely nervous" and,
according to the agents, provided inconsistent accounts about her flight
documentation. Id. An agent asked the defendant if she would accompany him to
the airport DEA office for further questions. Id. The defendant acquiesced and,
after being escorted to a private office, consented to a search of her person by a
female agent. Id. at 548-49. Two packages of heroin were found, and the defendant
was arrested. Id. at 549. The district court denied the defendant's motion to suppress,
and the defendant was convicted of possessing heroin with the intent to distribute.
Id.
The United States Supreme Court held the original encounter did not
constitute a seizure. Id. at 555. When discussing whether the agent's request for the
defendant to accompany him to the airport DEA office constituted a seizure, the
Court concluded, "The question whether the [defendant's] consent to accompany the
agents was in fact voluntary or was the product of duress or coercion, express or
implied, is to be determined by the totality of all the circumstances." Id. at 557. The
Court noted the defendant's age and education and stated, "It is additionally
suggested that the [defendant], a [black female], may have felt unusually threatened
by the officers, who were white males. While these factors were not irrelevant,
. . . neither were they decisive[.]" Id. at 558. The United States Supreme Court
ultimately held the totality of the evidence was sufficient to support the trial court's
finding that the defendant voluntarily consented to accompany the agents to the DEA
office. Id.
In United States v. Smith, the defendant argued the Fourth Amendment
reasonable person analysis should consider the defendant's race. 794 F.3d 681, 687
(7th Cir. 2015). The defendant specifically argued "no reasonable person in his
'position'—as a young black male confronted in a high-crime, high-poverty,
minority-dominated urban area where police-citizen relations are strained—would
have felt free to walk away from the encounter" with the law enforcement officers.
Id. at 687-88. The Seventh Circuit Court of Appeals stated:
We do not deny the relevance of race in everyday police
encounters with citizens in Milwaukee and around the
country. Nor do we ignore empirical data demonstrating
the existence of racial profiling, police brutality, and other
racial disparities in the criminal justice system. But today
we echo the sentiments of the Court in Mendenhall that
while [the defendant's] race is "not irrelevant" to the
question of whether a seizure occurred, it is not dispositive
either.
Id. at 688.
The Tenth Circuit Court of Appeals has concluded differently, rejecting the
argument that race is an appropriate consideration in the reasonable person analysis.
See United States v. Easley, 911 F.3d 1074, 1081-82 (10th Cir. 2018), cert. denied,
2019 WL 1886117 (U.S. Apr. 29, 2019). The Tenth Circuit distinguished
Mendenhall, finding its discussion of race was limited to the context of assessing
voluntariness, not seizure. Id. at 1081. The Tenth Circuit explained:
Requiring officers to determine how an individual's race
affects her reaction to a police request would seriously
complicate Fourth Amendment seizure law. As the
government notes, there is no easily discernable principle
to guide consideration of race in the reasonable person
analysis. . . . There is no uniform life experience for
persons of color, and there are surely divergent attitudes
toward law enforcement officers among members of the
population. Thus, there is no uniform way to apply a
reasonable person test that adequately accounts for racial
differences consistent with an objective standard for
Fourth Amendment seizures.
Id. at 1082.
We need not consider whether Spears' race is a factor to be considered when
resolving the issue of whether the encounter was consensual. The trial record
contains no evidence on this point other than the fact that Spears is a black male, and
Spears advanced no argument on this point to the trial court, thus rendering the issue
unpreserved.
There is evidence in the record to support the trial court's conclusion that the
encounter was consensual. We reverse the court of appeals on this point and hold
Spears was not seized until he was frisked by Agent Tracy. Consequently, until the
frisk, the Fourth Amendment was not implicated, and there was no requirement of a
showing of reasonable suspicion that Spears was engaged in criminal activity. See
Bostick, 501 U.S. at 434 (providing as long as the encounter remains consensual, it
does not trigger Fourth Amendment scrutiny, and there is no requirement of a
showing of reasonable suspicion of criminal activity).
B. Legality of the Frisk
We next address the legality of the frisk. Giving due consideration to the
evidence in the record, we conclude the law requires us to sustain the trial court's
finding that the frisk was justified.
"[B]efore the police may frisk a defendant, they must have a reasonable belief
the defendant is armed and dangerous." State v. Fowler, 322 S.C. 263, 267, 471
S.E.2d 706, 708 (Ct. App. 1996). "In other words, a reasonable person in the position
of the officer must believe the frisk was necessary to preserve the officer's safety."
Id. "In assessing whether a suspect is armed and dangerous, the officer need not be
absolutely certain the individual is armed." State v. Blassingame, 338 S.C. 240, 248-
49, 525 S.E.2d 535, 540 (Ct. App. 1999). A protective frisk may be employed after
either an investigative stop or a consensual encounter. United States v. Ellis, 501
F.3d 958, 961 (8th Cir. 2007) (citing United States v. Davis, 202 F.3d 1060, 1063
(8th Cir. 2000)). Terry dictates that even in the setting of a protective frisk, "it is
imperative that the facts be judged against an objective standard: would the facts
available to the officer at the moment of the seizure or the search 'warrant a man of
reasonable caution in the belief' that the action taken was appropriate?" 392 U.S. at
21-22 (quoting Carroll v. United States, 267 U.S. 132, 162 (1925)).
The trial court concluded Agent Tracy had a reasonable suspicion that Spears
was armed and dangerous and was therefore justified in frisking Spears. The trial
court stated, "Now the only justification for patting down the defendant is a
reasonable belief that his safety or the safety of others was in danger. Law
enforcement has pointed to specific and articulable facts which warranted a search
of the defendant's person." Evidence in the record supports the trial court's finding.
First, Agent Tracy was a veteran law enforcement officer with a certification in
interdiction. See State v. Moore, 415 S.C. 245, 255, 781 S.E.2d 897, 902 (2016)
(citing a law enforcement officer's "extensive experience" in drug interdiction in
support of common sense judgments); United States v. Lender, 985 F.2d 151, 154
(4th Cir. 1993) ("Courts are not remiss in crediting the practical experience of
officers who observe on a daily basis what transpires on the street."). Such
experience in law enforcement and interdiction lends support to the common sense
judgments Agent Tracy made during the encounter. Also, Agent Tracy's testimony
supports a finding that Spears kept placing his hands underneath his shirt near his
waistband and "would puff his shirt away from his waistband." Agent Tracy asked
Spears not to do this because he wanted to see Spears' hands to make sure Spears
was not reaching for a weapon. Despite being asked several times to not make this
"puffing" motion under his shirt, Spears did not comply. Only after Spears continued
to disobey Agent Tracy's request did Agent Tracy fear for his safety and find it
necessary to frisk Spears. We affirm the trial court's ruling that the frisk was
justified.
V. CONCLUSION
There is evidence in the record to support the trial court's finding that Spears
engaged in a consensual encounter with law enforcement, and there is evidence in
the record to support the trial court's finding that Agent Tracy was justified in
frisking Spears. Consequently, the trial court properly denied Spears' motion to
suppress evidence of the crack cocaine seized during the frisk. We reverse the court
of appeals and reinstate Spears' conviction and sentence.
REVERSED.
FEW, J., concurs. HEARN, J., concurring in a separate opinion.
BEATTY, C.J., dissenting in a separate opinion in which Acting
Justice John D. Geathers, concurs.
JUSTICE HEARN: I concur but write separately because I share many of the
dissent's concerns regarding whether Eric Spears—an African-American male—
actually felt free to walk away from the encounter with law enforcement. While I
am skeptical that he did, this does not change the fact that our standard of review
requires us to affirm unless there is clear error, meaning we cannot substitute our
judgment for that of the trial court. State v. Cardwell, 425 S.C. 595, 599, 824 S.E.2d
451, 453 (2019) ("The 'clear error' standard means that an appellate court will not
reverse a trial court's finding of fact simply because it would have decided the case
differently."). Further, as pointed out by the majority, Spears never raised the
argument the dissent advances to the trial court, where it would have had the
opportunity to specifically address this issue when deciding whether he was seized
pursuant to the totality of the circumstances. Indeed, had Spears raised this issue to
the trial court and briefed it before this Court, we would be in a position to consider
the reasoning of the dissent. Instead, this important discussion originated from the
bench, and the record contains nothing to enable us to alter our jurisprudence as the
dissent suggests. Accordingly, I concur.
CHIEF JUSTICE BEATTY: I respectfully dissent. I agree with the
majority of the Court of Appeals and would find: (1) Spears was seized under the
Fourth Amendment because a reasonable person would not have felt free to
terminate the encounter with law enforcement; and (2) law enforcement did not have
reasonable suspicion to justify the seizure. Accordingly, I would conclude the trial
court erred in denying Spears's motion to suppress.
A. Seizure
The Fourth Amendment to the United States Constitution protects a person's
right to be free from unreasonable searches and seizures. U.S. Const. amend. IV.
Not every interaction between law enforcement and a citizen constitutes a seizure.
Terry v. Ohio, 392 U.S. 1, 19 n.16 (1968). "Only when the officer, by means of
physical force or show of authority, has in some way restrained the liberty of a
citizen may we conclude that a 'seizure' has occurred." Terry, 392 U.S. at 19 n.16.
"[T]o determine whether a particular encounter constitutes a seizure, a court
must consider all the circumstances surrounding the encounter to determine whether
the police conduct would have communicated to a reasonable person that the person
was not free to decline the officers' requests or otherwise terminate the encounter."
Florida v. Bostick, 501 U.S. 429, 439 (1991); see Robinson v. State, 407 S.C. 169,
181, 754 S.E.2d 862, 868 (2014) ("A person has been seized within the meaning of
the Fourth Amendment at the point in time when, in light of all the circumstances
surrounding an incident, a reasonable person would have believed that he was not
free to leave." (quoting United States v. Mendenhall, 446 U.S. 544, 554 (1980))).
The threshold question in this case is whether Spears was seized. The
determination of this issue hinges on how a reasonable person would perceive the
encounter with law enforcement. Our Fourth Amendment jurisprudence does not
take into account personal characteristics such as race, sex, age, disability, and so
forth when making this determination. The test does, however, consider the totality
of the circumstances. In my view, a true consideration of the totality of the
circumstances cannot ignore how an individual's personal characteristics—and
accompanying experiences—impact whether he or she would feel free to terminate
an encounter with law enforcement.
Spears is an African-American male. Scholars have examined ad nauseam
the dynamics between marginalized groups—particularly African-Americans—and
law enforcement.3 African-Americans generally experience police misconduct and
brutality at higher levels than other demographics.4 Consequently, it is no surprise
that scholars have also found African-Americans often perceive their interactions
with law enforcement differently than other demographics. "For many members of
minority communities, however, the sight of an officer in uniform evokes a sense of
fear and trepidation, rather than security." Robert V. Ward, Consenting to a Search
and Seizure in Poor and Minority Neighborhoods: No Place for a "Reasonable
Person", 36 How. L.J. 239, 247 (1993). Moreover, "[g]iven the mistrust by certain
racial, ethnic, and socioeconomic groups, an individual who has observed or
experienced police brutality and disrespect will react differently to inquiries from
law enforcement officers . . . ."). Id. at 253. Unfortunately, under our existing
framework, this can result in the evisceration of Fourth Amendment protections for
many people of color.
Courts have also noted the existence of racial disparities in policing.
[O]ur court addressed at length "the burden of aggressive and intrusive
police action that falls disproportionately on African-American, and
sometimes Latino, males" and observed that "as a practical matter
3
See, e.g., Charles R. Epp et al., Beyond Profiling: The Institutional Sources of
Racial Disparities in Policing, 77 Pub. Admin. Rev. 168 (2017); Emily Ekins, The
Cato Inst., Policing in America: Understanding Public Attitudes Toward the Police.
Results from a National Survey (2016).
4
See, e.g., Epp, supra, at 174 ("Simply put, investigatory stops of vehicles especially
target minority communities and people of color."); Ekins, supra, at 30 ("African
Americans are about twice as likely as whites to report profanity or knowing
someone physically mistreated by the police."); Scottie Andrew, Police Are Three
Times More Likely to Kill Black Men, Study Finds: 'Not a Problem Confined to a
Single Region', Newsweek (July 23, 2018, 1:41 PM), https://www.newsweek.com
/black-men-three-times-likely-be-killed-police-1037922 ("Across the country, black
men are over three times more likely to be killed by police than white men, according
to a study . . . ."); Maggie Fox, Police Killings Hit People of Color Hardest, Study
Finds, NBC News (May 8, 2018, 8:00 AM), https://www.nbcnews.com/health/
health-news/police-killings-hit-people-color-hardest-study-finds-n872086 ("While
just over half of people killed by police are white, Hispanics and African-Americans
are on average younger, the researchers found. And people of black, Hispanic and
Native American background are disproportionately killed by police, they
reported.").
neither society nor our enforcement of the laws is yet colorblind."
There is little doubt that uneven policing may reasonably affect the
reaction of certain individuals—including those who are innocent—to
law enforcement.
United States v. Brown, 925 F.3d 1150, 1156 (9th Cir. 2019) (quoting Washington
v. Lambert, 98 F.3d 1181, 1187–88 (9th Cir. 1996)). United States Supreme Court
Justice Sonia Sotomayor has intimated:
But it is no secret that people of color are disproportionate victims of
this type of scrutiny. For generations, black and brown parents have
given their children "the talk"—instructing them never to run down the
street; always keep your hands where they can be seen; do not even
think of talking back to a stranger—all out of fear of how an officer
with a gun will react to them.
Utah v. Strieff, 136 S. Ct. 2056, 2070 (2016) (Sotomayor, J., dissenting) (internal
citations omitted); see Floyd v. City of New York, 959 F. Supp. 2d 540 (S.D.N.Y.
2013) (finding the City of New York liable for the New York Police Department's
stop-and-frisk policy, which violated plaintiffs' constitutional rights, and noting the
racial disparities in the policy's implementation).
In spite of these academic findings and judicial observations, our current
framework fails to meaningfully consider the ways in which a person's race can
influence their experience with law enforcement. As a result, I fear minority groups
are not always afforded the full protections of the Fourth Amendment. Given the
interests at stake, one would expect our criminal justice system to forcefully resist
marginalizing the experiences of people of color by insisting on a "color-blind"
reasonable person standard. See Ward, supra, at 241 ("Because the reasonable
person test assumes that a person's interactions with the police is a generic
experience, the test is biased."). In my opinion, the seizure analysis should consider
whether a reasonable Black person felt free to end an encounter with police. At the
very least, I believe courts should consider a person's race (and other personal
characteristics) in examining the totality of the circumstances in a seizure analysis.5
5
For example, in analyzing the totality of the circumstances to determine whether a
defendant was seized, the Ninth Circuit acknowledged, among other things, "the
publicized shooting by white Portland police officers of African-Americans" and
"the widely distributed pamphlet with which [the defendant] was familiar,
Notwithstanding the foregoing, Spears's status as an African-American male
is not the only circumstance militating against a conclusion that this was a
consensual encounter. I agree with the Court of Appeals' determination that Spears
was seized at the earliest when the officers made contact with him, and at the latest
when the officers asked him whether he possessed any illegal items. Prior to the
stop, the police followed Spears approximately 500 feet from the bus stop and
walked at a brisk pace to catch up to him. Once Spears stopped to engage with the
police, an officer explained there had been "problems in the past with drugs and
wanted subjects and counterfeit merchandise." The officer also inquired about
Spears's trip and asked for his identification. Subsequently, the officer asked Spears
whether he had any illegal items on him or his property.
Under the totality of the circumstances, a reasonable person in Spears's shoes
would not feel free to terminate the encounter with law enforcement. Spears was
aware that he was being followed by three police officers.6 The agents followed him
to a more isolated area and quickened their pace to catch up to him. In my view, a
reasonable person in this situation would not feel free to continue walking and
disregard the agent's request to talk.7 As the Court of Appeals pointed out—
correctly, in my opinion—the agents signaled to Spears that he was no longer free
to continue walking when they increased their speed to catch up to him.
Accordingly, Spears was arguably seized as soon as the police initiated contact.
Even assuming the initial contact between Spears and the agents did not
amount to a seizure, Spears was undoubtedly seized when the agent asked Spears
instructing the public to comply with an officer's instructions." United States v.
Washington, 490 F.3d 765, 773 (9th Cir. 2007).
6
Agent Tracy testified that Spears kept looking back at the agents as they were
following him. Agents Finch and Lorenzen testified that their guns and badges were
visible.
7
I question what would have happened had Spears continued walking and ignored
the agent's request to speak with him. Indeed, had Spears continued to walk away,
the agents may have interpreted this as furtive behavior that created reasonable
suspicion for a stop. See State v. Taylor, 401 S.C. 104, 736 S.E.2d 663 (2013)
(finding reasonable suspicion existed where the defendant attempted to avoid
officers by riding away on his bicycle). The Fourth Amendment could not possibly
intend to place citizens in this impossible catch-22 situation.
whether he possessed any illegal items. As mentioned, when Spears stopped to talk
with the agents, he was aware the agents had been following him.8 After asking a
few general questions, the agent stated there had been "problems" on the bus lines
with "drugs and wanted subjects and counterfeit merchandise." The agent then asked
Spears for identification and inquired whether Spears possessed any illegal items.
In my view, under these circumstances, a reasonable person would feel like
he or she was suspected of wrongdoing and thus obligated to comply with the agent's
requests.9 Indeed, this is the only logical conclusion a person in Spears's situation
8
In United States v. Jones, the Fourth Circuit examined whether a defendant was
seized when the officers blocked his car from leaving the scene. 678 F.3d 293
(2012). While the facts in Jones obviously differ and can be distinguished from the
instant case, I find the Fourth Circuit's analysis compelling. In Jones, the court noted
"the encounter here began with a citizen knowing that the police officers were
conspicuously following him, rather than a citizen, previously unaware of the police,
being approached by officers seemingly at random." Id. at 300. The court also made
much of the fact that the defendant in Jones was seemingly targeted by the officers.
"[H]ere, the totality of the circumstances would suggest to a reasonable person in
Jones's position that the officers suspected him of some sort of illegal activity in a
'high crime area,' which, in turn, would convey that he was a target of a criminal
investigation and thus not free to leave or terminate the encounter." Id. at 304.
9
In State v. Contreras, a New Jersey appellate court concluded an encounter between
the defendants and police officers was a seizure. In making this determination, the
court stated:
The officers proceeded to explain that there are 'problems' with drugs,
weapons, and other contraband being transported on the trains between
New York and New Jersey. They then asked defendants if they were
carrying any such contraband, a question that clearly conveyed to
defendants the message that the officers suspected them of criminal
activity.
742 A.2d 154, 160 (1999). Similarly, in State v. Pitts, the Supreme Court of Vermont
detailed several cases in other jurisdictions and noted there has been "a recognition
among many courts that while 'mere questioning' may not constitute a seizure per
se, pointed questions about drug possession or other illegal activity in circumstances
indicating that the individual is the subject of a particularized investigation may
convert a consensual encounter into a Terry stop requiring objective and articulable
suspicion under the Fourth Amendment." 978 A.2d 14, 19–21 (Vt. 2009). The court
ultimately found the defendant was seized, stating: "Although the officers' first few
could draw. This was not a situation in which the officers questioned passengers at
random as they disembarked—Spears was singled out, followed, and questioned.
Therefore, under the totality of the circumstances, I do not believe a reasonable
person in this situation would feel at liberty to terminate the encounter with law
enforcement. Accordingly, I would find Spears was seized under the Fourth
Amendment.
I also wish to address the State's and majority's reliance on Michigan v.
Chesternut, 486 U.S. 567 (1988), as I believe that case is readily distinguished. In
Chesternut, the police observed a man get out of a car and approach the defendant.
486 U.S. at 569. When the defendant saw the marked police cruiser approach the
corner where he was standing, he turned and ran. Id. The cruiser caught up to the
defendant and "drove alongside him for a short distance." Id. As the cruiser drove
alongside the defendant, he retrieved several packets from his pocket and discarded
them. Id. An officer got out of the car to examine the packets (which contained
pills), and the defendant stopped running while the officer was examining the
packets. Id.
The majority compares the agents' brisk walk behind Spears to the police
cruiser's "investigatory pursuit" in Chesternut and finds the agents' behavior here
"much less 'threatening.'" At the outset, I note the United States Supreme Court
expressly limited its holding in Chesternut to the particular facts in that case. Id. at
572–73 ("Rather than adopting either rule proposed by the parties and determining
that an investigatory pursuit is or is not necessarily a seizure under the Fourth
Amendment, we adhere to our traditional contextual approach, and determine only
that, in this particular case, the police conduct in question did not amount to a
seizure."). Additionally, there are significant factual differences between Chesternut
and this case. In Chesternut, the officers never commanded or asked the defendant
to stop. Here, the agents effectuated a seizure when they asked Spears if they could
speak with him. Unlike the police officers in Chesternut, the agents in this case
singled Spears out (among many disembarking passengers), followed him to a more
isolated location, accelerated their pace to catch up to him, and initiated
conversation.
Furthermore, the State and majority assert a finding of seizure in this case
would lead to the "absurd result" of a blanket prohibition on an officer's ability to
questions to [the defendant] were the kind that courts have uniformly held to be
innocuous and nonconfrontational, they rapidly progressed to inquiries indicating a
particularized suspicion of criminal activity."). Id. at 21.
walk briskly. I disagree. Here, the agents' pursuit of Spears is just one of many
circumstances to be considered, and the case does not turn solely on the speed at
which the agents walked. Because a court must always examine the totality of the
circumstances in determining whether a seizure occurred, the specific manner in
which an officer approaches a defendant will remain just one of many facts a court
must consider.
The State also contends upholding the Court of Appeals' decision will
jeopardize officer safety if police can no longer ask a person whether they possess
any illegal weapons. However, the agents did not ask Spears whether he had any
illegal weapons. Rather, the agents asked Spears whether he had any illegal items.
B. Reasonable Suspicion
After determining Spears was seized, the question becomes whether law
enforcement had a reasonable suspicion of criminal activity to warrant the seizure.
See Florida v. Royer, 460 U.S. 491, 512 (1983) ("To justify such a seizure an officer
must have a reasonable suspicion of criminal activity based on 'specific and
articulable facts . . . [and] rational inferences from those facts . . . .'" (quoting Terry,
392 U.S. at 21)).
Law enforcement initially grew suspicious of Spears because he appeared to
pay an "excessive" amount of attention to the officers and seemed "nervous."
According to one officer's testimony at trial, this was unusual because the agents
were dressed in plain clothes. However, two officers testified that their guns and
badges were visible, and one officer speculated that Spears noticed the police were
not "just off the bus or . . . there to pick anybody up." In my opinion, this would
suggest the presence of law enforcement at the bus stop was indeed "obvious." And,
practically speaking, once a person recognizes the presence of police, they are likely
to pay attention irrespective of the officers' dress. Nonetheless, there is nothing
particularly incriminating about looking at law enforcement.
In addition to paying the agents an "excessive" amount of attention, the
officers made only the following observations prior to stopping Spears: Spears and
his companion arrived on a bus line known to be used by criminals; the pair retrieved
four large pieces of luggage; Spears did not appear to be meeting anyone at the bus
stop; Spears began walking down the road away from the bus stop; and, while
walking away, Spears's companion handed him an unidentified item. In my view,
none of these facts, standing alone or together, provide articulable and reasonable
suspicion to justify a seizure.
Several of the aforementioned facts are entirely reasonable given the context
of the situation. One would expect two people traveling to South Carolina from New
York to have several pieces of luggage. Further, walking away from a bus stop after
disembarking is not suspicious activity. Indeed, Spears's companion testified the
pair decided to walk when their ride failed to show up. In addition, Spears walked
at a normal pace even though he knew he was being followed. Moreover, not one
agent could testify regarding the specifics of what Spears's companion handed him—
or even if she actually handed Spears anything at all. Therefore, these facts cannot
be relied upon to establish a reasonable suspicion that criminal activity was afoot.
Once these facts are dispensed with, law enforcement was left with only two
facts: (1) Spears's arrival on the bus line; and (2) Spears kept looking at the agents.
In Illinois v. Wardlow, the United States Supreme Court recognized that "presence
in an area of expected criminal activity" and "nervous, evasive behavior" are both
relevant—though not dispositive—in a reasonable suspicion analysis. 528 U.S. 119,
124 (2000). When considering the totality of the circumstances, these two factors
alone are woefully inadequate to provide an officer with any reason to suspect Spears
was engaged in criminal activity.
The Fourth Amendment requires a police officer to have more than a mere,
unsupported hunch before subjecting a citizen to police intrusion. See Robinson,
407 S.C. at 182, 754 S.E.2d at 868 ("Reasonable suspicion is something more than
an 'inchoate and unparticularized suspicion' or hunch." (quoting Terry, 392 U.S. at
27)). Although I am sympathetic to the everyday realities police officers face, the
courts must be careful to strike an equitable balance between the needs of law
enforcement and the constitutional rights of citizens. In Schneckloth v. Bustamonte,
Justice Thurgood Marshall aptly noted the following in his dissent:
Of course it would be 'practical' for the police to ignore the commands
of the Fourth Amendment, if by practicality we mean that more
criminals will be apprehended, even though the constitutional rights of
innocent people also go by the board. But such a practical advantage is
achieved only at the cost of permitting the police to disregard the
limitations that the Constitution places on their behavior, a cost that a
constitutional democracy cannot long absorb.
412 U.S. at 288 (Marshall, J., dissenting). Although Schneckloth addressed a
different Fourth Amendment issue, I believe Justice Marshall's words are equally
applicable here.
The United States population includes 42 million Americans of African
descent. Inexplicably, these Americans are basically invisible to those of us who
apply the analytical framework for reasonable behavior or beliefs. Somehow the
judiciary, intentionally or not, excludes these Americans' normal behaviors,
responses, and beliefs in circumstances involving law enforcement agents. For most,
the "totality of the circumstances" does not include consideration of the reasonable
behavior or response of African-Americans when confronted with certain stimuli.
Thus, the regrettable and unsettling conclusion is that the question of what is
"reasonable" is viewed solely from the perspective of Americans who are White. I
shudder to think about the probable result had the defendant continued to walk and
ignore the police.
This unassailable observation is not intended as an indictment of my
colleagues who wear the robe. I do not believe their obliviousness is due to
intentional disregard. I prefer to assign their selective blindness to a lifetime of being
repeatedly subjected to episodes of minimizing the African-American experience.
Life experiences influence the way that we all view the world and legal issues. We
should be cognizant of this fact and attempt to view the issue truly with an objective
eye. An objective eye would acknowledge the fact that African-Americans are being
reasonable when they respond in accordance with their collective experiences gained
over two hundred years.
This fact of life observation has no bearing on the actual guilt or innocence of
the defendant in this case. However, it has great significance to our Constitution,
due process, equal protection, and what it means to be an American.
Based on the foregoing, I would find the trial court erred in denying Spears's
motion to suppress because Spears was seized pursuant to the Fourth Amendment
without any articulable and reasonable suspicion. Therefore, I would affirm the
decision of the Court of Appeals.
Acting Justice John D. Geathers, concurs.
|
962 So.2d 916 (2007)
FULTON
v.
STATE.
No. 4D07-2652.
District Court of Appeal of Florida, Fourth District.
August 8, 2007.
Decision without published opinion. Affirmed.
|
Electronically Filed
Intermediate Court of Appeals
CAAP-13-0000429
07-AUG-2013
10:53 AM
|
274 F.Supp. 321 (1967)
Sheila HOLLOWAY et al., Plaintiffs,
v.
GAMBLE-SKOGMO, INC., et al., Defendants.
GAMBLE-SKOGMO, INC., Third-Party Plaintiff,
v.
UNITED STATES RUBBER COMPANY, Third-Party Defendant.
No. 67 C 499.
United States District Court N. D. Illinois, E. D.
October 25, 1967.
Berry & O'Conor, Ottawa, Ill., Peterson, Johnson & Martin, Princeton, Ill., for plaintiff.
Chadwell, Keck, Kayser, Ruggles & McLaren, Chicago, Ill., for defendant, Uniroyal.
Howard, French & Healy, Chicago, Ill., for defendant, Gamble-Skogmo.
OPINION
NAPOLI, District Judge.
Plaintiffs, who are all Illinois citizens, commenced this action in the Circuit Court of LaSalle County, Illinois, against Gamble-Skogmo, Inc., a Minnesota corporation, seeking to recover in excess of $10,000 for personal injuries allegedly caused by a defective automobile tire sold by Gamble-Skogmo to one of the plaintiffs. Shortly after filing of the complaint, plaintiffs filed an amended complaint, with leave of court, making similar allegations against defendant Bruce E. Bauter, an Illinois citizen. Meanwhile, Gamble-Skogmo filed a third party complaint against Uniroyal, a New Jersey Corporation, alleging that the tire in question was manufactured by Uniroyal, that if there was any negligence on the part of Gamble-Skogmo, this negligence was passive in nature, and that the negligence, if any, which caused the plaintiffs' injuries was that of Uniroyal. The third party complaint in its prayer for relief demands judgment against Uniroyal for all sums which may be adjudged against Gamble-Skogmo in the main action.
Uniroyal promptly filed a petition for removal of the entire controversy to the United States District Court for the Northern District of Illinois. The cause *322 is now before this court on plaintiff's motion for remand.
Uniroyal contends that this case is properly removable under 28 U.S.C. § 1441(c), which provides:
(c) Whenever a separate and independent claim or cause of action, which would be removable if sued upon alone, is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed and the district court may determine all issues therein, or, in its discretion, may remand all matters not otherwise within its original jurisdiction.
Removal statutes have always been strictly construed against allowing removal to the federal courts. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 61 S.Ct. 868, 85 L.Ed. 1214 (1941). When Section 1441(c) was amended to its present form in 1948, it was interpreted to restrict even further the right of removal. American Fire & Casualty Co. v. Finn, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702 (1951). Before the 1948 revision, "removable controversy" was interpreted as any possible action that a litigant might properly bring in a federal court so long as it was between citizens of different states. Whenever a suit in a state court had such federally cognizable controversy, the entire suit might be removed to the federal court. Barney v. Latham, 103 U.S. 205, 26 L.Ed. 514 (1880).
By its 1948 revision to the removal statute, Congress added one further requirement to the right of removal: not only must a suit be removable if sued upon alone, but it must be a "separate and independent claim or cause of action" joined with another non-removable claim. Commenting upon the significance of this new language in the removal statute, the Supreme Court in American Fire & Casualty Co. v. Finn, supra, said:
A separable controversy is no longer an adequate ground for removal unless it also constitutes a separate and independent claim or cause of action. [citations] Congress has authorized removal now under § 1441(c) only when there is a separate and independent claim or cause of action. Of course, "separate cause of action" restricts removal more than "separable controversy." In a suit covering multiple parties or issues based on a single claim, there may be only one cause of action and yet be separable controversies. The addition of the word "independent" gives emphasis to congressional intention to require more complete disassociation between the federally cognizable proceedings and those cognizable only in state courts before allowing removal. 341 U.S. at 11-12, 71 S.Ct. at 538. (emphasis added).
Under even the most liberal rules of third party practice, parties are not properly joined unless there is some question of law or fact common to all of them, and some claim asserted for or against all arising out of a single transaction or occurrence or series of related transactions or occurrences.[1] Third party complaints are not separate and independent of plaintiff's complaint, but are in whole or in part dependent thereon.
In the case at bar, it is apparent that the third party complaint is completely dependent upon the main action. Defendant Gamble-Skogmo makes no claim against Uniroyal other than for indemnification for sums adjudged against it and in favor of plaintiff. Unless and until a judgment is entered for plaintiff, Gamble-Skogmo can recover nothing from Uniroyal. Where there is but one actionable wrong contained in a complaint, although separable controversies may ensue as a consequence thereof, no right of removal exists. American Fire & Casualty Co. v. Finn, 341 U.S. 6, 71 S.Ct. 534 (1951). Similar considerations could be advanced for denying removal under 1441 (c) to mandatory counterclaims, crossclaims *323 and claims of intervenors. Indeed Professor Moore
* * * (does) not believe that any claim introduced into the action by counterclaim, crossclaim, third party claim, intervention, or garnishment should afford the basis for removal. (Moore's Commentary on U.S. Judicial Code, Par. 0.03 (37), page 252.)
The cases since American Fire & Casualty Co. v. Finn, supra, seem to be moving in the direction of adopting Professor Moore's interpretation. Several cases have directly held, in remanding third party actions for indemnity to the state courts, that removal under 28 U.S.C. § 1441(c) is limited to situations where joinder of claims or parties has been by plaintiff only. Rager v. Crampes, 223 F. Supp. 346, 347 (D.C., 1963); White v. Baltic Conveyor Company, 209 F.Supp. 716 (D.C., 1962); Shaver v. Arkansas-Best Freight System, Inc., 171 F.Supp. 754 (D.C., 1959). Other courts have reached the same result by finding that a third party complaint for indemnity is not "separate and independent" from plaintiff's action, within the meaning of the removal statute. Texas Plumbing Co. v. Zurn Industries, Inc., 169 F.Supp. 144 (D.C., 1958); Manternach v. Jones Country Farm Service Company, 156 F. Supp. 574 (D.C., 1957). A reading of these cases leaves the impression that it is difficult to imagine a third party complaint which is not "dependent" on the main cause of action, since under even the most liberal state third party practice, a close relation between the third party claim and the case in chief is a minimal requirement.
In view of the policy of placing narrow constructions upon statutes conferring removal jurisdiction in the federal courts, it is not at all unreasonable to limit removals under 28 U.S.C. § 1441 (c) to those cases where "separate and independent" causes of action have been "joined" by the original plaintiff. Plaintiff alone has the original choice of forum. Removal jurisdiction was in part intended to allow a defendant sued in a state court foreign to him to choose the federal forum in that district if he wishes. Removal jurisdiction was created as a check on the power a plaintiff would otherwise have to force a defendant to litigate an action over which original federal jurisdiction exists, in whichever state forum plaintiff chooses, subject only to the requirements of jurisdiction over the person. If a defendant wishes to take advantage of the opportunity afforded by the liberal third party practice rules in effect in many state jurisdictions today, with the consequent savings of multiple trials involving similar or identical issues of fact and law, he must bring his third party action in a forum he has not chosen. True, he could bring an independent action against the third party defendant elsewhere, in the forum of his choice. But he would then lose the advantage of settling, at a single trial, the ultimate liability for plaintiff's injuries. Multiple trials involving identical questions of fact and law are not only wasteful of expense and effort, but separate trials may run the risk of inconsistent resolution of identical questions of fact or law, even under expanding concepts of collateral estoppel.
No such considerations exist where a third party plaintiff impleads a third party defendant. Where the original cause of action is non-removable owing to absence of complete diversity, as in the case at bar, the original defendant, when he acts as third party plaintiff, does not have unlimited choice of forum, as the original plaintiff had. In many instances, a defendant-third party plaintiff is fortunate if he can achieve service of process over the third party defendant, since the forum chosen by the original plaintiff may not have jurisdiction over the person of the third party defendant.
It is not unreasonable to assume that Congress was aware of these policy considerations, and that Congress therefore intended to treat a defendant, brought in by a plaintiff who had absolute discretion in choice of forum, differently from a third party defendant brought in by a party who, by being named original defendant, had no part in naming the *324 state forum. It is quite reasonable to assume that Congress intended to allow only the former class of defendants the right to remove.
It is the view of this court that where an action not within original federal jurisdiction is brought in the state courts, introduction of a third party claim, even assuming that the claim is removable if sued upon alone, does not make all or any part of the action removable under 28 U.S.C. § 1441(c).
An appropriate order will enter.
NOTES
[1] In Illinois, a defendant may file a third party complaint against "a person not a party to the action who is or may be liable to him for all or part of the plaintiff's claim against him." Ill.Rev.Stat. Ch. 110 § 25(2). Rule 14, Federal Rules of Civil Procedure, is identically worded.
|
990 So.2d 793 (2008)
Rodney Loron JONES, Appellant,
v.
STATE of Mississippi, Appellee.
No. 2007-CP-01051-COA.
Court of Appeals of Mississippi.
September 16, 2008.
*794 Rodney Loron Jones (Pro Se), attorney for appellant.
Office Of The Attorney General by Laura Hogan Tedder, attorney for appellee.
Before LEE, P.J., ROBERTS and CARLTON, JJ.
SUMMARY OF THE CASE
ROBERTS, J., for the Court.
¶ 1. More than ten years ago, Rodney Loron Jones was convicted of armed robbery and sentenced as a habitual offender to a thirty-five-year sentence in the custody of the Mississippi Department of Corrections (MDOC). Nine years later, Jones filed a "motion to set aside sentence" and claimed he was unlawfully sentenced as a habitual offender based on the alleged illegality of one of his prior underlying convictions. The circuit court treated Jones's motion as a petition for post-conviction collateral relief and found that Jones's claim was time-barred. Consequently, the circuit court dismissed Jones's "motion to set aside sentence." Jones now appeals, but we find no error and affirm the judgment of the circuit court.
FACTS AND PROCEDURAL HISTORY
¶ 2. In October 1991, Jones went before the Lee County Circuit Court and pled guilty to three counts of grand larceny. The circuit court sentenced Jones to five years in the custody of the MDOC. However, the circuit court added the following language to its order:
The Court recommends the defendant be placed in the [Regimented Inmate Discipline] Program and reserves the right of Judicial Review in 180 days. After completion of [the] program[,] defendant shall be transported to the Greenwood/Leflore Co. Restitution Center. Defendant is ordered to make restitution of $2024.71 to victims in all three Lee County cases and pay costs of court in same.
¶ 3. Jones completed the RID program, and in October 1992, he went back before the circuit court. The circuit court found that Jones completed the RID program as ordered and suspended the balance of Jones's sentence. The circuit court also placed Jones on "supervised probation." Jones was transferred to the restitution center. Upon successful completion of the restitution program, Jones was to report back to the circuit court for specific probation terms.
¶ 4. Five days later, Jones left the restitution center without permission. Jones did not return to the restitution center. Two months later, officers with the Tupelo Police Department apprehended Jones. Jones went back before the circuit court, where he was sentenced as follows:
to serve a term of five (5) years in a facility designated by the Mississippi Department of Corrections for the State of Mississippi. Said sentence shall run concurrent with the sentences imposed in [the other two grand larceny convictions]. Said sentence shall begin this date.
¶ 5. Approximately three-and-a-half years later, Jones was indicted for armed robbery. The indictment against Jones contained an allegation that Jones was eligible for sentencing as a habitual offender pursuant to Mississippi Code Annotated *795 section 99-19-81. Jones was later convicted of armed robbery. On November 18, 1997, the Lee County Circuit Court sentenced Jones as a habitual offender to thirty-five years in the custody of the Mississippi Department of Corrections. Jones appealed his conviction, but this Court found no merit to Jones's appeal. Jones v. State, 743 So.2d 415, 421(¶ 25) (Miss.Ct. App.1999).
¶ 6. In April 2007, Jones filed a motion to set aside his thirty-five-year sentence for armed robbery. Jones claimed he was improperly sentenced as a habitual offender because, prior to his armed robbery conviction, he did not serve three sentences for one year or longer. Jones also claimed, incident to his three prior grand larceny convictions, the circuit court improperly placed him on probation because he never signed the probation order. The circuit court correctly treated Jones's motion as a petition for post-conviction collateral relief. The circuit court held that Jones's petition was time-barred and dismissed Jones's petition. Jones appeals.
STANDARD OF REVIEW
¶ 7. Jones appeals the circuit court's dismissal of his petition for post-conviction collateral relief. In reviewing Jones's issues, we will not reverse the circuit court's findings of fact unless the circuit court's findings were clearly erroneous. Williams v. State, 872 So.2d 711, 712(¶ 2) (Miss.Ct. App.2004). However, we will review questions of law pursuant to our familiar de novo standard of review. Id.
ANALYSIS
¶ 8. Jones claims the circuit court erred when it dismissed his petition for post-conviction collateral relief. Jones bases his argument on the premise that his sentence was improperly enhanced because he was not a habitual offender. That is, Jones claims the circuit court improperly placed him on probation because he never signed his probation order. Jones also claims the circuit court improperly revoked his probation.
¶ 9. First and foremost, Jones filed his collateral attack on his conviction approximately eight years after his unsuccessful direct appeal. Pursuant to Mississippi Code Annotated section 99-39-5(2) (Rev. 2007), "[a] motion for relief under this article shall be made within three (3) years after the time in which the prisoner's direct appeal is ruled upon by the Supreme Court of Mississippi...." This Court ruled on Jones's direct appeal on May 18, 1999. Jones filed his "motion to set aside sentence" on April 19, 2007. It follows that Jones's collateral attack was time-barred.
¶ 10. Additionally, Jones's collateral attack was barred for another reason. As noted above, Jones filed an unsuccessful direct appeal. Jones, 743 So.2d at 421(¶ 25). Pursuant to Mississippi Code Annotated section 99-39-7 (Rev.2007):
[w]here the conviction and sentence have been affirmed on appeal or the appeal has been dismissed, the motion under this article shall not be filed in the trial court until the motion shall have first been presented to a quorum of the justices of the supreme court of Mississippi, convened for said purpose either in term-time or in vacation, and an order granted allowing the filing of such motion in the trial court.
¶ 11. The record presently before us contains no indication that Jones presented his motion to the Mississippi Supreme Court. Likewise, the record contains no order from the supreme court that would have allowed Jones to file his motion in the circuit court. Because Jones's motion was not only time-barred, but procedurally barred as well, we find no error in the *796 circuit court's judgment dismissing Jones's collateral attack on his conviction.
¶ 12. THE JUDGMENT OF THE LEE COUNTY CIRCUIT COURT DISMISSING THE MOTION FOR POST-CONVICTION RELIEF IS AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO LEE COUNTY.
KING, C.J., LEE AND MYERS, P.JJ., IRVING, CHANDLER, GRIFFIS, BARNES, ISHEE AND CARLTON, JJ., CONCUR.
|
268 F.2d 214
GRAIN DEALERS MUTUAL INSURANCE COMPANY et al., Appellants,v.COCA-COLA BOTTLING COMPANY OF SEDALIA, MISSOURI, INC., a Corporation.
No. 16257.
United States Court of Appeals Eighth Circuit.
June 17, 1959.
Appeal from the United States District Court for the Western District of Missouri.
H. J. Toner, Kansas City, Mo., for appellants.
W. H. Martin, Boonville, Mo., and John T. Martin, Sedalia, Mo., for appellee.
PER CURIAM.
1
Appeal from District Court docketed and dismissed for want of prosecution at costs of appellants, on motion of appellee.
|
996 F.2d 1212
NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.Restoney ROBINSON, Plaintiff-Appellant,v.Peggy JONES, Defendant-Appellee.
No. 93-6234.
United States Court of Appeals,Fourth Circuit.
Submitted: June 7, 1993.Decided: June 23, 1993.
Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh. James C. Fox, Chief District Judge. (CA-91-532-CRT-F)
Restoney Robinson, Appellant Pro Se.
Jacob Leonard Safron, Special Deputy Attorney General, Raleigh, North Carolina, for Appellee.
E.D.N.C.
AFFIRMED.
Before HALL, WILKINSON, and WILLIAMS, Circuit Judges.
OPINION
PER CURIAM:
1
Restoney Robinson appeals from the district court's order denying relief under 42 U.S.C. § 1983 (1988) and denying his motion for reconsideration. Our review of the record and the district court's opinion discloses no abuse of discretion and that this appeal is without merit. Accordingly, we affirm on the reasoning of the district court. Robinson v. Jones, No. CA-91-532-CRT-F (E.D.N.C. Sept. 23, 1992; Dec. 3, 1992). 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
|
103 B.R. 819 (1989)
In re Raymond and Linouise MITCHELL, Debtors.
Bankruptcy No. 88-12209.
United States Bankruptcy Court, W.D. Texas, Austin Division.
June 30, 1989.
L. Parker McNeil, Clark, Thomas, Winters & Newton, Joseph D. Martinec, Martinec, Hargadon & Wise, P.C., Austin, Tex., for debtors.
Mark Browning, Sheinfeld, Maley & Kay, Austin, Tex., for First City Nat. Bank of Austin.
Russell P. Hale, Austin, Tex., for creditors' committee.
DECISION AND ORDER ON OBJECTIONS TO CLAIM OF EXEMPT PROPERTY
LEIF M. CLARK, Bankruptcy Judge.
A hearing was held before this court on January 11, 1989 regarding the objections of First City National Bank of Austin to the claimed exemptions of the debtors in this case. The objections focused on the debtors' claim to certain jewelry, including in particular a 6.18 carat diamond ring worn rather regularly by Mrs. Mitchell. In addition to considering whether the jewelry items claimed are exempt under Texas law, see Fernandez v. Seidler (In re Fernandez), 855 F.2d 218 (5th Cir.1988), this court must also grapple with the valuation standard appropriate to the task of determining whether the debtor has claimed in excess of $30,000 in personalty as exempt (Texas sets that figure as the "cap" on the total of personalty which can be claimed as exempt).
The bulk of the controversy centers on the valuation issue, the eligibility issue being largely controlled by this court's decision in In re Leva, 96 B.R. 723 (Bankr.W.D. Tex.1989). First City says that this court should simply apply a fair market standard of valuation, consistent with the language used in both section 522 of the Bankruptcy Code ("Code") and section 42.001 of the Texas Property Code. See 11 U.S.C. § 522(a)(2) (1982 & Supp. IV 1986);[1] Tex. Prop.Code Ann., § 42.001(a) (Vernon Supp. 1989).[2] The debtor argues for applying a distress or liquidation valuation, in keeping with the fresh start policy of the Code and in recognition of the asserted realities of bankruptcy that, if the property is not retained by the debtor, it will realize for the estate only what the chapter 7 trustee can get for it anyway, which is generally a *820 liquidation price. See In re Walsh, 5 B.R. 239 (Bankr.D.D.C.1980).
BACKGROUND FACTS
The evidence focused largely on the valuation issue, though some evidence regarding use and intent to use was also submitted. All of the jewelry pieces, including the 6.18 carat diamond ring, are worn regularly by the debtors (indeed, some of the pieces show a substantial amount of wear, detracting from their value). The debtors acquired all of the pieces for the purpose of wearing them, and many of the pieces included such comparatively utilitarian items as watches and earrings.
The evidence suggested mixed motives for acquiring the 6.18 carat diamond ring. On the one hand, the ring was purchased on the occasion of the Mitchells' twenty-fifth wedding anniversary. Mr. Mitchell had not been able to buy his wife much of an engagement ring when they were wed, so this was actually her first real wedding diamond. He paid in excess of $30,000 for the ring in 1978, evidently believing the ring to be a good investment at the time.[3]
Some years later, Mr. Mitchell read in a magazine that diamonds were no longer such a good investment, whereupon he began considering selling the ring before it lost much more in value. Following that article's suggestions, he used 15% of cost as the current value in his 1987 financial statements, and further devalued it when he prepared his bankruptcy schedules. He said he never tried to insure the diamond ring, largely because the insurance cost too much and the ring in any event was in many ways not replaceable.
These facts suggest dual motivation on the part of the debtor in the acquisition and retention of the diamond ring. The court does not believe that Mrs. Mitchell is nearly so willing to sell the ring as the debtors' expert is to buy it, representing as it does a memento of her twenty-fifth wedding anniversary. Although Mrs. Mitchell was not present in court, the bank's officer acknowledged that both Mr. and Mrs. Mitchell had, long before bankruptcy, attested that she always wears the ring. That it is not insured strongly suggests that insurance would do little to replace the sentimental value Mrs. Mitchell attaches to the ring. No doubt Mr. Mitchell used the ring to support his financial statement in previous years, but this court does not believe that represents a primarily investment-type intent. The court finds the testimony regarding use and intent to be credible and believes that, notwithstanding a clear investment purpose, expressed in both the size of the diamond and the testimony of Mr. Mitchell, other factors, such as continuous wear and sentimental attachment, carry considerable weight sufficient to qualify the ring as "clothing reasonably necessary for the family." Tex.Prop.Code Ann., § 42.002(3)(C); Fernandez v. Seidler (In re Fernandez), 855 F.2d 218, 221 (5th Cir.1988); In re Leva, 96 B.R. 723 (Bankr. W.D.Tex.1989); In re Reed, 89 B.R. 603 (Bankr.N.D.Tex.1988).
The valuation testimony differed dramatically. First City's expert assigned an "estate value"[4] to the 6.18 carat diamond ring, of approximately $6800.00 per carat, or $42,024.00. He gave the ring a fair market value of $36,000.00. The debtors' expert (the same man who wanted to buy the ring and who had also originally sold it to Mr. Mitchell) said that, in situations such as this, where the debtor had to sell, he would offer no more than $7,800.00 for the ring, as that would take into account the risk he would be taking in trying to re-market the ring to someone else. The latter value represented little or no "holding period" while the former assumed a reasonable exposure to the market of a period of months. The court finds both witnesses' testimony credible insofar as they are consistent with an assumed valuation standard, leaving the *821 court to decide which valuation standard should be adopted.
The debtors will be hard-pressed to keep the 6.18 carat diamond ring should this court find that the fair market valuation standard controls. The debtor has already claimed household goods worth $12,000.00 (by stipulation, which this court accepts), other jewelry of $4,500.00, other clothing of $1,000.00, and the cash surrender value of a life insurance policy ($30,857.00). If the diamond ring is indeed worth $36,000.00, the debtors will be forced to choose between the ring and their household furnishings.[5]
The argument advanced in favor of the fair market valuation standard ("FMV") is that both the state and federal exemption statutes expressly stipulate to that standard. See notes 1 and 2, supra; see also, Windfelder v. Rosen (In re Windfelder), 82 B.R. 367, 372 (Bankr.E.D.Pa.1988) (citing numerous cases); Swink v. Henderson (In re Henderson), 33 B.R. 149, 150 (Bankr.D.N.M.1983) (citing numerous cases). While section 506(a) in general directs a court to value property in light of the intended purpose of the valuation process and the intended use of the property, section 522(a) expressly directs that, for purposes of the exemption statutes, value means fair market value. 11 U.S.C. §§ 506(a), 522(a)(2) (1982 & Supp. IV 1986); In re Henderson, supra. When Texas courts use the term, in a variety of different contexts, they generally mean it in its generally accepted sense (willing buyer, willing seller, reasonable exposure to market). Wendlandt v. Wendlandt, 596 S.W.2d 323, 325 (Tex.Civ.App. Houston [1st Dist.] 1980, no writ) (divorce action); Senters v. State, 291 S.W.2d 739, 740 (Tex. Crim.App.1956) (criminal case); West Texas Hotel Co. v. City of El Paso, 83 S.W.2d 772 (Tex.Civ.App. El Paso 1935, writ dism'd) (tax suit); see Transwestern Pipeline Co. v. O'Brien, 418 F.2d 15, 17 (5th Cir.1969) (condemnation action).
The debtor appeals to logic, public policy, and practicality. The most elegant expression of the argument is found in In re Walsh, noted above. There, then Bankruptcy Judge Roger Whelan, after acknowledging the express language of the statute, fled to the panoply of canons of statutory construction for relief from the plain meaning of the statute. Here is what Judge Whelan argued:
Thus, in construing the meaning of the definition of value in Section 522, the Court must look to the usual and accepted meaning of "fair market value," while taking into consideration the liquidation context and the goals of the Code as a whole. . . . In ascertaining fair market value, "there should be taken into account all considerations that fairly might be brought forward and reasonably be given substantial weight in bargaining." [citations omitted]. . . . The definition is "not invariable," but "varies with the circumstances surrounding a given object and situation to which it is sought to apply the term." [citation omitted]. . . .
. . . . .
Inasmuch as the purpose of valuation under the exemption provisions is ultimately to determine whether such property is subject to liquidation by the trustee because it is in excess of specified monetary amounts, the Court believes that the term "fair market value," as it is used to define "value" in Section 522, must be interpreted in the liquidation context in a Chapter 7 case.
In re Walsh, 5 B.R. 239, 241 (Bankr.D.D.C. 1980) (emphasis added).
Judge Whelan then added, as illustration, that using fair market value in the traditional sense only hurts the debtor without augmenting the return to creditors. In his example, a debtor claiming the federal exemption *822 asserted an auto to be worth $1,200.00, though its "FMV" might be $2,000.00. The court orders a trustee's sale, because of the equity present, but the trustee is only able to fetch a liquidation price $1,200.00. The creditors have realized nothing. Meanwhile, the debtor is out the car. The debtor gets the money back (see section 522(d)(2)), but is unable to buy another car, because cars are not selling retail for less than $2,000.00. Walsh, 5 B.R. at 242, n. 3.
It is technically incorrect to say that Walsh favors the use of a liquidation valuation per se. The case instead encourages a focus on the applicable market when one speaks of "fair market value." Urging that the applicable market is the one available to a bankruptcy trustee, the values generated in that market will reflect the sale circumstance by being somewhat depressed.
There are a number of difficulties with this position, however. The argument is essentially circular and turns the generally accepted definition of fair market value on its ear. An essential component of fair market valuation is a reasonable holding period, the antithesis of Walsh's "liquidation" market. Nellis v. Rosenbaum (In re Nellis), 12 B.R. 770, 772 (Bankr.D.Conn. 1981).[6] A market is a setting in which buyers and sellers can deal with each other conveniently. Bradley, Macroeconomics, p. 39, (University of Maryland Press 1980). Walsh's liquidation scenario eliminates the convenient market, and by definition fails to reflect what the commodity is in fact worth. By focusing on "market," Walsh ignores the "fair" in fair market value.
There should simply be no such thing as a "bankruptcy market" when it comes to fair market value, especially insofar as the holding period is concerned. The directive to find fair market value compels the fact finder to act as though there were no bankruptcy. In an analogous context, that of condemnation proceedings, the Texas Supreme Court has said:
In determining the landowner's just compensation for what is taken from him, the fact finder is entitled to consider every factor affecting the price which the prudent and willing buyer and seller would exchange for the property. Some realities, however, must be excluded from the computation, which means that the exercise becomes to some extent hypothetical. The willingness and ability of buyer and seller are assumed. The fact of condemnation itself is excluded; fair market value must, by definition, be computed as if there were no proceedings to eliminate that market. By virtue of the hypothetical exercise, the courts could add an increment of project enhancement to the market up to the time of taking by simply decreeing it. To do so would add an artificial increment and place the landowner in a better position than he would have enjoyed had there been no construction or condemnation. The objective of the judicial process under the constitution and statutes is to make the landowner whole and to award him only what he could have obtained for his land in a free market.
City of Fort Worth v. Corbin, 504 S.W.2d 828, 830-32 (Tex.1974) (emphasis added).
Debtors implicitly argue that, for purposes of valuation, the universe of buyers for the jewelry item should be limited to those individuals who are interested only because of the bankruptcy. The Bank would expand that universe. Debtor's expert said that "in situations such as this, where the debtor had to sell, he would offer no more than $7,800.00 for the ring, as that would take into account the risk he would be taking in trying to re-market the ring to someone else." In fact, however, the debtors do not have to sell the ring. Indeed, if they do, perhaps it is not held for an exempt purpose after all. What this expert really means is: "Because I assume you are selling now and because there are *823 only a limited number of buyers now for your diamond, this is how much I will pay for your diamond. If you were to extend your decision to sell beyond this point when more buyers could enter the market for your diamond, I might have to reevaluate my position at that time." The "fair" in fair market value demands that there be a reasonable time in a reasonable universe for buyers and sellers for goods of this type.
There is also another (and what I consider to be a more fundamental) difficulty with the Walsh position, and that is that it is out of step with what I conceive to be the overriding function of the "cap" which Texas places on personal property exemptions. Section 42.002 of the Property Code sets out what Texas finds to be the "approved list" of items which Texans should be allowed to retain, no matter how much they owe creditors. Some of these items assure the survival of the individual or the family in some station above abject poverty.[7] Thus, we will not let creditors take away the debtor's means of transportation in this, the largest state among the lower forty-eight. Nor will we allow the farmer debtor to be deprived of the means with which to restart his herd (a bull and five cows, with calves). The debtor will be permitted to keep food, clothing, furniture, and the means of livelihood (to the extent directly related and essential to the profession or trade). In addition, Texas protects the dignity of its citizens, and seems to uphold a certain ethos in its exemption laws. A Texan should be allowed to keep two firearms, for example. Athletic and sporting equipment is on the list of protected items (musical instruments are not). Among the specific means of travel sanctioned by Texas' exemption law are both passenger cars and light trucks (this would include pickup trucks), if not used for the production of income. If used for income production, a Texan can also keep two horses (with saddle and bridle for each), or a pickup truck, or a camper truck.
In short, Texans cannot simply keep $30,000.00 worth of anything they want. Instead, they must pick items off an approved list of items which, according to the legislature, are the sort of things sufficiently important for a Texas debtor to keep regardless of the claims of creditors. See note 9, supra. Once debtors have "gone shopping" from this approved list and picked out what they want to keep, however, they must "go to the checkout line," as it were, to see how much can actually be "purchased" out of the "budget" allowed by the Texas Legislature in section 42.001(a) of the Property Code. This second step in the process balances out the competing concerns of assuring a debtor a fresh start and assuring creditors a fair recovery on their legitimate claims.[8] Letting the debtor have everything off the approved list without limitation offends the sensibilities of the common man (and woman) whom the legislature represents. The cap prevents abuse and overreaching by unscrupulous debtors who would borrow with impunity, then "thumb their noses" at their creditors.[9] The values which comprise *824 the cap must, therefore, reflect fair market, not liquidation, values of the personal property sought to be claimed exempt. The Texas exemption statutes, like those of most states, are not designed to give the debtor a cache of property to sell so that the debtor can raise some cash. To the contrary, the assumption is that the debtor will not need to raise cash, because he or she will already have what any Texan needs to survive.[10] Liquidation from the debtor's point of view is thus inapposite.[11]
The use of liquidation values for purposes of arriving at the cap would tend to encourage debtors to pick the lowest possible values in order to gather up the maximum from the approved list.[12] After bankruptcy (or after the collection action has been exhausted), the debtor could then sell the items at his or her leisure, realizing their true value while the creditors watch in frustration. This result is at cross purposes with the function of the cap, i.e., to prevent abuse by overreaching debtors.
Using fair market values will not, in the main, deprive most debtors of the necessities of life, nor will it subject most debtors to any particular indignities. "In Crisp v. Security Nat. Life Insurance Co., 369 S.W.2d 326 (Tex.1963), our supreme court recognized that used household goods, clothing, and personal effects have no "market value" in the ordinary meaning of that term." Wendlandt v. Wendlandt, 596 S.W.2d 323, 325 (Tex.Civ.App. Houston [1st Dist.] 1980, no writ). It is only when we come to such items as 6.18 carat diamond rings that we find a market to match. Once we have a market, there is no reason not to ask what the "fair market value" of that item is. Usually, in such situations, we will not be yanking the covers off the debtor's bed or wresting the wedding band off the debtor's finger. Debtors can, if they so choose, elect to do without comforts of hearth and home if a diamond ring means that much to them. All that the statute forces debtors to do is to make the hard choice. The salutary aspects of the exemption statute are not thereby undermined while the anti-abuse aspects are vindicated.
For these reasons, this court joins the majority of courts in holding that "fair market value" has its generally accepted meaning as it is used in section 522(a)(2) of the Bankruptcy Code. The court further holds that the phrase again has its generally accepted meaning as it is used in Texas' personal property exemption statute, section 42.001(a) of the Texas Property Code. The appropriate valuation standard is thus "fair market value," incorporating as it does an exposure of the item to the appropriate market for a reasonable period of time.[13] In this case, the court adopts the *825 fair market valuation suggested by First City's expert and finds the value of the 6.18 carat diamond ring to be $36,000.00.
The debtors are directed to file a new schedule B-4 listing their exemption claims in light of this decision. The valuations announced at trial by stipulation with respect to the furnishings are binding on both the debtors and First City and may not be further contested. The jewelry must be valued at the fair market value as set out in the appraisal prepared by First City's appraiser.[14] This decision shall constitute both the order of the court and findings and conclusions in support thereof.
So ORDERED.
NOTES
[1] "Value" means fair market value as of the date of the filing of the petition or, with respect to property that becomes property of the estate after such date, as of the date such property becomes property of the estate.
11 U.S.C. § 522(a)(2).
[2] Eligible personal property that is owned by a family and that has an aggregate fair market value of not more than $30,000 is exempt . . .
Tex.Prop.Code, § 42.001(a).
[3] The person who sold it to him was present at the bankruptcy hearing, ready to buy it back for just over $7,000.
[4] The estate value is what a jewelry company would have to pay on the diamond market to acquire the stone, as opposed to the retail market, which is what one would ask the customer to pay for the item.
[5] First City points out that, even at the debtors' values, the exemptions claimed exceed the $30,000 cap by $26,157.00. The cash surrender value of the life insurance policy thus also falls victim to First City's objection. The cash surrender value of the insurance policy is not exempt under Tex.Ins.Code Ann. § 21.21 (Vernon Supp.1989), and therefore must be counted under the "cash surrender value of life insurance" category, making its retention subject to the $30,000 cap. In re Brothers, 94 B.R. 82, 3 T.B.C.R. 180 (Bankr.N.D.Tex.1988).
[6] "what can be realized out of the assets within a reasonable time . . . at the regular market value, conceiving the latter as the amount which could be obtained for the property in question within such period. . . ." Nellis, 12 B.R. at 772, quoting 2 Collier on Bankruptcy, para. 101.31[5] (15th ed.1980).
[7] Our exemption laws attempt to strike a balance between the rights of creditors and the survival of debtors. They do not assure the preservation of a debtor's station in life, but rather act as a "safety net" to prevent debtors and their families from being left destitute, wards of the state as a result of creditor collection activity. Leva, 96 B.R. at 728. Exemptions are in fact a limit on a creditor's right to satisfaction of its claim out of the debtor's assets. The limitations are imposed for reasons of public policy. There is no public policy served in preserving the lifestyles of the rich and bankrupt.
[8] The trustee in Fernandez put it prosaically: "The Texas exemption laws are designed to afford the debtor a fresh start, not a head start." In re Fernandez, 855 F.2d at 221.
[9] A similar cap was in place for many years on the urban homestead, though Texas' legendary solicitude for the homestead tended to overwhelm the countervailing concern about debtors taking advantage of their creditors. The cap applied only to the value of the land, without regard to improvements, as of the date of acquisition. Hoffman v. Love, 494 S.W.2d 591 (Tex. Civ.App. Dallas), writ ref'd n.r.e., 499 S.W.2d 295 (Tex.1973). The extraordinary proof problems the timing of this valuation imposed on courts led eventually to an amendment to the Texas Constitution, replacing the value limitation for urban homesteads with a size limitation (one acre).
[10] Some commentators have recommended that exemption legislation allows the debtor to claim property of any kind subject to an overall value limitation. The laws on the books, by prescribing categories of exempt property, encourage acquisitions of the kinds that qualify although not otherwise needed or wanted by the debtor. While acknowledging that such legislation often results in planning for insolvency by debtors who wish to maximize what can be kept out of the reach of their creditors, the Act rejects the view that property of a delinquent debtor should be insulated from levy up to a certain value irrespective of its nature. The Uniform Exemptions Act, like Section 522 of Title 11 of the United States Code, thus does not reflect the view that every debtor is entitled to a minimum grubstake for whatever purpose may please him. Rather the premise of this Act is that in order for a debtor's property to be protected against compulsory application to the payment of his indebtedness, it must be used, or be adaptable for use, in ways and for purposes deemed on balance to be preferable to such application. These ways and purposes have a perceived relation to the provision of shelter, clothing, and other necessities of daily living in this country.
Commentary, Uniform Exemptions Act, 13 U.L.A. 207, 209 (West 1986).
[11] A number of courts have pointed out that the fair market value for many of these items, such as clothing, furniture, appliances, and the like, will frequently be nominal anyway. See Wendlant v. Wendlant, infra.
[12] As a practical matter, that is precisely what most debtors in bankruptcy do now when they file their Schedule B-4.
[13] This court does not need to reach the issue addressed in a number of other recent bankruptcy courts regarding whether fair market value is to be applied to the value of the items or to the value of the debtor's equity in the items. No evidence was here presented whether there are any liens against these assets and, if so, what the amount of those lien claims might be. The court also notes that the Fifth Circuit has left the issue in some considerable confusion as a result of its decisions in Allen v. Hale County State Bank (In re Allen), 725 F.2d 290 (5th Cir.1984) and Bessent v. United States (In re Bessent), 831 F.2d 82 (5th Cir.1987). To coin a phrase, rumors of the death of In re Allen may be premature. See In re Weiss, 92 B.R. 677 (Bankr.N.D.Tex.1988); In re Anthony, 102 B.R. 600, 2 T.B.C.R. 280 (Bankr.S.D.Tex.1988); see also In re Ricks, 40 B.R. 507, 509 (Bankr.D.D.C. 1984).
[14] This was the only testimony submitted on fair market value of the jewelry. The debtors may not further litigate the valuation question at this late date, having already put on their evidence and rested.
|
Order Michigan Supreme Court
Lansing, Michigan
May 30, 2007 Clifford W. Taylor,
Chief Justice
Michael F. Cavanagh
132992 Elizabeth A. Weaver
Marilyn Kelly
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman,
PEOPLE OF THE STATE OF MICHIGAN, Justices
Plaintiff-Appellee,
v SC: 132992
COA: 273930
Wayne CC: 05-007656-01
COLLEEN PATRICIA O’BRIEN,
Defendant-Appellant.
_________________________________________/
On order of the Court, the application for leave to appeal the November 29, 2006
order of the Court of Appeals is considered, and it is DENIED, because we are not
persuaded that the questions presented should be reviewed by this Court.
I, Corbin R. Davis, Clerk of the Michigan Supreme Court, certify that the
foregoing is a true and complete copy of the order entered at the direction of the Court.
May 30, 2007 _________________________________________
d0521 Clerk
|
Case: 15-14838 Date Filed: 02/15/2017 Page: 1 of 9
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 15-14838
Non-Argument Calendar
________________________
D.C. Docket No. 6:07-cr-00201-GAP-KRS-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
ALEJANDRO CANO,
a.k.a. Alejandro Cano-Sanchez,
Defendant-Appellant.
________________________
No. 15-14841
Non-Argument Calendar
________________________
D.C. Docket No. 6:10-cr-00003-MSS-DAB-2
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
Case: 15-14838 Date Filed: 02/15/2017 Page: 2 of 9
versus
EDENILSON A. HERNANDEZ,
a.k.a. Edenilson A. Hernandez-Rendero,
Defendant-Appellant.
________________________
No. 15-14925
Non-Argument Calendar
________________________
D.C. Docket No. 8:07-cr-00074-JDW-MAP-3
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
SEAN T. BAXTER,
Defendant-Appellant.
________________________
No. 15-15382
Non-Argument Calendar
________________________
D.C. Docket No. 2:04-cr-00016-JES-DNF-1
UNITED STATES OF AMERICA,
2
Case: 15-14838 Date Filed: 02/15/2017 Page: 3 of 9
Plaintiff-Appellee,
versus
ERNESTO GARCIA,
a.k.a. Limon,
Defendant-Appellant.
________________________
No. 15-15407
Non-Argument Calendar
________________________
D.C. Docket No. 8:11-cr-00119-RAL-TBM-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
JERSAIN PENALOZA-BENITEZ,
Defendant-Appellant.
________________________
Appeals from the United States District Court
for the Middle District of Florida
________________________
(February 15, 2017)
Before TJOFLAT, WILLIAM PRYOR, and JULIE CARNES, Circuit Judges.
PER CURIAM:
3
Case: 15-14838 Date Filed: 02/15/2017 Page: 4 of 9
In this consolidated appeal, Defendants Alejandro Cano, Edenilson
Hernandez, Sean Baxter, Ernesto Garcia, and Jersain Penaloza-Benitez appeal
separate district court decisions denying and partially denying their motions for a
sentence reduction under 18 U.S.C. § 3582(c)(2). Defendants’ motions relied on
Amendment 782 of the Sentencing Guidelines, which reduced the base offense
level for most drug offenses. Defendants also requested a downward variance
comparable to the one they received at their original sentencings. The district
courts denied and partially denied Defendants’ motions, concluding that a district
court may not reduce a defendant’s sentence below the low end of the amended
guideline range pursuant to U.S.S.G. § 1B1.10(b)(2)(A). After careful review, we
affirm.
I. BACKGROUND
Defendants were separately convicted of various unrelated drug offenses.
The probation officer prepared a presentence investigation report in each case,
utilizing U.S.S.G. § 2D1.1 to calculate each defendant’s base offense level. In four
of the cases, the district courts sentenced the defendants below their applicable
guideline ranges as a result of a downward variance. These variances were not
related to substantial assistance. In one of the cases, the district court departed
4
Case: 15-14838 Date Filed: 02/15/2017 Page: 5 of 9
from a criminal history category of III to II, and then sentenced the defendant
within the amended guideline range. 1
Following issuance of Amendment 782—made retroactive by Amendment
788—each defendant filed a motion requesting a sentence reduction under
§ 3582(c)(2). In particular, each defendant requested a sentence below their
amended guideline range under Amendment 782. Recognizing that binding
precedent precluded the district courts from varying below the minimum of the
amended guideline range, Defendants still requested a variance comparable to the
one imposed at their original sentencings.
In the cases of Cano and Hernandez, the district courts denied their
§ 3582(c)(2) motions, concluding that a sentence reduction was not permitted
under § 1B1.10(b)(2)(A) because their original sentences were either equal to or
below the minimum of their amended guideline ranges. As to Baxter, Garcia, and
Penaloza-Benitez, the district courts partially denied their motions. The district
1
To illustrate, Cano’s guideline range was 140 to 175 months’ imprisonment, but the district
court varied downward to 130 months’ imprisonment. As to Hernandez, the district court
calculated a guideline range of 135 to 168 months’ imprisonment, but imposed a 97-month
sentence based on the 18 U.S.C. § 3553(a) factors. As to Baxter, the district court imposed a
180-month sentence, which reflected a downward variance from the guideline range of 210 to
262 months’ imprisonment. Likewise, Penaloza-Benitez also received a downward variance to
120 months’ imprisonment from a guideline range of 135 to 168 months’ imprisonment. Unlike
the other defendants, the district court sentenced Garcia within the applicable guideline range.
To be clear, the district court departed from a criminal history category of III to a category II
after determining that Garcia’s criminal history was overrepresented, but then imposed a
sentence of 328 months—which was within the amended guideline range of 324 to 405 months’
imprisonment.
5
Case: 15-14838 Date Filed: 02/15/2017 Page: 6 of 9
courts reduced their sentences to the minimum of the amended guideline range, as
this was less than their original term of imprisonment, but did not grant these
defendants’ requests for a sentence below the low end of the amended guideline
ranges.
Following Defendants’ timely appeals of the denials of their § 3582(c)(2)
motions, we granted their motions to consolidate their appeals.
II. DISCUSSION
A. General Principles
We review de novo a district court’s legal conclusions on the scope of its
authority under § 3582(c)(2). United States v. Jones, 548 F.3d 1366, 1368 (11th
Cir. 2008). Under § 3582(c)(2), a district court may modify a term of
imprisonment when the original sentencing range has subsequently been lowered
as a result of an amendment to the Guidelines by the Sentencing Commission. 18
U.S.C. § 3582(c)(2).
To be eligible for a sentence reduction, a defendant must identify an
amendment to the Sentencing Guidelines that is listed in U.S.S.G. § 1B1.10(d).
U.S.S.G. § 1B1.10(a)(1). A district court may not use a guideline amendment to
reduce a defendant’s sentence unless the amendment actually lowers the
defendant’s applicable guideline range. Id. § 1B1.10(a)(2)(B); id. § 1B1.10,
comment. (n.1(A)).
6
Case: 15-14838 Date Filed: 02/15/2017 Page: 7 of 9
B. Analysis
Defendants’ appeal focuses on the district courts’ application of
§ 1B1.10(b)(2), as amended by Amendment 759, to deny their requests for a
sentence below the minimum of the amended guideline range.2
Prior to 2011, § 1B1.10 permitted the district court to reduce a defendant’s
sentence below the amended guideline range under certain circumstances.
U.S.S.G. § 1B1.10(b)(2)(B) (2010). However, the provision provided that if the
defendant had received a sentence below the guidelines as a result of a variance, a
further reduction would not be appropriate. Id. In 2011, the Sentencing
Commission issued Amendment 759, which, among other things, amended
§ 1B1.10 to prohibit courts from resentencing a defendant to a term below the
amended guideline range, except in cases of substantial assistance. U.S.S.G. App.
C, amend. 759; U.S.S.G. § 1B1.10(b)(2)(A)-(B). The Guidelines’ commentary
explains that the court may not impose a sentence below the amended guideline
range even if the defendant received a departure or variance at his original
sentencing. U.S.S.G. § 1B1.10, comment. (n.3).
Defendants argue that § 1B1.10(b)(2), as amended by Amendment 759,
violates the Ex Post Facto Clause, exceeds the Sentencing Commission’s authority
under 28 U.S.C. § 994(u), and violates the separation of powers doctrine. The
2
As noted earlier, Garcia did not receive a variance; he received a downward departure as to his
criminal history category and then received a sentence within the guideline range.
7
Case: 15-14838 Date Filed: 02/15/2017 Page: 8 of 9
problem for Defendants is that these arguments are foreclosed by our decision in
United States v. Colon, 707 F.3d 1255 (11th Cir. 2013). In Colon, we held that the
application of § 1B1.10(b)(2), post-Amendment 759, did not violate the Ex Post
Facto Clause or the separation of powers doctrine, nor did the Sentencing
Commission exceed its authority under § 994(u) by amending § 1B1.10(b)(2). See
Colon, 707 F.3d at 1258–62. Under the prior precedent rule, we are bound by our
decision in Colon “unless and until it is overruled by this court en banc or by the
Supreme Court.” United States v. Vega-Castillo, 540 F.3d 1235, 1236 (11th Cir.
2008) (quoting United States v. Brown, 342 F.3d 1245, 1246 (11th Cir. 2003)).
Defendants further assert that our decision in Colon has been undermined by
the Supreme Court’s subsequent decision in Peugh v. United States, 133 S. Ct.
2072 (2013). In Peugh, the Supreme Court held that a defendant’s rights under the
Ex Post Facto Clause are violated when he is sentenced under a more recent
version of the guidelines that provide for a harsher sentence than the guidelines
applicable at the time he committed the offense. 133 S. Ct. at 2079, 2088.
However, Peugh does not overrule or conflict with our decision in Colon, as Colon
addressed whether the application of a Guidelines’ amendment that limited the
district court’s discretion to reduce a defendant’s sentence under § 3582(c)(2)
violated the Ex Post Facto Clause. See Colon, 707 F.3d at 1258–62. Therefore,
Colon remains binding precedent. See Vega-Castillo, 540 F.3d at 1236.
8
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We are also not persuaded by Defendants’ argument that the post-
Amendment version of § 1B1.10(b)(2) conflicts with Congress’s statutory directive
to avoid unwarranted sentencing disparities. In fact, the Sentencing Commission
explained that Amendment 759, which eliminated the distinction between
departures and variances for purposes of the exception to § 1B1.10(b)(2), furthered
the “need to avoid unwarranted sentencing disparities and avoids [the need for]
litigation in individual cases.” U.S.S.G. App. C, amend. 759 (Reasons for
Amendment).
In short, the district court properly applied § 1B1.10(b)(2) in concluding that
Defendants were not entitled to a sentence reduction below the minimum of their
amended guideline ranges. Accordingly, the district courts’ denials and partial
denials of Defendants’ § 3582(c)(2) motions are AFFIRMED.
9
|
45 Ill. App.3d 771 (1977)
360 N.E.2d 122
THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee,
v.
THOMAS F. CURTIS, JR., et al., Defendants-Appellants.
No. 13449.
Illinois Appellate Court Fourth District.
Opinion filed February 10, 1977.
Rehearing denied March 11, 1977.
*772 Richard J. Wilson, Richard J. Geddes, and Richard E. Cunningham, all of State Appellate Defender's Office, of Springfield, for appellant.
C. Joseph Cavanagh, State's Attorney, of Springfield (Thomas F. Sonneborn, Assistant State's Attorney, and Dennis S. O'Brien, law student, of counsel), for the People.
Affirmed in part and reversed in part.
Mr. PRESIDING JUSTICE CRAVEN delivered the opinion of the court:
Defendants Thomas Curtis, Jr., Larry Whitmore and Ralph Romaker were found guilty by a Sangamon County jury of burglarizing John Kopatz's service station in Springfield on December 5, 1974. Each defendant was sentenced to 1 to 7 years in the penitentiary.
At trial, Officer Alan Daley testified that he first saw defendant Romaker and John Oliver standing on the sidewalk in front of the Kopatz Service Station at 12:30 a.m. on December 5, 1974. Daley was suspicious and requested to be assisted by a plain car. Within five minutes, Officers Tolly and Barnett drove past the station in a plain car and they noticed that a window had been broken out. These same officers then observed four men in a parking lot one-half block from the station working on a car with its hood raised. Two of these men matched the descriptions that had been radioed by Daley. Tolly and Barnett parked their car a quarter of a block away and observed the four men through binoculars. They saw two men working under the hood while the two others opened the trunk and removed two cases of soda and a wastebasket. One of the two men near the trunk was identified by Officer Barnett as John Oliver. Barnett testified that Oliver took the soda cases and wastebasket away from the car out of his sight, then returned without them. Officer Tolly testified that the man whom he observed carrying the soda cases and wastebasket was not one of the defendants but was unable, as was Barnett, to identify any *773 of the defendants as the man who assisted Oliver in unloading these items from the trunk.
After Tolly and Barnett observed the four men leaving the parking lot on foot, they checked the parking lot and discovered two cases of soda, a wastebasket, a battery charger and some handtools hidden in the bushes adjacent to the lot. Tolly and Barnett then went to Kopatz's Service Station and discovered that the front door had been forced open. They then returned to the parking lot just as another car pulled up and its passengers, the three defendants, John Oliver and Curtis' father, got out and proceeded to jump start the first car. The defendants and Oliver drove off in the first car but were stopped and arrested within minutes by other officers. The car was driven by Whitmore and belonged to his girlfriend.
Kopatz testified that he received a call from the police in the early morning of December 5, 1974. He went to his station and observed that there had been a burglary. At the police station, he identified the two cases of soda, the battery charger, the tools and wastebasket as items belonging to him which had been inside his station when he locked up approximately 6:30 p.m. the evening of December 4.
On appeal, defendants claim that they were not convicted beyond a reasonable doubt. Specifically, they argue that the evidence adduced at trial failed to support the State's theory that the defendants were guilty because they were in exclusive, recent and unexplainable possession of recently stolen property.
While the State argues that all three defendants are guilty based on the inference arising from recent possession of stolen property, we detect two shortcomings in that line of reasoning. First, the proof is insufficient to raise any inference of guilt just because the police found wrenches in the back seat of Whitmore's car. At trial, Kopatz did not identify any of the wrenches allegedly stolen. His only identification was made at the police station the morning of the burglary. Kopatz testified that he was shown some wrenches by the police and that he identified them as his own. But there was no proof whether the wrenches he identified were ones recovered from the bushes or those found in Whitmore's car. Without clear proof on this point, the jury had no right to infer that the wrenches found in Whitmore's car were stolen.
1 Second, when the defendants were arrested, they were not in possession of the soda cases, battery charger, wastebasket or tools identified by Kopatz as those stolen from his station. The only evidence of possession springs from the testimony of Tolly and Barnett that they saw Oliver and another unidentified person removing these items from the trunk of Whitmore's car. The officers both testified that two of the four persons they were observing were working under the hood while Oliver and some other person removed the stolen items from the trunk. While it *774 is true that recent, unexplained and exclusive possession of stolen property may permit an inference of guilt in burglary cases (People v. Garrett (1969), 115 Ill. App.2d 333, 253 N.E.2d 39; People v. Ray (1967), 80 Ill. App.2d 310, 225 N.E.2d 467), we do not feel that the facts here warrant such an inference because the factor of "exclusive" possession has not been met. There was no proof that the two suspects working under the hood were in possession of, or for that matter even aware of, the stolen goods in the trunk of Whitmore's car. All three defendants testified consistently that they had not been together as a foursome until after Whitmore's car stalled in the parking lot. Romaker and Curtis claimed to have been with Oliver all evening except for times when they split up as they were walking in the vicinity searching for Romaker's wife's stolen car. Whitmore testified that he was alone, out to buy some beer, when his car lights dimmed and he was forced to pull into the parking lot where his car then stalled. Thus, we have no proof that Curtis or Romaker were with Whitmore prior to when they were seen with him attending his car in the parking lot near the Kopatz station.
All of the defendants denied any knowledge of any burglary and they argue that there was a failure of proof beyond a reasonable doubt that any of them are guilty within the terms of the statute defining accountability (Ill. Rev. Stat. 1973, ch. 38, par. 5-2(c)(2)). To establish accountability there must be proof (1) that defendant solicited, aided, abetted, agreed or attempted to aid another person in the planning or commission of the offense; (2) that this participation on his part must have taken place either before or during the commission of the offense; and (3) that it must have been with the concurrent specific intent to promote or facilitate the commission of the offense. (People v. Tomer (1973), 15 Ill. App.3d 309, 311, 304 N.E.2d 129, 130.) Obviously, in the present case the State's proof is all circumstantial a burglary was committed, the defendants were in the vicinity and were seen with John Oliver who was positively identified as removing stolen goods from the car Whitmore had been driving. Nobody knows who entered the service station, but in order to convict, the jury had to find that either all of the defendants broke into the building with the intent to commit a theft or that one or two defendants or John Oliver did so while the others participated during the commission of the offense with the required criminal intent.
2 It is well established that to justify a conviction, circumstantial evidence must produce a reasonable and moral certainty that the accused committed the crime. (People v. Magnafichi (1956), 9 Ill.2d 169, 137 N.E.2d 256.) The evidence against Curtis and Romaker does not meet this standard of proof. As to them, there was not sufficient proof that they had "exclusive possession" of any stolen property as required in order for the jury to possibly infer guilt of burglary. The State proved no more than *775 that Curtis and Romaker were in the company of Whitmore, in whose car the stolen goods were stored, and Oliver, who was positively identified as taking stolen goods out of the trunk of the car. The mere presence of Curtis and Romaker is insufficient to establish accountability even if they had knowledge that the crime had been committed. People v. Dalton (1934), 355 Ill. 312, 189 N.E. 265; People v. Banks (1975), 28 Ill. App.3d 784, 329 N.E.2d 504; People v. Thompson (1975), 35 Ill. App.3d 105, 340 N.E.2d 631.
3 With respect to defendant Whitmore, the evidence was stronger. Oliver was seen along with an unidentified suspect, removing the stolen property from the trunk of the car Whitmore had been driving. Whitmore testified that, although the car belonged to his girlfriend, he had been using it. On these facts we find that it was reasonable to infer that Whitmore had recent, exclusive possession of the property stolen from Kopatz's station. In addition, Whitmore's testimony did not explain away the fact that the stolen property was taken from the trunk of the car he had been using. The burglary had to have occurred between 6:30 p.m. and 12:30 a.m. and Whitmore gave no reasonable explanation, consistent with his contention of innocence, of how the stolen goods got into the trunk during that time without his knowledge and concurrence. We believe that since Whitmore admitted exercising control over the car, stolen goods contained in that car could be said to have been in his possession. No reasonable explanation having been given by Whitmore, the jury could properly find Whitmore guilty of burglary.
For the above stated reasons, the convictions of defendants Ralph Romaker and Thomas Curtis, Jr., are reversed, and the conviction of Larry Whitmore is affirmed.
Affirmed in part; reversed in part.
GREEN and MILLS, JJ., concur.
|
330 A.2d 62 (1975)
Adella PIMENTAL et al.
v.
Norman D'ALLAIRE et al.
No. 73-169-Appeal.
Supreme Court of Rhode Island.
January 9, 1975.
*63 Lovett & Linder, Ltd., Stephen G. Linder, Providence, for plaintiffs.
Keenan, Rice, Dolan, Reardon & Kiernan, Leonard A. Kiernan, Jr., James A. Currier, Providence, for defendants.
OPINION
PAOLINO, Justice.
The plaintiffs brought this action for alleged negligence to recover for property damages and personal injuries resulting from an accident involving a motor vehicle operated by the plaintiff Adella Pimental, and one owned by the defendant Dorothy D'Allaire and operated by the defendant Norman D'Allaire. The case was heard before a justice of the Superior Court sitting with a jury which returned a verdict in the sum of $3,080 for the plaintiff Adella Pimental and $746.48 for her husband for consequential damages. Subsequently, the plaintiffs moved for an additur or in the alternative a new trial on the issue of damages. The motion was denied and the plaintiffs appealed to this court.[1]
Only a brief discussion of the facts is necessary. Mrs. Pimental was traveling behind a pickup truck and an automobile. The automobile stopped to pick up hitch-hikers, necessitating both the driver of the pickup truck and Mrs. Pimental to stop. Mrs. Pimental was stopped in the middle of a street when the automobile driven by defendant Mr. D'Allaire struck her automobile from the rear.
The Motion for a Directed Verdict
The first issue raised by this appeal pertains to the correctness of the trial justice's denial of plaintiff's motion for a directed verdict on the issue of liability at the close of all the evidence. The plaintiff maintains that there was neither a scintilla *64 of evidence as to plaintiff's contributory negligence, nor any question as to defendant's negligence. The plaintiff further argues that the trial justice's failure to direct a verdict resulted in some compromise of liability as implied by the amount of the award. We are convinced that this argument is without merit.
The plaintiff correctly cites our rule governing the denial of a directed verdict. See Hamrick v. Yellow Cab Co., 111 R.I. 515, 304 A.2d 666 (1973), where we said that the trial justice must view all the evidence in a light most favorable to the adverse party and is obliged to give such party the benefit of all reasonable and legitimate inferences which may be properly drawn therefrom without sifting or weighing the evidence or exercising the justice's independent judgment as to the credibility of witnesses; and, if after taking such a view, he finds that there exists issues upon which reasonable persons might draw conflicting conclusions, he should deny the motion and the issues should be left to the jury to determine. When the Supreme Court reviews the trial justice's decision on a motion for a directed verdict, the court looks at the evidence in the same manner and fashion as the trial justice and is bound by the same rules which govern him. Hill v. A.L.A. Constr. Co., 99 R.I. 228, 206 A.2d 642 (1965).
In reviewing the record by this standard, we find that there were fact questions pertaining to liability, especially with respect to the question of whether defendant's negligence was the proximate cause of plaintiff's condition or whether her condition was the result of prior injuries. In the circumstances the trial justice correctly allowed the case to go to the jury. This is true notwithstanding the trial justice's statement, when passing on plaintiff's motion for an additur or a new trial on the question of damages only, that "* * * in this case there wasn't much doubt about liability. It was a rear end collision. Clearly the defendant was responsible and at fault." The duty of the trial justice and his view of the merits in passing on the motion of an additur or a limited new trial are different from his duty and view of the merits in passing on a motion for a directed verdict.
As seen below, on a motion for an additur or a new trial the trial justice passes upon the weight of the evidence and makes his own determinations of credibility. The trial justice is precluded from doing so, however, under the directed verdict standard of Hamrick v. Yellow Cab Co., supra.
The Motion for an Additur or a New Trial on Damages Only
The plaintiff's second argument is that the $3,080 verdict awarded by the jury was solely compensatory and that the jury completely ignored the elements of pain and suffering and bodily injuries. The record does not support this contention. There is no clear indication that the jury ignored any consideration of these elements. The trial justice noted in his decision denying plaintiff's motion that the jury was justified in concluding on the facts that plaintiff's claims of pain and suffering were exaggerated and that the sum awarded was sufficient compensation for pain and suffering and loss of income. It is also worthy to note that there was sufficient evidence to cast doubt upon the accident as the legal cause of her total absence from work. Since there exists a reasonable basis for the award, we think that plaintiff's argument does not fall within the ambit of the "grossly inadequate" standard delimited in Fitzgerald v. Rendene, 98 R.I. 239, 201 A.2d 137 (1964).
The plaintiff further argues that the trial justice erred in ruling upon her motion for an additur or in the alternative for a new trial on the issue of damages. The rule for either alternative is substantially the same. In Dawson v. Rhode Island *65 Auditorium, Inc., 104 R.I. 116, 122-23, 242 A.2d 407, 412 (1968), we set out the rule governing the duty of the trial justice in granting a new trial as follows:
"He must utilize his superior judgment by independently reviewing all of the material evidence, passing upon the weight thereof, and determining the amount of credibility which he believes should be attached to the witnesses who appear before him. In carrying out this important function, the trial justice is permitted to reject some evidence or testimony, either because it was impeached, or contradicted, or because other circumstances render it inherently improbable; he may also draw inferences which are reasonable in view of the testimony and evidence which are in the record. Barbato v. Epstein, 97 R.I. 191, 196 A.2d 836. Upon scrutinizing all the evidence in the fashion and manner outlined in Barbato, the trial justice must then relate in his ultimate decision those portions of the evidence which he rejects, those principal witnesses who in his opinion are worthy of belief or disbelief, those inferences and conclusions he has drawn and the reasons which influence his determination. (citation omitted)
"After conforming with the above requirements, the trial justice must elect one of two paths to follow; first, in those instances in which his judgment tells him that the evidence is so evently balanced that reasonable men could arrive at different results in the consideration of the case, he is obliged to deny the motion and to affirm the verdict. (citation omitted) On the other hand, in those instances when the trial justice is satisfied that the verdict is contrary to the fair preponderance of the evidence and thereby fails either to respond to the merits of the controversy or to bring substantial justice to the parties, the motion must be sustained and the verdict set aside."
In the instant case the trial justice in considering plaintiff's motion has performed his duty in accordance with the guidelines set forth in Dawson and Barbato, both supra. In reviewing the evidence, he noted that one of the key factors was that the accident involved a very slight rear-end collision. He noted that the plaintiff had received a slight cervical strain. The trial justice thought that plaintiff had not sustained the burden of proving how long she would have been incapacitated from the accident irrespective of other possible causes present at the time. He referred to the evidence that she was asymptomatic for a period of time. He noted also that there were significant time lapses in seeing original medical attention and intermediary medical services thereafter. Finally, the trial justice referred to the doctor's direct testimony that the spasm in her neck was gone after the third visit and that the low back spasm did not appear until more than 2 months after the accident. He stated that reasonable minds could conclude that the low back spasm had nothing to do with the accident. He implied his own basic agreement with the jury award when he remarked that he might have returned a verdict a "bit higher." We read this remark as indicating that he did not find a demonstrable disparity to bring the verdict within DiBattista v. Lincoln, 109 R.I. 412, 286 A.2d 591 (1972), and we find no error in his assessment.
We believe that in his recitation of the evidence, and his stated reasons, the trial justice has implied the basis for his rejection of any contrary evidence which conflicted with his findings. We find that the trial justice has properly performed his duty.
On appeal from an adverse ruling on a motion for a new trial in cases where the trial justice properly performs his function, the plaintiff must persuade this *66 court that the trial justice in deciding the motion was clearly wrong or overlooked or misconceived material evidence on a controlling issue in the case. Labbe v. Hill Bros., 97 R.I. 269, 197 A.2d 305 (1964). The prime contentions of plaintiff are that the trial justice's decision ignored evidence relating to the low back injuries, the necessity for narcotic pain medication to relieve pain and use of vitamin B-12 for nerve irritation along with muscle relaxants. The plaintiff also argues that the trial justice ignored the testimony that her symptoms were so severe that one doctor thought she had a lumbar disc herniation. Finally, plaintiff argues that the trial justice misconceived the length of time that she suffered from various injuries.
The answer to all these contentions is that the trial justice did not base his decision on misconception, but rather on credibility and on the weight of the evidence. The precise issues were the severity of the pain and the length of time it took for Mrs. Pimental to recover from the lumbar injuries received as a result of the accident. From the factual recitations above it is clear that the trial justice was of the opinion that severity, recovery, and causation could be reasonably established from testimony other than that given by the doctor. In DiMaio v. Del Sesto, 102 R.I. 116, 228 A.2d 861 (1967), we said that the failure of a trial justice to refer to evidence contradictory to that upon which he relied, does not constitute misconceiving or overlooking material evidence providing that the trial justice referred to those parts of the evidence on which he did rely and indicated contrary evidence which he rejected. An attentive reading of his written decision satisfies this court that he fairly indicated the evidence on which he relied in his findings on severity, recovery and causation.
The plaintiff's appeal is denied and dismissed.
NOTES
[1] Although the claim of appeal indicates that both plaintiffs filed an appeal, this proceeding involves only the appeal of Adella Pimental, and therefore reference will be made solely to her as the plaintiff.
|
79 F.3d 1143
U.S.v.Patton*
NO. 95-40357
United States Court of Appeals,Fifth Circuit.
Feb 05, 1996
Appeal From: E.D.Tex., No. 6:94-CR-36-1
1
AFFIRMED.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
|
770 So.2d 786 (2000)
LAMSON PETROLEUM COMPANY
v.
HALLWOOD PETROLEUM, INC., et al.
No. 99-1444.
Court of Appeal of Louisiana, Third Circuit.
May 24, 2000.
Rehearing Denied August 2, 2000.
Writ Denied November 27, 2000.
*787 Mark H. Tompkins, Lafayette, LA, Ewell E. Eagan, New Orleans, LA, Counsel For Appellants Union Oil Company of California, Petrocorp, Inc., and Triton Oil and Gas Corp. and Triton Oil and Gas Corp.
Robin D. McGuire and Arthur D. Mouton, Lafayette, LA, Carl D. Rosenblum, Covert J. Geary, New Orleans, LA, Counsel For Appellee Lamson Petroleum Corp.
(Court composed of NED E. DOUCET, Jr., Chief Judge, SYLVIA R. COOKS, and OSWALD A. DECUIR, Judges).
DOUCET, Chief Judge.
This case concerns ownership of a 2.165 acre strip of roadbed located in the Scott Field area of Lafayette Parish, Louisiana. The Plaintiff, Lamson Petroleum Corporation (Lamson) sued Hallwood Petroleum, Inc. and others who claim ownership of the property or underlying minerals as landowners, mineral lessees, royalty owners or overriding royalty owners, seeking recognition of its oil, gas and mineral leases on the .59 acre tract, recovery of 100% of the production attributable to that property and a report of all sums due to it from the sale of production attributable to the property.
In 1989, Hallwood completed the A.L. Boudreaux No. 1 Well in the Scott Field. The property at issue in this suit is located in the production unit and both Hallwood and Lamson Petroleum Corporation purport to hold mineral leases on the property. The Defendants leased from the successors in title to the tracts divided in the succession of Severin Duhon. Lamson leased from the successors in title to a portion of the property which was allegedly left undivided. The trial judge, in his written reasons for judgment, correctly outlined the chain of title and the essential issues of this case as follows:
The 2.165 acre tract in controversy (Lamson's primary claim) is a strip out of and along the Eastern extremity of Section 6, T 10 S, R 4 E and is a part of the roadbed of the present Louisiana Highway 93, also known as Rue De Belier. The title history as it relates to the primary issue in this case is as follows:
(1) Prior to July 28, 1908, Severin Duhon was the owner of a tract of land described as containing 300 arpents, more or less, in Section 6, the Eastern boundary being the section line separating Sections 6 and 5, T 10 S, R 4 E. That tract included the property at issue in this case.[1]
*788 (2) By act dated July 28, 1908, Severin Duhon "donated and dedicates to the Parish of Lafayette for public use as a Public Road" a strip of land forty feet wide "on the Eastern line of his land along its full length."[2] The 2.165 acre strip at issue in this case is a part of the forty foot right of way.
(3) On February 4, 1918, Severin Duhon executed a noncupative will by public act in which the tract noted above, thought to contain 300 arpents, more or less, was divided into six lots, with the East and West halves of the tract each divided into three lots and each lot described as containing 50 arpents, more or less. Specific lots were devised to each heir. The lots at issue in this case are the three lots comprising the East half which were devised to Clara Duhon Boudreaux, Rose Duhon Hebert and Frank Duhon. For convenience, those heirs will be referred to simply as "Clara," "Rose" and "Frank."
(4) Severin Duhon died on March 11, 1921. His succession proceedings[3] contain two judgments. The first judgment, dated March 22, 1921, placed his heirs is possession of all of the property belonging to the succession, including specifically the 300 arpent tract, in undivided proportions and does not mention the will. The second judgment, dated March 23, 1921, ordered that the last will and testament be registered and executed.[4]
(5) On February 10, 1922, the heirs of Severin Duhon executed an untitled instrument which recites, inter alia:
"they each acquired from their ancestor, Severin Duhon, land situated in the Parish of Lafayette, La., said to contain fifty arpents, more or less."
* * * * * * * *
"they have been sent into possession * * * of the property belonging to the succession * * * the tract of land hereinbefore described being therein included."
* * * * * * * * * * *
"the said tract of land was equally divided into six parts and was transferred to them respectively by the said Severin Duhon as fully shown in said act, and they hereby ratify and confirm the partition and transfer to each of them of the said property made in said act and for the purpose of more definitely carrying the said partition they have caused a survey to be made of said tract of land and a division of same and plat thereof made by V.E. Smith, Civil Engineer, which is hereto attached and paraphed by me, officer, for identification herewith."[5]
The said untitled instrument of February 22, 1922 is referred to hereinafter as "the ratification instrument."
The trial court, after a trial on the merits, handed down judgment in favor of Lamson. Remaining as defendants at the time of trial were: Union Oil Company of California, PetroCorp Incorporated, Triton *789 Oil & Gas Corp., Integrated Drilling & Exploration, Inc., Quarles Drilling Corporation, T.M. Quigley, Graves Trust, Kenneth R. Landsdowne, Elaine Lyons, Joseph J. Passarello, Dick Polder, James T. Tavemakis, McCullough Energy Guaranty Distribution Program, 1992, L.P, Jules Menou Arceneaux, Paul H. Begnaud, John Roy Boudreaux, Ophie Boudreaux, Chase R. Champagne, Jonathan J. Champagne, Rachel Boudreaux Champagne, Chase R. Champagne 1990 Trust, Jonathan J. Champagne 1990 Trust, Rachael Boudreaux Champagne 1990 Trust, J.P. Drummond, Billie Jean Drummond, Gentry Oil & Gas, Inc., Pipe Oil & Gas Corp., Byron Charles Richard, Camille Ruth Richard, Donald Elphie Richard, Elizabeth Anne Richard, Helen Marie Richard, John Martin Richard, Ruth Begnaud Richard, Thomas Leonce Richard, Carol Ann Rivers, Elizabeth Alverson, Ronald J. Guidry, Ernest Clingman, Paul C. Perret, June Perret, Leon E. Perret, Joyce S. Perret, Gayle Rizzo, Peter C. Rizzo, Robert D. Booher, Four T's Ventures, Inc., Future Realty, Inc., James C. Gresham, Jr., Mineral Investment Corporation, Palm Production Company, Ben Woodson, Jr., Lila M. Towle Rubsamen, Roger D. Steward, Christian Kottemann, Jr., Helen Kottemann, Sharon Cheaney, Clarence D. Freberg, 11, Seven-F Production Company, James Robert Bostwick, Lisa F. Jamiolkowski, Katherine K. Freberg, William M. Freberg, James T. Davis, Diane Davis, Benjamin Saunders, Patricia Saunders, Estate of Theresa Cecil Dumaresq, Martin 0. Miller, Diane Miller, Adasair Copland, Lawrence Eustis, Tatjana Eustis, Estate of Fred Goodwin, Jr., Harold Mathy, Janelle Mathy, Karen A. Miller, Savage Exploration, Inc., Joy Scott, Morin Scott, Ellen Supple, Timothy Supple, Clifford John Terro, Warexeco, Inc., Mar, Inc. Bebe Lou Baynham, Michael Mathy, Warren R. St. Pierre, Bright Condos, James H. Dunbar, Jr., EMCO, Inc., Standard Mortgage Corporation, Petroex, Inc., L. Joe Sockwell Estate, Chester L. Boudreaux Estate, J.H. Echezabel, Inc., James H. Echezabel, John Warren Duhon, Geneva Duhon Smith, Gregory John Smith, Wade Smith, Jr., Terrance Chandler and Linda Chandler. Judgment was rendered against all these. Default judgments were rendered against: Adasair Copland, Lawrence Eustis, Tatjana Eustis, Estate of Fred Goodwin, Jr., Harold Mathy, Janelle Mathy, Karen A. Miller, Savage Exploration, Inc., Joy Scott, Morin Scott, Ellen Supple, Timothy Supple, Clifford John Terro, Warexeco, Inc., Mar, Inc., Bebe Lou Baynham, Michael Mathy, Warren R. St. Pierre, John Warren Duhon, Geneva Duhon Smith, Gregory John Smith, Wade Smith, Jr., Terrance Chandler, Linda Chandler, Ronald J. Guidry and James T. Tavemakis.
The judgment recognized the Lamson leases covering the 2.165 acres, ordered that effective January 1, 1990, 100% of the oil, gas and other mineral production attributable to the interest of Lamson and its lessors is due and payable to them, that the Defendants render an accounting of that production and that the Defendants pay legal interest on all amounts due Lamson for past production accruing from the time each amount was received by Lamson, except in so far as the amounts were deposited into an escrow account established by the parties. Suspensive appeals were filed by: Union Oil Company of California, PetroCorp Inc. and Triton Oil & Gas Corp., who will be referred to as the Appellants.
We first note that the Appellant's brief makes no reference to the record herein. Rule 2-12.4 or the Uniform Rules-Courts of Appeal states that:
The argument on a specification or assignment of error in a brief shall include a suitable reference by volume and page to the place in the record which contains the basis for the alleged error. The court may disregard the argument on that error in the event suitable reference to the record is not made.
Appellant's brief refers only to documents in its own Appendix. This is not *790 suitable reference to the record. However, we will consider the Appellant's arguments in spite of this deficit. However, we must first consider Lamson's motion to dismiss the appeal.
MOTION TO DISMISS
Lamson argues that, because the Appellants rights rise out of mineral leases from non-appealing Defendants, the judgment against the Appellants is final and cannot be appealed. We find no merit in this argument. La.Code Civ.P. art. 3664 provides that: "The owner of a mineral right may assert, protect, and defend his right in the same manner as the ownership or possession of other immovable property, and without the concurrence, joinder, or consent of the owner of the land or mineral rights." Therefore, we find that the Appellants have not lost their right of appeal as a result of the failure of the lessor/owners to appeal.
INTERPRETATION OF THE SUCCESSION DOCUMENTS
The Appellants assert four assignments of error questioning the trial court's interpretation of the succession documents:
1. Do the rules regarding the interpretation of deeds apply to testamentary dispositions?
2. Does a reference in an instrument to "bounded by public road" exclude the road unless a clear and precise intention to convey same is contained in such instrument?
3. Should a survey plat attached to an instrument ratifying a will control the interpretation of the limits of the property devised?
4. When does a survey plat control over the clearly expressed intent of the parties to an instrument?
After reviewing the record and the applicable law, we find that the trial court's reasons for judgment thoroughly and correctly answer these questions. Therefore we adopt them as our own, as follows:
The Inconsistency Of The Two Succession Judgments:
The inconsistency between the judgment of possession and the judgment ordering the will executed should be addressed. As indicated earlier, apart from the will, a judgment of possession was necessary to place the heirs in possession of the property not devised in the will.[6] It was perhaps by oversight that the judgment purported to place the heirs in possession, in indivision, of all of the succession property including specifically the 300 arpent tract without mention of the will. Civil Code Article 1302 captioned "Testamentary Partition" provides that "There is no occasion for partition, if the deceased has regulated it between the lawful heirs or strangers * * * and in such case the judge must follow the will of the testator * * *" If the judgment of March 22, 1921 placing the heirs in possession of the 300 arpent tract in indivision were to be considered contrary to Article 1302, such error would not affect the remaining succession property. If the judgment was in error as to the 300 arpent tract, it is the opinion of the court that the judgment rendered the following day, March 23, 1921, which ordered the will executed, constituted a correction of the judgment of possession rendered the previous day. Perhaps the better procedure would have been for the judgment of possession to recognize the will; order it executed; place the heirs, as legatees, in possession of the lots described in the will according to the terms of the will; and place the heirs, as intestate heirs, in possession of the remaining succession property in indivision.
Since, under the provisions of Article 1302, there was "no occasion for partition" because of the prior testamentary *791 partition, the untitled February 22, 1922 instrument was not a partition but rather a ratification of what had already been done by will. In addition to being a ratification, however, it was also an agreement by the legatees as to the location of the boundaries as shown on the attached Smith survey.
WHAT WERE THE EAST BOUNDARIES OF THE LOTS ACQUIRED BY CLARA, ROSE AND FRANK?
The threshold question in this case is whether the will and/or the ratification instrument conveyed the entire 300 arpent tract to the heirs or did any portion remain undivided? More specifically, the question is: Did the lots devised to Clara, Rose and Frank extend to the Eastern extremity of the tract, i.e., the section line? If they did, Lamson's lessors were not the owners of the property at issue and this action for recognition of its leases fails. If the property at issue was not included in the three lots and remained undivided, Lamson's leases, which were obtained on that basis, are entitled to recognition.
The Descriptions:
The Judgment of Possession: The East boundary in the description of the 300 arpent tract in the judgment of possession is "on the East by Armand Richard." It is undisputed that the tract extended East to the section line and included the 2.165 acres at issue in this case. Armand Richard owned the property East of the section line.
The Will: The descriptions of the lots bequeathed to Clara, Rose and Frank in Severin Duhon's last will and testament recite the East boundary of each of those lots as "public road."
The Text of the Ratification Instrument: In the February 22, 1922 instrument discussed earlier, the lots of Clara, Rose and Frank are described as bounded on the East "by lands of Armand Richard."
The Plat of Survey in the Ratification Instrument: The plat of survey of V.E. Smith dated December 26, 1921 which is a part of and paraphed for identification with the ratification instrument depicts the lots acquired by Clara, Rose and Frank as bounded on the East by "Public Road" but not including the road.
The Meaning of "Bounded by the Road"
It is obvious from the above that with reference to the East boundaries of the lots, the survey follows the worded descriptions in the will. However, both the will and the survey conflict with the worded descriptions in the ratification instrument. The issues to be determined, therefore, are (1) whether, in 1922, any part of the public road was West of the section line and if so, (2) whether the lots devised to Clara, Rose and Frank extended as far East as the section line or whether they stopped at the West right of way line of the public road as depicted on the survey.
With reference to whether any part of the road was West of the section line in 1922, the exact location of the section line is crucial because as stated earlier, the forty foot right of way grant was on the Eastern extremity of the Severin Duhon tract and the section line was the East boundary of that tract. The location of that section line was seriously disputed in Docket 96-2277 and the evidence on that issue was made a part of the record in Dockets 93-2341 and 93-2340. In those three cases, this court accepted the opinion of Michael Mayeux, the surveyor who testified on behalf of Lamson, as to the location of the section line. In the present case, there was additional testimony by Mayeux on that issue.[7] Charles Camp, the surveyor whose opinion differed from Mayeux as to the location of the section line and *792 who testified on behalf of the defendants in earlier cases, did not testify in the present case. However, his testimony in the earlier cases was made a part of the record in this case along with all of the other testimony in those cases. Based upon the evidence in the record and for the reasons stated in the earlier cases in this series, the court finds the location of the section line and of the forty foot right of way to be as shown on the surveys offered in evidence by Lamson.
The more difficult issue is whether the lots devised to Clara, Rose and Frank extended Easterly to the Eastern extremity of the Severin Duhon property or whether they stopped at the public road. Each of the earlier cases in this series contained worded descriptions which stated that the boundary at issue was the public road but each case was different in certain particulars. The difference between this case and the other cases is that in this case the will and the survey do not include the road in the three lots at issue but the ratification instrument, of which the survey is a part, does include it.
A boundary call of "public road" does not mean that the tract being described stops at the road right of way in every situation. In Dockets 96-2277 and 93-2340 this court held that the lots described in acts of partition as bounded by the public road meant that the property being described stopped at the road right of way and did not include any part of the road. In Docket 93-2341 this court held that the lots described as bounded by public road did not stop at the road but instead included all or part of the public roads recited to be the boundaries. Obviously, there were factors considered other than the boundary recitations in the written descriptions. The reasons for judgment in each of those cases contain discussions of the basic rules relating to the interpretation of property descriptions under Louisiana law. Much of the following is extracted from those reasons for judgment as well as from the reasons for judgment in Docket 93-2338.
Many factors enter into a discussion of a public road recited to be a boundary in a worded description. It is appropriate to begin by noting the criteria to be considered in a judicial determination of boundary locations. Although the principles set forth in the following language may have had earlier origins, the 1920 Louisiana Supreme Court case of Meyer v. Comegys, is probably the most-often cited: "* * * the legal guides for determining a question of boundary, or the location of a land line, in the order of their importance and value are: (1) Natural monuments; (2) artificial monuments; (3) distances; (4) courses; and (5) quantity. But the controlling consideration is the intention of the party or parties.[8]
Citing the many cases which have relied upon the above language is not necessary. Suffice it to say that language has not been overruled and to this day stands and is often cited by courts and surveyors as evidenced by the testimony in this series of cases. That a road is an artificial monument is not disputed and was specifically recognized in Meyer. It follows then that the recited East boundary of Clara's, Rose's, and Frank's lots in the Severin Duhon will was an artificial monument, i.e., a "public road."
If a tract of land is described as bounded on the East by "public road," does that mean that the boundary is the West right of way line of the road? With nothing else in the description or in the instrument indicating otherwise, the common sense interpretation of that language is, in this court's opinion, that the property stops at the road and does not include the road or any part of it. Such an interpretation has been recognized as the general rule in Louisiana. Interestingly, this rule was perhaps *793 most clearly and forcefully stated in a case in which the court was called upon to interpret a statute which modified that very rule. The statute is R.S. 9:2971 (Act 555 of 1956), and the case is State v. Tucker, [247 La. 188,] 170 So.2d 371 (La.1964). The statute provides in part as follows:
It shall be conclusively presumed that any transfer, conveyance, surface lease, mineral lease, mortgage or any other contract or grant affecting land described as fronting on or bounded by a waterway, canal, highway, road, street, alley, railroad or other right of way, shall be held, deemed and construed to include all of grantor's interest in and under such waterway, canal, highway, road, street, alley, railroad, or other right of way, whatever that interest may be, in the absence of any express provision therein particularly excluding the same therefrom; * * *
In addressing the constitutionality of another part of the act which gave it retroactive application in some situations, the court in Tucker set forth the law which applies to transactions prior to the effective date of the statute:
Important here, we think, is the circumstance that each of the deeds described the land conveyed by specific boundaries, one of which was the rail-road right of way. In Louisiana a sale of land by fixed boundaries is known as a sale Per aversionem. Deeply imbedded in our law is the principle that in such a sale the purchaser acquires only the land included within the designated boundaries. Prior to Act 555 of 1956, this ancient principle applied with equal force when the sale designated a railroad right of way as a boundary. Such a sale included no property underlying the right of way. The rule had a sound basis: It effectuated the intent of the parties, who had definitely fixed the perimeter of the property by contract. (Footnotes omitted, italics added)
The Tucker case held that the statute could have no application to conveyances prior to its effective date, August 1, 1956. Since the present case involves the descriptions in a 1918 will and a 1922 instrument of ratification, R.S. 9:2971 does not apply and the language from Tucker does apply. In addition to the cases cited in Tucker, many others have held that a description designating a road, canal, railroad, or other right of way as a boundary means that the described parcel stops at the right of way and does not include property underlying the right of way.[9]
That intention of the parties governs the interpretation of all contracts is a basic premise of contract law. Article 2045 of the Civil Code, captioned Determination of the intent of the parties sets forth the rule by defining interpretation of a contract. That article provides: "Interpretation of a contract is the determination of the common intent of the parties." Article 2046 provides that when the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent.[10]
*794 ... [I]n the present case defendants argue that in his will, Severin Duhon intended to partition the entire 300 arpent tract. They argue that the six lots which are described in the will total exactly 300 arpents and there would have been no reason to leave a small strip undivided. In the earlier cases in this series, while accepting the argument that the parties very probably did not intend to leave an undivided strip, it was the court's further opinion, however, that the parties very probably did not know that they owned any part of the road. This court held that the boundary description would not be changed by the court in order to reflect what the description might have been had the parties known that they owned part of the road. A similar situation exists in this case. The court agrees that the language of the will does not indicate that Severin Duhon wishes to leave a strip undivided along the East edge of his property. However, whether or not he knew that he owned part of the public road, he did not include it in the bequests to Clara, Rose and Frank and the court will not change the lot descriptions in his will to include property he would perhaps have included had he known that he owned it.
Defendants attempt to distinguish this case from cases in which there were sales per aversionem, arguing that here the court must determine the intention of a testator in a will as distinguished from the intention of the parties to a sale. In other words, argue the defendants, the numerous authorities relating to the interpretation of descriptions in a sale per aversionem have no application to descriptions in a will. They assert that Articles 1712 and 1713 of the Civil Code govern the determination of the intention of the parties in wills and that is different from interpretation of the intention of the parties in sales. While admitting that most of the jurisprudence cited in the interpretation of property descriptions involves sales, the court has found no authorities which suggest that words describing a parcel of land in a will should be interpreted differently from the same words in a sale.
The defendants cite language from Succession of Fertel, [208 La. 614,] 23 So.2d 234 (La.1945) that "When a will is executed, a reasonable and natural presumption is that the testator intends to dispose of his entire estate" presumably to support the argument that Duhon intended to devise the entire 300 arpent tract. While conceding a valid argument that Severin Duhon had no intention to leave an undivided strip East of the tract, the Fertel case does not support that argument. The Duhon will did not even pretend to dispose of all of his estate whereas in Fertel the will clearly disposed of the entire estate. If the presumption suggested by the defendants were applied, what would be the disposition of Duhon's property which is not mentioned in the will? As noted earlier, Civil Code Article 1709 specifically provides that if a will does not dispose of all of the property of the estate, the property "remaining undisposed of" devolves upon the legal heirs. Common sense dictates this even if the Civil Code did not.
To recapitulate: From Tucker comes recognition of the rule that a description with a road as a boundary indicates an intention of the parties that the described property stops at the road. It follows logically from that, however, that if the instrument reciting the road as a boundary contains words evidencing a stronger intention to include all or part of the road in the description, the stronger intention prevails. The problem arises when there are contradictory indications of intention of the parties as in the present case. In those circumstances, the court must determine which factors prevail.
.... In the present case, ..., the survey shows a public road which is clearly not a part of the lots at issue.
*795 Worded Description Versus Survey
There is extensive discussion In the case law of the long-established rule that in the event of a conflict between a worded description and a survey, the survey prevails. The survey in the ratification agreement, as recited earlier, was attached to and paraphed for identification with the instrument. The survey was a part of the act which was signed by the parties.
On the issue of a conflict between a worded description and a survey, the following language of the Supreme Court from Casso v. Ascension Realty Co., 196 So2d[So.] 1 (La.1940) is perhaps the most-cited language on the issue:
That the diagram or map attached to a deed controls the description has been so repeatedly held by this court that this rule has become a law of property in this state, and cannot be lightly disregarded in this case or any other case. The map controls the worded description * * * [T]he worded description may be detailed and accurate but, if there is a direct conflict with the worded description and the map, the map controls the worded description. 196 So2d[So.] 1, 5.
The court in Casso cited cases dating back to 1834 supporting the priority of surveys over worded descriptions.
A review of the jurisprudence indicates that there are two rules relating to surveys attached to deeds, and they are sometimes confused. The first rule is that an attached plat becomes a part of the deed; the second rule is that in the event of a conflict, the survey is over the wording in a description. Eves vs.[v.] Morgan City Fund, 252 So[.]2d 77[770] (La.App. 1st Cir.1971), recognized the separate rules:
Where an ambiguity or error exists with regard to the description in a deed, an attached map or survey relating to the ambiguity or error will control. Casso vs.[v.] Ascension Realty Co., 195 La. 1, 196 So. 1.
Where a map is annexed to a deed and reference made thereto in the description contained in the deed, the map is part of the deed the same as if copied therein. Werk vs.[v.] Leland University, 155 La. 971, 99 So. 716[ (La.1924)].
If an inconsistency exists between the description in a deed and an attached map or plat, the description in the map or plat prevails. Missouri Pacific Railroad Co. vs.[v.] Littleton, [(]La. App.[ 2 Cir.1960)], 125 So.2d 37.
A comprehensive discussion of the jurisprudence relating to those issues is not necessary. Suffice it to say that unless it is very obvious that a survey is wrong,[11] the survey prevails over the wording of the description if there is a conflict.
For the purpose of relating the jurisprudence involving surveys to the present case, it is appropriate to revisit the "legal guides for determining a question of boundary or the location of a land line" from Meyer vs[v.] Comegys, supra, discussed earlier. In their order of importance they are natural monuments, artificial monuments, distances, courses, and quantity, but the controlling consideration is the intention of the parties. How does that rule fit with the rules relating to surveys attached to deeds? Surveys are not specifically listed or ranked by importance in the "legal guides." Apparently they are a part of the catchall "controlling consideration is the intention of the party or parties."
Defendants assert that the surveyor, V.E. Smith, should have used the East boundary call of "lands of Armand Richard" which was in the worded description in the ratification instrument *796 rather than the "public road" call in the will. They argue that the plat which is attached to the ratification instrument is "an erroneous survey plat." In view of the "lands of Armand Richard" call in the worded description and the lack of any apparent reason for retaining a small strip in indivision, that argument is not unreasonable. That argument gives rise to two questions: (1) Did the heirs know they owned the property underlying the road? (2) Did the surveyor know that the heirs owned the property underlying the road? The evidence strongly suggests a negative answer to both questions.
Although perhaps not critical to this court's decision, it is interesting to note the language in the upper right corner of the plat of survey: "Note: the boundaries of this tract of land were pointed out to the surveyor by the parties interested in the partition." Admitting for the purpose of argument that in the ratification instrument, the heirs intended to partition the entire tract, what is the significance of the above language? Examining the events in sequence, the heirs pointed out four corners and instructed the surveyor to divide the tracts into six lots of equal size. However, the tract pointed out did not include all the property they owned because the Northeast and Southeast corners did not reach the East boundary of all of the property they owned. Next, the surveyor followed their instructions and divided the tract which was pointed out to him into six lots of equal size. Assuming the heirs mistakenly believed their ownership ended at the road and assuming it was a mistake for the surveyor to fail to make an independent determination of the true East boundary, what then should the court do about these mistakes?
The defendants contend that the strip which was not included in the survey should be added to the three Eastern lots allotted to Clara, Rose and Frank giving those heirs ownership beyond the lots shown in the survey and beyond the boundaries recited in the will. The only other solution is to decree that the strip of land on the East was not partitioned and that all of the heirs remained owners of the strip in indivision. Did the heirs intend the lots of Clara, Rose and Frank to extend beyond the lots allotted to them in the survey in order to reach the "lands of Armand Richard" even if it would mean that those three heirs would acquire more land than the other heirs? Because it is impossible to determine with any reasonable certainty what the heirs intended or whether they even knew they owned the land under the road, the manner in which the appellate courts have resolved this issue in similar cases becomes increasingly important, particularly the cases which treat the issue of worded descriptions versus survey. The fact that both the will and the survey designate the road as the boundary as against only the worded description in the ratification instrument certainly favors the road as the boundary.
Further Analysis of the Ratification Instrument
Did the ratification instrument do more than ratify the testamentary partition? The answer to that question must be affirmative because by incorporating the Smith survey, the ratification instrument established the precise boundaries of each of the six lots and additionally, it established a twenty foot right of way "as a reserved road for the benefit of each tract* * *" The more pertinent question is: Did the ratification instrument partition more land than Severin Duhon partitioned in his will? While there is unquestionably an inconsistency in the ratification instrument between the worded descriptions of the three lots and the attached survey, there is no inconsistency in the will. There is no language in the will which contradicts the East boundary of the three lots as "Public Road." Severin Duhon certainly had the right to designate the road as *797 the East boundaries of those lots irrespective of the location of the East boundary of the larger tract. However, on February 11, 1922, since the heirs were the owners in indivision of all property not specifically devised in their father's will, they certainly were legally capable of partitioning property which was not partitioned in the will. Ergo, the question becomes whether the parties wished to partition property not partitioned in the will. The following language from the ratification instrument is critical: "Appearers further declared that by said act Number 52506, the said tract of land was equally divided into six parts and was transferred to them respectively by the said Severin Duhon as fully shown in said act, and they hereby ratify and confirm the partition and transfer to each of them of the said property made in said act* *"
That language indicates an intention to ratify the partition and transfer of the identical property devised in the will ___ not to partition additional land.
Ruling As To East Boundaries Of The Lots Devised To Clara, Rose, & Frank
For the reasons discussed above, it is the ruling of the court that the public road as shown on the Smith survey was the East boundary of the lots devised to Clara, Rose and Frank and that Severin Duhon failed to devise the strip of land between those lots and the section line as a result of which the strip succeeded to his heirs intestate and undivided.
LOCATION OF THE EASTERN BOUNDARY
The Appellants assert two assignments of error alleging error on the part of the trial court concerning the method used to locate the eastern boundary line and/or the road described as the boundary in the will and on the plat. The Appellants argue that the testimony of the Plaintiff's expert was flawed and should not have been accepted by the trial court.
The trial court's determination of the location of a boundary is factual and should not be reversed in the absence of manifest error. Barker v. Quality Builders, Inc., 503 So.2d 1170 (La.App. 3 Cir. 1987); Broussard v. Coleman, 479 So.2d 1016 (La.App. 3 Cir.1985), writ denied, 481 So.2d 1354 (La.1986).
Where there is conflict in the testimony, reasonable evaluations of credibility and reasonable inferences should not be disturbed on review. Where the trial court's findings are based upon determinations of the credibility of witnesses, the manifest error rule requires that the trial court be afforded great discretion. Rosell v. ESCO, 549 So.2d 840 (La.1989).
After reviewing the evidence adduced at trial, we find no error in the trial court's findings or in the reasoning behind those findings as stated in its reasons for judgment. While the Appellant's expert felt that the eastern boundary was in a different location, the trial court's determination is supported by the record. Further, we find no manifest error in this determination. Accordingly, we may not overturn it on appeal.
RETROACTIVE LEASE DATE
The Appellants next contend that the trial judge erred in awarding Lamson the proceeds of production which occurred prior to the date of the recordation of its leases. The appellants argue that the public records doctrine entitles them to rely on the absence of recorded leases, and prevents Lamson from recovering from third parties before the leases were recorded. Lamson responds to this argument by pointing out that, as is reflected by the record, it has been appointed agent for its lessors to pursue this litigation on its behalf and is therefore entitled to recover under the provisions of La.Civ.Code art. 488 which provides that:
Products derived from a thing as a result of diminution of its substance belong *798 to the owner of that thing. When they are reclaimed by the owner, a possessor in good faith has the right to reimbursement of his expenses. A possessor in bad faith does not have this right.
The Appellants counter by arguing that insofar as Lamson has acquired the rights of the unleased owners to production prior to the date of recordation of its leases, its claims are limited by La.R.S. 30:10(A)(3) to a claim against the operator of the well. La.R.S. 30:10(A)(3) provides that:
If there is included in any unit created by the commissioner of conservation one or more unleased interests for which the party or parties entitled to market production therefrom have not made arrangements to separately dispose of the share of such production attributable to such tract, and the unit operator proceeds with the sale of unit production, then the unit operator shall pay to such party or parties such tract's pro rata share of the proceeds of the sale of production within one hundred eighty days of such sale.
While La.R.S. 30:10 does provide a remedy for unleased property owners to recover their share of the proceeds of a well from the operator of that well, we find no authority for the proposition that it provides the exclusive remedy for unleased land owners. In Bonnett v. Mize, 556 So.2d 228 (La.App. 2 Cir.1990), writ denied, 559 So.2d 1360 (La.1990), the court considered a case where a good faith possessor of immovable property received money from a mineral lease of that property. The court found that because the conveyance of the property to the good faith possessors was invalid, the owner was entitled to a money judgment against the good faith possessor for mineral lease rental payments and royalties received. While we agree that the Appellants have not been alleged to be the operator of the well, we find no error in the trial judge's decision to grant judgment against the Appellants as good faith possessors of the property at issue and in favor of Lamson, standing in the shoes of the owners.
CONCLUSION
For these reasons, the judgment of the trial court is affirmed. The Appellants are taxed with the cost of this appeal.
AFFIRMED.
NOTES
[1] It is undisputed that Severin Duhon is the common author in title of the lessors of Lamson and of the defendants within the provisions of C.C.P. art. 3643.
[2] Exhibit D-13. The printed form for the act is a form intended for use in a jury of freeholders grant. However, the required recitations for such a grant were intentionally deleted and the requirements of R.S. 48:492-494 (Revised Statutes 3369 and 3370 at that time) were not complied with. This gives rise to the issue of whether the parish acquired title to the strip or a servitude only. That issue is discussed later herein.
[3] Lamson Ex.-711
[4] A first impression might be that the judgment of possession was rendered prior to the discovery of the will. That is not the case, however, because the original petition for possession alleges that the decedent left a last will and testament and describes it. Since the will devised only the 300 arpent tract, perhaps this procedure was considered necessary to place the heirs in possession of the property not devised in the will. That matter is discussed further hereinafter.
[5] Joint Ex.-7
[6] C.C. art. 1709.
[7] Tr. pages 93-118.
[8] Meyer v. Comegys, 147 La. 851, 86 So. 307, 309 (1920).
[9] Where a description or plat indicates that the road abuts or adjoins the road, it means abutting the entire width of the right of way, not just the pavement or traveled surface. City of Alexandria v. Chicago, Rock Island & Pac. Railroad Co., 240 La. 1025, 126 So.2d 351, 352-53 (1961) (defining "abutting a street" to mean abutting the right of way and not the actual pavement); City of Shreveport v. Selber, 21 So.2d 738, 742 (La.App. 2d Cir. 1945).
[10] Articles 2045 and 2046 are a part of Title IV of the Civil Code captioned "Conventional Obligations or Contracts". They apply to sales contracts under terms of Article 2438 which is the first article of Title VII captioned "Sale". That article provides that "In all matters for which no special provision is made in this title, the contract of sale is governed by the rules of the titles on Obligations in General and Conventional Obligations or Contracts.
[11] Such as in Burt v. Carrier, 92 So.2d 86 (La.App. 1st Cir.1957); and James v. Buchert, 144 So.2d 435 (La.App. 4th Cir.1962).
|
113 F.Supp. 198 (1953)
HENDRY CORP. et al.
v.
AIRCRAFT RESCUE VESSELS, C-77436 and C-77439.
No. 1432.
United States District Court E. D. Louisiana, New Orleans Division.
June 15, 1953.
Supplemental Opinion June 27, 1953.
*199 Deutsch, Kerrigan & Stiles, Rene H. Himel, Jr., New Orleans, La., for libelants.
Terriberry, Young, Rault & Carroll, Benjamin W. Yancey, New Orleans, La., for respondents.
WRIGHT, District Judge.
Two 104 feet aircraft rescue vessels in tow in Port Royal Sound broke away from their tug during a storm and fetched up on the beach north of Hilton Head Island. After considerable effort and much delay, they were re-floated. Libelants herein seek a salvage award based on services rendered in re-floating the vessels.
The California Company, owner of the aircraft rescue vessels, entered into an *200 agreement of towage with the Hendry Corporation, one of the libelants herein. Under the contract Hendry Corporation agreed to tow seven aircraft rescue vessels without cargo from Charleston, South Carolina, to Harvey, Louisiana. Hendry Corporation was to furnish two tugs, the General Pershing and the Dragon, one tug to tow four of the vessels and the other three. The contract also contained the following provisions:
"The method of making up the tows will be determined by Hendry subject to the approval of representatives of California at Charleston, South Carolina. California assumes full responsibility for the method in which the tow is to be made up at the commencement of the voyage.
"The towage contemplated will be done at the sole risk of the aircraft rescue boats and neither Hendry nor the towing tugs or any other equipment used in the towage shall be liable for any loss or damage to the aircraft rescue boats unless the damage is caused by the gross negligence of Hendry, its agents or employees * * *."
The Hendry Corporation designated the Tug Dragon to tow the four aircraft rescue vessels from Charleston. Since this case concerns two of these four aircraft rescue vessels, no further reference will be made to the General Pershing and her tow except insofar as the General Pershing participated in the salvage of the stranded vessels.
The Dragon is a tug 54½ feet long, 17½ feet in beam, 5.8 feet in draft with a Diesel engine of 230 horsepower. The General Pershing is a Diesel tug 60 feet long, 16 feet 3 inches in beam, with a draft of 5 feet 5 inches. Her indicated horsepower is 225. The aircraft rescue vessels are of double plank mahogany 104 feet long, 19 feet in beam with a draft of 5 feet 6 inches. Each is powered with two marine engines developing together in excess of 3000 horsepower. The Hendry barge, hereinafter referred to, is made of wood sheathed in steel. She is approximately 105 feet long, 32 feet in beam and 9 feet in depth. At all pertinent times she was partially loaded with what has been described as "junk".
The makeup of the tow of the Dragon was directed by two representatives of the California Company and one Anslow, Charleston superintendent of the Hendry Corporation. In addition to the four rescue vessels, there was included in the tow the Hendry barge. The rescue vessels were made up two abreast with the barge astern.
There is a dispute in the evidence as to whether or not the representatives of California Company knew and approved of the barge being included in the tow. While it is customary in the towage business to include vessels of several different owners in the same tow, the towage agreement here seems to indicate that no other vessels would be towed. The matter is further confounded by the fact that Mr. Anslow of Hendry Corporation, who directed the makeup of the tow along with the representatives of the California Company, was drowned during the salvage operations. The master of the Dragon, however, testified that the representatives of the California Company knew and approved of the barge being included in the tow, while the same representatives steadfastly deny knowledge or approval. Since, as will be seen, it was the overload on the tug rather than the makeup of the tow which caused the vessels to strand, it will be unnecessary to resolve this conflict.
The Dragon and her tow departed Charleston early the morning of February 29, 1948. At the time the weather was fair and no storm warnings of any kind were displayed. On March 1, 1948 the tow entered Port Royal Sound from Beaufort River and headed south across the Sound toward the Intracoastal Waterway, a distance of three and a half miles. As the tow entered the Sound, a severe windstorm broke with northeast winds of 40 miles per hour. The Dragon headed into the wind in an attempt to ride out the storm, but after an hour the combined action of the wind and the tide in the sound, which was variously estimated from three to seven miles per hour, broke the cables coupling the two pairs of rescue vessels, and one pair of rescue vessels together with the *201 barge stranded on the lee shore of Hilton Head Island southwest of Port Royal Sound.
The storm in Port Royal Sound continued for several days and all efforts on the part of the Dragon to recover the stranded vessels proved unavailing. Hendry Corporation dispatched its tug General Pershing to the scene and Anslow arrived on March 3rd to direct the salvage operation. The attempt to salvage the vessels continued under Anslow's direction until March 5th when Anslow was drowned while attempting to recover a line which the Dragon had secured to the stranded vessels and bouyed the day before. On March 7th Hendry's Tampa superintendent, Kennard, arrived to direct the salvage operations. Finally, on March 10th, after the weather had moderated considerably, one of the rescue vessels was refloated and the other was brought off the beach the following morning. The vessels were pumped out, cleared of wreckage and debris and towed by the General Pershing to New Orleans where they were delivered to California's representative.
The Hendry Corporation, Kennard and the master, officers and crew of the General Pershing filed this libel in their own behalf and in behalf of Anslow's Estate to recover a salvage award for saving the aircraft rescue vessels. The California Company, claimant of the vessels, filed a cross-libel against Hendry for damage to the vessels resulting from the breakup of the tow.
Claimant does not contend that the provision of the towage agreement relieving the Hendy Corporation from liability for all except gross negligence, is unenforceable or against public policy. It contends, first, that the evidence proves gross negligence on the part of Hendry and alternatively, if it does not, it proves negligence, and consequently the libelants cannot recover a salvage award.
California contends that the Dragon and her owners were guilty of gross negligence in that the Dragon was undermanned and overloaded by the addition of the barge to the tow. Claimant also contends that the Dragon was unseaworthy in that she was not equipped with a radio by means of which warnings of the storm in Port Royal Sound could have been received.
Gross negligence has been defined as the entire absence of care, or very great negligence. It consists of utter disregard of the dictates of prudence, amounting to complete neglect of the rights of others. Hollander v. Davis, 5 Cir., 120 F.2d 131. Viewed from that standard, the actions of the Hendry Corporation leading up to the stranding of the rescue vessels do not amount to gross negligence. Although not convincing, there is yet substantial evidence in the record tending to show that the Dragon was capable of handling her tow, including the barge, in any weather reasonably to be expected during the voyage. Such evidence alone negates the charge of gross negligence based on overload. The charge that the Dragon was undermanned is without merit. She had a full complement as provided by her certificate. It is true she had no radio, but the evidence shows that no storm warnings were received by tugs in the area having radios. Further, the mere absence of a radio on a tug does not make her unseaworthy. The Dragon was built many years before radio came into vogue and the failure of her owners to have one installed does not necessarily make her an anachronism. The Pacific Fir, 2 Cir., 57 F.2d 965, 1932 A.M. C. 738. In any event, there is no proof that her failure to have a radio in any way contributed to the stranding of the vessels.
Claimant, however, is on much stronger ground when it reduces its charge against the Hendry Corporation to simple negligence. It is true that a tow boat is liable neither as an insurer nor as bailee of her tow. Stevens v. The White City, 285 U.S. 195, 52 S.Ct. 347, 76 L.Ed. 699. Her duty is to exercise such reasonable care and maritime skill as prudent navigators employ for the performance of similar services. Stall & McDermott v. The Southern Cross, 5 Cir., 196 F.2d 309, 1952 A.M.C. 876. Nor is a tug required to withstand all the perils of the sea or to control her tow in extreme weather. Waterman S. S. Corp. v. Shipowners & M. Towboat Co., 9 Cir., 199 F.2d 600, 1952 A.M.C. 1988. *202 Nevertheless, when a tug undertakes to tow more than she can reasonably be expected to tow through weather reasonably to be expected on the voyage, there is fault. The Dragon may have been properly manned and she may not be required to have a radio receiver on board, but the record does not justify the inclusion of the barge in the tow. The evidence shows that the inclusion of the barge reduced the tow's speed by half. In fact, when bad weather was encountered in Port Royal Sound, the tow made no headway at all. Although the calm safe water of the Intracoastal Canal was less than three miles away, the Dragon had no alternative but to expose her tow to continued pounding from the wind and sea. Even the master of the Dragon reluctantly admitted that she was overloaded and that he had so complained to Hendry officials. It was this overload which directly contributed to the breakup of the tow and the subsequent stranding of the vessels.
The inclusion of the barge also made the tow unseaworthy. It did more than overload the tug. The weight of the barge pulled the cleats and the bitts, to which the lines were made fast on the rescue vessels, out of the decks of those vessels. The aircraft rescue vessels are wooden vessels of light design whose mission is to effect rescues on water through the use of high speed. No prudent seaman would have attempted to tow the snub-nosed barge astern of the rescue vessels. It should have been obvious to Anslow and the Hendry Corporation that the very weight of the barge would pull the bitts and cleats through the decks of the rescue vessels in the event any sizeable seas were encountered.
Having found fault on the part of Hendry Corporation, it is pertinent now to determine the effect of that fault on the individual claims for salvage. First of all, it is clear that a tower may be granted a salvage award for rescuing the tow where the tow has become imperiled through no fault of the tower. The Connemara, 108 U.S. 352, 2 S.Ct. 754, 27 L.Ed. 751; The Olockson, 5 Cir., 281 F. 690. Since the fault of Hendry Corporation contributed to the stranding of the rescue vessels, however, that corporation is not entitled to salvage award. The Clarita and The Clara, 23 Wall. 1, 23 L.Ed. 146. And this is true even though the Tug Pershing, also owned by Hendry, participated in the salvage. The Glenfruin, 10 P.D. 103; The Pine Forest, 1 Cir., 129 F. 700, 1 L.R.A.,N.S., 873. The claim in behalf of Anslow likewise must be denied for the record shows that Anslow supervised the entire towage operation until the tow departed Charleston. The fault of the Hendry Corporation was Anslow's fault. Kennard, the officers and men of the Pershing, however, are entitled to a salvage award. The fault of Hendry Corporation cannot bar their recovery for services performed, there being no evidence whatever showing they contributed to the stranding of the vessels. The Glenfruin, supra.
In view of all the circumstances surrounding this entire salvage operation[1], the total salvage award should be 10% of the value of the vessels on being salved. In considering the portion to be awarded one set of salvors, the contribution made by all concerned with the salvage effort whether or not participating in the award must be considered. The Blackwall, 10 Wall. 1, 77 U.S. 1, 19 L.Ed. 870; Greene v. United States, D.C., 106 F.Supp. 682. Non-prosecution of their claims by some salvors and inability to make claim in others inures to the benefit of the owners of the salved vessels and not to salvors who do prosecute their claims. The Blackwall, *203 supra. Participating in the salvage operation at bar were the Tugs Dragon and Pershing, the officers and crews of both vessels, Anslow and Kennard. Ordinarily two-thirds of the salvage award goes to the vessel and one-third to the officers and men. Greene v. United States, supra. Using that rule of thumb and assuming all salvors may participate in the award, the award would be divided on the following basis: Two-thirds to Hendry Corporation as owner of the Tugs Dragon and Pershing, one third to Kennard, Anslow and the officers and crews of the tugs. Consequently, Kennard, the officers and men of the Pershing will be awarded one-sixth of one-tenth of the value of the vessels on being salved.
Supplemental Opinion
Since the opinion of the court herein finding fault against Hendry Corporation in the stranding of the aircraft rescue vessels, claimant has re-urged a contention previously made but unsupported by authority or argument. Claimant's contention is its asserted right to recover over against Hendry any sums it might be called upon to pay as salvage. Claimant argues that the release clause in the agreement protects Hendry against claims "for any loss or damage to the aircraft rescue boats" but salvage is not "loss or damage to the aircraft rescue boats", and consequently Hendry, being at fault in the stranding, is liable for salvage. The Brinton, D.C., 35 F.2d 543; Olsen Water, etc. Co. v. United States, 2 Cir., 21 F.2d 304; The Loyal, 2 Cir., 204 F. 930; The Refrigerant, Aspinall's Maritime Cases, Vol. XVI N.S., p. 559.
This argument perhaps would be sound but for the first part of the release agreement which reads: "The towage contemplated shall be done at the sole risk of the aircraft rescue vessels." Obviously such provision would cover the risk of salvage. Any other interpretation of this release agreement would be unrealistic. To sustain claimant's contention in this regard it would be necessary to hold that if Hendry's efforts to refloat the vessels had been unsuccessful, Hendry would be released from liability for loss of the vessels, but because Hendry was successful in getting the vessels off the strand, it is not released from liability for the salvage award. In view of the above, California's claim over against Hendry Corporation must be denied.
NOTES
[1] In The Blackwall, 10 Wall. 1, 77 U.S. 1, 19 L.Ed. 870, the Supreme Court named the following considerations as determinants of the amount of a salvage award: (1.) The labor expended by the salvors in rendering the salvage service. (2.) The promptitude, skill, and energy displayed in rendering the service and saving the property. (3.) The value of the property employed by the salvors in rendering the service, and the danger to which such property was exposed. (4.) The risk incurred by the salvors in securing the property from the impending peril. (5.) The value of the property saved. (6.) The degree of danger from which the property was rescued.
|
601 F.2d 579
Altisv.Department of Corrections
No. 79-6282
United States Court of Appeals, Fourth Circuit
7/12/79
1
W.D.Va.
AFFIRMED
|
34 Cal.Rptr.3d 613 (2005)
133 Cal.App.4th 121
ESTATE OF Mark R. HUGHES, Deceased.
Kirk D. Hartman, et al., Objectors and Appellants,
v.
Suzan Hughes, Objector and Respondent.
No. A106600.
Court of Appeal, First District, Division Three
October 6, 2005.
*614 Richard M. Norman, Matthew P. Guasco, Ventura, Charles E. Whitesell, Herbert A. Stroh, Glendale, Counsel for Appellants. Allan B. Cutrow, Peter B. Gelblum, Karl de Costa, Los Angeles, Counsel for Respondent.
PARRILLI, J.
Kirk D. Hartman and William and Patricia Gillespie appeal from a probate court order prorating estate taxes. They contend the court improperly charged them with a portion of another beneficiary's estimated future income taxes. We agree, and reverse. The estate tax proration provisions of the Probate Code do not contemplate the consideration of future income tax consequences. Neither does Estate of Bixby (1956) 140 Cal.App.2d 326, 295 P.2d 68 (Bixby), the authority relied on by respondent to justify the order before us. Bixby did not address estate tax proration, and establishes only the probate court's equitable authority to make adjustments for immediate tax consequences in distributing the estate. A more cautious and predictable approach is suggested by the current state of the law unless income tax consequences can be ascertained with reasonable certainty for purposes of equitable reallocation at the time of distribution, the beneficiaries of an estate are responsible for paying their own future taxes.
BACKGROUND
Mark R. Hughes, the founder of Herbalife, Inc., left a large estate. The sole beneficiary of the estate is a trust. The primary beneficiary of the trust is Alexander Reynolds Hughes (Alex), Mark's son, born in 1991. The trust provides for specific bequests of Herbalife stock to various beneficiaries, including appellants. Mr. *615 Hartman received 310,000 shares and the Gillespies 100,000 shares each. Alex received 2 million shares, which was by far the largest specific bequest (aside from appellants' shares, four other individual beneficiaries received a total of 190,000 shares, and a foundation received 200,000 shares). Alex is also the sole residuary beneficiary of the trust.
On a previous appeal, we affirmed a probate court order approving a proposed loan transaction the trustees negotiated with the Internal Revenue Service (IRS) for tax planning purposes.[1] This arrangement, characterized by the parties as a "Graegin" transaction (Estate of Graegin v. C.I.R. (1988) 56 T.C.M (CCH) 387, 1988 WL 98850), operated as follows: Hughes Investment Partnership, LLC (HIP), an entity controlled by the trust, loaned $49,953,945 at 8.6 percent interest to Zacadia Financial Ltd. (Zacadia), a limited partnership controlled by the family of the trustees' tax attorney. No payments were due from Zacadia for 25 years, until December 2027. HIP then borrowed the same amount from Zacadia at 8.75 percent interest. Both loans were on a zero coupon basis. Aside from a $10 million dollar payment due in September 2005, no interim principal or interest payments from HIP to Zacadia were required or permitted until December 2027. Zacadia received around $125,000 as loan fee, and will gain around $12,020,000 from the "spread" between the interest rates.
The tax benefits from the Graegin transaction were very substantial. Because all the interest on the loan back to HIP from Zacadia was currently deductible, the trust's estate tax liability was reduced by $166,528,930 (from $212,460,485 to $45,931,555). Furthermore, the IRS agreed to value the Herbalife stock at $19.50 per share, the sale price in a merger transaction negotiated by the trustees, instead of the much lower market value of the stock on the estate tax valuation date ($8.375 for Class A shares and $8.25 for Class B shares). As a result, all beneficiaries enjoyed greatly reduced capital gains tax exposure. However, HIP was required to make annual income tax payments over the 25-year life of the loan to Zacadia for the "phantom" interest income imputed to HIP.
Due to the merger and sale of the Herbalife stock, the beneficiaries received no actual stock. Instead, the trustees made monetary distributions based on the $19.50 share value, withholding a portion of the funds to account for the beneficiaries' shares of the estate taxes. Under the terms of Hughes's will and trust, each beneficiary is responsible for his or her pro rata share of estate taxes as provided in the Probate Code. The trustees petitioned the probate court for approval of a proposed estate tax proration. For the beneficiaries of specific bequests other than Alex, the trustees' calculation was based on the shares' market value rather than the $19.50 value, to compensate for the fact that only the trust would enjoy the benefit of the estate tax deduction for administration expenses.
Respondent Suzan Hughes, Alex's mother and guardian, objected to the trustees' proposal, contending there was no reason to treat Alex's specific bequest differently. She also claimed it was inconsistent for the other beneficiaries to enjoy the capital *616 gains benefits of the $19.50 valuation but to pay estate taxes based on the lower market values.
The trustees responded by filing an amended petition, asserting they were unable to determine how the Probate Code's estate tax proration provisions applied to the estate's circumstances. They proposed five different methods of proration, all of which treated Alex's specific bequest the same as the others. They refrained from endorsing any of these methods, noting each benefited Alex and the other beneficiaries in different degrees. The trustees stated they would "leave it to the respective beneficiaries and their representatives to advocate the selection of whatever method they believe the law or equity requires." The probate court, however, asked the trustees to recommend one of the methods. The trustees responded by suggesting "Method D," the alternative most similar to their original proposal.
Appellants filed responses advocating the adoption of "Method E," a proposal developed by the trustees' accountants. This method used the $19.50 share valuation and apportioned estate taxes "in the proportion that the value of the property received by each person interested in the estate bears to the total value of all property received by all persons interested in the estate," as stated in Probate Code section 20111. Appellants contended this was the only method proposed by the trustees that conformed with the requirements of the Probate Code. It was also the method that resulted in the lowest estate tax burden on the specific bequests.
Suzan Hughes responded that the recommendations from all other parties failed to equitably adjust the estate tax proration to account for the Graegin transaction's income tax consequences for Alex, as residuary beneficiary. Suzan claimed that under Estate of Bixby, supra, 140 Cal.App.2d at p. 326, 295 P.2d 68, the trustees were authorized to charge the other beneficiaries with a portion of the present value of Alex's future income tax liability on the interest income the trust would receive from Zacadia, to avoid the unjust enrichment of one class of beneficiaries at the expense of another class. She proposed the adoption of "Method E" with modifications to account for that future income tax liability.
The trustees filed a reply to Suzan's objections. They noted that any calculation of the present value of future income taxes was inherently speculative, given the variability of tax rates and the necessity of choosing a discount rate to determine present value. The trustees also observed that Alex, as the recipient of the largest specific bequest, might be best served by the proration method that would maximize the specific bequests. He stood to receive guardianship funds at the age of 18 and custodial funds by the age of 25, whereas his residuary bequest might not be received until he was 35.
The Gillespie appellants also filed a response to Suzan's objections, contending Bixby applied only to adjustments for income taxes accruing during the administration of the estate. They argued against any adjustment to account for Alex's future income tax liability, because (1) the beneficiaries of specific bequests had not been unjustly enriched at the expense of the residuary beneficiary, who enjoyed most of the estate tax savings flowing from the Graegin transaction; (2) the amount of future income taxes was highly speculative, requiring predictions as to tax rates, deductions available to the trust, and the selection of a proper discount rate; and (3) by way of analogy, future tax consequences are not taken into account in marital property divisions; instead, the family courts retain jurisdiction to make readjustments *617 if necessary, a course the probate court should not take in this case for reasons of finality and economy of judicial resources.
The probate court held a hearing at which all interested parties were afforded an opportunity to express their views on the proration issue. Toward the end of the hearing, the court announced it would adopt Suzan's proposal, using "Method E" with modifications to charge the beneficiaries of the specific bequests for a portion of the present values of the costs of the Graegin transaction and the trust's future income tax liability. Over appellants' objections, the court entered an order conforming with this approach. Estate taxes were prorated at $2.27 per share, interest paid to the IRS and the Franchise Tax Board at $.22 per share, interest spread and loan costs for the Graegin transaction at $.25 per share, and future estimated income tax at $2.67 per share, for a total of $5.41 per share. Alex's specific bequest was charged the same amount.
This appeal followed. (See Prob.Code, §§ 20123, subd. (b); 1303, subd. (l); 1304, subd. (c).)
DISCUSSION
Unless otherwise directed by the decedent or by federal law, "any estate tax shall be equitably prorated among the persons interested in the estate in the manner prescribed in this article." (Prob.Code, § 20110.) "The proration . . . shall be made in the proportion that the value of the property received by each person interested in the estate bears to the total value of all property received by all persons interested in the estate. . . ." (Prob.Code, § 20111.) When these statutes were reenacted in 1986, the Legislature omitted a provision requiring a court order to accomplish the proration. Accordingly, the judicial proration proceedings prescribed in Probate Code § 20120 et seq. are optional. (Cal. Law Revision Com. com., 54A West's Ann. Prob.Code (1991 ed.) foll. § 20111, p. 276; former Prob.Code, § 971, Stats.1943, ch. 894, § 1.)
Appellants claim the probate court in this case failed to follow the statutory proration formula. This is not entirely accurate; the court did allocate the estate taxes according to the formula provided by Probate Code section 20111. Indeed, the outcome sought by appellants is identical to that reached by the trial court, except they would eliminate the charge the court imposed on them for future estimated income taxes. It is the propriety of that charge, not the proration of the estate tax per se, that is before us on this appeal. The parties have referred us to no legal authority on this point, and our own research has disclosed none.
Appellants contend the income tax charge was not authorized by the Probate Code or the Bixby precedent, was improperly based on purely speculative considerations, and amounted to an unfair windfall for Alex.[2] Respondent characterizes the charge as a "Bixby adjustment" that reasonably and equitably apportions the costs of the Graegin transaction among all the beneficiaries, consistent with the directive in Probate Code section 20110 that estate taxes be "equitably prorated." Whether controlling law authorized the probate court to consider future income tax consequences when it prorated the estate taxes is a question of law, which we review independently. (Cf. KB Home v. Superior Court (2003) 112 Cal.App.4th 1076, 1083, 5 Cal.Rptr.3d 587.) We conclude the charge for future estimated income tax is inconsistent *618 with the statutory proration scheme, and Bixby has no application in the circumstances of this case.
1. The Estate Tax Proration Statutes Do Not Contemplate Proration of Income Taxes
The governing statutes refer to the proration of estate taxes, not income taxes. While Probate Code section 20110, subdivision (a) suggests the court has some equitable discretion in accomplishing the proration ("any estate tax shall be equitably prorated"), it also requires the proration to be performed "in the manner prescribed in this article." In the article so specified, the Legislature has authorized probate courts to make allowances for estate tax credits, exemptions, deductions, interest, and penalties. (Prob.Code, § 20112.) It has made no similar provision for income taxes payable by distributees, though it specifically addressed rarer tax consequences such as those attending specially valued real property under 26 U.S.C. section 2032A (Prob.Code, § 20114), excess retirement accumulations under 26 U.S.C. section 4980A (Prob.Code, § 20114.5), and generation-skipping transfer taxes (Prob.Code, § 20200 et seq.).
The Legislature did account for future estate tax consequences in the proration process. If payment of the estate tax is extended under federal law, those who receive the specific property giving rise to the extension are liable for the extended tax when it becomes due. (Prob.Code, § 20115.) And the personal representative or any interested party is authorized to seek modification of a proration order "whenever it appears that the amount of estate tax as actually determined is different from the amount of estate tax on which the court based the order." (Prob.Code, § 20124.) The Legislature made no similar provision for equalizing the effects of future income tax liability on property distributed from the estate. Notably, in neither of the provisions governing proration of estate taxes payable in the future did the Legislature contemplate that probate courts would engage in estimation of the future tax.
Income tax consequences are an inevitable aspect of most estate distributions. Presumably, the Legislature would have addressed them if it intended them to be a factor in the proration of estate taxes. We conclude the statutory procedure for estate tax proration does not include consideration of income tax consequences. If such consequences are reasonably ascertainable when the estate is distributed, they may be accounted for separately by way of a Bixby adjustment in appropriate circumstances, as we discuss next.
2. Bixby Does Not Authorize Reallocation of Estimated Future Taxes
In Bixby, the executor of the estate chose to deduct the expenses of estate administration on the estate's income tax return instead of on its estate tax return. By doing so, he saved $101,649.95 on the income taxes, but the estate taxes were $58,932.44 higher than they would have been had the deduction been taken on the estate tax return. The income beneficiary thus stood to gain a substantial tax saving, but at the expense of the residuary beneficiaries who, under the terms of the decedent's will, were responsible for paying all succession taxes. (Bixby, supra, 140 Cal.App.2d at pp. 330, 337, 295 P.2d 68.) In its order of preliminary distribution the probate court charged the income beneficiary with the portion of the income taxes attributable to the income she had received during the administration of the estate. The Court of Appeal held this was insufficient to repair the estate's loss of the estate tax deduction. It directed the *619 probate court to charge the income beneficiary's account with a proportional share of the $58,932.44 the residuary beneficiaries would have gained had the executor applied the deduction to the estate tax return. (Id. at pp. 338-340, 295 P.2d 68.) The income beneficiary received around 47 percent of the estate's gross income during the fiscal year in question; the rest went to the residuary beneficiaries. (Id. at pp. 331, 339, 295 P.2d 68.)
The Bixby court explained: "[W]e adopt this rule because it places the burden of the income tax on the income legatee, where it properly belongs, and obviates any dislocation of the testator's bounty by shifting the burden of an income tax to a residuary legatee. While the executor's election as to the use of deductions under the present circumstances still enables the income beneficiaries to receive an actual cash benefit in the form of tax savings, by the process of reallocating an appropriate portion of such savings to principal, no part of any beneficiary's inheritance is diminished so that another may reap a profit at his expense. It is within the province of the probate court to bring to its aid the full equitable powers with which as a superior court it is invested to [e]nsure that income beneficiaries do not profit at the expense of the remaindermen. (Estate of Eilert [1933] 131 Cal.App. 409, 416-417[, 21 P.2d 630].)" (Bixby, supra, 140 Cal.App.2d at p. 339, 295 P.2d 68.)
Respondent contends that without the estimated income tax proration ordered by the court, Alex, like the remaindermen in Bixby, would suffer a diminishment of his inheritance so that appellants could profit at his expense. We disagree. There are several significant distinctions between Bixby and this case. First, Bixby was not a proration case. The governing statute then, as now, provided for proration of estate taxes unless the testator directed otherwise. (Former Prob.Code § 970, Stats.1943, ch. 894, § 1; Prob.Code § 20110, subd. (b)(1).) The testator in Bixby provided for the payment of estate taxes from the residuary estate (Bixby, supra, 140 Cal.App.2d at p. 330, 295 P.2d 68), whereas Hughes directed that estate taxes be prorated as specified in the Probate Code.
Second, Bixby was concerned not with income taxes payable in the future, but with reallocating "an actual cash benefit in the form of tax savings." (Bixby, supra, 140 Cal.App.2d at p. 339, 295 P.2d 68.) Here, the actual cash benefit in the form of estate tax savings was appropriately allocated by the court's proration of the estate taxes. The court did not make an adjustment based on taxes that would have been immediately payable under an alternate scenario, as did the Bixby court. It attempted instead to shift some of Alex's future income tax burden to appellants, on the theory that those future taxes were one of the costs of the estate tax reduction accomplished by the Graegin transaction.
Third, in Bixby every dollar of income tax deduction was a lost dollar of estate tax deduction. Here, every dollar of interest taken as an estate tax deduction was not a dollar lost by Alex on his income taxes. The trade-off in this case is attenuated and highly uncertain. The interest deducted from the estate taxes is chargeable as income to Alex in future years, but as appellants point out Alex's actual income tax consequences depend on future rates, the performance of trust investments, and the future tax strategies employed by the trust on Alex's behalf. While Alex will presumably pay some amount in taxes over the 25 years before the trust receives its interest payment from Zacadia, this liability is at least partially offset by the fact that the trust immediately borrowed the principal amount *620 back from Zacadia and has the use of those funds to generate further income, while the trust's repayment of the bulk of the loan back is deferred for 25 years. This is hardly the sort of straightforward "unjust enrichment at the expense of the residuary beneficiar[y]" considered by the Bixby court. (Bixby, supra, 140 Cal.App.2d at p. 338, 295 P.2d 68.)[3]
Nothing in Bixby suggests the court's equitable powers extend to the prediction of income tax liabilities 25 years into the future, and the reduction of such liabilities to present value for purposes of reallocation among estate beneficiaries.[4] If a beneficiary's income tax liability, perhaps even a future tax liability, were reasonably ascertainable during the administration of the estate, and if the tax liabilities of the beneficiaries were so disproportionate as to call for equitable adjustment, a reallocation in the distribution of the estate might be within the "full equitable powers" of the probate court. (Bixby, supra, 140 Cal.App.2d at p. 339, 295 P.2d 68.) That is not this case. Respondent does not claim Alex's future taxes are ascertainable with any reasonable certainty. She argues the court was empowered to make an approximation of future tax liability for the purpose of equalizing the tax burdens. We cannot agree, particularly since, as noted above, it is difficult to say that the tax liabilities were inequitably distributed among the beneficiaries.
To sum up, neither Bixby nor the proration statutes authorize the probate courts to guess at future income tax consequences for some beneficiaries, and impose current charges on others to ameliorate those potential consequences. Even when such consequences are the result of estate tax planning, the court should refrain from attempting to adjust for indeterminate future income tax consequences. We believe the soundest course, and the course most consistent with the Probate Code, is to let the burden of future income taxes on estate property follow the income unless such taxes are both inequitable and reliably calculable. The parties interested in *621 an estate can plan around such a rule more predictably than a court can estimate what taxes may be paid by a party in future years.
DISPOSITION
The proration order is reversed insofar as it imposes a charge for future estimated income tax; in all other respects the order is affirmed. Appellants shall recover their costs on appeal.
McGUINESS, P.J., and POLLAK, J., concur.
NOTES
[1] Klein v. Hughes (April 20, 2004, A103940), 2004 WL 838198 [nonpub. opn.]. That appeal, like this one, was transferred to this court from the Second District Court of Appeal by order of the Chief Justice of the California Supreme Court. We grant appellants' request for judicial notice of our prior opinion and the petition for instructions underlying the order at issue in that case.
[2] Appellants do not challenge the part of the order charging them a pro rata share of the interest spread and loan costs for the Graegin transaction.
[3] Indeed, it is far from clear that Alex's future income taxes may properly be viewed as a "cost" of the Graegin transaction that should equitably be spread among all beneficiaries. Alex would incur income tax liability on the returns from the trust's investments whether or not the Graegin transaction took place. That transaction was an enormously profitable form of investment for Alex, considering the estate and capital gains tax benefits he enjoyed without tying up a significant amount of trust capital. In addition to the tax savings for the trust, about 80 percent of the principal amount of the loan back from Zacadia will be available for other investments during the entire 25-year life of the loan. The other beneficiaries have no interest in those investments. Compared to Alex's gains and opportunities for future gain, the benefits of the Graegin transaction for the other beneficiaries might fairly be characterized as incidental.
[4] Appellants rely on Marriage of Fonstein (1976) 17 Cal.3d 738, 131 Cal.Rptr. 873, 552 P.2d 1169, for the proposition that it is beyond the court's equitable authority to speculate about future tax consequences. Fonstein, however, is not analogous. There, the trial court adjusted a community property division to account for the income tax consequences of the husband's withdrawal from his law partnership. (Id. at pp. 745-746, 131 Cal.Rptr. 873, 552 P.2d 1169.) The Supreme Court rejected this approach, noting there was no indication in the record that the husband intended to withdraw, and thus no evidence a taxable event had occurred during the marriage or in connection with the property division. (Id. at pp. 749-750, and fn. 5, 131 Cal.Rptr. 873, 552 P.2d 1169.) Here, the Graegin transaction was a "taxable event" that occurred during the estate proceedings. Nevertheless, Fonstein does stand for the general proposition that "hypothetical inequity in the distribution of [ ] tax burdens" is not "adequate justification for introducing an unnecessarily complicated and speculative factor into the process of dividing [ ] property." (Id. at p. 750, 131 Cal.Rptr. 873, 552 P.2d 1169.)
|
UNITED STATES ARMY COURT OF CRIMINAL APPEALS
Before
GALLUP, TOZZI, and HAM
Appellate Military Judges
UNITED STATES, Appellee
v.
Private E1 CHRISTOPHER M. CARMER
United States Army, Appellant
ARMY 20070173
Headquarters, U.S. Army Signal Center and Fort Gordon
Donna Wright and Roger Nell, Military Judges
Colonel D. Shawn Shumake, Staff Judge Advocate
For Appellant: Colonel Christopher J. O’Brien, JA; Lieutenant Colonel
Steven C. Henricks, JA; Major Sean F. Mangan, JA; Major Jonathan F. Potter,
JA, USAR (on brief).
For Appellee: Lieutenant Colonel Francis C. Kiley, JA; Captain Michael D.
Wallace, JA (on brief).
12 September 2008
-----------------------------------------
SUMMARY DISPOSITION
-----------------------------------------
Per Curiam:
A military judge sitting as a special court-martial empowered to
issue a bad-conduct discharge convicted appellant, pursuant to his pleas,
of failure to repair on divers occasions, insubordination (five
specifications), wrongful use of marijuana (four specifications), wrongful
distribution of marijuana (two specifications), and communicating a threat,
in violation of Articles 91, 92, 112a, and 134 of the Uniform Code of
Military Justice, 10 U.S.C. §§ 891, 892, 912, and 934 [hereinafter UCMJ].
The military judge sentenced appellant to a bad-conduct discharge,
confinement for ten months, and reduction to Private E1. Pursuant to a
pretrial agreement, the convening authority approved only seven months
confinement and otherwise approved the adjudged sentence. The convening
authority also appropriately granted appellant credit for two days of
confinement against his sentence to confinement.
This case is before the court for review under Article 66, UCMJ.
Appellant asserts, inter alia, that he improvidently pled guilty to the two
specifications of distribution of marijuana and the one specification of
communicating a threat. We have considered the entire record of trial,
appellant’s assignments of error and the government’s reply thereto and
find appellant’s plea provident with respect to the two specifications of
distribution of marijuana but improvident to the one specification of
communicating a threat. Accordingly, we will take corrective action in our
decretal paragraph.
“[W]e review a military judge’s decision to accept a guilty plea for
an abuse of discretion and questions of law arising from the guilty plea de
novo.” United States v. Inabinette, 66 M.J. 320, 322 (C.A.A.F. 2008).
Furthermore, in reviewing a guilty plea, “we apply the substantial basis
test, looking at whether there is something in the record of trial, with
regard to the factual basis or the law, that would raise a substantial
question regarding the appellant’s guilty plea.” Id. See also United
States v. Eberle, 44 M.J. 374, 375 (C.A.A.F. 1996).
In addition, “[a] military judge may not accept a guilty plea without
first determining that a factual basis exists for the plea.” United States
v. Jordan, 57 M.J. 236, 238 (C.A.A.F. 2002)); see UCMJ art. 45(a). As our
superior court stated:
[T]o establish an adequate factual predicate for a guilty plea,
the military judge must elicit “factual circumstances as
revealed by the accused himself [that] objectively support that
plea[.]” United States v. Davenport, 9 MJ 364, 367 (CMA 1980).
It is not enough to elicit legal conclusions. The military
judge must elicit facts to support the plea of guilty. United
States v. Outhier, 45 MJ 326, 331 (1996). The record of trial
must reflect not only that the elements of each offense charged
have been explained to the accused, but also “make clear the
basis for a determination by the military trial judge . . .
whether the acts or the omissions of the accused constitute the
offense or offenses to which he is pleading guilty.” United
States v. Care, 18 USCMA 535, 541, 40 CMR 247, 253 (1969).
Jordan, 57 M.J. at 238 (alterations in original); United States v. Simmons,
63 M.J. 89, 92 (C.A.A.F. 2006).
Looking at the record as a whole, we find the military judge failed to
elicit sufficient facts from appellant pertaining to whether the alleged
unlawful communication of a threat was prejudicial to good order and
discipline or service discrediting. Specifically, while discussing the
specification alleging unlawful communication of a threat in violation of
Article 134, UCMJ, the military judge failed to inquire into whether the
actions of the appellant were prejudicial to good order and discipline or
of a nature to bring discredit upon the armed forces. Further, the portion
of the stipulation of fact relevant to the unlawful communication of a
threat specification merely recites the language of the element with no
further explanation or detail. Without a factual predicate, we fail to see
how the military judge determined “whether the acts . . . of the accused
constitute[d] the offense . . . to which he [pleaded] guilty.” Care, 18
U.S.C.M.A. at 541, 40 C.M.R. at 253; see United States v. Barton, 60 M.J.
62, 67 (C.A.A.F. 2004) (Erdmann, J., dissenting) (“The mere recitation of
the elements of a crime . . . and an accused’s rote response is simply not
sufficient to meet the requirements of Article 45 [and Care].”).
Therefore, we conclude a substantial basis in law and fact exists for
overturning the military judge’s acceptance of appellant’s guilty plea to
communicating a threat (Specification 1, Charge V).
The finding of guilty to Specification 1 of Charge V is set aside and
that specification is dismissed. This court has sufficient “experience and
familiarity with [the remaining offenses] to reliably determine what
sentence would have been imposed at trial by the military judge . . . .”
United States v. Moffeit, 63 M.J. 40, 43 (C.A.A.F. 2006) (Baker, J.,
concurring). Reassessing the sentence on the remaining findings of guilty
on the basis of the entire record, applying the principles of United States
v. Sales, 22 M.J. 305 (C.M.A. 1986), and Moffeit, 63 M.J. at 42-44, to
include Judge Baker’s concurring opinion, the court affirms the sentence as
approved.
FOR THE COURT:
MALCOLM H. SQUIRES, JR.
Clerk of Court
|
917 F.2d 25
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.Thomas Edward FLEMING, Defendant-Appellant.
No. 89-6439.
United States Court of Appeals, Sixth Circuit.
Oct. 23, 1990.
Before KEITH, KRUPANSKY and SUHRHEINRICH, Circuit Judges.
PER CURIAM.
1
Defendant-appellant, Thomas Edward Fleming (Fleming), has appealed from his jury conviction on (1) one count of possessing and distributing approximately 6 grams of cocaine in violation of 21 U.S.C. Sec. 841(a)(1); (2) one count of possession of a machine gun in violation of 26 U.S.C. Secs. 5861(d) and 5871; (3) one count of transferring a machine gun in violation of 26 U.S.C. Secs. 5861(e) and 5871; (4) one count of selling a machine gun to an individual who he knew or had reasonable cause to know was an unlawful user of cocaine in violation of 18 U.S.C. Secs. 922(d)(3) and 924; and (5) one count of selling 600 rounds of ammunition to an individual who he knew or had reasonable cause to know was an unlawful user of cocaine in violation of 18 U.S.C. Secs. 922(d)(3) and 924. The district court sentenced Fleming to a total of 10 years incarceration to be followed by 6 years of supervised release and a special assessment of $250.
2
On appeal, Fleming has charged that (1) the government failed to demonstrate that he was predisposed to commit the charged offenses; consequently, the charges should have been dismissed, because, as a matter of law, his assertions of entrapment afforded him a complete defense; (2) he was denied a fair trial as the result of prosecutorial misconduct; (3) he was denied effective assistance of counsel; and (4) he was denied a fair trial because one of the jurors was biased and had allegedly failed to accurately answer questions during voir dire that would have disclosed this purported bias.
3
Upon review of Fleming's assignments of error, the record in its entirety, the briefs of the parties, and the oral arguments of counsel, this court AFFIRMS Fleming's conviction, and the sentence imposed by the district court.
|
487 F.2d 1332
NATIONAL LABOR RELATIONS BOARD, Petitioner,v.MARI-WEATHER, INC. d/b/a Mackinac Jacks, Respondent.
No. 73-2118.
United States Court of Appeals,Sixth Circuit.
Dec. 13, 1973.
Elliott Moore, Asst. Gen. Counsel, National Labor Relations Board, Washington, D. C., Bernard Gottfried, Director, Region 7, N.L.R.B., Detroit, Mich., for petitioner.
Michael C. Kovaleski, Warren, Mich., for respondent.
Before CELEBREZZE, PECK and McCREE, Circuit Judges.
ORDER
1
On petition to enforce an order of the National Labor Relations Board.
2
This cause came on to be heard on the Board's application for summary entry of a judgment enforcing such order.
3
The Board states that the Respondent failed to file a statement of exceptions to the Decision of the Administrative Law Judge in this case before August 13, 1973, the deadline for filing exceptions to the Decision. The Board issued its Order on August 29, 1973, adopting the Decision of the Administrative Law Judge. The Board's Order has been served on Respondent in proper fashion.
4
Under section 10(e) of the National Labor Relations Act, as amended, 29 U.S.C. Sec. 160(e), "No objection that has not been urged before the Board, its member, agent, or agency, shall be considered by the [enforcing] court, unless the failure or neglect to urge such objection shall be excused because of extraordinary circumstances." In view of the Respondent's failure to file exceptions to the Administrative Law Judge's Decision in this case and its failure to file with this Court any indication of extraordinary circumstances which would excuse such failure, summary enforcement of the Board's order is appropriate. Therefore, it is ordered that the Order of the National Labor Relations Board in this cause be, and it hereby is, enforced.
|
625 P.2d 849 (1981)
Alice G. BAILEY, individually and as next friend of Russell Scott Bailey, and William Ray Blackburn, individually and as Personal Representative of the Estate of Anthony Ray Blackburn, Deceased, Appellants,
v.
Michael B. LENORD, Appellee.
No. 4696.
Supreme Court of Alaska.
March 13, 1981.
*851 Thomas C.L. Roberts and H. Bixler Whiting, Whiting & Rosie, Fairbanks, for appellants.
Dennis M. Bump and Doris R. Ehrens, Hughes, Thorsness, Gantz, Powell & Brundin, Fairbanks, for appellee.
Before RABINOWITZ, C.J., CONNOR, BURKE and MATTHEWS, JJ., and COATS, Judge, Court of Appeals.
OPINION
MATTHEWS, Justice.
This case arose from a motor vehicle accident which occurred on June 8, 1977, at the intersection of C and Dunbar Streets in Fairbanks. Michael Lenord was traveling north on C Street in his automobile. Russell Bailey and his passenger, Glenn Wise, were traveling west on Dunbar Street on Bailey's motorcycle. Anthony Blackburn was also traveling west on Dunbar on his motorcycle. After passing through a yield sign at the intersection of C and Dunbar, the two motorcycles struck Lenord's vehicle on the passenger side. As a result of the accident, Blackburn died and Bailey and Wise were injured.
On November 10, 1977, a complaint was filed for the wrongful death of Blackburn and for Bailey's personal injuries. Plaintiffs' theory was that Lenord's negligence *852 in speeding through a residential area and failing to keep a proper lookout caused the accident. A jury returned a verdict in favor of appellee, Lenord. Following the superior court's denial of their motion for a new trial, plaintiffs filed this appeal.
At trial Officer Layman of the Fairbanks Police Department described in detail speed tests he performed in his patrol car shortly after the accident. The trial court did not allow Layman to express an opinion as to Lenord's speed. Layman was allowed to testify, however, that his patrol car would have to have been traveling at least 40 miles per hour to leave the same amount of skid marks as were left by Lenord's vehicle.
The Court instructed the jury that the speed limit on C and Dunbar was 30 miles per hour. The court's speed limit instruction was based on the Alaska Administrative Code. The court further instructed the jury that racing was negligence per se, but refused to add negligence per se language to its instructions defining negligent and reckless driving.
Plaintiffs assert several errors by the trial court. They contend that the jury instruction relating to the applicable speed limit on C and Dunbar Streets was improperly based upon the Alaska Administrative Code rather than the Fairbanks Code of Ordinances; that the court improperly limited Officer Layman's testimony; that the jury should not have been instructed on racing; that negligence per se language should have been included in the jury instructions defining reckless and negligent driving; and that the trial court erred in denying plaintiffs' motion for a new trial. Each of these will be discussed in turn.
The Speed Limit Instruction
The trial court instructed the jury that the speed limit on C and Dunbar was 30 miles per hour.[1] The court's instruction was based on Title 13, § 02.275 of the Alaska Administrative Code.[2] Plaintiffs contend that the applicable law is contained in § 7.303 of the Fairbanks Code of Ordinances which sets the speed limit at 20 miles per hour.[3]
AS 28.01.010[4] states that the provisions of Title 28 (Motor Vehicles) are applicable *853 within all municipalities of the state and that a municipality may not enact an ordinance inconsistent with provisions of the title or regulations adopted under the title. Although AS 28.01.010(b) provides that a municipality may enact necessary ordinances to meet specific local requirements, a municipality cannot enact an ordinance which conflicts with state-wide traffic rules and regulations. Adkins v. Lester, 530 P.2d 11, 14-15 (Alaska 1974). Clearly, Fairbanks' 20 mile per hour speed limit is valid only if it is in conformance with state-wide traffic statutes and regulations.
13 AAC 02.280-285 authorizes municipalities to decrease or increase the speed limits specified in the Administrative Code and further provides that the altered limits are effective when signs giving notice thereof are erected.[5] Signing, therefore, is a condition precedent to the effectiveness of Fairbanks' 20 mile per hour speed limit.
Although several witnesses testified that they understood the speed limit on C and Dunbar Streets to be 20 miles per hour, there was no evidence that 20 mile-per-hour speed limit signs were erected in Hamilton Acres, the residential area where the accident occurred.[6] Likewise, there was no evidence that general speed limit signs were posted elsewhere in Fairbanks indicating that the speed limit on all non-arterial streets was to be 20 miles per hour. Since speed limit signs were not posted, the trial court did not err in instructing the jury that the applicable speed limit was the state-wide limit of 30 miles per hour.[7] Contrary to plaintiffs' assertion, the presumption *854 that a municipal ordinance has been validly enacted cannot be relied upon to prove that an altered speed limit has been posted where the effectiveness of the reduced limit is specifically conditioned upon posting.[8]
Officer Layman's Testimony
Officer Layman, the police officer who investigated the accident, measured the skid marks left by Lenord's vehicle and performed speed tests in his patrol car at the scene of the accident. At trial, plaintiffs asked Layman for his opinion of Lenord's speed prior to the accident. Defendant objected on the ground that a proper foundation for the admission of the testimony had not been laid.[9] The court allowed Layman to testify as to the speed the test vehicle would have to have been traveling to leave the same amount of skid marks as were left by Lenord's vehicle. Layman also testified that the differences between the test vehicle and the Lenord vehicle favored the Lenord vehicle. Plaintiffs claim the trial court erred in limiting Layman's testimony.
The admission in evidence of expert testimony lies within the sound discretion of the trial judge whose determination is reviewable only for an abuse of discretion. City of Fairbanks v. Nesbett, 432 P.2d 607, 611-12 (Alaska 1967). See also, Ferrell v. Baxter, 484 P.2d 250, 267 (Alaska 1971) and Bachner v. Rich, 554 P.2d 430, 446 (Alaska 1976). The test for determining abuse of discretion with respect to the admission of expert testimony is "whether the reasons for the exercise of discretion are clearly untenable and unreasonable." Lewis v. State, 469 P.2d 689, 695 (Alaska 1970). A review of the record reveals that Layman explained in detail the skid tests he performed and the instruments he used to determine Lenord's speed. In reaching his conclusion, Layman accounted for the differences in weight and brakes between the test car and Lenord's car and the effect of the collision on Lenord's speed.
Although it is a close question as to whether the exclusion of Layman's opinion was an abuse of discretion, any error that may have been committed in that regard would have been harmless. Layman testified that his patrol car would have to have been traveling at least 40 miles per hour to leave the same skid marks as the Lenord car, and that any variable between the patrol car and Lenord's would mean that the latter must have been traveling somewhat faster than 40 miles per hour. It is apparent therefore that the essence of Layman's conclusions was before the jury.
Racing Instructions
The trial court instructed the jury that racing, in violation of 13 AAC 02.330, is negligence per se.[10] Plaintiffs claim there is insufficient evidence in the record to support an instruction on racing.
A trial court may adopt a statute or regulation as the appropriate standard of care, if there is "sufficient evidence from which a jury could reasonably infer *855 the statute was violated." Bachner v. Rich, 554 P.2d 430, 441 n. 12 (Alaska 1976). The test for determining whether there is sufficient evidence to support a negligence per se instruction is "whether the facts and resulting inferences are such that reasonable people, viewing the evidence in the light most favorable to the party seeking the instruction could justifiably have different views on the question." Godfrey v. Hemenway, 617 P.2d 3, 7-8 (Alaska 1980).
There was sufficient evidence introduced at trial to support an instruction on racing. Officer Layman testified that both Bailey and Wise stated, after the accident, that Bailey accelerated to "catch up" with Blackburn after Blackburn passed them. Dr. Ha, who interviewed Bailey after the accident testified that Bailey told him he and Blackburn were "running the road," trying to pass each other, and their speed was such that they could not stop at the yield sign. The evidence is undisputed that the two vehicles were traveling down the road side-by-side. There is also evidence that both motorcycles disobeyed the yield sign on Dunbar Street. Viewing the evidence in the light most favorable to Lenord, we believe reasonable jurors could have concluded plaintiffs were racing. Therefore, the trial court did not abuse its discretion in instructing the jury that racing, in violation of 13 AAC 02.330, is negligence per se.
Negligent and Reckless Driving Instructions
Plaintiffs claim the trial court erred in not adding negligence per se language to Instruction No. 17 which defines reckless and negligent driving.[11] In Ferrell v. Baxter, 484 P.2d 250, 263 (Alaska 1971) we adopted the principles set forth in the Restatement (Second) of Torts §§ 286, 288A and 288B[12] in holding that a trial court *856 may, in its discretion, adopt a statute or regulation rather than the common law reasonable person standard as the applicable standard of care. Substitution of a statute or regulation is only appropriate where the statute or regulation prescribes specific conduct. Substitution is not appropriate where the statute or regulation sets out a general or abstract standard of care. Northern Lights Motel Inc. v. Sweaney, 561 P.2d 1176, 1183 (Alaska 1977); Bachner v. Rich, 554 P.2d 430, 441-42 (Alaska 1976); and Lester v. John R. Jorgensen Co., 400 F.2d 393, 396 (6th Cir.1968).
Alaska's statutes defining reckless and negligent driving do not prescribe specific conduct, but rather state that a person shall not drive a motor vehicle in a manner which creates an unjustifiable risk. The statutes define unjustifiable risk as a "risk of such nature and degree that a failure to avoid it constitutes a deviation from the standard of care a reasonable person would observe... ." Thus the statutes merely codify the usual common law standard of care. Because the statutes do not set forth precise standards of care, the trial court properly refused to add negligence per se language to Instruction No. 17.
Plaintiffs' contention that they were prejudiced because negligence per se language was included in Instructions No. 14 and No. 16, which were directed against plaintiffs, is without merit. The regulations contained in Instruction 14 and Instruction 16 prescribe specific forms of conduct. 13 AAC 02.130 referred to in Instruction 14 states that a driver approaching a yield sign must stop or slow down. 13 AAC 02.330, referred to in Instruction 16, prohibits racing. Plaintiffs were not prejudiced simply because the trial court correctly found negligence per se to be applicable to regulations prescribing particular conduct, but inapplicable to statutes couched in general and abstract terms.
New Trial Motion
Plaintiffs' final argument is that the court erred in denying their motion for a new trial.
"The matter of granting or refusing a new trial rests in the sound discretion of the trial judge." Ahlstrom v. Cummings, 388 P.2d 261, 262 (Alaska 1964). If there was an evidentiary basis for the jury's decision, the denial of a new trial must be affirmed. On the other hand, where "the evidence to support the verdict was completely lacking or was so slight and unconvincing as to make the verdict plainly unreasonable and unjust," a reversal of a denial of a new trial is proper.[13] Finally, in reviewing the denial of a motion for a new trial, we must view the evidence in the light most favorable to the non-moving party. City of Palmer v. Anderson, 603 P.2d 495, 501 (Alaska 1979).
Viewing the evidence in the light most favorable to Lenord, we conclude that there was an ample evidentiary basis for the jury's verdict. Lenord testified that he was traveling between 25 and 30 miles per hour in a 30 mile per hour zone. Other evidence that Lenord was driving in a normal manner was introduced at trial. Although witnesses for the plaintiffs testified that Lenord was speeding, the jurors were entitled to disbelieve their testimony. Because evidence of Lenord's non-negligence was not so slight or lacking as to make the verdict plainly unjust and unreasonable, we conclude that the trial court did not abuse its discretion in denying plaintiffs' motion for a new trial.
AFFIRMED.
NOTES
[1] Instruction No. 13 reads as follows:
I instruct you that under state law the speed limit for Dunbar and "C" Streets is 30 m.p.h.
Regardless of what the speed limit may be, the law in Alaska requires that a person not drive a vehicle at a speed greater than is reasonable and prudent under the conditions, having regard to the actual and potential hazards existing at the time. Speed must be controlled so as to avoid colliding with a person, vehicle or other conveyance operated in compliance with a legal requirement.
[2] 13 AAC 02.275 (amended July 1979) provides in part:
(b) Except when a special hazard exists that requires lower speed for compliance with (a) of this section, the limits specified in this section or established as authorized by this chapter or other law are the maximum lawful speeds, and a person may not drive a vehicle at a speed in excess of the maximum limit except as provided in this chapter.
(1) 30 miles per hour on a city street; ...
[3] The Fairbanks Code of Ordinances provides in part:
Sec. 7.303. Maximum Speed Limits.
(a) Except when a special hazard exists that requires lower speed for compliance with FGC 7.301, the limits specified in this section or established as authorized by this chapter are the maximum lawful speeds, and a person may not drive a vehicle at a speed in excess of the maximum limit except as provided in this chapter or controlling state traffic regulations:
(1) Fifteen miles per hour in an alley.
(2) Twenty miles per hour.
... .
(iii). Within a residence district except on arterial streets and except as otherwise provided herein.
[4] AS 28.01.010 provides in relevant part:
Provisions uniform throughout state. (a) The provisions of this title and the regulations adopted under this title are applicable within all municipalities of the state. No municipality may enact an ordinance which is inconsistent with the provisions of this title or the regulations adopted under this title. A municipality may not incorporate into a publication of traffic ordinances a provision of this title or the regulations adopted under this title without specifically identifying the provision or regulation as a state statute or regulation.
(b) A municipality may adopt by reference all or a part of this title and regulations adopted under this title, and may request and shall receive from the Departments of Public Safety and Community and Regional Affairs assistance in the drafting of model ordinances for adoption by reference. Notwithstanding (a) of this section, a municipality may enact necessary ordinances to meet specific local requirements... .
[5] 13 AAC 02.280-285 read as follows:
13 AAC 02.280. Alterations of Limits by State and Municipalities. (a) When the Department of Transportation and Public Facilities with the assistance of the department, or a municipality, in their respective jurisdictions and consistent with AS 28.01.010, determines upon the basis of an engineering and traffic investigation that a maximum speed prescribed in sec. .275(b) of this chapter is greater or lesser than is reasonable or safe under the conditions found to exist at an intersection, or an arterial street, or at any other place or part of the state or municipal highway system, the respective authority may determine a reasonable and safe maximum limit at the location. The maximum speed limit is effective when signs giving notice of the maximum limit are erected. 13 AAC 02.285. When Local Authority May Alter Maximum Limit. (a) When local authority in its jurisdiction determines that the maximum speed permitted under this chapter is greater or less than is reasonable and safe under the conditions found to exist upon a city street or part of a city street, the local authority may declare a reasonable and safe maximum limit on it which
(1) decreases the limit at an intersection; or
(2) increases the limit but not to more than 60 miles per hour; or
(3) decreases the limit but not to less than 20 miles per hour.
(b) A limit altered as authorized in this section is effective when an appropriate sign giving notice thereof is erected. The maximum speed limit may be declared effective at all times or at the times indicated upon the sign; and a different limit may be established for different times of day, different types of vehicles, varying weather conditions or other factors bearing on safe speed, which limits are effective when posted upon an appropriate fixed or variable sign.
[6] Plaintiffs' contention that Alaska's constitution, statutes, administrative code and traffic manual do not require Fairbanks to erect speed limit signs is without merit. Article X, § 11 of the Alaska Constitution specifically states that a municipality's powers are limited to those not prohibited by law. AS 28.01.010 prohibits municipalities from passing ordinances inconsistent with state-wide traffic statutes and regulations. Alaska's traffic regulations and statutes require municipalities to erect speed limit signs. The Alaska Traffic Manual which provides guidelines for the implementation of traffic control devices discourages the excessive use of signs, but also states that when a municipality increases or decreases a state-wide speed limit, "speed limit signs shall be placed at the beginning of each zone and at such other locations within the zone as necessary to advise the motorist of the posted limit." Alaska Traffic Manual, III-3A-02 (1978).
[7] Although AS 28.01.010(d), states that a municipality shall erect signs, the effectiveness of the state's 30 mile per hour limit is not conditioned upon signing.
[8] See, e.g., Clark v. Pamplin, 147 Cal. App.2d 676, 305 P.2d 950 (1957); Cavalli v. Luckett, 40 Cal. App.2d 250, 104 P.2d 708 (Cal. App. 1940); Weiland v. Vigil, 560 P.2d 939 (N.M.App. 1977).
[9] Before a police officer may give an opinion as to speed based on skidmarks and speed tests, counsel must show that the officer considered any significant dissimilarities between the test conditions and the accident conditions. Variables that may be relevant include road, tire, and brake conditions, vehicle weight, and the effect of the collision. See Annot. 29 A.L.R.3d 248, 253 (1970).
[10] Instruction No. 16 reads as follows:
Title 13 of the Alaska Administrative Code § 02.330 provides as follows:
(a) A person may not race a motor vehicle except as provided in this section. Persons comparing or contesting relative speeds of vehicles by simultaneous operations, whether or not the speed exceeds the maximum prescribed by law, violate this section.
If you find that a party to this action violated the traffic regulation just read to you, you will find such violation was negligence unless such party proves by a preponderance of the evidence that he did what might reasonably be expected of a person of ordinary prudence, acting under similar circumstances, who desired to comply with the law.
[11] Instruction No. 17 reads as follows:
Alaska law does not permit what is called negligent driving or reckless driving. The law relating to negligent driving states that:
A person who drives a motor vehicle in the state in a manner which creates an unjustifiable risk of harm to a person or to property and who, as a result of the creation of the risk, actually endangers a person or property is guilty of negligent driving. An unjustifiable risk is a risk of such a nature and degree that a failure to avoid it constitutes a deviation from the standard of care that a reasonable person would observe in the situation.
Proof that a defendant actually endangered a person or property is established by showing that, as a result of the defendant's driving,
(1) an accident occurred;
(2) a person, including the defendant, took evasive action to avoid an accident;
(3) a person, including the defendant, stopped or slowed down suddenly to avoid an accident; or
(4) a person or property, including the defendant or his property, was otherwise endangered.
The law relating to reckless driving states that:
A person who drives a motor vehicle in the state in a manner which creates a substantial and unjustifiable risk of harm to a person or to property is guilty of reckless driving. A substantial and unjustifiable risk is a risk of such a nature and degree that the conscious disregard of it or a failure to perceive it constitutes a gross deviation from the standard of conduct that a reasonable person would observe in the situation.
[12] Restatement (Second) of Torts § 286 (1965) provides:
The court may adopt as the standard of conduct of a reasonable man the requirements of a legislative enactment or an administrative regulation whose purpose is found to be exclusively or in part
(a) to protect a class of persons which includes the one whose interest is invaded, and
(b) to protect the particular interest which is invaded, and
(c) to protect that interest against the kind of harm which has resulted, and
(d) to protect that interest against the particular hazard from which the harm results.
Restatement (Second) of Torts § 288A (1965) provides:
(1) An excused violation of a legislative enactment or an administrative regulation is not negligence.
(2) Unless the enactment of regulation is construed not to permit such excuse, its violation is excused when
(a) the violation is reasonable because of the actor's incapacity;
(b) he neither knows nor should know of the occasion for compliance;
(c) he is unable after reasonable diligence or care to comply;
(d) he is confronted by an emergency not due to his own misconduct;
(e) compliance would involve a greater risk of harm to the actor or to others.
Restatement (Second) of Torts § 288B (1965) provides:
(1) The unexcused violation of a legislative enactment or an administrative regulation which is adopted by the court as defining the standard of conduct of a reasonable man, is negligence in itself.
(2) The unexcused violation of an enactment or regulation which is not so adopted may be relevant evidence bearing on the issue of negligent conduct.
[13] Sloan v. Atlantic Richfield Co., 541 P.2d 717, 724 (Alaska 1975), quoting Ahlstrom v. Cummings, 388 P.2d 261, 262 (Alaska 1964).
|
72 F.3d 1096
Antonio WILLIAMSv.Joseph RENE; Esso Virgin Islands, Inc. Scott Drake; JohnDoe, Third-party Defendants.Esso Virgin Islands, Inc., Appellant.
No. 95-7226.
United States Court of Appeals,Third Circuit.
Argued Aug. 16, 1995.Decided Nov. 15, 1995.
Robert T. Lehman (argued), Arthur H. Jones, Jr., Archer & Greiner, A Professional Corporation, Haddonfield, New Jersey, Douglas L. Capdeville, Christiansted, St. Croix, U.S.A. Virgin Islands, for Appellant.
Lee J. Rohn (argued), Maurice J. Cusick, Rohn & Cusick, Christiansted, St. Croix, U.S.A. Virgin Islands, Linda Morgan, Christiansted, St. Croix, U.S.A. Virgin Islands, Renee D. Dowling, Christiansted, St. Croix, U.S.A. Virgin Islands, for Appellee.
Before STAPLETON, LEWIS and WEIS, Circuit Judges.
OPINION OF THE COURT
WEIS, Circuit Judge.
1
In this Virgin Islands automobile accident case, evidence that an employee was driving a company car for his own convenience, together with a presumption of vicarious liability on the part of the employer, raised a question for the jury to resolve. Because the trial court granted a partial judgment as a matter of law against the employer on the respondeat superior issue, we will reverse and remand for a new trial.
2
For guidance on the retrial, we note that an unsupported opinion by an actuarial expert on the plaintiff's future earnings should not be received into evidence. We also conclude that the failure of defense counsel to advise the plaintiff's lawyer of an interview with an attending physician is not an adequate ground to exclude that doctor's testimony.
3
Plaintiff Antonio Williams was injured on St. Croix, Virgin Islands on December 12, 1990 when his pickup truck collided with an automobile owned by defendant Esso and operated by Joseph Rene, one of its employees. Williams sued both Esso and Rene in the District Court of the Virgin Islands. At the conclusion of the evidence at the trial, on the plaintiff's motion, the court dismissed Rene from the case. The jury then awarded plaintiff a verdict of $4.5 million against Esso. The district court denied Esso's post-trial motions. Williams v. Rene, 886 F.Supp. 1214 (D.V.I.1995).
4
Esso had assigned the automobile in question to the position held by one of its employees, Helen Sia. In carrying out her duties as a sales representative, Sia traveled frequently to visit various customers in the Virgin Islands. Esso permitted her to take the company car home after work and to use it for personal matters.
5
Sia's office was located about a quarter of a mile from the St. Croix Airport Terminal and was separated from it by the "Esso Yard." On some occasions, she would drive from her home to the airport terminal to meet with customers. At other times, she would travel directly from her residence to her office. If it became necessary during the work day to go to the airport terminal, Sia would either walk, drive the company car, or be "shuttled" by another Esso employee who might be available.
6
On the evening of December 11, 1990, the day before the accident, Sia drove the company car to her home with a passenger, her co-employee Rene, whose own vehicle had broken down. When they arrived at Sia's residence, she turned the car over to Rene, who then drove it to his home, some distance away. The understanding was that Rene would return the automobile to Sia at her home the following morning. She would then drive to the airport for a business appointment there, dropping Rene off at his job site.
7
Rene was a crew leader in the Esso group that refueled planes at the St. Croix Airport. He was not Sia's supervisor nor did she supervise him. No supervisory person authorized Rene to drive the car on this occasion.
8
The accident occurred not long after Rene left his home, between 6:45 a.m. and 7:00 a.m., and while he was en route to Sia's home. The record does not disclose when Sia and Rene were to report to work, but it may be assumed that the starting times were after the hour at which the accident occurred.
9
At the close of the evidence, the trial court granted the plaintiff's motion for a partial judgment as a matter of law, holding Esso responsible under respondeat superior principles. Plaintiff also moved to dismiss Rene as a defendant "conditioned on the granting of the motion for respondeat superior and ... seek its damages solely from Esso as a result of its employee in the course and scope of his employment." That motion was also granted and the case went to the jury with Esso as the sole defendant.
10
Defendant appealed, asserting that the district court erred in granting judgment as a matter of law on the agency issue and in failing to grant a remittitur or order a new trial because of the excessiveness of the verdict.
I.
11
The plaintiff's theory of liability against Esso is based on respondeat superior, that is, that an employer is responsible for the negligence of its employees that occurs within the course and scope of their employment. The employer's liability is vicarious and secondary to that of the employee, which is primary. The relationship was explained in Builders Supply Co. v. McCabe, 366 Pa. 322, 77 A.2d 368, 370 (1951): "[T]he person primarily liable is the employee or agent who committed the tort, and the employer or principal may recover indemnity from him for the damages which he [the employer] has been obliged to pay." Accord Sochanski v. Sears, Roebuck & Co., 689 F.2d 45, 50 (3d Cir.1982); Tromza v. Tecumseh Prods. Co., 378 F.2d 601, 605 (3d Cir.1967). The Restatement (Second) of Agency is in agreement. Section 401 comment (d) reads, "a servant who, while acting within the scope of employment, negligently injures a third person, although personally liable to such person, is also subject to liability to the principal if the principal is thereby required to pay damages." See also Restatement of Restitution Sec. 96 (1937).
12
Throughout the litigation, the parties seemed to assume that the liability of Esso and Rene was joint and several. This misunderstanding of the fundamental nature of Rene's primary responsibility led to a number of errors during the proceedings. For example, in her opening remarks to the jury, the plaintiff's counsel said "... if Mr. Rene was operating that vehicle in the course and scope of his employment, then his employer is the one who's responsible to pay the damages and that's Esso. And the law says if Mr. Rene was not in the course and scope of his employment, then Mr. Rene is liable for those damages."
13
These comments, of course, are a misstatement of the law. Rene, as the primary tortfeasor, would be liable in any event for his negligence in causing the accident without regard to whether Esso was secondarily liable. Esso would be responsible only if Rene were negligent and his conduct occurred during the course and scope of his employment. Esso's liability would be vicarious only, but Rene's conduct would be the sole, active negligence that caused the accident.
14
We turn then to the scope of employment issue. Because the Restatements furnish the guiding common law in the Virgin Islands, we look to sections 228 and 229 of the Restatement (Second) of Agency. V.I.Code Ann. tit. 1, Sec. 4 (1967).
15
Restatement section 228(1)(a), (b) provides that conduct of a servant is within the scope of employment if it is the kind he is employed to perform and it occurs substantially within the authorized time and space limits. Section 228(2) states that conduct is not within the scope of employment if it is "too little actuated by a purpose to serve the master."
16
Comment d to section 229 is particularly pertinent here. It discusses the "going to and from work" situation and notes the importance of ascertaining "whether the vehicle is supplied primarily for the purpose of assisting the [employer's] work, or for the purpose of assisting the employee to perform what is essentially his own job of getting to ... work." Simply because the employer provides a vehicle "does not establish that those who avail themselves of it are within the scope of employment while upon it, especially if the use is merely casual." Id.
17
The general rule is that employees are not within the scope of their employment while traveling to and returning from work. That principle was recognized by the Territorial Court of the Virgin Islands in McFarlane v. Jones Masonry, 25 V.I. 43 (Terr.Ct.1990). See also Charles v. Mitchell, 21 V.I. 478 (D.V.I.1985). There may be some circumstances that take a case out of the general rule, for example, when there are express instructions by the employer or when the trip serves some specific purpose of the employer other than merely providing for the presence of the employee at the work place. See, e.g., Caldwell v. A.R.B., Inc., 176 Cal.App.3d 1028, 222 Cal.Rptr. 494, 498 (1986).
18
In Pacheco v. United States, 409 F.2d 1234, 1237 (3d Cir.1969), we held that, generally speaking, proof of a defendant's ownership of a vehicle and of its operation at the time of the accident by an agent of the defendant creates a presumption that the driver was acting within the scope of employment. As we indicated in the opinion, that presumption is rebuttable. Id.
19
Federal Rule of Evidence 302 provides that the effect of a presumption is determined by state law whenever it supplies the rule of decision on a claim. Assuming, without deciding, that the Virgin Islands statute on presumptions, V.I.Code Ann. tit. 5, Sec. 812 (1967), governs here, Esso had the burden of proving that Rene was not acting within the scope of his employment once plaintiff established the Pacheco presumption.
20
The standard of review for the grant of a motion for judgment as a matter of law varies according to whether the moving party has the burden of proof. Fireman's Fund Ins. Co. v. Videfreeze Corp., 540 F.2d 1171, 1177 (3d Cir.1976). Because Esso had the burden of proof on the respondeat superior issue, the grant of the plaintiff's motion can be sustained "only if, viewing the evidence in the light most favorable to the non-moving party, there is no question of material fact for the jury, and any verdict other than the one directed would be erroneous under the governing law." Tait v. Armor Elevator Co., 958 F.2d 563, 569 (3d Cir.1992) (quoting Macleary v. Hines, 817 F.2d 1081, 1083 (3d Cir.1987)).
21
The record in this case contains ample evidence to rebut a Pacheco presumption. Rene's employment at the airport was not the type of job that required travel by automobile over the Island. Rene left his home between 6:45 and 7:00 a.m. The collision occurred shortly thereafter, apparently before he was to report for work at the airport. At the time of the collision, he was en route to Sia's home to turn the car over to her. Sia, a co-employee, had furnished the car as a favor to Rene to get him from her home to his and back. No one in a supervisory position at Esso had authorized or directed Rene to use the car on the day of the accident, or to pick up Sia.
22
Plaintiff produced some evidence that, at various times in the past, some of Esso's employees had been authorized during working hours to drive to employees' homes in order to bring them to the work place. That testimony was general and did not establish a clear policy, nor did it demonstrate that Rene had been directed to bring Sia to work. In this context, it is important to note, as the Restatement points out, the distinction between an employer's permission to drive a company car for personal errands and directions for the use of the automobile on the employer's business. The mere fact that Esso had allowed its employees to use its vehicles to bring other employees to work in the past did not establish that Rene was within the scope of employment.
23
Although plaintiff was entitled to a Pacheco presumption, there was adequate evidence to support a finding that Rene was using the automobile for his own personal convenience and not on the business of Esso. Consequently, the respondeat superior question should have been submitted to the jury. It was error, therefore, to grant judgment against Esso on the vicarious liability issue. Accordingly, a new trial must be granted.
24
At this juncture, the question arises whether the new trial should be granted only as to liability without vacating the damage award. In Gasoline Prods. Co. v. Champlin Refining Co., 283 U.S. 494, 51 S.Ct. 513, 75 L.Ed. 1188 (1931), the Supreme Court held that even if error as to one issue requires a new trial, it need not include other separate points that were properly decided. If the issue of damages, however, is so intertwined with liability that one cannot be submitted to the jury independently of the other without confusion and uncertainty, then a new trial must extend to all issues. Id. at 500-01, 51 S.Ct. at 515. Accord Simone v. Golden Nugget Hotel & Casino, 844 F.2d 1031, 1040 (3d Cir.1988); Vizzini v. Ford Motor Co., 569 F.2d 754, 759 (3d Cir.1977); see also Fed.R.Civ.P. 59(a).
25
This appeal presents a unique circumstance that has a bearing on the appropriate scope of a new trial. The district court granted the plaintiff's request to dismiss defendant Rene just before the case was submitted to the jury. The dismissal was conditional, that is, dependent on a judgment as a matter of law against Esso on the respondeat superior issue. The situation thus created may fairly be said to come within the purview of a comment in a leading treatise: "When fewer than all defendants are dismissed voluntarily, ... the court retains plenary power to reinstate those defendants until the claim has been adjudicated as to the remaining defendants." 9 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure Sec. 2367 at 323 (1995).
26
Because the respondeat superior ruling must be set aside, so too must Rene's dismissal be vacated. The district court acquiesced in the limited effect of the plaintiff's motion, and it would be inappropriate, as well as unfair, to hold at this point that Rene would no longer be a party. We therefore direct that Rene be reinstated as a defendant.
27
Having concluded that Rene will be a party on the retrial, we must consider what effect that factor will have on the remaining issues. It is significant that the jury reached its verdict on negligence and damages at a time when Rene was no longer a defendant in the case. On retrial, it may be that the jury will exonerate both Esso and Rene, or perhaps, leave Rene to bear full responsibility for the plaintiff's damages. In view of those possibilities, it would be inequitable to have Rene bound by a negligence finding or a damages assessment that a jury might not have rendered had it been aware that he was to be the sole, primarily-responsible defendant.
28
We need not blind ourselves to the fact that juries are apt to assess larger verdicts against major corporations than against individuals. Indeed, the plaintiff's ploy in dismissing Rene from the suit was clearly intended to focus the jury's attention on the deep pocket defendant, Esso. In the circumstances here, the new trial must extend to all parties and to damages as well as liability.
II.
29
Because we have decided that a new trial must include damages, we need not discuss at any length the defendant's contention that the verdict was excessive. However, guidance on some matters that may recur on the retrial may be helpful.
30
About a month and a half after the accident, plaintiff returned to his job as a first class mechanic at the Virgin Islands Water and Power Authority. He continued to work there until shortly before the trial began. In early 1992, plaintiff applied for, and received, a promotion to preventive maintenance supervisory foreman, a position that paid approximately $44,000 per year. That was a substantial increase over the $30,000 he received in 1991. His earnings in 1992 were approximately $35,000, but the record does not disclose what part of that sum included the higher pay for the supervisory position.
31
At trial, the plaintiff's actuarial expert, assuming plaintiff would be permanently disabled, projected his gross loss of income to be approximately $2 million. This calculation took into account both anticipated earnings and projected inflation to arrive at an annual increase of 5% over the plaintiff's current earnings. The witness reduced the $2 million figure to its present value of approximately $750,000.
32
In responding to a question from the plaintiff's counsel on redirect examination, the expert said that, based on actual earnings from 1991 through 1993, the average increase in income was 16.1% annually, more than three times higher than the 5% figure that he had used in projecting the gross earnings loss. Counsel then stated: "So instead of two million, you would have a number of six million dollars, is that right?" The expert replied, "Yes, ma'am, or close to it."
33
Two serious deficiencies undermine that testimony of counsel and expert. There was no evidence on which the witness could properly base an opinion that the plaintiff's gross earnings would triple in the remaining seventeen years of his service before retirement. The record contains no data on the salary scales at the Water and Power Authority and nothing to indicate that the plaintiff's experience and training would qualify him for positions higher than the one he held at time of trial. See Benjamin v. Peter's Farm Condominium Owners Ass'n, 820 F.2d 640, 642 (3d Cir.1987) (requiring evidence to justify prospective earnings); Gumbs v. International Harvester, Inc., 718 F.2d 88, 98 (3d Cir.1983) (same). The 16% average increase primarily was the result of the warping of the earnings record brought about by the substantial promotion from mechanic to supervisory foreman. Moreover, at no time was the $6 million projection reduced to present worth, an obligation that plaintiff must shoulder. See Gorniak v. National R.R. Passenger Corp., 889 F.2d 481, 486 (3d Cir.1989).
34
The $6 million figure apparently had an appreciable influence on the size of the verdict. In his post-trial opinion reviewing the damage award, the trial judge commented: "Plaintiff presented evidence ... that Mr. Williams' economic damages alone might be estimated at almost 6 million dollars." Williams, 886 F.Supp. at 1239. "If the jury believed this testimony, then the entire $4.5 million dollar award is actually lower than the evidence revealed in the record of Mr. Williams' maximum economic damages. If they believed this testimony, it is possible that they came up with the $4.5 million award without even considering any damages for pain and suffering. It is quite likely that the jury did believe plaintiff's evidence since it was essentially unrebutted by the defendants." Id. at 1241.1
35
Because of its misleading character, such unsupported and speculative expert testimony should not be received into evidence on the retrial.
36
Another ruling that requires some comment was the exclusion of the testimony of Dr. Walter Pedersen, the plaintiff's attending physician. Before the trial commenced, the court ruled in limine that defendant could not call the physician as a witness. Dr. Pedersen had treated plaintiff after the accident and submitted a report to the plaintiff's attorney. She, in turn, sent a copy to the defendant's counsel. About two years later, in the final pretrial order, plaintiff submitted a list of witnesses he proposed to call. Dr. Pedersen's name was not included. The defense, however, as part of its pretrial submission, listed Dr. Pedersen as a fact witness in its case.
37
After receiving the plaintiff's witness list, the defendant's counsel met with Dr. Pedersen. Plaintiff had previously executed a broadly-worded medical information release that would permit such an interview. Defense counsel did not tell the plaintiff's lawyer of his intention to discuss the plaintiff's injury with the physician.
38
The trial court based its exclusionary ruling on three grounds:
39
(1) despite local practice, defense counsel had failed to notify the plaintiff's lawyer of the interview;
40
(2) the defense proposed to elicit expert opinion evidence from Dr. Pedersen although he had been listed in its pretrial submission as a fact witness; and
41
(3) Dr. Pedersen had not submitted a report of his opinion to plaintiff as required by Fed.R.Civ.P. 26(b)(4)(B).
42
In DeMarines v. KLM Royal Dutch Airlines, 580 F.2d 1193, 1201-02 (3d Cir.1978), we discussed the factors that must be assessed in excluding a witness's testimony because of failure to comply with pretrial notice requirements:
43
1. the prejudice or surprise in fact to the opposing party;
44
2. the ability of that party to cure the prejudice;
45
3. the extent to which the orderly and efficient trial of the case would be disrupted; and
46
4. bad faith in failing to comply with the court's order.
47
In addition, the significance of the practical importance of the excluded evidence must be taken into consideration. Id. at 1202. See also Johnson v. H.K. Webster, Inc., 775 F.2d 1, 8 (1st Cir.1985); Stich v. United States, 730 F.2d 115, 118 (3d Cir.1984).
48
We find no evidence of surprise to plaintiff in the rather unusual situation present here. Plaintiff had previously obtained a report from Dr. Pedersen, and we may assume that he had been interviewed by the plaintiff's counsel. There was no indication that the trial would have been disrupted by receiving the physician's testimony.
49
The trial court apparently felt bound by a local policy articulated by the Territorial Court in Chase v. People's Drug Store, 24 V.I. 183, 187 (Terr.Ct.1989), which required the plaintiff's counsel to be notified before a defense lawyer interviewed an attending physician. Dismissing the written authorization to release medical information, the district court noted that despite similar waivers in Chase, the Territorial Court adopted the practice of a New Jersey case, Stempler v. Speidell, 100 N.J. 368, 495 A.2d 857 (1985). Stempler required prior notification to the plaintiff's counsel before defendant could interview an attending physician.
50
We have reservations about the restrictions imposed in Stempler and believe the better approach is expressed in International Business Mach. Corp. v. Edelstein, 526 F.2d 37 (2d Cir.1975). There, the court referred to "time-honored and decision-honored principles, namely, that counsel for all parties have a right to interview an adverse party's witnesses (the witness willing) in private, without the presence or consent of opposing counsel and without a transcript being made." Id. at 42. We are concerned that the Chase holding hinders settlement negotiations and trial preparation by restricting the gathering of relevant evidence in an informal fashion, thus requiring the more expensive and time-consuming procedures of a formal deposition.
51
Furthermore, by putting his physical condition at issue, plaintiff waived the physician-patient privilege with respect to the injuries claimed to have been incurred in the accident. See 5 V.I.Code Ann. tit. 5, Sec. 855(4) (1967); Fed.R.Evid. 501.
52
In any event, even failure to follow the Chase procedure would not provide sufficient cause to bar Dr. Pedersen's testimony in this case where plaintiff had received a report from the physician and had decided not to call him as a witness. The 1970 Advisory Committee report to Fed.R.Civ.P. 26(b)(4) noted that for discovery purposes, an expert witness who was an actor or viewer of the occurrence that is the subject matter of the lawsuit should be treated "as an ordinary witness." That same viewpoint is applicable here in the trial setting.
53
The significance of Dr. Pedersen's testimony is apparent from the dispute over whether the plaintiff's back condition was caused solely by the automobile accident in 1990. Our review of the trial record reveals references to previous injuries to the plaintiff's lower back in 1969, 1975, 1978, 1980, 1981, 1982 (two incidents), 1983, and 1986. In 1990, shortly before the accident in this suit, he also had an x-ray of the lower back.
54
Dr. Pedersen treated plaintiff for some of these previous injuries as well as those incurred in the auto accident in December of 1990. The extent of the plaintiff's disability caused by the pre-existing injuries and that portion attributable to the Rene collision are crucial in the determination of a proper damage award. It seems likely that Dr. Pedersen's testimony would be helpful to making an evaluation on causation, and he should be permitted to testify at the retrial. Of course, the trial court may require the defense to produce, in advance of trial, a report by Dr. Pedersen of any additional matters, including opinions that he intends to testify about, that had not been included in any previous reports to, or interviews with, the plaintiff's counsel.
55
Because other evidentiary matters raised by the defense may be obviated on the retrial, we do not address nor decide them at this juncture.
56
The judgment of the district court will be reversed and the case remanded for a new trial. Costs to abide the event.
1
Because he concluded that the loss of income made up such a large part of the award, the trial judge did not deem it necessary to review other cases involving similar injuries to determine the reasonableness of amounts awarded for pain and suffering. See Gumbs v. Pueblo Int'l, Inc., 823 F.2d 768 (3d Cir.1987); Couch v. St. Croix Marine Inc., 667 F.Supp. 223 (D.V.I.1987); Erysthee v. El Nuevo Lirio Grocery, 25 V.I. 307 (D.V.I.App.Div.1990). Such comparisons do provide some guidance for courts in considering whether a verdict is excessive and we commend the use of such data
|
732 N.W.2d 859 (2007)
STATE
v.
HICKS.
No. 2005AP2785-CR.
Supreme Court of Wisconsin.
March 14, 2007.
Petition for review denied.
|
430 F.3d 500
Judy E. MORRIS, M.D., Plaintiff, Appellant,v.UNUM LIFE INSURANCE COMPANY of America, Defendant, Appellee.
No. 04-2654.
United States Court of Appeals, First Circuit.
Heard September 9, 2005.
Decided December 6, 2005.
1
Jeffrey B. Rubin, for appellant.
2
Patricia A. Peard, with whom Ronald W. Schneider, Bernstein, Shur, Sawyer & Nelson, Katherine A. Robertson and Bulkey, Richardson & Gelinas, LLP, were on brief, for appellee.
3
Before BOUDIN, Chief Judge, SELYA, Circuit Judge, and SCHWARZER,* Senior District Judge.
4
SCHWARZER, Senior District Judge.
5
Plaintiff Judy Morris appeals the district court's denial of her motion for reconsideration. The district court entered judgment for Morris under the Employee Retirement and Insurance Security Act, 29 U.S.C. §§ 1001-1461, granting her two years of payments on her claim for mental disability. It denied her claim for benefits for long-term disability based on chronic fatigue syndrome. Morris did not file a timely notice of appeal from the judgment. Instead, she filed two post-judgment motions attacking the court's decision, which the court denied.1 Because Morris has not shown that the district court abused its discretion, we affirm the court's judgment.
PROCEDURAL HISTORY
6
On March 23, 2004, the district court issued a Memorandum and Order awarding Morris two years of benefits for mental disability but denying her claim for benefits for physical disability. On the same day, the court entered judgment pursuant to the Order, awarding Morris $231,214.82. Morris did not appeal the judgment but instead filed a motion for reconsideration on April 5, within the ten-day period allowed by Federal Rule of Civil Procedure 59(e).2 The district court denied that motion on April 21, but also granted Morris until May 28, 2004, "for the filing of any further post-judgment motions." On May 28, Morris informed the district court that she would be unable to file her post-judgment motions before June 1. On that day she filed a voluminous motion for reconsideration.3 The district court denied that motion on October 21 and the next day entered a second judgment "pursuant to the Memorandum and Order of the Court entered October 21, 2004."4 On November 5, Morris timely filed a notice of appeal "from the October 21, 2004 decision."
7
Morris has not appealed the merits judgment of March 23, 2004. The question is whether the denial of her motions for reconsideration was an abuse of discretion.
DISCUSSION
8
Federal Rule of Civil Procedure 59(e) provides that "[a]ny motion to alter or amend a judgment shall be filed no later than 10 days after entry of the judgment." That time limit is mandatory. See Federal Rule of Civil Procedure 6(b) stating that the court "may not extend the time for taking any action under Rule[] ... 59(e)." It leaves the district court with "no power or discretion to modify it." Vargas v. Gonzalez, 975 F.2d 916, 917 (1st Cir.1992). An untimely motion for reconsideration is therefore a nullity, at least for purposes of Rule 59(e). Flint v. Howard, 464 F.2d 1084, 1086 (1st Cir.1972) (citing Jusino v. Morales & Tio, 139 F.2d 946 (1st Cir.1944)).
9
Morris's April 5 motion for reconsideration was filed within the Rule 59(e) ten-day deadline. See Fed.R.Civ.P. 6(a). Morris did not appeal the April 21 denial of that motion, choosing instead to file a renewed motion for post-judgment relief. Even if the court's April 21 order were construed as leave to file further post-judgment motions, the court was without power to entertain a further Rule 59 motion. See Feinstein v. Moses, 951 F.2d 16, 19 (1st Cir.1991) (holding that district court lacks power to enlarge time to file Rule 59(e) motion). The June 1 motion, therefore, was a nullity for Rule 59(e) purposes and the district court was without jurisdiction to grant it. Air Line Pilots Ass'n v. Precision Valley Aviation, Inc., 26 F.3d 220, 224 (1st Cir.1994); Vargas, 975 F.2d at 918.
10
The Supreme Court has acknowledged a limited exception allowing otherwise untimely appeals from post-judgment motions in "unique circumstances." Thompson v. INS, 375 U.S. 384, 387, 84 S.Ct. 397, 11 L.Ed.2d 404 (1964); Air Line Pilots Ass'n, 26 F.3d at 225. The district court's order allowing further post-judgment motions to be filed until May 28, 2004, however, did not excuse Morris's late filing of her notice of appeal. First, this Circuit has questioned the continued viability of the Thompson doctrine. Davignon v. Clemmey, 322 F.3d 1, 10 (1st Cir.2003). Second, even if the doctrine remains viable, the district court's order did not create a "unique circumstance." "[C]ourts generally have insisted on the requirement that the doctrine applies only where a court has affirmatively assured a party that its appeal will be timely." United States v. Heller, 957 F.2d 26, 29 (1st Cir.1992) (internal quotation marks omitted). The district court gave no such assurance. The April 21 Order, which merely gave leave to file "post-judgment motions," did not relieve Morris from the Rule 59(e) deadline.
11
Even if we were to view Morris's motion as having been timely made under Federal Rule of Civil Procedure 60(b), as we may, see United States v. One Urban Lot, 882 F.2d 582, 584-85 (1st Cir.1989), the outcome would be the same. The June 1 motion did not assert any of the grounds for relief from judgment listed in Rule 60(b).
12
Although we do not reach the merits, our review of the record persuades us nonetheless that Morris's brief is totally lacking in any demonstration of error below and that "this is not a case where technical rules have immunized a miscarriage of justice." Flint, 464 F.2d at 1087.
CONCLUSION
13
The judgment is affirmed.
Affirmed
Notes:
*
Of the Northern District of California, sitting by designation
1
In addition to two motions for reconsideration, Morris filed a motion titled "Plaintiff's Motion for Extension and Enlargement of Time for Filing of Postjudgment Motions; Request for Hearing (Preferably By Telephone); and Other Matters" that did not directly challenge the court's March 23, 2004 decision
2
Plaintiff styled her motion "Request for Judicial Notice of Disability and Preliminary Request for Reconsideration of the Court's March 23, 2004 Verdict. Request for a Hearing as an Accommodation for My Disability."
3
The motion was styled: "Motion/Memorandum/Affidavit in Support of Judgment as a Matter of Law, and/or New (Non-Jury) Trial, and/or Reconsideration, and/or Alteration or Amendment to Court's March 23, 2004 Final Judgment with Addition or Amendment to Court's Findings of Fact and Case Precident [sic] as Required by Law."
4
The entry of a second judgment by the District Court clerk was presumably a clerical error
|
Simon v FrancInvest, S.A. (2020 NY Slip Op 03751)
Simon v FrancInvest, S.A.
2020 NY Slip Op 03751
Decided on July 2, 2020
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on July 2, 2020
Manzanet-Daniels, J.P., Gische, Kern, Oing, González, JJ.
11766N 162867/14
[*1] Jean-Pascal Simon, Plaintiff-Appellant,
vFrancInvest, S.A., Nominal Defendant, JJS Group, Inc., Nominal Defendant-Respondent, French-American Surgery Center, Inc., et al., Defendants-Respondents, Fifth Avenue Surgery Center, LLC, et al., Defendants.
Law Office of Nancy J. Volin, New York (Nancy J. Volin of counsel), for appellant.
Lebow & Sokolow LLP, New York (Mark D. Lebow of counsel), for respondents.
Order, Supreme Court, New York County (Saliann Scarpulla, J.), entered November 14, 2019, which denied plaintiff's motion for a default judgment against nominal defendants (FrancInvest and JJS), unanimously affirmed, with costs.
The court providently exercised its discretion in denying plaintiff's motion for a default judgment against FrancInvest and JJS and instead setting a schedule for the service of pleadings in light of various orders concerning the complaint (see Simon v FrancInvest, S.A., 178 AD3d 436 [1st Dept 2019]). While FrancInvest and JJS are appropriate parties given that plaintiff's current remaining claims are stockholder derivative claims, they are nominal defendants against which no direct claims have been made or relief sought.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: JULY 2, 2020
CLERK
|
In the United States Court of Federal Claims
OFFICE OF SPECIAL MASTERS
***************** ***
JOSEPH CORONA, * No. 13-1019V
* Special Master Christian J. Moran
Petitioner, *
v. * Filed: November 10, 2015
*
SECRETARY OF HEALTH * Attorneys’ fees and costs; award
AND HUMAN SERVICES, * in the amount to which respondent
* does not object.
Respondent. *
********************
F. John Caldwell, Jr., Maglio, Christopher & Toale, PA, Sarasota, FL, for
Petitioner;
Justine Walters, U.S. Dep’t of Justice, Washington, DC, for Respondent.
UNPUBLISHED DECISION ON FEES AND COSTS1
On November 9, 2015, petitioner filed a stipulation of fact concerning final
attorneys’ fees and costs in the above-captioned matter. Previously, petitioner
informally submitted a draft application for attorneys’ fees and costs to respondent
for review. Upon review of petitioner’s application, respondent raised objections
to certain items. Based on subsequent discussions, petitioner amended his
application to request $23,006.35, an amount to which respondent does not object.
The Court awards this amount.
On December 26, 2013, Joseph Corona filed a petition for compensation
alleging that the Tetanus-Diphtheria-acellular Pertussis (“Tdap”) vaccine, which he
received on April 4, 2012, caused him to suffer Guillain-Barré Syndrome (“GBS”).
Petitioner received compensation based upon the parties’ stipulation. Decision,
1
The E-Government Act of 2002, Pub. L. No. 107-347, 116 Stat. 2899, 2913 (Dec. 17,
2002), requires that the Court post this ruling on its website. Pursuant to Vaccine Rule 18(b), the
party has 14 days to file a motion proposing redaction of medical information or other
information described in 42 U.S.C. § 300aa-12(d)(4). Any redactions ordered by the special
master will appear in the document posted on the website.
issued Apr. 15, 2015. Because petitioner received compensation, he is entitled to
an award of attorneys’ fees and costs. 42 U.S.C. § 300aa-15(e).
Petitioner seeks a total of $23,006.35 in attorneys’ fees and costs. In
compliance with General Order No. 9, petitioner has filed a statement indicating
that while represented by Maglio, Christopher & Toale, PA Law Firm, he did not
incur costs related to the litigation of this matter. Respondent has no objection to
the amount requested for attorneys’ fees and costs.
After reviewing the request, the Court awards the following:
A lump sum of $23,006.35 in the form of a check made payable to
petitioner and petitioner’s attorney, F. John Caldwell, Jr., of the
law firm Maglio, Christopher, & Toale, for attorneys’ fees and
other litigation costs available under 42 U.S.C. § 300aa-15(e).
The Court thanks the parties for their cooperative efforts in resolving this
matter. The Clerk shall enter judgment accordingly.
Any questions may be directed to my law clerk, Dan Hoffman, at (202) 357-
6360.
IT IS SO ORDERED.
s/Christian J. Moran
Christian J. Moran
Special Master
2
|
3Jn tbe Wniteb ~tates (!Court of jfeberal (!Claims
No. 19-97C
(Filed January 23, 2019)
NOT FOR PUBLICATION
* * * * * * * * * * * * * * * * * *
*
*
GENE EDWARD SCOTT II, *
*
Plaintiff, *
*
V. *
*
THE UNITED STATES, *
*
Defendant. *
*
* * * * * * * * * * * * * * * * * *
ORDER
On January 16, 2019, plaintiff Gene Scott filed a complaint in this court
representing himself. He seems to allege that since he lives in an impoverished
area, the Equal Protection Clause of the Fourteenth Amendment of the U.S.
Constitution entitles him to $2,500,000,000, which he plans to spend on building a
"College University/Residential Hall with [a] medical facility in Holly Grove,
Arkansas." ECF No. 1, at 2-4. Our court's jurisdiction extends to violations of
statutes or Constitutional provisions that mandate federal payments. See Smith v.
United States, 709 F .3d 1114, 1116 (Fed. Cir. 2013) ("To be cognizable under the
Tucker Act, the claim must be for money damages against the United States, and
the substantive law must be money-mandating."); 28 U.S.C. § 149l(a)(l). But the
Federal Circuit has held that the Equal Protection Clause of the Fourteenth
Amendment is not a money-mandating provision of the Constitution. See, e.g.,
LeBlanc v. United States, 50 F .3d 1025, 1028 (Fed. Cir. 1995). Moreover, the
Fourteenth Amendment imposes obligations on states rather than the federal
government. See San Francisco Arts & Athletics, Inc. v. United States Olympic
Comm., 483 U.S. 522, 542 n.21 (1987) ("The Fourteenth Amendment applies to
actions by a State. The claimed association in this case is between the [United
States Olympic Committee] and the Federal Government. Therefore, the
Fourteenth Amendment does not apply.").t
t Even if plaintiff intended to base his claim on the so-called equal protection
component of the Fifth Amendment's Due Process Clause- which does apply to the
70 18 0040 0001 1393 1174
Under the rules of our court, "[i]f the court determines at any time that it
lacks subject-matter jurisdiction, the court must dismiss the action." Rules of the
United States Court of Federal Claims (RCFC) 12(h)(3). Thus, under RCFC
12(h)(3), this case is DISMISSED. To the extent that plaintiff's motion to proceed
in forma pauperis would relieve him of the requirement to pay filing fees, ECF No.
4, his motion is GRANTED. The Clerk shall close the case.
IT IS SO ORDERED.
federal government-our court would still la ck jurisdiction over the subject matter
of this lawsuit. See Carruth v. United States, 224 Ct. Cl. 422, 445 (1980) ("This
court has no jurisdiction over claims based upon the Due Process and Equal
Protection guarantees of the Fifth Amendment, because these constitutional
provisions do not obligate the Federal Government to pay money damages."); see
also LeBlanc, 50 F.3d at 1028.
-2-
|
State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: October 6, 2016 521970
________________________________
In the Matter of the Claim of
ERROL P. CAMPBELL,
Respondent.
TDA INDUSTRIES, INC., MEMORANDUM AND ORDER
Appellant.
COMMISSIONER OF LABOR,
Respondent.
________________________________
Calendar Date: September 12, 2016
Before: Egan Jr., J.P., Lynch, Devine, Clark and Mulvey, JJ.
__________
Eaton & Van Winkle LLP, New York City (Steven W. Wolfe of
counsel), for appellant.
Eric B. Kaviar, New York City, for Errol P. Campbell,
respondent.
__________
Clark, J.
Appeals from two decisions of the Unemployment Insurance
Appeal Board, filed January 29, 2015, which ruled that claimant
was entitled to receive unemployment insurance benefits.
TDA Industries, Inc. operates an indoor tennis club located
in Manhattan. Claimant was a tennis pro who provided individual
and group lessons to TDA's clients from 1988 to 2013. After
claimant was terminated from TDA, he applied for unemployment
insurance benefits, and the Department of Labor denied his
application upon finding, among other things, that he was an
independent contractor and not an employee of TDA. Following a
-2- 521970
hearing at which TDA failed to appear, an Administrative Law
Judge overruled the Department's determination, finding that
claimant was TDA's employee. TDA successfully moved to reopen
the hearing, and, after another hearing, the Administrative Law
Judge once again found that claimant was an employee. The
Unemployment Insurance Appeal Board affirmed that decision and
concluded that claimant was entitled to benefits. TDA appeals.
We affirm. "[I]t is well settled that the existence of an
employment relationship is a factual issue for the Board to
resolve and its determination will not be disturbed if supported
by substantial evidence" (Matter of Raynor [Synchronicity, Inc.—
Commissioner of Labor], 135 AD3d 1261, 1261 [2016]; see Matter of
DeVaul [Guardi—Commissioner of Labor], 138 AD3d 1371, 1371
[2016]). "An employer-employee relationship exists when the
evidence shows that the employer exercises control over the
results produced or the means used to achieve the results" – with
the latter being the more important factor (Matter of Empire
State Towing & Recovery Assn., Inc. [Commissioner of Labor], 15
NY3d 433, 437 [2010]; accord Matter of Waggoneer [Preston Leasing
Corp.—Commissioner of Labor], 137 AD3d 1380, 1380 [2016]).
The testimony at the hearing established that TDA is solely
responsible for setting the court rental and lesson fees,
scheduling lessons, assigning tennis pros to clients who sign up
for lessons and dictating which particular tennis court is to be
used for each lesson. For certain group lessons, TDA even
directs what type of stroke the tennis pros must teach. If a
client is dissatisfied with a tennis pro's services, the
complaint is handled by TDA. In addition, in the event that a
tennis pro is unable to attend a scheduled lesson, TDA
facilitates the rescheduling of the lesson or the coordinating of
a substitute tennis pro to teach the lesson. According to the
testimony of claimant and another tennis pro, which the Board
explicitly credited, if a tennis pro misses a scheduled lesson
and the court cannot be rented to another client, TDA deducts the
cost of the court rental fee from the tennis pro's weekly
earnings.
As for payment, each tennis pro is paid per lesson and the
pay rate varies depending on, among other things, the pro's
-3- 521970
certifications. Nonseasonal clients pay their court rental and
lesson fees directly to TDA and TDA pays the tennis pros by check
once a week. Seasonal clients – i.e., clients who reserve a
court for an entire season – pay their court rental fee up front
and then pay the tennis pros directly for each lesson at a rate
suggested by TDA and set forth in a contract between TDA and the
client. Overall, despite the existence of proof in the record
that could result in a contrary finding (see Matter of Concourse
Ophthalmology Assoc. [Roberts], 60 NY2d 734, 736 [1983]), we find
that the record contains substantial evidence to support the
Board's decision that TDA exercised sufficient control over
claimant's work so as to be considered his employer (see Matter
of Raynor [Synchronicity, Inc.—Commissioner of Labor], 135 AD3d
at 1262; Matter of Yoga Vida NYC, Inc. [Commissioner of Labor],
119 AD3d 1314, 1314-1315 [2014], lv granted 24 NY3d 909 [2014];
Matter of Human Performance, Inc. [Commissioner of Labor], 28
AD3d 971, 972 [2006]; compare Matter of Cohen [Classic Riverdale,
Inc.—Commissioner of Labor], 136 AD3d 1179, 1180-1181 [2016]).
Finally, we find unavailing TDA's assertion that claimant should
be estopped from claiming that he was an employee given that he
deducted expenses on his federal tax return as if he were self-
employed (see Matter of Stuckelman [Blodnick, Gordon, Fletcher &
Sibell, P.C.–Commissioner of Labor], 16 AD3d 882, 883 [2005]).
Egan Jr., J.P., Lynch, Devine and Mulvey, JJ., concur.
ORDERED that the decisions are affirmed, without costs.
ENTER:
Robert D. Mayberger
Clerk of the Court
|
373 F.Supp.2d 248 (2005)
In re SALOMON ANALYST LEVEL 3 LITIGATION
In re Salomon Analyst Williams Litigation
No. 02 Civ.6919 GEL, No. 02 Civ.8156 GEL.
United States District Court, S.D. New York.
January 11, 2005.
*249 Joseph H. Weiss, David C. Katz, Jack Zwick, Weiss & Yourman, New York City, Daniel A. Osborn, Christopher J. Marino, Beattie & Osborn LLP, New York City, Jacqueline Sailer, Gregory Linkh, Rabin, Murray & Frank LLP, New York City, Lead Counsel in Level 3 Litigation and Attorneys for Lead Plaintiffs Richard Garland, Douglas Lippold, and Charles Fuller.
Frederic S. Fox, Donald R. Hall, Kaplan Fox & Kilsheimer LLP, New York City, Lead Counsel in Williams Litigation and Attorneys for Lead Plaintiffs Small & Khalidy Investments, Richard P. Small Trust Clarence L. Bevington, and Gary A. Brom.
Martin London, Richard A. Rosen, Brad S. Karp, Eric S. Goldstein, Joyce S. Huang, Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York City, Peter K. Vigeland, Wilmer, Cutler & Pickering, New York City, for defendants Citigroup Inc., Salomon Smith Barney, and Jack Grubman.
*250 OPINION AND ORDER
LYNCH, District Judge.
These two related cases concern allegations that the defendant bank Citigroup, Inc. ("Citigroup"), its division Salomon Smith Barney ("SSB"), and its research analyst Jack Grubman engaged in a scheme to defraud purchasers and sellers of stock in Level 3 Communications ("Level 3") and Williams Communications Group ("Williams"), and to enrich themselves, by issuing and disseminating research analyst reports on these companies that were materially false and misleading. In an Opinion and Order dated December 2, 2004, the Court dismissed, in part, the Complaints in these actions. See In re Salomon Analyst Level 3 Litigation, 350 F.Supp.2d 477 (S.D.N.Y.2004). On December 21, 2004, the Level 3 Plaintiffs and the Williams Plaintiffs moved for partial reconsideration of that decision. For the reasons that follow, both motions will be denied.
DISCUSSION
I. Standard on a Motion for Reconsideration
Local Civil Rule 6.3 for the Southern District of New York provides that parties may file motions for reconsideration of the Court's decisions, accompanied by memoranda that set forth "the matters or controlling decisions which counsel believes the court has overlooked." Courts in this District review motions pursuant to Local Rule 6.3 under the same standards applicable to motions pursuant to Federal Rule of Civil Procedure 59(e), and thus "a motion for reconsideration is appropriate only where the movant demonstrates that the Court has overlooked controlling decisions or factual matters that were put before it on the underlying motion ... and which, had they been considered, might have reasonably altered the result before the Court." McCullagh v. Merrill Lynch & Co., 01 Civ. 7322(DAB), 2004 WL 744484, at *1 (S.D.N.Y. April 7, 2004) (citations and internal quotations omitted). Motions for reconsideration are not opportunities to re-argues issues or allegations already considered, and thus the rule should be "narrowly construed and strictly applied." National Congress for Puerto Rican Rights v. City of New York, 191 F.R.D. 52, 53 (S.D.N.Y.1999). In their motions, both the Level 3 Plaintiffs and the Williams Plaintiffs have identified a single allegation from the respective complaints that they claim the Court overlooked and that they argue should extend the actionable period back significantly before the April 18, 2001, date held appropriate in the December 2 Opinion. Although plaintiffs are correct that the December 2 Opinion did not specifically address the particular allegation they identify (in each case, merely two or three paragraphs in a nearly 200-paragraph complaint), neither of the allegations merits reconsideration under Local Rule 6.3 or alters the outcome of the motion to dismiss.
II. The Level 3 Plaintiffs' Motion
The Level 3 Plaintiffs argue that the Court "apparently overlooked" the allegations in paragraphs 59-61 of their Complaint, which they contend support an inference that Grubman's private opinion of Level 3 diverged from his publicly-stated opinion. (Level 3 Mem. 1.) Those paragraphs allege that, in February 1999, shortly before a planned public offering of Level 3 stock, a technical analyst at SSB issued a negative report on Winstar Communications and on the telecommunications sector in general.[1] Grubman had *251 already issued one positive report on Level 3, rating the stock at "Outperform" on January 4, 1999. After being contacted by an institutional investor client, "demanding that the technical analyst be punished for [the] report," Grubman forwarded the request on to the heads of Global Equity Research and U.S. Equity Research at SSB, noting in his email that "[t]hese are sentiments shared by many investors who we are waiting on to buy Level 3 also. Here is yet another request that we should punish the technical analyst so that it does not impact us on Level 3. On the roadshow, I want to be able to say we are taking action on the technical analyst, otherwise investors will be afraid that the same thing will happen to Level 3." (Level 3 Compl. ¶ 60.)
Plaintiffs argue that this email demonstrates that "Grubman was privately expressing an opinion on Level 3 that was different from his public opinion." (Level 3 Mem. 2.) Plainly it does not. Plaintiffs rely on their conclusory allegations in both the Complaint and their briefs that Grubman "knew" that the technical analyst was correct and Grubman's reports were wrong, and that Grubman's reports were therefore false and misleading. However, nothing in the email gives the slightest indication that Grubman thought the technical analyst was correct. At best the email supports an inference that Grubman wanted to control any statement by SSB on the stocks he covered, to assure that they accorded with his own expressed views. It does not support an inference that Grubman did not truly believe his own "outperform" or, on February 22, 1999, "buy" ratings or target prices on Level 3, and thus cannot suffice to adequately plead falsity and scienter as to those reports.
Nothing in the Level 3 Plaintiffs' motion alters the Court's conclusion in the December 2 Opinion that, considering the totality of the allegations, the Level 3 Complaint fails to adequately plead falsity and scienter as to Level 3 reports issued prior to April 18, 2001. Accordingly, the motion will be denied.
III. The Williams Plaintiffs' Motion
The Williams Plaintiffs argue that the Court did not address an allegation in their Complaint that Grubman's reports on Williams were false and misleading because his valuation models valued Williams at approximately $30 billion and "other valuation models at SSB" valued the company at approximately $9.3 billion. (Williams Compl. ¶¶ 3(d), 82(c).) Plaintiffs argue primarily that these paragraphs allege the omission of a material fact, which defendants had a duty to disclose, and therefore defendants'"truly held belief with respect to this omission" is irrelevant. (Williams Mem. 3.) In the alternative, they suggest that, even if the Court views the valuation models as opinions, the presence of the "other models" within SSB adequately pleads that defendants did not believe the models published in Grubman's reports on Williams. (Id. 3 n. 2.)
First, the Court rejects plaintiffs' characterization of valuation models as "fact" rather than "opinion." "Facts" about a company include data like amount of sales in a past quarter or the firm's market capitalization on a given date (closing price of the stock multiplied by number of shares outstanding), or events like an executive's promotion to CEO or the acquisition of a competitor. In contrast to these objective statements, financial valuation models depend so heavily on the discretionary choices of the modeler including choice of method (e.g., discounted cash flow vs. market-based methods), choice of assumptions (such as the proper discount rate or cost of capital for a particular firm or industry), and choice of "comparables" that the resulting models and their predictions *252 can only fairly be characterized as subjective opinions. Like other opinions, some valuation models may be more or less reliable than other models, have more or less predictive power, or hew more or less closely to the conventional wisdom on a subject, but they are nonetheless opinions and not objective facts. An analyst who sets out his own opinion of a stock's value based on the valuation model he finds most persuasive for that company does not omit a material fact by failing to note that others may have different opinions or analytic approaches.
Moreover, neither the Williams Complaint, the brief in opposition to the motion to dismiss, nor the brief on the motion for reconsideration offer any particularized allegations about who created these "other models," when they were created, for what purpose, using what methodology and assumptions, or whether Grubman or any of his supervisors in the research department were aware of their existence. It is impossible to tell from this general allegation whether the "other models" are comparable in any way to the models used by Grubman. In any event, the fact that other individuals within SSB may have had views different from Grubman's does not provide any basis for an inference that Grubman did not believe his own professed opinions on Williams' value, or that the other valuation models, rather than Grubman's, constituted SSB's true institutional opinion (if such a concept is even meaningful). Under these circumstances, the allegation cited by the Williams Plaintiffs cannot support an inference of fraud or satisfy the requirement that falsity and scienter be pled with particularity.
Nothing in the Williams Plaintiffs' motion alters the Court's prior conclusion that, considering the totality of the allegations, the Williams Complaint fails to adequately plead falsity and scienter as to Williams reports issued prior to April 18, 2001. Accordingly, the motion will be denied.
CONCLUSION
The motions for reconsideration submitted by the Level 3 and Williams plaintiffs do not present any fact or controlling legal authority that merits reconsideration of the Court's December 2 Opinion in these cases. Accordingly, both motions are denied. In light of the former pendency of these motions, defendants' time to answer the consolidated complaints in these cases is extended to January 31, 2005.
SO ORDERED.
NOTES
[1] According to the Level 3 Complaint, "a `technical analyst' reviews stock prices in a sector to interpret trends in the market, as opposed to a `qualitative analyst' like Grubman who reviews prices and company fundamentals for specific companies." (Level 3 Compl. ¶ 59 n. 1.)
|
859 F.2d 919
U.S.v.Roberson*
NO. 88-5502
United States Court of Appeals,Fifth Circuit.
OCT 03, 1988
1
Appeal From: W.D.Tex.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
|
810 F.Supp. 1184 (1992)
MID KANSAS FEDERAL SAVINGS AND LOAN ASSOCIATION OF WICHITA By and Through its Receiver RESOLUTION TRUST CORPORATION and Mid Kansas Savings and Loan Association, F.A. By and Through its receiver Resolution Trust Corporation, Plaintiffs,
v.
ORPHEUM THEATER COMPANY, LTD., a Kansas corporation; Orpheum Centre Office Building, a Kansas limited partnership; Orpheum Building Management, Inc., a Kansas corporation; Orpheum Centre Owners' Association, a Kansas corporation; Orpheum Performing Arts Centre, Ltd., a Kansas corporation; et al., Defendants.
Civ. A. No. 89-1613.
United States District Court, D. Kansas.
November 24, 1992.
*1185 *1186 David C. Adams, Karl R. Swartz, Susan R. Schrag, Morris, Laing, Evans, Brock & Kennedy, Chtd., Mert F. Buckley, Adams, Jones, Robinson & Malone, Wichita, KS, for Mid Kansas Federal Sav. and Loan Ass'n of Wichita, by and through its Receiver Resolution Trust Corporation.
Timothy B. Mustaine, Foulston & Siefkin, Wichita, KS, for Orpheum Centre Office Bldg., and Orpheum Bldg. Management.
Jack N. Turner, Turner Law, P.A., Wichita, KS, for Orpheum Performing Arts Centre, Ltd.
Alexander B. Mitchell, II, Klenda, Mitchell, Austerman & Zuercher, Wichita, KS, for M. Meredith Hill.
George A. Lowe, Lowe, Farmer, Bacon & Roe, Olathe, KS, for Earl Chandler.
David L. Dahl, Kassebaum & Johnson, Wichita, KS, for Robert Tway.
Thomas M. Bradshaw, Hoskins, King, McGannon & Hahn, Kansas City, MO, Robert A. West, Yonke, Arnold, Newbold & Regan, P.C., Kansas City, MO, for Richard W. Greene.
Thomas M. Bradshaw, Hoskins, King, McGannon & Hahn, David T. Holt, Campbell & Meyers, Kansas City, MO, for Daniel J. Burke.
Timothy B. Mustaine, Foulston & Siefkin, William S. Woolley, Martin, Pringle, Oliver, Wallace & Swartz, Wichita, KS, for James M. Callender.
William A. Vickery, McMaster & McMaster, Wichita, KS, for Lyle J. Darling.
*1187 Timothy B. Mustaine, Foulston & Siefkin, Roger Sherwood, Sherwood, Harper & Gregory, Wichita, KS, for J. Kendall Dillehay and Terry L. Duncan.
Timothy B. Mustaine, Foulston & Siefkin, Wichita, KS, for S.W. Furgason.
John F. Reals, Houk, Reals & Weber, Stephen B. Plummer, Sedgwick County Counselor, Wichita, KS, for R.M. Haden and Treva F. Haden.
Thomas M. Bradshaw, Hoskins, King, McGannon & Hahn, Robert A. West, Yonke, Arnold, Newbold & Regan, Kansas City, MO, for Roger B. Kelsay and Mildred G. Kelsay.
William A. Vickery, McMaster & McMaster, Stan E. Wisdom, Stan E. Wisdom, P.A., Wichita, KS, for Mary Lee Lewis.
Timothy B. Mustaine, Fouston & Siefkin, Roger Sherwood, Sherwood, Harper & Gregory, Wichita, KS, for Estel L. Landreth.
Terry G. Paup, pro se.
Timothy B. Mustaine, Foulston & Siefkind, Wichita, KS, for John S. Ranson and John H. Rogers.
John F. Reals, Michille A. Nolan, Stephen B. Plummer, Sedgwick County Counselor, Wichita, KS, for Marjorie I. Setter.
William A. Vickery, McMaster & McMaster, Wichita, KS, for Steven Wisdom.
Carmen S. Greenup, Sedgwick County Legal Dept., Wichita, KS, for Sedgwick County Bd. of Com'rs.
Kurt A. Harper, Sherwood, Harper & Gregory, Wichita, KS, for Estel L. Landreth and J. Kendall Dillehay.
Bradley A. Stout, Triplett, Woolf & Garretson, Wichita, KS, for Douglas V. Horbelt.
MEMORANDUM AND ORDER
THEIS, District Judge.
This action was brought by Mid Kansas Federal Savings and Loan Association of Wichita ("Mid Kansas") in state court. Several months later Resolution Trust Corporation was appointed receiver for Mid Kansas and was substituted as plaintiff in this action. Plaintiff removed the action to this court. Plaintiff seeks to collect on a series of promissory notes and related guarantees and to foreclose on the real estate mortgage securing the promissory notes. Defendants Daniel J. Burke ("Burke"), Richard Greene ("Greene"), and Roger B. and Mildred Kelsay ("the Kelsays") have filed a series of counterclaims and cross-claims.
The matter is before the court on several motions filed by the various parties. Pending before the court are the following motions: (1) two motions to remand (Doc's 225 and 227) and an alternative motion to transfer (Doc. 240); (2) a motion for jury trial (Doc. 260); (3) plaintiff's motion for summary judgment on the affirmative defenses and counterclaims of the defendants (Doc. 221); and (4) a motion for summary judgment by cross-claim defendants Estel L. Landreth ("Landreth") and J. Kendall Dillehay ("Dillehay") on cross-claims brought against them (Doc. 256). The parties stipulate that Kansas law governs this case.
The facts that are relevant to these motions are as follows. A joint venture was initiated by Stan Wisdom ("Wisdom") to purchase the Orpheum Theater building in downtown Wichita, Kansas and convert it into office condominiums for resale. Landreth and Dillehay participated in the joint venture. In 1986 the project was sold to a limited partnership, with most of the original joint venturers, including Landreth and Dillehay, and some new investors participating as limited partners. The limited partnership was called Orpheum Centre Office Building. Defendants Burke, Greene, and the Kelsays were among the new limited partners. Wisdom allegedly misrepresented several important facts in order to induce the new limited partners' investments. The general partner of the limited partnership was Orpheum Building Management, Inc. The original joint venturers were the sole shareholders in this corporation, and Landreth was its president.
In April 1984 Mid Kansas loaned the joint venture $2,500,000 in exchange for a promissory note and a mortgage on the Orpheum Theater building. In 1986, the *1188 promissory note was modified to make the limited partnership liable on the note, and personal guarantees were issued by the limited partners. The limited partnership defaulted on the loan, and in 1989 Mid Kansas brought an action in state court to recover on the note and the guarantees and to foreclose the mortgage on the Orpheum building. The RTC was later appointed receiver for the insolvent Mid Kansas and substituted as plaintiff in this action. The RTC removed the action to the United States District Court for the District of Kansas.
I. MOTIONS TO REMAND OR TRANSFER
The court must first decide the motions to remand submitted by the defendants Burke, Greene, and the Kelsays because the defendants argue therein that this court does not have subject matter jurisdiction over this case. If this court does not have subject matter jurisdiction, it must remand the case back to state court. 28 U.S.C. § 1447(c).
The Federal Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA") provides that any suit in which the RTC is a party, either originally or substituted for an insolvent institution, is a federal question case, giving the United States district courts original jurisdiction. 12 U.S.C. § 1441a(l)(1). Defendants nevertheless argue that this court does not have subject matter jurisdiction because the present action was not removable to this district under the statute. At the time plaintiff removed the action to federal court, the pre-amendment version of 12 U.S.C. § 1441a(l)(3) was in effect. Section 1441a(l)(3) provided in pertinent part:
Removal and Remand. The Corporation may, without bond or security, remove any such action, suit or proceeding from a State court to the United States District Court for the District of Columbia, or if the action, suit or proceeding arises out of the actions of the Corporation with respect to an institution for which a conservator or a receiver has been appointed, the United States district court for the district where the institution's principal place of business is located.
The Tenth Circuit Court of Appeals held that in cases in which the RTC was substituted as a party for an insolvent institution ("RTC substitution cases"), removal to any federal court other than the district court for the District of Columbia was improper. RTC v. Westgate Partners, Ltd., 937 F.2d 526 (10th Cir.1991). The court applied a plain language interpretation of the statute, while recognizing that it would be much more convenient for parties to litigate in the district where the institution was located ("the local federal district court") than in the District of Columbia. Id. at 530.
It was possible, under the pre-amendment statute, for an RTC substitution case to be tried in the local federal district court, albeit through an unwieldy procedure. The RTC would first remove the case to the federal district court for the District of Columbia under § 1441a(l)(3). That court, in turn, would transfer the case back to the local district court pursuant to 28 U.S.C. § 1404(a), which provides:
For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district where it might have been brought.
See, e.g., Kirby v. Mercury Sav. & Loan Ass'n, 755 F.Supp. 445, 447-48 (D.D.C. 1990); United Sav. Bank v. Rose, 752 F.Supp. 506, 508 (D.D.C.1990); Belgiovine Enterprises, Inc. v. City Fed. Sav. Bank, 748 F.Supp. 33, 38 (D.D.C.1990).[1] The *1189 "where it might have been brought" language was the sticking point in these cases. This language incorporates the requirements of jurisdiction and proper venue. See Hoffman v. Blaski, 363 U.S. 335, 342-44, 80 S.Ct. 1084, 1088-90, 4 L.Ed.2d 1254 (1960). The district court in the District of Columbia has repeatedly held that RTC substitution cases "might have been brought" in the local federal district court although the RTC could not have removed those cases there directly. Kirby, 755 F.Supp. at 447; United Sav. Bank, 752 F.Supp. at 508; Belgiovine Enterprises, 748 F.Supp. at 38; Piekarski, 743 F.Supp. at 43. The local federal district court has subject matter jurisdiction under 12 U.S.C. § 1441a(l)(1),[2] and venue is proper under the general venue provision of 28 U.S.C. § 1391(b). Kirby, 755 F.Supp. at 447; United Sav. Bank, 752 F.Supp. at 508; Belgiovine Enterprises, 748 F.Supp. at 38; Piekarski, 743 F.Supp. at 43.
In 1991 Congress amended § 1441a(l)(3) to state in part:
Removal and Remand. The Corporation, in any capacity and without bond or security, may remove any action, suit, or proceeding from a State court to the United States district court with jurisdiction over the place where the action, suit, or proceeding is pending, to the United States district court for the District of Columbia, or to the United States district court with jurisdiction over the principal place of business of any institution for which the Corporation has been appointed conservator or receiver if the action, suit, or proceeding is brought against the institution or the Corporation as conservator or receiver of such institution.
The amendment took effect February 1, 1992, more than two years after plaintiff removed this case to federal court. Plaintiff argues that the amendment should be applied retroactively. The court agrees.[3] Procedural statutes are applied retroactively unless Congress expresses a contrary intention or retroactive application would lead to manifest injustice. Merchants Nat'l Bank v. Safrabank, 776 F.Supp. 538, 540 (D.Kan.1991) (holding that the 1990 amendment to the general venue statute, 28 U.S.C. § 1391(b), applied retroactively). The statute at issue in this case is clearly procedural. It does not affect the substantive rights of the parties. Congress expressed no opinion as to retroactivity. Finally, there can be no manifest injustice in proceeding in the court that would have ultimately heard the case if plaintiff had properly removed the action to the District of Columbia. Therefore, the 1991 amendment to § 1441a(l)(3) applies, and the present action is properly before this court.
Even if the amendment does not apply retroactively, the defendants' motions to remand should be denied as untimely. FIRREA does not impose a specific time limit on motions to remand. Therefore, the courts have applied the time limit of the general removal statute, 28 U.S.C. § 1447(c), which states in part:
A motion to remand the case on the basis of any defect in removal procedure must be made within 30 days after the filing of the notice of removal under section 1446(a). If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. *1190 RTC v. Sonny's Old Land Corp., 937 F.2d 128, 131 (5th Cir.1991); Sweeney v. RTC, 765 F.Supp. 33, 35 (D.Mass.1991). The preamendment version of 12 U.S.C. § 1441a(l)(3) made the district court for the District of Columbia the exclusive venue for removal of RTC substitution cases. It did not, as defendants argue, impose a subject matter jurisdiction limitation. RTC v. Lightfoot, 938 F.2d 65, 67 (7th Cir.1991); Sonny's Old Land Corp., 937 F.2d at 130-31. But see B.C. Inv. Co. v. Fleischer, No. 90-2101-V, 1991 WL 179311 (D.Kan. Aug. 21, 1991) (Van Bebber, J.).[4] Here the defendants did not file motions to remand until nearly two years after the plaintiff removed the case to federal court. They have therefore waived their objections to any improper procedure.
Because the action is properly before this court, the plaintiff's alternative motion to transfer the case to the district court for the District of Columbia is moot.
II. MOTION FOR JURY TRIAL
Defendants Burke, Greene, and the Kelsays have moved for a jury trial on plaintiffs legal claims against them and on their counterclaims and cross-claims. No party has filed a response to this motion. The court is therefore entitled to summarily grant the motion as unopposed. D.Kan. Rule 206(g). However, the court believes the motion should be granted on the merits.
The first issue is whether the parties are procedurally barred from having the case tried to a jury. Burke, Greene, and the Kelsays failed to demand a jury trial within ten days of service of the last pleading, as Federal Rule of Civil Procedure 38(b) requires. However, the defendant Paup, who has since been dismissed from the action, and the cross-claim defendants did file a timely demand for trial by jury on essentially the same issues. Burke, Greene, and the Kelsays are entitled to rely on the other parties' demands for jury trial. 9 Wright and Miller, Federal Practice and Procedure § 2318 (1971). In the alternative, the court can in its discretion order a jury trial where the parties have not made a timely demand. Fed. R.Civ.P. 39(b).
The second issue is whether this case is properly triable to a jury. The issue is one of federal law. Simler v. Connor, 372 U.S. 221, 83 S.Ct. 609, 9 L.Ed.2d 691 (1963). The court agrees with defendants' assertion that the case is not primarily a foreclosure action, which would be brought in equity. See Bank of White Water v. Decker Inv., Inc., 238 Kan. 308, 710 P.2d 1258 (1985). The action is primarily one to recover on a promissory note and personal guarantees, clearly a legal action. This case involves other claims by the various parties, including fraud and breach of fiduciary duty. These claims are legal in nature and are therefore triable to a jury.
III. PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
Plaintiff seeks recovery from defendants Burke and the Kelsays on personal guarantees they made to secure Mid Kansas' loan to Orpheum. These defendants filed affirmative defenses and counterclaims against the plaintiff, RTC, the receiver for Mid Kansas, alleging that Mid Kansas Federal fraudulently induced them into their guarantees of Orpheum's promissory note. Plaintiff moves for summary judgment on these counterclaims and defenses.
The court is familiar with the standards governing the consideration of a motion for summary judgment. The Federal Rules of Civil Procedure provide that summary judgment is appropriate when the documentary evidence filed with the motion "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of *1191 law." Fed.R.Civ.P. 56(c). A principal purpose "of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses...." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). The court's inquiry is to determine "whether there is the need for a trial whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). In this case the parties agree on all the facts relevant to this motion.
Plaintiff asserts that defendants are barred by federal statute from raising the affirmative defense of fraud in the inducement and from bringing a counterclaim based on fraud. Plaintiff relies on 12 U.S.C. § 1823(e), which provides:
Agreements against interests of Corporation. No agreement which tends to diminish or defeat the interest of the Corporation in any asset acquired by it under this section or section 11, either as security for a loan or by purchase or as receiver of any insured depository institution shall be valid against the Corporation unless such agreement
(1) is in writing,
(2) was executed by the depository institution and any person claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the depository institution,
(3) was approved by the board of directors of the depository institution or its loan committee, which approval shall be reflected in the minutes of said board or committee, and
(4) has been, continuously, from the time of its execution, an official record of the depository institution.
The Supreme Court unanimously held that § 1823(e) bars a defendant from raising the defense of fraud in the inducement when the FDIC, acting as receiver for the depository institution, seeks to collect on a promissory note, unless the allegedly fraudulent statement complies with the four requirements of § 1823(e). Langley v. FDIC, 484 U.S. 86, 108 S.Ct. 396, 98 L.Ed.2d 340 (1987). In the case of FDIC v. Bell, 892 F.2d 64 (10th Cir.1989), the Tenth Circuit Court of Appeals extended the rationale of Langley to uphold summary judgment against the defendant on his counterclaims of fraud by omission. The result is the same when the RTC is the receiver because FIRREA gives the RTC the same rights under § 1823 as the FDIC. 12 U.S.C. § 1441a(b)(4)(A).
The defendants do not dispute that the federal statute bars these affirmative defenses and counterclaims. Rather, defendants contend that this court lacks subject matter jurisdiction over the case, as argued in their motion to remand. As stated above, the matter is properly before this court. There is no genuine issue of material fact, and the law clearly supports plaintiff's position. Therefore, plaintiff is entitled to summary judgment on defendants' counterclaims and affirmative defenses.
IV. MOTION BY CROSS-CLAIM DEFENDANTS LANDRETH AND DILLEHAY FOR SUMMARY JUDGMENT
Defendants Burke, Greene, and the Kelsays have filed cross-claims against Landreth and Dillehay, who were originally defendants in plaintiff's complaint. The cross-claims assert that Landreth and Dillehay, acting through Stan Wisdom, fraudulently induced the cross-claimants to enter into the limited partnership. The cross-claims are brought under the Kansas Securities Act, K.S.A. § 17-1201 et seq., and several common law tort theories. Greene also cross-claims for indemnity for any liability he incurs to the plaintiff in this case. Cross-claimants have settled with Wisdom on these claims and have released him from further liability. The cross-claim defendants move for summary judgment on these claims on several grounds: that the cross-claims are barred by the applicable statutes of limitations; that the releases of Wisdom and former defendants John Ranson *1192 ("Ranson") and S.W. Furgason ("Furgason") operate to release the cross-claim defendants; and that there are no genuine issues of material fact as to breach of fiduciary duty, conspiracy, or disregarding the corporate entity. For the reasons set forth below, the court will grant the motion for summary judgment in part and deny the motion in part.
As discussed above, summary judgment is available when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The party moving for summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact on its claim(s). Rule 56, however, imposes no requirement on the moving party to "support its motion with affidavits or other similar materials negating the opponent's claim." Id. 477 U.S. at 323, 106 S.Ct. at 2553 (emphasis in original). Once the moving party has properly supported its motion for summary judgment, the nonmoving party may not rest upon mere allegations or denials, but must set forth specific facts showing a genuine issue for trial, relying upon the types of evidentiary materials contemplated by Rule 56. Fed.R.Civ.P. 56(e). Each party must demonstrate to the court the existence of contested facts on each claim it will have to prove at trial. Celotex, 477 U.S. at 324, 106 S.Ct. at 2553. The court reviews the evidence on summary judgment under the substantive law and based on the evidentiary burden the party will face at trial on the particular claim. Anderson, 477 U.S. at 254, 106 S.Ct. at 2513.
The court will first consider whether cross-claimants complied with the two-year statute of limitations on their tort claims, found at K.S.A. 60-513. The cross-claim defendants argue that the statute of limitations expired two years after the cross-claimants made their investments in the Orpheum building project. The cross-claimants made their investments in the Orpheum limited partnership in December 1985. The cross-claims were filed in September 1989.
Cross-claimants counter that there is a material issue of fact concerning when the causes of action accrued. A cause of action in fraud or misrepresentation accrues when the fraud is actually discovered or when, with reasonable diligence, the fraud could have been discovered. Augusta Bank & Trust v. Broomfield, 231 Kan. 52, 62-63, 643 P.2d 100 (1982). "It does, however, imply actual knowledge, not mere suspicion of wrong. Further, even though his suspicions might have been aroused a party may be lulled into confidence by certain representations and forego any further investigation." Id. In this case the cross-claimants were unhappy with their investments for more than two years before they filed fraud claims. However, it is not clear at this stage whether their discontentment and suspicion amounted to knowledge of fraud more than two years before the cross-claims were filed. Moreover, it is not clear whether any failure to act sooner was caused in part by Wisdom's reassurances that the investment was doing better.
As for the other tort claims, these causes of action accrue when there is a reasonably ascertainable injury. Therefore, the cross-claim defendants' statement that the statute of limitations began to run when the cross-claimants invested in the limited partnership is incorrect. Cross-claimants assert that they did not suffer a reasonably ascertainable loss until the investment failed. Cross-claim defendants counter that the investment's poor performance before it actually failed was an ascertainable injury. Again, there is a genuine factual dispute as to when the cross-claimants' causes of action accrued.
Next the cross-claim defendants argue that the cross-claim brought under the Kansas Security Act is barred by the statute of limitations. Cross-claimants assert that they are entitled to recover under K.S.A. § 17-1268, which establishes a cause of action for fraud in securities sales.[5] K.S.A. § 17-1268 does not contain *1193 a statute of limitations. Therefore, the three-year statute of limitations for causes of action created by statute, K.S.A. § 60-512(2), applies. Comeau v. Rupp, No. 86-1531, 1988 WL 93977 at *9 (D.Kan., Mar. 23, 1988); Farney v. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 86-2576, 1988 WL 156237 at *4 (D.Kan. Jan. 21, 1988); Hecox v. R.G. Dickinson & Co., No. 84-1789, 1987 WL 14502 at *11 (D.Kan., Jan. 12, 1987).
The cross-claim was certainly filed more than three years after the alleged fraud occurred. Cross-claimants argue, however, that the statute of limitations on fraud cases does not begin to run until the alleged fraud is or should have been discovered. The court agrees. The Kansas courts have not decided this issue. However the federal district court in Kansas has applied the discovery rule to the Kansas Securities Act. Farney, 1988 WL 156237 at *4 (claim not barred by the three-year statute of limitations because "the facts are in dispute as to when Farney should have known that his injury was caused by Merrill Lynch's alleged actions...."). The cross-claim defendants note that the Supreme Court held in 1991 that there is a three-year statute of repose under the federal securities act. Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, ___ U.S. ___, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991). However, this decision does not affect interpretation of the state statute.
Third, the cross-claim defendants allege that they were released from liability. The cross-claimants entered into release agreements with Ranson, Furgason, and Wisdom. The cross-claim defendants argue that these releases operate to release the cross-claim defendants as well. The Wisdom releases state the following:
[Cross-claimant] is fully aware that he may have suffered damages which he may not be aware of at this time and which may not arise until sometime in the future and it is the clear intention of Richard W. Greene to accept the agreed to sum of money as a full and final settlement of all claims against the releases. However, Richard W. Greene expressly reserves his claims against, and does not release or discharge ... Estel L. Landreth, J. Kendall Dillehay, ...
The interpretation of a release agreement is a matter of intent. Sade v. Hemstrom, 205 Kan. 514, syl. ¶ 4, ¶ 5, 471 P.2d 340 (1970). In this case, the release agreements for Wisdom express the clear intent to retain causes of action against the cross-claim defendants. However, at the time of the alleged tortious conduct, Wisdom, Landreth, and Dillehay were participating in a joint venture to restore the Orpheum building. Under Kansas law, joint ventures are treated the same as partnerships. Modern Air Conditioning, 226 Kan. 70, 596 P.2d 816 (1979) (citing Neighbors Constr. Co., Inc. v. Seal-Wells Constr. Co., Inc., 219 Kan. 382, 548 P.2d 491 (1976)). When a partner acts within the scope of the partnership business he is acting as an agent of the partnership. *1194 K.S.A. § 56-309(a). Under Kansas law releasing an agent from liability for the agent's torts operates to release the tortfeasor's principal from vicarious liability, regardless of the parties' intent. Atkinson v. Wichita Clinic, P.A., 243 Kan. 705, 763 P.2d 1085 (1988). Therefore, by releasing Wisdom from liability for misrepresentation, the cross-claimants released the cross-claim defendants from any liability based solely on Wisdom's conduct. However, the agreement does not relieve cross-claim defendants from any liability based on their own actions or failures to act.[6] Specifically, Landreth and Dillehay remain liable for any breach of fiduciary duty and for any torts resulting from a conspiracy to defraud the cross-claimants. They are not subject to vicarious liability for Wisdom's conduct as their agent.
The agreement releasing Ranson and Furgason does not specifically mention the cross-claim defendants, but contains the following statement: "This Agreement shall be binding on and inure to the benefit of any partners, heirs, personal representatives, and successors of the parties hereto." It is unclear whether the parties intended the word "partners" to include participants in the Orpheum project.[7] The parties continued settlement negotiations after the release agreement was reached, which suggests that Landreth and Dillehay were not released. Furthermore, the agreement also states that the release is limited to Ranson and Furgason and their "agents, servants, successors, heirs, and personal representatives." Therefore, considering the evidence in the light most favorable to the cross-claimants, there is a genuine issue of material fact as to whether the release agreement was intended to release Landreth and Dillehay from liability.
Fourth, the cross-claim defendants argue that there is not sufficient evidence that they participated in a civil conspiracy which damaged the cross-claimants. The elements of a civil conspiracy are: (1) two or more persons; (2) an object to be accomplished; (3) a meeting of the minds in the object or course of action; (4) one or more unlawful overt acts; and (5) damages as the proximate result thereof. Citizens State Bank v. Gilmore, 226 Kan. 662, syl. 7, 603 P.2d 605 (1979). In particular, the cross-claim defendants argue there is no evidence of a meeting of the minds with respect to the misrepresentations. There is no evidence that Landreth and Dillehay expressly agreed with Wisdom to defraud potential investors. However, a party can prove a civil conspiracy with circumstantial evidence. Beverly v. McCullick, 211 Kan. 87, syl. ¶ 3, 505 P.2d 624 (1973). There is evidence that Wisdom obtained the cross-claim defendants' approval before soliciting investors, and that the cross-claim defendants knew both the content and the falsity of the statements Wisdom was making to investors. This creates a sufficient inference of meeting of the minds to preclude summary judgment.
Fifth, the cross-claim defendants argue that the cross-claimants cannot recover for breach of fiduciary duty. The cross-claimants assert that the cross-claim defendants breached their fiduciary duty to disclose the truth about the Orpheum's financial condition. Under Kansas law, fraud may include the failure to disclose information that one is under a legal or equitable duty to disclose. DuShane v. Union Nat'l Bank, 223 Kan. 755, 760, 576 P.2d 674 (1978); State ex rel. Secretary of *1195 S.R.S. v. Fomby, 11 Kan.App.2d 138, syl. ¶ 2, 715 P.2d 1045 (1986).
The cross-claim defendants do not dispute that as limited partners they owed a fiduciary duty to the other investors in the Orpheum project. They claim, however, that this duty did not arise until after the cross-claimants had become limited partners, and that therefore, any breach of fiduciary duty did not cause cross-claimants' loss. Fraud is not actionable unless it causes the plaintiff some injury. Canterbury Court, Inc. v. Rosenberg, 224 Kan. 493, 502-03, 582 P.2d 261 (1978). In this case the cross-claimants did incur expenses after their initial investments in the project, including cash contributions and guarantees on the promissory note to Mid Kansas. Therefore, there is a genuine issue of material fact as to whether any fraudulent omissions by the cross-claim defendants caused the cross-claimants to expand their investments in the project.
Finally, the court will consider the issue of Greene's indemnity cross-claim. Greene assigned his interest in the limited partnership to the Orpheum Building Managers, Inc., the corporate general partner of the Orpheum limited partnership. As part of the assignment, the corporation agreed to indemnify Greene for any liability he incurred. The cross-claim defendants were the dominant shareholders in the corporation. Greene claims he can reach the cross-claim defendants individually because the corporation was a sham and the corporate entity should be disregarded. The cross-claim defendants assert that the factors for disregarding the corporate entity of the general partner in the limited partnership have not been met.
"The concept that a corporation is a legal entity or person apart from its members is a mere fiction of the law introduced for convenience in conducting the business...." UAW v. Cardwell Mfg. Co., Inc., 416 F.Supp. 1267, 1285 (D.Kan.1976). The court will refuse to recognize the fiction and will disregard the corporate entity when the corporate form is used for fraudulent purposes or when the corporation is merely the alter ego of its dominant shareholders. Id. at 1286. The court considers eight factors in the decision whether to disregard the corporate entity:
(1) undercapitalization of a one-man corporation, (2) failure to observe corporate formalities, (3) nonpayment of dividends, (4) siphoning of corporate funds by the dominant stockholder, (5) nonfunctioning of other officers or directors, (6) absence of corporate records, (7) the use of the corporation as a facade for operations of the dominant stockholder or stockholders, and (8) the use of the corporate entity in promoting injustice or fraud.
Ramsey v. Adams, 4 Kan.App.2d 184, 186-87, 603 P.2d 1025 (1979) (citing Amoco Chem. Corp. v. Bach, 222 Kan. 589, 594, 567 P.2d 1337 (1977). Disregard of the corporate entity is a severe measure which the court should approach with great caution. See Kilpatrick Bros., Inc. v. Poynter, 205 Kan. 787, 796, 473 P.2d 33 (1970). However, all factors need not be present to justify disregarding the corporate entity. UAW v. Cardwell Mfg. Co., Inc., 416 F.Supp. at 1286. Each case is to be judged on its own special facts. Kilpatrick Bros., Inc. v. Poynter, 205 Kan. at 787, syl. ¶ 3, 473 P.2d 33; Service Iron Foundry, Inc. v. M.A. Bell Co., 2 Kan.App.2d 662, 673, 588 P.2d 463 (1978).
In this case it is not disputed that although the corporation had only nominal assets at the time of its formation, it acquired other assets after formation. It is unclear, however, whether the corporation remained undercapitalized. The original joint venturers were the only shareholders, and Landreth was the president. The corporation was formed to be the general partner of the limited partnership so the original joint venturers could retain control over the project and no individuals would face unlimited liability. It appears that the corporate formalities were observed. No dividends were paid. As for the other factors, the evidence is not clear at this stage. Accordingly, considering the evidence in the light most favorable to the cross-claimants, the motion for summary judgment on the indemnity cross-claim must be denied. See Mackey v. Burke, 751 F.2d 322, 327 *1196 (10th Cir.1984) (jury question exists where there is sufficient evidence for reasonable minds to differ on several factors).
IT IS BY THIS COURT THEREFORE ORDERED that the motions by defendants Burke, Greene, and the Kelsays to remand (Doc's 225 and 227) are hereby denied.
IT IS FURTHER ORDERED that the plaintiff's motion to transfer (Doc. 240) is hereby denied as moot.
IT IS FURTHER ORDERED that the motion by defendants Burke, Greene, and the Kelsays for jury trial (Doc. 260) is hereby granted.
IT IS FURTHER ORDERED that the plaintiff's motion for summary judgment (Doc. 221) is hereby granted.
IT IS FURTHER ORDERED that the motion by defendants Landreth and Dillehay for summary judgment (Doc. 256) is hereby granted in part and denied in part.
NOTES
[1] The case of Piekarski v. Home Owners Sav. Bank, 743 F.Supp. 38 (D.D.C.1990) is the paradigm of the "legal gymnastics" that the pre-amendment § 1441a(l)(3) caused. In that case the RTC, which had been substituted as defendant for the insolvent financial institution, removed the case to the United States District Court for the District of Minnesota. Id. at 40. That court ordered the case remanded to state court, whereupon the RTC again removed the action to federal court, this time to the United States District Court for the District of Columbia. Id. That court, finding that the conditions of 28 U.S.C. 1404(a) were met, transferred the case back to the United States District Court for the District of Minnesota. Id. at 42-44. The court recommended that the Congress revisit the issue. Id. at 44.
[2] 12 U.S.C. § 1441a(l)(1) provides:
In General. Notwithstanding any other provision of law, any civil action, suit, or proceeding to which the Corporation is a party shall be deemed to arise under the laws of the United States, and the United States district courts shall have original jurisdiction over such action, suit, or proceeding.
[3] Other courts have declined the opportunity to decide the retroactivity of this provision. E.g., 5300 Memorial Investors, Ltd. v. RTC, 973 F.2d 1160, 1163 (5th Cir.1992) Hellon & Assoc. v. Phoenix Resort Corp., 958 F.2d 295, 299-300 (9th Cir.1992). However, one court has recently held that another provision within the amendment does apply retroactively. Resolution Trust Corp. v. Bakker, 801 F.Supp. 706 (S.D.Fla.1992) (dealing with § 1441a(l)(3)(B), which defines when the RTC is deemed substituted for an insolvent institution for purposes of the 90-day time limit on removal).
[4] In Westgate Partners the Tenth Circuit Court of Appeals did not specifically state whether the issue was one of jurisdiction or venue. However, the court noted that once removed to the United States District Court for the District of Columbia, the case could be transferred to the local federal district court. Westgate Partners, 937 F.2d at 530 n. 6. This implies that § 1441a(l)(3) is not a jurisdictional limitation, because, as stated above, jurisdiction is a requirement for transfer.
[5] K.S.A. § 17-1268 states in pertinent part:
(a) Any person who ... offers or sells a security by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made in the light of the circumstances under which they are made not misleading (the buyer not knowing of the untruth or omission), and who does not sustain the burden of proof that such person did not know and in the exercise of reasonable care could not have known of the untruth or omission, is liable to the person buying the security from such person, who may sue either at law or in equity to recover the consideration paid for the security, together with interest at 15% per annum from the date of payment, costs, and reasonable attorney fees, less the amount of any income received on the security, upon the tender of the security, or for damages if the buyer no longer owns the security.
(b) Every person who directly or indirectly controls a seller liable under subsection (a), every partner, officer, or director (or person occupying a similar status or performing similar functions) or employee of such a seller who materially aids in the sale, and every broker-dealer or agent who materially aids in the sale is also liable jointly and severally with and to the same extent as the seller, unless the nonseller who is so liable sustains the burden of proof that such nonseller did not know, and in the exercise of reasonable care could not have known, of the existence of the facts by reason of which the liability is alleged to exist.
[6] The Kansas courts distinguish between releases and covenants not to sue. "In Kansas, while an unconditional release by the injured party of one joint tortfeasor will release all other joint tortfeasors, a covenant not to sue one will not release the others." Atkinson, 243 Kan. at 708, 763 P.2d 1085 (citing Jacobsen v. Woerner, 149 Kan. 598, 601, 89 P.2d 24 (1939)). However, the fact that an instrument is called a release is not controlling. The court must consider "the terms of the instrument, the words used, the amount shown as paid and accepted, the substance of the agreement and the intention of the parties as manifested by the instrument." Sade v. Hemstrom, 205 Kan. 514, Syl. ¶ 5, 471 P.2d 340. It is clear from the terms of this agreement that it was not intended to release other joint tortfeasors.
[7] The court cannot consider the statement within the context of the agreement because no party has provided a copy of the release agreement to the court.
|
THIRD DIVISION
September 28, 2007
No. 1-06-1174
CHRISTOPHER REILLY, a Minor by his ) Appeal from
Mother and Next Friend, DRUANNE REILLY, ) the Circuit Court
DRUANNE REILLY, and RONALD REILLY, ) of Cook County.
)
Plaintiffs-Appellants, )
)
v. )
)
WYETH f/k/a AMERICAN HOME PRODUCTS )
CORPORATION, BAXTER HEALTHCARE )
CORPORATION, BIOPORT CORPORATION, ) No. 02 L 014697
AVENTIS PASTEUR, INC., MERCK & CO., INC., )
CELLTECH PHARMACEUTICALS, INC. f/k/a )
MEDEVA PHARMACEUTICALS, INC., )
SMITHKLINE BEECHAM CORPORATION )
d/b/a GLAXOSMITHKLINE, ELI LILLY AND )
COMPANY, SIGMA-ALDRICH CO., )
SPECTRUM LABORATORY PRODUCTS, INC., )
And EMD CHEMICALS, ) Honorable
) Lynn Egan,
Defendants-Appellees. ) Judge Presiding.
JUSTICE THEIS delivered the opinion of the court:
Druanne Reilly, as mother and next friend of Christopher Reilly, brought this action
seeking recovery against defendants (vaccine defendants1 and thimerosal defendants2) for her
1
Wyeth F/k/a American Home Products Corporation, Baxter Healthcare Corporation,
Bioport Corporation, Aventis Pasteur, Inc., Merck & Co., Inc., Celltech Pharmaceuticals, Inc.
f/k/a Medeva Pharmaceuticals, Inc., Smithkline Beecham Corporation d/b/a Glaxosmithkline.
2
Eli Lilly and Company, Sigma-Aldrich Co., Spectrum Laboratory Products, Inc., and
EMD Chemicals.
1-06-1174
son’s autism, which was allegedly caused by his exposure to the mercury-based preservative,
thimerosal, contained in several childhood vaccines. Druanne and her husband Ronald Reilly also
individually brought an intentional infliction of emotional distress claim due to their son’s injuries.
The circuit court dismissed the minor plaintiff’s claims pursuant to section 2-619(a)(1) of the
Code of Civil Procedure (the Code) (735 ILCS 5/2-619(a)(1) (West 2004)) for failing to exhaust
his remedies under the National Childhood Vaccine Injury Act of 1986 (the Vaccine Act or Act)
(42 U.S.C. §300aa-1 et seq. (2000)). Additionally, the circuit court dismissed the parents’
intentional infliction of emotional distress claim pursuant to section 2-619(a)(9) of the Code (735
ILCS 5/2-619(a)(9) (West 2004)), finding that defendants’ alleged conduct could not constitute
extreme and outrageous conduct as a matter of law.
On appeal, plaintiffs contend that they are not precluded from filing a state court action
against defendants because: (1) Christopher did not suffer a “vaccine-related injury” as that term
is defined under the Act; (2) the thimerosal defendants are not vaccine manufacturers or
administrators under the Vaccine Act; (3) Christopher is not “qualified” to file a petition under the
Act because his petition is admittedly time-barred and the Act does not preempt state law; (4) the
Act’s lack of an equitable tolling provision violates Illinois public policy, which provides special
protection to minors; and (5) the limitations period under the Act violates Christopher’s due
process and equal protection rights under the United States Constitution. Additionally, plaintiffs
contend that the circuit court erred in dismissing their claim for intentional infliction of emotional
distress. For the following reasons, we affirm the judgment of the circuit court in part and reverse
and remand in part.
2
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BACKGROUND
As alleged in plaintiffs’ complaint, Christopher was born in 1995 and was administered a
series of routine childhood vaccinations over the course of two years that contained the mercury-
based preservative thimerosal. He subsequently developed certain disabilities, and in October
1998, he was diagnosed with autism, a neurological disorder. Plaintiffs alleged that defendants
manufactured or caused thimerosal to be placed into certain vaccines administered to Christopher
and that the exposure to the thimerosal caused his autism. The complaint was brought under
theories of product liability, breach of warranty, negligence, consumer fraud, and battery.
Additionally, plaintiffs Druanne and Ronald Reilly brought individual claims for intentional
infliction of emotional distress, essentially alleging that defendants intentionally or knowingly
added a known dangerous substance into a product designed, sold, and distributed for injection
into infants and toddlers.
Thereafter, defendants sought dismissal of all claims brought on behalf of Christopher
based on the argument that the state court lacked subject matter jurisdiction over these claims.
Specifically, defendants maintained that plaintiffs were required to exhaust the remedies provided
for by the Vaccine Act in the United States Court of Federal Claims before proceeding in state
court. Defendants also moved to dismiss the intentional infliction of emotional distress count
pursuant to sections 2-615 and 2-619(a)(9) of the Code. 735 ILCS 5/2-615, 2-619(a)(9) (West
2004). They maintained that defendants’ conduct was strictly regulated and approved by the
Food and Drug Administration (FDA). In support, they appended to their motion the relevant
provisions of the Code of Federal Regulations that outline the FDA’s requirements for the
3
1-06-1174
approval, manufacture, and labeling of vaccines. The trial court took judicial notice of these
regulations.3 Based on this affirmative matter, defendants argued that the legitimate making and
selling of FDA-approved thimerosal-containing vaccines could not constitute “extreme and
outrageous” conduct. Defendants also argued that plaintiffs failed to plead the severe emotional
distress element with the requisite specificity.
The circuit court dismissed the representative claims brought on behalf of Christopher
without prejudice for lack of subject matter jurisdiction because they stemmed from a “vaccine-
related injury” covered under the Vaccine Act. Additionally, after several opportunities to amend,
the court dismissed the intentional infliction of emotional distress claim with prejudice, finding
that the federal regulations demonstrated that the manufacturing and selling of FDA-approved
vaccines could not, as a matter of law, be characterized as extreme and outrageous conduct.
Plaintiffs filed a timely appeal.
ANALYSIS
In ruling on the circuit court’s dismissal order, we are asked to address the subject matter
jurisdiction of the circuit court with respect to the claims brought on behalf of Christopher.
Defendants sought to dismiss these claims pursuant to section 2-619(a)(1) of the Code (735 ILCS
5/2-619(a)(1) (West 2004)). A section 2-619 motion to dismiss admits the legal sufficiency of the
3
Defendants also submitted a 1982 FDA “Advance Notice of Proposed Rulemaking”
regarding over-the-counter drugs containing thimerosal for topical antimicrobial use (47 Fed.
Reg. 436 (January 5, 1982) (to be codified at 21 C.F.R. pt. 333)), and other public records of the
FDA and other agencies regarding the use of thimerosal as a preservative in vaccines. The trial
court did not consider these documents because it ruled that defendants failed to meet the
requisites of Supreme Court Rule 191 (145 Ill. 2d R. 191).
4
1-06-1174
complaint and raises defects, defenses, or other matters that act to defeat the claim. Cohen v.
McDonald’s Corp., 347 Ill. App. 3d 627, 632, 808 N.E.2d 1, 5 (2004). Specifically, it provides
for the involuntary dismissal of a cause of action based on the court’s lack of subject matter
jurisdiction. Kinn v. Prairie Farms/Muller Pinehurst, 368 Ill. App. 3d 728, 730, 859 N.E.2d 99,
101 (2006). Our review is de novo. Kinn, 368 Ill. App. 3d at 730, 859 N.E.2d at 101.
Plaintiffs contend that the circuit court erred in granting dismissal on the basis that
plaintiffs were required to exhaust their administrative remedies under the Vaccine Act. 42
U.S.C. §300aa-11 (2000). In order to fully understand plaintiffs’ arguments, a basic
understanding of the Vaccine Act’s purpose and administrative framework is necessary.
Enacted in 1986, the Vaccine Act established a remedial no-fault compensation program
for vaccine related injuries or death. 42 U.S.C. §300aa-10 et seq. (2000). The Act was designed
to protect the nation's vaccine supply and to create a fair and easily-administered program to
provide compensation for vaccine-related injuries. H.R. Rep. No. 99-908, at 5-7 (1986), as
reprinted in 1986 U.S.C.C.A.N. 6344, 6346-48. The statute has a twofold policy: to expedite the
award of damages and to protect vaccine manufacturers from burdensome litigation. H.R. Rep.
No. 99-908, at 4 (986), as reprinted in U.S.C.C.A.N. 6344-45. The program requires that a
person seeking compensation for a vaccine-related injury must first file a petition against the
United States Secretary of Health and Human Services before traditional tort remedies may be
pursued. 42 U.S.C. §300aa-11(a)(2)(A) (2000); Shalala v.Whitecotton, 514 U.S. 268, 270, 131
L. Ed. 2d 374, 378, 115 S. Ct. 1477, 1478 (1995) (explaining that a claimant alleging an injury
after the Vaccine Act's effective date “must exhaust the Act's procedures * * * before filing any de
5
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novo civil action in state or federal court”).
The claims are then heard by special masters appointed by the Court of Federal Claims,
are adjudicated informally (42. U.S.C. §300aa-12(d)(2) (2000)), and are then accorded
expeditious review by the Court of Federal Claims and the Federal Circuit Court of Appeals (42
U.S.C. §300aa-12(e)(2) (2000)); Whitecotton, 514 U.S. at 270, 131 L. Ed. 2d at 378, 115 S. Ct.
at 1478). Compensation awards are paid from the Vaccine Injury Compensation Trust Fund,
which is financed by excise taxes on certain vaccines. 42 U.S.C. §300aa-15(2) (2000); 26 U.S.C.
§9510(b)(1) (2000). The Vaccine Act does not totally preempt all traditional tort remedies for
covered damages. Rather, after the Court of Federal Claims renders a ruling on a claim, the
claimant may accept or reject any award. If he accepts an award, he waives further tort rights; if
he declines it, he may pursue traditional tort relief, with some restrictions. 42 U.S.C. §§300aa-21,
300aa-22 (2000).
Specifically pertinent to this appeal, section 300aa-11(a)(2)(A) of the Act provides in
relevant part that:
“No person may bring a civil action for damages *** against
a vaccine administrator or manufacturer in a State or Federal Court
for damages arising from a vaccine-related injury or death
associated with the administration of a vaccine *** unless a petition
has been filed *** for compensation under the Program for such
injury.” 42 U.S.C. §300aa-11(a)(2)(A) (2000).
The Act further provides that “[i]f a civil action which is barred under [the Act] is filed in a State
6
1-06-1174
or Federal court, the court shall dismiss the action.” 42 U.S.C. §300aa-(a)(2)(B)(2000).
Plaintiffs raise various arguments contending that they are not required to exhaust their
administrative remedies under the Vaccine Act before filing their claims on behalf of Christopher
in state court. Initially, we address plaintiffs’ argument that they are not required to comply with
the Vaccine Act’s procedural requirements because Christopher has not suffered a “vaccine-
related injury” as that term is defined in the Act. The Vaccine Act defines “vaccine-related injury”
as follows:
“an illness, injury, condition or death associated with one or
more of the vaccines set forth in the Vaccine Injury Table [42
C.F.R. § 100.3 (2006)], except that term does not include an
illness, injury, condition, or death associated with an adulterant or
contaminant intentionally added to such a vaccine.” 42 U.S.C.
§300aa-33(5) (2000).
Plaintiffs argue that they were harmed by thimerosal, and that thimerosal is not a vaccine but,
rather, a preservative added to multidose vials to extend a vaccine’s viable life. They allege that
the thimerosal as used in the vaccines administered to Christopher falls under the exception
because it is an “adulterant or contaminant” that was intentionally added to the vaccines. As a
result, they maintain that they have at least established a question of fact that should not be
decided by a motion to dismiss. We disagree.
The issue of whether Christopher’s injuries were “vaccine-related” as that term is defined
in the statute concerns the construction of the statute, which is a question of law to be reviewed
7
1-06-1174
de novo. Vine Street Clinic v. HealthLink, Inc., 222 Ill. 2d 276, 282, 856 N.E.2d 422, 427-28
(2006). The primary objective of this court when construing the meaning of a statute is to
ascertain and give effect to the intent of the legislature. Vine Street Clinic, 222 Ill. 2d at 282, 856
N.E.2d at 427-28. “The plain language of a statute is the most reliable indication of the
legislature’s objectives in enacting that particular law [citation], and when the language is clear, it
[will] be applied as written without resort to aids or tools of interpretation.” DeLuna v. Burciaga,
223 Ill. 2d 49, 59, 857 N.E.2d 229, 236 (2006).
Based on the allegations in the complaint, plaintiffs acknowledge that Christopher’s
injuries were allegedly caused by a preservative in the vaccines administered to him and therefore
his injuries were at least “associated with” the vaccines. Nevertheless, plaintiffs allege that the
exception for “adulterant” or “contaminant” applies here. Neither the Act nor its regulations
specifically define the terms “adulterant” or “contaminant.” Nevertheless, the dictionary defines
“adulterant” as something that makes an item “corrupt, debased, or *** impure by the addition of
a foreign or a baser substance.” Webster’s Third New International Dictionary 30 (1993). A
“contaminant” is defined as something that corrupts or infects by contact or association.
Webster’s Third New International Dictionary 490 (1993). A “preservative” is defined as a
substance added against “decay, discoloration, or spoilage.” Webster’s Third New International
Dictionary 1794 (1993). Thus, under the plain meaning of those words, thimerosal, as used in the
vaccines, is the antithesis of an adulterant or contaminant within the meaning of section 300aa-
33(5) of the Act (42 U.S.C. §300aa-33(5) (2000)) because its purpose is to prevent the
corruption of the vaccine. At the time the vaccine was made, it was “intentionally added” as an
8
1-06-1174
approved ingredient in the formulation of a vaccine to preserve it. See 21 C.F.R. §610.15 (2006)
(“[p]roducts in multi-dose containers shall contain a preservative”). Accordingly, injuries arising
from a vaccine preservative are “vaccine-related injuries” under the Act.
Several other federal and state courts that have considered this issue have all held that
under the plain meaning of the statute thimerosal is a constituent ingredient or component of the
vaccine and not an adulterant or contaminant as a matter of law. Moss v. Merck & Co., 381 F.3d
501, 503-04 (5th Cir. 2004); John & Jane Doe 2 v. Ortho-Clinical Diagnostics, Inc., 335 F. Supp.
2d 614, 622-23 (M.D.N.C. 2004); Laughter v. Aventis Pasteur, Inc., 291 F. Supp. 2d 406, 410
(M.D.N.C. 2003); Murphy v. Aventis Pasteur, Inc., 270 F. Supp. 2d 1368, 1375 (N.D. Ga. 2003);
Blackmon v. American Home Products Corp., 267 F. Supp. 2d 667, 673-75 (S.D. Tex. 2002);
Liu v. Aventis Pasteur, Inc., 219 F. Supp. 2d 762, 767 (W.D. Tex. 2002); Owens v. American
Home Products Corp., 203 F. Supp. 2d 748, 754-55 (S.D. Tex. 2002); Wax v. Aventis Pasteur,
Inc., 240 F. Supp. 2d 191, 194 (E.D.N.Y. 2002); Troxclair v. Aventis Pasteur, Inc., 374 N.J.
Super. 374, 864 A.2d 1147 (2005); Cheskiewicz v. Aventis Pasteur, Inc., 843 A.2d 1258, 1265-
66 (Pa. Super. 2004).
We note that our supreme court has indicated that “uniformity of decision is an important
consideration when state courts interpret federal statutes. [Citations.] * * * In the absence of a
decision of the United States Supreme Court, which would definitively answer the question
presented by this case, we elect to give considerable weight to the decisions of federal courts of
appeals and federal district courts that have addressed this issue.” Sprietsma v. Mercury Marine,
197 Ill. 2d 112, 119-20, 757 N.E.2d 75, 80 (2001), rev’d on other grounds, 537 U.S. 51, 154 L.
9
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Ed. 2d 466, 123 S. Ct. 518 (2002). We find no compelling reason here to construe the statute
inconsistently with the federal courts’ construction.
Additionally, although not binding authority, an administrative agency's interpretations of
the statutory scheme it is entrusted to administer has been given deference. See Chevron, U.S.A.,
Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844-45, 81 L. Ed. 2d 694, 704,
104 S. Ct. 2778, 2782-83 (1984). See also Wax, 240 F. Supp. 2d at 194 (“[T]he court defers, for
the purposes of this motion, to HHS’s interpretation that injuries caused by thimerosal in vaccines
are ‘vaccine-related’ for purposes of the Program”). The Secretary of Health and Human
Services, charged with the responsibility of administering the compensation program under the
Act (42 U.S.C. §§300aa-10 through 300aa-34 (2000)), maintains that any injury claims allegedly
caused by thimerosal in vaccines are “vaccine-related” and, therefore, require adjudication in the
Court of Federal Claims. See, e.g., The National Vaccine Injury Compensation Program at
http://www.hrsa.gov/vaccinecompensation (“[c]omponents, such as thimerosal, that are added to
microorganisms to create vaccines cannot and should not be considered adulterants or
contaminants. Instead, preservatives and components, such as thimerosal, should be considered
one of several elements that comprise vaccines”).
Furthermore, in 2002, the Court of Federal Claims ruled that thimerosal-related claims
were subject to its jurisdiction after construing the statutory definition of “vaccine-related injury.”
See Leroy v. Secretary of Department of Health & Human Services, No. 02-392V (Fed. Cl.
2002). By Autism General Order No.1, the Court of Federal Claims established a schedule for
adjudicating these autism-related claims and those proceedings are ongoing. In re Claims For
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Vaccine Injuries Resulting in Autism Spectrum Disorder or a Similar Neurodevelopmental
Disorder, 2002 WL 31696785 (Fed. Cl. July 3, 2002), 2007 WL 1983780 (Fed. Cl. May 25,
2007). Accordingly, based upon the plain meaning of the statute, the federal courts’ construction,
as well as the construction given by the agency charged with administering the Act, injuries
caused by thimerosal are “vaccine-related injuries” that fall within the scope of the Act.
Nevertheless, the Act’s exhaustion requirement does not apply to all vaccine-related
lawsuits. Rather, it applies to only those suits brought against a “vaccine administrator or
manufacturer.” 42 U.S.C. §300aa-11(a)(2)(A) (2000). Plaintiff contends that the thimerosal
defendants are not vaccine manufacturers or administrators and, therefore, plaintiffs are not
required to exhaust their administrative remedies before pursuing their claims against these
defendants in state court.
The Act does not define “vaccine,” but it does define “manufacturer” as “any corporation,
organization or institution, whether public or private *** which manufactures, imports, processes,
or distributes under its label any vaccine set forth in the Vaccine Injury Table.” 42 U.S.C.
§300aa-33(3) (2000). Thus, based on the definition as provided in the Act, the statute governs
suits against a “manufacturer” that manufactures the vaccine as a whole under its own label and
manufactures only those vaccines listed in the Vaccine Injury Table. The definition does not
include manufacturers that sell only the component parts of a vaccine to a vaccine manufacturer.
In evaluating this same issue, under the same factual scenario, the United States Court of
Appeals for the Fifth Circuit has also considered this specific language and has held that under the
plain meaning of the Act, the thimerosal manufacturers are not vaccine manufacturers. Moss v.
11
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Merck & Co., 381 F.3d 501, 504 (5th Cir. 2004). “Its status as a vaccine component no more
makes [t]himerosal a ‘vaccine’ than does the inclusion of a piston under the hood of an
automobile make that object an ‘engine.’ ” Moss, 381 F.3d at 504. The court reasoned as
follows:
“Thimerosal is part of the finished product, to be sure, but it is not
the finished product itself, and on its face the statute governs only
lawsuits filed against manufacturers of a completed vaccine shipped
under its own label and listed in the Vaccine Injury Table. Not
surprisingly, [t]himerosal is not sold as a vaccine, nor is it listed in
the statute’s table.” Moss, 381 F.3d at 504.
We find the federal court of appeals construction to be well reasoned. See also Holder v. Abbott
Laboratories, Inc., 444 F.3d 383 (5th Cir. 2006); McDonal v. Abbott Laboratories, 408 F.3d 177
(5th Cir. 2005) (applying the reasoning of Moss); Blackmon, 267 F. Supp. 2d at 678 (“[b]ecause
[defendant] allegedly supplies thimerosal (a raw material) to the [v]accine [m]anufacturers, but
does not manufacture or administer vaccines itself, [p]laintiffs' claims against [defendant] are not
subject to the Vaccine Act's tort suit bar”); Owens, 203 F. Supp. 2d at 758-59 (in a case
preceding Moss, the court held that although thimerosal claims were vaccine-related, the
manufacturers who supplied thimerosal to vaccine manufacturers, but did not manufacture the
vaccine, were not subject to the Vaccine Act).
Nevertheless, in the present case, the thimerosal defendants assert that suits against them
must be dismissed in order to comply with the legislative intent behind the Act, reiterating that the
12
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purpose of the Act is to reduce civil litigation and “resolve a national vaccine crisis.” In support,
defendants string cite numerous opinions, including unpublished opinions that do not specifically
address the definition of “manufacturer” under the Act. These cases either focus on whether
thimerosal-based claims are “vaccine-related” as defined by the Act rather than whether
thimerosal manufacturers are vaccine “manufacturers,” or rely on an outdated version of the
statute. To the extent that these opinions are nonprecedential and or not directly on point, we do
not consider them here.
The only published case cited by defendants addressing this issue is a federal district court
case from the eastern district of Kentucky, Ferguson ex rel. Ferguson v. Aventis Pasteur, Inc.,
444 F. Supp. 2d 755 (E.D. Ky. 2006), which essentially disagreed with the interpretation in Moss,
concluding that the thimerosal defendants were vaccine manufacturers under the Act. In doing
so, the court in Ferguson relied heavily on Leroy, No. 02-392V, an unpublished opinion of the
Court of Federal Claims in which the court was not asked to construe the statutory definition of a
vaccine manufacturer but, rather, was faced with a jurisdictional challenge premised on the notion
that thimerosal was an adulterant or contaminant. Leroy, slip op. at 5. As discussed in Moss, the
Leroy decision “stands for nothing more than the unremarkable proposition that a [t]himerosal-
related injury, occurring as a result of the administration of a vaccine, is a vaccine-related injury
within the meaning of the Vaccine Act.” Moss, 381 F.3d at 504. As Moss further reiterates, that
does not end the inquiry within the meaning of section 300aa-11(a)(2)(A) of the Act because a
claim is subject to the Act only if it alleges a vaccine-related injury and is filed against a vaccine
manufacturer. Moss, 381 F.3d at 504.
13
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Additionally, we reject Ferguson’s resort to the legislative history of the Act where the
plain meaning of a vaccine manufacturer is ascertainable and unambiguous. Kunkel v. Walton,
179 Ill. 2d 519, 534, 689 N.E.2d 1047, 1054 (1997) (where the language is clear, it will be given
effect without resort to other aids of construction). However, even if we were to consider the
legislative history of the Act, we find that it does not support the thimerosal defendants’ asserted
construction. In its original enactment, Congress explicitly stated that the compensation system
under the Vaccine Act was targeted to protect the manufacturers of vaccines. H.R. Rep. No. 99-
908, at 3, as reprinted in1986 U.S.C.C.A.N. 6344. In 1987, the Act was amended to include
vaccine administrators. Omnibus Budget Reconciliation Act of 1987, Pub. L. No. 100-203,
§4306, 101 Stat. 1330, 1330-224 (1987). In considering the import of this legislative history, the
Court of Federal Claims in Schumacher v. Secretary of Department of Health & Human Services,
2 F.3d 1128, 1133 (Fed. Cir. 1993), held that “Congress did not intend the Vaccine Act to bar
civil actions against any party other than a vaccine administrator or manufacturer.” Schumacher,
2 F.3d at 1133.
Thereafter, on November 25, 2002, the Vaccine Act was again amended by the passage of
the Homeland Security Act of 2002, Pub. L. No.107-296, §§1714 to 1717, 116 Stat. 2320, 2321
(2002), which, in part, amended section 300aa-33(3) of the Vaccine Act by specifically including
in the definition of “manufacturer,” those who manufacture “any component or ingredient of any
such vaccine.” Homeland Security Act of 2002, Pub. L. No.107-296, §1714, 116 Stat. 2320
(2002). However, this definition was short-lived as it was repealed in February 2003.
Consolidated Appropriations Resolution, 2003, Pub. L. No.108-7, §102, 117 Stat. 528 (2003).
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In section 102(c) of the repeal, identified as “Rule of Construction,” Congress indicated:
“No inference shall be drawn from the enactment of sections
1714 through 1717 of the Homeland Security Act of 2002 (Public
Law 107-296), or from this repeal, regarding the law prior to
enactment of sections 1714 through 1717 of the Homeland Security
Act of 2002 (Public Law 107-296). Further, no inference shall be
drawn that subsection (a) or (b) affects any change in that prior
law, or that Leroy v. Secretary of Health and Human Services,
Office of Special Master, No. 02-392V (October 11, 2002), was
incorrectly decided.” Consolidated Appropriations Resolution,
2003, Pub. L. No. 108-7, §102(c), 117 Stat. 528 (2003).
Additionally, section 102(d) of the repeal, which is identified as “Sense of the Congress,”
indicates that to ensure an adequate supply of vaccines and encourage the development of new
vaccines, steps should be taken to ensure that manufacturers of components or ingredients of
vaccines are adequately protected. Within six months of the repeal, Congress directed the
relevant Senate and House committees to report a bill addressing these issues. Consolidated
Appropriations Resolution, 2003, Pub. L. No.108-7, §102(d), 117 Stat. 529 (2003). Congress
has yet to pass any such legislation.
Thus, given that we are not to make any inferences from the amendment and subsequent
repeal, that the unpublished Leroy decision did not specifically address the issue of who is a
vaccine manufacturer, and that Congress has not spoken further on the issue, we rely on the plain
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meaning of the statute to hold that thimerosal manufacturers are not vaccine manufacturers.
“[O]nly the most extraordinary showing of contrary intentions from [the legislative history] would
justify a limitation on the ‘plain meaning’ of the statutory language.” Garcia v. United States, 469
U.S. 70, 75, 83 L. Ed. 2d 472, 477-78, 105 S. Ct. 479, 482 (1984). Accordingly, plaintiffs’
claims against the thimerosal defendants may proceed in state court.
We next consider plaintiffs’ contention that the Vaccine Act requires that Christopher be
“qualified” to file a petition in the Court of Federal Claims (42 U.S.C. §300aa-11(a)(9) (2000))
and that he is not “qualified” because his petition would admittedly be time-barred pursuant to
section 300aa-16(a)(2) of the Act (42 U.S.C. §300aa-16(a)(2) (2000)). As a result, they assert
that the representative claims against the vaccine manufacturers may properly be brought in state
court.
This court has previously rejected plaintiffs’ contention. In Dickey v. Connaught
Laboratories, Inc., 334 Ill. App. 3d 1048, 1052, 777 N.E.2d 974, 978 (2002), after examining the
statutory scheme, we held that the right to litigate in state court is lost if the party fails to first
follow the federal statutory guidelines. There, the court focused on the language of section
300aa-11(a)(2) of the Act (42 U.S.C. §300aa-11(a)(2) (2000)) and noted that subparagraph (A)
of that section provides in pertinent part that no state court action may be filed and no damages
awarded unless a petition has been filed “ ‘in accordance with section 300aa-16 of this title.’ ”
Dickey, 334 Ill. App. 3d at 1052, 777 N.E.2d at 978, quoting 42 U.S.C. §300aa-16(a)(2).
Section 300aa-16 of the Act provides in relevant part that “no petition may be filed for
compensation under the Program for such injury after the expiration of 36 months after the date
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of the occurrence of the first symptom or manifestation of onset or of the significant aggravation
of such injury.” 42 U.S.C. §300aa-16(a)(2) (2000). The court further explained that “ ‘if a civil
action which is barred under subparagraph (A) is filed in State or Federal court, the court shall
dismiss the action.’ ” Dickey, 334 Ill. App. 3d at 1052, 777 N.E.2d at 978, quoting 42 U.S.C.
§300aa-11(a)(2)(B) (2000).
Based on the plain language of the statute, taking these sections together, the court in
Dickey held that “this language clearly and unambiguously prohibits both an action and a remedy
in state or federal court unless there has been a timely filing with the claims court.” Dickey, 334
Ill. App. 3d at 1052, 777 N.E.2d at 978. See also Strauss v. American Home Products Corp.,
208 F. Supp. 2d 711 (S.D. Tex. 2002); Cheskiewicz, 843 A.2d at 1264.
We agree with the court in Dickey that the plain language of the Act provides that a party
may not sue in state court unless it has first filed a petition in the Court of Federal Claims within
the requisite 36-month period. Additionally, we find plaintiffs’ construction of the statute
untenable. A statute should be construed such that no term is rendered meaningless or
superfluous. Duncan v. Walker, 533 U.S. 167, 174, 150 L. Ed. 2d 251, 259, 121 S. Ct. 2120,
2125 (2001). Under plaintiffs’ construction, injured parties could choose to wait until the
limitations period expired under the Act and then seek redress in state court against the vaccine
manufacturers, thereby making the exhaustion requirements optional and essentially superfluous.
This construction is therefore inconsistent with the legislative purpose of the Act.
In a related argument, plaintiffs contend that Congress did not intend to preempt their
state law claims where their ability to file a petition in the Court of Federal Claims is time-barred.
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Plaintiffs’ argument conflates the distinction between preemption and exhaustion of remedies. In
Dickey, we explained that although the Vaccine Act does not preempt state law, Congress “may
mandate that a party first timely file with an administrative agency before the party may proceed
to a state civil action.” Dickey, 334 Ill. App. 3d at 1051, 777 N.E.2d at 977. The court cited
McAfee v. 5th Circuit Judges, 884 F.2d 221 (5th Cir. 1989), in support , in which there was no
preemption violation even though the Federal Tort Claims Act required a claimant to timely
present a claim to the appropriate federal agency as a prerequisite to filing their suit. Dickey, 334
Ill. App. 3d at 1051-52, 777 N.E.2d at 977. We find no reason to depart from this reasoned
conclusion and find that plaintiffs’ cited authority was also addressed and rejected as inapplicable
in Dickey. 334 Ill. App. 3d at 1053, 777 N.E.2d at 978.
We next address plaintiffs’ contention that the lack of an equitable tolling provision under
the Act for minors runs counter to Illinois public policy, which provides special protection for
minor’s rights and allows them to bring a tort action two years after attaining the age of 18 (735
ILCS 5/13-211 (West 2004)). The United States Court of Appeals for the Federal Circuit has
strictly construed the Vaccine Act’s statute of limitations and has held that the equitable tolling
doctrine is not available for claims arising under the Act. Brice v. Secretary of Health & Human
Services, 240 F.3d 1367, 1373-74 (Fed. Cir. 2001). The court in Brice reasoned that where the
statute provides for specific exceptions to the limitations provision, the court “[was] not inclined
to create other exceptions not specified by Congress.” Brice, 240 F.3d at 1373. Additionally, the
court relied on the legislative scheme, which includes other strict deadlines and was designed to
emphasize a quick resolution of claims. The court held that to allow equitable tolling would
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conflict with that legislative intent. Brice, 240 F.3d at 1373-74. 4
We find no conflict with Illinois public policy. Indeed, to the extent that the federal
administrative framework of the Vaccine Act implicates Illinois public policy, Illinois has
consistently held that time limitations upon bringing actions before administrative agencies are
matters of jurisdiction which cannot be tolled. Fredman Brothers Furniture Co. v. Department of
Revenue, 109 Ill. 2d 202, 209-10, 486 N.E.2d 893, 895 (1985); Robinson v. Human Rights
Comm’n, 201 Ill. App. 3d 722, 729, 559 N.E.2d 229, 233 (1990) (requirement under Human
Rights Act that charge be filed within 180 days after violation was committed is jurisdictional and
not subject to defense of tolling). Similarly, the Vaccine Act’s limitations period is also
jurisdictional and lacks equitable tolling. Brice v. Secretary of Health and Human Services, 55
Fed. Cl. 366, 369 (Fed. Cl. 2003), aff’d, 358 F.3d 865 (Fed. Cir. 2004); Brice, 240 F.3d at 1373-
74. Accordingly, in light of the lack of equitable tolling in similar circumstances under Illinois
law, it cannot be said that the Vaccine Act is inconsistent with Illinois public policy.
Furthermore, in Dickey, this court rejected plaintiffs’ argument, finding that Congress
considered public policy in its drafting of the Act, that it was focused on affording an injured party
an expedited procedure while keeping vaccine manufacturers in the market, and that its objectives
would not be realized if a claim was subject to protracted litigation. Dickey, 334 Ill. App. 3d at
1053-54, 777 N.E.2d at 978-79. For all of the foregoing reasons, we find no merit to plaintiffs’
4
We note that access to state tort remedies and their applicable statutes of limitation is not
entirely abolished under the Act but, rather, is deferred. Thus, where a petition proceeds in the
Court of Federal Claims, state statutes of limitation are explicitly stayed. 42 U.S.C. §§300aa-
21(c), 300aa-16(c) (2000).
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public policy argument.
We next consider plaintiffs’ constitutional claims. Plaintiffs contend that section 300aa-
16(a)(2) of the Act (42 U.S.C. §300aa-16(a)(2) (2000)) violates Christopher’s rights to due
process and equal protection under the fifth amendment. They assert that the Act provides
children who suffer from latent injuries such as autism with the same 36-month time frame to file
their petition for compensation as children who suffer injuries with clear and immediate onsets,
identified as so-called “on-table” injuries which are specifically listed in the Vaccine Act Injury
Table. 42 U.S.C. §300aa-14 (2000). Plaintiffs argue that the lack of a discovery rule for latent
“off-table” injuries precludes any reasonable opportunity to pursue a claim until after the statute
of limitations has run because these claims cannot be easily traced to the vaccine.
The Vaccine Act’s limitations period is subject to a rational-basis standard of review.
Black v. Secretary of Health & Human Services, 93 F.3d 781, 787 (Fed. Cir. 1996). Under the
rational-basis test, statutes are presumed to be valid if the classification drawn by the statute bears
a rational relationship to a legitimate governmental interest, “even if the law seems unwise or
works to the disadvantage of a particular group, or if the rationale for it seems tenuous.” Romer
v. Evans, 517 U.S. 620, 632, 134 L. Ed. 2d 855, 866, 116 S. Ct. 1620, 1627 (1996).
Initially, plaintiff fails to articulate any real invidious discrimination between the time frame
for filing for children with “on-table” injuries and those with “off-table” injuries. Rather, the two
classes of children are treated the same. The statute does not begin to run until the “manifestation
of onset” of the injury. 42 U.S.C. §300aa-16(a)(2) (2000). For example, although a child with
encephalopathy may have knowledge of an immediate injury, a child with a latent defect has until
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the injury manifests itself for the statute to begin to run. Accordingly, in both instances, the
statute does not begin to run until the claimant discovers the injury.
Plaintiffs’ argument was also considered and rejected in Blackmon v. American Home
Products Corp., 328 F. Supp. 2d 647 (S.D. Tex. 2004). There, in examining the rational-basis
test, the court reiterated that an essential purpose of the Vaccine Act was to ensure the continued
availability of vaccines on the market. “The Act reflects a policy judgment by Congress that this
legislative goal required some protection for vaccine manufacturers against tort suits.” Blackmon,
328 F. Supp. 2d at 655, citing Schafer v. American Cyanamid Co., 20 F.3d 1, 4 (1st Cir. 1994).
The court found the three-year limitations period to be logically connected to that legitimate
legislative goal. Blackmon, 328 F. Supp. 2d at 655. “There exists a clear, logical connection
between the means employed-a neutral limitation on claims-and the legislative goal pursued-
limitation of vaccine manufacturers' exposure to liability.” Blackmon, 328 F. Supp. 2d at 655.
Plaintiffs additionally object to the limitations provision on due process grounds. They
assert that they have been deprived of a protected property interest in their state cause of action
because they are barred under the Act’s time limitation and would be unable to seek relief in state
court. They argue that the Vaccine Act’s limitations period deprives them of any reasonable
opportunity to pursue a claim in the Court of Federal Claims until after the statute of limitations
has run due to the latent nature of autism and its complex causal link to thimerosal.
Plaintiffs argue that “[i]t is well established that the [p]laintiffs’ cause of action is a
protected property interest” citing Logan v. Zimmerman Brush Co., 455 U.S. 422, 71 L. Ed. 2d
265, 102 S. Ct. 1148 (1982), in support. Nevertheless, in Leuz v. Secretary of Health & Human
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Services, 63 Fed. Cl. 602, 610 (2005), the court addressed this very issue and held that the
plaintiffs had, in fact, not been deprived of any vested property rights. Therein, the court
explained that the due process protection of property interests only applies to interests that a
person has already acquired, and that a tort claim only becomes vested once a final judgment has
been rendered in the claimant’s favor. Leuz, 63 Fed. Cl. at 610. Although recognizing that in
Logan, 455 U.S. at 429 n.4, 71 L. Ed. 2d at 273 n.4,102 S. Ct. at 1154 n.4, the Supreme Court
held that in some instances, petitioners may have a “species of ‘property’ ” right in a state law
claim, the Leuz court distinguished Logan, finding that the plaintiffs “never had a right to pursue a
state tort claim for compensation for *** alleged vaccine-related injuries without first filing a
petition for those injuries under the Vaccine Act.” Leuz, 63 Fed. Cl. at 610-11. The court further
explained, “the only property rights petitioners had to sue a manufacturer for alleged vaccine-
related injuries necessarily flowed through the Vaccine Act.” Leuz, 63 Fed. Cl. at 611. Under the
same rationale in the present case, plaintiffs have not been deprived of any property right and,
therefore, cannot claim they suffered a due process violation. Accordingly, for all of the
foregoing reasons, we find no constitutional infirmity with the Act, and hold that the trial court
properly dismissed those representative claims alleged against the vaccine manufacturers.
Having dismissed the representative claims brought on Christopher’s behalf against the
vaccine manufacturers, we now consider plaintiffs’ individual claims for intentional infliction of
emotional distress. It is undisputed that this claim is not subject to the Vaccine Act because the
parents individually have not suffered a “vaccine-related injury” (42 U.S.C. §300aa-11(b)(1)(A)
(2000)). Rather, defendants maintain that the cause of action must be dismissed pursuant to both
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section 2-615 and 2-619(a)(9) of the Code. 735 ILCS 5/2-615, 2-619(a)(9) (West 2004).
A section 2-619(a)(9) motion to dismiss permits involuntary dismissal where “the claim
asserted against defendant is barred by other affirmative matter avoiding the legal effect of or
defeating the claim.” 735 ILCS 5/2-619(a)(9) (West 2004). Affirmative matter is “something in
the nature of a defense which negates the cause of action completely or refutes crucial conclusions
of law or material fact contained in or inferred from the complaint.” Illinois Graphics Co. v.
Nickum, 159 Ill. 2d 469, 486, 639 N.E.2d 1282, 1290 (1994). The moving party thus admits the
legal sufficiency of the complaint, but asserts an affirmative defense or other matter to defeat the
plaintiff's claim. Kedzie & 103d Currency Exchange, Inc. v. Hodge, 156 Ill. 2d 112, 115, 619
N.E.2d 732, 735 (1993).
Once a defendant satisfies the initial burden of presenting affirmative matter, the burden
then shifts to the plaintiff to establish that the defense is “unfounded or requires the resolution of
an essential element of material fact before it is proven.” Kedzie & 103d Currency Exchange,
Inc., 156 Ill. 2d at 116, 619 N.E.2d at 735. Because a dismissal under section 2-619(a)(9)
resembles the grant of a motion for summary judgment, an appeal from such a dismissal is the
same in nature as an appeal following a grant of summary judgment and is afforded de novo
review. Kedzie & 103d Currency Exchange, Inc., 156 Ill. 2d at 116, 619 N.E.2d at 735.
To state a cause of action for intentional infliction of emotional distress, plaintiffs must
allege that (1) the conduct was truly extreme and outrageous; (2) the actor either intended that his
conduct inflict severe emotional distress, or knew that there was a high probability that the
conduct would cause severe emotional distress; and (3) the conduct, in fact, caused severe
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emotional distress. Feltmeier v. Feltmeier, 207 Ill. 2d 263, 268-69, 798 N.E.2d 75, 80 (2003).
The complaint must be “ ‘specific, and detailed beyond what is normally considered permissible in
pleading a tort action.’ ” Welsh v. Commonwealth Edison Co., 306 Ill. App. 3d 148, 155, 713
N.E.2d 679, 684 (1999), quoting McCaskill v. Barr, 92 Ill. App. 3d 157, 158, 414 N.E.2d 1327,
1328 (1980).
Whether conduct could be deemed “extreme and outrageous” is evaluated objectively
based on all of the facts and circumstances. McGrath v. Fahey, 126 Ill. 2d 78, 90, 533 N.E.2d
806, 811 (1988). The nature of a defendant’s conduct must be “so extreme as to go beyond all
possible bounds of decency, and to be regarded as intolerable in a civilized community.” Kolegas
v. Heftel Broadcasting Corp., 154 Ill. 2d 1, 21, 607 N.E.2d 201, 211 (1992), quoting Restatement
(Second) of Torts §46, Comment d, at 73 (1965) (“ ‘recitation of the facts to an average member
of the community would arouse his resentment against the actor, and lead him to exclaim,
“Outrageous” ’ ”).
Plaintiffs alleged the following facts with respect to their intentional infliction of emotional
distress claim. Christopher was administered a series of vaccines containing the mercury-based
preservative thimerosal between 1995 and 1997. Defendants either manufactured, designed
and/or distributed thimerosal or manufactured, designed and/or distributed these childhood
vaccines containing thimerosal, representing that these products were safe to administer to
children, yet knowing that thimerosal caused or potentially caused severe neurological disorders
such as autism in these children. In support of this allegation, plaintiffs alleged that by 1982,
defendants knew or should have known that thimerosal was a toxin and that they had “actual
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knowledge that including thimerosal into vaccine products as a preservative administered to
children would potentially cause significant and permanent neurological injury to children.”
Additionally, plaintiffs alleged that “[i]n 1999 the [FDA] discovered that children were receiving
more than 100 times the Environmental Protection Agency’s limit for mercury by the time they
reached 18 months of age,” and “required the removal of [t]himerosal from all over-the-counter
drugs.” Plaintiffs further alleged that “[i]n 2001, the [FDA] issued a statement warning pregnant
women and young children from eating fish containing high levels of mercury for fear that the
consumption of substances [containing] mercury may cause neurological damage to children.”
Additionally, plaintiffs alleged that in 1999 and 2000 it was recommended that thimerosal be
removed from all childhood vaccines.
As affirmative matter to rebut those allegations, defendants submitted the relevant federal
regulations pertinent to the approval, manufacture, and labeling of vaccines by the FDA. For
example, section 601.2(d) of the Code of Federal Regulations provides that the issuance of a
license shall constitute a determination that the product meets the requisite safety standards. 21
C.F.R. §601.2(d) (2006). Section 610.15 provides in pertinent part that “[a]ny preservative used
shall be sufficiently nontoxic so that the amount present in the recommended dose of the product
will not be toxic to the recipient.” 21 C.F.R. §610.15 (2006).
Based upon plaintiffs’ allegations and the affirmative matter, plaintiffs cannot establish that
defendants engaged in “extreme and outrageous conduct” or that defendants intended or knew
that there was a high probability that their conduct would cause severe emotional distress.
According to plaintiffs’ allegations, it was not until two years after Christopher was administered
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these vaccines that the FDA or other health agencies announced that the amount of thimerosal in
vaccines could potentially cause adverse neurological side effects. Prior to that time, it is
undisputed that these vaccines were FDA-approved in accordance with a national public health
policy (See 42 U.S.C. §300aa-1 (2000)).
Plaintiffs’ allegation that defendants knew by 1982 that thimerosal was a toxic substance
cannot alone support extreme and outrageous conduct where defendants’ affirmative matter
established that under the requisite federal regulations, the FDA determined that the amount of
thimerosal used was “sufficiently nontoxic.” See 21 C.F.R. §610.15(a) (2006). Thus, it cannot
be said that defendants’ actions in manufacturing or distributing FDA-approved vaccines to
Christopher rose to the level of extreme and outrageous conduct or that severe emotional distress
was substantially certain to result from their conduct. Accordingly, the trial court properly
dismissed the intentional infliction of emotional distress count as a matter of law pursuant to
section 2-619(a)(9). 735 ILCS 5/2-619(a)(9) (West 2004). Due to our disposition, we need not
address defendants’ motion pursuant to section 2-615 of the Code.
For all of the foregoing reasons, we affirm the circuit court order dismissing the
representative claims brought on behalf of Christopher against the vaccine manufacturers for lack
of subject matter jurisdiction, but reverse that part of the order as it relates to the thimerosal
manufacturers, and affirm the dismissal of count VII for intentional infliction of emotional
distress.
Affirmed in part and reversed in part; cause remanded in part.
QUINN, P.J., and CUNNINGHAM, J., concur.
26
|
19 S.W.3d 533 (2000)
Richard W. FINLEY, Appellant,
v.
V.T. STEENKAMP, R.N., Salitha Jose and Vivra Renal Care d/b/a Community Dialysis Services of Fort Worth, Appellees.
No. 2-99-127-CV.
Court of Appeals of Texas, Fort Worth.
May 18, 2000.
*536 Manuel Rios, Dallas, for Appellant.
McManemin & Smith, Daniel P. Callahan, Dallas, for Appellee.
PANEL B: DAY, LIVINGSTON, and RICHARDS, JJ.
OPINION
SAM J. DAY, Justice.
I. INTRODUCTION
In this appeal, we must decide whether giving presuit notice of a health care liability claim to a health care provider as required by section 4.01 of the Medical Liability and Insurance Improvement Act ("the Act") tolls the statute of limitations applicable to a non-health care provider defendant on a related negligence claim. TEX.REV.CIV. STAT. ANN. art. 4590i, § 4.01(a), (c) (Vernon Supp.2000). We must also determine whether the trial court abused its discretion in dismissing a health care liability claim with prejudice after the plaintiff failed to timely file an expert report with the defendant health care provider, as required by section 13.01 of the Act. Id. § 13.01(d), (e).
We affirm.
II. BACKGROUND
In 1995, Appellant Richard W. Finley suffered from renal disease and received hemodialysis treatment at Appellee Vivra Renal Care, Inc. d/b/a Community Dialysis Services of Fort Worth ("CDS"), a dialysis center. In July 1995, Finley underwent surgery to revise the dialysis access in his left arm. On August 7, 1995, Finley went to CDS for his scheduled hemodialysis treatment. Finley was attended to by Appellee Salitha Jose, a dialysis technician employed by CDS. Appellee Terry Steenkamp, a charge nurse employed by CDS, was Jose's supervisor. Steenkamp did not inform Jose of Finley's recent graft revision. When Jose began Finley's treatment, she mistakenly inserted the dialysis needle into the non-functional graft rather than the new one. Blood began leaking into the soft tissue of Finley's arm and he immediately complained of pain. Finley was later discharged with instructions to apply ice to his arm. The incident was not reported to a physician.
After Finley returned home, his arm continued to swell and hurt. That evening, the pain in Finley's arm became so severe that he went to the emergency room. An emergency room physician evaluated Finley and admitted him to the hospital. Tests conducted the following day revealed that the revised graft in Finley's left arm could no longer be used for dialysis treatment. Finley was then taken to Harris Methodist Hospital where he received a catheter in his jugular vein. The blood loss into the hematoma area of Finley's left arm caused him to become anemic, requiring a blood transfusion. Additionally, Finley's left arm continued to leak fluid, which caused the skin on his arm to become bloody and blistered.
Before filing suit, Finley gave notice of his claim to Appellees. On October 20, 1997, 2 years and 75 days after the complained of incident, Finley filed suit against CDS, Steenkamp, and Jose, alleging the parties were negligent in performing his dialysis on August 7, 1995. Finley *537 also argued that CDS was liable under the doctrine of respondeat superior for Jose's and Steenkamp's alleged negligence.
On October 14, 1998, Steenkamp filed a motion to dismiss based on Finley's failure to provide an expert report within 180 days of filing suit, as required by section 13.01(d) of the Act. Id. art. 4590i, § 13.01(d). On the same date, CDS and Jose filed a motion for summary judgment. After a hearing, the trial court granted both motions. Finley filed a motion for new trial that was overruled by operation of law, followed by his notice of appeal.[1]
III. THE EXPERT REPORT REQUIREMENT
In his first issue, Finley alleges the trial court erred in dismissing his suit against Steenkamp because his failure to file the expert report within 180 days of filing suit was an accident or mistake, and was not intentional or the result of conscious indifference. In any health care liability claim, section 13.01(d) of article 4590i requires the complainant to file an expert report with each health care provider defendant within 180 days of filing the claim, describing how the health care provider breached the appropriate standard of care. Id. § 13.01(d), (r)(6). If a claimant fails to comply with this requirement, the court shall dismiss "the action of the claimant against that defendant with prejudice to the claim's refiling." Id. § 13.01(e)(3). However, if after a hearing the trial court finds that the claimant's failure to file the report as required by subsection (d) was "not intentional or the result of conscious indifference but was the result of an accident or mistake, the court shall grant a grace period of 30 days to permit the claimant to comply with that subsection." Id. § 13.01(g).
In this case, Finley's expert report was due on April 20, 1998. On October 14, 1998, almost one year after Finley filed suit, Steenkamp filed her motion to dismiss, alleging that Finley had not filed the required expert report. In support of her motion, Steenkamp attached a sworn affidavit from Marshall May, one of Steenkamp's attorneys. May stated that on June 22, 1998, he called Manuel Rios, Finley's counsel, and asked whether Finley had sent the expert report required by section 13.01. May said that Rios replied that he had not sent the report, but he would do so within a week. May stated that he never received the expert report.
Five days after Steenkamp filed her motion to dismiss, Finley filed his Designation of Expert Witnesses, which included an expert report compiled by Cherry Beckworth, Ph.D., R.N. Finley also filed a response to Steenkamp's motion and a request for an extension of time to file the expert report, alleging that his failure to comply with section 13.01(d) was not intentional or the result of conscious indifference, but was the result of an accident or mistake. Finley alleged that he failed to timely provide his expert report because (1) Appellees requested an abatement of this lawsuit for 45 days following service, (2) Finley's medical records were voluminous and were not provided to Finley until one month after the deadline to file the expert report, (3) the discovery process was delayed, (4) Finley's original expert *538 witness was unable to provide an expert report, and (5) on May 31, 1998, the trial court had entered a scheduling order designating October 19, 1998 as Finley's deadline to designate his expert witnesses and provide his expert report.
On November 6, 1998, the trial court held a hearing on Steenkamp's motion to dismiss. At the hearing, May testified that during his telephone conversation with Rios, May informed Rios that the 180-day deadline for filing his expert report had already passed. May testified that Rios said he was aware that the deadline had passed and that he would try to get the report to May as soon as he could. When May reminded Rios that Steenkamp was entitled to file a motion to dismiss the claim against her, Rios said he did not believe the trial court would grant the motion.
On cross-examination, May denied that he and Rios had discussed whether the trial court's scheduling order took precedence over the statutory deadline for filing the expert report. May also said Rios did not mention that he needed to take Steenkamp's deposition before he could file an expert report.
At the conclusion of the hearing, Rios argued that the trial court's scheduling order set October 19, 1998 as the deadline for Finley to designate expert witnesses and to file his expert report. Rios stated that he and May had discussed the scheduling order and neither had a problem with the deadlines it imposed. Rios also contended that during his telephone conversation with May, he and May discussed not only May's belief that the deadline for filing the report had passed, but also Rios's belief that the trial court's scheduling order had extended the deadline for filing the report until October 19, 1998. Finally, Rios argued that Appellees' delay in answering discovery and Rios's problems with his expert witness caused him to miss the deadline. After the hearing, the trial court granted Steenkamp's motion and dismissed Finley's claim against Steenkamp with prejudice.
On appeal, Finley contends the trial court erred in failing to grant his request for an extension of time to file the expert report as permitted by section 13.01(g) of article 4590i. Id. § 13.01(g). Specifically, Finley alleges that he established that his failure to timely file the expert report was a mistake or accident because he reasonably believed that the report was not due until October 19, 1998, as set forth in the trial court's scheduling order.
A. Standard of Review
We review the trial court's dismissal of a health care liability claim for failing to comply with the expert report provision of section 13.01 under an abuse-of-discretion standard. See Schorp v. Baptist Mem'l Health Sys., 5 S.W.3d 727, 731 (Tex.App.-San Antonio 1999, no pet.); Estrello v. Elboar, 965 S.W.2d 754, 758 (Tex.App.-Fort Worth 1998, no pet.). But see Palacios v. American Transitional Care Centers, 4 S.W.3d 857, 860 (Tex. App.-Houston [1st Dist.] 1999, pet. filed) (applying summary judgment standard to review trial court's dismissal of article 4590i claim). Whether a trial court abused its discretion depends on whether it acted without reference to any guiding rules or principles. See Estrello, 965 S.W.2d at 758. An abuse of discretion does not occur where the trial court bases its decision on conflicting evidence. See id. Moreover, a trial court does not abuse its discretion as long as some evidence of substantive and probative character exists to support the trial court's decision. See id.
B. Applicable Law
The Act does not define what constitutes an intentional act or conscious indifference, nor does it provide definitions or guidance as to what is considered an accident or mistake. However, because the language found in section 13.01(g) of article 4590i is identical to the language applicable in determining whether to grant a motion for *539 new trial after a default judgment, recent cases have construed these terms to apply in a manner similar to their application in a default judgment context. See, e.g., Schorp, 5 S.W.3d at 732; Nguyen v. Kim, 3 S.W.3d 146, 150-51 (Tex.App.-Houston [14 th Dist.] 1999, no pet.); McClure v. Landis, 959 S.W.2d 679, 681 (Tex.App.-Austin 1997, pet. denied).
An extension of time must be granted if the motion and affidavits filed by the movant set forth facts which, if true, would negate intentional or consciously indifferent conduct. See Director, State Employees Workers' Compensation Div. v. Evans, 889 S.W.2d 266, 268 (Tex. 1994). Some excuse, but not necessarily a good excuse, is enough to warrant an extension to file an expert report, as long as the act or omission causing the failure to file the report was in fact accidental. See Horsley-Layman v. Angeles, 968 S.W.2d 533, 536 (Tex.App.-Texarkana 1998, no pet.). The burden is on the party seeking relief to show some evidence of accident or mistake to demonstrate that he did not act intentionally or with conscious indifference. See Schorp, 5 S.W.3d at 732. It is then the defendant's burden to controvert the plaintiff's evidence of mistake, or else an issue of mistake exists and an extension of time must be granted. See id.
In determining whether the claimant's failure was intentional or the result of conscious indifference, we look to the knowledge and acts of the party seeking relief. See Nguyen, 3 S.W.3d at 151. An accident or mistake in this context is generally characterized by the claimant's inadequate knowledge of the facts or by an unexpected happening that precludes compliance. See id. at 152. Conscious indifference, on the other hand, means failing to take some action that would seem indicated to a person of reasonable sensibilities under similar circumstances. See id.
C. ANALYSIS
In this case, Finley argues that his failure to timely provide the expert report was the result of numerous circumstances that led to his mistaken belief that the date specified in the trial court's scheduling order took precedence over the 180-day deadline set out in section 13.01 of article 4590i. The crux of Finley's argument is that he thought the 180-day deadline was replaced by the trial court's scheduling order.
Finley's argument fails for numerous reasons. First, as Steenkamp correctly points out, the trial court did not issue its scheduling order until May 31, 1998, more than a month after the deadline had passed for Finley to turn over his expert report. Finley attempts to salvage this argument on appeal by contending that during the original 180-day period following the filing of this suit, Appellees abated the case for 45 days. Finley alleges that this abatement extended the expert report filing deadline by 45 days, into June 1998. Finley then alleges that on May 31, 1998, after the case resumed, the trial court entered its scheduling order designating October 19, 1998 as its deadline for Finley to designate his expert witnesses and provide his expert report. However, Finley did not raise this abatement argument until he filed his motion for new trial. In his motion for an extension of time, Finley merely alleged that Steenkamp had requested an abatement, presumably to support his argument that Steenkamp had tried to delay the case. He never argued, however, that the case was abated or that the abatement extended the period for filing his expert report.
Second, the trial court's scheduling order does not "designate[] October 19, 1998 as Appellant's deadline to ... provide expert reports," as Finley contends. Instead, the order specifies that Finley was required to provide the name of each of his expert witnesses expected to testify at trial, along with the expert's address and the topic of the witness's testimony, no later than October 19, 1998. Nothing in the court's scheduling order implied that it *540 was altering the date on which the expert report required by article 4590i was due.[2]
Additionally, Finley attempts to attach some significance to the fact that Steenkamp did not object to the trial court's scheduling order. Specifically, he argues that by not objecting to the order, Steenkamp agreed to October 19, 1998 as the date for Finley to file his expert report. For the reasons discussed in the previous paragraph, this argument is without merit.
Finley next contends that he was unable to timely file his expert report because Ann Layton, R.N., Finley's original expert witness, unexpectedly withdrew from the case and was unable to provide the required report. However, the record reflects that Finley did not ask Layton to prepare the expert report until May or June 1998, which is well after the 180-day deadline passed for filing the report. Thus, Layton's unexpected withdrawal from the case after the report was due could not have contributed to Finley's failure to timely comply with section 13.01.
Regarding Finley's argument that the slow discovery process and voluminous medical records are sufficient to excuse his failure, we do not believe these excuses are adequate to show accident or mistake. See, e.g., Broom v. MacMaster, 992 S.W.2d 659, 664 (Tex.App.-Dallas 1999, no pet.) (holding no accident or mistake had been shown where appellant's attorney knew of expert report deadline but failed to meet it because the case had only recently been referred to him, he had a large workload, and he assumed opposing counsel would not seek strict compliance with section 13.01(d)); Estrello, 965 S.W.2d at 758 (holding appellant failed to show accident or mistake where her only excuses for not meeting section 13.01(d) deadline were that appellant had missed several meetings with her attorney and appellee-physician had failed to return appellant's attorney's phone calls).
Finally, we disagree with Finley's contention that Steenkamp failed to specifically controvert the evidence presented by Finley regarding his mistaken belief. The uncontradicted evidence at the hearing demonstrated that in June 1998, Rios admitted that he knew the deadline for filing Finley's expert report had passed, but Rios did not believe the trial court would dismiss the case.[3] The trial court was entitled to infer from this testimony that Finley's attorney knew about the deadline but deliberately ignored it because he did not believe the trial court would dismiss the case. Absent a showing of accident or mistake that would justify Finley's failure to provide the expert report within the time required by section 13.01(d), we cannot conclude the trial court abused its discretion in dismissing Finley's claim against Steenkamp. Point one is overruled.
IV. TOLLING OF LIMITATIONS PERIOD
In his second issue, Finley argues that the trial court erred in granting summary *541 judgment in favor of CDS.[4] To support its motion, CDS argued that it was entitled to summary judgment based on the affirmative defense of limitations. Specifically, CDS argued that because a dialysis center was not a "health care provider" as defined by article 4590i, the 2-year statute of limitations for a personal injury suit applied. Alternatively, CDS argued that if the trial court determined CDS was a health care provider, Finley's claim should be dismissed for failure to timely file his expert report. In response, Finley alleged that CDS was not entitled to summary judgment because (1) CDS failed to plead the affirmative defense of limitations, (2) even if CDS was not a health care provider, it was liable to Finley under the doctrine of respondeat superior for Steenkamp's actions,[5] and (3) Finley's suit was timely filed because the applicable statute of limitations was tolled for 75 days when Finley gave presuit notice of his health care liability claim, as provided by section 4.01(c) of article 4590i.
We turn first to Finley's contention that CDS failed to plead this affirmative defense as required by Rule 94 of the rules of civil procedure. TEX.R. CIV. P. 94. An unpleaded affirmative defense may serve as the basis for a summary judgment when it is raised in the summary judgment motion and the non-movant does not object to the lack of a Rule 94 pleading in either its written response or before the rendition of judgment. See Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 494 (Tex. 1991); John Bezdek Ins. Assocs., Inc. v. American Indem. Co., 834 S.W.2d 401, 403 (Tex.App.-San Antonio 1992, no pet.); see also TEX.R. CIV. P. 166a(c) (providing that issues not expressly presented to the trial court may not serve as grounds for reversal of a summary judgment on appeal). Here, the record reflects that Finley failed to bring CDS's pleading deficiency to the trial court's attention. As a result, he waived the right to complain about this issue on appeal. Because Finley failed to preserve error on this issue, we must now determine whether Finley's suit against CDS was barred by limitations.
A. STANDARD OF REVIEW
The appropriate standard to be followed when reviewing a summary judgment is well-established. The movant has the burden to show that no genuine issues of material fact exists and that it is entitled to judgment as a matter of law. See TEX.R. CIV. P. 166a(c); Calvillo v. Gonzalez, 922 S.W.2d 928, 929 (Tex.1996); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex.1979). The movant asserting limitations as the basis for summary judgment assumes the burden to show as a matter of law that the suit is time barred. See Jennings v. Burgess, 917 S.W.2d 790, 793 (Tex.1996); Delgado v. Burns, 656 S.W.2d 428, 429 (Tex.1983). If the nonmovant asserts that a tolling provision applies, the movant must conclusively negate the tolling provision's application to show his entitlement to summary judgment. See Jennings, 917 S.W.2d at 793; Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 518 n. 2 (Tex.1988).
B. APPLICABLE LAW
Section 10.01 of article 4590i provides for a strict 2-year statute of limitations for all health care liability claims. TEX.REV.CIV. STAT. ANN. art. 4590i, § 10.01. As CDS correctly asserts, however, the limitations period in section 10.01 only applies to health care liability claims, i.e., claims against either a physician or a health care provider. Id. §§ 1.03(4), 10.01. *542 Because it is undisputed that CDS is neither a physician nor a health care provider under the Act,[6] the lawsuit against it is not a "health care liability claim" and is thus governed by the general 2-year statutory limitations period for a personal injury cause of action. See TEX. CIV. PRAC. & REM.CODE ANN. § 16.003(a) (Vernon 1986).
A cause of action for personal injury under section 16.003 of the civil practice and remedies code must be brought within 2 years from the date the cause of action accrues. Id.; Childs v. Haussecker, 974 S.W.2d 31, 36 (Tex.1998). A cause of action accrues when a wrongful act causes an injury. See Childs, 974 S.W.2d at 36; S.V. v. R.V., 933 S.W.2d 1, 4 (Tex.1996). In this case, the undisputed date of Finley's injury was August 7, 1995. The statute of limitations began running on that date; thus, Finley had until August 8, 1997 to timely file his personal injury suit against CDS. He failed to do so until October 20, 1997-73 days after the 2-year limitations period expired. As a result, unless the running of the limitations period was tolled, the trial court did not err in granting CDS's motion for summary judgment.
In response, Finley asserts that the section 16.003 statutory period was tolled by the following provision in article 4590i:
(a) Any person or his authorized agent asserting a health care liability claim shall give written notice of such claim by certified mail, return receipt requested, to each physician or health care provider against whom such claim is being made at least 60 days before the filing of a suit in any court of this state based upon a health care liability claim.
....
(c) Notice given as provided in this Act shall toll the applicable statute of limitations to and including a period of 75 days following the giving of the notice, and this tolling shall apply to all parties and potential parties.
TEX.REV.CIV. STAT. ANN. art. 4590i, § 4.01(a), (c) (emphasis added). Finley asserts that under the plain language of section 4.01(c) of the Act, his presuit notice to Steenkamp, who is a registered nurse and thus a "health care provider," tolled the applicable statute of limitations for 75 days for "all parties and potential parties," including CDS. CDS, on the other hand, contends that "all parties and potential parties" refers to only those parties involved in the health care liability claim, i.e., physicians and health care providers.
C. STATUTORY INTERPRETATION
Our primary objective in construing a statute is to determine and give effect to the Legislature's intent. See Mitchell Energy Corp. v. Ashworth, 943 S.W.2d 436, 438 (Tex.1997). If possible, we are to discern legislative intent from the plain meaning of the words of the statute. See Albertson's, Inc. v. Sinclair, 984 S.W.2d 958, 960 (Tex.1999); Monsanto Co. v. Cornerstones Mun. Util. Dist., 865 S.W.2d 937, 939 (Tex.1993). We do not, however, interpret statutory language so rigidly "that the almost certain intent of the Legislature is disregarded." City of LaPorte v. Barfield, 898 S.W.2d 288, 292 (Tex.1995). Instead, the court must consider the consequences that would follow from its construction of a statute and avoid absurd results. See TEX. GOV'T CODE ANN. § 311.023 (Vernon 1998); Sharp v. House of Lloyd, Inc., 815 S.W.2d 245, 249 (Tex. *543 1991). Moreover, legislative intent must be determined from the entire act, not from isolated portions thereof. See Jones v. Fowler, 969 S.W.2d 429, 432 (Tex.1998).
D. Analysis
As noted above, in construing section 4.01(c), Finley would have us to hold that the Legislature intended the "all parties and potential parties" language to toll the statute of limitations applicable to his negligence claim against CDS. After considering the consequences of this interpretation, we respectfully decline to do so. First, this interpretation would lead to absurd results. Under this construction, section 4.01 would toll for 75 days the statute of limitations applicable to any lawsuit filed against any defendante.g., an action for negligence, battery, or intentional infliction of emotional distressprovided that suit also involved (either legitimately or otherwise) presuit notice of a claim to a health care provider under article 4590i. Furthermore, this interpretation would allow plaintiffs to bring sham lawsuits against health care providers in order to obtain additional time to file their legitimate claims against parties not covered under the Act.
Second, in determining legislative intent, we are to consider the nature and object sought to be obtained by the Legislature. See Ashworth, 943 S.W.2d at 438. Article 4590i was enacted to curb escalating medical care costs resulting from the increasing number of health care liability claims being filed. TEX.REV.CIV. Stat. Ann. art. 4590i, § 1.02. The Legislature passed section 4.01 to give health care providers and physicians 60 days before a health care claim was filed to try to settle the case without the expense of litigation. See De Checa v. Diagnostic Ctr. Hosp., Inc., 852 S.W.2d 935, 938 (Tex.1993); Schepps v. Presbyterian Hosp., 652 S.W.2d 934, 937 (Tex.1983). At the same time, the Legislature sought to protect the health care claimant's right to maintain his lawsuit by tolling the applicable statute of limitations for 75 days. See De Checa, 852 S.W.2d at 938; Schepps, 652 S.W.2d at 937. We do not see how adopting Finley's argument to apply this tolling provision to all claims brought in conjunction with a health care liability suit, even if the claim is not brought against a health care provider, furthers the Legislature's purpose in enacting this statute.
Finally, we note that section 1.02 of the Act expressly provides that in passing article 4590i, the Legislature intended to "make certain modifications to the liability laws as they relate to health care liability claims only and with an intention of the legislature to not extend or apply such modifications of liability laws to any other area of the Texas legal system or tort law." TEX.REV.CIV. Stat. Ann. art. 4590i, § 1.02((b)(1), (7) (emphases added)). With this in mind, we cannot conclude that the Legislature ever intended for the tolling provision in section 4.01(c) to reach beyond the boundaries of section 4590i to extend the statute of limitations for a general negligence claim (or any other claim, for that matter) against a non-health care provider. Accordingly, we hold that "all parties and potential parties" in section 4.01(c) refers to only the parties to a health care liability claim as defined in section 1.03(4).[7]Id. § 1.03(4).
Because the running of the limitations period applicable to Finley's negligence claim against CDS was not tolled, the trial court did not err in granting CDS's motion *544 for summary judgment. Finley's second issue is overruled.
V. CONCLUSION
Because there was conflicting evidence from which the trial court could have concluded that Finley's failure to file his expert report was not the result of an accident or mistake, we hold the trial court did not abuse its discretion in dismissing the case against Steenkamp. Additionally, because the Legislature did not intend presuit notice of a health care liability claim to a health care provider to extend the limitations period for causes of action raised outside the Act, the trial court did not err in granting CDS's motion for summary judgment.
We affirm the trial court's order of dismissal in favor of Steenkamp. We also affirm the trial court's order granting summary judgment in favor of CDS.
NOTES
[1] Steenkamp argues that we should dismiss the appeal against her because Finley's notice of appeal is defective. Steenkamp alleges that under Rule 25.1(d) of the rules of appellate procedure, an appellant's notice of appeal must state the judgment and order appealed from. TEX.R.APP. P. 25.1(d). Because Finley's notice of appeal refers only to the trial court's order granting summary judgment in favor of CDS and Jose, Steenkamp argues that Finley failed to preserve error regarding the order dismissing the claims against Steenkamp. However, Rule 25.1(d) actually states that an appellant's notice of appeal must "state the date of the judgment or order appealed from." Id. (emphasis added). Here, Finley's notice of appeal included the date of the trial court's orders granting Steenkamp's motion for dismissal and CDS and Jose's motion for summary judgment. As a result, it was not defective under Rule 25.1(d). See John Hill Cayce, Jr. et al., Civil Appeals in Texas: Practicing Under the New Rules of Appellate Procedure, 49 Baylor L. Rev. 867, 886 (1997).
[2] The trial court's scheduling order provided in pertinent part:
1. EXPERT WITNESS DESIGNATION.
Each testifying expert's name, address and the topic of the witness'[s] testimony must be provided to opposing party no later than: 10/19/98: Plaintiff(s) 11/16/98: All other parties
Experts not provided in compliance with this paragraph will not be permitted to testify absent a showing of good cause.
[3] In his brief, Finley repeatedly references the affidavits of his attorney as evidence of his mistaken belief. These affidavits were attached to Finley's motion for new trial and Finley's response to Steenkamp's response to his motion for new trial. Finley's appeal, however, concerns only the trial court's order of dismissal, not the trial court's failure to grant his motion for new trial. As an appellate court, we review the actions of a trial court based only on the evidence before the court at the time it acted. See Methodist Hosps. v. Tall, 972 S.W.2d 894, 898 (Tex.App.-Corpus Christi 1998, no pet.). Because Rios's affidavits were not before the trial court at the time it ruled on Steenkamp's motion to dismiss, we cannot consider them in reviewing the trial court's decision.
[4] Finley does not challenge the summary judgment in favor of Jose.
[5] Finley appears to argue that his failure to sue CDS within the limitations period is irrelevant because an employer who is liable under the doctrine of respondeat superior need not be sued to be held liable for its employee's wrongful acts. Although Finley cites two cases that discuss the doctrine of respondeat superior in general terms, he does not provide any authority for this novel proposition, and we respectfully decline to adopt it.
[6] A health care provider is "any person, partnership, professional association, corporation, facility, or institution duly licensed or chartered by the State of Texas to provide health care as a registered nurse, hospital, dentist, podiatrist, pharmacist, or nursing home, or an officer, employee, or agent thereof acting in the course and scope of his employment." Id. § 1.03(3). This definition includes only those persons or entities specifically listed and does not impliedly include other entities. See, e.g., Townsend v. Catalina Ambulance Co., 857 S.W.2d 791, 796 (Tex.App.-Corpus Christi 1993, no writ). CDS is a dialysis center that operates during limited hours and, thus, is neither a general hospital nor a special hospital. See TEX. HEALTH & SAFETY CODE ANN. § 241.003(5), (15) (Vernon Supp.2000).
[7] Finley also contends that if this court limits the "all parties" language in section 4.01(c) to only those parties involved in a health care liability claim, this will lead to a "multiplicity of lawsuits." Finley contends that "[p]laintiffs will file one lawsuit before the two-year period against those negligent parties involved in an occurrence who are not `health care providers' and a second lawsuit, during the tolling period, against those parties involved in an occurrence who qualify as `health care providers' under Article 4590i." Assuming Finley is correct, this is not an uncommon occurrence and is certainly no reason to disregard the fundamental principle that all defendants must be timely sued.
|
505 F.Supp.2d 1226 (2007)
EDIZONE, LC, Plaintiff,
v.
CLOUD NINE, LLC, et al., Defendants.
Cloud Nine, LLC, et al., Counter-Claim Plaintiffs, and Third-Party Plaintiffs,
v.
Edizone, LC, Counter-Claim Defendant, and
Terry Pearce, et al., Third-Party Defendants.
No. 1:04-CV-117 TS.
United States District Court, D. Utah, Northern Division.
May 30, 2007.
*1227 Casey K. McGarvey, E. Scott Savage, Berman & Savage PC, Salt Lake City, UT, for Plaintiff.
Kristin A. VanOrman, Strong & Hanni, Christopher B. Snow, Jennifer A. James, Neil A. Kaplan, Rodney G. Snow, Clyde Snow Sessions & Swenson, Salt Lake City, UT, for Defendants.
MEMORANDUM DECISION AND ORDER DENYING MOTION TO CONTINUE, DENYING MOTION TO RECONSIDER, AND ENTERING SUMMARY JUDGMENT ON ISSUE OF INFRINGEMENT OF CLAIM 24 OF U.S. PATENT NO. 5,994,450
TED STEWART, District Judge.
This matter is before the Court to address Defendants' Motion to Continue,[1] Plaintiff's Motion for Reconsideration[2] of this Court's November 9, 2006 Order, Plaintiffs Motion for Partial Summary Judgment,[3] and to schedule a trial date and related deadlines for the action.
I. INTRODUCTION
The relevant facts and background to this case are set forth in this Court's November 9, 2006 Order[4] which, among other things, denied cross motions for summary judgment on the issue of Defendants' counterclaim of invalidity of U.S. Patent *1228 No. 5,749,111 ("the '111 patent") and U.S. Patent No. 6,026,527 ("the '527 patent").[5] In the Order, the Court found that there were genuine issues of material fact as to the following underlying factual issues comprising the elements of obviousness: (a) the scope and content of the prior art; (b) the level of ordinary skill in the art; (c) the differences between the claimed invention and the prior art; (d) the extent of any proffered objective indicia of nonobviousness; and (e) suggestion, motivation, or teaching in the prior art that would produce the claimed invention.[6]
In connection with its ruling, the Court noted that the United States Patent and Trademark Office ("PTO") had reexamined, or was then reexamining the various patents at issue, and had issued final office actions rejecting the claims of the '111 and '527 patents. Accordingly, the Court found that the presumption of validity patents typically enjoy was called into doubt,[7] and noted that summary judgment for Plaintiffs would be particularly inappropriate in light of the PTO's action.[8]
Plaintiff now moves for reconsideration of the Court's findings on the validity of the '111 and '527 patents, upon the basis that there is new evidence relating to the action. Apparently, on January 16 and/or 17, 2007, the PTO reversed course, issuing Notices of Intent to Issue Reexamination Certificate ("NIRC") which confirmed all claims of, and hence, determined valid, both the '111'and the '527 patents.[9]
Plaintiff also moves for summary judgment on the issue of Defendants' infringement of claim 24 of U.S. Patent No. 5,994,450 ("the '450 patent").
Finally, the Cloud Nine Defendants[10] move to continue the June 4, 2007 hearing on the abovementioned motions.
II. DISCUSSION
A Motion to Continue
The Cloud Nine Defendants recently retained new counsel due to the disqualification of their former counsel. New counsel entered appearances on May 14, 2007. Counsel seeks continuance of the current hearing on the abovementioned motions upon the grounds that the issues in this case are complex, the memoranda lengthy, and because the Supreme Court's recent decision in KSR International v. Teleflex, Inc.,[11] has changed the legal landscape underlying the motions.
The Court notes that the issues addressed in the current motions are discrete, and that the corresponding memoranda are not lengthy. Moreover, the issues have been fully briefed for some time. The Court notes that the Supreme Court's decision in KSR International may be relevant to some of the issues in this case, but that the decision does not affect this Court's rulings discussed below. The Court does not believe that supplemental memoranda or oral argument are necessary to resolve the issues. Finally, resolution of the outstanding motions will assist the Court and counsel in proceeding with the scheduling matters in this action. Therefore, the Court will deny Defendants' Motion to Continue, and, having reviewed the memoranda of the parties, makes the following rulings.
*1229 B. Motion for Reconsideration
"Grounds warranting a motion to reconsider include (1) an intervening change in the controlling law, (2) new evidence previously unavailable, and (3) the need to correct clear error or prevent manifest injustice."[12] The Court finds that the PTO's position does constitute new evidence, and it will, therefore, examine the merits of Plaintiffs Motion.
Plaintiff argues that, based on the new evidence, it is entitled to summary judgment on Defendants' invalidity counterclaim. First, Plaintiff argues that, based on the determinations of the PTO, the presumption of validity of the '111 and '527 patents "has been reinstated and strengthened."[13] Second, Plaintiff argues that Defendants' burden of establishing invalidity by clear and convincing evidence is so great that no reasonable jury could find for Defendants. Plaintiff also essentially states that the Court failed to sufficiently address Defendants' burden of proof in maintaining a counterclaim of invalidity.[14] Furthermore, Plaintiff challenges the Court's prior ruling by stating that the "factual issues do not address and cannot preclude a ruling of summary judgment for plaintiff'[15] and that this Court "cannot find there to be an issue of fact in light of the PTO's recent, final decisions."[16] Finally, Plaintiff argues that, in order for Defendants to survive a motion for summary judgment, they must prove that the PTO failed to perform its duty in the reexamination.[17]
Defendants' relevant counter arguments may be summarized in the following manner: first, the Court did not base its ruling in the November 9, 2006 Order on the arguments and reasoning of the PTO; second, the PTO's current position is not clear because it has recently granted a second request for reexamination of the '111 patent.
Plaintiffs position that the PTO's NIRCs strengthen the presumption of validity with respect to the '111 and '527 patents is erroneous. The presumption of validity is not substantive law, but merely a procedural device[18] The presumption is not strengthened by reexamination[19] Based on the PTO's new position here, and to the extent it was in doubt before, the presumption is clearly reinstated in this case. Accordingly, Defendant bears the "burden of persuasion on the merits . . . until final decision."[20] Importantly, the argument that Plaintiff makes regarding a supposed burden Defendant has of proving that the PTO failed to perform its duty applies merely to rebutting the imposition of the presumption.[21] Defendants are not necessarily required to meet this burden to avoid a summary judgment against them.
*1230 As mentioned in the Court's previous order,[22] the relevant burden Defendants must sustain is one of proving invalidity by clear and convincing evidence.[23] The "clear and convincing" standard is intermediate, existing between the "beyond a reasonable doubt" and "a preponderance of the evidence" standards.[24] Presumably, the standard moves closer toward the requirement of a showing "beyond a reasonable doubt" once the PTO has made a final determination in re-examination that a patent's claims are valid.[25] This must be true, even when, as here, the PTO has strangely granted a second request for reexamination of the '111 patent.[26]
Nonetheless, the Federal Circuit has stated quite clearly that there is "nothing untoward about the PTO upholding the validity of a reexamined patent which the district court later finds invalid."[27] Indeed, it appears that the only absolute requirement imposed on a district court is that it must give some evidentiary consideration to the PTO's decision.[28] Defendants properly point out that this Court only considered the PTO's previous reexamination findings as one piece of the overall evidence presented. Indeed, this is all that the Court was required to do.
Significantly, Plaintiff cites no decision where a PTO finding pursuant to reexamination demonstrated that no reasonable jury could return a verdict for the nonmoving party in the face of all the evidence presented.[29] To the contrary, it appears that none of the cases which Plaintiff cites support that summary judgment in its favor is proper in this context.[30]
Finally, the Court notes that it is perplexed by Plaintiffs argument that the Court failed to acknowledge that the relevant issues could be resolved in favor of Defendants, upon clear and convincing evidence. The Court redirects Plaintiffs attention to the Order for further review.[31]
*1231 Accordingly, the Court finds that the issue of the invalidity of the '111 and '527 patents is one for the jury. The Court will deny Plaintiffs Motion for Reconsideration.
C. Motion for Partial Summary Judgment
Plaintiff moves for judgment on the issue of Defendants' infringement of claim 24 of the '450 patent. Defendant argues that the Motion is untimely as dispositive motions for this case were due by May 19, 2006.
Fed.R.Civ.P. 16(b) allows the Court to amend a scheduling order upon a showing of good cause. "The primary measure of Rule 16's `good cause' standard is the moving party's diligence in attempting to meet the case management order's requirements.'"[32] Plaintiff here has not been diligent in attempting to meet the case management order's requirements. Moreover, Plaintiffs primary basis for its Motion appears to be this Court's claim construction pursuant to the' September 21, 2006 Markman Hearing Memorandum Decision and Order. Notwithstanding that the date of the hearing came after the deadline for dispositive motions, Plaintiffs Motion was filed over three months after, and when the date for trial was looming.
Nevertheless, the Court declines to ignore the substantive issue before it. It is well established that "`[d]istrict courts are widely acknowledged to possess the power to enter summary judgment sua sponte.'"[33] Summary judgment is proper if the moving party can demonstrate that there is no genuine issue of material fact and it is entitled to judgment as a matter of law.[34] In considering whether genuine issues of material fact exist, the Court determines whether a reasonable jury could return a verdict for the nonmoving party in the face of all the evidence presented.[35] A court may grant summary judgment in a patent case, "as in any other case, . . . when there are no disputed issues of material fact, . . . or when the nonmovant cannot prevail on the evidence submitted when viewed in a light most favorable to it".[36]
Infringement must be proven by a preponderance of the evidence.[37] The first step of determining whether literal infringement has occurred is claim construction.[38] This Court has conducted claim construction of the relevant terms following a Markman hearing. Next, the Court determines whether the claims at issue read on the accused device or composition.[39] Literal infringement requires *1232 that every element of the subject claim be found in the accused device or composition.[40]
Claim 24 of the '450 patent reads as follows:
An elastomeric material having
a plasticizer and a triblock copolymer of the general configuration A-B-A;
wherein said triblock copolymer has a weight average molecular weight of at least about 300,000 or more;
wherein A is selected from the group consisting of monoalkenylarene polymers;
wherein B is a hydrogenated polymer including a plurality of ethylene/propylene monomers and a plurality of ethylene/butylene monomers;
wherein the combined weights of said ethylene/propylene monomers and said ethylene/butylene monomers comprise at least about 50 weight percent of said hydrogenated polymer B;
wherein said plasticizer associates with said hydrogenated polymer B;
wherein said triblock copolymer has a measurable percent elongation at break;
wherein said plasticizer tends to increase the percent elongation at break of said triblock copolymer'
wherein said triblock copolymer has a rigidity measureable on the Gram Bloom scale; and
wherein said plasticizer tends to decrease the Gram Bloom rigidity of said triblock copolymer
Plaintiff states, as undisputed fact, that some or all of Defendants' products are made from combinations of the triblock copolymer Septon 4055 and mineral oil, and that this comprises each and every claim set forth above. Defendants do not controvert that at least some of their products use Septon 4055 and mineral oil in the manner asserted by Plaintiff. Plaintiffs assertion is, therefore, deemed as admitted.[41] There being no genuine issues of material fact, the Court determines that Plaintiff is entitled, as a matter of law, to a judgment that Defendants are infringing claim 24 of the '450 patent, assuming, of course, that the '450 patent is determined to be valid at trial.
III. CONCLUSION
For the foregoing reasons, it is therefore
ORDERED that Defendants' Motion to Continue (Docket No. 561) is DENIED. The Court will proceed with the scheduling matters in this action at the June 4, 2007 hearing. It is further
ORDERED that Plaintiff's Motion for Reconsideration (Docket No. 519) is DENIED. It is further
ORDERED that Plaintiffs Motion for Partial Summary Judgment (Docket No. 451) is DENIED. It is further
ORDERED that the following judgment is entered against Defendants, contingent upon a future finding that the '450 patent is valid: as a matter of law, Defendants' products infringe claim 24 of the '450 patent.
SO ORDERED.
NOTES
[1] Docket No. 561.
[2] Docket No. 519.
[3] Docket No. 451.
[4] Docket No. 381.
[5] Id. at 8-14.
[6] Id.
[7] Id. at 6.
[8] Id. at 14.
[9] Docket No. 520, Exs. A, B.
[10] Cloud Nine, LLC, Easy Seat, LLC, Rodney Ford and Blaine Ford.
[11] ___ U.S. ___, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007).
[12] Servants of Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir.2000).
[13] Docket No. 529, at 2.
[14] Docket No. 520, at 14 ("The Court never explained that all key issues also could be resolved in favor of defendant, upon clear and convincing evidence. . . . ").
[15] Id.
[16] Id.
[17] Plaintiff cites Am. Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1359-60 (Fed.Cir.1984) in support.
[18] T.J. Smith & Nephew Ltd. v. Consolidated Med. Equip., Inc., 821 F.2d 646, 648 (Fed.Cir. 1987).
[19] Id.
[20] In re Etter, 756 F.2d 852, 856 (Fed.Cir. 1985).
[21] See Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 1235 (Fed.Cir.2003) (citing Am. Hoist & Derrick Co., 725 F.2d at 1359, and stating that the imposition of presumption of validity standard is related to presumption that PTO does its job properly).
[22] Docket No. 381, at 6.
[23] Ryco, Inc. v. Ag-Bag Corp., 857 F.2d 1418, 1423 (Fed.Cir.1988).
[24] E.g., Gladstone et al., Patent Law Fundamentals, 4 Pat. L. Fundamentals § 20:36 (2d ed.) (citing Addington v. Texas, 441 U.S. 418, 423-25, 99 S.Ct. 1804, 60 L.Ed.2d 323 (1979)).
[25] American Hoist, 725 F.2d at 1364 (stating in dicta that PTO upholding of claims in reissue proceeding renders "burden of proof of unpatentability . . . more difficult to sustain.").
[26] Cf., Hoechst Celanese Corp. v. BP Chemicals Ltd., 78 F.3d 1575, 1584 (Fed.Cir.1996) ("grant by the examiner of a request for reexamination is not probative of unpatentability" and "does not establish a likelihood of patent invalidity").
[27] Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1428 (Fed.Cir.1988).
[28] Custom Accessories, Inc., v. Jeffrey-Allan Indust., Inc., 807 F.2d 955, 961 (Fed.Cir. 1986).
[29] Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Clifton v. Craig, 924 F.2d 182, 183 (10th Cir.1991).
[30] See, e.g., Custom Accessories, 807 F.2d at 961 (reversing judgment declaring patent invalid and remanding); Am Hoist & Derrick Co., 725 F.2d at 1364 (noting in dicta that a jury instruction addressing the effect of PTO reexamination would be proper); In re Laughlin Products, Inc., 265 F.Supp.2d 525, 529 (E.D.Pa.2003) (granting motion to stay; enying motion to dismiss); E.I. du Pont de Nemours & Co. v. Polaroid Graphics Imaging, Inc., 706 F.Supp. 1135, 1141 (D.Del.1989) (addressing motion for preliminary injunction; denying summary judgment motion requesting finding of invalidity).
[31] See, e.g., Docket No. 381, at 6 ("The party attacking validity has the burden of proving facts supporting a conclusion of invalidity by clear and convincing evidence."); 9-14 (finding genuine issues of material fact.).
[32] Inge v. Rock Financial Corp., 281 F.3d 613, 625 (6th Cir.2002) (quoting Bradford v. DANA Corp., 249 F.3d 807, 809 (8th Cir.2001)) (citing Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir.1992)) and citing Parker v. Columbia Pictures Indus., 204 F.3d 326, 340 (2d Cir.2000) (joining Eighth, Ninth, and Eleventh Circuits in construing "good cause" as depending on the movant's diligence).
[33] Durtsche v. Am. Colloid Co., 958 F.2d 1007, 1009 n. 1 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 326, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).
[34] Fed.R.Civ.P. 56(c).
[35] Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Clifton v. Craig, 924 F.2d 182, 183 (10th Cir.1991).
[36] Knoll Pharm. Co. v. Teva Pharms. USA, Inc., 367 F.3d 1381, 1383 (Fed.Cir.2004).
[37] Uniroyal Inc. v. Rudkin-Wiley Corp., 837 F.2d 1044, 1054 (Fed.Cir.1988).
[38] Id.
[39] Id.
[40] Id.
[41] DUCivR 56-1(c) ("All material facts of record meeting the requirements of Fed.R.Civ.P. 56 that are set forth with particularity in the statement of the movant will be deemed admitted for the purpose of summary judgment, unless specifically controverted by the statement of the opposing party identifying material facts of record meeting the requirements of Fed.R.Civ.P. 56.").
|
259 F.Supp. 523 (1966)
Mrs. Patricia B. MILLER, Individually, and on Behalf of her minor children, Denise Miller and Daniel Miller, Plaintiff,
v.
AMUSEMENT ENTERPRISES, INC., d/b/a Fun Fair Park, Defendant.
Civ. A. No. 3261.
United States District Court E. D. Louisiana, Baton Rouge Division.
September 13, 1966.
Johnnie A. Jones, Baton Rouge, La., and Norman Amaker, New York City, for plaintiff.
W. P. Wray, Jr., Wray & Simmons, Baton Rouge, La., for defendant.
*524 WEST, District Judge:
The plaintiffs bring this action pursuant to Section 201(b) (3) and Section 201(c) (3) of Title II of the Civil Rights Act of 1964, 42 U.S.C.A. § 2000a(b) (3) and § 2000a(c), seeking to enjoin the defendant from denying Negroes access to its amusement park. The defendant, Amusement Enterprises, Inc., is a Louisiana corporation domiciled in Baton Rouge, Louisiana, doing business under the trade name "Fun Fair Park." Fun Fair Park is an amusement park owned and operated by the defendant. It is located in Baton Rouge, Louisiana, near the Airline Highway, a major highway connecting Baton Rouge and New Orleans, Louisiana. This amusement park covers approximately two and three-fourths acres of land, and defendant operates thereon a number of mechanical rides for the amusement of children. During the winter months defendant also operates an ice skating rink at Fun Fair Park. Most of the mechanical rides used by the defendant were manufactured in and purchased from sources located in states other than Louisiana, but ever since their acquisition by the defendant they have been permanently affixed to defendant's property in Baton Rouge, Louisiana. Thus, in the course of their use as items of amusement, they remain at one place in Louisiana and do not at any time after their purchase by defendant move in either interstate or intrastate commerce.
On March 1, 1965, plaintiff, Mrs. Patricia B. Miller, took her two children to Fun Fair Park, intending to use the ice skating facilities which were then in operation. Upon their arrival at Fun Fair Park, the attendant, believing that one of the children who requested a pair of skates was a white child, handed her a pair of skates. Thereafter, upon learning that both of the children were Negroes, the attendant retrieved the skates and informed the plaintiffs that the facilities of Fun Fair Park were privately owned and were open for use by white people only.
While there are concession stands operated by the defendant where refreshments are served on the premises of Fun Fair Park, plaintiffs are making no claim here that the defendant is operating those concessions in violation of either Sections 201(b) (2), 201(c) (2), 201(b) (4), or 201(c) (4) of the Civil Rights Act. Plaintiffs' sole contention in this suit is that the defendant is operating a "place of * * * entertainment" in violation of Section 201(b) (3) and Section 201(c) (3) of the Civil Rights Act of 1964.
After considering the applicable law, and the arguments and briefs of counsel, the Court is of the opinion that the defendant is not operating a "place of * * entertainment" in violation of Section 201(b) (3) or Section 201(c) (3) of the Civil Rights Act of 1964.
Section 201 of the Act provides, in pertinent part, as follows:
"SEC. 201. (a) All persons shall be entitled to the full and equal enjoyment of the goods, services, facilities, privileges, advantages, and accommodations of any place of public accommodation, as defined in this section, without discrimination or segregation on the ground of race, color, religion, or national origin.
"(b) Each of the following establishments which serves the public is a place of public accommodation within the meaning of this title if its operations affect commerce, or if discrimination or segregation by it is supported by State action:
"(1) any inn, hotel, motel, or other establishment which provides lodging to transient guests, other than an establishment located within a building which contains not more than five rooms for rent or hire and which is actually occupied by the proprietor of such establishment as his residence;
"(2) any restaurant, cafeteria, lunchroom, lunch counter, soda fountain, or other facility principally engaged in selling food for consumption *525 on the premises, including, but not limited to, any such facility located on the premises of any retail establishment; or any gasoline station;
"(3) any motion picture house, theater, concert hall, sports arena, stadium or other place of exhibition or entertainment; and
* * * * * *
"c) The operations of an establishment affect commerce within the meaning of this title if (1) it is one of the establishments described in paragraph (1) of subsection (b); (2) in the case of an establishment described in paragraph (2) of subsection (b), it serves or offers to serve interstate travelers or a substantial portion of the food which it serves, or gasoline or other products which it sells, has moved in commerce; (3) in the case of an establishment described in paragraph (3) of subsection (b), it customarily presents films, performances, athletic teams, exhibitions, or other sources of entertainment which move in commerce; * * *"
Plaintiffs contend that Fun Fair Park is "a place of entertainment" as described in Section 201(b) (3), and that its operation "affects commerce" as defined in Section 201(c) (3) of the Act. Defendant, on the other hand, contends that first, Fun Fair Park is not a "place of entertainment" as contemplated by the Act, and secondly, that the operation of Fun Fair Park does not "affect commerce" as that term is specifically defined in Section 201(c) (3) of the Act. Since this is apparently a case of first impression, we must look to the Act itself and to the accepted rules of statutory construction in order to determine the extent of coverage of the various provisions contained therein.
To begin with, it is quite obvious that if the defendant's establishment is to be held to be covered by the Act, it must be determined that it is one of the facilities enumerated in Section 201(b) (3). That subsection covers "any motion picture house, theater, concert hall, sports arena, stadium or other place of exhibition or entertainment." It is also equally obvious that the defendant's establishment is not a "motion picture house, theater, concert hall, sports arena, or stadium." Thus, it is quite evident that for Fun Fair Park to be held to be within the coverage of this Section of the Act, it must be held to be first, a "place of exhibition or entertainment" and secondly, it must be held to "affect commerce" within the purview of Section 201(c) (3). We will first consider whether or not it is a "place of exhibition or entertainment."
This inquiry is immediately narrowed to the question of whether or not it is a "place of entertainment" for the reason that, it being agreed by all parties to this suit that no exhibitions are presented or conducted on the defendant's premises, it is obviously not a "place of exhibition." So, our first inquiry is immediately limited to the question of whether or not Fun Fair Park is a "place of entertainment" as contemplated by Section 201(b) (3) of the Act.
Section 201(b) (3), before providing for coverage of places of entertainment, specifically enumerates the type of establishment that is to be covered by this Section. This enumeration includes "motion picture house, theater, concert hall, sports arena," and "stadium." All of these specifically enumerated establishments are the kind that furnish entertainment to spectators as distinguished from participants. After enumerating these specific establishments, Section 201(b) (3) then provides for inclusion of "other places of exhibition or entertainment." Again, the reference to "exhibition" denotes an exhibit for the entertainment of spectators and not participants. The use of the word "other" before the words "place of exhibition or entertainment" makes it clear that Congress intended that the establishments included under this group would be "other" establishments similar to those specifically enumerated in that Section. To so hold is merely to apply an old and accepted rule of statutory construction known as the ejusdem generis *526 rule. This rule is defined in Black's Law Dictionary, Fourth Edition, as meaning "of the same kind, class or nature." The Court, in Bumpus v. United States, 325 F.2d 264 (CA 10-1963), recognizing the validity of this rule, said:
"We are of the opinion that the case is peculiarly one for the application of the maxim ejusdem generis. Literally, that phrase means `of the same kind or species.' It is a well known maxim of construction, sometimes called Lord Tenterden's Rule, to aid in ascertaining the meaning of a statute or other written instrument, and, under the maxim, where an enumeration of specific things is followed by a more general word or phrase, such general word or phrase is held to refer to things of the same kind, of things that fall within the classification of the specific terms."
And again, in Cuevas v. Sdrales, 344 F. 2d 1019 (CA 10-1965), the same Court said:
"Ordinarily, when specific terms in a statute are followed by general terms, the general terms are limited to matters similar to those specified, unless to do so would defeat the obvious purposes of the statute." (Citing authorities.)
Thus, since the establishments specifically enumerated in Section 201(b) (3) are all, without exception, of a kind which furnish entertainment to a spectator audience, rather than to a participating audience, it must follow that the general reference, following the specific, to "other place of * * * entertainment" must be held to refer to establishments of the same general kind as those specifically enumerated.
If, as urged by plaintiff, Congress had intended "to open all places of public accommodation to Negroes" it would have been quite easy for it to have said so. If that was the intent of Congress, it is difficult to understand why it so painstakingly defined, in Section 201 (b), in four different categories, the specific accommodations it sought to desegregate, and why it so carefully, in Section 201(c), provided for different tests to be applied in determining whether or not each of the several categories of public accommodations listed affects commerce. Obviously Congress did not intend to classify every business serving the public as a place of public accommodation. It is only those places falling within the definitions contained in Section 201(b) and Section 201(c) which Congress sought to reach by the Civil Rights Acts of 1964. Had they intended to include such activities as those engaged in at Fun Fair Park, it would have been simple for Congress to have included, for example, with "motion picture house, theater, concert hall, sports arena" and "stadium" in its list of specifics such other activities as bowling alleys, skating rinks, golf courses, amusement parks, and other participating activities. But it did not do so. And its failure to do so is a clear indication of its intention to exclude such activities from the coverage of the Act. Indeed, as stated in the Bureau of National Affairs Operations Manual on the Civil Rights Act of 1964 at page 83, "During the debates in the House, however, bowling alleys were mentioned specifically several times as examples of establishments outside the scope of the Act unless they operate lunch counters." Further indication that the type of activities engaged in at Fun Fair Park were not intended by Congress to be covered by the Act is found in the criticism of the Act by Honorable Robert W. Kastenmeier, who, while joining in the majority report of the House Judiciary Committee, criticized it for not going far enough in its coverage by stating:
"In title II, the bill reported by the full committee is deficient in that it guarantees equal access to only some public accommodations, as if racial equality were somehow divisible. Discrimination is prohibited in the reported version of H.R. 7152 in all hotels and lodging houses (with a minor exception), eating places, and places of entertainment and spectator sports. At the same time, the bill would allow *527 discrimination to continue in barber shops, beauty parlors, many other service establishments, retail stores, bowling alleys, and other places of recreation and participation sports, unless such places serve food. It is hard to follow a morality which allows one bowling alley to remain segregated, while another bowling alley down the street which serves sandwiches must allow Negroes to bowl." 2 U.S. Cong. and Adm. News (1964), p. 2410.
But despite this criticism by Mr. Kastenmeier, during the House debates, no change was made in this provision of the Act. Thus the intention of Congress seems clear. In commenting on Section 201 in its section by section analysis of the Act, the Senate Report (Judiciary Committee) No. 872, stated:
"There is no change from the bill as introduced. This is the second of three mutually exclusive groups of public establishments that are covered by the bill. This subsection would include all public places of amusement or entertainment which customarily present motion pictures, performing groups, athletic teams, exhibitions, or other sources of entertainment which move in interstate commerce. These public establishments would be within the purview of the bill even though at any particular time the source of entertainment being provided had not moved in interstate commerce. It is sufficient if the establishment "customarily" presents entertainment that has moved in interstate commerce. If this test is met, then the establishment would be subject to the bill at all times, even if current entertainment had not moved in interstate commerce." 2 U.S. Cong. and Adm. News (1964), p. 2357.
Thus, it is again apparent that there was a specific intent on the part of Congress to include in this Section only those establishments presenting entertainment for spectators rather than for participants. To hold otherwise would be to add something to the Act which Congress obviously intentionally omitted.
But even if we were to conclude that such a place of entertainment as that operated by the defendant could be held to be a place of public accommodation under Section 201(b) (3) of the Act, it still could not be held to "affect commerce" as that term is defined in Section 201(c) (3). That Section sets forth specific requirements which each of the mutually exclusive groups of establishments listed in Section 201(b) must meet if the establishment is to be covered by the Act. It is important to note that Congress carefully provided, in Section 201(c), for different criteria to be applied to each of the different groups of establishments listed in Section 201(b) when determining whether or not the establishment in question "affects commerce" such as to be considered an establishment covered by the Act. For example, Section 201(c) (1) provides that if the establishment in question is an inn, hotel, motel, etc. specifically listed in Section 201(b) (1), it is automatically covered by the Act. But when, in Section 201(c) (2) it dealt with restaurants, cafeterias, lunch rooms, etc., it used a different criteria. As to these establishments it is necessary to find that the establishment serves, or offers to serve interstate travelers or that a substantial portion of the food served has moved in interstate commerce. Then, when they came to the group of establishments including motion picture houses, theaters, concert halls, sports arenas, stadiums, and other places of exhibition and entertainment, an entirely different test was prescribed. Section 201(c) (3) provides that for such an establishment to affect commerce, it is necessary to find that it customarily presents films, performances, athletic teams, exhibitions, or other sources of entertainment which move in commerce. Again, applying the rule of ejusdem generis, it is obvious that the "other sources of entertainment" referred to includes only such things as are similar to the ones specifically enumerated, i. e., films, performances, athletic teams, and exhibitions, all of which are for the entertainment of spectators and not participants.
*528 But of even more significance is Congress' choice of words in referring to movement in commerce. When it laid down the test to be applied to restaurants and other eating places, it specifically provided that if a substantial portion of its food has moved in commerce, the establishment is covered. But when dealing with places of entertainment, it used a different test. The test here is whether or not the source of entertainment, such as the films, performances, exhibitions, etc. move in commerce. There is obviously a vast difference between that which has moved in commerce and that which moves in commerce. If a restaurant purchases its food in one state and has it shipped into another state, that food has moved in interstate commerce. But if the operator of Fun Fair Park purchases a mechanical device in a state other than Louisiana and has it shipped to Louisiana where it is then set up and operated permanently at one location as a source of entertainment, that device is not a "source of entertainment which moves in interstate commerce." The device is certainly not a source of entertainment until it is set up and operated. While the device itself, before it becomes a "source of entertainment" might have moved in commerce, nevertheless, if, as in the present case, after it has been set up and made operative in a permanent location as a source of entertainment it no longer moves in interstate commerce, then, by the express language of Section 201(c) (3), it does not "affect commerce." In the present case there is no dispute about the fact that subsequent to their initial purchase by defendant, the mechanical rides operated at Fun Fair Park move nowhere, either in interstate or intrastate commerce. It simply cannot be said that defendant is operating an establishment which "customarily presents * * * sources of entertainment which move in commerce." Thus, even if it were found that Fun Fair Park is a place of entertainment as contemplated by Section 201(b) (3), it must nevertheless be concluded that the sources of entertainment utilized at the Park do not move in commerce as contemplated by Section 201(c) (3).
Plaintiffs filed a motion for summary judgment, but at the pre-trial conference held on April 18, 1966, it was agreed by counsel for both parties that this case would be submitted to the Court on the stipulated facts herein set forth, and that the motion for summary judgment would be carried with the case. Now, for the reasons herein set forth, it is concluded that the defendant is not operating its facilities at Fun Fair Park in violation of Section 201(b) (3), or 201 (c) (3) of the Civil Rights Act of 1964, and thus, plaintiffs' motion for summary judgment must be denied and, on the merits this suit must be dismissed at plaintiffs' cost. Judgment will be rendered accordingly.
|
436 F.2d 1377
UNITED STATES of America, Appellee,v.James Alford CHATMAN, Appellant.
No. 26120.
United States Court of Appeals, Ninth Circuit.
February 2, 1971.
Appeal from the United States District Court for the Central District of California; Albert Lee Stephens, Jr., Judge.
Michael Korn, Van Nuys, Cal., for appellant.
Robert L. Meyer, U. S. Atty., David R. Nissen, Chief, Crim. Div., John W. Hornbeck, Asst. U. S. Atty., Los Angeles, Cal., for appellee.
Before MERRILL, KOELSCH and WRIGHT, Circuit Judges.
PER CURIAM:
1
The record manifests that the district court's denial of Chatman's mid-trial motion to dismiss counsel and to appoint a replacement did not constitute an abuse of discretion.1
2
This conclusion is dispositive of the appeal.
3
Judgment affirmed.
Notes:
1
The record likewise demonstrates that counsel afforded Chatman effective legal representation
|
978 F.2d 744
298 U.S.App.D.C. 247
NOTICE: D.C. Circuit Local Rule 11(c) states that unpublished orders, judgments, and explanatory memoranda may not be cited as precedents, but counsel may refer to unpublished dispositions when the binding or preclusive effect of the disposition, rather than its quality as precedent, is relevant.James RYAN, Appellant,v.Nicholas BRADY, Treasury Secretary, et al.
No. 91-5236.
United States Court of Appeals, District of Columbia Circuit.
Oct. 7, 1992.
Before MIKVA, Chief Judge and BUCKLEY and SENTELLE, Circuit Judges.
ORDER
PER CURIAM.
1
Upon consideration of the motion for summary affirmance; the motion for summary reversal and lodged response thereto; the motion for leave to file opposition out of time, the opposition thereto and motion for default judgment, the response thereto and reply to the opposition to the motion for leave to file; the motion to disqualify the Justice Department; the motion for emergency hearing; the motion for certification as a class action; and the motion for oral argument, it is
2
ORDERED that the motion for leave to file opposition out of time be granted. The Clerk is directed to file the lodged document. It is
3
FURTHER ORDERED that the motion for default judgment be denied. Neither the Federal Rules of Appellate Procedure, nor the rules of this court, provides for such a sanction. It is
4
FURTHER ORDERED that the motion to disqualify the Justice Department be denied. See 28 U.S.C. §§ 517, 518(b). It is
5
FURTHER ORDERED that the motion for summary affirmance be denied as to that portion of the district court's order, filed June 27, 1991, granting appellees' motion to dismiss appellant's complaint. See Ryan v. Brady, 776 F.Supp. 1, 2 (D.D.C.1991). The merits of the parties' positions are not so clear as to justify summary action. See Taxpayers Watchdog, Inc. v. Stanley, 819 F.2d 294, 297 (D.C.Cir.1987) (per curiam); Walker v. Washington, 627 F.2d 541, 545 (D.C.Cir.) (per curiam), cert. denied, 449 U.S. 994 (1980). It is
6
FURTHER ORDERED that the motion for summary affirmance be granted in all other respects, for the reasons stated in the district court's order. See 776 F.Supp. at 3. The merits of the parties' positions are so clear as to justify summary action. It is
7
FURTHER ORDERED that the motion for summary reversal be denied. It is
8
FURTHER ORDERED that the motion for emergency hearing be denied. Appellant has failed to articulate the "strongly compelling" reasons that would justify expedition of this appeal. See D.C. Circuit Handbook of Practice and Internal Procedures 40 (1987). It is
9
FURTHER ORDERED that the motion for certification as a class action and the motion for oral argument be dismissed as moot. It is
10
FURTHER ORDERED, on the court's own motion, that
11
William H. Dempsey, Esq.
Shea & Gardner
1800 Massachusetts Ave., NW
Washington, DC 20036
202-828-2000
12
a member of the bar of this court, be appointed as amicus curiae to present arguments in favor of appellant's position. While not otherwise limited, the parties and amicus are directed to address in their briefs the following questions: (1) whether appellant fulfilled the nonwaivable "presentment" prerequisite for judicial review under 42 U.S.C. § 405(g), see Mathews v. Eldridge, 424 U.S. 319, 328-29 (1976); compare Sulie v. Schweiker, 730 F.2d 1069, 1070-71 (7th Cir.1983) (per curiam) (suspension of prisoner's disability benefits meets presentment requirement), with Heckler v. Lopez, 463 U.S. 1328, 1334-35 (1983) (Rehnquist, J., in chambers) (expressing doubt that individuals who had not "questioned the initial determination" underlying termination of disability benefits had fulfilled presentment requirement) and City of New York v. Heckler, 742 F.2d 729, 735 (2d Cir.1984) (termination of benefits, without further action by claimant, does not meet presentment requirement), aff'd on other grounds sub nom. Bowen v. City of New York, 476 U.S. 467 (1986); (2) if the presentment requirement was met, whether appellant's challenge to 42 U.S.C. § 402(x) was sufficiently collateral to his claim for benefits to be subject to judicial review in the absence of exhaustion of administrative remedies, see Mathews v. Eldridge, 424 U.S. at 329-32; Jensen v. Schweiker, 709 F.2d 1227, 1229-30 (8th Cir.1983); (3) whether appellant's status as an Irish citizen affects the correctness of the district court's conclusion that venue was improperly laid in this district, see Galveston, H. & S.A. Ry. v. Gonzales, 151 U.S. 496, 506-07 (1894) (alien is not a resident of any judicial district, for purposes of determining venue); Williams v. United States, 704 F.2d 1222, 1225 (11th Cir.1983) (same); but cf. Arevalo-Franco v. United States INS, 889 F.2d 589, 590-91 (5th Cir.1989) (alien may file FOIA action in district where he lives, without regard to legal residence status); Williams, 704 F.2d at 1226-27 (resident alien, as defined in Treasury Regulations, may establish venue for challenge to IRS jeopardy assessment); (4) whether a rational justification, see Flemming v. Nestor, 363 U.S. 603, 611 (1960), supports the suspension, pursuant to section 402(x), of Social Security benefits payments to an otherwise eligible incarcerated felon, but not to an incarcerated misdemeanant; and (5) whether Article IV of the Treaty of Friendship, Commerce and Navigation, Jan. 21, 1950, U.S.-Ir., 1 U.S.T. 785, 790, or any other provision of a treaty or international agreement affects the propriety of applying section 402(x) to appellant.
13
The Clerk is directed to withhold issuance of the mandate herein until disposition of the remainder of the appeal.
|
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-7452
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
MICHAEL CASSANOVA DYSON,
Defendant - Appellant.
Appeal from the United States District Court for the Northern
District of West Virginia, at Wheeling. Frederick P. Stamp,
Jr., Senior District Judge. (5:09-cr-00021-FPS-JES-6; 5:11-cv-
00017-FPS-JES)
Submitted: January 21, 2014 Decided: January 24, 2014
Before MOTZ, KEENAN, and THACKER, Circuit Judges.
Dismissed by unpublished per curiam opinion.
Michael Cassanova Dyson, Appellant Pro Se. John Castle Parr,
Assistant United States Attorney, Wheeling, West Virginia, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Michael Cassanova Dyson seeks to appeal the district
court’s order denying his Fed. R. Civ. P. 60(b) motion for
relief from the court’s prior judgment * in light of Alleyne v.
United States, __ U.S. __, 133 S. Ct. 2151 (2013). 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 in debatable, and that the motion states a debatable
claim of the denial of a constitutional right. Slack, 529 U.S.
at 484-85.
*
The Rule 60(b) motion was filed in Dyson’s 28 U.S.C.
§ 2255 (2012) post-conviction proceeding, in which Dyson sought
relief from his sentence.
2
We have independently reviewed the record and conclude
that Dyson has not made the requisite showing. The district
court lacked jurisdiction to deny Dyson’s Rule 60(b) motion on
the merits because the claim he raised challenged the validity
of his sentence, and thus the motion should have been construed
as a successive 28 U.S.C. § 2255 motion. See Gonzalez v.
Crosby, 545 U.S. 524, 531-32 (2005) (explaining how to
differentiate a true Rule 60(b) motion from an unauthorized
second or successive habeas corpus petition); United States v.
Winestock, 340 F.3d 200, 207 (4th Cir. 2003) (same). In the
absence of pre-filing authorization from this court, the
district court lacked jurisdiction to hear a successive § 2255
motion. See 28 U.S.C. § 2244(b)(3) (2012).
Accordingly, we deny a certificate of appealability
and dismiss the appeal. 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.
DISMISSED
3
|
193 P.3d 629 (2008)
222 Or. App. 213
STATE
v.
SANCHEZ.
No. A129514
Court of Appeals of Oregon.
August 27, 2008.
Affirmed without opinion.
|
obligation be eliminated, and that the court reaffirm that the Newmans
are not parties to the case and have no standing.
On December 23, 2013, the district court entered an order
denying appellant's motion for reconsideration and noting that respondent
had been released from incarceration. The court determined that
appellant's request for primary custody while respondent was incarcerated
had been rendered moot. The court also determined that appellant's
request for joint legal custody had also been rendered moot because the
December 12 order had granted the parties joint legal and physical
custody. Finally, the district court determined that it was appropriate for
appellant to pay child support. This appeal followed.
On appeal, appellant contends that the district court infringed
upon his parental rights by allowing the Newmans to exercise
respondent's custodial rights during her incarceration without a finding
that appellant was unfit. Appellant also contends that contrary to the
district court's findings in its December 23 order, respondent was not
released from incarceration until January 2014. Thus, appellant requests
an order awarding him full custody, eliminating his child support
obligation, and barring the Newmans from any further attempts to obtain
custodial rights.
Having reviewed the record on appeal, we conclude that the
district court properly determined that appellant's challenge to the
custodial arrangement involving the Newmans was rendered moot once
respondent was released from incarceration. The court may not "give
opinions upon moot questions or abstract propositions, or . . . declare
principles of law which cannot affect the matter in issue before it." Univ.
& Cmty. Coll. Sys. of Nev. v. Nevadans for Sound Gov't, 120 Nev. 712, 720,
SUPREME COURT
OF
NEVADA
2
(0) 1947A 404.
100 P.3d 179, 186 (2004) (quoting NCAA v. Univ. of Nev., Reno, 97 Nev.
56, 57, 624 P.2d 10, 10 (1981)), A case that initially presents a live
controversy may be rendered moot by subsequent events. Personhaocl
Nev. v. Bristol, 126 Nev. „ 245 P.3d 572, 574 (2010). Under the
December 12, 2013, order, appellant and respondent share joint legal and
physical custody of the minor child upon respondent's release from
incarceration. To the extent that appellant seeks clarification of, or a
modification to the district court's order, such a request is more
appropriately directed to the district court in the first instance.'
Finally, we conclude that the district court did not abuse its
discretion in ordering appellant to pay $100 per month in child support,
which constitutes the statutory minimum amount of support. See NRS
12513.080(4); Wallace v. Wallace, 112 Nev. 1015, 1019, 922 P.2d 541, 543
(1996) (providing that matters of child support are within the district
court's sound discretion). Accordingly, we
ORDER the judgment of the district court AFFIRMED.
Parraguirre
Douglas Cherry
'Appellant's additional arguments concerning venue and
disqualification of the district judge should also be directed to the district
court.
SUPREME COURT
OF
NEVADA
3
(0) 1947A (e/9
cc: Hon. James Todd Russell, District Judge
Dallas Tayler Boyer
Lindsie Newman
Carson City Clerk
SUPREME COURT
OF
NEVADA
4
( o) t9 4 A ae.
|
846 So.2d 210 (2003)
The CITY OF RIDGELAND, Mississippi, City of Ridgeland Police Department, Police Chief Charles Newell and Donald Martin
v.
Donald FOWLER, Glenda Fowler, Individually and as Mother and Next Friend of Karen Ross Fowler.
No. 2000-IA-01470-SCT.
Supreme Court of Mississippi.
February 13, 2003.
Rehearing Denied June 5, 2003.
*211 Forrest W. Stringfellow, Jackson, attorney for appellants.
Vicki Robinson Slater, Jackson, Edward Blackmon, Jr., Trent L. Walker, Canton, attorneys for appellees.
EN BANC.
SMITH, P.J., for the Court.
¶ 1. This interlocutory appeal by the City of Ridgeland presents to this Court the sole question of whether the chancery court has subject matter jurisdiction over a lawsuit brought under the Mississippi Tort Claims Act, Miss.Code Ann. §§ 11-46-1 to -23 (Rev.2002). Adhering to our recent decision in Lawrence County School District v. Brister, 823 So.2d 459 (Miss. 2001), we hold that it does not and reverse and remand for a transfer of this case to the circuit court.
FACTS
¶ 2. Karen Ross Fowler, a twenty-year-old minor, was driving along Pear Orchard Road in Ridgeland, Madison County, Mississippi, in March of 2000. At the same time, officers of the City of Ridgeland Police Department were pursuing and attempting to apprehend a suspect near the intersection of North Park Drive and Pear Orchard Road. A collision is alleged to have occurred between the pursued vehicle of the suspect and Fowler when the suspect lost control of his vehicle. Fowler *212 sustained numerous injuries and underwent various surgeries and medical procedures.
¶ 3. Her parents, Donald and Glenda Fowler, filed suit in Madison County Chancery Court against the City of Ridgeland, City of Ridgeland Police Department, Police Chief Charles Newell and Donald Martin (hereinafter "City of Ridgeland") on behalf of themselves and their daughter seeking remedies in equity and at law. Among other remedies, the suit sought a temporary restraining order to command the City of Ridgeland to preserve Fowler's car, to allow the plaintiffs access to photograph and inspect the car, and to provide an inventory of evidence taken in connection with the collision. Further, the Fowlers sought injunctive relief to ensure the proper training of officers in the use of force and in pursuit situations. The Fowlers also asked for damages against the City of Ridgeland for the negligent supervision and behavior of its employees as well as damages against the individual employees. The Fowlers contend that the Chancery Court of Madison County is vested with jurisdiction over this case because of the equitable nature of the remedies sought.
¶ 4. The City of Ridgeland filed a Motion to Dismiss or In the Alternative to Transfer Case to Circuit Court, which the city maintains is the court of proper jurisdiction for a tort claims case. The chancellor denied this motion. The City then moved for interlocutory appeal. The trial court granted this motion but refused to stay the proceedings. By order, this Court granted the City's Petition for Permission to File Interlocutory Appeal and Motion for Stay of Proceedings, staying all proceedings pending resolution of the merits of the appeal. See M.R.A.P. 5.
DISCUSSION
¶ 5. We have previously settled this issue in Lawrence County School District v. Brister, 823 So.2d 459 (Miss.2001), where we stated:
While it is true that the Tort Claims Act is silent as to the court of jurisdiction, our constitution is not. Under the Mississippi Constitution, chancery courts are courts of limited jurisdiction and may hear all matters in equity, divorce and alimony, matters testamentary and of administration, minors; business, cases of idiocy, lunacy, and persons of unsound mind, and all cases under the laws in force at the time of the adoption of Constitution. Miss. Const. Art. 6 § 159(a)-(f) (1890). Circuit courts, on the other hand, are courts of general jurisdiction, having "original jurisdiction in all matters civil and criminal in this state not vested in another court." Id. § 156.
823 So.2d at 460. This Court went on to say that circuit court was the appropriate venue for negligence actions. "When a plaintiff's complaint neither requests nor requires equitable relief, a chancery court should not exercise jurisdiction." Id. (citing McLean v. Green, 352 So.2d 1312, 1314 (Miss.1977)).
¶ 6. Brister is not the first time that this Court has spoken on the distinctions between cases properly brought in chancery court versus circuit court. In United States Fidelity & Guaranty Co. v. Estate of Francis, 825 So.2d 38 (Miss.2002), this Court discussed the chancery court's lack of subject matter jurisdiction in a consolidated underinsured motorist carrier and insured's action against a carrier. Although the final judgment could not be reversed for jurisdictional error alone, this Court agreed with USF&G that the chancery court did not have subject matter *213 jurisdiction over the lawsuit.[1]Id. at 49. The first case this Court cited in agreement with USF&G was McLean, 352 So.2d at 1314. 825 So.2d at 44. McLean states that "when an action at bar arises from a tort claim, courts of equity should not assume jurisdiction over claims for personal injury." McLean, 352 So.2d at 1314. One reason offered in support of our holding was that, historically, tort claims have been tried by a jury. Id. As in Estate of Francis, this Court was unable to reverse because of absence of error other than jurisdiction. Id. (citing McLean, 352 So.2d at 1314). However, this Court further stated that despite the mandate of § 147 of the Mississippi Constitution, "we look with disfavor upon and consider it an abuse of discretion for a chancellor to assume jurisdiction of a common law action which properly should be tried in a court of law where the right to a trial by jury remains inviolate." Estate of Francis, 825 So.2d at 45 (quoting McLean, 352 So.2d at 1314)(citing Talbot & Higgins Lumber Co. v. McLeod Lumber Co., 147 Miss. 186, 113 So. 433 (1927)). See also Blackledge v. Scott, 530 So.2d 1363, 1365 (Miss.1988); Robertson v. Evans, 400 So.2d 1214 (Miss.1981).
¶ 7. This Court has reversed the judgment of a trial court when error other than lack of subject matter jurisdiction has been found. Southern Leisure Homes, Inc. v. Hardin, 742 So.2d 1088 (Miss.1999); Blackledge v. Scott, 530 So.2d 1363 (Miss. 1988). In Blackledge, this Court reversed the Chancery Court of Claiborne County, holding the suit was outside the subject matter jurisdiction of the chancery court. Blackledge, 530 So.2d at 1365-66.
¶ 8. Blackledge involved a rear-end collision. Id. The plaintiffs alleged the chancery court jurisdiction was proper because the matter would be "too complicated for a jury" and discovery expense in circuit court would be exorbitant. Id. at 1365. The chancellor agreed with the plaintiff's argument and accepted jurisdiction over the entire matter. Id. Recognizing that § 147 prohibits reversal upon jurisdictional grounds alone, this Court found the suit against the three insurance companies involved amounted to a fraudulent joinder as to venue and reversed since errors in venue are not within the § 147 bar. Id. at 1365-66.
¶ 9. In Southern Homes, this Court held that matters historically tried by a jury, such as breach of contract claims are best heard in circuit court. 742 So.2d at 1090. Southern Homes cited Article 6, § 159 of the Mississippi Constitution of 1890 which provides that:
The chancery court shall have full jurisdiction in the following matters and cases, viz:
(a) All matters in equity
(b) Divorce and alimony
(c) Matters testamentary and administration
(d) Minor's business
(e) Cases of idiocy, lunacy and persons of unsound mind
(f) All cases of which the said court had jurisdiction under the laws in force when this Constitution is put in operation.
Article 6, § 162 of the Constitution provides that "all causes that may be brought in the chancery court whereof the circuit court has exclusive jurisdiction shall be transferred to the circuit court." Southern Homes, 742 So.2d at 1090. This Court also held that if doubts arise as to the jurisdiction of the chancery court, and whether a claim is legal or equitable, those *214 doubts should be decided in favor of transfer to circuit court. Id. Southern Homes appropriately cites McDonald's Corp. v. Robinson Indus., Inc., 592 So.2d 927, 934 (Miss.1991), which states that "it is more appropriate for a circuit court to hear equity claims than it is for a chancery court to hear actions at law since circuit courts have general jurisdiction but chancery courts enjoy only limited jurisdiction." Id.
¶ 10. Southern Homes followed the correct procedure by filing an interlocutory appeal with this Court before a final judgment was issued on the merits of the case because the Mississippi Constitution prohibits reversal on a jurisdictional issue following a trial on the merits. Id. at 1091. This Court was able to grant the interlocutory appeal and ordered the case transferred to circuit court. Id.
¶ 11. As Southern Homes indicates, it is appropriate to seek permission to bring an interlocutory appeal under M.R.A.P. 5 to address the issue of subject matter jurisdiction in order to prevent a final resolution of the case in an inappropriate forum. Id. See also Estate of Francis, 825 So.2d at 46. This is exactly the procedural posture of the case at bar.
¶ 12. Here, the Fowlers use allegations of the necessity of an accounting and requests for a temporary restraining order and injunctive relief as a means of support for chancery jurisdiction. Of course, since the Ridgeland Police Department had already returned the automobile of the Fowlers prior to their filing suit, the injunction argument had to be abandoned. The Fowlers are thus left clinging to the sole claim that an accounting is necessary and thus chancery jurisdiction attaches. As far as the accounting claim is concerned, the City of Ridgeland is correct, any accounting which might be required is easily developed during discovery in circuit court.
¶ 13. Circuit court is the proper court for a tort claims act case. As we further stated in Brister, "The Mississippi Constitution requires that causes erroneously brought in chancery court be transferred to the appropriate circuit court. Miss. Const. art. 6 § 162. This provision is mandatory, and a chancellor has no discretion in this matter. McLean, 352 So.2d at 1314." 823 So.2d at 461 (emphasis added). This Court reversed and remanded the case for transfer to the proper court, Lawrence County Circuit Court. Here, as in Brister, not only is it proper, the Circuit Court of Madison County is the only court of jurisdiction for the case at bar.
CONCLUSION
¶ 14. This case was filed in the wrong court. Subject matter jurisdiction here is properly in the circuit court. Therefore, we reverse the chancery court's order denying the City's motion to dismiss or transfer to circuit court, and we remand this case to the chancery court for entry of an order transferring this case to the Madison County Circuit Court.
¶ 15. REVERSED AND REMANDED.
PITTMAN, C.J., WALLER, COBB AND CARLSON, JJ., CONCUR. GRAVES, J., CONCURS IN RESULT ONLY. EASLEY, J., DISSENTS WITHOUT SEPARATE WRITTEN OPINION. McRAE, P.J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY DIAZ, J. EASLEY, J., JOINS IN PART.
McRAE, P.J., Dissenting.
¶ 16. We are not here to decide the merits of whether the City was at fault. This is simply a case of whether there is jurisdiction in the chancery court to try *215 the equity matters that were originally pled with an ancillary case on the merits to be tried under the Tort Claims Act, Miss. Code Ann. §§ 11-46-1 to -23 (Rev.2002). Once chancery court takes jurisdiction it takes it for all purposes. Because there was enough equity pled initially in this case to attain chancery jurisdiction, I dissent.
¶ 17. In their amended complaint, the Fowlers specifically requested as relief: (1) a temporary restraining order commanding Ridgeland's police department to keep and preserve the Fowlers' automobile and all other items of evidence in its possession pending a hearing on a preliminary injunction in the case; (2) a preliminary injunction requiring Ridgeland's police department to preserve and keep the Fowlers' automobile and other evidence relating to the Fowlers' case intact; to allow the Fowlers' counsel access to the Fowlers' automobile for photographing and inspection by their experts when and as needed; to provide an inventory of evidence taken in connection with the accident; to provide an opportunity to the Fowlers' experts to examine, inspect, photograph and otherwise record said evidence; (3) a preliminary injunction prohibiting Ridgeland's police department from engaging in high-speed chase pursuits (except as prescribed by law), and from engaging in shootouts against fleeing felons, when it is entirely foreseeable that innocent persons may be injured or killed; (4) an injunction prohibiting Ridgeland's police department from permitting, encouraging and tolerating an official pattern, practice, or custom of its police officers that would violate the rights of the public at large, including the Fowlers; (5) an accounting for all coverages and funds available for the remedies sought by the Fowlers and toward which the Fowlers may look for satisfaction of the other claims; (6) a declaratory judgment that the policies, practices or customs of Ridgeland's police department referred to in the complaint are illegal; and (7) various prayers for monetary relief.
¶ 18. Contrary to the majority's opinion, well-settled rules governing jurisdiction of the chancery court clearly provide that the Madison County Chancery Court is the proper court of jurisdiction in this case.
I. THE CHANCERY COURT HAS JURISDICTION TO DECIDE THIS CASE.
¶ 19. The Constitution of this State grants the chancery courts in this state full jurisdiction over various matters, including "all matters in equity." Miss. Const. art. 6, § 159. Section 9-5-81 of the Mississippi Code also states that:
The chancery court in addition to the full jurisdiction in all the matters and cases expressly conferred upon it by the constitution shall have jurisdiction of all cases transferred to it by the circuit court or remanded to it by the supreme court; and such further jurisdiction, as is, in this chapter or elsewhere, provided by law.
Miss.Code Ann. § 9-5-81 (Rev.2002). It is also well-settled that if any aspect of a case is within its subject matter jurisdiction, the chancery court has authority to hear and adjudge any non-chancery pure-law claims via pendent jurisdiction. Johnson v. Hinds County, 524 So.2d 947, 953 (Miss.1988).
¶ 20. The instant case has been brought pursuant to the Tort Claims Act and includes claims against the City of Ridgeland, a political subdivision of this state. Miss.Code Ann. § 11-46-13, therefore, governs jurisdiction in this case specifically:
(1) Jurisdiction for any suit filed under the provisions of this chapter shall be in the court having original or concurrent *216 jurisdiction over a cause of action upon which the claim is based. The judge of the appropriate court shall hear and determine, without a jury, any suit filed under the provisions of this chapter.
(emphasis added). Thus, the Tort Claims Act does not prohibit chancery court jurisdiction, since it is a court of concurrent jurisdiction pursuant to Section 9-5-81. This conclusion is based on an exact reading of the statutory language, which grants jurisdiction in either of two forumsin either courts of original jurisdiction or courts of concurrent jurisdiction.
¶ 21. The majority, however, contorts this language, to create an unprincipled rule of law. Indeed, the majority cites Brister for a rule flatly prohibiting chancery court jurisdiction over Tort Claims Act cases. Lawrence County Sch. Dist. v. Brister, 823 So.2d 459 (Miss.2001).[2] Again, as recognized in the Brister dissent, there is nothing in the language of the Tort Claims Act or the Constitution providing for such a rule; nor is there any authority for such a rule.
¶ 22. This Court is not a super-legislature. We are not legislative delegates permitted to engage in ad hoc policy-making. We are not lawmakers. We are, rather, nine individuals whose constitutional task is to interpret the legislative product. There are cases before us where such task is particularly straining, to the eye, to the mind, and to the pen. Indeed, there are cases about which that product is unquestionably open to more than one interpretation. But neither the present case nor Brister, is one of them. We deal here with exacting, precise language granting jurisdiction over Tort Claims Act cases to courts of concurrent jurisdiction. The chancery court is one such court. Regardless of whether this is an improvident reality, judicially inefficient, plain bad policy, or otherwise, this set of nine individuals should not endeavor alteration through our constitutional task. Statutory amendments take place across the street in the Capitol Building, not here.
¶ 23. Brister is on point, but strictly for the proposition that absent an express grant of jurisdiction, a chancery court should not exercise jurisdiction over a claim "when a plaintiff's complaint neither requests nor requires equitable relief." Id. at 460. Brister stands only as a judicially made policy standing for the proposition that the Mississippi Tort Claims Act bars jurisdiction of tort claims in chancery court.
¶ 24. While Brister does state that "[n]egligence actions should be brought in circuit court," such statement standing *217 alone is pure dicta. Id. (emphasis added). Indeed, the statement is made without any citation whatsoever to one single point of authority; nor is it followed by supportive reasoning. Id. Moreover, to read Brister outside of the narrow rule for which it stands leads to an absurd evisceration of well-settled rules regarding the pendent jurisdiction of the chancery court.
¶ 25. In all cases, the ultimate resolution of jurisdiction is dependent upon three rules. First, where a well-pleaded complaint contains an independent basis for equity jurisdiction, chancery courts have full authority to hear and dispose of all legal issues. Tillotson v. Anders, 551 So.2d 212, 213 (Miss.1989) (citing Penrod Drilling Co. v. Bounds, 433 So.2d 916 (Miss.1983); Tideway Oil Programs, Inc. v. Serio, 431 So.2d 454, 464 (Miss.1983); Burnett v. Bass, 152 Miss. 517, 521, 120 So. 456 (1929)). Also, this Court has ruled that jurisdiction is determined at the time the suit is filed. Euclid-Miss. v. Western Cas. & Sur. Co., 249 Miss. 547, 163 So.2d 676, 679 (1964). In addition, once equity jurisdiction attaches, the cause may still be heard on its merits even though the equitable issues have been resolved prior to the time of hearing, leaving only legal issues to be resolved. Penrod, 433 So.2d at 919 (citing McClendon v. Miss. State Hwy. Comm'n, 205 Miss. 71, 38 So.2d 325 (1949); Euclid-Miss., 249 Miss. 547, 163 So.2d 676). Therefore, if equity jurisdiction was properly raised at the time of filing by any of the Fowlers' claims, jurisdiction is properly vested in the chancery court.
A. The Fowlers' request for a temporary restraining order and further injunctive relief in regards to the Fowlers' automobile properly raises equity jurisdiction.
¶ 26. With respect to the restraining order to prevent the release of the Fowler's automobile, the chancery court found that jurisdiction attaches at the time a suit is filed. In this case, the Fowlers filed the complaint and later amended it. Then Ridgeland's police department subsequently released the Fowlers' automobile. But because Ridgeland's police department was in possession of the car at the time the suit was filed, equity jurisdiction had attached and the case was properly in chancery court. Under this Court's holding in Penrod, 433 So.2d at 919, the chancery court had jurisdiction.
B. The Fowlers' request for an accounting properly raises equity jurisdiction.
¶ 27. In their amended complaint, the Fowlers requested an accounting of Ridgeland's liability coverage (which included its insurance and any funds which would be available for the remedies sought by the Fowlers). For an accounting to act as an independent grounds for equity jurisdiction, it must arise between the parties at suit. Tillotson, 551 So.2d at 214. The accounting for coverages arose between the parties presently at bar and was therefore legitimate.
¶ 28. The City of Ridgeland asserts that an accounting is improper and that discovery at the circuit court level is the better alternative for obtaining this information. At the hearing below, however, counsel for the Fowlers explained ongoing frustration with the City's lack of cooperation in obtaining information regarding insurance coverage during good faith settlement attempts. The relevant portion of the record reads as follows:
I (Fowler's counsel) was seeking a resolution as I'm required to do under the statute of the state Tort Claims Act. I wrote a letter to the adjuster, and I said, "Is there or is there not insurance covering the City of Ridgeland?" And he sent me a flippant answer with a copy *218 of the statute and said, "All we will ever owe you is $250, 000 under the statute," and never told me yes or no ... Further, Counsel says that all thatunder the state Tort Claims Act, all that there could be is 250,000, so it doesn't matter if there was insurance or not and its' going to come under the municipal plan... So this is not asomething I just made up. This is not just some sort of ruse to get an accounting, I need to know if they've got insurance, and if they do, how much it is. I couldn't even find that out during attempting good faith settlement with the City's municipal liability plan prior to instituting this suit. I never found out.
¶ 29. The resulting request for an injunction seeking an accounting is valid. Contrary to the City's argument that circuit court discovery is the better route, and contrary to the majority's shirking of this issue, the Fowlers' request for an accounting properly raises equity jurisdiction.
C. The Fowlers' requests for injunctions concerning evidentiary matters properly raise equity jurisdiction.
¶ 30. In count two of their amended complaint, the Fowlers requested several injunctions concerning evidentiary matters. Specifically, the Fowlers requested preliminary injunctions for the preservation of evidence gathered in their case, as there is a criminal matter underway regarding much of the same evidence. The Fowlers also sought an inventory of evidence taken in connection with the collision and an opportunity for Fowlers' experts to examine, photograph and/or record the evidence.
¶ 31. This Court has stated that mandatory injunctions should be granted in a cautious manner and only when such is the only effective remedy. Hall v. Wood, 443 So.2d 834, 841 (Miss.1983) (citing Homes, Inc. v. Anderson, 235 So.2d 680, 683 (Miss. 1970); Warrior, Inc. v. Easterly, 360 So.2d 700, 704 (Miss.1978)). Further, it is the insufficiency of a remedy at law which serves as the foundation for injunctive relief. Moore v. Sanders, 558 So.2d 1383, 1385 (Miss.1990) (citing V. Griffith, Mississippi Chancery Practice § 434 (2d ed.1950)).
¶ 32. The instant case raises a unique and justifiable concern as to the preservation of and access to the evidence. Indeed, there is a criminal proceeding involved wherein much of the same evidence will be and already has been repeatedly employed. Thus, the Fowlers' request for injunctive relief on this basis is the only remedy available to ensure the preservation of the evidence. Therefore, equity jurisdiction in the chancery court is proper on this basis.
D. The remaining injunctions requested by the Fowlers properly raise equity jurisdiction.
¶ 33. The Fowlers requested that the chancery court enjoin Ridgeland's police department from engaging in unlawful high-speed chases; from engaging in shootouts against fleeing felons (when injury to innocent persons is foreseeable); and from fostering an "official pattern, custom, or practice of violating the rights of the public at large." Further, the Fowlers requested an injunction requiring Ridgeland's police department to create and administer a policy which will "prevent dangerous incidents from injuring others in situations similar to the Fowlers."
¶ 34. Although the majority shirks this issue, too, to circumvent well-settled rules of equity jurisdiction, Ridgeland cited two cases for the proposition that the chancery court does not have the power to enjoin police pursuits: Gale v. Thomas, 759 So.2d 1150 (Miss.1999), and Smith v. City of *219 West Point, 475 So.2d 816 (Miss.1985). However, the closest that Gale gets to upholding this theory is that this Court found that officers are acting within the scope of their employment while engaged in police chases. Gale, 759 So.2d at 1157. In Smith, we stated that the duty of care a municipality owes to its citizens should take into account a community's expectation that police officers will do what is "reasonably necessary" to apprehend fleeing suspects. Smith, 475 So.2d at 818. This reasoning was used as a basis for this Court's finding that it is not negligence per se for a police officer, while in pursuit, to exceed the speed limit. Smith, 475 So.2d at 819. These findings in no way foreclose chancery jurisdiction to order an injunction against police activities that do not conform to the law.
¶ 35. As a result, the Fowlers' request for these four injunctions properly raised equity jurisdiction.
¶ 36. The majority ignores an entire corpus of jurisdictional law. Indeed, the pendent jurisdiction of the chancery court is a powerful grant of authority which allows for cases involving genuine concerns of both equity and law to be brought as one proceeding. Since requests for an accounting and injunctive relief were properly brought before the chancery court, equity jurisdiction was properly raised, thus establishing its jurisdiction over the entire matter. Chancery court jurisdiction should have been affirmed in this case. That it was not is a clear triumph for adhoc judicial policy-making. Accordingly, I dissent.
DIAZ, J., JOINS THIS OPINION. EASLEY, J., JOINS THIS OPINION IN PART.
NOTES
[1] USF&G filed a petition for interlocutory appeal with this Court six days before the trial. The petition was not considered by this Court until after a final judgment had been rendered on the merits of the case; therefore, it was denied as moot.
[2] But as the dissent in Brister made clear:
It is settled beyond question in this jurisdiction that where a suit is brought in the chancery court and the court takes jurisdiction on any one ground of equity, it will proceed in the one suit to a complete adjudication and settlement of every one of all the several disputed questions materially involved in the entire transaction, awarding by a single comprehensive decree all appropriate remedies legal as well as equitable, although all the other questions involved would otherwise be purely of legal cognizance; and if the ground of equity fails under the proof, the cause may be retained for a complete final decree on the remaining issues, although the latter present legal subjects only and the decree would cover only legal rights and grant none but legal remedies.
Shaw v. Owen, 229 Miss. 126, 132-33, 90 So.2d 179, 181 (1956) (emphasis added). We acknowledged a chancery court's pendent jurisdiction over issues of law more recently in Tillotson v. Anders, 551 So.2d 212 (Miss.1989). "Where there appears from the face of a well-pleaded complaint an independent basis for equity jurisdiction, our chancery courts may hear and adjudge law claims." Id. at 213 (citations omitted).
Brister, 823 So.2d at 464 (McRae, P.J., dissenting).
|
United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT August 19, 2003
Charles R. Fulbruge III
Clerk
No. 03-20155
Conference Calendar
DONALD F. HOBBS,
Plaintiff-Appellant,
versus
UNITED STATES, (Federal Torts Claims Act);
KENNETH M. HOYT, U.S. Judge,
Defendants-Appellees.
--------------------
Appeal from the United States District Court
for the Southern District of Texas
USDC No. H-02-CV-4524
--------------------
Before JONES, WIENER, and BENAVIDES, Circuit Judges.
PER CURIAM:*
Donald F. Hobbs (“Hobbs”), Texas state prisoner #691219,
proceeding pro se and in forma pauperis (“IFP”), appeals the
sua sponte dismissal of his 42 U.S.C. § 1983 and Federal Torts
Claims Act complaint for failure to state a claim upon which
relief could be granted pursuant to 28 U.S.C. § 1915A(b)(1).
Hobbs argues that Judge Kenneth M. Hoyt was not entitled to
absolute immunity because in a lawsuit, not related to the
*
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. 03-20155
-2-
instant lawsuit, Judge Hoyt acted without jurisdiction. Hobbs
also contends that the sua sponte dismissal of his complaint was
erroneous because he was not given an opportunity to develop the
factual basis of his allegations.
We review dismissals under 28 U.S.C. § 1915A de novo.
Ruiz v. United States, 160 F.3d 273, 275 (5th Cir. 1998).
Judges enjoy absolute judicial immunity for judicial acts
performed in judicial proceedings. Mays v. Sudderth, 97 F.3d
107, 110-11 (5th Cir. 1996). “A judge will not be deprived
of immunity because the action he took was in error, was done
maliciously, or was in excess of his authority; rather, he
will be subject to liability only when he has acted in the
‘clear absence of all jurisdiction.’” Id. at 111 (quoting
Stump v. Sparkman, 435 U.S. 349, 356-57 (1978) (further citation
omitted)). Judge Hoyt did not lack jurisdiction in Hobbs’s
previous case because Hobbs’s prior interlocutory appeal
challenging the venue of his hearing was not appealable. See
Askanase v. Livingwell, Inc., 981 F.2d 807, 809-10 (5th Cir.
1993). Consequently, Judge Hoyt and the United States of America
are entitled to absolute immunity. See Resolution Trust Corp.
v. United States Fidelity & Guar. Co., 27 F.3d 122, 126 (5th Cir.
1994); 28 U.S.C. § 2674. Hobbs’s contention that the district
court’s sua sponte dismissal of his complaint was erroneous lacks
merit because Hobbs has failed to identify additional facts that
could have been pleaded to support his complaint, and because he
No. 03-20155
-3-
set forth his “best case” in the district court. See Bazrowx
v. Scott, 136 F.3d 1053, 1054 (5th Cir. 1998).
Hobbs’s appeal is without arguable merit and is dismissed as
frivolous. See 5TH CIR. R. 42.2; Howard v. King, 707 F.2d 215,
219-20 (5th Cir. 1983). The dismissal of the appeal as frivolous
and the district court’s dismissal of Hobbs’s 42 U.S.C. § 1983
complaint for failure to state a claim each count as a “strike”
under the three-strikes provision of 28 U.S.C. § 1915(g).
See Adepegba v. Hammons, 103 F.3d 383, 387-88 (5th Cir. 1996).
Hobbs is CAUTIONED that if he accumulates three “strikes” under
28 U.S.C. § 1915(g), he will not be able to proceed in forma
pauperis in any civil action or appeal filed while he is
incarcerated or detained in any facility unless he is under
imminent danger of serious physical injury. See 28 U.S.C.
§ 1915(g).
APPEAL DISMISSED; THREE-STRIKES WARNING ISSUED.
|
729 F.2d 1453
Jefferson (Roger Lorenzo)v.Monday (Charles B.)
NO. 82-6414
United States Court of Appeals,fourth Circuit.
FEB 28, 1984
1
Appeal From: E.D.Va.
2
AFFIRMED.
|
132 F.3d 47
Procelv.U.S. Customs Service*
NO. 97-4298
United States Court of Appeals,Eleventh Circuit.
Dec 02, 1997
Appeal From: S.D.Fla. ,No.9601925CVDLG
1
Affirmed.
*
Fed.R.App.P. 34(a); 11th Cir.R. 34-3
|
219 So.2d 916 (1969)
Larry ROBINSON
v.
STATE of Mississippi.
No. 45280.
Supreme Court of Mississippi.
February 24, 1969.
*917 A.S. Scott, Jr., Laurel, for appellant.
Joe T. Patterson, Atty. Gen., by Guy N. Rogers, Asst. Atty. Gen., Jackson, for appellee.
BRADY, Justice.
This is an appeal from a verdict rendered against appellant, a twenty-seven year old colored male, in the Circuit Court of the Second Judicial District of Jones County, Mississippi, wherein appellant, Larry Robinson, was found guilty of the crime of armed robbery and sentenced to twenty-five years in the Mississippi State Penitentiary.
The facts pertinent to this appeal are as follows: On January 11, 1968, four colored men armed with pistols and a shotgun robbed the Robert's Grocery in Laurel, Mississippi, escaping with $1983.84 in change, currency and food stamps and with a money sack and a billfold belonging to Howard Smith, the manager of the store. Witnesses for the State included Howard Smith, Robert Smith, the store owner, and Bennie Dobbins, an employee of the store. It was established that the appellant, Larry Robinson, was known to two of these witnesses and that he was not one of the four men who actually entered the store. By the testimony of Howard Smith the State established the fact that a black Lincoln automobile belonging to Eudell Graham was seen in the vicinity of the store shortly prior to the time of the robbery. Edwina Moody, who lived half a block from Robert's Grocery, testified that she saw a black car in the alley near the store at approximately the time of the robbery.
The State's main witness was Larry Taylor, a sixteen year old boy who had *918 participated in the robbery. Howard Smith identified Larry Taylor as one of the men who entered and robbed the store. Larry Taylor testified that on January 11, 1968, he, along with Larry Robinson, age twenty-seven, Eudell Graham, age thirty, Jessie Edwards, age seventeen, Lamont Miller, age twenty-one, and Lebaron Washington, age seventeen, had robbed the Robert's Grocery in Laurel, Mississippi. He stated that Graham and Robinson did not actually enter the store because the people who worked there would have recognized them. After the robbery, the four who had entered the store returned to Eudell Graham's black Lincoln with a Tennessee tag which was parked in the alley about a block and a half from the store. Taylor testified that Larry Robinson opened the front door and that he jumped in the front seat. Larry Taylor further testified that at the time of the robbery the appellant was wearing a wig. The six men then proceeded to the Do-Drop Inn Hotel in New Orleans where they divided the money, each person receiving $234. The same evening the appellant took the black Lincoln and returned to Hattiesburg with three pawn tickets belonging to Eudell Graham in order to claim Graham's color television, transistor radio, and camera.
The appellant was arrested by Captain Tom Oglesbee and Officer Fluker of the Hattiesburg Police Department at the Hi Hat Club at Palmer's Crossing approximately five miles below Hattiesburg about 9 p.m. on January 11, 1968. At the curb near the club was parked the Lincoln automobile with a flat tire. The appellant had $258.99 in cash and the three pawn tickets belonging to Eudell Graham on his person when arrested, and he was wearing a wig.
Larry Taylor further testified that he was arrested at the hotel in New Orleans along with Eudell Graham and Lebaron Washington and that two pistols, a shotgun, the wallet, and money sack were all found. Lamont Miller and Jessie Edwards were not caught. The defendant's attorney objected to the introduction into evidence of the weapons, wallet and money sack. The proof shows that Larry Taylor previous to the trial of the appellant had pled guilty to the charge of armed robbery and had been sentenced to eight years in the Mississippi State Penitentiary.
The appellant's attorney on cross-examination attempted to impeach the testimony of the witness, Larry Taylor, by showing that at an earlier date he, along with the other men who had been arrested, said that Miller and Edwards had forced them to do the job. Larry Taylor testified that he had been told to tell the story to clear Graham and Robinson, but that it was not true and that the story that he was telling on the stand was the truth.
At the end of the evidence for the State the attorney for the appellant made a motion for a directed verdict which was denied. The defendant presented only one witness, Clarence Simms, the deputy sheriff and jailor of Jones County, who testified that the witness, Larry Taylor, had escaped from the Jones County Jail two times since he had been placed there. Taylor had previously testified that he escaped only one time. The jury found the appellant guilty, and he was sentenced to twenty-five years in the State Penitentiary. The appellant's motion for a new trial was overruled and an appeal was taken to this Court.
The appellant assigned as error that: (1) The court permitted the introduction of condemning evidence without any idea as to how this evidence came into the possession of the law, and (2) the court committed error by refusing the instruction which would have told the jury that the testimony of an accomplice should be considered with care, caution, suspicion and distrust.
Appellant was not present at the hotel at the time of the search and seizure of the items placed in evidence. Under the rule as set out in Jones v. United States, 362 U.S. 257, 80 S.Ct. 725, 4 L.Ed.2d 697, 78 A.L.R.2d 233 (1960), appellant had no standing to attack the legality of *919 the search and seizure. The fundamental basis for the exclusion of evidence obtained by means of an illegal search and seizure under the Fourth Amendment of the United States Constitution and Article 3, Section 23 of the Constitution of the State of Mississippi is the protection of privacy. "In order to qualify as a `person aggrieved by an unlawful search and seizure' one must have been a victim of a search or seizure, one against whom the search was directed, as distinguished from one who claims prejudice only through the use of evidence gathered as a consequence of a search or seizure directed at someone else. * * * [A] party will not be heard to claim a constitutional protection unless he `belongs to the class for whose sake the constitutional protection is given.' People of State of N.Y. ex rel. Hatch v. Reardon, 204 U.S. 152, 160, 27 S.Ct. 188, 190, 51 L.Ed. 415." Jones v. United States, 362 U.S. 257, 261, 80 S.Ct. 725, 731, 4 L.Ed.2d 697, 702 (1960). To establish standing a defendant must show either that he owned or possessed the seized property or had a substantial possessory interest in the premises searched or he must show that he was legally on the premises where the search occurred at the time of the search. Jones v. United States, supra; Garza-Fuentes v. United States, 400 F.2d 219 (5th Cir.1968); Simmons v. United States, 390 U.S. 377, 88 S.Ct. 967, 19 L.Ed.2d 1247 (1968); Parman v. United States, 399 F.2d 559 (D.C. Cir.1968); Norrell v. State, 116 Ga. App. 479, 157 S.E.2d 784 (1967); State v. Page, 251 La. 810, 206 So.2d 503 (1968); Lanier v. State, 219 Tenn. 417, 410 S.W.2d 411 (1966).
In conclusion we find no merit in appellant's second assignment of error, to-wit, that the court refused to give the appellant the following instruction:
The court instructs the jury for the defendant, Larry Robinson that the law looks with suspicion and distrust on the testimony of an accomplice, and requires the jury to weigh the same with great care and caution, and, in this case, that Larry Taylor was an accomplice, and in passing on what weight, it any, you would give his testimony, you should weigh it with great care and caution, and look upon it with distrust and suspicion.
The record discloses that the trial court altered or modified the instruction requested by the appellant so that it read as follows:
The Court instructs the jury for the defendant that the testimony of an accomplice is to be received and considered with caution and that in this case Larry Taylor was an accomplice, and in passing on what weight the jury gives his testimony they should weigh it with great care and caution.
The instruction as modified was offered to the appellant who declined to accept it.
The trial court had under our decisions and under the provisions of Mississippi Code of 1942 Annotated, Section 1530 (1956) the power not only to alter or modify the instruction requested, but also the power within its discretion to refuse to grant any instruction regarding the testimony of accomplices and the refusal to give such an instruction does not constitute reversible error. Miss.Code 1942 Ann. § 1530 (1956); Holmes v. State, 242 Miss. 407, 134 So.2d 485 (1961); Searcy v. State, 52 So.2d 483 (Miss. 1951); State v. Jennings, 50 So.2d 352 (Miss. 1951); Gordon v. State, 188 Miss. 708, 196 So. 507 (1940); Wellborn v. State, 140 Miss. 640, 105 So. 769 (1925); Matthews v. State, 108 Miss. 72, 66 So. 325 (1914); Johnson v. State, 78 Miss. 627, 29 So. 515 (1900); Scott v. State, 56 Miss. 287 (1879).
Affirmed.
GILLESPIE, P.J., and RODGERS, PATTERSON and SMITH, JJ., concur.
|
COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
KEVIN FULFORD,
Appellant,
v.
THE STATE OF TEXAS,
Appellee.
§
§
§
§
§
§
No. 08-10-00139-CR
Appeal from
120th District Court
of El Paso County, Texas
(TC # 20090D02629)
O P I N I O N
Kevin Fulford appeals his conviction for family-violence assault (enhanced). The jury
found Appellant guilty as charged and sentenced him to eight years’ imprisonment together with
a $10,000 fine. In two issues on appeal, Appellant complains that the evidence is legally and
factually insufficient to sustain his conviction. For the reasons that follow, we affirm.
FACTUAL SUMMARY
Appellant was charged by indictment with family-violence assault, enhanced by a prior
conviction. According to the indictment, on or about May 2, 2009, Appellant:
[I]ntentionally, knowingly, and recklessly cause[d] bodily harm to DEBRA PINA,
a member of [Appellant’s] family or household, by striking her about her body
with a belt.
The enhancement paragraph alleged that Appellant was previously convicted of an offense
against a member of his family. Appellant stipulated to the enhancement paragraph, but he pled
not guilty to the charged offense. The case was tried to a jury.
Officer Magaly Guevara and Officer Max Christopher Bechtel of the El Paso Police
Department testified for the State. On May 2, 2009, the officers responded to a dispatch sent in
response to a 9-1-1 call reporting a domestic assault. They arrived separately at the apartment
complex but proceeded to the designated apartment together. Officer Bechtel knocked on the
door, and Appellant answered, sporting a belt folded over in his right hand. The officers
immediately told Appellant to put the belt down, and he complied by tossing it into an infant car
seat. Both officers testified that when Appellant answered the door, he was sweating profusely
and breathing hard.
Appellant’s wife, Debra Pina, was sitting on a couch in the living room when they
arrived. The couple were the only people inside the apartment at that time. The officers
separated them. Officer Guevara initially approached Pina in the living room; but, when more
male officers arrived, Pina expressed a need to change clothing and Officer Guevara followed her
upstairs.
Officer Bechtel remained downstairs to question Appellant.
According to Officer Guevara, Pina was visibly shaken, scared, and had obviously been
crying. As Guevara followed Pina up the stairs, she noticed redness on the back on Pina’s arms,
but the staircase was fairly dark so she couldn’t quite tell what the marks looked like. Once
upstairs in the light, Guevara observed that Pina had multiple red, linear marks on the back of
each arm which were beginning to swell or “welt up.” When asked whether she was in pain,
Pina wouldn’t answer or even look at the officer. Officer Guevara also asked if Appellant had
caused the marks or hit her, but again Pina wouldn’t look at her and said nothing. When asked
whether this had happened before, Pina just cried. Officer Guevara then asked Pina if she could
photograph the injuries, but Pina refused and then said, “I just want him to leave.” At that point,
Officer Guevara returned downstairs and signaled to the other officers to arrest Appellant.
Once Appellant was arrested and escorted from the apartment, Officer Bechtel spoke with
Pina’s thirteen-year-old daughter Marissa, who had placed the 9-1-1 call. Over Appellant’s
objection, an audio recording was admitted into evidence as an excited utterance and played for
the jury. The CAD (Computer Assisted Dispatch) report was also admitted. According to the
tape and report, Marissa told the dispatcher that Appellant was hitting her mother with a belt.
Officer Bechtel testified that when he approached Marissa for questioning, she was visibly upset
and crying. He was not permitted to testify to anything Marissa said to him.
Both Pina and Marissa testified for the defense. According to Pina, she and Appellant
had a verbal argument but she denied that Appellant ever struck her. On cross-examination, she
admitted it was possible he had a belt in his hand and that she had red marks on her arm.
Marissa testified that she did not actually see Appellant hit her mother. She had been
outside with her siblings and her paternal aunt. She only called 9-1-1 because her aunt told her to
do so.
SUFFICIENCY OF THE EVIDENCE
The Court of Criminal Appeals recently abandoned factual sufficiency review in those
cases where the burden of proof is beyond a reasonable doubt. Brooks v. State, 323 S.W.3d 893,
894-95 (Tex.Crim.App. 2010)(finding no meaningful distinction between the legal and factual
sufficiency standards and no justification for retaining both standards, therefore overruling the
factual sufficiency review adopted in Clewis v. State, 922 S.W.2d 126, 133 (Tex.Crim.App.
1996)). In doing so, the Court also determined that the legal sufficiency standard articulated in
Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979), is the only
standard a reviewing court applies in determining whether the evidence is sufficient to support a
conviction. Brooks, 323 S.W.3d at 894-95. Therefore, in accordance with Brooks, we review
Appellant’s legal and factual sufficiency claims together under the Jackson legal-sufficiency
standard and determine whether the evidence is sufficient to support each and every essential
element of criminal offense beyond a reasonable doubt. See Brooks, 323 S.W.3d 894-95, citing
Jackson, 443 U.S. at 319, 99 S.Ct. 2789.
Standard of Review
Under the Jackson standard, a reviewing court must consider all evidence in the light
most favorable to the verdict and in doing so determine whether a rational justification exists for
the jury’s finding of guilt beyond a reasonable doubt. Brooks, 323 S.W.3d at 894-95, citing
Jackson, 443 U.S. at 319, 99 S.Ct. at 2789. As the trier of fact, the jury is the sole judge as to the
weight and credibility of witness testimony, and therefore, on appeal we must give deference to
the jury’s determinations. Brooks, 323 S.W.3d at 894-95. If the record contains conflicting
inferences, we must presume the jury resolved such facts in favor of the verdict and defer to that
resolution. Id. On appeal, we serve only to ensure the jury reached a rational verdict, and we
may not reevaluate the weight and credibility of the evidence produced at trial and in so doing
substitute our judgment for that of the fact finder. King v. State, 29 S.W.3d 556, 562
(Tex.Crim.App. 2000). This standard applies equally to both direct and circumstantial evidence.
King v. State, 895 S.W.2d 701, 703 (Tex.Crim.App. 1995).
Applicable Law
Appellant was charged with intentionally, knowingly, or recklessly causing bodily injury
to Debra Pina, a member of Appellant’s family or household, by striking her with a belt. A
person commits an assault if the person, “intentionally, knowingly, or recklessly causes bodily
injury to another, including the person’s spouse.” Tex.Penal Code Ann. § 22.01(a)(1)(West
2011). Bodily injury is defined as “physical pain, illness, or any impairment of physical
condition,” and is proved if the evidence shows that the victim suffered “some” pain. See
Tex.Penal Code Ann. § 1.07(a)(8)(West Supp. 2006); see Lane v. State, 763 S.W.2d 785, 786-87 (Tex.Crim.App. 1989). This definition is purposefully broad and seems to encompass even
relatively minor physical contacts so long as they constitute more than mere offensive touching.
See Lane, 763 S.W.2d at 786; see also York v. State, 833 S.W.2d 734, 736 (Tex.App.--Fort
Worth 1992, no pet.). The jury may infer that the victim suffered pain based on evidence of
injuries or the circumstances of the assault. See Goodin v. State, 750 S.W.2d 857, 859
(Tex.App.--Corpus Christi 1988, pet. ref’d).
Analysis
Appellant first contends that the State’s evidence did nothing more than create a
suspicion of guilt which, under Urbano v. State, 837 S.W.2d 114 (Tex.Crim.App. 1992),
superceded in part on other grounds, Herrin v. State, 125 S.W.3d 436 (Tex.Crim.App. 2002), is
insufficient to sustain a conviction. See Urbano, 837 S.W.2d at 116 (“[i]f the evidence at trial
raises only a suspicion of guilt, even a strong one, then that evidence is insufficient.”). Appellant
points to the fact that the State did not call Pina as a witness or produce any photographs, relying
primarily on the 9-1-1 call instead. He emphasizes that upon arrival at the apartment, the officers
did not hear a belt slapping or any other sounds which would indicate a physical altercation was
in progress, nor did they see any physical signs of a disturbance in the living room. Appellant
also heavily relies on the fact that Pina never accused Appellant of hitting her, and affirmatively
denied the allegations.
As the trier of fact, the jury was free to believe or disbelieve any part or all of a witness’s
testimony, and reconcile inconsistencies as they saw fit. See Margraves v. State, 34 S.W.3d 912,
919 (Tex.Crim.App. 2000). Apparently, the jury chose to believe the officers’ testimony and the
9-1-1 call over Pina’s and Marissa’s trial testimony. We must defer to the jury’s determination
of credibility. See Tex.Code Crim.Proc.Ann. art. 38.04 (West 1979); Bowden v. State, 628
S.W.2d 782, 784 (Tex.Crim.App. 1982)(holding that contradictions in evidence are reconciled by
the jury and will not result in reversal so long as there is enough credible testimony to support the
verdict.). Here, the jurors heard a recording in which Marissa told the operator that Appellant
was beating her mother with a belt. They also heard testimony from the responding officers that
when Appellant opened the door, he had a belt in his right hand and he was sweating profusely
and breathing hard. Pina was sitting on a couch in the living room and was visibly upset, shaken,
and had been crying. Finally, the jury heard testimony that red marks on the back of Pina’s arms
were beginning to welt which, in Officer Guevara’s opinion, was consistent with Pina being hit
by a belt. Considering the evidence before it, a rational jury could have found that Appellant
struck Pina, a member of his family or household, with a belt as alleged in the indictment.
Appellant next contends that even if the evidence supports a finding that Appellant struck
Pina with a belt, the conviction for assault cannot stand because there is no evidence he caused
any physical pain as required by the statute. The elements of family violence assault are: (1) the
defendant; (2) intentionally, knowingly, or recklessly; and (3) caused bodily harm to a family
member, including the defendant’s spouse. Davila v. State, 346 S.W.3d 587, 591 (Tex.App.--El Paso 2009, no pet.). It is not necessary for the victim to testify that she experienced pain. The
jury may draw reasonable inferences from the evidence, including the inference that a victim
suffered pain as the result of her injuries. See Bolton v. State, 619 S.W.2d 166, 167
(Tex.Crim.App. 1981)(evidence of cut sufficient to show bodily injury); Arzaga v. State, 86
S.W.3d 767, 778-79 (Tex.App.--El Paso 2002, no pet.)(swelling and bruising of lips sufficient to
show bodily injury); Goodin, 750 S.W.2d at 859 (bruises and muscle strain sufficient to show
bodily injury). We conclude that the evidence is sufficient to support the jury’s implied finding
that Appellant caused bodily injury, i.e., inflicted pain upon Pina, when he struck her with a belt.
See Scugoza v. State, 949 S.W.2d 360, 362-63 (Tex.App.--San Antonio 1997, no writ); see also
Blevins v. State, No. 02-09-00237-CR, 2010 WL 5395836, at *3 (Tex.App.--Fort Worth Dec. 30,
2010, pet. ref’d) (holding evidence legally sufficient to sustain a conviction for family assault
where appellant shoved his wife, even though his wife testified she did not feel any pain when
she was shoved).
Finally, Appellant complains that even if all of the statements in the 9-1-1 call are true, it
is reasonably possible that Appellant and Pina were engaged in mutual combat and that he struck
her in self-defense, or that he struck her with her consent, arguing that “[w]ithout contextual
evidence regarding Pina’s actions or reactions, no one result is more reasonable than the other.”
However, it is the defendant’s duty to raise such defensive theories at trial. Appellant has raised
them for the first time on appeal. Because the State need not disprove any and all possible
defenses, Appellant’s contention is without merit. See Allen v. State, 273 S.W.3d 689, 693
(Tex.App.--Houston [1st Dist.] 2008, no pet.)(noting that, “It is the defendant’s burden to
produce evidence raising the defense, after which the burden shifts to the State,” and that, “The
burden placed on the State is not one of producing evidence to refute the defensive claim, but
rather to prove its assault case beyond a reasonable doubt.”).
Based on the totality of the circumstances, in the light most favorable to the jury’s
verdict, we conclude that the jury could have reasonably found each and every element of assault
beyond a reasonable doubt. For these reasons, we overrule both issues for review and affirm the
trial court’s judgment.
November 9, 2011
ANN CRAWFORD McCLURE, Chief
Justice
Before McClure, C.J., Rivera, and Antcliff, JJ.
(Do Not Publish)
|
973 F.2d 487
INTERAMERICAN TRADE CORPORATION, Plaintiff-Appellant,v.COMPANHIA FABRICADORA DE PECAS; Cofap of America, Inc.,Defendants-Appellees.
No. 91-3908.
United States Court of Appeals,Sixth Circuit.
Argued May 8, 1992.Decided Aug. 19, 1992.
Charles J. Faruki, David A. Shough, Donald E. Burton (briefed), D. Jeffrey Ireland (argued and briefed), Faruki, Gilliam & Ireland, Dayton, Ohio, for plaintiff-appellant.
Howard P. Krisher, Charles Donald Shook (argued and briefed), Bieser, Greer & Landis, Dayton, Ohio, for defendants-appellees.
Before: GUY and BOGGS, Circuit Judges; and RONEY, Senior Circuit Judge.*
RONEY, Senior Circuit Judge.
1
The question presented in this case is whether the district court erred in dismissing the plaintiff's lawsuit because of a forum selection clause in the written agreements between the two parties. We affirm.
2
Plaintiff Interamerican Trade Corporation (ITC) is a Delaware corporation with its principal place of business in Dayton, Ohio. Defendant Companhia Fabricadora de Pecas (Cofap) is a Brazilian manufacturer of automotive parts and supplies with a subsidiary in Ohio. ITC and Cofap entered into a written agreement where ITC agreed to act as exclusive sales representative for Cofap in the United States in exchange for sales commissions. After the first agreement expired, they entered into a second written agreement. The two written agreements contain the following Brazilian forum selection clause:
3
In relation to the interpretation and compliance with this Agreement, the parties elect the jurisdiction of the competent Courts of Sao Paulo, Brazil, waiving any other jurisdiction that may correspond to them by reason of their present or future domicile.
4
They also entered into an oral agreement involving the sale of Cofap products.
5
ITC filed an action in Ohio state court against Cofap and its subsidiary, alleging that Cofap breached their agreements. Cofap removed the case to federal court. The district court dismissed, holding that because of the forum selection clause the lawsuit could only be brought in Sao Paulo, Brazil.
6
There is an apparent conflict among the circuits as to whether federal or state law applies regarding the enforceability of forum selection clauses where a federal court is sitting in diversity jurisdiction. The parties agree that the issue need not be decided in this case because Ohio courts treat forum selection clauses in a similar manner as the federal courts. See United Standard Management Corp. v. Mahoning Valley Solar Resources Inc., 16 Ohio App.3d 476, 16 OBR 559, 476 N.E.2d 724, 725-26 (1984). We, therefore, analyze the case under federal law for the purposes of this appeal.
7
Plaintiff-appellant ITC asserts that the district court misapplied the standard for determining the validity of a forum selection clause as articulated in Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). According to Bremen, the forum clause should control absent a strong showing that it should be set aside. "The correct approach [is] to enforce the forum clause specifically unless" ITC can "clearly show that enforcement would be unreasonable and unjust, or that the clause [is] invalid for such reason as fraud or overreaching." 407 U.S. at 15, 92 S.Ct. at 1916.
8
ITC does not allege fraud or overreaching. The contract is typewritten. The provision is not buried deep in finely printed matter. Rather, it is in the same type as the other clauses and is clear. ITC does not argue that it did not know that it was agreeing to the forum for litigation over the contract. ITC does argue that the clause was a non-negotiable provision of the agreement as to which it had no choice. ITC could have, however, walked away from the contract, being under no compulsion to deal in Cofap products. Where there is no contract of adhesion and a party is not somehow compelled to enter into a contract, the fact that the forum selection clause is so important to the defendant to be non-negotiable works against the plaintiff's position, rather than for it. Cf. Carnival Cruise Lines v. Shute, --- U.S. ----, ----, 111 S.Ct. 1522, 1528, 113 L.Ed.2d 622, 633 (1991); Mercury Coal & Coke, Inc. v. Mannesmann Pipe & Steel Corp., 696 F.2d 315, 318 (4th Cir.1982).
9
ITC contends that enforcement of the forum selection clause would be unjust and unreasonable, urging that: Brazil has no substantial relationship to the dispute; negotiations occurred primarily in Ohio; ITC acted as sales agent for Cofap inside the United States; documents related to the dealings are in Ohio; Cofap and ITC are located in Ohio; critical witnesses are in Ohio; third party witnesses are in the United States; and, one of the subjects of the disputed agreements, shock absorbers, is warehoused in Ohio. The problem with this argument is that it focuses on facts which were either present or reasonably could have been foreseen at the time ITC entered into the contract.
10
Cofap responds with other facts, fully known to the parties at the time of the contract: Brazil has a logical connection to the agreements; Brazil is the principal place of business of one of the parties; the clause appears in a freely-negotiated private international agreement; and, the contract requires that Brazilian law be applied.
11
ITC points to a holding of Bremen that a showing of serious inconvenience to a party can render a forum selection clause unreasonable and unenforceable. 407 U.S. at 16, 92 S.Ct. at 1916. Under this approach, however, in order to escape the contractual forum, it is incumbent upon ITC to show that trial in Brazil "will be so gravely difficult and inconvenient that [it] will for all practical purposes be deprived of [its] day in court." 407 U.S. at 18, 92 S.Ct. at 1917. ITC contends that litigation in Brazil would bar as a practical matter its claim, because in Brazil: a jury trial is not available; the judicial process is slow; trial by depositions is not permitted; ITC would have to deposit in excess of $2.2 million as security; judgment is generally awarded in cruzeiros, not dollars; and, it would be difficult for the plaintiff to get dollars out of Brazil. These matters were all known or foreseeable at the time ITC agreed to litigate in Brazilian courts, however.
12
As Cofap points out: the courts in Brazil are fully competent; litigation in Brazil may be more inconvenient for ITC but is not unjust; other courts have found Brazil to be a proper forum; and, speculative concern regarding fairness of a foreign court, which parties must have considered when negotiating the agreement, does not justify refusal to enforce the clause.
13
Here, "where it can be said with reasonable assurance that at the time they entered the contract" ITC and Cofap were "parties to a freely negotiated private international commercial agreement [and] contemplated the claimed inconvenience, it is difficult to see why any such claim of inconvenience should be heard to render the forum clause unenforceable." Bremen, 407 U.S. at 16, 92 S.Ct. at 1916. This is simply not a case in which a change of circumstances has occurred in Brazilian litigation that would justify a court in relieving ITC of its contractual commitment. We hold that ITC has not met the heavy burden of proof required to set aside the clause on the grounds of inconvenience. See Carnival Cruise Lines v. Shute, --- U.S. ----, ----, 111 S.Ct. 1522, 1527-29, 113 L.Ed.2d 622, 632-33 (1991).
14
ITC makes a second, fall-back, argument that, even if the forum selection clause is enforceable, the entire case should not have been dismissed because some of its claims are not within the forum selection clause. ITC's argument is that its first claim--for breach of written agreements--is the only claim within the scope of the forum selection clause, as the clause only references the two written agreements. Citing Farmland Indus., Inc. v. Frazier-Parrott Commodities, Inc., 806 F.2d 848, 852 (8th Cir.1986), ITC argues that the clause in the written agreements does not apply to its claims against Cofap for breach of oral agreements, violations of Ohio Rev.Code Ann. § 1335.11, wrongful repudiation, unjust enrichment, and breach of exclusive sales agreement.
15
The district court properly held that the forum selection clause embraces disputes concerning interpretation of and compliance with the agreements and that all of ITC's claims arise out of the alleged breaches by Cofap of the written agreements. See Moses v. Business Card Exp., Inc., 929 F.2d 1131, 1139-40 (6th Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 81, 116 L.Ed.2d 54 (1991); Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509 (9th Cir.1988). But cf. Caton v. Leach Corp., 896 F.2d 939, 942-43 (5th Cir.1990). ITC argues that, with respect to its claim under Ohio Rev.Code Ann. § 1335.11, a strong public policy of protecting local businesses from victimization by nonresident businesses for the failure to pay commissions prevents enforcement of the forum selection clause. This argument does not militate against the proper application of forum selection clause law. Cf. Bremen, 407 U.S. at 15-16, 92 S.Ct. at 1916-17.
16
AFFIRMED.
*
The Honorable Paul H. Roney, Senior Circuit Judge of the United States Court of Appeals for the Eleventh Circuit, sitting by designation
|
Case: 17-12283 Date Filed: 03/12/2019 Page: 1 of 5
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 17-12283
Non-Argument Calendar
________________________
D.C. Docket Nos. 4:16-cv-10043-UU; 4:02-cr-10005-UU-4
ELIO EXPOSITO,
Petitioner-Appellant,
versus
UNITED STATES OF AMERICA,
Respondent-Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(March 12, 2019)
Before JILL PRYOR, BRANCH, and EDMONDSON, Circuit Judges.
Case: 17-12283 Date Filed: 03/12/2019 Page: 2 of 5
PER CURIAM:
Elio Exposito, a federal prisoner, appeals the district court’s denial of his 28
U.S.C. § 2255 motion to vacate. No reversible error has been shown; we affirm.
In 2002, Exposito pleaded guilty to (1) conspiracy to commit armed bank
robbery, 18 U.S.C. § 371 (Count 1); (2) armed bank robbery, 18 U.S.C. § 2113(a),
(d), (e), and 2 (Count 2); (3) conspiracy to carry a firearm during and in relation to
a crime of violence, 18 U.S.C. § 924(o) (Count 5); and (4) knowingly carrying and
brandishing a firearm during and in relation to a crime of violence, 18 U.S.C.
§§ 924(c)(1)(A)(ii) and 2 (Count 6).
The district court sentenced Exposito to a total sentence of 219 months of
imprisonment. Exposito’s sentence included 60 months on Count 1, 135 months
on Count 2, and 135 months on Count 5, to run concurrently to each other, and a
consecutive 84-month sentence for Count 6. Exposito filed no direct appeal.
In his section 2255 motion, Exposito argued that he was “actually innocent”
of his conviction under 18 U.S.C. § 924(c), because -- in the light of the Supreme
Court’s decision in Johnson v. United States, 135 S. Ct. 2551 (2015) -- his
conviction for armed bank robbery no longer qualifies as a “crime of violence.”
The district court denied Exposito’s motion. The district court then granted
2
Case: 17-12283 Date Filed: 03/12/2019 Page: 3 of 5
Exposito a certificate of appealability on this issue: “whether Movant’s conviction
for armed bank robbery qualifies as a violent felony under § 924(c)’s use-of-force
clause.”
In reviewing the denial of a motion to vacate under section 2255, we review
de novo the district court’s legal conclusions and review the district court’s factual
findings for clear error. Stoufflet v. United States, 757 F.3d 1236, 1239 (11th Cir.
2014).
Section 924(c) provides for a mandatory consecutive sentence of at least
seven years if a defendant brandishes a firearm during a crime of violence. 18
U.S.C. § 924(c)(1)(A)(ii). “Crime of violence” is defined as a felony that satisfies
at least one of the following criteria:
(A) has as an element the use, attempted use, or threatened use of
physical force against the person or property of another, or
(B) that by its nature, involves a substantial risk that physical force
against the person or property of another may be used in the course of
committing the offense.
18 U.S.C. § 924(c)(3).
Exposito first contends that the Supreme Court’s decision in Johnson --
which struck down, as unconstitutionally vague, the residual clause of the Armed
Career Criminal Act, 18 U.S.C. § 924(e)(2)(B)(ii) -- also invalidated the “residual
clause” in section 924(c)(3)(B). This argument, however, is foreclosed by this
3
Case: 17-12283 Date Filed: 03/12/2019 Page: 4 of 5
Court’s binding precedent. See Ovalles v. United States, 905 F.3d 1231, 1253
(11th Cir. 2018) (en banc).
Applying the conduct-based approach adopted by this Court in Ovalles,
Exposito’s armed bank robbery conviction qualifies as a crime of violence under
section 924(c)(3)(B). The undisputed facts -- as set forth in the government’s
factual proffer -- demonstrate that, during the bank robbery, Exposito carried a gun
which he pointed at bank employees. Exposito and his codefendant restrained the
bank employees, stole over $170,000, and then demanded that a bank employee
give them keys to a car. Exposito and his codefendant used the car to drive a short
distance, where they boarded forcibly a boat and forced at gun point the boat’s
owner to transport them from Key Largo to Miami. In the light of Exposito’s
actual offense conduct, Exposito’s underlying conviction for armed bank robbery
involved a substantial risk of physical force and, thus, qualifies as a crime of
violence under section 924(c)(3)(B). See Ovalles, 905 F.3d at 1252-53
(concluding that defendant’s conviction for attempted carjacking constituted a
“crime of violence” under section 924(c)(3)(B) because the undisputed “real-life
details” of the crime demonstrated that defendant’s conduct “posed a very real
‘risk’ that physical force ‘may’ be used.”).
4
Case: 17-12283 Date Filed: 03/12/2019 Page: 5 of 5
Moreover, this Court has already concluded that a conviction for armed bank
robbery constitutes a “crime of violence” under the “use-of-force clause” in section
924(c)(3)(A). See In re Hines, 824 F.3d 1334, 1337 (11th Cir. 2016) (denying an
application for leave to file a second or successive section 2255 motion); In re
Hunt, 835 F.3d 1277, 1277 (same); see also In re Sams, 830 F.3d 1234, 1239 (11th
Cir. 2016) (concluding that a conviction for bank robbery alone -- pursuant to 18
U.S.C. § 2113(a) -- qualifies as a crime of violence under section 924(c)(3)(A)).
We are bound by that precedent. See In re Lambrix, 776 F.3d 789, 794 (11th Cir.
2015) (explaining that “our prior-panel-precedent rule applies with equal force as
to prior panel decisions published in the context of applications to file second or
successive petitions.”); United States v. Archer, 531 F.3d 1347, 1352 (11th Cir.
2008) (under this Court’s prior-panel-precedent rule, “a prior panel’s holding is
binding on all subsequent panels unless and until it is overruled or undermined to
the point of abrogation by the Supreme Court or by this court sitting en banc.”).
AFFIRMED.
5
|
562 F.Supp. 106 (1983)
Pat CANTERINO, et al., Plaintiffs,
v.
George WILSON, et al., Defendants.
Civ. A. No. 80-0545-L(J).
United States District Court, W.D. Kentucky, Louisville Division.
February 10, 1983.
*107 *108 Susan Deller Ross, Charles Ory, Terisa E. Chaw, U.S. Justice Dept., Civil Rights Div., Sp. Lit. Section, Washington, D.C., Ronald E. Meredith, U.S. Atty., Louisville, Ky., for plaintiff-intervenor.
Walker Bledsoe Smith, David A. Friedman, Anne Marie Regan, Legal Aid Society, Inc., Leslie W. Abramson, Louisville, Ky., Claudia T. Wright, ACLU, Nat. Prison Project, Washington, D.C., for plaintiffs.
Barbara W. Jones, Linda G. Cooper, Gen. Counsel, J. Gary Bale, Frankfort, Ky., for defendants.
MEMORANDUM OPINION
JOHNSTONE, District Judge.
This matter is before the Court on Defendant Kentucky Department of Correction's post-trial motion for supplemental relief from this Court's Order entered on July 26, 1982. A four week bench trial was held and judgment rendered in favor of the plaintiff-class, women inmates at the Kentucky Correctional Institution for Women (KCIW). Canterino, et al. v. Wilson, et al., 546 F.Supp. 174 (W.D.Ky.1982).
At a compliance conference conducted by the Court to settle the litigants' differences on October 13, 1982, two contested issues remained unresolved. First, whether administrators of KCIW must provide attorney-assistance for criminal and civil matters in order to meet their constitutional duty to assure that all inmates incarcerated at KCIW are provided meaningful access to the courts. Second, whether administrators of KCIW have created a constitutionally protected liberty interest in favor of the inmates requiring that a corrections officer may only issue an incident report if he or she personally witnesses an alleged institutional rule infraction. The Court requested the parties submit post-trial memoranda indicating their reliance on trial testimony and the applicable law on these two issues. Because of the length of the trial proceedings, a complete transcript is not available at this writing. However, having thoroughly reviewed the evidence, the memoranda of counsel, and the applicable law, the Court makes the following findings and conclusions.
I. ACCESS TO THE COURTS
Paragraph five of the Court's Order entered July 26, 1982, provides that, in addition to improvements required for the institution's law library:
Defendants [Kentucky Department of Corrections] shall make the services of an attorney available to inmates at KCIW on a part-time basis for at least twenty hours per week.
Defendants' memorandum sets forth the position that the inmates at KCIW have the same legal services as do all Kentucky male inmates in the system. They also state that the Kentucky Office of Public Advocacy (OPA) provides assistance with criminal matters for all Kentucky inmates and that OPA's current practice of providing one attorney to KCIW for one half day every three weeks is adequate to meet the needs of the women. As for civil matters, defendants suggest that the inmates' needs are satisfied by the services provided by inmate legal aides and the institution's recently upgraded law library.
Plaintiffs counter that the defendants have a constitutional duty to provide all KCIW inmates with meaningful access to the courts, which in this case, requires the *109 state to provide attorney-assistance to the inmates in addition to the law library.
This Court's Memorandum Opinion, Canterino v. Wilson, 546 F.Supp. at 216, imposing upon the defendants the duty to provide "... the equivalent of at least one half-time attorney, who will assist inmates in all areas, including habeas corpus and other civil matters, in which they have a demonstrated need...." found such assistance "... required by both the equal protection clause and the decision of the Supreme Court in Bounds v. Smith, 430 U.S. 817, 97 S.Ct. 1491, 52 L.Ed.2d 72 (1977)."
At trial, this Court found the KCIW law library "woefully inadequate" when the lawsuit was initiated. Canterino v. Wilson, 546 F.Supp. at 203. However, since the filing of this action, defendants are commended for their significant efforts to improve the resources of the KCIW law library. In addition, the availability of the library has been extended to fifteen hours of non-program time per week, the minimum imposed by this Court's Order, July 26, 1982.
Supplementing the law library, the Court found that "[o]ne attorney from the Kentucky Office for Public Advocacy visits KCIW for a half day every three weeks to assist inmates with criminal appeals. This attorney does not assist in civil matters or prison disciplinary proceedings, although most legal problems at KCIW concern civil matters, such as child custody. (Jarvis Testimony)." Canterino v. Wilson, 546 F.Supp. at 203.
The United States Supreme Court recognized "[i]t is now established beyond doubt that prisoners have a constitutional right to access to the courts," Bounds v. Smith, 420 U.S. 817, 821, 97 S.Ct. 1491, 1494, 52 L.Ed.2d 72 (1977), and that the burden is upon the states to ensure that the right of access remains unfettered. 430 U.S. at 829, 97 S.Ct. at 1498. To meet the constitutional requirement, the right to access must be "meaningful." 430 U.S. at 823, 97 S.Ct. at 1495. "`Meaningful access' to the courts is the touchstone." Id. Under Bounds, the right of meaningful access extends to the preparation and filing of actions challenging the fact of a prisoner's confinement as well as to actions challenging the legality of his conditions of confinement. 430 U.S. at 827, 97 S.Ct. at 1497; see Johnson v. Avery, 393 U.S. 483, 89 S.Ct. 747, 21 L.Ed.2d 718 (1969) (habeas corpus); Wolff v. McDonnell, 418 U.S. 539, 94 S.Ct. 2963, 41 L.Ed.2d 935 (1974) (civil rights).
In Bounds, the Court emphasized that while law libraries were one constitutionally acceptable method to assure meaningful access to the courts, other methods were not foreclosed:
Among the alternatives are the training of inmates as paralegal assistants to work under lawyers' supervision, the use of paraprofessionals and law students, either as volunteers or in formal, clinical programs, the organization of volunteer attorneys through bar associations or other groups, the hiring of lawyers on a part-time consultant basis, and the use of full-time staff attorneys, working either in new prison legal assistance organizations or as part of public defender or legal services offices.... Independent legal advisors can mediate or resolve administratively many prisoner complaints that would otherwise burden the courts, and can convince inmates that other grievances against the prison or the legal system are ill-founded, thereby facilitating rehabilitation by assuring the inmate that he has not been treated unfairly.... Any plan, however, must be evaluated as a whole to ascertain its compliance with constitutional standards.
430 U.S. at 831-832, 97 S.Ct. at 1499-1500.
Recognizing this right to access to the courts, the question before us is what type of plan is sufficient under the factual record developed in this action to ensure meaningful access to the courts on behalf of inmates at KCIW. The defendants contend that the KCIW law library, as supplemented by inmate law clerks and assistance of the once a month visit of the OPA attorney for criminal appeals, is sufficient. This Court disagrees.
*110 While other courts have held that law libraries are sufficient in and of themselves to protect the meaningful access to the courts, the factual record in this case indicates a law library available to some of the inmates only fifteen hours a week under the supervision of inexperienced inmate legal aides is insufficient to provide the inmates with the rights extended to them by the Constitution. These limitations imposed on the use of the library are compounded by the library's physical conditions. The testimony at trial showed that the library has insufficient space, lighting, and study areas, was too noisy, and compared unfavorably to the facility at the men's institution. [Inmate Legal Aide Carol Jarvis Testimony]. The physical deficiencies impede an inmate's ability to use the law library. There are no tables available for research. [Carol Jarvis Testimony]. Generally, protective custody and other inmates in the Cell Block cannot go to the law library. Legal aides must bring books to their cells and each inmate is limited to four law books per day, four days per week. [Testimony of Warden Betty Kassulke, Associate Warden Gail Chandler, and Carol Jarvis]. Some books, such as the Kentucky Revised Statutes and the Criminal Law of Kentucky may not be taken to the Cell Block. [Carol Jarvis Testimony].
These inmates are forced to rely upon a system whereby they must request specific legal materials from their cells. Such a system is wholly inadequate to ensure meaningful access to the courts. Williams v. Leeke, 584 F.2d 1336, 1339 (4th Cir.1978); Accord, Cruz v. Hauck, 627 F.2d 710, 720-721 (5th Cir.1980); Hooks v. Wainwright, 536 F.Supp. 1330, 1341 (M.D.Fla.1982). Unless the library adequately provides access to the courts for all inmates, some other assistance should be available for the initiation of habeas corpus and civil rights actions.
Exacerbating this situation is the fact that many inmates at KCIW are illiterate or otherwise unable to do effective legal research. Plaintiffs' Exhibit 5 imports that 69% of the KCIW population had less than a high school education, with half of the total population having completed only the eighth, ninth or tenth grades. This is corroborated by Table II of Plaintiffs' Exhibit 6 and Defendants' Exhibit 103.
Even if unlimited physical access could be provided to the law library, it would be unavailing to one who lacks sufficient opportunity or intellectual ability to utilize the facility. The facts indicate that this is the case at KCIW.
The unrebutted trial testimony shows that the inmate legal aides at KCIW cannot effectively perform the function of a legal assistant, as that term was used in Bounds v. Smith, 430 U.S. at 831, 97 S.Ct. at 1499. No comprehensive paralegal training is given, only a training course limited to legal research. [Carol Jarvis Testimony]. However, that course did not attempt to teach the sort of research and writing skills necessary to prepare legal briefs. The emphasis of the training was on criminal cases, with only films used to train inmates on civil matters. No continuing legal education seminars are conducted after the initial training. Since the attorney from OPA handles criminal appeals only and does not monitor the cases filed by the legal aides, it appears that the OPA attorney's narrow scope of representation and supervision, plus the clerks' lack of serious training in civil matters, do not qualify the inmate law clerks as "paralegal assistants ... work[ing] under lawyers' supervision." Bounds v. Smith, 430 U.S. at 831, 97 S.Ct. at 1499.
As defendants point out, the OPA attorney's services are limited by statute to provide only for "the representation of indigent persons accused of crimes or mental states which may result in their incarceration or confinement." K.R.S. 31.010. The November, 1982, affidavit of David Norat, OPA attorney servicing KCIW, provides that he does not "... undertake representation of inmates in civil actions other than in petitions for writs of habeas corpus and other civil cases directly relating to the challenge of a criminal conviction or a sentence." While OPA may be prohibited by *111 statute from assisting the inmates at KCIW on legal matters such as civil rights actions, the OPA is not the only source of attorney-assistance available to the defendants to provide counsel for these inmates.
Even this limited access to the OPA attorney afforded the KCIW inmates is less than that afforded to similarly situated male inmates in the Kentucky Prison System. The proof at trial indicated a denial of equal protection. We found, in our Memorandum Opinion of July 26, 1982, "KSP [Kentucky men's maximum security prison] has three full-time attorneys serving around 900 inmates," or one attorney hour per about seven inmates per week. Canterino v. Wilson, 546 F.Supp. at 203. "KSR [Kentucky men's medium security prison] has two full-time attorneys and one part-time, serving 1500 inmates a total of 96 attorney hours per week," or about one attorney hour per fifteen inmates per week. Id. There are about 150 women inmates incarcerated at KCIW. The state offered no basis for providing the women at KCIW with only one attorney hour per 150 inmates per week. The state has failed to show how such a disparity in access to the courts is justified. Glover v. Johnson, 478 F.Supp. 1075, 1079 (E.D.Mich.1979).
As recognized in Bounds, acceptable legal services programs may vary widely in their format. But to a greater or lesser degree, dependent upon the circumstances of a particular prison setting, it has been held that all permissible programs must affirmatively include at least three aspects to meet the Bounds standard. First, some source of legal information of a professional nature must be available to all inmates for the full legal development of their claims. This may consist of an adequate law library available to all inmates or qualified attorneys in sufficient number, or some combination of both. Secondly, for those inmates who possess insufficient intellectual or educational abilities to permit reasonable comprehension of their legal claims, provision must be made to allow them to communicate with someone who, after consultation with the legal learning source, is capable of translating their complaints into an understandable presentation. Such a presentation does not have to be refined, but it must be reasonable, straightforward, and an intelligible statement. This goal may be accomplished for the unlearned inmate through an institutional attorney, a free-world person with paralegal training, or an inmate, who through experience and intelligence, is a competent "writ-writer." Where these sources of assistance are present, and no physical or coercive restraints to prisoner complaints exist, due process mandating access to the courts is met.
Against this standard we measure the existing KCIW system.
Regarding a source of legal information, we find that the KCIW law library is now or is currently in the process of meeting the standards set out in this Court's Order entered July 26, 1982. However, the provision of a satisfactory law library does not settle the issue. As it is recognized in this Circuit, "... Defendants' position that they are obligated only to provide either an adequate law library or qualified legal assistance is too narrow a reading of Bounds. [Judge Feikens's emphasis]" Glover v. Johnson, 478 F.Supp. 1075, 1096 (E.D.Mich.1979).
Faced with a similar issue in considering the constitutionality of conditions at the women's correctional facility in Michigan, Judge Feikens noted in Glover v. Johnson that "[t]he adequacy of a prisoner's rights to access to the courts must be measured by the actual opportunity he or she has to raise a valid and meaningful claim before the courts." The United States Supreme Court recognized in Wolff v. McDonnell, 418 U.S. 539, 94 S.Ct. 2963, 41 L.Ed.2d 935 (1974), that the Due Process Clause assures that no person will be denied the opportunity to present to the judiciary allegations concerning violations of fundamental constitutional rights. "The recognition by the Court that prisoners have certain constitutional rights which can be protected by civil rights actions would be diluted if inmates, often `totally or functionally illiterate,' were unable to articulate their complaints to the courts." Id. at 579, 94 S.Ct. at 2986.
*112 It does not necessarily follow that the presence of a few inexperienced inmate legal aides at KCIW fulfill the constitutionally necessary translator to provide the metamorphosis for an inmate's pro se complaint into an understandable legal presentation. Historically, women inmates have not gained the experience of their male counterparts in providing legal assistance to other inmates as "writ-writers" or "jailhouse lawyers" because of the unavailability for many years of sufficient legal resources. Glover v. Johnson, 478 F.Supp. at 1097. As noted, at the time of the filing of this action, the KCIW law library was "woefully inadequate." Canterino v. Wilson, 546 F.Supp. at 203. The actions pending before this Court reflect the absence of effective inmate writ-writers at KCIW in comparison to the State's male institutions.
Defendants cannot reject the responsibility impressed upon them by the Constitution that they shall "... assist inmates in the preparation and filing of meaningful legal papers....," Bounds v. Smith, 430 U.S. at 823, 97 S.Ct. at 1495, on the grounds that men do not share the same opportunity. The services of an attorney is justified, not because there is or is not a similar program offered at the men's prisons, but because, unlike the male population generally, the women do not have a history of self-help in the legal field; the evidence tends to show that until recently they have had little access to adequate legal resources. At trial, defendants elicited no evidence substantiating the adequacy of its legal assistance program and did not carry its burden of demonstrating that the legal needs of the prison population are served by the existent program. Until the goal of meaningful access is reached, the defendants are charged with the responsibility of formulating a plan, compatible with security objectives, which will ensure that inmates needing assistance will have access to competent assistance.
Since trained inmate writ-writers are not available, such a plan, of course, must in some way provide for identification of either paid or volunteer attorneys or paralegal advisors within the meaning of Bounds, and it must also create a method whereby the inmate-plaintiff and advisor can meet together.
Based upon this Court's findings of fact at trial, the Court concludes that the program in effect at the time of trial as modified to date for providing KCIW inmates with legal assistance, taken together, does not provide a "constitutionally acceptable method to assure meaningful access to the courts." Bounds v. Smith, 430 U.S. at 830, 97 S.Ct. at 1499. We adopt the language of the Court's Memorandum Opinion and Order entered July 26, 1982, where it provides:
To bring access to courts to constitutional parity, defendants must 1) supply a library equivalent to those required for males at KSP and KSR, 2) substantially increase the amount of non-program time the library is open, and 3) provide the equivalent of at least one half-time attorney, who will assist inmates in all areas, including habeas corpus and other civil matters, in which they have a demonstrated need.
Canterino v. Wilson, 546 F.Supp. at 216.
Finding nothing indicating defendants are not in compliance with the first two elements of the Court's mandate, we leave to the parties the task of formulating the precise details within today's guidelines to accomplish the third element necessary to afford inmates at KCIW their fundamental constitutional right to meaningful access to the courts.
II. INCIDENT REPORTS
Paragraph four of the Court's Order in this action provides:
Defendants are directed to distribute to each inmate brought before the Adjustment Committee a document explaining in plain language the inmate's minimum due process rights which are embodied in defendants' Internal Management Directives. This document shall be served on inmates at least twenty-four hours prior to their Adjustment Committee hearing.
*113 Defendants, by their Motion for Supplemental Relief, dated September 17, 1982, sought to avoid this requirement contending it creates a "substantial burden" and is "unnecessary and not required by law or the Consent Decree or the Internal Management Directives."
On the other hand, plaintiffs respond that such a document is essential to ensure that each residents' due process rights are protected.
At a conference conducted by the Court on October 13, 1982, the parties agreed that, except for one contested provision, the plaintiffs' tendered document: "Inmate Rights KCIW Disciplinary Procedures," Exhibit "A" to Plaintiffs' Response to Defendants' Notice of Compliance, should be adopted in its entirety to meet the requirement of paragraph four of the Order. The contested subsection provides:
§ I.B. A CO [corrections officer] may only issue a write-up if he or she personally witnessed the incident.
This Court, in its Memorandum Opinion, interpreted Internal Management Directive (IMD) 713.03(D)(1) as requiring incident reports to include only facts personally witnessed by the reporting corrections officer. Canterino v. Wilson, 546 F.Supp. 174, 202 (W.D.Ky.1982). IMD 713.03(D)(1), Exhibit PX-22, specifically limits the issuance of incident reports to "... only those facts which the reporting employee has personally witnessed and otherwise verified...." [emphasis added]. The Court concluded this directive governed the issuance of all incident reports on the trial testimony of Gary Dennis, Executive Director of the Office of Corrections Training. [Defendants attached the partially transcribed portion of his trial testimony as Exhibit 1 to their post-trial memorandum]. At page 4 of Exhibit 1, Mr. Dennis testified:
We go over with them [corrections officers] the Incident Report. We talk with them about the importance of report writing and the fact that they are only to report what they see. They are not to deal with hearsay.
From the trial testimony, this appears to be a blanket requirement limiting the discretion of all corrections personnel, except in the case of an "extraordinary occurrence." Mr. Dennis, at page 5 of Exhibit 1, explained the difference between an "incident report" and an "extraordinary occurrence report."
We talk about two different kinds of reports. We have an incident report which is an Adjustment Committee action. We teach the employees to fill that out if there [is] an infraction of the code of conduct or the rules or regulations. There is another incident report called or sometimes referred to [as] an extraordinary occurrence report which is filled out. These are quite different. The incident report, that is where we teach our line staff members you report only what you see. Then that is turned over to the next [line] of supervision which is probably [a] lieutenant for investigation.
....
So we teach our line correctional officers, the new employees, your responsibility is [to] report only what you see, write in that report factual information and then that report is passed up to the next level of supervision and they will undertake the investigation. That is in an instance where there is [a] violation of the code of conduct. [emphasis added].
Even in a situation where an inmate might repeatedly say or do something disruptive, yet no staff member personally witnesses the act, Mr. Dennis explained at page 6-7 of Exhibit 1:
... we teach them they are not to take action on hearsay. That they are only to write reports when they charge an inmate with an offense that they have first hand knowledge of. They are not to take another inmate's testimony or another inmate's word that "X" called him an SOB.
Gary Dennis went on to explain, at page 6 of Exhibit 1, that in a situation where no officer witnesses a serious incident, such as a "cutting" incident,
... we would instruct our officer there to do an extraordinary occurrence report. *114 Which means at this particular point in time you are not charging any inmate with an offense under the offense and penalty code. All you are doing is describing what is an extraordinary occurrence. Whether it is a cutting or a fire or something that would bear investigation.
....
We would teach them to write a full description of the incident of what they saw. I want to make a clear distinction that in that case they are not charging an inmate with a violation. All they are doing is reporting the circumstances of that event. [emphasis added].
Thus, the policy governing the write-ups of an extraordinary occurrence report, where there is a serious offense committed and a full investigation verifying the event, even in the absence of a corrections officer personally witnessing the event, provides for charges to be brought against an inmate, not on the basis of the incident report alone, but upon the staffs' thorough investigation and the recommendation of an administrative officer. As KCIW Warden Betty Kassulke testified, extraordinary occurrence reports issue for fires, escapes, serious injuries, accidents, and similar incidents. Plaintiffs agree with this dichotomy distinquishing incident reports and extraordinary occurrence reports.
It is recognized in this Circuit that state policy limiting prison officials' discretion creates an enforceable liberty interest. Bills v. Henderson, 631 F.2d 1287 (6th Cir. 1980); Walker v. Hughes, 558 F.2d 1247 (6th Cir.1977). In addressing the issue of an inmate transfer into segregation, the Sixth Circuit stated that a "[l]iberty interest can be created by state rules or mutually explicit understandings as well as by statute." Bills v. Henderson, 631 F.2d at 1291.
In this action, the record reflects that the Kentucky Department of Corrections, through IMD 713.03(D)(1), Exhibit PX-22, has created such a liberty interest as set out above. The testimony of Gary Dennis confirms that this policy is applicable to all corrections officers.
As noted, it has been the state's policy that all incident reports shall issue only where a corrections officer personally witnesses the incident. In the case of an extraordinary occurrence, such as an escape, murder, extortion, fire, or similar serious violation of institutional rules or law, the Department indicates that, regardless of whether there is a staff witness, a full investigation shall be conducted verifying, documenting, and substantiating the incident, and upon the recommendation of administrative personnel, specific charges identifying the alleged infraction shall be brought against an inmate in the form of an "extraordinary occurrence report." The Court recognizes that the Administrators of the Kentucky Corrections Department must be allowed to issue charges of serious institutional infractions based on a thorough investigation since they cannot operate and maintain security otherwise. However, as to violations of prison conduct code, the Department requires all write-ups to be personally witnessed by a corrections officer. The defendants have offered no trial testimony or exhibits to the contrary.
On the basis of the record, exhibits, and trial testimony, the Court finds that the existing policy of the Department of Corrections might be better stated as follows:
Where there is a violation of the prison code of conduct, a corrections officer may only issue an incident report if he or she personally witnessed the incident pursuant to IMD 713.03(D)(1);
However, in the event of a serious inmate infraction (e.g., murder, fire, extortion, escape) a corrections officer need not personally witness the incident, but upon a thorough staff investigation verifying, documenting, and substantiating the acts or events involved in such an infraction, charges may be brought upon the recommendation of an administrative officer in the form of an extraordinary occurrence report.
The Department of Corrections current policy reflects an attitude of professionalism by the administrators and staff in their attempt to maintain the delicate balance *115 between institutional security and fairness to the inmate charged with a rule infraction.
An appropriate order is this day entered.
ORDER
For the reasons stated in the Memorandum Opinion this day entered,
IT IS ORDERED:
1. The parties shall submit a plan formulating the precise details to assure inmates at KCIW their fundamental constitutional right to meaningful access to the courts. Supplementing the changes previously mandated by this Court's Order of July 26, 1982, enlarging the KCIW law library and expanding its availability, this plan shall specifically provide for identification of either paid or volunteer attorneys or paralegal advisors within the meaning of Bounds v. Smith, 430 U.S. 817, 97 S.Ct. 1491, 52 L.Ed.2d 72 (1977), who will assist inmates in all areas, including criminal actions, habeas corpus and other civil matters, in which the inmates have a demonstrated need. By necessity, this plan will incorporate the available services afforded by the Kentucky Office of Public Advocacy, but will not be limited to that agency in fulfilling the state's constitutional responsibility. The plan must also create a method whereby the inmate plaintiff and advisor can meet together. Within the guidelines set out in the Memorandum Opinion, we leave to the parties the task of formulating the precise details of the plan.
The plan shall be submitted within sixty days of this Order.
2. As agreed and modified by the parties at a conference conducted by the Court on October 13, 1982, plaintiffs' tendered due process document: "Inmates Rights KCIW Disciplinary Procedures," Exhibit "A" to Plaintiffs' Response to Defendants' Notice of Compliance, shall be adopted in its entirety. However, while § I.B., as tendered, adequately addresses defendant's policy for verification and issuance of an "incident report," it does not address its policy for verification and issuance of an "extraordinary occurrence report" and the parties may supplement the wording of that section to clarify any ambiguity created by that omission.
As agreed by the parties, the due process document shall be incorporated verbatim into the new KCIW resident handbook for distribution to all inmates. However, until the information can be incorporated in the handbook, the document shall be given to the charged inmate at least 24 hours prior to the Adjustment Committee hearing.
This requirement shall become effective as soon as possible, or no later than ten days from the entry of this Order.
|
489 F.2d 891
CONFEDERATION OF POLICE, Individually and on behalf of itsmembers, et al., Plaintiffs-Appellees,v.James B. CONLISK, Jr., Individually and as Superintendent,Chicago PoliceDepartment, et al., Defendants-Appellants.
No. 73-1543.
United States Court of Appeals, Seventh Circuit.
Argued Sept. 14, 1973.Decided Nov. 29, 1973, Certiorari Denied April 22, 1974, See94 S.Ct. 1971.
Richard L. Curry, Daniel R. Pascale, Chicago, Ill., for defendants-appellants.
David A. Goldberger, Barbara P. O'Toole, American Civil Liberties Union, Chicago, Ill., for plaintiffs-appellees.
Before CASTLE, Senior Circuit Judge, and PELL and SPRECHER, Circuit judges.
PELL, Circuit Judge.
1
This is an appeal from an order of the district court which, inter alia, directed the defendants to reinstate the individual plaintiffs to their civil service positions in the Chicago Police Department. Plaintiffs are the Confederation of Police and six individually named police officers. The defendants are officials of the Police Department and members of the Police Board.
2
All of the individually named plaintiffs were subpoenaed to appear before a federal grand jury investigating allegations of criminal conspiracies and corruption among members of the Chicago Police Department. At the grand jury, each police officer was informed by the United States Attorney that whatever the witness said could be used against him. Each policeman was also advised of his Fifth Amendment privilege against self-incrimination. In reliance on the prior advice of counsel, each of the plaintiffs invoked the privilege and declined to answer questions. After the appearances at the grand jury, each of the police officers was summoned to appear before the Internal Affairs Division (IAD) of the Chicago Police Department. At this departmental inquiry, each policeman was directed by a superior officer to answer questions as to whether he had invoked the privilege against self-incrimination at his appearance before the grand jury. With a single exception, no police officer was questioned by the IAD concerning his 'official duties,' using that term in the sense of obligations ordinarily associated with police work as such.
3
All six police officers were suspended or discharged for violating certain rules of the Chicago Police Department by invoking the privilege against self-incrimination at the grand jury session. In particular, Rule 51 of the Police Department rules prohibited:
4
'Failing to give evidence before the Grand Jury, Coroner's inquest, in court, or before any governmental administrative body, including the Police Board, when properly called upon to do so, or refusing to testify on the grounds that such testimony might incriminate the member, or refusing to sign a waiver of immunity when requested to do so by a superior officer.'1
5
Suit was then brought by the six individual police officers and by the Confederation of Police on behalf of its members challenging the propriety of the suspensions and firings. The district court granted the plaintiffs' motion for summary judgment and this appeal followed.
6
* Analysis of the applicable case law must begin with Garrity v. New Jersey, 385 U.S. 493, 87 S.Ct. 616, 17 L.Ed.2d 562 (1967). In Garrity, policemen were questioned at an investigatory hearing about alleged traffic ticket 'fixing.' Each policeman, after being told that he would be subject to discharge from office if he refused to answer, gave the requested information. The officers' answers were then used in subsequent criminal prosecutions in which the policemen were convicted. The Supreme Court reversed the convictions, holding that the threat of discharge was a form of compulsion, depriving the policemen of a free choice as to whether to answer. 'The protection of the individual under the Fourteenth Amendment against coerced statements prohibits use in subsequent criminal proceedings of statements obtained under threat of removal from office.' 385 U.S. at 500, 87 S.Ct. at 620.
7
In Spevack v. Klein, 385 U.S. 511, 87 S.Ct. 625, 17 L.Ed.2d 574 (1967), the companion case of Garrity, the Court held that an attorney could not be disbarred solely because he refused to testify at a judicial inquiry when his refusal was based on the ground that his testimony would tend to incriminate him. Justice Fortas, concurring, went on to state:
8
'This Court has never held . . . that a policeman may not be discharged for refusal in disciplinary proceedings to testify as to his conduct as a police officer. It is quite a different matter if the State seeks to use the testimony given under this lash in a subsequent proceeding (as in Garrity).' 385 U.S. at 519-520, 87 S.Ct. at 630.
9
In Gardner v. Broderick, 392 U.S. 273, 88 S.Ct. 1913, 20 L.Ed.2d 1082 (1968), and Uniformed Sanitation Men Ass'n, Inc. v. Commissioner of Sanitation, 392 U.S. 280, 88 S.Ct. 1917, 20 L.Ed.2d 1089 (1968), the municipal employees involved had pursued an alternative course of action to that taken in Garrity. In Gardner, a policeman, pursuant to a subpoena, appeared before a grand jury investigating bribery and corruption in the police force. The police officer was advised of his privilege against self-incrimination but he was asked to sign a 'waiver of immunity' after being told he would be discharged if he did not sign it. The officer in Gardner, unlike the policeman in Garrity, declined to testify and also refused to sign the waiver. He was then given an administrative hearing and discharged solely for his refusal to sign the waiver of immunity form. Similarly, in Uniformed Sanitation Men, municipal employees refused to testify or sign waivers of immunity when called before the city's Commissioner of Investigation, who was inquiring into improper activities by sanitation employees. As in Gardner, an administrative hearing was then held, after which the sanitation employees were discharged for refusing to testify.
10
A unanimous Court held the dismissals in both cases to be violative of constitutional rights. As the Court noted in Gardner, the policeman there 'was discharged from office, not for failure to answer relevant questions about his official duties, but for refusal to waive a constitutional right. He was dismissed for failure to relinquish the protections of the privilege against self-incrimination.' 392 U.S. at 278, 88 S.Ct. at 1916. The employees in both cases were entitled to remain silent at the inquiries into the alleged improper conduct since 'it was clear that New York was seeking . . . testimony from their own lips which, despite the constitutional prohibition, could be used to prosecute them criminally.' 392 U.S. at 284, 88 S.Ct. at 1919.
11
Justice Fortas, writing for the Court in both Gardner and Uniformed Sanitation Men, expanded on his earlier statement in Spevack that the Court had never held that 'a policeman may not be discharged for refusal in disciplinary proceedings to testify as to his conduct as a police officer.' Spevack v. Klein, supra at 519, 87 S.Ct. at 630. In Gardner and Uniformed Sanitation Men, Justice Fortas distinguished the situation then before the Court-- where public employees were questioned by their employer only as to whether they exercised their Fifth Amendment privilege and were discharged solely for doing so in circumstances in which any testimony might have been used against them in criminal proceedings-- from the situation in which employees were discharged after 'an accounting of their use or abuse of their public trust.' 392 U.S. at 284, 88 S.Ct. at 1919. Justice Fortas characterized the latter situation as one in which the public employer demands, with threat of discharge, that its employee 'answer questions specificially, directly, and narrowly relating to the performance of his official duties, without being required to waive his immunity with respect to the use of his answers or the fruits thereof in a criminal prosecution of himself.' 392 U.S. at 278, 88 S.Ct. at 1916. In his footnote to this statement, Justice Fortas specificically noted that 'the statements in my separate opinion in Spevack v. Klein, supra, at 519-520 . . . are expressly limited to situations of this kind.' 392 U.S. at 278 n. 5, 88 S.Ct. at 1916. After such an 'accounting for public trust,' the employee may be dismissed either on the basis of his answers or for refusal to answer. However, should the employee answer, his answers, under Garrity, cannot be used against him in a subsequent criminal proceeding since they were the result of threat of discharge. In an 'accounting for public trust,' therefore, the employee is faced with the choice of answering or being dismissed from his job, but he knows that, should he answer, he cannot be criminally prosecuted on the basis of his own testimony. As Judge Friendly noted in Uniformed Sanitation Men Ass'n, Inc. v. Commissioner of Sanitation, 426 F.2d 619, 627 (2d Cir. 1970), cert. denied, 406 U.S. 961, 92 S.Ct. 2055, 32 L.Ed.2d 349 (1972), the sequel to the Supreme Court decision:
12
'Public employees do not have an absolute constitutional right to refuse to account for their official actions and still keep their jobs; their right, conferred by the Fifth Amendment itself, as construed in Garrity, is simply that neither what they say under such compulsion nor its fruits can be used against them in subsequent prosecution.'
13
In sum, then, the Gardner and Uniformed Sanitation Men decisions indicate that a public employer may discharge an employee for refusal to answer where the employer both asks specific questions relating to the employee's official duties and advises the employee of the consequences of his choice, i.e., that failure to answer will result in dismissal but that answers he gives and fruits thereof cannot be used against him in criminal proceedings. Kalkines v. United States, 473 F.2d 1391, 1393 (Ct.Cl.1973); Uniformed Sanitation Men Ass'n, Inc. v. Commissioner of Sanitation, 426 F.2d 619, 627 (2d Cir. 1970), cert. denied, 406 U.S. 961, 92 S.Ct. 2055, 32 L.Ed.2d 349 (1972).
14
In the present case, the policemen declined to answer questions at a grand jury, although they knew that, under Rule 51 of the Chicago Police Department rules, they could be discharged for so doing.2 When called before the IAD, the policemen were not, with one exception,3 asked specific, narrow questions relating to their official duties. Each was questioned, rather, only as to whether he had invoked the privilege against self-incrimination at the grand jury. Thereafter, the policemen were fired or suspended solely for invoking the Fifth Amendment at the grand jury. At no time, either at the grand jury or at the IAD inquiry, were the police officers informed that any information which they gave would not be used against them in criminal proceedings.4 These discharges were clearly unconstitutional under the rulings of Gardner and Uniformed Sanitation Men. The IAD inquiry was in no sense an 'accounting of public faith' as the questions were not 'specifically, directly, and narrowly' related to official duties and the officers were not advised that their answers would not be used against them in criminal proceedings.
II
15
Rule 51, to the extent that it denies police officers the privilege against self-incrimination where criminal prosecution may follows, is constitutionally invalid. That portion of it falls directly within the purview of Gardner and Uniformed Sanitation Men.
16
The district court held that Rules 2, 5, and 6 were unconstitutional as applied in this case. We agree with this determination. Rules 2, 5, and 6 were used only in conjunction with Rule 51 in discharging the six policemen. The underlying 'violation' in each case was the exercise of the privilege against self-incrimination before the grand jury, which was prohibited by Rule 51. Since we have found Rule 51 to be constitutionally invalid insofar as it denies the Fifth Amendment right to a public employee where there is a possibility of criminal prosecution, the use of Rules 2, 5, and 6 in conjunction with Rule 51 in such a circumstance was also invalid.
17
For the reasons above stated, the judgment of the district court is affirmed.
18
Affirmed.
1
The other pertinent rules are:
'IV. RULES OF CONDUCT.
'The following rules of conduct set forth expressly prohibited acts.
Rule 2. Any action or conduct which impedes the Department's efforts to achieve its goals, or brings discredit upon the Department.
Rule 5. Failure to perform a duty.
Rule 6. Disobedience of an order or directive, written or oral.'
2
Appellants stress that the United States Attorney at the grand jury could not have discharged the policemen who were city employees. We deem this point to be wholly immaterial to the disposition of the case. The compulsive factor was no less real
3
The one question to officer Shuey was answered unequivocally
4
Appellants argue that the IAD is not empowered to grant immunity from prosecution to the police officers. Such a power, however, is not necessary. In Garrity the Supreme Court indicated that the Fifth Amendment itself prohibited the use of statements or their fruits where the statements had been made under the threat of dismissal from public office. Therefore, by advising the officers that their statements, when given under threat of discharge, cannot be used against them in subsequent criminal proceedings, the IAD is not 'granting' immunity from prosecution; it is merely advising the officers of the constitutional limitations on any criminal prosecution should they answer. Uniformed Sanitation Men Ass'n, Inc. v. Commissioner of Sanitation, 426 F.2d 619, 627 (2d Cir. 1970), cert. denied, 406 U.S. 961, 92 S.Ct. 2055, 32 L.Ed.2d 349 (1972)
|
TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
JUDGMENT RENDERED JULY 18, 2014
NO. 03-14-00226-CV
Steven C. Kahle, Appellant
v.
Red Cheetah, Inc.; Red Cheetah Software, LP; and Andrew Morgan, Appellees
APPEAL FROM 98TH DISTRICT COURT OF TRAVIS COUNTY
BEFORE CHIEF JUSTICE JONES, JUSTICES ROSE AND GOODWIN
DISMISSED ON APPELLANT’S MOTION -- OPINION BY JUSTICE ROSE
This is an appeal from the judgment signed by the trial court on January 14, 2014. Appellant has
filed a motion to dismiss the appeal, and having considered the motion, the Court agrees that the
motion should be granted. Therefore, the Court grants the motion and dismisses the appeal. The
appellant shall pay all costs relating to this appeal, both in this Court and the court below.
|
Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-19-00791-CR
Victor BARCENAS,
Appellant
v.
The STATE of Texas,
Appellee
From the 187th Judicial District Court, Bexar County, Texas
Trial Court No. 2019CR5575
Honorable Stephanie R. Boyd, Judge Presiding
PER CURIAM
Sitting: Rebeca C. Martinez, Justice
Patricia O. Alvarez, Justice
Luz Elena D. Chapa, Justice
Delivered and Filed: February 5, 2020
DISMISSED
The trial court’s certification in this appeal states that this criminal case, “is a plea-bargain
case, and the defendant has NO right of appeal.” The certification further states, “[T]he defendant
has waived the right of appeal.”
Rule 25.2(a)(2) of the Texas Rules of Appellate Procedure provides:
In a plea bargain case—that is, a case in which a defendant’s plea was guilty or nolo
contendere and the punishment did not exceed the punishment recommended by the prosecutor
and agreed to by the defendant—a defendant may appeal only:
04-19-00791-CR
(A) those matters that were raised by written motion filed and ruled on before trial,
(B) after getting the trial court’s permission to appeal, or
(C) where the specific appeal is expressly authorized by statute.
TEX. R. APP. P. 25.2(a)(2). The clerk’s record, which contains a written plea bargain, establishes
the punishment assessed by the court does not exceed the punishment recommended by the
prosecutor and agreed to by the defendant. See id. The clerk’s record does not include a written
motion filed and ruled upon before trial, nor does it indicate the trial court gave its permission to
appeal. See id. Appellant has not identified with this court any statute that expressly authorizes
the specific appeal. See id. The trial court’s certification, therefore, appears to accurately reflect
that this is a plea-bargain case and appellant does not have a right to appeal.
We must dismiss an appeal “if a certification that shows the defendant has the right of
appeal has not been made part of the record.” TEX. R. APP. P. 25.2(d). We issued an order stating
this appeal would be dismissed unless an amended trial court certification was made part of the
appellate record by January 3, 2020. See TEX. R. APP. P. 25.2(d); Dears v. State, 154 S.W.3d 610
(Tex. Crim. App. 2005); Daniels v. State,110 S.W.3d 174 (Tex. App.—San Antonio 2003, no pet.).
No such amended trial court certification has been filed.
Accordingly, this appeal is dismissed pursuant to Rule 25.2(d).
PER CURIAM
DO NOT PUBLISH
-2-
|
IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA 15-1364
Filed: 2 August 2016
Wayne County, No. 13-CRS-54280
STATE OF NORTH CAROLINA
v.
ROBERT MORGAN SMITH
Appeal by Defendant from order and judgment dated 27 August 2014 by Judge
Joseph N. Crosswhite in Superior Court, Wayne County. Heard in the Court of
Appeals 25 April 2016.
Attorney General Roy Cooper, by Assistant Attorney General Whitney Hendrix
Belich, for the State.
Strickland, Agner & Associates, by Dustin B. Pittman, for Defendant.
McGEE, Chief Judge.
Robert Morgan Smith (“Defendant”) appeals from order of the trial court
summarily denying his motion to suppress his medical records pursuant to a search
warrant after he was charged with driving while impaired. Defendant contends the
trial court erred in denying his motion to suppress as untimely under N.C. Gen.
Stat. § 15A-971 et seq. Defendant further argues the trial court erroneously
admitted the medical records in violation of the physician-patient privilege, N.C.
STATE V. SMITH
Opinion of the Court
Gen. Stat. § 8-53, and certain health information disclosure provisions in N.C. Gen.
Stat. § 90-21.20B. We find no error.
I. Background
Sergeant Karl Rabun (“Sgt. Rabun”) of the Goldsboro Police Department
responded to an early morning call on 5 September 2013 reporting a motorcycle
crash at a traffic circle in downtown Goldsboro, North Carolina. Upon arriving at
the scene, Sgt. Rabun found Defendant lying on the ground on the east side of the
intersection, with one arm pinned beneath a “badly damaged” motorcycle. Sgt.
Rabun recognized Defendant as a local attorney who had previously worked in
Wayne County law enforcement. As Sgt. Rabun approached Defendant, he noticed
“the strong odor of alcoholic beverage . . . emanating from [Defendant’s] breath as
he was trying to speak and breathe.” Defendant was “complaining of pain . . . from
obviously being involved in [an] impact.” Sgt. Rabun directed Defendant to lie still
until emergency medical responders arrived. Rescue personnel and additional law
enforcement officers arrived and helped lift the motorcycle off Defendant.
Officer Matthew Marino (“Officer Marino”) of the Goldsboro Police Department
assumed responsibility as lead investigator of the crash. Officer Marino
immediately noticed the “very strong” odor of alcohol on Defendant’s breath. He
observed that the engine of Defendant’s motorcycle was still hot. Defendant was
transported by medical responders to the Emergency Room at Wayne Memorial
Hospital (“the hospital”), where he was treated for injuries.
-2-
STATE V. SMITH
Opinion of the Court
Approximately forty-five minutes after Defendant arrived at the hospital,
Officer Marino spoke with Defendant again. Officer Marino continued to detect a
strong odor of alcohol on Defendant’s breath and observed that Defendant had
bloodshot eyes and slurred speech. Officer Marino formed the opinion that
Defendant’s faculties were “appreciably impaired” and that “it was more probable
rather than not that [Defendant] [had been] driving under the influence of alcohol.”
After advising Defendant of his implied-consent rights, Officer Marino asked
Defendant to submit to a blood test. Defendant refused a blood test, telling Officer
Marino to “go get a warrant.” Later that morning, Officer Marino charged
Defendant with driving while impaired.
Officer Marino applied for a search warrant on 9 September 2013 to obtain
Defendant’s medical records from Wayne Memorial Hospital related to the
motorcycle crash, which was granted. Officer Marino received a total of twenty
pages of medical records. Defendant’s medical records noted that Defendant had
an elevated blood alcohol level at the time of treatment on 5 September 2013. The
State filed a notice of intent to use evidence on 6 March 2014, pursuant to N.C. Gen.
Stat. § 15A-975(b), including “any . . . oral, written, recorded, and otherwise
memorialized statements of the defendant” and “[a]ny and all laboratory analyses
provided to the Defendant.”
-3-
STATE V. SMITH
Opinion of the Court
Defendant filed a motion to suppress his medical records on 22 August 2014,
alleging that the search warrant had “illegally authorized the seizure of
[Defendant’s] hospital records pertaining to [his] . . . medical treatment beginning
5 September 2013.” In a memorandum of law filed with Defendant’s motion to
suppress, Defendant alleged that the search warrant violated North Carolina’s
physician-patient privilege, certain health information disclosure provisions in N.C.
Gen. Stat. § 90-21.20B, and the federal Health Insurance Portability and
Accountability Act (HIPAA). Defendant also alleged that the warrant was not
supported by probable cause as required by N.C. Gen. Stat. § 15A-244.
The State moved to summarily dismiss Defendant’s motion to suppress,
alleging that Defendant’s motion was untimely and accompanied by an insufficient
affidavit. Prior to trial, the trial court heard and summarily denied Defendant’s
motion to suppress, finding that Defendant’s motion was untimely under N.C. Gen.
Stat. § 15A-976, and that Defendant had not offered any newly discovered facts or
extraordinary circumstances that would justify a late filing. In denying Defendant’s
motion to suppress, the trial court noted it “[did] not address the merits of
[Defendant’s] motion, and . . . intentionally preserve[d] the right of the Defendant
to raise any objections during the course of th[e] trial at the appropriate time.”
The trial court then heard pre-trial arguments regarding the admissibility of
Defendant’s medical records. After considering the text of N.C.G.S. § 90-21.20B,
-4-
STATE V. SMITH
Opinion of the Court
relevant HIPAA provisions, and case law cited by the State, the trial court held it
would
allow [Defendant’s] records to be introduced for the limited
purposes indicated; specifically to establish [Defendant’s]
blood alcohol level, and any statements made by . . .
Defendant concerning the motor vehicle accident. Again,
this is all subject to the proper identifications and
authentications of these [medical] records at the
appropriate time [during trial].
The State was instructed to redact “all remaining information” based on the trial
court’s conclusion that it would have no probative value and that such redaction was
necessary to protect Defendant’s privacy. Defendant’s medical records were
subsequently admitted into evidence and published to the jury. The jury found
Defendant guilty on 27 August 2014 of driving while impaired. Defendant was
sentenced to a level two impaired driving sentence of twelve months, suspended for
a probationary term of twenty-four months. Defendant gave notice of appeal in open
court.
The State filed a motion to dismiss the appeal on 21 July 2015, based on
Defendant’s failure to timely serve the record on appeal. The motion was heard and
allowed by Judge Arnold O. Jones, II on 10 September 2015. Defendant petitioned
this Court on 15 September 2015 to issue a writ of certiorari to review the decision
of the trial court. The petition for writ of certiorari was allowed on 1 October 2015.
-5-
STATE V. SMITH
Opinion of the Court
Defendant appeals the trial court order summarily denying his motion to suppress
and the admission of his medical records into evidence.
II. Standard of Review
A trial court’s conclusions of law in ruling on a motion to suppress evidence are
reviewable de novo. See State v. Barnhill, 166 N.C. App. 228, 230, 601 S.E.2d 215,
217 (2004). “Under a de novo review, the court considers the matter anew and freely
substitutes its own judgment” for that of the trial court. State v. Williams, 362 N.C.
628,632-33, 669 S.E.2d 290, 294 (2008) (quoting In re Appeal of The Greens of Pine
Glen Ltd. P'ship, 356 N.C. 642, 647, 576 S.E.2d 316, 319 (2003)). We review de novo
the trial court’s conclusion that Defendant’s motion to suppress was untimely filed
under N.C. Gen. Stat. § 15A-976.
Defendant also argues that his medical records were improperly admitted
because they were obtained in violation of the physician-patient privilege, N.C. Gen.
Stat. § 8-53, as well as certain health information disclosure provisions in N.C. Gen.
Stat. § 90-21.20B. “Resolution of issues involving statutory construction is ultimately
a question of law for the courts. Where an appeal presents a question of statutory
interpretation, full review is appropriate, and we review a trial court’s conclusions of
law de novo[.]” In re Hamilton, 220 N.C. App. 350, 352, 725 S.E.2d 393, 395 (2012)
(citation omitted).
III. Analysis
A. Timeliness of Defendant’s Motion to Suppress
-6-
STATE V. SMITH
Opinion of the Court
Defendant first argues the trial court erred by summarily dismissing his
motion to suppress as untimely, pursuant to N.C. Gen. Stat. § 15A-976. Defendant
contends that, because the motion to suppress was not based on any of the grounds
specified in N.C. Gen. Stat. § 15A-974, it was not subject to the time constraints set
forth in N.C.G.S. § 15A-976. Under § 15A-974, evidence must be suppressed if “(1)
[i]ts exclusion is required by the Constitution of the United States or the Constitution
of the State of North Carolina; or (2) [i]t [was] obtained as a result of a substantial
violation of the provisions of this Chapter.” N.C. Gen. Stat. §§ 15A-974(a)(1)-(2)
(2015). See State v. Simpson, 320 N.C. 313, 322, 357 S.E.2d 332, 337 (1987) (“In
determining whether [N.C.G.S. § 15A-974(a)(2)] requires suppression, the reviewing
court must consider the importance of the interest violated, the extent of the deviation
from lawful conduct and whether the violation was willful, as well as the extent to
which suppression will deter future violations.”); State v. Wilson, 293 N.C. 47, 50, 235
S.E.2d 219, 221 (1977) (“G.S. 15A-974[(a)](1) . . . mandates the suppression of
evidence only when the evidence sought to be suppressed is obtained in violation of
defendant's constitutional rights.” (emphasis in original)). Defendant explicitly cited
the North Carolina and United States constitutions, as well as N.C.G.S. § 15A-971 et
seq., in support of his motion to suppress. As our Supreme Court has noted,
[a] defendant who seeks to suppress evidence upon a
ground specified in G.S. 15A-974 must comply with the
procedural requirements outlined in G.S. 15A-971, et
seq. Moreover, such defendant has the burden of
-7-
STATE V. SMITH
Opinion of the Court
establishing that his motion to suppress is timely and
proper in form.
State v. Satterfield, 300 N.C. 621, 624-25, 268 S.E.2d 510, 513-14 (1980) (internal
citation omitted)).
N.C. Gen. Stat. § 15A-976(b) provides that
[i]f the State gives notice not later than 20 working days
before trial of its intention to use evidence and if the
evidence is of a type listed in G.S. 15A-975(b), the
defendant may move to suppress the evidence only if [the]
motion is made not later than 10 working days following
receipt of the notice from the State.
N.C. Gen. Stat. § 15A-976(b) (2015). In turn, the “type[s] of evidence listed in G.S. §
975(b)” are
(1) [e]vidence of a statement made by a defendant;
(2) [e]vidence obtained by virtue of a search without a
search warrant; or
(3) [e]vidence obtained as a result of [a] search with a
search warrant when the defendant was not present at the
time of the execution of the search warrant.
N.C. Gen. Stat. §§ 15A-975(b)(1)-(3) (2015). Defendant concedes that his medical
records were obtained “with a search warrant when [he] was not present at the time
of the execution of the search warrant.” N.C.G.S. § 15A-976(b)(3). Accordingly,
Defendant’s motion to suppress fell squarely within the language of N.C.G.S. § 15A-
975(b)(3), and thus was subject to N.C.G.S. § 15A-976(b).
-8-
STATE V. SMITH
Opinion of the Court
The State filed its notice of intent to use certain evidence1 on 6 March 2014.
Defendant filed his motion to suppress all evidence obtained by search warrant on 22
August 2014, a few business hours before his trial was scheduled to begin. As
Defendant sought to suppress evidence obtained as a result of a search warrant
executed outside his presence, and because Defendant failed to file the motion to
suppress “not later than 10 working days following receipt of the notice from the
State,” N.C.G.S. § 15A-976(b) applies and his motion to suppress was untimely filed.
The trial court acted within its “statutorily vested [authority] . . . to deny summarily
[a] motion to suppress when the defendant fails to comply with the procedural
requirements of Article 53.” State v. Holloway, 311 N.C. 573, 578, 319 S.E.2d 261,
264 (1984).2
We note that even if a trial court erroneously summarily denies a motion to
suppress, the defendant must show the error was prejudicial. See, e.g., State v.
Speight, 166 N.C. App. 106, 115, 602 S.E.2d 4, 11 (2004) (concluding that although
the trial court erroneously denied defendant’s motion to suppress for untimeliness,
the error was not prejudicial); State v. Chance, 130 N.C. App. 107, 112, 502 S.E.2d
1 The State’s notice of intent identified two specific types of evidence potentially obtainable
from Defendant’s medical records: statements made by Defendant, and “[a]ny and all laboratory
analyses provided to [] Defendant.” Additional evidence listed in the notice of intent—“[a]ny and all
photographs, physical evidence, and video tapes collected from the Defendant, the Defendant’s home
or vehicle, the crime scene, and any other location”—was unrelated to Defendant’s medical records
and is not at issue in this appeal.
2 The General Assembly has indicated that procedural requirements found in Article 53 are
intended “to produce in as many cases as possible a summary granting or denial of the motion to
suppress.” See N.C. Gen. Stat. § 15A-977 official cmt. (2015).
-9-
STATE V. SMITH
Opinion of the Court
22, 25 (1998) (upholding trial court’s erroneous denial of motion to suppress where
defendant “failed to show a reasonable possibility that a different result would have
been reached at trial had such error[] not been committed.”). In this case, despite
denying Defendant’s motion to suppress on procedural grounds, the trial court
stressed that it “[did] not address the merits of [the] motion” and “intentionally
preserve[d] the right of the Defendant to raise any objections during the course of
th[e] trial at the appropriate time.” The trial court did, in fact, permit defense counsel
to argue at length regarding the admissibility of Defendant’s medical records,
including discussion of the substantive statutory arguments raised in Defendant’s
motion to suppress. Even assuming arguendo that the trial court erroneously
concluded Defendant’s motion to suppress was untimely, Defendant has not shown
“a reasonable possibility that, had the error in question not been committed, a
different result would have been reached at the trial.” See also N.C. Gen. Stat. § 15A-
1443(a) (2015).
B. Admissibility of Defendant’s Medical Records
Defendant also contends the trial court erred in admitting his medical records
into evidence “without regard for” the physician-patient privilege set forth in N.C.
Gen. Stat. § 8-53, and contrary to several health information disclosure provisions in
N.C. Gen. Stat. § 90-21.20B. We disagree and address each in turn.
(1) Physician-Patient Privilege
- 10 -
STATE V. SMITH
Opinion of the Court
Defendant maintains that, by the plain language of the physician-patient
privilege statute, N.C. Gen. Stat. § 8-53, disclosure of a patient’s medical records may
be compelled only by judicial order after determination that such disclosure is
“necessary to a proper administration of justice.” See N.C. Gen. Stat. § 8-53 (2015).
Defendant cites no authority, other than N.C.G.S. § 8-53 itself, to support his
argument that this statute provides the exclusive means of obtaining patient medical
records. The State asserts that another statute, N.C. Gen. Stat. § 90-21.20B, allows
law enforcement to obtain medical records through a search warrant for criminal
investigative purposes. It notes that the latter explicitly permits the disclosure of
certain protected patient health information to law enforcement “[n]otwithstanding
G.S. 8-53 or any other provision of law . . . .” See N.C. Gen. Stat. §§ 90-21.20B(a), (a1)
(2015). According to the State, this demonstrates that N.C.G.S. § 8-53 is not the only
statute under which patient medical records may be requested and released. We
agree.
(2) Disclosure pursuant to search warrant
We next consider Defendant’s argument that N.C.G.S. § 90-21.20B “[did not]
permit[] the disclosure to law enforcement and use at trial of the medical records in
this case.” (Def. br. at 15) We disagree.
N.C. Gen. Stat. § 90-21.20B provides in pertinent part:
(a) Notwithstanding G.S. 8-53 or any other provision of
law, a health care provider may disclose to a law
- 11 -
STATE V. SMITH
Opinion of the Court
enforcement officer protected health information only to
the extent that the information may be disclosed under the
federal Standards for Privacy of Individually Identifiable
Health Information, 45 C.F.R. § 164.512(f) and is not
specifically prohibited from disclosure by other state or
federal law.
(a1) Notwithstanding any other provision of law, if a person
is involved in a vehicle crash:
(1) Any health care provider who is providing
medical treatment to the person shall, upon request,
disclose to any law enforcement officer investigating
the crash the following information about the
person: name, current location, and whether the
person appears to be impaired by alcohol, drugs, or
another substance.
(2) Law enforcement officers shall be provided
access to visit and interview the person upon
request, except when the health care provider
requests temporary privacy for medical reasons.
(3) A health care provider shall disclose a certified
copy of all identifiable health information related to
that person as specified in a search warrant or an
order issued by a judicial official.
In interpreting N.C.G.S. § 90-21.20B, we look to the federal regulations referenced in
N.C.G.S. §90-21.20B(a), which govern disclosure of “protected health information for
a law enforcement purpose[.]” See 45 C.F.R. § 164.512(f) (2016). Those regulations
define “protected health information” as “individually identifiable health
information,” which in turn is defined as:
[I]nformation that is a subset of health information,
including demographic information collected from an
- 12 -
STATE V. SMITH
Opinion of the Court
individual, and:
(1) Is created or received by a health care provider,
health plan, employer, or health care clearinghouse;
and
(2) Relates to the past, present, or future physical
or mental health or condition of an individual; the
provision of health care to an individual; or the past,
present, or future payment for the provision of
health care to an individual; and
(i) That identifies the individual; or
(ii) With respect to which there is a reasonable basis to
believe the information can be used to identify the
individual.
45 C.F.R. § 160.103 (2016).3 The regulations further provide that a health care
provider may disclose protected health information (i.e., “individually identifiable
health information”) for a law enforcement purpose to a law enforcement official “[i]n
compliance with . . . [a] court order or court-ordered warrant” as long as “(1) [t]he
information sought is relevant and material to a legitimate law enforcement inquiry;
(2) [t]he request is specific and limited in scope to the extent reasonably practicable
3 “Protected health information” explicitly excludes four specific types of “individually
identifiable health information,” none of which are at issue in this case: (1) education records covered
by the federal Family Educational Rights and Privacy Act (FERPA), 20 U.S.C. § 1232g; (2) FERPA
records described in 20 U.S.C. § 1232g(a)(4)(B)(iv); (3) employment records held by a covered entity in
its role as employer; and (4) records “[r]egarding a person who has been deceased for more than 50
years.” See 45 C.F.R. § 160.103.
- 13 -
STATE V. SMITH
Opinion of the Court
in light of the purpose for which the information is sought; and (3) [d]e-identified
information4 could not reasonably be used.” 45 C.F.R. § 164.512(f)(1)(ii) (2016).
Defendant argues that “protected health information” obtainable by law
enforcement under 45 C.F.R. § 164.512(f) (and thus N.C.G.S. § 90-21.20B(a)) is
limited to “demographic information which identifies an individual or upon which
there is a reasonable basis to believe that an individual may be identified,” and that
N.C.G.S. § 90-21.20B(a) does not permit law enforcement to obtain any further
information. As an initial matter, we note that Defendant did not contend at trial
that certain “demographic information” in his medical records was obtainable by
search warrant; he contended that the records were improperly released because the
information in the records was “not obtained for a law enforcement purpose or a law
enforcement use.”5
Defendant overlooks the fact that “protected health information” (used
synonymously with “individually identifiable health information”), as defined in 45
C.F.R. § 160.103, “includ[es],” rather than is limited to, demographic information
4 “De-identified information” is “[h]ealth information that does not identify an individual and
with respect to which there is no reasonable basis to believe that the information can be used to identify
an individual . . . .” 45 C.F.R. § 164.514(a) (2016). HIPAA permits covered entities (i.e., health care
providers) to disclose limited de-identified health information “for the purposes of research, public
health, or health care operations.” 45 C.F.R. § 164.514(e)(3)(i) (2016).
5 Defendant argued instead that a different standard altogether, 45 C.F.R. § 164.512(e),
applied in this case. That provision governs disclosures of protected health information for judicial
and administrative proceedings (as opposed to disclosures for law enforcement purposes, see 45 C.F.R.
§ 164.512(f)), and contains notice and hearing requirements. In his brief before this Court, Defendant
does not refer to 45 C.F.R. § 164.512(e).
- 14 -
STATE V. SMITH
Opinion of the Court
about an individual patient. Defendant also reads the phrase out of context: the
regulations refer specifically to “demographic information collected from an
individual” (emphasis added). In our view, this merely recognizes that “health
information” encompasses information received directly from the patient, in addition
to information created by the provider or received from some other source.
By its plain language, 45 C.F.R. § 164.512(f) permits disclosure of health
information to law enforcement as required by search warrant, if certain conditions
are met. Defendant has not alleged that the search warrant in this case sought
information that was not “relevant and material to a legitimate law enforcement
inquiry” or was insufficiently “specific and limited in scope,” or that de-identified
information could have reasonably been used instead. See 45 C.F.R. § 164.512(f)(1)(ii)
(2016). Accordingly, Defendant has not demonstrated that his medical records were
obtained in violation of 45 C.F.R. § 164.512(f) or N.C.G.S. § 90-21.20B(a).
(3) Disclosures Related to a Vehicle Crash
Finally, N.C. Gen. Stat. § 90-21.20B(a1)(1) specifically addresses disclosure of
medical information about a person involved in a vehicle crash. It provides that
[n]otwithstanding any other provision of law, . . . [a]ny
health care provider who is providing medical treatment to
the person [involved in a vehicle crash] shall, upon request,
disclose to any law enforcement officer investigating the
crash the following information about the person: name,
current location, and whether the person appears to be
impaired by alcohol, drugs, or another substance.
- 15 -
STATE V. SMITH
Opinion of the Court
N.C. Gen. Stat. § 90-21.20B(a1)(1) (2015). Defendant argues that this “more narrow
provision” permits law enforcement officers investigating a vehicle crash, with or
without a search warrant, “to be provided information which informs them of the
identity of an individual and whether that person appears to be impaired—nothing
more.” We disagree.
In N.C.G.S. § 90-21.20B(a1)(1), the General Assembly authorized disclosure
“upon request” to law enforcement of the three types of information listed, in the
context of a vehicular accident. By contrast, N.C. Gen. Stat. § 90-21.20B(a1)(3)
permits disclosure of “identifiable health information related to th[e] person [involved
in the vehicle crash] as specified in a search warrant or other judicial order.” N.C.
Gen. Stat. § 90-21.20B(a1)(3) (2015) (emphases added). “The rules of statutory
construction require presumptions that the legislature inserted every part of a
provision for a purpose and that no part is redundant.” Hall v. Simmons, 329 N.C.
779, 784, 407 S.E.2d 816, 818 (1991) (citing State v. Williams, 286 N.C. 422, 432, 212
S.E.2d 113, 120 (1975)). This principle leads us to conclude that the information
listed in N.C.G.S. § 90-21.20B(a1)(1) may be disclosed, without a warrant, at the
request of law enforcement officials investigating a vehicle crash, while disclosure of
additional “identifiable health information” in the same context is possible, but
requires a search warrant or judicial order that “specifie[s]” the information sought.
As discussed above, under federal law, “identifiable health information” includes
- 16 -
STATE V. SMITH
Opinion of the Court
information created by a health provider that “[r]elates to the past, present, or future
physical or mental health or condition of an individual.” 45 C.F.R. § 160.103. Thus,
we conclude that under N.C.G.S. § 90-21.20B(a1)(3), “identifiable health
information” obtainable by search warrant is not strictly limited to an individual’s
name, current location, and perceived state of impairment.
On appeal, Defendant argues his medical records were inadmissible based
upon N.C.G.S. § 8-53 and N.C.G.S. § 90-21.20B only. He does not reassert the
additional argument raised before the trial court in his motion to suppress, that the
search warrant was not supported by sufficient probable cause in violation of N.C.
Gen. Stat. § 15A-244, and we do not reach that issue. Defendant also does not allege
the records were otherwise inadmissible due to some defect in evidentiary procedure.
See, e.g., State v. Drdak, 330 N.C. 587, 592-93, 411 S.E.2d 604, 607-08 (1992) (holding
that the State was required to lay a proper foundation for the admission of blood
alcohol test results not controlled by implied-consent statutory procedures). Because
Defendant has not shown that his medical records were obtained in violation of either
statute he cites, we find no error.
NO ERROR.
Judges STEPHENS and DAVIS concur.
- 17 -
|
787 F.2d 454
UNITED STATES, Appellee,v.Jeffrey L. OLDHAM, Appellant.
No. 85-1089.
United States Court of Appeals,Eighth Circuit.
Submitted March 11, 1986.Decided April 3, 1986.
Charles M. Meyer, Omaha, Neb., for appellant.
Stephen D. Anderson, Omaha, Neb., for appellee.
Before JOHN R. GIBSON and WOLLMAN, Circuit Judges, and HARPER,* Senior District Judge.
JOHN R. GIBSON, Circuit Judge.
1
Jeffrey Oldham appeals from the district court's1 denial of three motions for postconviction relief pursuant to 28 U.S.C. Sec. 2255 (1982), and the court's disposition of nineteen other pending motions. Oldham contends that the United States breached a written plea agreement in which he pleaded guilty to one count of conspiracy to distribute cocaine in violation of 21 U.S.C. Sec. 841(a)(1) (1982). He also contends that the district court improperly accepted his guilty plea under Federal Rule of Criminal Procedure 11. Finally, Oldham contends that he possesses new evidence which shows that the trial court was misinformed regarding his cooperation with state authorities under the plea agreement. The district court considered these arguments and denied Oldham's section 2255 motions. We affirm.
2
On September 21, 1983, Oldham was indicted on eight counts of distribution of controlled substances, and conspiracy to distribute controlled substances, in violation of 21 U.S.C. Secs. 841(a)(1), 843(b), 846 (1982). He pleaded not guilty to all counts. Subsequently, Oldham entered into a written plea agreement with the United States in which he agreed to plead guilty to count 1 of his indictment, conspiracy to distribute cocaine in violation of 21 U.S.C. Sec. 841(a)(1), and cooperate with law enforcement authorities in certain investigations into drug trafficking operations in western Nebraska. In return, the United States agreed not to prosecute Oldham on the other counts of the indictment. The United States also agreed to bring Oldham's cooperation to the district court's attention "either in open court or by other responsible and lawful means according to [Oldham's wishes]," United States v. Oldham, No. Cr. 83-0-63, Plea Agreement Paragraph 4 (Vol. II. Pleadings), and to make no recommendations regarding sentencing or parole terms. Oldham changed his plea to guilty on count 1 of the indictment, and the court dismissed all the other charges. The court then sentenced Oldham to a term of eight years.
3
Following pronouncement of sentence, Oldham submitted to the court voluminous letters and documents seeking various forms of relief. The court distilled these filings into twenty-two motions, appointed counsel to Oldham, and held a hearing. The court then issued a written order dismissing some of Oldham's motions as moot, and denying the remaining motions.2 On appeal Oldham renews his rule 11 challenge, and his claim that the United States violated the terms of his plea agreement.
4
The record shows that the district court complied with the procedures set forth in rule 11 when it accepted Oldham's guilty plea. Oldham appeared with counsel before the district court and the court advised him of the nature of the charges against him, and of the charge to which he had offered to plead guilty. The court also advised Oldham of the constitutional rights which he would waive by pleading guilty. The court further inquired whether Oldham was satisfied with his counsel's assistance. The court then made a determination that defendant's guilty plea was entered voluntarily and that there was a factual basis for the plea. After a careful reading of the transcript of the plea acceptance, we conclude that the district court did not err in denying Oldham's section 2255 motion grounded on improper plea-taking procedure.
5
We also hold that the United States did not violate the terms of its plea agreement with Oldham. The terms of the bargain are undisputed. The United States promised to dismiss all other counts of the indictment, and to refrain from filing any additional charges based on the conduct which gave rise to this indictment. The United States also promised to stand mute at sentencing, except to inform the court of Oldham's cooperation with law enforcement officers. The record clearly shows that the United States told the court that Oldham had cooperated with the Nebraska State Patrol since the time of his plea, that all other counts of the indictment were dismissed, and that the United States otherwise remained silent with respect to sentencing. The plea agreement required no more. The terms of the agreement were respected.
6
Finally, Oldham's contention that the sentencing court was not aware of his cooperation is without merit. In addition to the United States' statement to the court regarding Oldham's cooperation with state authorities, Oldham himself informed the court that he had cooperated extensively with law enforcement authorities by working undercover on a number of cases. Most notably, the record shows that prior to pronouncing sentence, the sentencing court stated:
7
Now, before the United States Attorney informed me, and before Mr. Oldham informed me this morning here in open court, that to some extent he has given some cooperation to the State Highway Patrol, I know that, and I have looked into that very carefully and I have considered it, and it is a factor in his favor, without any question * * *.
8
United States v. Oldham, No. 83-0-63, Transcript of Sentencing Hearing at 22 (D.Neb. Mar. 1, 1984).
9
Oldham's allegation that the court was not informed of his cooperation is, therefore, clearly without merit, and we affirm the district court's dismissal of his section 2255 motion grounded in this contention.
10
Oldham further argues that he has a letter from a representative of the Nebraska State Highway Patrol containing evidence that the trial court was misinformed. He requests an evidentiary hearing in which to present this evidence. This letter was not presented to the district court and the letter itself, and argument based upon it, are raised for the first time on appeal. Absent extraordinary circumstances, we will not consider an issue raised for the first time on appeal. Mustain v. Pearson, 592 F.2d 1018, 1020 (8th Cir.1979); Levitt v. United States, 517 F.2d 1339, 1347 (8th Cir.1975). Because we see no evidence of extraordinary circumstances in this case requiring departure from this rule, we decline to consider the new issue in this appeal.
11
Oldham argues that our refusal to consider this evidence simply will result in the case returning to the district court, ultimately raising the possible necessity of further appeal. Section 2255 leaves to the district court's discretion the determination whether an evidentiary hearing is necessary to determine factual contentions. There is no reason to depart from that procedure in this case.
12
The judgment of the district court is affirmed.
*
The HONORABLE ROY W. HARPER, Senior United States District Judge for the Eastern and Western Districts of Missouri
1
The Late Honorable Albert G. Schatz, United States District Judge for the District of Nebraska
2
Oldham's appeal to this court specifically targets only the court's disposition of the section 2255 motions. However, he states generally that he appeals from the disposition of all the pending motions. We have reviewed the district court's opinion treating the remaining motions and to the extent that they involved issues appealable to this court, we conclude that the district court did not err in its judgments
|
IN THE COURT OF CRIMINAL APPEALS
OF TEXAS
NO. PD-059-09
THE STATE OF TEXAS
v.
LUIS AGUILAR, Appellee
ON APPELLEE'S PETITION FOR DISCRETIONARY REVIEW
FROM THE THIRTEENTH COURT OF APPEALS
NUECES COUNTY
Per curiam.
O P I N I O N
Appellee was charged with murder. The trial court granted his motion to suppress his
confession, ruling that he did not voluntarily, knowingly, and intelligently waive his rights.
The State requested that the trial court enter findings of fact and conclusions of law, but the
trial court did not do so. The court of appeals reversed the trial court's ruling, holding that
Appellee validly waived his rights. State v. Aguilar, No. 13-17-332-CR (Tex. App. -- Corpus
Christi 2008). Appellee has filed a petition for discretionary review contending that the court
of appeals failed to give proper deference to the trial court's implicit findings of fact and
credibility determinations of the witnesses who testified at the hearing on the motion to
suppress.
When the voluntariness of a statement is challenged, article 38.22, § 6, of the Texas
Code of Criminal Procedure requires the trial court to make written findings of fact and
conclusions of law as to whether the challenged statement was made voluntarily. Article
38.22, § 6 is mandatory in its language and requires the trial court to file its findings and
conclusions regardless of whether a party objects to the absence of the omitted filing. Urias
v. State, 155 S.W.3d 141, 142 (Tex. Crim. App. 2004); Wicker v. State, 740 S.W.2d 779, 783
(Tex. Crim. App. 1987), cert. denied, 485 U.S. 938 (1988). Because the trial court did not
issue the requisite written findings of fact and conclusions of law, the court of appeals made
its decision without the benefit of the requisite findings and conclusions.
The proper procedure is that the trial judge be directed to make the required written
findings and conclusions. Urias, supra. We therefore grant review on our own motion based
on the trial court's failure to enter the requisite findings and conclusions and vacate the
judgment of the court of appeals. We remand this cause to the court of appeals with
instructions to request the trial court to comply with the provisions of Article 38.22, § 6. The
court of appeals shall then reconsider the voluntariness of Appellee's confession in light of
those findings of fact and conclusions of law.
Delivered: March 11, 2009
Do Not Publish
|
654 F.Supp. 1334 (1986)
INDEPENDENT PETROCHEMICAL CORPORATION, et al., Plaintiffs,
v.
AETNA CASUALTY AND SURETY COMPANY, et al., Defendants.
Civ. A. No. 83-3347.
United States District Court, District of Columbia.
February 4, 1986.
*1335 *1336 *1337 *1338 Alan G. Miller, Mitchell S. King, Hunter O'Hanian, Morrison, Mahoney & Miller, Boston, Mass., for U.S. Fire Ins. Co.
Michael Gallagher, Katheryn A. Dux, German, Gallagher & Murtaugh, Philadelphia, Pa., for Stonewall Ins. Co.
Lawrence E. Carr, Jr., Margaret H. Warner, Carr, Goodson & Lee, Washington, D.C., for The Continental Ins. Co.
James T. Wharton, Digges, Wharton & Levin, Annapolis, Md., for Midland Ins. Co.
Richard H. Gimer, Stephen L. Humphrey, Hamel & Park, Washington, D.C., for The American Employers' Co., Commercial Union Ins. Co.
James W. Greene, Charles O'Hara, Bromley, Brown & Walsh, Washington, D.C., for Continental Cas. Co., North Star Reinsurance Corp., Unigard Mut. Ins. Co., American Re-Ins. Co.; Mission Ins. Co.
James P. Schaller, M. Elizabeth Medaglia, Timothy R. Dingillian, Jackson & Campbell, Washington, D.C., for American Home Assur. Co., The Ins. Co. of the State of Pa., Lexington Ins. Co.
Robert E. Heggestad, Casey, Scott & Canfield, Washington, D.C., for Harbor Ins.
Martin R. Baach, Michael Nussbaum, Eric L. Lewis, Nussbaum, Owen & Webster, Washington, D.C., Harry S. Redmon, Jr., Phelps, Dunbar, Marks, Claverie & Sims, New Orleans, La., John G. McAndrews, Mendes & Mount, New York City, for Certain Underwriters at Lloyd's London, London Market Ins. Companies.
Peter J. Schlesinger, Simpson, Thacher & Bartlett, New York City, Douglas B. Mishkin, Melrod, Redmon & Gartlan, Washington, D.C., for The Travelers Indem. Co.
Dennis M. Flannery, W. Scott Blackmer, Alan S. Tenenbaum, Wilmer, Cutler & Pickering, *1339 Washington, D.C., for Ins. Co. of North America.
James E. Rocap, III, Martin D. Minsker, Stephen L. Nightingale, Miller, Cassidy, Larroca & Lewin, Washington, D.C., for Aetna Cas. & Sur. Co.
Jerold Oshinsky, Sherry W. Gilbert, Robert H. Shulman, Patricia A. Van Dyke, David M. Halbreich, Anderson, Baker, Kill & Olick, Washington, D.C., Mark Hulsey, Tim E. Sleeth, Smith & Hulsey, Jacksonville, Fla., for plaintiffs Independent Petrochemical Corp., The Charter Co., Charter Oil Co.
John P. Arness, P.C., Jamie M. Bennett, Hogan & Hartson, Washington, D.C., for Hartford Acc. & Indem. Co., First State Ins. Co.
MEMORANDUM
FLANNERY, District Judge.
This matter comes before the court on a variety of motions: (1) plaintiffs' motion for partial summary judgment regarding the method of triggering coverage of certain liability insurance and regarding defendants' obligation to pay defense costs for civil actions against plaintiffs; (2) defendants' motion to strike the affidavit of Thomas J. Terbrueggen which accompanies plaintiffs' motion for partial summary judgment; (3) defendant Pacific Indemnity Company ("Pacific")'s motion for summary judgment recognizing that Pacific never insured plaintiffs during the time in question; and (4) plaintiffs' cross motion for summary judgment against Pacific on the same issue.
I. Background
Plaintiff Independent Petrochemical Corporation ("IPC") is primarily in the business of terminaling and marketing various petrochemical products in Missouri. IPC is a wholly-owned subsidiary of plaintiff Charter Oil Company ("Charter"), which in turn is owned by plaintiff The Charter Company ("TCC"). Plaintiffs have filed for Chapter 11 bankruptcy in Florida.
Defendants are 23 insurance companies that sold 67 primary and excess liability insurance policies to plaintiffs from 1971 to 1983, for which plaintiffs paid in excess of $10 million and which provide coverage of approximately $1.115 million for each "occurrence" of certain "bodily injury" and "property damage."
In 1971, IPC agreed to help one of its customers, Northeastern Pharmaceutical and Chemical Company ("NEPACCO"), to remove waste products from a holding tank at NEPACCO's facility in Verona, Missouri. IPC did this by contacting an independent contractor, Russell Martin Bliss, who removed over twenty thousand gallons of waste products. It is now alleged that this waste material contained a concentration of dioxin, a toxic element that can cause physical injury.[1] Bliss allegedly mixed these waste products with waste oils he collected from other sources and sprayed the mixture as a dust suppressant at a number of sites in Missouri.
Fifty-seven civil actions involving more than 1,600 claimants have been filed in other courts against plaintiffs, as well as class actions and suits by the State of *1340 Missouri and the United States.[2] Most of the claims allege bodily injury and property damage from exposure to the contaminated spray material . One aspect of the claims is that they allege "delayed-manifestation" injury, meaning continuous and progressive damage from the exposure. The individual claimants seek in aggregate $4 billion in bodily injuries and property damage, as well as $4 billion in punitive damages.
Some of the claims have been settled. Four of plaintiffs' six primary insurance companies[3] have agreed to pay all of plaintiffs' defense costs for the time being in the remaining actions pursuant to a Standstill Interim Defense Agreement. Although the parties have attempted to negotiate a final settlement of defendants' obligations to defend and indemnify plaintiffs in the dioxin-related claims, no such settlement has been reached.
Although the insurance policies vary in minor ways, language from a representative policy[4] is as follows:
The "Coverage" provision states:
The company will pay on behalf of the insured all sums which the insured shall become legally obliged to pay as damages because of
bodily injury or property damage
to which this insurance applies, caused by an occurrence ....
The term "occurrence" is defined 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.
"Bodily injury" is defined as:
bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom.
"Property damage" is defined as"
(1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period.
The "defense" provision states:
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 of the suit are groundless, false or fraudulent....
Suit was filed in this court by plaintiffs in November of 1983. On June 14, 1985, plaintiffs filed a motion for partial summary judgment. Plaintiffs seek a declaration of the primary insurance carriers' obligations to defend plaintiffs against the dioxin-related claims on a final basis and a declaration of the primary and excess insurance carriers' obligations to indemnify plaintiffs for settlements and judgments, if any, in the dioxin-related claims.
Defendants were allowed to file jointly and individually papers under seal because *1341 of the sensitive nature of the information the insurance companies have had to reveal in their defenses. Defendants have moved to strike the affidavit of Thomas J. Terbrueggen, which plaintiffs submitted to support their motion.
Jointly, defendants oppose this court reaching such a summary declaration, contending that more time for discovery is needed. As defendants see it, there are genuine facts still in dispute regarding the dioxin-related claims and the applicability of the insurance policies to these claims. Defendants also argue that it is not clear which state's law applies to this action.
Individually, some defendants have raised objections peculiar to their particular policies. For instance, defendant Aetna argues that it was never made aware of existing dioxin-related claims when its policy was implemented in 1974. Absent such disclosure, the policy was procured through misrepresentation. Defendant Continental argues that it only insured plaintiff TCC and in a Florida lawsuit TCC itself seeks to establish that TCC's corporate liability for IPC's activities is a material issue of disputed fact. Defendant INA asserts that the definition of "occurrence" in its policy as well as the failure to disclose prior dioxin exposure precludes application of its policy. Certain excess insurers have also made individual objections. Defendant U.S. Fire Insurance Company ("U.S. Fire") argues that its policies can only be construed according to New York law. U.S. Fire has counterclaimed against plaintiffs, asserting fraud, misrepresentation, and failure to disclose material facts. Certain London defendants (underwriters at Lloyd's of London and companies in the London market) argue that language in their policies prohibit cumulation of policy limits and that on the evidence before the court, plaintiffs can be shown to have expected the dioxin injuries. Defendant Stonewall Insurance Company asserts that its provisions on the limits of liability may be incompatible with plaintiffs' requested relief. Many of the defendants assert that pollution-exclusion clauses in their policies prevent application of the policies to the dioxin-related claims.
One of the defendants, Pacific Indemnity Company, contends that it never insured IPC as a subsidiary of Charter (it had insured IPC as a subsidiary of another company prior to the dioxin-spraying) and therefore summary judgment should be granted against plaintiffs' claims regarding Pacific. On September 16, 1985, plaintiffs responded to this with their own motion for summary judgment against Pacific on the same issue.
Each of the motions will be considered separately. At the outset, this court notes that an action such as this requires a careful balancing of interests. There is clearly an efficiency and a justness in providing declaratory relief to an insured who in the face of numerous civil actions must suffer the conflicting views of its insurers regarding which insurers' policies apply. On the other hand, while general principles of insurance law do arise from standard insurance language, not all insurance companies and their policies can be blindly grouped together. Sweeping relief is appropriate only if necessary and not premature. Inevitably, certain issues of fact and law will be left to some future time when the actual litigation of the underlying dioxin-related claims occurs.
II. Plaintiffs' Motion for Partial Summary Judgment
Plaintiffs' motion for partial summary judgment seeks an order from this court that would allow three things. First, each insurer whose policy was in force at any time from a dioxin claimant's "first exposure or application" through the "last manifest development of bodily injury or property damage" would be required to pay in full for plaintiffs' liability, if any, for that claim. Second, each primary insurer would be obligated to pay plaintiffs' full defense costs in each underlying dioxin-related claim unless the insurer can demonstrate that no part of the alleged bodily injury or property damage process could have occurred during that insurer's policy period. *1342 Third, plaintiffs would have the right to select which policy should indemnify and which policy should defend for any given dioxin-related claim, including the right to choose different policies for defense and indemnity on the same claim.
A. Resolving the "Trigger-of-Coverage" Question
As noted above, the underlying dioxin-related claims allege "delayed-manifestation" injury, meaning that a period of time elapsed between the time of the exposure to the dioxin and the time the injury became apparent. Since different insurance companies may have insured for such injury over this period of time, the question arises of which trigger-of-coverage theory should be used.
Under a manifestation-only theory, the only insurance policy triggered to cover a claim would be the one in place at the time the injury becomes manifest. Under an exposure-only theory, the only insurance policy triggered to cover a claim would be the one in place when the exposure occurred. If exposure took place over a time period in which many insurance companies provided coverage, liability might be assigned to an insurance company for the number of years it provided coverage. In this action, at the time the underlying dioxin-related claims arose and were referred by plaintiffs to defendants, defendants stated their positions by asserting one of these two theories.[5]
Plaintiffs seek a declaratory judgment that the theory appropriate for delayed-manifestation claims is a multiple-trigger theory, such as was applied by this circuit in Keene Corp. v. Insurance Co. of North Am.[6] Under the Keene theory, every policy in effect at any time during the injury process, from the initial exposure until the last manifest development of the injury, is triggered for coverage of any liability.
Thus, plaintiffs seek a ruling that each insurance policy of defendants in effect at any time during the alleged bodily injury or property damage process from first exposure or application through the last manifest development of bodily injury or property damagein a dioxin-related claim is triggered to provide coverage for full payment of a claim up to the limits of the policy. Plaintiffs argue that Keene and its progeny are precedents which this court is obligated to follow. Alternatively, plaintiffs believe this court should find that the proper legal construction of general insurance policy language requires application of the trigger-of coverage theory.
The Keene case involved the obligations of liability insurance companies to a policyholder manufacturer that was incurring legal liability for injuries allegedly caused by exposure to asbestos-containing products. Exposure to these products, as with exposure to dioxin, was alleged to cause progressive injury which only manifested itself years after the exposure. This circuit's court of appeals held that the coverage of *1343 the policies was triggered under each policy in effect at any time during the entire injury process and that the insured could select any triggered policy for a full defense of an asbestos-related claim. Judge Wald suggested why such a flexible formula was preferable for this type of injury:
This process-oriented definition not only provides a flexible formula for adjudicating the legal issues associated with asbestos-related diseases, but also sets a useful precedent for other product-exposure injuries, as of yet unknown in origin. Further, the more comprehensive definition will give much needed certainty to the insurance industry, currently rent asunder by advocates of exposure and manifestation, whose fluctuating positions often depend upon their economic interests in a particular case, and by differing judicial rulings which seem to depend at least partially upon the equities of each case.
667 F.2d at 1058 (Wald, J. concurring). After considering the laws of Delaware, New York, the District of Columbia, Pennsylvania, Connecticut, and Massachusetts, Keene rested its analysis on three principles of insurance law common to all those jurisdictions: (1) insurance policies must be construed to give effect to the policies' dominant purpose of indemnity; (2) ambiguities in an insurance contract must be construed in favor of the insured; and (3) the court should give effect to the reasonable expectations of the policyholder. Plaintiff argues that Keene and its progeny are binding on this court because the relevant insurance policy language in this case and the injury alleged are basically identical to that found in Keene.
Defendants do not offer any particular alternative to the multiple-trigger theory, but instead argue that the trigger-of-coverage should not be determined at this point at all. While other factors may preclude such judgment as well, defendants correctly point out that the state law controlling this action has not yet been determined. This court agrees that such a determination is necessary under the Erie doctrine[7] prior to deciding the trigger-of-coverage issue.
In Eli Lilly, supra note 6, another case that considered the multiple-trigger (this time for DES injuries), the insurers had no connection with the District of Columbia other than being subject to personal jurisdiction here. This Circuit's Court of Appeals found that Indiana law controlled and therefore the court certified the trigger-of-coverage question to the Supreme Court of Indiana pursuant to Indiana's certification statute.
In this case, defendants also have no connection with the District of Columbia other than being subject to personal jurisdiction here. Unfortunately, the parties have raised the choice of law issue but not pursued the District of Columbia "interest analysis" test to ascertain a controlling body of state law.[8] This court's denial of defendants' motion to transfer, which argued in favor of application of Florida law, did not actually decide what law governs.[9] From the pleadings, it is clear that various states have contacts with this action and would have an interest in applying their substantive law. For instance, some of the insurance policies say that they are governed by the law of New York. Yet negotiations of various insurance policies took place across the country, in Florida, California, Georgia, Louisiana, and Texas. IPC *1344 is incorporated in Ohio but has its principal place of business in Missouri. Charter and TCC are incorporated in Florida. Of course, the underlying claims arise in Missouri.
Plaintiffs contend, however, that plaintiffs' motion can be granted under the laws of any of these jurisdictions. As they see it, where none of the various laws of the potential states gives specific guidance in resolving the case, the basic principles governing the interpetation of insurance policies (which all the states follow) should be used, inasmuch as there is no conflict of laws.[10] Thus, even if the Keene line of cases is not binding on this court because D.C. local law is not necessarily controlling, the general principles that guided the court in Keene (e.g., giving effect to the insured's reasonable expectations) should control.
While there are some general principles of insurance law accepted nationwide, the Keene multiple-trigger theory is not uniformly accepted as flowing from such principles. The Second Circuit rejected the Keene theory and adopted an "injury in fact" interpretation instead. American Home Prods. Corp. v. Liberty Mut. Ins. Co., 565 F.Supp. 1485 (S.D.N.Y.1983), aff'd as modified, 748 F.2d 760 (2d Cir.1984). Plaintiffs argue that subsequent New York state cases override American Home Products, see Servidone Constr. Corp. v. Security Ins. Co., 64 N.Y.2d 419, 488 N.Y. S.2d 139, 477 N.E.2d 441 (1985), and instead support a continuous or multiple trigger. Autotronic Sys., Inc. v. Aetna Life & Cas. Co., 89 A.D.2d 401, 456 N.Y.S.2d 504 (3d Dept.1982); Schultheis v. Centennial Ins. Co., 108 Misc.2d 725, 438 N.Y. S.2d 687 (Sup.Ct.1981). But see Allstate Ins. Co. v. Colonial Realty Co., 121 Misc.2d 640, 468 N.Y.S.2d 800 (Sup.Ct. 1983).
The Fifth Circuit, applying Louisiana law, has used an exposure-only theory, though in doing so it does not seem to have actually considered the multiple-trigger theory. Porter, supra note 5; Ducre v. Executive Officers of Halter Marine, Inc., 752 F.2d 976 (5th Cir.1985).
The First Circuit, citing Illinois and Ohio law, has applied a "manifestation-only" theory. Eagle Picher, supra note 5.
In Missouri, where the dioxin-related claims allegedly triggering the insurance policies arose, a federal district court has declined to accept any multiple-trigger theory absent an appropriate factual record. Continental Ins. Cos. v. Northeastern Pharmaceutical & Chem. Co., No. 84-5034-CV-S-4 (W.D.Mo. June 25, 1985) [Available on WESTLAW, DCTU database] appeal docketed, No. 85-1940-WM (8th Cir.1985). In that case, the court found that:
a more proper determination of the various issues concerning the insurer's duty to defend and to indemnify can be made after more specific findings of bodily injury and property damage are made. Certainly, a court could not attempt to resolve these major issues concerning insurance coverage for victims of hazardous waste disposal without having determined the various policy considerations and medical facts of each case.
Slip. op. at 15.
The Third Circuit, despite ACandS, supra note 6, declined to extend Keene beyond the asbestos personal injury context to a toxic waste coverage dispute. Riehl v. Travelers Insurance Co., 772 F.2d 19 (3d Cir.1985). Yet that court also never actually decided the trigger-of-coverage question. The Riehl court also sought development of a more complete factual record, but this may have been because there was no evidence of when the dumping began or who did it.
*1345 Most recently, the Ninth Circuit rejected the multiple-trigger theory in favor of an exposure-only trigger-of-coverage in considering insurance coverage for cumulative and progressive injury incurred from implantation of a contaminated heart valve. Hancock Laboratories Inc. v. Admiral Ins. Co., 777 F.2d 520 (9th Cir.1985) (Reed, J. sitting by designation). That court relied on the Sixth Circuit, which has also adopted the exposure-only theory. Insurance Co. of North Am. v. Forty-Eight Insulations, 633 F.2d 1212 (6th Cir.1980), modified, 657 F.2d 814, cert. denied, 454 U.S. 1109, 102 S.Ct. 686, 70 L.Ed.2d 650 (1981) (citing Illinois and New Jersey law).
This court finds that a conflict of laws exists on this issue. The trigger-of-coverage regarding defendants' liability for the dioxin-related claims cannot be decided until it is determined (1) which state has the "more substantial interest" in the resolution of the trigger-of-coverage issue; (2) which trigger-of-coverage theory that state would adopt; and (3) whether in that state extrinsic evidence would be required to construe the contracts at issue in this case. To this end, the parties should submit short briefs to aid the court in its decision. Additional discovery is not necessary to conduct this inquiry; enough facts concerning the underlying dioxin-related claims and the policies involved are ascertainable at this point to make this choice of law determination.
B. Legal Duty of Each Primary Defendant to Defend Plaintiffs
This court finds that each primary insurance carrier has an obligation to defend plaintiffs against third-party claims seeking damages for bodily injury or property damage arising from the dioxin-spraying, unless after discovery the insurer can demonstrate: (1) that its policy is negated by fraud or some other particular exclusion; or (2) that no part of the alleged bodily injury or property damage process could have occurred during that insurer's policy period.
Generally, the duty to defend is independent of and broader than the duty to indemnify. See, e.g., Trizec Properties v. Biltmore Const. Co., 767 F.2d 810, 811-12 (11th Cir.1985); Burton v. State Farm Mut. Auto Ins. Co., 335 F.2d 317, 321 (5th Cir.1964). Even defendants admit that an insurer must defend claims that are potentially subject to coverage, meaning those cases in which the allegations of the complaint, if proven, would give rise to coverage.[11] Consequently, there is little conflict in state law on this issue and general principles of insurance law are highly persuasive. An insurer's duty of defense requires it to defend all cases against a policyholder until the carrier can demonstrate affirmatively that a particular plaintiff's underlying claim is totally outside the scope of its coverage. The fact that the underlying claims involve allegations of continuous injury does not change this result. Prior to determining which trigger mechanism to use, a court can still find that a defendant insurance company is liable to provide a defense. Emons Indus., Inc. v. Liberty Mut. Fire Ins. Co., 481 F.Supp. 1022 (S.D.N.Y.1979).
While there is a link between the duty to defend and the duty to indemnify, even in trigger-of-coverage cases,[12] defendants apparently take the position that if the scope of the policy's coverage is in dispute, that dispute must be resolved before the duty to defend can be resolved. As a general rule, a liability insurer has no duty to *1346 defend a suit brought by a third party where the complaint fails to bring the case within the coverage of the policy. 14 Couch on Insurance, § 51:45 (rev. ed. 1982). Accord 7C Appleman, Insurance Law and Practice, § 4682 at 25 (1979). Yet this court finds that the duty to defend is not and cannot be dependent on the defendants' ultimate obligation to indemnify plaintiffs. There is no reason why the insured, whose insurer is obligated by contract to defend him, should have to try the facts in a suit against his insurer in order to obtain a defense. Travelers Indemnity Co. v. Dingwell, 414 A.2d 220, 227 (Me. 1980). The whole point to the insurance coverage duty to defend is to afford insureds some security and peace of mind when suits such as these are brought. If the allegations of the underlying complaint assert facts which raise the possibility of recovery, however remote, the insurer has an obligation to defend. Klein v. Salama, 545 F.Supp. 175, 177 (E.D.N.Y.1982).
The link with the indemnification issue, then, is that the burden is on defendants to demonstrate that there is no possibility of recovery under their policy before they can be relieved of their defense obligation.[13] After reading the various defense clauses of the primary insurance carriers' policies, and reviewing the nature of the claims underlying the dioxin cases, this court concludes that a possibility of recovery for which these insurers would be liable does exist. As such, their duties to defend are triggered. For any given claim, if an insurance company can show that coverage fails because of some reason specific to that policy, that defendant can, after conducting any necessary discovery, file a motion for summary judgment in this court with regard to their duty to defend and indemnify. If coverage fails because of some reason specific to an underlying dioxin-related claim (e.g., the entire injury process fell completely outside the time the insurance policy was in place), that defendant can pursue the matter in whichever court that claim is being brought.
Defendants point out that plaintiffs are currently receiving aid in preparing their defense for the dioxin-related claims. Most of plaintiffs primary carriers under the Interim Agreement are shouldering the burden of defense and therefore defendants assert that there is no need at this time to decide whether, in the end, defendants are actually obligated to do so.
This argument is unacceptable. Additional facts are not necessary to determine this issue. The simple fact that the underlying claims may be found outside the insurance coverage does not change the obligation to defend absent a showing that there is no possibility of recovery under the policies. Defendants have not met this burden. Further, as pointed out by plaintiffs, there are temporal limitations of the agreement: it may be terminated by defendants effective August 1, 1986. This court finds that since all of the underlying claims potentially trigger defendants' obligation to pay for those claims, they must be defended by the primary carrier defendants.
III. Defendants' Motion to Strike Terbrueggen Affidavit
Part of plaintiffs' argument in their motion for partial summary judgment is based on the affidavit of Thomas J. Terbrueggen. See Plaintiffs' Motion for Partial Summary Judgment, Exhibits, Section D. Terbrueggen is the Director of Risk Management for plaintiff TCC. The five-page affidavit describes the underlying facts of the ownership of IPC, the circumstances of the Bliss disposal, the filing of the dioxin-related claims, and the request to defendants to pay for the cost of defending against these claims.
*1347 On September 16, 1985, defendants filed a motion to strike this affidavit pursuant to FRCP Rule 56(e). Defendants argue that the affidavit: (1) is not made on personal knowledge; (2) includes conclusory assertions of fact and law that would not be admissible in evidence; (3) does not show affirmatively that the affiant is competent to testify to the matters stated therein; (4) does not attach or thoroughly identify the papers to which it refers; and (5) misstates the contents of the documents to which it does refer. Defendants are concerned that Terbrueggen cannot have knowledge about events that preceded the start of his employment in 1977. Further, defendants object to the summarization of defendants' insurance policies and summarization of the underlying dioxin-related complaints without the attachment of the actual documents.
To avoid any concerns regarding the personal knowledge issue, plaintiffs responded by filing the affidavit of Gregory F. Browne, who was employed by IPC from 1964 to 1982, and was district manager of IPC's St. Louis district after 1970. A second Terbrueggen affidavit was also filed by plaintiffs to clarify the post-1977 events. Plaintiffs also argue that summaries of pertinent contents of voluminous records are completely satisfactory under Rule 1006 of the Federal Rules of Evidence. There is no need to overburden the courts with the files of the policies or complaints.
This court accepts the Terbrueggen affidavit as cured by plaintiffs' supplemental filings. Given the number of dioxin-related claims underlying this matter, the summaries submitted by plaintiffs are appropriate and adequate. As for the assertions made in plaintiffs' affidavits, this court simply accords any conclusionary statements of law the weight they deserve.
IV. Defendant Pacific Indemnity Company's Motion for Summary Judgment and Plaintiffs' Cross-motion for Summary Judgment On the Same Issue of Whether Pacific Insured Plaintiff IPC
On August 16, 1985, defendant Pacific Indemnity Company ("Pacific") moved for summary judgment in its favor against plaintiffs. On September 16, 1985, plaintiffs responded with a cross-motion for summary judgment against Pacific. On October 17, 1985, Pacific replied regarding its motion and responded to plaintiffs' cross-motion. On November 4, 1985, plaintiffs replied regarding their cross-motion.
The basic issue at stake in these motions is whether, as a matter of law, Pacific insured plaintiffs after January 7, 1971, the date on which Pacific's insured, The Signal Companies, Inc. ("Signal"), sold IPC to plaintiff Charter, the subsidiary of TCC. If the insurance coverage given Signal fell away when IPC was sold, then Pacific provided no coverage for the dioxin-related claims, which arose six weeks after the sale. If the insurance coverage did carry over to plaintiffs, then Pacific is in the same position as all the other defendants since the policy did not run out until after the spraying occurred.
Pacific argues that the only coverage it provided for IPC was through a policy negotiated with Signal which covered many of Signal's subsidiaries.[14] IPC was among those subsidiaries covered. In 1970, Signal agreed to sell IPC to plaintiff Charter. In Article XXI of the Agreement and Plan of Reorganization,[15] the parties agreed that Signal would maintain insurance coverage on the assets being sold "pending the Closing Date." Charter could continue the coverage if it requested and reimbursed Signal for the Premiums for doing so. The sale occurred January 7, 1971.
*1348 Charter never sought assignment of the Pacific insurance policy and never made any payments for premiums to Pacific. Yet Charter did obtain an insurance Binder from defendant Travelers Insurance Company on October 13, 1970. On April 30, 1971, Travelers issued an endorsement naming IPC as an insured.
The first removal of waste materials containing dioxin occurred in February 1971. As Pacific sees it, plaintiffs did not want insurance coverage from Pacific, they did not need insurance coverage from Pacific, they did not pay for insurance coverage from Pacific, and they therefore are not entitled to insurance coverage from Pacific.
Plaintiffs respond that the literal language of the policy suggests that IPC was covered under the policy even after it was sold to Signal.[16] Plaintiffs interpret Item 6 of the policy as an independent list of covered companies from which IPC was not deleted during the policy period. Pacific should have cancelled the policy as to IPC pursuant to the Cancellation Clause. Yet no explicit cancellation exists. Other endorsements to the policy previously had added and deleted named insureds. See Pacific Exhibit 4. Further, plaintiffs argue that Charter and TCC are entitled to coverage as "insureds" as that term is defined in the policy.[17]
Further, Pacific argues that even if the policy did not fall away pursuant to the sale agreement, it does because the policy's consent to an assignment clause was never executed. General Condition A of the Pacific policy states that "assignment of this policy shall not be valid except by written consent of (Pacific)." Since Signal never made an assignment and Pacific never gave its consent, the insurance did not continue. See 16 Couch on Insurance 2d § 63:159-60 (rev. ed. 1983).
Plaintiffs argue that the sale of IPC did not involve an assignment within the meaning of the no-assignment clause. IPC's right to coverage was an asset of IPC which was not affected by the change in the ownership of IPC's capital stock. The transfer of this capital stock, therefore, was not an "assignment."
Pacific argues that such a theory is absurd because Pacific has no chance to bargain for the increased risk of insuring a subsidiary of Charter. The $1.5 million annual premium policy was only undertaken pursuant to an analysis of Signal and an assessment of the risk involved. Absent a valid consent to assignment clause, Pacific would not have the opportunity to analyze the degree and type of risk Pacific might be exposed to under a different owner. Before purchasing IPC, Charter did not have any sales, revenue or income from petroleum refining or marketing; it was a financial servicing and retailing outfit. It would be absurd to suggest that without an opportunity to conduct an investigation of a new policyholder, Pacific elected to insure a company that suddenly acquired $71 million work of oil and gas subsidiaries.
Plaintiffs contend that no alteration of insured-against risk in fact took place. After the sale of IPC, its business operations and management remained unchanged. IPC continued to conduct its petrochemical sales operations out of the same facilities. IPC's business practices, the number of employees, the location of operations, and the number of vehicles and pieces of equipment in operation did not change. Therefore, explicit consent to an assignment was *1349 not necessary, nor any investigation by Pacific.
This court finds that a written assignment of the policy was necessary for it to pass along with IPC as part of its "capital stock." Backed up by the clear intent of the policy, any time $71 million in assets changes ownership, especially to an owner unfamiliar with the business being sold, a material change in risk should be presumed. Further, without plaintiffs having paid any proportional premiums to Pacific, and given the language of the reorganization clause, it seems clear that neither Pacific nor Charter considered the Pacific insurance policy in effect after the sale of IPC, regardless of the fact that IPC was not deleted from Item 6 of the policy negotiated between Pacific and Signal. Since IPC is not an "insured", shareholders Charter and TCC are also not insured, for the same reasons and pursuant to the plain language of the policy.
V. Conclusion
The following motions remain to be determined in this suit: plaintiffs' motion for partial summary judgment regarding the trigger-of-coverage, defendants' joint motion to compel production of documents, and defendant Hartford's motion to dismiss for abuse of discovery. Once briefings have been received on the choice of law matter discussed above, the court will take these additional motions under advisement.
An appropriate Order accompanies this Memorandum.
ORDER
This matter comes before the court on plaintiffs' motion for partial summary judgment, defendants' motion to strike the affidavit of Thomas J. Terbrueggen, defendant Pacific Indemnity Company ("Pacific")'s motion for summary judgment, and plaintiffs' cross-motion for summary judgment against Pacific. Upon considerations of the motions, the oppositions thereto, and the entire record herein, it is, by the court, this 4th day of February, 1986,
ORDERED that each defendant that sold plaintiffs primary liability insurance is obligated to pay for plaintiffs' full defense costs in each underlying dioxin-related case unless the defendant primary carrier can demonstrate upon motion: (1) that the policy has no effect because of some conduct on the part of plaintiffs (such as fraud) or some exclusion provision within the policy; or (2) that no part of the alleged bodily injury or property damage process could have occurred during that defendant's policy period; and it is further
ORDERED that no later than February 18, 1986, plaintiffs and each of the remaining four primary insurers shall submit briefings of no more than 20 pages in length on the issues of: (1) what state's substantive law governs the trigger-of-coverage issue raised in plaintiffs' motion for partial summary judgment; (2) which trigger-of-coverage that state would apply in this action; and (3) whether extrinsic evidence would be required by that state in construing defendants' insurance policies; and it is further
ORDERED that no later than February 25, 1986, plaintiffs and each of the remaining four primary insurers may respond to their opponents' February 18, 1986 filings with briefs of no more than 10 pages; and it is further
ORDERED that defendants' motion to strike the affidavit of Thomas J. Terbrueggen is denied; and it is further
ORDERED that defendant Pacific's motion for summary judgment dismissing Pacific from this case is granted and plaintiffs' cross-motion for summary judgment against Pacific is denied; and it is further
ORDERED that plaintiffs' motion to strike defendants' supplemental oppositions to the motion for partial summary judgment is denied.
MEMORANDUM
On February 4, 1986, this court disposed of various motions pending in this case.[1]*1350 The court requested supplemental briefings regarding choice-of-law prior to final determination of plaintiff's motion for partial summary judgment.[2] In response to this, all primary insurers[3] and some excess insurers[4] filed supplemental papers.
The court now considers most of the remaining motions pending in this case: (1) motion of primary carriers to reconsider the court's Order of February 4, 1986 respecting the duty to defend; (2) motion of The Continental Insurance Company to clarify the court's Order of February 4, 1986; (3) plaintiffs' motion for partial summary judgment; (4) motion of American Home Insurance Company and Lexington Insurance Company to amend their answer; (5) motion of Hartford Accident and Indemnity Company for dismissal, or in the alternative, to compel the production of documents and responses to interrogatories and sanctions; (6) motion of Aetna Casualty and Surety Company and Insurance Company of North America to compel production of documents; and (7) motion of Insurance Company of North America for a protective order.
Given the complexity of the issues here considered, and the hundreds of papers filed to date in this case, the underlying facts bear repeating. Each motion is then considered separately.
I. Background
Plaintiff Independent Petrochemical Corporation ("IPC") is in the business of terminaling and marketing various petrochemical products in Missouri. IPC is a wholly-owned subsidiary of plaintiff Charter Oil Company ("Charter"), which in turn is owned by plaintiff The Charter Company ("TCC"). Plaintiffs have filed for Chapter 11 bankruptcy in Florida.
Defendants are 23 insurance companies that sold 66 primary and excess liability insurance policies to plaintiffs from 1971 to 1983, for which plaintiffs paid in excess of $10 million and which provide coverage of approximately $1.115 million for each "occurrence" of certain "bodily injury" and "property damage."
In 1971, IPC agreed to help one of its customers, Northeastern Pharmaceutical and Chemical Company ("NEPACCO"), to remove waste products from a holding tank at NEPACCO's facility in Verona, Missouri. IPC did this by contacting an independent contractor, Russell Martin Bliss, who removed over twenty thousand gallons of waste products. It is now alleged that this waste material contained a concentration of dioxin, a toxic element that can cause physical injury. Bliss allegedly mixed these waste products with waste oils he collected from other sources and sprayed the mixture as a dust suppressant at a number of sites in Missouri.
Fifty-seven civil actions involving more than 1,600 claimants have been filed in other courts against plaintiffs, as well as class actions and suits by Missouri and the United States.[5] Most of the claims allege *1351 bodily injury and property damage from exposure to the contaminated spray material. Many of the claims are "delayed-manifestation" claims, meaning that they allege continuous and progressive damage from the time of exposure to the time the injury became apparent. The individual claimants seek in aggregate $4 billion in bodily injuries and property damage, as well as $4 billion in punitive damages. Some of the claims have been settled.
Although the various insurance policies vary in minor ways, the relevant language from a representative policy[6] is as follows:
The "Coverage" provision states:
The company will pay on behalf of the insured all sums which the insured shall become legally obliged to pay as damages because of
bodily injury or property damage
to which this insurance applies, caused by an occurrence....
The term "occurrence" is defined 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.
"Bodily injury" is defined as:
bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom.
"Property damage" is defined as"
(1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period.
The "defense" provision states:
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 of the suit are groundless, false or fraudulent....
On June 14, 1985, plaintiffs filed their motion for partial summary judgment. On February 4, 1986, this court ordered that each defendant that sold plaintiffs primary insurance policies is obligated to pay for plaintiffs' full defense costs in each underlying dioxin-related case, unless the defendant primary carrier could show that coverage failed for certain reasons. Plaintiffs also sought a declaration of the primary and excess insurance carriers' obligations to indemnify plaintiffs for settlements and judgments, if any, in the dioxin-related claims. Rather than reach a decision concerning in what manner coverage should be triggered for purposes of indemnification, the court asked for supplemental briefings regarding the choice of law governing this issue.
Defendants oppose this court reaching a summary declaration on either the defense or indemnification issues on the grounds that there are genuine facts still in dispute regarding the dioxin-related claims. On the first round of briefings, this court allowed defendants to file jointly and individually briefings regarding plaintiffs' overall *1352 motion. On the second round of briefings, both sides were asked to file papers indicating which state law applies to this action and how that state would handle the indemnification issue placed before this court by plaintiffs. As a preliminary matter, this court notes that plaintiff bears the burden of pleading their motion and this court must conclude that there are no material facts in dispute before relief may be granted plaintiff.
II. Motion of Primary Carriers for Reconsideration
On February 4, 1986, this court granted in part plaintiffs' motion for partial summary judgment by ordering that:
each defendant that sold plaintiffs primary liability insurance is obligated to pay for plaintiffs' full defense costs in each underlying dioxin-related case unless the defendant primary carrier can demonstrate upon motion: (1) that the policy has no effect because of some conduct on the part of plaintiffs (such as fraud) or some exclusion provision within the policy; or (2) that no part of the alleged bodily injury or property damage process could have occurred during that defendant's policy period.
Order, at 1349.
The court reached this conclusion by noting that, unlike the issue of defendants' obligation to indemnify, the duty to defend question involved no significant conflict of laws among the potentially interested states. Further, the duty to defend is independent of and broader than the duty to indemnify. As a general matter, the duty to defend is based on the allegations of the underlying complaints filed against the insured and it arises where there is a possibility of coverage. After reviewing the defense clauses of the primary insurers as well as the allegations characteristic of the underlying dioxin-related cases, this court concluded that a possibility of recovery under the policies existed and therefore the duty to defend arose. The court instructed the carriers that the duty to defend could be disproved in one of two ways:
For any given claim, if an insurance company can show that coverage fails because of some reason specific to that policy, that defendant can, after conducting any necessary discovery, file a motion for summary judgment in this court with regard to their duty to defend and indemnify. If coverage fails because of some reason specific to an underlying dioxin-related claim (e.g., the entire injury process fell completely outside the time the insurance policy was in place), that defendant can pursue the matter in whichever court that claim is being brought.
Memorandum, at 1346.
The five primary carrier defendants now seek reconsideration of this mechanism for establishing their duty to defend. Defendants find two errors in the court's reasoning. First, defendants believe that plaintiffs have failed to carry their burden in showing that there are no factual disputes respecting (1) whether plaintiffs gave timely notice to defendants of the "occurrence" of injury in the underlying dioxin-related claims, and (2) whether plaintiffs made proper disclosure in procuring the insurance policies. If there are factual matters in dispute on these issues, plaintiffs are not entitled to partial summary judgment. Second, defendants argue that it is not enough to look at just the underlying dioxing-related complaints to show potential coverage giving rise to a duty to defend. Rather, the court must first determine that there has been timely notice and proper disclosure to the primary carriers before the duty to defend arises.
The effect of this court's Order was to require that each defendant bear the burden of showing sufficient facts on either issue notice or disclosure which would show that no duty to defend arises. In a sense, this was a provisional finding: the duty to defend was established until such time as any defendant could show that circumstances peculiar to its policies precluded *1353 recovery under those policies.[7] Rather than as a grant of partial summary judgment, the order is best characterized as a declaratory judgment of plaintiffs' right to a defense pending further developments.
Defendants argue that compliance with the notice provisions of the primary policies is a condition precedent to any duty to defend. See, e.g., Swiss National Ins. Co. v. Martorella, 239 So.2d 144, 145 (Fla.Dist. Ct.App.1970) (reversing trial judge's entry of summary judgment that insurer had duty to defend because of disputed facts on adequacy of notice). In other words, no duty to defend can be found until it is established by plaintiffs that notice was given in a timely manner. Further, to establish this on a summary judgment motion, plaintiffs must show that there are no genuine issues of fact regarding when and to what extent plaintiffs knew that the waste materials were sprayed. Defendants contend that there are too many unresolved facts to sustain such a motion. For instance, plaintiffs claim they were not aware until late 1982 that waste was sprayed on more than just two horse farms,[8] but various documents before the court suggest that plaintiffs may have known as early as September of 1974 that waste had been sprayed over streets and public places.[9] Defendants assert that absent further discovery establishing undisputed facts, it is for the factfinder to determine whether plaintiffs gave notice to defendants as soon as it was aware of potential injuries and that it disclosed all material facts when it procured policies of insurance.
Defendants argue persuasively and are supported by a smattering of state court decisions. The only federal court decision cited regarding notice as a condition precedent to finding a duty to defend, McPherson v. St. Paul Fire & Marine Ins. Co., 350 F.2d 563, 566 (5th Cir.1965), involved a motion for summary judgment by the insurance company, which is exactly the method of resolving the notice and disclosure issues set up by this court. Many of these cases involve the rather obvious situation of an insured who failed to notify the insurer that a single suit had been filed against the insured; none of these cases concern complex litigation involving numerous insurance companies that have provided various insurance policies over many years, potentially covering scores of underlying suits. To require plaintiffs to proceed against 23 insurance companies showing to a factfinder that all facts are indisputable on these issues, would deny plaintiffs a defense for quite some time, certainly while the underlying dioxin-related cases are being pursued. This completely frustrates the purpose of the insurance policies. This court finds that on the facts before it, enough evidence has been shown to conclude as a prima facie matter that notice was timely given to the insurers and material facts were disclosed, let alone that defendants were not prejudiced.
After careful consideration, this court adheres to its initial determination. Though there are further facts regarding the issues of disclosure and notice which may show that plaintiffs are not entitled to a defense by one or more of the carriers, at this time the court cannot say that such facts preclude the relief granted to plaintiffs. It is not enough to raise the mere possibility that a factual dispute may exist; defendants must raise genuine issues of fact. United States v. Potamkin Cadillac Corp., 689 F.2d 379, 381 (2d Cir.1982); accord Exxon Corp. v. Federal Trade Commission, 663 F.2d 120, 126-27 (D.C.Cir. *1354 1980). As discovery proceeds, each insurance company which can show that plaintiffs failed to disclose material facts when taking out the insurance, or that plaintiffs did not notify in a timely manner that an "occurrence" took place, is free to file a motion in this court for a declaration that their policies do not cover the dioxin-related claims. This will serve as an efficient method of considering the defenses of each insurance company; that is, how the established facts relate to the policies of each defendant when those policies were negotiated and in effect. If there are shown to be disputed facts, the matter can proceed to trial, where the burden is on defendants to prove such affirmative defenses. If it can be shown that any insurer paid defense costs when it should not have, then that insurer can seek indemnification from those insurers who are responsible for shouldering the defense burden, or from plaintiffs if no insurer is responsible for such defense. Defendants are correct that these defenses are analytically different from other defenses in that they may be resolved in this court without reference to the specifics in the underlying dioxin-related suits.
III. Motion of Continental Insurance Company to Clarify
Defendant Continental Insurance Company raises a valid concern regarding the application to Continental of the court's Order of February 4, 1986. That Order, as noted above, obligates the primary insurers to provide a full defense at this time pursuant to the policies issued to plaintiffs. Recognition should have been made within the Order that Continental insured only plaintiff TCC, not plaintiffs Charter or IPC. Pursuant to this court's inherent authority to clarify an interlocutory order, Continental's motion is granted and its duty to defend and indemnify is recognized to extend only to claims against plaintiff TCC.
IV. Plaintiffs' Motion for Partial Summary Judgment
The remaining issue in plaintiffs' motion for partial summary judgment seeks an order from this court that would allow two things. First, each insurer whose policy was in force at any time from a dioxin claimant's "first exposure or application" through the "last manifest development of bodily injury or property damage" would be required to pay in full for plaintiffs' liability, if any, for that claim. Second, plaintiffs would have the right to select which policy should indemnify and which policy should defend for any given dioxin-related claim, including the right to choose different policies for defense and indemnity on the same claim.
A. Resolving the "Trigger-of-Coverage" Question: Is it the Legal Duty of All Defendants to Indemnify Plaintiffs?
Plaintiffs undoubtedly filed suit in this court in the hope of securing the same treatment used by this circuit in Keene Corp. v. Insurance Co. of North Am., 667 F.2d 1034 (D.C.Cir.1981), cert. denied, 456 U.S. 951, 102 S.Ct. 2023, 72 L.Ed.2d 476 (1982). As noted above, the underlying dioxin-related claims are "delayed-manifestation" claims, meaning that a period of time has elapsed between the time of the exposure to the dioxin and the time the injury became apparent. Since different insurance companies may have insured for such injury over this period of time, the question arises of which "trigger-of-coverage" theory should be used.
Under an "exposure-only" theory, the only insurance policy triggered to cover a claim would be the one in place when the exposure occurred. If exposure took place over a time period in which many insurance companies provided coverage, liability might be assigned to an insurance company for the number of years it provided coverage. Under an "injury-in-fact" theory, the only insurance policy triggered to cover a claim would be the one in place when the exposure actually caused injury. Under a "manifestation-only" theory, the only insurance policy triggered to cover a claim would be the one in place at the time the injury becomes manifest.
*1355 Plaintiffs seek a declaratory judgment that the theory used in Keenewhich shall be called the "multiple-trigger" theory applies to this action. Under this theory, every policy in effect at any time during the injury process, from the initial exposure until the last manifest development of the injury, is triggered for coverage of any liability.
1. The Choice of Law Problem
In this court's Memorandum of February 4, 1986, it was determined that there was a conflict of laws among the potentially interested states on whether the Keene formulation is appropriate in this kind of case. Therefore, it was necessary to determine which potentially relevant jurisdiction has the "more substantial interest" in applying its local law.[10] The parties filed supplemental briefings discussing which state's law governs. Plaintiffs and many of the defendants believe that the law of the State of Florida governs this action. Other defendants argue in favor of applying California or New York local law. One defendant sees the laws of Ohio, Illinois, Missouri, Massachusetts, and Georgia as potentially applicable. After careful consideration of these arguments, this court finds that Missouri law applies to the trigger-of-coverage issue.
The leading case in this Circuit to date discussing choice of law in a case such as this is Eli Lilly & Co. v. Home Ins. Co., 653 F.Supp. 1 (D.D.C.1984), affirmed, 764 F.2d 876 (D.C.Cir.1985). In that case, after an extensive choice of law analysis, this court found that Indiana law governed the action because Indiana had the more substantial interest in the interpretation and application of the various insurance policies. As this court stated:
Eli Lilly, the insured, is an Indiana corporation with its principal place of business in Indiana. Indiana was a principal site of the negotiations and agreement on the terms of the coverage provisions and other pertinent provisions in these policies. More significantly, however, Eli Lilly and at least one of its insurers negotiated and preliminarily agreed that arbitration regarding any dispute over the interpretation of the policies would take place in Indianapolis, Indiana. Accordingly, it is the finding of this Court that Indiana law governs the interpretation of these insurance contracts.
Eli Lilly, at 7 (Johnson, J.). This conclusion was reached even though Pennsylvania and New York were also states where the parties negotiated and agreed on the terms of the insurance policies.
The contacts in this case are such that various states have some interest in the resolution of the choice of law issue. Most insurance policies were negotiated in Florida, California, Georgia, Louisiana, and Texas. Plaintiffs Charter and TCC are incorporated in and have their principal place of business in Florida. Yet plaintiff IPC is incorporated in Ohio and has its principal place of business in Missouri. Defendant INA only insured plaintiff Charter and all INA's policies were negotiated in Florida. Defendant Travelers' policies were negotiated and agreed upon in California by contracting with parties doing business in that state. Defendant U.S. Fire and certain London defendants hold policies in which there is an express provision calling for application of New York law. The execution and delivery of policies issued by defendant American Employers' Insurance Company and Employers Commercial Union Insurance Company implicate contacts with five states, all of which according to that defendant, are in accord on the trigger-of-coverage issue.
For a normal contract situation, five factors have been considered by this court: (1) the place of contracting; (2) the place of *1356 negotiation of the contract; (3) the place of performance of the contract; (4) the location of the subject matter of the contract; and (5) the place of the incorporation and the place of business of the parties. Koro Co., Inc. v. Bristol-Myers Co., 568 F.Supp. 280, 286 (D.D.C.1983), citing Restatement (2d) of Conflicts of Laws, § 188 (1971) (hereinafter referred to as "Restatement (2d)").
Application of these factors to this case presents considerable difficulties given the diverse nature of the parties and places of contracting. If Florida law were applied, certain defendants from other states who engaged primarily in insuring plaintiff IPC would be unfairly subjected to the law of a state not reasonably contemplated when the contract was created. Application of various state laws to various insurance contracts would be confusing, burdensome, unfair to plaintiffs if it creates significant gaps in coverage, and in this court's view unnecessary.
There are particular kinds of contracts which are given special attention because, in the absence of an effective choice of law by the parties, a particular contact plays an especially important role in the determination of the applicable state law. The trigger-of-coverage issue speaks to whether defendants are liable for indemnification to plaintiffs when injury or property damage is shown in the underlying dioxin-related suits. This issue is strongly connected with the location of the insured risk which the parties knew existed when the contracts were formed. While the location of two of the plaintiffs in Florida is significant, it is even more significant that all defendants knew that Florida plaintiffs were holding companies of plaintiff IPC and knew that IPC was engaged in terminaling and marketing various petrochemical products in Missouri. IPC was located in Missouri throughout the 1971-83 time period at issue in this suit and all of the activities giving rise to the underlying dioxin-related claims occurred in Missouri. It is not fortuitous for injuries to arise in Missouri from alleged improper waste disposal by IPC. Therefore, in the absence of specific choice of law provisions in defendants' insurance policies, this court finds that the law of Missouri governs the trigger-of-coverage question. See Restatement (2d), § 193 (the validity of liability insurance and the rights created thereby are determined by the law of the state which the parties understood to be the principal location of the insured risk).
This result promotes uniformity in situations where multiple insurers have insured parent corporations and their subsidiaries and extracted premiums based on the likelihood of liability arising from exposure of those subsidiaries. The parties, to the extent that they thought about the issue at all, must have expected that the local law of the state where the risk of exposure from IPC's activities is principally located (i.e. Missouri) would be applied to determine many of the issues arising under the insurance contract. Of course, given that all the injuries and property damage occurred in Missouri, and that the underlying dioxin-related claims are actively being pursued only in Missouri, Misourri has a natural interest in the determination of issues arising under the insurance contract.
Some defendants argue that due to Charter and TCC's many subsidiaries, especially in Florida, it was assumed that Florida law would apply for all their subsidiaries. Courts have noted, however, that for policies covering multiple risks, each risk may be treated as though it was insured by a separate policy, and the location of the risk at issue is deemed the principal risk for purposes of choice-of-law analysis. Diamond Int'l Corp. v. Allstate Ins. Co., 712 F.2d 1498, 1501 (1st Cir.1983) (quoting Consolidated Mut. Ins. Co. v. Radio Foods Corp., 108 N.H. 494, 497, 240 A.2d 47, 49 (1968)); accord Grand Sheet Metal Prods. Co. v. Aetna Cas. & Sur. Co., 500 F.Supp. 904, 909 (D.Conn.1980). Defendants are all sophisticated insurance companies who assess risk and determine premiums by considering potential liabilities with discrimination, not by blind grouping of insured risks.
*1357 Plaintiffs can hardly object to application of Missouri law. An express condition of plaintiff Charter's Chapter 11 reorganization plan, as ordered by the Florida Bankruptcy Court, is that only IPC will be responsible for dioxin-related losses. This limits Charter's exposure in the underlying dioxin-related cases to the assets of IPC. Florida's interest is clearly minimal.
Effect should be given, however, to those contracts in which a choice-of-law provision specifically designates the state whose law controls interpretation of that contract. Plaintiffs were not in a weak bargaining position when such contracts were formulated. Rather plaintiffs are large, sophisticated corporations capable of understanding the meaning and effect of a contractual provision designating the insurer's choice of state law as governing the contract. For this reason, those insurance policies containing an express choice-of-law provision will be given effect by this court on the trigger-of-coverage issue in lieu of application of Missouri law, unless there is no reasonable basis for the selection of that state's law or there is a fundamental conflict between that state's policy and that of Missouri. See Restatement (2d), § 187. This apparently only applies to defendants U.S. Fire and certain London defendants' policies, which call for application of New York law. These defendants' selection of New York law, which is highly developed in the insurance field, is reasonable, and, as shown below, presents no fundamental conflict with the law of Missouri.
2. Missouri law and New York law
Though not extensive, there is sufficient Missouri case law discussing which trigger-of-coverage is appropriate for delayed-manifestation injuries. In Standard Asbestos Mfg. & Insulating Co. v. Royal Indemnity Ins. Co., CV80-14909 (Mo.Cir.Ct., Jackson County Apr. 3, 1986) (O'Leary, J.), the insured sought a declaratory judgment in favor of Keene insurance coverage for asbestos bodily injury claims. In construing the CGL policies, the court applied Missouri law and found that:
the policies require a showing of actual injury, sickness or disease occurring during the policy period based upon the facts proved in each particular case. This means that an occurrence of "personal injury, sickness, or disease," is determined to be at any point in time at which a finder of fact determines that exposure to asbestos fibers resulted in a diagnosable and compensable injury.... An exposure that does not result in injury during coverage does not satisfy the policy's terms. On the other hand, a real but undiscovered injury proved in retrospect to have existed at a relevant time, would establish coverage, irrespective of the time the injury became manifest.
Id., at 17, 19. This holding is in accord with a much earlier decision by the Missouri Supreme Court. Tomritz v. Employers' Liability Assur. Corp., 343 Mo. 321, 121 S.W.2d 745 (1938). In that case, the court said that if a jury concluded that silicosis injury actually happened during the policy period, then the insurance policy was triggered.
Therefore, this court does not interpret Missouri law as accepting the Keene doctrine, as urged by plaintiffs. Indeed, a Missouri federal court recently declined to accept any multiple trigger absent a more developed factual record. Continental Ins. Cos. v. Northeastern Pharmaceutical & Chem. Co., No. 84-5034-CV-S-4 (W.D.Mo. June 25, 1985), appeal docketed, No. 85-1940-WM (8th Cir.1985).
Missouri appears to be in line with the current law on this issue in New York, as interpreted by the Second Circuit. American Home Prod. v. Liberty Mut. Ins. Co., 565 F.Supp. 1485 (S.D.N.Y.1983), aff'd as modified, 748 F.2d 760 (2d Cir.1984) (an "occurrence" of personal injury means "any point in time at which a finder of fact determines that the effects of exposure to a drug actually resulted in a diagnosable and compensable injury").
Plaintiffs contend that subsequent New York state court decisions, such as Servidone Constr. Corp. v. Security Ins. Co., 64 N.Y.2d 419, 488 N.Y.S.2d 139, 477 *1358 N.E.2d 441 (1985); Autotronic Sys., Inc. v. Aetna Life & Cas. Co., 89 A.D.2d 401, 456 N.Y.S.2d 504 (3d Dept.1982); and Schultheis v. Centennial Ins. Co., 108 Misc.2d 725, 438 N.Y.S.2d 687 (Sup.Ct.1981), override American Home and suggest application of a continuous trigger. This court finds nothing in these cases that limits the American Home analysis of trigger-of-coverage under New York law, and certainly no acceptance of the Keene multiple trigger doctrine. Servidone involved no delayed manifestation of injury. Autotronic accepted as triggering insurance coverage the exposure to toxic substances which aggravated existing injuries or caused additional injuries. Schultheis accepted as triggering insurance coverage the time when an act of medical malpractice was committed, not when its effects were discovered. Though there may not be a clear statement emerging from some of these lower state court opinions (see, e.g., Allstate Ins. Co. v. Colonial Realty Co., 121 Misc.2d 640, 468 N.Y.S.2d 800 (N.Y.Sup.Ct. 1983) which cites Keene as using an "exposure" theory), this court remains convinced that the "injury in fact" theory announced in American Home correctly states New York law.
Consequently, this court finds that defendants' policies are such that defendants are liable to indemnify plaintiffs within the terms of defendants' policies for "occurrences" of injury defined as follows. At any time a finder of fact determines that the effects of exposure to dioxin negligently released by plaintiffs actually resulted in diagnosable and compensable injury to one of the underlying dioxin-related claimants, if a defendant's insurance policy was in effect at that time, then that defendant's and only that defendant's duty to indemnify plaintiffs for the underlying claim is triggered. Depending on the facts of each case, the chemical involved, the period and intensity of exposure, and the person affected, an injury may occur in this sense upon exposure, at some point in time after exposure but before manifestation of the injury, or at manifestation.
3. The Existence of Genuine Issues of Fact
Defendants argue that there are a number of genuine issues of material fact in issue which preclude summary judgment regarding defendants' obligation to indemnify plaintiffs. As defendants see it, whether there is coverage for such liability under any policy cannot be determined in the absence of specific information concerning the nature, origin, and timing of the damage or injury that served as the basis for the settlement or judgment.[11] Since plaintiffs have provided no such information, nor any proof material to numerous specific policy provisions, defendants seek discovery to develop various factual issues.
Plaintiffs argue and this court agrees that specific details of the underlying cases need not be developed prior to a ruling on plaintiffs' motion. Since they are irrelevant, such details cannot create genuine issues of material fact. When the underlying dioxin-related claims first arose, defendants had no problem declaring their trigger-of-coverage positions without engaging in extensive fact analysis. The facts defendants are concerned about address the question of ultimate liability for a particular claim, not which of defendants' policies may be called upon to cover a particular claim if the claim succeeds. This court's ruling provides a format for determining for each underlying dioxin-related claim what defendants' coverage obligations are.
This is in line with this court's Owens-Illinois, Inc. v. Aetna Cas. & Surety Co., 597 F.Supp. 1515, 1526 (D.D.C.1984), appeal docketed, No. 85-5285 (Mar. 14, 1985). In that case, this court decided that no facts would come to light in an underlying claim *1359 that would be relevant to the interpretation of the policy language at issue. The court simply looked to the language of the insurance policies, the fact that alleged injuries had developed after exposure to the policyholder's product, and the fact that the policyholder could be held liable for the injuries.
Defendants discuss different areas which they feel require more factual detail. For instance, various insurance policies cover "property damage" in the form of "physical injury to tangible property" and "nonphysical injury provided such loss of use is caused by an occurrence during the policy period." Finding that a loss fits this definition supposedly requires findings of fact wholly unripe for a summary judgment decision. Thus damages sought in the dioxin-related claims for diminished economic value may not fit this definition. Damages sought by Missouri or the United States for compensation in relocating individuals may not fit this definition. Damages based on harm to the economic activity of businesses in the area may not fit this definition.
Plaintiffs properly reply that the while such damages may be outside the provision defining property damages, other applicable provisions of the policies provide coverage for damages that plaintiffs must pay as a result of property damage. Thus, the policies require defendant to pay all sums that flow from the alleged property damage. Courts have held that sums denominated as "clean-up" costs constitute damages for purposes of liability insurance coverage. See, e.g., Kutsher's Country Club Corp. v. Lincoln Insur. Co., 119 Misc.2d 889, 465 N.Y.S.2d 136, 139 (Sup.Ct. 1983); Lansco, Inc. v. Department of Environmental Protection, 138 N.J.Super. 275, 350 A.2d 520 (Ch.Div.1975), aff'd, 145 N.J.Super. 433, 368 A.2d 363 (1976), cert. denied, 73 N.J. 57, 372 A.2d 322 (1977). The claimants' alleged economic losses, if proven, also are covered as damages caused by alleged property damage. Economic loss and diminution of economic value is merely a measure of damages that result from the alleged property damage.
Defendants also contend that there are questions of fact concerning when the property damage took place. They believe the court must know when contaminants were introduced onto allegely contaminated property, when and how they were spread, and when the contamination was discovered. What event might, as a legal matter, trigger coverage in a toxic waste case may be the subject of some controversy. Defendant INA especially contends that its primary policies do not employ the normal definition of occurrence and therefore raise a unique question of fact as to the trigger of INA policies with respect to dioxin claims.
Plaintiffs properly reply that all the policies cover an "accident" or "occurrence" of a type that includes "continuous or repeated exposure" to conditions. Regardless of any differences in wording such as pointed out by INA, the initial contamination need not happen during any particular policy period in order to trigger coverage. What is important, is whether the policy was in place at the time exposure to the dioxin caused injury in fact. Sufficient information is before the court that these defendants had policies in place during the time relevant for the dioxin-related claims.
Defendants next argue that evidence is needed as to whether the property damage is of a progressive kind. Evidence is also needed that plaintiffs' liability for health-related claims will be based on "bodily injury" that occurred during the coverage period. Defendants point out there is no clear indication what kind of diseases are at stake here and whether dioxin was the cause. There is no indication whether diseases caused by dioxin have long latency periods or are progressive in nature. Defendants submit the affidivit of Raymond D. Harbison to show that dioxin does not produce a continuous injurious process in humans.
Plaintiffs properly reply that they are not required to establish medical evidence proving a causal connection in the dioxinrelated *1360 cases that have been filed against them. Obviously, plaintiffs hope that no such causal connection exists, but believe that if it can be shown by the claimants in the underlying cases then defendants' policies must be triggered to cover any liability.
4. Limitations on this Court's Ruling
Defendants do raise three areas pollution exclusion clauses, intent of plaintiff, and disclosure of material facts which on a complete development of the facts might release an insured from its indemnity and defense obligations. These areas are discussed below and are not decided at this time since to do so would be premature. This court finds, however, that while these issues remain undecided, the question of which trigger applies to this case remains unaffected.
Defendants assert that various policies contain "pollution exclusion" clauses which state that bodily injury and property damage arising out of the discharge of toxic chemicals onto land is not covered unless accidental. Such clauses therefore exclude coverage for the situation this case presents, inasmuch as the discharge was not accidental. Pursuant to more findings of fact, a finding that plaintiffs' claims are precluded by these clauses obviates the need to address the trigger-of-coverage issue. Defendants believe additional discovery will show that plaintiffs knew they were not covered for this.
Plaintiffs reply: (1) that these pollution exclusion clauses only apply to active pollutors (meaning Bliss, the independent contractor, not IPC)[12]; (2) that the activity in question was not "pollution" within the meaning of the exclusion since the contamination was through commercial spraying, not industrial disposal[13]; and (3) that the discharge was "sudden and accidental" in that plaintiffs did not expect or intend the contaminating activity or the alleged injuries and damages to occur.[14]
In the dioxin-related complaints filed against plaintiffs, it is alleged that IPC was aware of the likely results of its acts in disposing of the waste materials. If this is correct, then there is no insurance coverage. The coverage only indemnifies for damage that was neither expected nor intended by plaintiffs. Defendants argue that such a factual issue precludes summary judgment. Plaintiffs must show that they did not expect or intend the bodily injury or property damage.
Plaintiffs again reply that the record clearly shows that plaintiffs neither intended nor expected the dioxin-related harm alleged in the underlying actions. IPC was not aware that the waste products contained dioxin or was toxic. Deposition of Gregory F. Browne, November 6, 1985, at 131, 137. Certainly IPC did not expect or intend the ultimate consequences for the alleged multitude of bodily injuries and property damage.
*1361 As noted above regarding this court's decision on the duty to defend, defendants argue that some defendant insurers have affirmative defenses based on plaintiffs' failure to disclose facts about the potential for dioxin-related claims.
The court's response to these contentions is the same as it was with regard to the motion to reconsider the duty to defend ruling. Though there are further facts regarding the issues of disclosure and notice which may show that plaintiffs are not entitled to indemnification by one or more of the carriers, at this time the court cannot say that such facts preclude a declaration involving the appropriate trigger of coverage for any given claim. For any given claim, if an insurance company can show that coverage fails because of some reason specific to that policy, that defendant can, after conducting any necessary discovery, file a motion for summary judgment in this court with regard to their duty to defend and indemnify. If coverage fails because of some reason specific to an underlying dioxin-related claim (e.g., the entire injury process fell completely outside the time the insurance policy was in place), that defendant can pursue the matter in whichever court that claim is being brought.
5. The Relief Requested by Plaintiffs
Since the Keene multiple trigger is not to be applied in this case, certain matters of relief requested by plaintiffs are inappropriate. A multiple trigger will not be applied to property damage. Plaintiffs' ability to pick and choose amongst insurers over a continuous period is not in issue.
Defendants' challenge other aspects of the relief requested by plaintiffs. Defendants argue that they have no obligation to pay punitive damages on behalf of plaintiffs,[15] nor indemnify plaintiffs for the costs of complying with equitable remedies.[16]
Plaintiffs reply and this court agrees that the relief requested is entirely appropriate. When the insured itself is not personally at fault but is only liable vicariously for another's wrongdoing, insurance for punitive damages is permitted.[17] Public policy is not offended by covering any punitive damages imposed on plaintiffs since it appears that plaintiffs might be liable to the underlying claimants for the misfeasance of Bliss, not for any misconduct of their own. Of course, this depends in any particular case on whether the evidence warrants punitive damages. Yet at this point the court is unwilling to throw out plaintiffs' request for such coverage.
There are limits of recovery under the policies. Defendants argue that summary judgment should not be granted to plaintiffs since it would provide sweeping coverage for claims when the coverage is only for a certain amount. Plaintiffs reply that they are simply seeking coverage to the full extent of defendants per-occurrence limits of liability. Defendant Lloyds asserts that the defendants' policy limits cannot be "stacked" to cover "all dioxin-related damages." Plaintiffs reply and this court agrees that any stacking mechanism need not be determined at this time.
*1362 V. Motion of American Home Insurance Company to Amend
Defendants American Home Insurance Company of the State of Pennsylvania and the Lexington Insurance Company move this court pursuant to FRCP Rule 15(a) for leave to amend their answer to plaintiffs' first amended complaint. Defendants seek to add three affirmative defenses regarding: (1) plaintiffs' breach of warranties, mistake, misrepresentation or omission of material facts in application for insurance and in other dealings with respect to the spraying of the waste materials; (2) plaintiffs' failure to take appropriate remedial action upon discovering the cause of the dioxin-related injuries and property damage; and (3) the non-coverage of plaintiff Charter under certain policies due to omission of Charter as a named insured.
Plaintiffs oppose the addition of these defenses for two reasons. First, plaintiffs contend that the defense of misrepresentation, mistake, or omission of material facts must be pleaded with much greater specificity, giving the specific circumstances and facts applicable to each individual defendant which constitutes mistake, misrepresentation, or omission of material facts. Second, plaintiffs contend that none of the proposed defenses are specific enough to enable plaintiffs to ascertain which defendant and which plaintiff these proposed defenses supposedly involve. Plaintiffs cite the requirements of particularity as set out in FRCP Rule 9(b) as well as various cases as support for denying the motion.
As defendants point out, plaintiffs only support in case law for the proposition that Rule 9(b) applies to defenses in the same manner as it does to allegations found in a complaint is a patent case concerning the defense of fraud decided by the District Court of Illinois. Northern Engineering & Plastics Corp. v. Blackhawk Molding Co., 205 U.S.P.Q. 609 (D.Ill.1977). The purposes of Rule 9(b) are to provide a respondent with fair notice of a claim or defense and to ensure that it is based on a reasonable belief that a wrong has been committed. Determining whether these purposes are fulfilled is a matter largely within the discretion of this court. Plaintiffs have been aware of various misrepresentation, mistake, and non-disclosure defenses asserted by many of the defendants for some time. Indeed, at least ten defendants have pleaded substantially identical affirmative defenses as those proposed here without differentiating among plaintiffs and without any objection by plaintiffs as to their specificity. The posture of this case makes the defense of misrepresentation fairly clear: defendants believe that plaintiffs did not provide information about the dioxin spraying at the time the insurance policies were secured. This is not a complicated fraud case where the players and tactics cannot be identified absent detailed allegations. Further, the specifics of how much and when plaintiffs knew about the spraying and injuries are matters peculiarly within the control of plaintiffs. Specifics, especially those showing a pattern of omissions or failure to disclose, can develop more fully with discovery. Inasmuch as the thrust of this court's holdings today force defendants to show by motion that they are not required to defend or indemnify plaintiffs because of some misrepresentation by plaintiffs, it would be unfair to preclude defendants from asserting such a defense due to lack of information.
VI. Motion of Hartford for Dismissal or to Compel
On December 12, 1985, defendant Hartford filed a motion for dismissal of plaintiffs' case for abuse of discovery. Alternatively, Hartford sought to compel production of documents and responses to interrogatories, and for sanctions.
On February 10, 1986, Hartford and plaintiffs entered into a court-approved stipulation regarding Hartford's motion. The parties agreed that plaintiffs would supplement their responses to Hartford's first Set of Interrogatories and that briefing regarding disputes as to those responses *1363 would be deferred.[18] Consequently, the court does not at this time address Hartford's concern with plaintiffs' answers to interrogatories. The parties also agreed to pursue briefings regarding destruction of certain documents and plaintiffs' assertions of privilege regarding two documents. It is these matters which concern the court today.
A. Destruction of Documents
Hartford contends that the discovery that has taken place to date has been marked by a consistent pattern of obstructive and dilatory practices by plaintiffs. Central to this has been the destruction of various documents which may be relevant to Hartford's discovery efforts.
Through the deposition of Thomas Terbrueggen on July 17, 1985, Hartford learned that plaintiff Charter had no document retention policy and that numerous documents held by Charter have been destroyed by Charter employees since this action was initiated. For instance, Terbrueggen himself had directed the disposal of 37 notebooks of insurance-related documents two weeks before his first deposition took place. The empty notebook binders were presented to Hartford at the second Terbrueggen deposition. Terbrueggen asserted that he only destroyed documents that he believed were duplicated in other files, but he was unable to describe in any depth the contents of the documents, nor whether they contained handwritten notations not found on their duplicates. Terbrueggen stated that the notebooks contained "a lot of proposals that different people had made to us over the years on insurance programs that we may or may not have purchased." Deposition of Thomas Terbrueggen, July 19, 1985, at 133. Hartford believes that such documents are of critical importance since they may provide insight into Charter's intent and understanding of insurance policy terms that Charter agreed to over the past 15 years.
Hartford believes that Charter's obligation to preserve potentially relevant documents, see Struthers Patent Corp. v. Nestle Co., Inc., 558 F.Supp. 747 (D.N.J. 1981), arose when the dioxin claims against plaintiffs were filed over a decade ago. As Hartford sees it, continuous destruction of documents in the Risk Management Department since that time was clearly a violation of Charter's obligation. Since reconstruction of the documents is not possible, Hartford's ability to receive a fair trial is lost, and dismissal of the case is appropriate.
Plaintiffs respond that the notebooks in question contained old and useless documents which Terbrueggen, after review, determined were irrelevant to this litigation. Approximately 20 notebooks were retained as being possibly relevant. Those that were disposed of were extra copies, not originals. Deposition of Thomas Terbrueggen, July 19, 1985, at 133-39, 154. These notebooks dealt with subjects such as personnel practices, OSHA regulations, operating plans, seminar materials, and old proposals for insurance, including property insurance. Id., at 290, 296, 299, and 303-04. Hartford has not shown willful misconduct, nor that its defense has in fact been prejudiced.
Plaintiffs contend that dismissal of this case under FRCP Rule 37 is appropriate only when a party fails to obey a court order to provide discovery. Since plaintiffs have not done this, dismissal is inappropriate absent repeated violations of a court order or a proven record of bad faith. Hartford responds that this court has inherent equitable power beyond the confines of Rule 37 to dismiss this case. See United States v. Moss-American, Inc., 78 F.R.D. 214 (E.D.Wis.1978).
*1364 While this court may have such power, this court declines to exercise it in this case. There is no question that when relevant documents are willfully destroyed by a party then that party is culpable and should be held responsible for the prejudice it has caused. Wm. T. Thompson Co. v. General Nutrition Corp., 593 F.Supp. 1443 (C.D.Cal.1984). Hartford, however, has engaged in an insufficient showing that any relevant documents were in fact destroyed and that duplicates do not exist. Further, non-retention of such relevant documents must be a willful act, meaning deliberate obstructionist behavior. See Societe Internationale v. Rogers, 357 U.S. 197, 212, 78 S.Ct. 1087, 1096, 2 L.Ed.2d 1255 (1958). Terbrueggen's depositions make it clear that he sought to retain all potentially relevant documents and to destroy only documents duplicated elsewhere. Certainly there has been no violation of a court order and no clear intent to hinder Hartford's interests. Though it may be difficult for Hartford to make a stronger showing given that these are documents in Charter's control, this court is reluctant to engage in the extreme sanction of dismissal based on pure speculation by Hartford. This court, however, advises Charter that all additional documents that relate in any way to this case, duplicative or not, should be stored not destroyed, pending the outcome of this litigation.
B. Documents Subject to Privilege or Work Product
The primary person at IPC with knowledge of the events leading up to the dioxin contamination is Gregory F. Browne, the district manager of IPC's St Louis office. His knowledge may be critical in assessing whether IPC gave timely notice of the potential risk to the insurers and whether it disclosed the information it possessed about the dioxin claims to potential insurers.
Hartford seeks to compel production by plaintiffs of two documents a transcript of a telephone conversation and a memorandum relating to contacts between Browne and Kirk Baker, in-house counsel of a Charter subsidiary, Charter International Oil Company.
Plaintiffs believe both documents are protected as privileged attorney-client communications and as attorney work product. As plaintiffs see it, the transcript is of a telephone conversation and reflects Browne's effort to obtain legal advice from Baker with respect to potential claims arising from Russell Bliss's spraying activities. The memorandum was sent by Browne to Baker following the telephone conversation and was a written report of the Bliss incident.
Determining whether communications made between corporate employees and a corporation's counsel are privileged requires application of the guidelines set out in Upjohn Co. v. United States, 449 U.S. 383, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981) and Diversified Indus. Inc. v. Meredith, 572 F.2d 596 (8th Cir.1977), en banc hearing, 572 F.2d 606 (8th Cir.1978). The privilege exists to protect the giving of legal advice by a corporation's lawyer to those in a position to control (or to take a substantial part in control of) decisions about corporate matters which require legal advice. These people, usually directors or high-ranking officers, are the "control group." Information given by lower-level employees is also protected where such employees are directed to communicate with the corporation's lawyer to enable him to give the corporation sound and informed advice. Upjohn, 449 U.S. at 394, 101 S.Ct. at 685; 449 U.S. at 403, 101 S.Ct. at 689 (Burger, J. concurring); Diversified, 572 F.2d at 609.
Gregory Browne, as just one of IPC's district managers, was not within the "control group" of the corporation: he played no role in how the corporation legally handled the dioxin incidents, see Deposition of Gregory F. Browne, November 7, 1985, at 349-50, and cannot be said to personify the corporation. Further, plaintiffs have failed to show that Browne was directed by corporate superiors to communicate with Baker so that Baker could provide *1365 legal advice to the corporation. Browne said that he did not recall anyone asking him to prepare the report. Id., at 316, 320. Unlike in Upjohn, plaintiffs have also not shown that Browne was seeking legal advice or that he regarded the material to be of a confidential, legal nature. See generally id., at 320, 324-25. The burden is on plaintiffs to prove conclusively each element of the privilege. S.E.C. v. Gulf & Western Indus. Inc., 518 F.Supp. 675, 682 (D.D.C.1981). Without showing that such communications are a part of the control group's effort to secure legal advice, every memorandum and conversation between a corporate employee and corporate counsel could be confidential, which would expand the privilege far beyond its bounds and unnecessarily frustrate the efforts of others to discover corporate activity. Therefore, this court finds that these two documents are not privileged and orders their immediate release to defendants.
VII. Motion of Aetna and INA to Compel
On February 10, 1985, defendants Aetna and INA filed a motion to compel plaintiffs to produce approximately 150 documents currently withheld by plaintiffs on the basis of the attorney-client privilege. The documents, listed in defendants' Attachment 1 to their motion, were generated from 1974 to 1982 and were prepared, compiled or received by plaintiffs' attorneys in connection with the defense of the underlying cases against plaintiffs. Defendants believe the documents are critical to the issues of adequate notice and disclosure by plaintiffs to their insurers.
Defendants assert that regardless of whether these documents are privileged for some purposes, they are not privileged as between plaintiffs and their insurers under the "common interest" doctrine. Under that doctrine, communications between an insured and its attorney connected with the defense of underlying litigation are normally not privileged vis-a-vis the insured's carriers in subsequent litigation. See, e.g., Eureka Investment Corp. v. Chicago Title Ins. Co., 743 F.2d 932, 936-37 (D.C.Cir.1984); Car & General Ins. Corp. v. Goldstein, 179 F.Supp. 888, 890-91 (S.D. N.Y.1959), aff'd, 277 F.2d 162 (2d Cir.1960); Truck Ins. Exchange v. St. Paul Fire & Marine Ins. Co., 66 F.R.D. 129, 133-36 (E.D.Pa.1975); Southeastern Pennsylvania Transp. Auth. v. Transit Cas. Co., 55 F.R.D. 553, 557 (E.D.Pa.1972).
The crux of this dispute is whether the "common interest" doctrine trumps plaintiffs' claims of privilege where there is admittedly a common interest between the insurers and insureds in minimizing exposure in the underlying dioxin-related claims, but where there is also sharp dispute between insurers and insureds regarding insurance coverage. Defendants agree that plaintiffs are not obligated to disclose privileged communications directed specifically to the coverage questions at issue in this court. Rather, defendants seek documents related to plaintiffs' defense of the underlying dioxin-related claims. Plaintiffs contend that due to the dispute over coverage, there is no longer any common interest between insurer and insured, and privileged documents generated in the underlying litigation several years before need not be provided to the carriers.
This court disagrees with plaintiffs. There is no common interest between plaintiffs and defendants regarding communications made in anticipation of a dispute between plaintiffs and defendants. See generally Eureka Inv. Corp. v. Chicago Title Ins. Co., 743 F.2d 932 (1984). It is essential, however, to recognize that defendants are obligated at this time to defend plaintiffs in the underlying dioxin-related cases. To do this, access to documents prepared in anticipation of those claims are essential, and while those documents may be privileged from discovery by party opponents in the underlying claims, they cannot be privileged from carriers obligated to shoulder the burden of defending against those claims. There is no showing by plaintiffs that plaintiffs generated the documents expecting that they would be concealed from their insurance carriers. The documents *1366 were generated in anticipation of minimizing something of common interest to both parties in this suit: exposure to liability from tort claimants. In short, plaintiffs had no reasonable expectations of confidentiality with regard to these documents.
Consequently, plaintiffs may not withhold those documents designated in defendants' Attachment A unless they were prepared in anticipation of the issues under consideration by this court. Though some matters within these documents may be highly probative of the issues before the court, this court declines to set a per se rule that a coverage dispute wipes out an insurer's ability to receive documents necessary in defending the underlying claims.
VIII. INA Motion for a Protective Order
On March 26, 1986, defendant INA filed a motion for a protective order and a scheduling order. INA had previously filed a motion for partial summary judgment against plaintiffs. Instead of responding, plaintiffs moved for an extension of time in order to serve on INA a FRCP Rule 30(b)(6) request. This court granted plaintiffs until April 14, 1986, to respond to INA's motion but held in abeyance INA's motion for a protective order.
Though plaintiffs may be at fault for not pursuing such discovery with greater speed, there is no significant prejudice to INA in responding to such a discovery request. Once they do, plaintiffs can fully develop their response to INA's motion. These are difficult issues and the sooner necessary discovery is adequately completed, the sooner they may be resolved. Therefore, INA's motion will be denied.
IX. Conclusion
Due to the outcome of today's Memorandum, those defendants with pending motions for partial summary judgment may wish to amend them to incorporate matters such as the impact of Missouri law. In anticipation of this, the court will provide a reasonable time for such amendment and the filing of oppositions.
An appropriate Order accompanies this Memorandum.
ORDER AND DECLARATION
This matter comes before the court on various motions. Upon consideration of the movants' papers, the oppositions thereto, and the entire record herein, it is, by the court, this 2nd day of May, 1986
ORDERED that the motion of the primary carrier defendants for reconsideration of the court's Order of February 4, 1986 is denied; and it is further
ORDERED that Continental Insurance Company ("Continental")'s motion for clarification is granted to the extent that within the terms of this court's findings, any obligation of defendant Continental is to defend and indemnify only plaintiff The Charter Company; and it is further
ORDERED that Missouri law is determinative of the issues in this case; and it is further
ORDERED that plaintiffs' motion for partial summary judgment with regard to defendants' obligation to indemnify pursuant to a "multiple-trigger" theory is denied; and it is further
DECLARED that pursuant to this court's choice of law determination, if a finder of fact determines that at some time the effects of exposure to dioxin negligently released by plaintiffs actually resulted in diagnosable and compensable injury in fact to one of the underlying dioxin-related claimants, and if a defendant insurance carrier had a policy in effect at that time, then that defendant's duty to indemnify plaintiffs for the underlying claim is triggered; and it is further
DECLARED that notwithstanding defendants' duty to indemnify, any defendant primary insurance carrier is not obligated to indemnify plaintiffs if it can demonstrate upon motion that its insurance policy does not apply to the underlying dioxin-related claims because of some conduct on the part of plaintiffs (such as fraud or lack of notice) or some exclusion provision within the policy; and it is further
*1367 ORDERED that the motion of defendants American Home Insurance Company and Lexington Insurance Company to amend their answer is granted; and it is further
ORDERED that defendant Hartford Accident and Indemnity ("Hartford")'s motion to dismiss is denied; and it is further
ORDERED that defendant Hartford's motion to compel the production of two documents is granted; and it is further
ORDERED that defendant Hartford's motion to file a supplemental memorandum with regard to the inadequacy of plaintiffs' interrogatory responses is granted; and it is further
ORDERED that plaintiffs may respond to defendant Hartford's supplemental memorandum no later than May 12, 1986; and it is further
ORDERED that the discovery dispute regarding interrogatories between defendant Hartford and plaintiffs as well as all future discovery disputes are referred to the Magistrate; and it is further
ORDERED that defendants Aetna Casualty and Surety Company and Insurance Company of North America ("INA")'s motion to compel the production of documents is granted; and it is further
ORDERED that defendant INA's motion for a protective order is denied; and it is further
ORDERED that INA respond to plaintiffs' Rule 30(b)(6) request no later than May 12, 1986; and it is further
ORDERED that defendants Hartford and INA may file an amended motion for partial summary judgment in light of today's ruling no later than May 19, 1986; and it is further
ORDERED that plaintiffs may respond to defendants' motions for partial summary judgment no later than May 30, 1986; and it is further
ORDERED that defendants Hartford and INA may reply no later than June 6, 1986; and it is further
ORDERED that counsel appear for a status conference on May 12, 1986 at 10 a.m. to discuss any concerns of the parties in proceeding with this matter.
NOTES
[1] "Dioxin" is a name for an entire family of chemical compounds. The name refers to these compounds' basic structure: two oxygen atoms joining a pair of benzene rings.
One of defendants' objections to summary judgment at this time is that there has been no showing that dioxin causes a continuous, injurious process. Defendants submit an affidavit by Dr. Raymond D. Harbison (Attachment A of Joint Opposition of Defendants to Plaintiffs' Motion for Partial Summary Judgment, filed September 16, 1985) to show that the only adverse affects to humans from dioxin are chloracne (a skin condition) and prophyria cutanea tarda (a liver dysfunction). It is defendants' position that progressive injury must be shown before the relief requested by plaintiff may be granted.
There is disagreement within the scientific community over whether dioxin exposure has any serious long-term effect on human beings. See, e.g., Tschirley, Dioxin, Scientific American, Feb. 1986. For the reasons stated below, discussion of this matter is deferred until this court rules on the trigger-of-coverage relief sought by plaintiff.
[2] These actions are currently in pretrial stages and will be referred to throughout this Memorandum as "dioxin-related claims." Exhibit 3 to Plaintiffs' Affidavit of Thomas J. Terbrueggen contains five complaints representative of these claims.
[3] The primary insurance carriers are Aetna Casualty & Surety Company ("Aetna"), Continental Insurance Company ("Continental"), Insurance Company of North America ("INA"), Pacific Indemnity Company ("Pacific"), The Travelers Indemnity Company ("Travelers"), and Hartford Accident and Insurance Company ("Hartford").
Continental is contributing to the defense of its single named insured, plaintiff TCC. Pacific is contributing nothing for reasons discussed below concerning its motion for summary judgment.
[4] The provisions in the text are taken from Aetna policy number 39 AL 219867 SCA. See Exhibit 1 to Affidavit of Thomas J. Terbrueggen for a list of which insurers' policies covered plaintiffs for each year 1971 to 1983. The pertinent policy provisions of the primary comprehensive general liability policies issued to plaintiffs were filed September 20, 1985, as Attachment F (Defendants' Exhibit of Illustrative Policy Provisions) to their Joint Opposition to Plaintiffs' Motion for Partial Summary Judgment. Provisions regarding the excess policies appear in the same attachment.
[5] For application of the manifestation-only approach, see Eagle-Picher Indus. Inc. v. Liberty Mut. Ins. Co., 523 F.Supp. 110 (D.Mass.1981), aff'd as modified, 682 F.2d 12 (1st Cir.1982), cert. denied, 460 U.S. 1028, 103 S.Ct. 1280, 75 L.Ed.2d 500 (1983). For application of the exposure-only approach, see Porter v. American Optical Corp., 641 F.2d 1128 (5th Cir.1981), cert. denied, 454 U.S. 1109, 102 S.Ct. 686, 70 L.Ed.2d 650 (1981).
[6] 667 F.2d 1034 (D.C.Cir.1981), cert. denied, 455 U.S. 1007, 102 S.Ct. 1644, 71 L.Ed.2d 875, rehearing denied, 456 U.S. 951, 102 S.Ct. 2023, 72 L.Ed.2d 476 (1982).
Aside from Keene, this method has also been used in Eli Lilly & Co. v. Home Insurance Co., 653 F.Supp. 1 (1984), set aside and certified to Indiana for resolution of certain questions, 764 F.2d 876 (D.C.Cir.1985); Abex Corp. v. Maryland Cas. Co., No. 82-2098 (D.D.C. Apr. 16, 1985) [Available on WESTLAW, DCTU database], appeals docketed, Nos. 85-5602, -5659, -5660 (D.C.Cir. May 3 and May 28, 1985); Owens-Illinois, Inc. v. Aetna Cas. & Surety Co., 597 F.Supp 1515 (D.D.C.1984), appeal docketed, No. 85-5285 (D.C.Cir.1985); ACandS, Inc. v. Aetna Cas. & Surety Co., 576 F.Supp. 936 (E.D.Pa.1983), appeals docketed, 764 F.2d 968 (3d Cir.1985); Sandoz, Inc. v. Employer's Liability Assurance Corp., 554 F.Supp. 257 (D.N.J.1983); Vale Chem. Co. v. Hartford Accident & Indemnity Co., 340 Pa.Super. 510, 490 A.2d 896 (1985); Crown, Cork & Seal Co. v. Aetna Cas. & Surety Co., No. 1292 (Pa.Ct.C.P., Phil.Cty., Aug. 2, 1983).
[7] Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).
[8] See Blair v. Prudential Ins. Co., 472 F.2d 1356, 1359 (D.C.Cir.1972); Fowler v. A & A Co., 262 A.2d 344, 348 (D.C.1970).
Defendant U.S. Fire Insurance Co. has somewhat pursued a choice of law analysis, arguing that with some additional facts it would be clear that provisions within its policies calling for application of New York law should be given effect. The court defers consideration of this argument pending briefings by plaintiffs and the primary insurers.
[9] Independent Petrochem. Corp. v. Aetna Cas. & Surety Co., No. 83-3347, mem. op. at 7 (D.D.C. Aug. 13, 1984) (Flannery, J.) [Available on WESTLAW, DCTU database].
[10] Plaintiffs cite this court's decision in Turner & Newall, PLC v. American Mut. Liability Ins. Co., No. 82-1339, mem. op. at n. 1 (D.D.C. Aug. 1, 1985) (Flannery, J.) [Available on WESTLAW, DCTU database]. That decision, however, recognized that District of Columbia conflicts law pointed to Pennsylvania local law as determinitive of the specific issues before the court. Id.
[11] See, e.g., Salus Corp. v. Continental Cas. Co., 478 A.2d 1067, 1069-70 (D.C.1984); Hicksville Motors v. Merchants Mut. Ins. Co., 97 A.D.2d 396, 467 N.Y.S.2d 220, 221 (Sup.Ct.), aff'd, 61 N.Y.2d 661, 472 N.Y.S.2d 88, 460 N.E.2d 229 (1983); Lionel Freedman, Inc. v. Glens Falls Ins. Co., 27 N.Y.2d 364, 368, 318 N.Y.S.2d 303, 305, 267 N.E.2d 93, 95 (1971); see also Prudential Lines, Inc. v. Firemen's Ins. Co., 91 A.D.2d 1, 457 N.Y.S.2d 272, 275 (Sup.Ct.1982).
[12] Eagle-Picher, supra note 5, at 111. Accord Insurance Co. of North Am. v. Forty-Eight Insulations, Inc., 633 F.2d 1212, 1224-25 (6th Cir. 1980), modified, 657 F.2d 814, cert. denied, 454 U.S. 1109, 102 S.Ct. 686, 70 L.Ed.2d 650 (1981); Keene, supra note 6.
[13] Villa Charlotte Bronte, Inc. v. Commercial Union Ins. Co., 64 N.Y.2d 846, 487 N.Y.S.2d 314, 476 N.E.2d 640 (1985); Servidone Constr. Corp. v. Security Ins. Co., 64 N.Y.2d 419, 488 N.Y.S.2d 139, 477 N.E.2d 441 (1985); American Home Prods. Corp. v. Liberty Mut. Ins. Co., 748 F.2d 760, 764 n. 1 (2d Cir.1984); Seaboard Surety Co. v. Gillette Co., 64 N.Y.2d 304, 486 N.Y.S.2d 873, 876, 476 N.E.2d 272, 275 (1984); Sandoz, supra note 6, at 267.
[14] Pacific Policy No. CMP 31000-A, attached as Exhibit 4 to Pacific's Motion for Summary Judgment. This policy was in effect between Pacific and Signal from October 3, 1968 through October 3, 1971.
[15] This agreement appears as Exhibit No. 7 to Pacific's Statement of Material Facts as to Which There is No Genuine Issue.
[16] Under Item 1A of the Declarations to the policy, a "named insured":
shall mean the Signal Companies, Inc. ... and the subsidiaries and associate companies of "The Signal Companies" or its subsidiaries and associate companies; or other company but only as listed in ITEM 6 of the Declarations. ...
(emphasis added). In Item 6, IPC was a named insured under the policy.
[17] The policy provides coverage to "insureds," who are defined as follows:
The unqualified word "Insured," wherever used in this policy, includes not only the "NAMED INSURED" as shown in the Declarations, but also:
1. Any ... stockholder ... of the "Named Insured" by reason of occupying such position while acting for and on behalf of the "Named Insured"....
[1] Independent Petrochemical Corp. v. Aetna Cas. & Surety Co., Mem. & Order (D.D.C. Feb. 4, 1986) (Flannery, J.). At that time, this court dismissed defendant Pacific Indemnity Company from this case and recognized a duty to defend plaintiffs by the remaining insurance carrier defendants.
[2] Plaintiffs' motion for partial summary judgment, filed June 14, 1985, sought recognition by this court of defendants' duty to defend and duty to indemnify for tort claims filed against plaintiffs regarding the disposal of waste materials in Missouri.
[3] The remaining primary insurance carriers are Aetna Casualty and Surety Company ("Aetna"), Continental Insurance Company ("Continental"), Insurance Company of North America ("INA"), The Travelers Indemnity Company ("Travelers"), and Hartford Accident and Indemnity Company ("Hartford").
[4] The excess insurance carriers who requested and were permitted to file supplemental briefs on the choice-of-law issue were U.S. Fire Insurance Company ("U.S. Fire"), London defendants (which consist of numerous syndicates and companies), and American Employers' Insurance company and Employers Commercial Union Insurance Company.
[5] These actions are mostly in pretrial stages and will be referred to throughout this Memorandum as "dioxin-related" claims.
[6] The provisions in the text are taken from Aetna policy number 39 AL 219867 SCA. See Exhibit 1 to Affidavit of Thomas J. Terbrueggen for a list of which insurers' policies covered plaintiffs for each year 1971 to 1983. The pertinent policy provisions of the primary comprehensive general liability policies issued to plaintiff were filed September 20, 1985, as Attachment F (Defendants' Exhibit of Illustrative Policy Provisions) to their Joint Opposition to Plaintiffs' Motion for Partial Summary Judgment. Provisions regarding the excess policies appear in the same attachment.
The policy provisions at issue in this case are all variants of the Comprehensive General Liability Policy ("CGL"), a standard-form policy for liability coverage drafted during the 1960's by representatives of the insurance industry to deal with the problem of liability for injuries caused over a period of time. Instead of covering only "accidents", a word that connotes an event causing immediate or contemporaneous injury, the CGL was written to cover "occurrences", which includes exposure to conditions which result, during the policy period, in bodily injury. Unfortunately, what constitutes "bodily injury" is less than clear, thereby creating a basis for disputes as to the trigger of coverage.
[7] It should be noted that two defendants INA and Hartford have proceeded pursuant to this approach by filing motions for partial summary judgment with this court asserting that facts peculiar to their policies preclude any duty to defend or indemnify. Those two motions are not decided today.
[8] See Plaintiffs' Statement of Points and Authorities in Reply to Defendants' Various Oppositions to Plaintiffs' Motion for Partial Summary Judgment, filed November 18, 1985, at 72-75.
[9] See Joint Opposition of Defendants to Plaintiffs' Motion for Partial Summary Judgment, filed September 16, 1985, at 55-58.
[10] Under the choice-of-law rules of the District of Columbia, the local law of the state which has the "more substantial interest" in the resolution of the issues must be applied to the case. See Lee v. Flintkote Co., 593 F.2d 1275, 1279 n. 16 (D.C.Cir.1979); Clayman v. Goodman Properties Inc., 518 F.2d 1026, 1030 n. 22 (D.C.Cir. 1973); Fowler v. A & A Co., 262 A.2d 344 (D.C. 1970); Stevens v. American Serv. Mut. Ins. Co., 234 A.2d 305, 309 (D.C.1967).
[11] Aetna Insurance Co. v. Waco Scaffold & Shoring Co., 370 So.2d 1149 (Fla.Dist.Ct.App.1978), cert. denied, 368 So.2d 1375 (Fla.1979); American Motorists Insurance Co. v. Trane Co., 544 F.Supp. 669, 698 (W.D.Wis.1982), aff'd, 718 F.2d 842 (7th Cir.1983). Accord Sherman v. Ambassador Ins. Co., 670 F.2d 251, 259-60 (D.C.Cir. 1981).
[12] "Where the terms of an insurance policy are ambiguous or are subject to more than one reasonable construction, the policy must be construed most favorably to the insured and strictly against the insurer.... This is particularly so as to ambiguities found in an exclusionary clause." Allstate Ins. Co. v. Klock Oil Co., 73 A.D.2d 486, 426 N.Y.S.2d 603, 604 (4th Dept. 1980) (citations omitted). Where the policyholder is not actually engaged in the pollution-causing activity, the exclusion clause does not apply. See, e.g., Van's Westlake, 664 P.2d 1262, 1266; Autotronic Sys., 456 N.Y.S.2d at 504; Niagara County v. Utica Mutual Ins. Co., 80 A.D.2d 415, 439 N.Y.S.2d 538 (4th Dept.1981). IPC apparently did not generate or dispose of the waste material; it merely acted as an unfortunate intermediary in arranging for a hauler for the waste material generated by NEPACCO.
[13] Long Island Railroad Co. v. Commercial Union Ins. Co., [1982] Fire & Casualty Cas. [CCH] 14 (E.D.N.Y.1982) (policyholder engaged in weed spraying activities which caused chemical injuries could recover on policy despite exclusion clause).
[14] "Sudden and accidental" can be equated with "neither expected nor intended." See e.g., Allstate Ins. Co. v. Klock Oil Co., 73 A.D.2d 486, 426 N.Y.S.2d 603 (Sup.Ct.1980); Jackson Township Mun. Utilities Auth. v. Hartford Accident & Indemnity Co., 186 N.J.Super. 156, 451 A.2d 990 (1982); United Pacific Ins. Co. v. Van's Westlake Union, Inc., 34 Wash.App. 708, 664 P.2d 1262 (1983).
[15] Many jurisdictions hold that insurance policies do not, as a matter of public policy or contract construction, cover punitive damages. See Annotation, Liability Insurance As Extending To Liability for Punitive Or Exemplary Damages, 16 A.L.R. 4th 11 (1982). Typically, it is held that permitting a wrongdoer to be reimbursed by an insurance company for punitive damages would undercut the punitive and deterrent purpose of this type of award and thus contravene public policy. See, e.g., U.S. Concrete Pipe Co. v. Bould, 437 So.2d 1061, 1064 (Fla.1983); Crull v. Gleb, 382 S.W.2d 17, 23 (Mo.Ct.App.1964). For Missouri state court interpretation of policies such as those in this case, see Schnuck Markets, Inc. v. Transamerica Ins. Co., 652 S.W.2d 206, 208 (Mo.Ct.App.1983).
[16] Judgments not framed in the form of "damages" are not covered by defendants' policies under some state's laws. For Florida, see Aetna Cas. & Surety Co. v. Hanna, 224 F.2d 499 (5th Cir.1955).
[17] See, e.g., Ohio Ins. Co. v. Welfare Finance Co., 75 F.2d 58, 60 (8th Cir.1934); Schwab v. First Appalachian Ins. Co., 58 F.R.D. 615, 622 (S.D. Fla.1973).
[18] Upon supplementation of answers to Hartford's interrogatories, plaintiffs apparently have not satisfied Hartford. Hartford therefore asked this court on April 21, 1986 for leave to supplement its motion to compel. This court now grants that request and will give time for plaintiffs to file a response. This remaining discovery dispute and all future discovery disputes will be handled by the Magistrate.
|
IN THE COURT OF CRIMINAL APPEALS
OF TEXAS
NO. WR-71,058-01
EX PARTE MICHAEL EDWARD MCCASLAND, Applicant
ON APPLICATION FOR A WRIT OF HABEAS CORPUS
CAUSE NO. F38973A IN THE 18TH DISTRICT COURT
FROM JOHNSON COUNTY
Per curiam.
O R D E R
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 this application for writ of habeas corpus. Ex parte
Young, 418 S.W.2d 824, 826 (Tex. Crim. App. 1967). Applicant was convicted of four counts of
sexual assault, four counts of indecency with a child, and four counts of possession of child
pornography. He was sentenced to twenty years' imprisonment on four counts, to fifteen years on
four counts, and to ten years on four counts, all of which are to be served consecutively. The Tenth
Court of Appeals affirmed his conviction. McCasland v. State, No. 10-05-432-CR (Tex. App. -
Waco, delivered February 28, 2007, pet ref'd.)
Applicant contends, inter alia, that his trial counsel rendered ineffective assistance because
he did not call several witnesses who would have discredited the testimony of one of the
complainants, whose testimony constituted the primary evidence for several of these counts.
Applicant submitted several affidavits in support of these allegations, and trial counsel submitted
an affidavit which refuted several of them. The trial court signed an order concluding that there were
no controverted, previously unresolved issues of fact material to the legality of the Applicant's
confinement, but the conflicting affidavits do not support that conclusion. This record contains a
portion of proposed findings of fact, but those findings are not signed.
Applicant has alleged facts that, if true, might entitle him to relief. Strickland v. Washington,
466 U.S. 608 (1984); Ex parte Lemke, 13 S.W.3d 791,795-96 (Tex. Crim. App. 2000). In these
circumstances, additional facts are needed. As we held in Ex parte Rodriguez, 334 S.W.2d 294, 294
(Tex. Crim. App. 1960), the trial court is the appropriate forum for making findings of fact. The trial
court may use any means set out in Tex. Code Crim. Proc. art. 11.07, § 3(d), including conducting
an evidentiary hearing, relying on previously submitted affidavits, or obtaining additional affidavits.
In the appropriate case, the trial court may rely on its personal recollection. Id.
The trial court shall make findings of fact as to whether the performance of Applicant's trial
attorney was deficient and, if so, whether counsel's deficient performance prejudiced Applicant.
Those findings shall include a brief summary of the evidence presented at trial, a summary of what
testimony could have been presented at trial but was not, if any, and conclusions of whether counsel
was ineffective in failing to present that evidence and whether presentation of any such evidence
might have resulted in different verdicts. The trial court shall also make any other findings of fact
and conclusions of law that it deems relevant and appropriate to the disposition of Applicant's claim
for habeas corpus relief.
This application will be held in abeyance until the trial court has resolved the fact issues. The
issues shall be resolved within 90 days of this order. If any continuances are granted, a copy of the
order granting the continuance shall be sent to this Court. A supplemental transcript containing all
affidavits and interrogatories or the transcription of the court reporter's notes from any hearing or
deposition, along with the trial court's supplemental findings of fact and conclusions of law, shall
be returned to this Court within 120 days of the date of this order. Any extensions of time shall be
obtained from this Court.
Filed: April 29, 2009
Do not publish
|
358 F.Supp.2d 840 (2005)
Chomsy KOUANCHAO, Petitioner,
v.
U.S. CITIZENSHIP AND IMMIGRATION SERVICES, Respondent.
No. CIV. 04-51MJDJGL.
United States District Court, D. Minnesota.
February 22, 2005.
Roy D. Hawkinson, Hawkinson Law Office, Counsel for Petitioner.
Perry F. Sekus, Assistant United States Attorney, Counsel for Respondent.
*841 MEMORANDUM OF LAW & ORDER
DAVIS, District Judge.
I. INTRODUCTION
The above-entitled matter comes before the Court upon the Report and Recommendation of Chief United States Magistrate Judge Jonathan Lebedoff dated December 29, 2004. Petitioner filed objections to the Report and Recommendation.
Pursuant to statute, the Court has conducted a de novo review of the record. 28 U.S.C. § 636(b)(1); Local Rule 72.1(c). Based on that review the Court declines to adopt the Report and Recommendation.
II. FACTUAL BACKGROUND
According to Chomsy Kouanchao,[1] although her Certificate of Naturalization states that her birth date is September 5, 1945, her true birth date is September 15, 1942. In 1978, while Kouanchao was in Thai custody after having fled Laos, Kouanchao's cousin prepared documentation for the Thai government misstating Kouanchao's birth date as September 5, 1945. At that time, Kouanchao possessed no documentation stating her birth date. After 1978, Kouanchao incorrectly relied on the only available document regarding her birth date, which contained her cousin's mistake regarding the year of her birth. She used the 1945 birth date in all of her immigration and naturalization documents submitted to the United States government. In 1985, Kouanchao obtained a Certificate of Naturalization, which stated that her birth date was September 5, 1945.
In 1988, Kouanchao's sister, who lived in Laos, sent Kouanchao her school identification card, which contained the 1942 birth date. In 1993, Kouanchao obtained a delayed Laotian birth certificate with the corrected birth date. The birth certificate bears the signatures of three persons verifying her 1942 birth date. Kouanchao then obtained a corrected Minnesota driver's license and a corrected Social Security Card. In 1999, Kouanchao signed an Affidavit of Support in favor of sponsoring her relatives as immigrants to the United States. In that affidavit, she stated that her date of birth was September 5, 1945. When Kouanchao's passport expired in March 2003, she was unable to obtain a renewed passport because the birth date on her expired passport and Certificate of Naturalization did not match the birth date on her driver's license.
III. DISCUSSION
Kouanchao bears the burden of showing that the date on her Certificate of Naturalization is incorrect and that September 15, 1942, is her correct date of birth. See, e.g., In the Matter of the Application of Ohanian, No. Misc. 93-218(RJD), 1995 WL 62733, at *2 (E.D.N.Y. Jan. 31, 1995) (unpublished) (holding that "the burden is on the petitioner to demonstrate that the birth date on the Certificate of Naturalization is not correct"). The Government correctly notes that throughout the immigration process, Kouanchao swore multiple times that the 1945 birth date was correct. However, after fleeing a war-torn nation and possessing no other documentation containing the correct date, it would have been reasonable for her to assume that confirmation of her exact birth date would have been difficult, if not impossible. See Application of Levis, 46 F.Supp. 527, 528-29 (D.Md.1942) (granting petition to change birth date on petitioner's naturalization *842 records because, although "petitioner admits that he knew the date which he gave as the date of his birth was not accurate," petitioner's acts constituted "carelessness rather than wilful misrepresentation" because "[i]t was not unnatural for him to have assumed that verification of the exact date of his birth was difficult, if not impossible").
The Government is also correct that delayed birth certificates offer the opportunity for fraud. In this case, however, the delayed birth certificate contains the signatures of three witnesses with knowledge of Kouanchao's birth date. As in Levis, the certifications of those who claim to have witnessed Kouanchao's birth are unimpeached. Kouanchao also provides her Laotian school identification card issued in the 1960s, which contains the same 1942 birth date. "They may not be the best evidence, but they substantiate petitioner's own testimony which, standing alone, has the mark of truth and sincerity." Application of Levis, 46 F.Supp. at 529. Cf. Liu v. I.N.S., No. 98-MC-139, 1998 WL 809037 (N.D.N.Y. Nov.17, 1998) (unpublished) (dismissing petition without prejudice so that petitioner could gather additional evidence when her only evidence of her true birth date was a Chinese language Household Registration Certificate accompanied by an unauthenticated translation of that document). Although delayed birth certificates do present the opportunity for fraud, this is not an instance in which the Government has provided any documentary evidence to contradict Kouanchao's birth certificate and identification card, aside from Kouanchao's immigration documents. Cf. In the Matter of the Application of Ohanian, 1995 WL 62733, at *2 (finding that petitioner lacked credibility based on her testimony and on the Government's presentation of the following documentary evidence: an earlier-issued birth certificate, a marriage certificate, the petitioner's INS applications, and a biographic and medical report from 1979).
Although it would have been preferable for Kouanchao to have not used the incorrect birth date in the first place, or to have corrected the mistake at an earlier time, the passage of time does not bar her application. The Government has not asserted that it suffered any prejudice from the lapse of time.
The Government does not allege that Kouanchao intentionally misled it or that she received any benefit by misstating her year of birth during the immigration and naturalization process. Compare In re Hennig, 248 F. 990, 991 (E.D.N.Y.1918) (granting petitioner's request to change the year of birth stated on his naturalization papers from 1879 to 1874 because the change "would not affect the issuance of naturalization papers, as there is nothing to indicate willful misstatement of any material fact"), with Matter of Shrewsbury, No. 94-16736, 1996 WL 64988, at *1 (9th Cir. Feb.12, 1996) (unpublished) (refusing to alter birth date when petitioner originally lied about her birth date in order to be eligible for marriage, and thus, for United States citizenship). If Kouanchao is now permitted to change her birth date on her Certificate of Naturalization, she will not gain additional government benefits; the Social Security Administration has already accepted that her birth year is 1942. Cf. In re Konsh, 188 F.Supp. 136, 137-38 (E.D.N.Y.1960) (refusing to alter birth date when petitioner did not "state what harm he might suffer if the change is not now made," but court noted that if it made the requested change, petitioner could obtain Social Security benefits four years earlier).
The Court cannot imagine, and the Government has not mentioned, any consequence arising from changing Kouanchao's birth date on her Certificate of Naturalization *843 other than her ability to renew her passport. To punish Kouanchao because she cannot produce a contemporaneously issued birth certificate, when the Government's evidence states that "[d]ocuments regarding events that took place [in Laos] before 1975 are unavailable," or because two of the witnesses to her birth were children at the time of her birth, when Kouanchao is over sixty years old and is from a country whose inhabitants have been devastated by war, would be unjust. As Judge Learned Hand wrote almost a century ago,
No one wants gratuitously to impose upon naturalization proceedings that technical spirit which easily follows a literal application of so detailed a statute, and which results in vexatious disappointment, and in needless irritation, to a defenseless class of persons necessarily left to the guidance of officials, except in so far as the courts may mitigate the rigors of their interpretation.
In re Denny, 240 F. 845, 846 (S.D.N.Y.1917).
Kouanchao made a mistake but has now expended considerable effort to have her date of birth changed. The Court is satisfied that her mistake was not made with an improper motive and that changing the date on her Certificate of Naturalization will confer no undue benefit on Kouanchao, nor will it prejudice the Government. While the United States Citizenship and Immigration Services' regulations may not permit it to administratively amend the birth date on a Certificate of Naturalization in the absence of a clerical error, 8 C.F.R. §§ 338.5, 334.16, this Court has the power to order such an amendment. 8 C.F.R. § 334.16(b); Varghai v. I.N.S., Dist. Director, 932 F.Supp. 1245, 1246 (D.Or.1996). See also Matter of Shrewsbury, 1996 WL 64988, at *1 (holding that court had jurisdiction to amend pre-1990 naturalization order). In this case, the Court finds that Kouanchao has shown good cause for amendment of her Certificate of Naturalization.
Accordingly, based upon the files, records, and proceedings herein, IT IS HEREBY ORDERED that:
1. The Court declines to adopt the Chief Magistrate Judge's Report and Recommendation dated December 29, 2004 [Docket No. 9].
2. Chomsy Kouanchao's Petition to Amend/Correct Certificate of Naturalization [Docket No. 1] is GRANTED.
3. The United States Citizenship and Immigration Services shall issue an amended Certificate of Naturalization stating that Petitioner's date of birth is September 15, 1942.
NOTES
[1] Throughout the record, Petitioner's name is alternately spelled "Kouachao" and "Kouanchao." Because Petitioner's identifying documents, from her Certificate of Naturalization to her driver's license, identify her as "Kouanchao," the Court will use that spelling.
|
Not for Publication in West’s Federal Reporter
Citation Limited Pursuant to 1st Cir. Loc. R. 32.3
United States Court of Appeals
For the First Circuit
No. 02-1181
CHARLES PALMER,
Petitioner, Appellant,
v.
UNITED STATES,
Respondent, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Joseph A. DiClerico, U.S. District Judge]
Before
Boudin, Chief Judge,
Campbell, Senior Circuit Judge,
and Lipez, Circuit Judge.
Charles Palmer on brief pro se.
Thomas P. Colantuono, United States Attorney and Peter E.
Papps, First Assistant U.S. Attorney, on brief for appellee.
May 30, 2003
Per Curiam. Charles Palmer was granted a certificate of
appealability ("COA") by the district court to appeal from the
denial of his § 2255 motion as to the following issue: "whether
Counts I and IV were multiplicitous in violation of the Double
Jeopardy Clause." Because this issue was presented for the first
time in his § 2255 motion, it is procedurally defaulted. To
overcome that procedural default, Palmer must establish cause and
prejudice. See Sustache-Rivera v. United States, 221 F.3d 8, 17 (1st
Cir. 2000). In an attempt to meet that standard, Palmer claims
ineffective assistance of counsel by the attorney who represented
him at trial and on appeal.
"[F]ailure to raise a well-established, straightforward
and obvious double jeopardy claim constitutes ineffective
performance" sufficient to excuse a procedural default. Jackson v.
Leonardo, 162 F.3d 81, 85 (2d Cir. 1998). Here, however, the issue
of whether the conduct charged in Counts Two and Four of Palmer's
indictment constitutes a single conspiracy or two separate
conspiracies seems a close question at best and not "clearly
stronger than those [issues] presented" on appeal. Smith v.
Robbins, 528 U.S. 259, 288 (2000).
"The Double Jeopardy Clause provides that no person shall
'be subject for the same offence to be twice put in jeopardy of
life or limb. . . .' U.S. Const. amend. V. The Clause has three
aspects: it shields a defendant from a second prosecution for the
-2-
same offense after either conviction or acquittal, and it also
prohibits multiple punishments for the same offense." United States
v. Morris, 99 F.3d 476, 478 (1st Cir. 1996). Here, Palmer invokes
the Clause's protection against multiple punishments for the same
offense. The parties agree that although Palmer received concurrent
prison sentences on Counts One and Four, the $100 special
assessments imposed for each count, pursuant to 18 U.S.C. § 3013,
constitute multiple punishments. See Rutledge v. United States, 517
U.S. 292 (1996).
"In determining whether two charged conspiracies that
allege violations of the same substantive statute are actually the
same offense for double jeopardy purposes, we consider five
factors: (a) the time during which the activities occurred; (b) the
persons involved; (c) the places involved; (d) whether the same
evidence was used to prove the two conspiracies; and (e) whether
the same statutory provision was involved in both conspiracies."
United States v. Gomez-Pabon, 911 F.2d 847, 860 (1st Cir. 1990).
As to three of these factors, Counts One and Four are
identical: personnel, location and statutory provisions. Both
counts charge that Palmer conspired with Curtin to rob Sell's Mobil
Station in Nashua, New Hampshire, in violation of 18 U.S.C. § 1951.
However, the time frame for the two counts and the evidence
supporting them are distinct. Count One charges that the
conspiracy occurred on February 4, 1998, while Count Four charges
-3-
that the conspiracy occurred on February 7, 1998. There is
evidence from which two separate agreements to rob the same store
on those two dates could be established.
"A single agreement to commit several crimes constitutes
one conspiracy. By the same reasoning, multiple agreements to
commit separate crimes constitute multiple conspiracies." United
States v. Broce, 488 U.S. 563, 570-71 (1989). Palmer's indictment
alleged multiple agreements to commit separate robberies. The
evidence, including Palmer's confession, supports a finding that
the agreement to rob Sell's Mobil Station on February 7, 1998, was
separate from the agreement to rob the same location on February 4,
1998. The evidence about the co-conspirators' motives and
circumstances could reasonably be interpreted to establish two
separate agreements, each arising from an immediate need for drugs
to support their addiction, rather than a single agreement,
extending over several days, to rob a specific store. See United
States v. Palmer 203 F.3d 55, 64 (1st Cir. 2000)(commenting that the
co-conspirators "conspired to rob the stores to feed their habits.
They did not follow normal patterns of behavior").
Counsel's failure to raise this doubtful double jeopardy
claim, as Palmer requested, did not amount to deficient performance
which, by a "reasonably probability," prevented Palmer from
receiving "a fair trial, understood as a trial resulting in a
verdict worthy of confidence." Prou, 199 F.3d at 49. We also note
-4-
that it is uncertain whether the prejudice claimed by Palmer (a
$100 special assessment) would satisfy the applicable standard. See
Fields v. United States, 201 F.3d 1025, 1029 (8th Cir. 2000).
Because Palmer is not entitled to collateral relief on
the single issue for which a COA was granted, the district court's
denial of Palmer's § 2255 motion is affirmed.
-5-
|
17-3854-cv
Dr. Lucille Levin, et al. v. JPMorgan Chase Bank, N.A.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A
COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the
9th day of October, two thousand eighteen.
Present:
RICHARD C. WESLEY,
DEBRA ANN LIVINGSTON,
Circuit Judges,
GEOFFREY W. CRAWFORD,
District Judge.*
_____________________________________
DOCTOR LUCILLE LEVIN and JEREMY LEVIN,
Plaintiffs — Third-Party Defendants — Cross-Defendants — Counter-Claimants —
Counter-Defendants — Appellants,
v. 17-3854-cv
JPMORGAN CHASE BANK, N.A.,
Defendant — Third-Party Plaintiff — Third-Party Defendant — Counter-Defendant —
Cross-Defendant — Counter-Claimant — Appellee.†
_____________________________________
For Plaintiff-Appellants: SUZELLE M. SMITH, Howarth & Smith, Los Angeles,
CA
*
Chief Judge Geoffrey W. Crawford, of the United States District Court for the District of Vermont,
sitting by designation.
†
The Clerk of Court is respectfully instructed to amend the caption as set forth above.
1
For Defendant-Appellee: STEVEN B. FEIGENBAUM, Levi Lubarsky Feigenbaum
& Weiss LLP, New York, NY
Appeal from an October 27, 2017 judgment of the United States District Court for the
Southern District of New York (Oetken, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court is AFFIRMED.
Lucille and Jeremy Levin (“the Levins”) appeal from an October 27, 2017 order of the
United States District Court for the Southern District of New York (Oetken, J.), which was
certified as a final judgment under Federal Rule of Civil Procedure 54(b) on February 12, 2018,
denying their motion for leave to file a supplemental complaint pursuant to Federal Rule of Civil
Procedure 15(d). We assume the parties’ familiarity with the underlying facts, the procedural
history of the case, and the issues on appeal.
* * *
The Levins hold an unsatisfied judgment against the Islamic Republic of Iran (“Iran”)
arising out of the 1984 kidnapping of Jeremy Levin in Beirut, Lebanon. On February 6, 2008,
the United States District Court for the District of Columbia entered judgment in the amount of
$28,807,719 in the Levins’ lawsuit against Iran pursuant to § 1605(a)(7) of the Foreign
Sovereign Immunities Act of 1976, 28 U.S.C. §§ 1602 et seq. (“FSIA”).1 See Levin v. Islamic
Republic of Iran, 529 F. Supp. 2d 1 (D.D.C. 2007). The Levins now seek to attach funds to
satisfy that judgment.
1
Section 1605(a)(7) has since been repealed and replaced. Pub. L. No. 110-181, Div. A.,
§ 1083(b)(1)(A)(iii), 122 Stat. 341 (2008). The new provision, 28 U.S.C. § 1605A, now provides an
exception to the general immunity from suit of foreign governments where “the foreign state [has been]
designated as a state sponsor of terrorism” by the U.S. Department of State. § 1605A(a)(2)(A)(i)(l).
2
On June 26, 2009, the Levins filed their initial complaint in the instant lawsuit, alleging
that JPMorgan Chase Bank, N.A. (“JPMCB”) possessed “assets blocked by the U.S. government
due to the fact that Iran has an interest in them either directly or indirectly (‘Iranian Blocked
Assets’).” App 183. A later round of discovery revealed the existence of two previously
undisclosed Iranian Blocked Assets in JPMCB’s possession: (1) a deposit account under the
name of Lebanese businessman Kassim Tajideen (the “Tajideen Account”) and (2) an account
(the “Saderat Account”) holding the proceeds of a wire transfer, also known as an electronic
funds transfer (the “EFT”), that was blocked by JPMCB in accordance with Iranian sanctions
regulations promulgated by the Office of Foreign Assets Control (“OFAC”). On July 12, 2017,
the Levins sought leave under Fed. R. Civ. P. 15(d) to file a supplemental complaint seeking
turnover of the Tajideen Account and the Saderat Account pursuant to § 201(a) of the Terrorism
Risk Insurance Act of 2002 (“TRIA”)2 and §§ 1610(f)(1)(A) and (g)(1) of the FSIA.3
2
Section 201(a) of the TRIA provides:
Notwithstanding any other provision of law, and except as provided in subsection (b), in
every case in which a person has obtained a judgment against a terrorist party on a claim
based upon an act of terrorism, or for which a terrorist party is not immune under section
1605(a)(7) of title 28, United States Code, the blocked assets of that terrorist party
(including the blocked assets of any agency or instrumentality of that terrorist party) shall
be subject to execution or attachment in aid of execution in order to satisfy such
judgment to the extent of any compensatory damages for which such terrorist party has
been adjudged liable.
TRIA, Pub. L. No. 107-297, 116 Stat. 2322 (2002) (reprinted following 28 U.S.C. § 1610).
3
Section 1610 of FSIA provides, in pertinent part:
(f)(1)(A) Notwithstanding any other provision of law . . . any property with respect to
which financial transactions are prohibited or regulated pursuant to section 5(b) of the
Trading with the Enemy Act (50 U.S.C. App. 5(b)), section 620(a) of the Foreign
Assistance Act of 1961 (22 U.S.C. 2370(a)), sections 202 and 203 of the International
Emergency Economic Powers Act (50 U.S.C. 1701-1702), or any other proclamation,
order, regulation, or license issued pursuant thereto, shall be subject to execution or
attachment in aid of execution of any judgment relating to a claim for which a foreign
state (including any agency or instrumentality of such state) claiming such property is not
immune under section 1605(a)(7) (as in effect before the enactment of section 1605A) or
3
JPMCB did not oppose the Levins’ motion with respect to the Tajideen Account. With
respect to the Saderat Account, however, the parties differed. The Levins argued that the
Saderat Account was attachable because the funds belonged to an “agency or instrumentality” of
Iran—Bank Saderat, an Iranian bank based in Tehran (“Saderat”).4 JPMCB argued that Saderat
lacked title to the funds because the immediate transferor of the funds to JPMCB was not Saderat
but Lloyds Bank Plc (“Lloyds”), a U.K. bank headquartered in London that transferred the funds
in its capacity as Saderat’s correspondent bank.
The district court granted the Levins’ motion to supplement their complaint with respect
to the Tajideen Account but denied the motion with respect to the Saderat Account. With
respect to the Saderat Account, the court concluded that supplementation of the complaint would
be futile under Calderon-Cardona v. Bank of New York Mellon, 770 F.3d 993 (2d Cir. 2014), and
Hausler v. JP Morgan Chase Bank, N.A., 770 F.3d 207 (2d Cir. 2014). The court quoted
Hausler for the proposition that “in order for an EFT to be a blocked asset of [a terrorist state]
under TRIA §201(a), either [the terrorist state] itself or an agency or instrumentality thereof
(such as a state-owned financial institution) [must have] transmitted the EFT directly to the bank
where the EFT is held pursuant to the block.” Levin v. Bank of New York Mellon, No.
09-CV-5900 (JPO), 2017 WL 4863094, at *4 (S.D.N.Y. Oct. 27, 2017) (quoting Hausler, 770
section 1605A.
...
[(g)(1)] Subject to paragraph (3), the property of a foreign state against which a judgment
is entered under section 1605A, and the property of an agency or instrumentality of such
a state, including property that is a separate juridical entity or is an interest held directly
or indirectly in a separate juridical entity, is subject to attachment in aid of execution, and
execution, upon that judgment as provided in this section . . . .
28 U.S.C. § 1610.
4
Both parties agree, for the purposes of this appeal, that Saderat qualifies as an “agency or
instrumentality” of Iran.
4
F.3d at 212 (emphasis and brackets in original)). Because the blocked EFT in question was
transmitted to JPMCB directly by Lloyds, rather than Saderat, the EFT constituted property of
Lloyds and could not be attached under TRIA or FSIA. Id.
* * *
We review the district court’s holding de novo. A district court’s denial of leave to
amend or supplement a complaint is generally reviewed for abuse of discretion. See, e.g.,
McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007). However, “[w]hen the
denial of leave to amend is based on a legal interpretation, such as a determination that
amendment would be futile, a reviewing court conducts a de novo review.” Hutchison v.
Deutsche Bank Sec. Inc., 647 F.3d 479, 490 (2d Cir. 2011); see also Gorman v. Consol. Edison
Corp., 488 F.3d 586, 592 (2d Cir. 2007) (reviewing de novo a district court’s denial of leave to
amend on grounds of futility). Because the district court denied the Levins’ motion to amend
their complaint on grounds of futility, we review that decision de novo.
Whether the Levins may attach the Saderat Account to satisfy their judgment against Iran
turns on the issue of ownership of those funds. See FSIA § 1610(g)(1) (authorizing attachment
of “the property of a foreign state against which a judgment is entered under section 1605A, and
the property of an agency or instrumentality of such a state” (emphasis added)); TRIA § 201(a)
(“the blocked assets of [a] terrorist party (including the blocked assets of any agency or
instrumentality of that terrorist party)” (emphasis added)); FSIA § 1610(f)(1)(A) (“any property
with respect to which financial transactions are prohibited or regulated” (emphasis added)). See
also Calderon-Cardona, 770 F.3d at 1000 (“Whether attachment of [] EFTs under §1610(g) is
possible turns . . . on whether the blocked EFTs at issue are ‘property of’ [a foreign state or its
agency or instrumentality].”).
5
Ownership of property is generally a question of state law. In Calderon-Cardona, we
noted that “Congress has not defined the type of property interests that may be subject to
attachment under FSIA § 1610(g).” Id. at 1001; see also Hausler, 770 F.3d at 211 (observing
the same with regard to TRIA § 201(a)). Absent a federal definition of “property” in either
FSIA or TRIA, we apply the “general rule in this Circuit that when Congress has not created any
new property rights, but ‘merely attaches consequences, federally defined, to rights created under
state law,’ we must look to state law to define the ‘rights the [judgment debtor] has in the
property the [creditor] seeks to reach.’” Calderon-Cardona, 770 F.3d at 1001 (quoting
Export-Import Bank v. Asia Pulp & Paper Co., 609 F.3d 111, 117 (2d Cir. 2010) (brackets in
original)). The relevant state law governing EFTs blocked by New York banks is Article 4 of
the New York Uniform Commercial Code (“N.Y. UCC”). See N.Y. UCC § 4-A; Asia Pulp,
609 F.3d at 118 (Article 4-A was “enacted to provide a comprehensive body of law that defines
the rights and obligations that arise from wire transfers.” (internal quotation marks omitted)).
The application of N.Y. UCC Article 4 to EFTs has received extensive consideration in
this Circuit. In Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd., 585 F.3d 58 (2d Cir.
2009), we determined that under New York law “EFTs are neither the property of the originator
nor the beneficiary while briefly in the possession of an intermediary bank.” Id. at 71.
Subsequently, both Calderon-Cardona and Hausler addressed this issue with particular clarity.
In Calderon-Cardona, we observed that “under the N.Y. UCC’s statutory scheme, the only entity
with a property interest in an EFT while it is midstream is the entity immediately preceding the
bank ‘holding’ the EFT in the transaction chain.” Therefore, Calderon-Cardona held:
“[A]n EFT blocked midstream is ‘property of a foreign state’ or ‘the property of
an agency or instrumentality of such a state,’ subject to attachment under 28
U.S.C. § 1610(g), only where either the state itself or an agency or instrumentality
6
thereof (such as a state-owned financial institution) transmitted the EFT directly
to the bank where the EFT is held pursuant to the block.”
Calderon-Cardona, 770 F.3d at 1002 (emphasis added). Hausler then further extended
Calderon-Cardona’s holding to the TRIA context. In Hausler, we held that “in order for an
EFT to be a ‘blocked asset of’ Cuba under TRIA § 201(a), either Cuba ‘itself or an agency or
instrumentality thereof (such as a state-owned financial institution) [must have] transmitted the
EFT directly to the bank where the EFT is held pursuant to the block.” Hausler, 770 F.3d at
212 (quoting Calderon-Cardona, 770 F.3d at 1002) (emphasis added) (brackets in original)).
The Saderat Account falls squarely within the holding of these cases. Here, as in
Hausler, “it is undisputed that no [terrorist entity] transmitted any of the blocked EFTs in this
case directly to a blocking bank.” Id. Instead, the Saderat Account funds were transmitted
directly to JPMCB by Lloyds Bank. The Levins nowhere assert that Lloyds constitutes an
“agency or instrumentality” of Iran. Because the EFT was not transferred directly to JPMCB
by a foreign state or an agency or instrumentality of a foreign state, it was not “property of” a
foreign state or an agency or instrumentality of such a state, and thus not attachable under FSIA
or TRIA.
On appeal, the Levins principally contend that ownership of the Saderat Account at the
time of blocking is a disputed question of fact and that the district court should have allowed
supplementation of their complaint in order to proceed to discovery on that question. We
disagree. New York’s law of property—as applied to the context of EFTs blocked pursuant to
OFAC sanctions—has been established by Calderon-Cardona and Hausler. Under those cases,
ownership of an EFT blocked by a New York bank depends entirely on the identity of the
immediate transferor to that bank. See Calderon-Cardona, 770 F.3d at 1002 (permitting
7
attachment “only where either the state itself or an agency or instrumentality thereof . . .
transmitted the EFT directly to the bank where the EFT is held pursuant to the block”) (emphasis
added); Hausler, 770 F.3d at 212 (same). In this case, the identity of the immediate
transferor—Lloyds Bank—is undisputed. Since neither party contends that Lloyds Bank is an
agency or instrumentality of Iran itself, the EFT is not attachable.
Nor can we diverge from that result based on the Levins’ purported distinction between
the “intermediary bank” at issue in Calderon-Cardona and Hausler and the “correspondent
bank” relationship at issue here. To begin with, many authorities apparently consider these
categories indistinct. See, e.g., Sec. & Exch. Comm’n v. Homa, 514 F.3d 661, 668 n.15 (7th
Cir. 2008) (“A correspondent bank is an intermediary bank that a primary bank uses to facilitate
currency transactions in the country in which the intermediary bank is located.”). More
importantly, however, our precedents interpreting N.Y. UCC Article 4 render the asserted
distinction irrelevant. As the district court properly held, the purported distinction between
correspondent and intermediary banks “is a distinction without a difference, at least as it relates
to the Second Circuit’s rule in Hausler.” Levin, 2017 WL 4863094, at *4. Regardless of the
particular relationship between the immediate transferor of the funds and the entity that held title
to those funds at the beginning of the transaction, the ownership of blocked EFT funds is clearly
assigned by Calderon-Cardona and Hausler. “[E]ven where an EFT is transferred to a
blocking bank by a ‘correspondent bank,’ the transferred asset is considered the ‘sole property’
of the correspondent bank, rather than the ‘principal’ bank (i.e., Bank Saderat).” Id. (citing Doe
v. Ejercito De Liberacion Nacional, No. 15 Civ. 8652-LTS, 2017 WL 591193, at *1-3 (S.D.N.Y.
Feb. 14, 2017), aff’d, 899 F.3d 152 (2d Cir. 2018)).
8
Finally, we note that our circuit’s recent opinion in Doe v. JPMorgan Chase Bank, N.A.,
899 F.3d 152 (2d Cir. 2018), further bolsters our conclusion that the funds blocked by JPMCB
are not attachable. In Doe, a terrorist entity, Tajco Ltd. (“Tajco”), originated an EFT that
flowed to an intermediary bank, AHLI United Bank UK PLC (“AHLI”), which then transmitted
the funds to JPMCB, which then blocked the funds. Id. at 155. That sequence of events is
highly analogous to the one at issue here, with Tajco taking the place of Iran, AHLI taking the
place of Lloyds, and JPMCB playing the same role. Doe applied Calderon-Cardona and
Hausler in upholding the district court’s ruling that the funds were not attachable. See id. at
157 (“[O]ur decisions in Calderon-Cardona and Hausler compel the conclusion that neither
Grand Stores nor Tajco has any attachable property interest in the blocked funds at JPMorgan
since they were not the entities that directly passed the EFTs to JPMorgan.”). We do the same.
* * *
We have considered the Levins’ remaining arguments and find them to be without merit.
Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
9
|
317 F.3d 1168
UNITED STATES of America, Plaintiff-Appellee,v.Robert Henry WERNER, also known as Redelk Ironhorse Thomas, Defendant-Appellant.
No. 01-4202.
United States Court of Appeals, Tenth Circuit.
January 23, 2003.
Submitted on the briefs:*
Vicki Mandell-King, Assistant Federal Public Defender, Chief, Appellate Division, and Michael G. Katz, Federal Public Defender, Denver, CO, for Defendant-Appellant.
Felice John Viti, Assistant United States Attorney and Paul M. Warner, United States Attorney, Salt Lake City, UT, for Plaintiff-Appellee.
Before KELLY, BALDOCK, and HENRY, Circuit Judges.
PAUL KELLY, JR., Circuit Judge.
1
Defendant-Appellant Redelk Ironhorse Thomas, a.k.a. Robert Henry Werner, pursuant to a written plea agreement, pleaded guilty to one count of mailing threatening communications in violation of 18 U.S.C. § 844(e). He was sentenced to a term of imprisonment of 24 months followed by three years of supervised release. On appeal, Mr. Thomas contends that the government violated the terms of the plea agreement by not allocuting at the sentencing hearing. We exercise jurisdiction pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a), and affirm.
Background
2
Mr. Thomas was charged in a three-count indictment with mailing threatening communications in violation of 18 U.S.C. § 876 (Count I), and mailing threatening communications in violation of 18 U.S.C. § 844(e) (Counts II and II). He entered into a plea agreement with the government whereby he would plead guilty to Count Two. In exchange, the government agreed to several obligations, including the following: "The government will recommend that [Mr. Thomas] be sentenced at the low end of the applicable guideline range." I R. Doc. 69 at 6. During the change of plea hearing, the district court carefully reviewed the agreement with Mr. Thomas, expressly reminding him that "[t]he government will also recommend that you be sentenced at the low end of the applicable Guideline range." IV R. at 10. At the conclusion of the hearing, Mr. Thomas signed the plea agreement and the court accepted his guilty plea.
3
At sentencing on August 23, 2001, Mr. Thomas spoke for over 55 minutes to announce a range of objections to the Presentence Report ("PSR"), his treatment in confinement and other issues not relevant here. V R. at 31. The PSR expressly noted that "the government also agreed... to recommend [Mr. Thomas] be sentenced at the low end of the applicable guideline range." VI R. at 2. During the hearing, the district court indicated that it had read Mr. Thomas' PSR "about 3 times." V R. at 30. Mr. Thomas twice expressed his agreement with the PSR's conclusion regarding the appropriate sentencing range of 18 to 24 months: "the 18 to 24 I'm not going to dispute that," V R. at 29, and "I agree with the 18 to 24 months." Id. at 41. During the sentencing hearing, (1) the government did not verbalize its recommendation that Mr. Thomas be sentenced at the low end of the range, (2) Mr. Thomas did not object to the government's failure to do so, and (3) the court itself made no specific reference to the sentencing recommendation. Mr. Thomas received a sentence of 24 months imprisonment, the highest permitted under the guideline range. Id.
Discussion
4
A claim that the government has breached a plea agreement is a question of law we review de novo, even where, as here, the defendant failed to object at the time of the alleged breach. United States v. Peterson, 225 F.3d 1167, 1170 (10th Cir.2000); see also id. at n. 2 (noting the circuit split on whether to apply a plain error analysis, as do a majority of circuits, or de novo review).
5
Government promises in a plea agreement must be fulfilled to maintain the integrity of the plea. Santobello v. New York, 404 U.S. 257, 262, 92 S.Ct. 495, 30 L.Ed.2d 427 (1971). We apply a two-step analysis to determine if the government breached a plea agreement: (1) we examine the nature of the government's promise; and (2) we evaluate this promise in light of the defendant's reasonable understanding of the promise at the time the guilty plea was entered. United States v. Brye, 146 F.3d 1207, 1210 (10th Cir.1998). Principles of general contract law guide our analysis of the government's obligations under the agreement. Thus, in assessing whether the government has breached the agreement, we look first to the express terms of the agreement, and if applicable, we construe any ambiguities against the government as the drafter of the agreement. Id.
6
The plea agreement contained the following language: "The government will recommend that [Mr. Thomas] be sentenced at the low end of the applicable guideline range." I R. Doc. 69 at 6. Mr. Thomas contends that this required the government to allocute in favor of sentencing at the low end of the guidelines. Our holding in United States v. Smith, 140 F.3d 1325 (10th Cir.1998), controls our analysis of this provision. In Smith, we held that "the term `recommendation' in a plea agreement does not require the prosecutor to allocute in favor of specific adjustments in the defendant's sentence if the recommendations are contained in the PSR and the prosecutor does not allocute against an agreed-upon adjustment." 140 F.3d at 1327. We noted that "[d]efendants should be advised that when there is no specific statement in a plea agreement that the government must allocute in favor of its recommendation(s) at a sentencing hearing, the government can satisfy the term `recommendation' by having its recommendations included in the PSR, which is then called to the attention of the sentencing court." Id.
7
In this case, the government agreed in the plea agreement to recommend that Mr. Thomas be sentenced at the low end of the guideline range. The sentencing judge was aware of this recommendation, having advised Mr. Thomas of it during the change of plea hearing. Furthermore, the recommendation was included in the PSR, which the sentencing judge reviewed immediately prior to sentencing. The plea agreement contained no specific language requiring the government to allocute at sentencing and the government did not allocute against the recommendation. In light of Smith, the legal implications of the government's promise are clear. Mr. Thomas' reasonable expectations concerning the government's promise were fulfilled. His failure to object at sentencing is but further evidence that his expectations of the government were satisfied. As we noted in Smith, the sentencing judge may exercise his discretion at sentencing to ignore the government's recommendation without transforming the prosecutor's silence into a breach of the plea agreement. 140 F.3d at 1327.
8
Contrary to the dissent, we will not presume that an experienced district judge sentenced Mr. Thomas without awareness of the plea agreement, particularly when the terms of that agreement were contained in the PSR. No matter how much we deconstruct its language, Smith still controls this case; "would recommend" as used in Smith, 140 F.3d at 1326, and "will recommend" as used in this plea agreement, are legally indistinguishable. The government's obligation to make a non-binding recommendation was satisfied under the circumstances given our precedent.1 It is telling that Smith never discusses either the passage of time between the plea hearing and the sentencing hearing, nor the precise language of the plea agreement included in the PSR at issue in that case, for neither factor is legally relevant to the straightforward holding of Smith: "We hold that the term `recommendation' in a plea agreement does not require the prosecutor to allocute in favor of specific adjustments in the defendant's sentence if the recommendations are contained in the PSR...." 140 F.3d at 1327. Apparently, even Mr. Thomas himself no longer believes that the government breached the plea agreement by failing to allocute concerning the recommendation, for he has moved to dismiss this appeal without prejudice, characterizing the issues raised by his able counsel in this appeal as "frivolous."
9
AFFIRMED. The motion to dismiss the appeal is DENIED.
Notes:
*
After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appealSee Fed.R.App. P. 34(a); 10th Cir. R. 34.1(G). The cause therefore is ordered submitted without oral argument.
1
Although a divided panel of the Ninth Circuit has held that the district court's awareness of the recommendation contained in the plea agreement is insufficient in the absence of government allocution prior to sentencing,see United States v. Myers, 32 F.3d 411, 413 (9th Cir.1994) (per curiam), this court declined to follow Myers, citing it as contrary authority in Smith. Smith, 140 F.3d at 1327.
10
HENRY, Circuit Judge, dissenting.
11
In my view, the plea agreement at issue here required the government, at the sentencing hearing, to recommend that the court sentence Mr. Thomas at the low end of the applicable guideline range. By failing to make this recommendation at the time of sentencing, the government materially breached the plea agreement. I would therefore remand the case to the district court for re-sentencing and direct the government to make the required recommendation. My conclusion is based on a reading of United States v. Smith, 140 F.3d 1325 (10th Cir.1998), that differs from the majority's, and on the application of standard principles of contract interpretation.
Smith
12
Unlike the majority, I believe that this circuit's decision in Smith does not control our analysis. Two important facts distinguish Smith from the instant case.
13
First, although the majority does not mention it, twelve weeks passed in this case between the change of plea hearing (Rec vol. IV, Plea Hr'g, dated May 31, 2001) and the sentencing hearing (Rev. vol. V, Sentencing Hr'g, dated August 23, 2001). Although the district court recognized the government's promise to make such recommendations at the change of plea hearing, at the sentencing hearing the district court never expressly recognized that promise. With that much time having elapsed between the hearings, I am at least skeptical about whether the district court at the sentencing hearing recalled with precision what promises it had noted at the change of plea hearing. The case load of federal district court judges is heavy; I would not expect a judge to remember a part of a plea bargain negotiation that was discussed nearly three months earlier.
14
By contrast, in Smith, the district court at the sentencing hearing specifically "noted the statements in the PSR concerning the government's recommendations." Smith, 140 F.3d at 1327. Much as the government tries to imply otherwise — "the district court did note, in a sense, the government's recommendations ... stat[ing]at the sentencing hearing that it had read the PSR `about three times,'" Aple's Br. at 14-15 n. 6 — the majority fails to point to, and the record nowhere includes, a scintilla of specific evidence that the district court at the sentencing hearing acknowledged the recommendations.
15
Second, the panel in Smith construed different contractual language than the contract at issue here. In Smith, we considered the meaning of the noun "recommendation" as used in the parties' plea bargain agreement. See Smith, 140 F.3d at 1327. Here, the dispute is over the meaning of the future tense verb in the plea agreement's statement that the government "will recommend" the designated sentencing terms. Rec. vol. I, doc. 69, at 6 (Plea Agreement, dated May 31, 2001). While the phrase "will recommend" is obviously grammatically related to the language at issue in Smith, it is not identical. Thus, we must construe the plea agreement in this case to properly resolve this appeal.
Contract Principles
16
The majority states, and I agree, that "[p]rinciples of contract law guide our analysis of the government's obligations under the agreement," Maj. Op. at 1169, and that "(1) we must examine the nature of the government's promise; and (2) we evaluate this promise in light of the defendant's reasonable understanding of the promise at the time the guilty plea was entered." United States v. Brye, 146 F.3d 1207, 1210 (10th Cir.1998). However, citing to Smith, the majority unfortunately discards this framework, excerpting only one sentence of the relevant language in the plea agreement, and concluding that the language of the PSR is not "legally relevant." Op. at 1171.
17
I disagree. To determine the nature of the government's promise, we look to the terms of the agreement. Paragraph 13, subsections (a)—(c) of the plea agreement set forth "the terms and conditions of the agreement," and state in full:
18
(a) I [Mr. Thomas] will enter a plea of guilty to count II of the Indictment and will withdraw all my motions associated with the instant matter. At the time of my sentencing, the government will move this court to dismiss Counts I and III of the Indictment.
19
(b) The government will recommend that I be given a 3 level reduction for acceptance of responsibility, if my offense level is sixteen (16) or greater, or a two level reduction for acceptance of responsibility if my offense level is less than sixteen (16), if I demonstrate an acceptance of responsibility for this offense by virtue of my conduct up to and including the time of sentencing. I understand that if, in the opinion of the United States Attorney's office, I have not demonstrated an acceptance of responsibility for this offense, the government will not recommend the acceptance of responsibility reduction of the applicable guideline range. I further understand that if the government does not make a recommendation for acceptance of responsibility due to my failure to accept responsibility for this offense, it will NOT be a basis for me to withdraw my guilty plea. I understand that the Court need not follow the government's recommendation.
20
(c) The government will recommend that I be sentenced at the low end of the applicable guideline range.
21
Plea Agreement, Rec. vol. I, doc. 69, at 12 (dated May 31, 2001) (emphasis supplied, except for "NOT").
22
In interpreting that language, we must construe any ambiguities against the drafting party — here the government. See Brye, 146 F.3d at 1210. This bedrock principle of contract interpretation is recited by the majority, see Maj. Op. at 1169, but nowhere reappears in its analysis.
23
Applying that principle, I see two reasonable interpretations of the "terms and conditions" provisions of the plea agreement. First, these provisions can be read to state that, at the time of the sentencing hearing, the government must take each of the specified actions, (1) moving to dismiss counts I and III of the indictment, (2) recommending a downward adjustment in the offense level, and (3) recommending a sentence at the low end of the guideline range. This first interpretation is supported by the agreement's use of the phrase "up to and including the time of sentencing" in subsection (b): that assessment of Mr. Thomas's conduct clearly could not be completed before the sentencing hearing. On this reading of the contract, the government could only fulfill its promise by making a recommendation at sentencing. Second, and in the alternative, these provisions might be read as specifying a time for the recommendation specified in subsection (a) — to dismiss the two counts — but not specifying a time for the recommendations specified in subsections (b) and (c).
24
The ambiguity here is whether subsection (a)'s "[a]t the time of my sentencing" modifies only (a) or, instead, should be read to say that the government promised to make each of the recommendations referred to in §§ (a)—(c) at the time of the sentencing hearing. Given that ambiguity, we adopt the interpretation adverse to the government as the undisputed drafter of the plea agreement: the government had an affirmative obligation to take all three actions at the time of sentencing. This analysis flows directly from the application of ordinary rules of grammar and from traditional contract principles familiar to our court. See, e.g., Allison v. Bank One-Denver, 289 F.3d 1223, 1244 (10th Cir.2002) (Kelly, J.) ("The issue is at bottom a question of contract interpretation"). The analysis assuredly does not flow from some form of modern academic deconstruction of the plea agreement. See Black's Law Dictionary 418 (7th ed.1999) ("deconstruction, n. In critical legal studies, a method of analyzing legal principles .... [a]lso termed trashing") (each emphasis in original).
25
Step two requires that we evaluate the government's promise in light of the defendant's reasonable understanding at the time the guilty plea was entered. See Brye, 146 F.3d at 1210. It was reasonable for Mr. Thomas, at the time of the making of the plea agreement, to have understood that the government would recommend a sentence at the lower end of the guideline range at the sentencing hearing. That is not to say that it was reasonable for Mr. Thomas to expect that the recommendation be done in a certain manner, be it orally or in writing, but that it was reasonable for him to expect that the recommendation would be given when the sentencing hearing took place.
26
The majority instead relies on Mr. Thomas's failure to object at sentencing, concluding that his failure to object is "further evidence that his expectations of the government were satisfied." Maj. Op. at 1171. However, such reliance is problematic because, as the majority notes, we have already rejected an implied waiver rule that would penalize the defendant for failure to raise the issue at the sentencing hearing. See Maj. Op. at 1169; United States v. Peterson, 225 F.3d 1167, 1170 (10th Cir.2000) (holding that "a defendant does not waive his right to appeal a claim that the government has breached a plea agreement when he fails to object to the breach before the district court").
27
Moreover, while it is true that Mr. Thomas could have communicated the government's recommendation to the court, that speculation is immaterial to the question of whether the government had an obligation to make the promised recommendation and whether it fulfilled that obligation. See, e.g., United States v. Roberts, 570 F.2d 999, 1010 (D.C.Cir.1977) (in holding that the government breached the plea agreement at issue, reasoning that although the government was not the sole party at fault, "nevertheless the defendant was denied his right to have the allocution he had been promised put before the court at the time of sentencing as it clearly would have had the prosecutor addressed the court directly or filed a statement... at the time of sentence") (internal quotations and citations omitted).
Breach
28
The government concedes that the government counsel at the sentencing hearing said literally nothing regarding the recommendation and the government does not point to, nor does the record include, any other verbal or written words in which it actually made the recommendation. Nor does the government argue that it was not required to make the recommendation because Mr. Thomas did not demonstrate his acceptance of responsibility. Instead, the government simply argues by citation to Smith that it satisfied its obligation under the plea agreement by including the memorialization of the promise in the PSR, which the district court indicated it had reviewed prior to sentencing.
29
This argument is unpersuasive. A promise cannot be fulfilled merely by noting that the promise has been made and then doing nothing else. As I have noted, the plea agreement refers to a promise to commit a future act, stating that the government "will recommend" the designated terms of sentencing. Rec. vol. 1, doc. 69, at 6 (emphasis supplied). The PSR, on which the majority places critical importance in concluding that the government satisfied its obligations under the plea agreement, states only that "[t]he government also agreed to recommend the defendant be given a reduction in the offense level if he demonstrates said acceptance by virtue of his conduct up to and including the time of sentencing and to recommend he be sentenced at the low end of the applicable guideline range." Rec. vol. VI, at 1-2.
30
Unlike some PSRs, the PSR in this case did not memorialize the government's recommendation; instead, the PSR only noted the government's conditional promise to recommend. And the district court at the change of plea hearing similarly only noted that the government "will" recommend sentencing at the low range of the guideline range. Further, there is no evidence that the plea agreement was attached to the PSR that the district court reviewed prior to sentencing. Moreover, even if the PSR was fresh in the judge's mind at the sentencing hearing, the government's silence could be interpreted to mean that the government was not satisfied with Mr. Thomas's conduct up to and including the sentencing hearing. For all these reasons, I would hold that the government breached the plea agreement.
Materiality
31
As the Supreme Court has explained, because the government breached the plea agreement, "[w]e need not reach the question whether the sentencing judge would or would not have been influenced had he known all the details of the negotiations for the plea." Santobello v. New York, 404 U.S. 257, 262, 92 S.Ct. 495, 30 L.Ed.2d 427 (1971). This is the rule because "the interests of justice and appropriate recognition of the duties of the prosecution in relation to promises made in the negotiation of pleas of guilty will be best served by remanding." Id. See also United States v. Hayes, 946 F.2d 230, 233 (3d Cir.1991) ("The doctrine that the government must adhere to its bargain in the plea agreement is so fundamental that even though the government's breach is inadvertent and the breach probably did not influence the judge in the sentence imposed, due process and equity require that the sentence be vacated.") (internal quotation marks omitted) (emphasis supplied).
32
However, even if we were required to perform a separate materiality analysis, to my mind a broken promise by the government to recommend favorable sentencing terms, in this case that Mr. Thomas be sentenced at the low end of the applicable range, is clearly material. Government recommendations in favor of the defendant at least some of the time influence courts. By denying Mr. Thomas the promised recommendation, the government denied Mr. Thomas and the district court the opportunity to gain the benefit of the government's recommendation to the court. Indeed, Mr. Thomas could have fared no worse: following the government's breach, the district court, having not received the recommendation, sentenced Mr. Thomas to a prison term of 24 months, the absolute high end of the applicable range.
Remedy
33
Because an application of ordinary contract principles leads me to conclude that the government materially breached the agreement, I would remand for resentencing and direct that government to recommend at sentencing that the district court sentence Mr. Thomas at the low end of the 18-24 month range. See Allen v. Hadden, 57 F.3d 1529, 1534 (10th Cir.1995) ("If the court finds that the government breached the plea agreement, the court must remand the case either for specific performance or withdrawal of the defendant's guilty plea.").
Conclusion
34
Today's decision is a step in the wrong direction. Future defendants plea bargaining in this circuit will have less reason to trust the government's promises. As we recognized in United States v. Cooper, 70 F.3d 563, 567 (10th Cir.1995), "[i]t is critical that the government stand by its agreements .... in order to encourage plea bargaining." Further, requiring that the government follow through on promises that it makes to recommend certain sentencing terms relieves the already burdened district courts from having to elicit or acknowledge recommendations that the government has promised it "will" make. Most fundamentally, "prosecutorial conduct should set the ethical standard; minimally it should comply with the law." Id. (emphasis supplied). Because I believe that the government failed to comply with the legal obligation it assumed in entering into a plea agreement with Mr. Thomas, I respectfully dissent.
|
591 P.2d 310 (1979)
Robert H. HOUSTON, Appellant,
v.
The STATE of Oklahoma, Appellee.
No. 0-78-111.
Court of Criminal Appeals of Oklahoma.
February 12, 1979.
Frank Muret, Oklahoma City, for appellant.
Larry Derryberry, Atty. Gen., Mary Kathleen Rhodes, Asst. Atty. Gen., for appellee.
OPINION
CORNISH, Presiding Judge:
Robert H. Houston was charged with the offense of Obtaining Merchandise by Means and Use of a False and Bogus Check. Upon a plea of guilty, the appellant was given a three (3) year suspended sentence on March 30, 1976. One of the conditions of the suspended sentence was the payment of court costs, restitution and probation fees, which *311 were to be paid in $200.00 monthly installments. Thereafter, on June 13, 1977, the Oklahoma County District Attorney filed an application to revoke the appellant's suspended sentence. At the revocation hearing on September 8, 1977, the trial court sustained the application to revoke the suspended sentence.
The State's witness, Gertie Hamilton, an officer with the Department of Corrections, Division of Probation and Parole, testified the appellant was under her supervision while serving the suspended sentence. She said he met all the terms of his probation with the exception of paying court costs, restitution and probation fees. Ms. Hamilton stated the appellant told her he had applied for two jobs, but had not been employed during his probationary period. The State then rested.
The appellant testified in his own behalf that he was divorced, lived with his mother, who provided him with room and board, did not receive welfare or unemployment, and had been unemployed for 15 months. The appellant further testified he applied for a job at the Tiffany Inn and the Central Printing Company, but was unsuccessful. He stated he was aware of the terms of his suspended sentence, but had not made any payments. The appellant, who was previously employed by Dayton Tire and Rubber Company for several years, testified he "scruffled a living" and made money occasionally by being staked in poker games, but had difficulty obtaining gainful employment at the age of 51.
The single assignment of error advanced by the appellant is that he was denied equal protection of the law by the revocation of his suspended sentence. He contends he was unable to pay restitution, court costs and probation fees, and argues that imprisonment solely because he is indigent constitutes an invidious discrimination on the basis of wealth, in violation of the Equal Protection Clause of the Fourteenth Amendment.
The appellant assumes, as a basis for his assignment of error, that he was imprisoned solely because he is indigent. This is not entirely consistent with the record. Referring to the appellant, the trial judge stated, "I only get from him the idea that he has no intention really of trying to work." The trier of fact then concluded that the appellant was a person unwilling to put himself in a position to pay restitution rather than someone willing yet unable to pay.
In support of his argument, the appellant attempts to trace the development of the law on the denial of equal protection of indigents. He relies on Rutledge v. Turner, Okl.Cr., 495 P.2d 119 (1972), where this Court followed opinions of the United States Supreme Court in adopting rules concerning imprisonment for nonpayment of fines and costs. Thus, the application of Rules 5.5 and 5.6 of the Rules of this Court, 22 O.S.Supp. 1978, ch. 18, App., becomes particularly important in the case at bar. Rule 5.5 provides:
"If the defendant fails to make an installment payment when due, he must be given an opportunity to be heard as to his refusal or neglect to pay the installment when due. If no satisfactory explanation is given, the defendant may then be imprisoned. If, because of exigent circumstances or misfortune, defendant is unable to make payment of a particular installment when due, he should be given further opportunity to satisfy the fine and/or costs, this being with the discretion of the court, to be governed by the facts and circumstances of each particular case."
Rule 5.6 provides:
"In the event the defendant, because of physical disability or poverty, is unable to pay fine and/or costs either immediately or in installment payments, he must be relieved of the fine and/or costs; or, in the alternative, be required to report back to the court at a time fixed by the court to determine if a change of condition has made it possible for the defendant to commence making installment payments toward the satisfaction of fine and/or costs."
The record clearly reflects that the appellant failed to comply with the conditions of *312 his suspended sentence. Testimony indicates that the appellant made little effort to obtain employment. The appellant's own testimony shows he thought about and would like to return to his job at Dayton Tire and Rubber Company, but never got around to applying. The appellant presented no medical evidence indicating any disability. Accordingly, there is sufficient evidence to sustain the revocation of the suspended sentence.
Since failure to pay restitution, court costs, and fees was the reason for revocation, one cannot conclude there was per se discrimination resulting from indigency. It appears the appellant was not unable to make restitution, but rather chose not to find employment to enable him to do so.
Although the exact situation herein has not been addressed previously by this Court, similar questions have been answered by courts in other jurisdictions. In State v. Gerard, 57 Wis.2d 611, 205 N.W.2d 374 (1973), the defendant's probation was revoked for failure to comply with the terms thereof, including failure to pay court costs, disbursements and restitution. There, the defendant informed the court at the time of sentencing that if he was put on probation he was confident he could obtain gainful employment. The conditions of his suspended sentence were based on that information.
Upon revocation of his probation, the defendant contended the conditions thereof were unconstitutional in that they denied him equal protection because he was an indigent. In answering that contention, the court distinguished In re Antazo, 3 Cal.3d 100, 89 Cal. Rptr. 255, 473 P.2d 999 (1970), but quoted with approval the following language therefrom:
"`... we do not hold that the imposition upon an indigent offender of a fine and penalty assessment, either as a sentence or as a condition of probation, constitutes of necessity in all instances a violation of the equal protection clause. Depending upon the circumstances of the particular case and the condition of the individual offender, there are a variety of ways in which the state may fine the indigent offender, as alternatives to imprisonment, without offending the command of equal protection . .. Rather, our holding is simply that an indigent who would pay his fine if he could, must be given an option comparable to an offender who is not indigent. When the indigent offender refuses to avail himself of such alternatives at the inception, or defaults or otherwise fails to meet the conditions of the particular alternative which is offered him without a showing of reasonable excuse, the indigent offender becomes in the eyes of the court exactly the same as the contumacious offender who is not indigent. When either of these conditions obtain the offender's indigency ceases to be dispositive and he may, consistently with the mandate of the equal protection clause, be relegated to "working out" his fine by imprisonment.'" (Emphasis original)
The court then went on to state in State v. Gerard, supra, as follows:
"The case at hand does not involve discrimination based upon wealth, nor is this a case where the indigent defendant could not pay such costs and thereby had to serve an X-amount of time in jail at a dollar a day. Rather, this is a case where the defendant led the court to believe he would be working and supporting his family if allowed to be put on probation. He was therefore given an option comparable to an offender who is not indigent that is, jail or probation. While on probation the defendant had several jobs and was no longer indigent. The first was at Ampco Metal with a $90 per week take-home pay. The second was at Geuder-Paeschke and Frey Company with a $120 a week take-home pay. At this point in time he had the ability to at least make some payments. He refused to pay and did not pay anything not even a nominal amount. In this case, when the defendant had the ability to pay at least something and refused to avail himself of his alternatives, or refused to even attempt *313 to comply with probation conditions without a showing of reasonable excuse, he became in the eyes of the law exactly the same as the contumacious offender who is not indigent. His indigency ceases to be dispositive of the issue. In re Antazo, supra. His right to equal protection under the law has not been violated. He was given a fair chance. His indigency did not cause his probation to be revoked, but rather his own refusal to at least attempt compliance. His contumacious actions caused revocation and he knew of this possibility." (Emphasis added)
The decision of the trial court to revoke the suspended sentence in whole or only in part is within the sound discretion of the trial court and that decision will not be interfered with absent an abuse thereof. Wallace v. State, Okl.Cr., 562 P.2d 1175 (1977), and Barthiume v. State, Okl.Cr., 549 P.2d 366 (1976).
In the instant case, there was sufficient evidence to support the trial court's decision that the appellant had failed to make restitution and that his failure was not due to impossibility, undue hardship, physical disability, or other causes. For that reason the order of the trial court revoking appellant's suspended sentence is AFFIRMED.
BRETT and BUSSEY, JJ., concur.
|
510 F.Supp.2d 1085 (2007)
MAGICAL MILE, INC., d/b/a/ Ema Savahl Design, a Florida corporation, Plaintiff,
v.
Lloyd BENOWITZ a/k/a Lloyd Benz, an individual, Bahiye Fashion, Inc., a Florida corporation, Reina Simon, an individual, Baccio Couture Designs Corp., a Florida corporation, and Fausto Altamarino, an individual, Defendants.
No. 06-22929-CIV.
United States District Court, S.D. Florida.
April 27, 2007.
*1086 Laura Ganoza, Chalon Tamara Allen, Buchanan Ingersoll & Rooney, P.C., Miami, FL, for Plaintiff.
Dale Lyn Friedman, Conroy Simberg Ganon Krevans & Abel, Hollywood, FL, Steven Ira Peretz, Kluger Peretz Kaplan & Berlin, Miami, FL, for Defendants.
ORDER ON DEFENDANTS' PARTIAL MOTION TO DISMISS
PAUL C. HUCK, District Judge.
THIS CAUSE is before the Court upon Defendants Bahiye Fashion, Inc. ("Bahiye") and Reina Simon's ("Simon") Partial Motion to Dismiss [D.E. # 10], filed on February 8, 2007. The Court has reviewed the Motion and the parties' submissions, and is duly advised in the premises.
Plaintiff, Magical Mile, Inc., d/b/a Ema Savahl Design ("Magical Mile"), has filed a six-count complaint, alleging claims for copyright infringement, statutory and common law trade dress infringement, and statutory and common law unfair competition. In their Motion, Bahiye and Simon (collectively "Defendants") move to dismiss Magical Mile's claims of copyright infringement (Count I), Federal Unfair Competition (Count III) and Common Law Unfair Competition (Count V). For the following reasons, the Motion is granted in part and denied in part.
I. Factual Background
Magical Mile is a Florida corporation in the business of designing, manufacturing, marketing and distributing women's apparel. Bahiye is also a Florida corporation that manufactures, retails and wholesales women's apparel. Simon is a director and president of Bahiye.
Ema Savahl Design ("ESD"), Magical Mile's corporate identity, introduced "a revolutionary new 3-dimensional artistic design element to its collection of dresses, halter tops, bustiers, blouses, skirts and jeans." Compl. ¶ 4. Magical Mile states that these so-called "hand-painted embellishments" are their distinctive creation and, as a result of widespread sales and promotion, are recognized and relied upon as identifying ESD as their source. On or about November 7, 2006, ESD registered the hand-painted embellishments contained in two of their fashion lines with the Register of Copyrights.
In March 2002, ESD entered into a contract with Lloyd Benowitz, a/k/a Lloyd Benz ("Benz") as an independent sales *1087 representative.[1] Benz was to market and sell ESD's clothing line, including those containing the copyrighted designs and hand-painted embellishments. Benz's relationship with ESD ended on March 28, 2003, when Benz was terminated. With knowledge of the goodwill and reputation symbolized by the Ema Savahl trademark and trade name and with knowledge of the distinctive quality of ESD's hand-painted embellishments, Benz induced other manufacturers and retailers of women's clothing, including Bahiye, to copy and sell clothing containing the copyrighted designs and imitations of ESD's distinctive hand-painted embellishments.
Bahiye, at the direction of Simon, then engaged in the production, marketing, offering for sale, and selling of women's apparel, including dresses, halter tops, bustiers, blouses, skirts and jeans, that infringe upon ESD's copyrighted designs, contain a near exact imitation of the hand-painted embellishments, and which look confusingly similar to ESD's distinctive trade dress. In its Complaint, Magical Mile alleges that Defendants deliberately and willfully copied ESD's copyrighted designs and intended to deliberately trade off the goodwill that ESD had established with its designs.
II. Standard of Review
In reviewing a motion to dismiss, all well-pleaded facts in Plaintiffs complaint and all reasonable inferences drawn from those facts must be taken as true. Oladeinde v. City of Birmingham, 963 F.2d 1481, 1485 (11th Cir.1992). A complaint should not be dismissed for failure to state a claim unless it appears beyond a doubt that Plaintiff can prove no set of facts that support a claim for relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Bracewell v. Nicholson Air Servs., Inc., 680 F.2d 103, 104 (11th Cir.1982). Nonetheless, when on the basis of a dispositive issue of law no construction of the factual allegations will support the cause of action, dismissal of the complaint is appropriate. Marshall County Bd. of Educ. v. Marshall County Gas Dist., 992 F.2d 1171, 1174 (11th Cir.1993).
III. Discussion
A. Copyright Infringement (Count I)
Defendants first contend that Magical Mile fails to state a claim for copyright infringement because its designs are not entitled to copyright protection. In order to state a valid claim for copyright infringement, Magical Mile must allege: "(1) the specific original work that is the subject of the copyright claim; (2) that the plaintiff owns the copyright in the work; (3) that the work in question has been registered in compliance with the statute; and (4) by what acts and during what time the defendant has infringed the copyright." Klinger v. Weekly World News, Inc., 747 F.Supp. 1477, 1479 (S.D.Fla.1990). Defendants do not allege that Magical Mile has failed to plead the requirements for copyright infringement. Rather, Defendants attack the substance of Magical Mile's copyright infringement claim. For example, Defendants allege that ESD's designs do not satisfy the originality requirement of copyright because the artistic renderings are no more than a thematic concept of something that appears in the public domain. To the extent copyright protection is given, Defendants argue that because the designs depict familiar objects such as flowers and leaves, they are entitled to very narrow protection.
Defendants' contentions are misplaced at this stage in the litigation. As *1088 noted above, at the motion to dismiss stage, all well-pleaded facts in Plaintiffs complaint and all reasonable inferences drawn from those facts must be taken as true. Oladeinde, 963 F.2d at 1485. Magical Mile has alleged the specific original works that are the subject of the copyright claim-the specifically enumerated copyrighted items and the hand-painted embellishments. Magical Mile has alleged that it owns the copyright and that it has been properly registered. Finally, Magical Mile's complaint recounts the alleged acts by which Defendants infringed upon its copyright. Thus, Magical Mile has stated a valid claim for copyright infringement. That the claim may ultimately be inadequate is not enough to overcome such a valid claim at the motion to dismiss stage of litigation. Accordingly, Defendants motion to dismiss Magical Mile's claim for copyright infringement (Count I) is denied.
B. Preemption (Counts III and V)
Next, Defendants contend that Magical Mile's Lanham Act and common law claims for unfair competition are preempted by the Copyright Act. "The Copyright Act expressly preempts legal or equitable rights . . . that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible Medium of expression and come within the subject matter of copyright as specified by sections 102 and 103." Lipscher v. LRP Publications, Inc., 266 F.3d 1305, 1311 (11th Cir.2001) (citing 17 U.S.C. § 301(a)). The Eleventh Circuit employs a two-part test to be applied in copyright preemption cases: preemption occurs if the rights at issue (1) fall within the "subject matter of copyright set forth in sections 102 and 103" and (2) "are `equivalent to' the exclusive rights of section 106." Crow v. Wainwright, 720 F.2d 1224, 1225-26 (11th Cir.1983). See also Campbell v. Osmond, 917 F.Supp. 1574, 1583 (M.D.Fla.1996) (finding that a claim for unfair competition under the Lanham Act is only "subsumed by copyright law in so far as it attempts to protect against copying or is a claim based on a right equivalent to the exclusive rights within the scope of copyright"). The Eleventh Circuit has determined that rights are not "equivalent" if "an extra element is required instead of or in addition to the acts of reproduction, performance, distribution or display, in order to constitute a state-created cause of action." Foley v. Luster, 249 F.3d 1281, 1285 (11th Cir.2001) (quoting Computer Assoc. Int'l, Inc. v. Altai, Inc., 982 F.2d 693, 716 (2d Cir.1992)). Thus, if such an "extra element" is required for the plaintiff to succeed "then the right does not lie within the general scope of copyright and there is no preemption." Id.
The parties have not expressly addressed the first prong of the analysis, but both Magical Mile and Defendants appear to accept that Magical Mile's unfair competition claims fall within the subject matter of copyright., Indeed, Magical Mile's fashion designs seem to fall within the subject matter of copyright as set forth in section 102. Accordingly, the remaining, determinative issue is whether the unfair competition claims contain an "extra element" that places them outside the preemptive scope of copyright. "The rights provided to a copyright owner by section 106 have been described as the exclusive rights to do and to authorize (1) the reproduction of copyrighted work (to make copies), (2) the preparation of derivative works based on his copyrighted work, and (3) the distribution of copies of the copyrighted work to the public by sale or other transfer of ownership.'" Donald Frederick Evans & Assoc., Inc. v. Continental Homes, Inc., 785 F.2d 897, 914 (11th Cir.1986) quoting Schuchart & Assoc. v. Solo Serv. Corp., 540 F.Supp. 928, 943 (W.D.Tex.1982).
*1089 1. Count III (Federal Unfair Competition)
In Count III, Magical Mile alleges that Defendants'"use, marketing and offering for sale of the Bahiye infringing Garments . . . that incorporate the distinctive features of the hand-painted embellishment trade dress constitutes the use in commerce of false designations of origin, false and/or misleading descriptions or representations that are likely to cause confusion and mistake and to deceive consumers as to the source of origin of those products and/or the affiliation, connection or association of Defendants with ESD or the sponsorship or approval of Defendants' products by ESD." Compl. ¶ 52. The claim for unfair competition is brought pursuant to 15 U.S.C. § 1125(a).[2] Magical Mile's federal unfair competition claim is based upon Defendants' alleged trade dress infringement and not on the alleged copyright infringement. "In order to prevail on a claim for trade dress infringement . . . a plaintiff must prove three elements: (1) that the trade dress of the two products is confusingly similar; (2) that the features of the trade dress are primarily non-functional; and (3) that the trade dress is inherently distinctive or has acquired secondary meaning." Epic Metals Corp. v. Souliere, 99 F.3d 1034, 1038 (11th Cir.1996) (citing Brooks Shoe Mfg. Co. v. Suave Shoe Corp., 716 F.2d 854, 857 (11th Cir.1983)). It is evident from both the statutory language and Magical Mile's Count III claim that Magical Mile seeks to protect different rights than those protected by the Copyright Act. Virtually all of the elements are distinct from the requirements in proving a claim of copyright infringement. The federal unfair competition claim seeks to protect Magical Mile's designs from being associated or confused with Defendants', as opposed to protecting Magical Mile's rights in its copyrights under section 106. Because Magical Mile's federal unfair competition claim contains an "extra element" it is not preempted by federal copyright law and is not subject to dismissal.
2. Count V (Common Law Unfair Competition)
In Count V, Magical Mile alleges that "Defendants' acts of producing, marketing and selling the Bahiye infringing Garments . . . constitute unfair competition and have resulted in substantial damage to ESD's business, reputation and goodwill in violation of the common law of the State of Florida." Id. ¶ 62. The Eleventh Circuit has in fact determined that an "extra element" is necessary in order to prove a Florida common law unfair competition claim. Donald Frederick Evans & Assoc., Inc., 785 F.2d at 914. See also M.G.B. Homes, Inc. v. Ameron Homes, Inc., 903 F.2d 1486, 1493 (11th Cir.1990) (recognizing "extra element" in Florida unfair competition claim). In Evans, the court found that in order to prevail on an unfair *1090 competition claim under Florida common law, a plaintiff must "establish deceptive or fraudulent conduct of a competitor and likelihood of customer confusion." Id. citing Stagg Shop of Miami, Inc. v. Moss, 120 So.2d 39 (Fla.2d Dist.App.1960). Instead of simply focusing on the copying aspect, a Florida unfair competition claim "goes to the question of marketing." Id. Thud, in order for Magical Mile's common law unfair competition claim to survive, Magical Mile must prove that deceptive or fraudulent conduct by Defendants and a likelihood of customer confusion. M.G.B. Homes, Inc., 903 F.2d at 1493.
However, in this case Magical Mile has set forth no such allegations. Nowhere in its complaint does Magical Mile allege deceptive or fraudulent conduct or misrepresentations by Defendants. To the contrary, Magical Mile's unfair competition claim in Count V appears to be solely based on the "Defendants' acts of producing, marketing and selling the Bahiye infringing Garments." That mere allegation is insufficient to distinguish Magical Mile's common law unfair competition claim from its federal copyright infringement claim. Count V seeks only to protect those rights equivalent to those protected in section 106 of the Copyright Act. Accordingly, in the absence of any allegations of the necessary "extra element," Count V is preempted and must be dismissed.
IV. Conclusion
For the foregoing reasons, it is hereby
ORDERED that Defendants' Motion is GRANTED IN PART and DENIED IN PART. Defendants' Motion to Dismiss Counts I and III is DENIED. Defendants' Motion to Dismiss Count V is GRANTED. Accordingly, Count V is DISMISSED WITHOUT PREJUDICE. Magical Mile shall have leave to filed an amended complaint on or before Monday, May 7, 2007.
DONE and ORDERED.
NOTES
[1] Benz was initially a Defendant in this matter, but all claims against him have been voluntarily dismissed pursuant to a settlement agreement.
[2] Section 1125(a) states:
(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which
(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or
(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities,
shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.
|
92 Cal.App.3d 556 (1979)
155 Cal. Rptr. 89
THE PEOPLE, Plaintiff and Respondent,
v.
CHARLES STONEWALL JACKSON et al., Defendants and Appellants.
Docket No. 32420.
Court of Appeals of California, Second District, Division Five.
May 1, 1979.
*558 COUNSEL
Richard K. Cacioppo and Cynthia K. Cohan, under appointments by the Court of Appeal, for Defendants and Appellants.
Evelle J. Younger, Attorney General, Jack R. Winkler, Chief Assistant Attorney General, S. Clark Moore, Assistant Attorney General, Robert F. Katz and Dixie Moe, Deputy Attorneys General, for Plaintiff and Respondent.
OPINION
STEPHENS, J.
By information, appellant Jackson was charged with six counts of violation of Business and Professions Code section 4390, passing of a forged prescription; three counts of violation of Penal Code section 496, receiving stolen property; one count of violation of Health and Safety Code section 11368, possession of a narcotic by use of a forged prescription; and one count of violation of Penal Code section 475a, possession of a completed check with intent to defraud. The Penal Code section 475a count and one of the Penal Code section 496 counts were dismissed pursuant to a Penal Code section 1118 motion after trial. Jackson's motion for severance of his trial from that of his codefendant was denied by the trial court. Extrajudicial statements of codefendant Hattaway were admitted into evidence over Jackson's objections and a motion for a mistrial based on the admission of those statements was denied. Jackson was convicted of all the remaining counts.
Appellant Hattaway was charged by information with one count of violation of Business and Professions Code section 4390, three counts of violation of Penal Code section 496, and one count of violation of Penal Code section 475a. During jury trial, Hattaway's motions to dismiss the *559 charges and suppress his extrajudicial statements on the basis of failure to establish corpus delicti were denied. Hattaway's motion after trial, to dismiss pursuant to Penal Code section 1118, was granted as to all counts except the violation of Business and Professions Code section 4390. He was found guilty of that count.
FACTS
The facts of this case, insofar as necessary to discuss the matters raised on appeal, are as follows:
On August 23, 1977, appellant Jackson entered the Grand Pharmacy in Glendora, California. He presented two prescriptions for drugs and was told by the pharmacist to return the next day to pick up the merchandise. Shortly after Jackson left the pharmacy, a young black male entered the pharmacy and left a prescription for drugs for one S. Young Emerson. He too was told to return the next day to pick up the goods.
On August 24, 1977, Jackson drove to the pharmacy with appellant Hattaway as a passenger. Jackson entered the pharmacy, paid for the two prescriptions he had left the day before, and left the store with the drugs in a small bag. Once outside, he approached his car in which Hattaway was sitting, waved the bag, did a small dance and went into a nearby market. Appellant Hattaway then left the vehicle and went into the pharmacy. He requested a prescription for Dorothy Emerson or Mrs. Emerson who he said was his wife. Hattaway was told that there was no prescription under that name, whereupon he appeared puzzled and left the store. Both appellants drove away in Jackson's vehicle. After a short distance they were stopped by a police officer who had been observing their activities at the pharmacy. This officer had been informed by the pharmacist about the latter's suspicions concerning the prescriptions left by Jackson and the young black male. The officer arrested both appellants and later searched the car pursuant to a warrant. Found in the car were two bottles of drugs from the Grand Pharmacy, and various items of stolen property, including a passport, credit cards and checks belonging to an S.Y. Emerson.
On August 25, 1977, Hattaway, after being informed of and waiving his constitutional rights, told a police officer the following: That Jackson had told him to come over to his house if he wanted to make some money; that he went to Jackson's house where Jackson gave him some speed (amphetamine) and a hypodermic needle; that they then drove to the *560 Grand Pharmacy where Jackson told him to pick up a prescription for a Dorothy Emerson; and that he left the pharmacy when there was some confusion over what name the prescription was under. Hattaway also told the officer that he was a "runner for scrips [prescriptions]," that he was to receive a portion of the drugs he obtained, and that he sold drugs and false identifications for a living.
CONTENTIONS
Appellant Hattaway's first contention is that the trial court erred in admitting his extrajudicial statements before establishing the corpus delicti of the alleged offense, a violation of Business and Professions Code section 4390.[1] Hattaway's motion to suppress those statements was denied by the trial court.
(1a) Appellant Hattaway correctly states the rules that a prima facie showing of the corpus delicti of the crime charged must be made before a defendant's extrajudicial statements may be received into evidence, and that the corpus delicti must be proved entirely independently and without considering those statements. (People v. Cantrell (1973) 8 Cal.3d 678-680 [105 Cal. Rptr. 792, 504 P.2d 1256], disapproved on another point in People v. Wetmore (1978) 22 Cal.3d 318, 324 [headnote 1a, 1b] [149 Cal. Rptr. 265, 583 P.2d 1308]; People v. Mehaffey (1948) 32 Cal.2d 535 [197 P.2d 12].) (2a) Appellant Hattaway is incorrect in his assertion that these rules were not complied with in the present case.
Hattaway was charged with a violation of Business and Professions Code section 4390 which occurred on or about August 23, 1977. The facts, ante, set forth the evidence which was introduced prior to the admission of Hattaway's extrajudicial statements. From this sequence of events it could reasonably be inferred that Jackson and the unidentified black male were acting in concert to pass false prescriptions; that the prescription left for S.Y. Emerson was a false one; that Jackson and Hattaway had arranged to pick up the products of the false prescriptions on August 24; and that Hattaway intended to do so when he asked for the prescription for his wife, Dorothy or Mrs. Emerson. (1b) Corpus delicti may be established by slight evidence, by circumstantial evidence, and by reasonable inferences to be drawn from such evidence. (People v. Cantrell, supra, 8 Cal.3d at p. 679.) Moreover, it is not necessary to *561 connect the particular defendant with the perpetration of the crime in order to establish the corpus delicti. (People v. Mehaffey, supra, 32 Cal.2d at p. 545.) (2b) It is clear, therefore, that the corpus delicti of a violation of Business and Professions Code section 4390 was established prior to the introduction of Hattaway's extrajudicial statements.
Appellant Hattaway's second contention is that the evidence, even including his extrajudicial statements, failed to establish a violation by him, of Business and Professions Code section 4390. For Hattaway to prevail with this argument, it would have to appear upon an examination of all the evidence, viewed in a light most favorable to the respondent, that upon no reasonable hypothesis was there substantial evidence to support the verdict. (People v. Redmond (1969) 71 Cal.2d 745, 755 [79 Cal. Rptr. 529, 457 P.2d 321].) In the present case, reasonable inferences regarding Hattaway's conduct as detailed in the preceding paragraph, when bolstered by his extrajudicial statements (see Facts, ante, pp. 559-560), leave little doubt about the nature and purpose of that conduct. The issue, however, is whether that conduct constituted a violation of Business and Professions Code section 4390 as a matter of law.
Appellant Hattaway asserts that the violation of Business and Professions Code section 4390 was completed upon the passing of the S.Y. Emerson prescription by the unidentified black male, and it was the latter who was properly answerable for the crime, not Hattaway. Respondent argues that Hattaway could reasonably have been found to have aided and abetted Jackson in the passing of the prescription and thus was properly found guilty as a principal, even though he did not directly commit the act constituting the offense. (Pen. Code, § 31.) We concur with respondent's interpretation of the facts and add another. A violation of Business and Professions Code section 4390 can consist of "uttering" a false prescription for drugs, as well as passing such a prescription.[2] (3) The word "utter" means to use or attempt to use an instrument, whereby or in connection with which, a person asserts or represents to another, directly or indirectly, expressly or impliedly, by words or conduct, that the instrument is genuine. (CALJIC No. 15.25 (3d ed. 1970).) There was substantial evidence tending to prove that Hattaway attempted to use the false S.Y. Emerson prescription to obtain drugs, by asserting with his words and conduct that it was genuine. We therefore find that the verdict of guilty for appellant Hattaway's violation of Business and Professions Code section 4390 must stand.
*562 Appellant Jackson contends that the court erred in denying his motion to sever his trial from that of his codefendant Hattaway, and in admitting Hattaway's extrajudicial statements. The extrajudicial statements made by Hattaway are detailed in the fourth paragraph of "Facts." Jackson relies on Bruton v. United States (1968) 391 U.S. 123 [20 L.Ed.2d 476, 88 S.Ct. 1620], which involved an invalid confession of a defendant, received into evidence, which incriminated a codefendant. The defendant who made the confession did not testify at trial so the incriminating statements were not subject to cross-examination. The court held that there was substantial risk that the jury, despite instructions to the contrary, considered the confession in determining the codefendant's guilt and that therefore the latter's constitutional right of cross-examination was violated. (Ibid.) Jackson also relies on People v. Aranda (1965) 63 Cal.2d 518, 524-531 [47 Cal. Rptr. 353, 407 P.2d 265], which also involved an invalid confession, and in which the court established judicially declared rules of conduct regarding the admission of an extrajudicial statement of one defendant that implicates a codefendant. In essence, these rules permit a joint trial only if the incriminating extrajudicial statements are excluded or if the incriminating parts thereof are effectively deleted. (Id., at p. 530.)
Since, in the present case, Hattaway's extrajudicial statements were admitted without deletions and Jackson's motion for a severance of trials was denied, whether there was an Aranda-Bruton error turns on whether Hattaway's statements substantially incriminated Jackson. Whether they did so must be determined in light of the other evidence. (4) It is not Aranda or Bruton reversible error to admit into evidence, under proper limiting instructions to the jury, the extrajudicial statements of one defendant which link a codefendant to the commission of a crime, if there is substantial evidence, apart from the statements, linking that codefendant to that crime. (People v. Epps (1973) 34 Cal. App.3d 146, 154-161 [109 Cal. Rptr. 733]; People v. Romo (1975) 47 Cal. App.3d 976, 982-984 [121 Cal. Rptr. 684].) In the present case, the record reflects that the jury was instructed to disregard the extrajudicial statements of Hattaway insofar as they reflected on the guilt or innocence of Jackson.[3]
*563 We find substantial evidence, apart from Hattaway's statements, linking Jackson to each crime of which it can reasonably be said that Hattaway's statements incriminated him. These include all counts involving the two prescriptions passed by Jackson at the Grand Pharmacy, and the prescription passed by the unidentified black male at the same place. We need not reiterate that evidence here as it is adequately detailed in the first two paragraphs of "Facts." The last mentioned count needs some discussion, however.
Hattaway and Jackson were charged with a violation of Business and Professions Code section 4390 which occurred on or about August 23, 1977, and which involved a prescription in the name of S.Y. Emerson. The first two paragraphs of the facts reflect the evidence which was introduced attesting to the commission of that offense. From the sequence of events it could reasonably be inferred that Jackson and the unidentified black male were acting in concert to pass false prescriptions; that the prescription left for S.Y. Emerson was a false one; that Jackson and Hattaway had arranged to pick up the products of the false prescriptions on August 24; and that Hattaway intended to do so when he asked for the prescription for his wife, Dorothy or Mrs. Emerson. We thus see substantial evidence of this violation of Business and Professions Code section 4390 by Jackson.
In light of the substantial evidence inculpating Jackson, and the limiting instructions given the jury regarding the extrajudicial statements of Hattaway, we conclude that those statements did not substantially incriminate Jackson in a manner requiring reversal. Conceding error, it was harmless beyond a reasonable doubt.
The judgments are affirmed.
Hastings, J., concurred.
KAUS, P.J.
I dissent. I cannot conclude that the record contains sufficient substantial evidence to uphold the conviction on count 4 the count involving the Emerson prescription: there simply was no evidence that the prescription was other than genuine. (Cf., People v. Kurland (1973) 33 Cal. App.3d 197, 200-201 [108 Cal. Rptr. 874, 117 Cal. Rptr. 216].)
The majority bases its conclusion that the evidence was sufficient on three bits of circumstantial evidence: (1) the discovery in Jackson's car of *564 "stolen" items apparently belonging to an S.Y. Emerson; (2) the extrajudicial admissions of Hattaway; and (3) the cooperation between Hattaway and Jackson who had just engaged in a transaction involving prescriptions which were proved to have been forged. None of these, considered alone or in the aggregate, constitutes substantial evidence that the Emerson prescription was false.
1. There was no evidence that the Emerson passport, credit cards and checks were stolen. Indeed, the prosecutor conceded that fact when the receiving stolen property charge based on those documents was dismissed.
2. While Hattaway's extrajudicial admissions implicated him in some sort of nefarious dealings with Jackson concerning the drugs that had been ordered by way of the Emerson prescription, absent bald speculation that fact in no way proves that the Emerson prescription was false.
3. The prosecution presented a handwriting expert who testified that the two prescriptions which had been personally passed by Jackson were forgeries. No comparable evidence regarding the Emerson prescription was presented. While the interaction between Hattaway and Jackson may have raised a strong suspicion that the third prescription was also forged, such suspicion cannot substitute for solid proof of guilt. I would reverse count 4.
I also have my doubts on the Aranda-Bruton point. The majority holds that there was no Aranda-Bruton error because there was substantial evidence linking Jackson with the crime other than Hattaway's extrajudicial admissions. In support of this proposition, the majority cites People v. Epps (1973) 34 Cal. App.3d 146 [109 Cal. Rptr. 733] and People v. Romo (1975) 47 Cal. App.3d 976 [121 Cal. Rptr. 684]. From my reading of Epps and Romo two doubtful cases the majority overstates their effect. In Epps, the extrajudicial statements showed only that the codefendants were acquainted with each other. In this they were cumulative. Further they did not directly implicate the codefendant who had not made the admissions in the crime. In Romo, the principle adverted to is merely a dictum.
The situation here is vastly different from that in Epps. Hattaway's admissions clearly and directly implicated Jackson in the charged crimes. Because the court denied Jackson's alternative motion to sever or strike *565 the parts of the statements which implicated him, and because Hattaway did not testify, there was Aranda-Bruton error. The other evidence of guilt may have rendered the error harmless the present posture of the case makes it unnecessary for me to decide that question but it did not make the error nonexistent.
NOTES
[1] The pertinent part of Business and Professions Code section 4390 reads as follows: "Every person who signs the name of another, or of a fictitious person, or falsely makes, alters, forges, utters, publishes, passes, or attempts to pass, as genuine, any prescription for any drugs is guilty of a forgery...."
[2] See footnote 1 ante, page 560.
[3] "THE COURT: .... .... .... .... .... . .
"At this time I'm going to instruct that with respect to any statements made by, in this case, Mr. Hattaway to Officer Pfeiffer, and to which Officer Pfeiffer will now testify, those statements, to the extent that they mention Mr. Jackson, are limited solely to Mr. Hattaway; and any evidence of Mr. Jackson that comes in, you're to disregard and not consider in determining Mr. Jackson's guilt or innocence on these charges.
"The statement is solely limited to Mr. Hattaway. And it is not admitted as to Mr. Jackson. Although you'll hear the statements and they may concern Mr. Jackson, you are not to consider them. That's the law on the issue of the statement by a codefendant."
|
864 F.2d 789
U.S.v.Huckaby*
NO. 88-2140
United States Court of Appeals,Fifth Circuit.
DEC 23, 1988
1
Appeal From: S.D.Tex.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
|
791 F.2d 916
Fenselv.U.S.
85-3502
United States Court of Appeals,Third Circuit.
5/1/86
1
W.D.Pa.,
617 F.Supp. 22
ORDER AFFIRMED
|
132 F.3d 978
75 Fair Empl.Prac.Cas. (BNA) 1198,72 Empl. Prac. Dec. P 45,131Diane Sue HARRIS; Marina L. Prasky, Plaintiffs-Appellees,v.L & L WINGS, INCORPORATED, Defendant-Appellant.Diane Sue HARRIS; Marina L. Prasky, Plaintiffs-Appellees,v.L & L WINGS, INCORPORATED, Defendant-Appellant.
Nos. 96-2315, 96-2558.
United States Court of Appeals,Fourth Circuit.
Argued Oct. 31, 1997.Decided Dec. 24, 1997.
ARGUED: Victoria LaMonte Eslinger, Nexsen, Pruet, Jacobs & Pollard, L.L.P., Columbia, SC, for Appellant. Henrietta Urbani Golding, Bellamy, Rutenberg, Copeland, Epps, Gravely & Bowers, P.A., Myrtle Beach, SC, for Appellees. ON BRIEF: J. Michelle Childs, Jennifer J. Aldrich, David Rothstein, Nexsen, Pruet, Jacobs & Pollard, L.L.P., Columbia, SC, for Appellant.
Before WILKINSON, Chief Judge, MICHAEL, Circuit Judge, and BUTZNER, Senior Circuit Judge.
Affirmed by published opinion. Chief Judge WILKINSON wrote the opinion, in which Judge MICHAEL and Senior Judge BUTZNER joined.
OPINION
WILKINSON, Chief Judge:
1
Diane Harris and Marina Prasky sued their former employer, L & L Wings, Inc., for sexual harassment in violation of Title VII. A jury awarded Harris and Prasky compensatory and punitive damages. The district court declined to set aside the awards on Wings' post-trial motions. Wings disputes the sufficiency of the evidence for the jury's verdicts and challenges the trial court's award of attorneys' fees to Harris and Prasky. We affirm.
I.
2
Defendant Wings is a beachwear retailer that had several stores and four warehouses in the Myrtle Beach, South Carolina area during the time relevant to this lawsuit. Wings employed more than five hundred people year round, a number that swelled to more than one thousand workers during the busy summer season. Harris and Prasky were hourly workers in various capacities in Wings' warehouses. Given that they prevailed before the jury, we must review the evidence on appeal in the light most favorable to them. See Winant v. Bostic, 5 F.3d 767, 774 (4th Cir.1993).
3
Harris suffered sexual harassment for much of the time she was employed by Wings. The harassment began in early 1991, when she became assistant floor manager at Wings' Main Warehouse under the supervision of floor manager Ely Levy. This position required Harris to share a desk with Levy. On an almost daily basis, Levy grabbed Harris, embraced her, stroked her hair, massaged her back and shoulders, fondled her legs, and/or followed her around the warehouse. Once Levy pinned Harris against a box and tried to kiss her. In addition to these assaults, Harris endured persistent boasts by Levy about his sexual prowess, offers to promote her in exchange for dating him, and another offer of a hundred dollars if Harris would go to bed with him. Levy even offered to reward Harris' son with a raise if he would convince his mother to go out with him. When Harris resisted Levy's advances and complained to the warehouse manager, Shay Gat, and other members of Wings management about Levy's conduct, the harassment intensified. Levy also retaliated by interfering with Harris' job performance, hiding her paperwork and humiliating her in front of other employees.
4
While she worked at the Main Warehouse, Harris was placed in uncomfortable situations by other Wings employees as well. Their acts included repeated embraces, continuing attempts to engineer solitary situations, and a swat on her rear end.
5
Even after Harris escaped the Main Warehouse and Levy's direct supervision, harassment by him continued. In January 1992 Harris became the supervisor of Wings' Warehouses 1 and 2. She still went to the Main Warehouse almost every day to submit paperwork, however, and Levy continued to harass her on a near-daily basis. Every time Harris encountered Levy, he would either touch her or make vulgar comments or sexual advances to her or both. After early 1993, when Harris became supervisor of Warehouse 24, her personal contact with Levy was less frequent, but no less offensive; Levy groped her or made sexually crude remarks to her at virtually every opportunity. The harassment continued unabated until Harris was terminated in July 1993.
6
While she was employed at Wings, Prasky had to run a similar gauntlet of abuse. When she replaced Harris as Levy's assistant at the Main Warehouse in early 1992, Levy subjected her to much the same treatment as Harris: constant strokes, caresses and embraces as well as verbal harassment, including vulgar comments and sexual advances. When he saw her talking to other employees, he would grab her and say things like, "Don't talk to her. She's my wife," though of course she was not. On one occasion in 1992, Levy showed Prasky a T-shirt depicting frogs in twelve different sexual positions and said to her, "This is what I can do for you." Again, when Prasky resisted Levy's advances and complained to management, Levy got angry and the harassment intensified.
7
Prasky also suffered persistent harassment at the hands of other Wings employees. Jacky Heby, Wings' General Manager, tugged on her shorts and gestured as if to pull them down nearly every time he encountered her in the warehouse. He made suggestive and offensive remarks, once insisting that he had seen her perform as a stripper, "same size butt, same size breasts," and that he remembered shoving money into her underwear. And on one occasion Heby dismissed Ely Levy from the desk Levy shared with Prasky, sat beside Prasky himself, and grabbed and rubbed her leg. Norman Kleiman, Wings' swimwear buyer, once put his arm around Prasky and said "You can call it sexual harassment if you want, but you've got a great behind." The harassment ended only when Prasky was terminated in August 1993.
8
The fact that two female employees experienced a virtually identical course of harassment indicates that this was not an isolated phenomenon. Further, at Warehouse 24 Harris witnessed Nisso Mizrahi, a supervisor, "touching [two female employees], always trying to get them in a corner." Harris' son testified that when he worked at Wings he saw Ely Levy "touch a couple [female employees] on the shoulders, massage their shoulders, rub on their back." And a female former employee testified that she also experienced daily groping and sexual remarks by Ely Levy.
9
Nor did this harassment take place in a vacuum; the walls, tables, and bathrooms of the workplace were covered with graffiti, including slang references to sexual organs and sex acts. The walls were also covered with posters of scantily clad women, some of which had been defaced with obscene drawings of sexual organs and crude graffiti. As Harris put it, "It was filthy drawings, dirty jokes, racial slurs, the F-word everywhere. Swimwear posters with added parts drawn on." She saw Ely Levy himself sketching a private part on one poster.
10
The evidence presented at trial included the testimony of Harris and Prasky and other employees who witnessed and experienced harassment. Neither Shay Gat nor Ely Levy testified, although Shaul Levy and other Wings managers did appear at trial. In light of this evidence, the jury returned verdicts for both Harris and Prasky on their Title VII sexual harassment claims. The jury awarded Harris $6,933 and Prasky $5,915 in compensatory damages.1 The jury also awarded Harris and Prasky each $150,000 in punitive damages. Wings moved for judgment as a matter of law or for a new trial. The district court denied these motions and awarded Harris $68,491 and Prasky $57,838 in attorneys' fees and costs, less than each had sought. Wings appeals.
II.
A.
11
Wings first challenges the jury's award of compensatory damages to Harris and Prasky on their Title VII hostile environment claims.2 The company argues that it cannot be held liable for damages caused by the harassing conduct of its employees because no representative of the company had any notice of the harassment. See, e.g., Andrade v. Mayfair Management, Inc., 88 F.3d 258, 261 (4th Cir.1996); Amirmokri v. Baltimore Gas & Elec. Co., 60 F.3d 1126, 1130 (4th Cir.1995). Ample evidence, however, supports the conclusion that the company had notice of its employees' harassing conduct and failed to respond to it. Therefore, the jury's compensatory awards stand.
12
Wings was put on notice of the harassment Harris and Prasky experienced by repeated, specific complaints that each woman made to several managers. Harris complained of sexual harassment to Shay Gat, the warehouse manager, six to ten times beginning in May or June of 1991. She also complained to Hugo Schiller, Wings' internal management consultant. Harris even complained to Jacob Frank, another warehouse manager, about the harassment she saw Mizrahi perpetrate at Warehouse 24 against other female employees. And Harris testified that a month before she was terminated she threatened that if Wings did not do something about the intolerable work environment the employees "were going to do something." Prasky complained about sexual harassment to Gat and to Frank when he replaced Gat as warehouse manager in April 1993. And she complained to Schiller, once going into his office crying and begging him to get her away from Ely Levy. Prasky also complained to Schiller about the offensive graffiti on the walls and tables of the warehouse.
13
In this case, the complaints Harris and Prasky lodged gave Wings sufficient notice to impute liability to the company. First we observe that because Wings had no written grievance procedure or sexual harassment policy Harris and Prasky had no guidance about whom to contact in the event of a problem. They logically concluded that it made sense to complain to warehouse manager Gat, who both supervised Ely Levy, the primary harasser, and reported directly to the President of Wings, Shaul Levy. Harris and Prasky also introduced evidence that Shaul Levy was not accessible to them. Though his office was adjacent to the Main Warehouse, it was behind a door secured by a lock to which Harris and Prasky did not have the combination, and he came into the warehouse only infrequently. Furthermore, when the President was in the warehouse, Prasky testified that "He was usually with Shay [Gat] or Ely[Levy] and Jacky [Heby], and any time a regular worker wanted to go up and talk to him, Ely or Jacky or Shay would kind of just shoo them away." From this evidence the jury could reasonably conclude that it was impractical for Harris or Prasky to complain directly to the company President, who was physically separated from them and who, when he was in the warehouse, was usually shielded by the harassers about whom they sought to complain.
14
Even so, sufficient evidence supports the inference that the message made its way to the top of Wings management. Gat and Shaul Levy were known to be close, and in fact Shaul Levy testified generally that Gat brought many complaints about Ely Levy to him. Shaul Levy did occasionally come to the warehouse, where he must have witnessed firsthand the profusion of graffiti and pornography that covered the walls and contributed to the sexually hostile environment. In light of all this evidence the jury reasonably concluded that Wings itself had sufficient notice of Harris' and Prasky's plight to be liable for compensatory damages.
B.
15
We next address Wings' challenge to the jury's award of punitive damages to Harris and Prasky. Punitive damages are "an extraordinary remedy," to be reserved for egregious cases. Stephens v. South Atlantic Canners, Inc., 848 F.2d 484, 489 (4th Cir.1988). It is well established that exemplary damages are not an element of recovery in every case involving an intentional tort. McKinnon v. Kwong Wah Restaurant, 83 F.3d 498, 508-09 (1st Cir.1996). Specifically, the text and background of the Civil Rights Act of 1991, which authorizes punitive damages, emphasize that this extraordinary remedy is not to be awarded automatically in every successful Title VII suit. The 1991 Act approves punitive damages only "if the complaining party demonstrates that the respondent engaged in a discriminatory practice or discriminatory practices with malice or with reckless indifference to the federally protected rights of an aggrieved individual." 42 U.S.C. § 1981a(b)(1) (emphasis added). Indeed, "[p]laintiffs must first prove intentional discrimination, then must prove actual injury or loss arising therefrom to recover compensatory damages, and must meet an even higher standard (establishing that the employer acted with malice or reckless or callous indifference to their rights) to recover punitive damages." H.R.Rep. No. 40(I), 102d Cong., 1st Sess., at 72 (1991), quoted in McKinnon, 83 F.3d at 507.
16
This provision was enacted against a backdrop of prevailing doctrine that punitive damages are to be awarded only in cases where the twin aims of punishment and deterrence are paramount. See, e.g., City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 266-68, 101 S.Ct. 2748, 2759-60, 69 L.Ed.2d 616 (1981) (punitive damages are intended to punish and deter "extreme conduct"); Beauford v. Sisters of Mercy-Province of Detroit, Inc., 816 F.2d 1104, 1109 (6th Cir.1987) (punitive damages have "generally been limited to cases involving egregious conduct or a showing of willfulness or malice on the part of the defendant"). And even when they are available, punitive damages remain wholly within the jury's discretion and "are never awarded as of right, no matter how egregious the defendant's conduct." Smith v. Wade, 461 U.S. 30, 52, 103 S.Ct. 1625, 1638, 75 L.Ed.2d 632 (1983); see also McKinnon, 83 F.3d at 508.
17
In order to reach the jury on the issue of punitive damages, a plaintiff generally must make a "heightened showing" of the culpable state of mind of the employer, not just of the harasser. See Pandazides v. Virginia Bd. of Educ., 13 F.3d 823, 830 n. 9 (4th Cir.1994). In a sexual harassment case, clearing this "higher hurdle," Emmel v. Coca-Cola Bottling Co. of Chicago, 95 F.3d 627, 636 (7th Cir.1996), demands more than mere proof of the notice required for compensatory damages. "[W]here intentional discrimination occurs outside the scope of the agency relationship between employer and employee--in a hostile work environment case, for example--evidence sufficient to support employer liability may not establish that the employer maliciously or recklessly permitted the offending conduct." Kolstad v. American Dental Ass'n, 108 F.3d 1431, 1439 (D.C.Cir.), reh'g in banc granted, 108 F.3d 1446 (D.C.Cir.1997).
18
In evaluating the sufficiency of evidence on the malice or reckless indifference of employers, courts have focused on three types of evidence: (1) evidence of the employer's attitude towards sexual harassment; (2) direct statements by the employer about plaintiffs' rights or complaints; and (3) the egregiousness of the conduct at issue.
19
As to the employer's attitude or state of mind, our sister circuits have considered such evidence as whether the employer instituted a written sexual harassment policy and whether the employer's response adequately addressed complaints of harassment. In some cases, the existence of a written policy instituted in good faith has operated as a total bar to employer liability for punitive damages. See, e.g., Reynolds v. CSX Transp., Inc., 115 F.3d 860, 869 (11th Cir.1997), petition for cert. filed, 66 U.S.L.W. 3324 (U.S. Oct. 27, 1997) (No. 97-726); Splunge v. Shoney's, Inc., 97 F.3d 488, 491 (11th Cir.1996); Fitzgerald v. Mountain States Tel. and Tel. Co., 68 F.3d 1257, 1264 (10th Cir.1995). And in one case the Court of Appeals for the Eighth Circuit based its approval of punitive damages on the fact that the employer had ignored its own written harassment policy and responded to plaintiff's repeated complaints with the unacceptable suggestion that she move to a less attractive job to avoid the harasser. Kimzey v. Wal-Mart Stores, Inc., 107 F.3d 568, 576 (8th Cir.1997). In light of these precedents, Wings' failure to implement any sexual harassment or grievance policy and its utter failure to respond to repeated complaints of pervasive sexual harassment do little to bolster its challenge to the punitive award.
20
Of course, the absence of a written sexual harassment policy cannot alone establish employer liability even for compensatory damages, Reed v. A.W. Lawrence & Co., Inc., 95 F.3d 1170, 1180 (2d Cir.1996); Bouton v. BMW of North America, Inc., 29 F.3d 103, 109 (3d Cir.1994), so it is in no way dispositive of a claim for punitive damages. And we are not today suggesting that employers are required to enlist a small army of experts and consultants in order to craft such a policy. We note simply that the institution of a written sexual harassment policy goes a long way towards dispelling any claim about the employer's "reckless" or "malicious" state of mind. Had Wings implemented such a policy, the evaluation of the punitive damages question would have taken that into account.
21
Wings suggests, however, that the complex legal requirements in this whole area left it at sea. We are mindful of the difficulty employers face when dealing with claims of harassment, finding themselves between the rock of an inadequate response under Title VII and the hard place of potential tort liability for wrongful discharge of the alleged harasser. The legal standard of "prompt and adequate remedial action" in no way requires an employer to dispense with fair procedures for those accused or to discharge every alleged harasser. Knabe v. Boury Corp., 114 F.3d 407, 414 (3d Cir.1997) ("[A]n employer, in order to avoid liability for the discriminatory conduct of an employee, does not have to necessarily discipline or terminate the offending employee as long as the employer takes corrective action reasonably likely to prevent the offending conduct from reoccurring."). And a good faith investigation of alleged harassment may satisfy the "prompt and adequate" response standard, even if the investigation turns up no evidence of harassment. Kilgore v. Thompson & Brock Management, Inc., 93 F.3d 752, 754 (11th Cir.1996). Such an employer may avoid liability even if a jury later concludes that in fact harassment occurred. See Fitzgerald, 68 F.3d at 1264. But Wings did absolutely nothing to address the harassment of which Harris and Prasky complained. And this total absence of a response, not to mention a "prompt and adequate" one, is cognizable evidence of Wings' indifference to the federally protected rights of those in its employ.
22
There is also direct evidence here of the employer's wanton disregard for its employees' rights. In his testimony at trial the President of Wings, Shaul Levy, dismissed questions about why Wings did not have a written policy against sexual harassment by saying: "It's a ridiculous thing. Am I the judge to say who is right and who is wrong. In my opinion, they [the female employees] should go to somebody who has authority to be a judge. I'm not a judge. I'm just an employer." The jury could reasonably interpret this statement as a disavowal by Levy of any responsibility to rid his workplace of sexual harassment. Such direct disavowal of any Title VII responsibilities contributes to the case for punitive damages against the employer. See Beardsley v. Webb, 30 F.3d 524, 531 (4th Cir.1994); Nicks v. Missouri, 67 F.3d 699, 705 (8th Cir.1995).
23
The final factor in evaluating the propriety of punitive damages, the egregiousness of the conduct at issue, also supports the district court's submission of the question of punitive damages to the jury. The evidence presented to the jury described constant, often daily harassment of Harris and Prasky as well as other female employees of Wings. In addition to a torrent of vulgarities, including crude remarks and unwelcome sexual advances, Harris and Prasky were routinely grabbed, groped, fondled and otherwise physically assaulted by their supervisor "every chance he got" and by several other employees. As Prasky described, Levy "was always touching me.... He would run his fingers through my hair. He would touch my shoulders. Sometimes touch my leg. He would come up from behind me and grab my waist." Harris endured this conduct for more than two years before she was terminated, and Prasky suffered similar molestation for more than a year before she too was fired. The working environment was permeated with innuendo and graffiti that included "a lot of profanity, a lot of F-words, a lot of drawings, a lot of dirty jokes," and lewd, explicitly embellished posters. This was not a case of ambiguous or episodic behavior on the part of a defendant or of ultra sensitivity on the part of a plaintiff. Rather, the harassment was crude, persistent, demeaning, unrelenting, and widespread. The two employees were pawed over or propositioned nearly every day they went to work. Taken together, the egregious conduct at issue and the direct evidence of Wings' reckless indifference to the same suffice to sustain the jury's punitive verdicts.
24
Wings finally contends that most, if not all of the $150,000 Harris and Prasky each received as punitive damages constitutes an impermissible retroactive recovery for harassment that occurred before November 21, 1991, the date of enactment of the Civil Rights Act authorizing punitive damages. See Landgraf v. USI Film Prods., 511 U.S. 244, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994) (damages provisions of Civil Rights Act of 1991 do not apply retroactively). We disagree. Harris and Prasky introduced sufficient evidence that the harassment continued until they were terminated, long after November 1991, to establish the reasonableness of the jury's punitive damage awards. Moreover, the jury was specifically instructed that it ought not to consider evidence of incidents that occurred before enactment of the Civil Rights Act of 1991 in assessing damages. We have "no reason to depart from 'the almost invariable assumption of the law that jurors follow their instructions.' " Shannon v. United States, 512 U.S. 573, 585, 114 S.Ct. 2419, 2427, 129 L.Ed.2d 459 (1994) (quoting Richardson v. Marsh, 481 U.S. 200, 206, 107 S.Ct. 1702, 1707, 95 L.Ed.2d 176 (1987)); Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 604, 105 S.Ct. 2847, 2858, 86 L.Ed.2d 467 (1985).
III.
25
Wings also alleges that the district court's calculation of attorneys' fees and costs impermissibly included charges for secretarial work, vague and duplicative entries, and fees and costs for claims on which Harris and Prasky did not prevail. We review the district court's awards for abuse of discretion. Trimper v. City of Norfolk, 58 F.3d 68, 74 (4th Cir.1995). Harris sought attorneys' fees and costs in the amount of $90,190.21 and received $68,491. Prasky sought attorneys' fees and costs of $71,200.56 and received $57,838. The district court meticulously deducted fees and costs associated with unsuccessful claims, eliminated hours spent on secretarial tasks from its calculation of the lodestar, and declined plaintiffs' request for an upward adjustment to the lodestar figure. This careful consideration of the fee awards was not an abuse of discretion.
IV.
26
For the foregoing reasons, we affirm the judgment of the district court.
27
AFFIRMED.
1
Harris and Prasky advanced both quid pro quo and hostile environment theories of Title VII liability. The jury found in their favor on both theories, but the district court allowed compensatory damages to be awarded only once to each plaintiff. Because we find that the verdicts on hostile environment harassment are supported by the evidence, we need not consider the claims of quid pro quo harassment
2
Wings also challenges the propriety of consolidating the plaintiffs' suits. Federal Rule of Civil Procedure 42(a) approves consolidation of actions that involve a "common question of law or fact." These claims, brought against the same defendant, relying on the same witnesses, alleging the same misconduct, and answered with the same defenses, clearly meet this standard
|
357 F.2d 296
148 U.S.P.Q. 633
ATLAS SCRAPER AND ENGINEERING CO., a corporation, Appellant,v.Harry A. PURSCHE, an individual, Appellee.
No. 19404.
United States Court of Appeals Ninth Circuit.
Feb. 28, 1966.
R. Welton Whann, Robert M. McManigal, Welton B. Whann, Jas. M. Naylor, San Francisco, Cal., Eugene O. Heberer, Los Angeles, Cal., for appellant.
Lyon & Lyon, Lewis E. Lyon, John B. Young, Los Angeles, Cal., for appellee.
Before BARNES, JERTBERG and KOELSCH, Circuit Judges.
KOELSCH, Circuit Judge.
1
This is the second appeal in these cases. Of course some considerble knowledge of the background and earlier disposition of the litigation is essential to an intelligent understanding of the present appeal. But rather than burden this opinion with a detailed statement, we refer the reader to the prior opinion (300 F.2d 467 (9th Cir. 1961), cert. denied 371 U.S. 911, 83 S.Ct. 251, 9 L.Ed.2d 170), which sets out in sufficient detail all such information.
2
Atlas will not be permitted to question the trial court's determination that it was guilty of unfair competition. That issue was one finally settled on the former appeal. Pertinent is the frequently quoted statement in Himley v. Rose, 5 Cranch 313, 9 U.S. 313, 3 L.Ed. 111 (1809): 'Nothing is before this court but what is subsequent to the mandate.'
3
And we find no merit in Atlas' contention that the trial court, in awarding Pursche damages for and an injunction against such competition went beyond the mandate.1
4
True, this court did not give express approval to the provisions in the judgment for such affirmative relief; but neither did it expressly disapprove them. The opinion, however, does contain an extensive discussion of unfair competition and, as already noted, shows this court upheld the trial court on that issue. Surely no one could argue with any degree of plausibility that so much attention would be devoted to a mere abstract matter. Nor is a practical reason difficult to discover, if what hinged upon the outcome is kept clearly in mind. Perhaps the opinion is terse, but there was no occasion to labor the obvious.
5
Nor did the trial court err in refusing to deny Pursche all relief on the ground that he, Pursche, had misused his own patents to violate the antitrust laws. This was a defense. But Atlas did not assert it until after the remittitur on the affirmance of the judgment.2 At that stage such a motion was improper and, if granted, would have constituted a clear violation of that court's duty to carry out the mandate.
6
'When a case has been once decided by this court on appeal, and remanded to the (lower) court, whatever was before this court, and disposed of by its decree, is considered as finally settled. The (lower) court is bound by the decree as the law of the case; and must carry it into execution, according to the mandate. That court cannot vary it, or examine it for any other purpose than execution; or give any other or further relief; or review it, even for apparent error, upon any matter decided on appeal; or intermeddle with it, further than to settle so much as has been remanded.'
7
In re Sanford Fork & Tool Co., 160 U.S. 247, 255, 16 S.Ct. 291, 293, 40 L.Ed. 414 (1895).
8
Further, the trial court did not err in modifying the earlier decree which enjoined Atlas from unfair competition. That a court of equity possesses inherent power to adapt an injunction to meet the needs of a new day is settled, for the Supreme Court has declared that:
9
'A continuing decree of injunction directed to events to come is subject always to adaptation as events may shape the need. The distinction is between restraints that give protection to rights fully accrued upon facts so nearly permanent as to be substantially impervious to change, and those that involve the supervision of changing conduct or conditions and are thus provisional and tentative.'
10
United States v. Swift & Co., 286 U.S. 106, 52 S.Ct. 460, 76 L.Ed. 999 (1932); Food Fair Stores v. Food Fair, 177 F.2d 177 (1st Cir. 1949); Armstrong v. De Forest Radio Tel & Tel Co., 10 F.2d 727 (2d Cir. 1926). The supplemental injunction, like its predecessor, was confined to preventing unfair competition; it was issued 'to make more clear and specific what had already been enjoined' (Singer Mfg. Co. v. Seinfeld, 89 F.2d 35, 37 (2d Cir. 1937)) after a sufficient showing that Atlas had placed a construction on the original decree that was contrary to its spirit and the intention of the trial court and was threatening to act accordingly.3
11
Following the remittitur and after the final judgment had been settled as to form, but prior to entry, Pursche visited Chandler and sought to purchase the latter's patents. Precisely what representation Pursche made concerning the effect of the ensuing judgment is disputed. But, in any event, no agreement was reached. On learning of the incident, Atlas moved the trial court to withhold entry on the grounds that Pursche's conduct was unconscionable. Atlas urges as its final point the denial of this motion.
12
We entertain grave doubt that the trial court possessed authority to impose such a drastic sanction. In none of the cases cited by Atlas was this done or suggested.4 And an independent search has not proved enlightening. However, assuming power, we agree with the trial court's characterization of the argument as a 'tempest in a teapot.'
13
It is only Atlas' hyperbole that tends to make Pursche's asserted conduct of dubious propriety.
14
The judgment is affirmed.
1
The opinion forms a part of the mandate. H.P. Coffee Co. v. Reid, Murdoch & Co., 60 F.2d 387 (8th Cir. 1932)
2
By its motion Atlas sought to assert that the 'grant back' provision contained in the Pursche-Atlas agreement (which obligated Atlas to assign to Pursche all improvements for two way plows conceived and acquired by Atlas and which the trial court determined applied to the Chandler Patents) would operate to give Pursche a monopoly outside the scope of his own patents and, hence, was unenforceable and void under such decisions as Mercoid Corp. v. MidContinent Co., 320 U.S. 661, 64 S.Ct. 268, 88 L.Ed. 376 (1944) and Morton Salt Co. v. Suppiger, 314 U.S. 488, 62 S.Ct. 402, 86 L.Ed. 363 (1942); see also Transparent-Wrap Machine Corp. v. Stokes & Smith Co., 329 U.S. 637, 67 S.Ct. 610, 91 L.Ed. 563 (1947)
3
At the hearing on Pursche's motion the trial judge stated in these words what he had meant by the decree:
'It seemed to me when I signed the judgment that it would be unnecessary to use the additional language which you now seek to put in there, but it also seems to me-- and I am frank to say so-- that if Atlas is claiming any rights at all in the Chandler patents, that they lost by virtue of the judgment in this case. * * * Whatever they acquired in the Chandler patents was acquired wrongfully and by fraud and belonged to Pursche. Now if you have to use different language than I used before to spell that out, I think this should be done.'
The provision in the injunction affirmatively requiring Atlas to assign to Pursche all its interest in the Chandler patents was clearly within the spirit of the opinion and a permissible means to effectively forestall future unfair competition under some devious construction. The reservation in the grant back clause, making such inventions 'available' to Atlas, read in context, suggests that this right was conterminous with the licensing agreement.
4
The cases are Gorham Mfg. Co. v. Emery-Bird-Thayer Dry-Goods Co., 92 F. 774 (C.Ct.W.D.Mo., W.D.1899); Hoover Co. v. Sesquicentennial Exhibition Ass'n, 26 F.2d 821 (D.C.E.D.Pa.1928) and United Kingdom Optical Co. Ltd. v. American Optical Co., 68 F.2d 637 (1st Cir. 1934). They hold no more than that a fraudulent misrepresentation of a court's decision or process constitutes a contempt of court
|
131 B.R. 588 (1991)
In re Aristide Francis LEFEVE, Jr., Debtor.
FEDERAL DEPOSIT INSURANCE CORPORATION, Successor in Interest and Receiver for New Orleans Federal Savings and Loan Association, Plaintiff,
v.
Aristide F. LEFEVE, Jr., Defendant.
Bankruptcy No. 8807506SEG, Adv. No. 880974 SC.
United States Bankruptcy Court, S.D. Mississippi.
May 28, 1991.
*589 *590 John F. Landrum, New Orleans, La., Hollis C. Thompson, Jr., Gulfport, Miss., for plaintiff.
R. Wayne Woodall, Gulfport, Miss., for defendant, debtor.
OPINION
EDWARD R. GAINES, Bankruptcy Judge.
A complaint objecting to dischargeability of debts was filed by The Federal Savings and Loan Insurance Corporation as Receiver for New Orleans Federal Savings and Loan, and later substituted by The Federal Deposit Insurance Corporation, pursuant to section 523 of Title 11 of the United State Code. The matter was set for trial and heard by the Court.[1] Having considered the pleadings, briefs submitted by counsel and the evidence presented at trial, the Court finds that the debts which are the subject of these proceedings should not be discharged by the debtor, Aristide Francis Lefeve, Jr.
The Court has jurisdiction of the subject matter and of the parties to this proceeding pursuant to 28 U.S.C. § 1334, § 157. This is a core proceeding as defined in 28 U.S.C. § 157(b)(2)(A), (I) and (O).
I. FACTS
This adversary proceeding involves two loans made by New Orleans Federal Savings and Loan to Aristide F. Lefeve, Jr.: (1) a residential loan and, (2) a commercial loan in which Lefeve was a guarantor. The Court makes the following findings.
1. A petition for relief under Chapter 7 of Title 11 of the United States Code was filed by Aristide Francis Lefeve, Jr. on March 9, 1988.
2. An adversary complaint was filed by the Federal Savings and Loan Insurance Corporation, as Receiver for New Orleans Federal Savings & Loan Association, (NOF), wherein the Court was requested to *591 determine certain debts of Lefeve to be nondischargeable pursuant to 11 U.S.C. § 523(a)(2)(A), (a)(2)(B) and (a)(6).[2]
3. On March 1, 1984, Lefeve obtained a loan from New Orleans Federal in the principal amount of $261,000.00 for the purchase of a residence in Mississippi.
4. Lefeve subsequently defaulted on the loan and a consent judgment was entered against Lefeve for the remaining deficiency, and for damages for the improper filing of a Notice of Lis Pendens, in the United States District Court for the Southern District of Mississippi in the amount of $194,305.60 plus interest.[3]
5. The debtor's residential loan application indicated projected income for 1984 of $285,000.00, consisting of $15,000.00 base employment income, $100,000.00 bonuses, and $170,000.00 other income. The debtor's 1983 tax return showed total income of $122,703.79, consisting of $79,000.00 capital gains, $18,612.00 partnership income, and $25,000.00 fees. The debtor's 1984 tax return showed a loss of $81,004.00, consisting of $15,169.00 interest income, a business loss of $157,295.00, a $90,000.00 capital gain, and $28,878.00 other losses.
6. The contract for the sale and purchase of real estate signed by Lefeve on the residential loan shows a purchase price of $290,000 with a cash deposit by Lefeve of $10,000.00.
7. The residential loan application shows a cash deposit by Lefeve of $10,000.00.
8. The loan commitment agreement signed by Lefeve and dated February 14, 1984, shows a sales price of $290,000.00.
9. The HUD-1 closing statement signed by Lefeve shows a contract sales price of $290,000.00 and indicates $33,717.68 cash required from the borrower, Lefeve.
10. Without NOF's knowledge, no cash was, in fact, put up by Lefeve in this transaction, contrary to the recitations in the aforesaid contract, residential loan application and closing statement.
11. In a separate loan transaction, $500,000.00 was obtained from New Orleans Federal by Steven P. Drown on February 18, 1985, to acquire 103 lots from Rivers Bend, Inc., a corporation wholly owned by Lefeve.
12. In consideration for extending credit to Drown, Lefeve was required to execute a continuing guaranty in the amount of $250,000.00, and a financial statement to support the guaranty.
13. In a proceeding to enforce the guaranty, judgment was entered against Lefeve in the United States District Court for the Eastern District of Louisiana in the amount of $250,000.00 plus interest, attorneys' fees and costs.
14. Lefeve submitted a written financial statement in support of his guaranty to New Orleans Federal dated July 5, 1984, which he actually signed on December 10, 1984.
15. Lefeve entered a termination agreement dated August 28, 1984 with Longboat Development Corporation, The Sutton Road Company, Inc., L.J. Munna, III, and Harry C. Sherman, that terminated Lefeve's interests in various properties. A letter dated April 13, 1984, outlined the division of interests that resulted in the termination agreement.
16. At the time the financial statement was signed and delivered to New Orleans Federal, Lefeve no longer had any interest in certain properties listed as current assets in the statement including: (1) a 5.86 acre condominium site in Biloxi, Mississippi with a value of $1,275,000.00, (2) a one-third interest in property at Natchez Alley *592 in New Orleans with a value of $173,500.00, and (3) a house on Lot 15, Rivers Bend Subdivision, valued at $94,072.00.
17. Liabilities were owed by Lefeve that were not reflected on the financial statement including: (1) a mortgage on property on Interstate 10 in excess of $150,000.00, (2) a guaranty in favor of Northlake Federal Savings & Loan Association for a loan totalling $1,150,000 in connection with Brodie Island, (3) a continuing guaranty in favor of Audubon Federal Savings & Loan Association for a loan in the amount of $3,800,000.00, and (4) a guaranty in favor of Northlake Federal Savings & Loan for a loan of $75,000 to Leonard J. Munna, III and David Pyburn.
18. The financial statement showed Lefeve as the individual owner of properties which were actually owned by other legal entities, such as corporations and partnerships, in which he only held an interest.
19. With reference to the Drown loan, Lefeve was personally involved in the negotiations relating to the loan from New Orleans Federal.
20. A standard sales contract signed by Lefeve shows a purchase price on property to be purchased by the Drown loan funds of $630,000.00.
21. The loan disbursement statement shows Drown contributing $217,750.00 in cash toward the purchase price.
22. Without NOF's knowledge, Drown did not contribute any cash at closing of the loan from New Orleans Federal.
23. In the purchase transaction Lefeve obtained a $95,000.00 mortgage on the property and a 50% ownership in the corporation which was acquiring title to the property. The rights obtained by Lefeve in this transaction were not disclosed to NOF.
24. Lefeve was involved with several closings where cash contributions were to be made by the borrowers according to the loan closing documents, but which were not actually made.
25. An order was entered on January 25, 1989 stating that the Plaintiff's Requests for Admissions Nos. 1-10 are conclusively deemed admitted, Defendant having failed to respond within the time required by law. These admissions from FDIC requests to Lefeve include the following:
(1) That you met with representatives of New Orleans Federal Savings & Loan Association and discussed the terms of NOF's loan to Steven P. Drown so Drown could purchase property from your corporation, Rivers Bend, Inc.;
(2) Representatives of NOF told you that Drown could not obtain a loan in the principal amount of $500,000.00 unless you agreed to guarantee a portion of the loan;
(3) Before granting the $500,000.00 loan to Drown, NOF required that you submit a financial statement evidencing your assets and liabilities;
(4) Before granting the $500,000.00 loan to Drown, NOF required that you execute a continuing guaranty in the amount of $250,000.00 to secure the loan to Drown;
(5) During your conversations with NOF officials, you represented that Drown was purchasing the property from your corporation for the price of $717,500.00;
(6) Drown did not pay you $717,500.00 in cash to acquire the property;
(7) To purchase the property from your corporation Drown "paid" you the following: (1) $500,000.00 cash minus the costs of obtaining the loan from NOF; (2) a $95,000.00 mortgage payable to you and/or your corporation; and (3) fifty percent ownership in the corporation which was acquiring title to the property;
(8) The attached federal tax return for 1983 is a true copy of your personal tax return filed with the IRS for the year 1983;
(9) That NOF provided one hundred percent financing for you to acquire your residence on Rivers Bend Drive; and
(10) That you never submitted any payments to FSLIC in satisfaction of the $7,500.00 in damages specified in that Judgment rendered in the case entitled "Aristide F. Lefeve, Jr., et al. v. Hollis C. Thompson, Jr., as Substituted Trustee for the FSLIC and FSLIC as Receiver for *593 New Orleans Federal Savings and Loan Association," Civil Action NO. S87-0266(G) on the docket of the United States Bankruptcy Court for the Southern District of Mississippi, Southern Division.
II. ISSUES
The issues for adjudication here are as follows:
(1). Did Lefeve obtain his residential loan by use of a materially false residential loan application in violation of § 523(a)(2)(B)?
(2). Did Lefeve obtain his residential loan under false pretenses and false representations regarding amounts of purchase price and cash contribution in violation of § 523(a)(2)(A)?
(3). Did Lefeve violate § 523(a)(2)(A) in obtaining the Drown loan by use of false pretenses and false representations regarding purchase price, cash contribution, and ownership retention?
(4). Did Lefeve violate § 523(a)(2)(B) in obtaining the Drown loan by use of a materially false financial statement respecting his financial condition?
(5). Did Lefeve violate § 523(a)(6) in obtaining the loans by use of a materially false financial statement respecting his financial condition?
Adjudication of nondischargeability as to the particular debt results from violation of any of these statutes.
III. LAW
A.
The Court first considers the actions against Lefeve relating to his residential loan. Section 523(a)(2)(B) of Title 11 of the United States Code provides:
(a) A discharge under section 727 . . . of this title does not discharge an individual debtor from any debt . . .
(2) for money, property, services, or an extension, renewal, or refinancing of creditor, to the extent obtained by
(B) use of a statement in writing
(i) that is materially false;
(ii) respecting the debtor's or an insider's financial condition;
(iii) on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied; and
(iv) that the debtor caused to be made or published with intent to deceive . . .
11 U.S.C. § 523(a)(2)(B). Section 523(a)(2)(B) applies not only to documents styled as "Financial Statements", but to any false statements made in written loan applications. See, Personal Finance Co. v. Martinez, 115 F.2d 226, 227 (10th Cir.1940); In re Strapko, 5 B.R. 443, 445 (Bankr. D.Minn.1980).
The burden of proof for establishing an exception to discharge under section 523(a) is now by a preponderance of the evidence and not by the stricter standard of clear and convincing evidence. Grogan v. Garner, ___ U.S. ___, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991).
The debtor's residential loan application indicated projected income for 1984 of $285,000.00 when his 1983 tax return showed total income of $122,703.79 and his 1984 tax return showed a loss of $81,004.00. In addition, Lefeve's testimony indicated that the base monthly income listed in his residential loan application was predicated on draws from The Sutton Road entity and on his legal practice, but that he stopped receiving the draws in January of 1984, before the loan was approved, and realized in January of 1984 that he would not be receiving anything more from Sutton Road.
Mr. Ashton Ryan, a CPA at Arthur Anderson & Company responsible for rendering opinions on financial statements, testified that the income information on the residential loan application could not be reconciled with the tax returns and that the differences in the income shown were material from the standpoint of an underwriter and lender. The discrepancy between incomes shows at a minimum a reckless disregard on the part of the debtor in his submission of information to NOF. Testimony from Lefeve indicated that at the *594 time of the loan transaction the construction loan on the house was maturing after cost overruns and that he needed permanent financing.
In In re Jordan, 927 F.2d 221 (5th Cir. 1991), the Fifth Circuit stated that:
A materially false statement is one that "paints a substantially untruthful picture of a financial condition by representing information of the type which would normally affect the decision to grant credit." (citations omitted). Further, in determining whether a false statement is material, a relevant although not dispositive inquiry is "whether the lender would have made the loan had he known the debtor's true situation." In re Bogstad, 779 F.2d 370, 375 (7th Cir.1985).
927 F.2d at 224. The income information presented in Lefeve's residential loan application represented a materially false statement respecting his financial condition.
In regard to the element of reliance, Lefeve takes the position that the bank based its loan on appraisal values and that it did not in any way rely on any financial statements or loan applications that were requested or submitted. Ryan testified emphatically that income is of primary importance in the evaluation of a residential loan. Additionally, Hughes Drumm, a member of the board of directors for New Orleans Federal, testified that the income of a borrower was an important matter in determining whether a loan would be approved and that the loan committee relied on the income shown on Lefeve's residential loan application. The Court finds that the element of reliance was established by the evidence presented in this case. Additionally, the Court holds that even in the absence of this proof, reliance may be presumed as a matter of law given the posture of the FDIC as a party and the application of the D'Oench, Duhme doctrine, as discussed below.
Under the case of D'Oench, Duhme & Co. v. Federal Deposit Insurance Corp., 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942), and its progeny, the receiver of a federally insured bank or savings and loan association is protected from defenses based on side agreements or understandings not in the official papers of the failed institution. D'Oench has been applied to foreclose factual disputes concerning reliance under § 523(a)(2).[4] In In re Cerar, 97 B.R. 447 (C.D.Ill.1989), the District Court stated:
Normally, the existence of the element of reliance which must be established in order to prevent discharge of a debt depends upon whether the creditor actually relied on the debtor's representation when loaning money or providing services. However, the situation is different where the debtor's fraud was performed in conjunction with his creditor for the purpose of deceiving banking examiners and ultimately the FDIC.
97 B.R. at 449. See also, In re Figge, 94 B.R. 654, 665 (Bankr.C.D.Cal.1988). Further, in In re Bombard, 59 B.R. 952 (Bankr.D.Mass.1986) the Court held that reliance required by § 523(a)(2)(A) was furnished by the federal statute and the federal common laws which entitled the FDIC to rely on the bank records. The Court specifically found that proof of the bank's reliance itself was unpersuasive, but stated that the deficiency in proof was of little consequence because the FDIC was entitled to rely on the debtor's signature as a matter of law. 59 B.R. at 954.
Courts generally agree that the creditor must show that it considered and relied on the actual financial statement in question. In re Dawson, 16 B.R. 70, 73-74 (Bankr.E.D.Va.1981). However, it is true that "lenders do not have to hire detectives before relying on borrower's financial statements." In re Figge, 94 B.R. 654, 666 (Bankr.C.D.Cal.1988). See also, In re Garman, 643 F.2d 1252, 1260 (7th Cir.1980).
In In re Figge, supra, the Court held that the doctrine of D'Oench, Duhme & Co. v. *595 Federal Deposit Insurance Corp., 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942), "creates a presumption of reasonable reliance" by the FDIC in its objection to discharge of a debtor based on § 523(a)(2)(A) and (B). The Court stated that, "the element of reliance required by Section 523(a)(2)(A) and (B) is satisfied upon documentary evidence from the debtor's loan file, showing the written terms and conditions of the loan agreement". 94 B.R. at 668. In Figge, the Court found that the documents contained in the loan file satisfied the element of reasonable reliance. They included: (1) the debtor's financial statement submitted in support of his application for the loan, (2) the promissory note, (3) notes by the bank's personnel reflecting a credit check, (4) the security agreement, and (5) evidence of payment history.
The documentation in the Lefeve loan file of NOF includes the following: (1) financial statement, (2) adjustable rate note, (3) deed of trust, and (4) evidence of verification and credit checks. Documentation shows that Lefeve represented to NOF in February of 1984 that his 1983 income had been $186,000.00. This was not true. His 1983 income had been only $122,703.79.
The Fifth Circuit recently expounded on the extensive application of the D'Oench, Duhme doctrine in Bowen v. Federal Deposit Ins. Corp., 915 F.2d 1013 (5th Cir. 1990)[5] as follows:
The original D'Oench case applied only to a secret agreement used as a defense to a suit on a note by FDIC in its corporate capacity . . . [T]he doctrine has evolved to a rule that today is expansive and perhaps startling in its severity. The doctrinal extension we describe is considerable, but we believe experience has been a wise teacher.
The modern D'Oench rule protects the FDIC, as receiver of a failed bank or as purchaser of its assets, from a borrower who has "`lent himself to a scheme or arrangement' whereby banking authorities are likely to be misled." Beighley v. Federal Deposit Ins. Corp., 868 F.2d 776, 784 (5th Cir.1989) (quoting D'Oench). In particular, D'Oench bars the use of unrecorded agreements between the borrower and the bank as the basis for defenses or claims against the FDIC . . . Simply put, transactions not reflected on the bank's books do not appear on the judicial radar screen either . . .
915 F.2d at 1015-16.
The evidence in this matter is abundantly clear that Lefeve, at a minimum, "lent himself to a scheme or arrangement whereby banking authorities are likely to be misled". His own testimony indicates an intimate knowledge of loose banking practices among financial institutions with which he dealt during the period of time involving the transactions at issue. Even with this knowledge, Lefeve chose to participate in the practices for his own pecuniary gain. Given his experience as a real estate developer and attorney with extensive knowledge in lending policies and practices, it can be unquestioned that Lefeve knew the reasoning behind banking regulations of federally insured institutions that required accurate financial statements and other documentation to be included in a borrower's loan file. Thus, even if Lefeve could prove that the actual lending officials with which he conducted his business did not rely on any financial statements he submitted before granting him a loan, he would not be able show that bank regulators, auditors, or receivers, up the line, should not be entitled to rely on the truth on those documents. The facts of this case provide the very type of scenario which is intended to be covered by the doctrine of D'Oench, Duhme in the protection of the FDIC as an insurer. On this basis, the Court concludes that documentation in Lefeve's loan file satisfies the element of reliance by application of the doctrines announced in D'Oench, Duhme, and Figge as cited above.
On the element of intent to deceive under section 523(a)(2), the Court in Brigadier *596 Homes v. Hert, 81 B.R. 638 (Bankr. N.D.Fla.1987) stated the following:
Intent may be inferred from the surrounding circumstances. (citations omitted). Reckless disregard for the truth or falsity of a statement combined with the sheer magnitude of the resultant misrepresentation may combine to produce the inference of intent. (citations omitted) . . . Hert made these willful misrepresentations which he should have known would induce these parties to enter into the financial and contractual relationship with him, thus his intent to deceive the plaintiffs may be inferred. Carini v. Matera, 592 F.2d 378 (7th Cir.1979).
81 B.R. at 641.
Additionally, in In re Barrett, 2 B.R. 296, 301 (Bankr.E.D.Pa.1980), the Court stated that it will not shield an intelligent, educated businessman, who had ample opportunity to read what he signed, from his own carelessness, especially in light of his extensive dealings with banks. Lefeve is an experienced attorney, a real estate speculator and is sophisticated in real estate financings and underwriting criteria. His testimony reflects a very high degree of business acumen and familiarity with loan transactions and lending practices. In In re Jordan, supra, the Fifth Circuit stated that:
Nevertheless, [In re] Icsman [64 B.R. 58 (Bankr.N.Ohio 1986)] is not so far afield as to discredit its message: that debtors with business acumen, like the Jordans, are to be held to a higher standard. See also In re Mutschler, 45 B.R. 482 (Bankr.D.N.D.1984) ("Where the debtor is an individual of intelligence and experience in financial matters, courts have been more inclined to hold them responsible for uttering a false financial statement") . . . [O]ur review of the record convinces us that the bankruptcy judge was well within his discretion in inferring an intent to deceive from the circumstances surrounding the preparation and submission of the Jordans' financial statements.
927 F.2d at 226. The Court finds, given the size of the discrepancy misrepresented and the experience and intelligence of the debtor, that the element of intent has been established by the evidence in this matter.
The Court notes, additionally, that malfeasance has been specifically rejected by the Fifth Circuit as a requirement for application of D'Oench, Duhme, thus determining the borrower's good faith irrelevant. In Bowen v. Federal Deposit Ins. Corp., the Court stated:
In an attempt to escape the dungeon of Duhme, the Bowens raise a number of claims. Principally, they argue that D'Oench, Duhme requires "malfeasance" on the part of the borrower . . . [O]ur more recent holdings explicitly disavow a requirement of malfeasance:
We can dispense easily with [the] contention that the D'Oench, Duhme rule bars only claims or defenses based upon illegal side agreements entered into for the purpose of deceiving banking authorities. . . . [T]he Court [in D'Oench, Duhme] suggested that [the rule applies] even [to] a borrower who . . . did not "intend[] to deceive any person". . . . Hence, it is irrelevant . . . whether [the borrower] acted in good faith . . .
The lack of a malfeasance requirement makes D'Oench, Duhme a sharp sword and sturdy shield indeed. What is the purpose of such imposing armaments? Fundamentally, D'Oench attempts to ensure that FDIC examiners can accurately assess the condition of a bank based on its books. The doctrine means that the government has no duty to compile oral histories of the bank's customers and loan officers. Nor must the FDIC retain linguists and cryptologists to tease out the meaning of facially-unencumbered notes. Spreadsheet experts need not be joined by historians, soothsayers, and spiritualists in a Lewis Carroll-like search for a bank's unrecorded liabilities. Perhaps mindful of the fate that befell the Baker, whose search for the Snark ended with his own disappearance, D'Oench, Duhme seeks to ensure that a bank's assets do not "softly and suddenly vanish away." (footnote omitted)
*597 The dangers of a contrary policy should be obvious. Today, stable financial institutions sometimes seem as elusive as the Snark. Unrecorded agreementsthose rooted in the loose soil of casual transactions as much as those that spring from the malodorous loam of outright fraudare a threat to the ecology of the banking system that we can ill-afford. To check the growth of these hardy perennials, D'Oench forces borrowers to bear the risk that their unorthodox plants will bear no fruit. Those who till these soils may not shift the cost of their peculiar agronomy to the FDIC, the bank's depositors and unsecured creditors, and the taxpayers and depositors who fund the FDIC. (citations omitted).
As to the Bowens' malfeasance requirement, we would decline to adopt it even in the absence of precedent. Adulterating D'Oench, Duhme would amount to abandoning a bedrock protection for the uncertainty of quick-clay, a seemingly stable substance notorious for its rapid liquefaction. The firm resolution we provide today would collapse into an uncertain and fact-bound inquiry, soon to be followed by a landslide of "good faith" claims against the FDIC. We are not willing to remake the topography of the banking system in such a fashion. Nor, apparently, is Congress, which has directed the courts to void unrecorded agreements against the interests of FDIC-Receiver without regard to malfeasance . . . Accordingly, we reaffirm our earlier holdings: the D'Oench, Duhme doctrine is applicable even in the absence of malfeasance.
As an alternative to their malfeasance requirement, the Bowens suggest that D'Oench requires at least recklessness or negligence on the part of the borrower. They cite no authority for this proposition, however, and we do not regard it as consistent with our precedent or our holding today.
915 F.2d at 1016-17.
Based on the evidence presented, the Court finds that the elements necessary to establish an exception to discharge under section 523(a)(2)(B) in regard to the debtor's residential loan have been satisfied by the FDIC.
B.
The Court next considers the application of 11 U.S.C. § 523(a)(2)(A) in connection with Lefeve's residential loan at New Orleans Federal. This section provides that:
(a) A discharge under section 727 . . . does not discharge an individual debtor from any debt . . .
(2) for money, property, services, or an extension, renewal, or refinancing of creditor, to the extent obtained by
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial condition.
11 U.S.C. § 523(a)(2)(A). To except a debt from discharge based on false pretenses, the law imposes five requirements: (1) a representation by the debtor, (2) which was materially false, (3) which the debtor knew to be false at the time it was made, (4) made with the intention and purpose of deceiving the creditor, (5) which was relied upon by the creditor, and (6) as a result of which money, property, or services, or an extension, renewal, or refinancing of credit was obtained. See In re Cerar, 97 B.R. 447 (C.D.Ill.1989); In re Kimzey, 761 F.2d 421, 423 (7th Cir.1985); In re Houtman, 568 F.2d 651, 655 (9th Cir.1978); In re Lamb, 28 B.R. 462, 464 (Bankr.W.D.La. 1983); In re Brewood, 15 B.R. 211, 214 (Bankr.D.Kan.1981).
The debtor represented to New Orleans Federal that the purchase price of the residence was $290,000.00 and that he would contribute over $33,000.00 in cash. New Orleans Federal actually and unknowingly provided 100% financing for Lefeve to acquire his residence in loaning $261,000.00 to Lefeve, because no cash was contributed by Lefeve in the transaction.
The CPA, Ashton Ryan, testified that a lender wants proof of an owner's personal financial stake in property and that failure to pay cash is material to the lender. *598 Knowledge of Lefeve's failure to pay cash would have raised suspicions at NOF whether the transaction was arms-length and whether the purchase price accurately indicated or supported value.
The loan file indicates records that were relied upon by New Orleans Federal included the following:
(1) Contract for the sale and purchase of real estate showing a purchase price of $290,000.00 with a cash deposit from Lefeve of $10,000.00,
(2) Residential loan application showing a cash deposit of $10,000.00 from Lefeve,
(3) Loan commitment showing a sales price of $290,000.00,
(4) Loan authorization to attorney enclosing the sale agreement,
(5) Closing statement showing contract sales price of $290,000.00 and cash contribution by Lefeve of over $33,000.00.
Ryan testified that from a review of the residential loan file, NOF relied on the representation that a cash contribution was being made. Hughes Drumm testified that NOF had a policy against making 100% loans and required cash contributions from borrowers. Based on the evidence presented at this trial, the Court finds that FDIC has met its burden of proving by a preponderance of the evidence the elements necessary to establish an exception to discharge under section 523(a)(2)(A) in regard to the debtor's residential loan. Additionally, the Court notes that the element of reliance, although proven here, is presumed under the application of In re Figge, and In re Cerar, as cited in the above discussion.
C.
The Court next turns to the issues relating to the Drown loan. The FDIC alleges entitlement to a determination of nondischargeability pursuant to § 523(a)(2)(A) in connection with this loan.
It was represented to NOF that the loan to Steven Drown was to include a sizeable cash contribution from Drown in the amount of $217,500.00 on a purchase price of $717,500.00. The failure to put up cash for the loan, and the failure to disclose to NOF that Lefeve was retaining an ownership interest in the property and a mortgage from Drown, were material differences in the loan package as presented. A false representation may be passive. See In re Gitelman, 74 B.R. 492, 495 (Bankr.S.D.Fla.1987); In re Lamb, 28 B.R. 462, 564 (Bankr.W.D.La.1983); In re Thomas, 12 B.R. 765, 769 n. 9 (Bankr. N.D.Ga.1981). Testimony from Ryan and Drumm further indicates that these changes would be very important and material to an underwriter or loan committee member in evaluating the loan, since the borrower would have no personal stake in the property and the transaction would not be at arms length.
Ryan further testified that an underwriter relies on a borrower's cash contribution and that a bank auditor reviewing Lefeve's loan file would believe cash had been contributed. The file included the sales contract and the loan disbursement statement.
Lefeve was instrumental in the negotiations for the loan and attended all meetings concerning the loan. Drown became involved through Lefeve at a time when Lefeve did not think he could personally go to NOF for the loan in his name because he might have a problem with excessive loans to one borrower. Lefeve was most anxious to sell his property. The Fifth Circuit noted in In re Jordan that a bank may place reliance on data from a customer who is accompanied by a regular and well known customer.
[W]e are . . . convinced that Southeast's reliance on the Jordans' data, although perhaps not the most prudent of banking practices, was not unreasonable. Incontestably, in early 1985 the Jordans' faces were new and unfamiliar to Southeast executives. The couple was, however, accompanied by and seeking to purchase land from Deceteau, a regular and well known customer with substantial Southeast deposits.
927 F.2d at 225.
Based on the evidence presented, and law cited above, the Court finds that the burden of proving the elements necessary to establish an exception to discharge under *599 section 523(a)(2)(A) in regard to the Steven Drown loan have been met by the FDIC.
D.
The FDIC further contends a violation of § 523(a)(2)(B) in connection with the Drown loan by use of a materially false financial statement. The financial statement that is the subject of this proceeding was dated July 5, 1984, and submitted to New Orleans Federal on December 10, 1984. Section 523(a)(2)(B), as stated above, prevents discharge where the debtor has obtained money by use of a statement in writing respecting the debtor's financial condition, that is materially false, on which the creditor reasonably relied, and that the debtor published with intent to deceive.
The financial statement here showed numerous assets that Lefeve either never owned in his individual name, or had any interest in at the time of submission of the statement. The financial statement failed to disclose substantial contingent liabilities although the statement was very detailed, and contained supplementary explanatory notes. Ashton Ryan testified that the level of detail in Lefeve's financial statement was exemplary. The debtor argues that a general comment preceding the statement to the effect that the debtor may have contingent liabilities in the event of default of a partner was sufficient to put the reader on notice that he should ask questions. The differences between Lefeve's actual financial condition and that shown on his financial statement were material and should have been disclosed without interrogation or investigation by NOF. See, Bowen v. Federal Deposit Ins. Corp., 915 F.2d 1013, 1016 (5th Cir.1990) (spreadsheet experts need not be joined by historians, soothsayers, and spiritualists in a Lewis Carroll-like search for unrecorded liabilities). It is noted by the Court that it took several days of testimony for Lefeve himself to attempt to explain discrepancies in his own financial statement.
Lefeve tried to persuade the Court that after all corrections were made in his financial statement to reflect the actual assets and liabilities as of the date the financial statement was submitted, the misrepresentation in his overall net worth was not material and his financial condition was actually better than that shown. The Court holds that the evidence of material discrepancy in Lefeve's financial statement by overvaluing assets and undervaluing liabilities is overwhelming, particularly when the extensive detail and supplemental explanatory notes included as a part of the "exemplary" statement are considered. Additionally, the evidence submitted by Lefeve in attempting to show that his assets were greater than that shown was not sufficiently substantiated or persuasive. Where a financial statement contains numerous material misrepresentations of the kind depicted in Lefeve's financial statement, the debtor should not be allowed to claim a counterbalancing effect by showing yet additional discrepancies that appear to favor the debtor's overall financial condition. In In re Jordan, 927 F.2d 221 (5th Cir.1991), the debtors attempted to use this rationale:
The Jordans begin by denying that they provided Southeast with data that were materially false. They admit that their balance sheets and supplementary statements omitted several of their own and their corporation's liabilities, but assert that certain assets used to secure these liabilities were also excluded from these documents. As they see it, the unmentioned assets were approximately equivalent in value to unmentioned liabilities. Thus, they conclude, the omissions did not render their data materially untrue, because the data gave an essentially accurate portrayal of their aggregate net worth. . . .
A materially false statement is one that "paints a substantially untruthful picture of a financial condition by representing information of the type which would normally affect the decision to grant credit." . . . Further, in determining whether a false statement is material, a relevant although not dispositive inquiry is "whether the lender would have made the loan had he known the debtor's true situation." (citation omitted). Finally, it is well-established that writings with pertinent *600 omissions may qualify as "materially false" for purposes of § 523(a)(2)(B). (citation omitted).
With these principles as a backdrop, we reject the Jordans' argument for two independent reasons. First, the couple has failed to substantiate their assertion that the omitted liabilities were accompanied by omitted assets. . . . Second, even if the Jordans' assertions were borne out by the record, the data they submitted to Southeast were materially false for reasons wholly apart from omitted liabilities. Stated another way, the missing liabilities on the Jordans' balance sheets and supplementary statements were but the tip of the proverbial iceberg. . . . We thus agree with the bankruptcy court that the Jordans provided Southeast with written financial documents that were "materially false."
927 F.2d at 224.
Additionally, the debtor raises the argument that the termination agreement that divested him of properties in August of 1984 was not recorded at the time of submission of the financial statement, and thus the property was still technically his and disclosure was not necessary. He further stated that he only updated his financial statement every six months. In In re Duncan, 81 B.R. 665 (Bankr.M.D.Fla.1987) the Court stated that:
Demonstrating the debtors submitted the application and financial statement with the intent to deceive does not require a showing of actual knowledge of the falsity of the two documents. (citations omitted).
A creditor can establish intent to deceive by proving reckless indifference to, or reckless disregard of the accuracy of the information in the financial statement of the debtor. (citations omitted). While it is apparent the debtors and [third party purchaser] believed the debtors retained some sort of ownership interest in the real property, it is just as apparent the debtors recklessly disregarded the fact some interest may have been conveyed to [third party purchaser] by quit claim deed. The debtors knew that by failing to mention the transfer by quit claim deed, the financial statement and application were inaccurate. Thus, this element of Section 523(a)(2)(B) is met by clear and convincing evidence. In passing, the court would note there is sufficient evidence to establish this burden on the "Half Truth" doctrine. (citations omitted).
81 B.R. at 668. Additionally, the Court in Brigadier Homes v. Hert, 81 B.R. 638 (Bankr.N.D.Fla.1987) stated the following:
The element of intent must finally be addressed. Intent may be inferred from the surrounding circumstances. (citation omitted). Reckless disregard for the truth or falsity of a statement combined with the shear magnitude of the resultant misrepresentation may combine to produce the inference of intent. (citations omitted). This court finds Hert's nondisclosure of his limited ownership interest in the California property and his failure to amend the property value listed for the Indiana property upon learning of its over-inflated worth to be, at the least, reckless statements constituting willful misrepresentations. Hert made these willful misrepresentations which he should have known would induce these parties to enter into the financial and contractual relationship with him, thus his intent to deceive the plaintiffs may be inferred. Carini v. Matera, 592 F.2d 378 (7th Cir.1979).
81 B.R. at 641.
In In re Barrett, 2 B.R. 296, 301 (Bankr. E.D.Pa.1980), the Court stated that it will not shield an intelligent, educated businessman, who had ample opportunity to read what he signed, from his own carelessness, especially in light of his extensive dealings with banks. See also, In re Jordan, 927 F.2d 221, 226 (5th Cir.1991).
Lefeve's testimony indicated that he knew NOF conditioned the Drown loan on his guaranty and that a financial statement was required. Ashton Ryan testified that an underwriter relies heavily on a financial statement and especially one that was as well prepared as Lefeve's. He testified that the level of detail in Lefeve's financial *601 statement was exemplary. Ryan stated that a financial statement that was not current and that did not reflect material changes would not be meaningful to a lender or underwriter. Ryan concluded that NOF in fact relied on the financial statement. Hughes Drumm further testified that the loan committee relied upon financial statements as a matter of course.
As discussed previously, application of the D'Oench, Duhme doctrine may be used to foreclose factual disputes concerning reliance under section 523(a)(2). Under Figge, supra, the Court held that the doctrine of D'Oench, Duhme & Co. v. Federal Deposit Insurance Corp., 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942), "creates a presumption of reasonable reliance" by the FDIC in its objection to discharge of a debtor based on § 523(a)(2)(A) and (B). The Court stated that, "the element of reliance required by Section 523(a)(2)(A) and (B) is satisfied upon documentary evidence from the debtor's loan file, showing the written terms and conditions of the loan agreement". 94 B.R. at 668. Documents included in the Drown loan file of NOF included: (1) purchase money adjustable rate deed of trust note, (2) purchase money land deed of trust, (3) financial statement, and (4) evidence of verification.
Based on the evidence presented, and on the law cited in this opinion, the Court finds that the burden of proving the elements necessary to establish an exception to discharge under section 523(a)(2)(B) in regard to the Steven Drown loan have been met by the FDIC. Additionally, the Court notes that the element of reliance, although proven here, is presumed under the application of In re Figge and In re Cerar, as previously cited.
E.
Additionally, the FDIC alleges violation of § 523(a)(6) by Lefeve's submission of the materially false financial statement in connection with the Drown loan.[6] Section 523(a)(6) provides that:
(a) A discharge under section 727 . . . of this title does not discharge an individual debtor from any debt
(6) for willful and malicious injury by the debtor to another entity or to the property of another entity . . .
11 U.S.C. § 523(a)(6).
In In re Fondren, 119 B.R. 101 (Bankr. S.D.Miss.1990), this Court addressed the requirements for a willful and malicious injury under section 523(a)(6):
The court next considers whether a violation of section 523(a)(6) occurred thus rendering the debt to Guaranty Corporation nondischargeable. As stated above, section 523 provides that a discharge under section 727 does not discharge an individual from any debt for willful and malicious injury to another entity or to the property of another entity. In In re Hendry, 77 Bankr. 85 (Bankr.S.D.Miss.1987), the following was stated:
[T]he legislative history of § 523(a)(6) provides in the Committee Reports of the United State House of Representatives and Senate that:
Paragraph (6) excepts debts for willful and malicious injury by the debtor to another person or to the property of another person. Under this paragraph, "willful" means deliberate or intentional. To the extent that Tinker v. Colwell, 193 U.S. 473, 24 S.Ct. 505, 48 L.Ed. 754 (1902 [1904]), held that a looser standard is intended, and to the extent that other cases have relied on Tinker to apply a "reckless disregard" standard, they are overruled. (citations omitted).
*602 It is clear from the legislative history that "willful" means a deliberate or intentional action. However, a question remains as to the meaning of the term "malicious." The definition of the term has been inconsistent by the Courts and thus two standards have evolved.
One line of cases requires an act with an actual, conscious intent to cause injury or harm to the creditor. (citations omitted). This line of cases . . . encourages the Court to adopt this higher standard of the debtor having to have the conscious intent to harm . . .
A second line of cases has continued to adopt the Tinker standard of implied or constructive malice and requires an intentional act which results in injury or harm to the creditor . . . (citations omitted).
This Court finds that the standard adopted by the United States Fifth Circuit Court of Appeals, which is controlling here, is the interpretation of "willful and malicious" set forth in Collier on Bankruptcy, the leading bankruptcy treatise. See Vickers v. Home Indemnity Company, Inc., 546 F.2d 1149 (5th Cir.1977); Matter of Dardar, 620 F.2d 39 (5th Cir.1980); Seven Elves, Inc. v. Eskenazi, 704 F.2d 241 (5th Cir.1983); Matter of Quezada, 718 F.2d 121 (5th Cir. 1983). See also, In re Cecchini, 780 F.2d 1440 (9th Cir.1986). Collier provides:
In order to fall within the exception of section 523(a)(6), the injury to an entity or property must have been willful and malicious. An injury to an entity or property may be a malicious injury within this provision if it was wrongful and without just cause or excuse, even in the absence or personal hatred, spite or ill-will. The word "willful" means "deliberate or intentional," a deliberate and intentional act which necessarily leads to injury. Therefore, a wrongful act done intentionally, which necessarily produces harm and is without just cause or excuse, may constitute a willful and malicious injury.
3 Collier on Bankruptcy, 523.16 at 523-128 (15th ed. 1983).
Thus, when a wrongful act such as conversion, done intentionally, necessarily produces harm and is without just cause or excuse, it is "willful and malicious" even absent proof of a specific intent to injure. Cecchini at 1443.
77 B.R. at 89-90.
119 B.R. at 104-05.
In In re Cerar, 97 B.R. 447 (C.D.Ill. 1989), the FDIC brought an action under § 523(a)(2)(A) and (a)(6) seeking to prevent discharge of a forged note. The court stated:
In order to establish a case under this section, the FDIC must prove three elements: (1) a willful and malicious act, (2) done without cause or excuse, and (3) which leads to harm. See, Matter of DeVier, 57 B.R. 602 (Bkrcy.E.D.Mich. 1986).
The debtor does not dispute the bankruptcy court's finding that his action was willful but contends that it was not malicious. The bankruptcy court recognized that there are two lines of authority as to the legal standard for deciding what is a malicious act. One line requires an actual conscious intent to financially injure the creditor. (citation omitted). The other line adopts the less stringent standard of implied or constructive malice holding that where an act is deliberately and intentionally done with knowing disregard for the rights of another it falls within the statutory definition of malice even if there is an absence of malice toward the particular creditor . . .
The bankruptcy court concluded that the less strict definition of malice . . . is the better analysis. Accordingly, the court found that, because the debtor knew that the bank was subject to FDIC examination and that the forged note would be used to conceal his credit situation from bank examiners, and because the debtor proceeded in the face of that knowledge to deliberately and intentionally forge the note, his action was therefore malicious . . .
[T]he court agrees with the bankruptcy court that the FDIC established by clear and convincing evidence that there was *603 no legally cognizable cause or reason for Cerar's forgery of the note.
There is also no doubt that Cerar's action led to harm to the FDIC. The purpose of bank regulations which establish lending limits to any one borrower is to protect the bank from lending excessive funds to any one borrower, so that in the event the borrower fails to repay, the bank will not be placed in financial difficulty. The FDIC insures deposits so that depositors will be paid in the event the bank fails. When Cerar forged the note which permitted the Bank to continue to retain the excess loans on its books, a situation of potential harm was created for both the Bank and the FDIC. This potential came to fruition when the Bank failed and the FDIC was forced to take over the Bank. Cerar's actions clearly contributed to the failure of the Bank, although they were not the sole cause, and they were clearly of the type which the regulation was intended to prohibit.
97 B.R. at 451, 453.
The Court has previously determined that Lefeve's submission of the false financial statement in connection with the Drown loan was intentional. As previously cited, intent may be inferred from the surrounding circumstances. See Brigadier Homes v. Hert, 81 B.R. 638 (Bankr. N.D.Fla.1987). Additionally, Lefeve's testimony indicated that the reason for introducing Drown to New Orleans Federal was because he believed that he may have had excessive loans himself, thus Drown's participation was, in essence, intended as a further extension of credit for Lefeve's own benefit. This type of activity is the kind the banking regulations were specifically intended to prohibit. The overall course of conduct exhibited by Lefeve in the Drown loan transaction evidences that his acts were intentional.
The submission of the false financial statement was, in the opinion of this Court, the type of activity that produces harm to the creditor by aiding in the false depiction of a sound loan from a secure institution. As in the case of Cerar, Lefeve's actions contributed to the failure of New Orleans Federal. Based on this analysis, the Court finds that the requirements for a willful and malicious injury under section 523(a)(6) have been satisfied by the FDIC in connection with the Drown loan.
IV.
In summary, the Court concludes the following.
1. The debtor, Aristide Francis Lefeve, Jr., obtained his residential loan under false pretenses and false representations in violation of § 523(a)(2)(A), and by the use of a materially false financial statement in violation of § 523(a)(2)(B). Therefore, Lefeve's indebtedness to the FDIC in connection therewith is nondischargeable.
2. Lefeve obtained the Drown loan in violation of § 523(a)(2)(A) by the use of false pretenses and false representations, and in violation of § 523(a)(2)(B) by the use of a materially false financial statement. Therefore, Lefeve's indebtedness to the FDIC in connection therewith is nondischargeable.
3. Lefeve violated § 523(a)(6) in obtaining the Drown loan by the use of a materially false financial statement respecting his financial condition. Therefore, Lefeve's indebtedness to the FDIC in connection therewith is nondischargeable.
This opinion shall constitute findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052 and Federal Rule of Civil Procedure 52.
A separate judgment will be entered by the Court pursuant to Bankruptcy Rule 9021 and Federal Rule of Civil Procedure 58. Counsel for FDIC is requested to submit a proposed form of judgment setting forth the correct computation of interest, fees and costs, as awarded in the District Court actions, within 21 days of the date of entry of this opinion.
NOTES
[1] The complaint was set for trial and heard simultaneously with the complaint to determine dischargeability filed by the FDIC as Receiver for Crescent Federal Savings Bank in Adversary No. 880975 SC. The Crescent complaint alleged violations under 11 U.S.C. § 523(a)(2)(B) involving the same financial statement that is the subject of this proceeding. Portions of this opinion are taken from briefs filed by the parties in these cases.
[2] After commencement of this proceeding the Federal Deposit Insurance Corporation substituted itself as the Receiver for New Orleans Federal pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of 1989, Pub.L. No. 101-73, § 401(f)(2), 103 Stat. 183, 356 (1989). Accordingly, the Plaintiff in this proceeding will be referred to hereinafter as the Federal Deposit Insurance Corporation (FDIC).
[3] This amount included damages for slander of title in the amount of $7,500.00. Judgment was previously entered in this adversary proceeding declaring the $7,500.00 plus interest and costs to be nondischargeable.
[4] The element of reasonable reliance is the same under sections 523(a)(2)(A) and (B). In re Turner, 1989 WL 105750 (Bankr.N.D.Ill.1989). In re Howarter, 95 B.R. 180 (Bankr.S.C.Cal. 1989), aff'd, 114 B.R. 682 (9th Cir. BAP 1990). Therefore, the cases dealing with either section are authoritative on the element of reliance here.
[5] Although not a decision dealing with dischargeability in bankruptcy, this opinion is instructive on policy and application of the D'Oench, Duhme doctrine.
[6] The Court notes that in certain materials submitted to the Court, FDIC claims violation of § 523(a)(6) in connection with the § 523(a)(2)(A) false pretenses allegation on the Lefeve residential loan, and on the § 523(a)(2)(A) allegation on the Drown loan. However, on page 12 of the Complaint, the FDIC alleges that Lefeve's debt in connection with the Drown loan should be excepted from discharge because Lefeve executed and delivered to NOF a materially false financial statement respecting his financial condition, in violation of § 523, including, without limitation, § 523(a)(2)(B) and § 523(a)(6). Thus, the Court will restrict discussion on the § 523(a)(6) issue to the financial statement submitted in connection with the Drown loan.
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86 P.3d 1231 (2004)
Tricia A. PIPER, Respondent and Cross-Appellant,
v.
DEPARTMENT OF LABOR AND INDUSTRIES, Appellant.
No. 21526-1-III.
Court of Appeals of Washington, Division 3, Panel Eight.
March 30, 2004.
*1232 John R. Wasberg, Assistant Attorney General, Seattle, WA, for Appellant.
David A. Kohles, David A. Kohles, Inc. P.S., Stanwood, WA, William C. Smart, Keller, Rohrback LLP, Seattle, WA, for Appellant.
OPINION PUBLISHED IN PART
BROWN, C.J.
This is an attorney fee dispute arising after a jury found the Board of Industrial Insurance Appeals (Board) had erred in determining that Tricia Piper's lung illness was not an occupational disease. The trial court awarded Ms. Piper attorney fees for services rendered both before the Board and the trial court. The Department of Labor & Industries (Department) appealed the fee award as it relates to Board work, contending the award violates RCW 51.52.130 and Supreme Court precedent. Ms. Piper cross-appealed the trial court's hourly rate decision and its denial of certain travel expenses. We agree with the Department, and reverse in part. We disagree with Ms. Piper and affirm in part.
FACTS
Ms. Piper's alleged exposure to toxic chemicals at a dry cleaning establishment caused an industrial injury; however, the Department denied her claim for industrial insurance benefits. Ms. Piper aggressively and successfully litigated her claim before an Industrial Insurance Appeals Judge (IAJ). The Board reversed the IAJ in a split decision. The superior court jury reversed the Board, and the trial court remanded the matter to the Department with directions to award benefits that are not at issue here.
The trial court retained jurisdiction to determine attorney fees and costs. Ms. Piper's counsel submitted a detailed claim for the services of multiple attorneys and paralegals, and for costs. Her two principal Seattle-based attorneys billed at $300 to $350 per hour. Most of counsels' work was done before the Department and Board. Ms. Piper then moved for a total fee award of $215,085.75, based on a "lodestar" of $143,390.50 with a multiplier of 1.5.
In opposition, the Department filed affidavits of several Spokane-based attorneys with extensive worker's compensation experience. They generally charged lower fees.
On August 22, 2002, the trial court entered findings of fact and conclusions of law generally favorable to Ms. Piper. The trial court accepted nearly all of counsel's claimed work hours but it disallowed travel time related to the superior court trial. "A reasonable hourly rate of $200.00 is awarded with a multiplier of 1.5 for all attorney time." Clerk's Papers (CP) at 143 (Finding of Fact "kk").
After noting the remedial purpose underlying Title 51 RCW, the trial court concluded, "[t]he attorneys' fee award should be sufficient so that the benefits to which Tricia Piper is entitled are not unfairly reduced by the cost of litigation." CP at 144 (Conclusion of Law 6). The trial court awarded a base amount of $73,951 in attorney fees increased by a 1.5 lodestar multiplier to $110,926.50. The court awarded $11,148.14 in costs and $5,301.00 in paralegal fees (without a multiplier), then entered a consistent judgment.
The Department unsuccessfully sought reconsideration and then appealed. Ms. Piper cross-appealed.
*1233 ANALYSIS
A. RCW 51.52.130
The issue is whether RCW 51.52.130 authorizes the trial court to award the prevailing worker attorney fees incurred before the Board in addition to attorney fees before the superior court. In short, it does not. Borenstein v. Dep't of Labor & Indus., 49 Wash.2d 674, 306 P.2d 228 (1957); Rosales v. Dep't of Labor & Indus., 40 Wash.App. 712, 700 P.2d 748 (1985).
The statute partly states:
....
If in a worker or beneficiary appeal the decision and order of the board is reversed or modified and if the accident fund or medical aid fund is affected by the litigation, or if in an appeal by the department or employer the worker or beneficiary's right to relief is sustained, or in an appeal by a worker involving a state fund employer with twenty-five employees or less, in which the department does not appear and defend, and the board order in favor of the employer is sustained, the attorney's fee fixed by the court, for services before the court only, and the fees of medical and other witnesses and the costs shall be payable out of the administrative fund of the department.
RCW 51.52.130 (emphasis added).
The statute contains "no provision for the recovery of attorney's fees from or payable by the department for services rendered before the board." Borenstein, 49 Wash.2d at 676, 306 P.2d 228 (citing Harbor Plywood Corp. v. Dep't of Labor & Indus., 48 Wash.2d 553, 559-60, 295 P.2d 310 (1956)); accord Rosales, 40 Wash.App. at 716, 700 P.2d 748. "If such fees are to be paid by the department, it is a matter of policy to be determined and directed by the legislature through the enactment of a statute clearly providing for the payment of such fees by the department of labor and industries." Borenstein, 49 Wash.2d at 676-77, 306 P.2d 228. It is error for a superior court to award such fees. Rosales, 40 Wash.App. at 716, 700 P.2d 748. Borenstein and Rosales are directly on point and control here.
Ms. Piper incorrectly contends RCW 51.52.130 is ambiguous and thus in need of a liberal construction in her favor. The clear holdings of Borenstein and Rosales render her argument untenable. In any event, the statute is unambiguous. The fees and attorney charges for representing a worker may be "fixed" by the trial court for purposes of resolving potential disputes over the appropriate fee. RCW 51.52.130. But such fees are "payable" by the Department only when the worker prevails in superior court, and even then such fees are paid solely "for services before the court." RCW 51.52.130; Borenstein, 49 Wash.2d at 676, 306 P.2d 228; Rosales, 40 Wash.App. at 716, 700 P.2d 748.
Ms. Piper incorrectly insists the following sentence in a subsequent Supreme Court opinion overrules Borenstein: "The court may even award fees for the attorney services before the Department and the Board if the court determines that the fee fixed by the director or the Board for these services was inadequate." Brand v. Dep't of Labor & Indus., 139 Wash.2d 659, 670 n. 5, 989 P.2d 1111 (1999) (citing RCW 51.52.130). A proper reading of Brand shows the quoted footnote is a fleeting and unbinding dictum. See, e.g., ETCO, Inc. v. Dep't of Labor & Indus., 66 Wash.App. 302, 307, 831 P.2d 1133 (1992) (noting an appellate court is not bound by dicta).
Resolving an issue having no bearing on Borenstein, the Brand court held that a trial court may not reduce a prevailing worker's attorney fee award where the worker is partially successful in an appeal before the superior court or appellate court. See Brand, 139 Wash.2d at 670-72, 989 P.2d 1111. That is not the issue in this case. Borenstein is controlling and binds us until the Supreme Court decides otherwise. See State v. Gore, 101 Wash.2d 481, 487, 681 P.2d 227 (1984).
Ms. Piper offers alternative theories to affirm the trial court's award for fees for work before the Board. Generally, an appellate court may affirm a trial court on any theory supported by the pleadings and the record even if the trial court did not consider that theory. LaMon v. Butler, 112 Wash.2d 193, 200-01, 770 P.2d 1027 (1989).
*1234 First, Ms. Piper insists public policy supports the fee award. She cites no controlling authority supporting her proposition that policy concerns justify a lower court overruling Supreme Court precedent. See Gore, 101 Wash.2d at 487, 681 P.2d 227. Policy considerations are best left to the legislature. See Borenstein, 49 Wash.2d at 676-77, 306 P.2d 228.
Second, Ms. Piper suggests CR 11 sanctions. But, she did not move for CR 11 sanctions below. And, CR 11 sanctions are appropriate where a party or attorney files frivolous pleadings. Manteufel v. Safeco Ins. Co. of Am., 117 Wash.App. 168, 175-76, 68 P.3d 1093, review denied, 150 Wash.2d 1021, 81 P.3d 119 (2003). The Department's pleadings are not frivolous and, objectively, the Department's opposition to Ms. Piper's claim was based upon conflicting evidence on the cause of her condition. Hindsight is not an appropriate standard for applying CR 11. See In re Cooke, 93 Wash.App. 526, 529, 969 P.2d 127 (1999). Finally, we do not engage in CR 11 fact-finding. Biggs v. Vail, 124 Wash.2d 193, 197, 876 P.2d 448 (1994). Accordingly, Ms. Piper's CR 11 argument is unpersuasive.
Next, Ms. Piper contends the Department was subject to sanctions under RCW 4.84.185. But Ms. Piper did not file a motion for sanctions within 30 days after the judgment. Id. Consequently, Ms. Piper's demand for sanctions is time-barred. Id.
Finally, Ms. Piper asserts Department bad faith justifies a fee award. In egregious cases, a trial court may award a prevailing party attorney fees on a finding that the losing party acted in bad faith or wantonness. See, e.g., Miotke v. City of Spokane, 101 Wash.2d 307, 338, 678 P.2d 803 (1984); Pub. Util. Dist. No. 1 of Snohomish County v. Kottsick, 86 Wash.2d 388, 390, 545 P.2d 1 (1976). Notwithstanding the remedial purpose of Title 51 RCW to compensate injured workers, we cannot say on this record that the Department's position was taken in bad faith. Conflicting evidence as to causation was presented, and the Department's evidence persuaded the Board. Accordingly, Ms. Piper's bad faith argument is unpersuasive.
The trial court erred. The remedy is to reverse and remand for recalculation of the award.
A majority of the panel having determined that only the foregoing portion of this opinion will be printed in the Washington Appellate Reports and that the remainder, having no precedential value, shall be filed for public record pursuant to RCW 2.06.040, it is so ordered.
WE CONCUR: SWEENEY and KURTZ, JJ.
|
30 So.3d 1000 (2010)
Deborah TATE
v.
Michael TATE.
No. 09-CA-591.
Court of Appeal of Louisiana, Fifth Circuit.
January 12, 2010.
Mark M. Dennis Attorney at Law, Covington, Louisiana, for Plantiff/Appellee.
Rudy W. Gorrell, Attorney at Law, New Orleans, Louisiana, for Defendant/Appellant.
Panel composed of Judges EDWARD A. DUFRESNE, JR., CLARENCE E. McMANUS, and MARC E. JOHNSON.
CLARENCE E. McMANUS, Judge.
STATEMENT OF THE CASE
Deborah and Michael Tate were married on January 26, 1980. Deborah filed a petition for divorce on June 8, 1993. She then filed motion to partition community property on April 26, 1999 and a descriptive list of assets and liabilities on October 27, 1999 listing assets of a community home in Kenner and a piece of vacant land in Mississippi. The property values were listed as unknown. The mortgage on the community home was listed as a liability and Deborah claimed reimbursement claims for household bills she had paid.
Michael filed a descriptive list on December 13, 1999 listing the same immovables as assets with unknown values. He also listed assets of furnishings in the community home and the proceeds from the sale of timber on the Mississippi property. Michael listed tax bills on the Mississippi property and unknown amounts paid to the tax assessor, as well as the mortgage on the community home, as liabilities.
On March 23, 2009, the hearing officer recommended that a proposed consent judgment submitted with a motion to enforce consent judgment be made a judgment of partition in accordance with the transcript of July 17, 2000 proceedings. The proposed consent judgment had been dictated in open court on July 17, 2000.
Michael filed an objection to the hearing officer's recommendation on March 23, 2009 arguing there was never a consent judgment signed by either party. A hearing *1001 on the objection was held April 20, 2009 and the trial court issued a judgment on May 1, 2009 adopting the consent judgment dictated into the record July 17, 2000. That consent judgment provided that Michael transfer and convey his undivided one-half interest in the immovable property in Kenner with the community house, and the immovable property in Mississippi to Deborah in full ownership. Therefore, Michael was to transfer and convey the entirety of his interests in all immovable property to Deborah. Michael's retirement pension benefits in his name were to be assigned according to the "Sims formula", which was to go into effect on the date of divorce and the length of time that the benefits had accrued would be determined. Any pension benefits accrued after the date of divorce would be Michael's separate property. The consent judgment further provided that Deborah waived all rights she may have had under a retirement savings investment portion plan in Michael's name. Finally, Deborah was to indemnify Michael for any of the loan amount on the listed properties and was to hold Michael harmless for payment on the loan.
At the April 20, 2009 hearing before the trial court, Michael argued that even though he was present at the hearing in 2000, he stated to the trial court that he did not understand what was going on, especially related to the community property at issue. The trial court asked if he understood and he responded "[y]eah. I understand but there are certain things that I don't understand." Michael argued there was no meeting of the minds and, although there was some discussion before the court, there was some confusion regarding him agreeing to reimburse Deborah or turn over the land to her. Michael then left court without signing anything.
Deborah argued there was some confusion at the hearing, however, both attorneys and the court explained the law of reimbursement and in the end Michael understood the transfer of the land to Deborah and then asked questions regarding the retirement account.
Following the hearing, the trial court adopted the consent judgment. Michael now appeals the trial court's judgment granting the motion to make the consent judgment the formal judgment of the court. For the following reasons, we affirm the trial court's judgment.
DISCUSSION
First, we find there was a valid consent judgment placed on the record between the parties on July 17, 2000. On that date, both Michael and Deborah were present in court and both were represented by counsel. Deborah's counsel stated that they were set for trial but had reached an agreement or consent judgment. Both attorneys stated the terms of the consent judgment. Both parties were then asked if they understood what was put into the record by the attorneys. Michael then stated "Yeah. I understand but there are certain things that I don't understand." He stated he had talked it over with his attorney but did not understand about the land and house. Michael then explained that he had paid on the land every year except one and had paid on the house until 1993. So, he asked why Deborah deserved to get the land.
The trial court explained to Michael that Deborah would receive the land and house for reimbursements he owed to her for her payment of community debts. Michael's attorney also explained to him that the reimbursements were for Deborah's payments of the mortgage and household bills. Michael again stated he did not understand. Deborah's attorney went on to provide a financial explanation stating the appraisal value of the house, the balance of *1002 the loan, and the reimbursement due to Deborah. She then explained that half of the value of the house was $14,464.14 for each party and one half of the reimbursements due to Deborah equal $14,620.00. Therefore, Michael's one half of the house value is almost even with the reimbursements due to Deborah. The trial court further explained why Michael owed the reimbursements to Deborah.
Michael asked why the land was included since he had paid on it. The trial court explained that Michael owed the money and it had to be paid from somewhere, so the value in the Mississippi land made up the difference. The trial court went on to offer a hypothetical of Michael having a savings account that had nothing to do with the mortgage. The trial court stated that even in that instance, it would order Michael to pay Deborah the reimbursements out of the savings account, even if it had nothing to do with the marriage.
Michael asked no further questions regarding the reimbursement or transfer of the land. He did ask one question regarding the retirement plan. His attorney and the court explained that only the portion accrued during the marriage would be divided and anything accrued after would be his separate property. The court then asked one final time if everyone understood. There were no direct responses from the parties and the court instructed the attorneys to draw up the papers.
We find it is clear from this transcript that the court and attorneys fully explained the terms of the consent judgment to Michael. He did have questions regarding why the Mississippi land was being included to pay the reimbursements to Deborah. However, once he received extensive explanations from the court and attorneys, he did not offer any further objection to the consent judgment. The consent judgment appears to have been fully discussed between the attorneys and parties prior to the court hearing. And, the court had a chance to review the consent judgment and hear from each party. After all explanations were offered, the court accepted the consent judgment and asked the attorneys to present a written judgment.
La. C.C. art. 3072 provides that "[a] compromise shall be made in writing or recited in open court, in which case the recitation shall be susceptible of being transcribed from the record of the proceedings." In this case, the consent judgment or compromise was not perfected in writing, however, it was recited in open court and there was a full discussion on the record.
Therefore, we find the trial court found there to be a valid consent judgment on that date. Since the trial court found there to be a valid consent judgment at the hearing in open court in 2000, we also find the trial court correctly granted the motion to enforce the consent judgment in 2009.
AFFIRMED.
|
940 F.2d 663
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.Joyce M. BAKER, Defendant-Appellant.
No. 91-5393.
United States Court of Appeals, Sixth Circuit.
Aug. 6, 1991.
1
Before KENNEDY and NATHANIEL R. JONES, Circuit Judges, and HARVEY, Senior District Judge.*
ORDER
2
Joyce M. Baker, a federal prisoner, appeals the sentence imposed by the district court following her conviction on charges of wire fraud. The case has been referred to a panel of the court pursuant to Rule 9(a), Rules of the Sixth Circuit. Upon examination, the panel unanimously agrees that oral argument is not necessary. Fed.R.App.P. 34(a). In addition, counsel for all parties have waived oral argument in this case.
3
In October 1990, Baker pled guilty, pursuant to a Fed.R.Crim.P. 11 plea agreement, to one count of aiding and abetting in a conspiracy to obtain money by false pretenses by means of wire communication in interstate commerce in violation of 18 U.S.C. Secs. 2,371, and 1343. The plea agreement provided, inter alia, that the sentencing guidelines applied and that at sentencing the government would take no position with regard to Baker's assertion that she was entitled to a two level reduction as a minor participant pursuant to U.S.S.G. Sec. 3B1.2. In March 1991, Baker was sentenced to five years probation and four months in a halfway house. She has filed a timely appeal asserting that the district court erred in finding that she was not entitled to a two level reduction in her total offense level as a minor participant pursuant to U.S.S.G. Sec. 3B1.2.
4
Upon review, we conclude that the district court's denial of the minor participant reduction to Baker was not clearly erroneous. See United States v. Perry, 908 F.2d 56, 58 (6th Cir.), cert. denied, 111 S.Ct. 565 (1990); United States v. Williams, 894 F.2d 208, 213-14 (6th Cir.1990). Baker failed to meet her burden of showing by a preponderance of the evidence that she was entitled to a reduction as a minor participant pursuant to U.S.S.G. Sec. 3B1.2. See United States v. Rodriguez, 896 F.2d 1031, 1032-33 (6th Cir.1990).
5
Accordingly, the district court's judgment is hereby affirmed. Rule 9(b)(3), Rules of the Sixth Circuit.
*
The Honorable James Harvey, Senior U.S. District Judge for the Eastern District of Michigan, sitting by designation
|
United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
Nos. 02-3907/4019
___________
United States of America, *
*
Appellant/Cross Appellee, *
* Appeals from the United States
v. * District Court for the
* Southern District of Iowa.
Donald Michael Hutman, *
*
Cross Appellant/Appellee. *
___________
Submitted: May 13, 2003
Filed: August 12, 2003
___________
Before BOWMAN, HEANEY, and BYE, Circuit Judges.
___________
BYE, Circuit Judge.
The government contends the district court erred when it determined Donald
Hutman's career offender status (and resulting criminal history category VI)
overstated the seriousness of his criminal history. In a cross-appeal, Hutman
contends his 1992 burglary of a commercial structure should not count as one of the
two predicate offenses used to trigger career offender status. We reverse in part and
affirm in part.
I
Between January and May 2001, Hutman and two other individuals made
several sales of methamphetamine to a confidential informant and an undercover law
enforcement agent. When Hutman was arrested, he was in possesseion of an
additional nine grams of methamphetamine. Hutman, along with the other two
individuals, was charged in a nine-count indictment with conspiracy to distribute and
distribution of methamphetamine. On May 31, 2002, he pleaded guilty to the
conspiracy count in exchange for a dismissal of the other four counts.
A presentence report was prepared detailing Hutman's criminal history, which
began when Hutman was eighteen. On January 14, 1982, Hutman was convicted of
sexual abuse for molesting a five-year-old child after he admitted to fondling the
child's penis in an attempt to masturbate him. He spent five months in jail, followed
by three years of probation.
During the next two years, Hutman's probation officer filed two petitions to
revoke his probation. The first resulted from Hutman being charged with unlawful
flight from a law enforcement vehicle (while riding a motorcycle without a taillight,
Hutman fled at speeds up to 70 mph when police tried to stop him), a charge for
which he was sentenced on August 30, 1982. Probation was reinstated on the sex
abuse conviction, and Hutman was sentenced to three more years of probation on the
unlawful flight conviction. The second petition to revoke probation was filed on
January 10, 1984, after Hutman was charged with theft and trafficking in stolen
property. The theft and trafficking charges were dismissed when Hutman's probation
on both the sex abuse and unlawful flight convictions was reinstated. He was
discharged from probation on both convictions in 1985.
Hutman received his third conviction at the age of twenty-four when he was
convicted of the offense of failure to appear and spent one day in jail.
-2-
Hutman's fourth criminal conviction occurred when he was thirty years old.
In July 1992, Hutman and another person entered a storage area at an apartment
complex through a broken window. The two stole five paint containers, two doors,
and some plumbing fixtures. On April 7, 1993, Hutman was convicted of burglary
in the third degree and sentenced to four years of probation with six months
imprisonment deferred until October 1, 1993. He successfully petitioned the
sentencing court twice to further defer the jail sentence while he received mental
health counseling. In September 1994 the court deleted the six-month jail sentence
altogether because of Hutman's progress while on probation, and on July 5, 1995,
Hutman was discharged from probation.
Hutman's fifth conviction occurred when he was thirty-six years of age. On
June 14, 1999, the Iowa State Patrol stopped Hutman for speeding on Interstate 80.
After the arresting officer noticed the smell of marijuana emanating from the car, he
performed a routine weapons pat-down search on Hutman and discovered three
bundles of cash (totaling $4259) bound with electrical tape in Hutman's front and rear
pockets. A subsequent search of the vehicle uncovered 3.5 ounces of
methamphetamine in the passenger's purse. When the officer found the drugs,
Hutman's passenger screamed, "It's not mine, Donny please tell them where it came
from." Additional evidence indicated Hutman was trafficking methamphetamine
between Arizona and Iowa: a Fed Ex receipt was found in Hutman's wallet for a
package sent between the two states. On October 25, 1999, Hutman received a ten-
year suspended sentence for possession of a controlled substance with intent to
deliver, followed by five years of probation.
Most of Hutman's convictions occurred too long ago to count in his criminal
history, see United States Sentencing Guideline (U.S.S.G.) § 4A1.2(e), so the
presentence report assigned him a total of four points (one for the burglary, one for
the prior drug offense, and two for committing the instant offense while on probation)
placing him in Criminal History Category III. Hutman's prior burglary and drug
-3-
convictions count as crimes of violence under the career offender provisions of §
4B1.1, however, and automatically place him in Criminal History Category VI.
At his sentencing hearing, Hutman objected to his status as a career offender.
He contended the 1992 conviction for burglary of a commercial structure should not
count as one of the two predicate offenses required for career offender status. In the
alternative, Hutman argued Criminal History Category VI overstated the seriousness
of his criminal history, and moved the district court to depart downward pursuant to
U.S.S.G. § 4A1.3.1 The district court denied Hutman's objection to career offender
status, but granted the motion for a downward departure by reducing Hutman's
Criminal History Catergory from VI to III, and his offense level from 34 to 30,
resulting in a sentencing range of 121-151 months. The government filed a timely
appeal of the downward departure, and Hutman filed a timely cross-appeal of the
determination that his 1992 burglary offense constituted a predicate offense for career
offender purposes.
II
Under the PROTECT Act of 2003, Pub. L. No. 108-21 § 401, 117 Stat. 650,
657 (2003), amending 18 U.S.C. § 3742(e) effective April 30, 2003, we review de
novo the issue whether a departure is justified given the particular facts of a case. See
United States v. Aguilar-Portillo, 334 F.3d 744, 749-50 (8th Cir. 2003) (applying the
1
U.S.S.G. § 4A1.3 provides in relevant part that
[t]here may be cases where the court concludes that a defendant's
criminal history category significantly over-represents the seriousness
of a defendant's criminal history or the likelihood that a defendant will
commit further crimes. An example might include the case of a
defendant with two minor misdemeanor convictions close to ten years
prior to the instant offense and no other evidence of prior criminal
behavior in the intervening period.
-4-
PROTECT Act to a pending appeal); United States v. Mejia, 844 F.2d 209, 211 (5th
Cir. 1988) ("A change in the standard of review is properly characterized as
procedural rather than substantive [and therefore can be applied to a pending appeal
without violating the Ex Post Facto clause] because it neither increases the
punishment nor changes the elements of the offense or the facts that the government
must prove at trial.").
Four prior decisions guide our analysis in determining whether a downward
departure is appropriate given the facts of this case. In the first two cases, United
States v. Smith, 909 F.2d 1164 (8th Cir. 1990), and United States v. Senior, 935 F.2d
149 (8th Cir. 1991), we upheld decisions to depart downward despite a defendant's
status as a career offender. Smith involved a young defendant with a brief criminal
career, who committed the two predicate offenses used to trigger career offender
status within a two-month period at the age of nineteen. 909 F.2d at 1169.
Similarly, the defendant in Senior was relatively young when he committed the
predicate offenses used to trigger career offender status. When he was twenty, he
"robbed two Pizza Hut restaurants on the same night, and another Pizza Hut three
weeks later." 935 F.2d at 150. The state courts treated the three robberies '"as more
or less one criminal episode[,]'" because concurrent sentences were imposed. Id. at
151 (quoting the district court). Senior was paroled after spending three years in
prison. Id. When Senior was twenty-four, he sold Dilaudid to an undercover officer,
then fourteen days later possessed another controlled substance. A state court again
treated the two incidents as one, consolidating them for sentencing and imposing
concurrent sentences. Senior was paroled after spending eighteen months in prison.
Id. at 150-51.
In the two more recent decisions, United States v. McNeil, 90 F.3d 298 (8th
Cir. 1996), and United States v. Butler, 296 F.3d 721 (8th Cir. 2002), we reversed
downward departures from the career offender provisions. McNeil had two breaking-
-5-
and-entering convictions that triggered career offender status, one of which he
committed when he was seventeen. In departing downward, the district court "looked
at McNeil's age at the time he committed the prior predicate felonies, some of the
circumstances of their occurrences, and how the state courts handled the cases."
McNeil, 90 F.3d at 301. While noting those were all "proper factors to consider," we
concluded the district court "committed a clear error of judgment in its assessement
of the many significant aspects of McNeil's criminal history." Id. We then
summarized a criminal history that spanned twenty years, with periods of probation
that had "not deterred [McNeil] from the commission of further crime." Id. at 302.
Similarly, in Butler we held a district court abused its discretion in departing
downward from career offender status. Butler's criminal history included a number
of crimes but just two felonies, a robbery committed in 1988 when Butler was
seventeen and a conviction for sexual abuse committed when he was nineteen. 296
F.3d at 723-24. The district court departed downward presumably because of Butler's
youth at the time he committed the crimes, and because the robbery was non-violent
(Butler robbed a house in the daytime, took precautions to make sure the house was
unoccupied, and took only three items). Id. We reversed, recounting the details of
the sexual assault and concluding the district court failed to consider adequately the
seriousness of that predicate offense, id. at 724-25, or the fact that Butler had a
seventeen-year criminal career which "indicate[d] a pattern of serious criminal
activity." Id. at 725.
When read together, Smith, Senior, McNeil and Butler indicate a downward
departure from career offender status may be appropriate for a relatively young
defendant with a brief criminal career, but even in those instances a departure is
appropriate only if it "accurately reflect[s] the entire record of the defendant's
criminal history." McNeil, 90 F.3d at 301.
-6-
Hutman is not a young defendant with a brief criminal history. He broke the
law in his teens, twenties, thirties, and now with this offense, his forties. He has six
criminal convictions spanning twenty-one years and four decades of his life. Unlike
Smith and Senior, Hutman was well into his adult years when he committed the two
predicate offense that triggered the career offender guidelines. Like McNeil, prior
stints of probation have not deterred Hutman from the commission of further crime.
Three times he has had probation revocation petitions filed against him for
committing additional crimes while on probation, and the instant drug offense was
committed while he was on probation from a prior drug offense. Like Butler, Hutman
has a serious conviction for sexual assault. The district court apparently discounted
this conviction because Hutman received no criminal history points for it. Our
decisions in McNeil and Butler make clear, however, that the seriousness of the
defendant's entire criminal history must be considered before departing from the
guideline's career offender provisions.
In sum, a downward departure in this case would not accurately reflect Mr.
Hutman's entire criminal history. Mr. Hutman should be sentenced without departing
from the career offender provisions. We therefore reverse and remand for
resentencing consistent with this opinion.
III
Reviewing de novo the district court's conclusion that Hutman's 1992 burglary
of a commercial structure was a predicate offense for career offender status, United
States v. Fountain, 83 F.3d 946, 949 (8th Cir. 1996), we affirm. See United States v.
Blahowski, 324 F.3d 592, 595-596 (8th Cir. 2003) (collecting, discussing, and
reaffirming prior Eighth Circuit cases which hold the burglary of a commercial
-7-
structure counts as a "crime of violence"); see also United States v. Reynolds, 116
F.3d 328, 329 (8th Cir. 1997) ("One panel may not overrule another.").
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
-8-
|
660 F.2d 196
ST. PAUL FIRE AND MARINE INSURANCE COMPANY, a corporation,Plaintiff-Appellant,v.MICHIGAN NATIONAL BANK OF DETROIT, a national bankingcorporation, Defendant-Appellee.
No. 79-1533.
United States Court of Appeals,Sixth Circuit.
Argued Feb. 19, 1981.Decided Sept. 23, 1981.
Ronald A. Deneweth, Jenkins, Nystrom & Sterlacci, Janis B. DeGennaro, Southfield, Mich., for plaintiff-appellant.
Victor T. Adamo, Nederlander, Dodge & McCauley, Detroit, Mich., for defendant-appellee.
Before MERRITT, BROWN and KENNEDY, Circuit Judges.
BAILEY BROWN, Circuit Judge.
1
This is a diversity case to which Michigan law applies. The issue presented is whether a surety on a payment bond of a contractor, after paying a claim of a subcontractor, may maintain an action against a bank, which untimely dishonored for insufficient funds a check issued by the principal to the subcontractor, as assignee of the subcontractor's claim against the bank for such untimely dishonor of the check. The district court, Honorable Charles W. Joiner, held, on motion for summary judgment, that the surety could not maintain such an action and granted summary judgment to the ban. We agree and therefore affirm.
2
Appellant, St. Paul Fire and Marine Insurance Company (St. Paul), agreed to act as surety for Leo and Cappello/V. Pangori, Inc. (L & C), a general contractor, with respect to a construction project. In connection with this project, L & C became indebted to a subcontractor, Precision Pipe and Supply Company (Precision), which had supplied the project with labor and materials. In satisfaction of this debt, Precision received a check for $35,575.45, drawn by L & C on its bank, Michigan National Bank of Detroit (Michigan Bank), appellee herein.
3
Precision deposited this check in its account at the Wayne Oakland Bank on July 2, 1976, which, in turn, transferred the check to the Detroit Bank and Trust Company, its correspondent bank in the Detroit Clearing House Association. On July 6, 1976, the check was transferred to Michigan Bank, which allegedly gave oral notice of dishonor due to insufficient funds on July 7, 1976 and admittedly gave written notice of dishonor on July 8, 1976. St. Paul contends that written notice was required and was untimely under the applicable Uniform Commercial Code provisions and Clearing House Association rules and that, under Michigan law, the untimely dishonor subjected Michigan Bank to liability to the payee, Precision, for the face amount of the check. For the purposes of this appeal, this court, as did the district court, accepts these contentions as correct, that is, that Michigan Bank would have been liable to Precision.1
4
Upon the dishonor of L & C's check, Precision initially proceeded against L & C and St. Paul, ultimately obtaining a default judgment for the face amount of the check, $35,575.45. Subsequently, however, the parties agreed by stipulation to set aside the default judgment. St. Paul then paid Precision $35,575.45 in return for an assignment of Precision's cause of action against Michigan Bank. St. Paul then instituted this action, as Precision's assignee, against Michigan Bank for untimely dishonor.
5
As stated, the district court granted summary judgment to Michigan Bank; it held that after the underlying obligation had been satisfied by St. Paul, no cause of action against Michigan Bank remained in existence that could be assigned. For the reasons expressed below, we affirm.
6
Initially we note that in the trial court and on appeal St. Paul expressly eschews any rights it may have by virtue of subrogation; St. Paul relies solely on its status as assignee of Precision's claim against Michigan Bank.2 Accordingly, we begin our analysis with the well-settled proposition that "an assignee of a cause of action acquires the same right, title and interest enjoyed by the assignor." State Mutual Life Assurance Co. v. Deer Creek Park, 612 F.2d 259, 268 n.7 (6th Cir. 1979) (Michigan diversity case); see also 6 Am.Jur.2d, Assignments § 119 (Supp.1981). Thus, a determination of the right, title and interest held by Precision at the time of the assignment will necessarily resolve the question of what right, title and interest is currently held by St. Paul with respect to the present action.
7
At the outset it is clear that, in return for the assignment, Precision received total satisfaction for its injury. The $35,575.45 paid by St. Paul is the amount Precision was entitled to had it brought suit against St. Paul or Michigan Bank. More importantly, however, St. Paul also obtained a complete release from Precision. Although no written release appears in the record, the following colloquy between St. Paul's counsel, Mr. Deneweth, and the district court, which occurred during the hearing on Michigan Bank's motion for summary judgment, indicates that a release was obtained.
8
THE COURT: Did you pay more than was necessary?
9
MR. DENEWETH: We only paid the principal amount of the check. That's what was bargained for, 35,000-some-odd-dollars versus giving us an assignment and releases us from all liability on Leo & Cappello.
10
THE COURT: You didn't have an obligation? You paid the check?
11
MR. DENEWETH: We paid the check, so the basis of our lawsuit
12
THE COURT: You still owe the original obligation; is that what you're saying?
13
MR. DENEWETH: No, Your Honor. We got a complete release from Precision for honoring the check. We bargained for the release.
14
That a release was obtained is also indicated by St. Paul's statement that "Precision Pipe was fortunate enough to avail itself of the immediate remedy against (St. Paul)." Appellant's Brief at 8. Indeed, if St. Paul brought an assignment only, and did not obtain a release, Precision could have, after making the assignment, maintained suit against St. Paul on its bond.
15
Precision had available two alternative but consistent avenues of redress after the L & C draft was dishonored, one against L & C and St. Paul on the debt and the other against Michigan Bank for untimely dishonoring the check. Thus, the issue distilled is whether, having released St. Paul in consideration for full satisfaction of its debt, Precision could maintain an action against Michigan Bank. Clearly it could not.
16
To allow Precision, after settling in full with St. Paul, to bring an action against Michigan Bank, would, as the district court found, result in Precision's obtaining an impermissible double recovery. Several doctrines have evolved to prevent this result.
17
The doctrine most analogous to the instant case is the release doctrine as applied to independent concurrently negligent tortfeasors. In such a case, as here, the injured party has available two alternative means of recovery for the same injury. Admittedly a distinction lies in that the wrongdoers' liability in such a case springs from the commission of separate torts, but it is a distinction without a difference, as the essential features in both instances are the same: there are two separate bases of liability, and the entire loss can be recovered from either party. The general rule in Michigan is that "the release doctrine does not apply to independent concurrently negligent tortfeasors." Witucke v. Presque Isle Bank, 68 Mich.App. 599, 243 N.W.2d 907, 911 (1976). The Michigan courts do, however, recognize an exception to the general rule that is important here. In Witucke, the court noted:
18
(A) release to one of two tortfeasors who had acted in concert necessarily released the other, since there was in the eyes of the law but one cause of action against the two, liable for the same acts, which was surrendered. But as to independent wrongdoers, not acting in concert, who were liable for the same loss, there seems to be no reason to conclude that a release of one would release the others, except in so far as it was based upon actual satisfaction of the claim.
19
Id. at 910, quoting from Prosser on Torts, § 49, p. 301 (4th Ed. 1971) (emphasis added). Quoting from page 302 of the same learned work, the court continued:
20
(C)auses of action against mere concurrent tortfeasors not acting in concert have always been separate, and their separate character should not be affected by the possibility of joinder for procedural convenience. A surrender of one therefore should not on any logical or reasonable basis discharge the other, except to the extent that there has been full compensation.
21
Id. (emphasis added). Similarly, the rule has been stated to be that "(a) releasor can have but one satisfaction for his injury, and the receipt of full satisfaction as the consideration for a release necessarily works a discharge of all others liable for the same injury." 66 Am.Jur.2d, Release § 40 (Supp.1981) (citations omitted). See also Sobotta v. Vogel, 37 Mich.App. 59, 194 N.W.2d 564, 566 (1971) (if release constitutes complete satisfaction, plaintiff not entitled to further relief from another who may be independently liable). Thus, it is clear that, after releasing St. Paul and obtaining full satisfaction therefrom, Precision could not maintain a separate action against Michigan Bank, and neither can its assignee, St. Paul.3
22
The doctrine of election of remedies would also preclude Precision, or its assignee, from maintaining an action against Michigan Bank. In Rutter v. King, 57 Mich.App. 152, 226 N.W.2d 79 (1974), the court stated the applicable rule when a party has alternative but consistent remedies available.
23
Where plaintiff has alternate remedies, which are not inconsistent, the mere commencing of an action in a separate forum or resorting to one remedy is not a bar to commencing a different form of action. In such case there is no election until one of them is pursued to judgment.
24
Id. at 82. Even if the default judgment that was, by agreement between the parties, set aside may not be relied upon for invocation of this doctrine, we are of the opinion that Michigan courts would view full satisfaction of the claim, after the judgment in the same amount had been set aside, as the practical equivalent of a judgment. We are aware of no circumstance that would induce Michigan courts to depart from the rule that active pursuit of one of two consistent remedies is a bar if, as is the case here, full satisfaction is obtained. See generally, 25 Am.Jur.2d, Election of Remedies § 12 (Supp.1981).
25
We note that in American Surety Co. v. Bank of California, 133 F.2d 160 (9th Cir. 1943), the court, applying Oregon law, reached a result consistent with the holding in the instant case on somewhat similar facts. In American Surety the injured company (Interior), which was a depositor in defendant bank, suffered losses when its employee cashed checks on the company's account over forged endorsements. Interior was protected by surety bonds against such a loss, and the sureties (Insurers) reimbursed Interior and took an assignment of its claim against the bank. The American Surety court initially held that the surety could not recover on the basis of equitable subrogation because the equities in that case did not preponderate in favor of the sureties. Id. at 164. Turning to the issue of the effect of the assignment, the court held:
26
If Insurers have no right to subrogation, their position is not improved by the assignments to them of insured's claim against Bank. When Insurers paid Interior, the right of Interior to pursue its claim against Bank was destroyed as Interior would not be permitted a dual recovery. Therefore, there was in existence no enforceable claim against Bank which Interior could assign to Insurers, and which would support recovery in favor of Insurers.
27
Id. The American Surety court recognized, as do we, that allowing an assignee to maintain a cause of action against one independently liable when the injured party has already received full compensation from another who is also liable would, in effect, give the injured party double recovery.
28
This court totally rejects St. Paul's assertion that our holding "destroy(s) a creditor's right to assign a claim when that creditor has available to it two alternative but consistent means of collection." Appellant's Brief at 7. Our holding in no way limits the assignability of a chose in action. St. Paul stands in the same position as an assignee who takes an assignment with knowledge that, in consideration for a release, the assignor has obtained full satisfaction from one of the alternative sources of recovery. Finally, this court emphasizes that our holding does not decide what, if any, rights St. Paul had available to it in any capacity besides that of Precision's assignee.4
29
For the reasons expressed above the judgment of the district court is AFFIRMED.
30
MERRITT, Circuit Judge, dissenting.
31
The Court holds that the surety's payment to the creditor (Precision) of his principal's indebtedness on the negotiable instrument extinguishes the underlying debt and restricts the surety to an action for subrogation. Thus, since the surety has paid the debt evidenced by the instrument, the assignment of the creditor's cause of action against the bank for untimely dishonor of the instrument is a nullity. I disagree with this line of reasoning.
32
There is a clear split of authority on the question whether a surety who pays his principal's note or draft is restricted to a suit for subrogation or reimbursement on the theory that the surety's payment discharges the debt. Some courts keep the negotiable instrument alive and permit assignment, and others say it is discharged and dead. See Annots., 36 A.L.R. 553, 575-83 (1925), 77 A.L.R. 668, 672-74 (1932). It appears that Michigan is a jurisdiction that keeps the underlying instrument and indebtedness alive and permits assignment to the surety of the instrument and choses in action arising from its negotiation. See Schram v. Spivack, 68 F.Supp. 451 (E.D.Mich.1946). It seems to me that in light of these cases the fairest decision here is to permit the assignment and to reverse and remand the case to the District Court for a determination of the question whether the bank's untimely dishonor of the instrument caused the creditor's and hence the surety's loss. The court's formalistic reasoning that the underlying debt is discharged and the assignment a nullity has the effect of throwing the plaintiff out of court because he sought the wrong writ. If he had filed a bill for subrogation or a writ of indebitatus assumpsit, his action would lie but not an action for debt. The case should not be made to turn on this kind of technicality. Moreover, permitting an assignment by the creditor to the surety provides an added incentive for the surety to pay off.
1
Michigan Bank contends that it incurred no liability to Precision because: the notice given was sufficient and timely; it owed no duty to Precision with respect to notice; and, this action is barred by laches
2
We gather that the reason that St. Paul chose not to proceed on a subrogation theory was because it doubted that it could have prevailed under such theory. A party who claims and attempts to enforce subrogation rights must be able to show superior equities before he can recover. The only fault that Michigan Bank is guilty of, under St. Paul's theory of the case, is delaying notification of dishonor by one day. (Although there was a contention made by St. Paul for the first time in its untimely motion to rehear before the district court that Michigan Bank made some unauthorized charges against the account of L & C, the trial court correctly refused to consider this assertion because it was untimely and because no support for the contention was presented.) St. Paul, on the other hand, for good consideration, expressly assumed the risk that L & C would not pay its debts to its subcontractors. Moreover, had Michigan Bank paid the check in spite of insufficient funds, it would arguably have had, by subrogation, a claim against St. Paul. In any event, as we have said, no right of equitable subrogation is urged here
3
It should be noted that had St. Paul asserted a right of subrogation and had it been able to demonstrate a superior equitable position to that of Michigan Bank, the release by Precision would have been no impediment to St. Paul. This is so because the very theory of subrogation is to keep the claim alive for the benefit of the party that is subrogated to the claim
4
The two annotations cited in the dissent, 36 A.L.R. 553 (1925) and 77 A.L.R. 668 (1932), are styled "Rights and Remedies of Accommodation Party to Paper as Against Accommodated Party After Judgment" and deal with that question. The case cited in the dissent, Schram v. Spivack et al., 68 F.Supp. 451 (E.D.Mich.1946), holds that where an accommodation party and an accommodated party on a note suffer a judgment and the accommodation party pays the judgment and takes an assignment of the judgment from the judgment creditor, the accommodation party may recover from the accommodated party. However, it must be that the accommodation party does not recover on the judgment qua judgment for if this were true the accommodated party, upon paying the judgment to the judgment creditor and taking an assignment from him, could recover on the judgment against the accommodation party. Thus it must be that the accommodation party, after paying the judgment and taking an assignment, can recover against the accommodated party because, as between the two, the accommodated party owed the debt and therefore it can be said that there is an implied promise to reimburse the accommodation party or that equity is on the side of the accommodation party. (See annotations.)
The dissent would remand to the district court to determine whether superior equity is on the side of St. Paul. But St. Paul did not pursue this theory below or here; its basic position has been that, whether or not superior equity is on its side, it has an assignment from Precision and for this reason alone it is entitled to recover against Michigan Bank.
|
369 S.W.2d 844 (1963)
Thomas D. FERGUSON et ux., Appellants,
v.
AETNA CASUALTY & SURETY COMPANY, Argonaut Insurance Company, and Donald E. Bowles, d/b/a Shelton and Bowles Insurance Agency, Appellees.
No. 4149.
Court of Civil Appeals of Texas, Waco.
August 1, 1963.
Rehearing Denied August 15, 1963.
*845 Carter, Gallagher, Jones & Magee, Joe Hill Jones, Dallas, for appellant.
Bailey & Williams, James C. Allums, Jr., L. W. Anderson, Touchstone, Bernays & Johnston, Wade Smith, Dallas, for appellee.
McDONALD, Chief Justice.
Plaintiff sued defendant Insurance Companies upon the "medical payments provision" of policies issued upon her automobile (and sued defendant Insurance Agency upon policy which was requested but not issued). Such policies provide medical payments for the named insured who sustains "bodily injury, caused by accident, while occupying or through being struck by an automobile." The term "occupying" is defined in the policy as meaning "in or upon or entering into or alighting from an automobile."
Plaintiff had been to the beauty parlor. She left the beauty parlor, came out onto the parking lot where she had left her automobile. In front of the beauty shop was a board that went out into the parking area. Parked alongside of this board at the end of it was "an automobile". Plaintiff walked to the end of the board and reached out and grabbed the door handle of the car to support herself. While holding onto the handle for support, she stepped off the board and went down into the mud, breaking both legs and suffering other injuries. (The car plaintiff had hold of was not her own, and she was not in the act of entering such car; she was merely holding onto the handle for support as she walked around the car on her way to her own car, which was parked further down on the parking lot. However, if plaintiff was "in or upon, or entering or alighting from" this particular car, she would be covered by the policies. Houston Fire & Cas. Ins. Co. v. Kahn, Tex.Sup.Ct., 359 S.W.2d 892).
The Trial Court entered summary judgment that plaintiff take nothing, holding that plaintiff was not "occupying an automobile" within the definition of the medical payments of the policies which provide that the term "occupying," is defined as "in or upon or entering into or alighting from an automobile", at the time of sustaining injury.
Plaintiff appeals, contending that the trial court erred in rendering such summary judgment, and that the policies afforded coverage in the factual situation involved. Plaintiff further contends that plaintiff was "in or upon" the automobile that she was touching if she had "physical contact" with such automobile. Plaintiff had hold of the door handle to steady herself as she went around the car; she was not entering this automobile; she had not occupied this automobile, nor was she intending to enter it; she was simply holding on to the handle to steady herself as she walked around it.
The sole question for determination is whether plaintiff was "in or upon" the automobile she had her hand upon at the time she fell and sustained injury.
We think the language employed in the coverage of the insurance policies reasonably plain and unambiguous; and to say that plaintiff was "in or upon" the automobile she had her hand on would be placing a distorted meaning, and unreasonably strained construction upon the described *846 coverage. If plaintiff had been entering or alighting from the car she had her hand upon, at the time of her injury, a different situation would be presented. We cannot say she was "in or upon" the car simply because she put her hand upon it to steady her walk around it on the way to her own car from the beauty parlor. Moreover, we reject plaintiff's contention that "physical contact" alone is the test as to whether an insured is "in or upon" an automobile. We think the trial court correctly entered summary judgment that plaintiff take nothing. All of plaintiff's points and contentions are overruled and the judgment of the trial court is Affirmed.
|
20 So.3d 859 (2009)
ACEVEDO
v.
STATE.
No. 4D08-508.
District Court of Appeal of Florida, Fourth District.
October 28, 2009.
Decision Without Published Opinion Affirmed.
|
FILED
NOT FOR PUBLICATION APR 10 2015
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 13-50435
Plaintiff - Appellee, D.C. No. 3:12-cr-02967-WQH-1
v.
MEMORANDUM*
BRAULIO GONZALEZ-TEJEDA,
Defendant - Appellant.
Appeal from the United States District Court
for the Southern District of California
William Q. Hayes, District Judge, Presiding
Submitted April 8, 2015**
Pasadena California
Before: SILVERMAN and BEA, Circuit Judges and DONATO,*** District Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable James Donato, District Judge for the U.S. District
Court for the Northern District of California, sitting by designation.
Defendant Braulio Gonzalez-Tejeda appeals the district court’s denial of his
8 U.S.C. § 1326(d) motion to dismiss the indictment. We have jurisdiction
pursuant to 28 U.S.C. § 1291 and affirm the conviction.
The district court did not err when it considered judicially noticeable
conviction documents not admitted at the removal hearing to decide whether the
defendant had a plausible claim for relief from removal, i.e., whether the defendant
was removable as charged for having committed a drug trafficking aggravated
felony. United States v. Bustos-Ochoa, 704 F.3d 1053, 1056-57 (9th Cir. 2012)
(per curiam), amended, 714 F.3d 1133 (9th Cir. 2013). The defendant cannot
prove prejudice because the conviction documents confirm the defendant’s
admission to the immigration judge that the conviction was a drug trafficking
aggravated felony. Id.
Because the defendant cannot prove prejudice, in any event, we do not reach
his argument that his administrative appeal waiver was not considered and
intelligent.
AFFIRMED.
|
6 So.3d 74 (2009)
Jose SALAZAR, Appellant,
v.
WATSON LABORATORIES and AIG, Appellees.
No. 1D08-5884.
District Court of Appeal of Florida, First District.
February 9, 2009.
*75 Richard E. Zaldivar and Albert Marroquin of Richard E. Zaldivar, P.A., Miami, for Appellant.
James C. Price and Victor T. Armstrong of Law Office of James J. Gallagher, Ft. Lauderdale, for Appellees.
PER CURIAM.
Upon review of Appellant's response to this court's December 19, 2008, order to show cause, Appellees' Motion to Dismiss, filed December 15, 2008 is GRANTED. Appellant's appeal is DISMISSED for lack of jurisdiction. See Wometco Enters. v. Cordoves, 650 So.2d 1117 (Fla. 1st DCA 1995).
DAVIS, BENTON, and BROWNING, JJ., concur.
|
MODIFY and AFFIRM; and Opinion Filed November 4, 2016.
S
Court of Appeals
In The
Fifth District of Texas at Dallas
No. 05-16-00369-CR
TIRAY I. OATES, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 265th Judicial District Court
Dallas County, Texas
Trial Court Cause No. F-1576109-R
MEMORANDUM OPINION
Before Justices Fillmore, Brown, and Richter 1
Opinion by Justice Fillmore
A jury found appellant Tiray I. Oates guilty of aggravated robbery with a deadly weapon
and assessed punishment of seventeen years’ confinement. In two points of error, Oates
contends there was insufficient evidence that he used a firearm during the commission of the
robbery and the punishment phase jury charge erroneously deleted portions of mandatory jury
instructions regarding good-conduct time. We modify the judgment. As modified, we affirm the
judgment.
Background
Oates was charged with a June 24, 2015 aggravated robbery of the complainant A.M. 2 in
Dallas, Texas, by “intentionally and knowingly, while in the course of committing theft of
1
The Hon. Martin Richter, Justice, Assigned.
property and with intent to obtain or maintain control of said property, threaten[ing] and
plac[ing] [A.M.] in fear of imminent bodily injury and death, and defendant used and exhibited a
deadly weapon: to-wit: A FIREARM.” The jury rejected the lesser-included offense of robbery,
found Oates guilty of aggravated robbery with a deadly weapon as charged in the indictment, and
assessed punishment of seventeen years’ confinement. Oates filed this appeal.
Sufficiency of the Evidence
Oates does not contend the evidence was insufficient to find him guilty of robbery. In
fact, in his appellate brief, Oates states he “and two of his friends, twin brothers D.K. and K.K., 3
committed a robbery around 10:00 p.m. on June 24, 2015.” In his first point of error, Oates
asserts the evidence was insufficient to support his conviction for aggravated robbery.
Specifically, Oates contends there was insufficient evidence that “the object [Oates] used during
the robbery,” which was not recovered after the robbery, “was actually a firearm.”
Standard of Review
We review the sufficiency of the evidence under the standard set out in Jackson v.
Virginia, 443 U.S. 307 (1979). Fernandez v. State, 479 S.W.3d 835, 837 (Tex. Crim. App.
2016). We examine all the evidence in the light most favorable to the verdict and determine
whether any rational trier of fact could have found the essential elements of the offense beyond a
reasonable doubt. Jackson, 443 U.S. at 319; Fernandez, 479 S.W.3d at 837–38. This standard
recognizes “the responsibility of the trier of fact fairly to resolve conflicts in the testimony, to
weigh the evidence, and to draw reasonable inferences from basic facts to ultimate facts.”
Jackson, 443 U.S. at 319; see also Adames v. State, 353 S.W.3d 854, 860 (Tex. Crim. App.
2011). The factfinder is entitled to judge the credibility of the witnesses, and can choose to
2
In this opinion, we identify the minors A.M., F.W., M.W., and J.R. by their initials.
3
Although the record does not establish whether D.K. and K.K. were minors, their initials are used in appellant’s brief, implying they were
minors. Therefore, we have also referred to them in this opinion by their initials.
–2–
believe all, some, or none of the testimony presented by the parties. Chambers v. State, 805
S.W.2d 459, 461 (Tex. Crim. App. 1991); see also Wise v. State, 364 S.W.3d 900, 903 (Tex.
Crim. App. 2012) (“The factfinder exclusively determines the weight and credibility of the
evidence.”).
We defer to the factfinder’s determinations of credibility, and may not substitute our
judgment for that of the factfinder. Jackson, 443 U.S. at 319; Thornton v. State, 425 S.W.3d
289, 303 (Tex. Crim. App. 2014); King v. State, 29 S.W.3d 556, 562 (Tex. Crim. App. 2000) (in
conducting legal sufficiency analysis, appellate court “may not re-weigh the evidence and
substitute our judgment for that of the jury”). When there is conflicting evidence, we must
presume the factfinder resolved the conflict in favor of the verdict, and defer to that resolution.
Jackson, 443 U.S. at 326; Blea v. State, 483 S.W.3d 29, 33 (Tex. Crim. App. 2016).
Circumstantial evidence is as probative as direct evidence and, alone, can be sufficient to
establish guilt. Hooper v. State, 214 S.W.3d 9, 13 (Tex. Crim. App. 2007). Evidence is
sufficient if “the inferences necessary to establish guilt are reasonable based upon the cumulative
force of all the evidence when considered in the light most favorable to the verdict.” Wise, 364
S.W.3d at 903. A verdict of guilt will be upheld if the evidence is sufficient on any one of the
theories submitted. See Hooper, 214 S.W.3d at 14.
Discussion 4
Complainant A.M. testified that on the night of June 24, 2015, he was walking through a
breezeway between two apartment buildings with F.W., M.W., Trey, 5 and A.M.’s cousin, J.R.
Twin brothers, D.K. and K.K., approached and attempted to rob A.M. of his wallet, money, cell
4
Oates has not challenged the sufficiency of the evidence that he robbed A.M. on June 24, 2015. Therefore, we recite only those facts
necessary to address Oates’s point of error on appeal that there was insufficient evidence he exhibited or used a firearm during the commission of
that robbery.
5
Trey’s surname is not included in the record.
–3–
phone, and car keys. One of the twins pushed A.M. into some bushes. A.M. began fighting
back, and F.W. and J.R. tried to help him. Oates, who was with D.K. and K.K., “pulled a gun”
and placed it on J.R.’s chest and stated, “It ain’t worth your life.” A.M. indicated the gun Oates
was holding as looked like a “police gun.” A.M. said the top portion of the gun was gray and he
could see his reflection on that part of the pistol. A.M. described the gun as a semiautomatic
pistol; it was not a revolver and looked different than a pellet or “soft air gun.” A.M. testified the
hole in the barrel of the gun was larger than the hole in the barrel of a pellet gun. A.M. indicated
he had seen a real gun before. The gun Oates held looked like a real gun to A.M., and there was
no doubt in his mind the gun Oates pulled out was a real gun. A.M. could tell the gun was made
of a hard material and it hurt when Oates put the gun to J.R.’s chest. A.M. feared for his life and
surrendered his personal belongings, including his car keys. A.M. stated he would not have
surrendered his personal belongings if he had thought Oates had displayed a fake gun.
J.R. testified that when he came around the corner of the breezeway between the
apartment buildings, A.M. was fighting with one of the twins and the other twin kicked A.M.
J.R. tried to help A.M., and Oates pulled out a gun and placed the barrel of the gun to J.R.’s
chest. After Oates placed the gun to J.R.’s chest, he said, “Move around,” and “something about
losing your life.” J.R. stated he felt pain from having the gun pressed into his chest but also
stated it did not hurt. To J.R., the gun did not feel like a plastic BB gun or “air soft gun”; it felt
to him like a real gun. J.R. stated he did not really remember what the gun looked like, but he
had been around pellet or BB guns, and the gun Oates used did not resemble a pellet or BB gun.
J.R. testified he knew the gun was a real handgun. In an affidavit signed after the incident, J.R.
described Oates’s gun as gray on the top and black on the bottom.
F.W. testified that when he tried to grab the twin who was fighting with A.M., Oates
pulled out a gun. F.W. stated Oates put the barrel of the gun to J.R.’s head. F.W. testified the
–4–
gun Oates used looked real to him, but F.W. acknowledged he does not know whether the gun
was real or fake.
A person commits aggravated robbery if, during the course of a robbery, the person uses
or exhibits a deadly weapon. TEX. PENAL CODE ANN. § 29.03(a)(2) (West 2011). The penal
code defines a “deadly weapon” as “a firearm or anything manifestly designed, made, or adapted
for the purpose of inflicting death or serious bodily injury” or “anything that in the manner of its
use or intended use is capable of causing death or serious bodily injury.” Id. § 1.07(a)(17) (West
Supp. 2016). “Use” of a deadly weapon during the commission of the offense means the deadly
weapon “was employed or utilized in order to achieve its purpose.” Patterson v. State, 769
S.W.2d 938, 941 (Tex. Crim. App. 1989)). To “exhibit” a deadly weapon means the weapon
was “consciously shown or displayed during the commission of the offense.” Id.
When, as here, the State alleges in an indictment for aggravated robbery that the deadly
weapon used by the defendant was a firearm, it is required to prove use of a firearm beyond a
reasonable doubt. See Gomez v. State, 685 S.W.2d 333, 336 (Tex. Crim. App. 1985); Cruz v.
State, 238 S.W.3d 381, 388 (Tex. App.—Houston [1st Dist.] 2006, pet. ref’d). A jury may make
the reasonable inference from the victim’s testimony that the “gun” used in the commission of a
crime was, in fact, a firearm. See Wright v. State, 591 S.W.2d 458, 459 (Tex. Crim. App. 1979)
(jury may draw reasonable inference that a deadly weapon has been used from witness testimony
using the terms “gun,” “pistol,” or “revolver”); Joseph v. State, 681 S.W.2d 738, 739 (Tex.
App.—Houston [14th Dist.] 1984, no pet.) (absent any specific indication to the contrary at trial,
a “gun” is a firearm); Riddick v. State, 624 S.W.2d 709, 711 (Tex. App.—Houston [14th Dist.]
1981, no pet.). Threatening the victim with a gun, “in itself suggests that it is a firearm rather
than merely a gun of the non-lethal variety,” such as “BB guns, blow guns, pop guns, and grease
guns.” Cruz, 238 S.W.3d at 388–89 (citing O’Briant v. State, 556 S.W.2d 333, 336 (Tex. Crim.
–5–
App. 1977)); see also Davis v. State, 180 S.W.3d 277, 286 (Tex. App.—Texarkana 2005, no
pet.) (victim testified defendant pointed a gun at her and she was afraid she was going to die;
appellate court found this presented sufficient evidence for jury to find weapon used was a
firearm).
Viewing the evidence in the light most favorable to the jury’s verdict, the evidence, and
reasonable inferences that can be drawn from the evidence, were sufficient for the jury to find
the gun Oates used or exhibited in the robbery was, in fact, a firearm. See Wright, 591 S.W.2d at
459; Cruz, 238 S.W.3d at 388–89; Davis, 180 S.W.3d at 286. We conclude a rational juror could
have found beyond a reasonable doubt that Oates used or exhibited a firearm during the robbery.
Accordingly, we resolve Oates’s first point of error against him.
Jury Instructions
In his second point of error, Oates asserts the trial court violated its duty to provide the
jury instruction statutorily mandated by article 37.07, section 4(a) of the code of criminal
procedure. See TEX. CODE CRIM. PROC. ANN. art. 37.07, § 4(a) (West Supp. 2016). Oates
argues he was egregiously harmed by the incomplete version of the section 4(a) jury instruction
submitted to the jury, which omitted portions of the statutory instruction relating to good-conduct
time credits, because it erroneously conveyed he would receive good-conduct time credits and
“encouraged the jury to set [Oates]’s sentence with reference to its estimate of his non-existent
good conduct time credits.” The State acknowledges that the entire article 37.07, section 4(a)
instruction should have been given to the jury as mandated by statute but argues Oates was not
egregiously harmed by the error, and the omitted portion of the statutorily mandated section 4(a)
jury instruction benefitted, rather than harmed, Oates.
–6–
Standard of Review
Our first duty in analyzing a jury charge issue is to decide whether error exists. Price v.
State, 457 S.W.3d 437, 440 (Tex. Crim. App. 2015). In this case, the State concedes there was
error in the punishment phase jury instruction. Where error exists in the jury charge, we must
determine whether the error caused sufficient harm to warrant reversal. Ngo v. State, 175
S.W.3d 738, 743–44 (Tex. Crim. App. 2005). When, as in this case, the error was not objected
to, the error must be “fundamental” and requires reversal only if it was “so egregious and created
such harm that the defendant was deprived of a fair and impartial trial.” Villarreal v. State, 453
S.W.3d 429, 433 (Tex. Crim. App. 2015) (citing Almanza v. State, 686 S.W.2d 157, 171 (Tex.
Crim. App. 1985) (op. on reh’g)). Egregious harm exists when the record shows that a defendant
has suffered actual, rather than merely theoretical, harm from jury charge error. Nava v. State,
415 S.W.3d 289, 298 (Tex. Crim. App. 2013); Almanza, 686 S.W.2d at 174. Egregious harm
consists of error affecting the very basis of the case, depriving the defendant of a valuable right,
or vitally affecting a defensive theory. Villarreal, 453 S.W.3d at 433. “Egregious harm is a
‘high and difficult standard’ to meet, and such a determination must be ‘borne out by the trial
record.’” Id. (quoting Reeves v. State, 420 S.W.3d 812, 816 (Tex. Crim. App. 2013)). In
examining the record to determine whether charge error has resulted in egregious harm to a
defendant, we consider “(1) the entirety of the jury charge, (2) the state of the evidence,
including the contested issues and weight of probative evidence, (3) the arguments of counsel,
and (4) any other relevant information revealed by the trial record as a whole.” Id. (citing
Almanza, 686 S.W.2d at 171).
Discussion
Having been convicted of the first-degree felony of aggravated robbery with a deadly
weapon, Oates was ineligible for mandatory supervision. See TEX. GOV’T CODE ANN.
–7–
§ 508.149(a)(1), (12) (West Supp. 2016); TEX. PENAL CODE ANN. § 29.03(b). Oates
acknowledges in his appellate brief that, because he was not eligible for release on mandatory
supervision, he could not receive good-conduct time credits. See Parker v. State, 119 S.W.3d
350, 356 (Tex. App.—Waco 2003, pet. ref’d) (“If an inmate is not released on parole, he may be
released on ‘mandatory supervision’ when his actual time served plus good conduct time equals
his sentence. But, for certain crimes, including aggravated robbery, or when there is an entry in
the judgment that a deadly weapon was used, ‘mandatory supervision’ is not available and so the
accumulation of good conduct time becomes irrelevant.”) (internal citations omitted). 6 Despite
Oates’s ineligibility for good-conduct time credit, the trial court was required to instruct the jury
in conformity with article 37.07, section 4(a) of the code of criminal procedure, including the
provisions of the statutory instruction regarding good-conduct time. See TEX. CODE CRIM. PROC.
ANN. art. 37.07, § 4(a) (good-conduct time instruction is required in cases in which the jury
assesses punishment and the charged offense is listed in section 3g(a)(1) of article 42.12, or the
verdict contains affirmative finding deadly weapon was used or exhibited during commission of
felony offense); id. 42.12, § 3g(a) (West Supp. 2016); see also Cagle v. State, 23 S.W.3d 590,
593 (Tex. App.—Fort Worth 2000, pet. ref’d) (article 37.07 contains mandatory universal charge
applicable to all non-capital felonies listed under code of criminal procedure article 42.12,
section 3g(a)). 7
The jury here should have been charged pursuant to article 37.07, section 4(a), which
provides:
6
See also James v. State, No. 05-02-01910-CR, 2003 WL 23024806, at *3 (Tex. App.—Dallas Dec. 30, 2003, pet. ref.’d) (not designated
for publication) (appellant convicted of aggravated robbery and aggravated kidnapping ineligible for good-conduct time credits).
7
See also Bohanon v. State, No. 05-01-01411-CR, 2003 WL 22462545, at *3 (Tex. App.—Dallas Oct. 31, 2003, no pet.) (not designated
for publication) (appellant who was ineligible for good-conduct time credit because of aggravated robbery conviction complained of jury charge
containing statutorily mandated article 37.07, section 4(a) language regarding good-conduct time credit; trial judge who follows legislative
mandate and instructs jury according to article 37.07, section 4(a) when defendant is not eligible for good-conduct time does not commit statutory
error).
–8–
“Under the law applicable in this case, the defendant, if sentenced to a
term of imprisonment, may earn time off the period of incarceration imposed
through the award of good conduct time. Prison authorities may award good
conduct time to a prisoner who exhibits good behavior, diligence in carrying out
prison work assignments, and attempts at rehabilitation. If a prisoner engages in
misconduct, prison authorities may also take away all or part of any good conduct
time earned by the prisoner.
“It is also possible that the length of time for which the defendant will be
imprisoned might be reduced by the award of parole.
“Under the law applicable in this case, if the defendant is sentenced to a
term of imprisonment, the defendant will not become eligible for parole until the
actual time served equals one-half of the sentence imposed or 30 years, whichever
is less, without consideration of any good conduct time the defendant may earn. If
the defendant is sentenced to a term of less than four years, he must serve at least
two years before he is eligible for parole. Eligibility for parole does not guarantee
that parole will be granted.
“It cannot accurately be predicted how the parole law and good conduct
time might be applied to this defendant if sentenced to a term of imprisonment,
because the application of these laws will depend on decisions made by prison
and parole authorities.
“You may consider the existence of the parole law and good conduct time.
However, you are not to consider the extent to which good conduct time may be
awarded to or forfeited by this particular defendant. You are not to consider the
manner in which the parole law may be applied to this particular defendant.”
TEX. CODE CRIM. PROC. ANN. art. 37.07, § 4(a). In pertinent part, the jury charge here provided:
It is possible that the length of time for which the defendant will be
imprisoned might be reduced by the award of parole.
Under the law applicable in this case, if the defendant is sentenced to a
term of imprisonment, he will not become eligible for parole until the actual time
served equals one-half of the sentence imposed or 30 years, whichever is less.
Eligibility for parole does not guarantee that parole will be granted.
It cannot accurately be predicted how the parole law might be applied to
this defendant if he is sentenced to a term of imprisonment, because the
application of these laws will depend on decisions made by prison and parole
authorities.
You may consider the existence of the parole law; however, you are not to
consider the manner in which the parole law may be applied to this particular
defendant.
–9–
Although the trial court charged the jury on parole law, it failed to include statutorily mandated
instruction regarding good-conduct time. See Igo v. State, 210 S.W.3d 645, 646 (Tex. Crim.
App. 2006) (jury should have been instructed defendant would not become eligible for parole
until the actual time served, without considering good-conduct time, equaled one-half of the
sentence imposed). We agree with Oates that the jury instruction given by the trial judge was
erroneous because it did not comply with article 37.07, section 4(a) of the code of criminal
procedure.
Oates did not object to the erroneous jury charge. Accordingly, we analyze whether the
error was so egregious and created such harm that it denied Oates a fair and impartial trial. See
Marshall v. State, 479 S.W.3d 840, 843 (Tex. Crim. App. 2016) (if defendant did not timely
object to jury instructions, then reversal is required only if the error was so egregious and created
such harm that defendant did not have a fair and impartial trial); Villarreal, 453 S.W.3d at 433.
When assessing harm arising from jury charge error, “the actual degree of harm must be assayed
in light of the entire jury charge, the state of the evidence, including the contested issues and
weight of probative evidence, the argument of counsel and any other relevant information
revealed by the record of the trial as a whole.” Almanza, 686 S.W.2d at 171. In an unpublished
per curiam opinion, the court of criminal appeals has held that an appellate court improperly
limits its harm analysis when it does not address all of the Almanza factors. See Dougherty v.
State, PD-1411-05, 2006 WL 475802, at *1 (Tex. Crim. App. Mar. 1, 2006) (per curiam) (not
designated for publication) (citing Almanza, 686 S.W.2d at 157). 8 Therefore, our analysis
includes consideration of all four Almanza factors.
8
See also Davis v. State, No. 05-13-00200-CR, 2014 WL 1778269, at *12 (Tex. App.—Dallas May 1, 2014, pet. ref’d) (not designated for
publication).
–10–
The first Almanza factor requires consideration of the entire jury charge. See Almanza,
686 S.W.2d at 171. The only error Oates asserts in the punishment phase jury charge is the
omission of good-conduct time instructions contained in section 4(a) of article 37.07. The jury
was informed of the range of punishment; informed of the potential for community supervision;
instructed to limit its deliberations, under the law and evidence in the case, to the question of
punishment; admonished not to take into consideration Oates’s decision not to testify; and
instructed not to consider how parole may be applied to Oates when assessing punishment.
Absent evidence to the contrary, we presume the jurors understood and followed the trial court’s
instructions in the jury charge, see Taylor v. State, 332 S.W.3d 483, 492 (Tex. Crim. Ap. 2011),
and Oates has failed to show otherwise.
The article 37.07, section 4(a) jury instruction is designed to benefit the State, not the
defendant. The instruction was designed to increase sentences by informing juries “good-
conduct time combines with actual time served to determine parole eligibility.” Grigsby v. State,
833 S.W.2d 573, 576 (Tex. App.—Dallas 1992, pet. ref’d); see also TEX. CODE CRIM. PROC.
ANN. art. 37.07, § 4(a). As this Court stated in Grigsby, “[w]e fail to see how not giving a
charge meant to increase the length of a sentence harms an appellant.” Grigsby, 833 S.W.2d at
576. 9 Oates has failed to establish a reasonable probability that had the jury been provided the
complete article 37.07, section 4(a) instruction that included information regarding good-conduct
time, he would have received a lesser sentence. We cannot conclude the jury charge that omitted
references to good-conduct time credits for which Oates was not eligible harmed Oates. The jury
charge as a whole does not weigh in favor of concluding Oates was egregiously harmed.
9
See also Guzman v. State, No. 05-03-00465-CR, 2004 WL 406390, at *2 (Tex. App.—Dallas Mar. 5, 2004, pet. ref’d) (not designated for
publication) (it is the State, not the defendant, that benefits from the parole law instructions).
–11–
With respect to the second Almanza factor to be considered, the “state of the evidence,”
see Almanza, 686 S.W.2d at 171, Oates does not contend the evidence was insufficient to find
him guilty of robbery. In fact, in his appellate brief, Oates states that he and D.K. and K.K.
committed the robbery. The only challenge Oates presents concerning the sufficiency of the
evidence to support his conviction for aggravated robbery is whether the evidence was sufficient
for the jury to find that a firearm was used or exhibited during that robbery. After setting out the
testimony of A.M., J.R., and F.W. above, we concluded a rational juror could have found beyond
a reasonable doubt that Oates used or exhibited a firearm during the robbery.
At the punishment phase of trial, evidence was admitted indicating that while Oates was
in jail following his arrest on this charge, he engaged in a physical altercation and joined a
“clique” of inmates who tried to take charge of the area where they were housed. The jury also
heard the testimony of Detective Ken Schwartz of the Dallas Police Department that Oates was a
member of a gang and that A.M., J.R., F.W., M.W., and Trey were not documented gang
members. Photographs admitted into evidence that Oates had posted on social media two
months before the robbery showed him posing with guns and making gang hand signs. The
photographs also showed what appeared to be marijuana. Oates stipulated to prior juvenile
adjudications for burglaries of a building and a house and making a terroristic threat, and those
juvenile adjudications were introduced into evidence.
The jury convicted Oates of aggravated robbery, a first-degree felony. See TEX. PENAL
CODE ANN. § 29.03(b). The punishment range for the offense was life or a term of five to
ninety-nine years and a possible fine not to exceed $10,000. See id. § 12.32 (West 2011). The
jury assessed punishment of seventeen years’ confinement and no fine. That sentence falls at the
lower end of the range of punishment. The evidence admitted at the punishment phase of trial
provided ample support for the punishment assessed and does not suggest that harm resulted
–12–
from the erroneous jury charge. This factor does not weigh in favor of concluding Oates was
egregiously harmed.
The third Almanza factor pertains to the arguments of counsel. See Almanza, 686 S.W.2d
at 171. The State waived its right to proceed first with its punishment phase closing argument.
During the punishment phase closing argument of the defense, trial counsel emphasized Oates
was only twenty-one years old at the time of trial and requested the jury consider Oates’s age in
assessing punishment. Counsel stated the jury could send Oates to prison for the rest of his life,
but he did not think that would be appropriate and did not believe the State thought it would be
appropriate. Oates’s counsel asked that the jury assess a punishment of less than ten years’
confinement and recommend that the judge place Oates on probation. The prosecutor closed by
stating the punishment range for this offense was confinement for life or a term from five years
to ninety-nine years, but argued this case warranted an assessment of punishment “somewhere in
the middle” and this “isn’t a case for probation.” Like Oates’s counsel, the prosecutor noted
Oates is young, and the prosecutor stated, Oates is “going to come out of prison at some point”
still having “plenty of life ahead of him,” and “[w]hether he comes out in 40, or 50, or 35,
whatever age you guys decide is appropriate, he’ll come out with a lot of life ahead of him . . . .”
Oates asserts that the prosecutor’s statement that Oates would come out of prison at
“whatever age you guys decide,” asked the jury “to set Oates’s release date according to [its]
estimate of [Oates]’s good conduct time credits.” However, neither Oates’s counsel nor the
prosecutor discussed parole law or good-conduct time, or Oates’s ineligibility for good-conduct
time, during their closing arguments. See Luquis v. State, 72 S.W.3d 355, 367 (Tex. Crim. App.
2002) (noting neither the prosecutor nor the defense attorney discussed good-conduct time in
argument or urged the jury to assess a greater or lesser sentence based upon any potential good-
conduct time credit). Rather, when referring to the fact the jury could sentence Oates to a prison
–13–
term that would ensure he had life ahead of him once released, the prosecutor was simply
arguing the State’s position that the case warranted punishment “somewhere in the middle” of
the statutorily authorized term of five to ninety-nine years. We find nothing in the State’s
closing arguments indicating the State requested the jury to consider good-conduct time credits
in assessing Oates’s punishment. The third Almanza factor does not weigh in favor of
concluding Oates was egregiously harmed.
The fourth Almanza factor requires that we assess any other relevant information revealed
by the record of the trial as a whole that would have a bearing on whether Oates suffered
egregious harm. See Almanza, 686 S.W.2d at 171. Oates argues that a jury note sent to the trial
judge during the guilt–innocence phase of deliberations constitutes such “relevant information.”
During its deliberations concerning Oates’s guilt, the jury sent a note to the trial judge asking, “Is
there any way to find out now what the difference is between sentencing term for aggravated
robbery vs robbery?” The trial court responded in writing to the jurors that they had the law and
evidence applicable to the case. The fact jurors posed a question during guilt-innocence phase
deliberations concerning the statutory punishment ranges for the offenses of aggravated robbery
and robbery does not suggest Oates was egregiously harmed by the parole instruction contained
in the punishment phase jury charge. At the time the jury considered punishment, it had already
convicted Oates of aggravated robbery, and the punishment phase jury charge set forth the
proper range of punishment for the offense of aggravated robbery. During the jury’s
deliberations on punishment, there was no communication between the jury and the trial judge
regarding the parole instruction or the possible application of parole law to Oates. See Lopez v.
State, 314 S.W.3d 70, 73 (Tex. App.—Waco 2010, no pet.) (op. on reh’g). Nothing in the record
suggests the jury discussed, considered, or attempted to apply any aspect of parole law to Oates
despite the judicial admonition in the jury charge not to do so. Oates has presented no evidence
–14–
showing the jury was misled by the parole law charge actually given or increased his sentence
based on the absence of the portions of the article 37.07, section 4(a) instruction regarding good-
conduct time, for which he was not eligible. See Bolden v. State, 73 S.W.3d 428, 434 (Tex.
App.—Houston [1st Dist.] 2002, pet. ref’d) (error in omitting “good conduct time” portion of
parole instruction in jury charge was not reversible because appellant did not identify any
“actual” harm, but instead relied upon mere speculation regarding what jury might have
considered). The fourth Almanza factor does not weigh in favor of concluding Oates was
egregiously harmed.
Based on this record and in light of the Almanza factors, we are unable to conclude Oates
suffered egregious harm from the erroneous jury instruction concerning parole eligibility. Under
the standards necessary to show egregious harm, we conclude that the erroneous jury instruction
did not deprive Oates of a fair and impartial trial or affect the very basis of the case, deprive him
of a valuable right, or vitally affect a defensive theory. See Villarreal, 453 S.W.3d at 433. We
resolve Oates’s second point of error against him.
Judgment Modification
Where, as here, the record provides the necessary information to correct inaccuracies in a
trial court’s judgment, we have the authority to reform the judgment to speak the truth. TEX. R.
APP. P. 43.2(b); Asberry v. State, 813 S.W.2d 526, 529–30 (Tex. App.—Dallas 1991, pet. ref’d).
Our review of the record confirms the jury found Oates guilty of aggravated robbery using or
exhibiting a deadly weapon—a firearm—as charged in the indictment. The judgment incorrectly
reflects “N/A” as to “Findings on Deadly Weapon.” Accordingly, we modify the judgment to
reflect “Yes, Firearm” to the “Findings on Deadly Weapon.”
–15–
Conclusion
The judgment of the trial court is modified to reflect “Yes, Firearm” to the “Findings on
Deadly Weapon.” As modified, we affirm the trial court’s judgment.
/Robert M. Fillmore/
ROBERT M. FILLMORE
JUSTICE
Do Not Publish
TEX. R. APP. P. 47.2(b)
160369F.U05
–16–
S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
TIRAY I. OATES, Appellant On Appeal from the 265th Judicial District
Court, Dallas County, Texas,
No. 05-16-00369-CR V. Trial Court Cause No. F-1576109-R.
Opinion delivered by Justice Fillmore,
THE STATE OF TEXAS, Appellee Justices Brown and Richter participating.
Based on the Court’s opinion of this date, the judgment of the trial court is MODIFIED
to reflect “Yes, Firearm” to the “Findings on Deadly Weapon.” As MODIFIED, the judgment
is AFFIRMED.
Judgment entered this 4th day of November, 2016.
–17–
|
683 F.Supp.2d 278 (2010)
INTELLIGENT DIGITAL SYSTEMS, LLC, Russ & Russ PC Defined Benefit Pension Plan and Jay Edmond Russ, Plaintiffs,
v.
VISUAL MANAGEMENT SYSTEMS, INC., Jason Gonzalez, Howard Herman, Robert Moe, Michael Ryan, Col. Jack Jacobs, Ret., and Marty McFeely, Defendants.
No. CV 09-974.
United States District Court, E.D. New York.
January 28, 2010.
*280 Ira Levine, Esq., Great Neck, NY, Reed Smith LLP, by Paul E. Breene, Esq., New York, NY, Attorneys for Plaintiffs.
Certilman Balin Adler & Hyman, LLP, by Martin P. Unger, Esq., Paul B. Sweeney, Esq., East Meadow, NY, Attorneys for Defendants.
*281 MEMORANDUM AND ORDER
WEXLER, District Judge:
This is a case that arises out of the parties' business relationship which, in general terms, involved the sale of Plaintiffs' proprietary technology, and related business to Visual Management Systems, Inc, the Defendant company ("VMS"). The parties' transaction involved a sale of assets, a consulting agreement, and an unsecured convertible promissory note (the "Note"). The Note, carrying a principle amount of $1.544 million, allows for any amount owed (included any interest accrued) to be converted for payment, under certain circumstances, from cash to payment in the form VMS stock.
After VMS defaulted on its obligations pursuant to the parties' business transaction, this action was commenced. In addition to alleging various state law claims sounding in negligence, breach of contract, and fraud, the complaint sets forth Federal Securities Law Fraud claims pursuant to Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) and Rule 10b-5, promulgated pursuant thereto, 17 C.F.R. § 240.10b-5. (collectively referred to herein as (the "Securities Claim")).[1]
Presently before the court is Defendants' motion to dismiss the Securities Claim on the grounds that: (1) the Note is not a security subject to regulation under Federal law; (2) the complaint fails to allege the necessary scienter, and (3) the complaint fails to plead that the alleged fraud was committed "in connection with" the sale of a security. Defendants further move to dismiss on the ground that Plaintiffs have failed to allege fraud with the particularity required by Rule 9(b) of the Federal Rules of Civil Procedure. Finally, Defendants argue that if the lone Federal claim is dismissed, this court should refuse to exercise supplemental jurisdiction over the state law claims. Also before the court is Plaintiffs' motion seeking an order of attachment as to the assets of all Defendants.
BACKGROUND
I. The Parties and Their Business Relationship
Plaintiffs in this case are Intelligent Digital Systems, LLC ("IDS"), Russ & Russ Defined Benefit Pension Plan, and individual Plaintiff Jay Edmond Russ. Defendant VMS is a publicly traded company. The individually named Defendants are VMS Chief Executive Officer Jason Gonzalez and VMS Board members Robert Moe, Martin McFeely, Michael Ryan and Col. Jack Jacobs (ret.) (collectively, the "Individual Defendants").[2]
IDS was the owner of certain digital video recorder ("DVR") proprietary technology that was sold, along with other assets, to VMS pursuant to an asset purchase agreement entered into on April 2, 2008. In connection with the purchase, VMS executed the Note. Because the Note is the alleged "security" forming the basis of the Securities Claim, the court describes the Note in further detail. As noted, the principle amount of the Note is $1.544 million. The terms of the note provide, inter alia, for VMS to pay the principal amount on April 2, 2011 (the "Maturity *282 Date"). The Note accrues no interest if the principle amount is paid on the Maturity Date. Thereafter, the Note provides for interest at an annual rate of 12%.
Payment under the Note is convertible, at the discretion of IDS, and under circumstances enumerated in the Note, to the common stock of VMS. The Note sets the conversion price of a share of VMS at $1.15, subject to certain adjustments set forth in the Note. When, and if, IDS decides to exercise its right to convert, the Note provides that IDS would be issued an amount of shares of the common stock of VMS equal to the amount of principle owed (plus any accrued interest), divided by the conversion price (the "Conversion Number"). Upon such conversion, IDS would be issued the number of shares equal to the Conversion Number. The Note gives IDS the option to assign its rights under the Note to a third party. Such assignment may only be an assignment of the Note in whole, and all rights and obligations under the Note would pass to the assignee. Although the Note provides for conversion to the common stock of VMS, it states, on its face, that neither the Note, nor the common stock issuable upon exercise of the right to convert, have been "registered under the Securities Act of 1933 as amended." The Note further provides that "the common stock issuable upon conversion of this note may not be sold, offered for sale pledged or hypothecated in the absence of an effective registration statement ... under the Securities Act of 1933 ...."
II. The Motions
As noted, Defendants move to dismiss the Securities Claim on the ground that the Note is not a security within the meaning of the federal securities laws. Even assuming that the Note is a security, the complaint is alleged to be subject to dismissal for failure to properly allege: (1) scienter, and/or (2) that the fraud alleged was committed in connection with the sale of a security. Defendants also seek dismissal of the Securities Claim, and the claim of common law fraud, on Rule 9(b) pleading grounds. If the lone Federal claim is dismissed, Defendants seek dismissal of the entire action on the ground that this court should refuse to exercise supplemental jurisdiction over the state law claims.
Plaintiffs oppose the motion to dismiss on the grounds that the Note is a security, and that all other elements of the Securities Claim are properly pleaded. In the event that the federal claim is dismissed, Plaintiffs seek leave to amend their complaint to allege diversity jurisdiction.
In addition to opposing the motion to dismiss, Plaintiffs seek an order of attachment. Specifically, Plaintiffs seek attachment, pursuant to Article 62 of the CPLR, of the assets of all Defendants. Plaintiffs claim fulfillment of all statutory requirements for an attachment, and that attachment is necessary to secure the payment of any judgment.
DISCUSSION
I. Motion to Dismiss the Securities Claim
A. Standard for Motion to Dismiss
In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Supreme Court rejected the "oft-quoted" standard set forth in Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), that a complaint should not be dismissed, "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id. at 45-46, 78 S.Ct. 99. The court discarded the "no set of facts" language in favor of the requirement that plaintiff plead enough facts "to state a claim for relief that is plausible *283 on its face." Twombly, 127 S.Ct. at 1974, see also Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949-50, 173 L.Ed.2d 868 (2009).
While heightened factual pleading is not the new order of the day, Twombly holds that a "formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Williams v. Berkshire Fin. Grp. Inc., 491 F.Supp.2d 320, 324 (E.D.N.Y. 2007), quoting, Twombly, 127 S.Ct. at 1959. In the context of a motion to dismiss, this court must, as always, assume that all allegations set forth in the complaint are true and draw all inferences in favor of the non-moving party. Watts v. Services for the Underserved, 2007 WL 1651852 *2 (E.D.N.Y. June 6, 2007). The court must ensure, however, that the complaint sets forth "enough facts to state a claim to relief that is plausible on its face." Twombly, 127 S.Ct. at 1974. A pleading that does nothing more that recite facts and bare legal conclusions is insufficient to "unlock the doors of discovery ... and only a complaint that states a plausible claim for relief survives a motion to dismiss." Iqbal, 129 S.Ct. at 1950. While a Rule 12 motion is directed only to the sufficiency of the pleading, the court determining the motion may rightfully consider written documents attached to the complaint as well as documents incorporated thereto by reference and those of which plaintiff had knowledge and relied upon in commencing the action. See Brass v. Amer. Film Techn., Inc., 987 F.2d 142, 150 (2d Cir.1993); Watts, 2007 WL 1651852 *2.
B. Pleading Securities Fraud
To state a claim pursuant to the Securities Claim Plaintiffs must show that: (1) in connection with the purchase or sale of securities; (2) defendant, acting with scienter; (3) made an untrue statement of fact, or omitted to state a material fact in order to make the statement made, in light of the circumstances under which they were made, not misleading, and, (4) that reliance on defendant's action caused plaintiff's damage. Rothman v. Gregor, 220 F.3d 81, 89 (2d Cir.2000); Marcus v. Frome, 329 F.Supp.2d 464, 472 (S.D.N.Y. 2004).
II. Characterizing the Note
A. Standards for Determining Whether A Note Is A Security
The statutory definition of the term "security," includes the term "note." See 15 U.S.C. § 78c(a)(10). It has been recognized, however, that not all instruments bearing the title, "note," are securities that are regulated under the securities laws. See Reves v. Ernst & Young, 494 U.S. 56, 62-63, 110 S.Ct. 945, 108 L.Ed.2d 47 (1990). In Reves, the Supreme Court held that while all "notes" are presumed to be securities, that presumption is subject to rebuttal. Adopting the "family resemblance" test first articulated by the Second Circuit Court of Appeals, the Supreme Court held that a note will be deemed a security unless it is, or bears a "family resemblance" to, one of the judicially enumerated instruments that are recognized not to be securities. Reves, 494 U.S. at 65, 110 S.Ct. 945. Those exceptions are:
the note delivered in consumer financing,
the note secured by a mortgage on a home,
the short-term note secured by a lien on a small business or some of its assets,
the note evidencing a character loan to a bank customer,
short-term notes secured by an assignment of accounts receivable,
*284 a note which simply formalizes an open-account debt incurred in the ordinary course of business, and
notes evidencing loans by commercial banks for current operations.
Id. To determine whether the note at issue resembles one of the exceptions above, the court considers four factors. Specially, the court considers: (1) the motivations that would prompt a reasonable buyer and seller to enter into the transaction; (2) the plan of distribution of the instrument; (3) the reasonable expectation of the investing public, and (4) whether some factor, such as the existence of another regulatory scheme, significantly reduces the risk of the instrument, thereby rendering application of the securities laws unnecessary. Reves, 494 U.S. at 66-67, 110 S.Ct. 945; see, e.g., Roer v. Oxbridge Inc., 198 F.Supp.2d 212, 224 (E.D.N.Y.2001).
When considering these factors, the court bears in mind that the securities laws were enacted to regulate "investments." Reves, 494 U.S. at 61-62, 110 S.Ct. 945. The purchase of certain instruments, such as stocks, are "as a practical matter," always investments, so long as they have the "economic characteristics traditionally associated with a stock," Id. On the other hand, the term "note" is a "relatively broad term that encompasses instruments with widely varying characteristics, depending on whether issued in a consumer context, as commercial paper, or in some other investment context." Reves, 494 U.S. at 62, 110 S.Ct. 945 (citation omitted).
B. The Note is Not A Security
1. Motivation of the Parties
As to the first factor, the motivation of the parties, the court notes that where the motivation of the transaction is to raise money for the "general use of a business enterprise or to finance substantial investments," the motivation is likely to be deemed an investment, and consequently, the note is more likely to be characterized as a security. Reves, 494 U.S. at 66, 110 S.Ct. 945. If, on the other hand, the note is issued in connection with some commercial (as opposed to investment) purpose, the note is less likely to be characterized as a security. Id.; Roer, 198 F.Supp.2d at 224. Put succinctly, investment motivation indicates a security, while commercial or consumer motivation indicates a non-security. Pollack v. Laidlaw Holdings, Inc., 27 F.3d 808, 812 (2d Cir. 1994).
The transaction here is best described as the sale of technology from one business to another for a lump sum. The motivation of the seller is not to invest in the future success of the buyer, where the price to be paid might vary along with the success, or lack thereof, of the buyer's business. Instead, the amount to be paid is contractually established, and must be paid, whether or not the buyer's business is positively affected by the purchase. The risk attendant to the sale lies with the buyer, and not with the seller, who (in the absence of default) is guaranteed a set amount in payment. While payment might not, as here, be made in the event of a default, that default is not something that is unique to any "investment-like" character of the asset purchase, but is a risk attendant to any sale. The seller has not invested in the buyer's business, but has merely sold assets to the buyer.
The fact that the Note is convertible to shares of stock does not require a different conclusion. Relying heavily on language in the case of Leemon v. Burns, 175 F.Supp.2d 551 (S.D.N.Y.2001), Plaintiffs argue that the convertible nature of the Note, is a "strong factor" in favor of finding that the Note is a security. Leemon, 175 F.Supp.2d at 559. While this factor may have weighed heavily in Leemon, it is *285 not dispositive here. First, the fact that a note is convertible to stock, is not a factor identified by the Supreme Court when it adopted the family resemblance test. More importantly, Leemon is distinguishable because in that case it was clear that plaintiff had made a general investment in the defendant company. In return for that "investment," Leemon, 175 F.Supp.2d at 559, plaintiff was to receive a promissory note, stock, stock incentives, and a certain amount of control over the defendant company. It was clear that the note in Leemon represented an investment in the defendant company. Here, in contrast, the transaction is best characterized as a commercial sale of assets, and not as an investment. The commercial motivation of the parties weighs against a finding that the Note is a security. This motivation is unchanged by isolated language in Leemon focusing on the convertible nature of the note in that case.
2. Plan of Distribution
Consideration of the "plan of distribution" factor requires the court to consider whether the Note is "an instrument in which there is `common trading for speculation or investment.'" Reves, 494 U.S. at 66, 110 S.Ct. 945. If the instrument is "offered and sold to a broad segment of the public," it is likely to be deemed a security. Roer, 198 F.Supp.2d at 224. This factor takes into account the fact that Congress intended the securities laws to protect unsophisticated investors. Pollack, 27 F.3d at 813.
This factor weighs against a finding that the Note is a security. The Note merely evidences an obligation to pay an agreed upon amount, either in cash or in stock. While it is assignable, it is not registered to be traded, or to be the subject of speculation. In view of the fact that the Note evidences a single transaction, it is not one of many security-like instruments that are offered to "a broad segment of the public." See Reves, 494 U.S. at 68, 110 S.Ct. 945. Accordingly, the plan of distribution does not indicate that the Note is a security. Accord Equitable Life Assurance Society of the United States v. Arthur Andersen & Co., 655 F.Supp. 1225, 1243 (S.D.N.Y.1987) (note evidencing a "isolated transaction" and not designed for public trading, held not to be a security).
3. Reasonable Expectations of the Investing Public
As to the "reasonable expectations of the investing public," the court notes that in this case there is no "investing public," but only a single seller who expected only to be paid in full for an asset sale. While the seller can reasonably expect to be paid, either in cash or in stock, there is no reason for the seller to consider the Note evidencing that payment to be characterized as an investment in the buyer's business. Accordingly, this factor weighs against a finding that the Note is a security. Accord Benedict v. Amaducci, 1995 WL 413206 *10 (S.D.N.Y.1995) (fact that there was no "public expectation that the notes would be traded as securities" militates against finding that notes were securities).
4. Existence of Alternate Regulatory Scheme
Because the result of the court's analysis of the first three factors weighs so heavily against a finding that the Note is a security, the court need not consider the fourth factor, i.e., whether the existence of another regulatory scheme, significantly reduces the risk of the instrument and renders application of the securities laws unnecessary. The court notes only that even if there is not some regulatory scheme outside of the securities laws that applies here, that does not alter the fact that this one time business transaction between sophisticated parties is not the type of broad *286 investment scenario that the securities laws were meant to regulate.
For the foregoing reasons the court holds that the Note is not a security within the meaning of the federal securities laws. The Securities Claim is therefore dismissed, and it is unnecessary for the court to consider the alternative grounds urged in support of dismissal of this claim. See Leemon v. Burns, 175 F.Supp.2d 551, 557-58 (failure to establish any one element of securities fraud cause of action is fatal to claim). In view of the fact that Plaintiffs have alleged common law fraud in addition to their Securities Claim, the court considers whether the fraud claim complies with the heightened pleading requirements of Rule 9 of the Federal Rules of Civil Procedure.
III. Rule 9
A. Pleading Standards
Rule 9(b) of the Federal Rules of Civil Procedure ("Rule 9") requires that in "all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Fed. R.Civ.P. 9(b). States of mind such as malice, intent or knowledge may be generally averred. Id. Complaints alleging fraud are required to: (1) state the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent. McGrath v. Dominican College of Blauvelt, New York, 2009 WL 4249122 *5 (S.D.N.Y.2009) (citations omitted).
The purpose of Rule 9 is to "ensure that a defendant is informed sufficiently of the allegations against him such that he is in a position to answer the complaint and prepare a defense." Id. (citation omitted). Thus, although the pleading standard imposed by Rule 9 is high, the Second Circuit has held that the rule does not require the pleading of "detailed evidentiary matter." In re Scholastic, 252 F.3d 63, 72 (2d Cir. 2001). The ultimate issue when determining whether a pleading satisfies Rule 9 is whether or not the pleading puts defendant on sufficient notice of the claim and the actual ground upon which it is based. Id.
B. The Claim of Fraud Complies With Rule 9
The facts alleged in support of the claim of common law fraud are the same as those alleged in support of the now-dismissed Securities Claim. Plaintiffs support the claim of fraud by alleging that Defendants knowingly misrepresented the financial condition of VMS, and that this financial condition was knowingly and wrongfully misstated in the company's public financial disclosures. Specifically, Plaintiffs allege that Defendants became aware of the financial wrongdoing of VMS's former Chief Financial Officer after entering into a letter of intent with Plaintiffs, but before closing of the parties' transaction. It is further alleged that VMS knew that correction of financial misstatements would likely render the company insolvent, and therefore unable to comply with its obligations pursuant to the planned transaction. Defendants are alleged to have nonetheless decided to go forward with the transaction. It is alleged that the failure to disclose its true financial condition, and inability to pay, prior to closing the transaction with Plaintiffs constitutes fraudulent conduct.
While the court cannot say whether Plaintiffs' factual allegations are true, it holds that these allegations are sufficient to comply with Rule 9. Plaintiffs have set forth facts with sufficient specificity to put Defendants on notice of the precise nature of their claim. Under these circumstances, Rule 9 does not provide a basis for dismissal.
*287 IV. Supplemental or Diversity Jurisdiction
In view of the dismissal of the Securities Claimthe only claim alleged in the claim to support the exercise of Federal jurisdictionthe court addresses Plaintiffs' allegation that federal jurisdiction also exists pursuant to 28 U.S.C. § 1332 (diversity of citizenship). In light of the fact that it appears to the court that diversity jurisdiction may be properly alleged, the parties are directed to confer and determine whether Defendants will stipulate to the filing of an amended complaint, solely for the purpose of alleging such jurisdiction. Counsel for Plaintiff is directed to inform the court as to whether agreement on this issue is reached within two weeks of the date of this order. In the event that such agreement is not reached, the court will schedule a conference to consider whether motion practice on this issue is necessary. Having ruled on Defendants' motion to dismiss, the court turns to consider Plaintiffs' motion for an attachment.
V. Motion for Attachment
A. Legal Principles
Rule 64 of the Federal Rules of Civil Procedure provides that the remedy of attachment is governed by state law. See Fed.R.Civ.P. 64. Section 62 of the New York Civil Practice Law and Rules ("CPLR") therefore governs Plaintiffs motion to attach Defendants' assets. The relief of attachment is available, inter alia, where the party whose assets are sought to be attached is a non-domiciliary residing outside of the State of New York, or a foreign corporation that is not authorized to do business within New York. See C.P.L.R. § 6201(1). As the moving parties, Plaintiffs bear the burden of proving the right to an attachment, and that burden is high. Specifically, a party seeing an order of attachment must show a probability of success akin to that required to obtain injunctive relief. See Perrotta v. Giannoccaro, 141 Misc.2d 155, 532 N.Y.S.2d 998, 1000 (1988). Additionally, the moving party must show: (1) the existence of a cause of action; (2) that one or more of the Section 62 grounds for attachment exist, and (3) that the amount sought to be attached exceeds any amount sought by way of counterclaim. C.P.L.R. § 6212(a). Additionally, the court considers whether attachment is needed to secure payment or obtain jurisdiction. See Capital Ventures Intern. v. Republic of Argentina, 443 F.3d 214, 222 (2d Cir.2006).
Attachment is recognized as an extraordinary remedy. Accordingly, mere satisfaction of the statutory criteria does not guarantee that the motion will be granted. Instead, "relief is discretionary and since attachment is a harsh remedy, the court must exercise care in its application." Musket Corp. v. PDVSA Petroleo S.A., 512 F.Supp.2d 155, 160 (S.D.N.Y. 2007) (citation omitted). With these standards in mind the court turns to consider Plaintiffs' request.
B. Disposition of the Attachment Motion
Plaintiff seeks to attach the assets of all Defendantsthose of the corporate entity as well as those of all Individual Defendants. Certain grounds for attachment are easily met. Plaintiffs have shown that the Individual Defendants are non-domiciliaries who do not reside within the State of New York, and that VMS is a foreign corporation that is not qualified to do business in New York See C.P.L.R. § 6201(1). Additionally, Plaintiffs have demonstrated both a cause of action and an absence of any counterclaim. The court considers below whether the remaining elements of attachment are established with respect to either the Individual Defendants or VMS.
*288 1. The Individual Defendants
The core of Plaintiffs' case alleges improper filings with the SEC. While Plaintiffs may ultimately prove the involvement of each Individual Defendant, the court cannot hold, at this stage of the proceedings, that Plaintiffs have established the required probability of success on their claims of individual liability as to falsification of publicly filed documents. It is also unclear as to whether the Individual Defendants might be personally liable for payment on the contract at issue. Moreover, Plaintiffs' complaint focuses on the allegedly culpable acts of the corporate Defendant's former Chief Financial Officer, Howard Herman, and not any other individual Defendant. Herman, who has since been dismissed from this action, now submits an affidavit in support of the claim that the assets of the remaining Individual Defendants should be attached. The disparate nature of the facts in the complaint, when compared to those alleged in support of the order of attachment, renders those offered in support of the attachment less credible. For the foregoing reasons, the court does not find the probability of success as to the Individual Defendants that is required to attach the assets of these Defendants. Accordingly, the court denies the motion to attach the assets of the Individual Defendants.
2. The Corporate Defendant
As to VMS, the Corporate Defendant, the court reaches a different conclusion. With respect to this Defendant, the element of probability of success has been established. VMS is named as the sole Defendant in the complaint's fifth, sixth, seventh and eighth causes of action. These claims sounds in breach of contract, and allege that VMS breached its obligations to make payments with respect to: (1) the Note; (2) the consulting agreement with Plaintiff Russ; (3) the promissory note to be paid to Plaintiff pension plan, and (4) the asset purchase agreement. With respect to each of these claims, Plaintiffs have established a high probability of success. Indeed, the publicly filed statements of VMS acknowledge the existence of these agreements, as well as the failure of VMS to make scheduled payments. There appears to be no defense to these contractual claims against VMS, and the court therefore holds that there is strong likelihood of success as to each. Additionally, the precarious financial position of VMS weighs in favor of a finding that attachment is needed to secure payment. In view of the fact that the court has already found that Plaintiffs have established the remaining elements required for attachment, the court holds that it is appropriate to grant the request for an attachment with respect to the attachable assets of VMS.
The court notes, however, that Plaintiffs have not complied with the statutory requirement of an undertaking. No attachment will issue, therefore, at this time. Plaintiffs are directed to submit to this court, on notice to VMS, a proposed undertaking indicating the amount of the undertaking that is argued to be appropriate. Plaintiffs shall also submit, for the court's review, and on notice to VMS, any other documents necessary to effectuate an attachment as to the assets of VMS. Upon review and consideration of the Plaintiffs' proposal, the court will issue, if appropriate, the documents necessary to effectuate the attachment as to VMS.
CONCLUSION
For the foregoing reasons, Defendants' motion to dismiss Plaintiffs' securities fraud claims is granted. The motion to dismiss the claim of fraud pursuant to Rule 9 is denied. Plaintiffs' motion for an attachment is denied with respect to the Individual Defendants, and granted with *289 respect to the corporate Defendant, VMS. Plaintiff is directed to submit proposed attachment documents, on notice to VMS, to the court as directed above. The parties are directed to confer and report back to this court with respect to the filing of an amended complaint to allege diversity jurisdiction, as set forth above. The Clerk of the Court is directed to terminate the motion to dismiss as well as the motion for an attachment.
SO ORDERED.
NOTES
[1] Plaintiffs assert two separate securities fraud claims, one against all Defendants, and one against Defendant Gonzalez. The latter claim is asserted pursuant to Section 20(a), seeking to hold Gonzalez liable as a "controlling" person. As both claims require proof of the same essential elements discussed herein, the court refers to these claims as a single ("Securities Claim").
[2] The complaint also originally named VMS former Chief Financial Officer Howard Herman. The case against this Defendant has been voluntarily dismissed.
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Case: 14-10762 Document: 00513265967 Page: 1 Date Filed: 11/10/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 14-10762 FILED
November 10, 2015
Lyle W. Cayce
UNITED STATES OF AMERICA, Clerk
Plaintiff-Appellee
v.
JOHN RAY CHEEK,
Defendant-Appellant
Appeals from the United States District Court
for the Northern District of Texas
USDC No. 3:14-CV-1308
USDC No. 3:11-CR-157-1
Before DAVIS, JONES, and HAYNES, Circuit Judges.
PER CURIAM: *
John Ray Cheek, federal prisoner # 42969-177, seeks a certificate of
appealability (COA) to challenge the district court’s order transferring his 28
U.S.C. § 2255 motion to this court as an unauthorized second or successive
§ 2255 motion. The clerk of court docketed the transfer order itself under 14-
10741 and directed Cheek to file an application for authorization to file a
* 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: 14-10762 Document: 00513265967 Page: 2 Date Filed: 11/10/2015
No. 14-10762
successive habeas petition. When he failed to do so, that action was dismissed.
This appeal, then, is from the transfer order itself.
The transfer of an unauthorized § 2255 motion is not a final order under
28 U.S.C. § 2253(c)(1)(B). See United States v. Fulton, 780 F.3d 683, 688 (5th
Cir. 2015), cert. denied, 2015 WL 5772739 (Nov. 2, 2015) (No. 15-6348).
Therefore, “the appeal of such an order does not require a COA.” Id. In
addition, the record reflects that the claims asserted by Cheek were, or could
have been raised, in his first § 2255 motion. See Crone v. Cockrell, 324 F.3d
833, 837 (5th Cir. 2003). Cheek has failed to show that the district court erred
by concluding that it lacked jurisdiction to decide Cheek’s application without
permission from this court and by transferring the motion to this court.
Accordingly, Cheek’s motion for a COA is DENIED as unnecessary. The
district court correctly transferred the application to this court and that order
is AFFIRMED; the transferred application has already been dismissed. Thus,
no further action is available in this appeal.
2
|
IN THE COURT OF CRIMINAL APPEALS
OF TEXAS
NO. WR-82,551-01
EX PARTE CESAR IVAN CHAVEZ, Applicant
ON APPLICATION FOR A WRIT OF HABEAS CORPUS
CAUSE NO. W08-64527-R(A) IN THE 265 TH DISTRICT COURT
FROM DALLAS COUNTY
Per curiam.
OPINION
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 this application for writ of habeas corpus. Ex parte
Young, 418 S.W.2d 824, 826 (Tex. Crim. App. 1967). Applicant was convicted of capital murder
and automatically sentenced to life imprisonment without the possibility of parole in January 2010.
The Fifth Court of Appeals affirmed the conviction. Chavez v. State, No. 05-10-00132-CR (Tex.
App.–Dallas May 31, 2011).
Applicant contends, among other things, that his sentence of automatic life without parole
violates the Eighth Amendment of the U.S. Constitution because he was a juvenile at the time of the
2
offense. Miller v. Alabama, 132 S.Ct. 2455 (2012). This Court has held that Miller applies
retroactively in Texas. Ex parte Maxwell, 424 S.W.3d 66 (Tex. Crim. App. 2014).
Applicant was seventeen years old at the time of the offense. After being found guilty by a
jury, he was automatically sentenced to life in prison without the possibility of parole under the law
at the time. Tex. Penal Code §12.31(a)(2007).
Both the State and the trial court recommend granting a new punishment hearing. That
recommendation is supported by the record. Applicant is entitled to relief on that issue.
Relief is granted. The sentence in Cause No. F-0864527-R in the 265th District Court of
Dallas County is set aside, and Applicant is remanded to the custody of the Sheriff of Dallas County
for a new punishment hearing at which the fact finder shall determine whether Applicant’s life
sentence shall be with or without the possibility of parole. The trial court shall issue any necessary
bench warrant within 10 days after the mandate of this Court issues. All of Applicant’s grounds
attacking the conviction are denied based on the findings of the trial court and this Court’s
independent review of the record.
Copies of this opinion shall be sent to the Texas Department of Criminal Justice–Correctional
Institutions Division and Pardons and Paroles Division.
Delivered: February 3, 2016
Do Not Publish
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